HR3338-119

What This Bill Does

The MARKET CHOICE Act replaces part of the current fuel-tax and climate-regulation structure with a carbon-pricing and investment system. Title I adds subtitle L to the Internal Revenue Code, imposing a tax on fossil fuels produced in or imported into the United States at $40 per metric ton of carbon dioxide equivalent in 2027, then increasing annually by 5 percentage points plus CPI and adding a $4 adjustment if emissions exceed statutory benchmarks. It also taxes greenhouse-gas emissions from industrial processes such as iron, steel, refining, cement, petrochemicals, ammonia, aluminum, semiconductors, and electrical transmission, and from listed products such as fuel ethanol, industrial carbonates, nitrous oxide, biodiesel, and biomass fuels. Treasury, EPA, DOE, and CBP must define taxable emissions, refunds for sequestration and non-combustion use, credits for state payments, penalties equal to three times unpaid tax, and border tax adjustments for covered imports and exporter rebates. Title II creates the RISE Trust Fund from 75 percent of carbon-tax receipts and allocates money from 2027 through 2036 to the Highway Trust Fund, Airport and Airway Trust Fund, weatherization, displaced energy workers, leaking underground storage tanks, abandoned mines, coastal flooding, ARPA-E, carbon capture, carbon storage, energy storage, low-income household grants, reforestation, and conservation programs. It repeals federal motor vehicle and aviation fuel taxes after 2025 and modifies advanced coal project credits. Title III limits EPA greenhouse-gas rules for taxed emissions while preserving monitoring, health-based regulation, and backstop authority if emission targets are missed. Title IV creates a 10-member National Climate Commission to set emissions-reduction goals through 2056, review federal policy progress, and report to the President, Congress, and states.

Who Benefits and How

Low-income households benefit because 10 percent of RISE Trust Fund allocations flow through state grants for households at or below 150 percent of poverty or participating in SNAP, FDPIR, Puerto Rico or American Samoa nutrition assistance, Medicare low-income subsidy, or SSI. Highway Trust Fund programs benefit because 70 percent of annual RISE Trust Fund amounts from 2027 through 2036 are directed to highway infrastructure. Displaced energy workers benefit from a 10-year Labor Department program covering retraining, relocation, early retirement, health benefits, community redevelopment block grants, and United Mine Workers pension transfers. U.S. exporters in covered industrial sectors benefit from border-adjustment rebates for carbon-tax costs on covered exported goods. Weatherization programs, ARPA-E, carbon capture projects, reforestation, conservation programs, coastal flooding projects, airports, and abandoned mine programs receive dedicated RISE allocations.

Who Bears the Burden and How

Fossil fuel producers and importers must pay the combusted-fuel carbon tax at mine mouths, refineries, gas-processing exits, sale points, or import entry points. Industrial emitters in sectors such as steel, refining, cement, petrochemicals, aluminum, semiconductors, and electrical transmission must calculate taxable emissions and pay the same carbon tax rate. Importers of carbon-intensive goods must submit border tax adjustment payments unless products qualify for country or sector exemptions. Treasury carbon tax staff, EPA emissions staff, DOE technical staff, and CBP customs staff must write rules, calculate rates, process refunds, apply penalties, administer border adjustments, and manage RISE receipts. EPA climate regulators lose some Clean Air Act greenhouse-gas rulemaking authority for taxed emissions unless statutory backstop conditions restore it.

Key Provisions

• Creates a greenhouse-gas tax starting at $40 per metric ton in 2027 with CPI, 5-point, and emissions-target adjustments.
• Requires border tax adjustments for covered imports and exporter rebates for domestic eligible industrial sectors.
• Funds the RISE Trust Fund with 75 percent of carbon-tax receipts and directs allocations to infrastructure, household, worker, energy, conservation, and climate programs.
• Repeals federal motor vehicle and aviation fuel taxes for transactions after December 31, 2025.
• Limits overlapping EPA greenhouse-gas regulation for taxed emissions while preserving monitoring, health-based authority, and target-failure backstops.
• Creates a National Climate Commission to set emissions-reduction goals and report on federal climate policy progress.