I

106TH CONGRESS

2D SESSION H. R. 4805

To protect the energy security of the United States and decrease America’s

dependency on foreign oil sources to 50 percent by the year 2010 by

enhancing the use of renewable energy resources, conserving energy resources, improving energy efficiencies, and increasing domestic energy

supplies, mitigating the effect of increases in energy prices on the American consumer, including the poor and elderly, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

JUNE 29, 2000

Mr. WATKINS (for himself, Mr. THORNBERRY, Mr. SKEEN, Mr. SESSIONS, Mr.

SMITH of Texas, Mr. COMBEST, and Mr. YOUNG of Alaska) introduced

the following bill; which was referred to the Committee on Commerce,

and in addition to the Committees on Resources, Ways and Means, and

Science, 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

A BILL

To protect the energy security of the United States and

decrease America’s dependency on foreign oil sources

to 50 percent by the year 2010 by enhancing the use

of renewable energy resources, conserving energy resources, improving energy efficiencies, and increasing domestic energy supplies, mitigating the effect of increases

in energy prices on the American consumer, including

the poor and elderly, and for other purposes.
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1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘National Energy Secu5 rity Act of 2000’’.

6 SEC. 2. FINDINGS AND PURPOSES.

7 (a) FINDINGS.—The Congress finds that—

8 (1) increasing dependence on foreign sources of

9 oil causes systemic harm to all sectors of the domes10 tic United States economy, threatens National secu11 rity, undermines the ability of Federal, state, and

12 local units of government to provide essential serv13 ices, and jeopardizes the peace, security, and welfare

14 of the American people;

15 (2) dependence on imports of foreign oil was 46

16 percent in 1992, rose to more than 55 percent by

17 the beginning of 2000, and is estimated by the De18 partment of Energy to rise to 65 percent by 2020

19 unless current policies are altered;

20 (3) despite increased energy efficiencies, energy

21 use in the United States is expected to increase 27

22 percent by 2020.

23 (4) the United States lacks a comprehensive na24 tional energy policy and has taken actions that limit
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1 the availability and capability of the domestic energy

2 sources of oil and gas, coal, nuclear and hydro;

3 (5) a comprehensive energy strategy needs to be

4 developed to combat this trend, decrease the United

5 States dependence on imported oil supplies and

6 strengthen our national energy security;

7 (6) the goal of this comprehensive strategy

8 must be to decrease the United States dependence

9 on foreign oil supplies to not more than 50 percent

10 by the year 2010;

11 (7) in order to meet this goal, this comprehen12 sive energy strategy needs to be multi-faceted and

13 include enhancing the use of renewable energy re14 sources (including hydro, nuclear, solar, wind, and

15 biomass), conserving energy resources (including im16 proving energy efficiencies), and increasing domestic

17 supplies of nonrenewable resources (including oil,

18 natural gas, and coal);

19 (8) conservation efforts and alternative fuels

20 alone will not enable America to meet this goal as

21 conventional energy sources supply 96 percent of

22 America’s power at this time; and

23 (9) immediate actions also need to be taken in

24 order to mitigate the effect of recent increases in oil
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1 prices on the American consumer, including the poor

2 and the elderly.

3 (b) PURPOSES.—The purposes of this Act are to pro4 tect the energy security of the United States by decreasing

5 America’s dependency on foreign oil sources to not more

6 than 50 percent by the year 2010 by enhancing the use

7 of renewable energy resources, conserving energy re8 sources (including improving energy efficiencies), and in9 creasing domestic energy supplies and to mitigate the im10 mediate effect of increases in energy prices on the Amer11 ican consumer, including the poor and the elderly.

12 TITLE I—ENERGY SECURITY AC13 TIONS REQUIRED OF THE

14 SECRETARY OF ENERGY

15 SEC. 101. ANNUAL REPORT ON UNITED STATES ENERGY

16 INDEPENDENCE.

17 (a) REPORT.—Beginning on October 1, 2000, and

18 annually thereafter, the Secretary of Energy, in consulta19 tion with the Secretary of Defense and the heads of other

20 Federal agencies, shall submit a report to the President

21 and the Congress which evaluates the progress the United

22 States has made toward obtaining the goal of not more

23 than 50 percent dependence on foreign oil sources by

24 2010. The Secretary shall adopt as interim goals, a reduc-
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1 tion in dependence on oil imports to not more than 54

2 percent by 2005 and 52 percent by 2008.

3 (b) ALTERNATIVES.—The report submitted under

4 subsection (a) shall specify any specific legislation or ad5 ministrative actions necessary to meet the goal established

6 under such subsection, and set forth a range of options

7 and alternatives with a benefit/cost analysis for each op8 tion or alternative together with an estimate for the con9 tribution that each option or alternative could make to re10 duce foreign oil imports. The report shall indicate, in de11 tail, options and alternatives to—

12 (1) increase the use of renewable domestic en13 ergy sources, including conventional and non-conven14 tional sources such as, but not limited to, increased

15 hydroelectric generation at existing Federal facili16 ties,

17 (2) conserve energy resources, including improv18 ing efficiencies and decreasing consumption, and

19 (3) increase domestic production and use of oil,

20 natural gas, and coal, including any actions that

21 would need to be implemented to provide access to,

22 and transportation of, such energy resources.

23 (c) REFINERY CAPACITY.—As part of the reports

24 submitted in 2000, 2005, and 2008, the Secretary of En25 ergy shall examine and report on the condition of the do-
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1 mestic refinery industry and the extent of domestic stor2 age capacity for various categories of petroleum products

3 and make such recommendations as such Secretary be4 lieves will enhance domestic capabilities to respond to

5 short-term shortages of various fuels due to climate or

6 supply interruptions.

7 SEC. 102. REPORT OF THE NATIONAL PETROLEUM COUN8 CIL.

9 The Secretary of Energy shall review the report of

10 the National Petroleum Council submitted to him on De11 cember 15, 1999, and shall submit such report, together

12 with any recommendations for administrative or legislative

13 actions, to the President no later than September 30,

14 2000.

15 SEC. 103. INTERAGENCY WORK GROUP ON NATURAL GAS.

16 (a) INTERAGENCY WORK GROUP.—The Secretary of

17 Energy shall establish an Interagency Work Group on

18 Natural Gas (referred to as ‘‘Group’’ in this subsection)

19 within the National Economic Council. The Group shall

20 include representatives from each Federal agency that has

21 a significant role in the development and implementation

22 of natural gas policy, resource assessment, or technologies

23 for natural gas exploration, production, transportation,

24 and use.
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1 (b) STRATEGY AND COMPREHENSIVE POLICY.—The

2 Group shall develop a strategy and comprehensive policy

3 for the use of natural gas as an essential component of

4 overall national objectives of energy security, economic

5 growth, and environmental protection. In developing the

6 strategy and policy, the Group shall solicit and consider

7 suggestions from States and local units of government, in8 dustry, and other non-Federal groups, organizations, or

9 individuals possessing information or expertise in one or

10 more areas under review by the Group. The policy shall

11 recognize the significant lead times required for the devel12 opment of additional natural gas supplies and the delivery

13 infrastructure required to transport those supplies. The

14 Group shall consider, but is not limited to, issues of access

15 to and development of resources, transportation, tech16 nology development, environmental regulation and the as17 sociated economic and environmental costs of alternatives,

18 education of future workforce, financial incentives related

19 to exploration, production, transportation, development,

20 and use of natural gas.

21 (c) REPORT.—Not later than 6 months after the date

22 of the enactment of this Act, the Group shall submit a

23 report to the Secretary of Energy setting forth its rec24 ommendations on a comprehensive policy for the use of
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1 natural gas and the specific elements of a national strat2 egy to achieve the objectives of the policy.

3 (d) SECRETARY REVIEW.—The Secretary of Energy

4 shall review the report and, within 3 months, submit the

5 report, together with any recommendations for adminis6 trative or legislative actions, to the President and the ap7 propriate committees of the Congress.

8 (e) TRENDS.—The Group shall monitor trends for

9 the assumptions used in developing its report, including

10 the specific elements of a national strategy to achieve the

11 objectives of the comprehensive policy, and shall advise the

12 Secretary whenever it anticipates changes that might re13 quire alterations in the strategy.

14 (f) PROGRESS REPORT.—On June 1, 2002, and every

15 two years thereafter, the Group shall submit a report to

16 the President and the Congress evaluating the progress

17 that has been made in the prior two years in implementing

18 the strategy and accomplishing the objectives of the com19 prehensive policy.
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1 TITLE II—AMENDMENTS TO EN2 ERGY POLICY AND CON3 SERVATION ACT AND AC4 TIONS AFFECTING THE STRA5 TEGIC PETROLEUM RESERVE

6 SEC. 201. AMENDMENTS TO TITLE I OF EPCA.

7 Title I of the Energy Policy and Conservation Act

8 (42 U.S.C. 6211–6251) is amended—

9 (1) in section 161(h) (42 U.S.C. 6241), by—

10 (A) striking ‘‘and’’ at the end of (1)(A);

11 (B) striking ‘‘,’’ and inserting ‘‘; and’’ at

12 the end of (1)(B);

13 (C) inserting after paragraph (B) the fol14 lowing new paragraph:

15 ‘‘(C) concurs in the determination of the

16 Secretary of Defense that action taken under

17 this subsection will not impair national secu18 rity.’’; and

19 (D) striking the period after ‘‘Reserve’’ at

20 the end of paragraph (2) and inserting ‘‘, if the

21 Secretary finds that action taken under this

22 subsection will not have an adverse effect on

23 the domestic petroleum industry.’’;

24 (2) in section 166 (42 U.S.C. 6246), by—
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1 (A) striking ‘‘for fiscal year 2000’’ and in2 serting ‘‘2003’’; and

3 (B) striking ‘‘March 31, 2000’’ and insert4 ing ‘‘December 31, 2001’’; and

5 (3) in section 181 (42 U.S.C. 6251), by striking

6 ‘‘March 31, 2000’’ each place it appears and insert7 ing ‘‘December 31, 2003’’.

8 SEC. 202. AMENDMENTS TO TITLE II OF EPCA.

9 Title II of the Energy Policy and Conservation Act

10 (42 U.S.C. 6261–6285) is amended—

11 (1) in section 256(h) (42 U.S.C. 6276(h)), by

12 striking ‘‘year 1997’’ and inserting ‘‘years 1997

13 through 2003’’; and

14 (2) in section 281 (42 U.S.C. 6285), by striking

15 ‘March 31, 2000’ each place it appears and inserting

16 ‘‘December 31, 2003’’.

17 SEC. 203. STRATEGIC PETROLEUM RESERVE STUDY AND

18 REPORT.

19 The President shall immediately establish an Inter20 agency Panel on the Strategic Petroleum Study (referred

21 to as the ‘‘Panel’’ in this section) to study oil markets

22 and estimate the extent and frequency of fluctuations in

23 the supply and price of, and demand for crude oil in the

24 future and determine appropriate capacity of and uses for

25 the Strategic Petroleum Reserve. The Panel may rec-
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1 ommend changes in existing authorities to provide addi2 tional flexibility for and strengthen the ability of the Stra3 tegic Petroleum Reserve to respond to energy require4 ments. The Panel shall complete its study and submit a

5 report containing its findings and any recommendations

6 to the President and the Congress within six months from

7 the date of enactment of this Act.

8 TITLE III—PROVISIONS TO PRO9 TECT CONSUMERS AND LOW

10 INCOME FAMILIES AND EN11 COURAGE ENERGY EFFI12 CIENCIES

13 SEC. 301. CHANGES IN WEATHERIZATION PROGRAM TO

14 PROTECT LOW-INCOME PERSONS.

15 (a) The matter under the heading ‘‘ENERGY CON16 SERVATION (INCLUDING TRANSFER OF FUNDS)’’ in title II

17 of the Department of the Interior and Related Agencies

18 Appropriations Act, 2000 (113 Stat. 1535, 1501A–180),

19 is amended by striking ‘‘grants:’’ and all that follows and

20 inserting ‘‘grants.’’.

21 (b) Section 415 of the Energy Conservation and Pro22 duction Act (42 U.S.C. 6865) is amended—

23 (1) in subsection (a)(1) by striking the first

24 sentence;

25 (2) in subsection (a)(2) by—
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1 (A) striking ‘‘(A)’’,

2 (B) striking ‘‘approve a State’s application

3 to waive the 40 percent requirement established

4 in paragraph (1) if the State includes in its

5 plan’’ and inserting ‘‘establish’’, and

6 (C) striking subparagraph (B);

7 (3) in subsection (c)(1) by—

8 (A) striking ‘‘paragraphs (3) and (4)’’ and

9 inserting ‘‘paragraph (3)’’;

10 (B) striking ‘‘$1,600’’ and inserting

11 ‘‘$2,500’’;

12 (C) striking ‘‘and’’ at the end of subpara13 graph (C);

14 (D) striking the period and inserting ‘‘,

15 and’’ in subparagraph (D); and

16 (E) inserting after subparagraph (D) the

17 following new subparagraph:

18 ‘‘(E) the cost of making heating and cool19 ing modifications, including replacement.’’;

20 (4) in subsection (c)(3) by—

21 (A) striking ‘‘1991, the $1,600 per dwell22 ing unit limitation’’ and inserting ‘‘2000, the

23 $2,500 per dwelling unit average’’,

24 (B) striking ‘‘limitation’’ and inserting

25 ‘‘average’’ each time it appears, and
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1 (C) inserting ‘‘the’’ after ‘‘begining of’’ in

2 subparagraph (B); and

3 (5) by striking subsection (c)(4).

4 SEC. 302. SUMMER FILL AND FUEL BUDGETING PROGRAMS.

5 (a) Part C of title II of the Energy Policy and Con6 servation Act (42 U.S.C. 6211 et seq.) is amended by add7 ing at the end the following:

8 ‘‘SUMMER FILL AND FUEL BUDGETING PROGRAMS

9 ‘‘SEC. 273. (a) DEFINITIONS.—In this section:

10 ‘‘(1) BUDGET CONTRACT.—The term ‘budget

11 contract’ means a contract between a retailer and a

12 consumer under which the heating expenses of the

13 consumer are spread evenly over a period of months.

14 ‘‘(2) FIXED-PRICE CONTRACT.—The term

15 ‘fixed-price contract’ means a contract between a re16 tailer and a consumer under which the retailer

17 charges the consumer a set price for propane, ker18 osene, or heating oil without regard to market price

19 fluctuations.

20 ‘‘(3) PRICE CAP CONTRACT.—The term ‘price

21 cap contract’ means a contract between a retailer

22 and a consumer under which the retailer charges the

23 consumer the market price for propane, kerosene, or

24 heating oil, but the cost of the propane, kerosene, or
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1 heating oil may not exceed a maximum amount stat2 ed in the contract.

3 ‘‘(b) ASSISTANCE.—At the request of the chief execu4 tive officer of a State, the Secretary shall provide informa5 tion, technical assistance, and funding—

6 ‘‘(1) to develop education and outreach pro7 grams to encourage consumers to fill their storage

8 facilities for propane, kerosene, and heating oil dur9 ing the summer months; and

10 ‘‘(2) to promote the use of budget contracts,

11 price cap contracts, fixed-price contracts, and other

12 advantageous financial arrangements;

13 to avoid severe seasonal price increases for and supply

14 shortages of those products.

15 ‘‘(c) PREFERENCE.—In implementing this section,

16 the Secretary shall give preference to States that con17 tribute public funds or leverage private funds to develop

18 State summer fill and fuel budgeting programs.

19 ‘‘(d) AUTHORIZATION OF APPROPRIATIONS.—There

20 are authorized to be appropriated to carry out this

21 section—

22 ‘‘(1) $25,000,000 for fiscal year 2001; and

23 ‘‘(2) such sums as are necessary for each fiscal

24 year thereafter.
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1 ‘‘(e) INAPPLICABILITY OF EXPIRATION PROVISION.—

2 Section 281 shall not apply to this section.’’.

3 (b) The table of contents in the first section of the

4 Energy Policy and Conservation Act (42 U.S.C. prec.

5 6201) is amended by inserting after the item relating to

6 section 272 the following:

‘‘Sec. 273. Summer fill and fuel budgeting programs.’’.

7 SEC. 303. ENERGY EFFICIENCY SCIENCE INITIATIVE.

8 There are authorized to be appropriated $25,000,000

9 for fiscal year 2001 and such sums as are necessary for

10 each fiscal year thereafter for an Energy Efficiency

11 Science Initiative to be managed by the Assistant Sec12 retary for Energy Efficiency and Renewable Energy in

13 consultation with the Director of the Office of Science, for

14 grants to be competitively awarded and subject to peer re15 view for research relating to energy efficiency. The Sec16 retary of Energy shall submit to the Committee on Science

17 and the Committee on Appropriations of the House of

18 Representatives, and to the Committee on Energy and

19 Natural Resources and the Committee on Appropriations

20 of the Senate, an annual report on the activities of the

21 Energy Efficiency Science Initiative, including a descrip22 tion of the process used to award the funds and an expla23 nation of how the research relates to energy efficiency.
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1 TITLE IV—PROVISIONS TO EN2 HANCE THE USE OF DOMES3 TIC ENERGY RESOURCES

4 Subtitle A—Hydroelectric

5 Resources

6 SEC. 401. USE OF FEDERAL FACILITIES.

7 (a) The Secretary of the Interior and the Secretary

8 of the Army shall each inventory all dams, impoundments,

9 and other facilities under their jurisdiction.

10 (b) Based on this inventory and other information,

11 the Secretary of the Interior and Secretary of the Army

12 shall each submit a report to the Congress within six

13 months from the date of enactment of this Act. Each re14 port shall—

15 (1) Describe, in detail, each facility that is ca16 pable, with or without modification, of producing ad17 ditional hydroelectric power. For each such facility,

18 the report shall state the full potential for the facil19 ity to generate hydroelectric power, whether the fa20 cility is currently generating hydroelectric power,

21 and the costs to install, upgrade, modify, or take

22 other actions to increase the hydroelectric generating

23 capability of the facility. For each facility that cur24 rently has hydroelectric generating equipment, the

25 report shall indicate the condition of such equip-
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1 ment, the maintenance requirements, and the sched2 ule for any improvements as well as the purposes for

3 which power is generated.

4 (2) Describe what actions are planned and un5 derway to increase the hydroelectric production from

6 facilities under his jurisdiction and shall include any

7 recommendations the Secretary deems advisable to

8 increase such production, reduce costs, and improve

9 efficiency at Federal facilities, including, but not

10 limited to, use of lease of power privilege and con11 tracting with non-Federal entities for operation and

12 maintenance.

13 SEC. 402. EXPEDITED FERC HYDROELECTRIC LICENSING

14 PROCEDURES.

15 The Federal Energy Regulatory Commission shall

16 immediately undertake a comprehensive review of policies,

17 procedures and regulations for the licensing of hydro18 electric projects to determine how to reduce the cost and

19 time of obtaining a license. The Commission shall report

20 its findings within six months of the date of enactment

21 to the Congress, including any recommendations for legis22 lative changes.
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1 Subtitle B—Nuclear Resources

2 SEC. 410. NUCLEAR GENERATION.

3 The Chairman of the Nuclear Regulatory Commis4 sion shall submit a report to the Congress within 6 months

5 from the date of enactment of this Act on the state of

6 nuclear power generation and production in the United

7 States and the potential for increasing nuclear generating

8 capacity and production as part of this nation’s energy

9 mix. The report shall also review the status of the reli10 censing process for civilian nuclear power plants, including

11 current and anticipated applications, and recommenda12 tions for improvements in the process, including rec13 ommendations for expediting the process and ensuring

14 that relicensing is accomplished in a timely manner.

15 SEC. 411. NRC HEARING PROCEDURE.

16 Section 189(a)(1) of the Atomic Energy Act of 1954

17 (42 U.S.C. 2239(a)(1)) is amended by adding at the end

18 the following—

19 ‘‘(C) A hearing under this section shall be conducted

20 using informal adjudicatory procedures established under

21 sections 553 and 555 of title 5, United States Code, unless

22 the Commission determines that formal adjudicatory pro23 cedures are necessary—

24 ‘‘(i) to develop a sufficient record; or

25 ‘‘(ii) to achieve fairness.’’.
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1 Subtitle C—Development of a Na2 tional Spent Nuclear Fuel Strat3 egy

4 SEC. 415. FINDINGS.

5 The Congress makes the following findings:

6 (1) Prior to permanent closure of the geologic

7 repository in Yucca Mountain, Congress must deter8 mine whether the spent fuel in the repository should

9 be treated as waste subject to permanent burial or

10 should be considered an energy resource that is

11 needed to meet future energy requirements.

12 (2) Future use of nuclear energy may require

13 construction of a second geologic repository unless

14 Yucca Mountain can safely accommodate additional

15 spent fuel. Improved spent fuel strategies may in16 crease the capacity of Yucca Mountain.

17 (3) Prior to construction of any second perma18 nent geologic repository, the nation’s current plans

19 for permanent burial of spent fuel should be reevalu20 ated.

21 SEC. 416. OFFICE OF SPENT NUCLEAR FUEL RESEARCH.

22 (a) ESTABLISHMENT.—There is established an Office

23 of Spent Nuclear Fuel Research (referred to as the ‘‘Of24 fice’’ in this section) within the Office of Nuclear Energy

25 Science and Technology of the Department of Energy.
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1 The Office shall be headed by the Associate Director of

2 the Office of Nuclear Energy Science and Technology, who

3 shall be a member of the Senior Executive Service ap4 pointed by the Director of the Office of Nuclear Energy

5 Science and Technology and compensated at a rate deter6 mined by applicable law.

7 (b) ASSOCIATE DIRECTOR.—The Associate Director

8 of the Office of Spent Nuclear Fuel Research shall be re9 sponsible for carrying out an integrated research, develop10 ment, and demonstration program on technologies for

11 treatment, recycling, and disposal of high-level nuclear ra12 dioactive waste and spent nuclear fuel, subject to the gen13 eral supervision of the Secretary of Energy. The Associate

14 Director of the Office shall report to the Director of the

15 Office of Nuclear Energy Science and Technology. The

16 first such Associate Director shall be appointed within 90

17 days of the date of enactment of this Act.

18 (c) GRANT AND CONTRACT AUTHORITY.—In car19 rying out the Secretary’s responsibilities under this sec20 tion, the Secretary may make grants or enter into con21 tracts for the purposes of the research projects and activi22 ties described in subsection (d)(2).

23 (d)(1) DUTIES.—The Associate Director of the Office

24 shall involve national laboratories, universities, the com25 mercial nuclear industry, and other organizations to inves-
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1 tigate technologies for the treatment, recycling, and dis2 posal of spent nuclear fuel and high-level radioactive

3 waste.

4 (2) The Associate Director of the Office shall:

5 (A) develop a research plan to provide rec6 ommendations by 2015 for the treatment, recycling,

7 and disposal of spent nuclear fuel and high-level ra8 dioactive waste;

9 (B) identify technologies for the treatment, re10 cycling, and disposal of spent nuclear fuel and high11 level radioactive waste;

12 (C) conduct research and development activities

13 on such technologies;

14 (D) ensure that all activities include as key ob15 jectives minimization of proliferation concerns and

16 risk to health of the general public or site workers,

17 as well as development of cost-effective technologies;

18 (E) require research on both reactor- and accel19 erator-based transmutation systems;

20 (F) require research on advanced processing

21 and separations;

22 (G) encourage that research efforts include par23 ticipation of international collaborators;

24 (H) be authorized to fund international collabo25 rators when they bring unique capabilities not avail-
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1 able in the United States and their host country is

2 unable to provide for their support;

3 (I) ensure that research efforts with the Office

4 are coordinated with research on advance fuel cycles

5 and reactors conducted within the Office of Nuclear

6 Energy Science and Technology.

7 (e) REPORT.—The Associate Director of the Office

8 of Spent Nuclear Fuel Research shall annually prepare

9 and submit a report to the Congress on the activities and

10 expenditures of the Office, including the process that has

11 been made to achieve the objectives of subsection (d)(2).

12 Subtitle D—Coal Resources

13 SEC. 420. COAL GENERATING CAPACITY.

14 The Secretary of Energy shall examine existing coal15 fired power plants and submit a report to the Congress

16 within six months from the enactment of this Act on the

17 potential of such plants for increased generation and any

18 impediments to achieving such increase. The report shall

19 describe, in detail, options for improving the efficiency of

20 these plants. The report shall include recommendations for

21 a program of research, development, demonstration, and

22 commercial application to develop economically and envi23 ronmentally acceptable advanced technologies for current

24 electricity generation facilities using coal as the primary

25 feedstock, including commercial-scale applications of ad-
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1 vanced clean coal technologies. The report shall also in2 clude an assessment of the costs to develop and dem3 onstrate such technologies and the time required to under4 take such development and demonstration.

5 SEC. 425. COAL LIQUEFACTION.

6 The Secretary of Energy shall provide grants for the

7 refinement and demonstration of new technologies for the

8 conversion of coal to liquids. Such grants shall be for the

9 design and construction of an indirect liquefaction plant

10 capable of production in commercial quantities. There are

11 authorized to be appropriated for the purpose of this sec12 tion such sums as may be necessary through fiscal year

13 2004 facilities be sited or modified so as to avoid unneces14 sary duplication of roads and pipelines. The regulations

15 issued as required by section 504 of this title shall include

16 provisions granting rights-of-way and easements across

17 the Coastal Plain.

18 TITLE V—IMPROVEMENTS TO

19 FEDERAL OIL AND GAS LEASE

20 MANAGEMENT

21 SEC. 501. TITLE.

22 This title may be cited as the ‘‘Federal Oil and Gas

23 Lease Management Improvement Act of 2000’’.

24 SEC. 502. DEFINITIONS.

25 In this title—
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1 (1) APPLICATION FOR A PERMIT TO DRILL.—

2 The term ‘‘application for a permit to drill’’ means

3 a drilling plan including design, mechanical, and en4 gineering aspects for drilling a well.

5 (2) FEDERAL LAND.—

6 (A) IN GENERAL.—The term ‘‘Federal

7 land’’ means all land and interests in land

8 owned by the United States that are subject to

9 the mineral leasing laws, including mineral re10 sources or mineral estates reserved to the

11 United States in the conveyance of a surface or

12 nonmineral estate.

13 (B) EXCLUSION.—The term ‘‘Federal

14 land’’ does not include—

15 (i) Indian land (as defined in section

16 3 of the Federal Oil and Gas Royalty Man17 agement Act of 1982 (30 U.S.C. 1702));

18 or

19 (ii) submerged land on the outer Con20 tinental Shelf (as defined in section 2 of

21 the Outer Continental Shelf Lands Act (43

22 U.S.C. 1331)).

23 (3) OIL AND GAS CONSERVATION AUTHORITY.—

24 The term ‘‘oil and gas conservation authority’’

25 means the agency or agencies in each State respon-
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1 sible for regulating for conservation purposes oper2 ations to explore for and produce oil and natural

3 gas.

4 (4) PROJECT.—The term ‘‘project’’ means an

5 activity by a lessee, an operator, or an operating

6 rights owner to explore for, develop, produce, or

7 transport oil or gas resources.

8 (5) SECRETARY.—The term ‘‘Secretary’’

9 means—

10 (A) the Secretary of the Interior, with re11 spect to land under the administrative jurisdic12 tion of the Department of the Interior; and

13 (B) the Secretary of Agriculture, with re14 spect to land under the administrative jurisdic15 tion of the Department of Agriculture.

16 (6) SURFACE USE PLAN OF OPERATIONS.—The

17 term ‘‘surface use plan of operations’’ means a plan

18 for surface use, disturbance, and reclamation.

19 SEC. 503. NO PROPERTY RIGHT.

20 Nothing in this title gives a State a property right

21 or interest in any Federal lease or land.
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1 Subtitle A—State Option To Regu2 late Oil and Gas Lease Oper3 ations on Federal Land

4 SEC. 510. TRANSFER OF AUTHORITY.

5 (a) NOTIFICATION.—On or after the date that is 180

6 days after the date of enactment of this Act, a State may

7 notify the Secretary of its intent to accept authority for

8 regulation of operations, as described in subparagraphs

9 (A) through (K) of subsection (b)(2), under oil and gas

10 leases on Federal land within the State.

11 (b) TRANSFER OF AUTHORITY.—

12 (1) IN GENERAL.—Effective 180 days after the

13 Secretary receives the State’s notice, authority for

14 the regulation of oil and gas leasing operations is

15 transferred from the Secretary to the State.

16 (2) AUTHORITY INCLUDED.—The authority

17 transferred under paragraph (1) includes—

18 (A) processing and approving applications

19 for permits to drill, subject to surface use

20 agreements and other terms and conditions de21 termined by the Secretary;

22 (B) production operations;

23 (C) well testing;

24 (D) well completion;

25 (E) well spacing;
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1 (F) communization;

2 (G) conversion of a producing well to a

3 water well;

4 (H) well abandonment procedures;

5 (I) inspections;

6 (J) enforcement activities; and

7 (K) site security.

8 (c) RETAINED AUTHORITY.—The Secretary shall—

9 (1) retain authority over the issuance of leases

10 and the approval of surface use plans of operations

11 and project-level environmental analyses; and

12 (2) spend appropriated funds to ensure that

13 timely decisions are made respecting oil and gas

14 leasing, taking into consideration multiple uses of

15 Federal land, socioeconomic and environmental im16 pacts, and the results of consultations with State

17 and local government officials.

18 SEC. 511. ACTIVITY FOLLOWING TRANSFER OF AUTHORITY.

19 (a) FEDERAL AGENCIES.—Following the transfer of

20 authority, no Federal agency shall exercise the authority

21 formerly held by the Secretary as to oil and gas lease oper22 ations and related operations on Federal land.

23 (b) STATE AUTHORITY.—

24 (1) IN GENERAL.—Following the transfer of au25 thority, each State shall enforce its own oil and gas
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1 conservation laws and requirements pertaining to

2 transferred oil and gas lease operations and related

3 operations with due regard to the national interest

4 in the expedited, environmentally sound development

5 of oil and gas resources in a manner consistent with

6 oil and gas conservation principles.

7 (2) APPEALS.—Following a transfer of author8 ity under section 510, an appeal of any decision

9 made by a State oil and gas conservation authority

10 shall be made in accordance with State administra11 tive procedures.

12 (c) PENDING ENFORCEMENT ACTIONS.—The Sec13 retary may continue to enforce any pending actions re14 specting acts committed before the date on which author15 ity is transferred to a State under section 510 until those

16 proceedings are concluded.

17 (d) PENDING APPLICATIONS.—

18 (1) TRANSFER TO STATE.—All applications re19 specting oil and gas lease operations and related op20 erations on Federal land pending before the Sec21 retary on the date on which authority is transferred

22 under section 510 shall be immediately transferred

23 to the oil and gas conservation authority of the

24 State in which the lease is located.
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1 (2) ACTION BY THE STATE.—The oil and gas

2 conservation authority shall act on the application in

3 accordance with State laws (including regulations)

4 and requirements.

5 Subtitle B—Use of Cost Savings

6 From State Regulation

7 SEC. 521. COMPENSATION FOR COSTS.

8 (a) IN GENERAL.—Subject to the availability of ap9 propriations, the Secretary shall compensate any State for

10 costs incurred to carry out the authorities transferred

11 under section 510.

12 (b) PAYMENT SCHEDULE.—Payments shall be made

13 not less frequently than every quarter.

14 (c) COST BREAKDOWN REPORT.—Each State seek15 ing compensation shall report to the Secretary a cost

16 breakdown for the authorities transferred.

17 (d) LIMITATION ON AMOUNT.—

18 (1) IN GENERAL.—Compensation to a State

19 may not exceed 50 percent of the Secretary’s allo20 cated cost for oil and gas leasing activities under

21 section 35(b) of the Mineral Leasing Act (30 U.S.C.

22 191(b)) for the State for fiscal year 1997.

23 (2) ADJUSTMENT.—The Secretary shall adjust

24 the maximum level of cost compensation at least

25 once every 2 years to reflect any increases in the
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1 Consumer Price Index (all items, United States city

2 average) as prepared by the Department of Labor,

3 using 1997 as the baseline year.

4 SEC. 522. EXCLUSION OF COSTS OF PREPARING PLANNING

5 DOCUMENTS AND ANALYSES.

6 Section 35 of the Mineral Leasing Act (30 U.S.C.

7 191(b)) is amended by adding at the end the following:

8 ‘‘(6) The Secretary shall not include, for the purpose

9 of calculating the deduction under paragraph (1), costs

10 of preparing resource management planning documents

11 and analyses for areas in which mineral leasing is excluded

12 or areas in which the primary activity under review is not

13 mineral leasing and development.’’.

14 SEC. 523. RECEIPT SHARING.

15 Section 35(b)(1) of the Mineral Leasing Act (30

16 U.S.C. 191(b)(1)) is amended by striking ‘‘paid to States’’

17 and inserting ‘‘paid to States (other than States that ac18 cept a transfer of authority under section 510 of the Fed19 eral Oil and Gas Lease Management Act of 2000)’’.

20 Subtitle C—Streamlining and Cost

21 Reduction

22 SEC. 531. APPLICATIONS.

23 (a) LIMITATION ON COST RECOVERY.—Notwith24 standing sections 304 and 504 of the Federal Land Policy

25 and Management Act of 1976 (43 U.S.C. 1734, 1764) and
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1 section 9701 of title 31, United State Code, the Secretary

2 shall not recover the Secretary’s costs with respect to ap3 plications and other documents relating to oil and gas

4 leases.

5 (b) COMPLETION OF PLANNING DOCUMENTS AND

6 ANALYSES.—

7 (1) IN GENERAL.—The Secretary shall complete

8 any resource management planning documents and

9 analyses not later than 90 days after receiving any

10 offer, application, or request for which a planning

11 document or analysis is required to be prepared.

12 (2) PREPARATION BY APPLICANT OR LESSEE.—

13 If the Secretary is unable to complete the document

14 or analysis within the time prescribed by paragraph

15 (1), the Secretary shall notify the applicant or lessee

16 of the opportunity to prepare the required document

17 or analysis for the agency’s review and use in deci18 sionmaking.

19 (c) REIMBURSEMENT FOR COSTS OF NEPA ANAL20 YSES, DOCUMENTATION, AND STUDIES.—If—

21 (1) adequate funding to enable the Secretary to

22 timely prepare a project-level analysis required

23 under the National Environmental Policy Act of

24 1969 (42 U.S.C. 4321 et seq.) with respect to an oil

25 or gas lease is not appropriated; and
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1 (2) the lessee, operator, or operating rights

2 owner voluntarily pays for the cost of the required

3 analysis, documentation, or related study;

4 the Secretary shall reimburse the lessee, operator, or oper5 ating rights owner for its costs through royalty credits at6 tributable to the lease, unit agreement, or project area.

7 SEC. 532. TIMELY ISSUANCE OF DECISIONS.

8 (a) IN GENERAL.—The Secretary shall ensure the

9 timely issuance of Federal agency decisions respecting oil

10 and gas leasing and operations on Federal land.

11 (b) OFFER TO LEASE.—

12 (1) DEADLINE.—The Secretary shall accept or

13 reject an offer to lease not later than 90 days after

14 the filing of the offer.

15 (2) FAILURE TO MEET DEADLINE.—If an offer

16 is not acted upon within that time, the offer is

17 deemed to have been accepted.

18 (c) APPLICATION FOR PERMIT TO DRILL.—

19 (1) DEADLINE.—The Secretary and a State

20 that has accepted a transfer of authority under sec21 tion 510 shall approve or disapprove an application

22 for permit to drill not later than 30 days after re23 ceiving a complete application.

24 (2) FAILURE TO MEET DEADLINE.—If the ap25 plication is not acted on within the time prescribed
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1 by paragraph (1), the application is deemed to have

2 been approved.

3 (d) SURFACE USE PLAN OF OPERATIONS.—The Sec4 retary shall approve or disapprove a surface use plan of

5 operations not later than 30 days after receipt of a com6 plete plan.

7 (e) ADMINISTRATIVE APPEALS.—

8 (1) DEADLINE.—From the time that a Federal

9 oil and gas lessee or operator files a notice of admin10 istrative appeal of a decision or order of an officer

11 or employee of the Department of the Interior or the

12 Forest Service respecting a Federal oil and gas Fed13 eral lease, the Secretary shall have 2 years in which

14 to issue a final decision in the appeal.

15 (2) FAILURE TO MEET DEADLINE.—If no final

16 decision has been issued within the time prescribed

17 by paragraph (1), the appeal is deemed to have been

18 granted.

19 SEC. 533. ELIMINATION OF UNWARRANTED DENIALS AND

20 STAYS.

21 (a) IN GENERAL.—The Secretary shall ensure that

22 unwarranted denials and stays of lease issuance and un23 warranted restrictions on lease operations are eliminated

24 from the administration of oil and gas leasing on Federal

25 land.
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1 (b) LAND DESIGNATED FOR MULTIPLE USE.—

2 (1) IN GENERAL.—Land designated as available

3 for multiple use under Bureau of Land Management

4 resource management plans and Forest Service leas5 ing analyses shall be available for oil and gas leasing

6 without lease stipulations more stringent than re7 strictions on surface use and operations imposed

8 under the laws (including regulations) of the State

9 in which the lands are located unless the Secretary

10 includes in the decision approving the management

11 plan or leasing analysis a written explanation why

12 more stringent stipulations are warranted.

13 (2) APPEAL.—Any decision to require a more

14 stringent stipulation shall be administratively ap15 pealable and, following a final agency decision, shall

16 be subject to judicial review.

17 (c) REJECTION OF OFFER TO LEASE.—

18 (1) IN GENERAL.—If the Secretary rejects an

19 offer to lease on the ground that the land is unavail20 able for leasing, the Secretary shall provide a writ21 ten, detailed explanation of the reasons the land is

22 unavailable for leasing.

23 (2) PREVIOUS RESOURCE MANAGEMENT DECI24 SION.—If the determination of unavailability is

25 based on a previous resource management decision,
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1 the explanation shall include a careful assessment of

2 whether the reasons underlying the previous decision

3 are still persuasive.

4 (3) SEGREGATION OF AVAILABLE LAND FROM

5 UNAVAILABLE LAND.—The Secretary may not reject

6 an offer to lease land available for leasing on the

7 ground that the offer includes land unavailable for

8 leasing, and the Secretary shall segregate available

9 land from unavailable land, on the offeror’s request

10 following notice by the Secretary, before acting on

11 the offer to lease.

12 (d) DISAPPROVAL OR REQUIRED MODIFICATION OF

13 SURFACE USE PLANS OF OPERATIONS AND APPLICATION

14 FOR PERMIT TO DRILL.—The Secretary shall provide a

15 written, detailed explanation of the reasons for dis16 approving or requiring modifications of any surface use

17 plan of operations or application for permit to drill.

18 (e) EFFECTIVENESS OF DECISION.—A decision of the

19 Secretary respecting an oil and gas lease shall be effective

20 pending administrative appeal to the appropriate office

21 within the Department of the Interior or the Department

22 of Agriculture unless that office grants a stay in response

23 to a petition satisfying the criteria for a stay established

24 by section 4.21(b) of title 43, Code of Federal Regulations

25 (or any successor regulation).
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1 SEC. 534. REPORTS.

2 (a) IN GENERAL.—Not later than March 31, 2001,

3 the Secretaries shall jointly submit to the Congress a re4 port explaining the most efficient means of eliminating

5 overlapping jurisdiction, duplication of effort, and incon6 sistent policymaking and policy implementation as be7 tween the Bureau of Land Management and the Forest

8 Service.

9 (b) RECOMMENDATIONS.—The report shall include

10 recommendations on statutory changes needed to imple11 ment the report’s conclusions.

12 SEC. 535. SCIENTIFIC INVENTORY OF OIL AND GAS RE13 SERVES.

14 (a) IN GENERAL.—Not later than March 31, 2001,

15 the Secretary of the Interior, in consultation with the Di16 rector of the United States Geological Survey, shall pub17 lish, through notice in the Federal Register, a science18 based national inventory of the oil and gas reserves and

19 potential resources underlying Federal land and the Outer

20 Continental Shelf.

21 (b) CONTENTS.—The inventory shall—

22 (1) indicate what percentage of the oil and gas

23 reserves and resources is currently available for leas24 ing and development;

25 (2) specify the percentages of the reserves and

26 resources that are on—
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1 (A) land that is open for leasing as of the

2 date of enactment of this Act that has never

3 been leased;

4 (B) land that is open for leasing or devel5 opment subject to no surface occupancy stipula6 tions; and

7 (C) land that is open for leasing or devel8 opment subject to other lease stipulations that

9 have significantly impeded or prevented, or are

10 likely to significantly impede or prevent, devel11 opment; and

12 (3) indicate the percentage of oil and gas re13 sources that are not available for leasing or are

14 withdrawn from leasing.

15 (c) PUBLIC COMMENT.—

16 (1) IN GENERAL.—The Secretary of the Inte17 rior shall invite public comment on the inventory to

18 be filed not later than September 30, 2001.

19 (2) RESOURCE MANAGEMENT DECISIONS.—Spe20 cifically, the Secretary of the Interior shall invite

21 public comment on the effect of Federal resource

22 management decisions on past and future oil and

23 gas development.

24 (d) REPORT.—
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1 (1) IN GENERAL.—Not later than March 31,

2 2002, the Secretary of the Interior shall submit to

3 the President of the Senate and the Speaker of the

4 House of Representatives a report comprised of the

5 revised inventory and responses to the public com6 ments.

7 (2) CONTENTS.—The report shall specifically

8 indicate what steps the Secretaries believe are nec9 essary to increase the percentage of land open for

10 development of oil and gas resources.

11 Subtitle D—Federal Royalty

12 Certainty

13 SEC. 541. DEFINITIONS.

14 In this subtitle:

15 (1) MARKETABLE CONDITION.—The term

16 ‘‘marketable condition’’ means lease production that

17 is sufficiently free from impurities and otherwise in

18 a condition that the production will be accepted by

19 a purchaser under a sales contract typical for the

20 field or area.

21 (2) REASONABLE COMMERCIAL RATE.—

22 (A) IN GENERAL.—The term ‘‘reasonable

23 commercial rate’’ means—
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1 (i) in the case of an arm’s-length con2 tract, the actual cost incurred by the les3 see; or

4 (ii) in the case of a non-arm’s-length

5 contract—

6 (I) the rate charged in a contract

7 for similar services in the same area

8 between parties with opposing eco9 nomic interests; or

10 (II) if there are no arm’s-length

11 contracts for similar services in the

12 same area, the just and reasonable

13 rate for the transportation service

14 rendered by the lessee or lessee’s affil15 iate.

16 (B) DISPUTES.—Disputes between the

17 Secretary and a lessee over what constitutes a

18 just and reasonable rate for such service shall

19 be resolved by the Federal Energy Regulatory

20 Commission.

21 SEC. 542. AMENDMENT OF OUTER CONTINENTAL SHELF

22 LANDS ACT.

23 Section 8(b)(3) of the Outer Continental Shelf Lands

24 Act (43 U.S.C. 1337(b)(3)) is amended by striking the

25 semicolon at the end and inserting the following: ‘‘: Pro-
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1 vided, That if the payment is in value or amount, the roy2 alty due in value shall be based on the value of oil or gas

3 production at the lease in marketable condition, and the

4 royalty due in amount shall be based on the royalty share

5 of production at the lease; and if the payment in value

6 or amount is calculated from a point away from the lease,

7 the payment shall be adjusted for quality and location dif8 ferentials, and the lessee shall be allowed reimbursements

9 at a reasonable commercial rate for transportation (in10 cluding transportation to the point where the production

11 is put in marketable condition), marketing, processing,

12 and other services beyond the lease through the point of

13 sale, other disposition, or delivery;’’.

14 SEC. 543. AMENDMENT OF MINERAL LEASING ACT.

15 Section 17(c) of the Mineral Leasing Act (30 U.S.C.

16 226(c)) is amended by adding at the end the following:

17 ‘‘(3) ROYALTY DUE IN VALUE.—

18 ‘‘(A) IN GENERAL.—Royalty due in value

19 shall be based on the value of oil or gas produc20 tion at the lease in marketable condition, and

21 the royalty due in amount shall be based on the

22 royalty share of production at the lease.

23 ‘‘(B) CALCULATION OF VALUE OR AMOUNT

24 FROM A POINT AWAY FROM A LEASE.—If the
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1 payment in value or amount is calculated from

2 a point away from the lease—

3 ‘‘(i) the payment shall be adjusted for

4 quality and location differentials; and

5 ‘‘(ii) the lessee shall be allowed reim6 bursements at a reasonable commercial

7 rate for transportation (including transpor8 tation to the point where the production is

9 put in marketable condition), marketing,

10 processing, and other services beyond the

11 lease through the point of sale, other dis12 position, or delivery;’’.

13 SEC. 544. INDIAN LAND.

14 This subtitle shall not apply with respect to Indian

15 land.

16 Subtitle E—Royalty Reinvestment

17 in America

18 SEC. 551. ROYALTY INCENTIVE PROGRAM.

19 (a) IN GENERAL.—To encourage exploration and de20 velopment expenditures on Federal land and the Outer

21 Continental Shelf for the development of oil and gas re22 sources when the cash price of West Texas Intermediate

23 crude oil, as posted on the Dow Jones Commodities Index

24 chart, is less than $18 per barrel for 90 consecutive pric25 ing days or when natural gas prices as delivered at Henry
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1 Hub, Louisiana, are less than $2.30 per million British

2 thermal units for 90 consecutive days, the Secretary shall

3 allow a credit against the payment of royalties on Federal

4 oil production and gas production, respectively, in an

5 amount equal to 20 percent of the capital expenditures

6 made on exploration and development activities on Federal

7 oil and gas leases.

8 (b) NO CREDITING AGAINST ONSHORE FEDERAL

9 ROYALTY OBLIGATIONS.—In no case shall such capital ex10 penditures made on Outer Continental Shelf leases be

11 credited against onshore Federal royalty obligations.

12 SEC. 552. MARGINAL WELL PRODUCTION INCENTIVES.

13 To enhance the economics of marginal oil and gas

14 production by increasing the ultimate recovery from mar15 ginal wells when the cash price of West Texas Inter16 mediate crude oil, as posted on the Dow Jones Commod17 ities Index chart, is less than $18 per barrel for 90 con18 secutive pricing days or when natural gas prices are deliv19 ered at Henry Hub, Louisiana, are less than $2.30 per

20 million British thermal units for 90 consecutive days, the

21 Secretary shall reduce the royalty rate as production de22 clines for—

23 (1) onshore oil wells producing less than 30

24 barrels per day;
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1 (2) onshore gas wells producing less than 120

2 million British thermal units per day;

3 (3) offshore oil wells producing less than 300

4 barrels of oil per day; and

5 (4) offshore gas wells producing less than 1,200

6 million British thermal units per day.

7 SEC. 553. SUSPENSION OF PRODUCTION ON OIL AND GAS

8 OPERATIONS.

9 (a) IN GENERAL.—Any person operating an oil well

10 under a lease issued under the Mineral Leasing Act (30

11 U.S.C. 181 et seq.) or the Mineral Leasing Act for Ac12 quired Lands (30 U.S.C. 351 et seq.) may submit a notice

13 to the Secretary of the Interior of suspension of operation

14 and production at the well.

15 (b) PRODUCTION QUANTITIES NOT A FACTOR.—A

16 notice under subsection (a) may be submitted without re17 gard to per day production quantities at the well and with18 out regard to the requirements of subsection (a) of section

19 3103.4–4 of title 43 of the Code of Federal Regulations

20 (or any successor regulation), respecting the granting of

21 such relief, except that the notice shall be submitted to

22 an office in the Department of the Interior designated by

23 the Secretary of the Interior.

24 (c) PERIOD OF RELIEF.—On submission of a notice

25 under subsection (a) for an oil well, the operator of the
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1 well may suspend operation and production at the well for

2 a period beginning on the date of submission of the notice

3 and ending on the later of—

4 (1) the date that is 2 years after the date on

5 which the suspension of operation and production

6 commences; or

7 (2) the date on which the cash price of West

8 Texas Intermediate crude oil, as posted on the Dow

9 Jones Commodities Index chart, is greater than $15

10 per barrel for 90 consecutive pricing days.

11 TITLE VI—FRONTIER OIL AND

12 GAS EXPLORATION AND DE13 VELOPMENT INCENTIVES

14 SEC. 601. TITLE.

15 This title may be cited as the ‘‘Frontier Exploration

16 and Development Incentives Act of 2000’’.

17 SEC. 602. AMENDMENTS TO THE OUTER CONTINENTAL

18 SHELF LANDS ACT.

19 (a) CASH BONUS BID FIXED SHARE OF NET PROF20 ITS.—Section 8(a)(1)(D) of the Outer Continental Shelf

21 Lands Act, (43 U.S.C. 1337(a)(1)(D)) is amended by

22 striking ‘‘area;’’ and inserting ‘‘area, except that for pro23 duction in the Beaufort Sea and Chukchi Sea Planning

24 Areas of Alaska the Secretary is authorized to set the net

profit share at 162 25 ⁄3 percent;’’.
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1 (b) Section 8(a) of the Outer Continental Shelf Lands

2 Act (43 U.S.C. 1337(a)) is amended by adding at the end

3 the following:

4 ‘‘(10)(A) After an oil and gas lease is granted pursu5 ant to any of the bidding systems under paragraph (1),

6 the Secretary shall reduce any future royalty or rental ob7 ligation of the lessee on any lease issued by the Secretary

8 (and proposed by the lessee for such reduction) by an

9 amount equal to—

10 ‘‘(i) 10 percent of the qualified costs of explor11 atory wells drilled or geophysical work performed on

12 any lease issued by the Secretary, whichever is

13 greater, pursuant to this Act in the Beaufort Sea

14 and Chukci Sea Planning Areas of Alaska; plus

15 ‘‘(ii) an additional 10 percent of the qualified

16 costs of any such exploratory wells that are located

17 ten or more miles from another well drilled for oil

18 and gas.

19 ‘‘(B) For purposes of this paragraph:

20 ‘‘(i) The term ‘qualified costs’ means the costs

21 allocated to the exploratory well or geophysical work

22 in support of an exploration program pursuant to

23 section 263(j) the Internal Revenue Code of 1986.

24 ‘‘(ii) The term ‘exploratory well’ means either

25 an exploratory well as defined by the United States
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1 Securities and Exchange Commission in section

2 2100.4–10(a)(10) of title 17, Code of Federal Regu3 lations, or a well three or more miles from any oil

4 or gas well or a pipeline that transports oil or gas

5 to a market or terminal.

6 ‘‘(iii) The term ‘geophysical work’ means all

7 geophysical data gathering methods used in hydro8 carbon exploration and includes seismic, gravity,

9 magnetic, and electromagnetic measurements.

10 ‘‘(C) For purposes of this paragraph, all distances

11 shall be measured in horizontal distance. If a measure12 ment beginning or ending point is a well, the measurement

13 point shall be the bottom hole location of that well.’’.

14 TITLE VII—TAX MEASURES TO

15 ENHANCE DOMESTIC OIL AND

16 GAS PRODUCTION

17 Subtitle A—Marginal Well

18 Preservation

19 SEC. 701. SHORT TITLE; PURPOSE.

20 (a) SHORT TITLE.—This subtitle may be cited as the

21 ‘‘Marginal Well Preservation Act of 2000’’.

22 (b) PURPOSE.—The purpose of section 702 is to pre23 vent the abandonment of marginal oil and gas wells re24 sponsible for half of the domestic production of oil and

25 gas in the United States and of section 703 is to recognize
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1 that geological and geophysical expenditures and delay

2 rentals are ordinary and necessary business expenses that

3 should be deducted in the year the expense is incurred.

4 SEC. 702. TAX CREDIT FOR MARGINAL DOMESTIC OIL AND

5 NATURAL GAS WELL PRODUCTION.

6 (a) IN GENERAL.—Subpart D of part IV of sub7 chapter A of chapter 1 of the Internal Revenue Code of

8 1986 (relating to business credits) is amended by adding

9 at the end the following new section:

10 ‘‘SEC. 45D. CREDIT FOR PRODUCING OIL AND GAS FROM

11 MARGINAL WELLS.

12 ‘‘(a) GENERAL RULE.—For purposes of section 38,

13 the marginal well production credit for any taxable year

14 is an amount equal to the product of—

15 ‘‘(1) the credit amount, and

16 ‘‘(2) the qualified crude oil production and the

17 qualified natural gas production which is attrib18 utable to the taxpayer.

19 ‘‘(b) CREDIT AMOUNT.—For purposes of this

20 section—

21 ‘‘(1) IN GENERAL.—The credit amount is—

22 ‘‘(A) $3 per barrel of qualified crude oil

23 production, and

24 ‘‘(B) 50 cents per 1,000 cubic feet of

25 qualified natural gas production.
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1 ‘‘(2) REDUCTION AS OIL AND GAS PRICES IN2 CREASE.—

3 ‘‘(A) IN GENERAL.—The $3 and 50 cents

4 amounts under paragraph (1) shall each be re5 duced (but not below zero) by an amount which

6 bears the same ratio to such amount (deter7 mined without regard to this paragraph) as—

8 ‘‘(i) the excess (if any) of the applica9 ble reference price over $14 ($1.56 for

10 qualified natural gas production), bears to

11 ‘‘(ii) $3 ($0.33 for qualified natural

12 gas production).

13 The applicable reference price for a taxable

14 year is the reference price for the calendar year

15 preceding the calendar year in which the tax16 able year begins.

17 ‘‘(B) INFLATION ADJUSTMENT.—In the

18 case of any taxable year beginning in a calendar

19 year after 2000, each of the dollar amounts

20 contained in subparagraph (A) shall be in21 creased to an amount equal to such dollar

22 amount multiplied by the inflation adjustment

23 factor for such calendar year (determined under

24 section 43(b)(3)(B) by substituting ‘2000’ for

25 ‘1990’).
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1 ‘‘(C) REFERENCE PRICE.—For purposes of

2 this paragraph, the term ‘reference price’

3 means, with respect to any calendar year—

4 ‘‘(i) in the case of qualified crude oil

5 production, the reference price determined

6 under section 29(d)(2)(C), and

7 ‘‘(ii) in the case of qualified natural

8 gas production, the Secretary’s estimate of

9 the annual average wellhead price per

10 1,000 cubic feet for all domestic natural

11 gas.

12 ‘‘(c) QUALIFIED CRUDE OIL AND NATURAL GAS

13 PRODUCTION.—For purposes of this section—

14 ‘‘(1) IN GENERAL.—The terms ‘qualified crude

15 oil production’ and ‘qualified natural gas production’

16 mean domestic crude oil or natural gas which is pro17 duced from a marginal well.

18 ‘‘(2) LIMITATION ON AMOUNT OF PRODUCTION

19 WHICH MAY QUALIFY.—

20 ‘‘(A) IN GENERAL.—Crude oil or natural

21 gas produced during any taxable year from any

22 well shall not be treated as qualified crude oil

23 production or qualified natural gas production

24 to the extent production from the well during
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1 the taxable year exceeds 1,095 barrels or barrel

2 equivalents.

3 ‘‘(B) PROPORTIONATE REDUCTIONS.—

4 ‘‘(i) SHORT TAXABLE YEARS.—In the

5 case of a short taxable year, the limitations

6 under this paragraph shall be proportion7 ately reduced to reflect the ratio which the

8 number of days in such taxable year bears

9 to 365.

10 ‘‘(ii) WELLS NOT IN PRODUCTION EN11 TIRE YEAR.—In the case of a well which is

12 not capable of production during each day

13 of a taxable year, the limitations under

14 this paragraph applicable to the well shall

15 be proportionately reduced to reflect the

16 ratio which the number of days of produc17 tion bears to the total number of days in

18 the taxable year.

19 ‘‘(3) DEFINITIONS.—

20 ‘‘(A) MARGINAL WELL.—The term ‘mar21 ginal well’ means a domestic well—

22 ‘‘(i) the production from which during

23 the taxable year is treated as marginal

24 production under section 613A(c)(6), or

25 ‘‘(ii) which, during the taxable year—
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1 ‘‘(I) has average daily production

2 of not more than 25 barrel equiva3 lents, and

4 ‘‘(II) produces water at a rate

5 not less than 95 percent of total well

6 effluent.

7 ‘‘(B) CRUDE OIL, ETC.—The terms ‘crude

8 oil’, ‘natural gas’, ‘domestic’, and ‘barrel’ have

9 the meanings given such terms by section

10 613A(e).

11 ‘‘(C) BARREL EQUIVALENT.—The term

12 ‘barrel equivalent’ means, with respect to nat13 ural gas, a conversion ratio of 6,000 cubic feet

14 of natural gas to 1 barrel of crude oil.

15 ‘‘(d) OTHER RULES.—

16 ‘‘(1) PRODUCTION ATTRIBUTABLE TO THE TAX17 PAYER.—In the case of a marginal well in which

18 there is more than one owner of operating interests

19 in the well and the crude oil or natural gas produc20 tion exceeds the limitation under subsection (c)(2),

21 qualifying crude oil production or qualifying natural

22 gas production attributable to the taxpayer shall be

23 determined on the basis of the ratio which tax24 payer’s revenue interest in the production bears to
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1 the aggregate to the revenue interests of all oper2 ating interest owners in the production.

3 ‘‘(2) OPERATING INTEREST REQUIRED.—Any

4 credit under this section may be claimed only on

5 production which is attributable to the holder of an

6 operating interest.

7 ‘‘(3) PRODUCTION FROM NONCONVENTIONAL

8 SOURCES EXCLUDED.—In the case of production

9 from a marginal well which is eligible for the credit

10 allowed under section 29 for the taxable year, no

11 credit shall be allowable under this section unless

12 the taxpayer elects not to claim credit under section

13 29 with respect to the well.’’.

14 (b) CREDIT TREATED AS BUSINESS CREDIT.—Sec15 tion 38(b) of such Code is amended by striking ‘‘plus’’

16 at the end of paragraph (11), by striking the period at

17 the end of paragraph (12) and inserting’’, plus’’, and by

18 adding at the end of the following new paragraph:

19 ‘‘(13) the marginal oil and gas well production

20 credit determined under section 45D(a).’’.

21 (c) CREDIT ALLOWED AGAINST REGULAR AND MIN22 IMUM TAX.—

23 (1) IN GENERAL.—Subsection (c) of section 38

24 of such Code (relating to limitation based on amount

25 of tax) is amended by redesignating paragraph (3)
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1 as paragraph (4) and by inserting after paragraph

2 (2) the following new paragraph:

3 ‘‘(3) SPECIAL RULES FOR MARGINAL OIL AND

4 GAS WELL PRODUCTION CREDIT.—

5 ‘‘(A) IN GENERAL.—In the case of the

6 marginal oil and gas well production credit—

7 ‘‘(i) this section and section 39 shall

8 be applied separately with respect to the

9 credit, and

10 ‘‘(ii) in applying paragraph (1) to the

11 credit—

12 ‘‘(I) subparagraphs (A) and (B)

13 thereof shall not apply, and

14 ‘‘(II) the limitation under para15 graph (1) (as modified by subclause

16 (I)) shall be reduced by the credit al17 lowed under subsection (a) for the

18 taxable year (other than the marginal

19 oil and gas well production credit).

20 ‘‘(B) MARGINAL OIL AND GAS WELL PRO21 DUCTION CREDIT.—For purposes of this sub22 section, the term ‘marginal oil and gas well pro23 duction credit’ means the credit allowable under

24 subsection (a) by reason of section 45D(a).’’.
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1 (2) CONFORMING AMENDMENT.—Subclause (II)

2 of section 38(c)(2)(A)(ii) of such Code is amended

3 by inserting ‘‘or the marginal oil and gas well pro4 duction credit’’ after ‘‘employment credit’’.

5 (d) CARRYBACK.—Subsection (a) of section 39 of

6 such Code (relating to carryback and carryforward of un7 used credits generally) is amended by adding at the end

8 the following new paragraph:

9 ‘‘(3) 10-YEAR CARRYBACK FOR MARGINAL OIL

10 AND GAS WELL PRODUCTION CREDIT.—In the case

11 of the marginal oil and gas well production credit—

12 ‘‘(A) this section shall be applied sepa13 rately from the business credit (other than the

14 marginal oil and gas well production credit),

15 ‘‘(B) paragraph (1) shall be applied by

16 substituting ‘10 taxable year’ for ‘1 taxable

17 year’ in subparagraph (A) thereof, and

18 ‘‘(C) paragraph (2) shall be applied—

19 ‘‘(i) by substituting ‘31 taxable years’

20 for ‘21 taxable years’ in subparagraph (A)

21 thereof, and

22 ‘‘(ii) by substituting ‘30 taxable years’

23 for ‘20 taxable years’ in subparagraph (B)

24 thereof.’’.
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1 (e) COORDINATION WITH SECTION 29.—Section

2 29(a) of such Code is amended by striking ‘‘There’’ and

3 inserting ‘‘At the election of the taxpayer, there.’’

4 (f) CLERICAL AMENDMENT.—The table of sections

5 for subpart D of part IV of subchapter A of chapter 1

6 of such Code is amended by adding at the end the fol7 lowing item:

‘‘Sec. 45D. Credit for producing oil and gas from marginal wells.’’

8 (g) EFFECTIVE DATE.—The amendments made by

9 this section shall apply to production in taxable years be10 ginning after December 31, 2000.

11 SEC. 703. ELECTION TO EXPENSE GEOLOGICAL AND GEO12 PHYSICAL EXPENDITURES AND DELAY RENT13 AL PAYMENTS.

14 (a) GEOLOGICAL AND GEOPHYSICAL EXPENDITURES

15 FOR OIL AND WELLS.—

16 (1) IN GENERAL.—Section 263 of the Internal

17 Revenue Code of 1986 (relating to capital expendi18 tures) is amended by adding at the end the following

19 new subsection:

20 ‘‘(j) GEOLOGICAL AND GEOPHYSICAL EXPENDI21 TURES FOR OIL AND WELLS.—Notwithstanding sub22 section (a), a taxpayer may elect to treat geological and

23 geophysical expenses incurred in connection with the ex24 ploration for, or development of, oil or gas as expenses

25 which are not chargeable to capital account. Any expenses
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1 so treated shall be allowed as a deduction in the taxable

2 year in which paid or incurred.’’.

3 (2) CONFORMING AMENDMENT.—Section

4 263A(c)(3) of such Code is amended by inserting

5 ‘‘263(j),’’ after ‘‘263(i),’’.

6 (3) EFFECTIVE DATE.—

7 (A) IN GENERAL.—The amendments made

8 by this subsection shall apply to expenses paid

9 or incurred after the date of the enactment of

10 this Act.

11 (B) TRANSITION RULE.—In the case of

12 any expenses described in section 263(j) of the

13 Internal Revenue Code of 1986, as added by

14 this subsection, which were paid or incurred on

15 or before the date of the enactment of this Act,

16 the taxpayer may elect, at such time and in

17 such manner as the Secretary of the Treasury

18 may prescribe, to amortize the suspended por19 tion of such expenses over the 36-month period

20 beginning with the month in which the date of

21 the enactment of this Act occurs. For purposes

22 of this subparagraph, the suspended portion of

23 any expense is that portion of such expense

24 which, as of the first day of the 36-month pe-
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1 riod, has not been included in the cost of a

2 property or otherwise deducted.

3 (b) DELAY RENTAL PAYMENTS FOR DOMESTIC OIL

4 AND GAS WELLS.—

5 (1) IN GENERAL.—Section 263 of such Code

6 (relating to capital expenditures), as amended by

7 subsection (a)(1), is amended by adding at the end

8 the following new subsection:

9 ‘‘(k) DELAY RENTAL PAYMENTS FOR DOMESTIC OIL

10 AND GAS WELLS.—

11 ‘‘(1) IN GENERAL.—Notwithstanding subsection

12 (a), a taxpayer may elect to treat delay rental pay13 ments incurred in connection with the development

14 of oil or gas within the United States (as defined in

15 section 638) as payments which are not chargeable

16 to capital account. Any payments so treated shall be

17 allowed as a deduction in the taxable year in which

18 paid or incurred.

19 ‘‘(2) DELAY RENTAL PAYMENTS.—For purposes

20 of paragraph (1), the term ‘delay rental payment’

21 means an amount paid for the privilege of deferring

22 the drilling of an oil or gas well under an oil or gas

23 lease.’’.

24 (2) CONFORMING AMENDMENT.—Section

25 263A(c)(3) of such Code, as amended by subsection
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1 (a)(2), is amended by inserting ‘‘263(k),’’ after

2 ‘‘263(j),’’.

3 (3) EFFECTIVE DATE.—

4 (A) IN GENERAL.—The amendments made

5 by this subsection shall apply to payments made

6 or incurred after the date of the enactment of

7 this Act.

8 (B) TRANSITION RULE.—In the case of

9 any payments described in section 263(k) of the

10 Internal Revenue Code of 1986, as added by

11 this subsection, which were made or incurred on

12 or before the date of the enactment of this Act,

13 the taxpayer may elect, at such time and in

14 such manner as the Secretary of the Treasury

15 may prescribe, to amortize the suspended por16 tion of such payments over the 36-month period

17 beginning with the month in which the date of

18 the enactment of this Act occurs. For purposes

19 of this subparagraph, the suspended portion of

20 any payment is that portion of such payment

21 which, as of the first day of the 36-month pe22 riod, has not been included in the cost of a

23 property or otherwise deducted.
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1 Subtitle B—Independent Oil and

2 Gas Producers

3 SEC. 711. 5-YEAR NET OPERATING LOSS CARRYBACK FOR

4 LOSSES ATTRIBUTABLE TO OPERATING MIN5 ERAL INTERESTS OF INDEPENDENT OIL AND

6 GAS PRODUCERS.

7 (a) IN GENERAL.—Paragraph (1) of section 172(b)

8 of the Internal Revenue Code of 1986 (relating to years

9 to which loss may be carried) is amended by adding at

10 the end the following new subparagraph:

11 ‘‘(H) LOSSES ON OPERATING MINERAL IN12 TERESTS OF INDEPENDENT OIL AND GAS PRO13 DUCERS.—In the case of a taxpayer—

14 ‘‘(i) which has an eligible oil and gas

15 loss (as defined in subsection (j)) for a tax16 able year, and

17 ‘‘(ii) which is not an integrated oil

18 company (as defined in section 291(b)(4)),

19 such eligible oil and gas loss shall be a net

20 operating loss carryback to each of the 5

21 taxable years preceding the taxable year of

22 such loss.’’.

23 (b) ELIGIBLE OIL AND GAS LOSS.—Section 172 of

24 such Code is amended by redesignating subsection (j) as
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1 subsection (k) and by inserting after subsection (i) the fol2 lowing new subsection—

3 ‘‘(j) ELIGIBLE OIL AND GAS LOSS.—For purposes of

4 this section—

5 ‘‘(1) IN GENERAL.—The term ‘eligible oil and

6 gas loss’ means the lesser of—

7 ‘‘(A) the amount which would be the net

8 operating loss for the taxable year if only in9 come and deductions attributable to operating

10 mineral interests (as defined in section 614(d))

11 in oil and gas wells are taken into account, or

12 ‘‘(B) the amount of the net operating loss

13 for such taxable year.

14 ‘‘(2) COORDINATION WITH SUBSECTION

15 (b)(2).—For purposes of applying subsection (b)(2),

16 an eligible oil and gas loss for any taxable year shall

17 be treated in a manner similar to the manner in

18 which a specified liability loss is treated.

19 ‘‘(3) ELECTION.—Any taxpayer entitled to a 5-

20 year carryback under subsection (b)(1)(H) from any

21 loss year may elect to have the carryback period

22 with respect to such loss year determined without re23 gard to subsection (b)(1)(H).’’.
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1 (c) EFFECTIVE DATE.—The amendments made by

2 this section shall apply to net operating losses for taxable

3 years beginning after December 31, 1999.

4 SEC. 712. TEMPORARY SUSPENSION OF LIMITATION BASED

5 ON 65 PERCENT OF TAXABLE INCOME AND

6 EXTENSION OF SUSPENSION OF TAXABLE IN7 COME LIMIT WITH RESPECT TO MARGINAL

8 PRODUCTION.

9 (a) LIMITATION BASED ON 65 PERCENT OF TAX10 ABLE INCOME.—Subsection (d) of section 613A of the In11 ternal Revenue Code of 1986 (relating to limitation on

12 percentage depletion in case of oil and gas wells) is amend13 ed by adding at the end the following new paragraph:

14 ‘‘(6) TEMPORARY SUSPENSION OF TAXABLE IN15 COME LIMIT.—Paragraph (1) shall not apply to tax16 able years beginning after December 31, 1999, and

17 before January 1, 2006, including with respect to

18 amounts carried under the second sentence of para19 graph (1) to such taxable years.’’.

20 (b) EXTENSION OF SUSPENSION OF TAXABLE IN21 COME LIMIT WITH RESPECT TO MARGINAL PRODUC22 TION.—Subparagraph (H) of section 613A(c)(6) of such

23 Code (relating to temporary suspension of taxable income

24 limit with respect to marginal production) is amended by

25 striking ‘‘2002’’ and inserting ‘‘2006’’.
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1 (c) EFFECTIVE DATE.—The amendment made by

2 subsection (a) shall apply to taxable years beginning after

3 December 31, 1999.

4 Subtitle C—Other Provisions

5 SEC. 721. REPEAL OF REQUIREMENT OF CERTAIN AP6 PROVED TERMINALS TO OFFER DYED DIESEL

7 FUEL AND KEROSENE FOR NONTAXABLE

8 PURPOSES.

9 Section 4101 of the Internal Revenue Code of 1986

10 (relating to certain approved terminals of registered per11 sons required to offer dyed diesel fuel and kerosene for

12 nontaxable purposes) is amended by striking subsection

13 (e).

14 SEC. 722. CLARIFICATION OF QUALIFIED TERTIARY

15 INJECTANT EXPENSES FOR PURPOSES OF

16 THE ENHANCED OIL RECOVERY CREDIT.

17 (a) IN GENERAL.—Subparagraph (C) of section

18 43(c)(1) of the Internal Revenue Code of 1986 (defining

19 qualified enhanced oil recovery costs) is amended to read

20 as follows:

21 ‘‘(C) Any qualified tertiary injectant ex22 penses (as defined in section 193(b)(1)) which

23 are paid or incurred during the taxable year in

24 connection with a qualified enhanced oil recov25 ery project.’’.
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1 (b) EFFECTIVE DATE.—The amendment made by

2 this section shall apply to amounts paid or incurred after

3 the date of the enactment of this Act.

4 TITLE VIII—TAX MEASURES TO

5 ENHANCE THE USE OF RE6 NEWABLE ENERGY SOURCES,

7 IMPROVE ENERGY EFFI8 CIENCIES, PROTECT CON9 SUMERS AND CONVERSION

10 TO CLEAN BURNING FUELS

11 SEC. 801. CREDIT FOR ELECTRICITY PRODUCED FROM RE12 NEWABLE RESOURCES.

13 (a) EXTENSION AND MODIFICATION OF PLACED-IN14 SERVICE RULES.—Subparagraph (B) of section 45(c)(3)

15 of the Internal Revenue Code of 1986 is amended to read

16 as follows:

17 ‘‘(B) BIOMASS FACILITIES.—In the case of

18 a facility using biomass to produce electricity,

19 the term ‘qualified facility’ means, with respect

20 to any month, any facility owned, leased, or op21 erated by the taxpayer which is originally

22 placed in service before July 1, 2005, if, for

23 such month—

24 ‘‘(i) biomass comprises not less than

25 75 percent (on a Btu basis) of the average
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1 monthly fuel input of the facility for the

2 taxable year which includes such month, or

3 ‘‘(ii) in the case of a facility prin4 cipally using coal to produce electricity,

5 biomass comprises not more than 25 per6 cent (on a Btu basis) of the average

7 monthly fuel input of the facility for the

8 taxable year which includes such month.’’.

9 (b) SPECIAL RULES.—Subsection (c) of section 45 of

10 such Code is amended by adding at the end the following

11 new paragraph:

12 ‘‘(5) SPECIAL RULES.—

13 ‘‘(A) 75 PERCENT BIOMASS INPUT FACIL14 ITY.—In the case of a qualified facility de15 scribed in paragraph (3)(B)(i)—

16 ‘‘(i) the 10-year period referred to in

17 subsection (a) shall be treated as beginning

18 no earlier than the date of the enactment

19 of this paragraph, and

20 ‘‘(ii) subsection (b)(3) shall not apply

21 to any such facility originally placed in

22 service before January 1, 1997.

23 ‘‘(B) 25 PERCENT BIOMASS INPUT FACIL24 ITY.—In the case of a qualified facility de25 scribed in paragraph (3)(B)(ii)—
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1 ‘‘(i) the 10-year period referred to in

2 subsection (a) shall be treated as beginning

3 no earlier than the date of the enactment

4 of this paragraph, and

5 ‘‘(ii) the amount of the credit deter6 mined under subsection (a) with respect to

7 any project for any taxable year shall be

8 adjusted by multiplying such amount (de9 termined without regard to this clause) by

10 0.59.’’.

11 (c) CREDIT NOT TO APPLY TO ELECTRICITY SOLD

12 TO UTILITIES UNDER CERTAIN CONTRACTS.—Section

13 45(b) of such Code (relating to limitations and adjust14 ments) is amended by adding at the end the following:

15 ‘‘(4) CREDIT NOT TO APPLY TO ELECTRICITY

16 SOLD TO UTILITIES UNDER CERTAIN CONTRACTS.—

17 ‘‘(A) IN GENERAL.—The credit determined

18 under subsection (a) shall not apply to

19 electricity—

20 ‘‘(i) produced at a qualified facility

21 placed in service by the taxpayer after

22 June 30, 1999, and

23 ‘‘(ii) sold to a utility pursuant to a

24 contract originally entered into before Jan-
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1 uary 1, 1987 (whether or not amended or

2 restated after that date).

3 ‘‘(B) EXCEPTION.—Subparagraph (A)

4 shall not apply if—

5 ‘‘(i) the prices for energy and capacity

6 from such facility are established pursuant

7 to an amendment to the contract referred

8 to in subparagraph (A)(ii),

9 ‘‘(ii) such amendment provides that

10 the prices set forth in the contract which

11 exceed avoided cost prices determined at

12 the time of delivery shall apply only to an13 nual quantities of electricity (prorated for

14 partial years) which do not exceed the

15 greater of—

16 ‘‘(I) the average annual quantity

17 of electricity sold to the utility under

18 the contract during calendar years

19 1994, 1995, 1996, 1997, and 1998,

20 or

21 ‘‘(II) the estimate of the annual

22 electricity production set forth in the

23 contract, or, if there is no such esti24 mate, the greatest annual quantity of

25 electricity sold to the utility under the
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1 contract in any of the calendar years

2 1996, 1997, or 1998, and

3 ‘‘(iii) such amendment provides that

4 energy and capacity in excess of the limita5 tion in clause (ii) may be—

6 ‘‘(I) sold to the utility only at

7 prices that do not exceed avoided cost

8 prices determined at the time of deliv9 ery, or

10 ‘‘(II) sold to a third party subject

11 to a mutually agreed upon advance

12 notice to the utility.

13 For purposes of this subparagraph, avoided cost

14 prices shall be determined as provided for in

15 section 292.304(d)(1) of title 18, Code of Fed16 eral Regulations, or any successor regulation.’’.

17 (d) QUALIFIED FACILITIES INCLUDE ALL BIOMASS

18 FACILITIES.—

19 (1) IN GENERAL.—Subparagraph (B) of section

20 45(c)(1) of such Code (defining qualified energy re21 sources) is amended to read as follows—

22 ‘‘(B) biomass, and’’.

23 (2) BIOMASS DEFINED.—Paragraph (2) of sec24 tion 45(c) of such Code (relating to definitions) is

25 amended to read as follows:
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1 ‘‘(2) BIOMASS.—The term ‘biomass’ means—

2 ‘‘(A) any organic material from a plant

3 which is planted exclusively for purposes of

4 being used at a qualified facility to produce

5 electricity, or

6 ‘‘(B) any solid, nonhazardous, cellulosic

7 waste material which is segregated from other

8 waste materials and which is derived from—

9 ‘‘(i) any of the following forest-related

10 resources: mill residues, precommercial

11 thinnings, slash, and brush, but not includ12 ing old-growth timber or wood waste, or

13 byproducts therefrom, used to produce

14 electricity for a pulp and paper production

15 facility,

16 ‘‘(ii) poultry waste,

17 ‘‘(iii) urban sources, including waste

18 pallets, crates, and dunnage, manufac19 turing and construction wood wastes, and

20 landscape or right-of-way tree trimmings,

21 but not including unsegregated municipal

22 solid waste (garbage) or paper that is com23 monly recycled, or

24 ‘‘(iv) agriculture sources, including or25 chard tree crops, vineyard, grain, legumes,
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1 sugar, and other crop by-products or resi2 dues.’’.

3 (e) EFFECTIVE DATE.—The amendments made by

4 this section shall apply to electricity produced after the

5 date of the enactment of this Act.

6 SEC. 802. CERTAIN AMOUNTS RECEIVED BY ELECTRIC EN7 ERGY, GAS, OR STEAM UTILITIES EXCLUDED

8 FROM GROSS INCOME AS CONTRIBUTIONS TO

9 CAPITAL.

10 (a) IN GENERAL.—Subsection (c) of section 118 of

11 the Internal Revenue Code of 1986 (relating to special

12 rules for water and sewerage disposal utilities) is

13 amended—

14 (1) in the heading, by striking, ‘‘WATER AND

15 SEWERAGE DISPOSAL’’ and inserting ‘‘CER16 TAIN’’,

17 (2) in paragraph (1)—

18 (A) in the matter preceding paragraph (1),

19 by striking ‘‘water or’’ and inserting ‘‘electric

20 energy, gas (through a local distribution system

21 or transportation by pipeline), steam, water,

22 or’’ and

23 (B) in subparagraph (B), by striking

24 ‘‘water or’’ and inserting ‘‘electric energy, gas,

25 steam, water, or’’,
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1 (3) in paragraph (2)(A)(ii), by striking ‘‘water

2 or’’ and inserting ‘‘electric energy, gas, steam,

3 water, or’’, and

4 (4) in paragraph (3)—

5 (A) in subparagraph (A), by inserting

6 ‘‘such term shall include amounts paid as cus7 tomer connection fees (including amounts paid

8 to connect the customer’s line to an electric

9 line, a gas main, a steam line, or a main water

10 or sewer line) and’’ after ‘‘except that’’, and

11 (B) in subparagraph (C), by striking

12 ‘‘water or’’ and inserting ‘‘electric energy, gas,

13 steam, water, or’’.

14 (b) EFFECTIVE DATE.—The amendments made by

15 subsection (a) shall apply to amounts received after the

16 date of the enactment of this Act.

17 SEC. 803. EXTENSION OF CREDIT FOR ELECTRICITY PRO18 DUCED FROM STEEL COGENERATION.

19 (a) EXTENSION OF CREDIT FOR COKE PRODUCTION

20 AND STEEL MANUFACTURING FACILITIES.—Section

21 45(c)(1) (defining qualified energy resources) is amended

22 by striking ‘‘and’’ at the end of subparagraph (B), by

23 striking the period at the end of subparagraph (C) and

24 inserting ‘‘, and’’, and by adding at the end the following

25 new subparagraph:
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1 ‘‘(D) steel cogeneration.’’

2 (b) STEEL COGENERATION.—Section 45(c) of such

3 Code is amended by adding at the end the following:

4 ‘‘(5) STEEL COGENERATION.—The term ‘steel

5 cogeneration’ means the production of steam or

6 other form of thermal energy of at least 20 percent

7 of total production and the production of electricity

8 or mechanical energy (or both) of at least 20 percent

9 of total production (meaning production from all

10 waste sources in subparagraphs (A), (B), and (C)

11 from the entire facility that produces coke, iron ore,

12 iron, or steel), provided that the cogeneration meets

13 any regulatory energy-efficiency standards estab14 lished by the Secretary, and only to the extent that

15 such energy is produced from—

16 ‘‘(A) gases or heat generated during the

17 production of coke,

18 ‘‘(B) blast furnace gases or heat generated

19 during the production of iron ore or iron, or

20 ‘‘(C) waste gases or heat generated from

21 the manufacture of steel that uses at least 20

22 percent recycled material.’’.

23 (c) MODIFICATION OF PLACED IN SERVICE

24 RULES FOR STEEL COGENERATION FACILITIES.—

25 Section 45(c)(3) of such Code (defining qualified fa-
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1 cility) is amended by adding at the end the fol2 lowing:

3 ‘‘(D) STEEL COGENERATION FACILITIES.—

4 In the case of a facility using steel cogeneration

5 to produce electricity, the term ‘qualified facil6 ity’ means any facility permitted to operate

7 under the environmental requirements of the

8 Clean Air Act Amendments of 1990 which is

9 owned by the taxpayer and originally placed in

10 service after December 31, 1999, and before

11 January 1, 2005. Such a facility may be treated

12 as originally placed in service when such facility

13 was last upgraded to increase efficiency or gen14 eration capability. However, no facility shall be

15 allowed a credit for more than 10 years of pro16 duction.’’.

17 (d) CONFORMING AMENDMENTS.—

18 (1) The heading for section 45 of such Code is

19 amended by inserting ‘‘and waste energy’’ after ‘‘re20 newable’’.

21 (2) The item relating to section 45 in the table

22 of sections subpart D of part IV of subchapter A of

23 chapter 1 of such Code is amended by inserting

24 ‘‘and waste energy’’ after ‘‘renewable’’.
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1 (e) EFFECTIVE DATE.—The amendments made by

2 this section shall apply to taxable years beginning after

3 December 31, 2001, and before January 1, 2005.

4 SEC. 804. FULL EXPENSING OF HOME HEATING OIL STOR5 AGE FACILITIES.

6 (a) IN GENERAL.—Section 179(b) of the Internal

7 Revenue Code of 1986 (relating to limitations) is amended

8 by adding at the end of the following:

9 ‘‘(5) FULL EXPENSING OF HOME HEATING OIL

10 STORAGE FACILITIES.—Paragraphs (1) and (2) shall

11 not apply to section 179 property which is any stor12 age facility (not including a building or its structural

13 components) used in connection with the distribution

14 of home heating oil.’’.

15 (b) EFFECTIVE DATE.—The amendment made by

16 this section shall apply to property placed in service in

17 taxable years beginning after the date of the enactment

18 of this Act.

19 SEC. 805. RESIDENTIAL SOLAR ENERGY TAX CREDIT.

20 (a) IN GENERAL.—Subpart A of part IV of sub21 chapter A of chapter 1 of the Internal Revenue Code of

22 1986 (relating to nonrefundable personal credits) is

23 amended by inserting after section 25A the following new

24 section:
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1 ‘‘SEC. 25B. RESIDENTIAL SOLAR ENERGY PROPERTY.

2 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in3 dividual, there shall be allowed as a credit against the tax

4 imposed by this chapter for the taxable year an amount

5 equal to the sum of—

6 ‘‘(1) 15 percent of the qualified photovoltaic

7 property expenditures made by the taxpayer during

8 such year, and

9 ‘‘(2) 15 percent of the qualified solar water

10 heating property expenditures made by the taxpayer

11 during the taxable year.

12 ‘‘(b) LIMITATIONS.—

13 ‘‘(1) MAXIMUM CREDIT.—The credit allowed

14 under subsection (a)(2) shall not exceed $2,000 for

15 each system of solar energy property.

16 ‘‘(2) TYPE OF PROPERTY.—No expenditure may

17 be taken into account under this section unless such

18 expenditure is made by the taxpayer for property in19 stalled on or in connection with a dwelling unit

20 which is located in the United States and which is

21 used as a residence.

22 ‘‘(3) SAFETY CERTIFICATIONS.—No credit shall

23 be allowed under this section for an item of property

24 unless—

25 ‘‘(A) in the case of solar water heating

26 equipment, such equipment is certified for per-
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1 formance and safety by the non-profit Solar

2 Rating Certification Corporation or a com3 parable entity endorsed by the government of

4 the State in which such property is installed,

5 and

6 ‘‘(B) in the case of a photovoltaic system,

7 such system meets appropriate fire and electric

8 code requirements.

9 ‘‘(c) DEFINITIONS.—For purposes of this section—

10 ‘‘(1) QUALIFIED SOLAR WATER HEATING PROP11 ERTY EXPENDITURE.—The term ‘qualified solar

12 water heating property expenditure’ means an ex13 penditure for property that uses solar energy to heat

14 water for use in a dwelling unit with respect to

15 which a majority of the energy is derived from the

16 sun.

17 ‘‘(2) QUALIFIED PHOTOVOLTAIC PROPERTY EX18 PENDITURE.—The term ‘qualified photovoltaic prop19 erty expenditure’ means an expenditure for property

20 that uses solar energy to generate electricity for use

21 in a dwelling unit.

22 ‘‘(3) SOLAR PANELS.—No expenditure relating

23 to a solar panel or other property installed as a roof

24 (or portion thereof) shall fail to be treated as prop25 erty described in paragraph (1) or (2) solely because
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1 it constitutes a structural component of the struc2 ture on which it is installed.

3 ‘‘(4) LABOR COSTS.—Expenditures for labor

4 costs properly allocable to the onsite preparation, as5 sembly, or original installation of the property de6 scribed in paragraph (1) or (2) and for piping or

7 wiring to interconnect such property to the dwelling

8 unit shall be taken into account for purposes of this

9 section.

10 ‘‘(5) SWIMMING POOLS, ETC., USED AS STOR11 AGE MEDIUM.—Expenditures which are properly al12 locable to a swimming pool, hot tub, or any other

13 energy storage medium which has a function other

14 than the function of such storage shall not be taken

15 into account for purposes of this section.

16 ‘‘(d) SPECIAL RULES.—For purposes of this

17 section—

18 ‘‘(1) DOLLAR AMOUNTS IN CASE OF JOINT OC19 CUPANCY.—In the case of any dwelling unit which is

20 jointly occupied and used during any calendar year

21 as a residence by 2 or more individuals the following

22 shall apply—

23 ‘‘(A) The amount of the credit allowable

24 under subsection (a) by reason of expenditures

25 (as the case may be) made during such cal-
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1 endar year by any of such individuals with re2 spect to such dwelling unit shall be determined

3 by treating all of such individuals as 1 taxpayer

4 whose taxable year is such calendar year.

5 ‘‘(B) There shall be allowable with respect

6 to such expenditures to each of such individ7 uals, a credit under subsection (a) for the tax8 able year in which such calendar year ends in

9 an amount which bears the same ratio to the

10 amount determined under subparagraph (A) as

11 the amount of such expenditures made by such

12 individual during such calendar year bears to

13 the aggregate of such expenditures made by all

14 of such individuals during such calendar year.

15 ‘‘(2) TENANT-STOCKHOLDER IN COOPERATIVE

16 HOUSING CORPORATION.—In the case of an indi17 vidual who is a tenant-stockholder (as defined in sec18 tion 216) in a cooperative housing corporation (as

19 defined in such section), such individual shall be

20 treated as having made his tenant-stockholder’s pro21 portionate share (as defined in section 216(b)(3)) of

22 any expenditures of such corporation.

23 ‘‘(3) CONDOMINIUMS.—

24 ‘‘(A) IN GENERAL.—In the case of an indi25 vidual who is a member of a condominium man-
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1 agement association with respect to a condo2 minium which he owns, such individual shall be

3 treated as having made his proportionate share

4 of any expenditures of such association.

5 ‘‘(B) CONDOMINIUM MANAGEMENT ASSO6 CIATION.—For purposes of this paragraph, the

7 term ‘condominium management association’

8 means an organization which meets the require9 ments of paragraph (1) of section 528(c) (other

10 than subparagraph (E) thereof) with respect to

11 a condominium project substantially all of the

12 units of which are used as residences.

13 ‘‘(4) JOINT OWNERSHIP OF ITEMS OF SOLAR

14 ENERGY PROPERTY.—

15 ‘‘(A) IN GENERAL.—Any expenditure oth16 erwise qualifying as an expenditure described in

17 paragraph (1) or (2) of subsection (c) shall not

18 be treated as failing to so qualify merely be19 cause such expenditure was made with respect

20 to 2 or more dwelling units.

21 ‘‘(B) LIMITS APPLIED SEPARATELY.—In

22 the case of any expenditure described in sub23 paragraph (A), the amount of the credit allow24 able under subsection (a) shall (subject to para25 graph (1)) be computed separately with respect
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1 to the amount of the expenditure made for each

2 dwelling unit.

3 ‘‘(5) ALLOCATION IN CERTAIN CASES.—If less

4 than 80 percent of the use of an item is for nonbusi5 ness residential purposes, only that portion of the

6 expenditures for such item which is properly allo7 cable to use for nonbusiness residential purposes

8 shall be taken into account. For purposes of this

9 paragraph, use for a swimming pool shall be treated

10 as use which is not for residential purposes.

11 ‘‘(6) WHEN EXPENDITURE MADE; AMOUNT OF

12 EXPENDITURE.—

13 ‘‘(A) IN GENERAL.—Except as provided in

14 subparagraph (B), an expenditure with respect

15 to an item shall be treated as made when the

16 original installation of the item is completed.

17 ‘‘(B) EXPENDITURES PART OF BUILDING

18 CONSTRUCTION.—In the case of an expenditure

19 in connection with the construction or recon20 struction of a structure, such expenditure shall

21 be treated as made when the original use of the

22 constructed or reconstructed structure by the

23 taxpayer begins.

24 ‘‘(C) AMOUNT.—The amount of an ex25 penditure shall be the cost thereof.
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1 ‘‘(e) BASIS ADJUSTMENTS.—For purposes of this

2 subtitle, if a credit is allowed under this section for any

3 expenditure with respect to any property, the increase in

4 the basis of such property which would (but for this sub5 section) result from such expenditure shall be reduced by

6 the amount of the credit so allowed.’’.

7 (b) CONFORMING AMENDMENTS.—

8 (1) Subsection (a) of section 1016 of such Code

9 is amended by striking ‘and’ at the end of paragraph

10 (26), by striking the period at the end of paragraph

11 (27) and inserting ‘‘; and’’, and by adding at the

12 end the following new paragraph:

13 ‘‘(28) to the extent provided in section 25B(e),

14 in the case of amounts with respect to which a credit

15 has been allowed under section 25B.’’.

16 (2) The table of sections for subpart A of part

17 IV of subchapter A of chapter 1 of such Code is

18 amended by inserting after the item relating to sec19 tion 25A the following new item:

‘‘Sec. 25B. Residential solar energy property.’’

20 (c) EFFECTIVE DATE.—The amendments made by

21 this section shall apply to taxable years ending after De22 cember 31, 1999 and before December 31, 2004.
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1 SEC. 806. CREDIT FOR CERTAIN FUEL CELL AND COM2 BINED HEAT AND POWER SYSTEM PROPERTY

3 USED IN BUSINESS.

4 (a) ENERGY PERCENTAGE.—Paragraph (2) of sec5 tion 48(a) of the Internal Revenue Code of 1986 (relating

6 to energy percentage for energy credit) is amended by re7 designating subparagraph (B) as subparagraph (D) and

8 by inserting after subparagraph (A) the following new sub9 paragraphs:

10 ‘‘(B) QUALIFIED FUEL CELL PROPERTY.—

11 The energy percentage shall be 20 percent in

12 the case of qualified fuel cell property.

13 ‘‘(C) COMBINED HEAT AND POWER SYS14 TEM PROPERTY.—The energy percentage shall

15 be 8 percent in the case of combined heat and

16 power system property.’’.

17 (b) ENERGY PROPERTY DEFINED.—Subsection (a)

18 of section 48 of such Code (relating to the energy credit)

19 is amended by adding at the end the following new para20 graphs:

21 ‘‘(6) QUALIFIED FUEL CELL PROPERTY.—For

22 purposes of this subsection—

23 ‘‘(A) IN GENERAL.—The term ‘energy

24 property’ shall include qualified fuel cell prop25 erty.
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1 ‘‘(B) QUALIFIED FUEL CELL PROPERTY.—

2 The term ‘qualified fuel cell property’ means a

3 fuel cell that—

4 ‘‘(i) generates electricity and heat

5 using an electrochemical process,

6 ‘‘(ii) has an electricity-only generation

7 efficiency greater than 35 percent, and

8 ‘‘(iii) has a minimum generating ca9 pacity of 1 kilowatts.

10 ‘‘(7) COMBINED HEAT AND POWER SYSTEM

11 PROPERTY.—For purposes of this subsection—

12 ‘‘(A) IN GENERAL.—The term ‘energy

13 property’ shall include combined heat and

14 power system property.

15 ‘‘(B) COMBINED HEAT AND POWER SYS16 TEM PROPERTY.—The term ‘combined heat and

17 power system property’ means property com18 prising a system—

19 ‘‘(i) which uses the same energy

20 source for the simultaneous or sequential

21 generation of electrical power, mechanical

22 shaft power, or both, in combination with

23 the generation of steam or other forms of

24 useful thermal energy (including heating

25 and cooling applications),
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1 ‘‘(ii) which has an electrical capacity

2 of more than 50 kilowatts or a mechanical

3 energy capacity of more than 67 horse4 power or an equivalent combination of elec5 trical and mechanical energy capacities,

6 ‘‘(iii) which produces—

7 ‘‘(I) at least 20 percent of its

8 total useful energy in the form of

9 thermal energy, and

10 ‘‘(II) at least 20 percent of its

11 total useful energy in the form of elec12 trical or mechanical power (or a com13 bination thereof), and

14 ‘‘(iv) the energy efficiency percentage

15 of which exceeds 60 percent (70 percent in

16 the case of a system with an electrical ca17 pacity in excess of 50 megawatts or a me18 chanical energy capacity in excess of

19 67,000 horsepower, or an equivalent com20 bination of electrical and mechanical en21 ergy capacities).

22 ‘‘(C) SPECIAL RULES.—

23 ‘‘(i) ENERGY EFFICIENCY PERCENT24 AGE.—For purposes of subparagraph
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1 (B)(iv), the energy efficiency percentage of

2 a system is the fraction—

3 ‘‘(I) the numerator of which is

4 the total useful electrical, thermal,

5 and mechanical power produced by

6 the system at normal operating rates,

7 and

8 ‘‘(II) the denominator of which is

9 the lower heating value of the primary

10 fuel source for the system.

11 ‘‘(ii) DETERMINATIONS MADE ON BTU

12 BASIS.—The energy efficiency percentage

13 and the percentages under subparagraph

14 (B)(iii) shall be determined on a Btu basis.

15 ‘‘(iii) INPUT AND OUTPUT PROPERTY

16 NOT INCLUDED.—The term ‘combined heat

17 and power system property’ does not in18 clude property used to transport the en19 ergy source to the facility or to distribute

20 energy produced by the facility.

21 ‘‘(iv) PUBLIC UTILITY PROPERTY.—

22 ‘‘(I) ACCOUNTING RULE FOR

23 PUBLIC UTILITY PROPERTY.—In the

24 case that combined heat and power

25 system property is public utility prop-
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1 erty (as defined in section 46(f)(5) as

2 in effect on the day before the date of

3 the enactment of the Revenue Rec4 onciliation Act of 1990), the taxpayer

5 may only claim the credit under this

6 subsection if, with respect to such

7 property, the taxpayer uses a normal8 ization method of accounting.

9 ‘‘(II) CERTAIN EXCEPTION NOT

10 TO APPLY.—The matter in paragraph

11 (3) which follows subparagraph (D)

12 shall not apply to combined heat and

13 power system property.

14 ‘‘(v) DEPRECIATION.—No credit shall

15 be allowed for any combined heat and

16 power system property unless the taxpayer

17 elects to treat such property for purposes

18 of section 168 as having a class life of not

19 less than 22 years.’’.

20 (c) NO CARRYBACK OF ENERGY CREDIT BEFORE

21 EFFECTIVE DATE.—Subsection (d) of section 39 of such

22 Code is amended by adding at the end the following new

23 paragraph:

24 ‘‘(9) NO CARRYBACK OF ENERGY CREDIT BE25 FORE EFFECTIVE DATE.—No portion of the unused
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1 business credit for any taxable year which is attrib2 utable to the portion of the energy credit described

3 in section 48(a)(6) or (7) may be carried back to a

4 taxable year ending before the date of the enactment

5 of this paragraph.’’.

6 (d) DEPRECIATION.—

7 (1) Subparagraph (C) of section 168(e)(3) of

8 such Code is amended by striking the period at the

9 end of clause (ii) and inserting ‘‘, and’’, and by in10 serting after clause (ii) the following new clause:

11 ‘‘(iii) any energy property (as defined

12 in paragraphs (6) or (7) of section 48(a))

13 for which a credit is allowed under section

14 48 and which, but for this clause, would

15 have a recovery period of less than 15

16 years.’’.

17 (2) The table contained in subparagraph (B) of

18 section 168(g)(3) of such Code is amended by insert19 ing after the item relating to subparagraph (C)(i)

20 the following:

‘‘(C)(iii) ...................................................................................... 10’’.

21 (d) EFFECTIVE DATE.—The amendments made by

22 this section shall apply to periods after December 31,

23 2000, under rules similar to the rules of section 48(m)

24 of the Internal Revenue Code of 1986 (as in effect on the
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1 day before the date of the enactment of the Revenue Rec2 onciliation Act of 1990).

3 TITLE IX—ARCTIC COASTAL

4 PLAIN DOMESTIC ENERGY SE5 CURITY ACT OF 2000

6 SEC. 901. SHORT TITLE

7 This title may be cited as the ‘‘Arctic Coastal Plain

8 Domestic Energy Security Act of 2000’’.

9 SEC. 902. DEFINITIONS.

10 When used in this title the term—

11 (1) ‘‘Coastal Plain’’ means that area identified

12 as such in the map entitled ‘‘Arctic National Wildlife

13 Refuge’’, dated August 1980, as referenced in sec14 tion 1002(b) of the Alaska National Interest Lands

15 Conservation Act of 1980 (16 U.S.C. 3142(b)(1))

16 comprising approximately 1,549,000 acres; and

17 (2) ‘‘Secretary’’, except as otherwise provided,

18 means the Secretary of the Interior or the Sec19 retary’s designee.

20 SEC. 903. LEASING PROGRAM FOR LANDS WITHIN THE

21 COASTAL PLAIN.

22 (a) AUTHORIZATION.—The Congress hereby author23 izes and directs the Secretary, acting through the Bureau

24 of Land Management in consultation with the Fish and

25 Wildlife Service and other appropriate Federal offices and
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1 agencies, to take such actions as are necessary to establish

2 and implement a competitive oil and gas leasing program

3 that will result in an environmentally sound program for

4 the exploration, development, and production of the oil

5 and gas resources of the Coastal Plain and to administer

6 the provisions of this title through regulations, lease

7 terms, conditions, restrictions, prohibitions, stipulations,

8 and other provisions that ensure the oil and gas explo9 ration, development, and production activities on the

10 Coastal Plain will result in no significant adverse effect

11 on fish and wildlife, their habitat, subsistence resources,

12 and the environment, and shall require the application of

13 the best commercially available technology for oil and gas

14 exploration, development, and production, on all new ex15 ploration, development, and production operations, and

16 whenever practicable, on existing operations, and in a

17 manner to ensure the receipt of fair market value by the

18 public for the mineral resources to be leased.

19 (b) REPEAL.—The prohibitions and limitations con20 tained in section 1003 of the Alaska National Interest

21 Lands Conservation Act of 1980 (16 U.S.C. 3143) are

22 hereby repealed.

23 (c) COMPATIBILITY.—Congress hereby determines

24 that the oil and gas leasing program and activities author25 ized by this section in the Coastal Plain are compatible
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1 with the purposes for which the Arctic National Wildlife

2 Refuge was established, and that no further findings or

3 decisions are required to implement this determination.

4 (d) SOLE AUTHORITY.—This title shall be the sole

5 authority for leasing on the Coastal Plain: Provided, That

6 nothing in this title shall be deemed to expand or limit

7 State and local regulatory authority.

8 (e) FEDERAL LAND.—The Coastal Plain shall be

9 considered ‘‘Federal land’’ for the purposes of the Federal

10 Oil and Gas Royalty Management Act of 1982.

11 (f) SPECIAL AREAS.—The Secretary, after consulta12 tion with the State of Alaska, City of Kaktovik, and the

13 North Slope Borough, is authorized to designate up to a

14 total of 45,000 acres of the Coastal Plain as Special Areas

15 and close such areas to leasing if the Secretary determines

16 that these Special Areas are of such unique character and

17 interest so as to require special management and regu18 latory protection. The Secretary may, however, permit

19 leasing of all or portions of any Special Areas within the

20 Coastal Plain by setting lease terms that limit or condition

21 surface use and occupancy by lessees of such lands but

22 permit the use of horizontal drilling technology from sites

23 on leases located outside the designated Special Areas.

24 (g) LIMITATION ON CLOSED AREAS.—The Sec25 retary’s sole authority to close lands within the Coastal
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1 Plain to oil and gas leasing and to exploration, develop2 ment, and production is that set forth in this title.

3 (h) CONVEYANCE.—In order to maximize Federal

4 revenues by removing clouds on title of lands and clari5 fying land ownership patterns within the Coastal Plain,

6 the Secretary, notwithstanding the provisions of section

7 1302(h)(2) of the Alaska National Interest Lands Con8 servation Act (16 U.S.C. 3192(h)(2)), is authorized and

9 directed to convey (1) to the Kaktovik Inupiat Corporation

10 the surface estate of the lands described in paragraph 2

11 of the Public Land Order 6959, to the extent necessary

12 to fulfill the Corporation’s entitlement under section 12

13 of the Alaska Native Claims Settlement Act (43 U.S.C.

14 1611), and (2) to the Arctic Slope Regional Corporation

15 the subsurface estate beneath such surface estate pursu16 ant to the August 9, 1983, agreement between the Arctic

17 Slope Regional Corporation and the United States of

18 America.

19 SEC. 904. RULES AND REGULATIONS.

20 (a) PROMULGATION.—The Secretary shall prescribe

21 such rules and regulations as may be necessary to carry

22 out the purposes and provisions of this title, including

23 rules and regulations relating to protection of the fish and

24 wildlife, their habitat, subsistence resources, and the envi25 ronment of the Coastal Plain. Such rules and regulations
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1 shall be promulgated no later than fourteen months after

2 the date of enactment of this title and shall, as of their

3 effective date, apply to all operations conducted under a

4 lease issued or maintained under the provisions of this

5 title and all operations on the Coastal Plain related to the

6 leasing, exploration, development, and production of oil

7 and gas.

8 (b) REVISION OF REGULATIONS.—The Secretary

9 shall periodically review and, if appropriate, revise the

10 rules and regulations issued under subsection (a) of this

11 section to reflect any significant biological, environmental,

12 or engineering data which come to the Secretary’s atten13 tion.

14 SEC. 905. ADEQUACY OF THE DEPARTMENT OF THE INTE15 RIOR’S LEGISLATIVE ENVIRONMENTAL IM16 PACT STATEMENT.

17 The ‘‘Final Legislative Environmental Impact State18 ment’’ (April 1987) on the Coastal Plain prepared pursu19 ant to section 1002 of the Alaska National Interest Lands

20 Conservation Act of 1980 (16 U.S.C. 3142) and section

21 102(2)(C) of the National Environmental Policy Act of

22 1969 (42 U.S.C. 4332(2)(C)) is hereby found by the Con23 gress to be adequate to satisfy the legal and procedural

24 requirements of the National Environmental Policy Act of

25 1969 with respect to actions authorized to be taken by
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1 the Secretary to develop and promulgate the regulations

2 for the establishment of the leasing program authorized

3 by this title, to conduct the first lease sale and any subse4 quent lease sale authorized by this title, and to grant

5 rights-of-way and easements to carry out the purposes of

6 this title.

7 SEC. 906. LEASE SALES.

8 (a) LEASE SALES.—Lands may be leased pursuant

9 to the provisions of this title to any person qualified to

10 obtain a lease for deposits of oil and gas under the Mineral

11 Leasing Act, as amended (30 U.S.C. 181).

12 (b) PROCEDURES.—The Secretary shall, by regula13 tion, establish procedures for—

14 (1) receipt and consideration of sealed nomina15 tions for any area in the Coastal Plain for inclusion

16 in, or exclusion (as provided in subsection (c)) from,

17 a lease sale; and

18 (2) public notice of and comment on designa19 tion of areas to be included in, or excluded from, a

20 lease sale.

21 (c) LEASE SALES ON COASTAL PLAIN.—The Sec22 retary shall, by regulation, provide for lease sales of lands

23 on the Coastal Plain. When lease sales are to be held, they

24 shall occur after the nomination process provided for in

25 subsection (b) of this section. For the first lease sale, the
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1 Secretary shall offer for lease those acres receiving the

2 greatest number of nominations, but no less than two hun3 dred thousand acres and no more than three hundred

4 thousand acres shall be offered. If the total acreage nomi5 nated is less than two hundred thousand acres, the Sec6 retary shall include in such sale any other acreage which

7 he believes has the highest resource potential, but in no

8 event shall more than three hundred thousand acres of

9 the Coastal Plain be offered in such sale. With respect

10 to subsequent lease sales, the Secretary shall offer for

11 lease no less than two hundred thousand acres of the

12 Coastal Plain. The initial lease sale shall be held within

13 twenty months of the date of enactment of this title. The

14 second lease sale shall be held no later than twenty-four

15 months after the initial sale, with additional sales con16 ducted no later than twelve months thereafter so long as

17 sufficient interest in development exists to warrant, in the

18 Secretary’s judgment, the conduct of such sales.

19 SEC. 907. GRANT OF LEASES BY THE SECRETARY.

20 (a) IN GENERAL.—The Secretary is authorized to

21 grant to the highest responsible qualified bidder by sealed

22 competitive cash bonus bid any lands to be leased on the

23 Coastal Plain upon payment by the lessee of such bonus

24 as may be accepted by the Secretary and of such royalty

25 as may be fixed in the lease, which shall be not less then
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121 1 ⁄2 per centum in amount or value of the production

2 removed or sold from the lease.

3 (b) ANTITRUST REVIEW.—Following each notice of

4 a proposed lease sale and before the acceptance of bids

5 and the issuance of leases based on such bids, the Sec6 retary shall allow the Attorney General, in consultation

7 with the Federal Trade Commission, thirty days to per8 form an antitrust review of the results of such lease sale

9 on the likely effects the issuance of such leases would have

10 on competition and the Attorney General shall advise the

11 Secretary with respect to such review, including any rec12 ommendation for the nonacceptance of any bid or the im13 position of terms or conditions on any lease, as may be

14 appropriate to prevent any situation inconsistent with the

15 antitrust laws.

16 (c) SUBSEQUENT TRANSFERS.—No lease issued

17 under this title may be sold, exchanged, assigned, sublet,

18 or otherwise transferred except with the approval of the

19 Secretary. Prior to any such approval the Secretary shall

20 consult with, and give due consideration to the views of,

21 the Attorney General.

22 (d) IMMUNITY.—Nothing in this title shall be deemed

23 to convey to any person, association, corporation, or other

24 business organization immunity from civil or criminal li-
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1 ability, or to create defenses to actions, under any anti2 trust law.

3 (e) DEFINITIONS.—As used in this section, the

4 term—

5 (1) ‘‘antitrust review’’ shall be deemed an

6 ‘‘antitrust investigation’’ for the purposes of the

7 Antitrust Civil Process Act (15 U.S.C. 1311); and

8 (2) ‘‘antitrust laws’’ means those Acts set forth

9 in section 1 of the Clayton Act (15 U.S.C. 12) as

10 amended.

11 SEC. 908. LEASE TERMS AND CONDITIONS.

12 An oil or gas lease issued pursuant to this title

13 shall—

14 (1) be for a tract consisting of a compact area

15 not to exceed five thousand seven hundred sixty

16 acres, or nine surveyed or protracted sections which

17 shall be as compact in form as possible;

18 (2) be for an initial period of ten years and

19 shall be extended for so long thereafter as oil or gas

20 is produced in paying quantities from the lease or

21 unit area to which the lease is committed or for so

22 long as drilling or reworking operations, as approved

23 by the Secretary, are conducted on the lease or unit

24 area;
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1 (3) require the payment of royalty as provided

2 for in section 907 of this title;

3 (4) require that exploration activities pursuant

4 to any lease issued or maintained under this title

5 shall be conducted in accordance with an exploration

6 plan or a revision of such plan approved by the Sec7 retary;

8 (5) require that all development and production

9 pursuant to a lease issued or maintained pursuant

10 to this title shall be conducted in accordance with

11 development and production plans approved by the

12 Secretary;

13 (6) require posting of bond as required by sec14 tion 909 of this title;

15 (7) provide that the Secretary may close, on a

16 seasonal basis, portions of the Coastal Plain to ex17 ploratory drilling activities as necessary to protect

18 caribou calving areas and other species of fish and

19 wildlife;

20 (8) contain such provisions relating to rental

21 and other fees as the Secretary may prescribe at the

22 time of offering the area for lease;

23 (9) provide that the Secretary may direct or as24 sent to the suspension of operations and production

25 under any lease granted under the terms of this title
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1 in the interest of conservation of the resource or

2 where there is no available system to transport the

3 resource. If such a suspension is directed or as4 sented to by the Secretary, any payment of rental

5 prescribed by such lease shall be suspended during

6 such period of suspension of operations and produc7 tion, and the term of the lease shall be extended by

8 adding any such suspension period thereto;

9 (10) provide that whenever the owner of a non10 producing lease fails to comply with any of the pro11 visions of this Act, or of any applicable provision of

12 Federal or State environmental law, or of the lease,

13 or of any regulation issued under this title, such

14 lease may be canceled by the Secretary if such de15 fault continues for more than thirty days after mail16 ing of notice by registered letter to the lease owner

17 at the lease owner’s post office address of record;

18 (11) provide that whenever the owner of any

19 producing lease fails to comply with any of the pro20 visions of this title, or of any applicable provision of

21 Federal or State environmental law, or of the lease,

22 or of any regulation issued under this title, such

23 lease may be forfeited and canceled by any appro24 priate proceeding brought by the Secretary in any
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1 United States district court having jurisdiction

2 under the provisions of this title;

3 (12) provide that cancellation of a lease under

4 this title shall in no way release the owner of the

5 lease from the obligation to provide for reclamation

6 of the lease site;

7 (13) allow the lessee, at the discretion of the

8 Secretary, to make written relinquishment of all

9 rights under any lease issued pursuant to this title.

10 The Secretary shall accept such relinquishment by

11 the lessee of any lease issued under this title where

12 there has not been surface disturbance on the lands

13 covered by the lease;

14 (14) provide that for the purpose of conserving

15 the natural resources of any oil or gas pool, field, or

16 like area, or any part thereof, and in order to avoid

17 the unnecessary duplication of facilities, to protect

18 the environment of the Coastal Plain, and to protect

19 correlative rights, the Secretary shall require that, to

20 the greatest extent practicable, lessees unite with

21 each other in collectively adopting and operating

22 under a cooperative or unit plan of development for

23 operation of such pool, field, or like area, or any

24 part thereof, and the Secretary is also authorized

25 and directed to enter into such agreements as are
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1 necessary or appropriate for the protection of the

2 United States against drainage;

3 (15) require that the holder of a lease or leases

4 on lands within the Coastal Plain shall be fully re5 sponsible and liable for the reclamation of lands

6 within the Coastal Plain and any other Federal

7 lands adversely affected in connection with explo8 ration, development, production or transportation

9 activities on a lease within the Coastal Plain by the

10 holder of a lease or as a result of activities con11 ducted on the lease by any of the leaseholder’s sub12 contractors or agents;

13 (16) provide that the holder of a lease may not

14 delegate or convey, by contract of otherwise, the rec15 lamation responsibility and liability to another party

16 without the express written approval of the Sec17 retary;

18 (17) provide that the standard of reclamation

19 for lands required to be reclaimed under this title

20 be, as nearly as practicable, a condition capable of

21 supporting the uses which the lands were capable of

22 supporting prior to any exploration, development, or

23 production activities, or upon application by the les24 see, to a higher or better use as approved by the

25 Secretary;
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1 (18) contain the terms and conditions relating

2 to protection of fish and wildlife, their habitat, and

3 the environment, as required by section 903(a) of

4 this title;

5 (19) provide that the holder of a lease, its

6 agents, and contractors use best efforts to provide a

7 fair share, as determined by the level of obligation

8 previously agreed to in the 1974 agreement imple9 menting section 29 of the Federal Agreement and

10 Grant of Right of Way for the Operation of the

11 Trans-Alaska Pipeline, of employment and con12 tracting for Alaska Natives and Alaska Native Cor13 porations from throughout the State;

14 (20) require project agreements to the extent

15 feasible that will ensure productivity and consistency

16 recognizing a national interest in both labor stability

17 and the ability of construction labor and manage18 ment to meet the particular needs and conditions of

19 projects to be developed under leases issued pursu20 ant to this Act; and

21 (21) contain such other provisions as the Sec22 retary determines necessary to ensure compliance

23 with the provisions of this title and the regulations

24 issued under this title.
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1 SEC. 909. BONDING REQUIREMENTS TO ENSURE FINANCIAL

2 RESPONSIBILITY OF LESSEE AND AVOID FED3 ERAL LIABILITY.

4 (a) REQUIREMENT.—The Secretary shall, by rule or

5 regulation, establish such standards as may be necessary

6 to ensure that an adequate bond, surety, or other financial

7 arrangement will be established prior to the commence8 ment of surface disturbing activities on any lease, to en9 sure the complete and timely reclamation of the lease

10 tract, and the restoration of any lands or surface waters

11 adversely affected by lease operations after the abandon12 ment or cessation of oil and gas operations on the lease.

13 Such bond, surety, or financial arrangement is in addition

14 to, and not in lieu, of any bond, surety, or financial ar15 rangement required by any other regulatory authority or

16 required by any other provision of law.

17 (b) AMOUNT.—The bond, surety, or financial ar18 rangement shall be in an amount—

19 (1) to be determined by the Secretary to pro20 vide for reclamation of the lease site in accordance

21 with an approved or revised exploration or develop22 ment and production plan; plus

23 (2) set by the Secretary consistent with the

24 type of operations proposed, to provide the means

25 for rapid and effective cleanup, and to minimize

26 damages resulting from an oil spill, the escape of
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1 gas, refuse, domestic wastewater, hazardous or toxic

2 substances, or fire caused by oil and gas activities.

3 (c) ADJUSTMENT.—In the event that an approved ex4 ploration or development and production plan is revised,

5 the Secretary may adjust the amount of the bond, surety,

6 or other financial arrangement to conform to such modi7 fied plan.

8 (d) DURATION.—The responsibility and liability of

9 the lessee and its surety under the bond, surety, or other

10 financial arrangement shall continue until such time as

11 the Secretary determines that there has been compliance

12 with the terms and conditions of the lease and all applica13 ble law.

14 (e) TERMINATION.—Within sixty days after deter15 mining that there has been compliance with the terms and

16 conditions of the lease and all applicable laws, the Sec17 retary, after consultation with affected Federal and State

18 agencies, shall notify the lessee that the period of liability

19 under the bond, surety, or other financial arrangement has

20 been terminated.

21 SEC. 910. OIL AND GAS INFORMATION.

22 (a) IN GENERAL.—(1) Any lessee or permittee con23 ducting any exploration for, or development or production

24 of, oil or gas pursuant to this title shall provide the Sec25 retary access to all data and information from any lease
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1 granted pursuant to this title (including processed and

2 analyzed) obtained from such activity and shall provide

3 copies of such data and information as the Secretary may

4 request. Such data and information shall be provided in

5 accordance with regulations which the Secretary shall pre6 scribe.

7 (2) If processed and analyzed information provided

8 pursuant to paragraph (1) is provided in good faith by

9 the lessee or permittee, such lessee or permittee shall not

10 be responsible for any consequence of the use or of reliance

11 upon such processed and analyzed information.

12 (3) Whenever any data or information is provided to

13 the Secretary, pursuant to paragraph (1)—

14 (A) by a lessee or permittee, in the form and

15 manner of processing which is utilized by such lessee

16 or permittee in the normal conduct of business, the

17 Secretary shall pay the reasonable cost of reproduc18 ing such data and information; or

19 (B) by a lessee or permittee, in such other form

20 and manner of processing as the Secretary may re21 quest, the Secretary shall pay the reasonable cost of

22 processing and reproducing such data and informa23 tion.

24 (b) REGULATIONS.—The Secretary shall prescribe

25 regulations to: (1) assure that the confidentiality of privi-
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1 leged or proprietary information received by the Secretary

2 under this section will be maintained; and (2) set forth

3 the time periods and conditions which shall be applicable

4 to the release of such information.

5 SEC. 911. EXPEDITED JUDICIAL REVIEW.

6 (a) Any complaint seeking judicial review of any pro7 vision in this title, or any other action of the Secretary

8 under this title may be filed in any appropriate district

9 court of the United States, and such complaint must be

10 filed within ninety days from the date of the action being

11 challenged, or after such date if such complaint is based

12 solely on grounds arising after such ninetieth day, in

13 which case the complaint must be filed within ninety days

14 after the complainant knew or reasonably should have

15 known of the grounds for the complaint: Provided, That

16 any complaint seeking judicial review of an action of the

17 Secretary in promulgating any regulation under this title

18 may be filed only in the United States Court of Appeals

19 for the District of Columbia.

20 (b) Actions of the Secretary with respect to which re21 view could have been obtained under this section shall not

22 be subject to judicial review in any civil or criminal pro23 ceeding for enforcement.
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1 SEC. 912. RIGHTS-OF-WAY ACROSS THE COASTAL PLAIN.

2 Notwithstanding title XI of the Alaska National In3 terest Lands Conservation Act of 1980 (16 U.S.C. 3161

4 et seq.), the Secretary is authorized and directed to grant,

5 in accordance with the provisions of section 28 (c) through

6 (t) and (v) through (y) of the Mineral Leasing Act of 1920

7 (30 U.S.C. 185), rights-of-way and easements across the

8 Coastal Plain for the transportation of oil and gas under

9 such terms and conditions as may be necessary so as not

10 to result in a significant adverse effect on the fish and

11 wildlife, subsistence resources, their habitat, and the envi12 ronment of the Coastal Plain. Such terms and conditions

13 shall include requirements that facilities be sited or modi14 fied so as to avoid unnecessary duplication of roads and

15 pipelines. The regulations issued as required by section

16 904 of this title shall include provisions granting rights17 of-way and easements across the Coastal Plain.

18 SEC. 913. ENFORCEMENT OF SAFETY AND ENVIRON19 MENTAL REGULATIONS TO ENSURE COMPLI20 ANCE WITH TERMS AND CONDITIONS OF

21 LEASE.

22 (a) RESPONSIBILITY OF THE SECRETARY.—The Sec23 retary shall diligently enforce all regulations, lease terms,

24 conditions, restrictions, prohibitions, and stipulations pro25 mulgated pursuant to this title.
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1 (b) RESPONSIBILITY OF HOLDERS OF LEASE.—It

2 shall be the responsibility of any holder of a lease under

3 this title to—

4 (1) maintain all operations within such lease

5 area in compliance with regulations intended to pro6 tect persons and property on, and fish and wildlife,

7 their habitat, subsistence resources, and the environ8 ment of, the Coastal Plain; and

9 (2) allow prompt access at the site of any oper10 ations subject to regulation under this title to any

11 appropriate Federal or State inspector, and to pro12 vide such documents and records which are pertinent

13 to occupational or public health, safety, or environ14 mental protection, as may be requested.

15 (c) ON-SITE INSPECTION.—The Secretary shall pro16 mulgate regulations to provide for—

17 (1) scheduled onsite inspection by the Sec18 retary, at least twice a year, of facility on the Coast19 al Plain which is subject to any environmental or

20 safety regulation promulgated pursuant to this title

21 or conditions contained in any lease issue pursuant

22 to this title to assure compliance with such environ23 mental or safety regulations or conditions; and

24 (2) periodic onsite inspection by the Secretary

25 at least once a year without advance notice to the
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1 operator of such facility to assure compliance with

2 all environmental or safety regulations.

3 SEC. 914. NEW REVENUES.

4 Notwithstanding any other provision of law, all reve5 nues received by the Federal Government from competitive

6 bids, sales, bonuses, royalties, rents, fees, or interest de7 rived from the leasing of oil and gas within the Coastal

8 Plain shall be deposited into the Treasury of the United

9 States, solely as provided in this section. The Secretary

10 of the Treasury shall pay to the State of Alaska the same

11 percentage of such revenues as is set forth under the head12 ing ‘‘EXPLORATION OF NATIONAL PETROLEUM

13 RESERVE IN ALASKA’’ in Public Law 96–514 (94

14 Stat. 2957, 2964) semiannually to the State of Alaska,

15 on March 30 and September 30 of each year and shall

16 deposit the balance of all such revenues as miscellaneous

17 receipts in the Treasury.

18 TITLE X—CLEAN, RELIABLE,

19 AND AFFORDABLE ELECTRICITY

20 SEC. 1001. FINDINGS AND PURPOSES.

21 (a) FINDINGS.—Congress finds that—

22 (1) reliable, affordable, increasingly clean elec23 tricity will continue to power the growing the United

24 States economy. Increasing use of

25 electrotechnologies, the desire for continuous envi-
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1 ronmental improvement, a more competitive elec2 tricity market, and concerns about rising energy

3 prices add importance to the need for reliable, af4 fordable, increasingly clean electricity,

5 (2) coal, which currently accounts for more

than 1 6 ⁄2 of all electricity generated in the United

7 States, is the Nation’s most abundant fossil energy

8 resource; it comprises more than 85 percent of all

9 fossil resources in the United States, representing a

10 250-year supply at current usage rates,

11 (3) investments in power plant emissions con12 trol technology over the past 30 years have reduced

13 health-based pollutants from coal-based generating

14 plants by 32 percent, even as coal used for elec15 tricity generation has nearly tripled,

16 (4) continuous improvement in efficiency and

17 environmental performance from generating stations

18 will allow continued use for coal, the Nation’s most

19 abundant energy resource, and preserve less abun20 dant energy resources for other energy uses,

21 (5) new technologies for converting coal into

22 electricity can effectively eliminate health-based

23 emissions and improve efficiency by as much as 50

24 percent, yet initial commercial deployment of new

25 coal generating technologies entails significant risk
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1 that generators may be unable to accept in a newly

2 competitive electricity market, and

3 (6) continued environmental improvement in

4 coal-based generation toward an ultimate goal of

5 near-zero emissions is important and desirable.

6 (b) PURPOSE.—The purpose of this title is to amend

7 the Internal Revenue Code of 1986 and authorize Depart8 ment of Energy programs to—

9 (1) develop and implement an accelerated re10 search and development program for advanced clean

11 coal technologies for use in existing and new coal12 based electricity generating facilities,

13 (2) provide financial incentives to encourage the

14 retrofit, repowering, or replacement of existing coal15 based electricity generating facilities to protect the

16 environment and improve efficiency,

17 (3) encourage the early commercial application

18 of advanced clean coal technologies, and

19 (4) allow coal, the most abundant domestic en20 ergy resource, to help meet the Nation’s growing

21 need for clean, reliable, and affordable electricity.
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1 Subtitle A—Accelerated Tech2 nology Research and Develop3 ment Program for Advanced

4 Clean Coal Technology for New

5 and Existing Coal-Based Elec6 tric Generating Facilities

7 PART 1—NATIONAL COAL-BASED TECHNOLOGY

8 DEVELOPMENT AND APPLICATIONS PROGRAM

9 SEC. 1011. PURPOSES.

10 The purposes of this subtitle are to direct the

11 Secretary—

12 (1) to establish a coal-based technology develop13 ment program designed to achieve cost and perform14 ance goals;

15 (2) to undertake a study to identify tech16 nologies that may be capable of achieving the cost

17 and performance goals and for other purposes; and

18 (3) to implement a research, development, and

19 demonstration program designed to develop and

20 demonstrate in commercial-scale applications ad21 vanced clean coal technologies for existing coal-fired

22 power generation units.

23 SEC. 1012. COST AND PERFORMANCE GOALS.

24 (a) Within 120 days of the date of enactment of this

25 Act, the Secretary is directed to issue a set of technology
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1 cost and performance goals for public comment, and after

2 taking into account the public comments, the Secretary

3 shall submit the final technology cost and performance

4 goals to the Congress within 180 days of enactment of

5 this Act.

6 (b) In establishing these technology cost and perform7 ance goals, the Secretary shall consult with representatives

8 from the United States coal industry, electric utility indus9 try, railroads and other transportation industries, manu10 facturers of equipment utilizing advanced coal tech11 nologies, organizations representing workers, and mem12 bers of organizations formed to further the goals of envi13 ronmental protection or to promote the development and

14 use of advanced coal technologies.

15 (c) For purposes of this section, the term ‘‘cost and

16 performance goals’’ means the result of an assessment un17 dertaken by the Secretary, in consultation with those enti18 ties identified in subsection (b), that identifies costs and

19 associated performance of technologies that would permit

20 the continued cost-competitive use of coal for electricity

21 generation, as chemical feedstocks and as transportation

22 fuel in the years 2007, 2015, and beyond 2020.

23 SEC. 1013. STUDY.

24 (a) Not later than 12 months after the date of enact25 ment of this Act, the Secretary, in cooperation with the
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1 Secretary of the Interior and the Administrator of the En2 vironmental Protection Agency, shall undertake a coopera3 tive study designed to—

4 (1) identify technologies capable of achieving

5 the cost and performance goals established in section

6 1012;

7 (2) assess the costs to develop and demonstrate

8 such technologies and the amount of time required

9 to undertake and accomplish such development and

10 demonstration; and

11 (3) set forth a set of recommendations by which

12 the Department of Energy could undertake, in co13 operation with industry, technology development pro14 grams to develop and demonstrate such technologies.

15 (b) In carrying out this section, the Secretary shall

16 incorporate the advice of representatives with applicable

17 expertise from the United States coal industry, electric

18 utility industry, railroads and other coal transportation in19 dustries, manufacturers of equipment utilizing advanced

20 coal technologies, organizations representing workers, and

21 members of organizations formed to further the goals of

22 environmental protection or to promote the development

23 and use of advanced coal technologies.
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1 SEC. 1014. TECHNOLOGY RESEARCH AND DEVELOPMENT

2 PROGRAM.

3 (a) The Secretary shall, pursuant to the authority

4 and directions of this title and the Federal Non-Nuclear

5 Energy Research and Development Act of 1974 (Public

6 Law 93–577), the Energy Reorganization Act of 1974

7 (Public Law 93–438), and the Energy Policy Act of 1992

8 (Public Law 102–486), undertake and conduct programs

9 for research on and development, demonstration, and com10 mercial application of coal-based technologies. Such re11 search, development, demonstration, and commercial ap12 plication programs identified in section 1013 shall be de13 signed to achieve the cost and performance goals estab14 lished in sections 1012.

15 (b) Not later than 18 months after the date of enact16 ment of this Act, the Secretary shall transmit to the Presi17 dent and the Congress a report containing—

18 (1) a description of the programs in place or to

19 be undertaken within the Department of Energy to

20 support technologies that are designed to achieve the

21 cost and performance goals established in section

22 1012, and

23 (2) recommendations for additional authorities

24 required in order to achieve the cost and perform25 ance goals.
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1 SEC. 1015. AUTHORIZATION OF APPROPRIATIONS.

2 There are authorized to be appropriated to the Sec3 retary for carrying out this subtitle $100,000,000 for each

4 of fiscal years 2002 through 2012, to remain available

5 until expended. This authorization is supplemental to ex6 isting authorities and shall not be construed as a cap on

7 Department of Energy Fossil Energy Research and Devel8 opment and Clean Coal Technology appropriations.

9 PART 2—EXISTING PLANT TECHNOLOGY

10 APPLICATIONS

11 SEC. 1021. EXISTING PLANT TECHNOLOGY APPLICATIONS.

12 (a) The Secretary shall conduct a program of re13 search, development, demonstration, and commercial ap14 plication for the purpose of developing economically and

15 environmentally acceptable advanced technologies for utili16 zation at or within current electricity generation facilities

17 utilizing coal as the primary feedstock.

18 (b) Within 120 days after the date of enactment of

19 this Act, the Secretary shall transmit to Congress a de20 tailed plan for conducting the research, development, dem21 onstration, and commercial application programs for the

22 purpose of developing economically and environmentally

23 acceptable advanced technologies for utilization at or with24 in existing electricity generation facilities utilizing coal as

25 the primary feedstock. Such plan shall include a descrip26 tion of—
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1 (1) the program elements and management

2 structure to be utilized;

3 (2) the technical milestones to be achieved with

4 respect to each of the advanced coal-based tech5 nologies included in the plan;

6 (3) the research, development, and demonstra7 tion activities proposed to be conducted at existing

8 coal-based electric generation units of at least 50

9 megawatts nameplate rating and including design

10 improvements that will allow such units to provide

11 either—

12 (A) an overall design efficiency improve13 ment of not less than 5 percentage points on a

14 unit having design main steam throttle condi15 tions of at least 1,800 psi/1,000 F/1,000 F,

16 (B) a design removal for one or more of

17 the following emissions of not less than—

18 (i) 98 percent removal, annual aver19 age, of sulfur dioxide at a capital and oper20 ating cost at least 25 percent below com21 mercially available technology,

22 (ii) 85 percent removal, annual aver23 age, of nitrogen oxide without the use of

24 ammonia or urea, or
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1 (iii) 75 percent, annual average, emis2 sion reduction of total mercury excluding

3 any reductions due to use of activated car4 bon or a system for selective catalytic re5 duction; or

6 (C) 100 percent recycle/utilization options

7 of coal combustion wastes excluding gypsum

8 production for wallboard and coal fly ash and

9 bottom ash use in Portland cement and con10 crete applications.

11 SEC. 1022. DEMONSTRATION AND COMMERCIAL APPLICA12 TION PROGRAM.

13 (a) Not later than 180 days after the date of sub14 mittal of the program described in section 1021 of this

15 Act, the Secretary shall cause to have solicited proposals

16 for demonstrations designed to achieve the technical mile17 stones set forth in section 1021(b)(1)(C).

18 (b) In selecting a project or projects for financial as19 sistance under this subtitle, the Secretary shall utilize the

20 criteria for a qualifying project which shall provide a min21 imum of 50 percent cost sharing with the Federal Govern22 ment for the installation and operation of the clean coal

23 technology. In making project selections that meet the cri24 teria and purposes of the solicitation, the Department of

25 Energy shall select those projects which—
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1 (1) demonstrates overall cost reductions in the

2 utilization of coal to generate useful forms of energy;

3 (2) improves the competitiveness of coal among

4 various forms of energy in order to maintain a diver5 sity of fuel choices in the United States to meet elec6 tricity generation requirements; and

7 (3) cost-effectively achieves 1 or more of the

8 criteria set out in the solicitation, including a project

9 that demonstrates the emissions control of 1 or more

10 pollutants or the production of coal combustion by11 products that are capable of obtaining values signifi12 cantly greater than by-products currently produced.

13 (c) A qualifying project under this section shall be

14 exempt from the new source review provisions of the Clean

15 Air Act (42 U.S.C. 1857 et seq.).

16 SEC. 1023. AUTHORIZATION OF APPROPRIATIONS.

17 The Secretary, as of the date of enactment of this

18 Act, is authorized to utilize any funds appropriated, but

19 not currently committed, or that may become uncommit20 ted to any project selected under the existing ‘‘Clean Coal

21 Technology’’ program to administer and conduct this sub22 title.
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1 Subtitle B—Credit for Emission Re2 ductions and Efficiency Im3 provements in Existing Coal4 Based Electricity Generation

5 Facilities

6 SEC. 1031. CREDIT FOR INVESTMENT IN QUALIFYING

7 CLEAN COAL TECHNOLOGY.

8 (a) ALLOWANCE OF QUALIFYING CLEAN COAL

9 TECHNOLOGY UNIT CREDIT.—Section 46 of the Internal

10 Revenue Code of 1986 (relating to amount of credit) is

11 amended by striking ‘‘and’’ at the end of paragraph (2),

12 by striking the period at the end of paragraph (3) and

13 inserting ‘‘, and’’, and by adding at the end the following:

14 ‘‘(4) the qualifying clean coal technology unit

15 credit.’’.

16 (b) AMOUNT OF QUALIFYING CLEAN COAL TECH17 NOLOGY UNIT CREDIT.—Subpart E of part IV of sub18 chapter A of chapter 1 of the Internal Revenue Code of

19 1986 (relating to rules for computing investment credit)

20 is amended by inserting after section 48 the following:

21 ‘‘SEC. 48A. QUALIFYING CLEAN COAL TECHNOLOGY UNIT

22 CREDIT.

23 ‘‘(a) IN GENERAL.—For purposes of section 46, the

24 qualifying clean coal technology unit credit for any taxable

25 year is an amount equal to 20 percent of the qualified
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1 investment in a qualifying system of continuous emission

2 control for such taxable year.

3 ‘‘(b) QUALIFYING SYSTEM OF CONTINUOUS EMIS4 SION CONTROL.—

5 ‘‘(1) IN GENERAL.—For purposes of subsection

6 (a) the term ‘qualifying system of continuous emis7 sion control’ means a system of the taxpayer—

8 ‘‘(A) which is retrofitted to an existing

9 coal-based electricity generating unit, the retro10 fitting of which is completed by the taxpayer

11 (but only with respect to that portion of the

12 basis which is properly attributable to such ret13 rofitting),

14 ‘‘(B) which removes 1 or more of the pol15 lutants regulated under title I of the Clean Air

16 Act (42 U.S.C. 1857 et seq.),

17 ‘‘(C) that is depreciable under section 167,

18 ‘‘(D) that has a useful life of not less than

19 4 years, and

20 ‘‘(E) that is located in the United States.

21 ‘‘(2) SPECIAL RULE FOR SALE-LEASEBACKS.—

22 For purposes of subparagraph (A) of paragraph (1),

23 in the case of a unit that—

24 ‘‘(A) is originally placed in service by a

25 person, and
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1 ‘‘(B) is sold and leased back by such per2 son, or is leased to such person, within 3

3 months after the date such unit was originally

4 placed in service, for a period of not less than

5 12 years,

6 such unit shall be treated as originally placed in

7 service not earlier than the date on which such prop8 erty is used under the leaseback (or lease) referred

9 to in subparagraph (B). The preceding sentence

10 shall not apply to any property if the lessee and les11 sor of such property makes an election under this

12 sentence. Such an election, once made, may be re13 voked only with the consent of the Secretary.

14 ‘‘(c) EXISTING COAL-BASED ELECTRICITY GENER15 ATING UNIT.—For purposes of subsection (a), the term

16 ‘existing coal-based electricity generating unit’ means,

17 with respect to any taxable year, a steam generator-tur18 bine unit that utilizes coal to produce 50 percent or more

19 of its output as electricity and was in operation before the

20 effective date of this section.

21 ‘‘(d) LIMIT ON QUALIFYING CLEAN COAL TECH22 NOLOGY UNIT CREDIT.—For purposes of subsection (a),

23 the credit shall be applicable to no more than the first

24 $100,000,000 of qualifying investment in a qualifying sys-
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1 tem of continuous emission control at any 1 existing coal2 based electricity generating unit.

3 ‘‘(e) QUALIFIED INVESTMENT.—For purposes of sub4 section (a), the term ‘qualified investment’ means, with

5 respect to any taxable year, the basis of a qualifying sys6 tem of continuous emission control placed in service by

7 the taxpayer during such taxable year.

8 ‘‘(f) QUALIFIED PROGRESS EXPENDITURES.—

9 ‘‘(1) INCREASE IN QUALIFIED INVESTMENT.—

10 In the case of a taxpayer who has made an election

11 under paragraph (5), the amount of the qualified in12 vestment of such taxpayer for the taxable year (de13 termined under subsection (c) without regard to this

14 section) shall be increased by an amount equal to

15 the aggregate of each qualified progress expenditure

16 for the taxable year with respect to progress expend17 iture property.

18 ‘‘(2) PROGRESS EXPENDITURE PROPERTY DE19 FINED.—For purposes of this subsection, the term

20 ‘progress expenditure property’ means any property

21 being constructed by or for the taxpayer and which

22 it is reasonable to believe will qualify as a qualifying

23 system of continuous emission control which is being

24 constructed by or for the taxpayer when it is placed

25 in service.
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1 ‘‘(3) QUALIFIED PROGRESS EXPENDITURES DE2 FINED.—For purposes of this subsection—

3 ‘‘(A) SELF-CONSTRUCTED PROPERTY.—In

4 the case of any self-constructed property, the

5 term ‘qualified progress expenditures’ means

6 the amount which, for purposes of this subpart,

7 is properly chargeable (during such taxable

8 year) to capital account with respect to such

9 property.

10 ‘‘(B) NON-SELF-CONSTRUCTED PROP11 ERTY.—In the case of non-self-constructed

12 property, the term ‘qualified progress expendi13 tures’ means the amount paid during the tax14 able year to another person for the construction

15 of such property.

16 ‘‘(4) OTHER DEFINITIONS.—For purposes of

17 this subsection—

18 ‘‘(A) SELF-CONSTRUCTED PROPERTY.—

19 The term ‘self-constructed property’ means

20 property for which it is reasonable to believe

21 that more than half of the construction expendi22 tures will be made directly by the taxpayer.

23 ‘‘(B) NON-SELF-CONSTRUCTED PROP24 ERTY.—The term ‘non-self-constructed prop-
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1 erty’ means property which is not self-con2 structed property.

3 ‘‘(C) CONSTRUCTION, ETC.—The term

4 ‘construction’ includes reconstruction and erec5 tion, and the term ‘constructed’ includes recon6 structed and erected.

7 ‘‘(D) ONLY CONSTRUCTION OF QUALI8 FYING SYSTEM OF CONTINUOUS EMISSION CON9 TROL TO BE TAKEN INTO ACCOUNT.—Construc10 tion shall be taken into account only if, for pur11 poses of this subpart, expenditures therefor are

12 properly chargeable to capital account with re13 spect to the property.

14 ‘‘(5) ELECTION.—An election under this sub15 section may be made at such time and in such man16 ner as the Secretary may by regulations prescribe.

17 Such an election shall apply to the taxable year for

18 which made and to all subsequent taxable years.

19 Such an election, once made, may not be revoked ex20 cept with the consent of the Secretary.

21 ‘‘(g) COORDINATION WITH OTHER CREDITS.—This

22 section shall not apply to any property with respect to

23 which the rehabilitation credit under section 47 or the en24 ergy credit under section 48 is allowed unless the taxpayer
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1 elects to waive the application of such credit to such prop2 erty.

3 ‘‘(h) TERMINATION.—This section shall not apply

4 with respect to any qualified investment made more than

5 10 years after the effective date of this section.’’

6 (c) RECAPTURE.—Section 50(a) of the Internal Rev7 enue Code of 1986 (relating to other special rules) is

8 amended by adding at the end the following:

9 ‘‘(6) SPECIAL RULES RELATING TO QUALIFYING

10 SYSTEM OF CONTINUOUS EMISSION CONTROL.—For

11 purposes of applying this subsection in the case of

12 any credit allowable by reason of section 48A, the

13 following shall apply:

14 ‘‘(A) GENERAL RULE.—In lieu of the

15 amount of the increase in tax under paragraph

16 (1), the increase in tax shall be an amount

17 equal to the investment tax credit allowed under

18 section 38 for all prior taxable years with re19 spect to a qualifying system of continuous emis20 sion control (as defined by section 48A(b)(1))

21 multiplied by a fraction whose numerator is the

22 number of years remaining to fully depreciate

23 under this title the qualifying system of contin24 uous emission control disposed of, and whose

25 denominator is the total number of years over
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1 which such unit would otherwise have been sub2 ject to depreciation. For purposes of the pre3 ceding sentence, the year of disposition of the

4 qualifying system of continuous emission con5 trol property shall be treated as a year of re6 maining depreciation.

7 ‘‘(B) PROPERTY CEASES TO QUALIFY FOR

8 PROGRESS EXPENDITURES.—Rules similar to

9 the rules of paragraph (2) shall apply in the

10 case of qualified progress expenditures for a

11 qualifying system of continuous emission con12 trol under section 48A, except that the amount

13 of the increase in tax under subparagraph (A)

14 of this paragraph shall be substituted in lieu of

15 the amount described in such paragraph (2).

16 ‘‘(C) APPLICATION OF PARAGRAPH.—This

17 paragraph shall be applied separately with re18 spect to the credit allowed under section 38 re19 garding a qualifying system of continuous emis20 sion control.’’

21 (d) TRANSITIONAL RULE.—Section 39(d) of the In22 ternal Revenue Code of 1986 (relating to transitional

23 rules) is amended by adding at the end the following:

24 ‘‘(10) NO CARRYBACK OF SECTION 48A CREDIT

25 BEFORE EFFECTIVE DATE.—No portion of the un-
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1 used business credit for any taxable year which is

2 attributable to the qualifying clean coal technology

3 unit credit determined under section 48A may be

4 carried back to a taxable year ending before the date

5 of the enactment of section 48A.’’

6 (e) TECHNICAL AMENDMENTS.—

7 (1) Section 49(a)(1)(C) is amended by striking

8 ‘‘and’’ at the end of clause (ii), by striking the pe9 riod at the end of clause (iii) and inserting ‘‘, and’’,

10 and by adding at the end the following:

11 ‘‘(iv) the portion of the basis of any

12 qualifying system of continuous emission

13 control attributable to any qualified invest14 ment (as defined by section 48A(c)).’’

15 (2) Section 50(a)(4) is amended by striking

16 ‘‘and (2)’’ and inserting ‘‘, (2), and (6)’’.

17 (3) Section 50(c)(3) is amended—

18 (A) by inserting ‘‘(A)’’ before ‘‘In the case

19 of any energy credit or reforestation credit’’

20 and by striking ‘‘(A)’’ and ‘‘(B)’’ and inserting

21 ‘‘(i)’’ and ‘‘(ii)’’; and

22 (B) by inserting after clause (ii) ‘‘(B) Any

23 clean coal technology unit credit shall be ex24 empt from paragraph (1) and paragraph (2) of

25 section 50(c).
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1 (4) The table of sections for subpart E of part

2 IV of subchapter A of chapter 1, as amended by sec3 tion 101(d), is amended by inserting after the item

4 relating to section 48 the following:

‘‘Sec. 48A. Qualifying clean coal technology unit credit.’’

5 (f) INSTALLATIONS NOT SUBJECT TO NEW SOURCE

6 REVIEW.—

7 (1) Installation of a qualifying system of contin8 uous emission control shall be exempt from the new

9 source review provisions of the Clean Air Act (42

10 U.S.C. 1857 et seq.).

11 (2) Installation of a qualifying system of contin12 uous emission control that meets or exceeds, for the

13 applicable source category and pollutant being con14 trolled by the qualified system of continuous emis15 sion control, the standard of performance for new

16 stationary sources, on an existing coal-based elec17 tricity generating unit shall exempt the unit from

18 any new or increased emission control requirements

19 for the pollutant being controlled by the qualified

20 system of continuous emission control under title I

21 of the Clean Air Act (42 U.S.C. 1857 et seq.) for

22 a period of 10 years after the date the system of

23 continuous emission control is placed in service.

24 (g) EFFECTIVE DATE.—The amendments made by

25 this section shall apply to periods after December 31,
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1 2000, under rules similar to the rules of section 48(m)

2 of the Internal Revenue Code of 1986 (as in effect on the

3 day before the date of the enactment of the Revenue Rec4 onciliation Act of 1990).

5 SEC. 1032. CREDIT FOR PRODUCTION FROM A QUALIFYING

6 CLEAN COAL TECHNOLOGY UNIT.

7 (a) CREDIT FOR PRODUCTION FROM A QUALIFYING

8 CLEAN COAL TECHNOLOGY UNIT.—Subpart D of part IV

9 of subchapter A of chapter 1 of the Internal Revenue Code

10 of 1986 (relating to business related credits) is amended

11 by adding at the end the following:

12 ‘‘SEC. 45E. CREDIT FOR PRODUCTION FROM A QUALIFYING

13 CLEAN COAL TECHNOLOGY UNIT.

14 ‘‘(a) GENERAL RULE.—For purposes of section 38,

15 the qualifying clean coal technology production credit of

16 any taxpayer for any taxable year is equal to the product

17 of—

18 ‘‘(1) the applicable clean coal technology pro19 duction credit, multiplied by

20 ‘‘(2) the kilowatt hours of electricity—

21 ‘‘(A) produced by the taxpayer at a quali22 fying clean coal technology unit during the 10-

23 year period beginning on the date the unit was

24 returned to service after retrofit, repowering, or

25 replacement, and
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1 ‘‘(B) sold by the taxpayer to an unrelated

2 person during such taxable year.

3 ‘‘(b) CLEAN COAL TECHNOLOGY PRODUCTION CRED4 IT.—For purposes of this section, the clean coal tech5 nology production credit is, except as otherwise provided

6 for in this subparagraph, six tenths of a cent ($0.006).

7 ‘‘(c) INFLATION ADJUSTMENT FACTOR.—The appli8 cable amount of the clean coal technology production cred9 it shall each be adjusted by multiplying such amount by

10 the inflation adjustment factor for the calendar year in

11 which the amount is applied. If any amount as increased

12 under the preceding sentence is not a multiple of 0.01

13 cent, such amount shall be rounded to the nearest multiple

14 of 0.01 cent.

15 ‘‘(d) DEFINITIONS AND SPECIAL RULES.—For pur16 poses of this section—

17 ‘‘(1) the term ‘qualifying clean coal technology

18 unit’ means a unit of the taxpayer, which (A) is an

19 existing coal-based electricity generating steam gen20 erator-turbine unit which (B) has a nameplate ca21 pacity rating of not more than 300,000 kilowatts,

22 and (C) has been retrofitted, repowered, or replaced

23 with a clean coal technology within 10 years of the

24 effective date of this section,
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1 ‘‘(2) the term ‘clean coal technology’ means

2 technology that—

3 ‘‘(A) utilizes coal to produce 50 percent or

4 more of its thermal output as electricity, includ5 ing advanced pulverized coal or atmospheric flu6 idized bed combustion, pressurized fluidized bed

7 combustion, integrated gasification combined

8 cycle, or any other technology for the produc9 tion of electricity,

10 ‘‘(B) has a design heat rate not less than

11 500 Btu/kWh below that of the existing unit be12 fore it is retrofit, repowered, or replaced with

13 the qualifying clean coal technology,

14 ‘‘(C) has a maximum design heat rate of

15 not more than 9,000 Btu/kWh when the design

16 coal has a heat content of more than 8,000 Btu

17 per pound, and

18 ‘‘(D) has a maximum design heat rate of

19 not more than 10,500 Btu/kWh when the de20 sign coal has a heat content of 8,000 Btu per

21 pound or less,

22 ‘‘(3) the rules of paragraphs (3), (4), and (5)

23 of section 45 shall apply,

24 ‘‘(4) the term ‘inflation adjustment factor’

25 means, with respect to a calendar year, a fraction
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1 the numerator of which is the GDP implicit price

2 deflator for the preceding calendar year and the de3 nominator of which is the GDP implicit price

4 deflator for the calendar year 1998, and

5 ‘‘(5) the term ‘GDP implicit price deflator’

6 means the most recent revision of the implicit price

7 deflator for the gross domestic product as computed

8 by the Department of Commerce before March 15 of

9 the calendar year.’’

10 (c) CREDIT TREATED AS BUSINESS CREDIT.—Sec11 tion 38(b) of the Internal Revenue Code of 1986 is amend12 ed by striking ‘‘plus’’ at the end of paragraph (11), by

13 striking the period at the end of paragraph (12) and in14 serting ‘‘, plus’’, and by adding at the end the following:

15 ‘‘(13) the qualifying clean coal technology pro16 duction credit determined under section 45E(a).’’

17 (d) TRANSITIONAL RULE.—Section 39(d) of the In18 ternal Revenue Code of 1986 (relating to transitional

19 rules), as amended by section 1031(d), is amended by add20 ing at the end the following:

21 ‘‘(11) NO CARRYBACK OF CERTAIN CREDITS

22 BEFORE EFFECTIVE DATE.—No portion of the un23 used business credit for any taxable year which is

24 attributable to the credits allowable under any sec25 tion added to this subpart by the amendments made
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1 by the National Energy Security Act of 2000 may

2 be carried back to a taxable year ending before the

3 date of the enactment of such Act.’’

4 (e) CLERICAL AMENDMENT.—The table of sections

5 for subpart D of part IV of subchapter A of chapter 1

6 of the Internal Revenue Code of 1986 is amended by add7 ing at the end the following:

‘‘Sec. 45E. Credit for production from qualifying clean coal technology unit.’’

8 (f) MODIFICATIONS EXCLUDED FROM NEW SOURCE

9 REVIEW.—

10 (1) Modifications made to an existing coal11 based generation unit because of, or as part of a

12 qualifying clean coal technology unit shall be exempt

13 from the new source review provisions of the Clean

14 Air Act (42 U.S.C. 1857 et seq.).

15 (2) Installation of a qualifying clean coal tech16 nology, that meets or exceeds, for the applicable

17 source category, the standards of performance for

18 new sources under section 111 of the Clean Air Act

19 (42 U.S.C. 1857 et seq.), on an existing coal-based

20 electricity generating unit shall exempt that unit

21 from any new or increased emission control require22 ments under title I of the Clean Air Act (42 U.S.C.

23 1857 et seq.) for a period of 10 years after the
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1 qualifying clean coal technology is originally placed

2 in service.

3 (g) EFFECTIVE DATE.—The amendments made by

4 this section shall apply to production after the date of the

5 enactment of this Act.

6 SEC. 1033. DEBT REPAYMENT FOR THE INVESTMENT IN

7 THE RETROFIT, REPOWERING, OR REPLACE8 MENT OF EXISTING COAL-BASED GENERA9 TION WITH CERTAIN SYSTEMS OF CONTIN10 UOUS EMISSION CONTROL AND CLEAN COAL

11 TECHNOLOGY.

12 (a) ALLOWANCE OF DEBT REPAYMENT IN LIEU OF

13 QUALIFYING CLEAN COAL TECHNOLOGY CREDITS.—The

14 owner of a qualified system of continuous emission control

15 under section 1031 or a qualified clean coal technology

16 unit under section 1032 may elect to have the amount of

17 the credits applied to the prepayment of any debt or obli18 gations the owner has incurred under subchapter I, chap19 ter 31, title 7 of the Rural Electrification Act of 1936

20 (7 U.S.C. 901 et seq.) and has been selected by the owner

21 for such prepayment in lieu of a credit against the owner’s

22 tax obligations under the Internal Revenue Code of 1986.

23 (b) OWNER.—For purposes of this title, the owner

24 of a qualified system of continuous emission control under

25 section 1031 or a qualified clean coal technology unit
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1 under section 1032 shall be deemed to be a taxpayer and

2 thereby qualify for the credits for investment in a qualified

3 system of continuous emission control or production from

4 a qualifying clean coal technology facility as described in

5 section 48A, section 45E and allowed by section 38, not6 withstanding provisions to the contrary, of the Internal

7 Revenue Code of 1986. Furthermore, neither the amount

8 of the credit produced nor the use of such credit for the

9 prepayment of debt as set forth in subsection (a) shall give

10 rise to ‘‘income’’ for purposes of section 501(c)(12) of

11 such Code.

12 (c) UNRELATED PERSON.—For purposes of this title,

13 the term ‘‘unrelated person’’ shall have the meaning given

14 to such term by section 45 of such Code.

15 Subtitle C—Incentives for Early

16 Commercial Applications of Ad17 vanced Clean Coal Technologies

18 SEC. 1041. CREDIT FOR INVESTMENT IN QUALIFYING AD19 VANCED CLEAN COAL TECHNOLOGY.

20 (a) ALLOWANCE OF QUALIFYING ADVANCED CLEAN

21 COAL TECHNOLOGY FACILITY CREDIT.—Section 46 of

22 the Internal Revenue Code of 1986 (relating to amount

23 of credit) is amended by striking ‘‘and’’ at the end of para24 graph (3), by striking the period at the end of paragraph
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1 (4) and inserting ‘‘, and’’, and by adding at the end the

2 following:

3 ‘‘(5) the qualifying advanced clean coal tech4 nology facility credit.’’

5 (b) AMOUNT OF QUALIFYING ADVANCED CLEAN

6 COAL TECHNOLOGY FACILITY CREDIT.—Subpart E of

7 part IV of subchapter A of chapter 1 of the Internal Rev8 enue Code of 1986 (relating to rules for computing invest9 ment credit) is amended by inserting after section 48A

10 the following:

11 ‘‘SEC. 48B. QUALIFYING ADVANCED CLEAN COAL TECH12 NOLOGY FACILITY CREDIT.

13 ‘‘(a) IN GENERAL.—For purposes of section 46, the

14 qualifying advanced clean coal technology facility credit

15 for any taxable year is an amount equal to 10 percent

16 of the qualified investment in a qualifying advanced clean

17 coal technology facility for such taxable year.

18 ‘‘(b) QUALIFYING ADVANCED CLEAN COAL TECH19 NOLOGY FACILITY.—

20 ‘‘(1) IN GENERAL.—For purposes of subsection

21 (a) the term ‘qualifying advanced clean coal tech22 nology facility’ means a facility of the taxpayer—

23 ‘‘(A)(i)(I) which replaces a conventional

24 technology facility of the taxpayer and the origi-
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1 nal use of which commences with the taxpayer,

2 or

3 ‘‘(II) which is a retrofitted or repowered

4 conventional technology facility, the retrofitting

5 or repowering of which is completed by the tax6 payer (but only with respect to that portion of

7 the basis which is properly attributable to such

8 retrofitting or repowering), or

9 ‘‘(ii) which is acquired through purchase

10 (as defined by section 179(d)(2)),

11 ‘‘(B) that is depreciable under section 167,

12 ‘‘(C) that has a useful life of not less than

13 4 years,

14 ‘‘(D) that is located in the United States,

15 and

16 ‘‘(E) that uses qualifying advanced clean

17 coal technology.

18 ‘‘(2) SPECIAL RULE FOR SALE-LEASEBACKS.—

19 For purposes of subparagraph (A) of paragraph (1),

20 in the case of a facility that—

21 ‘‘(A) is originally placed in service by a

22 person, and

23 ‘‘(B) is sold and leased back by such per24 son, or is leased to such person, within 3

25 months after the date such facility was origi-
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1 nally placed in service, for a period of not less

2 than 12 years,

3 such facility shall be treated as originally placed in

4 service not earlier than the date on which such prop5 erty is used under the leaseback (or lease) referred

6 to in subparagraph (B). The preceding sentence

7 shall not apply to any property if the lessee and les8 sor of such property make an election under this

9 sentence. Such an election, once made, may be re10 voked only with the consent of the Secretary.

11 ‘‘(3) QUALIFYING ADVANCED CLEAN COAL

12 TECHNOLOGY.—For purposes of paragraph (1)(A)—

13 ‘‘(A) IN GENERAL.—The term ‘qualifying

14 advanced clean coal technology’ means, with re15 spect to clean coal technology—

16 ‘‘(i) applications totaling 1,000

17 megawatts of advanced pulverized coal or

18 atmospheric fluidized bed combustion tech19 nology (I) installed as a new, retrofit, or

20 repowering application, (II) operated be21 tween 2000 and 2015, (III) has a design

22 net heat rate of not more than 8,750 Btu

23 per kilowatt hour when the design coal has

24 a heat content of more than 8,000 Btu per

25 round, or has a design net heat rate of not
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1 more than 9,500 Btu per kilowatt hour

2 when the design coal has a heat content of

3 8,000 Btu per pound or less,

4 ‘‘(ii) applications totaling 1,500

5 megawatts of pressurized fluidized bed

6 combustion technology installed as a new,

7 retrofit, or repowering application and op8 erated between 2000 and 2015 that has a

9 design net heat rate of not more than

10 8,400 Btu per kilowatt hour when the de11 sign coal has a heat content of more than

12 8,000 Btu per pound, and has a design net

13 heat rate of not more than 9,500 Btu’s per

14 kilowatt hour when the design coal has a

15 heat content of 8,000 Btu per pound or

16 less,

17 ‘‘(iii) applications totaling 1,500

18 megawatts of integrated gasification com19 bined cycle technology (I) installed as a

20 new, retrofit, or repowering application,

21 (II) operated between 2000 and 2015,

22 (III) has a design net heat rate of not

23 more than 8,550 Btu per kilowatt hour

24 when the design coal has a heat content of

25 more than 8,000 Btu per pound, or (IV)
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1 has a design net heat rate of not more

2 than 9,500 Btu per kilowatt hour when the

3 design coal has a heat content of 8,000

4 Btu per pound or less, and

5 ‘‘(iv) applications totaling 2,000

6 megawatts of technology for the production

7 of electricity (I) installed as a new, retrofit,

8 or repowering application, (II) operated be9 tween 2000 and 2015, and (III) has a car10 bon emission rate that is not more than

11 85 percent of conventional technology.

12 ‘‘(B) EXCEPTIONS.—Such term shall not

13 include clean coal technology projects receiving

14 or scheduled to receive funding under the Clean

15 Coal Technology Program of the Department of

16 Energy.

17 ‘‘(C) CLEAN COAL TECHNOLOGY.—The

18 term ‘clean coal technology’ means advanced

19 technology that utilizes coal to produce 50 per20 cent or more of its thermal output as electricity

21 including advanced pulverized coal or atmos22 pheric fluidized bed combustion, pressurized flu23 idized bed combustion, integrated gasification

24 combined cycle, and any other technology for
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1 the production of electricity that exceeds the

2 performance of conventional technology.

3 ‘‘(D) CONVENTIONAL TECHNOLOGY.—The

4 term ‘conventional technology’ means—

5 ‘‘(i) coal-fired combustion technology

6 with a design net heat rate of not less than

7 9,300 Btu’s per kilowatt hour (HHV) and

8 a carbon equivalents omission rate of not

9 more than 0.53 pounds of carbon per kilo10 watt hour when the design coal has a heat

11 content of more than 8,000 Btu per

12 pound, or

13 ‘‘(ii) coal-fired combustion technology

14 with a design net heat rate of not less than

15 10,500 Btu’s per kilowatt hour (HHV)

16 and a carbon equivalents emission rate of

17 not more than 0.60 pounds of carbon per

18 kilowatt hour when the design coal has a

19 heat content of 8,000 Btu per pound or

20 less, or

21 ‘‘(iii) natural gas-fired combustion

22 technology with a design net heat rate of

23 not less than 7,500 Btu’s per kilowatt

24 hour (HHV) and a carbon equivalents
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1 emission rate of not more than 0.24 pound

2 of carbon per kilowatt hour.

3 ‘‘(E) DESIGN NET HEAT RATE.—The term

4 ‘design net heat rate’ shall be based on the de5 sign annual heat input to and the design annual

6 net electrical output from the qualifying ad7 vanced clean coal technology (determined with8 out regard to such technology’s cogeneration of

9 steam).

10 ‘‘(F) SELECTION CRITERIA.—Selection cri11 teria for clean coal technology facilities—

12 ‘‘(i) shall be established by the Sec13 retary of Energy as part of a competitive

14 solicitation,

15 ‘‘(ii) shall include primary criteria of

16 minimum design net heat rate, maximum

17 design thermal efficiency, and lowest cost

18 to the Government, and

19 ‘‘(iii) shall include supplemental cri20 teria as determined appropriate by the

21 Secretary of Energy.

22 ‘‘(c) QUALIFIED INVESTMENT.—For purposes of sub23 section (a), the term ‘qualified investment’ means, with

24 respect to any taxable year, the basis of a qualifying ad-
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1 vanced clean coal technology facility placed in service by

2 the taxpayer during such taxable year.

3 ‘‘(d) QUALIFIED PROGRESS EXPENDITURES.—

4 ‘‘(1) INCREASE IN QUALIFIED INVESTMENT.—

5 In the case of a taxpayer who has made an election

6 under paragraph (5), the amount of the qualified in7 vestment of such taxpayer for the taxable year (de8 termined under subsection (c) without regard to this

9 section) shall be increased by an amount equal to

10 the aggregate of each qualified progress expenditure

11 for the taxable year with respect to progress expend12 iture property.

13 ‘‘(2) PROGRESS EXPENDITURE PROPERTY DE14 FINED.—For purposes of this subsection, the term

15 ‘progress expenditure property’ means any property

16 being constructed by or for the taxpayer and which

17 it is reasonable to believe will qualify as a qualifying

18 advanced clean coal technology facility which is

19 being constructed by or for the taxpayer when it is

20 placed in service.

21 ‘‘(3) QUALIFIED PROGRESS EXPENDITURES DE22 FINED.—For purposes of this subsection—

23 ‘‘(A) SELF-CONSTRUCTED PROPERTY.—In

24 the case of any self-constructed property, the

25 term ‘qualified progress expenditures’ means
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1 the amount which, for purposes of this subpart,

2 is properly chargeable (during such taxable

3 year) to capital account with respect to such

4 property.

5 ‘‘(B) NON-SELF-CONSTRUCTED PROP6 ERTY.—In the case of non-self-constructed

7 property, the term ‘qualified progress expendi8 tures’ means the amount paid during the tax9 able year to another person for the construction

10 of such property.

11 ‘‘(4) OTHER DEFINITIONS.—For purposes of

12 this subsection—

13 ‘‘(A) SELF-CONSTRUCTED PROPERTY.—

14 The term ‘self-constructed property’ means

15 property for which it is reasonable to believe

16 that more than half of the construction expendi17 tures will be made directly by the taxpayer.

18 ‘‘(B) NON-SELF-CONSTRUCTED PROP19 ERTY.—The term ‘non-self-constructed prop20 erty’ means property which is not self-con21 structed property.

22 ‘‘(C) CONSTRUCTION, ETC.—The term

23 ‘construction’ includes reconstruction and erec24 tion, and the term ‘constructed’ includes recon25 structed and erected.
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1 ‘‘(D) ONLY CONSTRUCTION OF QUALI2 FYING ADVANCED CLEAN COAL TECHNOLOGY

3 FACILITY TO BE TAKEN INTO ACCOUNT.—Con4 struction shall be taken into account only if, for

5 purposes of this subpart, expenditures therefor

6 are properly chargeable to capital account with

7 respect to the property.

8 ‘‘(5) ELECTION.—An election under this sub9 section may be made at such time and in such man10 ner as the Secretary may by regulations prescribe.

11 Such an election shall apply to the taxable year for

12 which made and to all subsequent taxable years.

13 Such an election, once made, may not be revoked ex14 cept with the consent of the Secretary.

15 ‘‘(e) COORDINATION WITH OTHER CREDITS.—This

16 section shall not apply to any property with respect to

17 which the rehabilitation credit under section 47 or the en18 ergy credit under section 48 is allowed unless the taxpayer

19 elects to waive the application of such credit to such prop20 erty.

21 ‘‘(f) TERMINATION.—This section shall not apply

22 with respect to any qualified investment made more than

23 10 years after the effective date of this section.’’
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1 (c) RECAPTURE.—Section 50(a) of the Internal Rev2 enue Code of 1986 (relating to other special rules) is

3 amended by adding at the end the following:

4 ‘‘(7) SPECIAL RULES RELATING TO QUALIFYING

5 ADVANCED CLEAN COAL TECHNOLOGY FACILITY.—

6 For purposes of applying the subsection in the case

7 of any credit allowable by reason of section 48B, the

8 following shall apply:

9 ‘‘(A) GENERAL RULE.—In lieu of the

10 amount of the increase in tax under paragraph

11 (1), the increase in tax shall be an amount

12 equal to the investment tax credit allowed under

13 section 38 for all prior taxable years with re14 spect to a qualifying advanced clean coal tech15 nology facility (as defined by section 48B(b)(1))

16 multiplied by a fraction whose numerator is the

17 number of years remaining to fully depreciate

18 under this title the qualifying advanced clean

19 coal technology facility disposed of, and whose

20 denominator is the total number of years over

21 which such facility would otherwise have been

22 subject to depreciation. For purposes of this

23 preceding sentence, the year of disposition of

24 the qualifying advanced clean coal technology
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1 facility property shall be treated as a year of re2 maining depreciation.

3 ‘‘(B) PROPERTY CEASES TO QUALIFY FOR

4 PROGRESS EXPENDITURES.—Rules similar to

5 the rules of paragraph (2) shall apply in the

6 case of qualified progress expenditures for a

7 qualifying advanced clean coal technology facil8 ity under section 48B, except that the amount

9 of the increase in tax under subparagraph (A)

10 of this paragraph shall be substituted in lieu of

11 the amount described in such paragraph (2).

12 ‘‘(C) APPLICATION OF PARAGRAPH.—This

13 paragraph shall be applied separately with re14 spect to the credit allowed under section 38 re15 garding a qualifying advanced clean coal tech16 nology facility.’’

17 (d) TRANSITIONAL RULE.—Section 39(d) of the In18 ternal Revenue Code of 1986 (relating to transitional

19 rules) is amended by adding at the end the following:

20 ‘‘(12) NO CARRYBACK TO SECTION 48B CREDIT

21 BEFORE EFFECTIVE DATE.—No portion of the un22 used business credit for any taxable year which is

23 attributable to the qualifying advanced clean coal

24 technology facility credit determined under section
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1 48B may be carried back to a taxable year ending

2 before the date of the enactment of section 48B.’’

3 (e) TECHNICAL AMENDMENTS.—

4 (1) Section 49(a)(1)(C) is amended by striking

5 ‘‘and’’ at the end of clause (iii), by striking the pe6 riod at the end of clause (iv) and inserting ‘‘, and’’,

7 and by adding at the end the following:

8 ‘‘(v) the portion of the basis of any

9 qualifying advanced clean coal technology

10 facility attributable to any qualified invest11 ment (as defined by section 48B(c)).’’

12 (2) Section 50(a)(4) is amended by striking

13 ‘‘and (6)’’ and inserting ‘‘, (6), and (7)’’.

14 (3) Section 50(c)(3) is amended by inserting

15 after subparagraph (C) the following:

16 ‘‘(D) Any advanced clean coal technology

17 facility credit shall be exempt from paragraph

18 (1) and paragraph (2) of section 50(c).

19 (4) The table of sections for subpart E of part

20 IV of subchapter A of chapter 1 is amended by in21 serting after the item relating to section 48A the fol22 lowing:

‘‘Sec. 48B. Qualifying advanced clean coal technology facility

credit.’’

23 (f) INSTALLATIONS NOT SUBJECT TO NEW SOURCE

24 REVIEW.—
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1 (1) Installation of a qualifying advanced clean

2 coal technology facility shall be exempt from the new

3 source review provisions of the Clean Air Act (42

4 U.S.C. 1857 et seq.).

5 (2) Installation of a qualifying advanced clean

6 coal technology facility that meets or exceeds, for the

7 applicable source category, the standards of per8 formance for new stationary sources established

9 under section 111 of the Clean Air Act (42 U.S.C.

10 1857 et seq.), shall exempt that facility from any

11 new or increased emission control requirements

12 under title I of the Clean Air Act (42 U.S.C. 1857

13 et seq.) for a period of 10 years after the qualifying

14 clean coal technology facility is originally placed in

15 service.

16 (g) EFFECTIVE DATE.—The amendments made by

17 this section shall apply to periods after December 31,

18 2000, under rules similar to the rules of section 48(m)

19 of the Internal Revenue Code of 1986 (as in effect on the

20 day before the date of the enactment of the Revenue Rec21 onciliation Act of 1990).

22 SEC. 302. CREDIT FOR PRODUCTION FROM QUALIFYING

23 ADVANCED CLEAN COAL TECHNOLOGY.

24 (a) CREDIT FOR PRODUCTION FROM QUALIFYING

25 ADVANCED CLEAN COAL TECHNOLOGY.—Subpart D of
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1 part IV of subchapter A of chapter 1 of the Internal Rev2 enue Code of 1986 (relating to business related credits)

3 is amended by adding at the end the following:

4 ‘‘SEC. 45F. CREDIT FOR PRODUCTION FROM QUALIFYING

5 ADVANCED CLEAN COAL TECHNOLOGY.

6 ‘‘(a) GENERAL RULE.—For purposes of section 38,

7 the qualifying advanced clean coal technology production

8 credit of any taxpayer for any taxable year is equal to—

9 ‘‘(1) the applicable amount of advanced clean

10 coal technology production credit, multiplied by

11 ‘‘(2) the kilowatt hours of electricity—

12 ‘‘(A) produced by the taxpayer at a quali13 fying advanced clean coal technology facility

14 during the 10-year period beginning on the date

15 the facility was originally placed in service, and

16 ‘‘(B) sold by the taxpayer to an unrelated

17 person during such taxable year.

18 ‘‘(b) APPLICABLE AMOUNT.—For purposes of this

19 section, the applicable amount with respect to production

20 from a qualifying advanced clean coal technology facility

21 shall be determined as follows:

22 ‘‘(1) In the case of a facility originally placed

23 in service before 2008, if

24
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The facility design net heat rate, Btu/kWh (HHV) is

equal to

The applicable amount is:

For 1st 5

years of such

service

For 2d 5

years of such

service

Not more than 8,400 .............................................. $.0130 $.0115

More than 8,400 but not more than 8,550 ............ .0100 .0080

More than 8,550 but not more than 8,750 ............ .0075 .0060

1 ‘‘(2) In the case of a facility originally placed

2 in service after 2007 and before 2012, if

3

The facility design net heat rate, Btu/kWh (HHV) is

equal to

The applicable amount is:

For 1st 5

years of such

service

For 2d 5

years of such

service

Not more than 7,700 .............................................. $.0135 $.0110

More than 7,700 but not more than 8,125 ............ .0115 .0090

More than 8,125 but not more than 8,350 ............ .0090 .0080

4 ‘‘(3) In the case of a facility originally placed

5 in service after 2011 and before 2016, if

6

The facility design net heat rate, Btu/kWh (HHV) is

equal to

The applicable amount is:

For 1st 5

years of such

service

For 2d 5

years of such

service

Not more than 7,380 .............................................. $.0155 $.0135

More than 7,380 but not more than 7,720 ............ .0135 .0115

7 ‘‘(c) INFLATION ADJUSTMENT FACTOR.—Each

8 amount in paragraphs (1), (2), and (3) shall be adjusted

9 by multiplying such amount by the inflation adjustment

10 factor for the calendar year in which the amount is ap11 plied. If any amount as increased under the preceding sen12 tence is not a multiple of 0.01 cent, such amount shall

13 be rounded to the nearest multiple of 0.01 cent.
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1 ‘‘(d) DEFINITIONS AND SPECIAL RULES.—For pur2 poses of this section—

3 ‘‘(1) the rules of paragraphs (3), (4), and (5)

4 of section 45 shall apply,

5 ‘‘(2) the term ‘inflation adjustment factor’

6 means, with respect to a calendar year, a fraction

7 the numerator of which is the GDP implicit price

8 deflator for the preceding calendar year and the de9 nominator of which is the GDP implicit price

10 deflator for the calendar year 1998, and

11 ‘‘(3) the term ‘GDP implicit price deflator’

12 means the most recent revision of the implicit price

13 deflator for the gross domestic product as computed

14 by the Department of Commerce before March 15 of

15 the calendar year.’’

16 (b) CREDIT TREATED AS BUSINESS CREDIT.—Sec17 tion 38(b) of the Internal Revenue Code of 1986 is amend18 ed by striking ‘‘plus’’ at the end of paragraph (11), by

19 striking the period at the end of paragraph (12) and in20 serting ‘‘, plus’’, and by adding at the end the following:

21 ‘‘(13) the qualifying advanced clean coal tech22 nology production credit determined under section

23 45F(a).’’

24 (c) TRANSITIONAL RULE.—Section 39(d) of the In25 ternal Revenue Code of 1986 (relating to transitional
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1 rules), as amended by section 201(d), is amended by add2 ing at the end the following:

3 ‘‘(13) NO CARRYBACK OF CERTAIN CREDITS

4 BEFORE EFFECTIVE DATE.—No portion of the un5 used business credit for any taxable year which is

6 attributable to the credits allowable under any sec7 tion added to this subpart by the amendments made

8 by the National Energy Security Tax Act of 2000

9 may be carried back to a taxable year ending before

10 the date of the enactment of such Act.’’

11 (d) CLERICAL AMENDMENT.—The table of sections

12 for subpart D of part IV of subchapter A of chapter 1

13 of the Internal Revenue Code of 1986 is amended by add14 ing at the end the following:

‘‘Sec. 45F. Credit for production from qualifying advanced clean

coal technology.’’

15 (e) EFFECTIVE DATE.—The amendments made by

16 this section shall apply to production after the date of the

17 enactment of this Act.

18 SEC. 1043. DEBT REPAYMENT FOR THE INVESTMENT IN AD19 VANCED CLEAN COAL TECHNOLOGY.

20 (a) ALLOWANCE OF DEBT REPAYMENT IN LIEU OF

21 QUALIFYING ADVANCED CLEAN COAL TECHNOLOGY

22 CREDITS.—The owner of a qualified advanced clean coal

23 technology facility under sections 1041 and 1042 may

24 elect to have the amount of the qualifying clean coal tech-
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1 nology credits applied to the prepayment of any debt or

2 obligations the owner has incurred under subchapter I,

3 chapter 31, title 7 of the Rural Electrification Act of 1936

4 (7 U.S.C. 901 et seq.) and has been selected by the owner

5 for such prepayment in lieu of a credit against the owner’s

6 tax obligations under the Internal Revenue Code of 1986.

Æ