SECTION 1. Section 3 of chapter 25A of the Massachusetts General Laws, as appearing in the 2012 Official Edition, is hereby amended by inserting the following definitions:-

“Adult,” a resident of the Commonwealth age 18 or above.

“Minor,” a resident of the Commonwealth age 17 or below.

“Quintile 1,” the 20 percent of households in the Commonwealth with the lowest after-tax incomes.

“Quintile 2,” the 20 percent of households in the Commonwealth with the next-to-lowest after-tax incomes; also termed those households with incomes from the 20th to 40th percentile of all households in the Commonwealth.

“Quintile 3,” the middle 20 percent of households in the Commonwealth based on after-tax incomes; also termed those households from the 40th to 60th percentile of all households in the Commonwealth.

“Quintile 4,” the next to highest 20 percent of households based on after-tax incomes; also termed those households from the 60th to 80th percentile of all households in the Commonwealth.

“Quintile 5,” the 20 percent of households with the highest after-tax incomes of all households in the Commonwealth.

“DOR Commissioner”, the Commissioner of the Department of Revenue.

''Greenhouse gas'', carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs) and sulfur hexafluoride (SF6), and any other matter identified by the department of energy resources as a likely contributor to climate change.

“Greenhouse gas-emitting priority”, matter that emits or is capable of emitting a greenhouse gas when burned or released to the atmosphere and is identified as a priority under the terms of this act, except that natural gas, petroleum, coal and any solid, liquid or gaseous fuel derived therefrom shall be greenhouse gas-emitting priorities.

“Greenhouse gas pollution charges”, the charges imposed on each ton of CO2e pursuant to this chapter.

“Employer”, any person, corporation, partnership, governmental body, or other entity that has employees working in the commonwealth.

“Green Infrastructure Fund”, a fund whose revenues are derived from the pollution charges defined in this section, and whose funds are used to finance the development of green infrastructure, according to section 13B.

“Greenhouse gas pollution charges fund”, the greenhouse gas pollution charges fund established under section 13C, also called the “pollution charges fund.” of this chapter.

“Lifecycle Emissions,” greenhouse gas emissions that are released during phases of a fuel or other product’s life, including those emissions released during extraction, processing, transportation, and disposal.

“Motor vehicle fuel”, fuel for the operation of a motor vehicle, provided, that “fuel” and

“Motor vehicle” shall have the same meanings as defined in section one of chapter 64A.

“Total rebate shares,” the sum of all Commonwealth residents age 18 or older, plus one-half the sum of all Commonwealth residents age 17 or younger.

“Resident” shall have the same meaning as defined in section one of chapter 62.

“Low-income households” are those with household incomes at or below 60 percent of the statewide median household income or 60 percent of the area median household income as calculated annually by the United States Department of Housing and Urban Development.

“Low-income communities” are census tracts with median household incomes at or below 60 percent of the statewide median income.

“Rural households” are those residing in a municipality with a population density equal to or less than 500 residents per square mile of land in the municipality.

“The EEA Secretary”, The Secretary of the Executive Office of Energy and Environmental Affairs

SECTION 2. Section 6 of chapter 25A of the General Laws, as so appearing, is hereby amended by inserting after the last paragraph the following:-

(13) administer the schedules of greenhouse gas pollution charges and the greenhouse gas pollution charges rebate fund, both established pursuant to this chapter. The executive office of energy and environmental affairs shall delegate all collection of greenhouse gas pollution charges, distribution of rebates, and any other appropriate functions to the department of revenue. The department of revenue will carry out all functions delegated to it by the executive office of energy and environmental affairs.

SECTION 3. Chapter 25A of the General Laws, as so appearing, is hereby amended by inserting after section 13 the following sections:-

25A:13A Greenhouse gas pollution schedule and charges

(a) The EEA Secretary shall, using the best information and science reasonably available, consider whether to identify any greenhouse gas-emitting matter, in addition to natural gas, petroleum, coal, and any solid, liquid or gaseous fuel derived therefrom, as a greenhouse gas-emitting priority for the purposes of this chapter; except that emissions from farm animals and crops shall not be designated greenhouse gas-emitting priorities.

(b) The EEA Secretary shall determine the schedule of greenhouse gas pollution charges authorized under this chapter by multiplying the CO2e of each greenhouse gas-producing substance by the charge or charges established herein. For the purpose of calculating said schedule, the EEA Secretary shall determine the average CO2e per unit of each greenhouse gas-producing substance. For substances where the CO2e per unit is not precisely known, because the rate of leakage of the substance into the atmosphere is uncertain or for other reasons, the EEA Secretary shall use the best available information to estimate the average CO2e per unit of the substance used in the Commonwealth.

(c) The DOR commissioner, in consultation with the EEA Secretary, shall collect greenhouse gas pollution charges on the distribution or sale of greenhouse gas-emitting priorities. The charge in the first year of operation shall be $20 per ton of CO2e. Said charges shall increase by $5 every year until the rate is $40 per ton of CO2e. Beginning in the sixth year of implementation, the charge shall be annually defined as $5 multiplied by the total number of years since the fifth calendar year of implementation in which the EEA Secretary has determined that actual emissions have exceeded the annual emissions target for that calendar year, pursuant to Section 25A:13A(d), plus $40.

(d) Beginning in 2025, the EEA Secretary shall determine by no later than September 1st on an annual basis whether actual emissions of greenhouse gases from the preceding calendar year exceeded the annual emissions target for that year. If such a determination is made, the DOR commissioner shall update the greenhouse gas pollution charge on January 1st of the following calendar year. The annual emissions targets are defined as follows:

(1) Until 2030, the annual emissions target is equivalent to actual emissions in year one of implementation, minus a uniform rate of reduction in subsequent years such that the annual emissions target in 2030 is equal to the 2030 emissions limit as defined by chapter 21N, the Climate Protection & Green Economy Act.

(2) Between 2030 and 2040, the annual emissions target is defined as the 2030 emissions limit as defined by chapter 21N, the Climate Protection & Green Economy Act, minus a uniform rate of reduction in subsequent years such that the annual emissions target in 2040 is equal to the 2040 emissions limit as defined in chapter 21N.

(3) Between 2040 and 2050, the annual emissions target is defined as the 2040 emissions limit as defined by chapter 21N, the Climate Protection & Green Economy Act, minus a uniform rate of reduction in subsequent years such that the annual emissions target in 2050 is equal to the 2050 emissions limit as defined by chapter 21N.

(e) The EEA Secretary shall undertake all reasonable efforts to collect charges authorized pursuant to this chapter at the first point of distribution or sale within the commonwealth of a greenhouse gas-producing substance. Before 2025, the EEA Secretary shall amend current regulations, and develop new regulations if necessary, in order to measure and verify actual emissions of greenhouse gases from entities subject to carbon fees, in adherence with the timeframe described in Section 25A:13A(d). The regulations shall do all of the following:

(1) Require annual third-party verification of all entities subject to report greenhouse gas emissions.

(2) Make all reasonable efforts to promote consistency and streamlined reporting requirements across international, federal, and state greenhouse gas emission reporting programs.

(f) In the fourth year of implementation, and every two years thereafter, the EEA Secretary shall report to the house and senate committees on ways and means, the joint committee on telecommunications, utilities and energy, and the house and senate committees on global warming and climate change. Said reports shall consider whether any further adjustments in greenhouse gas pollution charges are recommended to account for inflation, to ensure progress towards reaching emissions limits for 2030, 2040, and 2050 included in or authorized by chapter 21N, the Climate Protection & Green Economy Act, or, pursuant to section 13C(f)(2) of this chapter, to mitigate serious harm to economic sectors, economic sub-sectors or individual employers of the commonwealth caused by collection of greenhouse gas pollution charges.

(g) Subject to subsection (b) of this section, the EEA Secretary shall determine the amount of carbon dioxide equivalents released in the form of escaped methane due to the extraction, transport, or distribution of natural gas before the point of consumption in the state, and shall add an additional charge to the carbon price for all natural gas based on the rate specified in subsection (c) of this section.

(h) Greenhouse gas-emitting priorities may produce GHG emissions prior to and subsequent to their combustion or other use within the Commonwealth, including emissions during extraction, refining, processing, transportation, and disposal. Such emissions may be significant in relation to the emissions from combustion or other use within the Commonwealth. Within three (3) years of this act coming into effect, the EEA Secretary shall issue a report and recommendations to the General Court as to whether such “lifecycle” emissions should have the greenhouse gas pollution charge applied to them.

(i) Power plants regulated by the Regional Greenhouse Gas Initiative, as defined in 310 CMR 7.70(1)(b), shall be exempt from the greenhouse gas pollution charges.

(j) Should the federal government, or a regional consortium of states, establish a carbon fee on the transportation or heating sectors, the DOR shall deduct the sum of payments made to other carbon price programs in the same year; provided, however, that the amount deducted may be no greater than the total amount of the carbon fee assessed by the DOR Commissioner.

25A:13B Green Infrastructure Fund

(a) There shall be established on the books of the commonwealth a separate fund to be known as the Green Infrastructure Fund (GIF). The DOR commissioner shall deposit 30% of proceeds collected under section 13A into said fund. The Green Infrastructure Fund will support investments in clean energy, clean transportation, and resiliency to the local impacts of climate change. Eligible projects shall include but not be limited to: investments in public transit, electric vehicles, electric vehicle infrastructure, and other modes of clean transportation; expansion of in-state renewable energy systems; energy efficiency and renewable energy investments in housing, municipal infrastructure, and public school buildings; and loan programs for small business climate resiliency, renewable energy, and efficiency upgrades. Funding for household projects shall include resources that enable renter households to access the benefits of energy efficiency and/or renewable energy.

(b) Governance

(1) A Green Infrastructure Fund Board of Directors shall be created, with its members chosen by the Governor of the Commonwealth. The EEA Secretary shall serve as Chair of the Green Infrastructure Fund Board, with 17 members representing: (i) the Department of Transportation; (ii) the Department of Environmental Protection; (iii) the Department of Energy Resources; (iv) the Department of Housing and Community Development; (v) the Office of the Treasurer; (vi) the Massachusetts Clean Energy Center; (vii) small business; (viii) large commercial/industrial business; (ix) organized labor; (x) state residents; (xi) low-income residents; (xii) municipalities; (xiii) clean energy; (xiv) public transportation; (xv) environmental protection; and (xvi) two separate representatives from regional planning associations representing different regions of the state.

(2) The Massachusetts Clean Energy Center (CEC), with the guidance of the Green Infrastructure Fund Board of Directors (GIF Board), shall develop and issue two-year plans for expenditure of the GIF funds. The CEC may assign responsibility for administering portions of the funds and plans to state agencies outside its authority, including but not limited to the Massachusetts Department of Transportation, the Massachusetts Department of Energy Resources, the Massachusetts Department of Environmental Protection, the Massachusetts Department of Education, and the Executive Office of Housing and Economic Development.

(3) Municipal governments and regional agencies serving municipalities, including regional transit authorities, are eligible to apply for funding from the GIF, through a grant procedure to be developed by the CEC under the direction of the GIF Board. The CEC must make technical assistance available as part of this grant procedure, using funds specified in Section 13B(b)(4).

(4) The Green Infrastructure Fund shall be administered by the CEC using up to 5% of Green Infrastructure Fund proceeds to cover administrative costs, including support from expert consultants, technical assistance to municipal governments and regional agencies, and program outreach.

(c) Investment

(1) Priority disbursements will be awarded to projects that concur with investment principles established by the GIF Board, in consultation with the public. Among these principles, all funded projects must facilitate, directly or indirectly, reductions of greenhouse gas emissions or provide resilience to the local impacts of climate change.

(2) The investment plan shall allocate a minimum of 40 percent of the available moneys in the fund to programs and projects that benefit individual low-income households, regardless of location, and to larger-scale projects located within the boundaries of, and benefiting individuals living in, low-income communities.

(3) Any funding guidelines developed for administering agencies pursuant to Section 13B shall include guidelines for how administering agencies should maximize and measure benefits for low-income households and communities, provided further that all construction, reconstruction, alteration, installation, demolition, maintenance or repair paid through the Green Infrastructure Fund shall be subject to Massachusetts General Law Chapter 149 Sections 26 to 27F inclusive, Massachusetts General Law Chapter 149 Section 29, and Massachusetts General Law Chapter 30 Section 39M.

(d) Annual Reporting

(1) The CEC shall submit an annual report to the appropriate committees of the Legislature on the status of projects funded pursuant to this bill and their outcomes.

(2) Administering agencies shall report to the CEC, and the CEC shall include in the report, a description of how the administering agencies have fulfilled legislative requirements pursuant to Section 13B(a) and Section 13B(c).

25A:13C Greenhouse gas pollution charges fund

(a) There shall be established on the books of the commonwealth a separate fund to be known as the greenhouse gas pollution charges fund. The DOR commissioner shall deposit into said fund all proceeds collected under section 13A that remain after distribution of funds to the Green Infrastructure Fund. None of said proceeds shall fund government operations of the commonwealth, other than to pay for reasonable administrative costs as provided under sub-section (b) of this section.

(b) The DOR commissioner shall disburse all greenhouse gas pollution charge proceeds as follows. 75 percent of the moneys shall be put into a household fund that is part of the greenhouse gas pollution charges fund. 25 percent of the moneys shall be put into an employers’ fund that is part of the greenhouse gas pollution charges fund. The DOR commissioner may retain a reasonable amount of charge proceeds to pay for the costs of administering the activities authorized by this chapter. Proceeds shall be available for the purposes enumerated in this section without appropriation.

(c) HOUSEHOLD FUND -- Of the funds transferred to the household fund, 25 percent of the total funds shall be used as follows:

(1) Ten (10) percent of the household rebate fund shall be distributed to households in quintile 1, as defined in Section 1 above. This 10 percent shall be divided by the sum of the adults in quintile one plus one-half the minors in quintile one, with the resulting number termed the “quintile 1 initial rebate.” Each household in quintile 1 shall receive a rebate equal to the number of adults in the household times the quintile 1 initial rebate, plus the number of children in the household times one-half the quintile 1 initial rebate.

(2) Ten (10) percent of the household rebate fund shall be distributed to the households in quintile 2. This 10 percent shall be divided by the sum of the adults in quintile 2 plus one-half the minors in quintile 2, with the resulting number termed the “quintile 2 initial rebate.” Each household in quintile 2 shall receive a rebate equal to the number of adults in the household times the quintile 2 initial rebate, plus the number of children in the household times one-half the quintile 2 initial rebate.

(3) Five (5) percent of the household rebate fund shall be distributed to the households in Quintile 3. This five (5) percent shall be divided by the sum of the adults in quintile 3 plus one-half the minors in quintile 3, with the resulting number termed the “quintile 3 initial rebate.” Each household in quintile 3 shall receive a rebate equal to the number of adults in the household times the quintile 3 initial rebate, plus the number of children in the household times one-half the quintile 3 initial rebate.

(d) The remaining 75 percent of the household fund shall be distributed as follows:

(1) The DOR commissioner shall direct a portion of the moneys to households in the form of motor fuel rebates, and a separate portion of the moneys to households in the form of home heating rebates. These portions are calculated as a percentage of annual carbon fee revenue derived from the sale of motor fuel and the sale of heating fuels to households, multiplied by total available moneys in the household fund after allocations in Section 13C(c) are carried out.

(2) Of the money directed to motor fuel rebates pursuant to Section 13C(d)(1), rural households, as defined in Section 1 above, shall receive a greater rebate per adult than non-rural households. The DOR Commissioner shall direct motor fuel rebates to each household in the commonwealth, such that:

(i) Non-rural households receive a flat rebate per adult, and a flat half rebate per minor.

(ii) Rural households receive a rebate per adult that is 1.3 times greater than the flat rebate per adult received by non-rural households. Rural households receive a rebate per minor that is 1.3 times greater than the flat half rebate per minor received by non-rural households.

(3) Ten (10) percent of the funds calculated in Section 13C(d)(1) that derive from charges collected on the sale of heating fuels to households shall be allocated to the Commonwealth’s Low Income Home Energy Assistance Program and transferred to the department of housing and community development for incorporation into that program, provided that DHCD shall have discretion to determine eligibility for these funds.

(4) The funds remaining in the household fund after the allocation of funds in Section 13C(d)(2) and Section 13C(d)(3) shall be divided by the total rebate shares, as defined in Section 1 above, with the resulting number termed the “remaining rebate per adult.” Each household, across all quintiles, shall receive a rebate equal to the remaining rebate per adult times the number of adults in the household plus the remaining rebate per adult times one-half number of children in the household.

(e) In rebating greenhouse gas pollution charge proceeds, the DOR Commissioner shall coordinate with officials of the executive office of energy and environmental affairs, the executive office of health and human services, the executive office of housing and economic development and other agencies in making all reasonable efforts to identify the names and addresses of all residents, with special attention to the names and addresses of low-income residents, so that they can receive rebates expeditiously.

(f) EMPLOYERS FUND -- The DOR Commissioner shall allocate the remaining 25 percent of the greenhouse gas pollution charge fund to the employers fund, to be distributed as follows:

(1) The DOR commissioner shall allocate $1 million of the employers fund annually to the Rapid Response Set-Aside fund, solely for the purpose of providing assistance to workers and communities experiencing displacement, loss of tax revenue, or other forms of economic loss due to the shrinkage of fossil fuel industries.

(2) The DOR commissioner, in consultation with the EEA Secretary and the commissioner of housing and economic development, shall, with special attention to manufacturing, agriculture, fisheries, and local governments, identify economic sectors or economic sub-sectors at risk of serious negative impacts as a consequence of the charges collected pursuant to this chapter. The commissioner may, as mitigation, calculate the total proceeds collected from said sectors or subsectors and may apportion part or all of said proceeds to the affected sector or sub-sector, provided that the sum of these rebates does not exceed the total available moneys in the employer fund. In order to provide such mitigation, the DOR commissioner shall show that such impacts are likely to occur, due to competition from employers outside the Commonwealth in combination with energy costs constituting a substantial fraction of total operating costs in the economic sector or sub-sector.

(2) Should additional moneys remain in the employer fund after distribution pursuant to Section 13C(f)(1) and 13C(f)(2), the DOR commissioner shall rebate the remaining employer funds to all other employers not included in Section 13C(f)(1) or Section 13D(b), including those employers otherwise exempt from taxes under chapter 63 due to their status as not-for- profit organizations or government entities. The DOR Commissioner shall distribute these funds such that each employer receives a flat rate of compensation times the number of full time equivalent employees.

(g) The DOR commissioner shall not be subject to penalties or lawsuits for damages if the charges collected under this chapter are not precisely equal to rebates returned under this chapter; provided, that the commissioner shall make all reasonable efforts to return to residents and employers in the aggregate all charges collected under this chapter, except for those funds placed in the fund for green infrastructure.

25A:13D Regulations; Miscellaneous

(a) The DOR commissioner and EEA Secretary shall promulgate rules and regulations necessary to carry out the provisions of this chapter.

(b) If any covered fuel or its derivative is used by a government agency whose primary purpose is to provide public transportation by bus, van, rail, ferry, or other means that reduce the amount of driving by private motor vehicles, the DOR commissioner shall fully compensate or exempt these agencies for their total costs associated with this chapter.

(c) The DOR commissioner shall do at least one of the following: (i) Provide rebates to low and moderate income households twice each year in advance of the annual heating season and summer cooling season; (ii) distribute part or all of the annual expected value of household rebates to low and moderate-income households prior to collecting greenhouse gas charges in year one; or (iii) otherwise set schedules and methods for distribution of rebates that ensure low and moderate-income households obtain rebates corresponding to the time schedule in which they can be expected to be paying greenhouse gas pollution charges.

(d) The commissioner may issue additional rebates or declare exemptions from charges in instances where charges have been paid but no emissions occur or are anticipated to occur.

(e) The EEA Secretary shall study the feasibility of imposing and collecting additional greenhouse gas emission charges on emissions attributable to biomass. The report shall include an analysis of the feasibility and expense of (i) calculating a reasonably accurate current statistical baseline, specific to the Commonwealth, of such emissions, and (ii) under what conditions biomass usage should be exempt from carbon fees. Within nine months of the effective date of this act, the commissioner shall submit the report to the house and senate committees on ways and means, the joint committee on telecommunications, utilities, and energy, and the house and senate committees on global warming and climate change.

(f) Within three years of the effective date of this legislation, the EEA Secretary shall prepare a report on options for and the implications of collecting charges for emissions of CO2e resulting from carbon-generated electricity produced or distributed in the commonwealth. The implications considered shall include, but not be limited to, potential effects on the market for emission allowances created by the regional greenhouse gas initiative.

(g) Rebates distributed pursuant to Section 13C shall not be counted in determining eligibility for other state programs with income limitations. To the degree possible, said rebates shall not count towards income limitations for federal programs.