MARKET CHOICE Act

I 116TH CONGRESS 1ST SESSION H. R. 4520 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 SEPTEMBER 26, 2019 Mr. FITZPATRICK (for himself, Mr. CARBAJAL, Mr. ROONEY of Florida, and Mr. PETERS) 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 Resources, Education and Labor, Trans- portation and Infrastructure, Science, Space, and Technology, and Agri- culture, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdic- tion 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 01:15 Oct 03, 2019 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H4520.IH H4520 dlhill on DSKBBY8HB2PROD with BILLS 2 •HR 4520 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 21:44 Oct 15, 2019 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H4520.IH H4520 dlhill on DSKBBY8HB2PROD with BILLS 3 •HR 4520 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 01:15 Oct 03, 2019 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H4520.IH H4520 dlhill on DSKBBY8HB2PROD with BILLS 4 •HR 4520 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 01:15 Oct 03, 2019 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H4520.IH H4520 dlhill on DSKBBY8HB2PROD with BILLS 5 •HR 4520 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 2021, $35 per met- 7 ric ton of carbon dioxide equivalent emissions, 8 and 9 ‘‘(B) for each calendar year after 2021, 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 ‘‘(C) CONSUMER PRICE INDEX FOR ANY 20 CALENDAR YEAR.—For purposes of subpara- 21 graph (B), the Consumer Price Index for the 22 previous calendar year is the average of the 23 Consumer Price Index for all-urban consumers 24 published by the Department of Labor as of the 25 VerDate Sep 11 2014 01:15 Oct 03, 2019 Jkt 099200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H4520.IH H4520 dlhill on DSKBBY8HB2PROD with BILLS 6 •HR 4520 IH close of the 12-month period ending on August 1 31 of such calendar year. For purposes of the 2 preceding sentence, the revision of the Con- 3 sumer Price Index which is most consistent 4 with the Consumer Price Index for calendar 5 year 1986 shall be used. 6 ‘‘(3) RATE ADJUSTMENT BASED ON EMISSION 7 LEVELS.— 8 ‘‘(A) REPORT.—Not later than March 30, 9 2022, and annually thereafter, the Secretary 10 and the Administrator shall jointly report the 11 emissions during the calendar year ending on 12 the preceding December 31 from sources sub- 13 ject to taxation under this part. The report 14 shall determine whether the cumulative amount 15 of annual emissions reported for the period be- 16 ginning in calendar year 2021 and through the 17 end of the preceding calendar year were less 18 than the emissions levels specified in the fol- 19 lowing schedule: 20 ‘‘(i) The total emissions through cal- 21 endar year 2021 are 4,900 million metric 22 tons of carbon dioxide equivalent. 23 VerDate Sep 11 2014 01:15 Oct 03, 2019 Jkt 099200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H4520.IH H4520 dlhill on DSKBBY8HB2PROD with BILLS 7 •HR 4520 IH ‘‘(ii) The total emissions through cal- 1 endar year 2022 are 9,700 million metric 2 tons of carbon dioxide equivalent. 3 ‘‘(iii) The total emissions through cal- 4 endar year 2023 are 14,400 million metric 5 tons of carbon dioxide equivalent. 6 ‘‘(iv) The total emissions through cal- 7 endar year 2024 are 19,000 million metric 8 tons of carbon dioxide equivalent. 9 ‘‘(v) The total emissions through cal- 10 endar year 2025 are 23,500 million metric 11 tons of carbon dioxide equivalent. 12 ‘‘(vi) The total emissions through cal- 13 endar year 2026 are 27,900 million metric 14 tons of carbon dioxide equivalent. 15 ‘‘(vii) The total emissions through cal- 16 endar year 2027 are 32,200 million metric 17 tons of carbon dioxide equivalent. 18 ‘‘(viii) The total emissions through 19 calendar year 2028 are 36,500 million 20 metric tons of carbon dioxide equivalent. 21 ‘‘(ix) The total emissions through cal- 22 endar year 2029 are 40,600 million metric 23 tons of carbon dioxide equivalent. 24 VerDate Sep 11 2014 01:15 Oct 03, 2019 Jkt 099200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H4520.IH H4520 dlhill on DSKBBY8HB2PROD with BILLS 8 •HR 4520 IH ‘‘(x) The total emissions through cal- 1 endar year 2030 are 44,800 million metric 2 tons of carbon dioxide equivalent. 3 ‘‘(xi) The total emissions through cal- 4 endar year 2031 are 48,800 million metric 5 tons of carbon dioxide equivalent. 6 ‘‘(B) ADJUSTMENTS FOR REPORT PE- 7 RIOD.— 8 ‘‘(i) IN GENERAL.—Not later than 9 March 30, 2023, and every two years 10 thereafter, the Secretary shall determine 11 whether an adjustment is required in ac- 12 cordance with clause (ii). 13 ‘‘(ii) PERIOD THROUGH 2032.—If the 14 emission level reported under subpara- 15 graph (A) for calendar year 2022, and 16 every second calendar year thereafter 17 through calendar year 2032, exceeds the 18 level for such calendar year specified in 19 clauses (i) through (xi) of subparagraph 20 (A), then the applicable amount under 21 paragraph (2) for the calendar year begin- 22 ning on the next January 1 following the 23 determination in clause (i) shall, after the 24 increase under paragraph (2) for such next 25 VerDate Sep 11 2014 01:15 Oct 03, 2019 Jkt 099200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H4520.IH H4520 dlhill on DSKBBY8HB2PROD with BILLS 9 •HR 4520 IH calendar year, be increased by an addi- 1 tional $4 per metric ton. 2 ‘‘(c) BY WHOM PAID.—The tax imposed by sub- 3 section (a) shall be paid by the owner of the fossil fuel 4 at the point of taxation. 5 ‘‘(d) POINT OF TAXATION.— 6 ‘‘(1) For fossil fuels produced within the United 7 States, the point of taxation shall be— 8 ‘‘(A) for coal, the mine mouth or, for 9 washed coal, the exit from the coal preparation 10 and processing plant, 11 ‘‘(B) for petroleum products, the exit point 12 from the refinery, and 13 ‘‘(C) for natural gas, the exit from the gas 14 processing plant or, for natural gas that is not 15 treated at a gas processing plant, the point of 16 sale to the person who combusts the gas or in- 17 corporates it into a product that is not intended 18 for combustion. 19 ‘‘(2) For any fossil fuel imported into the 20 United States, the point of taxation shall be the 21 point at which it first enters the United States. 22 ‘‘(e) EXEMPTIONS.— 23 ‘‘(1) EXEMPTION FOR NONCOMBUSTIVE 24 USES.— 25 VerDate Sep 11 2014 01:15 Oct 03, 2019 Jkt 099200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H4520.IH H4520 dlhill on DSKBBY8HB2PROD with BILLS 10 •HR 4520 IH ‘‘(A) REFUND FOR REDUCTION OR ELIMI- 1 NATION OF EMISSIONS.—Any manufacturer of a 2 product that incorporates a fossil fuel that has 3 been taxed under this section who can dem- 4 onstrate to the Secretary that the fossil fuel has 5 been transformed via the manufacture of the 6 product so that the fossil fuel’s emissions will 7 be reduced or eliminated over the product’s life- 8 time shall be entitled to a refund of the tax 9 paid under this section on the proportion of the 10 emissions reduced thereby, as determined by 11 the Secretary. 12 ‘‘(B) RULE.—The Secretary, in consulta- 13 tion with the Administrator, shall establish by 14 rule the criteria and process by which product 15 manufacturers can demonstrate that the condi- 16 tions in subparagraph (A) have been satisfied. 17 ‘‘(C) PUBLICATION OF REGULATIONS.— 18 The Secretary shall publish the regulations re- 19 quired by this subsection no later than one year 20 prior to the start of the calendar year referred 21 to in section 9901(b)(2)(A). The Secretary may 22 not collect the tax imposed by this section for 23 any calendar year that begins less than one 24 year after the regulations are published. 25 VerDate Sep 11 2014 01:15 Oct 03, 2019 Jkt 099200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H4520.IH H4520 dlhill on DSKBBY8HB2PROD with BILLS 11 •HR 4520 IH ‘‘(2) EXEMPTION FOR CARBON CAPTURE AND 1 STORAGE.— 2 ‘‘(A) REFUND FOR SEQUESTERS.—Any 3 person who sequesters greenhouse gas emissions 4 resulting from the combustion of fossil fuel that 5 has passed through a point of taxation shall be 6 entitled to a refund of the tax imposed by this 7 section. Emissions that are used for enhanced 8 oil recovery shall be entitled for such refund 9 provided that these emissions meet all of the 10 criteria applicable to other emissions that qual- 11 ify for such refund. 12 ‘‘(B) RULE.—The Secretary shall establish 13 by rule the procedures by which to apply for 14 such refunds and such refunds shall be paid 15 within six months of the Secretary receiving an 16 approvable application. 17 ‘‘(C) TIME OF REFUND.—The Secretary 18 may not refund any amounts under this para- 19 graph until such time as the Secretary has pub- 20 lished the regulations described in section 21 45Q(f)(2). 22 VerDate Sep 11 2014 01:15 Oct 03, 2019 Jkt 099200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H4520.IH H4520 dlhill on DSKBBY8HB2PROD with BILLS 12 •HR 4520 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 pro [Text truncated for display. Full text available on Congress.gov.]