MARKET CHOICE Act

Bill Number: H.R. 3338
Origin Chamber: House
Congress: 119th Congress, Session 1
Policy Area: Taxation
Status: Introduced
Latest Action: 2025-05-13: Referred to the Subcommittee on Highways and Transit.
Last Updated: 2026-01-12T19:44:14Z

AI-Generated Summary

Summary of H.R. 3338: MARKET CHOICE Act

Purpose

The legislation aims to address climate change and infrastructure needs by imposing a tax on greenhouse gas (GHG) emissions—gases like carbon dioxide that trap heat in the atmosphere—while eliminating certain existing fuel taxes. It generates revenue to fund infrastructure repairs, environmental protections, worker assistance, and research, promoting economic growth and emission reductions through market-based incentives.

Key Provisions

GHG Emissions Tax (Title I):
Starts in 2027, taxes fossil fuels (coal, petroleum, natural gas) at the point of production or import, based on potential emissions if burned ($40 per metric ton of carbon dioxide equivalent, or CO2e, rising annually by 5% plus inflation adjustments).
Extends to emissions from specific industrial processes (e.g., cement, steel production) at facilities emitting over 25,000 tons CO2e yearly, and certain products (e.g., biofuels, nitrous oxide) when used.
Includes border adjustments: Taxes imports from high-emission sectors to match U.S. costs and rebates exports, preventing "carbon leakage" (emissions shifting abroad); exempts least-developed countries.
Offers refunds for non-burning uses (e.g., manufacturing products that reduce emissions) and carbon capture/storage (trapping emissions underground).
Provides credits for state-level GHG payments, phasing out from 100% in 2027 to 0% after 2031.
Imposes triple the tax as a penalty for non-compliance.
Adjusts rates upward if emissions exceed targets (e.g., cumulative targets through 2037 to limit total emissions).

Revenue Distribution (Title II):
Creates the Rebuilding Infrastructure and Solutions for the Environment (RISE) Trust Fund with 75% of tax revenues.
Allocates funds (2027–2036): 70% to highways, 10% to state grants for low-income households (based on state fuel use), 4% to coastal flooding projects, plus shares for airports, weatherization, worker aid, research (e.g., carbon capture, energy storage), reforestation, and conservation.
Repeals federal excise taxes on motor vehicle and aviation fuels after December 31, 2025.
Modifies tax credits for advanced coal projects to encourage sequestration (storing captured emissions).

Amendments to Environmental Laws (Title III, Subtitle A):
Adds a moratorium to the Clean Air Act (until 2039 or earlier if emissions targets unmet) preventing EPA from regulating GHG emissions from taxed sources based solely on their heat-trapping effects (exceptions for health/welfare impacts, non-GHG pollutants, monitoring, and specific sectors like vehicles/aircraft).
Authorizes grants for state/local/tribal projects to mitigate chronic flooding (e.g., levees, natural habitats, resilient streets), prioritizing high-risk areas with up to 90% federal funding.
Explicitly states no preemption of state laws.

Worker Assistance (Title III, Subtitle B):
Provides 10-year program (from enactment) for fossil fuel and certain nuclear workers displaced by the Act, funding retraining, relocation, health benefits, early retirement, community redevelopment, and mine workers' pensions (if underfunded).

National Climate Commission (Title IV):
Establishes a 10-member bipartisan body (appointed by Congress/President) with expertise in energy, economy, and climate.
Duties: Set emission reduction goals (2031–2056 based on science), review federal policies, issue reports every 5 years with recommendations.
Funded by $5 million annually (2027–2039) plus private donations; can access federal data and hire experts.

Significant Changes to Existing Law

Tax Code Amendments: Adds a new subtitle to the Internal Revenue Code for GHG taxation, replacing fuel excise taxes (e.g., gasoline, diesel, aviation fuel) with emission-based fees; modifies coal project credits to require more sequestration and lower capacity thresholds.
Clean Air Act: Imposes a temporary ban on EPA GHG regulations for taxed emissions (focusing regulation on non-GHG effects), but preserves authority for vehicles, aircraft, nonroad engines, and fuels under specific sections; ends moratorium if emissions exceed targets by 2031 or 2035.
New Funds and Programs: Creates RISE Trust Fund for targeted spending; introduces state low-income rebates and flooding grants; establishes Climate Commission for ongoing oversight.
Border Measures: Introduces first-of-its-kind U.S. carbon border tax adjustments, aligned with international trade rules.

Potential Impacts

Government Agencies: Increases IRS/EPA workload for tax collection, emission tracking, and regulation (e.g., annual reports, rules within 1 year of enactment); shifts funding to DOT (highways/airports), DOE (research), Labor (workers), and Commerce/Army (flooding grants); creates new oversight via Climate Commission.
Citizens: Low-income households receive annual rebates (proportional to state emissions); displaced energy workers gain support; higher fuel/product costs may raise living expenses, but infrastructure investments could improve transport/safety; reduced emissions may lessen climate risks like flooding/extreme weather.
International Relations: Border taxes could pressure trading partners to cut emissions, risking trade disputes (e.g., with China/EU); notifications to countries encourage global action; exemptions for low-emission/developing nations promote equity but may affect U.S. competitiveness.

Main Stakeholders Affected

Energy Producers/Industries: Fossil fuel companies (coal, oil, gas), manufacturers (cement, steel, chemicals), and importers face new taxes/costs; benefits from rebates, credits, and research funding; potential job losses offset by worker aid.
Consumers and Households: Low-income groups gain rebates; all face higher energy/product prices, but infrastructure upgrades (roads, flood protection) provide broad benefits.
States and Localities: Receive grants for rebates, flooding mitigation, and conservation; retain regulatory authority without federal preemption.
Environmental/Conservation Groups: Gain from emission taxes, research, and natural infrastructure projects; moratorium limits some EPA actions.
Workers and Communities: Energy sector employees (fossil/nuclear) get transition support; rural/coastal areas benefit from redevelopment and flood resilience.
Government Entities: Treasury/IRS (tax admin), EPA (rules/monitoring), DOE/Labor (programs), and bipartisan Commission influence policy.

Notable Legal, Constitutional, or Political Implications

Legal: Relies on Congress's taxing power (Article I, Section 8); border adjustments must comply with WTO rules to avoid trade challenges; moratorium shifts regulatory burden from EPA to taxes, potentially limiting executive climate actions; no state preemption preserves federalism.
Constitutional: Tax-and-spend framework avoids direct regulation, reducing separation-of-powers issues; private donations to Commission require transparency to prevent undue influence.
Political: Bipartisan framing (findings note support) ties emissions to infrastructure/jobs, appealing across aisles; adjustable rates and worker aid mitigate opposition from fossil fuel states; long-term Commission ensures ongoing, science-based adjustments without annual congressional votes.

This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.

Sponsor

Rep. Fitzpatrick, Brian K. [R-PA-1]

Cosponsors (1)

Rep. Carbajal, Salud O. [D-CA-24]

Recent Actions

2025-05-13: Referred to the Subcommittee on Highways and Transit.
2025-05-13: Referred to the Committee on Ways and Means, and in addition to the Committees on Energy and Commerce, Natural Resources, Education and Workforce, Transportation and Infrastructure, Science, Space, and Technology, and Agriculture, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
2025-05-13: Referred to the Committee on Ways and Means, and in addition to the Committees on Energy and Commerce, Natural Resources, Education and Workforce, Transportation and Infrastructure, Science, Space, and Technology, and Agriculture, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
2025-05-13: Referred to the Committee on Ways and Means, and in addition to the Committees on Energy and Commerce, Natural Resources, Education and Workforce, Transportation and Infrastructure, Science, Space, and Technology, and Agriculture, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
2025-05-13: Referred to the Committee on Ways and Means, and in addition to the Committees on Energy and Commerce, Natural Resources, Education and Workforce, Transportation and Infrastructure, Science, Space, and Technology, and Agriculture, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
2025-05-13: Referred to the Committee on Ways and Means, and in addition to the Committees on Energy and Commerce, Natural Resources, Education and Workforce, Transportation and Infrastructure, Science, Space, and Technology, and Agriculture, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
2025-05-13: Referred to the Committee on Ways and Means, and in addition to the Committees on Energy and Commerce, Natural Resources, Education and Workforce, Transportation and Infrastructure, Science, Space, and Technology, and Agriculture, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
2025-05-13: Referred to the Committee on Ways and Means, and in addition to the Committees on Energy and Commerce, Natural Resources, Education and Workforce, Transportation and Infrastructure, Science, Space, and Technology, and Agriculture, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
2025-05-13: Introduced in House
2025-05-13: Introduced in House

Bill Versions

Modernizing America with Rebuilding to Kickstart the Economy of the Twenty-first Century with a Historic Infrastructure-Centered Expansion Act — issued 2025-05-13 — PDF (77 pages)