HR 5966 IH
101st CONGRESS
  2d Session
 H. R. 5966
To amend the Clean Air Act to begin reducing the accumulation of greenhouse
gases in the atmosphere, to create incentives to improve the efficiency of
fossil fuel use, to create incentives for the use of low carbon fuels and
renewable energy resources, to allow regulatory credit for carbon dioxide
reductions produced as a byproduct of the acid rain control program and other
energy efficiency programs, and to stimulate private market development of
carbon dioxide reducing technologies.
IN THE HOUSE OF REPRESENTATIVES
October 27, 1990
Mr. Cooper (for himself and Mr. SYNAR) introduced the following bill; which
was referred to the Committee on Energy and Commerce
A BILL
To amend the Clean Air Act to begin reducing the accumulation of greenhouse
gases in the atmosphere, to create incentives to improve the efficiency of
fossil fuel use, to create incentives for the use of low carbon fuels and
renewable energy resources, to allow regulatory credit for carbon dioxide
reductions produced as a byproduct of the acid rain control program and other
energy efficiency programs, and to stimulate private market development of
carbon dioxide reducing technologies.
  Be it enacted by the Senate and House of Representatives of the United
  States of America in Congress assembled,
SECTION 1. SHORT TITLE.
  This Act may be cited as the `CO2 Offsets Policy Enabling Act of 1990'.
SEC. 2. FINDINGS.
  The Congress finds that:
  (1) The United States has 5 percent of the world's population and yet
  consumes more than 20 percent of the world's fossil fuels and emits more than
  20 percent of the world's CO2 derived from the combustion of fossil fuels.
  (2) The United States consumes fossil fuels on a per capita basis at four
  times the worldwide average and more than twice the per capita average in
  many other highly industrialized countries.
  (3) High rates of energy consumption in the United States contribute to urban
  smog, acid rain, oil spills, and other environmental pollution problems.
  (4) Creating administrative mechanisms which require fossil fuel users
  to take account of the environmental consequences of their actions will
  balance the continued use of these critical energy resources with reductions
  in the environmental damages that they cause.
  (5) Administrative mechanisms that facilitate CO2 offset transactions will
  create incentives for technological innovation reducing further society's
  energy and environmental costs.
  (6) By providing incentives for energy users to use energy more efficiently,
  the United States can improve its economic productivity, enhance its
  international competitiveness, reduce its trade deficit and reduce its
  dependence on foreign oil.
  (7) Establishing a CO2 offsets policy would encourage electric utilities to
  consider their emissions of CO2 when making future demand and supply-side
  decisions to meet their future capacity requirements.
  (8) A Federal policy to take advantage of opportunities to offset greenhouse
  gas emissions would ensure that the United States can reduce its emissions
  of greenhouse gases while continuing to utilize coal, its most abundant
  domestic energy resource, which is essential to the Nation's long-range
  energy, economic, and national security.
  (9) A Federal CO2 offset policy offers the opportunity for the United States
  to begin to address the global climate change with a least-cost, market-based
  strategy which allows every industry the flexibility to choose the technology
  and displacement methods most appropriate for its individual circumstance.
SEC. 3. CONTROL OF GREENHOUSE GASES.
  The Clean Air Act is amended by adding the following new title at the
  end thereof:
TITLE IV--CONTROL OF GREENHOUSE GASES
`SEC. 401. DEFINITIONS.
  `As used in this title--
  `(1) The term `major CO2 source' means any stationary source of CO2 which
  emits or has the potential to emit 100,000 tons or more per year of CO2.
  `(2) The term `new major CO2 source' means any major CO2 source the
  construction or modification of which commences after the promulgation of
  rules under section 403.
  `(3) The terms `commence', `modification' and `construction' shall have
  the same meaning as such terms have when used in section 111.
  `(4) The term `permitting authority' means the authority established under
  this title to issue operating permits for major CO2 sources.
`SEC. 402. OFFSET CREDITS REQUIRED FOR NEW SOURCES.
  `(a) REQUIREMENT- No new major CO2 source may operate during any period
  unless the owner or operator of the source has obtained, and is in compliance
  with, a permit issued under this title. All new major stationary sources of
  CO2 shall obtain CO2 credits certified by the Administrator in the manner
  described in section 403. The owner or operator shall demonstrate possession
  of certified CO2 credits equal to one year's expected CO2 emissions to
  the permitting authority before commencing operation for the first year of
  operation. Thereafter, the owner or operator shall be required to deposit
  annually with the permitting authority sufficient certified CO2 credits
  to compensate for that year's annual CO2 emissions. The receipt by the
  permitting authority of such CO2 offset credits shall be a condition of any
  permit issued by the permitting authority to affected sources. A new major
  CO2 source that uses biomass as a fuel shall obtain CO2 credits in an amount
  sufficient to offset only the fossil fuel used in the production of that
  biomass. However, a new major CO2 source that uses as fuel trees that have
  been grown as a CO2 offset shall obtain CO2 credits for all CO2 emissions.
  `(b) VIOLATIONS- Each permit under this title shall require that any new
  major CO2 source which emits CO2 in an amount in excess of the CO2 offset
  credits held by the permittee shall obtain such credits as promptly as
  practicable, and in addition, pay a penalty of $250 per ton of CO2 emitted
  in excess of the offset credits held. The $250 per ton penalty shall be
  adjusted in each year after the year of the enactment of this title by the
  percentage, if any, by which the Consumer Price Index for the most recent
  calendar year ending before the beginning of such year exceeds the Consumer
  Price Index for the calendar year 1990. For purposes of this subsection--
  `(1) the Consumer Price Index for any calendar year is the average of the
  Consumer Price Index for all-urban consumers published by the Department
  of Labor, as of the close of the 12-month period ending on August 31 of
  each calendar year, and
  `(2) the revision of the Consumer Price Index which is most consistent
  with the Consumer Price Index for calendar year 1989 shall be used.
`SEC. 403. CERTIFICATION OF OFFSETS.
  `(a) CERTIFICATION BY PERMITTING AUTHORITY- A permitting authority may
  certify as a CO2 offset credit for any period any CO2 reduction if the
  person providing such reduction or the person purchasing such offset credit
  establishes to the satisfaction of the permitting authority that such
  reduction complies with the requirements of regulations under subsection
  (b). In the event that the permitting authority is a State agency operating
  under an EPA-approved program in accordance with section 404(b), the
  Administrator shall retain authority to review such State certifications
  prior to deposit in the National CO2 Offset Bank in accordance with
  section 405.
  `(b) EPA REGULATIONS-
  `(1) The Administrator shall establish regulations within 18 months after
  the enactment of this title concerning the certification of stationary
  source CO2 reductions. Such regulations shall prescribe certification
  procedures for any stationary source demonstrating CO2 reductions through
  fuel switching to less carbon intensive fuels.
  `(2) The Administrator shall, in consultation with the Secretary of
  Agriculture and the Secretary of the Interior, promulgate rules establishing
  CO2 fixation rates, which include the maintenance of CO2 sequestration for
  forest ecosystems, to include land productivity and normal precipitation,
  by region within 30 months of enactment of this title. Such rules must
  include but not be limited to the CO2 sequestration values associated
  with the preservation of ancient forests. In addition, these regulations
  should consider and prescribe the conditions under which public lands may
  be leased for the purpose of producing CO2 offsets. In no case shall offset
  credits after enactment be certified for forest area cut and reforested
  unless the person requesting such credit can first demonstrate that such
  reforestation would not have otherwise occurred.
  `(3) The Administrator shall, in consultation with the Secretary of Energy,
  promulgate rules within 24 months from the enactment of this title concerning
  each of the following:
  `(A) The certification of CO2 credits from fleet vehicle fuel efficiency
  improvements beyond the applicable Corporate Average Fuel Efficiency (CAFE)
  requirement. For purposes of this certification, the Administrator shall
  develop and employ an assessment of the statistical lifetime and use of
  vehicles proposed for CO2 offsets and the fuel efficiency improvement
  beyond the applicable CAFE requirement.
  `(B) The certification of CO2 credits from appliance efficiency improvements
  beyond the minimums required under the National Appliance Energy
  Conservation Amendments (NAECA 1988). Such certification procedures shall
  include adjustments to extra energy efficiency improvements to reflect the
  national proportion of household electricity derived from fossil fuels. In
  addition, the number of CO2 credits certified shall be estimated on the
  basis of the normal expected lifetime and use of the appliance.
  `(C) The certification of CO2 credits for energy conservation
  investments. The number of credits granted shall be adjusted by the national
  proportion of electricity generated by fossil fuels for the sector of the
  economy in which the conservation investment is made. The Administrator
  shall publish and periodically update a listing of approved conservation
  options and their CO2 credit yields.
  `(D) The certification of CO2 equivalent credits from the capture and use
  of coalbed methane. The credits granted shall reflect both the differential
  radiative activity and atmospheric lifetime of methane compared to CO2 as
  well as the CO2 produced as a result of its ultimate combustion. The CO2
  equivalence of methane shall be established in accordance with section
  403(c).
  `(E) The certification of CO2 credits created by construction of cogeneration
  facilities. These regulations shall account for the CO2 reductions produced
  both from any efficiency gain in thermal substitution as well as from
  any CO2 reductions produced from efficiency improvements over the energy
  supply being displaced. In all cases any CO2 emissions produced by the
  cogeneration project are subject to the section 402.
  `(4) The Administrator shall promulgate rules within 12 months after
  enactment of this title concerning the certification of CO2 equivalent
  credits for the capture and destruction of chlorofluorocarbons (CFCs) in
  amounts greater than required by other applicable law. The CO2 equivalence
  of all CFCs shall be established in accordance with section 403(c).
  `(5) Within 12 months of the date of enactment of this title, the
  Administrator shall establish regulations identifying the CO2 credits to be
  granted by fuel switches to less carbon intensive fuels for mobile sources.
  `(6) In no case shall CO2 offset sources be limited to those explicitly
  defined by regulation under section 403. Potential offset sources should
  be allowed to demonstrate to the satisfaction of the Administrator after
  notice and comment that such sources should be certified according to the
  intent of this program. Offset sources explicitly credited by regulation
  shall be allowed to demonstrate to the satisfaction of the Administrator
  after notice and comment that technical progress or other innovation has
  improved the efficiency of the CO2 offset producing process.
  `(7) In no case shall certification be granted for a utility shutdown for
  the purposes of repowering or refurbishing an existing facility.
  `(8) The Administrator may promulgate regulations under this section
  providing for expedited certification of CO2 credits. If such regulations
  are promulgated, the Administrator shall establish a requirement that,
  for purposes of section 402, a new major source of CO2 shall obtain more
  than one ton of CO2 offset credits certified pursuant to this paragraph
  for each ton emitted by such source. In determining the additional CO2
  offset credits required under the preceding sentence, the Administrator
  shall take into account the additional uncertainties in certification
  under such expedited procedures compared with certification under the
  other regulations of this section.
  `(9) The Administrator shall establish a baseline for each source of CO2
  offsets or category of such sources subject to certification requirements
  under this section. Such baselines shall be set according to the actual
  performance of such sources or categories of sources during calendar year
  1990. In no event shall such baselines be less stringent than those required
  under this Act or under any other provision of Federal law. In no case shall
  certification be granted for greenhouse gas reductions which are required
  under any other provision of this Act or other authority of Federal law.
  `(c) GREENHOUSE GAS CREDITS- The regulations under subsection (b) shall
  provide that a reduction in any air pollutant (including methane and N2O)
  which the Administrator determines to contribute to global warming may be
  certified as a CO2 offset credit if such reduction satisfies the criteria
  of subsection (b), except that the amount of such credit may be reduced
  or increased based on radiative differences and atmospheric lifetime to
  reflect the relative global warming potential of such air pollutants. The
  Administrator shall consult with the Administrators of the National
  Oceanic and Atmospheric Administration and the National Aeronautic and
  Space Administration concerning the determination of CO2 equivalents for
  all CFCs regulated by the Montreal Protocol to control substances that
  deplete Stratospheric Ozone and for all other greenhouse gases including
  but not limited to N2O and methane.
`SEC. 404. PERMIT PROGRAMS.
  `(a) REGULATIONS- The Administrator shall promulgate within 18 months
  after the date of the enactment of this title regulations establishing
  the minimum elements of a permit program to be administered by any air
  pollution control agency. These elements shall include each of the following:
  `(1) Requirements for permit applications, including a standard application
  form and criteria for determining in a timely fashion the completeness
  of applications.
  `(2) Monitoring and reporting requirements.
  `(3) Requirements for adequate personnel and funding to administer the
  program.
  `(4) A requirement that the permitting authority have adequate authority to--
  `(A) issue permits and assure compliance by all sources required to have
  a permit under this title with each applicable standard, regulation or
  requirement under this title;
  `(B) issue permits for a fixed term;
  `(C) terminate, modify, or revoke and reissue permits for cause;
  `(D) enforce permits, the requirement to obtain a permit, including
  authority to recover civil penalties for permit violations; and
  `(E) collect the annual CO2 offsets from affected sources for deposit with
  the Environmental Protection Agency to facilitate CO2 credit certification
  and tracking.
  `(5) Adequate, streamlined, and reasonable procedures for expeditiously
  determining when applications are complete, for processing such applications,
  for public notice, including offering an opportunity for public comment
  and a hearing, and for expeditious review of permit actions, including
  applications, renewals, or revisions, and including an opportunity for
  judicial review in State court of the final permit action by the applicant,
  any person who participated in the public comment process, and any other
  person who could obtain judicial review of that action under applicable law.
  `(b) SUBMISSION AND APPROVAL- (1) The Governor of each State shall develop
  and submit to the Administrator a permit program under State or local law or
  under an interstate compact meeting the requirements of this title. Not later
  than 1 year after receiving a program, and after notice and opportunity for
  public comment, the Administrator shall approve or disapprove such program.
  `(2) If the Governor does not submit a program as required under paragraph
  (1) or if the Administrator disapproves a program submitted by the Governor
  under paragraph (1), in whole or in part, the Administrator shall promulgate,
  administer, and enforce a program under this title for that State.
  `(c) SUSPENSION- The Administrator shall suspend the issuance of permits
  promptly upon publication of notice of approval of a permit program under
  this section, but may, in such notice, retain jurisdiction over permits
  that have been federally issued, but for which the administrative or
  judicial review process is not complete. The Administrator shall continue
  to administer and enforce federally issued permits under this title until
  they are replaced by a permit issued by a permitting program. Nothing in
  this subsection should be construed to limit the Administrator's ability
  to enforce permits issued by a State.
  `(d) CONDITIONS- Each permit issued under this title shall include
  an enforceable requirement that the permittee submit to the permitting
  authority, no less often than every 12 months, the results of any required
  monitoring, and such other conditions as are necessary to assure that the
  permittee has not emitted CO2 in excess of the CO2 emission offset credits
  held by the permittee.
  `(e) INSPECTION, ENTRY, MONITORING, CERTIFICATION, AND REPORTING-
  Each permit issued under this title shall set forth inspection, entry,
  monitoring, compliance certification, and reporting requirements to assure
  compliance with the permit terms and conditions. Such monitoring and
  reporting requirements shall conform to any applicable regulation under
  subsection (b). Any report required to be submitted by a permit issued to
  a corporation under this title shall be signed by a responsible corporate
  official, who shall certify its accuracy.
`SEC. 405. NATIONAL CO2 OFFSET BANK.
  `(a) EPA REGULATIONS-
  `(1) NATIONAL CO2 OFFSET BANK- Within 12 months of enactment of this title,
  the Administrator shall publish regulations creating a National CO2 Offset
  Bank for the purpose of ensuring adequate supplies of CO2 offsets and to
  create procedures for the tracking and retirement of used CO2 credits. At
  a minimum, these regulations must require the identification of the owners
  of CO2 offset credits, their addresses, the tonnages available, and the
  source of the CO2 credit. These regulations may require depositors to
  identify a minimum asking price.
  `(2) CO2 OFFSET CERTIFICATE ISSUANCE- Upon notification by the owner of a
  certified offset of a transfer of ownership of the offset, the Administrator
  shall debit the account of the seller in the National Offset Bank and
  credit the account of the purchaser. The Administrator, if requested by
  the purchaser, will issue certificates of CO2 credit equal to the purchase
  quantity and make such withdrawal from the bank within 60 days of receipt
  of such request.
  `(b) EPA OVERSIGHT- In exercising its certification review authority under
  section 403, the Administrator shall act within 90 days to decertify any CO2
  credit submitted for banking in accordance with the generic certification
  rules promulgated in accordance with section 403.
  `(c) PUBLIC LISTING OF CREDITS- The Administrator shall make available
  to the public on a continuous basis the contents of the National CO2
  Offset Bank to include but not be limited to the names and addresses of
  the owners of available CO2 credits, the associated tonnages, sources of
  the CO2 credits, and minimum asking prices if required.
  `(d) DEBITS- Allowances deposited with the Administrator by permitting
  authorities or permitted sources in compliance with the CO2 offset
  requirements established in section 402 shall be debited from the accounts
  of registered certified credit owners listed in the National CO2 Offset Bank.