II 

112TH CONGRESS 

1ST SESSION S. 559 

To promote the production and use of renewable energy, and for other 

purposes. 

IN THE SENATE OF THE UNITED STATES 

MARCH 10, 2011 

Ms. KLOBUCHAR introduced the following bill; which was read twice and 

referred to the Committee on Finance 

A BILL 

To promote the production and use of renewable energy, 

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; TABLE OF CONTENTS. 

4 (a) IN GENERAL.—This Act may be cited as the ‘‘Se5 curing America’s Future with Energy and Sustainable 

6 Technologies Act’’. 

7 (b) TABLE OF CONTENTS.—The table of contents of 

8 this Act is as follows: 

Sec. 1. Short title; table of contents. 

Sec. 2. Definition of Secretary. 

TITLE I—RENEWABLE FUEL PROGRAM 


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Sec. 101. Definition of advanced biofuel. 

Sec. 102. Biomass-based diesel. 

Sec. 103. International indirect land use changes. 

Sec. 104. Modification of definition of renewable biomass. 

TITLE II—PRODUCTION AND USE OF RENEWABLE FUEL 

Sec. 201. Loan guarantees for projects to construct renewable fuel pipelines. 

Sec. 202. Open fuel standard for transportation. 

Sec. 203. Tax incentives for qualified blender pumps. 

Sec. 204. Blender pump installation. 

TITLE III—RENEWABLE ENERGY TAX EXTENSIONS 

Sec. 301. Modification of credit for alcohol used as fuel. 

Sec. 302. Reform of biodiesel income tax incentives. 

Sec. 303. Reform of biodiesel excise tax incentives. 

Sec. 304. Biodiesel treated as taxable fuel. 

TITLE IV—RENEWABLE ELECTRICITY INTEGRATION CREDIT 

Sec. 401. Renewable electricity integration credit. 

TITLE V—WIND ENERGY 

Sec. 501. Removal of certain tax restrictions to promote expansion of capital 

for wind farm investment. 

TITLE VI—RENEWABLE ELECTRICITY AND ENERGY EFFICIENCY 

RESOURCE STANDARDS 

Sec. 601. Renewable electricity and energy efficiency resource standards. 

Sec. 602. Energy efficiency resource standard for retail electricity and natural 

gas distributors. 

Sec. 603. Voluntary renewable energy markets. 

1 SEC. 2. DEFINITION OF SECRETARY. 

2 In this Act, the term ‘‘Secretary’’ means the Sec3 retary of Energy. 

4 TITLE I—RENEWABLE FUEL 

5 PROGRAM 

6 SEC. 101. DEFINITION OF ADVANCED BIOFUEL. 

7 Section 211(o)(1)(B) of the Clean Air Act (42 U.S.C. 

8 7545(o)(1)(B)) is amended— 

9 (1) in clause (i), by striking ‘‘, other than eth10 anol derived from corn starch,’’; and 


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1 (2) in clause (ii)(II), by striking ‘‘(other than 

2 corn starch)’’. 

3 SEC. 102. BIOMASS-BASED DIESEL. 

4 Section 211(o)(2)(A) of the Clean Air Act (42 U.S.C. 

5 7545(o)(2)(A)) is amended by adding at the end the fol6 lowing: 

7 ‘‘(v) GRANDFATHERING BIOMASS8 BASED DIESEL.—The Administrator shall 

9 promulgate regulations that exempt from 

10 the lifecycle greenhouse gas requirements 

11 of subparagraphs (B) and (D) of para12 graph (1) up to the greater of 

13 1,000,000,000 gallons or the volume man14 date adopted pursuant to subparagraph 

15 (B)(ii), of biomass-based diesel annually 

16 from facilities that commenced construc17 tion before December 19, 2007.’’. 

18 SEC. 103. INTERNATIONAL INDIRECT LAND USE CHANGES. 

19 Section 211(o) of the Clean Air Act (42 U.S.C. 

20 7545(o)) is amended by adding at the end the following: 

21 ‘‘(13) INTERNATIONAL INDIRECT LAND USE

22 CHANGES.— 

23 ‘‘(A) EXCLUSION FROM REGULATORY RE24 QUIREMENTS REGARDING LIFECYCLE GREEN25 HOUSE GAS EMISSIONS.—Notwithstanding the 


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1 definition of ‘lifecycle greenhouse gas emissions’ 

2 in paragraph (1)(H), for purposes of deter3 mining whether a fuel meets a definition under 

4 paragraph (1) or complies with paragraph 

5 (2)(A)(i), the Administrator shall exclude emis6 sions from indirect land use changes outside the 

7 country of origin of the feedstock of a renew8 able fuel. 

9 ‘‘(B) NATIONAL ACADEMIES OF SCIENCE

10 REPORT.— 

11 ‘‘(i) IN GENERAL.—Not later than 

12 180 days after the date of enactment of 

13 this paragraph, the Administrator and the 

14 Secretary of Agriculture shall jointly ar15 range for the National Academies of 

16 Science to review and report on specified 

17 issues relating to indirect greenhouse gas 

18 emissions relating to transportation fuels. 

19 ‘‘(ii) MODELS AND METHODOLO20 GIES.—The report shall evaluate and re21 port on whether there are economic and 

22 environmental models and methodologies 

23 that individually, or as a system, can 

24 project with reliability, predictability, and 

25 confidence— 


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1 ‘‘(I) for purposes of determining 

2 whether a fuel meets a definition 

3 under paragraph (1) or complies with 

4 paragraph (2)(A)(i), indirect land use 

5 changes that are related to the pro6 duction of renewable fuels and that 

7 may occur outside the country in 

8 which the feedstocks are grown, and 

9 the impacts of those changes on 

10 greenhouse gas emissions; and 

11 ‘‘(II) indirect effects, both do12 mestic and international, related to 

13 the production and importation of 

14 nonrenewable transportation fuels 

15 that have significant greenhouse gas 

16 emissions, and the impact of those ef17 fects on greenhouse gas emissions. 

18 ‘‘(iii) ADMINISTRATION.— 

19 ‘‘(I) IN GENERAL.—The report 

20 shall— 

21 ‘‘(aa) include a review and 

22 assessment of all pertinent sci23 entific studies, methodologies, 

24 and data; 


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1 ‘‘(bb) evaluate potential 

2 methodologies for calculating 

3 emissions (including an evalua4 tion of methods for annualizing 

5 emissions associated with forest 

6 degradation or land conversion); 

7 and 

8 ‘‘(cc) make appropriate rec9 ommendations. 

10 ‘‘(II) INDIRECT EFFECTS.—The 

11 recommendations shall address indi12 rect effects, both domestic and inter13 national, relating to the production 

14 and importation of nonrenewable 

15 transportation fuels that have signifi16 cant greenhouse gas emissions. 

17 ‘‘(III) VALIDATION.—The report 

18 shall use appropriate validation proce19 dures, including sensitivity analyses, 

20 to measure how results change as as21 sumptions change. 

22 ‘‘(IV) MODELS.—The evaluation 

23 shall include a model, methodology, or 

24 system of models that assesses how 


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1 reliably the models, methodologies, or 

2 systems— 

3 ‘‘(aa) track actual outcomes 

4 over historical periods using 

5 available historical data; and 

6 ‘‘(bb) will project future out7 comes. 

8 ‘‘(iv) AVAILABILITY.—The report 

9 shall— 

10 ‘‘(I) be publicly available; and 

11 ‘‘(II) include sufficient informa12 tion and data so that economists and 

13 other scientists with relevant expertise 

14 that are not on the National Acad15 emies of Science panel can fully evalu16 ate the conclusions of the report. 

17 ‘‘(v) DEADLINE.—The report shall be 

18 completed not later than 3 years after the 

19 date of enactment of this paragraph. 

20 ‘‘(C) DETERMINATION.— 

21 ‘‘(i) IN GENERAL.—The Administrator 

22 and the Secretary of Agriculture shall, 

23 after notice and an opportunity for public 

24 comment, determine— 


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1 ‘‘(I) whether, for purposes of de2 termining compliance with the percent 

3 reductions in lifecycle greenhouse gas 

4 emissions specified in paragraph (1) 

5 for various renewable fuels, scientif6 ically valid models and methodologies 

7 exist to project indirect land use 

8 changes that are related to the pro9 duction of renewable fuels and that 

10 occur outside the country in which the 

11 feedstocks are grown outside the 

12 country of origin of the feedstocks; 

13 and 

14 ‘‘(II) the impact of those changes 

15 on greenhouse gas emissions. 

16 ‘‘(ii) BASIS.— 

17 ‘‘(I) REPORT.—The determina18 tion shall take into account the find19 ings and recommendations of the re20 port required under subparagraph 

21 (B), as well as other available sci22 entific, economic, and other relevant 

23 information. 

24 ‘‘(II) OTHER FEDERAL AGEN25 CIES.—The Administrator and the 


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1 Secretary of Agriculture may also con2 sider methods used by the Environ3 mental Protection Agency, the De4 partment of Agriculture, and other 

5 Federal agencies to assess or guide re6 lated policies. 

7 ‘‘(iii) PUBLICATION OF DETERMINA8 TIONS.— 

9 ‘‘(I) IN GENERAL.—The Admin10 istrator and the Secretary of Agri11 culture shall publish— 

12 ‘‘(aa) a proposed determina13 tion not later than 4 years after 

14 the date of enactment of this 

15 paragraph; and 

16 ‘‘(bb) a final determination 

17 not later than 5 years after the 

18 date of enactment of this para19 graph. 

20 ‘‘(II) EXPLANATION.—An expla21 nation and justification of the deter22 mination shall be included in the pro23 posed and final actions, together with 

24 a response to comments received. 

25 ‘‘(D) RESPONSE TO DETERMINATION.— 


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1 ‘‘(i) POSITIVE DETERMINATION.— 

2 ‘‘(I) IN GENERAL.—In the case 

3 of a positive determination under sub4 paragraph (C), the Administrator and 

5 the Secretary of Agriculture shall, 

6 after notice and an opportunity for 

7 public comment, by the same date 

8 jointly establish 1 or more methodolo9 gies to calculate greenhouse gas emis10 sions from indirect land use changes 

11 that are attributable to the production 

12 of renewable fuels and that occur out13 side the country in which feedstocks 

14 are grown outside the country of ori15 gin of the feedstock for purposes of 

16 calculating the lifecycle greenhouse 

17 gas emissions of a renewable fuel to 

18 determine whether the renewable fuel 

19 meets a definition under paragraph 

20 (1) or complies with paragraph 

21 (2)(A)(i). 

22 ‘‘(II) ADMINISTRATION.—In the 

23 calendar year following a positive de24 termination under subparagraph 

25 (C)— 


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1 ‘‘(aa) the exclusion under 

2 subparagraph (A) shall termi3 nate; and 

4 ‘‘(bb) the Administrator 

5 shall promulgate a regulation by 

6 the same date that shall include 

7 emissions from indirect land use 

8 changes outside the country of 

9 origin of a feedstock of a renew10 able fuel for purposes of calcu11 lating the lifecycle greenhouse 

12 gas emissions of the renewable 

13 fuel to determine whether the re14 newable fuel meets a definition 

15 under paragraph (1) or complies 

16 with paragraph (2)(A)(i) for re17 newable fuels sold in the calendar 

18 year. 

19 ‘‘(III) EFFECTIVE DATE.—The 

20 effective date of the regulation shall 

21 be 6 years after the date of enactment 

22 of this paragraph. 

23 ‘‘(ii) NEGATIVE DETERMINATION.—A 

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1 graph (C) shall include a statement of the 

2 basis for the determination. 

3 ‘‘(E) ACCOUNTABILITY.—The joint duties 

4 and actions of the Administrator and the Sec5 retary of Agriculture under this paragraph shall 

6 be subject to sections 304 and 307 as if the du7 ties and actions were the duties and actions of 

8 the Administrator alone.’’. 

9 SEC. 104. MODIFICATION OF DEFINITION OF RENEWABLE 

10 BIOMASS. 

11 (a) NATIONAL ACADEMY OF SCIENCES REPORT.— 

12 Not later than 1 year after the date of enactment of this 

13 Act, the Administrator of the Environmental Protection 

14 Agency, the Secretary of Agriculture, and the Federal En15 ergy Regulatory Commission shall jointly enter into an ar16 rangement with the National Academy of Sciences to 

17 evaluate how sources of renewable biomass contribute to 

18 the goals of increasing the energy independence of the 

19 United States, protecting the environment, and reducing 

20 global warming pollution. 

21 (b) MODIFICATION.— 

22 (1) EPA MODIFICATION AUTHORITY.—After re23 viewing the report required by subsection (a), the 

24 Administrator of the Environmental Protection 

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1 riculture, may, by regulation and after public notice 

2 and comment, modify the non-Federal land portion 

3 of the definition of ‘‘renewable biomass’’ in section 

4 211(o)(1)(I) of the Clean Air Act (42 U.S.C. 

5 7545(o)(1)(I)) and in section 610 of the Public Util6 ity Regulatory Policies Act of 1978 in order to ad7 vance the goals of increasing the energy independ8 ence of the United States, protecting the environ9 ment, and reducing global warming pollution. 

10 (2) FERC MODIFICATION AUTHORITY.—After 

11 reviewing the report required by subsection (a), the 

12 Federal Energy Regulatory Commission, with the 

13 concurrence of the Secretary of Agriculture, may, by 

14 regulation and after public notice and comment, 

15 modify the non-Federal lands portion of the defini16 tion of ‘‘renewable biomass’’ in section 610(a) of the 

17 Public Utility Regulatory Policies Act of 1978 in 

18 order to advance the goals of increasing the energy 

19 independence of the United States, protecting the 

20 environment, and reducing global warming pollution. 

21 (c) FEDERAL LAND.— 

22 (1) SCIENTIFIC REVIEW.—Not later than 1 year 

23 after the date of enactment of this Act, the Sec24 retary of the Interior, the Secretary of Agriculture, 

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1 tion Agency shall conduct a joint scientific review to 

2 evaluate how sources of biomass from Federal land 

3 could contribute to the goals of increasing the en4 ergy independence of the United States, protecting 

5 the environment, and reducing global warming pollu6 tion. 

7 (2) MODIFICATION AUTHORITY.—Based on the 

8 scientific review, the agencies may, by rule, modify 

9 the definition of ‘‘renewable biomass’’ from Federal 

10 land in sections 211(o)(1)(I) of the Clean Air Act 

11 (42 U.S.C. 7545(o)(1)(I)) and section 610 of the 

12 Public Utility Regulatory Policies Act of 1978, as 

13 appropriate, to advance the goals of increasing the 

14 energy independence of the United States, protecting 

15 the environment, and reducing global warming pollu16 tion. 

17 TITLE II—PRODUCTION AND USE 

18 OF RENEWABLE FUEL 

19 SEC. 201. LOAN GUARANTEES FOR PROJECTS TO CON20 STRUCT RENEWABLE FUEL PIPELINES. 

21 (a) DEFINITIONS.—Section 1701 of the Energy Pol22 icy Act of 2005 (42 U.S.C. 16511) is amended by adding 

23 at the end the following: 

24 ‘‘(6) RENEWABLE FUEL.—The term ‘renewable 

25 fuel’ has the meaning given the term in section 


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1 211(o)(1) of the Clean Air Act (42 U.S.C. 

2 7545(o)(1)), except that the term shall include all 

3 ethanol and biodiesel. 

4 ‘‘(7) RENEWABLE FUEL PIPELINE.—The term 

5 ‘renewable fuel pipeline’ means a pipeline for trans6 porting renewable fuel.’’. 

7 (b) AMOUNT.—Section 1702(c) of the Energy Policy 

8 Act of 2005 (42 U.S.C. 16512(c)) is amended— 

9 (1) by striking ‘‘Unless otherwise’’ and insert10 ing the following: 

11 ‘‘(1) IN GENERAL.—Unless otherwise’’; and 

12 (2) by adding at the end the following: 

13 ‘‘(2) RENEWABLE FUEL PIPELINES.—A guar14 antee for a project described in section 1703(b)(11) 

15 shall be in an amount equal to 80 percent of the 

16 project cost of the facility that is the subject of the 

17 guarantee, as estimated at the time at which the 

18 guarantee is issued.’’. 

19 (c) REASONABLE PROSPECT OF REPAYMENT.—Sec20 tion 1702(d) of the Energy Policy Act of 2005 (42 U.S.C. 

21 16512(d)) is amended by adding at the end the following: 

22 ‘‘(4) RENEWABLE FUEL PIPELINE.—In deter23 mining under paragraph (1) whether there is a rea24 sonable prospect of repayment with respect to a re25 newable fuel pipeline project described in section 


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1 1703(b)(11), the Secretary shall not require a dem2 onstration of existing contractual obligations for a 

3 specific minimum capacity of pipeline usage.’’. 

4 (d) RENEWABLE FUEL PIPELINE ELIGIBILITY.— 

5 Section 1703(b) of the Energy Policy Act of 2005 (42 

6 U.S.C. 16513(b)) is amended by adding at the end the 

7 following: 

8 ‘‘(11) Renewable fuel pipelines.’’. 

9 (e) RAPID DEPLOYMENT OF RENEWABLE FUEL.— 

10 Section 1705 of the Energy Policy Act of 2005 (42 U.S.C. 

11 16516) is amended— 

12 (1) in subsection (a)— 

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

14 by inserting ‘‘or, in the case of projects de15 scribed in paragraph (4), September 30, 2013’’ 

16 before the colon at the end; and 

17 (B) by adding at the end the following: 

18 ‘‘(4) Installation of sufficient infrastructure to 

19 allow for the cost-effective deployment of clean en20 ergy technologies appropriate to each region of the 

21 United States, including the deployment of renew22 able fuel pipelines through loan guarantees in an 

23 amount equal to 80 percent of the cost.’’; and 


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1 (2) in subsection (e), by inserting ‘‘ ‘or, in the 

2 case of projects described in subsection (a)(4), Sep3 tember 30, 2013’ ’’ before the period at the end. 

4 (f) REGULATIONS.—Not later than 90 days after the 

5 date of enactment of this Act, the Secretary of Energy 

6 shall issue such regulations as are necessary to carry out 

7 the amendments made by this section. 

8 SEC. 202. OPEN FUEL STANDARD FOR TRANSPORTATION. 

9 (a) IN GENERAL.—Chapter 329 of title 49, United 

10 States Code, is amended by adding at the end the fol11 lowing: 

12 ‘‘SEC. 32920. OPEN FUEL STANDARD FOR TRANSPOR13 TATION. 

14 ‘‘(a) DEFINITIONS.—In this section: 

15 ‘‘(1) E85.—The term ‘E85’ means a fuel mix16 ture containing approximately 85 percent ethanol 

17 and 15 percent gasoline or a special fuel by volume. 

18 ‘‘(2) FLEXIBLE FUEL AUTOMOBILE.—The term 

19 ‘flexible fuel automobile’ means an automobile that 

20 has been warranted by its manufacturer to operate 

21 on gasoline, E85, and M85. 

22 ‘‘(3) FUEL CHOICE-ENABLING AUTOMOBILE.— 

23 The term ‘fuel choice-enabling automobile’ means— 

24 ‘‘(A) a flexible fuel automobile; 


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1 ‘‘(B) an automobile that has been war2 ranted by its manufacturer to operate on bio3 diesel; 

4 ‘‘(C) an automobile that uses hydrogen 

5 fuel cell technology; 

6 ‘‘(D) a hybrid automobile, or an auto7 mobile with any other technology, that uses at 

8 least— 

9 ‘‘(i) during the 10-year period begin10 ning on the date of enactment of this sec11 tion, 50 percent less fossil fuel per mile 

12 than the average of vehicles in the class of 

13 the hybrid automobile or an automobile 

14 with any other technology (under the appli15 cable corporate average fuel standard 

16 under section 32902 of title 49, United 

17 States Code); and 

18 ‘‘(ii) effective beginning 10 years after 

19 the date of enactment of this section, 75 

20 percent less fossil fuel per mile than the 

21 average of vehicles in the class of the hy22 brid automobile or an automobile with any 

23 other technology (under the applicable cor24 porate average fuel standard under section 

25 32902 of title 49, United States Code); or 


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1 ‘‘(E) an automobile that only uses an elec2 tric motor to move the vehicle. 

3 ‘‘(4) HYBRID AUTOMOBILE.—The term ‘hybrid 

4 automobile’ means a light-duty automobile that uses 

5 2 or more distinct power sources to move the vehicle. 

6 ‘‘(5) LIGHT-DUTY AUTOMOBILE.—The term 

7 ‘light-duty automobile’ means a light-duty auto8 mobile (as defined in regulations promulgated by the 

9 Secretary of Transportation to establish corporate 

10 average fuel standards under section 32902 of title 

11 49, United States Code). 

12 ‘‘(6) LIGHT-DUTY AUTOMOBILE MANUFAC13 TURER’S ANNUAL COVERED INVENTORY.—The term 

14 ‘light-duty automobile manufacturer’s annual cov15 ered inventory’ means the number of light-duty 

16 automobiles powered solely by an internal combus17 tion engine that a manufacturer, during a given cal18 endar year, manufactures in the United States or 

19 imports from outside of the United States for sale 

20 in the United States. 

21 ‘‘(7) M85.—The term ‘M85’ means a fuel mix22 ture containing 85 percent methanol and 15 percent 

23 gasoline by volume. 

24 ‘‘(b) OPEN FUEL STANDARD FOR TRANSPOR25 TATION.— 


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1 ‘‘(1) IN GENERAL.—Except as provided in para2 graph (2), each light-duty automobile manufactur3 er’s annual covered inventory shall be comprised 

4 of— 

5 ‘‘(A) not less than 30 percent fuel choice6 enabling automobiles by model year 2013; 

7 ‘‘(B) not less than 50 percent fuel choice8 enabling automobiles by model year 2015; 

9 ‘‘(C) not less than 80 percent fuel choice10 enabling automobiles by model year 2017; and 

11 ‘‘(D) not less than 100 percent of fuel 

12 choice-enabling automobiles by model year 2021 

13 and each model year thereafter. 

14 ‘‘(2) TEMPORARY EXEMPTION FROM REQUIRE15 MENTS.— 

16 ‘‘(A) APPLICATION.—A manufacturer may 

17 request an exemption from the requirement de18 scribed in paragraph (1) by submitting an ap19 plication to the Secretary, at such time, in such 

20 manner, and containing such information as the 

21 Secretary may require by regulation. Each such 

22 application shall specify the models, lines, and 

23 types of automobiles affected. 

24 ‘‘(B) EVALUATION.—After evaluating an 

25 application received from a manufacturer, the 


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1 Secretary may at any time, under such terms 

2 and conditions, and to such extent as the Sec3 retary considers appropriate, temporarily ex4 empt, or renew the exemption of, a light-duty 

5 automobile from the requirement described in 

6 paragraph (1) if the Secretary determines that 

7 1 or more of the following unavoidable events 

8 that are not under the control of the manufac9 turer prevent the manufacturer of such auto10 mobile from meeting its required production 

11 volume of fuel choice-enabling automobiles: 

12 ‘‘(i) A disruption in the supply of any 

13 component required for compliance with 

14 the regulations. 

15 ‘‘(ii) A disruption in the use and in16 stallation by the manufacturer of such 

17 component. 

18 ‘‘(iii) The failure for plug-in hybrid 

19 electric automobiles to meet State air qual20 ity requirements as a result of the require21 ment described in paragraph (1). 

22 ‘‘(C) CONSOLIDATION.—The Secretary 

23 may consolidate applications received from mul24 tiple manufactures under subparagraph (A) if 

25 they are of a similar nature. 


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1 ‘‘(D) NOTICE.—The Secretary shall pub2 lish in the Federal Register— 

3 ‘‘(i) notice of each application received 

4 from a manufacturer; 

5 ‘‘(ii) notice of each decision to grant 

6 or deny a temporary exemption; and 

7 ‘‘(iii) the reasons for granting or de8 nying such exemptions. 

9 ‘‘(c) LIMITED LIABILITY PROTECTION FOR RENEW10 ABLE FUEL AND ETHANOL MANUFACTURE, USE, OR DIS11 TRIBUTION.— 

12 ‘‘(1) IN GENERAL.—Notwithstanding any other 

13 provision of Federal or State law, any fuel con14 taining ethanol or a renewable fuel (as defined in 

15 section 211(o)(1) of the Clean Air Act) that is used 

16 or intended to be used to operate an internal com17 bustion engine shall not be deemed to be a defective 

18 product or subject to a failure to warn due to such 

19 ethanol or renewable fuel content unless such fuel 

20 violates a control or prohibition imposed by the Ad21 ministrator under section 211 of the Clean Air Act 

22 (42 U.S.C. 7545). 

23 ‘‘(2) SAVINGS PROVISION.—Nothing in this sub24 section may be construed to affect the liability of 

25 any person other than liability based upon a claim 


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1 of defective product and failure to warn described in 

2 paragraph (1). 

3 ‘‘(d) RULEMAKING.—Not later than 1 year after the 

4 date of the enactment of this section, the Secretary of 

5 Transportation shall promulgate regulations to carry out 

6 this section in consultation with the Administrator and 

7 taking into consideration existing regulations.’’. 

8 (b) CONFORMING AMENDMENT.—The analysis for 

9 chapter 329 of title 49, United States Code, is amended 

10 by adding at the end the following: 

‘‘Sec. 32920. Open fuel standard for transportation.’’. 

11 SEC. 203. TAX INCENTIVES FOR QUALIFIED BLENDER 

12 PUMPS. 

13 (a) CREDIT FOR INSTALLATION OF BLENDER

14 PUMPS.—Section 30C of the Internal Revenue Code of 

15 1986 is amended by redesignating subsections (f) and (g) 

16 as subsections (g) and (h), respectively, and by inserting 

17 after subsection (e) the following new subsection: 

18 ‘‘(f) TREATMENT OF BLENDER PUMPS AS QUALI19 FIED ALTERNATIVE FUEL VEHICLE REFUELING PROP20 ERTY.— 

21 ‘‘(1) IN GENERAL.—A qualified blender pump 

22 shall be treated as qualified alternative refueling 

23 property under this section. 

24 ‘‘(2) QUALIFIED BLENDER PUMP.—For pur25 poses of this subsection, the term ‘qualified blender 


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1 pump’ means property (not including a building or 

2 its structural components)— 

3 ‘‘(A) which is subject to the allowance for 

4 depreciation or which is installed on property 

5 which is used as a principal residence, 

6 ‘‘(B) the original use of which begins with 

7 the taxpayer, and 

8 ‘‘(C) which is for the storage or dispensing 

9 of a qualified ethanol blend into the fuel tank 

10 of a motor vehicle (as defined in section 

11 179A(e)(2)) propelled by such blend, but only 

12 if— 

13 ‘‘(i) the storage or dispensing is at the 

14 point where such fuel is delivered into the 

15 fuel tank of the motor vehicle, and 

16 ‘‘(ii) such property is capable of dis17 pensing qualified ethanol blends of not less 

18 than 3 different percentage volumes of eth19 anol which may be selected by the pump 

20 operator. 

21 ‘‘(3) QUALIFIED ETHANOL BLEND.—For pur22 poses of this subsection, the term ‘qualified ethanol 

23 blend’ means any fuel which is not less than 20 per24 cent ethanol by volume and not more than 85 per25 cent ethanol by volume.’’. 


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

2 this subsection shall apply to property placed in service 

3 after the date of the enactment of this Act. 

4 SEC. 204. BLENDER PUMP INSTALLATION. 

5 (a) DEFINITIONS.—In this section: 

6 (1) BLENDER PUMP.—The term ‘‘blender 

7 pump’’ means an automotive fuel dispensing pump 

8 capable of dispensing at least 3 different blends of 

9 gasoline and ethanol, as selected by the pump oper10 ator, including blends ranging from 0 percent eth11 anol to 85 percent denatured ethanol, as determined 

12 by the Secretary. 

13 (2) COVERED ENTITY.—The term ‘‘covered en14 tity’’ means an individual or entity that owns or 

15 manages 10 or more retail fueling stations. 

16 (3) E–85 FUEL.—The term ‘‘E–85 fuel’’ means 

17 a blend of gasoline approximately 85 percent of the 

18 content of which is ethanol. 

19 (4) ETHANOL FUEL BLEND.—The term ‘‘eth20 anol fuel blend’’ means a blend of gasoline or a spe21 cial fuel and ethanol, with a minimum of 0 percent 

22 and maximum of 85 percent of the content of which 

23 is denatured ethanol. 

24 (b) MANDATE.— 


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1 (1) IN GENERAL.—Subject to paragraph (2), 

2 the Secretary shall, by regulation, require each cov3 ered entity to install, at each retail fueling station 

4 owned or managed by the covered entity, as a re5 placement for each pump at the retail fueling station 

6 that requires replacement after the effective date de7 scribed in paragraph (2)— 

8 (A) a blender pump; and 

9 (B) all blender pump fuel infrastructure, 

10 including infrastructure necessary— 

11 (i) for the direct retail sale of ethanol 

12 fuel blends (including E–85 fuel), includ13 ing blender pumps, transmission lines, and 

14 storage tanks; and 

15 (ii) to directly market ethanol fuel 

16 blends (including E–85 fuel) to gas retail17 ers, including inline blending equipment, 

18 pumps, storage tanks, and loadout equip19 ment. 

20 (2) EFFECTIVE DATE.—The effective date of 

21 the regulations described in paragraph (1) shall be 

22 January 1, 2013. 


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1 TITLE III—RENEWABLE ENERGY 

2 TAX EXTENSIONS 

3 SEC. 301. MODIFICATION OF CREDIT FOR ALCOHOL USED 

4 AS FUEL. 

5 (a) IN GENERAL.—Section 40 of the Internal Rev6 enue Code of 1986 is amended to read as follows: 

7 ‘‘SEC. 40. ALCOHOL, ETC., USED AS FUEL. 

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

9 the alcohol fuels credit determined under this section for 

10 the taxable year is an amount equal to the sum of— 

11 ‘‘(1) the credit amount for each gallon of quali12 fied alcohol production during such taxable year, 

13 ‘‘(2) the cellulosic biofuel producer credit deter14 mined under subsection (c) for such taxable year, 

15 plus 

16 ‘‘(3) in the case of an eligible small ethanol pro17 ducer, the small ethanol producer credit. 

18 ‘‘(b) QUALIFIED ALCOHOL PRODUCTION.—For pur19 poses of this section— 

20 ‘‘(1) IN GENERAL.—The term ‘qualified alcohol 

21 production’ means qualified alcohol which is pro22 duced by the taxpayer and which— 

23 ‘‘(A) is sold by the taxpayer to another 

24 person— 


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1 ‘‘(i) for use by such other person in 

2 the production of a qualified mixture in the 

3 ordinary course of such other person’s 

4 trade or business, 

5 ‘‘(ii) for use by such other person as 

6 a fuel in the ordinary course of such other 

7 person’s trade or business (other than cas8 ual off-farm production), or 

9 ‘‘(iii) who sells such alcohol at retail 

10 to another person and places such alcohol 

11 in the fuel tank of such other person, or 

12 ‘‘(B) is used or sold by the taxpayer for 

13 any purpose described in subparagraph (A). 

14 ‘‘(2) QUALIFIED ALCOHOL.—The term ‘quali15 fied alcohol’ means alcohol— 

16 ‘‘(A) which has lifecycle greenhouse gas 

17 emissions that are at least 15 percent less than 

18 baseline lifecycle greenhouse gas emissions (as 

19 determined by the Administrator of the Envi20 ronmental Protection Agency, in conjunction 

21 with the Secretary of Agriculture), and 

22 ‘‘(B) which has a proof of not less than 

23 200 (determined without regard to any added 

24 denaturants), and 


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1 does not include any alcohol which is purchased by 

2 the producer and the proof of which is increased by 

3 the producer by additional distillation. 

4 ‘‘(3) ALCOHOL.—The term ‘alcohol’ includes 

5 methanol and ethanol, without regard to the feed6 stock from which such alcohol is produced. 

7 ‘‘(4) QUALIFIED MIXTURE.—The term ‘quali8 fied mixture’ means a mixture of alcohol and gaso9 line or of alcohol and a special fuel which— 

10 ‘‘(A) is sold by the person producing such 

11 mixture to any person for use as a fuel, or 

12 ‘‘(B) is used as a fuel by the person pro13 ducing such mixture. 

14 ‘‘(5) DENIAL OF DOUBLE BENEFIT.—The 

15 amount of any qualified alcohol production which is 

16 qualified cellulosic biofuel production shall not be 

17 taken into account under subsection (a)(1). 

18 ‘‘(6) CREDIT AMOUNT.—For purposes of sub19 section (a)(1), the credit amount shall be determined 

20 in accordance with the following table: 

‘‘In the case of any sale or use 

during calendar year: 

The credit 

amount is: 

2012 ............................................................................................. 20 cents

2013 ............................................................................................. 15 cents

2014 ............................................................................................. 10 cents

2015 or thereafter ....................................................................... 5 cents. 

21 ‘‘(c) CELLULOSIC BIOFUEL PRODUCER CREDIT.— 


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1 ‘‘(1) IN GENERAL.—The cellulosic biofuel pro2 ducer credit determined under this subsection of any 

3 taxpayer is an amount equal to $1.01 for each gal4 lon of qualified cellulosic biofuel production. 

5 ‘‘(2) QUALIFIED CELLULOSIC BIOFUEL PRO6 DUCTION.—For purposes of this subsection, the 

7 term ‘qualified cellulosic biofuel production’ means 

8 any cellulosic biofuel which is produced by the tax9 payer, and which during the taxable year— 

10 ‘‘(A) is sold by the taxpayer to another 

11 person— 

12 ‘‘(i) for use by such other person in 

13 the production of a qualified cellulosic 

14 biofuel mixture in such other person’s 

15 trade or business (other than casual off16 farm production), 

17 ‘‘(ii) for use by such other person as 

18 a fuel in a trade or business, or 

19 ‘‘(iii) who sells such cellulosic biofuel 

20 at retail to another person and places such 

21 cellulosic biofuel in the fuel tank of such 

22 other person, or 

23 ‘‘(B) is used or sold by the taxpayer for 

24 any purpose described in subparagraph (A). 


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1 The qualified cellulosic biofuel production of any 

2 taxpayer for any taxable year shall not include any 

3 alcohol which is purchased by the taxpayer and with 

4 respect to which such producer increases the proof 

5 of the alcohol by additional distillation. 

6 ‘‘(3) QUALIFIED CELLULOSIC BIOFUEL MIX7 TURE.—For purposes of this subsection, the term 

8 ‘qualified cellulosic biofuel mixture’ means a mixture 

9 of cellulosic biofuel and gasoline or of cellulosic 

10 biofuel and a special fuel which— 

11 ‘‘(A) is sold by the person producing such 

12 mixture to any person for use as a fuel, or 

13 ‘‘(B) is used as a fuel by the person pro14 ducing such mixture. 

15 ‘‘(4) CELLULOSIC BIOFUEL.—For purposes of 

16 this subsection— 

17 ‘‘(A) IN GENERAL.—The term ‘cellulosic 

18 biofuel’ means any liquid fuel which— 

19 ‘‘(i) is produced from any 

20 lignocellulosic or hemicellulosic matter that 

21 is available on a renewable or recurring 

22 basis, and 

23 ‘‘(ii) meets the registration require24 ments for fuels and fuel additives estab25 lished by the Environmental Protection 


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1 Agency under section 211 of the Clean Air 

2 Act (42 U.S.C. 7545). 

3 ‘‘(B) EXCLUSION OF LOW-PROOF ALCO4 HOL.—Such term shall not include any alcohol 

5 with a proof of less than 200. The determina6 tion of the proof of any alcohol shall be made 

7 without regard to any added denaturants. 

8 ‘‘(C) EXCLUSION OF UNPROCESSED

9 FUELS.—The term ‘cellulosic biofuel’ shall not 

10 include any fuel if— 

11 ‘‘(i) more than 4 percent of such fuel 

12 (determined by weight) is any combination 

13 of water and sediment, or 

14 ‘‘(ii) the ash content of such fuel is 

15 more than 1 percent (determined by 

16 weight). 

17 ‘‘(5) ALLOCATION OF CELLULOSIC BIOFUEL

18 PRODUCER CREDIT TO PATRONS OF COOPERATIVE.— 

19 ‘‘(A) ELECTION TO ALLOCATE.— 

20 ‘‘(i) IN GENERAL.—In the case of a 

21 cooperative organization described in sec22 tion 1381(a), any portion of the credit de23 termined under this subsection for the tax24 able year may, at the election of the orga25 nization, be apportioned pro rata among 


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1 patrons of the organization on the basis of 

2 the quantity or value of business done with 

3 or for such patrons for the taxable year. 

4 ‘‘(ii) FORM AND EFFECT OF ELEC5 TION.—An election under clause (i) for any 

6 taxable year shall be made on a timely 

7 filed return for such year. Such election, 

8 once made, shall be irrevocable for such 

9 taxable year. Such election shall not take 

10 effect unless the organization designates 

11 the apportionment as such in a written no12 tice mailed to its patrons during the pay13 ment period described in section 1382(d). 

14 ‘‘(B) TREATMENT OF ORGANIZATIONS AND

15 PATRONS.— 

16 ‘‘(i) ORGANIZATIONS.—The amount of 

17 the credit not apportioned to patrons pur18 suant to subparagraph (A) shall be in19 cluded in the amount determined under 

20 this subsection for the taxable year of the 

21 organization. 

22 ‘‘(ii) PATRONS.—The amount of the 

23 credit apportioned to patrons pursuant to 

24 subparagraph (A) shall be included in the 

25 amount determined under this subsection 


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1 for the first taxable year of each patron 

2 ending on or after the last day of the pay3 ment period (as defined in section 

4 1382(d)) for the taxable year of the orga5 nization or, if earlier, for the taxable year 

6 of each patron ending on or after the date 

7 on which the patron receives notice from 

8 the cooperative of the apportionment. 

9 ‘‘(iii) SPECIAL RULES FOR DECREASE

10 IN CREDITS FOR TAXABLE YEAR.—If the 

11 amount of the credit of the organization 

12 determined under this subsection for a tax13 able year is less than the amount of such 

14 credit shown on the return of the organiza15 tion for such year, an amount equal to the 

16 excess of— 

17 ‘‘(I) such reduction, over 

18 ‘‘(II) the amount not apportioned 

19 to such patrons under subparagraph 

20 (A) for the taxable year, 

21 shall be treated as an increase in tax im22 posed by this chapter on the organization. 

23 Such increase shall not be treated as tax 

24 imposed by this chapter for purposes of deVerDate Mar 15 2010 23:36 Mar 11, 2011 Jkt 099200 PO 00000 Frm 00034 Fmt 6652 Sfmt 6201 E:\BILLS\S559.IS S559

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1 termining the amount of any credit under 

2 this chapter or for purposes of section 55. 

3 ‘‘(d) SMALL ETHANOL PRODUCER CREDIT.— 

4 ‘‘(1) IN GENERAL.—The small ethanol producer 

5 credit of any eligible small ethanol producer for any 

6 taxable year is 10 cents for each gallon of qualified 

7 ethanol fuel production of such producer. 

8 ‘‘(2) QUALIFIED ETHANOL FUEL PRODUC9 TION.—For purposes of this subsection, the term 

10 ‘qualified ethanol fuel production’ means any quali11 fied alcohol which is ethanol and which is produced 

12 by an eligible small ethanol producer. 

13 ‘‘(3) LIMITATION.—The qualified ethanol fuel 

14 production of any producer for any taxable year 

15 shall not exceed 15,000,000 gallons (determined 

16 without regard to any qualified cellulosic biofuel pro17 duction). 

18 ‘‘(4) ADDITIONAL DISTILLATION EXCLUDED.— 

19 The qualified ethanol fuel production of any pro20 ducer for any taxable year shall not include any al21 cohol which is purchased by the producer and with 

22 respect to which such producer increases the proof 

23 of the alcohol by additional distillation. 

24 ‘‘(5) ELIGIBLE SMALL ETHANOL PRODUCER.— 


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1 ‘‘(A) IN GENERAL.—For purposes of this 

2 subsection, the term ‘eligible small ethanol pro3 ducer’ means a person who, at all times during 

4 the taxable year, has a productive capacity for 

5 alcohol (as defined in subsection (b)(3)) not in 

6 excess of 60,000,000 gallons. 

7 ‘‘(B) AGGREGATION RULE.—For purposes 

8 of the 15,000,000 gallon limitation under para9 graph (3) and the 60,000,000 gallon limitation 

10 under subparagraph (A), all members of the 

11 same controlled group of corporations (within 

12 the meaning of section 267(f)) and all persons 

13 under common control (within the meaning of 

14 section 52(b) but determined by treating an in15 terest of more than 50 percent as a controlling 

16 interest) shall be treated as 1 person. 

17 ‘‘(C) PARTNERSHIPS, S CORPORATIONS, 

18 AND OTHER PASS-THRU ENTITIES.—In the case 

19 of a partnership, trust, S corporation, or other 

20 pass-thru entity, the limitations contained in 

21 paragraph (3) and subparagraph (A) shall be 

22 applied at the entity level and at the partner or 

23 similar level. 

24 ‘‘(D) ALLOCATION.—For purposes of this 

25 subsection, in the case of a facility in which 


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1 more than 1 person has an interest, productive 

2 capacity shall be allocated among such persons 

3 in such manner as the Secretary may prescribe. 

4 ‘‘(E) REGULATIONS.—The Secretary may 

5 prescribe such regulations as may be nec6 essary— 

7 ‘‘(i) to prevent the credit under this 

8 subsection from directly or indirectly bene9 fitting any person with a direct or indirect 

10 productive capacity of more than 

11 60,000,000 gallons of alcohol during the 

12 taxable year, or 

13 ‘‘(ii) to prevent any person from di14 rectly or indirectly benefitting with respect 

15 to more than 15,000,000 gallons of ethanol 

16 during the taxable year. 

17 ‘‘(6) ALLOCATION OF SMALL ETHANOL PRO18 DUCER CREDIT TO PATRONS OF COOPERATIVE.— 

19 Rules similar to the rules of subsection (c)(5) shall 

20 apply for purposes of this subsection. 

21 ‘‘(e) PERFORMANCE CREDIT FOR ALCOHOL.— 

22 ‘‘(1) IN GENERAL.—In the case of any qualified 

23 alcohol production in a taxable year from qualified 

24 alcohol which has a baseline lifecycle greenhouse gas 

25 improvement of not less than 50 percent, the credit 


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1 amount determined under subsection (a)(1) for such 

2 taxable year with respect to such production shall be 

3 increased by the applicable amount. 

4 ‘‘(2) APPLICABLE AMOUNT.—For purposes of 

5 paragraph (1), the applicable amount is— 

6 ‘‘(A) 5 cents for every gallon of qualified 

7 alcohol production from qualified alcohol which 

8 has a baseline lifecycle greenhouse gas improve9 ment of not less than 50 percent and less than 

10 75 percent, 

11 ‘‘(B) 15 cents for every gallon of qualified 

12 alcohol production from qualified alcohol which 

13 has a baseline lifecycle greenhouse gas improve14 ment of not less than 75 percent and less than 

15 90 percent, and 

16 ‘‘(C) 25 cents for every gallon of qualified 

17 alcohol production from qualified alcohol which 

18 has a baseline lifecycle greenhouse gas improve19 ment of not less than 90 percent. 

20 ‘‘(3) BASELINE LIFECYCLE GREENHOUSE GAS

21 IMPROVEMENT.—For purposes of this subsection, 

22 the term ‘baseline lifecycle greenhouse gas improve23 ment’ means the amount, expressed as a percentage, 

24 which is— 


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1 ‘‘(A) the direct lifecycle greenhouse gas 

2 emissions of an alcohol, divided by 

3 ‘‘(B) the baseline lifecycle greenhouse gas 

4 emissions, 

5 as determined by the Administrator of the Environ6 mental Protection Agency, in conjunction with the 

7 Secretary of Agriculture. 

8 ‘‘(f) DEFINITIONS AND SPECIAL RULES.—For pur9 poses of this section— 

10 ‘‘(1) SPECIAL FUEL.—The term ‘special fuel’ 

11 includes any liquid fuel (other than gasoline) which 

12 is suitable for use in an internal combustion engine. 

13 ‘‘(2) REGISTRATION REQUIREMENT.—No credit 

14 shall be determined under subsection (a)(1), (c), or 

15 (d) with respect to any taxpayer unless such tax16 payer is registered with the Secretary as a producer 

17 of alcohol or cellulosic biofuel, whichever is applica18 ble, under section 4101. 

19 ‘‘(3) SPECIAL RULE FOR CELLULOSIC BIOFUEL

20 PRODUCER CREDIT.—No cellulosic biofuel producer 

21 credit shall be determined under subsection (c) with 

22 respect to any cellulosic biofuel unless such cellulosic 

23 biofuel is produced in the United States and used as 

24 a fuel in the United States. For purposes of this 


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1 subsection, the term ‘United States’ includes any 

2 possession of the United States. 

3 ‘‘(4) LIMITATION TO ALCOHOL WITH CONNEC4 TION TO THE UNITED STATES.—No credit shall be 

5 determined under this section with respect to any al6 cohol which is produced outside the United States. 

7 For purposes of this paragraph, the term ‘United 

8 States’ includes any possession of the United States. 

9 ‘‘(5) MIXTURE OR ALCOHOL NOT USED AS A

10 FUEL, ETC.— 

11 ‘‘(A) MIXTURES.—If— 

12 ‘‘(i) any credit was determined under 

13 this section with respect to alcohol used in 

14 the production of any qualified mixture, 

15 and 

16 ‘‘(ii) any person— 

17 ‘‘(I) separates the alcohol from 

18 the mixture, or 

19 ‘‘(II) without separation, uses the 

20 mixture other than as a fuel, 

21 then there is hereby imposed on such person a 

22 tax equal to such credit so determined with re23 spect to each gallon of alcohol in such mixture. 

24 ‘‘(B) ALCOHOL.—If— 


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1 ‘‘(i) any credit was determined under 

2 this section with respect to the retail sale 

3 of any alcohol, and 

4 ‘‘(ii) any person mixes such alcohol or 

5 uses such alcohol other than as a fuel, 

6 then there is hereby imposed on such person a 

7 tax equal to such credit so determined with re8 spect to each gallon of such alcohol. 

9 ‘‘(C) CELLULOSIC BIOFUEL PRODUCER

10 CREDIT.—If— 

11 ‘‘(i) any credit is allowed under sub12 section (c), and 

13 ‘‘(ii) any person does not use such 

14 fuel for a purpose described in subsection 

15 (c)(3), 

16 then there is hereby imposed on such person a 

17 tax equal to $1.01 for each gallon of such cellu18 losic biofuel. 

19 ‘‘(D) SMALL ETHANOL PRODUCER CRED20 IT.—If— 

21 ‘‘(i) any credit is allowed under sub22 section (d), and 

23 ‘‘(ii) any person does not use such 

24 fuel for a purpose described in subsection 

25 (b)(1)(A), 


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1 then there is hereby imposed on such person a 

2 tax equal to 10 cents a gallon for each gallon 

3 of such alcohol. 

4 ‘‘(E) APPLICABLE LAWS.—All provisions of 

5 law, including penalties, shall, insofar as appli6 cable and not inconsistent with this section, 

7 apply in respect of any tax imposed under sub8 paragraph (A), (B), (C), or (D) as if such tax 

9 were imposed by section 4081 and not by this 

10 chapter. 

11 ‘‘(6) VOLUME OF ALCOHOL.—For purposes of 

12 determining under subsection (a) the number of gal13 lons of alcohol with respect to which a credit is al14 lowable under subsection (a), the volume of alcohol 

15 shall include the volume of any denaturant (includ16 ing gasoline) which is added under any formulas ap17 proved by the Secretary to the extent that such de18 naturants do not exceed 2 percent of the volume of 

19 such alcohol (including denaturants). 

20 ‘‘(7) PASS-THRU IN THE CASE OF ESTATES AND

21 TRUSTS.—Under regulations prescribed by the Sec22 retary, rules similar to the rules of subsection (d) of 

23 section 52 shall apply. 

24 ‘‘(8) ALLOCATION OF GENERAL CREDIT TO PA25 TRONS OF COOPERATIVE.—Rules similar to the rules 


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1 of subsection (c)(5) shall apply for purposes of the 

2 portion of the credit determined under subsection 

3 (a)(1). 

4 ‘‘(g) COORDINATION WITH EXEMPTION FROM EX5 CISE TAX.—The amount of the credit determined under 

6 this section with respect to any alcohol shall, under regula7 tions prescribed by the Secretary, be properly reduced to 

8 take into account any benefit provided with respect to such 

9 alcohol solely by reason of the application of section 

10 4041(b)(2), section 6426, or section 6427(e). 

11 ‘‘(h) TERMINATION.— 

12 ‘‘(1) IN GENERAL.—This section shall not apply 

13 to any sale or use for any period after December 31, 

14 2016. 

15 ‘‘(2) NO CARRYOVERS TO CERTAIN YEARS

16 AFTER EXPIRATION.—If this section ceases to apply 

17 for any period by reason of paragraph (1), no 

18 amount attributable to any sale or use before the 

19 first day of such period may be carried under section 

20 39 by reason of this section (treating the amount al21 lowed by reason of this section as the first amount 

22 allowed by this subpart) to any taxable year begin23 ning after the 3-taxable-year period beginning with 

24 the taxable year in which such first day occurs.’’. 

25 (b) CONFORMING AMENDMENTS.— 


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1 (1) Section 4101(a)(1) of the Internal Revenue 

2 Code of 1986 is amended by striking ‘‘section 

3 40(b)(6)(E)’’ and inserting ‘‘section 40(c)(4)’’. 

4 (2) Section 6426(g) of such Code is amended 

5 by striking ‘‘section 40(c)’’ and inserting ‘‘section 

6 40(g)’’. 

7 (3) Section 6501(m) of such Code is amended 

8 by striking ‘‘40(f),’’. 

9 (c) MODIFICATION OF VOLUMETRIC ETHANOL EX10 CISE TAX CREDIT.— 

11 (1) IN GENERAL.—Subsection (b) of section 

12 6426 of the Internal Revenue Code of 1986, as 

13 amended by this Act, is amended— 

14 (A) by striking paragraph (2) and insert15 ing the following: 

16 ‘‘(2) APPLICABLE AMOUNT.—For purposes of 

17 this subsection, with respect to each gallon of alco18 hol, the applicable amount is the sum of the credit 

19 amount determined in accordance with the following 

20 table plus the applicable amount under section 

21 40(e)(2) attributable to such gallon: 

‘‘In the case of any sale, use, or 

removal during calendar year: 

The credit 

amount is: 

2012 ............................................................................................. 20 cents

2013 ............................................................................................. 15 cents

2014 ............................................................................................. 10 cents

2015 ............................................................................................. 5 cents

2016 and thereafter ..................................................................... 0 cents’’, 

22 and 


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1 (B) by striking ‘‘December 31, 2011’’ in 

2 paragraph (6) and inserting ‘‘December 31, 

3 2015’’. 

4 (2) PAYMENTS IN LIEU OF CREDITS.—Subpara5 graph (A) of section 6427(e)(6) is amended by strik6 ing ‘‘December 31, 2010’’ and inserting ‘‘December 

7 31, 2015’’. 

8 (d) EXTENSION OF ADDITIONAL DUTIES ON ETH9 ANOL.—Headings 9901.00.50 and 9901.00.52 of the Har10 monized Tariff Schedule of the United States are each 

11 amended in the effective period column by striking ‘‘1/1/ 

12 2012’’ and inserting ‘‘1/1/2016’’. 

13 (e) EFFECTIVE DATES.— 

14 (1) IN GENERAL.—Except as provided in para15 graph (2), the amendments made by this section 

16 shall apply to fuel sold and used after December 31, 

17 2011. 

18 (2) ADDITIONAL DUTIES.—The amendments 

19 made by subsection (d) shall take effect on January 

20 1, 2012. 

21 SEC. 302. REFORM OF BIODIESEL INCOME TAX INCEN22 TIVES. 

23 (a) IN GENERAL.—Section 40A of the Internal Rev24 enue Code of 1986 is amended to read as follows: 


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1 ‘‘SEC. 40A. BIODIESEL PRODUCTION. 

2 ‘‘(a) IN GENERAL.—For purposes of section 38, the 

3 biodiesel fuels credit determined under this section for the 

4 taxable year is $1.00 for each gallon of biodiesel produced 

5 by the taxpayer which during the taxable year— 

6 ‘‘(1) is sold by such producer to another per7 son— 

8 ‘‘(A) for use by such other person’s trade 

9 or business (other than casual off-farm produc10 tion), 

11 ‘‘(B) for use by such other person as a fuel 

12 in a trade or business, or 

13 ‘‘(C) who sells such biodiesel at retail to 

14 another person and places such biodiesel in the 

15 fuel tank of such other person, or 

16 ‘‘(2) is used or sold by such producer for any 

17 purpose described in paragraph (1). 

18 ‘‘(b) INCREASED CREDIT FOR SMALL PRODUCERS.— 

19 ‘‘(1) IN GENERAL.—In the case of any eligible 

20 small biodiesel producer, subsection (a) shall be ap21 plied by increasing the dollar amount contained 

22 therein by 10 cents. 

23 ‘‘(2) LIMITATION.—Paragraph (1) shall only 

24 apply with respect to the first 15,000,000 gallons of 

25 biodiesel produced by any eligible small biodiesel 

26 producer during any taxable year. 


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1 ‘‘(c) COORDINATION WITH CREDIT AGAINST EXCISE

2 TAX.—The amount of the credit determined under this 

3 section with respect to any biodiesel shall be reduced to 

4 take into account any benefit provided with respect to such 

5 biodiesel solely by reason of the application of section 

6 6426 or 6427(e). 

7 ‘‘(d) DEFINITIONS AND SPECIAL RULES.—For pur8 poses of this section— 

9 ‘‘(1) BIODIESEL.—The term ‘biodiesel’ means 

10 liquid fuel derived from biomass which meets— 

11 ‘‘(A) the registration requirements for 

12 fuels and fuel additives established by the Envi13 ronmental Protection Agency under section 211 

14 of the Clean Air Act (42 U.S.C. 7545), and 

15 ‘‘(B) the requirements of the American So16 ciety of Testing and Materials D6751. 

17 Such term shall not include any liquid with respect 

18 to which a credit may be determined under section 

19 40. 

20 ‘‘(2) BIODIESEL NOT USED FOR A QUALIFIED

21 PURPOSE.—If— 

22 ‘‘(A) any credit was determined with re23 spect to any biodiesel under this section, and 


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1 ‘‘(B) any person does not use such bio2 diesel for the purpose described in subsection 

3 (a), 

4 then there is hereby imposed on such person a tax 

5 equal to the product of the rate applicable under 

6 subsection (a) and the number of gallons of such 

7 biodiesel. 

8 ‘‘(3) PASS-THRU IN THE CASE OF ESTATES AND

9 TRUSTS.—Under regulations prescribed by the Sec10 retary, rules similar to the rules of subsection (d) of 

11 section 52 shall apply. 

12 ‘‘(4) LIMITATION TO BIODIESEL PRODUCED IN

13 THE UNITED STATES.—No credit shall be deter14 mined under this section with respect to any bio15 diesel unless such biodiesel is produced in the United 

16 States from raw feedstock. For purposes of this 

17 paragraph, the term ‘United States’ includes any 

18 possession of the United States. 

19 ‘‘(5) BIODIESEL TRANSFERS FROM AN IRS REG20 ISTERED BIODIESEL PRODUCTION FACILITY TO AN

21 IRS REGISTERED TERMINAL OR REFINERY.—The 

22 credit allowed under subsection (a) shall be allowed 

23 to the terminal or refinery referred to in section 

24 4081(a)(1)(B)(i) in instances where section 

25 4081(a)(1)(B)(iii) is applicable. The credit allowed 


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1 under subsection (a) cannot be claimed by a ter2 minal or refinery on fuel upon which the credit was 

3 previously claimed by a biodiesel producer. 

4 ‘‘(e) DEFINITIONS AND SPECIAL RULES FOR SMALL

5 BIODIESEL PRODUCERS.— 

6 ‘‘(1) ELIGIBLE SMALL BIODIESEL PRODUCER.— 

7 The term ‘eligible small biodiesel producer’ means a 

8 person who at all times during the taxable year has 

9 a productive capacity for biodiesel not in excess of 

10 60,000,000 gallons. 

11 ‘‘(2) AGGREGATION RULE.—For purposes of 

12 the 15,000,000 gallon limitation under subsection 

13 (b)(2) and the 60,000,000 gallon limitation under 

14 paragraph (1), all members of the same controlled 

15 group of corporations (within the meaning of section 

16 267(f)) and all persons under common control (with17 in the meaning of section 52(b) but determined by 

18 treating an interest of more than 50 percent as a 

19 controlling interest) shall be treated as 1 person. 

20 ‘‘(3) PARTNERSHIP, S CORPORATION, AND

21 OTHER PASS-THRU ENTITIES.—In the case of a 

22 partnership, trust, S corporation, or other pass-thru 

23 entity, the limitations contained in subsection (b)(2) 

24 and paragraph (1) shall be applied at the entity level 

25 and at the partner or similar level. 


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1 ‘‘(4) ALLOCATION.—For purposes of this sub2 section, in the case of a facility in which more than 

3 1 person has an interest, productive capacity shall 

4 be allocated among such persons in such manner as 

5 the Secretary may prescribe. 

6 ‘‘(5) REGULATIONS.—The Secretary may pre7 scribe such regulations as may be necessary— 

8 ‘‘(A) to prevent the credit provided for in 

9 subsection (b) from directly or indirectly bene10 fitting any person with a direct or indirect pro11 ductive capacity of more than 60,000,000 gal12 lons of biodiesel during the taxable year, or 

13 ‘‘(B) to prevent any person from directly 

14 or indirectly benefitting with respect to more 

15 than 15,000,000 gallons during the taxable 

16 year. 

17 ‘‘(6) ALLOCATION OF SMALL BIODIESEL CREDIT

18 TO PATRONS OF COOPERATIVE.— 

19 ‘‘(A) ELECTION TO ALLOCATE.— 

20 ‘‘(i) IN GENERAL.—In the case of a 

21 cooperative organization described in sec22 tion 1381(a), any portion of the increase 

23 determined under subsection (b) for the 

24 taxable year may, at the election of the or25 ganization, be apportioned pro rata among 


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1 patrons of the organization on the basis of 

2 the quantity or value of business done with 

3 or for such patrons for the taxable year. 

4 ‘‘(ii) FORM AND EFFECT OF ELEC5 TION.—An election under clause (i) for any 

6 taxable year shall be made on a timely 

7 filed return for such year. Such election, 

8 once made, shall be irrevocable for such 

9 taxable year. Such election shall not take 

10 effect unless the organization designates 

11 the apportionment as such in a written no12 tice mailed to its patrons during the pay13 ment period described in section 1382(d). 

14 ‘‘(B) TREATMENT OF ORGANIZATIONS AND

15 PATRONS.— 

16 ‘‘(i) ORGANIZATIONS.—The amount of 

17 the credit not apportioned to patrons pur18 suant to subparagraph (A) shall be in19 cluded in the amount determined under 

20 subsection (b) for the taxable year of the 

21 organization. 

22 ‘‘(ii) PATRONS.—The amount of the 

23 credit apportioned to patrons pursuant to 

24 subparagraph (A) shall be included in the 

25 amount determined under such subsection 


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1 for the first taxable year of each patron 

2 ending on or after the last day of the pay3 ment period (as defined in section 

4 1382(d)) for the taxable year of the orga5 nization or, if earlier, for the taxable year 

6 of each patron ending on or after the date 

7 on which the patron receives notice from 

8 the cooperative of the apportionment. 

9 ‘‘(iii) SPECIAL RULES FOR DECREASE

10 IN CREDITS FOR TAXABLE YEAR.—If the 

11 amount of the credit of the organization 

12 determined under such subsection for a 

13 taxable year is less than the amount of 

14 such credit shown on the return of the or15 ganization for such year, an amount equal 

16 to the excess of— 

17 ‘‘(I) such reduction, over 

18 ‘‘(II) the amount not apportioned 

19 to such patrons under subparagraph 

20 (A) for the taxable year, shall be 

21 treated as an increase in tax imposed 

22 by this chapter on the organization. 

23 Such increase shall not be treated as tax 

24 imposed by this chapter for purposes of deVerDate Mar 15 2010 23:36 Mar 11, 2011 Jkt 099200 PO 00000 Frm 00052 Fmt 6652 Sfmt 6201 E:\BILLS\S559.IS S559

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1 termining the amount of any credit under 

2 this chapter or for purposes of section 55. 

3 ‘‘(f) RENEWABLE DIESEL.—For purposes of this 

4 title— 

5 ‘‘(1) TREATMENT IN THE SAME MANNER AS

6 BIODIESEL.—Renewable diesel shall be treated in 

7 the same manner as biodiesel. 

8 ‘‘(2) RENEWABLE DIESEL DEFINED.—The term 

9 ‘renewable diesel’ means liquid fuel derived from bio10 mass which meets— 

11 ‘‘(A) the registration requirements for 

12 fuels and fuel additives established by the Envi13 ronmental Protection Agency under section 211 

14 of the Clean Air Act (42 U.S.C. 7545), and 

15 ‘‘(B) the requirements of the American So16 ciety of Testing and Materials D975 or D396, 

17 or other equivalent standard approved by the 

18 Secretary. 

19 Such term shall not include any liquid with respect 

20 to which a credit may be determined under section 

21 40. Such term does not include any fuel derived 

22 from coprocessing biomass with a feedstock which is 

23 not biomass. For purposes of this paragraph, the 

24 term ‘biomass’ has the meaning given such term by 

25 section 45K(c)(3). 


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1 ‘‘(3) CERTAIN AVIATION FUEL.—Except as pro2 vided in the last 3 sentences of paragraph (2), the 

3 term ‘renewable diesel’ shall include fuel derived 

4 from biomass which meets the requirements of a De5 partment of Defense specification for military jet 

6 fuel or an American Society of Testing and Mate7 rials specification for aviation turbine fuel. 

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

9 any sale or use after December 31, 2016.’’. 

10 (b) CLERICAL AMENDMENT.—The table of sections 

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

12 of such Code is amended by striking the item relating to 

13 section 40A and inserting the following new item: 

‘‘Sec. 40A. Biodiesel production.’’. 

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

15 this section shall apply to biodiesel sold or used after De16 cember 31, 2011. 

17 SEC. 303. REFORM OF BIODIESEL EXCISE TAX INCENTIVES. 

18 (a) IN GENERAL.—Subsection (c) of section 6426 of 

19 the Internal Revenue Code of 1986 is amended to read 

20 as follows: 

21 ‘‘(c) BIODIESEL CREDIT.— 

22 ‘‘(1) IN GENERAL.—For purposes of this sec23 tion, the biodiesel credit is $1.00 for each gallon of 

24 biodiesel produced by the taxpayer and which— 


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1 ‘‘(A) is sold by such producer to another 

2 person— 

3 ‘‘(i) for use by such other person’s 

4 trade or business (other than casual off5 farm production), 

6 ‘‘(ii) for use by such other person as 

7 a fuel in a trade or business, or 

8 ‘‘(iii) who sells such biodiesel at retail 

9 to another person and places such biodiesel 

10 in the fuel tank of such other person, or 

11 ‘‘(B) is used or sold by such producer for 

12 any purpose described in subparagraph (A). 

13 ‘‘(2) DEFINITIONS.—Any term used in this sub14 section which is also used in section 40A shall have 

15 the meaning given such term by section 40A. 

16 ‘‘(3) BIODIESEL TRANSFERS FROM AN IRS REG17 ISTERED BIODIESEL PRODUCTION FACILITY TO AN

18 IRS REGISTERED TERMINAL.—The credit allowed 

19 under this subsection can be claimed by a registered 

20 terminal or refinery in instances where section 

21 4081(a)(1)(B)(iii) is applicable. The credit allowed 

22 under this subsection cannot be claimed by a ter23 minal or refinery on fuel upon which the credit was 

24 previously claimed by a biodiesel producer. 


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1 ‘‘(4) TERMINATION.—This subsection shall not 

2 apply to any sale, use, or removal for any period 

3 after December 31, 2016.’’. 

4 (b) PAYMENT OF CREDIT.—Subsection (e) of section 

5 6427 of such Code is amended— 

6 (1) by striking ‘‘or the biodiesel mixture credit’’ 

7 in paragraph (1), 

8 (2) by redesignating paragraphs (3) through 

9 (6) as paragraphs (4) through (7), respectively, and 

10 by inserting after paragraph (2) the following new 

11 paragraph: 

12 ‘‘(3) BIODIESEL CREDIT.—If any person pro13 duces biodiesel and sells or uses such biodiesel as 

14 provided in section 6426(c), the Secretary shall pay 

15 (without interest) to such person an amount equal to 

16 the biodiesel credit with respect to such biodiesel.’’, 

17 (3) by striking ‘‘paragraph (1) or (2)’’ each 

18 place it appears in paragraphs (4) and (6), as redes19 ignated by paragraph (2), and inserting ‘‘paragraph 

20 (1), (2), or (3)’’, 

21 (4) by striking ‘‘alternative fuel’’ each place it 

22 appears in paragraphs (4) and (6), as redesignated 

23 by paragraph (2), and inserting ‘‘fuel’’, and 

24 (5) by striking ‘‘biodiesel mixture (as defined in 

25 section 6426(c)(3))’’ in paragraph (7)(B), as so reVerDate Mar 15 2010 23:36 Mar 11, 2011 Jkt 099200 PO 00000 Frm 00056 Fmt 6652 Sfmt 6201 E:\BILLS\S559.IS S559

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1 designated, and inserting ‘‘biodiesel (within the 

2 meaning of section 40A)’’. 

3 (c) EXEMPTION FOR BIODIESEL TRANSFERRED

4 FROM A REGISTERED PRODUCER TO A REGISTERED TER5 MINAL.—Subparagraph (B) of section 4081(a)(1) of such 

6 Code is amended— 

7 (1) by striking ‘‘clause (ii)’’ in clause (i) and in8 serting ‘‘clauses (ii) and (iii)’’, and 

9 (2) by adding at the end the following new 

10 clause: 

11 ‘‘(iii) EXEMPTIONS FOR BIODIESEL

12 TRANSFERRED FROM A REGISTERED PRO13 DUCER TO A REGISTERED TERMINAL.— 

14 The tax imposed by this paragraph shall 

15 not apply to any removal or entry of bio16 diesel (as defined in section 40A(d)(1)) 

17 transferred in bulk (without regard to the 

18 manner of such transfer) to a terminal or 

19 refinery if— 

20 ‘‘(I) such biodiesel was produced 

21 by a person who is registered under 

22 section 4101 as a producer of bio23 diesel and who provides reporting 

24 under the ExStars fuel reporting sysVerDate Mar 15 2010 23:36 Mar 11, 2011 Jkt 099200 PO 00000 Frm 00057 Fmt 6652 Sfmt 6201 E:\BILLS\S559.IS S559

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1 tem of the Internal Revenue Service, 

2 and 

3 ‘‘(II) the operator of such ter4 minal or refinery is registered under 

5 section 4101.’’. 

6 (d) PRODUCER REGISTRATION REQUIREMENT.— 

7 Subsection (a) of section 6426 of such Code is amended 

8 by striking ‘‘subsections (d) and (e)’’ in the flush sentence 

9 at the end and inserting ‘‘subsections (c), (d), and (e)’’. 

10 (e) RECAPTURE.—Subsection (f) of section 6426 of 

11 such Code is amended to read as follows: 

12 ‘‘(f) RECAPTURE.— 

13 ‘‘(1) ALCOHOL FUEL MIXTURES.—If— 

14 ‘‘(A) any credit was determined under this 

15 section with respect to alcohol used in the pro16 duction of any alcohol fuel mixture, and 

17 ‘‘(B) any person— 

18 ‘‘(i) separates the alcohol from the 

19 mixture, or 

20 ‘‘(ii) without separation, uses the mix21 ture other than as a fuel, 

22 then there is hereby imposed on such person a tax 

23 equal to the product of the applicable amount and 

24 the number of gallons of such alcohol. 


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1 ‘‘(2) BIODIESEL.—If any credit was determined 

2 under this section with respect to the production of 

3 any biodiesel and any person does not use such bio4 diesel for a purpose described in subsection (c)(1), 

5 then there is hereby imposed on such person a tax 

6 equal to $1 for each gallon of such biodiesel. 

7 ‘‘(3) APPLICABLE LAWS.—All provisions of law, 

8 including penalties, shall, insofar as applicable and 

9 not inconsistent with this section, apply in respect of 

10 any tax imposed under paragraph (1) or (2) as if 

11 such tax were imposed by section 4081 and not by 

12 this section.’’. 

13 (f) CLERICAL AMENDMENT.—The heading of section 

14 6426 of such Code (and the item relating to such section 

15 in the table of sections for subchapter B of chapter 65 

16 of such Code) is amended by striking ‘‘alcohol fuel, bio17 diesel, and alternative fuel mixtures’’ and inserting ‘‘alco18 hol fuel mixtures, biodiesel production, and alternative fuel 

19 mixtures’’. 

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

21 this section shall apply to biodiesel sold or used after De22 cember 31, 2011. 

23 SEC. 304. BIODIESEL TREATED AS TAXABLE FUEL. 

24 (a) BIODIESEL TREATED AS TAXABLE FUEL.— 

25 Clause (i) of section 4083(a)(3)(A) of such Code is amendVerDate Mar 15 2010 23:36 Mar 11, 2011 Jkt 099200 PO 00000 Frm 00059 Fmt 6652 Sfmt 6201 E:\BILLS\S559.IS S559

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1 ed by inserting ‘‘, including biodiesel (as defined in section 

2 6426(c)(3)),’’ after ‘‘(other than gasoline)’’. 

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

4 this section shall apply to biodiesel removed, entered, or 

5 sold after the date which is 6 months after the date of 

6 the enactment of this Act. 

7 TITLE IV—RENEWABLE ELEC8 TRICITY INTEGRATION CRED9 IT 

10 SEC. 401. RENEWABLE ELECTRICITY INTEGRATION CREDIT. 

11 (a) BUSINESS CREDIT.— 

12 (1) IN GENERAL.—Subpart D of part IV of 

13 subchapter A of chapter 1 of the Internal Revenue 

14 Code of 1986 is amended by adding at the end the 

15 following new section: 

16 ‘‘SEC. 45S. RENEWABLE ELECTRICITY INTEGRATION CRED17 IT. 

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

19 in the case of an eligible taxpayer, the renewable electricity 

20 integration credit for any taxable year is an amount equal 

21 to the product of— 

22 ‘‘(1) the intermittent renewable portfolio factor 

23 of such eligible taxpayer, and 

24 ‘‘(2) the number of kilowatt hours of renewable 

25 electricity— 


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1 ‘‘(A) purchased or produced by such tax2 payer, and 

3 ‘‘(B) sold by such taxpayer to a retail cus4 tomer during the taxable year. 

5 ‘‘(b) INTERMITTENT RENEWABLE PORTFOLIO FAC6 TOR.— 

7 ‘‘(1) YEARS BEFORE 2017.—In the case of tax8 able years beginning before January 1, 2017, the 

9 intermittent renewable portfolio factor for an eligible 

10 taxpayer shall be determined as follows: 

‘‘In the case of an 

eligible taxpayer 

whose intermittent 

renewable electricity percentage 

is: 

For taxable years 

beginning before 

2012, the intermittent renewable 

portfolio factor is: 

For taxable years 

beginning in or 

after 2012, the 

intermittent renewable portfolio factor is: 

Less than 4 percent ....... zero cents zero cents 

At least 4 percent but 

less than 8 percent ..... 0.1 cents zero cents 

At least 8 percent but 

less than 12 percent ... 0.2 cents 0.2 cents 

At least 12 percent but 

less than 16 percent ... 0.3 cents 0.3 cents 

At least 16 percent but 

less than 20 percent ... 0.4 cents 0.4 cents 

At least 20 percent but 

less than 24 percent ... 0.5 cents 0.5 cents 

Equal to or greater than 

24 percent .................. 0.6 cents 0.6 cents. 

11 ‘‘(2) YEARS AFTER 2016.—In the case of tax12 able years beginning after December 31, 2016, the 

13 intermittent renewable portfolio factor for an eligible 

14 taxpayer shall be determined as follows: 


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‘‘In the case of an 

eligible taxpayer 

whose intermittent 

renewable electricity percentage 

is: 

For taxable years 

beginning before 

2019, the intermittent renewable 

portfolio factor is: 

For taxable years 

beginning in or 

after 2019, the 

intermittent renewable portfolio factor is: 

Less than 10 percent ..... zero cents zero cents 

At least 10 percent but 

less than 12 percent ... 0.2 cents zero cents 

At least 12 percent but 

less than 16 percent ... 0.3 cents 0.15 cents 

At least 16 percent but 

less than 20 percent ... 0.4 cents 0.4 cents 

At least 20 percent but 

less than 24 percent ... 0.5 cents 0.5 cents 

Equal to or greater than 

24 percent .................. 0.6 cents 0.6 cents. 

1 ‘‘(c) DEFINITIONS AND SPECIAL RULES.—For pur2 poses of this section— 

3 ‘‘(1) ELIGIBLE TAXPAYER.—The term ‘eligible 

4 taxpayer’ means an electric utility (as defined in sec5 tion 3(22) of the Federal Power Act, (16 U.S.C. 

6 796(22)). 

7 ‘‘(2) RENEWABLE ELECTRICITY.—The term ‘re8 newable electricity’ means electricity generated by— 

9 ‘‘(A) any facility using wind to generate 

10 such electricity; 

11 ‘‘(B) any facility using solar energy to gen12 erate such electricity; or 

13 ‘‘(C) any facility using any other intermit14 tent renewable energy source which the Sec15 retary of Energy determines has a capacity fac16 tor of less than 50 percent on an annual basis. 

17 ‘‘(3) INTERMITTENT RENEWABLE ELECTRICITY

18 PERCENTAGE.—The term ‘intermittent renewable 


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1 electricity percentage’ means the percentage of an el2 igible taxpayer’s total sales of electricity to retail 

3 customers that is derived from renewable electricity 

4 (determine without regard to whether such elec5 tricity was produced by the taxpayer). 

6 ‘‘(4) APPLICATION OF OTHER RULES.—For 

7 purposes of this section, rules similar to the rules of 

8 paragraphs (1), (3), and (5) of section 45(e) shall 

9 apply. 

10 ‘‘(5) CREDIT ALLOWED ONLY WITH RESPECT

11 TO 1 ELIGIBLE ENTITY.—No credit shall be allowed 

12 under subsection (a) with respect to renewable elec13 tricity purchased from another eligible entity if a 

14 credit has been allowed under this section or a pay15 ment has been made under section 6433 to such 

16 other eligible entity. 

17 ‘‘(d) CREDIT DISALLOWED UNLESS CREDIT PASSED

18 TO THIRD PARTY GENERATORS CHARGED FOR INTEGRA19 TION COSTS.— 

20 ‘‘(1) IN GENERAL.—In the case of renewable 

21 electricity eligible for the credit under subsection (a) 

22 that is purchased and not produced by an eligible 

23 taxpayer, no credit shall be allowed unless any 

24 charge the taxpayer has assessed the seller to re25 cover the integration costs associated with such elecVerDate Mar 15 2010 23:36 Mar 11, 2011 Jkt 099200 PO 00000 Frm 00063 Fmt 6652 Sfmt 6201 E:\BILLS\S559.IS S559

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1 tricity has been reduced (but not below zero) to the 

2 extent of the credit received under subsection (a) as3 sociated with such electricity. 

4 ‘‘(2) DEFINITIONS.—For purposes of paragraph 

5 (1), charges intended to recover integration costs do 

6 not include amounts paid by the producer of the 

7 electricity for interconnection facilities, distribution 

8 upgrades, network upgrades, or stand alone network 

9 upgrades as those terms have been defined by the 

10 Federal Energy Regulatory Commission in its 

11 Standard Interconnection Procedures. 

12 ‘‘(e) COORDINATION WITH PAYMENTS.—The amount 

13 of the credit determined under this section with respect 

14 to any electricity shall be reduced to take into account any 

15 payment provided with respect to such electricity solely by 

16 reason of the application of section 6433.’’. 

17 (2) CREDIT MADE PART OF GENERAL BUSINESS

18 CREDIT.—Subsection (b) of section 38 of the Inter19 nal Revenue Code of 1986 is amended by striking 

20 ‘‘plus’’ at the end of paragraph (35), by striking the 

21 period at the end of paragraph (36) and inserting ‘‘, 

22 plus’’, and by adding at the end the following new 

23 paragraph: 

24 ‘‘(37) the renewable electricity integration cred25 it determined under section 45S(a).’’. 


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1 (3) SPECIFIED CREDIT.—Subparagraph (B) of 

2 section 38(c)(4) of the Internal Revenue Code of 

3 1986 is amended by redesignating clauses (vii) 

4 through (ix) as clauses (viii) through (x), respec5 tively, and by inserting after clause (v) the following 

6 new clause: 

7 ‘‘(vi) the credit determined under sec8 tion 45S.’’. 

9 (4) CLERICAL AMENDMENT.—The table of sec10 tions for subpart D of part IV of subchapter A of 

11 chapter 1 of the Internal Revenue Code of 1986 is 

12 amended by adding at the end the following new 

13 item: 

‘‘Sec. 45S. Renewable electricity integration credit.’’. 

14 (b) PAYMENTS IN LIEU OF CREDIT.— 

15 (1) IN GENERAL.—Subchapter B of chapter 65 

16 of the Internal Revenue Code of 1986 is amended by 

17 adding at the end the following new section: 

18 ‘‘SEC. 6433. RENEWABLE ELECTRICITY INTEGRATION PAY19 MENTS. 

20 ‘‘(a) IN GENERAL.—If any eligible person sells re21 newable electricity to a retail customer, the Secretary shall 

22 pay (without interest) to any such person who elects to 

23 receive a payment an amount equal to the product of— 

24 ‘‘(1) the intermittent renewable portfolio factor 

25 of such eligible person; and 


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1 ‘‘(2) the number of kilowatt hours of renewable 

2 electricity— 

3 ‘‘(A) purchased or produced by such per4 son; and 

5 ‘‘(B) sold by such person in the trade or 

6 business of such person to a retail customer. 

7 ‘‘(b) TIMING OF PAYMENTS.— 

8 ‘‘(1) IN GENERAL.—Except as provided in para9 graph (2), rules similar to the rules of section 

10 6427(i)(1) shall apply for purposes of this section. 

11 ‘‘(2) QUARTERLY PAYMENTS.— 

12 ‘‘(A) IN GENERAL.—If, at the close of any 

13 quarter of the taxable year of any person, at 

14 least $750 is payable in the aggregate under 

15 subsection (a), to such person with respect to 

16 electricity purchased or produced during— 

17 ‘‘(i) such quarter; or 

18 ‘‘(ii) any prior quarter (for which no 

19 other claim has been filed) during such 

20 taxable year, a claim may be filed under 

21 this section with respect to such electricity. 

22 ‘‘(B) TIME FOR FILING CLAIM.—No claim 

23 filed under this paragraph shall be allowed un24 less filed on or before the last day of the first 


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1 quarter following the earliest quarter included 

2 in the claim. 

3 ‘‘(c) DEFINITIONS AND SPECIAL RULES.—For pur4 poses of this section: 

5 ‘‘(1) ELIGIBLE PERSON.—The term ‘eligible 

6 person’ means an electric utility (as defined in sec7 tion 3(22) of the Federal Power Act, (16 U.S.C. 

8 796(22)). 

9 ‘‘(2) OTHER DEFINITIONS.—Any term used in 

10 this section which is also used in section 45S shall 

11 have the meaning given such term under section 

12 45S. 

13 ‘‘(3) APPLICATION OF OTHER RULES.—For 

14 purposes of this section, rules similar to the rules of 

15 paragraphs (1) and (3) of section 45(e) shall apply. 

16 ‘‘(d) PAYMENT DISALLOWED UNLESS AMOUNT

17 PASSED TO THIRD PARTY GENERATORS CHARGED FOR

18 INTEGRATION COSTS.— 

19 ‘‘(1) IN GENERAL.—In the case of renewable 

20 electricity eligible for the payment under subsection 

21 (a) that is purchased and not produced by an eligi22 ble person, no payment shall be made under this sec23 tion unless any charge the eligible person has as24 sessed the seller to recover the integration costs as25 sociated with such electricity has been reduced (but 


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1 not below zero) to the extent of the payment re2 ceived under subsection (a) associated with such 

3 electricity. 

4 ‘‘(2) DEFINITIONS.—For purposes of paragraph 

5 (1), charges intended to recover integration costs do 

6 not include amounts paid by the producer of the 

7 electricity for interconnection facilities, distribution 

8 upgrades, network upgrades, or stand alone network 

9 upgrades as those terms have been defined by the 

10 Federal Energy Regulatory Commission in its 

11 Standard Interconnection Procedures.’’. 

12 (2) CLERICAL AMENDMENT.—The table of sec13 tions for subpart B of chapter 65 of the Internal 

14 Revenue Code of 1986 is amended by adding at the 

15 end the following new item: 

‘‘Sec. 6433. Renewable electricity integration payments.’’. 

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

17 this section shall apply to electricity produced or pur18 chased after December 31, 2010. 

19 TITLE V—WIND ENERGY 

20 SEC. 501. REMOVAL OF CERTAIN TAX RESTRICTIONS TO 

21 PROMOTE EXPANSION OF CAPITAL FOR WIND 

22 FARM INVESTMENT. 

23 (a) EXEMPTION FROM PASSIVE LOSS RULES.— 

24 (1) IN GENERAL.—Section 469(c) of the Inter25 nal Revenue Code of 1986 (defining passive activity) 


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1 is amended by adding at the end the following new 

2 paragraph: 

3 ‘‘(8) CERTAIN RENEWABLE ENERGY FACILI4 TIES.—The term ‘passive activity’ shall not include 

5 any trade or business involving ownership of 1 or 

6 more facilities described in section 45(d)(1).’’. 

7 (2) EFFECTIVE DATE.—The amendment made 

8 by this subsection shall apply to taxable years begin9 ning after December 31, 2010. 

10 (b) APPLICATION OF AT-RISK RULES.— 

11 (1) IN GENERAL.—Section 465(b)(6) of the In12 ternal Revenue Code of 1986 (relating to qualified 

13 nonrecourse financing treated as amount at risk) is 

14 amended— 

15 (A) by inserting ‘‘or renewable energy 

16 property’’ after ‘‘real property’’ each place it 

17 appears in subparagraphs (A) and (B)(i), and 

18 (B) by adding at the end the following new 

19 subparagraph: 

20 ‘‘(F) RENEWABLE ENERGY PROPERTY.— 

21 The term ‘renewable energy property’ means 

22 property described in section 45(d)(1).’’. 

23 (2) EFFECTIVE DATE.—The amendments made 

24 by this subsection shall apply to losses incurred after 


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1 December 31, 2010, with respect to property placed 

2 in service by the taxpayer after such date. 

3 (c) TREATMENT OF INCOME AND GAINS FROM WIND

4 ENERGY AS QUALIFYING INCOME FOR PUBLICLY TRADED

5 PARTNERSHIPS.— 

6 (1) IN GENERAL.—Section 7704(d) of the In7 ternal Revenue Code of 1986 (defining qualifying in8 come) is amended— 

9 (A) by inserting ‘‘wind energy,’’ after ‘‘fer10 tilizer,’’ in paragraph (1)(E), and 

11 (B) by adding at the end the following new 

12 paragraph: 

13 ‘‘(6) WIND ENERGY.—For purposes of para14 graph (1)(E), income and gains from wind energy 

15 include amounts realized from the sale of renewable 

16 energy credits, pollution allowances, and other envi17 ronmental attributes.’’. 

18 (2) EFFECTIVE DATE.—The amendments made 

19 by this subsection shall apply on the date of enact20 ment of this Act. 

21 (d) ANTI-ABUSE RULES.—The Secretary of Treasury 

22 or the Secretary’s designee shall prescribe such rules as 

23 are necessary to prevent the abuse of the purposes of the 

24 amendments made by this section. 


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1 TITLE VI—RENEWABLE ELEC2 TRICITY AND ENERGY EFFI3 CIENCY RESOURCE STAND4 ARDS 

5 SEC. 601. RENEWABLE ELECTRICITY AND ENERGY EFFI6 CIENCY RESOURCE STANDARDS. 

7 (a) IN GENERAL.—Title VI of the Public Utility Reg8 ulatory Policies Act of 1978 (16 U.S.C. 2601 et seq.) is 

9 amended by adding at the end the following: 

10 ‘‘SEC. 610. RENEWABLE ELECTRICITY AND ENERGY EFFI11 CIENCY RESOURCE STANDARDS. 

12 ‘‘(a) DEFINITIONS.—In this section: 

13 ‘‘(1) BASE QUANTITY OF ELECTRICITY.— 

14 ‘‘(A) IN GENERAL.—The term ‘base quan15 tity of electricity’ means the total quantity of 

16 electricity sold by an electric utility to electric 

17 consumers in a calendar year. 

18 ‘‘(B) EXCLUSIONS.—The term ‘base quan19 tity of electricity’ does not include electricity 

20 generated by a hydroelectric facility (including 

21 a pumped storage facility but excluding incre22 mental hydropower). 

23 ‘‘(2) DISTRIBUTED GENERATION FACILITY.— 

24 The term ‘distributed generation facility’ means a 

25 facility at a customer site. 


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1 ‘‘(3) GEOTHERMAL ENERGY.—The term ‘geo2 thermal energy’ means energy derived from a geo3 thermal deposit (within the meaning of section 

4 613(e)(2) of the Internal Revenue Code of 1986). 

5 ‘‘(4) INCREMENTAL GEOTHERMAL PRODUC6 TION.— 

7 ‘‘(A) IN GENERAL.—The term ‘incremental 

8 geothermal production’ means, for any year, the 

9 excess of— 

10 ‘‘(i) the total kilowatt hours of elec11 tricity produced from a facility (including a 

12 distributed generation facility) using geo13 thermal energy; over 

14 ‘‘(ii) the average number of kilowatt 

15 hours produced annually at the facility for 

16 5 of the previous 7 calendar years before 

17 the date of enactment of this section after 

18 eliminating the highest and the lowest kilo19 watt hour production years in that 7-year 

20 period. 

21 ‘‘(B) SPECIAL RULE.—A facility described 

22 in subparagraph (A) that was placed in service 

23 at least 7 years before the date of enactment of 

24 this section shall, commencing with the year in 

25 which that date of enactment occurs, reduce the 


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1 amount calculated under subparagraph (A)(ii) 

2 each year, on a cumulative basis, by the average 

3 percentage decrease in the annual kilowatt hour 

4 production for the 7-year period described in 

5 subparagraph (A)(ii) with such cumulative sum, 

6 but not to exceed 30 percent. 

7 ‘‘(5) INCREMENTAL HYDROPOWER.— 

8 ‘‘(A) IN GENERAL.—The term ‘incremental 

9 hydropower’ means additional energy generated 

10 as a result of efficiency improvements or capac11 ity additions made on or after— 

12 ‘‘(i) January 1, 2001; or 

13 ‘‘(ii) the effective commencement date 

14 of an existing applicable State renewable 

15 portfolio standard program at a hydro16 electric facility that was placed in service 

17 before that date. 

18 ‘‘(B) EXCLUSION.—The term ‘incremental 

19 hydropower’ does not include additional energy 

20 generated as a result of operational changes not 

21 directly associated with efficiency improvements 

22 or capacity additions. 

23 ‘‘(C) MEASUREMENT AND CERTIFI24 CATION.—Efficiency improvements and capacity 


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1 additions referred to in subparagraph (B) shall 

2 be— 

3 ‘‘(i) measured on the basis of the 

4 same water flow information used to deter5 mine a historic average annual generation 

6 baseline for the hydroelectric facility; and 

7 ‘‘(ii) certified by the Secretary or the 

8 Federal Energy Regulatory Commission. 

9 ‘‘(6) OCEAN ENERGY.—The term ‘ocean energy’ 

10 includes current, wave, tidal, and thermal energy. 

11 ‘‘(7) RENEWABLE BIOMASS.—Subject to section 

12 104(b) of the Securing America’s Future with En13 ergy and Sustainable Technologies Act, the term ‘re14 newable biomass’ means— 

15 ‘‘(A) materials, precommercial thinnings, 

16 or removed invasive species from National For17 est System land and public lands (as defined in 

18 section 103 of the Federal Land Policy and 

19 Management Act of 1976 (43 U.S.C. 1702)), 

20 including those that are byproducts of preven21 tive treatments (such as trees, wood, brush, 

22 thinnings, chips, and slash), that are removed 

23 as part of a federally recognized timber sale, or 

24 that are removed to reduce hazardous fuels, to 


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1 reduce or contain disease or insect infestation, 

2 or to restore ecosystem health, and that are— 

3 ‘‘(i) not from components of— 

4 ‘‘(I) a component of the National 

5 Wild and Scenic Rivers System; 

6 ‘‘(II) a component of the Na7 tional Wilderness Preservation Sys8 tem; 

9 ‘‘(III) a National Monument; 

10 ‘‘(IV) any part of the National 

11 Landscape Conservation System; 

12 ‘‘(V) a designated wilderness 

13 study area or other areas managed for 

14 wilderness characteristics; 

15 ‘‘(VI) an inventoried roadless 

16 area within the National Forest Sys17 tem; 

18 ‘‘(VII) an old growth stand (as 

19 defined by the applicable land man20 agement plan); 

21 ‘‘(VIII) a late-successional stand 

22 (except for dead, severely damaged, or 

23 badly infested trees) (as defined by 

24 the applicable land management 

25 plan); or 


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1 ‘‘(IX) a designated primitive 

2 area; 

3 ‘‘(ii) harvested in environmentally sus4 tainable quantities, as determined by the 

5 appropriate Federal land manager; and 

6 ‘‘(iii) harvested in accordance with ap7 plicable law and land management plans; 

8 ‘‘(B) any organic matter that is available 

9 on a renewable or recurring basis from non10 Federal land or land belonging to an Indian or 

11 Indian tribe that is held in trust by the United 

12 States or subject to a restriction against alien13 ation imposed by the United States, including— 

14 ‘‘(i) renewable plant material, includ15 ing— 

16 ‘‘(I) feed grains; 

17 ‘‘(II) other agricultural commod18 ities; 

19 ‘‘(III) other plants and trees; and 

20 ‘‘(IV) algae; and 

21 ‘‘(ii) waste material (other than com22 monly recycled paper), including— 

23 ‘‘(I) crop residue; 


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1 ‘‘(II) other vegetative waste ma2 terial (including wood waste and wood 

3 residues); 

4 ‘‘(III) animal waste and byprod5 ucts (including fats, oils, greases, and 

6 manure); 

7 ‘‘(IV) construction waste; 

8 ‘‘(V) food waste and yard waste; 

9 and 

10 ‘‘(VI) waste from single or multi11 cellular organisms; and 

12 ‘‘(C) residues and byproducts from wood, 

13 pulp, or paper products facilities. 

14 ‘‘(8) RENEWABLE ENERGY.—The term ‘renew15 able energy’ means electric energy generated at a fa16 cility (including a distributed generation facility) 

17 from— 

18 ‘‘(A) solar, wind, geothermal, or ocean en19 ergy; 

20 ‘‘(B) renewable biomass; 

21 ‘‘(C) landfill gas; 

22 ‘‘(D) municipal solid waste; 

23 ‘‘(E) incremental hydropower; or 

24 ‘‘(F) hydropower that has been certified by 

25 the Low Impact Hydropower Institute. 


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1 ‘‘(b) RENEWABLE ELECTRICITY REQUIREMENT.— 

2 ‘‘(1) REQUIREMENT.— 

3 ‘‘(A) IN GENERAL.—Subject to subpara4 graph (B), each electric utility that sells elec5 tricity to electric consumers shall obtain a per6 centage of the base quantity of electricity the 

7 electric utility sells to electric consumers in any 

8 calendar year through the means of compliance 

9 identified in paragraph (2). 

10 ‘‘(B) PERCENTAGE.—The percentage ob11 tained in a calendar year under subparagraph 

12 (A) shall not be less than the amount specified 

13 in the following table: 

Minimum annual 

‘‘Calendar years: percentage: 

2013 ................................................................................................... 10

2014 ................................................................................................... 11

2015 ................................................................................................... 12

2016 ................................................................................................... 13

2017 ................................................................................................... 14

2018 ................................................................................................... 15

2019 ................................................................................................... 16

2020 ................................................................................................... 17

2021 ................................................................................................... 18

2022 ................................................................................................... 19

2023 ................................................................................................... 21

2024 ................................................................................................... 23

2025 ................................................................................................... 25. 

14 ‘‘(2) MEANS OF COMPLIANCE.—Not later than 

15 60 days after the end of each calendar year, an elec16 tric utility shall meet the requirements of paragraph 

17 (1) by— 


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1 ‘‘(A) submitting to the Secretary renewable 

2 energy credits issued under subsection (c); 

3 ‘‘(B) making alternative compliance pay4 ments to the Secretary at the rate of 4 cents 

5 per kilowatt hour (as adjusted for inflation 

6 under subsection (g)); 

7 ‘‘(C) submitting to the Secretary energy 

8 efficiency credits established under section 

9 611(k) in a quantity that shall not exceed 15 

10 percent of the minimum percentage required in 

11 each calendar year under subparagraph (B); or 

12 ‘‘(D) conducting a combination of activities 

13 described in subparagraphs (A), (B), and (C). 

14 ‘‘(3) CLEAN ENERGY JOBS.—In carrying out 

15 this title, the Secretary shall, to the maximum ex16 tent practicable, encourage electric utilities, in meet17 ing the requirements of paragraph (1), also— 

18 ‘‘(A) to create jobs that pay a living wage 

19 that supports a family; 

20 ‘‘(B) to provide health insurance benefits 

21 to employees; and 

22 ‘‘(C) to comply with all Federal labor and 

23 environmental laws (including regulations). 

24 ‘‘(c) RENEWABLE ENERGY CREDIT TRADING PRO25 GRAM.— 


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1 ‘‘(1) IN GENERAL.—Not later than December 

2 31, 2011, the Secretary, in consultation with the Ad3 ministrator, shall establish a renewable energy credit 

4 trading program under which electric utilities shall 

5 submit to the Secretary renewable energy credits to 

6 certify the compliance of the electric utilities with re7 spect to obligations under subsection (b)(1). 

8 ‘‘(2) ADMINISTRATION.—As part of the pro9 gram, the Secretary shall— 

10 ‘‘(A) issue renewable energy credits to gen11 erators of electric energy from new renewable 

12 energy; 

13 ‘‘(B) issue renewable energy credits to 

14 electric utilities associated with State renewable 

15 portfolio standard compliance mechanisms pur16 suant to subsection (h); 

17 ‘‘(C) subject to subparagraph (D), ensure 

18 that a kilowatt hour, including the associated 

19 renewable energy credit, shall be used only once 

20 for purposes of compliance with this section; 

21 ‘‘(D) allow double credits for generation 

22 from facilities on Indian land and brownfield 

23 sites, and triple credits for generation from 

24 small renewable distributed generators (mean25 ing those no larger than 1 megawatt); 


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1 ‘‘(E) ensure that, with respect to a pur2 chaser that, as of the date of enactment of this 

3 section, has a purchase agreement from a re4 newable energy facility placed in service before 

5 that date (other than a biomass energy facility), 

6 the credit associated with the generation of re7 newable energy under the contract is issued to 

8 the purchaser of the electric energy; and 

9 ‘‘(F) not allow energy efficiency credits es10 tablished under section 611(k) to be traded. 

11 ‘‘(3) DURATION.—A credit described in para12 graph (2)(A) may only be used for compliance with 

13 this section during the 3-year period beginning on 

14 the date of issuance of the credit. 

15 ‘‘(4) TRANSFERS.—An electric utility that holds 

16 credits in excess of the quantity of credits needed to 

17 comply with subsection (b) may transfer the credits 

18 to another electric utility. 

19 ‘‘(5) DELEGATION OF MARKET FUNCTION.— 

20 The Secretary may delegate to an appropriate entity 

21 that establishes markets the administration of a na22 tional tradeable renewable energy credit market for 

23 purposes of creating a transparent national market 

24 for the sale or trade of renewable energy credits. 

25 ‘‘(d) ENFORCEMENT.— 


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1 ‘‘(1) CIVIL PENALTIES.—Any electric utility 

2 that fails to meet the compliance requirements of 

3 subsection (b) shall be subject to a civil penalty. 

4 ‘‘(2) AMOUNT OF PENALTY.—Subject to para5 graph (3), the amount of the civil penalty shall be 

6 equal to the product obtained by multiplying— 

7 ‘‘(A) the number of kilowatt-hours of elec8 tric energy sold to electric consumers in viola9 tion of subsection (b); by 

10 ‘‘(B) the greater of— 

11 ‘‘(i) 2 cents (adjusted for inflation 

12 under subsection (g)); or 

13 ‘‘(ii) 200 percent of the average mar14 ket value of renewable energy credits dur15 ing the year in which the violation oc16 curred. 

17 ‘‘(3) MITIGATION OR WAIVER.— 

18 ‘‘(A) IN GENERAL.—The Secretary may 

19 mitigate or waive a civil penalty under this sub20 section if the electric utility is unable to comply 

21 with subsection (b) due to a reason outside of 

22 the reasonable control of the electric utility. 

23 ‘‘(B) REDUCTION.—The Secretary shall re24 duce the amount of any penalty determined 

25 under paragraph (2) by an amount paid by the 


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1 electric utility to a State for failure to comply 

2 with the requirement of a State renewable en3 ergy program if the State requirement is great4 er than the applicable requirement of subsection 

5 (b). 

6 ‘‘(4) PROCEDURE FOR ASSESSING PENALTY.— 

7 The Secretary shall assess a civil penalty under this 

8 subsection in accordance with the procedures pre9 scribed by section 333(d) of the Energy Policy and 

10 Conservation Act (42 U.S.C. 6303(d)). 

11 ‘‘(e) STATE RENEWABLE ENERGY ACCOUNT PRO12 GRAM.— 

13 ‘‘(1) IN GENERAL.—There is established in the 

14 Treasury a State renewable energy account program. 

15 ‘‘(2) DEPOSITS.—All money collected by the 

16 Secretary from alternative compliance payments and 

17 the assessment of civil penalties under this section 

18 shall be deposited into the renewable energy account 

19 established pursuant to this subsection. 

20 ‘‘(3) USE.—Proceeds deposited in the State re21 newable energy account shall be used by the Sec22 retary to carry out a program to provide grants to 

23 the State agency responsible for developing State en24 ergy conservation plans under section 362 of the En25 ergy Policy and Conservation Act (42 U.S.C. 6322) 


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1 for the purposes of promoting renewable energy pro2 duction, including programs that promote tech3 nologies that reduce the use of electricity at cus4 tomer sites, such as solar water heating. 

5 ‘‘(4) ADMINISTRATION.—The Secretary may 

6 issue guidelines and criteria for grants awarded 

7 under this subsection. 

8 ‘‘(5) RECORDS.—State energy offices receiving 

9 grants under this section shall maintain such 

10 records and evidence of compliance as the Secretary 

11 may require. 

12 ‘‘(6) PREFERENCE.—In allocating funds under 

13 this subsection, the Secretary shall give preference— 

14 ‘‘(A) to States in regions that have a dis15 proportionately small share of economically sus16 tainable renewable energy generation capacity; 

17 and 

18 ‘‘(B) to State programs to stimulate or en19 hance innovative renewable energy technologies. 

20 ‘‘(f) EXEMPTIONS.—During any calendar year, this 

21 section shall not apply to an electric utility that sold less 

22 than 4,000,000 megawatt-hours of electric energy to elec23 tric consumers during the preceding calendar year. 

24 ‘‘(g) INFLATION ADJUSTMENT.—Not later than De25 cember 31 of each year beginning in 2011, the Secretary 


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1 shall adjust for United States dollar inflation from Janu2 ary 1, 2011 (as measured by the Consumer Price Index)— 

3 ‘‘(1) the price of a renewable energy credit 

4 under subsection (c)(2); and 

5 ‘‘(2) the amount of the civil penalty per kilo6 watt-hour under subsection (d)(2). 

7 ‘‘(h) STATE PROGRAMS.— 

8 ‘‘(1) IN GENERAL.—Subject to paragraph (2), 

9 nothing in this section diminishes any authority of 

10 a State or political subdivision of a State to adopt 

11 or enforce any law or regulation respecting renew12 able energy. 

13 ‘‘(2) COMPLIANCE.—Except as provided in sub14 section (d)(3), no such law or regulation shall relieve 

15 any person of any requirement otherwise applicable 

16 under this section. 

17 ‘‘(3) COORDINATION.—The Secretary, in con18 sultation with States having such renewable energy 

19 programs, shall, to the maximum extent practicable, 

20 facilitate coordination between the Federal program 

21 and State programs. 

22 ‘‘(4) REGULATIONS.— 

23 ‘‘(A) IN GENERAL.—The Secretary, in con24 sultation with States, shall promulgate regula25 tions to ensure that an electric utility subject to 


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1 the requirements of this section that is also 

2 subject to a State renewable energy standard 

3 receives renewable energy credits in relation to 

4 equivalent quantities of renewable energy asso5 ciated with compliance mechanisms, other than 

6 the generation or purchase of renewable energy 

7 by the electric utility, including the acquisition 

8 of certificates or credits and the payment of 

9 taxes, fees, surcharges, or other financial com10 pliance mechanisms by the electric utility or a 

11 customer of the electric utility, directly associ12 ated with the generation or purchase of renew13 able energy. 

14 ‘‘(B) PROHIBITION ON DOUBLE COUNT15 ING.—The regulations promulgated under this 

16 paragraph shall ensure that a kilowatt hour as17 sociated with a renewable energy credit issued 

18 pursuant to this subsection shall not be used 

19 for compliance with this section more than 

20 once. 

21 ‘‘(i) RECOVERY OF COSTS.— 

22 ‘‘(1) IN GENERAL.—The Commission shall pro23 mulgate and enforce such regulations as are nec24 essary to ensure that an electric utility recovers all 


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1 prudently incurred costs associated with compliance 

2 with this section. 

3 ‘‘(2) APPLICABLE LAW.—A regulation under 

4 paragraph (1) shall be enforceable in accordance 

5 with the provisions of law applicable to enforcement 

6 of regulations under the Federal Power Act (16 

7 U.S.C. 791a et seq.). 

8 ‘‘(j) REGULATIONS.— 

9 ‘‘(1) IN GENERAL.—Not later than 18 months 

10 after the date of enactment of this title, the Sec11 retary, in consultation with the leaders of relevant 

12 Federal agencies, shall promulgate regulations to 

13 carry out this title. 

14 ‘‘(2) PRIORITIES.—The regulations promul15 gated under paragraph (1) shall prioritize the use of 

16 components and products produced in the United 

17 States, without placing constraints that prevent 

18 compliance under this title, for new renewable en19 ergy facilities eligible to participate in activities 

20 under this title. 

21 ‘‘(k) TERMINATION OF AUTHORITY.—This section 

22 and the authority provided by this section terminate on 

23 December 31, 2040.’’. 

24 (b) TABLE OF CONTENTS AMENDMENT.—The table 

25 of contents of the Public Utility Regulatory Policies Act 


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1 of 1978 (16 U.S.C. prec. 2601) is amended by adding at 

2 the end of the items relating to title VI the following: 

‘‘Sec. 609. Rural and remote communities electrification grants. 

‘‘Sec. 610. Renewable electricity and energy efficiency resource standards.’’. 

3 SEC. 602. ENERGY EFFICIENCY RESOURCE STANDARD FOR 

4 RETAIL ELECTRICITY AND NATURAL GAS DIS5 TRIBUTORS. 

6 (a) IN GENERAL.—Title VI of the Public Utility Reg7 ulatory Policies Act of 1978 (16 U.S.C. 2601 et seq.) (as 

8 amended by section 601(a)) is amended by adding at the 

9 end the following: 

10 ‘‘SEC. 611. ENERGY EFFICIENCY RESOURCE STANDARD FOR 

11 RETAIL ELECTRICITY AND NATURAL GAS DIS12 TRIBUTORS. 

13 ‘‘(a) DEFINITIONS.—In this section: 

14 ‘‘(1) ADMINISTRATOR.—The term ‘Adminis15 trator’ means the Administrator of the Environ16 mental Protection Agency. 

17 ‘‘(2) AFFILIATE.—The term ‘affiliate’, when 

18 used with respect to a person, means another person 

19 that owns or controls, is owned or controlled by, or 

20 is under common ownership control with, the person, 

21 as determined under regulations promulgated by the 

22 Secretary. 

23 ‘‘(3) ANSI.—The term ‘ANSI’ means the 

24 American National Standards Institute. 


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1 ‘‘(4) ASHRAE.—The term ‘ASHRAE’ means 

2 the American Society of Heating, Refrigerating, and 

3 Air Conditioning Engineers. 

4 ‘‘(5) BASE QUANTITY.— 

5 ‘‘(A) IN GENERAL.—The term ‘base quan6 tity’, when used with respect to a retail elec7 tricity distributor or retail natural gas dis8 tributor, means the average annual quantity of 

9 electricity or natural gas delivered by the retail 

10 electricity distributor or retail natural gas dis11 tributor to retail customers during the 5 cal12 endar years immediately preceding the date of 

13 enactment of this section. 

14 ‘‘(B) EXCLUSION.—The term ‘base quan15 tity’, when used to determine the base quantity 

16 of a retail natural gas distributor, does not in17 clude natural gas delivered for purposes of elec18 tricity generation. 

19 ‘‘(6) CODES AND STANDARDS SAVINGS.— 

20 ‘‘(A) IN GENERAL.—The term ‘codes and 

21 standards savings’ means a reduction in end22 use electricity or natural gas consumption in 

23 the service territory of a retail electricity dis24 tributor or a retail natural gas distributor as a 

25 result of the adoption and implementation, after 


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1 the date of enactment of this section, of new or 

2 revised appliance and equipment efficiency 

3 standards or building energy codes. 

4 ‘‘(B) BASELINES.—In calculating codes 

5 and standards savings— 

6 ‘‘(i) the baseline for calculating sav7 ings from building codes shall be the more 

8 stringent of— 

9 ‘‘(I) the 2006 International En10 ergy Conservation Code for residential 

11 buildings and the ASHRAE/ANSI/ 

12 IESNA Standard 90.1 (2004) for 

13 commercial buildings; 

14 ‘‘(II) the applicable State build15 ing code in effect on the date of en16 actment of this section; or 

17 ‘‘(III) a baseline determined by 

18 the Secretary; and 

19 ‘‘(ii) the baseline for calculating sav20 ings from appliance standards shall be the 

21 average efficiency of new appliances in the 

22 applicable 1 or more categories prior to 

23 adoption and implementation of the new 

24 standard. 


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1 ‘‘(7) COST-EFFECTIVE.—The term ‘cost-effec2 tive’, when used with respect to an energy efficiency 

3 measure, means that the measure achieves a net 

4 present value of economic benefits over the life of 

5 the measure, both directly to the energy consumer 

6 and to the economy, that is greater than the net 

7 present value of the cost of the measure over the life 

8 of the measure, both directly to the energy consumer 

9 and to the economy. 

10 ‘‘(8) CUSTOMER FACILITY SAVINGS.—The term 

11 ‘customer facility savings’ means a reduction in end12 use electricity or natural gas consumption (including 

13 recycled energy savings) at a facility of an end-use 

14 consumer of electricity or natural gas served by a re15 tail electricity distributor or natural gas distributor, 

16 as compared to— 

17 ‘‘(A) in the case of new equipment that re18 places existing equipment at the end of the use19 ful life of the existing equipment, consumption 

20 by new equipment of average efficiency; 

21 ‘‘(B) in the case of new equipment that re22 places existing equipment with remaining useful 

23 life— 


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1 ‘‘(i) consumption of the existing 

2 equipment for the remaining useful life of 

3 the equipment; and 

4 ‘‘(ii) after that useful life, consump5 tion of new equipment of average effi6 ciency; 

7 ‘‘(C) in the case of a new facility, con8 sumption at a reference facility of average effi9 ciency; or 

10 ‘‘(D) in the case of energy savings meas11 ures at a facility not covered by subparagraphs 

12 (A) through (C), consumption at the facility 

13 during a base year. 

14 ‘‘(9) ELECTRICITY SAVINGS.—The term ‘elec15 tricity savings’ means reductions in electricity con16 sumption achieved through measures implemented 

17 after the date of enactment of this section, as deter18 mined in accordance with regulations promulgated 

19 by the Secretary, through— 

20 ‘‘(A) customer facility savings of elec21 tricity, adjusted to reflect any associated in22 crease in fuel consumption at the facility; 

23 ‘‘(B) reductions in distribution system 

24 losses of electricity achieved by a retail elec25 tricity distributor, as compared to losses attribVerDate Mar 15 2010 23:36 Mar 11, 2011 Jkt 099200 PO 00000 Frm 00092 Fmt 6652 Sfmt 6201 E:\BILLS\S559.IS S559

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1 utable to new or replacement distribution sys2 tem equipment of average efficiency (as defined 

3 in regulations promulgated by the Secretary); 

4 and 

5 ‘‘(C) codes and standards savings of elec6 tricity. 

7 ‘‘(10) IESNA.—The term ‘IESNA’ mean the 

8 Illuminating Engineering Society of North America. 

9 ‘‘(11) NATURAL GAS SAVINGS.—The term ‘nat10 ural gas savings’ means reductions in natural gas 

11 consumption from measures implemented after the 

12 date of enactment of this section, as determined in 

13 accordance with regulations promulgated by the Sec14 retary, through— 

15 ‘‘(A) customer facility savings of natural 

16 gas, adjusted to reflect any associated increase 

17 in electricity consumption or consumption of 

18 other fuels at the facility; 

19 ‘‘(B) reductions in leakage, operational 

20 losses, and consumption of natural gas fuel to 

21 operate a gas distribution system, achieved by 

22 a retail natural gas distributor, as compared to 

23 similar leakage, losses, and consumption during 

24 a base period (which shall not be less than 1 

25 year); and 


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1 ‘‘(C) codes and standards savings of nat2 ural gas. 

3 ‘‘(12) POWER POOL.—The term ‘power pool’ 

4 means an association of 2 or more interconnected 

5 electric systems that is recognized by the Commis6 sion as having an agreement to coordinate oper7 ations and planning for improved reliability and effi8 ciencies, including a Regional Transmission Organi9 zation or an Independent System Operator. 

10 ‘‘(13) RECYCLED ENERGY SAVINGS.—The term 

11 ‘recycled energy savings’ means a reduction in elec12 tricity or natural gas consumption that results from 

13 a modification of an industrial or commercial system 

14 that commenced operation before the date of enact15 ment of this section, in order to recapture electrical, 

16 mechanical, or thermal energy that would otherwise 

17 be wasted, as determined in accordance with regula18 tions promulgated by the Secretary. 

19 ‘‘(14) REPORTING PERIOD.—The term ‘report20 ing period’ means— 

21 ‘‘(A) calendar year 2013; and 

22 ‘‘(B) each successive calendar year there23 after. 

24 ‘‘(15) RETAIL ELECTRICITY DISTRIBUTOR.— 


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1 ‘‘(A) IN GENERAL.—The term ‘retail elec2 tricity distributor’ means, for any calendar 

3 year, an electric utility that owns or operates an 

4 electric distribution facility and, using the facil5 ity, delivered not less than 4,000,000 mega6 watt-hours of electric energy to electric con7 sumers for purposes other than resale during 

8 the most recent 2-calendar-year period for 

9 which data are available. 

10 ‘‘(B) ADMINISTRATION.—For purposes of 

11 determining whether an electric utility qualifies 

12 as a retail electricity distributor under subpara13 graph (A)— 

14 ‘‘(i) deliveries by any affiliate of an 

15 electric utility to electric consumers for 

16 purposes other than resale shall be consid17 ered to be deliveries by the electric utility; 

18 and 

19 ‘‘(ii) deliveries by any electric utility 

20 to a lessee, tenant, or affiliate of the elec21 tric utility shall not be treated as deliveries 

22 to electric consumers. 

23 ‘‘(16) RETAIL NATURAL GAS DISTRIBUTOR.— 

24 ‘‘(A) IN GENERAL.—The term ‘retail nat25 ural gas distributor’ means, for any given calVerDate Mar 15 2010 23:36 Mar 11, 2011 Jkt 099200 PO 00000 Frm 00095 Fmt 6652 Sfmt 6201 E:\BILLS\S559.IS S559

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1 endar year, a local distribution company (as de2 fined in section 2 of the Natural Gas Policy Act 

3 of 1978 (15 U.S.C. 3301)), that delivered to 

4 natural gas consumers more than 

5 5,000,000,000 cubic feet of natural gas during 

6 the most recent 2-calendar-year period for 

7 which data are available. 

8 ‘‘(B) ADMINISTRATION.—For purposes of 

9 determining whether a person qualifies as a re10 tail natural gas distributor under subparagraph 

11 (A)— 

12 ‘‘(i) deliveries of natural gas by any 

13 affiliate of a local distribution company to 

14 consumers for purposes other than resale 

15 shall be considered to be deliveries by the 

16 local distribution company; and 

17 ‘‘(ii) deliveries of natural gas to a les18 see, tenant, or affiliate of a local distribu19 tion company shall not be treated as deliv20 eries to natural gas consumers. 

21 ‘‘(17) THIRD-PARTY EFFICIENCY PROVIDER.— 

22 The term ‘third-party efficiency provider’ means any 

23 retailer, building owner, energy service company, fi24 nancial institution or other commercial, industrial or 

25 nonprofit entity that is capable of providing elecVerDate Mar 15 2010 23:36 Mar 11, 2011 Jkt 099200 PO 00000 Frm 00096 Fmt 6652 Sfmt 6201 E:\BILLS\S559.IS S559

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1 tricity savings or natural gas savings in accordance 

2 with subsections (e) and (f). 

3 ‘‘(b) ESTABLISHMENT OF PROGRAM.—Not later than 

4 18 months after the date of enactment of this section, the 

5 Secretary shall, by regulation, establish a program to im6 plement and enforce this section, including— 

7 ‘‘(1) measurement and verification procedures 

8 and standards under subsection (f); 

9 ‘‘(2) requirements under which retail electricity 

10 distributors and retail natural gas distributors 

11 shall— 

12 ‘‘(A) demonstrate, document, and report 

13 compliance with the performance standards es14 tablished under subsection (d); and 

15 ‘‘(B) estimate the impact of the standards 

16 on current and future electricity and natural 

17 gas use in the service territories of the retail 

18 electricity distributors and retail natural gas 

19 distributors, respectively; and 

20 ‘‘(3) requirements governing applications for, 

21 and implementation of, delegated State administra22 tion under subsection (h). 

23 ‘‘(c) COORDINATION WITH STATE PROGRAMS.—In 

24 establishing and implementing the program established 

25 under this section, the Secretary, in coordination with the 


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1 Administrator, shall, to the maximum extent practicable, 

2 preserve the integrity, and incorporate the best practices, 

3 of existing State energy efficiency programs. 

4 ‘‘(d) PERFORMANCE STANDARDS.— 

5 ‘‘(1) COMPLIANCE OBLIGATION.—Not later 

6 than April 1 of the calendar year immediately fol7 lowing each reporting period— 

8 ‘‘(A) each retail electricity distributor shall 

9 submit to the Secretary a report, in accordance 

10 with regulations promulgated by the Secretary, 

11 demonstrating that the retail electricity dis12 tributor has achieved cumulative electricity sav13 ings (adjusted to account for any attrition of 

14 savings measures implemented in prior years) 

15 in each calendar year that are least equal to the 

16 applicable percentage, established under para17 graph (2), (3), or (4), of the base quantity of 

18 the retail electricity distributor; and 

19 ‘‘(B) each retail natural gas distributor 

20 shall submit to the Secretary a report, in ac21 cordance with regulations promulgated by the 

22 Secretary, demonstrating that the retail natural 

23 gas distributor has achieved cumulative natural 

24 gas savings (adjusted to account for any attri25 tion of savings measures implemented in prior 


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1 years) in each calendar year compared to the 

2 base quantity of the retail natural gas dis3 tributor. 

4 ‘‘(2) STANDARDS FOR 2012 THROUGH 2020.— 

5 For purposes of paragraph (1), for each of calendar 

6 years 2012 through 2020, the applicable percentages 

7 shall be as follows: 

Cumulative electricity 

‘‘Calendar years: savings percentage: 

2012 ................................................................................................... 1.5

2013 ................................................................................................... 2.5

2014 ................................................................................................... 3.5

2015 ................................................................................................... 4.5

2016 ................................................................................................... 5.5

2017 ................................................................................................... 6.5

2018 ................................................................................................... 7.5

2019 ................................................................................................... 8.5

2020 ................................................................................................... 9.5. 

8 ‘‘(3) SUBSEQUENT YEARS.— 

9 ‘‘(A) CALENDAR YEARS 2021 THROUGH

10 2030.—Not later than December 31, 2015, the 

11 Secretary shall promulgate regulations estab12 lishing performance standards (expressed as ap13 plicable percentages of base quantity for both 

14 cumulative electricity savings and cumulative 

15 natural gas savings) for each of calendar years 

16 2021 through 2030. 

17 ‘‘(B) SUBSEQUENT EXTENSIONS.—Except 

18 as provided in subparagraph (A), not later than 

19 December 31 of the penultimate reporting pe20 riod for which performance standards have been 


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1 established under this paragraph, the Secretary 

2 shall promulgate regulations establishing per3 formance standards (expressed as applicable 

4 percentages of base quantity for both cumu5 lative electricity savings and cumulative natural 

6 gas savings) for the 10-calendar-year period fol7 lowing the last calendar year for which perform8 ance standards previously were established. 

9 ‘‘(C) REQUIREMENTS.— 

10 ‘‘(i) IN GENERAL.—Subject to clause 

11 (ii), the Secretary shall establish standards 

12 under this paragraph at levels that reflect 

13 the maximum achievable level of cost-effec14 tive energy efficiency potential, taking into 

15 account— 

16 ‘‘(I) cost-effective energy savings 

17 achieved by leading retail electricity 

18 distributors and retail natural gas dis19 tributors; 

20 ‘‘(II) opportunities for new codes 

21 and standard savings; 

22 ‘‘(III) technology improvements; 

23 and 

24 ‘‘(IV) other indicators of cost-ef25 fective energy efficiency potential. 


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1 ‘‘(ii) MINIMUM PERCENTAGE.—In no 

2 case shall the applicable percentages for 

3 any calendar year be lower than the appli4 cable percentage for calendar year 2020 

5 (including any increase in the standard for 

6 calendar year 2020 pursuant to paragraph 

7 (4)). 

8 ‘‘(4) MIDCOURSE REVIEW AND ADJUSTMENT OF

9 STANDARDS.— 

10 ‘‘(A) IN GENERAL.—Not later than De11 cember 31, 2014, and at 10-year intervals 

12 thereafter, the Secretary shall— 

13 ‘‘(i) review the most recent standards 

14 established under paragraph (2) or (3); 

15 and 

16 ‘‘(ii) by regulation, increase the stand17 ards if the Secretary determines that addi18 tional cost-effective energy efficiency po19 tential is achievable, taking into account 

20 the factors described in paragraph (3)(C). 

21 ‘‘(B) LEAD TIME.—If the Secretary revises 

22 standards under this paragraph, the regulations 

23 shall provide adequate lead time to ensure that 

24 compliance with the increased standards is fea25 sible. 


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1 ‘‘(5) DELAY OF SUBMISSION FOR FIRST RE2 PORTING PERIOD.— 

3 ‘‘(A) IN GENERAL.—Notwithstanding 

4 paragraphs (1) and (2), for the 2013 reporting 

5 period, the Secretary may accept a request from 

6 a retail electricity distributor or a retail natural 

7 gas distributor to delay the required submission 

8 of documentation of part or all of the required 

9 savings for up to 2 years. 

10 ‘‘(B) PLAN.—The request for delay shall 

11 include a plan for coming into full compliance 

12 by the end of the 2013 through 2014 reporting 

13 period. 

14 ‘‘(e) TRANSFERS OF ELECTRICITY OR NATURAL GAS

15 SAVINGS.— 

16 ‘‘(1) BILATERAL CONTRACTS FOR SAVINGS

17 TRANSFERS.—Subject to the other provisions of this 

18 section, a retail electricity distributor or retail nat19 ural gas distributor may use electricity savings or 

20 natural gas savings purchased, pursuant to a bilat21 eral contract, from another retail electricity dis22 tributor or retail natural gas distributor, a State, or 

23 a third-party efficiency provider to meet the applica24 ble performance standard under subsection (d). 


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1 ‘‘(2) REQUIREMENTS.—Electricity or natural 

2 gas savings purchased and used for compliance pur3 suant to this subsection shall be— 

4 ‘‘(A) measured and verified in accordance 

5 with subsection (f); 

6 ‘‘(B) reported in accordance with sub7 section (d); and 

8 ‘‘(C) achieved within the same State as is 

9 served by the retail electricity distributor or re10 tail natural gas distributor. 

11 ‘‘(3) EXCEPTION.—Notwithstanding paragraph 

12 (2)(C), a State regulatory authority may authorize a 

13 retail electricity distributor or a retail natural gas 

14 distributor regulated by the State regulatory author15 ity to purchase savings achieved in a different State, 

16 if— 

17 ‘‘(A) the savings are achieved within the 

18 same power pool; and 

19 ‘‘(B) the State regulatory authority that 

20 regulates the purchaser oversees the measure21 ment and verification of the savings pursuant to 

22 the procedures and standards applicable in the 

23 State of the purchaser. 

24 ‘‘(4) REGULATORY APPROVAL.—Nothing in this 

25 subsection limits or affects the authority of a State 


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1 regulatory authority to require a retail electricity 

2 distributor or retail natural gas distributor that is 

3 regulated by the State regulatory authority to obtain 

4 the authorization or approval of the State regulatory 

5 authority for a contract for transfer of savings 

6 under this subsection. 

7 ‘‘(5) LIMITATIONS.—In the interest of opti8 mizing achievement of cost-effective efficiency poten9 tial, the Secretary may prescribe such limitations as 

10 the Secretary determines to be appropriate with re11 spect to the proportion of the compliance obligation 

12 of a retail electricity or natural gas distributor, 

13 under the applicable performance standards under 

14 subsection (d), that may be met using electricity or 

15 natural gas savings that are purchased under this 

16 subsection. 

17 ‘‘(f) MEASUREMENT AND VERIFICATION OF SAV18 INGS.—The regulations promulgated under subsection (b) 

19 shall include— 

20 ‘‘(1) procedures and standards for defining and 

21 measuring electricity savings and natural gas sav22 ings that can be counted towards the performance 

23 standards established under subsection (d), which 

24 shall— 


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1 ‘‘(A) specify the types of energy efficiency 

2 and energy conservation measures that can be 

3 counted; 

4 ‘‘(B) require that energy consumption esti5 mates for customer facilities or parts of facili6 ties in the applicable base and current years be 

7 adjusted, as appropriate, to account for changes 

8 in weather, level of production, and building 

9 area; 

10 ‘‘(C) account for the useful life of meas11 ures; 

12 ‘‘(D) include considered savings values for 

13 specific, commonly used measures; 

14 ‘‘(E) allow for savings from a program to 

15 be estimated based on extrapolation from a rep16 resentative sample of participating customers; 

17 ‘‘(F) include procedures for counting com18 bined heat and power savings and recycled en19 ergy savings; 

20 ‘‘(G) establish methods for calculating 

21 codes and standards savings, including the use 

22 of verified compliance rates; 

23 ‘‘(H) count only measures and savings that 

24 are additional to business-as-usual practices; 


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1 ‘‘(I) except in the case of codes and stand2 ards savings, ensure that the retail electricity 

3 distributor or retail natural gas distributor 

4 claiming the savings played a significant role in 

5 achieving the savings (including through the ac6 tivities of a designated agent of the distributor 

7 or through the purchase of transferred savings); 

8 ‘‘(J) avoid double-counting of savings used 

9 for compliance with this section and section 

10 610, including transferred savings; and 

11 ‘‘(K) include savings from programs ad12 ministered by the retail electric or natural gas 

13 distributor that are funded by Federal, State, 

14 or other sources; and 

15 ‘‘(2) procedures and standards for third-party 

16 verification of reported electricity savings or natural 

17 gas savings. 

18 ‘‘(g) ENFORCEMENT AND JUDICIAL REVIEW.— 

19 ‘‘(1) REVIEW OF RETAIL DISTRIBUTOR RE20 PORTS.— 

21 ‘‘(A) IN GENERAL.—The Secretary shall 

22 review each report submitted to the Secretary 

23 by a retail electricity distributor or retail nat24 ural gas distributor under subsection (d) to 


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1 verify that the applicable performance stand2 ards under that subsection have been met. 

3 ‘‘(B) EXCLUSIONS.—In determining com4 pliance with the applicable performance stand5 ards, the Secretary shall exclude reported elec6 tricity savings or natural gas savings that are 

7 not adequately demonstrated and documented, 

8 in accordance with the regulations promulgated 

9 under subsections (d), (e), and (f). 

10 ‘‘(2) PENALTY FOR FAILURE TO DOCUMENT

11 ADEQUATE SAVINGS.—If a retail electricity dis12 tributor or a retail natural gas distributor fails to 

13 demonstrate compliance with an applicable perform14 ance standard under subsection (d) or to pay to the 

15 State an applicable alternative compliance payment 

16 under subsection (h)(4), the Secretary shall assess 

17 against the retail electricity distributor or retail nat18 ural gas distributor a civil penalty for each such fail19 ure in an amount equal to, as adjusted for inflation 

20 in accordance with such regulations as the Secretary 

21 may promulgate— 

22 ‘‘(A) $100 per megawatt-hour of electricity 

23 savings or alternative compliance payment that 

24 the retail electricity distributor failed to achieve 

25 or make, respectively; or 


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1 ‘‘(B) $10 per million Btu of natural gas 

2 savings or alternative compliance payment that 

3 the retail natural gas distributor failed to 

4 achieve or make, respectively. 

5 ‘‘(3) OFFSETTING STATE PENALTIES.—The 

6 Secretary shall reduce the amount of any penalty 

7 under paragraph (2) by the amount paid by the ap8 plicable retail electricity distributor or retail natural 

9 gas distributor to a State for failure to comply with 

10 the requirements of a State energy efficiency re11 source standard during the same compliance period, 

12 if the State standard is— 

13 ‘‘(A) comparable in type to the Federal 

14 standard established under this section; and 

15 ‘‘(B) more stringent than the applicable 

16 performance standards under subsection (d). 

17 ‘‘(4) ENFORCEMENT PROCEDURES.—The Sec18 retary shall assess a civil penalty, as provided under 

19 paragraph (2), in accordance with the procedures 

20 described in section 333(d) of the Energy Policy and 

21 Conservation Act (42 U.S.C. 6303(d)). 

22 ‘‘(5) JUDICIAL REVIEW.— 

23 ‘‘(A) IN GENERAL.—Any person that will 

24 be adversely affected by a final action taken by 

25 the Secretary under this section, other than the 


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1 assessment of a civil penalty, may use the pro2 cedures for review described in section 336(b) 

3 of the Energy Policy and Conservation Act (42 

4 U.S.C. 6306(b)). 

5 ‘‘(B) ADMINISTRATION.—For purposes of 

6 this paragraph, references to a rule in section 

7 336(b) of the Energy Policy and Conservation 

8 Act (42 U.S.C. 6306(b)) shall be considered to 

9 refer also to all other final actions of the Sec10 retary under this section other than the assess11 ment of a civil penalty. 

12 ‘‘(h) STATE ADMINISTRATION.— 

13 ‘‘(1) IN GENERAL.—On receipt of an applica14 tion from the Governor of a State (including, for 

15 purposes of this subsection, the Mayor of the Dis16 trict of Columbia), the Secretary may delegate to the 

17 State the administration of this section within the 

18 territory of the State if the Secretary determines 

19 that the State will implement an energy efficiency 

20 program that meets or exceeds the requirements of 

21 this section, including— 

22 ‘‘(A) achieving electricity savings and nat23 ural gas savings at least as great as the savings 

24 required under the applicable performance 

25 standards established under subsection (d); 


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1 ‘‘(B) reviewing reports and verifying elec2 tricity savings and natural gas savings achieved 

3 in the State (including savings transferred from 

4 outside the State); and 

5 ‘‘(C) collecting any alternative compliance 

6 payments under paragraph (4) and using the 

7 payments to implement cost-effective efficiency 

8 programs. 

9 ‘‘(2) SECRETARIAL DETERMINATION.—The Sec10 retary shall make a substantive determination ap11 proving or disapproving a State application, after 

12 public notice and comment, not later than 180 days 

13 after the date of receipt of a complete application. 

14 ‘‘(3) ALTERNATIVE MEASUREMENT AND

15 VERIFICATION PROCEDURES AND STANDARDS.—As 

16 part of an application submitted under paragraph 

17 (1), a State may request to use alternative measure18 ment and verification procedures and standards to 

19 the procedures and standards established under sub20 section (f), if the State demonstrates that the alter21 native procedures and standards provide a level of 

22 accuracy of measurement and verification that is at 

23 least equivalent to the Federal procedures and 

24 standards promulgated under subsection (f). 

25 ‘‘(4) ALTERNATIVE COMPLIANCE PAYMENTS.— 


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1 ‘‘(A) IN GENERAL.—As part of an applica2 tion submitted under paragraph (1), a State 

3 may permit retail electricity distributors or re4 tail natural gas distributors to pay to the State, 

5 by not later than April 1 of the calendar year 

6 immediately following the applicable reporting 

7 period, an alternative compliance payment in an 

8 amount equal to, as adjusted for inflation in ac9 cordance with such regulations as the Secretary 

10 may promulgate, not less than— 

11 ‘‘(i) $50 per megawatt-hour of elec12 tricity savings needed to make up any def13 icit with regard to a compliance obligation 

14 under the applicable performance stand15 ard; or 

16 ‘‘(ii) $5 per million Btu of natural gas 

17 savings needed to make up any deficit with 

18 regard to a compliance obligation under 

19 the applicable performance standard. 

20 ‘‘(B) USE OF PAYMENTS.— 

21 ‘‘(i) IN GENERAL.—Alternative com22 pliance payments collected by a State pur23 suant to subparagraph (A) shall be used 

24 by the State to administer the delegated 

25 authority of the State under this section 


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1 and to implement cost-effective energy effi2 ciency programs. 

3 ‘‘(ii) PROGRAMS.—The programs 

4 shall— 

5 ‘‘(I) to the maximum extent prac6 ticable, achieve electricity savings and 

7 natural gas savings in the State suffi8 cient to make up the deficit associated 

9 with the alternative compliance pay10 ments; and 

11 ‘‘(II) be measured and verified in 

12 accordance with the applicable proce13 dures and standards under subsection 

14 (f) or paragraph (3), as the case may 

15 be. 

16 ‘‘(5) REVIEW OF STATE IMPLEMENTATION.— 

17 ‘‘(A) PERIODIC REVIEW.—Every 2 years, 

18 the Secretary shall review State implementation 

19 of this section for conformance with the requirements of this section in approximately 1 20 ⁄2

21 of the States that have received approval under 

22 this subsection to administer the program, so 

23 that each State shall be reviewed at least once 

24 every 4 years. 


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1 ‘‘(B) REPORT.—To facilitate the review, 

2 the Secretary may require the State to submit 

3 a report demonstrating the compliance of the 

4 State with the requirements of this section, in5 cluding— 

6 ‘‘(i) reports submitted by retail elec7 tricity distributors and retail natural gas 

8 distributors to the State demonstrating 

9 compliance with applicable performance 

10 standards; 

11 ‘‘(ii) the impact of the standards on 

12 projected electricity and natural gas de13 mand within the State; 

14 ‘‘(iii) an accounting of the use of al15 ternative compliance payments by the 

16 State and the resulting electricity savings 

17 and natural gas savings achieved; and 

18 ‘‘(iv) such other information as the 

19 Secretary determines appropriate. 

20 ‘‘(C) REVIEW ON PETITION.—Notwith21 standing subparagraph (A), on the receipt of a 

22 public petition containing a credible allegation 

23 of substantial deficiencies, the Secretary shall 

24 promptly review the implementation by the 

25 State of delegated authority under this section. 


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1 ‘‘(D) DEFICIENCIES.— 

2 ‘‘(i) IN GENERAL.—If deficiencies are 

3 found in a review under this paragraph, 

4 the Secretary shall— 

5 ‘‘(I) notify the State; and 

6 ‘‘(II) direct the State to correct 

7 the deficiencies and to report to the 

8 Secretary on progress not later than 

9 180 days after the date of the receipt 

10 of review results. 

11 ‘‘(ii) SUBSTANTIAL DEFICIENCIES.—If 

12 the deficiencies are substantial, the Sec13 retary shall— 

14 ‘‘(I) disallow such reported sav15 ings as the Secretary determines are 

16 not credible due to deficiencies; 

17 ‘‘(II) re-review the State not 

18 later than 2 years after the date of 

19 the original review; and 

20 ‘‘(III) if substantial deficiencies 

21 remain uncorrected after the review 

22 provided for under subclause (II), re23 voke the authority of the State to ad24 minister the program established 

25 under this section. 


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1 ‘‘(6) CALLS FOR REVISION OF STATE APPLICA2 TIONS.—As a condition of maintaining the delegated 

3 authority of a State to administer this section, the 

4 Secretary may require the State to submit a revised 

5 application under paragraph (1) if the Secretary 

6 has— 

7 ‘‘(A) promulgated new or revised perform8 ance standards under subsection (d); 

9 ‘‘(B) promulgated new or substantially re10 vised measurement and verification procedures 

11 and standards under subsection (f); or 

12 ‘‘(C) otherwise substantially revised the 

13 program established under this section. 

14 ‘‘(i) INFORMATION AND REPORTS.—In accordance 

15 with section 13 of the Federal Energy Administration Act 

16 of 1974 (15 U.S.C. 772), the Secretary may require any 

17 retail electricity distributor, any retail natural gas dis18 tributor, any third-party efficiency provider, or such other 

19 entities as the Secretary considers appropriate, to provide 

20 any information the Secretary determines appropriate to 

21 carry out this section. 

22 ‘‘(j) STATE LAW.—Nothing in this section diminishes 

23 or qualifies any authority of a State or political subdivision 

24 of a State to adopt or enforce any law (including a regula25 tion) respecting electricity savings or natural gas savings, 


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1 including any law (including a regulation) establishing en2 ergy efficiency requirements that are more stringent than 

3 the requirements established under this section, except 

4 that no such law or regulation may relieve any person of 

5 any requirement otherwise applicable under this section. 

6 ‘‘(k) ENERGY EFFICIENCY CREDITS.—The Secretary 

7 shall issue energy efficiency credits at the end of each cal8 endar year to eligible retail electricity distributor for each 

9 kilowatt hour of electricity savings above the applicable 

10 percentage, established under paragraph (2), (3), or (4) 

11 of subsection (d), of the base quantity of the retail elec12 tricity distributor in a quantity that shall not exceed 15 

13 percent of the minimum percentage required in each cal14 endar year under section 610(b)(1)(B).’’. 

15 (b) TABLE OF CONTENTS AMENDMENT.—The table 

16 of contents of the Public Utility Regulatory Policies Act 

17 of 1978 (16 U.S.C. prec. 2601) (as amended by section 

18 601(b)) is amended by adding at the end of the items re19 lating to title VI the following: 

‘‘Sec. 611. Energy efficiency resource standard for retail electricity and natural 

gas distributors.’’. 

20 SEC. 603. VOLUNTARY RENEWABLE ENERGY MARKETS. 

21 (a) IN GENERAL.—It is the policy of the United 

22 States to support the continued growth of voluntary re23 newable energy markets. 


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1 (b) ADMINISTRATION.—Nothing in this Act or the 

2 amendments made by this Act is intended to interfere with 

3 or prevent the continued operation and growth of the vol4 untary renewable energy market. 

5 (c) REPORT ON EFFICACY OF VOLUNTARY RENEW6 ABLE ENERGY MARKET.—Not later than 2 years after the 

7 date of enactment of this Act, the Comptroller General 

8 of the United States shall submit to Congress a report 

9 describing the efficacy of the voluntary renewable energy 

10 market in the context of the pollution reduction and in11 vestment programs under this Act and the amendments 

12 made by this Act, including— 

13 (1) whether meaningful reductions in carbon di14 oxide emissions have occurred in response to invest15 ments in the voluntary renewable energy market; 

16 (2) whether the voluntary market continues to 

17 grow; and 

18 (3) a list of recommended strategies for ensur19 ing that— 

20 (A) meaningful emissions reductions may 

21 occur; and 

22 (B) the voluntary renewable energy market 

23 may continue to grow. 

Æ 


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