SWAP Act

I 116TH CONGRESS 1ST SESSION H. R. 4058 To amend the Internal Revenue Code of 1986 to impose a tax on greenhouse gas emissions, accordingly reduce tax rates on payroll, and for other purposes. IN THE HOUSE OF REPRESENTATIVES JULY 25, 2019 Mr. ROONEY of Florida (for himself and Mr. LIPINSKI) introduced the fol- lowing bill; which was referred to the Committee on Ways and Means, and in addition to the Committees on Energy and Commerce, and Science, Space, and Technology, for a period to be subsequently deter- mined 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 impose a tax on greenhouse gas emissions, accordingly reduce tax rates on payroll, 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 ‘‘Stemming Warming and Augmenting Pay Act of 2019’’ 5 or the ‘‘SWAP Act’’. 6 (b) TABLE OF CONTENTS.—The table of contents for 7 this Act is as follows: 8 VerDate Sep 11 2014 06:18 Aug 14, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H4058.IH H4058 kjohnson on DSK79L0C42 with BILLS 2 •HR 4058 IH Sec. 1. Short title; table of contents. Sec. 2. Findings. TITLE I—GREENHOUSE GAS EMISSIONS Sec. 101. Treatment of greenhouse gas emissions. TITLE II—CARBON REDUCED PAYROLL TAX Sec. 201. Carbon reduced payroll tax. TITLE III—DISTRIBUTION OF REVENUES FROM TAXATION OF GREENHOUSE GAS EMISSIONS Sec. 301. Establishment of the Carbon Trust Fund. Sec. 302. Appropriations from the Carbon Trust Fund. TITLE IV—AMENDMENTS TO FEDERAL ENVIRONMENTAL STATUTES Sec. 401. Amendments to the Clean Air Act. SEC. 2. FINDINGS. 1 The Congress finds the following: 2 (1) Climate change threatens global stability 3 and our national economy. 4 (2) Carbon emissions are a significant contrib- 5 utor to these threats and must be addressed. 6 (3) The United States private sector can face 7 these challenges and be a global leader in tech- 8 nology, innovation, and efficiency. 9 (4) A price on carbon levels the economic play- 10 ing field and spurs adoption of less carbon-intensive 11 practices and technologies. 12 (5) Recycling revenues back to employers and 13 employees will neutralize the potential impacts of a 14 tax. 15 VerDate Sep 11 2014 06:18 Aug 14, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H4058.IH H4058 kjohnson on DSK79L0C42 with BILLS 3 •HR 4058 IH TITLE I—GREENHOUSE GAS 1 EMISSIONS 2 SEC. 101. TREATMENT OF GREENHOUSE GAS EMISSIONS. 3 (a) IN GENERAL.—The Internal Revenue Code of 4 1986 is amended by adding at the end the following: 5 ‘‘Subtitle L—Greenhouse Gas 6 Emissions 7 ‘‘PART 1. TAXATION OF GREENHOUSE GAS EMISSIONS ‘‘PART 2. TAX ADJUSTMENTS FOR IMPORTS AND EXPORTS OF GREENHOUSE GAS INTENSIVE PRODUCTS ‘‘PART 1—TAXATION OF GREENHOUSE GAS 8 EMISSIONS 9 ‘‘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 10 FUEL GREENHOUSE GAS EMISSIONS. 11 ‘‘(a) IN GENERAL.—There is hereby imposed a tax 12 on fossil fuels produced within, or imported into, the 13 United States. 14 ‘‘(b) RATE OF TAX.— 15 ‘‘(1) GREENHOUSE GASES THAT WOULD BE RE- 16 LEASED IF THE FOSSIL FUEL WERE COMBUSTED.— 17 The tax imposed by subsection (a) shall be the appli- 18 VerDate Sep 11 2014 21:23 Aug 14, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H4058.IH H4058 kjohnson on DSK79L0C42 with BILLS 4 •HR 4058 IH cable amount per ton of carbon dioxide equivalent of 1 all greenhouse gases 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)— 6 ‘‘(A) For calendar year 2021, the term 7 ‘applicable amount’ means $30 per metric ton 8 of carbon dioxide equivalent emissions. 9 ‘‘(B) For each calendar year after 2021, 10 the term ‘applicable amount’ means the sum 11 of— 12 ‘‘(i) the applicable amount for the pre- 13 vious calendar, 14 ‘‘(ii) the sum of— 15 ‘‘(I) 5 percentage points, plus 16 ‘‘(II) a percentage increase in the 17 previous year’s tax rate equal to the 18 increase in the Consumer Price Index 19 for the previous calendar year, plus 20 ‘‘(iii) the increase, if any, required by 21 paragraph (3). 22 ‘‘(C) CONSUMER PRICE INDEX FOR ANY 23 CALENDAR YEAR.—For purposes of subpara- 24 graph (B), the Consumer Price Index for the 25 VerDate Sep 11 2014 06:18 Aug 14, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H4058.IH H4058 kjohnson on DSK79L0C42 with BILLS 5 •HR 4058 IH previous calendar year is the average of the 1 Consumer Price Index for all-urban consumers 2 published by the Department of Labor as of the 3 close of the 12-month period ending on August 4 31 of such calendar year. For purposes of the 5 preceding sentence, the revision of the Con- 6 sumer Price Index which is most consistent 7 with the Consumer Price Index for calendar 8 year 1986 shall be used. 9 ‘‘(3) ADJUSTMENT BASED ON EMISSION LEV- 10 ELS.— 11 ‘‘(A) IN GENERAL.—If, for calendar year 12 2023 and every second calendar year thereafter 13 through calendar year 2031, the cumulative 14 amount of emissions with respect to the cal- 15 endar year reported under subparagraph (B) 16 exceeds the cumulative amount of emissions 17 specified for such calendar year in subpara- 18 graph (C), then the increase required by this 19 paragraph for the calendar year beginning on 20 the next January 1 following the determination 21 in subparagraph (B) shall be $3 per metric ton. 22 ‘‘(B) ANNUAL REPORT.—Not later than 23 March 30, 2021, and annually thereafter, the 24 Secretary and the Administrator shall jointly 25 VerDate Sep 11 2014 06:18 Aug 14, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H4058.IH H4058 kjohnson on DSK79L0C42 with BILLS 6 •HR 4058 IH determine and report the emissions during the 1 calendar year ending on the preceding Decem- 2 ber 31 from sources subject to taxation under 3 this part. The report shall specify whether the 4 cumulative amount of annual emissions re- 5 ported for the period beginning in calendar year 6 2021 and ending at the end of the preceding 7 calendar year exceeds the emission levels speci- 8 fied in subparagraph (C). 9 ‘‘(C) EMISSION SCHEDULE.—The emission 10 schedule specified in this subparagraph is as 11 follows: 12 ‘‘(i) The total emissions through cal- 13 endar year 2021 are 5,000 million metric 14 tons of carbon dioxide equivalent. 15 ‘‘(ii) The total emissions through cal- 16 endar year 2022 are 9,800 million metric 17 tons of carbon dioxide equivalent. 18 ‘‘(iii) The total emissions through cal- 19 endar year 2023 are 14,600 million metric 20 tons of carbon dioxide equivalent. 21 ‘‘(iv) The total emissions through cal- 22 endar year 2024 are 19,200 million metric 23 tons of carbon dioxide equivalent. 24 VerDate Sep 11 2014 06:18 Aug 14, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H4058.IH H4058 kjohnson on DSK79L0C42 with BILLS 7 •HR 4058 IH ‘‘(v) The total emissions through cal- 1 endar year 2025 are 23,800 million metric 2 tons of carbon dioxide equivalent. 3 ‘‘(vi) The total emissions through cal- 4 endar year 2026 are 28,300 million metric 5 tons of carbon dioxide equivalent. 6 ‘‘(vii) The total emissions through cal- 7 endar year 2027 are 32,700 million metric 8 tons of carbon dioxide equivalent. 9 ‘‘(viii) The total emissions through 10 calendar year 2028 are 37,000 million 11 metric tons of carbon dioxide equivalent. 12 ‘‘(ix) The total emissions through cal- 13 endar year 2029 are 41,300 million metric 14 tons of carbon dioxide equivalent. 15 ‘‘(x) The total emissions through cal- 16 endar year 2030 are 45,500 million metric 17 tons of carbon dioxide equivalent. 18 ‘‘(xi) The total emissions through cal- 19 endar year 2031 are 49,700 million metric 20 tons of carbon dioxide equivalent. 21 ‘‘(c) BY WHOM PAID.—The tax imposed by sub- 22 section (a) shall be paid by the owner of the fossil fuel 23 at the point of taxation. 24 ‘‘(d) POINT OF TAXATION.— 25 VerDate Sep 11 2014 06:18 Aug 14, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H4058.IH H4058 kjohnson on DSK79L0C42 with BILLS 8 •HR 4058 IH ‘‘(1) For fossil fuels produced within the United 1 States, the point of taxation shall be— 2 ‘‘(A) for coal, the mine mouth or, for 3 washed coal, the exit from the coal preparation 4 and processing plant, 5 ‘‘(B) for petroleum products, the exit point 6 from the refinery, and 7 ‘‘(C) for natural gas, the exit from the gas 8 processing plant or, for natural gas that is not 9 treated at a gas processing plant, the point of 10 sale to the person who combusts the gas or in- 11 corporates it into a product that is not intended 12 for combustion. 13 ‘‘(2) For any fossil fuel imported into the 14 United States, the point of taxation shall be the 15 point at which it first enters the United States. 16 ‘‘(e) EXEMPTIONS.— 17 ‘‘(1) EXEMPTION FOR NONCOMBUSTIVE 18 USES.— 19 ‘‘(A) REFUND FOR REDUCTION OR ELIMI- 20 NATION OF EMISSIONS.—Any manufacturer of a 21 product that incorporates a fossil fuel that has 22 been taxed under this section who can dem- 23 onstrate to the Secretary that the fossil fuel has 24 been transformed via the manufacture of the 25 VerDate Sep 11 2014 06:18 Aug 14, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H4058.IH H4058 kjohnson on DSK79L0C42 with BILLS 9 •HR 4058 IH product so that the fossil fuel’s emissions will 1 be reduced or eliminated over the product’s life- 2 time shall be entitled to a refund of the tax 3 paid under this section on the proportion of the 4 emissions reduced thereby, as determined by 5 the Secretary. 6 ‘‘(B) RULE.—The Secretary, in consulta- 7 tion with the Administrator, shall establish by 8 rule the criteria and process by which product 9 manufacturers can demonstrate that the condi- 10 tions in subparagraph (A) have been satisfied. 11 ‘‘(C) PUBLICATION OF REGULATIONS.— 12 The Secretary shall publish the regulations re- 13 quired by this subsection no later than one year 14 prior to the start of the calendar year referred 15 to in section 9901(b)(2)(A). The Secretary may 16 not collect the tax imposed by this section for 17 any calendar year that begins less than one 18 year after the regulations are published. 19 ‘‘(2) EXEMPTION FOR CARBON CAPTURE AND 20 STORAGE.— 21 ‘‘(A) REFUND FOR SEQUESTERS.—Any 22 person who sequesters greenhouse gas emissions 23 resulting from the combustion of fossil fuel that 24 has passed through a point of taxation shall be 25 VerDate Sep 11 2014 06:18 Aug 14, 2019 Jkt 089200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H4058.IH H4058 kjohnson on DSK79L0C42 with BILLS 10 •HR 4058 IH entitled to a refund of the tax imposed by this 1 section. Emissions that are used for enhanced 2 oil recovery shall be entitled for such refund 3 provided that these emissions meet all of the 4 criteria applicable to other emissions that qual- 5 ify for such refund. No refund shall be recog- 6 nized for any amount of greenhouse gas which 7 has been credited under section 45Q. 8 ‘‘(B) RULE.—The Secretary shall establish 9 by rule the procedures by which to apply for 10 such refunds and such refunds shall be paid 11 within six months of the Secretary receiving an 12 approvable application. 13 ‘‘(C) TIME OF REFUND.—The Secretary 14 may not refund any amounts under this para- 15 graph until such time as the Secretary has pub- 16 lished the regulations described in section 17 45Q(d)(2). 18 ‘‘(3) REPORT TO CONGRESS.—The Secretary 19 shall, by January 1st of each calendar year, report 20 the total amount of refunds awarded in the previous 21 fiscal year under this subsection and shall include, 22 as appropriate, the amounts refunded under para- 23 graphs (1) and (2). 24 VerDate Sep 11 2014 06:18 Aug 14, 2019 Jkt 089200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H4058.IH H4058 kjohnson on DSK79L0C42 with BILLS 11 •HR 4058 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) Aluminum production. 21 ‘‘(J) Soda ash production. 22 ‘‘(K) Ferroalloy production. 23 ‘‘(L) Phosphoric acid production. 24 ‘‘(M) Glass production. 25 ‘‘(N) Zinc production. 26 VerDate Sep 11 2014 06:18 Aug 14, 2019 Jkt 089200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H4058.IH H4058 kjohnson on DSK79L0C42 with BILLS 12 •HR 4058 IH ‘‘(O) Lead production. 1 ‘‘(P) Magnesium production and proc- 2 essing. 3 ‘‘(Q) Nitric acid production. 4 ‘‘(R) Adipic acid production. 5 ‘‘(S) Semiconductor manufacture. 6 ‘‘(T) Electrical transmission and distribu- 7 tion. 8 ‘‘(2) REVISION OF THE LIST.—The Adminis- 9 trator shall review the list of source categories estab- 10 lished by this subsection not less than once every 11 five years to determine if they should continue to be 12 listed and publish the results of that review. The Ad- 13 ministrator may, if appropriate, add any source cat- 14 egories to this list by rule. 15 ‘‘(3) REMOVAL OF A SOURCE CATEGORY FROM 16 THE LIST.—The Administrator may remove a source 17 category from this list only if— 18 ‘‘(A) the total emissions from the entire 19 source category which are taxable under this 20 section have been less than 250,000 metric tons 21 of carbon dioxide equivalent per year for each 22 of three consecutive years, 23 ‘‘(B) the average emissions from facilities 24 in the source category which are taxable under 25 VerDate Sep 11 2014 06:18 Aug 14, 2019 Jkt 089200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\H4058.IH H4058 kjohnson on DSK79L0C42 [Text truncated for display. Full text available on Congress.gov.]