[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2177 Introduced in House (IH)]
<DOC>
119th CONGRESS
1st Session
H. R. 2177
To amend the Clean Air Act to establish a tradeable energy performance
standard for large electricity generators and thermal energy users, and
for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
March 18, 2025
Mr. Casten introduced the following bill; which was referred to the
Committee on Energy and Commerce
_______________________________________________________________________
A BILL
To amend the Clean Air Act to establish a tradeable energy performance
standard for large electricity generators and thermal energy users, and
for other purposes.
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 ``Tradeable Energy Performance
Standards Act''.
SEC. 2. ESTABLISHING TRADEABLE ENERGY PERFORMANCE STANDARDS.
The Clean Air Act (42 U.S.C. 7401 et seq.) is amended by adding
after title VI the following:
``TITLE VII--TRADEABLE ENERGY PERFORMANCE STANDARDS
``Sec. 701. Definitions.
``Sec. 702. Emission allowance submission requirement.
``Sec. 703. Emission allowance distribution.
``Sec. 704. Trading of emission allowances.
``Sec. 705. Emission allowance bilateral purchase agreements.
``Sec. 706. Voluntary program participation.
``Sec. 707. Emission allowance tracking system.
``Sec. 708. Offset program.
``Sec. 709. Penalty for noncompliance.
``Sec. 710. Comptroller general reports.
``Sec. 711. Final regulations.
``Sec. 712. Savings provisions.
``SEC. 701. DEFINITIONS.
``In this title:
``(1) Alternative compliance payment.--The term
`Alternative Compliance Payment' means a payment made under
section 703(e) in lieu of the submission of an emission
allowance.
``(2) Bilateral purchase agreement.--The term `bilateral
purchase agreement' means an agreement--
``(A) entered into after the date of enactment of
this title;
``(B) for a term of at least 10 years;
``(C) between the owner or operator of an Existing
Covered Facility and the owner or operator of a Newly
Constructed Low-Emission Covered Facility; and
``(D) in which the owner or operator of an Existing
Covered Facility agrees to purchase some or all of the
emissions allowances distributed to the owner or
operator of a Newly Constructed Low-Emission Covered
Facility.
``(3) Covered cogeneration facility.--The term `Covered
Cogeneration Facility' means a facility that simultaneously
produces useful thermal energy output and electricity and--
``(A) has a rated electric capacity of 2 megawatts
or greater; or
``(B) is a facility for which the Administrator has
approved a request under section 706(a)(3).
``(4) Covered electric facility.--The term `Covered
Electric Facility' means a facility that produces electricity
and--
``(A) has a rated electric capacity of 2 megawatts
or greater; or
``(B) is a facility for which the Administrator has
approved a request under section 706(a)(1).
``(5) Covered facility.--The term `Covered Facility' means
a Covered Electric Facility, a Covered Thermal Facility, or a
Covered Cogeneration Facility.
``(6) Covered thermal facility.--The term `Covered Thermal
Facility' means a facility--
``(A) that produces useful thermal energy output at
a Rated Fuel-Based Capacity of at least 50 million
British thermal units per hour, calculated on a higher
heating value basis, excluding any facility that the
Administrator determines is used to wholly or partially
provide carbon as a chemical ingredient for a process
to manufacture goods; or
``(B) for which the Administrator has approved a
request under section 706(a)(2).
``(7) Designated representative.--The term `designated
representative' means an individual for which a certificate of
representation has been submitted under section 703(e)(3).
``(8) Emission allowance.--The term `emission allowance'
means a limited authorization to emit 1 metric ton of carbon
dioxide that is distributed under section 703.
``(9) Existing covered facility.--The term `Existing
Covered Facility' means a Covered Facility--
``(A) the owner or operator of which is a party to
a bilateral purchase agreement; and
``(B) that produced electricity or useful thermal
energy output as of the date on which the owner or
operator entered into such agreement.
``(10) Fossil fuel.--The term `fossil fuel'--
``(A) means a carbon compound formed in the crust
of the Earth from decayed organic material; and
``(B) includes natural gas, petroleum, and coal.
``(11) Higher heating value basis.--The term `higher
heating value basis' means that a given calculation regarding
the total energy content of a fuel is made on the basis of the
heat produced per unit of fuel when--
``(A) complete combustion takes place at constant
pressure;
``(B) the products of combustion are cooled to the
initial temperature of the fuel and air; and
``(C) the water vapor formed during combustion is
condensed.
``(12) Hold.--The term `hold' means, with respect to an
emission allowance, to have in the appropriate account created
pursuant to the process under section 707(a)(2).
``(13) Newly constructed low-emission covered facility.--
The term `Newly Constructed Low-Emission Covered Facility'
means a Covered Facility--
``(A) the owner or operator of which is a party to
a bilateral purchase agreement;
``(B) that did not produce electricity or useful
thermal energy output prior to the date on which the
owner or operator entered into such agreement;
``(C) that, in the first full calendar year during
which the Covered Facility produces electricity or
useful thermal energy output, emits a lesser quantity
of carbon dioxide per megawatt-hour of electricity
production or per million British thermal units of
useful thermal energy output than the average Covered
Facility.
``(14) Output-based co2 emissions.--The term `Output-Based
CO2 Emissions' means the following:
``(A) Covered electric facility.--For a Covered
Electric Facility, the number that equals--
``(i) the total number of metric tons of
carbon dioxide emissions released by all
Covered Electric Facilities in a calendar year;
divided by
``(ii) the total number of megawatt-hours
of electricity produced by all Covered Electric
Facilities in such calendar year.
``(B) Covered thermal facility.--For a Covered
Thermal Facility, the number that equals--
``(i) the total number of metric tons of
carbon dioxide emissions from all Covered
Thermal Facilities in a calendar year; divided
by
``(ii) the total number of millions of
British thermal units of useful thermal energy
output from all Covered Thermal Facilities in
such calendar year.
``(15) Output-based co2 emissions baseline.--The term
`Output-Based CO2 Emissions Baseline' means, with respect to a
category of Covered Facility, the Output-Based CO2 Emissions in
calendar year 2027.
``(16) Output-based co2 emissions target.--The term
`Output-Based CO2 Emissions Target' means the number of metric
tons of carbon dioxide per megawatt-hour or per million British
thermal units, as applicable, that is used to calculate the
number of emission allowances distributed by the Administrator
to each Covered Facility under section 703.
``(17) Permanently sequestered.--The term `Permanently
Sequestered', with respect to carbon dioxide, means the carbon
dioxide shall not enter the atmosphere for at least 200 years,
according to the best available science.
``(18) Rated fuel-based capacity.--The term `Rated Fuel-
Based Capacity' means--
``(A) for facilities that produce useful thermal
energy output with the combustion of fuel, the peak
fuel combustion rate, expressed in millions of British
thermal units per hour; and
``(B) for facilities that produce useful thermal
energy output without the combustion of fuel, the peak
useful thermal energy output rate divided by 0.7,
expressed in millions of British thermal units per
hour.
``(19) Social cost of carbon.--The term `Social Cost of
Carbon' means the amount, in dollars, of the economic damages
that would result from emitting one additional metric ton of
carbon dioxide into the atmosphere, as determined by the
Administrator in accordance with the method described in the
document titled `Report on the Social Cost of Greenhouse Gases:
Estimates Incorporating Recent Scientific Advances' as
published by the Environmental Protection Agency in November
2023.
``(20) Total emission adjustment index.--The term `Total
Emission Adjustment Index' means, with respect to a given year,
the number used to adjust the amount of emission allowances
distributed for each megawatt-hour and for each million British
thermal units, as applicable, as described under section
703(c).
``(21) Total u.s. co2 emissions.--The term `Total U.S. CO2
Emissions' means, with respect to a given calendar year, the
total amount of carbon dioxide that would be produced if all
the fossil fuels imported into the United States or extracted
within the United States were fully combusted.
``(22) Useful thermal energy output.--The term `useful
thermal energy output'--
``(A) means the net amount of thermal energy
produced by a facility, including thermal energy
produced through the use of electricity; and
``(B) does not include energy in inlet combustion
air, feedwater, or other fluids not used as fuels for
combustion.
``SEC. 702. EMISSION ALLOWANCE SUBMISSION REQUIREMENT.
``(a) In General.--Beginning in calendar year 2028, not later than
June 1 of each calendar year, the owner or operator of each Covered
Facility shall submit to the Administrator one emission allowance for
each metric ton of carbon dioxide released directly to the atmosphere
by the facility during the preceding calendar year.
``(b) Acquisition of Emission Allowances.--The owner or operator of
a Covered Facility may acquire an emission allowance--
``(1) by receiving an emission allowance distributed under
section 703; and
``(2) by purchasing, exchanging, or transferring an
emission allowance in accordance with section 704.
``(c) Period of Use.--An emission allowance may be used by the
owner or operator of a Covered Facility to comply with subsection (a)
only for--
``(1) the calendar year for which the emission allowance is
distributed; or
``(2) the following calendar year.
``(d) Rounding of Emission Allowances.--Any fraction of an emission
allowance shall be rounded to the nearest whole emission allowance.
``SEC. 703. EMISSION ALLOWANCE DISTRIBUTION.
``(a) Distribution.--
``(1) Covered electric facilities.--For each of calendar
years 2028 through 2048, the Administrator shall, not later
than March 1 of a given calendar year, distribute to the owner
or operator of each Covered Electric Facility a number of
emission allowances equal to the product of--
``(A) the number of megawatt-hours of electricity
produced by the Covered Electric Facility during the
previous calendar year; and
``(B) the Output-Based CO2 Emissions Target for the
calendar year.
``(2) Covered thermal facilities.--For each of calendar
years 2028 through 2048, the Administrator shall, not later
than March 1 of a given calendar year, distribute to the owner
or operator of each Covered Thermal Facility a number of
emission allowances equal to the product of--
``(A) the number of millions of British thermal
units of useful thermal energy output produced by the
Covered Thermal Facility during the previous calendar
year; and
``(B) the Output-Based CO2 Emissions Target for the
calendar year.
``(3) Covered cogeneration facilities.--For each of
calendar years 2028 through 2048, the Administrator shall, not
later than March 1 of a given calendar year, distribute to the
owner or operator of each Covered Cogeneration Facility--
``(A) for each megawatt hour of electricity
produced by the Covered Cogeneration Facility, a number
of emission allowances calculated in accordance with
paragraph (1); and
``(B) for each million British thermal units of
useful thermal energy output produced by the Covered
Cogeneration Facility, a number of emission allowances
calculated in accordance with paragraph (2).
``(b) Calculation of the Output-Based Co2 Emissions Target.--
``(1) 2028.--The Output-Based CO2 Emissions Target for
calendar year 2028 shall equal the Output-Based CO2 Emissions
Baseline.
``(2) Subsequent years.--In a given calendar year other
than calendar year 2028, the Output-Based CO2 Emissions Target
shall be the greater of--
``(A) zero; and
``(B) the lesser of--
``(i) the Output-Based CO2 Emissions Target
of the preceding calendar year minus 5 percent
of the Output-Based CO2 Emissions Baseline;
``(ii) the Output-Based CO2 Emissions of
the preceding calendar year minus 5 percent of
the Output-Based CO2 Emissions Baseline;
``(iii) the Output-Based CO2 Emissions
Target of preceding calendar year minus 10
percent of the Output-Based CO2 Emissions
Baseline minus the Total Emission Adjustment
Index of the given calendar year; and
``(iv) the Output-Based CO2 Emissions of
preceding calendar year minus 10 percent of the
Output-Based CO2 Emissions Baseline minus the
Total Emission Adjustment Index of the given
calendar year.
``(c) Calculation of Total Emission Adjustment Index.--With respect
to a given calendar year, the Total Emission Adjustment Index shall be
calculated as 1 minus the ratio of--
``(1) the Total U.S. CO2 Emissions in the previous calendar
year; to
``(2) the Total U.S. CO2 Emissions in the calendar year
that began two years before the given year.
``(d) General Rules.--
``(1) Identification numbers.--The Administrator shall
assign to each emission allowance distributed under this
section a unique identification number.
``(2) Designated representatives.--The owner or operator of
each Covered Facility, and the owner or operator of each other
entity holding an emission allowance or receiving an emission
allowance from the Administrator under this title, shall submit
to the Administrator a certificate of representation
designating a designated representative.
``(3) Prevention of double counting.--The Administrator
shall not consider any Covered Facility to which the
Administrator distributes emission allowances under this
section to be more than one type of facility as defined under
paragraphs (3), (4), or (6) of section 701.
``(e) Alternative Compliance Payments.--
``(1) In general.--The owner or operator of a Covered
Facility may satisfy the requirements of section 702(a), in
whole or in part, with respect to any calendar year, by
submitting to the Administrator an Alternative Compliance
Payment in lieu of an emission allowance that would otherwise
be due.
``(2) Amounts.--
``(A) Calendar years 2028 through 2038.--For
calendar years 2028 through 2038, the amount of an
Alternative Compliance Payment shall be as follows,
except as the Administrator shall adjust for inflation:
------------------------------------------------------------------------
``Calendar Year Alternative Compliance Payment
------------------------------------------------------------------------
2028......................... $50.00
2029......................... $52.00
2030......................... $54.00
2031......................... $56.00
2032......................... $58.00
2033......................... $60.00
2034......................... $62.00
2035......................... $64.00
2036......................... $66.00
2037......................... $68.00
2038......................... $70.00
------------------------------------------------------------------------
``(B) Calendar years 2039 through 2048.--For
calendar years 2039 through 2048, the amount of the
Alternative Compliance Payment for a given year shall
annually increase by an equal amount from $70 in 2038,
adjusted for inflation under subparagraph (A), to the
Social Cost of Carbon in 2048.
``(C) Calendar year 2048 and thereafter.--The
amount of an Alternative Compliance Payment for
calendar year 2048 and thereafter shall be equal to the
Social Cost of Carbon.
``SEC. 704. TRADING OF EMISSION ALLOWANCES.
``(a) Permitted Transactions.--An entity that holds an emission
allowance may--
``(1) submit the emission allowances to the Administrator;
and
``(2) sell, exchange, and transfer the emission allowance
to another entity in accordance with subsection (c).
``(b) Legal Status of Emission Allowances.--
``(1) In general.--An emission allowance distributed by the
Administrator under this title does not constitute a property
right.
``(2) Termination or limitation.--Nothing in this title
shall be construed to limit or alter the authority of the
United States to terminate or limit the sale, exchange,
transfer, holding, or submission of emission allowances.
``(c) Effectiveness of Emission Allowance Transactions.--No sale,
exchange, transfer, or submission of an emission allowance shall be
effective for purposes of this title until a certification of the sale,
transfer, exchange, or submission is--
``(1) signed by the designated representative of the entity
holding the emission allowance; and
``(2) received and recorded by the Administrator in
accordance with regulations issued under section 707.
``SEC. 705. EMISSION ALLOWANCE BILATERAL PURCHASE AGREEMENTS.
``(a) Distribution of Allowances to an Existing Covered Facility.--
``(1) In general.--For a calendar year that is covered by a
bilateral purchase agreement, beginning with the first full
calendar year during which the Newly Constructed Low-Emission
Covered Facility produces electricity or useful thermal energy
output, the Administrator shall distribute to the owner or
operator of the Existing Covered Facility--
``(A) for megawatt hours of electricity or million
British thermal units of useful thermal energy output,
as applicable, produced by the Existing Covered
Facility that are covered by the agreement, a number of
emission allowances that is equal to--
``(i) such number of megawatt hours or
million British thermal units, as applicable;
multiplied by
``(ii) the Output-Based CO2 Emissions for
Covered Electric Facilities or Covered Thermal
Facilities, as applicable, for such first full
calendar year; and
``(B) for megawatt hours of electricity or million
British thermal units of useful thermal energy output,
as applicable, produced by the Existing Facility that
are not covered by the agreement, the number of
emission allowances calculated under section 703(a).
``(2) Calculation of megawatt hours or million british
thermal units covered by agreement.--For purposes of paragraph
(1), the number of megawatt hours of electricity or million
British thermal units of useful thermal energy output, as
applicable, produced by an Existing Covered Facility that are
covered by the agreement shall be equal to--
``(A) the number of emission allowances sold to the
owner or operator of the Existing Covered Facility
pursuant to the agreement for the first full calendar
year described in paragraph (1), divided by the
difference of--
``(i) the number of emission allowances
submitted to the Administrator by the owner or
operator of the Existing Covered Facility for
such first full calendar year; minus
``(ii) the number of emission allowances
distributed to the owner or operator of the
Existing Covered Facility by the Administrator
for such first full calendar year; multiplied
by
``(B) the total number of megawatt hours of
electricity or million British thermal units of useful
thermal energy output, as applicable, produced by the
Existing Covered Facility in such first full calendar
year.
``(b) Distribution of Allowances to a Newly Constructed Low-
Emission Covered Facility.--
``(1) In general.--For calendar years that are covered by
an agreement described in subsection (a), beginning with the
first full calendar year during which the Newly Constructed
Low-Emission Covered Facility produces at least 1 megawatt-hour
of electricity or 1 million British thermal units of useful
thermal energy output, the Administrator shall distribute to
the owner or operator of the Newly Constructed Low-Emission
Covered Facility--
``(A) for megawatt hours of electricity or million
British thermal units of useful thermal energy output,
as applicable, produced by the Newly Constructed Low-
Emission Covered Facility that are covered by the
agreement, a number of emission allowances that is
equal to--
``(i) such number of megawatt hours or
million British thermal units of useful thermal
energy output; multiplied by
``(ii) the Output-Based CO2 Emissions for
Covered Electric Facilities or Covered Thermal
Facilities, as applicable, for such first full
calendar year; and
``(B) for megawatt hours of electricity or million
British thermal units of useful thermal energy output,
as applicable, produced by the Newly Constructed Low-
Emission Covered Facility that are not covered by the
agreement, the number of emission allowances calculated
under section 703(a).
``(2) Calculation of megawatt hours or million british
thermal units covered by agreement.--For purposes of paragraph
(1), the number of megawatt hours of electricity or million
British thermal units of useful thermal energy output, as
applicable, produced by a Newly Constructed Low-Emission
Covered Facility that are covered by the agreement shall be
equal to--
``(A) the number of emission allowances sold to the
owner or operator of the Existing Covered Facility
pursuant to the agreement for the first full calendar
year described in paragraph (1), divided by the
difference of--
``(i) the number of emission allowances
submitted to the Administrator by the owner or
operator of the Newly Constructed Low-Emission
Covered Facility for such first full calendar
year; minus
``(ii) the number of emission allowances
distributed to the owner or operator of the
Newly Constructed Low-Emission Covered Facility
by the Administrator for such first full
calendar year; multiplied by
``(B) the total number of megawatt hours of
electricity or million British thermal units of useful
thermal energy output, as applicable, produced by the
Existing Facility in such first full calendar year.
``(c) Conditions.--The owner or operator of an existing Covered
Facility or Newly Constructed Low-Emission Covered Facility that is a
party to a bilateral purchase agreement may receive emission allowances
under this section only if such owner or operator provides to the
Administrator a copy of--
``(1) the applicable bilateral purchase agreement; and
``(2) any amendment to such bilateral purchase agreement
within 30 days of the amendment being made.
``(d) Regulations.--The Administrator shall promulgate regulation
to ensure the integrity and enforceability of contracts executed under
this section.
``SEC. 706. VOLUNTARY PROGRAM PARTICIPATION.
``(a) Eligible Entities.--The Administrator may, upon the request
of the owner or operator, classify--
``(1) as a Covered Electric Facility, any facility that
produces electricity at a Rated Fuel-Based Capacity of less
than 2 megawatts;
``(2) as a Covered Thermal Facility, any facility that
produces useful thermal energy output at a Rated Fuel-Based
Capacity of less than 50 million British thermal units per
hour, calculated on a higher heating value basis; and
``(3) as a Covered Cogeneration Facility, any facility
that--
``(A) simultaneously produces useful thermal energy
output and electricity; and
``(B) has a rated electric capacity of less than 2
megawatts.
``(b) Designation of Representative.--The Administrator shall
approve a request submitted under subsection (a) if the owner or
operator of the facility designates a representative under section
703(d)(2).
``(c) Deadline for Notification.--Not later than 90 days after
receipt of a request submitted under subsection (a), the Administrator
shall notify the owner or operator of the facility whether the
Administrator approves or disapproves the request.
``(d) Termination of Classification.--The Administrator shall
terminate the classification of a facility as a Covered Facility under
subsection (a) if, during the previous calendar year, the facility did
not--
``(1) produce electricity; or
``(2) produce useful thermal energy output.
``SEC. 707. EMISSION ALLOWANCE TRACKING SYSTEM.
``(a) Regulations.--The Administrator shall issue regulations to
provide for--
``(1) the establishment of a system to process the
distribution of emission allowances to Covered Facilities under
section 703 and section 705;
``(2) a process to create accounts in which Covered
Facilities and other entities may hold emission allowances;
``(3) the establishment of an emission allowance tracking
system to track--
``(A) the number of emission allowances sold,
exchanged, transferred, and submitted;
``(B) the price or monetary value of such emission
allowances;
``(C) the date of each such sale, exchange,
transfer, and submission;
``(D) the parties involved in each such sale,
exchange, transfer, and submission; and
``(E) any additional information the Administrator
determines necessary to ensure the integrity and
efficiency of the market for emission allowances; and
``(4) the weekly publication by the Administrator on the
website of the Environmental Protection Agency, in a publicly
available and searchable format, of--
``(A) a summary of average prices or monetary
values of emission allowances, the total number of
emission allowances sold, exchanged, transferred, or
submitted, and any other additional information
determined by the Administrator as necessary to ensure
the integrity and efficiency of the market for emission
allowances;
``(B) the number of emission allowances distributed
by the Administrator under section 703 and section 705;
``(C) the number of emission allowances distributed
by the Administrator under section 703 and section 705
during the calendar year before the year of publication
that are held at the end of each month of the current
calendar year by each category of Covered Facility; and
``(D) the number of emission allowances submitted
to the Administrator each year by each category of
Covered Facility.
``(b) Position Limits.--The Administrator, in consultation with the
Commodity Futures Trading Commission, shall establish by regulation
limits on the number of emission allowances that an entity may hold so
that, in the determination of the Administrator--
``(1) no entity shall hold a number of emission allowances
that may influence the price or monetary value of emission
allowances; and
``(2) adequate liquidity for buyers and sellers of emission
allowances shall be ensured.
``(c) Status of Submitted Emission Allowances.--Once an emission
allowance is submitted to the Administrator under section 702, the
emission allowance shall be disqualified from subsequent use under this
title, including subsequent sale, exchange, transfer, and submission.
``(d) Orderly and Competitive Market.--The Administrator shall
issue regulations as necessary in the determination of the
Administrator for an orderly and competitive market for selling,
exchanging, transferring, and submitting emission allowances.
``SEC. 708. OFFSET PROGRAM.
``(a) Carbon Mitigation Fund.--
``(1) Creation of fund.--The Administrator shall establish
a fund to be known as the `Carbon Mitigation Fund'.
``(2) Administration.--The Carbon Mitigation Fund shall be
administered by the Administrator.
``(3) Deposits.--There shall be deposited into the Carbon
Mitigation Fund the following:
``(A) The amounts paid as Alternative Compliance
Payments pursuant to section 703(e).
``(B) The amounts collected as civil penalties
under section 709.
``(4) Appropriation.--Amounts in the Carbon Mitigation Fund
shall be available without further appropriation or fiscal year
limitation to carry out the Offset Program under subsection
(b).
``(b) Offset Program.--
``(1) In general.--The Administrator shall carry out a
program (to be known as the `Offset Program') to award grants
to entities to carry out activities that avoid emissions of
greenhouse gases or permanently sequester carbon dioxide from
the atmosphere, as determined in accordance with paragraph (3).
``(2) Activities.--The activities described in paragraph
(1) may include--
``(A) improvements to the energy efficiency of
existing facilities and devices;
``(B) improvements to the electrical grid;
``(C) the replacement of natural gas space heaters,
natural gas water heaters, and natural gas stoves with
electric appliances;
``(D) the replacement of fossil fuel-powered
vehicles owned by State or local agencies with electric
vehicles or other low-carbon fuel vehicles;
``(E) the replacement of fossil fuel-powered ground
airport and seaport vehicles with electric vehicles or
other low-carbon fuel vehicles;
``(F) installation of charging stations for
electric vehicles along highways and other public roads
in urban areas and rural areas in which the
availability of such charging stations is significantly
below the national average; and
``(G) beneficial electrification-related reductions
not otherwise identified in this paragraph.
``(3) Criteria.--The Administrator may only award grants
under the Offset Program for an activity for which the
Administrator determines that--
``(A) the amount of greenhouse gas emissions to be
avoided or permanently sequestered from the atmosphere
by the activity will be adequately confirmed through
monitoring, reporting, and verification;
``(B) the risk that some amount of the carbon
dioxide that is to be sequestered from the atmosphere
by the activity may reenter the atmosphere at a later
date is adequately reflected through a discounting of
the amount described in paragraph (4)(C)(ii);
``(C) the risk that some amount of the greenhouse
gases, the emission of which is avoided by the
activity, may enter the atmosphere at a later date is
adequately reflected through a discounting of the
amount described in paragraph (4)(C)(i);
``(D) the risk that the activity may directly or
indirectly increase the release of greenhouse gases
from another location has been adequately addressed;
``(E) the activity is not required, or being
supported financially (except pursuant to this
subsection), by a Federal, State, or local law,
program, or activity; and
``(F) if the activity involves land use, the
activity--
``(i) aligns with the Sustainable
Development Goals, as adopted by of the United
Nations under the Post-2015 Development Agenda,
and amended by the United Nations, including
being consistent with the conservation of
biological diversity and natural ecosystems
(including forests and grasslands); and
``(ii) maintains ecosystem services and
other social and environmental benefits.
``(4) Proposals.--In order to apply for a grant awarded
under the Offset Program, an entity shall submit to the
Administrator a proposal that--
``(A) describes the activity to be carried out with
the grant;
``(B) identifies the amount of money for which the
entity is applying;
``(C) identifies the amount (to be measured in one-
year increments) of, as applicable--
``(i) greenhouse gas emissions to be
avoided by the activity; and
``(ii) carbon dioxide to be permanently
sequestered from the atmosphere by the
activity;
``(D) identifies the bid amount, expressed as
dollars per metric ton, which shall be the quotient
obtained by dividing the amount identified under
subparagraph (B) by the amount identified under
subparagraph (C);
``(E) provides any information required by the
Administrator in order to make a determination
described in paragraph (3); and
``(F) provides any other certifications the
Administrator determines appropriate.
``(5) Deadlines.--
``(A) Solicitation.--Not later than February 1,
2028, and each February 1 thereafter, the Administrator
shall solicit proposals for activities described in
paragraph (1) for which the Administrator may award
grants under the Offset Program.
``(B) Identification.--Not later than June 1, 2028,
and each June 1 thereafter, the Administrator shall
identify and publish a list of proposals that have been
submitted by March 1 of the applicable year for
activities described in paragraph (1) that qualify for
an award of a grant under the Offset Program.
``(C) Award of grants.--Not later than August 1,
2028, and each August 1 thereafter, the Administrator
shall, to the extent amounts are available in the
Carbon Mitigation Fund, award grants to entities that
submitted a proposal that is listed pursuant to
subparagraph (B).
``(6) Awards to most cost-effective activities.--The
Administrator shall award funds to entities for activities
described in proposals identified under paragraph (5)(B)--
``(A) beginning by awarding funds to the entity
submitting such a proposal with the lowest bid amount
identified pursuant to paragraph (4)(D); and
``(B) then awarding funds to entities sequentially
by entity submitting such a proposal with the next
lowest bid amount so identified until all funds are
awarded.
``(c) Regulations Regarding Carbon Dioxide Sequestration.--
``(1) Regulations.--Under section 711, the Administrator
shall issue regulations establishing--
``(A) the conditions under which carbon dioxide may
be safely and permanently sequestered;
``(B) the methods and processes by which carbon
dioxide may be safely and permanently sequestered,
including by incorporating the carbon in a commercial
product; and
``(C) requirements to account for the risk that
some fraction of the carbon dioxide intended to be
permanently sequestered may be emitted into the
atmosphere.
``(2) Existing requirements.--In issuing regulations
described in this subsection, the Administrator shall
incorporate to the extent practicable any existing requirements
for the sequestration of carbon dioxide, including any
requirements promulgated under section 45Q of the Internal
Revenue Code of 1986.
``(d) Consultation.--The Administrator shall consult with the
Secretary of the Interior and the Secretary of Agriculture in issuing
regulations to measure, monitor, and verify any natural sequestration
activities carried out using a grant awarded under the Offset Program.
``SEC. 709. PENALTY FOR NONCOMPLIANCE.
``(a) Civil Penalty.--
``(1) In general.--The owner or operator of a Covered
Facility that fails to submit an emission allowance as required
by section 702(a) shall be liable for payment to the
Administrator of a penalty in the amount described in paragraph
(2).
``(2) Amount.--The amount of a penalty described in this
paragraph shall be equal to the product of--
``(A) three times the highest price or monetary
value during the previous calendar year (as indicated
by the emission allowance tracking system established
pursuant to section 707) for the sale, exchange, or
transfer of an emission allowance; and
``(B) the number of emission allowances that the
owner or operator of the Covered Facility failed to
submit as described in paragraph (1).
``(3) Timing.--A penalty required under this subsection
shall be immediately due to the Administrator, without demand
by the Administrator.
``(4) No effect on liability.--A penalty due by the owner
or operator of a Covered Facility under this subsection shall
not diminish the liability of the owner or operator for any
fine, penalty, or assessment against the owner or operator for
the same violation under any other provision of this Act or any
other law.
``(b) Replacement Emission Allowances.--The owner or operator of a
Covered Facility that fails to submit one or more emission allowances
as required under section 702(a) for a calendar year shall submit a
number of emission allowances that is equal to sum of the number the
owner or operator failed to submit and the emission allowances
otherwise required to be submitted by the April 1 deadline of the
second succeeding calendar year.
``SEC. 710. COMPTROLLER GENERAL REPORTS.
``Not later than January 1, 2029, and every 2 years thereafter, the
Comptroller General of the United States shall submit to Congress a
report on the results of implementation of this title, which shall
include--
``(1) a comprehensive evaluation of--
``(A) the efficiency, transparency, and integrity
of the distribution of emission allowances under
section 703 and section 705;
``(B) the cost-effectiveness of this title in
reducing greenhouse gas emissions; and
``(C) the effectiveness of this title in--
``(i) creating and preserving jobs;
``(ii) ensuring a manageable transition to
a zero-emission economy for working families
and workers;
``(iii) driving the innovation and
deployment of zero-emission technologies; and
``(iv) maintaining an orderly and
competitive market for selling, exchanging,
transferring, and submitting emission
allowances; and
``(2) recommendations, if any, for legislative, regulatory,
or administrative changes with respect to this title to improve
its effectiveness.
``SEC. 711. FINAL REGULATIONS.
``The Administrator shall issue final regulations to carry out this
title not later than 24 months after the date of enactment of this
title.
``SEC. 712. SAVINGS PROVISIONS.
``Nothing in this title shall be interpreted to affect the
requirements of any other title of this Act.''.
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