S.Amdt. 4949

1. 1

   Change 1: Rewrites page 26, lines 23–25

   ReplacesPrinted page

   Removes page 26, lines 23–25 of the printed bill. See that page

   Inserted: (B) Exclusions.--The term "manufacture" does not include--

   Inserted: (i) the creation of a greenhouse gas through anaerobic decomposition; or

   Inserted: (ii) the creation of a greenhouse gas from manure or enteric fermentation.

   Original wording

   On page 26, strike lines 23 through 25 and insert the following:

2. 2

   Change 2: Inserts “, destroys, or avoids” after “reduces”

   InsertsPage 28, line 4Printed page

   …reduces[inserted: , destroys, or avoids]…

   Original wording

   On page 28, line 4, insert “, destroys, or avoids” after “reduces”.

3. 3

   Change 3: Strikes “from sources or sinks”

   StrikesPage 28, line 6Printed page

   Struck: from sources or sinks

   Original wording

   On page 28, line 6, strike “from sources or sinks”.

4. 4

   Change 4: Inserts new text on page 28, between lines 8 and 9

   InsertsPrinted page

   Inserted: (__) Offset project representative.--The term "offset project representative" means an individual or entity designated as an offset project representative in a petition for an offset project submitted under section 304.

   Original wording

   On page 28, between lines 8 and 9, insert the following:

5. 5

   Change 5: Rewrites page 77, line 9 through page 121, line 15

   ReplacesPrinted page

   Removes page 77, line 9 through page 121, line 15 of the printed bill. See that page

   Inserted: SEC. 302. ESTABLISHMENT OF A DOMESTIC OFFSET PROGRAM.

   Inserted: (a) Regulations.--Not later than 2 years after the date of enactment of this Act, the Administrator and the Secretary of Agriculture shall promulgate regulations authorizing the certification and issuance of offset allowances in accordance with this subtitle

   Inserted: (b) Use.--The regulations under subsection (a) shall provide that, beginning with calendar year 2012, owners and operators of covered entities may satisfy the allowance submission requirements of the owners and operators under section 202 for each calendar year by submitting a carbon dioxide equivalent quantity of domestic offset allowances of up to 1,000,000,000 tons.

   Inserted: (c) Carryover.--If the carbon dioxide equivalent quantity of domestic offset allowances submitted for a calendar year pursuant to this subtitle is less than 1,000,000,000 tons, notwithstanding subsection (b), the carbon dioxide equivalent quantity of domestic offset allowances that may be submitted by covered entities under this subtitle for the subsequent calendar year shall not exceed the sum of--

   Inserted: (1) 1,000,000,000 tons; and

   Inserted: (2) the difference between--

   Inserted: (A) 1,000,000,000 tons; and

   Inserted: (B) the carbon dioxide equivalent tons of offset allowances and emission allowances submitted by covered entities for the preceding calendar year under this subtitle.

   Inserted: (d) Reduction.--Beginning in calendar year 2030, the Administrator may reduce the quantity of tons of carbon dioxide equivalents available for offsets under this section except that the quantity may not be reduced to less than 85 percent of the quantity of tons specified in subsection (b).

   Inserted: (e) Exchange for Offsets From State and Regional Regulatory Programs.--

   Inserted: (1) In general.--Except as provided in paragraph (2), the Administrator shall issue offset allowances for projects that address emissions of greenhouse gas that would otherwise not have been covered under the limitations on emissions of greenhouse gases under this Act and meet the requirements of this subtitle for offset allowances--

   Inserted: (A) issued under a State or regional greenhouse gas regulatory program; or

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   Inserted: (B) are registered under or meet the standards of--

   Inserted: (i) the Climate Registry;

   Inserted: (ii) the California Climate Action Registry;

   Inserted: (iii) the Climate Action Reserve;

   Inserted: (iv) the GHG Registry;

   Inserted: (v) the Chicago Climate Exchange;

   Inserted: (vi) the GHG Clean Projects Registry; or

   Inserted: (vii) any other Federal or private reporting program.

   Inserted: (2) Nonapplicability.--This subsection shall not apply to offset allowances that have expired or been retired or canceled under a program described in paragraph (1).

   Inserted: (f) Requirements.--The regulations promulgated pursuant to subsection (a) shall--

   Inserted: (1) authorize the issuance and certification of offset allowances for greenhouse gas emission reductions, destruction, or avoidance, or increases in sequestration relative to the offset project baseline; for offset projects approved pursuant to section 304 in categories on the list issued under section 303;

   Inserted: (2) ensure that those offsets represent real, enforceable, verifiable, additional, and permanent reductions in greenhouse gas emissions or increases in sequestration;

   Inserted: (3) require that the offset project representative for an offset project establish the project baseline and register emission reductions with the offset Registry;

   Inserted: (4) specify the types of offset projects eligible to generate offset allowances, in accordance with section 303;

   Inserted: (5) establish procedures to monitor, quantify, and discount reductions in greenhouse gas emissions or increases in biological sequestration, in accordance with section 303;

   Inserted: (6) establish procedures for project initiation and approval, in accordance with section 304;

   Inserted: (7) establish procedures for third-party verification, registration, and issuance of offset allowances, in accordance with section 305;

   Inserted: (8) ensure permanence of offsets by mitigating and compensating for reversals, in accordance with section 306; and

   Inserted: (9) assign a unique serial number to each offset allowance issued under this section.

   Inserted: (g) Offset Allowances Rewarded.--The Administrator shall issue to the offset project representative offset allowances for qualifying emission reductions, destruction, or avoidance and biological sequestrations from an offset project that satisfies the applicable requirements of this subtitle.

   Inserted: (h) Transferability.--An offset allowance generated pursuant to this subtitle may be sold, traded, or transferred, on the condition that the offset allowance has not expired or been retired or canceled.

   Inserted: SEC. 303. ELIGIBLE OFFSET PROJECT TYPES.

   Inserted: (a) In General.--An offset allowance from agricultural, forestry, or other land use-related projects shall be provided only for achieving an offset of 1 or more greenhouse gases by a method other than a reduction of combustion of greenhouse gas-emitting fuel.

   Inserted: (b) Types of Eligible Offset Projects.--

   Inserted: (1) List of eligible agricultural and forestry offset project types.--

   Inserted: (A) Types.--The Secretary of Agriculture, in consultation with the Administrator, shall maintain a list of types of agricultural and forestry offset projects eligible to generate offset allowances under this subtitle, which list shall include--

   Inserted: (i) agricultural, grassland, and rangeland sequestration and management practices, including--

   Inserted: (I) altered tillage practices;

   Inserted: (II) winter cover cropping, continuous cropping, and other means to increase biomass returned to soil in lieu of planting followed by fallowing;

   Inserted: (III) conversion of cropland to rangeland or grassland, on the condition that the land has been in nonforest use for at least 10 years before the date of initiation of the project;

   Inserted: (IV) reduction of nitrogen fertilizer use or increase in nitrogen use efficiency;

   Inserted: (V) reduction in the frequency and duration on flooding of rice paddies;

   Inserted: (VI) reduction in carbon emissions from organic soils;

   Inserted: (VII) reduction in greenhouse gas emissions from manure and effluent; and

   Inserted: (VIII) reduction in greenhouse gas emissions due to changes in animal management practices, including dietary modifications;

   Inserted: (ii) changes in carbon stocks attributed to land use change and forestry activities, including--

   Inserted: (I) afforestation or reforestation of acreage not forested as of October 18, 2007; and

   Inserted: (II) forest management resulting in an increase in forest carbon stores;

   Inserted: (III) management of peatland or wetland; and

   Inserted: (IV) conservation of grassland and forested land;

   Inserted: (iii) manure management and disposal, including--

   Inserted: (I) waste aeration; and

   Inserted: (II) biogas capture and combustion; and

   Inserted: (iv) any combination of any of the offset project types described in this subparagraph.

   Inserted: (B) Additions to the list of eligible agricultural and forestry offset project types.--

   Inserted: (i) In general.--Not later than 2 years after the date of enactment of this Act and every 2 years thereafter, the Secretary of Agriculture, in consultation with the Administrator, after public notice and opportunity for comment, shall add types of offset projects to the list provided under subparagraph (A) if those types of projects meet standards for environmental integrity that are consistent with the purposes of this Act.

   Inserted: (ii) Additional types.--The Secretary of Agriculture, in consultation with the Administrator, shall also consider petitions to add types of offset projects to the list provided under subparagraph (A) if those types of projects meet standards for environmental integrity consistent with the purposes of this Act.

   Inserted: (c) List of Other Eligible Offset Project Types.--

   Inserted: (1) Types.--The Administrator shall maintain a list of types of offset projects not related to agriculture and forestry that are eligible to generate offset allowances under this subtitle, which list shall include--

   Inserted: (A) the capture or reduction of fugitive greenhouse gas emissions for which no covered facility is required under section 202(a) to submit any emission allowances, offset allowances, or international emission allowances;

   Inserted: (B) methane capture or combustion at nonagricultural facilities, including landfills, waste-to-energy facilities, and coal mines;

   Inserted: (C) reduction, destruction, or avoidance of sulfur hexafluoride emissions from sources of the emissions, including electrical transformation and distribution equipment;

   Inserted: (D) the capture and geological sequestration of greenhouse gas emissions that would not otherwise have been covered under the limitation on the emission of greenhouse gases under this Act;

   Inserted: (E) any other category proposed to the Administrator by petition; and

   Inserted: (F) any combination of any of the offset project types described in this paragraph.

   Inserted: (2) Additions to the list of eligible offset projects not related to agriculture and forestry.--

   Inserted: (A) In general.--Not later than 2 years after the date of enactment of this Act and every 2 years thereafter, the Administrator, after public notice and opportunity for comment, shall add types of offset projects to the list provided under paragraph (1) if those types of projects meet standards for environmental integrity that are consistent with the purposes of this Act.

   Inserted: (B) Additional types.--The Administrator shall also consider petitions to add types of offset projects to the list provided under subparagraph (A) if those types of projects meet standards for environmental integrity consistent with the purposes of this Act.

   Inserted: (d) Adoption of Common Procedures.--

   Inserted: (1) In general.--The program established under this section shall include the use of a separate set of procedures for rapidly approving and issuing allowances to types of projects listed under subsection (b) or (c), to the maximum extent practicable, if the Administrator and the Secretary of Agriculture for types of agricultural and forestry offset projects, determines that--

   Inserted: (A) there are broadly accepted standards or methodologies for quantifying and verifying the long-term greenhouse gas emission and mitigation benefits of the projects; and

   Inserted: (B) the procedures meet the requirements of this subtitle.

   Inserted: (2) Categories of projects.--The procedures described in paragraph (1) shall apply to--

   Inserted: (A) methane capture and combustion at nonagricultural facilities, including landfills and coal mines;

   Inserted: (B) manure management and disposal, including waste aeration and biogas capture and combustion;

   Inserted: (C) reduction of sulfur hexafluoride emissions from sources of the emissions, including electrical transformation and distribution equipment;

   Inserted: (D) such other categories of projects as the Administrator, in consultation with the Secretary of Agriculture for types of agricultural and forestry offset projects, may specify by regulation, subject to public notice and comment; and

   Inserted: (E) afforestation or reforestation of acreage not forested as of October 18, 2007, if the afforestation or reforestation uses native plant species.

   Inserted: (e) Requirements for Offset Methodologies.--

   Inserted: (1) Issuance.--Not later than three 2 years after the date of enactment of this Act, after public notice and opportunity for comment--

   Inserted: (A) the Secretary of Agriculture shall issue a methodology for each category listed pursuant to subsection (b); and

   Inserted: (B) the Administrator shall issue a methodology for each category listed pursuant to subsection (c).

   Inserted: (2) Specific requirements.--The methodology for each category issued under paragraph (1) shall--

   Inserted: (A) specify requirements for--

   Inserted: (i) determining additional emission reductions, destruction, avoidance, or sequestrations from a project;

   Inserted: (ii) accounting for emission leakage associated with an offset project;

   Inserted: (iii) accounting for a reversal, and managing for the risk of reversal, from an offset project involving biological sequestration; and

   Inserted: (iv) monitoring, verifying, and reporting the operation of an offset project;

   Inserted: (B) in the case of an agricultural and forestry offset project, take into account methodologies developed under section 1245 of the Food Security Act of 1985;

   Inserted: (C) include--

   Inserted: (i) a procedure for determining that the emission reductions, destruction, avoidance, or sequestrations from an offset project are not double-counted under any other program;

   Inserted: (ii) a procedure for delineating the boundaries of an offset project and determining the extent, if any, of emissions leakage from the offset project, based on scientifically sound methods, as determined by the Administrator, in consultation with the Secretary of Agriculture for agricultural and forestry offset projects;

   Inserted: (iii) a description of scientifically sound methods, as determined by the Administrator, in consultation with the Secretary of Agriculture for agricultural and forestry offset projects, for use in monitoring, measuring, and quantifying changes in emissions or sequestrations resulting from an offset project, including--

   Inserted: (I) a method for use in quantifying the uncertainty in those measurements; and

   Inserted: (II) a description of site-specific data that will be used in that monitoring, measurement, and quantification;

   Inserted: (iv) a procedure for use in establishing the baseline for an offset project that ensures that offset allowances will be issued only for emission reduction, destruction, avoidance, or sequestrations that are additional;

   Inserted: (v)(I) a threshold of uncertainty in the quantification of emission reductions, destruction, avoidance, or sequestrations and for baseline emission levels above which an offset project shall not be eligible to receive offset allowances; and

   Inserted: (II) a procedure by which an offset project representative may petition for different uncertainty factors if the offset project representative demonstrates to the Administrator, in consultation with the Secretary of Agriculture for agricultural and forestry offset projects, that the measurement methods used by the offset project have less uncertainty than assumed under the default methodology;

   Inserted: (vi) clear and objective tests specified by the Administrator, in consultation with the Secretary of Agriculture for agricultural and forestry offset projects, that are sufficient to ensure that an offset project--

   Inserted: (I) will be eligible to generate offset allowances only if, in the judgment of the Administrator and the Secretary of Agriculture, the project is additional; and

   Inserted: (II) is not required by existing government regulations, as determined by the Administrator and the Secretary of Agriculture;

   Inserted: (vii) a procedure to estimate leakage and ensure that the issuance of offset allowances is reduced an amount equivalent to the quantity of that leakage;

   Inserted: (viii) a procedure for use in--

   Inserted: (I) determining whether the quantity of carbon sequestered on or in land where a project is carried out was significantly changed during the 10-year period prior to initiation of the project; and

   Inserted: (II) excluding the offset project from receiving allowances under this subtitle, or adjusting the baseline of the offset project accordingly; and

   Inserted: (ix) a protocol for use in reporting emissions reductions, destruction, avoidance, or sequestrations (and any reversals) at least annually for the duration of the crediting period of the offset project pursuant to section 305(b).

   Inserted: (3) Revision.--

   Inserted: (A) Revision by the secretary of agriculture.--The Secretary of Agriculture shall revise each methodology issued under paragraph (1)(A), after public notice and opportunity for comment, not more once than every 10 years.

   Inserted: (B) Revision by the administrator.--The Administrator shall revise each methodology issued under paragraph (1)(B), after public notice and opportunity for comment, no more than once every 10 years.

   Inserted: (4) Project conformity.--

   Inserted: (A) In general.--If an offset project is approved pursuant to section 304 under a methodology that subsequently is revised under paragraph (3), the project shall remain subject to the prior methodology for the duration of the crediting period of the project pursuant to section 305(b).

   Inserted: (B) New crediting period.--An offset project described in subparagraph (A) may not be approved for a new crediting period unless the offset project representative demonstrates to the Administrator that the offset project is in conformity with a methodology that is in effect as of the date on which the petition for the offset project is filed.

   Inserted: (f) Technologies.--

   Inserted: (1) In general.--The Administrator, in consultation with the Secretary of Agriculture for agricultural and forestry offset projects, may issue, after notice and comment, a list of technologies and associated performance benchmarks the achievement of which the Administrator has determined shall be considered to be additional in specific project applications.

   Inserted: (2) Period of validity.--A determination of the Administrator with respect to paragraph (1) shall be valid for not more than 10 years after the date of the determination.

   Inserted: (g) Methodology Testing.--The Administrator and the Secretary of Agriculture may not issue a methodology under this section until the Administrator or the Secretary of Agriculture, as applicable, determines that--

   Inserted: (1) the methodology has been tested by 3 independent expert teams on at least 3 different offset projects to which that methodology would apply; and

   Inserted: (2) the emission reductions, destruction, avoidance, or sequestrations estimated by the expert teams for the same offset project do not differ by more than 10 percent.

   Inserted: SEC. 304. PROJECT INITIATION AND APPROVAL.

   Inserted: (a) Project Approval.--An offset project representative--

   Inserted: (1) may submit a petition for offset project approval at any time following the effective date of regulations promulgated under section 302; but

   Inserted: (2) may not use or distribute offset allowances until such approval is received and until after the emission reduction, destruction, avoidance, or sequestrations supporting the offset allowances have actually occurred.

   Inserted: (b) Petition Process.--A project petition shall consist of--

   Inserted: (1) a copy of the monitoring and quantification plan prepared for the offset project, as described in subsection (d);

   Inserted: (2) in the case of an offset project involving biological sequestration, a greenhouse gas initiation certification, as described under subsection (f);

   Inserted: (3) a designation of the individual or entity that shall be the offset project representative for the offset project;

   Inserted: (4) a monitoring and quantification plan from a third party verifier; and

   Inserted: (5) subject to this subtitle, any other information identified by the Administrator in the regulations promulgated under section 302 as being necessary to meet the objectives of this subtitle.

   Inserted: (c) Approval and Notification.--

   Inserted: (1) In general.--Not later than 120 days after the date on which the Administrator receives a complete petition under subsection (b), the Administrator, in conjunction with the Secretary of Agriculture, shall--

   Inserted: (A) determine whether the monitoring and quantification plan satisfies the applicable requirements of this subtitle;

   Inserted: (B) determine whether any greenhouse gas initiation certification indicates a significant deviation in accordance with subsection (f)(3); and

   Inserted: (C) notify the offset project representative of the determinations under subparagraphs (A) and (B).

   Inserted: (2) Appeal.--The Administrator shall establish mechanisms for appeal and review of determinations made under this subsection.

   Inserted: (d) Monitoring and Quantification.--

   Inserted: (1) In general.--An offset project representative shall make use of the standardized tools and methods described in this section to monitor, quantify, and discount reductions, destruction, or avoidance in greenhouse gas emissions or increases in sequestration.

   Inserted: (2) Monitoring and quantification plan.--A monitoring and quantification plan shall be used to monitor, quantify, and discount reductions, destruction, or avoidance of greenhouse gas emissions or increases in sequestration as described by this subsection.

   Inserted: (3) Plan completion and retention.--A monitoring and quantification plan shall be--

   Inserted: (A) completed for all offset projects prior to offset project initiation; and

   Inserted: (B) retained by the offset project representative for the duration of the offset project.

   Inserted: (4) Plan requirements.--Subject to section 302, the Administrator and the Secretary of Agriculture shall specify the required components of a monitoring and quantification plan, including--

   Inserted: (A) a description of the offset project, including project type;

   Inserted: (B) a determination of accounting periods;

   Inserted: (C) an assignment of reporting responsibility to the offset project representative;

   Inserted: (D) the contents and timing of public reports, including summaries of the original data, as well as the results of any analyses;

   Inserted: (E) a delineation of project boundaries, based on acceptable methods and formats;

   Inserted: (F) a description of which of the monitoring and quantification tools developed under subsection (g) are to be used to monitor and quantify changes in greenhouse gas fluxes or carbon stocks associated with a project;

   Inserted: (G) a description of which of the standardized methods developed under subsection (h) to be used to determine additionality, estimate the baseline carbon, and discount for leakage;

   Inserted: (H) what site-specific data, if any, will be used in monitoring and quantification;

   Inserted: (I) a description of procedures for use in managing and storing data, including quality-control standards and methods, such as redundancy in case record are lost;

   Inserted: (J) subject to the requirements of this subtitle, any other information identified by the Administrator and the Secretary of Agriculture as being necessary to meet the objectives of this subtitle; and

   Inserted: (K) in the case of an offset project involving biological sequestration, a description of the risk of reversals for the project, including any way in which the proposed project may alter the risk of reversal for the project or other projects in the area.

   Inserted: (e) Third Party Validation of Monitoring and Quantification Plan.--

   Inserted: (1) Offset validation.--A validation report for an offset project shall be completed by a verifier accredited in accordance with section 305(c)(3).

   Inserted: (2) Scope of validation.--The Administrator, in conjunction with the Secretary of Agriculture, shall specify the required components of a validation report, including components covering--

   Inserted: (A) whether the information, data, and documentation contained within a monitoring and quantification plan are sufficient for the analysis required by the certified methodology;

   Inserted: (B) any errors, omissions, or disagreements with the quantification plan;

   Inserted: (C) any net emission reductions or increases in sequestration;

   Inserted: (D) any determination of additionality;

   Inserted: (E) any calculation of leakage;

   Inserted: (F) any assessment of reversal risk and required set-aside;

   Inserted: (G) if it is a sequestration project, whether the land use information is sufficient to track past land use for the required 10 year-period and if there is a significant deviation under subsection (f)(3);

   Inserted: (H) any potential conflicts of interests between a verifier and project developer; and

   Inserted: (I) any other provision that the Administrator considers to be necessary to achieve the purpose of this subtitle.

   Inserted: (f) Greenhouse Gas Initiation Certification.--

   Inserted: (1) In general.--In reviewing a petition submitted under subsection (b), the Administrator, in conjunction with the Secretary of Agriculture, shall seek to exclude each activity that undermines the integrity of the offset program established under this subtitle, such as the conversion or clearing of land, or marked change in management regime, in anticipation of offset project initiation.

   Inserted: (2) Greenhouse gas initiation certification requirements.--A greenhouse gas initiation certification developed under this subtitle shall include--

   Inserted: (A) in the case of an agricultural project--

   Inserted: (i) the estimated greenhouse gas flux or carbon stock for the offset project for each of the 4 complete calendar years preceding the effective date of the regulations promulgated under section 302; and

   Inserted: (ii) the estimated greenhouse gas flux or carbon stock for the offset project, averaged across each of the 4 calendar years preceding the effective date of the regulations promulgated under section 302.

   Inserted: (B) in the case of a forestland project, a procedure for use in determining whether the quantity of carbon sequestered on or in land, if a project was carried out, significantly changed during the 10-year period prior to initiation of the project.

   Inserted: (3) Determination of significant deviation.--Based on standards developed by the Secretary of Agriculture and the Administrator--

   Inserted: (A) each greenhouse gas initiation certification submitted pursuant to this section shall be reviewed; and

   Inserted: (B) a determination shall be made as to whether, as a result of activities or behavior inconsistent with the purposes of this title, a significant deviation exists between the average annual greenhouse gas flux or carbon stock and the greenhouse gas flux or carbon stock for a given year.

   Inserted: (4) Adjustment for projects with significant deviation.--In the case of a significant deviation, the Administrator, in conjunction with the Secretary of Agriculture, shall adjust the number of allowances awarded in order to account for the deviation.

   Inserted: (g) Development of Monitoring and Quantification Tools for Offset Projects.--

   Inserted: (1) In general.--Subject to section 302, the Administrator and the Secretary of Agriculture for agricultural and forestry offset projects, shall develop standardized tools for use in the monitoring and quantification of changes in greenhouse gas fluxes or carbon stocks for each offset project type listed under subsections (b) and (c) of section 303.

   Inserted: (2) Tool development.--The tools used to monitor and quantify changes in greenhouse gas fluxes or carbon stocks shall, for each project type, include applicable--

   Inserted: (A) statistically-sound field and remote sensing sampling methods, procedures, techniques, protocols, or programs;

   Inserted: (B) models, factors, equations, or look-up tables;

   Inserted: (C) guidelines established pursuant to section 1605(b) of the Energy Policy Act of 1992 (42 U.S.C. 13385(b)) for use in the quantification of forestry and agriculture offsets; and

   Inserted: (D) in the case of an agricultural and forestry offset project, certified protocols for technologies, instruments, and methods to use in the measurement, monitoring, and verification of emission reductions and increased sequestration, that shall--

   Inserted: (i) be developed and updated (by regulation) by the Secretary of Agriculture in conjunction with the Consortium for Agricultural Soil Mitigation of Greenhouse Gases;

   Inserted: (ii) includes scientifically-based determination of the uncertainty value to be assigned to the use of that technology, instrument, or method; and

   Inserted: (iii) be used by the Secretary of Agriculture to meet the requirements of section 303(e)(2)(C)(iii)(I) and subsection (i) of this section; and

   Inserted: (E) any other process or tool considered to be acceptable by the Administrator, in consultation with the Secretary of Agriculture for agricultural and forestry offset projects.

   Inserted: (h) Development of Accounting and Discounting Methods.--

   Inserted: (1) In general.--The Secretary of Agriculture shall--

   Inserted: (A) develop standardized methods for use in accounting for additionality and uncertainty, estimating the baseline, and discounting for leakage for each offset project type listed under sections 303(b) and (c); and

   Inserted: (B) require that leakage be subtracted from reductions, destruction, avoidance in greenhouse gas emissions or increases in sequestration attributable to a project.

   Inserted: (2) Additionality determination and baseline estimation.--The standardized methods used to determine additionality and establish baselines shall, for each project type, at a minimum--

   Inserted: (A) in the case of a biological sequestration project or agricultural emission reduction project, determine the greenhouse gas flux or enhanced carbon stock on the basis of similarity for--

   Inserted: (i) a specific time period; and

   Inserted: (ii) a specific geographic area; and

   Inserted: (B) in the case of a nonbiological sequestration project or emission reduction project, specify a selected time period.

   Inserted: (3) Leakage.--The standardized methods used to determine and discount for leakage shall, at a minimum, take into consideration--

   Inserted: (A) the scope of the offset system in terms of activities and geography covered;

   Inserted: (B) the markets relevant to the offset project;

   Inserted: (C) in the case of offset projects not involving sequestration, emission intensity per unit of production, both inside and outside of the offset project; and

   Inserted: (D) a time period sufficient in length to yield a stable leakage rate.

   Inserted: (i) Uncertainty for Agricultural and Forestry Projects.--

   Inserted: (1) In general.--The Secretary of Agriculture shall develop standardized methods for use in determining and discounting for uncertainty, if appropriate, for offset project types listed under section 303(b).

   Inserted: (2) Basis.--The standardized methods used to determine and discount for uncertainty shall be based on--

   Inserted: (A) the robustness and rigor of the methods used by an offset project representative to monitor and quantify changes in greenhouse gas fluxes or carbon stocks; and

   Inserted: (B) the robustness and rigor of methods used by an offset project representative to determine additionality and leakage.

   Inserted: (j) Acquisition of New Data and Review of Methods for Agricultural and Forestry Projects.--The Secretary of Agriculture, in collaboration with the Consortium for Agricultural Soils Mitigation of Greenhouse Gases, shall--

   Inserted: (1) establish a comprehensive field sampling program to improve the scientific bases on which the standardized tools and methods developed under this section are based; and

   Inserted: (2) review and revise the standardized tools and methods developed under this section, based on--

   Inserted: (A) validation of existing methods, protocols, procedures, techniques, factors, equations, or models;

   Inserted: (B) development of new methods, protocols, procedures, techniques, factors, equations, or models;

   Inserted: (C) increased availability of field data or other datasets; and

   Inserted: (D) any other information identified by the Secretary of Agriculture that is necessary to meet the objectives of this subtitle.

   Inserted: (k) Coordination With Other Provisions.--In determining the quantity of offset allowances to issue to an offset project, the Administrator, in conjunction with the Secretary of Agriculture, shall ensure that a project does not receive allowances under subtitle C and offset allowances for the same ton of greenhouse gases emissions reduced, destroyed, avoided, or sequestered.

   Inserted: SEC. 305. OFFSET VERIFICATION AND ISSUANCE OF ALLOWANCES.

   Inserted: (a) In General.--An offset project representative may claim offset allowances for net emission reductions or increases in sequestration annually, after accounting for any necessary discounts in accordance with section 304, by submitting a verification report for any offset project to the Administrator, in conjunction with the Secretary of Agriculture.

   Inserted: (b) Crediting Period.--The crediting period for an approved offset project shall be--

   Inserted: (1) in the case of an offset project not involving afforestation or reforestation--

   Inserted: (A) a 10-year nonrenewable period; or

   Inserted: (B) a 7-year period, which may be renewed pursuant to the procedures under section 2404 for another 7 years not more than twice; and

   Inserted: (2) in the case of an offset project involving afforestation or reforestation, a period of 30 years for the 1 or more components of the project involving afforestation or reforestation.

   Inserted: (c) Offset Verification.--

   Inserted: (1) Scope of verification.--A verification report for an offset project shall be--

   Inserted: (A) completed by a verifier accredited in accordance with paragraph (3); and

   Inserted: (B) developed taking into consideration--

   Inserted: (i) the information and methodology contained within a monitoring and quantification plan;

   Inserted: (ii) data and subsequent analysis of the offset project, including--

   Inserted: (I) quantification of net emission reductions, destruction, or avoidance, or increases in sequestration;

   Inserted: (II) calculation of leakage; and

   Inserted: (III) identification of any reversals;

   Inserted: (iii) subject to the requirements of this subtitle, any other information identified by the Administrator as being necessary to achieve the purposes of this subtitle.

   Inserted: (2) Verification report requirements.--The Administrator, in conjunction with the Secretary of Agriculture, shall specify the required components of a verification report, including--

   Inserted: (A) the quantity of offsets generated;

   Inserted: (B) the quantity of discounts applied;

   Inserted: (C) an assessment of quantitative errors or omissions (and the effect of the errors or omissions on offsets);

   Inserted: (D) any potential conflicts of interests between a verifier and an offset project representative or other project developer; and

   Inserted: (E) any other provision that the Administrator considers to be necessary to achieve the purposes of this subtitle.

   Inserted: (3) Verifier accreditation.--

   Inserted: (A) In general.--The regulations promulgated pursuant to section 302 shall establish a process and requirements for accreditation by a third-party verifier that has no conflicts of interest.

   Inserted: (B) Public accessibility.--Each verifier meeting the requirements for accreditation in accordance with this paragraph shall be listed in a publicly-accessible database, which shall be maintained and updated by the Administrator, in conjunction with the Secretary of Agriculture.

   Inserted: (d) Registration and Issuing of Offsets.--

   Inserted: (1) In general.--Not later than 90 days after the date on which the Administrator receives a verification report required under subsection (b), the Administrator shall, in conjunction with the Secretary of Agriculture--

   Inserted: (A) determine whether the offsets satisfy the applicable requirements of this subtitle; and

   Inserted: (B) notify the offset project developer of that determination.

   Inserted: (2) Affirmative determination.--In the case of an affirmative determination under paragraph (1), the Administrator shall--

   Inserted: (A) register the offset allowances in accordance with this subtitle; and

   Inserted: (B) issue the offset allowances to the offset project representative.

   Inserted: (3) Appeal and review.--The Administrator shall establish mechanisms for the appeal and review of determinations made under this subsection.

   Inserted: SEC. 306. TRACKING OF REVERSALS FOR SEQUESTRATION PROJECTS.

   Inserted: (a) Reversal Risk Factor Determination.--

   Inserted: (1) In general.--In approving a biological sequestration offset project pursuant to section 304, the Administrator, in consultation with the Secretary of Agriculture if applicable, shall determine for the project the percentage probability that the project will experience a reversal over at least a 30 year-period of time but not more than a 100 year-period, taking into account insurance standards for comparable activities in the agricultural or forestry industry, depending on the offset project type.

   Inserted: (2) Application of the reversal risk factor.--When issuing offset allowances for a biological sequestration offset project pursuant to section 305, the Administrator shall transfer the quantity of allowances the Administrator otherwise would issue to the offset project representative for that calendar year a quantity that is equal to the product obtained by multiplying--

   Inserted: (A) the percentage probability determined for the project pursuant to paragraph (1); and

   Inserted: (B) the quantity of allowances issued for the project under section 304.

   Inserted: (b) Establishment of Biological Sequestration Offset Allowance Buffer Reserve.--

   Inserted: (1) In general.--Not later than 2 years after the date of enactment of this Act, the Administrator shall establish a biological sequestration offset allowance buffer reserve.

   Inserted: (2) Transfer of offsets.--The Administrator shall convey to the buffer reserve the offset allowances that are transferred pursuant to subsection (a)(2).

   Inserted: (3) Status of offset allowances in reserve.--Offset allowances in the offset reserve may not be used to satisfy allowance submission requirements.

   Inserted: (c) Reversal Certification.--

   Inserted: (1) Required certification.--The offset project representative for a biological sequestration offset project shall be required to submit to the Administrator a reversal certification not later than 1 year after the date of the approval of the project and once every 3 years thereafter for a period of 30 years after the date of approval of the offset project.

   Inserted: (2) Requirements.--A reversal certification submitted in accordance with this subsection shall describe--

   Inserted: (A) whether any unmitigated reversal relating to the offset project has occurred during the year preceding the year for which the certification is submitted;

   Inserted: (B) the quantity of each unmitigated reversal; and

   Inserted: (C) whether the unmitigated reversal was intentional or unintentional.

   Inserted: (3) Failure to provide certification.--The Administrator shall treat the failure of an offset project representative to provide a required certification pursuant to this subsection as an intentional reversal of the entire offset project under subsection (d)(3).

   Inserted: (d) Use of Offset Allowance Reserve.--

   Inserted: (1) Annual reversal review.--The Administrator, in conjunction with the Secretary of Agriculture, shall determine annually whether--

   Inserted: (A) any offset projects have experienced a reversal; and

   Inserted: (B) reversals that have occurred were intentional or unintentional, including through auditing of certifications provided pursuant to subsection (c).

   Inserted: (2) Unintentional reversals.--If the Administrator, in conjunction with the Secretary of Agriculture, determines that an unintentional reversal has occurred with respect to an offset project, the Administrator shall cancel a quantity of offset allowances in the biological sequestration offset allowance buffer reserve corresponding to the quantity of the reversal.

   Inserted: (3) Excess reversals.--If the quantity of a reversal exceeds the quantity of allowances in the biological sequestration offset allowance buffer reserve, the offset project representative shall compensate the buffer reserve by submitting a quantity of offset allowances or emissions allowances equal to the difference between--

   Inserted: (A) the quantity of the reversal; and

   Inserted: (B) the quantity of allowances in the buffer reserve.

   Inserted: (e) Intentional Reversals.--If the Administrator, in conjunction with the Secretary of Agriculture, determines that an intentional reversal has occurred with respect to an offset project, the Administrator shall require the relevant offset project representative to submit to the buffer reserve a quantity of offset allowances or emission allowances equal to the quantity of the reversal.

   Inserted: (f) Review of Buffer Reserve.--

   Inserted: (1) In general.--Not later than 5 years after date of enactment of this Act and every 5 years thereafter, the Administrator shall assess the adequacy of the content of offset allowances in the buffer reserve in light of the actual experience of reversals.

   Inserted: (2) Adjustment.--On the basis of the review conducted under paragraph (1), the Administrator may adjust the reversal risk factor determinations implemented under subsection (a).

   Inserted: SEC. 307. EXAMINATIONS.

   Inserted: (a) Regulations.--The regulations promulgated pursuant to section 302 shall govern the examination and auditing of offset allowances.

   Inserted: (b) Requirements.--The governing regulations described in subsection (a) shall specifically consider--

   Inserted: (1) principles for initiating and conducting examinations;

   Inserted: (2) the type or scope of examinations, including--

   Inserted: (A) reporting and recordkeeping; and

   Inserted: (B) site review or visitation;

   Inserted: (3) the rights and privileges of an examined party; and

   Inserted: (4) the establishment of an appeals process.

   Inserted: SEC. 308. TIMING AND THE PROVISION OF OFFSET ALLOWANCES.

   Inserted: An offset project that commences operation on or after the effective date of the governing rules described in section 307(a) shall be eligible to generate offset allowances under this subtitle, and receive emission allowances under the program established pursuant to title VII, if the offset project meets the other applicable requirements of this subtitle.

   Inserted: SEC. 309. OFFSET REGISTRY.

   Inserted: In addition to the requirements established by section 304, an offset allowance registered under this subtitle shall be accompanied in the Registry by--

   Inserted: (1) a verification report submitted pursuant to section 305(a);

   Inserted: (2) if the offset project involves biological sequestration, a reversal certification submitted pursuant to section 306(b); and

   Inserted: (3) subject to the requirements of this subtitle, any other information identified by the Administrator, in conjunction with the Secretary of Agriculture, as being necessary to achieve the purposes of this subtitle.

   Inserted: SEC. 310. ENVIRONMENTAL CONSIDERATIONS.

   Inserted: (a) Coordination to Minimize Negative Effects.--In promulgating regulations under this subtitle, the Administrator and the Secretary of Agriculture shall act (including by rejecting projects, if necessary) to avoid or minimize, to the maximum extent practicable, adverse effects on human health or the environment resulting from the implementation of offset projects under this subtitle.

   Inserted: (b) Report on Positive Effects.--Not later than 2 years after the date of enactment of this Act, the Administrator, in conjunction with the Secretary of Agriculture, shall submit to Congress a report detailing--

   Inserted: (1) the incentives, programs, or policies capable of fostering improvements to human health or the environment in conjunction with the implementation of offset projects under this subtitle; and

   Inserted: (2) the cost of those incentives, programs, or policies.

   Inserted: (c) Coordination to Enhance Environmental Benefits.--In promulgating regulations under this subtitle, the Administrator and the Secretary of Agriculture, in conjunction with the Secretary of Interior, shall--

   Inserted: (1) act to enhance and increase the adaptive capability of natural systems and resilience of those systems to climate change, including through the support of biodiversity, native species, and land management practices that foster natural ecosystem conditions; and

   Inserted: (2) coordinate actions taken under this paragraph, to the maximum extent practicable, with existing programs that have overlapping outcomes to maximize environmental benefits.

   Inserted: (d) Use of Native Plant Species in Offset Projects.--Not later than 18 months after the date of enactment of this Act, the Secretary of Agriculture shall promulgate regulations for the selection, use, and storage of native and nonnative plant materials--

   Inserted: (1) to ensure native plant materials are given primary consideration, in accordance with applicable Department of Agriculture guidance for use of native plant materials;

   Inserted: (2) to prohibit the use of Federal- or State-designated noxious weeds; and

   Inserted: (3) to prohibit the use of a species listed by a regional or State invasive plant council within the applicable region or State.

   Inserted: SEC. 311. PROGRAM REVIEW.

   Inserted: Not later than 5 years after the date of enactment of this Act, and periodically thereafter, the Administrator and the Secretary of Agriculture shall review and revise, as necessary to achieve the purposes of this Act, the regulations promulgated by each of the Administrator and the Secretary under this subtitle.

   Inserted: Subtitle B--Offsets and Emission Allowances From Other Countries SEC. 321. PRESIDENTIAL RULEMAKING.

   Inserted: (a) In General.--Not later than 2 years after the date of enactment of this Act, the President, in conjunction with the Administrator and the Secretary of State, shall promulgate regulations approving the use of offset allowances and emission allowances from other countries under this subtitle.

   Inserted: (b) Use.--The regulations under subsection (a) shall provide that, beginning with calendar year 2012, owners and operators of covered entities may satisfy the allowance submission requirements of the owners and operators under section 202 for a calendar year by submitting a carbon dioxide equivalent quantity of offset and emission allowances of up to 1,000,000,000 tons.

   Inserted: (c) Carryover.--If the sum of the carbon dioxide equivalent quantity of offset allowances and emission allowances submitted for a calendar year pursuant to this subtitle is less than 1,000,000,000 tons, notwithstanding subsection (b), the carbon dioxide equivalent quantity of offset allowances and emissions allowances that may be submitted by covered entities under this subtitle for the subsequent calendar year shall not exceed the sum of--

   Inserted: (1) 1,000,000,000 tons; and

   Inserted: (2) the difference between--

   Inserted: (A) 1,000,000,000 tons; and

   Inserted: (B) the carbon dioxide equivalent quantity of offset allowances and emission allowances submitted by covered entities for the preceding calendar year under this subtitle.

   Inserted: (d) Reduction.--Beginning in calendar year 2030, the Administrator may reduce the quantity of tons of carbon dioxide equivalents available for offsets under this section except that the quantity may not be reduced to less than 85 percent of the quantity of tons specified in subsection (b).

   Inserted: (e) Limitation of Offsets From the Clean Development Mechanism.--Notwithstanding any other provision of this Act, the owner or operator of a covered entity may satisfy not more than 5 percent of the total allowance submission requirement of the covered entity under section 202 for a calendar year by submitting offset allowances from projects or other activities registered under the Clean Development Mechanism of the United Nations Framework Convention on Climate Change, done at New York on May 9, 1992.

   Inserted: (f) Other Requirements.--The regulations promulgated under this subtitle shall--

   Inserted: (1) ensure the development and continued health of a robust market for domestic offsets; and

   Inserted: (2) take into consideration--

   Inserted: (A) protocols adopted in accordance with the United Nations Framework Convention on Climate Change, done at New York on May 9, 1992, including the Clean Development Mechanism established under that Convention;

   Inserted: (B) the continuing international negotiations under the United Nations Framework Convention on Climate Change, done at New York on May 9, 1992;

   Inserted: (C) the geographic distribution of offset projects;

   Inserted: (D) how the regulations can be designed to promote the adoption of emissions control policies by countries that do not have mandatory absolute tonnage limits in place as of the date of enactment of this Act;

   Inserted: (E) how the regulations can be designed to promote international offset activities in the economic interest of the United States, as evidenced by contributions to employment in the United States; and

   Inserted: (F) the benefits of ensuring that covered entities have certainty about and access to international offset allowances and emission allowances as promptly as practicable after the date of enactment of this Act and an ongoing basis thereafter.

   Inserted: (g) Presidential Review in 2030.--During calendar year 2030, the President shall submit to Congress a report that--

   Inserted: (1) analyzes the appropriateness of the 1,000,000,000-ton limitation on use of offset allowances and emission allowances under this subtitle; and

   Inserted: (2) provides recommendations as to whether and how to adjust the limitation.

   Inserted: SEC. 322. OFFSET ALLOWANCES ORIGINATING FROM PROJECTS OR OTHER ACTIVITIES IN OTHER COUNTRIES.

   Inserted: (a) Regulations.--Not later than 2 years after the date of enactment of this Act, the President, in conjunction with the Administrator and the Secretary of State, shall promulgate regulations establishing a system for registering and issuing offset allowances for projects or other activities that reduce, destroy, or avoid greenhouse gas emissions or increase sequestration of carbon dioxide in countries other than the United States.

   Inserted: (b) Requirements.--The regulations promulgated pursuant to subsection (a) shall ensure that emission reductions represented by the allowances are real, additional, permanent, verifiable, and enforceable.

   Inserted: (c) Entity Certification.--The owner or operator of a covered entity that submits an offset allowance issued pursuant to this section shall certify that the allowance has not been retired from use in the registry of the applicable foreign country.

   Inserted: (d) Exclusion.--Notwithstanding any other provision of this Act, activities that receive allowances under section 323 or 324 shall not be eligible to receive offset allowances under this section.

   Inserted: SEC. 323. OFFSET ALLOWANCES FOR INTERNATIONAL FOREST CARBON ACTIVITIES.

   Inserted: (a) Regulations.--Not later than 2 years after the date of enactment of this Act, the Administrator, in consultation with the Secretary of the Interior, the Secretary of State, and the Secretary of Agriculture, shall promulgate regulations (including quality and eligibility requirements) for the use of offset allowances for international forest carbon activities.

   Inserted: (b) Quality and Eligibility Requirements.--The regulations promulgated pursuant to subsection (a) shall require that, in order to be approved for use under this section, offset allowances for an international forest carbon activity shall meet such quality and eligibility requirements as the Administrator may establish, including a requirement that--

   Inserted: (1) the activity shall be designed, carried out, and managed--

   Inserted: (A) in accordance with widely-accepted, environmentally sustainable forestry practices;

   Inserted: (B) to promote native species and conservation or restoration of native forests, if practicable, and to avoid the introduction of invasive nonnative species;

   Inserted: (C) in a manner that is supportive of the internationally-recognized rights of indigenous and other forest-dependent people living in the affected areas; and

   Inserted: (D) in a manner that enhances the capability, if consistent with the applicable laws in the country involved, of local communities to exercise the right of free prior informed consent regarding projects or other activities; and

   Inserted: (2) the emission reductions or sequestrations are real, permanent, additional, verifiable, and enforceable, with reliable measuring and monitoring and appropriate accounting for leakage.

   Inserted: (c) National Level Activities.--

   Inserted: (1) In general.--The Administrator, in consultation with the Secretary of State, shall identify and periodically update a list of the names of countries that have--

   Inserted: (A) demonstrated the capacity to participate in international forest carbon activities at a national level, including--

   Inserted: (i) sufficient historical data on changes in national forest carbon stocks;

   Inserted: (ii) the technical capacity to monitor and measure forest carbon fluxes with an acceptable level of uncertainty; and

   Inserted: (iii) the institutional capacity to reduce emissions from deforestation and degradation;

   Inserted: (B) capped greenhouse gas emissions or otherwise established a credible national baseline or emission reference baseline;

   Inserted: (C) achieved national-level reductions of deforestation and degradation below a historical reference baseline, taking into consideration the average annual deforestation and degradation rates of the country during a period of at least 5 years;

   Inserted: (D) implemented an emission reduction program for the forest sector; and

   Inserted: (E) demonstrated those reductions using remote sensing technology, taking into consideration relevant international standards.

   Inserted: (2) Periodic review of national level reductions in deforestation and degradation.--The Administrator, in consultation with the Secretary of State, shall periodically review and update the list of the names of countries included under paragraph (1).

   Inserted: (3) Crediting and additionality.--A verified reduction in greenhouse gas emissions from deforestation and forest degradation under a cap or resulting from a nationwide emissions reference scenario described in paragraph (1)(B) shall be--

   Inserted: (A) eligible for offset allowances; and

   Inserted: (B) considered to satisfy the additionality criterion.

   Inserted: (d) Subnational Level Activities.--With respect to foreign countries other than the foreign countries described in subsection (c), the Administrator--

   Inserted: (1) shall recognize project-scale international forest carbon activities as eligible for offset allowances, subject to the quality criteria for forest carbon activities described in subsection (b); and

   Inserted: (2) is encouraged to identify other incentives, including economic and market-based incentives, to encourage developing countries with largely intact native forests to protect those forests.

   Inserted: (e) Other International Forest Carbon Activities.--An international forest carbon activity other than a reduction in deforestation or forest degradation shall be eligible for offset allowances under this section, subject to the eligibility requirements and quality criteria for forest carbon activities described in subsection (a) or other regulations promulgated pursuant to this Act.

   Inserted: (f) Discount.--

   Inserted: (1) Initial discount.--If, after the date that is 10 years after the date of enactment of this Act, the Administrator determines that a foreign country that, in the aggregate, generates greenhouse gas emissions accounting for more than 0.5 percent of global greenhouse gas emissions has not capped those emissions, established an emissions reference scenario based on historical data, or otherwise reduced total forest emissions of that foreign country, the Administrator shall apply a discount to distributions of offset allowances to that country under this section.

   Inserted: (2) Subsequent discount.--If, after the date that is 15 years after the date of enactment of this Act, the Administrator determines that a foreign country that, in the aggregate, generates greenhouse gas emissions accounting for more than 0.5 percent of global greenhouse gas emissions has not capped those emissions, established an emissions reference scenario based on historical data, or otherwise reduced total forest emissions of that foreign country, the Administrator shall cease distributions of offset allowances to that country under this section.

   Inserted: (g) Facility Certification.--The owner or operator of a covered entity that submits an offset allowance generated under this section shall certify that the offset allowance has not been retired from use in any greenhouse gas emissions registry.

   Inserted: (h) Maximum Use.--The regulations promulgated pursuant to this section shall ensure that offset allowances are not issued for sequestration or emission reductions that have been used or will be used by any other country for compliance with a domestic or international obligation to limit or reduce greenhouse gas emissions.

   Inserted: (i) Reviews.--Not later than 3 years after the date of enactment of this Act and every 5 years thereafter, the Administrator, in consultation with the Secretary of State, shall conduct a review of the activities undertaken pursuant to this subtitle, including the effects of the activities on indigenous and forest-dependent peoples residing in affected areas.

   Inserted: SEC. 324. EMISSION ALLOWANCES FROM OTHER COUNTRIES WITH EMISSIONS CAPS.

   Inserted: (a) Rulemaking.--Not later than 2 years after the date of enactment of this Act, the President, in conjunction with the Administrator and the Secretary of State, shall promulgate regulations, taking into consideration protocols adopted in accordance with the United Nations Framework Convention on Climate Change, done at New York on May 9, 1992, approving the use in the United States of emission allowances issued by countries other than the United States.

   Inserted: (b) Requirements.--The regulations promulgated pursuant to subsection (a) shall require that, in order to be approved for use in the United States--

   Inserted: (1) an emission allowance shall have been issued by a foreign country pursuant to a governmental program that imposes mandatory absolute tonnage limits on greenhouse gas emissions from the foreign country, or 1 or more industry sectors in that country, pursuant to protocols described in subsection (a); and

   Inserted: (2) the governmental program be of comparable stringency to the program established by this Act, including comparable monitoring, compliance, and enforcement.

   Inserted: (c) Facility Certification.--The owner or operator of a covered facility that submits an international allowance under this subtitle shall certify that the allowance has not been retired from use in the registry of the applicable foreign country.

   Inserted: SEC. 325. EFFECT OF SUBTITLE.

   Inserted: Nothing in this subtitle supersedes, limits, or otherwise affects any restriction imposed by Federal law (including regulations) on any interaction between an entity located in the United States and an entity located in a foreign country.

   Inserted: Subtitle C--Agriculture and Forestry Program in the United States SEC. 331. ALLOCATION.

   Inserted: Not later than 330 days before the beginning of each of calendar years 2012 through 2050, the Administrator shall allocate to the Secretary of Agriculture, for the program established pursuant to section 332, 5 percent of the emission allowances established pursuant to section 201(a) for that calendar year.

   Inserted: SEC. 332. AGRICULTURE AND FORESTRY PROGRAM.

   Inserted: (a) In General.--Not later than 2 years after the date of enactment of this Act, the Secretary of Agriculture shall promulgate regulations establishing a program for distributing emission allowances allocated pursuant to section 331 to entities in the agriculture and forestry sectors of the United States (including entities engaged in organic farming--

   Inserted: (1) as a reward for--

   Inserted: (A) achieving reductions in greenhouse gas emissions from the operations of the entities;

   Inserted: (B) achieving increases in greenhouse gas sequestration on land owned or managed by the entities; and

   Inserted: (C) conducting pilot projects or other research regarding innovative use in measuring--

   Inserted: (i) greenhouse gas emission reductions;

   Inserted: (ii) sequestration; or

   Inserted: (iii) other benefits and associated costs of the pilot projects;

   Inserted: (2) to place in a buffer reserve pursuant to section 306 or otherwise use to carry out this section; and

   Inserted: (3) to assist with the increased costs of fertilizer in the United States attributed to increased costs of natural gas due to fuel switching as a result of this Act.

   Inserted: (b) New Methodology Incubator.--

   Inserted: (1) In general.--The Secretary of Agriculture shall ensure that, during any 5-year period, the average annual percentage of the quantity of emission allowances established for a calendar year that is distributed to entities under the program established under paragraph (2) specifically for creating methodologies, tools, and support for the development and deployment of new project types shall be at least 0.25 percent.

   Inserted: (2) Support for innovation.--

   Inserted: (A) Acquisition of new data, improvement of methodologies, and development of new tools for designated offset activity types.--The Secretary of Agriculture shall establish a comprehensive field sampling and pilot project program to improve the scientific data and calibration of standardized tools and methodologies that--

   Inserted: (i) are used to measure greenhouse gas reductions or sequestration and baseline for categories of activities not covered by an emission limitation under this Act; and

   Inserted: (ii) are likely to provide significant emission reductions or sequestration.

   Inserted: (B) Targeted support for development and deployment of new technologies.--

   Inserted: (i) In general.--The Secretary of Agriculture shall establish a program for development and deployment of new technologies and methods in greenhouse gas reductions or sequestration for activities not covered by an emission limitation under this Act.

   Inserted: (ii) Selection; funding.--In carrying out the program under clause (i), the Secretary of Agriculture shall--

   Inserted: (I) select activities for participation in the program based on--

   Inserted: (aa) the potential emission reductions or sequestration of the activities; and

   Inserted: (bb) a market penetration review; and

   Inserted: (II) provide funding for a select number of projects--

   Inserted: (aa) to cover research on technologies and other barriers, prototypes, first-of-a-kind risk coverage, and initial market barriers; and

   Inserted: (bb) under limited categories of activities that are dependent on forward progress.

   Inserted: (c) Requirement.--The Secretary of Agriculture shall distribute emission allowances under this section in a manner that ensures that entities in the program under this section do not receive more compensation for emission reductions under this program than the entities would receive for the same reductions through an offset project under subtitle A.

   Inserted: (d) Coordination With Subtitle A.--

   Inserted: (1) In general.--Subject to paragraph (2), an individual or entity carrying out an activity under this subtitle that also qualifies as an offset project pursuant to subtitle A may petition (pursuant to the regulations under subtitle A) to receive offset allowances for reductions, destruction, avoidance, or sequestration of greenhouse gas emissions for which the individual or entity does not receive emission allowances under this section.

   Inserted: (2) Nonduplication.--A project may not receive both allowances under this subtitle and offset allowances for the same ton of greenhouse gas emissions reduced, destroyed, avoided, or sequestered.

   Original wording

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   Inserted: SEC. 1311. FINDINGS; PURPOSE.

   Inserted: (a) Findings.--Congress finds that--

   Inserted: (1) changes in land use patterns and forest sector emissions account for approximately 20 percent of global greenhouse gas emissions;

   Inserted: (2) land conversion and deforestation are 2 of the largest sources of greenhouse gas emissions in the developing world, comprising approximately 40 percent of the total greenhouse gas emissions of the developing world;

   Inserted: (3) with sufficient data, deforestation and forest degradation rates and forest carbon stocks can be measured with an acceptable degree of uncertainty;

   Inserted: (4) encouraging reduced deforestation and reduced forest degradation in foreign countries could--

   Inserted: (A) provide critical leverage to encourage voluntary participation by developing countries in emission limitation regimes;

   Inserted: (B) facilitate greater overall reductions in greenhouse gas emissions than otherwise would be practicable; and

   Inserted: (C) substantially benefit biodiversity, conservation, and indigenous and other forest-dependent people in developing countries;

   Inserted: (5) in addition to forest carbon activities that can be readily measured, monitored, and verified through national-scale programs and projects, there is great value in reducing emissions and sequestering carbon through forest carbon projects in countries that lack the institutional arrangements to support national-scale accounting of forest carbon stocks; and

   Inserted: (6) providing emission allowances in support of activities in countries that lack fully developed institutions for national-scale accounting could help to build capacity in those countries, sequester additional carbon, and increase participation by developing countries in international climate agreements.

   Inserted: (b) Purpose.--The purpose of this subtitle is to reduce greenhouse gas emissions by reducing deforestation and forest degradation in foreign countries in a manner that reduces the costs imposed by this Act on covered entities in the United States.

   Show 38 more inserted paragraphsShow less

   Inserted: SEC. 1312. INTERNATIONAL FOREST CARBON ACTIVITIES PROGRAM.

   Inserted: (a) Establishment.--Not later than 2 years after the date of enactment of this Act, the Administrator, in consultation with the Secretary of the Interior, the Secretary of State, and the Secretary of Agriculture, shall promulgate regulations to establish programs or recognize existing programs under which the Administrator shall provide emission allowances allocated pursuant to subsections (b) and (c) to assist developing countries in the efforts of the developing countries to achieve emissions reductions or increased sequestration of carbon dioxide from international forest carbon activities.

   Inserted: (b) Allocation.--Not later than 330 days before January 1 of each of calendar years 2012 through 2050, the Administrator shall allocate for distribution under this section 1 percent of the aggregate quantity of emission allowances established for the applicable calendar year pursuant to section 201(a).

   Inserted: (c) Early Action.--Not later than 2 years after the date of enactment of this Act, the Administrator shall allocate for early action distribution for each of calendar years 2010 and 2011 not more than 10 percent of the aggregate quantity of emission allowances allocated under subsection (b) for each of calendar years 2012 through 2022.

   Inserted: (d) Carryover.--If the sum of the emission allowances for a calendar year is not allocated for distribution in the calendar year, the Administrator shall carry over to the next calendar year the residual emission allowances.

   Inserted: (e) Ensuring Market Readiness in Developing Countries.--

   Inserted: (1) In general.--The Administrator shall--

   Inserted: (A) set aside a portion of the allowances to be allocated under subsections (b) and (c) for the purpose of ensuring market readiness in forested developing countries; and

   Inserted: (B) auction those allowances with the proceeds deposited into a market readiness account.

   Inserted: (2) Eligibility for proceeds.--The regulations promulgated pursuant to subsection (a) shall delineate the requirements for developing countries to be eligible to receive proceeds from the auction of emission allowances under paragraph (1) to be used for the preparation of a national reduced deforestation and forest degradation strategy (referred to in this section as a "REDD strategy"), including--

   Inserted: (A) developing a reliable estimate of the national forest carbon stocks and sources of forest emissions of the developing country;

   Inserted: (B) defining the national emission reference baseline for the developing country based on past emission rates;

   Inserted: (C) specifying options for reducing emissions; and

   Inserted: (D) implementing mechanisms that will support policies, programs, and projects to reduce emissions.

   Inserted: (f) Incentive Payments for Low-Cost Emission Reductions.--

   Inserted: (1) In general.--Subject to paragraph (2), the regulations promulgated pursuant to subsection (a) shall delineate the requirements for forested developing countries or other entities to be eligible to receive emission allowances under subsections (b) and (c) to implement the national REDD strategy of the countries or to implement low-cost emission reduction projects in the forest sector.

   Inserted: (2) Requirements.--Under the regulations promulgated under paragraph (1)--

   Inserted: (A) emission allowances under this section shall be awarded in a manner that favors--

   Inserted: (i) achievement of the greatest quantity of carbon sequestration or emission reductions for the lowest cost; and

   Inserted: (ii) broad geographical distribution of projects;

   Inserted: (B) no allowances for emission reduction under this section shall be awarded to countries, or entities for projects in countries, that meets the criteria established under section 1313(c)(1)(A), as determined by the Administrator, after the 2-year period beginning on the date the Administrator determines that those criteria apply;

   Inserted: (C) no allowances shall be issued in a calendar year beginning more than 5 years after the date of enactment of this Act to a project or activity in a country that generates greenhouse gas emissions accounting for more than 1 percent of global greenhouse gas emissions;

   Inserted: (D) no allowances shall be issued in a calendar year beginning more than 10 years after the date of enactment of this Act to a project or activity in a country that generates greenhouse gas emissions accounting for more than 0.5 percent of global greenhouse gas emissions; and

   Inserted: (E) unless the Administrator determines that provision of allowances to a project or activity in a country that would otherwise be subject to the exclusions in subparagraph (C) or (D) is in the interest of building needed capacity or reducing international leakage, allowances may be issued to the project or activity subject to other criteria in this subsection.

   Inserted: (g) Eligibility Requirements.--

   Inserted: (1) In general.--Not later than 2 years after the date of enactment of this Act, the Administrator, in consultation with the Secretary of the Interior, the Secretary of State, and the Secretary of Agriculture, shall promulgate regulations establishing eligibility requirements for the allocation of emission allowances under this subsection for international forest carbon activities, including requirements that those activities shall be designed, carried out, and managed--

   Inserted: (A) in accordance with widely-accepted environmentally sustainable forestry practices;

   Inserted: (B) to promote native species and restoration of native forests, if practicable, and to avoid the introduction of invasive nonnative species;

   Inserted: (C) in a manner that is supportive of the internationally-recognized rights of indigenous and other forest-dependent people living in the affected areas; and

   Inserted: (D) in a manner that enhances the capability, if consistent with the applicable laws in the country involved, of local communities to exercise the right of free, prior informed consent regarding projects or other activities.

   Inserted: (2) Quality criteria for international forest carbon allocations.--The regulations promulgated pursuant to paragraph (1) shall include requirements intended to ensure that the international forest carbon activity for which emission allowances are provided under this section results in real, permanent, additional, verifiable, and enforceable emission reductions, with reliable measuring and monitoring and appropriate accounting for leakage.

   Inserted: (h) Peatland and Other Natural Land That Sequester Carbon.--The Administrator may provide emission allowances under this section for a project for storage of carbon in peatland or other natural land if the Administrator determines that--

   Inserted: (1) the peatland or other natural land is capable of storing carbon; and

   Inserted: (2) the project for storage of carbon in the peatland or other natural land is capable of meeting the quality criteria described in subsection (a).

   Inserted: SEC. 1313. LIMITATION ON DOUBLE COUNTING.

   Inserted: Notwithstanding any other provision of this Act, activities that receive credit under subtitle B of title III shall not be eligible to receive emission allowances under this subtitle.

   Inserted: SEC. 1314. EFFECT OF SUBTITLE.

   Inserted: Nothing in this subtitle supersedes, limits, or otherwise affects any restriction imposed by Federal law (including regulations) on any interaction between an entity located in the United States and an entity located in a foreign country.

   Original wording

   Beginning on page 424, strike line 4 and all that follows through page 438, line 2, and insert the following:

Read automatically from the Congressional Record. Check the original before relying on it.

As printed