MARKET CHOICE Act

I 117TH CONGRESS 1ST SESSION H. R. 3039 To amend the Internal Revenue Code of 1986 to eliminate certain fuel excise taxes and impose a tax on greenhouse gas emissions to provide revenue for maintaining and building American infrastructure, and for other purposes. IN THE HOUSE OF REPRESENTATIVES MAY 7, 2021 Mr. FITZPATRICK (for himself and Mr. CARBAJAL) introduced the following bill; which was referred to the Committee on Ways and Means, and in addition to the Committees on Energy and Commerce, Natural Re- sources, Education and Labor, Transportation and Infrastructure, Science, Space, and Technology, and Agriculture, for a period to be sub- sequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned A BILL To amend the Internal Revenue Code of 1986 to eliminate certain fuel excise taxes and impose a tax on greenhouse gas emissions to provide revenue for maintaining and building American infrastructure, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE, TABLE OF CONTENTS. 3 (a) SHORT TITLE.—This Act may be cited as the 4 ‘‘Modernizing America with Rebuilding to Kickstart the 5 VerDate Sep 11 2014 05:13 Jun 30, 2021 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H3039.IH H3039 pbinns on DSKJLVW7X2PROD with BILLS 2 •HR 3039 IH Economy of the Twenty-first Century with a Historic In- 1 frastructure-Centered Expansion Act’’ or the ‘‘MARKET 2 CHOICE Act’’. 3 (b) TABLE OF CONTENTS.—The table of contents for 4 this Act is as follows: 5 Sec. 1. Short title, table of contents. Sec. 2. Findings. TITLE I—GREENHOUSE GAS EMISSIONS Sec. 101. Treatment of greenhouse gas emissions. TITLE II—DISTRIBUTION OF REVENUES FROM TAXATION OF GREENHOUSE GAS EMISSIONS Subtitle A—Rebuilding Infrastructure And Solutions For The Environment Trust Fund Sec. 201. Establishment of the RISE Trust Fund. Sec. 202. Appropriations from the RISE Trust Fund. Sec. 203. State grants. Subtitle B—Certain Manufacturers Excise Taxes Sec. 211. Repeal of Federal motor vehicle and aviation fuel taxes. Sec. 212. Amendments to certain tax credits for carbon capture and storage. Sec. 213. Modifications of qualifying advanced coal project credit. TITLE III—AMENDMENTS TO OTHER LAWS Subtitle A—Amendments to Federal Environmental Statutes Sec. 301. Amendments to the Clean Air Act. Sec. 302. Frequent and chronic flooding mitigation and adaptation infrastruc- ture projects. Sec. 303. No preemption of State law. Subtitle B—Assistance To Displaced Workers In The Energy Sector Sec. 321. Assistance to displaced workers in the energy sector. TITLE IV—NATIONAL CLIMATE COMMISSION Sec. 401. Establishment of Commission. Sec. 402. Duties of Commission. Sec. 403. Powers of Commission. Sec. 404. Funding for the activities of the Commission. Sec. 405. Staff of the Commission. SEC. 2. FINDINGS. 6 Congress finds that— 7 VerDate Sep 11 2014 05:13 Jun 30, 2021 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H3039.IH H3039 pbinns on DSKJLVW7X2PROD with BILLS 3 •HR 3039 IH (1) roads, bridges, airports, and urban trans- 1 portation systems are essential to the economic and 2 national security of the United States; 3 (2) there is a chronic shortfall in funding for 4 the maintenance of highways, bridges, and other 5 critical infrastructure; 6 (3) strategic investments in new infrastructure 7 will allow for economic growth and dynamism in the 8 21st century; 9 (4) there has been a marked increase in ex- 10 treme weather events and the negative impacts of a 11 changing climate are expected to worsen in every re- 12 gion of the United States; 13 (5) if left unaddressed, the consequences of a 14 changing climate have the potential to adversely im- 15 pact the health of all Americans, harm the economy, 16 and impose substantial costs on local, State, and 17 Federal budgets; 18 (6) efforts to reduce climate risk should protect 19 our Nation’s economy, security, infrastructure, agri- 20 culture, water supply, public health, and public safe- 21 ty; and 22 (7) there is bipartisan support for pursuing ef- 23 forts to reduce greenhouse gas emissions through 24 VerDate Sep 11 2014 05:13 Jun 30, 2021 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H3039.IH H3039 pbinns on DSKJLVW7X2PROD with BILLS 4 •HR 3039 IH economically viable, broadly supported private and 1 public policies and solutions. 2 TITLE I—GREENHOUSE GAS 3 EMISSIONS 4 SEC. 101. TREATMENT OF GREENHOUSE GAS EMISSIONS. 5 (a) IN GENERAL.—The Internal Revenue Code of 6 1986 is amended by adding at the end the following: 7 ‘‘Subtitle L—Greenhouse Gas 8 Emissions 9 ‘‘PART 1—TAXATION OF GREENHOUSE GAS 10 EMISSIONS 11 ‘‘Sec. 9901. Imposition of tax on combusted fossil fuel greenhouse gas emis- sions. ‘‘Sec. 9902. Imposition of tax on greenhouse gas emissions from certain indus- trial processes. ‘‘Sec. 9903. Imposition of tax on greenhouse gas emissions from certain prod- uct uses. ‘‘Sec. 9904. Calculation of taxable emissions. ‘‘Sec. 9905. Credit for state payments. ‘‘Sec. 9906. Penalties for nonpayment. ‘‘Sec. 9907. Definitions. ‘‘SEC. 9901. IMPOSITION OF TAX ON COMBUSTED FOSSIL 12 FUEL GREENHOUSE GAS EMISSIONS. 13 ‘‘(a) IN GENERAL.—There is hereby imposed a tax 14 on fossil fuels produced within, or imported into, the 15 United States. 16 ‘‘(b) RATE OF TAX.— 17 ‘‘(1) GREENHOUSE GASES THAT WOULD BE RE- 18 LEASED IF THE FOSSIL FUEL WERE COMBUSTED.— 19 The tax imposed by subsection (a) shall be the appli- 20 VerDate Sep 11 2014 05:13 Jun 30, 2021 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H3039.IH H3039 pbinns on DSKJLVW7X2PROD with BILLS 5 •HR 3039 IH cable amount per ton of carbon dioxide equivalent of 1 all greenhouse gasses that would be released if the 2 fossil fuel were combusted. 3 ‘‘(2) APPLICABLE AMOUNT OF CARBON DIOXIDE 4 EQUIVALENT EMISSIONS.—For purposes of para- 5 graph (1), the term ‘applicable amount’ means— 6 ‘‘(A) for calendar year 2023, $35 per met- 7 ric ton of carbon dioxide equivalent emissions, 8 and 9 ‘‘(B) for each calendar year after 2023, 10 the tax rate shall be the sum of— 11 ‘‘(i) the previous calendar year’s tax 12 rate, plus 13 ‘‘(ii) the sum of— 14 ‘‘(I) 5 percentage points, plus 15 ‘‘(II) a percentage increase in the 16 previous year’s tax rate equal to the 17 increase in the Consumer Price Index 18 for the previous calendar year. 19 ‘‘(3) CONSUMER PRICE INDEX FOR ANY CAL- 20 ENDAR YEAR.—For purposes of subparagraph (B), 21 the Consumer Price Index for the previous calendar 22 year is the average of the Consumer Price Index for 23 all-urban consumers published by the Department of 24 Labor as of the close of the 12-month period ending 25 VerDate Sep 11 2014 05:13 Jun 30, 2021 Jkt 019200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H3039.IH H3039 pbinns on DSKJLVW7X2PROD with BILLS 6 •HR 3039 IH on August 31 of such calendar year. For purposes 1 of the preceding sentence, the revision of the Con- 2 sumer Price Index which is most consistent with the 3 Consumer Price Index for calendar year 1986 shall 4 be used. 5 ‘‘(4) RATE ADJUSTMENT BASED ON EMISSION 6 LEVELS.— 7 ‘‘(A) REPORT.—Not later than March 30, 8 2024, and annually thereafter, the Secretary 9 and the Administrator shall jointly report the 10 emissions during the calendar year ending on 11 the preceding December 31 from sources sub- 12 ject to taxation under this part. The report 13 shall determine whether the cumulative amount 14 of annual emissions reported for the period be- 15 ginning in calendar year 2023 and through the 16 end of the preceding calendar year were less 17 than the emissions levels specified in the fol- 18 lowing schedule: 19 ‘‘(i) The total emissions through cal- 20 endar year 2023 are 4,700 million metric 21 tons of carbon dioxide equivalent. 22 ‘‘(ii) The total emissions through cal- 23 endar year 2024 are 9,400 million metric 24 tons of carbon dioxide equivalent. 25 VerDate Sep 11 2014 05:13 Jun 30, 2021 Jkt 019200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H3039.IH H3039 pbinns on DSKJLVW7X2PROD with BILLS 7 •HR 3039 IH ‘‘(iii) The total emissions through cal- 1 endar year 2025 are 14,000 million metric 2 tons of carbon dioxide equivalent. 3 ‘‘(iv) The total emissions through cal- 4 endar year 2026 are 18,300 million metric 5 tons of carbon dioxide equivalent. 6 ‘‘(v) The total emissions through cal- 7 endar year 2027 are 22,600 million metric 8 tons of carbon dioxide equivalent. 9 ‘‘(vi) The total emissions through cal- 10 endar year 2028 are 26,800 million metric 11 tons of carbon dioxide equivalent. 12 ‘‘(vii) The total emissions through cal- 13 endar year 2029 are 31,000 million metric 14 tons of carbon dioxide equivalent. 15 ‘‘(viii) The total emissions through 16 calendar year 2030 are 35,100 million 17 metric tons of carbon dioxide equivalent. 18 ‘‘(ix) The total emissions through cal- 19 endar year 2031 are 39,100 million metric 20 tons of carbon dioxide equivalent. 21 ‘‘(x) The total emissions through cal- 22 endar year 2032 are 43,100 million metric 23 tons of carbon dioxide equivalent. 24 VerDate Sep 11 2014 05:13 Jun 30, 2021 Jkt 019200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H3039.IH H3039 pbinns on DSKJLVW7X2PROD with BILLS 8 •HR 3039 IH ‘‘(xi) The total emissions through cal- 1 endar year 2033 are 47,100 million metric 2 tons of carbon dioxide equivalent. 3 ‘‘(B) ADJUSTMENTS FOR REPORT PE- 4 RIOD.— 5 ‘‘(i) IN GENERAL.—Not later than 6 March 30, 2025, and every two years 7 thereafter, the Secretary shall determine 8 whether an adjustment is required in ac- 9 cordance with clause (ii). 10 ‘‘(ii) PERIOD THROUGH 2034.—If the 11 emission level reported under subpara- 12 graph (A) for calendar year 2024, and 13 every second calendar year thereafter 14 through calendar year 2034, exceeds the 15 level for such calendar year specified in 16 clauses (i) through (xi) of subparagraph 17 (A), then the applicable amount under 18 paragraph (2) for the calendar year begin- 19 ning on the next January 1 following the 20 determination in clause (i) shall, after the 21 increase under paragraph (2) for such next 22 calendar year, be increased by an addi- 23 tional $4 per metric ton. 24 VerDate Sep 11 2014 05:13 Jun 30, 2021 Jkt 019200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H3039.IH H3039 pbinns on DSKJLVW7X2PROD with BILLS 9 •HR 3039 IH ‘‘(c) BY WHOM PAID.—The tax imposed by sub- 1 section (a) shall be paid by the owner of the fossil fuel 2 at the point of taxation. 3 ‘‘(d) POINT OF TAXATION.— 4 ‘‘(1) For fossil fuels produced within the United 5 States, the point of taxation shall be— 6 ‘‘(A) for coal, the mine mouth or, for 7 washed coal, the exit from the coal preparation 8 and processing plant, 9 ‘‘(B) for petroleum products, the exit point 10 from the refinery, and 11 ‘‘(C) for natural gas, the exit from the gas 12 processing plant or, for natural gas that is not 13 treated at a gas processing plant, the point of 14 sale to the person who combusts the gas or in- 15 corporates it into a product that is not intended 16 for combustion. 17 ‘‘(2) For any fossil fuel imported into the 18 United States, the point of taxation shall be the 19 point at which it first enters the United States. 20 ‘‘(e) EXEMPTIONS.— 21 ‘‘(1) EXEMPTION FOR NONCOMBUSTIVE 22 USES.— 23 ‘‘(A) REFUND FOR REDUCTION OR ELIMI- 24 NATION OF EMISSIONS.—Any manufacturer of a 25 VerDate Sep 11 2014 05:13 Jun 30, 2021 Jkt 019200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H3039.IH H3039 pbinns on DSKJLVW7X2PROD with BILLS 10 •HR 3039 IH product that incorporates a fossil fuel that has 1 been taxed under this section who can dem- 2 onstrate to the Secretary that the fossil fuel has 3 been transformed via the manufacture of the 4 product so that the fossil fuel’s emissions will 5 be reduced or eliminated over the product’s life- 6 time shall be entitled to a refund of the tax 7 paid under this section on the proportion of the 8 emissions reduced thereby, as determined by 9 the Secretary. 10 ‘‘(B) RULE.—The Secretary, in consulta- 11 tion with the Administrator, shall establish by 12 rule the criteria and process by which product 13 manufacturers can demonstrate that the condi- 14 tions in subparagraph (A) have been satisfied. 15 ‘‘(C) PUBLICATION OF REGULATIONS.— 16 The Secretary shall publish the regulations re- 17 quired by this subsection no later than one year 18 prior to the start of the calendar year referred 19 to in section 9901(b)(2)(A). The Secretary may 20 not collect the tax imposed by this section for 21 any calendar year that begins less than one 22 year after the regulations are published. 23 ‘‘(2) EXEMPTION FOR CARBON CAPTURE AND 24 STORAGE.— 25 VerDate Sep 11 2014 05:13 Jun 30, 2021 Jkt 019200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H3039.IH H3039 pbinns on DSKJLVW7X2PROD with BILLS 11 •HR 3039 IH ‘‘(A) REFUND FOR SEQUESTERS.—Any 1 person who sequesters greenhouse gas emissions 2 resulting from the combustion of fossil fuel that 3 has passed through a point of taxation shall be 4 entitled to a refund of the tax imposed by this 5 section. Emissions that are used for enhanced 6 oil recovery shall be entitled for such refund 7 provided that these emissions meet all of the 8 criteria applicable to other emissions that qual- 9 ify for such refund. 10 ‘‘(B) RULE.—The Secretary shall establish 11 by rule the procedures by which to apply for 12 such refunds and such refunds shall be paid 13 within six months of the Secretary receiving an 14 approvable application. 15 ‘‘(C) TIME OF REFUND.—The Secretary 16 may not refund any amounts under this para- 17 graph until such time as the Secretary has pub- 18 lished the regulations described in section 19 45Q(f)(2). 20 VerDate Sep 11 2014 05:13 Jun 30, 2021 Jkt 019200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H3039.IH H3039 pbinns on DSKJLVW7X2PROD with BILLS 12 •HR 3039 IH ‘‘SEC. 9902. IMPOSITION OF TAX ON GREENHOUSE GAS 1 EMISSIONS FROM CERTAIN INDUSTRIAL 2 PROCESSES. 3 ‘‘(a) IN GENERAL.—There is hereby imposed a tax 4 on industrial process greenhouse gas emissions by certain 5 source categories. 6 ‘‘(b) LIST OF SOURCE CATEGORIES.— 7 ‘‘(1) INITIAL LIST.—The Congress establishes 8 for purposes of this section a list of source cat- 9 egories subject to this section as follows: 10 ‘‘(A) Iron and steel production and met- 11 allurgical coke production. 12 ‘‘(B) Underground coal mining. 13 ‘‘(C) Coal preparation and processing 14 plants. 15 ‘‘(D) Refineries. 16 ‘‘(E) Cement production. 17 ‘‘(F) Petrochemical production. 18 ‘‘(G) Lime production. 19 ‘‘(H) Ammonia production. 20 ‘‘(I) [Text truncated for display. Full text available on Congress.gov.]