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[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[S. 2095 Placed on Calendar Senate (PCS)]

                                                       Calendar No. 432
108th CONGRESS
  2d Session
                                S. 2095

  To enhance energy conservation and research and development and to 
    provide for security and diversity in the energy supply for the 
                            American people.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                           February 12, 2004

 Mr. Domenici introduced the following bill; which was read the first 
                                  time

                           February 23, 2004

            Read the second time and placed on the calendar

_______________________________________________________________________

                                 A BILL

 
  To enhance energy conservation and research and development and to 
    provide for security and diversity in the energy supply for the 
                            American people.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Energy Policy Act 
of 2003''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

                       TITLE I--ENERGY EFFICIENCY

                      Subtitle A--Federal Programs

Sec. 101. Energy and water saving measures in congressional buildings.
Sec. 102. Energy management requirements.
Sec. 103. Energy use measurement and accountability.
Sec. 104. Procurement of energy efficient products.
Sec. 105. Voluntary commitments to reduce industrial energy intensity.
Sec. 106. Advanced Building Efficiency Testbed.
Sec. 107. Federal building performance standards.
Sec. 108. Increased use of recovered mineral component in federally 
                            funded projects involving procurement of 
                            cement or concrete.
            Subtitle B--Energy Assistance and State Programs

Sec. 121. Low Income Home Energy Assistance Program.
Sec. 122. Weatherization assistance.
Sec. 123. State energy programs.
Sec. 124. Energy efficient appliance rebate programs.
Sec. 125. Energy efficient public buildings.
Sec. 126. Low income community energy efficiency pilot program.
                 Subtitle C--Energy Efficient Products

Sec. 131. Energy Star program.
Sec. 132. HVAC maintenance consumer education program.
Sec. 133. Energy conservation standards for additional products.
Sec. 134. Energy labeling.
                       Subtitle D--Public Housing

Sec. 141. Capacity building for energy-efficient, affordable housing.
Sec. 142. Increase of CDBG public services cap for energy conservation 
                            and efficiency activities.
Sec. 143. FHA mortgage insurance incentives for energy efficient 
                            housing.
Sec. 144. Public Housing Capital Fund.
Sec. 145. Grants for energy-conserving improvements for assisted 
                            housing.
Sec. 146. North American Development Bank.
Sec. 147. Energy-efficient appliances.
Sec. 148. Energy efficiency standards.
Sec. 149. Energy strategy for HUD.
                       TITLE II--RENEWABLE ENERGY

                     Subtitle A--General Provisions

Sec. 201. Assessment of renewable energy resources.
Sec. 202. Renewable energy production incentive.
Sec. 203. Federal purchase requirement.
Sec. 204. Insular areas energy security.
Sec. 205. Use of photovoltaic energy in public buildings.
Sec. 206. Grants to improve the commercial value of forest biomass for 
                            electric energy, useful heat, 
                            transportation fuels, petroleum-based 
                            product substitutes, and other commercial 
                            purposes.
Sec. 207. Biobased products.
                     Subtitle B--Geothermal Energy

Sec. 211. Short title.
Sec. 212. Competitive lease sale requirements.
Sec. 213. Direct use.
Sec. 214. Royalties and near-term production incentives.
Sec. 215. Geothermal leasing and permitting on Federal lands.
Sec. 216. Review and report to Congress.
Sec. 217. Reimbursement for costs of NEPA analyses, documentation, and 
                            studies.
Sec. 218. Assessment of geothermal energy potential.
Sec. 219. Cooperative or unit plans.
Sec. 220. Royalty on byproducts.
Sec. 221. Repeal of authorities of Secretary to readjust terms, 
                            conditions, rentals, and royalties.
Sec. 222. Crediting of rental toward royalty.
Sec. 223. Lease duration and work commitment requirements.
Sec. 224. Advanced royalties required for suspension of production.
Sec. 225. Annual rental.
Sec. 226. Leasing and permitting on Federal lands withdrawn for 
                            military purposes.
Sec. 227. Technical amendments.
                       Subtitle C--Hydroelectric

                     Part I--Alternative Conditions

Sec. 231. Alternative conditions and fishways.
                     Part II--Additional Hydropower

Sec. 241. Hydroelectric production incentives.
Sec. 242. Hydroelectric efficiency improvement.
Sec. 243. Small hydroelectric power projects.
Sec. 244. Increased hydroelectric generation at existing Federal 
                            facilities.
Sec. 245. Shift of project loads to off-peak periods.
Sec. 246. Limitation on certain charges assessed to the Flint Creek 
                            Project, Montana.
Sec. 247. Reinstatement and transfer.
                         TITLE III--OIL AND GAS

           Subtitle A--Petroleum Reserve and Home Heating Oil

Sec. 301. Permanent authority to operate the Strategic Petroleum 
                            Reserve and other energy programs.
Sec. 302. National Oilheat Research Alliance.
                   Subtitle B--Production Incentives

Sec. 311. Definition of Secretary.
Sec. 312. Program on oil and gas royalties in-kind.
Sec. 313. Marginal property production incentives.
Sec. 314. Incentives for natural gas production from deep wells in the 
                            shallow waters of the Gulf of Mexico.
Sec. 315. Royalty relief for deep water production.
Sec. 316. Alaska offshore royalty suspension.
Sec. 317. Oil and gas leasing in the National Petroleum Reserve in 
                            Alaska.
Sec. 318. Orphaned, abandoned, or idled wells on Federal land.
Sec. 319. Combined hydrocarbon leasing.
Sec. 320. Liquified natural gas.
Sec. 321. Alternate energy-related uses on the Outer Continental Shelf.
Sec. 322. Preservation of geological and geophysical data.
Sec. 323. Oil and gas lease acreage limitations.
Sec. 324. Assessment of dependence of State of Hawaii on oil.
Sec. 325. Deadline for decision on appeals of consistency determination 
                            under the Coastal Zone Management Act of 
                            1972.
Sec. 326. Reimbursement for costs of NEPA analyses, documentation, and 
                            studies.
Sec. 327. Hydraulic fracturing.
Sec. 328. Oil and gas exploration and production defined.
Sec. 329. Outer Continental Shelf provisions.
Sec. 330. Appeals relating to pipeline construction or offshore mineral 
                            development projects.
Sec. 331. Bilateral international oil supply agreements.
Sec. 332. Natural gas market reform.
Sec. 333. Natural gas market transparency.
                   Subtitle C--Access to Federal Land

Sec. 341. Office of Federal Energy Project Coordination.
Sec. 342. Federal onshore oil and gas leasing and permitting practices.
Sec. 343. Management of Federal oil and gas leasing programs.
Sec. 344. Consultation regarding oil and gas leasing on public land.
Sec. 345. Estimates of oil and gas resources underlying onshore Federal 
                            land.
Sec. 346. Compliance with Executive Order 13211; actions concerning 
                            regulations that significantly affect 
                            energy supply, distribution, or use.
Sec. 347. Pilot project to improve Federal permit coordination.
Sec. 348. Deadline for consideration of applications for permits.
Sec. 349. Clarification of fair market rental value determinations for 
                            public land and Forest Service rights-of-
                            way.
Sec. 350. Energy facility rights-of-way and corridors on Federal land.
Sec. 351. Consultation regarding energy rights-of-way on public land.
Sec. 352. Renewable energy on Federal land.
Sec. 353. Electricity transmission line right-of-way, Cleveland 
                            National Forest and adjacent public land, 
                            California.
Sec. 354. Sense of Congress regarding development of minerals under 
                            Padre Island National Seashore.
Sec. 355. Encouraging prohibition of off-shore drilling in the Great 
                            Lakes.
Sec. 356. Finger Lakes National Forest withdrawal.
Sec. 357. Study on lease exchanges in the Rocky Mountain Front.
Sec. 358. Federal coalbed methane regulation.
Sec. 359. Livingston Parish mineral rights transfer.
                Subtitle D--Alaska Natural Gas Pipeline

Sec. 371. Short title.
Sec. 372. Definitions.
Sec. 373. Issuance of certificate of public convenience and necessity.
Sec. 374. Environmental reviews.
Sec. 375. Pipeline expansion.
Sec. 376. Federal Coordinator.
Sec. 377. Judicial review.
Sec. 378. State jurisdiction over in-State delivery of natural gas.
Sec. 379. Study of alternative means of construction.
Sec. 380. Clarification of ANGTA status and authorities.
Sec. 381. Sense of Congress concerning use of steel manufactured in 
                            North America negotiation of a project 
                            labor agreement.
Sec. 382. Sense of Congress and study concerning participation by small 
                            business concerns.
Sec. 383. Alaska pipeline construction training program.
Sec. 384. Sense of Congress concerning natural gas demand.
Sec. 385. Sense of Congress concerning Alaskan ownership.
Sec. 386. Loan guarantees.
                             TITLE IV--COAL

                Subtitle A--Clean Coal Power Initiative

Sec. 401. Authorization of appropriations.
Sec. 402. Project criteria.
Sec. 403. Report.
Sec. 404. Clean coal Centers of Excellence.
                    Subtitle B--Clean Power Projects

Sec. 411. Coal technology loan.
Sec. 412. Coal gasification.
Sec. 413. Integrated gasification combined cycle technology.
Sec. 414. Petroleum coke gasification.
Sec. 415. Integrated coal/renewable energy system.
Sec. 416. Electron scrubbing demonstration.
                    Subtitle C--Federal Coal Leases

Sec. 421. Repeal of the 160-acre limitation for coal leases.
Sec. 422. Mining plans.
Sec. 423. Payment of advance royalties under coal leases.
Sec. 424. Elimination of deadline for submission of coal lease 
                            operation and reclamation plan.
Sec. 425. Amendment relating to financial assurances with respect to 
                            bonus bids.
Sec. 426. Inventory requirement.
Sec. 427. Application of amendments.
                 Subtitle D--Coal and Related Programs

Sec. 441. Clean air coal program.
                         TITLE V--INDIAN ENERGY

Sec. 501. Short title.
Sec. 502. Office of Indian Energy Policy and Programs.
Sec. 503. Indian energy.
Sec. 504. Four Corners transmission line project.
Sec. 505. Energy efficiency in federally assisted housing.
Sec. 506. Consultation with Indian tribes.
                       TITLE VI--NUCLEAR MATTERS

               Subtitle A--Price-Anderson Act Amendments

Sec. 601. Short title.
Sec. 602. Extension of indemnification authority.
Sec. 603. Maximum assessment.
Sec. 604. Department of Energy liability limit.
Sec. 605. Incidents outside the United States.
Sec. 606. Reports.
Sec. 607. Inflation adjustment.
Sec. 608. Treatment of modular reactors.
Sec. 609. Applicability.
Sec. 610. Prohibition on assumption by United States Government of 
                            liability for certain foreign incidents.
Sec. 611. Civil penalties.
                  Subtitle B--General Nuclear Matters

Sec. 621. Licenses.
Sec. 622. NRC training program.
Sec. 623. Cost recovery from Government agencies.
Sec. 624. Elimination of pension offset.
Sec. 625. Antitrust review.
Sec. 626. Decommissioning.
Sec. 627. Limitation on legal fee reimbursement.
Sec. 628. Decommissioning pilot program.
Sec. 629. Report on feasibility of developing commercial nuclear energy 
                            generation facilities at existing 
                            Department of Energy sites.
Sec. 630. Uranium sales.
Sec. 631. Cooperative research and development and special 
                            demonstration projects for the uranium 
                            mining industry.
Sec. 632. Whistleblower protection.
Sec. 633. Medical isotope production.
Sec. 634. Fernald byproduct material.
Sec. 635. Safe disposal of greater-than-class C radioactive waste.
Sec. 636. Prohibition on nuclear exports to countries that sponsor 
                            terrorism.
Sec. 637. Uranium enrichment facilities.
Sec. 638. National uranium stockpile.
       Subtitle C--Advanced Reactor Hydrogen Cogeneration Project

Sec. 651. Project establishment.
Sec. 652. Project definition.
Sec. 653. Project management.
Sec. 654. Project requirements.
Sec. 655. Authorization of appropriations.
                      Subtitle D--Nuclear Security

Sec. 661. Nuclear facility threats.
Sec. 662. Fingerprinting for criminal history record checks.
Sec. 663. Use of firearms by security personnel of licensees and 
                            certificate holders of the Commission.
Sec. 664. Unauthorized introduction of dangerous weapons.
Sec. 665. Sabotage of nuclear facilities or fuel.
Sec. 666. Secure transfer of nuclear materials.
Sec. 667. Department of Homeland Security consultation.
Sec. 668. Authorization of appropriations.
                     TITLE VII--VEHICLES AND FUELS

                     Subtitle A--Existing Programs

Sec. 701. Use of alternative fuels by dual-fueled vehicles.
Sec. 702. Neighborhood electric vehicles.
Sec. 703. Credits for medium and heavy duty dedicated vehicles.
Sec. 704. Incremental cost allocation.
Sec. 705. Alternative compliance and flexibility.
Sec. 706. Review of Energy Policy Act of 1992 programs.
Sec. 707. Report concerning compliance with alternative fueled vehicle 
                            purchasing requirements.
  Subtitle B--Hybrid Vehicles, Advanced Vehicles, and Fuel Cell Buses

                        Part 1--Hybrid Vehicles

Sec. 711. Hybrid vehicles.
                       Part 2--Advanced Vehicles

Sec. 721. Definitions.
Sec. 722. Pilot program.
Sec. 723. Reports to Congress.
Sec. 724. Authorization of appropriations.
                        Part 3--Fuel Cell Buses

Sec. 731. Fuel cell transit bus demonstration.
                     Subtitle C--Clean School Buses

Sec. 741. Definitions.
Sec. 742. Program for replacement of certain school buses with clean 
                            school buses.
Sec. 743. Diesel retrofit program.
Sec. 744. Fuel cell school buses.
                       Subtitle D--Miscellaneous

Sec. 751. Railroad efficiency.
Sec. 752. Mobile emission reductions trading and crediting.
Sec. 753. Aviation fuel conservation and emissions.
Sec. 754. Diesel fueled vehicles.
Sec. 755. Conserve by bicycling program.
Sec. 756. Reduction of engine idling of heavy-duty vehicles.
Sec. 757. Biodiesel engine testing program.
Sec. 758. High occupancy vehicle exception.
                   Subtitle E--Automobile Efficiency

Sec. 771. Authorization of appropriations for implementation and 
                            enforcement of fuel economy standards.
Sec. 772. Revised considerations for decisions on maximum feasible 
                            average fuel economy.
Sec. 773. Extension of maximum fuel economy increase for alternative 
                            fueled vehicles.
Sec. 774. Study of feasibility and effects of reducing use of fuel for 
                            automobiles.
                          TITLE VIII--HYDROGEN

Sec. 801. Definitions.
Sec. 802. Plan.
Sec. 803. Programs.
Sec. 804. Interagency task force.
Sec. 805. Advisory Committee.
Sec. 806. External review.
Sec. 807. Miscellaneous provisions.
Sec. 808. Savings clause.
Sec. 809. Authorization of appropriations.
                   TITLE IX--RESEARCH AND DEVELOPMENT

Sec. 901. Goals.
Sec. 902. Definitions.
                     Subtitle A--Energy Efficiency

Sec. 904. Energy efficiency.
Sec. 905. Next Generation Lighting Initiative.
Sec. 906. National Building Performance Initiative.
Sec. 907. Secondary electric vehicle battery use program.
Sec. 908. Energy Efficiency Science Initiative.
Sec. 909. Electric motor control technology.
Sec. 910. Advanced Energy Technology Transfer Centers.
       Subtitle B--Distributed Energy and Electric Energy Systems

Sec. 911. Distributed energy and electric energy systems.
Sec. 912. Hybrid distributed power systems.
Sec. 913. High power density industry program.
Sec. 914. Micro-cogeneration energy technology.
Sec. 915. Distributed energy technology demonstration program.
Sec. 916. Reciprocating power.
                      Subtitle C--Renewable Energy

Sec. 918. Renewable energy.
Sec. 919. Bioenergy programs.
Sec. 920. Concentrating solar power research and development program.
Sec. 921. Miscellaneous projects.
Sec. 922. Renewable energy in public buildings.
Sec. 923. Study of marine renewable energy options.
                       Subtitle D--Nuclear Energy

Sec. 924. Nuclear energy.
Sec. 925. Nuclear energy research and development programs.
Sec. 926. Advanced fuel cycle initiative.
Sec. 927. University nuclear science and engineering support.
Sec. 928. Security of reactor designs.
Sec. 929. Alternatives to industrial radioactive sources.
Sec. 930. Geological isolation of spent fuel.
                       Subtitle E--Fossil Energy

                       Part I--Research Programs

Sec. 931. Fossil energy.
Sec. 932. Oil and gas research programs.
Sec. 933. Technology transfer.
Sec. 934. Research and development for coal mining technologies.
Sec. 935. Coal and related technologies program.
Sec. 936. Complex well technology testing facility.
Sec. 937. Fischer-Tropsch diesel fuel loan guarantee program.
   Part II--Ultra-Deepwater and Unconventional Natural Gas and Other 
                          Petroleum Resources

Sec. 941. Program authority.
Sec. 942. Ultra-deepwater program.
Sec. 943. Unconventional natural gas and other petroleum resources 
                            program.
Sec. 944. Additional requirements for awards.
Sec. 945. Advisory Committees.
Sec. 946. Limits on participation.
Sec. 947. Sunset.
Sec. 948. Definitions.
Sec. 949. Funding.
                          Subtitle F--Science

Sec. 951. Science.
Sec. 952. United States participation in ITER.
Sec. 953. Plan for fusion energy sciences program.
Sec. 954. Spallation Neutron Source.
Sec. 955. Support for science and energy facilities and infrastructure.
Sec. 956. Catalysis research and development program.
Sec. 957. Nanoscale science and engineering research, development, 
                            demonstration, and commercial application.
Sec. 958. Advanced scientific computing for energy missions.
Sec. 959. Genomes to Life program.
Sec. 960. Fission and fusion energy materials research program.
Sec. 961. Energy-Water Supply Program.
Sec. 962. Nitrogen fixation.
                   Subtitle G--Energy and Environment

Sec. 964. United States-Mexico energy technology cooperation.
Sec. 965. Western Hemisphere energy cooperation.
Sec. 966. Waste reduction and use of alternatives.
Sec. 967. Report on fuel cell test center.
Sec. 968. Arctic Engineering Research Center.
Sec. 969. Barrow Geophysical Research Facility.
Sec. 970. Western Michigan demonstration project.
                         Subtitle H--Management

Sec. 971. Availability of funds.
Sec. 972. Cost sharing.
Sec. 973. Merit review of proposals.
Sec. 974. External technical review of departmental programs.
Sec. 975. Improved coordination of technology transfer activities.
Sec. 976. Federal laboratory educational partners.
Sec. 977. Interagency cooperation.
Sec. 978. Technology infrastructure program.
Sec. 979. Reprogramming.
Sec. 980. Construction with other laws.
Sec. 981. Report on research and development program evaluation 
                            methodologies.
Sec. 982. Department of Energy Science and Technology Scholarship 
                            Program.
Sec. 983. Report on equal employment opportunity practices.
Sec. 984. Small business advocacy and assistance.
Sec. 985. Report on mobility of scientific and technical personnel.
Sec. 986. National Academy of Sciences report.
Sec. 987. Outreach.
Sec. 988. Competitive award of management contracts.
Sec. 989. Educational programs in science and mathematics.
                TITLE X--DEPARTMENT OF ENERGY MANAGEMENT

Sec. 1001. Additional Assistant Secretary position.
Sec. 1002. Other transactions authority.
                    TITLE XI--PERSONNEL AND TRAINING

Sec. 1101. Training guidelines for electric energy industry personnel.
Sec. 1102. Improved access to energy-related scientific and technical 
                            careers.
Sec. 1103. National Power Plant Operations Technology and Education 
                            Center.
Sec. 1104. International energy training.
                         TITLE XII--ELECTRICITY

Sec. 1201. Short title.
                   Subtitle A--Reliability Standards

Sec. 1211. Electric reliability standards.
         Subtitle B--Transmission Infrastructure Modernization

Sec. 1221. Siting of interstate electric transmission facilities.
Sec. 1222. Third-party finance.
Sec. 1223. Transmission system monitoring.
Sec. 1224. Advanced transmission technologies.
Sec. 1225. Electric transmission and distribution programs.
Sec. 1226. Advanced Power System Technology Incentive Program.
Sec. 1227. Office of Electric Transmission and Distribution.
            Subtitle C--Transmission Operation Improvements

Sec. 1231. Open nondiscriminatory access.
Sec. 1232. Sense of the Congress on Regional Transmission 
                            Organizations.
Sec. 1233. Regional Transmission Organization applications progress 
                            report.
Sec. 1234. Federal utility participation in Regional Transmission 
                            Organizations.
Sec. 1235. Standard market design.
Sec. 1236. Native load service obligation.
Sec. 1237. Study on the benefits of economic dispatch.
                  Subtitle D--Transmission Rate Reform

Sec. 1241. Transmission infrastructure investment.
Sec. 1242. Voluntary transmission pricing plans.
                    Subtitle E--Amendments to PURPA

Sec. 1251. Net metering and additional standards.
Sec. 1252. Smart metering.
Sec. 1253. Cogeneration and small power production purchase and sale 
                            requirements.
                      Subtitle F--Repeal of PUHCA

Sec. 1261. Short title.
Sec. 1262. Definitions.
Sec. 1263. Repeal of the Public Utility Holding Company Act of 1935.
Sec. 1264. Federal access to books and records.
Sec. 1265. State access to books and records.
Sec. 1266. Exemption authority.
Sec. 1267. Affiliate transactions.
Sec. 1268. Applicability.
Sec. 1269. Effect on other regulations.
Sec. 1270. Enforcement.
Sec. 1271. Savings provisions.
Sec. 1272. Implementation.
Sec. 1273. Transfer of resources.
Sec. 1274. Effective date.
Sec. 1275. Service allocation.
Sec. 1276. Authorization of appropriations.
Sec. 1277. Conforming amendments to the Federal Power Act.
 Subtitle G--Market Transparency, Enforcement, and Consumer Protection

Sec. 1281. Market transparency rules.
Sec. 1282. Market manipulation.
Sec. 1283. Enforcement.
Sec. 1284. Refund effective date.
Sec. 1285. Refund authority.
Sec. 1286. Sanctity of contract.
Sec. 1287. Consumer privacy and unfair trade practices.
                       Subtitle H--Merger Reform

Sec. 1291. Merger review reform and accountability.
Sec. 1292. Electric utility mergers.
                        Subtitle I--Definitions

Sec. 1295. Definitions.
            Subtitle J--Technical and Conforming Amendments

Sec. 1297. Conforming amendments.
                   TITLE XIII--ENERGY TAX INCENTIVES

Sec. 1300. Short title; etc.
        Subtitle A--Renewable Electricity Production Tax Credit

Sec. 1301. Extension and expansion of credit for electricity produced 
                            from certain renewable resources.
      Subtitle B--Alternative Motor Vehicles and Fuels Incentives

Sec. 1311. Alternative motor vehicle credit.
Sec. 1312. Modification of credit for qualified electric vehicles.
Sec. 1313. Credit for installation of alternative fueling stations.
Sec. 1314. Credit for retail sale of alternative fuels as motor vehicle 
                            fuel.
Sec. 1315. Small ethanol producer credit.
Sec. 1316. Incentives for biodiesel.
Sec. 1317. Alcohol fuel and biodiesel mixtures excise tax credit.
Sec. 1318. Sale of gasoline and diesel fuel at duty-free sales 
                            enterprises.
       Subtitle C--Conservation and Energy Efficiency Provisions

Sec. 1321. Credit for construction of new energy efficient home.
Sec. 1322. Credit for energy efficient appliances.
Sec. 1323. Credit for residential energy efficient property.
Sec. 1324. Credit for business installation of qualified fuel cells and 
                            stationary microturbine power plants.
Sec. 1325. Energy efficient commercial buildings deduction.
Sec. 1326. Three-year applicable recovery period for depreciation of 
                            qualified energy management devices.
Sec. 1327. Three-year applicable recovery period for depreciation of 
                            qualified water submetering devices.
Sec. 1328. Energy credit for combined heat and power system property.
Sec. 1329. Credit for energy efficiency improvements to existing homes.
                   Subtitle D--Clean Coal Incentives

 Part I--Credit for Emission Reductions and Efficiency Improvements in 
         Existing Coal-Based Electricity Generation Facilities

Sec. 1341. Credit for production from a qualifying clean coal 
                            technology unit.
Part II--Incentives for Early Commercial Applications of Advanced Clean 
                           Coal Technologies

Sec. 1342. Credit for investment in qualifying advanced clean coal 
                            technology.
Sec. 1343. Credit for production from a qualifying advanced clean coal 
                            technology unit.
      Part III--Treatment of Persons Not Able To Use Entire Credit

Sec. 1344. Treatment of persons not able to use entire credit.
                   Subtitle E--Oil and Gas Provisions

Sec. 1351. Oil and gas from marginal wells.
Sec. 1352. Natural gas gathering lines treated as 7-year property.
Sec. 1353. Expensing of capital costs incurred in complying with 
                            Environmental Protection Agency sulfur 
                            regulations.
Sec. 1354. Environmental tax credit.
Sec. 1355. Determination of small refiner exception to oil depletion 
                            deduction.
Sec. 1356. Marginal production income limit extension.
Sec. 1357. Amortization of delay rental payments.
Sec. 1358. Amortization of geological and geophysical expenditures.
Sec. 1359. Extension and modification of credit for producing fuel from 
                            a nonconventional source.
Sec. 1360. Natural gas distribution lines treated as 15-year property.
Sec. 1361. Credit for Alaska natural gas.
Sec. 1362. Certain Alaska natural gas pipeline property treated as 7-
                            year property.
Sec. 1363. Arbitrage rules not to apply to prepayments for natural gas.
Sec. 1364. Extension of enhanced oil recovery credit to certain Alaska 
                            facilities.
         Subtitle F--Electric Utility Restructuring Provisions

Sec. 1371. Modifications to special rules for nuclear decommissioning 
                            costs.
Sec. 1372. Treatment of certain income of cooperatives.
Sec. 1373. Sales or dispositions to implement Federal Energy Regulatory 
                            Commission or State electric restructuring 
                            policy.
                   Subtitle G--Additional Provisions

Sec. 1381. Extension of accelerated depreciation and wage credit 
                            benefits on Indian reservations.
Sec. 1382. Study of effectiveness of certain provisions by GAO.
Sec. 1383. Repeal of 4.3-cent motor fuel excise taxes on railroads and 
                            inland waterway transportation which remain 
                            in general fund.
Sec. 1384. Expansion of research credit.
                     Subtitle H--Revenue Provisions

          Part I--Provisions Designed To Curtail Tax Shelters

Sec. 1385. Penalty for failing to disclose reportable transaction.
Sec. 1386. Accuracy-related penalty for listed transactions and other 
                            reportable transactions having a 
                            significant tax avoidance purpose.
Sec. 1387. Tax shelter exception to confidentiality privileges relating 
                            to taxpayer communications.
Sec. 1388. Disclosure of reportable transactions.
Sec. 1389. Modifications to penalty for failure to register tax 
                            shelters.
Sec. 1390. Modification of penalty for failure to maintain lists of 
                            investors.
Sec. 1391. Penalty on promoters of tax shelters.
        Part II--Provisions to Discourage Corporate Expatriation

Sec. 1392. Tax treatment of inverted corporate entities.
Sec. 1393. Excise tax on stock compensation of insiders in inverted 
                            corporations.
Sec. 1394. Reinsurance of United States risks in foreign jurisdictions.
                   Part III--Other Revenue Provisions

Sec. 1395. Extension of Internal Revenue Service user fees.
Sec. 1396. Addition of vaccines against hepatitis A to list of taxable 
                            vaccines.
Sec. 1397. Individual expatriation to avoid tax.
                        TITLE XIV--MISCELLANEOUS

         Subtitle A--Rural and Remote Electricity Construction

Sec. 1401. Denali Commission programs.
Sec. 1402. Rural and remote community assistance.
                      Subtitle B--Coastal Programs

Sec. 1411. Royalty payments under leases under the Outer Continental 
                            Shelf Lands Act.
Sec. 1412. Domestic offshore energy reinvestment.
 Subtitle C--Reforms to the Board of Directors of the Tennessee Valley 
                               Authority

Sec. 1431. Change in composition, operation, and duties of the board of 
                            directors of the Tennessee Valley 
                            Authority.
Sec. 1432. Change in manner of appointment of staff.
Sec. 1433. Conforming amendments.
Sec. 1434. Appointments; effective date; transition.
                      Subtitle D--Other Provisions

Sec. 1441. Continuation of transmission security order.
Sec. 1442. Review of agency determinations.
Sec. 1443. Attainment dates for downwind ozone nonattainment areas.
Sec. 1444. Energy production incentives.
Sec. 1445. Use of granular mine tailings.
                   TITLE XV--ETHANOL AND MOTOR FUELS

                     Subtitle A--General Provisions

Sec. 1501. Renewable content of motor vehicle fuel.
Sec. 1502. Findings and MTBE transition assistance.
Sec. 1503. Use of MTBE.
Sec. 1504. National Academy of Sciences review and presidential 
                            determination.
Sec. 1505. Elimination of oxygen content requirement for reformulated 
                            gasoline.
Sec. 1506. Analyses of motor vehicle fuel changes.
Sec. 1507. Data collection.
Sec. 1508. Reducing the proliferation of State fuel controls.
Sec. 1509. Fuel system requirements harmonization study.
Sec. 1510. Commercial byproducts from municipal solid waste and 
                            cellulosic biomass loan guarantee program.
Sec. 1511. Resource center.
Sec. 1512. Cellulosic biomass and waste-derived ethanol conversion 
                            assistance.
Sec. 1513. Blending of compliant reformulated gasolines.
            Subtitle B--Underground Storage Tank Compliance

Sec. 1521. Short title.
Sec. 1522. Leaking underground storage tanks.
Sec. 1523. Inspection of underground storage tanks.
Sec. 1524. Operator training.
Sec. 1525. Remediation from oxygenated fuel additives.
Sec. 1526. Release prevention, compliance, and enforcement.
Sec. 1527. Delivery prohibition.
Sec. 1528. Federal facilities.
Sec. 1529. Tanks on tribal lands.
Sec. 1530. Future release containment technology.
Sec. 1531. Authorization of appropriations.
Sec. 1532. Conforming amendments.
Sec. 1533. Technical amendments.
                           TITLE XVI--STUDIES

Sec. 1601. Study on inventory of petroleum and natural gas storage.
Sec. 1602. Natural gas supply shortage report.
Sec. 1603. Split-estate Federal oil and gas leasing and development 
                            practices.
Sec. 1604. Resolution of Federal resource development conflicts in the 
                            Powder River Basin.
Sec. 1605. Study of energy efficiency standards.
Sec. 1606. Telecommuting study.
Sec. 1607. LIHEAP report.
Sec. 1608. Oil bypass filtration technology.
Sec. 1609. Total integrated thermal systems.
Sec. 1610. University collaboration.
Sec. 1611. Reliability and consumer protection assessment.

                       TITLE I--ENERGY EFFICIENCY

                      Subtitle A--Federal Programs

SEC. 101. ENERGY AND WATER SAVING MEASURES IN CONGRESSIONAL BUILDINGS.

    (a) In General.--Part 3 of title V of the National Energy 
Conservation Policy Act (42 U.S.C. 8251 et seq.) is amended by adding 
at the end the following:

``SEC. 552. ENERGY AND WATER SAVINGS MEASURES IN CONGRESSIONAL 
              BUILDINGS.

    ``(a) In General.--The Architect of the Capitol--
            ``(1) shall develop, update, and implement a cost-effective 
        energy conservation and management plan (referred to in this 
        section as the `plan') for all facilities administered by 
        Congress (referred to in this section as `congressional 
        buildings') to meet the energy performance requirements for 
        Federal buildings established under section 543(a)(1); and
            ``(2) shall submit the plan to Congress, not later than 180 
        days after the date of enactment of this section.
    ``(b) Plan Requirements.--The plan shall include--
            ``(1) a description of the life cycle cost analysis used to 
        determine the cost-effectiveness of proposed energy efficiency 
        projects;
            ``(2) a schedule of energy surveys to ensure complete 
        surveys of all congressional buildings every 5 years to 
        determine the cost and payback period of energy and water 
        conservation measures;
            ``(3) a strategy for installation of life cycle cost-
        effective energy and water conservation measures;
            ``(4) the results of a study of the costs and benefits of 
        installation of submetering in congressional buildings; and
            ``(5) information packages and `how-to' guides for each 
        Member and employing authority of Congress that detail simple, 
        cost-effective methods to save energy and taxpayer dollars in 
        the workplace.
    ``(c) Annual Report.--The Architect of the Capitol shall submit to 
Congress annually a report on congressional energy management and 
conservation programs required under this section that describes in 
detail--
            ``(1) energy expenditures and savings estimates for each 
        facility;
            ``(2) energy management and conservation projects; and
            ``(3) future priorities to ensure compliance with this 
        section.''.
    (b) Table of Contents Amendment.--The table of contents of the 
National Energy Conservation Policy Act is amended by adding at the end 
of the items relating to part 3 of title V the following new item:

``Sec. 552. Energy and water savings measures in congressional 
                            buildings.''.
    (c) Repeal.--Section 310 of the Legislative Branch Appropriations 
Act, 1999 (2 U.S.C. 1815), is repealed.
    (d) Energy Infrastructure.--The Architect of the Capitol, building 
on the Master Plan Study completed in July 2000, shall commission a 
study to evaluate the energy infrastructure of the Capital Complex to 
determine how the infrastructure could be augmented to become more 
energy efficient, using unconventional and renewable energy resources, 
in a way that would enable the Complex to have reliable utility service 
in the event of power fluctuations, shortages, or outages.
    (e) Authorization of Appropriations.--There are authorized to be 
appropriated to the Architect of the Capitol to carry out subsection 
(d), $2,000,000 for each of fiscal years 2004 through 2008.

SEC. 102. ENERGY MANAGEMENT REQUIREMENTS.

    (a) Energy Reduction Goals.--
            (1) Amendment.--Section 543(a)(1) of the National Energy 
        Conservation Policy Act (42 U.S.C. 8253(a)(1)) is amended by 
        striking ``its Federal buildings so that'' and all that follows 
        through the end and inserting ``the Federal buildings of the 
        agency (including each industrial or laboratory facility) so 
that the energy consumption per gross square foot of the Federal 
buildings of the agency in fiscal years 2004 through 2013 is reduced, 
as compared with the energy consumption per gross square foot of the 
Federal buildings of the agency in fiscal year 2001, by the percentage 
specified in the following table:

  ``Fiscal Year                                    Percentage reduction
                2004.......................................          2 
                2005.......................................          4 
                2006.......................................          6 
                2007.......................................          8 
                2008.......................................         10 
                2009.......................................         12 
                2010.......................................         14 
                2011.......................................         16 
                2012.......................................         18 
                2013.......................................      20.''.
            (2) Reporting baseline.--The energy reduction goals and 
        baseline established in paragraph (1) of section 543(a) of the 
        National Energy Conservation Policy Act (42 U.S.C. 8253(a)(1)), 
        as amended by this subsection, supersede all previous goals and 
        baselines under such paragraph, and related reporting 
        requirements.
    (b) Review and Revision of Energy Performance Requirement.--Section 
543(a) of the National Energy Conservation Policy Act (42 U.S.C. 
8253(a)) is further amended by adding at the end the following:
    ``(3) Not later than December 31, 2012, the Secretary shall review 
the results of the implementation of the energy performance requirement 
established under paragraph (1) and submit to Congress recommendations 
concerning energy performance requirements for fiscal years 2014 
through 2023.''.
    (c) Exclusions.--Section 543(c)(1) of the National Energy 
Conservation Policy Act (42 U.S.C. 8253(c)(1)) is amended by striking 
``An agency may exclude'' and all that follows through the end and 
inserting ``(A) An agency may exclude, from the energy performance 
requirement for a fiscal year established under subsection (a) and the 
energy management requirement established under subsection (b), any 
Federal building or collection of Federal buildings, if the head of the 
agency finds that--
            ``(i) compliance with those requirements would be 
        impracticable;
            ``(ii) the agency has completed and submitted all federally 
        required energy management reports;
            ``(iii) the agency has achieved compliance with the energy 
        efficiency requirements of this Act, the Energy Policy Act of 
        1992, Executive orders, and other Federal law; and
            ``(iv) the agency has implemented all practicable, life 
        cycle cost-effective projects with respect to the Federal 
        building or collection of Federal buildings to be excluded.
    ``(B) A finding of impracticability under subparagraph (A)(i) shall 
be based on--
            ``(i) the energy intensiveness of activities carried out in 
        the Federal building or collection of Federal buildings; or
            ``(ii) the fact that the Federal building or collection of 
        Federal buildings is used in the performance of a national 
        security function.''.
    (d) Review by Secretary.--Section 543(c)(2) of the National Energy 
Conservation Policy Act (42 U.S.C. 8253(c)(2)) is amended--
            (1) by striking ``impracticability standards'' and 
        inserting ``standards for exclusion'';
            (2) by striking ``a finding of impracticability'' and 
        inserting ``the exclusion''; and
            (3) by striking ``energy consumption requirements'' and 
        inserting ``requirements of subsections (a) and (b)(1)''.
    (e) Criteria.--Section 543(c) of the National Energy Conservation 
Policy Act (42 U.S.C. 8253(c)) is further amended by adding at the end 
the following:
    ``(3) Not later than 180 days after the date of enactment of this 
paragraph, the Secretary shall issue guidelines that establish criteria 
for exclusions under paragraph (1).''.
    (f) Retention of Energy and Water Savings.--Section 546 of the 
National Energy Conservation Policy Act (42 U.S.C. 8256) is amended by 
adding at the end the following new subsection:
    ``(e) Retention of Energy and Water Savings.--An agency may retain 
any funds appropriated to that agency for energy expenditures, water 
expenditures, or wastewater treatment expenditures, at buildings 
subject to the requirements of section 543(a) and (b), that are not 
made because of energy savings or water savings. Except as otherwise 
provided by law, such funds may be used only for energy efficiency, 
water conservation, or unconventional and renewable energy resources 
projects.''.
    (g) Reports.--Section 548(b) of the National Energy Conservation 
Policy Act (42 U.S.C. 8258(b)) is amended--
            (1) in the subsection heading, by inserting ``the President 
        and'' before ``Congress''; and
            (2) by inserting ``President and'' before ``Congress''.
    (h) Conforming Amendment.--Section 550(d) of the National Energy 
Conservation Policy Act (42 U.S.C. 8258b(d)) is amended in the second 
sentence by striking ``the 20 percent reduction goal established under 
section 543(a) of the National Energy Conservation Policy Act (42 
U.S.C. 8253(a)).'' and inserting ``each of the energy reduction goals 
established under section 543(a).''.

SEC. 103. ENERGY USE MEASUREMENT AND ACCOUNTABILITY.

    Section 543 of the National Energy Conservation Policy Act (42 
U.S.C. 8253) is further amended by adding at the end the following:
    ``(e) Metering of Energy Use.--
            ``(1) Deadline.--By October 1, 2010, in accordance with 
        guidelines established by the Secretary under paragraph (2), 
        all Federal buildings shall, for the purposes of efficient use 
        of energy and reduction in the cost of electricity used in such 
        buildings, be metered or submetered. Each agency shall use, to 
        the maximum extent practicable, advanced meters or advanced 
        metering devices that provide data at least daily and that 
        measure at least hourly consumption of electricity in the 
        Federal buildings of the agency. Such data shall be 
        incorporated into existing Federal energy tracking systems and 
        made available to Federal facility energy managers.
            ``(2) Guidelines.--
                    ``(A) In general.--Not later than 180 days after 
                the date of enactment of this subsection, the 
                Secretary, in consultation with the Department of 
                Defense, the General Services Administration, 
                representatives from the metering industry, utility 
                industry, energy services industry, energy efficiency 
                industry, energy efficiency advocacy organizations, 
                national laboratories, universities, and Federal 
                facility energy managers, shall establish guidelines 
                for agencies to carry out paragraph (1).
                    ``(B) Requirements for guidelines.--The guidelines 
                shall--
                            ``(i) take into consideration--
                                    ``(I) the cost of metering and 
                                submetering and the reduced cost of 
                                operation and maintenance expected to 
                                result from metering and submetering;
                                    ``(II) the extent to which metering 
                                and submetering are expected to result 
                                in increased potential for energy 
                                management, increased potential for 
                                energy savings and energy efficiency 
                                improvement, and cost and energy 
                                savings due to utility contract 
                                aggregation; and
                                    ``(III) the measurement and 
                                verification protocols of the 
                                Department of Energy;
                            ``(ii) include recommendations concerning 
                        the amount of funds and the number of trained 
                        personnel necessary to gather and use the 
                        metering information to track and reduce energy 
                        use;
                            ``(iii) establish priorities for types and 
                        locations of buildings to be metered and 
                        submetered based on cost-effectiveness and a 
                        schedule of 1 or more dates, not later than 1 
                        year after the date of issuance of the 
                        guidelines, on which the requirements specified 
                        in paragraph (1) shall take effect; and
                            ``(iv) establish exclusions from the 
                        requirements specified in paragraph (1) based 
                        on the de minimis quantity of energy use of a 
                        Federal building, industrial process, or 
                        structure.
            ``(3) Plan.--Not later than 6 months after the date 
        guidelines are established under paragraph (2), in a report 
        submitted by the agency under section 548(a), each agency shall 
        submit to the Secretary a plan describing how the agency will 
        implement the requirements of paragraph (1), including (A) how 
        the agency will designate personnel primarily responsible for 
        achieving the requirements and (B) demonstration by the agency, 
        complete with documentation, of any finding that advanced 
        meters or advanced metering devices, as defined in paragraph 
        (1), are not practicable.''.

SEC. 104. PROCUREMENT OF ENERGY EFFICIENT PRODUCTS.

    (a) Requirements.--Part 3 of title V of the National Energy 
Conservation Policy Act (42 U.S.C. 8251 et seq.), as amended by section 
101 of this Act, is amended by adding at the end the following:

``SEC. 553. FEDERAL PROCUREMENT OF ENERGY EFFICIENT PRODUCTS.

    ``(a) Definitions.--In this section:
            ``(1) Energy star product.--The term `Energy Star product' 
        means a product that is rated for energy efficiency under an 
        Energy Star program.
            ``(2) Energy star program.--The term `Energy Star program' 
        means the program established by section 324A of the Energy 
        Policy and Conservation Act.
            ``(3) Executive agency.--The term `executive agency' has 
        the meaning given the term in section 4 of the Office of 
        Federal Procurement Policy Act (41 U.S.C. 403).
            ``(4) FEMP designated product.--The term `FEMP designated 
        product' means a product that is designated under the Federal 
        Energy Management Program of the Department of Energy as being 
        among the highest 25 percent of equivalent products for energy 
        efficiency.
    ``(b) Procurement of Energy Efficient Products.--
            ``(1) Requirement.--To meet the requirements of an 
        executive agency for an energy consuming product, the head of 
        the executive agency shall, except as provided in paragraph 
        (2), procure--
                    ``(A) an Energy Star product; or
                    ``(B) a FEMP designated product.
            ``(2) Exceptions.--The head of an executive agency is not 
        required to procure an Energy Star product or FEMP designated 
        product under paragraph (1) if the head of the executive agency 
        finds in writing that--
                    ``(A) an Energy Star product or FEMP designated 
                product is not cost-effective over the life of the 
                product taking energy cost savings into account; or
                    ``(B) no Energy Star product or FEMP designated 
                product is reasonably available that meets the 
                functional requirements of the executive agency.
            ``(3) Procurement planning.--The head of an executive 
        agency shall incorporate into the specifications for all 
        procurements involving energy consuming products and systems, 
        including guide specifications, project specifications, and 
        construction, renovation, and services contracts that include 
        provision of energy consuming products and systems, and into 
        the factors for the evaluation of offers received for the 
        procurement, criteria for energy efficiency that are consistent 
        with the criteria used for rating Energy Star products and for 
        rating FEMP designated products.
    ``(c) Listing of Energy Efficient Products in Federal Catalogs.--
Energy Star products and FEMP designated products shall be clearly 
identified and prominently displayed in any inventory or listing of 
products by the General Services Administration or the Defense 
Logistics Agency. The General Services Administration or the Defense 
Logistics Agency shall supply only Energy Star products or FEMP 
designated products for all product categories covered by the Energy 
Star program or the Federal Energy Management Program, except in cases 
where the agency ordering a product specifies in writing that no Energy 
Star product or FEMP designated product is available to meet the 
buyer's functional requirements, or that no Energy Star product or FEMP 
designated product is cost-effective for the intended application over 
the life of the product, taking energy cost savings into account.
    ``(d) Specific Products.--(1) In the case of electric motors of 1 
to 500 horsepower, agencies shall select only premium efficient motors 
that meet a standard designated by the Secretary. The Secretary shall 
designate such a standard not later than 120 days after the date of the 
enactment of this section, after considering the recommendations of 
associated electric motor manufacturers and energy efficiency groups.
    ``(2) All Federal agencies are encouraged to take actions to 
maximize the efficiency of air conditioning and refrigeration 
equipment, including appropriate cleaning and maintenance, including 
the use of any system treatment or additive that will reduce the 
electricity consumed by air conditioning and refrigeration equipment. 
Any such treatment or additive must be--
            ``(A) determined by the Secretary to be effective in 
        increasing the efficiency of air conditioning and refrigeration 
        equipment without having an adverse impact on air conditioning 
        performance (including cooling capacity) or equipment useful 
        life;
            ``(B) determined by the Administrator of the Environmental 
        Protection Agency to be environmentally safe; and
            ``(C) shown to increase seasonal energy efficiency ratio 
        (SEER) or energy efficiency ratio (EER) when tested by the 
        National Institute of Standards and Technology according to 
        Department of Energy test procedures without causing any 
        adverse impact on the system, system components, the 
        refrigerant or lubricant, or other materials in the system.
Results of testing described in subparagraph (C) shall be published in 
the Federal Register for public review and comment. For purposes of 
this section, a hardware device or primary refrigerant shall not be 
considered an additive.
    ``(e) Regulations.--Not later than 180 days after the date of the 
enactment of this section, the Secretary shall issue guidelines to 
carry out this section.''.
    (b) Conforming Amendment.--The table of contents of the National 
Energy Conservation Policy Act is further amended by inserting after 
the item relating to section 552 the following new item:

``Sec. 553. Federal procurement of energy efficient products.''.

SEC. 105. VOLUNTARY COMMITMENTS TO REDUCE INDUSTRIAL ENERGY INTENSITY.

    (a) Voluntary Agreements.--The Secretary of Energy is authorized to 
enter into voluntary agreements with 1 or more persons in industrial 
sectors that consume significant amounts of primary energy per unit of 
physical output to reduce the energy intensity of their production 
activities by a significant amount relative to improvements in each 
sector in recent years.
    (b) Recognition.--The Secretary of Energy, in cooperation with the 
Administrator of the Environmental Protection Agency and other 
appropriate Federal agencies, shall recognize and publicize the 
achievements of participants in voluntary agreements under this 
section.
    (c) Definition.--In this section, the term ``energy intensity'' 
means the primary energy consumed per unit of physical output in an 
industrial process.

SEC. 106. ADVANCED BUILDING EFFICIENCY TESTBED.

    (a) Establishment.--The Secretary of Energy, in consultation with 
the Administrator of General Services, shall establish an Advanced 
Building Efficiency Testbed program for the development, testing, and 
demonstration of advanced engineering systems, components, and 
materials to enable innovations in building technologies. The program 
shall evaluate efficiency concepts for government and industry 
buildings, and demonstrate the ability of next generation buildings to 
support individual and organizational productivity and health 
(including by improving indoor air quality) as well as flexibility and 
technological change to improve environmental sustainability. Such 
program shall complement and not duplicate existing national programs.
    (b) Participants.--The program established under subsection (a) 
shall be led by a university with the ability to combine the expertise 
from numerous academic fields including, at a minimum, intelligent 
workplaces and advanced building systems and engineering, electrical 
and computer engineering, computer science, architecture, urban design, 
and environmental and mechanical engineering. Such university shall 
partner with other universities and entities who have established 
programs and the capability of advancing innovative building efficiency 
technologies.
    (c) Authorization of Appropriations.--There are authorized to be 
appropriated to the Secretary of Energy to carry out this section 
$6,000,000 for each of the fiscal years 2004 through 2006, to remain 
available until expended. For any fiscal year in which funds are 
expended under this section, the Secretary shall provide \1/3\ of the 
total amount to the lead university described in subsection (b), and 
provide the remaining \2/3\ to the other participants referred to in 
subsection (b) on an equal basis.

SEC. 107. FEDERAL BUILDING PERFORMANCE STANDARDS.

    Section 305(a) of the Energy Conservation and Production Act (42 
U.S.C. 6834(a)) is amended--
            (1) in paragraph (2)(A), by striking ``CABO Model Energy 
        Code, 1992'' and inserting ``the 2003 International Energy 
        Conservation Code''; and
            (2) by adding at the end the following:
    ``(3) Revised federal building energy efficiency performance 
standards.--
            ``(A) In general.--Not later than 1 year after the date of 
        enactment of this paragraph, the Secretary of Energy shall 
        establish, by rule, revised Federal building energy efficiency 
        performance standards that require that--
                    ``(i) if life-cycle cost-effective, for new Federal 
                buildings--
                            ``(I) such buildings be designed so as to 
                        achieve energy consumption levels at least 30 
                        percent below those of the version current as 
                        of the date of enactment of this paragraph of 
                        the ASHRAE Standard or the International Energy 
                        Conservation Code, as appropriate; and
                            ``(II) sustainable design principles are 
                        applied to the siting, design, and construction 
                        of all new and replacement buildings; and
                    ``(ii) where water is used to achieve energy 
                efficiency, water conservation technologies shall be 
                applied to the extent they are life-cycle cost 
                effective.
            ``(B) Additional revisions.--Not later than 1 year after 
        the date of approval of each subsequent revision of the ASHRAE 
        Standard or the International Energy Conservation Code, as 
        appropriate, the Secretary of Energy shall determine, based on 
        the cost-effectiveness of the requirements under the 
        amendments, whether the revised standards established under 
        this paragraph should be updated to reflect the amendments.
            ``(C) Statement on compliance of new buildings.--In the 
        budget request of the Federal agency for each fiscal year and 
        each report submitted by the Federal agency under section 
        548(a) of the National Energy Conservation Policy Act (42 
        U.S.C. 8258(a)), the head of each Federal agency shall 
        include--
                    ``(i) a list of all new Federal buildings owned, 
                operated, or controlled by the Federal agency; and
                    ``(ii) a statement concerning whether the Federal 
                buildings meet or exceed the revised standards 
                established under this paragraph.''.

SEC. 108. INCREASED USE OF RECOVERED MINERAL COMPONENT IN FEDERALLY 
              FUNDED PROJECTS INVOLVING PROCUREMENT OF CEMENT OR 
              CONCRETE.

    (a) Amendment.--Subtitle F of the Solid Waste Disposal Act (42 
U.S.C. 6961 et seq.) is amended by adding at the end the following new 
section:

  ``increased use of recovered mineral component in federally funded 
          projects involving procurement of cement or concrete

    ``Sec. 6005. (a) Definitions.--In this section:
            ``(1) Agency head.--The term `agency head' means--
                    ``(A) the Secretary of Transportation; and
                    ``(B) the head of each other Federal agency that on 
                a regular basis procures, or provides Federal funds to 
                pay or assist in paying the cost of procuring, material 
                for cement or concrete projects.
            ``(2) Cement or concrete project.--The term `cement or 
        concrete project' means a project for the construction or 
        maintenance of a highway or other transportation facility or a 
        Federal, State, or local government building or other public 
        facility that--
                    ``(A) involves the procurement of cement or 
                concrete; and
                    ``(B) is carried out in whole or in part using 
                Federal funds.
            ``(3) Recovered mineral component.--The term `recovered 
        mineral component' means--
                    ``(A) ground granulated blast furnace slag;
                    ``(B) coal combustion fly ash; and
                    ``(C) any other waste material or byproduct 
                recovered or diverted from solid waste that the 
                Administrator, in consultation with an agency head, 
                determines should be treated as recovered mineral 
                component under this section for use in cement or 
                concrete projects paid for, in whole or in part, by the 
                agency head.
    ``(b) Implementation of Requirements.--
            ``(1) In general.--Not later than 1 year after the date of 
        enactment of this section, the Administrator and each agency 
        head shall take such actions as are necessary to implement 
        fully all procurement requirements and incentives in effect as 
        of the date of enactment of this section (including guidelines 
        under section 6002) that provide for the use of cement and 
        concrete incorporating recovered mineral component in cement or 
        concrete projects.
            ``(2) Priority.--In carrying out paragraph (1) an agency 
        head shall give priority to achieving greater use of recovered 
        mineral component in cement or concrete projects for which 
        recovered mineral components historically have not been used or 
        have been used only minimally.
            ``(3) Conformance.--The Administrator and each agency head 
        shall carry out this subsection in accordance with section 
        6002.
    ``(c) Full Implementation Study.--
            ``(1) In general.--The Administrator, in cooperation with 
        the Secretary of Transportation and the Secretary of Energy, 
        shall conduct a study to determine the extent to which current 
        procurement requirements, when fully implemented in accordance 
        with subsection (b), may realize energy savings and 
        environmental benefits attainable with substitution of 
        recovered mineral component in cement used in cement or 
        concrete projects.
            ``(2) Matters to be addressed.--The study shall--
                    ``(A) quantify the extent to which recovered 
                mineral components are being substituted for Portland 
                cement, particularly as a result of current procurement 
                requirements, and the energy savings and environmental 
                benefits associated with that substitution;
                    ``(B) identify all barriers in procurement 
                requirements to greater realization of energy savings 
                and environmental benefits, including barriers 
                resulting from exceptions from current law; and
                    ``(C)(i) identify potential mechanisms to achieve 
                greater substitution of recovered mineral component in 
                types of cement or concrete projects for which 
                recovered mineral components historically have not been 
                used or have been used only minimally;
                    ``(ii) evaluate the feasibility of establishing 
                guidelines or standards for optimized substitution 
                rates of recovered mineral component in those cement or 
                concrete projects; and
                    ``(iii) identify any potential environmental or 
                economic effects that may result from greater 
                substitution of recovered mineral component in those 
                cement or concrete projects.
            ``(3) Report.--Not later than 30 months after the date of 
        enactment of this section, the Administrator shall submit to 
        Congress a report on the study.
    ``(d) Additional Procurement Requirements.--Unless the study 
conducted under subsection (c) identifies any effects or other problems 
described in subsection (c)(2)(C)(iii) that warrant further review or 
delay, the Administrator and each agency head shall, not later than 1 
year after the release of the report in accordance with subsection 
(c)(3), take additional actions authorized under this Act to establish 
procurement requirements and incentives that provide for the use of 
cement and concrete with increased substitution of recovered mineral 
component in the construction and maintenance of cement or concrete 
projects, so as to--
            ``(1) realize more fully the energy savings and 
        environmental benefits associated with increased substitution; 
        and
            ``(2) eliminate barriers identified under subsection (c).
    ``(e) Effect of Section.--Nothing in this section affects the 
requirements of section 6002 (including the guidelines and 
specifications for implementing those requirements).''.
    (b) Table of Contents Amendment.--The table of contents of the 
Solid Waste Disposal Act is amended by adding after the item relating 
to section 6004 the following new item:

``Sec. 6005. Increased use of recovered mineral component in federally 
                            funded projects involving procurement of 
                            cement or concrete.''.

            Subtitle B--Energy Assistance and State Programs

SEC. 121. LOW INCOME HOME ENERGY ASSISTANCE PROGRAM.

    Section 2602(b) of the Low-Income Home Energy Assistance Act of 
1981 (42 U.S.C. 8621(b)) is amended by striking ``and $2,000,000,000 
for each of fiscal years 2002 through 2004'' and inserting 
``$2,000,000,000 for fiscal years 2002 and 2003, and $3,400,000,000 for 
each of fiscal years 2004 through 2006''.

SEC. 122. WEATHERIZATION ASSISTANCE.

    Section 422 of the Energy Conservation and Production Act (42 
U.S.C. 6872) is amended by striking ``for fiscal years 1999 through 
2003 such sums as may be necessary'' and inserting ``$325,000,000 for 
fiscal year 2004, $400,000,000 for fiscal year 2005, and $500,000,000 
for fiscal year 2006''.

SEC. 123. STATE ENERGY PROGRAMS.

    (a) State Energy Conservation Plans.--Section 362 of the Energy 
Policy and Conservation Act (42 U.S.C. 6322) is amended by inserting at 
the end the following new subsection:
    ``(g) The Secretary shall, at least once every 3 years, invite the 
Governor of each State to review and, if necessary, revise the energy 
conservation plan of such State submitted under subsection (b) or (e). 
Such reviews should consider the energy conservation plans of other 
States within the region, and identify opportunities and actions 
carried out in pursuit of common energy conservation goals.''.
    (b) State Energy Efficiency Goals.--Section 364 of the Energy 
Policy and Conservation Act (42 U.S.C. 6324) is amended to read as 
follows:

                    ``state energy efficiency goals

    ``Sec. 364. Each State energy conservation plan with respect to 
which assistance is made available under this part on or after the date 
of enactment of the Energy Policy Act of 2003 shall contain a goal, 
consisting of an improvement of 25 percent or more in the efficiency of 
use of energy in the State concerned in calendar year 2010 as compared 
to calendar year 1990, and may contain interim goals.''.
    (c) Authorization of Appropriations.--Section 365(f) of the Energy 
Policy and Conservation Act (42 U.S.C. 6325(f)) is amended by striking 
``for fiscal years 1999 through 2003 such sums as may be necessary'' 
and inserting ``$100,000,000 for each of the fiscal years 2004 and 2005 
and $125,000,000 for fiscal year 2006''.

SEC. 124. ENERGY EFFICIENT APPLIANCE REBATE PROGRAMS.

    (a) Definitions.--In this section:
            (1) Eligible state.--The term ``eligible State'' means a 
        State that meets the requirements of subsection (b).
            (2) Energy star program.--The term ``Energy Star program'' 
        means the program established by section 324A of the Energy 
        Policy and Conservation Act.
            (3) Residential energy star product.--The term 
        ``residential Energy Star product'' means a product for a 
        residence that is rated for energy efficiency under the Energy 
        Star program.
            (4) Secretary.--The term ``Secretary'' means the Secretary 
        of Energy.
            (5) State energy office.--The term ``State energy office'' 
        means the State agency responsible for developing State energy 
        conservation plans under section 362 of the Energy Policy and 
        Conservation Act (42 U.S.C. 6322).
            (6) State program.--The term ``State program'' means a 
        State energy efficient appliance rebate program described in 
        subsection (b)(1).
    (b) Eligible States.--A State shall be eligible to receive an 
allocation under subsection (c) if the State--
            (1) establishes (or has established) a State energy 
        efficient appliance rebate program to provide rebates to 
        residential consumers for the purchase of residential Energy 
        Star products to replace used appliances of the same type;
            (2) submits an application for the allocation at such time, 
        in such form, and containing such information as the Secretary 
        may require; and
            (3) provides assurances satisfactory to the Secretary that 
        the State will use the allocation to supplement, but not 
        supplant, funds made available to carry out the State program.
    (c) Amount of Allocations.--
            (1) In general.--Subject to paragraph (2), for each fiscal 
        year, the Secretary shall allocate to the State energy office 
        of each eligible State to carry out subsection (d) an amount 
        equal to the product obtained by multiplying the amount made 
        available under subsection (f) for the fiscal year by the ratio 
        that the population of the State in the most recent calendar 
        year for which data are available bears to the total population 
        of all eligible States in that calendar year.
            (2) Minimum allocations.--For each fiscal year, the amounts 
        allocated under this subsection shall be adjusted 
        proportionately so that no eligible State is allocated a sum 
        that is less than an amount determined by the Secretary.
    (d) Use of Allocated Funds.--The allocation to a State energy 
office under subsection (c) may be used to pay up to 50 percent of the 
cost of establishing and carrying out a State program.
    (e) Issuance of Rebates.--Rebates may be provided to residential 
consumers that meet the requirements of the State program. The amount 
of a rebate shall be determined by the State energy office, taking into 
consideration--
            (1) the amount of the allocation to the State energy office 
        under subsection (c);
            (2) the amount of any Federal or State tax incentive 
        available for the purchase of the residential Energy Star 
        product; and
            (3) the difference between the cost of the residential 
        Energy Star product and the cost of an appliance that is not a 
        residential Energy Star product, but is of the same type as, 
        and is the nearest capacity, performance, and other relevant 
        characteristics (as determined by the State energy office) to, 
        the residential Energy Star product.
    (f) Authorization of Appropriations.--There are authorized to be 
appropriated to the Secretary to carry out this section $50,000,000 for 
each of the fiscal years 2004 through 2008.

SEC. 125. ENERGY EFFICIENT PUBLIC BUILDINGS.

    (a) Grants.--The Secretary of Energy may make grants to the State 
agency responsible for developing State energy conservation plans under 
section 362 of the Energy Policy and Conservation Act (42 U.S.C. 6322), 
or, if no such agency exists, a State agency designated by the Governor 
of the State, to assist units of local government in the State in 
improving the energy efficiency of public buildings and facilities--
            (1) through construction of new energy efficient public 
        buildings that use at least 30 percent less energy than a 
        comparable public building constructed in compliance with 
        standards prescribed in the most recent version of the 
        International Energy Conservation Code, or a similar State code 
        intended to achieve substantially equivalent efficiency levels; 
        or
            (2) through renovation of existing public buildings to 
        achieve reductions in energy use of at least 30 percent as 
        compared to the baseline energy use in such buildings prior to 
        renovation, assuming a 3-year, weather-normalized average for 
        calculating such baseline.
    (b) Administration.--State energy offices receiving grants under 
this section shall--
            (1) maintain such records and evidence of compliance as the 
        Secretary may require; and
            (2) develop and distribute information and materials and 
        conduct programs to provide technical services and assistance 
        to encourage planning, financing, and design of energy 
        efficient public buildings by units of local government.
    (c) Authorization of Appropriations.--For the purposes of this 
section, there are authorized to be appropriated to the Secretary of 
Energy $30,000,000 for each of fiscal years 2004 through 2008. Not more 
than 10 percent of appropriated funds shall be used for administration.

SEC. 126. LOW INCOME COMMUNITY ENERGY EFFICIENCY PILOT PROGRAM.

    (a) Grants.--The Secretary of Energy is authorized to make grants 
to units of local government, private, non-profit community development 
organizations, and Indian tribe economic development entities to 
improve energy efficiency; identify and develop alternative, renewable, 
and distributed energy supplies; and increase energy conservation in 
low income rural and urban communities.
    (b) Purpose of Grants.--The Secretary may make grants on a 
competitive basis for--
            (1) investments that develop alternative, renewable, and 
        distributed energy supplies;
            (2) energy efficiency projects and energy conservation 
        programs;
            (3) studies and other activities that improve energy 
        efficiency in low income rural and urban communities;
            (4) planning and development assistance for increasing the 
        energy efficiency of buildings and facilities; and
            (5) technical and financial assistance to local government 
        and private entities on developing new renewable and 
        distributed sources of power or combined heat and power 
        generation.
    (c) Definition.--For purposes of this section, the term ``Indian 
tribe'' means any Indian tribe, band, nation, or other organized group 
or community, including any Alaskan Native village or regional or 
village corporation as defined in or established pursuant to the Alaska 
Native Claims Settlement Act (43 U.S.C. 1601 et seq.), that is 
recognized as eligible for the special programs and services provided 
by the United States to Indians because of their status as Indians.
    (d) Authorization of Appropriations.--For the purposes of this 
section there are authorized to be appropriated to the Secretary of 
Energy $20,000,000 for each of fiscal years 2004 through 2006.

                 Subtitle C--Energy Efficient Products

SEC. 131. ENERGY STAR PROGRAM.

    (a) Amendment.--The Energy Policy and Conservation Act (42 U.S.C. 
6201 et seq.) is amended by inserting the following after section 324:

``SEC. 324A. ENERGY STAR PROGRAM.

    ``There is established at the Department of Energy and the 
Environmental Protection Agency a voluntary program to identify and 
promote energy-efficient products and buildings in order to reduce 
energy consumption, improve energy security, and reduce pollution 
through voluntary labeling of or other forms of communication about 
products and buildings that meet the highest energy efficiency 
standards. Responsibilities under the program shall be divided between 
the Department of Energy and the Environmental Protection Agency 
consistent with the terms of agreements between the 2 agencies. The 
Administrator and the Secretary shall--
            ``(1) promote Energy Star compliant technologies as the 
        preferred technologies in the marketplace for achieving energy 
        efficiency and to reduce pollution;
            ``(2) work to enhance public awareness of the Energy Star 
        label, including special outreach to small businesses;
            ``(3) preserve the integrity of the Energy Star label;
            ``(4) solicit comments from interested parties prior to 
        establishing or revising an Energy Star product category, 
        specification, or criterion (or effective dates for any of the 
        foregoing);
            ``(5) upon adoption of a new or revised product category, 
        specification, or criterion, provide reasonable notice to 
        interested parties of any changes (including effective dates) 
        in product categories, specifications, or criteria along with 
        an explanation of such changes and, where appropriate, 
        responses to comments submitted by interested parties; and
            ``(6) provide appropriate lead time (which shall be 9 
        months, unless the Agency or Department determines otherwise) 
        prior to the effective date for a new or a significant revision 
        to a product category, specification, or criterion, taking into 
        account the timing requirements of the manufacturing, product 
        marketing, and distribution process for the specific product 
        addressed.''.
    (b) Table of Contents Amendment.--The table of contents of the 
Energy Policy and Conservation Act is amended by inserting after the 
item relating to section 324 the following new item:

``Sec. 324A. Energy Star program.''.

SEC. 132. HVAC MAINTENANCE CONSUMER EDUCATION PROGRAM.

    Section 337 of the Energy Policy and Conservation Act (42 U.S.C. 
6307) is amended by adding at the end the following:
    ``(c) HVAC Maintenance.--For the purpose of ensuring that installed 
air conditioning and heating systems operate at their maximum rated 
efficiency levels, the Secretary shall, not later than 180 days after 
the date of enactment of this subsection, carry out a program to 
educate homeowners and small business owners concerning the energy 
savings resulting from properly conducted maintenance of air 
conditioning, heating, and ventilating systems. The Secretary shall 
carry out the program in a cost-shared manner in cooperation with the 
Administrator of the Environmental Protection Agency and such other 
entities as the Secretary considers appropriate, including industry 
trade associations, industry members, and energy efficiency 
organizations.
    ``(d) Small Business Education and Assistance.--The Administrator 
of the Small Business Administration, in consultation with the 
Secretary of Energy and the Administrator of the Environmental 
Protection Agency, shall develop and coordinate a Government-wide 
program, building on the existing Energy Star for Small Business 
Program, to assist small businesses to become more energy efficient, 
understand the cost savings obtainable through efficiencies, and 
identify financing options for energy efficiency upgrades. The 
Secretary and the Administrator of the Small Business Administration 
shall make the program information available directly to small 
businesses and through other Federal agencies, including the Federal 
Emergency Management Program and the Department of Agriculture.''.

SEC. 133. ENERGY CONSERVATION STANDARDS FOR ADDITIONAL PRODUCTS.

    (a) Definitions.--Section 321 of the Energy Policy and Conservation 
Act (42 U.S.C. 6291) is amended--
            (1) in paragraph (30)(S), by striking the period and adding 
        at the end the following: ``but does not include any lamp 
        specifically designed to be used for special purpose 
        applications and that is unlikely to be used in general purpose 
        applications such as those described in subparagraph (D), and 
        also does not include any lamp not described in subparagraph 
        (D) that is excluded by the Secretary, by rule, because the 
        lamp is designed for special applications and is unlikely to be 
        used in general purpose applications.''; and
            (2) by adding at the end the following:
            ``(32) The term `battery charger' means a device that 
        charges batteries for consumer products and includes battery 
        chargers embedded in other consumer products.
            ``(33) The term `commercial refrigerators, freezers, and 
        refrigerator-freezers' means refrigerators, freezers, or 
        refrigerator-freezers that--
                    ``(A) are not consumer products regulated under 
                this Act; and
                    ``(B) incorporate most components involved in the 
                vapor-compression cycle and the refrigerated 
                compartment in a single package.
            ``(34) The term `external power supply' means an external 
        power supply circuit that is used to convert household electric 
        current into either DC current or lower-voltage AC current to 
        operate a consumer product.
            ``(35) The term `illuminated exit sign' means a sign that--
                    ``(A) is designed to be permanently fixed in place 
                to identify an exit; and
                    ``(B) consists of an electrically powered integral 
                light source that illuminates the legend `EXIT' and any 
                directional indicators and provides contrast between 
                the legend, any directional indicators, and the 
                background.
            ``(36)(A) Except as provided in subparagraph (B), the term 
        `distribution transformer' means a transformer that--
                    ``(i) has an input voltage of 34.5 kilovolts or 
                less;
                    ``(ii) has an output voltage of 600 volts or less; 
                and
                    ``(iii) is rated for operation at a frequency of 60 
                Hertz.
            ``(B) The term `distribution transformer' does not 
        include--
                    ``(i) transformers with multiple voltage taps, with 
                the highest voltage tap equaling at least 20 percent 
                more than the lowest voltage tap;
                    ``(ii) transformers, such as those commonly known 
                as drive transformers, rectifier transformers, auto-
                transformers, Uninterruptible Power System 
                transformers, impedance transformers, harmonic 
                transformers, regulating transformers, sealed and 
                nonventilating transformers, machine tool transformers, 
                welding transformers, grounding transformers, or 
                testing transformers, that are designed to be used in a 
                special purpose application and are unlikely to be used 
                in general purpose applications; or
                    ``(iii) any transformer not listed in clause (ii) 
                that is excluded by the Secretary by rule because--
                            ``(I) the transformer is designed for a 
                        special application;
                            ``(II) the transformer is unlikely to be 
                        used in general purpose applications; and
                            ``(III) the application of standards to the 
                        transformer would not result in significant 
                        energy savings.
            ``(37) The term `low-voltage dry-type distribution 
        transformer' means a distribution transformer that--
                    ``(A) has an input voltage of 600 volts or less;
                    ``(B) is air-cooled; and
                    ``(C) does not use oil as a coolant.
            ``(38) The term `standby mode' means the lowest power 
        consumption mode that--
                    ``(A) cannot be switched off or influenced by the 
                user; and
                    ``(B) may persist for an indefinite time when an 
                appliance is connected to the main electricity supply 
                and used in accordance with the manufacturer's 
                instructions,
        as defined on an individual product basis by the Secretary.
            ``(39) The term `torchiere' means a portable electric lamp 
        with a reflector bowl that directs light upward so as to give 
        indirect illumination.
            ``(40) The term `traffic signal module' means a standard 8-
        inch (200mm) or 12-inch (300mm) traffic signal indication, 
        consisting of a light source, a lens, and all other parts 
        necessary for operation, that communicates movement messages to 
        drivers through red, amber, and green colors.
            ``(41) The term `transformer' means a device consisting of 
        2 or more coils of insulated wire that transfers alternating 
        current by electromagnetic induction from 1 coil to another to 
        change the original voltage or current value.
            ``(42) The term `unit heater' means a self-contained fan-
        type heater designed to be installed within the heated space, 
        except that such term does not include a warm air furnace.''.
    (b) Test Procedures.--Section 323 of the Energy Policy and 
Conservation Act (42 U.S.C. 6293) is amended--
            (1) in subsection (b), by adding at the end the following:
            ``(9) Test procedures for illuminated exit signs shall be 
        based on the test method used under Version 2.0 of the Energy 
        Star program of the Environmental Protection Agency for 
        illuminated exit signs.
            ``(10) Test procedures for distribution transformers and 
        low voltage dry-type distribution transformers shall be based 
        on the `Standard Test Method for Measuring the Energy 
        Consumption of Distribution Transformers' prescribed by the 
        National Electrical Manufacturers Association (NEMA TP 2-1998). 
        The Secretary may review and revise this test procedure. For 
        purposes of section 346(a), this test procedure shall be deemed 
        to be testing requirements prescribed by the Secretary under 
        section 346(a)(1) for distribution transformers for which the 
        Secretary makes a determination that energy conservation 
        standards would be technologically feasible and economically 
        justified, and would result in significant energy savings.
            ``(11) Test procedures for traffic signal modules shall be 
        based on the test method used under the Energy Star program of 
        the Environmental Protection Agency for traffic signal modules, 
        as in effect on the date of enactment of this paragraph.
            ``(12) Test procedures for medium base compact fluorescent 
        lamps shall be based on the test methods used under the August 
        9, 2001, version of the Energy Star program of the 
        Environmental Protection Agency and Department of Energy for 
        compact fluorescent lamps. Covered products shall meet all test 
        requirements for regulated parameters in section 325(bb). 
        However, covered products may be marketed prior to completion 
        of lamp life and lumen maintenance at 40 percent of rated life 
        testing provided manufacturers document engineering predictions 
        and analysis that support expected attainment of lumen 
        maintenance at 40 percent rated life and lamp life time.''; and
            (2) by adding at the end the following:
    ``(f) Additional Consumer and Commercial Products.--The Secretary 
shall, not later than 24 months after the date of enactment of this 
subsection, prescribe testing requirements for suspended ceiling fans, 
refrigerated bottled or canned beverage vending machines, and 
commercial refrigerators, freezers, and refrigerator-freezers. Such 
testing requirements shall be based on existing test procedures used in 
industry to the extent practical and reasonable. In the case of 
suspended ceiling fans, such test procedures shall include efficiency 
at both maximum output and at an output no more than 50 percent of the 
maximum output.''.
    (c) New Standards.--Section 325 of the Energy Policy and 
Conservation Act (42 U.S.C. 6295) is amended by adding at the end the 
following:
    ``(u) Battery Charger and External Power Supply Electric Energy 
Consumption.--
            ``(1) Initial rulemaking.--(A) The Secretary shall, within 
        18 months after the date of enactment of this subsection, 
        prescribe by notice and comment, definitions and test 
        procedures for the power use of battery chargers and external 
        power supplies. In establishing these test procedures, the 
        Secretary shall consider, among other factors, existing 
        definitions and test procedures used for measuring energy 
        consumption in standby mode and other modes and assess the 
        current and projected future market for battery chargers and 
        external power supplies. This assessment shall include 
        estimates of the significance of potential energy savings from 
        technical improvements to these products and suggested product 
        classes for standards. Prior to the end of this time period, 
        the Secretary shall hold a scoping workshop to discuss and 
        receive comments on plans for developing energy conservation 
        standards for energy use for these products.
            ``(B) The Secretary shall, within 3 years after the date of 
        enactment of this subsection, issue a final rule that 
        determines whether energy conservation standards shall be 
        issued for battery chargers and external power supplies or 
        classes thereof. For each product class, any such standards 
        shall be set at the lowest level of energy use that--
                    ``(i) meets the criteria and procedures of 
                subsections (o), (p), (q), (r), (s), and (t); and
                    ``(ii) will result in significant overall annual 
                energy savings, considering both standby mode and other 
                operating modes.
            ``(2) Review of standby energy use in covered products.--In 
        determining pursuant to section 323 whether test procedures and 
        energy conservation standards pursuant to this section should 
        be revised, the Secretary shall consider, for covered products 
        that are major sources of standby mode energy consumption, 
        whether to incorporate standby mode into such test procedures 
        and energy conservation standards, taking into account, among 
        other relevant factors, standby mode power consumption compared 
        to overall product energy consumption.
            ``(3) Rulemaking.--The Secretary shall not propose a 
        standard under this section unless the Secretary has issued 
        applicable test procedures for each product pursuant to section 
        323.
            ``(4) Effective date.--Any standard issued under this 
        subsection shall be applicable to products manufactured or 
imported 3 years after the date of issuance.
            ``(5) Voluntary programs.--The Secretary and the 
        Administrator shall collaborate and develop programs, including 
        programs pursuant to section 324A (relating to Energy Star 
        Programs) and other voluntary industry agreements or codes of 
        conduct, that are designed to reduce standby mode energy use.
    ``(v) Suspended Ceiling Fans, Vending Machines, and Commercial 
Refrigerators, Freezers, and Refrigerator-Freezers.--The Secretary 
shall not later than 36 months after the date on which testing 
requirements are prescribed by the Secretary pursuant to section 
323(f), prescribe, by rule, energy conservation standards for suspended 
ceiling fans, refrigerated bottled or canned beverage vending machines, 
and commercial refrigerators, freezers, and refrigerator-freezers. In 
establishing standards under this subsection, the Secretary shall use 
the criteria and procedures contained in subsections (o) and (p). Any 
standard prescribed under this subsection shall apply to products 
manufactured 3 years after the date of publication of a final rule 
establishing such standard.
    ``(w) Illuminated Exit Signs.--Illuminated exit signs manufactured 
on or after January 1, 2005, shall meet the Version 2.0 Energy Star 
Program performance requirements for illuminated exit signs prescribed 
by the Environmental Protection Agency.
    ``(x) Torchieres.--Torchieres manufactured on or after January 1, 
2005--
            ``(1) shall consume not more than 190 watts of power; and
            ``(2) shall not be capable of operating with lamps that 
        total more than 190 watts.
    ``(y) Low Voltage Dry-Type Distribution Transformers.--The 
efficiency of low voltage dry-type distribution transformers 
manufactured on or after January 1, 2005, shall be the Class I 
Efficiency Levels for distribution transformers specified in Table 4-2 
of the `Guide for Determining Energy Efficiency for Distribution 
Transformers' published by the National Electrical Manufacturers 
Association (NEMA TP-1-2002).
    ``(z) Traffic Signal Modules.--Traffic signal modules manufactured 
on or after January 1, 2006, shall meet the performance requirements 
used under the Energy Star program of the Environmental Protection 
Agency for traffic signals, as in effect on the date of enactment of 
this subsection, and shall be installed with compatible, electrically 
connected signal control interface devices and conflict monitoring 
systems.
    ``(aa) Unit Heaters.--Unit heaters manufactured on or after the 
date that is 3 years after the date of enactment of this subsection 
shall be equipped with an intermittent ignition device and shall have 
either power venting or an automatic flue damper.
    ``(bb) Medium Base Compact Fluorescent Lamps.--Bare lamp and 
covered lamp (no reflector) medium base compact fluorescent lamps 
manufactured on or after January 1, 2005, shall meet the following 
requirements prescribed by the August 9, 2001, version of the Energy 
Star Program Requirements for Compact Fluorescent Lamps, Energy Star 
Eligibility Criteria, Energy-Efficiency Specification issued by the 
Environmental Protection Agency and Department of Energy: minimum 
initial efficacy; lumen maintenance at 1000 hours; lumen maintenance at 
40 percent of rated life; rapid cycle stress test; and lamp life. The 
Secretary may, by rule, establish requirements for color quality (CRI); 
power factor; operating frequency; and maximum allowable start time 
based on the requirements prescribed by the August 9, 2001, version of 
the Energy Star Program Requirements for Compact Fluorescent Lamps. The 
Secretary may, by rule, revise these requirements or establish other 
requirements considering energy savings, cost effectiveness, and 
consumer satisfaction.
    ``(cc) Effective Date.--Section 327 shall apply--
            ``(1) to products for which standards are to be established 
        under subsections (u) and (v) on the date on which a final rule 
        is issued by the Department of Energy, except that any State or 
        local standards prescribed or enacted for any such product 
        prior to the date on which such final rule is issued shall not 
        be preempted until the standard established under subsection 
        (u) or (v) for that product takes effect; and
            ``(2) to products for which standards are established under 
        subsections (w) through (bb) on the date of enactment of those 
        subsections, except that any State or local standards 
        prescribed or enacted prior to the date of enactment of those 
        subsections shall not be preempted until the standards 
        established under subsections (w) through (bb) take effect.''.
    (d) Residential Furnace Fans.--Section 325(f)(3) of the Energy 
Policy and Conservation Act (42 U.S.C. 6295(f)(3)) is amended by adding 
the following new subparagraph at the end:
    ``(D) Notwithstanding any provision of this Act, the Secretary may 
consider, and prescribe, if the requirements of subsection (o) of this 
section are met, energy efficiency or energy use standards for 
electricity used for purposes of circulating air through duct work.''.

SEC. 134. ENERGY LABELING.

    (a) Rulemaking on Effectiveness of Consumer Product Labeling.--
Section 324(a)(2) of the Energy Policy and Conservation Act (42 U.S.C. 
6294(a)(2)) is amended by adding at the end the following:
    ``(F) Not later than 3 months after the date of enactment of this 
subparagraph, the Commission shall initiate a rulemaking to consider 
the effectiveness of the current consumer products labeling program in 
assisting consumers in making purchasing decisions and improving energy 
efficiency and to consider changes to the labeling rules that would 
improve the effectiveness of consumer product labels. Such rulemaking 
shall be completed not later than 2 years after the date of enactment 
of this subparagraph.''.
    (b) Rulemaking on Labeling for Additional Products.--Section 324(a) 
of the Energy Policy and Conservation Act (42 U.S.C. 6294(a)) is 
further amended by adding at the end the following:
    ``(5) The Secretary or the Commission, as appropriate, may, for 
covered products referred to in subsections (u) through (aa) of section 
325, prescribe, by rule, pursuant to this section, labeling 
requirements for such products after a test procedure has been set 
pursuant to section 323. In the case of products to which TP-1 
standards under section 325(y) apply, labeling requirements shall be 
based on the `Standard for the Labeling of Distribution Transformer 
Efficiency' prescribed by the National Electrical Manufacturers 
Association (NEMA TP-3) as in effect upon the date of enactment of this 
paragraph.''.

                       Subtitle D--Public Housing

SEC. 141. CAPACITY BUILDING FOR ENERGY-EFFICIENT, AFFORDABLE HOUSING.

    Section 4(b) of the HUD Demonstration Act of 1993 (42 U.S.C. 9816 
note) is amended--
            (1) in paragraph (1), by inserting before the semicolon at 
        the end the following: ``, including capabilities regarding the 
        provision of energy efficient, affordable housing and 
        residential energy conservation measures''; and
            (2) in paragraph (2), by inserting before the semicolon the 
        following: ``, including such activities relating to the 
        provision of energy efficient, affordable housing and 
residential energy conservation measures that benefit low-income 
families''.

SEC. 142. INCREASE OF CDBG PUBLIC SERVICES CAP FOR ENERGY CONSERVATION 
              AND EFFICIENCY ACTIVITIES.

    Section 105(a)(8) of the Housing and Community Development Act of 
1974 (42 U.S.C. 5305(a)(8)) is amended--
            (1) by inserting ``or efficiency'' after ``energy 
        conservation'';
            (2) by striking ``, and except that'' and inserting ``; 
        except that''; and
            (3) by inserting before the semicolon at the end the 
        following: ``; and except that each percentage limitation under 
        this paragraph on the amount of assistance provided under this 
        title that may be used for the provision of public services is 
        hereby increased by 10 percent, but such percentage increase 
        may be used only for the provision of public services 
        concerning energy conservation or efficiency''.

SEC. 143. FHA MORTGAGE INSURANCE INCENTIVES FOR ENERGY EFFICIENT 
              HOUSING.

    (a) Single Family Housing Mortgage Insurance.--Section 203(b)(2) of 
the National Housing Act (12 U.S.C. 1709(b)(2)) is amended, in the 
first undesignated paragraph beginning after subparagraph (B)(ii)(IV) 
(relating to solar energy systems), by striking ``20 percent'' and 
inserting ``30 percent''.
    (b) Multifamily Housing Mortgage Insurance.--Section 207(c) of the 
National Housing Act (12 U.S.C. 1713(c)) is amended, in the last 
undesignated paragraph beginning after paragraph (3) (relating to solar 
energy systems and residential energy conservation measures), by 
striking ``20 percent'' and inserting ``30 percent''.
    (c) Cooperative Housing Mortgage Insurance.--Section 213(p) of the 
National Housing Act (12 U.S.C. 1715e(p)) is amended by striking ``20 
per centum'' and inserting ``30 percent''.
    (d) Rehabilitation and Neighborhood Conservation Housing Mortgage 
Insurance.--Section 220(d)(3)(B)(iii)(IV) of the National Housing Act 
(12 U.S.C. 1715k(d)(3)(B)(iii)(IV)) is amended--
            (1) by striking ``with respect to rehabilitation projects 
        involving not more than five family units,''; and
            (2) by striking ``20 per centum'' and inserting ``30 
        percent''.
    (e) Low-Income Multifamily Housing Mortgage Insurance.--Section 
221(k) of the National Housing Act (12 U.S.C. 1715l(k)) is amended by 
striking ``20 per centum'' and inserting ``30 percent''.
    (f) Elderly Housing Mortgage Insurance.--Section 231(c)(2)(C) of 
the National Housing Act (12 U.S.C. 1715v(c)(2)(C)) is amended by 
striking ``20 per centum'' and inserting ``30 percent''.
    (g) Condominium Housing Mortgage Insurance.--Section 234(j) of the 
National Housing Act (12 U.S.C. 1715y(j)) is amended by striking ``20 
per centum'' and inserting ``30 percent''.

SEC. 144. PUBLIC HOUSING CAPITAL FUND.

    Section 9 of the United States Housing Act of 1937 (42 U.S.C. 
1437g) is amended--
            (1) in subsection (d)(1)--
                    (A) in subparagraph (I), by striking ``and'' at the 
                end;
                    (B) in subparagraph (J), by striking the period at 
                the end and inserting a semicolon; and
                    (C) by adding at the end the following new 
                subparagraphs:
                    ``(K) improvement of energy and water-use 
                efficiency by installing fixtures and fittings that 
                conform to the American Society of Mechanical 
                Engineers/American National Standards Institute 
                standards A112.19.2-1998 and A112.18.1-2000, or any 
                revision thereto, applicable at the time of 
                installation, and by increasing energy efficiency and 
                water conservation by such other means as the Secretary 
                determines are appropriate; and
                    ``(L) integrated utility management and capital 
                planning to maximize energy conservation and efficiency 
                measures.''; and
            (2) in subsection (e)(2)(C)--
                    (A) by striking ``The'' and inserting the 
                following:
                            ``(i) In general.--The''; and
                    (B) by adding at the end the following:
                            ``(ii) Third party contracts.--Contracts 
                        described in clause (i) may include contracts 
                        for equipment conversions to less costly 
                        utility sources, projects with resident-paid 
                        utilities, and adjustments to frozen base year 
                        consumption, including systems repaired to meet 
                        applicable building and safety codes and 
                        adjustments for occupancy rates increased by 
                        rehabilitation.
                            ``(iii) Term of contract.--The total term 
                        of a contract described in clause (i) shall not 
                        exceed 20 years to allow longer payback periods 
                        for retrofits, including windows, heating 
                        system replacements, wall insulation, site-
                        based generation, advanced energy savings 
                        technologies, including renewable energy 
                        generation, and other such retrofits.''.

SEC. 145. GRANTS FOR ENERGY-CONSERVING IMPROVEMENTS FOR ASSISTED 
              HOUSING.

    Section 251(b)(1) of the National Energy Conservation Policy Act 
(42 U.S.C. 8231(1)) is amended--
            (1) by striking ``financed with loans'' and inserting 
        ``assisted'';
            (2) by inserting after ``1959,'' the following: ``which are 
        eligible multifamily housing projects (as such term is defined 
        in section 512 of the Multifamily Assisted Housing Reform and 
        Affordability Act of 1997 (42 U.S.C. 1437f note)) and are 
        subject to mortgage restructuring and rental assistance 
        sufficiency plans under such Act,''; and
            (3) by inserting after the period at the end of the first 
        sentence the following new sentence: ``Such improvements may 
        also include the installation of energy and water conserving 
        fixtures and fittings that conform to the American Society of 
        Mechanical Engineers/American National Standards Institute 
        standards A112.19.2-1998 and A112.18.1-2000, or any revision 
        thereto, applicable at the time of installation.''.

SEC. 146. NORTH AMERICAN DEVELOPMENT BANK.

    Part 2 of subtitle D of title V of the North American Free Trade 
Agreement Implementation Act (22 U.S.C. 290m-290m-3) is amended by 
adding at the end the following:

``SEC. 545. SUPPORT FOR CERTAIN ENERGY POLICIES.

    ``Consistent with the focus of the Bank's Charter on environmental 
infrastructure projects, the Board members representing the United 
States should use their voice and vote to encourage the Bank to finance 
projects related to clean and efficient energy, including energy 
conservation, that prevent, control, or reduce environmental pollutants 
or contaminants.''.

SEC. 147. ENERGY-EFFICIENT APPLIANCES.

    In purchasing appliances, a public housing agency shall purchase 
energy-efficient appliances that are Energy Star products or FEMP-
designated products, as such terms are defined in section 553 of the 
National Energy Conservation Policy Act (as amended by this title), 
unless the purchase of energy-efficient appliances is not cost-
effective to the agency.

SEC. 148. ENERGY EFFICIENCY STANDARDS.

    Section 109 of the Cranston-Gonzalez National Affordable Housing 
Act (42 U.S.C. 12709) is amended--
            (1) in subsection (a)--
                    (A) in paragraph (1)--
                            (i) by striking ``1 year after the date of 
                        the enactment of the Energy Policy Act of 
                        1992'' and inserting ``September 30, 2004'';
                            (ii) in subparagraph (A), by striking 
                        ``and'' at the end;
                            (iii) in subparagraph (B), by striking the 
                        period at the end and inserting ``; and''; and
                            (iv) by adding at the end the following:
                    ``(C) rehabilitation and new construction of public 
                and assisted housing funded by HOPE VI revitalization 
                grants under section 24 of the United States Housing 
                Act of 1937 (42 U.S.C. 1437v), where such standards are 
                determined to be cost effective by the Secretary of 
                Housing and Urban Development.''; and
                    (B) in paragraph (2), by striking ``Council of 
                American'' and all that follows through ``90.1-1989')'' 
                and inserting ``2003 International Energy Conservation 
                Code'';
            (2) in subsection (b)--
                    (A) by striking ``within 1 year after the date of 
                the enactment of the Energy Policy Act of 1992'' and 
                inserting ``by September 30, 2004''; and
                    (B) by striking ``CABO'' and all that follows 
                through ``1989'' and inserting ``the 2003 International 
                Energy Conservation Code''; and
            (3) in subsection (c)--
                    (A) in the heading, by striking ``Model Energy 
                Code'' and inserting ``The International Energy 
                Conservation Code''; and
                    (B) by striking ``CABO'' and all that follows 
                through ``1989'' and inserting ``the 2003 International 
                Energy Conservation Code''.

SEC. 149. ENERGY STRATEGY FOR HUD.

    The Secretary of Housing and Urban Development shall develop and 
implement an integrated strategy to reduce utility expenses through 
cost-effective energy conservation and efficiency measures and energy 
efficient design and construction of public and assisted housing. The 
energy strategy shall include the development of energy reduction goals 
and incentives for public housing agencies. The Secretary shall submit 
a report to Congress, not later than 1 year after the date of the 
enactment of this Act, on the energy strategy and the actions taken by 
the Department of Housing and Urban Development to monitor the energy 
usage of public housing agencies and shall submit an update every 2 
years thereafter on progress in implementing the strategy.

                       TITLE II--RENEWABLE ENERGY

                     Subtitle A--General Provisions

SEC. 201. ASSESSMENT OF RENEWABLE ENERGY RESOURCES.

    (a) Resource Assessment.--Not later than 6 months after the date of 
enactment of this Act, and each year thereafter, the Secretary of 
Energy shall review the available assessments of renewable energy 
resources within the United States, including solar, wind, biomass, 
ocean (tidal, wave, current, and thermal), geothermal, and 
hydroelectric energy resources, and undertake new assessments as 
necessary, taking into account changes in market conditions, available 
technologies, and other relevant factors.
    (b) Contents of Reports.--Not later than 1 year after the date of 
enactment of this Act, and each year thereafter, the Secretary shall 
publish a report based on the assessment under subsection (a). The 
report shall contain--
            (1) a detailed inventory describing the available amount 
        and characteristics of the renewable energy resources; and
            (2) such other information as the Secretary believes would 
        be useful in developing such renewable energy resources, 
        including descriptions of surrounding terrain, population and 
        load centers, nearby energy infrastructure, location of energy 
        and water resources, and available estimates of the costs 
        needed to develop each resource, together with an 
        identification of any barriers to providing adequate 
        transmission for remote sources of renewable energy resources 
        to current and emerging markets, recommendations for removing 
        or addressing such barriers, and ways to provide access to the 
        grid that do not unfairly disadvantage renewable or other 
        energy producers.
    (c) Authorization of Appropriations.--For the purposes of this 
section, there are authorized to be appropriated to the Secretary of 
Energy $10,000,000 for each of fiscal years 2004 through 2008.

SEC. 202. RENEWABLE ENERGY PRODUCTION INCENTIVE.

    (a) Incentive Payments.--Section 1212(a) of the Energy Policy Act 
of 1992 (42 U.S.C. 13317(a)) is amended by striking ``and which 
satisfies'' and all that follows through ``Secretary shall establish.'' 
and inserting ``. If there are insufficient appropriations to make full 
payments for electric production from all qualified renewable energy 
facilities in any given year, the Secretary shall assign 60 percent of 
appropriated funds for that year to facilities that use solar, wind, 
geothermal, or closed-loop (dedicated energy crops) biomass 
technologies to generate electricity, and assign the remaining 40 
percent to other projects. The Secretary may, after transmitting to 
Congress an explanation of the reasons therefor, alter the percentage 
requirements of the preceding sentence.''.
    (b) Qualified Renewable Energy Facility.--Section 1212(b) of the 
Energy Policy Act of 1992 (42 U.S.C. 13317(b)) is amended--
            (1) by striking ``a State or any political'' and all that 
        follows through ``nonprofit electrical cooperative'' and 
        inserting ``a not-for-profit electric cooperative, a public 
        utility described in section 115 of the Internal Revenue Code 
        of 1986, a State, Commonwealth, territory, or possession of the 
        United States or the District of Columbia, or a political 
        subdivision thereof, or an Indian tribal government or 
        subdivision thereof,''; and
            (2) by inserting ``landfill gas,'' after ``wind, 
        biomass,''.
    (c) Eligibility Window.--Section 1212(c) of the Energy Policy Act 
of 1992 (42 U.S.C. 13317(c)) is amended by striking ``during the 10-
fiscal year period beginning with the first full fiscal year occurring 
after the enactment of this section'' and inserting ``after October 1, 
2003, and before October 1, 2013''.
    (d) Amount of Payment.--Section 1212(e)(1) of the Energy Policy Act 
of 1992 (42 U.S.C. 13317(e)(1)) is amended by inserting ``landfill 
gas,'' after ``wind, biomass,''.
    (e) Sunset.--Section 1212(f) of the Energy Policy Act of 1992 (42 
U.S.C. 13317(f)) is amended by striking ``the expiration of'' and all 
that follows through ``of this section'' and inserting ``September 30, 
2023''.
    (f) Authorization of Appropriations.--Section 1212(g) of the Energy 
Policy Act of 1992 (42 U.S.C. 13317(g)) is amended to read as follows:
    ``(g) Authorization of Appropriations.--
            ``(1) In general.--Subject to paragraph (2), there are 
        authorized to be appropriated such sums as may be necessary to 
        carry out this section for fiscal years 2003 through 2023.
            ``(2) Availability of funds.--Funds made available under 
        paragraph (1) shall remain available until expended.''.

SEC. 203. FEDERAL PURCHASE REQUIREMENT.

    (a) Requirement.--The President, acting through the Secretary of 
Energy, shall seek to ensure that, to the extent economically feasible 
and technically practicable, of the total amount of electric energy the 
Federal Government consumes during any fiscal year, the following 
amounts shall be renewable energy:
            (1) Not less than 3 percent in fiscal years 2005 through 
        2007.
            (2) Not less than 5 percent in fiscal years 2008 through 
        2010.
            (3) Not less than 7.5 percent in fiscal year 2011 and each 
        fiscal year thereafter.
    (b) Definitions.--In this section:
            (1) Biomass.--The term ``biomass'' means any solid, 
        nonhazardous, cellulosic material that is derived from--
                    (A) any of the following forest-related resources: 
                mill residues, precommercial thinnings, slash, and 
                brush, or nonmerchantable material;
                    (B) solid wood waste materials, including waste 
                pallets, crates, dunnage, manufacturing and 
                construction wood wastes (other than pressure-treated, 
                chemically-treated, or painted wood wastes), and 
                landscape or right-of-way tree trimmings, but not 
                including municipal solid waste (garbage), gas derived 
                from the biodegradation of solid waste, or paper that 
                is commonly recycled;
                    (C) agriculture wastes, including orchard tree 
                crops, vineyard, grain, legumes, sugar, and other crop 
                by-products or residues, and livestock waste nutrients; 
                or
                    (D) a plant that is grown exclusively as a fuel for 
                the production of electricity.
            (2) Renewable energy.--The term ``renewable energy'' means 
        electric energy generated from solar, wind, biomass, landfill 
        gas, geothermal, municipal solid waste, or new hydroelectric 
        generation capacity achieved from increased efficiency or 
        additions of new capacity at an existing hydroelectric project.
    (c) Calculation.--For purposes of determining compliance with the 
requirement of this section, the amount of renewable energy shall be 
doubled if--
            (1) the renewable energy is produced and used on-site at a 
        Federal facility;
            (2) the renewable energy is produced on Federal lands and 
        used at a Federal facility; or
            (3) the renewable energy is produced on Indian land as 
        defined in title XXVI of the Energy Policy Act of 1992 (25 
        U.S.C. 3501 et seq.) and used at a Federal facility.
    (d) Report.--Not later than April 15, 2005, and every 2 years 
thereafter, the Secretary of Energy shall provide a report to Congress 
on the progress of the Federal Government in meeting the goals 
established by this section.

SEC. 204. INSULAR AREAS ENERGY SECURITY.

    Section 604 of the Act entitled ``An Act to authorize 
appropriations for certain insular areas of the United States, and for 
other purposes'', approved December 24, 1980 (48 U.S.C. 1492), is 
amended--
            (1) in subsection (a)(4) by striking the period and 
        inserting a semicolon;
            (2) by adding at the end of subsection (a) the following 
        new paragraphs:
            ``(5) electric power transmission and distribution lines in 
        insular areas are inadequate to withstand damage caused by the 
        hurricanes and typhoons which frequently occur in insular areas 
        and such damage often costs millions of dollars to repair; and
            ``(6) the refinement of renewable energy technologies since 
        the publication of the 1982 Territorial Energy Assessment 
        prepared pursuant to subsection (c) reveals the need to 
        reassess the state of energy production, consumption, 
        infrastructure, reliance on imported energy, opportunities for 
        energy conservation and increased energy efficiency, and 
        indigenous sources in regard to the insular areas.'';
            (3) by amending subsection (e) to read as follows:
    ``(e)(1) The Secretary of the Interior, in consultation with the 
Secretary of Energy and the head of government of each insular area, 
shall update the plans required under subsection (c) by--
            ``(A) updating the contents required by subsection (c);
            ``(B) drafting long-term energy plans for such insular 
        areas with the objective of reducing, to the extent feasible, 
        their reliance on energy imports by the year 2010, increasing 
        energy conservation and energy efficiency, and maximizing, to 
        the extent feasible, use of indigenous energy sources; and
            ``(C) drafting long-term energy transmission line plans for 
        such insular areas with the objective that the maximum 
        percentage feasible of electric power transmission and 
        distribution lines in each insular area be protected from 
        damage caused by hurricanes and typhoons.
    ``(2) Not later than December 31, 2005, the Secretary of the 
Interior shall submit to Congress the updated plans for each insular 
area required by this subsection.''; and
            (4) by amending subsection (g)(4) to read as follows:
            ``(4) Power line grants for insular areas.--
                    ``(A) In general.--The Secretary of the Interior is 
                authorized to make grants to governments of insular 
                areas of the United States to carry out eligible 
                projects to protect electric power transmission and 
                distribution lines in such insular areas from damage 
                caused by hurricanes and typhoons.
                    ``(B) Eligible projects.--The Secretary may award 
                grants under subparagraph (A) only to governments of 
                insular areas of the United States that submit written 
                project plans to the Secretary for projects that meet 
                the following criteria:
                            ``(i) The project is designed to protect 
                        electric power transmission and distribution 
                        lines located in 1 or more of the insular areas 
                        of the United States from damage caused by 
                        hurricanes and typhoons.
                            ``(ii) The project is likely to 
                        substantially reduce the risk of future damage, 
                        hardship, loss, or suffering.
                            ``(iii) The project addresses 1 or more 
                        problems that have been repetitive or that pose 
                        a significant risk to public health and safety.
                            ``(iv) The project is not likely to cost 
                        more than the value of the reduction in direct 
                        damage and other negative impacts that the 
                        project is designed to prevent or mitigate. The 
                        cost benefit analysis required by this 
                        criterion shall be computed on a net present 
                        value basis.
                            ``(v) The project design has taken into 
                        consideration long-term changes to the areas 
                        and persons it is designed to protect and has 
                        manageable future maintenance and modification 
                        requirements.
                            ``(vi) The project plan includes an 
                        analysis of a range of options to address the 
                        problem it is designed to prevent or mitigate 
                        and a justification for the selection of the 
                        project in light of that analysis.
                            ``(vii) The applicant has demonstrated to 
                        the Secretary that the matching funds required 
                        by subparagraph (D) are available.
                    ``(C) Priority.--When making grants under this 
                paragraph, the Secretary shall give priority to grants 
                for projects which are likely to--
                            ``(i) have the greatest impact on reducing 
                        future disaster losses; and
                            ``(ii) best conform with plans that have 
                        been approved by the Federal Government or the 
                        government of the insular area where the 
                        project is to be carried out for development or 
                        hazard mitigation for that insular area.
                    ``(D) Matching requirement.--The Federal share of 
                the cost for a project for which a grant is provided 
                under this paragraph shall not exceed 75 percent of the 
                total cost of that project. The non-Federal share of 
                the cost may be provided in the form of cash or 
                services.
                    ``(E) Treatment of funds for certain purposes.--
                Grants provided under this paragraph shall not be 
                considered as income, a resource, or a duplicative 
                program when determining eligibility or benefit levels 
                for Federal major disaster and emergency assistance.
                    ``(F) Authorization of appropriations.--There are 
                authorized to be appropriated to carry out this 
                paragraph $5,000,000 for each fiscal year beginning 
                after the date of the enactment of this paragraph.''.

SEC. 205. USE OF PHOTOVOLTAIC ENERGY IN PUBLIC BUILDINGS.

    (a) In General.--Subchapter VI of chapter 31 of title 40, United 
States Code, is amended by adding at the end the following:
``Sec. 3177. Use of photovoltaic energy in public buildings
    ``(a) Photovoltaic Energy Commercialization Program.--
            ``(1) In general.--The Administrator of General Services 
        may establish a photovoltaic energy commercialization program 
        for the procurement and installation of photovoltaic solar 
        electric systems for electric production in new and existing 
        public buildings.
            ``(2) Purposes.--The purposes of the program shall be to 
        accomplish the following:
                    ``(A) To accelerate the growth of a commercially 
                viable photovoltaic industry to make this energy system 
                available to the general public as an option which can 
                reduce the national consumption of fossil fuel.
                    ``(B) To reduce the fossil fuel consumption and 
                costs of the Federal Government.
                    ``(C) To attain the goal of installing solar energy 
                systems in 20,000 Federal buildings by 2010, as 
                contained in the Federal Government's Million Solar 
                Roof Initiative of 1997.
                    ``(D) To stimulate the general use within the 
                Federal Government of life-cycle costing and innovative 
                procurement methods.
                    ``(E) To develop program performance data to 
                support policy decisions on future incentive programs 
                with respect to energy.
            ``(3) Acquisition of photovoltaic solar electric systems.--
                    ``(A) In general.--The program shall provide for 
                the acquisition of photovoltaic solar electric systems 
                and associated storage capability for use in public 
                buildings.
                    ``(B) Acquisition levels.--The acquisition of 
                photovoltaic electric systems shall be at a level 
                substantial enough to allow use of low-cost production 
                techniques with at least 150 megawatts (peak) 
                cumulative acquired during the 5 years of the program.
            ``(4) Administration.--The Administrator shall administer 
        the program and shall--
                    ``(A) issue such rules and regulations as may be 
                appropriate to monitor and assess the performance and 
                operation of photovoltaic solar electric systems 
                installed pursuant to this subsection;
                    ``(B) develop innovative procurement strategies for 
                the acquisition of such systems; and
                    ``(C) transmit to Congress an annual report on the 
                results of the program.
    ``(b) Photovoltaic Systems Evaluation Program.--
            ``(1) In general.--Not later than 60 days after the date of 
        enactment of this section, the Administrator, in consultation 
        with the Secretary of Energy, shall establish a photovoltaic 
        solar energy systems evaluation program to evaluate such 
        photovoltaic solar energy systems as are required in public 
        buildings.
            ``(2) Program requirement.--In evaluating photovoltaic 
        solar energy systems under the program, the Administrator shall 
        ensure that such systems reflect the most advanced technology.
    ``(c) Authorization of Appropriations.--
            ``(1) Photovoltaic energy commercialization program.--There 
        are authorized to be appropriated to carry out subsection (a) 
        $50,000,000 for each of fiscal years 2004 through 2008. Such 
        sums shall remain available until expended.
            ``(2) Photovoltaic systems evaluation program.--There are 
        authorized to be appropriated to carry out subsection (b) 
        $10,000,000 for each of fiscal years 2004 through 2008. Such 
        sums shall remain available until expended.''.
    (b) Conforming Amendment.--The section analysis for such chapter is 
amended by inserting after the item relating to section 3176 the 
following:

``3177. Use of photovoltaic energy in public buildings.''.

SEC. 206. GRANTS TO IMPROVE THE COMMERCIAL VALUE OF FOREST BIOMASS FOR 
              ELECTRIC ENERGY, USEFUL HEAT, TRANSPORTATION FUELS, 
              PETROLEUM-BASED PRODUCT SUBSTITUTES, AND OTHER COMMERCIAL 
              PURPOSES.

    (a) Findings.--Congress finds the following:
            (1) Thousands of communities in the United States, many 
        located near Federal lands, are at risk to wildfire. 
        Approximately 190,000,000 acres of land managed by the 
        Secretary of Agriculture and the Secretary of the Interior are 
        at risk of catastrophic fire in the near future. The 
        accumulation of heavy forest fuel loads continues to increase 
        as a result of disease, insect infestations, and drought, 
        further raising the risk of fire each year.
            (2) In addition, more than 70,000,000 acres across all land 
        ownerships are at risk to higher than normal mortality over the 
        next 15 years from insect infestation and disease. High levels 
        of tree mortality from insects and disease result in increased 
        fire risk, loss of old growth, degraded watershed conditions, 
        and changes in species diversity and productivity, as well as 
        diminished fish and wildlife habitat and decreased timber 
        values.
            (3) Preventive treatments such as removing fuel loading, 
        ladder fuels, and hazard trees, planting proper species mix and 
        restoring and protecting early successional habitat, and other 
        specific restoration treatments designed to reduce the 
        susceptibility of forest land, woodland, and rangeland to 
        insect outbreaks, disease, and catastrophic fire present the 
        greatest opportunity for long-term forest health by creating a 
        mosaic of species-mix and age distribution. Such prevention 
        treatments are widely acknowledged to be more successful and 
        cost effective than suppression treatments in the case of 
        insects, disease, and fire.
            (4) The byproducts of preventive treatment (wood, brush, 
        thinnings, chips, slash, and other hazardous fuels) removed 
        from forest lands, woodlands and rangelands represent an 
        abundant supply of biomass for biomass-to-energy facilities and 
        raw material for business. There are currently few markets for 
        the extraordinary volumes of byproducts being generated as a 
        result of the necessary large-scale preventive treatment 
        activities.
            (5) The United States should--
                    (A) promote economic and entrepreneurial 
                opportunities in using byproducts removed through 
                preventive treatment activities related to hazardous 
                fuels reduction, disease, and insect infestation; and
                    (B) develop and expand markets for traditionally 
                underused wood and biomass as an outlet for byproducts 
                of preventive treatment activities.
    (b) Definitions.--In this section:
            (1) Biomass.--The term ``biomass'' means trees and woody 
        plants, including limbs, tops, needles, and other woody parts, 
        and byproducts of preventive treatment, such as wood, brush, 
        thinnings, chips, and slash, that are removed--
                    (A) to reduce hazardous fuels; or
                    (B) to reduce the risk of or to contain disease or 
                insect infestation.
            (2) Indian tribe.--The term ``Indian tribe'' has the 
        meaning given the term in section 4(e) of the Indian Self-
        Determination and Education Assistance Act (25 U.S.C. 450b(e)).
            (3) Person.--The term ``person'' includes--
                    (A) an individual;
                    (B) a community (as determined by the Secretary 
                concerned);
                    (C) an Indian tribe;
                    (D) a small business, micro-business, or a 
                corporation that is incorporated in the United States; 
                and
                    (E) a nonprofit organization.
            (4) Preferred community.--The term ``preferred community'' 
        means--
                    (A) any town, township, municipality, or other 
                similar unit of local government (as determined by the 
                Secretary concerned) that--
                            (i) has a population of not more than 
                        50,000 individuals; and
                            (ii) the Secretary concerned, in the sole 
                        discretion of the Secretary concerned, 
                        determines contains or is located near land, 
                        the condition of which is at significant risk 
                        of catastrophic wildfire, disease, or insect 
                        infestation or which suffers from disease or 
                        insect infestation; or
                    (B) any county that--
                            (i) is not contained within a metropolitan 
                        statistical area; and
                            (ii) the Secretary concerned, in the sole 
                        discretion of the Secretary concerned, 
                        determines contains or is located near land, 
                        the condition of which is at significant risk 
                        of catastrophic wildfire, disease, or insect 
                        infestation or which suffers from disease or 
                        insect infestation.
            (5) Secretary concerned.--The term ``Secretary concerned'' 
        means--
                    (A) the Secretary of Agriculture with respect to 
                National Forest System lands; and
                    (B) the Secretary of the Interior with respect to 
                Federal lands under the jurisdiction of the Secretary 
                of the Interior and Indian lands.
    (c) Biomass Commercial Use Grant Program.--
            (1) In general.--The Secretary concerned may make grants to 
        any person that owns or operates a facility that uses biomass 
        as a raw material to produce electric energy, sensible heat, 
        transportation fuels, or substitutes for petroleum-based 
        products to offset the costs incurred to purchase biomass for 
        use by such facility.
            (2) Grant amounts.--A grant under this subsection may not 
        exceed $20 per green ton of biomass delivered.
            (3) Monitoring of grant recipient activities.--As a 
        condition of a grant under this subsection, the grant recipient 
        shall keep such records as the Secretary concerned may require 
        to fully and correctly disclose the use of the grant funds and 
        all transactions involved in the purchase of biomass. Upon 
        notice by a representative of the Secretary concerned, the 
        grant recipient shall afford the representative reasonable 
        access to the facility that purchases or uses biomass and an 
        opportunity to examine the inventory and records of the 
        facility.
    (d) Improved Biomass Use Grant Program.--
            (1) In general.--The Secretary concerned may make grants to 
        persons to offset the cost of projects to develop or research 
        opportunities to improve the use of, or add value to, biomass. 
        In making such grants, the Secretary concerned shall give 
        preference to persons in preferred communities.
            (2) Selection.--The Secretary concerned shall select a 
        grant recipient under paragraph (1) after giving consideration 
        to the anticipated public benefits of the project, including 
        the potential to develop thermal or electric energy resources 
        or affordable energy, opportunities for the creation or 
        expansion of small businesses and micro-businesses, and the 
        potential for new job creation.
            (3) Grant amount.--A grant under this subsection may not 
        exceed $500,000.
    (e) Authorization of Appropriations.--There are authorized to be 
appropriated $50,000,000 for each of the fiscal years 2004 through 2014 
to carry out this section.
    (f) Report.--Not later than October 1, 2010, the Secretary of 
Agriculture, in consultation with the Secretary of the Interior, shall 
submit to the Committee on Energy and Natural Resources and the 
Committee on Agriculture, Nutrition, and Forestry of the Senate and the 
Committee on Resources, the Committee on Energy and Commerce, and the 
Committee on Agriculture of the House of Representatives a report 
describing the results of the grant programs authorized by this 
section. The report shall include the following:
            (1) An identification of the size, type, and the use of 
        biomass by persons that receive grants under this section.
            (2) The distance between the land from which the biomass 
        was removed and the facility that used the biomass.
            (3) The economic impacts, particularly new job creation, 
        resulting from the grants to and operation of the eligible 
        operations.

SEC. 207. BIOBASED PRODUCTS.

    Section 9002(c)(1) of the Farm Security and Rural Investment Act of 
2002 (7 U.S.C. 8102(c)(1)) is amended by inserting ``or such items that 
comply with the regulations issued under section 103 of Public Law 100-
556 (42 U.S.C. 6914b-1)'' after ``practicable''.

                     Subtitle B--Geothermal Energy

SEC. 211. SHORT TITLE.

    This subtitle may be cited as the ``John Rishel Geothermal Steam 
Act Amendments of 2003''.

SEC. 212. COMPETITIVE LEASE SALE REQUIREMENTS.

    Section 4 of the Geothermal Steam Act of 1970 (30 U.S.C. 1003) is 
amended to read as follows:

``SEC. 4. LEASING PROCEDURES.

    ``(a) Nominations.--The Secretary shall accept nominations of lands 
to be leased at any time from qualified companies and individuals under 
this Act.
    ``(b) Competitive Lease Sale Required.--The Secretary shall hold a 
competitive lease sale at least once every 2 years for lands in a State 
which has nominations pending under subsection (a) if such lands are 
otherwise available for leasing.
    ``(c) Noncompetitive Leasing.--The Secretary shall make available 
for a period of 2 years for noncompetitive leasing any tract for which 
a competitive lease sale is held, but for which the Secretary does not 
receive any bids in a competitive lease sale.
    ``(d) Leases Sold As a Block.--If information is available to the 
Secretary indicating a geothermal resource that could be produced as 1 
unit can reasonably be expected to underlie more than 1 parcel to be 
offered in a competitive lease sale, the parcels for such a resource 
may be offered for bidding as a block in the competitive lease sale.
    ``(e) Pending Lease Applications on April 1, 2003.--It shall be a 
priority for the Secretary of the Interior, and for the Secretary of 
Agriculture with respect to National Forest Systems lands, to ensure 
timely completion of administrative actions necessary to process 
applications for geothermal leasing pending on April 1, 2003. Such an 
application, and any lease issued pursuant to such an application--
            ``(1) except as provided in paragraph (2), shall be subject 
        to this section as in effect on April 1, 2003; or
            ``(2) at the election of the applicant, shall be subject to 
        this section as in effect on the effective date of this 
        paragraph.''.

SEC. 213. DIRECT USE.

    (a) Fees for Direct Use.--Section 5 of the Geothermal Steam Act of 
1970 (30 U.S.C. 1004) is amended--
            (1) in paragraph (c) by redesignating subparagraphs (1) and 
        (2) as subparagraphs (A) and (B);
            (2) by redesignating paragraphs (a) through (d) in order as 
        paragraphs (1) through (4);
            (3) by inserting ``(a) In General.--'' after ``Sec. 5.''; 
        and
            (4) by adding at the end the following:
    ``(b) Direct Use.--Notwithstanding subsection (a)(1), with respect 
to the direct use of geothermal resources for purposes other than the 
commercial generation of electricity, the Secretary of the Interior 
shall establish a schedule of fees and collect fees pursuant to such a 
schedule in lieu of royalties based upon the total amount of the 
geothermal resources used. The schedule of fees shall ensure that there 
is a fair return to the public for the use of a geothermal resource 
based upon comparable fees charged for direct use of geothermal 
resources by States or private persons. For direct use by a State or 
local government for public purposes there shall be no royalty and the 
fee charged shall be nominal. Leases in existence on the date of 
enactment of the Energy Policy Act of 2003 shall be modified in order 
to reflect the provisions of this subsection.''.
    (b) Leasing for Direct Use.--Section 4 of the Geothermal Steam Act 
of 1970 (30 U.S.C. 1003) is further amended by adding at the end the 
following:
    ``(f) Leasing for Direct Use of Geothermal Resources.--Lands leased 
under this Act exclusively for direct use of geothermal resources shall 
be leased to any qualified applicant who first applies for such a lease 
under regulations issued by the Secretary, if--
            ``(1) the Secretary publishes a notice of the lands 
        proposed for leasing 60 days before the date of the issuance of 
        the lease; and
            ``(2) the Secretary does not receive in the 60-day period 
        beginning on the date of such publication any nomination to 
        include the lands concerned in the next competitive lease sale.
    ``(g) Area Subject to Lease for Direct Use.--A geothermal lease for 
the direct use of geothermal resources shall embrace not more than the 
amount of acreage determined by the Secretary to be reasonably 
necessary for such proposed utilization.''.
    (c) Existing Leases With a Direct Use Facility.--
            (1) Application to convert.--Any lessee under a lease under 
        the Geothermal Steam Act of 1970 that was issued before the 
        date of the enactment of this Act may apply to the Secretary of 
        the Interior, by not later than 18 months after the date of the 
        enactment of this Act, to convert such lease to a lease for 
        direct utilization of geothermal resources in accordance with 
        the amendments made by this section.
            (2) Conversion.--The Secretary shall approve such an 
        application and convert such a lease to a lease in accordance 
        with the amendments by not later than 180 days after receipt of 
        such application, unless the Secretary determines that the 
        applicant is not a qualified applicant with respect to the 
        lease.
            (3) Application of new lease terms.--The amendment made by 
        subsection (a)(4) shall apply with respect to payments under a 
        lease converted under this subsection that are due and owing to 
        the United States on or after July 16, 2003.

SEC. 214. ROYALTIES AND NEAR-TERM PRODUCTION INCENTIVES.

    (a) Royalty.--Section 5 of the Geothermal Steam Act of 1970 (30 
U.S.C. 1004) is further amended--
            (1) in subsection (a) by striking paragraph (1) and 
        inserting the following:
            ``(1) a royalty on electricity produced using geothermal 
        steam and associated geothermal resources, other than direct 
        use of geothermal resources, that shall be--
                    ``(A) not less than 1 percent and not more than 2.5 
                percent of the gross proceeds from the sale of 
                electricity produced from such resources during the 
first 10 years of production under the lease; and
                    ``(B) not less than 2 and not more than 5 percent 
                of the gross proceeds from the sale of electricity 
                produced from such resources during each year after 
                such 10-year period;''; and
            (2) by adding at the end the following:
    ``(c) Final Regulation Establishing Royalty Rates.--In issuing any 
final regulation establishing royalty rates under this section, the 
Secretary shall seek--
            ``(1) to provide lessees a simplified administrative 
        system;
            ``(2) to encourage new development; and
            ``(3) to achieve the same long-term level of royalty 
        revenues to States and counties as the regulation in effect on 
        the date of enactment of this subsection.
    ``(d) Credits for In-Kind Payments of Electricity.--The Secretary 
may provide to a lessee a credit against royalties owed under this Act, 
in an amount equal to the value of electricity provided under contract 
to a State or county government that is entitled to a portion of such 
royalties under section 20 of this Act, section 35 of the Mineral 
Leasing Act (30 U.S.C. 191), or section 6 of the Mineral Leasing Act 
for Acquired Lands (30 U.S.C. 355), if--
            ``(1) the Secretary has approved in advance the contract 
        between the lessee and the State or county government for such 
        in-kind payments;
            ``(2) the contract establishes a specific methodology to 
        determine the value of such credits; and
            ``(3) the maximum credit will be equal to the royalty value 
        owed to the State or county that is a party to the contract and 
        the electricity received will serve as the royalty payment from 
        the Federal Government to that entity.''.
    (b) Disposal of Moneys From Sales, Bonuses, Royalties, and 
Rentals.--Section 20 of the Geothermal Steam Act of 1970 (30 U.S.C. 
1019) is amended to read as follows:

``SEC. 20. DISPOSAL OF MONEYS FROM SALES, BONUSES, RENTALS, AND 
              ROYALTIES.

    ``(a) In General.--Except with respect to lands in the State of 
Alaska, all monies received by the United States from sales, bonuses, 
rentals, and royalties under this Act shall be paid into the Treasury 
of the United States. Of amounts deposited under this subsection, 
subject to the provisions of section 35 of the Mineral Leasing Act (30 
U.S.C. 191(b)) and section 5(a)(2) of this Act--
            ``(1) 50 percent shall be paid to the State within the 
        boundaries of which the leased lands or geothermal resources 
        are or were located; and
            ``(2) 25 percent shall be paid to the County within the 
        boundaries of which the leased lands or geothermal resources 
        are or were located.
    ``(b) Use of Payments.--Amounts paid to a State or county under 
subsection (a) shall be used consistent with the terms of section 35 of 
the Mineral Leasing Act (30 U.S.C. 191).''.
    (c) Near-Term Production Incentive for Existing Leases.--
            (1) In general.--Notwithstanding section 5(a) of the 
        Geothermal Steam Act of 1970, the royalty required to be paid 
        shall be 50 percent of the amount of the royalty otherwise 
        required, on any lease issued before the date of enactment of 
        this Act that does not convert to new royalty terms under 
        subsection (e)--
                    (A) with respect to commercial production of energy 
                from a facility that begins such production in the 6-
                year period beginning on the date of the enactment of 
                this Act; or
                    (B) on qualified expansion geothermal energy.
            (2) 4-year application.--Paragraph (1) applies only to new 
        commercial production of energy from a facility in the first 4 
        years of such production.
            (3) Effective date.--This subsection takes effect on 
        October 1, 2004.
    (d) Definition of Qualified Expansion Geothermal Energy.--In this 
section, the term ``qualified expansion geothermal energy'' means 
geothermal energy produced from a generation facility for which--
            (1) the production is increased by more than 10 percent as 
        a result of expansion of the facility carried out in the 6-year 
        period beginning on the date of the enactment of this Act; and
            (2) such production increase is greater than 10 percent of 
        the average production by the facility during the 5-year period 
        preceding the expansion of the facility.
    (e) Royalty Under Existing Leases.--
            (1) In general.--Any lessee under a lease issued under the 
        Geothermal Steam Act of 1970 before the date of the enactment 
        of this Act may modify the terms of the lease relating to 
        payment of royalties to comply with the amendment made by 
        subsection (a), by applying to the Secretary of the Interior by 
        not later than 18 months after the date of the enactment of 
        this Act.
            (2) Application of modification.--Such modification shall 
        apply to any use of geothermal steam and any associated 
        geothermal resources to which the amendment applies that occurs 
        after the date of that application.
            (3) Consultation.--The Secretary--
                    (A) shall consult with the State and local 
                governments affected by any proposed changes in lease 
                royalty terms under this subsection; and
                    (B) may establish a gross proceeds percentage 
                within the range specified in the amendment made by 
                subsection (a)(1) and with the concurrence of the 
                lessee and the State.

SEC. 215. GEOTHERMAL LEASING AND PERMITTING ON FEDERAL LANDS.

    (a) In General.--Not later than 180 days after the date of the 
enactment of this section, the Secretary of the Interior and the 
Secretary of Agriculture shall enter into and submit to Congress a 
memorandum of understanding in accordance with this section regarding 
leasing and permitting for geothermal development of public lands and 
National Forest System lands under their respective jurisdictions.
    (b) Lease and Permit Applications.--The memorandum of understanding 
shall--
            (1) identify areas with geothermal potential on lands 
        included in the National Forest System and, when necessary, 
        require review of management plans to consider leasing under 
        the Geothermal Steam Act of 1970 (30 U.S.C. 1001 et seq.) as a 
        land use; and
            (2) establish an administrative procedure for processing 
        geothermal lease applications, including lines of authority, 
        steps in application processing, and time limits for 
        application procession.
    (c) Data Retrieval System.--The memorandum of understanding shall 
establish a joint data retrieval system that is capable of tracking 
lease and permit applications and providing to the applicant 
information as to their status within the Departments of the Interior 
and Agriculture, including an estimate of the time required for 
administrative action.

SEC. 216. REVIEW AND REPORT TO CONGRESS.

    The Secretary of the Interior shall promptly review and report to 
Congress not later than 3 years after the date of the enactment of this 
Act regarding the status of all withdrawals from leasing under the 
Geothermal Steam Act of 1970 (30 U.S.C. 1001 et seq.) of Federal lands, 
specifying for each such area whether the basis for such withdrawal 
still applies.

SEC. 217. REIMBURSEMENT FOR COSTS OF NEPA ANALYSES, DOCUMENTATION, AND 
              STUDIES.

    (a) In General.--The Geothermal Steam Act of 1970 (30 U.S.C. 1001 
et seq.) is amended by adding at the end the following:

``SEC. 30. REIMBURSEMENT FOR COSTS OF CERTAIN ANALYSES, DOCUMENTATION, 
              AND STUDIES.

    ``(a) In General.--The Secretary of the Interior may reimburse a 
person that is a lessee, operator, operating rights owner, or applicant 
for any lease under this Act for reasonable amounts paid by the person 
for preparation for the Secretary by a contractor or other person 
selected by the Secretary of any project-level analysis, documentation, 
or related study required pursuant to the National Environmental Policy 
Act of 1969 (42 U.S.C. 4321 et seq.) with respect to the lease.
    ``(b) Conditions.--The Secretary may provide reimbursement under 
subsection (a) only if--
            ``(1) adequate funding to enable the Secretary to timely 
        prepare the analysis, documentation, or related study is not 
        appropriated;
            ``(2) the person paid the costs voluntarily;
            ``(3) the person maintains records of its costs in 
        accordance with regulations issued by the Secretary;
            ``(4) the reimbursement is in the form of a reduction in 
        the Federal share of the royalty required to be paid for the 
        lease for which the analysis, documentation, or related study 
        is conducted, and is agreed to by the Secretary and the person 
        reimbursed prior to commencing the analysis, documentation, or 
        related study; and
            ``(5) the agreement required under paragraph (4) contains 
        provisions--
                    ``(A) reducing royalties owed on lease production 
                based on market prices;
                    ``(B) stipulating an automatic termination of the 
                royalty reduction upon recovery of documented costs; 
                and
                    ``(C) providing a process by which the lessee may 
                seek reimbursement for circumstances in which 
                production from the specified lease is not possible.''.
    (b) Application.--The amendment made by this section shall apply 
with respect to an analysis, documentation, or a related study 
conducted on or after October 1, 2004, for any lease entered into 
before, on, or after the date of enactment of this Act.
    (c) Deadline for Regulations.--The Secretary shall issue 
regulations implementing the amendment made by this section by not 
later than 1 year after the date of enactment of this Act.

SEC. 218. ASSESSMENT OF GEOTHERMAL ENERGY POTENTIAL.

    The Secretary of Interior, acting through the Director of the 
United States Geological Survey and in cooperation with the States, 
shall update the 1978 Assessment of Geothermal Resources, and submit 
that updated assessment to Congress--
            (1) not later than 3 years after the date of enactment of 
        this Act; and
            (2) thereafter as the availability of data and developments 
        in technology warrant.

SEC. 219. COOPERATIVE OR UNIT PLANS.

    Section 18 of the Geothermal Steam Act of 1970 (30 U.S.C. 1017) is 
amended to read as follows:

``SEC. 18. UNIT AND COMMUNITIZATION AGREEMENTS.

    ``(a) Adoption of Units by Lessees.--
            ``(1) In general.--For the purpose of more properly 
        conserving the natural resources of any geothermal reservoir, 
        field, or like area, or any part thereof (whether or not any 
        part of the geothermal field, or like area, is then subject to 
        any Unit Agreement (cooperative plan of development or 
        operation)), lessees thereof and their representatives may 
        unite with each other, or jointly or separately with others, in 
        collectively adopting and operating under a Unit Agreement for 
        such field, or like area, or any part thereof including direct 
        use resources, if determined and certified by the Secretary to 
        be necessary or advisable in the public interest. A majority 
        interest of owners of any single lease shall have the authority 
        to commit that lease to a Unit Agreement. The Secretary of the 
        Interior may also initiate the formation of a Unit Agreement if 
        in the public interest.
            ``(2) Modification of lease requirements by secretary.--The 
        Secretary may, in the discretion of the Secretary, and with the 
        consent of the holders of leases involved, establish, alter, 
        change, or revoke rates of operations (including drilling, 
        operations, production, and other requirements) of such leases 
        and make conditions with reference to such leases, with the 
        consent of the lessees, in connection with the creation and 
        operation of any such Unit Agreement as the Secretary may deem 
        necessary or proper to secure the proper protection of the 
        public interest. Leases with unlike lease terms or royalty 
        rates do not need to be modified to be in the same unit.
    ``(b) Requirement of Plans Under New Leases.--The Secretary--
            ``(1) may provide that geothermal leases issued under this 
        Act shall contain a provision requiring the lessee to operate 
        under such a reasonable Unit Agreement; and
            ``(2) may prescribe such an Agreement under which such 
        lessee shall operate, which shall adequately protect the rights 
        of all parties in interest, including the United States.
    ``(c) Modification of Rate of Prospecting, Development, and 
Production.--The Secretary may require that any Agreement authorized by 
this section that applies to lands owned by the United States contain a 
provision under which authority is vested in the Secretary, or any 
person, committee, or State or Federal officer or agency as may be 
designated in the Agreement to alter or modify from time to time the 
rate of prospecting and development and the quantity and rate of 
production under such an Agreement.
    ``(d) Exclusion From Determination of Holding or Control.--Any 
lands that are subject to any Agreement approved or prescribed by the 
Secretary under this section shall not be considered in determining 
holdings or control under any provision of this Act.
    ``(e) Pooling of Certain Lands.--If separate tracts of lands cannot 
be independently developed and operated to use geothermal steam and 
associated geothermal resources pursuant to any section of this Act--
            ``(1) such lands, or a portion thereof, may be pooled with 
        other lands, whether or not owned by the United States, for 
        purposes of development and operation under a Communitization 
        Agreement providing for an apportionment of production or 
        royalties among the separate tracts of land comprising the 
        production unit, if such pooling is determined by the Secretary 
        to be in the public interest; and
            ``(2) operation or production pursuant to such an Agreement 
        shall be treated as operation or production with respect to 
        each tract of land that is subject to the agreement.
    ``(f) Unit Agreement Review.--No more than 5 years after approval 
of any cooperative or Unit Agreement and at least every 5 years 
thereafter, the Secretary shall review each such Agreement and, after 
notice and opportunity for comment, eliminate from inclusion in such 
Agreement any lands that the Secretary determines are not reasonably 
necessary for Unit operations under the Agreement. Such elimination 
shall be based on scientific evidence, and shall occur only if it is 
determined by the Secretary to be for the purpose of conserving and 
properly managing the geothermal resource. Any land so eliminated shall 
be eligible for an extension under subsection (g) of section 6 if it 
meets the requirements for such an extension.
    ``(g) Drilling or Development Contracts.-- The Secretary may, on 
such conditions as the Secretary may prescribe, approve drilling or 
development contracts made by 1 or more lessees of geothermal leases, 
with 1 or more persons, associations, or corporations if, in the 
discretion of the Secretary, the conservation of natural resources or 
the public convenience or necessity may require or the interests of the 
United States may be best served thereby. All leases operated under 
such approved drilling or development contracts, and interests 
thereunder, shall be excepted in determining holdings or control under 
section 7.
    ``(h) Coordination With State Governments.--The Secretary shall 
coordinate unitization and pooling activities with the appropriate 
State agencies and shall ensure that State leases included in any 
unitization or pooling arrangement are treated equally with Federal 
leases.''.

SEC. 220. ROYALTY ON BYPRODUCTS.

    Section 5 of the Geothermal Steam Act of 1970 (30 U.S.C. 1004) is 
further amended in subsection (a) by striking paragraph (2) and 
inserting the following:
            ``(2) a royalty on any byproduct that is a mineral named in 
        the first section of the Mineral Leasing Act (30 U.S.C. 181), 
        and that is derived from production under the lease, at the 
        rate of the royalty that applies under that Act to production 
        of such mineral under a lease under that Act;''.

SEC. 221. REPEAL OF AUTHORITIES OF SECRETARY TO READJUST TERMS, 
              CONDITIONS, RENTALS, AND ROYALTIES.

    Section 8 of the Geothermal Steam Act of 1970 (30 U.S.C. 1007) is 
amended by repealing subsection (b), and by redesignating subsection 
(c) as subsection (b).

SEC. 222. CREDITING OF RENTAL TOWARD ROYALTY.

    Section 5 of the Geothermal Steam Act of 1970 (30 U.S.C. 1004) is 
further amended--
            (1) in subsection (a)(2) by inserting ``and'' after the 
        semicolon at the end;
            (2) in subsection (a)(3) by striking ``; and'' and 
        inserting a period;
            (3) by striking paragraph (4) of subsection (a); and
            (4) by adding at the end the following:
    ``(e) Crediting of Rental Toward Royalty.--Any annual rental under 
this section that is paid with respect to a lease before the first day 
of the year for which the annual rental is owed shall be credited to 
the amount of royalty that is required to be paid under the lease for 
that year.''.

SEC. 223. LEASE DURATION AND WORK COMMITMENT REQUIREMENTS.

    Section 6 of the Geothermal Steam Act of 1970 (30 U.S.C. 1005) is 
amended--
            (1) by striking so much as precedes subsection (c), and 
        striking subsections (e), (g), (h), (i), and (j);
            (2) by redesignating subsections (c), (d), and (f) in order 
        as subsections (g), (h), and (i); and
            (3) by inserting before subsection (g), as so redesignated, 
        the following:

``SEC. 6. LEASE TERM AND WORK COMMITMENT REQUIREMENTS.

    ``(a) In General.--
            ``(1) Primary term.--A geothermal lease shall be for a 
        primary term of 10 years.
            ``(2) Initial extension.--The Secretary shall extend the 
        primary term of a geothermal lease for 5 years if, for each 
        year after the fifth year of the lease--
                    ``(A) the Secretary determined under subsection (c) 
                that the lessee satisfied the work commitment 
                requirements that applied to the lease for that year; 
                or
                    ``(B) the lessee paid in accordance with subsection 
                (d) the value of any work that was not completed in 
                accordance with those requirements.
            ``(3) Additional extension.--The Secretary shall extend the 
        primary term of a geothermal lease (after an initial extension 
        under paragraph (2)) for an additional 5 years if, for each 
        year of the initial extension under paragraph (2), the 
        Secretary determined under subsection (c) that the lessee 
        satisfied the work commitment requirements that applied to the 
        lease for that year.
    ``(b) Requirement to Satisfy Annual Work Commitment Requirement.--
            ``(1) In general.--The lessee for a geothermal lease shall, 
        for each year after the fifth year of the lease, satisfy work 
        commitment requirements prescribed by the Secretary that apply 
        to the lease for that year.
            ``(2) Prescription of work commitment requirements.--The 
        Secretary shall issue regulations prescribing minimum 
        equivalent dollar value work commitment requirements for 
        geothermal leases, that--
                    ``(A) require that a lessee, in each year after the 
                fifth year of the primary term of a geothermal lease, 
                diligently work to achieve commercial production or 
                utilization of steam under the lease;
                    ``(B) require that in each year to which work 
                commitment requirements under the regulations apply, 
                the lessee shall significantly reduce the amount of 
                work that remains to be done to achieve such production 
                or utilization;
                    ``(C) describe specific work that must be completed 
                by a lessee by the end of each year to which the work 
                commitment requirements apply and factors, such as 
                force majeure events, that suspend or modify the work 
                commitment obligation;
                    ``(D) carry forward and apply to work commitment 
                requirements for a year, work completed in any year in 
                the preceding 3-year period that was in excess of the 
                work required to be performed in that preceding year;
                    ``(E) establish transition rules for leases issued 
                before the date of the enactment of this subsection, 
                including terms under which a lease that is near the 
                end of its term on the date of enactment of this 
                subsection may be extended for up to 2 years--
                            ``(i) to allow achievement of production 
                        under the lease; or
                            ``(ii) to allow the lease to be included in 
                        a producing unit; and
                    ``(F) establish an annual payment that, at the 
                option of the lessee, may be exercised in lieu of 
                meeting any work requirement for a limited number of 
                years that the Secretary determines will not impair 
                achieving diligent development of the geothermal 
                resource.
            ``(3) Termination of application of requirements.--Work 
        commitment requirements prescribed under this subsection shall 
        not apply to a geothermal lease after the date on which 
        geothermal steam is produced or utilized under the lease in 
        commercial quantities.
    ``(c) Determination of Whether Requirements Satisfied.--The 
Secretary shall, by not later than 90 days after the end of each year 
for which work commitment requirements under subsection (b) apply to a 
geothermal lease--
            ``(1) determine whether the lessee has satisfied the 
        requirements that apply for that year;
            ``(2) notify the lessee of that determination; and
            ``(3) in the case of a notification that the lessee did not 
        satisfy work commitment requirements for the year, include in 
        the notification--
                    ``(A) a description of the specific work that was 
                not completed by the lessee in accordance with the 
                requirements; and
                    ``(B) the amount of the dollar value of such work 
                that was not completed, reduced by the amount of 
                expenditures made for work completed in a prior year 
                that is carried forward pursuant to subsection 
                (b)(2)(D).
    ``(d) Payment of Value of Uncompleted Work.--
            ``(1) In general.--If the Secretary notifies a lessee that 
        the lessee failed to satisfy work commitment requirements under 
        subsection (b), the lessee shall pay to the Secretary, by not 
        later than the end of the 60-day period beginning on the date 
        of the notification, the dollar value of work that was not 
        completed by the lessee, in the amount stated in the 
        notification (as reduced under subsection (c)(3)(B)).
            ``(2) Failure to pay value of uncompleted work.--If a 
        lessee fails to pay such amount to the Secretary before the end 
        of that period, the lease shall terminate upon the expiration 
        of the period.
    ``(e) Continuation After Commercial Production or Utilization.--If 
geothermal steam is produced or utilized in commercial quantities 
within the primary term of the lease under subsection (a) (including 
any extension of the lease under subsection (a)), such lease shall 
continue until the date on which geothermal steam is no longer produced 
or utilized in commercial quantities.
    ``(f) Conversion of Geothermal Lease to Mineral Lease.--The lessee 
under a lease that has produced geothermal steam for electrical 
generation, has been determined by the Secretary to be incapable of any 
further commercial production or utilization of geothermal steam, and 
that is producing any valuable byproduct in payable quantities may, 
within 6 months after such determination--
            ``(1) convert the lease to a mineral lease under the 
        Mineral Leasing Act (30 U.S.C. 181 et seq.) or under the 
        Mineral Leasing Act for Acquired Lands (30 U.S.C. 351 et seq.), 
        if the lands that are subject to the lease can be leased under 
        that Act for the production of such byproduct; or
            ``(2) convert the lease to a mining claim under the general 
        mining laws, if the byproduct is a locatable mineral.''.

SEC. 224. ADVANCED ROYALTIES REQUIRED FOR SUSPENSION OF PRODUCTION.

    Section 5 of the Geothermal Steam Act of 1970 (30 U.S.C. 1004) is 
further amended by adding at the end the following:
    ``(f) Advanced Royalties Required for Suspension of Production.--
            ``(1) Continuation of lease following cessation of 
        production.--If, at any time after commercial production under 
        a lease is achieved, production ceases for any cause the lease 
        shall remain in full force and effect--
                    ``(A) during the 1-year period beginning on the 
                date production ceases; and
                    ``(B) after such period if, and so long as, the 
                lessee commences and continues diligently and in good 
                faith until such production is resumed the steps, 
                operations, or procedures necessary to cause a 
                resumption of such production.
            ``(2) If production of heat or energy under a geothermal 
        lease is suspended after the date of any such production for 
        which royalty is required under subsection (a) and the terms of 
        paragraph (1) are not met, the Secretary shall require the 
        lessee, until the end of such suspension, to pay royalty in 
        advance at the monthly pro-rata rate of the average annual rate 
        at which such royalty was paid each year in the 5-year-period 
        preceding the date of suspension.
            ``(3) Paragraph (2) shall not apply if the suspension is 
        required or otherwise caused by the Secretary, the Secretary of 
        a military department, a State or local government, or a force 
        majeure.''.

SEC. 225. ANNUAL RENTAL.

    (a) Annual Rental Rate.--Section 5 of the Geothermal Steam Act of 
1970 (30 U.S.C. 1004) is further amended in subsection (a) in paragraph 
(3) by striking ``$1 per acre or fraction thereof for each year of the 
lease'' and all that follows through the end of the paragraph and 
inserting ``$1 per acre or fraction thereof for each year of the lease 
through the tenth year in the case of a lease awarded in a 
noncompetitive lease sale; or $2 per acre or fraction thereof for the 
first year, $3 per acre or fraction thereof for each of the second 
through tenth years, in the case of a lease awarded in a competitive 
lease sale; and $5 per acre or fraction thereof for each year after the 
10th year thereof for all leases.''.
    (b) Termination of Lease for Failure To Pay Rental.--Section 5 of 
the Geothermal Steam Act of 1970 (30 U.S.C. 1004) is further amended by 
adding at the end the following:
    ``(g) Termination of Lease for Failure To Pay Rental.---
            ``(1) In general.--The Secretary shall terminate any lease 
        with respect to which rental is not paid in accordance with 
        this Act and the terms of the lease under which the rental is 
        required, upon the expiration of the 45-day period beginning on 
        the date of the failure to pay such rental.
            ``(2) Notification.--The Secretary shall promptly notify a 
        lessee that has not paid rental required under the lease that 
        the lease will be terminated at the end of the period referred 
        to in paragraph (1).
            ``(3) Reinstatement.--A lease that would otherwise 
        terminate under paragraph (1) shall not terminate under that 
        paragraph if the lessee pays to the Secretary, before the end 
        of the period referred to in paragraph (1), the amount of 
        rental due plus a late fee equal to 10 percent of such 
        amount.''.

SEC. 226. LEASING AND PERMITTING ON FEDERAL LANDS WITHDRAWN FOR 
              MILITARY PURPOSES.

    Not later than 2 years after the date of enactment of this Act, the 
Secretary of the Interior and the Secretary of Defense, in consultation 
with each military service and with interested States, counties, 
representatives of the geothermal industry, and other persons, shall 
submit to Congress a joint report concerning leasing and permitting 
activities for geothermal energy on Federal lands withdrawn for 
military purposes. Such report shall include the following:
            (1) A description of the Military Geothermal Program, 
        including any differences between it and the non-Military 
        Geothermal Program, including required security procedures, and 
        operational considerations, and discussions as to the 
        differences, and why they are important. Further, the report 
        shall describe revenues or energy provided to the Department of 
        Defense and its facilities, royalty structures, where 
        applicable, and any revenue sharing with States and counties or 
        other benefits between--
                    (A) the implementation of the Geothermal Steam Act 
                of 1970 (30 U.S.C 1001 et seq.) and other applicable 
                Federal law by the Secretary of the Interior; and
                    (B) the administration of geothermal leasing under 
                section 2689 of title 10, United States Code, by the 
                Secretary of Defense.
            (2) If appropriate, a description of the current methods 
        and procedures used to ensure interagency coordination, where 
        needed, in developing renewable energy sources on Federal lands 
        withdrawn for military purposes, and an identification of any 
        new procedures that might be required in the future for the 
        improvement of interagency coordination to ensure efficient 
        processing and administration of leases or contracts for 
        geothermal energy on Federal lands withdrawn for military 
        purposes, consistent with the defense purposes of such 
        withdrawals.
            (3) Recommendations for any legislative or administrative 
        actions that might better achieve increased geothermal 
        production, including a common royalty structure, leasing 
        procedures, or other changes that increase production, offset 
        military operation costs, or enhance the Federal agencies' 
        ability to develop geothermal resources.
Except as provided in this section, nothing in this subtitle shall 
affect the legal status of the Department of the Interior and the 
Department of the Defense with respect to each other regarding 
geothermal leasing and development until such status is changed by law.

SEC. 227. TECHNICAL AMENDMENTS.

    The Geothermal Steam Act of 1970 (30 U.S.C. 1001 et seq.) is 
further amended as follows:
            (1) By striking ``geothermal steam and associated 
        geothermal resources'' each place it appears and inserting 
        ``geothermal resources''.
            (2) Section 2(e) (30 U.S.C. 1001(e)) is amended to read as 
        follows:
            ``(e) `direct use' means utilization of geothermal 
        resources for commercial, residential, agricultural, public 
        facilities, or other energy needs other than the commercial 
        production of electricity; and''.
            (3) Section 21 (30 U.S.C. 1020) is amended by striking 
        ``(a) Within one hundred'' and all that follows through ``(b) 
        Geothermal'' and inserting ``Geothermal''.
            (4) The first section (30 U.S.C. 1001 note) is amended by 
        striking ``That this'' and inserting the following:

``SECTION 1. SHORT TITLE.

    ``This''.
            (5) Section 2 (30 U.S.C. 1001) is amended by striking 
        ``Sec. 2. As'' and inserting the following:

``SEC. 2. DEFINITIONS.

    ``As''.
            (6) Section 3 (30 U.S.C. 1002) is amended by striking 
        ``Sec. 3. Subject'' and inserting the following:

``SEC. 3. LANDS SUBJECT TO GEOTHERMAL LEASING.

    ``Subject''.
            (7) Section 5 (30 U.S.C. 1004) is further amended by 
        striking ``Sec. 5.'', and by inserting immediately before and 
        above subsection (a) the following:

``SEC. 5. RENTS AND ROYALTIES.''.

            (8) Section 7 (30 U.S.C. 1006) is amended by striking 
        ``Sec. 7. A geothermal'' and inserting the following:

``SEC. 7. ACREAGE OF GEOTHERMAL LEASE.

    ``A geothermal''.
            (9) Section 8 (30 U.S.C. 1007) is amended by striking 
        ``Sec. 8. (a) The'' and inserting the following:

``SEC. 8. READJUSTMENT OF LEASE TERMS AND CONDITIONS.

    ``(a) The''.
            (10) Section 9 (30 U.S.C. 1008) is amended by striking 
        ``Sec. 9. If'' and inserting the following:

``SEC. 9. BYPRODUCTS.

    ``If''.
            (11) Section 10 (30 U.S.C. 1009) is amended by striking 
        ``Sec. 10. The'' and inserting the following:

``SEC. 10. RELINQUISHMENT OF GEOTHERMAL RIGHTS.

    ``The''.
            (12) Section 11 (30 U.S.C. 1010) is amended by striking 
        ``Sec. 11. The'' and inserting the following:

``SEC. 11. SUSPENSION OF OPERATIONS AND PRODUCTION.

    ``The''.
            (13) Section 12 (30 U.S.C. 1011) is amended by striking 
        ``Sec. 12. Leases'' and inserting the following:

``SEC. 12. TERMINATION OF LEASES.

    ``Leases''.
            (14) Section 13 (30 U.S.C. 1012) is amended by striking 
        ``Sec. 13. The'' and inserting the following:

``SEC. 13. WAIVER, SUSPENSION, OR REDUCTION OF RENTAL OR ROYALTY.

    ``The''.
            (15) Section 14 (30 U.S.C. 1013) is amended by striking 
        ``Sec. 14. Subject'' and inserting the following:

``SEC. 14. SURFACE LAND USE.

    ``Subject''.
            (16) Section 15 (30 U.S.C. 1014) is amended by striking 
        ``Sec. 15. (a) Geothermal'' and inserting the following:

``SEC. 15. LANDS SUBJECT TO GEOTHERMAL LEASING.

    ``(a) Geothermal''.
            (17) Section 16 (30 U.S.C. 1015) is amended by striking 
        ``Sec. 16. Leases'' and inserting the following:

``SEC. 16. REQUIREMENT FOR LESSEES.

    ``Leases''.
            (18) Section 17 (30 U.S.C. 1016) is amended by striking 
        ``Sec. 17. Administration'' and inserting the following:

``SEC. 17. ADMINISTRATION.

    ``Administration''.
            (19) Section 19 (30 U.S.C. 1018) is amended by striking 
        ``Sec. 19. Upon'' and inserting the following:

``SEC. 19. DATA FROM FEDERAL AGENCIES.

    ``Upon''.
            (20) Section 21 (30 U.S.C. 1020) is further amended by 
        striking ``Sec. 21.'', and by inserting immediately before and 
        above the remainder of that section the following:

``SEC. 21. PUBLICATION IN FEDERAL REGISTER; RESERVATION OF MINERAL 
              RIGHTS.''.

            (21) Section 22 (30 U.S.C. 1021) is amended by striking 
        ``Sec. 22. Nothing'' and inserting the following:

``SEC. 22. FEDERAL EXEMPTION FROM STATE WATER LAWS.

    ``Nothing''.
            (22) Section 23 (30 U.S.C. 1022) is amended by striking 
        ``Sec. 23. (a) All'' and inserting the following:

``SEC. 23. PREVENTION OF WASTE; EXCLUSIVITY.

    ``(a) All''.
            (23) Section 24 (30 U.S.C. 1023) is amended by striking 
        ``Sec. 24. The'' and inserting the following:

``SEC. 24. RULES AND REGULATIONS.

    ``The''.
            (24) Section 25 (30 U.S.C. 1024) is amended by striking 
        ``Sec. 25. As'' and inserting the following:

``SEC. 25. INCLUSION OF GEOTHERMAL LEASING UNDER CERTAIN OTHER LAWS.

    ``As''.
            (25) Section 26 is amended by striking ``Sec. 26. The'' and 
        inserting the following:

``SEC. 26. AMENDMENT.

    ``The''.
            (26) Section 27 (30 U.S.C. 1025) is amended by striking 
        ``Sec. 27. The'' and inserting the following:

``SEC. 27. FEDERAL RESERVATION OF CERTAIN MINERAL RIGHTS.

    ``The''.
            (27) Section 28 (30 U.S.C. 1026) is amended by striking 
        ``Sec. 28. (a)(1) The'' and inserting the following:

``SEC. 28. SIGNIFICANT THERMAL FEATURES.

    ``(a)(1) The''.
            (28) Section 29 (30 U.S.C. 1027) is amended by striking 
        ``Sec. 29. The'' and inserting the following:

``SEC. 29. LAND SUBJECT TO PROHIBITION ON LEASING.

    ``The''.

                       Subtitle C--Hydroelectric

                     PART I--ALTERNATIVE CONDITIONS

SEC. 231. ALTERNATIVE CONDITIONS AND FISHWAYS.

    (a) Federal Reservations.--Section 4(e) of the Federal Power Act 
(16 U.S.C. 797(e)) is amended by inserting after ``adequate protection 
and utilization of such reservation.'' at the end of the first proviso 
the following: ``The license applicant shall be entitled to a 
determination on the record, after opportunity for an expedited agency 
trial-type hearing of any disputed issues of material fact, with 
respect to such conditions. Such hearing may be conducted in accordance 
with procedures established by agency regulation in consultation with 
the Federal Energy Regulatory Commission.''.
    (b) Fishways.--Section 18 of the Federal Power Act (16 U.S.C. 811) 
is amended by inserting after ``and such fishways as may be prescribed 
by the Secretary of Commerce.'' the following: ``The license applicant 
shall be entitled to a determination on the record, after opportunity 
for an expedited agency trial-type hearing of any disputed issues of 
material fact, with respect to such fishways. Such hearing may be 
conducted in accordance with procedures established by agency 
regulation in consultation with the Federal Energy Regulatory 
Commission.''.
    (c) Alternative Conditions and Prescriptions.--Part I of the 
Federal Power Act (16 U.S.C. 791a et seq.) is amended by adding the 
following new section at the end thereof:

``SEC. 33. ALTERNATIVE CONDITIONS AND PRESCRIPTIONS.

    ``(a) Alternative Conditions.--(1) Whenever any person applies for 
a license for any project works within any reservation of the United 
States, and the Secretary of the department under whose supervision 
such reservation falls (referred to in this subsection as `the 
Secretary') deems a condition to such license to be necessary under the 
first proviso of section 4(e), the license applicant may propose an 
alternative condition.
    ``(2) Notwithstanding the first proviso of section 4(e), the 
Secretary shall accept the proposed alternative condition referred to 
in paragraph (1), and the Commission shall include in the license such 
alternative condition, if the Secretary determines, based on 
substantial evidence provided by the license applicant or otherwise 
available to the Secretary, that such alternative condition--
            ``(A) provides for the adequate protection and utilization 
        of the reservation; and
            ``(B) will either--
                    ``(i) cost less to implement; or
                    ``(ii) result in improved operation of the project 
                works for electricity production--
        as compared to the condition initially deemed necessary by the 
        Secretary.
    ``(3) The Secretary shall submit into the public record of the 
Commission proceeding with any condition under section 4(e) or 
alternative condition it accepts under this section, a written 
statement explaining the basis for such condition, and reason for not 
accepting any alternative condition under this section. The written 
statement must demonstrate that the Secretary gave equal consideration 
to the effects of the condition adopted and alternatives not accepted 
on energy supply, distribution, cost, and use; flood control; 
navigation; water supply; and air quality (in addition to the 
preservation of other aspects of environmental quality); based on such 
information as may be available to the Secretary, including information 
voluntarily provided in a timely manner by the applicant and others. 
The Secretary shall also submit, together with the aforementioned 
written statement, all studies, data, and other factual information 
available to the Secretary and relevant to the Secretary's decision.
    ``(4) Nothing in this section shall prohibit other interested 
parties from proposing alternative conditions.
    ``(5) If the Secretary does not accept an applicant's alternative 
condition under this section, and the Commission finds that the 
Secretary's condition would be inconsistent with the purposes of this 
part, or other applicable law, the Commission may refer the dispute to 
the Commission's Dispute Resolution Service. The Dispute Resolution 
Service shall consult with the Secretary and the Commission and issue a 
non-binding advisory within 90 days. The Secretary may accept the 
Dispute Resolution Service advisory unless the Secretary finds that the 
recommendation will not provide for the adequate protection and 
utilization of the reservation. The Secretary shall submit the advisory 
and the Secretary's final written determination into the record of the 
Commission's proceeding.
    ``(b) Alternative Prescriptions.--(1) Whenever the Secretary of the 
Interior or the Secretary of Commerce prescribes a fishway under 
section 18, the license applicant or licensee may propose an 
alternative to such prescription to construct, maintain, or operate a 
fishway.
    ``(2) Notwithstanding section 18, the Secretary of the Interior or 
the Secretary of Commerce, as appropriate, shall accept and prescribe, 
and the Commission shall require, the proposed alternative referred to 
in paragraph (1), if the Secretary of the appropriate department 
determines, based on substantial evidence provided by the licensee or 
otherwise available to the Secretary, that such alternative--
            ``(A) will be no less protective than the fishway initially 
        prescribed by the Secretary; and
            ``(B) will either--
                    ``(i) cost less to implement; or
                    ``(ii) result in improved operation of the project 
                works for electricity production,
        as compared to the fishway initially deemed necessary by the 
        Secretary.
    ``(3) The Secretary concerned shall submit into the public record 
of the Commission proceeding with any prescription under section 18 or 
alternative prescription it accepts under this section, a written 
statement explaining the basis for such prescription, and reason for 
not accepting any alternative prescription under this section. The 
written statement must demonstrate that the Secretary gave equal 
consideration to the effects of the condition adopted and alternatives 
not accepted on energy supply, distribution, cost, and use; flood 
control; navigation; water supply; and air quality (in addition to the 
preservation of other aspects of environmental quality); based on such 
information as may be available to the Secretary, including information 
voluntarily provided in a timely manner by the applicant and others. 
The Secretary shall also submit, together with the aforementioned 
written statement, all studies, data, and other factual information 
available to the Secretary and relevant to the Secretary's decision.
    ``(4) Nothing in this section shall prohibit other interested 
parties from proposing alternative prescriptions.
    ``(5) If the Secretary concerned does not accept an applicant's 
alternative prescription under this section, and the Commission finds 
that the Secretary's prescription would be inconsistent with the 
purposes of this part, or other applicable law, the Commission may 
refer the dispute to the Commission's Dispute Resolution Service. The 
Dispute Resolution Service shall consult with the Secretary and the 
Commission and issue a non-binding advisory within 90 days. The 
Secretary may accept the Dispute Resolution Service advisory unless the 
Secretary finds that the recommendation will be less protective than 
the fishway initially prescribed by the Secretary. The Secretary shall 
submit the advisory and the Secretary's final written determination 
into the record of the Commission's proceeding.''.

                     PART II--ADDITIONAL HYDROPOWER

SEC. 241. HYDROELECTRIC PRODUCTION INCENTIVES.

    (a) Incentive Payments.--For electric energy generated and sold by 
a qualified hydroelectric facility during the incentive period, the 
Secretary of Energy (referred to in this section as the ``Secretary'') 
shall make, subject to the availability of appropriations, incentive 
payments to the owner or operator of such facility. The amount of such 
payment made to any such owner or operator shall be as determined under 
subsection (e) of this section. Payments under this section may only be 
made upon receipt by the Secretary of an incentive payment application 
which establishes that the applicant is eligible to receive such 
payment and which satisfies such other requirements as the Secretary 
deems necessary. Such application shall be in such form, and shall be 
submitted at such time, as the Secretary shall establish.
    (b) Definitions.--For purposes of this section:
            (1) Qualified hydroelectric facility.--The term ``qualified 
        hydroelectric facility'' means a turbine or other generating 
        device owned or solely operated by a non-Federal entity which 
        generates hydroelectric energy for sale and which is added to 
        an existing dam or conduit.
            (2) Existing dam or conduit.--The term ``existing dam or 
        conduit'' means any dam or conduit the construction of which 
        was completed before the date of the enactment of this section 
        and which does not require any construction or enlargement of 
        impoundment or diversion structures (other than repair or 
        reconstruction) in connection with the installation of a 
        turbine or other generating device.
            (3) Conduit.--The term ``conduit'' has the same meaning as 
        when used in section 30(a)(2) of the Federal Power Act (16 
        U.S.C. 823a(a)(2)).
The terms defined in this subsection shall apply without regard to the 
hydroelectric kilowatt capacity of the facility concerned, without 
regard to whether the facility uses a dam owned by a governmental or 
nongovernmental entity, and without regard to whether the facility 
begins operation on or after the date of the enactment of this section.
    (c) Eligibility Window.--Payments may be made under this section 
only for electric energy generated from a qualified hydroelectric 
facility which begins operation during the period of 10 fiscal years 
beginning with the first full fiscal year occurring after the date of 
enactment of this subtitle.
    (d) Incentive Period.--A qualified hydroelectric facility may 
receive payments under this section for a period of 10 fiscal years 
(referred to in this section as the ``incentive period''). Such period 
shall begin with the fiscal year in which electric energy generated 
from the facility is first eligible for such payments.
    (e) Amount of Payment.--
            (1) In general.--Payments made by the Secretary under this 
        section to the owner or operator of a qualified hydroelectric 
        facility shall be based on the number of kilowatt hours of 
        hydroelectric energy generated by the facility during the 
        incentive period. For any such facility, the amount of such 
        payment shall be 1.8 cents per kilowatt hour (adjusted as 
        provided in paragraph (2)), subject to the availability of 
        appropriations under subsection (g), except that no facility 
        may receive more than $750,000 in 1 calendar year.
            (2) Adjustments.--The amount of the payment made to any 
        person under this section as provided in paragraph (1) shall be 
        adjusted for inflation for each fiscal year beginning after 
        calendar year 2003 in the same manner as provided in the 
        provisions of section 29(d)(2)(B) of the Internal Revenue Code 
        of 1986, except that in applying such provisions the calendar 
        year 2003 shall be substituted for calendar year 1979.
    (f) Sunset.--No payment may be made under this section to any 
qualified hydroelectric facility after the expiration of the period of 
20 fiscal years beginning with the first full fiscal year occurring 
after the date of enactment of this subtitle, and no payment may be 
made under this section to any such facility after a payment has been 
made with respect to such facility for a period of 10 fiscal years.
    (g) Authorization of Appropriations.--There are authorized to be 
appropriated to the Secretary to carry out the purposes of this section 
$10,000,000 for each of the fiscal years 2004 through 2013.

SEC. 242. HYDROELECTRIC EFFICIENCY IMPROVEMENT.

    (a) Incentive Payments.--The Secretary of Energy shall make 
incentive payments to the owners or operators of hydroelectric 
facilities at existing dams to be used to make capital improvements in 
the facilities that are directly related to improving the efficiency of 
such facilities by at least 3 percent.
    (b) Limitations.--Incentive payments under this section shall not 
exceed 10 percent of the costs of the capital improvement concerned and 
not more than 1 payment may be made with respect to improvements at a 
single facility. No payment in excess of $750,000 may be made with 
respect to improvements at a single facility.
    (c) Authorization of Appropriations.--There are authorized to be 
appropriated to carry out this section not more than $10,000,000 for 
each of the fiscal years 2004 through 2013.

SEC. 243. SMALL HYDROELECTRIC POWER PROJECTS.

    Section 408(a)(6) of the Public Utility Regulatory Policies Act of 
1978 (16 U.S.C. 2708(a)(6)) is amended by striking ``April 20, 1977'' 
and inserting ``March 4, 2003''.

SEC. 244. INCREASED HYDROELECTRIC GENERATION AT EXISTING FEDERAL 
              FACILITIES.

    (a) In General.--The Secretary of the Interior and the Secretary of 
Energy, in consultation with the Secretary of the Army, shall jointly 
conduct a study of the potential for increasing electric power 
production capability at federally owned or operated water regulation, 
storage, and conveyance facilities.
    (b) Content.--The study under this section shall include 
identification and description in detail of each facility that is 
capable, with or without modification, of producing additional 
hydroelectric power, including estimation of the existing potential for 
the facility to generate hydroelectric power.
    (c) Report.--The Secretaries shall submit to the Committees on 
Energy and Commerce, Resources, and Transportation and Infrastructure 
of the House of Representatives and the Committee on Energy and Natural 
Resources of the Senate a report on the findings, conclusions, and 
recommendations of the study under this section by not later than 18 
months after the date of the enactment of this Act. The report shall 
include each of the following:
            (1) The identifications, descriptions, and estimations 
        referred to in subsection (b).
            (2) A description of activities currently conducted or 
        considered, or that could be considered, to produce additional 
        hydroelectric power from each identified facility.
            (3) A summary of prior actions taken by the Secretaries to 
        produce additional hydroelectric power from each identified 
        facility.
            (4) The costs to install, upgrade, or modify equipment or 
        take other actions to produce additional hydroelectric power 
        from each identified facility and the level of Federal power 
        customer involvement in the determination of such costs.
            (5) The benefits that would be achieved by such 
        installation, upgrade, modification, or other action, including 
        quantified estimates of any additional energy or capacity from 
        each facility identified under subsection (b).
            (6) A description of actions that are planned, underway, or 
        might reasonably be considered to increase hydroelectric power 
        production by replacing turbine runners, by performing 
        generator upgrades or rewinds, or construction of pumped 
        storage facilities.
            (7) The impact of increased hydroelectric power production 
        on irrigation, fish, wildlife, Indian tribes, river health, 
        water quality, navigation, recreation, fishing, and flood 
        control.
            (8) Any additional recommendations to increase 
        hydroelectric power production from, and reduce costs and 
        improve efficiency at, federally owned or operated water 
        regulation, storage, and conveyance facilities.

SEC. 245. SHIFT OF PROJECT LOADS TO OFF-PEAK PERIODS.

    (a) In General.--The Secretary of the Interior shall--
            (1) review electric power consumption by Bureau of 
        Reclamation facilities for water pumping purposes; and
            (2) make such adjustments in such pumping as possible to 
        minimize the amount of electric power consumed for such pumping 
        during periods of peak electric power consumption, including by 
        performing as much of such pumping as possible during off-peak 
        hours at night.
    (b) Consent of Affected Irrigation Customers Required.--The 
Secretary may not under this section make any adjustment in pumping at 
a facility without the consent of each person that has contracted with 
the United States for delivery of water from the facility for use for 
irrigation and that would be affected by such adjustment.
    (c) Existing Obligations Not Affected.--This section shall not be 
construed to affect any existing obligation of the Secretary to provide 
electric power, water, or other benefits from Bureau of Reclamation 
facilities, including recreational releases.

SEC. 246. LIMITATION ON CERTAIN CHARGES ASSESSED TO THE FLINT CREEK 
              PROJECT, MONTANA.

    Notwithstanding section 10(e)(1) of the Federal Power Act (16 
U.S.C. 803(e)(1)) or any other provision of Federal law providing for 
the payment to the United States of charges for the use of Federal land 
for the purposes of operating and maintaining a hydroelectric 
development licensed by the Federal Energy Regulatory Commission 
(referred to in this section as the ``Commission''), any political 
subdivision of the State of Montana that holds a license for Commission 
Project No. 1473 in Granite and Deer Lodge Counties, Montana, shall be 
required to pay to the United States for the use of that land for each 
year during which the political subdivision continues to hold the 
license for the project, the lesser of--
            (1) $25,000; or
            (2) such annual charge as the Commission or any other 
        department or agency of the Federal Government may assess.

SEC. 247. REINSTATEMENT AND TRANSFER.

    (a) Reinstatement and Transfer of Federal License for Project 
Numbered 2696.--Notwithstanding section 8 of the Federal Power Act (16 
U.S.C. 801) or any other provision of such Act, the Federal Energy 
Regulatory Commission shall reinstate the license for Project No. 2696 
and transfer the license, without delay or the institution of any 
proceedings, to the Town of Stuyvesant, New York, holder of Federal 
Energy Regulatory Commission Preliminary Permit No. 11787, within 30 
days after the date of enactment of this Act.
    (b) Hydroelectric Incentives.--Project No. 2696 shall be entitled 
to the full benefit of any Federal legislation that promotes 
hydroelectric development that is enacted within 2 years either before 
or after the date of enactment of this Act.
    (c) Project Development and Financing.--The Federal Energy 
Regulatory Commission shall permit the Town of Stuyvesant to add as a 
colicensee any private or public entity or entities to the reinstated 
license at any time, notwithstanding the issuance of a preliminary 
permit to the Town of Stuyvesant and any consideration of municipal 
preference. The town shall be entitled, to the extent that funds are 
available or shall be made available, to receive loans under sections 
402 and 403 of the Public Utility Regulatory Policies Act of 1978 (16 
U.S.C. 2702 and 2703), or similar programs, for the reimbursement of 
feasibility studies or development costs, or both, incurred since 
January 1, 2001, through and including December 31, 2006. All power 
produced by the project shall be deemed incremental hydropower for 
purpose of qualifying for any energy credit or similar benefits.

                         TITLE III--OIL AND GAS

           Subtitle A--Petroleum Reserve and Home Heating Oil

SEC. 301. PERMANENT AUTHORITY TO OPERATE THE STRATEGIC PETROLEUM 
              RESERVE AND OTHER ENERGY PROGRAMS.

    (a) Amendment to Title I of the Energy Policy and Conservation 
Act.--Title I of the Energy Policy and Conservation Act (42 U.S.C. 6211 
et seq.) is amended--
            (1) by striking section 166 (42 U.S.C. 6246) and inserting 
        the following:

                   ``authorization of appropriations

    ``Sec. 166. There are authorized to be appropriated to the 
Secretary such sums as may be necessary to carry out this part and part 
D, to remain available until expended.'';
            (2) by striking section 186 (42 U.S.C. 6250e); and
            (3) by striking part E (42 U.S.C. 6251; relating to the 
        expiration of title I of the Act).
    (b) Amendment to Title II of the Energy Policy and Conservation 
Act.--Title II of the Energy Policy and Conservation Act (42 U.S.C. 
6271 et seq.) is amended--
            (1) by inserting before section 273 (42 U.S.C. 6283) the 
        following:

          ``Part C--Summer Fill and Fuel Budgeting Programs'';

            (2) by striking section 273(e) (42 U.S.C. 6283(e); relating 
        to the expiration of summer fill and fuel budgeting programs); 
        and
            (3) by striking part D (42 U.S.C. 6285; relating to the 
        expiration of title II of the Act).
    (c) Technical Amendments.--The table of contents for the Energy 
Policy and Conservation Act is amended--
            (1) by inserting after the items relating to part C of 
        title I the following:

              ``Part D--Northeast Home Heating Oil Reserve

``Sec. 181. Establishment.
``Sec. 182. Authority.
``Sec. 183. Conditions for release; plan.
``Sec. 184. Northeast Home Heating Oil Reserve Account.
``Sec. 185. Exemptions.'';
            (2) by amending the items relating to part C of title II to 
        read as follows:

           ``Part C--Summer Fill and Fuel Budgeting Programs

``Sec. 273. Summer fill and fuel budgeting programs.'';
        and
            (3) by striking the items relating to part D of title II.
    (d) Amendment to the Energy Policy and Conservation Act.--Section 
183(b)(1) of the Energy Policy and Conservation Act (42 U.S.C. 
6250(b)(1)) is amended by striking all after ``increases'' through to 
``mid-October through March'' and inserting ``by more than 60 percent 
over its 5-year rolling average for the months of mid-October through 
March (considered as a heating season average)''.
    (e) Fill Strategic Petroleum Reserve to Capacity.--The Secretary of 
Energy shall, as expeditiously as practicable, acquire petroleum in 
amounts sufficient to fill the Strategic Petroleum Reserve to the 
1,000,000,000 barrel capacity authorized under section 154(a) of the 
Energy Policy and Conservation Act (42 U.S.C. 6234(a)), consistent with 
the provisions of sections 159 and 160 of such Act (42 U.S.C. 6239, 
6240).

SEC. 302. NATIONAL OILHEAT RESEARCH ALLIANCE.

    Section 713 of the Energy Act of 2000 (42 U.S.C. 6201 note) is 
amended by striking ``4'' and inserting ``9''.

                   Subtitle B--Production Incentives

SEC. 311. DEFINITION OF SECRETARY.

    In this subtitle, the term ``Secretary'' means the Secretary of the 
Interior.

SEC. 312. PROGRAM ON OIL AND GAS ROYALTIES IN-KIND.

    (a) Applicability of Section.--Notwithstanding any other provision 
of law, this section applies to all royalty in-kind accepted by the 
Secretary on or after October 1, 2004, under any Federal oil or gas 
lease or permit under section 36 of the Mineral Leasing Act (30 U.S.C. 
192), section 27 of the Outer Continental Shelf Lands Act (43 U.S.C. 
1353), or any other Federal law governing leasing of Federal land for 
oil and gas development.
    (b) Terms and Conditions.--All royalty accruing to the United 
States shall, on the demand of the Secretary, be paid in oil or gas. If 
the Secretary makes such a demand, the following provisions apply to 
such payment:
            (1) Satisfaction of royalty obligation.--Delivery by, or on 
        behalf of, the lessee of the royalty amount and quality due 
        under the lease satisfies the lessee's royalty obligation for 
        the amount delivered, except that transportation and processing 
        reimbursements paid to, or deductions claimed by, the lessee 
        shall be subject to review and audit.
            (2) Marketable condition.--
                    (A) In general.--Royalty production shall be placed 
                in marketable condition by the lessee at no cost to the 
                United States.
                    (B) Definition of marketable condition.--In this 
                paragraph, the term ``in marketable condition'' means 
                sufficiently free from impurities and otherwise in a 
                condition that the royalty production will be accepted 
                by a purchaser under a sales contract typical of the 
                field or area in which the royalty production was 
                produced.
            (3) Disposition by the secretary.--The Secretary may--
                    (A) sell or otherwise dispose of any royalty 
                production taken in-kind (other than oil or gas 
                transferred under section 27(a)(3) of the Outer 
                Continental Shelf Lands Act (43 U.S.C. 1353(a)(3)) for 
                not less than the market price; and
                    (B) transport or process (or both) any royalty 
                production taken in-kind.
            (4) Retention by the secretary.--The Secretary may, 
        notwithstanding section 3302 of title 31, United States Code, 
        retain and use a portion of the revenues from the sale of oil 
        and gas taken in-kind that otherwise would be deposited to 
        miscellaneous receipts, without regard to fiscal year 
        limitation, or may use oil or gas received as royalty taken in-
        kind (in this paragraph referred to as ``royalty production'') 
        to pay the cost of--
                    (A) transporting the royalty production;
                    (B) processing the royalty production;
                    (C) disposing of the royalty production; or
                    (D) any combination of transporting, processing, 
                and disposing of the royalty production.
            (5) Limitation.--
                    (A) In general.--Except as provided in subparagraph 
                (B), the Secretary may not use revenues from the sale 
                of oil and gas taken in-kind to pay for personnel, 
                travel, or other administrative costs of the Federal 
                Government.
                    (B) Exception.--Notwithstanding subparagraph (A), 
                the Secretary may use a portion of the revenues from 
                the sale of oil taken in-kind, without fiscal year 
                limitation, to pay transportation costs, salaries, and 
                other administrative costs directly related to filling 
                the Strategic Petroleum Reserve.
    (c) Reimbursement of Cost.--If the lessee, pursuant to an agreement 
with the United States or as provided in the lease, processes the 
royalty gas or delivers the royalty oil or gas at a point not on or 
adjacent to the lease area, the Secretary shall--
            (1) reimburse the lessee for the reasonable costs of 
        transportation (not including gathering) from the lease to the 
        point of delivery or for processing costs; or
            (2) allow the lessee to deduct the transportation or 
        processing costs in reporting and paying royalties in-value for 
        other Federal oil and gas leases.
    (d) Benefit to the United States Required.--The Secretary may 
receive oil or gas royalties in-kind only if the Secretary determines 
that receiving royalties in-kind provides benefits to the United States 
that are greater than or equal to the benefits that are likely to have 
been received had royalties been taken in-value.
    (e) Reports.--
            (1) In general.--Not later than September 30, 2005, the 
        Secretary shall submit to Congress a report that addresses--
                    (A) actions taken to develop businesses processes 
                and automated systems to fully support the royalty-in-
                kind capability to be used in tandem with the royalty-
                in-value approach in managing Federal oil and gas 
                revenue; and
                    (B) future royalty-in-kind businesses operation 
                plans and objectives.
            (2) Reports on oil or gas royalties taken in-kind.--For 
        each of fiscal years 2004 through 2013 in which the United 
        States takes oil or gas royalties in-kind from production in 
        any State or from the Outer Continental Shelf, excluding 
        royalties taken in-kind and sold to refineries under subsection 
(h), the Secretary shall submit to Congress a report that describes--
                    (A) the methodology or methodologies used by the 
                Secretary to determine compliance with subsection (d), 
                including the performance standard for comparing 
                amounts received by the United States derived from 
                royalties in-kind to amounts likely to have been 
                received had royalties been taken in-value;
                    (B) an explanation of the evaluation that led the 
                Secretary to take royalties in-kind from a lease or 
                group of leases, including the expected revenue effect 
                of taking royalties in-kind;
                    (C) actual amounts received by the United States 
                derived from taking royalties in-kind and costs and 
                savings incurred by the United States associated with 
                taking royalties in-kind, including, but not limited 
                to, administrative savings and any new or increased 
                administrative costs; and
                    (D) an evaluation of other relevant public benefits 
                or detriments associated with taking royalties in-kind.
    (f) Deduction of Expenses.--
            (1) In general.--Before making payments under section 35 of 
        the Mineral Leasing Act (30 U.S.C. 191) or section 8(g) of the 
        Outer Continental Shelf Lands Act (43 U.S.C. 1337(g)) of 
        revenues derived from the sale of royalty production taken in-
        kind from a lease, the Secretary shall deduct amounts paid or 
        deducted under subsections (b)(4) and (c) and deposit the 
        amount of the deductions in the miscellaneous receipts of the 
        United States Treasury.
            (2) Accounting for deductions.--When the Secretary allows 
        the lessee to deduct transportation or processing costs under 
        subsection (c), the Secretary may not reduce any payments to 
        recipients of revenues derived from any other Federal oil and 
        gas lease as a consequence of that deduction.
    (g) Consultation With States.--The Secretary--
            (1) shall consult with a State before conducting a royalty 
        in-kind program under this subtitle within the State, and may 
        delegate management of any portion of the Federal royalty in-
        kind program to the State except as otherwise prohibited by 
        Federal law; and
            (2) shall consult annually with any State from which 
        Federal oil or gas royalty is being taken in-kind to ensure, to 
        the maximum extent practicable, that the royalty in-kind 
        program provides revenues to the State greater than or equal to 
        those likely to have been received had royalties been taken in-
        value.
    (h) Small Refineries.--
            (1) Preference.--If the Secretary finds that sufficient 
        supplies of crude oil are not available in the open market to 
        refineries that do not have their own source of supply for 
        crude oil, the Secretary may grant preference to such 
        refineries in the sale of any royalty oil accruing or reserved 
        to the United States under Federal oil and gas leases issued 
        under any mineral leasing law, for processing or use in such 
        refineries at private sale at not less than the market price.
            (2) Proration among refineries in production area.--In 
        disposing of oil under this subsection, the Secretary of Energy 
        may, at the discretion of the Secretary, prorate the oil among 
        refineries described in paragraph (1) in the area in which the 
        oil is produced.
    (i) Disposition to Federal Agencies.--
            (1) Onshore royalty.--Any royalty oil or gas taken by the 
        Secretary in-kind from onshore oil and gas leases may be sold 
        at not less than the market price to any Federal agency.
            (2) Offshore royalty.--Any royalty oil or gas taken in-kind 
        from a Federal oil or gas lease on the Outer Continental Shelf 
        may be disposed of only under section 27 of the Outer 
        Continental Shelf Lands Act (43 U.S.C. 1353).
    (j) Federal Low-Income Energy Assistance Programs.--
            (1) Preference.--In disposing of royalty oil or gas taken 
        in-kind under this section, the Secretary may grant a 
        preference to any person, including any Federal or State 
        agency, for the purpose of providing additional resources to 
        any Federal low-income energy assistance program.
            (2) Report.--Not later than 3 years after the date of 
        enactment of this Act, the Secretary shall transmit a report to 
        Congress, assessing the effectiveness of granting preferences 
        specified in paragraph (1) and providing a specific 
        recommendation on the continuation of authority to grant 
        preferences.
    (k) Effective Date.--This section takes effect on October 1, 2004.

SEC. 313. MARGINAL PROPERTY PRODUCTION INCENTIVES.

    (a) Definition of Marginal Property.--Until such time as the 
Secretary issues regulations under subsection (e) that prescribe a 
different definition, in this section the term ``marginal property'' 
means an onshore unit, communitization agreement, or lease not within a 
unit or communitization agreement, that produces on average the 
combined equivalent of less than 15 barrels of oil per well per day or 
90 million British thermal units of gas per well per day calculated 
based on the average over the 3 most recent production months, 
including only wells that produce on more than half of the days during 
those 3 production months.
    (b) Conditions for Reduction of Royalty Rate.--Until such time as 
the Secretary issues regulations under subsection (e) that prescribe 
different thresholds or standards, the Secretary shall reduce the 
royalty rate on--
            (1) oil production from marginal properties as prescribed 
        in subsection (c) when the spot price of West Texas 
        Intermediate crude oil at Cushing, Oklahoma, is, on average, 
        less than $15 per barrel for 90 consecutive trading days; and
            (2) gas production from marginal properties as prescribed 
        in subsection (c) when the spot price of natural gas delivered 
        at Henry Hub, Louisiana, is, on average, less than $2.00 per 
        million British thermal units for 90 consecutive trading days.
    (c) Reduced Royalty Rate.--
            (1) In general.--When a marginal property meets the 
        conditions specified in subsection (b), the royalty rate shall 
        be the lesser of--
                    (A) 5 percent; or
                    (B) the applicable rate under any other statutory 
                or regulatory royalty relief provision that applies to 
                the affected production.
            (2) Period of effectiveness.--The reduced royalty rate 
        under this subsection shall be effective beginning on the first 
        day of the production month following the date on which the 
        applicable condition specified in subsection (b) is met.
    (d) Termination of Reduced Royalty Rate.--A royalty rate prescribed 
in subsection (d)(1)(A) shall terminate--
            (1) with respect to oil production from a marginal 
        property, on the first day of the production month following 
        the date on which--
                    (A) the spot price of West Texas Intermediate crude 
                oil at Cushing, Oklahoma, on average, exceeds $15 per 
                barrel for 90 consecutive trading days; or
                    (B) the property no longer qualifies as a marginal 
                property; and
            (2) with respect to gas production from a marginal 
        property, on the first day of the production month following 
        the date on which--
                    (A) the spot price of natural gas delivered at 
                Henry Hub, Louisiana, on average, exceeds $2.00 per 
                million British thermal units for 90 consecutive 
                trading days; or
                    (B) the property no longer qualifies as a marginal 
                property.
    (e) Regulations Prescribing Different Relief.--
            (1) Discretionary regulations.--The Secretary may by 
        regulation prescribe different parameters, standards, and 
        requirements for, and a different degree or extent of, royalty 
        relief for marginal properties in lieu of those prescribed in 
        subsections (a) through (d).
            (2) Mandatory regulations.--Not later than 18 months after 
        the date of enactment of this Act, the Secretary shall by 
        regulation--
                    (A) prescribe standards and requirements for, and 
                the extent of royalty relief for, marginal properties 
                for oil and gas leases on the Outer Continental Shelf; 
                and
                    (B) define what constitutes a marginal property on 
                the Outer Continental Shelf for purposes of this 
                section.
            (3) Considerations.--In promulgating regulations under this 
        subsection, the Secretary may consider--
                    (A) oil and gas prices and market trends;
                    (B) production costs;
                    (C) abandonment costs;
                    (D) Federal and State tax provisions and the 
                effects of those provisions on production economics;
                    (E) other royalty relief programs;
                    (F) regional differences in average wellhead 
                prices;
                    (G) national energy security issues; and
                    (H) other relevant matters.
    (f) Savings Provision.--Nothing in this section prevents a lessee 
from receiving royalty relief or a royalty reduction pursuant to any 
other law (including a regulation) that provides more relief than the 
amounts provided by this section.
    (g) Effective Date.--This section takes effect on October 1, 2004.

SEC. 314. INCENTIVES FOR NATURAL GAS PRODUCTION FROM DEEP WELLS IN THE 
              SHALLOW WATERS OF THE GULF OF MEXICO.

    (a) Royalty Incentive Regulations.--The Secretary shall publish a 
final regulation to complete the rulemaking begun by the Notice of 
Proposed Rulemaking entitled ``Relief or Reduction in Royalty Rates--
Deep Gas Provisions'', published in the Federal Register on March 26, 
2003 (Federal Register, volume 68, number 58, 14868-14886).
    (b) Royalty Incentive Regulations for Ultra Deep Gas Wells.--
            (1) In general.--Not later than 180 days after the date of 
        enactment of this section, in addition to any other regulations 
        that may provide royalty incentives for natural gas produced 
        from deep wells on oil and gas leases issued pursuant to the 
        Outer Continental Shelf Lands Act (43 U.S.C. 1331 et seq.), the 
        Secretary shall issue regulations, in accordance with the 
        regulations published pursuant to subsection (a), granting 
        royalty relief suspension volumes of not less than 
        35,000,000,000 cubic feet with respect to the production of 
        natural gas from ultra deep wells on leases issued before 
        January 1, 2001, in shallow waters less than 200 meters deep 
        located in the Gulf of Mexico wholly west of 87 degrees, 30 
        minutes West longitude. Regulations issued under this 
        subsection shall be retroactive to the date that the Notice of 
        Proposed Rulemaking is published in the Federal Register.
            (2) Definition of ultra deep well.--In this subsection, the 
        term ``ultra deep well'' means a well drilled with a perforated 
        interval, the top of which is at least 20,000 feet true 
        vertical depth below the datum at mean sea level.
    (c) Effective Date.--This section takes effect on October 1, 2004.

SEC. 315. ROYALTY RELIEF FOR DEEP WATER PRODUCTION.

    (a) In General.--For all tracts located in water depths of greater 
than 400 meters in the Western and Central Planning Area of the Gulf of 
Mexico, including the portion of the Eastern Planning Area of the Gulf 
of Mexico encompassing whole lease blocks lying west of 87 degrees, 30 
minutes West longitude, any oil or gas lease sale under the Outer 
Continental Shelf Lands Act (43 U.S.C. 1331 et seq.) occurring within 5 
years after the date of enactment of this Act shall use the bidding 
system authorized in section 8(a)(1)(H) of the Outer Continental Shelf 
Lands Act (43 U.S.C. 1337(a)(1)(H)), except that the suspension of 
royalties shall be set at a volume of not less than--
            (1) 5,000,000 barrels of oil equivalent for each lease in 
        water depths of 400 to 800 meters;
            (2) 9,000,000 barrels of oil equivalent for each lease in 
        water depths of 800 to 1,600 meters; and
            (3) 12,000,000 barrels of oil equivalent for each lease in 
        water depths greater than 1,600 meters.
    (b) Limitation.--The Secretary may place limitations on the 
suspension of royalty relief granted based on market price.

SEC. 316. ALASKA OFFSHORE ROYALTY SUSPENSION.

    Section 8(a)(3)(B) of the Outer Continental Shelf Lands Act (43 
U.S.C. 1337(a)(3)(B)) is amended by inserting ``and in the Planning 
Areas offshore Alaska'' after ``West longitude''.

SEC. 317. OIL AND GAS LEASING IN THE NATIONAL PETROLEUM RESERVE IN 
              ALASKA.

    (a) Transfer of Authority.--
            (1) Redesignation.--The Naval Petroleum Reserves Production 
        Act of 1976 (42 U.S.C. 6501 et seq.) is amended by 
        redesignating section 107 (42 U.S.C. 6507) as section 108.
            (2) Transfer.--The matter under the heading ``exploration 
        of national petroleum reserve in alaska'' under the heading 
        ``ENERGY AND MINERALS'' of title I of Public Law 96-514 (42 
        U.S.C. 6508) is--
                    (A) transferred to the Naval Petroleum Reserves 
                Production Act of 1976 (42 U.S.C. 6501 et seq.);
                    (B) redesignated as section 107 of that Act; and
                    (C) moved so as to appear after section 106 of that 
                Act (42 U.S.C. 6506).
    (b) Competitive Leasing.--Section 107 of the Naval Petroleum 
Reserves Production Act of 1976 (as amended by subsection (a) of this 
section) is amended--
            (1) by striking the heading and all that follows through 
        ``Provided, That (1) activities'' and inserting the following:

``SEC. 107. COMPETITIVE LEASING OF OIL AND GAS.

    ``(a) In General.--Notwithstanding any other provision of law and 
pursuant to regulations issued by the Secretary, the Secretary shall 
conduct an expeditious program of competitive leasing of oil and gas in 
the National Petroleum Reserve in Alaska (referred to in this section 
as the `Reserve').
    ``(b) Mitigation of Adverse Effects.--Activities'';
            (2) by striking ``Alaska (the Reserve); (2) the'' and 
        inserting ``Alaska.
    ``(c) Land Use Planning; BLM Wilderness Study.--The'';
            (3) by striking ``Reserve; (3) the'' and inserting 
        ``Reserve.
    ``(d) First Lease Sale.--The'';
            (4) by striking ``4332); (4) the'' and inserting ``4321 et 
        seq.).
    ``(e) Withdrawals.--The'';
            (5) by striking ``herein; (5) bidding'' and inserting 
        ``under this section.
    ``(f) Bidding Systems.--Bidding'';
            (6) by striking ``629); (6) lease'' and inserting ``629).
    ``(g) Geological Structures.--Lease'';
            (7) by striking ``structures; (7) the'' and inserting 
        ``structures.
    ``(h) Size of Lease Tracts.--The'';
            (8) by striking ``Secretary; (8)'' and all that follows 
        through ``Drilling, production,'' and inserting ``Secretary.
    ``(i) Terms.--
            ``(1) In general.--Each lease shall be--
                    ``(A) issued for an initial period of not more than 
                10 years; and
                    ``(B) renewed for successive 10-year terms if--
                            ``(i) oil or gas is produced from the lease 
                        in paying quantities;
                            ``(ii) oil or gas is capable of being 
                        produced in paying quantities; or
                            ``(iii) drilling or reworking operations, 
                        as approved by the Secretary, are conducted on 
                        the leased land.
            ``(2) Renewal of nonproducing leases.--The Secretary shall 
        renew for an additional 10-year term a lease that does not meet 
        the requirements of paragraph (1)(B) if the lessee submits to 
        the Secretary an application for renewal not later than 60 days 
        before the expiration of the primary lease and--
                    ``(A) the lessee certifies, and the Secretary 
                agrees, that hydrocarbon resources were discovered on 1 
                or more wells drilled on the leased land in such 
                quantities that a prudent operator would hold the lease 
                for potential future development;
                    ``(B) the lessee--
                            ``(i) pays the Secretary a renewal fee of 
                        $100 per acre of leased land; and
                            ``(ii) provides evidence, and the Secretary 
                        agrees that, the lessee has diligently pursued 
                        exploration that warrants continuation with the 
                        intent of continued exploration or future 
                        development of the leased land; or
                    ``(C) all or part of the lease--
                            ``(i) is part of a unit agreement covering 
                        a lease described in subparagraph (A) or (B); 
                        and
                            ``(ii) has not been previously contracted 
                        out of the unit.
            ``(3) Applicability.--This subsection applies to a lease 
        that--
                    ``(A) is entered into before, on, or after the date 
                of enactment of the Energy Policy Act of 2003; and
                    ``(B) is effective on or after the date of 
                enactment of that Act.
    ``(j) Unit Agreements.--
            ``(1) In general.--For the purpose of conservation of the 
        natural resources of all or part of any oil or gas pool, field, 
        reservoir, or like area, lessees (including representatives) of 
        the pool, field, reservoir, or like area may unite with each 
        other, or jointly or separately with others, in collectively 
        adopting and operating under a unit agreement for all or part 
        of the pool, field, reservoir, or like area (whether or not any 
        other part of the oil or gas pool, field, reservoir, or like 
        area is already subject to any cooperative or unit plan of 
        development or operation), if the Secretary determines the 
        action to be necessary or advisable in the public interest.
            ``(2) Participation by state of alaska.--The Secretary 
        shall ensure that the State of Alaska is provided the 
        opportunity for active participation concerning creation and 
        management of units formed or expanded under this subsection 
        that include acreage in which the State of Alaska has an 
        interest in the mineral estate.
            ``(3) Participation by regional corporations.--The 
        Secretary shall ensure that any Regional Corporation (as 
        defined in section 3 of the Alaska Native Claims Settlement Act 
        (43 U.S.C. 1602)) is provided the opportunity for active 
        participation concerning creation and management of units that 
        include acreage in which the Regional Corporation has an 
        interest in the mineral estate.
            ``(4) Production allocation methodology.--The Secretary may 
        use a production allocation methodology for each participating 
        area within a unit created for land in the Reserve, State of 
        Alaska land, or Regional Corporation land shall, when 
        appropriate, be based on the characteristics of each specific 
        oil or gas pool, field, reservoir, or like area to take into 
        account reservoir heterogeneity and a real variation in 
        reservoir producibility across diverse leasehold interests.
            ``(5) Benefit of operations.--Drilling, production,'';
            (9) by striking ``When separate'' and inserting the 
        following:
            ``(6) Pooling.--If separate'';
            (10) by inserting ``(in consultation with the owners of the 
        other land)'' after ``determined by the Secretary of the 
        Interior'';
            (11) by striking ``thereto; (10) to'' and all that follows 
        through ``the terms provided therein'' and inserting ``to the 
        agreement.
    ``(k) Exploration Incentives.--
            ``(1) In general.--
                    ``(A) Waiver, suspension, or reduction.--To 
                encourage the greatest ultimate recovery of oil or gas 
                or in the interest of conservation, the Secretary may 
                waive, suspend, or reduce the rental fees or minimum 
                royalty, or reduce the royalty on an entire leasehold 
                (including on any lease operated pursuant to a unit 
                agreement), if (after consultation with the State of 
                Alaska and the North Slope Borough of Alaska and the 
                concurrence of any Regional Corporation for leases that 
                include lands available for acquisition by the Regional 
                Corporation under the provisions of section 1431(o) of 
                the Alaska National Interest Lands Conservation Act (16 
                U.S.C. 3101 et seq.)) the Secretary determines that the 
                waiver, suspension, or reduction is in the public 
                interest.
                    ``(B) Applicability.--This paragraph applies to a 
                lease that--
                            ``(i) is entered into before, on, or after 
                        the date of enactment of the Energy Policy Act 
                        of 2003; and
                            ``(ii) is effective on or after the date of 
                        enactment of that Act.'';
            (12) by striking ``The Secretary is authorized to'' and 
        inserting the following:
            ``(2) Suspension of operations and production.--The 
        Secretary may'';
            (13) by striking ``In the event'' and inserting the 
        following:
            ``(3) Suspension of payments.--If'';
            (14) by striking ``thereto; and (11) all'' and inserting 
        ``to the lease.
    ``(l) Receipts.--All'';
            (15) by redesignating clauses (A), (B), and (C) as clauses 
        (1), (2), and (3), respectively;
            (16) by striking ``Any agency'' and inserting the 
        following:
    ``(m) Explorations.--Any agency'';
            (17) by striking ``Any action'' and inserting the 
        following:
    ``(n) Environmental Impact Statements.--
            ``(1) Judicial review.--Any action'';
            (18) by striking ``The detailed'' and inserting the 
        following:
            ``(2) Initial lease sales.--The detailed'';
            (19) by striking ``of the Naval Petroleum Reserves 
        Production Act of 1976 (90 Stat. 304; 42 U.S.C. 6504)''; and
            (20) by adding at the end the following:
    ``(o) Waiver of Administration for Conveyed Lands.--Notwithstanding 
section 14(g) of the Alaska Native Claims Settlement Act (43 U.S.C. 
1613(g)) or any other provision of law--
            ``(1) the Secretary of the Interior shall waive 
        administration of any oil and gas lease insofar as such lease 
        covers any land in the National Petroleum Reserve in Alaska in 
        which the subsurface estate is conveyed to the Arctic Slope 
        Regional Corporation; and
            ``(2) if any such conveyance of such subsurface estate does 
        not cover all the land embraced within any such oil and gas 
        lease--
                    ``(A) the person who owns the subsurface estate in 
                any particular portion of the land covered by such 
                lease shall be entitled to all of the revenues reserved 
                under such lease as to such portion, including, without 
                limitation, all the royalty payable with respect to oil 
                or gas produced from or allocated to such particular 
                portion of the land covered by such lease; and
                    ``(B) the Secretary of the Interior shall segregate 
                such lease into 2 leases, 1 of which shall cover only 
                the subsurface estate conveyed to the Arctic Slope 
                Regional Corporation, and operations, production, or 
                other circumstances (other than payment of rentals or 
                royalties) that satisfy obligations of the lessee 
                under, or maintain, either of the segregated leases 
                shall likewise satisfy obligations of the lessee under, 
                or maintain, the other segregated lease to the same 
                extent as if such segregated leases remained a part of 
                the original unsegregated lease.''.

SEC. 318. ORPHANED, ABANDONED, OR IDLED WELLS ON FEDERAL LAND.

    (a) In General.--The Secretary, in cooperation with the Secretary 
of Agriculture, shall establish a program not later than 1 year after 
the date of enactment of this Act to remediate, reclaim, and close 
orphaned, abandoned, or idled oil and gas wells located on land 
administered by the land management agencies within the Department of 
the Interior and the Department of Agriculture.
    (b) Activities.--The program under subsection (a) shall--
            (1) include a means of ranking orphaned, abandoned, or 
        idled wells sites for priority in remediation, reclamation, and 
        closure, based on public health and safety, potential 
        environmental harm, and other land use priorities;
            (2) provide for identification and recovery of the costs of 
        remediation, reclamation, and closure from persons or other 
        entities currently providing a bond or other financial 
        assurance required under State or Federal law for an oil or gas 
        well that is orphaned, abandoned, or idled; and
            (3) provide for recovery from the persons or entities 
        identified under paragraph (2), or their sureties or 
        guarantors, of the costs of remediation, reclamation, and 
        closure of such wells.
    (c) Cooperation and Consultations.--In carrying out the program 
under subsection (a), the Secretary shall--
            (1) work cooperatively with the Secretary of Agriculture 
        and the States within which Federal land is located; and
            (2) consult with the Secretary of Energy and the Interstate 
        Oil and Gas Compact Commission.
    (d) Plan.--Not later than 1 year after the date of enactment of 
this Act, the Secretary, in cooperation with the Secretary of 
Agriculture, shall submit to Congress a plan for carrying out the 
program under subsection (a).
    (e) Idled Well.--For the purposes of this section, a well is idled 
if--
            (1) the well has been nonoperational for at least 7 years; 
        and
            (2) there is no anticipated beneficial use for the well.
    (f) Technical Assistance Program for Non-Federal Land.--
            (1) In general.--The Secretary of Energy shall establish a 
        program to provide technical and financial assistance to oil 
        and gas producing States to facilitate State efforts over a 10-
        year period to ensure a practical and economical remedy for 
        environmental problems caused by orphaned or abandoned oil and 
        gas exploration or production well sites on State or private 
        land.
            (2) Assistance.--The Secretary of Energy shall work with 
        the States, through the Interstate Oil and Gas Compact 
        Commission, to assist the States in quantifying and mitigating 
        environmental risks of onshore orphaned or abandoned oil or gas 
        wells on State and private land.
            (3) Activities.--The program under paragraph (1) shall 
        include--
                    (A) mechanisms to facilitate identification, if 
                feasible, of the persons currently providing a bond or 
                other form of financial assurance required under State 
                or Federal law for an oil or gas well that is orphaned 
                or abandoned;
                    (B) criteria for ranking orphaned or abandoned well 
                sites based on factors such as public health and 
                safety, potential environmental harm, and other land 
                use priorities;
                    (C) information and training programs on best 
                practices for remediation of different types of sites; 
                and
                    (D) funding of State mitigation efforts on a cost-
                shared basis.
    (g) Federal Reimbursement for Orphaned Well Reclamation Pilot 
Program.--
            (1) Reimbursement for remediating, reclaiming, and closing 
        wells on land subject to a new lease.--The Secretary shall 
        carry out a pilot program under which, in issuing a new oil and 
        gas lease on federally owned land on which 1 or more orphaned 
        wells are located, the Secretary--
                    (A) may require, but not as a condition of the 
                lease, that the lessee remediate, reclaim, and close in 
                accordance with standards established by the Secretary, 
all orphaned wells on the land leased; and
                    (B) shall develop a program to reimburse a lessee, 
                through a royalty credit against the Federal share of 
                royalties owed or other means, for the reasonable 
                actual costs of remediating, reclaiming, and closing 
                the orphaned well pursuant to that requirement.
            (2) Reimbursement for reclaiming orphaned wells on other 
        land.--In carrying out this subsection, the Secretary--
                    (A) may authorize any lessee under an oil and gas 
                lease on federally owned land to reclaim in accordance 
                with the Secretary's standards--
                            (i) an orphaned well on unleased federally 
                        owned land; or
                            (ii) an orphaned well located on an 
                        existing lease on federally owned land for the 
                        reclamation of which the lessee is not legally 
                        responsible; and
                    (B) shall develop a program to provide 
                reimbursement of 115 percent of the reasonable actual 
                costs of remediating, reclaiming, and closing the 
                orphaned well, through credits against the Federal 
                share of royalties or other means.
            (3) Effect of remediation, reclamation, or closure of well 
        pursuant to an approved remediation plan.--
                    (A) Definition of remediating party.--In this 
                paragraph the term ``remediating party'' means a person 
                who remediates, reclaims, or closes an abandoned, 
                orphaned, or idled well pursuant to this subsection.
                    (B) General rule.--A remediating party who 
                remediates, reclaims, or closes an abandoned, orphaned, 
                or idled well in accordance with a detailed written 
                remediation plan approved by the Secretary under this 
                subsection, shall be immune from civil liability under 
                Federal environmental laws, for--
                            (i) pre-existing environmental conditions 
                        at or associated with the well, unless the 
                        remediating party owns or operates, in the past 
                        owned or operated, or is related to a person 
                        that owns or operates or in the past owned or 
                        operated, the well or the land on which the 
                        well is located; or
                            (ii) any remaining releases of pollutants 
                        from the well during or after completion of the 
                        remediation, reclamation, or closure of the 
                        well, unless the remediating party causes 
                        increased pollution as a result of activities 
                        that are not in accordance with the approved 
                        remediation plan.
                    (C) Limitations.--Nothing in this section shall 
                limit in any way the liability of a remediating party 
                for injury, damage, or pollution resulting from the 
                remediating party's acts or omissions that are not in 
                accordance with the approved remediation plan, are 
                reckless or willful, constitute gross negligence or 
                wanton misconduct, or are unlawful.
            (4) Regulations.--The Secretary may issue such regulations 
        as are appropriate to carry out this subsection.
    (h) Authorization of Appropriations.--
            (1) In general.--There are authorized to be appropriated to 
        carry out this section $25,000,000 for each of fiscal years 
        2005 through 2009.
            (2) Use.--Of the amounts authorized under paragraph (1), 
        $5,000,000 are authorized for each fiscal year for activities 
        under subsection (f).

SEC. 319. COMBINED HYDROCARBON LEASING.

    (a) Special Provisions Regarding Leasing.--Section 17(b)(2) of the 
Mineral Leasing Act (30 U.S.C. 226(b)(2)) is amended--
            (1) by inserting ``(A)'' after ``(2)''; and
            (2) by adding at the end the following:
    ``(B) For any area that contains any combination of tar sand and 
oil or gas (or both), the Secretary may issue under this Act, 
separately--
            ``(i) a lease for exploration for and extraction of tar 
        sand; and
            ``(ii) a lease for exploration for and development of oil 
        and gas.
    ``(C) A lease issued for tar sand shall be issued using the same 
bidding process, annual rental, and posting period as a lease issued 
for oil and gas, except that the minimum acceptable bid required for a 
lease issued for tar sand shall be $2 per acre.
    ``(D) The Secretary may waive, suspend, or alter any requirement 
under section 26 that a permittee under a permit authorizing 
prospecting for tar sand must exercise due diligence, to promote any 
resource covered by a combined hydrocarbon lease.''.
    (b) Conforming Amendment.--Section 17(b)(1)(B) of the Mineral 
Leasing Act (30 U.S.C. 226(b)(1)(B)) is amended in the second sentence 
by inserting ``, subject to paragraph (2)(B),'' after ``Secretary''.
    (c) Regulations.--Not later than 45 days after the date of 
enactment of this Act, the Secretary shall issue final regulations to 
implement this section.

SEC. 320. LIQUIFIED NATURAL GAS.

    Section 3 of the Natural Gas Act (15 U.S.C. 717b) is amended by 
adding at the end the following:
    ``(d) Limitation on Commission Authority.--If an applicant under 
this section proposes to construct or expand a liquified natural gas 
terminal either onshore or in State waters for the purpose of importing 
liquified natural gas into the United States, the Commission shall not 
deny or condition the application solely on the basis that the 
applicant proposes to utilize the terminal exclusively or partially for 
gas that the applicant or any affiliate thereof will supply thereto. In 
all other respects, subsection (a) shall remain applicable to any such 
proposal.''.

SEC. 321. ALTERNATE ENERGY-RELATED USES ON THE OUTER CONTINENTAL SHELF.

    (a) Amendment to Outer Continental Shelf Lands Act.--Section 8 of 
the Outer Continental Shelf Lands Act (43 U.S.C. 1337) is amended by 
adding at the end the following:
    ``(p) Leases, Easements, or Rights-of-Way for Energy and Related 
Purposes.--
            ``(1) In general.--The Secretary, in consultation with the 
        Secretary of the Department in which the Coast Guard is 
        operating and other relevant departments and agencies of the 
        Federal Government, may grant a lease, easement, or right-of-
        way on the Outer Continental Shelf for activities not otherwise 
        authorized in this Act, the Deepwater Port Act of 1974 (33 
        U.S.C. 1501 et seq.), or the Ocean Thermal Energy Conversion 
        Act of 1980 (42 U.S.C. 9101 et seq.), or other applicable law, 
        if those activities--
                    ``(A) support exploration, development, production, 
                transportation, or storage of oil, natural gas, or 
                other minerals;
                    ``(B) produce or support production, 
                transportation, or transmission of energy from sources 
                other than oil and gas; or
                    ``(C) use, for energy-related or marine-related 
                purposes, facilities currently or previously used for 
                activities authorized under this Act.
            ``(2) Payments.--The Secretary shall establish reasonable 
        forms of payments for any easement or right-of-way granted 
        under this subsection. Such payments shall not be assessed on 
the basis of throughput or production. The Secretary may establish 
fees, rentals, bonus, or other payments by rule or by agreement with 
the party to which the lease, easement, or right-of-way is granted.
            ``(3) Consultation.--Before exercising authority under this 
        subsection, the Secretary shall consult with the Secretary of 
        Defense and other appropriate agencies concerning issues 
        related to national security and navigational obstruction.
            ``(4) Competitive or noncompetitive basis.--
                    ``(A) In general.--The Secretary may issue a lease, 
                easement, or right-of-way for energy and related 
                purposes as described in paragraph (1) on a competitive 
                or noncompetitive basis.
                    ``(B) Considerations.--In determining whether a 
                lease, easement, or right-of-way shall be granted 
                competitively or noncompetitively, the Secretary shall 
                consider such factors as--
                            ``(i) prevention of waste and conservation 
                        of natural resources;
                            ``(ii) the economic viability of an energy 
                        project;
                            ``(iii) protection of the environment;
                            ``(iv) the national interest and national 
                        security;
                            ``(v) human safety;
                            ``(vi) protection of correlative rights; 
                        and
                            ``(vii) potential return for the lease, 
                        easement, or right-of-way.
            ``(5) Regulations.--Not later than 270 days after the date 
        of enactment of the Energy Policy Act of 2003, the Secretary, 
        in consultation with the Secretary of the Department in which 
        the Coast Guard is operating and other relevant agencies of the 
        Federal Government and affected States, shall issue any 
        necessary regulations to ensure safety, protection of the 
        environment, prevention of waste, and conservation of the 
        natural resources of the Outer Continental Shelf, protection of 
        national security interests, and protection of correlative 
        rights in the Outer Continental Shelf.
            ``(6) Security.--The Secretary shall require the holder of 
        a lease, easement, or right-of-way granted under this 
        subsection to furnish a surety bond or other form of security, 
        as prescribed by the Secretary, and to comply with such other 
        requirements as the Secretary considers necessary to protect 
        the interests of the United States.
            ``(7) Effect of subsection.--Nothing in this subsection 
        displaces, supersedes, limits, or modifies the jurisdiction, 
        responsibility, or authority of any Federal or State agency 
        under any other Federal law.
            ``(8) Applicability.--This subsection does not apply to any 
        area on the Outer Continental Shelf designated as a National 
        Marine Sanctuary.''.
    (b) Conforming Amendment.--Section 8 of the Outer Continental Shelf 
Lands Act (43 U.S.C. 1337) is amended by striking the section heading 
and inserting the following: ``Leases, Easements, and Rights-of-Way on 
the Outer Continental Shelf.--''.
    (c) Savings Provision.--Nothing in the amendment made by subsection 
(a) requires, with respect to any project--
            (1) for which offshore test facilities have been 
        constructed before the date of enactment of this Act; or
            (2) for which a request for proposals has been issued by a 
        public authority,
any resubmittal of documents previously submitted or any 
reauthorization of actions previously authorized.

SEC. 322. PRESERVATION OF GEOLOGICAL AND GEOPHYSICAL DATA.

    (a) Short Title.--This section may be cited as the ``National 
Geological and Geophysical Data Preservation Program Act of 2003''.
    (b) Program.--The Secretary shall carry out a National Geological 
and Geophysical Data Preservation Program in accordance with this 
section--
            (1) to archive geologic, geophysical, and engineering data, 
        maps, well logs, and samples;
            (2) to provide a national catalog of such archival 
        material; and
            (3) to provide technical and financial assistance related 
        to the archival material.
    (c) Plan.--Not later than 1 year after the date of enactment of 
this Act, the Secretary shall submit to Congress a plan for the 
implementation of the Program.
    (d) Data Archive System.--
            (1) Establishment.--The Secretary shall establish, as a 
        component of the Program, a data archive system to provide for 
        the storage, preservation, and archiving of subsurface, 
        surface, geological, geophysical, and engineering data and 
        samples. The Secretary, in consultation with the Advisory 
        Committee, shall develop guidelines relating to the data 
        archive system, including the types of data and samples to be 
        preserved.
            (2) System components.--The system shall be comprised of 
        State agencies that elect to be part of the system and agencies 
        within the Department of the Interior that maintain geological 
        and geophysical data and samples that are designated by the 
        Secretary in accordance with this subsection. The Program shall 
        provide for the storage of data and samples through data 
        repositories operated by such agencies.
            (3) Limitation of designation.--The Secretary may not 
        designate a State agency as a component of the data archive 
        system unless that agency is the agency that acts as the 
        geological survey in the State.
            (4) Data from federal land.--The data archive system shall 
        provide for the archiving of relevant subsurface data and 
        samples obtained from Federal land--
                    (A) in the most appropriate repository designated 
                under paragraph (2), with preference being given to 
                archiving data in the State in which the data were 
                collected; and
                    (B) consistent with all applicable law and 
                requirements relating to confidentiality and 
                proprietary data.
    (e) National Catalog.--
            (1) In general.--As soon as practicable after the date of 
        enactment of this Act, the Secretary shall develop and 
        maintain, as a component of the Program, a national catalog 
        that identifies--
                    (A) data and samples available in the data archive 
                system established under subsection (d);
                    (B) the repository for particular material in the 
                system; and
                    (C) the means of accessing the material.
            (2) Availability.--The Secretary shall make the national 
        catalog accessible to the public on the site of the Survey on 
        the Internet, consistent with all applicable requirements 
        related to confidentiality and proprietary data.
    (f) Advisory Committee.--
            (1) In general.--The Advisory Committee shall advise the 
        Secretary on planning and implementation of the Program.
            (2) New duties.--In addition to its duties under the 
        National Geologic Mapping Act of 1992 (43 U.S.C. 31a et seq.), 
the Advisory Committee shall perform the following duties:
                    (A) Advise the Secretary on developing guidelines 
                and procedures for providing assistance for facilities 
                under subsection (g)(1).
                    (B) Review and critique the draft implementation 
                plan prepared by the Secretary under subsection (c).
                    (C) Identify useful studies of data archived under 
                the Program that will advance understanding of the 
                Nation's energy and mineral resources, geologic 
                hazards, and engineering geology.
                    (D) Review the progress of the Program in archiving 
                significant data and preventing the loss of such data, 
                and the scientific progress of the studies funded under 
                the Program.
                    (E) Include in the annual report to the Secretary 
                required under section 5(b)(3) of the National Geologic 
                Mapping Act of 1992 (43 U.S.C. 31d(b)(3)) an evaluation 
                of the progress of the Program toward fulfilling the 
                purposes of the Program under subsection (b).
    (g) Financial Assistance.--
            (1) Archive facilities.--Subject to the availability of 
        appropriations, the Secretary shall provide financial 
        assistance to a State agency that is designated under 
        subsection (d)(2) for providing facilities to archive energy 
        material.
            (2) Studies.--Subject to the availability of 
        appropriations, the Secretary shall provide financial 
        assistance to any State agency designated under subsection 
        (d)(2) for studies and technical assistance activities that 
        enhance understanding, interpretation, and use of materials 
        archived in the data archive system established under 
        subsection (d).
            (3) Federal share.--The Federal share of the cost of an 
        activity carried out with assistance under this subsection 
        shall be not more than 50 percent of the total cost of the 
        activity.
            (4) Private contributions.--The Secretary shall apply to 
        the non-Federal share of the cost of an activity carried out 
        with assistance under this subsection the value of private 
        contributions of property and services used for that activity.
    (h) Report.--The Secretary shall include in each report under 
section 8 of the National Geologic Mapping Act of 1992 (43 U.S.C. 
31g)--
            (1) a description of the status of the Program;
            (2) an evaluation of the progress achieved in developing 
        the Program during the period covered by the report; and
            (3) any recommendations for legislative or other action the 
        Secretary considers necessary and appropriate to fulfill the 
        purposes of the Program under subsection (b).
    (i) Maintenance of State Effort.--It is the intent of Congress that 
the States not use this section as an opportunity to reduce State 
resources applied to the activities that are the subject of the 
Program.
    (j) Definitions.--In this section:
            (1) Advisory committee.--The term ``Advisory Committee'' 
        means the advisory committee established under section 5 of the 
        National Geologic Mapping Act of 1992 (43 U.S.C. 31d).
            (2) Program.--The term ``Program'' means the National 
        Geological and Geophysical Data Preservation Program carried 
        out under this section.
            (3) Secretary.--The term ``Secretary'' means the Secretary 
        of the Interior, acting through the Director of the United 
        States Geological Survey.
            (4) Survey.--The term ``Survey'' means the United States 
        Geological Survey.
    (k) Authorization of Appropriations.--There are authorized to be 
appropriated to carry out this section $30,000,000 for each of fiscal 
years 2004 through 2008.

SEC. 323. OIL AND GAS LEASE ACREAGE LIMITATIONS.

    Section 27(d)(1) of the Mineral Leasing Act (30 U.S.C. 184(d)(1)) 
is amended by inserting after ``acreage held in special tar sand 
areas'' the following: ``, and acreage under any lease any portion of 
which has been committed to a federally approved unit or cooperative 
plan or communitization agreement or for which royalty (including 
compensatory royalty or royalty in-kind) was paid in the preceding 
calendar year,''.

SEC. 324. ASSESSMENT OF DEPENDENCE OF STATE OF HAWAII ON OIL.

    (a) Assessment.--The Secretary of Energy shall assess the economic 
implication of the dependence of the State of Hawaii on oil as the 
principal source of energy for the State, including--
            (1) the short- and long-term prospects for crude oil supply 
        disruption and price volatility and potential impacts on the 
        economy of Hawaii;
            (2) the economic relationship between oil-fired generation 
        of electricity from residual fuel and refined petroleum 
        products consumed for ground, marine, and air transportation;
            (3) the technical and economic feasibility of increasing 
        the contribution of renewable energy resources for generation 
        of electricity, on an island-by-island basis, including--
                    (A) siting and facility configuration;
                    (B) environmental, operational, and safety 
                considerations;
                    (C) the availability of technology;
                    (D) effects on the utility system including 
                reliability;
                    (E) infrastructure and transport requirements;
                    (F) community support; and
                    (G) other factors affecting the economic impact of 
                such an increase and any effect on the economic 
                relationship described in paragraph (2);
            (4) the technical and economic feasibility of using 
        liquified natural gas to displace residual fuel oil for 
        electric generation, including neighbor island opportunities, 
        and the effect of the displacement on the economic relationship 
        described in paragraph (2), including--
                    (A) the availability of supply;
                    (B) siting and facility configuration for onshore 
                and offshore liquified natural gas receiving terminals;
                    (C) the factors described in subparagraphs (B) 
                through (F) of paragraph (3); and
                    (D) other economic factors;
            (5) the technical and economic feasibility of using 
        renewable energy sources (including hydrogen) for ground, 
        marine, and air transportation energy applications to displace 
        the use of refined petroleum products, on an island-by-island 
        basis, and the economic impact of the displacement on the 
        relationship described in (2); and
            (6) an island-by-island approach to--
                    (A) the development of hydrogen from renewable 
                resources; and
                    (B) the application of hydrogen to the energy needs 
                of Hawaii
    (b) Contracting Authority.--The Secretary of Energy may carry out 
the assessment under subsection (a) directly or, in whole or in part, 
through 1 or more contracts with qualified public or private entities.
    (c) Report.--Not later than 300 days after the date of enactment of 
this Act, the Secretary of Energy shall prepare, in consultation with 
agencies of the State of Hawaii and other stakeholders, as appropriate, 
and submit to Congress, a report detailing the findings, conclusions, 
and recommendations resulting from the assessment.
    (d) Authorization of Appropriations.--There are authorized to be 
appropriated such sums as are necessary to carry out this section.

SEC. 325. DEADLINE FOR DECISION ON APPEALS OF CONSISTENCY DETERMINATION 
              UNDER THE COASTAL ZONE MANAGEMENT ACT OF 1972.

    (a) In General.--Section 319 of the Coastal Zone Management Act of 
1972 (16 U.S.C. 1465) is amended to read as follows:

                       ``appeals to the secretary

    ``Sec. 319. (a) Notice.--The Secretary shall publish an initial 
notice in the Federal Register not later than 30 days after the date of 
the filing of any appeal to the Secretary of a consistency 
determination under section 307.
    ``(b) Closure of Record.--
            ``(1) In general.--Not later than the end of the 120-day 
        period beginning on the date of publication of an initial 
        notice under subsection (a), the Secretary shall receive no 
        more filings on the appeal and the administrative record 
        regarding the appeal shall be closed.
            ``(2) Notice.--Upon the closure of the administrative 
        record, the Secretary shall immediately publish a notice that 
        the administrative record has been closed.
    ``(c) Deadline for Decision.--The Secretary shall issue a decision 
in any appeal filed under section 307 not later than 120 days after the 
closure of the administrative record.
    ``(d) Application.--This section applies to appeals initiated by 
the Secretary and appeals filed by an applicant.''.
    (b) Application.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendment made by subsection (a) shall apply with respect to 
        any appeal initiated or filed before, on, or after the date of 
        enactment of this Act.
            (2) Limitation.--Subsection (a) of section 319 of the 
        Coastal Zone Management Act of 1972 (as amended by subsection 
        (a)) shall not apply with respect to an appeal initiated or 
        filed before the date of enactment of this Act.
    (c) Closure of Record for Appeal Filed Before Date of Enactment.--
Notwithstanding section 319(b)(1) of the Coastal Zone Management Act of 
1972 (as amended by this section), in the case of an appeal of a 
consistency determination under section 307 of that Act initiated or 
filed before the date of enactment of this Act, the Secretary of 
Commerce shall receive no more filings on the appeal and the 
administrative record regarding the appeal shall be closed not later 
than 120 days after the date of enactment of this Act.

SEC. 326. REIMBURSEMENT FOR COSTS OF NEPA ANALYSES, DOCUMENTATION, AND 
              STUDIES.

    (a) In General.--The Mineral Leasing Act is amended by inserting 
after section 37 (30 U.S.C. 193) the following:

   ``reimbursement for costs of certain analyses, documentation, and 
                                studies

    ``Sec. 38. (a) In General.--The Secretary of the Interior may 
reimburse a person that is a lessee, operator, operating rights owner, 
or applicant for any lease under this Act for reasonable amounts paid 
by the person for preparation for the Secretary by a contractor or 
other person selected by the Secretary of any project-level analysis, 
documentation, or related study required pursuant to the National 
Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.) with respect 
to the lease.
    ``(b) Conditions.--The Secretary may provide reimbursement under 
subsection (a) only if--
            ``(1) adequate funding to enable the Secretary to timely 
        prepare the analysis, documentation, or related study is not 
        appropriated;
            ``(2) the person paid the costs voluntarily;
            ``(3) the person maintains records of its costs in 
        accordance with regulations issued by the Secretary;
            ``(4) the reimbursement is in the form of a reduction in 
        the Federal share of the royalty required to be paid for the 
        lease for which the analysis, documentation, or related study 
        is conducted, and is agreed to by the Secretary and the person 
        reimbursed prior to commencing the analysis, documentation, or 
        related study; and
            ``(5) the agreement required under paragraph (4) contains 
        provisions--
                    ``(A) reducing royalties owed on lease production 
                based on market prices;
                    ``(B) stipulating an automatic termination of the 
                royalty reduction upon recovery of documented costs; 
                and
                    ``(C) providing a process by which the lessee may 
                seek reimbursement for circumstances in which 
                production from the specified lease is not possible.''.
    (b) Application.--The amendment made by this section shall apply 
with respect to an analysis, documentation, or a related study 
conducted on or after October 1, 2008, for any lease entered into 
before, on, or after the date of enactment of this Act.
    (c) Deadline for Regulations.--The Secretary shall issue 
regulations implementing the amendment made by this section by not 
later than 1 year after the date of enactment of this Act.

SEC. 327. HYDRAULIC FRACTURING.

    Paragraph (1) of section 1421(d) of the Safe Drinking Water Act (42 
U.S.C. 300h(d)) is amended to read as follows:
            ``(1) Underground injection.--The term `underground 
        injection'--
                    ``(A) means the subsurface emplacement of fluids by 
                well injection; and
                    ``(B) excludes--
                            ``(i) the underground injection of natural 
                        gas for purposes of storage; and
                            ``(ii) the underground injection of fluids 
                        or propping agents pursuant to hydraulic 
                        fracturing operations related to oil or gas 
                        production activities.''.

SEC. 328. OIL AND GAS EXPLORATION AND PRODUCTION DEFINED.

    Section 502 of the Federal Water Pollution Control Act (33 U.S.C. 
1362) is amended by adding at the end the following:
            ``(24) Oil and gas exploration and production.--The term 
        `oil and gas exploration, production, processing, or treatment 
        operations or transmission facilities' means all field 
        activities or operations associated with exploration, 
        production, processing, or treatment operations, or 
        transmission facilities, including activities necessary to 
        prepare a site for drilling and for the movement and placement 
        of drilling equipment, whether or not such field activities or 
        operations may be considered to be construction activities.''.

SEC. 329. OUTER CONTINENTAL SHELF PROVISIONS.

    (a) Storage on the Outer Continental Shelf.--Section 5(a)(5) of the 
Outer Continental Shelf Lands Act (43 U.S.C. 1334(a)(5)) is amended by 
inserting ``from any source'' after ``oil and gas''.
    (b) Deepwater Projects.--Section 6 of the Deepwater Port Act of 
1974 (33 U.S.C. 1505) is amended by adding at the end the following:
    ``(d) Reliance on Activities of Other Agencies.--In fulfilling the 
requirements of section 5(f)--
            ``(1) to the extent that other Federal agencies have 
        prepared environmental impact statements, are conducting 
        studies, or are monitoring the affected human, marine, or 
        coastal environment, the Secretary may use the information 
        derived from those activities in lieu of directly conducting 
        such activities; and
            ``(2) the Secretary may use information obtained from any 
        State or local government or from any person.''.
    (c) Natural Gas Defined.--Section 3(13) of the Deepwater Port Act 
of 1974 (33 U.S.C. 1502(13)) is amended to read as follows:
            ``(13) natural gas means--
                    ``(A) natural gas unmixed; or
                    ``(B) any mixture of natural or artificial gas, 
                including compressed or liquefied natural gas, natural 
                gas liquids, liquefied petroleum gas, and condensate 
                recovered from natural gas;''.

SEC. 330. APPEALS RELATING TO PIPELINE CONSTRUCTION OR OFFSHORE MINERAL 
              DEVELOPMENT PROJECTS.

    (a) Agency of Record, Pipeline Construction Projects.--Any Federal 
administrative agency proceeding that is an appeal or review under 
section 319 of the Coastal Zone Management Act of 1972 (16 U.S.C. 
1465), as amended by this Act, related to Federal authority for an 
interstate natural gas pipeline construction project, including 
construction of natural gas storage and liquefied natural gas 
facilities, shall use as its exclusive record for all purposes the 
record compiled by the Federal Energy Regulatory Commission pursuant to 
the Commission's proceeding under sections 3 and 7 of the Natural Gas 
Act (15 U.S.C. 717b, 717f).
    (b) Sense of Congress.--It is the sense of Congress that all 
Federal and State agencies with jurisdiction over interstate natural 
gas pipeline construction activities should coordinate their 
proceedings within the timeframes established by the Federal Energy 
Regulatory Commission when the Commission is acting under sections 3 
and 7 of the Natural Gas Act (15 U.S.C. 717b, 717f) to determine 
whether a certificate of public convenience and necessity should be 
issued for a proposed interstate natural gas pipeline.
    (c) Agency of Record, Offshore Mineral Development Projects.--Any 
Federal administrative agency proceeding that is an appeal or review 
under section 319 of the Coastal Zone Management Act of 1972 (16 U.S.C. 
1465), as amended by this Act, related to Federal authority for the 
permitting, approval, or other authorization of energy projects, 
including projects to explore, develop, or produce mineral resources in 
or underlying the Outer Continental Shelf shall use as its exclusive 
record for all purposes (except for the filing of pleadings) the record 
compiled by the relevant Federal permitting agency.

SEC. 331. BILATERAL INTERNATIONAL OIL SUPPLY AGREEMENTS.

    (a) In General.--Notwithstanding any other provision of law, the 
President may export oil to, or secure oil for, any country pursuant to 
a bilateral international oil supply agreement entered into by the 
United States with the country before June 25, 1979, or to any country 
pursuant to the International Emergency Oil Sharing Plan of the 
International Energy Agency.
    (b) Memorandum of Agreement.--The following agreements are deemed 
to have entered into force by operation of law and are deemed to have 
no termination date:
            (1) The agreement entitled ``Agreement amending and 
        extending the memorandum of agreement of June 22, 1979'', 
        entered into force November 13, 1994 (TIAS 12580).
            (2) The agreement entitled ``Agreement amending the 
        contingency implementing arrangements of October 17, 1980'', 
        entered into force June 27, 1995 (TIAS 12670).

SEC. 332. NATURAL GAS MARKET REFORM.

    (a) Clarification of Existing CFTC Authority.--
            (1) False reporting.--Section 9(a)(2) of the Commodity 
        Exchange Act (7 U.S.C. 13(a)(2)) is amended by striking ``false 
        or misleading or knowingly inaccurate reports'' and inserting 
        ``knowingly false or knowingly misleading or knowingly 
        inaccurate reports''.
            (2) Commission Administrative and Civil Authority.--Section 
        9 of the Commodity Exchange Act (7 U.S.C. 13) is amended by 
        redesignating subsection (f) as subsection (e), and adding:
    ``(f) Commission Administrative and Civil Authority.--The 
Commission may bring administrative or civil actions as provided in 
this Act against any person for a violation of any provision of this 
section including, but not limited to, false reporting under subsection 
(a)(2).''.
            (3) Effect of amendments.--The amendments made by 
        paragraphs (1) and (2) restate, without substantive change, 
        existing burden of proof provisions and existing Commission 
        civil enforcement authority, respectively. These clarifying 
        changes do not alter any existing burden of proof or grant any 
        new statutory authority. The provisions of this section, as 
        restated herein, continue to apply to any action pending on or 
        commenced after the date of enactment of this Act for any act, 
        omission, or violation occurring before, on, or after, such 
        date of enactment.
    (b) Fraud Authority.--Section 4b of the Commodity Exchange Act (7 
U.S.C. 6b) is amended--
            (1) by redesignating subsections (b) and (c) as subsections 
        (c) and (d), respectively; and
            (2) by striking subsection (a) and inserting the following:
    ``(a) It shall be unlawful--
            ``(1) for any person, in or in connection with any order to 
        make, or the making of, any contract of sale of any commodity 
        for future delivery or in interstate commerce, that is made, or 
        to be made, on or subject to the rules of a designated contract 
        market, for or on behalf of any other person; or
            ``(2) for any person, in or in connection with any order to 
        make, or the making of, any contract of sale of any commodity 
        for future delivery, or other agreement, contract, or 
        transaction subject to section 5a(g) (1) and (2) of this Act, 
        that is made, or to be made, for or on behalf of, or with, any 
        other person, other than on or subject to the rules of a 
        designated contract market--
                    ``(A) to cheat or defraud or attempt to cheat or 
                defraud such other person;
                    ``(B) willfully to make or cause to be made to such 
                other person any false report or statement or willfully 
                to enter or cause to be entered for such other person 
                any false record;
                    ``(C) willfully to deceive or attempt to deceive 
                such other person by any means whatsoever in regard to 
                any order or contract or the disposition or execution 
                of any order or contract, or in regard to any act of 
                agency performed, with respect to any order or contract 
                for or, in the case of subsection (a)(2), with such 
                other person; or
                    ``(D)(i) to bucket an order if such order is either 
                represented by such person as an order to be executed, 
                or required to be executed, on or subject to the rules 
                of a designated contract market; or
                    ``(ii) to fill an order by offset against the order 
                or orders of any other person, or willfully and 
knowingly and without the prior consent of such other person to become 
the buyer in respect to any selling order of such other person, or 
become the seller in respect to any buying order of such other person, 
if such order is either represented by such person as an order to be 
executed, or required to be executed, on or subject to the rules of a 
designated contract market.
    ``(b) Subsection (a)(2) shall not obligate any person, in 
connection with a transaction in a contract of sale of a commodity for 
future delivery, or other agreement, contract or transaction subject to 
section 5a(g) (1) and (2) of this Act, with another person, to disclose 
to such other person nonpublic information that may be material to the 
market price of such commodity or transaction, except as necessary to 
make any statement made to such other person in connection with such 
transaction, not misleading in any material respect.''.
    (c) Jurisdiction of the CFTC.--The Natural Gas Act (15 U.S.C. 717 
et seq.) is amended by adding at the end:

``SEC. 26. JURISDICTION.

    ``This Act shall not affect the exclusive jurisdiction of the 
Commodity Futures Trading Commission with respect to accounts, 
agreements, contracts, or transactions in commodities under the 
Commodity Exchange Act (7 U.S.C. 1 et seq.). Any request for 
information by the Commission to a designated contract market, 
registered derivatives transaction execution facility, board of trade, 
exchange, or market involving accounts, agreements, contracts, or 
transactions in commodities (including natural gas, electricity, and 
other energy commodities) within the exclusive jurisdiction of the 
Commodity Futures Trading Commission shall be directed to the Commodity 
Futures Trading Commission, which shall cooperate in responding to any 
information request by the Commission.''.
    (d) Increased Penalties.--Section 21 of the Natural Gas Act (15 
U.S.C. 717t) is amended--
            (1) in subsection (a)--
                    (A) by striking ``$5,000'' and inserting 
                ``$1,000,000''; and
                    (B) by striking ``two years'' and inserting ``5 
                years''; and
            (2) in subsection (b), by striking ``$500'' and inserting 
        ``$50,000''.

SEC. 333. NATURAL GAS MARKET TRANSPARENCY.

    The Natural Gas Act (15 U.S.C 717 et seq.) is amended--
            (1) by redesignating section 24 as section 25; and
            (2) by inserting after section 23 the following:

``SEC. 24. NATURAL GAS MARKET TRANSPARENCY.

    ``(a) Authorization.--(1) Not later than 180 days after the date of 
enactment of the Energy Policy Act of 2003, the Federal Energy 
Regulatory Commission shall issue rules directing all entities subject 
to the Commission's jurisdiction as provided under this Act to timely 
report information about the availability and prices of natural gas 
sold at wholesale in interstate commerce to the Commission and price 
publishers.
    ``(2) The Commission shall evaluate the data for adequate price 
transparency and accuracy.
    ``(3) Rules issued under this subsection requiring the reporting of 
information to the Commission that may become publicly available shall 
be limited to aggregate data and transaction-specific data that are 
otherwise required by the Commission to be made public.
    ``(4) In exercising its authority under this section, the 
Commission shall not--
            ``(A) compete with, or displace from the market place, any 
        price publisher; or
            ``(B) regulate price publishers or impose any requirements 
        on the publication of information.
    ``(b) Timely Enforcement.--No person shall be subject to any 
penalty under this section with respect to a violation occurring more 
than 3 years before the date on which the Federal Energy Regulatory 
Commission seeks to assess a penalty.
    ``(c) Limitation on Commission Authority.--(1) The Commission shall 
not condition access to interstate pipeline transportation upon the 
reporting requirements authorized under this section.
    ``(2) Natural gas sales by a producer that are attributable to 
volumes of natural gas produced by such producer shall not be subject 
to the rules issued pursuant to this section.
    ``(3) The Commission shall not require natural gas producers, 
processors, or users who have a de minimis market presence to 
participate in the reporting requirements provided in this section.''.

                   Subtitle C--Access to Federal Land

SEC. 341. OFFICE OF FEDERAL ENERGY PROJECT COORDINATION.

    (a) Establishment.--The President shall establish the Office of 
Federal Energy Project Coordination (referred to in this section as the 
``Office'') within the Executive Office of the President in the same 
manner and with the same mission as the White House Energy Projects 
Task Force established by Executive Order No. 13212 (42 U.S.C. 13201 
note).
    (b) Staffing.--The Office shall be staffed by functional experts 
from relevant Federal agencies on a nonreimbursable basis to carry out 
the mission of the Office.
    (c) Report.--The Office shall transmit an annual report to Congress 
that describes the activities put in place to coordinate and expedite 
Federal decisions on energy projects. The report shall list 
accomplishments in improving the Federal decisionmaking process and 
shall include any additional recommendations or systemic changes needed 
to establish a more effective and efficient Federal permitting process.

SEC. 342. FEDERAL ONSHORE OIL AND GAS LEASING AND PERMITTING PRACTICES.

    (a) Review of Onshore Oil and Gas Leasing Practices.--
            (1) In general.--The Secretary of the Interior, in 
        consultation with the Secretary of Agriculture with respect to 
        National Forest System lands under the jurisdiction of the 
        Department of Agriculture, shall perform an internal review of 
        current Federal onshore oil and gas leasing and permitting 
        practices.
            (2) Inclusions.--The review shall include the process for--
                    (A) accepting or rejecting offers to lease;
                    (B) administrative appeals of decisions or orders 
                of officers or employees of the Bureau of Land 
                Management with respect to a Federal oil or gas lease;
                    (C) considering surface use plans of operation, 
                including the timeframes in which the plans are 
                considered, and any recommendations for improving and 
                expediting the process; and
                    (D) identifying stipulations to address site-
                specific concerns and conditions, including those 
                stipulations relating to the environment and resource 
                use conflicts.
    (b) Report.--Not later than 180 days after the date of enactment of 
this Act, the Secretary of the Interior and the Secretary of 
Agriculture shall transmit a report to Congress that describes--
            (1) actions taken under section 3 of Executive Order No. 
        13212 (42 U.S.C. 13201 note); and
            (2) actions taken or any plans to improve the Federal 
        onshore oil and gas leasing program.

SEC. 343. MANAGEMENT OF FEDERAL OIL AND GAS LEASING PROGRAMS.

    (a) Timely Action on Leases and Permits.--To ensure timely action 
on oil and gas leases and applications for permits to drill on land 
otherwise available for leasing, the Secretary of the Interior (in this 
section referred to as the ``Secretary'') shall--
            (1) ensure expeditious compliance with section 102(2)(C) of 
        the National Environmental Policy Act of 1969 (42 U.S.C. 
        4332(2)(C));
            (2) improve consultation and coordination with the States 
        and the public; and
            (3) improve the collection, storage, and retrieval of 
        information relating to the leasing activities.
    (b) Best Management Practices.--
            (1) In general.--Not later than 18 months after the date of 
        enactment of this Act, the Secretary shall develop and 
        implement best management practices to--
                    (A) improve the administration of the onshore oil 
                and gas leasing program under the Mineral Leasing Act 
                (30 U.S.C. 181 et seq.); and
                    (B) ensure timely action on oil and gas leases and 
                applications for permits to drill on lands otherwise 
                available for leasing.
            (2) Considerations.--In developing the best management 
        practices under paragraph (1), the Secretary shall consider any 
        recommendations from the review under section 342.
            (3) Regulations.--Not later than 180 days after the 
        development of best management practices under paragraph (1), 
        the Secretary shall publish, for public comment, proposed 
        regulations that set forth specific timeframes for processing 
        leases and applications in accordance with the practices, 
        including deadlines for--
                    (A) approving or disapproving resource management 
                plans and related documents, lease applications, and 
                surface use plans; and
                    (B) related administrative appeals.
    (c) Improved Enforcement.--The Secretary shall improve inspection 
and enforcement of oil and gas activities, including enforcement of 
terms and conditions in permits to drill.
    (d) Authorization of Appropriations.--In addition to amounts 
authorized to be appropriated to carry out section 17 of the Mineral 
Leasing Act (30 U.S.C. 226), there are authorized to be appropriated to 
the Secretary for each of fiscal years 2004 through 2007--
            (1) $40,000,000 to carry out subsections (a) and (b); and
            (2) $20,000,000 to carry out subsection (c).

SEC. 344. CONSULTATION REGARDING OIL AND GAS LEASING ON PUBLIC LAND.

    (a) In General.--Not later than 180 days after the date of 
enactment of this Act, the Secretary of the Interior and the Secretary 
of Agriculture shall enter into a memorandum of understanding regarding 
oil and gas leasing on--
            (1) public lands under the jurisdiction of the Secretary of 
        the Interior; and
            (2) National Forest System lands under the jurisdiction of 
        the Secretary of Agriculture.
    (b) Contents.--The memorandum of understanding shall include 
provisions that--
            (1) establish administrative procedures and lines of 
        authority that ensure timely processing of oil and gas lease 
        applications, surface use plans of operation, and applications 
        for permits to drill, including steps for processing surface 
        use plans and applications for permits to drill consistent with 
        the timelines established by the amendment made by section 348;
            (2) eliminate duplication of effort by providing for 
        coordination of planning and environmental compliance efforts; 
        and
            (3) ensure that lease stipulations are--
                    (A) applied consistently;
                    (B) coordinated between agencies; and
                    (C) only as restrictive as necessary to protect the 
                resource for which the stipulations are applied.
    (c) Data Retrieval System.--
            (1) In general.--Not later than 1 year after the date of 
        enactment of this Act, the Secretary of the Interior and the 
        Secretary of Agriculture shall establish a joint data retrieval 
        system that is capable of--
                    (A) tracking applications and formal requests made 
                in accordance with procedures of the Federal onshore 
                oil and gas leasing program; and
                    (B) providing information regarding the status of 
                the applications and requests within the Department of 
                the Interior and the Department of Agriculture.
            (2) Resource mapping.--Not later than 2 years after the 
        date of enactment of this Act, the Secretary of the Interior 
        and the Secretary of Agriculture shall establish a joint 
        Geographic Information System mapping system for use in--
                    (A) tracking surface resource values to aid in 
                resource management; and
                    (B) processing surface use plans of operation and 
                applications for permits to drill.

SEC. 345. ESTIMATES OF OIL AND GAS RESOURCES UNDERLYING ONSHORE FEDERAL 
              LAND.

    (a) Assessment.--Section 604 of the Energy Act of 2000 (42 U.S.C. 
6217) is amended--
            (1) in subsection (a)--
                    (A) in paragraph (1)--
                            (i) by striking ``reserve''; and
                            (ii) by striking ``and'' after the 
                        semicolon; and
                    (B) by striking paragraph (2) and inserting the 
                following:
            ``(2) the extent and nature of any restrictions or 
        impediments to the development of the resources, including--
                    ``(A) impediments to the timely granting of leases;
                    ``(B) post-lease restrictions, impediments, or 
                delays on development for conditions of approval, 
                applications for permits to drill, or processing of 
                environmental permits; and
                    ``(C) permits or restrictions associated with 
                transporting the resources for entry into commerce; and
            ``(3) the quantity of resources not produced or introduced 
        into commerce because of the restrictions.'';
            (2) in subsection (b)--
                    (A) by striking ``reserve'' and inserting 
                ``resource''; and
                    (B) by striking ``publically'' and inserting 
                ``publicly''; and
            (3) by striking subsection (d) and inserting the following:
    ``(d) Assessments.--Using the inventory, the Secretary of Energy 
shall make periodic assessments of economically recoverable resources 
accounting for a range of parameters such as current costs, commodity 
prices, technology, and regulations.''.
    (b) Methodology.--The Secretary of the Interior shall use the same 
assessment methodology across all geological provinces, areas, and 
regions in preparing and issuing national geological assessments to 
ensure accurate comparisons of geological resources.

SEC. 346. COMPLIANCE WITH EXECUTIVE ORDER 13211; ACTIONS CONCERNING 
              REGULATIONS THAT SIGNIFICANTLY AFFECT ENERGY SUPPLY, 
              DISTRIBUTION, OR USE.

    (a) Requirement.--The head of each Federal agency shall require 
that before the Federal agency takes any action that could have a 
significant adverse effect on the supply of domestic energy resources 
from Federal public land, the Federal agency taking the action shall 
comply with Executive Order No. 13211 (42 U.S.C. 13201 note).
    (b) Guidance.--Not later than 180 days after the date of enactment 
of this Act, the Secretary of Energy shall publish guidance for 
purposes of this section describing what constitutes a significant 
adverse effect on the supply of domestic energy resources under 
Executive Order No. 13211 (42 U.S.C. 13201 note).
    (c) Memorandum of Understanding.--The Secretary of the Interior and 
the Secretary of Agriculture shall include in the memorandum of 
understanding under section 344 provisions for implementing subsection 
(a) of this section.

SEC. 347. PILOT PROJECT TO IMPROVE FEDERAL PERMIT COORDINATION.

    (a) Establishment.--The Secretary of the Interior (in this section 
referred to as the ``Secretary'') shall establish a Federal Permit 
Streamlining Pilot Project (in this section referred to as the ``Pilot 
Project'').
    (b) Memorandum of Understanding.--
            (1) In general.--Not later than 90 days after the date of 
        enactment of this Act, the Secretary shall enter into a 
        memorandum of understanding with the Secretary of Agriculture, 
        the Administrator of the Environmental Protection Agency, and 
        the Chief of Engineers of the Army Corps of Engineers for 
        purposes of this section.
            (2) State participation.--The Secretary may request that 
        the Governors of Wyoming, Montana, Colorado, Utah, and New 
        Mexico be signatories to the memorandum of understanding.
    (c) Designation of Qualified Staff.--
            (1) In general.--Not later than 30 days after the date of 
        the signing of the memorandum of understanding under subsection 
        (b), all Federal signatory parties shall assign to each of the 
        field offices identified in subsection (d), on a 
        nonreimbursable basis, an employee who has expertise in the 
        regulatory issues relating to the office in which the employee 
        is employed, including, as applicable, particular expertise 
        in--
                    (A) the consultations and the preparation of 
                biological opinions under section 7 of the Endangered 
                Species Act of 1973 (16 U.S.C. 1536);
                    (B) permits under section 404 of Federal Water 
                Pollution Control Act (33 U.S.C. 1344);
                    (C) regulatory matters under the Clean Air Act (42 
                U.S.C. 7401 et seq.);
                    (D) planning under the National Forest Management 
                Act of 1976 (16 U.S.C. 472a et seq.); and
                    (E) the preparation of analyses under the National 
                Environmental Policy Act of 1969 (42 U.S.C. 4321 et 
                seq.).
            (2) Duties.--Each employee assigned under paragraph (1) 
        shall--
                    (A) not later than 90 days after the date of 
                assignment, report to the Bureau of Land Management 
                Field Managers in the office to which the employee is 
                assigned;
                    (B) be responsible for all issues relating to the 
                jurisdiction of the home office or agency of the 
                employee; and
                    (C) participate as part of the team of personnel 
                working on proposed energy projects, planning, and 
                environmental analyses.
    (d) Field Offices.--The following Bureau of Land Management Field 
Offices shall serve as the Pilot Project offices:
            (1) Rawlins, Wyoming.
            (2) Buffalo, Wyoming.
            (3) Miles City, Montana.
            (4) Farmington, New Mexico.
            (5) Carlsbad, New Mexico.
            (6) Glenwood Springs, Colorado.
            (7) Vernal, Utah.
    (e) Reports.--Not later than 3 years after the date of enactment of 
this Act, the Secretary shall transmit to Congress a report that--
            (1) outlines the results of the Pilot Project to date; and
            (2) makes a recommendation to the President regarding 
        whether the Pilot Project should be implemented throughout the 
        United States.
    (f) Additional Personnel.--The Secretary shall assign to each field 
office identified in subsection (d) any additional personnel that are 
necessary to ensure the effective implementation of--
            (1) the Pilot Project; and
            (2) other programs administered by the field offices, 
        including inspection and enforcement relating to energy 
        development on Federal land, in accordance with the multiple 
        use mandate of the Federal Land Policy and Management Act of 
        1976 (43 U.S.C. 1701 et seq).
    (g) Savings Provision.--Nothing in this section affects--
            (1) the operation of any Federal or State law; or
            (2) any delegation of authority made by the head of a 
        Federal agency whose employees are participating in the Pilot 
        Project.

SEC. 348. DEADLINE FOR CONSIDERATION OF APPLICATIONS FOR PERMITS.

    Section 17 of the Mineral Leasing Act (30 U.S.C. 226) is amended by 
adding at the end the following:
    ``(p) Deadlines for Consideration of Applications for Permits.--
            ``(1) In general.--Not later than 10 days after the date on 
        which the Secretary receives an application for any permit to 
        drill, the Secretary shall--
                    ``(A) notify the applicant that the application is 
                complete; or
                    ``(B) notify the applicant that information is 
                missing and specify any information that is required to 
                be submitted for the application to be complete.
            ``(2) Issuance or deferral.--Not later than 30 days after 
        the applicant for a permit has submitted a complete 
        application, the Secretary shall--
                    ``(A) issue the permit; or
                    ``(B)(i) defer decision on the permit; and
                    ``(ii) provide to the applicant a notice that 
                specifies any steps that the applicant could take for 
                the permit to be issued.
            ``(3) Requirements for deferred applications.--
                    ``(A) In general.--If the Secretary provides notice 
                under paragraph (2)(B)(ii), the applicant shall have a 
                period of 2 years from the date of receipt of the 
                notice in which to complete all requirements specified 
                by the Secretary, including providing information 
                needed for compliance with the National Environmental 
                Policy Act of 1969 (42 U.S.C. 4321 et seq.).
                    ``(B) Issuance of decision on permit.--If the 
                applicant completes the requirements within the period 
                specified in subparagraph (A), the Secretary shall 
                issue a decision on the permit not later than 10 days 
                after the date of completion of the requirements 
                described in subparagraph (A).
                    ``(C) Denial of permit.--If the applicant does not 
                complete the requirements within the period specified 
                in subparagraph (A), the Secretary shall deny the 
                permit.
    ``(q) Report.--On a quarterly basis, each field office of the 
Bureau of Land Management and the Forest Service shall transmit to the 
Secretary of the Interior or the Secretary of Agriculture, 
respectively, a report that--
            ``(1) specifies the number of applications for permits to 
        drill received by the field office in the period covered by the 
        report; and
            ``(2) describes how each of the applications was disposed 
        of by the field office.''.

SEC. 349. CLARIFICATION OF FAIR MARKET RENTAL VALUE DETERMINATIONS FOR 
              PUBLIC LAND AND FOREST SERVICE RIGHTS-OF-WAY.

    (a) Linear Rights-of-Way Under Federal Land Policy and Management 
Act of 1976.--Section 504 of the Federal Land Policy and Management Act 
of 1976 (43 U.S.C. 1764) is amended by adding at the end the following:
    ``(k) Determination of Fair Market Value of Linear Rights-of-Way.--
            ``(1) In general.--Effective beginning on the date of the 
        issuance of the rules required by paragraph (2), for purposes 
        of subsection (g), the Secretary concerned shall determine the 
        fair market value for the use of land encumbered by a linear 
        right-of-way granted, issued, or renewed under this title using 
        the valuation method described in paragraphs (2), (3), and (4).
            ``(2) Revisions.--Not later than 1 year after the date of 
        enactment of this subsection--
                    ``(A) the Secretary of the Interior shall amend 
                section 2803.1-2 of title 43, Code of Federal 
                Regulations, as in effect on the date of enactment of 
                this subsection, to revise the per acre rental fee zone 
                value schedule by State, county, and type of linear 
                right-of-way use to reflect current values of land in 
                each zone; and
                    ``(B) the Secretary of Agriculture shall make the 
                same revision for linear rights-of-way granted, issued, 
                or renewed under this title on National Forest System 
                land.
            ``(3) Updates.--The Secretary concerned shall annually 
        update the schedule revised under paragraph (2) by multiplying 
        the current year's rental per acre by the annual change, second 
        quarter to second quarter (June 30 to June 30) in the Gross 
        National Product Implicit Price Deflator Index published in the 
        Survey of Current Business of the Department of Commerce, 
        Bureau of Economic Analysis.
            ``(4) Review.--If the cumulative change in the index 
        referred to in paragraph (3) exceeds 30 percent, or the change 
        in the 3-year average of the 1-year Treasury interest rate used 
        to determine per acre rental fee zone values exceeds plus or 
        minus 50 percent, the Secretary concerned shall conduct a 
        review of the zones and rental per acre figures to determine 
        whether the value of Federal land has differed sufficiently 
        from the index referred to in paragraph (3) to warrant a 
        revision in the base zones and rental per acre figures. If, as 
        a result of the review, the Secretary concerned determines that 
        such a revision is warranted, the Secretary concerned shall 
        revise the base zones and rental per acre figures accordingly. 
        Any revision of base zones and rental per acre figure shall 
        only affect lease rental rates at inception or renewal.''.
    (b) Rights-of-Way Under Mineral Leasing Act.--Section 28(l) of the 
Mineral Leasing Act (30 U.S.C. 185(l)) is amended by inserting before 
the period at the end the following: ``using the valuation method 
described in section 2803.1-2 of title 43, Code of Federal Regulations, 
as revised in accordance with section 504(k) of the Federal Land Policy 
and Management Act of 1976 (43 U.S.C. 1764(k))''.

SEC. 350. ENERGY FACILITY RIGHTS-OF-WAY AND CORRIDORS ON FEDERAL LAND.

    (a) Report to Congress.--
            (1) In general.--Not later than 1 year after the date of 
        enactment of this Act, the Secretary of Agriculture and the 
        Secretary of the Interior, in consultation with the Secretary 
        of Commerce, the Secretary of Defense, the Secretary of Energy, 
        and the Federal Energy Regulatory Commission, shall submit to 
        Congress a joint report--
                    (A) that addresses--
                            (i) the location of existing rights-of-way 
                        and designated and de facto corridors for oil 
                        and gas pipelines and electric transmission and 
                        distribution facilities on Federal land; and
                            (ii) opportunities for additional oil and 
                        gas pipeline and electric transmission capacity 
                        within those rights-of-way and corridors; and
                    (B) that includes a plan for making available, on 
                request, to the appropriate Federal, State, and local 
                agencies, tribal governments, and other persons 
                involved in the siting of oil and gas pipelines and 
                electricity transmission facilities Geographic 
                Information System-based information regarding the 
                location of the existing rights-of-way and corridors 
                and any planned rights-of-way and corridors.
            (2) Consultations and considerations.--In preparing the 
        report, the Secretary of the Interior and the Secretary of 
        Agriculture shall consult with--
                    (A) other agencies of Federal, State, tribal, or 
                local units of government, as appropriate;
                    (B) persons involved in the siting of oil and gas 
                pipelines and electric transmission facilities; and
                    (C) other interested members of the public.
            (3) Limitation.--The Secretary of the Interior and the 
        Secretary of Agriculture shall limit the distribution of the 
        report and Geographic Information System-based information 
        referred to in paragraph (1) as necessary for national and 
        infrastructure security reasons, if either Secretary determines 
        that the information may be withheld from public disclosure 
        under a national security or other exception under section 
        552(b) of title 5, United States Code.
    (b) Corridor Designations.--
            (1) 11 contiguous western states.--Not later than 2 years 
        after the date of enactment of this Act, the Secretary of 
        Agriculture, the Secretary of Commerce, the Secretary of 
        Defense, the Secretary of Energy, and the Secretary of the 
        Interior, in consultation with the Federal Energy Regulatory 
        Commission and the affected utility industries, shall jointly--
                    (A) designate, under title V of the Federal Land 
                Policy and Management Act of 1976 (43 U.S.C. 1761 et 
                seq.) and other applicable Federal laws, corridors for 
                oil and gas pipelines and electricity transmission and 
                facilities on Federal land in the eleven contiguous 
                Western States (as defined in section 103 of the 
                Federal Land Policy and Management Act of 1976 (43 
U.S.C. 1702));
                    (B) perform any environmental reviews that may be 
                required to complete the designations of corridors for 
                the facilities on Federal land in the eleven contiguous 
                Western States; and
                    (C) incorporate the designated corridors into--
                            (i) the relevant departmental and agency 
                        land use and resource management plans; or
                            (ii) equivalent plans.
            (2) Other states.--Not later than 4 years after the date of 
        enactment of this Act, the Secretary of Agriculture, the 
        Secretary of Commerce, the Secretary of Defense, the Secretary 
        of Energy, and the Secretary of the Interior, in consultation 
        with the Federal Energy Regulatory Commission and the affected 
        utility industries, shall jointly--
                    (A) identify corridors for oil and gas pipelines 
                and electricity transmission and distribution 
                facilities on Federal land in the States other than 
                those described in paragraph (1); and
                    (B) schedule prompt action to identify, designate, 
                and incorporate the corridors into the land use plan.
            (3) Ongoing responsibilities.--After completing the 
        requirements under paragraphs (1) and (2), the Secretary of 
        Agriculture, the Secretary of Commerce, the Secretary of 
        Defense, the Secretary of Energy, and the Secretary of the 
        Interior, with respect to lands under their respective 
        jurisdictions, in consultation with the Federal Energy 
        Regulatory Commission and the affected utility industries, 
        shall establish procedures that--
                    (A) ensure that additional corridors for oil and 
                gas pipelines and electricity transmission and 
                distribution facilities on Federal land are promptly 
                identified and designated; and
                    (B) expedite applications to construct or modify 
                oil and gas pipelines and electricity transmission and 
                distribution facilities within the corridors, taking 
                into account prior analyses and environmental reviews 
                undertaken during the designation of corridors.
    (c) Considerations.--In carrying out this section, the Secretaries 
shall take into account the need for upgraded and new electricity 
transmission and distribution facilities to--
            (1) improve reliability;
            (2) relieve congestion; and
            (3) enhance the capability of the national grid to deliver 
        electricity.
    (d) Definition of Corridor.--
            (1) In general.--In this section and title V of the Federal 
        Land Policy and Management Act of 1976 (43 U.S.C. 1761 et 
        seq.), the term ``corridor'' means--
                    (A) a linear strip of land--
                            (i) with a width determined with 
                        consideration given to technological, 
                        environmental, and topographical factors; and
                            (ii) that contains, or may in the future 
                        contain, 1 or more utility, communication, or 
                        transportation facilities;
                    (B) a land use designation that is established--
                            (i) by law;
                            (ii) by Secretarial Order;
                            (iii) through the land use planning 
                        process; or
                            (iv) by other management decision; and
                    (C) a designation made for the purpose of 
                establishing the preferred location of compatible 
                linear facilities and land uses.
            (2) Specifications of corridor.--On designation of a 
        corridor under this section, the centerline, width, and 
        compatible uses of a corridor shall be specified.

SEC. 351. CONSULTATION REGARDING ENERGY RIGHTS-OF-WAY ON PUBLIC LAND.

    (a) Memorandum of Understanding.--
            (1) In general.--Not later than 6 months after the date of 
        enactment of this Act, the Secretary of Energy, in consultation 
        with the Secretary of the Interior, the Secretary of 
        Agriculture, and the Secretary of Defense with respect to lands 
        under their respective jurisdictions, shall enter into a 
        memorandum of understanding to coordinate all applicable 
        Federal authorizations and environmental reviews relating to a 
        proposed or existing utility facility. To the maximum extent 
        practicable under applicable law, the Secretary of Energy 
        shall, to ensure timely review and permit decisions, coordinate 
        such authorizations and reviews with any Indian tribes, multi-
        State entities, and State agencies that are responsible for 
        conducting any separate permitting and environmental reviews of 
        the affected utility facility.
            (2) Contents.--The memorandum of understanding shall 
        include provisions that--
                    (A) establish--
                            (i) a unified right-of-way application 
                        form; and
                            (ii) an administrative procedure for 
                        processing right-of-way applications, including 
                        lines of authority, steps in application 
                        processing, and timeframes for application 
                        processing;
                    (B) provide for coordination of planning relating 
                to the granting of the rights-of-way;
                    (C) provide for an agreement among the affected 
                Federal agencies to prepare a single environmental 
                review document to be used as the basis for all Federal 
                authorization decisions; and
                    (D) provide for coordination of use of right-of-way 
                stipulations to achieve consistency.
    (b) Natural Gas Pipelines.--
            (1) In general.--With respect to permitting activities for 
        interstate natural gas pipelines, the May 2002 document 
        entitled ``Interagency Agreement On Early Coordination Of 
        Required Environmental And Historic Preservation Reviews 
        Conducted In Conjunction With The Issuance Of Authorizations To 
        Construct And Operate Interstate Natural Gas Pipelines 
        Certificated By The Federal Energy Regulatory Commission'' 
        shall constitute compliance with subsection (a).
            (2) Report.--
                    (A) In general.--Not later than 1 year after the 
                date of enactment of this Act, and every 2 years 
                thereafter, agencies that are signatories to the 
                document referred to in paragraph (1) shall transmit to 
                Congress a report on how the agencies under the 
                jurisdiction of the Secretaries are incorporating and 
                implementing the provisions of the document referred to 
                in paragraph (1).
                    (B) Contents.--The report shall address--
                            (i) efforts to implement the provisions of 
                        the document referred to in paragraph (1);
                            (ii) whether the efforts have had a 
                        streamlining effect;
                            (iii) further improvements to the 
                        permitting process of the agency; and
                            (iv) recommendations for inclusion of State 
                        and tribal governments in a coordinated 
                        permitting process.
    (c) Definition of Utility Facility.--In this section, the term 
``utility facility'' means any privately, publicly, or cooperatively 
owned line, facility, or system--
            (1) for the transportation of--
                    (A) oil, natural gas, synthetic liquid fuel, or 
                gaseous fuel;
                    (B) any refined product produced from oil, natural 
                gas, synthetic liquid fuel, or gaseous fuel; or
                    (C) products in support of the production of 
                material referred to in subparagraph (A) or (B);
            (2) for storage and terminal facilities in connection with 
        the production of material referred to in paragraph (1); or
            (3) for the generation, transmission, and distribution of 
        electric energy.

SEC. 352. RENEWABLE ENERGY ON FEDERAL LAND.

    (a) Report.--
            (1) In general.--Not later than 24 months after the date of 
        enactment of this Act, the Secretary of the Interior, in 
        cooperation with the Secretary of Agriculture, shall develop 
        and transmit to Congress a report that includes recommendations 
        on opportunities to develop renewable energy on--
                    (A) public lands under the jurisdiction of the 
                Secretary of the Interior; and
                    (B) National Forest System lands under the 
                jurisdiction of the Secretary of Agriculture.
            (2) Contents.--The report shall include--
                    (A) 5-year plans developed by the Secretary of the 
                Interior and the Secretary of Agriculture, 
                respectively, for encouraging the development of 
                renewable energy consistent with applicable law and 
                management plans;
                    (B) an analysis of--
                            (i) the use of rights-of-way, leases, or 
                        other methods to develop renewable energy on 
                        such lands;
                            (ii) the anticipated benefits of grants, 
                        loans, tax credits, or other provisions to 
                        promote renewable energy development on such 
                        lands; and
                            (iii) any issues that the Secretary of the 
                        Interior or the Secretary of Agriculture have 
                        encountered in managing renewable energy 
                        projects on such lands, believe are likely to 
                        arise in relation to the development of 
                        renewable energy on such lands;
                    (C) a list, developed in consultation with the 
                Secretary of Energy and the Secretary of Defense, of 
                lands under the jurisdiction of the Department of 
                Energy or the Department of Defense that would be 
                suitable for development for renewable energy, and any 
                recommended statutory and regulatory mechanisms for 
                such development; and
                    (D) any recommendations relating to the issues 
                addressed in the report.
    (b) National Academy of Sciences Study.--
            (1) In general.--Not later than 90 days after the date of 
        enactment of this Act, the Secretary of the Interior shall 
        contract with the National Academy of Sciences to--
                    (A) study the potential for the development of 
                wind, solar, and ocean energy (including tidal, wave, 
                and thermal energy) on the Outer Continental Shelf;
                    (B) assess existing Federal authorities for the 
                development of such resources; and
                    (C) recommend statutory and regulatory mechanisms 
                for such development.
            (2) Transmittal.--The results of the study shall be 
        transmitted to Congress not later than 2 years after the date 
        of enactment of this Act.
    (c) Generation Capacity of Electricity From Renewable Energy 
Resources on Public Land.--The Secretary of the Interior shall, not 
later than 10 years after the date of enactment of this Act, seek to 
approve renewable energy projects located (or to be located) on public 
lands with a generation capacity of at least 10,000 megawatts of 
electricity.

SEC. 353. ELECTRICITY TRANSMISSION LINE RIGHT-OF-WAY, CLEVELAND 
              NATIONAL FOREST AND ADJACENT PUBLIC LAND, CALIFORNIA.

    (a) Issuance.--
            (1) In general.--Not later than 60 days after the 
        completion of the environmental reviews under subsection (c), 
        the Secretary of the Interior and the Secretary of Agriculture 
        shall issue all necessary grants, easements, permits, plan 
        amendments, and other approvals to allow for the siting and 
        construction of a high-voltage electricity transmission line 
        right-of-way running approximately north to south through the 
        Trabuco Ranger District of the Cleveland National Forest in the 
        State of California and adjacent lands under the jurisdiction 
        of the Bureau of Land Management and the Forest Service.
            (2) Inclusions.--The right-of-way approvals under paragraph 
        (1) shall provide all necessary Federal authorization from the 
        Secretary of the Interior and the Secretary of Agriculture for 
        the routing, construction, operation, and maintenance of a 500-
        kilovolt transmission line capable of meeting the long-term 
        electricity transmission needs of the region between the 
        existing Valley-Serrano transmission line to the north and the 
        Telega-Escondido transmission line to the south, and for 
        connecting to future generating capacity that may be developed 
        in the region.
    (b) Protection of Wilderness Areas.--The Secretary of the Interior 
and the Secretary of Agriculture shall not allow any portion of a 
transmission line right-of-way corridor identified in subsection (a) to 
enter any identified wilderness area in existence as of the date of 
enactment of this Act.
    (c) Environmental and Administrative Reviews.--
            (1) Department of interior or local agency.--The Secretary 
        of the Interior, acting through the Director of the Bureau of 
        Land Management, shall be the lead Federal agency with overall 
        responsibility to ensure completion of required environmental 
        and other reviews of the approvals to be issued under 
        subsection (a).
            (2) National forest system land.--For the portions of the 
        corridor on National Forest System lands, the Secretary of 
        Agriculture shall complete all required environmental reviews 
        and administrative actions in coordination with the Secretary 
        of the Interior.
            (3) Expeditious completion.--The reviews required for 
        issuance of the approvals under subsection (a) shall be 
        completed not later than 1 year after the date of the enactment 
        of this Act.
    (d) Other Terms and Conditions.--The transmission line right-of-way 
shall be subject to such terms and conditions as the Secretary of the 
Interior and the Secretary of Agriculture consider necessary, based on 
the environmental reviews under subsection (c), to protect the value of 
historic, cultural, and natural resources under the jurisdiction of the 
Secretary of the Interior or the Secretary of Agriculture.
    (e) Preference Among Proposals.--The Secretary of the Interior and 
the Secretary of Agriculture shall give a preference to any application 
or preapplication proposal for a transmission line right-of-way 
referred to in subsection (a) that was submitted before December 31, 
2002, over all other applications and proposals for the same or a 
similar right-of-way submitted on or after that date.

SEC. 354. SENSE OF CONGRESS REGARDING DEVELOPMENT OF MINERALS UNDER 
              PADRE ISLAND NATIONAL SEASHORE.

    (a) Findings.--Congress finds the following:
            (1) Pursuant to Public Law 87-712 (16 U.S.C. 459d et seq.; 
        popularly known as the ``Federal Enabling Act'') and various 
        deeds and actions under that Act, the United States is the 
        owner of only the surface estate of certain lands constituting 
        the Padre Island National Seashore.
            (2) Ownership of the oil, gas, and other minerals in the 
        subsurface estate of the lands constituting the Padre Island 
        National Seashore was never acquired by the United States, and 
        ownership of those interests is held by the State of Texas and 
        private parties.
            (3) Public Law 87-712 (16 U.S.C. 459d et seq.)--
                    (A) expressly contemplated that the United States 
                would recognize the ownership and future development of 
                the oil, gas, and other minerals in the subsurface 
                estate of the lands constituting the Padre Island 
                National Seashore by the owners and their mineral 
                lessees; and
                    (B) recognized that approval of the State of Texas 
                was required to create Padre Island National Seashore.
            (4) Approval was given for the creation of Padre Island 
        National Seashore by the State of Texas through Tex. Rev. Civ. 
        Stat. Ann. Art. 6077(t) (Vernon 1970), which expressly 
        recognized that development of the oil, gas, and other minerals 
        in the subsurface of the lands constituting Padre Island 
        National Seashore would be conducted with full rights of 
        ingress and egress under the laws of the State of Texas.
    (b) Sense of Congress.--It is the sense of Congress that with 
regard to Federal law, any regulation of the development of oil, gas, 
or other minerals in the subsurface of the lands constituting Padre 
Island National Seashore should be made as if those lands retained the 
status that the lands had on September 27, 1962.

SEC. 355. ENCOURAGING PROHIBITION OF OFF-SHORE DRILLING IN THE GREAT 
              LAKES.

    Congress encourages--
            (1) the States of Illinois, Michigan, New York, 
        Pennsylvania, and Wisconsin to continue to prohibit offshore 
        drilling in the Great Lakes for oil and gas; and
            (2) the States of Indiana, Minnesota, and Ohio to enact a 
        prohibition of such drilling.

SEC. 356. FINGER LAKES NATIONAL FOREST WITHDRAWAL.

    All Federal land within the boundary of Finger Lakes National 
Forest in the State of New York is withdrawn from--
            (1) all forms of entry, appropriation, or disposal under 
        the public land laws; and
            (2) disposition under all laws relating to oil and gas 
        leasing.

SEC. 357. STUDY ON LEASE EXCHANGES IN THE ROCKY MOUNTAIN FRONT.

    (a) Definitions.--For the purposes of this section:
            (1) Badger-two medicine area.--The term ``Badger-Two 
        Medicine Area'' means the Forest Service land located in--
                    (A) T. 31 N., R. 12-13 W.;
                    (B) T. 30 N., R. 11-13 W.;
                    (C) T. 29 N., R. 10-16 W.; and
                    (D) T. 28 N., R. 10-14 W.
            (2) Blackleaf area.--The term ``Blackleaf Area'' means the 
        Federal land owned by the Forest Service and Bureau of Land 
        Management that is located in--
                    (A) T. 27 N., R. 9 W.;
                    (B) T. 26 N., R. 9-10 W.;
                    (C) T. 25 N., R. 8-10 W.; and
                    (D) T. 24 N., R. 8-9 W.
            (3) Eligible lessee.--The term ``eligible lessee'' means a 
        lessee under a nonproducing lease.
            (4) Nonproducing lease.--The term ``nonproducing lease'' 
        means a Federal oil or gas lease--
                    (A) that is in existence and in good standing on 
                the date of enactment of this Act; and
                    (B) that is located in the Badger-Two Medicine Area 
                or the Blackleaf Area.
            (5) Secretary.--The term ``Secretary'' means the Secretary 
        of the Interior.
            (6) State.--The term ``State'' means the State of Montana.
    (b) Evaluation.--
            (1) In general.--The Secretary, in consultation with the 
        Governor of the State, and the eligible lessees, shall evaluate 
        opportunities for domestic oil and gas production through the 
        exchange of the nonproducing leases.
            (2) Requirements.--In carrying out the evaluation under 
        subsection (a), the Secretary shall--
                    (A) consider opportunities for domestic production 
                of oil and gas through--
                            (i) the exchange of the nonproducing leases 
                        for oil and gas lease tracts of comparable 
                        value in the State; and
                            (ii) the issuance of bidding, royalty, or 
                        rental credits for Federal oil and gas leases 
                        in the State in exchange for the cancellation 
                        of the nonproducing leases;
                    (B) consider any other appropriate means to 
                exchange, or provide compensation for the cancellation 
                of, nonproducing leases, subject to the consent of the 
                eligible lessees;
                    (C) consider the views of any interested persons, 
                including the State;
                    (D) determine the level of interest of the eligible 
                lessees in exchanging the nonproducing leases;
                    (E) assess the economic impact on the lessees and 
                the State of lease exchange, lease cancellation, and 
                final judicial or administrative decisions related to 
                the nonproducing leases; and
                    (F) provide recommendations on--
                            (i) whether to pursue an exchange of the 
                        nonproducing leases;
                            (ii) any changes in laws (including 
                        regulations) that are necessary for the 
                        Secretary to carry out the exchange; and
                            (iii) any other appropriate means to 
                        exchange or provide compensation for the 
                        cancellation of a nonproducing lease, subject 
                        to the consent of the eligible lessee.
    (c) Valuation of Nonproducing Leases.--For the purpose of the 
evaluation under subsection (a), the value of a nonproducing lease 
shall be an amount equal to the difference between--
            (1) the sum of--
                    (A) the amount paid by the eligible lessee for the 
                nonproducing lease;
                    (B) any direct expenditures made by the eligible 
                lessee before the transmittal of the report in 
                subsection (c) associated with the exploration and 
development of the nonproducing lease; and
                    (C) interest on any amounts under subparagraphs (A) 
                and (B) during the period beginning on the date on 
                which the amount was paid and ending on the date on 
                which credits are issued under subsection 
                (b)(2)(A)(ii); and
            (2) the sum of the revenues from the nonproducing lease.
    (d) Report to Congress.--Not later than 2 years after the date of 
the enactment of this Act, the Secretary shall initiate the evaluation 
in subsection (b) and transmit to Congress a report on the evaluation.

SEC. 358. FEDERAL COALBED METHANE REGULATION.

    Any State currently on the list of Affected States established 
under section 1339(b) of the Energy Policy Act of 1992 (42 U.S.C. 
13368(b)) shall be removed from the list if, not later than 3 years 
after the date of enactment of this Act, the State takes, or prior to 
the date of enactment has taken, any of the actions required for 
removal from the list under such section 1339(b).

SEC. 359. LIVINGSTON PARISH MINERAL RIGHTS TRANSFER.

    (a) Amendments.--Section 102 of Public Law 102-562 (106 Stat. 4234) 
is amended--
            (1) by striking ``(a) In General.--
            (2) by striking ``and subject to the reservation in 
        subsection (b),''; and
            (3) by striking subsection (b).
    (b) Implementation of Amendment.--The Secretary of the Interior 
shall execute the legal instruments necessary to effectuate the 
amendment made by subsection (a)(3).

                Subtitle D--Alaska Natural Gas Pipeline

SEC. 371. SHORT TITLE.

    This subtitle may be cited as the ``Alaska Natural Gas Pipeline 
Act''.

SEC. 372. DEFINITIONS.

    In this subtitle:
            (1) Alaska natural gas.--The term ``Alaska natural gas'' 
        means natural gas derived from the area of the State of Alaska 
        lying north of 64 degrees north latitude.
            (2) Alaska natural gas transportation project.--The term 
        ``Alaska natural gas transportation project'' means any natural 
        gas pipeline system that carries Alaska natural gas to the 
        border between Alaska and Canada (including related facilities 
        subject to the jurisdiction of the Commission) that is 
        authorized under--
                    (A) the Alaska Natural Gas Transportation Act of 
                1976 (15 U.S.C. 719 et seq.); or
                    (B) section 373.
            (3) Alaska natural gas transportation system.--The term 
        ``Alaska natural gas transportation system'' means the Alaska 
        natural gas transportation project authorized under the Alaska 
        Natural Gas Transportation Act of 1976 (15 U.S.C. 719 et seq.) 
        and designated and described in section 2 of the President's 
        decision.
            (4) Commission.--The term ``Commission'' means the Federal 
        Energy Regulatory Commission.
            (5) Federal coordinator.--The term ``Federal Coordinator'' 
        means the head of the Office of the Federal Coordinator for 
        Alaska Natural Gas Transportation Projects established by 
        section 376(a).
            (6) President's decision.--The term ``President's 
        decision'' means the decision and report to Congress on the 
        Alaska natural gas transportation system--
                    (A) issued by the President on September 22, 1977, 
                in accordance with section 7 of the Alaska Natural Gas 
                Transportation Act of 1976 (15 U.S.C. 719e); and
                    (B) approved by Public Law 95-158 (15 U.S.C. 719f 
                note; 91 Stat. 1268).
            (7) Secretary.--The term ``Secretary'' means the Secretary 
        of Energy.
            (8) State.--The term ``State'' means the State of Alaska.

SEC. 373. ISSUANCE OF CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY.

    (a) Authority of the Commission.--Notwithstanding the Alaska 
Natural Gas Transportation Act of 1976 (15 U.S.C. 719 et seq.), the 
Commission may, in accordance with section 7(c) of the Natural Gas Act 
(15 U.S.C. 717f(c)), consider and act on an application for the 
issuance of a certificate of public convenience and necessity 
authorizing the construction and operation of an Alaska natural gas 
transportation project other than the Alaska natural gas transportation 
system.
    (b) Issuance of Certificate.--
            (1) In general.--The Commission shall issue a certificate 
        of public convenience and necessity authorizing the 
        construction and operation of an Alaska natural gas 
        transportation project under this section if the applicant has 
        satisfied the requirements of section 7(e) of the Natural Gas 
        Act (15 U.S.C. 717f(e)).
            (2) Considerations.--In considering an application under 
        this section, the Commission shall presume that--
                    (A) a public need exists to construct and operate 
                the proposed Alaska natural gas transportation project; 
                and
                    (B) sufficient downstream capacity will exist to 
                transport the Alaska natural gas moving through the 
                project to markets in the contiguous United States.
    (c) Expedited Approval Process.--Not later than 60 days after the 
date of issuance of the final environmental impact statement under 
section 374 for an Alaska natural gas transportation project, the 
Commission shall issue a final order granting or denying any 
application for a certificate of public convenience and necessity for 
the project under section 7(c) of the Natural Gas Act (15 U.S.C. 
717f(c)) and this section.
    (d) Prohibition of Certain Pipeline Route.--No license, permit, 
lease, right-of-way, authorization, or other approval required under 
Federal law for the construction of any pipeline to transport natural 
gas from land within the Prudhoe Bay oil and gas lease area may be 
granted for any pipeline that follows a route that--
            (1) traverses land beneath navigable waters (as defined in 
        section 2 of the Submerged Lands Act (43 U.S.C. 1301)) beneath, 
        or the adjacent shoreline of, the Beaufort Sea; and
            (2) enters Canada at any point north of 68 degrees north 
        latitude.
    (e) Open Season.--
            (1) In general.--Not later than 120 days after the date of 
        enactment of this Act, the Commission shall issue regulations 
        governing the conduct of open seasons for Alaska natural gas 
        transportation projects (including procedures for the 
        allocation of capacity).
            (2) Regulations.--The regulations referred to in paragraph 
        (1) shall--
                    (A) include the criteria for and timing of any open 
                seasons;
                    (B) promote competition in the exploration, 
                development, and production of Alaska natural gas; and
                    (C) for any open season for capacity exceeding the 
                initial capacity, provide the opportunity for the 
                transportation of natural gas other than from the 
Prudhoe Bay and Point Thomson units.
            (3) Applicability.--Except in a case in which an expansion 
        is ordered in accordance with section 375, initial or expansion 
        capacity on any Alaska natural gas transportation project shall 
        be allocated in accordance with procedures to be established by 
        the Commission in regulations issued under paragraph (1).
    (f) Projects in the Contiguous United States.--
            (1) In general.--An application for additional or expanded 
        pipeline facilities that may be required to transport Alaska 
        natural gas from Canada to markets in the contiguous United 
        States may be made in accordance with the Natural Gas Act (15 
        U.S.C. 717a et seq.).
            (2) Expansion.--To the extent that a pipeline facility 
        described in paragraph (1) includes the expansion of any 
        facility constructed in accordance with the Alaska Natural Gas 
        Transportation Act of 1976 (15 U.S.C. 719 et seq.), that Act 
        shall continue to apply.
    (g) Study of In-State Needs.--The holder of the certificate of 
public convenience and necessity issued, modified, or amended by the 
Commission for an Alaska natural gas transportation project shall 
demonstrate that the holder has conducted a study of Alaska in-State 
needs, including tie-in points along the Alaska natural gas 
transportation project for in-State access.
    (h) Alaska Royalty Gas.--
            (1) In general.--Except as provided in paragraph (2), the 
        Commission, on a request by the State and after a hearing, may 
        provide for reasonable access to the Alaska natural gas 
        transportation project by the State (or State designee) for the 
        transportation of royalty gas of the State for the purpose of 
        meeting local consumption needs within the State.
            (2) Exception.--The rates of shippers of subscribed 
        capacity on an Alaska natural gas transportation project 
        described in paragraph (1), as in effect as of the date on 
        which access under that paragraph is granted, shall not be 
        increased as a result of such access.
    (i) Regulations.--The Commission may issue such regulations as are 
necessary to carry out this section.

SEC. 374. ENVIRONMENTAL REVIEWS.

    (a) Compliance With NEPA.--The issuance of a certificate of public 
convenience and necessity authorizing the construction and operation of 
any Alaska natural gas transportation project under section 373 shall 
be treated as a major Federal action significantly affecting the 
quality of the human environment within the meaning of section 
102(2)(C) of the National Environmental Policy Act of 1969 (42 U.S.C. 
4332(2)(C)).
    (b) Designation of Lead Agency.--
            (1) In general.--The Commission--
                    (A) shall be the lead agency for purposes of 
                complying with the National Environmental Policy Act of 
                1969 (42 U.S.C. 4321 et seq.); and
                    (B) shall be responsible for preparing the 
                environmental impact statement required by section 
                102(2)(c) of that Act (42 U.S.C. 4332(2)(c)) with 
                respect to an Alaska natural gas transportation project 
                under section 373.
            (2) Consolidation of statements.--In carrying out paragraph 
        (1), the Commission shall prepare a single environmental impact 
        statement, which shall consolidate the environmental reviews of 
        all Federal agencies considering any aspect of the Alaska 
        natural gas transportation project covered by the environmental 
        impact statement.
    (c) Other Agencies.--
            (1) In general.--Each Federal agency considering an aspect 
        of the construction and operation of an Alaska natural gas 
        transportation project under section 373 shall--
                    (A) cooperate with the Commission; and
                    (B) comply with deadlines established by the 
                Commission in the preparation of the environmental 
                impact statement under this section.
            (2) Satisfaction of nepa requirements.--The environmental 
        impact statement prepared under this section shall be adopted 
        by each Federal agency described in paragraph (1) in 
        satisfaction of the responsibilities of the Federal agency 
        under section 102(2)(C) of the National Environmental Policy 
        Act of 1969 (42 U.S.C. 4332(2)(C)) with respect to the Alaska 
        natural gas transportation project covered by the environmental 
        impact statement.
    (d) Expedited Process.--The Commission shall--
            (1) not later than 1 year after the Commission determines 
        that the application under section 373 with respect to an 
        Alaska natural gas transportation project is complete, issue a 
        draft environmental impact statement under this section; and
            (2) not later than 180 days after the date of issuance of 
        the draft environmental impact statement, issue a final 
        environmental impact statement, unless the Commission for good 
        cause determines that additional time is needed.

SEC. 375. PIPELINE EXPANSION.

    (a) Authority.--With respect to any Alaska natural gas 
transportation project, on a request by 1 or more persons and after 
giving notice and an opportunity for a hearing, the Commission may 
order the expansion of the Alaska natural gas project if the Commission 
determines that such an expansion is required by the present and future 
public convenience and necessity.
    (b) Responsibilities of Commission.--Before ordering an expansion 
under subsection (a), the Commission shall--
            (1) approve or establish rates for the expansion service 
        that are designed to ensure the recovery, on an incremental or 
        rolled-in basis, of the cost associated with the expansion 
        (including a reasonable rate of return on investment);
            (2) ensure that the rates do not require existing shippers 
        on the Alaska natural gas transportation project to subsidize 
        expansion shippers;
            (3) find that a proposed shipper will comply with, and the 
        proposed expansion and the expansion of service will be 
        undertaken and implemented based on, terms and conditions 
        consistent with the tariff of the Alaska natural gas 
        transportation project in effect as of the date of the 
        expansion;
            (4) find that the proposed facilities will not adversely 
        affect the financial or economic viability of the Alaska 
        natural gas transportation project;
            (5) find that the proposed facilities will not adversely 
        affect the overall operations of the Alaska natural gas 
        transportation project;
            (6) find that the proposed facilities will not diminish the 
        contract rights of existing shippers to previously subscribed 
        certificated capacity;
            (7) ensure that all necessary environmental reviews have 
        been completed; and
            (8) find that adequate downstream facilities exist or are 
        expected to exist to deliver incremental Alaska natural gas to 
        market.
    (c) Requirement for a Firm Transportation Agreement.--Any order of 
the Commission issued in accordance with this section shall be void 
unless the person requesting the order executes a firm transportation 
agreement with the Alaska natural gas transportation project within 
such reasonable period of time as the order may specify.
    (d) Limitation.--Nothing in this section expands or otherwise 
affects any authority of the Commission with respect to any natural gas 
pipeline located outside the State.
    (e) Regulations.--The Commission may issue such regulations as are 
necessary to carry out this section.

SEC. 376. FEDERAL COORDINATOR.

    (a) Establishment.--There is established, as an independent office 
in the executive branch, the Office of the Federal Coordinator for 
Alaska Natural Gas Transportation Projects.
    (b) Federal Coordinator.--
            (1) Appointment.--The Office shall be headed by a Federal 
        Coordinator for Alaska Natural Gas Transportation Projects, who 
        shall be appointed by the President, by and with the advice and 
        consent of the Senate, to serve a term to last until 1 year 
        following the completion of the project referred to in section 
        373.
            (2) Compensation.--The Federal Coordinator shall be 
        compensated at the rate prescribed for level III of the 
        Executive Schedule (5 U.S.C. 5314).
    (c) Duties.--The Federal Coordinator shall be responsible for--
            (1) coordinating the expeditious discharge of all 
        activities by Federal agencies with respect to an Alaska 
        natural gas transportation project; and
            (2) ensuring the compliance of Federal agencies with the 
        provisions of this subtitle.
    (d) Reviews and Actions of Other Federal Agencies.--
            (1) Expedited reviews and actions.--All reviews conducted 
        and actions taken by any Federal agency relating to an Alaska 
        natural gas transportation project authorized under this 
        section shall be expedited, in a manner consistent with 
        completion of the necessary reviews and approvals by the 
        deadlines under this subtitle.
            (2) Prohibition of certain terms and conditions.--No 
        Federal agency may include in any certificate, right-of-way, 
        permit, lease, or other authorization issued to an Alaska 
        natural gas transportation project any term or condition that 
        may be permitted, but is not required, by any applicable law if 
        the Federal Coordinator determines that the term or condition 
        would prevent or impair in any significant respect the 
        expeditious construction and operation, or an expansion, of the 
        Alaska natural gas transportation project.
            (3) Prohibition of certain actions.--Unless required by 
        law, no Federal agency shall add to, amend, or abrogate any 
        certificate, right-of-way, permit, lease, or other 
        authorization issued to an Alaska natural gas transportation 
        project if the Federal Coordinator determines that the action 
        would prevent or impair in any significant respect the 
        expeditious construction and operation, or an expansion, of the 
        Alaska natural gas transportation project.
            (4) Limitation.--The Federal Coordinator shall not have 
        authority to--
                    (A) override--
                            (i) the implementation or enforcement of 
                        regulations issued by the Commission under 
                        section 373; or
                            (ii) an order by the Commission to expand 
                        the project under section 375; or
                    (B) impose any terms, conditions, or requirements 
                in addition to those imposed by the Commission or any 
                agency with respect to construction and operation, or 
                an expansion of, the project.
    (e) State Coordination.--
            (1) In general.--The Federal Coordinator and the State 
        shall enter into a joint surveillance and monitoring agreement 
        similar to the agreement in effect during construction of the 
        Trans-Alaska Pipeline, to be approved by the President and the 
        Governor of the State, for the purpose of monitoring the 
        construction of the Alaska natural gas transportation project.
            (2) Primary responsibility.--With respect to an Alaska 
        natural gas transportation project--
                    (A) the Federal Government shall have primary 
                surveillance and monitoring responsibility in areas 
                where the Alaska natural gas transportation project 
                crosses Federal land or private land; and
                    (B) the State government shall have primary 
                surveillance and monitoring responsibility in areas 
                where the Alaska natural gas transportation project 
                crosses State land.
    (f) Transfer of Federal Inspector Functions and Authority.--On 
appointment of the Federal Coordinator by the President, all of the 
functions and authority of the Office of Federal Inspector of 
Construction for the Alaska Natural Gas Transportation System vested in 
the Secretary under section 3012(b) of the Energy Policy Act of 1992 
(15 U.S.C. 719e note; Public Law 102-486), including all functions and 
authority described and enumerated in the Reorganization Plan No. 1 of 
1979 (44 Fed. Reg. 33663), Executive Order No. 12142 of June 21, 1979 
(44 Fed. Reg. 36927), and section 5 of the President's decision, shall 
be transferred to the Federal Coordinator.
    (g) Temporary Authority.--The functions, authorities, duties, and 
responsibilities of the Federal Coordinator shall be vested in the 
Secretary until the later of the appointment of the Federal Coordinator 
by the President, or 18 months after the date of enactment of this Act.

SEC. 377. JUDICIAL REVIEW.

    (a) Exclusive Jurisdiction.--Except for review by the Supreme Court 
on writ of certiorari, the United States Court of Appeals for the 
District of Columbia Circuit shall have original and exclusive 
jurisdiction to determine--
            (1) the validity of any final order or action (including a 
        failure to act) of any Federal agency or officer under this 
        subtitle;
            (2) the constitutionality of any provision of this 
        subtitle, or any decision made or action taken under this 
        subtitle; or
            (3) the adequacy of any environmental impact statement 
        prepared under the National Environmental Policy Act of 1969 
        (42 U.S.C. 4321 et seq.) with respect to any action under this 
        subtitle.
    (b) Deadline for Filing Claim.--A claim arising under this subtitle 
may be brought not later than 60 days after the date of the decision or 
action giving rise to the claim.
    (c) Expedited Consideration.--The United States Court of Appeals 
for the District of Columbia Circuit shall set any action brought under 
subsection (a) for expedited consideration, taking into account the 
national interest of enhancing national energy security by providing 
access to the significant gas reserves in Alaska needed to meet the 
anticipated demand for natural gas.
    (d) Amendment of the Alaska Natural Gas Transportation Act of 
1976.--Section 10(c) of the Alaska Natural Gas Transportation Act of 
1976 (15 U.S.C. 719h) is amended--
            (1) by striking ``(c)(1) A claim'' and inserting the 
        following:
    ``(c) Jurisdiction.--
            ``(1) Special courts.--
                    ``(A) In general.--A claim'';
            (2) by striking ``Such court shall have'' and inserting the 
        following:
                    ``(B) Exclusive jurisdiction.--The Special Court 
                shall have'';
            (3) by inserting after paragraph (1) the following:
            ``(2) Expedited consideration.--The Special Court shall set 
        any action brought under this section for expedited 
        consideration, taking into account the national interest 
        described in section 2.''; and
            (4) in paragraph (3), by striking ``(3) The enactment'' and 
        inserting the following:
            ``(3) Environmental impact statements.--The enactment''.

SEC. 378. STATE JURISDICTION OVER IN-STATE DELIVERY OF NATURAL GAS.

    (a) Local Distribution.--Any facility receiving natural gas from an 
Alaska natural gas transportation project for delivery to consumers 
within the State--
            (1) shall be deemed to be a local distribution facility 
        within the meaning of section 1(b) of the Natural Gas Act (15 
        U.S.C. 717(b)); and
            (2) shall not be subject to the jurisdiction of the 
        Commission.
    (b) Additional Pipelines.--Except as provided in section 373(d), 
nothing in this subtitle shall preclude or otherwise affect a future 
natural gas pipeline that may be constructed to deliver natural gas to 
Fairbanks, Anchorage, Matanuska-Susitna Valley, or the Kenai peninsula 
or Valdez or any other site in the State for consumption within or 
distribution outside the State.
    (c) Rate Coordination.--
            (1) In general.--In accordance with the Natural Gas Act (15 
        U.S.C. 717a et seq.), the Commission shall establish rates for 
        the transportation of natural gas on any Alaska natural gas 
        transportation project.
            (2) Consultation.--In carrying out paragraph (1), the 
        Commission, in accordance with section 17(b) of the Natural Gas 
        Act (15 U.S.C. 717p(b)), shall consult with the State regarding 
        rates (including rate settlements) applicable to natural gas 
        transported on and delivered from the Alaska natural gas 
        transportation project for use within the State.

SEC. 379. STUDY OF ALTERNATIVE MEANS OF CONSTRUCTION.

    (a) Requirement of Study.--If no application for the issuance of a 
certificate or amended certificate of public convenience and necessity 
authorizing the construction and operation of an Alaska natural gas 
transportation project has been filed with the Commission by the date 
that is 18 months after the date of enactment of this Act, the 
Secretary shall conduct a study of alternative approaches to the 
construction and operation of such an Alaska natural gas transportation 
project.
    (b) Scope of Study.--The study under subsection (a) shall take into 
consideration the feasibility of--
            (1) establishing a Federal Government corporation to 
        construct an Alaska natural gas transportation project; and
            (2) securing alternative means of providing Federal 
        financing and ownership (including alternative combinations of 
        Government and private corporate ownership) of the Alaska 
        natural gas transportation project.
    (c) Consultation.--In conducting the study under subsection (a), 
the Secretary shall consult with the Secretary of the Treasury and the 
Secretary of the Army (acting through the Chief of Engineers).
    (d) Report.--On completion of any study under subsection (a), the 
Secretary shall submit to Congress a report that describes--
            (1) the results of the study; and
            (2) any recommendations of the Secretary (including 
        proposals for legislation to implement the recommendations).

SEC. 380. CLARIFICATION OF ANGTA STATUS AND AUTHORITIES.

    (a) Savings Clause.--Nothing in this subtitle affects--
            (1) any decision, certificate, permit, right-of-way, lease, 
        or other authorization issued under section 9 of the Alaska 
        Natural Gas Transportation Act of 1976 (15 U.S.C. 719g); or
            (2) any Presidential finding or waiver issued in accordance 
        with that Act.
    (b) Clarification of Authority to Amend Terms and Conditions to 
Meet Current Project Requirements.--Any Federal agency responsible for 
granting or issuing any certificate, permit, right-of-way, lease, or 
other authorization under section 9 of the Alaska Natural Gas 
Transportation Act of 1976 (15 U.S.C. 719g) may add to, amend, or 
rescind any term or condition included in the certificate, permit, 
right-of-way, lease, or other authorization to meet current project 
requirements (including the physical design, facilities, and tariff 
specifications), if the addition, amendment, or rescission--
            (1) would not compel any change in the basic nature and 
        general route of the Alaska natural gas transportation system 
        as designated and described in section 2 of the President's 
        decision; or
            (2) would not otherwise prevent or impair in any 
        significant respect the expeditious construction and initial 
        operation of the Alaska natural gas transportation system.
    (c) Updated Environmental Reviews.--The Secretary shall require the 
sponsor of the Alaska natural gas transportation system to submit such 
updated environmental data, reports, permits, and impact analyses as 
the Secretary determines are necessary to develop detailed terms, 
conditions, and compliance plans required by section 5 of the 
President's decision.

SEC. 381. SENSE OF CONGRESS CONCERNING USE OF STEEL MANUFACTURED IN 
              NORTH AMERICA NEGOTIATION OF A PROJECT LABOR AGREEMENT.

    It is the sense of Congress that--
            (1) an Alaska natural gas transportation project would 
        provide significant economic benefits to the United States and 
        Canada; and
            (2) to maximize those benefits, the sponsors of the Alaska 
        natural gas transportation project should make every effort 
        to--
                    (A) use steel that is manufactured in North 
                America; and
                    (B) negotiate a project labor agreement to expedite 
                construction of the pipeline.

SEC. 382. SENSE OF CONGRESS AND STUDY CONCERNING PARTICIPATION BY SMALL 
              BUSINESS CONCERNS.

    (a) Definition of Small Business Concern.--In this section, the 
term ``small business concern'' has the meaning given the term in 
section 3(a) of the Small Business Act (15 U.S.C. 632(a)).
    (b) Sense of Congress.--It is the sense of Congress that--
            (1) an Alaska natural gas transportation project would 
        provide significant economic benefits to the United States and 
        Canada; and
            (2) to maximize those benefits, the sponsors of the Alaska 
        natural gas transportation project should maximize the 
        participation of small business concerns in contracts and 
        subcontracts awarded in carrying out the project.
    (c) Study.--
            (1) In general.--The Comptroller General of the United 
        States shall conduct a study to determine the extent to which 
        small business concerns participate in the construction of oil 
        and gas pipelines in the United States.
            (2) Report.--Not later than 1 year after the date of 
        enactment of this Act, the Comptroller General shall submit to 
        Congress a report that describes results of the study under 
        paragraph (1).
            (3) Updates.--The Comptroller General shall--
                    (A) update the study at least once every 5 years 
                until construction of an Alaska natural gas 
                transportation project is completed; and
                    (B) on completion of each update, submit to 
                Congress a report containing the results of the update.

SEC. 383. ALASKA PIPELINE CONSTRUCTION TRAINING PROGRAM.

    (a) Program.--
            (1) Establishment.--The Secretary of Labor (in this section 
        referred to as the ``Secretary'') shall make grants to the 
        Alaska Workforce Investment Board--
                    (A) to recruit and train adult and dislocated 
                workers in Alaska, including Alaska Natives, in the 
                skills required to construct and operate an Alaska gas 
                pipeline system; and
                    (B) for the design and construction of a training 
                facility to be located in Fairbanks, Alaska, to support 
                an Alaska gas pipeline training program.
            (2) Coordination with existing programs.--The training 
        program established with the grants authorized under paragraph 
        (1) shall be consistent with the vision and goals set forth in 
        the State of Alaska Unified Plan, as developed pursuant to the 
        Workforce Investment Act of 1998 (29 U.S.C. 2801 et seq.).
    (b) Requirements for Grants.--The Secretary shall make a grant 
under subsection (a) only if--
            (1) the Governor of the State of Alaska requests the grant 
        funds and certifies in writing to the Secretary that there is a 
        reasonable expectation that the construction of the Alaska 
        natural gas pipeline system will commence by the date that is 2 
        years after the date of the certification; and
            (2) the Secretary of Energy concurs in writing to the 
        Secretary with the certification made under paragraph (1) after 
        considering--
                    (A) the status of necessary Federal and State 
                permits;
                    (B) the availability of financing for the Alaska 
                natural gas pipeline project; and
                    (C) other relevant factors.
    (c) Authorization of Appropriations.--There are authorized to be 
appropriated to the Secretary to carry out this section $20,000,000. 
Not more than 15 percent of the funds may be used for the facility 
described in subsection (a)(1)(B).

SEC. 384. SENSE OF CONGRESS CONCERNING NATURAL GAS DEMAND.

    It is the sense of Congress that--
            (1) North American demand for natural gas will increase 
        dramatically over the course of the next several decades;
            (2) both the Alaska Natural Gas Pipeline and the Mackenzie 
        Delta Natural Gas project in Canada will be necessary to help 
        meet the increased demand for natural gas in North America;
            (3) Federal and State officials should work together with 
        officials in Canada to ensure both projects can move forward in 
        a mutually beneficial fashion;
            (4) Federal and State officials should acknowledge that the 
        smaller scope, fewer permitting requirements, and lower cost of 
        the Mackenzie Delta project means it will most likely be 
        completed before the Alaska Natural Gas Pipeline;
            (5) natural gas production in the 48 contiguous States and 
        Canada will not be able to meet all domestic demand in the 
        coming decades; and
            (6) as a result, natural gas delivered from Alaskan North 
        Slope will not displace or reduce the commercial viability of 
        Canadian natural gas produced from the Mackenzie Delta or 
        production from the 48 contiguous States.

SEC. 385. SENSE OF CONGRESS CONCERNING ALASKAN OWNERSHIP.

    It is the sense of Congress that--
            (1) Alaska Native Regional Corporations, companies owned 
        and operated by Alaskans, and individual Alaskans should have 
        the opportunity to own shares of the Alaska natural gas 
        pipeline in a way that promotes economic development for the 
        State; and
            (2) to facilitate economic development in the State, all 
        project sponsors should negotiate in good faith with any 
        willing Alaskan person that desires to be involved in the 
        project.

SEC. 386. LOAN GUARANTEES.

    (a) Authority.--(1) The Secretary may enter into agreements with 1 
or more holders of a certificate of public convenience and necessity 
issued under section 373(b) or section 9 of the Alaska Natural Gas 
Transportation Act of 1976 (15 U.S.C. 719g) to issue Federal guarantee 
instruments with respect to loans and other debt obligations for a 
qualified infrastructure project.
    (2) Subject to the requirements of this section, the Secretary may 
also enter into agreements with 1 or more owners of the Canadian 
portion of a qualified infrastructure project to issue Federal 
guarantee instruments with respect to loans and other debt obligations 
for a qualified infrastructure project as though such owner were a 
holder described in paragraph (1).
    (3) The authority of the Secretary to issue Federal guarantee 
instruments under this section for a qualified infrastructure project 
shall expire on the date that is 2 years after the date on which the 
final certificate of public convenience and necessity (including any 
Canadian certificates of public convenience and necessity) is issued 
for the project. A final certificate shall be considered to have been 
issued when all certificates of public convenience and necessity have 
been issued that are required for the initial transportation of 
commercially economic quantities of natural gas from Alaska to the 
continental United States.
    (b) Conditions.--(1) The Secretary may issue a Federal guarantee 
instrument for a qualified infrastructure project only after a 
certificate of public convenience and necessity under section 373(b) or 
an amended certificate under section 9 of the Alaska Natural Gas 
Transportation Act of 1976 (15 U.S.C. 719g) has been issued for the 
project.
    (2) The Secretary may issue a Federal guarantee instrument under 
this section for a qualified infrastructure project only if the loan or 
other debt obligation guaranteed by the instrument has been issued by 
an eligible lender.
    (3) The Secretary shall not require as a condition of issuing a 
Federal guarantee instrument under this section any contractual 
commitment or other form of credit support of the sponsors (other than 
equity contribution commitments and completion guarantees), or any 
throughput or other guarantee from prospective shippers greater than 
such guarantees as shall be required by the project owners.
    (c) Limitations on Amounts.--(1) The amount of loans and other debt 
obligations guaranteed under this section for a qualified 
infrastructure project shall not exceed 80 percent of the total capital 
costs of the project, including interest during construction.
    (2) The principal amount of loans and other debt obligations 
guaranteed under this section shall not exceed, in the aggregate, 
$18,000,000,000, which amount shall be indexed for United States dollar 
inflation from the date of enactment of this Act, as measured by the 
Consumer Price Index.
    (d) Loan Terms and Fees.--(1) The Secretary may issue Federal 
guarantee instruments under this section that take into account 
repayment profiles and grace periods justified by project cash flows 
and project-specific considerations. The term of any loan guaranteed 
under this section shall not exceed 30 years.
    (2) An eligible lender may assess and collect from the borrower 
such other fees and costs associated with the application and 
origination of the loan or other debt obligation as are reasonable and 
customary for a project finance transaction in the oil and gas sector.
    (e) Regulations.--The Secretary may issue regulations to carry out 
this section.
    (f) Authorization of Appropriations.--There are authorized to be 
appropriated such sums as may be necessary to cover the cost of loan 
guarantees under this section, as defined by section 502(5) of the 
Federal Credit Reform Act of 1990 (2 U.S.C. 661a(5)). Such sums shall 
remain available until expended.
    (g) Definitions.--In this section, the following definitions apply:
            (1) The term ``Consumer Price Index'' means the Consumer 
        Price Index for all-urban consumers, United States city 
        average, as published by the Bureau of Labor Statistics, or if 
        such index shall cease to be published, any successor index or 
        reasonable substitute thereof.
            (2) The term ``eligible lender'' means any non-Federal 
        qualified institutional buyer (as defined by section 
        230.144A(a) of title 17, Code of Federal Regulations (or any 
        successor regulation), known as Rule 144A(a) of the Securities 
        and Exchange Commission and issued under the Securities Act of 
        1933), including--
                    (A) a qualified retirement plan (as defined in 
                section 4974(c) of the Internal Revenue Code of 1986 
                (26 U.S.C. 4974(c)) that is a qualified institutional 
                buyer; and
                    (B) a governmental plan (as defined in section 
                414(d) of the Internal Revenue Code of 1986 (26 U.S.C. 
                414(d)) that is a qualified institutional buyer.
            (3) The term ``Federal guarantee instrument'' means any 
        guarantee or other pledge by the Secretary to pledge the full 
        faith and credit of the United States to pay all of the 
        principal and interest on any loan or other debt obligation 
        entered into by a holder of a certificate of public convenience 
        and necessity.
            (4) The term ``qualified infrastructure project'' means an 
        Alaskan natural gas transportation project consisting of the 
        design, engineering, finance, construction, and completion of 
        pipelines and related transportation and production systems 
        (including gas treatment plants), and appurtenances thereto, 
        that are used to transport natural gas from the Alaska North 
        Slope to the continental United States.

                             TITLE IV--COAL

                Subtitle A--Clean Coal Power Initiative

SEC. 401. AUTHORIZATION OF APPROPRIATIONS.

    (a) Clean Coal Power Initiative.--There are authorized to be 
appropriated to the Secretary of Energy (referred to in this title as 
the ``Secretary'') to carry out the activities authorized by this 
subtitle $200,000,000 for each of fiscal years 2004 through 2012, to 
remain available until expended.
    (b) Report.--The Secretary shall submit to Congress the report 
required by this subsection not later than March 31, 2005. The report 
shall include, with respect to subsection (a), a 10-year plan 
containing--
            (1) a detailed assessment of whether the aggregate funding 
        levels provided under subsection (a) are the appropriate 
        funding levels for that program;
            (2) a detailed description of how proposals will be 
        solicited and evaluated, including a list of all activities 
        expected to be undertaken;
            (3) a detailed list of technical milestones for each coal 
        and related technology that will be pursued; and
            (4) a detailed description of how the program will avoid 
        problems enumerated in General Accounting Office reports on the 
        Clean Coal Technology Program, including problems that have 
        resulted in unspent funds and projects that failed either 
        financially or scientifically.

SEC. 402. PROJECT CRITERIA.

    (a) In General.--The Secretary shall not provide funding under this 
subtitle for any project that does not advance efficiency, 
environmental performance, and cost competitiveness well beyond the 
level of technologies that are in commercial service or have been 
demonstrated on a scale that the Secretary determines is sufficient to 
demonstrate that commercial service is viable as of the date of 
enactment of this Act.
    (b) Technical Criteria for Clean Coal Power Initiative.--
            (1) Gasification projects.--
                    (A) In general.--In allocating the funds made 
                available under section 401(a), the Secretary shall 
                ensure that at least 60 percent of the funds are used 
                only for projects on coal-based gasification 
                technologies, including gasification combined cycle, 
                gasification fuel cells, gasification coproduction, and 
                hybrid gasification/combustion.
                    (B) Technical milestones.--The Secretary shall 
                periodically set technical milestones specifying the 
                emission and thermal efficiency levels that coal 
                gasification projects under this subtitle shall be 
                designed, and reasonably expected, to achieve. The 
                technical milestones shall become more restrictive 
                during the life of the program. The Secretary shall set 
                the periodic milestones so as to achieve by 2020 coal 
                gasification projects able--
                            (i) to remove 99 percent of sulfur dioxide;
                            (ii) to emit not more than .05 lbs of 
                        NO<INF>X</INF> per million Btu;
                            (iii) to achieve substantial reductions in 
                        mercury emissions; and
                            (iv) to achieve a thermal efficiency of--
                                    (I) 60 percent for coal of more 
                                than 9,000 Btu;
                                    (II) 59 percent for coal of 7,000 
                                to 9,000 Btu; and
                                    (III) 50 percent for coal of less 
                                than 7,000 Btu.
            (2) Other projects.--The Secretary shall periodically set 
        technical milestones and ensure that up to 40 percent of the 
        funds appropriated pursuant to section 401(a) are used for 
        projects not described in paragraph (1). The milestones shall 
        specify the emission and thermal efficiency levels that 
        projects funded under this paragraph shall be designed to and 
        reasonably expected to achieve. The technical milestones shall 
        become more restrictive during the life of the program. The 
        Secretary shall set the periodic milestones so as to achieve by 
        2010 projects able--
                    (A) to remove 97 percent of sulfur dioxide;
                    (B) to emit no more than .08 lbs of NO<INF>X</INF> 
                per million Btu;
                    (C) to achieve substantial reductions in mercury 
                emissions; and
                    (D) to achieve a thermal efficiency of--
                            (i) 45 percent for coal of more than 9,000 
                        Btu;
                            (ii) 44 percent for coal of 7,000 to 9,000 
                        Btu; and
                            (iii) 40 percent for coal of less than 
                        7,000 Btu.
            (3) Consultation.--Before setting the technical milestones 
        under paragraphs (1)(B) and (2), the Secretary shall consult 
        with the Administrator of the Environmental Protection Agency 
        and interested entities, including coal producers, industries 
        using coal, organizations to promote coal or advanced coal 
        technologies, environmental organizations, and organizations 
        representing workers.
            (4) Existing units.--In the case of projects at units in 
        existence on the date of enactment of this Act, in lieu of the 
        thermal efficiency requirements set forth in paragraph 
        (1)(B)(iv) and (2)(D), the milestones shall be designed to 
        achieve an overall thermal design efficiency improvement, 
        compared to the efficiency of the unit as operated, of not less 
        than--
                    (A) 7 percent for coal of more than 9,000 Btu;
                    (B) 6 percent for coal of 7,000 to 9,000 Btu; or
                    (C) 4 percent for coal of less than 7,000 Btu.
            (5) Permitted uses.--In carrying out this subtitle, the 
        Secretary may fund projects that include, as part of the 
        project, the separation and capture of carbon dioxide.
    (c) Financial Criteria.--The Secretary shall not provide a funding 
award under this subtitle unless the recipient documents to the 
satisfaction of the Secretary that--
            (1) the award recipient is financially viable without the 
        receipt of additional Federal funding;
            (2) the recipient will provide sufficient information to 
        the Secretary to enable the Secretary to ensure that the award 
        funds are spent efficiently and effectively; and
            (3) a market exists for the technology being demonstrated 
        or applied, as evidenced by statements of interest in writing 
        from potential purchasers of the technology.
    (d) Financial Assistance.--The Secretary shall provide financial 
assistance to projects that meet the requirements of subsections (a), 
(b), and (c) and are likely to--
            (1) achieve overall cost reductions in the utilization of 
        coal to generate useful forms of energy;
            (2) improve the competitiveness of coal among various forms 
        of energy in order to maintain a diversity of fuel choices in 
        the United States to meet electricity generation requirements; 
        and
            (3) demonstrate methods and equipment that are applicable 
        to 25 percent of the electricity generating facilities, using 
        various types of coal, that use coal as the primary feedstock 
        as of the date of enactment of this Act.
    (e) Federal Share.--The Federal share of the cost of a coal or 
related technology project funded by the Secretary under this subtitle 
shall not exceed 50 percent.
    (f) Applicability.--No technology, or level of emission reduction, 
shall be treated as adequately demonstrated for purposes of section 111 
of the Clean Air Act (42 U.S.C. 7411), achievable for purposes of 
section 169 of that Act (42 U.S.C. 7479), or achievable in practice for 
purposes of section 171 of that Act (42 U.S.C. 7501) solely by reason 
of the use of such technology, or the achievement of such emission 
reduction, by 1 or more facilities receiving assistance under this 
subtitle.

SEC. 403. REPORT.

    Not later than 1 year after the date of enactment of this Act, and 
once every 2 years thereafter through 2012, the Secretary, in 
consultation with other appropriate Federal agencies, shall submit to 
Congress a report describing--
            (1) the technical milestones set forth in section 402 and 
        how those milestones ensure progress toward meeting the 
        requirements of subsections (b)(1)(B) and (b)(2) of section 
        402; and
            (2) the status of projects funded under this subtitle.

SEC. 404. CLEAN COAL CENTERS OF EXCELLENCE.

    As part of the program authorized in section 401, the Secretary 
shall award competitive, merit-based grants to universities for the 
establishment of Centers of Excellence for Energy Systems of the 
Future. The Secretary shall provide grants to universities that show 
the greatest potential for advancing new clean coal technologies.

                    Subtitle B--Clean Power Projects

SEC. 411. COAL TECHNOLOGY LOAN.

    There are authorized to be appropriated to the Secretary 
$125,000,000 to provide a loan to the owner of the experimental plant 
constructed under United States Department of Energy cooperative 
agreement number DE-FC-22-91PC90544 on such terms and conditions as the 
Secretary determines, including interest rates and upfront payments.

SEC. 412. COAL GASIFICATION.

    The Secretary is authorized to provide loan guarantees for a 
project to produce energy from a plant using integrated gasification 
combined cycle technology of at least 400 megawatts in capacity that 
produces power at competitive rates in deregulated energy generation 
markets and that does not receive any subsidy (direct or indirect) from 
ratepayers.

SEC. 413. INTEGRATED GASIFICATION COMBINED CYCLE TECHNOLOGY.

    The Secretary is authorized to provide loan guarantees for a 
project to produce energy from a plant using integrated gasification 
combined cycle technology located in a taconite-producing region of the 
United States that is entitled under the law of the State in which the 
plant is located to enter into a long-term contract approved by a State 
Public Utility Commission to sell at least 450 megawatts of output to a 
utility.

SEC. 414. PETROLEUM COKE GASIFICATION.

    The Secretary is authorized to provide loan guarantees for at least 
1 petroleum coke gasification polygeneration project.

SEC. 415. INTEGRATED COAL/RENEWABLE ENERGY SYSTEM.

    The Secretary is authorized, subject to the availability of 
appropriations, to provide loan guarantees for a project to produce 
energy from coal of less than 7,000 btu/lb using appropriate advanced 
integrated gasification combined cycle technology, including repowering 
of existing facilities, that is combined with wind and other renewable 
sources, minimizes and offers the potential to sequester carbon dioxide 
emissions, and provides a ready source of hydrogen for near-site fuel 
cell demonstrations. The facility may be built in stages, combined 
output shall be at least 200 megawatts at successively more competitive 
rates, and the facility shall be located in the Upper Great Plains. 
Section 402(b) technical criteria apply, and the Federal cost share 
shall not exceed 50 percent. The loan guarantees provided under this 
section do not preclude the facility from receiving an allocation for 
investment tax credits under section 48A of the Internal Revenue Code 
of 1986. Utilizing this investment tax credit does not prohibit the use 
of other Clean Coal Program funding.

SEC. 416. ELECTRON SCRUBBING DEMONSTRATION.

    The Secretary shall use $5,000,000 from amounts appropriated to 
initiate, through the Chicago Operations Office, a project to 
demonstrate the viability of high-energy electron scrubbing technology 
on commercial-scale electrical generation using high-sulfur coal.

                    Subtitle C--Federal Coal Leases

SEC. 421. REPEAL OF THE 160-ACRE LIMITATION FOR COAL LEASES.

    Section 3 of the Mineral Leasing Act (30 U.S.C. 203) is amended--
            (1) in the first sentence--
                    (A) by striking ``Any person'' and inserting ``(a) 
                Any person'';
                    (B) by inserting a comma after ``may''; and
                    (C) by striking ``upon'' and all that follows 
                through the period and inserting the following: ``upon 
                a finding by the Secretary that the lease--
            ``(1) would be in the interest of the United States;
            ``(2) would not displace a competitive interest in the 
        land; and
            ``(3) would not include land or deposits that can be 
        developed as part of another potential or existing operation;
secure modifications of the original coal lease by including additional 
coal land or coal deposits contiguous or cornering to those embraced in 
the lease, but in no event shall the total area added by any 
modifications to an existing coal lease exceed 1,280 acres, or add 
acreage larger than the acreage in the original lease.'';
            (2) in the second sentence, by striking ``The Secretary'' 
        and inserting the following:
    ``(b) The Secretary''; and
            (3) in the third sentence, by striking ``The minimum'' and 
        inserting the following:
    ``(c) The minimum''.

SEC. 422. MINING PLANS.

    Section 2(d)(2) of the Mineral Leasing Act (30 U.S.C. 202a(2)) is 
amended--
            (1) by inserting ``(A)'' after ``(2)''; and
            (2) by adding at the end the following:
    ``(B) The Secretary may establish a period of more than 40 years if 
the Secretary determines that the longer period--
            ``(i) will ensure the maximum economic recovery of a coal 
        deposit; or
            ``(ii) the longer period is in the interest of the orderly, 
        efficient, or economic development of a coal resource.''.

SEC. 423. PAYMENT OF ADVANCE ROYALTIES UNDER COAL LEASES.

    Section 7(b) of the Mineral Leasing Act (30 U.S.C. 207(b)) is 
amended to read as follows:
    ``(b)(1) Each lease shall be subjected to the condition of diligent 
development and continued operation of the mine or mines, except in a 
case in which operations under the lease are interrupted by strikes, 
the elements, or casualties not attributable to the lessee.
    ``(2)(A) The Secretary of the Interior may suspend the condition of 
continued operation upon the payment of advance royalties, if the 
Secretary determines that the public interest will be served by the 
suspension.
    ``(B) Advance royalties required under subparagraph (A) shall be 
computed based on--
            ``(i) the average price for coal sold in the spot market 
        from the same region during the last month of each applicable 
        continued operation year; or
            ``(ii) by using other methods established by the Secretary 
        of the Interior to capture the commercial value of coal,
and based on commercial quantities, as defined by regulation by the 
Secretary of the Interior.
    ``(C) The aggregate number of years during the initial and any 
extended term of any lease for which advance royalties may be accepted 
in lieu of the condition of continued operation shall not exceed 20.
    ``(3) The amount of any production royalty paid for any year shall 
be reduced (but not below 0) by the amount of any advance royalties 
paid under the lease, to the extent that the advance royalties have not 
been used to reduce production royalties for a prior year.
    ``(4) The Secretary may, upon 6 months' notice to a lessee, cease 
to accept advance royalties in lieu of the requirement of continued 
operation.
    ``(5) Nothing in this subsection affects the requirement contained 
in the second sentence of subsection (a) relating to commencement of 
production at the end of 10 years.''.

SEC. 424. ELIMINATION OF DEADLINE FOR SUBMISSION OF COAL LEASE 
              OPERATION AND RECLAMATION PLAN.

    Section 7(c) of the Mineral Leasing Act (30 U.S.C. 207(c)) is 
amended in the first sentence by striking ``and not later than three 
years after a lease is issued,''.

SEC. 425. AMENDMENT RELATING TO FINANCIAL ASSURANCES WITH RESPECT TO 
              BONUS BIDS.

    Section 2(a) of the Mineral Leasing Act (30 U.S.C. 201(a)) is 
amended by adding at the end the following:
    ``(4)(A) The Secretary shall not require a surety bond or any other 
financial assurance to guarantee payment of deferred bonus bid 
installments with respect to any coal lease issued on a cash bonus bid 
to a lessee or successor in interest having a history of a timely 
payment of noncontested coal royalties and advanced coal royalties in 
lieu of production (where applicable) and bonus bid installment 
payments.
    ``(B) The Secretary may waive any requirement that a lessee provide 
a surety bond or other financial assurance for a coal lease issued 
before the date of the enactment of the Energy Policy Act of 2003 only 
if the Secretary determines that the lessee has a history of making 
timely payments referred to in subparagraph (A).
    ``(5) Notwithstanding any other provision of law, if the lessee 
under a coal lease fails to pay any installment of a deferred cash 
bonus bid within 10 days after the Secretary provides written notice 
that payment of the installment is past due--
            ``(A) the lease shall automatically terminate; and
            ``(B) any bonus payments already made to the United States 
        with respect to the lease shall not be returned to the lessee 
        or credited in any future lease sale.''.

SEC. 426. INVENTORY REQUIREMENT.

    (a) Review of Assessments.--
            (1) In general.--The Secretary of the Interior, in 
        consultation with the Secretary of Agriculture and the 
Secretary, shall review coal assessments and other available data to 
identify--
                    (A) public lands, other than National Park lands, 
                with coal resources;
                    (B) the extent and nature of any restrictions or 
                impediments to the development of coal resources on 
                public lands identified under subparagraph (A); and
                    (C) with respect to areas of such lands for which 
                sufficient data exists, resources of compliant coal and 
                supercompliant coal.
            (2) Definitions.--In this subsection:
                    (A) Compliant coal.--The term ``compliant coal'' 
                means coal that contains not less than 1.0 and not more 
                than 1.2 pounds of sulfur dioxide per million Btu.
                    (B) Supercompliant coal.--The term ``supercompliant 
                coal'' means coal that contains less than 1.0 pounds of 
                sulfur dioxide per million Btu.
    (b) Completion and Updating of the Inventory.--The Secretary of the 
Interior--
            (1) shall complete the inventory under subsection (a)(1) by 
        not later than 2 years after the date of the enactment of this 
        Act; and
            (2) shall update the inventory as the availability of data 
        and developments in technology warrant.
    (c) Report.--The Secretary of the Interior shall submit to 
Congress, and make publicly available--
            (1) a report containing the inventory under this section by 
        not later than 2 years after the effective date of this 
        section; and
            (2) each update of that inventory.

SEC. 427. APPLICATION OF AMENDMENTS.

    The amendments made by this subtitle apply--
            (1) with respect to any coal lease issued on or after the 
        date of enactment of this Act; and
            (2) with respect to any coal lease issued before the date 
        of enactment of this Act, upon the earlier of--
                    (A) the date of readjustment of the lease as 
                provided for by section 7(a) of the Mineral Leasing Act 
                (30 U.S.C. 207(a)); or
                    (B) the date the lessee requests such application.

                 Subtitle D--Coal and Related Programs

SEC. 441. CLEAN AIR COAL PROGRAM.

    (a) Amendment.--The Energy Policy Act of 1992 is amended by adding 
the following new title at the end thereof:

                  ``TITLE XXXI--CLEAN AIR COAL PROGRAM

``SEC. 3101. FINDINGS; PURPOSES; DEFINITIONS.

    ``(a) Findings.--The Congress finds that--
            ``(1) new environmental regulations present additional 
        challenges for coal-fired electrical generation in the private 
        marketplace; and
            ``(2) the Department of Energy, in cooperation with 
        industry, has already fully developed and commercialized 
        several new clean-coal technologies that will allow the clean 
        use of coal.
    ``(b) Purposes.--The purposes of this title are to--
            ``(1) promote national energy policy and energy security, 
        diversity, and economic competitiveness benefits that result 
        from the increased use of coal;
            ``(2) mitigate financial risks, reduce the cost, and 
        increase the marketplace acceptance of the new clean coal 
        technologies; and
            ``(3) advance the deployment of pollution control equipment 
        to meet the current and future obligations of coal-fired 
        generation units regulated under the Clean Air Act (42 U.S.C. 
        7402 and following).

``SEC. 3102. AUTHORIZATION OF PROGRAM.

    ``The Secretary shall carry out a program to facilitate production 
and generation of coal-based power and the installation of pollution 
control equipment.

``SEC. 3103. AUTHORIZATION OF APPROPRIATIONS.

    ``(a) Pollution Control Projects.--There are authorized to be 
appropriated to the Secretary $300,000,000 for fiscal year 2005, 
$100,000,000 for fiscal year 2006, $40,000,000 for fiscal year 2007, 
$30,000,000 for fiscal year 2008, and $30,000,000 for fiscal year 2009, 
to remain available until expended, for carrying out the program for 
pollution control projects, which may include--
            ``(1) pollution control equipment and processes for the 
        control of mercury air emissions;
            ``(2) pollution control equipment and processes for the 
        control of nitrogen dioxide air emissions or sulfur dioxide 
        emissions;
            ``(3) pollution control equipment and processes for the 
        mitigation or collection of more than one pollutant;
            ``(4) advanced combustion technology for the control of at 
        least two pollutants, including mercury, particulate matter, 
        nitrogen oxides, and sulfur dioxide, which may also be designed 
        to improve the energy efficiency of the unit; and
            ``(5) advanced pollution control equipment and processes 
        designed to allow use of the waste byproducts or other 
        byproducts of the equipment or an electrical generation unit 
        designed to allow the use of byproducts.
Funds appropriated under this subsection which are not awarded before 
fiscal year 2011 may be applied to projects under subsection (b), in 
addition to amounts authorized under subsection (b).
    ``(b) Generation Projects.--There are authorized to be appropriated 
to the Secretary $150,000,000 for fiscal year 2006, $250,000,000 for 
each of the fiscal years 2007 through 2011, and $100,000,000 for fiscal 
year 2012, to remain available until expended, for generation projects 
and air pollution control projects. Such projects may include--
            ``(1) coal-based electrical generation equipment and 
        processes, including gasification combined cycle or other coal-
        based generation equipment and processes;
            ``(2) associated environmental control equipment, that will 
        be cost-effective and that is designed to meet anticipated 
        regulatory requirements;
            ``(3) coal-based electrical generation equipment and 
        processes, including gasification fuel cells, gasification 
        coproduction, and hybrid gasification/combustion projects; and
            ``(4) advanced coal-based electrical generation equipment 
        and processes, including oxidation combustion techniques, 
        ultra-supercritical boilers, and chemical looping, which the 
        Secretary determines will be cost-effective and could 
        substantially contribute to meeting anticipated environmental 
        or energy needs.
    ``(c) Limitation.--Funds placed at risk during any fiscal year for 
Federal loans or loan guarantees pursuant to this title may not exceed 
30 percent of the total funds obligated under this title.

``SEC. 3104. AIR POLLUTION CONTROL PROJECT CRITERIA.

    ``The Secretary shall pursuant to authorizations contained in 
section 3103 provide funding for air pollution control projects 
designed to facilitate compliance with Federal and State environmental 
regulations, including any regulation that may be established with 
respect to mercury.

``SEC. 3105. CRITERIA FOR GENERATION PROJECTS.

    ``(a) Criteria.--The Secretary shall establish criteria on which 
selection of individual projects described in section 3103(b) should be 
based. The Secretary may modify the criteria as appropriate to reflect 
improvements in equipment, except that the criteria shall not be 
modified to be less stringent. These selection criteria shall include--
            ``(1) prioritization of projects whose installation is 
        likely to result in significant air quality improvements in 
        nonattainment air quality areas;
            ``(2) prioritization of projects that result in the 
        repowering or replacement of older, less efficient units;
            ``(3) documented broad interest in the procurement of the 
        equipment and utilization of the processes used in the projects 
        by electrical generator owners or operators;
            ``(4) equipment and processes beginning in 2005 through 
        2010 that are projected to achieve an thermal efficiency of--
                    ``(A) 40 percent for coal of more than 9,000 Btu 
                per pound based on higher heating values;
                    ``(B) 38 percent for coal of 7,000 to 9,000 Btu per 
                pound based on higher heating values; and
                    ``(C) 36 percent for coal of less than 7,000 Btu 
                per pound based on higher heating values--
        except that energy used for coproduction or cogeneration shall 
        not be counted in calculating the thermal efficiency under this 
        paragraph; and
            ``(5) equipment and processes beginning in 2011 and 2012 
        that are projected to achieve an thermal efficiency of--
                    ``(A) 45 percent for coal of more than 9,000 Btu 
                per pound based on higher heating values;
                    ``(B) 44 percent for coal of 7,000 to 9,000 Btu per 
                pound based on higher heating values; and
                    ``(C) 40 percent for coal of less than 7,000 Btu 
                per pound based on higher heating values--
        except that energy used for coproduction or cogeneration shall 
        not be counted in calculating the thermal efficiency under this 
        paragraph.
    ``(b) Selection.--(1) In selecting the projects, up to 25 percent 
of the projects selected may be either coproduction or cogeneration or 
other gasification projects, but at least 25 percent of the projects 
shall be for the sole purpose of electrical generation, and priority 
should be given to equipment and projects less than 600 MW to foster 
and promote standard designs.
    ``(2) The Secretary shall give priority to projects that have been 
developed and demonstrated that are not yet cost competitive, and for 
coal energy generation projects that advance efficiency, environmental 
performance, or cost competitiveness significantly beyond the level of 
pollution control equipment that is in operation on a full scale.

``SEC. 3106. FINANCIAL CRITERIA.

    ``(a) In General.--The Secretary shall only provide financial 
assistance to projects that meet the requirements of sections 3103 and 
3104 and are likely to--
            ``(1) achieve overall cost reductions in the utilization of 
        coal to generate useful forms of energy; and
            ``(2) improve the competitiveness of coal in order to 
        maintain a diversity of domestic fuel choices in the United 
        States to meet electricity generation requirements.
    ``(b) Conditions.--The Secretary shall not provide a funding award 
under this title unless--
            ``(1) the award recipient is financially viable without the 
        receipt of additional Federal funding; and
            ``(2) the recipient provides sufficient information to the 
        Secretary for the Secretary to ensure that the award funds are 
        spent efficiently and effectively.
    ``(c) Equal Access.--The Secretary shall, to the extent practical, 
utilize cooperative agreement, loan guarantee, and direct Federal loan 
mechanisms designed to ensure that all electrical generation owners 
have equal access to these technology deployment incentives. The 
Secretary shall develop and direct a competitive solicitation process 
for the selection of technologies and projects under this title.

``SEC. 3107. FEDERAL SHARE.

    ``The Federal share of the cost of a coal or related technology 
project funded by the Secretary under this title shall not exceed 50 
percent. For purposes of this title, Federal funding includes only 
appropriated funds.

``SEC. 3108. APPLICABILITY.

    ``No technology, or level of emission reduction, shall be treated 
as adequately demonstrated for purposes of section 111 of the Clean Air 
Act (42 U.S.C. 7411), achievable for purposes of section 169 of the 
Clean Air Act (42 U.S.C. 7479), or achievable in practice for purposes 
of section 171 of the Clean Air Act (42 U.S.C. 7501) solely by reason 
of the use of such technology, or the achievement of such emission 
reduction, by one or more facilities receiving assistance under this 
title.''.
    (b) Table of Contents Amendment.--The table of contents of the 
Energy Policy Act of 1992 is amended by adding at the end the 
following:

                  ``TITLE XXXI--CLEAN AIR COAL PROGRAM

``Sec. 3101. Findings; purposes; definitions.
``Sec. 3102. Authorization of program.
``Sec. 3103. Authorization of appropriations.
``Sec. 3104. Air pollution control project criteria.
``Sec. 3105. Criteria for generation projects.
``Sec. 3106. Financial criteria.
``Sec. 3107. Federal share.
``Sec. 3108. Applicability.''.

                         TITLE V--INDIAN ENERGY

SEC. 501. SHORT TITLE.

    This title may be cited as the ``Indian Tribal Energy Development 
and Self-Determination Act of 2003''.

SEC. 502. OFFICE OF INDIAN ENERGY POLICY AND PROGRAMS.

    (a) In General.--Title II of the Department of Energy Organization 
Act (42 U.S.C. 7131 et seq.) is amended by adding at the end the 
following:

             ``office of indian energy policy and programs

    ``Sec. 217. (a) Establishment.--There is established within the 
Department an Office of Indian Energy Policy and Programs (referred to 
in this section as the `Office'). The Office shall be headed by a 
Director, who shall be appointed by the Secretary and compensated at a 
rate equal to that of level IV of the Executive Schedule under section 
5315 of title 5, United States Code.
    ``(b) Duties of Director.--The Director, in accordance with Federal 
policies promoting Indian self-determination and the purposes of this 
Act, shall provide, direct, foster, coordinate, and implement energy 
planning, education, management, conservation, and delivery programs of 
the Department that--
            ``(1) promote Indian tribal energy development, efficiency, 
        and use;
            ``(2) reduce or stabilize energy costs;
            ``(3) enhance and strengthen Indian tribal energy and 
        economic infrastructure relating to natural resource 
        development and electrification; and
            ``(4) bring electrical power and service to Indian land and 
        the homes of tribal members located on Indian lands or 
        acquired, constructed, or improved (in whole or in part) with 
        Federal funds.''.
    (b) Conforming Amendments.--
            (1) The table of contents of the Department of Energy 
        Organization Act (42 U.S.C. prec. 7101) is amended--
                    (A) in the item relating to section 209, by 
                striking ``Section'' and inserting ``Sec.''; and
                    (B) by striking the items relating to sections 213 
                through 216 and inserting the following:

  ``Sec. 213. Establishment of policy for National Nuclear Security 
                            Administration.
  ``Sec. 214. Establishment of security, counterintelligence, and 
                            intelligence policies.
  ``Sec. 215. Office of Counterintelligence.
  ``Sec. 216. Office of Intelligence.
  ``Sec. 217. Office of Indian Energy Policy and Programs.''.
            (2) Section 5315 of title 5, United States Code, is amended 
        by inserting ``Director, Office of Indian Energy Policy and 
        Programs, Department of Energy.'' after ``Inspector General, 
        Department of Energy.''.

SEC. 503. INDIAN ENERGY.

    (a) In General.--Title XXVI of the Energy Policy Act of 1992 (25 
U.S.C. 3501 et seq.) is amended to read as follows:

                      ``TITLE XXVI--INDIAN ENERGY

``SEC. 2601. DEFINITIONS.

    ``For purposes of this title:
            ``(1) The term `Director' means the Director of the Office 
        of Indian Energy Policy and Programs, Department of Energy.
            ``(2) The term `Indian land' means--
                    ``(A) any land located within the boundaries of an 
                Indian reservation, pueblo, or rancheria;
                    ``(B) any land not located within the boundaries of 
                an Indian reservation, pueblo, or rancheria, the title 
                to which is held--
                            ``(i) in trust by the United States for the 
                        benefit of an Indian tribe or an individual 
                        Indian;
                            ``(ii) by an Indian tribe or an individual 
                        Indian, subject to restriction against 
                        alienation under laws of the United States; or
                            ``(iii) by a dependent Indian community; 
                        and
                    ``(C) land that is owned by an Indian tribe and was 
                conveyed by the United States to a Native Corporation 
                pursuant to the Alaska Native Claims Settlement Act (43 
                U.S.C. 1601 et seq.), or that was conveyed by the 
                United States to a Native Corporation in exchange for 
                such land.
            ``(3) The term `Indian reservation' includes--
                    ``(A) an Indian reservation in existence in any 
                State or States as of the date of enactment of this 
                paragraph;
                    ``(B) a public domain Indian allotment; and
                    ``(C) a dependent Indian community located within 
                the borders of the United States, regardless of whether 
                the community is located--
                            ``(i) on original or acquired territory of 
                        the community; or
                            ``(ii) within or outside the boundaries of 
                        any particular State.
            ``(4) The term `Indian tribe' has the meaning given the 
        term in section 4 of the Indian Self-Determination and 
        Education Assistance Act (25 U.S.C. 450b), except that the term 
        `Indian tribe', for the purpose of paragraph (11) and sections 
        2603(b)(3) and 2604, shall not include any Native Corporation.
            ``(5) The term `integration of energy resources' means any 
        project or activity that promotes the location and operation of 
        a facility (including any pipeline, gathering system, 
        transportation system or facility, or electric transmission or 
        distribution facility) on or near Indian land to process, 
        refine, generate electricity from, or otherwise develop energy 
        resources on, Indian land.
            ``(6) The term `Native Corporation' has the meaning given 
        the term in section 3 of the Alaska Native Claims Settlement 
        Act (43 U.S.C. 1602).
            ``(7) The term `organization' means a partnership, joint 
        venture, limited liability company, or other unincorporated 
        association or entity that is established to develop Indian 
        energy resources.
            ``(8) The term `Program' means the Indian energy resource 
        development program established under section 2602(a).
            ``(9) The term `Secretary' means the Secretary of the 
        Interior.
            ``(10) The term `tribal energy resource development 
        organization' means an organization of 2 or more entities, at 
        least 1 of which is an Indian tribe, that has the written 
        consent of the governing bodies of all Indian tribes 
        participating in the organization to apply for a grant, loan, 
        or other assistance authorized by section 2602.
            ``(11) The term `tribal land' means any land or interests 
        in land owned by any Indian tribe, title to which is held in 
        trust by the United States or which is subject to a restriction 
        against alienation under laws of the United States.

``SEC. 2602. INDIAN TRIBAL ENERGY RESOURCE DEVELOPMENT.

    ``(a) Department of the Interior Program.--
            ``(1) To assist Indian tribes in the development of energy 
        resources and further the goal of Indian self-determination, 
        the Secretary shall establish and implement an Indian energy 
        resource development program to assist consenting Indian tribes 
        and tribal energy resource development organizations in 
        achieving the purposes of this title.
            ``(2) In carrying out the Program, the Secretary shall--
                    ``(A) provide development grants to Indian tribes 
                and tribal energy resource development organizations 
                for use in developing or obtaining the managerial and 
                technical capacity needed to develop energy resources 
                on Indian land, and to properly account for resulting 
                energy production and revenues;
                    ``(B) provide grants to Indian tribes and tribal 
                energy resource development organizations for use in 
                carrying out projects to promote the integration of 
                energy resources, and to process, use, or develop those 
                energy resources, on Indian land; and
                    ``(C) provide low-interest loans to Indian tribes 
                and tribal energy resource development organizations 
                for use in the promotion of energy resource development 
                on Indian land and integration of energy resources.
            ``(3) There are authorized to be appropriated to carry out 
        this subsection such sums as are necessary for each of fiscal 
        years 2004 through 2014.
    ``(b) Department of Energy Indian Energy Education Planning and 
Management Assistance Program.--
            ``(1) The Director shall establish programs to assist 
        consenting Indian tribes in meeting energy education, research 
        and development, planning, and management needs.
            ``(2) In carrying out this subsection, the Director may 
        provide grants, on a competitive basis, to an Indian tribe or 
        tribal energy resource development organization for use in 
        carrying out--
                    ``(A) energy, energy efficiency, and energy 
                conservation programs;
                    ``(B) studies and other activities supporting 
                tribal acquisitions of energy supplies, services, and 
                facilities;
                    ``(C) planning, construction, development, 
                operation, maintenance, and improvement of tribal 
                electrical generation, transmission, and distribution 
                facilities located on Indian land; and
                    ``(D) development, construction, and 
                interconnection of electric power transmission 
                facilities located on Indian land with other electric 
                transmission facilities.
            ``(3)(A) The Director may develop, in consultation with 
        Indian tribes, a formula for providing grants under this 
        subsection.
            ``(B) In providing a grant under this subsection, the 
        Director shall give priority to an application received from an 
        Indian tribe with inadequate electric service (as determined by 
        the Director).
            ``(4) The Secretary of Energy may issue such regulations as 
        necessary to carry out this subsection.
            ``(5) There are authorized to be appropriated to carry out 
        this subsection $20,000,000 for each of fiscal years 2004 
        through 2014.
    ``(c) Department of Energy Loan Guarantee Program.--
            ``(1) Subject to paragraph (3), the Secretary of Energy may 
        provide loan guarantees (as defined in section 502 of the 
        Federal Credit Reform Act of 1990 (2 U.S.C. 661a)) for not more 
        than 90 percent of the unpaid principal and interest due on any 
        loan made to any Indian tribe for energy development.
            ``(2) A loan guarantee under this subsection shall be made 
        by--
                    ``(A) a financial institution subject to 
                examination by the Secretary of Energy; or
                    ``(B) an Indian tribe, from funds of the Indian 
                tribe.
            ``(3) The aggregate outstanding amount guaranteed by the 
        Secretary of Energy at any time under this subsection shall not 
        exceed $2,000,000,000.
            ``(4) The Secretary of Energy may issue such regulations as 
        the Secretary of Energy determines are necessary to carry out 
        this subsection.
            ``(5) There are authorized to be appropriated such sums as 
        are necessary to carry out this subsection, to remain available 
        until expended.
            ``(6) Not later than 1 year from the date of enactment of 
        this section, the Secretary of Energy shall report to Congress 
        on the financing requirements of Indian tribes for energy 
        development on Indian land.
    ``(d) Federal Agencies--Indian Energy Preference.--
            ``(1) In purchasing electricity or any other energy product 
        or byproduct, a Federal agency or department may give 
        preference to an energy and resource production enterprise, 
        partnership, consortium, corporation, or other type of business 
        organization the majority of the interest in which is owned and 
        controlled by 1 or more Indian tribes.
            ``(2) In carrying out this subsection, a Federal agency or 
        department shall not--
                    ``(A) pay more than the prevailing market price for 
                an energy product or byproduct; or
                    ``(B) obtain less than prevailing market terms and 
                conditions.

``SEC. 2603. INDIAN TRIBAL ENERGY RESOURCE REGULATION.

    ``(a) Grants.--The Secretary may provide to Indian tribes, on an 
annual basis, grants for use in accordance with subsection (b).
    ``(b) Use of Funds.--Funds from a grant provided under this section 
may be used--
            ``(1) by an Indian tribe for the development of a tribal 
        energy resource inventory or tribal energy resource on Indian 
        land;
            ``(2) by an Indian tribe for the development of a 
        feasibility study or other report necessary to the development 
        of energy resources on Indian land;
            ``(3) by an Indian tribe (other than an Indian Tribe in 
        Alaska except the Metlakatla Indian Community) for the 
        development and enforcement of tribal laws (including 
        regulations) relating to tribal energy resource development and 
        the development of technical infrastructure to protect the 
        environment under applicable law; or
            ``(4) by a Native Corporation for the development and 
        implementation of corporate policies and the development of 
        technical infrastructure to protect the environment under 
        applicable law; and
            ``(5) by an Indian tribe for the training of employees 
        that--
                    ``(A) are engaged in the development of energy 
                resources on Indian land; or
                    ``(B) are responsible for protecting the 
                environment.
    ``(c) Other Assistance.--In carrying out the obligations of the 
United States under this title, the Secretary shall ensure, to the 
maximum extent practicable and to the extent of available resources, 
that upon the request of an Indian tribe, the Indian tribe shall have 
available scientific and technical information and expertise, for use 
in the Indian tribe's regulation, development, and management of energy 
resources on Indian land. The Secretary may fulfill this responsibility 
either directly, through the use of Federal officials, or indirectly, 
by providing financial assistance to the Indian tribe to secure 
independent assistance.

``SEC. 2604. LEASES, BUSINESS AGREEMENTS, AND RIGHTS-OF-WAY INVOLVING 
              ENERGY DEVELOPMENT OR TRANSMISSION.

    ``(a) Leases and Business Agreements.--Subject to the provisions of 
this section--
            ``(1) an Indian tribe may, at its discretion, enter into a 
        lease or business agreement for the purpose of energy resource 
        development on tribal land, including a lease or business 
        agreement for--
                    ``(A) exploration for, extraction of, processing 
                of, or other development of the Indian tribe's energy 
                mineral resources located on tribal land; and
                    ``(B) construction or operation of an electric 
                generation, transmission, or distribution facility 
                located on tribal land or a facility to process or 
                refine energy resources developed on tribal land; and
            ``(2) such lease or business agreement described in 
        paragraph (1) shall not require the approval of the Secretary 
        under section 2103 of the Revised Statutes (25 U.S.C. 81) or 
        any other provision of law, if--
                    ``(A) the lease or business agreement is executed 
                pursuant to a tribal energy resource agreement approved 
                by the Secretary under subsection (e);
                    ``(B) the term of the lease or business agreement 
                does not exceed--
                            ``(i) 30 years; or
                            ``(ii) in the case of a lease for the 
                        production of oil resources, gas resources, or 
                        both, 10 years and as long thereafter as oil or 
gas is produced in paying quantities; and
                    ``(C) the Indian tribe has entered into a tribal 
                energy resource agreement with the Secretary, as 
                described in subsection (e), relating to the 
                development of energy resources on tribal land 
                (including the periodic review and evaluation of the 
                activities of the Indian tribe under the agreement, to 
                be conducted pursuant to the provisions required by 
                subsection (e)(2)(D)(i)).
    ``(b) Rights-of-Way for Pipelines or Electric Transmission or 
Distribution Lines.--An Indian tribe may grant a right-of-way over 
tribal land for a pipeline or an electric transmission or distribution 
line without approval by the Secretary if--
            ``(1) the right-of-way is executed in accordance with a 
        tribal energy resource agreement approved by the Secretary 
        under subsection (e);
            ``(2) the term of the right-of-way does not exceed 30 
        years;
            ``(3) the pipeline or electric transmission or distribution 
        line serves--
                    ``(A) an electric generation, transmission, or 
                distribution facility located on tribal land; or
                    ``(B) a facility located on tribal land that 
                processes or refines energy resources developed on 
                tribal land; and
            ``(4) the Indian tribe has entered into a tribal energy 
        resource agreement with the Secretary, as described in 
        subsection (e), relating to the development of energy resources 
        on tribal land (including the periodic review and evaluation of 
        the Indian tribe's activities under such agreement described in 
        subparagraphs (D) and (E) of subsection (e)(2)).
    ``(c) Renewals.--A lease or business agreement entered into or a 
right-of-way granted by an Indian tribe under this section may be 
renewed at the discretion of the Indian tribe in accordance with this 
section.
    ``(d) Validity.--No lease, business agreement, or right-of-way 
relating to the development of tribal energy resources pursuant to the 
provisions of this section shall be valid unless the lease, business 
agreement, or right-of-way is authorized by the provisions of a tribal 
energy resource agreement approved by the Secretary under subsection 
(e)(2).
    ``(e) Tribal Energy Resource Agreements.--
            ``(1) On issuance of regulations under paragraph (8), an 
        Indian tribe may submit to the Secretary for approval a tribal 
        energy resource agreement governing leases, business 
        agreements, and rights-of-way under this section.
            ``(2)(A) Not later than 180 days after the date on which 
        the Secretary receives a tribal energy resource agreement 
        submitted by an Indian tribe under paragraph (1), or not later 
        than 60 days after the Secretary receives a revised tribal 
        energy resource agreement submitted by an Indian tribe under 
        paragraph (4)(C), (or such later date as may be agreed to by 
        the Secretary and the Indian tribe), the Secretary shall 
        approve or disapprove the tribal energy resource agreement.
            ``(B) The Secretary shall approve a tribal energy resource 
        agreement submitted under paragraph (1) if--
                    ``(i) the Secretary determines that the Indian 
                tribe has demonstrated that the Indian tribe has 
                sufficient capacity to regulate the development of 
                energy resources of the Indian tribe;
                    ``(ii) the tribal energy resource agreement 
                includes provisions required under subparagraph (D); 
                and
                    ``(iii) the tribal energy resource agreement 
                includes provisions that, with respect to a lease, 
                business agreement, or right-of-way under this 
                section--
                            ``(I) ensure the acquisition of necessary 
                        information from the applicant for the lease, 
                        business agreement, or right-of-way;
                            ``(II) address the term of the lease or 
                        business agreement or the term of conveyance of 
                        the right-of-way;
                            ``(III) address amendments and renewals;
                            ``(IV) address the economic return to the 
                        Indian tribe under leases, business agreements, 
                        and rights-of-way;
                            ``(V) address technical or other relevant 
                        requirements;
                            ``(VI) establish requirements for 
                        environmental review in accordance with 
                        subparagraph (C);
                            ``(VII) ensure compliance with all 
                        applicable environmental laws;
                            ``(VIII) identify final approval authority;
                            ``(IX) provide for public notification of 
                        final approvals;
                            ``(X) establish a process for consultation 
                        with any affected States concerning off-
                        reservation impacts, if any, identified 
                        pursuant to the provisions required under 
                        subparagraph (C)(i);
                            ``(XI) describe the remedies for breach of 
                        the lease, business agreement, or right-of-way;
                            ``(XII) require each lease, business 
                        agreement, and right-of-way to include a 
                        statement that, in the event that any of its 
                        provisions violates an express term or 
                        requirement set forth in the tribal energy 
                        resource agreement pursuant to which it was 
                        executed--
                                    ``(aa) such provision shall be null 
                                and void; and
                                    ``(bb) if the Secretary determines 
                                such provision to be material, the 
                                Secretary shall have the authority to 
                                suspend or rescind the lease, business 
                                agreement, or right-of-way or take 
                                other appropriate action that the 
                                Secretary determines to be in the best 
                                interest of the Indian tribe;
                            ``(XIII) require each lease, business 
                        agreement, and right-of-way to provide that it 
                        will become effective on the date on which a 
                        copy of the executed lease, business agreement, 
                        or right-of-way is delivered to the Secretary 
                        in accordance with regulations adopted pursuant 
                        to this subsection; and
                            ``(XIV) include citations to tribal laws, 
                        regulations, or procedures, if any, that set 
                        out tribal remedies that must be exhausted 
                        before a petition may be submitted to the 
                        Secretary pursuant to paragraph (7)(B).
            ``(C) Tribal energy resource agreements submitted under 
        paragraph (1) shall establish, and include provisions to ensure 
        compliance with, an environmental review process that, with 
        respect to a lease, business agreement, or right-of-way under 
        this section, provides for--
                    ``(i) the identification and evaluation of all 
                significant environmental impacts (as compared with a 
                no-action alternative), including effects on cultural 
                resources;
                    ``(ii) the identification of proposed mitigation;
                    ``(iii) a process for ensuring that the public is 
                informed of and has an opportunity to comment on the 
                environmental impacts of the proposed action before 
                tribal approval of the lease, business agreement, or 
                right-of-way; and
                    ``(iv) sufficient administrative support and 
                technical capability to carry out the environmental 
                review process.
            ``(D) A tribal energy resource agreement negotiated between 
        the Secretary and an Indian tribe in accordance with this 
        subsection shall include--
                    ``(i) provisions requiring the Secretary to conduct 
                a periodic review and evaluation to monitor the 
                performance of the Indian tribe's activities associated 
                with the development of energy resources under the 
                tribal energy resource agreement; and
                    ``(ii) when such review and evaluation result in a 
                finding by the Secretary of imminent jeopardy to a 
                physical trust asset arising from a violation of the 
                tribal energy resource agreement or applicable Federal 
                laws, provisions authorizing the Secretary to take 
                appropriate actions determined by the Secretary to be 
                necessary to protect such asset, which actions may 
                include reassumption of responsibility for activities 
                associated with the development of energy resources on 
                tribal land until the violation and conditions that 
                gave rise to such jeopardy have been corrected.
            ``(E) The periodic review and evaluation described in 
        subparagraph (D) shall be conducted on an annual basis, except 
        that, after the third such annual review and evaluation, the 
        Secretary and the Indian tribe may mutually agree to amend the 
        tribal energy resource agreement to authorize the review and 
        evaluation required by subparagraph (D) to be conducted once 
        every 2 years.
            ``(3) The Secretary shall provide notice and opportunity 
        for public comment on tribal energy resource agreements 
        submitted for approval under paragraph (1). The Secretary's 
        review of a tribal energy resource agreement under the National 
        Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.) shall 
        be limited to the direct effects of that approval.
            ``(4) If the Secretary disapproves a tribal energy resource 
        agreement submitted by an Indian tribe under paragraph (1), the 
        Secretary shall, not later than 10 days after the date of 
        disapproval--
                    ``(A) notify the Indian tribe in writing of the 
                basis for the disapproval;
                    ``(B) identify what changes or other actions are 
                required to address the concerns of the Secretary; and
                    ``(C) provide the Indian tribe with an opportunity 
                to revise and resubmit the tribal energy resource 
                agreement.
            ``(5) If an Indian tribe executes a lease or business 
        agreement or grants a right-of-way in accordance with a tribal 
        energy resource agreement approved under this subsection, the 
        Indian tribe shall, in accordance with the process and 
        requirements set forth in the Secretary's regulations adopted 
        pursuant to paragraph (8), provide to the Secretary--
                    ``(A) a copy of the lease, business agreement, or 
                right-of-way document (including all amendments to and 
                renewals of the document); and
                    ``(B) in the case of a tribal energy resource 
                agreement or a lease, business agreement, or right-of-
                way that permits payments to be made directly to the 
                Indian tribe, information and documentation of those 
                payments sufficient to enable the Secretary to 
                discharge the trust responsibility of the United States 
                to enforce the terms of, and protect the Indian tribe's 
                rights under, the lease, business agreement, or right-
                of-way.
            ``(6)(A) For purposes of the activities to be undertaken by 
        the Secretary pursuant to this section, the Secretary shall--
                    ``(i) carry out such activities in a manner 
                consistent with the trust responsibility of the United 
                States relating to mineral and other trust resources; 
                and
                    ``(ii) act in good faith and in the best interests 
                of the Indian tribes.
            ``(B) Subject to the provisions of subsections (a)(2), (b), 
        and (c) waiving the requirement of Secretarial approval of 
        leases, business agreements, and rights-of-way executed 
        pursuant to tribal energy resource agreements approved under 
        this section, and the provisions of subparagraph (D), nothing 
        in this section shall absolve the United States from any 
        responsibility to Indians or Indian tribes, including, but not 
        limited to, those which derive from the trust relationship or 
        from any treaties, statutes, and other laws of the United 
        States, Executive Orders, or agreements between the United 
        States and any Indian tribe.
            ``(C) The Secretary shall continue to have a trust 
        obligation to ensure that the rights and interests of an Indian 
        tribe are protected in the event that--
                    ``(i) any other party to any such lease, business 
                agreement, or right-of-way violates any applicable 
                provision of Federal law or the terms of any lease, 
                business agreement, or right-of-way under this section; 
                or
                    ``(ii) any provision in such lease, business 
                agreement, or right-of-way violates any express 
                provision or requirement set forth in the tribal energy 
                resource agreement pursuant to which the lease, 
                business agreement, or right-of-way was executed.
            ``(D) Notwithstanding subparagraph (B), the United States 
        shall not be liable to any party (including any Indian tribe) 
        for any of the negotiated terms of, or any losses resulting 
        from the negotiated terms of, a lease, business agreement, or 
        right-of-way executed pursuant to and in accordance with a 
        tribal energy resource agreement approved by the Secretary 
        under paragraph (2). For the purpose of this subparagraph, the 
        term `negotiated terms' means any terms or provisions that are 
        negotiated by an Indian tribe and any other party or parties to 
        a lease, business agreement, or right-of-way entered into 
        pursuant to an approved tribal energy resource agreement.
            ``(7)(A) In this paragraph, the term `interested party' 
        means any person or entity the interests of which have 
        sustained or will sustain a significant adverse environmental 
        impact as a result of the failure of an Indian tribe to comply 
        with a tribal energy resource agreement of the Indian tribe 
        approved by the Secretary under paragraph (2).
            ``(B) After exhaustion of tribal remedies, and in 
        accordance with the process and requirements set forth in 
        regulations adopted by the Secretary pursuant to paragraph (8), 
        an interested party may submit to the Secretary a petition to 
        review compliance of an Indian tribe with a tribal energy 
        resource agreement of the Indian tribe approved by the 
        Secretary under paragraph (2).
            ``(C)(i) Not later than 120 days after the date on which 
        the Secretary receives a petition under subparagraph (B), the 
        Secretary shall determine whether the Indian tribe is not in 
compliance with the tribal energy resource agreement, as alleged in the 
petition.
            ``(ii) The Secretary may adopt procedures under paragraph 
        (8) authorizing an extension of time, not to exceed 120 days, 
        for making the determination under clause (i) in any case in 
        which the Secretary determines that additional time is 
        necessary to evaluate the allegations of the petition.
            ``(iii) Subject to subparagraph (D), if the Secretary 
        determines that the Indian tribe is not in compliance with the 
        tribal energy resource agreement as alleged in the petition, 
        the Secretary shall take such action as is necessary to ensure 
        compliance with the provisions of the tribal energy resource 
        agreement, which action may include--
                    ``(I) temporarily suspending some or all activities 
                under a lease, business agreement, or right-of-way 
                under this section until the Indian tribe or such 
                activities are in compliance with the provisions of the 
                approved tribal energy resource agreement; or
                    ``(II) rescinding approval of all or part of the 
                tribal energy resource agreement, and if all of such 
                agreement is rescinded, reassuming the responsibility 
                for approval of any future leases, business agreements, 
                or rights-of-way described in subsections (a) and (b).
            ``(D) Prior to seeking to ensure compliance with the 
        provisions of the tribal energy resource agreement of an Indian 
        tribe under subparagraph (C)(iii), the Secretary shall--
                    ``(i) make a written determination that describes 
                the manner in which the tribal energy resource 
                agreement has been violated;
                    ``(ii) provide the Indian tribe with a written 
                notice of the violations together with the written 
                determination; and
                    ``(iii) before taking any action described in 
                subparagraph (C)(iii) or seeking any other remedy, 
                provide the Indian tribe with a hearing and a 
                reasonable opportunity to attain compliance with the 
                tribal energy resource agreement.
            ``(E) An Indian tribe described in subparagraph (D) shall 
        retain all rights to appeal as provided in regulations issued 
        by the Secretary.
            ``(8) Not later than 1 year after the date of enactment of 
        the Indian Tribal Energy Development and Self-Determination Act 
        of 2003, the Secretary shall issue regulations that implement 
        the provisions of this subsection, including--
                    ``(A) criteria to be used in determining the 
                capacity of an Indian tribe described in paragraph 
                (2)(B)(i), including the experience of the Indian tribe 
                in managing natural resources and financial and 
                administrative resources available for use by the 
                Indian tribe in implementing the approved tribal energy 
                resource agreement of the Indian tribe;
                    ``(B) a process and requirements in accordance with 
                which an Indian tribe may--
                            ``(i) voluntarily rescind a tribal energy 
                        resource agreement approved by the Secretary 
                        under this subsection; and
                            ``(ii) return to the Secretary the 
                        responsibility to approve any future leases, 
                        business agreements, and rights-of-way 
                        described in this subsection;
                    ``(C) provisions setting forth the scope of, and 
                procedures for, the periodic review and evaluation 
                described in subparagraphs (D) and (E) of paragraph 
                (2), including provisions for review of transactions, 
                reports, site inspections, and any other review 
                activities the Secretary determines to be appropriate; 
                and
                    ``(D) provisions defining final agency actions 
                after exhaustion of administrative appeals from 
                determinations of the Secretary under paragraph (7).
    ``(f) No Effect on Other Law.--Nothing in this section affects the 
application of--
            ``(1) any Federal environment law;
            ``(2) the Surface Mining Control and Reclamation Act of 
        1977 (30 U.S.C. 1201 et seq.); or
            ``(3) except as otherwise provided in this title, the 
        Indian Mineral Development Act of 1982 (25 U.S.C. 2101 et seq.) 
        and the National Environmental Policy Act of 1969 (42 U.S.C. 
        4321 et seq.).
    ``(g) Authorization of Appropriations.--There are authorized to be 
appropriated to the Secretary such sums as are necessary for each of 
fiscal years 2004 through 2014 to implement the provisions of this 
section and to make grants or provide other appropriate assistance to 
Indian tribes to assist the Indian tribes in developing and 
implementing tribal energy resource agreements in accordance with the 
provisions of this section.

``SEC. 2605. INDIAN MINERAL DEVELOPMENT REVIEW.

    ``(a) In General.--The Secretary shall conduct a review of all 
activities being conducted under the Indian Mineral Development Act of 
1982 (25 U.S.C. 2101 et seq.) as of that date.
    ``(b) Report.--Not later than 1 year after the date of enactment of 
the Indian Tribal Energy Development and Self-Determination Act of 
2003, the Secretary shall submit to Congress a report that includes--
            ``(1) the results of the review;
            ``(2) recommendations to ensure that Indian tribes have the 
        opportunity to develop Indian energy resources; and
            ``(3) an analysis of the barriers to the development of 
        energy resources on Indian land (including legal, fiscal, 
        market, and other barriers), along with recommendations for the 
        removal of those barriers.

``SEC. 2606. FEDERAL POWER MARKETING ADMINISTRATIONS.

    ``(a) Definitions.--In this section:
            ``(1) The term ``Administrator'' means the Administrator of 
        the Bonneville Power Administration and the Administrator of 
        the Western Area Power Administration.
            ``(2) The term ``power marketing administration'' means--
                    ``(A) the Bonneville Power Administration;
                    ``(B) the Western Area Power Administration; and
                    ``(C) any other power administration the power 
                allocation of which is used by or for the benefit of an 
                Indian tribe located in the service area of the 
                administration.
    ``(b) Encouragement of Indian Tribal Energy Development.--Each 
Administrator shall encourage Indian tribal energy development by 
taking such actions as are appropriate, including administration of 
programs of the Bonneville Power Administration and the Western Area 
Power Administration, in accordance with this section.
    ``(c) Action by the Administrator.--In carrying out this section, 
and in accordance with existing law--
            ``(1) each Administrator shall consider the unique 
        relationship that exists between the United States and Indian 
        tribes;
            ``(2) power allocations from the Western Area Power 
        Administration to Indian tribes may be used to meet firming and 
        reserve needs of Indian-owned energy projects on Indian land;
            ``(3) the Administrator of the Western Area Power 
        Administration may purchase non-federally generated power from 
Indian tribes to meet the firming and reserve requirements of the 
Western Area Power Administration; and
            ``(4) each Administrator shall not pay more than the 
        prevailing market price for an energy product nor obtain less 
        than prevailing market terms and conditions.
    ``(d) Assistance for Transmission System Use.--(1) An Administrator 
may provide technical assistance to Indian tribes seeking to use the 
high-voltage transmission system for delivery of electric power.
    ``(2) The costs of technical assistance provided under paragraph 
(1) shall be funded by the Secretary of Energy using nonreimbursable 
funds appropriated for that purpose, or by the applicable Indian 
tribes.
    ``(e) Power Allocation Study.--Not later than 2 years after the 
date of enactment of the Indian Tribal Energy Development and Self-
Determination Act of 2003, the Secretary of Energy shall submit to 
Congress a report that--
            ``(1) describes the use by Indian tribes of Federal power 
        allocations of the Western Area Power Administration (or power 
        sold by the Southwestern Power Administration) and the 
        Bonneville Power Administration to or for the benefit of Indian 
        tribes in service areas of those administrations; and
            ``(2) identifies--
                    ``(A) the quantity of power allocated to, or used 
                for the benefit of, Indian tribes by the Western Area 
                Power Administration;
                    ``(B) the quantity of power sold to Indian tribes 
                by other power marketing administrations; and
                    ``(C) barriers that impede tribal access to and use 
                of Federal power, including an assessment of 
                opportunities to remove those barriers and improve the 
                ability of power marketing administrations to deliver 
                Federal power.
    ``(f) Authorization of Appropriations.--There are authorized to be 
appropriated to carry out this section $750,000, which shall remain 
available until expended and shall not be reimbursable.

``SEC. 2607. WIND AND HYDROPOWER FEASIBILITY STUDY.

    ``(a) Study.--The Secretary of Energy, in coordination with the 
Secretary of the Army and the Secretary, shall conduct a study of the 
cost and feasibility of developing a demonstration project that would 
use wind energy generated by Indian tribes and hydropower generated by 
the Army Corps of Engineers on the Missouri River to supply firming 
power to the Western Area Power Administration.
    ``(b) Scope of Study.--The study shall--
            ``(1) determine the feasibility of the blending of wind 
        energy and hydropower generated from the Missouri River dams 
        operated by the Army Corps of Engineers;
            ``(2) review historical and projected requirements for 
        firming power and the patterns of availability and use of 
        firming power;
            ``(3) assess the wind energy resource potential on tribal 
        land and projected cost savings through a blend of wind and 
        hydropower over a 30-year period;
            ``(4) determine seasonal capacity needs and associated 
        transmission upgrades for integration of tribal wind 
        generation; and
            ``(5) include an independent tribal engineer as a study 
        team member.
    ``(c) Report.--Not later than 1 year after the date of enactment of 
the Energy Policy Act of 2003, the Secretary and Secretary of the Army 
shall submit to Congress a report that describes the results of the 
study, including--
            ``(1) an analysis of the potential energy cost or benefits 
        to the customers of the Western Area Power Administration 
        through the use of combined wind and hydropower;
            ``(2) an evaluation of whether a combined wind and 
        hydropower system can reduce reservoir fluctuation, enhance 
        efficient and reliable energy production, and provide Missouri 
        River management flexibility;
            ``(3) recommendations for a demonstration project that 
        could be carried out by the Western Area Power Administration 
        in partnership with an Indian tribal government or tribal 
        energy resource development organization to demonstrate the 
        feasibility and potential of using wind energy produced on 
        Indian land to supply firming energy to the Western Area Power 
        Administration or any other Federal power marketing agency; and
            ``(4) an identification of--
                    ``(A) the economic and environmental costs or 
                benefits to be realized through such a Federal-tribal 
                partnership; and
                    ``(B) the manner in which such a partnership could 
                contribute to the energy security of the United States.
    ``(d) Funding.--
            ``(1) Authorization of appropriations.--There are 
        authorized to be appropriated to carry out this section 
        $500,000, to remain available until expended.
            ``(2) Nonreimbursability.--Costs incurred by the Secretary 
        in carrying out this section shall be nonreimbursable.''.
    (b) Conforming Amendments.--The table of contents for the Energy 
Policy Act of 1992 is amended by striking the items relating to title 
XXVI and inserting the following:

  ``Sec. 2601. Definitions.
  ``Sec. 2602. Indian tribal energy resource development.
  ``Sec. 2603. Indian tribal energy resource regulation.
  ``Sec. 2604. Leases, business agreements, and rights-of-way involving 
                            energy development or transmission.
  ``Sec. 2605. Indian mineral development review.
  ``Sec. 2606. Federal Power Marketing Administrations.
  ``Sec. 2607. Wind and hydropower feasibility study.''.

SEC. 504. FOUR CORNERS TRANSMISSION LINE PROJECT.

    The Dine Power Authority, an enterprise of the Navajo Nation, shall 
be eligible to receive grants and other assistance as authorized by 
section 217 of the Department of Energy Organization Act, as added by 
section 502 of this title, and section 2602 of the Energy Policy Act of 
1992, as amended by this title, for activities associated with the 
development of a transmission line from the Four Corners Area to 
southern Nevada, including related power generation opportunities.

SEC. 505. ENERGY EFFICIENCY IN FEDERALLY ASSISTED HOUSING.

    (a) In General.--The Secretary of Housing and Urban Development 
shall promote energy conservation in housing that is located on Indian 
land and assisted with Federal resources through--
            (1) the use of energy-efficient technologies and 
        innovations (including the procurement of energy-efficient 
        refrigerators and other appliances);
            (2) the promotion of shared savings contracts; and
            (3) the use and implementation of such other similar 
        technologies and innovations as the Secretary of Housing and 
        Urban Development considers to be appropriate.
    (b) Amendment.--Section 202(2) of the Native American Housing and 
Self-Determination Act of 1996 (25 U.S.C. 4132(2)) is amended by 
inserting ``improvement to achieve greater energy efficiency,'' after 
``planning,''.

SEC. 506. CONSULTATION WITH INDIAN TRIBES.

    In carrying out this title and the amendments made by this title, 
the Secretary of Energy and the Secretary shall, as appropriate and to 
the maximum extent practicable, involve and consult with Indian tribes 
in a manner that is consistent with the Federal trust and 
the government-to-government relationships between Indian tribes and 
the United States.

                       TITLE VI--NUCLEAR MATTERS

               Subtitle A--Price-Anderson Act Amendments

SEC. 601. SHORT TITLE.

    This subtitle may be cited as the ``Price-Anderson Amendments Act 
of 2003''.

SEC. 602. EXTENSION OF INDEMNIFICATION AUTHORITY.

    (a) Indemnification of Nuclear Regulatory Commission Licensees.--
Section 170 c. of the Atomic Energy Act of 1954 (42 U.S.C. 2210(c)) is 
amended--
            (1) in the subsection heading, by striking ``Licenses'' and 
        inserting ``Licensees''; and
            (2) by striking ``December 31, 2003'' each place it appears 
        and inserting ``December 31, 2023''.
    (b) Indemnification of Department of Energy Contractors.--Section 
170 d.(1)(A) of the Atomic Energy Act of 1954 (42 U.S.C. 2210(d)(1)(A)) 
is amended by striking ``December 31, 2004'' and inserting ``December 
31, 2023''.
    (c) Indemnification of Nonprofit Educational Institutions.--Section 
170 k. of the Atomic Energy Act of 1954 (42 U.S.C. 2210(k)) is amended 
by striking ``August 1, 2002'' each place it appears and inserting 
``December 31, 2023''.

SEC. 603. MAXIMUM ASSESSMENT.

    Section 170 of the Atomic Energy Act of 1954 (42 U.S.C. 2210) is 
amended--
            (1) in the second proviso of the third sentence of 
        subsection b.(1)--
                    (A) by striking ``$63,000,000'' and inserting 
                ``$95,800,000''; and
                    (B) by striking ``$10,000,000 in any 1 year'' and 
                inserting ``$15,000,000 in any 1 year (subject to 
                adjustment for inflation under subsection t.)''; and
            (2) in subsection t.(1)--
                    (A) by inserting ``total and annual'' after 
                ``amount of the maximum'';
                    (B) by striking ``the date of the enactment of the 
                Price-Anderson Amendments Act of 1988'' and inserting 
                ``August 20, 2003''; and
                    (C) in subparagraph (A), by striking ``such date of 
                enactment'' and inserting ``August 20, 2003''.

SEC. 604. DEPARTMENT OF ENERGY LIABILITY LIMIT.

    (a) Indemnification of Department of Energy Contractors.--Section 
170 d. of the Atomic Energy Act of 1954 (42 U.S.C. 2210(d)) is amended 
by striking paragraph (2) and inserting the following:
    ``(2) In an agreement of indemnification entered into under 
paragraph (1), the Secretary--
            ``(A) may require the contractor to provide and maintain 
        financial protection of such a type and in such amounts as the 
        Secretary shall determine to be appropriate to cover public 
        liability arising out of or in connection with the contractual 
        activity; and
            ``(B) shall indemnify the persons indemnified against such 
        liability above the amount of the financial protection 
        required, in the amount of $10,000,000,000 (subject to 
        adjustment for inflation under subsection t.), in the 
        aggregate, for all persons indemnified in connection with the 
        contract and for each nuclear incident, including such legal 
        costs of the contractor as are approved by the Secretary.''.
    (b) Contract Amendments.--Section 170 d. of the Atomic Energy Act 
of 1954 (42 U.S.C. 2210(d)) is further amended by striking paragraph 
(3) and inserting the following--
    ``(3) All agreements of indemnification under which the Department 
of Energy (or its predecessor agencies) may be required to indemnify 
any person under this section shall be deemed to be amended, on the 
date of enactment of the Price-Anderson Amendments Act of 2003, to 
reflect the amount of indemnity for public liability and any applicable 
financial protection required of the contractor under this 
subsection.''.
    (c) Liability Limit.--Section 170 e.(1)(B) of the Atomic Energy Act 
of 1954 (42 U.S.C. 2210(e)(1)(B)) is amended--
            (1) by striking ``the maximum amount of financial 
        protection required under subsection b. or''; and
            (2) by striking ``paragraph (3) of subsection d., whichever 
        amount is more'' and inserting ``paragraph (2) of subsection 
        d.''.

SEC. 605. INCIDENTS OUTSIDE THE UNITED STATES.

    (a) Amount of Indemnification.--Section 170 d.(5) of the Atomic 
Energy Act of 1954 (42 U.S.C. 2210(d)(5)) is amended by striking 
``$100,000,000'' and inserting ``$500,000,000''.
    (b) Liability Limit.--Section 170 e.(4) of the Atomic Energy Act of 
1954 (42 U.S.C. 2210(e)(4)) is amended by striking ``$100,000,000'' and 
inserting ``$500,000,000''.

SEC. 606. REPORTS.

    Section 170 p. of the Atomic Energy Act of 1954 (42 U.S.C. 2210(p)) 
is amended by striking ``August 1, 1998'' and inserting ``December 31, 
2019''.

SEC. 607. INFLATION ADJUSTMENT.

    Section 170 t. of the Atomic Energy Act of 1954 (42 U.S.C. 2210(t)) 
is amended--
            (1) by redesignating paragraph (2) as paragraph (3); and
            (2) by inserting after paragraph (1) the following:
    ``(2) The Secretary shall adjust the amount of indemnification 
provided under an agreement of indemnification under subsection d. not 
less than once during each 5-year period following July 1, 2003, in 
accordance with the aggregate percentage change in the Consumer Price 
Index since--
            ``(A) that date, in the case of the first adjustment under 
        this paragraph; or
            ``(B) the previous adjustment under this paragraph.''.

SEC. 608. TREATMENT OF MODULAR REACTORS.

    Section 170 b. of the Atomic Energy Act of 1954 (42 U.S.C. 2210(b)) 
is amended by adding at the end the following:
    ``(5)(A) For purposes of this section only, the Commission shall 
consider a combination of facilities described in subparagraph (B) to 
be a single facility having a rated capacity of 100,000 electrical 
kilowatts or more.
    ``(B) A combination of facilities referred to in subparagraph (A) 
is 2 or more facilities located at a single site, each of which has a 
rated capacity of 100,000 electrical kilowatts or more but not more 
than 300,000 electrical kilowatts, with a combined rated capacity of 
not more than 1,300,000 electrical kilowatts.''.

SEC. 609. APPLICABILITY.

    The amendments made by sections 603, 604, and 605 do not apply to a 
nuclear incident that occurs before the date of the enactment of this 
Act.

SEC. 610. PROHIBITION ON ASSUMPTION BY UNITED STATES GOVERNMENT OF 
              LIABILITY FOR CERTAIN FOREIGN INCIDENTS.

    Section 170 of the Atomic Energy Act of 1954 (42 U.S.C. 2210) is 
amended by adding at the end the following new subsection:
    ``u. Prohibition on Assumption of Liability for Certain Foreign 
Incidents.--Notwithstanding this section or any other provision of law, 
no officer of the United States or of any department, agency, or 
instrumentality of the United States Government may enter into any 
contract or other arrangement, or into any amendment or modification of 
a contract or other arrangement, the purpose or effect of which would 
be to directly or indirectly impose liability on the United States 
Government, or any department, agency, or instrumentality of the United 
States Government, or to otherwise directly or indirectly require an 
indemnity by the United States Government, for nuclear incidents 
occurring in connection with the design, construction, or operation of 
a production facility or utilization facility in any country whose 
government has been identified by the Secretary of State as engaged in 
state sponsorship of terrorist activities (specifically including any 
country the government of which, as of September 11, 2001, had been 
determined by the Secretary of State under section 620A(a) of the 
Foreign Assistance Act of 1961 (22 U.S.C. 2371(a)), section 6(j)(1) of 
the Export Administration Act of 1979 (50 U.S.C. App. 2405(j)(1)), or 
section 40(d) of the Arms Export Control Act (22 U.S.C. 2780(d)) to 
have repeatedly provided support for acts of international terrorism). 
This subsection shall not apply to nuclear incidents occurring as a 
result of missions, carried out under the direction of the Secretary of 
Energy, the Secretary of Defense, or the Secretary of State, that are 
necessary to safely secure, store, transport, or remove nuclear 
materials for nuclear safety or nonproliferation purposes.''.

SEC. 611. CIVIL PENALTIES.

    (a) Repeal of Automatic Remission.--Section 234A b.(2) of the 
Atomic Energy Act of 1954 (42 U.S.C. 2282a(b)(2)) is amended by 
striking the last sentence.
    (b) Limitation for Not-for-Profit Institutions.--Subsection d. of 
section 234A of the Atomic Energy Act of 1954 (42 U.S.C. 2282a(d)) is 
amended to read as follows:
    ``d.(1) Notwithstanding subsection a., in the case of any not-for-
profit contractor, subcontractor, or supplier, the total amount of 
civil penalties paid under subsection a. may not exceed the total 
amount of fees paid within any 1-year period (as determined by the 
Secretary) under the contract under which the violation occurs.
    ``(2) For purposes of this section, the term ``not-for-profit'' 
means that no part of the net earnings of the contractor, 
subcontractor, or supplier inures to the benefit of any natural person 
or for-profit artificial person.''.
    (c) Effective Date.--The amendments made by this section shall not 
apply to any violation of the Atomic Energy Act of 1954 (42 U.S.C. 2011 
et seq.) occurring under a contract entered into before the date of 
enactment of this section.

                  Subtitle B--General Nuclear Matters

SEC. 621. LICENSES.

    Section 103 c. of the Atomic Energy Act of 1954 (42 U.S.C. 2133(c)) 
is amended by inserting ``from the authorization to commence 
operations'' after ``forty years''.

SEC. 622. NRC TRAINING PROGRAM.

    (a) In General.--In order to maintain the human resource investment 
and infrastructure of the United States in the nuclear sciences, health 
physics, and engineering fields, in accordance with the statutory 
authorities of the Nuclear Regulatory Commission relating to the 
civilian nuclear energy program, the Nuclear Regulatory Commission 
shall carry out a training and fellowship program to address shortages 
of individuals with critical nuclear safety regulatory skills.
    (b) Authorization of Appropriations.--
            (1) In general.--There are authorized to be appropriated to 
        the Nuclear Regulatory Commission to carry out this section 
        $1,000,000 for each of fiscal years 2004 through 2008.
            (2) Availability.--Funds made available under paragraph (1) 
        shall remain available until expended.

SEC. 623. COST RECOVERY FROM GOVERNMENT AGENCIES.

    Section 161 w. of the Atomic Energy Act of 1954 (42 U.S.C. 2201(w)) 
is amended--
            (1) by striking ``for or is issued'' and all that follows 
        through ``1702'' and inserting ``to the Commission for, or is 
        issued by the Commission, a license or certificate'';
            (2) by striking ``483a'' and inserting ``9701''; and
            (3) by striking ``, of applicants for, or holders of, such 
        licenses or certificates''.

SEC. 624. ELIMINATION OF PENSION OFFSET.

    Section 161 of the Atomic Energy Act of 1954 (42 U.S.C. 2201) is 
amended by adding at the end the following:
    ``y. Exempt from the application of sections 8344 and 8468 of title 
5, United States Code, an annuitant who was formerly an employee of the 
Commission who is hired by the Commission as a consultant, if the 
Commission finds that the annuitant has a skill that is critical to the 
performance of the duties of the Commission.''.

SEC. 625. ANTITRUST REVIEW.

    Section 105 c. of the Atomic Energy Act of 1954 (42 U.S.C. 2135(c)) 
is amended by adding at the end the following:
    ``(9) Applicability.--This subsection does not apply to an 
application for a license to construct or operate a utilization 
facility or production facility under section 103 or 104 b. that is 
filed on or after the date of enactment of this paragraph.''.

SEC. 626. DECOMMISSIONING.

    Section 161 i. of the Atomic Energy Act of 1954 (42 U.S.C. 2201(i)) 
is amended--
            (1) by striking ``and (3)'' and inserting ``(3)''; and
            (2) by inserting before the semicolon at the end the 
        following: ``, and (4) to ensure that sufficient funds will be 
        available for the decommissioning of any production or 
        utilization facility licensed under section 103 or 104 b., 
        including standards and restrictions governing the control, 
        maintenance, use, and disbursement by any former licensee under 
        this Act that has control over any fund for the decommissioning 
        of the facility''.

SEC. 627. LIMITATION ON LEGAL FEE REIMBURSEMENT.

    The Department of Energy shall not, except as required under a 
contract entered into before the date of enactment of this Act, 
reimburse any contractor or subcontractor of the Department for any 
legal fees or expenses incurred with respect to a complaint subsequent 
to--
            (1) an adverse determination on the merits with respect to 
        such complaint against the contractor or subcontractor by the 
        Director of the Department of Energy's Office of Hearings and 
        Appeals pursuant to part 708 of title 10, Code of Federal 
        Regulations, or by a Department of Labor Administrative Law 
        Judge pursuant to section 211 of the Energy Reorganization Act 
        of 1974 (42 U.S.C. 5851); or
            (2) an adverse final judgment by any State or Federal court 
        with respect to such complaint against the contractor or 
        subcontractor for wrongful termination or retaliation due to 
        the making of disclosures protected under chapter 12 of title 
        5, United States Code, section 211 of the Energy Reorganization 
        Act of 1974 (42 U.S.C. 5851), or any comparable State law,
unless the adverse determination or final judgment is reversed upon 
further administrative or judicial review.

SEC. 628. DECOMMISSIONING PILOT PROGRAM.

    (a) Pilot Program.--The Secretary of Energy shall establish a 
decommissioning pilot program to decommission and decontaminate the 
sodium-cooled fast breeder experimental test-site reactor located in 
northwest Arkansas in accordance with the decommissioning activities 
contained in the August 31, 1998, Department of Energy report on the 
reactor.
    (b) Authorization of Appropriations.--There are authorized to be 
appropriated to the Secretary of Energy to carry out this section 
$16,000,000.

SEC. 629. REPORT ON FEASIBILITY OF DEVELOPING COMMERCIAL NUCLEAR ENERGY 
              GENERATION FACILITIES AT EXISTING DEPARTMENT OF ENERGY 
              SITES.

    Not later than 1 year after the date of the enactment of this Act, 
the Secretary of Energy shall submit to Congress a report on the 
feasibility of developing commercial nuclear energy generation 
facilities at Department of Energy sites in existence on the date of 
enactment of this Act.

SEC. 630. URANIUM SALES.

    (a) Sales, Transfers, and Services.--Section 3112 of the USEC 
Privatization Act (42 U.S.C. 2297h-10) is amended by striking 
subsections (d), (e), and (f) and inserting the following:
    ``(d) Inventory Sales.--(1) In addition to the transfers and sales 
authorized under subsections (b) and (c) and under paragraph (5) of 
this subsection, the United States Government may transfer or sell 
uranium in any form subject to paragraphs (2), (3), and (4).
    ``(2) Except as provided in subsections (b) and (c) and paragraph 
(5) of this subsection, no sale or transfer of uranium shall be made 
under this subsection by the United States Government unless--
            ``(A) the President determines that the material is not 
        necessary for national security needs and the sale or transfer 
        has no adverse impact on implementation of existing government-
        to-government agreements;
            ``(B) the price paid to the appropriate Federal agency, if 
        the transaction is a sale, will not be less than the fair 
        market value of the material; and
            ``(C) the sale or transfer to commercial nuclear power end 
        users is made pursuant to a contract of at least 3 years' 
        duration.
    ``(3) Except as provided in paragraph (5), the United States 
Government shall not make any transfer or sale of uranium in any form 
under this subsection that would cause the total amount of uranium 
transferred or sold pursuant to this subsection that is delivered for 
consumption by commercial nuclear power end users to exceed--
            ``(A) 3,000,000 pounds of U<INF>3</INF>O<INF>8</INF> 
        equivalent in fiscal year 2004, 2005, 2006, 2007, 2008, or 
        2009;
            ``(B) 5,000,000 pounds of U<INF>3</INF>O<INF>8</INF> 
        equivalent in fiscal year 2010 or 2011;
            ``(C) 7,000,000 pounds of U<INF>3</INF>O<INF>8</INF> 
        equivalent in fiscal year 2012; and
            ``(D) 10,000,000 pounds of U<INF>3</INF>O<INF>8</INF> 
        equivalent in fiscal year 2013 or any fiscal year thereafter.
    ``(4) Except for sales or transfers under paragraph (5), for the 
purposes of this subsection, the recovery of uranium from uranium 
bearing materials transferred or sold by the United States Government 
to the domestic uranium industry shall be the preferred method of 
making uranium available. The recovered uranium shall be counted 
against the annual maximum deliveries set forth in this section, when 
such uranium is sold to end users.
    ``(5) The United States Government may make the following sales and 
transfers:
            ``(A) Sales or transfers to a Federal agency if the 
        material is transferred for the use of the receiving agency 
        without any resale or transfer to another entity and the 
        material does not meet commercial specifications.
            ``(B) Sales or transfers to any person for national 
        security purposes, as determined by the Secretary.
            ``(C) Sales or transfers to any State or local agency or 
        nonprofit, charitable, or educational institution for use other 
        than the generation of electricity for commercial use.
            ``(D) Sales or transfers to the Department of Energy 
        research reactor sales program.
            ``(E) Sales or transfers, at fair market value, for 
        emergency purposes in the event of a disruption in supply to 
        commercial nuclear power end users in the United States.
            ``(F) Sales or transfers, at fair market value, for use in 
        a commercial reactor in the United States with nonstandard fuel 
        requirements.
            ``(G) Sales or transfers provided for under law for use by 
        the Tennessee Valley Authority in relation to the Department of 
        Energy's highly enriched uranium or tritium programs.
    ``(6) For purposes of this subsection, the term ``United States 
Government'' does not include the Tennessee Valley Authority.
    ``(e) Savings Provision.--Nothing in this subchapter modifies the 
terms of the Russian HEU Agreement.
    ``(f) Services.--Notwithstanding any other provision of this 
section, if the Secretary determines that the Corporation has failed, 
or may fail, to perform any obligation under the Agreement between the 
Department of Energy and the Corporation dated June 17, 2002, and as 
amended thereafter, which failure could result in termination of the 
Agreement, the Secretary shall notify Congress, in such a manner that 
affords Congress an opportunity to comment, prior to a determination by 
the Secretary whether termination, waiver, or modification of the 
Agreement is required. The Secretary is authorized to take such action 
as he determines necessary under the Agreement to terminate, waive, or 
modify provisions of the Agreement to achieve its purposes.''.
    (b) Report.--Not later than 3 years after the date of enactment of 
this Act, the Secretary of Energy shall report to Congress on the 
implementation of this section. The report shall include a discussion 
of available excess uranium inventories; all sales or transfers made by 
the United States Government; the impact of such sales or transfers on 
the domestic uranium industry, the spot market uranium price, and the 
national security interests of the United States; and any steps taken 
to remediate any adverse impacts of such sales or transfers.

SEC. 631. COOPERATIVE RESEARCH AND DEVELOPMENT AND SPECIAL 
              DEMONSTRATION PROJECTS FOR THE URANIUM MINING INDUSTRY.

    (a) Authorization of Appropriations.--There are authorized to be 
appropriated to the Secretary of Energy $10,000,000 for each of fiscal 
years 2004, 2005, and 2006 for--
            (1) cooperative, cost-shared agreements between the 
        Department of Energy and domestic uranium producers to 
        identify, test, and develop improved in situ leaching mining 
        technologies, including low-cost environmental restoration 
        technologies that may be applied to sites after completion of 
        in situ leaching operations; and
            (2) funding for competitively selected demonstration 
        projects with domestic uranium producers relating to--
                    (A) enhanced production with minimal environmental 
                impacts;
                    (B) restoration of well fields; and
                    (C) decommissioning and decontamination activities.
    (b) Domestic Uranium Producer.--For purposes of this section, the 
term ``domestic uranium producer'' has the meaning given that term in 
section 1018(4) of the Energy Policy Act of 1992 (42 U.S.C. 2296b-
7(4)), except that the term shall not include any producer that has not 
produced uranium from domestic reserves on or after July 30, 1998.
    (c) Limitation.--No activities funded under this section may be 
carried out in the State of New Mexico.

SEC. 632. WHISTLEBLOWER PROTECTION.

    (a) Definition of Employer.--Section 211(a)(2) of the Energy 
Reorganization Act of 1974 (42 U.S.C. 5851(a)(2)) is amended--
            (1) in subparagraph (C), by striking ``and'' at the end;
            (2) in subparagraph (D), by striking the period at the end 
        and inserting ``; and''; and
            (3) by adding at the end the following:
                    ``(E) a contractor or subcontractor of the 
                Commission.''.
    (b) De Novo Review.--Subsection (b) of such section 211 is amended 
by adding at the end the following new paragraph:
            ``(4) If the Secretary has not issued a final decision 
        within 540 days after the filing of a complaint under paragraph 
        (1), and there is no showing that such delay is due to the bad 
        faith of the person seeking relief under this paragraph, such 
        person may bring an action at law or equity for de novo review 
        in the appropriate district court of the United States, which 
        shall have jurisdiction over such an action without regard to 
        the amount in controversy.''.

SEC. 633. MEDICAL ISOTOPE PRODUCTION.

    Section 134 of the Atomic Energy Act of 1954 (42 U.S.C. 2160d) is 
amended--
            (1) in subsection a., by striking ``a. The Commission'' and 
        inserting ``a. In General.--Except as provided in subsection 
        b., the Commission'';
            (2) by redesignating subsection b. as subsection c.; and
            (3) by inserting after subsection a. the following:
    ``b. Medical Isotope Production.--
            ``(1) Definitions.--In this subsection:
                    ``(A) Highly enriched uranium.--The term `highly 
                enriched uranium' means uranium enriched to include 
                concentration of U-235 above 20 percent.
                    ``(B) Medical isotope.--The term `medical isotope' 
                includes Molybdenum 99, Iodine 131, Xenon 133, and 
                other radioactive materials used to produce a 
                radiopharmaceutical for diagnostic, therapeutic 
                procedures or for research and development.
                    ``(C) Radiopharmaceutical.--The term 
                `radiopharmaceutical' means a radioactive isotope 
                that--
                            ``(i) contains byproduct material combined 
                        with chemical or biological material; and
                            ``(ii) is designed to accumulate 
                        temporarily in a part of the body for 
                        therapeutic purposes or for enabling the 
                        production of a useful image for use in a 
                        diagnosis of a medical condition.
                    ``(D) Recipient country.--The term `recipient 
                country' means Canada, Belgium, France, Germany, and 
                the Netherlands.
            ``(2) Licenses.--The Commission may issue a license 
        authorizing the export (including shipment to and use at 
        intermediate and ultimate consignees specified in the license) 
        to a recipient country of highly enriched uranium for medical 
        isotope production if, in addition to any other requirements of 
        this Act (except subsection a.), the Commission determines 
        that--
                    ``(A) a recipient country that supplies an 
                assurance letter to the United States Government in 
                connection with the consideration by the Commission of 
                the export license application has informed the United 
                States Government that any intermediate consignees and 
                the ultimate consignee specified in the application are 
                required to use the highly enriched uranium solely to 
                produce medical isotopes; and
                    ``(B) the highly enriched uranium for medical 
                isotope production will be irradiated only in a reactor 
                in a recipient country that--
                            ``(i) uses an alternative nuclear reactor 
                        fuel; or
                            ``(ii) is the subject of an agreement with 
                        the United States Government to convert to an 
                        alternative nuclear reactor fuel when 
                        alternative nuclear reactor fuel can be used in 
                        the reactor.
            ``(3) Review of physical protection requirements.--
                    ``(A) In general.--The Commission shall review the 
                adequacy of physical protection requirements that, as 
                of the date of an application under paragraph (2), are 
                applicable to the transportation and storage of highly 
                enriched uranium for medical isotope production or 
                control of residual material after irradiation and 
                extraction of medical isotopes.
                    ``(B) Imposition of additional requirements.--If 
                the Commission determines that additional physical 
                protection requirements are necessary (including a 
                limit on the quantity of highly enriched uranium that 
                may be contained in a single shipment), the Commission 
                shall impose such requirements as license conditions or 
                through other appropriate means.
            ``(4) First report to congress.--
                    ``(A) NAS study.--The Secretary shall enter into an 
                arrangement with the National Academy of Sciences to 
                conduct a study to determine--
                            ``(i) the feasibility of procuring supplies 
                        of medical isotopes from commercial sources 
                        that do not use highly enriched uranium;
                            ``(ii) the current and projected demand and 
                        availability of medical isotopes in regular 
                        current domestic use;
                            ``(iii) the progress that is being made by 
                        the Department of Energy and others to 
                        eliminate all use of highly enriched uranium in 
reactor fuel, reactor targets, and medical isotope production 
facilities; and
                            ``(iv) the potential cost differential in 
                        medical isotope production in the reactors and 
                        target processing facilities if the products 
                        were derived from production systems that do 
                        not involve fuels and targets with highly 
                        enriched uranium.
                    ``(B) Feasibility.--For the purpose of this 
                subsection, the use of low enriched uranium to produce 
                medical isotopes shall be determined to be feasible 
                if--
                            ``(i) low enriched uranium targets have 
                        been developed and demonstrated for use in the 
                        reactors and target processing facilities that 
                        produce significant quantities of medical 
                        isotopes to serve United States needs for such 
                        isotopes;
                            ``(ii) sufficient quantities of medical 
                        isotopes are available from low enriched 
                        uranium targets and fuel to meet United States 
                        domestic needs; and
                            ``(iii) the average anticipated total cost 
                        increase from production of medical isotopes in 
                        such facilities without use of highly enriched 
                        uranium is less than 10 percent.
                    ``(C) Report by the secretary.--Not later than 5 
                years after the date of enactment of the Energy Policy 
                Act of 2003, the Secretary shall submit to Congress a 
                report that--
                            ``(i) contains the findings of the National 
                        Academy of Sciences made in the study under 
                        subparagraph (A); and
                            ``(ii) discloses the existence of any 
                        commitments from commercial producers to 
                        provide domestic requirements for medical 
                        isotopes without use of highly enriched uranium 
                        consistent with the feasibility criteria 
                        described in subparagraph (B) not later than 
                        the date that is 4 years after the date of 
                        submission of the report.
            ``(5) Second report to congress.--If the study of the 
        National Academy of Sciences determines under paragraph 
        (4)(A)(i) that the procurement of supplies of medical isotopes 
        from commercial sources that do not use highly enriched uranium 
        is feasible, but the Secretary is unable to report the 
        existence of commitments under paragraph (4)(C)(ii), not later 
        than the date that is 6 years after the date of enactment of 
        the Energy Policy Act of 2003, the Secretary shall submit to 
        Congress a report that describes options for developing 
        domestic supplies of medical isotopes in quantities that are 
        adequate to meet domestic demand without the use of highly 
        enriched uranium consistent with the cost increase described in 
        paragraph (4)(B)(iii).
            ``(6) Certification.--At such time as commercial facilities 
        that do not use highly enriched uranium are capable of meeting 
        domestic requirements for medical isotopes, within the cost 
        increase described in paragraph (4)(B)(iii) and without 
        impairing the reliable supply of medical isotopes for domestic 
        utilization, the Secretary shall submit to Congress a 
        certification to that effect.
            ``(7) Sunset provision.--After the Secretary submits a 
        certification under paragraph (6), the Commission shall, by 
        rule, terminate its review of export license applications under 
        this subsection.''.

SEC. 634. FERNALD BYPRODUCT MATERIAL.

    Notwithstanding any other law, the material in the concrete silos 
at the Fernald uranium processing facility managed on the date of 
enactment of this Act by the Department of Energy shall be considered 
byproduct material (as defined by section 11 e.(2) of the Atomic Energy 
Act of 1954 (42 U.S.C. 2014(e)(2))). The Department of Energy may 
dispose of the material in a facility regulated by the Nuclear 
Regulatory Commission or by an Agreement State. If the Department of 
Energy disposes of the material in such a facility, the Nuclear 
Regulatory Commission or the Agreement State shall regulate the 
material as byproduct material under that Act. This material shall 
remain subject to the jurisdiction of the Department of Energy until it 
is received at a commercial, Nuclear Regulatory Commission-licensed, or 
Agreement State-licensed facility, at which time the material shall be 
subject to the health and safety requirements of the Nuclear Regulatory 
Commission or the Agreement State with jurisdiction over the disposal 
site.

SEC. 635. SAFE DISPOSAL OF GREATER-THAN-CLASS C RADIOACTIVE WASTE.

    (a) Designation of Responsibility.--The Secretary of Energy shall 
designate an Office within the Department of Energy to have the 
responsibility for activities needed to develop a new, or use an 
existing, facility for safely disposing of all low-level radioactive 
waste with concentrations of radionuclides that exceed the limits 
established by the Nuclear Regulatory Commission for Class C 
radioactive waste (referred to in this section as ``GTCC waste'').
    (b) Comprehensive Plan.--The Secretary of Energy shall develop a 
comprehensive plan for permanent disposal of GTCC waste which includes 
plans for a disposal facility. This plan shall be transmitted to 
Congress in a series of reports, including the following:
            (1) Report on short-term plan.--Not later than 180 days 
        after the date of enactment of this Act, the Secretary of 
        Energy shall submit to Congress a plan describing the 
        Secretary's operational strategy for continued recovery and 
        storage of GTCC waste until a permanent disposal facility is 
        available.
            (2) Update of 1987 report.--
                    (A) In general.--Not later than 1 year after the 
                date of enactment of this Act, the Secretary of Energy 
                shall submit to Congress an update of the Secretary's 
                February 1987 report submitted to Congress that made 
                comprehensive recommendations for the disposal of GTCC 
                waste.
                    (B) Contents.--The update under this paragraph 
                shall contain--
                            (i) a detailed description and 
                        identification of the GTCC waste that is to be 
                        disposed;
                            (ii) a description of current domestic and 
                        international programs, both Federal and 
                        commercial, for management and disposition of 
                        GTCC waste;
                            (iii) an identification of the Federal and 
                        private options and costs for the safe disposal 
                        of GTCC waste;
                            (iv) an identification of the options for 
                        ensuring that, wherever possible, generators 
                        and users of GTCC waste bear all reasonable 
                        costs of waste disposal;
                            (v) an identification of any new statutory 
                        authority required for disposal of GTCC waste; 
                        and
                            (vi) in coordination with the Environmental 
                        Protection Agency and the Nuclear Regulatory 
                        Commission, an identification of any new 
                        regulatory guidance needed for the disposal of 
                        GTCC waste.
            (3) Report on cost and schedule for completion of 
        environmental impact statement and record of decision.--Not 
        later than 180 days after the date of submission of the update 
        required under paragraph (2), the Secretary of Energy shall 
        submit to Congress a report containing an estimate of the cost 
and schedule to complete a draft and final environmental impact 
statement and to issue a record of decision for a permanent disposal 
facility, utilizing either a new or existing facility, for GTCC waste.

SEC. 636. PROHIBITION ON NUCLEAR EXPORTS TO COUNTRIES THAT SPONSOR 
              TERRORISM.

    (a) In General.--Section 129 of the Atomic Energy Act of 1954 (42 
U.S.C. 2158) is amended--
            (1) by inserting ``a.'' before ``No nuclear materials and 
        equipment''; and
            (2) by adding at the end the following new subsection:
    ``b.(1) Notwithstanding any other provision of law, including 
specifically section 121 of this Act, and except as provided in 
paragraphs (2) and (3), no nuclear materials and equipment or sensitive 
nuclear technology, including items and assistance authorized by 
section 57 b. of this Act and regulated under part 810 of title 10, 
Code of Federal Regulations, and nuclear-related items on the Commerce 
Control List maintained under part 774 of title 15 of the Code of 
Federal Regulations, shall be exported or reexported, or transferred or 
retransferred whether directly or indirectly, and no Federal agency 
shall issue any license, approval, or authorization for the export or 
reexport, or transfer, or retransfer, whether directly or indirectly, 
of these items or assistance (as defined in this paragraph) to any 
country whose government has been identified by the Secretary of State 
as engaged in state sponsorship of terrorist activities (specifically 
including any country the government of which has been determined by 
the Secretary of State under section 620A(a) of the Foreign Assistance 
Act of 1961 (22 U.S.C. 2371(a)), section 6(j)(1) of the Export 
Administration Act of 1979 (50 U.S.C. App. 2405(j)(1)), or section 
40(d) of the Arms Export Control Act (22 U.S.C. 2780(d)) to have 
repeatedly provided support for acts of international terrorism).
    ``(2) This subsection shall not apply to exports, reexports, 
transfers, or retransfers of radiation monitoring technologies, 
surveillance equipment, seals, cameras, tamper-indication devices, 
nuclear detectors, monitoring systems, or equipment necessary to safely 
store, transport, or remove hazardous materials, whether such items, 
services, or information are regulated by the Department of Energy, the 
Department of Commerce, or the Nuclear Regulatory Commission, except to 
the extent that such technologies, equipment, seals, cameras, devices, 
detectors, or systems are available for use in the design or 
construction of nuclear reactors or nuclear weapons.
    ``(3) The President may waive the application of paragraph (1) to a 
country if the President determines and certifies to Congress that the 
waiver will not result in any increased risk that the country receiving 
the waiver will acquire nuclear weapons, nuclear reactors, or any 
materials or components of nuclear weapons and--
            ``(A) the government of such country has not within the 
        preceding 12-month period willfully aided or abetted the 
        international proliferation of nuclear explosive devices to 
        individuals or groups or willfully aided and abetted an 
        individual or groups in acquiring unsafeguarded nuclear 
        materials;
            ``(B) in the judgment of the President, the government of 
        such country has provided adequate, verifiable assurances that 
        it will cease its support for acts of international terrorism;
            ``(C) the waiver of that paragraph is in the vital national 
        security interest of the United States; or
            ``(D) such a waiver is essential to prevent or respond to a 
        serious radiological hazard in the country receiving the waiver 
        that may or does threaten public health and safety.''.
    (b) Applicability To Exports Approved for Transfer but Not 
Transferred.--Subsection b. of section 129 of Atomic Energy Act of 
1954, as added by subsection (a) of this section, shall apply with 
respect to exports that have been approved for transfer as of the date 
of the enactment of this Act but have not yet been transferred as of 
that date.

SEC. 637. URANIUM ENRICHMENT FACILITIES.

    (a) Nuclear Regulatory Commission Review of Applications.--
            (1) In general.--In order to facilitate a timely review and 
        approval of an application in a proceeding for a license for 
        the construction and operation of a uranium enrichment facility 
        under sections 53 and 63 of the Atomic Energy Act of 1954 (42 
        U.S.C. 2073, 2093) (referred to in this subsection as a 
        ``covered proceeding''), the Nuclear Regulatory Commission 
        shall, not later than 30 days after the receipt of the 
        application, establish, by order, the schedule for the conduct 
        of any hearing that may be requested by any person whose 
        interest may be affected by the covered proceeding.
            (2) Final agency decision.--The schedule shall provide that 
        a final decision by the Commission on the application shall be 
        made not later than the date that is 2 years after the date of 
        submission of the application by the applicant.
            (3) Compliance with schedule.--
                    (A) In general.--The Commission shall establish a 
                process to assess compliance with the schedule 
                established under paragraph (1) on an ongoing basis 
                during the course of the review of the application, 
                including ensuring compliance with schedules and 
                milestones that are established for the conduct of any 
                covered proceeding by the Atomic Safety and Licensing 
                Board.
                    (B) Report.--The Commission shall submit to 
                Congress on a bimonthly basis a report describing the 
                status of compliance with the schedule established 
                under paragraph (1), including a description of the 
                status of actions required to be completed pursuant to 
                the schedule by officers and employees of--
                            (i) the Commission in undertaking the 
                        safety and environmental review of 
                        applications; and
                            (ii) the Atomic Safety and Licensing Board 
                        in the conduct of any covered proceeding.
            (4) Environmental review.--
                    (A) In general.--In evaluating an application under 
                the National Environmental Policy Act of 1969 (42 
                U.S.C. 4321 et seq.) for licensing of a facility in a 
                covered proceeding, the Commission shall limit the 
                consideration of need to whether the licensing of the 
                facility would advance the national interest of 
                encouraging in the United States--
                            (i) additional secure, reliable uranium 
                        enrichment capacity;
                            (ii) diverse supplies and suppliers of 
                        uranium enrichment capacity; and
                            (iii) the deployment of advanced centrifuge 
                        enrichment technology.
                    (B) Comment.--In carrying out subparagraph (A), the 
                Commission shall consider and solicit the views of 
                other affected Federal agencies.
                    (C) Atomic safety and licensing board.--
                            (i) In general.--Except as provided in 
                        clause (ii), in any covered proceeding, the 
                        Commission shall allow the litigation and 
                        resolution by the Atomic Safety and Licensing 
                        Board of issues arising under the National 
                        Environmental Policy Act of 1969 (42 U.S.C. 
                        4321 et seq.), on the basis of information 
submitted by the applicant in its environmental report, prior to 
publication of any required environmental impact statement.
                            (ii) Exceptions.--On the publication of any 
                        required environmental impact statement, issues 
                        may be proffered for resolution by the Atomic 
                        Safety and Licensing Board only if information 
                        or conclusions in the environmental impact 
                        statement differ significantly from the 
                        information or conclusions in the environmental 
                        report submitted by the applicant.
                    (D) Environmental justice.--In a covered 
                proceeding, the Commission shall apply the criteria in 
                Appendix C of the final report entitled ``Environmental 
                Review Guidance for Licensing Actions Associated with 
                NMSS Programs'' (NUREG-1748), published in August 2003, 
                in any required review of environmental justice.
            (5) Low-level waste.--In any covered proceeding, the 
        Commission shall--
                    (A) deem the obligation of the Secretary of Energy 
                pursuant to section 3113 of the USEC Privitization Act 
                (42 U.S.C. 2297 h-11) to constitute a plausible 
                strategy with regard to the disposition of depleted 
                uranium generated by such facility; and
                    (B) treat any residual material that remains 
                following the extraction of any usable resource value 
                from depleted uranium as low-level radioactive waste 
                under part 61 of title 10, Code of Federal Regulations.
            (6) Adjudicatory hearing on licensing of uranium enrichment 
        facilities.--Section 193(b) of the Atomic Energy Act of 1954 
        (42 U.S.C. 2243(b)) is amended by striking paragraph (2) and 
        inserting the following:
            ``(2) Timing.--On the issuance of a final decision on the 
        application by the Atomic Safety and Licensing Board, the 
        Commission shall issue and make immediately effective any 
        license for the construction and operation of a uranium 
        enrichment facility under sections 53 and 63, on a 
        determination by the Commission that the issuance of the 
        license would not cause irreparable injury to the public health 
        and safety or the common defense and security, notwithstanding 
        the pendency before the Commission of any appeal or petition 
        for review of any decision of the Atomic Safety and Licensing 
        Board.''.
    (b) Department of Energy Responsibilities.--
            (1) In general.--Not later than 180 days after a request is 
        made to the Secretary of Energy by an applicant for or 
        recipient of a license for a uranium enrichment facility under 
        section 53, 63, or 193 of the Atomic Energy Act of 1954 (42 
        U.S.C. 2073, 2093, 2243), the Secretary shall enter into a 
        memorandum of agreement with the applicant or licensee that 
        provides a schedule for the transfer to the Secretary, not 
        later than 5 years after the generation of any depleted uranium 
        hexafluoride, of title and possession of the depleted uranium 
        hexafluoride to be generated by the applicant or licensee.
            (2) Cost.--
                    (A) In general.--Subject to subparagraphs (B) and 
                (C), the memorandum of agreement shall specify the cost 
                to be assessed by the Secretary for the transfer to the 
                Secretary of the depleted uranium hexafluoride.
                    (B) Nondiscriminatory basis.--The cost shall be 
                determined by the Secretary on a nondiscriminatory 
                basis.
                    (C) Cost.--Taking into account the physical and 
                chemical characteristics of such depleted uranium 
                hexafluoride, the cost shall not exceed the cost 
                assessed by the Secretary for the acceptance of 
                depleted uranium hexafluoride under--
                            (i) the memorandum of agreement between the 
                        United States Department of Energy and the 
                        United States Enrichment Corporation Relating 
                        to Depleted Uranium, dated June 30, 1998; and
                            (ii) the Agreement Between the U.S. 
                        Department of Energy and USEC Inc., dated June 
                        17, 2002.

SEC. 638. NATIONAL URANIUM STOCKPILE.

    (a) Stockpile Creation.--The Secretary of Energy may create a 
national low-enriched uranium stockpile with the goals to--
            (1) enhance national energy security; and
            (2) reduce global proliferation threats.
    (b) Source of Material.--The Secretary shall obtain material for 
the stockpile from--
            (1) material derived from blend-down of Russian highly 
        enriched uranium derived from weapons materials; and
            (2) domestically mined and enriched uranium.
    (c) Limitation on Sales or Transfers.--Sales or transfer of 
materials in the stockpile shall occur pursuant to section 3112 of the 
USEC Privitization Act (42 U.S.C. 2297h-10), as amended by section 630.

       Subtitle C--Advanced Reactor Hydrogen Cogeneration Project

SEC. 651. PROJECT ESTABLISHMENT.

    The Secretary of Energy (in this subtitle referred to as the 
``Secretary'') is directed to establish an Advanced Reactor Hydrogen 
Cogeneration Project.

SEC. 652. PROJECT DEFINITION.

    The project shall consist of the research, development, design, 
construction, and operation of a hydrogen production cogeneration 
research facility that, relative to the current commercial reactors, 
enhances safety features, reduces waste production, enhances thermal 
efficiencies, increases proliferation resistance, and has the potential 
for improved economics and physical security in reactor siting. This 
facility shall be constructed so as to enable research and development 
on advanced reactors of the type selected and on alternative approaches 
for reactor-based production of hydrogen.

SEC. 653. PROJECT MANAGEMENT.

    (a) Management.--The project shall be managed within the Department 
by the Office of Nuclear Energy, Science, and Technology.
    (b) Lead Laboratory.--The lead laboratory for the project, 
providing the site for the reactor construction, shall be the Idaho 
National Engineering and Environmental Laboratory (in this subtitle 
referred to as ``INEEL'').
    (c) Steering Committee.--The Secretary shall establish a national 
steering committee with membership from the national laboratories, 
universities, and industry to provide advice to the Secretary and the 
Director of the Office of Nuclear Energy, Science, and Technology on 
technical and program management aspects of the project.
    (d) Collaboration.--Project activities shall be conducted at INEEL, 
other national laboratories, universities, domestic industry, and 
international partners.

SEC. 654. PROJECT REQUIREMENTS.

    (a) Research and Development.--
            (1) In general.--The project shall include planning, 
        research and development, design, and construction of an 
        advanced, next-generation, nuclear energy system suitable for 
        enabling further research and development on advanced 
reactor technologies and alternative approaches for reactor-based 
generation of hydrogen.
            (2) Reactor test capabilities at ineel.--The project shall 
        utilize, where appropriate, extensive reactor test capabilities 
        resident at INEEL.
            (3) Alternatives.--The project shall be designed to explore 
        technical, environmental, and economic feasibility of 
        alternative approaches for reactor-based hydrogen production.
            (4) Industrial lead.--The industrial lead for the project 
        shall be a company incorporated in the United States.
    (b) International Collaboration.--
            (1) In general.--The Secretary shall seek international 
        cooperation, participation, and financial contribution in this 
        project.
            (2) Assistance from international partners.--The Secretary 
        may contract for assistance from specialists or facilities from 
        member countries of the Generation IV International Forum, the 
        Russian Federation, or other international partners where such 
        specialists or facilities provide access to cost-effective and 
        relevant skills or test capabilities.
            (3) Generation iv international forum.--International 
        activities shall be coordinated with the Generation IV 
        International Forum.
            (4) Generation iv nuclear energy systems program.--The 
        Secretary may combine this project with the Generation IV 
        Nuclear Energy Systems Program.
    (c) Demonstration.--The overall project, which may involve 
demonstration of selected project objectives in a partner nation, must 
demonstrate both electricity and hydrogen production and may provide 
flexibility, where technically and economically feasible in the design 
and construction, to enable tests of alternative reactor core and 
cooling configurations.
    (d) Partnerships.--The Secretary shall establish cost-shared 
partnerships with domestic industry or international participants for 
the research, development, design, construction, and operation of the 
research facility, and preference in determining the final project 
structure shall be given to an overall project which retains United 
States leadership while maximizing cost sharing opportunities and 
minimizing Federal funding responsibilities.
    (e) Target Date.--The Secretary shall select technologies and 
develop the project to provide initial testing of either hydrogen 
production or electricity generation by 2010, or provide a report to 
Congress explaining why this date is not feasible.
    (f) Waiver of Construction Timelines.--The Secretary is authorized 
to conduct the Advanced Reactor Hydrogen Cogeneration Project without 
the constraints of DOE Order 413.3, relating to program and project 
management for the acquisition of capital assets, as necessary to meet 
the specified operational date.
    (g) Competition.--The Secretary may fund up to 2 teams for up to 1 
year to develop detailed proposals for competitive evaluation and 
selection of a single proposal and concept for further progress. The 
Secretary shall define the format of the competitive evaluation of 
proposals.
    (h) Use of Facilities.--Research facilities in industry, national 
laboratories, or universities either within the United States or with 
cooperating international partners may be used to develop the enabling 
technologies for the research facility. Utilization of domestic 
university-based facilities shall be encouraged to provide educational 
opportunities for student development.
    (i) Role of Nuclear Regulatory Commission.--
            (1) In general.--The Nuclear Regulatory Commission shall 
        have licensing and regulatory authority for any reactor 
        authorized under this subtitle, pursuant to section 202 of the 
        Energy Reorganization Act of 1974 (42 U.S.C. 5842).
            (2) Risk-based criteria.--The Secretary shall seek active 
        participation of the Nuclear Regulatory Commission throughout 
        the project to develop risk-based criteria for any future 
        commercial development of a similar reactor architecture.
    (j) Report--The Secretary shall develop and transmit to Congress a 
comprehensive project plan not later than April 30, 2004. The project 
plan shall be updated annually with each annual budget submission.

SEC. 655. AUTHORIZATION OF APPROPRIATIONS.

    (a) Research, Development, and Design Programs.--The following sums 
are authorized to be appropriated to the Secretary for all activities 
under this subtitle except for construction activities described in 
subsection (b):
            (1) For fiscal year 2004, $35,000,000.
            (2) For each of fiscal years 2005 through 2008, 
        $150,000,000.
            (3) For fiscal years beyond 2008, such sums as are 
        necessary.
    (b) Construction.--There are authorized to be appropriated to the 
Secretary for all project-related construction activities, to be 
available until expended, $500,000,000.

                      Subtitle D--Nuclear Security

SEC. 661. NUCLEAR FACILITY THREATS.

    (a) Study.--The President, in consultation with the Nuclear 
Regulatory Commission (referred to in this subtitle as the 
``Commission'') and other appropriate Federal, State, and local 
agencies and private entities, shall conduct a study to identify the 
types of threats that pose an appreciable risk to the security of the 
various classes of facilities licensed by the Commission under the 
Atomic Energy Act of 1954 (42 U.S.C. 2011 et seq.). Such study shall 
take into account, but not be limited to--
            (1) the events of September 11, 2001;
            (2) an assessment of physical, cyber, biochemical, and 
        other terrorist threats;
            (3) the potential for attack on facilities by multiple 
        coordinated teams of a large number of individuals;
            (4) the potential for assistance in an attack from several 
        persons employed at the facility;
            (5) the potential for suicide attacks;
            (6) the potential for water-based and air-based threats;
            (7) the potential use of explosive devices of considerable 
        size and other modern weaponry;
            (8) the potential for attacks by persons with a 
        sophisticated knowledge of facility operations;
            (9) the potential for fires, especially fires of long 
        duration;
            (10) the potential for attacks on spent fuel shipments by 
        multiple coordinated teams of a large number of individuals;
            (11) the adequacy of planning to protect the public health 
        and safety at and around nuclear facilities, as appropriate, in 
        the event of a terrorist attack against a nuclear facility; and
            (12) the potential for theft and diversion of nuclear 
        materials from such facilities.
    (b) Summary and Classification Report.--Not later than 180 days 
after the date of the enactment of this Act, the President shall 
transmit to Congress and the Commission a report--
            (1) summarizing the types of threats identified under 
        subsection (a); and
            (2) classifying each type of threat identified under 
        subsection (a), in accordance with existing laws and 
        regulations, as either--
                    (A) involving attacks and destructive acts, 
                including sabotage, directed against the facility by an 
                enemy of the United States, whether a foreign 
                government or other person, or otherwise falling under 
                the responsibilities of the Federal Government; or
                    (B) involving the type of risks that Commission 
                licensees should be responsible for guarding against.
    (c) Federal Action Report.--Not later than 90 days after the date 
on which a report is transmitted under subsection (b), the President 
shall transmit to Congress a report on actions taken, or to be taken, 
to address the types of threats identified under subsection (b)(2)(A), 
including identification of the Federal, State, and local agencies 
responsible for carrying out the obligations and authorities of the 
United States. Such report may include a classified annex, as 
appropriate.
    (d) Regulations.--Not later than 180 days after the date on which a 
report is transmitted under subsection (b), the Commission may revise, 
by rule, the design basis threats issued before the date of enactment 
of this section as the Commission considers appropriate based on the 
summary and classification report.
    (e) Physical Security Program.--The Commission shall establish an 
operational safeguards response evaluation program that ensures that 
the physical protection capability and operational safeguards response 
for sensitive nuclear facilities, as determined by the Commission 
consistent with the protection of public health and the common defense 
and security, shall be tested periodically through Commission approved 
or designed, observed, and evaluated force-on-force exercises to 
determine whether the ability to defeat the design basis threat is 
being maintained. For purposes of this subsection, the term ``sensitive 
nuclear facilities'' includes at a minimum commercial nuclear power 
plants and category I fuel cycle facilities.
    (f) Control of Information.--Notwithstanding any other provision of 
law, the Commission may undertake any rulemaking under this subtitle in 
a manner that will fully protect safeguards and classified national 
security information.
    (g) Federal Security Coordinators.--
            (1) Regional offices.--Not later than 18 months after the 
        date of enactment of this Act, the Commission shall assign a 
        Federal security coordinator, under the employment of the 
        Commission, to each region of the Commission.
            (2) Responsibilities.--The Federal security coordinator 
        shall be responsible for--
                    (A) communicating with the Commission and other 
                Federal, State, and local authorities concerning 
                threats, including threats against such classes of 
                facilities as the Commission determines to be 
                appropriate;
                    (B) ensuring that such classes of facilities as the 
                Commission determines to be appropriate maintain 
                security consistent with the security plan in 
                accordance with the appropriate threat level; and
                    (C) assisting in the coordination of security 
                measures among the private security forces at such 
                classes of facilities as the Commission determines to 
                be appropriate and Federal, State, and local 
                authorities, as appropriate.
    (h) Training Program.--The President shall establish a program to 
provide technical assistance and training to Federal agencies, the 
National Guard, and State and local law enforcement and emergency 
response agencies in responding to threats against a designated nuclear 
facility.

SEC. 662. FINGERPRINTING FOR CRIMINAL HISTORY RECORD CHECKS.

    (a) In General.--Subsection a. of section 149 of the Atomic Energy 
Act of 1954 (42 U.S.C. 2169(a)) is amended--
            (1) by striking ``a. The Nuclear'' and all that follows 
        through ``section 147.'' and inserting the following:
    ``a. In General.--
            ``(1) Requirements.--
                    ``(A) In general.-- The Commission shall require 
                each individual or entity--
                            ``(i) that is licensed or certified to 
                        engage in an activity subject to regulation by 
                        the Commission;
                            ``(ii) that has filed an application for a 
                        license or certificate to engage in an activity 
                        subject to regulation by the Commission; or
                            ``(iii) that has notified the Commission, 
                        in writing, of an intent to file an application 
                        for licensing, certification, permitting, or 
                        approval of a product or activity subject to 
                        regulation by the Commission,
                to fingerprint each individual described in 
                subparagraph (B) before the individual is permitted 
                unescorted access or access, whichever is applicable, 
                as described in subparagraph (B).
                    ``(B) Individuals required to be fingerprinted.--
                The Commission shall require to be fingerprinted each 
                individual who--
                            ``(i) is permitted unescorted access to--
                                    ``(I) a utilization facility; or
                                    ``(II) radioactive material or 
                                other property subject to regulation by 
                                the Commission that the Commission 
                                determines to be of such significance 
                                to the public health and safety or the 
                                common defense and security as to 
                                warrant fingerprinting and background 
                                checks; or
                            ``(ii) is permitted access to safeguards 
                        information under section 147.'';
            (2) by striking ``All fingerprints obtained by a licensee 
        or applicant as required in the preceding sentence'' and 
        inserting the following:
            ``(2) Submission to the attorney general.--All fingerprints 
        obtained by an individual or entity as required in paragraph 
        (1)'';
            (3) by striking ``The costs of any identification and 
        records check conducted pursuant to the preceding sentence 
        shall be paid by the licensee or applicant.'' and inserting the 
        following:
            ``(3) Costs.--The costs of any identification and records 
        check conducted pursuant to paragraph (1) shall be paid by the 
        individual or entity required to conduct the fingerprinting 
        under paragraph (1)(A).''; and
            (4) by striking ``Notwithstanding any other provision of 
        law, the Attorney General may provide all the results of the 
        search to the Commission, and, in accordance with regulations 
        prescribed under this section, the Commission may provide such 
        results to licensee or applicant submitting such 
        fingerprints.'' and inserting the following:
            ``(4) Provision to individual or entity required to conduct 
        fingerprinting.--Notwithstanding any other provision of law, 
        the Attorney General may provide all the results of the search 
        to the Commission, and, in accordance with regulations 
        prescribed under this section, the Commission may provide such 
        results to the individual or entity required to conduct the 
        fingerprinting under paragraph (1)(A).''.
    (b) Administration.--Subsection c. of section 149 of the Atomic 
Energy Act of 1954 (42 U.S.C. 2169(c)) is amended--
            (1) by striking ``, subject to public notice and comment, 
        regulations--'' and inserting ``requirements--''; and
            (2) by striking, in paragraph (2)(B), ``unescorted access 
        to the facility of a licensee or applicant'' and inserting 
        ``unescorted access to a utilization facility, radioactive 
        material, or other property described in subsection a.(1)(B)''.
    (c) Biometric Methods.--Subsection d. of section 149 of the Atomic 
Energy Act of 1954 (42 U.S.C. 2169(d)) is redesignated as subsection 
e., and the following is inserted after subsection c.:
    ``d. Use of Other Biometric Methods.--The Commission may satisfy 
any requirement for a person to conduct fingerprinting under this 
section using any other biometric method for identification approved 
for use by the Attorney General, after the Commission has approved the 
alternative method by rule.''.

SEC. 663. USE OF FIREARMS BY SECURITY PERSONNEL OF LICENSEES AND 
              CERTIFICATE HOLDERS OF THE COMMISSION.

    Section 161 of the Atomic Energy Act of 1954 (42 U.S.C. 2201) is 
amended by adding at the end the following subsection:
            ``(z)(1) notwithstanding section 922(o), (v), and (w) of 
        title 18, United States Code, or any similar provision of any 
        State law or any similar rule or regulation of a State or any 
        political subdivision of a State prohibiting the transfer or 
        possession of a handgun, a rifle or shotgun, a short-barreled 
        shotgun, a short-barreled rifle, a machinegun, a semiautomatic 
        assault weapon, ammunition for the foregoing, or a large 
        capacity ammunition feeding device, authorize security 
        personnel of licensees and certificate holders of the 
        Commission (including employees of contractors of licensees and 
        certificate holders) to receive, possess, transport, import, 
        and use 1 or more of those weapons, ammunition, or devices, if 
        the Commission determines that--
                    ``(A) such authorization is necessary to the 
                discharge of the security personnel's official duties; 
                and
                    ``(B) the security personnel--
                            ``(i) are not otherwise prohibited from 
                        possessing or receiving a firearm under Federal 
                        or State laws pertaining to possession of 
                        firearms by certain categories of persons;
                            ``(ii) have successfully completed 
                        requirements established through guidelines 
                        implementing this subsection for training in 
                        use of firearms and tactical maneuvers;
                            ``(iii) are engaged in the protection of--
                                    ``(I) facilities owned or operated 
                                by a Commission licensee or certificate 
                                holder that are designated by the 
                                Commission; or
                                    ``(II) radioactive material or 
                                other property owned or possessed by a 
                                person that is a licensee or 
                                certificate holder of the Commission, 
                                or that is being transported to or from 
                                a facility owned or operated by such a 
                                licensee or certificate holder, and 
                                that has been determined by the 
                                Commission to be of significance to the 
                                common defense and security or public 
                                health and safety; and
                            ``(iv) are discharging their official 
                        duties.
            ``(2) Such receipt, possession, transportation, 
        importation, or use shall be subject to--
                    ``(A) chapter 44 of title 18, United States Code, 
                except for section 922(a)(4), (o), (v), and (w);
                    ``(B) chapter 53 of title 26, United States Code, 
                except for section 5844; and
                    ``(C) a background check by the Attorney General, 
                based on fingerprints and including a check of the 
                system established under section 103(b) of the Brady 
                Handgun Violence Prevention Act (18 U.S.C. 922 note) to 
                determine whether the person applying for the authority 
                is prohibited from possessing or receiving a firearm 
                under Federal or State law.
            ``(3) This subsection shall become effective upon the 
        issuance of guidelines by the Commission, with the approval of 
        the Attorney General, to govern the implementation of this 
        subsection.
            ``(4) In this subsection, the terms ``handgun'', ``rifle'', 
        ``shotgun'', ``firearm'', ``ammunition'', ``machinegun'', 
        ``semiautomatic assault weapon'', ``large capacity ammunition 
        feeding device'', ``short-barreled shotgun'', and ``short-
        barreled rifle'' shall have the meanings given those terms in 
        section 921(a) of title 18, United States Code.''.

SEC. 664. UNAUTHORIZED INTRODUCTION OF DANGEROUS WEAPONS.

    Section 229 a. of the Atomic Energy Act of 1954 (42 U.S.C. 
2278a(a)) is amended in the first sentence by inserting ``or subject to 
the licensing authority of the Commission or to certification by the 
Commission under this Act or any other Act'' before the period at the 
end.

SEC. 665. SABOTAGE OF NUCLEAR FACILITIES OR FUEL.

    (a) In General.--Section 236 a. of the Atomic Energy Act of 1954 
(42 U.S.C. 2284(a)) is amended--
            (1) in paragraph (2), by striking ``storage facility'' and 
        inserting ``storage, treatment, or disposal facility'';
            (2) in paragraph (3)--
                    (A) by striking ``such a utilization facility'' and 
                inserting ``a utilization facility licensed under this 
                Act''; and
                    (B) by striking ``or'' at the end;
            (3) in paragraph (4)--
                    (A) by striking ``facility licensed'' and inserting 
                ``, uranium conversion, or nuclear fuel fabrication 
                facility licensed or certified''; and
                    (B) by striking the comma at the end and inserting 
                a semicolon; and
            (4) by inserting after paragraph (4) the following:
            ``(5) any production, utilization, waste storage, waste 
        treatment, waste disposal, uranium enrichment, uranium 
        conversion, or nuclear fuel fabrication facility subject to 
        licensing or certification under this Act during construction 
        of the facility, if the destruction or damage caused or 
        attempted to be caused could adversely affect public health and 
        safety during the operation of the facility;
            ``(6) any primary facility or backup facility from which a 
        radiological emergency preparedness alert and warning system is 
        activated; or
            ``(7) any radioactive material or other property subject to 
        regulation by the Nuclear Regulatory Commission that, before 
        the date of the offense, the Nuclear Regulatory Commission 
        determines, by order or regulation published in the Federal 
        Register, is of significance to the public health and safety or 
        to common defense and security,''.
    (b) Penalties.--Section 236 of the Atomic Energy Act of 1954 (42 
U.S.C. 2284) is amended by striking ``$10,000 or imprisoned for not 
more than 20 years, or both, and, if death results to any person, shall 
be imprisoned for any term of years or for life'' both places it 
appears and inserting ``$1,000,000 or imprisoned for up to life without 
parole''.

SEC. 666. SECURE TRANSFER OF NUCLEAR MATERIALS.

    (a) Amendment.--Chapter 14 of the Atomic Energy Act of 1954 (42 
U.S.C. 2201-2210b) is amended by adding at the end the following new 
section:

``SEC. 170C. SECURE TRANSFER OF NUCLEAR MATERIALS.

    ``a. The Nuclear Regulatory Commission shall establish a system to 
ensure that materials described in subsection b., when transferred or 
received in the United States by any party pursuant to an import or 
export license issued pursuant to this Act, are accompanied by a 
manifest describing the type and amount of materials being transferred 
or received. Each individual receiving or accompanying the transfer of 
such materials shall be subject to a security background check 
conducted by appropriate Federal entities.
    ``b. Except as otherwise provided by the Commission by regulation, 
the materials referred to in subsection a. are byproduct materials, 
source materials, special nuclear materials, high-level radioactive 
waste, spent nuclear fuel, transuranic waste, and low-level radioactive 
waste (as defined in section 2(16) of the Nuclear Waste Policy Act of 
1982 (42 U.S.C. 10101(16))).''.
    (b) Regulations.--Not later than 1 year after the date of the 
enactment of this Act, and from time to time thereafter as it considers 
necessary, the Nuclear Regulatory Commission shall issue regulations 
identifying radioactive materials or classes of individuals that, 
consistent with the protection of public health and safety and the 
common defense and security, are appropriate exceptions to the 
requirements of section 170C of the Atomic Energy Act of 1954, as added 
by subsection (a) of this section.
    (c) Effective Date.--The amendment made by subsection (a) shall 
take effect upon the issuance of regulations under subsection (b), 
except that the background check requirement shall become effective on 
a date established by the Commission.
    (d) Effect on Other Law.--Nothing in this section or the amendment 
made by this section shall waive, modify, or affect the application of 
chapter 51 of title 49, United States Code, part A of subtitle V of 
title 49, United States Code, part B of subtitle VI of title 49, United 
States Code, and title 23, United States Code.
    (e) Table of Sections Amendment.--The table of sections for chapter 
14 of the Atomic Energy Act of 1954 is amended by adding at the end the 
following new item:

``Sec. 170C. Secure transfer of nuclear materials.''.

SEC. 667. DEPARTMENT OF HOMELAND SECURITY CONSULTATION.

    Before issuing a license for a utilization facility, the Nuclear 
Regulatory Commission shall consult with the Department of Homeland 
Security concerning the potential vulnerabilities of the location of 
the proposed facility to terrorist attack.

SEC. 668. AUTHORIZATION OF APPROPRIATIONS.

    (a) In General.--There are authorized to be appropriated such sums 
as are necessary to carry out this subtitle and the amendments made by 
this subtitle.
    (b) Aggregate Amount of Charges.--Section 6101(c)(2)(A) of the 
Omnibus Budget Reconciliation Act of 1990 (42 U.S.C. 2214(c)(2)(A)) is 
amended--
            (1) in clause (i), by striking ``and'' at the end;
            (2) in clause (ii), by striking the period at the end and 
        inserting ``; and'' and
            (3) by adding at the end the following:
                            ``(iii) amounts appropriated to the 
                        Commission for homeland security activities of 
                        the Commission for the fiscal year, except for 
                        the costs of fingerprinting and background 
                        checks required by section 149 of the Atomic 
                        Energy Act of 1954 (42 U.S.C. 2169) and the 
                        costs of conducting security inspections.''.

                     TITLE VII--VEHICLES AND FUELS

                     Subtitle A--Existing Programs

SEC. 701. USE OF ALTERNATIVE FUELS BY DUAL-FUELED VEHICLES.

    Section 400AA(a)(3)(E) of the Energy Policy and Conservation Act 
(42 U.S.C. 6374(a)(3)(E)) is amended to read as follows:
    ``(E)(i) Dual fueled vehicles acquired pursuant to this section 
shall be operated on alternative fuels unless the Secretary determines 
that an agency qualifies for a waiver of such requirement for vehicles 
operated by the agency in a particular geographic area in which--
            ``(I) the alternative fuel otherwise required to be used in 
        the vehicle is not reasonably available to retail purchasers of 
        the fuel, as certified to the Secretary by the head of the 
        agency; or
            ``(II) the cost of the alternative fuel otherwise required 
        to be used in the vehicle is unreasonably more expensive 
        compared to gasoline, as certified to the Secretary by the head 
        of the agency.
    ``(ii) The Secretary shall monitor compliance with this 
subparagraph by all such fleets and shall report annually to Congress 
on the extent to which the requirements of this subparagraph are being 
achieved. The report shall include information on annual reductions 
achieved from the use of petroleum-based fuels and the problems, if 
any, encountered in acquiring alternative fuels.''.

SEC. 702. NEIGHBORHOOD ELECTRIC VEHICLES.

    (a) Amendments.--Section 301 of the Energy Policy Act of 1992 (42 
U.S.C. 13211) is amended--
            (1) in paragraph (3), by striking ``or a dual fueled 
        vehicle'' and inserting ``, a dual fueled vehicle, or a 
        neighborhood electric vehicle'';
            (2) in paragraph (13), by striking ``and'' at the end;
            (3) in paragraph (14), by striking the period at the end 
        and inserting ``; and''; and
            (4) by adding at the end the following:
            ``(15) the term `neighborhood electric vehicle' means a 
        motor vehicle that--
                    ``(A) meets the definition of a low-speed vehicle 
                (as defined in part 571 of title 49, Code of Federal 
                Regulations);
                    ``(B) meets the definition of a zero-emission 
                vehicle (as defined in section 86.1702-99 of title 40, 
                Code of Federal Regulations);
                    ``(C) meets the requirements of Federal Motor 
                Vehicle Safety Standard No. 500; and
                    ``(D) has a maximum speed of not greater than 25 
                miles per hour.''.
    (b) Credits.--Notwithstanding section 508 of the Energy Policy Act 
of 1992 (42 U.S.C. 13258) or any other provision of law, a neighborhood 
electric vehicle shall not be allocated credit as more than 1 vehicle 
for purposes of determining compliance with any requirement under title 
III or title V of such Act.

SEC. 703. CREDITS FOR MEDIUM AND HEAVY DUTY DEDICATED VEHICLES.

    Section 508 of the Energy Policy Act of 1992 (42 U.S.C. 13258) is 
amended by adding at the end the following:
    ``(e) Credit for Purchase of Medium and Heavy Duty Dedicated 
Vehicles.--
            ``(1) Definitions.--In this subsection:
                    ``(A) Heavy duty dedicated vehicle.--The term 
                `heavy duty dedicated vehicle' means a dedicated 
                vehicle that has a gross vehicle weight rating of more 
                than 14,000 pounds.
                    ``(B) Medium duty dedicated vehicle.--The term 
                `medium duty dedicated vehicle' means a dedicated 
                vehicle that has a gross vehicle weight rating of more 
                than 8,500 pounds but not more than 14,000 pounds.
            ``(2) Credits for medium duty vehicles.--The Secretary 
        shall issue 2 full credits to a fleet or covered person under 
        this title, if the fleet or covered person acquires a medium 
        duty dedicated vehicle.
            ``(3) Credits for heavy duty vehicles.--The Secretary shall 
        issue 3 full credits to a fleet or covered person under this 
        title, if the fleet or covered person acquires a heavy duty 
        dedicated vehicle.
            ``(4) Use of credits.--At the request of a fleet or covered 
        person allocated a credit under this subsection, the Secretary 
        shall, for the year in which the acquisition of the dedicated 
        vehicle is made, treat that credit as the acquisition of 1 
        alternative fueled vehicle that the fleet or covered person is 
        required to acquire under this title.''.

SEC. 704. INCREMENTAL COST ALLOCATION.

    Section 303(c) of the Energy Policy Act of 1992 (42 U.S.C. 
13212(c)) is amended by striking ``may'' and inserting ``shall''.

SEC. 705. ALTERNATIVE COMPLIANCE AND FLEXIBILITY.

    (a) Alternative Compliance.--
            (1) In general.--Title V of the Energy Policy Act of 1992 
        (42 U.S.C. 13251 et seq.) is amended--
                    (A) by redesignating section 514 as section 515; 
                and
                    (B) by inserting after section 513 the following:

``SEC. 514. ALTERNATIVE COMPLIANCE.

    ``(a) Application for Waiver.--Any covered person subject to 
section 501 and any State subject to section 507(o) may petition the 
Secretary for a waiver of the applicable requirements of section 501 or 
507(o).
    ``(b) Grant of Waiver.--The Secretary may grant a waiver of the 
requirements of section 501 or 507(o) upon a showing that the fleet 
owned, operated, leased, or otherwise controlled by the State or 
covered person--
            ``(1) will achieve a reduction in its annual consumption of 
        petroleum fuels equal to the reduction in consumption of 
        petroleum that would result from 100 percent compliance with 
        fuel use requirements in section 501, or, for entities covered 
        under section 507(o), a reduction equal to the covered State 
        entity's consumption of alternative fuels if all its 
        alternative fuel vehicles given credit under section 508 were 
        to use alternative fuel 100 percent of the time; and
            ``(2) is in compliance with all applicable vehicle emission 
        standards established by the Administrator under the Clean Air 
        Act (42 U.S.C. 7401 et seq.).
    ``(c) Revocation of Waiver.--The Secretary shall revoke any waiver 
granted under this section if the State or covered person fails to 
comply with subsection (b).''.
            (2) Table of contents amendment.--The table of contents of 
        the Energy Policy Act of 1992 (42 U.S.C. prec. 13201) is 
        amended by striking the item relating to section 514 and 
        inserting the following:

``Sec. 514. Alternative compliance.
``Sec. 515. Authorization of appropriations.''.
    (b) Credits.--Section 508 of the Energy Policy Act of 1992 (42 
U.S.C. 13258) (as amended by section 703) is amended--
            (1) by redesignating subsections (b) through (e) as 
        subsections (c) through (f), respectively;
            (2) by striking subsection (a) and inserting the following:
    ``(a) In General.--The Secretary shall allocate a credit to a fleet 
or covered person that is required to acquire an alternative fueled 
vehicle under this title, if that fleet or person acquires an 
alternative fueled vehicle--
            ``(1) in excess of the number that fleet or person is 
        required to acquire under this title;
            ``(2) before the date on which that fleet or person is 
        required to acquire an alternative fueled vehicle under this 
        title; or
            ``(3) that is eligible to receive credit under subsection 
        (b).
    ``(b) Maximum Available Power.--The Secretary shall allocate credit 
to a fleet under subsection (a)(3) for the acquisition by the fleet of 
a hybrid vehicle as follows:
            ``(1) For a hybrid vehicle with at least 4 percent but less 
        than 10 percent maximum available power, the Secretary shall 
        allocate 25 percent of 1 credit.
            ``(2) For a hybrid vehicle with at least 10 percent but 
        less than 20 percent maximum available power, the Secretary 
        shall allocate 50 percent of 1 credit.
            ``(3) For a hybrid vehicle with at least 20 percent but 
        less than 30 percent maximum available power, the Secretary 
        shall allocate 75 percent of 1 credit.
            ``(4) For a hybrid vehicle with 30 percent or more maximum 
        available power, the Secretary shall allocate 1 credit.''; and
            (3) by adding at the end the following:
    ``(g) Credit for Investment in Alternative Fuel Infrastructure.--
            ``(1) Definition of qualifying infrastructure.--In this 
        subsection, the term `qualifying infrastructure' means--
                    ``(A) equipment required to refuel or recharge 
                alternative fueled vehicles;
                    ``(B) facilities or equipment required to maintain, 
                repair, or operate alternative fueled vehicles; and
                    ``(C) such other activities as the Secretary 
                considers to constitute an appropriate expenditure in 
                support of the operation, maintenance, or further 
                widespread adoption of or utilization of alternative 
                fueled vehicles.
            ``(2) Issuance of credits.--The Secretary shall issue a 
        credit to a fleet or covered person under this title for 
        investment in qualifying infrastructure if the qualifying 
        infrastructure is open to the general public during regular 
        business hours.
            ``(3) Amount.--For the purpose of credits under this 
        subsection--
                    ``(A) 1 credit shall be equal to a minimum 
                investment of $25,000 in cash or equivalent 
                expenditure, as determined by the Secretary; and
                    ``(B) except in the case of a Federal or State 
                fleet, no part of the investment may be provided by 
                Federal or State funds.
            ``(4) Use of credits.--At the request of a fleet or covered 
        person allocated a credit under this subsection, the Secretary 
        shall, for the year in which the investment is made, treat that 
        credit as the acquisition of 1 alternative fueled vehicle that 
        the fleet or covered person is required to acquire under this 
        title.
    ``(h) Definition of Maximum Available Power.--In this section, the 
term `maximum available power' means the quotient obtained by 
dividing--
            ``(1) the maximum power available from the energy storage 
        device of a hybrid vehicle, during a standard 10-second pulse 
        power or equivalent test; by
            ``(2) the sum of--
                    ``(A) the maximum power described in subparagraph 
                (A); and
                    ``(B) the net power of the internal combustion or 
                heat engine, as determined in accordance with standards 
                established by the Society of Automobile Engineers.''.
    (c) Lease Condensate Fuels.--Section 301 of the Energy Policy Act 
of 1992 (42 U.S.C. 13211) (as amended by section 702) is amended--
            (1) in paragraph (2), by inserting ``mixtures containing 50 
        percent or more by volume of lease condensate or fuels 
        extracted from lease condensate;'' after ``liquefied petroleum 
        gas;'';
            (2) in paragraph (14)--
                    (A) by inserting ``mixtures containing 50 percent 
                or more by volume of lease condensate or fuels 
                extracted from lease condensate,'' after ``liquefied 
                petroleum gas,''; and
                    (B) by striking ``and'' at the end;
            (3) in paragraph (15), by striking the period at the end 
        and inserting ``; and''; and
            (4) by adding at the end the following:
            ``(16) the term `lease condensate' means a mixture, 
        primarily of pentanes and heavier hydrocarbons, that is 
        recovered as a liquid from natural gas in lease separation 
        facilities.''.
    (d) Lease Condensate Use Credits.--
            (1) In general.--Title III of the Energy Policy Act of 1992 
        (42 U.S.C. 13211 et seq.) is amended by adding at the end the 
        following:

``SEC. 313. LEASE CONDENSATE USE CREDITS.

    ``(a) In General.--Subject to subsection (d), the Secretary shall 
allocate 1 credit under this section to a fleet or covered person for 
each qualifying volume of the lease condensate component of fuel 
containing at least 50 percent lease condensate, or fuels extracted 
from lease condensate, after the date of enactment of this section for 
use by the fleet or covered person in vehicles owned or operated by the 
fleet or covered person that weigh more than 8,500 pounds gross vehicle 
weight rating.
    ``(b) Requirements.--A credit allocated under this section--
            ``(1) shall be subject to the same exceptions, authority, 
        documentation, and use of credits that are specified for 
        qualifying volumes of biodiesel in section 312; and
            ``(2) shall not be considered a credit under section 508.
    ``(c) Regulation.--
            ``(1) In general.--Subject to subsection (d), not later 
        than January 1, 2004, after the collection of appropriate 
        information and data that consider usage options, uses in other 
        industries, products, or processes, potential volume 
        capacities, costs, air emissions, and fuel efficiencies, the 
        Secretary shall issue a regulation establishing requirements 
        and procedures for the implementation of this section.
            ``(2) Qualifying volume.--The regulation shall include a 
        determination of an appropriate qualifying volume for lease 
        condensate, except that in no case shall the Secretary 
        determine that the qualifying volume for lease condensate is 
        less than 1,125 gallons.
    ``(d) Applicability.--This section applies unless the Secretary 
finds that the use of lease condensate as an alternative fuel would 
adversely affect public health or safety or ambient air quality or the 
environment.''.
            (2) Table of contents amendment.--The table of contents of 
        the Energy Policy Act of 1992 (42 U.S.C. prec. 13201) is 
        amended by adding at the end of the items relating to title III 
        the following:

``Sec. 313. Lease condensate use credits.''.
    (e) Emergency Exemption.--Section 301 of the Energy Policy Act of 
1992 (42 U.S.C. 13211) (as amended by section 702 and this section) is 
amended in paragraph (9)(E) by inserting before the semicolon at the 
end ``, including vehicles directly used in the emergency repair of 
transmission lines and in the restoration of electricity service 
following power outages, as determined by the Secretary''.

SEC. 706. REVIEW OF ENERGY POLICY ACT OF 1992 PROGRAMS.

    (a) In General.--Not later than 180 days after the date of 
enactment of this section, the Secretary of Energy shall complete a 
study to determine the effect that titles III, IV, and V of the Energy 
Policy Act of 1992 (42 U.S.C. 13211 et seq.) have had on--
            (1) the development of alternative fueled vehicle 
        technology;
            (2) the availability of that technology in the market; and
            (3) the cost of alternative fueled vehicles.
    (b) Topics.--As part of the study under subsection (a), the 
Secretary shall specifically identify--
            (1) the number of alternative fueled vehicles acquired by 
        fleets or covered persons required to acquire alternative 
        fueled vehicles;
            (2) the quantity, by type, of alternative fuel actually 
        used in alternative fueled vehicles acquired by fleets or 
        covered persons;
            (3) the quantity of petroleum displaced by the use of 
        alternative fuels in alternative fueled vehicles acquired by 
        fleets or covered persons;
            (4) the direct and indirect costs of compliance with 
        requirements under titles III, IV, and V of the Energy Policy 
        Act of 1992 (42 U.S.C. 13211 et seq.), including--
                    (A) vehicle acquisition requirements imposed on 
                fleets or covered persons;
                    (B) administrative and recordkeeping expenses;
                    (C) fuel and fuel infrastructure costs;
                    (D) associated training and employee expenses; and
                    (E) any other factors or expenses the Secretary 
                determines to be necessary to compile reliable 
                estimates of the overall costs and benefits of 
                complying with programs under those titles for fleets, 
                covered persons, and the national economy;
            (5) the existence of obstacles preventing compliance with 
        vehicle acquisition requirements and increased use of 
        alternative fuel in alternative fueled vehicles acquired by 
        fleets or covered persons; and
            (6) the projected impact of amendments to the Energy Policy 
        Act of 1992 made by this title.
    (c) Report.--Upon completion of the study under this section, the 
Secretary shall submit to Congress a report that describes the results 
of the study and includes any recommendations of the Secretary for 
legislative or administrative changes concerning the alternative fueled 
vehicle requirements under titles III, IV and V of the Energy Policy 
Act of 1992 (42 U.S.C. 13211 et seq.).

SEC. 707. REPORT CONCERNING COMPLIANCE WITH ALTERNATIVE FUELED VEHICLE 
              PURCHASING REQUIREMENTS.

    Section 310(b)(1) of the Energy Policy Act of 1992 (42 U.S.C. 
13218(b)(1)) is amended by striking ``1 year after the date of 
enactment of this subsection'' and inserting ``February 15, 2004''.

  Subtitle B--Hybrid Vehicles, Advanced Vehicles, and Fuel Cell Buses

                        PART 1--HYBRID VEHICLES

SEC. 711. HYBRID VEHICLES.

    The Secretary of Energy shall accelerate efforts directed toward 
the improvement of batteries and other rechargeable energy storage 
systems, power electronics, hybrid systems integration, and other 
technologies for use in hybrid vehicles.

                       PART 2--ADVANCED VEHICLES

SEC. 721. DEFINITIONS.

    In this part:
            (1) Alternative fueled vehicle.--
                    (A) In general.--The term ``alternative fueled 
                vehicle'' means a vehicle propelled solely on an 
                alternative fuel (as defined in section 301 of the 
                Energy Policy Act of 1992 (42 U.S.C. 13211)).
                    (B) Exclusion.--The term ``alternative fueled 
                vehicle'' does not include a vehicle that the Secretary 
                determines, by regulation, does not yield substantial 
                environmental benefits over a vehicle operating solely 
                on gasoline or diesel derived from fossil fuels.
            (2) Fuel cell vehicle.--The term ``fuel cell vehicle'' 
        means a vehicle propelled by an electric motor powered by a 
        fuel cell system that converts chemical energy into electricity 
        by combining oxygen (from air) with hydrogen fuel that is 
        stored on the vehicle or is produced onboard by reformation of 
        a hydrocarbon fuel. Such fuel cell system may or may not 
        include the use of auxiliary energy storage systems to enhance 
        vehicle performance.
            (3) Hybrid vehicle.--The term ``hybrid vehicle'' means a 
        medium or heavy duty vehicle propelled by an internal 
        combustion engine or heat engine using any combustible fuel and 
        an onboard rechargeable energy storage device.
            (4) Neighborhood electric vehicle.--The term ``neighborhood 
        electric vehicle'' means a motor vehicle that--
                    (A) meets the definition of a low-speed vehicle (as 
                defined in part 571 of title 49, Code of Federal 
                Regulations);
                    (B) meets the definition of a zero-emission vehicle 
                (as defined in section 86.1702-99 of title 40, Code of 
                Federal Regulations);
                    (C) meets the requirements of Federal Motor Vehicle 
                Safety Standard No. 500; and
                    (D) has a maximum speed of not greater than 25 
                miles per hour.
            (5) Pilot program.--The term ``pilot program'' means the 
        competitive grant program established under section 722.
            (6) Secretary.--The term ``Secretary'' means the Secretary 
        of Energy.
            (7) Ultra-low sulfur diesel vehicle.--The term ``ultra-low 
        sulfur diesel vehicle'' means a vehicle manufactured in any of 
        model years 2003 through 2006 powered by a heavy-duty diesel 
        engine that--
                    (A) is fueled by diesel fuel that contains sulfur 
                at not more than 15 parts per million; and
                    (B) emits not more than the lesser of--
                            (i) for vehicles manufactured in--
                                    (I) model year 2003, 3.0 grams per 
                                brake horsepower-hour of oxides of 
                                nitrogen and .01 grams per brake 
                                horsepower-hour of particulate matter; 
                                and
                                    (II) model years 2004 through 2006, 
                                2.5 grams per brake horsepower-hour of 
                                nonmethane hydrocarbons and oxides of 
                                nitrogen and .01 grams per brake 
                                horsepower-hour of particulate matter; 
                                or
                            (ii) the quantity of emissions of 
                        nonmethane hydrocarbons, oxides of nitrogen, 
                        and particulate matter of the best-performing 
                        technology of ultra-low sulfur diesel vehicles 
                        of the same class and application that are 
                        commercially available.

SEC. 722. PILOT PROGRAM.

    (a) Establishment.--The Secretary, in consultation with the 
Secretary of Transportation, shall establish a competitive grant pilot 
program, to be administered through the Clean Cities Program of the 
Department of Energy, to provide not more than 15 geographically 
dispersed project grants to State governments, local governments, or 
metropolitan transportation authorities to carry out a project or 
projects for the purposes described in subsection (b).
    (b) Grant Purposes.--A grant under this section may be used for the 
following purposes:
            (1) The acquisition of alternative fueled vehicles or fuel 
        cell vehicles, including--
                    (A) passenger vehicles (including neighborhood 
                electric vehicles); and
                    (B) motorized 2-wheel bicycles, scooters, or other 
                vehicles for use by law enforcement personnel or other 
                State or local government or metropolitan 
                transportation authority employees.
            (2) The acquisition of alternative fueled vehicles, hybrid 
        vehicles, or fuel cell vehicles, including--
                    (A) buses used for public transportation or 
                transportation to and from schools;
                    (B) delivery vehicles for goods or services; and
                    (C) ground support vehicles at public airports 
                (including vehicles to carry baggage or push or pull 
                airplanes toward or away from terminal gates).
            (3) The acquisition of ultra-low sulfur diesel vehicles.
            (4) Installation or acquisition of infrastructure necessary 
        to directly support an alternative fueled vehicle, fuel cell 
        vehicle, or hybrid vehicle project funded by the grant, 
        including fueling and other support equipment.
            (5) Operation and maintenance of vehicles, infrastructure, 
        and equipment acquired as part of a project funded by the 
        grant.
    (c) Applications.--
            (1) Requirements.--
                    (A) In general.--The Secretary shall issue 
                requirements for applying for grants under the pilot 
                program.
                    (B) Minimum requirements.--At a minimum, the 
                Secretary shall require that an application for a 
                grant--
                            (i) be submitted by the head of a State or 
                        local government or a metropolitan 
                        transportation authority, or any combination 
thereof, and a registered participant in the Clean Cities Program of 
the Department of Energy; and
                            (ii) include--
                                    (I) a description of the project 
                                proposed in the application, including 
                                how the project meets the requirements 
                                of this part;
                                    (II) an estimate of the ridership 
                                or degree of use of the project;
                                    (III) an estimate of the air 
                                pollution emissions reduced and fossil 
                                fuel displaced as a result of the 
                                project, and a plan to collect and 
                                disseminate environmental data, related 
                                to the project to be funded under the 
                                grant, over the life of the project;
                                    (IV) a description of how the 
                                project will be sustainable without 
                                Federal assistance after the completion 
                                of the term of the grant;
                                    (V) a complete description of the 
                                costs of the project, including 
                                acquisition, construction, operation, 
                                and maintenance costs over the expected 
                                life of the project;
                                    (VI) a description of which costs 
                                of the project will be supported by 
                                Federal assistance under this part; and
                                    (VII) documentation to the 
                                satisfaction of the Secretary that 
                                diesel fuel containing sulfur at not 
                                more than 15 parts per million is 
                                available for carrying out the project, 
                                and a commitment by the applicant to 
                                use such fuel in carrying out the 
                                project.
            (2) Partners.--An applicant under paragraph (1) may carry 
        out a project under the pilot program in partnership with 
        public and private entities.
    (d) Selection Criteria.--In evaluating applications under the pilot 
program, the Secretary shall--
            (1) consider each applicant's previous experience with 
        similar projects; and
            (2) give priority consideration to applications that--
                    (A) are most likely to maximize protection of the 
                environment;
                    (B) demonstrate the greatest commitment on the part 
                of the applicant to ensure funding for the proposed 
                project and the greatest likelihood that the project 
                will be maintained or expanded after Federal assistance 
                under this part is completed; and
                    (C) exceed the minimum requirements of subsection 
                (c)(1)(B)(ii).
    (e) Pilot Project Requirements.--
            (1) Maximum amount.--The Secretary shall not provide more 
        than $20,000,000 in Federal assistance under the pilot program 
        to any applicant.
            (2) Cost sharing.--The Secretary shall not provide more 
        than 50 percent of the cost, incurred during the period of the 
        grant, of any project under the pilot program.
            (3) Maximum period of grants.--The Secretary shall not fund 
        any applicant under the pilot program for more than 5 years.
            (4) Deployment and distribution.--The Secretary shall seek 
        to the maximum extent practicable to ensure a broad geographic 
        distribution of project sites.
            (5) Transfer of information and knowledge.--The Secretary 
        shall establish mechanisms to ensure that the information and 
        knowledge gained by participants in the pilot program are 
        transferred among the pilot program participants and to other 
        interested parties, including other applicants that submitted 
        applications.
    (f) Schedule.--
            (1) Publication.--Not later than 90 days after the date of 
        enactment of this Act, the Secretary shall publish in the 
        Federal Register, Commerce Business Daily, and elsewhere as 
        appropriate, a request for applications to undertake projects 
        under the pilot program. Applications shall be due not later 
        than 180 days after the date of publication of the notice.
            (2) Selection.--Not later than 180 days after the date by 
        which applications for grants are due, the Secretary shall 
        select by competitive, peer reviewed proposal, all applications 
        for projects to be awarded a grant under the pilot program.
    (g) Limit on Funding.--The Secretary shall provide not less than 20 
nor more than 25 percent of the grant funding made available under this 
section for the acquisition of ultra-low sulfur diesel vehicles.

SEC. 723. REPORTS TO CONGRESS.

    (a) Initial Report.--Not later than 60 days after the date on which 
grants are awarded under this part, the Secretary shall submit to 
Congress a report containing--
            (1) an identification of the grant recipients and a 
        description of the projects to be funded;
            (2) an identification of other applicants that submitted 
        applications for the pilot program; and
            (3) a description of the mechanisms used by the Secretary 
        to ensure that the information and knowledge gained by 
        participants in the pilot program are transferred among the 
        pilot program participants and to other interested parties, 
        including other applicants that submitted applications.
    (b) Evaluation.--Not later than 3 years after the date of enactment 
of this Act, and annually thereafter until the pilot program ends, the 
Secretary shall submit to Congress a report containing an evaluation of 
the effectiveness of the pilot program, including--
            (1) an assessment of the benefits to the environment 
        derived from the projects included in the pilot program; and
            (2) an estimate of the potential benefits to the 
        environment to be derived from widespread application of 
        alternative fueled vehicles and ultra-low sulfur diesel 
        vehicles.

SEC. 724. AUTHORIZATION OF APPROPRIATIONS.

    There are authorized to be appropriated to the Secretary to carry 
out this part $200,000,000, to remain available until expended.

                        PART 3--FUEL CELL BUSES

SEC. 731. FUEL CELL TRANSIT BUS DEMONSTRATION.

    (a) In General.--The Secretary of Energy, in consultation with the 
Secretary of Transportation, shall establish a transit bus 
demonstration program to make competitive, merit-based awards for 5-
year projects to demonstrate not more than 25 fuel cell transit buses 
(and necessary infrastructure) in 5 geographically dispersed 
localities.
    (b) Preference.--In selecting projects under this section, the 
Secretary of Energy shall give preference to projects that are most 
likely to mitigate congestion and improve air quality.
    (c) Authorization of Appropriations.--There are authorized to be 
appropriated to the Secretary of Energy to carry out this section 
$10,000,000 for each of fiscal years 2004 through 2008.

                     Subtitle C--Clean School Buses

SEC. 741. DEFINITIONS.

    In this subtitle:
            (1) Administrator.--The term ``Administrator'' means the 
        Administrator of the Environmental Protection Agency.
            (2) Alternative fuel.--The term ``alternative fuel'' means 
        liquefied natural gas, compressed natural gas, liquefied 
        petroleum gas, hydrogen, propane, or methanol or ethanol at no 
        less than 85 percent by volume.
            (3) Alternative fuel school bus.--The term ``alternative 
        fuel school bus'' means a school bus that meets all of the 
        requirements of this subtitle and is operated solely on an 
        alternative fuel.
            (4) Emissions control retrofit technology.--The term 
        ``emissions control retrofit technology'' means a particulate 
        filter or other emissions control equipment that is verified or 
        certified by the Administrator or the California Air Resources 
        Board as an effective emission reduction technology when 
        installed on an existing school bus.
            (5) Idling.--The term ``idling'' means operating an engine 
        while remaining stationary for more than approximately 15 
        minutes, except that the term does not apply to routine 
        stoppages associated with traffic movement or congestion.
            (6) Secretary.--The term ``Secretary'' means the Secretary 
        of Energy.
            (7) Ultra-low sulfur diesel fuel.--The term ``ultra-low 
        sulfur diesel fuel'' means diesel fuel that contains sulfur at 
        not more than 15 parts per million.
            (8) Ultra-low sulfur diesel fuel school bus.--The term 
        ``ultra-low sulfur diesel fuel school bus'' means a school bus 
        that meets all of the requirements of this subtitle and is 
        operated solely on ultra-low sulfur diesel fuel.

SEC. 742. PROGRAM FOR REPLACEMENT OF CERTAIN SCHOOL BUSES WITH CLEAN 
              SCHOOL BUSES.

    (a) Establishment.--The Administrator, in consultation with the 
Secretary and other appropriate Federal departments and agencies, shall 
establish a program for awarding grants on a competitive basis to 
eligible entities for the replacement of existing school buses 
manufactured before model year 1991 with alternative fuel school buses 
and ultra-low sulfur diesel fuel school buses.
    (b) Requirements.--
            (1) In general.--Not later than 90 days after the date of 
        enactment of this Act, the Administrator shall establish and 
        publish in the Federal Register grant requirements on 
        eligibility for assistance, and on implementation of the 
        program established under subsection (a), including 
        instructions for the submission of grant applications and 
        certification requirements to ensure compliance with this 
        subtitle.
            (2) Application deadlines.--The requirements established 
        under paragraph (1) shall require submission of grant 
        applications not later than--
                    (A) in the case of the first year of program 
                implementation, the date that is 180 days after the 
                publication of the requirements in the Federal 
                Register; and
                    (B) in the case of each subsequent year, June 1 of 
                the year.
    (c) Eligible Recipients.--A grant shall be awarded under this 
section only--
            (1) to 1 or more local or State governmental entities 
        responsible for providing school bus service to 1 or more 
        public school systems or responsible for the purchase of school 
        buses;
            (2) to 1 or more contracting entities that provide school 
        bus service to 1 or more public school systems, if the grant 
        application is submitted jointly with the 1 or more school 
        systems to be served by the buses, except that the application 
        may provide that buses purchased using funds awarded shall be 
        owned, operated, and maintained exclusively by the 1 or more 
        contracting entities; or
            (3) to a nonprofit school transportation association 
        representing private contracting entities, if the association 
        has notified and received approval from the 1 or more school 
        systems to be served by the buses.
    (d) Award Deadlines.--
            (1) In general.--Subject to paragraph (2), the 
        Administrator shall award a grant made to a qualified applicant 
        for a fiscal year--
                    (A) in the case of the first fiscal year of program 
                implementation, not later than the date that is 90 days 
                after the application deadline established under 
                subsection (b)(2); and
                    (B) in the case of each subsequent fiscal year, not 
                later than August 1 of the fiscal year.
            (2) Insufficient number of qualified grant applications.--
        If the Administrator does not receive a sufficient number of 
        qualified grant applications to meet the requirements of 
        subsection (i)(1) for a fiscal year, the Administrator shall 
        award a grant made to a qualified applicant under subsection 
        (i)(2) not later than September 30 of the fiscal year.
    (e) Types of Grants.--
            (1) In general.--A grant under this section shall be used 
        for the replacement of school buses manufactured before model 
        year 1991 with alternative fuel school buses and ultra-low 
        sulfur diesel fuel school buses.
            (2) No economic benefit.--Other than the receipt of the 
        grant, a recipient of a grant under this section may not 
        receive any economic benefit in connection with the receipt of 
        the grant.
            (3) Priority of grant applications.--The Administrator 
        shall give priority to applicants that propose to replace 
        school buses manufactured before model year 1977.
    (f) Conditions of Grant.--A grant provided under this section shall 
include the following conditions:
            (1) School bus fleet.--All buses acquired with funds 
        provided under the grant shall be operated as part of the 
        school bus fleet for which the grant was made for a minimum of 
        5 years.
            (2) Use of funds.--Funds provided under the grant may only 
        be used--
                    (A) to pay the cost, except as provided in 
                paragraph (3), of new alternative fuel school buses or 
                ultra-low sulfur diesel fuel school buses, including 
                State taxes and contract fees associated with the 
                acquisition of such buses; and
                    (B) to provide--
                            (i) up to 20 percent of the price of the 
                        alternative fuel school buses acquired, for 
                        necessary alternative fuel infrastructure if 
                        the infrastructure will only be available to 
                        the grant recipient; and
                            (ii) up to 25 percent of the price of the 
                        alternative fuel school buses acquired, for 
                        necessary alternative fuel infrastructure if 
                        the infrastructure will be available to the 
                        grant recipient and to other bus fleets.
            (3) Grant recipient funds.--The grant recipient shall be 
        required to provide at least--
                    (A) in the case of a grant recipient described in 
                paragraph (1) or (3) of subsection (c), the lesser of--
                            (i) an amount equal to 15 percent of the 
                        total cost of each bus received; or
                            (ii) $15,000 per bus; and
                    (B) in the case of a grant recipient described in 
                subsection (c)(2), the lesser of--
                            (i) an amount equal to 20 percent of the 
                        total cost of each bus received; or
                            (ii) $20,000 per bus.
            (4) Ultra-low sulfur diesel fuel.--In the case of a grant 
        recipient receiving a grant for ultra-low sulfur diesel fuel 
        school buses, the grant recipient shall be required to provide 
        documentation to the satisfaction of the Administrator that 
        diesel fuel containing sulfur at not more than 15 parts per 
        million is available for carrying out the purposes of the 
        grant, and a commitment by the applicant to use such fuel in 
        carrying out the purposes of the grant.
            (5) Timing.--All alternative fuel school buses, ultra-low 
        sulfur diesel fuel school buses, or alternative fuel 
        infrastructure acquired under a grant awarded under this 
        section shall be purchased and placed in service as soon as 
        practicable.
    (g) Buses.--
            (1) In general.--Except as provided in paragraph (2), 
        funding under a grant made under this section for the 
        acquisition of new alternative fuel school buses or ultra-low 
        sulfur diesel fuel school buses shall only be used to acquire 
        school buses--
                    (A) with a gross vehicle weight of greater than 
                14,000 pounds;
                    (B) that are powered by a heavy duty engine;
                    (C) in the case of alternative fuel school buses 
                manufactured in model years 2004 through 2006, that 
                emit not more than 1.8 grams per brake horsepower-hour 
                of nonmethane hydrocarbons and oxides of nitrogen and 
                .01 grams per brake horsepower-hour of particulate 
                matter; and
                    (D) in the case of ultra-low sulfur diesel fuel 
                school buses manufactured in model years 2004 through 
                2006, that emit not more than 2.5 grams per brake 
                horsepower-hour of nonmethane hydrocarbons and oxides 
                of nitrogen and .01 grams per brake horsepower-hour of 
                particulate matter.
            (2) Limitations.--A bus shall not be acquired under this 
        section that emits nonmethane hydrocarbons, oxides of nitrogen, 
        or particulate matter at a rate greater than the best 
        performing technology of the same class of ultra-low sulfur 
        diesel fuel school buses commercially available at the time the 
        grant is made.
    (h) Deployment and Distribution.--The Administrator shall--
            (1) seek, to the maximum extent practicable, to achieve 
        nationwide deployment of alternative fuel school buses and 
        ultra-low sulfur diesel fuel school buses through the program 
        under this section; and
            (2) ensure a broad geographic distribution of grant awards, 
        with a goal of no State receiving more than 10 percent of the 
        grant funding made available under this section for a fiscal 
        year.
    (i) Allocation of Funds.--
            (1) In general.--Subject to paragraph (2), of the amount of 
        grant funding made available to carry out this section for any 
        fiscal year, the Administrator shall use--
                    (A) 70 percent for the acquisition of alternative 
                fuel school buses or supporting infrastructure; and
                    (B) 30 percent for the acquisition of ultra-low 
                sulfur diesel fuel school buses.
            (2) Insufficient number of qualified grant applications.--
        After the first fiscal year in which this program is in effect, 
        if the Administrator does not receive a sufficient number of 
        qualified grant applications to meet the requirements of 
        subparagraph (A) or (B) of paragraph (1) for a fiscal year, 
        effective beginning on August 1 of the fiscal year, the 
        Administrator shall make the remaining funds available to other 
        qualified grant applicants under this section.
    (j) Reduction of School Bus Idling.--Each local educational agency 
(as defined in section 9101 of the Elementary and Secondary Education 
Act of 1965 (20 U.S.C. 7801)) that receives Federal funds under the 
Elementary and Secondary Education Act of 1965 (20 U.S.C. 6301 et seq.) 
is encouraged to develop a policy, consistent with the health, safety, 
and welfare of students and the proper operation and maintenance of 
school buses, to reduce the incidence of unnecessary school bus idling 
at schools when picking up and unloading students.
    (k) Annual Report.--
            (1) In general.--Not later than January 31 of each year, 
        the Administrator shall transmit to Congress a report 
        evaluating implementation of the programs under this section 
        and section 743.
            (2) Components.--The reports shall include a description 
        of--
                    (A) the total number of grant applications 
                received;
                    (B) the number and types of alternative fuel school 
                buses, ultra-low sulfur diesel fuel school buses, and 
                retrofitted buses requested in grant applications;
                    (C) grants awarded and the criteria used to select 
                the grant recipients;
                    (D) certified engine emission levels of all buses 
                purchased or retrofitted under the programs under this 
                section and section 743;
                    (E) an evaluation of the in-use emission level of 
                buses purchased or retrofitted under the programs under 
                this section and section 743; and
                    (F) any other information the Administrator 
                considers appropriate.
    (l) Authorization of Appropriations.--There are authorized to be 
appropriated to the Administrator to carry out this section, to remain 
available until expended--
            (1) $45,000,000 for fiscal year 2005;
            (2) $65,000,000 for fiscal year 2006;
            (3) $90,000,000 for fiscal year 2007; and
            (4) such sums as are necessary for each of fiscal years 
        2008 and 2009.

SEC. 743. DIESEL RETROFIT PROGRAM.

    (a) Establishment.--The Administrator, in consultation with the 
Secretary, shall establish a program for awarding grants on a 
competitive basis to entities for the installation of retrofit 
technologies for diesel school buses.
    (b) Eligible Recipients.--A grant shall be awarded under this 
section only--
            (1) to a local or State governmental entity responsible for 
        providing school bus service to 1 or more public school 
        systems;
            (2) to 1 or more contracting entities that provide school 
        bus service to 1 or more public school systems, if the grant 
        application is submitted jointly with the 1 or more school 
        systems that the buses will serve, except that the application 
        may provide that buses purchased using funds awarded shall be 
        owned, operated, and maintained exclusively by the 1 or more 
        contracting entities; or
            (3) to a nonprofit school transportation association 
        representing private contracting entities, if the association 
        has notified and received approval from the 1 or more school 
        systems to be served by the buses.
    (c) Awards.--
            (1) In general.--The Administrator shall seek, to the 
        maximum extent practicable, to ensure a broad geographic 
distribution of grants under this section.
            (2) Preferences.--In making awards of grants under this 
        section, the Administrator shall give preference to proposals 
        that--
                    (A) will achieve the greatest reductions in 
                emissions of nonmethane hydrocarbons, oxides of 
                nitrogen, or particulate matter per proposal or per 
                bus; or
                    (B) involve the use of emissions control retrofit 
                technology on diesel school buses that operate solely 
                on ultra-low sulfur diesel fuel.
    (d) Conditions of Grant.--A grant shall be provided under this 
section on the conditions that--
            (1) buses on which retrofit emissions-control technology 
        are to be demonstrated--
                    (A) will operate on ultra-low sulfur diesel fuel 
                where such fuel is reasonably available or required for 
                sale by State or local law or regulation;
                    (B) were manufactured in model year 1991 or later; 
                and
                    (C) will be used for the transportation of school 
                children to and from school for a minimum of 5 years;
            (2) grant funds will be used for the purchase of emission 
        control retrofit technology, including State taxes and contract 
        fees; and
            (3) grant recipients will provide at least 15 percent of 
        the total cost of the retrofit, including the purchase of 
        emission control retrofit technology and all necessary labor 
        for installation of the retrofit.
    (e) Verification.--Not later than 90 days after the date of 
enactment of this Act, the Administrator shall publish in the Federal 
Register procedures to verify--
            (1) the retrofit emissions-control technology to be 
        demonstrated;
            (2) that buses powered by ultra-low sulfur diesel fuel on 
        which retrofit emissions-control technology are to be 
        demonstrated will operate on diesel fuel containing not more 
        than 15 parts per million of sulfur; and
            (3) that grants are administered in accordance with this 
        section.
    (f) Authorization of Appropriations.--There are authorized to be 
appropriated to the Administrator to carry out this section, to remain 
available until expended--
            (1) $20,000,000 for fiscal year 2005;
            (2) $35,000,000 for fiscal year 2006;
            (3) $45,000,000 for fiscal year 2007; and
            (4) such sums as are necessary for each of fiscal years 
        2008 and 2009.

SEC. 744. FUEL CELL SCHOOL BUSES.

    (a) Establishment.--The Secretary shall establish a program for 
entering into cooperative agreements--
            (1) with private sector fuel cell bus developers for the 
        development of fuel cell-powered school buses; and
            (2) subsequently, with not less than 2 units of local 
        government using natural gas-powered school buses and such 
        private sector fuel cell bus developers to demonstrate the use 
        of fuel cell-powered school buses.
    (b) Cost Sharing.--The non-Federal contribution for activities 
funded under this section shall be not less than--
            (1) 20 percent for fuel infrastructure development 
        activities; and
            (2) 50 percent for demonstration activities and for 
        development activities not described in paragraph (1).
    (c) Reports to Congress.--Not later than 3 years after the date of 
enactment of this Act, the Secretary shall transmit to Congress a 
report that--
            (1) evaluates the process of converting natural gas 
        infrastructure to accommodate fuel cell-powered school buses; 
        and
            (2) assesses the results of the development and 
        demonstration program under this section.
    (d) Authorization of Appropriations.--There are authorized to be 
appropriated to the Secretary to carry out this section $25,000,000 for 
the period of fiscal years 2004 through 2006.

                       Subtitle D--Miscellaneous

SEC. 751. RAILROAD EFFICIENCY.

    (a) Establishment.--The Secretary of Energy shall, in cooperation 
with the Secretary of Transportation and the Administrator of the 
Environmental Protection Agency, establish a cost-shared, public-
private research partnership involving the Federal Government, railroad 
carriers, locomotive manufacturers and equipment suppliers, and the 
Association of American Railroads, to develop and demonstrate railroad 
locomotive technologies that increase fuel economy, reduce emissions, 
and lower costs of operation.
    (b) Authorization of Appropriations.--There are authorized to be 
appropriated to the Secretary of Energy to carry out this section--
            (1) $25,000,000 for fiscal year 2005;
            (2) $35,000,000 for fiscal year 2006; and
            (3) $50,000,000 for fiscal year 2007.

SEC. 752. MOBILE EMISSION REDUCTIONS TRADING AND CREDITING.

    (a) In General.--Not later than 180 days after the date of 
enactment of this Act, the Administrator of the Environmental 
Protection Agency shall submit to Congress a report on the experience 
of the Administrator with the trading of mobile source emission 
reduction credits for use by owners and operators of stationary source 
emission sources to meet emission offset requirements within a 
nonattainment area.
    (b) Contents.--The report shall describe--
            (1) projects approved by the Administrator that include the 
        trading of mobile source emission reduction credits for use by 
        stationary sources in complying with offset requirements, 
        including a description of--
                    (A) project and stationary sources location;
                    (B) volumes of emissions offset and traded;
                    (C) the sources of mobile emission reduction 
                credits; and
                    (D) if available, the cost of the credits;
            (2) the significant issues identified by the Administrator 
        in consideration and approval of trading in the projects;
            (3) the requirements for monitoring and assessing the air 
        quality benefits of any approved project;
            (4) the statutory authority on which the Administrator has 
        based approval of the projects;
            (5) an evaluation of how the resolution of issues in 
        approved projects could be used in other projects; and
            (6) any other issues that the Administrator considers 
        relevant to the trading and generation of mobile source 
        emission reduction credits for use by stationary sources or for 
        other purposes.

SEC. 753. AVIATION FUEL CONSERVATION AND EMISSIONS.

    (a) In General.--Not later than 60 days after the date of enactment 
of this Act, the Administrator of the Federal Aviation Administration 
and the Administrator of the Environmental Protection Agency shall 
jointly initiate a study to identify--
            (1) the impact of aircraft emissions on air quality in 
        nonattainment areas; and
            (2) ways to promote fuel conservation measures for aviation 
        to--
                    (A) enhance fuel efficiency; and
                    (B) reduce emissions.
    (b) Focus.--The study under subsection (a) shall focus on how air 
traffic management inefficiencies, such as aircraft idling at airports, 
result in unnecessary fuel burn and air emissions.
    (c) Report.--Not later than 1 year after the date of the initiation 
of the study under subsection (a), the Administrator of the Federal 
Aviation Administration and the Administrator of the Environmental 
Protection Agency shall jointly submit to the Committee on Energy and 
Commerce and the Committee on Transportation and Infrastructure of the 
House of Representatives and the Committee on Environment and Public 
Works and the Committee on Commerce, Science, and Transportation of the 
Senate a report that--
            (1) describes the results of the study; and
            (2) includes any recommendations on ways in which 
        unnecessary fuel use and emissions affecting air quality may be 
        reduced--
                    (A) without adversely affecting safety and security 
                and increasing individual aircraft noise; and
                    (B) while taking into account all aircraft 
                emissions and the impact of the emissions on human 
                health.

SEC. 754. DIESEL FUELED VEHICLES.

    (a) Definition of Tier 2 Emission Standards.--In this section, the 
term ``tier 2 emission standards'' means the motor vehicle emission 
standards that apply to passenger cars, light trucks, and larger 
passenger vehicles manufactured after the 2003 model year, as issued on 
February 10, 2000, by the Administrator of the Environmental Protection 
Agency under sections 202 and 211 of the Clean Air Act (42 U.S.C. 7521, 
7545).
    (b) Diesel Combustion and After-Treatment Technologies.--The 
Secretary of Energy shall accelerate efforts to improve diesel 
combustion and after-treatment technologies for use in diesel fueled 
motor vehicles.
    (c) Goals.--The Secretary shall carry out subsection (b) with a 
view toward achieving the following goals:
            (1) Developing and demonstrating diesel technologies that, 
        not later than 2010, meet the following standards:
                    (A) Tier 2 emission standards.
                    (B) The heavy-duty emissions standards of 2007 that 
                are applicable to heavy-duty vehicles under regulations 
                issued by the Administrator of the Environmental 
                Protection Agency as of the date of enactment of this 
                Act.
            (2) Developing the next generation of low-emission, high-
        efficiency diesel engine technologies, including homogeneous 
        charge compression ignition technology.

SEC. 755. CONSERVE BY BICYCLING PROGRAM.

    (a) Definitions.--In this section:
            (1) Program.--The term ``program'' means the Conserve by 
        Bicycling Program established by subsection (b).
            (2) Secretary.--The term ``Secretary'' means the Secretary 
        of Transportation.
    (b) Establishment.--There is established within the Department of 
Transportation a program to be known as the ``Conserve by Bicycling 
Program''.
    (c) Projects.--
            (1) In general.--In carrying out the program, the Secretary 
        shall establish not more than 10 pilot projects that are--
                    (A) dispersed geographically throughout the United 
                States; and
                    (B) designed to conserve energy resources by 
                encouraging the use of bicycles in place of motor 
                vehicles.
            (2) Requirements.--A pilot project described in paragraph 
        (1) shall--
                    (A) use education and marketing to convert motor 
                vehicle trips to bicycle trips;
                    (B) document project results and energy savings (in 
                estimated units of energy conserved);
                    (C) facilitate partnerships among interested 
                parties in at least 2 of the fields of--
                            (i) transportation;
                            (ii) law enforcement;
                            (iii) education;
                            (iv) public health;
                            (v) environment; and
                            (vi) energy;
                    (D) maximize bicycle facility investments;
                    (E) demonstrate methods that may be used in other 
                regions of the United States; and
                    (F) facilitate the continuation of ongoing programs 
                that are sustained by local resources.
            (3) Cost sharing.--At least 20 percent of the cost of each 
        pilot project described in paragraph (1) shall be provided from 
        State or local sources.
    (d) Energy and Bicycling Research Study.--
            (1) In general.--Not later than 2 years after the date of 
        enactment of this Act, the Secretary shall enter into a 
        contract with the National Academy of Sciences for, and the 
        National Academy of Sciences shall conduct and submit to 
        Congress a report on, a study on the feasibility of converting 
        motor vehicle trips to bicycle trips.
            (2) Components.--The study shall--
                    (A) document the results or progress of the pilot 
                projects under subsection (c);
                    (B) determine the type and duration of motor 
                vehicle trips that people in the United States may 
                feasibly make by bicycle, taking into consideration 
                factors such as--
                            (i) weather;
                            (ii) land use and traffic patterns;
                            (iii) the carrying capacity of bicycles; 
                        and
                            (iv) bicycle infrastructure;
                    (C) determine any energy savings that would result 
                from the conversion of motor vehicle trips to bicycle 
                trips;
                    (D) include a cost-benefit analysis of bicycle 
                infrastructure investments; and
                    (E) include a description of any factors that would 
                encourage more motor vehicle trips to be replaced with 
                bicycle trips.
    (e) Authorization of Appropriations.--There are authorized to be 
appropriated to the Secretary to carry out this section $6,200,000, to 
remain available until expended, of which--
            (1) $5,150,000 shall be used to carry out pilot projects 
        described in subsection (c);
            (2) $300,000 shall be used by the Secretary to coordinate, 
        publicize, and disseminate the results of the program; and
            (3) $750,000 shall be used to carry out subsection (d).

SEC. 756. REDUCTION OF ENGINE IDLING OF HEAVY-DUTY VEHICLES.

    (a) Definitions.--In this section:
            (1) Administrator.--The term ``Administrator'' means the 
        Administrator of the Environmental Protection Agency.
            (2) Advanced truck stop electrification system.--The term 
        ``advanced truck stop electrification system'' means a 
        stationary system that delivers heat, air conditioning, 
        electricity, and communications, and is capable of providing 
        verifiable and auditable evidence of use of those services, to 
        a heavy-duty vehicle and any occupants of the heavy-duty 
        vehicle without relying on components mounted onboard the 
        heavy-duty vehicle for delivery of those services.
            (3) Auxiliary power unit.--The term ``auxiliary power 
        unit'' means an integrated system that--
                    (A) provides heat, air conditioning, engine 
                warming, and electricity to the factory-installed 
                components on a heavy-duty vehicle as if the main drive 
                engine of the heavy-duty vehicle were running; and
                    (B) is certified by the Administrator under part 89 
                of title 40, Code of Federal Regulations (or any 
                successor regulation), as meeting applicable emission 
                standards.
            (4) Heavy-duty vehicle.--The term ``heavy-duty vehicle'' 
        means a vehicle that--
                    (A) has a gross vehicle weight rating greater than 
                12,500 pounds; and
                    (B) is powered by a diesel engine.
            (5) Idle reduction technology.--The term ``idle reduction 
        technology'' means an advanced truck stop electrification 
        system, auxiliary power unit, or other device or system of 
        devices that--
                    (A) is used to reduce long-duration idling of a 
                heavy-duty vehicle; and
                    (B) allows for the main drive engine or auxiliary 
                refrigeration engine of a heavy-duty vehicle to be shut 
                down.
            (6) Long-duration idling.--
                    (A) In general.--The term ``long-duration idling'' 
                means the operation of a main drive engine or auxiliary 
                refrigeration engine of a heavy-duty vehicle, for a 
                period greater than 15 consecutive minutes, at a time 
                at which the main drive engine is not engaged in gear.
                    (B) Exclusions.--The term ``long-duration idling'' 
                does not include the operation of a main drive engine 
                or auxiliary refrigeration engine of a heavy-duty 
                vehicle during a routine stoppage associated with 
                traffic movement or congestion.
    (b) Idle Reduction Technology Benefits, Programs, and Studies.--
            (1) In general.--Not later than 90 days after the date of 
        enactment of this Act, the Administrator shall--
                    (A)(i) commence a review of the mobile source air 
                emission models of the Environmental Protection Agency 
                used under the Clean Air Act (42 U.S.C. 7401 et seq.) 
                to determine whether the models accurately reflect the 
                emissions resulting from long-duration idling of heavy-
                duty vehicles and other vehicles and engines; and
                    (ii) update those models as the Administrator 
                determines to be appropriate; and
                    (B)(i) commence a review of the emission reductions 
                achieved by the use of idle reduction technology; and
                    (ii) complete such revisions of the regulations and 
                guidance of the Environmental Protection Agency as the 
                Administrator determines to be appropriate.
            (2) Deadline for completion.--Not later than 180 days after 
        the date of enactment of this Act, the Administrator shall--
                    (A) complete the reviews under subparagraphs (A)(i) 
                and (B)(i) of paragraph (1); and
                    (B) prepare and make publicly available 1 or more 
                reports on the results of the reviews.
            (3) Discretionary inclusions.--The reviews under 
        subparagraphs (A)(i) and (B)(i) of paragraph (1) and the 
        reports under paragraph (2)(B) may address the potential fuel 
        savings resulting from use of idle reduction technology.
            (4) Idle reduction deployment program.--
                    (A) Establishment.--
                            (i) In general.--Not later than 90 days 
                        after the date of enactment of this Act, the 
                        Administrator, in consultation with the 
                        Secretary of Transportation, shall establish a 
                        program to support deployment of idle reduction 
                        technology.
                            (ii) Priority.--The Administrator shall 
                        give priority to the deployment of idle 
                        reduction technology based on beneficial 
                        effects on air quality and ability to lessen 
                        the emission of criteria air pollutants.
                    (B) Funding.--
                            (i) Authorization of appropriations.--There 
                        are authorized to be appropriated to the 
                        Administrator to carry out subparagraph (A) 
                        $19,500,000 for fiscal year 2004, $30,000,000 
                        for fiscal year 2005, and $45,000,000 for 
                        fiscal year 2006.
                            (ii) Cost sharing.--Subject to clause 
                        (iii), the Administrator shall require at least 
                        50 percent of the costs directly and 
                        specifically related to any project under this 
                        section to be provided from non-Federal 
                        sources.
                            (iii) Necessary and appropriate 
                        reductions.--The Administrator may reduce the 
                        non-Federal requirement under clause (ii) if 
                        the Administrator determines that the reduction 
                        is necessary and appropriate to meet the 
                        objectives of this section.
            (5) Idling location study.--
                    (A) In general.--Not later than 90 days after the 
                date of enactment of this Act, the Administrator, in 
                consultation with the Secretary of Transportation, 
                shall commence a study to analyze all locations at 
                which heavy-duty vehicles stop for long-duration 
                idling, including--
                            (i) truck stops;
                            (ii) rest areas;
                            (iii) border crossings;
                            (iv) ports;
                            (v) transfer facilities; and
                            (vi) private terminals.
                    (B) Deadline for completion.--Not later than 180 
                days after the date of enactment of this Act, the 
                Administrator shall--
                            (i) complete the study under subparagraph 
                        (A); and
                            (ii) prepare and make publicly available 1 
                        or more reports of the results of the study.
    (c) Vehicle Weight Exemption.--Section 127(a) of title 23, United 
States Code, is amended--
            (1) by designating the first through eleventh sentences as 
        paragraphs (1) through (11), respectively; and
            (2) by adding at the end the following:
            ``(12) Heavy duty vehicles.--
                    ``(A) In general.--Subject to subparagraphs (B) and 
                (C), in order to promote reduction of fuel use and 
                emissions because of engine idling, the maximum gross 
                vehicle weight limit and the axle weight limit for any 
                heavy-duty vehicle equipped with an idle reduction 
                technology shall be increased by a quantity necessary 
                to compensate for the additional weight of the idle 
                reduction system.
                    ``(B) Maximum weight increase.--The weight increase 
                under subparagraph (A) shall be not greater than 250 
                pounds.
                    ``(C) Proof.--On request by a regulatory agency or 
                law enforcement agency, the vehicle operator shall 
                provide proof (through demonstration or certification) 
                that--
                            ``(i) the idle reduction technology is 
                        fully functional at all times; and
                            ``(ii) the 250-pound gross weight increase 
                        is not used for any purpose other than the use 
                        of idle reduction technology described in 
                        subparagraph (A).''.

SEC. 757. BIODIESEL ENGINE TESTING PROGRAM.

    (a) In General.--Not later that 180 days after the date of 
enactment of this Act, the Secretary shall initiate a partnership with 
diesel engine, diesel fuel injection system, and diesel vehicle 
manufacturers and diesel and biodiesel fuel providers, to include 
biodiesel testing in advanced diesel engine and fuel system technology.
    (b) Scope.--The program shall provide for testing to determine the 
impact of biodiesel from different sources on current and future 
emission control technologies, with emphasis on--
            (1) the impact of biodiesel on emissions warranty, in-use 
        liability, and antitampering provisions;
            (2) the impact of long-term use of biodiesel on engine 
        operations;
            (3) the options for optimizing these technologies for both 
        emissions and performance when switching between biodiesel and 
        diesel fuel; and
            (4) the impact of using biodiesel in these fueling systems 
        and engines when used as a blend with 2006 Environmental 
        Protection Agency-mandated diesel fuel containing a maximum of 
        15-parts-per-million sulfur content.
    (c) Report.--Not later than 2 years after the date of enactment of 
this Act, the Secretary shall provide an interim report to Congress on 
the findings of the program, including a comprehensive analysis of 
impacts from biodiesel on engine operation for both existing and 
expected future diesel technologies, and recommendations for ensuring 
optimal emissions reductions and engine performance with biodiesel.
    (d) Authorization of Appropriations.--There are authorized to be 
appropriated $5,000,000 for each of fiscal years 2004 through 2008 to 
carry out this section.
    (e) Definition.--For purposes of this section, the term 
``biodiesel'' means a diesel fuel substitute produced from nonpetroleum 
renewable resources that meets the registration requirements for fuels 
and fuel additives established by the Environmental Protection Agency 
under section 211 of the Clean Air Act (42 U.S.C. 7545) and that meets 
the American Society for Testing and Materials D6751-02a Standard 
Specification for Biodiesel Fuel (B100) Blend Stock for Distillate 
Fuels.

SEC. 758. HIGH OCCUPANCY VEHICLE EXCEPTION.

    Notwithstanding section 102(a) of title 23, United States Code, a 
State may permit a vehicle with fewer than 2 occupants to operate in 
high occupancy vehicle lanes if the vehicle--
            (1) is a dedicated vehicle (as defined in section 301 of 
        the Energy Policy Act of 1992 (42 U.S.C. 13211)); or
            (2) is a hybrid vehicle (as defined by the State for the 
        purpose of this section).

                   Subtitle E--Automobile Efficiency

SEC. 771. AUTHORIZATION OF APPROPRIATIONS FOR IMPLEMENTATION AND 
              ENFORCEMENT OF FUEL ECONOMY STANDARDS.

    In addition to any other funds authorized by law, there are 
authorized to be appropriated to the National Highway Traffic Safety 
Administration to carry out its obligations with respect to average 
fuel economy standards $2,000,000 for each of fiscal years 2004 through 
2008.

SEC. 772. REVISED CONSIDERATIONS FOR DECISIONS ON MAXIMUM FEASIBLE 
              AVERAGE FUEL ECONOMY.

    Section 32902(f) of title 49, United States Code, is amended to 
read as follows:
    ``(f) Considerations for Decisions on Maximum Feasible Average Fuel 
Economy.--When deciding maximum feasible average fuel economy under 
this section, the Secretary of Transportation shall consider the 
following matters:
            ``(1) Technological feasibility.
            ``(2) Economic practicability.
            ``(3) The effect of other motor vehicle standards of the 
        Government on fuel economy.
            ``(4) The need of the United States to conserve energy.
            ``(5) The effects of fuel economy standards on passenger 
        automobiles, nonpassenger automobiles, and occupant safety.
            ``(6) The effects of compliance with average fuel economy 
        standards on levels of automobile industry employment in the 
        United States.''.

SEC. 773. EXTENSION OF MAXIMUM FUEL ECONOMY INCREASE FOR ALTERNATIVE 
              FUELED VEHICLES.

    (a) Manufacturing Incentives.--Section 32905 of title 49, United 
States Code, is amended--
            (1) in each of subsections (b) and (d), by striking ``1993-
        2004'' and inserting ``1993-2008'';
            (2) in subsection (f), by striking ``2001'' and inserting 
        ``2005''; and
            (3) in subsection (f)(1), by striking ``2004'' and 
        inserting ``2008''.
    (b) Maximum Fuel Economy Increase.--Subsection (a)(1) of section 
32906 of title 49, United States Code, is amended--
            (1) in subparagraph (A), by striking ``the model years 
        1993-2004'' and inserting ``model years 1993-2008''; and
            (2) in subparagraph (B), by striking ``the model years 
        2005-2008'' and inserting ``model years 2009-2012''.

SEC. 774. STUDY OF FEASIBILITY AND EFFECTS OF REDUCING USE OF FUEL FOR 
              AUTOMOBILES.

    (a) In General.--Not later than 30 days after the date of the 
enactment of this Act, the Administrator of the National Highway 
Traffic Safety Administration shall initiate a study of the feasibility 
and effects of reducing by model year 2012, by a significant 
percentage, the amount of fuel consumed by automobiles.
    (b) Subjects of Study.--The study under this section shall 
include--
            (1) examination of, and recommendation of alternatives to, 
        the policy under current Federal law of establishing average 
        fuel economy standards for automobiles and requiring each 
        automobile manufacturer to comply with average fuel economy 
        standards that apply to the automobiles it manufactures;
            (2) examination of how automobile manufacturers could 
        contribute toward achieving the reduction referred to in 
        subsection (a);
            (3) examination of the potential of fuel cell technology in 
        motor vehicles in order to determine the extent to which such 
        technology may contribute to achieving the reduction referred 
        to in subsection (a); and
            (4) examination of the effects of the reduction referred to 
        in subsection (a) on--
                    (A) gasoline supplies;
                    (B) the automobile industry, including sales of 
                automobiles manufactured in the United States;
                    (C) motor vehicle safety; and
                    (D) air quality.
    (c) Report.--The Administrator shall submit to Congress a report on 
the findings, conclusion, and recommendations of the study under this 
section by not later than 1 year after the date of the enactment of 
this Act.

                          TITLE VIII--HYDROGEN

SEC. 801. DEFINITIONS.

    In this title:
            (1) Advisory committee.--The term ``Advisory Committee'' 
        means the Hydrogen Technical and Fuel Cell Advisory Committee 
        established under section 805.
            (2) Department.--The term ``Department'' means the 
        Department of Energy.
            (3) Fuel cell.--The term ``fuel cell'' means a device that 
        directly converts the chemical energy of a fuel and an oxidant 
        into electricity by an electrochemical process taking place at 
        separate electrodes in the device.
            (4) Infrastructure.--The term ``infrastructure'' means the 
        equipment, systems, or facilities used to produce, distribute, 
        deliver, or store hydrogen.
            (5) Light duty vehicle.--The term ``light duty vehicle'' 
        means a car or truck classified by the Department of 
        Transportation as a Class I or IIA vehicle.
            (6) Secretary.--The term ``Secretary'' means the Secretary 
        of Energy.

SEC. 802. PLAN.

    Not later than 6 months after the date of enactment of this Act, 
the Secretary shall transmit to Congress a coordinated plan for the 
programs described in this title and any other programs of the 
Department that are directly related to fuel cells or hydrogen. The 
plan shall describe, at a minimum--
            (1) the agenda for the next 5 years for the programs 
        authorized under this title, including the agenda for each 
        activity enumerated in section 803(a);
            (2) the types of entities that will carry out the 
        activities under this title and what role each entity is 
        expected to play;
            (3) the milestones that will be used to evaluate the 
        programs for the next 5 years;
            (4) the most significant technical and nontechnical hurdles 
        that stand in the way of achieving the goals described in 
        section 803(b), and how the programs will address those 
        hurdles; and
            (5) the policy assumptions that are implicit in the plan, 
        including any assumptions that would affect the sources of 
        hydrogen or the marketability of hydrogen-related products.

SEC. 803. PROGRAMS.

    (a) Activities.--The Secretary, in partnership with the private 
sector, shall conduct programs to address--
            (1) production of hydrogen from diverse energy sources, 
        including--
                    (A) fossil fuels, which may include carbon capture 
                and sequestration;
                    (B) hydrogen-carrier fuels (including ethanol and 
                methanol);
                    (C) renewable energy resources, including biomass; 
                and
                    (D) nuclear energy;
            (2) use of hydrogen for commercial, industrial, and 
        residential electric power generation;
            (3) safe delivery of hydrogen or hydrogen-carrier fuels, 
        including--
                    (A) transmission by pipeline and other distribution 
                methods; and
                    (B) convenient and economic refueling of vehicles 
                either at central refueling stations or through 
                distributed on-site generation;
            (4) advanced vehicle technologies, including--
                    (A) engine and emission control systems;
                    (B) energy storage, electric propulsion, and hybrid 
                systems;
                    (C) automotive materials; and
                    (D) other advanced vehicle technologies;
            (5) storage of hydrogen or hydrogen-carrier fuels, 
        including development of materials for safe and economic 
        storage in gaseous, liquid, or solid form at refueling 
        facilities and onboard vehicles;
            (6) development of safe, durable, affordable, and efficient 
        fuel cells, including fuel-flexible fuel cell power systems, 
        improved manufacturing processes, high-temperature membranes, 
        cost-effective fuel processing for natural gas, fuel cell stack 
        and system reliability, low temperature operation, and cold 
        start capability;
            (7) development, after consultation with the private 
        sector, of necessary codes and standards (including 
        international codes and standards and voluntary consensus 
        standards adopted in accordance with OMB Circular A-119) and 
        safety practices for the production, distribution, storage, and 
        use of hydrogen, hydrogen-carrier fuels, and related products; 
        and
            (8) a public education program to develop improved 
        knowledge and acceptability of hydrogen-based systems.
    (b) Program Goals.--
            (1) Vehicles.--For vehicles, the goals of the program are--
                    (A) to enable a commitment by automakers no later 
                than year 2015 to offer safe, affordable, and 
                technically viable hydrogen fuel cell vehicles in the 
                mass consumer market; and
                    (B) to enable production, delivery, and acceptance 
                by consumers of model year 2020 hydrogen fuel cell and 
                other hydrogen-powered vehicles that will have--
                            (i) a range of at least 300 miles;
                            (ii) improved performance and ease of 
                        driving;
                            (iii) safety and performance comparable to 
                        vehicle technologies in the market; and
                            (iv) when compared to light duty vehicles 
                        in model year 2003--
                                    (I) fuel economy that is 
                                substantially higher;
                                    (II) substantially lower emissions 
                                of air pollutants; and
                                    (III) equivalent or improved 
                                vehicle fuel system crash integrity and 
                                occupant protection.
            (2) Hydrogen energy and energy infrastructure.--For 
        hydrogen energy and energy infrastructure, the goals of the 
        program are to enable a commitment not later than 2015 that 
        will lead to infrastructure by 2020 that will provide--
                    (A) safe and convenient refueling;
                    (B) improved overall efficiency;
                    (C) widespread availability of hydrogen from 
                domestic energy sources through--
                            (i) production, with consideration of 
                        emissions levels;
                            (ii) delivery, including transmission by 
                        pipeline and other distribution methods for 
                        hydrogen; and
                            (iii) storage, including storage in surface 
                        transportation vehicles;
                    (D) hydrogen for fuel cells, internal combustion 
                engines, and other energy conversion devices for 
                portable, stationary, and transportation applications; 
                and
                    (E) other technologies consistent with the 
                Department's plan.
            (3) Fuel cells.--The goals for fuel cells and their 
        portable, stationary, and transportation applications are to 
        enable--
                    (A) safe, economical, and environmentally sound 
                hydrogen fuel cells;
                    (B) fuel cells for light duty and other vehicles; 
                and
                    (C) other technologies consistent with the 
                Department's plan.
    (c) Demonstration.--In carrying out the programs under this 
section, the Secretary shall fund a limited number of demonstration 
projects, consistent with a determination of the maturity, cost-
effectiveness, and environmental impacts of technologies supporting 
each project. In selecting projects under this subsection, the 
Secretary shall, to the extent practicable and in the public interest, 
select projects that--
            (1) involve using hydrogen and related products at existing 
        facilities or installations, such as existing office buildings, 
        military bases, vehicle fleet centers, transit bus authorities, 
        or units of the National Park System;
            (2) depend on reliable power from hydrogen to carry out 
        essential activities;
            (3) lead to the replication of hydrogen technologies and 
        draw such technologies into the marketplace;
            (4) include vehicle, portable, and stationary 
        demonstrations of fuel cell and hydrogen-based energy 
        technologies;
            (5) address the interdependency of demand for hydrogen fuel 
        cell applications and hydrogen fuel infrastructure;
            (6) raise awareness of hydrogen technology among the 
        public;
            (7) facilitate identification of an optimum technology 
        among competing alternatives;
            (8) address distributed generation using renewable sources; 
        and
            (9) address applications specific to rural or remote 
        locations, including isolated villages and islands, the 
        National Park System, and tribal entities.
The Secretary shall give preference to projects which address multiple 
elements contained in paragraphs (1) through (9).
    (d) Deployment.--In carrying out the programs under this section, 
the Secretary shall, in partnership with the private sector, conduct 
activities to facilitate the deployment of hydrogen energy and energy 
infrastructure, fuel cells, and advanced vehicle technologies.
    (e) Funding.--
            (1) In general.--The Secretary shall carry out the programs 
        under this section using a competitive, merit-based review 
        process and consistent with the generally applicable Federal 
        laws and regulations governing awards of financial assistance, 
        contracts, or other agreements.
            (2) Research centers.--Activities under this section may be 
        carried out by funding nationally recognized university-based 
        or Federal laboratory research centers.
    (f) Cost Sharing.--
            (1) Research and development.--Except as otherwise provided 
        in this title, for research and development programs carried 
        out under this title the Secretary shall require a commitment 
        from non-Federal sources of at least 20 percent of the cost of 
        the project. The Secretary may reduce or eliminate the non-
        Federal requirement under this paragraph if the Secretary 
        determines that the research and development is of a basic or 
        fundamental nature or involves technical analyses or 
        educational activities.
            (2) Demonstration and commercial application.--Except as 
        otherwise provided in this title, the Secretary shall require 
        at least 50 percent of the costs directly and specifically 
        related to any demonstration or commercial application project 
        under this title to be provided from non-Federal sources. The 
        Secretary may reduce the non-Federal requirement under this 
        paragraph if the Secretary determines that the reduction is 
        necessary and appropriate considering the technological risks 
        involved in the project and is necessary to meet the objectives 
        of this title.
            (3) Calculation of amount.--In calculating the amount of 
        the non-Federal commitment under paragraph (1) or (2), the 
        Secretary may include personnel, services, equipment, and other 
        resources.
            (4) Size of non-federal share.--The Secretary may consider 
        the size of the non-Federal share in selecting projects.
    (g) Disclosure.--Section 623 of the Energy Policy Act of 1992 (42 
U.S.C. 13293) relating to the protection of information shall apply to 
projects carried out through grants, cooperative agreements, or 
contracts under this title.

SEC. 804. INTERAGENCY TASK FORCE.

    (a) Establishment.--Not later than 120 days after the date of 
enactment of this Act, the President shall establish an interagency 
task force chaired by the Secretary with representatives from each of 
the following:
            (1) The Office of Science and Technology Policy within the 
        Executive Office of the President.
            (2) The Department of Transportation.
            (3) The Department of Defense.
            (4) The Department of Commerce (including the National 
        Institute of Standards and Technology).
            (5) The Department of State.
            (6) The Environmental Protection Agency.
            (7) The National Aeronautics and Space Administration.
            (8) Other Federal agencies as the Secretary determines 
        appropriate.
    (b) Duties.--
            (1) Planning.--The interagency task force shall work 
        toward--
                    (A) a safe, economical, and environmentally sound 
                fuel infrastructure for hydrogen and hydrogen-carrier 
                fuels, including an infrastructure that supports buses 
                and other fleet transportation;
                    (B) fuel cells in government and other 
                applications, including portable, stationary, and 
                transportation applications;
                    (C) distributed power generation, including the 
                generation of combined heat, power, and clean fuels 
                including hydrogen;
                    (D) uniform hydrogen codes, standards, and safety 
                protocols; and
                    (E) vehicle hydrogen fuel system integrity safety 
                performance.
            (2) Activities.--The interagency task force may organize 
        workshops and conferences, may issue publications, and may 
        create databases to carry out its duties. The interagency task 
        force shall--
                    (A) foster the exchange of generic, nonproprietary 
                information and technology among industry, academia, 
                and government;
                    (B) develop and maintain an inventory and 
                assessment of hydrogen, fuel cells, and other advanced 
                technologies, including the commercial capability of 
                each technology for the economic and environmentally 
                safe production, distribution, delivery, storage, and 
                use of hydrogen;
                    (C) integrate technical and other information made 
                available as a result of the programs and activities 
                under this title;
                    (D) promote the marketplace introduction of 
                infrastructure for hydrogen fuel vehicles; and
                    (E) conduct an education program to provide 
                hydrogen and fuel cell information to potential end-
                users.
    (c) Agency Cooperation.--The heads of all agencies, including those 
whose agencies are not represented on the interagency task force, shall 
cooperate with and furnish information to the interagency task force, 
the Advisory Committee, and the Department.

SEC. 805. ADVISORY COMMITTEE.

    (a) Establishment.--The Hydrogen Technical and Fuel Cell Advisory 
Committee is established to advise the Secretary on the programs and 
activities under this title.
    (b) Membership.--
            (1) Members.--The Advisory Committee shall be comprised of 
        not fewer than 12 nor more than 25 members. The members shall 
        be appointed by the Secretary to represent domestic industry, 
        academia, professional societies, government agencies, Federal 
        laboratories, previous advisory panels, and financial, 
        environmental, and other appropriate organizations based on the 
        Department's assessment of the technical and other 
        qualifications of committee members and the needs of the 
        Advisory Committee.
            (2) Terms.--The term of a member of the Advisory Committee 
        shall not be more than 3 years. The Secretary may appoint 
        members of the Advisory Committee in a manner that allows the 
        terms of the members serving at any time to expire at spaced 
        intervals so as to ensure continuity in the functioning of the 
        Advisory Committee. A member of the Advisory Committee whose 
        term is expiring may be reappointed.
            (3) Chairperson.--The Advisory Committee shall have a 
        chairperson, who is elected by the members from among their 
        number.
    (c) Review.--The Advisory Committee shall review and make 
recommendations to the Secretary on--
            (1) the implementation of programs and activities under 
        this title;
            (2) the safety, economical, and environmental consequences 
        of technologies for the production, distribution, delivery, 
        storage, or use of hydrogen energy and fuel cells; and
            (3) the plan under section 802.
    (d) Response.--
            (1) Consideration of recommendations.--The Secretary shall 
        consider, but need not adopt, any recommendations of the 
        Advisory Committee under subsection (c).
            (2) Biennial report.--The Secretary shall transmit a 
        biennial report to Congress describing any recommendations made 
        by the Advisory Committee since the previous report. The report 
        shall include a description of how the Secretary has 
        implemented or plans to implement the recommendations, or an 
        explanation of the reasons that a recommendation will not be 
        implemented. The report shall be transmitted along with the 
        President's budget proposal.
    (e) Support.--The Secretary shall provide resources necessary in 
the judgment of the Secretary for the Advisory Committee to carry out 
its responsibilities under this title.

SEC. 806. EXTERNAL REVIEW.

    (a) Plan.--The Secretary shall enter into an arrangement with the 
National Academy of Sciences to review the plan prepared under section 
802, which shall be completed not later than 6 months after the Academy 
receives the plan. Not later than 45 days after receiving the review, 
the Secretary shall transmit the review to Congress along with a plan 
to implement the review's recommendations or an explanation of the 
reasons that a recommendation will not be implemented.
    (b) Additional Review.--The Secretary shall enter into an 
arrangement with the National Academy of Sciences under which the 
Academy will review the programs under section 803 during the fourth 
year following the date of enactment of this Act. The Academy's review 
shall include the research priorities and technical milestones, and 
evaluate the progress toward achieving them. The review shall be 
completed not later than 5 years after the date of enactment of this 
Act. Not later than 45 days after receiving the review, the Secretary 
shall transmit the review to Congress along with a plan to implement 
the review's recommendations or an explanation for the reasons that a 
recommendation will not be implemented.

SEC. 807. MISCELLANEOUS PROVISIONS.

    (a) Representation.--The Secretary may represent the United States 
interests with respect to activities and programs under this title, in 
coordination with the Department of Transportation, the National 
Institute of Standards and Technology, and other relevant Federal 
agencies, before governments and nongovernmental organizations 
including--
            (1) other Federal, State, regional, and local governments 
        and their representatives;
            (2) industry and its representatives, including members of 
        the energy and transportation industries; and
            (3) in consultation with the Department of State, foreign 
        governments and their representatives including international 
        organizations.
    (b) Regulatory Authority.--Nothing in this title shall be construed 
to alter the regulatory authority of the Department.

SEC. 808. SAVINGS CLAUSE.

    Nothing in this title shall be construed to affect the authority of 
the Secretary of Transportation that may exist prior to the date of 
enactment of this Act with respect to--
            (1) research into, and regulation of, hydrogen-powered 
        vehicles fuel systems integrity, standards, and safety under 
        subtitle VI of title 49, United States Code;
            (2) regulation of hazardous materials transportation under 
        chapter 51 of title 49, United States Code;
            (3) regulation of pipeline safety under chapter 601 of 
        title 49, United States Code;
            (4) encouragement and promotion of research, development, 
        and deployment activities relating to advanced vehicle 
        technologies under section 5506 of title 49, United States 
        Code;
            (5) regulation of motor vehicle safety under chapter 301 of 
        title 49, United States Code;
            (6) automobile fuel economy under chapter 329 of title 49, 
        United States Code; or
            (7) representation of the interests of the United States 
        with respect to the activities and programs under the authority 
        of title 49, United States Code.

SEC. 809. AUTHORIZATION OF APPROPRIATIONS.

    There are authorized to be appropriated to the Secretary to carry 
out this title, in addition to any amounts made available for these 
purposes under other Acts--
            (1) $273,500,000 for fiscal year 2004;
            (2) $375,000,000 for fiscal year 2005;
            (3) $450,000,000 for fiscal year 2006;
            (4) $500,000,000 for fiscal year 2007; and
            (5) $550,000,000 for fiscal year 2008.

                   TITLE IX--RESEARCH AND DEVELOPMENT

SEC. 901. GOALS.

    (a) In General.--The Secretary shall conduct a balanced set of 
programs of energy research, development, demonstration, and commercial 
application to support Federal energy policy and programs by the 
Department. Such programs shall be focused on--
            (1) increasing the efficiency of all energy intensive 
        sectors through conservation and improved technologies;
            (2) promoting diversity of energy supply;
            (3) decreasing the Nation's dependence on foreign energy 
        supplies;
            (4) improving United States energy security; and
            (5) decreasing the environmental impact of energy-related 
        activities.
    (b) Goals.--The Secretary shall publish measurable 5-year cost and 
performance-based goals with each annual budget submission in at least 
the following areas:
            (1) Energy efficiency for buildings, energy-consuming 
        industries, and vehicles.
            (2) Electric energy generation (including distributed 
        generation), transmission, and storage.
            (3) Renewable energy technologies including wind power, 
        photovoltaics, solar thermal systems, geothermal energy, 
        hydrogen-fueled systems, biomass-based systems, biofuels, and 
        hydropower.
            (4) Fossil energy including power generation, onshore and 
        offshore oil and gas resource recovery, and transportation.
            (5) Nuclear energy including programs for existing and 
        advanced reactors and education of future specialists.
    (c) Public Comment.--The Secretary shall provide mechanisms for 
input on the annually published goals from industry, university, and 
other public sources.
    (d) Effect of Goals.--
            (1) No new authority or requirement.--Nothing in subsection 
        (a) or the annually published goals shall--
                    (A) create any new--
                            (i) authority for any Federal agency; or
                            (ii) requirement for any other person;
                    (B) be used by a Federal agency to support the 
                establishment of regulatory standards or regulatory 
                requirements; or
                    (C) alter the authority of the Secretary to make 
                grants or other awards.
            (2) No limitation.--Nothing in this subsection shall be 
        construed to limit the authority of the Secretary to impose 
        conditions on grants or other awards based on the goals in 
        subsection (a) or any subsequent modification thereto.

SEC. 902. DEFINITIONS.

    For purposes of this title:
            (1) Department.--The term ``Department'' means the 
        Department of Energy.
            (2) Departmental mission.--The term ``departmental 
        mission'' means any of the functions vested in the Secretary of 
        Energy by the Department of Energy Organization Act (42 U.S.C. 
        7101 et seq.) or other law.
            (3) Institution of higher education.--The term 
        ``institution of higher education'' has the meaning given that 
        term in section 101(a) of the Higher Education Act of 1965 (20 
        U.S.C. 1001(a)).
            (4) National laboratory.--The term ``National Laboratory'' 
        means any of the following laboratories owned by the 
        Department:
                    (A) Ames Laboratory.
                    (B) Argonne National Laboratory.
                    (C) Brookhaven National Laboratory.
                    (D) Fermi National Accelerator Laboratory.
                    (E) Idaho National Engineering and Environmental 
                Laboratory.
                    (F) Lawrence Berkeley National Laboratory.
                    (G) Lawrence Livermore National Laboratory.
                    (H) Los Alamos National Laboratory.
                    (I) National Energy Technology Laboratory.
                    (J) National Renewable Energy Laboratory.
                    (K) Oak Ridge National Laboratory.
                    (L) Pacific Northwest National Laboratory.
                    (M) Princeton Plasma Physics Laboratory.
                    (N) Sandia National Laboratories.
                    (O) Stanford Linear Accelerator Center.
                    (P) Thomas Jefferson National Accelerator Facility.
            (5) Nonmilitary energy laboratory.--The term ``nonmilitary 
        energy laboratory'' means the laboratories listed in paragraph 
        (4), except for those listed in subparagraphs (G), (H), and 
        (N).
            (6) Secretary.--The term ``Secretary'' means the Secretary 
        of Energy.
            (7) Single-purpose research facility.--The term ``single-
        purpose research facility'' means any of the primarily single-
        purpose entities owned by the Department or any other 
        organization of the Department designated by the Secretary.

                     Subtitle A--Energy Efficiency

SEC. 904. ENERGY EFFICIENCY.

    (a) In General.--The following sums are authorized to be 
appropriated to the Secretary for energy efficiency and conservation 
research, development, demonstration, and commercial application 
activities, including activities authorized under this subtitle:
            (1) For fiscal year 2004, $616,000,000.
            (2) For fiscal year 2005, $695,000,000.
            (3) For fiscal year 2006, $772,000,000.
            (4) For fiscal year 2007, $865,000,000.
            (5) For fiscal year 2008, $920,000,000.
    (b) Allocations.--From amounts authorized under subsection (a), the 
following sums are authorized:
            (1) For activities under section 905--
                    (A) for fiscal year 2004, $20,000,000;
                    (B) for fiscal year 2005, $30,000,000;
                    (C) for fiscal year 2006, $50,000,000;
                    (D) for fiscal year 2007, $50,000,000; and
                    (E) for fiscal year 2008, $50,000,000.
            (2) For activities under section 907--
                    (A) for fiscal year 2004, $4,000,000; and
                    (B) for each of fiscal years 2005 through 2008, 
                $7,000,000.
            (3) For activities under section 908--
                    (A) for fiscal year 2004, $20,000,000;
                    (B) for fiscal year 2005, $25,000,000;
                    (C) for fiscal year 2006, $30,000,000;
                    (D) for fiscal year 2007, $35,000,000; and
                    (E) for fiscal year 2008, $40,000,000.
            (4) For activities under section 909, $2,000,000 for each 
        of fiscal years 2005 through 2008.
    (c) Extended Authorization.--There are authorized to be 
appropriated to the Secretary for activities under section 905, 
$50,000,000 for each of fiscal years 2009 through 2013.
    (d) Limitation on Use of Funds.--None of the funds authorized to be 
appropriated under this section may be used for--
            (1) the issuance and implementation of energy efficiency 
        regulations;
            (2) the Weatherization Assistance Program under part A of 
        title IV of the Energy Conservation and Production Act (42 
        U.S.C. 6861 et seq.);
            (3) the State Energy Program under part D of title III of 
        the Energy Policy and Conservation Act (42 U.S.C. 6321 et 
        seq.); or
            (4) the Federal Energy Management Program under part 3 of 
        title V of the National Energy Conservation Policy Act (42 
        U.S.C. 8251 et seq.).

SEC. 905. NEXT GENERATION LIGHTING INITIATIVE.

    (a) In General.--The Secretary shall carry out a Next Generation 
Lighting Initiative in accordance with this section to support 
research, development, demonstration, and commercial application 
activities related to advanced solid-state lighting technologies based 
on white light emitting diodes.
    (b) Objectives.--The objectives of the initiative shall be to 
develop advanced solid-state organic and inorganic lighting 
technologies based on white light emitting diodes that, compared to 
incandescent and fluorescent lighting technologies, are longer lasting; 
more energy-efficient; and cost-competitive, and have less 
environmental impact.
    (c) Industry Alliance.--The Secretary shall, not later than 3 
months after the date of enactment of this section, competitively 
select an Industry Alliance to represent participants that are private, 
for-profit firms which, as a group, are broadly representative of 
United States solid state lighting research, development, 
infrastructure, and manufacturing expertise as a whole.
    (d) Research.--
            (1) In general.--The Secretary shall carry out the research 
        activities of the Next Generation Lighting Initiative through 
        competitively awarded grants to researchers, including Industry 
        Alliance participants, National Laboratories, and institutions 
        of higher education.
            (2) Assistance from the industry alliance.--The Secretary 
        shall annually solicit from the Industry Alliance--
                    (A) comments to identify solid-state lighting 
                technology needs;
                    (B) assessment of the progress of the Initiative's 
                research activities; and
                    (C) assistance in annually updating solid-state 
                lighting technology roadmaps.
            (3) Availability of information and roadmaps.--The 
        information and roadmaps under paragraph (2) shall be available 
        to the public and public response shall be solicited by the 
        Secretary.
    (e) Development, Demonstration, and Commercial Application.--The 
Secretary shall carry out a development, demonstration, and commercial 
application program for the Next Generation Lighting Initiative through 
competitively selected awards. The Secretary may give preference to 
participants of the Industry Alliance selected pursuant to subsection 
(c).
    (f) Intellectual Property.--The Secretary may require, in 
accordance with the authorities provided in section 202(a)(ii) of title 
35, United States Code, section 152 of the Atomic Energy Act of 1954 
(42 U.S.C. 2182), and section 9 of the Federal Nonnuclear Energy 
Research and Development Act of 1974 (42 U.S.C. 5908), that--
            (1) for any new invention resulting from activities under 
        subsection (d)--
                    (A) the Industry Alliance members that are active 
                participants in research, development, and 
                demonstration activities related to the advanced solid-
                state lighting technologies that are the subject of 
                this section shall be granted first option to negotiate 
                with the invention owner nonexclusive licenses and 
                royalties for uses of the invention related to solid-
                state lighting on terms that are reasonable under the 
                circumstances; and
                    (B)(i) for 1 year after a United States patent is 
                issued for the invention, the patent holder shall not 
                negotiate any license or royalty with any entity that 
                is not a participant in the Industry Alliance described 
                in subparagraph (A); and
                    (ii) during the year described in clause (i), the 
                invention owner shall negotiate nonexclusive licenses 
                and royalties in good faith with any interested 
                participant in the Industry Alliance described in 
                subparagraph (A); and
            (2) such other terms as the Secretary determines are 
        required to promote accelerated commercialization of inventions 
        made under the Initiative.
    (g) National Academy Review.--The Secretary shall enter into an 
arrangement with the National Academy of Sciences to conduct periodic 
reviews of the Next Generation Lighting Initiative. The Academy shall 
review the research priorities, technical milestones, and plans for 
technology transfer and progress towards achieving them. The Secretary 
shall consider the results of such reviews in evaluating the 
information obtained under subsection (d)(2).
    (h) Definitions.--As used in this section:
            (1) Advanced solid-state lighting.--The term ``advanced 
        solid-state lighting'' means a semiconducting device package 
        and delivery system that produces white light using externally 
        applied voltage.
            (2) Research.--The term ``research'' includes research on 
        the technologies, materials, and manufacturing processes 
        required for white light emitting diodes.
            (3) Industry alliance.--The term ``Industry Alliance'' 
        means an entity selected by the Secretary under subsection (c).
            (4) White light emitting diode.--The term ``white light 
        emitting diode'' means a semiconducting package, utilizing 
        either organic or inorganic materials, that produces white 
        light using externally applied voltage.

SEC. 906. NATIONAL BUILDING PERFORMANCE INITIATIVE.

    (a) Interagency Group.--Not later than 90 days after the date of 
enactment of this Act, the Director of the Office of Science and 
Technology Policy shall establish an interagency group to develop, in 
coordination with the advisory committee established under subsection 
(e), a National Building Performance Initiative (in this 
section referred to as the ``Initiative''). The interagency group shall 
be co-chaired by appropriate officials of the Department and the 
Department of Commerce, who shall jointly arrange for the provision of 
necessary administrative support to the group.
    (b) Integration of Efforts.--The Initiative, working with the 
National Institute of Building Sciences, shall integrate Federal, 
State, and voluntary private sector efforts to reduce the costs of 
construction, operation, maintenance, and renovation of commercial, 
industrial, institutional, and residential buildings.
    (c) Plan.--Not later than 1 year after the date of enactment of 
this Act, the interagency group shall submit to Congress a plan for 
carrying out the appropriate Federal role in the Initiative. The plan 
shall include--
            (1) research, development, demonstration, and commercial 
        application of systems and materials for new construction and 
        retrofit relating to the building envelope and building system 
        components; and
            (2) the collection, analysis, and dissemination of research 
        results and other pertinent information on enhancing building 
        performance to industry, government entities, and the public.
    (d) Department of Energy Role.--Within the Federal portion of the 
Initiative, the Department shall be the lead agency for all aspects of 
building performance related to use and conservation of energy.
    (e) Advisory Committee.--
            (1) Establishment.--The Secretary, in consultation with the 
        Secretary of Commerce and the Director of the Office of Science 
        and Technology Policy, shall establish an advisory committee 
        to--
                    (A) analyze and provide recommendations on 
                potential private sector roles and participation in the 
                Initiative; and
                    (B) review and provide recommendations on the plan 
                described in subsection (c).
            (2) Membership.--Membership of the advisory committee shall 
        include representatives with a broad range of appropriate 
        expertise, including expertise in--
                    (A) building research and technology;
                    (B) architecture, engineering, and building 
                materials and systems; and
                    (C) the residential, commercial, and industrial 
                sectors of the construction industry.
    (f) Construction.--Nothing in this section provides any Federal 
agency with new authority to regulate building performance.

SEC. 907. SECONDARY ELECTRIC VEHICLE BATTERY USE PROGRAM.

    (a) Definitions.--For purposes of this section:
            (1) Associated equipment.--The term ``associated 
        equipment'' means equipment located where the batteries will be 
        used that is necessary to enable the use of the energy stored 
        in the batteries.
            (2) Battery.--The term `battery'' means an energy storage 
        device that previously has been used to provide motive power in 
        a vehicle powered in whole or in part by electricity.
    (b) Program.--The Secretary shall establish and conduct a research, 
development, demonstration, and commercial application program for the 
secondary use of batteries if the Secretary finds that there are 
sufficient numbers of such batteries to support the program. The 
program shall be--
            (1) designed to demonstrate the use of batteries in 
        secondary applications, including utility and commercial power 
        storage and power quality;
            (2) structured to evaluate the performance, including 
        useful service life and costs, of such batteries in field 
        operations, and the necessary supporting infrastructure, 
        including reuse and disposal of batteries; and
            (3) coordinated with ongoing secondary battery use programs 
        at the National Laboratories and in industry.
    (c) Solicitation.--Not later than 180 days after the date of 
enactment of this Act, if the Secretary finds under subsection (b) that 
there are sufficient numbers of batteries to support the program, the 
Secretary shall solicit proposals to demonstrate the secondary use of 
batteries and associated equipment and supporting infrastructure in 
geographic locations throughout the United States. The Secretary may 
make additional solicitations for proposals if the Secretary determines 
that such solicitations are necessary to carry out this section.
    (d) Selection of Proposals.--
            (1) In general.--The Secretary shall, not later than 90 
        days after the closing date established by the Secretary for 
        receipt of proposals under subsection (c), select up to 5 
        proposals which may receive financial assistance under this 
        section, subject to the availability of appropriations.
            (2) Diversity; environmental effect.--In selecting 
        proposals, the Secretary shall consider diversity of battery 
        type, geographic and climatic diversity, and life-cycle 
        environmental effects of the approaches.
            (3) Limitation.--No 1 project selected under this section 
        shall receive more than 25 percent of the funds authorized for 
        the program under this section.
            (4) Optimization of federal resources.--The Secretary shall 
        consider the extent of involvement of State or local government 
        and other persons in each demonstration project to optimize use 
        of Federal resources.
            (5) Other criteria.--The Secretary may consider such other 
        criteria as the Secretary considers appropriate.
    (e) Conditions.--The Secretary shall require that--
            (1) relevant information be provided to the Department, the 
        users of the batteries, the proposers, and the battery 
        manufacturers;
            (2) the proposer provide at least 50 percent of the costs 
        associated with the proposal; and
            (3) the proposer provide to the Secretary such information 
        regarding the disposal of the batteries as the Secretary may 
        require to ensure that the proposer disposes of the batteries 
        in accordance with applicable law.

SEC. 908. ENERGY EFFICIENCY SCIENCE INITIATIVE.

    (a) Establishment.--The Secretary shall establish an Energy 
Efficiency Science Initiative to be managed by the Assistant Secretary 
in the Department with responsibility for energy conservation under 
section 203(a)(9) of the Department of Energy Organization Act (42 
U.S.C. 7133(a)(9)), in consultation with the Director of the Office of 
Science, for grants to be competitively awarded and subject to peer 
review for research relating to energy efficiency.
    (b) Report.--The Secretary shall submit to Congress, along with the 
President's annual budget request under section 1105(a) of title 31, 
United States Code, a report on the activities of the Energy Efficiency 
Science Initiative, including a description of the process used to 
award the funds and an explanation of how the research relates to 
energy efficiency.

SEC. 909. ELECTRIC MOTOR CONTROL TECHNOLOGY.

    The Secretary shall conduct a research, development, demonstration, 
and commercial application program on advanced control devices to 
improve the energy efficiency of electric motors used in heating, 
ventilation, air conditioning, and comparable systems.

SEC. 910. ADVANCED ENERGY TECHNOLOGY TRANSFER CENTERS.

    (a) Grants.--Not later than 18 months after the date of enactment 
of this Act, the Secretary shall make grants to nonprofit institutions, 
State and local governments, or universities (or consortia thereof), to 
establish a geographically dispersed network of Advanced Energy 
Technology Transfer Centers, to be located in areas the Secretary 
determines have the greatest need of the services of such Centers.
    (b) Activities.--
            (1) In general.--Each Center shall operate a program to 
        encourage demonstration and commercial application of advanced 
        energy methods and technologies through education and outreach 
        to building and industrial professionals, and to other 
        individuals and organizations with an interest in efficient 
        energy use.
            (2) Advisory panel.--Each Center shall establish an 
        advisory panel to advise the Center on how best to accomplish 
        the activities under paragraph (1).
    (c) Application.--A person seeking a grant under this section shall 
submit to the Secretary an application in such form and containing such 
information as the Secretary may require. The Secretary may award a 
grant under this section to an entity already in existence if the 
entity is otherwise eligible under this section.
    (d) Selection Criteria.--The Secretary shall award grants under 
this section on the basis of the following criteria, at a minimum:
            (1) The ability of the applicant to carry out the 
        activities in subsection (b).
            (2) The extent to which the applicant will coordinate the 
        activities of the Center with other entities, such as State and 
        local governments, utilities, and educational and research 
        institutions.
    (e) Matching Funds.--The Secretary shall require a non-Federal 
matching requirement of at least 50 percent of the costs of 
establishing and operating each Center.
    (f) Advisory Committee.--The Secretary shall establish an advisory 
committee to advise the Secretary on the establishment of Centers under 
this section. The advisory committee shall be composed of individuals 
with expertise in the area of advanced energy methods and technologies, 
including at least 1 representative from--
            (1) State or local energy offices;
            (2) energy professionals;
            (3) trade or professional associations;
            (4) architects, engineers, or construction professionals;
            (5) manufacturers;
            (6) the research community; and
            (7) nonprofit energy or environmental organizations.
    (g) Definitions.--For purposes of this section:
            (1) Advanced energy methods and technologies.--The term 
        ``advanced energy methods and technologies'' means all methods 
        and technologies that promote energy efficiency and 
        conservation, including distributed generation technologies, 
        and life-cycle analysis of energy use.
            (2) Center.--The term ``Center'' means an Advanced Energy 
        Technology Transfer Center established pursuant to this 
        section.
            (3) Distributed generation.--The term ``distributed 
        generation'' means an electric power generation facility that 
        is designed to serve retail electric consumers at or near the 
        facility site.

       Subtitle B--Distributed Energy and Electric Energy Systems

SEC. 911. DISTRIBUTED ENERGY AND ELECTRIC ENERGY SYSTEMS.

    (a) In General.--The following sums are authorized to be 
appropriated to the Secretary for distributed energy and electric 
energy systems activities, including activities authorized under this 
subtitle:
            (1) For fiscal year 2004, $190,000,000.
            (2) For fiscal year 2005, $200,000,000.
            (3) For fiscal year 2006, $220,000,000.
            (4) For fiscal year 2007, $240,000,000.
            (5) For fiscal year 2008, $260,000,000.
    (b) Micro-Cogeneration Energy Technology.--From amounts authorized 
under subsection (a), $20,000,000 for each of fiscal years 2004 and 
2005 is authorized for activities under section 914.

SEC. 912. HYBRID DISTRIBUTED POWER SYSTEMS.

    (a) Requirement.--Not later than 1 year after the date of enactment 
of this Act, the Secretary shall develop and transmit to Congress a 
strategy for a comprehensive research, development, demonstration, and 
commercial application program to develop hybrid distributed power 
systems that combine--
            (1) 1 or more renewable electric power generation 
        technologies of 10 megawatts or less located near the site of 
        electric energy use; and
            (2) nonintermittent electric power generation technologies 
        suitable for use in a distributed power system.
    (b) Contents.--The strategy shall--
            (1) identify the needs best met with such hybrid 
        distributed power systems and the technological barriers to the 
        use of such systems;
            (2) provide for the development of methods to design, test, 
        integrate into systems, and operate such hybrid distributed 
        power systems;
            (3) include, as appropriate, research, development, 
        demonstration, and commercial application on related 
        technologies needed for the adoption of such hybrid distributed 
        power systems, including energy storage devices and 
        environmental control technologies;
            (4) include research, development, demonstration, and 
        commercial application of interconnection technologies for 
        communications and controls of distributed generation 
        architectures, particularly technologies promoting real-time 
        response to power market information and physical conditions on 
        the electrical grid; and
            (5) describe how activities under the strategy will be 
        integrated with other research, development, demonstration, and 
        commercial application activities supported by the Department 
        related to electric power technologies.

SEC. 913. HIGH POWER DENSITY INDUSTRY PROGRAM.

    The Secretary shall establish a comprehensive research, 
development, demonstration, and commercial application program to 
improve energy efficiency of high power density facilities, including 
data centers, server farms, and telecommunications facilities. Such 
program shall consider technologies that provide significant 
improvement in thermal controls, metering, load management, peak load 
reduction, or the efficient cooling of electronics.

SEC. 914. MICRO-COGENERATION ENERGY TECHNOLOGY.

    The Secretary shall make competitive, merit-based grants to 
consortia for the development of micro-cogeneration energy technology. 
The consortia shall explore--
            (1) the use of small-scale combined heat and power in 
        residential heating appliances; and
            (2) the use of excess power to operate other appliances 
        within the residence and supply excess generated power to the 
        power grid.

SEC. 915. DISTRIBUTED ENERGY TECHNOLOGY DEMONSTRATION PROGRAM.

    The Secretary, within the sums authorized under section 911(a), may 
provide financial assistance to coordinating consortia of 
interdisciplinary participants for demonstrations designed to 
accelerate the utilization of distributed energy technologies, such as 
fuel cells, microturbines, reciprocating engines, thermally activated 
technologies, and combined heat and power systems, in highly energy 
intensive commercial applications.

SEC. 916. RECIPROCATING POWER.

    The Secretary shall conduct a research, development, and 
demonstration program regarding fuel system optimization and emissions 
reduction after-treatment technologies for industrial reciprocating 
engines. Such after-treatment technologies shall use processes that 
reduce emissions by recirculating exhaust gases and shall be designed 
to be retrofitted to any new or existing diesel or natural gas engine 
used for power generation, peaking power generation, combined heat and 
power, or compression.

                      Subtitle C--Renewable Energy

SEC. 918. RENEWABLE ENERGY.

    (a) In General.--The following sums are authorized to be 
appropriated to the Secretary for renewable energy research, 
development, demonstration, and commercial application activities, 
including activities authorized under this subtitle:
            (1) For fiscal year 2004, $480,000,000.
            (2) For fiscal year 2005, $550,000,000.
            (3) For fiscal year 2006, $610,000,000.
            (4) For fiscal year 2007, $659,000,000.
            (5) For fiscal year 2008, $710,000,000.
    (b) Bioenergy.--From the amounts authorized under subsection (a), 
the following sums are authorized to be appropriated to carry out 
section 919:
            (1) For fiscal year 2004, $135,425,000.
            (2) For fiscal year 2005, $155,600,000.
            (3) For fiscal year 2006, $167,650,000.
            (4) For fiscal year 2007, $180,000,000.
            (5) For fiscal year 2008, $192,000,000.
    (c) Concentrating Solar Power.--From amounts authorized under 
subsection (a), the following sums are authorized to be appropriated to 
carry out section 920:
            (1) For fiscal year 2004, $20,000,000.
            (2) For fiscal year 2005, $40,000,000.
            (3) For each of fiscal years 2006, 2007 and 2008, 
        $50,000,000.
    (d) Public Buildings.--From the amounts authorized under subsection 
(a), $30,000,000 for each of the fiscal years 2004 through 2008 are 
authorized to be appropriated to carry out section 922.
    (e) Limits on Use of Funds.--
            (1) No funds for renewable support and implementation.--
        None of the funds authorized to be appropriated under this 
        section may be used for Renewable Support and Implementation.
            (2) Grants.--Of the funds authorized under subsection (b), 
        not less than $5,000,000 for each fiscal year shall be made 
        available for grants to Historically Black Colleges and 
        Universities, Tribal Colleges, and Hispanic-Serving 
        Institutions.
            (3) Regional field verification program.--Of the funds 
        authorized under subsection (a), not less than $4,000,000 for 
        each fiscal year shall be made available for the Regional Field 
        Verification Program of the Department.
            (4) Off-stream pumped storage hydropower.--Of the funds 
        authorized under subsection (a), such sums as may be necessary 
        shall be made available for demonstration projects of off-
        stream pumped storage hydropower.
    (f) Consultation.--In carrying out this subtitle, the Secretary, in 
consultation with the Secretary of Agriculture, shall demonstrate the 
use of advanced wind power technology, including combined use with coal 
gasification; biomass; geothermal energy systems; and other renewable 
energy technologies to assist in delivering electricity to rural and 
remote locations.

SEC. 919. BIOENERGY PROGRAMS.

    (a) Definitions.--For the purposes of this section:
            (1) The term ``agricultural byproducts'' includes waste 
        products, including poultry fat and poultry waste.
            (2) The term ``cellulosic biomass'' means any portion of a 
        crop containing lignocellulose or hemicellulose, including 
        barley grain, grapeseed, forest thinnings, rice bran, rice 
        hulls, rice straw, soybean matter, and sugarcane bagasse, or 
        any crop grown specifically for the purpose of producing 
        cellulosic feedstocks.
    (b) Program.--The Secretary shall conduct a program of research, 
development, demonstration, and commercial application for bioenergy, 
including--
            (1) biopower energy systems;
            (2) biofuels;
            (3) bio-based products;
            (4) integrated biorefineries that may produce biopower, 
        biofuels, and bio-based products;
            (5) cross-cutting research and development in feedstocks 
        and enzymes; and
            (6) economic analysis.
    (c) Biofuels and Bio-Based Products.--The goals of the biofuels and 
bio-based products programs shall be to develop, in partnership with 
industry--
            (1) advanced biochemical and thermochemical conversion 
        technologies capable of making biofuels that are price-
        competitive with gasoline or diesel in either internal 
        combustion engines or fuel cell-powered vehicles, and bio-based 
        products from a variety of feedstocks, including grains, 
        cellulosic biomass, and other agricultural byproducts; and
            (2) advanced biotechnology processes capable of making 
        biofuels and bio-based products with emphasis on development of 
        biorefinery technologies using enzyme-based processing systems.

SEC. 920. CONCENTRATING SOLAR POWER RESEARCH AND DEVELOPMENT PROGRAM.

    (a) In General.--The Secretary shall conduct a program of research 
and development to evaluate the potential of concentrating solar power 
for hydrogen production, including cogeneration approaches for both 
hydrogen and electricity. Such program shall take advantage of existing 
facilities to the extent possible and shall include--
            (1) development of optimized technologies that are common 
        to both electricity and hydrogen production;
            (2) evaluation of thermochemical cycles for hydrogen 
        production at the temperatures attainable with concentrating 
        solar power;
            (3) evaluation of materials issues for the thermochemical 
        cycles described in paragraph (2);
            (4) system architectures and economics studies; and
            (5) coordination with activities in the Advanced Reactor 
        Hydrogen Cogeneration Project on high temperature materials, 
        thermochemical cycles, and economic issues.
    (b) Assessment.--In carrying out the program under this section, 
the Secretary shall--
            (1) assess conflicting guidance on the economic potential 
        of concentrating solar power for electricity production 
        received from the National Research Council report entitled 
        ``Renewable Power Pathways: A Review of the U.S. Department of 
        Energy's Renewable Energy Programs'' in 2000 and subsequent 
        Department-funded reviews of that report; and
            (2) provide an assessment of the potential impact of the 
        technology before, or concurrent with, submission of the fiscal 
        year 2006 budget.
    (c) Report.--Not later than 5 years after the date of enactment of 
this Act, the Secretary shall provide a report to Congress on the 
economic and technical potential for electricity or hydrogen 
production, with or without cogeneration, with concentrating solar 
power, including the economic and technical feasibility of potential 
construction of a pilot demonstration facility suitable for commercial 
production of electricity or hydrogen from concentrating solar power.

SEC. 921. MISCELLANEOUS PROJECTS.

    The Secretary may conduct research, development, demonstration, and 
commercial application programs for--
            (1) ocean energy, including wave energy; and
            (2) the combined use of renewable energy technologies with 
        one another and with other energy technologies, including the 
        combined use of wind power and coal gasification technologies.

SEC. 922. RENEWABLE ENERGY IN PUBLIC BUILDINGS.

    (a) Demonstration and Technology Transfer Program.--The Secretary 
shall establish a program for the demonstration of innovative 
technologies for solar and other renewable energy sources in buildings 
owned or operated by a State or local government, and for the 
dissemination of information resulting from such demonstration to 
interested parties.
    (b) Limit on Federal Funding.--The Secretary shall provide under 
this section no more than 40 percent of the incremental costs of the 
solar or other renewable energy source project funded.
    (c) Requirement.--As part of the application for awards under this 
section, the Secretary shall require all applicants--
            (1) to demonstrate a continuing commitment to the use of 
        solar and other renewable energy sources in buildings they own 
        or operate; and
            (2) to state how they expect any award to further their 
        transition to the significant use of renewable energy.

SEC. 923. STUDY OF MARINE RENEWABLE ENERGY OPTIONS.

    (a) In General.--The Secretary shall enter into an arrangement with 
the National Academy of Sciences to conduct a study on--
            (1) the feasibility of various methods of renewable 
        generation of energy from the ocean, including energy from 
        waves, tides, currents, and thermal gradients; and
            (2) the research, development, demonstration, and 
        commercial application activities required to make marine 
        renewable energy generation competitive with other forms of 
        electricity generation.
    (b) Transmittal.--Not later than 1 year after the date of enactment 
of this Act, the Secretary shall transmit the study to Congress along 
with the Secretary's recommendations for implementing the results of 
the study.

                       Subtitle D--Nuclear Energy

SEC. 924. NUCLEAR ENERGY.

    (a) Core Programs.--The following sums are authorized to be 
appropriated to the Secretary for nuclear energy research, development, 
demonstration, and commercial application activities, including 
activities authorized under this subtitle, other than those described 
in subsection (b):
            (1) For fiscal year 2004, $273,000,000.
            (2) For fiscal year 2005, $355,000,000.
            (3) For fiscal year 2006, $430,000,000.
            (4) For fiscal year 2007, $455,000,000.
            (5) For fiscal year 2008, $545,000,000.
    (b) Nuclear Infrastructure Support.--The following sums are 
authorized to be appropriated to the Secretary for activities under 
section 925(e):
            (1) For fiscal year 2004, $125,000,000.
            (2) For fiscal year 2005, $130,000,000.
            (3) For fiscal year 2006, $135,000,000.
            (4) For fiscal year 2007, $140,000,000.
            (5) For fiscal year 2008, $145,000,000.
    (c) Allocations.--From amounts authorized under subsection (a), the 
following sums are authorized:
            (1) For activities under section 926--
                    (A) for fiscal year 2004, $140,000,000;
                    (B) for fiscal year 2005, $145,000,000;
                    (C) for fiscal year 2006, $150,000,000;
                    (D) for fiscal year 2007, $155,000,000; and
                    (E) for fiscal year 2008, $275,000,000.
            (2) For activities under section 927--
                    (A) for fiscal year 2004, $35,200,000;
                    (B) for fiscal year 2005, $44,350,000;
                    (C) for fiscal year 2006, $49,200,000;
                    (D) for fiscal year 2007, $54,950,000; and
                    (E) for fiscal year 2008, $60,000,000.
            (3) For activities under section 929, for each of fiscal 
        years 2004 through 2008, $6,000,000.
    (d) Limitation on Use of Funds.--None of the funds authorized under 
this section may be used for decommissioning the Fast Flux Test 
Facility.

SEC. 925. NUCLEAR ENERGY RESEARCH AND DEVELOPMENT PROGRAMS.

    (a) Nuclear Energy Research Initiative.--The Secretary shall carry 
out a Nuclear Energy Research Initiative for research and development 
related to nuclear energy.
    (b) Nuclear Energy Plant Optimization Program.--The Secretary shall 
carry out a Nuclear Energy Plant Optimization Program to support 
research and development activities addressing reliability, 
availability, productivity, component aging, safety, and security of 
existing nuclear power plants.
    (c) Nuclear Power 2010 Program.--The Secretary shall carry out a 
Nuclear Power 2010 Program, consistent with recommendations in the 
October 2001 report entitled ``A Roadmap to Deploy New Nuclear Power 
Plants in the United States by 2010'' issued by the Nuclear Energy 
Research Advisory Committee of the Department. Whatever type of reactor 
is chosen for the hydrogen cogeneration project under subtitle C of 
title VI, that type shall not be addressed in the Program under this 
section. The Program shall include--
            (1) support for first-of-a-kind engineering design and 
        certification expenses of advanced nuclear power plant designs, 
        which offer improved safety and economics over current 
        conventional plants and the promise of near-term to medium-term 
        commercial deployment;
            (2) action by the Secretary to encourage domestic power 
        companies to install new nuclear plant capacity as soon as 
        possible;
            (3) utilization of the expertise and capabilities of 
        industry, universities, and National Laboratories in evaluation 
of advanced nuclear fuel cycles and fuels testing;
            (4) consideration of proliferation-resistant passively-
        safe, small reactors suitable for long-term electricity 
        production without refueling and suitable for use in remote 
        installations;
            (5) participation of international collaborators in 
        research, development, design, and deployment efforts as 
        appropriate and consistent with United States interests in 
        nonproliferation of nuclear weapons;
            (6) encouragement for university and industry 
        participation; and
            (7) selection of projects such as to strengthen the 
        competitive position of the domestic nuclear power industrial 
        infrastructure.
    (d) Generation IV Nuclear Energy Systems Initiative.--The Secretary 
shall carry out a Generation IV Nuclear Energy Systems Initiative to 
develop an overall technology plan and to support research and 
development necessary to make an informed technical decision about the 
most promising candidates for eventual commercial application. The 
Initiative shall examine advanced proliferation-resistant and passively 
safe reactor designs, including designs that--
            (1) are economically competitive with other electric power 
        generation plants;
            (2) have higher efficiency, lower cost, and improved safety 
        compared to reactors in operation on the date of enactment of 
        this Act;
            (3) use fuels that are proliferation-resistant and have 
        substantially reduced production of high-level waste per unit 
        of output; and
            (4) use improved instrumentation.
    (e) Nuclear Infrastructure Support.--The Secretary shall develop 
and implement a strategy for the facilities of the Office of Nuclear 
Energy, Science, and Technology and shall transmit a report containing 
the strategy along with the President's budget request to Congress for 
fiscal year 2006.

SEC. 926. ADVANCED FUEL CYCLE INITIATIVE.

    (a) In General.--The Secretary, through the Director of the Office 
of Nuclear Energy, Science, and Technology, shall conduct an advanced 
fuel recycling technology research and development program to evaluate 
proliferation-resistant fuel recycling and transmutation technologies 
that minimize environmental or public health and safety impacts as an 
alternative to aqueous reprocessing technologies deployed as of the 
date of enactment of this Act in support of evaluation of alternative 
national strategies for spent nuclear fuel and the Generation IV 
advanced reactor concepts, subject to annual review by the Secretary's 
Nuclear Energy Research Advisory Committee or other independent entity, 
as appropriate. Opportunities to enhance progress of the program 
through international cooperation should be sought.
    (b) Reports.--The Secretary shall report on the activities of the 
advanced fuel recycling technology research and development program as 
part of the Department's annual budget submission.

SEC. 927. UNIVERSITY NUCLEAR SCIENCE AND ENGINEERING SUPPORT.

    (a) Establishment.--The Secretary shall support a program to invest 
in human resources and infrastructure in the nuclear sciences and 
engineering and related fields (including health physics and nuclear 
and radiochemistry), consistent with departmental missions related to 
civilian nuclear research and development.
    (b) Duties.--In carrying out the program under this section, the 
Secretary shall establish fellowship and faculty assistance programs, 
as well as provide support for fundamental research and encourage 
collaborative research among industry, National Laboratories, and 
universities through the Nuclear Energy Research Initiative. The 
Secretary is encouraged to support activities addressing the entire 
fuel cycle through involvement of both the Office of Nuclear Energy, 
Science, and Technology and the Office of Civilian Radioactive Waste 
Management. The Secretary shall support communication and outreach 
related to nuclear science, engineering, and nuclear waste management, 
consistent with interests of the United States in nonproliferation of 
nuclear weapons capabilities.
    (c) Strengthening University Research and Training Reactors and 
Associated Infrastructure.--Activities under this section may include--
            (1) converting research and training reactors currently 
        using high-enrichment fuels to low-enrichment fuels, upgrading 
        operational instrumentation, and sharing of reactors among 
        institutions of higher education;
            (2) providing technical assistance, in collaboration with 
        the United States nuclear industry, in relicensing and 
        upgrading research and training reactors as part of a student 
        training program; and
            (3) providing funding, through the Innovations in Nuclear 
        Infrastructure and Education Program, for reactor improvements 
        as part of a focused effort that emphasizes research, training, 
        and education.
    (d) University National Laboratory Interactions.--The Secretary 
shall develop sabbatical fellowship and visiting scientist programs to 
encourage sharing of personnel between National Laboratories and 
universities.
    (e) Operating and Maintenance Costs.--Funding for a research 
project provided under this section may be used to offset a portion of 
the operating and maintenance costs of a research and training reactor 
at an institution of higher education used in the research project.

SEC. 928. SECURITY OF REACTOR DESIGNS.

    The Secretary, through the Director of the Office of Nuclear 
Energy, Science, and Technology, shall conduct a research and 
development program on cost-effective technologies for increasing the 
safety of reactor designs from natural phenomena and the security of 
reactor designs from deliberate attacks.

SEC. 929. ALTERNATIVES TO INDUSTRIAL RADIOACTIVE SOURCES.

    (a) Study.--The Secretary shall conduct a study and provide a 
report to Congress not later than August 1, 2004. The study shall--
            (1) survey industrial applications of large radioactive 
        sources, including well-logging sources;
            (2) review current domestic and international Department, 
        Department of Defense, Department of State, and commercial 
        programs to manage and dispose of radioactive sources;
            (3) discuss disposal options and practices for currently 
        deployed or future sources and, if deficiencies are noted in 
        existing disposal options or practices for either deployed or 
        future sources, recommend options to remedy deficiencies; and
            (4) develop a program plan for research and development to 
        develop alternatives to large industrial sources that reduce 
        safety, environmental, or proliferation risks to either workers 
        using the sources or the public.
    (b) Program.--The Secretary shall establish a research and 
development program to implement the program plan developed under 
subsection (a)(4). The program shall include miniaturized particle 
accelerators for well-logging or other industrial applications and 
portable accelerators for production of short-lived radioactive 
materials at an industrial site.

SEC. 930. GEOLOGICAL ISOLATION OF SPENT FUEL.

    The Secretary shall conduct a study to determine the feasibility of 
deep borehole disposal of spent nuclear fuel and high-level radioactive 
waste. The study shall emphasize geological, chemical, and hydrological 
characterization of, and design of engineered structures for, deep 
borehole environments. Not later than 1 year after the date of 
enactment of this Act, the Secretary shall transmit the study to 
Congress.

                       Subtitle E--Fossil Energy

                       PART I--RESEARCH PROGRAMS

SEC. 931. FOSSIL ENERGY.

    (a) In General.--The following sums are authorized to be 
appropriated to the Secretary for fossil energy research, development, 
demonstration, and commercial application activities, including 
activities authorized under this part:
            (1) For fiscal year 2004, $530,000,000.
            (2) For fiscal year 2005, $556,000,000.
            (3) For fiscal year 2006, $583,000,000.
            (4) For fiscal year 2007, $611,000,000.
            (5) For fiscal year 2008, $626,000,000.
    (b) Allocations.--From amounts authorized under subsection (a), the 
following sums are authorized:
            (1) For activities under section 932(b)(2), $28,000,000 for 
        each of the fiscal years 2004 through 2008.
            (2) For activities under section 934--
                    (A) for fiscal year 2004, $12,000,000;
                    (B) for fiscal year 2005, $15,000,000; and
                    (C) for each of fiscal years 2006 through 2008, 
                $20,000,000.
            (3) For activities under section 935--
                    (A) for fiscal year 2004, $259,000,000;
                    (B) for fiscal year 2005, $272,000,000;
                    (C) for fiscal year 2006, $285,000,000;
                    (D) for fiscal year 2007, $298,000,000; and
                    (E) for fiscal year 2008, $308,000,000.
            (4) For the Office of Arctic Energy under section 3197 of 
        the Floyd D. Spence National Defense Authorization Act for 
        Fiscal Year 2001 (42 U.S.C. 7144d), $25,000,000 for each of 
        fiscal years 2004 through 2008.
            (5) For activities under section 933, $4,000,000 for fiscal 
        year 2004 and $2,000,000 for each of fiscal years 2005 through 
        2008.
    (c) Extended Authorization.--There are authorized to be 
appropriated to the Secretary for the Office of Arctic Energy under 
section 3197 of the Floyd D. Spence National Defense Authorization Act 
for Fiscal Year 2001 (42 U.S.C. 7144d), $25,000,000 for each of fiscal 
years 2009 through 2012.
    (d) Limits on Use of Funds.--
            (1) No funds for certain programs.--None of the funds 
        authorized under this section may be used for Fossil Energy 
        Environmental Restoration or Import/Export Authorization.
            (2) Institutions of higher education.--Of the funds 
        authorized under subsection (b)(2), not less than 20 percent of 
        the funds appropriated for each fiscal year shall be dedicated 
        to research and development carried out at institutions of 
        higher education.

SEC. 932. OIL AND GAS RESEARCH PROGRAMS.

    (a) Oil and Gas Research.--The Secretary shall conduct a program of 
research, development, demonstration, and commercial application on oil 
and gas, including--
            (1) exploration and production;
            (2) gas hydrates;
            (3) reservoir life and extension;
            (4) transportation and distribution infrastructure;
            (5) ultraclean fuels;
            (6) heavy oil and oil shale;
            (7) related environmental research; and
            (8) compressed natural gas marine transport.
    (b) Fuel Cells.--
            (1) In general.--The Secretary shall conduct a program of 
        research, development, demonstration, and commercial 
        application on fuel cells for low-cost, high-efficiency, fuel-
        flexible, modular power systems.
            (2) Improved manufacturing production and processes.--The 
        demonstrations under paragraph (1) shall include fuel cell 
        technology for commercial, residential, and transportation 
        applications, and distributed generation systems, utilizing 
        improved manufacturing production and processes.
    (c) Natural Gas and Oil Deposits Report.--Not later than 2 years 
after the date of enactment of this Act, and every 2 years thereafter, 
the Secretary of the Interior, in consultation with other appropriate 
Federal agencies, shall transmit a report to Congress of the latest 
estimates of natural gas and oil reserves, reserves growth, and 
undiscovered resources in Federal and State waters off the coast of 
Louisiana and Texas.
    (d) Integrated Clean Power and Energy Research.--
            (1) National center or consortium of excellence.--The 
        Secretary shall establish a national center or consortium of 
        excellence in clean energy and power generation, utilizing the 
        resources of the existing Clean Power and Energy Research 
        Consortium, to address the Nation's critical dependence on 
        energy and the need to reduce emissions.
            (2) Program.--The center or consortium shall conduct a 
        program of research, development, demonstration, and commercial 
        application on integrating the following focus areas:
                    (A) Efficiency and reliability of gas turbines for 
                power generation.
                    (B) Reduction in emissions from power generation.
                    (C) Promotion of energy conservation issues.
                    (D) Effectively utilizing alternative fuels and 
                renewable energy.
                    (E) Development of advanced materials technology 
                for oil and gas exploration and utilization in harsh 
                environments.
                    (F) Education on energy and power generation 
                issues.

SEC. 933. TECHNOLOGY TRANSFER.

    The Secretary shall establish a competitive program to award a 
contract to a nonprofit entity for the purpose of transferring 
technologies developed with public funds. The entity selected under 
this section shall have experience in offshore oil and gas technology 
research management, in the transfer of technologies developed with 
public funds to the offshore and maritime industry, and in management 
of an offshore and maritime industry consortium. The program consortium 
selected under section 942 shall not be eligible for selection under 
this section. When appropriate, the Secretary shall consider utilizing 
the entity selected under this section when implementing the activities 
authorized by section 975.

SEC. 934. RESEARCH AND DEVELOPMENT FOR COAL MINING TECHNOLOGIES.

    (a) Establishment.--The Secretary shall carry out a program of 
research and development on coal mining technologies. The Secretary 
shall cooperate with appropriate Federal agencies, coal producers, 
trade associations, equipment manufacturers, institutions of higher 
education with mining engineering departments, and other relevant 
entities.
    (b) Program.--The research and development activities carried out 
under this section shall--
            (1) be guided by the mining research and development 
        priorities identified by the Mining Industry of the Future 
        Program and in the recommendations from relevant reports of the 
        National Academy of Sciences on mining technologies;
            (2) include activities exploring minimization of 
        contaminants in mined coal that contribute to environmental 
        concerns including development and demonstration of 
        electromagnetic wave imaging ahead of mining operations;
            (3) develop and demonstrate electromagnetic wave imaging 
        and radar techniques for horizontal drilling in coal beds in 
        order to increase methane recovery efficiency, prevent spoilage 
        of domestic coal reserves, and minimize water disposal 
        associated with methane extraction; and
            (4) expand mining research capabilities at institutions of 
        higher education.

SEC. 935. COAL AND RELATED TECHNOLOGIES PROGRAM.

    (a) In General.--In addition to the programs authorized under title 
IV, the Secretary shall conduct a program of technology research, 
development, demonstration, and commercial application for coal and 
power systems, including programs to facilitate production and 
generation of coal-based power through--
            (1) innovations for existing plants;
            (2) integrated gasification combined cycle;
            (3) advanced combustion systems;
            (4) turbines for synthesis gas derived from coal;
            (5) carbon capture and sequestration research and 
        development;
            (6) coal-derived transportation fuels and chemicals;
            (7) solid fuels and feedstocks;
            (8) advanced coal-related research;
            (9) advanced separation technologies; and
            (10) a joint project for permeability enhancement in coals 
        for natural gas production and carbon dioxide sequestration.
    (b) Cost and Performance Goals.--In carrying out programs 
authorized by this section, the Secretary shall identify cost and 
performance goals for coal-based technologies that would permit the 
continued cost-competitive use of coal for electricity generation, as 
chemical feedstocks, and as transportation fuel in 2007, 2015, and the 
years after 2020. In establishing such cost and performance goals, the 
Secretary shall--
            (1) consider activities and studies undertaken to date by 
        industry in cooperation with the Department in support of such 
        assessment;
            (2) consult with interested entities, including coal 
        producers, industries using coal, organizations to promote coal 
        and advanced coal technologies, environmental organizations, 
        and organizations representing workers;
            (3) not later than 120 days after the date of enactment of 
        this Act, publish in the Federal Register proposed draft cost 
        and performance goals for public comments; and
            (4) not later than 180 days after the date of enactment of 
        this Act and every 4 years thereafter, submit to Congress a 
        report describing final cost and performance goals for such 
        technologies that includes a list of technical milestones as 
        well as an explanation of how programs authorized in this 
        section will not duplicate the activities authorized under the 
        Clean Coal Power Initiative authorized under subtitle A of 
        title IV.

SEC. 936. COMPLEX WELL TECHNOLOGY TESTING FACILITY.

    The Secretary, in coordination with industry leaders in extended 
research drilling technology, shall establish a Complex Well Technology 
Testing Facility at the Rocky Mountain Oilfield Testing Center to 
increase the range of extended drilling technologies.

SEC. 937. FISCHER-TROPSCH DIESEL FUEL LOAN GUARANTEE PROGRAM.

    (a) Definition of Fischer-Tropsch Diesel Fuel.--In this section, 
the term ``Fischer-Tropsch diesel fuel'' means diesel fuel that--
            (1) contains less than 10 parts per million sulfur; and
            (2) is produced through the Fischer-Tropsch liquification 
        process from coal or waste from coal that was mined in the 
        United States.
    (b) Loan Guarantees.--
            (1) Establishment of program.--The Secretary of Energy 
        shall establish a program to provide guarantees of loans by 
        private lending institutions for the construction of facilities 
        for the production of Fischer-Tropsch diesel fuel and 
        commercial byproducts of that production.
            (2) Requirements.--The Secretary may provide a loan 
        guarantee under paragraph (1) if--
                    (A) without a loan guarantee, credit is not 
                available to the applicant under reasonable terms or 
                conditions sufficient to finance the construction of a 
                facility described in paragraph (1);
                    (B) the prospective earning power of the applicant 
                and the character and value of the security pledged 
                provide a reasonable assurance of repayment of the loan 
                to be guaranteed in accordance with the terms of the 
                loan; and
                    (C) the loan bears interest at a rate determined by 
                the Secretary to be reasonable, taking into account the 
                current average yield on outstanding obligations of the 
                United States with remaining periods of maturity 
                comparable to the maturity of the loan.
            (3) Criteria.--In selecting recipients of loan guarantees 
        from among applicants, the Secretary shall give preference to 
        proposals that--
                    (A) meet all Federal and State permitting 
                requirements;
                    (B) are most likely to be successful; and
                    (C) are located in local markets that have the 
                greatest need for the facility because of--
                            (i) the availability of domestic coal or 
                        coal waste for conversion; or
                            (ii) a projected high level of demand for 
                        Fischer-Tropsch diesel fuel or other commercial 
                        byproducts of the facility.
            (4) Maturity.--A loan guaranteed under paragraph (1) shall 
        have a maturity of not more than 25 years.
            (5) Terms and conditions.--The loan agreement for a loan 
        guaranteed under paragraph (1) shall provide that no provision 
        of the loan may be amended or waived without the consent of the 
        Secretary.
            (6) Guarantee fee.--A recipient of a loan guarantee under 
        paragraph (1) shall pay the Secretary an amount to be 
        determined by the Secretary to be sufficient to cover the 
        administrative costs of the Secretary relating to the loan 
        guarantee.
            (7) Full faith and credit.--
                    (A) In general.--The full faith and credit of the 
                United States is pledged to payment of loan guarantees 
                made under this section.
                    (B) Conclusive evidence.--Any loan guarantee made 
                by the Secretary under this section shall be conclusive 
                evidence of the eligibility of the loan for the 
                guarantee with respect to principal and interest.
                    (C) Validity.--The validity of a loan guarantee 
                shall be incontestable in the hands of a holder of the 
                guaranteed loan.
            (8) Reports.--Until each guaranteed loan under this section 
        is repaid in full, the Secretary shall annually submit to 
Congress a report on the activities of the Secretary under this 
section.
            (9) Authorization of appropriations.--There are authorized 
        to be appropriated such sums as are necessary to carry out this 
        section.
            (10) Termination of authority.--The authority of the 
        Secretary to issue a new loan guarantee under paragraph (1) 
        terminates on the date that is 5 years after the date of 
        enactment of this Act.

   PART II--ULTRA-DEEPWATER AND UNCONVENTIONAL NATURAL GAS AND OTHER 
                          PETROLEUM RESOURCES

SEC. 941. PROGRAM AUTHORITY.

    (a) In General.--The Secretary shall carry out a program under this 
part of research, development, demonstration, and commercial 
application of technologies for ultra-deepwater and unconventional 
natural gas and other petroleum resource exploration and production, 
including addressing the technology challenges for small producers, 
safe operations, and environmental mitigation (including reduction of 
greenhouse gas emissions and sequestration of carbon).
    (b) Program Elements.--The program under this part shall address 
the following areas, including improving safety and minimizing 
environmental impacts of activities within each area:
            (1) Ultra-deepwater technology, including drilling to 
        formations in the Outer Continental Shelf to depths greater 
        than 15,000 feet.
            (2) Ultra-deepwater architecture.
            (3) Unconventional natural gas and other petroleum resource 
        exploration and production technology, including the technology 
        challenges of small producers.
    (c) Limitation on Location of Field Activities.--Field activities 
under the program under this part shall be carried out only--
            (1) in--
                    (A) areas in the territorial waters of the United 
                States not under any Outer Continental Shelf moratorium 
                as of September 30, 2002;
                    (B) areas onshore in the United States on public 
                land administered by the Secretary of the Interior 
                available for oil and gas leasing, where consistent 
                with applicable law and land use plans; and
                    (C) areas onshore in the United States on State or 
                private land, subject to applicable law; and
            (2) with the approval of the appropriate Federal or State 
        land management agency or private land owner.
    (d) Research at National Energy Technology Laboratory.--The 
Secretary, through the National Energy Technology Laboratory, shall 
carry out research complementary to research under subsection (b).
    (e) Consultation With Secretary of the Interior.--In carrying out 
this part, the Secretary shall consult regularly with the Secretary of 
the Interior.

SEC. 942. ULTRA-DEEPWATER PROGRAM.

    (a) In General.--The Secretary shall carry out the activities under 
section 941(a), to maximize the use of the ultra-deepwater natural gas 
and other petroleum resources of the United States by increasing the 
supply of such resources, through reducing the cost and increasing the 
efficiency of exploration for and production of such resources, while 
improving safety and minimizing environmental impacts.
    (b) Role of the Secretary.--The Secretary shall have ultimate 
responsibility for, and oversight of, all aspects of the program under 
this section.
    (c) Role of the Program Consortium.--
            (1) In general.--The Secretary may contract with a 
        consortium to--
                    (A) manage awards pursuant to subsection (f)(4);
                    (B) make recommendations to the Secretary for 
                project solicitations;
                    (C) disburse funds awarded under subsection (f) as 
                directed by the Secretary in accordance with the annual 
                plan under subsection (e); and
                    (D) carry out other activities assigned to the 
                program consortium by this section.
            (2) Limitation.--The Secretary may not assign any 
        activities to the program consortium except as specifically 
        authorized under this section.
            (3) Conflict of interest.--
                    (A) Procedures.--The Secretary shall establish 
                procedures--
                            (i) to ensure that each board member, 
                        officer, or employee of the program consortium 
                        who is in a decision-making capacity under 
                        subsection (f)(3) or (4) shall disclose to the 
                        Secretary any financial interests in, or 
                        financial relationships with, applicants for or 
                        recipients of awards under this section, 
                        including those of his or her spouse or minor 
                        child, unless such relationships or interests 
                        would be considered to be remote or 
                        inconsequential; and
                            (ii) to require any board member, officer, 
                        or employee with a financial relationship or 
                        interest disclosed under clause (i) to recuse 
                        himself or herself from any review under 
                        subsection (f)(3) or oversight under subsection 
                        (f)(4) with respect to such applicant or 
                        recipient.
                    (B) Failure to comply.--The Secretary may 
                disqualify an application or revoke an award under this 
                section if a board member, officer, or employee has 
                failed to comply with procedures required under 
                subparagraph (A)(ii).
    (d) Selection of the Program Consortium.--
            (1) In general.--The Secretary shall select the program 
        consortium through an open, competitive process.
            (2) Members.--The program consortium may include 
        corporations, trade associations, institutions of higher 
        education, National Laboratories, or other research 
        institutions. After submitting a proposal under paragraph (4), 
        the program consortium may not add members without the consent 
        of the Secretary.
            (3) Tax status.--The program consortium shall be an entity 
        that is exempt from tax under section 501(c)(3) of the Internal 
        Revenue Code of 1986.
            (4) Schedule.--Not later than 180 days after the date of 
        enactment of this Act, the Secretary shall solicit proposals 
        from eligible consortia to perform the duties in subsection 
        (c)(1), which shall be submitted not later than 360 days after 
        the date of enactment of this Act. The Secretary shall select 
        the program consortium not later than 18 months after such date 
        of enactment.
            (5) Application.--Applicants shall submit a proposal 
        including such information as the Secretary may require. At a 
        minimum, each proposal shall--
                    (A) list all members of the consortium;
                    (B) fully describe the structure of the consortium, 
                including any provisions relating to intellectual 
                property; and
                    (C) describe how the applicant would carry out the 
                activities of the program consortium under this 
                section.
            (6) Eligibility.--To be eligible to be selected as the 
        program consortium, an applicant must be an entity whose 
        members collectively have demonstrated capabilities in planning 
and managing research, development, demonstration, and commercial 
application programs in natural gas or other petroleum exploration or 
production.
            (7) Criterion.--The Secretary shall consider the amount of 
        the fee an applicant proposes to receive under subsection (g) 
        in selecting a consortium under this section.
    (e) Annual Plan.--
            (1) In general.--The program under this section shall be 
        carried out pursuant to an annual plan prepared by the 
        Secretary in accordance with paragraph (2).
            (2) Development.--
                    (A) Solicitation of recommendations.--Before 
                drafting an annual plan under this subsection, the 
                Secretary shall solicit specific written 
                recommendations from the program consortium for each 
                element to be addressed in the plan, including those 
                described in paragraph (4). The Secretary may request 
                that the program consortium submit its recommendations 
                in the form of a draft annual plan.
                    (B) Submission of recommendations; other comment.--
                The Secretary shall submit the recommendations of the 
                program consortium under subparagraph (A) to the Ultra-
                Deepwater Advisory Committee established under section 
                945(a) for review, and such Advisory Committee shall 
                provide to the Secretary written comments by a date 
                determined by the Secretary. The Secretary may also 
                solicit comments from any other experts.
                    (C) Consultation.--The Secretary shall consult 
                regularly with the program consortium throughout the 
                preparation of the annual plan.
            (3) Publication.--The Secretary shall transmit to Congress 
        and publish in the Federal Register the annual plan, along with 
        any written comments received under paragraph (2)(A) and (B).
            (4) Contents.--The annual plan shall describe the ongoing 
        and prospective activities of the program under this section 
        and shall include--
                    (A) a list of any solicitations for awards that the 
                Secretary plans to issue to carry out research, 
                development, demonstration, or commercial application 
                activities, including the topics for such work, who 
                would be eligible to apply, selection criteria, and the 
                duration of awards; and
                    (B) a description of the activities expected of the 
                program consortium to carry out subsection (f)(4).
            (5) Estimates of increased royalty receipts.--The 
        Secretary, in consultation with the Secretary of the Interior, 
        shall provide an annual report to Congress with the President's 
        budget on the estimated cumulative increase in Federal royalty 
        receipts (if any) resulting from the implementation of this 
        part. The initial report under this paragraph shall be 
        submitted in the first President's budget following the 
        completion of the first annual plan required under this 
        subsection.
    (f) Awards.--
            (1) In general.--The Secretary shall make awards to carry 
        out research, development, demonstration, and commercial 
        application activities under the program under this section. 
        The program consortium shall not be eligible to receive such 
        awards, but members of the program consortium may receive such 
        awards.
            (2) Proposals.--The Secretary shall solicit proposals for 
        awards under this subsection in such manner and at such time as 
        the Secretary may prescribe, in consultation with the program 
        consortium.
            (3) Review.--The Secretary shall make awards under this 
        subsection through a competitive process, which shall include a 
        review by individuals selected by the Secretary. Such 
        individuals shall include, for each application, Federal 
        officials, the program consortium, and non-Federal experts who 
        are not board members, officers, or employees of the program 
        consortium or of a member of the program consortium.
            (4) Oversight.--
                    (A) In general.--The program consortium shall 
                oversee the implementation of awards under this 
                subsection, consistent with the annual plan under 
                subsection (e), including disbursing funds and 
                monitoring activities carried out under such awards for 
                compliance with the terms and conditions of the awards.
                    (B) Effect.--Nothing in subparagraph (A) shall 
                limit the authority or responsibility of the Secretary 
                to oversee awards, or limit the authority of the 
                Secretary to review or revoke awards.
                    (C) Provision of information.--The Secretary shall 
                provide to the program consortium the information 
                necessary for the program consortium to carry out its 
                responsibilities under this paragraph.
    (g) Administrative Costs.--
            (1) In general.--To compensate the program consortium for 
        carrying out its activities under this section, the Secretary 
        shall provide to the program consortium funds sufficient to 
        administer the program. This compensation may include a 
        management fee consistent with Department of Energy contracting 
        practices and procedures.
            (2) Advance.--The Secretary shall advance funds to the 
        program consortium upon selection of the consortium, which 
        shall be deducted from amounts to be provided under paragraph 
        (1).
    (h) Audit.--The Secretary shall retain an independent, commercial 
auditor to determine the extent to which funds provided to the program 
consortium, and funds provided under awards made under subsection (f), 
have been expended in a manner consistent with the purposes and 
requirements of this part. The auditor shall transmit a report annually 
to the Secretary, who shall transmit the report to Congress, along with 
a plan to remedy any deficiencies cited in the report.

SEC. 943. UNCONVENTIONAL NATURAL GAS AND OTHER PETROLEUM RESOURCES 
              PROGRAM.

    (a) In General.--The Secretary shall carry out activities under 
subsection 941(b)(3), to maximize the use of the onshore unconventional 
natural gas and other petroleum resources of the United States, by 
increasing the supply of such resources, through reducing the cost and 
increasing the efficiency of exploration for and production of such 
resources, while improving safety and minimizing environmental impacts.
    (b) Awards.--
            (1) In general.--The Secretary shall carry out this section 
        through awards to research consortia made through an open, 
        competitive process. As a condition of award of funds, 
        qualified research consortia shall--
                    (A) demonstrate capability and experience in 
                unconventional onshore natural gas or other petroleum 
                research and development;
                    (B) provide a research plan that demonstrates how 
                additional natural gas or oil production will be 
                achieved; and
                    (C) at the request of the Secretary, provide 
                technical advice to the Secretary for the purposes of 
                developing the annual plan required under subsection 
                (e).
            (2) Production potential.--The Secretary shall seek to 
        ensure that the number and types of awards made under this 
        subsection have reasonable potential to lead to additional oil 
        and natural gas production on Federal lands.
            (3) Schedule.--To carry out this subsection, not later than 
        180 days after the date of enactment of this Act, the Secretary 
        shall solicit proposals from research consortia, which shall be 
        submitted not later than 360 days after the date of enactment 
        of this Act. The Secretary shall select the first group of 
        research consortia to receive awards under this subsection not 
        later than 18 months after such date of enactment.
    (c) Audit.--The Secretary shall retain an independent, commercial 
auditor to determine the extent to which funds provided under awards 
made under this section have been expended in a manner consistent with 
the purposes and requirements of this part. The auditor shall transmit 
a report annually to the Secretary, who shall transmit the report to 
Congress, along with a plan to remedy any deficiencies cited in the 
report.
    (d) Focus Areas for Awards.--
            (1) Unconventional resources.--Awards from allocations 
        under section 949(d)(2) shall focus on areas including advanced 
        coalbed methane, deep drilling, natural gas production from 
        tight sands, natural gas production from gas shales, stranded 
        gas, innovative exploration and production techniques, enhanced 
        recovery techniques, and environmental mitigation of 
        unconventional natural gas and other petroleum resources 
        exploration and production.
            (2) Small producers.--Awards from allocations under section 
        949(d)(3) shall be made to consortia consisting of small 
        producers or organized primarily for the benefit of small 
        producers, and shall focus on areas including complex geology 
        involving rapid changes in the type and quality of the oil and 
        gas reservoirs across the reservoir; low reservoir pressure; 
        unconventional natural gas reservoirs in coalbeds, deep 
        reservoirs, tight sands, or shales; and unconventional oil 
        reservoirs in tar sands and oil shales.
    (e) Annual Plan.--
            (1) In general.--The program under this section shall be 
        carried out pursuant to an annual plan prepared by the 
        Secretary in accordance with paragraph (2).
            (2) Development.--
                    (A) Written recommendations.--Before drafting an 
                annual plan under this subsection, the Secretary shall 
                solicit specific written recommendations from the 
                research consortia receiving awards under subsection 
                (b) and the Unconventional Resources Technology 
                Advisory Committee for each element to be addressed in 
                the plan, including those described in subparagraph 
                (D).
                    (B) Consultation.--The Secretary shall consult 
                regularly with the research consortia throughout the 
                preparation of the annual plan.
                    (C) Publication.--The Secretary shall transmit to 
                Congress and publish in the Federal Register the annual 
                plan, along with any written comments received under 
                subparagraph (A).
                    (D) Contents.--The annual plan shall describe the 
                ongoing and prospective activities under this section 
                and shall include a list of any solicitations for 
                awards that the Secretary plans to issue to carry out 
                research, development, demonstration, or commercial 
                application activities, including the topics for such 
                work, who would be eligible to apply, selection 
                criteria, and the duration of awards.
            (3) Estimates of increased royalty receipts.--The 
        Secretary, in consultation with the Secretary of the Interior, 
        shall provide an annual report to Congress with the President's 
        budget on the estimated cumulative increase in Federal royalty 
        receipts (if any) resulting from the implementation of this 
        part. The initial report under this paragraph shall be 
        submitted in the first President's budget following the 
        completion of the first annual plan required under this 
        subsection.
    (f) Activities by the United States Geological Survey.--The 
Secretary of the Interior, through the United States Geological Survey, 
shall, where appropriate, carry out programs of long-term research to 
complement the programs under this section.

SEC. 944. ADDITIONAL REQUIREMENTS FOR AWARDS.

    (a) Demonstration Projects.--An application for an award under this 
part for a demonstration project shall describe with specificity the 
intended commercial use of the technology to be demonstrated.
    (b) Flexibility in Locating Demonstration Projects.--Subject to the 
limitation in section 941(c), a demonstration project under this part 
relating to an ultra-deepwater technology or an ultra-deepwater 
architecture may be conducted in deepwater depths.
    (c) Intellectual Property Agreements.--If an award under this part 
is made to a consortium (other than the program consortium), the 
consortium shall provide to the Secretary a signed contract agreed to 
by all members of the consortium describing the rights of each member 
to intellectual property used or developed under the award.
    (d) Technology Transfer.--2.5 percent of the amount of each award 
made under this part shall be designated for technology transfer and 
outreach activities under this title.
    (e) Cost Sharing Reduction for Independent Producers.--In applying 
the cost sharing requirements under section 972 to an award under this 
part the Secretary may reduce or eliminate the non-Federal requirement 
if the Secretary determines that the reduction is necessary and 
appropriate considering the technological risks involved in the 
project.

SEC. 945. ADVISORY COMMITTEES.

    (a) Ultra-Deepwater Advisory Committee.--
            (1) Establishment.--Not later than 270 days after the date 
        of enactment of this Act, the Secretary shall establish an 
        advisory committee to be known as the Ultra-Deepwater Advisory 
        Committee.
            (2) Membership.--The advisory committee under this 
        subsection shall be composed of members appointed by the 
        Secretary including--
                    (A) individuals with extensive research experience 
                or operational knowledge of offshore natural gas and 
                other petroleum exploration and production;
                    (B) individuals broadly representative of the 
                affected interests in ultra-deepwater natural gas and 
                other petroleum production, including interests in 
                environmental protection and safe operations;
                    (C) no individuals who are Federal employees; and
                    (D) no individuals who are board members, officers, 
                or employees of the program consortium.
            (3) Duties.--The advisory committee under this subsection 
        shall--
                    (A) advise the Secretary on the development and 
                implementation of programs under this part related to 
                ultra-deepwater natural gas and other petroleum 
                resources; and
                    (B) carry out section 942(e)(2)(B).
            (4) Compensation.--A member of the advisory committee under 
        this subsection shall serve without compensation but shall 
        receive travel expenses in accordance with applicable 
        provisions under subchapter I of chapter 57 of title 5, United 
        States Code.
    (b) Unconventional Resources Technology Advisory Committee.--
            (1) Establishment.--Not later than 270 days after the date 
        of enactment of this Act, the Secretary shall establish an 
        advisory committee to be known as the Unconventional Resources 
        Technology Advisory Committee.
            (2) Membership.--The advisory committee under this 
        subsection shall be composed of members appointed by the 
        Secretary including--
                    (A) a majority of members who are employees or 
                representatives of independent producers of natural gas 
                and other petroleum, including small producers;
                    (B) individuals with extensive research experience 
                or operational knowledge of unconventional natural gas 
                and other petroleum resource exploration and 
                production;
                    (C) individuals broadly representative of the 
                affected interests in unconventional natural gas and 
                other petroleum resource exploration and production, 
                including interests in environmental protection and 
                safe operations; and
                    (D) no individuals who are Federal employees.
            (3) Duties.--The advisory committee under this subsection 
        shall advise the Secretary on the development and 
        implementation of activities under this part related to 
        unconventional natural gas and other petroleum resources.
            (4) Compensation.--A member of the advisory committee under 
        this subsection shall serve without compensation but shall 
        receive travel expenses in accordance with applicable 
        provisions under subchapter I of chapter 57 of title 5, United 
        States Code.
    (c) Prohibition.--No advisory committee established under this 
section shall make recommendations on funding awards to particular 
consortia or other entities, or for specific projects.

SEC. 946. LIMITS ON PARTICIPATION.

    An entity shall be eligible to receive an award under this part 
only if the Secretary finds--
            (1) that the entity's participation in the program under 
        this part would be in the economic interest of the United 
        States; and
            (2) that either--
                    (A) the entity is a United States-owned entity 
                organized under the laws of the United States; or
                    (B) the entity is organized under the laws of the 
                United States and has a parent entity organized under 
                the laws of a country that affords--
                            (i) to United States-owned entities 
                        opportunities, comparable to those afforded to 
                        any other entity, to participate in any 
                        cooperative research venture similar to those 
                        authorized under this part;
                            (ii) to United States-owned entities local 
                        investment opportunities comparable to those 
                        afforded to any other entity; and
                            (iii) adequate and effective protection for 
                        the intellectual property rights of United 
                        States-owned entities.

SEC. 947. SUNSET.

    The authority provided by this part shall terminate on September 
30, 2011.

SEC. 948. DEFINITIONS.

    In this part:
            (1) Deepwater.--The term ``deepwater'' means a water depth 
        that is greater than 200 but less than 1,500 meters.
            (2) Independent producer of oil or gas.--
                    (A) In general.--The term ``independent producer of 
                oil or gas'' means any person that produces oil or gas 
                other than a person to whom subsection (c) of section 
                613A of the Internal Revenue Code of 1986 does not 
                apply by reason of paragraph (2) (relating to certain 
                retailers) or paragraph (4) (relating to certain 
                refiners) of section 613A(d) of such Code.
                    (B) Rules for applying paragraphs (2) and (4) of 
                section 613a(d).--For purposes of subparagraph (A), 
                paragraphs (2) and (4) of section 613A(d) of the 
                Internal Revenue Code of 1986 shall be applied by 
                substituting ``calendar year'' for ``taxable year'' 
                each place it appears in such paragraphs.
            (3) Program consortium.--The term ``program consortium'' 
        means the consortium selected under section 942(d).
            (4) Remote or inconsequential.--The term ``remote or 
        inconsequential'' has the meaning given that term in 
        regulations issued by the Office of Government Ethics under 
        section 208(b)(2) of title 18, United States Code.
            (5) Small producer.--The term ``small producer'' means an 
        entity organized under the laws of the United States with 
        production levels of less than 1,000 barrels per day of oil 
        equivalent.
            (6) Ultra-deepwater.--The term ``ultra-deepwater'' means a 
        water depth that is equal to or greater than 1,500 meters.
            (7) Ultra-deepwater architecture.--The term ``ultra-
        deepwater architecture'' means the integration of technologies 
        for the exploration for, or production of, natural gas or other 
        petroleum resources located at ultra-deepwater depths.
            (8) Ultra-deepwater technology.--The term ``ultra-deepwater 
        technology'' means a discrete technology that is specially 
        suited to address 1 or more challenges associated with the 
        exploration for, or production of, natural gas or other 
        petroleum resources located at ultra-deepwater depths.
            (9) Unconventional natural gas and other petroleum 
        resource.--The term ``unconventional natural gas and other 
        petroleum resource'' means natural gas and other petroleum 
        resource located onshore in an economically inaccessible 
        geological formation, including resources of small producers.

SEC. 949. FUNDING.

    (a) Authorization of Appropriations.--There are authorized to be 
appropriated to the Secretary, to be deposited in the Fund, such sums 
as are necessary for each of the fiscal years 2004 through 2013, to 
remain available until expended.
    (b) Obligational Authority.--Monies in the Fund shall be available 
to the Secretary for obligation under this part without fiscal year 
limitation, to remain available until expended.
    (c) Allocation.--Amounts obligated from the Fund under this section 
in each fiscal year shall be allocated as follows:
            (1) 50 percent shall be for activities under section 942.
            (2) 35 percent shall be for activities under section 
        943(d)(1).
            (3) 10 percent shall be for activities under section 
        943(d)(2).
            (4) 5 percent shall be for research under section 941(d).
    (d) Fund.--There is hereby established in the Treasury of the 
United States a separate fund to be known as the ``Ultra-Deepwater and 
Unconventional Natural Gas and Other Petroleum Research Fund''.

                          Subtitle F--Science

SEC. 951. SCIENCE.

    (a) In General.--The following sums are authorized to be 
appropriated to the Secretary for research, development, demonstration, 
and commercial application activities of the Office of Science, 
including activities authorized under this subtitle, including the 
amounts authorized under the amendment made by section 958(c)(2)(C), 
and including basic energy sciences, advanced scientific computing 
research, biological and environmental research, fusion energy 
sciences, high energy physics, nuclear physics, and research analysis 
and infrastructure support:
            (1) For fiscal year 2004, $3,785,000,000.
            (2) For fiscal year 2005, $4,153,000,000.
            (3) For fiscal year 2006, $4,618,000,000.
            (4) For fiscal year 2007, $5,310,000,000.
            (5) For fiscal year 2008, $5,800,000,000.
    (b) Allocations.--From amounts authorized under subsection (a), the 
following sums are authorized:
            (1) For activities of the Fusion Energy Sciences Program, 
        including activities under sections 952 and 953--
                    (A) for fiscal year 2004, $335,000,000;
                    (B) for fiscal year 2005, $349,000,000;
                    (C) for fiscal year 2006, $362,000,000;
                    (D) for fiscal year 2007, $377,000,000; and
                    (E) for fiscal year 2008, $393,000,000.
            (2) For the Spallation Neutron Source--
                    (A) for construction in fiscal year 2004, 
                $124,600,000;
                    (B) for construction in fiscal year 2005, 
                $79,800,000;
                    (C) for completion of construction in fiscal year 
                2006, $41,100,000; and
                    (D) for other project costs (including research and 
                development necessary to complete the project, 
                preoperations costs, and capital equipment related to 
                construction), $103,279,000 for the period encompassing 
                fiscal years 2003 through 2006, to remain available 
                until expended through September 30, 2006.
            (3) For Catalysis Research activities under section 956--
                    (A) for fiscal year 2004, $33,000,000;
                    (B) for fiscal year 2005, $35,000,000;
                    (C) for fiscal year 2006, $36,500,000;
                    (D) for fiscal year 2007, $38,200,000; and
                    (E) for fiscal year 2008, $40,100,000.
            (4) For Nanoscale Science and Engineering Research 
        activities under section 957--
                    (A) for fiscal year 2004, $270,000,000;
                    (B) for fiscal year 2005, $292,000,000;
                    (C) for fiscal year 2006, $322,000,000;
                    (D) for fiscal year 2007, $355,000,000; and
                    (E) for fiscal year 2008, $390,000,000.
            (5) For activities under section 957(c), from the amounts 
        authorized under paragraph (4) of this subsection--
                    (A) for fiscal year 2004, $135,000,000;
                    (B) for fiscal year 2005, $150,000,000;
                    (C) for fiscal year 2006, $120,000,000;
                    (D) for fiscal year 2007, $100,000,000; and
                    (E) for fiscal year 2008, $125,000,000.
            (6) For activities in the Genomes to Life Program under 
        section 959--
                    (A) for fiscal year 2004, $100,000,000; and
                    (B) for fiscal years 2005 through 2008, such sums 
                as may be necessary.
            (7) For activities in the Energy-Water Supply Program under 
        section 961, $30,000,000 for each of fiscal years 2004 through 
        2008.
    (c) ITER Construction.--In addition to the funds authorized under 
subsection (b)(1), such sums as may be necessary for costs associated 
with ITER construction, consistent with limitations under section 952.

SEC. 952. UNITED STATES PARTICIPATION IN ITER.

    (a) In General.--The United States may participate in ITER in 
accordance with the provisions of this section.
    (b) Agreement.--
            (1) In general.--The Secretary is authorized to negotiate 
        an agreement for United States participation in ITER.
            (2) Contents.--Any agreement for United States 
        participation in ITER shall, at a minimum--
                    (A) clearly define the United States financial 
                contribution to construction and operating costs;
                    (B) ensure that the share of ITER's high-technology 
                components manufactured in the United States is at 
                least proportionate to the United States financial 
                contribution to ITER;
                    (C) ensure that the United States will not be 
                financially responsible for cost overruns in components 
                manufactured in other ITER participating countries;
                    (D) guarantee the United States full access to all 
                data generated by ITER;
                    (E) enable United States researchers to propose and 
                carry out an equitable share of the experiments at 
                ITER;
                    (F) provide the United States with a role in all 
                collective decisionmaking related to ITER; and
                    (G) describe the process for discontinuing or 
                decommissioning ITER and any United States role in 
                those processes.
    (c) Plan.--The Secretary, in consultation with the Fusion Energy 
Sciences Advisory Committee, shall develop a plan for the participation 
of United States scientists in ITER that shall include the United 
States research agenda for ITER, methods to evaluate whether ITER is 
promoting progress toward making fusion a reliable and affordable 
source of power, and a description of how work at ITER will relate to 
other elements of the United States fusion program. The Secretary shall 
request a review of the plan by the National Academy of Sciences.
    (d) Limitation.--No funds shall be expended for the construction of 
ITER until the Secretary has transmitted to Congress--
            (1) the agreement negotiated pursuant to subsection (b) and 
        120 days have elapsed since that transmission;
            (2) a report describing the management structure of ITER 
        and providing a fixed dollar estimate of the cost of United 
        States participation in the construction of ITER, and 120 days 
        have elapsed since that transmission;
            (3) a report describing how United States participation in 
        ITER will be funded without reducing funding for other programs 
        in the Office of Science, including other fusion programs, and 
        60 days have elapsed since that transmission; and
            (4) the plan required by subsection (c) (but not the 
        National Academy of Sciences review of that plan), and 60 days 
have elapsed since that transmission.
    (e) Alternative to ITER.--If at any time during the negotiations on 
ITER, the Secretary determines that construction and operation of ITER 
is unlikely or infeasible, the Secretary shall send to Congress, as 
part of the budget request for the following year, a plan for 
implementing the domestic burning plasma experiment known as FIRE, 
including costs and schedules for such a plan. The Secretary shall 
refine such plan in full consultation with the Fusion Energy Sciences 
Advisory Committee and shall also transmit such plan to the National 
Academy of Sciences for review.
    (f) Definitions.--In this section and sections 951(b)(1) and (c):
            (1) Construction.--The term ``construction'' means the 
        physical construction of the ITER facility, and the physical 
        construction, purchase, or manufacture of equipment or 
        components that are specifically designed for the ITER 
        facility, but does not mean the design of the facility, 
        equipment, or components.
            (2) FIRE.--The term ``FIRE'' means the Fusion Ignition 
        Research Experiment, the fusion research experiment for which 
        design work has been supported by the Department as a possible 
        alternative burning plasma experiment in the event that ITER 
        fails to move forward.
            (3) ITER.--The term ``ITER'' means the international 
        burning plasma fusion research project in which the President 
        announced United States participation on January 30, 2003.

SEC. 953. PLAN FOR FUSION ENERGY SCIENCES PROGRAM.

    (a) Declaration of Policy.--It shall be the policy of the United 
States to conduct research, development, demonstration, and commercial 
application to provide for the scientific, engineering, and commercial 
infrastructure necessary to ensure that the United States is 
competitive with other nations in providing fusion energy for its own 
needs and the needs of other nations, including by demonstrating 
electric power or hydrogen production for the United States energy grid 
utilizing fusion energy at the earliest date possible.
    (b) Planning.--
            (1) In general.--Not later than 180 days after the date of 
        enactment of this Act, the Secretary shall present to Congress 
        a plan, with proposed cost estimates, budgets, and potential 
        international partners, for the implementation of the policy 
        described in subsection (a). The plan shall ensure that--
                    (A) existing fusion research facilities are more 
                fully utilized;
                    (B) fusion science, technology, theory, advanced 
                computation, modeling, and simulation are strengthened;
                    (C) new magnetic and inertial fusion research 
                facilities are selected based on scientific innovation, 
                cost effectiveness, and their potential to advance the 
                goal of practical fusion energy at the earliest date 
                possible, and those that are selected are funded at a 
                cost-effective rate;
                    (D) communication of scientific results and methods 
                between the fusion energy science community and the 
                broader scientific and technology communities is 
                improved;
                    (E) inertial confinement fusion facilities are 
                utilized to the extent practicable for the purpose of 
                inertial fusion energy research and development; and
                    (F) attractive alternative inertial and magnetic 
                fusion energy approaches are more fully explored.
            (2) Costs and schedules.--Such plan shall also address the 
        status of and, to the degree possible, costs and schedules 
        for--
                    (A) in coordination with the program under section 
                960, the design and implementation of international or 
                national facilities for the testing of fusion 
                materials; and
                    (B) the design and implementation of international 
                or national facilities for the testing and development 
                of key fusion technologies.

SEC. 954. SPALLATION NEUTRON SOURCE.

    (a) Definition.--For the purposes of this section, the term 
``Spallation Neutron Source'' means Department Project 99-E-334, Oak 
Ridge National Laboratory, Oak Ridge, Tennessee.
    (b) Report.--The Secretary shall report on the Spallation Neutron 
Source as part of the Department's annual budget submission, including 
a description of the achievement of milestones, a comparison of actual 
costs to estimated costs, and any changes in estimated project costs or 
schedule.
    (c) Limitations.--The total amount obligated by the Department, 
including prior year appropriations, for the Spallation Neutron Source 
shall not exceed--
            (1) $1,192,700,000 for costs of construction;
            (2) $219,000,000 for other project costs; and
            (3) $1,411,700,000 for total project cost.

SEC. 955. SUPPORT FOR SCIENCE AND ENERGY FACILITIES AND INFRASTRUCTURE.

    (a) Facility and Infrastructure Policy.--The Secretary shall 
develop and implement a strategy for facilities and infrastructure 
supported primarily from the Office of Science, the Office of Energy 
Efficiency and Renewable Energy, the Office of Fossil Energy, or the 
Office of Nuclear Energy, Science, and Technology Programs at all 
National Laboratories and single-purpose research facilities. Such 
strategy shall provide cost-effective means for--
            (1) maintaining existing facilities and infrastructure, as 
        needed;
            (2) closing unneeded facilities;
            (3) making facility modifications; and
            (4) building new facilities.
    (b) Report.--
            (1) In general.--The Secretary shall prepare and transmit, 
        along with the President's budget request to Congress for 
        fiscal year 2006, a report containing the strategy developed 
        under subsection (a).
            (2) Contents.--For each National Laboratory and single-
        purpose research facility, for the facilities primarily used 
        for science and energy research, such report shall contain--
                    (A) the current priority list of proposed 
                facilities and infrastructure projects, including cost 
                and schedule requirements;
                    (B) a current 10-year plan that demonstrates the 
                reconfiguration of its facilities and infrastructure to 
                meet its missions and to address its long-term 
                operational costs and return on investment;
                    (C) the total current budget for all facilities and 
                infrastructure funding; and
                    (D) the current status of each facility and 
                infrastructure project compared to the original 
                baseline cost, schedule, and scope.

SEC. 956. CATALYSIS RESEARCH AND DEVELOPMENT PROGRAM.

    (a) Establishment.--The Secretary, through the Office of Science, 
shall support a program of research and development in catalysis 
science consistent with the Department's statutory authorities related 
to research and development. The program shall include efforts to--
            (1) enable catalyst design using combinations of 
        experimental and mechanistic methodologies coupled with 
computational modeling of catalytic reactions at the molecular level;
            (2) develop techniques for high throughput synthesis, 
        assay, and characterization at nanometer and subnanometer 
        scales in situ under actual operating conditions;
            (3) synthesize catalysts with specific site architectures;
            (4) conduct research on the use of precious metals for 
        catalysis; and
            (5) translate molecular understanding to the design of 
        catalytic compounds.
    (b) Duties of the Office of Science.--In carrying out the program 
under this section, the Director of the Office of Science shall--
            (1) support both individual investigators and 
        multidisciplinary teams of investigators to pioneer new 
        approaches in catalytic design;
            (2) develop, plan, construct, acquire, share, or operate 
        special equipment or facilities for the use of investigators in 
        collaboration with national user facilities such as nanoscience 
        and engineering centers;
            (3) support technology transfer activities to benefit 
        industry and other users of catalysis science and engineering; 
        and
            (4) coordinate research and development activities with 
        industry and other Federal agencies.
    (c) Triennial Assessment.--The National Academy of Sciences shall 
review the catalysis program every 3 years to report on gains made in 
the fundamental science of catalysis and its progress towards 
developing new fuels for energy production and material fabrication 
processes.

SEC. 957. NANOSCALE SCIENCE AND ENGINEERING RESEARCH, DEVELOPMENT, 
              DEMONSTRATION, AND COMMERCIAL APPLICATION.

    (a) Establishment.--The Secretary, acting through the Office of 
Science, shall support a program of research, development, 
demonstration, and commercial application in nanoscience and 
nanoengineering. The program shall include efforts to further the 
understanding of the chemistry, physics, materials science, and 
engineering of phenomena on the scale of nanometers and to apply that 
knowledge to the Department's mission areas.
    (b) Duties of the Office of Science.--In carrying out the program 
under this section, the Office of Science shall--
            (1) support both individual investigators and teams of 
        investigators, including multidisciplinary teams;
            (2) carry out activities under subsection (c);
            (3) support technology transfer activities to benefit 
        industry and other users of nanoscience and nanoengineering;
            (4) coordinate research and development activities with 
        other Department programs, industry, and other Federal 
        agencies;
            (5) ensure that societal and ethical concerns will be 
        addressed as the technology is developed by--
                    (A) establishing a research program to identify 
                societal and ethical concerns related to 
                nanotechnology, and ensuring that the results of such 
                research are widely disseminated; and
                    (B) integrating, insofar as possible, research on 
                societal and ethical concerns with nanotechnology 
                research and development; and
            (6) ensure that the potential of nanotechnology to produce 
        or facilitate the production of clean, inexpensive energy is 
        realized by supporting nanotechnology energy applications 
        research and development.
    (c) Nanoscience and Nanoengineering Research Centers and Major 
Instrumentation.--
            (1) In general.--The Secretary shall carry out projects to 
        develop, plan, construct, acquire, operate, or support special 
        equipment, instrumentation, or facilities for investigators 
        conducting research and development in nanoscience and 
        nanoengineering.
            (2) Activities.--Projects under paragraph (1) may include 
        the measurement of properties at the scale of nanometers, 
        manipulation at such scales, and the integration of 
        technologies based on nanoscience or nanoengineering into bulk 
        materials or other technologies.
            (3) Facilities.--Facilities under paragraph (1) may include 
        electron microcharacterization facilities, microlithography 
        facilities, scanning probe facilities, and related 
        instrumentation.
            (4) Collaborations.--The Secretary shall encourage 
        collaborations among Department programs, institutions of 
        higher education, laboratories, and industry at facilities 
        under this subsection.

SEC. 958. ADVANCED SCIENTIFIC COMPUTING FOR ENERGY MISSIONS.

    (a) In General.--The Secretary, acting through the Office of 
Science, shall support a program to advance the Nation's computing 
capability across a diverse set of grand challenge, computationally 
based, science problems related to departmental missions.
    (b) Duties of the Office of Science.--In carrying out the program 
under this section, the Office of Science shall--
            (1) advance basic science through computation by developing 
        software to solve grand challenge science problems on new 
        generations of computing platforms in collaboration with other 
        Department program offices;
            (2) enhance the foundations for scientific computing by 
        developing the basic mathematical and computing systems 
        software needed to take full advantage of the computing 
        capabilities of computers with peak speeds of 100 teraflops or 
        more, some of which may be unique to the scientific problem of 
        interest;
            (3) enhance national collaboratory and networking 
        capabilities by developing software to integrate geographically 
        separated researchers into effective research teams and to 
        facilitate access to and movement and analysis of large 
        (petabyte) data sets;
            (4) develop and maintain a robust scientific computing 
        hardware infrastructure to ensure that the computing resources 
        needed to address departmental missions are available; and
            (5) explore new computing approaches and technologies that 
        promise to advance scientific computing, including developments 
        in quantum computing.
    (c) High-Performance Computing Act of 1991 Amendments.--The High-
Performance Computing Act of 1991 is amended--
            (1) in section 4 (15 U.S.C. 5503)--
                    (A) in paragraph (3) by striking ``means'' and 
                inserting ``and networking and information technology 
                mean'', and by striking ``(including vector 
                supercomputers and large scale parallel systems)''; and
                    (B) in paragraph (4), by striking ``packet 
                switched''; and
            (2) in section 203 (15 U.S.C. 5523)--
                    (A) in subsection (a), by striking all after ``As 
                part of the'' and inserting ``Networking and 
                Information Technology Research and Development 
                Program, the Secretary of Energy shall conduct basic 
                and applied research in networking and information 
                technology, with emphasis on supporting fundamental 
                research in the physical sciences and engineering, and 
                energy applications; providing supercomputer access and 
advanced communication capabilities and facilities to scientific 
researchers; and developing tools for distributed scientific 
collaboration.'';
                    (B) in subsection (b), by striking ``Program'' and 
                inserting ``Networking and Information Technology 
                Research and Development Program''; and
                    (C) by amending subsection (e) to read as follows:
    ``(e) Authorization of Appropriations.--There are authorized to be 
appropriated to the Secretary of Energy to carry out the Networking and 
Information Technology Research and Development Program such sums as 
may be necessary for fiscal years 2004 through 2008.''.
    (d) Coordination.--The Secretary shall ensure that the program 
under this section is integrated and consistent with--
            (1) the Advanced Simulation and Computing Program, formerly 
        known as the Accelerated Strategic Computing Initiative, of the 
        National Nuclear Security Administration; and
            (2) other national efforts related to advanced scientific 
        computing for science and engineering.
    (e) Report.--
            (1) In general.--Before undertaking any new initiative to 
        develop any new advanced architecture for high-speed computing, 
        the Secretary, through the Director of the Office of Science, 
        shall transmit a report to Congress describing--
                    (A) the expected duration and cost of the 
                initiative;
                    (B) the technical milestones the initiative is 
                designed to achieve;
                    (C) how institutions of higher education and 
                private firms will participate in the initiative; and
                    (D) why the goals of the initiative could not be 
                achieved through existing programs.
            (2) Limitation.--No funds may be expended on any initiative 
        described in paragraph (1) until 30 days after the report 
        required by that paragraph is transmitted to Congress.

SEC. 959. GENOMES TO LIFE PROGRAM.

    (a) Program.--
            (1) Establishment.--The Secretary shall establish a 
        research, development, and demonstration program in genetics, 
        protein science, and computational biology to support the 
        energy, national security, and environmental mission of the 
        Department.
            (2) Grants.--The program shall support individual 
        investigators and multidisciplinary teams of investigators 
        through competitive, merit-reviewed grants.
            (3) Consultation.--In carrying out the program, the 
        Secretary shall consult with other Federal agencies that 
        conduct genetic and protein research.
    (b) Goals.--The program shall have the goal of developing 
technologies and methods based on the biological functions of genomes, 
microbes, and plants that--
            (1) can facilitate the production of fuels, including 
        hydrogen;
            (2) convert carbon dioxide to organic carbon;
            (3) improve national security and combat terrorism;
            (4) detoxify soils and water at Department facilities 
        contaminated with heavy metals and radiological materials; and
            (5) address other Department missions as identified by the 
        Secretary.
    (c) Plan.--
            (1) Development of plan.--Not later than 1 year after the 
        date of enactment of this Act, the Secretary shall prepare and 
        transmit to Congress a research plan describing how the program 
        authorized pursuant to this section will be undertaken to 
        accomplish the program goals established in subsection (b).
            (2) Review of plan.--The Secretary shall contract with the 
        National Academy of Sciences to review the research plan 
        developed under this subsection. The Secretary shall transmit 
        the review to Congress not later than 18 months after 
        transmittal of the research plan under paragraph (1), along 
        with the Secretary's response to the recommendations contained 
        in the review.
    (d) Genomes to Life User Facilities and Ancillary Equipment.--
            (1) In general.--Within the funds authorized to be 
        appropriated pursuant to this Act, the amounts specified under 
        section 951(b)(6) shall, subject to appropriations, be 
        available for projects to develop, plan, construct, acquire, or 
        operate special equipment, instrumentation, or facilities for 
        investigators conducting research, development, demonstration, 
        and commercial application in systems biology and proteomics 
        and associated biological disciplines.
            (2) Facilities.--Facilities under paragraph (1) may include 
        facilities, equipment, or instrumentation for--
                    (A) the production and characterization of 
                proteins;
                    (B) whole proteome analysis;
                    (C) characterization and imaging of molecular 
                machines; and
                    (D) analysis and modeling of cellular systems.
            (3) Collaborations.--The Secretary shall encourage 
        collaborations among universities, laboratories, and industry 
        at facilities under this subsection. All facilities under this 
        subsection shall have a specific mission of technology transfer 
        to other institutions.
    (e) Prohibition on Biomedical and Human Cell and Human Subject 
Research.--
            (1) No biomedical research.--In carrying out the program 
        under this section, the Secretary shall not conduct biomedical 
        research.
            (2) Limitations.--Nothing in this section shall authorize 
        the Secretary to conduct any research or demonstrations--
                    (A) on human cells or human subjects; or
                    (B) designed to have direct application with 
                respect to human cells or human subjects.

SEC. 960. FISSION AND FUSION ENERGY MATERIALS RESEARCH PROGRAM.

    In the President's fiscal year 2006 budget request, the Secretary 
shall establish a research and development program on material science 
issues presented by advanced fission reactors and the Department's 
fusion energy program. The program shall develop a catalog of material 
properties required for these applications, develop theoretical models 
for materials possessing the required properties, benchmark models 
against existing data, and develop a roadmap to guide further research 
and development in this area.

SEC. 961. ENERGY-WATER SUPPLY PROGRAM.

    (a) Establishment.--There is established within the Department the 
Energy-Water Supply Program, to study energy-related and certain other 
issues associated with the supply of drinking water and operation of 
community water systems and to study water supply issues related to 
energy.
    (b) Definitions.--For the purposes of this section:
            (1) Administrator.--The term ``Administrator'' means the 
        Administrator of the Environmental Protection Agency.
            (2) Agency.--The term ``Agency'' means the Environmental 
        Protection Agency.
            (3) Foundation.--The term ``Foundation'' means the American 
        Water Works Association Research Foundation.
            (4) Indian tribe.--The term ``Indian tribe'' has the 
        meaning given the term in section 4 of the Indian Self-
        Determination and Education Assistance Act (25 U.S.C. 450b).
            (5) Program.--The term ``Program'' means the Energy-Water 
        Supply Program established by this section.
    (c) Program Areas.--The Program shall develop methods, means, 
procedures, equipment, and improved technologies relating to--
            (1) the arsenic removal program under subsection (d);
            (2) the desalination program under subsection (e); and
            (3) the water and energy sustainability program under 
        subsection (f).
    (d) Arsenic Removal Program.--
            (1) In general.--As soon as practicable after the date of 
        enactment of this Act, the Secretary, in coordination with the 
        Administrator and in partnership with the Foundation, shall 
        utilize the facilities, institutions, and relationships 
        established in the Consolidated Appropriations Resolution, 2003 
        as described in Senate Report 107-220 to carry out a research 
        program to provide innovative methods and means for removal of 
        arsenic.
            (2) Required evaluations.--The program shall, to the 
        maximum extent practicable, evaluate the means of--
                    (A) reducing energy costs incurred in using arsenic 
                removal technologies;
                    (B) minimizing materials, operating, and 
                maintenance costs; and
                    (C) minimizing any quantities of waste (especially 
                hazardous waste) that result from use of arsenic 
                removal technologies.
            (3) Peer review.--Where applicable and reasonably 
        available, projects undertaken under this subsection shall be 
        peer-reviewed.
            (4) Community water systems.--In carrying out the program 
        under this subsection, the Secretary, in coordination with the 
        Administrator, shall--
                    (A) select projects involving a geographically and 
                hydrologically diverse group of community water systems 
                (as defined in section 1003 of the Public Health 
                Service Act (42 U.S.C. 300)) and water chemistries, 
                that have experienced technical or economic 
                difficulties in providing drinking water with levels of 
                arsenic at 10 parts-per-billion or lower, which 
                projects shall be designed to develop innovative 
                methods and means to deliver drinking water that 
                contains less than 10 parts per billion of arsenic; and
                    (B) provide not less than 40 percent of all funds 
                spent pursuant to this subsection to address the needs 
                of, and in collaboration with, rural communities or 
                Indian tribes.
            (5) Cost effectiveness.--The Foundation shall create 
        methods for determining cost effectiveness of arsenic removal 
        technologies used in the program.
            (6) Education, training, and technology.--The Foundation 
        shall include education, training, and technology transfer as 
        part of the program.
            (7) Coordination.--The Secretary shall consult with the 
        Administrator to ensure that all activities conducted under the 
        program are coordinated with the Agency and do not duplicate 
        other programs in the Agency and other Federal agencies, State 
        programs, and academia.
            (8) Reports.--Not later than 1 year after the date of 
        commencement of the program under this subsection, and once 
        every year thereafter, the Secretary shall submit to the 
        Committee on Energy and Commerce of the House of 
        Representatives and the Committee on Environment and Public 
        Works and the Committee on Energy and Natural Resources of the 
        Senate a report on the results of the program under this 
        subsection.
    (e) Desalination Program.--
            (1) In general.--The Secretary, in cooperation with the 
        Commissioner of Reclamation of the Department of the Interior, 
        shall carry out a program to conduct research and develop 
        methods and means for desalination in accordance with the 
        desalination technology progress plan developed under title II 
        of the Energy and Water Development Appropriations Act, 2002 
        (115 Stat. 498), and described in Senate Report 107-39 under 
        the heading ``water and related resources'' in the ``Bureau of 
        Reclamation'' section.
            (2) Requirements.--The desalination program shall--
                    (A) use the resources of the Department and the 
                Department of the Interior that were involved in the 
                development of the 2003 National Desalination and Water 
                Purification Technology Roadmap for next-generation 
                desalination technology;
                    (B) focus on technologies that are appropriate for 
                use in desalinating brackish groundwater, drinking 
                water, wastewater and other saline water supplies, or 
                disposal of residual brine or salt; and
                    (C) consider the use of renewable energy sources.
            (3) Construction projects.--Funds made available to carry 
        out this subsection may be used for construction projects, 
        including completion of the National Desalination Research 
        Center for brackish groundwater and ongoing operational costs 
        of this facility.
            (4) Steering committee.--The Secretary and the Commissioner 
        of Reclamation of the Department of the Interior shall jointly 
        establish a steering committee for activities conducted under 
        this subsection. The steering committee shall be jointly 
        chaired by 1 representative from the program and 1 
        representative from the Bureau of Reclamation.
    (f) Water and Energy Sustainability Program.--
            (1) In general.--The Secretary shall develop a program to 
        identify methods, means, procedures, equipment, and improved 
        technologies necessary to ensure that sufficient quantities of 
        water are available to meet energy needs and sufficient energy 
        is available to meet water needs.
            (2) Assessments.--In order to acquire information and avoid 
        duplication, the Secretary shall work in collaboration with the 
        Secretary of the Interior, the Army Corps of Engineers, the 
        Administrator, the Secretary of Commerce, the Secretary of 
        Defense, relevant State agencies, nongovernmental 
        organizations, and academia, to assess--
                    (A) future water resources needed to support energy 
                development and production within the United States 
                including water used for hydropower, and production of, 
                or electricity generation by, hydrogen, biomass, fossil 
                fuels, and nuclear fuel;
                    (B) future energy resources needed to support water 
                purification and wastewater treatment, including 
                desalination and water conveyance;
                    (C) use of impaired and nontraditional water 
                supplies for energy production other than oil and gas 
                extraction;
                    (D) technology and programs for improving water use 
                efficiency; and
                    (E) technologies to reduce water use in energy 
                development and production.
            (3) Roadmap; tools.--The Secretary shall--
                    (A) develop a program plan and technology 
                development roadmap for the Water and Energy 
                Sustainability Program to identify scientific and 
                technical requirements and activities that are required 
                to support planning for energy sustainability under 
                current and potential future conditions of water 
                availability, use of impaired water for energy 
                production and other uses, and reduction of water use 
                in energy development and production;
                    (B) develop tools for national and local energy and 
                water sustainability planning, including numerical 
                models, decision analysis tools, economic analysis 
                tools, databases, and planning methodologies and 
                strategies;
                    (C) implement at least 3 planning projects 
                involving energy development or production that use the 
                tools described in subparagraph (B) and assess the 
                viability of those tools at the scale of river basins 
                with at least 1 demonstration involving an 
                international border; and
                    (D) transfer those tools to other Federal agencies, 
                State agencies, nonprofit organizations, industry, and 
                academia.
            (4) Report.--Not later than 1 year after the date of 
        enactment of this Act, the Secretary shall submit to Congress a 
        report on the Water and Energy Sustainability Program that--
                    (A) includes the results of the assessment under 
                paragraph (2) and the program plan and technology 
                development roadmap; and
                    (B) identifies policy, legal, and institutional 
                issues related to water and energy sustainability.

SEC. 962. NITROGEN FIXATION.

    The Secretary, acting through the Office of Science, shall support 
a program of research, development, demonstration, and commercial 
application on biological nitrogen fixation, including plant genomics 
research relevant to the development of commercial crop varieties with 
enhanced nitrogen fixation efficiency and ability.

                   Subtitle G--Energy and Environment

SEC. 964. UNITED STATES-MEXICO ENERGY TECHNOLOGY COOPERATION.

    (a) Program.--The Secretary shall establish a research, 
development, demonstration, and commercial application program to be 
carried out in collaboration with entities in Mexico and the United 
States to promote energy efficient, environmentally sound economic 
development along the United States-Mexico border that minimizes public 
health risks from industrial activities in the border region.
    (b) Program Management.--The program under subsection (a) shall be 
managed by the Department of Energy Carlsbad Environmental Management 
Field Office.
    (c) Technology Transfer.--In carrying out projects and activities 
under this section, the Secretary shall assess the applicability of 
technology developed under the Environmental Management Science Program 
of the Department.
    (d) Intellectual Property.--In carrying out this section, the 
Secretary shall comply with the requirements of any agreement entered 
into between the United States and Mexico regarding intellectual 
property protection.
    (e) Authorization of Appropriations.--The following sums are 
authorized to be appropriated to the Secretary to carry out activities 
under this section:
            (1) For each of fiscal years 2004 and 2005, $5,000,000.
            (2) For each of fiscal years 2006, 2007, and 2008, 
        $6,000,000.

SEC. 965. WESTERN HEMISPHERE ENERGY COOPERATION.

    (a) Program.--The Secretary shall carry out a program to promote 
cooperation on energy issues with Western Hemisphere countries.
    (b) Activities.--Under the program, the Secretary shall fund 
activities to work with Western Hemisphere countries to--
            (1) assist the countries in formulating and adopting 
        changes in economic policies and other policies to--
                    (A) increase the production of energy supplies; and
                    (B) improve energy efficiency; and
            (2) assist in the development and transfer of energy supply 
        and efficiency technologies that would have a beneficial impact 
        on world energy markets.
    (c) University Participation.--To the extent practicable, the 
Secretary shall carry out the program under this section with the 
participation of universities so as to take advantage of the acceptance 
of universities by Western Hemisphere countries as sources of unbiased 
technical and policy expertise when assisting the Secretary in--
            (1) evaluating new technologies;
            (2) resolving technical issues;
            (3) working with those countries in the development of new 
        policies; and
            (4) training policymakers, particularly in the case of 
        universities that involve the participation of minority 
        students, such as Hispanic-serving institutions and 
        Historically Black Colleges and Universities.
    (d) Authorization of Appropriations.--There are authorized to be 
appropriated to carry out this section--
            (1) $8,000,000 for fiscal year 2004;
            (2) $10,000,000 for fiscal year 2005;
            (3) $13,000,000 for fiscal year 2006;
            (4) $16,000,000 for fiscal year 2007; and
            (5) $19,000,000 for fiscal year 2008.

SEC. 966. WASTE REDUCTION AND USE OF ALTERNATIVES.

    (a) Grant Authority.--The Secretary may make a single grant to a 
qualified institution to examine and develop the feasibility of burning 
post-consumer carpet in cement kilns as an alternative energy source. 
The purposes of the grant shall include determining--
            (1) how post-consumer carpet can be burned without 
        disrupting kiln operations;
            (2) the extent to which overall kiln emissions may be 
        reduced;
            (3) the emissions of air pollutants and other relevant 
        environmental impacts; and
            (4) how this process provides benefits to both cement kiln 
        operations and carpet suppliers.
    (b) Qualified Institution.--For the purposes of subsection (a), a 
qualified institution is a research-intensive institution of higher 
education with demonstrated expertise in the fields of fiber recycling 
and logistical modeling of carpet waste collection and preparation.
    (c) Authorization of Appropriations.--There are authorized to be 
appropriated to the Secretary for carrying out this section $500,000.

SEC. 967. REPORT ON FUEL CELL TEST CENTER.

    (a) Report.--Not later than 1 year after the date of enactment of 
this Act, the Secretary shall transmit to Congress a report on the 
results of a study of the establishment of a test center for next-
generation fuel cells at an institution of higher education that has 
available a continuous source of hydrogen and access to the electric 
transmission grid. Such report shall include a conceptual design for 
such test center and a projection of the costs of establishing the test 
center.
    (b) Authorization of Appropriations.--There are authorized to be 
appropriated to the Secretary for carrying out this section $500,000.

SEC. 968. ARCTIC ENGINEERING RESEARCH CENTER.

    (a) In General.--The Secretary of Energy (referred to in this 
section as the ``Secretary'') in consultation with the Secretary of 
Transportation and the United States Arctic Research Commission shall 
provide annual grants to a university located adjacent to the Arctic 
Energy Office of the Department of Energy, to establish and operate a 
university research center to be headquartered in Fairbanks and to be 
known as the ``Arctic Engineering Research Center'' (referred to in 
this section as the ``Center'').
    (b) Purpose.--The purpose of the Center shall be to conduct 
research on, and develop improved methods of, construction and use of 
materials to improve the overall performance of roads, bridges, 
residential, commercial, and industrial structures, and other 
infrastructure in the Arctic region, with an emphasis on developing--
            (1) new construction techniques for roads, bridges, rail, 
        and related transportation infrastructure and residential, 
        commercial, and industrial infrastructure that are capable of 
        withstanding the Arctic environment and using limited energy 
        resources as efficiently as possible;
            (2) technologies and procedures for increasing road, 
        bridge, rail, and related transportation infrastructure and 
        residential, commercial, and industrial infrastructure safety, 
        reliability, and integrity in the Arctic region;
            (3) new materials and improving the performance and energy 
        efficiency of existing materials for the construction of roads, 
        bridges, rail, and related transportation infrastructure and 
        residential, commercial, and industrial infrastructure in the 
        Arctic region; and
            (4) recommendations for new local, regional, and State 
        permitting and building codes to ensure transportation and 
        building safety and efficient energy use when constructing, 
        using, and occupying such infrastructure in the Arctic region.
    (c) Objectives.--The Center shall carry out--
            (1) basic and applied research in the subjects described in 
        subsection (b), the products of which shall be judged by peers 
        or other experts in the field to advance the body of knowledge 
        in road, bridge, rail, and infrastructure engineering in the 
        Arctic region; and
            (2) an ongoing program of technology transfer that makes 
        research results available to potential users in a form that 
        can be implemented.
    (d) Amount of Grant.--For each of fiscal years 2004 through 2009, 
the Secretary shall provide a grant in the amount of $3,000,000 to the 
institution specified in subsection (a) to carry out this section.
    (e) Authorization of Appropriations.--There are authorized to be 
appropriated to carry out this section $3,000,000 for each of fiscal 
years 2004 through 2009.

SEC. 969. BARROW GEOPHYSICAL RESEARCH FACILITY.

    (a) Establishment.--The Secretary of Commerce, in consultation with 
the Secretaries of Energy and the Interior, the Director of the 
National Science Foundation, and the Administrator of the Environmental 
Protection Agency, shall establish a joint research facility in Barrow, 
Alaska, to be known as the ``Barrow Geophysical Research Facility'', to 
support scientific research activities in the Arctic.
    (b) Authorization of Appropriations.--There are authorized to be 
appropriated to the Secretaries of Commerce, Energy, and the Interior, 
the Director of the National Science Foundation, and the Administrator 
of the Environmental Protection Agency for the planning, design, 
construction, and support of the Barrow Geophysical Research Facility 
$61,000,000.

SEC. 970. WESTERN MICHIGAN DEMONSTRATION PROJECT.

    The Administrator of the Environmental Protection Agency, in 
consultation with the State of Michigan and affected local officials, 
shall conduct a demonstration project to address the effect of 
transported ozone and ozone precursors in Southwestern Michigan. The 
demonstration program shall address projected nonattainment areas in 
Southwestern Michigan that include counties with design values for 
ozone of less than .095 based on years 2000 to 2002 or the most current 
3-year period of air quality data. The Administrator shall assess any 
difficulties such areas may experience in meeting the 8-hour national 
ambient air quality standard for ozone due to the effect of transported 
ozone or ozone precursors into the areas. The Administrator shall work 
with State and local officials to determine the extent of ozone and 
ozone precursor transport, to assess alternatives to achieve compliance 
with the 8-hour standard apart from local controls, and to determine 
the timeframe in which such compliance could take place. The 
Administrator shall complete this demonstration project no later than 2 
years after the date of enactment of this section and shall not impose 
any requirement or sanction that might otherwise apply during the 
pendency of the demonstration project.

                         Subtitle H--Management

SEC. 971. AVAILABILITY OF FUNDS.

    Funds authorized to be appropriated to the Department under this 
title shall remain available until expended.

SEC. 972. COST SHARING.

    (a) Research and Development.--Except as otherwise provided in this 
title, for research and development programs carried out under this 
title the Secretary shall require a commitment from non-Federal sources 
of at least 20 percent of the cost of the project. The Secretary may 
reduce or eliminate the non-Federal requirement under this subsection 
if the Secretary determines that the research and development is of a 
basic or fundamental nature or involves technical analyses or 
educational activities.
    (b) Demonstration and Commercial Application.--Except as otherwise 
provided in this title, the Secretary shall require at least 50 percent 
of the costs directly and specifically related to any demonstration or 
commercial application project under this title to be provided from 
non-Federal sources. The Secretary may reduce the non-Federal 
requirement under this subsection if the Secretary determines that the 
reduction is necessary and appropriate considering the technological 
risks involved in the project and is necessary to meet the objectives 
of this title.
    (c) Calculation of Amount.--In calculating the amount of the non-
Federal commitment under subsection (a) or (b), the Secretary may 
include personnel, services, equipment, and other resources.
    (d) Size of Non-Federal Share.--The Secretary may consider the size 
of the non-Federal share in selecting projects.

SEC. 973. MERIT REVIEW OF PROPOSALS.

    Awards of funds authorized under this title shall be made only 
after an impartial review of the scientific and technical merit of the 
proposals for such awards has been carried out by or for the 
Department.

SEC. 974. EXTERNAL TECHNICAL REVIEW OF DEPARTMENTAL PROGRAMS.

    (a) National Energy Research and Development Advisory Boards.--
            (1) In general.--The Secretary shall establish 1 or more 
        advisory boards to review Department research, development, 
        demonstration, and commercial application programs in energy 
efficiency, renewable energy, nuclear energy, and fossil energy.
            (2) Existing advisory boards.--The Secretary may designate 
        an existing advisory board within the Department to fulfill the 
        responsibilities of an advisory board under this subsection, 
        and may enter into appropriate arrangements with the National 
        Academy of Sciences to establish such an advisory board.
    (b) Office of Science Advisory Committees.--
            (1) Utilization of existing committees.--The Secretary 
        shall continue to use the scientific program advisory 
        committees chartered under the Federal Advisory Committee Act 
        (5 U.S.C. App.) by the Office of Science to oversee research 
        and development programs under that Office.
            (2) Science advisory committee.--
                    (A) Establishment.--There shall be in the Office of 
                Science a Science Advisory Committee that includes the 
                chairs of each of the advisory committees described in 
                paragraph (1).
                    (B) Responsibilities.--The Science Advisory 
                Committee shall--
                            (i) serve as the science advisor to the 
                        Director of the Office of Science;
                            (ii) advise the Director with respect to 
                        the well-being and management of the National 
                        Laboratories and single-purpose research 
                        facilities;
                            (iii) advise the Director with respect to 
                        education and workforce training activities 
                        required for effective short-term and long-term 
                        basic and applied research activities of the 
                        Office of Science; and
                            (iv) advise the Director with respect to 
                        the well being of the university research 
                        programs supported by the Office of Science.
    (c) Membership.--Each advisory board under this section shall 
consist of persons with appropriate expertise representing a diverse 
range of interests.
    (d) Meetings and Purposes.--Each advisory board under this section 
shall meet at least semiannually to review and advise on the progress 
made by the respective research, development, demonstration, and 
commercial application program or programs. The advisory board shall 
also review the measurable cost and performance-based goals for such 
programs as established under section 901(b), and the progress on 
meeting such goals.
    (e) Periodic Reviews and Assessments.--The Secretary shall enter 
into appropriate arrangements with the National Academy of Sciences to 
conduct periodic reviews and assessments of the programs authorized by 
this title, the measurable cost and performance-based goals for such 
programs as established under section 901(b), if any, and the progress 
on meeting such goals. Such reviews and assessments shall be conducted 
every 5 years, or more often as the Secretary considers necessary, and 
the Secretary shall transmit to Congress reports containing the results 
of all such reviews and assessments.

SEC. 975. IMPROVED COORDINATION OF TECHNOLOGY TRANSFER ACTIVITIES.

    (a) Technology Transfer Coordinator.--The Secretary shall designate 
a Technology Transfer Coordinator to perform oversight of and policy 
development for technology transfer activities at the Department. The 
Technology Transfer Coordinator shall--
            (1) coordinate the activities of the Technology Transfer 
        Working Group;
            (2) oversee the expenditure of funds allocated to the 
        Technology Transfer Working Group; and
            (3) coordinate with each technology partnership ombudsman 
        appointed under section 11 of the Technology Transfer 
        Commercialization Act of 2000 (42 U.S.C. 7261c).
    (b) Technology Transfer Working Group.--The Secretary shall 
establish a Technology Transfer Working Group, which shall consist of 
representatives of the National Laboratories and single-purpose 
research facilities, to--
            (1) coordinate technology transfer activities occurring at 
        National Laboratories and single-purpose research facilities;
            (2) exchange information about technology transfer 
        practices, including alternative approaches to resolution of 
        disputes involving intellectual property rights and other 
        technology transfer matters; and
            (3) develop and disseminate to the public and prospective 
        technology partners information about opportunities and 
        procedures for technology transfer with the Department, 
        including those related to alternative approaches to resolution 
        of disputes involving intellectual property rights and other 
        technology transfer matters.
    (c) Technology Transfer Responsibility.--Nothing in this section 
shall affect the technology transfer responsibilities of Federal 
employees under the Stevenson-Wydler Technology Innovation Act of 1980 
(15 U.S.C. 3701 et seq.).

SEC. 976. FEDERAL LABORATORY EDUCATIONAL PARTNERS.

    (a) Distribution of Royalties Received by Federal Agencies.--
Section 14(a)(1)(B)(v) of the Stevenson-Wydler Technology Innovation 
Act of 1980 (15 U.S.C. 3710c(a)(1)(B)(v)), is amended to read as 
follows:
                    ``(v) for scientific research and development and 
                for educational assistance and other purposes 
                consistent with the missions and objectives of the 
                agency and the laboratory.''.
    (b) Cooperative Research and Development Agreements.--Section 
12(b)(5)(C) of the Stevenson-Wydler Technology Innovation Act of 1980 
(15 U.S.C. 3710a(b)(5)(C)) is amended to read as follows:
            ``(C) for scientific research and development and for 
        educational assistance consistent with the missions and 
        objectives of the agency and the laboratory.''.

SEC. 977. INTERAGENCY COOPERATION.

    The Secretary shall enter into discussions with the Administrator 
of the National Aeronautics and Space Administration with the goal of 
reaching an interagency working agreement between the 2 agencies that 
would make the National Aeronautics and Space Administration's 
expertise in energy, gained from its existing and planned programs, 
more readily available to the relevant research, development, 
demonstration, and commercial applications programs of the Department. 
Technologies to be discussed should include the National Aeronautics 
and Space Administration's modeling, research, development, testing, 
and evaluation of new energy technologies, including solar, wind, fuel 
cells, and hydrogen storage and distribution.

SEC. 978. TECHNOLOGY INFRASTRUCTURE PROGRAM.

    (a) Establishment.--The Secretary shall establish a Technology 
Infrastructure Program in accordance with this section.
    (b) Purpose.--The purpose of the Technology Infrastructure Program 
shall be to improve the ability of National Laboratories and single-
purpose research facilities to support departmental missions by--
            (1) stimulating the development of technology clusters that 
        can support departmental missions at the National Laboratories 
        or single-purpose research facilities;
            (2) improving the ability of National Laboratories and 
        single-purpose research facilities to leverage and benefit from 
commercial research, technology, products, processes, and services; and
            (3) encouraging the exchange of scientific and 
        technological expertise between National Laboratories or 
        single-purpose research facilities and entities that can 
        support departmental missions at the National Laboratories or 
        single-purpose research facilities, such as institutions of 
        higher education; technology-related business concerns; 
        nonprofit institutions; and agencies of State, tribal, or local 
        governments.
    (c) Projects.--The Secretary shall authorize the Director of each 
National Laboratory or single-purpose research facility to implement 
the Technology Infrastructure Program at such National Laboratory or 
facility through projects that meet the requirements of subsections (d) 
and (e).
    (d) Program Requirements.--Each project funded under this section 
shall meet the following requirements:
            (1) Each project shall include at least 1 of each of the 
        following entities: A business; an institution of higher 
        education; a nonprofit institution; and an agency of a State, 
        local, or tribal government.
            (2) Not less than 50 percent of the costs of each project 
        funded under this section shall be provided from non-Federal 
        sources. The calculation of costs paid by the non-Federal 
        sources to a project shall include cash, personnel, services, 
        equipment, and other resources expended on the project after 
        start of the project. Independent research and development 
        expenses of Government contractors that qualify for 
        reimbursement under section 31.205-18(e) of the Federal 
        Acquisition Regulation issued pursuant to section 25(c)(1) of 
        the Office of Federal Procurement Policy Act (41 U.S.C. 
        421(c)(1)) may be credited toward costs paid by non-Federal 
        sources to a project, if the expenses meet the other 
        requirements of this section.
            (3) All projects under this section shall be competitively 
        selected using procedures determined by the Secretary.
            (4) Any participant that receives funds under this section 
        may use generally accepted accounting principles for 
        maintaining accounts, books, and records relating to the 
        project.
            (5) No Federal funds shall be made available under this 
        section for construction or any project for more than 5 years.
    (e) Selection Criteria.--
            (1) In general.--The Secretary shall allocate funds under 
        this section only if the Director of the National Laboratory or 
        single-purpose research facility managing the project 
        determines that the project is likely to improve the ability of 
        the National Laboratory or single-purpose research facility to 
        achieve technical success in meeting departmental missions.
            (2) Criteria.--The Secretary shall consider the following 
        criteria in selecting a project to receive Federal funds:
                    (A) The potential of the project to promote the 
                development of a commercially sustainable technology 
                cluster following the period of Department investment, 
                which will derive most of the demand for its products 
                or services from the private sector, and which will 
                support departmental missions at the participating 
                National Laboratory or single-purpose research 
                facility.
                    (B) The potential of the project to promote the use 
                of commercial research, technology, products, 
                processes, and services by the participating National 
                Laboratory or single-purpose research facility to 
                achieve its mission or the commercial development of 
                technological innovations made at the participating 
                National Laboratory or single-purpose research 
                facility.
                    (C) The extent to which the project involves a wide 
                variety and number of institutions of higher education, 
                nonprofit institutions, and technology-related business 
                concerns that can support the missions of the 
                participating National Laboratory or single-purpose 
                research facility and that will make substantive 
                contributions to achieving the goals of the project.
                    (D) The extent to which the project focuses on 
                promoting the development of technology-related 
                business concerns that are small businesses or involves 
                such small businesses substantively in the project.
                    (E) Such other criteria as the Secretary determines 
                to be appropriate.
    (f) Allocation.--In allocating funds for projects approved under 
this section, the Secretary shall provide--
            (1) the Federal share of the project costs; and
            (2) additional funds to the National Laboratory or single-
        purpose research facility managing the project to permit the 
        National Laboratory or single-purpose research facility to 
        carry out activities relating to the project, and to coordinate 
        such activities with the project.
    (g) Report to Congress.--Not later than July 1, 2006, the Secretary 
shall report to Congress on whether the Technology Infrastructure 
Program should be continued and, if so, how the program should be 
managed.
    (h) Definitions.--In this section:
            (1) Technology cluster.--The term ``technology cluster'' 
        means a concentration of technology-related business concerns, 
        institutions of higher education, or nonprofit institutions 
        that reinforce each other's performance in the areas of 
        technology development through formal or informal 
        relationships.
            (2) Technology-related business concern.--The term 
        ``technology-related business concern'' means a for-profit 
        corporation, company, association, firm, partnership, or small 
        business concern that conducts scientific or engineering 
        research; develops new technologies; manufactures products 
        based on new technologies; or performs technological services.
    (i) Authorization of Appropriations.--There are authorized to be 
appropriated to the Secretary for activities under this section 
$10,000,000 for each of fiscal years 2004, 2005, and 2006.

SEC. 979. REPROGRAMMING.

    (a) Distribution Report.--Not later than 60 days after the date of 
the enactment of an Act appropriating amounts authorized under this 
title, the Secretary shall transmit to the appropriate authorizing 
committees of Congress a report explaining how such amounts will be 
distributed among the authorizations contained in this title.
    (b) Prohibition.--
            (1) In general.--No amount identified under subsection (a) 
        shall be reprogrammed if such reprogramming would result in an 
        obligation which changes an individual distribution required to 
        be reported under subsection (a) by more than 5 percent unless 
        the Secretary has transmitted to the appropriate authorizing 
        committees of Congress a report described in subsection (c) and 
        a period of 30 days has elapsed after such committees receive 
        the report.
            (2) Computation.--In the computation of the 30-day period 
        described in paragraph (1), there shall be excluded any day on 
        which either House of Congress is not in session because of an 
        adjournment of more than 3 days to a day certain.
    (c) Reprogramming Report.--A report referred to in subsection 
(b)(1) shall contain a full and complete statement of the action 
proposed to be taken and the facts and circumstances relied on in 
support of the proposed action.

SEC. 980. CONSTRUCTION WITH OTHER LAWS.

    Except as otherwise provided in this title, the Secretary shall 
carry out the research, development, demonstration, and commercial 
application programs, projects, and activities authorized by this title 
in accordance with the applicable provisions of the Atomic Energy Act 
of 1954 (42 U.S.C. 2011 et seq.), the Federal Nonnuclear Research and 
Development Act of 1974 (42 U.S.C. 5901 et seq.), the Energy Policy Act 
of 1992 (42 U.S.C. 13201 et seq.), the Stevenson-Wydler Technology 
Innovation Act of 1980 (15 U.S.C. 3701 et seq.), chapter 18 of title 
35, United States Code (commonly referred to as the Bayh-Dole Act), and 
any other Act under which the Secretary is authorized to carry out such 
activities.

SEC. 981. REPORT ON RESEARCH AND DEVELOPMENT PROGRAM EVALUATION 
              METHODOLOGIES.

    Not later than 180 days after the date of enactment of this Act, 
the Secretary shall enter into appropriate arrangements with the 
National Academy of Sciences to investigate and report on the 
scientific and technical merits of any evaluation methodology currently 
in use or proposed for use in relation to the scientific and technical 
programs of the Department by the Secretary or other Federal official. 
Not later than 6 months after receiving the report of the National 
Academy, the Secretary shall submit such report to Congress, along with 
any other views or plans of the Secretary with respect to the future 
use of such evaluation methodology.

SEC. 982. DEPARTMENT OF ENERGY SCIENCE AND TECHNOLOGY SCHOLARSHIP 
              PROGRAM.

    (a) Establishment of Program.--
            (1) In general.--The Secretary is authorized to establish a 
        Department of Energy Science and Technology Scholarship Program 
        to award scholarships to individuals that is designed to 
        recruit and prepare students for careers in the Department.
            (2) Competitive process.--Individuals shall be selected to 
        receive scholarships under this section through a competitive 
        process primarily on the basis of academic merit, with 
        consideration given to financial need and the goal of promoting 
        the participation of individuals identified in section 33 or 34 
        of the Science and Engineering Equal Opportunities Act (42 
        U.S.C. 1885a or 1885b).
            (3) Service agreements.--To carry out the Program the 
        Secretary shall enter into contractual agreements with 
        individuals selected under paragraph (2) under which the 
        individuals agree to serve as full-time employees of the 
        Department, for the period described in subsection (f)(1), in 
        positions needed by the Department and for which the 
        individuals are qualified, in exchange for receiving a 
        scholarship.
    (b) Scholarship Eligibility.--In order to be eligible to 
participate in the Program, an individual must--
            (1) be enrolled or accepted for enrollment as a full-time 
        student at an institution of higher education in an academic 
        program or field of study described in the list made available 
        under subsection (d);
            (2) be a United States citizen; and
            (3) at the time of the initial scholarship award, not be a 
        Federal employee as defined in section 2105 of title 5 of the 
        United States Code.
    (c) Application Required.--An individual seeking a scholarship 
under this section shall submit an application to the Secretary at such 
time, in such manner, and containing such information, agreements, or 
assurances as the Secretary may require.
    (d) Eligible Academic Programs.--The Secretary shall make publicly 
available a list of academic programs and fields of study for which 
scholarships under the Program may be utilized, and shall update the 
list as necessary.
    (e) Scholarship Requirement.--
            (1) In general.--The Secretary may provide a scholarship 
        under the Program for an academic year if the individual 
        applying for the scholarship has submitted to the Secretary, as 
        part of the application required under subsection (c), a 
        proposed academic program leading to a degree in a program or 
        field of study on the list made available under subsection (d).
            (2) Duration of eligibility.--An individual may not receive 
        a scholarship under this section for more than 4 academic 
        years, unless the Secretary grants a waiver.
            (3) Scholarship amount.--The dollar amount of a scholarship 
        under this section for an academic year shall be determined 
        under regulations issued by the Secretary, but shall in no case 
        exceed the cost of attendance.
            (4) Authorized uses.--A scholarship provided under this 
        section may be expended for tuition, fees, and other authorized 
        expenses as established by the Secretary by regulation.
            (5) Contracts regarding direct payments to institutions.--
        The Secretary may enter into a contractual agreement with an 
        institution of higher education under which the amounts 
        provided for a scholarship under this section for tuition, 
        fees, and other authorized expenses are paid directly to the 
        institution with respect to which the scholarship is provided.
    (f) Period of Obligated Service.--
            (1) Duration of service.--The period of service for which 
        an individual shall be obligated to serve as an employee of the 
        Department is, except as provided in subsection (h)(2), 24 
        months for each academic year for which a scholarship under 
        this section is provided.
            (2) Schedule for service.--
                    (A) In general.--Except as provided in subparagraph 
                (B), obligated service under paragraph (1) shall begin 
                not later than 60 days after the individual obtains the 
                educational degree for which the scholarship was 
                provided.
                    (B) Deferral.--The Secretary may defer the 
                obligation of an individual to provide a period of 
                service under paragraph (1) if the Secretary determines 
                that such a deferral is appropriate. The Secretary 
                shall prescribe the terms and conditions under which a 
                service obligation may be deferred through regulation.
    (g) Penalties for Breach of Scholarship Agreement.--
            (1) Failure to complete academic training.--Scholarship 
        recipients who fail to maintain a high level of academic 
        standing, as defined by the Secretary by regulation, who are 
        dismissed from their educational institutions for disciplinary 
        reasons, or who voluntarily terminate academic training before 
        graduation from the educational program for which the 
        scholarship was awarded, shall be in breach of their 
        contractual agreement and, in lieu of any service obligation 
        arising under such agreement, shall be liable to the United 
        States for repayment not later than 1 year after the date of 
        default of all scholarship funds paid to them and to the 
        institution of higher education on their behalf under the 
        agreement, except as provided in subsection (h)(2). The 
        repayment period may be extended by the Secretary when 
        determined to be necessary, as established by regulation.
            (2) Failure to begin or complete the service obligation or 
        meet the terms and conditions of deferment.--A scholarship 
        recipient who, for any reason, fails to begin or complete a 
        service obligation under this section after completion of 
        academic training, or fails to comply with the terms and 
        conditions of deferment established by the Secretary pursuant 
        to subsection (f)(2)(B), shall be in breach of the contractual 
        agreement. When a recipient breaches an agreement for the 
        reasons stated in the preceding sentence, the recipient shall 
        be liable to the United States for an amount equal to--
                    (A) the total amount of scholarships received by 
                such individual under this section; plus
                    (B) the interest on the amounts of such awards 
                which would be payable if at the time the awards were 
                received they were loans bearing interest at the 
                maximum legal prevailing rate, as determined by the 
                Treasurer of the United States,
        multiplied by 3.
    (h) Waiver or Suspension of Obligation.--
            (1) Death of individual.--Any obligation of an individual 
        incurred under the Program (or a contractual agreement 
        thereunder) for service or payment shall be canceled upon the 
        death of the individual.
            (2) Impossibility or extreme hardship.--The Secretary shall 
        by regulation provide for the partial or total waiver or 
        suspension of any obligation of service or payment incurred by 
        an individual under the Program (or a contractual agreement 
        thereunder) whenever compliance by the individual is impossible 
        or would involve extreme hardship to the individual, or if 
        enforcement of such obligation with respect to the individual 
        would be contrary to the best interests of the Government.
    (i) Definitions.--In this section the following definitions apply:
            (1) Cost of attendance.--The term ``cost of attendance'' 
        has the meaning given that term in section 472 of the Higher 
        Education Act of 1965 (20 U.S.C. 1087ll).
            (2) Program.--The term ``Program'' means the Department of 
        Energy Science and Technology Scholarship Program established 
        under this section.
    (j) Authorization of Appropriations.--There are authorized to be 
appropriated to the Secretary for activities under this section--
            (1) for fiscal year 2004, $800,000;
            (2) for fiscal year 2005, $1,600,000;
            (3) for fiscal year 2006, $2,000,000;
            (4) for fiscal year 2007, $2,000,000; and
            (5) for fiscal year 2008, $2,000,000.

SEC. 983. REPORT ON EQUAL EMPLOYMENT OPPORTUNITY PRACTICES.

    Not later than 12 months after the date of enactment of this Act, 
and biennially thereafter, the Secretary shall transmit to Congress a 
report on the equal employment opportunity practices at National 
Laboratories. Such report shall include--
            (1) a thorough review of each laboratory contractor's equal 
        employment opportunity policies, including promotion to 
        management and professional positions and pay raises;
            (2) a statistical report on complaints and their 
        disposition in the laboratories;
            (3) a description of how equal employment opportunity 
        practices at the laboratories are treated in the contract and 
        in calculating award fees for each contractor;
            (4) a summary of disciplinary actions and their disposition 
        by either the Department or the relevant contractors for each 
        laboratory;
            (5) a summary of outreach efforts to attract women and 
        minorities to the laboratories;
            (6) a summary of efforts to retain women and minorities in 
        the laboratories; and
            (7) a summary of collaboration efforts with the Office of 
        Federal Contract Compliance Programs to improve equal 
        employment opportunity practices at the laboratories.

SEC. 984. SMALL BUSINESS ADVOCACY AND ASSISTANCE.

    (a) Small Business Advocate.--The Secretary shall require the 
Director of each National Laboratory, and may require the Director of a 
single-purpose research facility, to designate a small business 
advocate to--
            (1) increase the participation of small business concerns, 
        including socially and economically disadvantaged small 
        business concerns, in procurement, collaborative research, 
        technology licensing, and technology transfer activities 
        conducted by the National Laboratory or single-purpose research 
        facility;
            (2) report to the Director of the National Laboratory or 
        single-purpose research facility on the actual participation of 
        small business concerns, including socially and economically 
        disadvantaged small business concerns, in procurement, 
        collaborative research, technology licensing, and technology 
        transfer activities along with recommendations, if appropriate, 
on how to improve participation;
            (3) make available to small businesses training, mentoring, 
        and information on how to participate in procurement and 
        collaborative research activities;
            (4) increase the awareness inside the National Laboratory 
        or single-purpose research facility of the capabilities and 
        opportunities presented by small business concerns; and
            (5) establish guidelines for the program under subsection 
        (b) and report on the effectiveness of such program to the 
        Director of the National Laboratory or single-purpose research 
        facility.
    (b) Establishment of Small Business Assistance Program.--The 
Secretary shall require the Director of each National Laboratory, and 
may require the Director of a single-purpose research facility, to 
establish a program to provide small business concerns--
            (1) assistance directed at making them more effective and 
        efficient subcontractors or suppliers to the National 
        Laboratory or single-purpose research facility; or
            (2) general technical assistance, the cost of which shall 
        not exceed $10,000 per instance of assistance, to improve the 
        small business concerns' products or services.
    (c) Use of Funds.--None of the funds expended under subsection (b) 
may be used for direct grants to the small business concerns.
    (d) Definitions.--In this section:
            (1) Small business concern.--The term ``small business 
        concern'' has the meaning given such term in section 3 of the 
        Small Business Act (15 U.S.C. 632).
            (2) Socially and economically disadvantaged small business 
        concerns.--The term ``socially and economically disadvantaged 
        small business concerns'' has the meaning given such term in 
        section 8(a)(4) of the Small Business Act (15 U.S.C. 
        637(a)(4)).
    (e) Authorization of Appropriations.--There are authorized to be 
appropriated to the Secretary for activities under this section 
$5,000,000 for each of fiscal years 2004 through 2008.

SEC. 985. REPORT ON MOBILITY OF SCIENTIFIC AND TECHNICAL PERSONNEL.

    Not later than 2 years after the date of enactment of this Act, the 
Secretary shall transmit a report to Congress identifying any policies 
or procedures of a contractor operating a National Laboratory or 
single-purpose research facility that create disincentives to the 
temporary transfer of scientific and technical personnel among the 
contractor-operated National Laboratories or contractor-operated 
single-purpose research facilities and provide suggestions for 
improving interlaboratory exchange of scientific and technical 
personnel.

SEC. 986. NATIONAL ACADEMY OF SCIENCES REPORT.

    Not later than 90 days after the date of enactment of this Act, the 
Secretary shall enter into an arrangement with the National Academy of 
Sciences for the Academy to--
            (1) conduct a study on--
                    (A) the obstacles to accelerating the commercial 
                application of energy technology; and
                    (B) the adequacy of Department policies and 
                procedures for, and oversight of, technology transfer-
                related disputes between contractors of the Department 
                and the private sector; and
            (2) transmit a report to Congress on recommendations 
        developed as a result of the study.

SEC. 987. OUTREACH.

    The Secretary shall ensure that each program authorized by this 
title includes an outreach component to provide information, as 
appropriate, to manufacturers, consumers, engineers, architects, 
builders, energy service companies, institutions of higher education, 
small businesses, facility planners and managers, State and local 
governments, and other entities.

SEC. 988. COMPETITIVE AWARD OF MANAGEMENT CONTRACTS.

    None of the funds authorized to be appropriated to the Secretary by 
this title may be used to award a management and operating contract for 
a nonmilitary energy laboratory of the Department unless such contract 
is competitively awarded or the Secretary grants, on a case-by-case 
basis, a waiver to allow for such a deviation. The Secretary may not 
delegate the authority to grant such a waiver and shall submit to 
Congress a report notifying Congress of the waiver and setting forth 
the reasons for the waiver at least 60 days prior to the date of the 
award of such a contract.

SEC. 989. EDUCATIONAL PROGRAMS IN SCIENCE AND MATHEMATICS.

    (a) Activities.--Section 3165(a) of the Department of Energy 
Science Education Enhancement Act (42 U.S.C. 7381b(a)) is amended by 
adding at the end the following:
            ``(14) Support competitive events for students, under 
        supervision of teachers, designed to encourage student interest 
        and knowledge in science and mathematics.''.
    (b) Authorization of Appropriations.--Section 3169 of the 
Department of Energy Science Education Enhancement Act (42 U.S.C. 
7381e), as so redesignated by section 1102(b), is amended by inserting 
before the period ``; and $40,000,000 for each of fiscal years 2004 
through 2008''.

                TITLE X--DEPARTMENT OF ENERGY MANAGEMENT

SEC. 1001. ADDITIONAL ASSISTANT SECRETARY POSITION.

    (a) Additional Assistant Secretary Position To Enable Improved 
Management of Nuclear Energy Issues.--
            (1) In general.--Section 203(a) of the Department of Energy 
        Organization Act (42 U.S.C. 7133(a)) is amended by striking 
        ``six Assistant Secretaries'' and inserting ``7 Assistant 
        Secretaries''.
            (2) Sense of congress.--It is the sense of Congress that 
        the leadership for departmental missions in nuclear energy 
        should be at the Assistant Secretary level.
    (b) Technical and Conforming Amendments.--
            (1) Title 5.--Section 5315 of title 5, United States Code, 
        is amended by striking ``Assistant Secretaries of Energy (6)'' 
        and inserting ``Assistant Secretaries of Energy (7)''.
            (2) Department of energy organization act.--The table of 
        contents for the Department of Energy Organization Act (42 
        U.S.C. 7101 note) is amended--
                    (A) by striking ``Section 209'' and inserting 
                ``Sec. 209'';
                    (B) by striking ``213.'' and inserting ``Sec. 
                213.'';
                    (C) by striking ``214.'' and inserting ``Sec. 
                214.'';
                    (D) by striking ``215.'' and inserting ``Sec. 
                215.''; and
                    (E) by striking ``216.'' and inserting ``Sec. 
                216.''.

SEC. 1002. OTHER TRANSACTIONS AUTHORITY.

    Section 646 of the Department of Energy Organization Act (42 U.S.C. 
7256) is amended by adding at the end the following:
    ``(g)(1) In addition to other authorities granted to the Secretary 
under law, the Secretary may enter into other transactions on such 
terms as the Secretary may deem appropriate in furtherance of research, 
development, or demonstration functions vested in the Secretary. Such 
other transactions shall not be subject to the provisions of section 9 
of the Federal Nonnuclear Energy Research and Development Act of 1974 
(42 U.S.C. 5908) or section 152 of the Atomic Energy Act of 1954 (42 
U.S.C. 2182).
    ``(2)(A) The Secretary shall ensure that--
            ``(i) to the maximum extent the Secretary determines 
        practicable, no transaction entered into under paragraph (1) 
        provides for research, development, or demonstration that 
        duplicates research, development, or demonstration being 
        conducted under existing projects carried out by the 
        Department;
            ``(ii) to the extent the Secretary determines practicable, 
        the funds provided by the Government under a transaction 
        authorized by paragraph (1) do not exceed the total amount 
        provided by other parties to the transaction; and
            ``(iii) to the extent the Secretary determines practicable, 
        competitive, merit-based selection procedures shall be used 
        when entering into transactions under paragraph (1).
    ``(B) A transaction authorized by paragraph (1) may be used for a 
research, development, or demonstration project only if the Secretary 
makes a written determination that the use of a standard contract, 
grant, or cooperative agreement for the project is not feasible or 
appropriate.
    ``(3)(A) The Secretary shall protect from disclosure, including 
disclosure under section 552 of title 5, United States Code, for up to 
5 years after the date the information is received by the Secretary--
            ``(i) a proposal, proposal abstract, and supporting 
        documents submitted to the Department in a competitive or 
        noncompetitive process having the potential for resulting in an 
        award under paragraph (1) to the party submitting the 
        information; and
            ``(ii) a business plan and technical information relating 
        to a transaction authorized by paragraph (1) submitted to the 
        Department as confidential business information.
    ``(B) The Secretary may protect from disclosure, for up to 5 years 
after the information was developed, any information developed pursuant 
to a transaction under paragraph (1) which developed information is of 
a character that it would be protected from disclosure under section 
552(b)(4) of title 5, United States Code, if obtained from a person 
other than a Federal agency.
    ``(4) Not later than 90 days after the date of enactment of this 
subsection, the Secretary shall prescribe guidelines for using other 
transactions authorized by paragraph (1). Such guidelines shall be 
published in the Federal Register for public comment under rulemaking 
procedures of the Department.
    ``(5) The authority of the Secretary under this subsection may be 
delegated only to an officer of the Department who is appointed by the 
President by and with the advice and consent of the Senate and may not 
be delegated to any other person.
    ``(6)(A) Not later than September 31, 2005, the Comptroller General 
of the United States shall report to Congress on the Department's use 
of the authorities granted under this section, including the ability to 
attract nontraditional government contractors and whether additional 
safeguards are needed with respect to the use of such authorities.
    ``(B) In this section, the term `nontraditional Government 
contractor' has the same meaning as the term `nontraditional defense 
contractor' as defined in section 845(e) of the National Defense 
Authorization Act for Fiscal Year 1994 (Public Law 103-160; 10 U.S.C. 
2371 note).''.

                    TITLE XI--PERSONNEL AND TRAINING

SEC. 1101. TRAINING GUIDELINES FOR ELECTRIC ENERGY INDUSTRY PERSONNEL.

    The Secretary of Energy, in consultation with the Secretary of 
Labor and jointly with the electric industry and recognized employee 
representatives, shall develop model personnel training guidelines to 
support electric system reliability and safety. The training guidelines 
shall, at a minimum--
            (1) include training requirements for workers engaged in 
        the construction, operation, inspection, and maintenance of 
        electric generation, transmission, and distribution, including 
        competency and certification requirements, and assessment 
        requirements that include initial and ongoing evaluation of 
        workers, recertification assessment procedures, and methods for 
        examining or testing the qualification of individuals 
        performing covered tasks; and
            (2) consolidate existing training guidelines on the 
        construction, operation, maintenance, and inspection of 
        electric generation, transmission, and distribution facilities, 
        such as those established by the National Electric Safety Code 
        and other industry consensus standards.

SEC. 1102. IMPROVED ACCESS TO ENERGY-RELATED SCIENTIFIC AND TECHNICAL 
              CAREERS.

    (a) Department of Energy Science Education Programs.--Section 3164 
of the Department of Energy Science Education Enhancement Act (42 
U.S.C. 7381a) is amended by adding at the end the following:
    ``(c) Programs for Students From Underrepresented Groups.--In 
carrying out a program under subsection (a), the Secretary shall give 
priority to activities that are designed to encourage students from 
underrepresented groups to pursue scientific and technical careers.''.
    (b) Partnerships With Historically Black Colleges and Universities, 
Hispanic-Servicing Institutions, and Tribal Colleges.--The Department 
of Energy Science Education Enhancement Act (42 U.S.C. 7381 et seq.) is 
amended--
            (1) by redesignating sections 3167 and 3168 as sections 
        3168 and 3169, respectively; and
            (2) by inserting after section 3166 the following:

``SEC. 3167. PARTNERSHIPS WITH HISTORICALLY BLACK COLLEGES AND 
              UNIVERSITIES, HISPANIC-SERVING INSTITUTIONS, AND TRIBAL 
              COLLEGES.

    ``(a) Definitions.--In this section:
            ``(1) Hispanic-serving institution.--The term `Hispanic-
        serving institution' has the meaning given that term in section 
        502(a) of the Higher Education Act of 1965 (20 U.S.C. 
        1101a(a)).
            ``(2) Historically black college or university.--The term 
        `historically Black college or university' has the meaning 
        given the term `part B institution' in section 322 of the 
        Higher Education Act of 1965 (20 U.S.C. 1061).
            ``(3) National laboratory.--The term `National Laboratory' 
        has the meaning given that term in section 902 of the Energy 
        Policy Act of 2003.
            ``(4) Science facility.--The term `science facility' has 
        the meaning given the term `single-purpose research facility' 
        in section 902 of the Energy Policy Act of 2003.
            ``(5) Tribal college.--The term `tribal college' has the 
        meaning given the term `Tribal College or University' in 
        section 316(b)(3) of the Higher Education Act of 1965 (20 
        U.S.C. 1059c(b)(3)).
    ``(b) Education Partnership.--The Secretary shall direct the 
Director of each National Laboratory and, to the extent practicable, 
the head of any science facility to increase the participation of 
historically Black colleges or universities, Hispanic-serving 
institutions, or tribal colleges in activities that increase the 
capacity of the historically Black colleges or universities, Hispanic-
serving institutions, or tribal colleges to train personnel in science 
or engineering.
    ``(c) Activities.--An activity under subsection (b) may include--
            ``(1) collaborative research;
            ``(2) equipment transfer;
            ``(3) training activities conducted at a National 
        Laboratory or science facility; and
            ``(4) mentoring activities conducted at a National 
        Laboratory or science facility.
    ``(d) Report.--Not later than 2 years after the date of enactment 
of the Energy Policy Act of 2003, the Secretary shall submit to 
Congress a report on the activities carried out under this section.''.

SEC. 1103. NATIONAL POWER PLANT OPERATIONS TECHNOLOGY AND EDUCATION 
              CENTER.

    (a) Establishment.--The Secretary shall support the establishment 
of a National Power Plant Operations Technology and Education Center 
(in this section referred to as the ``Center''), to address the need 
for training and educating certified operators for nonnuclear electric 
power generation plants.
    (b) Role.--The Center shall provide both training and continuing 
education relating to nonnuclear electric power generation plant 
technologies and operations. The Center shall conduct training and 
education activities on site and through Internet-based information 
technologies that allow for learning at remote sites.
    (c) Criteria for Competitive Selection.--The Secretary shall 
support the establishment of the Center at an institution of higher 
education with expertise in power plant technology and operation and 
with the ability to provide onsite as well as Internet-based training.

SEC. 1104. INTERNATIONAL ENERGY TRAINING.

    (a) In General.--The Secretary of Energy, in consultation with the 
Secretaries of Commerce, Interior, and State and the Federal Energy 
Regulatory Commission, shall coordinate training and outreach efforts 
for international commercial energy markets in countries with 
developing and restructuring economies.
    (b) Components.--The efforts may address--
            (1) production-related fiscal regimes;
            (2) grid and network issues;
            (3) energy user and demand side response;
            (4) international trade of energy; and
            (5) international transportation of energy.
    (c) Authorization of Appropriations.--There are authorized to be 
appropriated to carry out this section $1,500,000 for each of fiscal 
years 2004 through 2007.

                         TITLE XII--ELECTRICITY

SEC. 1201. SHORT TITLE.

    This title may be cited as the ``Electric Reliability Act of 
2003''.

                   Subtitle A--Reliability Standards

SEC. 1211. ELECTRIC RELIABILITY STANDARDS.

    (a) In General.--Part II of the Federal Power Act (16 U.S.C 824 et 
seq.) is amended by adding at the end the following:

``SEC. 215. ELECTRIC RELIABILITY.

    ``(a) Definitions.--For purposes of this section:
            ``(1) The term `bulk-power system' means--
                    ``(A) facilities and control systems necessary for 
                operating an interconnected electric energy 
                transmission network (or any portion thereof); and
                    ``(B) electric energy from generation facilities 
                needed to maintain transmission system reliability.
        The term does not include facilities used in the local 
        distribution of electric energy.
            ``(2) The terms `Electric Reliability Organization' and 
        `ERO' mean the organization certified by the Commission under 
        subsection (c) the purpose of which is to establish and enforce 
        reliability standards for the bulk-power system, subject to 
        Commission review.
            ``(3) The term `reliability standard' means a requirement, 
        approved by the Commission under this section, to provide for 
        reliable operation of the bulk-power system. The term includes 
        requirements for the operation of existing bulk-power system 
        facilities and the design of planned additions or modifications 
        to such facilities to the extent necessary to provide for 
        reliable operation of the bulk-power system, but the term does 
        not include any requirement to enlarge such facilities or to 
        construct new transmission capacity or generation capacity.
            ``(4) The term `reliable operation' means operating the 
        elements of the bulk-power system within equipment and electric 
        system thermal, voltage, and stability limits so that 
        instability, uncontrolled separation, or cascading failures of 
        such system will not occur as a result of a sudden disturbance 
        or unanticipated failure of system elements.
            ``(5) The term `Interconnection' means a geographic area in 
        which the operation of bulk-power system components is 
        synchronized such that the failure of 1 or more of such 
        components may adversely affect the ability of the operators of 
        other components within the system to maintain reliable 
operation of the facilities within their control.
            ``(6) The term `transmission organization' means a Regional 
        Transmission Organization, Independent System Operator, 
        independent transmission provider, or other transmission 
        organization finally approved by the Commission for the 
        operation of transmission facilities.
            ``(7) The term `regional entity' means an entity having 
        enforcement authority pursuant to subsection (e)(4).
    ``(b) Jurisdiction and Applicability.--(1) The Commission shall 
have jurisdiction, within the United States, over the ERO certified by 
the Commission under subsection (c), any regional entities, and all 
users, owners and operators of the bulk-power system, including but not 
limited to the entities described in section 201(f), for purposes of 
approving reliability standards established under this section and 
enforcing compliance with this section. All users, owners and operators 
of the bulk-power system shall comply with reliability standards that 
take effect under this section.
    ``(2) The Commission shall issue a final rule to implement the 
requirements of this section not later than 180 days after the date of 
enactment of this section.
    ``(c) Certification.--Following the issuance of a Commission rule 
under subsection (b)(2), any person may submit an application to the 
Commission for certification as the Electric Reliability Organization. 
The Commission may certify 1 such ERO if the Commission determines that 
such ERO--
            ``(1) has the ability to develop and enforce, subject to 
        subsection (e)(2), reliability standards that provide for an 
        adequate level of reliability of the bulk-power system; and
            ``(2) has established rules that--
                    ``(A) assure its independence of the users and 
                owners and operators of the bulk-power system, while 
                assuring fair stakeholder representation in the 
                selection of its directors and balanced decisionmaking 
                in any ERO committee or subordinate organizational 
                structure;
                    ``(B) allocate equitably reasonable dues, fees, and 
                other charges among end users for all activities under 
                this section;
                    ``(C) provide fair and impartial procedures for 
                enforcement of reliability standards through the 
                imposition of penalties in accordance with subsection 
                (e) (including limitations on activities, functions, or 
                operations, or other appropriate sanctions);
                    ``(D) provide for reasonable notice and opportunity 
                for public comment, due process, openness, and balance 
                of interests in developing reliability standards and 
                otherwise exercising its duties; and
                    ``(E) provide for taking, after certification, 
                appropriate steps to gain recognition in Canada and 
                Mexico.
    ``(d) Reliability Standards.--(1) The Electric Reliability 
Organization shall file each reliability standard or modification to a 
reliability standard that it proposes to be made effective under this 
section with the Commission.
    ``(2) The Commission may approve, by rule or order, a proposed 
reliability standard or modification to a reliability standard if it 
determines that the standard is just, reasonable, not unduly 
discriminatory or preferential, and in the public interest. The 
Commission shall give due weight to the technical expertise of the 
Electric Reliability Organization with respect to the content of a 
proposed standard or modification to a reliability standard and to the 
technical expertise of a regional entity organized on an 
Interconnection-wide basis with respect to a reliability standard to be 
applicable within that Interconnection, but shall not defer with 
respect to the effect of a standard on competition. A proposed standard 
or modification shall take effect upon approval by the Commission.
    ``(3) The Electric Reliability Organization shall rebuttably 
presume that a proposal from a regional entity organized on an 
Interconnection-wide basis for a reliability standard or modification 
to a reliability standard to be applicable on an Interconnection-wide 
basis is just, reasonable, and not unduly discriminatory or 
preferential, and in the public interest.
    ``(4) The Commission shall remand to the Electric Reliability 
Organization for further consideration a proposed reliability standard 
or a modification to a reliability standard that the Commission 
disapproves in whole or in part.
    ``(5) The Commission, upon its own motion or upon complaint, may 
order the Electric Reliability Organization to submit to the Commission 
a proposed reliability standard or a modification to a reliability 
standard that addresses a specific matter if the Commission considers 
such a new or modified reliability standard appropriate to carry out 
this section.
    ``(6) The final rule adopted under subsection (b)(2) shall include 
fair processes for the identification and timely resolution of any 
conflict between a reliability standard and any function, rule, order, 
tariff, rate schedule, or agreement accepted, approved, or ordered by 
the Commission applicable to a transmission organization. Such 
transmission organization shall continue to comply with such function, 
rule, order, tariff, rate schedule or agreement accepted approved, or 
ordered by the Commission until--
            ``(A) the Commission finds a conflict exists between a 
        reliability standard and any such provision;
            ``(B) the Commission orders a change to such provision 
        pursuant to section 206 of this part; and
            ``(C) the ordered change becomes effective under this part.
If the Commission determines that a reliability standard needs to be 
changed as a result of such a conflict, it shall order the ERO to 
develop and file with the Commission a modified reliability standard 
under paragraph (4) or (5) of this subsection.
    ``(e) Enforcement.--(1) The ERO may impose, subject to paragraph 
(2), a penalty on a user or owner or operator of the bulk-power system 
for a violation of a reliability standard approved by the Commission 
under subsection (d) if the ERO, after notice and an opportunity for a 
hearing--
            ``(A) finds that the user or owner or operator has violated 
        a reliability standard approved by the Commission under 
        subsection (d); and
            ``(B) files notice and the record of the proceeding with 
        the Commission.
    ``(2) A penalty imposed under paragraph (1) may take effect not 
earlier than the 31st day after the ERO files with the Commission 
notice of the penalty and the record of proceedings. Such penalty shall 
be subject to review by the Commission, on its own motion or upon 
application by the user, owner or operator that is the subject of the 
penalty filed within 30 days after the date such notice is filed with 
the Commission. Application to the Commission for review, or the 
initiation of review by the Commission on its own motion, shall not 
operate as a stay of such penalty unless the Commission otherwise 
orders upon its own motion or upon application by the user, owner or 
operator that is the subject of such penalty. In any proceeding to 
review a penalty imposed under paragraph (1), the Commission, after 
notice and opportunity for hearing (which hearing may consist solely of 
the record before the ERO and opportunity for the presentation of 
supporting reasons to affirm, modify, or set aside the penalty), shall 
by order affirm, set aside, reinstate, or modify the penalty, and, if 
appropriate, remand to the ERO for further proceedings. The Commission 
shall implement expedited procedures for such hearings.
    ``(3) On its own motion or upon complaint, the Commission may order 
compliance with a reliability standard and may impose a penalty against 
a user or owner or operator of the bulk-power system if the Commission 
finds, after notice and opportunity for a hearing, that the user or 
owner or operator of the bulk-power system has engaged or is about to 
engage in any acts or practices that constitute or will constitute a 
violation of a reliability standard.
    ``(4) The Commission shall issue regulations authorizing the ERO to 
enter into an agreement to delegate authority to a regional entity for 
the purpose of proposing reliability standards to the ERO and enforcing 
reliability standards under paragraph (1) if--
            ``(A) the regional entity is governed by--
                    ``(i) an independent board;
                    ``(ii) a balanced stakeholder board; or
                    ``(iii) a combination independent and balanced 
                stakeholder board.
            ``(B) the regional entity otherwise satisfies the 
        provisions of subsection (c)(1) and (2); and
            ``(C) the agreement promotes effective and efficient 
        administration of bulk-power system reliability.
The Commission may modify such delegation. The ERO and the Commission 
shall rebuttably presume that a proposal for delegation to a regional 
entity organized on an Interconnection-wide basis promotes effective 
and efficient administration of bulk-power system reliability and 
should be approved. Such regulation may provide that the Commission may 
assign the ERO's authority to enforce reliability standards under 
paragraph (1) directly to a regional entity consistent with the 
requirements of this paragraph.
    ``(5) The Commission may take such action as is necessary or 
appropriate against the ERO or a regional entity to ensure compliance 
with a reliability standard or any Commission order affecting the ERO 
or a regional entity.
    ``(6) Any penalty imposed under this section shall bear a 
reasonable relation to the seriousness of the violation and shall take 
into consideration the efforts of such user, owner, or operator to 
remedy the violation in a timely manner.
    ``(f) Changes in Electric Reliability Organization Rules.--The 
Electric Reliability Organization shall file with the Commission for 
approval any proposed rule or proposed rule change, accompanied by an 
explanation of its basis and purpose. The Commission, upon its own 
motion or complaint, may propose a change to the rules of the ERO. A 
proposed rule or proposed rule change shall take effect upon a finding 
by the Commission, after notice and opportunity for comment, that the 
change is just, reasonable, not unduly discriminatory or preferential, 
is in the public interest, and satisfies the requirements of subsection 
(c).
    ``(g) Reliability Reports.--The ERO shall conduct periodic 
assessments of the reliability and adequacy of the bulk-power system in 
North America.
    ``(h) Coordination With Canada and Mexico.--The President is urged 
to negotiate international agreements with the governments of Canada 
and Mexico to provide for effective compliance with reliability 
standards and the effectiveness of the ERO in the United States and 
Canada or Mexico.
    ``(i) Savings Provisions.--(1) The ERO shall have authority to 
develop and enforce compliance with reliability standards for only the 
bulk-power system.
    ``(2) This section does not authorize the ERO or the Commission to 
order the construction of additional generation or transmission 
capacity or to set and enforce compliance with standards for adequacy 
or safety of electric facilities or services.
    ``(3) Nothing in this section shall be construed to preempt any 
authority of any State to take action to ensure the safety, adequacy, 
and reliability of electric service within that State, as long as such 
action is not inconsistent with any reliability standard.
    ``(4) Within 90 days of the application of the Electric Reliability 
Organization or other affected party, and after notice and opportunity 
for comment, the Commission shall issue a final order determining 
whether a State action is inconsistent with a reliability standard, 
taking into consideration any recommendation of the ERO.
    ``(5) The Commission, after consultation with the ERO and the State 
taking action, may stay the effectiveness of any State action, pending 
the Commission's issuance of a final order.
    ``(j) Regional Advisory Bodies.--The Commission shall establish a 
regional advisory body on the petition of at least \2/3\ of the States 
within a region that have more than \1/2\ of their electric load served 
within the region. A regional advisory body shall be composed of 1 
member from each participating State in the region, appointed by the 
Governor of each State, and may include representatives of agencies, 
States, and provinces outside the United States. A regional advisory 
body may provide advice to the Electric Reliability Organization, a 
regional entity, or the Commission regarding the governance of an 
existing or proposed regional entity within the same region, whether a 
standard proposed to apply within the region is just, reasonable, not 
unduly discriminatory or preferential, and in the public interest, 
whether fees proposed to be assessed within the region are just, 
reasonable, not unduly discriminatory or preferential, and in the 
public interest and any other responsibilities requested by the 
Commission. The Commission may give deference to the advice of any such 
regional advisory body if that body is organized on an Interconnection-
wide basis.
    ``(k) Alaska and Hawaii.--The provisions of this section do not 
apply to Alaska or Hawaii.''.
    (b) Status of ERO.--The Electric Reliability Organization certified 
by the Federal Energy Regulatory Commission under section 215(c) of the 
Federal Power Act and any regional entity delegated enforcement 
authority pursuant to section 215(e)(4) of that Act are not 
departments, agencies, or instrumentalities of the United States 
Government.

         Subtitle B--Transmission Infrastructure Modernization

SEC. 1221. SITING OF INTERSTATE ELECTRIC TRANSMISSION FACILITIES.

    (a) Amendment of Federal Power Act.--Part II of the Federal Power 
Act is amended by adding at the end the following:

``SEC. 216. SITING OF INTERSTATE ELECTRIC TRANSMISSION FACILITIES.

    ``(a) Designation of National Interest Electric Transmission 
Corridors.--
            ``(1) Transmission congestion study.--Within 1 year after 
        the enactment of this section, and every 3 years thereafter, 
        the Secretary of Energy, in consultation with affected States, 
        shall conduct a study of electric transmission congestion. 
        After considering alternatives and recommendations from 
        interested parties, including an opportunity for comment from 
        affected States, the Secretary shall issue a report, based on 
        such study, which may designate any geographic area 
        experiencing electric energy transmission capacity constraints 
        or congestion that adversely affects consumers as a national 
        interest electric transmission corridor. The Secretary shall 
        conduct the study and issue the report in consultation with any 
        appropriate regional entity referenced in section 215 of this 
        Act.
            ``(2) Considerations.--In determining whether to designate 
        a national interest electric transmission corridor referred to 
        in paragraph (1) under this section, the Secretary may consider 
        whether--
                    ``(A) the economic vitality and development of the 
                corridor, or the end markets served by the corridor, 
may be constrained by lack of adequate or reasonably priced 
electricity;
                    ``(B)(i) economic growth in the corridor, or the 
                end markets served by the corridor, may be jeopardized 
                by reliance on limited sources of energy; and
                    ``(ii) a diversification of supply is warranted;
                    ``(C) the energy independence of the United States 
                would be served by the designation;
                    ``(D) the designation would be in the interest of 
                national energy policy; and
                    ``(E) the designation would enhance national 
                defense and homeland security.
    ``(b) Construction Permit.--Except as provided in subsection (i), 
the Commission is authorized, after notice and an opportunity for 
hearing, to issue a permit or permits for the construction or 
modification of electric transmission facilities in a national interest 
electric transmission corridor designated by the Secretary under 
subsection (a) if the Commission finds that--
            ``(1)(A) a State in which the transmission facilities are 
        to be constructed or modified is without authority to--
                    ``(i) approve the siting of the facilities; or
                    ``(ii) consider the interstate benefits expected to 
                be achieved by the proposed construction or 
                modification of transmission facilities in the State;
            ``(B) the applicant for a permit is a transmitting utility 
        under this Act but does not qualify to apply for a permit or 
        siting approval for the proposed project in a State because the 
        applicant does not serve end-use customers in the State; or
            ``(C) a State commission or other entity that has authority 
        to approve the siting of the facilities has--
                    ``(i) withheld approval for more than 1 year after 
                the filing of an application pursuant to applicable law 
                seeking approval or 1 year after the designation of the 
                relevant national interest electric transmission 
                corridor, whichever is later; or
                    ``(ii) conditioned its approval in such a manner 
                that the proposed construction or modification will not 
                significantly reduce transmission congestion in 
                interstate commerce or is not economically feasible;
            ``(2) the facilities to be authorized by the permit will be 
        used for the transmission of electric energy in interstate 
        commerce;
            ``(3) the proposed construction or modification is 
        consistent with the public interest;
            ``(4) the proposed construction or modification will 
        significantly reduce transmission congestion in interstate 
        commerce and protects or benefits consumers; and
            ``(5) the proposed construction or modification is 
        consistent with sound national energy policy and will enhance 
        energy independence.
    ``(c) Permit Applications.--Permit applications under subsection 
(b) shall be made in writing to the Commission. The Commission shall 
issue rules setting forth the form of the application, the information 
to be contained in the application, and the manner of service of notice 
of the permit application upon interested persons.
    ``(d) Comments.--In any proceeding before the Commission under 
subsection (b), the Commission shall afford each State in which a 
transmission facility covered by the permit is or will be located, each 
affected Federal agency and Indian tribe, private property owners, and 
other interested persons, a reasonable opportunity to present their 
views and recommendations with respect to the need for and impact of a 
facility covered by the permit.
    ``(e) Rights-of-Way.--In the case of a permit under subsection (b) 
for electric transmission facilities to be located on property other 
than property owned by the United States or a State, if the permit 
holder cannot acquire by contract, or is unable to agree with the owner 
of the property to the compensation to be paid for, the necessary 
right-of-way to construct or modify such transmission facilities, the 
permit holder may acquire the right-of-way by the exercise of the right 
of eminent domain in the district court of the United States for the 
district in which the property concerned is located, or in the 
appropriate court of the State in which the property is located. The 
practice and procedure in any action or proceeding for that purpose in 
the district court of the United States shall conform as nearly as may 
be with the practice and procedure in similar action or proceeding in 
the courts of the State where the property is situated.
    ``(f) State Law.--Nothing in this section shall preclude any person 
from constructing or modifying any transmission facility pursuant to 
State law.
    ``(g) Compensation.--Any exercise of eminent domain authority 
pursuant to this section shall be considered a taking of private 
property for which just compensation is due. Just compensation shall be 
an amount equal to the full fair market value of the property taken on 
the date of the exercise of eminent domain authority, except that the 
compensation shall exceed fair market value if necessary to make the 
landowner whole for decreases in the value of any portion of the land 
not subject to eminent domain. Any parcel of land acquired by eminent 
domain under this subsection shall be transferred back to the owner 
from whom it was acquired (or his heirs or assigns) if the land is not 
used for the construction or modification of electric transmission 
facilities within a reasonable period of time after the acquisition. 
Other than construction, modification, operation, or maintenance of 
electric transmission facilities and related facilities, property 
acquired under subsection (e) may not be used for any purpose 
(including use for any heritage area, recreational trail, or park) 
without the consent of the owner of the parcel from whom the property 
was acquired (or the owner's heirs or assigns).
    ``(h) Coordination of Federal Authorizations for Transmission and 
Distribution Facilities.--
            ``(1) Lead agency.--If an applicant, or prospective 
        applicant, for a Federal authorization related to an electric 
        transmission or distribution facility so requests, the 
        Department of Energy (DOE) shall act as the lead agency for 
        purposes of coordinating all applicable Federal authorizations 
        and related environmental reviews of the facility. For purposes 
        of this subsection, the term `Federal authorization' means any 
        authorization required under Federal law in order to site a 
        transmission or distribution facility, including but not 
        limited to such permits, special use authorizations, 
        certifications, opinions, or other approvals as may be 
        required, whether issued by a Federal or a State agency. To the 
        maximum extent practicable under applicable Federal law, the 
        Secretary of Energy shall coordinate this Federal authorization 
        and review process with any Indian tribes, multi-State 
        entities, and State agencies that are responsible for 
        conducting any separate permitting and environmental reviews of 
        the facility, to ensure timely and efficient review and permit 
        decisions.
            ``(2) Authority to set deadlines.--As lead agency, the 
        Department of Energy, in consultation with agencies responsible 
        for Federal authorizations and, as appropriate, with Indian 
        tribes, multi-State entities, and State agencies that are 
        willing to coordinate their own separate permitting and 
        environmental reviews with the Federal authorization 
and environmental reviews, shall establish prompt and binding 
intermediate milestones and ultimate deadlines for the review of, and 
Federal authorization decisions relating to, the proposed facility. The 
Secretary of Energy shall ensure that once an application has been 
submitted with such data as the Secretary considers necessary, all 
permit decisions and related environmental reviews under all applicable 
Federal laws shall be completed within 1 year or, if a requirement of 
another provision of Federal law makes this impossible, as soon 
thereafter as is practicable. The Secretary of Energy also shall 
provide an expeditious pre-application mechanism for prospective 
applicants to confer with the agencies involved to have each such 
agency determine and communicate to the prospective applicant within 60 
days of when the prospective applicant submits a request for such 
information concerning--
                    ``(A) the likelihood of approval for a potential 
                facility; and
                    ``(B) key issues of concern to the agencies and 
                public.
            ``(3) Consolidated environmental review and record of 
        decision.--As lead agency head, the Secretary of Energy, in 
        consultation with the affected agencies, shall prepare a single 
        environmental review document, which shall be used as the basis 
        for all decisions on the proposed project under Federal law. 
        The document may be an environmental assessment or 
        environmental impact statement under the National Environmental 
        Policy Act of 1969 if warranted, or such other form of analysis 
        as may be warranted. The Secretary of Energy and the heads of 
        other agencies shall streamline the review and permitting of 
        transmission and distribution facilities within corridors 
        designated under section 503 of the Federal Land Policy and 
        Management Act (43 U.S.C. 1763) by fully taking into account 
        prior analyses and decisions relating to the corridors. Such 
        document shall include consideration by the relevant agencies 
        of any applicable criteria or other matters as required under 
        applicable laws.
            ``(4) Appeals.--In the event that any agency has denied a 
        Federal authorization required for a transmission or 
        distribution facility, or has failed to act by the deadline 
        established by the Secretary pursuant to this section for 
        deciding whether to issue the authorization, the applicant or 
        any State in which the facility would be located may file an 
        appeal with the Secretary, who shall, in consultation with the 
        affected agency, review the denial or take action on the 
        pending application. Based on the overall record and in 
        consultation with the affected agency, the Secretary may then 
        either issue the necessary authorization with any appropriate 
        conditions, or deny the application. The Secretary shall issue 
        a decision within 90 days of the filing of the appeal. In 
        making a decision under this paragraph, the Secretary shall 
        comply with applicable requirements of Federal law, including 
        any requirements of the Endangered Species Act, the Clean Water 
        Act, the National Forest Management Act, the National 
        Environmental Policy Act of 1969, and the Federal Land Policy 
        and Management Act.
            ``(5) Conforming regulations and memoranda of 
        understanding.--Not later than 18 months after the date of 
        enactment of this section, the Secretary of Energy shall issue 
        any regulations necessary to implement this subsection. Not 
        later than 1 year after the date of enactment of this section, 
        the Secretary and the heads of all Federal agencies with 
        authority to issue Federal authorizations shall enter into 
        Memoranda of Understanding to ensure the timely and coordinated 
        review and permitting of electricity transmission and 
        distribution facilities. The head of each Federal agency with 
        authority to issue a Federal authorization shall designate a 
        senior official responsible for, and dedicate sufficient other 
        staff and resources to ensure, full implementation of the DOE 
        regulations and any Memoranda. Interested Indian tribes, multi-
        State entities, and State agencies may enter such Memoranda of 
        Understanding.
            ``(6) Duration and renewal.--Each Federal land use 
        authorization for an electricity transmission or distribution 
        facility shall be issued--
                    ``(A) for a duration, as determined by the 
                Secretary of Energy, commensurate with the anticipated 
                use of the facility, and
                    ``(B) with appropriate authority to manage the 
                right-of-way for reliability and environmental 
                protection.
        Upon the expiration of any such authorization (including an 
        authorization issued prior to enactment of this section), the 
        authorization shall be reviewed for renewal taking fully into 
        account reliance on such electricity infrastructure, 
        recognizing its importance for public health, safety and 
        economic welfare and as a legitimate use of Federal lands.
            ``(7) Maintaining and enhancing the transmission 
        infrastructure.--In exercising the responsibilities under this 
        section, the Secretary of Energy shall consult regularly with 
        the Federal Energy Regulatory Commission (FERC), FERC-approved 
        electric reliability organizations (including related regional 
        entities), and FERC-approved Regional Transmission 
        Organizations and Independent System Operators.
    ``(i) Interstate Compacts.--The consent of Congress is hereby given 
for 3 or more contiguous States to enter into an interstate compact, 
subject to approval by Congress, establishing regional transmission 
siting agencies to facilitate siting of future electric energy 
transmission facilities within such States and to carry out the 
electric energy transmission siting responsibilities of such States. 
The Secretary of Energy may provide technical assistance to regional 
transmission siting agencies established under this subsection. Such 
regional transmission siting agencies shall have the authority to 
review, certify, and permit siting of transmission facilities, 
including facilities in national interest electric transmission 
corridors (other than facilities on property owned by the United 
States). The Commission shall have no authority to issue a permit for 
the construction or modification of electric transmission facilities 
within a State that is a party to a compact, unless the members of a 
compact are in disagreement and the Secretary makes, after notice and 
an opportunity for a hearing, the finding described in section 
(b)(1)(C).
    ``(j) Savings Clause.--Nothing in this section shall be construed 
to affect any requirement of the environmental laws of the United 
States, including, but not limited to, the National Environmental 
Policy Act of 1969. Subsection (h)(4) of this section shall not apply 
to any Congressionally-designated components of the National Wilderness 
Preservation System, the National Wild and Scenic Rivers System, or the 
National Park system (including National Monuments therein).
    ``(k) ERCOT.--This section shall not apply within the area referred 
to in section 212(k)(2)(A).''.
    (b) Reports to Congress on Corridors and Rights of Way on Federal 
Lands.--The Secretary of the Interior, the Secretary of Energy, the 
Secretary of Agriculture, and the Chairman of the Council on 
Environmental Quality shall, within 90 days of the date of enactment of 
this subsection, submit a joint report to Congress identifying each of 
the following:
            (1) All existing designated transmission and distribution 
        corridors on Federal land and the status of work related to 
proposed transmission and distribution corridor designations under 
Title V of the Federal Land Policy and Management Act (43 U.S.C. 1761 
et seq.), the schedule for completing such work, any impediments to 
completing the work, and steps that Congress could take to expedite the 
process.
            (2) The number of pending applications to locate 
        transmission and distribution facilities on Federal lands, key 
        information relating to each such facility, how long each 
        application has been pending, the schedule for issuing a timely 
        decision as to each facility, and progress in incorporating 
        existing and new such rights-of-way into relevant land use and 
        resource management plans or their equivalent.
            (3) The number of existing transmission and distribution 
        rights-of-way on Federal lands that will come up for renewal 
        within the following 5-, 10-, and 15-year periods, and a 
        description of how the Secretaries plan to manage such 
        renewals.

SEC. 1222. THIRD-PARTY FINANCE.

    (a) Existing Facilities.--The Secretary of Energy (hereinafter in 
this section referred to as the ``Secretary''), acting through the 
Administrator of the Western Area Power Administration (hereinafter in 
this section referred to as ``WAPA''), or through the Administrator of 
the Southwestern Power Administration (hereinafter in this section 
referred to as ``SWPA''), or both, may design, develop, construct, 
operate, maintain, or own, or participate with other entities in 
designing, developing, constructing, operating, maintaining, or owning, 
an electric power transmission facility and related facilities 
(``Project'') needed to upgrade existing transmission facilities owned 
by SWPA or WAPA if the Secretary of Energy, in consultation with the 
applicable Administrator, determines that the proposed Project--
            (1)(A) is located in a national interest electric 
        transmission corridor designated under section 216(a) of the 
        Federal Power Act and will reduce congestion of electric 
        transmission in interstate commerce; or
            (B) is necessary to accommodate an actual or projected 
        increase in demand for electric transmission capacity;
            (2) is consistent with--
                    (A) transmission needs identified, in a 
                transmission expansion plan or otherwise, by the 
                appropriate Regional Transmission Organization or 
                Independent System Operator (as defined in the Federal 
                Power Act), if any, or approved regional reliability 
                organization; and
                    (B) efficient and reliable operation of the 
                transmission grid; and
            (3) would be operated in conformance with prudent utility 
        practice.
    (b) New Facilities.--The Secretary, acting through WAPA or SWPA, or 
both, may design, develop, construct, operate, maintain, or own, or 
participate with other entities in designing, developing, constructing, 
operating, maintaining, or owning, a new electric power transmission 
facility and related facilities (``Project'') located within any State 
in which WAPA or SWPA operates if the Secretary, in consultation with 
the applicable Administrator, determines that the proposed Project--
            (1)(A) is located in an area designated under section 
        216(a) of the Federal Power Act and will reduce congestion of 
        electric transmission in interstate commerce; or
            (B) is necessary to accommodate an actual or projected 
        increase in demand for electric transmission capacity;
            (2) is consistent with--
                    (A) transmission needs identified, in a 
                transmission expansion plan or otherwise, by the 
                appropriate Regional Transmission Organization or 
                Independent System Operator, if any, or approved 
                regional reliability organization; and
                    (B) efficient and reliable operation of the 
                transmission grid;
            (3) will be operated in conformance with prudent utility 
        practice;
            (4) will be operated by, or in conformance with the rules 
        of, the appropriate (A) Regional Transmission Organization or 
        Independent System Operator, if any, or (B) if such an 
        organization does not exist, regional reliability organization; 
        and
            (5) will not duplicate the functions of existing 
        transmission facilities or proposed facilities which are the 
        subject of ongoing or approved siting and related permitting 
        proceedings.
    (c) Other Funds.--
            (1) In general.--In carrying out a Project under subsection 
        (a) or (b), the Secretary may accept and use funds contributed 
        by another entity for the purpose of carrying out the Project.
            (2) Availability.--The contributed funds shall be available 
        for expenditure for the purpose of carrying out the Project--
                    (A) without fiscal year limitation; and
                    (B) as if the funds had been appropriated 
                specifically for that Project.
            (3) Allocation of costs.--In carrying out a Project under 
        subsection (a) or (b), any costs of the Project not paid for by 
        contributions from another entity shall be collected through 
        rates charged to customers using the new transmission 
        capability provided by the Project and allocated equitably 
        among these project beneficiaries using the new transmission 
        capability.
    (d) Relationship to Other Laws.--Nothing in this section affects 
any requirement of--
            (1) any Federal environmental law, including the National 
        Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.);
            (2) any Federal or State law relating to the siting of 
        energy facilities; or
            (3) any existing authorizing statutes.
    (e) Savings Clause.--Nothing in this section shall constrain or 
restrict an Administrator in the utilization of other authority 
delegated to the Administrator of WAPA or SWPA.
    (f) Secretarial Determinations.--Any determination made pursuant to 
subsection (a) or (b) shall be based on findings by the Secretary using 
the best available data.
    (g) Limitations.--The Secretary shall not accept and use more than 
$100,000,000 under subsection (c)(1) for the period encompassing fiscal 
years 2005 through 2013.
    (h) Effective Date.--This section takes effect on October 1, 2004.

SEC. 1223. TRANSMISSION SYSTEM MONITORING.

    Within 6 months after the date of enactment of this Act, the 
Secretary of Energy and the Federal Energy Regulatory Commission shall 
study and report to Congress on the steps which must be taken to 
establish a system to make available to all transmission system owners 
and Regional Transmission Organizations (as defined in the Federal 
Power Act) within the Eastern and Western Interconnections real-time 
information on the functional status of all transmission lines within 
such Interconnections. In such study, the Commission shall assess 
technical means for implementing such transmission information system 
and identify the steps the Commission or Congress must take to require 
the implementation of such system.

SEC. 1224. ADVANCED TRANSMISSION TECHNOLOGIES.

    (a) Authority.--The Federal Energy Regulatory Commission, in the 
exercise of its authorities under the Federal Power Act and the Public 
Utility Regulatory Policies Act of 1978, shall encourage the deployment 
of advanced transmission technologies.
    (b) Definition.--For the purposes of this section, the term 
``advanced transmission technologies'' means technologies that increase 
the capacity, efficiency, or reliability of existing or new 
transmission facilities, including, but not limited to--
            (1) high-temperature lines (including superconducting 
        cables);
            (2) underground cables;
            (3) advanced conductor technology (including advanced 
        composite conductors, high-temperature low-sag conductors, and 
        fiber optic temperature sensing conductors);
            (4) high-capacity ceramic electric wire, connectors, and 
        insulators;
            (5) optimized transmission line configurations (including 
        multiple phased transmission lines);
            (6) modular equipment;
            (7) wireless power transmission;
            (8) ultra-high voltage lines;
            (9) high-voltage DC technology;
            (10) flexible AC transmission systems;
            (11) energy storage devices (including pumped hydro, 
        compressed air, superconducting magnetic energy storage, 
        flywheels, and batteries);
            (12) controllable load;
            (13) distributed generation (including PV, fuel cells, 
        microturbines);
            (14) enhanced power device monitoring;
            (15) direct system state sensors;
            (16) fiber optic technologies;
            (17) power electronics and related software (including real 
        time monitoring and analytical software); and
            (18) any other technologies the Commission considers 
        appropriate.
    (c) Obsolete or Impracticable Technologies.--The Commission is 
authorized to cease encouraging the deployment of any technology 
described in this section on a finding that such technology has been 
rendered obsolete or otherwise impracticable to deploy.

SEC. 1225. ELECTRIC TRANSMISSION AND DISTRIBUTION PROGRAMS.

    (a) Electric Transmission and Distribution Program.--The Secretary 
of Energy (hereinafter in this section referred to as the 
``Secretary'') acting through the Director of the Office of Electric 
Transmission and Distribution shall establish a comprehensive research, 
development, demonstration and commercial application program to 
promote improved reliability and efficiency of electrical transmission 
and distribution systems. This program shall include--
            (1) advanced energy delivery and storage technologies, 
        materials, and systems, including new transmission 
        technologies, such as flexible alternating current transmission 
        systems, composite conductor materials and other technologies 
        that enhance reliability, operational flexibility, or power-
        carrying capability;
            (2) advanced grid reliability and efficiency technology 
        development;
            (3) technologies contributing to significant load 
        reductions;
            (4) advanced metering, load management, and control 
        technologies;
            (5) technologies to enhance existing grid components;
            (6) the development and use of high-temperature 
        superconductors to--
                    (A) enhance the reliability, operational 
                flexibility, or power-carrying capability of electric 
                transmission or distribution systems; or
                    (B) increase the efficiency of electric energy 
                generation, transmission, distribution, or storage 
                systems;
            (7) integration of power systems, including systems to 
        deliver high-quality electric power, electric power 
        reliability, and combined heat and power;
            (8) supply of electricity to the power grid by small scale, 
        distributed and residential-based power generators;
            (9) the development and use of advanced grid design, 
        operation and planning tools;
            (10) any other infrastructure technologies, as appropriate; 
        and
            (11) technology transfer and education.
    (b) Program Plan.--Not later than 1 year after the date of the 
enactment of this legislation, the Secretary, in consultation with 
other appropriate Federal agencies, shall prepare and transmit to 
Congress a 5-year program plan to guide activities under this section. 
In preparing the program plan, the Secretary may consult with 
utilities, energy services providers, manufacturers, institutions of 
higher education, other appropriate State and local agencies, 
environmental organizations, professional and technical societies, and 
any other persons the Secretary considers appropriate.
    (c) Implementation.--The Secretary shall consider implementing this 
program using a consortium of industry, university and national 
laboratory participants.
    (d) Report.--Not later than 2 years after the transmittal of the 
plan under subsection (b), the Secretary shall transmit a report to 
Congress describing the progress made under this section and 
identifying any additional resources needed to continue the development 
and commercial application of transmission and distribution 
infrastructure technologies.
    (e) Power Delivery Research Initiative.--
            (1) In general.--The Secretary shall establish a research, 
        development, demonstration, and commercial application 
        initiative specifically focused on power delivery utilizing 
        components incorporating high temperature superconductivity.
            (2) Goals.--The goals of this initiative shall be to--
                    (A) establish facilities to develop high 
                temperature superconductivity power applications in 
                partnership with manufacturers and utilities;
                    (B) provide technical leadership for establishing 
                reliability for high temperature superconductivity 
                power applications including suitable modeling and 
                analysis;
                    (C) facilitate commercial transition toward direct 
                current power transmission, storage, and use for high 
                power systems utilizing high temperature 
                superconductivity; and
                    (D) facilitate the integration of very low 
                impedance high temperature superconducting wires and 
                cables in existing electric networks to improve system 
                performance, power flow control and reliability.
            (3) Requirements.--The initiative shall include--
                    (A) feasibility analysis, planning, research, and 
                design to construct demonstrations of superconducting 
                links in high power, direct current and controllable 
                alternating current transmission systems;
                    (B) public-private partnerships to demonstrate 
                deployment of high temperature superconducting cable 
                into testbeds simulating a realistic transmission grid 
                and under varying transmission conditions, including 
                actual grid insertions; and
                    (C) testbeds developed in cooperation with national 
                laboratories, industries, and universities to 
                demonstrate these technologies, prepare the 
technologies for commercial introduction, and address cost or 
performance roadblocks to successful commercial use.
            (4) Authorization of appropriations.--For purposes of 
        carrying out this subsection, there are authorized to be 
        appropriated--
                    (A) for fiscal year 2004, $15,000,000;
                    (B) for fiscal year 2005, $20,000,000;
                    (C) for fiscal year 2006, $30,000,000;
                    (D) for fiscal year 2007, $35,000,000; and
                    (E) for fiscal year 2008, $40,000,000.

SEC. 1226. ADVANCED POWER SYSTEM TECHNOLOGY INCENTIVE PROGRAM.

    (a) Program.--The Secretary of Energy is authorized to establish an 
Advanced Power System Technology Incentive Program to support the 
deployment of certain advanced power system technologies and to improve 
and protect certain critical governmental, industrial, and commercial 
processes. Funds provided under this section shall be used by the 
Secretary to make incentive payments to eligible owners or operators of 
advanced power system technologies to increase power generation through 
enhanced operational, economic, and environmental performance. Payments 
under this section may only be made upon receipt by the Secretary of an 
incentive payment application establishing an applicant as either--
            (1) a qualifying advanced power system technology facility; 
        or
            (2) a qualifying security and assured power facility.
    (b) Incentives.--Subject to availability of funds, a payment of 1.8 
cents per kilowatt-hour shall be paid to the owner or operator of a 
qualifying advanced power system technology facility under this section 
for electricity generated at such facility. An additional 0.7 cents per 
kilowatt-hour shall be paid to the owner or operator of a qualifying 
security and assured power facility for electricity generated at such 
facility. Any facility qualifying under this section shall be eligible 
for an incentive payment for up to, but not more than, the first 
10,000,000 kilowatt-hours produced in any fiscal year.
    (c) Eligibility.--For purposes of this section:
            (1) Qualifying advanced power system technology facility.--
        The term ``qualifying advanced power system technology 
        facility'' means a facility using an advanced fuel cell, 
        turbine, or hybrid power system or power storage system to 
        generate or store electric energy.
            (2) Qualifying security and assured power facility.--The 
        term ``qualifying security and assured power facility'' means a 
        qualifying advanced power system technology facility determined 
        by the Secretary of Energy, in consultation with the Secretary 
        of Homeland Security, to be in critical need of secure, 
        reliable, rapidly available, high-quality power for critical 
        governmental, industrial, or commercial applications.
    (d) Authorization.--There are authorized to be appropriated to the 
Secretary of Energy for the purposes of this section, $10,000,000 for 
each of the fiscal years 2004 through 2010.

SEC. 1227. OFFICE OF ELECTRIC TRANSMISSION AND DISTRIBUTION.

    (a) Creation of an Office of Electric Transmission and 
Distribution.--Title II of the Department of Energy Organization Act 
(42 U.S.C. 7131 et seq.) (as amended by section 502(a)) is amended by 
inserting the following after section 217, as added by title V:

``SEC. 218. OFFICE OF ELECTRIC TRANSMISSION AND DISTRIBUTION.

    ``(a) Establishment.--There is established within the Department an 
Office of Electric Transmission and Distribution. This Office shall be 
headed by a Director, subject to the authority of the Secretary. The 
Director shall be appointed by the Secretary. The Director shall be 
compensated at the annual rate prescribed for level IV of the Executive 
Schedule under section 5315 of title 5, United States Code.
    ``(b) Director.--The Director shall--
            ``(1) coordinate and develop a comprehensive, multi-year 
        strategy to improve the Nation's electricity transmission and 
        distribution;
            ``(2) implement or, where appropriate, coordinate the 
        implementation of, the recommendations made in the Secretary's 
        May 2002 National Transmission Grid Study;
            ``(3) oversee research, development, and demonstration to 
        support Federal energy policy related to electricity 
        transmission and distribution;
            ``(4) grant authorizations for electricity import and 
        export pursuant to section 202(c), (d), (e), and (f) of the 
        Federal Power Act (16 U.S.C. 824a);
            ``(5) perform other functions, assigned by the Secretary, 
        related to electricity transmission and distribution; and
            ``(6) develop programs for workforce training in power and 
        transmission engineering.''.
    (b) Conforming Amendments.--(1) The table of contents of the 
Department of Energy Organization Act (42 U.S.C. 7101 note) is amended 
by inserting after the item relating to section 217 the following new 
item:

``Sec. 218. Office of Electric Transmission and Distribution.''.
    (2) Section 5315 of title 5, United States Code, is amended by 
inserting after the item relating to ``Inspector General, Department of 
Energy.'' the following:
            ``Director, Office of Electric Transmission and 
        Distribution, Department of Energy.''.

            Subtitle C--Transmission Operation Improvements

SEC. 1231. OPEN NONDISCRIMINATORY ACCESS.

    Part II of the Federal Power Act (16 U.S.C. 824 et seq.) is amended 
by inserting after section 211 the following new section:

``SEC. 211A. OPEN ACCESS BY UNREGULATED TRANSMITTING UTILITIES.

    ``(a) Transmission Services.--Subject to section 212(h), the 
Commission may, by rule or order, require an unregulated transmitting 
utility to provide transmission services--
            ``(1) at rates that are comparable to those that the 
        unregulated transmitting utility charges itself; and
            ``(2) on terms and conditions (not relating to rates) that 
        are comparable to those under which such unregulated 
        transmitting utility provides transmission services to itself 
        and that are not unduly discriminatory or preferential.
    ``(b) Exemption.--The Commission shall exempt from any rule or 
order under this section any unregulated transmitting utility that--
            ``(1) sells no more than 4,000,000 megawatt hours of 
        electricity per year; or
            ``(2) does not own or operate any transmission facilities 
        that are necessary for operating an interconnected transmission 
        system (or any portion thereof); or
            ``(3) meets other criteria the Commission determines to be 
        in the public interest.
    ``(c) Local Distribution Facilities.--The requirements of 
subsection (a) shall not apply to facilities used in local 
distribution.
    ``(d) Exemption Termination.--Whenever the Commission, after an 
evidentiary hearing held upon a complaint and after giving 
consideration to reliability standards established under section 215, 
finds on the basis of a preponderance of the evidence that any 
exemption granted pursuant to subsection (b) unreasonably impairs the 
continued reliability of an interconnected transmission system, it 
shall revoke the exemption granted to that transmitting utility.
    ``(e) Application to Unregulated Transmitting Utilities.--The rate 
changing procedures applicable to public utilities under subsections 
(c) and (d) of section 205 are applicable to unregulated transmitting 
utilities for purposes of this section.
    ``(f) Remand.--In exercising its authority under paragraph (1) of 
subsection (a), the Commission may remand transmission rates to an 
unregulated transmitting utility for review and revision where 
necessary to meet the requirements of subsection (a).
    ``(g) Other Requests.--The provision of transmission services under 
subsection (a) does not preclude a request for transmission services 
under section 211.
    ``(h) Limitation.--The Commission may not require a State or 
municipality to take action under this section that would violate a 
private activity bond rule for purposes of section 141 of the Internal 
Revenue Code of 1986 (26 U.S.C. 141).
    ``(i) Transfer of Control of Transmitting Facilities.--Nothing in 
this section authorizes the Commission to require an unregulated 
transmitting utility to transfer control or operational control of its 
transmitting facilities to an RTO or any other Commission-approved 
independent transmission organization designated to provide 
nondiscriminatory transmission access.
    ``(j) Definition.--For purposes of this section, the term 
`unregulated transmitting utility' means an entity that--
            ``(1) owns or operates facilities used for the transmission 
        of electric energy in interstate commerce; and
            ``(2) is an entity described in section 201(f).''.

SEC. 1232. SENSE OF CONGRESS ON REGIONAL TRANSMISSION ORGANIZATIONS.

    It is the sense of Congress that, in order to promote fair, open 
access to electric transmission service, benefit retail consumers, 
facilitate wholesale competition, improve efficiencies in transmission 
grid management, promote grid reliability, remove opportunities for 
unduly discriminatory or preferential transmission practices, and 
provide for the efficient development of transmission infrastructure 
needed to meet the growing demands of competitive wholesale power 
markets, all transmitting utilities in interstate commerce should 
voluntarily become members of Regional Transmission Organizations as 
defined in section 3 of the Federal Power Act.

SEC. 1233. REGIONAL TRANSMISSION ORGANIZATION APPLICATIONS PROGRESS 
              REPORT.

    Not later than 120 days after the date of enactment of this 
section, the Federal Energy Regulatory Commission shall submit to 
Congress a report containing each of the following:
            (1) A list of all regional transmission organization 
        applications filed at the Commission pursuant to subpart F of 
        part 35 of title 18, Code of Federal Regulations (in this 
        section referred to as ``Order No. 2000''), including an 
        identification of each public utility and other entity included 
        within the proposed membership of the regional transmission 
        organization.
            (2) A brief description of the status of each pending 
        regional transmission organization application, including a 
        precise explanation of how each fails to comply with the 
        minimal requirements of Order No. 2000 and what steps need to 
        be taken to bring each application into such compliance.
            (3) For any application that has not been finally approved 
        by the Commission, a detailed description of every aspect of 
        the application that the Commission has determined does not 
        conform to the requirements of Order No. 2000.
            (4) For any application that has not been finally approved 
        by the Commission, an explanation by the Commission of why the 
        items described pursuant to paragraph (3) constitute material 
        noncompliance with the requirements of the Commission's Order 
        No. 2000 sufficient to justify denial of approval by the 
        Commission.
            (5) For all regional transmission organization applications 
        filed pursuant to the Commission's Order No. 2000, whether 
        finally approved or not--
                    (A) a discussion of that regional transmission 
                organization's efforts to minimize rate seams between 
                itself and--
                            (i) other regional transmission 
                        organizations; and
                            (ii) entities not participating in a 
                        regional transmission organization;
                    (B) a discussion of the impact of such seams on 
                consumers and wholesale competition; and
                    (C) a discussion of minimizing cost-shifting on 
                consumers.

SEC. 1234. FEDERAL UTILITY PARTICIPATION IN REGIONAL TRANSMISSION 
              ORGANIZATIONS.

    (a) Definitions.--For purposes of this section--
            (1) Appropriate federal regulatory authority.--The term 
        ``appropriate Federal regulatory authority'' means--
                    (A) with respect to a Federal power marketing 
                agency (as defined in the Federal Power Act), the 
                Secretary of Energy, except that the Secretary may 
                designate the Administrator of a Federal power 
                marketing agency to act as the appropriate Federal 
                regulatory authority with respect to the transmission 
                system of that Federal power marketing agency; and
                    (B) with respect to the Tennessee Valley Authority, 
                the Board of Directors of the Tennessee Valley 
                Authority.
            (2) Federal utility.--The term ``Federal utility'' means a 
        Federal power marketing agency or the Tennessee Valley 
        Authority.
            (3) Transmission system.--The term ``transmission system'' 
        means electric transmission facilities owned, leased, or 
        contracted for by the United States and operated by a Federal 
        utility.
    (b) Transfer.--The appropriate Federal regulatory authority is 
authorized to enter into a contract, agreement or other arrangement 
transferring control and use of all or part of the Federal utility's 
transmission system to an RTO or ISO (as defined in the Federal Power 
Act), approved by the Federal Energy Regulatory Commission. Such 
contract, agreement or arrangement shall include--
            (1) performance standards for operation and use of the 
        transmission system that the head of the Federal utility 
        determines necessary or appropriate, including standards that 
        assure recovery of all the Federal utility's costs and expenses 
        related to the transmission facilities that are the subject of 
        the contract, agreement or other arrangement; consistency with 
        existing contracts and third-party financing arrangements; and 
        consistency with said Federal utility's statutory authorities, 
        obligations, and limitations;
            (2) provisions for monitoring and oversight by the Federal 
        utility of the RTO's or ISO's fulfillment of the terms and 
        conditions of the contract, agreement or other arrangement, 
        including a provision for the resolution of disputes through 
        arbitration or other means with the regional transmission 
        organization or with other participants, notwithstanding the 
        obligations and limitations of any other law regarding 
        arbitration; and
            (3) a provision that allows the Federal utility to withdraw 
        from the RTO or ISO and terminate the contract, agreement or 
other arrangement in accordance with its terms.
Neither this section, actions taken pursuant to it, nor any other 
transaction of a Federal utility using an RTO or ISO shall confer upon 
the Federal Energy Regulatory Commission jurisdiction or authority over 
the Federal utility's electric generation assets, electric capacity or 
energy that the Federal utility is authorized by law to market, or the 
Federal utility's power sales activities.
    (c) Existing Statutory and Other Obligations.--
            (1) System operation requirements.--No statutory provision 
        requiring or authorizing a Federal utility to transmit electric 
        power or to construct, operate or maintain its transmission 
        system shall be construed to prohibit a transfer of control and 
        use of its transmission system pursuant to, and subject to all 
        requirements of subsection (b).
            (2) Other obligations.--This subsection shall not be 
        construed to--
                    (A) suspend, or exempt any Federal utility from, 
                any provision of existing Federal law, including but 
                not limited to any requirement or direction relating to 
                the use of the Federal utility's transmission system, 
                environmental protection, fish and wildlife protection, 
                flood control, navigation, water delivery, or 
                recreation; or
                    (B) authorize abrogation of any contract or treaty 
                obligation.
            (3) Repeal.--Section 311 of title III of Appendix B of the 
        Act of October 27, 2000 (Public Law 106-377, section 1(a)(2); 
        114 Stat. 1441, 1441A-80; 16 U.S.C. 824n) is repealed.

SEC. 1235. STANDARD MARKET DESIGN.

    (a) Remand.--The Commission's proposed rulemaking entitled 
``Remedying Undue Discrimination through Open Access Transmission 
Service and Standard Electricity Market Design'' (Docket No. RM01-12-
000) (``SMD NOPR'') is remanded to the Commission for reconsideration. 
No final rule mandating a standard electricity market design pursuant 
to the proposed rulemaking, including any rule or order of general 
applicability within the scope of the proposed rulemaking, may be 
issued before October 31, 2006, or take effect before December 31, 
2006. Any final rule issued by the Commission pursuant to the proposed 
rulemaking shall be preceded by a second notice of proposed rulemaking 
issued after the date of enactment of this Act and an opportunity for 
public comment.
    (b) Savings Clause.--This section shall not be construed to modify 
or diminish any authority or obligation the Commission has under this 
division, the Federal Power Act, or other applicable law, including, 
but not limited to, any authority to--
            (1) issue any rule or order (of general or particular 
        applicability) pursuant to any such authority or obligation; or
            (2) act on a filing or filings by 1 or more transmitting 
        utilities for the voluntary formation of a Regional 
        Transmission Organization or Independent System Operator (as 
        defined in the Federal Power Act) (and related market 
        structures or rules) or voluntary modification of an existing 
        Regional Transmission Organization or Independent System 
        Operator (and related market structures or rules).

SEC. 1236. NATIVE LOAD SERVICE OBLIGATION.

    Part II of the Federal Power Act (16 U.S.C. 824 et seq.) is amended 
by adding at the end the following:

``SEC. 217. NATIVE LOAD SERVICE OBLIGATION.

    ``(a) Meeting Service Obligations.--(1) Any load-serving entity 
that, as of the date of enactment of this section--
            ``(A) owns generation facilities, markets the output of 
        Federal generation facilities, or holds rights under 1 or more 
        wholesale contracts to purchase electric energy, for the 
        purpose of meeting a service obligation, and
            ``(B) by reason of ownership of transmission facilities, or 
        1 or more contracts or service agreements for firm transmission 
        service, holds firm transmission rights for delivery of the 
        output of such generation facilities or such purchased energy 
        to meet such service obligation,
is entitled to use such firm transmission rights, or, equivalent 
tradable or financial transmission rights, in order to deliver such 
output or purchased energy, or the output of other generating 
facilities or purchased energy to the extent deliverable using such 
rights, to the extent required to meet its service obligation.
    ``(2) To the extent that all or a portion of the service obligation 
covered by such firm transmission rights or equivalent tradable or 
financial transmission rights is transferred to another load-serving 
entity, the successor load-serving entity shall be entitled to use the 
firm transmission rights or equivalent tradable or financial 
transmission rights associated with the transferred service obligation. 
Subsequent transfers to another load-serving entity, or back to the 
original load-serving entity, shall be entitled to the same rights.
    ``(3) The Commission shall exercise its authority under this Act in 
a manner that facilitates the planning and expansion of transmission 
facilities to meet the reasonable needs of load-serving entities to 
satisfy their service obligations.
    ``(b) Allocation of Transmission Rights.--Nothing in this section 
shall affect any methodology approved by the Commission prior to 
September 15, 2003, for the allocation of transmission rights by an RTO 
or ISO that has been authorized by the Commission to allocate 
transmission rights.
    ``(c) Certain Transmission Rights.--The Commission may exercise 
authority under this Act to make transmission rights not used to meet 
an obligation covered by subsection (a) available to other entities in 
a manner determined by the Commission to be just, reasonable, and not 
unduly discriminatory or preferential.
    ``(d) Obligation To Build.--Nothing in this Act shall relieve a 
load-serving entity from any obligation under State or local law to 
build transmission or distribution facilities adequate to meet its 
service obligations.
    ``(e) Contracts.--Nothing in this section shall provide a basis for 
abrogating any contract or service agreement for firm transmission 
service or rights in effect as of the date of the enactment of this 
subsection.
    ``(f) Water Pumping Facilities.--The Commission shall ensure that 
any entity described in section 201(f) that owns transmission 
facilities used predominately to support its own water pumping 
facilities shall have, with respect to such facilities, protections for 
transmission service comparable to those provided to load-serving 
entities pursuant to this section.
    ``(g) ERCOT.--This section shall not apply within the area referred 
to in section 212(k)(2)(A).
    ``(h) Jurisdiction.--This section does not authorize the Commission 
to take any action not otherwise within its jurisdiction.
    ``(i) Effect of Exercising Rights.--An entity that lawfully 
exercises rights granted under subsection (a) shall not be considered 
by such action as engaging in undue discrimination or preference under 
this Act.
    ``(j) TVA Area.--For purposes of subsection (a)(1)(B), a load-
serving entity that is located within the service area of the Tennessee 
Valley Authority and that has a firm wholesale power supply contract 
with the Tennessee Valley Authority shall be deemed to hold firm 
transmission rights for the transmission of such power.
    ``(k) Definitions.--For purposes of this section:
            ``(1) The term `distribution utility' means an electric 
        utility that has a service obligation to end-users or to a 
State utility or electric cooperative that, directly or indirectly, 
through 1 or more additional State utilities or electric cooperatives, 
provides electric service to end-users.
            ``(2) The term `load-serving entity' means a distribution 
        utility or an electric utility that has a service obligation.
            ``(3) The term `service obligation' means a requirement 
        applicable to, or the exercise of authority granted to, an 
        electric utility under Federal, State or local law or under 
        long-term contracts to provide electric service to end-users or 
        to a distribution utility.
            ``(4) The term `State utility' means a State or any 
        political subdivision of a State, or any agency, authority, or 
        instrumentality of any 1 or more of the foregoing, or a 
        corporation which is wholly owned, directly or indirectly, by 
        any 1 or more of the foregoing, competent to carry on the 
        business of developing, transmitting, utilizing or distributing 
        power.''.

SEC. 1237. STUDY ON THE BENEFITS OF ECONOMIC DISPATCH.

    (a) Study.--The Secretary of Energy, in coordination and 
consultation with the States, shall conduct a study on--
            (1) the procedures currently used by electric utilities to 
        perform economic dispatch;
            (2) identifying possible revisions to those procedures to 
        improve the ability of nonutility generation resources to offer 
        their output for sale for the purpose of inclusion in economic 
        dispatch; and
            (3) the potential benefits to residential, commercial, and 
        industrial electricity consumers nationally and in each State 
        if economic dispatch procedures were revised to improve the 
        ability of nonutility generation resources to offer their 
        output for inclusion in economic dispatch.
    (b) Definition.--The term ``economic dispatch'' when used in this 
section means the operation of generation facilities to produce energy 
at the lowest cost to reliably serve consumers, recognizing any 
operational limits of generation and transmission facilities.
    (c) Report to Congress and the States.--Not later than 90 days 
after the date of enactment of this Act, and on a yearly basis 
following, the Secretary of Energy shall submit a report to Congress 
and the States on the results of the study conducted under subsection 
(a), including recommendations to Congress and the States for any 
suggested legislative or regulatory changes.

                  Subtitle D--Transmission Rate Reform

SEC. 1241. TRANSMISSION INFRASTRUCTURE INVESTMENT.

    Part II of the Federal Power Act (16 U.S.C. 824 et seq.) is amended 
by adding at the end the following:

``SEC. 218. TRANSMISSION INFRASTRUCTURE INVESTMENT.

    ``(a) Rulemaking Requirement.--Within 1 year after the enactment of 
this section, the Commission shall establish, by rule, incentive-based 
(including, but not limited to performance-based) rate treatments for 
the transmission of electric energy in interstate commerce by public 
utilities for the purpose of benefiting consumers by ensuring 
reliability and reducing the cost of delivered power by reducing 
transmission congestion. Such rule shall--
            ``(1) promote reliable and economically efficient 
        transmission and generation of electricity by promoting capital 
        investment in the enlargement, improvement, maintenance and 
        operation of facilities for the transmission of electric energy 
        in interstate commerce;
            ``(2) provide a return on equity that attracts new 
        investment in transmission facilities (including related 
        transmission technologies);
            ``(3) encourage deployment of transmission technologies and 
        other measures to increase the capacity and efficiency of 
        existing transmission facilities and improve the operation of 
        such facilities; and
            ``(4) allow recovery of all prudently incurred costs 
        necessary to comply with mandatory reliability standards issued 
        pursuant to section 215 of this Act.
The Commission may, from time to time, revise such rule.
    ``(b) Additional Incentives for RTO Participation.--In the rule 
issued under this section, the Commission shall, to the extent within 
its jurisdiction, provide for incentives to each transmitting utility 
or electric utility that joins a Regional Transmission Organization or 
Independent System Operator. Incentives provided by the Commission 
pursuant to such rule shall include--
            ``(1) recovery of all prudently incurred costs to develop 
        and participate in any proposed or approved RTO, ISO, or 
        independent transmission company;
            ``(2) recovery of all costs previously approved by a State 
        commission which exercised jurisdiction over the transmission 
        facilities prior to the utility's participation in the RTO or 
        ISO, including costs necessary to honor preexisting 
        transmission service contracts, in a manner which does not 
        reduce the revenues the utility receives for transmission 
        services for a reasonable transition period after the utility 
        joins the RTO or ISO;
            ``(3) recovery as an expense in rates of the costs 
        prudently incurred to conduct transmission planning and 
        reliability activities, including the costs of participating in 
        RTO, ISO and other regional planning activities and design, 
        study and other precertification costs involved in seeking 
        permits and approvals for proposed transmission facilities;
            ``(4) a current return in rates for construction work in 
        progress for transmission facilities and full recovery of 
        prudently incurred costs for constructing transmission 
        facilities;
            ``(5) formula transmission rates; and
            ``(6) a maximum 15-year accelerated depreciation on new 
        transmission facilities for rate treatment purposes.
The Commission shall ensure that any costs recoverable pursuant to this 
subsection may be recovered by such utility through the transmission 
rates charged by such utility or through the transmission rates charged 
by the RTO or ISO that provides transmission service to such utility.
    ``(c) Just and Reasonable Rates.--All rates approved under the 
rules adopted pursuant to this section, including any revisions to such 
rules, are subject to the requirement of sections 205 and 206 that all 
rates, charges, terms, and conditions be just and reasonable and not 
unduly discriminatory or preferential.''.

SEC. 1242. VOLUNTARY TRANSMISSION PRICING PLANS.

    Part II of the Federal Power Act (16 U.S.C. 824 et seq.) is amended 
by adding at the end the following:

``SEC. 219. VOLUNTARY TRANSMISSION PRICING PLANS.

    ``(a) In General.--Any transmission provider, including an RTO or 
ISO, may submit to the Commission a plan or plans under section 205 
containing the criteria for determining the person or persons that will 
be required to pay for any construction of new transmission facilities 
or expansion, modification or upgrade of transmission facilities (in 
this section referred to as `transmission service related expansion') 
or new generator interconnection.
    ``(b) Voluntary Transmission Pricing Plans.--(1) Any plan or plans 
submitted under subsection (a) shall specify the method or methods by 
which costs may be allocated or assigned. Such methods may include, but 
are not limited to:
            ``(A) directly assigned;
            ``(B) participant funded; or
            ``(C) rolled into regional or sub-regional rates.
    ``(2) FERC shall approve a plan or plans submitted under 
subparagraph (B) of paragraph (1) if such plan or plans--
            ``(A) result in rates that are just and reasonable and not 
        unduly discriminatory or preferential consistent with section 
        205; and
            ``(B) ensure that the costs of any transmission service 
        related expansion or new generator interconnection not required 
        to meet applicable reliability standards established under 
        section 215 are assigned in a fair manner, meaning that those 
        who benefit from the transmission service related expansion or 
        new generator interconnection pay an appropriate share of the 
        associated costs, provided that--
                    ``(i) costs may not be assigned or allocated to an 
                electric utility if the native load customers of that 
                utility would not have required such transmission 
                service related expansion or new generator 
                interconnection absent the request for transmission 
                service related expansion or new generator 
                interconnection that necessitated the investment;
                    ``(ii) the party requesting such transmission 
                service related expansion or new generator 
                interconnection shall not be required to pay for both--
                            ``(I) the assigned cost of the upgrade; and
                            ``(II) the difference between--
                                    ``(aa) the embedded cost paid for 
                                transmission services (including the 
                                cost of the requested upgrade); and
                                    ``(bb) the embedded cost that would 
                                have been paid absent the upgrade; and
                    ``(iii) the party or parties who pay for facilities 
                necessary for the transmission service related 
                expansion or new generator interconnection receives 
                full compensation for its costs for the participant 
                funded facilities in the form of--
                            ``(I) monetary credit equal to the cost of 
                        the participant funded facilities (accounting 
                        for the time value of money at the Gross 
                        Domestic Product deflator), which credit shall 
                        be pro-rated in equal installments over a 
                        period of not more than 30 years and shall not 
                        exceed in total the amount of the initial 
                        investment, against the transmission charges 
                        that the funding entity or its assignee is 
                        otherwise assessed by the transmission 
                        provider;
                            ``(II) appropriate financial or physical 
                        rights; or
                            ``(III) any other method of cost recovery 
                        or compensation approved by the Commission.
    ``(3) A plan submitted under this section shall apply only to--
            ``(A) a contract or interconnection agreement executed or 
        filed with the Commission after the date of enactment of this 
        section; or
            ``(B) an interconnection agreement pending rehearing as of 
        November 1, 2003.
    ``(4) Nothing in this section diminishes or alters the rights of 
individual members of an RTO or ISO under this Act.
    ``(5) Nothing in this section shall affect the allocation of costs 
or the cost methodology employed by an RTO or ISO authorized by the 
Commission to allocate costs (including costs for transmission service 
related expansion or new generator interconnection) prior to the date 
of enactment of this section.
    ``(6) This section shall not apply within the area referred to in 
section 212(k)(2)(A).
    ``(7) The term `transmission provider' means a public utility that 
owns or operates facilities that provide interconnection or 
transmission service in interstate commerce.''.

                    Subtitle E--Amendments to PURPA

SEC. 1251. NET METERING AND ADDITIONAL STANDARDS.

    (a) Adoption of Standards.--Section 111(d) of the Public Utility 
Regulatory Policies Act of 1978 (16 U.S.C. 2621(d)) is amended by 
adding at the end the following:
            ``(11) Net metering.--Each electric utility shall make 
        available upon request net metering service to any electric 
        consumer that the electric utility serves. For purposes of this 
        paragraph, the term `net metering service' means service to an 
        electric consumer under which electric energy generated by that 
        electric consumer from an eligible on-site generating facility 
        and delivered to the local distribution facilities may be used 
        to offset electric energy provided by the electric utility to 
        the electric consumer during the applicable billing period.
            ``(12) Fuel sources.--Each electric utility shall develop a 
        plan to minimize dependence on 1 fuel source and to ensure that 
        the electric energy it sells to consumers is generated using a 
        diverse range of fuels and technologies, including renewable 
        technologies.
            ``(13) Fossil fuel generation efficiency.--Each electric 
        utility shall develop and implement a 10-year plan to increase 
        the efficiency of its fossil fuel generation.''.
    (b) Compliance.--
            (1) Time limitations.--Section 112(b) of the Public Utility 
        Regulatory Policies Act of 1978 (16 U.S.C. 2622(b)) is amended 
        by adding at the end the following:
    ``(3)(A) Not later than 2 years after the enactment of this 
paragraph, each State regulatory authority (with respect to each 
electric utility for which it has ratemaking authority) and each 
nonregulated electric utility shall commence the consideration referred 
to in section 111, or set a hearing date for such consideration, with 
respect to each standard established by paragraphs (11) through (13) of 
section 111(d).
    ``(B) Not later than 3 years after the date of the enactment of 
this paragraph, each State regulatory authority (with respect to each 
electric utility for which it has ratemaking authority), and each 
nonregulated electric utility, shall complete the consideration, and 
shall make the determination, referred to in section 111 with respect 
to each standard established by paragraphs (11) through (13) of section 
111(d).''.
            (2) Failure to comply.--Section 112(c) of the Public 
        Utility Regulatory Policies Act of 1978 (16 U.S.C. 2622(c)) is 
        amended by adding at the end the following:
``In the case of each standard established by paragraphs (11) through 
(13) of section 111(d), the reference contained in this subsection to 
the date of enactment of this Act shall be deemed to be a reference to 
the date of enactment of such paragraphs (11) through (13).''.
            (3) Prior state actions.--
                    (A) In general.--Section 112 of the Public Utility 
                Regulatory Policies Act of 1978 (16 U.S.C. 2622) is 
                amended by adding at the end the following:
    ``(d) Prior State Actions.--Subsections (b) and (c) of this section 
shall not apply to the standards established by paragraphs (11) through 
(13) of section 111(d) in the case of any electric utility in a State 
if, before the enactment of this subsection--
            ``(1) the State has implemented for such utility the 
        standard concerned (or a comparable standard);
            ``(2) the State regulatory authority for such State or 
        relevant nonregulated electric utility has conducted a 
        proceeding to consider implementation of the standard concerned 
        (or a comparable standard) for such utility; or
            ``(3) the State legislature has voted on the implementation 
        of such standard (or a comparable standard) for such 
        utility.''.
                    (B) Cross reference.--Section 124 of such Act (16 
                U.S.C. 2634) is amended by adding the following at the 
                end thereof: ``In the case of each standard established 
                by paragraphs (11) through (13) of section 111(d), the 
                reference contained in this subsection to the date of 
                enactment of this Act shall be deemed to be a reference 
                to the date of enactment of such paragraphs (11) 
                through (13).''.

SEC. 1252. SMART METERING.

    (a) In General.--Section 111(d) of the Public Utilities Regulatory 
Policies Act of 1978 (16 U.S.C. 2621(d)) is amended by adding at the 
end the following:
            ``(14) Time-based metering and communications.--
                    ``(A) Not later than 18 months after the date of 
                enactment of this paragraph, each electric utility 
                shall offer each of its customer classes, and provide 
                individual customers upon customer request, a time-
                based rate schedule under which the rate charged by the 
                electric utility varies during different time periods 
                and reflects the variance, if any, in the utility's 
                costs of generating and purchasing electricity at the 
                wholesale level. The time-based rate schedule shall 
                enable the electric consumer to manage energy use and 
                cost through advanced metering and communications 
                technology.
                    ``(B) The types of time-based rate schedules that 
                may be offered under the schedule referred to in 
                subparagraph (A) include, among others--
                            ``(i) time-of-use pricing whereby 
                        electricity prices are set for a specific time 
                        period on an advance or forward basis, 
                        typically not changing more often than twice a 
                        year, based on the utility's cost of generating 
                        and/or purchasing such electricity at the 
                        wholesale level for the benefit of the 
                        consumer. Prices paid for energy consumed 
                        during these periods shall be pre-established 
                        and known to consumers in advance of such 
                        consumption, allowing them to vary their demand 
                        and usage in response to such prices and manage 
                        their energy costs by shifting usage to a lower 
                        cost period or reducing their consumption 
                        overall;
                            ``(ii) critical peak pricing whereby time-
                        of-use prices are in effect except for certain 
                        peak days, when prices may reflect the costs of 
                        generating and/or purchasing electricity at the 
                        wholesale level and when consumers may receive 
                        additional discounts for reducing peak period 
                        energy consumption; and
                            ``(iii) real-time pricing whereby 
                        electricity prices are set for a specific time 
                        period on an advanced or forward basis, 
                        reflecting the utility's cost of generating 
                        and/or purchasing electricity at the wholesale 
                        level, and may change as often as hourly.
                    ``(C) Each electric utility subject to subparagraph 
                (A) shall provide each customer requesting a time-based 
                rate with a time-based meter capable of enabling the 
                utility and customer to offer and receive such rate, 
                respectively.
                    ``(D) For purposes of implementing this paragraph, 
                any reference contained in this section to the date of 
                enactment of the Public Utility Regulatory Policies Act 
                of 1978 shall be deemed to be a reference to the date 
                of enactment of this paragraph.
                    ``(E) In a State that permits third-party marketers 
                to sell electric energy to retail electric consumers, 
                such consumers shall be entitled to receive the same 
                time-based metering and communications device and 
                service as a retail electric consumer of the electric 
                utility.
                    ``(F) Notwithstanding subsections (b) and (c) of 
                section 112, each State regulatory authority shall, not 
                later than 18 months after the date of enactment of 
                this paragraph conduct an investigation in accordance 
                with section 115(i) and issue a decision whether it is 
                appropriate to implement the standards set out in 
                subparagraphs (A) and (C).''.
    (b) State Investigation of Demand Response and Time-Based 
Metering.--Section 115 of the Public Utilities Regulatory Policies Act 
of 1978 (16 U.S.C. 2625) is amended as follows:
            (1) By inserting in subsection (b) after the phrase ``the 
        standard for time-of-day rates established by section 
        111(d)(3)'' the following: ``and the standard for time-based 
        metering and communications established by section 
        111(d)(14)''.
            (2) By inserting in subsection (b) after the phrase ``are 
        likely to exceed the metering'' the following: ``and 
        communications''.
            (3) By adding at the end the following:
    ``(i) Time-based metering and communications.--In making a 
determination with respect to the standard established by section 
111(d)(14), the investigation requirement of section 111(d)(14)(F) 
shall be as follows: Each State regulatory authority shall conduct an 
investigation and issue a decision whether or not it is appropriate for 
electric utilities to provide and install time-based meters and 
communications devices for each of their customers which enable such 
customers to participate in time-based pricing rate schedules and other 
demand response programs.''.
    (c) Federal Assistance on Demand Response.--Section 132(a) of the 
Public Utility Regulatory Policies Act of 1978 (16 U.S.C. 2642(a)) is 
amended by striking ``and'' at the end of paragraph (3), striking 
the period at the end of paragraph (4) and inserting ``; and'', and by 
adding the following at the end thereof:
            ``(5) technologies, techniques, and rate-making methods 
        related to advanced metering and communications and the use of 
        these technologies, techniques and methods in demand response 
        programs.''.
    (d) Federal Guidance.--Section 132 of the Public Utility Regulatory 
Policies Act of 1978 (16 U.S.C. 2642) is amended by adding the 
following at the end thereof:
    ``(d) Demand Response.--The Secretary shall be responsible for--
            ``(1) educating consumers on the availability, advantages, 
        and benefits of advanced metering and communications 
        technologies, including the funding of demonstration or pilot 
        projects;
            ``(2) working with States, utilities, other energy 
        providers and advanced metering and communications experts to 
        identify and address barriers to the adoption of demand 
        response programs; and
            ``(3) not later than 180 days after the date of enactment 
        of the Energy Policy Act of 2003, providing Congress with a 
        report that identifies and quantifies the national benefits of 
        demand response and makes a recommendation on achieving 
        specific levels of such benefits by January 1, 2005.''.
    (e) Demand Response and Regional Coordination.--
            (1) In general.--It is the policy of the United States to 
        encourage States to coordinate, on a regional basis, State 
        energy policies to provide reliable and affordable demand 
        response services to the public.
            (2) Technical assistance.--The Secretary of Energy shall 
        provide technical assistance to States and regional 
        organizations formed by 2 or more States to assist them in--
                    (A) identifying the areas with the greatest demand 
                response potential;
                    (B) identifying and resolving problems in 
                transmission and distribution networks, including 
                through the use of demand response;
                    (C) developing plans and programs to use demand 
                response to respond to peak demand or emergency needs; 
                and
                    (D) identifying specific measures consumers can 
                take to participate in these demand response programs.
            (3) Report.--Not later than 1 year after the date of 
        enactment of the Energy Policy Act of 2003, the Commission 
        shall prepare and publish an annual report, by appropriate 
        region, that assesses demand response resources, including 
        those available from all consumer classes, and which identifies 
        and reviews--
                    (A) saturation and penetration rate of advanced 
                meters and communications technologies, devices and 
                systems;
                    (B) existing demand response programs and time-
                based rate programs;
                    (C) the annual resource contribution of demand 
                resources;
                    (D) the potential for demand response as a 
                quantifiable, reliable resource for regional planning 
                purposes; and
                    (E) steps taken to ensure that, in regional 
                transmission planning and operations, demand resources 
                are provided equitable treatment as a quantifiable, 
                reliable resource relative to the resource obligations 
                of any load-serving entity, transmission provider, or 
                transmitting party.
    (f) Federal Encouragement of Demand Response Devices.--It is the 
policy of the United States that time-based pricing and other forms of 
demand response, whereby electricity customers are provided with 
electricity price signals and the ability to benefit by responding to 
them, shall be encouraged, and the deployment of such technology and 
devices that enable electricity customers to participate in such 
pricing and demand response systems shall be facilitated. It is further 
the policy of the United States that the benefits of such demand 
response that accrue to those not deploying such technology and 
devices, but who are part of the same regional electricity entity, 
shall be recognized.
    (g) Time Limitations.--Section 112(b) of the Public Utility 
Regulatory Policies Act of 1978 (16 U.S.C. 2622(b)) is amended by 
adding at the end the following:
            ``(4)(A) Not later than 1 year after the enactment of this 
        paragraph, each State regulatory authority (with respect to 
        each electric utility for which it has ratemaking authority) 
        and each nonregulated electric utility shall commence the 
        consideration referred to in section 111, or set a hearing date 
        for such consideration, with respect to the standard 
        established by paragraph (14) of section 111(d).
            ``(B) Not later than 2 years after the date of the 
        enactment of this paragraph, each State regulatory authority 
        (with respect to each electric utility for which it has 
        ratemaking authority), and each nonregulated electric utility, 
        shall complete the consideration, and shall make the 
        determination, referred to in section 111 with respect to the 
        standard established by paragraph (14) of section 111(d).''.
    (h) Failure To Comply.--Section 112(c) of the Public Utility 
Regulatory Policies Act of 1978 (16 U.S.C. 2622(c)) is amended by 
adding at the end the following:
``In the case of the standard established by paragraph (14) of section 
111(d), the reference contained in this subsection to the date of 
enactment of this Act shall be deemed to be a reference to the date of 
enactment of such paragraph (14).''.
    (i) Prior State Actions Regarding Smart Metering Standards.--
            (1) In general.--Section 112 of the Public Utility 
        Regulatory Policies Act of 1978 (16 U.S.C. 2622) is amended by 
        adding at the end the following:
    ``(e) Prior State Actions.--Subsections (b) and (c) of this section 
shall not apply to the standard established by paragraph (14) of 
section 111(d) in the case of any electric utility in a State if, 
before the enactment of this subsection--
            ``(1) the State has implemented for such utility the 
        standard concerned (or a comparable standard);
            ``(2) the State regulatory authority for such State or 
        relevant nonregulated electric utility has conducted a 
        proceeding to consider implementation of the standard concerned 
        (or a comparable standard) for such utility within the previous 
        3 years; or
            ``(3) the State legislature has voted on the implementation 
        of such standard (or a comparable standard) for such utility 
        within the previous 3 years.''.
            (2) Cross reference.--Section 124 of such Act (16 U.S.C. 
        2634) is amended by adding the following at the end thereof: 
        ``In the case of the standard established by paragraph (14) of 
        section 111(d), the reference contained in this subsection to 
        the date of enactment of this Act shall be deemed to be a 
        reference to the date of enactment of such paragraph (14).''.

SEC. 1253. COGENERATION AND SMALL POWER PRODUCTION PURCHASE AND SALE 
              REQUIREMENTS.

    (a) Termination of Mandatory Purchase and Sale Requirements.--
Section 210 of the Public Utility Regulatory Policies Act of 1978 (16 
U.S.C. 824a-3) is amended by adding at the end the following:
    ``(m) Termination of Mandatory Purchase and Sale Requirements.--
            ``(1) Obligation to purchase.--After the date of enactment 
        of this subsection, no electric utility shall be required to 
enter into a new contract or obligation to purchase electric energy 
from a qualifying cogeneration facility or a qualifying small power 
production facility under this section if the Commission finds that the 
qualifying cogeneration facility or qualifying small power production 
facility has nondiscriminatory access to--
                    ``(A)(i) independently administered, auction-based 
                day ahead and real time wholesale markets for the sale 
                of electric energy; and (ii) wholesale markets for 
                long-term sales of capacity and electric energy; or
                    ``(B)(i) transmission and interconnection services 
                that are provided by a Commission-approved regional 
                transmission entity and administered pursuant to an 
                open access transmission tariff that affords 
                nondiscriminatory treatment to all customers; and (ii) 
                competitive wholesale markets that provide a meaningful 
                opportunity to sell capacity, including long-term and 
                short-term sales, and electric energy, including long-
                term, short-term and real-time sales, to buyers other 
                than the utility to which the qualifying facility is 
                interconnected. In determining whether a meaningful 
                opportunity to sell exists, the Commission shall 
                consider, among other factors, evidence of transactions 
                within the relevant market; or
                    ``(C) wholesale markets for the sale of capacity 
                and electric energy that are, at a minimum, of 
                comparable competitive quality as markets described in 
                subparagraphs (A) and (B).
            ``(2) Revised purchase and sale obligation for new 
        facilities.--(A) After the date of enactment of this 
        subsection, no electric utility shall be required pursuant to 
        this section to enter into a new contract or obligation to 
        purchase from or sell electric energy to a facility that is not 
        an existing qualifying cogeneration facility unless the 
        facility meets the criteria for qualifying cogeneration 
        facilities established by the Commission pursuant to the 
        rulemaking required by subsection (n).
            ``(B) For the purposes of this paragraph, the term 
        `existing qualifying cogeneration facility' means a facility 
        that--
                    ``(i) was a qualifying cogeneration facility on the 
                date of enactment of subsection (m); or
                    ``(ii) had filed with the Commission a notice of 
                self-certification, self recertification or an 
                application for Commission certification under 18 CFR 
                292.207 prior to the date on which the Commission 
                issues the final rule required by subsection (n).
            ``(3) Commission review.--Any electric utility may file an 
        application with the Commission for relief from the mandatory 
        purchase obligation pursuant to this subsection on a service 
        territory-wide basis. Such application shall set forth the 
        factual basis upon which relief is requested and describe why 
        the conditions set forth in subparagraphs (A), (B) or (C) of 
        paragraph (1) of this subsection have been met. After notice, 
        including sufficient notice to potentially affected qualifying 
        cogeneration facilities and qualifying small power production 
        facilities, and an opportunity for comment, the Commission 
        shall make a final determination within 90 days of such 
        application regarding whether the conditions set forth in 
        subparagraphs (A), (B) or (C) of paragraph (1) have been met.
            ``(4) Reinstatement of obligation to purchase.--At any time 
        after the Commission makes a finding under paragraph (3) 
        relieving an electric utility of its obligation to purchase 
        electric energy, a qualifying cogeneration facility, a 
        qualifying small power production facility, a State agency, or 
        any other affected person may apply to the Commission for an 
        order reinstating the electric utility's obligation to purchase 
        electric energy under this section. Such application shall set 
        forth the factual basis upon which the application is based and 
        describe why the conditions set forth in subparagraphs (A), (B) 
        or (C) of paragraph (1) of this subsection are no longer met. 
        After notice, including sufficient notice to potentially 
        affected utilities, and opportunity for comment, the Commission 
        shall issue an order within 90 days of such application 
        reinstating the electric utility's obligation to purchase 
        electric energy under this section if the Commission finds that 
        the conditions set forth in subparagraphs (A), (B) or (C) of 
        paragraph (1) which relieved the obligation to purchase, are no 
        longer met.
            ``(5) Obligation to sell.--After the date of enactment of 
        this subsection, no electric utility shall be required to enter 
        into a new contract or obligation to sell electric energy to a 
        qualifying cogeneration facility or a qualifying small power 
        production facility under this section if the Commission finds 
        that--
                    ``(A) competing retail electric suppliers are 
                willing and able to sell and deliver electric energy to 
                the qualifying cogeneration facility or qualifying 
                small power production facility; and
                    ``(B) the electric utility is not required by State 
                law to sell electric energy in its service territory.
            ``(6) No effect on existing rights and remedies.--Nothing 
        in this subsection affects the rights or remedies of any party 
        under any contract or obligation, in effect or pending approval 
        before the appropriate State regulatory authority or non-
        regulated electric utility on the date of enactment of this 
        subsection, to purchase electric energy or capacity from or to 
        sell electric energy or capacity to a qualifying cogeneration 
        facility or qualifying small power production facility under 
        this Act (including the right to recover costs of purchasing 
        electric energy or capacity).
            ``(7) Recovery of costs.--(A) The Commission shall issue 
        and enforce such regulations as are necessary to ensure that an 
        electric utility that purchases electric energy or capacity 
        from a qualifying cogeneration facility or qualifying small 
        power production facility in accordance with any legally 
        enforceable obligation entered into or imposed under this 
        section recovers all prudently incurred costs associated with 
        the purchase.
            ``(B) A regulation under subparagraph (A) shall be 
        enforceable in accordance with the provisions of law applicable 
        to enforcement of regulations under the Federal Power Act (16 
        U.S.C. 791a et seq.).
    ``(n) Rulemaking for New Qualifying Facilities.--(1)(A) Not later 
than 180 days after the date of enactment of this section, the 
Commission shall issue a rule revising the criteria in 18 CFR 292.205 
for new qualifying cogeneration facilities seeking to sell electric 
energy pursuant to section 210 of this Act to ensure--
            ``(i) that the thermal energy output of a new qualifying 
        cogeneration facility is used in a productive and beneficial 
        manner;
            ``(ii) the electrical, thermal, and chemical output of the 
        cogeneration facility is used fundamentally for industrial, 
        commercial, or institutional purposes and is not intended 
        fundamentally for sale to an electric utility, taking into 
        account technological, efficiency, economic, and variable 
        thermal energy requirements, as well as State laws applicable 
        to sales of electric energy from a qualifying facility to its 
        host facility; and
            ``(iii) continuing progress in the development of efficient 
        electric energy generating technology.
    ``(B) The rule issued pursuant to section (n)(1)(A) shall be 
applicable only to facilities that seek to sell electric energy 
pursuant to section 210 of this Act. For all other purposes, except as 
specifically provided in section (m)(2)(A), qualifying facility status 
shall be determined in accordance with the rules and regulations of 
this Act.
    ``(2) Notwithstanding rule revisions under paragraph (1), the 
Commission's criteria for qualifying cogeneration facilities in effect 
prior to the date on which the Commission issues the final rule 
required by paragraph (1) shall continue to apply to any cogeneration 
facility that--
            ``(A) was a qualifying cogeneration facility on the date of 
        enactment of subsection (m), or
            ``(B) had filed with the Commission a notice of self-
        certification, self-recertification or an application for 
        Commission certification under 18 CFR 292.207 prior to the date 
        on which the Commission issues the final rule required by 
        paragraph (1).''.
    (b) Elimination of Ownership Limitations.--
            (1) Qualifying small power production facility.--Section 
        3(17)(C) of the Federal Power Act (16 U.S.C. 796(17)(C)) is 
        amended to read as follows:
                    ``(C) `qualifying small power production facility' 
                means a small power production facility that the 
                Commission determines, by rule, meets such requirements 
                (including requirements respecting fuel use, fuel 
                efficiency, and reliability) as the Commission may, by 
                rule, prescribe;''.
            (2) Qualifying cogeneration facility.--Section 3(18)(B) of 
        the Federal Power Act (16 U.S.C. 796(18)(B)) is amended to read 
        as follows:
                    ``(B) `qualifying cogeneration facility' means a 
                cogeneration facility that the Commission determines, 
                by rule, meets such requirements (including 
                requirements respecting minimum size, fuel use, and 
                fuel efficiency) as the Commission may, by rule, 
                prescribe;''.

                      Subtitle F--Repeal of PUHCA

SEC. 1261. SHORT TITLE.

    This subtitle may be cited as the ``Public Utility Holding Company 
Act of 2003''.

SEC. 1262. DEFINITIONS.

    For purposes of this subtitle:
            (1) Affiliate.--The term ``affiliate'' of a company means 
        any company, 5 percent or more of the outstanding voting 
        securities of which are owned, controlled, or held with power 
        to vote, directly or indirectly, by such company.
            (2) Associate company.--The term ``associate company'' of a 
        company means any company in the same holding company system 
        with such company.
            (3) Commission.--The term ``Commission'' means the Federal 
        Energy Regulatory Commission.
            (4) Company.--The term ``company'' means a corporation, 
        partnership, association, joint stock company, business trust, 
        or any organized group of persons, whether incorporated or not, 
        or a receiver, trustee, or other liquidating agent of any of 
        the foregoing.
            (5) Electric utility company.--The term ``electric utility 
        company'' means any company that owns or operates facilities 
        used for the generation, transmission, or distribution of 
        electric energy for sale.
            (6) Exempt wholesale generator and foreign utility 
        company.--The terms ``exempt wholesale generator'' and 
        ``foreign utility company'' have the same meanings as in 
        sections 32 and 33, respectively, of the Public Utility Holding 
        Company Act of 1935 (15 U.S.C. 79z-5a, 79z-5b), as those 
        sections existed on the day before the effective date of this 
        subtitle.
            (7) Gas utility company.--The term ``gas utility company'' 
        means any company that owns or operates facilities used for 
        distribution at retail (other than the distribution only in 
        enclosed portable containers or distribution to tenants or 
        employees of the company operating such facilities for their 
        own use and not for resale) of natural or manufactured gas for 
        heat, light, or power.
            (8) Holding company.--The term ``holding company'' means--
                    (A) any company that directly or indirectly owns, 
                controls, or holds, with power to vote, 10 percent or 
                more of the outstanding voting securities of a public-
                utility company or of a holding company of any public-
                utility company; and
                    (B) any person, determined by the Commission, after 
                notice and opportunity for hearing, to exercise 
                directly or indirectly (either alone or pursuant to an 
                arrangement or understanding with 1 or more persons) 
                such a controlling influence over the management or 
                policies of any public-utility company or holding 
                company as to make it necessary or appropriate for the 
                rate protection of utility customers with respect to 
                rates that such person be subject to the obligations, 
                duties, and liabilities imposed by this subtitle upon 
                holding companies.
            (9) Holding company system.--The term ``holding company 
        system'' means a holding company, together with its subsidiary 
        companies.
            (10) Jurisdictional rates.--The term ``jurisdictional 
        rates'' means rates accepted or established by the Commission 
        for the transmission of electric energy in interstate commerce, 
        the sale of electric energy at wholesale in interstate 
        commerce, the transportation of natural gas in interstate 
        commerce, and the sale in interstate commerce of natural gas 
        for resale for ultimate public consumption for domestic, 
        commercial, industrial, or any other use.
            (11) Natural gas company.--The term ``natural gas company'' 
        means a person engaged in the transportation of natural gas in 
        interstate commerce or the sale of such gas in interstate 
        commerce for resale.
            (12) Person.--The term ``person'' means an individual or 
        company.
            (13) Public utility.--The term ``public utility'' means any 
        person who owns or operates facilities used for transmission of 
        electric energy in interstate commerce or sales of electric 
        energy at wholesale in interstate commerce.
            (14) Public-utility company.--The term ``public-utility 
        company'' means an electric utility company or a gas utility 
        company.
            (15) State commission.--The term ``State commission'' means 
        any commission, board, agency, or officer, by whatever name 
        designated, of a State, municipality, or other political 
        subdivision of a State that, under the laws of such State, has 
        jurisdiction to regulate public utility companies.
            (16) Subsidiary company.--The term ``subsidiary company'' 
        of a holding company means--
                    (A) any company, 10 percent or more of the 
                outstanding voting securities of which are directly or 
                indirectly owned, controlled, or held with power to 
                vote, by such holding company; and
                    (B) any person, the management or policies of which 
                the Commission, after notice and opportunity for 
                hearing, determines to be subject to a controlling 
                influence, directly or indirectly, by such holding 
company (either alone or pursuant to an arrangement or understanding 
with 1 or more other persons) so as to make it necessary for the rate 
protection of utility customers with respect to rates that such person 
be subject to the obligations, duties, and liabilities imposed by this 
subtitle upon subsidiary companies of holding companies.
            (17) Voting security.--The term ``voting security'' means 
        any security presently entitling the owner or holder thereof to 
        vote in the direction or management of the affairs of a 
        company.

SEC. 1263. REPEAL OF THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935.

    The Public Utility Holding Company Act of 1935 (15 U.S.C. 79 et 
seq.) is repealed.

SEC. 1264. FEDERAL ACCESS TO BOOKS AND RECORDS.

    (a) In General.--Each holding company and each associate company 
thereof shall maintain, and shall make available to the Commission, 
such books, accounts, memoranda, and other records as the Commission 
determines are relevant to costs incurred by a public utility or 
natural gas company that is an associate company of such holding 
company and necessary or appropriate for the protection of utility 
customers with respect to jurisdictional rates.
    (b) Affiliate Companies.--Each affiliate of a holding company or of 
any subsidiary company of a holding company shall maintain, and shall 
make available to the Commission, such books, accounts, memoranda, and 
other records with respect to any transaction with another affiliate, 
as the Commission determines are relevant to costs incurred by a public 
utility or natural gas company that is an associate company of such 
holding company and necessary or appropriate for the protection of 
utility customers with respect to jurisdictional rates.
    (c) Holding Company Systems.--The Commission may examine the books, 
accounts, memoranda, and other records of any company in a holding 
company system, or any affiliate thereof, as the Commission determines 
are relevant to costs incurred by a public utility or natural gas 
company within such holding company system and necessary or appropriate 
for the protection of utility customers with respect to jurisdictional 
rates.
    (d) Confidentiality.--No member, officer, or employee of the 
Commission shall divulge any fact or information that may come to his 
or her knowledge during the course of examination of books, accounts, 
memoranda, or other records as provided in this section, except as may 
be directed by the Commission or by a court of competent jurisdiction.

SEC. 1265. STATE ACCESS TO BOOKS AND RECORDS.

    (a) In General.--Upon the written request of a State commission 
having jurisdiction to regulate a public-utility company in a holding 
company system, the holding company or any associate company or 
affiliate thereof, other than such public-utility company, wherever 
located, shall produce for inspection books, accounts, memoranda, and 
other records that--
            (1) have been identified in reasonable detail in a 
        proceeding before the State commission;
            (2) the State commission determines are relevant to costs 
        incurred by such public-utility company; and
            (3) are necessary for the effective discharge of the 
        responsibilities of the State commission with respect to such 
        proceeding.
    (b) Limitation.--Subsection (a) does not apply to any person that 
is a holding company solely by reason of ownership of 1 or more 
qualifying facilities under the Public Utility Regulatory Policies Act 
of 1978 (16 U.S.C. 2601 et seq.).
    (c) Confidentiality of Information.--The production of books, 
accounts, memoranda, and other records under subsection (a) shall be 
subject to such terms and conditions as may be necessary and 
appropriate to safeguard against unwarranted disclosure to the public 
of any trade secrets or sensitive commercial information.
    (d) Effect on State Law.--Nothing in this section shall preempt 
applicable State law concerning the provision of books, accounts, 
memoranda, and other records, or in any way limit the rights of any 
State to obtain books, accounts, memoranda, and other records under any 
other Federal law, contract, or otherwise.
    (e) Court Jurisdiction.--Any United States district court located 
in the State in which the State commission referred to in subsection 
(a) is located shall have jurisdiction to enforce compliance with this 
section.

SEC. 1266. EXEMPTION AUTHORITY.

    (a) Rulemaking.--Not later than 90 days after the effective date of 
this subtitle, the Commission shall issue a final rule to exempt from 
the requirements of section 1264 (relating to Federal access to books 
and records) any person that is a holding company, solely with respect 
to 1 or more--
            (1) qualifying facilities under the Public Utility 
        Regulatory Policies Act of 1978 (16 U.S.C. 2601 et seq.);
            (2) exempt wholesale generators; or
            (3) foreign utility companies.
    (b) Other Authority.--The Commission shall exempt a person or 
transaction from the requirements of section 1264 (relating to Federal 
access to books and records) if, upon application or upon the motion of 
the Commission--
            (1) the Commission finds that the books, accounts, 
        memoranda, and other records of any person are not relevant to 
        the jurisdictional rates of a public utility or natural gas 
        company; or
            (2) the Commission finds that any class of transactions is 
        not relevant to the jurisdictional rates of a public utility or 
        natural gas company.

SEC. 1267. AFFILIATE TRANSACTIONS.

    (a) Commission Authority Unaffected.--Nothing in this subtitle 
shall limit the authority of the Commission under the Federal Power Act 
(16 U.S.C. 791a et seq.) to require that jurisdictional rates are just 
and reasonable, including the ability to deny or approve the pass 
through of costs, the prevention of cross-subsidization, and the 
issuance of such rules and regulations as are necessary or appropriate 
for the protection of utility consumers.
    (b) Recovery of Costs.--Nothing in this subtitle shall preclude the 
Commission or a State commission from exercising its jurisdiction under 
otherwise applicable law to determine whether a public-utility company, 
public utility, or natural gas company may recover in rates any costs 
of an activity performed by an associate company, or any costs of goods 
or services acquired by such public-utility company from an associate 
company.

SEC. 1268. APPLICABILITY.

    Except as otherwise specifically provided in this subtitle, no 
provision of this subtitle shall apply to, or be deemed to include--
            (1) the United States;
            (2) a State or any political subdivision of a State;
            (3) any foreign governmental authority not operating in the 
        United States;
            (4) any agency, authority, or instrumentality of any entity 
        referred to in paragraph (1), (2), or (3); or
            (5) any officer, agent, or employee of any entity referred 
        to in paragraph (1), (2), (3), or (4) acting as such in the 
        course of his or her official duty.

SEC. 1269. EFFECT ON OTHER REGULATIONS.

    Nothing in this subtitle precludes the Commission or a State 
commission from exercising its jurisdiction under otherwise applicable 
law to protect utility customers.

SEC. 1270. ENFORCEMENT.

    The Commission shall have the same powers as set forth in sections 
306 through 317 of the Federal Power Act (16 U.S.C. 825e-825p) to 
enforce the provisions of this subtitle.

SEC. 1271. SAVINGS PROVISIONS.

    (a) In General.--Nothing in this subtitle, or otherwise in the 
Public Utility Holding Company Act of 1935, or rules, regulations, or 
orders thereunder, prohibits a person from engaging in or continuing to 
engage in activities or transactions in which it is legally engaged or 
authorized to engage on the date of enactment of this Act, if that 
person continues to comply with the terms (other than an expiration 
date or termination date) of any such authorization, whether by rule or 
by order.
    (b) Effect on Other Commission Authority.--Nothing in this subtitle 
limits the authority of the Commission under the Federal Power Act (16 
U.S.C. 791a et seq.) or the Natural Gas Act (15 U.S.C. 717 et seq.).

SEC. 1272. IMPLEMENTATION.

    Not later than 12 months after the date of enactment of this 
subtitle, the Commission shall--
            (1) issue such regulations as may be necessary or 
        appropriate to implement this subtitle (other than section 
        1265, relating to State access to books and records); and
            (2) submit to Congress detailed recommendations on 
        technical and conforming amendments to Federal law necessary to 
        carry out this subtitle and the amendments made by this 
        subtitle.

SEC. 1273. TRANSFER OF RESOURCES.

    All books and records that relate primarily to the functions 
transferred to the Commission under this subtitle shall be transferred 
from the Securities and Exchange Commission to the Commission.

SEC. 1274. EFFECTIVE DATE.

    (a) In General.--Except for section 1272 (relating to 
implementation), this subtitle shall take effect 12 months after the 
date of enactment of this subtitle.
    (b) Compliance With Certain Rules.--If the Commission approves and 
makes effective any final rulemaking modifying the standards of conduct 
governing entities that own, operate, or control facilities for 
transmission of electricity in interstate commerce or transportation of 
natural gas in interstate commerce prior to the effective date of this 
subtitle, any action taken by a public-utility company or utility 
holding company to comply with the requirements of such rulemaking 
shall not subject such public-utility company or utility holding 
company to any regulatory requirement applicable to a holding company 
under the Public Utility Holding Company Act of 1935 (15 U.S.C. 79 et 
seq.).

SEC. 1275. SERVICE ALLOCATION.

    (a) FERC Review.--In the case of non-power goods or administrative 
or management services provided by an associate company organized 
specifically for the purpose of providing such goods or services to any 
public utility in the same holding company system, at the election of 
the system or a State commission having jurisdiction over the public 
utility, the Commission, after the effective date of this subtitle, 
shall review and authorize the allocation of the costs for such goods 
or services to the extent relevant to that associate company in order 
to assure that each allocation is appropriate for the protection of 
investors and consumers of such public utility.
    (b) Cost Allocation.--Nothing in this section shall preclude the 
Commission or a State commission from exercising its jurisdiction under 
other applicable law with respect to the review or authorization of any 
costs allocated to a public utility in a holding company system located 
in the affected State as a result of the acquisition of non-power goods 
or administrative and management services by such public utility from 
an associate company organized specifically for that purpose.
    (c) Rules.--Not later than 6 months after the date of enactment of 
this Act, the Commission shall issue rules (which rules shall be 
effective no earlier than the effective date of this subtitle) to 
exempt from the requirements of this section any company in a holding 
company system whose public utility operations are confined 
substantially to a single State and any other class of transactions 
that the Commission finds is not relevant to the jurisdictional rates 
of a public utility.
    (d) Public Utility.--As used in this section, the term ``public 
utility'' has the meaning given that term in section 201(e) of the 
Federal Power Act.

SEC. 1276. AUTHORIZATION OF APPROPRIATIONS.

    There are authorized to be appropriated such funds as may be 
necessary to carry out this subtitle.

SEC. 1277. CONFORMING AMENDMENTS TO THE FEDERAL POWER ACT.

    (a) Conflict of Jurisdiction.--Section 318 of the Federal Power Act 
(16 U.S.C. 825q) is repealed.
    (b) Definitions.--(1) Section 201(g)(5) of the Federal Power Act 
(16 U.S.C. 824(g)(5)) is amended by striking ``1935'' and inserting 
``2003''.
    (2) Section 214 of the Federal Power Act (16 U.S.C. 824m) is 
amended by striking ``1935'' and inserting ``2003''.

 Subtitle G--Market Transparency, Enforcement, and Consumer Protection

SEC. 1281. MARKET TRANSPARENCY RULES.

    Part II of the Federal Power Act (16 U.S.C. 824 et seq.) is amended 
by adding at the end the following:

``SEC. 220. MARKET TRANSPARENCY RULES.

    ``(a) In General.--Not later than 180 days after the date of 
enactment of this section, the Commission shall issue rules 
establishing an electronic information system to provide the Commission 
and the public with access to such information as is necessary or 
appropriate to facilitate price transparency and participation in 
markets subject to the Commission's jurisdiction under this Act. Such 
systems shall provide information about the availability and market 
price of wholesale electric energy and transmission services to the 
Commission, State commissions, buyers and sellers of wholesale electric 
energy, users of transmission services, and the public on a timely 
basis. The Commission shall have authority to obtain such information 
from any electric utility or transmitting utility, including any entity 
described in section 201(f).
    ``(b) Exemptions.--The Commission shall exempt from disclosure 
information it determines would, if disclosed, be detrimental to the 
operation of an effective market or jeopardize system security. This 
section shall not apply to transactions for the purchase or sale of 
wholesale electric energy or transmission services within the area 
described in section 212(k)(2)(A). In determining the information to be 
made available under this section and time to make such information 
available, the Commission shall seek to ensure that consumers and 
competitive markets are protected from the adverse effects of potential 
collusion or other anti-competitive behaviors that can be facilitated 
by untimely public disclosure of transaction-specific information.
    ``(c) Commodity Futures Trading Commission.--This section shall not 
affect the exclusive jurisdiction of the Commodity Futures Trading 
Commission with respect to accounts, agreements, contracts, or 
transactions in commodities under the Commodity Exchange Act (7 U.S.C. 
1 et seq.). Any request for information to a designated contract 
market, registered derivatives transaction execution facility, board of 
trade, exchange, or market involving accounts, agreements, contracts, 
or transactions in commodities (including natural gas, electricity and 
other energy commodities) within the exclusive jurisdiction of the 
Commodity Futures Trading Commission shall be directed to the Commodity 
Futures Trading Commission.
    ``(d) Savings Provision.--In exercising its authority under this 
section, the Commission shall not--
            ``(1) compete with, or displace from the market place, any 
        price publisher; or
            ``(2) regulate price publishers or impose any requirements 
        on the publication of information.''.

SEC. 1282. MARKET MANIPULATION.

    Part II of the Federal Power Act (16 U.S.C. 824 et seq.) is amended 
by adding at the end the following:

``SEC. 221. PROHIBITION ON FILING FALSE INFORMATION.

    ``No person or other entity (including an entity described in 
section 201(f)) shall willfully and knowingly report any information 
relating to the price of electricity sold at wholesale or availability 
of transmission capacity, which information the person or any other 
entity knew to be false at the time of the reporting, to a Federal 
agency with intent to fraudulently affect the data being compiled by 
such Federal agency.

``SEC. 222. PROHIBITION ON ROUND TRIP TRADING.

    ``(a) Prohibition.--No person or other entity (including an entity 
described in section 201(f)) shall willfully and knowingly enter into 
any contract or other arrangement to execute a `round trip trade' for 
the purchase or sale of electric energy at wholesale.
    ``(b) Definition.--For the purposes of this section, the term 
`round trip trade' means a transaction, or combination of transactions, 
in which a person or any other entity--
            ``(1) enters into a contract or other arrangement to 
        purchase from, or sell to, any other person or other entity 
        electric energy at wholesale;
            ``(2) simultaneously with entering into the contract or 
        arrangement described in paragraph (1), arranges a financially 
        offsetting trade with such other person or entity for the same 
        such electric energy, at the same location, price, quantity and 
        terms so that, collectively, the purchase and sale transactions 
        in themselves result in no financial gain or loss; and
            ``(3) enters into the contract or arrangement with a 
        specific intent to fraudulently affect reported revenues, 
        trading volumes, or prices.''.

SEC. 1283. ENFORCEMENT.

    (a) Complaints.--Section 306 of the Federal Power Act (16 U.S.C. 
825e) is amended as follows:
            (1) By inserting ``electric utility,'' after ``Any 
        person,''.
            (2) By inserting ``, transmitting utility,'' after 
        ``licensee'' each place it appears.
    (b) Review of Commission Orders.--Section 313(a) of the Federal 
Power Act (16 U.S.C. 8251) is amended by inserting `electric utility,' 
after `person,' in the first 2 places it appears and by striking `any 
person unless such person' and inserting `any entity unless such 
entity'.
    (c) Investigations.--Section 307(a) of the Federal Power Act (16 
U.S.C. 825f(a)) is amended as follows:
            (1) By inserting `, electric utility, transmitting utility, 
        or other entity' after `person' each time it appears.
            (2) By striking the period at the end of the first sentence 
        and inserting the following: ``or in obtaining information 
        about the sale of electric energy at wholesale in interstate 
        commerce and the transmission of electric energy in interstate 
        commerce.''.
    (d) Criminal Penalties.--Section 316 of the Federal Power Act (16 
U.S.C. 825o) is amended--
            (1) in subsection (a), by striking ``$5,000'' and inserting 
        ``$1,000,000'', and by striking ``two years'' and inserting ``5 
        years'';
            (2) in subsection (b), by striking ``$500'' and inserting 
        ``$25,000''; and
            (3) by striking subsection (c).
    (e) Civil Penalties.--Section 316A of the Federal Power Act (16 
U.S.C. 825o-1) is amended as follows:
            (1) In subsections (a) and (b), by striking ``section 211, 
        212, 213, or 214'' each place it appears and inserting ``Part 
        II''.
            (2) In subsection (b), by striking ``$10,000'' and 
        inserting ``$1,000,000''.

SEC. 1284. REFUND EFFECTIVE DATE.

    Section 206(b) of the Federal Power Act (16 U.S.C. 824e(b)) is 
amended as follows:
            (1) By striking ``the date 60 days after the filing of such 
        complaint nor later than 5 months after the expiration of such 
        60-day period'' in the second sentence and inserting ``the date 
        of the filing of such complaint nor later than 5 months after 
        the filing of such complaint''.
            (2) By striking ``60 days after'' in the third sentence and 
        inserting ``of''.
            (3) By striking ``expiration of such 60-day period'' in the 
        third sentence and inserting ``publication date''.
            (4) By striking the fifth sentence and inserting the 
        following: ``If no final decision is rendered by the conclusion 
        of the 180-day period commencing upon initiation of a 
        proceeding pursuant to this section, the Commission shall state 
        the reasons why it has failed to do so and shall state its best 
        estimate as to when it reasonably expects to make such 
        decision.''.

SEC. 1285. REFUND AUTHORITY.

    Section 206 of the Federal Power Act (16 U.S.C. 824e) is amended by 
adding the following new subsection at the end thereof:
    ``(e)(1) Except as provided in paragraph (2), if an entity 
described in section 201(f) voluntarily makes a short-term sale of 
electric energy and the sale violates Commission rules in effect at the 
time of the sale, such entity shall be subject to the Commission's 
refund authority under this section with respect to such violation.
    ``(2) This section shall not apply to--
            ``(A) any entity that sells less than 8,000,000 megawatt 
        hours of electricity per year; or
            ``(B) any electric cooperative.
    ``(3) For purposes of this subsection, the term `short-term sale' 
means an agreement for the sale of electric energy at wholesale in 
interstate commerce that is for a period of 31 days or less (excluding 
monthly contracts subject to automatic renewal).
    ``(4) The Commission shall have refund authority under subsection 
(e)(1) with respect to a voluntary short-term sale of electric energy 
by the Bonneville Power Administration (in this section `Bonneville') 
only if the sale is at an unjust and unreasonable rate and, in that 
event, may order a refund only for short-term sales made by Bonneville 
at rates that are higher than the highest just and reasonable rate 
charged by any other entity for a short-term sale of electric energy in 
the same geographic market for the same, or most nearly comparable, 
period as the sale by Bonneville.
    ``(5) With respect to any Federal power marketing agency or the 
Tennessee Valley Authority, the Commission shall not assert or exercise 
any regulatory authority or powers under subsection (e)(1) other than 
the ordering of refunds to achieve a just and reasonable rate.''.

SEC. 1286. SANCTITY OF CONTRACT.

    (a) In General.--The Federal Energy Regulatory Commission (in this 
section, ``the Commission'') shall have no authority to abrogate or 
modify any provision of an executed contract or executed contract 
amendment described in subsection (b) that has been entered into or 
taken effect, except upon a finding that failure to take such action 
would be contrary to the public interest.
    (b) Limitation.--Except as provided in subsection (c), this section 
shall apply only to a contract or contract amendment--
            (1) executed on or after the date of enactment of this Act; 
        and
            (2) entered into--
                    (A) for the purchase or sale of electric energy 
                under section 205 of the Federal Power Act (16 U.S.C. 
                824d) where the seller has been authorized by the 
                Commission to charge market-based rates; or
                    (B) under section 4 of the Natural Gas Act (15 
                U.S.C. 717c) where the natural gas company has been 
                authorized by the Commission to charge market-based 
                rates for the service described in the contract.
    (c) Exclusion.--This section shall not apply to an executed 
contract or executed contract amendment that expressly provides for a 
standard of review other than the public interest standard.
    (d) Savings Provision.--With respect to contracts to which this 
section does not apply, nothing in this section alters existing law 
regarding the applicable standard of review for a contract subject to 
the jurisdiction of the Commission.

SEC. 1287. CONSUMER PRIVACY AND UNFAIR TRADE PRACTICES.

    (a) Privacy.--The Federal Trade Commission may issue rules 
protecting the privacy of electric consumers from the disclosure of 
consumer information obtained in connection with the sale or delivery 
of electric energy to electric consumers.
    (b) Slamming.--The Federal Trade Commission may issue rules 
prohibiting the change of selection of an electric utility except with 
the informed consent of the electric consumer or if approved by the 
appropriate State regulatory authority.
    (c) Cramming.--The Federal Trade Commission may issue rules 
prohibiting the sale of goods and services to an electric consumer 
unless expressly authorized by law or the electric consumer.
    (d) Rulemaking.--The Federal Trade Commission shall proceed in 
accordance with section 553 of title 5, United States Code, when 
prescribing a rule under this section.
    (e) State Authority.--If the Federal Trade Commission determines 
that a State's regulations provide equivalent or greater protection 
than the provisions of this section, such State regulations shall apply 
in that State in lieu of the regulations issued by the Commission under 
this section.
    (f) Definitions.--For purposes of this section:
            (1) State regulatory authority.--The term ``State 
        regulatory authority'' has the meaning given that term in 
        section 3(21) of the Federal Power Act (16 U.S.C. 796(21)).
            (2) Electric consumer and electric utility.--The terms 
        ``electric consumer'' and ``electric utility'' have the 
        meanings given those terms in section 3 of the Public Utility 
        Regulatory Policies Act of 1978 (16 U.S.C. 2602).

                       Subtitle H--Merger Reform

SEC. 1291. MERGER REVIEW REFORM AND ACCOUNTABILITY.

    (a) Merger Review Reform.--Within 180 days after the date of 
enactment of this Act, the Secretary of Energy, in consultation with 
the Federal Energy Regulatory Commission and the Attorney General of 
the United States, shall prepare, and transmit to Congress each of the 
following:
            (1) A study of the extent to which the authorities vested 
        in the Federal Energy Regulatory Commission under section 203 
        of the Federal Power Act are duplicative of authorities vested 
        in--
                    (A) other agencies of Federal and State Government; 
                and
                    (B) the Federal Energy Regulatory Commission, 
                including under sections 205 and 206 of the Federal 
                Power Act.
            (2) Recommendations on reforms to the Federal Power Act 
        that would eliminate any unnecessary duplication in the 
        exercise of regulatory authority or unnecessary delays in the 
        approval (or disapproval) of applications for the sale, lease, 
        or other disposition of public utility facilities.
    (b) Merger Review Accountability.--Not later than 1 year after the 
date of enactment of this Act and annually thereafter, with respect to 
all orders issued within the preceding year that impose a condition on 
a sale, lease, or other disposition of public utility facilities under 
section 203(b) of the Federal Power Act, the Federal Energy Regulatory 
Commission shall transmit a report to Congress explaining each of the 
following:
            (1) The condition imposed.
            (2) Whether the Commission could have imposed such 
        condition by exercising its authority under any provision of 
        the Federal Power Act other than under section 203(b).
            (3) If the Commission could not have imposed such condition 
        other than under section 203(b), why the Commission determined 
        that such condition was consistent with the public interest.

SEC. 1292. ELECTRIC UTILITY MERGERS.

    (a) Amendment.--Section 203(a) of the Federal Power Act (16 U.S.C. 
824b(a)) is amended to read as follows:
    ``(a)(1) No public utility shall, without first having secured an 
order of the Commission authorizing it to do so--
            ``(A) sell, lease, or otherwise dispose of the whole of its 
        facilities subject to the jurisdiction of the Commission, or 
        any part thereof of a value in excess of $10,000,000;
            ``(B) merge or consolidate, directly or indirectly, such 
        facilities or any part thereof with those of any other person, 
        by any means whatsoever; or
            ``(C) purchase, acquire, or take any security with a value 
        in excess of $10,000,000 of any other public utility.
    ``(2) No holding company in a holding company system that includes 
a public utility shall purchase, acquire, or take any security with a 
value in excess of $10,000,000 of, or, by any means whatsoever, 
directly or indirectly, merge or consolidate with, a public utility or 
a holding company in a holding company system that includes a public 
utility with a value in excess of $10,000,000 without first having 
secured an order of the Commission authorizing it to do so.
    ``(3) Upon receipt of an application for such approval the 
Commission shall give reasonable notice in writing to the Governor and 
State commission of each of the States in which the physical property 
affected, or any part thereof, is situated, and to such other persons 
as it may deem advisable.
    ``(4) After notice and opportunity for hearing, the Commission 
shall approve the proposed disposition, consolidation, acquisition, or 
change in control, if it finds that the proposed transaction will be 
consistent with the public interest. In evaluating whether a 
transaction will be consistent with the public interest, the Commission 
shall consider whether the proposed transaction--
            ``(A) will adequately protect consumer interests;
            ``(B) will be consistent with competitive wholesale 
        markets;
            ``(C) will impair the financial integrity of any public 
        utility that is a party to the transaction or an associate 
        company of any party to the transaction; and
            ``(D) satisfies such other criteria as the Commission 
        considers consistent with the public interest.
    ``(5) The Commission shall, by rule, adopt procedures for the 
expeditious consideration of applications for the approval of 
dispositions, consolidations, or acquisitions under this section. Such 
rules shall identify classes of transactions, or specify criteria for 
transactions, that normally meet the standards established in paragraph 
(4). The Commission shall provide expedited review for such 
transactions. The Commission shall grant or deny any other application 
for approval of a transaction not later than 180 days after the 
application is filed. If the Commission does not act within 180 days, 
such application shall be deemed granted unless the Commission finds, 
based on good cause, that further consideration is required to 
determine whether the proposed transaction meets the standards of 
paragraph (4) and issues an order tolling the time for acting on the 
application for not more than 180 days, at the end of which additional 
period the Commission shall grant or deny the application.
    ``(6) For purposes of this subsection, the terms `associate 
company', `holding company', and `holding company system' have the 
meaning given those terms in the Public Utility Holding Company Act of 
2003.''.
    (b) Effective Date.--The amendments made by this section shall take 
effect 12 months after the date of enactment of this section.

                        Subtitle I--Definitions

SEC. 1295. DEFINITIONS.

    (a) Electric Utility.--Section 3(22) of the Federal Power Act (16 
U.S.C. 796(22)) is amended to read as follows:
            ``(22) Electric utility.--The term `electric utility' means 
        any person or Federal or State agency (including any entity 
        described in section 201(f)) that sells electric energy; such 
        term includes the Tennessee Valley Authority and each Federal 
        power marketing administration.''.
    (b) Transmitting Utility.--Section 3(23) of the Federal Power Act 
(16 U.S.C. 796(23)) is amended to read as follows:
            ``(23) Transmitting utility.--The term `transmitting 
        utility' means an entity, including any entity described in 
        section 201(f), that owns, operates, or controls facilities 
        used for the transmission of electric energy--
                    ``(A) in interstate commerce; or
                    ``(B) for the sale of electric energy at 
                wholesale.''.
    (c) Additional Definitions.--Section 3 of the Federal Power Act (16 
U.S.C. 796) is amended by adding at the end the following:
            ``(26) Electric cooperative.--The term `electric 
        cooperative' means a cooperatively owned electric utility.
            ``(27) RTO.--The term `Regional Transmission Organization' 
        or `RTO' means an entity of sufficient regional scope approved 
        by the Commission to exercise operational or functional control 
        of facilities used for the transmission of electric energy in 
        interstate commerce and to ensure nondiscriminatory access to 
        such facilities.
            ``(28) ISO.--The term `Independent System Operator' or 
        `ISO' means an entity approved by the Commission to exercise 
        operational or functional control of facilities used for the 
        transmission of electric energy in interstate commerce and to 
        ensure nondiscriminatory access to such facilities.''.
    (d) Commission.--For the purposes of this title, the term 
``Commission'' means the Federal Energy Regulatory Commission.
    (e) Applicability.--Section 201(f) of the Federal Power Act (16 
U.S.C. 824(f)) is amended by adding after ``political subdivision of a 
state,'' the following: ``an electric cooperative that has financing 
under the Rural Electrification Act of 1936 (7 U.S.C. 901 et seq.) or 
that sells less than 4,000,000 megawatt hours of electricity per 
year,''.

            Subtitle J--Technical and Conforming Amendments

SEC. 1297. CONFORMING AMENDMENTS.

    The Federal Power Act is amended as follows:
            (1) Section 201(b)(2) of such Act (16 U.S.C. 824(b)(2)) is 
        amended as follows:
                    (A) In the first sentence by striking ``210, 211, 
                and 212'' and inserting ``203(a)(2), 206(e), 210, 211, 
                211A, 212, 215, 216, 217, 218, 219, 220, 221, and 
                222''.
                    (B) In the second sentence by striking ``210 or 
                211'' and inserting ``203(a)(2), 206(e), 210, 211, 
                211A, 212, 215, 216, 217, 218, 219, 220, 221, and 
                222''.
                    (C) Section 201(b)(2) of such Act is amended by 
                striking ``The'' in the first place it appears and 
                inserting ``Notwithstanding section 201(f), the'' and 
                in the second sentence after ``any order'' by inserting 
                ``or rule''.
            (2) Section 201(e) of such Act is amended by striking 
        ``210, 211, or 212'' and inserting ``206(e), 206(f), 210, 211, 
        211A, 212, 215, 216, 217, 218, 219, 220, 221, and 222''.
            (3) Section 206 of such Act (16 U.S.C. 824e) is amended as 
        follows:
                    (A) In subsection (b), in the seventh sentence, by 
                striking ``the public utility to make''.
                    (B) In the first sentence of subsection (a), by 
                striking `hearing had' and inserting ``hearing held''.
            (4) Section 211(c) of such Act (16 U.S.C. 824j(c)) is 
        amended by--
                    (A) striking ``(2)'';
                    (B) striking ``(A)'' and inserting ``(1)''
                    (C) striking ``(B)'' and inserting ``(2)''; and
                    (D) striking ``termination of modification'' and 
                inserting ``termination or modification''.
            (5) Section 211(d)(1) of such Act (16 U.S.C. 824j(d)(1)) is 
        amended by striking ``electric utility'' the second time it 
        appears and inserting ``transmitting utility''.
            (6) Section 315 (c) of such Act (16 U.S.C. 825n(c)) is 
        amended by striking ``subsection'' and inserting ``section''.

                   TITLE XIII--ENERGY TAX INCENTIVES

SEC. 1300. SHORT TITLE; ETC.

    (a) Short Title.--This title may be cited as the ``Energy Tax 
Incentives Act''.
    (b) Amendment of 1986 Code.--Except as otherwise expressly 
provided, whenever in this title an amendment or repeal is expressed in 
terms of an amendment to, or repeal of, a section or other provision, 
the reference shall be considered to be made to a section or other 
provision of the Internal Revenue Code of 1986.
    (c) Table of Contents.--The table of contents for this title is as 
follows:

Sec. 1300. Short title; etc.
        Subtitle A--Renewable Electricity Production Tax Credit

Sec. 1301. Extension and expansion of credit for electricity produced 
                            from certain renewable resources.
      Subtitle B--Alternative Motor Vehicles and Fuels Incentives

Sec. 1311. Alternative motor vehicle credit.
Sec. 1312. Modification of credit for qualified electric vehicles.
Sec. 1313. Credit for installation of alternative fueling stations.
Sec. 1314. Credit for retail sale of alternative fuels as motor vehicle 
                            fuel.
Sec. 1315. Small ethanol producer credit.
Sec. 1316. Incentives for biodiesel.
Sec. 1317. Alcohol fuel and biodiesel mixtures excise tax credit.
Sec. 1318. Sale of gasoline and diesel fuel at duty-free sales 
                            enterprises.
       Subtitle C--Conservation and Energy Efficiency Provisions

Sec. 1321. Credit for construction of new energy efficient home.
Sec. 1322. Credit for energy efficient appliances.
Sec. 1323. Credit for residential energy efficient property.
Sec. 1324. Credit for business installation of qualified fuel cells and 
                            stationary microturbine power plants.
Sec. 1325. Energy efficient commercial buildings deduction.
Sec. 1326. Three-year applicable recovery period for depreciation of 
                            qualified energy management devices.
Sec. 1327. Three-year applicable recovery period for depreciation of 
                            qualified water submetering devices.
Sec. 1328. Energy credit for combined heat and power system property.
Sec. 1329. Credit for energy efficiency improvements to existing homes.
                   Subtitle D--Clean Coal Incentives

 Part I--Credit for Emission Reductions and Efficiency Improvements in 
         Existing Coal-Based Electricity Generation Facilities

Sec. 1341. Credit for production from a qualifying clean coal 
                            technology unit.
Part II--Incentives for Early Commercial Applications of Advanced Clean 
                           Coal Technologies

Sec. 1342. Credit for investment in qualifying advanced clean coal 
                            technology.
Sec. 1343. Credit for production from a qualifying advanced clean coal 
                            technology unit.
      Part III--Treatment of Persons Not Able To Use Entire Credit

Sec. 1344. Treatment of persons not able to use entire credit.
                   Subtitle E--Oil and Gas Provisions

Sec. 1351. Oil and gas from marginal wells.
Sec. 1352. Natural gas gathering lines treated as 7-year property.
Sec. 1353. Expensing of capital costs incurred in complying with 
                            Environmental Protection Agency sulfur 
                            regulations.
Sec. 1354. Environmental tax credit.
Sec. 1355. Determination of small refiner exception to oil depletion 
                            deduction.
Sec. 1356. Marginal production income limit extension.
Sec. 1357. Amortization of delay rental payments.
Sec. 1358. Amortization of geological and geophysical expenditures.
Sec. 1359. Extension and modification of credit for producing fuel from 
                            a nonconventional source.
Sec. 1360. Natural gas distribution lines treated as 15-year property.
Sec. 1361. Credit for Alaska natural gas.
Sec. 1362. Certain Alaska natural gas pipeline property treated as 7-
                            year property.
Sec. 1363. Arbitrage rules not to apply to prepayments for natural gas.
Sec. 1364. Extension of enhanced oil recovery credit to certain Alaska 
                            facilities.
         Subtitle F--Electric Utility Restructuring Provisions

Sec. 1371. Modifications to special rules for nuclear decommissioning 
                            costs.
Sec. 1372. Treatment of certain income of cooperatives.
Sec. 1373. Sales or dispositions to implement Federal Energy Regulatory 
                            Commission or State electric restructuring 
                            policy.
                   Subtitle G--Additional Provisions

Sec. 1381. Extension of accelerated depreciation and wage credit 
                            benefits on Indian reservations.
Sec. 1382. Study of effectiveness of certain provisions by GAO.
Sec. 1383. Repeal of 4.3-cent motor fuel excise taxes on railroads and 
                            inland waterway transportation which remain 
                            in general fund.
Sec. 1384. Expansion of research credit.
                     Subtitle H--Revenue Provisions

          Part I--Provisions Designed To Curtail Tax Shelters

Sec. 1385. Penalty for failing to disclose reportable transaction.
Sec. 1386. Accuracy-related penalty for listed transactions and other 
                            reportable transactions having a 
                            significant tax avoidance purpose.
Sec. 1387. Tax shelter exception to confidentiality privileges relating 
                            to taxpayer communications.
Sec. 1388. Disclosure of reportable transactions.
Sec. 1389. Modifications to penalty for failure to register tax 
                            shelters.
Sec. 1390. Modification of penalty for failure to maintain lists of 
                            investors.
Sec. 1391. Penalty on promoters of tax shelters.
        Part II--Provisions to Discourage Corporate Expatriation

Sec. 1392. Tax treatment of inverted corporate entities.
Sec. 1393. Excise tax on stock compensation of insiders in inverted 
                            corporations.
Sec. 1394. Reinsurance of United States risks in foreign jurisdictions.
                   Part III--Other Revenue Provisions

Sec. 1395. Extension of Internal Revenue Service user fees.
Sec. 1396. Addition of vaccines against hepatitis A to list of taxable 
                            vaccines.
Sec. 1397. Individual expatriation to avoid tax.

        Subtitle A--Renewable Electricity Production Tax Credit

SEC. 1301. EXTENSION AND EXPANSION OF CREDIT FOR ELECTRICITY PRODUCED 
              FROM CERTAIN RENEWABLE RESOURCES.

    (a) Expansion of Qualified Energy Resources.--Subsection (c) of 
section 45 (relating to electricity produced from certain renewable 
resources) is amended to read as follows:
    ``(c) Qualified Energy Resources.--For purposes of this section--
            ``(1) In general.--The term `qualified energy resources' 
        means--
                    ``(A) wind,
                    ``(B) closed-loop biomass,
                    ``(C) biomass (other than closed-loop biomass),
                    ``(D) geothermal energy,
                    ``(E) solar energy,
                    ``(F) small irrigation power,
                    ``(G) biosolids and sludge, and
                    ``(H) municipal solid waste.''.
            ``(2) Closed-loop biomass.--The term `closed-loop biomass' 
        means any organic material from a plant which is planted 
        exclusively for purposes of being used at a qualified facility 
        to produce electricity.
            ``(3) Biomass.--
                    ``(A) In general.--The term `biomass' means--
                            ``(i) any agricultural livestock waste 
                        nutrients, or
                            ``(ii) any solid, nonhazardous, cellulosic 
                        waste material which is segregated from other 
                        waste materials and which is derived from--
                                    ``(I) any of the following forest-
                                related resources: mill and harvesting 
                                residues, precommercial thinnings, 
                                slash, and brush,
                                    ``(II) solid wood waste materials, 
                                including waste pallets, crates, 
                                dunnage, manufacturing and construction 
                                wood wastes (other than pressure-
                                treated, chemically-treated, or painted 
                                wood wastes), and landscape or right-
                                of-way tree trimmings, but not 
                                including municipal solid waste, gas 
                                derived from the biodegradation of 
                                solid waste, or paper which is commonly 
                                recycled, or
                                    ``(III) agriculture sources, 
                                including orchard tree crops, vineyard, 
                                grain, legumes, sugar, and other crop 
                                by-products or residues.
                    ``(B) Agricultural livestock waste nutrients.--
                            ``(i) In general.--The term `agricultural 
                        livestock waste nutrients' means agricultural 
                        livestock manure and litter, including wood 
                        shavings, straw, rice hulls, and other bedding 
material for the disposition of manure.
                            ``(ii) Agricultural livestock.--The term 
                        `agricultural livestock' includes bovine, 
                        swine, poultry, and sheep.
            ``(4) Geothermal energy.--The term `geothermal energy' 
        means energy derived from a geothermal deposit (within the 
        meaning of section 613(e)(2)).
            ``(5) Small irrigation power.--The term `small irrigation 
        power' means power--
                    ``(A) generated without any dam or impoundment of 
                water through an irrigation system canal or ditch, and
                    ``(B) the installed capacity of which is less than 
                5 megawatts.
            ``(6) Biosolids and sludge.--The term `biosolids and 
        sludge' means the residue or solids removed in the treatment of 
        commercial, industrial, or municipal wastewater.
            ``(7) Municipal solid waste.--The term `municipal solid 
        waste' has the meaning given the term `solid waste' under 
        section 2(27) of the Solid Waste Disposal Act (42 U.S.C. 
        6903).''.
    (b) Extension and Expansion of Qualified Facilities.--
            (1) In general.--Section 45 is amended by redesignating 
        subsection (d) as subsection (e) and by inserting after 
        subsection (c) the following new subsection:
    ``(d) Qualified Facilities.--For purposes of this section--
            ``(1) Wind facility.--In the case of a facility using wind 
        to produce electricity, the term `qualified facility' means any 
        facility owned by the taxpayer which is originally placed in 
        service after December 31, 1993, and before January 1, 2007.
            ``(2) Closed-loop biomass facility.--
                    ``(A) In general.--In the case of a facility using 
                closed-loop biomass to produce electricity, the term 
                `qualified facility' means any facility--
                            ``(i) owned by the taxpayer which is 
                        originally placed in service after December 31, 
                        1992, and before January 1, 2007, or
                            ``(ii) owned by the taxpayer which before 
                        January 1, 2007, is originally placed in 
                        service and modified to use closed-loop biomass 
                        to co-fire with coal, with other biomass, or 
                        with both, but only if the modification is 
                        approved under the Biomass Power for Rural 
                        Development Programs or is part of a pilot 
                        project of the Commodity Credit Corporation as 
                        described in 65 Fed. Reg. 63052.
                    ``(B) Special rules.--In the case of a qualified 
                facility described in subparagraph (A)(ii)--
                            ``(i) the 10-year period referred to in 
                        subsection (a) shall be treated as beginning no 
                        earlier than October 1, 2004,
                            ``(ii) the amount of the credit determined 
                        under subsection (a) with respect to the 
                        facility shall be an amount equal to the amount 
                        determined without regard to this clause 
                        multiplied by the ratio of the thermal content 
                        of the closed-loop biomass used in such 
                        facility to the thermal content of all fuels 
                        used in such facility, and
                            ``(iii) if the owner of such facility is 
                        not the producer of the electricity, the person 
                        eligible for the credit allowable under 
                        subsection (a) shall be the lessee or the 
                        operator of such facility.
            ``(3) Biomass facility.--
                    ``(A) In general.--In the case of a facility using 
                biomass (other than closed-loop biomass) to produce 
                electricity, the term `qualified facility' means any 
                facility owned by the taxpayer which--
                            ``(i) in the case of a facility using 
                        agricultural livestock waste nutrients, is 
                        originally placed in service after September 
                        30, 2004 and before January 1, 2007, and
                            ``(ii) in the case of any other facility, 
                        is originally placed in service before January 
                        1, 2005.
                    ``(B) Special rules for preeffective date 
                facilities.--In the case of any facility described in 
                subparagraph (A)(ii) which is placed in service before 
                October 1, 2004--
                            ``(i) subsection (a)(1) shall be applied by 
                        substituting `1.2 cents' for `1.5 cents', and
                            ``(ii) the 5-year period beginning on 
                        October 1, 2004, shall be substituted for the 
                        10-year period in subsection (a)(2)(A)(ii).
                    ``(C) Credit eligibility.--In the case of any 
                facility described in subparagraph (A), if the owner of 
                such facility is not the producer of the electricity, 
                the person eligible for the credit allowable under 
                subsection (a) shall be the lessee or the operator of 
                such facility.
            ``(4) Geothermal or solar energy facility.--
                    ``(A) In general.--In the case of a facility using 
                geothermal or solar energy to produce electricity, the 
                term `qualified facility' means any facility owned by 
                the taxpayer which is originally placed in service 
                after September 30, 2004, and before January 1, 2007.
                    ``(B) Special rule.--In the case of any facility 
                described in subparagraph (A), the 5-year period 
                beginning on the date the facility was originally 
                placed in service shall be substituted for the 10-year 
                period in subsection (a)(2)(A)(ii).
            ``(5) Small irrigation power facility.--In the case of a 
        facility using small irrigation power to produce electricity, 
        the term `qualified facility' means any facility owned by the 
        taxpayer which is originally placed in service after September 
        30, 2004, and before January 1, 2007.
            ``(6) Biosolids and sludge facility.--In the case of a 
        facility using waste heat from the incineration of biosolids 
        and sludge to produce electricity, the term `qualified 
        facility' means any facility owned by the taxpayer which is 
        originally placed in service after September 30, 2004, and 
        before January 1, 2007. Such term shall not include any 
        property described in section 48(a)(6) the basis of which is 
        taken into account for purposes of the energy credit under 
        section 46.
            ``(7) Municipal solid waste facility.--
                    ``(A) In general.--In the case of a facility or 
                unit incinerating municipal solid waste to produce 
                electricity, the term `qualified facility' means any 
                facility or unit owned by the taxpayer which is 
                originally placed in service after September 30, 2004, 
                and before January 1, 2007.
                    ``(B) Special rule.--In the case of any facility or 
                unit described in subparagraph (A), the 5-year period 
                beginning on the date the facility or unit was 
                originally placed in service shall be substituted for 
the 10-year period in subsection (a)(2)(A)(ii).
                    ``(C) Credit eligibility.--In the case of any 
                qualified facility described in subparagraph (A), if 
                the owner of such facility is not the producer of the 
                electricity, the person eligible for the credit 
                allowable under subsection (a) shall be the lessee or 
                the operator of such facility.''.
            (2) No credit for certain production.--Section 45(e) 
        (relating to definitions and special rules), as redesignated by 
        paragraph (1), is amended by striking paragraph (6) and 
        inserting the following new paragraph:
            ``(6) Operations inconsistent with solid waste disposal 
        act.--In the case of a qualified facility described in 
        subsection (d)(6)(A), subsection (a) shall not apply to 
        electricity produced at such facility during any taxable year 
        if, during a portion of such year, there is a certification in 
        effect by the Administrator of the Environmental Protection 
        Agency that such facility was permitted to operate in a manner 
        inconsistent with section 4003(d) of the Solid Waste Disposal 
        Act (42 U.S.C. 6943(d)).''.
            (3) Conforming amendment.--Section 45(e), as so 
        redesignated, is amended by striking ``subsection (c)(3)(A)'' 
        in paragraph (7)(A)(i) and inserting ``subsection (d)(1)''.
    (c) Credit Rate for Electricity Produced From New Facilities.--
            (1) In general.--Section 45(a) is amended by adding at the 
        end the following new flush sentence:
``In the case of electricity produced after September 30, 2004, at any 
qualified facility originally placed in service after such date, 
paragraph (1) shall be applied by substituting `1.8 cents' for `1.5 
cents'.''.
            (2) New rate not subject to inflation adjustment.--Section 
        45(b)(2) (relating to credit and phaseout adjustment based on 
        inflation) is amended by adding at the end the following new 
        sentence: ``This paragraph shall not apply to any amount which 
        is substituted for the 1.5 cent amount in subsection (a) by 
        reason of any provision of this section.''.
    (d) Elimination of Certain Credit Reductions.--Section 45(b)(3)(A) 
(relating to credit reduced for grants, tax-exempt bonds, subsidized 
energy financing, and other credits) is amended--
            (1) by striking clause (ii),
            (2) by redesignating clauses (iii) and (iv) as clauses (ii) 
        and (iii),
            (3) by inserting ``(other than proceeds of an issue of 
        State or local government obligations the interest on which is 
        exempt from tax under section 103, or any loan, debt, or other 
        obligation incurred under subchapter I of chapter 31 of title 7 
        of the Rural Electrification Act of 1936 (7 U.S.C. 901 et 
        seq.), as in effect on the date of the enactment of the Energy 
        Tax Incentives Act)'' after ``project'' in clause (ii) (as so 
        redesignated),
            (4) by adding at the end the following new sentence: ``This 
        paragraph shall not apply with respect to any facility 
        described in subsection (d)(2)(A)(ii).'', and
            (5) by striking ``tax-exempt bonds,'' in the heading and 
        inserting ``certain''.
    (e) Treatment of Persons Not Able To Use Entire Credit.--Section 
45(e) (relating to definitions and special rules), as redesignated by 
subsection (b)(1), is amended by adding at the end the following new 
paragraph:
            ``(8) Treatment of persons not able to use entire credit.--
                    ``(A) Allowance of credit.--
                            ``(i) In general.--Except as otherwise 
                        provided in this subsection--
                                    ``(I) any credit allowable under 
                                subsection (a) with respect to a 
                                qualified facility owned by a person 
                                described in clause (ii) may be 
                                transferred or used as provided in this 
                                paragraph, and
                                    ``(II) the determination as to 
                                whether the credit is allowable shall 
                                be made without regard to the tax-
                                exempt status of the person.
                            ``(ii) Persons described.--A person is 
                        described in this clause if the person is--
                                    ``(I) an organization described in 
                                section 501(c)(12)(C) and exempt from 
                                tax under section 501(a),
                                    ``(II) an organization described in 
                                section 1381(a)(2)(C),
                                    ``(III) a public utility (as 
                                defined in section 136(c)(2)(B)), which 
                                is exempt from income tax under this 
                                subtitle,
                                    ``(IV) any State or political 
                                subdivision thereof, the District of 
                                Columbia, any possession of the United 
                                States, or any agency or 
                                instrumentality of any of the 
                                foregoing, or
                                    ``(V) any Indian tribal government 
                                (within the meaning of section 7871) or 
                                any agency or instrumentality thereof.
                    ``(B) Transfer of credit.--
                            ``(i) In general.--A person described in 
                        subparagraph (A)(ii) may transfer any credit to 
                        which subparagraph (A)(i) applies through an 
                        assignment to any other person not described in 
                        subparagraph (A)(ii). Such transfer may be 
                        revoked only with the consent of the Secretary.
                            ``(ii) Regulations.--The Secretary shall 
                        prescribe such regulations as necessary to 
                        ensure that any credit described in clause (i) 
                        is assigned once and not reassigned by such 
                        other person.
                            ``(iii) Transfer proceeds treated as 
                        arising from essential government function.--
                        Any proceeds derived by a person described in 
                        subclause (III), (IV), or (V) of subparagraph 
                        (A)(ii) from the transfer of any credit under 
                        clause (i) shall be treated as arising from the 
                        exercise of an essential government function.
                    ``(C) Use of credit as an offset.--Notwithstanding 
                any other provision of law, in the case of a person 
                described in subclause (I), (II), or (V) of 
                subparagraph (A)(ii), any credit to which subparagraph 
                (A)(i) applies may be applied by such person, to the 
                extent provided by the Secretary of Agriculture, as a 
                prepayment of any loan, debt, or other obligation the 
                entity has incurred under subchapter I of chapter 31 of 
                title 7 of the Rural Electrification Act of 1936 (7 
                U.S.C. 901 et seq.), as in effect on the date of the 
                enactment of the Energy Tax Incentives Act.
                    ``(D) Credit not income.--Any transfer under 
                subparagraph (B) or use under subparagraph (C) of any 
                credit to which subparagraph (A)(i) applies shall not 
                be treated as income for purposes of section 
                501(c)(12).
                    ``(E) Treatment of unrelated persons.--For purposes 
                of subsection (a)(2)(B), sales of electricity among and 
                between persons described in subparagraph (A)(ii) shall 
be treated as sales between unrelated parties.''.
    (f) Effective Dates.--
            (1) In general.--Except as otherwise provided in this 
        subsection, the amendments made by this section shall apply to 
        electricity produced and sold--
                    (A) with respect to facilities described in 
                paragraphs (1) and (2)(A)(i) of section 45(d), as 
                amended by this section, after December 31, 2003, in 
                taxable years ending after such date, and
                    (B) with respect to all other facilities described 
                in section 45(d), as amended by this section, after 
                September 30, 2004, in taxable years ending after such 
                date.
            (2) Certain biomass facilities.--With respect to any 
        facility described in section 45(d)(3)(A)(ii) of the Internal 
        Revenue Code of 1986, as added by subsection (b)(1), which is 
        placed in service before the date of the enactment of this Act, 
        the amendments made by this section shall apply to electricity 
        produced and sold after September 30, 2004, in taxable years 
        ending after such date.
            (3) Credit rate for new facilities.--The amendments made by 
        subsection (c) shall apply to electricity produced and sold 
        after September 30, 2004, in taxable years ending after such 
        date.
            (4) Nonapplication of amendments to preeffective date 
        poultry waste facilities.--The amendments made by this section 
        shall not apply with respect to any poultry waste facility 
        (within the meaning of section 45(c)(3)(C), as in effect on 
        September 30, 2004) placed in service on or before such date.

      Subtitle B--Alternative Motor Vehicles and Fuels Incentives

SEC. 1311. ALTERNATIVE MOTOR VEHICLE CREDIT.

    (a) In General.--Subpart B of part IV of subchapter A of chapter 1 
(relating to foreign tax credit, etc.) is amended by adding at the end 
the following new section:

``SEC. 30B. ALTERNATIVE MOTOR VEHICLE CREDIT.

    ``(a) Allowance of Credit.--There shall be allowed as a credit 
against the tax imposed by this chapter for the taxable year an amount 
equal to the sum of--
            ``(1) the new qualified fuel cell motor vehicle credit 
        determined under subsection (b),
            ``(2) the new qualified hybrid motor vehicle credit 
        determined under subsection (c), and
            ``(3) the new qualified alternative fuel motor vehicle 
        credit determined under subsection (d).
    ``(b) New Qualified Fuel Cell Motor Vehicle Credit.--
            ``(1) In general.--For purposes of subsection (a), the new 
        qualified fuel cell motor vehicle credit determined under this 
        subsection with respect to a new qualified fuel cell motor 
        vehicle placed in service by the taxpayer during the taxable 
        year is--
                    ``(A) $4,000, if such vehicle has a gross vehicle 
                weight rating of not more than 8,500 pounds,
                    ``(B) $10,000, if such vehicle has a gross vehicle 
                weight rating of more than 8,500 pounds but not more 
                than 14,000 pounds,
                    ``(C) $20,000, if such vehicle has a gross vehicle 
                weight rating of more than 14,000 pounds but not more 
                than 26,000 pounds, and
                    ``(D) $40,000, if such vehicle has a gross vehicle 
                weight rating of more than 26,000 pounds.
            ``(2) Increase for fuel efficiency.--
                    ``(A) In general.--The amount determined under 
                paragraph (1)(A) with respect to a new qualified fuel 
                cell motor vehicle which is a passenger automobile or 
                light truck shall be increased by--
                            ``(i) $1,000, if such vehicle achieves at 
                        least 150 percent but less than 175 percent of 
                        the 2002 model year city fuel economy,
                            ``(ii) $1,500, if such vehicle achieves at 
                        least 175 percent but less than 200 percent of 
                        the 2002 model year city fuel economy,
                            ``(iii) $2,000, if such vehicle achieves at 
                        least 200 percent but less than 225 percent of 
                        the 2002 model year city fuel economy,
                            ``(iv) $2,500, if such vehicle achieves at 
                        least 225 percent but less than 250 percent of 
                        the 2002 model year city fuel economy,
                            ``(v) $3,000, if such vehicle achieves at 
                        least 250 percent but less than 275 percent of 
                        the 2002 model year city fuel economy,
                            ``(vi) $3,500, if such vehicle achieves at 
                        least 275 percent but less than 300 percent of 
the 2002 model year city fuel economy, and
                            ``(vii) $4,000, if such vehicle achieves at 
                        least 300 percent of the 2002 model year city 
                        fuel economy.
                    ``(B) 2002 model year city fuel economy.--For 
                purposes of subparagraph (A), the 2002 model year city 
                fuel economy with respect to a vehicle shall be 
                determined in accordance with the following tables:
                            ``(i) In the case of a passenger 
                        automobile:
                                               The 2002 model year city
``If vehicle inertia weight class                      fuel economy is:
        is:
    1,500 or 1,750 lbs............................            45.2 mpg 
    2,000 lbs.....................................            39.6 mpg 
    2,250 lbs.....................................            35.2 mpg 
    2,500 lbs.....................................            31.7 mpg 
    2,750 lbs.....................................            28.8 mpg 
    3,000 lbs.....................................            26.4 mpg 
    3,500 lbs.....................................            22.6 mpg 
    4,000 lbs.....................................            19.8 mpg 
    4,500 lbs.....................................            17.6 mpg 
    5,000 lbs.....................................            15.9 mpg 
    5,500 lbs.....................................            14.4 mpg 
    6,000 lbs.....................................            13.2 mpg 
    6,500 lbs.....................................            12.2 mpg 
    7,000 to 8,500 lbs............................            11.3 mpg.
                            ``(ii) In the case of a light truck:

                                               The 2002 model year city
``If vehicle inertia weight class                      fuel economy is:
        is:
    1,500 or 1,750 lbs............................            39.4 mpg 
    2,000 lbs.....................................            35.2 mpg 
    2,250 lbs.....................................            31.8 mpg 
    2,500 lbs.....................................            29.0 mpg 
    2,750 lbs.....................................            26.8 mpg 
    3,000 lbs.....................................            24.9 mpg 
    3,500 lbs.....................................            21.8 mpg 
    4,000 lbs.....................................            19.4 mpg 
    4,500 lbs.....................................            17.6 mpg 
    5,000 lbs.....................................            16.1 mpg 
    5,500 lbs.....................................            14.8 mpg 
    6,000 lbs.....................................            13.7 mpg 
    6,500 lbs.....................................            12.8 mpg 
    7,000 to 8,500 lbs............................            12.1 mpg.
                    ``(C) Vehicle inertia weight class.--For purposes 
                of subparagraph (B), the term `vehicle inertia weight 
                class' has the same meaning as when defined in 
                regulations prescribed by the Administrator of the 
                Environmental Protection Agency for purposes of the 
                administration of title II of the Clean Air Act (42 
                U.S.C. 7521 et seq.).
            ``(3) New qualified fuel cell motor vehicle.--For purposes 
        of this subsection, the term `new qualified fuel cell motor 
        vehicle' means a motor vehicle--
                    ``(A) which is propelled by power derived from 1 or 
                more cells which convert chemical energy directly into 
                electricity by combining oxygen with hydrogen fuel 
                which is stored on board the vehicle in any form and 
                may or may not require reformation prior to use,
                    ``(B) which, in the case of a passenger automobile 
                or light truck--
                            ``(i) for 2002 and later model vehicles, 
                        has received a certificate of conformity under 
                        the Clean Air Act and meets or exceeds the 
                        equivalent qualifying California low emission 
                        vehicle standard under section 243(e)(2) of the 
                        Clean Air Act for that make and model year, and
                            ``(ii) for 2004 and later model vehicles, 
                        has received a certificate that such vehicle 
                        meets or exceeds the Bin 5 Tier II emission 
                        level established in regulations prescribed by 
                        the Administrator of the Environmental 
                        Protection Agency under section 202(i) of the 
                        Clean Air Act for that make and model year 
                        vehicle,
                    ``(C) the original use of which commences with the 
                taxpayer,
                    ``(D) which is acquired for use or lease by the 
                taxpayer and not for resale, and
                    ``(E) which is made by a manufacturer.
    ``(c) New Qualified Hybrid Motor Vehicle Credit.--
            ``(1) In general.--For purposes of subsection (a), the new 
        qualified hybrid motor vehicle credit determined under this 
        subsection with respect to a new qualified hybrid motor vehicle 
        placed in service by the taxpayer during the taxable year is 
        the credit amount determined under paragraph (2).
            ``(2) Credit amount.--
                    ``(A) In general.--The credit amount determined 
                under this paragraph shall be determined in accordance 
                with the following tables:
                            ``(i) In the case of a new qualified hybrid 
                        motor vehicle which is a passenger automobile, 
                        medium duty passenger vehicle, or light truck 
                        and which provides the following percentage of 
                        the maximum available power:

``If percentage of the maximum
  available power is:                             The credit amount is:
    At least 4 percent but less than 10 percent...                $250 
    At least 10 percent but less than 20 percent..                $500 
    At least 20 percent but less than 30 percent..                $750 
    At least 30 percent...........................              $1,000.
                            ``(ii) In the case of a new qualified 
                        hybrid motor vehicle which is a heavy duty 
                        hybrid motor vehicle and which provides the 
                        following percentage of the maximum available 
                        power:
                                    ``(I) If such vehicle has a gross 
                                vehicle weight rating of not more than 
                                14,000 pounds:

``If percentage of the maximum
  available power is:                             The credit amount is:
    At least 20 percent but less than 30 percent..              $1,000 
    At least 30 percent but less than 40 percent..              $1,750 
    At least 40 percent but less than 50 percent..              $2,000 
    At least 50 percent but less than 60 percent..              $2,250 
    At least 60 percent...........................              $2,500.
                                    ``(II) If such vehicle has a gross 
                                vehicle weight rating of more than 
                                14,000 but not more than 26,000 pounds:

``If percentage of the maximum
  available power is:                             The credit amount is:
    At least 20 percent but less than 30 percent..              $4,000 
    At least 30 percent but less than 40 percent..              $4,500 
    At least 40 percent but less than 50 percent..              $5,000 
    At least 50 percent but less than 60 percent..              $5,500 
    At least 60 percent...........................              $6,000.
                                    ``(III) If such vehicle has a gross 
                                vehicle weight rating of more than 
                                26,000 pounds:

``If percentage of the maximum
  available power is:                             The credit amount is:
    At least 20 percent but less than 30 percent..              $6,000 
    At least 30 percent but less than 40 percent..              $7,000 
    At least 40 percent but less than 50 percent..              $8,000 
    At least 50 percent but less than 60 percent..              $9,000 
    At least 60 percent...........................             $10,000.
                    ``(B) Increase for fuel efficiency.--
                            ``(i) Amount.--The amount determined under 
                        subparagraph (A)(i) with respect to a new 
                        qualified hybrid motor vehicle which is a 
                        passenger automobile or light truck shall be 
                        increased by--
                                    ``(I) $500, if such vehicle 
                                achieves at least 125 percent but 
less than 150 percent of the 2002 model year city fuel economy,
                                    ``(II) $1,000, if such vehicle 
                                achieves at least 150 percent but less 
                                than 175 percent of the 2002 model year 
                                city fuel economy,
                                    ``(III) $1,500, if such vehicle 
                                achieves at least 175 percent but less 
                                than 200 percent of the 2002 model year 
                                city fuel economy,
                                    ``(IV) $2,000, if such vehicle 
                                achieves at least 200 percent but less 
                                than 225 percent of the 2002 model year 
                                city fuel economy,
                                    ``(V) $2,500, if such vehicle 
                                achieves at least 225 percent but less 
                                than 250 percent of the 2002 model year 
                                city fuel economy, and
                                    ``(VI) $3,000, if such vehicle 
                                achieves at least 250 percent of the 
                                2002 model year city fuel economy.
                            ``(ii) 2002 model year city fuel economy.--
                        For purposes of clause (i), the 2002 model year 
                        city fuel economy with respect to a vehicle 
                        shall be determined on a gasoline gallon 
                        equivalent basis as determined by the 
                        Administrator of the Environmental Protection 
                        Agency using the tables provided in subsection 
                        (b)(2)(B) with respect to such vehicle.
                    ``(C) Increase for accelerated emissions 
                performance.--The amount determined under subparagraph 
                (A)(ii) with respect to an applicable heavy duty hybrid 
                motor vehicle shall be increased by the increased 
                credit amount determined in accordance with the 
                following tables:
                            ``(i) In the case of a vehicle which has a 
                        gross vehicle weight rating of not more than 
                        14,000 pounds:

``If the model year is:             The increased credit amount is:
    2003..........................................              $3,000 
    2004..........................................              $2,500 
    2005..........................................              $2,000 
    2006..........................................              $1,500.
                            ``(ii) In the case of a vehicle which has a 
                        gross vehicle weight rating of more than 14,000 
                        pounds but not more than 26,000 pounds:

``If the model year is:             The increased credit amount is:
    2003..........................................              $7,750 
    2004..........................................              $6,500 
    2005..........................................              $5,250 
    2006..........................................              $4,000.
                            ``(iii) In the case of a vehicle which has 
                        a gross vehicle weight rating of more than 
                        26,000 pounds:

``If the model year is:             The increased credit amount is:
    2003..........................................             $12,000 
    2004..........................................             $10,000 
    2005..........................................              $8,000 
    2006..........................................              $6,000.
                    ``(D) Definitions relating to credit amount.--
                            ``(i) Applicable heavy duty hybrid motor 
                        vehicle.--For purposes of subparagraph (C), the 
                        term `applicable heavy duty hybrid motor 
                        vehicle' means a heavy duty hybrid motor 
                        vehicle which is powered by an internal 
                        combustion or heat engine which is certified as 
                        meeting the emission standards set in the 
                        regulations prescribed by the Administrator of 
                        the Environmental Protection Agency for 2007 
                        and later model year diesel heavy duty engines, 
                        or for 2008 and later model year ottocycle 
                        heavy duty engines, as applicable.
                            ``(ii) Maximum available power.--
                                    ``(I) Passenger automobile, medium 
                                duty passenger vehicle, or light 
                                truck.--For purposes of subparagraph 
                                (A)(i), the term `maximum available 
                                power' means the maximum power 
                                available from the rechargeable energy 
                                storage system, during a standard 10 
                                second pulse power or equivalent test, 
                                divided by such maximum power and the 
                                SAE net power of the heat engine.
                                    ``(II) Heavy duty hybrid motor 
                                vehicle.--For purposes of subparagraph 
                                (A)(ii), the term `maximum available 
                                power' means the maximum power 
                                available from the rechargeable energy 
                                storage system, during a standard 10 
                                second pulse power or equivalent test, 
                                divided by the vehicle's total traction 
                                power. The term `total traction power' 
                                means the sum of the peak power from 
                                the rechargeable energy storage system 
                                and the heat engine peak power of the 
                                vehicle, except that if such storage 
                                system is the sole means by which the 
                                vehicle can be driven, the total 
                                traction power is the peak power of 
                                such storage system.
            ``(3) New qualified hybrid motor vehicle.--For purposes of 
        this subsection--
                    ``(A) In general.--The term `new qualified hybrid 
                motor vehicle' means a motor vehicle--
                            ``(i) which draws propulsion energy from 
                        onboard sources of stored energy which are 
                        both--
                                    ``(I) an internal combustion or 
                                heat engine using consumable fuel, and
                                    ``(II) a rechargeable energy 
                                storage system,
                            ``(ii) which, in the case of a passenger 
                        automobile, medium duty passenger vehicle, or 
                        light truck--
                                    ``(I) for 2002 and later model 
                                vehicles, has received a certificate of 
                                conformity under the Clean Air Act and 
                                meets or exceeds the equivalent 
                                qualifying California low emission 
                                vehicle standard under section 
                                243(e)(2) of the Clean Air Act for that 
                                make and model year, and
                                    ``(II) for 2004 and later model 
                                vehicles, has received a certificate 
                                that such vehicle meets or exceeds the 
                                Bin 5 Tier II emission level 
                                established in regulations prescribed 
                                by the Administrator of the 
                                Environmental Protection Agency under 
                                section 202(i) of the Clean Air Act for 
                                that make and model year vehicle,
                            ``(iii) which, in the case of a heavy duty 
                        hybrid motor vehicle, has an internal 
                        combustion or heat engine which has received a 
                        certificate of conformity under the Clean Air 
                        Act as meeting the emission standards set in 
                        the regulations prescribed by the Administrator 
                        of the Environmental Protection Agency for 2004 
                        through 2007 model year diesel heavy duty 
                        engines or ottocycle heavy duty engines, as 
                        applicable,
                            ``(iv) the original use of which commences 
                        with the taxpayer,
                            ``(v) which is acquired for use or lease by 
                        the taxpayer and not for resale, and
                            ``(vi) which is made by a manufacturer.
                    ``(B) Consumable fuel.--For purposes of 
                subparagraph (A)(i)(I), the term `consumable fuel' 
                means any solid, liquid, or gaseous matter which 
                releases energy when consumed by an auxiliary power 
                unit.
            ``(4) Heavy duty hybrid motor vehicle.--For purposes of 
        this subsection, the term `heavy duty hybrid motor vehicle' 
        means a new qualified hybrid motor vehicle which has a gross 
        vehicle weight rating of more than 8,500 pounds. Such term does 
        not include a medium duty passenger vehicle.
    ``(d) New Qualified Alternative Fuel Motor Vehicle Credit.--
            ``(1) Allowance of credit.--Except as provided in paragraph 
        (5), the new qualified alternative fuel motor vehicle credit 
        determined under this subsection is an amount equal to the 
        applicable percentage of the incremental cost of any new 
        qualified alternative fuel motor vehicle placed in service by 
        the taxpayer during the taxable year.
            ``(2) Applicable percentage.--For purposes of paragraph 
        (1), the applicable percentage with respect to any new 
        qualified alternative fuel motor vehicle is--
                    ``(A) 40 percent, plus
                    ``(B) 30 percent, if such vehicle--
                            ``(i) has received a certificate of 
                        conformity under the Clean Air Act and meets or 
                        exceeds the most stringent standard available 
                        for certification under the Clean Air Act for 
                        that make and model year vehicle (other than a 
                        zero emission standard), or
                            ``(ii) has received an order certifying the 
                        vehicle as meeting the same requirements as 
                        vehicles which may be sold or leased in 
                        California and meets or exceeds the most 
                        stringent standard available for certification 
                        under the State laws of California (enacted in 
                        accordance with a waiver granted under section 
                        209(b) of the Clean Air Act) for that make and 
                        model year vehicle (other than a zero emission 
                        standard).
        For purposes of the preceding sentence, in the case of any new 
        qualified alternative fuel motor vehicle which weighs more than 
        14,000 pounds gross vehicle weight rating, the most stringent 
        standard available shall be such standard available for 
        certification on the date of the enactment of the Energy Tax 
        Incentives Act.
            ``(3) Incremental cost.--For purposes of this subsection, 
        the incremental cost of any new qualified alternative fuel 
        motor vehicle is equal to the amount of the excess of the 
        manufacturer's suggested retail price for such vehicle over 
        such price for a gasoline or diesel fuel motor vehicle of the 
        same model, to the extent such amount does not exceed--
                    ``(A) $5,000, if such vehicle has a gross vehicle 
                weight rating of not more than 8,500 pounds,
                    ``(B) $10,000, if such vehicle has a gross vehicle 
                weight rating of more than 8,500 pounds but not more 
                than 14,000 pounds,
                    ``(C) $25,000, if such vehicle has a gross vehicle 
                weight rating of more than 14,000 pounds but not more 
                than 26,000 pounds, and
                    ``(D) $40,000, if such vehicle has a gross vehicle 
                weight rating of more than 26,000 pounds.
            ``(4) New qualified alternative fuel motor vehicle.--For 
        purposes of this subsection--
                    ``(A) In general.--The term `new qualified 
                alternative fuel motor vehicle' means any motor 
                vehicle--
                            ``(i) which is only capable of operating on 
                        an alternative fuel,
                            ``(ii) the original use of which commences 
                        with the taxpayer,
                            ``(iii) which is acquired by the taxpayer 
                        for use or lease, but not for resale, and
                            ``(iv) which is made by a manufacturer.
                    ``(B) Alternative fuel.--The term `alternative 
                fuel' means compressed natural gas, liquefied natural 
                gas, liquefied petroleum gas, hydrogen, and any liquid 
                at least 85 percent of the volume of which consists of 
                methanol.
            ``(5) Credit for mixed-fuel vehicles.--
                    ``(A) In general.--In the case of a mixed-fuel 
                vehicle placed in service by the taxpayer during the 
                taxable year, the credit determined under this 
                subsection is an amount equal to--
                            ``(i) in the case of a 75/25 mixed-fuel 
                        vehicle, 70 percent of the credit which would 
have been allowed under this subsection if such vehicle was a qualified 
alternative fuel motor vehicle, and
                            ``(ii) in the case of a 90/10 mixed-fuel 
                        vehicle, 90 percent of the credit which would 
                        have been allowed under this subsection if such 
                        vehicle was a qualified alternative fuel motor 
                        vehicle.
                    ``(B) Mixed-fuel vehicle.--For purposes of this 
                subsection, the term `mixed-fuel vehicle' means any 
                motor vehicle described in subparagraph (C) or (D) of 
                paragraph (3), which--
                            ``(i) is certified by the manufacturer as 
                        being able to perform efficiently in normal 
                        operation on a combination of an alternative 
                        fuel and a petroleum-based fuel,
                            ``(ii) either--
                                    ``(I) has received a certificate of 
                                conformity under the Clean Air Act, or
                                    ``(II) has received an order 
                                certifying the vehicle as meeting the 
                                same requirements as vehicles which may 
                                be sold or leased in California and 
                                meets or exceeds the low emission 
                                vehicle standard under section 88.105-
                                94 of title 40, Code of Federal 
                                Regulations, for that make and model 
                                year vehicle,
                            ``(iii) the original use of which commences 
                        with the taxpayer,
                            ``(iv) which is acquired by the taxpayer 
                        for use or lease, but not for resale, and
                            ``(v) which is made by a manufacturer.
                    ``(C) 75/25 mixed-fuel vehicle.--For purposes of 
                this subsection, the term `75/25 mixed-fuel vehicle' 
                means a mixed-fuel vehicle which operates using at 
                least 75 percent alternative fuel and not more than 25 
                percent petroleum-based fuel.
                    ``(D) 90/10 mixed-fuel vehicle.--For purposes of 
                this subsection, the term `90/10 mixed-fuel vehicle' 
                means a mixed-fuel vehicle which operates using at 
                least 90 percent alternative fuel and not more than 10 
                percent petroleum-based fuel.
    ``(e) Application With Other Credits.--The credit allowed under 
subsection (a) for any taxable year shall not exceed the excess (if 
any) of--
            ``(1) the regular tax for the taxable year reduced by the 
        sum of the credits allowable under subpart A and sections 27, 
        29, and 30, over
            ``(2) the tentative minimum tax for the taxable year.
    ``(f) Other Definitions and Special Rules.--For purposes of this 
section--
            ``(1) Motor vehicle.--The term `motor vehicle' has the 
        meaning given such term by section 30(c)(2).
            ``(2) City fuel economy.--The city fuel economy with 
        respect to any vehicle shall be measured in a manner which is 
        substantially similar to the manner city fuel economy is 
        measured in accordance with procedures under part 600 of 
        subchapter Q of chapter I of title 40, Code of Federal 
        Regulations, as in effect on the date of the enactment of this 
        section.
            ``(3) Other terms.--The terms `automobile', `passenger 
        automobile', `medium duty passenger vehicle', `light truck', 
        and `manufacturer' have the meanings given such terms in 
        regulations prescribed by the Administrator of the 
        Environmental Protection Agency for purposes of the 
        administration of title II of the Clean Air Act (42 U.S.C. 7521 
        et seq.).
            ``(4)  Reduction in basis.--For purposes of this subtitle, 
        the basis of any property for which a credit is allowable under 
        subsection (a) shall be reduced by the amount of such credit so 
        allowed (determined without regard to subsection (e)).
            ``(5) No double benefit.--The amount of any deduction or 
        other credit allowable under this chapter--
                    ``(A) for any incremental cost taken into account 
                in computing the amount of the credit determined under 
                subsection (d) shall be reduced by the amount of such 
                credit attributable to such cost, and
                    ``(B) with respect to a vehicle described under 
                subsection (b) or (c), shall be reduced by the amount 
                of credit allowed under subsection (a) for such vehicle 
                for the taxable year.
            ``(6) Property used by tax-exempt entities.--In the case of 
        a credit amount which is allowable with respect to a motor 
        vehicle which is acquired by an entity exempt from tax under 
        this chapter, the person which sells or leases such vehicle to 
        the entity shall be treated as the taxpayer with respect to the 
        vehicle for purposes of this section and the credit shall be 
        allowed to such person, but only if the person clearly 
        discloses to the entity at the time of any sale or lease the 
        specific amount of any credit otherwise allowable to the entity 
        under this section.
            ``(7) Recapture.--The Secretary shall, by regulations, 
        provide for recapturing the benefit of any credit allowable 
        under subsection (a) with respect to any property which ceases 
        to be property eligible for such credit (including recapture in 
        the case of a lease period of less than the economic life of a 
        vehicle).
            ``(8) Property used outside united states, etc., not 
        qualified.--No credit shall be allowed under subsection (a) 
        with respect to any property referred to in section 50(b) or 
        with respect to the portion of the cost of any property taken 
        into account under section 179.
            ``(9) Election to not take credit.--No credit shall be 
        allowed under subsection (a) for any vehicle if the taxpayer 
        elects to not have this section apply to such vehicle.
            ``(10) Carryback and carryforward allowed.--
                    ``(A) In general.--If the credit allowable under 
                subsection (a) for a taxable year exceeds the amount of 
                the limitation under subsection (e) for such taxable 
                year (in this paragraph referred to as the `unused 
                credit year'), such excess shall be a credit carryback 
                to each of the 3 taxable years preceding the unused 
                credit year and a credit carryforward to each of the 20 
                taxable years following the unused credit year, except 
                that no excess may be carried to a taxable year 
                beginning before October 1, 2004.
                    ``(B) Rules.--Rules similar to the rules of section 
                39 shall apply with respect to the credit carryback and 
                credit carryforward under subparagraph (A).
            ``(11) Interaction with air quality and motor vehicle 
        safety standards.--Unless otherwise provided in this section, a 
        motor vehicle shall not be considered eligible for a credit 
        under this section unless such vehicle is in compliance with--
                    ``(A) the applicable provisions of the Clean Air 
                Act for the applicable make and model year of the 
                vehicle (or applicable air quality provisions of State 
                law in the case of a State which has adopted such 
                provision under a waiver under section 209(b) of the 
                Clean Air Act), and
                    ``(B) the motor vehicle safety provisions of 
                sections 30101 through 30169 of title 49, United States 
                Code.
    ``(g) Regulations.--
            ``(1) In general.--Except as provided in paragraph (2), the 
        Secretary shall promulgate such regulations as necessary to 
        carry out the provisions of this section.
            ``(2) Coordination in prescription of certain 
        regulations.--The Secretary of the Treasury, in coordination 
        with the Secretary of Transportation and the Administrator of 
        the Environmental Protection Agency, shall prescribe such 
        regulations as necessary to determine whether a motor vehicle 
        meets the requirements to be eligible for a credit under this 
        section.
    ``(h) Termination.--This section shall not apply to any property 
purchased after--
            ``(1) in the case of a new qualified fuel cell motor 
        vehicle (as described in subsection (b)), December 31, 2011, 
        and
            ``(2) in the case of any other property, December 31, 
        2006.''.
    (b) Conforming Amendments.--
            (1) Section 1016(a) is amended by striking ``and'' at the 
        end of paragraph (27), by striking the period at the end of 
        paragraph (28) and inserting ``, and'', and by adding at the 
        end the following new paragraph:
            ``(29) to the extent provided in section 30B(f)(4).''.
            (2) Section 55(c)(2) is amended by inserting ``30B(e),'' 
        after ``30(b)(3),''.
            (3) Section 6501(m) is amended by inserting ``30B(f)(9),'' 
        after ``30(d)(4),''.
            (4) The table of sections for subpart B of part IV of 
        subchapter A of chapter 1 is amended by inserting after the 
        item relating to section 30A the following new item:

        ``Sec. 30B. Alternative motor vehicle credit.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to property placed in service after September 30, 2004, in 
taxable years ending after such date.

SEC. 1312. MODIFICATION OF CREDIT FOR QUALIFIED ELECTRIC VEHICLES.

    (a) Amount of Credit.--
            (1) In general.--Section 30(a) (relating to allowance of 
        credit) is amended by striking ``10 percent of''.
            (2) Limitation of credit according to type of vehicle.--
        Section 30(b) (relating to limitations) is amended--
                    (A) by striking paragraphs (1) and (2) and 
                inserting the following new paragraph:
            ``(1) Limitation according to type of vehicle.--The amount 
        of the credit allowed under subsection (a) for any vehicle 
        shall not exceed the greatest of the following amounts 
        applicable to such vehicle:
                    ``(A) In the case of a vehicle with a gross vehicle 
                weight rating not exceeding 8,500 pounds--
                            ``(i) except as provided in clause (ii) or 
                        (iii), $3,500,
                            ``(ii) $6,000, if such vehicle is--
                                    ``(I) capable of a driving range of 
                                at least 100 miles on a single charge 
                                of the vehicle's rechargeable batteries 
                                as measured pursuant to the urban 
                                dynamometer schedules under appendix I 
                                to part 86 of title 40, Code of Federal 
                                Regulations, or
                                    ``(II) capable of a payload 
                                capacity of at least 1,000 pounds, and
                            ``(iii) if such vehicle is a low-speed 
                        vehicle which conforms to Standard 500 
                        prescribed by the Secretary of Transportation 
                        (49 CFR 571.500), as in effect on the date of 
                        the enactment of the Energy Tax Incentives Act, 
                        the lesser of--
                                    ``(I) 10 percent of the 
                                manufacturer's suggested retail price 
                                of the vehicle, or
                                    ``(II) $1,500.
                    ``(B) In the case of a vehicle with a gross vehicle 
                weight rating exceeding 8,500 but not exceeding 14,000 
                pounds, $10,000.
                    ``(C) In the case of a vehicle with a gross vehicle 
                weight rating exceeding 14,000 but not exceeding 26,000 
                pounds, $20,000.
                    ``(D) In the case of a vehicle with a gross vehicle 
                weight rating exceeding 26,000 pounds, $40,000.'', and
                    (B) by redesignating paragraph (3) as paragraph 
                (2).
            (3) Conforming amendments.--
                    (A) Section 53(d)(1)(B)(iii) is amended by striking 
                ``section 30(b)(3)(B)'' and inserting ``section 
                30(b)(2)(B)''.
                    (B) Section 55(c)(2), as amended by this Act, is 
                amended by striking ``30(b)(3)'' and inserting 
                ``30(b)(2)''.
    (b) Qualified Battery Electric Vehicle.--
            (1) In general.--Section 30(c)(1)(A) (defining qualified 
        electric vehicle) is amended to read as follows:
                    ``(A) which is--
                            ``(i) operated solely by use of a battery 
                        or battery pack, or
                            ``(ii) powered primarily through the use of 
                        an electric battery or battery pack using a 
                        flywheel or capacitor which stores energy 
                        produced by an electric motor through 
                        regenerative braking to assist in vehicle 
                        operation,''.
            (2) Leased vehicles.--Section 30(c)(1)(C) is amended by 
        inserting ``or lease'' after ``use''.
            (3) Conforming amendments.--
                    (A) Subsections (a), (b)(2), and (c) of section 30 
                are each amended by inserting ``battery'' after 
                ``qualified'' each place it appears.
                    (B) The heading of subsection (c) of section 30 is 
                amended by inserting ``Battery'' after ``Qualified''.
                    (C) The heading of section 30 is amended by 
                inserting ``battery'' after ``qualified''.
                    (D) The item relating to section 30 in the table of 
                sections for subpart B of part IV of subchapter A of 
                chapter 1 is amended by inserting ``battery'' after 
                ``qualified''.
                    (E) Section 179A(c)(3) is amended by inserting 
                ``battery'' before ``electric''.
                    (F) The heading of paragraph (3) of section 179A(c) 
                is amended by inserting ``battery'' before 
                ``electric''.
    (c) Additional Special Rules.--Section 30(d) (relating to special 
rules) is amended by adding at the end the following new paragraphs:
            ``(5) No double benefit.--The amount of any deduction or 
        other credit allowable under this chapter for any cost taken 
        into account in computing the amount of the credit determined 
        under subsection (a) shall be reduced by the amount of such 
        credit attributable to such cost.
            ``(6) Property used by tax-exempt entities.--In the case of 
        a credit amount which is allowable with respect to a vehicle 
        which is acquired by an entity exempt from tax under this 
        chapter, the person which sells or leases such vehicle to the 
        entity shall be treated as the taxpayer with respect to the 
        vehicle for purposes of this section and the credit shall be 
        allowed to such person, but only if the person clearly 
        discloses to the entity at the time of any sale or lease the 
        specific amount of any credit otherwise allowable to the entity 
        under this section.
            ``(7) Carryback and carryforward allowed.--
                    ``(A) In general.--If the credit allowable under 
                subsection (a) for a taxable year exceeds the amount of 
                the limitation under subsection (b)(2) for such taxable 
                year (in this paragraph referred to as the `unused 
                credit year'), such excess shall be a credit carryback 
                to each of the 3 taxable years preceding the unused 
                credit year and a credit carryforward to each of the 20 
                taxable years following the unused credit year, except 
                that no excess may be carried to a taxable year 
                beginning before October 1, 2004.
                    ``(B) Rules.--Rules similar to the rules of section 
                39 shall apply with respect to the credit carryback and 
                credit carryforward under subparagraph (A).''.
    (d) Effective Date.--The amendments made by this section shall 
apply to property placed in service after September 30, 2004, in 
taxable years ending after such date.

SEC. 1313. CREDIT FOR INSTALLATION OF ALTERNATIVE FUELING STATIONS.

    (a) In General.--Subpart B of part IV of subchapter A of chapter 1 
(relating to foreign tax credit, etc.), as amended by this Act, is 
amended by adding at the end the following new section:

``SEC. 30C. CLEAN-FUEL VEHICLE REFUELING PROPERTY CREDIT.

    ``(a) Credit Allowed.--There shall be allowed as a credit against 
the tax imposed by this chapter for the taxable year an amount equal to 
50 percent of the amount paid or incurred by the taxpayer during the 
taxable year for the installation of qualified clean-fuel vehicle 
refueling property.
    ``(b) Limitation.--The credit allowed under subsection (a)--
            ``(1) with respect to any retail clean-fuel vehicle 
        refueling property, shall not exceed $30,000, and
            ``(2) with respect to any residential clean-fuel vehicle 
        refueling property, shall not exceed $1,000.
    ``(c) Year Credit Allowed.--Notwithstanding subsection (a), no 
credit shall be allowed under subsection (a) with respect to any 
qualified clean-fuel vehicle refueling property before the taxable year 
in which the property is placed in service by the taxpayer.
    ``(d) Definitions.--For purposes of this section--
            ``(1) Qualified clean-fuel vehicle refueling property.--The 
        term `qualified clean-fuel vehicle refueling property' has the 
        same meaning given such term by section 179A(d).
            ``(2) Residential clean-fuel vehicle refueling property.--
        The term `residential clean-fuel vehicle refueling property' 
        means qualified clean-fuel vehicle refueling property which is 
        installed on property which is used as the principal residence 
        (within the meaning of section 121) of the taxpayer.
            ``(3) Retail clean-fuel vehicle refueling property.--The 
        term `retail clean-fuel vehicle refueling property' means 
        qualified clean-fuel vehicle refueling property which is 
        installed on property (other than property described in 
        paragraph (2)) used in a trade or business of the taxpayer.
    ``(e) Application With Other Credits.--The credit allowed under 
subsection (a) for any taxable year shall not exceed the excess (if 
any) of--
            ``(1) the regular tax for the taxable year reduced by the 
        sum of the credits allowable under subpart A and sections 27, 
        29, 30, and 30B, over
            ``(2) the tentative minimum tax for the taxable year.
    ``(f) Basis Reduction.--For purposes of this title, the basis of 
any property shall be reduced by the portion of the cost of such 
property taken into account under subsection (a).
    ``(g) No Double Benefit.--
            ``(1) Coordination with other deductions and credits.--
        Except as provided in paragraph (2), the amount of any 
        deduction or other credit allowable under this chapter for any 
        cost taken into account in computing the amount of the credit 
        determined under subsection (a) shall be reduced by the amount 
        of such credit attributable to such cost.
            ``(2) No deduction allowed under section 179a.--No 
        deduction shall be allowed under section 179A with respect to 
        any property with respect to which a credit is allowed under 
        subsection (a).
    ``(h) Refueling Property Installed for Tax-Exempt Entities.--In the 
case of qualified clean-fuel vehicle refueling property installed on 
property owned or used by an entity exempt from tax under this chapter, 
the person which installs such refueling property for the entity shall 
be treated as the taxpayer with respect to the refueling property for 
purposes of this section (and such refueling property shall be treated 
as retail clean-fuel vehicle refueling property) and the credit shall 
be allowed to such person, but only if the person clearly discloses to 
the entity in any installation contract the specific amount of the 
credit allowable under this section.
    ``(i) Carryforward Allowed.--
            ``(1) In general.--If the credit allowable under subsection 
        (a) for a taxable year exceeds the amount of the limitation 
        under subsection (e) for such taxable year, such excess shall 
        be a credit carryforward to each of the 20 taxable years 
        following such taxable year.
            ``(2) Rules.--Rules similar to the rules of section 39 
        shall apply with respect to the credit carryforward under 
        paragraph (1).
    ``(j) Special Rules.--Rules similar to the rules of paragraphs (4) 
and (5) of section 179A(e) shall apply.
    ``(k) Regulations.--The Secretary shall prescribe such regulations 
as necessary to carry out the provisions of this section.
    ``(l) Termination.--This section shall not apply to any property 
placed in service--
            ``(1) in the case of property relating to hydrogen, after 
        December 31, 2011, and
            ``(2) in the case of any other property, after December 31, 
        2007.''.
    (b) Modifications to Extension of Deduction for Certain Refueling 
Property.--
            (1) In general.--Subsection (f) of section 179A is amended 
        to read as follows:
    ``(f) Termination.--This section shall not apply to any property 
placed in service--
            ``(1) in the case of property relating to hydrogen, after 
        December 31, 2011, and
            ``(2) in the case of any other property, after December 31, 
        2007.''.
            (2) Extension of phaseout.--Section 179A(b)(1)(B) is 
        amended--
                    (A) by striking ``calendar year 2004'' in clause 
                (i) and inserting ``calendar years 2004 and 2005 
                (calendar years 2004 through 2009 in the case of 
                property relating to hydrogen) '',
                    (B) by striking ``2005'' in clause (ii) and 
                inserting ``2006 (calendar year 2010 in the case of 
                property relating to hydrogen)'', and
                    (C) by striking ``2006'' in clause (iii) and 
                inserting ``2007 (calendar year 2011 in the case of 
                property relating to hydrogen)''.
    (c) Incentive for Production of Hydrogen at Qualified Clean-Fuel 
Vehicle Refueling Property.--Section 179A(d) (defining qualified clean-
fuel vehicle refueling property) is amended by adding at the end the 
following new flush sentence:
``In the case of clean-burning fuel which is hydrogen produced from 
another clean-burning fuel, paragraph (3)(A) shall be applied by 
substituting `production, storage, or dispensing' for `storage or 
dispensing' both places it appears.''.
    (d) Conforming Amendments.--
            (1) Section 1016(a), as amended by this Act, is amended by 
        striking ``and'' at the end of paragraph (28), by striking the 
period at the end of paragraph (29) and inserting ``, and'', and by 
adding at the end the following new paragraph:
            ``(30) to the extent provided in section 30C(f).''.
            (2) Section 55(c)(2), as amended by this Act, is amended by 
        inserting ``30C(e),'' after ``30B(e),''.
            (3) The table of sections for subpart B of part IV of 
        subchapter A of chapter 1, as amended by this Act, is amended 
        by inserting after the item relating to section 30B the 
        following new item:

        ``Sec. 30C. Clean-fuel vehicle refueling property credit.''.
    (e) Effective Date.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendments made by this section shall apply to property placed 
        in service after September 30, 2004, in taxable years ending 
        after such date.
            (2) Extension of phaseout.--The amendments made by 
        subsection (b)(2) shall apply to property placed in service 
        after December 31, 2003, in taxable years ending after such 
        date.

SEC. 1314. CREDIT FOR RETAIL SALE OF ALTERNATIVE FUELS AS MOTOR VEHICLE 
              FUEL.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
(relating to business related credits) is amended by inserting after 
section 40 the following new section:

``SEC. 40A. CREDIT FOR RETAIL SALE OF ALTERNATIVE FUELS AS MOTOR 
              VEHICLE FUEL.

    ``(a) General Rule.--For purposes of section 38, the alternative 
fuel retail sales credit for any taxable year is the applicable amount 
for each gasoline gallon equivalent of alternative fuel sold at retail 
by the taxpayer during such year as a fuel to propel any qualified 
motor vehicle.
    ``(b) Definitions.--For purposes of this section--
            ``(1) Applicable amount.--The term `applicable amount' 
        means the amount determined in accordance with the following 
        table:

``In the case of any taxable year
  ending in--                                The applicable amount is--
    2004..........................................            40 cents 
    2005 and 2006.................................            50 cents.
            ``(2) Alternative fuel.--The term `alternative fuel' means 
        compressed natural gas, liquefied natural gas, liquefied 
        petroleum gas, hydrogen, or any liquid at least 85 percent of 
        the volume of which consists of methanol or ethanol.
            ``(3) Gasoline gallon equivalent.--The term `gasoline 
        gallon equivalent' means, with respect to any alternative fuel, 
        the amount (determined by the Secretary) of such fuel having a 
        Btu content of 114,000.
            ``(4) Qualified motor vehicle.--The term `qualified motor 
        vehicle' means any motor vehicle (as defined in section 
        30(c)(2)) which meets any applicable Federal or State emissions 
        standards with respect to each fuel by which such vehicle is 
        designed to be propelled.
            ``(5) Sold at retail.--
                    ``(A) In general.--The term `sold at retail' means 
                the sale, for a purpose other than resale, after 
                manufacture, production, or importation.
                    ``(B) Use treated as sale.--If any person uses 
                alternative fuel (including any use after importation) 
                as a fuel to propel any new qualified alternative fuel 
                motor vehicle (as defined in section 30B(d)(4)) before 
                such fuel is sold at retail, then such use shall be 
                treated in the same manner as if such fuel were sold at 
                retail as a fuel to propel such a vehicle by such 
                person.
    ``(c) No Double Benefit.--The amount of any deduction or other 
credit allowable under this chapter for any fuel taken into account in 
computing the amount of the credit determined under subsection (a) 
shall be reduced by the amount of such credit attributable to such 
fuel.
    ``(d) Pass-Thru in the Case of Estates and Trusts.--Under 
regulations prescribed by the Secretary, rules similar to the rules of 
subsection (d) of section 52 shall apply.
    ``(e) Termination.--This section shall not apply to any fuel sold 
at retail after December 31, 2006.''.
    (b) Credit Treated as Business Credit.--Section 38(b) (relating to 
current year business credit) is amended by striking ``plus'' at the 
end of paragraph (14), by striking the period at the end of paragraph 
(15) and inserting ``, plus'', and by adding at the end the following 
new paragraph:
            ``(16) the alternative fuel retail sales credit determined 
        under section 40A(a).''.
    (c) Transitional Rule.--Section 39(d) (relating to transitional 
rules) is amended by adding at the end the following new paragraph:
            ``(11) No carryback of section 40a credit before effective 
        date.--No portion of the unused business credit for any taxable 
        year which is attributable to the alternative fuel retail sales 
        credit determined under section 40A(a) may be carried back to a 
        taxable year ending before October 1, 2004.''.
    (d) Clerical Amendment.--The table of sections for subpart D of 
part IV of subchapter A of chapter 1 is amended by inserting after the 
item relating to section 40 the following new item:

        ``Sec. 40A. Credit for retail sale of alternative fuels as 
                            motor vehicle fuel.''.
    (e) Effective Date.--The amendments made by this section shall 
apply to fuel sold at retail after September 30, 2004, in taxable years 
ending after such date.

SEC. 1315. SMALL ETHANOL PRODUCER CREDIT.

    (a) Allocation of Alcohol Fuels Credit to Patrons of a 
Cooperative.--Section 40(g) (relating to definitions and special rules 
for eligible small ethanol producer credit) is amended by adding at the 
end the following new paragraph:
            ``(6) Allocation of small ethanol producer credit to 
        patrons of cooperative.--
                    ``(A) Election to allocate.--
                            ``(i) In general.--In the case of a 
                        cooperative organization described in section 
                        1381(a), any portion of the credit determined 
                        under subsection (a)(3) for the taxable year 
                        may, at the election of the organization, be 
                        apportioned pro rata among patrons of the 
                        organization on the basis of the quantity or 
value of business done with or for such patrons for the taxable year.
                            ``(ii) Form and effect of election.--An 
                        election under clause (i) for any taxable year 
                        shall be made on a timely filed return for such 
                        year. Such election, once made, shall be 
                        irrevocable for such taxable year.
                    ``(B) Treatment of organizations and patrons.--The 
                amount of the credit apportioned to patrons under 
                subparagraph (A)--
                            ``(i) shall not be included in the amount 
                        determined under subsection (a) with respect to 
                        the organization for the taxable year, and
                            ``(ii) shall be included in the amount 
                        determined under subsection (a) for the taxable 
                        year of each patron for which the patronage 
                        dividends for the taxable year described in 
                        subparagraph (A) are included in gross income.
                    ``(C) Special rules for decrease in credits for 
                taxable year.--If the amount of the credit of a 
                cooperative organization determined under subsection 
                (a)(3) for a taxable year is less than the amount of 
                such credit shown on the return of the cooperative 
                organization for such year, an amount equal to the 
                excess of--
                            ``(i) such reduction, over
                            ``(ii) the amount not apportioned to such 
                        patrons under subparagraph (A) for the taxable 
                        year,
                shall be treated as an increase in tax imposed by this 
                chapter on the organization. Such increase shall not be 
                treated as tax imposed by this chapter for purposes of 
                determining the amount of any credit under this chapter 
                or for purposes of section 55.''.
    (b) Improvements to Small Ethanol Producer Credit.--
            (1) Definition of small ethanol producer.--Section 40(g) 
        (relating to definitions and special rules for eligible small 
        ethanol producer credit) is amended by striking ``30,000,000'' 
        each place it appears and inserting ``60,000,000''.
            (2) Small ethanol producer credit not a passive activity 
        credit.--Clause (i) of section 469(d)(2)(A) is amended by 
        striking ``subpart D'' and inserting ``subpart D, other than 
        section 40(a)(3),''.
            (3) Allowing credit against entire regular tax and minimum 
        tax.--
                    (A) In general.--Subsection (c) of section 38 
                (relating to limitation based on amount of tax) is 
                amended by redesignating paragraph (4) as paragraph (5) 
                and by inserting after paragraph (3) the following new 
                paragraph:
            ``(4) Special rules for small ethanol producer credit.--
                    ``(A) In general.--In the case of the small ethanol 
                producer credit--
                            ``(i) this section and section 39 shall be 
                        applied separately with respect to the credit, 
                        and
                            ``(ii) in applying paragraph (1) to the 
                        credit--
                                    ``(I) the amounts in subparagraphs 
                                (A) and (B) thereof shall be treated as 
                                being zero, and
                                    ``(II) the limitation under 
                                paragraph (1) (as modified by subclause 
                                (I)) shall be reduced by the credit 
                                allowed under subsection (a) for the 
                                taxable year (other than the small 
                                ethanol producer credit).
                    ``(B) Small ethanol producer credit.--For purposes 
                of this subsection, the term `small ethanol producer 
                credit' means the credit allowable under subsection (a) 
                by reason of section 40(a)(3).''.
                    (B) Conforming amendments.--Subclause (II) of 
                section 38(c)(2)(A)(ii) and subclause (II) of section 
                38(c)(3)(A)(ii) are each amended by inserting ``or the 
                small ethanol producer credit'' after ``employee 
                credit''.
            (4) Small ethanol producer credit not added back to income 
        under section 87.--Section 87 (relating to income inclusion of 
        alcohol fuel credit) is amended to read as follows:

``SEC. 87. ALCOHOL FUEL CREDIT.

    ``Gross income includes an amount equal to the sum of--
            ``(1) the amount of the alcohol mixture credit determined 
        with respect to the taxpayer for the taxable year under section 
        40(a)(1), and
            ``(2) the alcohol credit determined with respect to the 
        taxpayer for the taxable year under section 40(a)(2).''.
    (c) Conforming Amendment.--Section 1388 (relating to definitions 
and special rules for cooperative organizations) is amended by adding 
at the end the following new subsection:
    ``(k) Cross Reference.--For provisions relating to the 
apportionment of the alcohol fuels credit between cooperative 
organizations and their patrons, see section 40(g)(6).''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after September 30, 2004.

SEC. 1316. INCENTIVES FOR BIODIESEL.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
(relating to business related credits), as amended by this Act, is 
amended by inserting after section 40A the following new section:

``SEC. 40B. BIODIESEL USED AS FUEL.

    ``(a) General Rule.--For purposes of section 38, the biodiesel 
fuels credit determined under this section for the taxable year is an 
amount equal to the sum of--
            ``(1) the biodiesel mixture credit, plus
            ``(2) the biodiesel credit.
    ``(b) Definition of Biodiesel Mixture Credit and Biodiesel 
Credit.--For purposes of this section--
            ``(1) Biodiesel mixture credit.--
                    ``(A) In general.--The biodiesel mixture credit of 
                any taxpayer for any taxable year is 50 cents for each 
                gallon of biodiesel used by the taxpayer in the 
                production of a qualified biodiesel mixture.
                    ``(B) Qualified biodiesel mixture.--The term 
                `qualified biodiesel mixture' means a mixture of 
                biodiesel and diesel fuel which--
                            ``(i) is sold by the taxpayer producing 
                        such mixture to any person for use as a fuel, 
                        or
                            ``(ii) is used as a fuel by the taxpayer 
                        producing such mixture.
                    ``(C) Sale or use must be in trade or business, 
                etc.--Biodiesel used in the production of a qualified 
                biodiesel mixture shall be taken into account--
                            ``(i) only if the sale or use described in 
                        subparagraph (B) is in a trade or business of 
                        the taxpayer, and
                            ``(ii) for the taxable year in which such 
                        sale or use occurs.
                    ``(D) Casual off-farm production not eligible.--No 
                credit shall be allowed under this section with respect 
                to any casual off-farm production of a qualified 
                biodiesel mixture.
            ``(2) Biodiesel credit.--
                    ``(A) In general.--The biodiesel credit of any 
                taxpayer for any taxable year is 50 cents for each 
                gallon of biodiesel which is not in a mixture with 
                diesel fuel and which during the taxable year--
                            ``(i) is used by the taxpayer as a fuel in 
                        a trade or business, or
                            ``(ii) is sold by the taxpayer at retail to 
                        a person and placed in the fuel tank of such 
                        person's vehicle.
                    ``(B) User credit not to apply to biodiesel sold at 
                retail.--No credit shall be allowed under subparagraph 
                (A)(i) with respect to any biodiesel which was sold in 
                a retail sale described in subparagraph (A)(ii).
            ``(3) Credit for agri-biodiesel.--
                    ``(A) In general.--Subject to subparagraph (B), in 
                the case of any biodiesel which is agri-biodiesel, 
                paragraphs (1)(A) and (2)(A) shall be applied by 
                substituting `$1.00' for `50 cents'.
                    ``(B) Certification for agri-biodiesel.--
                Subparagraph (A) shall apply only if the taxpayer 
                described in paragraph (1)(A) or (2)(A) obtains a 
                certification (in such form and manner as prescribed by 
                the Secretary) from the producer of the agri-biodiesel 
                which identifies the product produced.
    ``(c) Coordination With Credit Against Excise Tax.--The amount of 
the credit determined under this section with respect to any agri-
biodiesel shall, under regulations prescribed by the Secretary, be 
properly reduced to take into account any benefit provided with respect 
to such agri-biodiesel solely by reason of the application of section 
6426 or 6427(e).
    ``(d) Definitions and Special Rules.--For purposes of this 
section--
            ``(1) Biodiesel.--The term `biodiesel' means the monoalkyl 
        esters of long chain fatty acids derived from plant or animal 
        matter for use in diesel-powered engines which meet--
                    ``(A) the registration requirements for fuels and 
                fuel additives established by the Environmental 
                Protection Agency under section 211 of the Clean Air 
                Act (42 U.S.C. 7545), and
                    ``(B) the requirements of the American Society of 
                Testing and Materials D6751.
            ``(2) Agri-biodiesel.--The term `agri-biodiesel' means 
        biodiesel derived solely from virgin oils. Such term shall 
        include esters derived from vegetable oils from corn, soybeans, 
        sunflower seeds, cottonseeds, canola, crambe, rapeseeds, 
        safflowers, flaxseeds, rice bran, and mustard seeds, and from 
        animal fats.
            ``(3) Biodiesel mixture not used as a fuel, etc.--
                    ``(A) Imposition of tax.--If--
                            ``(i) any credit was determined under this 
                        section with respect to biodiesel used in the 
                        production of any qualified biodiesel mixture, 
                        and
                            ``(ii) any person--
                                    ``(I) separates such biodiesel from 
                                the mixture, or
                                    ``(II) without separation, uses the 
                                mixture other than as a fuel,
                        then there is hereby imposed on such person a 
                        tax equal to the product of the rate applicable 
                        under subsection (b)(1)(A) and the number of 
                        gallons of the mixture.
                    ``(B) Applicable laws.--All provisions of law, 
                including penalties, shall, insofar as applicable and 
                not inconsistent with this section, apply in respect of 
                any tax imposed under subparagraph (A) as if such tax 
                were imposed by section 4081 and not by this chapter.
            ``(4) Pass-thru in the case of estates and trusts.--Under 
        regulations prescribed by the Secretary, rules similar to the 
        rules of subsection (d) of section 52 shall apply.
    ``(e) Termination.--This section shall not apply to any fuel sold 
after December 31, 2005.''.
    (b) Credit Treated as Part of General Business Credit.--Section 
38(b) (relating to current year business credit), as amended by this 
Act, is amended by striking ``plus'' at the end of paragraph (15), by 
striking the period at the end of paragraph (16) and inserting ``, 
plus'', and by adding at the end the following new paragraph:
            ``(17) the biodiesel fuels credit determined under section 
        40B(a).''.
    (c) Conforming Amendments.--
            (1) Section 39(d), as amended by this Act, is amended by 
        adding at the end the following new paragraph:
            ``(12) No carryback of biodiesel fuels credit before 
        effective date.--No portion of the unused business credit for 
        any taxable year which is attributable to the biodiesel fuels 
        credit determined under section 40B may be carried back to a 
        taxable year ending before October 1, 2004.''.
            (2)(A) Section 87, as amended by this Act, is amended--
                    (i) by striking ``and'' at the end of paragraph 
                (1),
                    (ii) by striking the period at the end of paragraph 
                (2) and inserting ``, and'',
                    (iii) by adding at the end the following new 
                paragraph:
            ``(3) the biodiesel fuels credit determined with respect to 
        the taxpayer for the taxable year under section 40B(a).'', and
            (iv) by striking ``fuel credit'' in the heading and 
        inserting ``and biodiesel fuels credits''.
            (B) The item relating to section 87 in the table of 
        sections for part II of subchapter B of chapter 1 is amended by 
        striking ``fuel credit'' and inserting ``and biodiesel fuels 
        credits''.
            (3) Section 196(c) is amended by striking ``and'' at the 
        end of paragraph (9), by striking the period at the end of 
        paragraph (10) and inserting ``, and'', and by adding at the 
        end the following new paragraph:
            ``(11) the biodiesel fuels credit determined under section 
        40B(a).''.
            (4) The table of sections for subpart D of part IV of 
        subchapter A of chapter 1, as amended by this Act, is amended 
        by adding after the item relating to section 40A the following 
        new item:

                              ``Sec. 40B. Biodiesel used as fuel.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to fuel sold after September 30, 2004, in taxable years ending 
after such date.

SEC. 1317. ALCOHOL FUEL AND BIODIESEL MIXTURES EXCISE TAX CREDIT.

    (a) In General.--Subchapter B of chapter 65 (relating to rules of 
special application) is amended by inserting after section 6425 the 
following new section:

``SEC. 6426. CREDIT FOR ALCOHOL FUEL AND BIODIESEL MIXTURES.

    ``(a) Allowance of Credits.--There shall be allowed as a credit 
against the tax imposed by section 4081 an amount equal to the sum of--
            ``(1) the alcohol fuel mixture credit, plus
            ``(2) the biodiesel mixture credit.
    ``(b) Alcohol Fuel Mixture Credit.--
            ``(1) In general.--For purposes of this section, the 
        alcohol fuel mixture credit is the applicable amount for each 
        gallon of alcohol used by the taxpayer in producing an alcohol 
        fuel mixture.
            ``(2) Applicable amount.--For purposes of this subsection--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), the applicable amount is 52 cents (51 
                cents in the case of any sale or use after 2004).
                    ``(B) Mixtures not containing ethanol.--In the case 
                of an alcohol fuel mixture in which none of the alcohol 
                consists of ethanol, the applicable amount is 60 cents.
            ``(3) Alcohol fuel mixture.--For purposes of this 
        subsection, the term `alcohol fuel mixture' is a mixture 
        which--
                    ``(A) consists of alcohol and a taxable fuel, and
                    ``(B) is sold for use or used as a fuel by the 
                taxpayer producing the mixture.
            ``(4) Other definitions.--For purposes of this subsection--
                    ``(A) Alcohol.--The term `alcohol' includes 
                methanol and ethanol but does not include--
                            ``(i) alcohol produced from petroleum, 
                        natural gas, or coal (including peat), or
                            ``(ii) alcohol with a proof of less than 
                        190 (determined without regard to any added 
                        denaturants).
                Such term also includes an alcohol gallon equivalent of 
                ethyl tertiary butyl ether or other ethers produced 
                from such alcohol.
                    ``(B) Taxable fuel.--The term `taxable fuel' has 
                the meaning given such term by section 4083(a)(1).
            ``(5) Termination.--This subsection shall not apply to any 
        sale or use for any period after December 31, 2010.
    ``(c) Biodiesel Mixture Credit.--
            ``(1) In general.--For purposes of this section, the 
        biodiesel mixture credit is the product of the applicable 
        amount and the number of gallons of biodiesel used by the 
        taxpayer in producing any qualified biodiesel mixture.
            ``(2) Applicable amount.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), the applicable amount is 50 cents.
                    ``(B) Amount for agri-biodiesel.--
                            ``(i) In general.--Subject to clause (ii), 
                        in the case of any biodiesel which is agri-
                        biodiesel, the applicable amount is $1.00.
                            ``(ii) Certification for agri-biodiesel.--
                        Clause (i) shall apply only if the taxpayer 
                        described in paragraph (1) obtains a 
                        certification (in such form and manner as 
                        prescribed by the Secretary) from the producer 
                        of the agri-biodiesel which identifies the 
                        product produced.
            ``(3) Definitions.--Any term used in this subsection which 
        is also used in section 40B shall have the meaning given such 
        term by section 40B.
            ``(4) Termination.--This subsection shall not apply to any 
        sale or use for any period after December 31, 2005.
    ``(d) Mixture not used as a fuel, etc.--
            ``(1) Imposition of tax.--If--
                    ``(A) any credit was determined under this section 
                with respect to alcohol or biodiesel used in the 
production of any alcohol fuel mixture or qualified biodiesel mixture, 
respectively, and
                    ``(B) any person--
                            ``(i) separates such alcohol or biodiesel 
                        from the mixture, or
                            ``(ii) without separation, uses the mixture 
                        other than as a fuel,
                then there is hereby imposed on such person a tax equal 
                to the product of the applicable amount and the number 
                of gallons of such alcohol or biodiesel.
            ``(2) Applicable laws.--All provisions of law, including 
        penalties, shall, insofar as applicable and not inconsistent 
        with this section, apply in respect of any tax imposed under 
        paragraph (1) as if such tax were imposed by section 4081 and 
        not by this section.''.
    (b) Registration Requirement.--Section 4101(a) (relating to 
registration) is amended by inserting ``and every person producing 
biodiesel (as defined in section 40B(d)(1)) or alcohol (as defined in 
section 6426(b)(4)(A))'' after ``4091''.
    (c) Conforming Amendments.--
            (1) Section 40(c) is amended by striking ``section 4081(c), 
        or section 4091(c)'' and inserting ``section 4091(c), section 
        6426, section 6427(e), or section 6427(f)''.
            (2) Section 40(d)(4)(B) is amended by striking ``or 
        4081(c)''.
            (3) Section 40(e)(1) is amended--
                    (A) by striking ``2007'' in subparagraph (A) and 
                inserting ``2010'', and
                    (B) by striking ``2008'' in subparagraph (B) and 
                inserting ``2011''.
            (4) Section 40(h) is amended--
                    (A) by striking ``2007'' in paragraph (1) and 
                inserting ``2010'', and
                    (B) by striking ``, 2006, or 2007'' in the table 
                contained in paragraph (2) and inserting ``through 
                2010''.
            (5) Section 4041(b)(2)(B) is amended by striking ``a 
        substance other than petroleum or natural gas'' and inserting 
        ``coal (including peat)''.
            (6) Paragraph (1) of section 4041(k) is amended to read as 
        follows:
            ``(1) In general.--Under regulations prescribed by the 
        Secretary, in the case of the sale or use of any liquid at 
        least 10 percent of which consists of alcohol (as defined in 
        section 6426(b)(4)(A)), the rate of the tax imposed by 
        subsection (c)(1) shall be the comparable rate under section 
        4091(c).''.
            (7) Section 4081 is amended by striking subsection (c).
            (8) Paragraph (2) of section 4083(a) is amended to read as 
        follows:
            ``(2) Gasoline.--The term `gasoline'--
                    ``(A) includes any gasoline blend, other than 
                qualified methanol or ethanol fuel (as defined in 
                section 4041(b)(2)(B)) or a denaturant of alcohol (as 
                defined in section 6426(b)(4)(A)), and
                    ``(B) includes, to the extent prescribed in 
                regulations--
                            ``(i) any gasoline blend stock, and
                            ``(ii) any product commonly used as an 
                        additive in gasoline.
        For purposes of subparagraph (B)(i), the term `gasoline blend 
        stock' means any petroleum product component of gasoline.''.
            (9) Section 6427 is amended by inserting after subsection 
        (d) the following new subsection:
    ``(e) Alcohol or Biodiesel Used To Produce Alcohol Fuel and 
Biodiesel Mixtures or Used as Fuels.--Except as provided in subsection 
(k)--
            ``(1) Used to produce a mixture.--If any person produces a 
        mixture described in section 6426 in such person's trade or 
        business, the Secretary shall pay (without interest) to such 
        person an amount equal to the alcohol fuel mixture credit or 
        the biodiesel mixture credit with respect to such mixture.
            ``(2) Used as fuel.--If alcohol (as defined in section 
        40(d)(1)) or biodiesel (as defined in section 40B(d)(1)) or 
        agri-biodiesel (as defined in section 40B(d)(2)) which is not 
        in a mixture with a taxable fuel (as defined in section 
        4083(a)(1))--
                    ``(A) is used by any person as a fuel in a trade or 
                business, or
                    ``(B) is sold by any person at retail to another 
                person and placed in the fuel tank of such person's 
                vehicle,
        the Secretary shall pay (without interest) to such person an 
        amount equal to the alcohol credit (as determined under section 
        40(b)(2)) or the biodiesel credit (as determined under section 
        40B(b)(2)) with respect to such fuel.
            ``(3) Coordination with other repayment provisions.--No 
        amount shall be payable under paragraph (1) with respect to any 
        mixture with respect to which an amount is allowed as a credit 
        under section 6426.
            ``(4) Termination.--This subsection shall not apply with 
        respect to--
                    ``(A) any alcohol fuel mixture (as defined in 
                section 6426(b)(3)) or alcohol (as so defined) sold or 
                used after December 31, 2010, and
                    ``(B) any qualified biodiesel mixture (within the 
                meaning of section 6426(c)(1)) or biodiesel (as so 
                defined) or agri-biodiesel (as so defined) sold or used 
                after December 31, 2005.''.
            (10) Subsection (f) of section 6427 is amended to read as 
        follows:
    ``(f) Aviation Fuel Used To Produce Certain Alcohol Fuels.--
            ``(1) In general.--Except as provided in subsection (k), if 
        any aviation fuel on which tax was imposed by section 4091 at 
        the regular tax rate is used by any person in producing a 
        mixture described in section 4091(c)(1)(A) which is sold or 
        used in such person's trade or business, the Secretary shall 
        pay (without interest) to such person an amount equal to the 
        excess of the regular tax rate over the incentive tax rate with 
        respect to such fuel.
            ``(2) Definitions.--For purposes of paragraph (1)--
                    ``(A) Regular tax rate.--The term `regular tax 
                rate' means the aggregate rate of tax imposed by 
                section 4091 determined without regard to subsection 
                (c) thereof.
                    ``(B) Incentive tax rate.--The term `incentive tax 
                rate' means the aggregate rate of tax imposed by 
                section 4091 with respect to fuel described in 
                subsection (c)(2) thereof.
            ``(3) Coordination with other repayment provisions.--No 
        amount shall be payable under paragraph (1) with respect to any 
        aviation fuel with respect to which an amount is payable under 
        subsection (d) or (l).
            ``(4) Termination.--This subsection shall not apply with 
        respect to any mixture sold or used after September 30, 
        2007.''.
            (11) Paragraphs (1) and (2) of section 6427(i) are amended 
        by inserting ``(f),'' after ``(d),''.
            (12) Section 6427(i)(3) is amended--
                    (A) by striking ``subsection (f)'' both places it 
                appears in subparagraph (A) and inserting ``subsection 
                (e)(1)'',
                    (B) by striking ``gasoline, diesel fuel, or 
                kerosene used to produce a qualified alcohol mixture 
                (as defined in section 4081(c)(3))'' in subparagraph 
                (A) and inserting ``a mixture described in section 
                6426'',
                    (C) by striking ``subsection (f)(1)'' in 
                subparagraph (B) and inserting ``subsection (e)(1)'',
                    (D) by striking ``20 days of the date of the filing 
                of such claim'' in subparagraph (B) and inserting ``45 
                days of the date of the filing of such claim (20 days 
                in the case of an electronic claim)'', and
                    (E) by striking ``alcohol mixture'' in the heading 
                and inserting ``alcohol fuel and biodiesel mixture''.
            (13) Section 6427(o) is amended--
                    (A) by striking paragraph (1) and inserting the 
                following new paragraph:
            ``(1) any tax is imposed by section 4081, and'',
                    (B) by striking ``such gasohol'' in paragraph (2) 
                and inserting ``the alcohol fuel mixture (as defined in 
                section 6426(b)(3))'',
                    (C) by striking ``gasohol'' both places it appears 
                in the matter following paragraph (2) and inserting 
                ``alcohol fuel mixture'', and
                    (D) by striking ``Gasohol'' in the heading and 
                inserting ``Alcohol Fuel Mixture''.
            (14) Section 9503(b)(1) is amended by adding at the end the 
        following new flush sentence:
        ``For purposes of this paragraph, taxes received under sections 
        4041 and 4081 shall be determined without reduction for credits 
        under section 6426.''.
            (15) Section 9503(b)(4) is amended--
                    (A) by adding ``or'' at the end of subparagraph 
                (C),
                    (B) by striking the comma at the end of 
                subparagraph (D)(iii) and inserting a period, and
                    (C) by striking subparagraphs (E) and (F).
            (16) Section 9503(c)(2)(A)(i)(III) is amended by inserting 
        ``(other than subsection (e) thereof)'' after ``section 6427''.
            (17) Section 9503(e)(2) is amended by striking subparagraph 
        (B) and by redesignating subparagraphs (C), (D), and (E) as 
        subparagraphs (B), (C), and (D), respectively.
            (18) The table of sections for subchapter B of chapter 65 
        is amended by inserting after the item relating to section 6425 
        the following new item:

        ``Sec. 6426. Credit for alcohol fuel and biodiesel mixtures.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to fuel sold or used after September 30, 2004.
    (e) Format for Filing.--The Secretary of the Treasury shall 
describe the electronic format for filing claims described in section 
6427(i)(3)(B) of the Internal Revenue Code of 1986 (as amended by 
subsection (b)(12)(D)) not later than September 30, 2004.

SEC. 1318. SALE OF GASOLINE AND DIESEL FUEL AT DUTY-FREE SALES 
              ENTERPRISES.

    (a) Prohibition.--Section 555(b) of the Tariff Act of 1930 (19 
U.S.C. 1555(b)) is amended--
            (1) by redesignating paragraphs (6) through (8) as 
        paragraphs (7) through (9), respectively; and
            (2) by inserting after paragraph (5) the following:
            ``(6) Any gasoline or diesel fuel sold at a duty-free sales 
        enterprise shall be considered to be entered for consumption 
        into the customs territory of the United States.''.
    (b) Construction.--The amendments made by this section shall not be 
construed to create any inference with respect to the interpretation of 
any provision of law as such provision was in effect on the day before 
the date of enactment of this Act.
    (c) Effective date.--The amendments made by this section shall take 
effect on the date of enactment of this Act.

       Subtitle C--Conservation and Energy Efficiency Provisions

SEC. 1321. CREDIT FOR CONSTRUCTION OF NEW ENERGY EFFICIENT HOME.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
(relating to business related credits), as amended by this Act, is 
amended by adding at the end the following new section:

``SEC. 45G. NEW ENERGY EFFICIENT HOME CREDIT.

    ``(a) In General.--For purposes of section 38, in the case of an 
eligible contractor, the credit determined under this section for the 
taxable year is an amount equal to the aggregate adjusted bases of all 
energy efficient property installed in a qualifying new home during 
construction of such home.
    ``(b) Limitations.--
            ``(1) Maximum credit.--
                    ``(A) In general.--The credit allowed by this 
                section with respect to a qualifying new home shall not 
                exceed--
                            ``(i) in the case of a 30-percent home, 
                        $1,000, and
                            ``(ii) in the case of a 50-percent home, 
                        $2,000.
                    ``(B) 30- or 50-percent home.--For purposes of 
                subparagraph (A)--
                            ``(i) 30-percent home.--The term `30-
                        percent home' means--
                                    ``(I) a qualifying new home which 
                                is certified to have a projected level 
                                of annual heating and cooling energy 
                                consumption, measured in terms of 
                                average annual energy cost to the 
                                homeowner, which is at least 30 percent 
                                less than the annual level of heating 
                                and cooling energy consumption of a 
                                qualifying new home constructed in 
                                accordance with the latest standards of 
                                chapter 4 of the International Energy 
                                Conservation Code approved by the 
                                Department of Energy before the 
                                construction of such qualifying new 
                                home and any applicable Federal minimum 
                                efficiency standards for equipment, or
                                    ``(II) in the case of a qualifying 
                                new home which is a manufactured home, 
                                a home which meets the applicable 
                                standards required by the Administrator 
                                of the Environmental Protection Agency 
                                under the Energy Star Labeled Homes 
                                program.
                            ``(ii) 50-percent home.--The term `50-
                        percent home' means a qualifying new home which 
                        would be described in clause (i)(I) if 50 
                        percent were substituted for 30 percent.
                    ``(C) Prior credit amounts on same home taken into 
                account.--The amount of the credit otherwise allowable 
                for the taxable year with respect to a qualifying new 
                home under clause (i) or (ii) of subparagraph (A) shall 
                be reduced by the sum of the credits allowed under 
                subsection (a) to any taxpayer with respect to the home 
                for all preceding taxable years.
            ``(2) Coordination with certain credits.--For purposes of 
        this section--
                    ``(A) the basis of any property referred to in 
                subsection (a) shall be reduced by that portion of the 
                basis of any property which is attributable to the 
                rehabilitation credit (as determined under section 
                47(a)) or to the energy credit (as determined under 
                section 48(a)), and
                    ``(B) expenditures taken into account under section 
                25D, 47, or 48(a) shall not be taken into account under 
                this section.
            ``(3) Provider limitation.--Any eligible contractor who 
        directly or indirectly provides the guarantee of energy savings 
        under a guarantee-based method of certification described in 
        subsection (d)(1)(D) shall not be eligible to receive the 
        credit allowed by this section.
    ``(c) Definitions.--For purposes of this section--
            ``(1) Eligible contractor.--The term `eligible contractor' 
        means--
                    ``(A) the person who constructed the qualifying new 
                home, or
                    ``(B) in the case of a qualifying new home which is 
                a manufactured home, the manufactured home producer of 
                such home.
        If more than 1 person is described in subparagraph (A) or (B) 
        with respect to any qualifying new home, such term means the 
        person designated as such by the owner of such home.
            ``(2) Energy efficient property.--The term `energy 
        efficient property' means any energy efficient building 
        envelope component, and any energy efficient heating or cooling 
        equipment or system which can, individually or in combination 
        with other components, meet the requirements of this section.
            ``(3) Qualifying new home.--
                    ``(A) In general.--The term `qualifying new home' 
                means a dwelling--
                            ``(i) located in the United States,
                            ``(ii) the construction of which is 
                        substantially completed after September 30, 
                        2004, and
                            ``(iii) the first use of which after 
                        construction is as a principal residence 
                        (within the meaning of section 121).
                    ``(B) Manufactured home included.--The term 
                `qualifying new home' includes a manufactured home 
                conforming to Federal Manufactured Home Construction 
                and Safety Standards (24 CFR 3280).
            ``(4) Construction.--The term `construction' includes 
        reconstruction and rehabilitation.
            ``(5) Building envelope component.--The term `building 
        envelope component' means--
                    ``(A) any insulation material or system which is 
                specifically and primarily designed to reduce the heat 
                loss or gain of a qualifying new home when installed in 
                or on such home,
                    ``(B) exterior windows (including skylights), and
                    ``(C) exterior doors.
    ``(d) Certification.--
            ``(1) Method of certification.--
                    ``(A) In general.--A certification described in 
                subsection (b)(1)(B) shall be determined either by a 
                component-based method, a performance-based method, or 
                a guarantee-based method, or, in the case of a 
                qualifying new home which is a manufactured home, by a 
                method prescribed by the Administrator of the 
                Environmental Protection Agency under the Energy Star 
                Labeled Homes program.
                    ``(B) Component-based method.--A component-based 
                method is a method which uses the applicable technical 
                energy efficiency specifications or ratings (including 
product labeling requirements) for the energy efficient building 
envelope component or energy efficient heating or cooling equipment. 
The Secretary shall, in consultation with the Administrator of the 
Environmental Protection Agency, develop prescriptive component-based 
packages which are equivalent in energy performance to properties which 
qualify under subparagraph (C).
                    ``(C) Performance-based method.--
                            ``(i) In general.--A performance-based 
                        method is a method which calculates projected 
                        energy usage and cost reductions in the 
                        qualifying new home in relation to a new home--
                                    ``(I) heated by the same fuel type, 
                                and
                                    ``(II) constructed in accordance 
                                with the latest standards of chapter 4 
                                of the International Energy 
                                Conservation Code approved by the 
                                Department of Energy before the 
                                construction of such qualifying new 
                                home and any applicable Federal minimum 
                                efficiency standards for equipment.
                            ``(ii) Computer software.--Computer 
                        software shall be used in support of a 
                        performance-based method certification under 
                        clause (i). Such software shall meet procedures 
                        and methods for calculating energy and cost 
                        savings in regulations promulgated by the 
                        Secretary of Energy.
                    ``(D) Guarantee-based method.--
                            ``(i) In general.--A guarantee-based method 
                        is a method which guarantees in writing to the 
                        homeowner energy savings of either 30 percent 
                        or 50 percent over the 2000 International 
                        Energy Conservation Code for heating and 
                        cooling costs. The guarantee shall be provided 
                        for a minimum of 2 years and shall fully 
                        reimburse the homeowner any heating and cooling 
                        costs in excess of the guaranteed amount.
                            ``(ii) Computer software.--Computer 
                        software shall be selected by the provider to 
                        support the guarantee-based method 
                        certification under clause (i). Such software 
                        shall meet procedures and methods for 
                        calculating energy and cost savings in 
                        regulations promulgated by the Secretary of 
                        Energy.
            ``(2) Provider.--A certification described in subsection 
        (b)(1)(B) shall be provided by--
                    ``(A) in the case of a component-based method, a 
                local building regulatory authority, a utility, or a 
                home energy rating organization,
                    ``(B) in the case of a performance-based method or 
                a guarantee-based method, an individual recognized by 
                an organization designated by the Secretary for such 
                purposes, or
                    ``(C) in the case of a qualifying new home which is 
                a manufactured home, a manufactured home primary 
                inspection agency.
            ``(3) Form.--
                    ``(A) In general.--A certification described in 
                subsection (b)(1)(B) shall be made in writing in a 
                manner which specifies in readily verifiable fashion 
                the energy efficient building envelope components and 
                energy efficient heating or cooling equipment installed 
                and their respective rated energy efficiency 
                performance, and
                            ``(i) in the case of a performance-based 
                        method, accompanied by a written analysis 
                        documenting the proper application of a 
                        permissible energy performance calculation 
                        method to the specific circumstances of such 
                        qualifying new home, and
                            ``(ii) in the case of a qualifying new home 
                        which is a manufactured home, accompanied by 
                        such documentation as required by the 
                        Administrator of the Environmental Protection 
                        Agency under the Energy Star Labeled Homes 
                        program.
                    ``(B) Form provided to buyer.--A form documenting 
                the energy efficient building envelope components and 
                energy efficient heating or cooling equipment installed 
                and their rated energy efficiency performance shall be 
                provided to the buyer of the qualifying new home. The 
                form shall include labeled R-value for insulation 
                products, NFRC-labeled U-factor and solar heat gain 
                coefficient for windows, skylights, and doors, labeled 
                annual fuel utilization efficiency (AFUE) ratings for 
                furnaces and boilers, labeled heating seasonal 
                performance factor (HSPF) ratings for electric heat 
                pumps, and labeled seasonal energy efficiency ratio 
                (SEER) ratings for air conditioners.
                    ``(C) Ratings label affixed in dwelling.--A 
                permanent label documenting the ratings in subparagraph 
                (B) shall be affixed to the front of the electrical 
                distribution panel of the qualifying new home, or shall 
                be otherwise permanently displayed in a readily 
                inspectable location in such home.
            ``(4) Regulations.--
                    ``(A) In general.--In prescribing regulations under 
                this subsection for performance-based and guarantee-
                based certification methods, the Secretary shall 
                prescribe procedures for calculating annual energy 
                usage and cost reductions for heating and cooling and 
                for the reporting of the results. Such regulations 
                shall--
                            ``(i) provide that any calculation 
                        procedures be fuel neutral such that the same 
                        energy efficiency measures allow a qualifying 
                        new home to be eligible for the credit under 
                        this section regardless of whether such home 
                        uses a gas or oil furnace or boiler or an 
                        electric heat pump, and
                            ``(ii) require that any computer software 
                        allow for the printing of the Federal tax forms 
                        necessary for the credit under this section and 
                        for the printing of forms for disclosure to the 
                        homebuyer.
                    ``(B) Providers.--For purposes of paragraph (2)(B), 
                the Secretary shall establish requirements for the 
                designation of individuals based on the requirements 
                for energy consultants and home energy raters specified 
                by the Mortgage Industry National Home Energy Rating 
                Standards.
    ``(e) Application.--Subsection (a) shall apply to qualifying new 
homes the construction of which is substantially completed after 
September 30, 2004, and purchased during the period beginning on such 
date and ending on--
            ``(1) in the case of any 30-percent home, December 31, 
        2005, and
            ``(2) in the case of any 50-percent home, December 31, 
        2007.''.
    (b) Credit Made Part of General Business Credit.--Section 38(b) 
(relating to current year business credit), as amended by this Act, is 
amended by striking ``plus'' at the end of paragraph (16), by striking 
the period at the end of paragraph (17) and inserting ``, plus'', and 
by adding at the end the following new paragraph:
            ``(18) the new energy efficient home credit determined 
        under section 45G(a).''.
    (c) Denial of Double Benefit.--Section 280C (relating to certain 
expenses for which credits are allowable) is amended by adding at the 
end the following new subsection:
    ``(d) New Energy Efficient Home Expenses.--No deduction shall be 
allowed for that portion of expenses for a qualifying new home 
otherwise allowable as a deduction for the taxable year which is equal 
to the amount of the credit determined for such taxable year under 
section 45G(a).''.
    (d) Limitation on Carryback.--Section 39(d) (relating to transition 
rules), as amended by this Act, is amended by adding at the end the 
following new paragraph:
            ``(13) No carryback of new energy efficient home credit 
        before effective date.--No portion of the unused business 
        credit for any taxable year which is attributable to the credit 
        determined under section 45G may be carried back to any taxable 
        year ending before October 1, 2004.''.
    (e) Deduction for Certain Unused Business Credits.--Section 196(c) 
(defining qualified business credits), as amended by this Act, is 
amended by striking ``and'' at the end of paragraph (10), by striking 
the period at the end of paragraph (11) and inserting ``, and'', and by 
adding after paragraph (11) the following new paragraph:
            ``(12) the new energy efficient home credit determined 
        under section 45G(a).''.
    (f) Clerical Amendment.--The table of sections for subpart D of 
part IV of subchapter A of chapter 1, as amended by this Act, is 
amended by adding at the end the following new item:

                              ``Sec. 45G. New energy efficient home 
                                        credit.''.
    (g) Effective Date.--The amendments made by this section shall 
apply to homes the construction of which is substantially completed 
after September 30, 2004.

SEC. 1322. CREDIT FOR ENERGY EFFICIENT APPLIANCES.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
(relating to business-related credits), as amended by this Act, is 
amended by adding at the end the following new section:

``SEC. 45H. ENERGY EFFICIENT APPLIANCE CREDIT.

    ``(a) Allowance of Credit.--
            ``(1) In general.--For purposes of section 38, the energy 
        efficient appliance credit determined under this section for 
        the taxable year is an amount equal to the sum of the amounts 
        determined under paragraph (2) for qualified energy efficient 
        appliances produced by the taxpayer during the calendar year 
        ending with or within the taxable year.
            ``(2) Amount.--The amount determined under this paragraph 
        for any category described in subsection (b)(2)(B) shall be the 
        product of the applicable amount for appliances in the category 
        and the eligible production for the category.
    ``(b) Applicable Amount; Eligible Production.--For purposes of 
subsection (a)--
            ``(1) Applicable amount.--The applicable amount is--
                    ``(A) $50, in the case of--
                            ``(i) a clothes washer which is 
                        manufactured with at least a 1.42 MEF, or
                            ``(ii) a refrigerator which consumes at 
                        least 10 percent less kilowatt hours per year 
                        than the energy conservation standards for 
                        refrigerators promulgated by the Department of 
                        Energy and effective on July 1, 2001,
                    ``(B) $100, in the case of--
                            ``(i) a clothes washer which is 
                        manufactured with at least a 1.50 MEF, or
                            ``(ii) a refrigerator which consumes at 
                        least 15 percent (20 percent in the case of a 
                        refrigerator manufactured after 2006) less 
                        kilowatt hours per year than such energy 
                        conservation standards, and
                    ``(C) $150, in the case of a refrigerator 
                manufactured before 2007 which consumes at least 20 
                percent less kilowatt hours per year than such energy 
                conservation standards.
            ``(2) Eligible production.--
                    ``(A) In general.--The eligible production of each 
                category of qualified energy efficient appliances is 
                the excess of--
                            ``(i) the number of appliances in such 
                        category which are produced by the taxpayer 
                        during such calendar year, over
                            ``(ii) the average number of appliances in 
                        such category which were produced by the 
                        taxpayer during calendar years 2000, 2001, and 
                        2002.
                    ``(B) Categories.--For purposes of subparagraph 
                (A), the categories are--
                            ``(i) clothes washers described in 
                        paragraph (1)(A)(i),
                            ``(ii) clothes washers described in 
                        paragraph (1)(B)(i),
                            ``(iii) refrigerators described in 
                        paragraph (1)(A)(ii),
                            ``(iv) refrigerators described in paragraph 
                        (1)(B)(ii), and
                            ``(v) refrigerators described in paragraph 
                        (1)(C).
    ``(c) Limitation on Maximum Credit.--
            ``(1) In general.--The amount of credit allowed under 
        subsection (a) with respect to a taxpayer for all taxable years 
        shall not exceed $60,000,000, of which not more than 
        $30,000,000 may be allowed with respect to the credit 
        determined by using the applicable amount under subsection 
        (b)(1)(A).
            ``(2) Limitation based on gross receipts.--The credit 
        allowed under subsection (a) with respect to a taxpayer for the 
        taxable year shall not exceed an amount equal to 2 percent of 
        the average annual gross receipts of the taxpayer for the 3 
        taxable years preceding the taxable year in which the credit is 
        determined.
            ``(3) Gross receipts.--For purposes of this subsection, the 
        rules of paragraphs (2) and (3) of section 448(c) shall apply.
    ``(d) Definitions.--For purposes of this section--
            ``(1) Qualified energy efficient appliance.--The term 
        `qualified energy efficient appliance' means--
                    ``(A) a clothes washer described in subparagraph 
                (A)(i) or (B)(i) of subsection (b)(1), or
                    ``(B) a refrigerator described in subparagraph 
                (A)(ii), (B)(ii), or (C) of subsection (b)(1).
            ``(2) Clothes washer.--The term `clothes washer' means a 
        residential clothes washer, including a residential style coin 
        operated washer.
            ``(3) Refrigerator.--The term `refrigerator' means an 
        automatic defrost refrigerator-freezer which has an internal 
        volume of at least 16.5 cubic feet.
            ``(4) MEF.--The term `MEF' means Modified Energy Factor (as 
        determined by the Secretary of Energy).
    ``(e) Special Rules.--
            ``(1) In general.--Rules similar to the rules of 
        subsections (c), (d), and (e) of section 52 shall apply for 
        purposes of this section.
            ``(2) Aggregation rules.--All persons treated as a single 
        employer under subsection (a) or (b) of section 52 or 
        subsection (m) or (o) of section 414 shall be treated as 1 
        person for purposes of subsection (a).
    ``(f) Verification.--The taxpayer shall submit such information or 
certification as the Secretary, in consultation with the Secretary of 
Energy, determines necessary to claim the credit amount under 
subsection (a).
    ``(g) Termination.--This section shall not apply--
            ``(1) with respect to refrigerators described in subsection 
        (b)(1)(A)(ii) produced after December 31, 2004, and
            ``(2) with respect to all other qualified energy efficient 
        appliances produced after December 31, 2007.''.
    (b) Credit Made Part of General Business Credit.--Section 38(b) 
(relating to current year business credit), as amended by this Act, is 
amended by striking ``plus'' at the end of paragraph (17), by striking 
the period at the end of paragraph (18) and inserting ``, plus'', and 
by adding at the end the following new paragraph:
            ``(19) the energy efficient appliance credit determined 
        under section 45H(a).''.
    (c) Limitation on Carryback.--Section 39(d) (relating to transition 
rules), as amended by this Act, is amended by adding at the end the 
following new paragraph:
            ``(14) No carryback of energy efficient appliance credit 
        before effective date.--No portion of the unused business 
        credit for any taxable year which is attributable to the energy 
        efficient appliance credit determined under section 45H may be 
        carried to a taxable year ending before October 1, 2004.''.
    (d) Clerical Amendment.--The table of sections for subpart D of 
part IV of subchapter A of chapter 1, as amended by this Act, is 
amended by adding at the end the following new item:

                              ``Sec. 45H. Energy efficient appliance 
                                        credit.''.
    (e) Effective Date.--The amendments made by this section shall 
apply to appliances produced after September 30, 2004, in taxable years 
ending after such date.

SEC. 1323. CREDIT FOR RESIDENTIAL ENERGY EFFICIENT PROPERTY.

    (a) In General.--Subpart A of part IV of subchapter A of chapter 1 
(relating to nonrefundable personal credits) is amended by inserting 
after section 25B the following new section:

``SEC. 25C. RESIDENTIAL ENERGY EFFICIENT PROPERTY.

    ``(a) Allowance of Credit.--In the case of an individual, there 
shall be allowed as a credit against the tax imposed by this chapter 
for the taxable year an amount equal to the sum of--
            ``(1) 15 percent of the qualified photovoltaic property 
        expenditures made by the taxpayer during such year,
            ``(2) 15 percent of the qualified solar water heating 
        property expenditures made by the taxpayer during such year,
            ``(3) 30 percent of the qualified fuel cell property 
        expenditures made by the taxpayer during such year,
            ``(4) 30 percent of the qualified wind energy property 
        expenditures made by the taxpayer during such year, and
            ``(5) the sum of the qualified Tier 2 energy efficient 
        building property expenditures made by the taxpayer during such 
        year.
    ``(b) Limitations.--
            ``(1) Maximum credit.--The credit allowed under subsection 
        (a) shall not exceed--
                    ``(A) $2,000 for property described in paragraph 
                (1), (2), or (5) of subsection (d),
                    ``(B) $500 for each 0.5 kilowatt of capacity of 
                property described in subsection (d)(4), and
                    ``(C) for property described in subsection (d)(6)--
                            ``(i) $150 for each electric heat pump 
                        water heater,
                            ``(ii) $125 for each advanced natural gas, 
                        oil, propane furnace, or hot water boiler,
                            ``(iii) $150 for each advanced natural gas, 
                        oil, or propane water heater,
                            ``(iv) $50 for each natural gas, oil, or 
                        propane water heater,
                            ``(v) $50 for an advanced main air 
                        circulating fan,
                            ``(vi) $150 for each advanced combination 
                        space and water heating system,
                            ``(vii) $50 for each combination space and 
                        water heating system, and
                            ``(viii) $250 for each geothermal heat 
                        pump.
            ``(2) Safety certifications.--No credit shall be allowed 
        under this section for an item of property unless--
                    ``(A) in the case of solar water heating property, 
                such property is certified for performance and safety 
                by the non-profit Solar Rating Certification 
                Corporation or a comparable entity endorsed by the 
                government of the State in which such property is 
                installed,
                    ``(B) in the case of a photovoltaic property, a 
                fuel cell property, or a wind energy property, such 
                property meets appropriate fire and electric code 
                requirements, and
                    ``(C) in the case of property described in 
                subsection (d)(6), such property meets the performance 
                and quality standards, and the certification 
                requirements (if any), which--
                            ``(i) have been prescribed by the Secretary 
                        by regulations (after consultation with the 
                        Secretary of Energy or the Administrator of the 
                        Environmental Protection Agency, as 
                        appropriate),
                            ``(ii) in the case of the energy efficiency 
                        ratio (EER) for property described in 
                        subsection (d)(6)(B)(viii)--
                                    ``(I) require measurements to be 
                                based on published data which is tested 
                                by manufacturers at 95 degrees 
                                Fahrenheit, and
                                    ``(II) do not require ratings to be 
                                based on certified data of the Air 
                                Conditioning and Refrigeration 
                                Institute, and
                            ``(iii) are in effect at the time of the 
                        acquisition of the property.
    ``(c) Carryforward of Unused Credit.--If the credit allowable under 
subsection (a) exceeds the limitation imposed by section 26(a) for such 
taxable year reduced by the sum of the credits allowable under this 
subpart (other than this section and section 25D), such excess shall be 
carried to the succeeding taxable year and added to the credit 
allowable under subsection (a) for such succeeding taxable year.
    ``(d) Definitions.--For purposes of this section--
            ``(1) Qualified solar water heating property expenditure.--
        The term `qualified solar water heating property expenditure' 
        means an expenditure for property to heat water for use in a 
        dwelling unit located in the United States and used as a 
        residence by the taxpayer if at least half of the energy used 
        by such property for such purpose is derived from the sun.
            ``(2) Qualified photovoltaic property expenditure.--The 
        term `qualified photovoltaic property expenditure' means an 
        expenditure for property which uses solar energy to generate 
        electricity for use in a dwelling unit located in the United 
        States and used as a residence by the taxpayer.
            ``(3) Solar panels.--No expenditure relating to a solar 
        panel or other property installed as a roof (or portion 
        thereof) shall fail to be treated as property described in 
        paragraph (1) or (2) solely because it constitutes a structural 
        component of the structure on which it is installed.
            ``(4) Qualified fuel cell property expenditure.--The term 
        `qualified fuel cell property expenditure' means an expenditure 
        for qualified fuel cell property (as defined in section 
        48(a)(4)) installed on or in connection with a dwelling unit 
        located in the United States and used as a principal residence 
        (within the meaning of section 121) by the taxpayer.
            ``(5) Qualified wind energy property expenditure.--The term 
        `qualified wind energy property expenditure' means an 
        expenditure for property which uses wind energy to generate 
        electricity for use in a dwelling unit located in the United 
        States and used as a residence by the taxpayer.
            ``(6) Qualified tier 2 energy efficient building property 
        expenditure.--
                    ``(A) In general.--The term `qualified Tier 2 
                energy efficient building property expenditure' means 
                an expenditure for any Tier 2 energy efficient building 
                property.
                    ``(B) Tier 2 energy efficient building property.--
                The term `Tier 2 energy efficient building property' 
                means--
                            ``(i) an electric heat pump water heater 
                        which yields an energy factor of at least 1.7 
                        in the standard Department of Energy test 
                        procedure,
                            ``(ii) an advanced natural gas, oil, 
                        propane furnace, or hot water boiler which 
                        achieves at least 95 percent annual fuel 
                        utilization efficiency (AFUE),
                            ``(iii) an advanced natural gas, oil, or 
                        propane water heater which has an energy factor 
                        of at least 0.80 in the standard Department of 
                        Energy test procedure,
                            ``(iv) a natural gas, oil, or propane water 
                        heater which has an energy factor of at least 
                        0.65 but less than 0.80 in the standard 
                        Department of Energy test procedure,
                            ``(v) an advanced main air circulating fan 
                        used in a new natural gas, propane, or oil-
                        fired furnace, including main air circulating 
                        fans that use a brushless permanent magnet 
                        motor or another type of motor which achieves 
                        similar or higher efficiency at half and full 
                        speed, as determined by the Secretary,
                            ``(vi) an advanced combination space and 
                        water heating system which has a combined 
                        energy factor of at least 0.80 and a combined 
                        annual fuel utilization efficiency (AFUE) of at 
                        least 78 percent in the standard Department of 
                        Energy test procedure,
                            ``(vii) a combination space and water 
                        heating system which has a combined energy 
                        factor of at least 0.65 but less than 0.80 and 
                        a combined annual fuel utilization efficiency 
                        (AFUE) of at least 78 percent in the standard 
                        Department of Energy test procedure, and
                            ``(viii) a geothermal heat pump which has 
                        an energy efficiency ratio (EER) of at least 
                        21.
            ``(7) Labor costs.--Expenditures for labor costs properly 
        allocable to the onsite preparation, assembly, or original 
        installation of the property described in paragraph (1), (2), 
        (4), (5), or (6) and for piping or wiring to interconnect such 
        property to the dwelling unit shall be taken into account for 
        purposes of this section.
            ``(8) Swimming pools, etc., used as storage medium.--
        Expenditures which are properly allocable to a swimming pool, 
        hot tub, or any other energy storage medium which has a 
        function other than the function of such storage shall not be 
        taken into account for purposes of this section.
    ``(e) Special Rules.--For purposes of this section--
            ``(1) Dollar amounts in case of joint occupancy.--In the 
        case of any dwelling unit which is jointly occupied and used 
        during any calendar year as a residence by 2 or more 
        individuals the following rules shall apply:
                    ``(A) The amount of the credit allowable, under 
                subsection (a) by reason of expenditures (as the case 
                may be) made during such calendar year by any of such 
                individuals with respect to such dwelling unit shall be 
                determined by treating all of such individuals as 1 
                taxpayer whose taxable year is such calendar year.
                    ``(B) There shall be allowable, with respect to 
                such expenditures to each of such individuals, a credit 
                under subsection (a) for the taxable year in which such 
                calendar year ends in an amount which bears the same 
                ratio to the amount determined under subparagraph (A) 
                as the amount of such expenditures made by such 
                individual during such calendar year bears to the 
                aggregate of such expenditures made by all of such 
                individuals during such calendar year.
            ``(2) Tenant-stockholder in cooperative housing 
        corporation.--In the case of an individual who is a tenant-
        stockholder (as defined in section 216) in a cooperative 
        housing corporation (as defined in such section), such 
        individual shall be treated as having made his tenant-
        stockholder's proportionate share (as defined in section 
        216(b)(3)) of any expenditures of such corporation.
            ``(3) Condominiums.--
                    ``(A) In general.--In the case of an individual who 
                is a member of a condominium management association 
                with respect to a condominium which the individual 
                owns, such individual shall be treated as having made 
                the individual's proportionate share of any 
                expenditures of such association.
                    ``(B) Condominium management association.--For 
                purposes of this paragraph, the term `condominium 
                management association' means an organization which 
                meets the requirements of paragraph (1) of section 
                528(c) (other than subparagraph (E) thereof) with 
                respect to a condominium project substantially all of 
                the units of which are used as residences.
            ``(4) Allocation in certain cases.--Except in the case of 
        qualified wind energy property expenditures, if less than 80 
        percent of the use of an item is for nonbusiness purposes, only 
        that portion of the expenditures for such item which is 
        properly allocable to use for nonbusiness purposes shall be 
        taken into account.
            ``(5) When expenditure made; amount of expenditure.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), an expenditure with respect to an 
                item shall be treated as made when the original 
                installation of the item is completed.
                    ``(B) Expenditures part of building construction.--
                In the case of an expenditure in connection with the 
                construction or reconstruction of a structure, such 
                expenditure shall be treated as made when the original 
                use of the constructed or reconstructed structure by 
                the taxpayer begins.
                    ``(C) Amount.--The amount of any expenditure shall 
                be the cost thereof.
            ``(6) Property financed by subsidized energy financing.--
        For purposes of determining the amount of expenditures made by 
        any individual with respect to any dwelling unit, there shall 
        not be taken into account expenditures which are made from 
        subsidized energy financing (as defined in section 
        48(a)(5)(C)).
    ``(f) Basis Adjustments.--For purposes of this subtitle, if a 
credit is allowed under this section for any expenditure with respect 
to any property, the increase in the basis of such property which would 
(but for this subsection) result from such expenditure shall be reduced 
by the amount of the credit so allowed.
    ``(g) Termination.--The credit allowed under this section shall not 
apply to expenditures after December 31, 2007.''.
    (b) Credit Allowed Against Regular Tax and Alternative Minimum 
Tax.--
            (1) In general.--Section 25C(b), as added by subsection 
        (a), is amended by adding at the end the following new 
        paragraph:
            ``(3) Limitation based on amount of tax.--The credit 
        allowed under subsection (a) for the taxable year shall not 
        exceed the excess of--
                    ``(A) the sum of the regular tax liability (as 
                defined in section 26(b)) plus the tax imposed by 
                section 55, over
                    ``(B) the sum of the credits allowable under this 
                subpart (other than this section and section 25D) and 
                section 27 for the taxable year.''.
            (2) Conforming amendments.--
                    (A) Section 25C(c), as added by subsection (a), is 
                amended by striking ``section 26(a) for such taxable 
                year reduced by the sum of the credits allowable under 
                this subpart (other than this section and section 
                25D)'' and inserting ``subsection (b)(3)''.
                    (B) Section 23(b)(4)(B) is amended by inserting 
                ``and section 25C'' after ``this section''.
                    (C) Section 24(b)(3)(B) is amended by striking ``23 
                and 25B'' and inserting ``23, 25B, and 25C''.
                    (D) Section 25(e)(1)(C) is amended by inserting 
                ``25C,'' after ``25B,''.
                    (E) Section 25B(g)(2) is amended by striking 
                ``section 23'' and inserting ``sections 23 and 25C''.
                    (F) Section 26(a)(1) is amended by striking ``and 
                25B'' and inserting ``25B, and 25C''.
                    (G) Section 904(h) is amended by striking ``and 
                25B'' and inserting ``25B, and 25C''.
                    (H) Section 1400C(d) is amended by striking ``and 
                25B'' and inserting ``25B, and 25C''.
    (c) Additional Conforming Amendments.--
            (1) Section 1016(a), as amended by this Act, is amended by 
        striking ``and'' at the end of paragraph (29), by striking the 
        period at the end of paragraph (30) and inserting ``, and'', 
        and by adding at the end the following new paragraph:
            ``(31) to the extent provided in section 25C(f), in the 
        case of amounts with respect to which a credit has been allowed 
        under section 25C.''.
            (2) The table of sections for subpart A of part IV of 
        subchapter A of chapter 1 is amended by inserting after the 
        item relating to section 25B the following new item:

                              ``Sec. 25C. Residential energy efficient 
                                        property.''.
    (d) Effective Dates.--
            (1) In general.--Except as provided by paragraph (2), the 
        amendments made by this section shall apply to expenditures 
        after September 30, 2004, in taxable years ending after such 
        date.
            (2) Subsection (b).--The amendments made by subsection (b) 
        shall apply to taxable years beginning after September 30, 
        2004.

SEC. 1324. CREDIT FOR BUSINESS INSTALLATION OF QUALIFIED FUEL CELLS AND 
              STATIONARY MICROTURBINE POWER PLANTS.

    (a) In General.--Section 48(a)(3)(A) (defining energy property) is 
amended by striking ``or'' at the end of clause (i), by adding ``or'' 
at the end of clause (ii), and by inserting after clause (ii) the 
following new clause:
                            ``(iii) qualified fuel cell property or 
                        qualified microturbine property,''.
    (b) Qualified Fuel Cell Property; Qualified Microturbine 
Property.--Section 48(a) (relating to energy credit) is amended by 
redesignating paragraphs (4) and (5) as paragraphs (5) and (6), 
respectively, and by inserting after paragraph (3) the following new 
paragraph:
            ``(4) Qualified fuel cell property; qualified microturbine 
        property.--For purposes of this subsection--
                    ``(A) Qualified fuel cell property.--
                            ``(i) In general.--The term `qualified fuel 
                        cell property' means a fuel cell power plant 
                        which--
                                    ``(I) generates at least 0.5 
                                kilowatt of electricity using an 
                                electrochemical process, and
                                    ``(II) has an electricity-only 
                                generation efficiency greater than 30 
                                percent.
                            ``(ii) Limitation.--In the case of 
                        qualified fuel cell property placed in service 
                        during the taxable year, the credit otherwise 
                        determined under paragraph (1) for such year 
                        with respect to such property shall not exceed 
                        an amount equal to $500 for each 0.5 kilowatt 
                        of capacity of such property.
                            ``(iii) Fuel cell power plant.--The term 
                        `fuel cell power plant' means an integrated 
                        system comprised of a fuel cell stack assembly 
                        and associated balance of plant components 
                        which converts a fuel into electricity using 
                        electrochemical means.
                            ``(iv) Termination.--The term `qualified 
                        fuel cell property' shall not include any 
                        property placed in service after December 31, 
                        2007.
                    ``(B) Qualified microturbine property.--
                            ``(i) In general.--The term `qualified 
                        microturbine property' means a stationary 
                        microturbine power plant which--
                                    ``(I) has a capacity of less than 
                                2,000 kilowatts, and
                                    ``(II) has an electricity-only 
                                generation efficiency of not less than 
                                26 percent at International Standard 
                                Organization conditions.
                            ``(ii) Limitation.--In the case of 
                        qualified microturbine property placed in 
                        service during the taxable year, the credit 
                        otherwise determined under paragraph (1) for 
                        such year with respect to such property shall 
                        not exceed an amount equal to $200 for each 
                        kilowatt of capacity of such property.
                            ``(iii) Stationary microturbine power 
                        plant.--The term `stationary microturbine power 
                        plant' means an integrated system comprised of 
                        a gas turbine engine, a combustor, a 
                        recuperator or regenerator, a generator or 
                        alternator, and associated balance of plant 
                        components which converts a fuel into 
                        electricity and thermal energy. Such term also 
                        includes all secondary components located 
                        between the existing infrastructure for fuel 
                        delivery and the existing infrastructure for 
                        power distribution, including equipment and 
                        controls for meeting relevant power standards, 
                        such as voltage, frequency, and power factors.
                            ``(iv) Termination.--The term `qualified 
                        microturbine property' shall not include any 
                        property placed in service after December 31, 
                        2006.''.
    (c) Energy Percentage.--Section 48(a)(2)(A) (relating to energy 
percentage) is amended to read as follows:
                    ``(A) In general.--The energy percentage is--
                            ``(i) in the case of qualified fuel cell 
                        property, 30 percent, and
                            ``(ii) in the case of any other energy 
                        property, 10 percent.''.
    (d) Conforming Amendments.--
                    (A) Section 29(b)(3)(A)(i)(III) is amended by 
                striking ``section 48(a)(4)(C)'' and inserting 
                ``section 48(a)(5)(C)''.
                    (B) Section 48(a)(1) is amended by inserting 
                ``except as provided in subparagraph (A)(ii) or (B)(ii) 
                of paragraph (4),'' before ``the energy''.
    (e) Effective Date.--The amendments made by this section shall 
apply to property placed in service after September 30, 2004, in 
taxable years ending after such date, under rules similar to the rules 
of section 48(m) of the Internal Revenue Code of 1986 (as in effect on 
the day before the date of the enactment of the Revenue Reconciliation 
Act of 1990).

SEC. 1325. ENERGY EFFICIENT COMMERCIAL BUILDINGS DEDUCTION.

    (a) In General.--Part VI of subchapter B of chapter 1 (relating to 
itemized deductions for individuals and corporations) is amended by 
inserting after section 179A the following new section:

``SEC. 179B. ENERGY EFFICIENT COMMERCIAL BUILDINGS DEDUCTION.

    ``(a) In General.--There shall be allowed as a deduction for the 
taxable year in which a building is placed in service by a taxpayer, an 
amount equal to the energy efficient commercial building property 
expenditures made by such taxpayer with respect to the construction or 
reconstruction of such building for the taxable year or any preceding 
taxable year.
    ``(b) Maximum Amount of Deduction.--The amount of energy efficient 
commercial building property expenditures taken into account under 
subsection (a) shall not exceed an amount equal to the product of--
            ``(1) $2.25, and
            ``(2) the square footage of the building with respect to 
        which the expenditures are made.
    ``(c) Energy Efficient Commercial Building Property Expenditures.--
For purposes of this section--
            ``(1) In general.--The term `energy efficient commercial 
        building property expenditures' means amounts paid or incurred 
        for energy efficient property installed on or in connection 
        with the construction or reconstruction of a building--
                    ``(A) for which depreciation is allowable under 
                section 167,
                    ``(B) which is located in the United States, and
                    ``(C) which is the type of structure to which the 
                Standard 90.1-2001 of the American Society of Heating, 
                Refrigerating, and Air Conditioning Engineers and the 
                Illuminating Engineering Society of North America is 
                applicable.
        Such term includes expenditures for labor costs properly 
        allocable to the onsite preparation, assembly, or original 
        installation of the property.
            ``(2) Energy efficient property.--For purposes of paragraph 
        (1)--
                    ``(A) In general.--The term `energy efficient 
                property' means any property which reduces total annual 
                energy and power costs with respect to the lighting, 
                heating, cooling, ventilation, and hot water supply 
                systems of the building by 50 percent or more in 
                comparison to a building which meets the minimum 
                requirements of Standard 90.1-2001 of the American 
                Society of Heating, Refrigerating, and Air Conditioning 
                Engineers and the Illuminating Engineering Society of 
                North America, using methods of calculation described 
                in subparagraph (B) and certified by qualified 
                individuals as provided under paragraph (5).
                    ``(B) Methods of calculation.--The Secretary, in 
                consultation with the Secretary of Energy, shall 
                promulgate regulations which describe in detail methods 
                for calculating and verifying energy and power costs.
                    ``(C) Computer software.--
                            ``(i) In general.--Any calculation 
                        described in subparagraph (B) shall be prepared 
                        by qualified computer software.
                            ``(ii) Qualified computer software.--For 
                        purposes of this subparagraph, the term 
                        `qualified computer software' means software--
                                    ``(I) for which the software 
                                designer has certified that the 
                                software meets all procedures and 
                                detailed methods for calculating energy 
                                and power costs as required by the 
                                Secretary,
                                    ``(II) which provides such forms as 
                                required to be filed by the Secretary 
                                in connection with energy efficiency of 
                                property and the deduction allowed 
                                under this section, and
                                    ``(III) which provides a notice 
                                form which summarizes the energy 
                                efficiency features of the building and 
                                its projected annual energy costs.
            ``(3) Allocation of deduction for public property.--In the 
        case of energy efficient commercial building property 
        expenditures made by a public entity with respect to the 
        construction or reconstruction of a public building, the 
        Secretary shall promulgate regulations under which the value of 
        the deduction with respect to such expenditures which would be 
        allowable to the public entity under this section (determined 
        without regard to the tax-exempt status of such entity) may be 
        allocated to the person primarily responsible for designing the 
        energy efficient property. Such person shall be treated as the 
        taxpayer for purposes of this section.
            ``(4) Notice to owner.--Any qualified individual providing 
        a certification under paragraph (5) shall provide an 
        explanation to the owner of the building regarding the energy 
        efficiency features of the building and its projected annual 
        energy costs as provided in the notice under paragraph 
        (2)(C)(ii)(III).
            ``(5) Certification.--
                    ``(A) In general.--The Secretary shall prescribe 
                procedures for the inspection and testing for 
                compliance of buildings by qualified individuals 
                described in subparagraph (B). Such procedures shall 
                be--
                            ``(i) comparable, given the difference 
                        between commercial and residential buildings, 
                        to the requirements in the Mortgage Industry 
                        National Home Energy Rating Standards, and
                            ``(ii) fuel neutral such that the same 
                        energy efficiency measures allow a building to 
                        be eligible for the credit under this section 
                        regardless of whether such building uses a gas 
                        or oil furnace or boiler or an electric heat 
                        pump.
                    ``(B) Qualified individuals.--Individuals qualified 
                to determine compliance shall be only those individuals 
                who are recognized by an organization certified by the 
                Secretary for such purposes. The Secretary may qualify 
                a home energy ratings organization, a local building 
                regulatory authority, a State or local energy office, a 
                utility, or any other organization which meets the 
                requirements prescribed under this paragraph.
                    ``(C) Proficiency of qualified individuals.--The 
                Secretary shall consult with nonprofit organizations 
                and State agencies with expertise in energy efficiency 
                calculations and inspections to develop proficiency 
                tests and training programs to qualify individuals to 
                determine compliance.
    ``(d) Basis Reduction.--For purposes of this subtitle, if a 
deduction is allowed under this section with respect to any energy 
efficient property, the basis of such property shall be reduced by the 
amount of the deduction so allowed.
    ``(e) Regulations.--The Secretary shall promulgate such regulations 
as necessary to take into account new technologies regarding energy 
efficiency and renewable energy for purposes of determining energy 
efficiency and savings under this section.
    ``(f) Termination.--This section shall not apply with respect to 
any energy efficient commercial building property expenditures in 
connection with a building the construction of which is not completed 
on or before December 31, 2009.''.
    (b) Conforming Amendments.--
            (1) Section 1016(a), as amended by this Act, is amended by 
        striking ``and'' at the end of paragraph (30), by striking the 
        period at the end of paragraph (31) and inserting ``, and'', 
        and by adding at the end the following new paragraph:
            ``(32) to the extent provided in section 179B(d).''.
            (2) Section 1245(a) is amended by inserting ``179B,'' after 
        ``179A,'' both places it appears in paragraphs (2)(C) and 
        (3)(C).
            (3) Section 1250(b)(3) is amended by inserting before the 
        period at the end of the first sentence ``or by section 179B''.
            (4) Section 263(a)(1) is amended by striking ``or'' at the 
        end of subparagraph (G), by striking the period at the end of 
        subparagraph (H) and inserting ``, or'', and by inserting after 
        subparagraph (H) the following new subparagraph:
                    ``(I) expenditures for which a deduction is allowed 
                under section 179B.''.
            (5) Section 312(k)(3)(B) is amended by striking ``or 179A'' 
        each place it appears in the heading and text and inserting ``, 
        179A, or 179B''.
    (c) Clerical Amendment.--The table of sections for part VI of 
subchapter B of chapter 1 is amended by inserting after section 179A 
the following new item:

                              ``Sec. 179B. Energy efficient commercial 
                                        buildings deduction.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after September 30, 2004.

SEC. 1326. THREE-YEAR APPLICABLE RECOVERY PERIOD FOR DEPRECIATION OF 
              QUALIFIED ENERGY MANAGEMENT DEVICES.

    (a) In General.--Section 168(e)(3)(A) (defining 3-year property) is 
amended by striking ``and'' at the end of clause (ii), by striking the 
period at the end of clause (iii) and inserting ``, and'', and by 
adding at the end the following new clause:
                            ``(iv) any qualified energy management 
                        device.''.
    (b) Definition of Qualified Energy Management Device.--Section 
168(i) (relating to definitions and special rules) is amended by 
inserting at the end the following new paragraph:
            ``(15) Qualified energy management device.--
                    ``(A) In general.--The term `qualified energy 
                management device' means any energy management device 
                which is placed in service before January 1, 2008, by a 
                taxpayer who is a supplier of electric energy or a 
                provider of electric energy services.
                    ``(B) Energy management device.--For purposes of 
                subparagraph (A), the term `energy management device' 
                means any meter or metering device which is used by the 
                taxpayer--
                            ``(i) to measure and record electricity 
                        usage data on a time-differentiated basis in at 
                        least 4 separate time segments per day, and
                            ``(ii) to provide such data on at least a 
                        monthly basis to both consumers and the 
                        taxpayer.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to property placed in service after September 30, 2004, in 
taxable years ending after such date.

SEC. 1327. THREE-YEAR APPLICABLE RECOVERY PERIOD FOR DEPRECIATION OF 
              QUALIFIED WATER SUBMETERING DEVICES.

    (a) In General.--Section 168(e)(3)(A) (defining 3-year property), 
as amended by this Act, is amended by striking ``and'' at the end of 
clause (iii), by striking the period at the end of clause (iv) and 
inserting ``, and'', and by adding at the end the following new clause:
                            ``(v) any qualified water submetering 
                        device.''.
    (b) Definition of Qualified Water Submetering Device.--Section 
168(i) (relating to definitions and special rules), as amended by this 
Act, is amended by inserting at the end the following new paragraph:
            ``(16) Qualified water submetering device.--
                    ``(A) In general.--The term `qualified water 
                submetering device' means any water submetering device 
                which is placed in service before January 1, 2008, by a 
                taxpayer who is an eligible resupplier with respect to 
                the unit for which the device is placed in service.
                    ``(B) Water submetering device.--For purposes of 
                this paragraph, the term `water submetering device' 
                means any submetering device which is used by the 
                taxpayer--
                            ``(i) to measure and record water usage 
                        data, and
                            ``(ii) to provide such data on at least a 
                        monthly basis to both consumers and the 
                        taxpayer.
                    ``(C) Eligible resupplier.--For purposes of 
                subparagraph (A), the term `eligible resupplier' means 
                any taxpayer who purchases and installs qualified water 
                submetering devices in every unit in any multi-unit 
                property.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to property placed in service after September 30, 2004, in 
taxable years ending after such date.

SEC. 1328. ENERGY CREDIT FOR COMBINED HEAT AND POWER SYSTEM PROPERTY.

    (a) In General.--Section 48(a)(3)(A) (defining energy property), as 
amended by this Act, is amended by striking ``or'' at the end of clause 
(ii), by adding ``or'' at the end of clause (iii), and by inserting 
after clause (iii) the following new clause:
                            ``(iv) combined heat and power system 
                        property,''.
    (b) Combined Heat and Power System Property.--Section 48(a) 
(relating to energy credit), as amended by this Act, is amended by 
redesignating paragraphs (5) and (6) as paragraphs (6) and (7), 
respectively, and by inserting after paragraph (4) the following new 
paragraph:
            ``(5) Combined heat and power system property.--For 
        purposes of this subsection--
                    ``(A) Combined heat and power system property.--The 
                term `combined heat and power system property' means 
                property comprising a system--
                            ``(i) which uses the same energy source for 
                        the simultaneous or sequential generation of 
                        electrical power, mechanical shaft power, or 
                        both, in combination with the generation of 
                        steam or other forms of useful thermal energy 
                        (including heating and cooling applications),
                            ``(ii) which has an electrical capacity of 
                        more than 50 kilowatts or a mechanical energy 
                        capacity of more than 67 horsepower or an 
                        equivalent combination of electrical and 
                        mechanical energy capacities,
                            ``(iii) which produces--
                                    ``(I) at least 20 percent of its 
                                total useful energy in the form of 
                                thermal energy which is not used to 
                                produce electrical or mechanical power 
                                (or combination thereof), and
                                    ``(II) at least 20 percent of its 
                                total useful energy in the form of 
                                electrical or mechanical power (or 
                                combination thereof),
                            ``(iv) the energy efficiency percentage of 
                        which exceeds 60 percent (70 percent in the 
                        case of a system with an electrical capacity in 
                        excess of 50 megawatts or a mechanical energy 
                        capacity in excess of 67,000 horsepower, or an 
                        equivalent combination of electrical and 
                        mechanical energy capacities), and
                            ``(v) which is placed in service before 
                        January 1, 2007.
                    ``(B) Special rules.--
                            ``(i) Energy efficiency percentage.--For 
                        purposes of subparagraph (A)(iv), the energy 
                        efficiency percentage of a system is the 
                        fraction--
                                    ``(I) the numerator of which is the 
                                total useful electrical, thermal, and 
                                mechanical power produced by the system 
                                at normal operating rates, and expected 
                                to be consumed in its normal 
                                application, and
                                    ``(II) the denominator of which is 
                                the lower heating value of the primary 
                                fuel source for the system.
                            ``(ii) Determinations made on btu basis.--
                        The energy efficiency percentage and the 
                        percentages under subparagraph (A)(iii) shall 
                        be determined on a Btu basis.
                            ``(iii) Input and output property not 
                        included.--The term `combined heat and power 
                        system property' does not include property used 
                        to transport the energy source to the facility 
                        or to distribute energy produced by the 
                        facility.
                            ``(iv) Public utility property.--
                                    ``(I) Accounting rule for public 
                                utility property.--If the combined heat 
                                and power system property is public 
                                utility property (as defined in section 
                                168(i)(10)), the taxpayer may only 
                                claim the credit under this subsection 
                                if, with respect to such property, the 
                                taxpayer uses a normalization method of 
                                accounting.
                                    ``(II) Certain exception not to 
                                apply.--The matter following paragraph 
                                (3)(D) shall not apply to combined heat 
                                and power system property.
                             ``(v) Nonapplication of certain rules.--
                        For purposes of determining if the term 
                        `combined heat and power system property' 
                        includes technologies which generate 
                        electricity or mechanical power using back-
                        pressure steam turbines in place of existing 
                        pressure-reducing valves or which make use of 
                        waste heat from industrial processes such as by 
                        using organic rankin, stirling, or kalina heat 
                        engine systems, subparagraph (A) shall be 
                        applied without regard to clauses (i), (iii), 
                        and (iv) thereof.
                    ``(C) Extension of depreciation recovery period.--
                If a taxpayer is allowed a credit under this section 
for a combined heat and power system property which has a class life of 
15 years or less under section 168, such property shall be treated as 
having a 22-year class life for purposes of section 168.''.
    (c) Limitation on Carryback.--Section 39(d) (relating to transition 
rules), as amended by this Act, is amended by adding at the end the 
following new paragraph:
            ``(15) No carryback of energy credit before effective 
        date.--No portion of the unused business credit for any taxable 
        year which is attributable to the energy credit with respect to 
        property described in section 48(a)(5) may be carried back to a 
        taxable year ending before October 1, 2004.''.
    (d) Conforming Amendments.--
                    (A) Section 25C(e)(6), as added by this Act, is 
                amended by striking ``section 48(a)(5)(C)'' and 
                inserting ``section 48(a)(6)(C)''.
                    (B) Section 29(b)(3)(A)(i)(III), as amended by this 
                Act, is amended by striking ``section 48(a)(5)(C)'' and 
                inserting ``section 48(a)(6)(C)''.
    (e) Effective Date.--The amendments made by this subsection shall 
apply to property placed in service after September 30, 2004, in 
taxable years ending after such date, under rules similar to the rules 
of section 48(m) of the Internal Revenue Code of 1986 (as in effect on 
the day before the date of the enactment of the Revenue Reconciliation 
Act of 1990).

SEC. 1329. CREDIT FOR ENERGY EFFICIENCY IMPROVEMENTS TO EXISTING HOMES.

    (a) In General.--Subpart A of part IV of subchapter A of chapter 1 
(relating to nonrefundable personal credits), as amended by this Act, 
is amended by inserting after section 25C the following new section:

``SEC. 25D. ENERGY EFFICIENCY IMPROVEMENTS TO EXISTING HOMES.

    ``(a) Allowance of Credit.--In the case of an individual, there 
shall be allowed as a credit against the tax imposed by this chapter 
for the taxable year an amount equal to 10 percent of the amount paid 
or incurred by the taxpayer for qualified energy efficiency 
improvements installed during such taxable year.
    ``(b) Limitation.--The credit allowed by this section with respect 
to a dwelling for any taxable year shall not exceed $300, reduced (but 
not below zero) by the sum of the credits allowed under subsection (a) 
to the taxpayer with respect to the dwelling for all preceding taxable 
years.
    ``(c) Carryforward of Unused Credit.--If the credit allowable under 
subsection (a) exceeds the limitation imposed by section 26(a) for such 
taxable year reduced by the sum of the credits allowable under this 
subpart (other than this section) for such taxable year, such excess 
shall be carried to the succeeding taxable year and added to the credit 
allowable under subsection (a) for such succeeding taxable year.
    ``(d) Qualified Energy Efficiency Improvements.--For purposes of 
this section, the term `qualified energy efficiency improvements' means 
any energy efficient building envelope component which is certified to 
meet or exceed the latest prescriptive criteria for such component in 
the International Energy Conservation Code approved by the Department 
of Energy before the installation of such component, or any combination 
of energy efficiency measures which are certified as achieving at least 
a 30 percent reduction in heating and cooling energy usage for the 
dwelling (as measured in terms of energy cost to the taxpayer), if--
            ``(1) such component or combination of measures is 
        installed in or on a dwelling which--
                    ``(A) is located in the United States,
                    ``(B) has not been treated as a qualifying new home 
                for purposes of any credit allowed under section 45G, 
                and
                    ``(C) is owned and used by the taxpayer as the 
                taxpayer's principal residence (within the meaning of 
                section 121),
            ``(2) the original use of such component or combination of 
        measures commences with the taxpayer, and
            ``(3) such component or combination of measures reasonably 
        can be expected to remain in use for at least 5 years.
    ``(e) Certification.--
            ``(1) Methods of certification.--
                    ``(A) Component-based method.--The certification 
                described in subsection (d) for any component described 
                in such subsection shall be determined on the basis of 
                applicable energy efficiency ratings (including product 
                labeling requirements) for affected building envelope 
                components.
                    ``(B) Performance-based method.--
                            ``(i) In general.--The certification 
                        described in subsection (d) for any combination 
                        of measures described in such subsection shall 
                        be--
                                    ``(I) determined by comparing the 
                                projected heating and cooling energy 
                                usage for the dwelling to such usage 
                                for such dwelling in its original 
                                condition, and
                                    ``(II) accompanied by a written 
                                analysis documenting the proper 
                                application of a permissible energy 
                                performance calculation method to the 
                                specific circumstances of such 
                                dwelling.
                            ``(ii) Computer software.--Computer 
                        software shall be used in support of a 
                        performance-based method certification under 
                        clause (i). Such software shall meet procedures 
                        and methods for calculating energy and cost 
                        savings in regulations promulgated by the 
                        Secretary of Energy.
            ``(2) Provider.--A certification described in subsection 
        (d) shall be provided by--
                    ``(A) in the case of the method described in 
                paragraph (1)(A), a third party, such as a local 
                building regulatory authority, a utility, 
a manufactured home primary inspection agency, or a home energy rating 
organization, or
                    ``(B) in the case of the method described in 
                paragraph (1)(B), an individual recognized by an 
                organization designated by the Secretary for such 
                purposes.
            ``(3) Form.--A certification described in subsection (d) 
        shall be made in writing on forms which specify in readily 
        inspectable fashion the energy efficient components and other 
        measures and their respective efficiency ratings, and which 
        include a permanent label affixed to the electrical 
        distribution panel of the dwelling.
            ``(4) Regulations.--
                    ``(A) In general.--In prescribing regulations under 
                this subsection for certification methods described in 
                paragraph (1)(B), the Secretary, after examining the 
                requirements for energy consultants and home energy 
                ratings providers specified by the Mortgage Industry 
                National Home Energy Rating Standards, shall prescribe 
                procedures for calculating annual energy usage and cost 
                reductions for heating and cooling and for the 
                reporting of the results. Such regulations shall--
                            ``(i) provide that any calculation 
                        procedures be fuel neutral such that the same 
                        energy efficiency measures allow a dwelling to 
                        be eligible for the credit under this section 
                        regardless of whether such dwelling uses a gas 
                        or oil furnace or boiler or an electric heat 
                        pump, and
                            ``(ii) require that any computer software 
                        allow for the printing of the Federal tax forms 
                        necessary for the credit under this section and 
                        for the printing of forms for disclosure to the 
                        owner of the dwelling.
                    ``(B) Providers.--For purposes of paragraph (2)(B), 
                the Secretary shall establish requirements for the 
                designation of individuals based on the requirements 
                for energy consultants and home energy raters specified 
                by the Mortgage Industry National Home Energy Rating 
                Standards.
    ``(f) Definitions and Special Rules.--For purposes of this 
section--
            ``(1) Dollar amounts in case of joint occupancy.--In the 
        case of any dwelling unit which is jointly occupied and used 
        during any calendar year as a residence by 2 or more 
        individuals the following rules shall apply:
                    ``(A) The amount of the credit allowable under 
                subsection (a) by reason of expenditures for the 
                qualified energy efficiency improvements made during 
                such calendar year by any of such individuals with 
                respect to such dwelling unit shall be determined by 
                treating all of such individuals as 1 taxpayer whose 
                taxable year is such calendar year.
                    ``(B) There shall be allowable, with respect to 
                such expenditures to each of such individuals, a credit 
                under subsection (a) for the taxable year in which such 
                calendar year ends in an amount which bears the same 
                ratio to the amount determined under subparagraph (A) 
                as the amount of such expenditures made by such 
                individual during such calendar year bears to the 
                aggregate of such expenditures made by all of such 
                individuals during such calendar year.
            ``(2) Tenant-stockholder in cooperative housing 
        corporation.--In the case of an individual who is a tenant-
        stockholder (as defined in section 216) in a cooperative 
        housing corporation (as defined in such section), such 
        individual shall be treated as having paid his tenant-
        stockholder's proportionate share (as defined in section 
        216(b)(3)) of the cost of qualified energy efficiency 
        improvements made by such corporation.
            ``(3) Condominiums.--
                    ``(A) In general.--In the case of an individual who 
                is a member of a condominium management association 
                with respect to a condominium which the individual 
                owns, such individual shall be treated as having paid 
                the individual's proportionate share of the cost of 
                qualified energy efficiency improvements made by such 
                association.
                    ``(B) Condominium management association.--For 
                purposes of this paragraph, the term `condominium 
                management association' means an organization which 
                meets the requirements of paragraph (1) of section 
                528(c) (other than subparagraph (E) thereof) with 
                respect to a condominium project substantially all of 
                the units of which are used as residences.
            ``(4) Building envelope component.--The term `building 
        envelope component' means--
                    ``(A) any insulation material or system which is 
                specifically and primarily designed to reduce the heat 
                loss or gain or a dwelling when installed in or on such 
                dwelling,
                    ``(B) exterior windows (including skylights), and
                    ``(C) exterior doors.
            ``(5) Manufactured homes included.--For purposes of this 
        section, the term `dwelling' includes a manufactured home which 
        conforms to Federal Manufactured Home Construction and Safety 
        Standards (24 CFR 3280).
    ``(g) Basis Adjustment.--For purposes of this subtitle, if a credit 
is allowed under this section for any expenditure with respect to any 
property, the increase in the basis of such property which would (but 
for this subsection) result from such expenditure shall be reduced by 
the amount of the credit so allowed.
    ``(h) Termination.--Subsection (a) shall not apply to qualified 
energy efficiency improvements installed after December 31, 2006.''.
    (b) Credit Allowed Against Regular Tax and Alternative Minimum 
Tax.--
            (1) In general.--Section 25D(b), as added by subsection 
        (a), is amended--
                    (A) by striking ``The credit'' and inserting the 
                following:
            ``(1) Dollar amount.--The credit'', and
                    (B) by adding at the end the following new 
                paragraph:
            ``(2) Limitation based on amount of tax.--The credit 
        allowed under subsection (a) for the taxable year shall not 
        exceed the excess of--
                    ``(A) the sum of the regular tax liability (as 
                defined in section 26(b)) plus the tax imposed by 
                section 55, over
                    ``(B) the sum of the credits allowable under this 
                subpart (other than this section) and section 27 for 
                the taxable year.''.
            (2) Conforming amendments.--
                    (A) Section 25D(c), as added by subsection (a), is 
                amended by striking ``section 26(a) for such taxable 
                year reduced by the sum of the credits allowable under 
                this subpart (other than this section)'' and inserting 
                ``subsection (b)(2)''.
                    (B) Section 23(b)(4)(B), as amended by this Act, is 
                amended by striking ``section 25C'' and inserting 
                ``sections 25C and 25D''.
                    (C) Section 24(b)(3)(B), as amended by this Act, is 
                amended by striking ``and 25C'' and inserting ``25C, 
                and 25D''.
                    (D) Section 25(e)(1)(C), as amended by this Act, is 
                amended by inserting ``25D,'' after ``25C,''.
                    (E) Section 25B(g)(2), as amended by this Act, is 
                amended by striking ``23 and 25C'' and inserting ``23, 
                25C, and 25D''.
                    (F) Section 26(a)(1), as amended by this Act, is 
                amended by striking ``and 25C'' and inserting ``25C, 
                and 25D''.
                    (G) Section 904(h), as amended by this Act, is 
                amended by striking ``and 25C'' and inserting ``25C, 
                and 25D''.
                    (H) Section 1400C(d), as amended by this Act, is 
                amended by striking ``and 25C'' and inserting ``25C, 
                and 25D''.
    (c) Additional Conforming Amendments.--
            (1) Section 1016(a), as amended by this Act, is amended by 
        striking ``and'' at the end of paragraph (31), by striking the 
        period at the end of paragraph (32) and inserting ``; and'', 
        and by adding at the end the following new paragraph:
            ``(33) to the extent provided in section 25D(g), in the 
        case of amounts with respect to which a credit has been allowed 
        under section 25D.''.
            (2) The table of sections for subpart A of part IV of 
        subchapter A of chapter 1, as amended by this Act, is amended 
        by inserting after the item relating to section 25C the 
        following new item:

                              ``Sec. 25D. Energy efficiency 
                                        improvements to existing 
                                        homes.''.
    (d) Effective Dates.--
            (1) In general.--Except as provided by paragraph (2), the 
        amendments made by this section shall apply to property 
        installed after September 30, 2004, in taxable years ending 
        after such date.
            (2) Subsection (b).--The amendments made by subsection (b) 
        shall apply to taxable years beginning after September 30, 
        2004.

                   Subtitle D--Clean Coal Incentives

 PART I--CREDIT FOR EMISSION REDUCTIONS AND EFFICIENCY IMPROVEMENTS IN 
         EXISTING COAL-BASED ELECTRICITY GENERATION FACILITIES

SEC. 1341. CREDIT FOR PRODUCTION FROM A QUALIFYING CLEAN COAL 
              TECHNOLOGY UNIT.

    (a) Credit for Production From a Qualifying Clean Coal Technology 
Unit.--Subpart D of part IV of subchapter A of chapter 1 (relating to 
business related credits), as amended by this Act, is amended by adding 
at the end the following new section:

``SEC. 45I. CREDIT FOR PRODUCTION FROM A QUALIFYING CLEAN COAL 
              TECHNOLOGY UNIT.

    ``(a) General Rule.--For purposes of section 38, the qualifying 
clean coal technology production credit of any taxpayer for any taxable 
year is equal to--
            ``(1) the applicable amount of clean coal technology 
        production credit, multiplied by
            ``(2) the applicable percentage of the sum of--
                    ``(A) the kilowatt hours of electricity, plus
                    ``(B) each 3,413 Btu of fuels or chemicals,
        produced by the taxpayer during such taxable year at a 
        qualifying clean coal technology unit, but only if such 
        production occurs during the 10-year period beginning on the 
        date the unit was returned to service after becoming a 
        qualifying clean coal technology unit.
    ``(b) Applicable Amount.--
            ``(1) In general.--For purposes of this section, the 
        applicable amount of clean coal technology production credit is 
        equal to $0.0034.
            ``(2) Inflation adjustment.--For calendar years after 2004, 
        the applicable amount of clean coal technology production 
        credit shall be adjusted by multiplying such amount by the 
        inflation adjustment factor for the calendar year in which the 
        amount is applied. If any amount as increased under the 
        preceding sentence is not a multiple of 0.01 cent, such amount 
        shall be rounded to the nearest multiple of 0.01 cent.
    ``(c) Applicable Percentage.--For purposes of this section, with 
respect to any qualifying clean coal technology unit, the applicable 
percentage is the percentage equal to the ratio which the portion of 
the national megawatt capacity limitation allocated to the taxpayer 
with respect to such unit under subsection (e) bears to the total 
megawatt capacity of such unit.
    ``(d) Definitions and Special Rules.--For purposes of this 
section--
            ``(1) Qualifying clean coal technology unit.--The term 
        `qualifying clean coal technology unit' means a clean coal 
        technology unit of the taxpayer which--
                    ``(A) on October 1, 2004--
                            ``(i) was a coal-based electricity 
                        generating steam generator-turbine unit which 
                        was not a clean coal technology unit, and
                            ``(ii) had a nameplate capacity rating of 
                        not more than 300 megawatts,
                    ``(B) becomes a clean coal technology unit as the 
                result of the retrofitting, repowering, or replacement 
                of the unit with clean coal technology during the 10-
                year period beginning on October 1, 2004,
                    ``(C) is not receiving nor is scheduled to receive 
                funding under the Clean Coal Technology Program, the 
                Power Plant Improvement Initiative, or the Clean Coal 
                Power Initiative administered by the Secretary of 
                Energy, and
                    ``(D) receives an allocation of a portion of the 
                national megawatt capacity limitation under subsection 
                (e).
            ``(2) Clean coal technology unit.--The term `clean coal 
        technology unit' means a unit which--
                    ``(A) uses clean coal technology, including 
                advanced pulverized coal or atmospheric fluidized bed 
                combustion, pressurized fluidized bed combustion, 
                integrated gasification combined cycle, or any other 
                technology, for the production of electricity,
                    ``(B) uses an input of at least 75 percent coal to 
                produce at least 50 percent of its thermal output as 
                electricity,
                    ``(C) has a design net heat rate of at least 500 
                less than that of such unit as described in paragraph 
                (1)(A),
                    ``(D) has a maximum design net heat rate of not 
                more than 9,500, and
                    ``(E) meets the pollution control requirements of 
                paragraph (3).
            ``(3) Pollution control requirements.--
                    ``(A) In general.--A unit meets the requirements of 
                this paragraph if--
                            ``(i) its emissions of sulfur dioxide, 
                        nitrogen oxide, or particulates meet the lower 
                        of the emission levels for each such emission 
                        specified in--
                                    ``(I) subparagraph (B), or
                                    ``(II) the new source performance 
                                standards of the Clean Air Act (42 
                                U.S.C. 7411) which are in effect for 
                                the category of source at the time of 
                                the retrofitting, repowering, or 
                                replacement of the unit, and
                            ``(ii) its emissions do not exceed any 
                        relevant emission level specified by regulation 
                        pursuant to the hazardous air pollutant 
                        requirements of the Clean Air Act (42 U.S.C. 
                        7412) in effect at the time of the 
                        retrofitting, repowering, or replacement.
                    ``(B) Specific levels.--The levels specified in 
                this subparagraph are--
                            ``(i) in the case of sulfur dioxide 
                        emissions, 50 percent of the sulfur dioxide 
                        emission levels specified in the new source 
                        performance standards of the Clean Air Act (42 
                        U.S.C. 7411) in effect on the date of the 
                        enactment of this section for the category of 
                        source,
                            ``(ii) in the case of nitrogen oxide 
                        emissions--
                                    ``(I) 0.1 pound per million Btu of 
                                heat input if the unit is not a 
                                cyclone-fired boiler, and
                                    ``(II) if the unit is a cyclone-
                                fired boiler, 15 percent of the 
                                uncontrolled nitrogen oxide emissions 
                                from such boilers, and
                            ``(iii) in the case of particulate 
                        emissions, 0.02 pound per million Btu of heat 
                        input.
            ``(4) Design net heat rate.--The design net heat rate with 
        respect to any unit, measured in Btu per kilowatt hour (HHV)--
                    ``(A) shall be based on the design annual heat 
                input to and the design annual net electrical power, 
                fuels, and chemicals output from such unit (determined 
                without regard to such unit's co-generation of steam),
                    ``(B) shall be adjusted for the heat content of the 
                design coal to be used by the unit if it is less than 
                12,000 Btu per pound according to the following 
                formula:
        Design net heat rate = Unit net heat rate  x  [l- {((12,000-
        design coal heat content, Btu per pound)/1,000)  x  0.013}],
                    ``(C) shall be corrected for the site reference 
                conditions of--
                            ``(i) elevation above sea level of 500 
                        feet,
                            ``(ii) air pressure of 14.4 pounds per 
                        square inch absolute (psia),
                            ``(iii) temperature, dry bulb of 63 deg.F,
                            ``(iv) temperature, wet bulb of 54 deg.F, 
                        and
                            ``(v) relative humidity of 55 percent, and
                    ``(D) if carbon capture controls have been 
                installed with respect to any qualifying unit and such 
                controls remove at least 50 percent of the unit's 
                carbon dioxide emissions, shall be adjusted up to the 
                design heat rate level which would have resulted 
                without the installation of such controls.
            ``(5) HHV.--The term `HHV' means higher heating value.
            ``(6) Application of certain rules.--The rules of 
        paragraphs (3), (4), and (5) of section 45(e) shall apply.
            ``(7) Inflation adjustment factor.--
                    ``(A) In general.--The term `inflation adjustment 
                factor' means, with respect to a calendar year, a 
                fraction the numerator of which is the GDP implicit 
                price deflator for the preceding calendar year and the 
                denominator of which is the GDP implicit price deflator 
                for the calendar year 2003.
                    ``(B) GDP implicit price deflator.--The term `GDP 
                implicit price deflator' means, for any calendar year, 
                the most recent revision of the implicit price deflator 
                for the gross domestic product as of June 30 of such 
                calendar year as computed by the Department of Commerce 
                before October 1 of such calendar year.
            ``(8) Noncompliance with pollution laws.--For purposes of 
        this section, a unit which is not in compliance with the 
        applicable State and Federal pollution prevention, control, and 
        permit requirements for any period of time shall not be 
        considered to be a qualifying clean coal technology unit during 
        such period.
    ``(e) National Limitation on the Aggregate Capacity of Qualifying 
Clean Coal Technology Units.--
            ``(1) In general.--For purposes of this section, the 
        national megawatt capacity limitation for qualifying clean coal 
        technology units is 4,000 megawatts.
            ``(2) Allocation of limitation.--The Secretary shall 
        allocate the national megawatt capacity limitation for 
        qualifying clean coal technology units in such manner as the 
        Secretary may prescribe under the regulations under paragraph 
        (3).
            ``(3) Regulations.--Not later than 6 months after the date 
        of the enactment of this section, the Secretary shall prescribe 
        such regulations as may be necessary or appropriate--
                    ``(A) to carry out the purposes of this subsection,
                    ``(B) to limit the capacity of any qualifying clean 
                coal technology unit to which this section applies so 
                that the megawatt capacity allocated to any unit under 
                this subsection does not exceed 300 megawatts and the 
                combined megawatt capacity allocated to all such units 
                when all such units are placed in service during the 
                10-year period described in subsection (d)(1)(B), does 
                not exceed 4,000 megawatts,
                    ``(C) to provide a certification process under 
                which the Secretary, in consultation with the Secretary 
                of Energy, shall approve and allocate the national 
                megawatt capacity limitation--
                            ``(i) to encourage that units with the 
                        highest thermal efficiencies, when adjusted for 
                        the heat content of the design coal and site 
                        reference conditions described in subsection 
                        (d)(4)(C), and environmental performance, be 
                        placed in service as soon as possible, and
                            ``(ii) to allocate capacity to taxpayers 
                        which have a definite and credible plan for 
                        placing into commercial operation a qualifying 
                        clean coal technology unit, including--
                                    ``(I) a site,
                                    ``(II) contractual commitments for 
                                procurement and construction or, in the 
                                case of regulated utilities, the 
                                agreement of the State utility 
                                commission,
                                    ``(III) filings for all necessary 
                                preconstruction approvals,
                                    ``(IV) a demonstrated record of 
                                having successfully completed 
                                comparable projects on a timely basis, 
                                and
                                    ``(V) such other factors that the 
                                Secretary determines are appropriate,
                    ``(D) to allocate the national megawatt capacity 
                limitation to a portion of the capacity of a qualifying 
                clean coal technology unit if the Secretary determines 
                that such an allocation would maximize the amount of 
                efficient production encouraged with the available tax 
                credits,
                    ``(E) to set progress requirements and conditional 
                approvals so that capacity allocations for clean coal 
                technology units which become unlikely to meet the 
                necessary conditions for qualifying can be reallocated 
                by the Secretary to other clean coal technology units, 
                and
                    ``(F) to provide taxpayers with opportunities to 
                correct administrative errors and omissions with 
                respect to allocations and record keeping within a 
                reasonable period after discovery, taking into account 
                the availability of regulations and other 
                administrative guidance from the Secretary.''.
    (b) Credit Treated as Business Credit.--Section 38(b) (relating to 
current year business credit), as amended by this Act, is amended by 
striking ``plus'' at the end of paragraph (18), by striking the period 
at the end of paragraph (19) and inserting ``, plus'', and by adding at 
the end the following new paragraph:
            ``(20) the qualifying clean coal technology production 
        credit determined under section 45I(a).''.
    (c) Transitional Rule.--Section 39(d) (relating to transitional 
rules), as amended by this Act, is amended by adding at the end the 
following new paragraph:
            ``(16) No carryback of section 45i credit before effective 
        date.--No portion of the unused business credit for any taxable 
        year which is attributable to the qualifying clean coal 
        technology production credit determined under section 45I may 
        be carried back to a taxable year ending before October 1, 
        2004.''.
    (d) Clerical Amendment.--The table of sections for subpart D of 
part IV of subchapter A of chapter 1, as amended by this Act, is 
amended by adding at the end the following new item:

``Sec. 45I. Credit for production from a qualifying clean coal 
                            technology unit.''.
    (e) Effective Date.--The amendments made by this section shall 
apply to production after September 30, 2004, in taxable years ending 
after such date.

PART II--INCENTIVES FOR EARLY COMMERCIAL APPLICATIONS OF ADVANCED CLEAN 
                           COAL TECHNOLOGIES

SEC. 1342. CREDIT FOR INVESTMENT IN QUALIFYING ADVANCED CLEAN COAL 
              TECHNOLOGY.

    (a) Allowance of Qualifying Advanced Clean Coal Technology Unit 
Credit.--Section 46 (relating to amount of credit) is amended by 
striking ``and'' at the end of paragraph (2), by striking the period at 
the end of paragraph (3) and inserting ``, and'', and by adding at the 
end the following new paragraph:
            ``(4) the qualifying advanced clean coal technology unit 
        credit.''.
    (b) Amount of Qualifying Advanced Clean Coal Technology Unit 
Credit.--Subpart E of part IV of subchapter A of chapter 1 (relating to 
rules for computing investment credit) is amended by inserting after 
section 48 the following new section:

``SEC. 48A. QUALIFYING ADVANCED CLEAN COAL TECHNOLOGY UNIT CREDIT.

    ``(a) In General.--For purposes of section 46, the qualifying 
advanced clean coal technology unit credit for any taxable year is an 
amount equal to 10 percent of the applicable percentage of the 
qualified investment in a qualifying advanced clean coal technology 
unit for such taxable year.
    ``(b) Qualifying Advanced Clean Coal Technology Unit.--
            ``(1) In general.--For purposes of subsection (a), the term 
        `qualifying advanced clean coal technology unit' means an 
        advanced clean coal technology unit of the taxpayer--
                    ``(A)(i) in the case of a unit first placed in 
                service after September 30, 2004, the original use of 
                which commences with the taxpayer, or
                    ``(ii) in the case of the retrofitting or 
                repowering of a unit first placed in service before 
                October 1, 2004, the retrofitting or repowering of 
                which is completed by the taxpayer after such date, or
                    ``(B) which is depreciable under section 167,
                    ``(C) which has a useful life of not less than 4 
                years,
                    ``(D) which is located in the United States,
                    ``(E) which is not receiving nor is scheduled to 
                receive funding under the Clean Coal Technology 
                Program, the Power Plant Improvement Initiative, or the 
                Clean Coal Power Initiative administered by the 
                Secretary of Energy,
                    ``(F) which is not a qualifying clean coal 
                technology unit, and
                    ``(G) which receives an allocation of a portion of 
                the national megawatt capacity limitation under 
                subsection (f).
            ``(2) Special rule for sale-leasebacks.--For purposes of 
        subparagraph (A) of paragraph (1), in the case of a unit 
        which--
                    ``(A) is originally placed in service by a person, 
                and
                    ``(B) is sold and leased back by such person, or is 
                leased to such person, within 3 months after the date 
                such unit was originally placed in service, for a 
                period of not less than 12 years--
        such unit shall be treated as originally placed in service not 
        earlier than the date on which such unit is used under the 
        leaseback (or lease) referred to in subparagraph (B). The 
        preceding sentence shall not apply to any property if the 
        lessee and lessor of such property make an election under this 
        sentence. Such an election, once made, may be revoked only with 
        the consent of the Secretary.
            ``(3) Noncompliance with pollution laws.--For purposes of 
        this subsection, a unit which is not in compliance with the 
        applicable State and Federal pollution prevention, control, and 
        permit requirements for any period of time shall not be 
        considered to be a qualifying advanced clean coal technology 
        unit during such period.
    ``(c) Applicable Percentage.--For purposes of this section, with 
respect to any qualifying advanced clean coal technology unit, the 
applicable percentage is the percentage equal to the ratio which the 
portion of the national megawatt capacity limitation allocated to the 
taxpayer with respect to such unit under subsection (f) bears to the 
total megawatt capacity of such unit.
    ``(d) Advanced Clean Coal Technology Unit.--For purposes of this 
section--
            ``(1) In general.--The term `advanced clean coal technology 
        unit' means a new, retrofit, or repowering unit of the taxpayer 
        which--
                    ``(A) is--
                            ``(i) an eligible advanced pulverized coal 
                        or atmospheric fluidized bed combustion 
                        technology unit,
                            ``(ii) an eligible pressurized fluidized 
                        bed combustion technology unit,
                            ``(iii) an eligible integrated gasification 
                        combined cycle technology unit, or
                            ``(iv) an eligible other technology unit, 
                        and
                    ``(B) meets the carbon emission rate requirements 
                of paragraph (6).
            ``(2) Eligible advanced pulverized coal or atmospheric 
        fluidized bed combustion technology unit.--The term `eligible 
        advanced pulverized coal or atmospheric fluidized bed 
        combustion technology unit' means a clean coal technology unit 
        using advanced pulverized coal or atmospheric fluidized bed 
        combustion technology which--
                    ``(A) is placed in service after September 30, 
                2004, and before January 1, 2013, and
                    ``(B) has a design net heat rate of not more than 
                8,500 (8,900 in the case of units placed in service 
                before 2009).
            ``(3) Eligible pressurized fluidized bed combustion 
        technology unit.--The term `eligible pressurized fluidized bed 
        combustion technology unit' means a clean coal technology unit 
        using pressurized fluidized bed combustion technology which--
                    ``(A) is placed in service after September 30, 
                2004, and before January 1, 2017, and
                    ``(B) has a design net heat rate of not more than 
                7,720 (8,900 in the case of units placed in service 
                before 2009, and 8,500 in the case of units placed in 
                service after 2008 and before 2013).
            ``(4) Eligible integrated gasification combined cycle 
        technology unit.--The term `eligible integrated gasification 
        combined cycle technology unit' means a clean coal technology 
        unit using integrated gasification combined cycle technology, 
        with or without fuel or chemical co-production, which--
                    ``(A) is placed in service after September 30, 
                2004, and before January 1, 2017,
                    ``(B) has a design net heat rate of not more than 
                7,720 (8,900 in the case of units placed in service 
                before 2009, and 8,500 in the case of units placed in 
                service after 2008 and before 2013), and
                    ``(C) has a net thermal efficiency (HHV) using coal 
                with fuel or chemical co-production of not less than 
                44.2 percent (38.4 percent in the case of units placed 
                in service before 2009, and 40.2 percent in the case of 
                units placed in service after 2008 and before 2013).
            ``(5) Eligible other technology unit.--The term `eligible 
        other technology unit' means a clean coal technology unit using 
        any other technology for the production of electricity which is 
        placed in service after September 30, 2004, and before January 
        1, 2017.
            ``(6) Carbon emission rate requirements.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), a unit meets the requirements of this 
                paragraph if--
                            ``(i) in the case of a unit using design 
                        coal with a heat content of not more than 9,000 
                        Btu per pound, the carbon emission rate is less 
than 0.60 pound of carbon per kilowatt hour, and
                            ``(ii) in the case of a unit using design 
                        coal with a heat content of more than 9,000 Btu 
                        per pound, the carbon emission rate is less 
                        than 0.54 pound of carbon per kilowatt hour.
                    ``(B) Eligible other technology unit.--In the case 
                of an eligible other technology unit, subparagraph (A) 
                shall be applied by substituting `0.51' and `0.459' for 
                `0.60' and `0.54', respectively.
    ``(e) General Definitions.--Any term used in this section which is 
also used in section 45I shall have the meaning given such term in 
section 45I.
    ``(f) National Limitation on the Aggregate Capacity of Advanced 
Clean Coal Technology Units.--
            ``(1) In general.--For purposes of subsection (b)(1)(G), 
        the national megawatt capacity limitation is--
                    ``(A) for qualifying advanced clean coal technology 
                units using advanced pulverized coal or atmospheric 
                fluidized bed combustion technology, not more than 
                1,000 megawatts (not more than 500 megawatts in the 
                case of units placed in service before 2009),
                    ``(B) for such units using pressurized fluidized 
                bed combustion technology, not more than 500 megawatts 
                (not more than 250 megawatts in the case of units 
                placed in service before 2009),
                    ``(C) for such units using integrated gasification 
                combined cycle technology, with or without fuel or 
                chemical co-production, not more than 2,000 megawatts 
                (not more than 750 megawatts in the case of units 
                placed in service before 2009), and
                    ``(D) for such units using other technology for the 
                production of electricity, not more than 500 megawatts 
                (not more than 250 megawatts in the case of units 
                placed in service before 2009).
            ``(2) Allocation of limitation.--The Secretary shall 
        allocate the national megawatt capacity limitation for 
        qualifying advanced clean coal technology units in such manner 
        as the Secretary may prescribe under the regulations under 
        paragraph (3).
            ``(3) Regulations.--Not later than 6 months after the date 
        of the enactment of this section, the Secretary shall prescribe 
        such regulations as may be necessary or appropriate--
                    ``(A) to carry out the purposes of this subsection 
                and section 45J,
                    ``(B) to limit the capacity of any qualifying 
                advanced clean coal technology unit to which this 
                section applies so that the combined megawatt capacity 
                of all such units to which this section applies does 
                not exceed 4,000 megawatts,
                    ``(C) to provide a certification process described 
                in section 45I(e)(3)(C),
                    ``(D) to carry out the purposes described in 
                subparagraphs (D), (E), and (F) of section 45I(e)(3), 
                and
                    ``(E) to reallocate capacity which is not allocated 
                to any technology described in subparagraphs (A) 
                through (D) of paragraph (1) because an insufficient 
                number of qualifying units request an allocation for 
                such technology, to another technology described in 
                such subparagraphs in order to maximize the amount of 
                energy efficient production encouraged with the 
                available tax credits.
            ``(4) Selection criteria.--For purposes of this subsection, 
        the selection criteria for allocating the national megawatt 
        capacity limitation to qualifying advanced clean coal 
        technology units--
                    ``(A) shall be established by the Secretary of 
                Energy as part of a competitive solicitation,
                    ``(B) shall include primary criteria of minimum 
                design net heat rate, maximum design thermal 
                efficiency, environmental performance, and lowest cost 
                to the Government, and
                    ``(C) shall include supplemental criteria as 
                determined appropriate by the Secretary of Energy.
    ``(g) Qualified Investment.--For purposes of subsection (a), the 
term `qualified investment' means, with respect to any taxable year, 
the basis of a qualifying advanced clean coal technology unit placed in 
service by the taxpayer during such taxable year (in the case of a unit 
described in subsection (b)(1)(A)(ii), only that portion of the basis 
of such unit which is properly attributable to the retrofitting or 
repowering of such unit).
    ``(h) Qualified Progress Expenditures.--
            ``(1) Increase in qualified investment.--In the case of a 
        taxpayer who has made an election under paragraph (5), the 
        amount of the qualified investment of such taxpayer for the 
        taxable year (determined under subsection (g) without regard to 
        this subsection) shall be increased by an amount equal to the 
        aggregate of each qualified progress expenditure for the 
        taxable year with respect to progress expenditure property.
            ``(2) Progress expenditure property defined.--For purposes 
        of this subsection, the term `progress expenditure property' 
        means any property being constructed by or for the taxpayer and 
        which it is reasonable to believe will qualify as a qualifying 
        advanced clean coal technology unit which is being constructed 
        by or for the taxpayer when it is placed in service.
            ``(3) Qualified progress expenditures defined.--For 
        purposes of this subsection--
                    ``(A) Self-constructed property.--In the case of 
                any self-constructed property, the term `qualified 
                progress expenditures' means the amount which, for 
                purposes of this subpart, is properly chargeable 
                (during such taxable year) to capital account with 
                respect to such property.
                    ``(B) Nonself-constructed property.--In the case of 
                nonself-constructed property, the term `qualified 
                progress expenditures' means the amount paid during the 
                taxable year to another person for the construction of 
such property.
            ``(4) Other definitions.--For purposes of this subsection--
                    ``(A) Self-constructed property.--The term `self-
                constructed property' means property for which it is 
                reasonable to believe that more than half of the 
                construction expenditures will be made directly by the 
                taxpayer.
                    ``(B) Nonself-constructed property.--The term 
                `nonself-constructed property' means property which is 
                not self-constructed property.
                    ``(C) Construction, etc.--The term `construction' 
                includes reconstruction and erection, and the term 
                `constructed' includes reconstructed and erected.
                    ``(D) Only construction of qualifying advanced 
                clean coal technology unit to be taken into account.--
                Construction shall be taken into account only if, for 
                purposes of this subpart, expenditures therefor are 
                properly chargeable to capital account with respect to 
                the property.
            ``(5) Election.--An election under this subsection may be 
        made at such time and in such manner as the Secretary may by 
        regulations prescribe. Such an election shall apply to the 
        taxable year for which made and to all subsequent taxable 
        years. Such an election, once made, may not be revoked except 
        with the consent of the Secretary.
    ``(i) Coordination With Other Credits.--This section shall not 
apply to any property with respect to which the rehabilitation credit 
under section 47 or the energy credit under section 48 is allowed 
unless the taxpayer elects to waive the application of such credit to 
such property.''.
    (c) Recapture.--Section 50(a) (relating to other special rules) is 
amended by adding at the end the following new paragraph:
            ``(6) Special rules relating to qualifying advanced clean 
        coal technology unit.--For purposes of applying this subsection 
        in the case of any credit allowable by reason of section 48A, 
        the following rules shall apply:
                    ``(A) General rule.--In lieu of the amount of the 
                increase in tax under paragraph (1), the increase in 
                tax shall be an amount equal to the investment tax 
                credit allowed under section 38 for all prior taxable 
                years with respect to a qualifying advanced clean coal 
                technology unit (as defined by section 48A(b)(1)) 
                multiplied by a fraction the numerator of which is the 
                number of years remaining to fully depreciate under 
                this title the qualifying advanced clean coal 
                technology unit disposed of, and the denominator of 
                which is the total number of years over which such unit 
                would otherwise have been subject to depreciation. For 
                purposes of the preceding sentence, the year of 
                disposition of the qualifying advanced clean coal 
                technology unit shall be treated as a year of remaining 
                depreciation.
                    ``(B) Property ceases to qualify for progress 
                expenditures.--Rules similar to the rules of paragraph 
                (2) shall apply in the case of qualified progress 
                expenditures for a qualifying advanced clean coal 
                technology unit under section 48A, except that the 
                amount of the increase in tax under subparagraph (A) of 
                this paragraph shall be substituted for the amount 
                described in such paragraph (2).
                    ``(C) Application of paragraph.--This paragraph 
                shall be applied separately with respect to the credit 
                allowed under section 38 regarding a qualifying 
                advanced clean coal technology unit.''.
    (d) Transitional Rule.--Section 39(d) (relating to transitional 
rules), as amended by this Act, is amended by adding at the end the 
following new paragraph:
            ``(17) No carryback of section 48a credit before effective 
        date.--No portion of the unused business credit for any taxable 
        year which is attributable to the qualifying advanced clean 
        coal technology unit credit determined under section 48A may be 
        carried back to a taxable year ending before October 1, 
        2004.''.
    (e) Technical Amendments.--
            (1) Section 49(a)(1)(C) is amended by striking ``and'' at 
        the end of clause (ii), by striking the period at the end of 
        clause (iii) and inserting ``, and'', and by adding at the end 
        the following new clause:
                            ``(iv) the portion of the basis of any 
                        qualifying advanced clean coal technology unit 
                        attributable to any qualified investment (as 
                        defined by section 48A(g)).''.
            (2) Section 50(a)(4) is amended by striking ``and (2)'' and 
        inserting ``, (2), and (6)''.
            (3) Section 50(c) is amended by adding at the end the 
        following new paragraph:
            ``(6) Nonapplication.--Paragraphs (1) and (2) shall not 
        apply to any qualifying advanced clean coal technology unit 
        credit under section 48A.''.
            (4) The table of sections for subpart E of part IV of 
        subchapter A of chapter 1 is amended by inserting after the 
        item relating to section 48 the following new item:

``Sec. 48A. Qualifying advanced clean coal technology unit credit.''.
    (f) Effective Date.--The amendments made by this section shall 
apply to periods after September 30, 2004, under rules similar to the 
rules of section 48(m) of the Internal Revenue Code of 1986 (as in 
effect on the day before the date of the enactment of the Revenue 
Reconciliation Act of 1990).

SEC. 1343. CREDIT FOR PRODUCTION FROM A QUALIFYING ADVANCED CLEAN COAL 
              TECHNOLOGY UNIT.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
(relating to business related credits), as amended by this Act, is 
amended by adding at the end the following new section:

``SEC. 45J. CREDIT FOR PRODUCTION FROM A QUALIFYING ADVANCED CLEAN COAL 
              TECHNOLOGY UNIT.

    ``(a) General Rule.--For purposes of section 38, the qualifying 
advanced clean coal technology production credit of any taxpayer for 
any taxable year is equal to--
            ``(1) the applicable amount of advanced clean coal 
        technology production credit, multiplied by
            ``(2) the applicable percentage (as determined under 
        section 48A(c)) of the sum of--
                    ``(A) the kilowatt hours of electricity, plus
                    ``(B) each 3,413 Btu of fuels or chemicals--
        produced by the taxpayer during such taxable year at a 
        qualifying advanced clean coal technology unit, but only if 
        such production occurs during the 10-year period beginning on 
        the date the unit was originally placed in service (or returned 
        to service after becoming a qualifying advanced clean coal 
        technology unit).
    ``(b) Applicable Amount.--For purposes of this section--
            ``(1) In general.--Except as provided in paragraph (2), the 
        applicable amount of advanced clean coal technology production 
        credit with respect to production from a qualifying advanced 
        clean coal technology unit shall be determined as follows:
                    ``(A) If the qualifying advanced clean coal 
                technology unit is producing electricity only:
                            ``(i) In the case of a unit originally 
                        placed in service before 2009, if--

 
------------------------------------------------------------------------
                                            The applicable amount is:
                                       ---------------------------------
    ``The design net heat rate is:      For 1st 5 years   For 2d 5 years
                                        of such service  of such service
------------------------------------------------------------------------
Not more than 8,500...................          $.0060           $.0038
More than 8,500 but not more than               $.0025           $.0010
 8,750................................
More than 8,750 but less than 8,900...          $.0010          $.0010.
------------------------------------------------------------------------

                            ``(ii) In the case of a unit originally 
                        placed in service after 2008 and before 2013, 
                        if--

 
------------------------------------------------------------------------
                                            The applicable amount is:
                                       ---------------------------------
    ``The design net heat rate is:      For 1st 5 years   For 2d 5 years
                                        of such service  of such service
------------------------------------------------------------------------
Not more than 7,770...................          $.0105           $.0090
More than 7,770 but not more than               $.0085           $.0068
 8,125................................
More than 8,125 but less than 8,500...          $.0075          $.0055.
------------------------------------------------------------------------

                            ``(iii) In the case of a unit originally 
                        placed in service after 2012 and before 2017, 
                        if--

 
------------------------------------------------------------------------
                                            The applicable amount is:
                                       ---------------------------------
    ``The design net heat rate is:      For 1st 5 years   For 2d 5 years
                                        of such service  of such service
------------------------------------------------------------------------
Not more than 7,380...................          $.0140           $.0115
More than 7,380 but not more than               $.0120          $.0090.
 7,720................................
------------------------------------------------------------------------

                    ``(B) If the qualifying advanced clean coal 
                technology unit is producing fuel or chemicals:
                            ``(i) In the case of a unit originally 
                        placed in service before 2009, if--

 
------------------------------------------------------------------------
                                            The applicable amount is:
     ``The unit design net thermal     ---------------------------------
         efficiency (HHV) is:           For 1st 5 years   For 2d 5 years
                                        of such service  of such service
------------------------------------------------------------------------
Not less than 40.2 percent............          $.0060           $.0038
Less than 40.2 but not less than 39             $.0025           $.0010
 percent..............................
Less than 39 but not less than 38.4             $.0010          $.0010.
 percent..............................
------------------------------------------------------------------------

                            ``(ii) In the case of a unit originally 
                        placed in service after 2008 and before 2013, 
                        if--

 
------------------------------------------------------------------------
                                            The applicable amount is:
     ``The unit design net thermal     ---------------------------------
         efficiency (HHV) is:           For 1st 5 years   For 2d 5 years
                                        of such service  of such service
------------------------------------------------------------------------
Not less than 43.9 percent............          $.0105           $.0090
Less than 43.9 but not less than 42             $.0085           $.0068
 percent..............................
Less than 42 but not less than 40.2             $.0075          $.0055.
 percent..............................
------------------------------------------------------------------------

                            ``(iii) In the case of a unit originally 
                        placed in service after 2012 and before 2017, 
                        if--

 
------------------------------------------------------------------------
                                            The applicable amount is:
     ``The unit design net thermal     ---------------------------------
         efficiency (HHV) is:           For 1st 5 years   For 2d 5 years
                                        of such service  of such service
------------------------------------------------------------------------
Not less than 46.3 percent............          $.0140           $.0115
Less than 46.3 but not less than 44.2           $.0120          $.0090.
 percent..............................
------------------------------------------------------------------------

            ``(2) Special rule for units qualifying for greater 
        applicable amount when placed in service.--If, at the time a 
        qualifying advanced clean coal technology unit is placed in 
        service, production from the unit would be entitled to a 
        greater applicable amount if such unit had been placed in 
        service at a later date, the applicable amount for such unit 
        shall be such greater amount.
    ``(c) Inflation Adjustment.--For calendar years after 2004, each 
dollar amount in subsection (b)(1) shall be adjusted by multiplying 
such amount by the inflation adjustment factor for the calendar year in 
which the amount is applied. If any amount as increased under the 
preceding sentence is not a multiple of 0.01 cent, such amount shall be 
rounded to the nearest multiple of 0.01 cent.
    ``(d) Definitions and Special Rules.--For purposes of this 
section--
            ``(1) In general.--Any term used in this section which is 
        also used in section 45I or 48A shall have the meaning given 
        such term in such section.
            ``(2) Applicable rules.--The rules of paragraphs (3), (4), 
        and (5) of section 45(e) shall apply.''.
    (b) Credit Treated as Business Credit.--Section 38(b) (relating to 
current year business credit), as amended by this Act, is amended by 
striking ``plus'' at the end of paragraph (19), by striking the period 
at the end of paragraph (20) and inserting ``, plus'', and by adding at 
the end the following new paragraph:
            ``(21) the qualifying advanced clean coal technology 
        production credit determined under section 45J(a).''.
    (c) Transitional Rule.--Section 39(d) (relating to transitional 
rules), as amended by this Act, is amended by adding at the end the 
following new paragraph:
            ``(18) No carryback of section 45j credit before effective 
        date.--No portion of the unused business credit for any taxable 
        year which is attributable to the qualifying advanced clean 
        coal technology production credit determined under section 45J 
        may be carried back to a taxable year ending before October 1, 
        2004.''.
    (d) Denial of Double Benefit.--Section 29(d) (relating to other 
definitions and special rules) is amended by adding at the end the 
following new paragraph:
            ``(9) Denial of double benefit.--This section shall not 
        apply with respect to any qualified fuel the production of 
        which may be taken into account for purposes of determining the 
        credit under section 45J.''.
    (e) Clerical Amendment.--The table of sections for subpart D of 
part IV of subchapter A of chapter 1, as amended by this Act, is 
amended by adding at the end the following new item:

``Sec. 45J. Credit for production from a qualifying advanced clean coal 
                            technology unit.''.
    (f) Effective Date.--The amendments made by this section shall 
apply to production after September 30, 2004, in taxable years ending 
after such date.

      PART III--TREATMENT OF PERSONS NOT ABLE TO USE ENTIRE CREDIT

SEC. 1344. TREATMENT OF PERSONS NOT ABLE TO USE ENTIRE CREDIT.

    (a) In General.--Section 45I, as added by this Act, is amended by 
adding at the end the following new subsection:
    ``(f) Treatment of Person Not Able To Use Entire Credit.--
            ``(1) Allowance of credits.--
                    ``(A) In general.--Any credit allowable under this 
                section, section 45J, or section 48A with respect to a 
                facility owned by a person described in subparagraph 
                (B) may be transferred or used as provided in this 
                subsection, and the determination as to whether the 
                credit is allowable shall be made without regard to the 
                tax-exempt status of the person.
                    ``(B) Persons described.--A person is described in 
                this subparagraph if the person is--
                            ``(i) an organization described in section 
                        501(c)(12)(C) and exempt from tax under section 
                        501(a),
                            ``(ii) an organization described in section 
                        1381(a)(2)(C),
                            ``(iii) a public utility (as defined in 
                        section 136(c)(2)(B)),
                            ``(iv) any State or political subdivision 
                        thereof, the District of Columbia, or any 
                        agency or instrumentality of any of the 
                        foregoing,
                            ``(v) any Indian tribal government (within 
                        the meaning of section 7871) or any agency or 
                        instrumentality thereof, or
                            ``(vi) the Tennessee Valley Authority.
            ``(2) Transfer of credit.--
                    ``(A) In general.--A person described in clause 
                (i), (ii), (iii), (iv), or (v) of paragraph (1)(B) may 
                transfer any credit to which paragraph (1)(A) applies 
                through an assignment to any other person not described 
                in paragraph (1)(B). Such transfer may be revoked only 
                with the consent of the Secretary.
                    ``(B) Regulations.--The Secretary shall prescribe 
                such regulations as necessary to ensure that any credit 
                described in subparagraph (A) is claimed once and not 
                reassigned by such other person.
                    ``(C) Transfer proceeds treated as arising from 
                essential government function.--Any proceeds derived by 
                a person described in clause (iii), (iv), or (v) of 
                paragraph (1)(B) from the transfer of any credit under 
                subparagraph (A) shall be treated as arising from the 
                exercise of an essential government function.
            ``(3) Use of credit as an offset.--Notwithstanding any 
        other provision of law, in the case of a person described in 
        clause (i), (ii), or (v) of paragraph (1)(B), any credit to 
        which paragraph (1)(A) applies may be applied by such person, 
        to the extent provided by the Secretary of Agriculture, as a 
        prepayment of any loan, debt, or other obligation the entity 
        has incurred under subchapter I of chapter 31 of title 7 of the 
        Rural Electrification Act of 1936 (7 U.S.C. 901 et seq.), as in 
        effect on the date of the enactment of this section.
            ``(4) Use by tva.--
                    ``(A) In general.--Notwithstanding any other 
                provision of law, in the case of a person described in 
                paragraph (1)(B)(vi), any credit to which paragraph 
                (1)(A) applies may be applied as a credit against the 
                payments required to be made in any fiscal year under 
                section 15d(e) of the Tennessee Valley Authority Act of 
                1933 (16 U.S.C. 831n-4(e)) as an annual return on the 
                appropriations investment and an annual repayment sum.
                    ``(B) Treatment of credits.--The aggregate amount 
                of credits described in paragraph (1)(A) with respect 
                to such person shall be treated in the same manner and 
                to the same extent as if such credits were a payment in 
                cash and shall be applied first against the annual 
                return on the appropriations investment.
                    ``(C) Credit carryover.--With respect to any fiscal 
                year, if the aggregate amount of credits described in 
                paragraph (1)(A) with respect to such person exceeds 
                the aggregate amount of payment obligations described 
                in subparagraph (A), the excess amount shall remain 
                available for application as credits against the 
                amounts of such payment obligations in succeeding 
                fiscal years in the same manner as described in this 
                paragraph.
            ``(5) Credit not income.--Any transfer under paragraph (2) 
        or use under paragraph (3) of any credit to which paragraph 
        (1)(A) applies shall not be treated as income for purposes of 
        section 501(c)(12).
            ``(6) Treatment of unrelated persons.--For purposes of this 
        subsection, transfers among and between persons described in 
        clauses (i), (ii), (iii), (iv), and (v) of paragraph (1)(B) 
        shall be treated as transfers between unrelated parties.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to production after September 30, 2004, in taxable years ending after 
such date.

                   Subtitle E--Oil and Gas Provisions

SEC. 1351. OIL AND GAS FROM MARGINAL WELLS.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
(relating to business credits), as amended by this Act, is amended by 
adding at the end the following new section:

``SEC. 45K. CREDIT FOR PRODUCING OIL AND GAS FROM MARGINAL WELLS.

    ``(a) General Rule.--For purposes of section 38, the marginal well 
production credit for any taxable year is an amount equal to the 
product of--
            ``(1) the credit amount, and
            ``(2) the qualified crude oil production and the qualified 
        natural gas production which is attributable to the taxpayer.
    ``(b) Credit Amount.--For purposes of this section--
            ``(1) In general.--The credit amount is--
                    ``(A) $3 per barrel of qualified crude oil 
                production, and
                    ``(B) 50 cents per 1,000 cubic feet of qualified 
                natural gas production.
            ``(2) Reduction as oil and gas prices increase.--
                    ``(A) In general.--The $3 and 50 cents amounts 
                under paragraph (1) shall each be reduced (but not 
                below zero) by an amount which bears the same ratio to 
                such amount (determined without regard to this 
                paragraph) as--
                            ``(i) the excess (if any) of the applicable 
                        reference price over $15 ($1.67 for qualified 
                        natural gas production), bears to
                            ``(ii) $3 ($0.33 for qualified natural gas 
                        production).
                The applicable reference price for a taxable year is 
                the reference price of the calendar year preceding the 
                calendar year in which the taxable year begins.
                    ``(B) Inflation adjustment.--
                            ``(i) In general.--In the case of any 
                        taxable year beginning in a calendar year after 
                        2004, each of the dollar amounts contained in 
                        subparagraph (A) shall be increased to an 
                        amount equal to such dollar amount multiplied 
                        by the inflation adjustment factor for such 
                        calendar year.
                            ``(ii) Inflation adjustment factor.--For 
                        purposes of clause (i)--
                                    ``(I) In general.--The term 
                                `inflation adjustment factor' means, 
                                with respect to a calendar year, a 
                                fraction the numerator of which is the 
                                GDP implicit price deflator for the 
                                preceding calendar year and the 
                                denominator of which is the GDP 
                                implicit price deflator for the 
                                calendar year 2003.
                                    ``(II) GDP implicit price 
                                deflator.--The term `GDP implicit price 
                                deflator' means, for any calendar year, 
                                the most recent revision of the 
                                implicit price deflator for the gross 
                                domestic product as of June 30 of such 
                                calendar year as computed by the 
                                Department of Commerce before October 1 
                                of such calendar year.
                    ``(C) Reference price.--For purposes of this 
                paragraph, the term `reference price' means, with 
                respect to any calendar year--
                            ``(i) in the case of qualified crude oil 
                        production, the reference price determined 
                        under section 29(d)(2)(C), and
                            ``(ii) in the case of qualified natural gas 
                        production, the Secretary's estimate of the 
                        annual average wellhead price per 1,000 cubic 
                        feet for all domestic natural gas.
    ``(c) Qualified Crude Oil and Natural Gas Production.--For purposes 
of this section--
            ``(1) In general.--The terms `qualified crude oil 
        production' and `qualified natural gas production' mean 
        domestic crude oil or domestic natural gas which is produced 
        from a qualified marginal well.
            ``(2) Limitation on amount of production which may 
        qualify.--
                    ``(A) In general.--Crude oil or natural gas 
                produced during any taxable year from any well shall 
                not be treated as qualified crude oil production or 
                qualified natural gas production to the extent 
                production from the well during the taxable year 
                exceeds 1,095 barrels or barrel equivalents.
                    ``(B) Proportionate reductions.--
                            ``(i) Short taxable years.--In the case of 
                        a short taxable year, the limitations under 
                        this paragraph shall be proportionately reduced 
                        to reflect the ratio which the number of days 
                        in such taxable year bears to 365.
                            ``(ii) Wells not in production entire 
                        year.--In the case of a well which is not 
                        capable of production during each day of a 
                        taxable year, the limitations under this 
                        paragraph applicable to the well shall be 
                        proportionately reduced to reflect the ratio 
                        which the number of days of production bears to 
                        the total number of days in the taxable year.
            ``(3) Noncompliance with pollution laws.--Production from 
        any well during any period in which such well is not in 
        compliance with applicable Federal pollution prevention, 
        control, and permit requirements shall not be treated as 
        qualified crude oil production or qualified natural gas 
        production.
            ``(4) Definitions.--
                    ``(A) Qualified marginal well.--The term `qualified 
                marginal well' means a domestic well--
                            ``(i) the production from which during the 
                        taxable year is treated as marginal production 
                        under section 613A(c)(6), or
                            ``(ii) which, during the taxable year--
                                    ``(I) has average daily production 
                                of not more than 25 barrel equivalents, 
                                and
                                    ``(II) produces water at a rate not 
                                less than 95 percent of total well 
                                effluent.
                    ``(B) Crude oil, etc.--The terms `crude oil', 
                `natural gas', `domestic', and `barrel' have the 
                meanings given such terms by section 613A(e).
                    ``(C) Barrel equivalent.--The term `barrel 
                equivalent' means, with respect to natural gas, a 
                conversation ratio of 6,000 cubic feet of natural gas 
                to 1 barrel of crude oil.
                    ``(D) Domestic natural gas.--The term `domestic 
                natural gas' does not include Alaska natural gas (as 
                defined in section 45M(c)(1)).
    ``(d) Other Rules.--
            ``(1) Production attributable to the taxpayer.--In the case 
        of a qualified marginal well in which there is more than 1 
        owner of operating interests in the well and the crude oil or 
        natural gas production exceeds the limitation under subsection 
        (c)(2), qualifying crude oil production or qualifying natural 
        gas production attributable to the taxpayer shall be determined 
        on the basis of the ratio which taxpayer's revenue interest in 
        the production bears to the aggregate of the revenue interests 
        of all operating interest owners in the production.
            ``(2) Operating interest required.--Any credit under this 
        section may be claimed only on production which is attributable 
        to the holder of an operating interest.
            ``(3) Production from nonconventional sources excluded.--In 
        the case of production from a qualified marginal well which is 
        eligible for the credit allowed under section 29 for the 
        taxable year, no credit shall be allowable under this section 
unless the taxpayer elects not to claim the credit under section 29 
with respect to the well.''.
    (b) Credit Treated as Business Credit.--Section 38(b) (relating to 
current year business credit), as amended by this Act, is amended by 
striking ``plus'' at the end of paragraph (20), by striking the period 
at the end of paragraph (21) and inserting ``, plus'', and by adding at 
the end the following new paragraph:
            ``(22) the marginal oil and gas well production credit 
        determined under section 45K(a).''.
    (c) No Carryback of Marginal Oil and Gas Well Production Credit 
Before Effective Date.--Section 39(d) (relating to transition rules), 
as amended by this Act, is amended by adding at the end the following 
new paragraph:
            ``(19) No carryback of marginal oil and gas well production 
        credit before effective date.--No portion of the unused 
        business credit for any taxable year which is attributable to 
        the marginal oil and gas well production credit determined 
        under section 45K may be carried back to a taxable year ending 
        before October 1, 2004.''.
    (d) Coordination With Section 29.--Section 29(a) (relating to 
allowance of credit) is amended by striking ``There'' and inserting 
``At the election of the taxpayer, there''.
    (e) Clerical Amendment.--The table of sections for subpart D of 
part IV of subchapter A of chapter 1, as amended by this Act, is 
amended by adding at the end the following new item:

                              ``Sec. 45K. Credit for producing oil and 
                                        gas from marginal wells.''.
    (f) Effective Date.--The amendments made by this section shall 
apply to production in taxable years beginning after September 30, 
2004.

SEC. 1352. NATURAL GAS GATHERING LINES TREATED AS 7-YEAR PROPERTY.

    (a) In General.--Section 168(e)(3)(C) (defining 7-year property) is 
amended by striking ``and'' at the end of clause (i), by redesignating 
clause (ii) as clause (iii), and by inserting after clause (i) the 
following new clause:
                            ``(ii) any natural gas gathering line, 
                        and''.
    (b) Natural Gas Gathering Line.--Section 168(i) (relating to 
definitions and special rules), as amended by this Act, is amended by 
adding at the end the following new paragraph:
            ``(17) Natural gas gathering line.--The term `natural gas 
        gathering line' means--
                    ``(A) the pipe, equipment, and appurtenances used 
                to deliver natural gas from the wellhead or a 
                commonpoint to the point at which such gas first 
                reaches--
                            ``(i) a gas processing plant,
                            ``(ii) an interconnection with a 
                        transmission pipeline certificated by the 
                        Federal Energy Regulatory Commission as an 
                        interstate transmission pipeline,
                            ``(iii) an interconnection with an 
                        intrastate transmission pipeline, or
                            ``(iv) a direct interconnection with a 
                        local distribution company, a gas storage 
                        facility, or an industrial consumer, or
                    ``(B) any other pipe, equipment, or appurtenances 
                determined to be a gathering line by the Federal Energy 
                Regulatory Commission.
    (c) Alternative System.--The table contained in section 
168(g)(3)(B) (relating to special rule for certain property assigned to 
classes) is amended by inserting after the item relating to 
subparagraph (C)(i) the following new item:

``(C)(ii)......................................................   14''.
    (d) Effective Date.--The amendments made by this section shall 
apply to property placed in service after September 30, 2004, in 
taxable years ending after such date.

SEC. 1353. EXPENSING OF CAPITAL COSTS INCURRED IN COMPLYING WITH 
              ENVIRONMENTAL PROTECTION AGENCY SULFUR REGULATIONS.

    (a) In General.--Part VI of subchapter B of chapter 1 (relating to 
itemized deductions for individuals and corporations), as amended by 
this Act, is amended by inserting after section 179B the following new 
section:

``SEC. 179C. DEDUCTION FOR CAPITAL COSTS INCURRED IN COMPLYING WITH 
              ENVIRONMENTAL PROTECTION AGENCY SULFUR REGULATIONS.

    ``(a) Treatment as Expense.--
            ``(1) In general.--A small business refiner may elect to 
        treat any qualified capital costs as an expense which is not 
        chargeable to capital account. Any qualified cost which is so 
        treated shall be allowed as a deduction for the taxable year in 
        which the cost is paid or incurred.
            ``(2) Limitation.--
                    ``(A) In general.--The aggregate costs which may be 
                taken into account under this subsection for any 
                taxable year with respect to any facility may not 
                exceed the applicable percentage of the qualified 
                capital costs paid or incurred for the taxable year 
                with respect to such facility.
                    ``(B) Applicable percentage.--For purposes of 
                subparagraph (A)--
                            ``(i) In general.--Except as provided in 
                        clause (ii), the applicable percentage is 75 
                        percent.
                            ``(ii) Reduced percentage.--In the case of 
                        any facility with average daily refinery runs 
                        or average retained production for the period 
                        described in subsection (b)(2) in excess of 
                        155,000 barrels, the percentage described in 
                        clause (i) shall be reduced (but not below 
                        zero) by the product of--
                                    ``(I) such percentage (before the 
                                application of this clause), and
                                    ``(II) the ratio of such excess to 
                                50,000 barrels.
    ``(b) Definitions.--For purposes of this section--
            ``(1) Qualified capital costs.--The term `qualified capital 
        costs' means any costs which--
                    ``(A) are otherwise chargeable to capital account, 
                and
                    ``(B) are paid or incurred for the purpose of 
                complying with the Highway Diesel Fuel Sulfur Control 
                Requirement of the Environmental Protection Agency, as 
                in effect on the date of the enactment of this section, 
                with respect to a facility placed in service by the 
                taxpayer before such date.
            ``(2) Small business refiner.--The term `small business 
        refiner' means, with respect to any taxable year, a refiner of 
        crude oil--
                    ``(A) which, within the refinery operations of the 
                business, employs not more than 1,500 employees on any 
                day during such taxable year, and
                    ``(B) the average daily refinery run or average 
                retained production of which for all facilities of the 
                taxpayer for the 1-year period ending on the date of 
                the enactment of this section did not exceed 410,000 
                barrels.
    ``(c) Coordination With Other Provisions.--Section 280B shall not 
apply to amounts which are treated as expenses under this section.
    ``(d) Basis Reduction.--For purposes of this title, the basis of 
any property shall be reduced by the portion of the cost of such 
property taken into account under subsection (a).
    ``(e) Controlled Groups.--For purposes of this section, all persons 
treated as a single employer under subsection (b), (c), (m), or (o) of 
section 414 shall be treated as a single employer.''.
    (b) Conforming Amendments.--
            (1) Section 263(a)(1), as amended by this Act, is amended 
        by striking ``or'' at the end of subparagraph (H), by striking 
        the period at the end of subparagraph (I) and inserting ``, 
        or'', and by inserting after subparagraph (I) the following new 
        subparagraph:
                    ``(J) expenditures for which a deduction is allowed 
                under section 179C.''.
            (2) Section 263A(c)(3) is amended by inserting ``179C,'' 
        after ``section''.
            (3) Section 312(k)(3)(B), as amended by this Act, is 
        amended by striking ``or 179B'' each place it appears in the 
        heading and text and inserting ``179B, or 179C''.
            (4) Section 1016(a), as amended by this Act, is amended by 
        striking ``and'' at the end of paragraph (32), by striking the 
        period at the end of paragraph (33) and inserting ``, and'', 
        and by adding at the end the following new paragraph:
            ``(34) to the extent provided in section 179C(d).''.
            (5) Section 1245(a), as amended by this Act, is amended by 
        inserting ``179C,'' after ``179B,'' both places it appears in 
        paragraphs (2)(C) and (3)(C).
            (6) The table of sections for part VI of subchapter B of 
        chapter 1, as amended by this Act, is amended by inserting 
        after the item relating to section 179B the following new item:

``Sec. 179C. Deduction for capital costs incurred in complying with 
                            Environmental Protection Agency sulfur 
                            regulations.''.
    (c) Effective Date.--The amendment made by this section shall apply 
to expenses paid or incurred after December 31, 2002, in taxable years 
ending after such date.

SEC. 1354. ENVIRONMENTAL TAX CREDIT.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
(relating to business-related credits), as amended by this Act, is 
amended by adding at the end the following new section:

``SEC. 45L. ENVIRONMENTAL TAX CREDIT.

    ``(a) In General.--For purposes of section 38, the amount of the 
environmental tax credit determined under this section with respect to 
any small business refiner for any taxable year is an amount equal to 5 
cents for every gallon of low-sulfur diesel fuel produced at a facility 
by such small business refiner during such taxable year.
    ``(b) Maximum Credit.--
            ``(1) In general.--For any small business refiner, the 
        aggregate amount determined under subsection (a) for any 
        taxable year with respect to any facility shall not exceed the 
        applicable percentage of the qualified capital costs paid or 
        incurred by such small business refiner with respect to such 
        facility during the applicable period, reduced by the credit 
        allowed under subsection (a) with respect to such facility for 
        any preceding year.
            ``(2) Applicable percentage.--For purposes of paragraph 
        (1)--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), the applicable percentage is 25 
                percent.
                    ``(B) Reduced percentage.--The percentage described 
                in subparagraph (A) shall be reduced in the same manner 
                as under section 179C(a)(2)(B)(ii).
    ``(c) Definitions.--For purposes of this section--
            ``(1) In general.--The terms `small business refiner' and 
        `qualified capital costs' have the same meaning as given in 
        section 179C.
            ``(2) Low-sulfur diesel fuel.--The term `low-sulfur diesel 
        fuel' means diesel fuel containing not more than 15 parts per 
        million of sulfur.
            ``(3) Applicable period.--The term `applicable period' 
        means, with respect to any facility, the period beginning on 
        the day after the date of the enactment of this section and 
        ending with the date which is 1 year after the date on which 
        the taxpayer must comply with the applicable EPA regulations 
        with respect to such facility.
            ``(4) Applicable epa regulations.--The term `applicable EPA 
        regulations' means the Highway Diesel Fuel Sulfur Control 
        Requirements of the Environmental Protection Agency, as in 
        effect on the date of the enactment of this section.
    ``(d) Certification.--
            ``(1) Required.--Not later than the date which is 30 months 
        after the first day of the first taxable year in which a credit 
        is allowed under this section with respect to a facility, the 
        small business refiner shall obtain a certification from the 
        Secretary, in consultation with the Administrator of 
the Environmental Protection Agency, that the taxpayer's qualified 
capital costs with respect to such facility will result in compliance 
with the applicable EPA regulations.
            ``(2) Contents of application.--An application for 
        certification shall include relevant information regarding unit 
        capacities and operating characteristics sufficient for the 
        Secretary, in consultation with the Administrator of the 
        Environmental Protection Agency, to determine that such 
        qualified capital costs are necessary for compliance with the 
        applicable EPA regulations.
            ``(3) Review period.--Any application shall be reviewed and 
        notice of certification, if applicable, shall be made within 60 
        days of receipt of such application. In the event the Secretary 
        does not notify the taxpayer of the results of such 
        certification within such period, the taxpayer may presume the 
        certification to be issued until so notified.
            ``(4) Statute of limitations.--With respect to the credit 
        allowed under this section--
                    ``(A) the statutory period for the assessment of 
                any deficiency attributable to such credit shall not 
                expire before the end of the 3-year period ending on 
                the date that the period described in paragraph (3) 
                ends with respect to the taxpayer, and
                    ``(B) such deficiency may be assessed before the 
                expiration of such 3-year period notwithstanding the 
                provisions of any other law or rule of law which would 
                otherwise prevent such assessment.
    ``(e) Controlled Groups.--For purposes of this section, all persons 
treated as a single employer under subsection (b), (c), (m), or (o) of 
section 414 shall be treated as a single employer.
    ``(f) Cooperative Organizations.--
            ``(1) Apportionment of credit.--
                    ``(A) In general.--In the case of a cooperative 
                organization described in section 1381(a), any portion 
                of the credit determined under subsection (a) for the 
                taxable year may, at the election of the organization, 
                be apportioned among patrons eligible to share in 
                patronage dividends on the basis of the quantity or 
                value of business done with or for such patrons for the 
                taxable year.
                    ``(B) Form and effect of election.--An election 
                under subparagraph (A) for any taxable year shall be 
                made on a timely filed return for such year. Such 
                election, once made, shall be irrevocable for such 
                taxable year.
            ``(2) Treatment of organizations and patrons.--
                    ``(A) Organizations.--The amount of the credit not 
                apportioned to patrons pursuant to paragraph (1) shall 
                be included in the amount determined under subsection 
                (a) for the taxable year of the organization.
                    ``(B) Patrons.--The amount of the credit 
                apportioned to patrons pursuant to paragraph (1) shall 
                be included in the amount determined under subsection 
                (a) for the first taxable year of each patron ending on 
                or after the last day of the payment period (as defined 
                in section 1382(d)) for the taxable year of the 
                organization or, if earlier, for the taxable year of 
                each patron ending on or after the date on which the 
                patron receives notice from the cooperative of the 
                apportionment.
            ``(3) Special rules for decrease in credits for taxable 
        year.--If the amount of the credit of a cooperative 
        organization determined under subsection (a) for a taxable year 
        is less than the amount of such credit shown on the return of 
        the cooperative organization for such year, an amount equal to 
        the excess of--
                    ``(A) such reduction, over
                    ``(B) the amount not apportioned to such patrons 
                under paragraph (1) for the taxable year--
        shall be treated as an increase in tax imposed by this chapter 
        on the organization. Such increase shall not be treated as tax 
        imposed by this chapter for purposes of determining the amount 
        of any credit under this chapter or for purposes of section 
        55.''.
    (b) Credit Made Part of General Business Credit.--Section 38(b) 
(relating to current year business credit), as amended by this Act, is 
amended by striking ``plus'' at the end of paragraph (21), by striking 
the period at the end of paragraph (22) and inserting ``, plus'', and 
by adding at the end the following new paragraph:
            ``(23) in the case of a small business refiner, the 
        environmental tax credit determined under section 45L(a).''.
    (c) Denial of Double Benefit.--Section 280C (relating to certain 
expenses for which credits are allowable), as amended by this Act, is 
amended by adding at the end the following new subsection:
    ``(e) Environmental Tax Credit.--No deduction shall be allowed for 
that portion of the expenses otherwise allowable as a deduction for the 
taxable year which is equal to the amount of the credit determined for 
the taxable year under section 45L(a).''.
    (d) Clerical Amendment.--The table of sections for subpart D of 
part IV of subchapter A of chapter 1, as amended by this Act, is 
amended by adding at the end the following new item:

                              ``Sec. 45L. Environmental tax credit.''.
    (e) Effective Date.--The amendments made by this section shall 
apply to expenses paid or incurred after December 31, 2002, in taxable 
years ending after such date.

SEC. 1355. DETERMINATION OF SMALL REFINER EXCEPTION TO OIL DEPLETION 
              DEDUCTION.

    (a) In General.--Paragraph (4) of section 613A(d) (relating to 
limitations on application of subsection (c)) is amended to read as 
follows:
            ``(4) Certain refiners excluded.--If the taxpayer or 1 or 
        more related persons engages in the refining of crude oil, 
        subsection (c) shall not apply to the taxpayer for a taxable 
        year if the average daily refinery runs of the taxpayer and 
        such persons for the taxable year exceed 60,000 barrels. For 
        purposes of this paragraph, the average daily refinery runs for 
any taxable year shall be determined by dividing the aggregate refinery 
runs for the taxable year by the number of days in the taxable year.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years ending after September 30, 2004.

SEC. 1356. MARGINAL PRODUCTION INCOME LIMIT EXTENSION.

    Section 613A(c)(6)(H) (relating to temporary suspension of taxable 
income limit with respect to marginal production) is amended by 
striking ``2004'' and inserting ``2007''.

SEC. 1357. AMORTIZATION OF DELAY RENTAL PAYMENTS.

    (a) In General.--Section 167 (relating to depreciation) is amended 
by redesignating subsection (h) as subsection (i) and by inserting 
after subsection (g) the following new subsection:
    ``(h) Amortization of Delay Rental Payments for Domestic Oil and 
Gas Wells.--
            ``(1) In general.--Any delay rental payment paid or 
        incurred in connection with the development of oil or gas wells 
        within the United States (as defined in section 638) shall be 
        allowed as a deduction ratably over the 24-month period 
        beginning on the date that such payment was paid or incurred.
            ``(2) Half-year convention.--For purposes of paragraph (1), 
        any payment paid or incurred during the taxable year shall be 
        treated as paid or incurred on the mid-point of such taxable 
        year.
            ``(3) Exclusive method.--Except as provided in this 
        subsection, no depreciation or amortization deduction shall be 
        allowed with respect to such payments.
            ``(4) Treatment upon abandonment.--If any property to which 
        a delay rental payment relates is retired or abandoned during 
        the 24-month period described in paragraph (1), no deduction 
        shall be allowed on account of such retirement or abandonment 
        and the amortization deduction under this subsection shall 
        continue with respect to such payment.
            ``(5) Delay rental payments.--For purposes of this 
        subsection, the term `delay rental payment' means an amount 
        paid for the privilege of deferring development of an oil or 
        gas well under an oil or gas lease.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to amounts paid or incurred in taxable years beginning after 
September 30, 2004.

SEC. 1358. AMORTIZATION OF GEOLOGICAL AND GEOPHYSICAL EXPENDITURES.

    (a) In General.--Section 167 (relating to depreciation), as amended 
by this Act, is amended by redesignating subsection (i) as subsection 
(j) and by inserting after subsection (h) the following new subsection:
    ``(i) Amortization of Geological and Geophysical Expenditures.--
            ``(1) In general.--Any geological and geophysical expenses 
        paid or incurred in connection with the exploration for, or 
        development of, oil or gas within the United States (as defined 
        in section 638) shall be allowed as a deduction ratably over 
        the 24-month period beginning on the date that such expense was 
        paid or incurred.
            ``(2) Special rules.--For purposes of this subsection, 
        rules similar to the rules of paragraphs (2), (3), and (4) of 
        subsection (h) shall apply.''.
    (b) Conforming Amendment.--Section 263A(c)(3) is amended by 
inserting ``167(h), 167(i),'' after ``under section''.
    (c) Effective Date.--The amendments made by this section shall 
apply to costs paid or incurred in taxable years beginning after 
September 30, 2004.

SEC. 1359. EXTENSION AND MODIFICATION OF CREDIT FOR PRODUCING FUEL FROM 
              A NONCONVENTIONAL SOURCE.

    (a) In General.--Section 29 (relating to credit for producing fuel 
from a nonconventional source) is amended by adding at the end the 
following new subsection:
    ``(h) Extension for Other Facilities.--
            ``(1) Oil and gas.--In the case of a well or facility for 
        producing qualified fuels described in subparagraph (A) or (B) 
        of subsection (c)(1) which was drilled or placed in service 
        after September 30, 2004, and before January 1, 2007, 
        notwithstanding subsection (f), this section shall apply with 
        respect to such fuels produced at such well or facility before 
        the close of the 3-year period beginning on the date that such 
        well is drilled or such facility is placed in service.
            ``(2) Facilities producing fuels from agricultural and 
        animal waste.--
                    ``(A) In general.--In the case of facility for 
                producing liquid, gaseous, or solid fuels from 
                qualified agricultural and animal wastes, including 
                such fuels when used as feedstocks, which was placed in 
                service after September 30, 2004, and before January 1, 
                2007, this section shall apply with respect to fuel 
                produced at such facility before the close of the 3-
                year period beginning on the date such facility is 
                placed in service.
                    ``(B) Qualified agricultural and animal waste.--For 
                purposes of this paragraph, the term `qualified 
                agricultural and animal waste' means agriculture and 
                animal waste, including by-products, packaging, and any 
                materials associated with the processing, feeding, 
                selling, transporting, or disposal of agricultural or 
                animal products or wastes.
            ``(3) Wells producing viscous oil.--
                    ``(A) In general.--In the case of a well for 
                producing viscous oil which was placed in service after 
                September 30, 2004, and before January 1, 2007, this 
                section shall apply with respect to fuel produced at 
                such well before the close of the 3-year period 
                beginning on the date such well is placed in service.
                    ``(B) Viscous oil.--The term `viscous oil' means 
                heavy oil, as defined in section 613A(c)(6), except 
                that--
                            ``(i) `22 degrees' shall be substituted for 
                        `20 degrees' in applying subparagraph (F) 
                        thereof, and
                            ``(ii) in all cases, the oil gravity shall 
                        be measured from the initial well-head samples, 
                        drill cuttings, or down hole samples.
                    ``(C) Waiver of unrelated person requirement.--In 
                the case of viscous oil, the requirement under 
                subsection (a)(2)(A) of a sale to an unrelated person 
                shall not apply to any sale to the extent that the 
                viscous oil is not consumed in the immediate vicinity 
                of the wellhead.
            ``(4) Facilities producing refined coal.--
                    ``(A) In general.--In the case of a facility 
                described in subparagraph (C) for producing refined 
                coal which was placed in service after September 30, 
                2004, and before January 1, 2007, this section shall 
                apply with respect to fuel produced at such facility 
                before the close of the 5-year period beginning on the 
                date such facility is placed in service.
                    ``(B) Refined coal.--For purposes of this 
                paragraph, the term `refined coal' means a fuel which 
                is a liquid, gaseous, or solid synthetic fuel produced 
                from coal (including lignite) or high carbon fly ash, 
                including such fuel used as a feedstock.
                    ``(C) Covered facilities.--
                            ``(i) In general.--A facility is described 
                        in this subparagraph if such facility produces 
                        refined coal using a technology which results 
                        in--
                                    ``(I) a qualified emission 
                                reduction, and
                                    ``(II) a qualified enhanced value.
                            ``(ii) Qualified emission reduction.--For 
                        purposes of this subparagraph, the term 
                        `qualified emission reduction' means a 
                        reduction of at least 20 percent of the 
                        emissions of nitrogen oxide and either sulfur 
                        dioxide or mercury released when burning the 
                        refined coal (excluding any dilution caused by 
                        materials combined or added during the 
                        production process), as compared to the 
                        emissions released when burning the feedstock 
                        coal or comparable coal predominantly available 
                        in the marketplace as of January 1, 2003.
                            ``(iii) Qualified enhanced value.--For 
                        purposes of this subparagraph, the term 
                        `qualified enhanced value' means an increase of 
                        at least 50 percent in the market value of the 
                        refined coal (excluding any increase caused by 
                        materials combined or added during the 
                        production process), as compared to the value 
                        of the feedstock coal.
                            ``(iv) Qualifying advanced clean coal 
                        technology units excluded.--A facility 
                        described in this subparagraph shall not 
                        include a qualifying advanced clean coal 
                        technology unit (as defined in section 48A(b)).
            ``(5) Coalmine gas.--
                    ``(A) In general.--This section shall apply to 
                coalmine gas--
                            ``(i) captured or extracted by the taxpayer 
                        during the period beginning after September 30, 
                        2004, and ending before January 1, 2007, and
                            ``(ii) utilized as a fuel source or sold by 
                        or on behalf of the taxpayer to an unrelated 
                        person during such period.
                    ``(B) Coalmine gas.--For purposes of this 
                paragraph, the term `coalmine gas' means any methane 
                gas which is--
                            ``(i) liberated during or as a result of 
                        coal mining operations, or
                            ``(ii) extracted up to 10 years in advance 
                        of coal mining operations as part of a specific 
                        plan to mine a coal deposit.
                    ``(C) Special rule for advanced extraction.--In the 
                case of coalmine gas which is captured in advance of 
                coal mining operations, the credit under subsection (a) 
                shall be allowed only after the date the coal 
                extraction occurs in the immediate area where the 
                coalmine gas was removed.
                    ``(D) Noncompliance with pollution laws.--This 
                paragraph shall not apply to the capture or extraction 
                of coalmine gas from coal mining operations with 
                respect to any period in which such coal mining 
                operations are not in compliance with applicable State 
                and Federal pollution prevention, control, and permit 
                requirements.
            ``(6) Special rules.--In determining the amount of credit 
        allowable under this section solely by reason of this 
        subsection--
                    ``(A) Fuels treated as qualified fuels.--Any fuel 
                described in paragraph (2), (3), (4), or (5) shall be 
                treated as a qualified fuel for purposes of this 
                section.
                    ``(B) Daily limit.--The amount of qualified fuels 
                sold during any taxable year which may be taken into 
                account by reason of this subsection with respect to 
                any project shall not exceed an average barrel-of-oil 
                equivalent of 200,000 cubic feet of natural gas per 
                day. Days before the date the project is placed in 
                service shall not be taken into account in determining 
                such average.
                    ``(C) Credit amount.--The dollar amount applicable 
                under subsection (a)(1) shall be $3 (and the inflation 
                adjustment under subsection (b)(2) shall not apply to 
                such amount).''.
    (b) Clarification of Placed in Service Date for Certain Landfill 
Gas Facilities.--Section 29(d) (relating to other definitions and 
special rules), as amended by this Act, is amended by adding at the end 
the following new paragraph:
            ``(10) Clarification of placed in service date for certain 
        landfill gas facilities.--
                    ``(A) In general.--In the case of a landfill placed 
                in service on or before the date of the enactment of 
                this paragraph--
                            ``(i) a facility for producing qualified 
                        fuel from such landfill shall include all 
                        wells, pipes, and related components used to 
                        collect landfill gas, and
                            ``(ii) production of landfill gas from such 
                        landfill attributable to wells, pipes, and 
                        related components placed in service after such 
                        date of enactment shall be treated as produced 
                        from a facility placed in service on the date 
                        such wells, pipes, and related components were 
                        placed in service.
                    ``(B) Landfill gas.--The term `landfill gas' means 
                gas described in subsection (c)(1)(B)(ii) and derived 
                from the biodegradation of municipal solid waste.''.
    (c) Extension for certain fuel produced at existing facilities.--
Section 29(f)(2) (relating to application of section) is amended by 
inserting ``(January 1, 2006, in the case of any coke, coke gas, or 
natural gas and byproducts produced by coal gasification from lignite 
in a facility described in paragraph (1)(B))'' after ``January 1, 
2003''.
    (d) Study of Coalbed Methane.--
            (1) In general.--The Secretary of the Treasury shall 
        conduct a study regarding the effect of section 29 of the 
        Internal Revenue Code of 1986 on the production of coalbed 
        methane.
            (2) Contents of study.--The study under paragraph (1) shall 
        estimate the total amount of credits under section 29 of the 
        Internal Revenue Code of 1986 claimed annually and in the 
        aggregate which are related to the production of coalbed 
        methane since the date of the enactment of such section 29. 
        Such study shall report the annual value of such credits 
        allowable for coalbed methane compared to the average annual 
        wellhead price of natural gas (per thousand cubic feet of 
        natural gas). Such study shall also estimate the incremental 
        increase in production of coalbed methane which has resulted 
        from the enactment of such section 29, and the cost to the 
        Federal Government, in terms of the net tax benefits claimed, 
        per thousand cubic feet of incremental coalbed methane produced 
        annually and in the aggregate since such enactment.
    (e) Effective Dates.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendments made by this section shall apply to fuel sold after 
        September 30, 2004, in taxable years ending after such date.
            (2) Existing facilities.--The amendments made by subsection 
        (c) shall apply to fuel sold after December 31, 2002, in 
        taxable years ending after such date.

SEC. 1360. NATURAL GAS DISTRIBUTION LINES TREATED AS 15-YEAR PROPERTY.

    (a) In General.--Section 168(e)(3)(E) (defining 15-year property) 
is amended by striking ``and'' at the end of clause (ii), by striking 
the period at the end of clause (iii) and by inserting ``, and'', and 
by adding at the end the following new clause:
                            ``(iv) any natural gas distribution 
                        line.''.
    (b) Alternative System.--The table contained in section 
168(g)(3)(B) (relating to special rule for certain property assigned to 
classes), as amended by this Act, is amended by adding after the item 
relating to subparagraph (E)(iii) the following new item:

``(E)(iv)......................................................   35''.
    (c) Effective Date.--The amendments made by this section shall 
apply to property placed in service after September 30, 2004, in 
taxable years ending after such date.

SEC. 1361. CREDIT FOR ALASKA NATURAL GAS.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
(relating to business related credits), as amended by this Act, is 
amended by adding at the end the following new section:

``SEC. 45M. ALASKA NATURAL GAS.

    ``(a) In General.--For purposes of section 38, the Alaska natural 
gas credit for any taxable year is an amount equal to the product of--
            ``(1) the credit amount, and
            ``(2) Alaska natural gas the production of which is 
        attributable to the taxpayer.
    ``(b) Credit Amount.--For purposes of this section--
            ``(1) In general.--The credit amount is $0.52 per 1,000,000 
        Btu of Alaska natural gas.
            ``(2) Reduction as gas prices increase.--
                    ``(A) In general.--The dollar amount under 
                paragraph (1) shall be reduced (but not below zero) by 
                an amount which bears the same ratio to such amount 
                (determined without regard to this paragraph) as--
                            ``(i) the excess (if any) of the applicable 
                        reference price over $0.83, bears to
                            ``(ii) $0.52.
                    ``(B) Applicable reference price.--For purposes of 
                this paragraph--
                            ``(i) In general.--The applicable reference 
                        price for any calendar month in a taxable year 
                        is the reference price for the calendar month 
                        in which production occurs.
                            ``(ii) Reference price.--The term 
                        `reference price' means, with respect to any 
                        calendar month, a published market price for 
                        natural gas in United States dollars per 
                        1,000,000 Btu (reduced by any gas 
                        transportation costs and gas processing costs 
                        as determined by the appropriate national 
                        regulatory body for natural gas transportation) 
                        as determined under regulations by the 
                        Secretary.
                    ``(C) Inflation adjustment.--
                            ``(i) In general.--In the case of any 
                        taxable year beginning in a calendar year after 
                        2004, each of the dollar amounts contained in 
                        paragraph (1) and subparagraph (A) of this 
                        paragraph shall be increased to an amount equal 
                        to such dollar amount multiplied by the 
                        inflation adjustment factor for such calendar 
                        year.
                            ``(ii) Inflation adjustment factor.--For 
                        purposes of clause (i)--
                                    ``(I) In general.--The term 
                                `inflation adjustment factor' means, 
                                with respect to a calendar year, a 
                                fraction the numerator of which is the 
                                GDP implicit price deflator for the 
                                preceding calendar year and the 
                                denominator of which is the GDP 
                                implicit price deflator for the 
                                calendar year 2003.
                                    ``(II) GDP implicit price 
                                deflator.--The term `GDP implicit price 
                                deflator' means, for any calendar year, 
                                the most recent revision of the 
                                implicit price deflator for the gross 
                                domestic product as of June 30 of such 
                                calendar year as computed by the 
                                Department of Commerce before October 1 
                                of such calendar year.
    ``(c) Alaska Natural Gas.--For purposes of this section--
            ``(1) In general.--The term `Alaska natural gas' means 
        natural gas entering the Alaska natural gas pipeline (as 
        defined in section 168(i)(18) (determined without regard to 
        subparagraph (B) thereof)) which is produced from a well--
                    ``(A) located in the area of the State of Alaska 
                lying north of 64 degrees North latitude, determined by 
                excluding the area of the Alaska National Wildlife 
                Refuge (including the continental shelf thereof within 
                the meaning of section 638(1)), and
                    ``(B) pursuant to the applicable State and Federal 
                pollution prevention, control, and permit requirements 
                from such area (including the continental shelf thereof 
                within the meaning of section 638(1)).
            ``(2) Natural gas.--The term `natural gas' has the meaning 
        given such term by section 613A(e)(2).
    ``(d) Special Rules.--For purposes of this section--
            ``(1) Production attributable to the taxpayer.--
                    ``(A) In general.--In the case of a well in which 
                there is more than 1 person or entity--
                            ``(i) entitled to production of Alaska 
                        natural gas, or
                            ``(ii) at the election of such person or 
                        entity, entitled to the value of production as 
                        either an operating interest owner or a royalty 
                        interest owner--
                the portion of such production attributable to such 
                person or entity shall be determined on the basis of 
                the ratio which the person's or entity's interest in 
                the production or the value of production bears to the 
                aggregate of the interests of all such persons or 
                entities. Production otherwise attributable to a United 
                States tax-exempt person or entity by reason of a 
                royalty interest shall be attributable to such person 
                or entity with respect to whom royalty-in-value 
                production remains or to whom royalty-in-kind 
                production is sold.
                    ``(B) Partnership properties.--In the case of a 
                partnership, for purposes of applying subparagraph (A), 
                production shall be attributable to its partners based 
                on each partner's distributive share of Alaska natural 
                gas which is produced from partnership properties and 
                attributable to the partnership or its partners under 
                subparagraph (A).
            ``(2) Pass-Thru in the Case of Estates and Trusts.--Under 
        regulations prescribed by the Secretary, rules similar to the 
        rules of subsection (d) of section 52 shall apply.
    ``(e) Application of Section.--This section shall apply to Alaska 
natural gas during the period--
            ``(1) beginning with the later of--
                    ``(A) January 1, 2010, or
                    ``(B) the initial date for the interstate 
                transportation of such Alaska natural gas, and
            ``(2) ending with the date which is 25 years after the date 
        described in paragraph (1).''.
    (b) Credit Treated as Business Credit.--Section 38(b) (relating to 
current year business credit), as amended by this Act, is amended by 
striking ``plus'' at the end of paragraph (22), by striking the period 
at the end of paragraph (23) and inserting ``, plus'', and by adding at 
the end the following new paragraph:
            ``(24) The Alaska natural gas credit determined under 
        section 45M(a).''.
    (c) Allowing Credit Against Entire Regular Tax and Minimum Tax.--
            (1) In general.--Section 38(c) (relating to limitation 
        based on amount of tax), as amended by this Act, is amended by 
        redesignating paragraph (5) as paragraph (6) and by inserting 
        after paragraph (4) the following new paragraph:
            ``(5) Special rules for alaska natural gas credit.--
                    ``(A) In general.--In the case of the Alaska 
                natural gas credit--
                            ``(i) this section and section 39 shall be 
                        applied separately with respect to the credit, 
                        and
                            ``(ii) in applying paragraph (1) to the 
                        credit--
                                    ``(I) the amounts in subparagraphs 
                                (A) and (B) thereof shall be treated as 
                                being zero, and
                                    ``(II) the limitation under 
                                paragraph (1) (as modified by subclause 
                                (I)) shall be reduced by the credit 
                                allowed under subsection (a) for the 
                                taxable year (other than the Alaska 
                                natural gas credit).
                    ``(B) Alaska Natural Gas Credit.--For purposes of 
                this subsection, the term `Alaska natural gas credit' 
                means the credit allowable under subsection (a) by 
                reason of section 45M(a).''.
            (2) Conforming amendments.--Subclause (II) of section 
        38(c)(2)(A)(ii), as amended by this Act, subclause (II) of 
        section 38(c)(3)(A)(ii), as amended by this Act, and subclause 
        (II) of section 38(c)(4)(A)(ii), as added by this Act, are each 
        amended by inserting ``or the Alaska natural gas credit'' after 
        ``producer credit''.
    (d) Clerical Amendment.--The table of sections for subpart D of 
part IV of subchapter A of chapter 1, as amended by this Act, is 
amended by adding at the end the following new item:

``Sec. 45M. Alaska natural gas.''.

SEC. 1362. CERTAIN ALASKA NATURAL GAS PIPELINE PROPERTY TREATED AS 7-
              YEAR PROPERTY.

    (a) In General.--Section 168(e)(3)(C) (defining 7-year property), 
as amended by this Act, is amended by striking ``and'' at the end of 
clause (ii), by redesignating clause (iii) as clause (iv), and by 
inserting after clause (ii) the following new clause:
                            ``(iii) any Alaska natural gas pipeline, 
                        and''.
    (b) Alaska Natural Gas Pipeline.--Section 168(i) (relating to 
definitions and special rules), as amended by this Act, is amended by 
adding at the end the following new paragraph:
            ``(18) Alaska natural gas pipeline.--The term `Alaska 
        natural gas pipeline' means the natural gas pipeline system 
        located in the State of Alaska which--
                    ``(A) has a capacity of more than 500,000,000,000 
                Btu of natural gas per day, and
                    ``(B) is--
                            ``(i) placed in service after December 31, 
                        2012, or
                            ``(ii) treated as placed in service on 
                        January 1, 2013, if the taxpayer who places 
                        such system in service before January 1, 2013, 
                        elects such treatment.
        Such term includes the pipe, trunk lines, related equipment, 
        and appurtenances used to carry natural gas, but does not 
        include any gas processing plant.''.
    (c) Alternative System.--The table contained in section 
168(g)(3)(B) (relating to special rule for certain property assigned to 
classes), as amended by this Act, is amended by inserting after the 
item relating to subparagraph (C)(ii) the following new item:

``(C)(iii).....................................................   14''.
    ``(d) Effective Date.--The amendments made by this section shall 
apply to property placed in service after September 30, 2004.

SEC. 1363. ARBITRAGE RULES NOT TO APPLY TO PREPAYMENTS FOR NATURAL GAS.

    (a) In General.--Section 148(b) (relating to higher yielding 
investments) is amended by adding at the end the following new 
paragraph:
            ``(4) Safe harbor for prepaid natural gas.--
                    ``(A) In general.--The term `investment-type 
                property' does not include a prepayment under a 
                qualified natural gas supply contract.
                    ``(B) Qualified natural gas supply contract.--For 
                purposes of this paragraph, the term `qualified natural 
                gas supply contract' means any contract to acquire 
                natural gas for resale by or for a utility owned by a 
                governmental unit if the amount of gas permitted to be 
                acquired under the contract for the utility during any 
                year does not exceed the sum of--
                            ``(i) the annual average amount during the 
                        testing period of natural gas purchased (other 
                        than for resale) by customers of such utility 
                        who are located within the service area of such 
                        utility, and
                            ``(ii) the amount of natural gas to be used 
                        to transport the prepaid natural gas to the 
                        utility during such year.
                    ``(C) Natural gas used to generate electricity.--
                Natural gas used to generate electricity shall be taken 
                into account in determining the average under 
                subparagraph (B)(i)--
                            ``(i) only if the electricity is generated 
                        by a utility owned by a governmental unit, and
                            ``(ii) only to the extent that the 
                        electricity is sold (other than for resale) to 
                        customers of such utility who are located 
                        within the service area of such utility.
                    ``(D) Adjustments for changes in customer base.--
                            ``(i) New business customers.--If--
                                    ``(I) after the close of the 
                                testing period and before the date of 
                                issuance of the issue, the utility 
                                owned by a governmental unit enters 
                                into a contract to supply natural gas 
                                (other than for resale) for use by a 
                                business at a property within the 
                                service area of such utility, and
                                    ``(II) the utility did not supply 
                                natural gas to such property during the 
                                testing period or the ratable amount of 
                                natural gas to be supplied under the 
                                contract is significantly greater than 
                                the ratable amount of gas supplied to 
                                such property during the testing 
                                period--
                        then a contract shall not fail to be treated as 
                        a qualified natural gas supply contract by 
                        reason of supplying the additional natural gas 
                        under the contract referred to in subclause 
                        (I).
                            ``(ii) Overall limitation.--The average 
                        under subparagraph (B)(i) shall not exceed the 
                        annual amount of natural gas reasonably 
                        expected to be purchased (other than for 
                        resale) by persons who are located within the 
                        service area of such utility and who, as of the 
                        date of issuance of the issue, are customers of 
                        such utility.
                    ``(E) Ruling requests.--The Secretary may increase 
                the average under subparagraph (B)(i) for any period if 
                the utility owned by the governmental unit establishes 
                to the satisfaction of the Secretary that, based on 
                objective evidence of growth in natural gas consumption 
                or population, such average would otherwise be 
                insufficient for such period.
                    ``(F) Adjustment for natural gas otherwise on 
                hand.--
                            ``(i) In general.--The amount otherwise 
                        permitted to be acquired under the contract for 
                        any period shall be reduced by--
                                    ``(I) the applicable share of 
                                natural gas held by the utility on the 
                                date of issuance of the issue, and
                                    ``(II) the natural gas (not taken 
                                into account under subclause (I)) which 
                                the utility has a right to acquire 
                                during such period (determined as of 
                                the date of issuance of the issue).
                            ``(ii) Applicable share.--For purposes of 
                        clause (i), the term `applicable share' means, 
                        with respect to any period, the natural gas 
                        allocable to such period if the gas were 
                        allocated ratably over the period to which the 
                        prepayment relates.
                    ``(G) Intentional acts.--Subparagraph (A) shall 
                cease to apply to any issue if the utility owned by the 
                governmental unit engages in any intentional act to 
                render the volume of natural gas acquired by such 
                prepayment to be in excess of the sum of--
                            ``(i) the amount of natural gas needed 
                        (other than for resale) by customers of such 
                        utility who are located within the service area 
                        of such utility, and
                            ``(ii) the amount of natural gas used to 
                        transport such natural gas to the utility.
                    ``(H) Testing period.--For purposes of this 
                paragraph, the term `testing period' means, with 
                respect to an issue, the most recent 5 calendar years 
                ending before the date of issuance of the issue.
                    ``(I) Service area.--For purposes of this 
                paragraph, the service area of a utility owned by a 
                governmental unit shall be comprised of--
                            ``(i) any area throughout which such 
                        utility provided at all times during the 
                        testing period--
                                    ``(I) in the case of a natural gas 
                                utility, natural gas transmission or 
                                distribution services, and
                                    ``(II) in the case of an electric 
                                utility, electricity distribution 
                                services,
                            ``(ii) any area within a county contiguous 
                        to the area described in clause (i) in which 
                        retail customers of such utility are located if 
                        such area is not also served by another utility 
                        providing natural gas or electricity services, 
                        as the case may be, and
                            ``(iii) any area recognized as the service 
                        area of such utility under State or Federal 
                        law.''.
    (b) Private Loan Financing Test Not To Apply to Prepayments for 
Natural Gas.--Section 141(c)(2) (providing exceptions to the private 
loan financing test) is amended by striking ``or'' at the end of 
subparagraph (A), by striking the period at the end of subparagraph (B) 
and inserting ``, or'', and by adding at the end the following new 
subparagraph:
                    ``(C) is a qualified natural gas supply contract 
                (as defined in section 148(b)(4)).''.
    (c) Effective Date.--The amendment made by this section shall apply 
to obligations issued after September 30, 2004.

SEC. 1364. EXTENSION OF ENHANCED OIL RECOVERY CREDIT TO CERTAIN ALASKA 
              FACILITIES.

    (a) In General.--Section 43(c)(1) (defining qualified enhanced oil 
recovery costs) is amended by adding at the end the following new 
subparagraph:
                    ``(D) Any amount which is paid or incurred during 
                the taxable year to construct a gas treatment plant 
                which--
                            ``(i) is located in the area of the United 
                        States (within the meaning of section 638(1)) 
                        lying north of 64 degrees North latitude,
                            ``(ii) prepares Alaska natural gas (as 
                        defined in section 45M(c)(1)) for 
                        transportation through a pipeline with a 
                        capacity of at least 2,000,000,000,000 Btu of 
                        natural gas per day, and
                            ``(iii) produces carbon dioxide which is 
                        injected into hydrocarbon-bearing geological 
                        formations.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to costs paid or incurred in taxable years beginning after September 
30, 2004.

         Subtitle F--Electric Utility Restructuring Provisions

SEC. 1371. MODIFICATIONS TO SPECIAL RULES FOR NUCLEAR DECOMMISSIONING 
              COSTS.

    (a) Repeal of Limitation on Deposits Into Fund Based on Cost of 
Service; Contributions After Funding Period.--Subsection (b) of section 
468A (relating to special rules for nuclear decommissioning costs) is 
amended to read as follows:
    ``(b) Limitation on Amounts Paid Into Fund.--The amount which a 
taxpayer may pay into the Fund for any taxable year shall not exceed 
the ruling amount applicable to such taxable year.''.
    (b) Clarification of Treatment of Fund Transfers.--Section 468A(e) 
(relating to Nuclear Decommissioning Reserve Fund) is amended by adding 
at the end the following new paragraph:
            ``(8) Treatment of fund transfers.--If, in connection with 
        the transfer of the taxpayer's interest in a nuclear power 
        plant, the taxpayer transfers the Fund with respect to such 
        power plant to the transferee of such interest and the 
        transferee elects to continue the application of this section 
        to such Fund--
                    ``(A) the transfer of such Fund shall not cause 
                such Fund to be disqualified from the application of 
                this section, and
                    ``(B) no amount shall be treated as distributed 
                from such Fund, or be includable in gross income, by 
                reason of such transfer.''.
    (c) Treatment of Certain Decommissioning Costs.--
            (1) In general.--Section 468A is amended by redesignating 
        subsections (f) and (g) as subsections (g) and (h), 
        respectively, and by inserting after subsection (e) the 
        following new subsection:
    ``(f) Transfers Into Qualified Funds.--
            ``(1) In general.--Notwithstanding subsection (b), any 
        taxpayer maintaining a Fund to which this section applies with 
        respect to a nuclear power plant may transfer into such Fund 
        not more than an amount equal to the present value of the 
        excess of the total nuclear decommissioning costs with respect 
        to such nuclear power plant over the portion of such costs 
        taken into account in determining the ruling amount in effect 
        immediately before the transfer.
            ``(2) Deduction for amounts transferred.--
                    ``(A) In general.--Except as provided in 
                subparagraph (C), the deduction allowed by subsection 
                (a) for any transfer permitted by this subsection shall 
                be allowed ratably over the remaining estimated useful 
                life (within the meaning of subsection (d)(2)(A)) of 
                the nuclear power plant beginning with the taxable year 
                during which the transfer is made.
                    ``(B) Denial of deduction for previously deducted 
                amounts.--No deduction shall be allowed for any 
                transfer under this subsection of an amount for which a 
                deduction was previously allowed or a corresponding 
                amount was not included in gross income. For purposes 
                of the preceding sentence, a ratable portion of each 
                transfer shall be treated as being from previously 
                deducted or excluded amounts to the extent thereof.
                    ``(C) Transfers of qualified funds.--If--
                            ``(i) any transfer permitted by this 
                        subsection is made to any Fund to which this 
                        section applies, and
                            ``(ii) such Fund is transferred 
                        thereafter--
                any deduction under this subsection for taxable years 
                ending after the date that such Fund is transferred 
                shall be allowed to the transferee and not the 
                transferor. The preceding sentence shall not apply if 
                the transferor is an entity exempt from tax under this 
                chapter.
                    ``(D) Special rules.--
                            ``(i) Gain or loss not recognized.--No gain 
                        or loss shall be recognized on any transfer 
                        permitted by this subsection.
                            ``(ii) Transfers of appreciated property.--
                        If appreciated property is transferred in a 
                        transfer permitted by this subsection, the 
                        amount of the deduction shall not exceed the 
                        adjusted basis of such property.
            ``(3) New ruling amount required.--Paragraph (1) shall not 
        apply to any transfer unless the taxpayer requests from the 
Secretary a new schedule of ruling amounts in connection with such 
transfer.
            ``(4) No basis in qualified funds.--Notwithstanding any 
        other provision of law, the taxpayer's basis in any Fund to 
        which this section applies shall not be increased by reason of 
        any transfer permitted by this subsection.''.
            (2) New ruling amount to take into account total costs.--
        Subparagraph (A) of section 468A(d)(2) (defining ruling amount) 
        is amended to read as follows:
                    ``(A) fund the total nuclear decommissioning costs 
                with respect to such power plant over the estimated 
                useful life of such power plant, and''.
    (d) Technical Amendment.--Section 468A(e)(2) (relating to taxation 
of Fund) is amended--
            (1) by striking ``rate set forth in subparagraph (B)'' in 
        subparagraph (A) and inserting ``rate of 20 percent'',
            (2) by striking subparagraph (B), and
            (3) by redesignating subparagraphs (C) and (D) as 
        subparagraphs (B) and (C), respectively.
    (e) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after September 30, 2004.

SEC. 1372. TREATMENT OF CERTAIN INCOME OF COOPERATIVES.

    (a) Income From Open Access and Nuclear Decommissioning 
Transactions.--
            (1) In general.--Section 501(c)(12)(C) (relating to list of 
        exempt organizations) is amended by striking ``or'' at the end 
        of clause (i), by striking clause (ii), and by adding at the 
        end the following new clauses:
                            ``(ii) from any open access transaction 
                        (other than income received or accrued directly 
                        or indirectly from a member),
                            ``(iii) from any nuclear decommissioning 
                        transaction,
                            ``(iv) from any asset exchange or 
                        conversion transaction, or
                            ``(v) from the prepayment of any loan, 
                        debt, or obligation made, insured, or 
                        guaranteed under the Rural Electrification Act 
                        of 1936.''.
            (2) Definitions and special rules.--Section 501(c)(12) is 
        amended by adding at the end the following new subparagraphs:
                    ``(E) For purposes of subparagraph (C)(ii)--
                            ``(i) The term `open access transaction' 
                        means any transaction meeting the open access 
                        requirements of any of the following subclauses 
                        with respect to a mutual or cooperative 
                        electric company:
                                    ``(I) The provision or sale of 
                                electric transmission service or 
                                ancillary services meets the open 
                                access requirements of this subclause 
                                only if such services are provided on a 
                                nondiscriminatory open access basis 
                                pursuant to an open access transmission 
                                tariff filed with and approved by FERC, 
                                including an acceptable reciprocity 
                                tariff, or under a regional 
                                transmission organization agreement 
                                approved by FERC.
                                    ``(II) The provision or sale of 
                                electric energy distribution services 
                                or ancillary services meets the open 
                                access requirements of this subclause 
                                only if such services are provided on a 
                                nondiscriminatory open access basis to 
                                end-users served by distribution 
                                facilities owned by the mutual or 
                                cooperative electric company (or its 
                                members).
                                    ``(III) The delivery or sale of 
                                electric energy generated by a 
                                generation facility meets the open 
                                access requirements of this subclause 
                                only if such facility is directly 
                                connected to distribution facilities 
                                owned by the mutual or cooperative 
                                electric company (or its members) which 
                                owns the generation facility, and such 
                                distribution facilities meet the open 
                                access requirements of subclause (II).
                            ``(ii) Clause (i)(I) shall apply in the 
                        case of a voluntarily filed tariff only if the 
                        mutual or cooperative electric company files a 
                        report with FERC within 90 days after the date 
                        of the enactment of this subparagraph relating 
                        to whether or not such company will join a 
                        regional transmission organization.
                            ``(iii) A mutual or cooperative electric 
                        company shall be treated as meeting the open 
                        access requirements of clause (i)(I) if a 
                        regional transmission organization controls the 
                        transmission facilities.
                            ``(iv) References to FERC in this 
                        subparagraph shall be treated as including 
                        references to the Public Utility Commission of 
                        Texas with respect to any ERCOT utility (as 
                        defined in section 212(k)(2)(B) of the Federal 
                        Power Act (16 U.S.C. 824k(k)(2)(B))) or 
                        references to the Rural Utilities Service with 
                        respect to any other facility not subject to 
                        FERC jurisdiction.
                            ``(v) For purposes of this subparagraph--
                                    ``(I) The term `transmission 
                                facility' means an electric output 
                                facility (other than a generation 
                                facility) which operates at an electric 
                                voltage of 69 kilovolts or greater. To 
                                the extent provided in regulations, 
                                such term includes any output facility 
                                which FERC determines is a transmission 
                                facility under standards applied by 
                                FERC under the Federal Power Act (as in 
                                effect on the date of the enactment of 
                                the Energy Tax Incentives Act).
                                    ``(II) The term `regional 
                                transmission organization' includes an 
                                independent system operator.
                                    ``(III) The term `FERC' means the 
                                Federal Energy Regulatory Commission.
                    ``(F) The term `nuclear decommissioning 
                transaction' means--
                            ``(i) any transfer into a trust, fund, or 
                        instrument established to pay any nuclear 
                        decommissioning costs if the transfer is in 
                        connection with the transfer of the mutual or 
                        cooperative electric company's interest in a 
                        nuclear power plant or nuclear power plant 
                        unit,
                            ``(ii) any distribution from any trust, 
                        fund, or instrument established to pay any 
                        nuclear decommissioning costs, or
                            ``(iii) any earnings from any trust, fund, 
                        or instrument established to pay any nuclear 
                        decommissioning costs.
                    ``(G) The term `asset exchange or conversion 
                transaction' means any voluntary exchange or 
                involuntary conversion of any property related to 
                generating, transmitting, distributing, or selling 
                electric energy by a mutual or cooperative electric 
                company, the gain from which qualifies for deferred 
                recognition under section 1031 or 1033, but only if the 
                replacement property acquired by such company pursuant 
                to such section constitutes property which is used, or 
                to be used, for--
                            ``(i) generating, transmitting, 
                        distributing, or selling electric energy, or
                            ``(ii) producing, transmitting, 
                        distributing, or selling natural gas.''.
    (b) Treatment of Income From Load Loss Transactions.--Section 
501(c)(12), as amended by subsection (a)(2), is amended by adding after 
subparagraph (G) the following new subparagraph:
                    ``(H)(i) In the case of a mutual or cooperative 
                electric company described in this paragraph or an 
                organization described in section 1381(a)(2)(C), income 
                received or accrued from a load loss transaction shall 
                be treated as an amount collected from members for the 
                sole purpose of meeting losses and expenses.
                    ``(ii) For purposes of clause (i), the term `load 
                loss transaction' means any wholesale or retail sale of 
                electric energy (other than to members) to the extent 
                that the aggregate sales during the recovery period do 
                not exceed the load loss mitigation sales limit for 
                such period.
                    ``(iii) For purposes of clause (ii), the load loss 
                mitigation sales limit for the recovery period is the 
                sum of the annual load losses for each year of such 
                period.
                    ``(iv) For purposes of clause (iii), a mutual or 
                cooperative electric company's annual load loss for 
                each year of the recovery period is the amount (if any) 
                by which--
                            ``(I) the megawatt hours of electric energy 
                        sold during such year to members of such 
                        electric company are less than
                            ``(II) the megawatt hours of electric 
                        energy sold during the base year to such 
                        members.
                    ``(v) For purposes of clause (iv)(II), the term 
                `base year' means--
                            ``(I) the calendar year preceding the 
                        start-up year, or
                            ``(II) at the election of the electric 
                        company, the second or third calendar years 
                        preceding the start-up year.
                    ``(vi) For purposes of this subparagraph, the 
                recovery period is the 7-year period beginning with the 
                start-up year.
                    ``(vii) For purposes of this subparagraph, the 
                start-up year is the calendar year which includes 
                October 1, 2004, or, if later, at the election of the 
                mutual or cooperative electric company--
                            ``(I) the first year that such electric 
                        company offers nondiscriminatory open access, 
                        or
                            ``(II) the first year in which at least 10 
                        percent of such electric company's sales are 
                        not to members of such electric company.
                    ``(viii) A company shall not fail to be treated as 
                a mutual or cooperative company for purposes of this 
                paragraph or as a corporation operating on a 
                cooperative basis for purposes of section 1381(a)(2)(C) 
                by reason of the treatment under clause (i).
                    ``(ix) In the case of a mutual or cooperative 
                electric company, income from any open access 
                transaction received, or accrued, indirectly from a 
                member shall be treated as an amount collected from 
                members for the sole purpose of meeting losses and 
                expenses.''.
    (c) Exception From Unrelated Business Taxable Income.--Section 
512(b) (relating to modifications) is amended by adding at the end the 
following new paragraph:
            ``(18) Treatment of mutual or cooperative electric 
        companies.--In the case of a mutual or cooperative electric 
        company described in section 501(c)(12), there shall be 
        excluded income which is treated as member income under 
        subparagraph (H) thereof.''.
    (d) Cross Reference.--Section 1381 is amended by adding at the end 
the following new subsection:
    ``(c) Cross Reference.--

                                ``For treatment of income from load 
loss transactions of organizations described in subsection (a)(2)(C), 
see section 501(c)(12)(H).''.
    (e) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after September 30, 2004.

SEC. 1373. SALES OR DISPOSITIONS TO IMPLEMENT FEDERAL ENERGY REGULATORY 
              COMMISSION OR STATE ELECTRIC RESTRUCTURING POLICY.

    (a) In General.--Section 451 (relating to general rule for taxable 
year of inclusion) is amended by adding at the end the following new 
subsection:
    ``(i) Special Rule for Sales or Dispositions To Implement Federal 
Energy Regulatory Commission or State Electric Restructuring Policy.--
            ``(1) In general.--For purposes of this subtitle, if a 
        taxpayer elects the application of this subsection to a 
        qualifying electric transmission transaction in any taxable 
        year--
                    ``(A) any ordinary income derived from such 
                transaction which would be required to be recognized 
                under section 1245 or 1250 for such taxable year 
                (determined without regard to this subsection), and
                    ``(B) any income derived from such transaction in 
                excess of such ordinary income which is required to be 
                included in gross income for such taxable year 
                (determined without regard to this subsection)--
        shall be so recognized and included ratably over the 8-taxable 
        year period beginning with such taxable year.
            ``(2) Qualifying electric transmission transaction.--For 
        purposes of this subsection, the term `qualifying electric 
        transmission transaction' means any sale or other disposition 
        before January 1, 2008, of--
                    ``(A) property used by the taxpayer in the trade or 
                business of providing electric transmission services, 
                or
                    ``(B) any stock or partnership interest in a 
                corporation or partnership, as the case may be, whose 
                principal trade or business consists of providing 
                electric transmission services,
        but only if such sale or disposition is to an independent 
        transmission company.
            ``(3) Independent transmission company.--For purposes of 
        this subsection, the term `independent transmission company' 
        means--
                    ``(A) a regional transmission organization approved 
                by the Federal Energy Regulatory Commission,
                    ``(B) a person--
                            ``(i) who the Federal Energy Regulatory 
                        Commission determines in its authorization of 
                        the transaction under section 203 of the 
                        Federal Power Act (16 U.S.C. 824b) is not a 
                        market participant within the meaning of such 
                        Commission's rules applicable to regional 
                        transmission organizations, and
                            ``(ii) whose transmission facilities to 
                        which the election under this subsection 
                        applies are under the operational control of a 
                        Federal Energy Regulatory Commission-approved 
                        regional transmission organization before the 
                        close of the period specified in such 
                        authorization, but not later than January 1, 
                        2008, or
                    ``(C) in the case of facilities subject to the 
                exclusive jurisdiction of the Public Utility Commission 
                of Texas, a person which is approved by that Commission 
                as consistent with Texas State law regarding an 
                independent transmission organization.
            ``(4) Election.--An election under paragraph (1), once 
        made, shall be irrevocable.
            ``(5) Nonapplication of installment sales treatment.--
        Section 453 shall not apply to any qualifying electric 
        transmission transaction with respect to which an election to 
        apply this subsection is made.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to transactions occurring after September 30, 2004.

                   Subtitle G--Additional Provisions

SEC. 1381. EXTENSION OF ACCELERATED DEPRECIATION AND WAGE CREDIT 
              BENEFITS ON INDIAN RESERVATIONS.

    (a) Special Recovery Period for Property on Indian Reservations.--
Section 168(j)(8) (relating to termination) is amended by striking 
``2004'' and inserting ``2005''.
    (b) Indian Employment Credit.--Section 45A(f) (relating to 
termination) is amended by striking ``2004'' and inserting ``2005''.

SEC. 1382. STUDY OF EFFECTIVENESS OF CERTAIN PROVISIONS BY GAO.

    (a) Study.--The Comptroller General of the United States shall 
undertake an ongoing analysis of--
            (1) the effectiveness of the alternative motor vehicles and 
        fuel incentives provisions under title II and the conservation 
        and energy efficiency provisions under title III, and
            (2) the recipients of the tax benefits contained in such 
        provisions, including an identification of such recipients by 
        income and other appropriate measurements.
Such analysis shall quantify the effectiveness of such provisions by 
examining and comparing the Federal Government's forgone revenue to the 
aggregate amount of energy actually conserved and tangible 
environmental benefits gained as a result of such provisions.
    (b) Reports.--The Comptroller General of the United States shall 
report the analysis required under subsection (a) to Congress not later 
than December 31, 2004, and annually thereafter.

SEC. 1383. REPEAL OF 4.3-CENT MOTOR FUEL EXCISE TAXES ON RAILROADS AND 
              INLAND WATERWAY TRANSPORTATION WHICH REMAIN IN GENERAL 
              FUND.

    (a) Taxes on Trains.--
            (1) In general.--Subparagraph (A) of section 4041(a)(1) is 
        amended by striking ``or a diesel-powered train'' each place it 
        appears and by striking ``or train''.
            (2) Conforming amendments.--
                    (A) Subparagraph (C) of section 4041(a)(1) is 
                amended by striking clause (ii) and by redesignating 
                clause (iii) as clause (ii).
                    (B) Subparagraph (C) of section 4041(b)(1) is 
                amended by striking all that follows ``section 
                6421(e)(2)'' and inserting a period.
                    (C) Subsection (d) of section 4041 is amended by 
                redesignating paragraph (3) as paragraph (4) and by 
                inserting after paragraph (2) the following new 
                paragraph:
            ``(3) Diesel fuel used in trains.--There is hereby imposed 
        a tax of 0.1 cent per gallon on any liquid other than gasoline 
        (as defined in section 4083)--
                    ``(A) sold by any person to an owner, lessee, or 
                other operator of a diesel-powered train for use as a 
                fuel in such train, or
                    ``(B) used by any person as a fuel in a diesel-
                powered train unless there was a taxable sale of such 
                fuel under subparagraph (A).
        No tax shall be imposed by this paragraph on the sale or use of 
        any liquid if tax was imposed on such liquid under section 
        4081.''
                    (D) Subsection (f) of section 4082 is amended by 
                striking ``section 4041(a)(1)'' and inserting 
                ``subsections (d)(3) and (a)(1) of section 4041, 
                respectively''.
                    (E) Paragraph (3) of section 4083(a) is amended by 
                striking ``or a diesel-powered train''.
                    (F) Paragraph (3) of section 6421(f) is amended to 
                read as follows:
            ``(3) Gasoline used in trains.--In the case of gasoline 
        used as a fuel in a train, this section shall not apply with 
        respect to the Leaking Underground Storage Tank Trust Fund 
        financing rate under section 4081.''
                    (G) Paragraph (3) of section 6427(l) is amended to 
                read as follows:
            ``(3) Refund of certain taxes on fuel used in diesel-
        powered trains.--For purposes of this subsection, the term 
        `nontaxable use' includes fuel used in a diesel-powered train. 
        The preceding sentence shall not apply to the tax imposed by 
        section 4041(d) and the Leaking Underground Storage Tank Trust 
        Fund financing rate under section 4081 except with respect to 
        fuel sold for exclusive use by a State or any political 
        subdivision thereof.''
    (b) Fuel Used on Inland Waterways.--
            (1) In general.--Paragraph (1) of section 4042(b) is 
        amended by adding ``and'' at the end of subparagraph (A), by 
        striking ``, and'' at the end of subparagraph (B) and inserting 
        a period, and by striking subparagraph (C).
            (2) Conforming amendment.--Paragraph (2) of section 4042(b) 
        is amended by striking subparagraph (C).
    (c) Effective Date.--The amendments made by this section shall take 
effect on October 1, 2004.

SEC. 1384. EXPANSION OF RESEARCH CREDIT.

    (a) Credit for Expenses Attributable to Certain Collaborative 
Energy Research Consortia.--
            (1) In general.--Section 41(a) (relating to credit for 
        increasing research activities) is amended by striking ``and'' 
        at the end of paragraph (1), by striking the period at the end 
        of paragraph (2) and inserting ``, and'', and by adding at the 
        end the following new paragraph:
            ``(3) 20 percent of the amounts paid or incurred by the 
        taxpayer in carrying on any trade or business of the taxpayer 
        during the taxable year (including as contributions) to an 
        energy research consortium.''.
            (2) Energy research consortium defined.--Section 41(f) 
        (relating to special rules) is amended by adding at the end the 
        following new paragraph:
            ``(6) Energy research consortium.--
                    ``(A) In general.--The term `energy research 
                consortium' means any organization--
                            ``(i) which is--
                                    ``(I) described in section 
                                501(c)(3) and is exempt from tax under 
                                section 501(a) and is organized and 
                                operated primarily to conduct energy 
                                research, or
                                    ``(II) organized and operated 
                                primarily to conduct energy research in 
                                the public interest (within the meaning 
                                of section 501(c)(3)),
                            ``(ii) which is not a private foundation,
                            ``(iii) to which at least 5 unrelated 
                        persons paid or incurred during the calendar 
                        year in which the taxable year of the 
                        organization begins amounts (including as 
                        contributions) to such organization for energy 
                        research, and
                            ``(iv) to which no single person paid or 
                        incurred (including as contributions) during 
                        such calendar year an amount equal to more than 
                        50 percent of the total amounts received by 
                        such organization during such calendar year for 
                        energy research.
                    ``(B) Treatment of persons.--All persons treated as 
                a single employer under subsection (a) or (b) of 
                section 52 shall be treated as related persons for 
                purposes of subparagraph (A)(iii) and as a single 
                person for purposes of subparagraph (A)(iv).''.
            (3) Conforming amendment.--Section 41(b)(3)(C) is amended 
        by inserting ``(other than an energy research consortium)'' 
        after ``organization''.
    (b) Repeal of Limitation on Contract Research Expenses Paid to 
Small Businesses, Universities, and Federal Laboratories.--Section 
41(b)(3) (relating to contract research expenses) is amended by adding 
at the end the following new subparagraph:
                    ``(D) Amounts paid to eligible small businesses, 
                universities, and federal laboratories.--
                            ``(i) In general.--In the case of amounts 
                        paid by the taxpayer to--
                                    ``(I) an eligible small business,
                                    ``(II) an institution of higher 
                                education (as defined in section 
                                3304(f)), or
                                    ``(III) an organization which is a 
                                Federal laboratory--
                        for qualified research which is energy 
                        research, subparagraph (A) shall be applied by 
                        substituting `100 percent' for `65 percent'.
                            ``(ii) Eligible small business.--For 
                        purposes of this subparagraph, the term 
                        `eligible small business' means a small 
                        business with respect to which the taxpayer 
                        does not own (within the meaning of section 
                        318) 50 percent or more of--
                                    ``(I) in the case of a corporation, 
                                the outstanding stock of the 
                                corporation (either by vote or value), 
                                and
                                    ``(II) in the case of a small 
                                business which is not a corporation, 
                                the capital and profits interests of 
                                the small business.
                            ``(iii) Small business.--For purposes of 
                        this subparagraph--
                                    ``(I) In general.--The term `small 
                                business' means, with respect to any 
                                calendar year, any person if the annual 
                                average number of employees employed by 
                                such person during either of the 2 
                                preceding calendar years was 500 or 
                                fewer. For purposes of the preceding 
                                sentence, a preceding calendar year may 
                                be taken into account only if the 
                                person was in existence throughout the 
                                year.
                                    ``(II) Startups, controlled groups, 
                                and predecessors.--Rules similar to the 
                                rules of subparagraphs (B) and (D) of 
section 220(c)(4) shall apply for purposes of this clause.
                            ``(iv) Federal laboratory.--For purposes of 
                        this subparagraph, the term `Federal 
                        laboratory' has the meaning given such term by 
                        section 4(6) of the Stevenson-Wydler Technology 
                        Innovation Act of 1980 (15 U.S.C. 3703(6)), as 
                        in effect on the date of the enactment of the 
                        Energy Tax Incentives Act.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to amounts paid or incurred after the date of the enactment of 
this Act.

                     Subtitle H--Revenue Provisions

          PART I--PROVISIONS DESIGNED TO CURTAIL TAX SHELTERS

SEC. 1385. PENALTY FOR FAILING TO DISCLOSE REPORTABLE TRANSACTION.

    (a) In General.--Part I of subchapter B of chapter 68 (relating to 
assessable penalties) is amended by inserting after section 6707 the 
following new section:

``SEC. 6707A. PENALTY FOR FAILURE TO INCLUDE REPORTABLE TRANSACTION 
              INFORMATION WITH RETURN OR STATEMENT.

    ``(a) Imposition of Penalty.--Any person who fails to include on 
any return or statement any information with respect to a reportable 
transaction which is required under section 6011 to be included with 
such return or statement shall pay a penalty in the amount determined 
under subsection (b).
    ``(b) Amount of Penalty.--
            ``(1) In general.--Except as provided in paragraphs (2) and 
        (3), the amount of the penalty under subsection (a) shall be 
        $50,000.
            ``(2) Listed transaction.--The amount of the penalty under 
        subsection (a) with respect to a listed transaction shall be 
        $100,000.
            ``(3) Increase in penalty for large entities and high net 
        worth individuals.--
                    ``(A) In general.--In the case of a failure under 
                subsection (a) by--
                            ``(i) a large entity, or
                            ``(ii) a high net worth individual--
                the penalty under paragraph (1) or (2) shall be twice 
                the amount determined without regard to this paragraph.
                    ``(B) Large entity.--For purposes of subparagraph 
                (A), the term `large entity' means, with respect to any 
                taxable year, a person (other than a natural person) 
                with gross receipts in excess of $10,000,000 for the 
                taxable year in which the reportable transaction occurs 
                or the preceding taxable year. Rules similar to the 
                rules of paragraph (2) and subparagraphs (B), (C), and 
                (D) of paragraph (3) of section 448(c) shall apply for 
                purposes of this subparagraph.
                    ``(C) High net worth individual.--For purposes of 
                subparagraph (A), the term `high net worth individual' 
                means, with respect to a reportable transaction, a 
                natural person whose net worth exceeds $2,000,000 
                immediately before the transaction.
    ``(c) Definitions.--For purposes of this section--
            ``(1) Reportable transaction.--The term `reportable 
        transaction' means any transaction with respect to which 
        information is required to be included with a return or 
        statement because, as determined under regulations prescribed 
        under section 6011, such transaction is of a type which the 
        Secretary determines as having a potential for tax avoidance or 
        evasion.
            ``(2) Listed transaction.--Except as provided in 
        regulations, the term `listed transaction' means a reportable 
        transaction which is the same as, or substantially similar to, 
        a transaction specifically identified by the Secretary as a tax 
        avoidance transaction for purposes of section 6011.
    ``(d) Authority To Rescind Penalty.--
            ``(1) In general.--The Commissioner of Internal Revenue may 
        rescind all or any portion of any penalty imposed by this 
        section with respect to any violation if--
                    ``(A) the violation is with respect to a reportable 
                transaction other than a listed transaction,
                    ``(B) the person on whom the penalty is imposed has 
                a history of complying with the requirements of this 
                title,
                    ``(C) it is shown that the violation is due to an 
                unintentional mistake of fact;
                    ``(D) imposing the penalty would be against equity 
                and good conscience, and
                    ``(E) rescinding the penalty would promote 
                compliance with the requirements of this title and 
                effective tax administration.
            ``(2) Discretion.--The exercise of authority under 
        paragraph (1) shall be at the sole discretion of the 
        Commissioner and may be delegated only to the head of the 
        Office of Tax Shelter Analysis. The Commissioner, in the 
        Commissioner's sole discretion, may establish a procedure to 
        determine if a penalty should be referred to the Commissioner 
        or the head of such Office for a determination under paragraph 
        (1).
            ``(3) No appeal.--Notwithstanding any other provision of 
        law, any determination under this subsection may not be 
        reviewed in any administrative or judicial proceeding.
            ``(4) Records.--If a penalty is rescinded under paragraph 
        (1), the Commissioner shall place in the file in the Office of 
        the Commissioner the opinion of the Commissioner or the head of 
        the Office of Tax Shelter Analysis with respect to the 
        determination, including--
                    ``(A) the facts and circumstances of the 
                transaction,
                    ``(B) the reasons for the rescission, and
                    ``(C) the amount of the penalty rescinded.
            ``(5) Report.--The Commissioner shall each year report to 
        the Committee on Ways and Means of the House of Representatives 
        and the Committee on Finance of the Senate--
                    ``(A) a summary of the total number and aggregate 
                amount of penalties imposed, and rescinded, under this 
                section, and
                    ``(B) a description of each penalty rescinded under 
                this subsection and the reasons therefor.
    ``(e) Penalty Reported to SEC.--In the case of a person--
            ``(1) which is required to file periodic reports under 
        section 13 or 15(d) of the Securities Exchange Act of 1934 or 
        is required to be consolidated with another person for purposes 
        of such reports, and
            ``(2) which--
                    ``(A) is required to pay a penalty under this 
                section with respect to a listed transaction, or
                    ``(B) is required to pay a penalty under section 
                6662A with respect to any reportable transaction at a 
rate prescribed under section 6662A(c)--
the requirement to pay such penalty shall be disclosed in such reports 
filed by such person for such periods as the Secretary shall specify. 
Failure to make a disclosure in accordance with the preceding sentence 
shall be treated as a failure to which the penalty under subsection 
(b)(2) applies.
    ``(f) Coordination With Other Penalties.--The penalty imposed by 
this section is in addition to any penalty imposed under this title.''.
    (b) Conforming Amendment.--The table of sections for part I of 
subchapter B of chapter 68 is amended by inserting after the item 
relating to section 6707 the following:

                              ``Sec. 6707A. Penalty for failure to 
                                        include reportable transaction 
                                        information with return or 
                                        statement.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to returns and statements the due date for which is after the 
date of the enactment of this Act.

SEC. 1386. ACCURACY-RELATED PENALTY FOR LISTED TRANSACTIONS AND OTHER 
              REPORTABLE TRANSACTIONS HAVING A SIGNIFICANT TAX 
              AVOIDANCE PURPOSE.

    (a) In General.--Subchapter A of chapter 68 is amended by inserting 
after section 6662 the following new section:

``SEC. 6662A. IMPOSITION OF ACCURACY-RELATED PENALTY ON UNDERSTATEMENTS 
              WITH RESPECT TO REPORTABLE TRANSACTIONS.

    ``(a) Imposition of Penalty.--If a taxpayer has a reportable 
transaction understatement for any taxable year, there shall be added 
to the tax an amount equal to 20 percent of the amount of such 
understatement.
    ``(b) Reportable Transaction Understatement.--For purposes of this 
section--
            ``(1) In general.--The term `reportable transaction 
        understatement' means the sum of--
                    ``(A) the product of--
                            ``(i) the amount of the increase (if any) 
                        in taxable income which results from a 
                        difference between the proper tax treatment of 
                        an item to which this section applies and the 
                        taxpayer's treatment of such item (as shown on 
                        the taxpayer's return of tax), and
                            ``(ii) the highest rate of tax imposed by 
                        section 1 (section 11 in the case of a taxpayer 
                        which is a corporation), and
                    ``(B) the amount of the decrease (if any) in the 
                aggregate amount of credits determined under subtitle A 
                which results from a difference between the taxpayer's 
                treatment of an item to which this section applies (as 
                shown on the taxpayer's return of tax) and the proper 
                tax treatment of such item.
        For purposes of subparagraph (A), any reduction of the excess 
        of deductions allowed for the taxable year over gross income 
        for such year, and any reduction in the amount of capital 
        losses which would (without regard to section 1211) be allowed 
        for such year, shall be treated as an increase in taxable 
        income.
            ``(2) Items to which section applies.--This section shall 
        apply to any item which is attributable to--
                    ``(A) any listed transaction, and
                    ``(B) any reportable transaction (other than a 
                listed transaction) if a significant purpose of such 
                transaction is the avoidance or evasion of Federal 
                income tax.
    ``(c) Higher Penalty for Nondisclosed Listed and Other Avoidance 
Transactions.--
            ``(1) In general.--Subsection (a) shall be applied by 
        substituting `30 percent' for `20 percent' with respect to the 
        portion of any reportable transaction understatement with 
        respect to which the requirement of section 6664(d)(2)(A) is 
        not met.
            ``(2) Rules applicable to compromise of penalty.--
                    ``(A) In general.--If the 1st letter of proposed 
                deficiency which allows the taxpayer an opportunity for 
                administrative review in the Internal Revenue Service 
                Office of Appeals has been sent with respect to a 
                penalty to which paragraph (1) applies, only the 
                Commissioner of Internal Revenue may compromise all or 
                any portion of such penalty.
                    ``(B) Applicable rules.--The rules of paragraphs 
                (2), (3), (4), and (5) of section 6707A(d) shall apply 
                for purposes of subparagraph (A).
    ``(d) Definitions of Reportable and Listed Transactions.--For 
purposes of this section, the terms `reportable transaction' and 
`listed transaction' have the respective meanings given to such terms 
by section 6707A(c).
    ``(e) Special Rules.--
            ``(1) Coordination with penalties, etc., on other 
        understatements.--In the case of an understatement (as defined 
        in section 6662(d)(2))--
                    ``(A) the amount of such understatement (determined 
                without regard to this paragraph) shall be increased by 
                the aggregate amount of reportable transaction 
                understatements for purposes of determining whether 
                such understatement is a substantial understatement 
                under section 6662(d)(1), and
                    ``(B) the addition to tax under section 6662(a) 
                shall apply only to the excess of the amount of the 
                substantial understatement (if any) after the 
                application of subparagraph (A) over the aggregate 
                amount of reportable transaction understatements.
            ``(2) Coordination with other penalties.--
                    ``(A) Application of fraud penalty.--References to 
                an underpayment in section 6663 shall be treated as 
                including references to a reportable transaction 
                understatement.
                    ``(B) No double penalty.--This section shall not 
                apply to any portion of an understatement on which a 
                penalty is imposed under section 6663.
            ``(3) Special rule for amended returns.--Except as provided 
        in regulations, in no event shall any tax treatment included 
        with an amendment or supplement to a return of tax be taken 
        into account in determining the amount of any reportable 
        transaction understatement if the amendment or supplement is 
        filed after the earlier of the date the taxpayer is first 
        contacted by the Secretary regarding the examination of the 
        return or such other date as is specified by the Secretary.
                    ``(4) Cross reference.--

                                ``For reporting of section 6662A(c) 
penalty to the Securities and Exchange Commission, see section 
6707A(e).''.
    (b) Determination of Other Understatements.--Subparagraph (A) of 
section 6662(d)(2) is amended by adding at the end the following flush 
sentence:
                ``The excess under the preceding sentence shall be 
                determined without regard to items to which section 
                6662A applies.''.
    (c) Reasonable Cause Exception.--
            (1) In general.--Section 6664 is amended by adding at the 
        end the following new subsection:
    ``(d) Reasonable Cause Exception for Reportable Transaction 
Understatements.--
            ``(1) In general.--No penalty shall be imposed under 
        section 6662A with respect to any portion of a reportable 
        transaction understatement if it is shown that there was a 
        reasonable cause for such portion and that the taxpayer acted 
        in good faith with respect to such portion.
            ``(2) Special rules.--Paragraph (1) shall not apply to any 
        reportable transaction understatement unless--
                    ``(A) the relevant facts affecting the tax 
                treatment of the item are adequately disclosed in 
                accordance with the regulations prescribed under 
                section 6011,
                    ``(B) there is or was substantial authority for 
                such treatment, and
                    ``(C) the taxpayer reasonably believed that such 
                treatment was more likely than not the proper 
                treatment.
        A taxpayer failing to adequately disclose in accordance with 
        section 6011 shall be treated as meeting the requirements of 
        subparagraph (A) if the penalty for such failure was rescinded 
        under section 6707A(d).
            ``(3) Rules relating to reasonable belief.--For purposes of 
        paragraph (2)(C)--
                    ``(A) In general.--A taxpayer shall be treated as 
                having a reasonable belief with respect to the tax 
                treatment of an item only if such belief--
                            ``(i) is based on the facts and law that 
                        exist at the time the return of tax which 
                        includes such tax treatment is filed, and
                            ``(ii) relates solely to the taxpayer's 
                        chances of success on the merits of such 
                        treatment and does not take into account the 
                        possibility that a return will not be audited, 
                        such treatment will not be raised on audit, or 
                        such treatment will be resolved through 
                        settlement if it is raised.
                    ``(B) Certain opinions may not be relied upon.--
                            ``(i) In general.--An opinion of a tax 
                        advisor may not be relied upon to establish the 
                        reasonable belief of a taxpayer if--
                                    ``(I) the tax advisor is described 
                                in clause (ii), or
                                    ``(II) the opinion is described in 
                                clause (iii).
                            ``(ii) Disqualified tax advisors.--A tax 
                        advisor is described in this clause if the tax 
                        advisor--
                                    ``(I) is a material advisor (within 
                                the meaning of section 6111(b)(1)) who 
                                participates in the organization, 
                                management, promotion, or sale of the 
                                transaction or who is related (within 
                                the meaning of section 267(b) or 
                                707(b)(1)) to any person who so 
                                participates,
                                    ``(II) is compensated directly or 
                                indirectly by a material advisor with 
                                respect to the transaction,
                                    ``(III) has a fee arrangement with 
                                respect to the transaction which is 
                                contingent on all or part of the 
                                intended tax benefits from the 
                                transaction being sustained, or
                                    ``(IV) as determined under 
                                regulations prescribed by the 
                                Secretary, has a continuing financial 
                                interest with respect to the 
                                transaction.
                            ``(iii) Disqualified opinions.--For 
                        purposes of clause (i), an opinion is 
                        disqualified if the opinion--
                                    ``(I) is based on unreasonable 
                                factual or legal assumptions (including 
                                assumptions as to future events),
                                    ``(II) unreasonably relies on 
                                representations, statements, findings, 
                                or agreements of the taxpayer or any 
                                other person,
                                    ``(III) does not identify and 
                                consider all relevant facts, or
                                    ``(IV) fails to meet any other 
                                requirement as the Secretary may 
                                prescribe.''.
            (2) Conforming amendment.--The heading for subsection (c) 
        of section 6664 is amended by inserting ``for Underpayments'' 
        after ``Exception''.
    (d) Conforming Amendments.--
            (1) Subparagraph (C) of section 461(i)(3) is amended by 
        striking ``section 6662(d)(2)(C)(iii)'' and inserting ``section 
        1274(b)(3)(C)''.
            (2) Paragraph (3) of section 1274(b) is amended--
                    (A) by striking ``(as defined in section 
                6662(d)(2)(C)(iii))'' in subparagraph (B)(i), and
                    (B) by adding at the end the following new 
                subparagraph:
                    ``(C) Tax shelter.--For purposes of subparagraph 
                (B), the term `tax shelter' means--
                            ``(i) a partnership or other entity,
                            ``(ii) any investment plan or arrangement, 
                        or
                            ``(iii) any other plan or arrangement--
                if a significant purpose of such partnership, entity, 
                plan, or arrangement is the avoidance or evasion of 
                Federal income tax.''.
            (3) Section 6662(d) is amended--
                    (A) by striking subparagraphs (C) and (D) of 
                paragraph (2), and
                    (B) by adding at the end the following:
            ``(3) Secretarial list.--For purposes of this subsection, 
        section 6664(d)(2), and section 6694(a)(1), the Secretary may 
        prescribe a list of positions for which the Secretary believes 
        there is not substantial authority or there is no reasonable 
        belief that the tax treatment is more likely than not the 
        proper tax treatment. Such list (and any revisions thereof) 
        shall be published in the Federal Register or the Internal 
        Revenue Bulletin.''.
            (4) Section 6664(c)(1) is amended by striking ``this part'' 
        and inserting ``section 6662 or 6663''.
            (5) Subsection (b) of section 7525 is amended by striking 
        ``section 6662(d)(2)(C)(iii)'' and inserting ``section 
        1274(b)(3)(C)''.
            (6)(A) The heading for section 6662 is amended to read as 
        follows:

``SEC. 6662. IMPOSITION OF ACCURACY-RELATED PENALTY ON 
              UNDERPAYMENTS.''.

            (B) The table of sections for part II of subchapter A of 
        chapter 68 is amended by striking the item relating to section 
        6662 and inserting the following new items:

                              ``Sec. 6662. Imposition of accuracy-
                                        related penalty on 
                                        underpayments.
                              ``Sec. 6662A. Imposition of accuracy-
                                        related penalty on 
                                        understatements with respect to 
                                        reportable transactions.''.
    (e) Effective Date.--The amendments made by this section shall 
apply to taxable years ending after the date of the enactment of this 
Act.

SEC. 1387. TAX SHELTER EXCEPTION TO CONFIDENTIALITY PRIVILEGES RELATING 
              TO TAXPAYER COMMUNICATIONS.

    (a) In General.--Section 7525(b) (relating to section not to apply 
to communications regarding corporate tax shelters) is amended to read 
as follows:
    ``(b) Section Not To Apply to Communications Regarding Tax 
Shelters.--The privilege under subsection (a) shall not apply to any 
written communication which is--
            ``(1) between a federally authorized tax practitioner and--
                    ``(A) any person,
                    ``(B) any director, officer, employee, agent, or 
                representative of the person, or
                    ``(C) any other person holding a capital or profits 
                interest in the person, and
            ``(2) in connection with the promotion of the direct or 
        indirect participation of the person in any tax shelter (as 
        defined in section 1274(b)(3)(C)).''.
    (b) Effective Date.--The amendment made by this section shall apply 
to communications made on or after the date of the enactment of this 
Act.

SEC. 1388. DISCLOSURE OF REPORTABLE TRANSACTIONS.

    (a) In General.--Section 6111 (relating to registration of tax 
shelters) is amended to read as follows:

``SEC. 6111. DISCLOSURE OF REPORTABLE TRANSACTIONS.

    ``(a) In General.--Each material advisor with respect to any 
reportable transaction shall make a return (in such form as the 
Secretary may prescribe) setting forth--
            ``(1) information identifying and describing the 
        transaction,
            ``(2) information describing any potential tax benefits 
        expected to result from the transaction, and
            ``(3) such other information as the Secretary may 
        prescribe.
Such return shall be filed not later than the date specified by the 
Secretary.
    ``(b) Definitions.--For purposes of this section--
            ``(1) Material advisor.--
                    ``(A) In general.--The term `material advisor' 
                means any person--
                            ``(i) who provides any material aid, 
                        assistance, or advice with respect to 
                        organizing, promoting, selling, implementing, 
                        or carrying out any reportable transaction, and
                            ``(ii) who directly or indirectly derives 
                        gross income in excess of the threshold amount 
                        for such aid, assistance, or advice.
                    ``(B) Threshold amount.--For purposes of 
                subparagraph (A), the threshold amount is--
                            ``(i) $50,000 in the case of a reportable 
                        transaction substantially all of the tax 
                        benefits from which are provided to natural 
                        persons, and
                            ``(ii) $250,000 in any other case.
            ``(2) Reportable transaction.--The term `reportable 
        transaction' has the meaning given to such term by section 
        6707A(c).
    ``(c) Regulations.--The Secretary may prescribe regulations which 
provide--
            ``(1) that only 1 person shall be required to meet the 
        requirements of subsection (a) in cases in which 2 or more 
        persons would otherwise be required to meet such requirements,
            ``(2) exemptions from the requirements of this section, and
            ``(3) such rules as may be necessary or appropriate to 
        carry out the purposes of this section.''.
    (b) Conforming Amendments.--
            (1) The item relating to section 6111 in the table of 
        sections for subchapter B of chapter 61 is amended to read as 
        follows:

                              ``Sec. 6111. Disclosure of reportable 
                                        transactions.''.
            (2)(A) So much of section 6112 as precedes subsection (c) 
        thereof is amended to read as follows:

``SEC. 6112. MATERIAL ADVISORS OF REPORTABLE TRANSACTIONS MUST KEEP 
              LISTS OF ADVISEES.

    ``(a) In General.--Each material advisor (as defined in section 
6111) with respect to any reportable transaction (as defined in section 
6707A(c)) shall maintain, in such manner as the Secretary may by 
regulations prescribe, a list--
            ``(1) identifying each person with respect to whom such 
        advisor acted as such a material advisor with respect to such 
        transaction, and
            ``(2) containing such other information as the Secretary 
        may by regulations require.
This section shall apply without regard to whether a material advisor 
is required to file a return under section 6111 with respect to such 
transaction.''.
            (B) Section 6112 is amended by redesignating subsection (c) 
        as subsection (b).
            (C) Section 6112(b), as redesignated by subparagraph (B), 
        is amended--
                    (i) by inserting ``written'' before ``request'' in 
                paragraph (1)(A), and
                    (ii) by striking ``shall prescribe'' in paragraph 
                (2) and inserting ``may prescribe''.
            (D) The item relating to section 6112 in the table of 
        sections for subchapter B of chapter 61 is amended to read as 
        follows:

                              ``Sec. 6112. Material advisors of 
                                        reportable transactions must 
                                        keep lists of advisees.''.
            (3)(A) The heading for section 6708 is amended to read as 
        follows:

``SEC. 6708. FAILURE TO MAINTAIN LISTS OF ADVISEES WITH RESPECT TO 
              REPORTABLE TRANSACTIONS.''.

            (B) The item relating to section 6708 in the table of 
        sections for part I of subchapter B of chapter 68 is amended to 
        read as follows:

                              ``Sec. 6708. Failure to maintain lists of 
                                        advisees with respect to 
                                        reportable transactions.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to transactions with respect to which material aid, assistance, 
or advice referred to in section 6111(b)(1)(A)(i) of the Internal 
Revenue Code of 1986 (as added by this section) is provided after the 
date of the enactment of this Act.

SEC. 1389. MODIFICATIONS TO PENALTY FOR FAILURE TO REGISTER TAX 
              SHELTERS.

    (a) In General.--Section 6707 (relating to failure to furnish 
information regarding tax shelters) is amended to read as follows:

``SEC. 6707. FAILURE TO FURNISH INFORMATION REGARDING REPORTABLE 
              TRANSACTIONS.

    ``(a) In General.--If a person who is required to file a return 
under section 6111(a) with respect to any reportable transaction--
            ``(1) fails to file such return on or before the date 
        prescribed therefor, or
            ``(2) files false or incomplete information with the 
        Secretary with respect to such transaction--
such person shall pay a penalty with respect to such return in the 
amount determined under subsection (b).
    ``(b) Amount of Penalty.--
            ``(1) In general.--Except as provided in paragraph (2), the 
        penalty imposed under subsection (a) with respect to any 
        failure shall be $50,000.
            ``(2) Listed transactions.--The penalty imposed under 
        subsection (a) with respect to any listed transaction shall be 
        an amount equal to the greater of--
                    ``(A) $200,000, or
                    ``(B) 50 percent of the gross income derived by 
                such person with respect to aid, assistance, or advice 
                which is provided with respect to the listed 
                transaction before the date the return including the 
                transaction is filed under section 6111.
        Subparagraph (B) shall be applied by substituting `75 percent' 
        for `50 percent' in the case of an intentional failure or act 
        described in subsection (a).
    ``(c) Rescission Authority.--The provisions of section 6707A(d) 
(relating to authority of Commissioner to rescind penalty) shall apply 
to any penalty imposed under this section.
    ``(d) Reportable and Listed Transactions.--The terms `reportable 
transaction' and `listed transaction' have the respective meanings 
given to such terms by section 6707A(c).''.
    (b) Clerical Amendment.--The item relating to section 6707 in the 
table of sections for part I of subchapter B of chapter 68 is amended 
by striking ``tax shelters'' and inserting ``reportable transactions''.
    (c) Effective Date.--The amendments made by this section shall 
apply to returns the due date for which is after the date of the 
enactment of this Act.

SEC. 1390. MODIFICATION OF PENALTY FOR FAILURE TO MAINTAIN LISTS OF 
              INVESTORS.

    (a) In General.--Subsection (a) of section 6708 is amended to read 
as follows:
    ``(a) Imposition of Penalty.--
            ``(1) In general.--If any person who is required to 
        maintain a list under section 6112(a) fails to make such list 
        available upon written request to the Secretary in accordance 
        with section 6112(b)(1)(A) within 20 business days after the 
        date of the Secretary's request, such person shall pay a 
        penalty of $10,000 for each day of such failure after such 20th 
        day.
            ``(2) Reasonable cause exception.--No penalty shall be 
        imposed by paragraph (1) with respect to the failure on any day 
        if such failure is due to reasonable cause.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to requests made after the date of the enactment of this Act.

SEC. 1391. PENALTY ON PROMOTERS OF TAX SHELTERS.

    (a) Penalty on Promoting Abusive Tax Shelters.--Section 6700(a) is 
amended by adding at the end the following new sentence: 
``Notwithstanding the first sentence, if an activity with respect to 
which a penalty imposed under this subsection involves a statement 
described in paragraph (2)(A), the amount of the penalty shall be equal 
to 50 percent of the gross income derived (or to be derived) from such 
activity by the person on which the penalty is imposed.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to activities after the date of the enactment of this Act.

        PART II--PROVISIONS TO DISCOURAGE CORPORATE EXPATRIATION

SEC. 1392. TAX TREATMENT OF INVERTED CORPORATE ENTITIES.

    (a) In General.--Subchapter C of chapter 80 (relating to provisions 
affecting more than one subtitle) is amended by adding at the end the 
following new section:

``SEC. 7874. RULES RELATING TO INVERTED CORPORATE ENTITIES.

    ``(a) Inverted Corporations Treated as Domestic Corporations.--
            ``(1) In general.--If a foreign incorporated entity is 
        treated as an inverted domestic corporation, then, 
        notwithstanding section 7701(a)(4), such entity shall be 
        treated for purposes of this title as a domestic corporation.
            ``(2) Inverted domestic corporation.--For purposes of this 
        section, a foreign incorporated entity shall be treated as an 
        inverted domestic corporation if, pursuant to a plan (or a 
        series of related transactions)--
                    ``(A) the entity completes after March 20, 2002, 
                the direct or indirect acquisition of substantially all 
                of the properties held directly or indirectly by a 
                domestic corporation or substantially all of the 
                properties constituting a trade or business of a 
                domestic partnership,
                    ``(B) after the acquisition at least 80 percent of 
                the stock (by vote or value) of the entity is held--
                            ``(i) in the case of an acquisition with 
                        respect to a domestic corporation, by former 
                        shareholders of the domestic corporation by 
                        reason of holding stock in the domestic 
                        corporation, or
                            ``(ii) in the case of an acquisition with 
                        respect to a domestic partnership, by former 
                        partners of the domestic partnership by reason 
                        of holding a capital or profits interest in the 
                        domestic partnership, and
                    ``(C) the expanded affiliated group which after the 
                acquisition includes the entity does not have 
                substantial business activities in the foreign country 
                in which or under the law of which the entity is 
                created or organized when compared to the total 
business activities of such expanded affiliated group.
        Except as provided in regulations, an acquisition of properties 
        of a domestic corporation shall not be treated as described in 
        subparagraph (A) if none of the corporation's stock was readily 
        tradeable on an established securities market at any time 
        during the 4-year period ending on the date of the acquisition.
    ``(b) Preservation of Domestic Tax Base in Certain Inversion 
Transactions to Which Subsection (a) Does Not Apply.--
            ``(1) In general.--If a foreign incorporated entity would 
        be treated as an inverted domestic corporation with respect to 
        an acquired entity if either--
                    ``(A) subsection (a)(2)(A) were applied by 
                substituting `after December 31, 1996, and on or before 
                March 20, 2002' for `after March 20, 2002' and 
                subsection (a)(2)(B) were applied by substituting `more 
                than 50 percent' for `at least 80 percent', or
                    ``(B) subsection (a)(2)(B) were applied by 
                substituting `more than 50 percent' for `at least 80 
                percent'--
        then the rules of subsection (c) shall apply to any inversion 
        gain of the acquired entity during the applicable period and 
        the rules of subsection (d) shall apply to any related party 
        transaction of the acquired entity during the applicable 
        period. This subsection shall not apply for any taxable year if 
        subsection (a) applies to such foreign incorporated entity for 
        such taxable year.
            ``(2) Acquired entity.--For purposes of this section--
                    ``(A) In general.--The term `acquired entity' means 
                the domestic corporation or partnership substantially 
                all of the properties of which are directly or 
                indirectly acquired in an acquisition described in 
                subsection (a)(2)(A) to which this subsection applies.
                    ``(B) Aggregation rules.--Any domestic person 
                bearing a relationship described in section 267(b) or 
                707(b) to an acquired entity shall be treated as an 
                acquired entity with respect to the acquisition 
                described in subparagraph (A).
            ``(3) Applicable period.--For purposes of this section--
                    ``(A) In general.--The term `applicable period' 
                means the period--
                            ``(i) beginning on the first date 
                        properties are acquired as part of the 
                        acquisition described in subsection (a)(2)(A) 
                        to which this subsection applies, and
                            ``(ii) ending on the date which is 10 years 
                        after the last date properties are acquired as 
                        part of such acquisition.
                    ``(B) Special rule for inversions occurring before 
                march 21, 2002.--In the case of any acquired entity to 
                which paragraph (1)(A) applies, the applicable period 
                shall be the 10-year period beginning on January 1, 
                2003.
    ``(c) Tax on Inversion Gains May Not Be Offset.--If subsection (b) 
applies--
            ``(1) In general.--The taxable income of an acquired entity 
        (or any expanded affiliated group which includes such entity) 
        for any taxable year which includes any portion of the 
        applicable period shall in no event be less than the inversion 
        gain of the entity for the taxable year.
            ``(2) Credits not allowed against tax on inversion gain.--
        Credits shall be allowed against the tax imposed by this 
        chapter on an acquired entity for any taxable year described in 
        paragraph (1) only to the extent such tax exceeds the product 
        of--
                    ``(A) the amount of the inversion gain for the 
                taxable year, and
                    ``(B) the highest rate of tax specified in section 
                11(b)(1).
        For purposes of determining the credit allowed by section 901 
        inversion gain shall be treated as from sources within the 
        United States.
            ``(3) Special rules for partnerships.--In the case of an 
        acquired entity which is a partnership--
                    ``(A) the limitations of this subsection shall 
                apply at the partner rather than the partnership level,
                    ``(B) the inversion gain of any partner for any 
                taxable year shall be equal to the sum of--
                            ``(i) the partner's distributive share of 
                        inversion gain of the partnership for such 
                        taxable year, plus
                            ``(ii) income or gain required to be 
                        recognized for the taxable year by the partner 
                        under section 367(a), 741, or 1001, or under 
                        any other provision of chapter 1, by reason of 
                        the transfer during the applicable period of 
                        any partnership interest of the partner in such 
                        partnership to the foreign incorporated entity, 
                        and
                    ``(C) the highest rate of tax specified in the rate 
                schedule applicable to the partner under chapter 1 
                shall be substituted for the rate of tax under 
                paragraph (2)(B).
            ``(4) Inversion gain.--For purposes of this section, the 
        term `inversion gain' means any income or gain required to be 
        recognized under section 304, 311(b), 367, 1001, or 1248, or 
        under any other provision of chapter 1, by reason of the 
        transfer during the applicable period of stock or other 
        properties by an acquired entity--
                    ``(A) as part of the acquisition described in 
                subsection (a)(2)(A) to which subsection (b) applies, 
                or
                    ``(B) after such acquisition to a foreign related 
                person.
        The Secretary may provide that income or gain from the sale of 
        inventories or other transactions in the ordinary course of a 
        trade or business shall not be treated as inversion gain under 
        subparagraph (B) to the extent the Secretary determines such 
        treatment would not be inconsistent with the purposes of this 
section.
            ``(5) Coordination with section 172 and minimum tax.--Rules 
        similar to the rules of paragraphs (3) and (4) of section 
        860E(a) shall apply for purposes of this section.
            ``(6) Statute of limitations.--
                    ``(A) In general.--The statutory period for the 
                assessment of any deficiency attributable to the 
                inversion gain of any taxpayer for any pre-inversion 
                year shall not expire before the expiration of 3 years 
                from the date the Secretary is notified by the taxpayer 
                (in such manner as the Secretary may prescribe) of the 
                acquisition described in subsection (a)(2)(A) to which 
                such gain relates and such deficiency may be assessed 
                before the expiration of such 3-year period 
                notwithstanding the provisions of any other law or rule 
                of law which would otherwise prevent such assessment.
                    ``(B) Pre-inversion year.--For purposes of 
                subparagraph (A), the term `pre-inversion year' means 
                any taxable year if--
                            ``(i) any portion of the applicable period 
                        is included in such taxable year, and
                            ``(ii) such year ends before the taxable 
                        year in which the acquisition described in 
                        subsection (a)(2)(A) is completed.
    ``(d) Special Rules Applicable to Related Party Transactions.--
            ``(1) Annual application for agreements on return 
        positions.--
                    ``(A) In general.--Each acquired entity to which 
                subsection (b) applies shall file with the Secretary an 
                application for an approval agreement under 
                subparagraph (D) for each taxable year which includes a 
                portion of the applicable period. Such application 
                shall be filed at such time and manner, and shall 
                contain such information, as the Secretary may 
                prescribe.
                    ``(B) Secretarial action.--Within 90 days of 
                receipt of an application under subparagraph (A) (or 
                such longer period as the Secretary and entity may 
                agree upon), the Secretary shall--
                            ``(i) enter into an agreement described in 
                        subparagraph (D) for the taxable year covered 
                        by the application,
                            ``(ii) notify the entity that the Secretary 
                        has determined that the application was filed 
                        in good faith and substantially complies with 
                        the requirements for the application under 
                        subparagraph (A), or
                            ``(iii) notify the entity that the 
                        Secretary has determined that the application 
                        was not filed in good faith or does not 
                        substantially comply with such requirements.
                If the Secretary fails to act within the time 
                prescribed under the preceding sentence, the entity 
                shall be treated for purposes of this paragraph as 
                having received notice under clause (ii).
                    ``(C) Failures to comply.--If an acquired entity 
                fails to file an application under subparagraph (A), or 
                the acquired entity receives a notice under 
                subparagraph (B)(iii), for any taxable year, then for 
                such taxable year--
                            ``(i) there shall not be allowed any 
                        deduction, or addition to basis or cost of 
                        goods sold, for amounts paid or incurred, or 
                        losses incurred, by reason of a transaction 
                        between the acquired entity and a foreign 
                        related person,
                            ``(ii) any transfer or license of 
                        intangible property (as defined in section 
                        936(h)(3)(B)) between the acquired entity and a 
                        foreign related person shall be disregarded, 
                        and
                            ``(iii) any cost-sharing arrangement 
                        between the acquired entity and a foreign 
                        related person shall be disregarded.
                    ``(D) Approval agreement.--For purposes of 
                subparagraph (A), the term `approval agreement' means a 
                prefiling, advance pricing, or other agreement 
                specified by the Secretary which contains such 
                provisions as the Secretary determines necessary to 
                ensure that the requirements of sections 163(j), 
                267(a)(3), 482, and 845, and any other provision of 
                this title applicable to transactions between related 
                persons and specified by the Secretary, are met.
                    ``(E) Tax court review.--
                            ``(i) In general.--The Tax Court shall have 
                        jurisdiction over any action brought by an 
                        acquired entity receiving a notice under 
                        subparagraph (B)(iii) to determine whether the 
                        issuance of the notice was an abuse of 
                        discretion, but only if the action is brought 
                        within 30 days after the date of the mailing 
                        (determined under rules similar to section 
                        6213) of the notice.
                            ``(ii) Court action.--The Tax Court shall 
                        issue its decision within 30 days after the 
                        filing of the action under clause (i) and may 
                        order the Secretary to issue a notice described 
                        in subparagraph (B)(ii).
                            ``(iii) Review.--An order of the Tax Court 
                        under this subparagraph shall be reviewable in 
                        the same manner as any other decision of the 
                        Tax Court.
            ``(2) Modifications of limitation on interest deduction.--
        In the case of an acquired entity to which subsection (b) 
        applies, section 163(j) shall be applied--
                    ``(A) without regard to paragraph (2)(A)(ii) 
                thereof, and
                    ``(B) by substituting `25 percent' for `50 percent' 
                each place it appears in paragraph (2)(B) thereof.
    ``(e) Other Definitions and Special Rules.--For purposes of this 
section--
            ``(1) Rules for application of subsection (a)(2).--In 
        applying subsection (a)(2) for purposes of subsections (a) and 
(b), the following rules shall apply:
                    ``(A) Certain stock disregarded.--There shall not 
                be taken into account in determining ownership for 
                purposes of subsection (a)(2)(B)--
                            ``(i) stock held by members of the expanded 
                        affiliated group which includes the foreign 
                        incorporated entity, or
                            ``(ii) stock of such entity which is sold 
                        in a public offering or private placement 
                        related to the acquisition described in 
                        subsection (a)(2)(A).
                    ``(B) Plan deemed in certain cases.--If a foreign 
                incorporated entity acquires directly or indirectly 
                substantially all of the properties of a domestic 
                corporation or partnership during the 4-year period 
                beginning on the date which is 2 years before the 
                ownership requirements of subsection (a)(2)(B) are met 
                with respect to such domestic corporation or 
                partnership, such actions shall be treated as pursuant 
                to a plan.
                    ``(C) Certain transfers disregarded.--The transfer 
                of properties or liabilities (including by contribution 
                or distribution) shall be disregarded if such transfers 
                are part of a plan a principal purpose of which is to 
                avoid the purposes of this section.
                    ``(D) Special rule for related partnerships.--For 
                purposes of applying subsection (a)(2) to the 
                acquisition of a domestic partnership, except as 
                provided in regulations, all partnerships which are 
                under common control (within the meaning of section 
                482) shall be treated as 1 partnership.
                    ``(E) Treatment of certain rights.--The Secretary 
                shall prescribe such regulations as may be necessary--
                            ``(i) to treat warrants, options, contracts 
                        to acquire stock, convertible debt instruments, 
                        and other similar interests as stock, and
                            ``(ii) to treat stock as not stock.
            ``(2) Expanded affiliated group.--The term `expanded 
        affiliated group' means an affiliated group as defined in 
        section 1504(a) but without regard to section 1504(b)(3), 
        except that section 1504(a) shall be applied by substituting 
        `more than 50 percent' for `at least 80 percent' each place it 
        appears.
            ``(3) Foreign incorporated entity.--The term `foreign 
        incorporated entity' means any entity which is, or but for 
        subsection (a)(1) would be, treated as a foreign corporation 
        for purposes of this title.
            ``(4) Foreign related person.--The term `foreign related 
        person' means, with respect to any acquired entity, a foreign 
        person which--
                    ``(A) bears a relationship to such entity described 
                in section 267(b) or 707(b), or
                    ``(B) is under the same common control (within the 
                meaning of section 482) as such entity.
            ``(5) Subsequent acquisitions by unrelated domestic 
        corporations.--
                    ``(A) In general.--Subject to such conditions, 
                limitations, and exceptions as the Secretary may 
                prescribe, if, after an acquisition described in 
                subsection (a)(2)(A) to which subsection (b) applies, a 
                domestic corporation stock of which is traded on an 
                established securities market acquires directly or 
                indirectly any properties of one or more acquired 
                entities in a transaction with respect to which the 
                requirements of subparagraph (B) are met, this section 
                shall cease to apply to any such acquired entity with 
                respect to which such requirements are met.
                    ``(B) Requirements.--The requirements of the 
                subparagraph are met with respect to a transaction 
                involving any acquisition described in subparagraph (A) 
                if--
                            ``(i) before such transaction the domestic 
                        corporation did not have a relationship 
                        described in section 267(b) or 707(b), and was 
                        not under common control (within the meaning of 
                        section 482), with the acquired entity, or any 
                        member of an expanded affiliated group 
                        including such entity, and
                            ``(ii) after such transaction, such 
                        acquired entity--
                                    ``(I) is a member of the same 
                                expanded affiliated group which 
                                includes the domestic corporation or 
                                has such a relationship or is under 
                                such common control with any member of 
                                such group, and
                                    ``(II) is not a member of, and does 
                                not have such a relationship and is not 
                                under such common control with any 
                                member of, the expanded affiliated 
                                group which before such acquisition 
                                included such entity.
    ``(f) Regulations.--The Secretary shall provide such regulations as 
are necessary to carry out this section, including regulations 
providing for such adjustments to the application of this section as 
are necessary to prevent the avoidance of the purposes of this section, 
including the avoidance of such purposes through--
            ``(1) the use of related persons, pass-through or other 
        noncorporate entities, or other intermediaries, or
            ``(2) transactions designed to have persons cease to be (or 
        not become) members of expanded affiliated groups or related 
        persons.''.
    (b) Treatment of Agreements.--
            (1) Confidentiality.--
                    (A) Treatment as return information.--Section 
                6103(b)(2) (relating to return information) is amended 
                by striking ``and'' at the end of subparagraph (C), by 
                inserting ``and'' at the end of subparagraph (D), and 
                by inserting after subparagraph (D) the following new 
                subparagraph:
                    ``(E) any approval agreement under section 
                7874(d)(1) to which any preceding subparagraph does not 
                apply and any background information related to the 
                agreement or any application for the agreement,''.
                    (B) Exception from public inspection as written 
                determination.--Section 6110(b)(1)(B) is amended by 
                striking ``or (D)'' and inserting ``, (D), or (E)''.
            (2) Reporting.--The Secretary of the Treasury shall include 
        with any report on advance pricing agreements required to be 
        submitted after the date of the enactment of this Act under 
        section 521(b) of the Ticket to Work and Work Incentives 
        Improvement Act of 1999 (Public Law 106-170) a report regarding 
        approval agreements under section 7874(d)(1) of the Internal 
        Revenue Code of 1986. Such report shall include information 
        similar to the information required with respect to advance 
        pricing agreements and shall be treated for confidentiality 
        purposes in the same manner as the reports on advance pricing 
        agreements are treated under section 521(b)(3) of such Act.
    (c) Information Reporting.--The Secretary of the Treasury shall 
exercise the Secretary's authority under the Internal Revenue Code of 
1986 to require entities involved in transactions to which section 7874 
of such Code (as added by subsection (a)) applies to report to the 
Secretary, shareholders, partners, and such other persons as the 
Secretary may prescribe such information as is necessary to ensure the 
proper tax treatment of such transactions.
    (d) Conforming Amendment.--The table of sections for subchapter C 
of chapter 80 is amended by adding at the end the following new item:

                              ``Sec. 7874. Rules relating to inverted 
                                        corporate entities.''.
    (e) Transition Rule for Certain Regulated Investment Companies and 
Unit Investment Trusts.--Notwithstanding section 7874 of the Internal 
Revenue Code of 1986 (as added by subsection (a)), a regulated 
investment company, or other pooled fund or trust specified by the 
Secretary of the Treasury, may elect to recognize gain by reason of 
section 367(a) of such Code with respect to a transaction under which a 
foreign incorporated entity is treated as an inverted domestic 
corporation under section 7874(a) of such Code by reason of an 
acquisition completed after March 20, 2002, and before January 1, 2004.

SEC. 1393. EXCISE TAX ON STOCK COMPENSATION OF INSIDERS IN INVERTED 
              CORPORATIONS.

    (a) In General.--Subtitle D is amended by adding at the end the 
following new chapter:

 ``CHAPTER 48--STOCK COMPENSATION OF INSIDERS IN INVERTED CORPORATIONS

                              ``Sec. 5000A. Stock compensation of 
                                        insiders in inverted 
                                        corporations entities.

``SEC. 5000A. STOCK COMPENSATION OF INSIDERS IN INVERTED CORPORATIONS.

    ``(a) Imposition of Tax.--In the case of an individual who is a 
disqualified individual with respect to any inverted corporation, there 
is hereby imposed on such person a tax equal to 20 percent of the value 
(determined under subsection (b)) of the specified stock compensation 
held (directly or indirectly) by or for the benefit of such individual 
or a member of such individual's family (as defined in section 267) at 
any time during the 12-month period beginning on the date which is 6 
months before the inversion date.
    ``(b) Value.--For purposes of subsection (a)--
            ``(1) In general.--The value of specified stock 
        compensation shall be--
                    ``(A) in the case of a stock option (or other 
                similar right) or any stock appreciation right, the 
                fair value of such option or right, and
                    ``(B) in any other case, the fair market value of 
                such compensation.
            ``(2) Date for determining value.--The determination of 
        value shall be made--
                    ``(A) in the case of specified stock compensation 
                held on the inversion date, on such date,
                    ``(B) in the case of such compensation which is 
                canceled during the 6 months before the inversion date, 
                on the day before such cancellation, and
                    ``(C) in the case of such compensation which is 
                granted after the inversion date, on the date such 
                compensation is granted.
    ``(c) Tax To Apply Only If Shareholder Gain Recognized.--Subsection 
(a) shall apply to any disqualified individual with respect to an 
inverted corporation only if gain (if any) on any stock in such 
corporation is recognized in whole or part by any shareholder by reason 
of the acquisition referred to in section 7874(a)(2)(A) (determined by 
substituting `July 10, 2002' for `March 20, 2002') with respect to such 
corporation.
    ``(d) Exception Where Gain Recognized on Compensation.--Subsection 
(a) shall not apply to--
            ``(1) any stock option which is exercised on the inversion 
        date or during the 6-month period before such date and to the 
        stock acquired in such exercise, and
            ``(2) any specified stock compensation which is sold, 
        exchanged, or distributed during such period in a transaction 
        in which gain or loss is recognized in full.
    ``(e) Definitions.--For purposes of this section--
            ``(1) Disqualified individual.--The term `disqualified 
        individual' means, with respect to a corporation, any 
        individual who, at any time during the 12-month period 
        beginning on the date which is 6 months before the inversion 
        date--
                    ``(A) is subject to the requirements of section 
                16(a) of the Securities Exchange Act of 1934 with 
                respect to such corporation or any member of the 
                expanded affiliated group which includes such 
                corporation, or
                    ``(B) would be subject to such requirements if such 
                corporation or member were an issuer of equity 
                securities referred to in such section.
            ``(2) Inverted corporation; inversion date.--
                    ``(A) Inverted corporation.--The term `inverted 
                corporation' means any corporation to which subsection 
                (a) or (b) of section 7874 applies determined--
                            ``(i) by substituting `July 10, 2002' for 
                        `March 20, 2002' in section 7874(a)(2)(A), and
                            ``(ii) without regard to subsection 
                        (b)(1)(A).
                Such term includes any predecessor or successor of such 
                a corporation.
                    ``(B) Inversion date.--The term `inversion date' 
                means, with respect to a corporation, the date on which 
                the corporation first becomes an inverted corporation.
            ``(3) Specified stock compensation.--
                    ``(A) In general.--The term `specified stock 
                compensation' means payment (or right to payment) 
                granted by the inverted corporation (or by any member 
                of the expanded affiliated group which includes such 
                corporation) to any person in connection with the 
                performance of services by a disqualified individual 
                for such corporation or member if the value of such 
                payment or right is based on (or determined by 
                reference to) the value (or change in value) of stock 
                in such corporation (or any such member).
                    ``(B) Exceptions.--Such term shall not include--
                            ``(i) any option to which part II of 
                        subchapter D of chapter 1 applies, or
                            ``(ii) any payment or right to payment from 
                        a plan referred to in section 280G(b)(6).
            ``(4) Expanded affiliated group.--The term `expanded 
        affiliated group' means an affiliated group (as defined in 
        section 1504(a) without regard to section 1504(b)(3)); except 
        that section 1504(a) shall be applied by substituting `more 
        than 50 percent' for `at least 80 percent' each place it 
        appears.
    ``(f) Special Rules.--For purposes of this section--
            ``(1) Cancellation of restriction.--The cancellation of a 
        restriction which by its terms will never lapse shall be 
        treated as a grant.
            ``(2) Payment or reimbursement of tax by corporation 
        treated as specified stock compensation.--Any payment of the 
        tax imposed by this section directly or indirectly by the 
        inverted corporation or by any member of the expanded 
        affiliated group which includes such corporation--
                    ``(A) shall be treated as specified stock 
                compensation, and
                    ``(B) shall not be allowed as a deduction under any 
                provision of chapter 1.
            ``(3) Certain restrictions ignored.--Whether there is 
        specified stock compensation, and the value thereof, shall be 
        determined without regard to any restriction other than a 
        restriction which by its terms will never lapse.
            ``(4) Property transfers.--Any transfer of property shall 
        be treated as a payment and any right to a transfer of property 
        shall be treated as a right to a payment.
            ``(5) Other administrative provisions.--For purposes of 
        subtitle F, any tax imposed by this section shall be treated as 
        a tax imposed by subtitle A.
    ``(g) Regulations.--The Secretary shall prescribe such regulations 
as may be necessary or appropriate to carry out the purposes of this 
section.''.
    (b) Denial of Deduction.--
            (1) In general.--Paragraph (6) of section 275(a) is amended 
        by inserting ``48,'' after ``46,''.
            (2) $1,000,000 limit on deductible compensation reduced by 
        payment of excise tax on specified stock compensation.--
        Paragraph (4) of section 162(m) is amended by adding at the end 
        the following new subparagraph:
                    ``(G) Coordination with excise tax on specified 
                stock compensation.--The dollar limitation contained in 
                paragraph (1) with respect to any covered employee 
                shall be reduced (but not below zero) by the amount of 
                any payment (with respect to such employee) of the tax 
                imposed by section 5000A directly or indirectly by the 
                inverted corporation (as defined in such section) or by 
                any member of the expanded affiliated group (as defined 
                in such section) which includes such corporation.''.
    (c) Conforming Amendments.--
            (1) The last sentence of section 3121(v)(2)(A) is amended 
        by inserting before the period ``or to any specified stock 
        compensation (as defined in section 5000A) on which tax is 
        imposed by section 5000A''.
            (2) The table of chapters for subtitle D is amended by 
        adding at the end the following new item:

                              ``Chapter 48. Stock compensation of 
                                        insiders in inverted 
                                        corporations.''.
    (d) Effective Date.--The amendments made by this section shall take 
effect on July 11, 2002; except that periods before such date shall not 
be taken into account in applying the periods in subsections (a) and 
(e)(1) of section 5000A of the Internal Revenue Code of 1986, as added 
by this section.

SEC. 1394. REINSURANCE OF UNITED STATES RISKS IN FOREIGN JURISDICTIONS.

    (a) In General.--Section 845(a) (relating to allocation in case of 
reinsurance agreement involving tax avoidance or evasion) is amended by 
striking ``source and character'' and inserting ``amount, source, or 
character''.
    (b) Effective Date.--The amendments made by this section shall 
apply to any risk reinsured after April 11, 2002.

                   PART III--OTHER REVENUE PROVISIONS

SEC. 1395. EXTENSION OF INTERNAL REVENUE SERVICE USER FEES.

    Section 7528(c) is amended by striking ``December 31, 2004'' and 
inserting ``September 30, 2013''.

SEC. 1396. ADDITION OF VACCINES AGAINST HEPATITIS A TO LIST OF TAXABLE 
              VACCINES.

    (a) In General.--Section 4132(a)(1) (defining taxable vaccine) is 
amended by redesignating subparagraphs (I), (J), (K), and (L) as 
subparagraphs (J), (K), (L), and (M), respectively, and by inserting 
after subparagraph (H) the following new subparagraph:
                    ``(I) Any vaccine against hepatitis A.''.
    (b) Conforming Amendment.--Section 9510(c)(1)(A) is amended by 
striking ``October 18, 2000'' and inserting ``April 2, 2003''.
    (c) Effective Date.--
            (1) Sales, etc.--The amendments made by this section shall 
        apply to sales and uses on or after the first day of the first 
        month which begins more than 4 weeks after the date of the 
        enactment of this Act.
            (2) Deliveries.--For purposes of paragraph (1) and section 
        4131 of the Internal Revenue Code of 1986, in the case of sales 
        on or before the effective date described in such paragraph for 
        which delivery is made after such date, the delivery date shall 
        be considered the sale date.

SEC. 1397. INDIVIDUAL EXPATRIATION TO AVOID TAX.

    (a) Expatriation To Avoid Tax.--
            (1) In general.--Subsection (a) of section 877 (relating to 
        treatment of expatriates) is amended to read as follows:
    ``(a) Treatment of Expatriates.--
            ``(1) In general.--Every nonresident alien individual to 
        whom this section applies and who, within the 10-year period 
        immediately preceding the close of the taxable year, lost 
        United States citizenship shall be taxable for such taxable 
        year in the manner provided in subsection (b) if the tax 
        imposed pursuant to such subsection (after any reduction in 
        such tax under the last sentence of such subsection) exceeds 
        the tax which, without regard to this section, is imposed 
        pursuant to section 871.
            ``(2) Individuals subject to this section.--This section 
        shall apply to any individual if--
                    ``(A) the average annual net income tax (as defined 
                in section 38(c)(1)) of such individual for the period 
                of 5 taxable years ending before the date of the loss 
                of United States citizenship is greater than $122,000,
                    ``(B) the net worth of the individual as of such 
                date is $2,000,000 or more, or
                    ``(C) such individual fails to certify under 
                penalty of perjury that he has met the requirements of 
                this title for the 5 preceding taxable years or fails 
                to submit such evidence of such compliance as the 
                Secretary may require.
        In the case of the loss of United States citizenship in any 
        calendar year after 2003, such $122,000 amount shall be 
        increased by an amount equal to such dollar amount multiplied 
        by the cost-of-living adjustment determined under section 
        1(f)(3) for such calendar year by substituting `2002' for 
        `1992' in subparagraph (B) thereof. Any increase under the 
        preceding sentence shall be rounded to the nearest multiple of 
        $1,000.''.
            (2) Revision of exceptions from alternative tax.--
        Subsection (c) of section 877 (relating to tax avoidance not 
        presumed in certain cases) is amended to read as follows:
    ``(c) Exceptions.--
            ``(1) In general.--Subparagraphs (A) and (B) of subsection 
        (a)(2) shall not apply to an individual described in paragraph 
        (2) or (3).
            ``(2) Dual citizens.--
                    ``(A) In general.--An individual is described in 
                this paragraph if--
                            ``(i) the individual became at birth a 
                        citizen of the United States and a citizen of 
                        another country and continues to be a citizen 
                        of such other country, and
                            ``(ii) the individual has had no 
                        substantial contacts with the United States.
                    ``(B) Substantial contacts.--An individual shall be 
                treated as having no substantial contacts with the 
                United States only if the individual--
                            ``(i) was never a resident of the United 
                        States (as defined in section 7701(b)),
                            ``(ii) has never held a United States 
                        passport, and
                            ``(iii) was not present in the United 
                        States for more than 30 days during any 
                        calendar year which is 1 of the 10 calendar 
                        years preceding the individual's loss of United 
                        States citizenship.
            ``(3) Certain minors.--An individual is described in this 
        paragraph if--
                    ``(A) the individual became at birth a citizen of 
                the United States,
                    ``(B) neither parent of such individual was a 
                citizen of the United States at the time of such birth,
                    ``(C) the individual's loss of United States 
                citizenship occurs before such individual attains age 
                18\1/2\, and
                    ``(D) the individual was not present in the United 
                States for more than 30 days during any calendar year 
                which is 1 of the 10 calendar years preceding the 
                individual's loss of United States citizenship.''.
            (3) Conforming amendment.--Section 2107(a) is amended to 
        read as follows:
    ``(a) Treatment of Expatriates.--A tax computed in accordance with 
the table contained in section 2001 is hereby imposed on the transfer 
of the taxable estate, determined as provided in section 2106, of every 
decedent nonresident not a citizen of the United States if the date of 
death occurs during a taxable year with respect to which the decedent 
is subject to tax under section 877(b).''.
    (b) Special Rules for Determining When an Individual Is No Longer a 
United States Citizen or Long-Term Resident.--Section 7701 (relating to 
definitions) is amended by redesignating subsection (n) as subsection 
(o) and by inserting after subsection (m) the following new subsection:
    ``(n) Special Rules for Determining When an Individual Is No Longer 
a United States Citizen or Long-Term Resident.--An individual who would 
not (but for this subsection) be treated as a citizen or resident of 
the United States shall continue to be treated as a citizen or resident 
of the United States until such individual--
            ``(1) gives notice of an expatriating act or termination of 
        residency (with the requisite intent to relinquish citizenship 
        or terminate residency) to the Secretary of State or the 
        Secretary of Homeland Security, and
            ``(2) provides a statement in accordance with section 
        6039G.''.
    (c) Physical Presence in the United States for More Than 30 Days.--
Section 877 (relating to expatriation to avoid tax) is amended by 
adding at the end the following new subsection:
    ``(g) Physical Presence.--This section shall not apply to any 
individual for any taxable year during the 10-year period referred to 
in subsection (a) in which such individual is present (within the 
meaning of section 7701(b)(7) without regard to subparagraphs (B), (C), 
and (D) thereof) in the United States for more than 30 days in the 
calendar year ending in such taxable year, and such individual shall be 
treated for purposes of this title as a citizen or resident of the 
United States for such taxable year.''.
    (d) Transfers Subject to Gift Tax.--Subsection (a) of section 2501 
(relating to taxable transfers) is amended by adding at the end the 
following:
            ``(6) Transfers of certain stock.--
                    ``(A) In general.--Paragraph (3) shall not apply to 
                the transfer of stock described in subparagraph (B) by 
                any individual to whom section 877(b) applies, and 
                section 2511(a) shall be applied without regard to 
                whether such stock is property which is situated within 
                the United States.
                    ``(B) Valuation.--For purposes of subparagraph (A), 
                the value of stock shall be determined as provided in 
                section 2103, except that--
                            ``(i) if the donor owned (within the 
                        meaning of section 958(a)) at the time of such 
                        transfer 10 percent or more of the total 
                        combined voting power of all classes of stock 
                        entitled to vote of a foreign corporation, and
                            ``(ii) if such donor owned (within the 
                        meaning of section 958(a)), or is considered to 
                        have owned (by applying the ownership rules of 
                        section 958(b)), at the time of such transfer, 
                        more than 50 percent of--
                                    ``(I) the total combined voting 
                                power of all classes of stock entitled 
                                to vote of such corporation, or
                                    ``(II) the total value of the stock 
                                of such corporation--
                then the portion of the fair market value of the stock 
                of such foreign corporation transferred by such donor 
                which is included for purposes of subparagraph (A) 
                shall be the amount which bears the same ratio to such 
                value as the fair market value of any assets owned by 
                such foreign corporation and situated in the United 
                States at the time of such transfer bears to the total 
                fair market value of all assets owned by such foreign 
                corporation at such time. For purposes of the preceding 
                sentence, a donor shall be treated as owning stock of a 
                foreign corporation at the time of such transfer if, at 
                such time, by trust or otherwise, within the meaning of 
                sections 2035 to 2038, inclusive, he owned such 
                stock.''.
    (e) Enhanced Information Reporting From Individuals Losing United 
States Citizenship.--
            (1) In general.--Subsection (a) of section 6039G is amended 
        to read as follows:
    ``(a) In General.--Notwithstanding any other provision of law, any 
individual to whom section 877(b) applies for any taxable year shall 
provide a statement for such taxable year which includes the 
information described in subsection (b).''.
            (2) Information to be provided.--Subsection (b) of section 
        6039G is amended to read as follows:
    ``(b) Information To Be Provided.--Information required under 
subsection (a) shall include--
            ``(1) the taxpayer's TIN,
            ``(2) the mailing address of such individual's principal 
        foreign residence,
            ``(3) the foreign country, in which such individual is 
        residing,
            ``(4) the foreign country of which such individual is a 
        citizen,
            ``(5) information detailing the income, assets, and 
        liabilities of such individual,
            ``(6) the number of days that the individual was present in 
        the United States during the taxable year, and
            ``(7) such other information as the Secretary may 
        prescribe.''.
            (3) Increase in penalty.--Subsection (d) of section 6039G 
        is amended to read as follows:
    ``(d) Penalty.--If--
            ``(1) an individual is required to file a statement under 
        subsection (a) for any taxable year, and
            ``(2) fails to file such a statement with the Secretary on 
        or before the date such statement is required to be filed or 
        fails to include all the information required to be shown on 
        the statement or includes incorrect information--
such individual shall pay a penalty of $5,000 unless it is shown that 
such failure is due to reasonable cause and not to willful neglect.''.
            (4) Conforming amendment.--Section 6039G is amended by 
        striking subsections (c), (f), and (g) and by redesignating 
        subsections (d) and (e) as subsection (c) and (d), 
        respectively.
    (f) Effective Date.--The amendments made by this section shall 
apply to individuals who expatriate after February 27, 2003.

                        TITLE XIV--MISCELLANEOUS

         Subtitle A--Rural and Remote Electricity Construction

SEC. 1401. DENALI COMMISSION PROGRAMS.

    (a) Power Cost Equalization Program.--There are authorized to be 
appropriated to the Denali Commission established by the Denali 
Commission Act of 1998 (42 U.S.C. 3121 note) not more than $5,000,000 
for each of fiscal years 2005 through 2011 for the purposes of funding 
the power cost equalization program established under section 42.45.100 
of the Alaska Statutes.
    (b) Availability of Funds.--
            (1) Purpose.--Amounts authorized in paragraph (2) shall be 
        available to the Denali Commission to permit energy generation 
        and development (including fuel cells, hydroelectric, solar, 
        wind, wave, and tidal energy, and alternative energy sources), 
        energy transmission (including interties), fuel tank 
        replacement and clean-up, fuel transportation networks and 
        related facilities, power cost equalization programs, and other 
        energy programs, notwithstanding any other provision of law.
            (2) Authorization of appropriations.--There are authorized 
        to be appropriated to the Denali Commission to carry out 
        paragraph (1) $50,000,000 for each of fiscal years 2004 through 
        2013.

SEC. 1402. RURAL AND REMOTE COMMUNITY ASSISTANCE.

    (a) Program.--Section 19 of the Rural Electrification Act of 1936 
(7 U.S.C. 918a) is amended by striking all that precedes subsection (b) 
and inserting the following:

``SEC. 19. ELECTRIC GENERATION, TRANSMISSION, AND DISTRIBUTION 
              FACILITIES EFFICIENCY GRANTS AND LOANS TO RURAL AND 
              REMOTE COMMUNITIES WITH EXTREMELY HIGH ELECTRICITY COSTS.

    ``(a) In General.--The Secretary, acting through the Rural 
Utilities Service, may--
            ``(1) in coordination with State rural development 
        initiatives, make grants and loans to persons, States, 
        political subdivisions of States, and other entities organized 
        under the laws of States, to acquire, construct, extend, 
        upgrade, and otherwise improve electric generation, 
        transmission, and distribution facilities serving communities 
        in which the average revenue per kilowatt hour of electricity 
        for all consumers is greater than 150 percent of the average 
        revenue per kilowatt hour of electricity for all consumers in 
        the United States (as determined by the Energy Information 
        Administration using the most recent data available);
            ``(2) make grants and loans to the Denali Commission 
        established by the Denali Commission Act of 1998 (42 U.S.C. 
        3121 note; Public 105-277) to be used for the purpose of 
        providing funds to acquire, construct, extend, upgrade, 
        finance, and otherwise improve electric generation, 
        transmission, and distribution facilities serving communities 
        described in paragraph (1); and
            ``(3) make grants to State entities to establish and 
        support a revolving fund to provide a more cost-effective means 
        of purchasing fuel in areas where the fuel cannot be shipped by 
        means of surface transportation.''.
    (b) Definition of Person.--Section 13 of the Rural Electrification 
Act of 1936 (7 U.S.C. 913) is amended by striking ``or association'' 
and inserting ``association, or Indian tribe (as defined in section 4 
of the Indian Self-Determination and Education Assistance Act)''.

                      Subtitle B--Coastal Programs

SEC. 1411. ROYALTY PAYMENTS UNDER LEASES UNDER THE OUTER CONTINENTAL 
              SHELF LANDS ACT.

    (a) Royalty Relief.--
            (1) In general.--For purposes of providing compensation for 
        lessees and a State for which amounts are authorized by section 
        6004(c) of the Oil Pollution Act of 1990 (Public Law 101-380), 
        effective beginning October 1, 2008, a lessee may withhold from 
        payment any royalty due and owing to the United States under 
        any leases under the Outer Continental Shelf Lands Act (43 
        U.S.C. 1301 et seq.) for offshore oil or gas production from a 
        covered lease tract if, on or before the date that the payment 
        is due and payable to the United States, the lessee makes a 
        payment to the Secretary of the Interior of 44 cents for every 
        $1 of royalty withheld.
            (2) Use of amounts paid to secretary.--Within 30 days after 
        the Secretary of the Interior receives payments under paragraph 
        (1), the Secretary of the Interior shall--
                    (A) make 47.5 percent of such payments available to 
                the State referred to in section 6004(c) of the Oil 
                Pollution Act of 1990; and
                    (B) make 52.5 percent of such payments available 
                equally, only for the programs and purposes identified 
                as number 282 at page 1389 of House Report number 108-
                10 and for a program described at page 1159 of that 
                Report in the State referred to in such section 
                6004(c).
            (3) Treatment of amounts.--Any royalty withheld by a lessee 
        in accordance with this section (including any portion thereof 
        that is paid to the Secretary of the Interior under paragraph 
        (1)) shall be treated as paid for purposes of satisfaction of 
        the royalty obligations of the lessee to the United States.
            (4) Certification of withheld amounts.--The Secretary of 
        the Treasury shall--
                    (A) determine the amount of royalty withheld by a 
                lessee under this section; and
                    (B) promptly publish a certification when the total 
                amount of royalty withheld by the lessee under this 
                section is equal to--
                            (i) the dollar amount stated at page 47 of 
                        Senate Report number 101-534, which is 
                        designated therein as the total drainage claim 
                        for the West Delta field; plus
                            (ii) interest as described at page 47 of 
                        that Report.
    (b) Period of Royalty Relief.--Subsection (a) shall apply to 
royalty amounts that are due and payable in the period beginning on 
January 1, 2008, and ending on the date on which the Secretary of the 
Treasury publishes a certification under subsection (a)(4)(B).
    (c) Definitions.--As used in this section:
            (1) Covered lease tract.--The term ``covered lease tract'' 
        means a leased tract (or portion of a leased tract)--
                    (A) lying seaward of the zone defined and governed 
                by section 8(g) of the Outer Continental Shelf Lands 
                Act (43 U.S.C. 1337(g)); or
                    (B) lying within such zone but to which such 
                section does not apply.
            (2) Lessee.--The term ``lessee''--
                    (A) means a person or entity that, on the date of 
                the enactment of the Oil Pollution Act of 1990, was a 
                lessee referred to in section 6004(c) of that Act (as 
                in effect on that date of the enactment), but did not 
                hold lease rights in Federal offshore lease OCS-G-5669; 
                and
                    (B) includes successors and affiliates of a person 
                or entity described in subparagraph (A).

SEC. 1412. DOMESTIC OFFSHORE ENERGY REINVESTMENT.

    (a) Domestic Offshore Energy Reinvestment Program.--The Outer 
Continental Shelf Lands Act (43 U.S.C. 1331 et seq.) is amended by 
adding at the end the following:

``SEC. 32. DOMESTIC OFFSHORE ENERGY REINVESTMENT PROGRAM.

    ``(a) Definitions.--In this section:
            ``(1) Approved plan.--The term `approved plan' means a 
        Secure Energy Reinvestment Plan approved by the Secretary under 
        this section.
            ``(2) Coastal energy state.--The term `Coastal Energy 
        State' means a Coastal State off the coastline of which, within 
        the seaward lateral boundary as determined by the map 
        referenced in subsection (c)(2)(A), Outer Continental Shelf 
        bonus bids or royalties are generated, other than bonus bids or 
        royalties from a leased tract within any area of the Outer 
        Continental Shelf for which a moratorium on new leasing was in 
        effect as of January 1, 2002, unless the lease was issued 
        before the establishment of the moratorium and was in 
        production on such date.
            ``(3) Coastal political subdivision.--The term `coastal 
        political subdivision' means a county, parish, or other 
        equivalent subdivision of a Coastal Energy State, all or part 
        of which lies within the boundaries of the coastal zone of the 
        State, as identified in the State's approved coastal zone 
        management program under the Coastal Zone Management Act of 
        1972 (16 U.S.C. 1451 et seq.) on the date of the enactment of 
        this section.
            ``(4) Coastal population.--The term `coastal population' 
        means the population of a coastal political subdivision, as 
        determined by the most recent official data of the Census 
        Bureau.
            ``(5) Coastline.--The term `coastline' has the same meaning 
        as the term `coast line' in subsection 2(c) of the Submerged 
        Lands Act (43 U.S.C. 1301(c)).
            ``(6) Fund.--The term `Fund' means the Secure Energy 
        Reinvestment Fund established by this section.
            ``(7) Leased tract.--The term `leased tract' means a tract 
        maintained under section 6 or leased under section 8 for the 
        purpose of drilling for, developing, and producing oil and 
        natural gas resources.
            ``(8) Qualified outer continental shelf revenues.--(A) 
        Except as provided in subparagraph (B), the term `qualified 
        Outer Continental Shelf revenues' means all amounts received by 
        the United States on or after October 1, 2003, from each leased 
        tract or portion of a leased tract lying seaward of the zone 
        defined and governed by section 8(g), or lying within such zone 
        but to which section 8(g) does not apply, including bonus bids, 
        rents, royalties (including payments for royalties taken in 
        kind and sold), net profit share payments, and related 
        interest.
            ``(B) Such term does not include any revenues from a leased 
        tract or portion of a leased tract that is included within any 
        area of the Outer Continental Shelf for which a moratorium on 
        new leasing was in effect as of January 1, 2002, unless the 
        lease was issued before the establishment of the moratorium and 
        was in production on such date.
            ``(9) Secretary.--The term `Secretary' means the Secretary 
        of the Interior.
    ``(b) Secure Energy Reinvestment Fund.--
            ``(1) Establishment.--There is established in the Treasury 
        of the United States a separate account which shall be known as 
        the `Secure Energy Reinvestment Fund'. The Fund shall consist 
        of amounts deposited under paragraph (2), and such other 
        amounts as may be appropriated to the Fund.
            ``(2) Deposits.--For each fiscal year after fiscal year 
        2003, the Secretary of the Treasury shall deposit into the Fund 
        the following:
                    ``(A) Notwithstanding section 9, all qualified 
                Outer Continental Shelf revenues attributable to 
                royalties received by the United States in the fiscal 
                year that are in excess of the following amount:
                            ``(i) $3,455,000,000 in the case of 
                        royalties received in fiscal year 2004.
                            ``(ii) $3,726,000,000 in the case of 
                        royalties received in fiscal year 2005.
                            ``(iii) $4,613,000,000 in the case of 
                        royalties received in fiscal year 2006.
                            ``(iv) $5,226,000,000 in the case of 
                        royalties received in fiscal year 2007.
                            ``(v) $5,841,000,000 in the case of 
                        royalties received in fiscal year 2008.
                            ``(vi) $5,763,000,000 in the case of 
                        royalties received in fiscal year 2009.
                            ``(vii) $6,276,000,000 in the case of 
                        royalties received in fiscal year 2010.
                            ``(viii) $6,351,000,000 in the case of 
                        royalties received in fiscal year 2011.
                            ``(ix) $6,551,000,000 in the case of 
                        royalties received in fiscal year 2012.
                            ``(x) $5,120,000,000 in the case of 
                        royalties received in fiscal year 2013.
                    ``(B) Notwithstanding section 9, all qualified 
                Outer Continental shelf revenues attributable to bonus 
                bids received by the United States in each of the 
                fiscal years 2004 through 2013 that are in excess of 
                $1,000,000,000.
                    ``(C) Notwithstanding section 9, in addition to 
                amounts deposited under subparagraphs (A) and (B), 
                $35,000,000 of amounts received by the United States 
                each fiscal year as royalties for oil or gas production 
                on the Outer Continental Shelf, except that no amounts 
                shall be deposited under this subparagraph before 
                fiscal year 2004 or after fiscal year 2013.
                    ``(D) All interest earned under paragraph (4).
                    ``(E) All repayments under subsection (f).
            ``(3) Reduction in deposit.--(A) For each fiscal year after 
        fiscal year 2013 in which amounts received by the United States 
        as royalties for oil or gas production on the Outer Continental 
        Shelf are less than the sum of the amounts described in 
        subparagraph (B) (before the application of this subparagraph), 
        the Secretary of the Treasury shall reduce each of the amounts 
        described in subparagraph (B) proportionately.
            ``(B) The amounts referred to in subparagraph (A) are the 
        following:
                    ``(i) The amount required to be covered into the 
                Historic Preservation Fund under section 108 of the 
                National Historic Preservation Act (16 U.S.C. 470h) on 
                the date of the enactment of this paragraph.
                    ``(ii) The amount required to be credited to the 
                Land and Water Conservation Fund under section 2(c)(2) 
                of the Land and Water Conservation Fund Act of 1965 (16 
                U.S.C. 4601-5(c)(2)) on the date of the enactment of 
                this paragraph.
                    ``(iii) The amount required to be deposited under 
                subparagraph (C) of paragraph (2) of this subsection.
            ``(4) Investment.--The Secretary of the Treasury shall 
        invest moneys in the Fund (including interest) in public debt 
        securities with maturities suitable to the needs of the Fund, 
        as determined by the Secretary of the Treasury, and bearing 
        interest at rates determined by the Secretary of the Treasury, 
        taking into consideration current market yields on outstanding 
        marketable obligations of the United States of comparable 
        maturity. Such invested moneys shall remain invested until 
        needed to meet requirements for disbursement under this 
        section.
            ``(5) Review and revision of baseline amounts.--Not later 
        than December 31, 2008, the Secretary of the Interior, in 
        consultation with the Secretary of the Treasury, shall--
                    ``(A) determine the amount and composition of Outer 
                Continental Shelf revenues that were received by the 
                United States in each of the fiscal years 2004 through 
                2008;
                    ``(B) project the amount and composition of Outer 
                Continental Shelf revenues that will be received in the 
                United States in each of the fiscal years 2009 through 
                2013; and
                    ``(C) submit to the Congress a report regarding 
                whether any of the dollar amounts set forth in clauses 
                (v) through (x) of paragraph (2)(A) or paragraph (2)(B) 
                should be modified to reflect those projections.
            ``(6) Authorization of appropriation of additional 
        amounts.--In addition to the amounts deposited into the Fund 
        under paragraph (2) there are authorized to be appropriated to 
        the Fund--
                    ``(A) for each of fiscal years 2004 through 2013 up 
                to $500,000,000; and
                    ``(B) for each fiscal year after fiscal year 2013 
                up to 25 percent of qualified Outer Continental Shelf 
                revenues received by the United States in the preceding 
                fiscal year.
    ``(c) Use of Secure Energy Reinvestment Fund.--
            ``(1) In general.--(A) Amounts into the Fund shall be 
        available for obligation or expenditure only for the purposes 
        of this section, and only as provided for in an appropriations 
        Act. The appropriations may be made without fiscal year 
        limitation.
            ``(B) Of amounts made available under subsection (m), the 
        Secretary shall use amounts remaining after the application of 
        subsections (h) and (i) to pay to each Coastal Energy State 
        that has a Secure Energy Reinvestment Plan approved by the 
        Secretary under this section, and to coastal political 
        subdivisions of such State, the amount allocated to the State 
        or coastal political subdivision, respectively, under this 
        subsection.
            ``(C) The Secretary shall make payments under this 
        paragraph in December of 2004, and of each year thereafter, or 
        as soon as practicable thereafter.
            ``(2) Allocation.--The Secretary shall allocate amounts 
        made available under subsection (m) in a fiscal year, and other 
        amounts determined by the Secretary to be available to carry 
        out this section, among Coastal Energy States that have an 
        approved plan, and to coastal political subdivisions of such 
        States, as follows:
                    ``(A)(i) Of the amounts made available for each of 
                the first 10 fiscal years for which amounts are 
                available for allocation under this paragraph, the 
                allocation for each Coastal Energy State shall be 
                calculated based on the ratio of qualified Outer 
                Continental Shelf revenues generated off the coastline 
                of the Coastal Energy State to the qualified Outer 
                Continental Shelf revenues generated off the coastlines 
                of all Coastal Energy States for the period beginning 
                January 1, 1992, and ending December 31, 2001.
                    ``(ii) Of the amounts available for a fiscal year 
                in a subsequent 10-fiscal-year period, the allocation 
                for each Coastal Energy State shall be calculated based 
                on such ratio determined by the Secretary with respect 
                to qualified Outer Continental Shelf revenues generated 
                in each subsequent corresponding 10-year period.
                    ``(iii) For purposes of this subparagraph, 
                qualified Outer Continental Shelf revenues shall be 
                considered to be generated off the coastline of a 
                Coastal Energy State if the geographic center of the 
                lease tract from which the revenues are generated is 
                located within the area formed by the extension of the 
                State's seaward lateral boundaries, calculated using 
                the strict and scientifically derived conventions 
                established to delimit international lateral boundaries 
                under the Law of the Sea, as indicated on the map 
                entitled `Calculated Seaward Lateral Boundaries' and 
                dated October 2003, on file in the Office of the 
                Director, Minerals Management Service.
                    ``(B) 35 percent of each Coastal Energy State's 
                allocable share as determined under subparagraph (A) 
                shall be allocated among and paid directly to the 
                coastal political subdivisions of the State by the 
                Secretary based on the following formula:
                            ``(i) 25 percent shall be allocated based 
                        on the ratio of each coastal political 
                        subdivision's coastal population to the coastal 
                        population of all coastal political 
                        subdivisions of the Coastal Energy State.
                            ``(ii) 25 percent shall be allocated based 
                        on the ratio of each coastal political 
                        subdivision's coastline miles to the coastline 
                        miles of all coastal political subdivisions of 
                        the State. In the case of a coastal political 
                        subdivision without a coastline, the coastline 
                        of the political subdivision for purposes of 
                        this clause shall be one-third the average 
                        length of the coastline of the other coastal 
                        political subdivisions of the State.
                            ``(iii) 50 percent shall be allocated based 
                        on a formula that allocates 75 percent of the 
                        funds based on such coastal political 
                        subdivision's relative distance from any leased 
                        tract used to calculate that State's allocation 
                        and 25 percent of the funds based on the 
                        relative level of Outer Continental Shelf oil 
                        and gas activities in a coastal political 
                        subdivision to the level of Outer Continental 
                        Shelf oil and gas activities in all coastal 
                        political subdivisions in such State, as 
                        determined by the Secretary, except that in the 
                        case of a coastal political subdivision in the 
                        State of California that has a coastal 
                        shoreline, that is not within 200 miles of the 
                        geographic center of a leased tract or portion 
                        of a leased tract, and in which there is 
                        located one or more oil refineries the 
                        allocation under this clause shall be 
                        determined as if that coastal political 
                        subdivision were located within a distance of 
                        50 miles from the geographic center of the 
                        closest leased tract with qualified Outer 
                        Continental Shelf revenues.
            ``(3) Reallocation.--Any amount allocated to a Coastal 
        Energy State or coastal political subdivision of such a State 
        but not disbursed because of a failure of a Coastal Energy 
        State to have an approved plan shall be reallocated by the 
        Secretary among all other Coastal Energy States in a manner 
        consistent with this subsection, except that the Secretary--
                    ``(A) shall hold the amount in escrow within the 
                Fund until the earlier of the end of the next fiscal 
                year in which the allocation is made or the final 
                resolution of any appeal regarding the disapproval of a 
                plan submitted by the State under this section; and
                    ``(B) shall continue to hold such amount in escrow 
                until the end of the subsequent fiscal year thereafter, 
                if the Secretary determines that such State is making a 
good faith effort to develop and submit, or update, a Secure Energy 
Reinvestment Plan under subsection (d).
            ``(4) Minimum share.--Notwithstanding any other provision 
        of this subsection, the amount allocated under this subsection 
        to each Coastal Energy State each fiscal year shall be not less 
        than 5 percent of the total amount available for that fiscal 
        year for allocation under this subsection to Coastal Energy 
        States, except that for any Coastal Energy State determined by 
        the Secretary to have an area formed by the extension of the 
        State's seaward lateral boundary, as designated by the map 
        referenced in paragraph (2)(A)(iii), of less than 490 square 
        statute miles, the amount allocated to such State shall not be 
        less than 10 percent of the total amount available for that 
        fiscal year for allocation under this subsection.
            ``(5) Recomputation.--If the allocation to one or more 
        Coastal Energy States under paragraph (4) with respect to a 
        fiscal year is greater than the amount that would be allocated 
        to such States under this subsection if paragraph (4) did not 
        apply, then the allocations under this subsection to all other 
        Coastal Energy States shall be paid from the amount remaining 
        after deduction of the amounts allocated under paragraph (4), 
        but shall be reduced on a pro rata basis by the sum of the 
        allocations under paragraph (4) so that not more than 100 
        percent of the funds available in the Fund for allocation with 
        respect to that fiscal year is allocated.
    ``(d) Secure Energy Reinvestment Plan.--
            ``(1) Development and submission of state plans.--The 
        Governor of each State seeking to receive funds under this 
        section shall prepare, and submit to the Secretary, a Secure 
        Energy Reinvestment Plan describing planned expenditures of 
        funds received under this section. The Governor shall include 
        in the State plan submitted to the Secretary plans prepared by 
        the coastal political subdivisions of the State. The Governor 
        and the coastal political subdivision shall solicit local input 
        and provide for public participation in the development of the 
        State plan. In describing the planned expenditures, the State 
        and coastal political subdivisions shall include only items 
        that are uses authorized under subsection (e).
            ``(2) Approval or disapproval.--
                    ``(A) In general.--The Secretary may not disburse 
                funds to a State or coastal political subdivision of a 
                State under this section before the date the State has 
                an approved plan. The Secretary shall approve a Secure 
                Energy Reinvestment Plan submitted by a State under 
                paragraph (1) if the Secretary determines that the 
                expenditures provided for in the plan are uses 
                authorized under subsection (e), and that the plan 
                contains each of the following:
                            ``(i) The name of the State agency that 
                        will have the authority to represent and act 
                        for the State in dealing with the Secretary for 
                        purposes of this section.
                            ``(ii) A program for the implementation of 
                        the plan, that (I) has as a goal improving the 
                        environment, (II) has as a goal addressing the 
                        impacts of oil and gas production from the 
                        Outer Continental Shelf, and (III) includes a 
                        description of how the State and coastal 
                        political subdivisions of the State will 
                        evaluate the effectiveness of the plan.
                            ``(iii) Certification by the Governor that 
                        ample opportunity has been accorded for public 
                        participation in the development and revision 
                        of the plan.
                            ``(iv) Measures for taking into account 
                        other relevant Federal resources and programs. 
                        The plan shall be correlated so far as 
                        practicable with other State, regional, and 
                        local plans.
                            ``(v) For any State for which the ratio 
                        determined under subsection (c)(2)(A)(i) or 
                        (c)(2)(A)(ii), as appropriate, expressed as a 
                        percentage, exceeds 25 percent, a plan to spend 
                        not less than 30 percent of the total funds 
                        provided under this section each fiscal year to 
                        that State and appropriate coastal political 
                        subdivisions, to address the socioeconomic or 
                        environmental impacts identified in the plan 
                        that remain significant or progressive after 
                        implementation of mitigation measures 
                        identified in the most current environmental 
                        impact statement (as of the date of the 
                        enactment of this clause) required under the 
                        National Environmental Protection Act of 1969 
                        for lease sales under this Act.
                            ``(vi) A plan to utilize at least one-half 
                        of the funds provided pursuant to subsection 
                        (c)(2)(B), and a portion of other funds 
                        provided to such State under this section, on 
                        programs or projects that are coordinated and 
                        conducted in partnership between the State and 
                        coastal political subdivision.
                    ``(B) Procedure and timing.--The Secretary shall 
                approve or disapprove each plan submitted in accordance 
                with this subsection within 90 days after its 
                submission.
            ``(3) Amendment or revision.--Any amendment to or revision 
        of an approved plan shall be prepared and submitted in 
        accordance with the requirements under this paragraph for the 
        submittal of plans, and shall be approved or disapproved by the 
        Secretary in accordance with paragraph (2)(B).
    ``(e) Authorized Uses.--A Coastal Energy State, and a coastal 
political subdivision of such a State, shall use amounts paid under 
this section (including any such amounts deposited into a trust fund 
administered by the State or coastal political subdivision dedicated to 
uses consistent with this subsection), in compliance with Federal and 
State law and the approved plan of the State, only for one or more of 
the following purposes:
            ``(1) Projects and activities, including educational 
        activities, for the conservation, protection, or restoration of 
        coastal areas including wetlands.
            ``(2) Mitigating damage to, or the protection of, fish, 
        wildlife, or natural resources.
            ``(3) To the extent of such sums as are considered 
        reasonable by the Secretary, planning assistance and 
        administrative costs of complying with this section.
            ``(4) Implementation of federally approved plans or 
        programs for marine, coastal, subsidence, or conservation 
        management or for protection of resources from natural 
        disasters.
            ``(5) Mitigating impacts of Outer Continental Shelf 
        activities through funding onshore infrastructure and public 
        service needs.
    ``(f) Compliance With Authorized Uses.--If the Secretary determines 
that an expenditure of an amount made by a Coastal Energy State or 
coastal political subdivision is not in accordance with the approved 
plan of the State (including the plans of coastal political 
subdivisions included in such plan), the Secretary shall not disburse 
any further amounts under this section to that Coastal Energy State or 
coastal political subdivision until--
            ``(1) the amount is repaid to the Secretary; or
            ``(2) the Secretary approves an amendment to the plan that 
        authorizes the expenditure.
    ``(g) Arbitration of State and Local Disputes.--The Secretary may 
require, as a condition of any payment under this section, that a State 
or coastal political subdivision in a State must submit to 
arbitration--
            ``(1) any dispute between the State or coastal political 
        subdivision (or both) and the Secretary regarding 
        implementation of this section; and
            ``(2) any dispute between the State and political 
        subdivision regarding implementation of this section, including 
        any failure to include, in the plan submitted by the State for 
        purposes of subsection (d), any spending plan of the coastal 
        political subdivision.
    ``(h) Administrative Expenses.--Of amounts made available under 
subsection (m) for each fiscal year, the Secretary may use up to one-
half of one percent for the administrative costs of implementing this 
section.
    ``(i) Funding for Consortium.--
            ``(1) In general.--Of amounts made available under 
        subsection (m) for each of fiscal year 2004 through 2013, 2 
        percent shall be used by the Secretary of the Interior to 
        provide funding for the Coastal Restoration and Enhancement 
        through Science and Technology program.
            ``(2) Treatment.--Any amount provided by the Secretary of 
        the Interior under this subsection for a fiscal year shall, for 
        purposes of determining the amount appropriated under any other 
        provision of law that authorizes appropriations to carry out 
        the program referred to in paragraph (1), be treated as 
        appropriated under that other provision.
    ``(j) Disposition of Funds.--A Coastal Energy State or coastal 
political subdivision may use funds provided to such entity under this 
section, subject to subsection (e), for any payment that is eligible to 
be made with funds provided to States under section 35 of the Mineral 
Leasing Act (30 U.S.C. 191).
    ``(k) Reports.--Each fiscal year following a fiscal year in which a 
Coastal Energy State or coastal political subdivision of a Coastal 
Energy State receives funds under this section, the Governor of the 
Coastal Energy State, in coordination with such State's coastal 
political subdivisions, shall account for all funds so received for the 
previous fiscal year in a written report to the Secretary. The report 
shall include, in accordance with regulations prescribed by the 
Secretary, a description of all projects and activities that received 
such funds. In order to avoid duplication, such report may incorporate, 
by reference, any other reports required to be submitted under other 
provisions of law.
    ``(l) Signs.--The Secretary shall require, as a condition of any 
allocation of funds provided with amounts made available by this 
section, that each State and coastal political subdivision shall 
include on any sign otherwise installed at any site at or near an 
entrance or public use focal point area for which such funds are used, 
a statement that the existence or development of the site (or both), as 
appropriate, is a product of such funds.
    ``(m) Authorization of Appropriations.--There are authorized to be 
appropriated from the Fund to the Secretary to carry out this section, 
for fiscal year 2004 and each fiscal year thereafter, the amounts 
deposited into the Fund during the preceding fiscal year.''.
    (b) Additional Amendments.--Section 31 of the Outer Continental 
Shelf Lands Act (43 U.S.C. 1356a) is amended--
            (1) by striking subsection (a);
            (2) in subsection (c) by striking ``For fiscal year 2001, 
        $150,000,000 is'' and inserting ``Such sums as may be necessary 
        to carry out this section are'';
            (3) in subsection (d)(1)(B) by striking ``, except'' and 
        all that follows through the end of the sentence and inserting 
        a period;
            (4) by redesignating subsections (b) through (g) in order 
        as subsection (a) through (f); and
            (5) by striking ``subsection (f)'' each place it appears 
        and inserting ``subsection (e)''.
    (c) Utilization of Coastal Restoration and Enhancement Through 
Science and Technology Program.--
            (1) Authorization.--The Secretary of the Interior and the 
        Secretary of Commerce may each use the Coastal Restoration and 
        Enhancement through Science and Technology program for the 
        purposes of--
                    (A) assessing the effects of coastal habitat 
                restoration techniques;
                    (B) developing improved ecosystem modeling 
                capabilities for improved predictions of coastal 
                conditions and habitat change and for developing new 
                technologies for restoration activities; and
                    (C) identifying economic options to address 
                socioeconomic consequences of coastal degradation.
            (2) Condition.--The Secretary of the Interior, in 
        consultation with the Secretary of Commerce, shall ensure that 
        the program--
                    (A) establishes procedures designed to avoid 
                duplicative activities among Federal agencies and 
                entities receiving Federal funds;
                    (B) coordinates with persons involved in similar 
                activities; and
                    (C) establishes a mechanism to collect, organize, 
                and make available information and findings on coastal 
                restoration.
            (3) Report.--Not later than September 30, 2008, the 
        Secretary of the Interior, in consultation with the Secretary 
        of Commerce, shall transmit a report to the Congress on the 
        effectiveness of any Federal and State restoration efforts 
        conducted pursuant to this subsection and make recommendations 
        to improve coordinated coastal restoration efforts.
            (4) Funding.--For each of fiscal years 2004 through 2013, 
        there is authorized to be appropriated to the Secretary 
        $10,000,000 to carry out activities under this subsection.

 Subtitle C--Reforms to the Board of Directors of the Tennessee Valley 
                               Authority

SEC. 1431. CHANGE IN COMPOSITION, OPERATION, AND DUTIES OF THE BOARD OF 
              DIRECTORS OF THE TENNESSEE VALLEY AUTHORITY.

    The Tennessee Valley Authority Act of 1933 (16 U.S.C. 831 et seq.) 
is amended by striking section 2 and inserting the following:

``SEC. 2. MEMBERSHIP, OPERATION, AND DUTIES OF THE BOARD OF DIRECTORS.

    ``(a) Membership.--
            ``(1) Appointment.--The Board of Directors of the 
        Corporation (referred to in this Act as the `Board') shall be 
        composed of 9 members appointed by the President by and with 
        the advice and consent of the Senate, at least 5 of whom shall 
        be a legal resident of a State any part of which is in the 
        service area of the Corporation.
            ``(2) Chairman.--The members of the Board shall select 1 of 
        the members to act as Chairman of the Board.
    ``(b) Qualifications.--To be eligible to be appointed as a member 
of the Board, an individual--
            ``(1) shall be a citizen of the United States;
            ``(2) shall have management expertise relative to a large 
        for-profit or nonprofit corporate, government, or academic 
        structure;
            ``(3) shall not be an employee of the Corporation; and
            ``(4) shall make full disclosure to Congress of any 
        investment or other financial interest that the individual 
        holds in the energy industry.
    ``(c) Recommendations.--In appointing members of the Board, the 
President shall--
            ``(1) consider recommendations from such public officials 
        as--
                    ``(A) the Governors of States in the service area;
                    ``(B) individual citizens;
                    ``(C) business, industrial, labor, electric power 
                distribution, environmental, civic, and service 
                organizations; and
                    ``(D) the congressional delegations of the States 
                in the service area; and
            ``(2) seek qualified members from among persons who reflect 
        the diversity, including the geographical diversity, and needs 
        of the service area of the Corporation.
    ``(d) Terms.--
            ``(1) In general.--A member of the Board shall serve a term 
        of 5 years. A member of the Board whose term has expired may 
        continue to serve after the member's term has expired until the 
        date on which a successor takes office, except that the member 
        shall not serve beyond the end of the session of Congress in 
        which the term of the member expires.
            ``(2) Vacancies.--A member appointed to fill a vacancy on 
        the Board occurring before the expiration of the term for which 
        the predecessor of the member was appointed shall be appointed 
        for the remainder of that term.
    ``(e) Quorum.--
            ``(1) In general.--Five of the members of the Board shall 
        constitute a quorum for the transaction of business.
            ``(2) Vacancies.--A vacancy on the Board shall not impair 
        the power of the Board to act.
    ``(f) Compensation.--
            ``(1) In general.--A member of the Board shall be entitled 
        to receive--
                    ``(A) a stipend of--
                            ``(i) $45,000 per year; or
                            ``(ii)(I) in the case of the chairman of 
                        any committee of the Board created by the 
                        Board, $46,000 per year; or
                            ``(II) in the case of the chairman of the 
                        Board, $50,000 per year; and
                    ``(B) travel expenses, including per diem in lieu 
                of subsistence, in the same manner as persons employed 
                intermittently in Government service under section 5703 
                of title 5, United States Code.
            ``(2) Adjustments in stipends.--The amount of the stipend 
        under paragraph (1)(A)(i) shall be adjusted by the same 
        percentage, at the same time and manner, and subject to the 
        same limitations as are applicable to adjustments under section 
        5318 of title 5, United States Code.
    ``(g) Duties.--
            ``(1) In general.--The Board shall--
                    ``(A) establish the broad goals, objectives, and 
                policies of the Corporation that are appropriate to 
                carry out this Act;
                    ``(B) develop long-range plans to guide the 
                Corporation in achieving the goals, objectives, and 
                policies of the Corporation and provide assistance to 
                the chief executive officer to achieve those goals, 
                objectives, and policies;
                    ``(C) ensure that those goals, objectives, and 
                policies are achieved;
                    ``(D) approve an annual budget for the Corporation;
                    ``(E) adopt and submit to Congress a conflict-of-
                interest policy applicable to members of the Board and 
                employees of the Corporation;
                    ``(F) establish a compensation plan for employees 
                of the Corporation in accordance with subsection (i);
                    ``(G) approve all compensation (including salary or 
                any other pay, bonuses, benefits, incentives, and any 
                other form of remuneration) of all managers and 
                technical personnel that report directly to the chief 
                executive officer (including any adjustment to 
                compensation);
                    ``(H) ensure that all activities of the Corporation 
                are carried out in compliance with applicable law;
                    ``(I) create an audit committee, composed solely of 
                Board members independent of the management of the 
                Corporation, which shall--
                            ``(i) in consultation with the inspector 
                        general of the Corporation, recommend to the 
                        Board an external auditor;
                            ``(ii) receive and review reports from the 
                        external auditor of the Corporation and 
                        inspector general of the Corporation; and
                            ``(iii) make such recommendations to the 
                        Board as the audit committee considers 
                        necessary;
                    ``(J) create such other committees of Board members 
                as the Board considers to be appropriate;
                    ``(K) conduct such public hearings as it deems 
                appropriate on issues that could have a substantial 
                effect on--
                            ``(i) the electric ratepayers in the 
                        service area; or
                            ``(ii) the economic, environmental, social, 
                        or physical well-being of the people of the 
                        service area;
                    ``(L) establish the electricity rates charged by 
                the Corporation; and
                    ``(M) engage the services of an external auditor 
                for the Corporation.
            ``(2) Meetings.--The Board shall meet at least 4 times each 
        year.
    ``(h) Chief Executive Officer.--
            ``(1) Appointment.--The Board shall appoint a person to 
        serve as chief executive officer of the Corporation.
            ``(2) Qualifications.--
                    ``(A) In general.--To serve as chief executive 
                officer of the Corporation, a person--
                            ``(i) shall have senior executive-level 
                        management experience in large, complex 
                        organizations;
                            ``(ii) shall not be a current member of the 
                        Board or have served as a member of the Board 
                        within 2 years before being appointed chief 
                        executive officer; and
                            ``(iii) shall comply with the conflict-of-
                        interest policy adopted by the Board.
                    ``(B) Expertise.--In appointing a chief executive 
                officer, the Board shall give particular consideration 
                to appointing an individual with expertise in the 
                electric industry and with strong financial skills.
            ``(3) Tenure.--The chief executive officer shall serve at 
        the pleasure of the Board.
    ``(i) Compensation Plan.--
            ``(1) In general.--The Board shall approve a compensation 
        plan that specifies all compensation (including salary or any 
        other pay, bonuses, benefits, incentives, and any other form of 
        remuneration) for the chief executive officer and employees of 
        the Corporation.
            ``(2) Annual survey.--The compensation plan shall be based 
        on an annual survey of the prevailing compensation for similar 
        positions in private industry, including engineering and 
        electric utility companies, publicly owned electric utilities, 
        and Federal, State, and local governments.
            ``(3) Considerations.--The compensation plan shall provide 
        that education, experience, level of responsibility, geographic 
        differences, and retention and recruitment needs will be taken 
        into account in determining compensation of employees.
            ``(4) Positions at or below level iv.--The chief executive 
        officer shall determine the salary and benefits of employees 
        whose annual salary is not greater than the annual rate payable 
        for positions at level IV of the Executive Schedule under 
        section 5315 of title 5, United States Code.
            ``(5) Positions above level iv.--On the recommendation of 
        the chief executive officer, the Board shall approve the 
        salaries of employees whose annual salaries would be in excess 
        of the annual rate payable for positions at level IV of the 
        Executive Schedule under section 5315 of title 5, United States 
        Code.''.

SEC. 1432. CHANGE IN MANNER OF APPOINTMENT OF STAFF.

    Section 3 of the Tennessee Valley Authority Act of 1933 (16 U.S.C. 
831b) is amended--
            (1) by striking the first undesignated paragraph and 
        inserting the following:
    ``(a) Appointment by the Chief Executive Officer.--The chief 
executive officer shall appoint, with the advice and consent of the 
Board, and without regard to the provisions of the civil service laws 
applicable to officers and employees of the United States, such 
managers, assistant managers, officers, employees, attorneys, and 
agents as are necessary for the transaction of the business of the 
Corporation.''; and
            (2) by striking ``All contracts'' and inserting the 
        following:
    ``(b) Wage Rates.--All contracts''.

SEC. 1433. CONFORMING AMENDMENTS.

    (a) The Tennessee Valley Authority Act of 1933 (16 U.S.C. 831 et 
seq.) is amended--
            (1) by striking ``board of directors'' each place it 
        appears and inserting ``Board of Directors''; and
            (2) by striking ``board'' each place it appears and 
        inserting ``Board''.
    (b) Section 9 of the Tennessee Valley Authority Act of 1933 (16 
U.S.C. 831h) is amended--
            (1) by striking ``The Comptroller General of the United 
        States shall audit'' and inserting the following:
    ``(c) Audits.--The Comptroller General of the United States shall 
audit''; and
            (2) by striking ``The Corporation shall determine'' and 
        inserting the following:
    ``(d) Administrative Accounts and Business Documents.--The 
Corporation shall determine''.
    (c) Title 5, United States Code, is amended--
            (1) in section 5314, by striking ``Chairman, Board of 
        Directors of the Tennessee Valley Authority.''; and
            (2) in section 5315, by striking ``Members, Board of 
        Directors of the Tennessee Valley Authority.''.

SEC. 1434. APPOINTMENTS; EFFECTIVE DATE; TRANSITION.

    (a) Appointments.--
            (1) In general.--As soon as practicable after the date of 
        enactment of this Act, the President shall submit to the Senate 
        nominations of 6 persons to serve as members of the Board of 
        Directors of the Tennessee Valley Authority in addition to the 
        members serving on the date of enactment of this Act.
            (2) Initial terms.--Notwithstanding section 2(d) of the 
        Tennessee Valley Authority Act of 1933 (as amended by this 
        subtitle), in making the appointments under paragraph (1), the 
        President shall appoint--
                    (A) 2 members for a term to expire on May 18, 2006;
                    (B) 2 members for a term to expire on May 18, 2008; 
                and
                    (C) 2 members for a term to expire on May 18, 2010.
    (b) Effective Date.--The amendments made by this section and 
sections 1431, 1432, and 1433 take effect on the later of the date on 
which at least 3 persons nominated under subsection (a) take office or 
May 18, 2005.
    (c) Selection of Chairman.--The Board of Directors of the Tennessee 
Valley Authority shall select 1 of the members to act as Chairman of 
the Board not later than 30 days after the effective date of this 
section.
    (d) Conflict-of-Interest Policy.--The Board of Directors of the 
Tennessee Valley Authority shall adopt and submit to Congress a 
conflict-of-interest policy, as required by section 2(g)(1)(E) of the 
Tennessee Valley Authority Act of 1933 (as amended by this subtitle), 
as soon as practicable after the effective date of this section.
    (e) Transition.--A person who is serving as a member of the Board 
of Directors of the Tennessee Valley Authority on the date of enactment 
of this Act--
            (1) shall continue to serve until the end of the current 
        term of the member; but
            (2) after the effective date specified in subsection (b), 
        shall serve under the terms of the Tennessee Valley Authority 
        Act of 1933 (as amended by this subtitle); and
            (3) may not be reappointed.

                      Subtitle D--Other Provisions

SEC. 1441. CONTINUATION OF TRANSMISSION SECURITY ORDER.

    Department of Energy Order No. 202-03-2, issued by the Secretary of 
Energy on August 28, 2003, shall remain in effect unless rescinded by 
Federal statute.

SEC. 1442. REVIEW OF AGENCY DETERMINATIONS.

    Section 7 of the Natural Gas Act (15 U.S.C. 717f) is amended by 
adding at the end the following:
    ``(i)(1) The United States Court of Appeals for the District of 
Columbia Circuit shall have original and exclusive jurisdiction over 
any civil action--
            ``(A) for review of any order or action of any Federal or 
        State administrative agency or officer to issue, condition, or 
        deny any permit, license, concurrence, or approval issued under 
        authority of any Federal law, other than the Coastal Zone 
        Management Act of 1972 (16 U.S.C. 1451 et seq.), required for 
        the construction of a natural gas pipeline for which a 
        certificate of public convenience and necessity is issued by 
        the Commission under this section;
            ``(B) alleging unreasonable delay by any Federal or State 
        administrative agency or officer in entering an order or taking 
        other action described in subparagraph (A); or
            ``(C) challenging any decision made or action taken under 
        this subsection.
    ``(2)(A) If the Court finds that the order, action, or failure to 
act is not consistent with the public convenience and necessity (as 
determined by the Commission under this section), or would prevent the 
construction and operation of natural gas facilities authorized by the 
certificate of public convenience and necessity, the permit, license, 
concurrence, or approval that is the subject of the order, action, or 
failure to act shall be deemed to have been issued subject to any 
conditions set forth in the reviewed order or action that the Court 
finds to be consistent with the public convenience and necessity.
    ``(B) For purposes of paragraph (1)(B), the failure of an agency or 
officer to issue any such permit, license, concurrence, or approval 
within the later of 1 year after the date of filing of an application 
for the permit, license, concurrence, or approval or 60 days after the 
date of issuance of the certificate of public convenience and necessity 
under this section, shall be considered to be unreasonable delay unless 
the Court, for good cause shown, determines otherwise.
    ``(C) The Court shall set any action brought under paragraph (1) 
for expedited consideration.''.

SEC. 1443. ATTAINMENT DATES FOR DOWNWIND OZONE NONATTAINMENT AREAS.

    Section 181 of the Clean Air Act (42 U.S.C. 7511) is amended by 
adding the following new subsection at the end thereof:
    ``(d) Extended Attainment Date for Certain Downwind Areas.--
            ``(1) Definitions.--(A) The term `upwind area' means an 
        area that--
                    ``(i) significantly contributes to nonattainment in 
                another area, hereinafter referred to as a `downwind 
                area'; and
                    ``(ii) is either--
                            ``(I) a nonattainment area with a later 
                        attainment date than the downwind area, or
                            ``(II) an area in another State that the 
                        Administrator has found to be significantly 
                        contributing to nonattainment in the downwind 
                        area in violation of section 110(a)(2)(D) and 
                        for which the Administrator has established 
                        requirements through notice and comment 
                        rulemaking to eliminate the emissions causing 
                        such significant contribution.
            ``(B) The term `current classification' means the 
        classification of a downwind area under this section at the 
        time of the determination under paragraph (2).
            ``(2) Extension.--If the Administrator--
                    ``(A) determines that any area is a downwind area 
                with respect to a particular national ambient air 
                quality standard for ozone; and
                    ``(B) approves a plan revision for such area as 
                provided in paragraph (3) prior to a reclassification 
                under subsection (b)(2)(A)--
        the Administrator, in lieu of such reclassification, shall 
        extend the attainment date for such downwind area for such 
        standard in accordance with paragraph (5).
            ``(3) Required approval.--In order to extend the attainment 
        date for a downwind area under this subsection, the 
        Administrator must approve a revision of the applicable 
        implementation plan for the downwind area for such standard 
        that--
                    ``(A) complies with all requirements of this Act 
                applicable under the current classification of the 
                downwind area, including any requirements applicable to 
                the area under section 172(c) for such standard; and
                    ``(B) includes any additional measures needed to 
                demonstrate attainment by the extended attainment date 
                provided under this subsection.
            ``(4) Prior reclassification determination.--If, no more 
        than 18 months prior to the date of enactment of this 
        subsection, the Administrator made a reclassification 
        determination under subsection (b)(2)(A) for any downwind area, 
        and the Administrator approves the plan revision referred to in 
        paragraph (3) for such area within 12 months after the date of 
        enactment of this subsection, the reclassification shall be 
        withdrawn and the attainment date extended in accordance with 
        paragraph (5) upon such approval. The Administrator shall also 
        withdraw a reclassification determination under subsection 
        (b)(2)(A) made after the date of enactment of this subsection 
        and extend the attainment date in accordance with paragraph (5) 
        if the Administrator approves the plan revision referred to in 
        paragraph (3) within 12 months of the date the reclassification 
        determination under subsection (b)(2)(A) is issued. In such 
        instances the `current classification' used for evaluating the 
        revision of the applicable implementation plan under paragraph 
        (3) shall be the classification of the downwind area under this 
        section immediately prior to such reclassification.
            ``(5) Extended date.--The attainment date extended under 
        this subsection shall provide for attainment of such national 
        ambient air quality standard for ozone in the downwind area as 
        expeditiously as practicable but no later than the date on 
        which the last reductions in pollution transport necessary for 
        attainment in the downwind area are required to be achieved by 
        the upwind area or areas.''.

SEC. 1444. ENERGY PRODUCTION INCENTIVES.

    (a) In General.--A State may provide to any entity--
            (1) a credit against any tax or fee owed to the State under 
        a State law, or
            (2) any other tax incentive--
determined by the State to be appropriate, in the amount calculated 
under and in accordance with a formula determined by the State, for 
production described in subsection (b) in the State by the entity that 
receives such credit or such incentive.
    (b) Eligible Entities.--Subsection (a) shall apply with respect to 
the production in the State of--
            (1) electricity from coal mined in the State and used in a 
        facility, if such production meets all applicable Federal and 
        State laws and if such facility uses scrubbers or other forms 
        of clean coal technology,
            (2) electricity from a renewable source such as wind, 
        solar, or biomass, or
            (3) ethanol.
    (c) Effect on Interstate Commerce.--Any action taken by a State in 
accordance with this section with respect to a tax or fee payable, or 
incentive applicable, for any period beginning after the date of the 
enactment of this Act shall--
            (1) be considered to be a reasonable regulation of 
        commerce; and
            (2) not be considered to impose an undue burden on 
        interstate commerce or to otherwise impair, restrain, or 
        discriminate, against interstate commerce.

SEC. 1445. USE OF GRANULAR MINE TAILINGS.

    (a) Amendment.--Subtitle F of the Solid Waste Disposal Act (42 
U.S.C. 6961 et seq.) is amended by adding at the end the following:

``SEC. 6006. USE OF GRANULAR MINE TAILINGS.

    ``(a) Mine Tailings.--
            ``(1) In general.--Not later than 180 days after the date 
        of enactment of this section, the Administrator, in 
        consultation with the Secretary of Transportation and heads of 
other Federal agencies, shall establish criteria (including an 
evaluation of whether to establish a numerical standard for 
concentration of lead and other hazardous substances) for the safe and 
environmentally protective use of granular mine tailings from the Tar 
Creek, Oklahoma Mining District, known as `chat', for--
                    ``(A) cement or concrete projects; and
                    ``(B) transportation construction projects 
                (including transportation construction projects 
                involving the use of asphalt) that are carried out, in 
                whole or in part, using Federal funds.
            ``(2) Requirements.--In establishing criteria under 
        paragraph (1), the Administrator shall consider--
                    ``(A) the current and previous uses of granular 
                mine tailings as an aggregate for asphalt; and
                    ``(B) any environmental and public health risks and 
                benefits derived from the removal, transportation, and 
                use in transportation projects of granular mine 
                tailings.
            ``(3) Public participation.--In establishing the criteria 
        under paragraph (1), the Administrator shall solicit and 
        consider comments from the public.
            ``(4) Applicability of criteria.--On the establishment of 
        the criteria under paragraph (1), any use of the granular mine 
        tailings described in paragraph (1) in a transportation project 
        that is carried out, in whole or in part, using Federal funds, 
        shall meet the criteria established under paragraph (1).
    ``(b) Effect of Sections.--Nothing in this section or section 6005 
affects any requirement of any law (including a regulation) in effect 
on the date of enactment of this section.''.
    (b) Conforming Amendment.--The table of contents of the Solid Waste 
Disposal Act (42 U.S.C. prec. 6901) is amended by adding at the end of 
the items relating to subtitle F the following:

``Sec. 6006. Use of granular mine tailings.''.

                   TITLE XV--ETHANOL AND MOTOR FUELS

                     Subtitle A--General Provisions

SEC. 1501. RENEWABLE CONTENT OF MOTOR VEHICLE FUEL.

    (a) In General.--Section 211 of the Clean Air Act (42 U.S.C. 7545) 
is amended--
            (1) by redesignating subsection (o) as subsection (q); and
            (2) by inserting after subsection (n) the following:
    ``(o) Renewable Fuel Program.--
            ``(1) Definitions.--In this section:
                    ``(A) Ethanol.--(i) The term `cellulosic biomass 
                ethanol' means ethanol derived from any lignocellulosic 
                or hemicellulosic matter that is available on a 
                renewable or recurring basis, including--
                            ``(I) dedicated energy crops and trees;
                            ``(II) wood and wood residues;
                            ``(III) plants;
                            ``(IV) grasses;
                            ``(V) agricultural residues; and
                            ``(VI) fibers.
                    ``(ii) The term `waste derived ethanol' means 
                ethanol derived from--
                            ``(I) animal wastes, including poultry fats 
                        and poultry wastes, and other waste materials; 
                        or
                            ``(II) municipal solid waste.
                    ``(B) Renewable fuel.--
                            ``(i) In general.--The term `renewable 
                        fuel' means motor vehicle fuel that--
                                    ``(I)(aa) is produced from grain, 
                                starch, oilseeds, or other biomass; or
                                    ``(bb) is natural gas produced from 
                                a biogas source, including a landfill, 
                                sewage waste treatment plant, feedlot, 
                                or other place where decaying organic 
                                material is found; and
                                    ``(II) is used to replace or reduce 
                                the quantity of fossil fuel present in 
                                a fuel mixture used to operate a motor 
                                vehicle.
                            ``(ii) Inclusion.--The term `renewable 
                        fuel' includes cellulosic biomass ethanol, 
                        waste derived ethanol, and biodiesel (as 
                        defined in section 312(f) of the Energy Policy 
                        Act of 1992 (42 U.S.C. 13220(f)) and any 
                        blending components derived from renewable fuel 
                        (provided that only the renewable fuel portion 
                        of any such blending component shall be 
                        considered part of the applicable volume under 
                        the renewable fuel program established by this 
                        subsection).
                    ``(C) Small refinery.--The term `small refinery' 
                means a refinery for which average aggregate daily 
                crude oil throughput for the calendar year (as 
                determined by dividing the aggregate throughput for the 
                calendar year by the number of days in the calendar 
                year) does not exceed 75,000 barrels.
            ``(2) Renewable fuel program.--
                    ``(A) In general.--Not later than 1 year after the 
                enactment of this subsection, the Administrator shall 
                promulgate regulations ensuring that motor vehicle fuel 
                sold or dispensed to consumers in the contiguous United 
                States, on an annual average basis, contains the 
                applicable volume of renewable fuel as specified in 
                subparagraph (B). Regardless of the date of 
                promulgation, such regulations shall contain compliance 
                provisions for refiners, blenders, and importers, as 
                appropriate, to ensure that the requirements of this 
                section are met, but shall not restrict where renewable 
                fuel can be used, or impose any per-gallon obligation 
                for the use of renewable fuel. If the Administrator 
                does not promulgate such regulations, the applicable 
                percentage referred to in paragraph (4), on a volume 
                percentage of gasoline basis, shall be 2.2 in 2005.
                    ``(B) Applicable volume.--
                            ``(i) Calendar years 2005 through 2012.--
                        For the purpose of subparagraph (A), the 
                        applicable volume for any of calendar years 
                        2005 through 2012 shall be determined in 
                        accordance with the following table:

                 ``Applicable volume of renewable fuel

  Calendar year:                               (In billions of gallons)
                2005.......................................        3.1 
                2006.......................................        3.3 
                2007.......................................        3.5 
                2008.......................................        3.8 
                2009.......................................        4.1 
                2010.......................................        4.4 
                2011.......................................        4.7 
                2012.......................................        5.0 
                            ``(ii) Calendar year 2013 and thereafter.--
                        For the purpose of subparagraph (A), the 
                        applicable volume for calendar year 2013 and 
                        each calendar year thereafter shall be equal to 
the product obtained by multiplying--
                                    ``(I) the number of gallons of 
                                gasoline that the Administrator 
                                estimates will be sold or introduced 
                                into commerce in the calendar year; and
                                    ``(II) the ratio that--
                                            ``(aa) 5.0 billion gallons 
                                        of renewable fuels; bears to
                                            ``(bb) the number of 
                                        gallons of gasoline sold or 
                                        introduced into commerce in 
                                        calendar year 2012.
            ``(3) Non-contiguous state opt-in.--Upon the petition of a 
        non-contiguous State, the Administrator may allow the renewable 
        fuel program established by subtitle A of title XV of the 
        Energy Policy Act of 2003 to apply in such non-contiguous State 
        at the same time or any time after the Administrator 
        promulgates regulations under paragraph (2). The Administrator 
        may promulgate or revise regulations under paragraph (2), 
        establish applicable percentages under paragraph (4), provide 
        for the generation of credits under paragraph (6), and take 
        such other actions as may be necessary to allow for the 
        application of the renewable fuels program in a non-contiguous 
        State.
            ``(4) Applicable percentages.--
                    ``(A) Provision of estimate of volumes of gasoline 
                sales.--Not later than October 31 of each of calendar 
                years 2004 through 2011, the Administrator of the 
                Energy Information Administration shall provide to the 
                Administrator of the Environmental Protection Agency an 
                estimate of the volumes of gasoline that will be sold 
                or introduced into commerce in the United States during 
                the following calendar year.
                    ``(B) Determination of applicable percentages.--
                            ``(i) In general.--Not later than November 
                        30 of each of the calendar years 2004 through 
                        2011, based on the estimate provided under 
                        subparagraph (A), the Administrator shall 
                        determine and publish in the Federal Register, 
                        with respect to the following calendar year, 
                        the renewable fuel obligation that ensures that 
                        the requirements of paragraph (2) are met.
                            ``(ii) Required elements.--The renewable 
                        fuel obligation determined for a calendar year 
                        under clause (i) shall--
                                    ``(I) be applicable to refiners, 
                                blenders, and importers, as 
                                appropriate;
                                    ``(II) be expressed in terms of a 
                                volume percentage of gasoline sold or 
                                introduced into commerce; and
                                    ``(III) subject to subparagraph 
                                (C)(i), consist of a single applicable 
                                percentage that applies to all 
                                categories of persons specified in 
                                subclause (I).
                    ``(C) Adjustments.--In determining the applicable 
                percentage for a calendar year, the Administrator shall 
                make adjustments--
                            ``(i) to prevent the imposition of 
                        redundant obligations to any person specified 
                        in subparagraph (B)(ii)(I); and
                            ``(ii) to account for the use of renewable 
                        fuel during the previous calendar year by small 
                        refineries that are exempt under paragraph 
                        (11).
            ``(5) Equivalency.--For the purpose of paragraph (2), 1 
        gallon of either cellulosic biomass ethanol or waste derived 
        ethanol--
                    ``(A) shall be considered to be the equivalent of 
                1.5 gallon of renewable fuel; or
                    ``(B) if the cellulosic biomass ethanol or waste 
                derived ethanol is derived from agricultural residue or 
                is an agricultural byproduct (as that term is used in 
                section 919 of the Energy Policy Act of 2003), shall be 
                considered to be the equivalent of 2.5 gallons of 
                renewable fuel.
            ``(6) Credit program.--
                    ``(A) In general.--The regulations promulgated to 
                carry out this subsection shall provide for the 
                generation of an appropriate amount of credits by any 
                person that refines, blends, or imports gasoline that 
                contains a quantity of renewable fuel that is greater 
                than the quantity required under paragraph (2). Such 
                regulations shall provide for the generation of an 
                appropriate amount of credits for biodiesel fuel. If a 
                small refinery notifies the Administrator that it 
                waives the exemption provided paragraph (11), the 
                regulations shall provide for the generation of credits 
                by the small refinery beginning in the year following 
                such notification.
                    ``(B) Use of credits.--A person that generates 
                credits under subparagraph (A) may use the credits, or 
                transfer all or a portion of the credits to another 
                person, for the purpose of complying with paragraph 
                (2).
                    ``(C) Life of credits.--A credit generated under 
                this paragraph shall be valid to show compliance--
                            ``(i) in the calendar year in which the 
                        credit was generated or the next calendar year; 
                        or
                            ``(ii) in the calendar year in which the 
                        credit was generated or next two consecutive 
                        calendar years if the Administrator promulgates 
                        regulations under paragraph (7).
                    ``(D) Inability to purchase sufficient credits.--
                The regulations promulgated to carry out this 
                subsection shall include provisions allowing any person 
                that is unable to generate or purchase sufficient 
                credits to meet the requirements under paragraph (2) to 
                carry forward a renewable fuel deficit provided that, 
                in the calendar year following the year in which the 
                renewable fuel deficit is created, such person shall 
                achieve compliance with the renewable fuel requirement 
                under paragraph (2), and shall generate or purchase 
                additional renewable fuel credits to offset the 
                renewable fuel deficit of the previous year.
            ``(7) Seasonal variations in renewable fuel use.--
                    ``(A) Study.--For each of the calendar years 2005 
                through 2012, the Administrator of the Energy 
                Information Administration shall conduct a study of 
                renewable fuels blending to determine whether there are 
                excessive seasonal variations in the use of renewable 
                fuels.
                    ``(B) Regulation of excessive seasonal 
                variations.--If, for any calendar year, the 
                Administrator of the Energy Information Administration, 
                based on the study under subparagraph (A), makes the 
                determinations specified in subparagraph (C), the 
                Administrator shall promulgate regulations to ensure 
                that 35 percent or more of the quantity of renewable 
                fuels necessary to meet the requirement of paragraph 
                (2) is used during each of the periods specified in 
subparagraph (D) of each subsequent calendar year.
                    ``(C) Determinations.--The determinations referred 
                to in subparagraph (B) are that--
                            ``(i) less than 35 percent of the quantity 
                        of renewable fuels necessary to meet the 
                        requirement of paragraph (2) has been used 
                        during one of the periods specified in 
                        subparagraph (D) of the calendar year;
                            ``(ii) a pattern of excessive seasonal 
                        variation described in clause (i) will continue 
                        in subsequent calendar years; and
                            ``(iii) promulgating regulations or other 
                        requirements to impose a 35 percent or more 
                        seasonal use of renewable fuels will not 
                        prevent or interfere with the attainment of 
                        national ambient air quality standards or 
                        significantly increase the price of motor fuels 
                        to the consumer.
                    ``(D) Periods.--The two periods referred to in this 
                paragraph are--
                            ``(i) April through September; and
                            ``(ii) January through March and October 
                        through December.
                    ``(E) Exclusions.--Renewable fuels blended or 
                consumed in 2005 in a State which has received a waiver 
                under section 209(b) shall not be included in the study 
                in subparagraph (A).
            ``(8) Waivers.--
                    ``(A) In general.--The Administrator, in 
                consultation with the Secretary of Agriculture and the 
                Secretary of Energy, may waive the requirement of 
                paragraph (2) in whole or in part on petition by one or 
                more States by reducing the national quantity of 
                renewable fuel required under this subsection--
                            ``(i) based on a determination by the 
                        Administrator, after public notice and 
                        opportunity for comment, that implementation of 
                        the requirement would severely harm the economy 
                        or environment of a State, a region, or the 
                        United States; or
                            ``(ii) based on a determination by the 
                        Administrator, after public notice and 
                        opportunity for comment, that there is an 
                        inadequate domestic supply or distribution 
                        capacity to meet the requirement.
                     ``(B) Petitions for waivers.--The Administrator, 
                in consultation with the Secretary of Agriculture and 
                the Secretary of Energy, shall approve or disapprove a 
                State petition for a waiver of the requirement of 
                paragraph (2) within 90 days after the date on which 
                the petition is received by the Administrator.
                    ``(C) Termination of waivers.--A waiver granted 
                under subparagraph (A) shall terminate after 1 year, 
                but may be renewed by the Administrator after 
                consultation with the Secretary of Agriculture and the 
                Secretary of Energy.
            ``(9) Study and waiver for initial year of program.--Not 
        later than 180 days after the enactment of this subsection, the 
        Secretary of Energy shall complete for the Administrator a 
        study assessing whether the renewable fuels requirement under 
        paragraph (2) will likely result in significant adverse 
        consumer impacts in 2005, on a national, regional, or State 
        basis. Such study shall evaluate renewable fuel supplies and 
        prices, blendstock supplies, and supply and distribution system 
        capabilities. Based on such study, the Secretary shall make 
        specific recommendations to the Administrator regarding waiver 
        of the requirements of paragraph (2), in whole or in part, to 
        avoid any such adverse impacts. Within 270 days after the 
        enactment of this subsection, the Administrator shall, 
        consistent with the recommendations of the Secretary, waive, in 
        whole or in part, the renewable fuels requirement under 
        paragraph (2) by reducing the national quantity of renewable 
        fuel required under this subsection in 2005. This paragraph 
        shall not be interpreted as limiting the Administrator's 
        authority to waive the requirements of paragraph (2) in whole, 
        or in part, under paragraph (8) or paragraph (10), pertaining 
        to waivers.
            ``(10) Assessment and waiver.--The Administrator, in 
        consultation with the Secretary of Energy and the Secretary of 
        Agriculture, shall evaluate the requirement of paragraph (2) 
        and determine, prior to January 1, 2007, and prior to January 1 
        of any subsequent year in which the applicable volume of 
        renewable fuel is increased under paragraph (2)(B), whether the 
        requirement of paragraph (2), including the applicable volume 
        of renewable fuel contained in paragraph (2)(B) should remain 
        in effect, in whole or in part, during 2007 or any year or 
        years subsequent to 2007. In evaluating the requirement of 
        paragraph (2) and in making any determination under this 
        section, the Administrator shall consider the best available 
        information and data collected by accepted methods or best 
        available means regarding--
                    ``(A) the capacity of renewable fuel producers to 
                supply an adequate amount of renewable fuel at 
                competitive prices to fulfill the requirement of 
                paragraph (2);
                    ``(B) the potential of the requirement of paragraph 
                (2) to significantly raise the price of gasoline, food 
                (excluding the net price impact on the requirement in 
                paragraph (2) on commodities used in the production of 
                ethanol), or heating oil for consumers in any 
                significant area or region of the country above the 
                price that would otherwise apply to such commodities in 
                the absence of such requirement;
                    ``(C) the potential of the requirement of paragraph 
                (2) to interfere with the supply of fuel in any 
                significant gasoline market or region of the country, 
                including interference with the efficient operation of 
                refiners, blenders, importers, wholesale suppliers, and 
                retail vendors of gasoline, and other motor fuels; and
                    ``(D) the potential of the requirement of paragraph 
                (2) to cause or promote exceedances of Federal, State, 
                or local air quality standards.
        If the Administrator determines, by clear and convincing 
        information, after public notice and the opportunity for 
        comment, that the requirement of paragraph (2) would have 
        significant and meaningful adverse impact on the supply of fuel 
        and related infrastructure or on the economy, public health, or 
        environment of any significant area or region of the country, 
        the Administrator may waive, in whole or in part, the 
        requirement of paragraph (2) in any one year for which the 
        determination is made for that area or region of the country, 
        except that any such waiver shall not have the effect of 
        reducing the applicable volume of renewable fuel specified in 
        paragraph (2)(B) with respect to any year for which the 
        determination is made. In determining economic impact under 
        this paragraph, the Administrator shall not consider the 
        reduced revenues available from the Highway Trust Fund (section 
        9503 of the Internal Revenue Code of 1986) as a result of the 
        use of ethanol.
            ``(11) Small refineries.--
                    ``(A) In general.--The requirement of paragraph (2) 
                shall not apply to small refineries until the first 
                calendar year beginning more than 5 years after the 
                first year set forth in the table in paragraph 
                (2)(B)(i). Not later than December 31, 2007, the 
                Secretary of Energy shall complete for the 
                Administrator a study to determine whether the 
                requirement of paragraph (2) would impose a 
                disproportionate economic hardship on small refineries. 
                For any small refinery that the Secretary of Energy 
                determines would experience a disproportionate economic 
                hardship, the Administrator shall extend the small 
                refinery exemption for such small refinery for no less 
                than two additional years.
                    ``(B) Economic hardship.--
                            ``(i) Extension of exemption.--A small 
                        refinery may at any time petition the 
                        Administrator for an extension of the exemption 
                        from the requirement of paragraph (2) for the 
                        reason of disproportionate economic hardship. 
                        In evaluating a hardship petition, the 
                        Administrator, in consultation with the 
                        Secretary of Energy, shall consider the 
                        findings of the study in addition to other 
                        economic factors.
                            ``(ii) Deadline for action on petitions.--
                        The Administrator shall act on any petition 
                        submitted by a small refinery for a hardship 
                        exemption not later than 90 days after the 
                        receipt of the petition.
                    ``(C) Credit program.--If a small refinery notifies 
                the Administrator that it waives the exemption provided 
                by this Act, the regulations shall provide for the 
                generation of credits by the small refinery beginning 
                in the year following such notification.
                    ``(D) Opt-in for small refiners.--A small refinery 
                shall be subject to the requirements of this section if 
                it notifies the Administrator that it waives the 
                exemption under subparagraph (A).
            ``(12) Ethanol market concentration analysis.--
                    ``(A) Analysis.--
                            ``(i) In general.--Not later than 180 days 
                        after the date of enactment of this subsection, 
                        and annually thereafter, the Federal Trade 
                        Commission shall perform a market concentration 
                        analysis of the ethanol production industry 
                        using the Herfindahl-Hirschman Index to 
                        determine whether there is sufficient 
                        competition among industry participants to 
                        avoid price setting and other anticompetitive 
                        behavior.
                            ``(ii) Scoring.--For the purpose of scoring 
                        under clause (i) using the Herfindahl-Hirschman 
                        Index, all marketing arrangements among 
                        industry participants shall be considered.
                    ``(B) Report.--Not later than December 1, 2004, and 
                annually thereafter, the Federal Trade Commission shall 
                submit to Congress and the Administrator a report on 
                the results of the market concentration analysis 
                performed under subparagraph (A)(i).''.
    (b) Penalties and Enforcement.--Section 211(d) of the Clean Air Act 
(42 U.S.C. 7545(d)) is amended as follows:
            (1) In paragraph (1)--
                    (A) in the first sentence, by striking ``or (n)'' 
                each place it appears and inserting ``(n), or (o)''; 
                and
                    (B) in the second sentence, by striking ``or (m)'' 
                and inserting ``(m), or (o)''.
            (2) In the first sentence of paragraph (2), by striking 
        ``and (n)'' each place it appears and inserting ``(n), and 
        (o)''.
    (c) Survey of Renewable Fuel Market.--
            (1) Survey and report.--Not later than December 1, 2006, 
        and annually thereafter, the Administrator of the Environmental 
        Protection Agency (in consultation with the Secretary of Energy 
        acting through the Administrator of the Energy Information 
        Administration) shall--
                    (A) conduct, with respect to each conventional 
                gasoline use area and each reformulated gasoline use 
                area in each State, a survey to determine the market 
                shares of--
                            (i) conventional gasoline containing 
                        ethanol;
                            (ii) reformulated gasoline containing 
                        ethanol;
                            (iii) conventional gasoline containing 
                        renewable fuel; and
                            (iv) reformulated gasoline containing 
                        renewable fuel; and
                    (B) submit to Congress, and make publicly 
                available, a report on the results of the survey under 
                subparagraph (A).
            (2) Recordkeeping and reporting requirements.--The 
        Administrator of the Environmental Protection Agency 
        (hereinafter in this subsection referred to as the 
        ``Administrator'') may require any refiner, blender, or 
        importer to keep such records and make such reports as are 
        necessary to ensure that the survey conducted under paragraph 
        (1) is accurate. The Administrator, to avoid duplicative 
        requirements, shall rely, to the extent practicable, on 
        existing reporting and recordkeeping requirements and other 
        information available to the Administrator including gasoline 
        distribution patterns that include multistate use areas.
            (3) Applicable law.--Activities carried out under this 
        subsection shall be conducted in a manner designed to protect 
        confidentiality of individual responses.

SEC. 1502. FINDINGS AND MTBE TRANSITION ASSISTANCE.

    (a) Findings.--Congress finds that--
            (1) since 1979, methyl tertiary butyl ether (hereinafter in 
        this section referred to as ``MTBE'') has been used nationwide 
        at low levels in gasoline to replace lead as an octane booster 
        or anti-knocking agent;
            (2) Public Law 101-549 (commonly known as the ``Clean Air 
        Act Amendments of 1990'') (42 U.S.C. 7401 et seq.) established 
        a fuel oxygenate standard under which reformulated gasoline 
        must contain at least 2 percent oxygen by weight;
            (3) at the time of the adoption of the fuel oxygen 
        standard, Congress was aware that significant use of MTBE would 
        result from the adoption of that standard, and that the use of 
        MTBE would likely be important to the cost-effective 
        implementation of that program;
            (4) Congress was aware that gasoline and its component 
        additives can and do leak from storage tanks;
            (5) the fuel industry responded to the fuel oxygenate 
        standard established by Public Law 101-549 by making 
        substantial investments in--
                    (A) MTBE production capacity; and
                    (B) systems to deliver MTBE-containing gasoline to 
                the marketplace;
            (6) having previously required oxygenates like MTBE for air 
        quality purposes, Congress has--
                    (A) reconsidered the relative value of MTBE in 
                gasoline;
                    (B) decided to establish a date certain for action 
                by the Environmental Protection Agency to prohibit the 
                use of MTBE in gasoline; and
                    (C) decided to provide for the elimination of the 
                oxygenate requirement for reformulated gasoline and to 
                provide for a renewable fuels content requirement for 
                motor fuel; and
            (7) it is appropriate for Congress to provide some limited 
        transition assistance--
                    (A) to merchant producers of MTBE who produced MTBE 
                in response to a market created by the oxygenate 
                requirement contained in the Clean Air Act; and
                    (B) for the purpose of mitigating any fuel supply 
                problems that may result from the elimination of the 
                oxygenate requirement for reformulated gasoline and 
                from the decision to establish a date certain for 
                action by the Environmental Protection Agency to 
                prohibit the use of MTBE in gasoline.
    (b) Purposes.--The purpose of this section is to provide assistance 
to merchant producers of MTBE in making the transition from producing 
MTBE to producing other fuel additives.
    (c) MTBE Merchant Producer Conversion Assistance.--Section 211(c) 
of the Clean Air Act (42 U.S.C. 7545(c)) is amended by adding at the 
end the following:
            ``(5) MTBE merchant producer conversion assistance.--
                    ``(A) In general.--
                            ``(i) Grants.--The Secretary of Energy, in 
                        consultation with the Administrator, may make 
                        grants to merchant producers of methyl tertiary 
                        butyl ether (hereinafter in this subsection 
                        referred to as `MTBE') in the United States to 
                        assist the producers in the conversion of 
                        eligible production facilities described in 
                        subparagraph (C) to the production of iso-
                        octane, iso-octene, alkylates, or renewable 
                        fuels.
                            ``(ii) Determination.--The Administrator, 
                        in consultation with the Secretary of Energy, 
                        may determine that transition assistance for 
                        the production of iso-octane, iso-octene, 
                        alkylates, or renewable fuels is inconsistent 
                        with the provisions of subparagraph (B) and, on 
                        that basis, may deny applications for grants 
                        authorized by this paragraph.
                    ``(B) Further grants.--The Secretary of Energy, in 
                consultation with the Administrator, may also further 
                make grants to merchant producers of MTBE in the United 
                States to assist the producers in the conversion of 
                eligible production facilities described in 
                subparagraph (C) to the production of such other fuel 
                additives (unless the Administrator determines that 
                such fuel additives may reasonably be anticipated to 
                endanger public health or the environment) that, 
                consistent with this subsection--
                            ``(i) have been registered and have been 
                        tested or are being tested in accordance with 
                        the requirements of this section; and
                            ``(ii) will contribute to replacing 
                        gasoline volumes lost as a result of amendments 
                        made to subsection (k) of this section by 
                        sections 1503(a) and 1505 of the Energy Policy 
                        Act of 2003.
                    ``(C) Eligible production facilities.--A production 
                facility shall be eligible to receive a grant under 
                this paragraph if the production facility--
                            ``(i) is located in the United States; and
                            ``(ii) produced MTBE for consumption before 
                        April 1, 2003 and ceased production at any time 
                        after the date of enactment of this paragraph.
                    ``(D) Authorization of appropriations.--There are 
                authorized to be appropriated to carry out this 
                paragraph $250,000,000 for each of fiscal years 2005 
                through 2012, to remain available until expended.''.
    (d) Effect on State Law.--The amendments made to the Clean Air Act 
by this title have no effect regarding any available authority of 
States to limit the use of methyl tertiary butyl ether in motor vehicle 
fuel.

SEC. 1503. USE OF MTBE.

    (a) In General.--Subject to subsections (e) and (f), not later than 
December 31, 2014, the use of methyl tertiary butyl ether (hereinafter 
in this section referred to as ``MTBE'') in motor vehicle fuel in any 
State other than a State described in subsection (c) is prohibited.
    (b) Regulations.--The Administrator of the Environmental Protection 
Agency (hereafter referred to in this section as the ``Administrator'') 
shall promulgate regulations to effect the prohibition in subsection 
(a).
    (c) States That Authorize Use.--A State described in this 
subsection is a State in which the Governor of the State submits a 
notification to the Administrator authorizing the use of MTBE in motor 
vehicle fuel sold or used in the State.
    (d) Publication of Notice.--The Administrator shall publish in the 
Federal Register each notice submitted by a State under subsection (c).
    (e) Trace Quantities.--In carrying out subsection (a), the 
Administrator may allow trace quantities of MTBE, not to exceed 0.5 
percent by volume, to be present in motor vehicle fuel in cases that 
the Administrator determines to be appropriate.
    (f) Limitation.--The Administrator, under authority of subsection 
(a), shall not prohibit or control the production of MTBE for export 
from the United States or for any other use other than for use in motor 
vehicle fuel.

SEC. 1504. NATIONAL ACADEMY OF SCIENCES REVIEW AND PRESIDENTIAL 
              DETERMINATION.

    (a) NAS Review.--Not later than May 31, 2013, the Secretary shall 
enter into an arrangement with the National Academy of Sciences to 
review the use of methyl tertiary butyl ether (hereafter referred to in 
this section as ``MTBE'') in fuel and fuel additives. The review shall 
only use the best available scientific information and data collected 
by accepted methods or the best available means. The review shall 
examine the use of MTBE in fuel and fuel additives, significant 
beneficial and detrimental effects of this use on environmental quality 
or public health or welfare including the costs and benefits of such 
effects, likely effects of controls or prohibitions on MTBE regarding 
fuel availability and price, and other appropriate and reasonable 
actions that are available to protect the environment or public health 
or welfare from any detrimental effects of the use of MTBE in fuel or 
fuel additives. The review shall be peer-reviewed prior to publication 
and all supporting data and analytical models shall be available to the 
public. The review shall be completed no later than May 31, 2014.
    (b) Presidential Determination.--No later than June 30, 2014, the 
President may make a determination that restrictions on the use of MTBE 
to be implemented pursuant to section 1503 shall not take place and 
that the legal authority contained in section 1503 to prohibit the use 
of MTBE in motor vehicle fuel shall become null and void.

SEC. 1505. ELIMINATION OF OXYGEN CONTENT REQUIREMENT FOR REFORMULATED 
              GASOLINE.

    (a) Elimination.--
            (1) In general.--Section 211(k) of the Clean Air Act (42 
        U.S.C. 7545(k)) is amended as follows:
                    (A) In paragraph (2)--
                            (i) in the second sentence of subparagraph 
                        (A), by striking ``(including the oxygen 
                        content requirement contained in subparagraph 
                        (B))'';
                            (ii) by striking subparagraph (B); and
                            (iii) by redesignating subparagraphs (C) 
                        and (D) as subparagraphs (B) and (C), 
                        respectively.
                    (B) In paragraph (3)(A), by striking clause (v).
                    (C) In paragraph (7)--
                            (i) in subparagraph (A)--
                                    (I) by striking clause (i); and
                                    (II) by redesignating clauses (ii) 
                                and (iii) as clauses (i) and (ii), 
                                respectively; and
                            (ii) in subparagraph (C)--
                                    (I) by striking clause (ii).
                                    (II) by redesignating clause (iii) 
                                as clause (ii).
            (2) Effective date.--The amendments made by paragraph (1) 
        take effect 270 days after the date of enactment of this Act, 
        except that such amendments shall take effect upon such date of 
        enactment in any State that has received a waiver under section 
        209(b) of the Clean Air Act.
    (b) Maintenance of Toxic Air Pollutant Emission Reductions.--
Section 211(k)(1) of the Clean Air Act (42 U.S.C. 7545(k)(1)) is 
amended as follows:
            (1) By striking ``Within 1 year after the enactment of the 
        Clean Air Act Amendments of 1990,'' and inserting the 
        following:
                    ``(A) In general.--Not later than November 15, 
                1991,''.
            (2) By adding at the end the following:
                    ``(B) Maintenance of toxic air pollutant emissions 
                reductions from reformulated gasoline.--
                            ``(i) Definitions.--In this subparagraph 
                        the term `PADD' means a Petroleum 
                        Administration for Defense District.
                            ``(ii) Regulations regarding emissions of 
                        toxic air pollutants.--Not later than 270 days 
                        after the date of enactment of this 
                        subparagraph the Administrator shall establish, 
                        for each refinery or importer, standards for 
                        toxic air pollutants from use of the 
                        reformulated gasoline produced or distributed 
                        by the refinery or importer that maintain the 
                        reduction of the average annual aggregate 
                        emissions of toxic air pollutants for 
                        reformulated gasoline produced or distributed 
                        by the refinery or importer during calendar 
                        years 1999 and 2000, determined on the basis of 
                        data collected by the Administrator with 
                        respect to the refinery or importer.
                            ``(iii) Standards applicable to specific 
                        refineries or importers.--
                                    ``(I) Applicability of standards.--
                                For any calendar year, the standards 
                                applicable to a refinery or importer 
                                under clause (ii) shall apply to the 
                                quantity of gasoline produced or 
                                distributed by the refinery or importer 
                                in the calendar year only to the extent 
                                that the quantity is less than or equal 
                                to the average annual quantity of 
                                reformulated gasoline produced or 
                                distributed by the refinery or importer 
                                during calendar years 1999 and 2000.
                                    ``(II) Applicability of other 
                                standards.--For any calendar year, the 
                                quantity of gasoline produced or 
                                distributed by a refinery or importer 
                                that is in excess of the quantity 
                                subject to subclause (I) shall be 
                                subject to standards for toxic air 
                                pollutants promulgated under 
                                subparagraph (A) and paragraph (3)(B).
                            ``(iv) Credit program.--The Administrator 
                        shall provide for the granting and use of 
                        credits for emissions of toxic air pollutants 
                        in the same manner as provided in paragraph 
                        (7).
                            ``(v) Regional protection of toxics 
                        reduction baselines.--
                                    ``(I) In general.--Not later than 
                                60 days after the date of enactment of 
                                this subparagraph, and not later than 
                                April 1 of each calendar year that 
                                begins after that date of enactment, 
                                the Administrator shall publish in the 
                                Federal Register a report that 
                                specifies, with respect to the previous 
                                calendar year--
                                            ``(aa) the quantity of 
                                        reformulated gasoline produced 
                                        that is in excess of the 
                                        average annual quantity of 
                                        reformulated gasoline produced 
                                        in 1999 and 2000; and
                                            ``(bb) the reduction of the 
                                        average annual aggregate 
                                        emissions of toxic air 
                                        pollutants in each PADD, based 
                                        on retail survey data or data 
                                        from other appropriate sources.
                                    ``(II) Effect of failure to 
                                maintain aggregate toxics reductions.--
                                If, in any calendar year, the reduction 
                                of the average annual aggregate 
                                emissions of toxic air pollutants in a 
                                PADD fails to meet or exceed the 
                                reduction of the average annual 
                                aggregate emissions of toxic air 
                                pollutants in the PADD in calendar 
                                years 1999 and 2000, the Administrator, 
                                not later than 90 days after the date 
                                of publication of the report for the 
                                calendar year under subclause (I), 
                                shall--
                                            ``(aa) identify, to the 
                                        maximum extent practicable, the 
                                        reasons for the failure, 
                                        including the sources, volumes, 
                                        and characteristics of 
                                        reformulated gasoline that 
                                        contributed to the failure; and
                                            ``(bb) promulgate revisions 
                                        to the regulations promulgated 
                                        under clause (ii), to take 
                                        effect not earlier than 180 
                                        days but not later than 270 
                                        days after the date of 
                                        promulgation, to provide that, 
                                        notwithstanding clause 
                                        (iii)(II), all reformulated 
                                        gasoline produced or 
                                        distributed at each refinery or 
                                        importer shall meet the 
                                        standards applicable under 
                                        clause (ii) not later than 
                                        April 1 of the year following 
                                        the report in subclause (II) 
                                        and for subsequent years.
                            ``(vi) Regulations to control hazardous air 
                        pollutants from motor vehicles and motor 
                        vehicle fuels.--Not later than July 1, 2004, 
                        the Administrator shall promulgate final 
                        regulations to control hazardous air pollutants 
                        from motor vehicles and motor vehicle fuels, as 
                        provided for in section 80.1045 of title 40, 
                        Code of Federal Regulations (as in effect on 
                        the date of enactment of this subparagraph).''.
    (c) Consolidation in Reformulated Gasoline Regulations.--Not later 
than 180 days after the date of enactment of this Act, the 
Administrator of the Environmental Protection Agency shall revise the 
reformulated gasoline regulations under subpart D of part 80 of title 
40, Code of Federal Regulations, to consolidate the regulations 
applicable to VOC-Control Regions 1 and 2 under section 80.41 of that 
title by eliminating the less stringent requirements applicable to 
gasoline designated for VOC-Control Region 2 and instead applying the 
more stringent requirements applicable to gasoline designated for VOC-
Control Region 1.
    (d) Savings Clause.--Nothing in this section is intended to affect 
or prejudice either any legal claims or actions with respect to 
regulations promulgated by the Administrator of the Environmental 
Protection Agency (hereinafter in this subsection referred to as the 
``Administrator'') prior to the date of enactment of this Act regarding 
emissions of toxic air pollutants from motor vehicles or the adjustment 
of standards applicable to a specific refinery or importer made under 
such prior regulations and the Administrator may apply such adjustments 
to the standards applicable to such refinery or importer under clause 
(iii)(I) of section 211(k)(1)(B) of the Clean Air Act, except that--
            (1) the Administrator shall revise such adjustments to be 
        based only on calendar years 1999-2000; and
            (2) for adjustments based on toxic air pollutant emissions 
        from reformulated gasoline significantly below the national 
        annual average emissions of toxic air pollutants from all 
        reformulated gasoline, the Administrator may revise such 
        adjustments to take account of the scope of Federal or State 
        prohibitions on the use of methyl tertiary butyl ether imposed 
        after the date of the enactment of this paragraph, except that 
        any such adjustment shall require such refiner or importer, to 
        the greatest extent practicable, to maintain the reduction 
        achieved during calendar years 1999-2000 in the average annual 
        aggregate emissions of toxic air pollutants from reformulated 
        gasoline produced or distributed by the refinery or importer: 
        Provided, That any such adjustment shall not be made at a level 
        below the average percentage of reductions of emissions of 
        toxic air pollutants for reformulated gasoline supplied to PADD 
        I during calendar years 1999-2000.

SEC. 1506. ANALYSES OF MOTOR VEHICLE FUEL CHANGES.

    Section 211 of the Clean Air Act (42 U.S.C. 7545) is amended by 
inserting after subsection (o) the following:
    ``(p) Analyses of Motor Vehicle Fuel Changes and Emissions Model.--
            ``(1) Anti-backsliding analysis.--
                    ``(A) Draft analysis.--Not later than 4 years after 
                the date of enactment of this subsection, the 
                Administrator shall publish for public comment a draft 
                analysis of the changes in emissions of air pollutants 
                and air quality due to the use of motor vehicle fuel 
                and fuel additives resulting from implementation of the 
                amendments made by subtitle A of title XV of the Energy 
                Policy Act of 2003.
                    ``(B) Final analysis.--After providing a reasonable 
                opportunity for comment but not later than 5 years 
                after the date of enactment of this paragraph, the 
                Administrator shall publish the analysis in final form.
            ``(2) Emissions model.--For the purposes of this 
        subsection, as soon as the necessary data are available, the 
        Administrator shall develop and finalize an emissions model 
        that reasonably reflects the effects of gasoline 
        characteristics or components on emissions from vehicles in the 
        motor vehicle fleet during calendar year 2005.''.

SEC. 1507. DATA COLLECTION.

    Section 205 of the Department of Energy Organization Act (42 U.S.C. 
7135) is amended by adding at the end the following:
    ``(m) Renewable Fuels Survey.--(1) In order to improve the ability 
to evaluate the effectiveness of the Nation's renewable fuels mandate, 
the Administrator shall conduct and publish the results of a survey of 
renewable fuels demand in the motor vehicle fuels market in the United 
States monthly, and in a manner designed to protect the confidentiality 
of individual responses. In conducting the survey, the Administrator 
shall collect information both on a national and regional basis, 
including each of the following:
            ``(A) The quantity of renewable fuels produced.
            ``(B) The quantity of renewable fuels blended.
            ``(C) The quantity of renewable fuels imported.
            ``(D) The quantity of renewable fuels demanded.
            ``(E) Market price data.
            ``(F) Such other analyses or evaluations as the 
        Administrator finds is necessary to achieve the purposes of 
        this section.
    ``(2) The Administrator shall also collect or estimate information 
both on a national and regional basis, pursuant to subparagraphs (A) 
through (F) of paragraph (1), for the 5 years prior to implementation 
of this subsection.
    ``(3) This subsection does not affect the authority of the 
Administrator to collect data under section 52 of the Federal Energy 
Administration Act of 1974 (15 U.S.C. 790a).''.

SEC. 1508. REDUCING THE PROLIFERATION OF STATE FUEL CONTROLS.

    (a) EPA Approval of State Plans With Fuel Controls.--Section 
211(c)(4)(C) of the Clean Air Act (42 U.S.C. 7545(c)(4)(C)) is amended 
by adding at the end the following: ``The Administrator shall not 
approve a control or prohibition respecting the use of a fuel or fuel 
additive under this subparagraph unless the Administrator, after 
consultation with the Secretary of Energy, publishes in the Federal 
Register a finding that, in the Administrator's judgment, such control 
or prohibition will not cause fuel supply or distribution interruptions 
or have a significant adverse impact on fuel producibility in the 
affected area or contiguous areas.''.
    (b) Study.--The Administrator of the Environmental Protection 
Agency (hereinafter in this subsection referred to as the 
``Administrator''), in cooperation with the Secretary of Energy, shall 
undertake a study of the projected effects on air quality, the 
proliferation of fuel blends, fuel availability, and fuel costs of 
providing a preference for each of the following:
            (A) Reformulated gasoline referred to in subsection (k) of 
        section 211 of the Clean Air Act.
            (B) A low RVP gasoline blend that has been certified by the 
        Administrator as having a Reid Vapor Pressure of 7.0 pounds per 
        square inch (psi).
            (C) A low RVP gasoline blend that has been certified by the 
        Administrator as having a Reid Vapor Pressure of 7.8 pounds per 
        square inch (psi).
In carrying out such study, the Administrator shall obtain comments 
from affected parties. The Administrator shall submit the results of 
such study to the Congress not later than 18 months after the date of 
enactment of this Act, together with any recommended legislative 
changes.

SEC. 1509. FUEL SYSTEM REQUIREMENTS HARMONIZATION STUDY.

    (a) Study.--
            (1) In general.--The Administrator of the Environmental 
        Protection Agency (hereinafter in this section referred to as 
        the ``Administrator'') and the Secretary of Energy shall 
        jointly conduct a study of Federal, State, and local 
        requirements concerning motor vehicle fuels, including--
                    (A) requirements relating to reformulated gasoline, 
                volatility (measured in Reid vapor pressure), 
                oxygenated fuel, and diesel fuel; and
                    (B) other requirements that vary from State to 
                State, region to region, or locality to locality.
            (2) Required elements.--The study shall assess--
                    (A) the effect of the variety of requirements 
                described in paragraph (1) on the supply, quality, and 
                price of motor vehicle fuels available to consumers in 
                various States and localities;
                    (B) the effect of the requirements described in 
                paragraph (1) on achievement of--
                            (i) national, regional, and local air 
                        quality standards and goals; and
                            (ii) related environmental and public 
                        health protection standards and goals;
                    (C) the effect of Federal, State, and local motor 
                vehicle fuel regulations, including multiple motor 
                vehicle fuel requirements, on--
                            (i) domestic refineries;
                            (ii) the fuel distribution system; and
                            (iii) industry investment in new capacity;
                    (D) the effect of the requirements described in 
                paragraph (1) on emissions from vehicles, refineries, 
                and fuel handling facilities;
                    (E) the feasibility of developing national or 
                regional motor vehicle fuel slates for the 48 
                contiguous States that, while improving air quality at 
                the national, regional and local levels consistent with 
                the attainment of national ambient air quality 
                standards, could--
                            (i) enhance flexibility in the fuel 
                        distribution infrastructure and improve fuel 
                        fungibility;
                            (ii) reduce price volatility and costs to 
                        consumers and producers;
                            (iii) provide increased liquidity to the 
                        gasoline market; and
                            (iv) enhance fuel quality, consistency, and 
                        supply;
                    (F) the feasibility of providing incentives to 
                promote cleaner burning motor vehicle fuel; and
                    (G) the extent to which improvements in air quality 
                and any increases or decreases in the price of motor 
                fuel can be projected to result from the Environmental 
                Protection Agency's Tier II requirements for 
                conventional gasoline and vehicle emission systems, the 
                reformulated gasoline program, the renewable content 
                requirements established by this subtitle, State 
                programs regarding gasoline volatility, and any other 
                requirements imposed by States or localities affecting 
                the composition of motor fuel.
    (b) Report.--
            (1) In general.--Not later than December 31, 2007, the 
        Administrator and the Secretary of Energy shall submit to 
        Congress a report on the results of the study conducted under 
        subsection (a).
            (2) Recommendations.--
                    (A) In general.--The report under this subsection 
                shall contain recommendations for legislative and 
                administrative actions that may be taken--
                            (i) to improve air quality;
                            (ii) to reduce costs to consumers and 
                        producers; and
                            (iii) to increase supply liquidity.
                    (B) Required considerations.--The recommendations 
                under subparagraph (A) shall take into account the need 
                to provide advance notice of required modifications to 
                refinery and fuel distribution systems in order to 
                ensure an adequate supply of motor vehicle fuel in all 
                States.
            (3) Consultation.--In developing the report under this 
        subsection, the Administrator and the Secretary of Energy shall 
        consult with--
                    (A) the Governors of the States;
                    (B) automobile manufacturers;
                    (C) motor vehicle fuel producers and distributors; 
                and
                    (D) the public.

SEC. 1510. COMMERCIAL BYPRODUCTS FROM MUNICIPAL SOLID WASTE AND 
              CELLULOSIC BIOMASS LOAN GUARANTEE PROGRAM.

    (a) Definition of Municipal Solid Waste.--In this section, the term 
``municipal solid waste'' has the meaning given the term ``solid 
waste'' in section 1004 of the Solid Waste Disposal Act (42 U.S.C. 
6903).
    (b) Establishment of Program.--The Secretary of Energy (hereinafter 
in this section referred to as the ``Secretary'') shall establish a 
program to provide guarantees of loans by private institutions for the 
construction of facilities for the processing and conversion of 
municipal solid waste and cellulosic biomass into fuel ethanol and 
other commercial byproducts.
    (c) Requirements.--The Secretary may provide a loan guarantee under 
subsection (b) to an applicant if--
            (1) without a loan guarantee, credit is not available to 
        the applicant under reasonable terms or conditions sufficient 
        to finance the construction of a facility described in 
        subsection (b);
            (2) the prospective earning power of the applicant and the 
        character and value of the security pledged provide a 
        reasonable assurance of repayment of the loan to be guaranteed 
        in accordance with the terms of the loan; and
            (3) the loan bears interest at a rate determined by the 
        Secretary to be reasonable, taking into account the current 
        average yield on outstanding obligations of the United States 
        with remaining periods of maturity comparable to the maturity 
        of the loan.
    (d) Criteria.--In selecting recipients of loan guarantees from 
among applicants, the Secretary shall give preference to proposals 
that--
            (1) meet all applicable Federal and State permitting 
        requirements;
            (2) are most likely to be successful; and
            (3) are located in local markets that have the greatest 
        need for the facility because of--
                    (A) the limited availability of land for waste 
                disposal;
                    (B) the availability of sufficient quantities of 
                cellulosic biomass; or
                    (C) a high level of demand for fuel ethanol or 
                other commercial byproducts of the facility.
    (e) Maturity.--A loan guaranteed under subsection (b) shall have a 
maturity of not more than 20 years.
    (f) Terms and Conditions.--The loan agreement for a loan guaranteed 
under subsection (b) shall provide that no provision of the loan 
agreement may be amended or waived without the consent of the 
Secretary.
    (g) Assurance of Repayment.--The Secretary shall require that an 
applicant for a loan guarantee under subsection (b) provide an 
assurance of repayment in the form of a performance bond, insurance, 
collateral, or other means acceptable to the Secretary in an amount 
equal to not less than 20 percent of the amount of the loan.
    (h) Guarantee Fee.--The recipient of a loan guarantee under 
subsection (b) shall pay the Secretary an amount determined by the 
Secretary to be sufficient to cover the administrative costs of the 
Secretary relating to the loan guarantee.
    (i) Full Faith and Credit.--The full faith and credit of the United 
States is pledged to the payment of all guarantees made under this 
section. Any such guarantee made by the Secretary shall be conclusive 
evidence of the eligibility of the loan for the guarantee with respect 
to principal and interest. The validity of the guarantee shall be 
incontestable in the hands of a holder of the guaranteed loan.
    (j) Reports.--Until each guaranteed loan under this section has 
been repaid in full, the Secretary shall annually submit to Congress a 
report on the activities of the Secretary under this section.
    (k) Authorization of Appropriations.--There are authorized to be 
appropriated such sums as are necessary to carry out this section.
    (l) Termination of Authority.--The authority of the Secretary to 
issue a loan guarantee under subsection (b) terminates on the date that 
is 10 years after the date of enactment of this Act.

SEC. 1511. RESOURCE CENTER.

    (a) Definition.--In this section, the term ``RFG State'' means a 
State in which is located one or more covered areas (as defined in 
section 211(k)(10)(D) of the Clean Air Act (42 U.S.C. 7545(k)(10)(D)).
    (b) Authorization of Appropriations for Resource Center.--There are 
authorized to be appropriated, for a resource center to further develop 
bioconversion technology using low-cost biomass for the production of 
ethanol at the Center for Biomass-Based Energy at the University of 
Mississippi and the University of Oklahoma, $4,000,000 for each of 
fiscal years 2004 through 2006.
    (c) Renewable Fuel Production Research and Development Grants.--
            (1) In general.--The Administrator of the Environmental 
        Protection Agency shall provide grants for the research into, 
        and development and implementation of, renewable fuel 
        production technologies in RFG States with low rates of ethanol 
        production, including low rates of production of cellulosic 
        biomass ethanol.
            (2) Eligibility.--
                    (A) In general.--The entities eligible to receive a 
                grant under this subsection are academic institutions 
                in RFG States, and consortia made up of combinations of 
                academic institutions, industry, State government 
                agencies, or local government agencies in RFG States, 
                that have proven experience and capabilities with 
                relevant technologies.
                    (B) Application.--To be eligible to receive a grant 
                under this subsection, an eligible entity shall submit 
                to the Administrator an application in such manner and 
                form, and accompanied by such information, as the 
                Administrator may specify.
            (3) Authorization of appropriations.--There are authorized 
        to be appropriated to carry out this subsection $25,000,000 for 
        each of fiscal years 2004 through 2008.

SEC. 1512. CELLULOSIC BIOMASS AND WASTE-DERIVED ETHANOL CONVERSION 
              ASSISTANCE.

    Section 211 of the Clean Air Act (42 U.S.C. 7545) is amended by 
adding at the end the following:
    ``(r) Cellulosic Biomass and Waste-Derived Ethanol Conversion 
Assistance.--
            ``(1) In general.--The Secretary of Energy may provide 
        grants to merchant producers of cellulosic biomass ethanol and 
        waste-derived ethanol in the United States to assist the 
        producers in building eligible production facilities described 
        in paragraph (2) for the production of ethanol.
            ``(2) Eligible production facilities.--A production 
        facility shall be eligible to receive a grant under this 
        subsection if the production facility--
                    ``(A) is located in the United States; and
                    ``(B) uses cellulosic biomass or waste-derived 
                feedstocks derived from agricultural residues, 
                municipal solid waste, or agricultural byproducts as 
                that term is used in section 919 of the Energy Policy 
                Act of 2003.
            ``(3) Authorization of appropriations.--There are 
        authorized to be appropriated the following amounts to carry 
        out this subsection:
                    ``(A) $100,000,000 for fiscal year 2004.
                    ``(B) $250,000,000 for fiscal year 2005.
                    ``(C) $400,000,000 for fiscal year 2006.''.

SEC. 1513. BLENDING OF COMPLIANT REFORMULATED GASOLINES.

    Section 211 of the Clean Air Act (42 U.S.C. 7545) is amended by 
adding at the end the following:
    ``(s) Blending of Compliant Reformulated Gasolines.--
            ``(1) In general.--Notwithstanding subsections (h) and (k) 
        and subject to the limitations in paragraph (2) of this 
        subsection, it shall not be a violation of this subtitle for a 
        gasoline retailer, during any month of the year, to blend at a 
        retail location batches of ethanol-blended and non-ethanol-
        blended reformulated gasoline, provided that--
                    ``(A) each batch of gasoline to be blended has been 
                individually certified as in compliance with 
                subsections (h) and (k) prior to being blended;
                    ``(B) the retailer notifies the Administrator prior 
                to such blending, and identifies the exact location of 
                the retail station and the specific tank in which such 
                blending will take place;
                    ``(C) the retailer retains and, as requested by the 
                Administrator or the Administrator's designee, makes 
                available for inspection such certifications accounting 
                for all gasoline at the retail outlet; and
                    ``(D) the retailer does not, between June 1 and 
                September 15 of each year, blend a batch of VOC-
                controlled, or `summer', gasoline with a batch of non-
                VOC-controlled, or `winter', gasoline (as these terms 
                are defined under subsections (h) and (k)).
    ``(2) Limitations.--
                    ``(A) Frequency limitation.--A retailer shall only 
                be permitted to blend batches of compliant reformulated 
                gasoline under this subsection a maximum of two 
                blending periods between May 1 and September 15 of each 
                calendar year.
                    ``(B) Duration of blending period.--Each blending 
                period authorized under subparagraph (A) shall extend 
                for a period of no more than 10 consecutive calendar 
                days.
            ``(3) Surveys.--A sample of gasoline taken from a retail 
        location that has blended gasoline within the past 30 days and 
        is in compliance with subparagraphs (A), (B), (C), and (D) of 
        paragraph (1) shall not be used in a VOC survey mandated by 40 
        CFR Part 80.
            ``(4) State implementation plans.--A State shall be held 
        harmless and shall not be required to revise its State 
        implementation plan under section 110 to account for the 
        emissions from blended gasoline authorized under paragraph (1).
            ``(5) Preservation of state law.--Nothing in this 
        subsection shall--
                    ``(A) preempt existing State laws or regulations 
                regulating the blending of compliant gasolines; or
                    ``(B) prohibit a State from adopting such 
                restrictions in the future.
            ``(6) Regulations.--The Administrator shall promulgate, 
        after notice and comment, regulations implementing this 
        subsection within one year after the date of enactment of this 
        subsection.
            ``(7) Effective date.--This subsection shall become 
        effective 15 months after the date of its enactment and shall 
        apply to blended batches of reformulated gasoline on or after 
        that date, regardless of whether the implementing regulations 
        required by paragraph (6) have been promulgated by the 
        Administrator by that date.
            ``(8) Liability.--No person other than the person 
        responsible for blending under this subsection shall be subject 
        to an enforcement action or penalties under subsection (d) 
        solely arising from the blending of compliant reformulated 
        gasolines by the retailers.
            ``(9) Formulation of gasoline.--This subsection does not 
        grant authority to the Administrator or any State (or any 
        subdivision thereof) to require reformulation of gasoline at 
        the refinery to adjust for potential or actual emissions 
        increases due to the blending authorized by this subsection.''.

            Subtitle B--Underground Storage Tank Compliance

SEC. 1521. SHORT TITLE.

    This subtitle may be cited as the ``Underground Storage Tank 
Compliance Act of 2003''.

SEC. 1522. LEAKING UNDERGROUND STORAGE TANKS.

    (a) In General.--Section 9004 of the Solid Waste Disposal Act (42 
U.S.C. 6991c) is amended by adding at the end the following:
    ``(f) Trust Fund Distribution.--
            ``(1) In general.--
                    ``(A) Amount and permitted uses of distribution.--
                The Administrator shall distribute to States not less 
                than 80 percent of the funds from the Trust Fund that 
                are made available to the Administrator under section 
                9014(2)(A) for each fiscal year for use in paying the 
                reasonable costs, incurred under a cooperative 
                agreement with any State for--
                            ``(i) actions taken by the State under 
                        section 9003(h)(7)(A);
                            ``(ii) necessary administrative expenses, 
                        as determined by the Administrator, that are 
                        directly related to State fund or State 
                        assurance programs under subsection (c)(1);
                            ``(iii) any State fund or State assurance 
                        program carried out under subsection (c)(1) for 
                        a release from an underground storage tank 
                        regulated under this subtitle to the extent 
                        that, as determined by the State in accordance 
                        with guidelines developed jointly by the 
                        Administrator and the States, the financial 
                        resources of the owner and operator of the 
                        underground storage tank (including resources 
                        provided by a program in accordance with 
                        subsection (c)(1)) are not adequate to pay the 
                        cost of a corrective action without 
                        significantly impairing the ability of the 
                        owner or operator to continue in business; or
                            ``(iv) enforcement, by a State or a local 
                        government, of State or local regulations 
                        pertaining to underground storage tanks 
                        regulated under this subtitle.
                    ``(B) Use of funds for enforcement.--In addition to 
                the uses of funds authorized under subparagraph (A), 
                the Administrator may use funds from the Trust Fund 
                that are not distributed to States under subparagraph 
                (A) for enforcement of any regulation promulgated by 
                the Administrator under this subtitle.
                    ``(C) Prohibited uses.--Funds provided to a State 
                by the Administrator under subparagraph (A) shall not 
                be used by the State to provide financial assistance to 
                an owner or operator to meet any requirement relating 
                to underground storage tanks under subparts B, C, D, H, 
                and G of part 280 of title 40, Code of Federal 
                Regulations (as in effect on the date of enactment of 
                this subsection).
            ``(2) Allocation.--
                    ``(A) Process.--Subject to subparagraphs (B) and 
                (C), in the case of a State with which the 
                Administrator has entered into a cooperative agreement 
                under section 9003(h)(7)(A), the Administrator shall 
                distribute funds from the Trust Fund to the State using 
                an allocation process developed by the Administrator.
                    ``(B) Diversion of state funds.--The Administrator 
                shall not distribute funds under subparagraph (A)(iii) 
                of subsection (f)(1) to any State that has diverted 
                funds from a State fund or State assurance program for 
                purposes other than those related to the regulation of 
                underground storage tanks covered by this subtitle, 
                with the exception of those transfers that had been 
                completed earlier than the date of enactment of this 
                subsection.
                    ``(C) Revisions to process.--The Administrator may 
                revise the allocation process referred to in 
                subparagraph (A) after--
                            ``(i) consulting with State agencies 
                        responsible for overseeing corrective action 
                        for releases from underground storage tanks; 
                        and
                            ``(ii) taking into consideration, at a 
                        minimum, each of the following:
                                    ``(I) The number of confirmed 
                                releases from federally regulated 
                                leaking underground storage tanks in 
                                the States.
                                    ``(II) The number of federally 
                                regulated underground storage tanks in 
                                the States.
                                    ``(III) The performance of the 
                                States in implementing and enforcing 
                                the program.
                                    ``(IV) The financial needs of the 
                                States.
                                    ``(V) The ability of the States to 
                                use the funds referred to in 
                                subparagraph (A) in any year.
            ``(3) Distributions to state agencies.--Distributions from 
        the Trust Fund under this subsection shall be made directly to 
        a State agency that--
                    ``(A) enters into a cooperative agreement referred 
                to in paragraph (2)(A); or
                    ``(B) is enforcing a State program approved under 
                this section.
            ``(4) Cost recovery prohibition.--Funds from the Trust Fund 
        provided by States to owners or operators under paragraph 
        (1)(A)(iii) shall not be subject to cost recovery by the 
        Administrator under section 9003(h)(6).''.
    (b) Withdrawal of Approval of State Funds.--Section 9004(c) of the 
Solid Waste Disposal Act (42 U.S.C. 6991c(c)) is amended by inserting 
the following new paragraph at the end thereof:
            ``(6) Withdrawal of approval.--After an opportunity for 
        good faith, collaborative efforts to correct financial 
        deficiencies with a State fund, the Administrator may withdraw 
        approval of any State fund or State assurance program to be 
        used as a financial responsibility mechanism without 
        withdrawing approval of a State underground storage tank 
        program under section 9004(a).''.

SEC. 1523. INSPECTION OF UNDERGROUND STORAGE TANKS.

    (a) Inspection Requirements.--Section 9005 of the Solid Waste 
Disposal Act (42 U.S.C. 6991d) is amended by inserting the following 
new subsection at the end thereof:
    ``(c) Inspection Requirements.--
            ``(1) Uninspected tanks.--In the case of underground 
        storage tanks regulated under this subtitle that have not 
        undergone an inspection since December 22, 1998, not later than 
        2 years after the date of enactment of this subsection, the 
        Administrator or a State that receives funding under this 
        subtitle, as appropriate, shall conduct on-site inspections of 
        all such tanks to determine compliance with this subtitle and 
        the regulations under this subtitle (40 CFR 280) or a 
        requirement or standard of a State program developed under 
        section 9004.
            ``(2) Periodic inspections.--After completion of all 
        inspections required under paragraph (1), the Administrator or 
        a State that receives funding under this subtitle, as 
        appropriate, shall conduct on-site inspections of each 
        underground storage tank regulated under this subtitle at least 
        once every 3 years to determine compliance with this subtitle 
        and the regulations under this subtitle (40 CFR 280) or a 
        requirement or standard of a State program developed under 
        section 9004. The Administrator may extend for up to one 
        additional year the first 3-year inspection interval under this 
        paragraph if the State demonstrates that it has insufficient 
        resources to complete all such inspections within the first 3-
        year period.
            ``(3) Inspection authority.--Nothing in this section shall 
        be construed to diminish the Administrator's or a State's 
        authorities under section 9005(a).''.
    (b) Study of Alternative Inspection Programs.--The Administrator of 
the Environmental Protection Agency, in coordination with a State, 
shall gather information on compliance assurance programs that could 
serve as an alternative to the inspection programs under section 
9005(c) of the Solid Waste Disposal Act (42 U.S.C. 6991d(c)) and shall, 
within 4 years after the date of enactment of this Act, submit a report 
to the Congress containing the results of such study.

SEC. 1524. OPERATOR TRAINING.

    (a) In General.--Section 9010 of the Solid Waste Disposal Act (42 
U.S.C. 6991i) is amended to read as follows:

``SEC. 9010. OPERATOR TRAINING.

    ``(a) Guidelines.--
            ``(1) In general.--Not later than 2 years after the date of 
        enactment of the Underground Storage Tank Compliance Act of 
        2003, in consultation and cooperation with States and after 
        public notice and opportunity for comment, the Administrator 
        shall publish guidelines that specify training requirements for 
        persons having primary daily on-site management responsibility 
        for the operation and maintenance of underground storage tanks.
            ``(2) Considerations.--The guidelines described in 
        paragraph (1) shall take into account--
                    ``(A) State training programs in existence as of 
                the date of publication of the guidelines;
                    ``(B) training programs that are being employed by 
                tank owners and tank operators as of the date of 
                enactment of the Underground Storage Tank Compliance 
                Act of 2003;
                    ``(C) the high turnover rate of tank operators and 
                other personnel;
                    ``(D) the frequency of improvement in underground 
                storage tank equipment technology;
                    ``(E) the nature of the businesses in which the 
                tank operators are engaged; and
                    ``(F) such other factors as the Administrator 
                determines to be necessary to carry out this section.
    ``(b) State Programs.--
            ``(1) In general.--Not later than 2 years after the date on 
        which the Administrator publishes the guidelines under 
        subsection (a)(1), each State that receives funding under this 
        subtitle shall develop State-specific training requirements 
        that are consistent with the guidelines developed under 
        subsection (a)(1).
            ``(2) Requirements.--State requirements described in 
        paragraph (1) shall--
                    ``(A) be consistent with subsection (a);
                    ``(B) be developed in cooperation with tank owners 
                and tank operators;
                    ``(C) take into consideration training programs 
                implemented by tank owners and tank operators as of the 
                date of enactment of this section; and
                    ``(D) be appropriately communicated to tank owners 
                and operators.
            ``(3) Financial incentive.--The Administrator may award to 
        a State that develops and implements requirements described in 
        paragraph (1), in addition to any funds that the State is 
        entitled to receive under this subtitle, not more than 
        $200,000, to be used to carry out the requirements.
    ``(c) Operators.--All persons having primary daily on-site 
management responsibility for the operation and maintenance of any 
underground storage tank shall--
            ``(1) meet the training requirements developed under 
        subsection (b); and
            ``(2) repeat the applicable requirements developed under 
        subsection (b), if the tank for which they have primary daily 
        on-site management responsibilities is determined to be out of 
        compliance with--
                    ``(A) a requirement or standard promulgated by the 
                Administrator under section 9003; or
                    ``(B) a requirement or standard of a State program 
                approved under section 9004.''.
    (b) State Program Requirement.--Section 9004(a) of the Solid Waste 
Disposal Act (42 U.S.C. 6991c(a)) is amended by striking ``and'' at the 
end of paragraph (7), by striking the period at the end of paragraph 
(8) and inserting ``; and'', and by adding the following new paragraph 
at the end thereof:
            ``(9) State-specific training requirements as required by 
        section 9010.''.
    (c) Enforcement.--Section 9006(d)(2) of such Act (42 U.S.C. 6991e) 
is amended as follows:
            (1) By striking ``or'' at the end of subparagraph (B).
            (2) By adding the following new subparagraph after 
        subparagraph (C):
            ``(D) the training requirements established by States 
        pursuant to section 9010 (relating to operator training); or''.
    (d) Table of Contents.--The item relating to section 9010 in table 
of contents for the Solid Waste Disposal Act is amended to read as 
follows:

``Sec. 9010. Operator training.''.

SEC. 1525. REMEDIATION FROM OXYGENATED FUEL ADDITIVES.

    Section 9003(h) of the Solid Waste Disposal Act (42 U.S.C. 
6991b(h)) is amended as follows:
            (1) In paragraph (7)(A)--
                    (A) by striking ``paragraphs (1) and (2) of this 
                subsection'' and inserting ``paragraphs (1), (2), and 
                (12)'' ; and
                    (B) by striking ``and including the authorities of 
                paragraphs (4), (6), and (8) of this subsection'' and 
                inserting ``and the authority under sections 9011 and 
                9012 and paragraphs (4), (6), and (8),''.
            (2) By adding at the end the following:
            ``(12) Remediation of oxygenated fuel contamination.--
                    ``(A) In general.--The Administrator and the States 
                may use funds made available under section 9014(2)(B) 
                to carry out corrective actions with respect to a 
                release of a fuel containing an oxygenated fuel 
                additive that presents a threat to human health or 
                welfare or the environment.
                    ``(B) Applicable authority.--The Administrator or a 
                State shall carry out subparagraph (A) in accordance 
                with paragraph (2), and in the case of a State, in 
                accordance with a cooperative agreement entered into by 
                the Administrator and the State under paragraph (7).''.

SEC. 1526. RELEASE PREVENTION, COMPLIANCE, AND ENFORCEMENT.

    (a) Release Prevention and Compliance.--Subtitle I of the Solid 
Waste Disposal Act (42 U.S.C. 6991 et seq.) is amended by adding at the 
end the following:

``SEC. 9011. USE OF FUNDS FOR RELEASE PREVENTION AND COMPLIANCE.

    ``Funds made available under section 9014(2)(D) from the Trust Fund 
may be used to conduct inspections, issue orders, or bring actions 
under this subtitle--
            ``(1) by a State, in accordance with a grant or cooperative 
        agreement with the Administrator, of State regulations 
        pertaining to underground storage tanks regulated under this 
        subtitle; and
            ``(2) by the Administrator, for tanks regulated under this 
        subtitle (including under a State program approved under 
        section 9004).''.
    (b) Government-Owned Tanks.--Section 9003 of the Solid Waste 
Disposal Act (42 U.S.C. 6991b) is amended by adding at the end the 
following:
    ``(i) Government-Owned Tanks.--
            ``(1) State compliance report.--(A) Not later than 2 years 
        after the date of enactment of this subsection, each State that 
        receives funding under this subtitle shall submit to the 
        Administrator a State compliance report that--
                    ``(i) lists the location and owner of each 
                underground storage tank described in subparagraph (B) 
                in the State that, as of the date of submission of the 
                report, is not in compliance with section 9003; and
                    ``(ii) specifies the date of the last inspection 
                and describes the actions that have been and will be 
                taken to ensure compliance of the underground storage 
                tank listed under clause (i) with this subtitle.
            ``(B) An underground storage tank described in this 
        subparagraph is an underground storage tank that is--
                    ``(i) regulated under this subtitle; and
                    ``(ii) owned or operated by the Federal, State, or 
                local government.
            ``(C) The Administrator shall make each report, received 
        under subparagraph (A), available to the public through an 
        appropriate media.
            ``(2) Financial incentive.--The Administrator may award to 
        a State that develops a report described in paragraph (1), in 
        addition to any other funds that the State is entitled to 
        receive under this subtitle, not more than $50,000, to be used 
        to carry out the report.
            ``(3) Not a safe harbor.--This subsection does not relieve 
        any person from any obligation or requirement under this 
        subtitle.''.
    (c) Public Record.--Section 9002 of the Solid Waste Disposal Act 
(42 U.S.C. 6991a) is amended by adding at the end the following:
    ``(d) Public Record.--
            ``(1) In general.--The Administrator shall require each 
        State that receives Federal funds to carry out this subtitle to 
        maintain, update at least annually, and make available to the 
        public, in such manner and form as the Administrator shall 
        prescribe (after consultation with States), a record of 
        underground storage tanks regulated under this subtitle.
            ``(2) Considerations.--To the maximum extent practicable, 
        the public record of a State, respectively, shall include, for 
        each year--
                    ``(A) the number, sources, and causes of 
                underground storage tank releases in the State;
                    ``(B) the record of compliance by underground 
                storage tanks in the State with--
                            ``(i) this subtitle; or
                            ``(ii) an applicable State program approved 
                        under section 9004; and
                    ``(C) data on the number of underground storage 
                tank equipment failures in the State.''.
    (d) Incentive for Performance.--Section 9006 of the Solid Waste 
Disposal Act (42 U.S.C. 6991e) is amended by adding at the end the 
following:
    ``(e) Incentive for Performance.--Both of the following may be 
taken into account in determining the terms of a civil penalty under 
subsection (d):
            ``(1) The compliance history of an owner or operator in 
        accordance with this subtitle or a program approved under 
        section 9004.
            ``(2) Any other factor the Administrator considers 
        appropriate.''.
    (e) Table of Contents.--The table of contents for such subtitle I 
is amended by adding the following new item at the end thereof:

``Sec. 9011. Use of funds for release prevention and compliance.''.

SEC. 1527. DELIVERY PROHIBITION.

    (a) In General.--Subtitle I of the Solid Waste Disposal Act (42 
U.S.C. 6991 et seq.) is amended by adding at the end the following:

``SEC. 9012. DELIVERY PROHIBITION.

    ``(a) Requirements.--
            ``(1) Prohibition of delivery or deposit.--Beginning 2 
        years after the date of enactment of this section, it shall be 
        unlawful to deliver to, deposit into, or accept a regulated 
        substance into an underground storage tank at a facility which 
        has been identified by the Administrator or a State 
        implementing agency to be ineligible for fuel delivery or 
        deposit.
            ``(2) Guidance.--Within 1 year after the date of enactment 
        of this section, the Administrator and States that receive 
        funding under this subtitle shall, in consultation with the 
        underground storage tank owner and product delivery industries, 
        for territory for which they are the primary implementing 
        agencies, publish guidelines detailing the specific processes 
        and procedures they will use to implement the provisions of 
this section. The processes and procedures include, at a minimum--
                    ``(A) the criteria for determining which 
                underground storage tank facilities are ineligible for 
                delivery or deposit;
                    ``(B) the mechanisms for identifying which 
                facilities are ineligible for delivery or deposit to 
                the underground storage tank owning and fuel delivery 
                industries;
                    ``(C) the process for reclassifying ineligible 
                facilities as eligible for delivery or deposit; and
                    ``(D) a delineation of, or a process for 
                determining, the specified geographic areas subject to 
                paragraph (4).
            ``(3) Delivery prohibition notice.--
                    ``(A) Roster.--The Administrator and each State 
                implementing agency that receives funding under this 
                subtitle shall establish within 24 months after the 
                date of enactment of this section a Delivery 
                Prohibition Roster listing underground storage tanks 
                under the Administrator's or the State's jurisdiction 
                that are determined to be ineligible for delivery or 
                deposit pursuant to paragraph (2).
                    ``(B) Notification.--The Administrator and each 
                State, as appropriate, shall make readily known, to 
                underground storage tank owners and operators and to 
                product delivery industries, the underground storage 
                tanks listed on a Delivery Prohibition Roster by:
                            ``(i) posting such Rosters, including the 
                        physical location and street address of each 
                        listed underground storage tank, on official 
                        web sites and, if the Administrator or the 
                        State so chooses, other electronic means;
                            ``(ii) updating these Rosters periodically; 
                        and
                            ``(iii) installing a tamper-proof tag, 
                        seal, or other device blocking the fill pipes 
                        of such underground storage tanks to prevent 
                        the delivery of product into such underground 
                        storage tanks.
                    ``(C) Roster updates.--The Administrator and the 
                State shall update the Delivery Prohibition Rosters as 
                appropriate, but not less than once a month on the 
                first day of the month.
                    ``(D) Tampering with device.--
                            ``(i) Prohibition.--It shall be unlawful 
                        for any person, other than an authorized 
                        representative of the Administrator or a State, 
                        as appropriate, to remove, tamper with, 
                        destroy, or damage a device installed by the 
                        Administrator or a State, as appropriate, under 
                        subparagraph (B)(iii) of this subsection.
                            ``(ii) Civil penalties.--Any person 
                        violating clause (i) of this subparagraph shall 
                        be subject to a civil penalty not to exceed 
                        $10,000 for each violation.
            ``(4) Limitation.--
                    ``(A) Rural and remote areas.--Subject to 
                subparagraph (B), the Administrator or a State shall 
                not include an underground storage tank on a Delivery 
                Prohibition Roster under paragraph (3) if an urgent 
                threat to public health, as determined by the 
                Administrator, does not exist and if such a delivery 
                prohibition would jeopardize the availability of, or 
                access to, fuel in any rural and remote areas.
                    ``(B) Applicability of limitation.--The limitation 
                under subparagraph (A) shall apply only during the 180-
                day period following the date of a determination by the 
                Administrator or the appropriate State that exercising 
                the authority of paragraph (3) is limited by 
                subparagraph (A).
    ``(b) Effect on State Authority.--Nothing in this section shall 
affect the authority of a State to prohibit the delivery of a regulated 
substance to an underground storage tank.
    ``(c) Defense to Violation.--A person shall not be in violation of 
subsection (a)(1) if the underground storage tank into which a 
regulated substance is delivered is not listed on the Administrator's 
or the appropriate State's Prohibited Delivery Roster 7 calendar days 
prior to the delivery being made.''.
    (b) Enforcement.--Section 9006(d)(2) of such Act (42 U.S.C. 
6991e(d)(2)) is amended as follows:
            (1) By adding the following new subparagraph after 
        subparagraph (D):
            ``(E) the delivery prohibition requirement established by 
        section 9012,''.
            (2) By adding the following new sentence at the end 
        thereof: ``Any person making or accepting a delivery or deposit 
        of a regulated substance to an underground storage tank at an 
        ineligible facility in violation of section 9012 shall also be 
        subject to the same civil penalty for each day of such 
        violation.''.
    (c) Table of Contents.--The table of contents for such subtitle I 
is amended by adding the following new item at the end thereof:

``Sec. 9012. Delivery prohibition.''.

SEC. 1528. FEDERAL FACILITIES.

    Section 9007 of the Solid Waste Disposal Act (42 U.S.C. 6991f) is 
amended to read as follows:

``SEC. 9007. FEDERAL FACILITIES.

    ``(a) In General.--Each department, agency, and instrumentality of 
the executive, legislative, and judicial branches of the Federal 
Government (1) having jurisdiction over any underground storage tank or 
underground storage tank system, or (2) engaged in any activity 
resulting, or which may result, in the installation, operation, 
management, or closure of any underground storage tank, release 
response activities related thereto, or in the delivery, acceptance, or 
deposit of any regulated substance to an underground storage tank or 
underground storage tank system shall be subject to, and comply with, 
all Federal, State, interstate, and local requirements, both 
substantive and procedural (including any requirement for permits or 
reporting or any provisions for injunctive relief and such sanctions as 
may be imposed by a court to enforce such relief), respecting 
underground storage tanks in the same manner, and to the same extent, 
as any person is subject to such requirements, including the payment of 
reasonable service charges. The Federal, State, interstate, and local 
substantive and procedural requirements referred to in this subsection 
include, but are not limited to, all administrative orders and all 
civil and administrative penalties and fines, regardless of whether 
such penalties or fines are punitive or coercive in nature or are 
imposed for isolated, intermittent, or continuing violations. The 
United States hereby expressly waives any immunity otherwise applicable 
to the United States with respect to any such substantive or procedural 
requirement (including, but not limited to, any injunctive relief, 
administrative order or civil or administrative penalty or fine 
referred to in the preceding sentence, or reasonable service charge). 
The reasonable service charges referred to in this subsection include, 
but are not limited to, fees or charges assessed in connection with the 
processing and issuance of permits, renewal of permits, amendments to 
permits, review of plans, studies, and other documents, and inspection 
and monitoring of facilities, as well as any other nondiscriminatory 
charges that are assessed in connection with a Federal, State, 
interstate, or local underground storage tank regulatory program. 
Neither the United States, nor any agent, employee, or officer thereof, 
shall be immune or exempt from any process or sanction of any State or 
Federal Court with respect to the enforcement of any such injunctive 
relief. No agent, employee, or officer of the United States shall be 
personally liable for any civil penalty under any Federal, State, 
interstate, or local law concerning underground storage tanks with 
respect to any act or omission within the scope of the official duties 
of the agent, employee, or officer. An agent, employee, or officer of 
the United States shall be subject to any criminal sanction (including, 
but not limited to, any fine or imprisonment) under any Federal or 
State law concerning underground storage tanks, but no department, 
agency, or instrumentality of the executive, legislative, or judicial 
branch of the Federal Government shall be subject to any such sanction. 
The President may exempt any underground storage tank of any 
department, agency, or instrumentality in the executive branch from 
compliance with such a requirement if he determines it to be in the 
paramount interest of the United States to do so. No such exemption 
shall be granted due to lack of appropriation unless the President 
shall have specifically requested such appropriation as a part of the 
budgetary process and the Congress shall have failed to make available 
such requested appropriation. Any exemption shall be for a period not 
in excess of one year, but additional exemptions may be granted for 
periods not to exceed one year upon the President's making a new 
determination. The President shall report each January to the Congress 
all exemptions from the requirements of this section granted during the 
preceding calendar year, together with his reason for granting each 
such exemption.
    ``(b) Review of and Report on Federal Underground Storage Tanks.--
            ``(1) Review.--Not later than 12 months after the date of 
        enactment of the Underground Storage Tank Compliance Act of 
        2003, each Federal agency that owns or operates 1 or more 
        underground storage tanks, or that manages land on which 1 or 
        more underground storage tanks are located, shall submit to the 
        Administrator, the Committee on Energy and Commerce of the 
        United States House of Representatives, and the Committee on 
        the Environment and Public Works of the United States Senate a 
        compliance strategy report that--
                    ``(A) lists the location and owner of each 
                underground storage tank described in this paragraph;
                    ``(B) lists all tanks that are not in compliance 
                with this subtitle that are owned or operated by the 
                Federal agency;
                    ``(C) specifies the date of the last inspection by 
                a State or Federal inspector of each underground 
                storage tank owned or operated by the agency;
                    ``(D) lists each violation of this subtitle 
                respecting any underground storage tank owned or 
                operated by the agency;
                    ``(E) describes the operator training that has been 
                provided to the operator and other persons having 
                primary daily on-site management responsibility for the 
                operation and maintenance of underground storage tanks 
                owned or operated by the agency; and
                    ``(F) describes the actions that have been and will 
                be taken to ensure compliance for each underground 
                storage tank identified under subparagraph (B).
            ``(2) Not a safe harbor.--This subsection does not relieve 
        any person from any obligation or requirement under this 
        subtitle.''.

SEC. 1529. TANKS ON TRIBAL LANDS.

    (a) In General.--Subtitle I of the Solid Waste Disposal Act (42 
U.S.C. 6991 et seq.) is amended by adding the following at the end 
thereof:

``SEC. 9013. TANKS ON TRIBAL LANDS.

    ``(a) Strategy.--The Administrator, in coordination with Indian 
tribes, shall, not later than 1 year after the date of enactment of 
this section, develop and implement a strategy--
            ``(1) giving priority to releases that present the greatest 
        threat to human health or the environment, to take necessary 
        corrective action in response to releases from leaking 
        underground storage tanks located wholly within the boundaries 
        of--
                    ``(A) an Indian reservation; or
                    ``(B) any other area under the jurisdiction of an 
                Indian tribe; and
            ``(2) to implement and enforce requirements concerning 
        underground storage tanks located wholly within the boundaries 
        of--
                    ``(A) an Indian reservation; or
                    ``(B) any other area under the jurisdiction of an 
                Indian tribe.
    ``(b) Report.--Not later than 2 years after the date of enactment 
of this section, the Administrator shall submit to Congress a report 
that summarizes the status of implementation and enforcement of this 
subtitle in areas located wholly within--
            ``(1) the boundaries of Indian reservations; and
            ``(2) any other areas under the jurisdiction of an Indian 
        tribe.
The Administrator shall make the report under this subsection available 
to the public.
    ``(c) Not a Safe Harbor.--This section does not relieve any person 
from any obligation or requirement under this subtitle.
    ``(d) State Authority.--Nothing in this section applies to any 
underground storage tank that is located in an area under the 
jurisdiction of a State, or that is subject to regulation by a State, 
as of the date of enactment of this section.''.
    (b) Table of Contents.--The table of contents for such subtitle I 
is amended by adding the following new item at the end thereof:

``Sec. 9013. Tanks on Tribal lands.''.

SEC. 1530. FUTURE RELEASE CONTAINMENT TECHNOLOGY.

    Not later than 2 years after the date of enactment of this Act, the 
Administrator of the Environmental Protection Agency, after 
consultation with States, shall make available to the public and to the 
Committee on Energy and Commerce of the House of Representatives and 
the Committee on Environment and Public Works of the Senate information 
on the effectiveness of alternative possible methods and means for 
containing releases from underground storage tanks systems.

SEC. 1531. AUTHORIZATION OF APPROPRIATIONS.

    (a) In General.--Subtitle I of the Solid Waste Disposal Act (42 
U.S.C. 6991 et seq.) is amended by adding at the end the following:

``SEC. 9014. AUTHORIZATION OF APPROPRIATIONS.

    ``There are authorized to be appropriated to the Administrator the 
following amounts:
            ``(1) To carry out subtitle I (except sections 9003(h), 
        9005(c), 9011 and 9012) $50,000,000 for each of fiscal years 
        2004 through 2008.
            ``(2) From the Trust Fund, notwithstanding section 
        9508(c)(1) of the Internal Revenue Code of 1986:
                    ``(A) to carry out section 9003(h) (except section 
                9003(h)(12)) $200,000,000 for each of fiscal years 2004 
                through 2008;
                    ``(B) to carry out section 9003(h)(12), 
                $200,000,000 for each of fiscal years 2004 through 
                2008;
                    ``(C) to carry out sections 9004(f) and 9005(c) 
                $100,000,000 for each of fiscal years 2004 through 
                2008; and
                    ``(D) to carry out sections 9011 and 9012 
                $55,000,000 for each of fiscal years 2004 through 
                2008.''.
    (b) Table of Contents.--The table of contents for such subtitle I 
is amended by adding the following new item at the end thereof:

``Sec. 9014. Authorization of appropriations.''.

SEC. 1532. CONFORMING AMENDMENTS.

    (a) In General.--Section 9001 of the Solid Waste Disposal Act (42 
U.S.C. 6991) is amended as follows:
            (1) By striking ``For the purposes of this subtitle--'' and 
        inserting ``In this subtitle:''.
            (2) By redesignating paragraphs (1), (2), (3), (4), (5), 
        (6), (7), and (8) as paragraphs (10), (7), (4), (3), (8), (5), 
        (2), and (6), respectively.
            (3) By inserting before paragraph (2) (as redesignated by 
        paragraph (2) of this subsection) the following:
            ``(1) Indian tribe.--
                    ``(A) In general.-- The term `Indian tribe' means 
                any Indian tribe, band, nation, or other organized 
                group or community that is recognized as being eligible 
                for special programs and services provided by the 
                United States to Indians because of their status as 
                Indians.
                    ``(B) Inclusions.--The term `Indian tribe' includes 
                an Alaska Native village, as defined in or established 
                under the Alaska Native Claims Settlement Act (43 
                U.S.C. 1601 et seq.); and''.
            (4) By inserting after paragraph (8) (as redesignated by 
        paragraph (2) of this subsection) the following:
            ``(9) Trust fund.-- The term `Trust Fund' means the Leaking 
        Underground Storage Tank Trust Fund established by section 9508 
        of the Internal Revenue Code of 1986.''.
    (b) Conforming Amendments.--The Solid Waste Disposal Act (42 U.S.C. 
6901 and following) is amended as follows:
            (1) Section 9003(f) (42 U.S.C. 6991b(f)) is amended--
                    (A) in paragraph (1), by striking ``9001(2)(B)'' 
                and inserting ``9001(7)(B)''; and
                    (B) in paragraphs (2) and (3), by striking 
                ``9001(2)(A)'' each place it appears and inserting 
                ``9001(7)(A)''.
            (2) Section 9003(h) (42 U.S.C. 6991b(h)) is amended in 
        paragraphs (1), (2)(C), (7)(A), and (11) by striking ``Leaking 
        Underground Storage Tank Trust Fund'' each place it appears and 
        inserting ``Trust Fund''.
            (3) Section 9009 (42 U.S.C. 6991h) is amended--
                    (A) in subsection (a), by striking ``9001(2)(B)'' 
                and inserting ``9001(7)(B)''; and
                    (B) in subsection (d), by striking ``section 
                9001(1) (A) and (B)'' and inserting ``subparagraphs (A) 
                and (B) of section 9001(10)''.

SEC. 1533. TECHNICAL AMENDMENTS.

    The Solid Waste Disposal Act is amended as follows:
            (1) Section 9001(4)(A) (42 U.S.C. 6991(4)(A)) is amended by 
        striking ``sustances'' and inserting ``substances''.
            (2) Section 9003(f)(1) (42 U.S.C. 6991b(f)(1)) is amended 
        by striking ``subsection (c) and (d) of this section'' and 
        inserting ``subsections (c) and (d)''.
            (3) Section 9004(a) (42 U.S.C. 6991c(a)) is amended by 
        striking ``in 9001(2) (A) or (B) or both'' and inserting ``in 
        subparagraph (A) or (B) of section 9001(7)''.
            (4) Section 9005 (42 U.S.C. 6991d) is amended--
                    (A) in subsection (a), by striking ``study taking'' 
                and inserting ``study, taking'';
                    (B) in subsection (b)(1), by striking ``relevent'' 
                and inserting ``relevant''; and
                    (C) in subsection (b)(4), by striking 
                ``Evironmental'' and inserting ``Environmental''.

                           TITLE XVI--STUDIES

SEC. 1601. STUDY ON INVENTORY OF PETROLEUM AND NATURAL GAS STORAGE.

    (a) Definition.--For purposes of this section ``petroleum'' means 
crude oil, motor gasoline, jet fuel, distillates, and propane.
    (b) Study.--The Secretary of Energy shall conduct a study on 
petroleum and natural gas storage capacity and operational inventory 
levels, nationwide and by major geographical regions.
    (c) Contents.--The study shall address--
            (1) historical normal ranges for petroleum and natural gas 
        inventory levels;
            (2) historical and projected storage capacity trends;
            (3) estimated operation inventory levels below which 
        outages, delivery slowdown, rationing, interruptions in 
        service, or other indicators of shortage begin to appear;
            (4) explanations for inventory levels dropping below normal 
        ranges; and
            (5) the ability of industry to meet United States demand 
        for petroleum and natural gas without shortages or price 
        spikes, when inventory levels are below normal ranges.
    (d) Report to Congress.--Not later than 1 year after the date of 
enactment of this Act, the Secretary of Energy shall submit a report to 
Congress on the results of the study, including findings and any 
recommendations for preventing future supply shortages.

SEC. 1602. NATURAL GAS SUPPLY SHORTAGE REPORT.

    (a) Report.--Not later than 6 months after the date of enactment of 
this Act, the Secretary of Energy shall submit to Congress a report on 
natural gas supplies and demand. In preparing the report, the Secretary 
shall consult with experts in natural gas supply and demand as well as 
representatives of State and local units of government, tribal 
organizations, and consumer and other organizations. As the Secretary 
deems advisable, the Secretary may hold public hearings and provide 
other opportunities for public comment. The report shall contain 
recommendations for Federal actions that, if implemented, will result 
in a balance between natural gas supply and demand at a level that will 
ensure, to the maximum extent practicable, achievement of the 
objectives established in subsection (b).
    (b) Objectives of Report.--In preparing the report, the Secretary 
shall seek to develop a series of recommendations that will result in a 
balance between natural gas supply and demand adequate to--
            (1) provide residential consumers with natural gas at 
        reasonable and stable prices;
            (2) accommodate long-term maintenance and growth of 
        domestic natural gas-dependent industrial, manufacturing, and 
        commercial enterprises;
            (3) facilitate the attainment of national ambient air 
        quality standards under the Clean Air Act;
            (4) permit continued progress in reducing emissions 
        associated with electric power generation; and
            (5) support development of the preliminary phases of 
        hydrogen-based energy technologies.
    (c) Contents of Report.--The report shall provide a comprehensive 
analysis of natural gas supply and demand in the United States for the 
period from 2004 to 2015. The analysis shall include, at a minimum--
            (1) estimates of annual domestic demand for natural gas 
        that take into account the effect of Federal policies and 
        actions that are likely to increase and decrease demand for 
        natural gas;
            (2) projections of annual natural gas supplies, from 
        domestic and foreign sources, under existing Federal policies;
            (3) an identification of estimated natural gas supplies 
        that are not available under existing Federal policies;
            (4) scenarios for decreasing natural gas demand and 
        increasing natural gas supplies comparing relative economic and 
        environmental impacts of Federal policies that--
                    (A) encourage or require the use of natural gas to 
                meet air quality, carbon dioxide emission reduction, or 
                energy security goals;
                    (B) encourage or require the use of energy sources 
                other than natural gas, including coal, nuclear, and 
                renewable sources;
                    (C) support technologies to develop alternative 
                sources of natural gas and synthetic gas, including 
                coal gasification technologies;
                    (D) encourage or require the use of energy 
                conservation and demand side management practices; and
                    (E) affect access to domestic natural gas supplies; 
                and
            (5) recommendations for Federal actions to achieve the 
        objectives of the report, including recommendations that--
                    (A) encourage or require the use of energy sources 
                other than natural gas, including coal, nuclear, and 
                renewable sources;
                    (B) encourage or require the use of energy 
                conservation or demand side management practices;
                    (C) support technologies for the development of 
                alternative sources of natural gas and synthetic gas, 
                including coal gasification technologies; and
                    (D) will improve access to domestic natural gas 
                supplies.

SEC. 1603. SPLIT-ESTATE FEDERAL OIL AND GAS LEASING AND DEVELOPMENT 
              PRACTICES.

    (a) Review.--In consultation with affected private surface owners, 
oil and gas industry, and other interested parties, the Secretary of 
the Interior shall undertake a review of the current policies and 
practices with respect to management of Federal subsurface oil and gas 
development activities and their effects on the privately owned 
surface. This review shall include--
            (1) a comparison of the rights and responsibilities under 
        existing mineral and land law for the owner of a Federal 
        mineral lease, the private surface owners and the Department;
            (2) a comparison of the surface owner consent provisions in 
        section 714 of the Surface Mining Control and Reclamation Act 
        of 1977 (30 U.S.C. 1304) concerning surface mining of Federal 
        coal deposits and the surface owner consent provisions for oil 
        and gas development, including coalbed methane production; and
            (3) recommendations for administrative or legislative 
        action necessary to facilitate reasonable access for Federal 
        oil and gas activities while addressing surface owner concerns 
        and minimizing impacts to private surface.
    (b) Report.--The Secretary of the Interior shall report the results 
of such review to Congress not later than 180 days after the date of 
enactment of this Act.

SEC. 1604. RESOLUTION OF FEDERAL RESOURCE DEVELOPMENT CONFLICTS IN THE 
              POWDER RIVER BASIN.

    The Secretary of the Interior shall--
            (1) undertake a review of existing authorities to resolve 
        conflicts between the development of Federal coal and the 
        development of Federal and non-Federal coalbed methane in the 
        Powder River Basin in Wyoming and Montana; and
            (2) not later than 6 months after the date of enactment of 
        this Act, report to Congress on alternatives to resolve these 
        conflicts and identification of a preferred alternative with 
        specific legislative language, if any, required to implement 
        the preferred alternative.

SEC. 1605. STUDY OF ENERGY EFFICIENCY STANDARDS.

    The Secretary of Energy shall contract with the National Academy of 
Sciences for a study, to be completed within 1 year after the date of 
enactment of this Act, to examine whether the goals of energy 
efficiency standards are best served by measurement of energy consumed, 
and efficiency improvements, at the actual site of energy consumption, 
or through the full fuel cycle, beginning at the source of energy 
production. The Secretary shall submit the report to Congress.

SEC. 1606. TELECOMMUTING STUDY.

    (a) Study Required.--The Secretary, in consultation with the 
Commission, the Director of the Office of Personnel Management, the 
Administrator of General Services, and the Administrator of NTIA, shall 
conduct a study of the energy conservation implications of the 
widespread adoption of telecommuting by Federal employees in the United 
States.
    (b) Required Subjects of Study.--The study required by subsection 
(a) shall analyze the following subjects in relation to the energy 
saving potential of telecommuting by Federal employees:
            (1) Reductions of energy use and energy costs in commuting 
        and regular office heating, cooling, and other operations.
            (2) Other energy reductions accomplished by telecommuting.
            (3) Existing regulatory barriers that hamper telecommuting, 
        including barriers to broadband telecommunications services 
        deployment.
            (4) Collateral benefits to the environment, family life, 
        and other values.
    (c) Report Required.--The Secretary shall submit to the President 
and Congress a report on the study required by this section not later 
than 6 months after the date of enactment of this Act. Such report 
shall include a description of the results of the analysis of each of 
the subject described in subsection (b).
    (d) Definitions.--As used in this section:
            (1) Secretary.--The term ``Secretary'' means the Secretary 
        of Energy.
            (2) Commission.--The term ``Commission'' means the Federal 
        Communications Commission.
            (3) NTIA.--The term ``NTIA'' means the National 
        Telecommunications and Information Administration of the 
        Department of Commerce.
            (4) Telecommuting.--The term ``telecommuting'' means the 
        performance of work functions using communications 
        technologies, thereby eliminating or substantially reducing the 
        need to commute to and from traditional worksites.
            (5) Federal employee.--The term ``Federal employee'' has 
        the meaning provided the term ``employee'' by section 2105 of 
        title 5, United States Code.

SEC. 1607. LIHEAP REPORT.

    Not later than 1 year after the date of enactment of this Act, the 
Secretary of Health and Human Services shall transmit to Congress a 
report on how the Low-Income Home Energy Assistance Program could be 
used more effectively to prevent loss of life from extreme 
temperatures. In preparing such report, the Secretary shall consult 
with appropriate officials in all 50 States and the District of 
Columbia.

SEC. 1608. OIL BYPASS FILTRATION TECHNOLOGY.

    The Secretary of Energy and the Administrator of the Environmental 
Protection Agency shall--
            (1) conduct a joint study of the benefits of oil bypass 
        filtration technology in reducing demand for oil and protecting 
        the environment;
            (2) examine the feasibility of using oil bypass filtration 
        technology in Federal motor vehicle fleets; and
            (3) include in such study, prior to any determination of 
        the feasibility of using oil bypass filtration technology, the 
        evaluation of products and various manufacturers.

SEC. 1609. TOTAL INTEGRATED THERMAL SYSTEMS.

    The Secretary of Energy shall--
            (1) conduct a study of the benefits of total integrated 
        thermal systems in reducing demand for oil and protecting the 
        environment; and
            (2) examine the feasibility of using total integrated 
        thermal systems in Department of Defense and other Federal 
        motor vehicle fleets.

SEC. 1610. UNIVERSITY COLLABORATION.

    Not later than 2 years after the date of enactment of this Act, the 
Secretary of Energy shall transmit to Congress a report that examines 
the feasibility of promoting collaborations between large institutions 
of higher education and small institutions of higher education through 
grants, contracts, and cooperative agreements made by the Secretary for 
energy projects. The Secretary shall also consider providing incentives 
for the inclusion of small institutions of higher education, including 
minority-serving institutions, in energy research grants, contracts, 
and cooperative agreements.

SEC. 1611. RELIABILITY AND CONSUMER PROTECTION ASSESSMENT.

    Not later than 5 years after the date of enactment of this Act, and 
each 5 years thereafter, the Federal Energy Regulatory Commission shall 
assess the effects of the exemption of electric cooperatives and 
government-owned utilities from Commission regulation under section 
201(f) of the Federal Power Act. The assessment shall include any 
effects on--
            (1) reliability of interstate electric transmission 
        networks;
            (2) benefit to consumers, and efficiency, of competitive 
        wholesale electricity markets;
            (3) just and reasonable rates for electricity consumers; 
        and
            (4) the ability of the Commission to protect electricity 
        consumers.
If the Commission finds that the 201(f) exemption results in adverse 
effects on consumers or electric reliability, the Commission shall make 
appropriate recommendations to Congress pursuant to section 311 of the 
Federal Power Act.
                                                       Calendar No. 432

108th CONGRESS

  2d Session

                                S. 2095

Rule___________________________________________________________________

                                 A BILL

  To enhance energy conservation and research and development and to 
    provide for security and diversity in the energy supply for the 
                            American people.

Rule___________________________________________________________________

                           February 23, 2004

            Read the second time and placed on the calendar
```