II

106TH CONGRESS

2D SESSION S. 2904

To amend the Internal Revenue Code of 1986 to provide tax incentives

to encourage the production and use of efficient energy sources, and

for other purposes.

IN THE SENATE OF THE UNITED STATES

JULY 21, 2000

Mr. BINGAMAN (for himself, Mr. DASCHLE, Mr. BAUCUS, Mr. BYRD, Mr.

BAYH, Mr. LEVIN, Mr. ROCKEFELLER, and Mr. JOHNSON) introduced

the following bill; which was read twice and referred to the Committee

on Finance

A BILL

To amend the Internal Revenue Code of 1986 to provide

tax incentives to encourage the production and use of

efficient energy sources, and for other purposes.

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; AMENDMENT OF 1986 CODE;

4 TABLE OF CONTENTS.

5 (a) SHORT TITLE.—This Act may be cited as the

6 ‘‘Energy Security Tax and Policy Act of 2000’’.

7 (b) AMENDMENT OF 1986 CODE.—Except as other8 wise expressly provided, whenever in this Act an amend-
2

S 2904 IS

1 ment or repeal is expressed in terms of an amendment

2 to, or repeal of, a section or other provision, the reference

3 shall be considered to be made to a section or other provi4 sion of the Internal Revenue Code of 1986.

5 (c) TABLE OF CONTENTS.—The table of contents for

6 this Act is as follows:

Sec. 1. Short title; amendment of 1986 Code; table of contents.

TITLE I—ENERGY-EFFICIENT PROPERTY USED IN BUSINESS

Sec. 101. Incentive for Distributed Generation.

Sec. 102. Credit for energy-efficient property used in business, including hybrid

vehicles.

Sec. 103. Energy Efficient Commercial Building Property Deduction.

TITLE II—NONBUSINESS ENERGY SYSTEMS

Sec. 201. Credit for certain nonbusiness energy systems.

TITLE III—ALTERNATIVE FUELS

Sec. 301. Allocation of alcohol fuels credit to patrons of a cooperative.

TITLE IV—AUTOMOBILES

Sec. 401. Extension of credit for qualified electric vehicles.

Sec. 402. Additional Deduction for Cost of Installation of Alternative Fueling

Stations.

Sec. 403. Credit for Retail Sale of Clean Burning Fuels as Motor Vehicle Fuel.

Sec. 404. Exception to HOV Passenger Requirements for Alternative Fuel Vehicles.

TITLE V—CLEAN COAL TECHNOLOGIES

Sec. 501. Credit for investment in qualifying clean coal technology.

Sec. 502. Credit for production from qualifying clean coal technology.

Sec. 503. Risk pool for qualifying clean coal technology.

TITLE VI—METHANE RECOVERY

Sec. 601. Credit for capture of coalmine methane gas.

TITLE VII—OIL AND GAS PRODUCTION

Sec. 701. Credit for production of re-refined lubricating oil.

Sec. 702. Oil and gas from marginal wells.

Sec. 703. Deduction for delay rental payments.

Sec. 704. Election to expense geological and geophysical expenditures.

TITLE VIII—RENEWABLE POWER GENERATION
3

S 2904 IS

Sec. 801. Modifications to credit for electricity produced from renewable resources.

Sec. 802. Credit for capital costs of qualified biomass-based generating system.

Sec. 803. Treatment of facilities using bagasse to produce energy as solid waste

disposal facilities eligible for tax-exempt financing.

Sec. 804. Federal renewable portfolio standard.

TITLE IX—STEELMAKING

Sec. 901. Extension of credit for electricity to production from steel cogeneration.

TITLE X—ENERGY EMERGENCIES

Sec. 1001. Energy Policy and Conservation Act Amendments.

Sec. 1002. Energy Conservation Programs for Schools and Hospitals.

Sec. 1003. State Energy Programs.

Sec. 1004. Annual Home Heating Readiness.

Sec. 1005. Summer Fill and Fuel Budgeting Programs.

Sec. 1006. Use of Energy Futures for Fuel Purchases.

Sec. 1007. Increased Use of Alternative Fuels by Federal Fleets.

Sec. 1008. Full Expensing of Home Heating Oil and Propane Storage Facilities.

TITLE XI—ENERGY EFFICIENCY

Sec. 1101. Energy Savings Performance Contracts.

Sec. 1102. Weatherization.

Sec. 1103. Public Benefits System.

Sec. 1104. National Oil Heat Research Alliance Act.

TITLE XII—ELECTRICITY

Sec. 1201. Comprehensive Indian Energy Program.

Sec. 1202. Interconnection.

1 TITLE I—ENERGY-EFFICIENT

2 PROPERTY USED IN BUSINESS

3 SEC. 101. INCENTIVE FOR DISTRIBUTED GENERATION.

4 (a) IN GENERAL.—Section 168(e)(3)(E) of the Inter5 nal Revenue Code (classifying certain property as 15-year

6 property) is amended by striking ‘‘and’’ at the end of

7 clause (ii), striking the period at the end of clause (iii)

8 and inserting ‘‘, and’’, and by adding the following new

9 clause:
4

S 2904 IS

1 ‘‘(iv) any distributed power prop2 erty.’’.

3 (b) CONFORMING AMENDMENTS.—(1) Section 168(i)

4 is amended by adding at the end the following new para5 graph:

6 ‘‘(15) DISTRIBUTED POWER PROPERTY.—The

7 term ‘distributed power property’ means property—

8 ‘‘(A) which is used in the generation of

9 electricity for primary use—

10 ‘‘(i) in nonresidential real or residen11 tial rental property used in the taxpayer’s

12 trade or business, or

13 ‘‘(ii) in the taxpayer’s industrial man14 ufacturing process or plant activity, with a

15 rated total capacity in excess of 500 kilo16 watts,

17 ‘‘(B) which also may produce usable ther18 mal energy or mechanical power for use in a

19 heating or cooling application, as long as at

20 least 40 percent of the total useful energy pro21 duced consists of—

22 ‘‘(i) with respect to assets described in

23 subparagraph (A)(i), electrical power

24 (whether sold or used by the taxpayer), or
5

S 2904 IS

1 ‘‘(ii) with respect to assets described

2 in subparagraph (A)(ii), electrical power

3 (whether sold or used by the taxpayer) and

4 thermal or mechanical energy used in the

5 taxpayer’s industrial manufacturing proc6 ess or plant activity,

7 ‘‘(C) which is not used to transport pri8 mary fuel to the generating facility or to dis9 tribute energy within or outside of the facility,

10 and

11 ‘‘(D) where it is reasonably expected that

12 not more than 50 percent of the produced elec13 tricity will be sold to, or used by, unrelated per14 sons.

15 For purposes of subparagraph (B), energy output is

16 determined on the basis of expected annual output

17 levels, measured in British thermal units (Btu),

18 using standard conversion factors established by the

19 Secretary.’’.

20 (2) Subparagraph (B) of section 168(g)(3) is amend21 ed by inserting after the item relating to subparagraph

22 (E)(iii) in the table contained therein the following new

23 line:

24 ‘‘(E)(iv) 22’’.
6

S 2904 IS

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

2 this section are effective for property placed in service on

3 or after December 31, 2000.

4 SEC. 102. CREDIT FOR CERTAIN ENERGY-EFFICIENT PROP5 ERTY USED IN BUSINESS.

6 (a) IN GENERAL.—Subpart E of part IV of sub7 chapter A of chapter 1 (relating to rules for computing

8 investment credit) is amended by inserting after section

9 48 the following:

10 ‘‘SEC. 48A. ENERGY CREDIT.

11 ‘‘(a) IN GENERAL.—For purposes of section 46, the

12 energy credit for any taxable year is the sum of—

13 ‘‘(1) the amount equal to the energy percentage

14 of the basis of each energy property placed in service

15 during such taxable year, and

16 ‘‘(2) the credit amount for each qualified hybrid

17 vehicle placed in service during the taxable year.

18 ‘‘(b) ENERGY PERCENTAGE.—

19 ‘‘(1) IN GENERAL.—The energy percentage is—

20 ‘‘(A) except as otherwise provided in this

21 subparagraph, 10 percent,

22 ‘‘(B) in the case of energy property de23 scribed in clauses (i), (iii), (vi), and (vii) of sub24 section (c)(1)(A), 20 percent,
7

S 2904 IS

1 ‘‘(C) in the case of energy property de2 scribed in subsection (c)(1)(A)(v), 15 percent,

3 and

4 ‘‘(D) in the case of energy property de5 scribed in subsection (c)(1)(A)(ii) relating to a

6 high risk geothermal well, 20 percent.

7 ‘‘(2) COORDINATION WITH REHABILITATION.—

8 The energy percentage shall not apply to that por9 tion of the basis of any property which is attrib10 utable to qualified rehabilitation expenditures.

11 ‘‘(c) ENERGY PROPERTY DEFINED.—

12 ‘‘(1) IN GENERAL.—For purposes of this sub13 part, the term ‘energy property’ means any

14 property—

15 ‘‘(A) which is—

16 ‘‘(i) solar energy property,

17 ‘‘(ii) geothermal energy property,

18 ‘‘(iii) energy-efficient building prop19 erty,

20 ‘‘(iv) combined heat and power system

21 property,

22 ‘‘(v) low core loss distribution trans23 former property,

24 ‘‘(vi) qualified anaerobic digester

25 property, or
8

S 2904 IS

1 ‘‘(vii) qualified wind energy systems

2 equipment property,

3 ‘‘(B)(i) the construction, reconstruction, or

4 erection of which is completed by the taxpayer,

5 or

6 ‘‘(ii) which is acquired by the taxpayer if

7 the original use of such property commences

8 with the taxpayer.

9 ‘‘(C) which can reasonably be expected to

10 remain in operation for at least 5 years,

11 ‘‘(D) with respect to which depreciation (or

12 amortization in lieu of depreciation) is allow13 able, and

14 ‘‘(E) which meets the performance and

15 quality standards (if any) which—

16 ‘‘(i) have been prescribed by the Sec17 retary by regulations (after consultation

18 with the Secretary of Energy), and

19 ‘‘(ii) are in effect at the time of the

20 acquisition of the property.

21 ‘‘(2) EXCEPTIONS.—

22 ‘‘(A) PUBLIC UTILITY PROPERTY.—Such

23 term shall not include any property which is

24 public utility property (as defined in section

25 46(f)(5) as in effect on the day before the date
9

S 2904 IS

1 of the enactment of the Revenue Reconciliation

2 Act of 1990), except for property described in

3 paragraph (1)(A)(iv).

4 ‘‘(B) CERTAIN WIND EQUIPMENT.—Such

5 term shall not include equipment described in

6 paragraph (1)(A)(vii) which is taken into ac7 count for purposes of section 45 for the taxable

8 year.

9 ‘‘(d) DEFINITIONS RELATING TO TYPES OF ENERGY

10 PROPERTY.—For purposes of this section—

11 ‘‘(1) SOLAR ENERGY PROPERTY.—

12 ‘‘(A) IN GENERAL.—The term ‘solar en13 ergy property’ means equipment which uses

14 solar energy to generate electricity, to heat or

15 cool (or provide hot water for use in) a struc16 ture, or to provide solar process heat.

17 ‘‘(B) SWIMMING POOLS, ETC. USED AS

18 STORAGE MEDIUM.—The term ‘solar energy

19 property’ shall not include property with respect

20 to which expenditures are properly allocable to

21 a swimming pool, hot tub, or any other energy

22 storage medium which has a function other

23 than the function of such storage.

24 ‘‘(C) SOLAR PANELS.—No solar panel or

25 other property installed as a roof (or portion
10

S 2904 IS

1 thereof) shall fail to be treated as solar energy

2 property solely because it constitutes a struc3 tural component of the structure on which it is

4 installed.

5 ‘‘(2) GEOTHERMAL ENERGY PROPERTY.—

6 ‘‘(A) IN GENERAL.—The term ‘geothermal

7 energy property’ means equipment used to

8 produce, distribute, or use energy derived from

9 a geothermal deposit (within the meaning of

10 section 613(e)(2)), but only, in the case of elec11 tricity generated by geothermal power, up to

12 (but not including) the electrical transmission

13 stage.

14 ‘‘(B) HIGH RISK GEOTHERMAL WELL.—

15 The term ‘high risk geothermal well’ means a

16 geothermal deposit (within the meaning of sec17 tion 613(e)(2)) which requires high risk drilling

18 techniques. Such deposit may not be located in

19 a State or national park or in an area in which

20 the relevant State park authority or the Na21 tional Park Service determines the development

22 of such a deposit will negatively impact on a

23 State or national park.

24 ‘‘(3) ENERGY-EFFICIENT BUILDING PROP25 ERTY.—
11

S 2904 IS

1 ‘‘(A) IN GENERAL.—The term ‘energy-effi2 cient building property’ means—

3 ‘‘(i) a fuel cell that—

4 ‘‘(I) generates electricity and

5 heat using an electrochemical process,

6 ‘‘(II) has an electricity-only gen7 eration efficiency greater than 35 per8 cent, and

9 ‘‘(III) has a minimum generating

10 capacity of 5 kilowatts,

11 ‘‘(ii) an electric heat pump hot water

12 heater that yields an energy factor of 1.7

13 or greater under standards prescribed by

14 the Secretary of Energy,

15 ‘‘(iii) an electric heat pump that has

16 a heating system performance factor

17 (HSPF) of 9 or greater and a cooling sea18 sonal energy efficiency ratio (SEER) of

19 13.5 or greater,

20 ‘‘(iv) a natural gas heat pump that

21 has a coefficient of performance of not less

22 than 1.25 for heating and not less than

23 0.60 for cooling,
12

S 2904 IS

1 ‘‘(v) a central air conditioner that has

2 a cooling seasonal energy efficiency ratio

3 (SEER) of 13.5 or greater,

4 ‘‘(vi) an advanced natural gas water

5 heater that—

6 ‘‘(I) increases steady state effi7 ciency and reduces standby and vent

8 losses, and

9 ‘‘(II) has an energy factor of at

10 least 0.65,

11 ‘‘(vii) an advanced natural gas fur12 nace that achieves a 95 percent AFUE,

13 and

14 ‘‘(viii) natural gas cooling

15 equipment—

16 ‘‘(I) that has a coefficient of per17 formance of not less than .60, or

18 ‘‘(II) that uses desiccant tech19 nology and has an efficiency rating of

20 40 percent.

21 ‘‘(B) LIMITATIONS.—The credit under sub22 section (a)(1) for the taxable year may not

23 exceed—
13

S 2904 IS

1 ‘‘(i) $500 in the case of property de2 scribed in subparagraph (A) other than

3 clauses (i) and (iv) thereof,

4 ‘‘(ii) $500 for each kilowatt of capac5 ity in the case of a fuel cell described in

6 subparagraph (A)(i), and

7 ‘‘(iii) $1,000 in the case of a natural

8 gas heat pump described in subparagraph

9 (A)(iv).

10 ‘‘(4) COMBINED HEAT AND POWER SYSTEM

11 PROPERTY.—

12 ‘‘(A) IN GENERAL.—The term ‘combined

13 heat and power system property’ means

14 property—

15 ‘‘(i) comprising a system for the same

16 energy source for the simultaneous or se17 quential generation of electrical power, me18 chanical shaft power, or both, in combina19 tion with steam, heat, or other forms of

20 useful energy,

21 ‘‘(ii) that has an electrical capacity of

22 more than 50 kilowatts or a mechanical

23 energy capacity of more than 67 horse24 power or an equivalent combination of elec-
14

S 2904 IS

1 trical and mechanical energy capacities,

2 and

3 ‘‘(iii) that produces at least 20 per4 cent of its total useful energy in the form

5 of both thermal energy and electrical or

6 mechanical power.

7 ‘‘(B) ACCOUNTING RULE FOR PUBLIC

8 UTILITY PROPERTY.—In the case that combined

9 heat and power system property is public utility

10 property (as defined in section 46(f)(5) as in ef11 fect on the day before the date of the enact12 ment of the Revenue Reconciliation Act of

13 1990), the taxpayer may only claim the credit

14 under subsection (a)(1) if, with respect to such

15 property, the taxpayer uses a normalization

16 method of accounting.

17 ‘‘(5) LOW CORE LOSS DISTRIBUTION TRANS18 FORMER PROPERTY.—The term ‘low core loss dis19 tribution transformer property’ means a distribution

20 transformer which has energy savings from a highly

21 efficient core of at least 20 percent more than the

22 average for power ratings reported by studies re23 quired under section 124 of the Energy Policy Act

24 of 1992.
15

S 2904 IS

1 ‘‘(6) QUALIFIED ANAEROBIC DIGESTER PROP2 ERTY.—The term ‘qualified anaerobic digester prop3 erty’ means an anaerobic digester for manure or

4 crop waste that achieves at least 65 percent effi5 ciency measured in terms of the fraction of energy

6 input converted to electricity and useful thermal en7 ergy.

8 ‘‘(7) QUALIFIED WIND ENERGY SYSTEMS

9 EQUIPMENT PROPERTY.—The term ‘qualified wind

10 energy systems equipment property’ means wind en11 ergy systems equipment with a turbine size of not

12 more than 50 kilowatts rated capacity.

13 ‘‘(e) QUALIFIED HYBRID VEHICLES.—For purposes

14 of subsection (a)(2)—

15 ‘‘(1) CREDIT AMOUNT.—

16 ‘‘(A) IN GENERAL.—The credit amount for

17 each qualified hybrid vehicle with a recharge18 able energy storage system that provides the

19 applicable percentage of the maximum available

20 power shall be the amount specified in the fol21 lowing table:

‘‘Applicable percentage greater than or

equal to—

(Percent)

Less

than—

(Percent)

Credit

amount

is:

5 .............................................................................. 10 $500

10 ............................................................................ 20 1,000

20 ............................................................................ 30 1,500

30 ............................................................................ .................... 2,000
16

S 2904 IS

1 ‘‘(B) INCREASE IN CREDIT AMOUNT FOR

2 REGENERATIVE BRAKING SYSTEM.—In the case

3 of a qualified hybrid vehicle that actively em4 ploys a regenerative braking system which sup5 plies to the rechargeable energy storage system

6 the applicable percentage of the energy avail7 able from braking in a typical 60 miles per

8 hour to 0 miles per hour braking event, the

9 credit amount determined under subparagraph

10 (A) shall be increased by the amount specified

11 in the following table:

‘‘Applicable percentage greater than or

equal to—

(Percent)

Less

than—

(Percent)

Credit

amount

increase

is:

20 ............................................................................ 40 $250

40 ............................................................................ 60 500

60 ............................................................................ .................... 1,000

12 ‘‘(2) QUALIFIED HYBRID VEHICLE.—The term

13 ‘qualified hybrid vehicle’ means an automobile that

14 meets all regulatory requirements applicable to gaso15 line-powered automobiles and that can draw propul16 sion energy from both of the following on-board

17 sources of stored energy:

18 ‘‘(A) A consumable fuel.

19 ‘‘(B) A rechargeable energy storage sys20 tem, provided that the automobile is at least
17

S 2904 IS

1 33% more efficient than the average vehicle in

2 its vehicle characterization as defined by EPA.

3 ‘‘(3) MAXIMUM AVAILABLE POWER.—The term

4 ‘maximum available power’ means the maximum

5 value of the sum of the heat engine and electric

6 drive system power or other non-heat energy conver7 sion devices available for a driver’s command for

8 maximum acceleration at vehicle speeds under 75

9 miles per hour.

10 ‘‘(4) AUTOMOBILE.—The term ‘automobile’ has

11 the meaning given such term by section 4064(b)(1)

12 (without regard to subparagraphs (B) and (C) there13 of). A vehicle shall not fail to be treated as an auto14 mobile solely by reason of weight if such vehicle is

15 rated at 8,500 pounds gross vehicle weight rating or

16 less.

17 ‘‘(5) DOUBLE BENEFIT; PROPERTY USED OUT18 SIDE UNITED STATES, ETC., NOT QUALIFIED.—No

19 credit shall be allowed under subsection (a)(2) with

20 respect to—

21 ‘‘(A) any property for which a credit is al22 lowed under section 25B or 30,

23 ‘‘(B) any property referred to in section

24 50(b), and
18

S 2904 IS

1 ‘‘(C) the portion of the cost of any prop2 erty taken into account under section 179 or

3 179A.

4 ‘‘(6) REGULATIONS.—

5 ‘‘(A) TREASURY.—The Secretary shall pre6 scribe such regulations as may be necessary or

7 appropriate to carry out the purposes of this

8 subsection.

9 ‘‘(B) ENVIRONMENTAL PROTECTION AGEN10 CY.—The Administrator of the Environmental

11 Protection Agency shall prescribe such regula12 tions as may be necessary or appropriate to

13 specify the testing and calculation procedures

14 that would be used to determine whether a vehi15 cle meets the qualifications for a credit under

16 this subsection.

17 ‘‘(7) TERMINATION.—Paragraph (2) shall not

18 apply with respect to any vehicle placed in service

19 during a calendar year ending before January 1,

20 2003, or after December 31, 2006.

21 ‘‘(f) SPECIAL RULES.—For purposes of this

22 section—

23 ‘‘(1) SPECIAL RULE FOR PROPERTY FINANCED

24 BY SUBSIDIZED ENERGY FINANCING OR INDUSTRIAL

25 DEVELOPMENT BONDS.—
19

S 2904 IS

1 ‘‘(A) REDUCATION OF BASIS.—For pur2 poses of applying the energy percentage to any

3 property, if such property is financed in whole

4 or in part by—

5 ‘‘(i) subsidized energy financing, or

6 ‘‘(ii) the proceeds of a private activity

7 bond (within the meaning of section 141)

8 the interest on which is exempt from tax

9 under section 103, the amount taken into

10 account as the basis of such property shall

11 not exceed the amount which (but for this

12 subparagraph) would be so taken into ac13 count multiplied by the fraction deter14 mined under subparagraph (B).

15 ‘‘(B) DETERMINATION OF FRACTION.—For

16 purposes of subparagraph (A), the fraction de17 termined under this subparagraph is 1 reduced

18 by a fraction—

19 ‘‘(i) the numerator of which is that

20 portion of the basis of the property which

21 is allocable to such financing or proceeds,

22 and

23 ‘‘(ii) the denominator of which is the

24 basis of the property.
20

S 2904 IS

1 ‘‘(C) SUBSIDIZED ENERGY FINANCING.—

2 For purposes of subparagraph (A), the term

3 ‘subsidized energy financing’ means financing

4 provided under a Federal, State, or local pro5 gram a principal purpose of which is to provide

6 subsidized financing for projects designed to

7 conserve or produce energy.

8 ‘‘(2) CERTAIN PROGRESS EXPENDITURE RULES

9 MADE APPLICABLE.—Rules similar to the rules of

10 subsections (c)(4) and (d) of section 46 (as in effect

11 on the day before the date of the enactment of the

12 Revenue Reconciliation Act of 1990) shall apply for

13 purposes of this section.

14 ‘‘(g) APPLICATION OF SECTION.—

15 ‘‘(1) IN GENERAL.—Except as provided by

16 paragraph (2) and subsection (e), this section shall

17 apply to property placed in service after December

18 31, 2000, and before January 1, 2004.

19 ‘‘(2) EXCEPTIONS.—

20 ‘‘(A) SOLAR ENERGY AND GEOTHERMAL

21 ENERGY PROPERTY.—Paragraph (1) shall not

22 apply to solar energy property or geothermal

23 energy property.

24 ‘‘(B) FUEL CELL PROPERTY.—In the case

25 of property that is a fuel cell described in sub-
21

S 2904 IS

1 section (d)(3)(A)(i), this section shall apply to

2 property placed in service after December 31,

3 2000, and before January 1, 2005.’’

4 (b) CONFORMING AMENDMENTS.—

5 (1) Section 48 is amended to read as follows:

6 ‘‘SEC. 48. REFORESTATION CREDIT.

7 ‘‘(a) IN GENERAL.—For purposes of section 46, the

8 reforestation credit for any taxable year is 20 percent of

9 the portion of the amortizable basis of any qualified timber

10 property which was acquired during such taxable year and

11 which is taken into account under section 194 (after the

12 application of section 194(b)(1)).

13 ‘‘(b) DEFINITIONS.—For purposes of this subpart,

14 the terms ‘amortizable basis’ and ‘qualified timber prop15 erty’ have the respective meanings given to such terms by

16 section 194.’’

17 (2) Section 39(d) is amended by adding at the

18 end the following:

19 ‘‘(9) NO CARRYBACK OF ENERGY CREDIT BE20 FORE EFFECTIVE DATE.—No portion of the unused

21 business credit for any taxable year which is attrib22 utable to the energy credit determined under section

23 48A may be carried back to a taxable year ending

24 before the date of the enactment of section 48A.’’
22

S 2904 IS

1 (3) Section 280C is amended by adding at the

2 end the following:

3 ‘‘(d) CREDIT FOR ENERGY PROPERTY EXPENSES.—

4 ‘‘(1) IN GENERAL.—No deduction shall be al5 lowed for that portion of the expenses for energy

6 property (as defined in section 48A(c)) otherwise al7 lowable as a deduction for the taxable year which is

8 equal to the amount of the credit determined for

9 such taxable year under section 48A(a).

10 ‘‘(2) SIMILAR RULE WHERE TAXPAYER CAP11 ITALIZES RATHER THAN DEDUCTS EXPENSES.—If—

12 ‘‘(A) the amount of the credit allowable for

13 the taxable year under section 48A (determined

14 without regard to section 38(c)), exceeds

15 ‘‘(B) the amount allowable as a deduction

16 for the taxable year for expenses for energy

17 property (determined without regard to para18 graph (1)), the amount chargeable to capital

19 account for the taxable year for such expenses

20 shall be reduced by the amount of such excess.

21 ‘‘(3) CONTROLLED GROUPS.—Paragraph (3) of

22 subsection (b) shall apply for purposes of this sub23 section.’’
23

S 2904 IS

1 (4) Section 29(b)(3)(A)(i)(III) is amended by

2 striking ‘section 48(a)(4)(C)’ and inserting ‘section

3 48A(f)(1)(C)’.

4 (5) Section 50(a)(2)(E) is amended by striking

5 ‘section 48(a)(5)’ and inserting ‘section 48A(f)(2)’.

6 (6) Section 168(e)(3)(B) is amended—

7 (A) by striking clause (vi)(I) and inserting

8 the following:

9 ‘‘(I) is described in paragraph (1) or

10 (2) of section 48A(d) (or would be so de11 scribed if ‘solar and wind’ were substituted

12 for ‘solar’ in paragraph (1)(B)),’’, and

13 (B) in the last sentence by striking ‘‘sec14 tion 48(a)(3)’’ and inserting ‘‘section

15 48A(c)(2)(A)’’.

16 (c) CLERICAL AMENDMENT.—The table of sections

17 for subpart E of part IV of subchapter A of chapter 1

18 is amended by striking the item relating to section 48 and

19 inserting the following:

‘‘Sec. 48. Reforestation credit.

‘‘Sec. 48A. Energy credit.’’

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

21 this section shall apply to property placed in service after

22 December 31, 2000, under rules similar to the rules of

23 section 48(m) of the Internal Revenue Code of 1986 (as
24

S 2904 IS

1 in effect on the day before the date of the enactment of

2 the Revenue Reconciliation Act of 1990).

3 SEC. 103. ENERGY EFFICIENT COMMERCIAL BUILDING

4 PROPERTY DEDUCTION.

5 ‘‘(a) IN GENERAL.—There shall be allowed as a de6 duction for the taxable year an amount equal to the sum

7 of the energy efficient commercial building amount deter8 mined under subsection (b).

9 ‘‘(b)(1) DEDUCTION ALLOWED.—For purposes of

10 subsection (a)—

11 ‘‘(A) IN GENERAL.—The energy efficient com12 mercial building property deduction determined

13 under this subsection is an amount equal to energy

14 efficient commercial building property expenditures

15 made by a taxpayer for the taxable year.

16 ‘‘(B) MAXIMUM AMOUNT OF DEDUCTION.—The

17 amount of energy efficient commercial building prop18 erty expenditures taken into account under subpara19 graph (A) shall not exceed an amount equal to the

20 product of—

21 ‘‘(i) $2.25, and

22 ‘‘(ii) the square footage of the building

23 with respect to which the expenditures are

24 made.
25

S 2904 IS

1 ‘‘(C) YEAR DEDUCTION ALLOWED.—The deduc2 tion under subparagraph (A) shall be allowed in the

3 taxable year in which the construction of the build4 ing is completed.

5 ‘‘(2) ENERGY EFFICIENT COMMERCIAL BUILDING

6 PROPERTY EXPENDITURES.—For purposes of this sub7 section, the term ‘energy efficient commercial building

8 property expenditures’ means an amount paid or incurred

9 for energy efficient commercial building property installed

10 on or in connection with new construction or reconstruc11 tion of property—

12 ‘‘(A) for which depreciation is allowable under

13 section 167,

14 ‘‘(B) which is located in the United States, and

15 ‘‘(C) the construction or erection of which is

16 completed by the taxpayer.

17 Such property includes all residential rental property, in18 cluding low-rise multifamily structures and single family

19 housing property which is not within the scope of Stand20 ard 90.1–1999 (described in paragraph (3)). Such term

21 includes expenditures for labor costs properly allocable to

22 the onsite preparation, assembly, or original installation

23 of the property.

24 ‘‘(3) ENERGY EFFICIENT COMMERCIAL BUILDING

25 PROPERTY.—For purposes of paragraph (2)—
26

S 2904 IS

1 ‘‘(A) IN GENERAL.—The term ‘energy efficient

2 commercial building property’ means any property

3 which reduces total annual energy and power costs

4 with respect to the lighting, heating, cooling, ventila5 tion, and hot water supply systems of the building

6 by 50 percent or more in comparison to a reference

7 building which meets the requirements of Standard

8 90.1–1999 of the American Society of Heating, Re9 frigerating, and Air Conditioning Engineers and the

10 Illuminating Engineering Society of North America

11 using methods of calculation under subparagraph

12 (B) and certified by qualified professionals as pro13 vided under paragraph (6).

14 ‘‘(B) METHODS OF CALCULATION.—The Sec15 retary, in consultation with the Secretary of Energy,

16 shall promulgate regulations which describe in detail

17 methods for calculating and verifying energy and

18 power consumption and cost, taking into consider19 ation the provisions of the 1998 California Nonresi20 dential ACM Manual. These procedures shall meet

21 the following requirements:

22 ‘‘(i) In calculating tradeoffs and energy

23 performance, the regulations shall prescribe the

24 costs per unit of energy and power, such as kil25 owatt hour, kilowatt, gallon of fuel oil, and
27

S 2904 IS

1 cubic foot or Btu of natural gas, which may be

2 dependent on time of usage.

3 ‘‘(ii) The calculational methodology shall

4 require that compliance be demonstrated for a

5 whole building. If some systems of the building,

6 such as lighting, are designed later than other

7 systems of the building, the method shall pro8 vide that either—

9 ‘‘(I) the expenses taken into account

10 under paragraph (1) shall not occur until

11 the date designs for all energy-using sys12 tems of the building are completed,

13 ‘‘(II) the energy performance of all

14 systems and components not yet designed

15 shall be assumed to comply minimally with

16 the requirements of such Standard 90.1–

17 1999, or

18 ‘‘(III) the expenses taken into account

19 under paragraph (1) shall be a fraction of

20 such expenses based on the performance of

21 less than all energy-using systems in ac22 cordance with clause (iii).

23 ‘‘(iii) The expenditures in connection with

24 the design of subsystems in the building, such

25 as the envelope, the heating, ventilation, air
28

S 2904 IS

1 conditioning and water heating system, and the

2 lighting system shall be allocated to the appro3 priate building subsystem based on system-spe4 cific energy cost savings targets in regulations

5 promulgated by the Secretary of Energy which

6 are equivalent, using the calculation method7 ology, to the whole building requirement of 50

8 percent savings.

9 ‘‘(iv) The calculational methods under this

10 subparagraph need not comply fully with sec11 tion 11 of such Standard 90.1–1999.

12 ‘‘(v) The calculational methods shall be

13 fuel neutral, such that the same energy effi14 ciency features shall qualify a building for the

15 deduction under this subsection regardless of

16 whether the heating source is a gas or oil fur17 nace or an electric heat pump.

18 ‘‘(vi) The calculational methods shall pro19 vide appropriate calculated energy savings for

20 design methods and technologies not otherwise

21 credited in either such Standard 90.1–1999 or

22 in the 1998 California Nonresidential ACM

23 Manual, including the following:

24 ‘‘(I) Natural ventilation.

25 ‘‘(II) Evaporative cooling.
29

S 2904 IS

1 ‘‘(III) Automatic lighting controls

2 such as occupancy sensors, photocells, and

3 timeclocks.

4 ‘‘(IV) Daylighting.

5 ‘‘(V) Designs utilizing semi-condi6 tioned spaces that maintain adequate com7 fort conditions without air conditioning or

8 without heating.

9 ‘‘(VI) Improved fan system efficiency,

10 including reductions in static pressure.

11 ‘‘(VII) Advanced unloading mecha12 nisms for mechanical cooling, such as mul13 tiple or variable speed compressors.

14 ‘‘(VIII) The calculational methods

15 may take into account the extent of com16 missioning in the building, and allow the

17 taxpayer to take into account measured

18 performance that exceeds typical perform19 ance.

20 ‘‘(C) COMPUTER SOFTWARE.—

21 ‘‘(i) IN GENERAL.—Any calculation under

22 this paragraph shall be prepared by qualified

23 computer software.
30

S 2904 IS

1 ‘‘(ii) QUALIFIED COMPUTER SOFTWARE.—

2 For purposes of this subparagraph, the term

3 ‘qualified computer software’ means software—

4 ‘‘(I) for which the software designer

5 has certified that the software meets all

6 procedures and detailed methods for

7 caculating energy and power consumption

8 and costs as required by the Secretary.

9 ‘‘(II) which provides such forms as re10 quired to be filed by the Secretary in con11 nection with energy efficiency of property

12 and the deduction allowed under this sub13 section, and

14 ‘‘(III) which provides a notice form

15 which summarizes the energy efficiency

16 features of the building and its projected

17 annual energy costs.

18 ‘‘(4) ALLOCATION OF DEDUCTION FOR PUBLIC PROP19 ERTY.—In the case of energy efficient commercial building

20 property installed on or in public property, the Secretary

21 shall promulgate a regulation to allow the allocation of the

22 deduction to the person primarily responsible for designing

23 the property in lieu of the public entity which is the owner

24 of such property. Such person shall be treated as the tax

25 payer for purposes of this subsection.
31

S 2904 IS

1 ‘‘(5) NOTICE TO OWNER.—The qualified individual

2 shall provide an explanation to the owner of the building

3 regarding the energy efficiency features of the building

4 and its projected annual energy costs as provided in the

5 notice under paragraph (3)(C)(ii)(III).

6 ‘‘(6) CERTIFICATION.—

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

8 paragraph, the Secretary, in consultation with the

9 Secretary of Energy, shall establish requirements for

10 certification and compliance procedures similar to

11 the procedures under section 25B(c)(7).

12 ‘‘(B) QUALIFIED INDIVIDUALS.—Individuals

13 qualified to determine compliance shall be only those

14 individuals who are recognized by an organization

15 certified by the Secretary for such purposes.

16 ‘‘(C) PROFICIENCY OF QUALIFIED INDIVID17 UALS.—The Secretary shall consult with nonprofit

18 organizations and State agencies with expertise in

19 energy efficiency calculations and inspections to de20 velop proficiency tests and training programs to

21 qualify individuals to determine compliance.

22 ‘‘(g) TERMINATION.—This section shall not apply

23 with respect to—
32

S 2904 IS

1 ‘‘(1) any energy property placed in service be2 fore December 31, 2000, and after December 31,

3 2006, and

4 ‘‘(2) any energy efficient commercial building

5 property expenditures in connection with property—

6 ‘‘(A) the plans for which are not certified

7 under subsection (f)(6) on or before December

8 31, 2006, and

9 ‘‘(B) the construction of which is not com10 pleted on or before December 31, 2008.’’

11 TITLE II—NONBUSINESS

12 ENERGY SYSTEMS

13 SEC. 201. CREDIT FOR CERTAIN NONBUSINESS ENERGY

14 SYSTEMS.

15 (a) IN GENERAL.—Subpart A of part IV of sub16 chapter A of chapter 1 (relating to nonrefundable personal

17 credits) is amended by inserting after section 25A the fol18 lowing:

19 ‘‘SEC. 25B. NONBUSINESS ENERGY PROPERTY.

20 ‘‘(a) ALLOWANCE OF CREDIT.—

21 ‘‘(1) IN GENERAL.—In the case of an indi22 vidual, there shall be allowed as a credit against the

23 tax imposed by this chapter for the taxable year an

24 amount equal to the sum of—
33

S 2904 IS

1 ‘‘(A) the applicable percentage of residen2 tial energy property expenditures made by the

3 taxpayer during such year,

4 ‘‘(B) the credit amount (determined under

5 section 48A(e)) for each vehicle purchased dur6 ing the taxable year which is a qualified hybrid

7 vehicle (as defined in section 48A(e)(2)), and

8 ‘‘(C) the credit amount specified in the fol9 lowing table for a new, highly energy-efficient

10 principal residence:

In the case of:

The credit amount

is:

For the period:

Beginning on:Ending

on:

30 percent property ........................ $1,000 1/1/2001 12/31/2002

50 percent property ........................ $2,000 1/1/2001 12/31/2004.

11 In the case of any new, highly energy-efficient

12 principal residence, the credit amount shall be

13 zero for any period for which a credit amount

14 is not specified for such property in the table

15 under subparagraph (C).

16 ‘‘(2) APPLICABLE PERCENTAGE.—

17 ‘‘(A) IN GENERAL.—The applicable per18 centage shall be determined in accordance with

19 the following table:

In the case of: Percentage is:

For the period:

Beginning on:Ending

on:

20% energy-eff. bldg. prop ............. 20 1/1/2001 12/31/2004
34

S 2904 IS

In the case of: Percentage is:

For the period:

Beginning on:Ending

on:

10% energy-eff. bldg. prop ............. 10 1/1/2001 12/31/2002

Solar water heating property ......... 15 1/1/2001 12/31/2007

Photovoltaic property ..................... 15 1/1/2001 12/31/2007.

1 ‘‘(B) PERIODS FOR WHICH PERCENTAGE

2 NOT SPECIFIED.—In the case of any residential

3 energy property, the applicable percentage shall

4 be zero for any period for which an applicable

5 percentage is not specified for such property

6 under subparagraph (A).

7 ‘‘(b) MAXIMUM CREDIT.—

8 ‘‘(1) IN GENERAL.—In the case of property de9 scribed in the following table, the amount of the

10 credit allowed under subsection (a)(1)(A) for the

11 taxable year for each item of such property with re12 spect to a dwelling unit shall not exceed the amount

13 specified for such property in such table:

Description of property item: Maximum allowable credit

amount is:

20 percent energy-efficient building property (other than a fuel

cell or natural gas heat pump).

$500.

20 percent energy-efficient building property fuel cell described

in section 48A(d)(3)(A)(i).

$500 per each kw/hr of capacity.

Natural gas heat pump described

in section 48A(d)(3)(D)(iv).

$1,000.

10 percent energy-efficient building property.$250.

Solar water heating property ......... $1,000.

Photovoltaic property .................... $2,000.

14 (2) COORDINATION OF LIMITATIONS.—If a

15 credit is allowed to the taxpayer for any taxable year
35

S 2904 IS

1 by reason of an acquisition of a new, highly energy2 efficient principal residence, no other credit shall be

3 allowed under subsection (a)(1)(A) with respect to

4 such residence during the 1-taxable year period be5 ginning with such taxable year.

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

7 ‘‘(1) RESIDENTIAL ENERGY PROPERTY EX8 PENDITURES.—The term ‘residential energy prop9 erty expenditures’ means expenditures made by the

10 taxpayer for qualified energy property installed on or

11 in connection with a dwelling unit which—

12 ‘‘(A) is located in the United States, and

13 ‘‘(B) is used by the taxpayer as a resi14 dence.

15 Such term includes expenditures for labor costs

16 properly allocable to the onsite preparation, assem17 bly, or original installation of the property.

18 ‘‘(2) QUALIFIED ENERGY PROPERTY.—

19 ‘‘(A) IN GENERAL.—The term ‘qualified

20 energy property’ means—

21 ‘‘(i) energy-efficient building property,

22 ‘‘(ii) solar water heating property, and

23 ‘‘(iii) photovoltaic property.

24 ‘‘(B) SWIMMING POOL, ETC., USED AS

25 STORAGE MEDIUM; SOLAR PANELS.—For pur-
36

S 2904 IS

1 poses of this paragraph, the provisions of sub2 paragraphs (B) and (C) of section 48A(d)(1)

3 shall apply.

4 ‘‘(3) ENERGY-EFFICIENT BUILDING PROP5 ERTY.—The term ‘energy-efficient building property’

6 has the meaning given to such term by section

7 48A(e)(3).

8 ‘‘(4) SOLAR WATER HEATING PROPERTY.—The

9 term ‘solar water heating property’ means property

10 which, when installed in connection with a structure,

11 uses solar energy for the purpose of providing hot

12 water for use within such structure.

13 ‘‘(5) PHOTOVOLTAIC PROPERTY.—The term

14 ‘photovoltaic property’ means property which, when

15 installed in connection with a structure, uses a solar

16 photovoltaic process to generate electricity for use in

17 such structure.

18 ‘‘(6) NEW, HIGHLY ENERGY-EFFICIENT PRIN19 CIPAL RESIDENCE.—

20 ‘‘(A) IN GENERAL.—Property is a new,

21 highly energy-efficient principal residence if—

22 ‘‘(i) such property is located in the

23 United States,

24 ‘‘(ii) the original use of such property

25 commences with the taxpayer and is, at
37

S 2904 IS

1 the time of such use, the principal resi2 dence of the taxpayer, and

3 ‘‘(iii) such property is certified before

4 such use commences as being 50 percent

5 property or 30 percent property.

6 ‘‘(B) 50 OR 30 PERCENT PROPERTY.—

7 ‘‘(i) IN GENERAL.—For purposes of

8 subparagraph (A), property is 50 percent

9 property or 30 percent property if the pro10 jected energy usage of such property is re11 duced by 50 percent or 30 percent, respec12 tively, compared to the energy usage of a

13 reference house that complies with min14 imum standard practice, such as the 1998

15 International Energy Conservation Code of

16 the International Code Council, as deter17 mined according to the requirements speci18 fied in clause (ii).

19 ‘‘(ii) PROCEDURES.—

20 ‘‘(I) IN GENERAL.—For purposes

21 of clause (i), energy usage shall be

22 demonstrated either by a component23 based approach or a performance24 based approach.
38

S 2904 IS

1 ‘‘(II) COMPONENT APPROACH.—

2 Compliance by the component ap3 proach is achieved when all of the

4 components of the house comply with

5 the requirements of prescriptive pack6 ages established by the Secretary of

7 Energy, in consultation with the Ad8 ministrator of the Environmental Pro9 tection Agency, such that they are

10 equivalent to the results of using the

11 performance-based approach of sub12 clause (III) to achieve the required re13 duction in energy usage.

14 ‘‘(III) PERFORMANCE-BASED AP15 PROACH.—Performance-based compli16 ance shall be demonstrated in terms

17 of the required percentage reductions

18 in projected energy use. Computer

19 software used in support of perform20 ance-based compliance must meet all

21 of the procedures and methods for

22 calculating energy savings reductions

23 that are promulgated by the Secretary

24 of Energy. Such regulations on the

25 specifications for software shall be
39

S 2904 IS

1 based in the 1998 California Residen2 tial Alternative Calculation Method

3 Approval Manual, except that the cal4 culation procedures shall be developed

5 such that the same energy efficiency

6 measures qualify as a home for tax

7 credits regardless of whether the home

8 uses a gas or oil furnace or boiler, or

9 an electric heat pump.

10 ‘‘(IV) APPROVAL OF SOFTWARE

11 SUBMISSIONS.—The Secretary of En12 ergy shall approve software submis13 sions that comply with the calculation

14 requirements of subclause (III).

15 ‘‘(C) DETERMINATIONS OF COMPLIANCE.—

16 A determination of compliance made for the

17 purposes of this paragraph shall be filed with

18 the Secretary of Energy within 1 year of the

19 date of such determination and shall include the

20 TIN of the certifer, the address of the building

21 in compliance, and the identity of the person

22 for whom such determination was performed.

23 Determinations of compliance filed within the

24 Secretary of Energy shall be available for in25 spection by the Secretary.
40

S 2904 IS

1 ‘‘(D) COMPLIANCE.—

2 ‘‘(i) IN GENERAL.—The Secretary of

3 Energy in consultation with the Secretary

4 of the Treasury shall establish require5 ments for certification and compliance pro6 cedures after examining the requirements

7 for energy consultants and home energy

8 ratings providers specified by the Mortgage

9 Industry National Accreditation Proce10 dures for Home Energy Rating Systems.

11 ‘‘(ii) INDIVIDUALS QUALIFIED TO DE12 TERMINE COMPLIANCE.—Indivdiuals quali13 fied to determine compliance shall be only

14 those individuals who are recognized by an

15 organization certified by the Secretary of

16 Energy for such purposes.

17 ‘‘(E) PRINCIPAL RESIDENCE.—The term ‘prin18 cipal residence’ has the same meaning as when

19 used in section 121, except that the period for

20 which a building is treated as the principal resi21 dence of the taxpayer shall also include the 60-

22 day period ending on the 1st day on which it

23 would (but for this subparagraph) first be

24 treated as the taxpayer’s principal residence.
41

S 2904 IS

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

2 section—

3 ‘‘(1) DOLLAR AMOUNTS IN CASE OF JOINT OC4 CUPANCY.—In the case of any dwelling unit which if

5 jointly occupied and used during any calendar year

6 as a residence by 2 or more individuals the following

7 shall apply:

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

9 under subsection (a) by reason of expenditures

10 made during each calendar year by any of such

11 individuals with respect to such dwelling unit

12 shall be determined by treating all of such indi13 viduals as 1 taxpayer whose taxable year is

14 such calendar year.

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

16 to such expenditures to each of such individ17 uals, a credit under subsection (a) for the tax18 able year in which such calendar year ends in

19 an amount which bears the same ratio to the

20 amount determined under subparagraph (A) as

21 the amount of such expenditures made by such

22 individuals during such calendar year bears to

23 the aggregate of such expenditures made by all

24 of such individuals during such calendar year.
42

S 2904 IS

1 ‘‘(2) TENANT-STOCKHOLDER IN COOPERATIVE

2 HOUSING CORPORATION.—In the case of an indi3 vidual who is a tenant-stockholder (as defined in sec4 tion 216) in a cooperative housing corporation (as

5 defined in such section), such individual shall be

6 treated as having made his tenant-stockholder’s

7 proportinate share (as defined in section 216(b)(3))

8 of any expenditures of such corporation.

9 ‘‘(3) CONDOMINIUMS.—

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

11 individiual who is a member of a condominium

12 management association with respect to a con13 dominium which the individual owns, such indi14 vidual shall be treated as having made his pro15 portionate share of any expenditures of such as16 sociation.

17 ‘‘(B) CONDOMINIUM MANAGEMENT ASSO18 CIATION.—For purpose of this paragraph, the

19 ‘condominium management association’ means

20 an organization which meets the requirements

21 of paragraph (1) of section 528(c) (other than

22 subparagraph (E) thereof) with respect to a

23 condominimum project substantially all of the

24 units of which are used as residences.

25 ‘‘(4) JOINT OWNERSHIP OF ENERGY ITEMS.—
43

S 2904 IS

1 ‘‘(A) IN GENERAL.—Any expenditure oth2 erwise qualifying as a residential energy prop3 erty expenditure shall not be treated as failing

4 to so qualify merely because such expenditure

5 was made with respect to 2 or more dwelling

6 units.

7 ‘‘(B) LIMITS APPLIED SEPARATELY.—In

8 the case of any ependiture described in sub9 paragraph (A), the amount of the credit allow10 able under subsection (a) shall (subject to para11 graph (1)) be computed separately with respect

12 to the amount of the expenditure made for each

13 dwelling unit.

14 ‘‘(5) ALLOCATION IN CERTAIN CASES.—

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

16 subparagraph (B), if less than 80 percent of

17 the use of an item as for nonbusiness purposes,

18 only that portion of the expenditures for such

19 item which is properly allocable to use for non20 business purposes shall be taken into account.

21 For purposes of this paragraph, use for a swim22 ming pool shall be treated as use which is not

23 for nonbusiness purposes.

24 ‘‘(B) SPECIAL RULE FOR VEHICLES.—For

25 purposes of this section and section 48A, a ve-
44

S 2904 IS

1 hicle shall be treated as used entirely for busi2 ness or nonbusiness purposes if the majority of

3 the use of such vehicle is for business or non4 business purposes, as the case may be.

5 ‘‘(6) DOUBLE BENEFIT; PROPERTY USED OUT6 SIDE UNITED STATES, ETC., NOT QUALIFIED.—No

7 credit shall be allowed under subsection (a)(1)(B)

8 with respect to—

9 ‘‘(A) any property for which a credit is al10 lowed under section 30 or 48A.

11 ‘‘(B) any property referrerd to in section

12 50(b), and

13 ‘‘(C) the portion of the cost of any prop14 erty taken into account under section 179 or

15 179A.

16 ‘‘(7) WHEN EXPENDITURE MADE; AMOUNT OF

17 EXPENDITURE.—

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

19 subparagraph (B), an expenditure with respect

20 to an item shall be treated as made when the

21 original installation of the item is completed.

22 ‘‘(B) EXPENDITURES PART OF BUILDING

23 CONSTRUCTION.—In the case of an expenditure

24 in connection with the construction of a struc25 ture, such expenditure shall be treated as made
45

S 2904 IS

1 when the original use of the constructed struc2 ture by the taxpayer begins.

3 ‘‘(C) AMOUNT.—The amount of any ex4 penditure shall be the cost thereof.

5 ‘‘(8) PROPERTY FINANCED BY SUBSIDIZED EN6 ERGY FINANCING.—

7 ‘‘(A) REDUCTION OF EXPENDITURES.—

8 For purposes of determining the amount of res9 idential energy property expenditures made by

10 any individual with respect to any dwelling unit,

11 there shall not be taken in to account expendi12 tures which are made from subsidized energy fi13 nancing (as defined in section 48A(f)(1)(C)).

14 ‘‘(B) DOLLAR LIMITS REDUCED.—The dol15 lar amounts in the table contained in subsection

16 (b)(1) with respect to each property purchased

17 for such dwelling unit for any taxable year of

18 such taxpayer shall be reduced proportionately

19 by an amount equal to the sum of—

20 ‘‘(i) the amount of the expenditures

21 made by the taxpayer during such taxable

22 year with respect to such dwelling unit and

23 not taken into account by reason of sub24 paragraph (A), and
46

S 2904 IS

1 ‘‘(ii) the amount of any Federal,

2 State, or local grant received by the tax3 payer during such taxable year which is

4 used to make residential energy property

5 expenditures with respect to the dwelling

6 unit and is not included in the gross in7 come of such taxpayer.

8 ‘‘(9) SAFETY CERTIFICATIONS.—No credit shall

9 be allowed under this section for an item of property

10 unless—

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

12 property, such property is certified for perform13 ance and safety by the non-profit Solar Rating

14 Certification Corporation or a comparable enti15 ty endorsed by the government of the State in

16 which such property is installed, and

17 ‘‘(B) in the case of photovoltaic property,

18 such property meets appropriate fire and elec19 tric code requirements.

20 ‘‘(e) BASIS ADJUSTMENTS.—For purposes of this

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

22 expenditure with respect to any property, the increase in

23 the basis of such property which would (but for this sub24 section) result from such expenditure shall be reduced by

25 the amount of the credit so allowed.’’
47

S 2904 IS

1 (b) CONFORMING AMENDMENTS.—

2 (1) Section 1016(a) is amended by striking

3 ‘‘and’’ at the end of paragraph (26), by striking the

4 period at the end of paragraph (27) and inserting ‘‘;

5 and’’, and by adding at the end the following:

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

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

8 has been allowed under section 25B.’’

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

10 IV of subchapter A of chapter 1 is amended by in11 serting after the item relating to section 25A the

12 following:

‘‘Sec. 25B. Nonbusiness energy property.’’

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

14 this section shall apply to expenditures after December 31,

15 2000.

16 TITLE III—ALTERNATIVE FUELS

17 SEC. 301. ALLOCATION OF ALCOHOL FUELS CREDIT TO

18 PATRONS OF A COOPERATIVE.

19 (a) IN GENERAL.—Section 40(d) (relating to alcohol

20 used as fuel) is amended by adding at the end the fol21 lowing:

22 ‘‘(6) ALLOCATION OF SMALL ETHANOL PRO23 DUCER CREDIT TO PATRONS OF COOPERATIVE.—

24 ‘‘(A) IN GENERAL.—In the case of a coop25 erative organization described in section
48

S 2904 IS

1 1381(a), any portion of the credit determined

2 under subsection (a)(3) for the taxable year

3 may, at the election of the organization made

4 on a timely filed return (including extensions)

5 for such year, be apportioned pro rata among

6 patrons of the organization on the basis of the

7 quantity or value of business done with or for

8 such patrons for the taxable year. Such an elec9 tion, once made, shall be irrevocable for such

10 taxable year.

11 ‘‘(B) TREATMENT OF ORGANIZATIONS AND

12 PATRONS.—The amount of the credit appor13 tioned to patrons pursuant to subparagraph

14 (A)—

15 ‘‘(i) shall not be included in the

16 amount determined under subsection (a)

17 for the taxable year of the organization,

18 and

19 ‘‘(ii) shall be included in the amount

20 determined under subsection (a) for the

21 taxable year of each patron in which the

22 patronage dividend for the taxable year re23 ferred to in subparagraph (A) is includible

24 in gross income.
49

S 2904 IS

1 ‘‘(C) SPECIAL RULE FOR DECREASING

2 CREDIT FOR TAXABLE YEAR.—If the amount of

3 the credit of a cooperative organization deter4 mined under subsection (a)(3) for a taxable

5 year is less than the amount of such credit

6 shown on the cooperative organization’s return

7 for such year, an amount equal to the excess of

8 such reduction over the amount not apportioned

9 to the patrons under subparagraph (a) for the

10 taxable year shall be treated as an increase in

11 tax imposed by this chapter on the organiza12 tion. Any such increase shall not be treated as

13 tax imposed by this chapter for purposes of de14 termining the amount of any credit under this

15 subpart or subpart A, B, E, or G of this part.’’

16 (b) TECHNICAL AMENDMENT.—Section 1388 (relat17 ing to definitions and special rules for cooperative organi18 zations) is amended by adding at the end the following:

19 ‘‘(k) CROSS REFERENCE.—For provisions relating to

20 the apportionment of the alcohol fuels credit between coop21 erative organizations and their patrons, see section

22 40(d)(6).’’

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

24 this section shall apply to taxable years beginning after

25 December 31, 2000.
50

S 2904 IS

1 TITLE IV—AUTOMOBILES

2 SEC. 401. EXTENSION OF CREDIT FOR QUALIFIED ELEC3 TRIC VEHICLES.

4 (a) EXTENSION OF CREDIT FOR QUALIFIED ELEC5 TRIC VEHICLES.—Subsection (f) of section 30 (relating to

6 termination) is amended by striking ‘‘December 31, 2004’’

7 and inserting ‘‘December 31, 2006’’.

8 (b) REPEAL OF PHASEOUT.—Subsection (b) of sec9 tion 30 (relating to limitations) is amended by striking

10 paragraph (2) and redesignating paragraph (3) as para11 graph (2).

12 (c) NO DOUBLE BENEFIT.—

13 (1) Subsection (d) of section 30 (relating to

14 special rules) is amended by adding at the end the

15 following:

16 ‘‘(5) NO DOUBLE BENEFIT.—No credit shall be

17 allowed under subsection (a) with respect to any ve18 hicle if the taxpayer claims a credit for such vehicle

19 under section 25B(a)(1)(B) or 48A(a)(2).’’

20 (2) Paragraph (3) of section 30(d) (relating to

21 property used outside United States, etc., not quali22 fied) is amended by striking ‘‘section 50(b)’’ and in23 serting ‘‘section 25B, 48A, or 50(b)’’.

24 (3) Paragraph (5) of section 179A(e) (relating

25 to property used outside United States, etc., not
51

S 2904 IS

1 qualified) is amended by striking ‘‘section 50(b)’’

2 and inserting ‘‘section 25B, 48A, or 50(b)’’.

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

4 this section shall apply to property placed in service after

5 December 31, 2000.

6 SEC. 402. ADDITIONAL DEDUCTION FOR COST OF INSTAL7 LATION OF ALTERNATIVE FUELING STA8 TIONS.

9 (a) IN GENERAL.—Subparagraph (A) of section

10 179A(b)(2) of the Internal Revenue Code of 1986 (relat11 ing to qualified clean-fuel vehicle refueling property) is

12 amended to read as follows:

13 ‘‘(A) IN GENERAL.—The aggregate cost

14 which may be taken into account under sub15 section (a)(1)(B) with respect to qualified

16 clean-fuel vehicle refueling property placed in

17 service during the taxable year at a location

18 shall not exceed the sum of—

19 ‘‘(i) with respect to costs not de20 scribed in clause (ii), the excess (if any)

21 of—

22 ‘‘(I) $100,000, over

23 ‘‘(II) the aggregate amount of

24 such costs taken into account under

25 subsection (a)(1)(B) by the taxpayer
52

S 2904 IS

1 (or any related person or predecessor)

2 with respect to property placed in

3 service at such location for all pre4 ceding taxable years, plus

5 ‘‘(ii) the lesser of—

6 ‘‘(I) the cost of the installation of

7 such property, or

8 ‘‘(II) $30,000.’’.

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

10 this section shall apply to property placed in service after

11 December 31, 2000.

12 SEC. 403. CREDIT FOR RETAIL SALE OF CLEAN BURNING

13 FUELS AS MOTOR VEHICLE FUEL.

14 (a) IN GENERAL.—Subpart D of part IV of sub15 chapter A of chapter 1 of the Internal Revenue Code of

16 1986 (relating to business related credits) is amended by

17 inserting after section 40 the following:

18 ‘‘SEC. 40A. CREDIT FOR RETAIL SALE OF CLEAN BURNING

19 FUELS AS MOTOR VEHICLE FUEL.

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

21 the clean burning fuel retail sales credit of any taxpayer

22 for any taxable year is 50 cents for each gasoline gallon

23 equivalent of clean burning fuel sold at retail by the tax24 payer during such year as a fuel to propel any qualified

25 motor vehicle.
53

S 2904 IS

1 ‘‘(b) DEFINITIONS.—For purposes of this section—

2 ‘‘(1) CLEAN BURNING FUEL.—The term ‘clean

3 burning fuel’ means natural gas, compressed natural

4 gas, liquefied natural gas, liquefied petroleum gas,

5 hydrogen, and any liquid at least 85 percent of

6 which consists of methanol.

7 ‘‘(2) GASOLINE GALLON EQUIVALENT.—The

8 term ‘gasoline gallon equivalent’ means, with respect

9 to any clean burning fuel, the amount (determined

10 by the Secretary) of such fuel having a Btu content

11 of 114,000.

12 ‘‘(3) QUALIFIED MOTOR VEHICLE.—The term

13 ‘qualified motor vehicle’ means any motor vehicle (as

14 defined in section 179A(e)) which meets any applica15 ble Federal or State emissions standards with re16 spect to each fuel by which such vehicle is designed

17 to be propelled.

18 ‘‘(4) SOLD AT RETAIL.—

19 ‘‘(A) IN GENERAL.—The term ‘sold at re20 tail’ means the sale, for a purpose other than

21 resale, after manufacture, production, or impor22 tation.

23 ‘‘(B) USE TREATED AS SALE.—If any per24 son uses clean burning fuel as a fuel to propel

25 any qualified motor vehicle (including any use
54

S 2904 IS

1 after importation) before such fuel is sold at re2 tail, then such use shall be treated in the same

3 manner as if such fuel were sold at retail as a

4 fuel to propel such vehicle by such person.

5 ‘‘(c) NO DOUBLE BENEFIT.—The amount of the

6 credit determined under subsection (a) shall be reduced

7 by the amount of any deduction or credit allowable under

8 this chapter for fuel taken into account in computing the

9 amount of such credit.

10 ‘‘(d) TERMINATION.—This section shall not apply to

11 any fuel sold at retail after December 31, 2007.’’.

12 (b) CREDIT TREATED AS BUSINESS CREDIT.—Sec13 tion 38(b) of the Internal Revenue Code of 1986 (relating

14 to current year business credit) is amended by striking

15 ‘‘plus’’ at the end of paragraph (11), by striking the period

16 at the end of paragraph (12) and inserting, ‘‘, plus’’, and

17 by adding at the end the following:

18 ‘‘(13) the clean burning fuel retail sales credit

19 determined under section 40A(a).’’.

20 (c) TRANSITIONAL RULE.—Section 39(d) of the In21 ternal Revenue Code of 1986 (relating to transitional

22 rules) is amended by adding at the end the following:

23 ‘‘(9) NO CARRYBACK OF SECTION 40A CREDIT

24 BEFORE EFFECTIVE DATE.—No portion of the un25 used business credit for any taxable year which is
55

S 2904 IS

1 attributable to the clean burning fuel retail sales

2 credit determined under section 40A(a) may be car3 ried back to a taxable year ending before January

4 1, 2000.’’.

5 (d) CLERICAL AMENDMENT.—The table of sections

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

7 of the Internal Revenue Code of 1986 is amended by in8 serting after the item relating to section 40 the following:

‘‘Sec. 40A. Credit for retail sale of clean burning fuels as motor

vehicle fuel.’’.

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

10 this section shall apply to fuel sold at retail after Decem11 ber 31, 2000, in taxable years ending after such date.

12 SEC. 404. EXCEPTION TO HOV PASSENGER REQUIREMENTS

13 FOR ALTERNATIVE FUEL VEHICLES.

14 Section 102(a) of title 23, United States Code, is

15 amended by inserting ‘‘(unless, at the discretion of the

16 State highway department, the vehicle operates on, or is

17 fueled by, an alternative fuel (as defined in section 301

18 of Public Law 102–486 (42 U.S.C. 13211(2)))’’ after ‘‘re19 quired’’.
56

S 2904 IS

1 TITLE V—CLEAN COAL

2 TECHNOLOGIES

3 SEC. 501. CREDIT FOR INVESTMENT IN QUALIFFYING

4 CLEAN COAL TECHNOLOGY.

5 (a) ALLOWANCE OF QUALIFYING CLEAN COAL

6 TECHNOLOGY FACILITY CREDIT.—Section 46 (relating to

7 amount of credit) is amended by striking ‘‘and’’ at the

8 end of paragraph (2), by striking the period at the end

9 of paragraph (3) and inserting ‘‘, and’’, and by adding

10 at the end the following:

11 ‘‘(4) the qualifying clean coal technology facility

12 credit.’’

13 (b) AMOUNT OF QUALIFYING CLEAN COAL TECH14 NOLOGY FACILITY CREDIT.—Subpart E of part IV of sub15 chapter A of chapter 1 (relating to rules for computing

16 investment credit), as amended by section 101(a), is

17 amended by inserting after section 48A the following:

18 ‘‘SEC. 48B. QUALIFYING CLEAN COAL TECHNOLOGY FACIL19 ITY CREDIT.

20 ‘‘(a) IN GENERAL.—For purposes of section 46, the

21 qualifying clean coal technology facility credit for any tax22 able year is an amount equal to 10 percent of the qualified

23 investment in a qualifying clean coal technology facility

24 for such taxable year.
57

S 2904 IS

1 ‘‘(b) QUALIFYING CLEAN COAL TECHNOLOGY FACIL2 ITY.—

3 ‘‘(1) IN GENERAL.—For purposes of subsection

4 (a), the term ‘qualifying clean coal technology facil5 ity’ means a facility of the taxpayer—

6 ‘‘(A)(i)(I) which replaces a conventional

7 technology facility of the taxpayer and the origi8 nal use of which commences with the taxpayer,

9 or

10 ‘‘(II) which is a retrofitted or repowered

11 conventional technology facility, the retrofitting

12 or repowering of which is completed by the tax13 payer (but only with respect to that portion of

14 the basis which is properly attributable to such

15 retrofitting or repowering), or

16 ‘‘(ii) that is acquired through purchase (as

17 defined by section 179(d)(2)),

18 ‘‘(B) that is depreciable under section 167,

19 ‘‘(C) that has a useful life of not less than

20 4 years,

21 ‘‘(D) that is located in the United States,

22 and

23 ‘‘(E) that uses qualifying clean coal tech24 nology.
58

S 2904 IS

1 ‘‘(2) SPECIAL RULE FOR SALE-LEASEBACKS.—

2 For purposes of subparagraph (A) of paragraph (1),

3 in the case of a facility that—

4 ‘‘(A) is originally placed in service by a

5 person, and

6 ‘‘(B) is sold and leased back by such per7 son, or is leased to such person, within 3

8 months after the date such facility was origi9 nally placed in servcie, for a period of not less

10 than 12 years.

11 such facility shall be treated as originally placed in

12 service not earlier than the date on which such prop13 erty is used under the leaseback (or lease) referred

14 to in subparagraph (B). The preceding sentence

15 shall not apply to any property if the lessee and les16 sor of such property make an election under this

17 sentence. Such an election, once made, may be re18 voked only with the consent of the Secretary.

19 ‘‘(3) QUALIFYING CLEAN COAL TECHNOLOGY.—

20 For purposes of paragraph (1)(A)—

21 ‘‘(A) IN GENERAL.—The term ‘qualifying

22 clean coal technology’ means, with respect to

23 clean coal technology—

24 ‘‘(i) applications totaling 1,000

25 megawatts of advanced pulverized coal or
59

S 2904 IS

1 atmospheric fluidized bed combustion tech2 nology installed as a new, retrofit, or

3 repowering application and operated be4 tween 2000 and 2014 that has a design

5 average net heat rate of not more than

6 8,750 Btu’s per kilowatt hour,

7 ‘‘(ii) applications totaling 1,500

8 megawatts of pressurized fluidized bed

9 combustion technology installed as a new,

10 retrofit, or repowering application and op11 erated between 2000 and 2014 that has a

12 design average net heat rate of not more

13 than 8,400 Btu’s per kilowatt hour,

14 ‘‘(iii) applications totaling 1,500

15 megawatts of integrated gasification com16 bined cycle technology installed as a new,

17 retrofit, or repowering application and op18 erated between 2000 and 2014 that has a

19 design average net heat rate of not more

20 than 8,550 Btu’s per kilowatt hour,

21 ‘‘(iv) applications totaling 2,000

22 megawatts or equivalent of technology for

23 the production of electricity installed as a

24 new, retrofit, or repowering application

25 and operated between 2000 and 2014 that
60

S 2904 IS

1 has a carbon emission rate that is not

2 more than 85 percent of conventional tech3 nology.

4 ‘‘(B) EXCEPTIONS.—Such term shall not

5 include clean coal technology projects receiving

6 or scheduled to receive funding under the Clean

7 Coal Technology Program of the Department of

8 Energy.

9 ‘‘(C) CLEAN COAL TECHNOLOGY.—The

10 term ‘clean coal technology’ means advanced

11 technology that utilizes coal to produce 50 per12 cent or more of its thermal output as electricity

13 including advanced pulverized coal or atmos14 pheric fluidized bed combustion, pressurized flu15 idized bed combustion, integrated gasification

16 combined cycle, and any other technology for

17 the production of electricity that exceeds the

18 performance of conventional technology.

19 ‘‘(D) CONVENTIONAL COAL TECH20 NOLOGY.—The term ‘conventional technology’

21 means—

22 ‘‘(i) coal-fired combustion technology

23 with a design average net heat rate of not

24 less than 9,300 Btu’s per kilowatt hour

25 (HHV) and a carbon equivalents emission
61

S 2904 IS

1 rate of not more than 0.53 pounds of car2 bon per kilowatt hour; or

3 ‘‘(ii) natural gas-fired combustion

4 technology with a design average net heat

5 rate of not less than 7,500 Btu’s per kilo6 watt hour (HHV) and a carbon equivalents

7 emission rate of not more than 0.24 pound

8 of carbon per kilowatt hour.

9 ‘‘(E) DESIGN AVERAGE NET HEAT RATE.—

10 The term ‘design average net heat rate’ shall be

11 based on the design average annual heat input

12 to and the design average annual net electrical

13 output from the qualifying clean coal technology

14 (determined without regard to such technology’s

15 co-generation of steam).

16 ‘‘(F) SELECTION CRITERIA.—Selection cri17 teria for clean coal technology facilities—

18 ‘‘(i) shall be established by the Sec19 retary of Energy as part of a competitive

20 solicitation,

21 ‘‘(ii) shall include primary criteria of

22 minimum design average net heat rate,

23 maximum design average thermal effi24 ciency, and lowest cost to the government,

25 and
62

S 2904 IS

1 ‘‘(iii) shall include supplemental cri2 teria as determined appropriate by the

3 Secretary of Energy.

4 ‘‘(c) QUALIFIED INVESTMENT.—For purposes of sub5 section (a), the term ‘qualified investment’ means, with

6 respect to any taxable year, the basis of a qualifying clean

7 coal technology facility placed in service by the taxpayer

8 during such taxable year.

9 ‘‘(d) QUALIFIED PROGRESS EXPENDITURES.—

10 ‘‘(1) INCREASE IN QUALIFIED INVESTMENT.—

11 In the case of a taxpayer who has made an election

12 under paragraph (5), the amount of the qualified in13 vestment of such taxpayer for the taxable year (de14 termined under subsection (c) without regard to this

15 section) shall be increased by an amount equal to

16 the aggregate of each qualified progress expenditure

17 for the taxable year with respect to progress expend18 iture property.

19 ‘‘(2) PROGRESS EXPENDITURE PROPERTY DE20 FINED.—For purposes of this subsection, the term

21 ‘progress expenditure property’ means any property

22 being constructed by or for the taxpayer and which

23 it is reasonable to believe will qualify as a qualifying

24 clean coal technology facility which is being con-
63

S 2904 IS

1 structed by or for the taxpayer when it is placed in

2 service.

3 ‘‘(3) QUALIFIED PROGRESS EXPENDITURES DE4 FINED.—For purposes of this subsection—

5 ‘‘(A) SELF-CONSTRUCTED PROPERTY.—In

6 the case of any self-constructed property, the

7 term ‘qualified progress expenditures’ means

8 the amount which, for purposes of this subpart,

9 is properly chargeable (during such taxable

10 year) to capital account with respect to such

11 property.

12 ‘‘(B) NON-SELF-CONSTRUCTED PROP13 ERTY.—In the case of non-self-constructed

14 property, the term ‘qualified progress expendi15 tures’ means the amount paid during the tax16 able year to another person for the construction

17 of such property.

18 ‘‘(4) OTHER DEFINITIONS.—For purposes of

19 this subsection—

20 ‘‘(A) SELF-CONSTRUCTED PROPERTY.—

21 The term ‘self-constructed property’ means

22 property for which it is reasonable to believe

23 that more than half of the construction expendi24 tures will be made directly by the taxpayer.
64

S 2904 IS

1 ‘‘(B) NON-SELF-CONSTRUCTED PROP2 ERTY.—The term ‘non-self-constructed prop3 erty’ means property which is not self-con4 structed property.

5 ‘‘(C) CONSTRUCTION, ETC.—The term

6 ‘construction’ includes reconstruction and erec7 tion, and the term ‘constructed’ includes recon8 structed and erected.

9 ‘‘(D) ONLY CONSTRUCTION OF QUALI10 FYING CLEAN COAL TECHNOLOGY FACILITY TO

11 BE TAKEN INTO ACCOUNT.—Construction shall

12 be taken into account only if, for purposes of

13 this subpart, expenditures therefor are properly

14 chargeable to capital account with respect to

15 the property.

16 ‘‘(5) ELECTION.—An election under this sub17 section may be made at such time and in such man18 ner as the Secretary may by regulations prescribe.

19 Such an election shall apply to the taxable year for

20 which made and to all subsequent taxable years.

21 Such an election, once made, may not be revoked ex22 cept with the consent of the Secretary.

23 ‘‘(e) COORDINATION WITH OTHER CREDITS.—This

24 section shall not apply to any property with respect to

25 which the rehabilitation credit under section 47 or the en-
65

S 2904 IS

1 ergy credit under section 48A is allowed unless the tax2 payer elects to waive the application of such credit to such

3 property.

4 ‘‘(f) TERMINATION.—This section shall not apply

5 with respect to any qualified investment after December

6 31, 2014.’’

7 ‘‘(c) RECAPTURE.—Section 50(a) (relating to other

8 special rules) is amended by adding at the end the fol9 lowing:

10 ‘‘(6) SPECIAL RULES RELATING TO QUALIFYING

11 CLEAN COAL TECHNOLOGY FACILITY.—For purposes

12 of applying this subsection in the case of any credit

13 allowable by reason of section 48B, the following

14 shall apply:

15 ‘‘(A) GENERAL RULE.—In lieu of the

16 amount of the increase in tax under paragraph

17 (1), the increase in tax shall be an amount

18 equal to the investment tax credit allowed under

19 section 38 for all prior taxable years with re20 spect to a qualifying clean coal technology facil21 ity (as defined by section 48B(b)(1)) multiplied

22 by a fraction whose numerator is the number of

23 years remaining to fully depreciate under this

24 title the qualifying clean coal technology facility

25 disposed of, and whose denominator is the total
66

S 2904 IS

1 number of years over which such facility would

2 otherwise have been subject to depreciation. For

3 purposes of the preceding sentence, the year of

4 disposition of the qualifying clean coal tech5 nology facility property shall be treated as a

6 year of remaining 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 clean coal technology facility under

12 section 48B, except that the amount of the in13 crease in tax under subparagraph (A) of this

14 paragraph shall be substituted in lieu of the

15 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 clean coal technology facil20 ity.’’

21 (d) TRANSITIONAL RULE.—Section 39(d) of the In22 ternal Revenue Code of 1986 (relating to transitional

23 rules), as amended by section 101(b)(2), is amended by

24 adding at the end the following:
67

S 2904 IS

1 ‘‘(10) NO CARRYBACK OF SECTION 48B CREDIT

2 BEFORE EFFECTIVE DATE.—No portion of the un3 used business credit for any taxable year which is

4 attributable to the qualifying clean coal technology

5 facility credit determined under section 48B may be

6 carried back to a taxable year ending before the date

7 of the enactment of section 48B.’’

8 (e) TECHNICAL AMENDMENTS.—

9 (1) Section 49(a)(1)(C) is amended by striking

10 ‘‘and’’ at the end of clause (ii), by striking the pe11 riod at the end of clause (iii) and inserting ‘‘, and’’,

12 and by adding at the end the following:

13 ‘‘(iv) the portion of the basis of

14 any qualifying clean coal technology

15 facility attributable to any qualified

16 investment (as defined by section

17 48B(c)).’’

18 (2) Section 50(a)(4) is amended by striking

19 ‘‘and (2)’’ and inserting ‘‘, (2), and (6)’’.

20 (3) The table of sections for subpart E of part

21 IV of subchapter A of chapter 1, as amended by sec22 tion 101(d), is amended by inserting after the item

23 relating to section 48A the following:

‘‘Sec. 48B. Qualifying clean coal technology facility credit.’’

24 (f) EFFECTIVE DATE.—The amendments made by

25 this section shall apply to periods after December 31,
68

S 2904 IS

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. 502. CREDIT FOR PRODUCTION FROM QUALIFYING

6 CLEAN COAL TECHNOLOGY.

7 (a) CREDIT FOR PRODUCTION FROM QUALIFYING

8 CLEAN COAL TECHNOLOGY.—Subpart D of part IV of

9 subchapter A of chapter 1 (relating to business related

10 credits) is amended by adding at the end the following:

11 ‘‘SEC. 45D. CREDIT FOR PRODUCTION FROM QUALIFYING

12 CLEAN COAL TECHNOLOGY.

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

14 the qualifying clean coal technology production credit of

15 any taxpayer for any taxable year is equal to the applica16 ble amount for each kilowatt hour—

17 ‘‘(1) produced by the taxpayer at a qualifying

18 clean coal technology facility during the 10-year pe19 riod beginning on the date the facility was originally

20 placed in service, and

21 ‘‘(2) sold by the taxpayer to an unrelated per22 son during such taxable year.

23 ‘‘(b) APPLICABLE AMOUNT.—For purposes of this

24 section, the applicable amount with respect to production
69

S 2904 IS

1 from a qualifying clean coal technology facility shall be

2 determined as follows:

3 ‘‘(1) In the case of a facility originally placed

4 in service before 2007, if—

‘‘The facility design average net heat

rate, Btu/kWh (HHV) is equal to:

The applicable

amount is:

For 1st 5

yrs of

such

service

For 2d 5

yrs of

such

service

Not more than 8400 ............................................... $.0130 $.0110

More than 8400 but not more than 8550 .............. .0100 .0085

More than 8550 but not more than 8750 .............. .0090 .0070.

5 ‘‘(2) In the case of a facility originally placed

6 in service after 2006 and before 2011, if—

‘‘The facility design average net heat

rate, Btu/kWh (HHV) is equal to:

The applicable

amount is:

For 1st 5

yrs of

such

service

For 2d 5

yrs of

such

service

Not more than 7770 ............................................... $.0100 $.0080

More than 7770 but not more than 8125 .............. .0080 .0065

More than 8125 but not more than 8350 .............. .0070 .0055.

7 ‘‘(3) In the case of a facility originally placed

8 in service after 2010 and before 2015, if—

‘‘The facility design average net heat

rate, Btu/kWh (HHV) is equal to:

The applicable

amount is:

For 1st 5

yrs of

such

service

For 2d 5

yrs of

such

service

Not more than 7720 ............................................... $.0085 $.0070

More than 7720 but not more than 7380 .............. .0070 .0045.

9 ‘‘(c) INFLATION ADJUSTMENT FACTOR.—Each

10 amount in paragraphs (1), (2), and (3) shall each be ad11 justed by multiplying such amount by the inflation adjust-
70

S 2904 IS

1 ment factor for the calendar year in which the amount

2 is applied. If any amount as increased under the preceding

3 sentence is not a multiple of 0.01 cent, such amount shall

4 be rounded to the nearest multiple of 0.01 cent.

5 ‘‘(d) DEFINITIONS AND SPECIAL RULES.—For pur6 poses of this section—

7 ‘‘(1) any term used in this section which is also

8 used in section 48B shall have the meaning given

9 such term in section 48B,

10 ‘‘(2) the rules of paragraphs (3), (4), and (5)

11 of section 45 shall apply,

12 ‘‘(3) the term ‘inflation adjustment factor’

13 means, with respect to a calendar year, a fraction

14 the numerator of which is the GDP implicit price

15 deflator for the preceding calendar year and the de16 nominator of which is the GDP implicit price

17 deflator for the calendar year 1998, and

18 ‘‘(4) the term ‘GDP implicit price deflator’

19 means the most recent revision of the implicit price

20 deflator for the gross domestic product as computed

21 by the Department of Commerce before March 15 of

22 the calendar year.’’

23 (b) CREDIT TREATED AS BUSINESS CREDIT.—Sec24 tion 38(b) is amended by striking ‘‘plus’’ at the end of

25 paragraph (11), by striking the period at the end of para-
71

S 2904 IS

1 graph (12) and inserting ‘‘, plus’’, and by adding at the

2 end the following:

3 ‘‘(13) the qualifying clean coal technology pro4 duction credit determined under section 45D(a).’’

5 (c) TRANSITIONAL RULE.—Section 39(d) (relating to

6 transitional rules), as amended by section 501(d), is

7 amended by adding at the end the following:

8 ‘‘(11) NO CARRYACK OF CERTAIN CREDITS BE9 FORE EFFECTIVE DATE.—No portion of the unused

10 business credit for any taxable year which is attrib11 utable to the credits allowable under any section

12 added to this subpart by the amendments made by

13 the Energy Security Tax and Policy Act of 2000

14 may be carried back to a taxable year ending before

15 the date of the enactment of such Act.’’

16 (d) CLERICAL AMENDMENT.—The table of sections

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

18 is amended by adding at the end the following:

‘‘Sec. 45D. Credit for production from qualifying clean coal technology.’’.

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

20 this section shall apply to production after December 31,

21 2000.

22 SEC. 503. RISK POOL FOR QUALIFYING CLEAN COAL TECH23 NOLOGY.

24 (a) ESTABLISHMENT.—The Secretary of the Treas25 ury shall establish a financial risk pool which shall be
72

S 2904 IS

1 available to any United States owner of qualifying clean

2 coal technology (as defined in section 48B(b)(3) of the In3 ternal Revenue Code of 1986) to offset for the first 3 three

4 years of the operation of such technology the costs (not

5 to exceed 5 percent of the total cost of installation) for

6 modifications resulting from the technology’s failure to

7 achieve its design performance.

8 (b) AUTHORIZATION OF APPROPRIATIONS.—There is

9 authorized to be appropriated such sums as are necessary

10 to carry out the purposes of this section.

11 TITLE VI—METHANE RECOVERY

12 SEC. 601. CREDIT FOR CAPTURE OF COALMINE METHANE

13 GAS.

14 (a) CREDIT FOR CAPTURE OF COALMINE METHANE

15 GAS.—Subpart D of part IV of subchapter A of chapter

16 1 (relating to business related credits), as amended by sec17 tion 502(a), is amended by adding at the end the fol18 lowing:

19 ‘‘SEC. 45E. CREDIT FOR CAPTURE OF COALMINE METH20 ANE GAS.

21 ‘‘(b) DEFINITION OF COALMINE METHANE GAS.—

22 The term ‘‘Coalmine Methane Gas’’ as used in this section

23 means any methane gas which is being liberated, or would

24 be liberated, during coal mine operations or as a result

25 of past coal mining operations, or which is extracted up
73

S 2904 IS

1 to ten years in advance of coal mining operations as part

2 of specific plan to mine a coal deposit.

3 ‘‘For the purpose of section 38, the coalmine methane

4 gas capture credit of any taxpayer for any taxable year

5 is $1.21 for each one million British thermal units of

6 coalmine methane gas captured by the taxpayer and uti7 lized as a fuel source or sold by or on behalf of the tax8 payer to an unrelated person during such taxable year

9 (within the meaning of section 45).’’.

10 (b) Credits for the capture of coalmine methane gas

11 shall be earned upon the utilization as a fuel source or

12 sale and delivery of the coalmine methane gas to an unre13 lated party, except that credit for coalmine methane gas

14 which is captured in advance of mining operations shall

15 be claimed only after coal extraction occurs in the imme16 diate area where the coalmine methane gas was removed.

17 (c) CREDIT TREATED AS BUSINESS CREDIT.—Sec18 tion 38(b), as amended by section 502(b), is amended by

19 striking ‘‘plus’’ at the end of paragraph (12), by striking

20 the period at the end of paragraph (13) and inserting

21 ‘‘, plus’’, and by adding at the end the following:

22 ‘‘(14) the coalmine methane gas capture credit

23 determined under section 45E(a).’’.

24 (d) CLERICAL AMENDMENT.—The table of sections

25 for subpart D of part IV of subchapter A of chapter 1,
74

S 2904 IS

1 as amended by section 502(d), is amended by adding at

2 the end the following:

‘‘Sec. 45E. Credit for the capture of coalmine methane gas.’’.

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

4 this section shall apply to the capture of coalmine methane

5 gas after December 31, 2000, and on or before December

6 31, 2006.

7 TITLE VII—OIL AND GAS

8 PRODUCTION

9 SEC. 701. CREDIT FOR PRODUCTION OR RE-REFINED LU10 BRICATING OIL.

11 (a) IN GENERAL.—Subpart D of part IV of sub12 chapter A of chapter 1 (relating to business related cred13 its), as amended by section 601(a), is amended by adding

14 at the end the following:

15 ‘‘SEC. 45F. CREDIT FOR PRODUCING RE-REFINED LUBRI16 CATING OIL.

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

18 the re-refined lubricating oil production credit of any tax19 payer for any taxable year is equal to $4.05 per barrel

20 of qualified re-refined lubricating oil production which is

21 attributable to the taxpayer (within the meaning of section

22 29(d)(3)).

23 ‘‘(b) QUALIFIED RE-REFINED LUBRICATING OIL

24 PRODUCTION.—For purposes of this section—
75

S 2904 IS

1 ‘‘(1) IN GENERAL.—The term ‘qualified re-re2 fined lubricating oil production’ means a base oil

3 manufactured from at least 95 percent used oil and

4 not more than 2 percent of previously unused oil by

5 a re-refining process which effectively removes phys6 ical and chemical impurities and spent and unspent

7 additives to the extent that such base oil meets in8 dustry standards for engine oil as defined by the

9 American Petroleum Institute document API 1509

10 as in effect on the date of the enactment of this sec11 tion.

12 ‘‘(2) LIMITATION ON AMOUNT OF PRODUCTION

13 WHICH MAY QUALIFY.—Re-refined lubricating oil

14 produced during any taxable year shall not be treat15 ed as qualified re-refined lubricating oil production

16 but only to the extent average daily production dur17 ing the taxable year exceeds 7,000 barrels.

18 ‘‘(3) BARREL.—The term ‘barrel’ has the

19 meaning given such term by section 613A(e)(4).

20 (c) INFLATION ADJUSTMENT.—In the case of any

21 taxable year beginning in a calendar year after 2000, the

22 dollar amount contained in subsection (a) shall be in23 creased to an amount equal to such dollar amount multi24 plied by the inflation adjustment factor for such calendar
76

S 2904 IS

1 year (determined under section 29(d)(2)(B) by sub2 stituting ‘2000’ for ‘1979’).’’.

3 (b) CREDIT TREATED AS BUSINESS CREDIT.—Sec4 tion 38(b) (relating to current year business credit), as

5 amended by section 601(b), is amended by striking ‘plus’

6 at the end of paragraph (13), by striking the period at

7 the end of paragraph (14), and inserting ‘, plus’, and by

8 adding at the end the following:

9 ‘‘(15) the re-refined lubricating oil production

10 credit determined under section 45F(a).’’.

11 (c) CLERICAL AMENDMENT.—The table of sections

12 for subpart D of part IV of subchapter A of chapter 1,

13 as amended by section 601(c), is amended by adding at

14 the end the following:

‘‘Sec. 45F. Credit for producing re-refined lubricating oil.’’.

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

16 this section shall apply to production after December 31,

17 2000.

18 SEC. 702. OIL AND GAS FROM MARGINAL WELLS.

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

20 MARGINAL WELLS.

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

22 the marginal well production credit for any taxable year

23 is an amount equal to the product of—

24 ‘‘(1) the credit amount, and
77

S 2904 IS

1 ‘‘(2) the qualified credit oil production and the

2 qualified natural gas production which is attrib3 utable to the taxpayer.

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

5 section—

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

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

8 production, and

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

10 qualified natural gas production.

11 ‘‘(2) REDUCTION AS OIL AND GAS PRICES IN12 CREASE.—

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

14 amounts under paragraph (1) shall each be re15 duced (but not below zero) by an amount which

16 bears the same ratio to such amount (deter17 mined without regard to this paragraph) as—

18 ‘‘(i) the excess (if any) of the applica19 ble reference price over $14 ($1.56 for

20 qualified natural gas production), bears to

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

22 gas production).

23 The applicable reference price for a taxable

24 year is the reference price of the calendar year
78

S 2904 IS

1 preceding the calendar year in which the tax2 able year begins.

3 ‘‘(B) INFLATION ADJUSTMENT.—In the

4 case of any taxable year beginning in a calendar

5 year after 2000, each of the dollar amounts

6 contained in subparagraph (A) shall be in7 creased to an amount equal to such dollar

8 amount multiplied by the inflation adjustment

9 factor for such calendar year (determined under

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

11 ‘1990’).

12 ‘‘(C) REFERENCE PRICE.—For purposes of

13 this paragraph, the term ‘reference price’

14 means, with respect to any calendar year—

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

16 production, the reference price determined

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

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

19 gas production, the Secretary’s estimate of

20 the annual average wellhead price per

21 1,000 cubic feet for all domestic natural

22 gas.

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

24 PRODUCTION.—For purposes of this section—
79

S 2904 IS

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

2 oil production’ and ‘qualified natural gas production’

3 mean domestic crude oil or natural gas which is pro4 duced from a marginal well.

5 ‘‘(2) LIMITATION ON AMOUNT OF PRODUCTION

6 WHICH MAY QUALIFY.—

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

8 gas produced during any taxable year from any

9 well shall not be treated or qualified crude oil

10 production or qualified natural gas production

11 to the extent production from the well during

12 the taxable year exceeds 1,095 barrels or barrel

13 equivalents.

14 ‘‘(B) PROPORTIONATE REDUCTIONS.—

15 ‘‘(i) SHORT TAXABLE YEARS.—In the

16 case of a short taxable year, the limitations

17 under this paragraph shall be proportion18 ately reduced to reflect the ratio which the

19 number of days in such taxable year bears

20 to 365.

21 ‘‘(ii) WELLS NOT IN PRODUCTION EN22 TIRE YEAR.—In the case of a well which is

23 not capable of production during each day

24 of a taxable year, the limitations under

25 this paragraph applicable to the well shall
80

S 2904 IS

1 be proportionately reduced to reflect the

2 ratio which the number of days of produc3 tion bears to the total number of days in

4 the taxable year.

5 ‘‘(3) DEFINITIONS.—

6 ‘‘(A) MARGINAL WELL.—The term ‘mar7 ginal well’ means a domestic well—

8 ‘‘(i) the production from which during

9 the taxable year is treated as marginal

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

11 ‘‘(ii) which, during the taxable year—

12 ‘‘(I) has average daily production

13 of not more than 25 barrel equiva14 lents, and

15 ‘‘(II) produces water at a rate

16 not less than 95 percent of total well

17 effluent.

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

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

20 the meanings given such terms by section

21 613A(e).

22 ‘‘(C) BARREL EQUIVALENT.—The term

23 ‘barrel equivalent’ means, with respect to nat24 ural gas, a conversation ratio of 6,000 cubic

25 feet of natural gas to 1 barrel of crude oil.
81

S 2904 IS

1 ‘‘(d) OTHER RULES.—

2 ‘‘(1) PRODUCTION ATTRIBUTABLE TO THE TAX3 PAYER.—In the case of a marginal well in which

4 there is more than one owner of operating interests

5 in the well and the crude oil or natural gas produc6 tion exceeds the limitation under subsection (c)(2),

7 qualifying crude oil production or qualifying natural

8 gas production attributable to the taxpayer shall be

9 determined on the basis of the ratio which tax10 payer’s revenue interest in the production bears to

11 the aggregate of the revenue interests of all oper12 ating interest owners in the production.

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

14 credit under this section may be claimed only on

15 production which is attributable to the holder of an

16 operating interest.

17 ‘‘(3) PRODUCTION FROM NONCONVENTIONAL

18 SOURCES EXCLUDED.—In the case of production

19 from a marginal well which is eligible for the credit

20 allowed under section 29 for the taxable year, no

21 credit shall be allowable under this section unless

22 the taxpayer elects not to claim the credit under sec23 tion 29 with respect to the well.’’.

24 (c) CREDIT TREATED AS BUSINESS CREDIT.—Sec25 tion 38(b) is amended by striking ‘plus’ at the end of para-
82

S 2904 IS

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

2 (12) and inserting ‘, plus’, and by adding at the end the

3 following new paragraph:

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

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

6 (d) CREDIT ALLOWED AGAINST REGULAR AND MIN7 IMUM TAX.—

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

9 (relating to limitation based on amount of tax) is

10 amended by redesignating paragraph (3) as para11 graph (4) and by inserting after paragraph (2) the

12 following new paragraph:

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

14 GAS WELL PRODUCTION CREDIT.—

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

16 marginal oil and gas well production credit—

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

18 be applied separately with respect to the

19 credit, and

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

21 credit—

22 ‘‘(I) subparagraphs (A) and (B)

23 thereof shall not apply, and

24 ‘‘(II) the limitation under para25 graph (1) (as modified by subclause
83

S 2904 IS

1 (I)) shall be reduced by the credit al2 lowed under subsection (a) for the

3 taxable year (other than the marginal

4 oil and gas well production credit).

5 ‘‘(B) MARGINAL OIL AND GAS WELL PRO6 DUCTION CREDIT.—For purposes of this sub7 section, the term ‘marginal oil and gas well pro8 duction credit’ means the credit allowable under

9 subsection (a) by reason of section 45D(a).’’.

10 (2) CONFORMING AMENDMENT.—Subclause (II)

11 of section 38(c)(2)(A)(ii) is amended by inserting

12 ‘‘or the marginal oil and gas well production credit’’

13 after ‘‘employment credit’’.

14 (e) CARRYBACK.—Subsection (a) of section 39 (relat15 ing to carryback and carryforward of unused credits gen16 erally) is amended by adding at the end the following new

17 paragraph:

18 ‘‘(3) 10-YEAR CARRYBACK FOR MARGINAL OIL

19 AND GAS WELL PRODUCTION CREDIT.—In the case

20 of the marginal oil and gas well production credit—

21 ‘‘(A) this section shall be applied sepa22 rately from the business credit (other than the

23 marginal oil and gas well production credit),
84

S 2904 IS

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

2 substituting ‘10 taxable years’ for ‘1 taxable

3 years’ in subparagraph (A) thereof, and

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

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

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

7 thereof, and

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

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

10 thereof.’’.

11 (f) COORDINATION WITH SECTION 29.—Section

12 29(a) is amended by striking ‘‘There’’ and inserting ‘‘At

13 the election of the taxpayer, there’’.

14 (g) CLERICAL AMENDMENT.—The table of sections

15 for subpart D of part IV of subchapter A of chapter I

16 is amended by adding at the end the following item:

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

17 (h) EFFECTIVE DATE.—The amendments made by

18 this section shall apply to production in taxable years be19 ginning after December 31, 2000.

20 SEC. 703. DEDUCTION FOR DELAY RENTAL PAYMENTS.

21 (a) IN GENERAL.—Section 263 (relating to capital

22 expenditures) is amended by adding after subsection (i)

23 the following new subsection:

24 ‘‘(j) DELAY RENTAL PAYMENTS FOR DOMESTIC OIL

25 AND GAS WELLS.—
85

S 2904 IS

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

2 (a), a taxpayer may elect to treat delay rental pay3 ments incurred in connection with the development

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

5 section 638) as payments which are not chargeable

6 to capital account. Any payments so treated shall be

7 allowed as a deduction in the taxable year in which

8 paid or incurred.

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

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

11 means an amount paid for the privilege of deferring

12 development of an oil or gas well.’’

13 (b) CONFORMING AMENDMENT.—Section 263A(c)(3)

14 is amended by inserting ‘‘263(j),’’ after ‘263(i),’.

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

16 this section shall apply to amounts paid or incurred in tax17 able years beginning after December 31, 2000.

18 SEC. 704. ELECTION TO EXPENSE GEOLOGICAL AND GEO19 PHYSICAL EXPENDITURES.

20 (a) IN GENERAL.—Section 263 (relating to capital

21 expenditures) is amended by adding after subsection (j)

22 the following new subsection:

23 ‘‘(k) GEOLOGICAL AND GEOPHYSICAL EXPENDI24 TURES FOR DOMESTIC OIL AND GAS WELLS.—Notwith25 standing subsection (a), a taxpayer may elect to treat geo-
86

S 2904 IS

1 logical and geophysical expenses incurred in connection

2 with the exploration for, or development of, oil or gas with3 in the United States (as defined in section 638) as ex4 penses which are not chargeable to capital account. Any

5 expenses so treated shall be allowed as a deduction in the

6 taxable year in which paid or incurred.’’

7 (b) CONFORMING AMENDMENT.—Section 263A(c)(3)

8 is amended by inserting ‘‘263(k),’’ after ‘‘263(j),’’.

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

10 this section shall apply to costs paid or incurred in taxable

11 years beginning after December 31, 2000.

12 TITLE VIII—RENEWABLE POWER

13 GENERATION

14 SEC. 801. MODIFICATIONS TO CREDIT FOR ELECTRICITY

15 PRODUCED FROM RENEWABLE RESOURCES.

16 (a) EXPANSION OF QUALIFIED ENERGY RE17 SOURCES.—

18 (1) IN GENERAL.—Section 45(c)(1) (defining

19 qualified energy resources) is amended by striking

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

21 subparagraph (C), and by adding at the end the fol22 lowing:

23 ‘‘(C) biomass (other than closed-loop bio24 mass), or

25 ‘‘(D) poultry waste.’’
87

S 2904 IS

1 (2) DEFINITIONS.—Section 45(c) is amended

2 by redesignating paragraph (3) as paragraph (4)

3 and by striking paragraphs (2) and (4) and insert4 ing the following:

5 ‘‘(2) BIOMASS.—

6 ‘‘(A) IN GENERAL.—The term ‘biomass’

7 means—

8 ‘‘(i) closed-loop biomass, and

9 ‘‘(ii) any solid, nonhazardous, cel10 lulosic waste material, which is segregated

11 from other waste materials, and which is

12 derived from—

13 ‘‘(I) any of the following forest14 related resources: mill residues,

15 precommercial thinnings, slash, and

16 brush, not including old-growth tim17 ber,

18 ‘‘(II) waste pallets, crates, and

19 dunnage, and landscape or right-of20 way tree trimmings, but not including

21 unsegregated municipal solid waste

22 (garbage) and post-consumer waste23 paper, or

24 ‘‘(III) agriculture sources, includ25 ing orchard tree crops, vineyard,
88

S 2904 IS

1 grain, legumes, sugar, and other crop

2 by-products or residues.

3 ‘‘(B) CLOSED-LOOP BIOMASS.—The term

4 ‘closed-loop biomass’ means any organic mate5 rial from a plant which is planted exclusively

6 for purposes of being used at a qualified facility

7 to produce electricity.

8 ‘‘(3) POULTRY WASTE.—The term ‘poultry

9 waste’ means poultry manure and litter, including

10 wood shavings, straw, rice hulls, and other bedding

11 material for the disposition of manure.’’

12 (b) EXTENSION AND MODIFICATION OF PLACED-IN

13 SERVICE RULES.—Paragraph (4) of section 45(c), as re14 designated by subsection (a), is amended to read as fol15 lows:

16 ‘‘(4) QUALIFIED FACILITY.—

17 ‘‘(A) WIND FACILITY.—In the case of a fa18 cility using wind to produce electricity, the term

19 ‘qualified facility’ means any facility owned by

20 the taxpayer which is originally placed in serv21 ice after December 31, 1993.

22 ‘‘(B) CLOSED-LOOP BIOMASS FACILITY.—

23 In the case of a facility using closed-loop bio24 mass to produce electricity, the term ‘qualified
89

S 2904 IS

1 facility’ means any facility owned by the tax2 payer which:

3 ‘‘(i) is originally placed in service

4 after December 31, 1992 and before Janu5 ary 1, 2005, or

6 ‘‘(ii) is originally placed in service be7 fore December 31, 2000, and modified to

8 use closed loop biomass to co-fire with coal

9 after such date and before January 1,

10 2005.

11 ‘‘(C) BIOMASS FACILITY.—In the case of a

12 facility using biomass (other than closed-loop

13 biomass) to produce electricity, the term ‘quali14 fied facility’ means:

15 ‘‘(i) any facility owned by the tax16 payer which is originally placed in service

17 after December 31, 2000 and before Janu18 ary 1, 2005, or

19 ‘‘(ii) is originally placed in service be20 fore December 31, 2000 and modified to

21 co-fire biomass with coal after such date

22 and before January 1, 2005.

23 ‘‘(D) POULTRY WASTE FACILITY.—In the

24 case of a facility using poultry waste to produce

25 electricity, the term ‘qualified facility’ means:
90

S 2904 IS

1 ‘‘(i) any facility of the taxpayer which

2 is originally placed in service after Decem3 ber 31, 1999 and before January 1, 2005,

4 or

5 ‘‘(ii) is originally placed in service be6 fore December 31, 2000 and modified to

7 co-fire poultry waste with coal after such

8 date and before January 1, 2005.

9 ‘‘(E) SPECIAL RULES.—

10 ‘‘(i) COMBINED PRODUCTION FACILI11 TIES INCLUDED.—For purposes of this

12 paragraph, the term ‘qualified facility’

13 shall include a facility using biomass to

14 produce electricity and other biobased

15 products such as renewables based chemi16 cals and fuels.

17 ‘‘(ii) SPECIAL RULES.—In the case of

18 a qualified facility described in subpara19 graph (B), (C) or (D)—

20 ‘‘(I) the 10-year period referred

21 to in subsection (a) shall be treated as

22 beginning upon the date the taxpayer

23 first applies for the credit, and

24 ‘‘(II) subsection (b)(3) shall not

25 apply to any such facility originally
91

S 2904 IS

1 placed in service before January 1,

2 1997.’

3 (c) ELECTRICITY PRODUCED FROM BIOMASS CO4 FIRED IN COAL PLANTS.—Paragraph (1) of section 45(a)

5 (relating to general rule) is amended by inserting ‘‘(1.0

6 cents in the case of electricity produced from biomass,

7 other than closed loop biomass, co-fired in a facility which

8 produces electricity from coal) after ‘‘1.5 cents.’’

9 (d) COORDINATION WITH OTHER CREDITS.—Section

10 45(d) (relating to definitions and special rules) is amended

11 by adding at the end the following:

12 ‘‘(8) COORDINATION WITH OTHER CREDITS.—

13 This section shall not apply to any production with

14 respect to which the clean coal technology produc15 tion credit under section 45(b) is allowed unless the

16 taxpayer elects to waive the application of such cred17 it to such production.’’

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

19 this section shall apply to electricity produced after De20 cember 31, 2000.

21 SEC. 802. CREDIT FOR CAPITAL COSTS OF QUALIFIED BIO22 MASS-BASED GENERATING SYSTEM.

23 (a) ALLOWANCE OF QUALIFIED BIOMASS-BASED

24 GENERATING SYSTEM FACILITY CREDIT.—Section 46

25 (relating to amount of credit), as amended by section
92

S 2904 IS

1 501(a), is amended by striking ‘‘and’’ at the end of para2 graph (3), by striking the period at the end of paragraph

3 (4) and inserting ‘‘, and’’, and by adding at the end the

4 following:

5 ‘‘(5) the qualified biomass-based generating sys6 tem facility credit.’’

7 (b) AMOUNT OF CREDIT.—Subpart E of part IV of

8 subchapter A of chapter 1 (relating to rules for computing

9 investment credit), as amended by section 501(b), is

10 amended by inserting after section 48C the following:

SEC. 48C. Qualified biomass-based generating system facility credit.

11 ‘‘(a) IN GENERAL.—For purposes of section 46, the

12 qualified biomass-based generating system facility credit

13 for any taxable year is an amount equal to 20 percent

14 of the qualified investment in a qualified biomass-based

15 generating system facility for such taxable year.

16 ‘‘(b) QUALIFIED BIOMASS-BASED GENERATING SYS17 TEM FACILITY.—

18 ‘‘(1) IN GENERAL.—For purposes of subsection

19 (a), the term ‘qualified biomass-based generating

20 system facility’ means a facility of the taxpayer—

21 ‘‘(A)(i) the original use of which com22 mences with the taxpayer or the reconstruction

23 of which is completed by the taxpayer (but only

24 with respect to that portion of the basis which
93

S 2904 IS

1 is properly attributable to such reconstruction),

2 or

3 ‘‘(ii) that is acquired through purchase (as

4 defined by section 179(d)(2)),

5 ‘‘(B) that is depreciable under section 167,

6 ‘‘(C) that has a useful life of not less than

7 4 years, and

8 ‘‘(D) that uses a qualified biomass-based

9 generating system.

10 ‘‘(2) SPECIAL RULE FOR SALE-LEASEBACKS.—

11 For purposes of subparagraph (A) of paragraph (1),

12 in the case of a facility that—

13 ‘‘(A) is originally placed in service by a

14 person, and

15 ‘‘(B) is sold and leased back by such per16 son, or is leased to such person, within 3

17 months after the date such facility was origi18 nally placed in service, for a period of not less

19 than 12 years, such facility shall be treated as

20 originally placed in service not earlier than the

21 date on which such property is used under the

22 leaseback (or lease) referred to in subparagraph

23 (B). The preceding sentence shall not apply to

24 any property if the lessee and lessor of such

25 property make an election under this sentence.
94

S 2904 IS

1 Such an election, once made, may be revoked

2 only with the consent of the Secretary.

3 ‘‘(3) QUALIFIED BIOMASS-BASED GENERATING

4 SYSTEM.—For purposes of paragraph (1)(D), the

5 term ‘qualified biomass-based generating system’

6 means a biomass-based integrated gasification com7 bined cycle (IGCC) generating system which has an

8 electricity-only generation efficiency greater than 40

9 percent.

10 ‘‘(c) QUALIFIED INVESTMENT.—For purposes of sub11 section (a), the term ‘qualified investment’ means, with

12 respect to any taxable year, the basis of a qualified bio13 mass-based generating system facility placed in service by

14 the taxpayer during such taxable year.

15 ‘‘(d) QUALIFIED PROGRESS EXPENDITURES.—

16 ‘‘(1) INCREASE IN QUALIFIED INVESTMENT.—

17 In the case of a taxpayer who has made an election

18 under paragraph (5), the amount of the qualified in19 vestment of such taxpayer for the taxable year (de20 termined under subsection (c) without regard to this

21 section) shall be increased by an amount equal to

22 the aggregate of each qualified progress expenditure

23 for the taxable year with respect to progress expend24 iture property.
95

S 2904 IS

1 ‘‘(2) PROGRESS EXPENDITURE PROPERTY DE2 FINED.—For purposes of this subsection, the term

3 ‘progress expenditure property’ means any property

4 being constructed by or for the taxpayer and

5 which—

6 ‘‘(A) cannot reasonably be expected to be

7 completed in less than 18 months, and

8 ‘‘(B) it is reasonable to believe will qualify

9 as a qualified biomass-based generating system

10 facility which is being constructed by or for the

11 taxpayer when it is placed in service.

12 ‘‘(3) QUALIFIED PROGRESS EXPENDITURES DE13 FINED.—For purposes of this subsection—

14 ‘‘(A) SELF-CONSTRUCTED PROPERTY.—In

15 the case of any self-constructed property, the

16 term ‘qualified progress expenditures’ means

17 the amount which, for purposes of this subpart,

18 is properly chargeable (during such taxable

19 year) to capital account with respect to such

20 property.

21 ‘‘(B) NON-SELF-CONSTRUCTED PROP22 ERTY.—In the case of non-self-constructed

23 property, the term ‘qualified progress expendi24 tures’ means the amount paid during the tax-
96

S 2904 IS

1 able year to another person for the construction

2 of such property.

3 ‘‘(4) OTHER DEFINITIONS.—For purposes of

4 this subsection—

5 ‘‘(A) SELF-CONSTRUCTED PROPERTY.—

6 The term ‘self-constructed property’ means

7 property for which it is reasonable to believe

8 that more than half of the construction expendi9 tures will be made directly by the taxpayer.

10 ‘‘(B) NON-SELF-CONSTRUCTED PROP11 ERTY.—The term ‘non-self-constructed prop12 erty’ means property which is not self-con13 structed property.

14 ‘‘(C) CONSTRUCTION, ETC..—The term

15 ‘construction’ includes reconstruction and erec16 tion, and the term ‘constructed’ includes recon17 structed and erected.

18 ‘‘(D) ONLY CONSTRUCTION OF QUALIFIED

19 BIOMASS-BASED GENERATING SYSTEM FACILITY

20 TO BE TAKEN INTO ACCOUNT.—Construction

21 shall be taken into account only if, for purposes

22 of this subpart, expenditures therefor are prop23 erly chargeable to capital account with respect

24 to the property.
97

S 2904 IS

1 ‘‘(5) ELECTION.—An election under this sub2 section may be made at such time and in such man3 ner as the Secretary may by regulations prescribe.

4 Such an election shall apply to the taxable year for

5 which made and to all subsequent taxable years.

6 Such an election, once made, may not be revoked ex7 cept with the consent of the Secretary.

8 ‘‘(e) COORDINATION WITH OTHER CREDITS.—This

9 section shall not apply to any property with respect to

10 which the rehabilitation credit under section 47 or the en11 ergy credit under section 48A is allowed unless the tax12 payer elects to waive the application of such credits to

13 such property.’’.

14 (c) RECAPTURE.—Section 50(a) (relating to other

15 special rules), as amended by section 501(c), is amended

16 by adding at the end the following:

17 ‘‘(7) SPECIAL RULES RELATING TO QUALIFIED

18 BIOMASS-BASED GENERATING SYSTEM FACILITY.—

19 For purposes of applying this subsection in the case

20 of any credit allowable by reason of section 48C, the

21 following shall apply:

22 ‘‘(A) GENERAL RULE.—In lieu of the

23 amount of the increase in tax under paragraph

24 (1), the increase in tax shall be an amount

25 equal to the investment tax credit allowed under
98

S 2904 IS

1 section 38 for all prior taxable years with re2 spect to a qualified biomass-based generating

3 system facility (as defined by section 48C(b))

4 multiplied by a fraction whose numerator is the

5 number of years remaining to fully depreciate

6 under this title the qualified biomass-based gen7 erating system facility disposed of, and whose

8 denominator is the total number of years over

9 which such facility would otherwise have been

10 subject to depreciation. For purposes of the

11 preceding sentence, the year of disposition of

12 the qualified biomass-based generating system

13 facility shall be treated as a year of remaining

14 depreciation.

15 ‘‘(B) PROPERTY CEASES TO QUALIFY FOR

16 PROGRESS EXPENDITURES.—Rules similar to

17 the rules of paragraph (2) shall apply in the

18 case of qualified progress expenditures for a

19 qualified biomass-based generating system facil20 ity under section 48C, except that the amount

21 of the increase in tax under subparagraph (A)

22 of this paragraph shall be substituted in lieu of

23 the amount described in such paragraph (2).

24 ‘‘(C) APPLICATION OF PARAGRAPH.—This

25 paragraph shall be applied separately with re-
99

S 2904 IS

1 spect to the credit allowed under section 38 re2 garding a qualified biomass-based generating

3 system facility.’’.

4 (d) TRANSITIONAL RULE.—Section 39(d) of the In5 ternal Revenue Code of 1986 (relating to transitional

6 rules), as amended by section 501(d), is amended by add7 ing at the end the following:

8 ‘‘(11) NO CARRYBACK OF SECTION 48C CREDIT

9 BEFORE EFFECTIVE DATE.—No portion of the un10 used business credit for any taxable year which is

11 attributable to the qualified biomass-based gener12 ating system facility credit determined under section

13 48C may be carried back to a taxable year ending

14 before the date of the enactment of section 48C.’’.

15 (e) TECHNICAL AMENDMENTS.—

16 (1) Section 49(a)(1)(C), as amended by section

17 501(e), is amended by striking ‘‘and’’ at the end of

18 clause (iii), by striking the period at the end of

19 clause (iv) and inserting ‘‘, and’’, and by adding at

20 the end the following:

21 ‘‘(v) the portion of the basis of any

22 qualified biomass-based generating system

23 facility attributable to any qualified invest24 ment (as defined by section 48C(c)).’’.
100

S 2904 IS

1 (2) Section 50(a)(4), as amended by section

2 501(e), is amended by striking ‘‘and (6)’’ and insert3 ing ‘‘, (6), and (7)’’.

4 (3) The table of sections for subpart E of part

5 IV of subchapter A of chapter 1, as amended by sec6 tion 501(e), is amended by inserting after the item

7 relating to section 48B the following:

‘‘Sec. 48C. Qualified biomass-based generating system facility credit.’’.

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

9 this section shall apply to periods after December 31,

10 1999, under rules similar to the rules of section 48(m)

11 of the Internal Revenue Code of 1986 (as in effect on the

12 day before the date of the enactment of the Revenue Rec13 onciliation Act of 1990).

14 SEC. 803. TREATMENT OF FACILITIES USING BAGASSE TO

15 PRODUCE ENERGY AS SOLID WASTE DIS16 POSAL FACILITIES ELIGIBLE FOR TAX-EX17 EMPT FINANCING.

18 (a) IN GENERAL.—Section 142 (relating to exempt

19 facility bond) is amended by adding at the end the fol20 lowing:

21 ‘‘(k) SOLID WASTE DISPOSAL FACILITIES.—For pur22 poses of subsection (a)(6), the term ‘solid waste disposal

23 facilities’ includes property located in Hawaii and used for

24 the collection, storage, treatment, utilization, processing,
101

S 2904 IS

1 or final disposal of bagasse in the manufacture of eth2 anol.’’.

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

4 this section shall apply to bonds issued after the date of

5 the enactment of this Act.

6 SEC. 804. FEDERAL RENEWABLE PORTFOLIO STANDARD.

7 Title VI of the Public Utility Regulatory Policies Act

8 of 1978 is further amended by adding at the end the fol9 lowing:

10 ‘‘SEC. 610. FEDERAL RENEWABLE PORTFOLIO STANDARD.

11 ‘‘(a) MINIMUM RENEWABLE GENERATION REQUIRE12 MENT.—For each calendar year beginning with 2003, a

13 retail electric supplier shall submit to the Secretary renew14 able energy credits in an amount equal to the required

15 annual percentage, specified in subsection (b), of the total

16 electric energy sold by the retain electric supplier to elec17 tric consumers in the calendar year. The retail electric

18 supplier shall make this submission before April 1 of the

19 following calendar year.

20 ‘‘(b) REQUIRED ANNUAL PERCENTAGE.—

21 ‘‘(1) For calendar years 2003 and 2004, the re22 quired annual percentage shall determined by the

23 Secretary in an amount less than the amount in

24 paragraph (2);
102

S 2904 IS

1 ‘‘(2) For calendar years 2005 through 2015,

2 the required annual percentage shall be determined

3 by the Secretary, but no less than 2.5 percent of the

4 retail electric supplier’s base amount by the year

5 2007 increasing to 5.0 percent by the year 2012

6 continuing through 2015.

7 ‘‘(c) SUBMISSION OF CREDITS.—(1) A retail electric

8 supplier may satisfy the requirements of subsection (a)

9 through the submission of—

10 ‘‘(A) renewable energy credits issued under sub11 section (d) for renewable energy generated by the re12 tail electric supplier in the calendar year for which

13 credits are being submitted or any previous calendar

14 year;

15 ‘‘(B) renewable energy credits obtained by pur16 chase or exchange under subsection (e);

17 ‘‘(C) renewable energy credits borrowed against

18 future years under subsection (f); or

19 ‘‘(D) any combination of credits under subpara20 graphs (A), (B), and (C).

21 ‘‘(2) A credit may be counted toward compliance with

22 subsection (a) only once.

23 ‘‘(d) ISSUANCE OF CREDITS.—(1) The Secretary

24 shall establish, not later than one year after the date of
103

S 2904 IS

1 enactment of this section, a program to issue, monitor the

2 sale or exchange of, and track renewable energy credits.

3 ‘‘(2) Under the program, an entity that generates

4 electric energy through the use of a renewable energy re5 source may apply to the Secretary for the issuance of re6 newable energy credits. The application shall indicate—

7 ‘‘(A) the type of renewable energy resource used

8 to produce the electricity,

9 ‘‘(B) the State in which the electric energy was

10 produced, and

11 ‘‘(C) any other information the Secretary deter12 mines appropriate.

13 ‘‘(3)(A) Except as provided in paragraphs (B) and

14 (C), the Secretary shall issue to an entity one renewable

15 energy credit for each kilowatt-hour of electric energy the

16 entity generates through the use of a renewable energy

17 resource in any State in 2001 and any succeeding year

18 through 2015.

19 ‘‘(B) For incremental hydropower the credits shall be

20 calculated based on normalized water flows, and not actual

21 generation. The calculation of the credits for incremental

22 hydropower shall not be based on any operational changes

23 at the hydroproject not directly associated with the effi24 ciency improvements or capacity additions.
104

S 2904 IS

1 ‘‘(C) The Secretary shall issue two renewable energy

2 credits for each kilowatt-hour of electric energy generated

3 through the use of a renewable energy resource in any

4 State in 2001 and any succeeding year, if the generating

5 facility is located on Indian land. For purposes of this

6 paragraph, renewable energy generated by biomass cofired

7 with other fuels is eligible for two credits only if the bio8 mass was grown on the land eligible under this paragraph.

9 ‘‘(D) To be eligible for a renewable energy credit, the

10 unit of electricity generated through the use of a renew11 able energy resource may be sold or may be used by the

12 generator. If both a renewable energy resource and a non13 renewable energy resource are used to generate the electric

14 energy, the Secretary shall issue credits based on the pro15 portion of the renewable energy source used. The Sec16 retary shall identify renewable energy credits by type of

17 generation and by the State in which the generating facil18 ity is located.

19 ‘‘(4) In order to receive a renewable energy credit,

20 the recipient of a renewable energy credit shall pay a fee,

21 calculated by the Secretary, in an amount that is equal

22 to the administrative costs of issuing, recording, moni23 toring the sale or exchange of, and tracking the credit or

24 does not exceed five percent of the dollar value of the cred-
105

S 2904 IS

1 it, whichever is lower. The Secretary shall retain the fee

2 and use it to pay these administrative costs.

3 ‘‘(5) When a generator sells electric energy generated

4 through the use of a renewable energy resource to a retail

5 electric supplier under a contract subject to section 210

6 of this Act, the retail electric supplier is treated as the

7 generator of the electric energy for the purposes of this

8 section for the duration of the contract.

9 ‘‘(e) CREDIT TRADING.—A renewable energy credit

10 may be sold or exchanged by the entity to whom issued

11 or by any other entity who acquires the credit. A renew12 able energy credit for any year that is not used to satisfy

13 the minimum renewable generation requirement of sub14 section (a) for that year may be carried forward for use

15 in another year.

16 ‘‘(f) CREDIT BORROWING.—At any time before the

17 end of the calendar year, a retail electric supplier that has

18 reason to believe that it will not have sufficient renewable

19 energy credits to comply with subsection (a) may—

20 ‘‘(1) submit a plan to the Secretary dem21 onstrating that the retail electric supplier will earn

22 sufficient credits within the next 3 calendar years

23 which, when taken into account, will enable the re24 tail electric supplier to meet the requirements of

25 subsection (a) for the calendar year involved; and
106

S 2904 IS

1 ‘‘(2) upon the approval of the plan by the Sec2 retary, apply credits that the plan demonstrates will

3 be earned within the next 3 calendar years to meet

4 the requirements of subsection (a) for the calendar

5 year involved.

6 ‘‘(g) ENFORCEMENT.—The Secretary may bring an

7 action in the appropriate United States district court to

8 impose a civil penalty on a retail supplier that does not

9 comply with subsection (a). A retail electric supplier who

10 does not submit the required number of renewable energy

11 credits under subsection (a) is subject to a civil penalty

12 of not more than 3 cents each for the renewable energy

13 credits not submitted.

14 ‘‘(h) INFORMATION COLLECTION.—The Secretary

15 may collect the information necessary to verify and

16 audit—

17 ‘‘(1) the annual electric energy generation and

18 renewable energy generation of any entity applying

19 for renewable energy credits under this section,

20 ‘‘(2) the validity of renewable energy credits

21 submitted by a retail electric supplier to the Sec22 retary, and

23 ‘‘(3) the quantity of electricity sales of all retail

24 electric suppliers.
107

S 2904 IS

1 ‘‘(i) ENVIRONMENTAL SAVINGS CLAUSE.—Incre2 mental hydropower shall be subject to all applicable envi3 ronmental laws and licensing and regulatory requirements.

4 ‘‘(j) EXEMPTION FOR ALASKA AND HAWAII.—This

5 section shall not apply to any retail electric supplier in

6 Alaska or Hawaii.

7 ‘‘(k) STATE SAVINGS CLAUSE.—This section does not

8 preclude a State from requiring additional renewable en9 ergy generation in that State.

10 ‘‘(l) DEFINITIONS.—For purposes of this section—

11 ‘‘(1) The term ‘incremental hydropower’ means

12 additional generation capacity achieved from in13 creased efficiency or additions of new capacity at an

14 existing hydroelectric dam.

15 ‘‘(2) The term ‘Indian land’ means—

16 ‘‘(A) any land within the limits of any In17 dian reservation, pueblo or rancheria,

18 ‘‘(B) any land not within the limits of any

19 Indian reservation, pueblo or rancheria title to

20 which was on the date of enactment of this

21 paragraph either held by the United States for

22 the benefit of any Indian tribe or individual or

23 held by any Indian tribe or individual subject to

24 restriction by the United States against alien25 ation,
108

S 2904 IS

1 ‘‘(C) any dependent Indian community,

2 and

3 ‘‘(D) any land conveyed to any Alaska Na4 tive corporation under the Alaska Native

5 Claims Settlement Act.

6 ‘‘(3) The term ‘Indian tribe’ means any Indian

7 tribe, band, nation, or other organized group or com8 munity, including any Alaska Native village or re9 gional or village corporation as defined in or estab10 lished pursuant to the Alaska Native Claims Settle11 ment Act (43 U.S.C. 1601 et seq.), which is recog12 nized as eligible for the special programs and serv13 ices provided by the United States to Indians be14 cause of their status as Indians.

15 ‘‘(4) The term ‘renewable energy’ means elec16 tric energy generated by a renewable energy re17 source.

18 ‘‘(5) The term ‘renewable energy resource’

19 means solar thermal, photovoltaic, wind, geothermal,

20 biomass (including organic waste, but not unsegre21 gated municipal solid waste), or incremental hydro22 power facility or modification to an existing facility

23 to co-fire biomass or to expand electricity production

24 from an existing renewable facility that is placed in

25 service on or after January 1, 2001.
109

S 2904 IS

1 ‘‘(6) The term ‘retail electric supplier’ means a

2 person, State agency, or Federal agency that sells

3 electric energy to an electric consumer.

4 ‘‘(7) The term ‘retail electric supplier’s base

5 amount’ means the total amount of electric energy

6 sold by the retail electric supplier to electric cus7 tomers during the most recent calendar year for

8 which information is available, excluding electric en9 ergy generated by solar energy, wind, geothermal,

10 biomass, or hydroelectric facility placed in service

11 prior to January 1, 2001.

12 ‘‘(m) SUNSET.—Subsection (a) of this section expires

13 December 31, 2015.’’.

14 TITLE IX—STEELMAKING

15 SEC. 901. EXTENSION OF CREDIT FOR ELECTRICITY TO

16 PRODUCTION FROM STEEL CONGENERATION.

17 (a) EXTENSION OF CREDIT FOR COKE PRODUCTION

18 AND STEEL MANUFACTURING FACILITIES.—Section

19 45(c)(1) (defining qualified energy resources), as amended

20 by section 507 of Public Law 106–170, is amended by

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

22 the period at the end of subparagraph (C) and inserting

23 ‘‘, and’’, and by adding at the end the following:

24 ‘‘(E) steel congeneration.’’.
110

S 2904 IS

1 (b) STEEL COGENERATION.—Section 45(c), is

2 amended by adding at the end the following:

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

4 cogeneration’ means the production of electricity and

5 steam (or other form of thermal energy) from any

6 or all waste sources in subparagraphs (A), (B), and

7 (C) within an operating facility that produces or in8 tegrates the production of coke, direct reduced iron

9 ore, iron, or steel provided that the cogeneration

10 meets any regulatory energy-efficiency standards es11 tablished by the Secretary, and only to the extent

12 that such energy is produced from—

13 ‘‘(A) gases or heat generated from the pro14 duction of metallurgical coke,

15 ‘‘(B) gases or heat generated from the pro16 duction of direct reduced iron ore or iron, from

17 blast furnace or direct ironmaking processes, or

18 ‘‘(C) gases or heat generated from the

19 manufacture of steel.’’.

20 (c) MODIFICATION OF PLACED IN SERVICE RULES

21 FOR STEEL COGENERATION FACILITIES.—Section

22 45(c)(4) (defining qualified facility), as amended by sec23 tion 507 of Public Law 106–170, is amended by adding

24 at the end the following:
111

S 2904 IS

1 ‘‘(F) STEEL COGENERATION FACILITIES.—

2 In the case of a facility using steel cogeneration

3 to produce electricity, the term ‘qualified facil4 ity’ means any facility permitted to operate

5 under the environmental requirements of the

6 Clean Air Act Amendments of 1990 which is

7 owned by the taxpayer and originally placed in

8 service after December 31, 2000, and before

9 January 1, 2006. Such a facility may be treated

10 as originally placed in service when such facility

11 was last upgraded to increase efficiency or gen12 eration capability. However, no facility shall be

13 allowed a credit under this section for more

14 than 10 years of production.’’.

15 (d) CONFORMING AMENDMENTS.—

16 (1) The heading for section 45 is amended by

17 inserting ‘‘and waste energy’’ after ‘‘renewable’’.

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

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

20 chapter 1 is amended by inserting ‘‘and waste en21 ergy’’ after ‘‘renewable’’.

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

23 this section shall apply to taxable years beginning after

24 December 31, 2001.
112

S 2904 IS

1 TITLE X—ENERGY

2 EMERGENCIES

3 SEC. 1001. ENERGY POLICY AND CONSERVATION ACT

4 AMENDMENTS.

5 (a) Title I of the Energy Policy and Conservation Act

6 (42 U.S.C. 6211–6251) is amended—

7 (1) in section 166 (42 U.S.C. 6246), by insert8 ing ‘‘through 2003’’ after ‘‘2000.’’

9 (2) in section 181 (42 U.S.C. 6251), by striking

10 ‘‘March 31, 2000’’ each place it appears and insert11 ing ‘‘September 30, 2003’’.

12 (b) Title II of the Energy Policy and Conservation

13 Act (42 U.S.C. 6261–6285) is amended—

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

15 striking the last sentence and inserting the fol16 lowing, ‘‘For the purpose of carrying out this sub17 section, there are authorized to be appropriated such

18 sums as may be necessary.’’.

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

20 ‘‘March 31, 2000’’ each place it appears and insert21 ing ‘‘September 30, 2003’’.

22 (c) AMENDMENT.—Title I of the Energy Policy and

23 Conservation Act is amended by—

24 (1) redesignating part D as part E;
113

S 2904 IS

1 (2) redesignating section 181 as section 191;

2 and

3 (3) inserting after part C the following new

4 part D:

5 ‘‘PART D—NORTHEAST HOME HEATING OIL

6 RESERVE

7 ‘‘ESTABLISHMENT

8 ‘‘SEC. 181. (a) Notwithstanding any other provision

9 of this Act, the Secretary may establish, maintain, and

10 operate in the Northeast a Northeast Home Heating Oil

11 Reserve. A Reserve established under this part is not a

12 component of the Strategic Petroleum Reserve established

13 under part B of this title. A Reserve established under

14 this part shall contain no more than 2 million barrels of

15 petroleum distillate.

16 ‘‘(b) For the purposes of this part—

17 ‘‘(1) the term ‘Northeast’ means the States of

18 Maine, New Hampshire, Vermont, Massachusetts,

19 Connecticut, Rhode Island, New York, Pennsylvania,

20 and New Jersey; and

21 ‘‘(2) the term ‘petroleum distillate’ includes

22 heating oil and diesel fuel.

23 ‘‘AUTHORITY

24 ‘‘SEC. 182. To the extent necessary or appropriate

25 to carry out this part, the Secretary may—
114

S 2904 IS

1 ‘‘(1) purchase, contract for, lease, or otherwise

2 acquire, in whole or in part, storage and related fa3 cilities, and storage services;

4 ‘‘(2) use, lease, maintain, sell, or otherwise dis5 pose of storage and related facilities acquired under

6 this part;

7 ‘‘(3) acquire by purchase, exchange (including

8 exchange of petroleum product from the Strategic

9 Petroleum Reserve or received as royalty from Fed10 eral lands), lease, or otherwise, petroleum distillate

11 for storage in the Northeast Home Heating Oil Re12 serve;

13 ‘‘(4) store petroleum distillate in facilities not

14 owned by the United States;

15 ‘‘(5) sell, exchange, or otherwise dispose of pe16 troleum distillate from the Reserve established under

17 this part; including to maintain the quality or quan18 tity of the petroleum distillate in the Reserve or to

19 maintain the operational capability of the Reserve.

20 ‘‘CONDITIONS FOR RELEASE; PLAN

21 ‘‘SEC. 183. The Secretary may drawdown the Reserve

22 only upon a finding by the President that there is a severe

23 energy supply interruption. A ‘severe energy supply inter24 ruption’ may be deemed to exist—
115

S 2904 IS

1 ‘‘(1) if the President determines that a severe

2 increase in the price of heating oil has resulted from

3 such emergency situation;

4 ‘‘(2) if the President finds that (1) a cir5 cumstance, other than that described in subsection

6 (a) exists that constitutes a regional supply shortage

7 of significant scope or duration; and (2) action taken

8 under this subsection would assist directly and sig9 nificantly in reducing the adverse impact of such

10 shortage.

11 ‘‘(3) DEFINITION.—For purposes of this section

12 ‘severe increase in the price of heating oil’ means—

13 ‘‘(A) the price differential between crude

14 oil, as reflected in the spot price from a pub15 lished index, and No. 2 heating oil, as reported

16 in the Energy Information Administration’s re17 tail price data for the Northeast, increases by

18 more than 50 percent over its five year seasonal

19 rolling average, and continues for 10 consecu20 tive days; and

21 ‘‘(B) The price differential continues to in22 crease during the most recent week for which

23 price information is available.

24 ‘‘(4) The Secretary shall conduct a continuing

25 evaluation of the residential price data supplied by
116

S 2904 IS

1 the Energy Information Administration for the

2 Northeast and data on crude oil prices from pub3 lished sources.

4 ‘‘(5) After consultation with the heating oil in5 dustry, the Secretary shall determine procedures to

6 be used during a drawdown of the Reserve. The pro7 cedures shall ensure that:

8 ‘‘(A) the petroleum distillate is sold

9 through a competitive process; and

10 ‘‘(B) in all sales or exchanges, the Sec11 retary receives revenue or its equivalent in pe12 troleum distillate that provides the Department

13 with full market value.

14 ‘‘(6) Within 45 days of the date of the enact15 ment of this section, the Secretary shall transmit to

16 the President and, if the President approves, to the

17 Congress a plan describing—

18 ‘‘(A) the acquisition of storage and related

19 facilities or storage services for the Reserve;

20 ‘‘(B) the acquisition of petroleum distillate

21 for storage in the Reserve;

22 ‘‘(C) the anticipated methods of disposition

23 of petroleum distillate from the Reserve; and

24 ‘‘(D) the estimated costs of establishment,

25 maintenance, and operation of the Reserve.
117

S 2904 IS

1 ‘‘NORTHEAST HOME HEATING OIL RESERVE ACCOUNT

2 ‘‘SEC. 184. (a) Upon a decision of the Secretary of

3 Energy to establish a Reserve under this part, the Sec4 retary of the Treasury shall establish in the Treasury of

5 the United States an account known as the ‘Northeast

6 Home Heating Oil Reserve Account’ (referred to in this

7 section as the ‘Account’).

8 ‘‘(b) The Secretary of the Treasury shall deposit in

9 the Account any amounts appropriated to the Account and

10 any receipts from the sale, exchange, or other disposition

11 of petroleum distillate from the Reserve.

12 ‘‘(c) The Secretary of Energy may obligate amounts

13 in the Account to carry out activities under this part with14 out the need for further appropriation, and amounts avail15 able to the Secretary of Energy for obligation under this

16 section shall remain available without fiscal year limita17 tion.

18 ‘‘EXEMPTIONS

19 ‘‘SEC. 185. An action taken under this part is not

20 subject to the rulemaking requirements of section 523 of

21 this Act, section 501 of the Department of Energy Organi22 zation Act, or section 553 of title 5, United States Code;

23 and

24 ‘‘(b) AUTHORIZATION OF APPROPRIATIONS.—There

25 are authorized to be appropriated such sums as may be
118

S 2904 IS

1 necessary to carry out part D of title I of the Energy Pol2 icy and Conservation Act.’’.

3 SEC. 1002. ENERGY CONSERVATION PROGRAMS FOR

4 SCHOOLS AND HOSPITALS.

5 Title III of the Energy Policy and Conservation Act

6 (42 U.S.C. 6325) is amended as follows:

7 ‘‘SEC. 365 (f). For the purpose of carrying out this

8 part there are authorized to be appropriated such sums

9 as may be necessary.’’.

10 SEC. 1003. STATE ENERGY PROGRAMS.

11 Title III of the Energy Policy and Conservation Act

12 (42 U.S.C. 6371f) is amended as follows:

13 ‘‘SEC. 397. For the purpose of carrying out this part,

14 there are authorized to be appropriated such sums as may

15 be necessary.

16 SEC. 1004. ANNUAL HOME HEATING READINESS PROGRAM.

17 (a) IN GENERAL.—Part A of title I of the Energy

18 Policy and Conservation Act (42 U.S.C. 6211 et seq.) is

19 amended by adding at the end the following:

20 ‘‘ANNUAL HOME HEATING READINESS

21 ‘‘(a) IN GENERAL.—The Secretary, in conjunction

22 with the Administrator of the Energy Information Agency,

23 shall coordinate with all interested states on an annual

24 basis a program to assess the adequacy of supplies for nat25 ural gas, heating oil and propane and develop joint rec-
119

S 2904 IS

1 ommendations for responding to regional shortages or

2 price spikes.

3 ‘‘(b) On or before September 1 of each year, the Sec4 retary, acting through the Administrator of the Energy

5 Information Agency, shall submit to Congress a Home

6 Heating Readiness Report on the readiness of the natural

7 gas, heating oil and propane industries to supply fuel

8 under various weather conditions, including rapid de9 creases in temperature.

10 ‘‘(c) CONTENTS.—The Home Heating Readiness Re11 port shall include—

12 ‘‘(1) estimates of the consumption, expendi13 tures, and average price per MMBtu or gallon of

14 natural gas, heating oil and propane for the upcom15 ing period of October through March for various

16 weather conditions, with special attention to extreme

17 weather, and various regions of the country;

18 ‘‘(2) an evaluation of—

19 ‘‘(A) global and regional crude oil and re20 fined product supplies;

21 ‘‘(B) the adequacy and utilization of refin22 ery capacity;

23 ‘‘(C) weather conditions;

24 ‘‘(D) the refined product transportation

25 system;
120

S 2904 IS

1 ‘‘(E) market inefficiencies; and

2 ‘‘(F) any other factor affecting the func3 tional capability of the natural gas, heating oil

4 industry and propane industry that has the po5 tential to affect national or regional supplies

6 and prices;

7 ‘‘(3) recommendations on steps that the Fed8 eral, State, and local governments can take to pre9 vent or alleviate the impact of sharp and sustained

10 increases in the price of natural gas, heating oil and

11 propane; and

12 ‘‘(4) recommendations on steps that companies

13 engaged in the production, refining, storage, trans14 portation of heating oil or propane, or any other ac15 tivity related to the heating oil industry or propane

16 industry, can take to prevent or alleviate the impact

17 of sharp and sustained increases in the price of

18 heating oil and propane.

19 ‘‘(d) INFORMATION REQUESTS.—The Secretary may

20 request information necessary to prepare the Home Heat21 ing Readiness Report from companies described in sub22 section (b)(4).’’.

23 (b) CONFORMING AND TECHNICAL AMENDMENTS.—

24 The Energy Policy and Conservation Act is amended—
121

S 2904 IS

1 (1) in the table of contents in the first section

2 (42 U.S.C. prec. 6201), by inserting after the item

3 relating to section 106 the following:

‘‘Sec. 107. Major fuel burning stationary source.

‘‘Sec. 108. Annual home heating readiness report.’’; and

4 (2) in section 107 (42 U.S.C. 6215), by striking

5 ‘‘SEC. 107. (a) No Governor’’ and inserting the fol6 lowing:

7 ‘‘SEC. 107. MAJOR FUEL BURNING STATIONARY SOURCE.

8 ‘‘(a) No Governor’’.

9 SEC. 1005. SUMMER FILL AND FUEL BUDGETING PRO10 GRAMS.

11 (a) IN GENERAL.—Part C of title II of the Energy

12 Policy and Conservation Act (42 U.S.C. 6211 et seq.) is

13 amended by adding at the end the following:

14 ‘‘SEC. 273. SUMMER FILL AND FUEL BUDGETING PRO15 GRAMS.

16 ‘‘(a) DEFINITIONS.—In this section:

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

18 contract’ means a contract between a retailer and a

19 consumer under which the heating expenses of the

20 consumer are spread evenly over a period of months.

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

22 ‘fixed-price contract’ means a contract between a re23 tailer and a consumer under which the retailer

24 charges the consumer a set price for propane, ker-
122

S 2904 IS

1 osene, or heating oil without regard to market price

2 fluctuations.

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

4 cap contract’ means a contract between a retailer

5 and a consumer under which the retailer charges the

6 consumer the market price for propane, kerosene, or

7 heating oil, but the cost of the propane, kerosene, or

8 heating oil may not exceed a maximum amount stat9 ed in the contract.

10 ‘‘(b) ASSISTANCE.—At the request of the chief execu11 tive officer of a State, the Secretary shall provide informa12 tion, technical assistance, and funding—

13 ‘‘(1) to develop education and outreach pro14 grams to encourage consumers to fill their storage

15 facilities for propane, kerosene, and heating oil dur16 ing the summer months; and

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

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

19 advantageous financial arrangements;

20 to avoid severe seasonal price increases for and supply

21 shortages of those products.

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

23 the Secretary shall give preference to States that con24 tribute public funds or leverage private funds to develop

25 State summer fill and fuel budgeting programs.
123

S 2904 IS

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

2 are authorized to be appropriated to carry out this

3 section—

4 ‘‘(1) $25,000,000 for fiscal year 2001; and

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

6 year thereafter.

7 ‘‘(e) INAPPLICABILITY OF EXPIRATION PROVISION.—

8 Section 281 does not apply to this section.’’

9 (b) CONFORMING AMENDMENT.—The table of con10 tents in the first section of the Energy Policy and Con11 servation Act (42 U.S.C. prec. 6201) is amended by in12 serting after the item relating to section 272 the following:

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

13 SEC. 1006. USE OF ENERGY FUTURES FOR FUEL PUR14 CHASES.

15 (a) HEATING OIL STUDY.—The Secretary shall con16 duct a study—

17 (1) to ascertain if the use of energy futures and

18 options contracts could provide cost-effective protec19 tion from sudden surges in the price of heating oil

20 (including number two fuel oil, propane, and ker21 osene) for governments, consumer cooperatives, and

22 other organizations that purchase heating oil in bulk

23 to market to end use consumers in the Northeast

24 (Maine, New Hampshire, Vermont, Massachusetts,
124

S 2904 IS

1 Rhode Island, Connecticut, New York, Pennsylvania,

2 and New Jersey); and

3 (2) to ascertain how these entities may be most

4 effectively educated in the prudent use of energy fu5 tures and options contracts to maximize their pur6 chasing effectiveness, protect themselves against

7 sudden or unanticipated surges in the price of heat8 ing oil, and minimize long-term heating oil costs.

9 (b) REPORT.—The Secretary, no later than 180 days

10 after appropriations are enacted to carry out this Act,

11 shall transmit the study required in this section to the

12 Committee on Energy and Commerce of the House of

13 Representatives and the Committee on Energy and Nat14 ural Resources of the Senate. The report shall contain a

15 review of prior studies conducted on the subjects described

16 in subsection (a).

17 (c) PILOT PROGRAM.—If the study required in sub18 section (a) indicates that futures and options contracts

19 can provide cost-effective protection from sudden surges

20 in heating oil prices, the Secretary shall conduct a pilot

21 program, commencing not later than 30 days after the

22 transmission of the study required in subsection (b), to

23 educate such governmental entities, consumer coopera24 tives, and other organizations on the prudent and cost25 effective use of energy futures and options contracts to
125

S 2904 IS

1 increase their protection against sudden or unanticipated

2 surges in the price of heating oil and increase the effi3 ciency of their heating oil purchase programs.

4 (d) AUTHORIZATION.—There is authorized to be ap5 propriated $3 million in fiscal year 2001 to carry out this

6 section.

7 SEC. 1007. INCREASED USE OF ALTERNATIVE FUELS BY

8 FEDERAL FLEETS.

9 Title IV of the Energy Policy and Conservation Act

10 (42 U.S.C. 6374) is amended as follows: In Sec.

11 400AA(a)(3)(E), insert the following sentence at the end,

12 ‘‘Except that, no later than fiscal year 2003 at least 50

13 percent of the total annual volume of fuel used must be

14 from alternative fuels.’’, and in Sec. 400AA(g)(4)(B),

15 after the words, ‘‘solely on alternative fuel’’, insert the

16 words ‘‘, including a three wheeled enclosed electric vehicle

17 having a VIN number’’.

18 SEC. 1008. FULL EXPENSING OF HOME HEATING OIL AND

19 PROPANE STORAGE FACILITIES.

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

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

22 by adding at the end the following:

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

24 AND PROPANE STORAGE FACILITIES.—Paragraphs

25 (1) and (2) shall not apply to section 179 property
126

S 2904 IS

1 which is any storage facility (not including a build2 ing or its structural components) used in connection

3 with the distribution of home heating oil or liquefied

4 petroleum gas.’’.

5 TITLE XI—ENERGY EFFICIENCY

6 SEC. 1101. ENERGY SAVINGS PERFORMANCE CONTRACTS.

7 (a) Section 801(a)(1) of the National Energy Con8 servation Policy Act (42 U.S.C. 8287(a)(1)) is amended

9 by—

10 (1) inserting ‘‘and water’’ after ‘‘energy’’ the

11 first place it appears;

12 (2) striking ‘‘that purpose’’ and inserting

13 ‘‘these purposes’’;

14 (3) inserting ‘‘or water’’ after ‘‘energy’’ the sec15 ond place it appears;

16 (4) inserting ‘‘or water conservation’’ after ‘‘en17 ergy’’ the third place it appears; and

18 (5) inserting ‘‘or water’’ after ‘‘energy’’ the

19 fourth place it appears.

20 (b) Section 801(a)(2)(A) of the National Energy

21 Conservation Policy Act (42 U.S.C. 8287(a)(2)(A)) is

22 amended by—

23 (1) inserting ‘‘or water’’ after ‘‘energy’’ the

24 first place it appears; and
127

S 2904 IS

1 (2) inserting ‘‘or water conservation’’ after ‘‘en2 ergy’’ the next two places it appears.

3 (c) Section 801(a)(2)(B) of the National Energy Con4 servation Policy Act (42 U.S.C. 8287(a)(2)(B)) is amend5 ed by—

6 (1) inserting ‘‘or water’’ after ‘‘energy’’ each

7 place it appears; and

8 (2) inserting ‘‘energy or’’ before ‘‘utilities’’ the

9 second place it appears.

10 (d) Section 801(a)(2)(D)(iii) of the National Energy

11 Conservation Policy Act (42 U.S.C. 8287(a)(2)(D)) is

12 amended by striking ‘‘$750,000’’ and inserting

13 ‘‘$10,000,000’’.

14 (e) Section 801(b)(1)(A) of the National Energy Con15 servation Policy Act (42 U.S.C. 8287(b)(1)(B)) is amend16 ed by inserting ‘‘and water’’ after ‘‘energy’’.

17 (f) Section 801(b)(1)(B) of the National Energy Con18 servation Policy Act (42 U.S.C. 8287(b)(1)(B)) is amend19 ed by—

20 (1) inserting ‘‘or water’’ after ‘‘energy’’ the

21 first place it appears; and

22 (2) inserting ‘‘or water’’ after ‘‘energy’’ the sec23 ond place it appears.

24 (g) Section 801(b)(2)(A) of the National Energy

25 Conservation Policy Act (42 U.S.C. 8287(b)(2)(A)) is
128

S 2904 IS

1 amended by inserting ‘‘or water’’ after ‘‘energy’’ each

2 place it appears.

3 (h) Section 801(b)(2)(C) of the National Energy

4 Conservation Policy Act (42 U.S.C. 8287(b)(2)(C)) is

5 amended by inserting ‘‘or water’’ after ‘‘energy’’ each

6 place it appears.

7 (i) Section 801(b)(3) of the National Energy Con8 servation Policy Act (42 U.S.C. 8287(b)(3)) is amended

9 by inserting ‘‘or water’’ after ‘‘energy’’.

10 (j) Section 801(c)(1) of the National Energy Con11 servation Policy Act (42 U.S.C. 8287(c)(1)) is repealed.

12 (k) Section 801(c)(2) of the National Energy Con13 servation Policy Act (42 U.S.C. 8287(c)) is amended by

14 inserting ‘‘or water’’ after ‘‘energy’’ each place it appears.

15 (l) Section 802 of the National Energy Conservation

16 Policy Act (42 U.S.C. 8287a.) is amended by inserting

17 ‘‘and water’’ after ‘‘energy’’.

18 (m) Section 803 of the National Energy Conservation

19 Policy Act (42 U.S.C. 8287b.) is amended by inserting

20 ‘‘and water’’ after ‘‘energy’’.

21 (n) Section 804(2) of the National Energy Conserva22 tion Policy Act (42 U.S.C. 8287c.(2)) is amended in para23 graph (a)(2) by inserting ‘‘or water’’ after ‘‘energy’’ each

24 place it appears.
129

S 2904 IS

1 (o) Section 804(3) of the National Energy Conserva2 tion Policy Act (42 U.S.C. 8287c.(3)) is amended in para3 graph (a)(3) by inserting ‘‘or water’’ after ‘‘energy’’.

4 (p) Section 804(4) of the National Energy Conserva5 tion Policy Act (42 U.S.C. 8287c.(3)) is amended to read

6 as follows:

7 ‘‘(4) The term ‘energy or water conservation

8 measure’ includes an ‘energy conservation measure’

9 as defined in section 551(4), or a ‘water conserva10 tion measure,’ which is a measure applied to a Fed11 eral building that improves water efficiency, is life

12 cycle cost effective, and involves water conservation,

13 water recycling or reuse, improvements in operation

14 or maintenance efficiencies, retrofit activities or

15 other related activities.’’.

16 (q) The seventh paragraph under the heading ‘‘Ad17 ministrative Provisions, Department of Energy,’’ in title

18 II of the Act Making Appropriation for the Department

19 of the Interior and Related Agencies for the Fiscal Year

20 Ending September 30, 1999 is amended by inserting ‘‘and

21 water’’ after ‘‘energy’’ each place it appears.

22 (r) Section 101(e) of Public Law 105–277 is amend23 ed by—

24 (1) inserting ‘‘and water conservation’’ after

25 ‘‘efficiency’’ in the title; and
130

S 2904 IS

1 (2) inserting ‘‘and water’’ after ‘‘energy’’ each

2 place it appears.

3 SEC. 1102. WEATHERIZATION.

4 (a) Section 414 of the Energy and Conservation and

5 Production Act (42 U.S.C. 6865) is amended by inserting

6 the following sentence in subsection (a): ‘‘The application

7 shall contain the state’s best estimate of matching funding

8 available from state and local governments and from pri9 vate sources,’’ after the words ‘‘assistance to such per10 sons’’. And, by inserting the words, ‘‘without regard to

11 availability of matching funding’’, after the words ‘‘low12 income persons throughout the States,’’.

13 (b) Section 415 of the Energy and Conservation and

14 Production Act (42 U.S.C. 6865) is amended—

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

16 sentence;

17 (2) in subsection (a)(2) by—

18 (A) striking ‘‘(A)’’,

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

20 to waive the 40 percent requirement established

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

22 plan’’ and inserting ‘‘establish’’, and

23 (C) striking subparagraph (B);

24 (3) in subsection (c)(1) by—
131

S 2904 IS

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

2 inserting ‘‘paragraph (3)’’,

3 (B) striking ‘‘$1600’’ and inserting

4 ‘‘$2500’’,

5 (C) striking ‘‘and’’ at the end of subpara6 graph (C),

7 (D) striking the period and inserting ‘‘;

8 and’’ in subparagraph (D), and

9 (E) inserting after subparagraph (D) the

10 following new subparagraph: ‘‘(E) the cost of

11 making heating and cooling modifications, in12 cluding replacement.’’;

13 (4) in subsection (c)(3) by—

14 (A) striking ‘‘1991, the $1600 per dwelling

15 unit limitation’’ and inserting ‘‘2000, the $2500

16 per dwelling unit average’’,

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

18 ‘‘average’’ each time it appears, and

19 (C) inserting ‘‘the’’ after ‘‘beginning of’’ in

20 subparagraph (B); and

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

22 SEC. 1103. PUBLIC BENEFITS FUND.

23 (a) DEFINITIONS.—For purposes of this section—

24 (1) the term ‘‘eligible public purpose program’’

25 means a State or tribal program that—
132

S 2904 IS

1 (A) assists low-income households in meet2 ing their home energy needs;

3 (B) provides for the planning, construc4 tion, or improvement of facilities to generate,

5 transmit, or distribute electricity to Indian

6 tribes or rural and remote communities;

7 (C) provides for the development and im8 plementation of measures to reduce the demand

9 for electricity; or

10 (D) provides for—

11 (i) new or additional capacity, or im12 proves the efficiency of existing capacity,

13 from a wind, biomass, geothermal, solar

14 thermal, photovoltaic, combined heat and

15 power energy source, or

16 (ii) additional generating capacity

17 achieved from increased efficiency at exist18 ing hydroelectric dams or additions of new

19 capacity at existing hydroelectric dams;

20 (2) the term ‘‘fiscal agent’’ means the entity

21 designated under subsection (b)(2)(B);

22 (3) the term ‘‘Fund’’ means the Public Benefits

23 Fund established under subsection (b)(2)(A);

24 (4) the term ‘‘Indian tribe’’ means any Indian

25 tribe, band, nation, or other organized group or com-
133

S 2904 IS

1 munity, including any Alaska Native village or re2 gional or village corporation as defined in or estab3 lished pursuant to the Alaska Native Claims Settle4 ment Act (43 U.S.C. 1601 et seq.), which is recog5 nized as eligible for the special programs and serv6 ices provided by the United States to Indians be7 cause of their status as Indians; and

8 (5) the term ‘‘State’’ means each of the States

9 and the District of Columbia.

10 (b) PUBLIC BENEFITS FUND.—There is established

11 in the Treasury of the United States a separate fund, to

12 be known as the Public Benefits Fund. The Fund shall

13 consist of amounts collected by the fiscal agent under sub14 section (e). The fiscal agent may disburse amounts in the

15 Fund, without further appropriation, in accordance with

16 this section.

17 (c) FISCAL AGENT.—The Secretary shall appoint a

18 fiscal agent shall collect and disburse the amounts in the

19 Fund in accordance with this section.

20 (d) SECRETARY.—The Secretary shall prescribe rules

21 for:

22 (1) the determination of charges under sub23 section (e);
134

S 2904 IS

1 (2) the collection of amounts for the Fund, in2 cluding provisions for overcollection or undercollec3 tion;

4 (3) the equitable allocation of the Fund among

5 States and Indian tribes based upon—

6 (A) the number of low-income households

7 in such State or tribal jurisdiction; and

8 (B) the average annual cost of electricity

9 used by households in such State or tribal juris10 diction; and

11 (4) the criteria by which the fiscal agent deter12 mines whether a State or tribal government’s pro13 gram is an eligible public purpose program.

14 (e) PUBLIC BENEFITS CHARGE.—(1) As a condition

15 of existing or future interconnection with facilities of any

16 transmitting utility, each owner of an electric generating

17 facility whose nameplate capacity exceeds five megawatts

18 shall pay the transmitting utility a public benefits charge

19 determined under paragraph (2), even if the generation

20 facility and the transmitting facility are under common

21 ownership or are otherwise affiliated. Each importer of

22 electric energy from Canada or Mexico, as a condition of

23 existing or future interconnection with facilities of any

24 transmitting utility in the United States, shall pay this

25 same charge for imported electric energy. The transmit-
135

S 2904 IS

1 ting utility common ownership or are otherwise affiliated.

2 Each importer of electric energy from Canada or Mexico,

3 as a condition of existing or future interconnection with

4 facilities of any transmitting utility in the United States,

5 shall pay this same charge for imported electric energy.

6 The transmitting utility shall pay the amounts collected

7 to the fiscal agent at the close of each month, and the

8 fiscal agent shall deposit the amounts into the Fund as

9 offsetting collections.

10 (2)(A) The Commission shall calculate the rate for

11 the public benefits charge for each calendar year at an

12 amount—

13 (i) equal to $3 billion per year, divided by the

14 estimated kilowatt hours of electric energy to be

15 generated by generators subject to the charge, but

16 (ii) not to exceed 1 mill per kilowatt-hour.

17 (B) Amounts collected in excess of $3 billion in a fis18 cal year shall be retained in the fund and the assessment

19 in the following year shall be reduced by that amount.

20 (f) DISBURSAL FROM THE FUND.—

21 (1) The fiscal agent shall disburse amounts in

22 the Fund to participating States and tribal govern23 ments as a block grant to carry out eligible public

24 purpose programs in accordance with this subsection

25 and rules prescribed under subsection (d).
136

S 2904 IS

1 (2)(A) The fiscal agent shall disburse amounts

2 for a calendar year from the Fund to a State or

3 tribal government in twelve equal monthly payments

4 beginning two months after the beginning of the cal5 endar year.

6 (B) The fiscal agent shall make distributions to

7 the State or tribal government or to an entity des8 ignated by the State or tribal government to receive

9 payments. The State or tribal government may des10 ignate a nonregulated utility as an entity to receive

11 payments under this section.

12 (C) A State or tribal government may use

13 amounts received only for the eligible public purpose

14 programs the State or tribal government designated

15 in its submission to the fiscal agent and the fiscal

16 agent determined eligible.

17 (g) REPORT.—One year before the date of expiration

18 of this section, the Secretary shall report to Congress

19 whether a public benefits fund should continue to exist.

20 (h) SUNSET.—This section expires at midnight on

21 December 31, 2015.’’.

22 SEC. 1104. NATIONAL OIL HEAT RESEARCH ALLIANCE ACT

23 DEFINITIONS.

24 In this section:
137

S 2904 IS

1 (1) ALLIANCE.—The term ‘‘Alliance’’ means a

2 national oilheat research alliance established under

3 section 104.

4 (2) CONSUMER EDUCATION.—The term ‘‘con5 sumer education’’ means the provision of informa6 tion to assist consumers and other persons in mak7 ing evaluations and decisions regarding oilheat and

8 other nonindustrial commercial or residential space

9 or hot water heating fuels.

10 (3) EXCHANGE.—The term ‘‘exchange’’ means

11 an agreement that—

12 (A) entitles each party or its customers to

13 receive oilheat from the other party; and

14 (B) requires only an insubstantial portion

15 of the volumes involved in the exchange to be

16 settled in cash or property other than the

17 oilheat.

18 (4) INDUSTRY TRADE ASSOCIATION.—The term

19 ‘‘industry trade association’’ means an organization

20 described in paragraph (3) or (6) of section 501(c)

21 of the Internal Revenue Code of 1986 that is exempt

22 from taxation under section 501(a) of that Code and

23 is organized for the purpose of representing the

24 oilheat industry.
138

S 2904 IS

1 (5) NO. 1 DISTILLATE.—The term ‘‘No. 1 dis2 tillate’’ means fuel oil classified as No. 1 distillate

3 by the American Society for Testing and Materials.

4 (6) NO. 2 DYED DISTILLATE.—The term ‘‘No.

5 2 dyed distillate’’ means fuel oil classified as No. 2

6 distillate by the American Society for Testing and

7 Materials that is indelibly dyed in accordance with

8 regulations prescribed by the Secretary of the Treas9 ury under section 4082(a)(2) of the Internal Rev10 enue Code of 1986.

11 (7) OILHEAT.—The term ‘‘oilheat’’ means—

12 (A) No. 1 distillate; and

13 (B) No. 2 dyed distillate;

14 that is used as a fuel for nonindustrial commercial

15 or residential space or hot water heating.

16 (8) OILHEAT INDUSTRY.—

17 (A) IN GENERAL.—The term ‘‘oilheat in18 dustry’’ means—

19 (i) persons in the production, trans20 portation, or sale of oilheat; and

21 (ii) persons engaged in the manufac22 ture or distribution of oilheat utilization

23 equipment.
139

S 2904 IS

1 (B) EXCLUSION.—The term ‘‘oilheat in2 dustry’’ does not include ultimate consumers of

3 oilheat.

4 (9) PUBLIC MEMBER.—The term ‘‘public mem5 ber’’ means a member of the Alliance described in

6 section 105(c)(1)(F).

7 (10) QUALIFIED INDUSTRY ORGANIZATION.—

8 The term ‘‘qualified industry organization’’ means

9 the National Association for Oilheat Research and

10 Education or a successor organization.

11 (11) QUALIFIED STATE ASSOCIATION.—The

12 term ‘‘qualified State association’’ means the indus13 try trade association or other organization that the

14 qualified industry organization or the Alliance deter15 mines best represents retail marketers in a State.

16 (12) RETAIL MARKETER.—The term ‘‘retail

17 marketer’’ means a person engaged primarily in the

18 sale of oilheat to ultimate consumers.

19 (13) SECRETARY.—The term ‘‘Secretary’’

20 means the Secretary of Energy.

21 (14) WHOLESALE DISTRIBUTOR.—The term

22 ‘‘wholesale distributor’’ means a person that—

23 (A)(i) produces No. 1 distillate or No. 2

24 dyed distillate;
140

S 2904 IS

1 (ii) imports No. 1 distillate or No. 2 dyed

2 distillate; or

3 (iii) transports No. 1 distillate or No. 2

4 dyed distillate across State boundaries or

5 among local marketing areas; and

6 (B) sells the distillate to another person

7 that does not produce, import, or transport No.

8 1 distillate or No. 2 dyed distillate across State

9 boundaries or among local marketing areas.

10 (15) STATE.—The term ‘State’ means the sev11 eral States, except the State of Alaska.

12 ‘‘SEC. 102. REFERENDA.

13 ‘‘(a) CREATION OF PROGRAM.—

14 ‘‘(1) IN GENERAL.—The oilheat industry,

15 through the qualified industry organization, may

16 conduct, at its own expense, a referendum among re17 tail marketers and wholesale distributors for the es18 tablishment of a national oilheat research alliance.

19 ‘‘(2) REIMBURSEMENT OF COST.—The Alliance,

20 if established, shall reimburse the qualified industry

21 organization for the cost of accounting and docu22 mentation for the referendum.

23 ‘‘(3) CONDUCT.—A referendum under para24 graph (1) shall be conducted by an independent au25 diting firm.
141

S 2904 IS

1 ‘‘(4) VOTING RIGHTS.—

2 ‘‘(A) RETAIL MARKETERS.—Voting rights

3 of retail marketers in a referendum under para4 graph (1) shall be based on the volume of

5 oilheat sold in a State by each retail marketer

6 in the calendar year previous to the year in

7 which the referendum is conducted or in an8 other representative period.

9 ‘‘(B) WHOLESALE DISTRIBUTORS.—Voting

10 rights of wholesale distributors in a referendum

11 under paragraph (1) shall be based on the vol12 ume of No. 1 distillate and No. 2 dyed distillate

13 sold in a State by each wholesale distributor in

14 the calendar year previous to the year in which

15 the referendum is conducted or in another rep16 resentative period, weighted by the ratio of the

17 total volume or No. 1 distillate and No. 2 dyed

18 distillate sold for nonindustrial commercial and

19 residential space and hot water heating in the

20 State to the total volume of No. 1 distillate and

21 No. 2 dyed distillate sold in that State.

22 ‘‘(5) ESTABLISHMENT BY APPROVAL OF TWO23 THIRDS.—

24 ‘‘(A) IN GENERAL.—Subject to subpara25 graph (B), on approval of persons representing
142

S 2904 IS

1 two-thirds of the total volume of oilheat voted

2 in the retail marketer class and two-thirds of

3 the total weighted volume of No. 1 distillate

4 and No. 2 dyed distillate voted in the wholesale

5 distributor class, the Alliance shall be estab6 lished and shall be authorized to levy assess7 ments under section 107.

8 ‘‘(B) REQUIREMENT OF MAJORITY OF RE9 TAIL MARKETERS.—Except as provided in sub10 section (b), the oilheat industry in a State shall

11 not participate in the Alliance if less than 50

12 percent of the retail marketer vote in the State

13 approves establishment of the Alliance.

14 ‘‘(6) CERTIFICATION OF VOLUMES.—Each per15 son voting in the referendum shall certify to the

16 independent auditing firm the volume of oilheat, No.

17 1 distillate, or No. 2 dyed distillate represented by

18 the vote of the person.

19 ‘‘(7) NOTIFICATION.—Not later than 90 days

20 after the date of enactment of this title, a qualified

21 State association may notify the qualified industry

22 organization in writing that a referendum under

23 paragraph (1) will not be conducted in the State.

24 ‘‘(b) SUBSEQUENT STATE PARTICIPATION.—The

25 oilheat industry in a State that has not participated ini-
143

S 2904 IS

1 tially in the Alliance may subsequently elect to participate

2 by conducting a referendum under subsection (a).

3 ‘‘(c) TERMINATION OR SUSPENSION.—

4 ‘‘(1) IN GENERAL.—On the initiative of the Al5 liance or on petition to the Alliance by retail market6 ers and wholesale distributors representing 35 per7 cent of the volume of oilheat or weighted No. 1 dis8 tillate and No. 2 dyed distillate in each class, the Al9 liance shall, at its own expense, hold a referendum,

10 to be conducted by an independent auditing firm se11 lected by the Alliance, to determine whether the

12 oilheat industry favors termination or suspension of

13 the Alliance.

14 ‘‘(2) VOLUME PERCENTAGES REQUIRED TO

15 TERMINATE OR SUSPEND.—Termination or suspen16 sion shall not take effect unless termination or sus17 pension is approved by—

18 ‘‘(A) persons representing more than one19 half of the total volume of oilheat voted in the

20 retail marketer class and more than one-half of

21 the total volume of weighted No. 1 distillate

22 and No. 2 dyed distillate voted in the wholesale

23 distributor class; or
144

S 2904 IS

1 ‘‘(B) persons representing more than two2 thirds of the total volume of fuel voted in either

3 such class.

4 ‘‘(d) CALCULATION OF OILHEAT SALES.—For the

5 purposes of this section and section 105, the volume of

6 oilheat sold annually in a State shall be determined on

7 the basis of information provided by the Energy Informa8 tion Administration with respect to a calendar year or

9 other representative period.

10 ‘‘SEC. 103. MEMBERSHIP.

11 ‘‘(a) SELECTION.—

12 ‘‘(1) IN GENERAL.—Except as provided in sub13 section (c)(1)(C), the qualified industry organization

14 shall select members of the Alliance representing the

15 oilheat industry in a State from a list of nominees

16 submitted by the qualified State association in the

17 State.

18 ‘‘(2) VACANCIES.—A vacancy in the Alliance

19 shall be filled in the same manner as the original se20 lection.

21 ‘‘(b) REPRESENTATION.—In selecting members of

22 the Alliance, the qualified industry organization shall

23 make best efforts to select members that are representa24 tive of the oilheat industry, including representation of—
145

S 2904 IS

1 ‘‘(1) interstate and intrastate operators among

2 retail marketers;

3 ‘‘(2) wholesale distributors of No. 1 distillate

4 and No. 2 dyed distillate;

5 ‘‘(3) large and small companies among whole6 sale distributors and retail marketers; and

7 ‘‘(4) diverse geographic regions of the country.

8 ‘‘(c) NUMBER OF MEMBERS.—

9 ‘‘(1) IN GENERAL.—The membership of the Al10 liance shall be as follows:

11 ‘‘(A) One member representing each State

12 with oilheat sales in excess of 32,000,000 gal13 lons per year.

14 ‘‘(B) If fewer than 24 States are rep15 resented under subparagraph (A), 1 member

16 representing each of the States with the highest

17 volume of annual oilheat sales, as necessary to

18 cause the total number of States represented

19 under subparagraph (A) and this subparagraph

20 to equal 24.

21 ‘‘(C) 5 representatives of retail marketers,

22 1 each to be selected by the qualified State as23 sociations of the 5 States with the highest vol24 ume of annual oilheat sales.
146

S 2904 IS

1 ‘‘(D) 5 additional representatives of retail

2 marketers.

3 ‘‘(E) 21 representatives of wholesale dis4 tributors.

5 ‘‘(F) 6 public members, who shall be rep6 resentatives of significant users of oilheat, the

7 oilheat research community, State energy offi8 cials, or other groups knowledgeable about

9 oilheat.

10 ‘‘(2) FULL-TIME OWNERS OR EMPLOYEES.—

11 Other than the public members, Alliance members

12 shall be full-time owners or employees of members of

13 the oilheat industry, except that members described

14 in subparagraphs (C), (D), and (E) of paragraph (1)

15 may be employees of the qualified industry organiza16 tion or an industry trade association.

17 ‘‘(d) COMPENSATION.—Alliance members shall re18 ceive no compensation for their service, nor shall Alliance

19 members be reimbursed for expenses relating to their serv20 ice, except that public members, on request, may be reim21 bursed for reasonable expenses directly related to partici22 pation in meetings of the Alliance.

23 ‘‘(e) TERMS.—

24 ‘‘(1) IN GENERAL.—Subject to paragraph (4), a

25 member of the Alliance shall serve a term of 3 years,
147

S 2904 IS

1 except that a member filling an unexpired term may

2 serve a total of 7 consecutive years.

3 ‘‘(2) TERM LIMIT.—A member may serve not

4 more than 2 full consecutive terms.

5 ‘‘(3) FORMER MEMBERS.—A former member of

6 the Alliance may be returned to the Alliance if the

7 member has not been a member for a period of 2

8 years.

9 ‘‘(4) INITIAL APPOINTMENTS.—Initial appoint10 ments to the Alliance shall be for terms of 1, 2, and

11 3 years, as determined by the qualified industry or12 ganization, staggered to provide for the subsequent

13 selection of one-third of the members each year.

14 ‘‘SEC. 104. FUNCTIONS.

15 ‘‘(a) IN GENERAL.—

16 ‘‘(1) PROGRAMS, PROJECTS; CONTRACTS AND

17 OTHER AGREEMENTS.—The Alliance—

18 ‘‘(A) shall develop programs and projects

19 and enter into contracts or other agreements

20 with other persons and entities for imple21 menting this title, including programs—

22 ‘‘(i) to enhance consumer and em23 ployee safety and training;
148

S 2904 IS

1 ‘‘(ii) to provide for research develop2 ment, and demonstration of clean and effi3 cient oilheat utilization equipment; and

4 ‘‘(iii) for consumer education; and

5 ‘‘(B) may provide for the payment of the

6 costs of carrying out subparagraph (A) with as7 sessments collected under section 107.

8 ‘‘(2) COORDINATION.—The Alliance shall co9 ordinate its activities with industry trade associa10 tions and other persons as appropriate to provide ef11 ficient delivery of services and to avoid unnecessary

12 duplication of activities.

13 ‘‘(3) ACTIVITIES.—

14 ‘‘(A) EXCLUSIONS.—Activities under

15 clause (i) or (ii) of paragraph (1)(A) shall not

16 include advertising, promotions, or consumer

17 surveys in support of advertising or promotions.

18 ‘‘(B) RESEARCH, DEVELOPMENT, AND

19 DEMONSTRATION ACTIVITIES.—

20 ‘‘(i) IN GENERAL.—Research, develop21 ment, and demonstration activities under

22 paragraph (1)(A)(ii) shall include—

23 ‘‘(I) all activities incidental to re24 search, development, and demonstra-
149

S 2904 IS

1 tion of clean and efficient oilheat utili2 zation equipment; and

3 ‘‘(II) the obtaining of patents, in4 cluding payment of attorney’s fees for

5 making and perfecting a patent appli6 cation.

7 ‘‘(ii) EXCLUDED ACTIVITIES.—Re8 search, development, and demonstration

9 activities under paragraph (1)(A)(ii) shall

10 not include research, development, and

11 demonstration of oilheat utilization equip12 ment with respect to which technically fea13 sible and commercially feasible operations

14 have been verified, except that funds may

15 be provided for improvements to existing

16 equipment until the technical feasibility

17 and commercial feasibility of the operation

18 of those improvements have been verified.

19 ‘‘(b) PRIORITIES.—In the development of programs

20 and projects, the Alliance shall give priority to issues relat21 ing to—

22 ‘‘(1) research, development, and demonstration;

23 ‘‘(2) safety;

24 ‘‘(3) consumer education; and

25 ‘‘(4) training.
150

S 2904 IS

1 ‘‘(c) ADMINISTRATION.—

2 ‘‘(1) OFFICERS; COMMITTEES; BYLAWS.—The

3 Alliance—

4 ‘‘(A) shall select from among its members

5 a chairperson and other officers as necessary;

6 ‘‘(B) may establish and authorize commit7 tees and subcommittees of the Alliance to take

8 specific actions that the Alliance is authorized

9 to take; and

10 ‘‘(C) shall adopt bylaws for the conduct of

11 business and the implementation of this title.

12 ‘‘(2) SOLICITATION OF OILHEAT INDUSTRY

13 COMMENT AND RECOMMENDATIONS.—The Alliance

14 shall establish procedures for the solicitation of

15 oilheat industry comment and recommendations on

16 any significant contracts and other agreements, pro17 grams, and projects to be funded by the Alliance.

18 ‘‘(4) VOTING.—Each member of the Alliance

19 shall have 1 vote in matters before the Alliance.

20 ‘‘(d) ADMINISTRATIVE EXPENSES.—

21 ‘‘(1) IN GENERAL.—The administrative ex22 penses of operating the Alliance (not including costs

23 incurred in the collection of assessments under sec24 tion 107) plus amounts paid under paragraph (2)

25 shall not exceed 7 percent of the amount of assess-
151

S 2904 IS

1 ments collected in any calendar year, except that

2 during the first year of operation of the Alliance

3 such expenses and amounts shall not exceed 10 per4 cent of the amount of assessments.

5 ‘‘(2) REIMBURSEMENT OF THE SECRETARY.—

6 ‘‘(A) IN GENERAL.—The Alliance shall an7 nually reimburse the Secretary for costs in8 curred by the Federal Government relating to

9 the Alliance.

10 ‘‘(B) LIMITATION.—Reimbursement under

11 subparagraph (A) for any calendar year shall

12 not exceed the amount that the Secretary deter13 mines is twice the average annual salary of 1

14 employee of the Department of Energy.

15 ‘‘(e) BUDGET.—

16 ‘‘(1) PUBLICATION OF PROPOSED BUDGET.—

17 Before August 1 of each year, the Alliance shall

18 publish for public review and comment a proposed

19 budget for the next calendar year, including the

20 probable costs of all programs, projects, and con21 tracts and other agreements.

22 ‘‘(2) SUBMISSION TO THE SECRETARY AND

23 CONGRESS.—After review and comment under para24 graph (1), the Alliance shall submit the proposed

25 budget to the Secretary and Congress.
152

S 2904 IS

1 ‘‘(3) RECOMMENDATIONS BY THE SEC2 RETARY.—The Secretary may recommend for inclu3 sion in the budget programs and activities that the

4 Secretary considers appropriate.

5 ‘‘(4) IMPLEMENTATION.—The Alliance shall not

6 implement a proposed budget until the expiration of

7 60 days after submitting the proposed budget to the

8 Secretary.

9 ‘‘(f) RECORDS; AUDITS.—

10 ‘‘(1) RECORDS.—The Alliance shall—

11 ‘‘(A) keep records that clearly reflect all of

12 the acts the transactions of the Alliance; and

13 ‘‘(B) make the records available to the

14 public.

15 ‘‘(2) AUDITS.—

16 ‘‘(A) IN GENERAL.—The records of the Al17 liance (including fee assessment reports and ap18 plications for refunds under section 107(b)(4))

19 shall be audited by a certified public accountant

20 at least once each year and at such other times

21 as the Alliance may designate.

22 ‘‘(B) AVAILABILITY OF AUDIT REPORTS.—

23 Copies of each audit report shall be provided to

24 the Secretary, the members of the Alliance, and
153

S 2904 IS

1 the qualified industry organization, and, on re2 quest to other members of the oilheat industry.

3 ‘‘(C) Policies and procedures.—

4 ‘‘(i) IN GENERAL.—The Alliance

5 shall establish policies and procedures

6 for auditing compliance with this title.

7 ‘‘(ii) CONFORMITY WITH

8 GAAP.—The policies and procedures

9 established under clause (i) shall con10 form with generally accepted account11 ing principles.

12 ‘‘(g) PUBLIC ACCESS to ALLIANCE PROCEEDINGS.—

13 ‘‘(1) PUBLIC NOTICE.—The alliance shall give

14 at least 30 days’ public notice of each meeting of the

15 Alliance.

16 ‘‘(2) MEETINGS OPEN TO THE PUBLIC.—Each

17 meeting of the Alliance shall be open to the public.

18 ‘‘(3) MINUTES.—The minutes of each meeting

19 of the Alliance shall be made available to and readily

20 accessible by the public.

21 ‘‘(h) ANNUAL REPORT.—Each year the Alliance shall

22 prepare and make publicly available a report that—

23 ‘‘(1) includes a description of all programs,

24 projects, and contracts and other agreements under-
154

S 2904 IS

1 taken by the Alliance during the previous year and

2 those planned for the current year; and

3 ‘‘(2) details the allocation of Alliance resources

4 for each such program and project.

5 ‘‘SEC. 105. ASSESSMENTS.

6 ‘‘(a) RATE.—The assessment rate shall be equal to

7 two-tenths-cent per gallon of No. 1 distillate and No. 2

8 dyed distillate.

9 ‘‘(b) COLLECTION RULES.—

10 ‘‘(1) COLLECTION AT POINT OF SALE.—The as11 sessment shall be collected at the point of sale of

12 No. 1 distillate and No. 2 dyed distillate by a whole13 sale distributor to a person other than a wholesale

14 distributor, including a sale made pursuant to an ex15 change.

16 ‘‘(2) RESPONSIBILITY FOR PAYMENT.—A

17 wholesale distributor—

18 ‘‘(A) shall be responsible for payment of an

19 assessment to the Alliance on a quarterly basis;

20 and

21 ‘‘(B) shall provide to the Alliance certifi22 cation of the volume of fuel sold.

23 ‘‘(3) NO OWNERSHIP INTEREST.—A person that

24 has no ownership interest in No. 1 distillate or No.
155

S 2904 IS

1 2 dyed distillate shall not be responsible for payment

2 of an assessment under this section.

3 ‘‘(4) FAILURE TO RECEIVE PAYMENT.—

4 ‘‘(A) REFUND.—A wholesale distributor

5 that does not receive payments from a pur6 chaser for No. 1 distillate or No. 2 dyed dis7 tillate within 1 year of the date of sale may

8 apply for a refund from the Alliance of the as9 sessment paid.

10 ‘‘(B) AMOUNT.—The amount of a refund

11 shall not exceed the amount of the assessment

12 levied on the No. 1 distillate or No. 2 dyed dis13 tillate for which payment was not received.

14 ‘‘(5) IMPORTATION AFTER POINT OF SALE.—

15 The owner of No. 1 distillate or No. 2 dyed distillate

16 imported after the point of sale—

17 ‘‘(A) shall be responsible for payment of

18 the assessment of the Alliance at the point at

19 which the product enters the United States; and

20 ‘‘(B) shall provide to the Alliance certifi21 cation of the volume of fuel imported.

22 ‘‘(6) LATE PAYMENT CHARGE.—The Alliance

23 may establish a late payment charge and rate of in24 terest to be imposed on any person who fails to
156

S 2904 IS

1 remit or pay to the Alliance any amount due under

2 this title.

3 ‘‘(7) ALTERNATIVE COLLECTION RULES.—The

4 Alliance may establish, or approve a request of the

5 oilheat industry in a State for, an alternative means

6 of collecting the assessment if another means is de7 termined to be more efficient or more effective.

8 ‘‘(c) SALE FOR USE OTHER THAN AS OILHEAT.—

9 No. 1 distillate and No. 2 dyed distillate sold for uses

10 other than as oilheat are excluded from the assessment.

11 ‘‘(d) INVESTMENT OF FUNDS.—Pending disburse12 ment under a program, project, or contract or other agree13 ment the Alliance may invest funds collected through as14 sessments, and any other finds received by the Alliance,

15 only—

16 ‘‘(1) in obligations of the United States or any

17 agency of the United States;

18 ‘‘(2) in general obligations of any State or any

19 political subdivision of a State;

20 ‘‘(3) in any interest-bearing account or certifi21 cate of deposit of a bank that is a member of the

22 Federal Reserve System; or

23 ‘‘(4) in obligations fully guaranteed as principal

24 and interest by the United States.

25 ‘‘(e) STATE, LOCAL, AND REGIONAL PROGRAMS.—
157

S 2904 IS

1 ‘‘(1) COORDINATION.—The Alliance shall estab2 lish a program coordinating the operation of the Al3 liance with the operator of any similar State, local,

4 or regional program created under State law (includ5 ing a regulation), or similar entity.

6 ‘‘(2) FUNDS MADE AVAILABLE TO QUALIFIED

7 STATE ASSOCIATIONS.—

8 ‘‘(A) IN GENERAL.—

9 ‘‘(i) BASE AMOUNT.—The Alliance

10 shall make available to the qualified State

11 association of each State an amount equal

12 to 15 percent of the amount of assess13 ments collected in the State.

14 ‘‘(ii) ADDITIONAL AMOUNT.—

15 ‘‘(I) IN GENERAL.—A qualified

16 State association may request that the

17 Alliance provide to the association any

18 portion of the remaining 85 percent of

19 the amount of assessments collected

20 in the State.

21 ‘‘(II) REQUEST REQUIRE22 MENTS.—A request under this clause

23 shall—

24 ‘‘(aa) specify the amount of

25 funds requested;
158

S 2904 IS

1 ‘‘(bb) describe in detail the

2 specific uses for which the re3 quested funds are sought;

4 ‘‘(cc) include a commitment

5 to comply with this title in using

6 the requested funds; and

7 ‘‘(dd) be made publicly

8 available.

9 ‘‘(III) DIRECT BENEFIT.—The

10 Alliance shall not provide any funds in

11 response to a request under this

12 clause unless the Alliance determines

13 that the funds will be used to directly

14 benefit the oilheat industry.

15 ‘‘(IV) MONITORING; TERMS, CON16 DITIONS, AND REPORTING REQUIRE17 MENTS.—The Alliance shall—

18 ‘‘(aa) monitor the use of

19 funds provided under this clause;

20 and

21 ‘‘(bb) impose whatever

22 terms, conditions, and reporting

23 requirements that the Alliance

24 considers necessary to ensure

25 compliance with this title.
159

S 2904 IS

1 ‘‘SEC. 106. MARKET SURVEY AND CONSUMER PROTECTION.

2 ‘‘(a) PRICE ANALYSIS.—Beginning 2 years after es3 tablishment of the Alliance and annually thereafter, the

4 Secretary of Commerce, using only data provided by the

5 Energy Information Administration and other public

6 sources, shall prepare and make available to the Congress,

7 the Alliance, the Secretary of Energy, and the public, an

8 analysis of changes in the price of oilheat relative to other

9 energy sources. The oilheat price analysis shall compare

10 indexed changes in the price of consumer grade oilheat

11 to a composite of indexed changes in the price of residen12 tial electricity, residential natural gas, and propane on an

13 annual average basis. For purposes of indexing changes

14 in oilheat, residential electricity, residential natural gas,

15 and propane prices, the Secretary of Commerce shall use

16 a 5-year rolling average price beginning with the year 4

17 years prior to the establishment of the Alliance.

18 ‘‘(b) AUTHORITY TO RESTRICT ACTIVITIES.—If in

19 any year the 5-year average price composite index of con20 sumer grade oilheat exceeds the 5-year rolling average

21 price composite index of residential electricity, residential

22 natural gas, and propane in an amount greater than 10.1

23 percent, the activities of the Alliance shall be restricted

24 to research and development, training, and safety matters.

25 The Alliance shall inform the Secretary of Energy and the

26 Congress of any restriction of activities under this sub-
160

S 2904 IS

1 section. Upon expiration of 180 days after the beginning

2 of any such restriction of activities, the Secretary of Com3 merce shall again conduct the oilheat price analysis de4 scribed in subsection (a). Activities of the Alliance shall

5 continue to be restricted under this subsection until the

6 price index excess is 10.1 percent or less.

7 ‘‘SEC. 107. COMPLIANCE.

8 ‘‘(a) IN GENERAL.—The Alliance may bring a civil

9 action in United States district court to compel payment

10 of an assessment under section 107.

11 ‘‘(b) COSTS.—A successful action for compliance

12 under this section may also require payment by the de13 fendant of the costs incurred by the Alliance in bringing

14 the action.

15 ‘‘SEC. 108. LOBBYING RESTRICTIONS.

16 ‘‘No funds derived from assessments under section

17 107 collected by the Alliance shall be used to influence

18 legislation or elections, except that the Alliance may use

19 such funds to formulate and submit to the Secretary rec20 ommendations for amendments to this title or other laws

21 that would further the purposes of this title.

22 ‘‘SEC. 109. DISCLOSURE.

23 ‘‘Any consumer education activity undertaken with

24 funds provided by the Alliance shall include a statement
161

S 2904 IS

1 that the activities were supported, in whole or in part, by

2 the Alliance.

3 ‘‘SEC. 110. VIOLATIONS.

4 ‘‘(a) PROHIBITION.—It shall be unlawful for any per5 son to conduct a consumer education activity, undertaken

6 with funds derived from assessments collected by the Alli7 ance under section 107, that includes—

8 ‘‘(1) a reference to a private brand name;

9 ‘‘(2) a false or unwarranted claim on behalf of

10 oilheat or related products; or

11 ‘‘(3) a reference with respect to the attributes

12 or use of any competing product.

13 ‘‘(b) COMPLAINTS.—

14 ‘‘(1) IN GENERAL.—A public utility that is ag15 grieved by a violation described in subsection (a)

16 may file a complaint with the Alliance.

17 ‘‘(2) TRANSMITTAL TO QUALIFIED STATE ASSO18 CIATION.—A complaint shall be transmitted concur19 rently to any qualified State association undertaking

20 the consumer education activity with respect to

21 which the complaint is made.

22 ‘‘(3) CESSATION OF ACTIVITIES.—On receipt of

23 a complaint under this subsection, the Alliance, and

24 any qualified State association undertaking the con25 sumer education activity with respect to which the
162

S 2904 IS

1 complaint is made, shall cease that consumer edu2 cation activity until—

3 ‘‘(A) the complaint is withdrawn; or

4 ‘‘(B) a court determines that the conduct

5 of the activity complained of does not constitute

6 a violation of subsection (a).

7 ‘‘(c) RESOLUTION BY PARTIES.—

8 ‘‘(1) IN GENERAL.—Not later than 10 days

9 after a compliant is filed and transmitted under sub10 section (b), the complaining party, the Alliance, and

11 any qualified State association undertaking the con12 sumer education activity with respect to which the

13 compliant is made shall meet to attempt to resolve

14 the compliant.

15 ‘‘(2) WITHDRAWAL OF COMPLAINT.—If the

16 issues in dispute are resolved in those discussions,

17 the complaining party shall withdraw its complaint.

18 ‘‘(d) JUDICIAL REVIEW.—

19 ‘‘(1) IN GENERAL.—A public utility filing a

20 complaint under this section, the Alliance, a quali21 fied State association undertaking the consumer

22 education activity with respect to which a complaint

23 under this section is made, or any person aggrieved

24 by a violation of subsection (a) may seek appropriate

25 relief in United States district court.
163

S 2904 IS

1 ‘‘(2) RELIEF.—A public utility filing a com2 plaint under this section shall be entitled to tem3 porary and injunctive relief enjoining the consumer

4 education activity with respect to which a complaint

5 under this section is made until—

6 ‘‘(A) the complaint is withdrawn; or

7 ‘‘(B) the court has determined that what

8 the consumer education activity complained of

9 does not constitute a violation of subsection (a).

10 ‘‘(e) ATTORNEY’S FEES.—

11 ‘‘(1) MERITORIOUS CASE.—In a case in Federal

12 court in which the court grants a public utility in13 junctive relief under subsection (d), the public utility

14 shall be entitled to recover an attorney’s fee from

15 the Alliance and any qualified State association un16 dertaking the consumer education activity with re17 spect to which a complaint under this section is

18 made.

19 ‘‘(2) NONMERITORIOUS CASE.—In any case

20 under subsection (d) in which the court determines

21 a complaint under subsection (b) to be frivolous and

22 without merit, the prevailing party shall be entitled

23 to recover an attorney’s fee.

24 ‘‘(f) SAVINGS CLAUSE.—Nothing in this section shall

25 limit causes of action brought under any other law.
164

S 2904 IS

1 ‘‘SEC. 111. SUNSET.

2 ‘‘This title shall cease to be effective as of the date

3 that is 4 years after the date on which the Alliance is es4 tablished.’’.

5 TITLE XII—ELECTRICITY

6 SEC. 1201. COMPREHENSIVE INDIAN ENERGY PROGRAM.

7 (a) Title XXVI of the Energy Policy Act of 1992 (25

8 U.S.C. 3501–3506) is amended by adding after section

9 2606 the following new section—

10 ‘‘SEC. 2607. COMPREHENSIVE INDIAN ENERGY PROGRAM.

11 ‘‘(a) DEFINITIONS.—For purposes of this section—

12 ‘‘(1) ‘Director’ means the Director of the Office

13 of Indian Energy Policy and Programs established

14 by section 217 of the Department of Energy Organi15 zation Act; and

16 ‘‘(2) ‘Indian land’ means—

17 ‘‘(A) any land within the limits of an In18 dian reservation, pueblo, or ranchera;

19 ‘‘(B) any land not within the limits of an

20 Indian reservation, pueblo, or ranchera whose

21 title on the date of enactment of this section

22 was held—

23 ‘‘(i) in trust by the United States for

24 the benefit of an Indian tribe,
165

S 2904 IS

1 ‘‘(ii) by an Indian tribe subject to re2 striction by the United States against

3 alienation, or

4 ‘‘(iii) by a dependent Indian commu5 nity; and

6 ‘‘(C) land conveyed to an Alaska Native

7 Corporation under the Alaska Native Claims

8 Settlement Act.

9 ‘‘(b) INDIAN ENERGY EDUCATION, PLANNING AND

10 MANAGEMENT ASSISTANCE.—(1) The Director shall es11 tablish programs within the Office of Indian Energy Pol12 icy and Programs to assist Indian tribes to meet their en13 ergy education, research and development, planning, and

14 management needs.

15 ‘‘(2) The Director may make grants, on a competitive

16 basis, to an Indian tribe for—

17 ‘‘(A) renewable, energy efficiency, and conserva18 tion programs;

19 ‘‘(B) studies and other activities supporting

20 tribal acquisition of energy supplies, services, and fa21 cilities; and

22 ‘‘(C) planning, constructing, developing, oper23 ating, maintaining, and improving tribal electrical

24 generation, transmission, and distribution facilities.
166

S 2904 IS

1 ‘‘(3) The Director may develop, in consultation with

2 Indian tribes, a formula for making grants under this sec3 tion. The formula may take into account the following—

4 ‘‘(A) total number of acres of Indian land

5 owned by an Indian tribe;

6 ‘‘(B) total number of households on the tribe’s

7 Indian land;

8 ‘‘(C) total number of households on the Indian

9 tribe’s Indian land that have no electricity service or

10 are underserved; and

11 ‘‘(D) financial or other assets available to the

12 tribe from any source.

13 ‘‘(4) In making a grant under paragraph (2)(E), the

14 Director shall give priority to an application received from

15 an Indian tribe that is not served or served inadequately

16 by an electric utility, as that term is defined in section

17 3(4) of the Public Utility Regulatory Policies Act of 1978

18 (16 U.S.C. 2602(4)), or by a person, State agency, or any

19 other non-federal entity that owns or operates a local dis20 tribution facility used for the sale of electric energy to an

21 electric consumer.

22 ‘‘(5) There are authorized to be appropriated to the

23 Department of Energy such sums as may be necessary to

24 carry out the purposes of this section.
167

S 2904 IS

1 ‘‘(c) APPLICATION OF BUY INDIAN ACT.—(1) An

2 agency or department of the United States Government

3 may give, in the purchase and sale of electricity, oil, gas,

4 coal, or other energy product or by-product produced, con5 verted, or transferred on Indian lands, preference, under

6 section 23 of the Act of June 25, 1910 (25 U.S.C. 47)

7 (commonly known as the ‘‘Buy Indian Act’’), to an energy

8 and resource production enterprise, partnership, corpora9 tion, or other type of business organization majority or

10 wholly owned and controlled by an Indian, a tribal govern11 ment, or a business, enterprise, or operation of the Amer12 ican Indian Tribal Governments.

13 ‘‘(2) In implementing this subsection, an agency or

14 department shall pay no more for energy production than

15 the prevailing market price and shall obtain no less than

16 existing market terms and conditions.

17 ‘‘(d) This section does not—

18 ‘‘(1) limit the discretion vested in an Adminis19 trator of a Federal Power Administration to market

20 and allocate Federal power, or

21 ‘‘(2) alter Federal laws under which a Federal

22 Power Administration markets, allocates, or pur23 chases power.’’.
168

S 2904 IS

1 (b) OFFICE OF INDIAN POLICY AND PROGRAMS.—

2 Title II of the Department of Energy Organization Act

3 is amended by inserting the following after section 216:

4 ‘‘OFFICE OF INDIAN ENERGY POLICY AND PROGRAMS

5 ‘‘SEC. 217. (a) There is established within the De6 partment an Office of Indian Energy Policy and Pro7 grams. This Office shall be headed by a Director, who

8 shall be appointed by the Secretary and compensated at

9 the rate equal to that of level IV of the Executive Schedule

10 under section 5315 of Title 5, United States Code. The

11 Director shall perform the duties assigned the Director

12 under the Comprehensive Indian Energy Act and this sec13 tion.

14 ‘‘(b) The Director shall provide, direct, foster, coordi15 nate, and implement energy planning, education, manage16 ment, conservation, and delivery programs of the Depart17 ment that—

18 ‘‘(1) promote tribal energy efficiency and utili19 zation;

20 ‘‘(2) modernize and develop, for the benefit of

21 Indian tribes, tribal energy and economic infrastruc22 ture related to natural resource development and

23 electrification;

24 ‘‘(3) preserve and promote tribal sovereignty

25 and self determination related to energy matters and

26 energy deregulation;
169

S 2904 IS

1 ‘‘(4) lower or stabilize energy costs; and

2 ‘‘(5) electrify tribal members’ homes and tribal

3 lands.

4 ‘‘(c) The Director shall carry out the duties assigned

5 the Secretary under title XXVI of the Energy Policy Act

6 of 1992 (25 U.S.C. 3501 et seq.).’’.

7 (c) CONFORMING AMENDMENT.—Section 2603(c) of

8 the Energy Policy Act of 1992 (25 U.S.C. 3503(c)) is

9 amended to read as follows:

10 ‘‘(c) There are authorized to be appropriated such

11 sums as may be necessary to carry out the purposes of

12 this section.’’.

13 (d) The Table of Contents of the Department of En14 ergy Act is amended by inserting after the item relating

15 to section 216 the following new item:

‘‘217. Office of Indian Energy Policy and Programs.’’.

16 (e) Section 5315 of title 5, United States Code, is

17 amended by inserting ‘‘Director, Office of Indian Energy

18 Policy and Programs, Department of Energy.’’ after ‘‘Di19 rector, Office of Science, Department of Energy.’’.

20 SEC. 1202. INTERCONNECTION.

21 Title II of the Federal Power Act is further amended

22 by adding after section 210 (16 U.S.C. 824i) the fol23 lowing:
170

S 2904 IS

1 ‘‘SEC. 210A. INTERCONNECTION OF DISTRIBUTED GENERA2 TION FACILITIES.

3 ‘‘(a) RULEMAKING AUTHORITY.—Not later than one

4 year after the date of enactment of this section, the Com5 mission shall adopt rules to ensure the interconnection of

6 distributed generation facilities to local distribution facili7 ties of an electric utility.

8 ‘‘(b) INTERCONNECTION AUTHORITY.—Upon the ap9 plication of the owner or operator of a distributed genera10 tion facility, the Commission may issue an order requiring

11 the physical connection of the local distribution facilities

12 of an electric utility with the distributed generation facility

13 of the applicant.

14 ‘‘(c) STATE AUTHORITY.—Any interconnection or15 dered under this section shall be subject to regulation by

16 the appropriate State commission.

17 ‘‘(d) DEFINITION.—As used in this section, the term

18 ‘distributed generation facility’ means—

19 ‘‘(1) a small-scale electric power generation fa20 cility that is designed to serve customers at or near

21 the facility, or

22 ‘‘(2) a facility using a single fuel source to

23 produce at the point of use either electric or me24 chanical power and thermal energy.’’.

Æ