HR2454 and S1733 - Title VII - Program Rules
Produced: 10/14/2009 2:11:42 PM by Nick Santos, 1Sky Policy Staff
| H.R. 2454 | S. 1733 | |
| PART C--PROGRAM RULES | = | PART C--PROGRAM RULES |
| SEC. 721. EMISSION ALLOWANCES. | SEC. 721. EMISSION ALLOWANCES. | |
| (a) In General- The Administrator shall establish a separate quantity of emission allowances for each calendar year starting in 2012, in the amounts prescribed under subsection (e). | (a) In General- The Administrator shall establish a separate quantity of emission allowances for each calendar year starting in 2012, in the amounts prescribed under subsection (e). | |
| (b) Identification Numbers- The Administrator shall assign to each emission allowance established under subsection (a) a unique identification number that includes the vintage year for that emission allowance. | (b) Identification Numbers- The Administrator shall assign to each emission allowance established under subsection (a) a unique identification number that includes the vintage year for that emission allowance. | |
| (c) Legal Status of Emission Allowances- | (c) Legal Status of Emission Allowances- | |
| (1) IN GENERAL- An allowance established by the Administrator under this title does not constitute a property right, nor does any offset credit or other instrument established or issued under the American Clean Energy and Security Act of 2009, and the amendments made thereby, for the purpose of demonstrating compliance with this title. | <> | (1) IN GENERAL- An allowance established by the Administrator under this title does not constitute a property right. |
| (2) TERMINATION OR LIMITATION- Nothing in this Act or any other provision of law shall be construed to limit or alter the authority of the United States, including the Administrator acting pursuant to statutory authority, to terminate or limit allowances, offset credits, or term offset credits. | = | (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, including the Administrator acting pursuant to statutory authority, to terminate or limit allowances, offset credits, or term offset credits. |
| (3) OTHER PROVISIONS UNAFFECTED- Except as otherwise specified in this Act, nothing in this Act relating to allowances, offset credits, or term offset credits established or issued under this title shall affect the application of any other provision of law to a covered entity, or the responsibility for a covered entity to comply with any such provision of law. | (3) OTHER PROVISIONS UNAFFECTED- Except as otherwise specified in this Act, nothing in this Act relating to allowances, offset credits, or term offset credits established or issued under this title shall affect the application of any other provision of law to a covered entity, or the responsibility for a covered entity to comply with any such provision of law. | |
| (d) Savings Provision- Nothing in this part shall be construed as requiring a change of any kind in any State law regulating electric utility rates and charges, or as affecting any State law regarding such State regulation, or as limiting State regulation (including any prudency review) under such a State law. Nothing in this part shall be construed as modifying the Federal Power Act or as affecting the authority of the Federal Energy Regulatory Commission under that Act. Nothing in this part shall be construed to interfere with or impair any program for competitive bidding for power supply in a State in which such program is established. | <> | (d) Savings Provision- Nothing in this part shall be construed as requiring a change of any kind in any State law regulating electric utility rates and charges, or as affecting any State law regarding such State regulation, or as limiting State regulation (including any prudency review) under such a State law. Nothing in this part shall be construed as modifying the Federal Power Act (16 U.S.C. 791a et seq.) or as affecting the authority of the Federal Energy Regulatory Commission under that Act. Nothing in this part shall be construed to interfere with or impair any program for competitive bidding for power supply in a State in which such program is established. |
| (e) Allowances for Each Calendar Year- | = | (e) Allowances for Each Calendar Year- |
| (1) IN GENERAL- Except as provided in paragraph (2), the number of emission allowances established by the Administrator under subsection (a) for each calendar year shall be as provided in the following table: | (1) IN GENERAL- Except as provided in paragraph (2), the number of emission allowances established by the Administrator under subsection (a) for each calendar year shall be as provided in the following table: | |
| ---------------------------------------------------------------- | <> | ----------------------------------------------------------- |
| ----------------------------------------------------------- | ||
| Calendar year Emission allowances (in millions) | Calendar Year Emissions Allowances (MtCO2e) | |
| ---------------------------------------------------------------- | ||
| 2012 4,627 | = | 2012 4,627 |
| 2013 4,544 | 2013 4,544 | |
| 2014 5,099 | 2014 5,099 | |
| 2015 5,003 | 2015 5,003 | |
| 2016 5,482 | 2016 5,482 | |
| 2017 5,375 | <> | 2017 5,261 |
| 2018 5,269 | 2018 5,132 | |
| 2019 5,162 | 2019 5,002 | |
| 2020 5,056 | 2020 4,873 | |
| 2021 4,903 | 2021 4,739 | |
| 2022 4,751 | 2022 4,605 | |
| 2023 4,599 | 2023 4,471 | |
| 2024 4,446 | 2024 4,337 | |
| 2025 4,294 | 2025 4,203 | |
| 2026 4,142 | 2026 4,069 | |
| 2027 3,990 | 2027 3,935 | |
| 2028 3,837 | 2028 3,801 | |
| 2029 3,685 | 2029 3,667 | |
| 2030 3,533 | = | 2030 3,533 |
| 2031 3,408 | 2031 3,408 | |
| 2032 3,283 | 2032 3,283 | |
| 2033 3,158 | 2033 3,158 | |
| 2034 3,033 | 2034 3,033 | |
| 2035 2,908 | 2035 2,908 | |
| 2036 2,784 | 2036 2,784 | |
| 2037 2,659 | 2037 2,659 | |
| 2038 2,534 | 2038 2,534 | |
| 2039 2,409 | 2039 2,409 | |
| 2040 2,284 | 2040 2,284 | |
| 2041 2,159 | 2041 2,159 | |
| 2042 2,034 | 2042 2,034 | |
| 2043 1,910 | 2043 1,910 | |
| 2044 1,785 | 2044 1,785 | |
| 2045 1,660 | 2045 1,660 | |
| 2046 1,535 | 2046 1,535 | |
| 2047 1,410 | 2047 1,410 | |
| 2048 1,285 | 2048 1,285 | |
| 2049 1,160 | 2049 1,160 | |
| 2050 and each year thereafter 1,035 | <> | 2050 1,035 |
| ---------------------------------------------------------------- | ----------------------------------------------------------- | |
| (2) REVISION- | = | (2) REVISION- |
| (A) IN GENERAL- The Administrator may adjust, in accordance with subparagraph (B), the number of emission allowances established pursuant to paragraph (1) if, after notice and an opportunity for public comment, the Administrator determines that-- | (A) IN GENERAL- The Administrator may adjust, in accordance with subparagraph (B), the number of emission allowances established pursuant to paragraph (1) if, after notice and an opportunity for public comment, the Administrator determines that-- | |
| (i) United States greenhouse gas emissions in 2005 were other than 7,206 million metric tons carbon dioxide equivalent; | (i) United States greenhouse gas emissions in 2005 were other than 7,206 million metric tons carbon dioxide equivalent; | |
| (ii) if the requirements of this title for 2012 had been in effect in 2005, section 722 would have required emission allowances to be held for other than 66.2 percent of United States greenhouse gas emissions in 2005; | (ii) if the requirements of this title for 2012 had been in effect in 2005, section 722 would have required emission allowances to be held for other than 66.2 percent of United States greenhouse gas emissions in 2005; | |
| (iii) if the requirements of this title for 2014 had been in effect in 2005, section 722 would have required emission allowances to be held for other than 75.7 percent of United States greenhouse gas emissions in 2005; or | (iii) if the requirements of this title for 2014 had been in effect in 2005, section 722 would have required emission allowances to be held for other than 75.7 percent of United States greenhouse gas emissions in 2005; or | |
| (iv) if the requirements of this title for 2016 had been in effect in 2005, section 722 would have required emission allowances to be held for other than 84.5 percent United States greenhouse gas emissions in 2005. | (iv) if the requirements of this title for 2016 had been in effect in 2005, section 722 would have required emission allowances to be held for other than 84.5 percent United States greenhouse gas emissions in 2005. | |
| (B) ADJUSTMENT FORMULA- | (B) ADJUSTMENT FORMULA- | |
| (i) IN GENERAL- If the Administrator adjusts under this paragraph the number of emission allowances established pursuant to paragraph (1), the number of emission allowances the Administrator establishes for any given calendar year shall equal the product of-- | (i) IN GENERAL- If the Administrator adjusts under this paragraph the number of emission allowances established pursuant to paragraph (1), the number of emission allowances the Administrator establishes for any given calendar year shall equal the product of-- | |
| (I) United States greenhouse gas emissions in 2005, expressed in tons of carbon dioxide equivalent; | (I) United States greenhouse gas emissions in 2005, expressed in tons of carbon dioxide equivalent; | |
| (II) the percent of United States greenhouse gas emissions in 2005, expressed in tons of carbon dioxide equivalent, that would have been subject to section 722 if the requirements of this title for the given calendar year had been in effect in 2005; and | (II) the percent of United States greenhouse gas emissions in 2005, expressed in tons of carbon dioxide equivalent, that would have been subject to section 722 if the requirements of this title for the given calendar year had been in effect in 2005; and | |
| (III) the percentage set forth for that calendar year in section 703(a), or determined under clause (ii) of this subparagraph. | (III) the percentage set forth for that calendar year in section 703(a), or determined under clause (ii) of this subparagraph. | |
| (ii) TARGETS- In applying the portion of the formula in clause (i)(III) of this subparagraph, for calendar years for which a percentage is not listed in section 703(a), the Administrator shall use a uniform annual decline in the amount of emissions between the years that are specified. | (ii) TARGETS- In applying the portion of the formula in clause (i)(III) of this subparagraph, for calendar years for which a percentage is not listed in section 703(a), the Administrator shall use a uniform annual decline in the amount of emissions between the years that are specified. | |
| (iii) CARBON DIOXIDE EQUIVALENT VALUE- If the Administrator adjusts under this paragraph the number of emission allowances established pursuant to paragraph (1), the Administrator shall use the carbon dioxide equivalent values established pursuant to section 712. | (iii) CARBON DIOXIDE EQUIVALENT VALUE- If the Administrator adjusts under this paragraph the number of emission allowances established pursuant to paragraph (1), the Administrator shall use the carbon dioxide equivalent values established pursuant to section 712. | |
| (iv) LIMITATION ON ADJUSTMENT TIMING- Once a calendar year has started, the Administrator may not adjust the number of emission allowances to be established for that calendar year. | (iv) LIMITATION ON ADJUSTMENT TIMING- Once a calendar year has started, the Administrator may not adjust the number of emission allowances to be established for that calendar year. | |
| (C) LIMITATION ON ADJUSTMENT AUTHORITY- The Administrator may adjust under this paragraph the number of emission allowances to be established pursuant to paragraph (1) only once. | (C) LIMITATION ON ADJUSTMENT AUTHORITY- The Administrator may adjust under this paragraph the number of emission allowances to be established pursuant to paragraph (1) only once. | |
| (f) Compensatory Allowance- | (f) Compensatory Allowance- | |
| (1) IN GENERAL- The regulations promulgated under subsection (h) shall provide for the establishment and distribution of compensatory allowances for-- | (1) IN GENERAL- The regulations promulgated under subsection (h) shall provide for the establishment and distribution of compensatory allowances for-- | |
| (A) the destruction, in 2012 or later, of fluorinated gases that are greenhouse gases if-- | (A) the destruction, in 2012 or later, of fluorinated gases that are greenhouse gases if-- | |
| (i) allowances or offset credits were retired for their production or importation; and | (i) allowances or offset credits were retired for their production or importation; and | |
| (ii) such gases are not required to be destroyed under any other provision of law; | (ii) such gases are not required to be destroyed under any other provision of law; | |
| (B) the nonemissive use, in 2012 or later, of petroleum-based or coal-based liquid or gaseous fuel, petroleum coke, natural gas liquid, or natural gas as a feedstock, if allowances or offset credits were retired for the greenhouse gases that would have been emitted from their combustion; and | (B) the nonemissive use, in 2012 or later, of petroleum-based or coal-based liquid or gaseous fuel, petroleum coke, natural gas liquid, or natural gas as a feedstock, if allowances or offset credits were retired for the greenhouse gases that would have been emitted from their combustion; and | |
| (C) the conversionary use, in 2012 or later, of fluorinated gases in a manufacturing process, including semiconductor research or manufacturing, if allowances or offset credits were retired for the production or importation of such gas. | (C) the conversionary use, in 2012 or later, of fluorinated gases in a manufacturing process, including semiconductor research or manufacturing, if allowances or offset credits were retired for the production or importation of such gas. | |
| (2) ESTABLISHMENT AND DISTRIBUTION- | (2) ESTABLISHMENT AND DISTRIBUTION- | |
| (A) IN GENERAL- Not later than 90 days after the end of each calendar year, the Administrator shall establish and distribute to the entity taking the actions described in subparagraph (A), (B), or (C) of paragraph (1) a quantity of compensatory allowances equivalent to the number of tons of carbon dioxide equivalent of avoided emissions achieved through such actions. In establishing the quantity of compensatory allowances, the Administrator shall take into account the carbon dioxide equivalent value of any greenhouse gas resulting from such action. | (A) IN GENERAL- Not later than 90 days after the end of each calendar year, the Administrator shall establish and distribute to the entity taking the actions described in subparagraph (A), (B), or (C) of paragraph (1) a quantity of compensatory allowances equivalent to the number of tons of carbon dioxide equivalent of avoided emissions achieved through such actions. In establishing the quantity of compensatory allowances, the Administrator shall take into account the carbon dioxide equivalent value of any greenhouse gas resulting from such action. | |
| (B) SOURCE OF ALLOWANCES- Compensatory allowances established under this subsection shall not be emission allowances established under subsection (a). | (B) SOURCE OF ALLOWANCES- Compensatory allowances established under this subsection shall not be emission allowances established under subsection (a). | |
| (C) IDENTIFICATION NUMBERS- The Administrator shall assign to each compensatory allowance established under subparagraph (A) a unique identification number. | (C) IDENTIFICATION NUMBERS- The Administrator shall assign to each compensatory allowance established under subparagraph (A) a unique identification number. | |
| (3) DEFINITIONS- For purposes of this subsection-- | (3) DEFINITIONS- For purposes of this subsection-- | |
| (A) the term destruction' means the conversion of a greenhouse gas by thermal, chemical, or other means to another gas or set of gases with little or no carbon dioxide equivalent value; | (A) the term destruction' means the conversion of a greenhouse gas by thermal, chemical, or other means to another gas or set of gases with little or no carbon dioxide equivalent value; | |
| (B) the term nonemissive use' means the use of fossil fuel as a feedstock in an industrial or manufacturing process to the extent that greenhouse gases are not emitted from such process, and to the extent that the products of such process are not intended for use as, or to be contained in, a fuel; and | (B) the term nonemissive use' means the use of fossil fuel as a feedstock in an industrial or manufacturing process to the extent that greenhouse gases are not emitted from such process, and to the extent that the products of such process are not intended for use as, or to be contained in, a fuel; and | |
| (C) the term conversionary use' means the conversion during research or manufacturing of a fluorinated gas into another greenhouse gas or set of gases with a lower carbon dioxide equivalent value. | (C) the term conversionary use' means the conversion during research or manufacturing of a fluorinated gas into another greenhouse gas or set of gases with a lower carbon dioxide equivalent value. | |
| (4) FEEDSTOCK EMISSIONS STUDY- | (4) FEEDSTOCK EMISSIONS STUDY- | |
| (A) The Administrator may conduct a study to determine the extent to which petroleum-based or coal-based liquid or gaseous fuel, petroleum coke, natural gas liquid, or natural gas are used as feedstocks in manufacturing processes to produce products and the greenhouse gas emissions resulting from such uses. | (A) The Administrator may conduct a study to determine the extent to which petroleum-based or coal-based liquid or gaseous fuel, petroleum coke, natural gas liquid, or natural gas are used as feedstocks in manufacturing processes to produce products and the greenhouse gas emissions resulting from such uses. | |
| (B) If as a result of such a study, the Administrator determines that the use of such products by noncovered sources results in substantial emissions of greenhouse gases and that such emissions have not been adequately addressed under other requirements of this Act, the Administrator may, after notice and comment rulemaking, promulgate a regulation reducing compensatory allowances commensurately if doing so will not result in shifting such emissions to noncovered sources. | <> | (B) If as a result of such a study, the Administrator determines that the use of such products by noncovered sources results in substantial emissions of greenhouse gases or their precursors and that such emissions have not been adequately addressed under other requirements of this Act, the Administrator may, after notice and comment rulemaking, promulgate a regulation reducing compensatory allowances commensurately if doing so will not result in leakage. |
| (g) Fluorinated Gases Assessment- No later than March 31, 2014, the Administrator shall complete an assessment of the regulation of non-HFC fluorinated gases under this title to determine whether the most appropriate point of regulation is at the gas manufacturer or importer level, or at the source of emissions downstream. If the Administrator determines, based on consideration of environmental effectiveness, cost effectiveness, administrative feasibility, extent of coverage of emissions, competitiveness and other relevant considerations consistent with the purposes of this title, that emissions of non-HFC fluorinated gases can best be regulated by designating downstream emission sources as covered entities with compliance obligations under section 722, the Administrator shall, after notice and comment rulemaking, change the definition of covered entity and the compliance obligations under section 722 with respect to non-HFC fluorinated gases accordingly, consistent with the purposes of this title, and establish such other requirements as are necessary to ensure compliance for such entities with the requirements of this title. | (g) Fluorinated Gases Assessment- | |
| (1) IN GENERAL- Not later than March 31, 2014, the Administrator shall conduct an assessment of the regulation of non-hydrofluorocarbon fluorinated gases under this title (excluding perfluorocarbon) to determine whether the most appropriate point of regulation of those gases is at-- | ||
| (A) the gas manufacturer or importer level; or | ||
| (B) the downstream source of the emissions. | ||
| (2) MODIFICATION OF DEFINITION- If the Administrator determines, based on consideration of environmental effectiveness, cost-effectiveness, administrative feasibility, extent of coverage of emissions, and competitiveness considerations, that emissions of non-hydrofluorocarbon fluorinated gases (excluding perfluorocarbons) can best be regulated by designating downstream emission sources as covered entities with compliance obligations under section 722, the Administrator shall-- | ||
| (A) after providing notice and an opportunity for comment, modify the definition of the term covered entity' with respect to fluorinated gases (other than hydrofluorocarbons and perfluorocarbons) accordingly; and | ||
| (B) establish such requirements as are necessary to ensure compliance by the covered entities with the requirements of this title. | ||
| (h) Regulations- Not later than 24 months after the date of enactment of this title, the Administrator shall promulgate regulations to carry out the provisions of this title. | = | (h) Regulations- Not later than 24 months after the date of enactment of this title, the Administrator shall promulgate regulations to carry out the provisions of this title. |
| SEC. 722. PROHIBITION OF EXCESS EMISSIONS. | SEC. 722. PROHIBITION OF EXCESS EMISSIONS. | |
| (a) Prohibition- Except as provided in subsection (c), effective January 1, 2012, each covered entity is prohibited from emitting greenhouse gases and having attributable greenhouse gas emissions, in combination, in excess of its allowable emissions level. A covered entity's allowable emissions level for each calendar year is the number of emission allowances (or offset credits or other allowances as provided in subsection (d)) it holds as of 12:01 a.m. on April 1 (or a later date established by the Administrator under subsection (j)) of the following calendar year. | <> | (a) Prohibition- Except as provided in subsection (c), effective January 1, 2012, each covered entity is prohibited from emitting greenhouse gases, and having attributable greenhouse gas emissions, in combination, in excess of its allowable emissions level. A covered entity's allowable emissions level for each calendar year is the number of emission allowances (or credits or other allowances as provided in subsection (d)) it holds as of 12:01 a.m. on April 1 (or a later date established by the Administrator under subsection (j)) of the following calendar year. |
| (b) Methods of Demonstrating Compliance- Except as otherwise provided in this section, the owner or operator of a covered entity shall not be considered to be in compliance with the prohibition in subsection (a) unless, as of 12:01 a.m. on April 1 (or a later date established by the Administrator under subsection (j)) of each calendar year starting in 2013, the owner or operator holds a quantity of emission allowances (or offset credits or other allowances as provided in subsection (d)) at least as great as the quantity calculated as follows: | (b) Methods of Demonstrating Compliance- Except as otherwise provided in this section, the owner or operator of a covered entity shall not be considered to be in compliance with the prohibition in subsection (a) unless, as of 12:01 a.m. on April 1 (or a later date established by the Administrator under subsection (j)) of each calendar year starting in 2013, the owner or operator holds a quantity of emission allowances (or credits or other allowances as provided in subsection (d)) at least as great as the quantity calculated as follows: | |
| (1) ELECTRICITY SOURCES- For a covered entity described in section 700(13)(A), 1 emission allowance for each ton of carbon dioxide equivalent of greenhouse gas that such covered entity emitted in the previous calendar year, excluding emissions resulting from the combustion of-- | = | (1) ELECTRICITY SOURCES- For a covered entity described in section 700(13)(A), 1 emission allowance for each ton of carbon dioxide equivalent of greenhouse gas that such covered entity emitted in the previous calendar year, excluding emissions resulting from the combustion of-- |
| (A) petroleum-based or coal-based liquid fuel; | (A) petroleum-based or coal-based liquid fuel; | |
| (B) natural gas liquid; | (B) natural gas liquid; | |
| (C) renewable biomass or gas derived from renewable biomass; or | (C) renewable biomass or gas derived from renewable biomass; or | |
| (D) petroleum coke or gas derived from petroleum coke. | <> | (D) petroleum coke. |
| (2) FUEL PRODUCERS AND IMPORTERS- For a covered entity described in section 700(13)(B), 1 emission allowance for each ton of carbon dioxide equivalent of greenhouse gas that would be emitted from the combustion of any petroleum-based or coal-based liquid fuel, petroleum coke, or natural gas liquid, produced or imported by such covered entity during the previous calendar year for sale or distribution in interstate commerce, assuming no capture and sequestration of any greenhouse gas emissions. | = | (2) FUEL PRODUCERS AND IMPORTERS- For a covered entity described in section 700(13)(B), 1 emission allowance for each ton of carbon dioxide equivalent of greenhouse gas that would be emitted from the combustion of any petroleum-based or coal-based liquid fuel, petroleum coke, or natural gas liquid, produced or imported by such covered entity during the previous calendar year for sale or distribution in interstate commerce, assuming no capture and sequestration of any greenhouse gas emissions. |
| (3) INDUSTRIAL GAS PRODUCERS AND IMPORTERS- For a covered entity described in section 700(13)(C), 1 emission allowance for each ton of carbon dioxide equivalent of fossil fuel-based carbon dioxide, nitrous oxide, or any other fluorinated gas that is a greenhouse gas (except for nitrogen trifluoride), or any combination thereof, produced or imported by such covered entity during the previous calendar year for sale or distribution in interstate commerce. | <> | (3) INDUSTRIAL GAS PRODUCERS AND IMPORTERS- For a covered entity described in section 700(13)(C), 1 emission allowance for each ton of carbon dioxide equivalent of fossil fuel-based carbon dioxide, nitrous oxide, or any other fluorinated gas that is a greenhouse gas (except for nitrogen trifluoride), or any combination thereof, produced or imported by such covered entity during the previous calendar year for sale or distribution in interstate commerce or released as fugitive emissions in the production of fluorinated gas. |
| (4) NITROGEN TRIFLUORIDE SOURCES- For a covered entity described in section 700(13)(D), 1 emission allowance for each ton of carbon dioxide equivalent of nitrogen trifluoride that such covered entity emitted in the previous calendar year. | = | (4) NITROGEN TRIFLUORIDE SOURCES- For a covered entity described in section 700(13)(D), 1 emission allowance for each ton of carbon dioxide equivalent of nitrogen trifluoride that such covered entity emitted in the previous calendar year. |
| (5) GEOLOGICAL SEQUESTRATION SITES- For a covered entity described in section 700(13)(E), 1 emission allowance for each ton of carbon dioxide equivalent of greenhouse gas that such covered entity emitted in the previous calendar year. | (5) GEOLOGICAL SEQUESTRATION SITES- For a covered entity described in section 700(13)(E), 1 emission allowance for each ton of carbon dioxide equivalent of greenhouse gas that such covered entity emitted in the previous calendar year. | |
| (6) INDUSTRIAL STATIONARY SOURCES- For a covered entity described in section 700(13)(F), (G), or (H), 1 emission allowance for each ton of carbon dioxide equivalent of greenhouse gas that such covered entity emitted in the previous calendar year, excluding emissions resulting from-- | (6) INDUSTRIAL STATIONARY SOURCES- For a covered entity described in section 700(13)(F), (G), or (H), 1 emission allowance for each ton of carbon dioxide equivalent of greenhouse gas that such covered entity emitted in the previous calendar year, excluding emissions resulting from-- | |
| (A) the combustion of petroleum-based or coal-based liquid fuel; | (A) the combustion of petroleum-based or coal-based liquid fuel; | |
| (B) the combustion of natural gas liquid; | (B) the combustion of natural gas liquid; | |
| (C) the combustion of renewable biomass or gas derived from renewable biomass; | (C) the combustion of renewable biomass or gas derived from renewable biomass; | |
| (D) the combustion of petroleum coke or gas derived from petroleum coke; or | <> | (D) the combustion of petroleum coke; or |
| (E) the use of any fluorinated gas that is a greenhouse gas purchased for use at that covered entity, except for nitrogen trifluoride. | = | (E) the use of any fluorinated gas that is a greenhouse gas purchased for use at that covered entity, except for nitrogen trifluoride. |
| (7) INDUSTRIAL FOSSIL FUEL-FIRED COMBUSTION DEVICES- For a covered entity described in section 700(13)(I), 1 emission allowance for each ton of carbon dioxide equivalent of greenhouse gas that the devices emitted in the previous calendar year, excluding emissions resulting from the combustion of-- | (7) INDUSTRIAL FOSSIL FUEL-FIRED COMBUSTION DEVICES- For a covered entity described in section 700(13)(I), 1 emission allowance for each ton of carbon dioxide equivalent of greenhouse gas that the devices emitted in the previous calendar year, excluding emissions resulting from the combustion of-- | |
| (A) petroleum-based or coal-based liquid fuel; | (A) petroleum-based or coal-based liquid fuel; | |
| (B) natural gas liquid; | (B) natural gas liquid; | |
| (C) renewable biomass or gas derived from renewable biomass; or | (C) renewable biomass or gas derived from renewable biomass; or | |
| (D) petroleum coke or gas derived from petroleum coke. | <> | (D) petroleum coke. |
| (8) NATURAL GAS LOCAL DISTRIBUTION COMPANIES- For a covered entity described in section 700(13)(J), 1 emission allowance for each ton of carbon dioxide equivalent of greenhouse gas that would be emitted from the combustion of the natural gas, and any other gas meeting the specifications for commingling with natural gas for purposes of delivery, that such entity delivered during the previous calendar year to customers that are not covered entities, assuming no capture and sequestration of that greenhouse gas. | = | (8) NATURAL GAS LOCAL DISTRIBUTION COMPANIES- For a covered entity described in section 700(13)(J), 1 emission allowance for each ton of carbon dioxide equivalent of greenhouse gas that would be emitted from the combustion of the natural gas, and any other gas meeting the specifications for commingling with natural gas for purposes of delivery, that such entity delivered during the previous calendar year to customers that are not covered entities, assuming no capture and sequestration of that greenhouse gas. |
| <> | (9) R&D FACILITIES- | |
| (A) IN GENERAL- For a qualified R&D facility that emitted 25,000 tons per year or more carbon dioxide equivalent in the previous calendar year, 1 emission allowance for each ton of carbon dioxide equivalent of greenhouse gas that such facility emitted in the previous calendar year. | ||
| (B) TREATMENT- A qualified R&D facility shall be treated as a separate covered entity solely for purposes of applying the requirements of this subsection. | ||
| (9) ALGAE-BASED FUELS- Where carbon dioxide (or another greenhouse gas) generated by a covered entity is used as an input in the production of algae-based fuels, the Administrator shall ensure that emission allowances are required to be held either for the carbon dioxide generated by a covered entity that is used to grow the algae or for the portion of the carbon dioxide emitted from combustion of the fuel produced from such algae that is attributable to carbon dioxide generated by a covered entity, but not for both. | (10) ALGAE-BASED FUELS- Where carbon dioxide (or another greenhouse gas) is used as an input in the production of algae-based fuels, the Administrator shall ensure that allowances are required to be held either for the carbon dioxide used to grow the algae or for the carbon dioxide emitted from combustion of the fuel produced from such algae, but not for both. | |
| (10) FUGITIVE EMISSIONS- The greenhouse gas emissions to which paragraphs (1), (4), (6), and (7) apply shall not include fugitive emissions of greenhouse gas, except to the extent the Administrator determines that data on the carbon dioxide equivalent value of greenhouse gas in the fugitive emissions can be provided with sufficient precision, reliability, accessibility, and timeliness to ensure the integrity of emission allowances, the allowance tracking system, and the cap on emissions. | (11) FUGITIVE EMISSIONS- The greenhouse gas emissions to which paragraphs (1), (4), (6), and (7) apply shall not include fugitive emissions of greenhouse gas, except to the extent the Administrator determines that data on the carbon dioxide equivalent value of greenhouse gas in the fugitive emissions can be provided with sufficient precision, reliability, accessibility, and timeliness to ensure the integrity of emission allowances, the allowance tracking system, and the limits on emissions. | |
| (11) EXPORT EXEMPTION- This section shall not apply to any petroleum-based or coal-based liquid fuel, petroleum coke, natural gas liquid, fossil fuel-based carbon dioxide, nitrous oxide, or fluorinated gas that is exported for sale or use. | (12) EXPORT EXEMPTION- This section shall not apply to any petroleum-based or coal-based liquid fuel, petroleum coke, natural gas liquid, fossil fuel-based carbon dioxide, nitrous oxide, or fluorinated gas that is exported for sale or use. | |
| (12) NATURAL GAS LIQUIDS- For natural gas liquids, the covered entity subject to the requirement stated in paragraph (2) shall be the owner of the natural gas liquids at the point the natural gas liquids are separated into merchantable products. | (13) NATURAL GAS LIQUIDS- Notwithstanding subsection (a), if the owner or operator of a covered entity described in section 700(13)(B) that produces natural gas liquids does not take ownership of the liquids, and is not responsible for the distribution or use of the liquids in commerce, the owner of the liquids shall be responsible for compliance with this section, section 723, and other relevant sections of this title with respect to such liquids. In the regulations promulgated under section 721, the Administrator shall include such provisions with respect to such liquids as the Administrator determines are appropriate to determine and ensure compliance, and to penalize noncompliance. In such a case, the owner of the covered entity shall provide to the Administrator, in a manner to be determined by the Administrator, information regarding the quantity and ownership of liquids produced at the covered entity. | |
| (13) APPLICATION OF MULTIPLE PARAGRAPHS- For a covered entity to which more than 1 of paragraphs (1) through (8) apply, all applicable paragraphs shall apply, except that not more than 1 emission allowance shall be required for the same emission. | (14) APPLICATION OF MULTIPLE PARAGRAPHS- For a covered entity to which more than 1 of paragraphs (1) through (8) apply, all applicable paragraphs shall apply, except that not more than 1 emission allowance shall be required for the same emission. | |
| (14) APPLICATION TO FRACTIONS OF TONS- In applying paragraphs (1) through (8), any amount less than 1 ton of carbon dioxide equivalent of emissions or attributable greenhouse gas emissions shall be treated as 1 ton of such carbon dioxide equivalent. | ||
| (c) Phase-in of Prohibition- | = | (c) Phase-In of Prohibition- |
| (1) INDUSTRIAL STATIONARY SOURCES- The prohibition under subsection (a) shall first apply to a covered entity described in section 700(13)(D), (F), (G), (H), or (I), with respect to emissions occurring during calendar year 2014. | (1) INDUSTRIAL STATIONARY SOURCES- The prohibition under subsection (a) shall first apply to a covered entity described in section 700(13)(D), (F), (G), (H), or (I), with respect to emissions occurring during calendar year 2014. | |
| (2) NATURAL GAS LOCAL DISTRIBUTION COMPANIES- The prohibition under subsection (a) shall first apply to a covered entity described in section 700(13)(J) with respect to deliveries occurring during calendar year 2016. | (2) NATURAL GAS LOCAL DISTRIBUTION COMPANIES- The prohibition under subsection (a) shall first apply to a covered entity described in section 700(13)(J) with respect to deliveries occurring during calendar year 2016. | |
| (d) Additional Methods- In addition to using the method of compliance described in subsection (b), a covered entity may do the following: | (d) Additional Methods- In addition to using the method of compliance described in subsection (b), a covered entity may do the following: | |
| (1) OFFSET CREDITS- | (1) OFFSET CREDITS- | |
| <> | (A) CREDITS- | |
| (A) IN GENERAL- Covered entities collectively may, in accordance with this paragraph, use offset credits to demonstrate compliance for up to a maximum of 2 billion tons of greenhouse gas emissions annually. The ability to demonstrate compliance with offset credits shall be divided pro rata among covered entities by allowing each covered entity to satisfy a percentage of the number of allowances required to be held under subsection (b) to demonstrate compliance by holding 1 domestic offset credit or 1.25 international offset credits in lieu of an emission allowance, except as provided in subparagraph (D). | (i) IN GENERAL- Covered entities collectively may, in accordance with this paragraph, use offset credits to demonstrate compliance for up to a maximum of 2,000,000,000 tons of greenhouse gas emissions annually. | |
| (ii) DEMONSTRATION OF COMPLIANCE- In any calendar year, a covered entity may demonstrate compliance by holding 1 domestic offset credit or 1.25 international offset credits in lieu of an emission allowance, except as provided in subparagraph (D), up to a total number of offset credits described in subparagraph (B). | ||
| (B) APPLICABLE PERCENTAGE- The percentage referred to in subparagraph (A) for a given calendar year shall be determined by dividing 2 billion by the sum of 2 billion plus the number of emission allowances established under section 721(a) for the previous year, and multiplying that number by 100. Not more than one half of the applicable percentage under this paragraph may be used by holding domestic offset credits, and not more than one half of the applicable percentage under this paragraph may be used by holding international offset credits, except as provided in subparagraph (C). | (B) APPLICABLE PERCENTAGE- | |
| (i) IN GENERAL- The total number of offset credits referred to in subparagraph (A)(ii) for a covered entity for a given calendar year shall be determined by-- | ||
| (I) dividing-- | ||
| (aa) the tons of carbon dioxide equivalent of greenhouse gas emissions of the covered entity (except for the types of emissions excluded under subparagraphs (A) through (D) of subsection (b)(1), subparagraphs (A) through (E) of subsection (b)(6), and subparagraphs (A) through (D) of subsection (b)(7)) and attributable greenhouse gas emissions for the year before the preceding calendar year; by | ||
| (bb) the sum of the tons of carbon dioxide equivalent of greenhouse gas emissions of all covered entities (except for the types of emissions excluded under subparagraphs (A) through (D) of subsection (b)(1), subparagraphs (A) through (E) of subsection (b)(6), and subparagraphs (A) through (D) of subsection (b)(7)) and attributable greenhouse gas emissions for the year before the preceding calendar year; and | ||
| (II) multiplying the quotient obtained under subclause (I) by 2,000,000,000. | ||
| (ii) APPLICABILITY- Clause (i) shall apply to a covered entity (including a covered entity that commenced operation during the preceding calendar year) even if the covered entity had no greenhouse gas emissions or attributable greenhouse gas emissions described in that clause. | ||
| (iii) OFFSET CREDITS- Not more than 3/4 of the applicable percentage under this paragraph may be used by holding domestic offset credits, and not more than 1/4 of the applicable percentage under this paragraph may be used by holding international offset credits, except as provided in subparagraph (C). | ||
| (C) MODIFIED PERCENTAGES- If the Administrator determines that domestic offset credits available for use in demonstrating compliance in any calendar year at domestic offset prices generally equal to or less than emission allowance prices, are likely to offset less than 0.9 billion tons of greenhouse gas emissions (measured in tons of carbon dioxide equivalents), for purposes of compliance demonstration in that year the Administrator shall-- | (C) MODIFIED PERCENTAGES- If the Administrator determines that domestic offset credits available for use in demonstrating compliance in any calendar year at domestic offset prices generally equal to or less than allowance prices, are likely to offset less than 900,000,000 tons of greenhouse gas emissions (measured in tons of carbon dioxide equivalents), the Administrator shall increase the percent of emissions that can be offset through the use of international offset credits (and decrease the percent of emissions that can be allowed through the use of domestic offset credits by the same amount) to reflect the amount that 1,500,000,000 exceeds the number of domestic offset credits the Administrator determines is available for that year, up to a maximum of 750,000,000 tons of greenhouse gas emissions. | |
| (i) increase the percentage of emissions that can be offset through the use of international offset credits to reflect the amount that 1.0 billion exceeds the number of domestic offset credits the Administrator determines is available, at prices generally equal to or less than emission allowance prices, for that year, up to a maximum of 0.5 billion tons of greenhouse gas emissions; and | ||
| (ii) decrease the percentage of emissions that can be offset through the use of domestic offset credits by the same amount. | ||
| (D) INTERNATIONAL OFFSET CREDITS- Notwithstanding subparagraph (A), to demonstrate compliance prior to calendar year 2018, a covered entity may use 1 international offset credit in lieu of an emission allowance up to the amount permitted under this paragraph. | = | (D) INTERNATIONAL OFFSET CREDITS- Notwithstanding subparagraph (A), to demonstrate compliance prior to calendar year 2018, a covered entity may use 1 international offset credit in lieu of an emission allowance up to the amount permitted under this paragraph. |
| (E) President'S RECOMMENDATION- The President may make a recommendation to Congress as to whether the number 2 billion specified in subparagraphs (A) and (B) should be increased or decreased. | <> | (E) President'S RECOMMENDATION- The President may make a recommendation to Congress as to whether the number 2,000,000,000 specified in subparagraphs (A) and (B) should be increased or decreased. |
| (2) TERM OFFSET CREDITS- | = | (2) TERM OFFSET CREDITS- |
| (A) IN GENERAL- Covered entities may, in accordance with this paragraph, use non-expired term offset credits instead of domestic offset credits for purposes of temporarily demonstrating compliance with this section. | (A) IN GENERAL- Covered entities may, in accordance with this paragraph, use non-expired term offset credits instead of domestic offset credits for purposes of temporarily demonstrating compliance with this section. | |
| (B) AMOUNT- The combined quantity of term offset credits and domestic offset credits used by a covered entity to demonstrate compliance for its emissions or attributable greenhouse gas emissions in any given year shall not exceed the quantity of domestic offset credits that a covered entity is entitled to use for that year to demonstrate compliance in accordance with paragraph (1). | (B) AMOUNT- The combined quantity of term offset credits and domestic offset credits used by a covered entity to demonstrate compliance for its emissions or attributable greenhouse gas emissions in any given year shall not exceed the quantity of domestic offset credits that a covered entity is entitled to use for that year to demonstrate compliance in accordance with paragraph (1). | |
| (C) EXPIRATION- A term offset credit shall expire in the year after its term ends. The term of a term offset credit shall be calculated by adding to the year of issuance the number of years equal to the length of the crediting period for the practice or project for which the term offset credit was issued, but in no case shall be later than the date 5 years from the date of issuance. | (C) EXPIRATION- A term offset credit shall expire in the year after its term ends. The term of a term offset credit shall be calculated by adding to the year of issuance the number of years equal to the length of the crediting period for the practice or project for which the term offset credit was issued, but in no case shall be later than the date 5 years from the date of issuance. | |
| (D) DEMONSTRATING COMPLIANCE UPON EXPIRATION OF TERM OFFSET CREDIT- With respect to the emissions for which a covered entity is using term offset credits to demonstrate compliance temporarily with this section, the owner or operator of a covered entity shall not be considered to be in compliance with the prohibition in subsection (a) unless, as of 12:01 a.m. on April 1 (or a later date established by the Administrator under subsection (j)) of the calendar year in which a term offset credit expires, the owner or operator holds-- | (D) DEMONSTRATING COMPLIANCE UPON EXPIRATION OF TERM OFFSET CREDIT- With respect to the emissions for which a covered entity is using term offset credits to demonstrate compliance temporarily with this section, the owner or operator of a covered entity shall not be considered to be in compliance with the prohibition in subsection (a) unless, as of 12:01 a.m. on April 1 (or a later date established by the Administrator under subsection (j)) of the calendar year in which a term offset credit expires, the owner or operator holds-- | |
| (i) for purposes of finally demonstrating compliance, an allowance or a domestic offset credit; or | (i) for purposes of finally demonstrating compliance, an allowance or a domestic offset credit; or | |
| (ii) for purposes of temporarily demonstrating compliance, a non-expired term offset credit. | (ii) for purposes of temporarily demonstrating compliance, a non-expired term offset credit. | |
| Domestic offset credits used for purposes of finally demonstrating compliance under this subparagraph shall not be subject to the percentage limitations in subparagraph (B). | <> | (E) INAPPLICABILITY OF PERCENTAGE LIMITATIONS- Domestic offset credits used for purposes of finally demonstrating compliance under this subparagraph shall not be subject to the percentage limitations in subparagraph (B). |
| (E) FINANCIAL ASSURANCE- A covered entity may not use a term offset credit to demonstrate compliance temporarily unless it simultaneously provides to the Administrator financial assurance that, at the end of the term offset credit's crediting term, the covered entity will have sufficient resources to obtain the quantity of allowances or credits necessary to demonstrate final compliance. The Administrator shall issue regulations establishing requirements for such financial assurance, which shall take into account the increased risk associated with longer crediting terms. These regulations shall take into account the total number of tons of carbon dioxide equivalent of greenhouse gas emissions for which a covered entity is demonstrating compliance temporarily, and may set a limit on this amount. In the event that a covered entity that used term offset credits to demonstrate compliance temporarily fails to meet the requirements of subparagraph (D) at the end of the term offset credits' crediting term, if the financial assurance mechanism fails to provide to the Administrator the number of allowances or offset credits for which the crediting term has expired, then the Administrator shall retire that number of allowances with the vintage year 2 years after the year in which the term offset credit expires in the same amount. Allowances so retired shall not be counted as emission allowances established for that calendar year under section 721(a). | (F) FINANCIAL ASSURANCE- A covered entity may not use a term offset credit to demonstrate compliance temporarily unless it simultaneously provides to the Administrator financial assurance that, at the end of the term offset credits crediting term, the covered entity will have sufficient resources to obtain the quantity of allowances or credits necessary to demonstrate final compliance. The Administrator shall issue regulations establishing requirements for such financial assurance, which shall take into account the increased risk associated with longer crediting terms. These regulations shall take into account the total number of tons of carbon dioxide equivalent of greenhouse gas emissions for which a covered entity is demonstrating compliance temporarily, and may set a limit on this amount. In the event that a covered entity that used term offset credits to demonstrate compliance temporarily fails to meet the requirements of subparagraph (D) at the end of the term offset credits' crediting term, if the financial assurance mechanism fails to provide to the Administrator the number of allowances or offset credits for which the crediting term has expired, then the Administrator shall retire that number of allowances with the vintage year 2 years after the year in which the term offset credit expires in the same amount. Allowances so retired shall not be counted as emission allowances established for that calendar year under section 721(a). | |
| (3) INTERNATIONAL EMISSION ALLOWANCES- To demonstrate compliance, a covered entity may hold an international emission allowance in lieu of an emission allowance, except as modified under section 728(d). | = | (3) INTERNATIONAL EMISSION ALLOWANCES- To demonstrate compliance, a covered entity may hold an international emission allowance in lieu of an emission allowance, except as modified under section 728(d). |
| (4) COMPENSATORY ALLOWANCES- To demonstrate compliance, a covered entity may hold a compensatory allowance obtained under section 721(f) in lieu of an emission allowance. | (4) COMPENSATORY ALLOWANCES- To demonstrate compliance, a covered entity may hold a compensatory allowance obtained under section 721(f) in lieu of an emission allowance. | |
| (e) Retirement of Allowances and Credits- As soon as practicable after a deadline established for covered entities to demonstrate compliance with this title, the Administrator shall retire the quantity of allowances or credits required to be held under this title. | (e) Retirement of Allowances and Credits- As soon as practicable after a deadline established for covered entities to demonstrate compliance with this title, the Administrator shall retire the quantity of allowances or credits required to be held under this title. | |
| (f) Alternative Metrics- For categories of covered entities described in subparagraph (B), (C), (D), (G), (H), or (I) of section 700(13), the Administrator may, by rule, establish an applicability threshold for inclusion under those subparagraphs using an alternative metric and level, provided that such metric and level are easier to administer and cover the same size and type of sources as the threshold defined in such subparagraphs. | (f) Alternative Metrics- For categories of covered entities described in subparagraph (B), (C), (D), (G), (H), or (I) of section 700(13), the Administrator may, by rule, establish an applicability threshold for inclusion under those subparagraphs using an alternative metric and level, provided that such metric and level are easier to administer and cover the same size and type of sources as the threshold defined in such subparagraphs. | |
| (g) Threshold Review- For each category of covered entities described in subparagraph (B), (C), (D), (G), (H), or (I) of section 700(13), the Administrator shall, in 2020 and once every 8 years thereafter, review the carbon dioxide equivalent emission threshold that is used to define covered entities in such category. After consideration of-- | <> | (g) Threshold Review- For each category of covered entities described in subparagraph (B), (C), (D), (G), (H), or (I) of section 700(13), the Administrator shall, in 2020 and once every 8 years thereafter, review the carbon dioxide equivalent emission thresholds that are used to define covered entities. After consideration of-- |
| (1) emissions from covered entities in such category, and from other entities of the same type that emit less than the threshold amount for the category (including emission sources that commence operation after the date of enactment of this title that are not covered entities); and | (1) emissions from covered entities in each such category, and from other entities of the same type that emit less than the threshold amount for the category (including emission sources that commence operation after the date of enactment of this title that are not covered entities); and | |
| (2) whether greater greenhouse gas emission reductions can be cost-effectively achieved by lowering the applicable threshold, | = | (2) whether greater greenhouse gas emission reductions can be cost-effectively achieved by lowering the applicable threshold, |
| the Administrator may by rule lower such threshold to not less than 10,000 tons of carbon dioxide equivalent emissions. In determining the cost effectiveness of potential reductions from lowering the threshold for covered entities, the Administrator shall consider alternative regulatory greenhouse gas programs, including setting standards under other titles of this Act. | the Administrator may by rule lower such threshold to not less than 10,000 tons of carbon dioxide equivalent emissions. In determining the cost effectiveness of potential reductions from lowering the threshold for covered entities, the Administrator shall consider alternative regulatory greenhouse gas programs, including setting standards under other titles of this Act. | |
| (h) Designated Representatives- The regulations promulgated under section 721(h) shall require that each covered entity, and each entity holding allowances or offset credits or receiving allowances or offset credits from the Administrator under this title, submit to the Administrator a certificate of representation designating a designated representative. | <> | (h) Designated Representatives- The regulations promulgated under section 721(h) shall require that each covered entity, and each entity holding allowances or credits or receiving allowances or credits from the Administrator under this title, select a designated representative. |
| (i) Education and Outreach- | = | (i) Education and Outreach- |
| (1) IN GENERAL- The Administrator shall establish and carry out a program of education and outreach to assist covered entities, especially entities having little experience with environmental regulatory requirements similar or comparable to those under this title, in preparing to meet the compliance obligations of this title. Such program shall include education with respect to using markets to effectively achieve such compliance. | (1) IN GENERAL- The Administrator shall establish and carry out a program of education and outreach to assist covered entities, especially entities having little experience with environmental regulatory requirements similar or comparable to those under this title, in preparing to meet the compliance obligations of this title. Such program shall include education with respect to using markets to effectively achieve such compliance. | |
| (2) FAILURE TO RECEIVE INFORMATION- A failure to receive information or assistance under this subsection may not be used as a defense against an allegation of any violation of this title. | (2) FAILURE TO RECEIVE INFORMATION- A failure to receive information or assistance under this subsection may not be used as a defense against an allegation of any violation of this title. | |
| (j) Adjustment of Deadline- The Administrator may, by rule, establish a deadline for demonstrating compliance, for a calendar year, later than the date provided in subsection (a), as necessary to ensure the availability of emissions data, but in no event shall the deadline be later than June 1. | (j) Adjustment of Deadline- The Administrator may, by rule, establish a deadline for demonstrating compliance, for a calendar year, later than the date provided in subsection (a), as necessary to ensure the availability of emissions data, but in no event shall the deadline be later than June 1. | |
| (k) Notice Requirement for Covered Entities Receiving Natural Gas From Natural Gas Local Distribution Companies- The owner or operator of a covered entity that takes delivery of natural gas from a natural gas local distribution company shall, not later than September 1 of each calendar year, notify such natural gas local distribution company in writing that such entity will qualify as a covered entity under this title for that calendar year. | (k) Notice Requirement for Covered Entities Receiving Natural Gas From Natural Gas Local Distribution Companies- The owner or operator of a covered entity that takes delivery of natural gas from a natural gas local distribution company shall, not later than September 1 of each calendar year, notify such natural gas local distribution company in writing that such entity will qualify as a covered entity under this title for that calendar year. | |
| (l) Compliance Obligation- For purposes of this title, the year of a compliance obligation is the year in which compliance is determined, not the year in which the greenhouse gas emissions occur or the covered entity has attributable greenhouse gas emissions. | (l) Compliance Obligation- For purposes of this title, the year of a compliance obligation is the year in which compliance is determined, not the year in which the greenhouse gas emissions occur or the covered entity has attributable greenhouse gas emissions. | |
| SEC. 723. PENALTY FOR NONCOMPLIANCE. | SEC. 723. PENALTY FOR NONCOMPLIANCE. | |
| (a) Enforcement- A violation of any prohibition of, requirement of, or regulation promulgated pursuant to this title shall be a violation of this Act. It shall be a violation of this Act for a covered entity to emit greenhouse gases and have attributable greenhouse gas emissions, in combination, in excess of its allowable emissions level as provided in section 722(a). Each ton of carbon dioxide equivalent for which a covered entity fails to demonstrate compliance under section 722 shall be a separate violation. In the event that a covered entity fails to demonstrate compliance at the expiration of a term offset credit's crediting term as required by section 722(d)(2)(D), the year of the violation shall be the year in which the term offset credit expires. | <> | (a) Enforcement- A violation of any prohibition of, requirement of, or regulation promulgated pursuant to this title shall be a violation of this Act. It shall be a violation of this Act for a covered entity to emit greenhouse gases, and have attributable greenhouse gas emissions, in combination, in excess of its allowable emissions level as provided in section 722(a). Each ton of carbon dioxide equivalent for which a covered entity fails to demonstrate compliance under section 722(b) shall be a separate violation. In the event that a covered entity fails to demonstrate compliance at the expiration of a term of offset credits crediting term as required by section 722(d)(2)(D), the year of the violation shall be the year in which the term offset credit expires. |
| (b) Excess Emissions Penalty- | = | (b) Excess Emissions Penalty- |
| (1) IN GENERAL- The owner or operator of any covered entity that fails for any year to comply, on the deadline described in section 722(a), (d)(2), or (j), shall be liable for payment to the Administrator of an excess emissions penalty in the amount described in paragraph (2). | <> | (1) IN GENERAL- The owner or operator of any covered entity that fails for any year to comply, on the deadline described in section 722(a) or (j), shall be liable for payment to the Administrator of an excess emissions penalty in the amount described in paragraph (2). |
| (2) AMOUNT- The amount of an excess emissions penalty required to be paid under paragraph (1) shall be equal to the product obtained by multiplying-- | = | (2) AMOUNT- The amount of an excess emissions penalty required to be paid under paragraph (1) shall be equal to the product obtained by multiplying-- |
| (A) the tons of carbon dioxide equivalent of greenhouse gas emissions or attributable greenhouse gas emissions for which the owner or operator of a covered entity failed to demonstrate compliance under section 722 on the deadline; by | <> | (A) the tons of carbon dioxide equivalent of greenhouse gas emissions or attributable greenhouse gas emissions for which the owner or operator of a covered entity failed to comply under section 722(b) on the deadline; by |
| (B) twice the auction clearing price for the earliest vintage year emission allowances in the last auction carried out pursuant to section 791 before such deadline. | (B) twice the fair market value of emission allowances established for emissions occurring in the calendar year for which the emission allowances were due. | |
| (3) TIMING- An excess emissions penalty required under this subsection shall be immediately due and payable to the Administrator, without demand, in accordance with regulations promulgated by the Administrator, which shall be issued not later than 2 years after the date of enactment of this title. | = | (3) TIMING- An excess emissions penalty required under this subsection shall be immediately due and payable to the Administrator, without demand, in accordance with regulations promulgated by the Administrator, which shall be issued not later than 2 years after the date of enactment of this title. |
| (4) NO EFFECT ON LIABILITY- An excess emissions penalty due and payable by the owners or operators of a covered entity under this subsection shall not diminish the liability of the owners or operators for any fine, penalty, or assessment against the owners or operators for the same violation under any other provision of this Act or any other law. | (4) NO EFFECT ON LIABILITY- An excess emissions penalty due and payable by the owners or operators of a covered entity under this subsection shall not diminish the liability of the owners or operators for any fine, penalty, or assessment against the owners or operators for the same violation under any other provision of this Act or any other law. | |
| (c) Excess Emissions Allowances- The owner or operator of a covered entity that fails for any year to comply on the deadline described in section 722(a), (d)(2), or (j) shall be liable to offset the covered entity's excess combination of greenhouse gases emitted and attributable greenhouse gas emissions by an equal quantity of emission allowances during the following calendar year, or such longer period as the Administrator may prescribe. During the year in which the covered entity failed to comply, or any year thereafter, the Administrator may deduct the emission allowances required under this subsection to offset the covered entity's excess greenhouse gas emissions or attributable greenhouse gas emissions. | <> | (c) Excess Emissions Allowances- The owner or operator of a covered entity that fails for any year to comply on the deadline described in section 722(a) or (j) shall be liable to offset the covered entity's excess combination of greenhouse gases emitted and attributable greenhouse gas emissions by an equal quantity of emission allowances during the following calendar year, or such longer period as the Administrator may prescribe. During the year in which the covered entity failed to comply, or any year thereafter, the Administrator may deduct the emission allowances required under this subsection to offset the covered entity's excess actual or attributable emissions. |
| SEC. 724. TRADING. | = | SEC. 724. TRADING. |
| (a) Permitted Transactions- Except as otherwise provided in this title, the lawful holder of an emission allowance, compensatory allowance, or offset credit may, without restriction, sell, exchange, transfer, hold for compliance in accordance with section 722, or request that the Administrator retire the emission allowance, compensatory allowance, or offset credit. | (a) Permitted Transactions- Except as otherwise provided in this title, the lawful holder of an emission allowance, compensatory allowance, or offset credit may, without restriction, sell, exchange, transfer, hold for compliance in accordance with section 722, or request that the Administrator retire the emission allowance, compensatory allowance, or offset credit. | |
| (b) No Restriction on Transactions- The privilege of purchasing, holding, selling, exchanging, transferring, and requesting retirement of emission allowances, compensatory allowances, or offset credits shall not be restricted to the owners and operators of covered entities, except as otherwise provided in this title. | (b) No Restriction on Transactions- The privilege of purchasing, holding, selling, exchanging, transferring, and requesting retirement of emission allowances, compensatory allowances, or offset credits shall not be restricted to the owners and operators of covered entities, except as otherwise provided in this title. | |
| (c) Effectiveness of Allowance Transfers- No transfer of an allowance, offset credit, or term offset credit shall be effective for purposes of this title until a certification of the transfer, signed by the designated representative of the transferor, is received and recorded by the Administrator in accordance with regulations promulgated under section 721(h). | <> | (c) Effectiveness of Allowance Transfers- No transfer of an allowance or offset credit shall be effective for purposes of this title until a certification of the transfer, signed by the designated representative of the transferor, is received and recorded by the Administrator in accordance with regulations promulgated under section 721(h). |
| (d) Allowance Tracking System- The regulations promulgated under section 721(h) shall include a system for issuing, recording, holding, and tracking allowances, offset credits, and term offset credits that shall specify all necessary procedures and requirements for an orderly and competitive functioning of the allowance and offset credit markets. Such regulations shall provide for appropriate publication of the information in the system on the Internet. | = | (d) Allowance Tracking System- The regulations promulgated under section 721(h) shall include a system for issuing, recording, holding, and tracking allowances, offset credits, and term offset credits that shall specify all necessary procedures and requirements for an orderly and competitive functioning of the allowance and offset credit markets. Such regulations shall provide for appropriate publication of the information in the system on the Internet. |
| SEC. 725. BANKING AND BORROWING. | SEC. 725. BANKING AND BORROWING. | |
| (a) Banking- An emission allowance may be used to comply with section 722 or section 723 for emissions in-- | <> | (a) Banking- An emission allowance may be used to comply with section 722 or 723 for emissions in-- |
| (1) the vintage year for the allowance; or | = | (1) the vintage year for the allowance; or |
| (2) any calendar year subsequent to the vintage year for the allowance. | (2) any calendar year subsequent to the vintage year for the allowance. | |
| (b) Expiration- | (b) Expiration- | |
| (1) REGULATIONS- The Administrator may establish by regulation criteria and procedures for determining whether, and for implementing a determination that, the expiration of an allowance, offset credit, or term offset credit, established or issued under the American Clean Energy and Security Act of 2009 or the amendments made thereby, or expiration of the ability to use an international emission allowance to comply with section 722, is necessary to ensure the authenticity and integrity of allowances, offset credits, or term offset credits or the allowance tracking system. | <> | (1) REGULATIONS- The Administrator may establish by regulation criteria and procedures for determining whether, and for implementing a determination that, the expiration of an allowance, credit, or term offset credit established or issued by the Administrator under this title, or expiration of the ability to use an international emission allowance to comply with section 722, is necessary to ensure the authenticity and integrity of allowances, credits, or term offset credits or the allowance tracking system. |
| (2) GENERAL RULE- An allowance, offset credit, or term offset credit, established or issued under the American Clean Energy and Security Act of 2009 or the amendments made thereby, shall not expire unless-- | (2) GENERAL RULE- An allowance, credit, or term offset credit established or issued by the Administrator under this title shall not expire unless-- | |
| (A) it is retired by the Administrator pursuant to this title; or | (A) it is retired by the Administrator as required under this title; or | |
| (B) it is determined to expire or to have expired by a specific date by the Administrator in accordance with regulations promulgated under paragraph (1). | = | (B) it is determined to expire or to have expired by a specific date by the Administrator in accordance with regulations promulgated under paragraph (1). |
| (3) INTERNATIONAL EMISSION ALLOWANCES- The ability to use an international emission allowance to comply with section 722 shall not expire unless-- | (3) INTERNATIONAL EMISSION ALLOWANCES- The ability to use an international emission allowance to comply with section 722 shall not expire unless-- | |
| (A) the allowance is retired by the Administrator pursuant to this title; or | <> | (A) the allowance is retired by the Administrator as required by this title; or |
| (B) the ability to use such allowance to meet such compliance obligation requirements is determined to expire or to have expired by a specific date by the Administrator in accordance with regulations promulgated under paragraph (1). | = | (B) the ability to use such allowance to meet such compliance obligation requirements is determined to expire or to have expired by a specific date by the Administrator in accordance with regulations promulgated under paragraph (1). |
| (c) Borrowing Future Vintage Year Allowances- | (c) Borrowing Future Vintage Year Allowances- | |
| (1) BORROWING WITHOUT INTEREST- In addition to the uses described in subsection (a), an emission allowance may be used to demonstrate compliance under section 722 or comply with section 723 for emissions, production, importation, manufacture, or deliveries in the calendar year immediately preceding the vintage year for the allowance. | <> | (1) BORROWING WITHOUT INTEREST- In addition to the uses described in subsection (a), an emission allowance may be used to comply with section 722(a) or 723 for emissions, production, importation, manufacture, or deliveries in the calendar year immediately preceding the vintage year for the allowance. |
| (2) BORROWING WITH INTEREST- | = | (2) BORROWING WITH INTEREST- |
| (A) IN GENERAL- A covered entity may demonstrate compliance under section 722 in a specific calendar year for up to 15 percent of its emissions by holding emission allowances with a vintage year 1 to 5 years later than that calendar year. | <> | (A) IN GENERAL- A covered entity may demonstrate compliance under subsection (b) in a specific calendar year for up to 15 percent of its emissions by holding emission allowances with a vintage year 1 to 5 years later than that calendar year. |
| (B) LIMITATIONS- An emission allowance borrowed pursuant to this paragraph shall be an emission allowance that is established by the Administrator for a specific future calendar year under section 721(a) and that is held by the borrower. | = | (B) LIMITATIONS- An emission allowance borrowed pursuant to this paragraph shall be an emission allowance that is established by the Administrator for a specific future calendar year under section 721(a) and that is held by the borrower. |
| (C) PREPAYMENT OF INTEREST- For each emission allowance that an owner or operator of a covered entity borrows pursuant to this paragraph, such owner or operator shall, at the time it borrows the allowance, hold for retirement by the Administrator, and the Administrator shall retire, a quantity of emission allowances that is equal to the product obtained by multiplying-- | <> | (C) PREPAYMENT OF INTEREST- For each emission allowance that an owner or operator of a covered entity borrows pursuant to this paragraph, such owner or operator shall, at the time it borrows the allowance, hold for retirement by the Administrator a quantity of emission allowances that is equal to the product obtained by multiplying-- |
| (i) 0.08; by | = | (i) 0.08; by |
| (ii) the number of years between the calendar year in which the allowance is being used to satisfy a compliance obligation and the vintage year of the allowance. | (ii) the number of years between the calendar year in which the allowance is being used to satisfy a compliance obligation and the vintage year of the allowance. | |
| SEC. 726. STRATEGIC RESERVE. | <> | SEC. 726. MARKET STABILITY RESERVE. |
| (a) Strategic Reserve Auctions- | (a) Market Stability Reserve Auctions- | |
| (1) IN GENERAL- Once each quarter of each calendar year for which allowances are established under section 721(a), the Administrator shall auction strategic reserve allowances. | (1) IN GENERAL- Once each quarter of each calendar year for which allowances are established under section 721(a), the Administrator shall auction market stability reserve allowances. | |
| (2) RESTRICTION TO COVERED ENTITIES- In each auction conducted under paragraph (1), only covered entities that the Administrator expects will be required to comply with section 722 in the following calendar year shall be eligible to make purchases. | = | (2) RESTRICTION TO COVERED ENTITIES- In each auction conducted under paragraph (1), only covered entities that the Administrator expects will be required to comply with section 722 in the following calendar year shall be eligible to make purchases. |
| (b) Pool of Emission Allowances for Strategic Reserve Auctions- | <> | (b) Pool of Emission Allowances for Market Stability Reserve Auctions- |
| (1) FILLING THE STRATEGIC RESERVE INITIALLY- | (1) FILLING THE MARKET STABILITY RESERVE INITIALLY- | |
| (A) IN GENERAL- The Administrator shall, not later than 2 years after the date of enactment of this title, establish a strategic reserve account, and shall place in that account an amount of emission allowances established under section 721(a) for each calendar year from 2012 through 2050 in the amounts specified in subparagraph (B) of this paragraph. | (A) IN GENERAL- The Administrator shall, not later than 2 years after the date of enactment of this title, establish a market stability reserve account, and shall place in that account an amount of emission allowances established under section 721(a). | |
| (B) AMOUNT- The amount referred to in subparagraph (A) shall be-- | ||
| (i) for each of calendar years 2012 through 2019, 1 percent of the quantity of emission allowances established for that year pursuant to section 721(e)(1); | ||
| (ii) for each of calendar years 2020 through 2029, 2 percent of the quantity of emission allowances established for that year pursuant to section 721(e)(1); and | ||
| (iii) for each of calendar years 2030 through 2050, 3 percent of the quantity of emission allowances established for that year pursuant to section 721(e)(1). | ||
| (C) EFFECT ON OTHER PROVISIONS- Any provision in this title (except for subparagraph (B) of this paragraph) that refers to a quantity or percentage of the emission allowances established for a calendar year under section 721(a) shall be considered to refer to the amount of emission allowances as determined pursuant to section 721(e), less any emission allowances established for that year that are placed in the strategic reserve account under this paragraph. | (B) EFFECT ON OTHER PROVISIONS- Any provision in this title (except for subparagraph (B) of this paragraph) that refers to a quantity or percentage of the emission allowances established for a calendar year under section 721(a) shall be considered to refer to the amount of emission allowances as determined pursuant to section 721(e), less any emission allowances established for that year that are placed in the market stability reserve account under this paragraph. | |
| (2) SUPPLEMENTING THE STRATEGIC RESERVE- The Administrator shall also-- | (2) SUPPLEMENTING THE MARKET STABILITY RESERVE- The Administrator shall also-- | |
| (A) at the end of each calendar year, transfer to the strategic reserve account each emission allowance that was offered for sale but not sold at any auction conducted under section 791; and | (A) at the end of each calendar year, transfer to the market stability reserve account each emission allowance that was offered for sale but not sold at any auction conducted under section 778; and | |
| (B) deposit emission allowances established under subsection (g) from auction proceeds into the strategic reserve, to the extent necessary to maintain the reserve at its original size. | (B) transfer emission allowances established under subsection (g) from auction proceeds, and deposit them into the market stability reserve, to the extent necessary to maintain the reserve at its original size. | |
| (c) Minimum Strategic Reserve Auction Price- | (c) Minimum Market Stability Reserve Auction Price- | |
| (1) IN GENERAL- At each strategic reserve auction, the Administrator shall offer emission allowances for sale beginning at a minimum price per emission allowance, which shall be known as the minimum strategic reserve auction price'. | (1) IN GENERAL- At each market stability reserve auction, the Administrator shall offer emission allowances for sale beginning at a minimum price per emission allowance, which shall be known as the minimum market stability reserve auction price'. | |
| (2) INITIAL MINIMUM STRATEGIC RESERVE AUCTION PRICES- The minimum strategic reserve auction price shall be $28 (in constant 2009 dollars) for the strategic reserve auctions held in 2012. For the strategic reserve auctions held in 2013 and 2014, the minimum strategic reserve auction price shall be the strategic reserve auction price for the previous year increased by 5 percent plus the rate of inflation (as measured by the Consumer Price Index for All Urban Consumers). | (2) INITIAL MINIMUM MARKET STABILITY RESERVE AUCTION PRICES- The minimum market stability reserve auction price shall be $28 (in constant 2005 dollars) for the market stability reserve auctions held in 2012. For the market stability reserve auctions held in 2013 through 2017, the minimum market stability reserve auction price shall be the market stability reserve auction price for the previous year increased by 5 percent plus the rate of inflation (as measured by the Consumer Price Index for All Urban Consumers). | |
| (3) MINIMUM STRATEGIC RESERVE AUCTION PRICE IN SUBSEQUENT YEARS- For each strategic reserve auction held in 2015 and each year thereafter, the minimum strategic reserve auction price shall be 60 percent above a rolling 36-month average of the daily closing price for that year's emission allowance vintage as reported on registered carbon trading facilities, calculated using constant dollars. | (3) MINIMUM MARKET STABILITY RESERVE AUCTION PRICE IN SUBSEQUENT YEARS- For each market stability reserve auction held in 2018 and each year thereafter, the minimum market stability reserve auction price shall be the market stability reserve auction price for the previous year increased by 7 percent, plus the rate of inflation (as measured by the Consumer Price Index for All Urban Consumers). | |
| (d) Quantity of Emission Allowances Released From the Strategic Reserve- | (d) Quantity of Emission Allowances Released From the Market Stability Reserve- | |
| (1) INITIAL LIMITS- For each of calendar years 2012 through 2016, the annual limit on the number of emission allowances from the strategic reserve account that may be auctioned is an amount equal to 5 percent of the emission allowances established for that calendar year under section 721(a). This limit does not apply to international offset credits sold on consignment pursuant to subsection (h). | (1) INITIAL LIMITS- Subject to paragraph (4), for each of calendar years 2012 through 2016, the annual limit on the number of emission allowances from the market stability reserve account that may be auctioned is an amount equal to 15 percent of the emission allowances established for that calendar year under section 721(a). This limit does not apply to offset credits sold on consignment pursuant to subsection (h). | |
| (2) LIMITS IN SUBSEQUENT YEARS- For calendar year 2017 and each year thereafter, the annual limit on the number of emission allowances from the strategic reserve account that may be auctioned is an amount equal to 10 percent of the emission allowances established for that calendar year under section 721(a). This limit does not apply to international offset credits sold on consignment pursuant to subsection (h). | (2) LIMITS IN SUBSEQUENT YEARS- Subject to paragraph (4), for calendar year 2017 and each year thereafter, the annual limit on the number of emission allowances from the market stability reserve account that may be auctioned is an amount equal to 25 percent of the emission allowances established for that calendar year under section 721(a). This limit does not apply to offset credits sold on consignment pursuant to subsection (h). | |
| (3) ALLOCATION OF LIMITATION- One-fourth of each year's annual strategic reserve auction limit under this subsection shall be made available for auction in each quarter. Any allowances from the strategic reserve account that are made available for sale in a quarterly auction and not sold shall be rolled over and added to the quantity available for sale in the following quarter, except that allowances not sold at auction in the fourth quarter of a year shall not be rolled over to the following calendar year's auctions, but shall be returned to the strategic reserve account. | (3) ALLOCATION OF LIMITATION- One-fourth of each year's annual market stability reserve auction limit under this subsection shall be made available for auction in each quarter. Any allowances from the market stability reserve account that are made available for sale in a quarterly auction and not sold shall be rolled over and added to the quantity available for sale in the following quarter, except that allowances not sold at auction in the fourth quarter of a year shall not be rolled over to the following calendar year's auctions, but shall be returned to the market stability reserve account. | |
| (4) AUTHORITY TO ADJUST LIMITATION- The Administrator may adjust the limits in paragraphs (1) or (2) if the Administrator determines an adjustment is required to prevent disruptively high prices or to preserve the integrity of the market stability reserve. | ||
| (e) Purchase Limit- | = | (e) Purchase Limit- |
| (1) IN GENERAL- Except as provided in paragraph (2) or (3), the annual number of emission allowances that a covered entity may purchase at the strategic reserve auctions in each calendar year shall not exceed 20 percent of the covered entity's combined greenhouse gas emissions and attributable greenhouse gas emissions during the most recent year for which allowances or offset credits were retired under section 722. | <> | (1) IN GENERAL- Except as provided in paragraph (2) or (3), the annual number of emission allowances that a covered entity may purchase at the market stability reserve auctions in each calendar year shall not exceed 20 percent of the covered entity's emissions during the most recent year for which allowances or credits were retired under section 722. |
| (2) 2012 LIMIT- For calendar year 2012, the maximum aggregate number of emission allowances that a covered entity may purchase from that year's strategic reserve auctions shall be 20 percent of the covered entity's combined greenhouse gas emissions and attributable greenhouse gas emissions that the covered entity reported to the registry established under section 713 for 2011 and that would be subject to section 722(a) if occurring in later calendar years. | (2) 2012 LIMIT- For calendar year 2012, the maximum aggregate number of emission allowances that a covered entity may purchase from that year's market stability reserve auctions shall be 20 percent of the covered entity's greenhouse gas emissions that the covered entity reported to the registry established under section 713 for 2011 and that would be subject to section 722(a) if occurring in later calendar years. | |
| (3) NEW ENTRANTS- The Administrator shall, by regulation, establish a separate purchase limit applicable to entities that expect to become a covered entity in the year of the auction, permitting them to purchase emission allowances at the strategic reserve auctions in their first calendar year of operation in an amount of at least 20 percent of their expected combined greenhouse gas emissions and attributable greenhouse gas emissions for that year. | (3) NEW ENTRANTS- The Administrator shall, by regulation, establish a separate purchase limit applicable to entities that expect to become a covered entity in the year of the auction, permitting them to purchase emission allowances at the market stability reserve auctions in their first calendar year of operation in an amount of at least 20 percent of their expected combined emissions and attributable greenhouse gas emissions for that year. | |
| (f) Delegation or Contract- Pursuant to regulations under this section, the Administrator may, by delegation or contract, provide for the conduct of strategic reserve auctions under the Administrator's supervision by other departments or agencies of the Federal Government or by nongovernmental agencies, groups, or organizations. | (f) Delegation or Contract- Pursuant to regulations under this section, the Administrator may, by delegation or contract, provide for the conduct of market stability reserve auctions under the Administrator's supervision by other departments or agencies of the Federal Government or by nongovernmental agencies, groups, or organizations. | |
| (g) Use of Auction Proceeds- | = | (g) Use of Auction Proceeds- |
| (1) DEPOSIT IN STRATEGIC RESERVE FUND- The proceeds from strategic reserve auctions shall be placed in the Strategic Reserve Fund established under section 793(1), and shall be available without further appropriation or fiscal year limitation for the purposes described in this subsection. | <> | (1) DEPOSIT IN MARKET STABILITY RESERVE FUND- The proceeds from market stability reserve auctions shall be placed in the Market Stability Reserve Fund established by subsection (j), and shall be available without further appropriation or fiscal year limitation for the purposes described in this subsection. |
| (2) INTERNATIONAL OFFSET CREDITS FOR REDUCED DEFORESTATION- The Administrator shall use the proceeds from each strategic reserve auction to purchase international offset credits issued for reduced deforestation activities pursuant to section 743(e). The Administrator shall retire those international offset credits and establish a number of emission allowances equal to 80 percent of the number of international offset credits so retired. Emission allowances established under this paragraph shall be in addition to those established under section 721(a). | (2) OFFSET CREDITS- The Administrator shall use the proceeds from each market stability reserve auction to purchase offset credits, including domestic offset credits and international offset credits issued for reduced deforestation activities pursuant to section 753. The Administrator shall retire those offset credits and establish a number of emission allowances equal to the number of international offset credits so retired. Emission allowances established under this paragraph shall be in addition to those established under section 721(a). | |
| (3) EMISSION ALLOWANCES- The Administrator shall deposit emission allowances established under paragraph (2) in the strategic reserve, except that, with respect to any such emission allowances in excess of the amount necessary to fill the strategic reserve to its original size, the Administrator shall-- | (3) EMISSION ALLOWANCES- The Administrator shall deposit emission allowances established under paragraph (2) in the market stability reserve, except that, with respect to any such emission allowances in excess of the amount necessary to fill the market stability reserve to its original size, the Administrator shall-- | |
| (A) except as provided in subparagraph (B), assign a vintage year to the emission allowance, which shall be no earlier than the year in which the allowance is established under paragraph (2), and shall treat such allowances as ones that are not designated for distribution or auction for purposes of section 782(q) and (r); and | (A) except as provided in subparagraph (B), assign a vintage year to the emission allowance, which shall be no earlier than the year in which the allowance is established under paragraph (2) and shall treat such allowances as ones that are not designated for distribution or auction; and | |
| (B) to the extent any such allowances cannot be assigned a vintage year because of the limitation in paragraph (4), retire the allowances. | = | (B) to the extent any such allowances cannot be assigned a vintage year because of the limitation in paragraph (4), retire the allowances. |
| (4) LIMITATION- In no case may the Administrator assign under paragraph (3)(A) more emission allowances to a vintage year than the number of emission allowances from that vintage year that were placed in the strategic reserve account under subsection (b)(1). | <> | (4) LIMITATION- In no case may the Administrator assign under paragraph (3)(A) more emission allowances to a vintage year than the number of emission allowances from that vintage year that were placed in the market stability reserve account under subsection (b)(1). |
| (h) Availability of International Offset Credits for Auction- | (h) Availability of Offset Credits for Auction- | |
| (1) IN GENERAL- The regulations promulgated under section 721(h) shall allow any entity holding international offset credits from reduced deforestation issued under section 743(e) to request that the Administrator include such offset credits in an upcoming strategic reserve auction. The regulations shall provide that-- | (1) IN GENERAL- The regulations promulgated under section 721(h) shall allow any entity holding offset credits to request that the Administrator include such offset credits in an upcoming market stability reserve auction. The regulations shall provide that-- | |
| (A) such international offset credits will be used to fill bid orders only after the supply of strategic reserve allowances available for sale at that auction has been depleted; | ||
| (B) international offset credits may be sold at a strategic reserve auction under this subsection only if the Administrator determines that it is highly likely that covered entities will, to cover emissions occurring in the year the auction is held, use offset credits to demonstrate compliance under section 722 for emissions equal to or greater than 80 percent of 2 billion tons of carbon dioxide equivalent; | ||
| (C) upon sale of such international offset credits, the Administrator shall retire those international offset credits, and establish and provide to the purchasers a number of emission allowances equal to 80 percent of the number of international offset credits so retired, which allowances shall be in addition to those established under section 721(a); and | (A) upon sale of such offset credits, the Administrator shall retire those offset credits, and establish and provide to the purchasers a number of emission allowances equal to the number of offset credits so retired, which allowances shall be in addition to those established under section 721(a); and | |
| (D) for international offset credits sold pursuant to this subsection, the proceeds for the entity that offered the international offset credits for sale shall be the lesser of-- | (B) for offset credits sold pursuant to this subsection, the proceeds for the entity that offered the offset credits for sale shall be the lesser of-- | |
| (i) the average daily closing price for international offset credits sold on registered exchanges (or if such price is unavailable, the average price as determined by the Administrator) during the six months prior to the strategic reserve auction at which they were auctioned, with the remaining funds collected upon the sale of the international offset credits deposited in the Treasury; and | (i) the average daily closing price for offset credits sold on registered exchanges (or if such price is unavailable, the average price as determined by the Administrator) during the six months prior to the market stability reserve auction at which they were auctioned, with the remaining funds collected upon the sale of the offset credits deposited in the Treasury; and | |
| (ii) the amount received for the international offset credits at the auction. | (ii) the amount received for the offset credits at the auction. | |
| (2) PROCEEDS- For international offset credits sold pursuant to this subsection, notwithstanding section 3302 of title 31, United States Code, or any other provision of law, within 90 days of receipt, the United States shall transfer the proceeds from the auction, as defined in paragraph (1)(D), to the entity that offered the international offset credits for sale. No funds transferred from a purchaser to a seller of international offset credits under this paragraph shall be held by any officer or employee of the United States or treated for any purpose as public monies. | (2) PROCEEDS- For offset credits sold pursuant to this subsection, notwithstanding section 3302 of title 31, United States Code, or any other provision of law, within 90 days of receipt, the United States shall transfer the proceeds from the auction, as defined in paragraph (1)(D), to the entity that offered the offset credits for sale. No funds transferred from a purchaser to a seller of offset credits under this paragraph shall be held by any officer or employee of the United States or treated for any purpose as public monies. | |
| (3) PRICING- When the Administrator acts under this subsection as the agent of an entity in possession of international offset credits, the Administrator is not obligated to obtain the highest price possible for the international offset credits, and instead shall auction such international offset credits in the same manner and pursuant to the same rules (except as modified in paragraph (1)) as set forth for auctioning strategic reserve allowances. Entities requesting that such international offset credits be offered for sale at a strategic reserve auction may not set a minimum reserve price for their international offset credits that is different than the minimum strategic reserve auction price set pursuant to subsection (c). | (3) PRICING- When the Administrator acts under this subsection as the agent of an entity in possession of offset credits, the Administrator is not obligated to obtain the highest price possible for the offset credits, and instead shall auction such offset credits in the same manner and pursuant to the same rules (except as modified in paragraph (1)) as set forth for auctioning market stability reserve allowances. Entities requesting that such offset credits be offered for sale at a market stability reserve auction may not set a minimum reserve price for their offset credits that is different than the minimum market stability reserve auction price set pursuant to subsection (c). | |
| (i) Initial Regulations- Not later than 24 months after the date of enactment of this title, the Administrator shall promulgate regulations, in consultation with other appropriate agencies, governing the auction of allowances under this section. Such regulations shall include the following requirements: | = | (i) Initial Regulations- Not later than 24 months after the date of enactment of this title, the Administrator shall promulgate regulations, in consultation with other appropriate agencies, governing the auction of allowances under this section. Such regulations shall include 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, 2012. | (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, 2012. | |
| (2) AUCTION FORMAT- Auctions shall follow a single-round, sealed-bid, uniform price format. | (2) AUCTION FORMAT- Auctions shall follow a single-round, sealed-bid, uniform price format. | |
| (3) PARTICIPATION; FINANCIAL ASSURANCE- Auctions shall be open to any covered entity eligible to purchase emission allowances at the auction under subsection (a)(2), except that the Administrator may establish financial assurance requirements to ensure that auction participants can and will perform on their bids. | (3) PARTICIPATION; FINANCIAL ASSURANCE- Auctions shall be open to any covered entity eligible to purchase emission allowances at the auction under subsection (a)(2), except that the Administrator may establish financial assurance requirements to ensure that auction participants can and will perform on their bids. | |
| (4) DISCLOSURE OF BENEFICIAL OWNERSHIP- Each bidder in an auction shall be required to disclose the person or entity sponsoring or benefitting from the bidder's participation in the auction if such person or entity is, in whole or in part, other than the bidder. | (4) DISCLOSURE OF BENEFICIAL OWNERSHIP- Each bidder in an auction shall be required to disclose the person or entity sponsoring or benefitting from the bidder's participation in the auction if such person or entity is, in whole or in part, other than the bidder. | |
| (5) PURCHASE LIMITS- No person may, directly or in concert with another participant, purchase more than 20 percent of the allowances offered for sale at any quarterly auction. | (5) PURCHASE LIMITS- No person may, directly or in concert with another participant, purchase more than 20 percent of the allowances offered for sale at any quarterly auction. | |
| (6) PUBLICATION OF INFORMATION- After the auction, the Administrator shall, in a timely fashion, publish the identities of winning bidders, the quantity of allowances obtained by each winning bidder, and the auction clearing price. | (6) PUBLICATION OF INFORMATION- After the auction, the Administrator shall, in a timely fashion, publish the identities of winning bidders, the quantity of allowances obtained by each winning bidder, and the auction clearing price. | |
| (7) OTHER REQUIREMENTS- The Administrator may include in the regulations such other requirements or provisions as the Administrator, in consultation with other agencies as appropriate, considers appropriate to promote effective, efficient, transparent, and fair administration of auctions under this section. | (7) OTHER REQUIREMENTS- The Administrator may include in the regulations such other requirements or provisions as the Administrator, in consultation with other agencies as appropriate, considers appropriate to promote effective, efficient, transparent, and fair administration of auctions under this section. | |
| <> | (j) Market Stability Reserve Fund- There are established in the Treasury of the United States a fund to be known as the Market Stability Reserve Fund'. | |
| (j) Revision of Regulations- The Administrator may, at any time, in consultation with other agencies as appropriate, revise the initial regulations promulgated under subsection (i) by promulgating new regulations. Such revised regulations need not meet the requirements identified in subsection (i) if the Administrator determines that an alternative auction design would be more effective, taking into account factors including costs of administration, transparency, fairness, and risks of collusion or manipulation. In determining whether and how to revise the initial regulations under this subsection, the Administrator shall not consider maximization of revenues to the Federal Government. | (k) Revision of Regulations- The Administrator may, at any time, in consultation with other agencies as appropriate, revise the initial regulations promulgated under subsection (i). Such revised regulations need not meet the requirements identified in subsection (i) if the Administrator determines that an alternative auction design would be more effective, taking into account factors including costs of administration, transparency, fairness, and risks of collusion or manipulation. In determining whether and how to revise the initial regulations under this subsection, the Administrator shall not consider maximization of revenues to the Federal Government. | |
| SEC. 727. PERMITS. | = | SEC. 727. PERMITS. |
| (a) Permit Program- For stationary sources subject to title V of this Act that are covered entities, the provisions of this title shall be implemented by permits issued to such covered entities (and enforced) in accordance with the provisions of title V, as modified by this title. Any such permit issued by the Administrator, or by a State or Indian tribe with an approved permit program, shall require the owner or operator of a covered entity to hold allowances or offset credits at least equal to the total annual amount of carbon dioxide equivalents for its combined emissions and attributable greenhouse gas emissions to which section 722 applies. No such permit shall be issued that is inconsistent with the requirements of this title, and title V as applicable. Nothing in this section regarding compliance plans or in title V shall be construed as affecting allowances or offset credits. Submission of a statement by the owner or operator, or the designated representative of the owners and operators, of a covered entity that the owners and operators will hold allowances or offset credits for the entity's combined emissions and attributable greenhouse gas emissions to which section 722 applies shall be deemed to meet the proposed and approved planning requirements of title V. Recordation by the Administrator of transfers of allowances and offset credits shall amend automatically all applicable proposed or approved permit applications, compliance plans, and permits. | <> | (a) Permit Program- For stationary sources subject to title V of this Act, that are covered entities, the provisions of this title shall be implemented by permits issued to such covered entities (and enforced) in accordance with the provisions of title V, as modified by this title. Any such permit issued by the Administrator, or by a State with an approved permit program, shall require the owner or operator of a covered entity to hold emission allowances or offset credits at least equal to the total annual amount of carbon dioxide equivalents for its combined emissions and attributable greenhouse gas emissions to which section 722 applies. No such permit shall be issued that is inconsistent with the requirements of this title, and title V as applicable. Nothing in this section regarding compliance plans or in title V shall be construed as affecting allowances or offset credits. Submission of a statement by the owner or operator, or the designated representative of the owners and operators, of a covered entity that the owners and operators will hold emission allowances or offset credits for the entity's combined emissions and attributable greenhouse gas emissions to which section 722 applies shall be deemed to meet the proposed and approved planning requirements of title V. Recordation by the Administrator of transfers of emission allowances shall amend automatically all applicable proposed or approved permit applications, compliance plans, and permits. |
| (b) Multiple Owners- No permit shall be issued under this section and no allowances or offset credits shall be disbursed under this title to a covered entity or any other person until the designated representative of the owners or operators has filed a certificate of representation with regard to matters under this title, including the holding and distribution of emission allowances and the proceeds of transactions involving emission allowances. Where there are multiple holders of a legal or equitable title to, or a leasehold interest in, such a covered entity or other entity or where a utility or industrial customer purchases power under a long-term power purchase contract from an independent power production facility that is a covered entity, the certificate shall state-- | = | (b) Multiple Owners- No permit shall be issued under this section and no allowances or offset credits shall be disbursed under this title to a covered entity or any other person until the designated representative of the owners or operators has filed a certificate of representation with regard to matters under this title, including the holding and distribution of emission allowances and the proceeds of transactions involving emission allowances. Where there are multiple holders of a legal or equitable title to, or a leasehold interest in, such a covered entity or other entity or where a utility or industrial customer purchases power under a long-term power purchase contract from an independent power production facility that is a covered entity, the certificate shall state-- |
| (1) that emission allowances and the proceeds of transactions involving emission allowances will be deemed to be held or distributed in proportion to each holder's legal, equitable, leasehold, or contractual reservation or entitlement; or | (1) that emission allowances and the proceeds of transactions involving emission allowances will be deemed to be held or distributed in proportion to each holder's legal, equitable, leasehold, or contractual reservation or entitlement; or | |
| (2) if such multiple holders have expressly provided for a different distribution of emission allowances by contract, that emission allowances and the proceeds of transactions involving emission allowances will be deemed to be held or distributed in accordance with the contract. | (2) if such multiple holders have expressly provided for a different distribution of emission allowances by contract, that emission allowances and the proceeds of transactions involving emission allowances will be deemed to be held or distributed in accordance with the contract. | |
| A passive lessor, or a person who has an equitable interest through such lessor, whose rental payments are not based, either directly or indirectly, upon the revenues or income from the covered entity or other entity shall not be deemed to be a holder of a legal, equitable, leasehold, or contractual interest for the purpose of holding or distributing emission allowances as provided in this subsection, during either the term of such leasehold or thereafter, unless expressly provided for in the leasehold agreement. Except as otherwise provided in this subsection, where all legal or equitable title to or interest in a covered entity, or other entity, is held by a single person, the certificate shall state that all emission allowances received by the entity are deemed to be held for that person. | A passive lessor, or a person who has an equitable interest through such lessor, whose rental payments are not based, either directly or indirectly, upon the revenues or income from the covered entity or other entity shall not be deemed to be a holder of a legal, equitable, leasehold, or contractual interest for the purpose of holding or distributing emission allowances as provided in this subsection, during either the term of such leasehold or thereafter, unless expressly provided for in the leasehold agreement. Except as otherwise provided in this subsection, where all legal or equitable title to or interest in a covered entity, or other entity, is held by a single person, the certificate shall state that all emission allowances received by the entity are deemed to be held for that person. | |
| (c) Prohibition- It shall be unlawful for any person to operate any stationary source subject to the requirements of this section except in compliance with the terms and requirements of a permit issued by the Administrator or a State or Indian tribe with an approved permit program in accordance with this section. For purposes of this subsection, compliance, as provided in section 504(f), with a permit issued under title V which complies with this title for covered entities shall be deemed compliance with this subsection as well as section 502(a). | <> | (c) Prohibition- It shall be unlawful for any person to operate any stationary source subject to the requirements of this section except in compliance with the terms and requirements of a permit issued by the Administrator or a State with an approved permit program in accordance with this section. For purposes of this subsection, compliance, as provided in section 504(f), with a permit issued under title V which complies with this title for covered entities shall be deemed compliance with this subsection as well as section 502(a). |
| (d) Reliability- Nothing in this section or title V shall be construed as requiring termination of operations of a stationary source that is a covered entity for failure to have an approved permit, or compliance plan, that is consistent with the requirements in the second and fifth sentences of subsection (a) concerning the holding of allowances or offset credits, except that any such covered entity may be subject to the applicable enforcement provision of section 113. | (d) Reliability- Nothing in this section or title V shall be construed as requiring termination of operations of a stationary source that is a covered entity for failure to have an approved permit, or compliance plan, that is consistent with the requirements in the second and fifth sentences of subsection (a) concerning the holding of emission allowances, compensatory allowances, international emission allowances, or offset allowances, except that any such covered entity may be subject to the applicable enforcement provision of section 113. | |
| (e) Regulations- Not later than 2 years after the date of enactment of this title, the Administrator shall promulgate regulations to implement this section. To provide for permits required under this section, each State in which one or more stationary sources that are covered entities are located shall submit, in accordance with this section and title V, revised permit programs for approval. | (e) Regulations- The Administrator shall promulgate regulations to implement this section. To provide for permits required under this section, each State in which one or more stationary sources and that are covered entities are located shall submit, in accordance with this section and title V, revised permit programs for approval. | |
| SEC. 728. INTERNATIONAL EMISSION ALLOWANCES. | = | SEC. 728. INTERNATIONAL EMISSION ALLOWANCES. |
| (a) Qualifying Programs- The Administrator, in consultation with the Secretary of State, may by rule designate an international climate change program as a qualifying international program if-- | (a) Qualifying Programs- The Administrator, in consultation with the Secretary of State, may by rule designate an international climate change program as a qualifying international program if-- | |
| (1) the program is run by a national or supranational foreign government, and imposes a mandatory absolute tonnage limit on greenhouse gas emissions from 1 or more foreign countries, or from 1 or more economic sectors in such a country or countries; and | (1) the program is run by a national or supranational foreign government, and imposes a mandatory absolute tonnage limit on greenhouse gas emissions from 1 or more foreign countries, or from 1 or more economic sectors in such a country or countries; and | |
| (2) the program is at least as stringent as the program established by this title, including provisions to ensure at least comparable monitoring, compliance, enforcement, quality of offsets, and restrictions on the use of offsets. | (2) the program is at least as stringent as the program established by this title, including provisions to ensure at least comparable monitoring, compliance, enforcement, quality of offsets, and restrictions on the use of offsets. | |
| (b) Disqualified Allowances- An international emission allowance may not be held under section 722(d)(2) if it is in the nature of an offset instrument or allowance awarded based on the achievement of greenhouse gas emission reductions or avoidance, or greenhouse gas sequestration, that are not subject to the mandatory absolute tonnage limits referred to in subsection (a)(1). | <> | (b) Disqualified Allowances- An international emission allowance may not be held under section 722(d)(3) if it is in the nature of an offset instrument or allowance awarded based on the achievement of greenhouse gas emission reductions or avoidance, or greenhouse gas sequestration, that are not subject to the mandatory absolute tonnage limits referred to in subsection (a)(1). |
| (c) Retirement- | = | (c) Retirement- |
| (1) ENTITY CERTIFICATION- The owner or operator of an entity that holds an international emission allowance under section 722(d)(2) shall certify to the Administrator that such international emission allowance has not previously been used to comply with any foreign, international, or domestic greenhouse gas regulatory program. | <> | (1) ENTITY CERTIFICATION- The owner or operator of an entity that holds an international emission allowance under section 722(d)(3) shall certify to the Administrator that such international emission allowance has not previously been used to comply with any foreign, international, or domestic greenhouse gas regulatory program. |
| (2) RETIREMENT- | = | (2) RETIREMENT- |
| (A) FOREIGN AND INTERNATIONAL REGULATORY ENTITIES- The Administrator, in consultation with the Secretary of State, shall seek, by whatever means appropriate, including agreements and technical cooperation on allowance tracking, to ensure that any relevant foreign, international, and domestic regulatory entities-- | (A) FOREIGN AND INTERNATIONAL REGULATORY ENTITIES- The Administrator, in consultation with the Secretary of State, shall seek, by whatever means appropriate, including agreements and technical cooperation on allowance tracking, to ensure that any relevant foreign, international, and domestic regulatory entities-- | |
| (i) are notified of the use, for purposes of compliance with this title, of any international emission allowance; and | (i) are notified of the use, for purposes of compliance with this title, of any international emission allowance; and | |
| (ii) provide for the disqualification of such international emission allowance for any subsequent use under the relevant foreign, international, or domestic greenhouse gas regulatory program, regardless of whether such use is a sale, exchange, or submission to satisfy a compliance obligation. | (ii) provide for the disqualification of such international emission allowance for any subsequent use under the relevant foreign, international, or domestic greenhouse gas regulatory program, regardless of whether such use is a sale, exchange, or submission to satisfy a compliance obligation. | |
| (B) DISQUALIFICATION FROM FURTHER USE- The Administrator shall ensure that, once an international emission allowance has been disqualified or otherwise used for purposes of compliance with this title, such allowance shall be disqualified from any further use under this title. | (B) DISQUALIFICATION FROM FURTHER USE- The Administrator shall ensure that, once an international emission allowance has been disqualified or otherwise used for purposes of compliance with this title, such allowance shall be disqualified from any further use under this title. | |
| (d) Use Limitations- The Administrator may, by rule, apply a limit to the percentage of the combined greenhouse gas emissions and attributable greenhouse gas emissions of a covered entity with respect to which compliance may be demonstrated by holding international emission allowances under section 722(d)(2), consistent with the purposes of the Safe Climate Act. | <> | (d) Use Limitations- The Administrator may, by rule, modify the percentage applicable to international emission allowances under section 722(d)(3), consistent with the purposes of the Clean Energy Jobs and American Power Act. |
Find out more about this exciting 1Sky/350.org merger and how you can stay involved with the climate movement at 350.org.
