§ Legislative Act Policy
Environmental Revenue
Current Status
Existing Law: Clean Air Act (42 U.S.C. � 7401 et seq.) regulates emissions through permits, not pricing. Mineral Leasing Act of 1920 (30 U.S.C. � 181 et seq.) sets federal royalty rates. General Mining Law of 1872 governs hardrock mining with zero federal royalties�
Current Authority: EPA administers emissions regulations. Bureau of Land Management and ONRR administer mineral leases. Forest Service administers timber sales
Existing Limitations: No federal price on carbon emissions. US emits approximately 5 billion metric tons CO2 equivalent annually�. Federal oil/gas royalty rates unchanged since 1920 (12.5% onshore, 18.75% offshore)�. Hardrock mining pays zero federal royalties under 1872 law�. Timber sales underpriced relative to market value. Approximately 500,000 abandoned hardrock mine sites require remediation at estimated cost exceeding $50 billion
Problem
Specific Harm: Absence of carbon pricing externalizes climate costs estimated at $50-200 per ton (federal interagency working group social cost of carbon)4 onto society through extreme weather, sea level rise, agricultural disruption, and public health impacts. Fossil fuel producers face no cost for emissions while society bears consequences. Outdated royalty rates provide implicit subsidy to extraction industries. Hardrock mining extracts billions in value from federal lands while paying zero royalties and leaving remediation costs to taxpayers
Who is Affected: All Americans bear externalized costs of unpriced carbon emissions. Taxpayers subsidize below-market extraction. Communities near abandoned mines face environmental degradation. Clean energy alternatives disadvantaged by unpriced fossil fuel externalities
Gaps in Current Law: No mechanism to price carbon emissions. Royalty rates reflect 1920 (oil/gas) and 1872 (hardrock) conditions rather than current market values. No dedicated funding for abandoned mine remediation. Border adjustment absent allows carbon leakage to non-pricing jurisdictions
Accountability Failures: EPA regulates through permits without economic incentive. BLM lacks authority to charge market-rate royalties absent Congressional action. GAO has repeatedly identified royalty rate inadequacy�
Proposed Reform
Primary Policy Change: Establish carbon fee of $50 per metric ton CO2 equivalent (phased in over 5 years) with border adjustment. Modernize resource extraction royalties to 16% for oil/gas and 8-12% for hardrock minerals
New Requirements: Carbon fee collection at point of first sale or large emitter source (facilities exceeding 25,000 metric tons CO2e annually). Border carbon adjustment on imports from non-pricing countries. Quarterly emissions reporting via Federal Environmental Platform. Modern royalty rates for all federal extraction. Timber harvested from federal lands subject to harvest fee equal to 10% of sale value
New Prohibitions: Royalty relief and rate reduction programs repealed
Enforcement: Court of Federal Claims with enhanced jurisdiction for carbon fee and royalty disputes. Binding decisions subject to judicial review only in DC Circuit on questions of law. Integration with EPA continuous emissions monitoring systems (CEMS) and satellite verification where available. Aggregate emissions and fee data published quarterly on public dashboard
Definitions:
Covered Greenhouse Gases: Carbon dioxide (CO2). Methane (CH4) at 25x CO2 equivalent. Nitrous oxide (N2O) at 298x CO2 equivalent. Fluorinated gases at respective global warming potentials per EPA determination
Carbon Fee Phase-In Rate: Year 1: $10. Year 2: $20. Year 3: $30. Year 4: $40. Year 5 and thereafter: $50, adjusted annually for inflation using the Consumer Price Index
Border Adjustment Covered Imports: Cement, steel, aluminum, fertilizers, electricity, hydrogen, glass, ceramics, paper, chemicals, and other goods as designated by the Secretary based on carbon intensity
Border Adjustment Exemption: Imports from countries with carbon pricing at or above 80% of US fee rate are exempt
Embedded Carbon Calculation: Default emissions factors established by Treasury. Importers may demonstrate lower actual emissions with verified documentation
Export Rebate: Exporters may claim rebate of carbon fees embedded in exported products
Hardrock Mining Royalty Rates: 8% of gross value for copper, gold, silver, lead, zinc, uranium. 12% for rare earth elements, lithium, cobalt, and critical minerals as designated by Secretary
Carbon Revenue Allocation: 80% General Fund. 15% Carbon Transition Assistance Fund (worker retraining, community economic development, energy assistance). 5% administration including Federal Environmental Tax Platform
Abandoned Mine Remediation Fund: 50% of hardrock royalty revenue deposited in Abandoned Mine Land Reclamation Fund
What Changes
Before: No federal carbon price. Climate externalities borne by society. Oil/gas royalties at 1920 rates (12.5% onshore). Hardrock mining pays zero federal royalty under 1872 law�. 500,000 abandoned mine sites unfunded. No border adjustment allows carbon leakage. Clean energy disadvantaged by unpriced fossil fuel externalities
After: $50/ton carbon fee (phased in over 5 years). Border adjustment on imports from non-pricing countries. 16% oil/gas royalty. 8-12% hardrock royalty (new). Abandoned mine remediation funded. Federal Environmental Tax Platform enables digital reporting. Independent tribunal resolves disputes. 15% of carbon revenue funds worker transition
ROI
Costs:
| Item | 10-Year |
|---|---|
| Federal Environmental Tax Platform | $2.0B |
| Court of Federal Claims operations | $0.5B |
| Administrative costs | $2.5B |
Savings:
| Item | Gross | Capture | Net |
|---|---|---|---|
| Carbon fee revenue | $1.8T | 100% | $1.8T |
| Extraction royalties | $490B | 100% | $490B |
| Total revenue | $2.29T | 100% | $2.29T |
Societal Benefits:
| Benefit | Annual | NPV (3%) | NPV (7%) |
|---|---|---|---|
| Climate damage avoided | $150B | $1.3T | $950B |
| Transition fund (allocated) | $39B | $331B | $247B |
| Abandoned mine cleanup | $2B | $17B | $13B |
Summary:
| Category | 10-Year | Notes |
|---|---|---|
| Federal Revenue | $2.29T | Carbon $1.8T + Extraction $490B |
| Implementation Costs | $2.5B | Platform, tribunal, administration |
| Net Federal Impact | $2.29T | Revenue declines as emissions fall |
Federal Budget Impact
Carbon fee revenue builds from $52B in Year 1 to $259B at full implementation. Revenue declines over time as emissions fall, indicating environmental success. Extraction royalties provide stable $49B annually. Total net federal revenue: $308B annually at full implementation.
Societal Benefits
Internalizes $50-200/ton social cost of carbon through price signal. Funds worker transition and community support. Addresses 150-year legacy of zero hardrock mining royalties. Creates level playing field for clean energy competition.
References
- General Mining Law of 1872 (30 U.S.C. � 22 et seq.)
- EPA Greenhouse Gas Inventory (2024)
- GAO-21-138, Federal Oil and Gas Royalties (2021)
- Interagency Working Group on Social Cost of Greenhouse Gases (2021)
- Clean Air Act (42 U.S.C. � 7401 et seq.)
- Mineral Leasing Act of 1920 (30 U.S.C. � 181 et seq.)
- Outer Continental Shelf Lands Act (43 U.S.C. � 1331 et seq.)
- Massachusetts v. EPA, 549 U.S. 497 (2007) (EPA authority over greenhouse gases)
- EU Emissions Trading System (operational since 2005, current price >�70/ton)
- Canada federal carbon price (CAD $65/ton 2023, rising to $170 by 2030)
- Sweden carbon tax ($130/ton, world's highest)
- British Columbia carbon tax (revenue-neutral since 2008)
Change Log
2025-01-17 - Oversight Consolidation: Simplified Court of Federal Claims enforcement language to empower existing court rather than specifying new ALJ appointments.
2025-12-07 - Template Standardization: Converted ROI section to required table format. Broke semicolon chains into separate sentences. Standardized spacing between bullet points. Removed timeline language from definitions section.
2025-12-07 - Inline Citations: Added superscript citations. Standardized References section.
2025-12-07 - Legislative Language Removal: Merged unique provisions into Proposed Reform; deleted Legislative Language section.
Complete Revision (November 2025): Consolidated carbon pricing and resource extraction into single Environmental Revenue framework. Removed industrial pollution taxes (EPA regulation preferred over pricing for non-carbon pollutants). Industrial pollution tax ($462B) created economic shock risk. Option C hybrid approach deferred in favor of regulatory controls via EPA while carbon pricing addresses climate externality directly.