II 

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.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 

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

5 ‘‘Energy Policy Act of 2003’’. 

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

7 this Act is as follows:
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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 
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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. 
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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. 
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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 
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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 
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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 
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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. 
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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. 
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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 
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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 
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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.
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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. 
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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 
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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.

1 TITLE I—ENERGY EFFICIENCY 

2 Subtitle A—Federal Programs 

3 SEC. 101. ENERGY AND WATER SAVING MEASURES IN CON4 GRESSIONAL BUILDINGS. 

5 (a) IN GENERAL.—Part 3 of title V of the National 

6 Energy Conservation Policy Act (42 U.S.C. 8251 et seq.) 

7 is amended by adding at the end the following: 

8 ‘‘SEC. 552. ENERGY AND WATER SAVINGS MEASURES IN 

9 CONGRESSIONAL BUILDINGS. 

10 ‘‘(a) IN GENERAL.—The Architect of the Capitol—

11 ‘‘(1) shall develop, update, and implement a 

12 cost-effective energy conservation and management 

13 plan (referred to in this section as the ‘plan’) for all 

14 facilities administered by Congress (referred to in 

15 this section as ‘congressional buildings’) to meet the 

16 energy performance requirements for Federal build17 ings established under section 543(a)(1); and 

18 ‘‘(2) shall submit the plan to Congress, not 

19 later than 180 days after the date of enactment of 

20 this section. 
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1 ‘‘(b) PLAN REQUIREMENTS.—The plan shall in2 clude—

3 ‘‘(1) a description of the life cycle cost analysis 

4 used to determine the cost-effectiveness of proposed 

5 energy efficiency projects; 

6 ‘‘(2) a schedule of energy surveys to ensure 

7 complete surveys of all congressional buildings every 

8 5 years to determine the cost and payback period of 

9 energy and water conservation measures; 

10 ‘‘(3) a strategy for installation of life cycle cost11 effective energy and water conservation measures; 

12 ‘‘(4) the results of a study of the costs and ben13 efits of installation of submetering in congressional 

14 buildings; and 

15 ‘‘(5) information packages and ‘how-to’ guides 

16 for each Member and employing authority of Con17 gress that detail simple, cost-effective methods to 

18 save energy and taxpayer dollars in the workplace. 

19 ‘‘(c) ANNUAL REPORT.—The Architect of the Capitol 

20 shall submit to Congress annually a report on congres21 sional energy management and conservation programs re22 quired under this section that describes in detail—

23 ‘‘(1) energy expenditures and savings estimates 

24 for each facility; 
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1 ‘‘(2) energy management and conservation 

2 projects; and 

3 ‘‘(3) future priorities to ensure compliance with 

4 this section.’’. 

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

6 of contents of the National Energy Conservation Policy 

7 Act is amended by adding at the end of the items relating 

8 to part 3 of title V the following new item:

‘‘Sec. 552. Energy and water savings measures in congressional buildings.’’.

9 (c) REPEAL.—Section 310 of the Legislative Branch 

10 Appropriations Act, 1999 (2 U.S.C. 1815), is repealed. 

11 (d) ENERGY INFRASTRUCTURE.—The Architect of 

12 the Capitol, building on the Master Plan Study completed 

13 in July 2000, shall commission a study to evaluate the 

14 energy infrastructure of the Capital Complex to determine 

15 how the infrastructure could be augmented to become 

16 more energy efficient, using unconventional and renewable 

17 energy resources, in a way that would enable the Complex 

18 to have reliable utility service in the event of power fluc19 tuations, shortages, or outages. 

20 (e) AUTHORIZATION OF APPROPRIATIONS.—There 

21 are authorized to be appropriated to the Architect of the 

22 Capitol to carry out subsection (d), $2,000,000 for each 

23 of fiscal years 2004 through 2008. 

24 SEC. 102. ENERGY MANAGEMENT REQUIREMENTS. 

25 (a) ENERGY REDUCTION GOALS.—
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1 (1) AMENDMENT.—Section 543(a)(1) of the 

2 National Energy Conservation Policy Act (42 U.S.C. 

3 8253(a)(1)) is amended by striking ‘‘its Federal 

4 buildings so that’’ and all that follows through the 

5 end and inserting ‘‘the Federal buildings of the 

6 agency (including each industrial or laboratory facil7 ity) so that the energy consumption per gross square 

8 foot of the Federal buildings of the agency in fiscal 

9 years 2004 through 2013 is reduced, as compared 

10 with the energy consumption per gross square foot 

11 of the Federal buildings of the agency in fiscal year 

12 2001, by the percentage specified in the following 

13 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.’’.

14 (2) REPORTING BASELINE.—The energy reduc15 tion goals and baseline established in paragraph (1) 

16 of section 543(a) of the National Energy Conserva17 tion Policy Act (42 U.S.C. 8253(a)(1)), as amended 

18 by this subsection, supersede all previous goals and 

19 baselines under such paragraph, and related report20 ing requirements. 
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1 (b) REVIEW AND REVISION OF ENERGY PERFORM2 ANCE REQUIREMENT.—Section 543(a) of the National 

3 Energy Conservation Policy Act (42 U.S.C. 8253(a)) is 

4 further amended by adding at the end the following: 

5 ‘‘(3) Not later than December 31, 2012, the Sec6 retary shall review the results of the implementation of 

7 the energy performance requirement established under 

8 paragraph (1) and submit to Congress recommendations 

9 concerning energy performance requirements for fiscal 

10 years 2014 through 2023.’’. 

11 (c) EXCLUSIONS.—Section 543(c)(1) of the National 

12 Energy Conservation Policy Act (42 U.S.C. 8253(c)(1)) 

13 is amended by striking ‘‘An agency may exclude’’ and all 

14 that follows through the end and inserting ‘‘(A) An agency 

15 may exclude, from the energy performance requirement 

16 for a fiscal year established under subsection (a) and the 

17 energy management requirement established under sub18 section (b), any Federal building or collection of Federal 

19 buildings, if the head of the agency finds that—

20 ‘‘(i) compliance with those requirements would 

21 be impracticable; 

22 ‘‘(ii) the agency has completed and submitted 

23 all federally required energy management reports; 

24 ‘‘(iii) the agency has achieved compliance with 

25 the energy efficiency requirements of this Act, the 
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1 Energy Policy Act of 1992, Executive orders, and 

2 other Federal law; and 

3 ‘‘(iv) the agency has implemented all prac4 ticable, life cycle cost-effective projects with respect 

5 to the Federal building or collection of Federal 

6 buildings to be excluded. 

7 ‘‘(B) A finding of impracticability under subpara8 graph (A)(i) shall be based on— 

9 ‘‘(i) the energy intensiveness of activities car10 ried out in the Federal building or collection of Fed11 eral buildings; or 

12 ‘‘(ii) the fact that the Federal building or col13 lection of Federal buildings is used in the perform14 ance of a national security function.’’. 

15 (d) REVIEW BY SECRETARY.—Section 543(c)(2) of 

16 the National Energy Conservation Policy Act (42 U.S.C. 

17 8253(c)(2)) is amended— 

18 (1) by striking ‘‘impracticability standards’’ and 

19 inserting ‘‘standards for exclusion’’; 

20 (2) by striking ‘‘a finding of impracticability’’ 

21 and inserting ‘‘the exclusion’’; and 

22 (3) by striking ‘‘energy consumption require23 ments’’ and inserting ‘‘requirements of subsections 

24 (a) and (b)(1)’’. 
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1 (e) CRITERIA.—Section 543(c) of the National En2 ergy Conservation Policy Act (42 U.S.C. 8253(c)) is fur3 ther amended by adding at the end the following: 

4 ‘‘(3) Not later than 180 days after the date of enact5 ment of this paragraph, the Secretary shall issue guide6 lines that establish criteria for exclusions under paragraph 

7 (1).’’. 

8 (f) RETENTION OF ENERGY AND WATER SAVINGS.—

9 Section 546 of the National Energy Conservation Policy 

10 Act (42 U.S.C. 8256) is amended by adding at the end 

11 the following new subsection: 

12 ‘‘(e) RETENTION OF ENERGY AND WATER SAV13 INGS.—An agency may retain any funds appropriated to 

14 that agency for energy expenditures, water expenditures, 

15 or wastewater treatment expenditures, at buildings subject 

16 to the requirements of section 543(a) and (b), that are 

17 not made because of energy savings or water savings. Ex18 cept as otherwise provided by law, such funds may be used 

19 only for energy efficiency, water conservation, or uncon20 ventional and renewable energy resources projects.’’. 

21 (g) REPORTS.—Section 548(b) of the National En22 ergy Conservation Policy Act (42 U.S.C. 8258(b)) is 

23 amended—

24 (1) in the subsection heading, by inserting 

25 ‘‘THE PRESIDENT AND’’ before ‘‘CONGRESS’’; and 
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1 (2) by inserting ‘‘President and’’ before ‘‘Con2 gress’’. 

3 (h) CONFORMING AMENDMENT.—Section 550(d) of 

4 the National Energy Conservation Policy Act (42 U.S.C. 

5 8258b(d)) is amended in the second sentence by striking 

6 ‘‘the 20 percent reduction goal established under section 

7 543(a) of the National Energy Conservation Policy Act 

8 (42 U.S.C. 8253(a)).’’ and inserting ‘‘each of the energy 

9 reduction goals established under section 543(a).’’. 

10 SEC. 103. ENERGY USE MEASUREMENT AND ACCOUNT11 ABILITY. 

12 Section 543 of the National Energy Conservation 

13 Policy Act (42 U.S.C. 8253) is further amended by adding 

14 at the end the following: 

15 ‘‘(e) METERING OF ENERGY USE.—

16 ‘‘(1) DEADLINE.—By October 1, 2010, in ac17 cordance with guidelines established by the Sec18 retary under paragraph (2), all Federal buildings 

19 shall, for the purposes of efficient use of energy and 

20 reduction in the cost of electricity used in such 

21 buildings, be metered or submetered. Each agency 

22 shall use, to the maximum extent practicable, ad23 vanced meters or advanced metering devices that 

24 provide data at least daily and that measure at least 

25 hourly consumption of electricity in the Federal 
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1 buildings of the agency. Such data shall be incor2 porated into existing Federal energy tracking sys3 tems and made available to Federal facility energy 

4 managers. 

5 ‘‘(2) GUIDELINES.—

6 ‘‘(A) IN GENERAL.—Not later than 180 

7 days after the date of enactment of this sub8 section, the Secretary, in consultation with the 

9 Department of Defense, the General Services 

10 Administration, representatives from the meter11 ing industry, utility industry, energy services in12 dustry, energy efficiency industry, energy effi13 ciency advocacy organizations, national labora14 tories, universities, and Federal facility energy 

15 managers, shall establish guidelines for agencies 

16 to carry out paragraph (1). 

17 ‘‘(B) REQUIREMENTS FOR GUIDELINES.—

18 The guidelines shall—

19 ‘‘(i) take into consideration—

20 ‘‘(I) the cost of metering and 

21 submetering and the reduced cost of 

22 operation and maintenance expected 

23 to result from metering and sub24 metering; 
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1 ‘‘(II) the extent to which meter2 ing and submetering are expected to 

3 result in increased potential for en4 ergy management, increased potential 

5 for energy savings and energy effi6 ciency improvement, and cost and en7 ergy savings due to utility contract 

8 aggregation; and

9 ‘‘(III) the measurement and 

10 verification protocols of the Depart11 ment of Energy; 

12 ‘‘(ii) include recommendations con13 cerning the amount of funds and the num14 ber of trained personnel necessary to gath15 er and use the metering information to 

16 track and reduce energy use; 

17 ‘‘(iii) establish priorities for types and 

18 locations of buildings to be metered and 

19 submetered based on cost-effectiveness and 

20 a schedule of 1 or more dates, not later 

21 than 1 year after the date of issuance of 

22 the guidelines, on which the requirements 

23 specified in paragraph (1) shall take effect; 

24 and 
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1 ‘‘(iv) establish exclusions from the re2 quirements specified in paragraph (1) 

3 based on the de minimis quantity of energy 

4 use of a Federal building, industrial proc5 ess, or structure. 

6 ‘‘(3) PLAN.—Not later than 6 months after the 

7 date guidelines are established under paragraph (2), 

8 in a report submitted by the agency under section 

9 548(a), each agency shall submit to the Secretary a 

10 plan describing how the agency will implement the 

11 requirements of paragraph (1), including (A) how 

12 the agency will designate personnel primarily respon13 sible for achieving the requirements and (B) dem14 onstration by the agency, complete with documenta15 tion, of any finding that advanced meters or ad16 vanced metering devices, as defined in paragraph 

17 (1), are not practicable.’’. 

18 SEC. 104. PROCUREMENT OF ENERGY EFFICIENT PROD19 UCTS. 

20 (a) REQUIREMENTS.—Part 3 of title V of the Na21 tional Energy Conservation Policy Act (42 U.S.C. 8251 

22 et seq.), as amended by section 101 of this Act, is amend23 ed by adding at the end the following: 
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1 ‘‘SEC. 553. FEDERAL PROCUREMENT OF ENERGY EFFI2 CIENT PRODUCTS. 

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

4 ‘‘(1) ENERGY STAR PRODUCT.—The term ‘En5 ergy Star product’ means a product that is rated for 

6 energy efficiency under an Energy Star program. 

7 ‘‘(2) ENERGY STAR PROGRAM.—The term ‘En8 ergy Star program’ means the program established 

9 by section 324A of the Energy Policy and Conserva10 tion Act. 

11 ‘‘(3) EXECUTIVE AGENCY.—The term ‘executive 

12 agency’ has the meaning given the term in section 

13 4 of the Office of Federal Procurement Policy Act 

14 (41 U.S.C. 403). 

15 ‘‘(4) FEMP DESIGNATED PRODUCT.—The term 

16 ‘FEMP designated product’ means a product that is 

17 designated under the Federal Energy Management 

18 Program of the Department of Energy as being 

19 among the highest 25 percent of equivalent products 

20 for energy efficiency. 

21 ‘‘(b) PROCUREMENT OF ENERGY EFFICIENT PROD22 UCTS.— 

23 ‘‘(1) REQUIREMENT.—To meet the require24 ments of an executive agency for an energy con25 suming product, the head of the executive agency 

26 shall, except as provided in paragraph (2), procure—
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1 ‘‘(A) an Energy Star product; or 

2 ‘‘(B) a FEMP designated product. 

3 ‘‘(2) EXCEPTIONS.—The head of an executive 

4 agency is not required to procure an Energy Star 

5 product or FEMP designated product under para6 graph (1) if the head of the executive agency finds 

7 in writing that— 

8 ‘‘(A) an Energy Star product or FEMP 

9 designated product is not cost-effective over the 

10 life of the product taking energy cost savings 

11 into account; or 

12 ‘‘(B) no Energy Star product or FEMP 

13 designated product is reasonably available that 

14 meets the functional requirements of the execu15 tive agency. 

16 ‘‘(3) PROCUREMENT PLANNING.—The head of 

17 an executive agency shall incorporate into the speci18 fications for all procurements involving energy con19 suming products and systems, including guide speci20 fications, project specifications, and construction, 

21 renovation, and services contracts that include provi22 sion of energy consuming products and systems, and 

23 into the factors for the evaluation of offers received 

24 for the procurement, criteria for energy efficiency 

25 that are consistent with the criteria used for rating 
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1 Energy Star products and for rating FEMP des2 ignated products. 

3 ‘‘(c) LISTING OF ENERGY EFFICIENT PRODUCTS IN

4 FEDERAL CATALOGS.—Energy Star products and FEMP 

5 designated products shall be clearly identified and promi6 nently displayed in any inventory or listing of products 

7 by the General Services Administration or the Defense Lo8 gistics Agency. The General Services Administration or 

9 the Defense Logistics Agency shall supply only Energy 

10 Star products or FEMP designated products for all prod11 uct categories covered by the Energy Star program or the 

12 Federal Energy Management Program, except in cases 

13 where the agency ordering a product specifies in writing 

14 that no Energy Star product or FEMP designated product 

15 is available to meet the buyer’s functional requirements, 

16 or that no Energy Star product or FEMP designated 

17 product is cost-effective for the intended application over 

18 the life of the product, taking energy cost savings into ac19 count. 

20 ‘‘(d) SPECIFIC PRODUCTS.—(1) In the case of elec21 tric motors of 1 to 500 horsepower, agencies shall select 

22 only premium efficient motors that meet a standard des23 ignated by the Secretary. The Secretary shall designate 

24 such a standard not later than 120 days after the date 

25 of the enactment of this section, after considering the rec-
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1 ommendations of associated electric motor manufacturers 

2 and energy efficiency groups. 

3 ‘‘(2) All Federal agencies are encouraged to take ac4 tions to maximize the efficiency of air conditioning and 

5 refrigeration equipment, including appropriate cleaning 

6 and maintenance, including the use of any system treat7 ment or additive that will reduce the electricity consumed 

8 by air conditioning and refrigeration equipment. Any such 

9 treatment or additive must be—

10 ‘‘(A) determined by the Secretary to be effective 

11 in increasing the efficiency of air conditioning and 

12 refrigeration equipment without having an adverse 

13 impact on air conditioning performance (including 

14 cooling capacity) or equipment useful life; 

15 ‘‘(B) determined by the Administrator of the 

16 Environmental Protection Agency to be environ17 mentally safe; and 

18 ‘‘(C) shown to increase seasonal energy effi19 ciency ratio (SEER) or energy efficiency ratio 

20 (EER) when tested by the National Institute of 

21 Standards and Technology according to Department 

22 of Energy test procedures without causing any ad23 verse impact on the system, system components, the 

24 refrigerant or lubricant, or other materials in the 

25 system. 
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1 Results of testing described in subparagraph (C) shall be 

2 published in the Federal Register for public review and 

3 comment. For purposes of this section, a hardware device 

4 or primary refrigerant shall not be considered an additive. 

5 ‘‘(e) REGULATIONS.—Not later than 180 days after 

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

7 shall issue guidelines to carry out this section.’’. 

8 (b) CONFORMING AMENDMENT.—The table of con9 tents of the National Energy Conservation Policy Act is

10 further amended by inserting after the item relating to 

11 section 552 the following new item:

‘‘Sec. 553. Federal procurement of energy efficient products.’’.

12 SEC. 105. VOLUNTARY COMMITMENTS TO REDUCE INDUS13 TRIAL ENERGY INTENSITY. 

14 (a) VOLUNTARY AGREEMENTS.—The Secretary of 

15 Energy is authorized to enter into voluntary agreements 

16 with 1 or more persons in industrial sectors that consume 

17 significant amounts of primary energy per unit of physical 

18 output to reduce the energy intensity of their production 

19 activities by a significant amount relative to improvements 

20 in each sector in recent years. 

21 (b) RECOGNITION.—The Secretary of Energy, in co22 operation with the Administrator of the Environmental 

23 Protection Agency and other appropriate Federal agen24 cies, shall recognize and publicize the achievements of par25 ticipants in voluntary agreements under this section. 
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1 (c) DEFINITION.—In this section, the term ‘‘energy 

2 intensity’’ means the primary energy consumed per unit 

3 of physical output in an industrial process. 

4 SEC. 106. ADVANCED BUILDING EFFICIENCY TESTBED. 

5 (a) ESTABLISHMENT.—The Secretary of Energy, in 

6 consultation with the Administrator of General Services, 

7 shall establish an Advanced Building Efficiency Testbed 

8 program for the development, testing, and demonstration 

9 of advanced engineering systems, components, and mate10 rials to enable innovations in building technologies. The 

11 program shall evaluate efficiency concepts for government 

12 and industry buildings, and demonstrate the ability of 

13 next generation buildings to support individual and orga14 nizational productivity and health (including by improving 

15 indoor air quality) as well as flexibility and technological 

16 change to improve environmental sustainability. Such pro17 gram shall complement and not duplicate existing national 

18 programs. 

19 (b) PARTICIPANTS.—The program established under 

20 subsection (a) shall be led by a university with the ability 

21 to combine the expertise from numerous academic fields 

22 including, at a minimum, intelligent workplaces and ad23 vanced building systems and engineering, electrical and 

24 computer engineering, computer science, architecture, 

25 urban design, and environmental and mechanical engi-
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1 neering. Such university shall partner with other univer2 sities and entities who have established programs and the 

3 capability of advancing innovative building efficiency tech4 nologies. 

5 (c) AUTHORIZATION OF APPROPRIATIONS.—There 

6 are authorized to be appropriated to the Secretary of En7 ergy to carry out this section $6,000,000 for each of the 

8 fiscal years 2004 through 2006, to remain available until 

9 expended. For any fiscal year in which funds are expended 

under this section, the Secretary shall provide 1 10 ⁄3 of the 

11 total amount to the lead university described in subsection 

(b), and provide the remaining 2 12 ⁄3 to the other participants 

13 referred to in subsection (b) on an equal basis. 

14 SEC. 107. FEDERAL BUILDING PERFORMANCE STANDARDS. 

15 Section 305(a) of the Energy Conservation and Pro16 duction Act (42 U.S.C. 6834(a)) is amended—

17 (1) in paragraph (2)(A), by striking ‘‘CABO 

18 Model Energy Code, 1992’’ and inserting ‘‘the 2003 

19 International Energy Conservation Code’’; and 

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

21 ‘‘(3) REVISED FEDERAL BUILDING ENERGY EFFI22 CIENCY PERFORMANCE STANDARDS.—

23 ‘‘(A) IN GENERAL.—Not later than 1 year after 

24 the date of enactment of this paragraph, the Sec25 retary of Energy shall establish, by rule, revised 
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1 Federal building energy efficiency performance 

2 standards that require that—

3 ‘‘(i) if life-cycle cost-effective, for new Fed4 eral buildings—

5 ‘‘(I) such buildings be designed so as 

6 to achieve energy consumption levels at 

7 least 30 percent below those of the version 

8 current as of the date of enactment of this 

9 paragraph of the ASHRAE Standard or 

10 the International Energy Conservation 

11 Code, as appropriate; and 

12 ‘‘(II) sustainable design principles are 

13 applied to the siting, design, and construc14 tion of all new and replacement buildings; 

15 and 

16 ‘‘(ii) where water is used to achieve energy 

17 efficiency, water conservation technologies shall 

18 be applied to the extent they are life-cycle cost 

19 effective. 

20 ‘‘(B) ADDITIONAL REVISIONS.—Not later than 

21 1 year after the date of approval of each subsequent 

22 revision of the ASHRAE Standard or the Inter23 national Energy Conservation Code, as appropriate, 

24 the Secretary of Energy shall determine, based on 

25 the cost-effectiveness of the requirements under the 
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1 amendments, whether the revised standards estab2 lished under this paragraph should be updated to re3 flect the amendments. 

4 ‘‘(C) STATEMENT ON COMPLIANCE OF NEW

5 BUILDINGS.—In the budget request of the Federal 

6 agency for each fiscal year and each report sub7 mitted by the Federal agency under section 548(a) 

8 of the National Energy Conservation Policy Act (42 

9 U.S.C. 8258(a)), the head of each Federal agency 

10 shall include—

11 ‘‘(i) a list of all new Federal buildings 

12 owned, operated, or controlled by the Federal 

13 agency; and 

14 ‘‘(ii) a statement concerning whether the 

15 Federal buildings meet or exceed the revised 

16 standards established under this paragraph.’’.

17 SEC. 108. INCREASED USE OF RECOVERED MINERAL COM18 PONENT IN FEDERALLY FUNDED PROJECTS 

19 INVOLVING PROCUREMENT OF CEMENT OR 

20 CONCRETE. 

21 (a) AMENDMENT.—Subtitle F of the Solid Waste 

22 Disposal Act (42 U.S.C. 6961 et seq.) is amended by add23 ing at the end the following new section: 
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1 ‘‘INCREASED USE OF RECOVERED MINERAL COMPONENT

2 IN FEDERALLY FUNDED PROJECTS INVOLVING PRO3 CUREMENT OF CEMENT OR CONCRETE

4 ‘‘SEC. 6005. (a) DEFINITIONS.—In this section: 

5 ‘‘(1) AGENCY HEAD.—The term ‘agency head’ 

6 means—

7 ‘‘(A) the Secretary of Transportation; and 

8 ‘‘(B) the head of each other Federal agen9 cy that on a regular basis procures, or provides 

10 Federal funds to pay or assist in paying the 

11 cost of procuring, material for cement or con12 crete projects. 

13 ‘‘(2) CEMENT OR CONCRETE PROJECT.—The 

14 term ‘cement or concrete project’ means a project 

15 for the construction or maintenance of a highway or 

16 other transportation facility or a Federal, State, or 

17 local government building or other public facility 

18 that—

19 ‘‘(A) involves the procurement of cement 

20 or concrete; and 

21 ‘‘(B) is carried out in whole or in part 

22 using Federal funds. 

23 ‘‘(3) RECOVERED MINERAL COMPONENT.—The 

24 term ‘recovered mineral component’ means—

25 ‘‘(A) ground granulated blast furnace slag; 
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1 ‘‘(B) coal combustion fly ash; and 

2 ‘‘(C) any other waste material or byprod3 uct recovered or diverted from solid waste that 

4 the Administrator, in consultation with an 

5 agency head, determines should be treated as 

6 recovered mineral component under this section 

7 for use in cement or concrete projects paid for, 

8 in whole or in part, by the agency head. 

9 ‘‘(b) IMPLEMENTATION OF REQUIREMENTS.—

10 ‘‘(1) IN GENERAL.—Not later than 1 year after 

11 the date of enactment of this section, the Adminis12 trator and each agency head shall take such actions 

13 as are necessary to implement fully all procurement 

14 requirements and incentives in effect as of the date 

15 of enactment of this section (including guidelines 

16 under section 6002) that provide for the use of ce17 ment and concrete incorporating recovered mineral 

18 component in cement or concrete projects. 

19 ‘‘(2) PRIORITY.—In carrying out paragraph (1) 

20 an agency head shall give priority to achieving great21 er use of recovered mineral component in cement or 

22 concrete projects for which recovered mineral compo23 nents historically have not been used or have been 

24 used only minimally. 
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1 ‘‘(3) CONFORMANCE.—The Administrator and 

2 each agency head shall carry out this subsection in 

3 accordance with section 6002. 

4 ‘‘(c) FULL IMPLEMENTATION STUDY.—

5 ‘‘(1) IN GENERAL.—The Administrator, in co6 operation with the Secretary of Transportation and 

7 the Secretary of Energy, shall conduct a study to de8 termine the extent to which current procurement re9 quirements, when fully implemented in accordance 

10 with subsection (b), may realize energy savings and 

11 environmental benefits attainable with substitution 

12 of recovered mineral component in cement used in 

13 cement or concrete projects. 

14 ‘‘(2) MATTERS TO BE ADDRESSED.—The study 

15 shall—

16 ‘‘(A) quantify the extent to which recov17 ered mineral components are being substituted 

18 for Portland cement, particularly as a result of 

19 current procurement requirements, and the en20 ergy savings and environmental benefits associ21 ated with that substitution; 

22 ‘‘(B) identify all barriers in procurement 

23 requirements to greater realization of energy 

24 savings and environmental benefits, including 
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1 barriers resulting from exceptions from current 

2 law; and 

3 ‘‘(C)(i) identify potential mechanisms to 

4 achieve greater substitution of recovered min5 eral component in types of cement or concrete 

6 projects for which recovered mineral compo7 nents historically have not been used or have 

8 been used only minimally; 

9 ‘‘(ii) evaluate the feasibility of establishing 

10 guidelines or standards for optimized substi11 tution rates of recovered mineral component in 

12 those cement or concrete projects; and 

13 ‘‘(iii) identify any potential environmental 

14 or economic effects that may result from great15 er substitution of recovered mineral component 

16 in those cement or concrete projects. 

17 ‘‘(3) REPORT.—Not later than 30 months after 

18 the date of enactment of this section, the Adminis19 trator shall submit to Congress a report on the 

20 study. 

21 ‘‘(d) ADDITIONAL PROCUREMENT REQUIREMENTS.—

22 Unless the study conducted under subsection (c) identifies 

23 any effects or other problems described in subsection 

24 (c)(2)(C)(iii) that warrant further review or delay, the Ad25 ministrator and each agency head shall, not later than 1 
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1 year after the release of the report in accordance with sub2 section (c)(3), take additional actions authorized under 

3 this Act to establish procurement requirements and incen4 tives that provide for the use of cement and concrete with 

5 increased substitution of recovered mineral component in 

6 the construction and maintenance of cement or concrete 

7 projects, so as to—

8 ‘‘(1) realize more fully the energy savings and 

9 environmental benefits associated with increased 

10 substitution; and 

11 ‘‘(2) eliminate barriers identified under sub12 section (c). 

13 ‘‘(e) EFFECT OF SECTION.—Nothing in this section 

14 affects the requirements of section 6002 (including the 

15 guidelines and specifications for implementing those re16 quirements).’’. 

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

18 of contents of the Solid Waste Disposal Act is amended 

19 by adding after the item relating to section 6004 the fol20 lowing new item:

‘‘Sec. 6005. Increased use of recovered mineral component in federally funded 

projects involving procurement of cement or concrete.’’.
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1 Subtitle B—Energy Assistance and 

2 State Programs 

3 SEC. 121. LOW INCOME HOME ENERGY ASSISTANCE PRO4 GRAM. 

5 Section 2602(b) of the Low-Income Home Energy 

6 Assistance Act of 1981 (42 U.S.C. 8621(b)) is amended 

7 by striking ‘‘and $2,000,000,000 for each of fiscal years 

8 2002 through 2004’’ and inserting ‘‘$2,000,000,000 for 

9 fiscal years 2002 and 2003, and $3,400,000,000 for each 

10 of fiscal years 2004 through 2006’’. 

11 SEC. 122. WEATHERIZATION ASSISTANCE. 

12 Section 422 of the Energy Conservation and Produc13 tion Act (42 U.S.C. 6872) is amended by striking ‘‘for 

14 fiscal years 1999 through 2003 such sums as may be nec15 essary’’ and inserting ‘‘$325,000,000 for fiscal year 2004, 

16 $400,000,000 for fiscal year 2005, and $500,000,000 for 

17 fiscal year 2006’’. 

18 SEC. 123. STATE ENERGY PROGRAMS. 

19 (a) STATE ENERGY CONSERVATION PLANS.—Section 

20 362 of the Energy Policy and Conservation Act (42 U.S.C. 

21 6322) is amended by inserting at the end the following 

22 new subsection: 

23 ‘‘(g) The Secretary shall, at least once every 3 years, 

24 invite the Governor of each State to review and, if nec25 essary, revise the energy conservation plan of such State 
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1 submitted under subsection (b) or (e). Such reviews should 

2 consider the energy conservation plans of other States 

3 within the region, and identify opportunities and actions 

4 carried out in pursuit of common energy conservation 

5 goals.’’. 

6 (b) STATE ENERGY EFFICIENCY GOALS.—Section 

7 364 of the Energy Policy and Conservation Act (42 U.S.C. 

8 6324) is amended to read as follows: 

9 ‘‘STATE ENERGY EFFICIENCY GOALS

10 ‘‘SEC. 364. Each State energy conservation plan with 

11 respect to which assistance is made available under this 

12 part on or after the date of enactment of the Energy Pol13 icy Act of 2003 shall contain a goal, consisting of an im14 provement of 25 percent or more in the efficiency of use 

15 of energy in the State concerned in calendar year 2010 

16 as compared to calendar year 1990, and may contain in17 terim goals.’’. 

18 (c) AUTHORIZATION OF APPROPRIATIONS.—Section 

19 365(f) of the Energy Policy and Conservation Act (42 

20 U.S.C. 6325(f)) is amended by striking ‘‘for fiscal years 

21 1999 through 2003 such sums as may be necessary’’ and 

22 inserting ‘‘$100,000,000 for each of the fiscal years 2004 

23 and 2005 and $125,000,000 for fiscal year 2006’’. 

24 SEC. 124. ENERGY EFFICIENT APPLIANCE REBATE PRO25 GRAMS. 

26 (a) DEFINITIONS.—In this section: 
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1 (1) ELIGIBLE STATE.—The term ‘‘eligible 

2 State’’ means a State that meets the requirements 

3 of subsection (b). 

4 (2) ENERGY STAR PROGRAM.—The term ‘‘En5 ergy Star program’’ means the program established 

6 by section 324A of the Energy Policy and Conserva7 tion Act. 

8 (3) RESIDENTIAL ENERGY STAR PRODUCT.—

9 The term ‘‘residential Energy Star product’’ means 

10 a product for a residence that is rated for energy ef11 ficiency under the Energy Star program. 

12 (4) SECRETARY.—The term ‘‘Secretary’’ means 

13 the Secretary of Energy.

14 (5) STATE ENERGY OFFICE.—The term ‘‘State 

15 energy office’’ means the State agency responsible 

16 for developing State energy conservation plans under 

17 section 362 of the Energy Policy and Conservation 

18 Act (42 U.S.C. 6322). 

19 (6) STATE PROGRAM.—The term ‘‘State pro20 gram’’ means a State energy efficient appliance re21 bate program described in subsection (b)(1). 

22 (b) ELIGIBLE STATES.—A State shall be eligible to 

23 receive an allocation under subsection (c) if the State—

24 (1) establishes (or has established) a State en25 ergy efficient appliance rebate program to provide 
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1 rebates to residential consumers for the purchase of 

2 residential Energy Star products to replace used ap3 pliances of the same type; 

4 (2) submits an application for the allocation at 

5 such time, in such form, and containing such infor6 mation as the Secretary may require; and 

7 (3) provides assurances satisfactory to the Sec8 retary that the State will use the allocation to sup9 plement, but not supplant, funds made available to 

10 carry out the State program. 

11 (c) AMOUNT OF ALLOCATIONS.—

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

13 for each fiscal year, the Secretary shall allocate to 

14 the State energy office of each eligible State to carry 

15 out subsection (d) an amount equal to the product 

16 obtained by multiplying the amount made available 

17 under subsection (f) for the fiscal year by the ratio 

18 that the population of the State in the most recent 

19 calendar year for which data are available bears to 

20 the total population of all eligible States in that cal21 endar year. 

22 (2) MINIMUM ALLOCATIONS.—For each fiscal 

23 year, the amounts allocated under this subsection 

24 shall be adjusted proportionately so that no eligible 
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1 State is allocated a sum that is less than an amount 

2 determined by the Secretary. 

3 (d) USE OF ALLOCATED FUNDS.—The allocation to 

4 a State energy office under subsection (c) may be used 

5 to pay up to 50 percent of the cost of establishing and 

6 carrying out a State program. 

7 (e) ISSUANCE OF REBATES.—Rebates may be pro8 vided to residential consumers that meet the requirements 

9 of the State program. The amount of a rebate shall be 

10 determined by the State energy office, taking into consid11 eration—

12 (1) the amount of the allocation to the State 

13 energy office under subsection (c); 

14 (2) the amount of any Federal or State tax in15 centive available for the purchase of the residential 

16 Energy Star product; and 

17 (3) the difference between the cost of the resi18 dential Energy Star product and the cost of an ap19 pliance that is not a residential Energy Star prod20 uct, but is of the same type as, and is the nearest 

21 capacity, performance, and other relevant character22 istics (as determined by the State energy office) to, 

23 the residential Energy Star product. 

24 (f) AUTHORIZATION OF APPROPRIATIONS.—There 

25 are authorized to be appropriated to the Secretary to carry 
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1 out this section $50,000,000 for each of the fiscal years 

2 2004 through 2008.

3 SEC. 125. ENERGY EFFICIENT PUBLIC BUILDINGS. 

4 (a) GRANTS.—The Secretary of Energy may make 

5 grants to the State agency responsible for developing State 

6 energy conservation plans under section 362 of the Energy 

7 Policy and Conservation Act (42 U.S.C. 6322), or, if no 

8 such agency exists, a State agency designated by the Gov9 ernor of the State, to assist units of local government in 

10 the State in improving the energy efficiency of public 

11 buildings and facilities—

12 (1) through construction of new energy efficient 

13 public buildings that use at least 30 percent less en14 ergy than a comparable public building constructed 

15 in compliance with standards prescribed in the most 

16 recent version of the International Energy Conserva17 tion Code, or a similar State code intended to 

18 achieve substantially equivalent efficiency levels; or 

19 (2) through renovation of existing public build20 ings to achieve reductions in energy use of at least 

21 30 percent as compared to the baseline energy use 

22 in such buildings prior to renovation, assuming a 3-

23 year, weather-normalized average for calculating 

24 such baseline. 
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1 (b) ADMINISTRATION.—State energy offices receiving 

2 grants under this section shall—

3 (1) maintain such records and evidence of com4 pliance as the Secretary may require; and 

5 (2) develop and distribute information and ma6 terials and conduct programs to provide technical 

7 services and assistance to encourage planning, fi8 nancing, and design of energy efficient public build9 ings by units of local government. 

10 (c) AUTHORIZATION OF APPROPRIATIONS.—For the 

11 purposes of this section, there are authorized to be appro12 priated to the Secretary of Energy $30,000,000 for each 

13 of fiscal years 2004 through 2008. Not more than 10 per14 cent of appropriated funds shall be used for administra15 tion. 

16 SEC. 126. LOW INCOME COMMUNITY ENERGY EFFICIENCY 

17 PILOT PROGRAM. 

18 (a) GRANTS.—The Secretary of Energy is authorized 

19 to make grants to units of local government, private, non20 profit community development organizations, and Indian 

21 tribe economic development entities to improve energy effi22 ciency; identify and develop alternative, renewable, and 

23 distributed energy supplies; and increase energy conserva24 tion in low income rural and urban communities. 
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1 (b) PURPOSE OF GRANTS.—The Secretary may make 

2 grants on a competitive basis for—

3 (1) investments that develop alternative, renew4 able, and distributed energy supplies; 

5 (2) energy efficiency projects and energy con6 servation programs; 

7 (3) studies and other activities that improve en8 ergy efficiency in low income rural and urban com9 munities; 

10 (4) planning and development assistance for in11 creasing the energy efficiency of buildings and facili12 ties; and 

13 (5) technical and financial assistance to local 

14 government and private entities on developing new 

15 renewable and distributed sources of power or com16 bined heat and power generation. 

17 (c) DEFINITION.—For purposes of this section, the 

18 term ‘‘Indian tribe’’ means any Indian tribe, band, nation, 

19 or other organized group or community, including any 

20 Alaskan Native village or regional or village corporation 

21 as defined in or established pursuant to the Alaska Native 

22 Claims Settlement Act (43 U.S.C. 1601 et seq.), that is 

23 recognized as eligible for the special programs and services 

24 provided by the United States to Indians because of their 

25 status as Indians. 
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1 (d) AUTHORIZATION OF APPROPRIATIONS.—For the 

2 purposes of this section there are authorized to be appro3 priated to the Secretary of Energy $20,000,000 for each 

4 of fiscal years 2004 through 2006. 

5 Subtitle C—Energy Efficient 

6 Products 

7 SEC. 131. ENERGY STAR PROGRAM. 

8 (a) AMENDMENT.—The Energy Policy and Conserva9 tion Act (42 U.S.C. 6201 et seq.) is amended by inserting 

10 the following after section 324: 

11 ‘‘SEC. 324A. ENERGY STAR PROGRAM. 

12 ‘‘There is established at the Department of Energy 

13 and the Environmental Protection Agency a voluntary 

14 program to identify and promote energy-efficient products

15 and buildings in order to reduce energy consumption, im16 prove energy security, and reduce pollution through vol17 untary labeling of or other forms of communication about 

18 products and buildings that meet the highest energy effi19 ciency standards. Responsibilities under the program shall 

20 be divided between the Department of Energy and the En21 vironmental Protection Agency consistent with the terms 

22 of agreements between the 2 agencies. The Administrator 

23 and the Secretary shall—

24 ‘‘(1) promote Energy Star compliant tech25 nologies as the preferred technologies in the market-
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1 place for achieving energy efficiency and to reduce 

2 pollution; 

3 ‘‘(2) work to enhance public awareness of the 

4 Energy Star label, including special outreach to 

5 small businesses; 

6 ‘‘(3) preserve the integrity of the Energy Star 

7 label; 

8 ‘‘(4) solicit comments from interested parties 

9 prior to establishing or revising an Energy Star 

10 product category, specification, or criterion (or effec11 tive dates for any of the foregoing); 

12 ‘‘(5) upon adoption of a new or revised product 

13 category, specification, or criterion, provide reason14 able notice to interested parties of any changes (in15 cluding effective dates) in product categories, speci16 fications, or criteria along with an explanation of 

17 such changes and, where appropriate, responses to 

18 comments submitted by interested parties; and 

19 ‘‘(6) provide appropriate lead time (which shall 

20 be 9 months, unless the Agency or Department de21 termines otherwise) prior to the effective date for a 

22 new or a significant revision to a product category, 

23 specification, or criterion, taking into account the 

24 timing requirements of the manufacturing, product 
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1 marketing, and distribution process for the specific 

2 product addressed.’’. 

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

4 of contents of the Energy Policy and Conservation Act is 

5 amended by inserting after the item relating to section 

6 324 the following new item:

‘‘Sec. 324A. Energy Star program.’’.

7 SEC. 132. HVAC MAINTENANCE CONSUMER EDUCATION 

8 PROGRAM. 

9 Section 337 of the Energy Policy and Conservation 

10 Act (42 U.S.C. 6307) is amended by adding at the end 

11 the following: 

12 ‘‘(c) HVAC MAINTENANCE.—For the purpose of en13 suring that installed air conditioning and heating systems 

14 operate at their maximum rated efficiency levels, the Sec15 retary shall, not later than 180 days after the date of en16 actment of this subsection, carry out a program to educate 

17 homeowners and small business owners concerning the en18 ergy savings resulting from properly conducted mainte19 nance of air conditioning, heating, and ventilating sys20 tems. The Secretary shall carry out the program in a cost21 shared manner in cooperation with the Administrator of 

22 the Environmental Protection Agency and such other enti23 ties as the Secretary considers appropriate, including in24 dustry trade associations, industry members, and energy 

25 efficiency organizations. 
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1 ‘‘(d) SMALL BUSINESS EDUCATION AND ASSIST2 ANCE.—The Administrator of the Small Business Admin3 istration, in consultation with the Secretary of Energy and 

4 the Administrator of the Environmental Protection Agen5 cy, shall develop and coordinate a Government-wide pro6 gram, building on the existing Energy Star for Small 

7 Business Program, to assist small businesses to become 

8 more energy efficient, understand the cost savings obtain9 able through efficiencies, and identify financing options 

10 for energy efficiency upgrades. The Secretary and the Ad11 ministrator of the Small Business Administration shall 

12 make the program information available directly to small 

13 businesses and through other Federal agencies, including 

14 the Federal Emergency Management Program and the 

15 Department of Agriculture.’’. 

16 SEC. 133. ENERGY CONSERVATION STANDARDS FOR ADDI17 TIONAL PRODUCTS. 

18 (a) DEFINITIONS.—Section 321 of the Energy Policy 

19 and Conservation Act (42 U.S.C. 6291) is amended—

20 (1) in paragraph (30)(S), by striking the period 

21 and adding at the end the following: ‘‘but does not 

22 include any lamp specifically designed to be used for 

23 special purpose applications and that is unlikely to 

24 be used in general purpose applications such as 

25 those described in subparagraph (D), and also does 
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1 not include any lamp not described in subparagraph 

2 (D) that is excluded by the Secretary, by rule, be3 cause the lamp is designed for special applications 

4 and is unlikely to be used in general purpose appli5 cations.’’; and 

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

7 ‘‘(32) The term ‘battery charger’ means a de8 vice that charges batteries for consumer products 

9 and includes battery chargers embedded in other 

10 consumer products. 

11 ‘‘(33) The term ‘commercial refrigerators, 

12 freezers, and refrigerator-freezers’ means refrig13 erators, freezers, or refrigerator-freezers that—

14 ‘‘(A) are not consumer products regulated 

15 under this Act; and 

16 ‘‘(B) incorporate most components involved 

17 in the vapor-compression cycle and the refrig18 erated compartment in a single package. 

19 ‘‘(34) The term ‘external power supply’ means 

20 an external power supply circuit that is used to con21 vert household electric current into either DC cur22 rent or lower-voltage AC current to operate a con23 sumer product. 

24 ‘‘(35) The term ‘illuminated exit sign’ means a 

25 sign that—
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1 ‘‘(A) is designed to be permanently fixed in 

2 place to identify an exit; and 

3 ‘‘(B) consists of an electrically powered in4 tegral light source that illuminates the legend 

5 ‘EXIT’ and any directional indicators and pro6 vides contrast between the legend, any direc7 tional indicators, and the background. 

8 ‘‘(36)(A) Except as provided in subparagraph 

9 (B), the term ‘distribution transformer’ means a 

10 transformer that—

11 ‘‘(i) has an input voltage of 34.5 kilovolts 

12 or less; 

13 ‘‘(ii) has an output voltage of 600 volts or 

14 less; and 

15 ‘‘(iii) is rated for operation at a frequency 

16 of 60 Hertz. 

17 ‘‘(B) The term ‘distribution transformer’ does 

18 not include—

19 ‘‘(i) transformers with multiple voltage 

20 taps, with the highest voltage tap equaling at 

21 least 20 percent more than the lowest voltage 

22 tap; 

23 ‘‘(ii) transformers, such as those commonly 

24 known as drive transformers, rectifier trans25 formers, auto-transformers, Uninterruptible 
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1 Power System transformers, impedance trans2 formers, harmonic transformers, regulating 

3 transformers, sealed and nonventilating trans4 formers, machine tool transformers, welding 

5 transformers, grounding transformers, or test6 ing transformers, that are designed to be used 

7 in a special purpose application and are unlikely 

8 to be used in general purpose applications; or 

9 ‘‘(iii) any transformer not listed in clause 

10 (ii) that is excluded by the Secretary by rule be11 cause—

12 ‘‘(I) the transformer is designed for a 

13 special application;

14 ‘‘(II) the transformer is unlikely to be 

15 used in general purpose applications; and 

16 ‘‘(III) the application of standards to 

17 the transformer would not result in signifi18 cant energy savings. 

19 ‘‘(37) The term ‘low-voltage dry-type distribu20 tion transformer’ means a distribution transformer 

21 that—

22 ‘‘(A) has an input voltage of 600 volts or 

23 less; 

24 ‘‘(B) is air-cooled; and 

25 ‘‘(C) does not use oil as a coolant. 
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1 ‘‘(38) The term ‘standby mode’ means the low2 est power consumption mode that—

3 ‘‘(A) cannot be switched off or influenced 

4 by the user; and 

5 ‘‘(B) may persist for an indefinite time 

6 when an appliance is connected to the main 

7 electricity supply and used in accordance with 

8 the manufacturer’s instructions, 

9 as defined on an individual product basis by the Sec10 retary. 

11 ‘‘(39) The term ‘torchiere’ means a portable 

12 electric lamp with a reflector bowl that directs light 

13 upward so as to give indirect illumination. 

14 ‘‘(40) The term ‘traffic signal module’ means a 

15 standard 8-inch (200mm) or 12-inch (300mm) traf16 fic signal indication, consisting of a light source, a 

17 lens, and all other parts necessary for operation, 

18 that communicates movement messages to drivers 

19 through red, amber, and green colors. 

20 ‘‘(41) The term ‘transformer’ means a device 

21 consisting of 2 or more coils of insulated wire that 

22 transfers alternating current by electromagnetic in23 duction from 1 coil to another to change the original 

24 voltage or current value. 
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1 ‘‘(42) The term ‘unit heater’ means a self-con2 tained fan-type heater designed to be installed with3 in the heated space, except that such term does not 

4 include a warm air furnace.’’. 

5 (b) TEST PROCEDURES.—Section 323 of the Energy 

6 Policy and Conservation Act (42 U.S.C. 6293) is amend7 ed—

8 (1) in subsection (b), by adding at the end the 

9 following: 

10 ‘‘(9) Test procedures for illuminated exit signs 

11 shall be based on the test method used under 

12 Version 2.0 of the Energy Star program of the Envi13 ronmental Protection Agency for illuminated exit 

14 signs. 

15 ‘‘(10) Test procedures for distribution trans16 formers and low voltage dry-type distribution trans17 formers shall be based on the ‘Standard Test Meth18 od for Measuring the Energy Consumption of Dis19 tribution Transformers’ prescribed by the National 

20 Electrical Manufacturers Association (NEMA TP 2–

21 1998). The Secretary may review and revise this test 

22 procedure. For purposes of section 346(a), this test 

23 procedure shall be deemed to be testing require24 ments prescribed by the Secretary under section 

25 346(a)(1) for distribution transformers for which the 
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1 Secretary makes a determination that energy con2 servation standards would be technologically feasible 

3 and economically justified, and would result in sig4 nificant energy savings. 

5 ‘‘(11) Test procedures for traffic signal modules 

6 shall be based on the test method used under the 

7 Energy Star program of the Environmental Protec8 tion Agency for traffic signal modules, as in effect 

9 on the date of enactment of this paragraph. 

10 ‘‘(12) Test procedures for medium base com11 pact fluorescent lamps shall be based on the test 

12 methods used under the August 9, 2001, version of 

13 the Energy Star program of the Environmental Pro14 tection Agency and Department of Energy for com15 pact fluorescent lamps. Covered products shall meet 

16 all test requirements for regulated parameters in 

17 section 325(bb). However, covered products may be 

18 marketed prior to completion of lamp life and lumen 

19 maintenance at 40 percent of rated life testing pro20 vided manufacturers document engineering pre21 dictions and analysis that support expected attain22 ment of lumen maintenance at 40 percent rated life 

23 and lamp life time.’’; and 

24 (2) by adding at the end the following: 
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1 ‘‘(f) ADDITIONAL CONSUMER AND COMMERCIAL

2 PRODUCTS.—The Secretary shall, not later than 24 

3 months after the date of enactment of this subsection, pre4 scribe testing requirements for suspended ceiling fans, re5 frigerated bottled or canned beverage vending machines, 

6 and commercial refrigerators, freezers, and refrigerator7 freezers. Such testing requirements shall be based on ex8 isting test procedures used in industry to the extent prac9 tical and reasonable. In the case of suspended ceiling fans, 

10 such test procedures shall include efficiency at both max11 imum output and at an output no more than 50 percent 

12 of the maximum output.’’. 

13 (c) NEW STANDARDS.—Section 325 of the Energy 

14 Policy and Conservation Act (42 U.S.C. 6295) is amended 

15 by adding at the end the following: 

16 ‘‘(u) BATTERY CHARGER AND EXTERNAL POWER

17 SUPPLY ELECTRIC ENERGY CONSUMPTION.—

18 ‘‘(1) INITIAL RULEMAKING.—(A) The Secretary 

19 shall, within 18 months after the date of enactment 

20 of this subsection, prescribe by notice and comment, 

21 definitions and test procedures for the power use of 

22 battery chargers and external power supplies. In es23 tablishing these test procedures, the Secretary shall 

24 consider, among other factors, existing definitions 

25 and test procedures used for measuring energy con-
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1 sumption in standby mode and other modes and as2 sess the current and projected future market for 

3 battery chargers and external power supplies. This 

4 assessment shall include estimates of the significance 

5 of potential energy savings from technical improve6 ments to these products and suggested product 

7 classes for standards. Prior to the end of this time 

8 period, the Secretary shall hold a scoping workshop 

9 to discuss and receive comments on plans for devel10 oping energy conservation standards for energy use 

11 for these products. 

12 ‘‘(B) The Secretary shall, within 3 years after 

13 the date of enactment of this subsection, issue a 

14 final rule that determines whether energy conserva15 tion standards shall be issued for battery chargers 

16 and external power supplies or classes thereof. For 

17 each product class, any such standards shall be set 

18 at the lowest level of energy use that—

19 ‘‘(i) meets the criteria and procedures of 

20 subsections (o), (p), (q), (r), (s), and (t); and 

21 ‘‘(ii) will result in significant overall an22 nual energy savings, considering both standby 

23 mode and other operating modes. 

24 ‘‘(2) REVIEW OF STANDBY ENERGY USE IN

25 COVERED PRODUCTS.—In determining pursuant to 
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1 section 323 whether test procedures and energy con2 servation standards pursuant to this section should 

3 be revised, the Secretary shall consider, for covered 

4 products that are major sources of standby mode en5 ergy consumption, whether to incorporate standby 

6 mode into such test procedures and energy conserva7 tion standards, taking into account, among other 

8 relevant factors, standby mode power consumption 

9 compared to overall product energy consumption. 

10 ‘‘(3) RULEMAKING.—The Secretary shall not 

11 propose a standard under this section unless the 

12 Secretary has issued applicable test procedures for 

13 each product pursuant to section 323. 

14 ‘‘(4) EFFECTIVE DATE.—Any standard issued 

15 under this subsection shall be applicable to products

16 manufactured or imported 3 years after the date of 

17 issuance. 

18 ‘‘(5) VOLUNTARY PROGRAMS.—The Secretary 

19 and the Administrator shall collaborate and develop 

20 programs, including programs pursuant to section 

21 324A (relating to Energy Star Programs) and other 

22 voluntary industry agreements or codes of conduct, 

23 that are designed to reduce standby mode energy 

24 use. 
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1 ‘‘(v) SUSPENDED CEILING FANS, VENDING MA2 CHINES, AND COMMERCIAL REFRIGERATORS, FREEZERS, 

3 AND REFRIGERATOR-FREEZERS.—The Secretary shall not 

4 later than 36 months after the date on which testing re5 quirements are prescribed by the Secretary pursuant to 

6 section 323(f), prescribe, by rule, energy conservation 

7 standards for suspended ceiling fans, refrigerated bottled 

8 or canned beverage vending machines, and commercial re9 frigerators, freezers, and refrigerator-freezers. In estab10 lishing standards under this subsection, the Secretary 

11 shall use the criteria and procedures contained in sub12 sections (o) and (p). Any standard prescribed under this 

13 subsection shall apply to products manufactured 3 years 

14 after the date of publication of a final rule establishing 

15 such standard. 

16 ‘‘(w) ILLUMINATED EXIT SIGNS.—Illuminated exit 

17 signs manufactured on or after January 1, 2005, shall 

18 meet the Version 2.0 Energy Star Program performance 

19 requirements for illuminated exit signs prescribed by the 

20 Environmental Protection Agency. 

21 ‘‘(x) TORCHIERES.—Torchieres manufactured on or 

22 after January 1, 2005—

23 ‘‘(1) shall consume not more than 190 watts of 

24 power; and 
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1 ‘‘(2) shall not be capable of operating with 

2 lamps that total more than 190 watts. 

3 ‘‘(y) LOW VOLTAGE DRY-TYPE DISTRIBUTION

4 TRANSFORMERS.—The efficiency of low voltage dry-type 

5 distribution transformers manufactured on or after Janu6 ary 1, 2005, shall be the Class I Efficiency Levels for dis7 tribution transformers specified in Table 4–2 of the ‘Guide 

8 for Determining Energy Efficiency for Distribution Trans9 formers’ published by the National Electrical Manufactur10 ers Association (NEMA TP–1–2002). 

11 ‘‘(z) TRAFFIC SIGNAL MODULES.—Traffic signal 

12 modules manufactured on or after January 1, 2006, shall 

13 meet the performance requirements used under the En14 ergy Star program of the Environmental Protection Agen15 cy for traffic signals, as in effect on the date of enactment 

16 of this subsection, and shall be installed with compatible, 

17 electrically connected signal control interface devices and 

18 conflict monitoring systems. 

19 ‘‘(aa) UNIT HEATERS.—Unit heaters manufactured 

20 on or after the date that is 3 years after the date of enact21 ment of this subsection shall be equipped with an intermit22 tent ignition device and shall have either power venting 

23 or an automatic flue damper. 

24 ‘‘(bb) MEDIUM BASE COMPACT FLUORESCENT

25 LAMPS.—Bare lamp and covered lamp (no reflector) me-
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1 dium base compact fluorescent lamps manufactured on or 

2 after January 1, 2005, shall meet the following require3 ments prescribed by the August 9, 2001, version of the 

4 Energy Star Program Requirements for Compact Fluores5 cent Lamps, Energy Star Eligibility Criteria, Energy-Effi6 ciency Specification issued by the Environmental Protec7 tion Agency and Department of Energy: minimum initial 

8 efficacy; lumen maintenance at 1000 hours; lumen mainte9 nance at 40 percent of rated life; rapid cycle stress test; 

10 and lamp life. The Secretary may, by rule, establish re11 quirements for color quality (CRI); power factor; oper12 ating frequency; and maximum allowable start time based 

13 on the requirements prescribed by the August 9, 2001, 

14 version of the Energy Star Program Requirements for 

15 Compact Fluorescent Lamps. The Secretary may, by rule, 

16 revise these requirements or establish other requirements 

17 considering energy savings, cost effectiveness, and con18 sumer satisfaction. 

19 ‘‘(cc) EFFECTIVE DATE.—Section 327 shall apply—

20 ‘‘(1) to products for which standards are to be 

21 established under subsections (u) and (v) on the 

22 date on which a final rule is issued by the Depart23 ment of Energy, except that any State or local 

24 standards prescribed or enacted for any such prod25 uct prior to the date on which such final rule is 
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1 issued shall not be preempted until the standard es2 tablished under subsection (u) or (v) for that prod3 uct takes effect; and 

4 ‘‘(2) to products for which standards are estab5 lished under subsections (w) through (bb) on the 

6 date of enactment of those subsections, except that 

7 any State or local standards prescribed or enacted 

8 prior to the date of enactment of those subsections 

9 shall not be preempted until the standards estab10 lished under subsections (w) through (bb) take ef11 fect.’’. 

12 (d) RESIDENTIAL FURNACE FANS.—Section 

13 325(f)(3) of the Energy Policy and Conservation Act (42 

14 U.S.C. 6295(f)(3)) is amended by adding the following 

15 new subparagraph at the end: 

16 ‘‘(D) Notwithstanding any provision of this Act, the 

17 Secretary may consider, and prescribe, if the requirements 

18 of subsection (o) of this section are met, energy efficiency 

19 or energy use standards for electricity used for purposes 

20 of circulating air through duct work.’’. 

21 SEC. 134. ENERGY LABELING. 

22 (a) RULEMAKING ON EFFECTIVENESS OF CONSUMER

23 PRODUCT LABELING.—Section 324(a)(2) of the Energy 

24 Policy and Conservation Act (42 U.S.C. 6294(a)(2)) is 

25 amended by adding at the end the following: 
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1 ‘‘(F) Not later than 3 months after the date of enact2 ment of this subparagraph, the Commission shall initiate 

3 a rulemaking to consider the effectiveness of the current 

4 consumer products labeling program in assisting con5 sumers in making purchasing decisions and improving en6 ergy efficiency and to consider changes to the labeling 

7 rules that would improve the effectiveness of consumer 

8 product labels. Such rulemaking shall be completed not 

9 later than 2 years after the date of enactment of this sub10 paragraph.’’. 

11 (b) RULEMAKING ON LABELING FOR ADDITIONAL

12 PRODUCTS.—Section 324(a) of the Energy Policy and 

13 Conservation Act (42 U.S.C. 6294(a)) is further amended 

14 by adding at the end the following: 

15 ‘‘(5) The Secretary or the Commission, as appro16 priate, may, for covered products referred to in sub17 sections (u) through (aa) of section 325, prescribe, by rule, 

18 pursuant to this section, labeling requirements for such 

19 products after a test procedure has been set pursuant to 

20 section 323. In the case of products to which TP–1 stand21 ards under section 325(y) apply, labeling requirements 

22 shall be based on the ‘Standard for the Labeling of Dis23 tribution Transformer Efficiency’ prescribed by the Na24 tional Electrical Manufacturers Association (NEMA TP–
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1 3) as in effect upon the date of enactment of this para2 graph.’’. 

3 Subtitle D—Public Housing

4 SEC. 141. CAPACITY BUILDING FOR ENERGY-EFFICIENT, AF5 FORDABLE HOUSING. 

6 Section 4(b) of the HUD Demonstration Act of 1993 

7 (42 U.S.C. 9816 note) is amended—

8 (1) in paragraph (1), by inserting before the 

9 semicolon at the end the following: ‘‘, including ca10 pabilities regarding the provision of energy efficient, 

11 affordable housing and residential energy conserva12 tion measures’’; and 

13 (2) in paragraph (2), by inserting before the 

14 semicolon the following: ‘‘, including such activities 

15 relating to the provision of energy efficient, afford16 able housing and residential energy conservation 

17 measures that benefit low-income families’’. 

18 SEC. 142. INCREASE OF CDBG PUBLIC SERVICES CAP FOR 

19 ENERGY CONSERVATION AND EFFICIENCY 

20 ACTIVITIES. 

21 Section 105(a)(8) of the Housing and Community 

22 Development Act of 1974 (42 U.S.C. 5305(a)(8)) is 

23 amended—

24 (1) by inserting ‘‘or efficiency’’ after ‘‘energy 

25 conservation’’; 
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1 (2) by striking ‘‘, and except that’’ and insert2 ing ‘‘; except that’’; and 

3 (3) by inserting before the semicolon at the end 

4 the following: ‘‘; and except that each percentage 

5 limitation under this paragraph on the amount of 

6 assistance provided under this title that may be used 

7 for the provision of public services is hereby in8 creased by 10 percent, but such percentage increase 

9 may be used only for the provision of public services 

10 concerning energy conservation or efficiency’’. 

11 SEC. 143. FHA MORTGAGE INSURANCE INCENTIVES FOR 

12 ENERGY EFFICIENT HOUSING. 

13 (a) SINGLE FAMILY HOUSING MORTGAGE INSUR14 ANCE.—Section 203(b)(2) of the National Housing Act 

15 (12 U.S.C. 1709(b)(2)) is amended, in the first undesig16 nated paragraph beginning after subparagraph (B)(ii)(IV) 

17 (relating to solar energy systems), by striking ‘‘20 per18 cent’’ and inserting ‘‘30 percent’’. 

19 (b) MULTIFAMILY HOUSING MORTGAGE INSUR20 ANCE.—Section 207(c) of the National Housing Act (12 

21 U.S.C. 1713(c)) is amended, in the last undesignated 

22 paragraph beginning after paragraph (3) (relating to solar 

23 energy systems and residential energy conservation meas24 ures), by striking ‘‘20 percent’’ and inserting ‘‘30 per25 cent’’. 
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1 (c) COOPERATIVE HOUSING MORTGAGE INSUR2 ANCE.—Section 213(p) of the National Housing Act (12 

3 U.S.C. 1715e(p)) is amended by striking ‘‘20 per centum’’ 

4 and inserting ‘‘30 percent’’. 

5 (d) REHABILITATION AND NEIGHBORHOOD CON6 SERVATION HOUSING MORTGAGE INSURANCE.—Section 

7 220(d)(3)(B)(iii)(IV) of the National Housing Act (12 

8 U.S.C. 1715k(d)(3)(B)(iii)(IV)) is amended—

9 (1) by striking ‘‘with respect to rehabilitation 

10 projects involving not more than five family units,’’; 

11 and 

12 (2) by striking ‘‘20 per centum’’ and inserting 

13 ‘‘30 percent’’. 

14 (e) LOW-INCOME MULTIFAMILY HOUSING MORT15 GAGE INSURANCE.—Section 221(k) of the National Hous16 ing Act (12 U.S.C. 1715l(k)) is amended by striking ‘‘20 

17 per centum’’ and inserting ‘‘30 percent’’. 

18 (f) ELDERLY HOUSING MORTGAGE INSURANCE.—

19 Section 231(c)(2)(C) of the National Housing Act (12 

20 U.S.C. 1715v(c)(2)(C)) is amended by striking ‘‘20 per 

21 centum’’ and inserting ‘‘30 percent’’. 

22 (g) CONDOMINIUM HOUSING MORTGAGE INSUR23 ANCE.—Section 234(j) of the National Housing Act (12 

24 U.S.C. 1715y(j)) is amended by striking ‘‘20 per centum’’ 

25 and inserting ‘‘30 percent’’. 
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1 SEC. 144. PUBLIC HOUSING CAPITAL FUND. 

2 Section 9 of the United States Housing Act of 1937 

3 (42 U.S.C. 1437g) is amended—

4 (1) in subsection (d)(1)—

5 (A) in subparagraph (I), by striking ‘‘and’’ 

6 at the end; 

7 (B) in subparagraph (J), by striking the 

8 period at the end and inserting a semicolon; 

9 and 

10 (C) by adding at the end the following new 

11 subparagraphs: 

12 ‘‘(K) improvement of energy and water-use 

13 efficiency by installing fixtures and fittings that 

14 conform to the American Society of Mechanical 

15 Engineers/American National Standards Insti16 tute standards A112.19.2–1998 and 

17 A112.18.1–2000, or any revision thereto, appli18 cable at the time of installation, and by increas19 ing energy efficiency and water conservation by 

20 such other means as the Secretary determines 

21 are appropriate; and 

22 ‘‘(L) integrated utility management and 

23 capital planning to maximize energy conserva24 tion and efficiency measures.’’; and 

25 (2) in subsection (e)(2)(C)—
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1 (A) by striking ‘‘The’’ and inserting the 

2 following: 

3 ‘‘(i) IN GENERAL.—The’’; and 

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

5 ‘‘(ii) THIRD PARTY CONTRACTS.—

6 Contracts described in clause (i) may in7 clude contracts for equipment conversions 

8 to less costly utility sources, projects with 

9 resident-paid utilities, and adjustments to 

10 frozen base year consumption, including 

11 systems repaired to meet applicable build12 ing and safety codes and adjustments for 

13 occupancy rates increased by rehabilita14 tion. 

15 ‘‘(iii) TERM OF CONTRACT.—The total 

16 term of a contract described in clause (i) 

17 shall not exceed 20 years to allow longer 

18 payback periods for retrofits, including 

19 windows, heating system replacements, 

20 wall insulation, site-based generation, ad21 vanced energy savings technologies, includ22 ing renewable energy generation, and other 

23 such retrofits.’’. 
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1 SEC. 145. GRANTS FOR ENERGY-CONSERVING IMPROVE2 MENTS FOR ASSISTED HOUSING. 

3 Section 251(b)(1) of the National Energy Conserva4 tion Policy Act (42 U.S.C. 8231(1)) is amended—

5 (1) by striking ‘‘financed with loans’’ and in6 serting ‘‘assisted’’; 

7 (2) by inserting after ‘‘1959,’’ the following: 

8 ‘‘which are eligible multifamily housing projects (as 

9 such term is defined in section 512 of the Multi10 family Assisted Housing Reform and Affordability 

11 Act of 1997 (42 U.S.C. 1437f note)) and are subject 

12 to mortgage restructuring and rental assistance suf13 ficiency plans under such Act,’’; and 

14 (3) by inserting after the period at the end of 

15 the first sentence the following new sentence: ‘‘Such 

16 improvements may also include the installation of 

17 energy and water conserving fixtures and fittings 

18 that conform to the American Society of Mechanical 

19 Engineers/American National Standards Institute 

20 standards A112.19.2–1998 and A112.18.1–2000, or 

21 any revision thereto, applicable at the time of instal22 lation.’’. 

23 SEC. 146. NORTH AMERICAN DEVELOPMENT BANK. 

24 Part 2 of subtitle D of title V of the North American 

25 Free Trade Agreement Implementation Act (22 U.S.C. 
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1 290m–290m–3) is amended by adding at the end the fol2 lowing: 

3 ‘‘SEC. 545. SUPPORT FOR CERTAIN ENERGY POLICIES. 

4 ‘‘Consistent with the focus of the Bank’s Charter on 

5 environmental infrastructure projects, the Board members 

6 representing the United States should use their voice and 

7 vote to encourage the Bank to finance projects related to 

8 clean and efficient energy, including energy conservation, 

9 that prevent, control, or reduce environmental pollutants 

10 or contaminants.’’. 

11 SEC. 147. ENERGY-EFFICIENT APPLIANCES. 

12 In purchasing appliances, a public housing agency 

13 shall purchase energy-efficient appliances that are Energy 

14 Star products or FEMP-designated products, as such 

15 terms are defined in section 553 of the National Energy 

16 Conservation Policy Act (as amended by this title), unless

17 the purchase of energy-efficient appliances is not cost-ef18 fective to the agency. 

19 SEC. 148. ENERGY EFFICIENCY STANDARDS. 

20 Section 109 of the Cranston-Gonzalez National Af21 fordable Housing Act (42 U.S.C. 12709) is amended—

22 (1) in subsection (a)—

23 (A) in paragraph (1)—

24 (i) by striking ‘‘1 year after the date 

25 of the enactment of the Energy Policy Act 
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1 of 1992’’ and inserting ‘‘September 30, 

2 2004’’; 

3 (ii) in subparagraph (A), by striking 

4 ‘‘and’’ at the end; 

5 (iii) in subparagraph (B), by striking 

6 the period at the end and inserting ‘‘; 

7 and’’; and 

8 (iv) by adding at the end the fol9 lowing: 

10 ‘‘(C) rehabilitation and new construction of 

11 public and assisted housing funded by HOPE 

12 VI revitalization grants under section 24 of the 

13 United States Housing Act of 1937 (42 U.S.C. 

14 1437v), where such standards are determined 

15 to be cost effective by the Secretary of Housing 

16 and Urban Development.’’; and 

17 (B) in paragraph (2), by striking ‘‘Council 

18 of American’’ and all that follows through 

19 ‘‘90.1–1989’)’’ and inserting ‘‘2003 Inter20 national Energy Conservation Code’’; 

21 (2) in subsection (b)—

22 (A) by striking ‘‘within 1 year after the 

23 date of the enactment of the Energy Policy Act 

24 of 1992’’ and inserting ‘‘by September 30, 

25 2004’’; and 
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1 (B) by striking ‘‘CABO’’ and all that fol2 lows through ‘‘1989’’ and inserting ‘‘the 2003 

3 International Energy Conservation Code’’; and 

4 (3) in subsection (c)—

5 (A) in the heading, by striking ‘‘MODEL

6 ENERGY CODE’’ and inserting ‘‘THE INTER7 NATIONAL ENERGY CONSERVATION CODE’’; 

8 and 

9 (B) by striking ‘‘CABO’’ and all that fol10 lows through ‘‘1989’’ and inserting ‘‘the 2003 

11 International Energy Conservation Code’’. 

12 SEC. 149. ENERGY STRATEGY FOR HUD. 

13 The Secretary of Housing and Urban Development 

14 shall develop and implement an integrated strategy to re15 duce utility expenses through cost-effective energy con16 servation and efficiency measures and energy efficient de17 sign and construction of public and assisted housing. The 

18 energy strategy shall include the development of energy 

19 reduction goals and incentives for public housing agencies. 

20 The Secretary shall submit a report to Congress, not later 

21 than 1 year after the date of the enactment of this Act, 

22 on the energy strategy and the actions taken by the De23 partment of Housing and Urban Development to monitor 

24 the energy usage of public housing agencies and shall sub-
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1 mit an update every 2 years thereafter on progress in im2 plementing the strategy.

3 TITLE II—RENEWABLE ENERGY 

4 Subtitle A—General Provisions 

5 SEC. 201. ASSESSMENT OF RENEWABLE ENERGY RE6 SOURCES. 

7 (a) RESOURCE ASSESSMENT.—Not later than 6 

8 months after the date of enactment of this Act, and each 

9 year thereafter, the Secretary of Energy shall review the 

10 available assessments of renewable energy resources with11 in the United States, including solar, wind, biomass, ocean 

12 (tidal, wave, current, and thermal), geothermal, and hy13 droelectric energy resources, and undertake new assess14 ments as necessary, taking into account changes in market 

15 conditions, available technologies, and other relevant fac16 tors. 

17 (b) CONTENTS OF REPORTS.—Not later than 1 year 

18 after the date of enactment of this Act, and each year 

19 thereafter, the Secretary shall publish a report based on 

20 the assessment under subsection (a). The report shall con21 tain—

22 (1) a detailed inventory describing the available 

23 amount and characteristics of the renewable energy 

24 resources; and 
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1 (2) such other information as the Secretary be2 lieves would be useful in developing such renewable 

3 energy resources, including descriptions of sur4 rounding terrain, population and load centers, near5 by energy infrastructure, location of energy and 

6 water resources, and available estimates of the costs 

7 needed to develop each resource, together with an 

8 identification of any barriers to providing adequate 

9 transmission for remote sources of renewable energy 

10 resources to current and emerging markets, rec11 ommendations for removing or addressing such bar12 riers, and ways to provide access to the grid that do 

13 not unfairly disadvantage renewable or other energy 

14 producers. 

15 (c) AUTHORIZATION OF APPROPRIATIONS.—For the 

16 purposes of this section, there are authorized to be appro17 priated to the Secretary of Energy $10,000,000 for each 

18 of fiscal years 2004 through 2008. 

19 SEC. 202. RENEWABLE ENERGY PRODUCTION INCENTIVE. 

20 (a) INCENTIVE PAYMENTS.—Section 1212(a) of the 

21 Energy Policy Act of 1992 (42 U.S.C. 13317(a)) is 

22 amended by striking ‘‘and which satisfies’’ and all that 

23 follows through ‘‘Secretary shall establish.’’ and inserting 

24 ‘‘. If there are insufficient appropriations to make full pay25 ments for electric production from all qualified renewable 
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1 energy facilities in any given year, the Secretary shall as2 sign 60 percent of appropriated funds for that year to fa3 cilities that use solar, wind, geothermal, or closed-loop 

4 (dedicated energy crops) biomass technologies to generate 

5 electricity, and assign the remaining 40 percent to other 

6 projects. The Secretary may, after transmitting to Con7 gress an explanation of the reasons therefor, alter the per8 centage requirements of the preceding sentence.’’. 

9 (b) QUALIFIED RENEWABLE ENERGY FACILITY.—

10 Section 1212(b) of the Energy Policy Act of 1992 (42 

11 U.S.C. 13317(b)) is amended—

12 (1) by striking ‘‘a State or any political’’ and 

13 all that follows through ‘‘nonprofit electrical cooper14 ative’’ and inserting ‘‘a not-for-profit electric cooper15 ative, a public utility described in section 115 of the 

16 Internal Revenue Code of 1986, a State, Common17 wealth, territory, or possession of the United States 

18 or the District of Columbia, or a political subdivision 

19 thereof, or an Indian tribal government or subdivi20 sion thereof,’’; and 

21 (2) by inserting ‘‘landfill gas,’’ after ‘‘wind, bio22 mass,’’. 

23 (c) ELIGIBILITY WINDOW.—Section 1212(c) of the 

24 Energy Policy Act of 1992 (42 U.S.C. 13317(c)) is 

25 amended by striking ‘‘during the 10-fiscal year period be-
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1 ginning with the first full fiscal year occurring after the 

2 enactment of this section’’ and inserting ‘‘after October 

3 1, 2003, and before October 1, 2013’’.

4 (d) AMOUNT OF PAYMENT.—Section 1212(e)(1) of 

5 the Energy Policy Act of 1992 (42 U.S.C. 13317(e)(1)) 

6 is amended by inserting ‘‘landfill gas,’’ after ‘‘wind, bio7 mass,’’. 

8 (e) SUNSET.—Section 1212(f) of the Energy Policy 

9 Act of 1992 (42 U.S.C. 13317(f)) is amended by striking 

10 ‘‘the expiration of’’ and all that follows through ‘‘of this 

11 section’’ and inserting ‘‘September 30, 2023’’. 

12 (f) AUTHORIZATION OF APPROPRIATIONS.—Section 

13 1212(g) of the Energy Policy Act of 1992 (42 U.S.C. 

14 13317(g)) is amended to read as follows: 

15 ‘‘(g) AUTHORIZATION OF APPROPRIATIONS.—

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

17 there are authorized to be appropriated such sums 

18 as may be necessary to carry out this section for fis19 cal years 2003 through 2023. 

20 ‘‘(2) AVAILABILITY OF FUNDS.—Funds made 

21 available under paragraph (1) shall remain available 

22 until expended.’’. 

23 SEC. 203. FEDERAL PURCHASE REQUIREMENT. 

24 (a) REQUIREMENT.—The President, acting through 

25 the Secretary of Energy, shall seek to ensure that, to the 
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1 extent economically feasible and technically practicable, of 

2 the total amount of electric energy the Federal Govern3 ment consumes during any fiscal year, the following 

4 amounts shall be renewable energy: 

5 (1) Not less than 3 percent in fiscal years 2005 

6 through 2007. 

7 (2) Not less than 5 percent in fiscal years 2008 

8 through 2010. 

9 (3) Not less than 7.5 percent in fiscal year 

10 2011 and each fiscal year thereafter. 

11 (b) DEFINITIONS.—In this section: 

12 (1) BIOMASS.—The term ‘‘biomass’’ means any 

13 solid, nonhazardous, cellulosic material that is de14 rived from—

15 (A) any of the following forest-related re16 sources: mill residues, precommercial thinnings, 

17 slash, and brush, or nonmerchantable material; 

18 (B) solid wood waste materials, including 

19 waste pallets, crates, dunnage, manufacturing 

20 and construction wood wastes (other than pres21 sure-treated, chemically-treated, or painted 

22 wood wastes), and landscape or right-of-way 

23 tree trimmings, but not including municipal 

24 solid waste (garbage), gas derived from the bio-
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1 degradation of solid waste, or paper that is 

2 commonly recycled; 

3 (C) agriculture wastes, including orchard 

4 tree crops, vineyard, grain, legumes, sugar, and 

5 other crop by-products or residues, and live6 stock waste nutrients; or 

7 (D) a plant that is grown exclusively as a 

8 fuel for the production of electricity. 

9 (2) RENEWABLE ENERGY.—The term ‘‘renew10 able energy’’ means electric energy generated from 

11 solar, wind, biomass, landfill gas, geothermal, munic12 ipal solid waste, or new hydroelectric generation ca13 pacity achieved from increased efficiency or addi14 tions of new capacity at an existing hydroelectric 

15 project. 

16 (c) CALCULATION.—For purposes of determining 

17 compliance with the requirement of this section, the 

18 amount of renewable energy shall be doubled if—

19 (1) the renewable energy is produced and used 

20 on-site at a Federal facility; 

21 (2) the renewable energy is produced on Fed22 eral lands and used at a Federal facility; or 

23 (3) the renewable energy is produced on Indian 

24 land as defined in title XXVI of the Energy Policy 
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1 Act of 1992 (25 U.S.C. 3501 et seq.) and used at 

2 a Federal facility. 

3 (d) REPORT.—Not later than April 15, 2005, and 

4 every 2 years thereafter, the Secretary of Energy shall 

5 provide a report to Congress on the progress of the Fed6 eral Government in meeting the goals established by this 

7 section. 

8 SEC. 204. INSULAR AREAS ENERGY SECURITY. 

9 Section 604 of the Act entitled ‘‘An Act to authorize 

10 appropriations for certain insular areas of the United 

11 States, and for other purposes’’, approved December 24, 

12 1980 (48 U.S.C. 1492), is amended—

13 (1) in subsection (a)(4) by striking the period 

14 and inserting a semicolon; 

15 (2) by adding at the end of subsection (a) the 

16 following new paragraphs: 

17 ‘‘(5) electric power transmission and distribu18 tion lines in insular areas are inadequate to with19 stand damage caused by the hurricanes and ty20 phoons which frequently occur in insular areas and 

21 such damage often costs millions of dollars to repair; 

22 and 

23 ‘‘(6) the refinement of renewable energy tech24 nologies since the publication of the 1982 Territorial 

25 Energy Assessment prepared pursuant to subsection 
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1 (c) reveals the need to reassess the state of energy 

2 production, consumption, infrastructure, reliance on 

3 imported energy, opportunities for energy conserva4 tion and increased energy efficiency, and indigenous 

5 sources in regard to the insular areas.’’; 

6 (3) by amending subsection (e) to read as fol7 lows: 

8 ‘‘(e)(1) The Secretary of the Interior, in consultation 

9 with the Secretary of Energy and the head of government 

10 of each insular area, shall update the plans required under 

11 subsection (c) by—

12 ‘‘(A) updating the contents required by sub13 section (c); 

14 ‘‘(B) drafting long-term energy plans for such 

15 insular areas with the objective of reducing, to the 

16 extent feasible, their reliance on energy imports by 

17 the year 2010, increasing energy conservation and 

18 energy efficiency, and maximizing, to the extent fea19 sible, use of indigenous energy sources; and 

20 ‘‘(C) drafting long-term energy transmission 

21 line plans for such insular areas with the objective 

22 that the maximum percentage feasible of electric 

23 power transmission and distribution lines in each in24 sular area be protected from damage caused by hur25 ricanes and typhoons. 
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1 ‘‘(2) Not later than December 31, 2005, the Sec2 retary of the Interior shall submit to Congress the updated 

3 plans for each insular area required by this subsection.’’; 

4 and 

5 (4) by amending subsection (g)(4) to read as 

6 follows: 

7 ‘‘(4) POWER LINE GRANTS FOR INSULAR

8 AREAS.—

9 ‘‘(A) IN GENERAL.—The Secretary of the 

10 Interior is authorized to make grants to govern11 ments of insular areas of the United States to 

12 carry out eligible projects to protect electric 

13 power transmission and distribution lines in 

14 such insular areas from damage caused by hur15 ricanes and typhoons. 

16 ‘‘(B) ELIGIBLE PROJECTS.—The Secretary 

17 may award grants under subparagraph (A) only 

18 to governments of insular areas of the United 

19 States that submit written project plans to the 

20 Secretary for projects that meet the following 

21 criteria: 

22 ‘‘(i) The project is designed to protect 

23 electric power transmission and distribu24 tion lines located in 1 or more of the insu-
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1 lar areas of the United States from dam2 age caused by hurricanes and typhoons.

3 ‘‘(ii) The project is likely to substan4 tially reduce the risk of future damage, 

5 hardship, loss, or suffering. 

6 ‘‘(iii) The project addresses 1 or more 

7 problems that have been repetitive or that 

8 pose a significant risk to public health and 

9 safety. 

10 ‘‘(iv) The project is not likely to cost 

11 more than the value of the reduction in di12 rect damage and other negative impacts 

13 that the project is designed to prevent or 

14 mitigate. The cost benefit analysis required 

15 by this criterion shall be computed on a 

16 net present value basis. 

17 ‘‘(v) The project design has taken into 

18 consideration long-term changes to the 

19 areas and persons it is designed to protect 

20 and has manageable future maintenance 

21 and modification requirements. 

22 ‘‘(vi) The project plan includes an 

23 analysis of a range of options to address 

24 the problem it is designed to prevent or 
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1 mitigate and a justification for the selec2 tion of the project in light of that analysis. 

3 ‘‘(vii) The applicant has demonstrated 

4 to the Secretary that the matching funds 

5 required by subparagraph (D) are avail6 able. 

7 ‘‘(C) PRIORITY.—When making grants 

8 under this paragraph, the Secretary shall give 

9 priority to grants for projects which are likely 

10 to—

11 ‘‘(i) have the greatest impact on re12 ducing future disaster losses; and 

13 ‘‘(ii) best conform with plans that 

14 have been approved by the Federal Govern15 ment or the government of the insular area 

16 where the project is to be carried out for 

17 development or hazard mitigation for that 

18 insular area. 

19 ‘‘(D) MATCHING REQUIREMENT.—The 

20 Federal share of the cost for a project for which 

21 a grant is provided under this paragraph shall 

22 not exceed 75 percent of the total cost of that 

23 project. The non-Federal share of the cost may 

24 be provided in the form of cash or services. 
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1 ‘‘(E) TREATMENT OF FUNDS FOR CERTAIN

2 PURPOSES.—Grants provided under this para3 graph shall not be considered as income, a re4 source, or a duplicative program when deter5 mining eligibility or benefit levels for Federal 

6 major disaster and emergency assistance. 

7 ‘‘(F) AUTHORIZATION OF APPROPRIA8 TIONS.—There are authorized to be appro9 priated to carry out this paragraph $5,000,000 

10 for each fiscal year beginning after the date of 

11 the enactment of this paragraph.’’. 

12 SEC. 205. USE OF PHOTOVOLTAIC ENERGY IN PUBLIC 

13 BUILDINGS. 

14 (a) IN GENERAL.—Subchapter VI of chapter 31 of 

15 title 40, United States Code, is amended by adding at the 

16 end the following: 

17 ‘‘§ 3177. Use of photovoltaic energy in public build18 ings 

19 ‘‘(a) PHOTOVOLTAIC ENERGY COMMERCIALIZATION

20 PROGRAM.—

21 ‘‘(1) IN GENERAL.—The Administrator of Gen22 eral Services may establish a photovoltaic energy 

23 commercialization program for the procurement and 

24 installation of photovoltaic solar electric systems for 
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1 electric production in new and existing public build2 ings. 

3 ‘‘(2) PURPOSES.—The purposes of the program 

4 shall be to accomplish the following: 

5 ‘‘(A) To accelerate the growth of a com6 mercially viable photovoltaic industry to make 

7 this energy system available to the general pub8 lic as an option which can reduce the national 

9 consumption of fossil fuel. 

10 ‘‘(B) To reduce the fossil fuel consumption 

11 and costs of the Federal Government. 

12 ‘‘(C) To attain the goal of installing solar 

13 energy systems in 20,000 Federal buildings by 

14 2010, as contained in the Federal Government’s 

15 Million Solar Roof Initiative of 1997. 

16 ‘‘(D) To stimulate the general use within 

17 the Federal Government of life-cycle costing 

18 and innovative procurement methods. 

19 ‘‘(E) To develop program performance 

20 data to support policy decisions on future incen21 tive programs with respect to energy. 

22 ‘‘(3) ACQUISITION OF PHOTOVOLTAIC SOLAR

23 ELECTRIC SYSTEMS.—

24 ‘‘(A) IN GENERAL.—The program shall 

25 provide for the acquisition of photovoltaic solar 
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1 electric systems and associated storage capa2 bility for use in public buildings. 

3 ‘‘(B) ACQUISITION LEVELS.—The acquisi4 tion of photovoltaic electric systems shall be at 

5 a level substantial enough to allow use of low6 cost production techniques with at least 150 

7 megawatts (peak) cumulative acquired during 

8 the 5 years of the program. 

9 ‘‘(4) ADMINISTRATION.—The Administrator 

10 shall administer the program and shall—

11 ‘‘(A) issue such rules and regulations as 

12 may be appropriate to monitor and assess the 

13 performance and operation of photovoltaic solar 

14 electric systems installed pursuant to this sub15 section; 

16 ‘‘(B) develop innovative procurement strat17 egies for the acquisition of such systems; and 

18 ‘‘(C) transmit to Congress an annual re19 port on the results of the program. 

20 ‘‘(b) PHOTOVOLTAIC SYSTEMS EVALUATION PRO21 GRAM.—

22 ‘‘(1) IN GENERAL.—Not later than 60 days 

23 after the date of enactment of this section, the Ad24 ministrator, in consultation with the Secretary of 

25 Energy, shall establish a photovoltaic solar energy 
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1 systems evaluation program to evaluate such photo2 voltaic solar energy systems as are required in public 

3 buildings. 

4 ‘‘(2) PROGRAM REQUIREMENT.—In evaluating 

5 photovoltaic solar energy systems under the pro6 gram, the Administrator shall ensure that such sys7 tems reflect the most advanced technology. 

8 ‘‘(c) AUTHORIZATION OF APPROPRIATIONS.—

9 ‘‘(1) PHOTOVOLTAIC ENERGY COMMERCIALIZA10 TION PROGRAM.—There are authorized to be appro11 priated to carry out subsection (a) $50,000,000 for 

12 each of fiscal years 2004 through 2008. Such sums 

13 shall remain available until expended. 

14 ‘‘(2) PHOTOVOLTAIC SYSTEMS EVALUATION

15 PROGRAM.—There are authorized to be appropriated 

16 to carry out subsection (b) $10,000,000 for each of 

17 fiscal years 2004 through 2008. Such sums shall re18 main available until expended.’’. 

19 (b) CONFORMING AMENDMENT.—The section anal20 ysis for such chapter is amended by inserting after the 

21 item relating to section 3176 the following:

‘‘3177. Use of photovoltaic energy in public buildings.’’.
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1 SEC. 206. GRANTS TO IMPROVE THE COMMERCIAL VALUE 

2 OF FOREST BIOMASS FOR ELECTRIC ENERGY, 

3 USEFUL HEAT, TRANSPORTATION FUELS, PE4 TROLEUM-BASED PRODUCT SUBSTITUTES, 

5 AND OTHER COMMERCIAL PURPOSES. 

6 (a) FINDINGS.—Congress finds the following:

7 (1) Thousands of communities in the United 

8 States, many located near Federal lands, are at risk 

9 to wildfire. Approximately 190,000,000 acres of land 

10 managed by the Secretary of Agriculture and the 

11 Secretary of the Interior are at risk of catastrophic 

12 fire in the near future. The accumulation of heavy 

13 forest fuel loads continues to increase as a result of 

14 disease, insect infestations, and drought, further 

15 raising the risk of fire each year. 

16 (2) In addition, more than 70,000,000 acres 

17 across all land ownerships are at risk to higher than 

18 normal mortality over the next 15 years from insect 

19 infestation and disease. High levels of tree mortality 

20 from insects and disease result in increased fire risk, 

21 loss of old growth, degraded watershed conditions, 

22 and changes in species diversity and productivity, as 

23 well as diminished fish and wildlife habitat and de24 creased timber values. 

25 (3) Preventive treatments such as removing fuel 

26 loading, ladder fuels, and hazard trees, planting 
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1 proper species mix and restoring and protecting 

2 early successional habitat, and other specific restora3 tion treatments designed to reduce the susceptibility 

4 of forest land, woodland, and rangeland to insect 

5 outbreaks, disease, and catastrophic fire present the 

6 greatest opportunity for long-term forest health by 

7 creating a mosaic of species-mix and age distribu8 tion. Such prevention treatments are widely acknowl9 edged to be more successful and cost effective than 

10 suppression treatments in the case of insects, dis11 ease, and fire. 

12 (4) The byproducts of preventive treatment 

13 (wood, brush, thinnings, chips, slash, and other haz14 ardous fuels) removed from forest lands, woodlands 

15 and rangelands represent an abundant supply of bio16 mass for biomass-to-energy facilities and raw mate17 rial for business. There are currently few markets 

18 for the extraordinary volumes of byproducts being 

19 generated as a result of the necessary large-scale 

20 preventive treatment activities. 

21 (5) The United States should—

22 (A) promote economic and entrepreneurial 

23 opportunities in using byproducts removed 

24 through preventive treatment activities related 
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1 to hazardous fuels reduction, disease, and insect 

2 infestation; and 

3 (B) develop and expand markets for tradi4 tionally underused wood and biomass as an out5 let for byproducts of preventive treatment ac6 tivities. 

7 (b) DEFINITIONS.—In this section: 

8 (1) BIOMASS.—The term ‘‘biomass’’ means 

9 trees and woody plants, including limbs, tops, nee10 dles, and other woody parts, and byproducts of pre11 ventive treatment, such as wood, brush, thinnings, 

12 chips, and slash, that are removed—

13 (A) to reduce hazardous fuels; or 

14 (B) to reduce the risk of or to contain dis15 ease or insect infestation. 

16 (2) INDIAN TRIBE.—The term ‘‘Indian tribe’’ 

17 has the meaning given the term in section 4(e) of 

18 the Indian Self-Determination and Education Assist19 ance Act (25 U.S.C. 450b(e)). 

20 (3) PERSON.—The term ‘‘person’’ includes—

21 (A) an individual; 

22 (B) a community (as determined by the 

23 Secretary concerned); 

24 (C) an Indian tribe; 
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1 (D) a small business, micro-business, or a 

2 corporation that is incorporated in the United 

3 States; and 

4 (E) a nonprofit organization. 

5 (4) PREFERRED COMMUNITY.—The term ‘‘pre6 ferred community’’ means— 

7 (A) any town, township, municipality, or 

8 other similar unit of local government (as deter9 mined by the Secretary concerned) that—

10 (i) has a population of not more than 

11 50,000 individuals; and 

12 (ii) the Secretary concerned, in the 

13 sole discretion of the Secretary concerned, 

14 determines contains or is located near 

15 land, the condition of which is at signifi16 cant risk of catastrophic wildfire, disease, 

17 or insect infestation or which suffers from 

18 disease or insect infestation; or 

19 (B) any county that—

20 (i) is not contained within a metro21 politan statistical area; and 

22 (ii) the Secretary concerned, in the 

23 sole discretion of the Secretary concerned, 

24 determines contains or is located near 

25 land, the condition of which is at signifi-
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1 cant risk of catastrophic wildfire, disease, 

2 or insect infestation or which suffers from 

3 disease or insect infestation. 

4 (5) SECRETARY CONCERNED.—The term ‘‘Sec5 retary concerned’’ means—

6 (A) the Secretary of Agriculture with re7 spect to National Forest System lands; and 

8 (B) the Secretary of the Interior with re9 spect to Federal lands under the jurisdiction of 

10 the Secretary of the Interior and Indian lands. 

11 (c) BIOMASS COMMERCIAL USE GRANT PROGRAM.—

12 (1) IN GENERAL.—The Secretary concerned 

13 may make grants to any person that owns or oper14 ates a facility that uses biomass as a raw material 

15 to produce electric energy, sensible heat, transpor16 tation fuels, or substitutes for petroleum-based prod17 ucts to offset the costs incurred to purchase biomass 

18 for use by such facility. 

19 (2) GRANT AMOUNTS.—A grant under this sub20 section may not exceed $20 per green ton of biomass 

21 delivered. 

22 (3) MONITORING OF GRANT RECIPIENT ACTIVI23 TIES.—As a condition of a grant under this sub24 section, the grant recipient shall keep such records 

25 as the Secretary concerned may require to fully and 
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1 correctly disclose the use of the grant funds and all 

2 transactions involved in the purchase of biomass. 

3 Upon notice by a representative of the Secretary 

4 concerned, the grant recipient shall afford the rep5 resentative reasonable access to the facility that pur6 chases or uses biomass and an opportunity to exam7 ine the inventory and records of the facility. 

8 (d) IMPROVED BIOMASS USE GRANT PROGRAM.—

9 (1) IN GENERAL.—The Secretary concerned 

10 may make grants to persons to offset the cost of 

11 projects to develop or research opportunities to im12 prove the use of, or add value to, biomass. In mak13 ing such grants, the Secretary concerned shall give 

14 preference to persons in preferred communities. 

15 (2) SELECTION.—The Secretary concerned shall 

16 select a grant recipient under paragraph (1) after 

17 giving consideration to the anticipated public bene18 fits of the project, including the potential to develop 

19 thermal or electric energy resources or affordable en20 ergy, opportunities for the creation or expansion of 

21 small businesses and micro-businesses, and the po22 tential for new job creation. 

23 (3) GRANT AMOUNT.—A grant under this sub24 section may not exceed $500,000. 
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1 (e) AUTHORIZATION OF APPROPRIATIONS.—There 

2 are authorized to be appropriated $50,000,000 for each 

3 of the fiscal years 2004 through 2014 to carry out this 

4 section. 

5 (f) REPORT.—Not later than October 1, 2010, the 

6 Secretary of Agriculture, in consultation with the Sec7 retary of the Interior, shall submit to the Committee on 

8 Energy and Natural Resources and the Committee on Ag9 riculture, Nutrition, and Forestry of the Senate and the 

10 Committee on Resources, the Committee on Energy and 

11 Commerce, and the Committee on Agriculture of the 

12 House of Representatives a report describing the results 

13 of the grant programs authorized by this section. The re14 port shall include the following: 

15 (1) An identification of the size, type, and the 

16 use of biomass by persons that receive grants under 

17 this section. 

18 (2) The distance between the land from which 

19 the biomass was removed and the facility that used 

20 the biomass. 

21 (3) The economic impacts, particularly new job 

22 creation, resulting from the grants to and operation 

23 of the eligible operations. 
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1 SEC. 207. BIOBASED PRODUCTS. 

2 Section 9002(c)(1) of the Farm Security and Rural 

3 Investment Act of 2002 (7 U.S.C. 8102(c)(1)) is amended 

4 by inserting ‘‘or such items that comply with the regula5 tions issued under section 103 of Public Law 100–556 (42 

6 U.S.C. 6914b–1)’’ after ‘‘practicable’’.

7 Subtitle B—Geothermal Energy 

8 SEC. 211. SHORT TITLE. 

9 This subtitle may be cited as the ‘‘John Rishel Geo10 thermal Steam Act Amendments of 2003’’. 

11 SEC. 212. COMPETITIVE LEASE SALE REQUIREMENTS. 

12 Section 4 of the Geothermal Steam Act of 1970 (30 

13 U.S.C. 1003) is amended to read as follows: 

14 ‘‘SEC. 4. LEASING PROCEDURES. 

15 ‘‘(a) NOMINATIONS.—The Secretary shall accept 

16 nominations of lands to be leased at any time from quali17 fied companies and individuals under this Act. 

18 ‘‘(b) COMPETITIVE LEASE SALE REQUIRED.—The 

19 Secretary shall hold a competitive lease sale at least once 

20 every 2 years for lands in a State which has nominations 

21 pending under subsection (a) if such lands are otherwise 

22 available for leasing. 

23 ‘‘(c) NONCOMPETITIVE LEASING.—The Secretary 

24 shall make available for a period of 2 years for non25 competitive leasing any tract for which a competitive lease 
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1 sale is held, but for which the Secretary does not receive 

2 any bids in a competitive lease sale. 

3 ‘‘(d) LEASES SOLD AS A BLOCK.—If information is 

4 available to the Secretary indicating a geothermal resource 

5 that could be produced as 1 unit can reasonably be ex6 pected to underlie more than 1 parcel to be offered in a 

7 competitive lease sale, the parcels for such a resource may 

8 be offered for bidding as a block in the competitive lease 

9 sale. 

10 ‘‘(e) PENDING LEASE APPLICATIONS ON APRIL 1, 

11 2003.—It shall be a priority for the Secretary of the Inte12 rior, and for the Secretary of Agriculture with respect to 

13 National Forest Systems lands, to ensure timely comple14 tion of administrative actions necessary to process applica15 tions for geothermal leasing pending on April 1, 2003. 

16 Such an application, and any lease issued pursuant to 

17 such an application—

18 ‘‘(1) except as provided in paragraph (2), shall 

19 be subject to this section as in effect on April 1, 

20 2003; or 

21 ‘‘(2) at the election of the applicant, shall be 

22 subject to this section as in effect on the effective 

23 date of this paragraph.’’. 
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1 SEC. 213. DIRECT USE. 

2 (a) FEES FOR DIRECT USE.—Section 5 of the Geo3 thermal Steam Act of 1970 (30 U.S.C. 1004) is amend4 ed—

5 (1) in paragraph (c) by redesignating subpara6 graphs (1) and (2) as subparagraphs (A) and (B); 

7 (2) by redesignating paragraphs (a) through (d) 

8 in order as paragraphs (1) through (4); 

9 (3) by inserting ‘‘(a) IN GENERAL.—’’ after 

10 ‘‘SEC. 5.’’; and 

11 (4) by adding at the end the following: 

12 ‘‘(b) DIRECT USE.—Notwithstanding subsection 

13 (a)(1), with respect to the direct use of geothermal re14 sources for purposes other than the commercial generation 

15 of electricity, the Secretary of the Interior shall establish 

16 a schedule of fees and collect fees pursuant to such a 

17 schedule in lieu of royalties based upon the total amount 

18 of the geothermal resources used. The schedule of fees 

19 shall ensure that there is a fair return to the public for 

20 the use of a geothermal resource based upon comparable 

21 fees charged for direct use of geothermal resources by 

22 States or private persons. For direct use by a State or 

23 local government for public purposes there shall be no roy24 alty and the fee charged shall be nominal. Leases in exist25 ence on the date of enactment of the Energy Policy Act 
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1 of 2003 shall be modified in order to reflect the provisions 

2 of this subsection.’’. 

3 (b) LEASING FOR DIRECT USE.—Section 4 of the 

4 Geothermal Steam Act of 1970 (30 U.S.C. 1003) is fur5 ther amended by adding at the end the following: 

6 ‘‘(f) LEASING FOR DIRECT USE OF GEOTHERMAL

7 RESOURCES.—Lands leased under this Act exclusively for 

8 direct use of geothermal resources shall be leased to any 

9 qualified applicant who first applies for such a lease under 

10 regulations issued by the Secretary, if—

11 ‘‘(1) the Secretary publishes a notice of the 

12 lands proposed for leasing 60 days before the date 

13 of the issuance of the lease; and 

14 ‘‘(2) the Secretary does not receive in the 60-

15 day period beginning on the date of such publication 

16 any nomination to include the lands concerned in the 

17 next competitive lease sale. 

18 ‘‘(g) AREA SUBJECT TO LEASE FOR DIRECT USE.—

19 A geothermal lease for the direct use of geothermal re20 sources shall embrace not more than the amount of acre21 age determined by the Secretary to be reasonably nec22 essary for such proposed utilization.’’. 

23 (c) EXISTING LEASES WITH A DIRECT USE FACIL24 ITY.—
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1 (1) APPLICATION TO CONVERT.—Any lessee 

2 under a lease under the Geothermal Steam Act of 

3 1970 that was issued before the date of the enact4 ment of this Act may apply to the Secretary of the 

5 Interior, by not later than 18 months after the date 

6 of the enactment of this Act, to convert such lease 

7 to a lease for direct utilization of geothermal re8 sources in accordance with the amendments made by 

9 this section. 

10 (2) CONVERSION.—The Secretary shall approve 

11 such an application and convert such a lease to a 

12 lease in accordance with the amendments by not 

13 later than 180 days after receipt of such application, 

14 unless the Secretary determines that the applicant is 

15 not a qualified applicant with respect to the lease. 

16 (3) APPLICATION OF NEW LEASE TERMS.—The 

17 amendment made by subsection (a)(4) shall apply 

18 with respect to payments under a lease converted 

19 under this subsection that are due and owing to the 

20 United States on or after July 16, 2003.

21 SEC. 214. ROYALTIES AND NEAR-TERM PRODUCTION IN22 CENTIVES. 

23 (a) ROYALTY.—Section 5 of the Geothermal Steam 

24 Act of 1970 (30 U.S.C. 1004) is further amended—
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1 (1) in subsection (a) by striking paragraph (1) 

2 and inserting the following: 

3 ‘‘(1) a royalty on electricity produced using geo4 thermal steam and associated geothermal resources, 

5 other than direct use of geothermal resources, that 

6 shall be—

7 ‘‘(A) not less than 1 percent and not more 

8 than 2.5 percent of the gross proceeds from the 

9 sale of electricity produced from such resources

10 during the first 10 years of production under 

11 the lease; and 

12 ‘‘(B) not less than 2 and not more than 5 

13 percent of the gross proceeds from the sale of 

14 electricity produced from such resources during 

15 each year after such 10-year period;’’; and 

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

17 ‘‘(c) FINAL REGULATION ESTABLISHING ROYALTY

18 RATES.—In issuing any final regulation establishing roy19 alty rates under this section, the Secretary shall seek—

20 ‘‘(1) to provide lessees a simplified administra21 tive system; 

22 ‘‘(2) to encourage new development; and 

23 ‘‘(3) to achieve the same long-term level of roy24 alty revenues to States and counties as the regula-
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1 tion in effect on the date of enactment of this sub2 section. 

3 ‘‘(d) CREDITS FOR IN-KIND PAYMENTS OF ELEC4 TRICITY.—The Secretary may provide to a lessee a credit 

5 against royalties owed under this Act, in an amount equal 

6 to the value of electricity provided under contract to a 

7 State or county government that is entitled to a portion 

8 of such royalties under section 20 of this Act, section 35 

9 of the Mineral Leasing Act (30 U.S.C. 191), or section 

10 6 of the Mineral Leasing Act for Acquired Lands (30 

11 U.S.C. 355), if—

12 ‘‘(1) the Secretary has approved in advance the 

13 contract between the lessee and the State or county 

14 government for such in-kind payments; 

15 ‘‘(2) the contract establishes a specific method16 ology to determine the value of such credits; and 

17 ‘‘(3) the maximum credit will be equal to the 

18 royalty value owed to the State or county that is a 

19 party to the contract and the electricity received will 

20 serve as the royalty payment from the Federal Gov21 ernment to that entity.’’. 

22 (b) DISPOSAL OF MONEYS FROM SALES, BONUSES, 

23 ROYALTIES, AND RENTALS.—Section 20 of the Geo24 thermal Steam Act of 1970 (30 U.S.C. 1019) is amended 

25 to read as follows: 
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1 ‘‘SEC. 20. DISPOSAL OF MONEYS FROM SALES, BONUSES, 

2 RENTALS, AND ROYALTIES. 

3 ‘‘(a) IN GENERAL.—Except with respect to lands in 

4 the State of Alaska, all monies received by the United 

5 States from sales, bonuses, rentals, and royalties under 

6 this Act shall be paid into the Treasury of the United 

7 States. Of amounts deposited under this subsection, sub8 ject to the provisions of section 35 of the Mineral Leasing 

9 Act (30 U.S.C. 191(b)) and section 5(a)(2) of this Act—

10 ‘‘(1) 50 percent shall be paid to the State with11 in the boundaries of which the leased lands or geo12 thermal resources are or were located; and 

13 ‘‘(2) 25 percent shall be paid to the County 

14 within the boundaries of which the leased lands or 

15 geothermal resources are or were located. 

16 ‘‘(b) USE OF PAYMENTS.—Amounts paid to a State 

17 or county under subsection (a) shall be used consistent 

18 with the terms of section 35 of the Mineral Leasing Act 

19 (30 U.S.C. 191).’’. 

20 (c) NEAR-TERM PRODUCTION INCENTIVE FOR EX21 ISTING LEASES.—

22 (1) IN GENERAL.—Notwithstanding section 

23 5(a) of the Geothermal Steam Act of 1970, the roy24 alty required to be paid shall be 50 percent of the 

25 amount of the royalty otherwise required, on any 

26 lease issued before the date of enactment of this Act 
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1 that does not convert to new royalty terms under 

2 subsection (e)—

3 (A) with respect to commercial production 

4 of energy from a facility that begins such pro5 duction in the 6-year period beginning on the 

6 date of the enactment of this Act; or 

7 (B) on qualified expansion geothermal en8 ergy. 

9 (2) 4-YEAR APPLICATION.—Paragraph (1) ap10 plies only to new commercial production of energy 

11 from a facility in the first 4 years of such produc12 tion. 

13 (3) EFFECTIVE DATE.—This subsection takes 

14 effect on October 1, 2004. 

15 (d) DEFINITION OF QUALIFIED EXPANSION GEO16 THERMAL ENERGY.—In this section, the term ‘‘qualified 

17 expansion geothermal energy’’ means geothermal energy 

18 produced from a generation facility for which—

19 (1) the production is increased by more than 10 

20 percent as a result of expansion of the facility car21 ried out in the 6-year period beginning on the date 

22 of the enactment of this Act; and 

23 (2) such production increase is greater than 10 

24 percent of the average production by the facility dur-
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1 ing the 5-year period preceding the expansion of the 

2 facility. 

3 (e) ROYALTY UNDER EXISTING LEASES.—

4 (1) IN GENERAL.—Any lessee under a lease 

5 issued under the Geothermal Steam Act of 1970 be6 fore the date of the enactment of this Act may mod7 ify the terms of the lease relating to payment of roy8 alties to comply with the amendment made by sub9 section (a), by applying to the Secretary of the Inte10 rior by not later than 18 months after the date of 

11 the enactment of this Act. 

12 (2) APPLICATION OF MODIFICATION.—Such 

13 modification shall apply to any use of geothermal 

14 steam and any associated geothermal resources to 

15 which the amendment applies that occurs after the 

16 date of that application. 

17 (3) CONSULTATION.—The Secretary—

18 (A) shall consult with the State and local 

19 governments affected by any proposed changes 

20 in lease royalty terms under this subsection; 

21 and 

22 (B) may establish a gross proceeds per23 centage within the range specified in the 

24 amendment made by subsection (a)(1) and with 

25 the concurrence of the lessee and the State. 
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1 SEC. 215. GEOTHERMAL LEASING AND PERMITTING ON 

2 FEDERAL LANDS. 

3 (a) IN GENERAL.—Not later than 180 days after the 

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

5 Interior and the Secretary of Agriculture shall enter into 

6 and submit to Congress a memorandum of understanding 

7 in accordance with this section regarding leasing and per8 mitting for geothermal development of public lands and 

9 National Forest System lands under their respective juris10 dictions. 

11 (b) LEASE AND PERMIT APPLICATIONS.—The memo12 randum of understanding shall—

13 (1) identify areas with geothermal potential on 

14 lands included in the National Forest System and, 

15 when necessary, require review of management plans 

16 to consider leasing under the Geothermal Steam Act 

17 of 1970 (30 U.S.C. 1001 et seq.) as a land use; and 

18 (2) establish an administrative procedure for 

19 processing geothermal lease applications, including 

20 lines of authority, steps in application processing, 

21 and time limits for application procession. 

22 (c) DATA RETRIEVAL SYSTEM.—The memorandum 

23 of understanding shall establish a joint data retrieval sys24 tem that is capable of tracking lease and permit applica25 tions and providing to the applicant information as to 

26 their status within the Departments of the Interior and 
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1 Agriculture, including an estimate of the time required for 

2 administrative action. 

3 SEC. 216. REVIEW AND REPORT TO CONGRESS. 

4 The Secretary of the Interior shall promptly review 

5 and report to Congress not later than 3 years after the 

6 date of the enactment of this Act regarding the status of 

7 all withdrawals from leasing under the Geothermal Steam

8 Act of 1970 (30 U.S.C. 1001 et seq.) of Federal lands, 

9 specifying for each such area whether the basis for such 

10 withdrawal still applies. 

11 SEC. 217. REIMBURSEMENT FOR COSTS OF NEPA ANAL12 YSES, DOCUMENTATION, AND STUDIES. 

13 (a) IN GENERAL.—The Geothermal Steam Act of 

14 1970 (30 U.S.C. 1001 et seq.) is amended by adding at 

15 the end the following: 

16 ‘‘SEC. 30. REIMBURSEMENT FOR COSTS OF CERTAIN ANAL17 YSES, DOCUMENTATION, AND STUDIES. 

18 ‘‘(a) IN GENERAL.—The Secretary of the Interior 

19 may reimburse a person that is a lessee, operator, oper20 ating rights owner, or applicant for any lease under this 

21 Act for reasonable amounts paid by the person for prepa22 ration for the Secretary by a contractor or other person 

23 selected by the Secretary of any project-level analysis, doc24 umentation, or related study required pursuant to the Na-
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1 tional Environmental Policy Act of 1969 (42 U.S.C. 4321 

2 et seq.) with respect to the lease. 

3 ‘‘(b) CONDITIONS.—The Secretary may provide reim4 bursement under subsection (a) only if—

5 ‘‘(1) adequate funding to enable the Secretary 

6 to timely prepare the analysis, documentation, or re7 lated study is not appropriated; 

8 ‘‘(2) the person paid the costs voluntarily; 

9 ‘‘(3) the person maintains records of its costs 

10 in accordance with regulations issued by the Sec11 retary; 

12 ‘‘(4) the reimbursement is in the form of a re13 duction in the Federal share of the royalty required 

14 to be paid for the lease for which the analysis, docu15 mentation, or related study is conducted, and is 

16 agreed to by the Secretary and the person reim17 bursed prior to commencing the analysis, docu18 mentation, or related study; and 

19 ‘‘(5) the agreement required under paragraph 

20 (4) contains provisions—

21 ‘‘(A) reducing royalties owed on lease pro22 duction based on market prices; 

23 ‘‘(B) stipulating an automatic termination 

24 of the royalty reduction upon recovery of docu25 mented costs; and 
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1 ‘‘(C) providing a process by which the les2 see may seek reimbursement for circumstances 

3 in which production from the specified lease is 

4 not possible.’’. 

5 (b) APPLICATION.—The amendment made by this 

6 section shall apply with respect to an analysis, documenta7 tion, or a related study conducted on or after October 1, 

8 2004, for any lease entered into before, on, or after the 

9 date of enactment of this Act. 

10 (c) DEADLINE FOR REGULATIONS.—The Secretary 

11 shall issue regulations implementing the amendment made 

12 by this section by not later than 1 year after the date 

13 of enactment of this Act. 

14 SEC. 218. ASSESSMENT OF GEOTHERMAL ENERGY POTEN15 TIAL. 

16 The Secretary of Interior, acting through the Direc17 tor of the United States Geological Survey and in coopera18 tion with the States, shall update the 1978 Assessment 

19 of Geothermal Resources, and submit that updated assess20 ment to Congress—

21 (1) not later than 3 years after the date of en22 actment of this Act; and 

23 (2) thereafter as the availability of data and de24 velopments in technology warrant. 
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1 SEC. 219. COOPERATIVE OR UNIT PLANS. 

2 Section 18 of the Geothermal Steam Act of 1970 (30 

3 U.S.C. 1017) is amended to read as follows: 

4 ‘‘SEC. 18. UNIT AND COMMUNITIZATION AGREEMENTS. 

5 ‘‘(a) ADOPTION OF UNITS BY LESSEES.—

6 ‘‘(1) IN GENERAL.—For the purpose of more 

7 properly conserving the natural resources of any 

8 geothermal reservoir, field, or like area, or any part 

9 thereof (whether or not any part of the geothermal 

10 field, or like area, is then subject to any Unit Agree11 ment (cooperative plan of development or oper12 ation)), lessees thereof and their representatives may 

13 unite with each other, or jointly or separately with 

14 others, in collectively adopting and operating under 

15 a Unit Agreement for such field, or like area, or any 

16 part thereof including direct use resources, if deter17 mined and certified by the Secretary to be necessary 

18 or advisable in the public interest. A majority inter19 est of owners of any single lease shall have the au20 thority to commit that lease to a Unit Agreement. 

21 The Secretary of the Interior may also initiate the 

22 formation of a Unit Agreement if in the public inter23 est. 

24 ‘‘(2) MODIFICATION OF LEASE REQUIREMENTS

25 BY SECRETARY.—The Secretary may, in the discre26 tion of the Secretary, and with the consent of the 
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1 holders of leases involved, establish, alter, change, or 

2 revoke rates of operations (including drilling, oper3 ations, production, and other requirements) of such 

4 leases and make conditions with reference to such 

5 leases, with the consent of the lessees, in connection 

6 with the creation and operation of any such Unit 

7 Agreement as the Secretary may deem necessary or 

8 proper to secure the proper protection of the public 

9 interest. Leases with unlike lease terms or royalty 

10 rates do not need to be modified to be in the same 

11 unit. 

12 ‘‘(b) REQUIREMENT OF PLANS UNDER NEW

13 LEASES.—The Secretary—

14 ‘‘(1) may provide that geothermal leases issued 

15 under this Act shall contain a provision requiring 

16 the lessee to operate under such a reasonable Unit 

17 Agreement; and 

18 ‘‘(2) may prescribe such an Agreement under 

19 which such lessee shall operate, which shall ade20 quately protect the rights of all parties in interest, 

21 including the United States. 

22 ‘‘(c) MODIFICATION OF RATE OF PROSPECTING, DE23 VELOPMENT, AND PRODUCTION.—The Secretary may re24 quire that any Agreement authorized by this section that 

25 applies to lands owned by the United States contain a pro-
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1 vision under which authority is vested in the Secretary, 

2 or any person, committee, or State or Federal officer or 

3 agency as may be designated in the Agreement to alter 

4 or modify from time to time the rate of prospecting and 

5 development and the quantity and rate of production 

6 under such an Agreement. 

7 ‘‘(d) EXCLUSION FROM DETERMINATION OF HOLD8 ING OR CONTROL.—Any lands that are subject to any 

9 Agreement approved or prescribed by the Secretary under 

10 this section shall not be considered in determining hold11 ings or control under any provision of this Act. 

12 ‘‘(e) POOLING OF CERTAIN LANDS.—If separate 

13 tracts of lands cannot be independently developed and op14 erated to use geothermal steam and associated geothermal 

15 resources pursuant to any section of this Act—

16 ‘‘(1) such lands, or a portion thereof, may be 

17 pooled with other lands, whether or not owned by 

18 the United States, for purposes of development and 

19 operation under a Communitization Agreement pro20 viding for an apportionment of production or royal21 ties among the separate tracts of land comprising 

22 the production unit, if such pooling is determined by 

23 the Secretary to be in the public interest; and 

24 ‘‘(2) operation or production pursuant to such 

25 an Agreement shall be treated as operation or pro-
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1 duction with respect to each tract of land that is 

2 subject to the agreement. 

3 ‘‘(f) UNIT AGREEMENT REVIEW.—No more than 5 

4 years after approval of any cooperative or Unit Agreement 

5 and at least every 5 years thereafter, the Secretary shall 

6 review each such Agreement and, after notice and oppor7 tunity for comment, eliminate from inclusion in such 

8 Agreement any lands that the Secretary determines are 

9 not reasonably necessary for Unit operations under the 

10 Agreement. Such elimination shall be based on scientific 

11 evidence, and shall occur only if it is determined by the 

12 Secretary to be for the purpose of conserving and properly 

13 managing the geothermal resource. Any land so eliminated 

14 shall be eligible for an extension under subsection (g) of 

15 section 6 if it meets the requirements for such an exten16 sion. 

17 ‘‘(g) DRILLING OR DEVELOPMENT CONTRACTS.— 

18 The Secretary may, on such conditions as the Secretary 

19 may prescribe, approve drilling or development contracts 

20 made by 1 or more lessees of geothermal leases, with 1 

21 or more persons, associations, or corporations if, in the 

22 discretion of the Secretary, the conservation of natural re23 sources or the public convenience or necessity may require 

24 or the interests of the United States may be best served 

25 thereby. All leases operated under such approved drilling 
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1 or development contracts, and interests thereunder, shall 

2 be excepted in determining holdings or control under sec3 tion 7. 

4 ‘‘(h) COORDINATION WITH STATE GOVERNMENTS.—

5 The Secretary shall coordinate unitization and pooling ac6 tivities with the appropriate State agencies and shall en7 sure that State leases included in any unitization or pool8 ing arrangement are treated equally with Federal leases.’’. 

9 SEC. 220. ROYALTY ON BYPRODUCTS. 

10 Section 5 of the Geothermal Steam Act of 1970 (30 

11 U.S.C. 1004) is further amended in subsection (a) by 

12 striking paragraph (2) and inserting the following: 

13 ‘‘(2) a royalty on any byproduct that is a min14 eral named in the first section of the Mineral Leas15 ing Act (30 U.S.C. 181), and that is derived from 

16 production under the lease, at the rate of the royalty 

17 that applies under that Act to production of such 

18 mineral under a lease under that Act;’’. 

19 SEC. 221. REPEAL OF AUTHORITIES OF SECRETARY TO RE20 ADJUST TERMS, CONDITIONS, RENTALS, AND 

21 ROYALTIES. 

22 Section 8 of the Geothermal Steam Act of 1970 (30 

23 U.S.C. 1007) is amended by repealing subsection (b), and 

24 by redesignating subsection (c) as subsection (b). 
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1 SEC. 222. CREDITING OF RENTAL TOWARD ROYALTY. 

2 Section 5 of the Geothermal Steam Act of 1970 (30 

3 U.S.C. 1004) is further amended—

4 (1) in subsection (a)(2) by inserting ‘‘and’’ 

5 after the semicolon at the end; 

6 (2) in subsection (a)(3) by striking ‘‘; and’’ and 

7 inserting a period; 

8 (3) by striking paragraph (4) of subsection (a); 

9 and 

10 (4) by adding at the end the following: 

11 ‘‘(e) CREDITING OF RENTAL TOWARD ROYALTY.—

12 Any annual rental under this section that is paid with re13 spect to a lease before the first day of the year for which 

14 the annual rental is owed shall be credited to the amount 

15 of royalty that is required to be paid under the lease for 

16 that year.’’. 

17 SEC. 223. LEASE DURATION AND WORK COMMITMENT RE18 QUIREMENTS. 

19 Section 6 of the Geothermal Steam Act of 1970 (30 

20 U.S.C. 1005) is amended—

21 (1) by striking so much as precedes subsection 

22 (c), and striking subsections (e), (g), (h), (i), and 

23 (j); 

24 (2) by redesignating subsections (c), (d), and 

25 (f) in order as subsections (g), (h), and (i); and 
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1 (3) by inserting before subsection (g), as so re2 designated, the following: 

3 ‘‘SEC. 6. LEASE TERM AND WORK COMMITMENT REQUIRE4 MENTS. 

5 ‘‘(a) IN GENERAL.—

6 ‘‘(1) PRIMARY TERM.—A geothermal lease shall 

7 be for a primary term of 10 years. 

8 ‘‘(2) INITIAL EXTENSION.—The Secretary shall 

9 extend the primary term of a geothermal lease for 

10 5 years if, for each year after the fifth year of the 

11 lease—

12 ‘‘(A) the Secretary determined under sub13 section (c) that the lessee satisfied the work 

14 commitment requirements that applied to the 

15 lease for that year; or 

16 ‘‘(B) the lessee paid in accordance with 

17 subsection (d) the value of any work that was 

18 not completed in accordance with those require19 ments. 

20 ‘‘(3) ADDITIONAL EXTENSION.—The Secretary 

21 shall extend the primary term of a geothermal lease 

22 (after an initial extension under paragraph (2)) for 

23 an additional 5 years if, for each year of the initial 

24 extension under paragraph (2), the Secretary deter25 mined under subsection (c) that the lessee satisfied 
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1 the work commitment requirements that applied to 

2 the lease for that year. 

3 ‘‘(b) REQUIREMENT TO SATISFY ANNUAL WORK

4 COMMITMENT REQUIREMENT.—

5 ‘‘(1) IN GENERAL.—The lessee for a geothermal 

6 lease shall, for each year after the fifth year of the 

7 lease, satisfy work commitment requirements pre8 scribed by the Secretary that apply to the lease for 

9 that year. 

10 ‘‘(2) PRESCRIPTION OF WORK COMMITMENT RE11 QUIREMENTS.—The Secretary shall issue regulations 

12 prescribing minimum equivalent dollar value work 

13 commitment requirements for geothermal leases, 

14 that—

15 ‘‘(A) require that a lessee, in each year 

16 after the fifth year of the primary term of a 

17 geothermal lease, diligently work to achieve 

18 commercial production or utilization of steam 

19 under the lease; 

20 ‘‘(B) require that in each year to which 

21 work commitment requirements under the regu22 lations apply, the lessee shall significantly re23 duce the amount of work that remains to be 

24 done to achieve such production or utilization; 
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1 ‘‘(C) describe specific work that must be 

2 completed by a lessee by the end of each year 

3 to which the work commitment requirements 

4 apply and factors, such as force majeure events, 

5 that suspend or modify the work commitment 

6 obligation; 

7 ‘‘(D) carry forward and apply to work 

8 commitment requirements for a year, work 

9 completed in any year in the preceding 3-year 

10 period that was in excess of the work required 

11 to be performed in that preceding year; 

12 ‘‘(E) establish transition rules for leases 

13 issued before the date of the enactment of this 

14 subsection, including terms under which a lease 

15 that is near the end of its term on the date of 

16 enactment of this subsection may be extended 

17 for up to 2 years—

18 ‘‘(i) to allow achievement of produc19 tion under the lease; or 

20 ‘‘(ii) to allow the lease to be included 

21 in a producing unit; and 

22 ‘‘(F) establish an annual payment that, at 

23 the option of the lessee, may be exercised in lieu 

24 of meeting any work requirement for a limited 

25 number of years that the Secretary determines 
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1 will not impair achieving diligent development 

2 of the geothermal resource. 

3 ‘‘(3) TERMINATION OF APPLICATION OF RE4 QUIREMENTS.—Work commitment requirements pre5 scribed under this subsection shall not apply to a 

6 geothermal lease after the date on which geothermal 

7 steam is produced or utilized under the lease in com8 mercial quantities.

9 ‘‘(c) DETERMINATION OF WHETHER REQUIREMENTS

10 SATISFIED.—The Secretary shall, by not later than 90 

11 days after the end of each year for which work commit12 ment requirements under subsection (b) apply to a geo13 thermal lease—

14 ‘‘(1) determine whether the lessee has satisfied 

15 the requirements that apply for that year; 

16 ‘‘(2) notify the lessee of that determination; and 

17 ‘‘(3) in the case of a notification that the lessee 

18 did not satisfy work commitment requirements for 

19 the year, include in the notification—

20 ‘‘(A) a description of the specific work that 

21 was not completed by the lessee in accordance 

22 with the requirements; and 

23 ‘‘(B) the amount of the dollar value of 

24 such work that was not completed, reduced by 

25 the amount of expenditures made for work com-
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1 pleted in a prior year that is carried forward 

2 pursuant to subsection (b)(2)(D). 

3 ‘‘(d) PAYMENT OF VALUE OF UNCOMPLETED

4 WORK.—

5 ‘‘(1) IN GENERAL.—If the Secretary notifies a 

6 lessee that the lessee failed to satisfy work commit7 ment requirements under subsection (b), the lessee 

8 shall pay to the Secretary, by not later than the end 

9 of the 60-day period beginning on the date of the 

10 notification, the dollar value of work that was not 

11 completed by the lessee, in the amount stated in the 

12 notification (as reduced under subsection (c)(3)(B)). 

13 ‘‘(2) FAILURE TO PAY VALUE OF

14 UNCOMPLETED WORK.—If a lessee fails to pay such 

15 amount to the Secretary before the end of that pe16 riod, the lease shall terminate upon the expiration of 

17 the period. 

18 ‘‘(e) CONTINUATION AFTER COMMERCIAL PRODUC19 TION OR UTILIZATION.—If geothermal steam is produced 

20 or utilized in commercial quantities within the primary 

21 term of the lease under subsection (a) (including any ex22 tension of the lease under subsection (a)), such lease shall 

23 continue until the date on which geothermal steam is no 

24 longer produced or utilized in commercial quantities. 
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1 ‘‘(f) CONVERSION OF GEOTHERMAL LEASE TO MIN2 ERAL LEASE.—The lessee under a lease that has produced 

3 geothermal steam for electrical generation, has been deter4 mined by the Secretary to be incapable of any further com5 mercial production or utilization of geothermal steam, and 

6 that is producing any valuable byproduct in payable quan7 tities may, within 6 months after such determination—

8 ‘‘(1) convert the lease to a mineral lease under 

9 the Mineral Leasing Act (30 U.S.C. 181 et seq.) or 

10 under the Mineral Leasing Act for Acquired Lands 

11 (30 U.S.C. 351 et seq.), if the lands that are subject 

12 to the lease can be leased under that Act for the 

13 production of such byproduct; or 

14 ‘‘(2) convert the lease to a mining claim under 

15 the general mining laws, if the byproduct is a 

16 locatable mineral.’’. 

17 SEC. 224. ADVANCED ROYALTIES REQUIRED FOR SUSPEN18 SION OF PRODUCTION. 

19 Section 5 of the Geothermal Steam Act of 1970 (30 

20 U.S.C. 1004) is further amended by adding at the end 

21 the following: 

22 ‘‘(f) ADVANCED ROYALTIES REQUIRED FOR SUSPEN23 SION OF PRODUCTION.—

24 ‘‘(1) CONTINUATION OF LEASE FOLLOWING

25 CESSATION OF PRODUCTION.—If, at any time after 
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1 commercial production under a lease is achieved, 

2 production ceases for any cause the lease shall re3 main in full force and effect—

4 ‘‘(A) during the 1-year period beginning on 

5 the date production ceases; and 

6 ‘‘(B) after such period if, and so long as, 

7 the lessee commences and continues diligently 

8 and in good faith until such production is re9 sumed the steps, operations, or procedures nec10 essary to cause a resumption of such produc11 tion. 

12 ‘‘(2) If production of heat or energy under a 

13 geothermal lease is suspended after the date of any 

14 such production for which royalty is required under 

15 subsection (a) and the terms of paragraph (1) are 

16 not met, the Secretary shall require the lessee, until 

17 the end of such suspension, to pay royalty in ad18 vance at the monthly pro-rata rate of the average 

19 annual rate at which such royalty was paid each 

20 year in the 5-year-period preceding the date of sus21 pension. 

22 ‘‘(3) Paragraph (2) shall not apply if the sus23 pension is required or otherwise caused by the Sec24 retary, the Secretary of a military department, a 

25 State or local government, or a force majeure.’’. 
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1 SEC. 225. ANNUAL RENTAL. 

2 (a) ANNUAL RENTAL RATE.—Section 5 of the Geo3 thermal Steam Act of 1970 (30 U.S.C. 1004) is further 

4 amended in subsection (a) in paragraph (3) by striking 

5 ‘‘$1 per acre or fraction thereof for each year of the lease’’ 

6 and all that follows through the end of the paragraph and 

7 inserting ‘‘$1 per acre or fraction thereof for each year 

8 of the lease through the tenth year in the case of a lease 

9 awarded in a noncompetitive lease sale; or $2 per acre or 

10 fraction thereof for the first year, $3 per acre or fraction 

11 thereof for each of the second through tenth years, in the 

12 case of a lease awarded in a competitive lease sale; and 

13 $5 per acre or fraction thereof for each year after the 10th 

14 year thereof for all leases.’’. 

15 (b) TERMINATION OF LEASE FOR FAILURE TO PAY

16 RENTAL.—Section 5 of the Geothermal Steam Act of 

17 1970 (30 U.S.C. 1004) is further amended by adding at 

18 the end the following: 

19 ‘‘(g) TERMINATION OF LEASE FOR FAILURE TO PAY

20 RENTAL.—–

21 ‘‘(1) IN GENERAL.—The Secretary shall termi22 nate any lease with respect to which rental is not 

23 paid in accordance with this Act and the terms of 

24 the lease under which the rental is required, upon 

25 the expiration of the 45-day period beginning on the 

26 date of the failure to pay such rental. 
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1 ‘‘(2) NOTIFICATION.—The Secretary shall 

2 promptly notify a lessee that has not paid rental re3 quired under the lease that the lease will be termi4 nated at the end of the period referred to in para5 graph (1). 

6 ‘‘(3) REINSTATEMENT.—A lease that would 

7 otherwise terminate under paragraph (1) shall not 

8 terminate under that paragraph if the lessee pays to 

9 the Secretary, before the end of the period referred 

10 to in paragraph (1), the amount of rental due plus 

11 a late fee equal to 10 percent of such amount.’’.

12 SEC. 226. LEASING AND PERMITTING ON FEDERAL LANDS 

13 WITHDRAWN FOR MILITARY PURPOSES. 

14 Not later than 2 years after the date of enactment 

15 of this Act, the Secretary of the Interior and the Secretary 

16 of Defense, in consultation with each military service and 

17 with interested States, counties, representatives of the 

18 geothermal industry, and other persons, shall submit to 

19 Congress a joint report concerning leasing and permitting 

20 activities for geothermal energy on Federal lands with21 drawn for military purposes. Such report shall include the 

22 following: 

23 (1) A description of the Military Geothermal 

24 Program, including any differences between it and 

25 the non-Military Geothermal Program, including re-
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1 quired security procedures, and operational consider2 ations, and discussions as to the differences, and 

3 why they are important. Further, the report shall 

4 describe revenues or energy provided to the Depart5 ment of Defense and its facilities, royalty structures, 

6 where applicable, and any revenue sharing with 

7 States and counties or other benefits between—

8 (A) the implementation of the Geothermal 

9 Steam Act of 1970 (30 U.S.C 1001 et seq.) and 

10 other applicable Federal law by the Secretary of 

11 the Interior; and 

12 (B) the administration of geothermal leas13 ing under section 2689 of title 10, United 

14 States Code, by the Secretary of Defense. 

15 (2) If appropriate, a description of the current 

16 methods and procedures used to ensure interagency 

17 coordination, where needed, in developing renewable 

18 energy sources on Federal lands withdrawn for mili19 tary purposes, and an identification of any new pro20 cedures that might be required in the future for the 

21 improvement of interagency coordination to ensure 

22 efficient processing and administration of leases or 

23 contracts for geothermal energy on Federal lands 

24 withdrawn for military purposes, consistent with the 

25 defense purposes of such withdrawals. 
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1 (3) Recommendations for any legislative or ad2 ministrative actions that might better achieve in3 creased geothermal production, including a common 

4 royalty structure, leasing procedures, or other 

5 changes that increase production, offset military op6 eration costs, or enhance the Federal agencies’ abil7 ity to develop geothermal resources. 

8 Except as provided in this section, nothing in this subtitle 

9 shall affect the legal status of the Department of the Inte10 rior and the Department of the Defense with respect to 

11 each other regarding geothermal leasing and development 

12 until such status is changed by law. 

13 SEC. 227. TECHNICAL AMENDMENTS. 

14 The Geothermal Steam Act of 1970 (30 U.S.C. 1001 

15 et seq.) is further amended as follows: 

16 (1) By striking ‘‘geothermal steam and associ17 ated geothermal resources’’ each place it appears 

18 and inserting ‘‘geothermal resources’’. 

19 (2) Section 2(e) (30 U.S.C. 1001(e)) is amend20 ed to read as follows: 

21 ‘‘(e) ‘direct use’ means utilization of geothermal 

22 resources for commercial, residential, agricultural, 

23 public facilities, or other energy needs other than the 

24 commercial production of electricity; and’’. 
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1 (3) Section 21 (30 U.S.C. 1020) is amended by 

2 striking ‘‘(a) Within one hundred’’ and all that fol3 lows through ‘‘(b) Geothermal’’ and inserting ‘‘Geo4 thermal’’. 

5 (4) The first section (30 U.S.C. 1001 note) is 

6 amended by striking ‘‘That this’’ and inserting the 

7 following: 

8 ‘‘SECTION 1. SHORT TITLE. 

9 ‘‘This’’. 

10 (5) Section 2 (30 U.S.C. 1001) is amended by 

11 striking ‘‘SEC. 2. As’’ and inserting the following: 

12 ‘‘SEC. 2. DEFINITIONS. 

13 ‘‘As’’. 

14 (6) Section 3 (30 U.S.C. 1002) is amended by 

15 striking ‘‘SEC. 3. Subject’’ and inserting the fol16 lowing: 

17 ‘‘SEC. 3. LANDS SUBJECT TO GEOTHERMAL LEASING. 

18 ‘‘Subject’’. 

19 (7) Section 5 (30 U.S.C. 1004) is further 

20 amended by striking ‘‘SEC. 5.’’, and by inserting im21 mediately before and above subsection (a) the fol22 lowing: 
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1 ‘‘SEC. 5. RENTS AND ROYALTIES.’’. 

2 (8) Section 7 (30 U.S.C. 1006) is amended by 

3 striking ‘‘SEC. 7. A geothermal’’ and inserting the 

4 following: 

5 ‘‘SEC. 7. ACREAGE OF GEOTHERMAL LEASE. 

6 ‘‘A geothermal’’. 

7 (9) Section 8 (30 U.S.C. 1007) is amended by 

8 striking ‘‘SEC. 8. (a) The’’ and inserting the fol9 lowing: 

10 ‘‘SEC. 8. READJUSTMENT OF LEASE TERMS AND CONDI11 TIONS. 

12 ‘‘(a) The’’. 

13 (10) Section 9 (30 U.S.C. 1008) is amended by 

14 striking ‘‘SEC. 9. If’’ and inserting the following: 

15 ‘‘SEC. 9. BYPRODUCTS. 

16 ‘‘If’’. 

17 (11) Section 10 (30 U.S.C. 1009) is amended 

18 by striking ‘‘SEC. 10. The’’ and inserting the fol19 lowing: 

20 ‘‘SEC. 10. RELINQUISHMENT OF GEOTHERMAL RIGHTS. 

21 ‘‘The’’. 

22 (12) Section 11 (30 U.S.C. 1010) is amended 

23 by striking ‘‘SEC. 11. The’’ and inserting the fol24 lowing: 

25 ‘‘SEC. 11. SUSPENSION OF OPERATIONS AND PRODUCTION. 

26 ‘‘The’’. 
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1 (13) Section 12 (30 U.S.C. 1011) is amended 

2 by striking ‘‘SEC. 12. Leases’’ and inserting the fol3 lowing: 

4 ‘‘SEC. 12. TERMINATION OF LEASES. 

5 ‘‘Leases’’. 

6 (14) Section 13 (30 U.S.C. 1012) is amended 

7 by striking ‘‘SEC. 13. The’’ and inserting the fol8 lowing: 

9 ‘‘SEC. 13. WAIVER, SUSPENSION, OR REDUCTION OF RENT10 AL OR ROYALTY. 

11 ‘‘The’’. 

12 (15) Section 14 (30 U.S.C. 1013) is amended 

13 by striking ‘‘SEC. 14. Subject’’ and inserting the fol14 lowing: 

15 ‘‘SEC. 14. SURFACE LAND USE. 

16 ‘‘Subject’’. 

17 (16) Section 15 (30 U.S.C. 1014) is amended 

18 by striking ‘‘SEC. 15. (a) Geothermal’’ and inserting 

19 the following: 

20 ‘‘SEC. 15. LANDS SUBJECT TO GEOTHERMAL LEASING. 

21 ‘‘(a) Geothermal’’. 

22 (17) Section 16 (30 U.S.C. 1015) is amended 

23 by striking ‘‘SEC. 16. Leases’’ and inserting the fol24 lowing: 
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1 ‘‘SEC. 16. REQUIREMENT FOR LESSEES. 

2 ‘‘Leases’’. 

3 (18) Section 17 (30 U.S.C. 1016) is amended 

4 by striking ‘‘SEC. 17. Administration’’ and inserting 

5 the following: 

6 ‘‘SEC. 17. ADMINISTRATION. 

7 ‘‘Administration’’. 

8 (19) Section 19 (30 U.S.C. 1018) is amended 

9 by striking ‘‘SEC. 19. Upon’’ and inserting the fol10 lowing: 

11 ‘‘SEC. 19. DATA FROM FEDERAL AGENCIES. 

12 ‘‘Upon’’. 

13 (20) Section 21 (30 U.S.C. 1020) is further 

14 amended by striking ‘‘SEC. 21.’’, and by inserting 

15 immediately before and above the remainder of that 

16 section the following: 

17 ‘‘SEC. 21. PUBLICATION IN FEDERAL REGISTER; RESERVA18 TION OF MINERAL RIGHTS.’’. 

19 (21) Section 22 (30 U.S.C. 1021) is amended 

20 by striking ‘‘SEC. 22. Nothing’’ and inserting the 

21 following: 

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

23 ‘‘Nothing’’. 

24 (22) Section 23 (30 U.S.C. 1022) is amended 

25 by striking ‘‘SEC. 23. (a) All’’ and inserting the fol26 lowing: 
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1 ‘‘SEC. 23. PREVENTION OF WASTE; EXCLUSIVITY. 

2 ‘‘(a) All’’. 

3 (23) Section 24 (30 U.S.C. 1023) is amended 

4 by striking ‘‘SEC. 24. The’’ and inserting the fol5 lowing: 

6 ‘‘SEC. 24. RULES AND REGULATIONS. 

7 ‘‘The’’. 

8 (24) Section 25 (30 U.S.C. 1024) is amended 

9 by striking ‘‘SEC. 25. As’’ and inserting the fol10 lowing:

11 ‘‘SEC. 25. INCLUSION OF GEOTHERMAL LEASING UNDER 

12 CERTAIN OTHER LAWS. 

13 ‘‘As’’. 

14 (25) Section 26 is amended by striking ‘‘SEC. 

15 26. The’’ and inserting the following: 

16 ‘‘SEC. 26. AMENDMENT. 

17 ‘‘The’’. 

18 (26) Section 27 (30 U.S.C. 1025) is amended 

19 by striking ‘‘SEC. 27. The’’ and inserting the fol20 lowing: 

21 ‘‘SEC. 27. FEDERAL RESERVATION OF CERTAIN MINERAL 

22 RIGHTS. 

23 ‘‘The’’. 

24 (27) Section 28 (30 U.S.C. 1026) is amended 

25 by striking ‘‘SEC. 28. (a)(1) The’’ and inserting the 

26 following: 
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1 ‘‘SEC. 28. SIGNIFICANT THERMAL FEATURES. 

2 ‘‘(a)(1) The’’. 

3 (28) Section 29 (30 U.S.C. 1027) is amended 

4 by striking ‘‘SEC. 29. The’’ and inserting the fol5 lowing: 

6 ‘‘SEC. 29. LAND SUBJECT TO PROHIBITION ON LEASING. 

7 ‘‘The’’.

8 Subtitle C—Hydroelectric 

9 PART I—ALTERNATIVE CONDITIONS 

10 SEC. 231. ALTERNATIVE CONDITIONS AND FISHWAYS. 

11 (a) FEDERAL RESERVATIONS.—Section 4(e) of the 

12 Federal Power Act (16 U.S.C. 797(e)) is amended by in13 serting after ‘‘adequate protection and utilization of such 

14 reservation.’’ at the end of the first proviso the following: 

15 ‘‘The license applicant shall be entitled to a determination 

16 on the record, after opportunity for an expedited agency 

17 trial-type hearing of any disputed issues of material fact, 

18 with respect to such conditions. Such hearing may be con19 ducted in accordance with procedures established by agen20 cy regulation in consultation with the Federal Energy 

21 Regulatory Commission.’’. 

22 (b) FISHWAYS.—Section 18 of the Federal Power Act 

23 (16 U.S.C. 811) is amended by inserting after ‘‘and such 

24 fishways as may be prescribed by the Secretary of Com25 merce.’’ the following: ‘‘The license applicant shall be enti26 tled to a determination on the record, after opportunity 
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1 for an expedited agency trial-type hearing of any disputed 

2 issues of material fact, with respect to such fishways. Such 

3 hearing may be conducted in accordance with procedures 

4 established by agency regulation in consultation with the 

5 Federal Energy Regulatory Commission.’’. 

6 (c) ALTERNATIVE CONDITIONS AND PRESCRIP7 TIONS.—Part I of the Federal Power Act (16 U.S.C. 791a 

8 et seq.) is amended by adding the following new section 

9 at the end thereof: 

10 ‘‘SEC. 33. ALTERNATIVE CONDITIONS AND PRESCRIPTIONS. 

11 ‘‘(a) ALTERNATIVE CONDITIONS.—(1) Whenever any 

12 person applies for a license for any project works within 

13 any reservation of the United States, and the Secretary 

14 of the department under whose supervision such reserva15 tion falls (referred to in this subsection as ‘the Secretary’) 

16 deems a condition to such license to be necessary under 

17 the first proviso of section 4(e), the license applicant may 

18 propose an alternative condition. 

19 ‘‘(2) Notwithstanding the first proviso of section 4(e), 

20 the Secretary shall accept the proposed alternative condi21 tion referred to in paragraph (1), and the Commission 

22 shall include in the license such alternative condition, if 

23 the Secretary determines, based on substantial evidence 

24 provided by the license applicant or otherwise available to 

25 the Secretary, that such alternative condition—
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1 ‘‘(A) provides for the adequate protection and 

2 utilization of the reservation; and 

3 ‘‘(B) will either—

4 ‘‘(i) cost less to implement; or 

5 ‘‘(ii) result in improved operation of the 

6 project works for electricity production—

7 as compared to the condition initially deemed nec8 essary by the Secretary. 

9 ‘‘(3) The Secretary shall submit into the public 

10 record of the Commission proceeding with any condition 

11 under section 4(e) or alternative condition it accepts under 

12 this section, a written statement explaining the basis for 

13 such condition, and reason for not accepting any alter14 native condition under this section. The written statement 

15 must demonstrate that the Secretary gave equal consider16 ation to the effects of the condition adopted and alter17 natives not accepted on energy supply, distribution, cost, 

18 and use; flood control; navigation; water supply; and air 

19 quality (in addition to the preservation of other aspects 

20 of environmental quality); based on such information as 

21 may be available to the Secretary, including information 

22 voluntarily provided in a timely manner by the applicant 

23 and others. The Secretary shall also submit, together with 

24 the aforementioned written statement, all studies, data, 
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1 and other factual information available to the Secretary 

2 and relevant to the Secretary’s decision. 

3 ‘‘(4) Nothing in this section shall prohibit other inter4 ested parties from proposing alternative conditions. 

5 ‘‘(5) If the Secretary does not accept an applicant’s 

6 alternative condition under this section, and the Commis7 sion finds that the Secretary’s condition would be incon8 sistent with the purposes of this part, or other applicable 

9 law, the Commission may refer the dispute to the Commis10 sion’s Dispute Resolution Service. The Dispute Resolution 

11 Service shall consult with the Secretary and the Commis12 sion and issue a non-binding advisory within 90 days. The 

13 Secretary may accept the Dispute Resolution Service advi14 sory unless the Secretary finds that the recommendation 

15 will not provide for the adequate protection and utilization 

16 of the reservation. The Secretary shall submit the advisory 

17 and the Secretary’s final written determination into the 

18 record of the Commission’s proceeding. 

19 ‘‘(b) ALTERNATIVE PRESCRIPTIONS.—(1) Whenever 

20 the Secretary of the Interior or the Secretary of Commerce 

21 prescribes a fishway under section 18, the license appli22 cant or licensee may propose an alternative to such pre23 scription to construct, maintain, or operate a fishway. 

24 ‘‘(2) Notwithstanding section 18, the Secretary of the 

25 Interior or the Secretary of Commerce, as appropriate, 
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1 shall accept and prescribe, and the Commission shall re2 quire, the proposed alternative referred to in paragraph 

3 (1), if the Secretary of the appropriate department deter4 mines, based on substantial evidence provided by the li5 censee or otherwise available to the Secretary, that such 

6 alternative—

7 ‘‘(A) will be no less protective than the fishway 

8 initially prescribed by the Secretary; and 

9 ‘‘(B) will either—

10 ‘‘(i) cost less to implement; or 

11 ‘‘(ii) result in improved operation of the 

12 project works for electricity production, 

13 as compared to the fishway initially deemed nec14 essary by the Secretary. 

15 ‘‘(3) The Secretary concerned shall submit into the 

16 public record of the Commission proceeding with any pre17 scription under section 18 or alternative prescription it ac18 cepts under this section, a written statement explaining 

19 the basis for such prescription, and reason for not accept20 ing any alternative prescription under this section. The 

21 written statement must demonstrate that the Secretary 

22 gave equal consideration to the effects of the condition 

23 adopted and alternatives not accepted on energy supply, 

24 distribution, cost, and use; flood control; navigation; water 

25 supply; and air quality (in addition to the preservation of 
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1 other aspects of environmental quality); based on such in2 formation as may be available to the Secretary, including 

3 information voluntarily provided in a timely manner by the 

4 applicant and others. The Secretary shall also submit, to5 gether with the aforementioned written statement, all 

6 studies, data, and other factual information available to 

7 the Secretary and relevant to the Secretary’s decision. 

8 ‘‘(4) Nothing in this section shall prohibit other inter9 ested parties from proposing alternative prescriptions. 

10 ‘‘(5) If the Secretary concerned does not accept an 

11 applicant’s alternative prescription under this section, and 

12 the Commission finds that the Secretary’s prescription 

13 would be inconsistent with the purposes of this part, or 

14 other applicable law, the Commission may refer the dis15 pute to the Commission’s Dispute Resolution Service. The 

16 Dispute Resolution Service shall consult with the Sec17 retary and the Commission and issue a non-binding advi18 sory within 90 days. The Secretary may accept the Dis19 pute Resolution Service advisory unless the Secretary 

20 finds that the recommendation will be less protective than 

21 the fishway initially prescribed by the Secretary. The Sec22 retary shall submit the advisory and the Secretary’s final 

23 written determination into the record of the Commission’s 

24 proceeding.’’.
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1 PART II—ADDITIONAL HYDROPOWER 

2 SEC. 241. HYDROELECTRIC PRODUCTION INCENTIVES. 

3 (a) INCENTIVE PAYMENTS.—For electric energy gen4 erated and sold by a qualified hydroelectric facility during 

5 the incentive period, the Secretary of Energy (referred to 

6 in this section as the ‘‘Secretary’’) shall make, subject to 

7 the availability of appropriations, incentive payments to 

8 the owner or operator of such facility. The amount of such 

9 payment made to any such owner or operator shall be as 

10 determined under subsection (e) of this section. Payments 

11 under this section may only be made upon receipt by the 

12 Secretary of an incentive payment application which estab13 lishes that the applicant is eligible to receive such payment 

14 and which satisfies such other requirements as the Sec15 retary deems necessary. Such application shall be in such 

16 form, and shall be submitted at such time, as the Sec17 retary shall establish. 

18 (b) DEFINITIONS.—For purposes of this section: 

19 (1) QUALIFIED HYDROELECTRIC FACILITY.—

20 The term ‘‘qualified hydroelectric facility’’ means a 

21 turbine or other generating device owned or solely 

22 operated by a non-Federal entity which generates 

23 hydroelectric energy for sale and which is added to 

24 an existing dam or conduit. 

25 (2) EXISTING DAM OR CONDUIT.—The term 

26 ‘‘existing dam or conduit’’ means any dam or con-
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1 duit the construction of which was completed before 

2 the date of the enactment of this section and which 

3 does not require any construction or enlargement of 

4 impoundment or diversion structures (other than re5 pair or reconstruction) in connection with the instal6 lation of a turbine or other generating device. 

7 (3) CONDUIT.—The term ‘‘conduit’’ has the 

8 same meaning as when used in section 30(a)(2) of 

9 the Federal Power Act (16 U.S.C. 823a(a)(2)). 

10 The terms defined in this subsection shall apply without 

11 regard to the hydroelectric kilowatt capacity of the facility 

12 concerned, without regard to whether the facility uses a 

13 dam owned by a governmental or nongovernmental entity, 

14 and without regard to whether the facility begins oper15 ation on or after the date of the enactment of this section. 

16 (c) ELIGIBILITY WINDOW.—Payments may be made 

17 under this section only for electric energy generated from 

18 a qualified hydroelectric facility which begins operation 

19 during the period of 10 fiscal years beginning with the 

20 first full fiscal year occurring after the date of enactment 

21 of this subtitle. 

22 (d) INCENTIVE PERIOD.—A qualified hydroelectric 

23 facility may receive payments under this section for a pe24 riod of 10 fiscal years (referred to in this section as the 

25 ‘‘incentive period’’). Such period shall begin with the fiscal 
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1 year in which electric energy generated from the facility 

2 is first eligible for such payments. 

3 (e) AMOUNT OF PAYMENT.—

4 (1) IN GENERAL.—Payments made by the Sec5 retary under this section to the owner or operator of 

6 a qualified hydroelectric facility shall be based on 

7 the number of kilowatt hours of hydroelectric energy 

8 generated by the facility during the incentive period. 

9 For any such facility, the amount of such payment 

10 shall be 1.8 cents per kilowatt hour (adjusted as 

11 provided in paragraph (2)), subject to the avail12 ability of appropriations under subsection (g), except 

13 that no facility may receive more than $750,000 in 

14 1 calendar year. 

15 (2) ADJUSTMENTS.—The amount of the pay16 ment made to any person under this section as pro17 vided in paragraph (1) shall be adjusted for inflation 

18 for each fiscal year beginning after calendar year 

19 2003 in the same manner as provided in the provi20 sions of section 29(d)(2)(B) of the Internal Revenue 

21 Code of 1986, except that in applying such provi22 sions the calendar year 2003 shall be substituted for 

23 calendar year 1979. 

24 (f) SUNSET.—No payment may be made under this 

25 section to any qualified hydroelectric facility after the ex-
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1 piration of the period of 20 fiscal years beginning with 

2 the first full fiscal year occurring after the date of enact3 ment of this subtitle, and no payment may be made under 

4 this section to any such facility after a payment has been 

5 made with respect to such facility for a period of 10 fiscal 

6 years. 

7 (g) AUTHORIZATION OF APPROPRIATIONS.—There 

8 are authorized to be appropriated to the Secretary to carry 

9 out the purposes of this section $10,000,000 for each of 

10 the fiscal years 2004 through 2013. 

11 SEC. 242. HYDROELECTRIC EFFICIENCY IMPROVEMENT. 

12 (a) INCENTIVE PAYMENTS.—The Secretary of En13 ergy shall make incentive payments to the owners or oper14 ators of hydroelectric facilities at existing dams to be used 

15 to make capital improvements in the facilities that are di16 rectly related to improving the efficiency of such facilities 

17 by at least 3 percent. 

18 (b) LIMITATIONS.—Incentive payments under this 

19 section shall not exceed 10 percent of the costs of the cap20 ital improvement concerned and not more than 1 payment 

21 may be made with respect to improvements at a single 

22 facility. No payment in excess of $750,000 may be made 

23 with respect to improvements at a single facility. 

24 (c) AUTHORIZATION OF APPROPRIATIONS.—There 

25 are authorized to be appropriated to carry out this section 
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1 not more than $10,000,000 for each of the fiscal years 

2 2004 through 2013. 

3 SEC. 243. SMALL HYDROELECTRIC POWER PROJECTS. 

4 Section 408(a)(6) of the Public Utility Regulatory 

5 Policies Act of 1978 (16 U.S.C. 2708(a)(6)) is amended 

6 by striking ‘‘April 20, 1977’’ and inserting ‘‘March 4, 

7 2003’’. 

8 SEC. 244. INCREASED HYDROELECTRIC GENERATION AT 

9 EXISTING FEDERAL FACILITIES. 

10 (a) IN GENERAL.—The Secretary of the Interior and 

11 the Secretary of Energy, in consultation with the Sec12 retary of the Army, shall jointly conduct a study of the 

13 potential for increasing electric power production capa14 bility at federally owned or operated water regulation, 

15 storage, and conveyance facilities. 

16 (b) CONTENT.—The study under this section shall in17 clude identification and description in detail of each facil18 ity that is capable, with or without modification, of pro19 ducing additional hydroelectric power, including esti20 mation of the existing potential for the facility to generate 

21 hydroelectric power. 

22 (c) REPORT.—The Secretaries shall submit to the 

23 Committees on Energy and Commerce, Resources, and 

24 Transportation and Infrastructure of the House of Rep25 resentatives and the Committee on Energy and Natural 
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1 Resources of the Senate a report on the findings, conclu2 sions, and recommendations of the study under this sec3 tion by not later than 18 months after the date of the

4 enactment of this Act. The report shall include each of 

5 the following: 

6 (1) The identifications, descriptions, and esti7 mations referred to in subsection (b). 

8 (2) A description of activities currently con9 ducted or considered, or that could be considered, to 

10 produce additional hydroelectric power from each 

11 identified facility. 

12 (3) A summary of prior actions taken by the 

13 Secretaries to produce additional hydroelectric power 

14 from each identified facility. 

15 (4) The costs to install, upgrade, or modify 

16 equipment or take other actions to produce addi17 tional hydroelectric power from each identified facil18 ity and the level of Federal power customer involve19 ment in the determination of such costs. 

20 (5) The benefits that would be achieved by such 

21 installation, upgrade, modification, or other action, 

22 including quantified estimates of any additional en23 ergy or capacity from each facility identified under 

24 subsection (b). 
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1 (6) A description of actions that are planned, 

2 underway, or might reasonably be considered to in3 crease hydroelectric power production by replacing 

4 turbine runners, by performing generator upgrades 

5 or rewinds, or construction of pumped storage facili6 ties. 

7 (7) The impact of increased hydroelectric power 

8 production on irrigation, fish, wildlife, Indian tribes, 

9 river health, water quality, navigation, recreation, 

10 fishing, and flood control. 

11 (8) Any additional recommendations to increase 

12 hydroelectric power production from, and reduce 

13 costs and improve efficiency at, federally owned or 

14 operated water regulation, storage, and conveyance 

15 facilities. 

16 SEC. 245. SHIFT OF PROJECT LOADS TO OFF-PEAK PERI17 ODS. 

18 (a) IN GENERAL.—The Secretary of the Interior 

19 shall—

20 (1) review electric power consumption by Bu21 reau of Reclamation facilities for water pumping 

22 purposes; and 

23 (2) make such adjustments in such pumping as 

24 possible to minimize the amount of electric power 

25 consumed for such pumping during periods of peak 
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1 electric power consumption, including by performing 

2 as much of such pumping as possible during off3 peak hours at night. 

4 (b) CONSENT OF AFFECTED IRRIGATION CUSTOMERS

5 REQUIRED.—The Secretary may not under this section 

6 make any adjustment in pumping at a facility without the 

7 consent of each person that has contracted with the 

8 United States for delivery of water from the facility for 

9 use for irrigation and that would be affected by such ad10 justment. 

11 (c) EXISTING OBLIGATIONS NOT AFFECTED.—This 

12 section shall not be construed to affect any existing obliga13 tion of the Secretary to provide electric power, water, or 

14 other benefits from Bureau of Reclamation facilities, in15 cluding recreational releases. 

16 SEC. 246. LIMITATION ON CERTAIN CHARGES ASSESSED TO 

17 THE FLINT CREEK PROJECT, MONTANA. 

18 Notwithstanding section 10(e)(1) of the Federal 

19 Power Act (16 U.S.C. 803(e)(1)) or any other provision 

20 of Federal law providing for the payment to the United 

21 States of charges for the use of Federal land for the pur22 poses of operating and maintaining a hydroelectric devel23 opment licensed by the Federal Energy Regulatory Com24 mission (referred to in this section as the ‘‘Commission’’), 

25 any political subdivision of the State of Montana that 
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1 holds a license for Commission Project No. 1473 in Gran2 ite and Deer Lodge Counties, Montana, shall be required 

3 to pay to the United States for the use of that land for 

4 each year during which the political subdivision continues 

5 to hold the license for the project, the lesser of—

6 (1) $25,000; or 

7 (2) such annual charge as the Commission or 

8 any other department or agency of the Federal Gov9 ernment may assess.

10 SEC. 247. REINSTATEMENT AND TRANSFER. 

11 (a) REINSTATEMENT AND TRANSFER OF FEDERAL

12 LICENSE FOR PROJECT NUMBERED 2696.—Notwith13 standing section 8 of the Federal Power Act (16 U.S.C. 

14 801) or any other provision of such Act, the Federal En15 ergy Regulatory Commission shall reinstate the license for 

16 Project No. 2696 and transfer the license, without delay 

17 or the institution of any proceedings, to the Town of 

18 Stuyvesant, New York, holder of Federal Energy Regu19 latory Commission Preliminary Permit No. 11787, within 

20 30 days after the date of enactment of this Act. 

21 (b) HYDROELECTRIC INCENTIVES.—Project No. 

22 2696 shall be entitled to the full benefit of any Federal 

23 legislation that promotes hydroelectric development that 

24 is enacted within 2 years either before or after the date 

25 of enactment of this Act. 
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1 (c) PROJECT DEVELOPMENT AND FINANCING.—The 

2 Federal Energy Regulatory Commission shall permit the 

3 Town of Stuyvesant to add as a colicensee any private or 

4 public entity or entities to the reinstated license at any 

5 time, notwithstanding the issuance of a preliminary permit 

6 to the Town of Stuyvesant and any consideration of mu7 nicipal preference. The town shall be entitled, to the extent 

8 that funds are available or shall be made available, to re9 ceive loans under sections 402 and 403 of the Public Util10 ity Regulatory Policies Act of 1978 (16 U.S.C. 2702 and 

11 2703), or similar programs, for the reimbursement of fea12 sibility studies or development costs, or both, incurred 

13 since January 1, 2001, through and including December 

14 31, 2006. All power produced by the project shall be 

15 deemed incremental hydropower for purpose of qualifying 

16 for any energy credit or similar benefits.

17 TITLE III—OIL AND GAS

18 Subtitle A—Petroleum Reserve and 

19 Home Heating Oil 

20 SEC. 301. PERMANENT AUTHORITY TO OPERATE THE STRA21 TEGIC PETROLEUM RESERVE AND OTHER 

22 ENERGY PROGRAMS. 

23 (a) AMENDMENT TO TITLE I OF THE ENERGY POL24 ICY AND CONSERVATION ACT.—Title I of the Energy Pol-
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1 icy and Conservation Act (42 U.S.C. 6211 et seq.) is 

2 amended—

3 (1) by striking section 166 (42 U.S.C. 6246) 

4 and inserting the following: 

5 ‘‘AUTHORIZATION OF APPROPRIATIONS

6 ‘‘SEC. 166. There are authorized to be appropriated 

7 to the Secretary such sums as may be necessary to carry 

8 out this part and part D, to remain available until ex9 pended.’’; 

10 (2) by striking section 186 (42 U.S.C. 6250e); 

11 and 

12 (3) by striking part E (42 U.S.C. 6251; relat13 ing to the expiration of title I of the Act). 

14 (b) AMENDMENT TO TITLE II OF THE ENERGY POL15 ICY AND CONSERVATION ACT.—Title II of the Energy 

16 Policy and Conservation Act (42 U.S.C. 6271 et seq.) is 

17 amended—

18 (1) by inserting before section 273 (42 U.S.C. 

19 6283) the following: 

20 ‘‘PART C—SUMMER FILL AND FUEL BUDGETING

21 PROGRAMS’’; 

22 (2) by striking section 273(e) (42 U.S.C. 

23 6283(e); relating to the expiration of summer fill 

24 and fuel budgeting programs); and 

25 (3) by striking part D (42 U.S.C. 6285; relat26 ing to the expiration of title II of the Act). 
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1 (c) TECHNICAL AMENDMENTS.—The table of con2 tents for the Energy Policy and Conservation Act is 

3 amended—

4 (1) by inserting after the items relating to part 

5 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.’’;

6 (2) by amending the items relating to part C of 

7 title II to read as follows:

‘‘PART C—SUMMER FILL AND FUEL BUDGETING PROGRAMS

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

8 and 

9 (3) by striking the items relating to part D of 

10 title II. 

11 (d) AMENDMENT TO THE ENERGY POLICY AND CON12 SERVATION ACT.—Section 183(b)(1) of the Energy Policy 

13 and Conservation Act (42 U.S.C. 6250(b)(1)) is amended 

14 by striking all after ‘‘increases’’ through to ‘‘mid-October 

15 through March’’ and inserting ‘‘by more than 60 percent 

16 over its 5-year rolling average for the months of mid-Octo17 ber through March (considered as a heating season aver18 age)’’. 

19 (e) FILL STRATEGIC PETROLEUM RESERVE TO CA20 PACITY.—The Secretary of Energy shall, as expeditiously 
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1 as practicable, acquire petroleum in amounts sufficient to 

2 fill the Strategic Petroleum Reserve to the 1,000,000,000 

3 barrel capacity authorized under section 154(a) of the En4 ergy Policy and Conservation Act (42 U.S.C. 6234(a)), 

5 consistent with the provisions of sections 159 and 160 of 

6 such Act (42 U.S.C. 6239, 6240). 

7 SEC. 302. NATIONAL OILHEAT RESEARCH ALLIANCE. 

8 Section 713 of the Energy Act of 2000 (42 U.S.C. 

9 6201 note) is amended by striking ‘‘4’’ and inserting ‘‘9’’.

10 Subtitle B—Production Incentives 

11 SEC. 311. DEFINITION OF SECRETARY. 

12 In this subtitle, the term ‘‘Secretary’’ means the Sec13 retary of the Interior. 

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

15 (a) APPLICABILITY OF SECTION.—Notwithstanding 

16 any other provision of law, this section applies to all roy17 alty in-kind accepted by the Secretary on or after October 

18 1, 2004, under any Federal oil or gas lease or permit 

19 under section 36 of the Mineral Leasing Act (30 U.S.C. 

20 192), section 27 of the Outer Continental Shelf Lands Act 

21 (43 U.S.C. 1353), or any other Federal law governing 

22 leasing of Federal land for oil and gas development. 

23 (b) TERMS AND CONDITIONS.—All royalty accruing 

24 to the United States shall, on the demand of the Sec-
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1 retary, be paid in oil or gas. If the Secretary makes such 

2 a demand, the following provisions apply to such payment: 

3 (1) SATISFACTION OF ROYALTY OBLIGATION.—

4 Delivery by, or on behalf of, the lessee of the royalty 

5 amount and quality due under the lease satisfies the 

6 lessee’s royalty obligation for the amount delivered, 

7 except that transportation and processing reimburse8 ments paid to, or deductions claimed by, the lessee 

9 shall be subject to review and audit. 

10 (2) MARKETABLE CONDITION.—

11 (A) IN GENERAL.—Royalty production 

12 shall be placed in marketable condition by the 

13 lessee at no cost to the United States. 

14 (B) DEFINITION OF MARKETABLE CONDI15 TION.—In this paragraph, the term ‘‘in market16 able condition’’ means sufficiently free from im17 purities and otherwise in a condition that the 

18 royalty production will be accepted by a pur19 chaser under a sales contract typical of the field 

20 or area in which the royalty production was 

21 produced. 

22 (3) DISPOSITION BY THE SECRETARY.—The 

23 Secretary may—

24 (A) sell or otherwise dispose of any royalty 

25 production taken in-kind (other than oil or gas 
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1 transferred under section 27(a)(3) of the Outer 

2 Continental Shelf Lands Act (43 U.S.C. 

3 1353(a)(3)) for not less than the market price; 

4 and 

5 (B) transport or process (or both) any roy6 alty production taken in-kind. 

7 (4) RETENTION BY THE SECRETARY.—The Sec8 retary may, notwithstanding section 3302 of title 31, 

9 United States Code, retain and use a portion of the 

10 revenues from the sale of oil and gas taken in-kind 

11 that otherwise would be deposited to miscellaneous 

12 receipts, without regard to fiscal year limitation, or 

13 may use oil or gas received as royalty taken in-kind 

14 (in this paragraph referred to as ‘‘royalty produc15 tion’’) to pay the cost of—

16 (A) transporting the royalty production; 

17 (B) processing the royalty production; 

18 (C) disposing of the royalty production; or 

19 (D) any combination of transporting, proc20 essing, and disposing of the royalty production. 

21 (5) LIMITATION.—

22 (A) IN GENERAL.—Except as provided in 

23 subparagraph (B), the Secretary may not use 

24 revenues from the sale of oil and gas taken in-
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1 kind to pay for personnel, travel, or other ad2 ministrative costs of the Federal Government. 

3 (B) EXCEPTION.—Notwithstanding sub4 paragraph (A), the Secretary may use a portion 

5 of the revenues from the sale of oil taken in6 kind, without fiscal year limitation, to pay 

7 transportation costs, salaries, and other admin8 istrative costs directly related to filling the 

9 Strategic Petroleum Reserve. 

10 (c) REIMBURSEMENT OF COST.—If the lessee, pursu11 ant to an agreement with the United States or as provided 

12 in the lease, processes the royalty gas or delivers the roy13 alty oil or gas at a point not on or adjacent to the lease 

14 area, the Secretary shall—

15 (1) reimburse the lessee for the reasonable costs 

16 of transportation (not including gathering) from the 

17 lease to the point of delivery or for processing costs; 

18 or 

19 (2) allow the lessee to deduct the transportation 

20 or processing costs in reporting and paying royalties 

21 in-value for other Federal oil and gas leases. 

22 (d) BENEFIT TO THE UNITED STATES REQUIRED.—

23 The Secretary may receive oil or gas royalties in-kind only 

24 if the Secretary determines that receiving royalties in-kind 

25 provides benefits to the United States that are greater 
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1 than or equal to the benefits that are likely to have been 

2 received had royalties been taken in-value. 

3 (e) REPORTS.—

4 (1) IN GENERAL.—Not later than September 

5 30, 2005, the Secretary shall submit to Congress a 

6 report that addresses—

7 (A) actions taken to develop businesses 

8 processes and automated systems to fully sup9 port the royalty-in-kind capability to be used in 

10 tandem with the royalty-in-value approach in 

11 managing Federal oil and gas revenue; and 

12 (B) future royalty-in-kind businesses oper13 ation plans and objectives. 

14 (2) REPORTS ON OIL OR GAS ROYALTIES TAKEN

15 IN-KIND.—For each of fiscal years 2004 through 

16 2013 in which the United States takes oil or gas 

17 royalties in-kind from production in any State or 

18 from the Outer Continental Shelf, excluding royal19 ties taken in-kind and sold to refineries under sub20 section (h), the Secretary shall submit to Congress 

21 a report that describes—

22 (A) the methodology or methodologies used 

23 by the Secretary to determine compliance with 

24 subsection (d), including the performance 

25 standard for comparing amounts received by 
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1 the United States derived from royalties in-kind 

2 to amounts likely to have been received had roy3 alties been taken in-value; 

4 (B) an explanation of the evaluation that 

5 led the Secretary to take royalties in-kind from 

6 a lease or group of leases, including the ex7 pected revenue effect of taking royalties in-kind; 

8 (C) actual amounts received by the United 

9 States derived from taking royalties in-kind and 

10 costs and savings incurred by the United States 

11 associated with taking royalties in-kind, includ12 ing, but not limited to, administrative savings 

13 and any new or increased administrative costs; 

14 and 

15 (D) an evaluation of other relevant public 

16 benefits or detriments associated with taking 

17 royalties in-kind. 

18 (f) DEDUCTION OF EXPENSES.—

19 (1) IN GENERAL.—Before making payments 

20 under section 35 of the Mineral Leasing Act (30 

21 U.S.C. 191) or section 8(g) of the Outer Continental 

22 Shelf Lands Act (43 U.S.C. 1337(g)) of revenues 

23 derived from the sale of royalty production taken in24 kind from a lease, the Secretary shall deduct 

25 amounts paid or deducted under subsections (b)(4) 
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1 and (c) and deposit the amount of the deductions in 

2 the miscellaneous receipts of the United States 

3 Treasury. 

4 (2) ACCOUNTING FOR DEDUCTIONS.—When the 

5 Secretary allows the lessee to deduct transportation 

6 or processing costs under subsection (c), the Sec7 retary may not reduce any payments to recipients of 

8 revenues derived from any other Federal oil and gas 

9 lease as a consequence of that deduction. 

10 (g) CONSULTATION WITH STATES.—The Sec11 retary—

12 (1) shall consult with a State before conducting 

13 a royalty in-kind program under this subtitle within 

14 the State, and may delegate management of any 

15 portion of the Federal royalty in-kind program to 

16 the State except as otherwise prohibited by Federal 

17 law; and 

18 (2) shall consult annually with any State from 

19 which Federal oil or gas royalty is being taken in20 kind to ensure, to the maximum extent practicable, 

21 that the royalty in-kind program provides revenues 

22 to the State greater than or equal to those likely to 

23 have been received had royalties been taken in-value. 

24 (h) SMALL REFINERIES.—
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1 (1) PREFERENCE.—If the Secretary finds that 

2 sufficient supplies of crude oil are not available in 

3 the open market to refineries that do not have their 

4 own source of supply for crude oil, the Secretary 

5 may grant preference to such refineries in the sale 

6 of any royalty oil accruing or reserved to the United 

7 States under Federal oil and gas leases issued under 

8 any mineral leasing law, for processing or use in 

9 such refineries at private sale at not less than the 

10 market price. 

11 (2) PRORATION AMONG REFINERIES IN PRO12 DUCTION AREA.—In disposing of oil under this sub13 section, the Secretary of Energy may, at the discre14 tion of the Secretary, prorate the oil among refin15 eries described in paragraph (1) in the area in which 

16 the oil is produced. 

17 (i) DISPOSITION TO FEDERAL AGENCIES.—

18 (1) ONSHORE ROYALTY.—Any royalty oil or gas 

19 taken by the Secretary in-kind from onshore oil and 

20 gas leases may be sold at not less than the market 

21 price to any Federal agency. 

22 (2) OFFSHORE ROYALTY.—Any royalty oil or 

23 gas taken in-kind from a Federal oil or gas lease on 

24 the Outer Continental Shelf may be disposed of only 
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1 under section 27 of the Outer Continental Shelf 

2 Lands Act (43 U.S.C. 1353). 

3 (j) FEDERAL LOW-INCOME ENERGY ASSISTANCE

4 PROGRAMS.—

5 (1) PREFERENCE.—In disposing of royalty oil 

6 or gas taken in-kind under this section, the Sec7 retary may grant a preference to any person, includ8 ing any Federal or State agency, for the purpose of 

9 providing additional resources to any Federal low-in10 come energy assistance program. 

11 (2) REPORT.—Not later than 3 years after the 

12 date of enactment of this Act, the Secretary shall 

13 transmit a report to Congress, assessing the effec14 tiveness of granting preferences specified in para15 graph (1) and providing a specific recommendation 

16 on the continuation of authority to grant pref17 erences. 

18 (k) EFFECTIVE DATE.—This section takes effect on 

19 October 1, 2004. 

20 SEC. 313. MARGINAL PROPERTY PRODUCTION INCENTIVES. 

21 (a) DEFINITION OF MARGINAL PROPERTY.—Until 

22 such time as the Secretary issues regulations under sub23 section (e) that prescribe a different definition, in this sec24 tion the term ‘‘marginal property’’ means an onshore unit, 

25 communitization agreement, or lease not within a unit or 
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1 communitization agreement, that produces on average the 

2 combined equivalent of less than 15 barrels of oil per well 

3 per day or 90 million British thermal units of gas per well 

4 per day calculated based on the average over the 3 most 

5 recent production months, including only wells that 

6 produce on more than half of the days during those 3 pro7 duction months. 

8 (b) CONDITIONS FOR REDUCTION OF ROYALTY

9 RATE.—Until such time as the Secretary issues regula10 tions under subsection (e) that prescribe different thresh11 olds or standards, the Secretary shall reduce the royalty 

12 rate on—

13 (1) oil production from marginal properties as 

14 prescribed in subsection (c) when the spot price of 

15 West Texas Intermediate crude oil at Cushing, Okla16 homa, is, on average, less than $15 per barrel for 90 

17 consecutive trading days; and 

18 (2) gas production from marginal properties as 

19 prescribed in subsection (c) when the spot price of 

20 natural gas delivered at Henry Hub, Louisiana, is, 

21 on average, less than $2.00 per million British ther22 mal units for 90 consecutive trading days. 

23 (c) REDUCED ROYALTY RATE.—
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1 (1) IN GENERAL.—When a marginal property 

2 meets the conditions specified in subsection (b), the 

3 royalty rate shall be the lesser of—

4 (A) 5 percent; or 

5 (B) the applicable rate under any other 

6 statutory or regulatory royalty relief provision 

7 that applies to the affected production. 

8 (2) PERIOD OF EFFECTIVENESS.—The reduced 

9 royalty rate under this subsection shall be effective 

10 beginning on the first day of the production month 

11 following the date on which the applicable condition 

12 specified in subsection (b) is met. 

13 (d) TERMINATION OF REDUCED ROYALTY RATE.—

14 A royalty rate prescribed in subsection (d)(1)(A) shall ter15 minate—

16 (1) with respect to oil production from a mar17 ginal property, on the first day of the production 

18 month following the date on which—

19 (A) the spot price of West Texas Inter20 mediate crude oil at Cushing, Oklahoma, on av21 erage, exceeds $15 per barrel for 90 consecutive 

22 trading days; or

23 (B) the property no longer qualifies as a 

24 marginal property; and 
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1 (2) with respect to gas production from a mar2 ginal property, on the first day of the production 

3 month following the date on which—

4 (A) the spot price of natural gas delivered 

5 at Henry Hub, Louisiana, on average, exceeds 

6 $2.00 per million British thermal units for 90 

7 consecutive trading days; or 

8 (B) the property no longer qualifies as a 

9 marginal property. 

10 (e) REGULATIONS PRESCRIBING DIFFERENT RE11 LIEF.—

12 (1) DISCRETIONARY REGULATIONS.—The Sec13 retary may by regulation prescribe different param14 eters, standards, and requirements for, and a dif15 ferent degree or extent of, royalty relief for marginal 

16 properties in lieu of those prescribed in subsections 

17 (a) through (d). 

18 (2) MANDATORY REGULATIONS.—Not later 

19 than 18 months after the date of enactment of this 

20 Act, the Secretary shall by regulation—

21 (A) prescribe standards and requirements 

22 for, and the extent of royalty relief for, mar23 ginal properties for oil and gas leases on the 

24 Outer Continental Shelf; and 
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1 (B) define what constitutes a marginal 

2 property on the Outer Continental Shelf for 

3 purposes of this section. 

4 (3) CONSIDERATIONS.—In promulgating regu5 lations under this subsection, the Secretary may con6 sider—

7 (A) oil and gas prices and market trends; 

8 (B) production costs; 

9 (C) abandonment costs; 

10 (D) Federal and State tax provisions and 

11 the effects of those provisions on production ec12 onomics; 

13 (E) other royalty relief programs; 

14 (F) regional differences in average well15 head prices; 

16 (G) national energy security issues; and 

17 (H) other relevant matters. 

18 (f) SAVINGS PROVISION.—Nothing in this section 

19 prevents a lessee from receiving royalty relief or a royalty 

20 reduction pursuant to any other law (including a regula21 tion) that provides more relief than the amounts provided 

22 by this section. 

23 (g) EFFECTIVE DATE.—This section takes effect on 

24 October 1, 2004. 
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1 SEC. 314. INCENTIVES FOR NATURAL GAS PRODUCTION 

2 FROM DEEP WELLS IN THE SHALLOW WA3 TERS OF THE GULF OF MEXICO. 

4 (a) ROYALTY INCENTIVE REGULATIONS.—The Sec5 retary shall publish a final regulation to complete the rule6 making begun by the Notice of Proposed Rulemaking enti7 tled ‘‘Relief or Reduction in Royalty Rates—Deep Gas 

8 Provisions’’, published in the Federal Register on March 

9 26, 2003 (Federal Register, volume 68, number 58, 

10 14868-14886). 

11 (b) ROYALTY INCENTIVE REGULATIONS FOR ULTRA

12 DEEP GAS WELLS.—

13 (1) IN GENERAL.—Not later than 180 days 

14 after the date of enactment of this section, in addi15 tion to any other regulations that may provide roy16 alty incentives for natural gas produced from deep 

17 wells on oil and gas leases issued pursuant to the 

18 Outer Continental Shelf Lands Act (43 U.S.C. 1331 

19 et seq.), the Secretary shall issue regulations, in ac20 cordance with the regulations published pursuant to 

21 subsection (a), granting royalty relief suspension vol22 umes of not less than 35,000,000,000 cubic feet 

23 with respect to the production of natural gas from 

24 ultra deep wells on leases issued before January 1, 

25 2001, in shallow waters less than 200 meters deep 

26 located in the Gulf of Mexico wholly west of 87 de-
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1 grees, 30 minutes West longitude. Regulations 

2 issued under this subsection shall be retroactive to 

3 the date that the Notice of Proposed Rulemaking is 

4 published in the Federal Register. 

5 (2) DEFINITION OF ULTRA DEEP WELL.—In 

6 this subsection, the term ‘‘ultra deep well’’ means a 

7 well drilled with a perforated interval, the top of 

8 which is at least 20,000 feet true vertical depth 

9 below the datum at mean sea level. 

10 (c) EFFECTIVE DATE.—This section takes effect on 

11 October 1, 2004. 

12 SEC. 315. ROYALTY RELIEF FOR DEEP WATER PRODUC13 TION. 

14 (a) IN GENERAL.—For all tracts located in water 

15 depths of greater than 400 meters in the Western and 

16 Central Planning Area of the Gulf of Mexico, including 

17 the portion of the Eastern Planning Area of the Gulf of 

18 Mexico encompassing whole lease blocks lying west of 87 

19 degrees, 30 minutes West longitude, any oil or gas lease 

20 sale under the Outer Continental Shelf Lands Act (43 

21 U.S.C. 1331 et seq.) occurring within 5 years after the 

22 date of enactment of this Act shall use the bidding system 

23 authorized in section 8(a)(1)(H) of the Outer Continental 

24 Shelf Lands Act (43 U.S.C. 1337(a)(1)(H)), except that 
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1 the suspension of royalties shall be set at a volume of not 

2 less than—

3 (1) 5,000,000 barrels of oil equivalent for each 

4 lease in water depths of 400 to 800 meters; 

5 (2) 9,000,000 barrels of oil equivalent for each 

6 lease in water depths of 800 to 1,600 meters; and 

7 (3) 12,000,000 barrels of oil equivalent for each 

8 lease in water depths greater than 1,600 meters. 

9 (b) LIMITATION.—The Secretary may place limita10 tions on the suspension of royalty relief granted based on 

11 market price. 

12 SEC. 316. ALASKA OFFSHORE ROYALTY SUSPENSION. 

13 Section 8(a)(3)(B) of the Outer Continental Shelf 

14 Lands Act (43 U.S.C. 1337(a)(3)(B)) is amended by in15 serting ‘‘and in the Planning Areas offshore Alaska’’ after 

16 ‘‘West longitude’’. 

17 SEC. 317. OIL AND GAS LEASING IN THE NATIONAL PETRO18 LEUM RESERVE IN ALASKA. 

19 (a) TRANSFER OF AUTHORITY.—

20 (1) REDESIGNATION.—The Naval Petroleum 

21 Reserves Production Act of 1976 (42 U.S.C. 6501 

22 et seq.) is amended by redesignating section 107 (42 

23 U.S.C. 6507) as section 108. 

24 (2) TRANSFER.—The matter under the heading 

25 ‘‘EXPLORATION OF NATIONAL PETROLEUM RESERVE
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1 IN ALASKA’’ under the heading ‘‘ENERGY AND 

2 MINERALS’’ of title I of Public Law 96–514 (42 

3 U.S.C. 6508) is—

4 (A) transferred to the Naval Petroleum 

5 Reserves Production Act of 1976 (42 U.S.C. 

6 6501 et seq.); 

7 (B) redesignated as section 107 of that 

8 Act; and 

9 (C) moved so as to appear after section 

10 106 of that Act (42 U.S.C. 6506). 

11 (b) COMPETITIVE LEASING.—Section 107 of the 

12 Naval Petroleum Reserves Production Act of 1976 (as 

13 amended by subsection (a) of this section) is amended—

14 (1) by striking the heading and all that follows 

15 through ‘‘Provided, That (1) activities’’ and insert16 ing the following: 

17 ‘‘SEC. 107. COMPETITIVE LEASING OF OIL AND GAS. 

18 ‘‘(a) IN GENERAL.—Notwithstanding any other pro19 vision of law and pursuant to regulations issued by the 

20 Secretary, the Secretary shall conduct an expeditious pro21 gram of competitive leasing of oil and gas in the National 

22 Petroleum Reserve in Alaska (referred to in this section 

23 as the ‘Reserve’).

24 ‘‘(b) MITIGATION OF ADVERSE EFFECTS.—Activi25 ties’’; 
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1 (2) by striking ‘‘Alaska (the Reserve); (2) the’’ 

2 and inserting ‘‘Alaska. 

3 ‘‘(c) LAND USE PLANNING; BLM WILDERNESS

4 STUDY.—The’’; 

5 (3) by striking ‘‘Reserve; (3) the’’ and inserting 

6 ‘‘Reserve. 

7 ‘‘(d) FIRST LEASE SALE.—The’’; 

8 (4) by striking ‘‘4332); (4) the’’ and inserting 

9 ‘‘4321 et seq.). 

10 ‘‘(e) WITHDRAWALS.—The’’; 

11 (5) by striking ‘‘herein; (5) bidding’’ and insert12 ing ‘‘under this section. 

13 ‘‘(f) BIDDING SYSTEMS.—Bidding’’; 

14 (6) by striking ‘‘629); (6) lease’’ and inserting 

15 ‘‘629). 

16 ‘‘(g) GEOLOGICAL STRUCTURES.—Lease’’; 

17 (7) by striking ‘‘structures; (7) the’’ and insert18 ing ‘‘structures. 

19 ‘‘(h) SIZE OF LEASE TRACTS.—The’’; 

20 (8) by striking ‘‘Secretary; (8)’’ and all that fol21 lows through ‘‘Drilling, production,’’ and inserting 

22 ‘‘Secretary. 

23 ‘‘(i) TERMS.—

24 ‘‘(1) IN GENERAL.—Each lease shall be—
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1 ‘‘(A) issued for an initial period of not 

2 more than 10 years; and 

3 ‘‘(B) renewed for successive 10-year terms 

4 if—

5 ‘‘(i) oil or gas is produced from the 

6 lease in paying quantities; 

7 ‘‘(ii) oil or gas is capable of being pro8 duced in paying quantities; or 

9 ‘‘(iii) drilling or reworking operations, 

10 as approved by the Secretary, are con11 ducted on the leased land. 

12 ‘‘(2) RENEWAL OF NONPRODUCING LEASES.—

13 The Secretary shall renew for an additional 10-year 

14 term a lease that does not meet the requirements of 

15 paragraph (1)(B) if the lessee submits to the Sec16 retary an application for renewal not later than 60 

17 days before the expiration of the primary lease 

18 and—

19 ‘‘(A) the lessee certifies, and the Secretary 

20 agrees, that hydrocarbon resources were discov21 ered on 1 or more wells drilled on the leased 

22 land in such quantities that a prudent operator 

23 would hold the lease for potential future devel24 opment; 

25 ‘‘(B) the lessee—
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1 ‘‘(i) pays the Secretary a renewal fee 

2 of $100 per acre of leased land; and 

3 ‘‘(ii) provides evidence, and the Sec4 retary agrees that, the lessee has diligently 

5 pursued exploration that warrants continu6 ation with the intent of continued explo7 ration or future development of the leased 

8 land; or 

9 ‘‘(C) all or part of the lease—

10 ‘‘(i) is part of a unit agreement cov11 ering a lease described in subparagraph 

12 (A) or (B); and 

13 ‘‘(ii) has not been previously con14 tracted out of the unit. 

15 ‘‘(3) APPLICABILITY.—This subsection applies 

16 to a lease that—

17 ‘‘(A) is entered into before, on, or after the 

18 date of enactment of the Energy Policy Act of 

19 2003; and 

20 ‘‘(B) is effective on or after the date of en21 actment of that Act. 

22 ‘‘(j) UNIT AGREEMENTS.—

23 ‘‘(1) IN GENERAL.—For the purpose of con24 servation of the natural resources of all or part of 

25 any oil or gas pool, field, reservoir, or like area, les-
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1 sees (including representatives) of the pool, field, 

2 reservoir, or like area may unite with each other, or 

3 jointly or separately with others, in collectively 

4 adopting and operating under a unit agreement for 

5 all or part of the pool, field, reservoir, or like area 

6 (whether or not any other part of the oil or gas pool, 

7 field, reservoir, or like area is already subject to any 

8 cooperative or unit plan of development or oper9 ation), if the Secretary determines the action to be 

10 necessary or advisable in the public interest. 

11 ‘‘(2) PARTICIPATION BY STATE OF ALASKA.—

12 The Secretary shall ensure that the State of Alaska 

13 is provided the opportunity for active participation 

14 concerning creation and management of units 

15 formed or expanded under this subsection that in16 clude acreage in which the State of Alaska has an 

17 interest in the mineral estate. 

18 ‘‘(3) PARTICIPATION BY REGIONAL CORPORA19 TIONS.—The Secretary shall ensure that any Re20 gional Corporation (as defined in section 3 of the 

21 Alaska Native Claims Settlement Act (43 U.S.C. 

22 1602)) is provided the opportunity for active partici23 pation concerning creation and management of units 

24 that include acreage in which the Regional Corpora25 tion has an interest in the mineral estate. 
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1 ‘‘(4) PRODUCTION ALLOCATION METHOD2 OLOGY.—The Secretary may use a production alloca3 tion methodology for each participating area within 

4 a unit created for land in the Reserve, State of Alas5 ka land, or Regional Corporation land shall, when 

6 appropriate, be based on the characteristics of each 

7 specific oil or gas pool, field, reservoir, or like area 

8 to take into account reservoir heterogeneity and a 

9 real variation in reservoir producibility across diverse 

10 leasehold interests. 

11 ‘‘(5) BENEFIT OF OPERATIONS.—Drilling, pro12 duction,’’; 

13 (9) by striking ‘‘When separate’’ and inserting 

14 the following: 

15 ‘‘(6) POOLING.—If separate’’; 

16 (10) by inserting ‘‘(in consultation with the 

17 owners of the other land)’’ after ‘‘determined by the 

18 Secretary of the Interior’’; 

19 (11) by striking ‘‘thereto; (10) to’’ and all that 

20 follows through ‘‘the terms provided therein’’ and in21 serting ‘‘to the agreement. 

22 ‘‘(k) EXPLORATION INCENTIVES.—

23 ‘‘(1) IN GENERAL.—

24 ‘‘(A) WAIVER, SUSPENSION, OR REDUC25 TION.—To encourage the greatest ultimate re-
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1 covery of oil or gas or in the interest of con2 servation, the Secretary may waive, suspend, or 

3 reduce the rental fees or minimum royalty, or 

4 reduce the royalty on an entire leasehold (in5 cluding on any lease operated pursuant to a 

6 unit agreement), if (after consultation with the 

7 State of Alaska and the North Slope Borough 

8 of Alaska and the concurrence of any Regional 

9 Corporation for leases that include lands avail10 able for acquisition by the Regional Corporation 

11 under the provisions of section 1431(o) of the 

12 Alaska National Interest Lands Conservation 

13 Act (16 U.S.C. 3101 et seq.)) the Secretary de14 termines that the waiver, suspension, or reduc15 tion is in the public interest. 

16 ‘‘(B) APPLICABILITY.—This paragraph ap17 plies to a lease that—

18 ‘‘(i) is entered into before, on, or after 

19 the date of enactment of the Energy Policy 

20 Act of 2003; and 

21 ‘‘(ii) is effective on or after the date 

22 of enactment of that Act.’’;

23 (12) by striking ‘‘The Secretary is authorized 

24 to’’ and inserting the following: 
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1 ‘‘(2) SUSPENSION OF OPERATIONS AND PRO2 DUCTION.—The Secretary may’’; 

3 (13) by striking ‘‘In the event’’ and inserting 

4 the following: 

5 ‘‘(3) SUSPENSION OF PAYMENTS.—If’’; 

6 (14) by striking ‘‘thereto; and (11) all’’ and in7 serting ‘‘to the lease. 

8 ‘‘(l) RECEIPTS.—All’’; 

9 (15) by redesignating clauses (A), (B), and (C) 

10 as clauses (1), (2), and (3), respectively; 

11 (16) by striking ‘‘Any agency’’ and inserting 

12 the following: 

13 ‘‘(m) EXPLORATIONS.—Any agency’’; 

14 (17) by striking ‘‘Any action’’ and inserting the 

15 following: 

16 ‘‘(n) ENVIRONMENTAL IMPACT STATEMENTS.—

17 ‘‘(1) JUDICIAL REVIEW.—Any action’’; 

18 (18) by striking ‘‘The detailed’’ and inserting 

19 the following: 

20 ‘‘(2) INITIAL LEASE SALES.—The detailed’’; 

21 (19) by striking ‘‘of the Naval Petroleum Re22 serves Production Act of 1976 (90 Stat. 304; 42 

23 U.S.C. 6504)’’; and 

24 (20) by adding at the end the following: 
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1 ‘‘(o) WAIVER OF ADMINISTRATION FOR CONVEYED

2 LANDS.—Notwithstanding section 14(g) of the Alaska 

3 Native Claims Settlement Act (43 U.S.C. 1613(g)) or any 

4 other provision of law—

5 ‘‘(1) the Secretary of the Interior shall waive 

6 administration of any oil and gas lease insofar as 

7 such lease covers any land in the National Petro8 leum Reserve in Alaska in which the subsurface es9 tate is conveyed to the Arctic Slope Regional Cor10 poration; and 

11 ‘‘(2) if any such conveyance of such subsurface 

12 estate does not cover all the land embraced within 

13 any such oil and gas lease—

14 ‘‘(A) the person who owns the subsurface 

15 estate in any particular portion of the land cov16 ered by such lease shall be entitled to all of the 

17 revenues reserved under such lease as to such 

18 portion, including, without limitation, all the 

19 royalty payable with respect to oil or gas pro20 duced from or allocated to such particular por21 tion of the land covered by such lease; and 

22 ‘‘(B) the Secretary of the Interior shall 

23 segregate such lease into 2 leases, 1 of which 

24 shall cover only the subsurface estate conveyed 

25 to the Arctic Slope Regional Corporation, and 
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1 operations, production, or other circumstances 

2 (other than payment of rentals or royalties) 

3 that satisfy obligations of the lessee under, or 

4 maintain, either of the segregated leases shall 

5 likewise satisfy obligations of the lessee under, 

6 or maintain, the other segregated lease to the 

7 same extent as if such segregated leases re8 mained a part of the original unsegregated 

9 lease.’’. 

10 SEC. 318. ORPHANED, ABANDONED, OR IDLED WELLS ON 

11 FEDERAL LAND. 

12 (a) IN GENERAL.—The Secretary, in cooperation 

13 with the Secretary of Agriculture, shall establish a pro14 gram not later than 1 year after the date of enactment 

15 of this Act to remediate, reclaim, and close orphaned, 

16 abandoned, or idled oil and gas wells located on land ad17 ministered by the land management agencies within the 

18 Department of the Interior and the Department of Agri19 culture. 

20 (b) ACTIVITIES.—The program under subsection (a) 

21 shall—

22 (1) include a means of ranking orphaned, aban23 doned, or idled wells sites for priority in remedi24 ation, reclamation, and closure, based on public 
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1 health and safety, potential environmental harm, 

2 and other land use priorities; 

3 (2) provide for identification and recovery of 

4 the costs of remediation, reclamation, and closure 

5 from persons or other entities currently providing a 

6 bond or other financial assurance required under 

7 State or Federal law for an oil or gas well that is 

8 orphaned, abandoned, or idled; and 

9 (3) provide for recovery from the persons or en10 tities identified under paragraph (2), or their sure11 ties or guarantors, of the costs of remediation, rec12 lamation, and closure of such wells. 

13 (c) COOPERATION AND CONSULTATIONS.—In car14 rying out the program under subsection (a), the Secretary 

15 shall—

16 (1) work cooperatively with the Secretary of Ag17 riculture and the States within which Federal land 

18 is located; and 

19 (2) consult with the Secretary of Energy and 

20 the Interstate Oil and Gas Compact Commission. 

21 (d) PLAN.—Not later than 1 year after the date of 

22 enactment of this Act, the Secretary, in cooperation with 

23 the Secretary of Agriculture, shall submit to Congress a 

24 plan for carrying out the program under subsection (a). 
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1 (e) IDLED WELL.—For the purposes of this section, 

2 a well is idled if—

3 (1) the well has been nonoperational for at least 

4 7 years; and 

5 (2) there is no anticipated beneficial use for the 

6 well. 

7 (f) TECHNICAL ASSISTANCE PROGRAM FOR NON8 FEDERAL LAND.—

9 (1) IN GENERAL.—The Secretary of Energy 

10 shall establish a program to provide technical and fi11 nancial assistance to oil and gas producing States to 

12 facilitate State efforts over a 10-year period to en13 sure a practical and economical remedy for environ14 mental problems caused by orphaned or abandoned 

15 oil and gas exploration or production well sites on 

16 State or private land. 

17 (2) ASSISTANCE.—The Secretary of Energy 

18 shall work with the States, through the Interstate 

19 Oil and Gas Compact Commission, to assist the 

20 States in quantifying and mitigating environmental 

21 risks of onshore orphaned or abandoned oil or gas 

22 wells on State and private land. 

23 (3) ACTIVITIES.—The program under para24 graph (1) shall include—
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1 (A) mechanisms to facilitate identification, 

2 if feasible, of the persons currently providing a 

3 bond or other form of financial assurance re4 quired under State or Federal law for an oil or 

5 gas well that is orphaned or abandoned; 

6 (B) criteria for ranking orphaned or aban7 doned well sites based on factors such as public 

8 health and safety, potential environmental 

9 harm, and other land use priorities; 

10 (C) information and training programs on 

11 best practices for remediation of different types 

12 of sites; and 

13 (D) funding of State mitigation efforts on 

14 a cost-shared basis. 

15 (g) FEDERAL REIMBURSEMENT FOR ORPHANED

16 WELL RECLAMATION PILOT PROGRAM.—

17 (1) REIMBURSEMENT FOR REMEDIATING, RE18 CLAIMING, AND CLOSING WELLS ON LAND SUBJECT

19 TO A NEW LEASE.—The Secretary shall carry out a 

20 pilot program under which, in issuing a new oil and 

21 gas lease on federally owned land on which 1 or 

22 more orphaned wells are located, the Secretary—

23 (A) may require, but not as a condition of 

24 the lease, that the lessee remediate, reclaim, 

25 and close in accordance with standards estab-
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1 lished by the Secretary, all orphaned wells on 

2 the land leased; and 

3 (B) shall develop a program to reimburse 

4 a lessee, through a royalty credit against the 

5 Federal share of royalties owed or other means, 

6 for the reasonable actual costs of remediating, 

7 reclaiming, and closing the orphaned well pur8 suant to that requirement. 

9 (2) REIMBURSEMENT FOR RECLAIMING OR10 PHANED WELLS ON OTHER LAND.—In carrying out 

11 this subsection, the Secretary—

12 (A) may authorize any lessee under an oil 

13 and gas lease on federally owned land to re14 claim in accordance with the Secretary’s stand15 ards—

16 (i) an orphaned well on unleased fed17 erally owned land; or 

18 (ii) an orphaned well located on an ex19 isting lease on federally owned land for the 

20 reclamation of which the lessee is not le21 gally responsible; and 

22 (B) shall develop a program to provide re23 imbursement of 115 percent of the reasonable 

24 actual costs of remediating, reclaiming, and 

25 closing the orphaned well, through credits 
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1 against the Federal share of royalties or other 

2 means. 

3 (3) EFFECT OF REMEDIATION, RECLAMATION, 

4 OR CLOSURE OF WELL PURSUANT TO AN APPROVED

5 REMEDIATION PLAN.—

6 (A) DEFINITION OF REMEDIATING

7 PARTY.—In this paragraph the term ‘‘remedi8 ating party’’ means a person who remediates, 

9 reclaims, or closes an abandoned, orphaned, or 

10 idled well pursuant to this subsection. 

11 (B) GENERAL RULE.—A remediating party 

12 who remediates, reclaims, or closes an aban13 doned, orphaned, or idled well in accordance 

14 with a detailed written remediation plan ap15 proved by the Secretary under this subsection, 

16 shall be immune from civil liability under Fed17 eral environmental laws, for— 

18 (i) pre-existing environmental condi19 tions at or associated with the well, unless 

20 the remediating party owns or operates, in 

21 the past owned or operated, or is related to 

22 a person that owns or operates or in the 

23 past owned or operated, the well or the 

24 land on which the well is located; or 
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1 (ii) any remaining releases of pollut2 ants from the well during or after comple3 tion of the remediation, reclamation, or 

4 closure of the well, unless the remediating 

5 party causes increased pollution as a result 

6 of activities that are not in accordance 

7 with the approved remediation plan. 

8 (C) LIMITATIONS.—Nothing in this section 

9 shall limit in any way the liability of a remedi10 ating party for injury, damage, or pollution re11 sulting from the remediating party’s acts or 

12 omissions that are not in accordance with the 

13 approved remediation plan, are reckless or will14 ful, constitute gross negligence or wanton mis15 conduct, or are unlawful. 

16 (4) REGULATIONS.—The Secretary may issue 

17 such regulations as are appropriate to carry out this 

18 subsection. 

19 (h) AUTHORIZATION OF APPROPRIATIONS.—

20 (1) IN GENERAL.—There are authorized to be 

21 appropriated to carry out this section $25,000,000 

22 for each of fiscal years 2005 through 2009. 

23 (2) USE.—Of the amounts authorized under 

24 paragraph (1), $5,000,000 are authorized for each 

25 fiscal year for activities under subsection (f). 
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1 SEC. 319. COMBINED HYDROCARBON LEASING. 

2 (a) SPECIAL PROVISIONS REGARDING LEASING.—

3 Section 17(b)(2) of the Mineral Leasing Act (30 U.S.C. 

4 226(b)(2)) is amended—

5 (1) by inserting ‘‘(A)’’ after ‘‘(2)’’; and 

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

7 ‘‘(B) For any area that contains any combination of 

8 tar sand and oil or gas (or both), the Secretary may issue 

9 under this Act, separately—

10 ‘‘(i) a lease for exploration for and extraction of 

11 tar sand; and 

12 ‘‘(ii) a lease for exploration for and development 

13 of oil and gas. 

14 ‘‘(C) A lease issued for tar sand shall be issued using 

15 the same bidding process, annual rental, and posting pe16 riod as a lease issued for oil and gas, except that the min17 imum acceptable bid required for a lease issued for tar 

18 sand shall be $2 per acre. 

19 ‘‘(D) The Secretary may waive, suspend, or alter any 

20 requirement under section 26 that a permittee under a 

21 permit authorizing prospecting for tar sand must exercise 

22 due diligence, to promote any resource covered by a com23 bined hydrocarbon lease.’’. 

24 (b) CONFORMING AMENDMENT.—Section 

25 17(b)(1)(B) of the Mineral Leasing Act (30 U.S.C. 

26 226(b)(1)(B)) is amended in the second sentence by in-
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1 serting ‘‘, subject to paragraph (2)(B),’’ after ‘‘Sec2 retary’’. 

3 (c) REGULATIONS.—Not later than 45 days after the 

4 date of enactment of this Act, the Secretary shall issue 

5 final regulations to implement this section. 

6 SEC. 320. LIQUIFIED NATURAL GAS. 

7 Section 3 of the Natural Gas Act (15 U.S.C. 717b) 

8 is amended by adding at the end the following: 

9 ‘‘(d) LIMITATION ON COMMISSION AUTHORITY.—If 

10 an applicant under this section proposes to construct or 

11 expand a liquified natural gas terminal either onshore or 

12 in State waters for the purpose of importing liquified nat13 ural gas into the United States, the Commission shall not 

14 deny or condition the application solely on the basis that 

15 the applicant proposes to utilize the terminal exclusively 

16 or partially for gas that the applicant or any affiliate 

17 thereof will supply thereto. In all other respects, sub18 section (a) shall remain applicable to any such proposal.’’. 

19 SEC. 321. ALTERNATE ENERGY-RELATED USES ON THE 

20 OUTER CONTINENTAL SHELF. 

21 (a) AMENDMENT TO OUTER CONTINENTAL SHELF

22 LANDS ACT.—Section 8 of the Outer Continental Shelf 

23 Lands Act (43 U.S.C. 1337) is amended by adding at the 

24 end the following: 
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1 ‘‘(p) LEASES, EASEMENTS, OR RIGHTS-OF-WAY FOR

2 ENERGY AND RELATED PURPOSES.—

3 ‘‘(1) IN GENERAL.—The Secretary, in consulta4 tion with the Secretary of the Department in which 

5 the Coast Guard is operating and other relevant de6 partments and agencies of the Federal Government, 

7 may grant a lease, easement, or right-of-way on the 

8 Outer Continental Shelf for activities not otherwise 

9 authorized in this Act, the Deepwater Port Act of 

10 1974 (33 U.S.C. 1501 et seq.), or the Ocean Ther11 mal Energy Conversion Act of 1980 (42 U.S.C. 

12 9101 et seq.), or other applicable law, if those activi13 ties—

14 ‘‘(A) support exploration, development, 

15 production, transportation, or storage of oil, 

16 natural gas, or other minerals; 

17 ‘‘(B) produce or support production, trans18 portation, or transmission of energy from 

19 sources other than oil and gas; or 

20 ‘‘(C) use, for energy-related or marine-re21 lated purposes, facilities currently or previously 

22 used for activities authorized under this Act. 

23 ‘‘(2) PAYMENTS.—The Secretary shall establish 

24 reasonable forms of payments for any easement or 

25 right-of-way granted under this subsection. Such
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1 payments shall not be assessed on the basis of 

2 throughput or production. The Secretary may estab3 lish fees, rentals, bonus, or other payments by rule 

4 or by agreement with the party to which the lease, 

5 easement, or right-of-way is granted. 

6 ‘‘(3) CONSULTATION.—Before exercising au7 thority under this subsection, the Secretary shall 

8 consult with the Secretary of Defense and other ap9 propriate agencies concerning issues related to na10 tional security and navigational obstruction. 

11 ‘‘(4) COMPETITIVE OR NONCOMPETITIVE

12 BASIS.—

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

14 issue a lease, easement, or right-of-way for en15 ergy and related purposes as described in para16 graph (1) on a competitive or noncompetitive 

17 basis. 

18 ‘‘(B) CONSIDERATIONS.—In determining 

19 whether a lease, easement, or right-of-way shall 

20 be granted competitively or noncompetitively, 

21 the Secretary shall consider such factors as—

22 ‘‘(i) prevention of waste and conserva23 tion of natural resources; 

24 ‘‘(ii) the economic viability of an en25 ergy project; 
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1 ‘‘(iii) protection of the environment; 

2 ‘‘(iv) the national interest and na3 tional security; 

4 ‘‘(v) human safety; 

5 ‘‘(vi) protection of correlative rights; 

6 and 

7 ‘‘(vii) potential return for the lease, 

8 easement, or right-of-way. 

9 ‘‘(5) REGULATIONS.—Not later than 270 days 

10 after the date of enactment of the Energy Policy Act 

11 of 2003, the Secretary, in consultation with the Sec12 retary of the Department in which the Coast Guard 

13 is operating and other relevant agencies of the Fed14 eral Government and affected States, shall issue any 

15 necessary regulations to ensure safety, protection of 

16 the environment, prevention of waste, and conserva17 tion of the natural resources of the Outer Conti18 nental Shelf, protection of national security inter19 ests, and protection of correlative rights in the Outer 

20 Continental Shelf. 

21 ‘‘(6) SECURITY.—The Secretary shall require 

22 the holder of a lease, easement, or right-of-way 

23 granted under this subsection to furnish a surety 

24 bond or other form of security, as prescribed by the 

25 Secretary, and to comply with such other require-
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1 ments as the Secretary considers necessary to pro2 tect the interests of the United States. 

3 ‘‘(7) EFFECT OF SUBSECTION.—Nothing in this 

4 subsection displaces, supersedes, limits, or modifies 

5 the jurisdiction, responsibility, or authority of any 

6 Federal or State agency under any other Federal 

7 law. 

8 ‘‘(8) APPLICABILITY.—This subsection does not 

9 apply to any area on the Outer Continental Shelf 

10 designated as a National Marine Sanctuary.’’. 

11 (b) CONFORMING AMENDMENT.—Section 8 of the 

12 Outer Continental Shelf Lands Act (43 U.S.C. 1337) is 

13 amended by striking the section heading and inserting the 

14 following: ‘‘LEASES, EASEMENTS, AND RIGHTS-OF-WAY

15 ON THE OUTER CONTINENTAL SHELF.—’’. 

16 (c) SAVINGS PROVISION.—Nothing in the amendment 

17 made by subsection (a) requires, with respect to any 

18 project—

19 (1) for which offshore test facilities have been 

20 constructed before the date of enactment of this Act; 

21 or 

22 (2) for which a request for proposals has been 

23 issued by a public authority, 

24 any resubmittal of documents previously submitted or any 

25 reauthorization of actions previously authorized. 
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1 SEC. 322. PRESERVATION OF GEOLOGICAL AND GEO2 PHYSICAL DATA. 

3 (a) SHORT TITLE.—This section may be cited as the 

4 ‘‘National Geological and Geophysical Data Preservation 

5 Program Act of 2003’’. 

6 (b) PROGRAM.—The Secretary shall carry out a Na7 tional Geological and Geophysical Data Preservation Pro8 gram in accordance with this section—

9 (1) to archive geologic, geophysical, and engi10 neering data, maps, well logs, and samples; 

11 (2) to provide a national catalog of such archi12 val material; and 

13 (3) to provide technical and financial assistance 

14 related to the archival material. 

15 (c) PLAN.—Not later than 1 year after the date of 

16 enactment of this Act, the Secretary shall submit to Con17 gress a plan for the implementation of the Program. 

18 (d) DATA ARCHIVE SYSTEM.—

19 (1) ESTABLISHMENT.—The Secretary shall es20 tablish, as a component of the Program, a data ar21 chive system to provide for the storage, preservation, 

22 and archiving of subsurface, surface, geological, geo23 physical, and engineering data and samples. The 

24 Secretary, in consultation with the Advisory Com25 mittee, shall develop guidelines relating to the data 
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1 archive system, including the types of data and sam2 ples to be preserved. 

3 (2) SYSTEM COMPONENTS.—The system shall 

4 be comprised of State agencies that elect to be part 

5 of the system and agencies within the Department 

6 of the Interior that maintain geological and geo7 physical data and samples that are designated by 

8 the Secretary in accordance with this subsection. 

9 The Program shall provide for the storage of data 

10 and samples through data repositories operated by 

11 such agencies. 

12 (3) LIMITATION OF DESIGNATION.—The Sec13 retary may not designate a State agency as a com14 ponent of the data archive system unless that agency 

15 is the agency that acts as the geological survey in 

16 the State. 

17 (4) DATA FROM FEDERAL LAND.—The data ar18 chive system shall provide for the archiving of rel19 evant subsurface data and samples obtained from 

20 Federal land—

21 (A) in the most appropriate repository des22 ignated under paragraph (2), with preference 

23 being given to archiving data in the State in 

24 which the data were collected; and 
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1 (B) consistent with all applicable law and 

2 requirements relating to confidentiality and pro3 prietary data. 

4 (e) NATIONAL CATALOG.—

5 (1) IN GENERAL.—As soon as practicable after 

6 the date of enactment of this Act, the Secretary 

7 shall develop and maintain, as a component of the 

8 Program, a national catalog that identifies—

9 (A) data and samples available in the data 

10 archive system established under subsection (d); 

11 (B) the repository for particular material 

12 in the system; and 

13 (C) the means of accessing the material. 

14 (2) AVAILABILITY.—The Secretary shall make 

15 the national catalog accessible to the public on the 

16 site of the Survey on the Internet, consistent with all 

17 applicable requirements related to confidentiality 

18 and proprietary data. 

19 (f) ADVISORY COMMITTEE.— 

20 (1) IN GENERAL.—The Advisory Committee 

21 shall advise the Secretary on planning and imple22 mentation of the Program. 

23 (2) NEW DUTIES.—In addition to its duties 

24 under the National Geologic Mapping Act of 1992
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1 (43 U.S.C. 31a et seq.), the Advisory Committee 

2 shall perform the following duties: 

3 (A) Advise the Secretary on developing 

4 guidelines and procedures for providing assist5 ance for facilities under subsection (g)(1). 

6 (B) Review and critique the draft imple7 mentation plan prepared by the Secretary under 

8 subsection (c). 

9 (C) Identify useful studies of data archived 

10 under the Program that will advance under11 standing of the Nation’s energy and mineral re12 sources, geologic hazards, and engineering geol13 ogy. 

14 (D) Review the progress of the Program in 

15 archiving significant data and preventing the 

16 loss of such data, and the scientific progress of 

17 the studies funded under the Program. 

18 (E) Include in the annual report to the 

19 Secretary required under section 5(b)(3) of the 

20 National Geologic Mapping Act of 1992 (43 

21 U.S.C. 31d(b)(3)) an evaluation of the progress 

22 of the Program toward fulfilling the purposes of 

23 the Program under subsection (b). 

24 (g) FINANCIAL ASSISTANCE.—
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1 (1) ARCHIVE FACILITIES.—Subject to the avail2 ability of appropriations, the Secretary shall provide 

3 financial assistance to a State agency that is des4 ignated under subsection (d)(2) for providing facili5 ties to archive energy material. 

6 (2) STUDIES.—Subject to the availability of ap7 propriations, the Secretary shall provide financial as8 sistance to any State agency designated under sub9 section (d)(2) for studies and technical assistance 

10 activities that enhance understanding, interpreta11 tion, and use of materials archived in the data ar12 chive system established under subsection (d). 

13 (3) FEDERAL SHARE.—The Federal share of 

14 the cost of an activity carried out with assistance 

15 under this subsection shall be not more than 50 per16 cent of the total cost of the activity. 

17 (4) PRIVATE CONTRIBUTIONS.—The Secretary 

18 shall apply to the non-Federal share of the cost of 

19 an activity carried out with assistance under this 

20 subsection the value of private contributions of prop21 erty and services used for that activity. 

22 (h) REPORT.—The Secretary shall include in each re23 port under section 8 of the National Geologic Mapping Act 

24 of 1992 (43 U.S.C. 31g)—

25 (1) a description of the status of the Program; 
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1 (2) an evaluation of the progress achieved in 

2 developing the Program during the period covered by 

3 the report; and 

4 (3) any recommendations for legislative or other 

5 action the Secretary considers necessary and appro6 priate to fulfill the purposes of the Program under 

7 subsection (b). 

8 (i) MAINTENANCE OF STATE EFFORT.—It is the in9 tent of Congress that the States not use this section as 

10 an opportunity to reduce State resources applied to the 

11 activities that are the subject of the Program. 

12 (j) DEFINITIONS.—In this section: 

13 (1) ADVISORY COMMITTEE.—The term ‘‘Advi14 sory Committee’’ means the advisory committee es15 tablished under section 5 of the National Geologic 

16 Mapping Act of 1992 (43 U.S.C. 31d). 

17 (2) PROGRAM.—The term ‘‘Program’’ means 

18 the National Geological and Geophysical Data Pres19 ervation Program carried out under this section. 

20 (3) SECRETARY.—The term ‘‘Secretary’’ means 

21 the Secretary of the Interior, acting through the Di22 rector of the United States Geological Survey. 

23 (4) SURVEY.—The term ‘‘Survey’’ means the 

24 United States Geological Survey. 
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1 (k) AUTHORIZATION OF APPROPRIATIONS.—There 

2 are authorized to be appropriated to carry out this section 

3 $30,000,000 for each of fiscal years 2004 through 2008. 

4 SEC. 323. OIL AND GAS LEASE ACREAGE LIMITATIONS. 

5 Section 27(d)(1) of the Mineral Leasing Act (30 

6 U.S.C. 184(d)(1)) is amended by inserting after ‘‘acreage 

7 held in special tar sand areas’’ the following: ‘‘, and acre8 age under any lease any portion of which has been com9 mitted to a federally approved unit or cooperative plan or 

10 communitization agreement or for which royalty (includ11 ing compensatory royalty or royalty in-kind) was paid in 

12 the preceding calendar year,’’. 

13 SEC. 324. ASSESSMENT OF DEPENDENCE OF STATE OF HA14 WAII ON OIL. 

15 (a) ASSESSMENT.—The Secretary of Energy shall as16 sess the economic implication of the dependence of the 

17 State of Hawaii on oil as the principal source of energy 

18 for the State, including—

19 (1) the short- and long-term prospects for crude 

20 oil supply disruption and price volatility and poten21 tial impacts on the economy of Hawaii; 

22 (2) the economic relationship between oil-fired 

23 generation of electricity from residual fuel and re24 fined petroleum products consumed for ground, ma25 rine, and air transportation; 
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1 (3) the technical and economic feasibility of in2 creasing the contribution of renewable energy re3 sources for generation of electricity, on an island-by4 island basis, including—

5 (A) siting and facility configuration; 

6 (B) environmental, operational, and safety 

7 considerations; 

8 (C) the availability of technology; 

9 (D) effects on the utility system including 

10 reliability; 

11 (E) infrastructure and transport require12 ments; 

13 (F) community support; and 

14 (G) other factors affecting the economic 

15 impact of such an increase and any effect on 

16 the economic relationship described in para17 graph (2); 

18 (4) the technical and economic feasibility of 

19 using liquified natural gas to displace residual fuel 

20 oil for electric generation, including neighbor island 

21 opportunities, and the effect of the displacement on 

22 the economic relationship described in paragraph 

23 (2), including—

24 (A) the availability of supply; 
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1 (B) siting and facility configuration for on2 shore and offshore liquified natural gas receiv3 ing terminals; 

4 (C) the factors described in subparagraphs 

5 (B) through (F) of paragraph (3); and 

6 (D) other economic factors; 

7 (5) the technical and economic feasibility of 

8 using renewable energy sources (including hydrogen) 

9 for ground, marine, and air transportation energy 

10 applications to displace the use of refined petroleum 

11 products, on an island-by-island basis, and the eco12 nomic impact of the displacement on the relationship 

13 described in (2); and 

14 (6) an island-by-island approach to—

15 (A) the development of hydrogen from re16 newable resources; and 

17 (B) the application of hydrogen to the en18 ergy needs of Hawaii 

19 (b) CONTRACTING AUTHORITY.—The Secretary of 

20 Energy may carry out the assessment under subsection 

21 (a) directly or, in whole or in part, through 1 or more 

22 contracts with qualified public or private entities. 

23 (c) REPORT.—Not later than 300 days after the date 

24 of enactment of this Act, the Secretary of Energy shall 

25 prepare, in consultation with agencies of the State of Ha-
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1 waii and other stakeholders, as appropriate, and submit 

2 to Congress, a report detailing the findings, conclusions, 

3 and recommendations resulting from the assessment. 

4 (d) AUTHORIZATION OF APPROPRIATIONS.—There 

5 are authorized to be appropriated such sums as are nec6 essary to carry out this section. 

7 SEC. 325. DEADLINE FOR DECISION ON APPEALS OF CON8 SISTENCY DETERMINATION UNDER THE 

9 COASTAL ZONE MANAGEMENT ACT OF 1972. 

10 (a) IN GENERAL.—Section 319 of the Coastal Zone 

11 Management Act of 1972 (16 U.S.C. 1465) is amended 

12 to read as follows: 

13 ‘‘APPEALS TO THE SECRETARY

14 ‘‘SEC. 319. (a) NOTICE.—The Secretary shall publish 

15 an initial notice in the Federal Register not later than 30 

16 days after the date of the filing of any appeal to the Sec17 retary of a consistency determination under section 307. 

18 ‘‘(b) CLOSURE OF RECORD.—

19 ‘‘(1) IN GENERAL.—Not later than the end of 

20 the 120-day period beginning on the date of publica21 tion of an initial notice under subsection (a), the 

22 Secretary shall receive no more filings on the appeal 

23 and the administrative record regarding the appeal 

24 shall be closed. 

25 ‘‘(2) NOTICE.—Upon the closure of the admin26 istrative record, the Secretary shall immediately 
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1 publish a notice that the administrative record has 

2 been closed. 

3 ‘‘(c) DEADLINE FOR DECISION.—The Secretary shall 

4 issue a decision in any appeal filed under section 307 not 

5 later than 120 days after the closure of the administrative 

6 record. 

7 ‘‘(d) APPLICATION.—This section applies to appeals 

8 initiated by the Secretary and appeals filed by an appli9 cant.’’. 

10 (b) APPLICATION.—

11 (1) IN GENERAL.—Except as provided in para12 graph (2), the amendment made by subsection (a) 

13 shall apply with respect to any appeal initiated or 

14 filed before, on, or after the date of enactment of 

15 this Act. 

16 (2) LIMITATION.—Subsection (a) of section 319 

17 of the Coastal Zone Management Act of 1972 (as 

18 amended by subsection (a)) shall not apply with re19 spect to an appeal initiated or filed before the date 

20 of enactment of this Act. 

21 (c) CLOSURE OF RECORD FOR APPEAL FILED BE22 FORE DATE OF ENACTMENT.—Notwithstanding section 

23 319(b)(1) of the Coastal Zone Management Act of 1972 

24 (as amended by this section), in the case of an appeal of 

25 a consistency determination under section 307 of that Act 
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1 initiated or filed before the date of enactment of this Act, 

2 the Secretary of Commerce shall receive no more filings 

3 on the appeal and the administrative record regarding the 

4 appeal shall be closed not later than 120 days after the 

5 date of enactment of this Act. 

6 SEC. 326. REIMBURSEMENT FOR COSTS OF NEPA ANAL7 YSES, DOCUMENTATION, AND STUDIES. 

8 (a) IN GENERAL.—The Mineral Leasing Act is 

9 amended by inserting after section 37 (30 U.S.C. 193) 

10 the following: 

11 ‘‘REIMBURSEMENT FOR COSTS OF CERTAIN ANALYSES, 

12 DOCUMENTATION, AND STUDIES

13 ‘‘SEC. 38. (a) IN GENERAL.—The Secretary of the 

14 Interior may reimburse a person that is a lessee, operator, 

15 operating rights owner, or applicant for any lease under 

16 this Act for reasonable amounts paid by the person for 

17 preparation for the Secretary by a contractor or other per18 son selected by the Secretary of any project-level analysis, 

19 documentation, or related study required pursuant to the 

20 National Environmental Policy Act of 1969 (42 U.S.C. 

21 4321 et seq.) with respect to the lease. 

22 ‘‘(b) CONDITIONS.—The Secretary may provide reim23 bursement under subsection (a) only if—

24 ‘‘(1) adequate funding to enable the Secretary 

25 to timely prepare the analysis, documentation, or re26 lated study is not appropriated; 
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1 ‘‘(2) the person paid the costs voluntarily; 

2 ‘‘(3) the person maintains records of its costs 

3 in accordance with regulations issued by the Sec4 retary; 

5 ‘‘(4) the reimbursement is in the form of a re6 duction in the Federal share of the royalty required 

7 to be paid for the lease for which the analysis, docu8 mentation, or related study is conducted, and is 

9 agreed to by the Secretary and the person reim10 bursed prior to commencing the analysis, docu11 mentation, or related study; and 

12 ‘‘(5) the agreement required under paragraph 

13 (4) contains provisions—

14 ‘‘(A) reducing royalties owed on lease pro15 duction based on market prices; 

16 ‘‘(B) stipulating an automatic termination 

17 of the royalty reduction upon recovery of docu18 mented costs; and 

19 ‘‘(C) providing a process by which the les20 see may seek reimbursement for circumstances 

21 in which production from the specified lease is 

22 not possible.’’. 

23 (b) APPLICATION.—The amendment made by this 

24 section shall apply with respect to an analysis, documenta25 tion, or a related study conducted on or after October 1, 
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1 2008, for any lease entered into before, on, or after the 

2 date of enactment of this Act. 

3 (c) DEADLINE FOR REGULATIONS.—The Secretary 

4 shall issue regulations implementing the amendment made 

5 by this section by not later than 1 year after the date 

6 of enactment of this Act. 

7 SEC. 327. HYDRAULIC FRACTURING. 

8 Paragraph (1) of section 1421(d) of the Safe Drink9 ing Water Act (42 U.S.C. 300h(d)) is amended to read 

10 as follows: 

11 ‘‘(1) UNDERGROUND INJECTION.—The term 

12 ‘underground injection’—

13 ‘‘(A) means the subsurface emplacement of 

14 fluids by well injection; and 

15 ‘‘(B) excludes—

16 ‘‘(i) the underground injection of nat17 ural gas for purposes of storage; and 

18 ‘‘(ii) the underground injection of 

19 fluids or propping agents pursuant to hy20 draulic fracturing operations related to oil 

21 or gas production activities.’’. 
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1 SEC. 328. OIL AND GAS EXPLORATION AND PRODUCTION 

2 DEFINED. 

3 Section 502 of the Federal Water Pollution Control 

4 Act (33 U.S.C. 1362) is amended by adding at the end 

5 the following: 

6 ‘‘(24) OIL AND GAS EXPLORATION AND PRO7 DUCTION.—The term ‘oil and gas exploration, pro8 duction, processing, or treatment operations or 

9 transmission facilities’ means all field activities or 

10 operations associated with exploration, production, 

11 processing, or treatment operations, or transmission 

12 facilities, including activities necessary to prepare a 

13 site for drilling and for the movement and placement 

14 of drilling equipment, whether or not such field ac15 tivities or operations may be considered to be con16 struction activities.’’. 

17 SEC. 329. OUTER CONTINENTAL SHELF PROVISIONS. 

18 (a) STORAGE ON THE OUTER CONTINENTAL

19 SHELF.—Section 5(a)(5) of the Outer Continental Shelf 

20 Lands Act (43 U.S.C. 1334(a)(5)) is amended by insert21 ing ‘‘from any source’’ after ‘‘oil and gas’’. 

22 (b) DEEPWATER PROJECTS.—Section 6 of the Deep23 water Port Act of 1974 (33 U.S.C. 1505) is amended by 

24 adding at the end the following: 

25 ‘‘(d) RELIANCE ON ACTIVITIES OF OTHER AGEN26 CIES.—In fulfilling the requirements of section 5(f)—
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1 ‘‘(1) to the extent that other Federal agencies 

2 have prepared environmental impact statements, are 

3 conducting studies, or are monitoring the affected 

4 human, marine, or coastal environment, the Sec5 retary may use the information derived from those 

6 activities in lieu of directly conducting such activi7 ties; and 

8 ‘‘(2) the Secretary may use information ob9 tained from any State or local government or from 

10 any person.’’. 

11 (c) NATURAL GAS DEFINED.—Section 3(13) of the 

12 Deepwater Port Act of 1974 (33 U.S.C. 1502(13)) is 

13 amended to read as follows: 

14 ‘‘(13) natural gas means—

15 ‘‘(A) natural gas unmixed; or 

16 ‘‘(B) any mixture of natural or artificial 

17 gas, including compressed or liquefied natural 

18 gas, natural gas liquids, liquefied petroleum 

19 gas, and condensate recovered from natural 

20 gas;’’. 

21 SEC. 330. APPEALS RELATING TO PIPELINE CONSTRUC22 TION OR OFFSHORE MINERAL DEVELOP23 MENT PROJECTS. 

24 (a) AGENCY OF RECORD, PIPELINE CONSTRUCTION

25 PROJECTS.—Any Federal administrative agency pro-
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1 ceeding that is an appeal or review under section 319 of 

2 the Coastal Zone Management Act of 1972 (16 U.S.C. 

3 1465), as amended by this Act, related to Federal author4 ity for an interstate natural gas pipeline construction 

5 project, including construction of natural gas storage and 

6 liquefied natural gas facilities, shall use as its exclusive 

7 record for all purposes the record compiled by the Federal 

8 Energy Regulatory Commission pursuant to the Commis9 sion’s proceeding under sections 3 and 7 of the Natural 

10 Gas Act (15 U.S.C. 717b, 717f). 

11 (b) SENSE OF CONGRESS.—It is the sense of Con12 gress that all Federal and State agencies with jurisdiction 

13 over interstate natural gas pipeline construction activities 

14 should coordinate their proceedings within the timeframes 

15 established by the Federal Energy Regulatory Commission 

16 when the Commission is acting under sections 3 and 7 

17 of the Natural Gas Act (15 U.S.C. 717b, 717f) to deter18 mine whether a certificate of public convenience and neces19 sity should be issued for a proposed interstate natural gas 

20 pipeline. 

21 (c) AGENCY OF RECORD, OFFSHORE MINERAL DE22 VELOPMENT PROJECTS.—Any Federal administrative 

23 agency proceeding that is an appeal or review under sec24 tion 319 of the Coastal Zone Management Act of 1972 

25 (16 U.S.C. 1465), as amended by this Act, related to Fed-
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1 eral authority for the permitting, approval, or other au2 thorization of energy projects, including projects to ex3 plore, develop, or produce mineral resources in or under4 lying the Outer Continental Shelf shall use as its exclusive 

5 record for all purposes (except for the filing of pleadings) 

6 the record compiled by the relevant Federal permitting 

7 agency. 

8 SEC. 331. BILATERAL INTERNATIONAL OIL SUPPLY AGREE9 MENTS. 

10 (a) IN GENERAL.—Notwithstanding any other provi11 sion of law, the President may export oil to, or secure oil 

12 for, any country pursuant to a bilateral international oil 

13 supply agreement entered into by the United States with 

14 the country before June 25, 1979, or to any country pur15 suant to the International Emergency Oil Sharing Plan 

16 of the International Energy Agency. 

17 (b) MEMORANDUM OF AGREEMENT.—The following 

18 agreements are deemed to have entered into force by oper19 ation of law and are deemed to have no termination date: 

20 (1) The agreement entitled ‘‘Agreement amend21 ing and extending the memorandum of agreement of 

22 June 22, 1979’’, entered into force November 13, 

23 1994 (TIAS 12580). 

24 (2) The agreement entitled ‘‘Agreement amend25 ing the contingency implementing arrangements of 
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1 October 17, 1980’’, entered into force June 27, 

2 1995 (TIAS 12670).

3 SEC. 332. NATURAL GAS MARKET REFORM. 

4 (a) CLARIFICATION OF EXISTING CFTC AUTHOR5 ITY.—

6 (1) FALSE REPORTING.—Section 9(a)(2) of the 

7 Commodity Exchange Act (7 U.S.C. 13(a)(2)) is 

8 amended by striking ‘‘false or misleading or know9 ingly inaccurate reports’’ and inserting ‘‘knowingly 

10 false or knowingly misleading or knowingly inac11 curate reports’’. 

12 (2) COMMISSION ADMINISTRATIVE AND CIVIL

13 AUTHORITY.—Section 9 of the Commodity Ex14 change Act (7 U.S.C. 13) is amended by redesig15 nating subsection (f) as subsection (e), and adding: 

16 ‘‘(f) COMMISSION ADMINISTRATIVE AND CIVIL AU17 THORITY.—The Commission may bring administrative or 

18 civil actions as provided in this Act against any person 

19 for a violation of any provision of this section including, 

20 but not limited to, false reporting under subsection 

21 (a)(2).’’. 

22 (3) EFFECT OF AMENDMENTS.—The amend23 ments made by paragraphs (1) and (2) restate, with24 out substantive change, existing burden of proof pro25 visions and existing Commission civil enforcement 
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1 authority, respectively. These clarifying changes do 

2 not alter any existing burden of proof or grant any 

3 new statutory authority. The provisions of this sec4 tion, as restated herein, continue to apply to any ac5 tion pending on or commenced after the date of en6 actment of this Act for any act, omission, or viola7 tion occurring before, on, or after, such date of en8 actment. 

9 (b) FRAUD AUTHORITY.—Section 4b of the Com10 modity Exchange Act (7 U.S.C. 6b) is amended—

11 (1) by redesignating subsections (b) and (c) as 

12 subsections (c) and (d), respectively; and 

13 (2) by striking subsection (a) and inserting the 

14 following: 

15 ‘‘(a) It shall be unlawful—

16 ‘‘(1) for any person, in or in connection with 

17 any order to make, or the making of, any contract 

18 of sale of any commodity for future delivery or in 

19 interstate commerce, that is made, or to be made, on 

20 or subject to the rules of a designated contract mar21 ket, for or on behalf of any other person; or 

22 ‘‘(2) for any person, in or in connection with 

23 any order to make, or the making of, any contract 

24 of sale of any commodity for future delivery, or 

25 other agreement, contract, or transaction subject to 
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1 section 5a(g) (1) and (2) of this Act, that is made, 

2 or to be made, for or on behalf of, or with, any other 

3 person, other than on or subject to the rules of a 

4 designated contract market—

5 ‘‘(A) to cheat or defraud or attempt to 

6 cheat or defraud such other person; 

7 ‘‘(B) willfully to make or cause to be made 

8 to such other person any false report or state9 ment or willfully to enter or cause to be entered 

10 for such other person any false record; 

11 ‘‘(C) willfully to deceive or attempt to de12 ceive such other person by any means whatso13 ever in regard to any order or contract or the 

14 disposition or execution of any order or con15 tract, or in regard to any act of agency per16 formed, with respect to any order or contract 

17 for or, in the case of subsection (a)(2), with 

18 such other person; or 

19 ‘‘(D)(i) to bucket an order if such order is 

20 either represented by such person as an order 

21 to be executed, or required to be executed, on 

22 or subject to the rules of a designated contract 

23 market; or 

24 ‘‘(ii) to fill an order by offset against the 

25 order or orders of any other person, or willfully
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1 and knowingly and without the prior consent of 

2 such other person to become the buyer in re3 spect to any selling order of such other person, 

4 or become the seller in respect to any buying 

5 order of such other person, if such order is ei6 ther represented by such person as an order to 

7 be executed, or required to be executed, on or 

8 subject to the rules of a designated contract 

9 market. 

10 ‘‘(b) Subsection (a)(2) shall not obligate any person, 

11 in connection with a transaction in a contract of sale of 

12 a commodity for future delivery, or other agreement, con13 tract or transaction subject to section 5a(g) (1) and (2) 

14 of this Act, with another person, to disclose to such other 

15 person nonpublic information that may be material to the 

16 market price of such commodity or transaction, except as 

17 necessary to make any statement made to such other per18 son in connection with such transaction, not misleading 

19 in any material respect.’’. 

20 (c) JURISDICTION OF THE CFTC.—The Natural Gas 

21 Act (15 U.S.C. 717 et seq.) is amended by adding at the 

22 end: 

23 ‘‘SEC. 26. JURISDICTION. 

24 ‘‘This Act shall not affect the exclusive jurisdiction 

25 of the Commodity Futures Trading Commission with re-
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1 spect to accounts, agreements, contracts, or transactions 

2 in commodities under the Commodity Exchange Act (7 

3 U.S.C. 1 et seq.). Any request for information by the Com4 mission to a designated contract market, registered deriva5 tives transaction execution facility, board of trade, ex6 change, or market involving accounts, agreements, con7 tracts, or transactions in commodities (including natural 

8 gas, electricity, and other energy commodities) within the 

9 exclusive jurisdiction of the Commodity Futures Trading 

10 Commission shall be directed to the Commodity Futures 

11 Trading Commission, which shall cooperate in responding 

12 to any information request by the Commission.’’. 

13 (d) INCREASED PENALTIES.—Section 21 of the Nat14 ural Gas Act (15 U.S.C. 717t) is amended—

15 (1) in subsection (a)—

16 (A) by striking ‘‘$5,000’’ and inserting 

17 ‘‘$1,000,000’’; and 

18 (B) by striking ‘‘two years’’ and inserting 

19 ‘‘5 years’’; and 

20 (2) in subsection (b), by striking ‘‘$500’’ and 

21 inserting ‘‘$50,000’’. 

22 SEC. 333. NATURAL GAS MARKET TRANSPARENCY. 

23 The Natural Gas Act (15 U.S.C 717 et seq.) is 

24 amended—
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1 (1) by redesignating section 24 as section 25; 

2 and 

3 (2) by inserting after section 23 the following: 

4 ‘‘SEC. 24. NATURAL GAS MARKET TRANSPARENCY. 

5 ‘‘(a) AUTHORIZATION.—(1) Not later than 180 days 

6 after the date of enactment of the Energy Policy Act of 

7 2003, the Federal Energy Regulatory Commission shall 

8 issue rules directing all entities subject to the Commis9 sion’s jurisdiction as provided under this Act to timely re10 port information about the availability and prices of nat11 ural gas sold at wholesale in interstate commerce to the 

12 Commission and price publishers. 

13 ‘‘(2) The Commission shall evaluate the data for ade14 quate price transparency and accuracy. 

15 ‘‘(3) Rules issued under this subsection requiring the 

16 reporting of information to the Commission that may be17 come publicly available shall be limited to aggregate data 

18 and transaction-specific data that are otherwise required 

19 by the Commission to be made public. 

20 ‘‘(4) In exercising its authority under this section, the 

21 Commission shall not—

22 ‘‘(A) compete with, or displace from the market 

23 place, any price publisher; or 

24 ‘‘(B) regulate price publishers or impose any re25 quirements on the publication of information. 
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1 ‘‘(b) TIMELY ENFORCEMENT.—No person shall be 

2 subject to any penalty under this section with respect to 

3 a violation occurring more than 3 years before the date 

4 on which the Federal Energy Regulatory Commission 

5 seeks to assess a penalty. 

6 ‘‘(c) LIMITATION ON COMMISSION AUTHORITY.—(1) 

7 The Commission shall not condition access to interstate 

8 pipeline transportation upon the reporting requirements 

9 authorized under this section. 

10 ‘‘(2) Natural gas sales by a producer that are attrib11 utable to volumes of natural gas produced by such pro12 ducer shall not be subject to the rules issued pursuant to 

13 this section. 

14 ‘‘(3) The Commission shall not require natural gas 

15 producers, processors, or users who have a de minimis 

16 market presence to participate in the reporting require17 ments provided in this section.’’. 

18 Subtitle C—Access to Federal Land 

19 SEC. 341. OFFICE OF FEDERAL ENERGY PROJECT COORDI20 NATION. 

21 (a) ESTABLISHMENT.—The President shall establish 

22 the Office of Federal Energy Project Coordination (re23 ferred to in this section as the ‘‘Office’’) within the Execu24 tive Office of the President in the same manner and with 

25 the same mission as the White House Energy Projects 
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1 Task Force established by Executive Order No. 13212 (42 

2 U.S.C. 13201 note). 

3 (b) STAFFING.—The Office shall be staffed by func4 tional experts from relevant Federal agencies on a non5 reimbursable basis to carry out the mission of the Office. 

6 (c) REPORT.—The Office shall transmit an annual 

7 report to Congress that describes the activities put in place 

8 to coordinate and expedite Federal decisions on energy 

9 projects. The report shall list accomplishments in improv10 ing the Federal decisionmaking process and shall include 

11 any additional recommendations or systemic changes 

12 needed to establish a more effective and efficient Federal 

13 permitting process. 

14 SEC. 342. FEDERAL ONSHORE OIL AND GAS LEASING AND 

15 PERMITTING PRACTICES. 

16 (a) REVIEW OF ONSHORE OIL AND GAS LEASING

17 PRACTICES.—

18 (1) IN GENERAL.—The Secretary of the Inte19 rior, in consultation with the Secretary of Agri20 culture with respect to National Forest System lands 

21 under the jurisdiction of the Department of Agri22 culture, shall perform an internal review of current 

23 Federal onshore oil and gas leasing and permitting 

24 practices. 
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1 (2) INCLUSIONS.—The review shall include the 

2 process for—

3 (A) accepting or rejecting offers to lease; 

4 (B) administrative appeals of decisions or 

5 orders of officers or employees of the Bureau of 

6 Land Management with respect to a Federal oil 

7 or gas lease; 

8 (C) considering surface use plans of oper9 ation, including the timeframes in which the 

10 plans are considered, and any recommendations 

11 for improving and expediting the process; and 

12 (D) identifying stipulations to address site13 specific concerns and conditions, including those 

14 stipulations relating to the environment and re15 source use conflicts. 

16 (b) REPORT.—Not later than 180 days after the date 

17 of enactment of this Act, the Secretary of the Interior and 

18 the Secretary of Agriculture shall transmit a report to 

19 Congress that describes—

20 (1) actions taken under section 3 of Executive 

21 Order No. 13212 (42 U.S.C. 13201 note); and 

22 (2) actions taken or any plans to improve the 

23 Federal onshore oil and gas leasing program.
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1 SEC. 343. MANAGEMENT OF FEDERAL OIL AND GAS LEAS2 ING PROGRAMS. 

3 (a) TIMELY ACTION ON LEASES AND PERMITS.—To 

4 ensure timely action on oil and gas leases and applications 

5 for permits to drill on land otherwise available for leasing, 

6 the Secretary of the Interior (in this section referred to 

7 as the ‘‘Secretary’’) shall—

8 (1) ensure expeditious compliance with section 

9 102(2)(C) of the National Environmental Policy Act 

10 of 1969 (42 U.S.C. 4332(2)(C)); 

11 (2) improve consultation and coordination with 

12 the States and the public; and 

13 (3) improve the collection, storage, and retrieval 

14 of information relating to the leasing activities. 

15 (b) BEST MANAGEMENT PRACTICES.—

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

17 after the date of enactment of this Act, the Sec18 retary shall develop and implement best manage19 ment practices to—

20 (A) improve the administration of the on21 shore oil and gas leasing program under the 

22 Mineral Leasing Act (30 U.S.C. 181 et seq.); 

23 and 

24 (B) ensure timely action on oil and gas 

25 leases and applications for permits to drill on 

26 lands otherwise available for leasing. 
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1 (2) CONSIDERATIONS.—In developing the best 

2 management practices under paragraph (1), the Sec3 retary shall consider any recommendations from the 

4 review under section 342. 

5 (3) REGULATIONS.—Not later than 180 days 

6 after the development of best management practices 

7 under paragraph (1), the Secretary shall publish, for 

8 public comment, proposed regulations that set forth 

9 specific timeframes for processing leases and appli10 cations in accordance with the practices, including 

11 deadlines for—

12 (A) approving or disapproving resource 

13 management plans and related documents, lease 

14 applications, and surface use plans; and 

15 (B) related administrative appeals. 

16 (c) IMPROVED ENFORCEMENT.—The Secretary shall 

17 improve inspection and enforcement of oil and gas activi18 ties, including enforcement of terms and conditions in per19 mits to drill. 

20 (d) AUTHORIZATION OF APPROPRIATIONS.—In addi21 tion to amounts authorized to be appropriated to carry 

22 out section 17 of the Mineral Leasing Act (30 U.S.C. 

23 226), there are authorized to be appropriated to the Sec24 retary for each of fiscal years 2004 through 2007—
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1 (1) $40,000,000 to carry out subsections (a) 

2 and (b); and 

3 (2) $20,000,000 to carry out subsection (c). 

4 SEC. 344. CONSULTATION REGARDING OIL AND GAS LEAS5 ING ON PUBLIC LAND. 

6 (a) IN GENERAL.—Not later than 180 days after the 

7 date of enactment of this Act, the Secretary of the Interior 

8 and the Secretary of Agriculture shall enter into a memo9 randum of understanding regarding oil and gas leasing 

10 on—

11 (1) public lands under the jurisdiction of the 

12 Secretary of the Interior; and 

13 (2) National Forest System lands under the ju14 risdiction of the Secretary of Agriculture. 

15 (b) CONTENTS.—The memorandum of understanding 

16 shall include provisions that—

17 (1) establish administrative procedures and 

18 lines of authority that ensure timely processing of oil 

19 and gas lease applications, surface use plans of oper20 ation, and applications for permits to drill, including 

21 steps for processing surface use plans and applica22 tions for permits to drill consistent with the 

23 timelines established by the amendment made by 

24 section 348; 
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1 (2) eliminate duplication of effort by providing 

2 for coordination of planning and environmental com3 pliance efforts; and 

4 (3) ensure that lease stipulations are—

5 (A) applied consistently; 

6 (B) coordinated between agencies; and 

7 (C) only as restrictive as necessary to pro8 tect the resource for which the stipulations are 

9 applied. 

10 (c) DATA RETRIEVAL SYSTEM.—

11 (1) IN GENERAL.—Not later than 1 year after 

12 the date of enactment of this Act, the Secretary of 

13 the Interior and the Secretary of Agriculture shall 

14 establish a joint data retrieval system that is capable 

15 of—

16 (A) tracking applications and formal re17 quests made in accordance with procedures of 

18 the Federal onshore oil and gas leasing pro19 gram; and 

20 (B) providing information regarding the 

21 status of the applications and requests within 

22 the Department of the Interior and the Depart23 ment of Agriculture. 

24 (2) RESOURCE MAPPING.—Not later than 2 

25 years after the date of enactment of this Act, the 
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1 Secretary of the Interior and the Secretary of Agri2 culture shall establish a joint Geographic Informa3 tion System mapping system for use in—

4 (A) tracking surface resource values to aid 

5 in resource management; and 

6 (B) processing surface use plans of oper7 ation and applications for permits to drill. 

8 SEC. 345. ESTIMATES OF OIL AND GAS RESOURCES UNDER9 LYING ONSHORE FEDERAL LAND. 

10 (a) ASSESSMENT.—Section 604 of the Energy Act of 

11 2000 (42 U.S.C. 6217) is amended—

12 (1) in subsection (a)—

13 (A) in paragraph (1)—

14 (i) by striking ‘‘reserve’’; and 

15 (ii) by striking ‘‘and’’ after the semi16 colon; and 

17 (B) by striking paragraph (2) and insert18 ing the following: 

19 ‘‘(2) the extent and nature of any restrictions 

20 or impediments to the development of the resources, 

21 including—

22 ‘‘(A) impediments to the timely granting of 

23 leases; 

24 ‘‘(B) post-lease restrictions, impediments, 

25 or delays on development for conditions of ap-
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1 proval, applications for permits to drill, or proc2 essing of environmental permits; and 

3 ‘‘(C) permits or restrictions associated with 

4 transporting the resources for entry into com5 merce; and 

6 ‘‘(3) the quantity of resources not produced or 

7 introduced into commerce because of the restric8 tions.’’; 

9 (2) in subsection (b)—

10 (A) by striking ‘‘reserve’’ and inserting 

11 ‘‘resource’’; and 

12 (B) by striking ‘‘publically’’ and inserting 

13 ‘‘publicly’’; and 

14 (3) by striking subsection (d) and inserting the 

15 following: 

16 ‘‘(d) ASSESSMENTS.—Using the inventory, the Sec17 retary of Energy shall make periodic assessments of eco18 nomically recoverable resources accounting for a range of 

19 parameters such as current costs, commodity prices, tech20 nology, and regulations.’’. 

21 (b) METHODOLOGY.—The Secretary of the Interior 

22 shall use the same assessment methodology across all geo23 logical provinces, areas, and regions in preparing and 

24 issuing national geological assessments to ensure accurate 

25 comparisons of geological resources.
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1 SEC. 346. COMPLIANCE WITH EXECUTIVE ORDER 13211; AC2 TIONS CONCERNING REGULATIONS THAT 

3 SIGNIFICANTLY AFFECT ENERGY SUPPLY, 

4 DISTRIBUTION, OR USE. 

5 (a) REQUIREMENT.—The head of each Federal agen6 cy shall require that before the Federal agency takes any 

7 action that could have a significant adverse effect on the 

8 supply of domestic energy resources from Federal public 

9 land, the Federal agency taking the action shall comply 

10 with Executive Order No. 13211 (42 U.S.C. 13201 note). 

11 (b) GUIDANCE.—Not later than 180 days after the 

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

13 shall publish guidance for purposes of this section describ14 ing what constitutes a significant adverse effect on the 

15 supply of domestic energy resources under Executive 

16 Order No. 13211 (42 U.S.C. 13201 note). 

17 (c) MEMORANDUM OF UNDERSTANDING.—The Sec18 retary of the Interior and the Secretary of Agriculture 

19 shall include in the memorandum of understanding under 

20 section 344 provisions for implementing subsection (a) of 

21 this section. 

22 SEC. 347. PILOT PROJECT TO IMPROVE FEDERAL PERMIT 

23 COORDINATION. 

24 (a) ESTABLISHMENT.—The Secretary of the Interior 

25 (in this section referred to as the ‘‘Secretary’’) shall estab-
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1 lish a Federal Permit Streamlining Pilot Project (in this 

2 section referred to as the ‘‘Pilot Project’’). 

3 (b) MEMORANDUM OF UNDERSTANDING.—

4 (1) IN GENERAL.—Not later than 90 days after 

5 the date of enactment of this Act, the Secretary 

6 shall enter into a memorandum of understanding 

7 with the Secretary of Agriculture, the Administrator 

8 of the Environmental Protection Agency, and the 

9 Chief of Engineers of the Army Corps of Engineers 

10 for purposes of this section. 

11 (2) STATE PARTICIPATION.—The Secretary 

12 may request that the Governors of Wyoming, Mon13 tana, Colorado, Utah, and New Mexico be signato14 ries to the memorandum of understanding. 

15 (c) DESIGNATION OF QUALIFIED STAFF.—

16 (1) IN GENERAL.—Not later than 30 days after 

17 the date of the signing of the memorandum of un18 derstanding under subsection (b), all Federal signa19 tory parties shall assign to each of the field offices 

20 identified in subsection (d), on a nonreimbursable 

21 basis, an employee who has expertise in the regu22 latory issues relating to the office in which the em23 ployee is employed, including, as applicable, par24 ticular expertise in—
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1 (A) the consultations and the preparation 

2 of biological opinions under section 7 of the En3 dangered Species Act of 1973 (16 U.S.C. 

4 1536); 

5 (B) permits under section 404 of Federal 

6 Water Pollution Control Act (33 U.S.C. 1344); 

7 (C) regulatory matters under the Clean Air 

8 Act (42 U.S.C. 7401 et seq.); 

9 (D) planning under the National Forest 

10 Management Act of 1976 (16 U.S.C. 472a et 

11 seq.); and 

12 (E) the preparation of analyses under the 

13 National Environmental Policy Act of 1969 (42 

14 U.S.C. 4321 et seq.). 

15 (2) DUTIES.—Each employee assigned under 

16 paragraph (1) shall—

17 (A) not later than 90 days after the date 

18 of assignment, report to the Bureau of Land 

19 Management Field Managers in the office to 

20 which the employee is assigned; 

21 (B) be responsible for all issues relating to 

22 the jurisdiction of the home office or agency of 

23 the employee; and 
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1 (C) participate as part of the team of per2 sonnel working on proposed energy projects, 

3 planning, and environmental analyses. 

4 (d) FIELD OFFICES.—The following Bureau of Land 

5 Management Field Offices shall serve as the Pilot Project 

6 offices: 

7 (1) Rawlins, Wyoming. 

8 (2) Buffalo, Wyoming. 

9 (3) Miles City, Montana. 

10 (4) Farmington, New Mexico. 

11 (5) Carlsbad, New Mexico. 

12 (6) Glenwood Springs, Colorado. 

13 (7) Vernal, Utah. 

14 (e) REPORTS.—Not later than 3 years after the date 

15 of enactment of this Act, the Secretary shall transmit to 

16 Congress a report that—

17 (1) outlines the results of the Pilot Project to 

18 date; and 

19 (2) makes a recommendation to the President 

20 regarding whether the Pilot Project should be imple21 mented throughout the United States. 

22 (f) ADDITIONAL PERSONNEL.—The Secretary shall 

23 assign to each field office identified in subsection (d) any 

24 additional personnel that are necessary to ensure the ef25 fective implementation of—
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1 (1) the Pilot Project; and 

2 (2) other programs administered by the field of3 fices, including inspection and enforcement relating 

4 to energy development on Federal land, in accord5 ance with the multiple use mandate of the Federal 

6 Land Policy and Management Act of 1976 (43 

7 U.S.C. 1701 et seq). 

8 (g) SAVINGS PROVISION.—Nothing in this section af9 fects—

10 (1) the operation of any Federal or State law; 

11 or 

12 (2) any delegation of authority made by the 

13 head of a Federal agency whose employees are par14 ticipating in the Pilot Project. 

15 SEC. 348. DEADLINE FOR CONSIDERATION OF APPLICA16 TIONS FOR PERMITS. 

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

18 226) is amended by adding at the end the following: 

19 ‘‘(p) DEADLINES FOR CONSIDERATION OF APPLICA20 TIONS FOR PERMITS.—

21 ‘‘(1) IN GENERAL.—Not later than 10 days 

22 after the date on which the Secretary receives an ap23 plication for any permit to drill, the Secretary 

24 shall—
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1 ‘‘(A) notify the applicant that the applica2 tion is complete; or 

3 ‘‘(B) notify the applicant that information 

4 is missing and specify any information that is 

5 required to be submitted for the application to 

6 be complete. 

7 ‘‘(2) ISSUANCE OR DEFERRAL.—Not later than 

8 30 days after the applicant for a permit has sub9 mitted a complete application, the Secretary shall—

10 ‘‘(A) issue the permit; or 

11 ‘‘(B)(i) defer decision on the permit; and 

12 ‘‘(ii) provide to the applicant a notice that 

13 specifies any steps that the applicant could take 

14 for the permit to be issued. 

15 ‘‘(3) REQUIREMENTS FOR DEFERRED APPLICA16 TIONS.—

17 ‘‘(A) IN GENERAL.—If the Secretary pro18 vides notice under paragraph (2)(B)(ii), the ap19 plicant shall have a period of 2 years from the 

20 date of receipt of the notice in which to com21 plete all requirements specified by the Sec22 retary, including providing information needed 

23 for compliance with the National Environmental 

24 Policy Act of 1969 (42 U.S.C. 4321 et seq.).
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1 ‘‘(B) ISSUANCE OF DECISION ON PER2 MIT.—If the applicant completes the require3 ments within the period specified in subpara4 graph (A), the Secretary shall issue a decision 

5 on the permit not later than 10 days after the 

6 date of completion of the requirements de7 scribed in subparagraph (A). 

8 ‘‘(C) DENIAL OF PERMIT.—If the appli9 cant does not complete the requirements within 

10 the period specified in subparagraph (A), the 

11 Secretary shall deny the permit. 

12 ‘‘(q) REPORT.—On a quarterly basis, each field office 

13 of the Bureau of Land Management and the Forest Serv14 ice shall transmit to the Secretary of the Interior or the 

15 Secretary of Agriculture, respectively, a report that—

16 ‘‘(1) specifies the number of applications for 

17 permits to drill received by the field office in the pe18 riod covered by the report; and 

19 ‘‘(2) describes how each of the applications was 

20 disposed of by the field office.’’. 

21 SEC. 349. CLARIFICATION OF FAIR MARKET RENTAL VALUE 

22 DETERMINATIONS FOR PUBLIC LAND AND 

23 FOREST SERVICE RIGHTS-OF-WAY. 

24 (a) LINEAR RIGHTS-OF-WAY UNDER FEDERAL

25 LAND POLICY AND MANAGEMENT ACT OF 1976.—Section 
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1 504 of the Federal Land Policy and Management Act of 

2 1976 (43 U.S.C. 1764) is amended by adding at the end 

3 the following: 

4 ‘‘(k) DETERMINATION OF FAIR MARKET VALUE OF

5 LINEAR RIGHTS-OF-WAY.—

6 ‘‘(1) IN GENERAL.—Effective beginning on the 

7 date of the issuance of the rules required by para8 graph (2), for purposes of subsection (g), the Sec9 retary concerned shall determine the fair market 

10 value for the use of land encumbered by a linear 

11 right-of-way granted, issued, or renewed under this 

12 title using the valuation method described in para13 graphs (2), (3), and (4). 

14 ‘‘(2) REVISIONS.—Not later than 1 year after 

15 the date of enactment of this subsection—

16 ‘‘(A) the Secretary of the Interior shall 

17 amend section 2803.1–2 of title 43, Code of 

18 Federal Regulations, as in effect on the date of 

19 enactment of this subsection, to revise the per 

20 acre rental fee zone value schedule by State, 

21 county, and type of linear right-of-way use to 

22 reflect current values of land in each zone; and 

23 ‘‘(B) the Secretary of Agriculture shall 

24 make the same revision for linear rights-of-way 
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1 granted, issued, or renewed under this title on 

2 National Forest System land. 

3 ‘‘(3) UPDATES.—The Secretary concerned shall 

4 annually update the schedule revised under para5 graph (2) by multiplying the current year’s rental 

6 per acre by the annual change, second quarter to 

7 second quarter (June 30 to June 30) in the Gross 

8 National Product Implicit Price Deflator Index pub9 lished in the Survey of Current Business of the De10 partment of Commerce, Bureau of Economic Anal11 ysis. 

12 ‘‘(4) REVIEW.—If the cumulative change in the 

13 index referred to in paragraph (3) exceeds 30 per14 cent, or the change in the 3-year average of the 1-

15 year Treasury interest rate used to determine per 

16 acre rental fee zone values exceeds plus or minus 50 

17 percent, the Secretary concerned shall conduct a re18 view of the zones and rental per acre figures to de19 termine whether the value of Federal land has dif20 fered sufficiently from the index referred to in para21 graph (3) to warrant a revision in the base zones 

22 and rental per acre figures. If, as a result of the re23 view, the Secretary concerned determines that such 

24 a revision is warranted, the Secretary concerned 

25 shall revise the base zones and rental per acre fig-
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1 ures accordingly. Any revision of base zones and 

2 rental per acre figure shall only affect lease rental 

3 rates at inception or renewal.’’. 

4 (b) RIGHTS-OF-WAY UNDER MINERAL LEASING

5 ACT.—Section 28(l) of the Mineral Leasing Act (30 

6 U.S.C. 185(l)) is amended by inserting before the period 

7 at the end the following: ‘‘using the valuation method de8 scribed in section 2803.1–2 of title 43, Code of Federal 

9 Regulations, as revised in accordance with section 504(k) 

10 of the Federal Land Policy and Management Act of 1976 

11 (43 U.S.C. 1764(k))’’. 

12 SEC. 350. ENERGY FACILITY RIGHTS-OF-WAY AND COR13 RIDORS ON FEDERAL LAND. 

14 (a) REPORT TO CONGRESS.—

15 (1) IN GENERAL.—Not later than 1 year after 

16 the date of enactment of this Act, the Secretary of 

17 Agriculture and the Secretary of the Interior, in con18 sultation with the Secretary of Commerce, the Sec19 retary of Defense, the Secretary of Energy, and the 

20 Federal Energy Regulatory Commission, shall sub21 mit to Congress a joint report—

22 (A) that addresses—

23 (i) the location of existing rights-of24 way and designated and de facto corridors 

25 for oil and gas pipelines and electric trans-
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1 mission and distribution facilities on Fed2 eral land; and 

3 (ii) opportunities for additional oil 

4 and gas pipeline and electric transmission 

5 capacity within those rights-of-way and 

6 corridors; and 

7 (B) that includes a plan for making avail8 able, on request, to the appropriate Federal, 

9 State, and local agencies, tribal governments, 

10 and other persons involved in the siting of oil 

11 and gas pipelines and electricity transmission 

12 facilities Geographic Information System-based 

13 information regarding the location of the exist14 ing rights-of-way and corridors and any planned 

15 rights-of-way and corridors. 

16 (2) CONSULTATIONS AND CONSIDERATIONS.—

17 In preparing the report, the Secretary of the Interior 

18 and the Secretary of Agriculture shall consult 

19 with—

20 (A) other agencies of Federal, State, tribal, 

21 or local units of government, as appropriate; 

22 (B) persons involved in the siting of oil 

23 and gas pipelines and electric transmission fa24 cilities; and 

25 (C) other interested members of the public. 
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1 (3) LIMITATION.—The Secretary of the Interior 

2 and the Secretary of Agriculture shall limit the dis3 tribution of the report and Geographic Information 

4 System-based information referred to in paragraph 

5 (1) as necessary for national and infrastructure se6 curity reasons, if either Secretary determines that 

7 the information may be withheld from public disclo8 sure under a national security or other exception 

9 under section 552(b) of title 5, United States Code. 

10 (b) CORRIDOR DESIGNATIONS.—

11 (1) 11 CONTIGUOUS WESTERN STATES.—Not 

12 later than 2 years after the date of enactment of 

13 this Act, the Secretary of Agriculture, the Secretary 

14 of Commerce, the Secretary of Defense, the Sec15 retary of Energy, and the Secretary of the Interior, 

16 in consultation with the Federal Energy Regulatory 

17 Commission and the affected utility industries, shall 

18 jointly—

19 (A) designate, under title V of the Federal 

20 Land Policy and Management Act of 1976 (43 

21 U.S.C. 1761 et seq.) and other applicable Fed22 eral laws, corridors for oil and gas pipelines and 

23 electricity transmission and facilities on Federal 

24 land in the eleven contiguous Western States 

25 (as defined in section 103 of the Federal Land
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1 Policy and Management Act of 1976 (43 U.S.C. 

2 1702)); 

3 (B) perform any environmental reviews 

4 that may be required to complete the designa5 tions of corridors for the facilities on Federal 

6 land in the eleven contiguous Western States; 

7 and 

8 (C) incorporate the designated corridors 

9 into—

10 (i) the relevant departmental and 

11 agency land use and resource management 

12 plans; or 

13 (ii) equivalent plans. 

14 (2) OTHER STATES.—Not later than 4 years 

15 after the date of enactment of this Act, the Sec16 retary of Agriculture, the Secretary of Commerce, 

17 the Secretary of Defense, the Secretary of Energy, 

18 and the Secretary of the Interior, in consultation 

19 with the Federal Energy Regulatory Commission 

20 and the affected utility industries, shall jointly—

21 (A) identify corridors for oil and gas pipe22 lines and electricity transmission and distribu23 tion facilities on Federal land in the States 

24 other than those described in paragraph (1); 

25 and 
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1 (B) schedule prompt action to identify, 

2 designate, and incorporate the corridors into 

3 the land use plan. 

4 (3) ONGOING RESPONSIBILITIES.—After com5 pleting the requirements under paragraphs (1) and 

6 (2), the Secretary of Agriculture, the Secretary of 

7 Commerce, the Secretary of Defense, the Secretary 

8 of Energy, and the Secretary of the Interior, with 

9 respect to lands under their respective jurisdictions, 

10 in consultation with the Federal Energy Regulatory 

11 Commission and the affected utility industries, shall 

12 establish procedures that—

13 (A) ensure that additional corridors for oil 

14 and gas pipelines and electricity transmission 

15 and distribution facilities on Federal land are 

16 promptly identified and designated; and 

17 (B) expedite applications to construct or 

18 modify oil and gas pipelines and electricity 

19 transmission and distribution facilities within 

20 the corridors, taking into account prior analyses 

21 and environmental reviews undertaken during 

22 the designation of corridors. 

23 (c) CONSIDERATIONS.—In carrying out this section, 

24 the Secretaries shall take into account the need for up-
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1 graded and new electricity transmission and distribution 

2 facilities to—

3 (1) improve reliability; 

4 (2) relieve congestion; and 

5 (3) enhance the capability of the national grid 

6 to deliver electricity. 

7 (d) DEFINITION OF CORRIDOR.—

8 (1) IN GENERAL.—In this section and title V of 

9 the Federal Land Policy and Management Act of 

10 1976 (43 U.S.C. 1761 et seq.), the term ‘‘corridor’’ 

11 means—

12 (A) a linear strip of land—

13 (i) with a width determined with con14 sideration given to technological, environ15 mental, and topographical factors; and 

16 (ii) that contains, or may in the fu17 ture contain, 1 or more utility, communica18 tion, or transportation facilities; 

19 (B) a land use designation that is estab20 lished—

21 (i) by law; 

22 (ii) by Secretarial Order; 

23 (iii) through the land use planning 

24 process; or 
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1 (iv) by other management decision; 

2 and 

3 (C) a designation made for the purpose of 

4 establishing the preferred location of compatible 

5 linear facilities and land uses. 

6 (2) SPECIFICATIONS OF CORRIDOR.—On des7 ignation of a corridor under this section, the center8 line, width, and compatible uses of a corridor shall 

9 be specified.

10 SEC. 351. CONSULTATION REGARDING ENERGY RIGHTS-OF11 WAY ON PUBLIC LAND. 

12 (a) MEMORANDUM OF UNDERSTANDING.—

13 (1) IN GENERAL.—Not later than 6 months 

14 after the date of enactment of this Act, the Sec15 retary of Energy, in consultation with the Secretary 

16 of the Interior, the Secretary of Agriculture, and the 

17 Secretary of Defense with respect to lands under 

18 their respective jurisdictions, shall enter into a 

19 memorandum of understanding to coordinate all ap20 plicable Federal authorizations and environmental 

21 reviews relating to a proposed or existing utility fa22 cility. To the maximum extent practicable under ap23 plicable law, the Secretary of Energy shall, to ensure 

24 timely review and permit decisions, coordinate such 

25 authorizations and reviews with any Indian tribes, 
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1 multi-State entities, and State agencies that are re2 sponsible for conducting any separate permitting 

3 and environmental reviews of the affected utility fa4 cility. 

5 (2) CONTENTS.—The memorandum of under6 standing shall include provisions that—

7 (A) establish—

8 (i) a unified right-of-way application 

9 form; and 

10 (ii) an administrative procedure for 

11 processing right-of-way applications, in12 cluding lines of authority, steps in applica13 tion processing, and timeframes for appli14 cation processing; 

15 (B) provide for coordination of planning 

16 relating to the granting of the rights-of-way; 

17 (C) provide for an agreement among the 

18 affected Federal agencies to prepare a single 

19 environmental review document to be used as 

20 the basis for all Federal authorization decisions; 

21 and 

22 (D) provide for coordination of use of 

23 right-of-way stipulations to achieve consistency. 

24 (b) NATURAL GAS PIPELINES.—
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1 (1) IN GENERAL.—With respect to permitting 

2 activities for interstate natural gas pipelines, the 

3 May 2002 document entitled ‘‘Interagency Agree4 ment On Early Coordination Of Required Environ5 mental And Historic Preservation Reviews Con6 ducted In Conjunction With The Issuance Of Au7 thorizations To Construct And Operate Interstate 

8 Natural Gas Pipelines Certificated By The Federal 

9 Energy Regulatory Commission’’ shall constitute 

10 compliance with subsection (a). 

11 (2) REPORT.—

12 (A) IN GENERAL.—Not later than 1 year 

13 after the date of enactment of this Act, and 

14 every 2 years thereafter, agencies that are sig15 natories to the document referred to in para16 graph (1) shall transmit to Congress a report 

17 on how the agencies under the jurisdiction of 

18 the Secretaries are incorporating and imple19 menting the provisions of the document referred 

20 to in paragraph (1).

21 (B) CONTENTS.—The report shall ad22 dress—

23 (i) efforts to implement the provisions 

24 of the document referred to in paragraph 

25 (1);
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1 (ii) whether the efforts have had a 

2 streamlining effect; 

3 (iii) further improvements to the per4 mitting process of the agency; and 

5 (iv) recommendations for inclusion of 

6 State and tribal governments in a coordi7 nated permitting process. 

8 (c) DEFINITION OF UTILITY FACILITY.—In this sec9 tion, the term ‘‘utility facility’’ means any privately, pub10 licly, or cooperatively owned line, facility, or system—

11 (1) for the transportation of—

12 (A) oil, natural gas, synthetic liquid fuel, 

13 or gaseous fuel; 

14 (B) any refined product produced from oil, 

15 natural gas, synthetic liquid fuel, or gaseous 

16 fuel; or 

17 (C) products in support of the production 

18 of material referred to in subparagraph (A) or 

19 (B); 

20 (2) for storage and terminal facilities in connec21 tion with the production of material referred to in 

22 paragraph (1); or 

23 (3) for the generation, transmission, and dis24 tribution of electric energy. 
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1 SEC. 352. RENEWABLE ENERGY ON FEDERAL LAND. 

2 (a) REPORT.—

3 (1) IN GENERAL.—Not later than 24 months 

4 after the date of enactment of this Act, the Sec5 retary of the Interior, in cooperation with the Sec6 retary of Agriculture, shall develop and transmit to 

7 Congress a report that includes recommendations on 

8 opportunities to develop renewable energy on—

9 (A) public lands under the jurisdiction of 

10 the Secretary of the Interior; and 

11 (B) National Forest System lands under 

12 the jurisdiction of the Secretary of Agriculture. 

13 (2) CONTENTS.—The report shall include—

14 (A) 5-year plans developed by the Sec15 retary of the Interior and the Secretary of Agri16 culture, respectively, for encouraging the devel17 opment of renewable energy consistent with ap18 plicable law and management plans; 

19 (B) an analysis of—

20 (i) the use of rights-of-way, leases, or 

21 other methods to develop renewable energy 

22 on such lands; 

23 (ii) the anticipated benefits of grants, 

24 loans, tax credits, or other provisions to 

25 promote renewable energy development on 

26 such lands; and 
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1 (iii) any issues that the Secretary of 

2 the Interior or the Secretary of Agriculture 

3 have encountered in managing renewable 

4 energy projects on such lands, believe are 

5 likely to arise in relation to the develop6 ment of renewable energy on such lands; 

7 (C) a list, developed in consultation with 

8 the Secretary of Energy and the Secretary of 

9 Defense, of lands under the jurisdiction of the 

10 Department of Energy or the Department of 

11 Defense that would be suitable for development 

12 for renewable energy, and any recommended 

13 statutory and regulatory mechanisms for such 

14 development; and 

15 (D) any recommendations relating to the 

16 issues addressed in the report. 

17 (b) NATIONAL ACADEMY OF SCIENCES STUDY.—

18 (1) IN GENERAL.—Not later than 90 days after 

19 the date of enactment of this Act, the Secretary of 

20 the Interior shall contract with the National Acad21 emy of Sciences to—

22 (A) study the potential for the development 

23 of wind, solar, and ocean energy (including 

24 tidal, wave, and thermal energy) on the Outer 

25 Continental Shelf; 
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1 (B) assess existing Federal authorities for 

2 the development of such resources; and 

3 (C) recommend statutory and regulatory 

4 mechanisms for such development. 

5 (2) TRANSMITTAL.—The results of the study 

6 shall be transmitted to Congress not later than 2 

7 years after the date of enactment of this Act. 

8 (c) GENERATION CAPACITY OF ELECTRICITY FROM

9 RENEWABLE ENERGY RESOURCES ON PUBLIC LAND.—

10 The Secretary of the Interior shall, not later than 10 years 

11 after the date of enactment of this Act, seek to approve 

12 renewable energy projects located (or to be located) on 

13 public lands with a generation capacity of at least 10,000 

14 megawatts of electricity. 

15 SEC. 353. ELECTRICITY TRANSMISSION LINE RIGHT-OF16 WAY, CLEVELAND NATIONAL FOREST AND 

17 ADJACENT PUBLIC LAND, CALIFORNIA. 

18 (a) ISSUANCE.—

19 (1) IN GENERAL.—Not later than 60 days after 

20 the completion of the environmental reviews under 

21 subsection (c), the Secretary of the Interior and the 

22 Secretary of Agriculture shall issue all necessary 

23 grants, easements, permits, plan amendments, and 

24 other approvals to allow for the siting and construc25 tion of a high-voltage electricity transmission line 
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1 right-of-way running approximately north to south 

2 through the Trabuco Ranger District of the Cleve3 land National Forest in the State of California and 

4 adjacent lands under the jurisdiction of the Bureau 

5 of Land Management and the Forest Service. 

6 (2) INCLUSIONS.—The right-of-way approvals 

7 under paragraph (1) shall provide all necessary Fed8 eral authorization from the Secretary of the Interior 

9 and the Secretary of Agriculture for the routing, 

10 construction, operation, and maintenance of a 500-

11 kilovolt transmission line capable of meeting the 

12 long-term electricity transmission needs of the region 

13 between the existing Valley-Serrano transmission 

14 line to the north and the Telega-Escondido trans15 mission line to the south, and for connecting to fu16 ture generating capacity that may be developed in 

17 the region. 

18 (b) PROTECTION OF WILDERNESS AREAS.—The Sec19 retary of the Interior and the Secretary of Agriculture 

20 shall not allow any portion of a transmission line right21 of-way corridor identified in subsection (a) to enter any 

22 identified wilderness area in existence as of the date of 

23 enactment of this Act. 

24 (c) ENVIRONMENTAL AND ADMINISTRATIVE RE25 VIEWS.—
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1 (1) DEPARTMENT OF INTERIOR OR LOCAL

2 AGENCY.—The Secretary of the Interior, acting 

3 through the Director of the Bureau of Land Man4 agement, shall be the lead Federal agency with over5 all responsibility to ensure completion of required 

6 environmental and other reviews of the approvals to 

7 be issued under subsection (a). 

8 (2) NATIONAL FOREST SYSTEM LAND.—For the 

9 portions of the corridor on National Forest System 

10 lands, the Secretary of Agriculture shall complete all 

11 required environmental reviews and administrative 

12 actions in coordination with the Secretary of the In13 terior. 

14 (3) EXPEDITIOUS COMPLETION.—The reviews 

15 required for issuance of the approvals under sub16 section (a) shall be completed not later than 1 year 

17 after the date of the enactment of this Act. 

18 (d) OTHER TERMS AND CONDITIONS.—The trans19 mission line right-of-way shall be subject to such terms 

20 and conditions as the Secretary of the Interior and the 

21 Secretary of Agriculture consider necessary, based on the 

22 environmental reviews under subsection (c), to protect the 

23 value of historic, cultural, and natural resources under the 

24 jurisdiction of the Secretary of the Interior or the Sec25 retary of Agriculture.
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1 (e) PREFERENCE AMONG PROPOSALS.—The Sec2 retary of the Interior and the Secretary of Agriculture 

3 shall give a preference to any application or preapplication 

4 proposal for a transmission line right-of-way referred to 

5 in subsection (a) that was submitted before December 31, 

6 2002, over all other applications and proposals for the 

7 same or a similar right-of-way submitted on or after that 

8 date. 

9 SEC. 354. SENSE OF CONGRESS REGARDING DEVELOPMENT 

10 OF MINERALS UNDER PADRE ISLAND NA11 TIONAL SEASHORE. 

12 (a) FINDINGS.—Congress finds the following: 

13 (1) Pursuant to Public Law 87–712 (16 U.S.C. 

14 459d et seq.; popularly known as the ‘‘Federal Ena15 bling Act’’) and various deeds and actions under 

16 that Act, the United States is the owner of only the 

17 surface estate of certain lands constituting the 

18 Padre Island National Seashore. 

19 (2) Ownership of the oil, gas, and other min20 erals in the subsurface estate of the lands consti21 tuting the Padre Island National Seashore was never 

22 acquired by the United States, and ownership of 

23 those interests is held by the State of Texas and pri24 vate parties. 
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1 (3) Public Law 87–712 (16 U.S.C. 459d et 

2 seq.)—

3 (A) expressly contemplated that the United 

4 States would recognize the ownership and fu5 ture development of the oil, gas, and other min6 erals in the subsurface estate of the lands con7 stituting the Padre Island National Seashore by 

8 the owners and their mineral lessees; and 

9 (B) recognized that approval of the State 

10 of Texas was required to create Padre Island 

11 National Seashore. 

12 (4) Approval was given for the creation of 

13 Padre Island National Seashore by the State of 

14 Texas through Tex. Rev. Civ. Stat. Ann. Art. 

15 6077(t) (Vernon 1970), which expressly recognized 

16 that development of the oil, gas, and other minerals 

17 in the subsurface of the lands constituting Padre Is18 land National Seashore would be conducted with full 

19 rights of ingress and egress under the laws of the 

20 State of Texas. 

21 (b) SENSE OF CONGRESS.—It is the sense of Con22 gress that with regard to Federal law, any regulation of 

23 the development of oil, gas, or other minerals in the sub24 surface of the lands constituting Padre Island National 
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1 Seashore should be made as if those lands retained the 

2 status that the lands had on September 27, 1962. 

3 SEC. 355. ENCOURAGING PROHIBITION OF OFF-SHORE 

4 DRILLING IN THE GREAT LAKES. 

5 Congress encourages—

6 (1) the States of Illinois, Michigan, New York, 

7 Pennsylvania, and Wisconsin to continue to prohibit 

8 offshore drilling in the Great Lakes for oil and gas; 

9 and 

10 (2) the States of Indiana, Minnesota, and Ohio 

11 to enact a prohibition of such drilling. 

12 SEC. 356. FINGER LAKES NATIONAL FOREST WITHDRAWAL. 

13 All Federal land within the boundary of Finger Lakes 

14 National Forest in the State of New York is withdrawn 

15 from—

16 (1) all forms of entry, appropriation, or disposal 

17 under the public land laws; and 

18 (2) disposition under all laws relating to oil and 

19 gas leasing.

20 SEC. 357. STUDY ON LEASE EXCHANGES IN THE ROCKY 

21 MOUNTAIN FRONT. 

22 (a) DEFINITIONS.—For the purposes of this section: 

23 (1) BADGER-TWO MEDICINE AREA.—The term 

24 ‘‘Badger-Two Medicine Area’’ means the Forest 

25 Service land located in—
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1 (A) T. 31 N., R. 12–13 W.; 

2 (B) T. 30 N., R. 11–13 W.; 

3 (C) T. 29 N., R. 10–16 W.; and 

4 (D) T. 28 N., R. 10–14 W. 

5 (2) BLACKLEAF AREA.—The term ‘‘Blackleaf 

6 Area’’ means the Federal land owned by the Forest 

7 Service and Bureau of Land Management that is lo8 cated in—

9 (A) T. 27 N., R. 9 W.; 

10 (B) T. 26 N., R. 9–10 W.; 

11 (C) T. 25 N., R. 8–10 W.; and 

12 (D) T. 24 N., R. 8–9 W. 

13 (3) ELIGIBLE LESSEE.—The term ‘‘eligible les14 see’’ means a lessee under a nonproducing lease. 

15 (4) NONPRODUCING LEASE.—The term ‘‘non16 producing lease’’ means a Federal oil or gas lease—

17 (A) that is in existence and in good stand18 ing on the date of enactment of this Act; and 

19 (B) that is located in the Badger-Two 

20 Medicine Area or the Blackleaf Area. 

21 (5) SECRETARY.—The term ‘‘Secretary’’ means 

22 the Secretary of the Interior. 

23 (6) STATE.—The term ‘‘State’’ means the State 

24 of Montana. 

25 (b) EVALUATION.—
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1 (1) IN GENERAL.—The Secretary, in consulta2 tion with the Governor of the State, and the eligible 

3 lessees, shall evaluate opportunities for domestic oil 

4 and gas production through the exchange of the 

5 nonproducing leases. 

6 (2) REQUIREMENTS.—In carrying out the eval7 uation under subsection (a), the Secretary shall—

8 (A) consider opportunities for domestic 

9 production of oil and gas through—

10 (i) the exchange of the nonproducing 

11 leases for oil and gas lease tracts of com12 parable value in the State; and 

13 (ii) the issuance of bidding, royalty, or 

14 rental credits for Federal oil and gas leases 

15 in the State in exchange for the cancella16 tion of the nonproducing leases; 

17 (B) consider any other appropriate means 

18 to exchange, or provide compensation for the 

19 cancellation of, nonproducing leases, subject to 

20 the consent of the eligible lessees; 

21 (C) consider the views of any interested 

22 persons, including the State; 

23 (D) determine the level of interest of the 

24 eligible lessees in exchanging the nonproducing 

25 leases; 
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1 (E) assess the economic impact on the les2 sees and the State of lease exchange, lease can3 cellation, and final judicial or administrative de4 cisions related to the nonproducing leases; and 

5 (F) provide recommendations on—

6 (i) whether to pursue an exchange of 

7 the nonproducing leases; 

8 (ii) any changes in laws (including 

9 regulations) that are necessary for the Sec10 retary to carry out the exchange; and 

11 (iii) any other appropriate means to 

12 exchange or provide compensation for the 

13 cancellation of a nonproducing lease, sub14 ject to the consent of the eligible lessee. 

15 (c) VALUATION OF NONPRODUCING LEASES.—For 

16 the purpose of the evaluation under subsection (a), the 

17 value of a nonproducing lease shall be an amount equal 

18 to the difference between—

19 (1) the sum of—

20 (A) the amount paid by the eligible lessee 

21 for the nonproducing lease; 

22 (B) any direct expenditures made by the 

23 eligible lessee before the transmittal of the re24 port in subsection (c) associated with the explo-
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1 ration and development of the nonproducing 

2 lease; and 

3 (C) interest on any amounts under sub4 paragraphs (A) and (B) during the period be5 ginning on the date on which the amount was 

6 paid and ending on the date on which credits 

7 are issued under subsection (b)(2)(A)(ii); and 

8 (2) the sum of the revenues from the nonpro9 ducing lease. 

10 (d) REPORT TO CONGRESS.—Not later than 2 years 

11 after the date of the enactment of this Act, the Secretary 

12 shall initiate the evaluation in subsection (b) and transmit 

13 to Congress a report on the evaluation. 

14 SEC. 358. FEDERAL COALBED METHANE REGULATION. 

15 Any State currently on the list of Affected States es16 tablished under section 1339(b) of the Energy Policy Act 

17 of 1992 (42 U.S.C. 13368(b)) shall be removed from the 

18 list if, not later than 3 years after the date of enactment 

19 of this Act, the State takes, or prior to the date of enact20 ment has taken, any of the actions required for removal 

21 from the list under such section 1339(b). 

22 SEC. 359. LIVINGSTON PARISH MINERAL RIGHTS TRANS23 FER. 

24 (a) AMENDMENTS.—Section 102 of Public Law 102–

25 562 (106 Stat. 4234) is amended—
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1 (1) by striking ‘‘(a) IN GENERAL.— 

2 (2) by striking ‘‘and subject to the reservation 

3 in subsection (b),’’; and 

4 (3) by striking subsection (b). 

5 (b) IMPLEMENTATION OF AMENDMENT.—The Sec6 retary of the Interior shall execute the legal instruments 

7 necessary to effectuate the amendment made by sub8 section (a)(3).

9 Subtitle D—Alaska Natural Gas 

10 Pipeline 

11 SEC. 371. SHORT TITLE. 

12 This subtitle may be cited as the ‘‘Alaska Natural 

13 Gas Pipeline Act’’. 

14 SEC. 372. DEFINITIONS. 

15 In this subtitle: 

16 (1) ALASKA NATURAL GAS.—The term ‘‘Alaska 

17 natural gas’’ means natural gas derived from the 

18 area of the State of Alaska lying north of 64 degrees 

19 north latitude. 

20 (2) ALASKA NATURAL GAS TRANSPORTATION

21 PROJECT.—The term ‘‘Alaska natural gas transpor22 tation project’’ means any natural gas pipeline sys23 tem that carries Alaska natural gas to the border 

24 between Alaska and Canada (including related facili-
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1 ties subject to the jurisdiction of the Commission) 

2 that is authorized under—

3 (A) the Alaska Natural Gas Transpor4 tation Act of 1976 (15 U.S.C. 719 et seq.); or 

5 (B) section 373. 

6 (3) ALASKA NATURAL GAS TRANSPORTATION

7 SYSTEM.—The term ‘‘Alaska natural gas transpor8 tation system’’ means the Alaska natural gas trans9 portation project authorized under the Alaska Nat10 ural Gas Transportation Act of 1976 (15 U.S.C. 

11 719 et seq.) and designated and described in section 

12 2 of the President’s decision. 

13 (4) COMMISSION.—The term ‘‘Commission’’ 

14 means the Federal Energy Regulatory Commission. 

15 (5) FEDERAL COORDINATOR.—The term ‘‘Fed16 eral Coordinator’’ means the head of the Office of 

17 the Federal Coordinator for Alaska Natural Gas 

18 Transportation Projects established by section 

19 376(a). 

20 (6) PRESIDENT’S DECISION.—The term ‘‘Presi21 dent’s decision’’ means the decision and report to 

22 Congress on the Alaska natural gas transportation 

23 system—

24 (A) issued by the President on September 

25 22, 1977, in accordance with section 7 of the 
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1 Alaska Natural Gas Transportation Act of 

2 1976 (15 U.S.C. 719e); and 

3 (B) approved by Public Law 95–158 (15 

4 U.S.C. 719f note; 91 Stat. 1268). 

5 (7) SECRETARY.—The term ‘‘Secretary’’ means 

6 the Secretary of Energy. 

7 (8) STATE.—The term ‘‘State’’ means the State 

8 of Alaska. 

9 SEC. 373. ISSUANCE OF CERTIFICATE OF PUBLIC CONVEN10 IENCE AND NECESSITY. 

11 (a) AUTHORITY OF THE COMMISSION.—Notwith12 standing the Alaska Natural Gas Transportation Act of 

13 1976 (15 U.S.C. 719 et seq.), the Commission may, in 

14 accordance with section 7(c) of the Natural Gas Act (15 

15 U.S.C. 717f(c)), consider and act on an application for 

16 the issuance of a certificate of public convenience and ne17 cessity authorizing the construction and operation of an 

18 Alaska natural gas transportation project other than the 

19 Alaska natural gas transportation system. 

20 (b) ISSUANCE OF CERTIFICATE.—

21 (1) IN GENERAL.—The Commission shall issue 

22 a certificate of public convenience and necessity au23 thorizing the construction and operation of an Alas24 ka natural gas transportation project under this sec25 tion if the applicant has satisfied the requirements 
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1 of section 7(e) of the Natural Gas Act (15 U.S.C. 

2 717f(e)). 

3 (2) CONSIDERATIONS.—In considering an appli4 cation under this section, the Commission shall pre5 sume that—

6 (A) a public need exists to construct and 

7 operate the proposed Alaska natural gas trans8 portation project; and 

9 (B) sufficient downstream capacity will 

10 exist to transport the Alaska natural gas mov11 ing through the project to markets in the con12 tiguous United States. 

13 (c) EXPEDITED APPROVAL PROCESS.—Not later 

14 than 60 days after the date of issuance of the final envi15 ronmental impact statement under section 374 for an 

16 Alaska natural gas transportation project, the Commission 

17 shall issue a final order granting or denying any applica18 tion for a certificate of public convenience and necessity 

19 for the project under section 7(c) of the Natural Gas Act 

20 (15 U.S.C. 717f(c)) and this section. 

21 (d) PROHIBITION OF CERTAIN PIPELINE ROUTE.—

22 No license, permit, lease, right-of-way, authorization, or 

23 other approval required under Federal law for the con24 struction of any pipeline to transport natural gas from 
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1 land within the Prudhoe Bay oil and gas lease area may 

2 be granted for any pipeline that follows a route that—

3 (1) traverses land beneath navigable waters (as 

4 defined in section 2 of the Submerged Lands Act 

5 (43 U.S.C. 1301)) beneath, or the adjacent shoreline 

6 of, the Beaufort Sea; and 

7 (2) enters Canada at any point north of 68 de8 grees north latitude. 

9 (e) OPEN SEASON.—

10 (1) IN GENERAL.—Not later than 120 days 

11 after the date of enactment of this Act, the Commis12 sion shall issue regulations governing the conduct of 

13 open seasons for Alaska natural gas transportation 

14 projects (including procedures for the allocation of 

15 capacity). 

16 (2) REGULATIONS.—The regulations referred to 

17 in paragraph (1) shall—

18 (A) include the criteria for and timing of 

19 any open seasons; 

20 (B) promote competition in the explo21 ration, development, and production of Alaska 

22 natural gas; and 

23 (C) for any open season for capacity ex24 ceeding the initial capacity, provide the oppor25 tunity for the transportation of natural gas
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1 other than from the Prudhoe Bay and Point 

2 Thomson units. 

3 (3) APPLICABILITY.—Except in a case in which 

4 an expansion is ordered in accordance with section 

5 375, initial or expansion capacity on any Alaska nat6 ural gas transportation project shall be allocated in 

7 accordance with procedures to be established by the 

8 Commission in regulations issued under paragraph 

9 (1). 

10 (f) PROJECTS IN THE CONTIGUOUS UNITED

11 STATES.—

12 (1) IN GENERAL.—An application for additional 

13 or expanded pipeline facilities that may be required 

14 to transport Alaska natural gas from Canada to 

15 markets in the contiguous United States may be 

16 made in accordance with the Natural Gas Act (15 

17 U.S.C. 717a et seq.). 

18 (2) EXPANSION.—To the extent that a pipeline 

19 facility described in paragraph (1) includes the ex20 pansion of any facility constructed in accordance 

21 with the Alaska Natural Gas Transportation Act of 

22 1976 (15 U.S.C. 719 et seq.), that Act shall con23 tinue to apply. 

24 (g) STUDY OF IN-STATE NEEDS.—The holder of the 

25 certificate of public convenience and necessity issued, 
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1 modified, or amended by the Commission for an Alaska 

2 natural gas transportation project shall demonstrate that 

3 the holder has conducted a study of Alaska in-State needs, 

4 including tie-in points along the Alaska natural gas trans5 portation project for in-State access. 

6 (h) ALASKA ROYALTY GAS.—

7 (1) IN GENERAL.—Except as provided in para8 graph (2), the Commission, on a request by the 

9 State and after a hearing, may provide for reason10 able access to the Alaska natural gas transportation 

11 project by the State (or State designee) for the 

12 transportation of royalty gas of the State for the 

13 purpose of meeting local consumption needs within 

14 the State. 

15 (2) EXCEPTION.—The rates of shippers of sub16 scribed capacity on an Alaska natural gas transpor17 tation project described in paragraph (1), as in ef18 fect as of the date on which access under that para19 graph is granted, shall not be increased as a result 

20 of such access. 

21 (i) REGULATIONS.—The Commission may issue such 

22 regulations as are necessary to carry out this section. 

23 SEC. 374. ENVIRONMENTAL REVIEWS. 

24 (a) COMPLIANCE WITH NEPA.—The issuance of a 

25 certificate of public convenience and necessity authorizing 
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1 the construction and operation of any Alaska natural gas 

2 transportation project under section 373 shall be treated 

3 as a major Federal action significantly affecting the qual4 ity of the human environment within the meaning of sec5 tion 102(2)(C) of the National Environmental Policy Act 

6 of 1969 (42 U.S.C. 4332(2)(C)). 

7 (b) DESIGNATION OF LEAD AGENCY.—

8 (1) IN GENERAL.—The Commission—

9 (A) shall be the lead agency for purposes 

10 of complying with the National Environmental 

11 Policy Act of 1969 (42 U.S.C. 4321 et seq.); 

12 and 

13 (B) shall be responsible for preparing the 

14 environmental impact statement required by 

15 section 102(2)(c) of that Act (42 U.S.C. 

16 4332(2)(c)) with respect to an Alaska natural 

17 gas transportation project under section 373. 

18 (2) CONSOLIDATION OF STATEMENTS.—In car19 rying out paragraph (1), the Commission shall pre20 pare a single environmental impact statement, which 

21 shall consolidate the environmental reviews of all 

22 Federal agencies considering any aspect of the Alas23 ka natural gas transportation project covered by the 

24 environmental impact statement. 

25 (c) OTHER AGENCIES.—
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1 (1) IN GENERAL.—Each Federal agency consid2 ering an aspect of the construction and operation of 

3 an Alaska natural gas transportation project under 

4 section 373 shall—

5 (A) cooperate with the Commission; and 

6 (B) comply with deadlines established by 

7 the Commission in the preparation of the envi8 ronmental impact statement under this section. 

9 (2) SATISFACTION OF NEPA REQUIREMENTS.—

10 The environmental impact statement prepared under 

11 this section shall be adopted by each Federal agency 

12 described in paragraph (1) in satisfaction of the re13 sponsibilities of the Federal agency under section 

14 102(2)(C) of the National Environmental Policy Act 

15 of 1969 (42 U.S.C. 4332(2)(C)) with respect to the 

16 Alaska natural gas transportation project covered by 

17 the environmental impact statement. 

18 (d) EXPEDITED PROCESS.—The Commission shall—

19 (1) not later than 1 year after the Commission 

20 determines that the application under section 373 

21 with respect to an Alaska natural gas transportation 

22 project is complete, issue a draft environmental im23 pact statement under this section; and 

24 (2) not later than 180 days after the date of 

25 issuance of the draft environmental impact state-
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1 ment, issue a final environmental impact statement, 

2 unless the Commission for good cause determines 

3 that additional time is needed. 

4 SEC. 375. PIPELINE EXPANSION. 

5 (a) AUTHORITY.—With respect to any Alaska natural 

6 gas transportation project, on a request by 1 or more per7 sons and after giving notice and an opportunity for a hear8 ing, the Commission may order the expansion of the Alas9 ka natural gas project if the Commission determines that 

10 such an expansion is required by the present and future 

11 public convenience and necessity. 

12 (b) RESPONSIBILITIES OF COMMISSION.—Before or13 dering an expansion under subsection (a), the Commission 

14 shall—

15 (1) approve or establish rates for the expansion 

16 service that are designed to ensure the recovery, on 

17 an incremental or rolled-in basis, of the cost associ18 ated with the expansion (including a reasonable rate 

19 of return on investment); 

20 (2) ensure that the rates do not require existing 

21 shippers on the Alaska natural gas transportation 

22 project to subsidize expansion shippers; 

23 (3) find that a proposed shipper will comply 

24 with, and the proposed expansion and the expansion 

25 of service will be undertaken and implemented based 
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1 on, terms and conditions consistent with the tariff of 

2 the Alaska natural gas transportation project in ef3 fect as of the date of the expansion; 

4 (4) find that the proposed facilities will not ad5 versely affect the financial or economic viability of 

6 the Alaska natural gas transportation project; 

7 (5) find that the proposed facilities will not ad8 versely affect the overall operations of the Alaska 

9 natural gas transportation project; 

10 (6) find that the proposed facilities will not di11 minish the contract rights of existing shippers to 

12 previously subscribed certificated capacity; 

13 (7) ensure that all necessary environmental re14 views have been completed; and 

15 (8) find that adequate downstream facilities 

16 exist or are expected to exist to deliver incremental 

17 Alaska natural gas to market. 

18 (c) REQUIREMENT FOR A FIRM TRANSPORTATION

19 AGREEMENT.—Any order of the Commission issued in ac20 cordance with this section shall be void unless the person 

21 requesting the order executes a firm transportation agree22 ment with the Alaska natural gas transportation project 

23 within such reasonable period of time as the order may 

24 specify.
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1 (d) LIMITATION.—Nothing in this section expands or 

2 otherwise affects any authority of the Commission with 

3 respect to any natural gas pipeline located outside the 

4 State. 

5 (e) REGULATIONS.—The Commission may issue such 

6 regulations as are necessary to carry out this section. 

7 SEC. 376. FEDERAL COORDINATOR. 

8 (a) ESTABLISHMENT.—There is established, as an 

9 independent office in the executive branch, the Office of 

10 the Federal Coordinator for Alaska Natural Gas Trans11 portation Projects. 

12 (b) FEDERAL COORDINATOR.—

13 (1) APPOINTMENT.—The Office shall be headed 

14 by a Federal Coordinator for Alaska Natural Gas 

15 Transportation Projects, who shall be appointed by 

16 the President, by and with the advice and consent 

17 of the Senate, to serve a term to last until 1 year 

18 following the completion of the project referred to in 

19 section 373. 

20 (2) COMPENSATION.—The Federal Coordinator 

21 shall be compensated at the rate prescribed for level 

22 III of the Executive Schedule (5 U.S.C. 5314). 

23 (c) DUTIES.—The Federal Coordinator shall be re24 sponsible for—
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1 (1) coordinating the expeditious discharge of all 

2 activities by Federal agencies with respect to an 

3 Alaska natural gas transportation project; and 

4 (2) ensuring the compliance of Federal agencies 

5 with the provisions of this subtitle. 

6 (d) REVIEWS AND ACTIONS OF OTHER FEDERAL

7 AGENCIES.—

8 (1) EXPEDITED REVIEWS AND ACTIONS.—All 

9 reviews conducted and actions taken by any Federal 

10 agency relating to an Alaska natural gas transpor11 tation project authorized under this section shall be 

12 expedited, in a manner consistent with completion of 

13 the necessary reviews and approvals by the deadlines 

14 under this subtitle. 

15 (2) PROHIBITION OF CERTAIN TERMS AND CON16 DITIONS.—No Federal agency may include in any 

17 certificate, right-of-way, permit, lease, or other au18 thorization issued to an Alaska natural gas trans19 portation project any term or condition that may be 

20 permitted, but is not required, by any applicable law 

21 if the Federal Coordinator determines that the term 

22 or condition would prevent or impair in any signifi23 cant respect the expeditious construction and oper24 ation, or an expansion, of the Alaska natural gas 

25 transportation project. 
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1 (3) PROHIBITION OF CERTAIN ACTIONS.—Un2 less required by law, no Federal agency shall add to, 

3 amend, or abrogate any certificate, right-of-way, per4 mit, lease, or other authorization issued to an Alas5 ka natural gas transportation project if the Federal 

6 Coordinator determines that the action would pre7 vent or impair in any significant respect the expedi8 tious construction and operation, or an expansion, of 

9 the Alaska natural gas transportation project. 

10 (4) LIMITATION.—The Federal Coordinator 

11 shall not have authority to— 

12 (A) override—

13 (i) the implementation or enforcement 

14 of regulations issued by the Commission 

15 under section 373; or 

16 (ii) an order by the Commission to ex17 pand the project under section 375; or 

18 (B) impose any terms, conditions, or re19 quirements in addition to those imposed by the 

20 Commission or any agency with respect to con21 struction and operation, or an expansion of, the 

22 project. 

23 (e) STATE COORDINATION.—

24 (1) IN GENERAL.—The Federal Coordinator 

25 and the State shall enter into a joint surveillance 
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1 and monitoring agreement similar to the agreement 

2 in effect during construction of the Trans-Alaska 

3 Pipeline, to be approved by the President and the 

4 Governor of the State, for the purpose of monitoring 

5 the construction of the Alaska natural gas transpor6 tation project. 

7 (2) PRIMARY RESPONSIBILITY.—With respect 

8 to an Alaska natural gas transportation project—

9 (A) the Federal Government shall have pri10 mary surveillance and monitoring responsibility 

11 in areas where the Alaska natural gas transpor12 tation project crosses Federal land or private 

13 land; and 

14 (B) the State government shall have pri15 mary surveillance and monitoring responsibility 

16 in areas where the Alaska natural gas transpor17 tation project crosses State land. 

18 (f) TRANSFER OF FEDERAL INSPECTOR FUNCTIONS

19 AND AUTHORITY.—On appointment of the Federal Coor20 dinator by the President, all of the functions and authority 

21 of the Office of Federal Inspector of Construction for the 

22 Alaska Natural Gas Transportation System vested in the 

23 Secretary under section 3012(b) of the Energy Policy Act 

24 of 1992 (15 U.S.C. 719e note; Public Law 102–486), in25 cluding all functions and authority described and enumer-
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1 ated in the Reorganization Plan No. 1 of 1979 (44 Fed. 

2 Reg. 33663), Executive Order No. 12142 of June 21, 

3 1979 (44 Fed. Reg. 36927), and section 5 of the Presi4 dent’s decision, shall be transferred to the Federal Coordi5 nator. 

6 (g) TEMPORARY AUTHORITY.—The functions, au7 thorities, duties, and responsibilities of the Federal Coor8 dinator shall be vested in the Secretary until the later of 

9 the appointment of the Federal Coordinator by the Presi10 dent, or 18 months after the date of enactment of this 

11 Act. 

12 SEC. 377. JUDICIAL REVIEW. 

13 (a) EXCLUSIVE JURISDICTION.—Except for review by 

14 the Supreme Court on writ of certiorari, the United States 

15 Court of Appeals for the District of Columbia Circuit shall 

16 have original and exclusive jurisdiction to determine—

17 (1) the validity of any final order or action (in18 cluding a failure to act) of any Federal agency or of19 ficer under this subtitle; 

20 (2) the constitutionality of any provision of this 

21 subtitle, or any decision made or action taken under 

22 this subtitle; or 

23 (3) the adequacy of any environmental impact 

24 statement prepared under the National Environ-
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1 mental Policy Act of 1969 (42 U.S.C. 4321 et seq.) 

2 with respect to any action under this subtitle. 

3 (b) DEADLINE FOR FILING CLAIM.—A claim arising 

4 under this subtitle may be brought not later than 60 days 

5 after the date of the decision or action giving rise to the 

6 claim. 

7 (c) EXPEDITED CONSIDERATION.—The United 

8 States Court of Appeals for the District of Columbia Cir9 cuit shall set any action brought under subsection (a) for 

10 expedited consideration, taking into account the national 

11 interest of enhancing national energy security by providing 

12 access to the significant gas reserves in Alaska needed to 

13 meet the anticipated demand for natural gas. 

14 (d) AMENDMENT OF THE ALASKA NATURAL GAS

15 TRANSPORTATION ACT OF 1976.—Section 10(c) of the 

16 Alaska Natural Gas Transportation Act of 1976 (15 

17 U.S.C. 719h) is amended—

18 (1) by striking ‘‘(c)(1) A claim’’ and inserting 

19 the following: 

20 ‘‘(c) JURISDICTION.—

21 ‘‘(1) SPECIAL COURTS.—

22 ‘‘(A) IN GENERAL.—A claim’’; 

23 (2) by striking ‘‘Such court shall have’’ and in24 serting the following:
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1 ‘‘(B) EXCLUSIVE JURISDICTION.—The 

2 Special Court shall have’’; 

3 (3) by inserting after paragraph (1) the fol4 lowing: 

5 ‘‘(2) EXPEDITED CONSIDERATION.—The Spe6 cial Court shall set any action brought under this 

7 section for expedited consideration, taking into ac8 count the national interest described in section 2.’’; 

9 and 

10 (4) in paragraph (3), by striking ‘‘(3) The en11 actment’’ and inserting the following: 

12 ‘‘(3) ENVIRONMENTAL IMPACT STATEMENTS.—

13 The enactment’’. 

14 SEC. 378. STATE JURISDICTION OVER IN-STATE DELIVERY 

15 OF NATURAL GAS. 

16 (a) LOCAL DISTRIBUTION.—Any facility receiving 

17 natural gas from an Alaska natural gas transportation 

18 project for delivery to consumers within the State—

19 (1) shall be deemed to be a local distribution fa20 cility within the meaning of section 1(b) of the Nat21 ural Gas Act (15 U.S.C. 717(b)); and 

22 (2) shall not be subject to the jurisdiction of the 

23 Commission. 

24 (b) ADDITIONAL PIPELINES.—Except as provided in 

25 section 373(d), nothing in this subtitle shall preclude or 
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1 otherwise affect a future natural gas pipeline that may 

2 be constructed to deliver natural gas to Fairbanks, An3 chorage, Matanuska-Susitna Valley, or the Kenai penin4 sula or Valdez or any other site in the State for consump5 tion within or distribution outside the State. 

6 (c) RATE COORDINATION.—

7 (1) IN GENERAL.—In accordance with the Nat8 ural Gas Act (15 U.S.C. 717a et seq.), the Commis9 sion shall establish rates for the transportation of 

10 natural gas on any Alaska natural gas transpor11 tation project. 

12 (2) CONSULTATION.—In carrying out para13 graph (1), the Commission, in accordance with sec14 tion 17(b) of the Natural Gas Act (15 U.S.C. 

15 717p(b)), shall consult with the State regarding 

16 rates (including rate settlements) applicable to nat17 ural gas transported on and delivered from the Alas18 ka natural gas transportation project for use within 

19 the State. 

20 SEC. 379. STUDY OF ALTERNATIVE MEANS OF CONSTRUC21 TION. 

22 (a) REQUIREMENT OF STUDY.—If no application for 

23 the issuance of a certificate or amended certificate of pub24 lic convenience and necessity authorizing the construction 

25 and operation of an Alaska natural gas transportation 
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1 project has been filed with the Commission by the date 

2 that is 18 months after the date of enactment of this Act, 

3 the Secretary shall conduct a study of alternative ap4 proaches to the construction and operation of such an 

5 Alaska natural gas transportation project. 

6 (b) SCOPE OF STUDY.—The study under subsection 

7 (a) shall take into consideration the feasibility of—

8 (1) establishing a Federal Government corpora9 tion to construct an Alaska natural gas transpor10 tation project; and 

11 (2) securing alternative means of providing 

12 Federal financing and ownership (including alter13 native combinations of Government and private cor14 porate ownership) of the Alaska natural gas trans15 portation project. 

16 (c) CONSULTATION.—In conducting the study under 

17 subsection (a), the Secretary shall consult with the Sec18 retary of the Treasury and the Secretary of the Army (act19 ing through the Chief of Engineers). 

20 (d) REPORT.—On completion of any study under sub21 section (a), the Secretary shall submit to Congress a re22 port that describes— 

23 (1) the results of the study; and 
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1 (2) any recommendations of the Secretary (in2 cluding proposals for legislation to implement the 

3 recommendations). 

4 SEC. 380. CLARIFICATION OF ANGTA STATUS AND AU5 THORITIES. 

6 (a) SAVINGS CLAUSE.—Nothing in this subtitle af7 fects—

8 (1) any decision, certificate, permit, right-of9 way, lease, or other authorization issued under sec10 tion 9 of the Alaska Natural Gas Transportation Act 

11 of 1976 (15 U.S.C. 719g); or 

12 (2) any Presidential finding or waiver issued in 

13 accordance with that Act. 

14 (b) CLARIFICATION OF AUTHORITY TO AMEND

15 TERMS AND CONDITIONS TO MEET CURRENT PROJECT

16 REQUIREMENTS.—Any Federal agency responsible for 

17 granting or issuing any certificate, permit, right-of-way, 

18 lease, or other authorization under section 9 of the Alaska 

19 Natural Gas Transportation Act of 1976 (15 U.S.C. 

20 719g) may add to, amend, or rescind any term or condi21 tion included in the certificate, permit, right-of-way, lease, 

22 or other authorization to meet current project require23 ments (including the physical design, facilities, and tariff 

24 specifications), if the addition, amendment, or rescission—
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1 (1) would not compel any change in the basic 

2 nature and general route of the Alaska natural gas 

3 transportation system as designated and described in 

4 section 2 of the President’s decision; or 

5 (2) would not otherwise prevent or impair in 

6 any significant respect the expeditious construction 

7 and initial operation of the Alaska natural gas 

8 transportation system. 

9 (c) UPDATED ENVIRONMENTAL REVIEWS.—The Sec10 retary shall require the sponsor of the Alaska natural gas 

11 transportation system to submit such updated environ12 mental data, reports, permits, and impact analyses as the 

13 Secretary determines are necessary to develop detailed 

14 terms, conditions, and compliance plans required by sec15 tion 5 of the President’s decision. 

16 SEC. 381. SENSE OF CONGRESS CONCERNING USE OF 

17 STEEL MANUFACTURED IN NORTH AMERICA 

18 NEGOTIATION OF A PROJECT LABOR AGREE19 MENT. 

20 It is the sense of Congress that—

21 (1) an Alaska natural gas transportation 

22 project would provide significant economic benefits 

23 to the United States and Canada; and 
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1 (2) to maximize those benefits, the sponsors of 

2 the Alaska natural gas transportation project should 

3 make every effort to—

4 (A) use steel that is manufactured in 

5 North America; and 

6 (B) negotiate a project labor agreement to 

7 expedite construction of the pipeline. 

8 SEC. 382. SENSE OF CONGRESS AND STUDY CONCERNING 

9 PARTICIPATION BY SMALL BUSINESS CON10 CERNS. 

11 (a) DEFINITION OF SMALL BUSINESS CONCERN.—

12 In this section, the term ‘‘small business concern’’ has the 

13 meaning given the term in section 3(a) of the Small Busi14 ness Act (15 U.S.C. 632(a)). 

15 (b) SENSE OF CONGRESS.—It is the sense of Con16 gress that—

17 (1) an Alaska natural gas transportation 

18 project would provide significant economic benefits 

19 to the United States and Canada; and 

20 (2) to maximize those benefits, the sponsors of 

21 the Alaska natural gas transportation project should 

22 maximize the participation of small business con23 cerns in contracts and subcontracts awarded in car24 rying out the project. 

25 (c) STUDY.—
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1 (1) IN GENERAL.—The Comptroller General of 

2 the United States shall conduct a study to determine 

3 the extent to which small business concerns partici4 pate in the construction of oil and gas pipelines in 

5 the United States. 

6 (2) REPORT.—Not later than 1 year after the 

7 date of enactment of this Act, the Comptroller Gen8 eral shall submit to Congress a report that describes 

9 results of the study under paragraph (1). 

10 (3) UPDATES.—The Comptroller General 

11 shall—

12 (A) update the study at least once every 5 

13 years until construction of an Alaska natural 

14 gas transportation project is completed; and 

15 (B) on completion of each update, submit 

16 to Congress a report containing the results of 

17 the update. 

18 SEC. 383. ALASKA PIPELINE CONSTRUCTION TRAINING 

19 PROGRAM. 

20 (a) PROGRAM.—

21 (1) ESTABLISHMENT.—The Secretary of Labor 

22 (in this section referred to as the ‘‘Secretary’’) shall 

23 make grants to the Alaska Workforce Investment 

24 Board—
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1 (A) to recruit and train adult and dis2 located workers in Alaska, including Alaska Na3 tives, in the skills required to construct and op4 erate an Alaska gas pipeline system; and 

5 (B) for the design and construction of a 

6 training facility to be located in Fairbanks, 

7 Alaska, to support an Alaska gas pipeline train8 ing program. 

9 (2) COORDINATION WITH EXISTING PRO10 GRAMS.—The training program established with the 

11 grants authorized under paragraph (1) shall be con12 sistent with the vision and goals set forth in the 

13 State of Alaska Unified Plan, as developed pursuant 

14 to the Workforce Investment Act of 1998 (29 U.S.C. 

15 2801 et seq.). 

16 (b) REQUIREMENTS FOR GRANTS.—The Secretary 

17 shall make a grant under subsection (a) only if—

18 (1) the Governor of the State of Alaska re19 quests the grant funds and certifies in writing to the 

20 Secretary that there is a reasonable expectation that 

21 the construction of the Alaska natural gas pipeline 

22 system will commence by the date that is 2 years 

23 after the date of the certification; and 
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1 (2) the Secretary of Energy concurs in writing 

2 to the Secretary with the certification made under 

3 paragraph (1) after considering—

4 (A) the status of necessary Federal and 

5 State permits; 

6 (B) the availability of financing for the 

7 Alaska natural gas pipeline project; and 

8 (C) other relevant factors. 

9 (c) AUTHORIZATION OF APPROPRIATIONS.—There 

10 are authorized to be appropriated to the Secretary to carry 

11 out this section $20,000,000. Not more than 15 percent 

12 of the funds may be used for the facility described in sub13 section (a)(1)(B). 

14 SEC. 384. SENSE OF CONGRESS CONCERNING NATURAL 

15 GAS DEMAND. 

16 It is the sense of Congress that—

17 (1) North American demand for natural gas 

18 will increase dramatically over the course of the next 

19 several decades; 

20 (2) both the Alaska Natural Gas Pipeline and 

21 the Mackenzie Delta Natural Gas project in Canada 

22 will be necessary to help meet the increased demand 

23 for natural gas in North America; 

24 (3) Federal and State officials should work to25 gether with officials in Canada to ensure both 
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1 projects can move forward in a mutually beneficial 

2 fashion; 

3 (4) Federal and State officials should acknowl4 edge that the smaller scope, fewer permitting re5 quirements, and lower cost of the Mackenzie Delta 

6 project means it will most likely be completed before 

7 the Alaska Natural Gas Pipeline; 

8 (5) natural gas production in the 48 contiguous 

9 States and Canada will not be able to meet all do10 mestic demand in the coming decades; and 

11 (6) as a result, natural gas delivered from Alas12 kan North Slope will not displace or reduce the com13 mercial viability of Canadian natural gas produced 

14 from the Mackenzie Delta or production from the 48 

15 contiguous States. 

16 SEC. 385. SENSE OF CONGRESS CONCERNING ALASKAN 

17 OWNERSHIP. 

18 It is the sense of Congress that— 

19 (1) Alaska Native Regional Corporations, com20 panies owned and operated by Alaskans, and indi21 vidual Alaskans should have the opportunity to own 

22 shares of the Alaska natural gas pipeline in a way 

23 that promotes economic development for the State; 

24 and 
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1 (2) to facilitate economic development in the 

2 State, all project sponsors should negotiate in good 

3 faith with any willing Alaskan person that desires to 

4 be involved in the project. 

5 SEC. 386. LOAN GUARANTEES. 

6 (a) AUTHORITY.—(1) The Secretary may enter into 

7 agreements with 1 or more holders of a certificate of pub8 lic convenience and necessity issued under section 373(b) 

9 or section 9 of the Alaska Natural Gas Transportation Act 

10 of 1976 (15 U.S.C. 719g) to issue Federal guarantee in11 struments with respect to loans and other debt obligations 

12 for a qualified infrastructure project. 

13 (2) Subject to the requirements of this section, the 

14 Secretary may also enter into agreements with 1 or more 

15 owners of the Canadian portion of a qualified infrastruc16 ture project to issue Federal guarantee instruments with 

17 respect to loans and other debt obligations for a qualified 

18 infrastructure project as though such owner were a holder 

19 described in paragraph (1). 

20 (3) The authority of the Secretary to issue Federal 

21 guarantee instruments under this section for a qualified 

22 infrastructure project shall expire on the date that is 2 

23 years after the date on which the final certificate of public 

24 convenience and necessity (including any Canadian certifi25 cates of public convenience and necessity) is issued for the 
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1 project. A final certificate shall be considered to have been 

2 issued when all certificates of public convenience and ne3 cessity have been issued that are required for the initial 

4 transportation of commercially economic quantities of nat5 ural gas from Alaska to the continental United States. 

6 (b) CONDITIONS.—(1) The Secretary may issue a 

7 Federal guarantee instrument for a qualified infrastruc8 ture project only after a certificate of public convenience 

9 and necessity under section 373(b) or an amended certifi10 cate under section 9 of the Alaska Natural Gas Transpor11 tation Act of 1976 (15 U.S.C. 719g) has been issued for 

12 the project. 

13 (2) The Secretary may issue a Federal guarantee in14 strument under this section for a qualified infrastructure 

15 project only if the loan or other debt obligation guaranteed 

16 by the instrument has been issued by an eligible lender. 

17 (3) The Secretary shall not require as a condition of 

18 issuing a Federal guarantee instrument under this section 

19 any contractual commitment or other form of credit sup20 port of the sponsors (other than equity contribution com21 mitments and completion guarantees), or any throughput 

22 or other guarantee from prospective shippers greater than 

23 such guarantees as shall be required by the project own24 ers.
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1 (c) LIMITATIONS ON AMOUNTS.—(1) The amount of 

2 loans and other debt obligations guaranteed under this 

3 section for a qualified infrastructure project shall not ex4 ceed 80 percent of the total capital costs of the project, 

5 including interest during construction. 

6 (2) The principal amount of loans and other debt ob7 ligations guaranteed under this section shall not exceed, 

8 in the aggregate, $18,000,000,000, which amount shall be 

9 indexed for United States dollar inflation from the date 

10 of enactment of this Act, as measured by the Consumer 

11 Price Index. 

12 (d) LOAN TERMS AND FEES.—(1) The Secretary 

13 may issue Federal guarantee instruments under this sec14 tion that take into account repayment profiles and grace 

15 periods justified by project cash flows and project-specific 

16 considerations. The term of any loan guaranteed under 

17 this section shall not exceed 30 years. 

18 (2) An eligible lender may assess and collect from the 

19 borrower such other fees and costs associated with the ap20 plication and origination of the loan or other debt obliga21 tion as are reasonable and customary for a project finance 

22 transaction in the oil and gas sector. 

23 (e) REGULATIONS.—The Secretary may issue regula24 tions to carry out this section. 
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1 (f) AUTHORIZATION OF APPROPRIATIONS.—There 

2 are authorized to be appropriated such sums as may be 

3 necessary to cover the cost of loan guarantees under this 

4 section, as defined by section 502(5) of the Federal Credit 

5 Reform Act of 1990 (2 U.S.C. 661a(5)). Such sums shall 

6 remain available until expended. 

7 (g) DEFINITIONS.—In this section, the following defi8 nitions apply: 

9 (1) The term ‘‘Consumer Price Index’’ means 

10 the Consumer Price Index for all-urban consumers, 

11 United States city average, as published by the Bu12 reau of Labor Statistics, or if such index shall cease 

13 to be published, any successor index or reasonable 

14 substitute thereof. 

15 (2) The term ‘‘eligible lender’’ means any non16 Federal qualified institutional buyer (as defined by 

17 section 230.144A(a) of title 17, Code of Federal 

18 Regulations (or any successor regulation), known as 

19 Rule 144A(a) of the Securities and Exchange Com20 mission and issued under the Securities Act of 

21 1933), including—

22 (A) a qualified retirement plan (as defined 

23 in section 4974(c) of the Internal Revenue Code 

24 of 1986 (26 U.S.C. 4974(c)) that is a qualified 

25 institutional buyer; and 
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1 (B) a governmental plan (as defined in 

2 section 414(d) of the Internal Revenue Code of 

3 1986 (26 U.S.C. 414(d)) that is a qualified in4 stitutional buyer. 

5 (3) The term ‘‘Federal guarantee instrument’’ 

6 means any guarantee or other pledge by the Sec7 retary to pledge the full faith and credit of the 

8 United States to pay all of the principal and interest 

9 on any loan or other debt obligation entered into by 

10 a holder of a certificate of public convenience and 

11 necessity. 

12 (4) The term ‘‘qualified infrastructure project’’ 

13 means an Alaskan natural gas transportation project 

14 consisting of the design, engineering, finance, con15 struction, and completion of pipelines and related 

16 transportation and production systems (including 

17 gas treatment plants), and appurtenances thereto, 

18 that are used to transport natural gas from the 

19 Alaska North Slope to the continental United 

20 States.
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1 TITLE IV—COAL 

2 Subtitle A—Clean Coal Power 

3 Initiative 

4 SEC. 401. AUTHORIZATION OF APPROPRIATIONS. 

5 (a) CLEAN COAL POWER INITIATIVE.—There are au6 thorized to be appropriated to the Secretary of Energy (re7 ferred to in this title as the ‘‘Secretary’’) to carry out the 

8 activities authorized by this subtitle $200,000,000 for 

9 each of fiscal years 2004 through 2012, to remain avail10 able until expended. 

11 (b) REPORT.—The Secretary shall submit to Con12 gress the report required by this subsection not later than 

13 March 31, 2005. The report shall include, with respect 

14 to subsection (a), a 10-year plan containing—

15 (1) a detailed assessment of whether the aggre16 gate funding levels provided under subsection (a) are 

17 the appropriate funding levels for that program; 

18 (2) a detailed description of how proposals will 

19 be solicited and evaluated, including a list of all ac20 tivities expected to be undertaken; 

21 (3) a detailed list of technical milestones for 

22 each coal and related technology that will be pur23 sued; and 

24 (4) a detailed description of how the program 

25 will avoid problems enumerated in General Account-
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1 ing Office reports on the Clean Coal Technology 

2 Program, including problems that have resulted in 

3 unspent funds and projects that failed either finan4 cially or scientifically. 

5 SEC. 402. PROJECT CRITERIA. 

6 (a) IN GENERAL.—The Secretary shall not provide 

7 funding under this subtitle for any project that does not 

8 advance efficiency, environmental performance, and cost 

9 competitiveness well beyond the level of technologies that 

10 are in commercial service or have been demonstrated on 

11 a scale that the Secretary determines is sufficient to dem12 onstrate that commercial service is viable as of the date 

13 of enactment of this Act. 

14 (b) TECHNICAL CRITERIA FOR CLEAN COAL POWER

15 INITIATIVE.—

16 (1) GASIFICATION PROJECTS.—

17 (A) IN GENERAL.—In allocating the funds 

18 made available under section 401(a), the Sec19 retary shall ensure that at least 60 percent of 

20 the funds are used only for projects on coal21 based gasification technologies, including gasifi22 cation combined cycle, gasification fuel cells, 

23 gasification coproduction, and hybrid gasifi24 cation/combustion. 
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1 (B) TECHNICAL MILESTONES.—The Sec2 retary shall periodically set technical milestones 

3 specifying the emission and thermal efficiency 

4 levels that coal gasification projects under this 

5 subtitle shall be designed, and reasonably ex6 pected, to achieve. The technical milestones 

7 shall become more restrictive during the life of 

8 the program. The Secretary shall set the peri9 odic milestones so as to achieve by 2020 coal 

10 gasification projects able—

11 (i) to remove 99 percent of sulfur di12 oxide; 

13 (ii) to emit not more than .05 lbs of 

14 NOX per million Btu; 

15 (iii) to achieve substantial reductions 

16 in mercury emissions; and 

17 (iv) to achieve a thermal efficiency 

18 of—

19 (I) 60 percent for coal of more 

20 than 9,000 Btu; 

21 (II) 59 percent for coal of 7,000 

22 to 9,000 Btu; and 

23 (III) 50 percent for coal of less 

24 than 7,000 Btu.
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1 (2) OTHER PROJECTS.—The Secretary shall pe2 riodically set technical milestones and ensure that up 

3 to 40 percent of the funds appropriated pursuant to 

4 section 401(a) are used for projects not described in 

5 paragraph (1). The milestones shall specify the 

6 emission and thermal efficiency levels that projects 

7 funded under this paragraph shall be designed to 

8 and reasonably expected to achieve. The technical 

9 milestones shall become more restrictive during the 

10 life of the program. The Secretary shall set the peri11 odic milestones so as to achieve by 2010 projects 

12 able—

13 (A) to remove 97 percent of sulfur dioxide; 

14 (B) to emit no more than .08 lbs of NOX

15 per million Btu; 

16 (C) to achieve substantial reductions in 

17 mercury emissions; and 

18 (D) to achieve a thermal efficiency of—

19 (i) 45 percent for coal of more than 

20 9,000 Btu; 

21 (ii) 44 percent for coal of 7,000 to 

22 9,000 Btu; and 

23 (iii) 40 percent for coal of less than 

24 7,000 Btu. 
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1 (3) CONSULTATION.—Before setting the tech2 nical milestones under paragraphs (1)(B) and (2), 

3 the Secretary shall consult with the Administrator of 

4 the Environmental Protection Agency and interested 

5 entities, including coal producers, industries using 

6 coal, organizations to promote coal or advanced coal 

7 technologies, environmental organizations, and orga8 nizations representing workers. 

9 (4) EXISTING UNITS.—In the case of projects 

10 at units in existence on the date of enactment of this 

11 Act, in lieu of the thermal efficiency requirements 

12 set forth in paragraph (1)(B)(iv) and (2)(D), the 

13 milestones shall be designed to achieve an overall 

14 thermal design efficiency improvement, compared to 

15 the efficiency of the unit as operated, of not less 

16 than—

17 (A) 7 percent for coal of more than 9,000 

18 Btu; 

19 (B) 6 percent for coal of 7,000 to 9,000 

20 Btu; or 

21 (C) 4 percent for coal of less than 7,000 

22 Btu. 

23 (5) PERMITTED USES.—In carrying out this 

24 subtitle, the Secretary may fund projects that in-
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1 clude, as part of the project, the separation and cap2 ture of carbon dioxide. 

3 (c) FINANCIAL CRITERIA.—The Secretary shall not 

4 provide a funding award under this subtitle unless the re5 cipient documents to the satisfaction of the Secretary 

6 that—

7 (1) the award recipient is financially viable 

8 without the receipt of additional Federal funding; 

9 (2) the recipient will provide sufficient informa10 tion to the Secretary to enable the Secretary to en11 sure that the award funds are spent efficiently and 

12 effectively; and 

13 (3) a market exists for the technology being 

14 demonstrated or applied, as evidenced by statements 

15 of interest in writing from potential purchasers of 

16 the technology. 

17 (d) FINANCIAL ASSISTANCE.—The Secretary shall 

18 provide financial assistance to projects that meet the re19 quirements of subsections (a), (b), and (c) and are likely 

20 to—

21 (1) achieve overall cost reductions in the utiliza22 tion of coal to generate useful forms of energy; 

23 (2) improve the competitiveness of coal among 

24 various forms of energy in order to maintain a diver-
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1 sity of fuel choices in the United States to meet elec2 tricity generation requirements; and 

3 (3) demonstrate methods and equipment that 

4 are applicable to 25 percent of the electricity gener5 ating facilities, using various types of coal, that use 

6 coal as the primary feedstock as of the date of en7 actment of this Act. 

8 (e) FEDERAL SHARE.—The Federal share of the cost 

9 of a coal or related technology project funded by the Sec10 retary under this subtitle shall not exceed 50 percent. 

11 (f) APPLICABILITY.—No technology, or level of emis12 sion reduction, shall be treated as adequately dem13 onstrated for purposes of section 111 of the Clean Air Act 

14 (42 U.S.C. 7411), achievable for purposes of section 169 

15 of that Act (42 U.S.C. 7479), or achievable in practice 

16 for purposes of section 171 of that Act (42 U.S.C. 7501) 

17 solely by reason of the use of such technology, or the 

18 achievement of such emission reduction, by 1 or more fa19 cilities receiving assistance under this subtitle. 

20 SEC. 403. REPORT. 

21 Not later than 1 year after the date of enactment 

22 of this Act, and once every 2 years thereafter through 

23 2012, the Secretary, in consultation with other appro24 priate Federal agencies, shall submit to Congress a report 

25 describing—
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1 (1) the technical milestones set forth in section 

2 402 and how those milestones ensure progress to3 ward meeting the requirements of subsections 

4 (b)(1)(B) and (b)(2) of section 402; and 

5 (2) the status of projects funded under this 

6 subtitle. 

7 SEC. 404. CLEAN COAL CENTERS OF EXCELLENCE. 

8 As part of the program authorized in section 401, 

9 the Secretary shall award competitive, merit-based grants 

10 to universities for the establishment of Centers of Excel11 lence for Energy Systems of the Future. The Secretary 

12 shall provide grants to universities that show the greatest 

13 potential for advancing new clean coal technologies. 

14 Subtitle B—Clean Power Projects 

15 SEC. 411. COAL TECHNOLOGY LOAN. 

16 There are authorized to be appropriated to the Sec17 retary $125,000,000 to provide a loan to the owner of the 

18 experimental plant constructed under United States De19 partment of Energy cooperative agreement number DE–

20 FC–22–91PC90544 on such terms and conditions as the 

21 Secretary determines, including interest rates and upfront 

22 payments. 

23 SEC. 412. COAL GASIFICATION. 

24 The Secretary is authorized to provide loan guaran25 tees for a project to produce energy from a plant using 
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1 integrated gasification combined cycle technology of at 

2 least 400 megawatts in capacity that produces power at 

3 competitive rates in deregulated energy generation mar4 kets and that does not receive any subsidy (direct or indi5 rect) from ratepayers. 

6 SEC. 413. INTEGRATED GASIFICATION COMBINED CYCLE 

7 TECHNOLOGY. 

8 The Secretary is authorized to provide loan guaran9 tees for a project to produce energy from a plant using 

10 integrated gasification combined cycle technology located 

11 in a taconite-producing region of the United States that 

12 is entitled under the law of the State in which the plant 

13 is located to enter into a long-term contract approved by 

14 a State Public Utility Commission to sell at least 450 

15 megawatts of output to a utility. 

16 SEC. 414. PETROLEUM COKE GASIFICATION. 

17 The Secretary is authorized to provide loan guaran18 tees for at least 1 petroleum coke gasification 

19 polygeneration project. 

20 SEC. 415. INTEGRATED COAL/RENEWABLE ENERGY SYS21 TEM. 

22 The Secretary is authorized, subject to the avail23 ability of appropriations, to provide loan guarantees for 

24 a project to produce energy from coal of less than 7,000 

25 btu/lb using appropriate advanced integrated gasification
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1 combined cycle technology, including repowering of exist2 ing facilities, that is combined with wind and other renew3 able sources, minimizes and offers the potential to seques4 ter carbon dioxide emissions, and provides a ready source 

5 of hydrogen for near-site fuel cell demonstrations. The fa6 cility may be built in stages, combined output shall be at 

7 least 200 megawatts at successively more competitive 

8 rates, and the facility shall be located in the Upper Great 

9 Plains. Section 402(b) technical criteria apply, and the 

10 Federal cost share shall not exceed 50 percent. The loan 

11 guarantees provided under this section do not preclude the 

12 facility from receiving an allocation for investment tax 

13 credits under section 48A of the Internal Revenue Code 

14 of 1986. Utilizing this investment tax credit does not pro15 hibit the use of other Clean Coal Program funding. 

16 SEC. 416. ELECTRON SCRUBBING DEMONSTRATION. 

17 The Secretary shall use $5,000,000 from amounts 

18 appropriated to initiate, through the Chicago Operations 

19 Office, a project to demonstrate the viability of high-en20 ergy electron scrubbing technology on commercial-scale 

21 electrical generation using high-sulfur coal. 
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1 Subtitle C—Federal Coal Leases 

2 SEC. 421. REPEAL OF THE 160–ACRE LIMITATION FOR COAL 

3 LEASES. 

4 Section 3 of the Mineral Leasing Act (30 U.S.C. 203) 

5 is amended—

6 (1) in the first sentence—

7 (A) by striking ‘‘Any person’’ and inserting 

8 ‘‘(a) Any person’’; 

9 (B) by inserting a comma after ‘‘may’’; 

10 and 

11 (C) by striking ‘‘upon’’ and all that follows 

12 through the period and inserting the following: 

13 ‘‘upon a finding by the Secretary that the 

14 lease—

15 ‘‘(1) would be in the interest of the United 

16 States; 

17 ‘‘(2) would not displace a competitive interest 

18 in the land; and 

19 ‘‘(3) would not include land or deposits that can 

20 be developed as part of another potential or existing 

21 operation; 

22 secure modifications of the original coal lease by including 

23 additional coal land or coal deposits contiguous or cor24 nering to those embraced in the lease, but in no event shall 

25 the total area added by any modifications to an existing 
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1 coal lease exceed 1,280 acres, or add acreage larger than 

2 the acreage in the original lease.’’; 

3 (2) in the second sentence, by striking ‘‘The 

4 Secretary’’ and inserting the following: 

5 ‘‘(b) The Secretary’’; and 

6 (3) in the third sentence, by striking ‘‘The min7 imum’’ and inserting the following: 

8 ‘‘(c) The minimum’’. 

9 SEC. 422. MINING PLANS. 

10 Section 2(d)(2) of the Mineral Leasing Act (30 

11 U.S.C. 202a(2)) is amended—

12 (1) by inserting ‘‘(A)’’ after ‘‘(2)’’; and 

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

14 ‘‘(B) The Secretary may establish a period of more 

15 than 40 years if the Secretary determines that the longer 

16 period—

17 ‘‘(i) will ensure the maximum economic recovery 

18 of a coal deposit; or 

19 ‘‘(ii) the longer period is in the interest of the 

20 orderly, efficient, or economic development of a coal 

21 resource.’’. 

22 SEC. 423. PAYMENT OF ADVANCE ROYALTIES UNDER COAL 

23 LEASES. 

24 Section 7(b) of the Mineral Leasing Act (30 U.S.C. 

25 207(b)) is amended to read as follows: 
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1 ‘‘(b)(1) Each lease shall be subjected to the condition 

2 of diligent development and continued operation of the 

3 mine or mines, except in a case in which operations under 

4 the lease are interrupted by strikes, the elements, or cas5 ualties not attributable to the lessee. 

6 ‘‘(2)(A) The Secretary of the Interior may suspend 

7 the condition of continued operation upon the payment of 

8 advance royalties, if the Secretary determines that the 

9 public interest will be served by the suspension. 

10 ‘‘(B) Advance royalties required under subparagraph 

11 (A) shall be computed based on—

12 ‘‘(i) the average price for coal sold in the spot 

13 market from the same region during the last month 

14 of each applicable continued operation year; or 

15 ‘‘(ii) by using other methods established by the 

16 Secretary of the Interior to capture the commercial 

17 value of coal, 

18 and based on commercial quantities, as defined by regula19 tion by the Secretary of the Interior. 

20 ‘‘(C) The aggregate number of years during the ini21 tial and any extended term of any lease for which advance 

22 royalties may be accepted in lieu of the condition of contin23 ued operation shall not exceed 20. 

24 ‘‘(3) The amount of any production royalty paid for 

25 any year shall be reduced (but not below 0) by the amount 
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1 of any advance royalties paid under the lease, to the extent 

2 that the advance royalties have not been used to reduce 

3 production royalties for a prior year. 

4 ‘‘(4) The Secretary may, upon 6 months’ notice to 

5 a lessee, cease to accept advance royalties in lieu of the 

6 requirement of continued operation. 

7 ‘‘(5) Nothing in this subsection affects the require8 ment contained in the second sentence of subsection (a) 

9 relating to commencement of production at the end of 10 

10 years.’’. 

11 SEC. 424. ELIMINATION OF DEADLINE FOR SUBMISSION OF 

12 COAL LEASE OPERATION AND RECLAMATION 

13 PLAN. 

14 Section 7(c) of the Mineral Leasing Act (30 U.S.C. 

15 207(c)) is amended in the first sentence by striking ‘‘and 

16 not later than three years after a lease is issued,’’. 

17 SEC. 425. AMENDMENT RELATING TO FINANCIAL ASSUR18 ANCES WITH RESPECT TO BONUS BIDS. 

19 Section 2(a) of the Mineral Leasing Act (30 U.S.C. 

20 201(a)) is amended by adding at the end the following: 

21 ‘‘(4)(A) The Secretary shall not require a surety bond 

22 or any other financial assurance to guarantee payment of 

23 deferred bonus bid installments with respect to any coal 

24 lease issued on a cash bonus bid to a lessee or successor 

25 in interest having a history of a timely payment of noncon-
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1 tested coal royalties and advanced coal royalties in lieu 

2 of production (where applicable) and bonus bid installment 

3 payments. 

4 ‘‘(B) The Secretary may waive any requirement that 

5 a lessee provide a surety bond or other financial assurance 

6 for a coal lease issued before the date of the enactment 

7 of the Energy Policy Act of 2003 only if the Secretary 

8 determines that the lessee has a history of making timely 

9 payments referred to in subparagraph (A). 

10 ‘‘(5) Notwithstanding any other provision of law, if 

11 the lessee under a coal lease fails to pay any installment 

12 of a deferred cash bonus bid within 10 days after the Sec13 retary provides written notice that payment of the install14 ment is past due—

15 ‘‘(A) the lease shall automatically terminate; 

16 and 

17 ‘‘(B) any bonus payments already made to the 

18 United States with respect to the lease shall not be 

19 returned to the lessee or credited in any future lease 

20 sale.’’. 

21 SEC. 426. INVENTORY REQUIREMENT. 

22 (a) REVIEW OF ASSESSMENTS.—

23 (1) IN GENERAL.—The Secretary of the Inte24 rior, in consultation with the Secretary of Agri-
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1 culture and the Secretary, shall review coal assess2 ments and other available data to identify—

3 (A) public lands, other than National Park 

4 lands, with coal resources; 

5 (B) the extent and nature of any restric6 tions or impediments to the development of coal 

7 resources on public lands identified under sub8 paragraph (A); and 

9 (C) with respect to areas of such lands for 

10 which sufficient data exists, resources of com11 pliant coal and supercompliant coal. 

12 (2) DEFINITIONS.—In this subsection: 

13 (A) COMPLIANT COAL.—The term ‘‘compli14 ant coal’’ means coal that contains not less 

15 than 1.0 and not more than 1.2 pounds of sul16 fur dioxide per million Btu. 

17 (B) SUPERCOMPLIANT COAL.—The term 

18 ‘‘supercompliant coal’’ means coal that contains 

19 less than 1.0 pounds of sulfur dioxide per mil20 lion Btu. 

21 (b) COMPLETION AND UPDATING OF THE INVEN22 TORY.—The Secretary of the Interior—

23 (1) shall complete the inventory under sub24 section (a)(1) by not later than 2 years after the 

25 date of the enactment of this Act; and 
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1 (2) shall update the inventory as the availability 

2 of data and developments in technology warrant. 

3 (c) REPORT.—The Secretary of the Interior shall 

4 submit to Congress, and make publicly available—

5 (1) a report containing the inventory under this 

6 section by not later than 2 years after the effective 

7 date of this section; and 

8 (2) each update of that inventory. 

9 SEC. 427. APPLICATION OF AMENDMENTS.

10 The amendments made by this subtitle apply—

11 (1) with respect to any coal lease issued on or 

12 after the date of enactment of this Act; and 

13 (2) with respect to any coal lease issued before 

14 the date of enactment of this Act, upon the earlier 

15 of—

16 (A) the date of readjustment of the lease 

17 as provided for by section 7(a) of the Mineral 

18 Leasing Act (30 U.S.C. 207(a)); or 

19 (B) the date the lessee requests such appli20 cation. 
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1 Subtitle D—Coal and Related 

2 Programs 

3 SEC. 441. CLEAN AIR COAL PROGRAM. 

4 (a) AMENDMENT.—The Energy Policy Act of 1992 

5 is amended by adding the following new title at the end 

6 thereof: 

7 ‘‘TITLE XXXI—CLEAN AIR COAL 

8 PROGRAM 

9 ‘‘SEC. 3101. FINDINGS; PURPOSES; DEFINITIONS. 

10 ‘‘(a) FINDINGS.—The Congress finds that—

11 ‘‘(1) new environmental regulations present ad12 ditional challenges for coal-fired electrical generation 

13 in the private marketplace; and 

14 ‘‘(2) the Department of Energy, in cooperation 

15 with industry, has already fully developed and com16 mercialized several new clean-coal technologies that 

17 will allow the clean use of coal. 

18 ‘‘(b) PURPOSES.—The purposes of this title are to—

19 ‘‘(1) promote national energy policy and energy 

20 security, diversity, and economic competitiveness 

21 benefits that result from the increased use of coal; 

22 ‘‘(2) mitigate financial risks, reduce the cost, 

23 and increase the marketplace acceptance of the new 

24 clean coal technologies; and 
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1 ‘‘(3) advance the deployment of pollution con2 trol equipment to meet the current and future obli3 gations of coal-fired generation units regulated 

4 under the Clean Air Act (42 U.S.C. 7402 and fol5 lowing). 

6 ‘‘SEC. 3102. AUTHORIZATION OF PROGRAM. 

7 ‘‘The Secretary shall carry out a program to facilitate 

8 production and generation of coal-based power and the in9 stallation of pollution control equipment. 

10 ‘‘SEC. 3103. AUTHORIZATION OF APPROPRIATIONS. 

11 ‘‘(a) POLLUTION CONTROL PROJECTS.—There are 

12 authorized to be appropriated to the Secretary 

13 $300,000,000 for fiscal year 2005, $100,000,000 for fis14 cal year 2006, $40,000,000 for fiscal year 2007, 

15 $30,000,000 for fiscal year 2008, and $30,000,000 for fis16 cal year 2009, to remain available until expended, for car17 rying out the program for pollution control projects, which 

18 may include—

19 ‘‘(1) pollution control equipment and processes 

20 for the control of mercury air emissions; 

21 ‘‘(2) pollution control equipment and processes 

22 for the control of nitrogen dioxide air emissions or 

23 sulfur dioxide emissions; 
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1 ‘‘(3) pollution control equipment and processes 

2 for the mitigation or collection of more than one pol3 lutant; 

4 ‘‘(4) advanced combustion technology for the 

5 control of at least two pollutants, including mercury, 

6 particulate matter, nitrogen oxides, and sulfur diox7 ide, which may also be designed to improve the en8 ergy efficiency of the unit; and 

9 ‘‘(5) advanced pollution control equipment and 

10 processes designed to allow use of the waste byprod11 ucts or other byproducts of the equipment or an 

12 electrical generation unit designed to allow the use 

13 of byproducts. 

14 Funds appropriated under this subsection which are not 

15 awarded before fiscal year 2011 may be applied to projects 

16 under subsection (b), in addition to amounts authorized 

17 under subsection (b). 

18 ‘‘(b) GENERATION PROJECTS.—There are authorized 

19 to be appropriated to the Secretary $150,000,000 for fis20 cal year 2006, $250,000,000 for each of the fiscal years 

21 2007 through 2011, and $100,000,000 for fiscal year 

22 2012, to remain available until expended, for generation 

23 projects and air pollution control projects. Such projects 

24 may include—
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1 ‘‘(1) coal-based electrical generation equipment 

2 and processes, including gasification combined cycle 

3 or other coal-based generation equipment and proc4 esses; 

5 ‘‘(2) associated environmental control equip6 ment, that will be cost-effective and that is designed 

7 to meet anticipated regulatory requirements; 

8 ‘‘(3) coal-based electrical generation equipment 

9 and processes, including gasification fuel cells, gas10 ification coproduction, and hybrid gasification/com11 bustion projects; and 

12 ‘‘(4) advanced coal-based electrical generation 

13 equipment and processes, including oxidation com14 bustion techniques, ultra-supercritical boilers, and 

15 chemical looping, which the Secretary determines 

16 will be cost-effective and could substantially con17 tribute to meeting anticipated environmental or en18 ergy needs. 

19 ‘‘(c) LIMITATION.—Funds placed at risk during any 

20 fiscal year for Federal loans or loan guarantees pursuant 

21 to this title may not exceed 30 percent of the total funds 

22 obligated under this title. 

23 ‘‘SEC. 3104. AIR POLLUTION CONTROL PROJECT CRITERIA. 

24 ‘‘The Secretary shall pursuant to authorizations con25 tained in section 3103 provide funding for air pollution
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1 control projects designed to facilitate compliance with 

2 Federal and State environmental regulations, including 

3 any regulation that may be established with respect to 

4 mercury. 

5 ‘‘SEC. 3105. CRITERIA FOR GENERATION PROJECTS. 

6 ‘‘(a) CRITERIA.—The Secretary shall establish cri7 teria on which selection of individual projects described in 

8 section 3103(b) should be based. The Secretary may mod9 ify the criteria as appropriate to reflect improvements in 

10 equipment, except that the criteria shall not be modified 

11 to be less stringent. These selection criteria shall include—

12 ‘‘(1) prioritization of projects whose installation 

13 is likely to result in significant air quality improve14 ments in nonattainment air quality areas; 

15 ‘‘(2) prioritization of projects that result in the 

16 repowering or replacement of older, less efficient 

17 units; 

18 ‘‘(3) documented broad interest in the procure19 ment of the equipment and utilization of the proc20 esses used in the projects by electrical generator 

21 owners or operators; 

22 ‘‘(4) equipment and processes beginning in 

23 2005 through 2010 that are projected to achieve an 

24 thermal efficiency of—
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1 ‘‘(A) 40 percent for coal of more than 

2 9,000 Btu per pound based on higher heating 

3 values; 

4 ‘‘(B) 38 percent for coal of 7,000 to 9,000 

5 Btu per pound based on higher heating values; 

6 and 

7 ‘‘(C) 36 percent for coal of less than 7,000 

8 Btu per pound based on higher heating val9 ues—

10 except that energy used for coproduction or cogen11 eration shall not be counted in calculating the ther12 mal efficiency under this paragraph; and 

13 ‘‘(5) equipment and processes beginning in 

14 2011 and 2012 that are projected to achieve an 

15 thermal efficiency of—

16 ‘‘(A) 45 percent for coal of more than 

17 9,000 Btu per pound based on higher heating 

18 values; 

19 ‘‘(B) 44 percent for coal of 7,000 to 9,000 

20 Btu per pound based on higher heating values; 

21 and 

22 ‘‘(C) 40 percent for coal of less than 7,000 

23 Btu per pound based on higher heating val24 ues—
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1 except that energy used for coproduction or cogen2 eration shall not be counted in calculating the ther3 mal efficiency under this paragraph. 

4 ‘‘(b) SELECTION.—(1) In selecting the projects, up 

5 to 25 percent of the projects selected may be either co6 production or cogeneration or other gasification projects, 

7 but at least 25 percent of the projects shall be for the 

8 sole purpose of electrical generation, and priority should 

9 be given to equipment and projects less than 600 MW to 

10 foster and promote standard designs. 

11 ‘‘(2) The Secretary shall give priority to projects that 

12 have been developed and demonstrated that are not yet 

13 cost competitive, and for coal energy generation projects 

14 that advance efficiency, environmental performance, or 

15 cost competitiveness significantly beyond the level of pollu16 tion control equipment that is in operation on a full scale. 

17 ‘‘SEC. 3106. FINANCIAL CRITERIA. 

18 ‘‘(a) IN GENERAL.—The Secretary shall only provide 

19 financial assistance to projects that meet the requirements 

20 of sections 3103 and 3104 and are likely to—

21 ‘‘(1) achieve overall cost reductions in the utili22 zation of coal to generate useful forms of energy; 

23 and 

24 ‘‘(2) improve the competitiveness of coal in 

25 order to maintain a diversity of domestic fuel choices 
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1 in the United States to meet electricity generation 

2 requirements. 

3 ‘‘(b) CONDITIONS.—The Secretary shall not provide 

4 a funding award under this title unless—

5 ‘‘(1) the award recipient is financially viable 

6 without the receipt of additional Federal funding; 

7 and 

8 ‘‘(2) the recipient provides sufficient informa9 tion to the Secretary for the Secretary to ensure 

10 that the award funds are spent efficiently and effec11 tively. 

12 ‘‘(c) EQUAL ACCESS.—The Secretary shall, to the ex13 tent practical, utilize cooperative agreement, loan guar14 antee, and direct Federal loan mechanisms designed to en15 sure that all electrical generation owners have equal access 

16 to these technology deployment incentives. The Secretary 

17 shall develop and direct a competitive solicitation process 

18 for the selection of technologies and projects under this 

19 title. 

20 ‘‘SEC. 3107. FEDERAL SHARE. 

21 ‘‘The Federal share of the cost of a coal or related 

22 technology project funded by the Secretary under this title 

23 shall not exceed 50 percent. For purposes of this title, 

24 Federal funding includes only appropriated funds. 
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1 ‘‘SEC. 3108. APPLICABILITY. 

2 ‘‘No technology, or level of emission reduction, shall 

3 be treated as adequately demonstrated for purposes of sec4 tion 111 of the Clean Air Act (42 U.S.C. 7411), achievable 

5 for purposes of section 169 of the Clean Air Act (42 

6 U.S.C. 7479), or achievable in practice for purposes of 

7 section 171 of the Clean Air Act (42 U.S.C. 7501) solely 

8 by reason of the use of such technology, or the achieve9 ment of such emission reduction, by one or more facilities 

10 receiving assistance under this title.’’. 

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

12 of contents of the Energy Policy Act of 1992 is amended 

13 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.’’.

14 TITLE V—INDIAN ENERGY 

15 SEC. 501. SHORT TITLE. 

16 This title may be cited as the ‘‘Indian Tribal Energy 

17 Development and Self-Determination Act of 2003’’. 
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1 SEC. 502. OFFICE OF INDIAN ENERGY POLICY AND PRO2 GRAMS. 

3 (a) IN GENERAL.—Title II of the Department of En4 ergy Organization Act (42 U.S.C. 7131 et seq.) is amend5 ed by adding at the end the following: 

6 ‘‘OFFICE OF INDIAN ENERGY POLICY AND PROGRAMS

7 ‘‘SEC. 217. (a) ESTABLISHMENT.—There is estab8 lished within the Department an Office of Indian Energy 

9 Policy and Programs (referred to in this section as the 

10 ‘Office’). The Office shall be headed by a Director, who 

11 shall be appointed by the Secretary and compensated at 

12 a rate equal to that of level IV of the Executive Schedule 

13 under section 5315 of title 5, United States Code. 

14 ‘‘(b) DUTIES OF DIRECTOR.—The Director, in ac15 cordance with Federal policies promoting Indian self-de16 termination and the purposes of this Act, shall provide, 

17 direct, foster, coordinate, and implement energy planning, 

18 education, management, conservation, and delivery pro19 grams of the Department that—

20 ‘‘(1) promote Indian tribal energy development, 

21 efficiency, and use;

22 ‘‘(2) reduce or stabilize energy costs; 

23 ‘‘(3) enhance and strengthen Indian tribal en24 ergy and economic infrastructure relating to natural 

25 resource development and electrification; and 
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1 ‘‘(4) bring electrical power and service to In2 dian land and the homes of tribal members located 

3 on Indian lands or acquired, constructed, or im4 proved (in whole or in part) with Federal funds.’’. 

5 (b) CONFORMING AMENDMENTS.—

6 (1) The table of contents of the Department of 

7 Energy Organization Act (42 U.S.C. prec. 7101) is 

8 amended—

9 (A) in the item relating to section 209, by 

10 striking ‘‘Section’’ and inserting ‘‘Sec.’’; and 

11 (B) by striking the items relating to sec12 tions 213 through 216 and inserting the fol13 lowing:

‘‘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.’’.

14 (2) Section 5315 of title 5, United States Code, 

15 is amended by inserting ‘‘Director, Office of Indian 

16 Energy Policy and Programs, Department of En17 ergy.’’ after ‘‘Inspector General, Department of En18 ergy.’’. 

19 SEC. 503. INDIAN ENERGY. 

20 (a) IN GENERAL.—Title XXVI of the Energy Policy 

21 Act of 1992 (25 U.S.C. 3501 et seq.) is amended to read 

22 as follows: 
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1 ‘‘TITLE XXVI—INDIAN ENERGY 

2 ‘‘SEC. 2601. DEFINITIONS. 

3 ‘‘For purposes of this title: 

4 ‘‘(1) The term ‘Director’ means the Director of 

5 the Office of Indian Energy Policy and Programs, 

6 Department of Energy. 

7 ‘‘(2) The term ‘Indian land’ means—

8 ‘‘(A) any land located within the bound9 aries of an Indian reservation, pueblo, or 

10 rancheria; 

11 ‘‘(B) any land not located within the 

12 boundaries of an Indian reservation, pueblo, or 

13 rancheria, the title to which is held—

14 ‘‘(i) in trust by the United States for 

15 the benefit of an Indian tribe or an indi16 vidual Indian; 

17 ‘‘(ii) by an Indian tribe or an indi18 vidual Indian, subject to restriction against 

19 alienation under laws of the United States; 

20 or 

21 ‘‘(iii) by a dependent Indian commu22 nity; and 

23 ‘‘(C) land that is owned by an Indian tribe 

24 and was conveyed by the United States to a 

25 Native Corporation pursuant to the Alaska Na-
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1 tive Claims Settlement Act (43 U.S.C. 1601 et 

2 seq.), or that was conveyed by the United 

3 States to a Native Corporation in exchange for 

4 such land. 

5 ‘‘(3) The term ‘Indian reservation’ includes—

6 ‘‘(A) an Indian reservation in existence in 

7 any State or States as of the date of enactment 

8 of this paragraph; 

9 ‘‘(B) a public domain Indian allotment; 

10 and 

11 ‘‘(C) a dependent Indian community lo12 cated within the borders of the United States, 

13 regardless of whether the community is lo14 cated—

15 ‘‘(i) on original or acquired territory 

16 of the community; or 

17 ‘‘(ii) within or outside the boundaries 

18 of any particular State. 

19 ‘‘(4) The term ‘Indian tribe’ has the meaning 

20 given the term in section 4 of the Indian Self-Deter21 mination and Education Assistance Act (25 U.S.C. 

22 450b), except that the term ‘Indian tribe’, for the 

23 purpose of paragraph (11) and sections 2603(b)(3) 

24 and 2604, shall not include any Native Corporation. 
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1 ‘‘(5) The term ‘integration of energy resources’ 

2 means any project or activity that promotes the loca3 tion and operation of a facility (including any pipe4 line, gathering system, transportation system or fa5 cility, or electric transmission or distribution facility) 

6 on or near Indian land to process, refine, generate 

7 electricity from, or otherwise develop energy re8 sources on, Indian land. 

9 ‘‘(6) The term ‘Native Corporation’ has the 

10 meaning given the term in section 3 of the Alaska 

11 Native Claims Settlement Act (43 U.S.C. 1602). 

12 ‘‘(7) The term ‘organization’ means a partner13 ship, joint venture, limited liability company, or 

14 other unincorporated association or entity that is es15 tablished to develop Indian energy resources. 

16 ‘‘(8) The term ‘Program’ means the Indian en17 ergy resource development program established 

18 under section 2602(a). 

19 ‘‘(9) The term ‘Secretary’ means the Secretary 

20 of the Interior. 

21 ‘‘(10) The term ‘tribal energy resource develop22 ment organization’ means an organization of 2 or 

23 more entities, at least 1 of which is an Indian tribe, 

24 that has the written consent of the governing bodies 

25 of all Indian tribes participating in the organization 
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1 to apply for a grant, loan, or other assistance au2 thorized by section 2602. 

3 ‘‘(11) The term ‘tribal land’ means any land or 

4 interests in land owned by any Indian tribe, title to 

5 which is held in trust by the United States or which 

6 is subject to a restriction against alienation under 

7 laws of the United States. 

8 ‘‘SEC. 2602. INDIAN TRIBAL ENERGY RESOURCE DEVELOP9 MENT. 

10 ‘‘(a) DEPARTMENT OF THE INTERIOR PROGRAM.—

11 ‘‘(1) To assist Indian tribes in the development 

12 of energy resources and further the goal of Indian 

13 self-determination, the Secretary shall establish and 

14 implement an Indian energy resource development 

15 program to assist consenting Indian tribes and tribal 

16 energy resource development organizations in achiev17 ing the purposes of this title. 

18 ‘‘(2) In carrying out the Program, the Sec19 retary shall—

20 ‘‘(A) provide development grants to Indian 

21 tribes and tribal energy resource development 

22 organizations for use in developing or obtaining 

23 the managerial and technical capacity needed to 

24 develop energy resources on Indian land, and to 
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1 properly account for resulting energy produc2 tion and revenues; 

3 ‘‘(B) provide grants to Indian tribes and 

4 tribal energy resource development organiza5 tions for use in carrying out projects to pro6 mote the integration of energy resources, and to 

7 process, use, or develop those energy resources, 

8 on Indian land; and 

9 ‘‘(C) provide low-interest loans to Indian 

10 tribes and tribal energy resource development 

11 organizations for use in the promotion of en12 ergy resource development on Indian land and 

13 integration of energy resources. 

14 ‘‘(3) There are authorized to be appropriated to 

15 carry out this subsection such sums as are necessary 

16 for each of fiscal years 2004 through 2014. 

17 ‘‘(b) DEPARTMENT OF ENERGY INDIAN ENERGY

18 EDUCATION PLANNING AND MANAGEMENT ASSISTANCE

19 PROGRAM.—

20 ‘‘(1) The Director shall establish programs to 

21 assist consenting Indian tribes in meeting energy 

22 education, research and development, planning, and 

23 management needs.

24 ‘‘(2) In carrying out this subsection, the Direc25 tor may provide grants, on a competitive basis, to an 
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1 Indian tribe or tribal energy resource development 

2 organization for use in carrying out—

3 ‘‘(A) energy, energy efficiency, and energy 

4 conservation programs; 

5 ‘‘(B) studies and other activities sup6 porting tribal acquisitions of energy supplies, 

7 services, and facilities; 

8 ‘‘(C) planning, construction, development, 

9 operation, maintenance, and improvement of 

10 tribal electrical generation, transmission, and 

11 distribution facilities located on Indian land; 

12 and 

13 ‘‘(D) development, construction, and inter14 connection of electric power transmission facili15 ties located on Indian land with other electric 

16 transmission facilities. 

17 ‘‘(3)(A) The Director may develop, in consulta18 tion with Indian tribes, a formula for providing 

19 grants under this subsection. 

20 ‘‘(B) In providing a grant under this sub21 section, the Director shall give priority to an applica22 tion received from an Indian tribe with inadequate 

23 electric service (as determined by the Director). 

24 ‘‘(4) The Secretary of Energy may issue such 

25 regulations as necessary to carry out this subsection. 
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1 ‘‘(5) There are authorized to be appropriated to 

2 carry out this subsection $20,000,000 for each of 

3 fiscal years 2004 through 2014. 

4 ‘‘(c) DEPARTMENT OF ENERGY LOAN GUARANTEE

5 PROGRAM.—

6 ‘‘(1) Subject to paragraph (3), the Secretary of 

7 Energy may provide loan guarantees (as defined in 

8 section 502 of the Federal Credit Reform Act of 

9 1990 (2 U.S.C. 661a)) for not more than 90 percent 

10 of the unpaid principal and interest due on any loan 

11 made to any Indian tribe for energy development. 

12 ‘‘(2) A loan guarantee under this subsection 

13 shall be made by—

14 ‘‘(A) a financial institution subject to ex15 amination by the Secretary of Energy; or 

16 ‘‘(B) an Indian tribe, from funds of the In17 dian tribe. 

18 ‘‘(3) The aggregate outstanding amount guar19 anteed by the Secretary of Energy at any time under 

20 this subsection shall not exceed $2,000,000,000. 

21 ‘‘(4) The Secretary of Energy may issue such 

22 regulations as the Secretary of Energy determines 

23 are necessary to carry out this subsection. 
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1 ‘‘(5) There are authorized to be appropriated 

2 such sums as are necessary to carry out this sub3 section, to remain available until expended. 

4 ‘‘(6) Not later than 1 year from the date of en5 actment of this section, the Secretary of Energy 

6 shall report to Congress on the financing require7 ments of Indian tribes for energy development on In8 dian land. 

9 ‘‘(d) FEDERAL AGENCIES—INDIAN ENERGY PREF10 ERENCE.—

11 ‘‘(1) In purchasing electricity or any other en12 ergy product or byproduct, a Federal agency or de13 partment may give preference to an energy and re14 source production enterprise, partnership, consor15 tium, corporation, or other type of business organi16 zation the majority of the interest in which is owned 

17 and controlled by 1 or more Indian tribes. 

18 ‘‘(2) In carrying out this subsection, a Federal 

19 agency or department shall not—

20 ‘‘(A) pay more than the prevailing market 

21 price for an energy product or byproduct; or 

22 ‘‘(B) obtain less than prevailing market 

23 terms and conditions. 
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1 ‘‘SEC. 2603. INDIAN TRIBAL ENERGY RESOURCE REGULA2 TION. 

3 ‘‘(a) GRANTS.—The Secretary may provide to Indian 

4 tribes, on an annual basis, grants for use in accordance 

5 with subsection (b). 

6 ‘‘(b) USE OF FUNDS.—Funds from a grant provided 

7 under this section may be used—

8 ‘‘(1) by an Indian tribe for the development of 

9 a tribal energy resource inventory or tribal energy 

10 resource on Indian land; 

11 ‘‘(2) by an Indian tribe for the development of 

12 a feasibility study or other report necessary to the 

13 development of energy resources on Indian land; 

14 ‘‘(3) by an Indian tribe (other than an Indian 

15 Tribe in Alaska except the Metlakatla Indian Com16 munity) for the development and enforcement of 

17 tribal laws (including regulations) relating to tribal 

18 energy resource development and the development of 

19 technical infrastructure to protect the environment 

20 under applicable law; or 

21 ‘‘(4) by a Native Corporation for the develop22 ment and implementation of corporate policies and 

23 the development of technical infrastructure to pro24 tect the environment under applicable law; and 

25 ‘‘(5) by an Indian tribe for the training of em26 ployees that—
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1 ‘‘(A) are engaged in the development of en2 ergy resources on Indian land; or 

3 ‘‘(B) are responsible for protecting the en4 vironment. 

5 ‘‘(c) OTHER ASSISTANCE.—In carrying out the obli6 gations of the United States under this title, the Secretary 

7 shall ensure, to the maximum extent practicable and to 

8 the extent of available resources, that upon the request 

9 of an Indian tribe, the Indian tribe shall have available 

10 scientific and technical information and expertise, for use 

11 in the Indian tribe’s regulation, development, and manage12 ment of energy resources on Indian land. The Secretary 

13 may fulfill this responsibility either directly, through the 

14 use of Federal officials, or indirectly, by providing finan15 cial assistance to the Indian tribe to secure independent 

16 assistance. 

17 ‘‘SEC. 2604. LEASES, BUSINESS AGREEMENTS, AND RIGHTS18 OF-WAY INVOLVING ENERGY DEVELOPMENT 

19 OR TRANSMISSION. 

20 ‘‘(a) LEASES AND BUSINESS AGREEMENTS.—Subject 

21 to the provisions of this section—

22 ‘‘(1) an Indian tribe may, at its discretion, 

23 enter into a lease or business agreement for the pur24 pose of energy resource development on tribal land, 

25 including a lease or business agreement for—
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1 ‘‘(A) exploration for, extraction of, proc2 essing of, or other development of the Indian 

3 tribe’s energy mineral resources located on trib4 al land; and 

5 ‘‘(B) construction or operation of an elec6 tric generation, transmission, or distribution fa7 cility located on tribal land or a facility to proc8 ess or refine energy resources developed on trib9 al land; and 

10 ‘‘(2) such lease or business agreement described 

11 in paragraph (1) shall not require the approval of 

12 the Secretary under section 2103 of the Revised 

13 Statutes (25 U.S.C. 81) or any other provision of 

14 law, if—

15 ‘‘(A) the lease or business agreement is ex16 ecuted pursuant to a tribal energy resource 

17 agreement approved by the Secretary under 

18 subsection (e); 

19 ‘‘(B) the term of the lease or business 

20 agreement does not exceed—

21 ‘‘(i) 30 years; or 

22 ‘‘(ii) in the case of a lease for the pro23 duction of oil resources, gas resources, or 

24 both, 10 years and as long thereafter as oil
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1 or gas is produced in paying quantities; 

2 and 

3 ‘‘(C) the Indian tribe has entered into a 

4 tribal energy resource agreement with the Sec5 retary, as described in subsection (e), relating 

6 to the development of energy resources on tribal 

7 land (including the periodic review and evalua8 tion of the activities of the Indian tribe under 

9 the agreement, to be conducted pursuant to the 

10 provisions required by subsection (e)(2)(D)(i)). 

11 ‘‘(b) RIGHTS-OF-WAY FOR PIPELINES OR ELECTRIC

12 TRANSMISSION OR DISTRIBUTION LINES.—An Indian 

13 tribe may grant a right-of-way over tribal land for a pipe14 line or an electric transmission or distribution line without 

15 approval by the Secretary if—

16 ‘‘(1) the right-of-way is executed in accordance 

17 with a tribal energy resource agreement approved by 

18 the Secretary under subsection (e); 

19 ‘‘(2) the term of the right-of-way does not ex20 ceed 30 years; 

21 ‘‘(3) the pipeline or electric transmission or dis22 tribution line serves—

23 ‘‘(A) an electric generation, transmission, 

24 or distribution facility located on tribal land; or 
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1 ‘‘(B) a facility located on tribal land that 

2 processes or refines energy resources developed 

3 on tribal land; and 

4 ‘‘(4) the Indian tribe has entered into a tribal 

5 energy resource agreement with the Secretary, as de6 scribed in subsection (e), relating to the development 

7 of energy resources on tribal land (including the 

8 periodic review and evaluation of the Indian tribe’s 

9 activities under such agreement described in sub10 paragraphs (D) and (E) of subsection (e)(2)). 

11 ‘‘(c) RENEWALS.—A lease or business agreement en12 tered into or a right-of-way granted by an Indian tribe 

13 under this section may be renewed at the discretion of the 

14 Indian tribe in accordance with this section. 

15 ‘‘(d) VALIDITY.—No lease, business agreement, or 

16 right-of-way relating to the development of tribal energy 

17 resources pursuant to the provisions of this section shall 

18 be valid unless the lease, business agreement, or right-of19 way is authorized by the provisions of a tribal energy re20 source agreement approved by the Secretary under sub21 section (e)(2). 

22 ‘‘(e) TRIBAL ENERGY RESOURCE AGREEMENTS.—

23 ‘‘(1) On issuance of regulations under para24 graph (8), an Indian tribe may submit to the Sec25 retary for approval a tribal energy resource agree-
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1 ment governing leases, business agreements, and 

2 rights-of-way under this section. 

3 ‘‘(2)(A) Not later than 180 days after the date 

4 on which the Secretary receives a tribal energy re5 source agreement submitted by an Indian tribe 

6 under paragraph (1), or not later than 60 days after 

7 the Secretary receives a revised tribal energy re8 source agreement submitted by an Indian tribe 

9 under paragraph (4)(C), (or such later date as may 

10 be agreed to by the Secretary and the Indian tribe), 

11 the Secretary shall approve or disapprove the tribal 

12 energy resource agreement. 

13 ‘‘(B) The Secretary shall approve a tribal en14 ergy resource agreement submitted under paragraph 

15 (1) if—

16 ‘‘(i) the Secretary determines that the In17 dian tribe has demonstrated that the Indian 

18 tribe has sufficient capacity to regulate the de19 velopment of energy resources of the Indian 

20 tribe; 

21 ‘‘(ii) the tribal energy resource agreement 

22 includes provisions required under subpara23 graph (D); and 

24 ‘‘(iii) the tribal energy resource agreement 

25 includes provisions that, with respect to a lease, 
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1 business agreement, or right-of-way under this 

2 section—

3 ‘‘(I) ensure the acquisition of nec4 essary information from the applicant for 

5 the lease, business agreement, or right-of6 way; 

7 ‘‘(II) address the term of the lease or 

8 business agreement or the term of convey9 ance of the right-of-way; 

10 ‘‘(III) address amendments and re11 newals; 

12 ‘‘(IV) address the economic return to 

13 the Indian tribe under leases, business 

14 agreements, and rights-of-way; 

15 ‘‘(V) address technical or other rel16 evant requirements; 

17 ‘‘(VI) establish requirements for envi18 ronmental review in accordance with sub19 paragraph (C); 

20 ‘‘(VII) ensure compliance with all ap21 plicable environmental laws; 

22 ‘‘(VIII) identify final approval author23 ity; 

24 ‘‘(IX) provide for public notification of 

25 final approvals; 
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1 ‘‘(X) establish a process for consulta2 tion with any affected States concerning 

3 off-reservation impacts, if any, identified 

4 pursuant to the provisions required under 

5 subparagraph (C)(i); 

6 ‘‘(XI) describe the remedies for 

7 breach of the lease, business agreement, or 

8 right-of-way; 

9 ‘‘(XII) require each lease, business 

10 agreement, and right-of-way to include a 

11 statement that, in the event that any of its 

12 provisions violates an express term or re13 quirement set forth in the tribal energy re14 source agreement pursuant to which it was 

15 executed—

16 ‘‘(aa) such provision shall be null 

17 and void; and 

18 ‘‘(bb) if the Secretary determines 

19 such provision to be material, the Sec20 retary shall have the authority to sus21 pend or rescind the lease, business 

22 agreement, or right-of-way or take 

23 other appropriate action that the Sec24 retary determines to be in the best in25 terest of the Indian tribe; 
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1 ‘‘(XIII) require each lease, business 

2 agreement, and right-of-way to provide 

3 that it will become effective on the date on 

4 which a copy of the executed lease, busi5 ness agreement, or right-of-way is deliv6 ered to the Secretary in accordance with 

7 regulations adopted pursuant to this sub8 section; and 

9 ‘‘(XIV) include citations to tribal 

10 laws, regulations, or procedures, if any, 

11 that set out tribal remedies that must be 

12 exhausted before a petition may be sub13 mitted to the Secretary pursuant to para14 graph (7)(B). 

15 ‘‘(C) Tribal energy resource agreements sub16 mitted under paragraph (1) shall establish, and in17 clude provisions to ensure compliance with, an envi18 ronmental review process that, with respect to a 

19 lease, business agreement, or right-of-way under this 

20 section, provides for—

21 ‘‘(i) the identification and evaluation of all 

22 significant environmental impacts (as compared 

23 with a no-action alternative), including effects 

24 on cultural resources;
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1 ‘‘(ii) the identification of proposed mitiga2 tion; 

3 ‘‘(iii) a process for ensuring that the public 

4 is informed of and has an opportunity to com5 ment on the environmental impacts of the pro6 posed action before tribal approval of the lease, 

7 business agreement, or right-of-way; and 

8 ‘‘(iv) sufficient administrative support and 

9 technical capability to carry out the environ10 mental review process. 

11 ‘‘(D) A tribal energy resource agreement nego12 tiated between the Secretary and an Indian tribe in 

13 accordance with this subsection shall include—

14 ‘‘(i) provisions requiring the Secretary to 

15 conduct a periodic review and evaluation to 

16 monitor the performance of the Indian tribe’s 

17 activities associated with the development of en18 ergy resources under the tribal energy resource 

19 agreement; and 

20 ‘‘(ii) when such review and evaluation re21 sult in a finding by the Secretary of imminent 

22 jeopardy to a physical trust asset arising from 

23 a violation of the tribal energy resource agree24 ment or applicable Federal laws, provisions au25 thorizing the Secretary to take appropriate ac-
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1 tions determined by the Secretary to be nec2 essary to protect such asset, which actions may 

3 include reassumption of responsibility for activi4 ties associated with the development of energy 

5 resources on tribal land until the violation and 

6 conditions that gave rise to such jeopardy have 

7 been corrected. 

8 ‘‘(E) The periodic review and evaluation de9 scribed in subparagraph (D) shall be conducted on 

10 an annual basis, except that, after the third such an11 nual review and evaluation, the Secretary and the 

12 Indian tribe may mutually agree to amend the tribal 

13 energy resource agreement to authorize the review 

14 and evaluation required by subparagraph (D) to be 

15 conducted once every 2 years. 

16 ‘‘(3) The Secretary shall provide notice and op17 portunity for public comment on tribal energy re18 source agreements submitted for approval under 

19 paragraph (1). The Secretary’s review of a tribal en20 ergy resource agreement under the National Envi21 ronmental Policy Act of 1969 (42 U.S.C. 4321 et 

22 seq.) shall be limited to the direct effects of that ap23 proval. 

24 ‘‘(4) If the Secretary disapproves a tribal en25 ergy resource agreement submitted by an Indian 
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1 tribe under paragraph (1), the Secretary shall, not 

2 later than 10 days after the date of disapproval—

3 ‘‘(A) notify the Indian tribe in writing of 

4 the basis for the disapproval; 

5 ‘‘(B) identify what changes or other ac6 tions are required to address the concerns of 

7 the Secretary; and 

8 ‘‘(C) provide the Indian tribe with an op9 portunity to revise and resubmit the tribal en10 ergy resource agreement. 

11 ‘‘(5) If an Indian tribe executes a lease or busi12 ness agreement or grants a right-of-way in accord13 ance with a tribal energy resource agreement ap14 proved under this subsection, the Indian tribe shall, 

15 in accordance with the process and requirements set 

16 forth in the Secretary’s regulations adopted pursu17 ant to paragraph (8), provide to the Secretary—

18 ‘‘(A) a copy of the lease, business agree19 ment, or right-of-way document (including all 

20 amendments to and renewals of the document); 

21 and 

22 ‘‘(B) in the case of a tribal energy resource 

23 agreement or a lease, business agreement, or 

24 right-of-way that permits payments to be made 

25 directly to the Indian tribe, information and 
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1 documentation of those payments sufficient to 

2 enable the Secretary to discharge the trust re3 sponsibility of the United States to enforce the 

4 terms of, and protect the Indian tribe’s rights 

5 under, the lease, business agreement, or right6 of-way. 

7 ‘‘(6)(A) For purposes of the activities to be un8 dertaken by the Secretary pursuant to this section, 

9 the Secretary shall—

10 ‘‘(i) carry out such activities in a manner 

11 consistent with the trust responsibility of the 

12 United States relating to mineral and other 

13 trust resources; and 

14 ‘‘(ii) act in good faith and in the best in15 terests of the Indian tribes. 

16 ‘‘(B) Subject to the provisions of subsections 

17 (a)(2), (b), and (c) waiving the requirement of Sec18 retarial approval of leases, business agreements, and 

19 rights-of-way executed pursuant to tribal energy re20 source agreements approved under this section, and 

21 the provisions of subparagraph (D), nothing in this 

22 section shall absolve the United States from any re23 sponsibility to Indians or Indian tribes, including, 

24 but not limited to, those which derive from the trust 

25 relationship or from any treaties, statutes, and other 
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1 laws of the United States, Executive Orders, or 

2 agreements between the United States and any In3 dian tribe. 

4 ‘‘(C) The Secretary shall continue to have a 

5 trust obligation to ensure that the rights and inter6 ests of an Indian tribe are protected in the event 

7 that—

8 ‘‘(i) any other party to any such lease, 

9 business agreement, or right-of-way violates any 

10 applicable provision of Federal law or the terms 

11 of any lease, business agreement, or right-of12 way under this section; or 

13 ‘‘(ii) any provision in such lease, business 

14 agreement, or right-of-way violates any express 

15 provision or requirement set forth in the tribal 

16 energy resource agreement pursuant to which 

17 the lease, business agreement, or right-of-way 

18 was executed. 

19 ‘‘(D) Notwithstanding subparagraph (B), the 

20 United States shall not be liable to any party (in21 cluding any Indian tribe) for any of the negotiated 

22 terms of, or any losses resulting from the negotiated 

23 terms of, a lease, business agreement, or right-of24 way executed pursuant to and in accordance with a 

25 tribal energy resource agreement approved by the 
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1 Secretary under paragraph (2). For the purpose of 

2 this subparagraph, the term ‘negotiated terms’ 

3 means any terms or provisions that are negotiated 

4 by an Indian tribe and any other party or parties to 

5 a lease, business agreement, or right-of-way entered 

6 into pursuant to an approved tribal energy resource 

7 agreement. 

8 ‘‘(7)(A) In this paragraph, the term ‘interested 

9 party’ means any person or entity the interests of 

10 which have sustained or will sustain a significant ad11 verse environmental impact as a result of the failure 

12 of an Indian tribe to comply with a tribal energy re13 source agreement of the Indian tribe approved by 

14 the Secretary under paragraph (2). 

15 ‘‘(B) After exhaustion of tribal remedies, and in 

16 accordance with the process and requirements set 

17 forth in regulations adopted by the Secretary pursu18 ant to paragraph (8), an interested party may sub19 mit to the Secretary a petition to review compliance 

20 of an Indian tribe with a tribal energy resource 

21 agreement of the Indian tribe approved by the Sec22 retary under paragraph (2). 

23 ‘‘(C)(i) Not later than 120 days after the date 

24 on which the Secretary receives a petition under sub25 paragraph (B), the Secretary shall determine wheth-
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1 er the Indian tribe is not in compliance with the 

2 tribal energy resource agreement, as alleged in the 

3 petition. 

4 ‘‘(ii) The Secretary may adopt procedures 

5 under paragraph (8) authorizing an extension of 

6 time, not to exceed 120 days, for making the deter7 mination under clause (i) in any case in which the 

8 Secretary determines that additional time is nec9 essary to evaluate the allegations of the petition. 

10 ‘‘(iii) Subject to subparagraph (D), if the Sec11 retary determines that the Indian tribe is not in 

12 compliance with the tribal energy resource agree13 ment as alleged in the petition, the Secretary shall 

14 take such action as is necessary to ensure compli15 ance with the provisions of the tribal energy resource 

16 agreement, which action may include—

17 ‘‘(I) temporarily suspending some or all ac18 tivities under a lease, business agreement, or 

19 right-of-way under this section until the Indian 

20 tribe or such activities are in compliance with 

21 the provisions of the approved tribal energy re22 source agreement; or 

23 ‘‘(II) rescinding approval of all or part of 

24 the tribal energy resource agreement, and if all 

25 of such agreement is rescinded, reassuming the 
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1 responsibility for approval of any future leases, 

2 business agreements, or rights-of-way described 

3 in subsections (a) and (b). 

4 ‘‘(D) Prior to seeking to ensure compliance with 

5 the provisions of the tribal energy resource agree6 ment of an Indian tribe under subparagraph (C)(iii), 

7 the Secretary shall—

8 ‘‘(i) make a written determination that de9 scribes the manner in which the tribal energy 

10 resource agreement has been violated; 

11 ‘‘(ii) provide the Indian tribe with a writ12 ten notice of the violations together with the 

13 written determination; and 

14 ‘‘(iii) before taking any action described in 

15 subparagraph (C)(iii) or seeking any other rem16 edy, provide the Indian tribe with a hearing and 

17 a reasonable opportunity to attain compliance 

18 with the tribal energy resource agreement. 

19 ‘‘(E) An Indian tribe described in subparagraph 

20 (D) shall retain all rights to appeal as provided in 

21 regulations issued by the Secretary. 

22 ‘‘(8) Not later than 1 year after the date of en23 actment of the Indian Tribal Energy Development 

24 and Self-Determination Act of 2003, the Secretary 
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1 shall issue regulations that implement the provisions 

2 of this subsection, including—

3 ‘‘(A) criteria to be used in determining the 

4 capacity of an Indian tribe described in para5 graph (2)(B)(i), including the experience of the 

6 Indian tribe in managing natural resources and 

7 financial and administrative resources available 

8 for use by the Indian tribe in implementing the 

9 approved tribal energy resource agreement of 

10 the Indian tribe; 

11 ‘‘(B) a process and requirements in accord12 ance with which an Indian tribe may—

13 ‘‘(i) voluntarily rescind a tribal energy 

14 resource agreement approved by the Sec15 retary under this subsection; and 

16 ‘‘(ii) return to the Secretary the re17 sponsibility to approve any future leases, 

18 business agreements, and rights-of-way de19 scribed in this subsection; 

20 ‘‘(C) provisions setting forth the scope of, 

21 and procedures for, the periodic review and 

22 evaluation described in subparagraphs (D) and 

23 (E) of paragraph (2), including provisions for 

24 review of transactions, reports, site inspections, 
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1 and any other review activities the Secretary 

2 determines to be appropriate; and 

3 ‘‘(D) provisions defining final agency ac4 tions after exhaustion of administrative appeals 

5 from determinations of the Secretary under 

6 paragraph (7). 

7 ‘‘(f) NO EFFECT ON OTHER LAW.—Nothing in this 

8 section affects the application of—

9 ‘‘(1) any Federal environment law; 

10 ‘‘(2) the Surface Mining Control and Reclama11 tion Act of 1977 (30 U.S.C. 1201 et seq.); or 

12 ‘‘(3) except as otherwise provided in this title, 

13 the Indian Mineral Development Act of 1982 (25 

14 U.S.C. 2101 et seq.) and the National Environ15 mental Policy Act of 1969 (42 U.S.C. 4321 et seq.). 

16 ‘‘(g) AUTHORIZATION OF APPROPRIATIONS.—There 

17 are authorized to be appropriated to the Secretary such 

18 sums as are necessary for each of fiscal years 2004 

19 through 2014 to implement the provisions of this section 

20 and to make grants or provide other appropriate assist21 ance to Indian tribes to assist the Indian tribes in devel22 oping and implementing tribal energy resource agreements 

23 in accordance with the provisions of this section. 
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1 ‘‘SEC. 2605. INDIAN MINERAL DEVELOPMENT REVIEW. 

2 ‘‘(a) IN GENERAL.—The Secretary shall conduct a 

3 review of all activities being conducted under the Indian 

4 Mineral Development Act of 1982 (25 U.S.C. 2101 et 

5 seq.) as of that date. 

6 ‘‘(b) REPORT.—Not later than 1 year after the date 

7 of enactment of the Indian Tribal Energy Development 

8 and Self-Determination Act of 2003, the Secretary shall 

9 submit to Congress a report that includes—

10 ‘‘(1) the results of the review; 

11 ‘‘(2) recommendations to ensure that Indian 

12 tribes have the opportunity to develop Indian energy 

13 resources; and 

14 ‘‘(3) an analysis of the barriers to the develop15 ment of energy resources on Indian land (including 

16 legal, fiscal, market, and other barriers), along with 

17 recommendations for the removal of those barriers. 

18 ‘‘SEC. 2606. FEDERAL POWER MARKETING ADMINISTRA19 TIONS. 

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

21 ‘‘(1) The term ‘‘Administrator’’ means the Ad22 ministrator of the Bonneville Power Administration 

23 and the Administrator of the Western Area Power 

24 Administration. 

25 ‘‘(2) The term ‘‘power marketing administra26 tion’’ means—
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1 ‘‘(A) the Bonneville Power Administration; 

2 ‘‘(B) the Western Area Power Administra3 tion; and 

4 ‘‘(C) any other power administration the 

5 power allocation of which is used by or for the 

6 benefit of an Indian tribe located in the service 

7 area of the administration. 

8 ‘‘(b) ENCOURAGEMENT OF INDIAN TRIBAL ENERGY

9 DEVELOPMENT.—Each Administrator shall encourage In10 dian tribal energy development by taking such actions as 

11 are appropriate, including administration of programs of 

12 the Bonneville Power Administration and the Western 

13 Area Power Administration, in accordance with this sec14 tion. 

15 ‘‘(c) ACTION BY THE ADMINISTRATOR.—In carrying 

16 out this section, and in accordance with existing law—

17 ‘‘(1) each Administrator shall consider the 

18 unique relationship that exists between the United 

19 States and Indian tribes; 

20 ‘‘(2) power allocations from the Western Area 

21 Power Administration to Indian tribes may be used 

22 to meet firming and reserve needs of Indian-owned 

23 energy projects on Indian land; 

24 ‘‘(3) the Administrator of the Western Area 

25 Power Administration may purchase non-federally
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1 generated power from Indian tribes to meet the 

2 firming and reserve requirements of the Western 

3 Area Power Administration; and 

4 ‘‘(4) each Administrator shall not pay more 

5 than the prevailing market price for an energy prod6 uct nor obtain less than prevailing market terms and 

7 conditions. 

8 ‘‘(d) ASSISTANCE FOR TRANSMISSION SYSTEM

9 USE.—(1) An Administrator may provide technical assist10 ance to Indian tribes seeking to use the high-voltage trans11 mission system for delivery of electric power. 

12 ‘‘(2) The costs of technical assistance provided under 

13 paragraph (1) shall be funded by the Secretary of Energy 

14 using nonreimbursable funds appropriated for that pur15 pose, or by the applicable Indian tribes. 

16 ‘‘(e) POWER ALLOCATION STUDY.—Not later than 2 

17 years after the date of enactment of the Indian Tribal En18 ergy Development and Self-Determination Act of 2003, 

19 the Secretary of Energy shall submit to Congress a report 

20 that—

21 ‘‘(1) describes the use by Indian tribes of Fed22 eral power allocations of the Western Area Power 

23 Administration (or power sold by the Southwestern 

24 Power Administration) and the Bonneville Power 
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1 Administration to or for the benefit of Indian tribes 

2 in service areas of those administrations; and 

3 ‘‘(2) identifies—

4 ‘‘(A) the quantity of power allocated to, or 

5 used for the benefit of, Indian tribes by the 

6 Western Area Power Administration; 

7 ‘‘(B) the quantity of power sold to Indian 

8 tribes by other power marketing administra9 tions; and 

10 ‘‘(C) barriers that impede tribal access to 

11 and use of Federal power, including an assess12 ment of opportunities to remove those barriers 

13 and improve the ability of power marketing ad14 ministrations to deliver Federal power. 

15 ‘‘(f) AUTHORIZATION OF APPROPRIATIONS.—There 

16 are authorized to be appropriated to carry out this section 

17 $750,000, which shall remain available until expended and 

18 shall not be reimbursable. 

19 ‘‘SEC. 2607. WIND AND HYDROPOWER FEASIBILITY STUDY. 

20 ‘‘(a) STUDY.—The Secretary of Energy, in coordina21 tion with the Secretary of the Army and the Secretary, 

22 shall conduct a study of the cost and feasibility of devel23 oping a demonstration project that would use wind energy 

24 generated by Indian tribes and hydropower generated by 

25 the Army Corps of Engineers on the Missouri River to 
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1 supply firming power to the Western Area Power Adminis2 tration. 

3 ‘‘(b) SCOPE OF STUDY.—The study shall—

4 ‘‘(1) determine the feasibility of the blending of 

5 wind energy and hydropower generated from the 

6 Missouri River dams operated by the Army Corps of 

7 Engineers; 

8 ‘‘(2) review historical and projected require9 ments for firming power and the patterns of avail10 ability and use of firming power; 

11 ‘‘(3) assess the wind energy resource potential 

12 on tribal land and projected cost savings through a 

13 blend of wind and hydropower over a 30-year period; 

14 ‘‘(4) determine seasonal capacity needs and as15 sociated transmission upgrades for integration of 

16 tribal wind generation; and 

17 ‘‘(5) include an independent tribal engineer as 

18 a study team member. 

19 ‘‘(c) REPORT.—Not later than 1 year after the date 

20 of enactment of the Energy Policy Act of 2003, the Sec21 retary and Secretary of the Army shall submit to Congress 

22 a report that describes the results of the study, includ23 ing—

24 ‘‘(1) an analysis of the potential energy cost or 

25 benefits to the customers of the Western Area Power 
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1 Administration through the use of combined wind 

2 and hydropower; 

3 ‘‘(2) an evaluation of whether a combined wind 

4 and hydropower system can reduce reservoir fluctua5 tion, enhance efficient and reliable energy produc6 tion, and provide Missouri River management flexi7 bility; 

8 ‘‘(3) recommendations for a demonstration 

9 project that could be carried out by the Western 

10 Area Power Administration in partnership with an 

11 Indian tribal government or tribal energy resource 

12 development organization to demonstrate the feasi13 bility and potential of using wind energy produced 

14 on Indian land to supply firming energy to the 

15 Western Area Power Administration or any other 

16 Federal power marketing agency; and 

17 ‘‘(4) an identification of—

18 ‘‘(A) the economic and environmental costs 

19 or benefits to be realized through such a Fed20 eral-tribal partnership; and 

21 ‘‘(B) the manner in which such a partner22 ship could contribute to the energy security of 

23 the United States. 

24 ‘‘(d) FUNDING.—
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1 ‘‘(1) AUTHORIZATION OF APPROPRIATIONS.—

2 There are authorized to be appropriated to carry out 

3 this section $500,000, to remain available until ex4 pended. 

5 ‘‘(2) NONREIMBURSABILITY.—Costs incurred 

6 by the Secretary in carrying out this section shall be 

7 nonreimbursable.’’. 

8 (b) CONFORMING AMENDMENTS.—The table of con9 tents for the Energy Policy Act of 1992 is amended by 

10 striking the items relating to title XXVI and inserting the 

11 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.’’.

12 SEC. 504. FOUR CORNERS TRANSMISSION LINE PROJECT. 

13 The Dine Power Authority, an enterprise of the Nav14 ajo Nation, shall be eligible to receive grants and other 

15 assistance as authorized by section 217 of the Department 

16 of Energy Organization Act, as added by section 502 of 

17 this title, and section 2602 of the Energy Policy Act of 

18 1992, as amended by this title, for activities associated 

19 with the development of a transmission line from the Four 

20 Corners Area to southern Nevada, including related power 

21 generation opportunities. 
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1 SEC. 505. ENERGY EFFICIENCY IN FEDERALLY ASSISTED 

2 HOUSING. 

3 (a) IN GENERAL.—The Secretary of Housing and 

4 Urban Development shall promote energy conservation in 

5 housing that is located on Indian land and assisted with 

6 Federal resources through—

7 (1) the use of energy-efficient technologies and 

8 innovations (including the procurement of energy-ef9 ficient refrigerators and other appliances); 

10 (2) the promotion of shared savings contracts; 

11 and 

12 (3) the use and implementation of such other 

13 similar technologies and innovations as the Secretary 

14 of Housing and Urban Development considers to be 

15 appropriate. 

16 (b) AMENDMENT.—Section 202(2) of the Native 

17 American Housing and Self-Determination Act of 1996 

18 (25 U.S.C. 4132(2)) is amended by inserting ‘‘improve19 ment to achieve greater energy efficiency,’’ after ‘‘plan20 ning,’’. 

21 SEC. 506. CONSULTATION WITH INDIAN TRIBES. 

22 In carrying out this title and the amendments made 

23 by this title, the Secretary of Energy and the Secretary 

24 shall, as appropriate and to the maximum extent prac25 ticable, involve and consult with Indian tribes in a manner 

26 that is consistent with the Federal trust and the govern-
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1 ment-to-government relationships between Indian tribes 

2 and the United States.

3 TITLE VI—NUCLEAR MATTERS 

4 Subtitle A—Price-Anderson Act 

5 Amendments 

6 SEC. 601. SHORT TITLE. 

7 This subtitle may be cited as the ‘‘Price-Anderson 

8 Amendments Act of 2003’’. 

9 SEC. 602. EXTENSION OF INDEMNIFICATION AUTHORITY. 

10 (a) INDEMNIFICATION OF NUCLEAR REGULATORY

11 COMMISSION LICENSEES.—Section 170 c. of the Atomic 

12 Energy Act of 1954 (42 U.S.C. 2210(c)) is amended—

13 (1) in the subsection heading, by striking ‘‘LI14 CENSES’’ and inserting ‘‘LICENSEES’’; and 

15 (2) by striking ‘‘December 31, 2003’’ each 

16 place it appears and inserting ‘‘December 31, 

17 2023’’. 

18 (b) INDEMNIFICATION OF DEPARTMENT OF ENERGY

19 CONTRACTORS.—Section 170 d.(1)(A) of the Atomic En20 ergy Act of 1954 (42 U.S.C. 2210(d)(1)(A)) is amended 

21 by striking ‘‘December 31, 2004’’ and inserting ‘‘Decem22 ber 31, 2023’’. 

23 (c) INDEMNIFICATION OF NONPROFIT EDUCATIONAL

24 INSTITUTIONS.—Section 170 k. of the Atomic Energy Act 

25 of 1954 (42 U.S.C. 2210(k)) is amended by striking ‘‘Au-
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1 gust 1, 2002’’ each place it appears and inserting ‘‘Decem2 ber 31, 2023’’. 

3 SEC. 603. MAXIMUM ASSESSMENT. 

4 Section 170 of the Atomic Energy Act of 1954 (42 

5 U.S.C. 2210) is amended—

6 (1) in the second proviso of the third sentence 

7 of subsection b.(1)—

8 (A) by striking ‘‘$63,000,000’’ and insert9 ing ‘‘$95,800,000’’; and 

10 (B) by striking ‘‘$10,000,000 in any 1 

11 year’’ and inserting ‘‘$15,000,000 in any 1 year 

12 (subject to adjustment for inflation under sub13 section t.)’’; and 

14 (2) in subsection t.(1)—

15 (A) by inserting ‘‘total and annual’’ after 

16 ‘‘amount of the maximum’’; 

17 (B) by striking ‘‘the date of the enactment 

18 of the Price-Anderson Amendments Act of 

19 1988’’ and inserting ‘‘August 20, 2003’’; and 

20 (C) in subparagraph (A), by striking ‘‘such 

21 date of enactment’’ and inserting ‘‘August 20, 

22 2003’’. 

23 SEC. 604. DEPARTMENT OF ENERGY LIABILITY LIMIT. 

24 (a) INDEMNIFICATION OF DEPARTMENT OF ENERGY

25 CONTRACTORS.—Section 170 d. of the Atomic Energy Act 
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1 of 1954 (42 U.S.C. 2210(d)) is amended by striking para2 graph (2) and inserting the following: 

3 ‘‘(2) In an agreement of indemnification entered into 

4 under paragraph (1), the Secretary—

5 ‘‘(A) may require the contractor to provide and 

6 maintain financial protection of such a type and in 

7 such amounts as the Secretary shall determine to be 

8 appropriate to cover public liability arising out of or 

9 in connection with the contractual activity; and 

10 ‘‘(B) shall indemnify the persons indemnified 

11 against such liability above the amount of the finan12 cial protection required, in the amount of 

13 $10,000,000,000 (subject to adjustment for inflation 

14 under subsection t.), in the aggregate, for all per15 sons indemnified in connection with the contract and 

16 for each nuclear incident, including such legal costs 

17 of the contractor as are approved by the Secretary.’’. 

18 (b) CONTRACT AMENDMENTS.—Section 170 d. of the 

19 Atomic Energy Act of 1954 (42 U.S.C. 2210(d)) is further 

20 amended by striking paragraph (3) and inserting the fol21 lowing—

22 ‘‘(3) All agreements of indemnification under which 

23 the Department of Energy (or its predecessor agencies) 

24 may be required to indemnify any person under this sec25 tion shall be deemed to be amended, on the date of enact-
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1 ment of the Price-Anderson Amendments Act of 2003, to 

2 reflect the amount of indemnity for public liability and any 

3 applicable financial protection required of the contractor 

4 under this subsection.’’. 

5 (c) LIABILITY LIMIT.—Section 170 e.(1)(B) of the 

6 Atomic Energy Act of 1954 (42 U.S.C. 2210(e)(1)(B)) is 

7 amended—

8 (1) by striking ‘‘the maximum amount of finan9 cial protection required under subsection b. or’’; and 

10 (2) by striking ‘‘paragraph (3) of subsection d., 

11 whichever amount is more’’ and inserting ‘‘para12 graph (2) of subsection d.’’. 

13 SEC. 605. INCIDENTS OUTSIDE THE UNITED STATES. 

14 (a) AMOUNT OF INDEMNIFICATION.—Section 170 

15 d.(5) of the Atomic Energy Act of 1954 (42 U.S.C. 

16 2210(d)(5)) is amended by striking ‘‘$100,000,000’’ and 

17 inserting ‘‘$500,000,000’’. 

18 (b) LIABILITY LIMIT.—Section 170 e.(4) of the 

19 Atomic Energy Act of 1954 (42 U.S.C. 2210(e)(4)) is 

20 amended by striking ‘‘$100,000,000’’ and inserting 

21 ‘‘$500,000,000’’. 

22 SEC. 606. REPORTS. 

23 Section 170 p. of the Atomic Energy Act of 1954 (42 

24 U.S.C. 2210(p)) is amended by striking ‘‘August 1, 1998’’ 

25 and inserting ‘‘December 31, 2019’’. 
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1 SEC. 607. INFLATION ADJUSTMENT. 

2 Section 170 t. of the Atomic Energy Act of 1954 (42 

3 U.S.C. 2210(t)) is amended—

4 (1) by redesignating paragraph (2) as para5 graph (3); and 

6 (2) by inserting after paragraph (1) the fol7 lowing: 

8 ‘‘(2) The Secretary shall adjust the amount of indem9 nification provided under an agreement of indemnification 

10 under subsection d. not less than once during each 5-year 

11 period following July 1, 2003, in accordance with the ag12 gregate percentage change in the Consumer Price Index 

13 since—

14 ‘‘(A) that date, in the case of the first adjust15 ment under this paragraph; or 

16 ‘‘(B) the previous adjustment under this para17 graph.’’. 

18 SEC. 608. TREATMENT OF MODULAR REACTORS. 

19 Section 170 b. of the Atomic Energy Act of 1954 (42 

20 U.S.C. 2210(b)) is amended by adding at the end the fol21 lowing: 

22 ‘‘(5)(A) For purposes of this section only, the Com23 mission shall consider a combination of facilities described 

24 in subparagraph (B) to be a single facility having a rated 

25 capacity of 100,000 electrical kilowatts or more.
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1 ‘‘(B) A combination of facilities referred to in sub2 paragraph (A) is 2 or more facilities located at a single 

3 site, each of which has a rated capacity of 100,000 elec4 trical kilowatts or more but not more than 300,000 elec5 trical kilowatts, with a combined rated capacity of not 

6 more than 1,300,000 electrical kilowatts.’’. 

7 SEC. 609. APPLICABILITY. 

8 The amendments made by sections 603, 604, and 605 

9 do not apply to a nuclear incident that occurs before the 

10 date of the enactment of this Act.

11 SEC. 610. PROHIBITION ON ASSUMPTION BY UNITED 

12 STATES GOVERNMENT OF LIABILITY FOR 

13 CERTAIN FOREIGN INCIDENTS. 

14 Section 170 of the Atomic Energy Act of 1954 (42 

15 U.S.C. 2210) is amended by adding at the end the fol16 lowing new subsection: 

17 ‘‘u. PROHIBITION ON ASSUMPTION OF LIABILITY FOR

18 CERTAIN FOREIGN INCIDENTS.—Notwithstanding this 

19 section or any other provision of law, no officer of the 

20 United States or of any department, agency, or instrumen21 tality of the United States Government may enter into any 

22 contract or other arrangement, or into any amendment or 

23 modification of a contract or other arrangement, the pur24 pose or effect of which would be to directly or indirectly 

25 impose liability on the United States Government, or any 
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1 department, agency, or instrumentality of the United 

2 States Government, or to otherwise directly or indirectly 

3 require an indemnity by the United States Government, 

4 for nuclear incidents occurring in connection with the de5 sign, construction, or operation of a production facility or 

6 utilization facility in any country whose government has 

7 been identified by the Secretary of State as engaged in 

8 state sponsorship of terrorist activities (specifically includ9 ing any country the government of which, as of September 

10 11, 2001, had been determined by the Secretary of State 

11 under section 620A(a) of the Foreign Assistance Act of 

12 1961 (22 U.S.C. 2371(a)), section 6(j)(1) of the Export 

13 Administration Act of 1979 (50 U.S.C. App. 2405(j)(1)), 

14 or section 40(d) of the Arms Export Control Act (22 

15 U.S.C. 2780(d)) to have repeatedly provided support for 

16 acts of international terrorism). This subsection shall not 

17 apply to nuclear incidents occurring as a result of mis18 sions, carried out under the direction of the Secretary of 

19 Energy, the Secretary of Defense, or the Secretary of 

20 State, that are necessary to safely secure, store, transport, 

21 or remove nuclear materials for nuclear safety or non22 proliferation purposes.’’. 
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1 SEC. 611. CIVIL PENALTIES. 

2 (a) REPEAL OF AUTOMATIC REMISSION.—Section 

3 234A b.(2) of the Atomic Energy Act of 1954 (42 U.S.C. 

4 2282a(b)(2)) is amended by striking the last sentence. 

5 (b) LIMITATION FOR NOT-FOR-PROFIT INSTITU6 TIONS.—Subsection d. of section 234A of the Atomic En7 ergy Act of 1954 (42 U.S.C. 2282a(d)) is amended to read 

8 as follows: 

9 ‘‘d.(1) Notwithstanding subsection a., in the case of 

10 any not-for-profit contractor, subcontractor, or supplier, 

11 the total amount of civil penalties paid under subsection 

12 a. may not exceed the total amount of fees paid within 

13 any 1-year period (as determined by the Secretary) under 

14 the contract under which the violation occurs. 

15 ‘‘(2) For purposes of this section, the term ‘‘not-for16 profit’’ means that no part of the net earnings of the con17 tractor, subcontractor, or supplier inures to the benefit of 

18 any natural person or for-profit artificial person.’’. 

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

20 this section shall not apply to any violation of the Atomic 

21 Energy Act of 1954 (42 U.S.C. 2011 et seq.) occurring 

22 under a contract entered into before the date of enactment 

23 of this section. 
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1 Subtitle B—General Nuclear 

2 Matters 

3 SEC. 621. LICENSES. 

4 Section 103 c. of the Atomic Energy Act of 1954 (42 

5 U.S.C. 2133(c)) is amended by inserting ‘‘from the au6 thorization to commence operations’’ after ‘‘forty years’’. 

7 SEC. 622. NRC TRAINING PROGRAM. 

8 (a) IN GENERAL.—In order to maintain the human 

9 resource investment and infrastructure of the United 

10 States in the nuclear sciences, health physics, and engi11 neering fields, in accordance with the statutory authorities 

12 of the Nuclear Regulatory Commission relating to the ci13 vilian nuclear energy program, the Nuclear Regulatory 

14 Commission shall carry out a training and fellowship pro15 gram to address shortages of individuals with critical nu16 clear safety regulatory skills. 

17 (b) AUTHORIZATION OF APPROPRIATIONS.—

18 (1) IN GENERAL.—There are authorized to be 

19 appropriated to the Nuclear Regulatory Commission 

20 to carry out this section $1,000,000 for each of fis21 cal years 2004 through 2008. 

22 (2) AVAILABILITY.—Funds made available 

23 under paragraph (1) shall remain available until ex24 pended. 
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1 SEC. 623. COST RECOVERY FROM GOVERNMENT AGENCIES. 

2 Section 161 w. of the Atomic Energy Act of 1954 

3 (42 U.S.C. 2201(w)) is amended—

4 (1) by striking ‘‘for or is issued’’ and all that 

5 follows through ‘‘1702’’ and inserting ‘‘to the Com6 mission for, or is issued by the Commission, a li7 cense or certificate’’; 

8 (2) by striking ‘‘483a’’ and inserting ‘‘9701’’; 

9 and 

10 (3) by striking ‘‘, of applicants for, or holders 

11 of, such licenses or certificates’’. 

12 SEC. 624. ELIMINATION OF PENSION OFFSET. 

13 Section 161 of the Atomic Energy Act of 1954 (42 

14 U.S.C. 2201) is amended by adding at the end the fol15 lowing: 

16 ‘‘y. Exempt from the application of sections 8344 and 

17 8468 of title 5, United States Code, an annuitant who was 

18 formerly an employee of the Commission who is hired by 

19 the Commission as a consultant, if the Commission finds 

20 that the annuitant has a skill that is critical to the per21 formance of the duties of the Commission.’’. 

22 SEC. 625. ANTITRUST REVIEW. 

23 Section 105 c. of the Atomic Energy Act of 1954 (42 

24 U.S.C. 2135(c)) is amended by adding at the end the fol25 lowing: 
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1 ‘‘(9) APPLICABILITY.—This subsection does not 

2 apply to an application for a license to construct or oper3 ate a utilization facility or production facility under sec4 tion 103 or 104 b. that is filed on or after the date of 

5 enactment of this paragraph.’’. 

6 SEC. 626. DECOMMISSIONING. 

7 Section 161 i. of the Atomic Energy Act of 1954 (42 

8 U.S.C. 2201(i)) is amended—

9 (1) by striking ‘‘and (3)’’ and inserting ‘‘(3)’’; 

10 and 

11 (2) by inserting before the semicolon at the end 

12 the following: ‘‘, and (4) to ensure that sufficient 

13 funds will be available for the decommissioning of 

14 any production or utilization facility licensed under 

15 section 103 or 104 b., including standards and re16 strictions governing the control, maintenance, use, 

17 and disbursement by any former licensee under this 

18 Act that has control over any fund for the decom19 missioning of the facility’’. 

20 SEC. 627. LIMITATION ON LEGAL FEE REIMBURSEMENT. 

21 The Department of Energy shall not, except as re22 quired under a contract entered into before the date of 

23 enactment of this Act, reimburse any contractor or sub24 contractor of the Department for any legal fees or ex-
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1 penses incurred with respect to a complaint subsequent 

2 to—

3 (1) an adverse determination on the merits with 

4 respect to such complaint against the contractor or 

5 subcontractor by the Director of the Department of 

6 Energy’s Office of Hearings and Appeals pursuant 

7 to part 708 of title 10, Code of Federal Regulations, 

8 or by a Department of Labor Administrative Law 

9 Judge pursuant to section 211 of the Energy Reor10 ganization Act of 1974 (42 U.S.C. 5851); or 

11 (2) an adverse final judgment by any State or 

12 Federal court with respect to such complaint against 

13 the contractor or subcontractor for wrongful termi14 nation or retaliation due to the making of disclo15 sures protected under chapter 12 of title 5, United 

16 States Code, section 211 of the Energy Reorganiza17 tion Act of 1974 (42 U.S.C. 5851), or any com18 parable State law, 

19 unless the adverse determination or final judgment is re20 versed upon further administrative or judicial review. 

21 SEC. 628. DECOMMISSIONING PILOT PROGRAM. 

22 (a) PILOT PROGRAM.—The Secretary of Energy shall 

23 establish a decommissioning pilot program to decommis24 sion and decontaminate the sodium-cooled fast breeder ex25 perimental test-site reactor located in northwest Arkansas 
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1 in accordance with the decommissioning activities con2 tained in the August 31, 1998, Department of Energy re3 port on the reactor. 

4 (b) AUTHORIZATION OF APPROPRIATIONS.—There 

5 are authorized to be appropriated to the Secretary of En6 ergy to carry out this section $16,000,000. 

7 SEC. 629. REPORT ON FEASIBILITY OF DEVELOPING COM8 MERCIAL NUCLEAR ENERGY GENERATION 

9 FACILITIES AT EXISTING DEPARTMENT OF 

10 ENERGY SITES. 

11 Not later than 1 year after the date of the enactment 

12 of this Act, the Secretary of Energy shall submit to Con13 gress a report on the feasibility of developing commercial 

14 nuclear energy generation facilities at Department of En15 ergy sites in existence on the date of enactment of this 

16 Act. 

17 SEC. 630. URANIUM SALES. 

18 (a) SALES, TRANSFERS, AND SERVICES.—Section 

19 3112 of the USEC Privatization Act (42 U.S.C. 2297h–

20 10) is amended by striking subsections (d), (e), and (f) 

21 and inserting the following: 

22 ‘‘(d) INVENTORY SALES.—(1) In addition to the 

23 transfers and sales authorized under subsections (b) and 

24 (c) and under paragraph (5) of this subsection, the United 
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1 States Government may transfer or sell uranium in any 

2 form subject to paragraphs (2), (3), and (4). 

3 ‘‘(2) Except as provided in subsections (b) and (c) 

4 and paragraph (5) of this subsection, no sale or transfer 

5 of uranium shall be made under this subsection by the 

6 United States Government unless—

7 ‘‘(A) the President determines that the material 

8 is not necessary for national security needs and the 

9 sale or transfer has no adverse impact on implemen10 tation of existing government-to-government agree11 ments; 

12 ‘‘(B) the price paid to the appropriate Federal 

13 agency, if the transaction is a sale, will not be less 

14 than the fair market value of the material; and 

15 ‘‘(C) the sale or transfer to commercial nuclear 

16 power end users is made pursuant to a contract of 

17 at least 3 years’ duration. 

18 ‘‘(3) Except as provided in paragraph (5), the United 

19 States Government shall not make any transfer or sale 

20 of uranium in any form under this subsection that would 

21 cause the total amount of uranium transferred or sold pur22 suant to this subsection that is delivered for consumption 

23 by commercial nuclear power end users to exceed—

24 ‘‘(A) 3,000,000 pounds of U3O8 equivalent in 

25 fiscal year 2004, 2005, 2006, 2007, 2008, or 2009; 
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1 ‘‘(B) 5,000,000 pounds of U3O8 equivalent in 

2 fiscal year 2010 or 2011; 

3 ‘‘(C) 7,000,000 pounds of U3O8 equivalent in 

4 fiscal year 2012; and 

5 ‘‘(D) 10,000,000 pounds of U3O8 equivalent in 

6 fiscal year 2013 or any fiscal year thereafter. 

7 ‘‘(4) Except for sales or transfers under paragraph 

8 (5), for the purposes of this subsection, the recovery of 

9 uranium from uranium bearing materials transferred or 

10 sold by the United States Government to the domestic 

11 uranium industry shall be the preferred method of making 

12 uranium available. The recovered uranium shall be count13 ed against the annual maximum deliveries set forth in this 

14 section, when such uranium is sold to end users. 

15 ‘‘(5) The United States Government may make the 

16 following sales and transfers: 

17 ‘‘(A) Sales or transfers to a Federal agency if 

18 the material is transferred for the use of the receiv19 ing agency without any resale or transfer to another 

20 entity and the material does not meet commercial 

21 specifications. 

22 ‘‘(B) Sales or transfers to any person for na23 tional security purposes, as determined by the Sec24 retary. 
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1 ‘‘(C) Sales or transfers to any State or local 

2 agency or nonprofit, charitable, or educational insti3 tution for use other than the generation of electricity 

4 for commercial use. 

5 ‘‘(D) Sales or transfers to the Department of 

6 Energy research reactor sales program. 

7 ‘‘(E) Sales or transfers, at fair market value, 

8 for emergency purposes in the event of a disruption 

9 in supply to commercial nuclear power end users in 

10 the United States. 

11 ‘‘(F) Sales or transfers, at fair market value, 

12 for use in a commercial reactor in the United States 

13 with nonstandard fuel requirements. 

14 ‘‘(G) Sales or transfers provided for under law 

15 for use by the Tennessee Valley Authority in relation 

16 to the Department of Energy’s highly enriched ura17 nium or tritium programs. 

18 ‘‘(6) For purposes of this subsection, the term 

19 ‘‘United States Government’’ does not include the Ten20 nessee Valley Authority. 

21 ‘‘(e) SAVINGS PROVISION.—Nothing in this sub22 chapter modifies the terms of the Russian HEU Agree23 ment. 

24 ‘‘(f) SERVICES.—Notwithstanding any other provi25 sion of this section, if the Secretary determines that the 
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1 Corporation has failed, or may fail, to perform any obliga2 tion under the Agreement between the Department of En3 ergy and the Corporation dated June 17, 2002, and as 

4 amended thereafter, which failure could result in termi5 nation of the Agreement, the Secretary shall notify Con6 gress, in such a manner that affords Congress an oppor7 tunity to comment, prior to a determination by the Sec8 retary whether termination, waiver, or modification of the 

9 Agreement is required. The Secretary is authorized to take 

10 such action as he determines necessary under the Agree11 ment to terminate, waive, or modify provisions of the 

12 Agreement to achieve its purposes.’’. 

13 (b) REPORT.—Not later than 3 years after the date 

14 of enactment of this Act, the Secretary of Energy shall 

15 report to Congress on the implementation of this section. 

16 The report shall include a discussion of available excess 

17 uranium inventories; all sales or transfers made by the 

18 United States Government; the impact of such sales or 

19 transfers on the domestic uranium industry, the spot mar20 ket uranium price, and the national security interests of 

21 the United States; and any steps taken to remediate any 

22 adverse impacts of such sales or transfers.
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1 SEC. 631. COOPERATIVE RESEARCH AND DEVELOPMENT 

2 AND SPECIAL DEMONSTRATION PROJECTS 

3 FOR THE URANIUM MINING INDUSTRY. 

4 (a) AUTHORIZATION OF APPROPRIATIONS.—There 

5 are authorized to be appropriated to the Secretary of En6 ergy $10,000,000 for each of fiscal years 2004, 2005, and 

7 2006 for—

8 (1) cooperative, cost-shared agreements between 

9 the Department of Energy and domestic uranium 

10 producers to identify, test, and develop improved in 

11 situ leaching mining technologies, including low-cost 

12 environmental restoration technologies that may be 

13 applied to sites after completion of in situ leaching 

14 operations; and 

15 (2) funding for competitively selected dem16 onstration projects with domestic uranium producers 

17 relating to—

18 (A) enhanced production with minimal en19 vironmental impacts; 

20 (B) restoration of well fields; and 

21 (C) decommissioning and decontamination 

22 activities. 

23 (b) DOMESTIC URANIUM PRODUCER.—For purposes 

24 of this section, the term ‘‘domestic uranium producer’’ has 

25 the meaning given that term in section 1018(4) of the En26 ergy Policy Act of 1992 (42 U.S.C. 2296b–7(4)), except 
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1 that the term shall not include any producer that has not 

2 produced uranium from domestic reserves on or after July 

3 30, 1998. 

4 (c) LIMITATION.—No activities funded under this 

5 section may be carried out in the State of New Mexico. 

6 SEC. 632. WHISTLEBLOWER PROTECTION. 

7 (a) DEFINITION OF EMPLOYER.—Section 211(a)(2) 

8 of the Energy Reorganization Act of 1974 (42 U.S.C. 

9 5851(a)(2)) is amended—

10 (1) in subparagraph (C), by striking ‘‘and’’ at 

11 the end; 

12 (2) in subparagraph (D), by striking the period 

13 at the end and inserting ‘‘; and’’; and 

14 (3) by adding at the end the following: 

15 ‘‘(E) a contractor or subcontractor of the 

16 Commission.’’. 

17 (b) DE NOVO REVIEW.—Subsection (b) of such sec18 tion 211 is amended by adding at the end the following 

19 new paragraph: 

20 ‘‘(4) If the Secretary has not issued a final de21 cision within 540 days after the filing of a complaint 

22 under paragraph (1), and there is no showing that 

23 such delay is due to the bad faith of the person 

24 seeking relief under this paragraph, such person 

25 may bring an action at law or equity for de novo re-
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1 view in the appropriate district court of the United 

2 States, which shall have jurisdiction over such an ac3 tion without regard to the amount in controversy.’’.

4 SEC. 633. MEDICAL ISOTOPE PRODUCTION. 

5 Section 134 of the Atomic Energy Act of 1954 (42 

6 U.S.C. 2160d) is amended—

7 (1) in subsection a., by striking ‘‘a. The Com8 mission’’ and inserting ‘‘a. IN GENERAL.—Except as 

9 provided in subsection b., the Commission’’; 

10 (2) by redesignating subsection b. as subsection 

11 c.; and 

12 (3) by inserting after subsection a. the fol13 lowing: 

14 ‘‘b. MEDICAL ISOTOPE PRODUCTION.—

15 ‘‘(1) DEFINITIONS.—In this subsection: 

16 ‘‘(A) HIGHLY ENRICHED URANIUM.—The 

17 term ‘highly enriched uranium’ means uranium 

18 enriched to include concentration of U–235 

19 above 20 percent. 

20 ‘‘(B) MEDICAL ISOTOPE.—The term ‘med21 ical isotope’ includes Molybdenum 99, Iodine 

22 131, Xenon 133, and other radioactive mate23 rials used to produce a radiopharmaceutical for 

24 diagnostic, therapeutic procedures or for re25 search and development. 
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1 ‘‘(C) RADIOPHARMACEUTICAL.—The term 

2 ‘radiopharmaceutical’ means a radioactive iso3 tope that—

4 ‘‘(i) contains byproduct material com5 bined with chemical or biological material; 

6 and 

7 ‘‘(ii) is designed to accumulate tempo8 rarily in a part of the body for therapeutic 

9 purposes or for enabling the production of 

10 a useful image for use in a diagnosis of a 

11 medical condition. 

12 ‘‘(D) RECIPIENT COUNTRY.—The term ‘re13 cipient country’ means Canada, Belgium, 

14 France, Germany, and the Netherlands. 

15 ‘‘(2) LICENSES.—The Commission may issue a 

16 license authorizing the export (including shipment to 

17 and use at intermediate and ultimate consignees 

18 specified in the license) to a recipient country of 

19 highly enriched uranium for medical isotope produc20 tion if, in addition to any other requirements of this 

21 Act (except subsection a.), the Commission deter22 mines that—

23 ‘‘(A) a recipient country that supplies an 

24 assurance letter to the United States Govern25 ment in connection with the consideration by 
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1 the Commission of the export license applica2 tion has informed the United States Govern3 ment that any intermediate consignees and the 

4 ultimate consignee specified in the application 

5 are required to use the highly enriched uranium 

6 solely to produce medical isotopes; and 

7 ‘‘(B) the highly enriched uranium for med8 ical isotope production will be irradiated only in 

9 a reactor in a recipient country that—

10 ‘‘(i) uses an alternative nuclear reac11 tor fuel; or 

12 ‘‘(ii) is the subject of an agreement 

13 with the United States Government to con14 vert to an alternative nuclear reactor fuel 

15 when alternative nuclear reactor fuel can 

16 be used in the reactor. 

17 ‘‘(3) REVIEW OF PHYSICAL PROTECTION RE18 QUIREMENTS.—

19 ‘‘(A) IN GENERAL.—The Commission shall 

20 review the adequacy of physical protection re21 quirements that, as of the date of an applica22 tion under paragraph (2), are applicable to the 

23 transportation and storage of highly enriched 

24 uranium for medical isotope production or con-
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1 trol of residual material after irradiation and 

2 extraction of medical isotopes. 

3 ‘‘(B) IMPOSITION OF ADDITIONAL RE4 QUIREMENTS.—If the Commission determines 

5 that additional physical protection requirements 

6 are necessary (including a limit on the quantity 

7 of highly enriched uranium that may be con8 tained in a single shipment), the Commission 

9 shall impose such requirements as license condi10 tions or through other appropriate means. 

11 ‘‘(4) FIRST REPORT TO CONGRESS.—

12 ‘‘(A) NAS STUDY.—The Secretary shall 

13 enter into an arrangement with the National 

14 Academy of Sciences to conduct a study to de15 termine—

16 ‘‘(i) the feasibility of procuring sup17 plies of medical isotopes from commercial 

18 sources that do not use highly enriched 

19 uranium; 

20 ‘‘(ii) the current and projected de21 mand and availability of medical isotopes 

22 in regular current domestic use; 

23 ‘‘(iii) the progress that is being made 

24 by the Department of Energy and others 

25 to eliminate all use of highly enriched ura-
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1 nium in reactor fuel, reactor targets, and 

2 medical isotope production facilities; and 

3 ‘‘(iv) the potential cost differential in 

4 medical isotope production in the reactors 

5 and target processing facilities if the prod6 ucts were derived from production systems 

7 that do not involve fuels and targets with 

8 highly enriched uranium. 

9 ‘‘(B) FEASIBILITY.—For the purpose of 

10 this subsection, the use of low enriched uranium 

11 to produce medical isotopes shall be determined 

12 to be feasible if— 

13 ‘‘(i) low enriched uranium targets 

14 have been developed and demonstrated for 

15 use in the reactors and target processing 

16 facilities that produce significant quantities 

17 of medical isotopes to serve United States 

18 needs for such isotopes; 

19 ‘‘(ii) sufficient quantities of medical 

20 isotopes are available from low enriched 

21 uranium targets and fuel to meet United 

22 States domestic needs; and 

23 ‘‘(iii) the average anticipated total 

24 cost increase from production of medical 

25 isotopes in such facilities without use of 
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1 highly enriched uranium is less than 10 

2 percent. 

3 ‘‘(C) REPORT BY THE SECRETARY.—Not 

4 later than 5 years after the date of enactment 

5 of the Energy Policy Act of 2003, the Secretary 

6 shall submit to Congress a report that—

7 ‘‘(i) contains the findings of the Na8 tional Academy of Sciences made in the 

9 study under subparagraph (A); and 

10 ‘‘(ii) discloses the existence of any 

11 commitments from commercial producers 

12 to provide domestic requirements for med13 ical isotopes without use of highly enriched 

14 uranium consistent with the feasibility cri15 teria described in subparagraph (B) not 

16 later than the date that is 4 years after 

17 the date of submission of the report. 

18 ‘‘(5) SECOND REPORT TO CONGRESS.—If the 

19 study of the National Academy of Sciences deter20 mines under paragraph (4)(A)(i) that the procure21 ment of supplies of medical isotopes from commer22 cial sources that do not use highly enriched uranium 

23 is feasible, but the Secretary is unable to report the 

24 existence of commitments under paragraph 

25 (4)(C)(ii), not later than the date that is 6 years 
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1 after the date of enactment of the Energy Policy Act 

2 of 2003, the Secretary shall submit to Congress a 

3 report that describes options for developing domestic 

4 supplies of medical isotopes in quantities that are 

5 adequate to meet domestic demand without the use 

6 of highly enriched uranium consistent with the cost 

7 increase described in paragraph (4)(B)(iii). 

8 ‘‘(6) CERTIFICATION.—At such time as com9 mercial facilities that do not use highly enriched 

10 uranium are capable of meeting domestic require11 ments for medical isotopes, within the cost increase 

12 described in paragraph (4)(B)(iii) and without im13 pairing the reliable supply of medical isotopes for 

14 domestic utilization, the Secretary shall submit to 

15 Congress a certification to that effect. 

16 ‘‘(7) SUNSET PROVISION.—After the Secretary 

17 submits a certification under paragraph (6), the 

18 Commission shall, by rule, terminate its review of 

19 export license applications under this subsection.’’. 

20 SEC. 634. FERNALD BYPRODUCT MATERIAL. 

21 Notwithstanding any other law, the material in the 

22 concrete silos at the Fernald uranium processing facility 

23 managed on the date of enactment of this Act by the De24 partment of Energy shall be considered byproduct mate25 rial (as defined by section 11 e.(2) of the Atomic Energy 
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1 Act of 1954 (42 U.S.C. 2014(e)(2))). The Department of 

2 Energy may dispose of the material in a facility regulated 

3 by the Nuclear Regulatory Commission or by an Agree4 ment State. If the Department of Energy disposes of the 

5 material in such a facility, the Nuclear Regulatory Com6 mission or the Agreement State shall regulate the material 

7 as byproduct material under that Act. This material shall 

8 remain subject to the jurisdiction of the Department of 

9 Energy until it is received at a commercial, Nuclear Regu10 latory Commission-licensed, or Agreement State-licensed 

11 facility, at which time the material shall be subject to the 

12 health and safety requirements of the Nuclear Regulatory 

13 Commission or the Agreement State with jurisdiction over 

14 the disposal site. 

15 SEC. 635. SAFE DISPOSAL OF GREATER-THAN-CLASS C RA16 DIOACTIVE WASTE. 

17 (a) DESIGNATION OF RESPONSIBILITY.—The Sec18 retary of Energy shall designate an Office within the De19 partment of Energy to have the responsibility for activities 

20 needed to develop a new, or use an existing, facility for 

21 safely disposing of all low-level radioactive waste with con22 centrations of radionuclides that exceed the limits estab23 lished by the Nuclear Regulatory Commission for Class 

24 C radioactive waste (referred to in this section as ‘‘GTCC 

25 waste’’). 
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1 (b) COMPREHENSIVE PLAN.—The Secretary of En2 ergy shall develop a comprehensive plan for permanent 

3 disposal of GTCC waste which includes plans for a dis4 posal facility. This plan shall be transmitted to Congress 

5 in a series of reports, including the following: 

6 (1) REPORT ON SHORT-TERM PLAN.—Not later 

7 than 180 days after the date of enactment of this 

8 Act, the Secretary of Energy shall submit to Con9 gress a plan describing the Secretary’s operational 

10 strategy for continued recovery and storage of 

11 GTCC waste until a permanent disposal facility is 

12 available. 

13 (2) UPDATE OF 1987 REPORT.—

14 (A) IN GENERAL.—Not later than 1 year 

15 after the date of enactment of this Act, the Sec16 retary of Energy shall submit to Congress an 

17 update of the Secretary’s February 1987 report 

18 submitted to Congress that made comprehen19 sive recommendations for the disposal of GTCC 

20 waste. 

21 (B) CONTENTS.—The update under this 

22 paragraph shall contain—

23 (i) a detailed description and identi24 fication of the GTCC waste that is to be 

25 disposed; 
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1 (ii) a description of current domestic 

2 and international programs, both Federal 

3 and commercial, for management and dis4 position of GTCC waste; 

5 (iii) an identification of the Federal 

6 and private options and costs for the safe 

7 disposal of GTCC waste; 

8 (iv) an identification of the options for 

9 ensuring that, wherever possible, genera10 tors and users of GTCC waste bear all rea11 sonable costs of waste disposal; 

12 (v) an identification of any new statu13 tory authority required for disposal of 

14 GTCC waste; and 

15 (vi) in coordination with the Environ16 mental Protection Agency and the Nuclear 

17 Regulatory Commission, an identification 

18 of any new regulatory guidance needed for 

19 the disposal of GTCC waste. 

20 (3) REPORT ON COST AND SCHEDULE FOR

21 COMPLETION OF ENVIRONMENTAL IMPACT STATE22 MENT AND RECORD OF DECISION.—Not later than 

23 180 days after the date of submission of the update 

24 required under paragraph (2), the Secretary of En25 ergy shall submit to Congress a report containing an
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1 estimate of the cost and schedule to complete a draft 

2 and final environmental impact statement and to 

3 issue a record of decision for a permanent disposal 

4 facility, utilizing either a new or existing facility, for 

5 GTCC waste. 

6 SEC. 636. PROHIBITION ON NUCLEAR EXPORTS TO COUN7 TRIES THAT SPONSOR TERRORISM. 

8 (a) IN GENERAL.—Section 129 of the Atomic Energy 

9 Act of 1954 (42 U.S.C. 2158) is amended—

10 (1) by inserting ‘‘a.’’ before ‘‘No nuclear mate11 rials and equipment’’; and 

12 (2) by adding at the end the following new sub13 section: 

14 ‘‘b.(1) Notwithstanding any other provision of law, 

15 including specifically section 121 of this Act, and except 

16 as provided in paragraphs (2) and (3), no nuclear mate17 rials and equipment or sensitive nuclear technology, in18 cluding items and assistance authorized by section 57 b. 

19 of this Act and regulated under part 810 of title 10, Code 

20 of Federal Regulations, and nuclear-related items on the 

21 Commerce Control List maintained under part 774 of title 

22 15 of the Code of Federal Regulations, shall be exported 

23 or reexported, or transferred or retransferred whether di24 rectly or indirectly, and no Federal agency shall issue any 

25 license, approval, or authorization for the export or reex-
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1 port, or transfer, or retransfer, whether directly or indi2 rectly, of these items or assistance (as defined in this para3 graph) to any country whose government has been identi4 fied by the Secretary of State as engaged in state sponsor5 ship of terrorist activities (specifically including any coun6 try the government of which has been determined by the 

7 Secretary of State under section 620A(a) of the Foreign 

8 Assistance Act of 1961 (22 U.S.C. 2371(a)), section 

9 6(j)(1) of the Export Administration Act of 1979 (50 

10 U.S.C. App. 2405(j)(1)), or section 40(d) of the Arms Ex11 port Control Act (22 U.S.C. 2780(d)) to have repeatedly 

12 provided support for acts of international terrorism). 

13 ‘‘(2) This subsection shall not apply to exports, reex14 ports, transfers, or retransfers of radiation monitoring 

15 technologies, surveillance equipment, seals, cameras, tam16 per-indication devices, nuclear detectors, monitoring sys17 tems, or equipment necessary to safely store, transport, 

18 or remove hazardous materials, whether such items, serv19 ices, or information are regulated by the Department of 

20 Energy, the Department of Commerce, or the Nuclear 

21 Regulatory Commission, except to the extent that such 

22 technologies, equipment, seals, cameras, devices, detectors, 

23 or systems are available for use in the design or construc24 tion of nuclear reactors or nuclear weapons. 
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1 ‘‘(3) The President may waive the application of 

2 paragraph (1) to a country if the President determines 

3 and certifies to Congress that the waiver will not result 

4 in any increased risk that the country receiving the waiver 

5 will acquire nuclear weapons, nuclear reactors, or any ma6 terials or components of nuclear weapons and—

7 ‘‘(A) the government of such country has not 

8 within the preceding 12-month period willfully aided 

9 or abetted the international proliferation of nuclear 

10 explosive devices to individuals or groups or willfully 

11 aided and abetted an individual or groups in acquir12 ing unsafeguarded nuclear materials; 

13 ‘‘(B) in the judgment of the President, the gov14 ernment of such country has provided adequate, 

15 verifiable assurances that it will cease its support for 

16 acts of international terrorism; 

17 ‘‘(C) the waiver of that paragraph is in the vital 

18 national security interest of the United States; or 

19 ‘‘(D) such a waiver is essential to prevent or re20 spond to a serious radiological hazard in the country 

21 receiving the waiver that may or does threaten pub22 lic health and safety.’’. 

23 (b) APPLICABILITY TO EXPORTS APPROVED FOR

24 TRANSFER BUT NOT TRANSFERRED.—Subsection b. of 

25 section 129 of Atomic Energy Act of 1954, as added by 
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1 subsection (a) of this section, shall apply with respect to 

2 exports that have been approved for transfer as of the date 

3 of the enactment of this Act but have not yet been trans4 ferred as of that date. 

5 SEC. 637. URANIUM ENRICHMENT FACILITIES. 

6 (a) NUCLEAR REGULATORY COMMISSION REVIEW OF

7 APPLICATIONS.—

8 (1) IN GENERAL.—In order to facilitate a time9 ly review and approval of an application in a pro10 ceeding for a license for the construction and oper11 ation of a uranium enrichment facility under sec12 tions 53 and 63 of the Atomic Energy Act of 1954 

13 (42 U.S.C. 2073, 2093) (referred to in this sub14 section as a ‘‘covered proceeding’’), the Nuclear Reg15 ulatory Commission shall, not later than 30 days 

16 after the receipt of the application, establish, by 

17 order, the schedule for the conduct of any hearing 

18 that may be requested by any person whose interest 

19 may be affected by the covered proceeding. 

20 (2) FINAL AGENCY DECISION.—The schedule 

21 shall provide that a final decision by the Commission 

22 on the application shall be made not later than the 

23 date that is 2 years after the date of submission of 

24 the application by the applicant. 

25 (3) COMPLIANCE WITH SCHEDULE.—
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1 (A) IN GENERAL.—The Commission shall 

2 establish a process to assess compliance with 

3 the schedule established under paragraph (1) 

4 on an ongoing basis during the course of the re5 view of the application, including ensuring com6 pliance with schedules and milestones that are 

7 established for the conduct of any covered pro8 ceeding by the Atomic Safety and Licensing 

9 Board. 

10 (B) REPORT.—The Commission shall sub11 mit to Congress on a bimonthly basis a report 

12 describing the status of compliance with the 

13 schedule established under paragraph (1), in14 cluding a description of the status of actions re15 quired to be completed pursuant to the schedule 

16 by officers and employees of—

17 (i) the Commission in undertaking the 

18 safety and environmental review of applica19 tions; and 

20 (ii) the Atomic Safety and Licensing 

21 Board in the conduct of any covered pro22 ceeding. 

23 (4) ENVIRONMENTAL REVIEW.—

24 (A) IN GENERAL.—In evaluating an appli25 cation under the National Environmental Policy 
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1 Act of 1969 (42 U.S.C. 4321 et seq.) for licens2 ing of a facility in a covered proceeding, the 

3 Commission shall limit the consideration of 

4 need to whether the licensing of the facility 

5 would advance the national interest of encour6 aging in the United States—

7 (i) additional secure, reliable uranium 

8 enrichment capacity; 

9 (ii) diverse supplies and suppliers of 

10 uranium enrichment capacity; and 

11 (iii) the deployment of advanced cen12 trifuge enrichment technology. 

13 (B) COMMENT.—In carrying out subpara14 graph (A), the Commission shall consider and 

15 solicit the views of other affected Federal agen16 cies. 

17 (C) ATOMIC SAFETY AND LICENSING

18 BOARD.—

19 (i) IN GENERAL.—Except as provided 

20 in clause (ii), in any covered proceeding, 

21 the Commission shall allow the litigation 

22 and resolution by the Atomic Safety and 

23 Licensing Board of issues arising under 

24 the National Environmental Policy Act of 

25 1969 (42 U.S.C. 4321 et seq.), on the
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1 basis of information submitted by the ap2 plicant in its environmental report, prior to 

3 publication of any required environmental 

4 impact statement. 

5 (ii) EXCEPTIONS.—On the publication 

6 of any required environmental impact 

7 statement, issues may be proffered for res8 olution by the Atomic Safety and Licensing 

9 Board only if information or conclusions in 

10 the environmental impact statement differ 

11 significantly from the information or con12 clusions in the environmental report sub13 mitted by the applicant. 

14 (D) ENVIRONMENTAL JUSTICE.—In a cov15 ered proceeding, the Commission shall apply the 

16 criteria in Appendix C of the final report enti17 tled ‘‘Environmental Review Guidance for Li18 censing Actions Associated with NMSS Pro19 grams’’ (NUREG–1748), published in August 

20 2003, in any required review of environmental 

21 justice. 

22 (5) LOW-LEVEL WASTE.—In any covered pro23 ceeding, the Commission shall—

24 (A) deem the obligation of the Secretary of 

25 Energy pursuant to section 3113 of the USEC 
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1 Privitization Act (42 U.S.C. 2297 h–11) to con2 stitute a plausible strategy with regard to the 

3 disposition of depleted uranium generated by 

4 such facility; and 

5 (B) treat any residual material that re6 mains following the extraction of any usable re7 source value from depleted uranium as low-level 

8 radioactive waste under part 61 of title 10, 

9 Code of Federal Regulations. 

10 (6) ADJUDICATORY HEARING ON LICENSING OF

11 URANIUM ENRICHMENT FACILITIES.—Section 193(b) 

12 of the Atomic Energy Act of 1954 (42 U.S.C. 

13 2243(b)) is amended by striking paragraph (2) and 

14 inserting the following: 

15 ‘‘(2) TIMING.—On the issuance of a final deci16 sion on the application by the Atomic Safety and Li17 censing Board, the Commission shall issue and make 

18 immediately effective any license for the construction 

19 and operation of a uranium enrichment facility 

20 under sections 53 and 63, on a determination by the 

21 Commission that the issuance of the license would 

22 not cause irreparable injury to the public health and 

23 safety or the common defense and security, notwith24 standing the pendency before the Commission of any 
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1 appeal or petition for review of any decision of the 

2 Atomic Safety and Licensing Board.’’. 

3 (b) DEPARTMENT OF ENERGY RESPONSIBILITIES.—

4 (1) IN GENERAL.—Not later than 180 days 

5 after a request is made to the Secretary of Energy 

6 by an applicant for or recipient of a license for a 

7 uranium enrichment facility under section 53, 63, or 

8 193 of the Atomic Energy Act of 1954 (42 U.S.C. 

9 2073, 2093, 2243), the Secretary shall enter into a 

10 memorandum of agreement with the applicant or li11 censee that provides a schedule for the transfer to 

12 the Secretary, not later than 5 years after the gen13 eration of any depleted uranium hexafluoride, of title 

14 and possession of the depleted uranium hexafluoride 

15 to be generated by the applicant or licensee. 

16 (2) COST.—

17 (A) IN GENERAL.—Subject to subpara18 graphs (B) and (C), the memorandum of agree19 ment shall specify the cost to be assessed by the 

20 Secretary for the transfer to the Secretary of 

21 the depleted uranium hexafluoride. 

22 (B) NONDISCRIMINATORY BASIS.—The 

23 cost shall be determined by the Secretary on a 

24 nondiscriminatory basis. 
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1 (C) COST.—Taking into account the phys2 ical and chemical characteristics of such de3 pleted uranium hexafluoride, the cost shall not 

4 exceed the cost assessed by the Secretary for 

5 the acceptance of depleted uranium hexafluoride 

6 under—

7 (i) the memorandum of agreement be8 tween the United States Department of 

9 Energy and the United States Enrichment 

10 Corporation Relating to Depleted Ura11 nium, dated June 30, 1998; and 

12 (ii) the Agreement Between the U.S. 

13 Department of Energy and USEC Inc., 

14 dated June 17, 2002. 

15 SEC. 638. NATIONAL URANIUM STOCKPILE. 

16 (a) STOCKPILE CREATION.—The Secretary of En17 ergy may create a national low-enriched uranium stockpile 

18 with the goals to—

19 (1) enhance national energy security; and 

20 (2) reduce global proliferation threats. 

21 (b) SOURCE OF MATERIAL.—The Secretary shall ob22 tain material for the stockpile from—

23 (1) material derived from blend-down of Rus24 sian highly enriched uranium derived from weapons 

25 materials; and 
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1 (2) domestically mined and enriched uranium. 

2 (c) LIMITATION ON SALES OR TRANSFERS.—Sales or 

3 transfer of materials in the stockpile shall occur pursuant 

4 to section 3112 of the USEC Privitization Act (42 U.S.C. 

5 2297h–10), as amended by section 630.

6 Subtitle C—Advanced Reactor 

7 Hydrogen Cogeneration Project 

8 SEC. 651. PROJECT ESTABLISHMENT. 

9 The Secretary of Energy (in this subtitle referred to 

10 as the ‘‘Secretary’’) is directed to establish an Advanced 

11 Reactor Hydrogen Cogeneration Project. 

12 SEC. 652. PROJECT DEFINITION. 

13 The project shall consist of the research, develop14 ment, design, construction, and operation of a hydrogen 

15 production cogeneration research facility that, relative to 

16 the current commercial reactors, enhances safety features, 

17 reduces waste production, enhances thermal efficiencies, 

18 increases proliferation resistance, and has the potential for 

19 improved economics and physical security in reactor siting. 

20 This facility shall be constructed so as to enable research 

21 and development on advanced reactors of the type selected 

22 and on alternative approaches for reactor-based produc23 tion of hydrogen. 
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1 SEC. 653. PROJECT MANAGEMENT. 

2 (a) MANAGEMENT.—The project shall be managed 

3 within the Department by the Office of Nuclear Energy, 

4 Science, and Technology. 

5 (b) LEAD LABORATORY.—The lead laboratory for the 

6 project, providing the site for the reactor construction, 

7 shall be the Idaho National Engineering and Environ8 mental Laboratory (in this subtitle referred to as 

9 ‘‘INEEL’’). 

10 (c) STEERING COMMITTEE.—The Secretary shall es11 tablish a national steering committee with membership 

12 from the national laboratories, universities, and industry 

13 to provide advice to the Secretary and the Director of the 

14 Office of Nuclear Energy, Science, and Technology on 

15 technical and program management aspects of the project. 

16 (d) COLLABORATION.—Project activities shall be con17 ducted at INEEL, other national laboratories, univer18 sities, domestic industry, and international partners. 

19 SEC. 654. PROJECT REQUIREMENTS. 

20 (a) RESEARCH AND DEVELOPMENT.—

21 (1) IN GENERAL.—The project shall include 

22 planning, research and development, design, and 

23 construction of an advanced, next-generation, nu24 clear energy system suitable for enabling further re25 search and development on advanced reactor tech-
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1 nologies and alternative approaches for reactor-based 

2 generation of hydrogen. 

3 (2) REACTOR TEST CAPABILITIES AT INEEL.—

4 The project shall utilize, where appropriate, exten5 sive reactor test capabilities resident at INEEL. 

6 (3) ALTERNATIVES.—The project shall be de7 signed to explore technical, environmental, and eco8 nomic feasibility of alternative approaches for reac9 tor-based hydrogen production. 

10 (4) INDUSTRIAL LEAD.—The industrial lead for 

11 the project shall be a company incorporated in the 

12 United States. 

13 (b) INTERNATIONAL COLLABORATION.—

14 (1) IN GENERAL.—The Secretary shall seek 

15 international cooperation, participation, and finan16 cial contribution in this project. 

17 (2) ASSISTANCE FROM INTERNATIONAL PART18 NERS.—The Secretary may contract for assistance 

19 from specialists or facilities from member countries 

20 of the Generation IV International Forum, the Rus21 sian Federation, or other international partners 

22 where such specialists or facilities provide access to 

23 cost-effective and relevant skills or test capabilities. 
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1 (3) GENERATION IV INTERNATIONAL FORUM.—

2 International activities shall be coordinated with the 

3 Generation IV International Forum. 

4 (4) GENERATION IV NUCLEAR ENERGY SYS5 TEMS PROGRAM.—The Secretary may combine this 

6 project with the Generation IV Nuclear Energy Sys7 tems Program. 

8 (c) DEMONSTRATION.—The overall project, which 

9 may involve demonstration of selected project objectives 

10 in a partner nation, must demonstrate both electricity and 

11 hydrogen production and may provide flexibility, where 

12 technically and economically feasible in the design and 

13 construction, to enable tests of alternative reactor core 

14 and cooling configurations. 

15 (d) PARTNERSHIPS.—The Secretary shall establish 

16 cost-shared partnerships with domestic industry or inter17 national participants for the research, development, de18 sign, construction, and operation of the research facility, 

19 and preference in determining the final project structure 

20 shall be given to an overall project which retains United 

21 States leadership while maximizing cost sharing opportu22 nities and minimizing Federal funding responsibilities. 

23 (e) TARGET DATE.—The Secretary shall select tech24 nologies and develop the project to provide initial testing 

25 of either hydrogen production or electricity generation by 
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1 2010, or provide a report to Congress explaining why this 

2 date is not feasible. 

3 (f) WAIVER OF CONSTRUCTION TIMELINES.—The 

4 Secretary is authorized to conduct the Advanced Reactor 

5 Hydrogen Cogeneration Project without the constraints of 

6 DOE Order 413.3, relating to program and project man7 agement for the acquisition of capital assets, as necessary 

8 to meet the specified operational date. 

9 (g) COMPETITION.—The Secretary may fund up to 

10 2 teams for up to 1 year to develop detailed proposals for 

11 competitive evaluation and selection of a single proposal 

12 and concept for further progress. The Secretary shall de13 fine the format of the competitive evaluation of proposals. 

14 (h) USE OF FACILITIES.—Research facilities in in15 dustry, national laboratories, or universities either within 

16 the United States or with cooperating international part17 ners may be used to develop the enabling technologies for 

18 the research facility. Utilization of domestic university19 based facilities shall be encouraged to provide educational 

20 opportunities for student development. 

21 (i) ROLE OF NUCLEAR REGULATORY COMMISSION.—

22 (1) IN GENERAL.—The Nuclear Regulatory 

23 Commission shall have licensing and regulatory au24 thority for any reactor authorized under this sub-
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1 title, pursuant to section 202 of the Energy Reorga2 nization Act of 1974 (42 U.S.C. 5842). 

3 (2) RISK-BASED CRITERIA.—The Secretary 

4 shall seek active participation of the Nuclear Regu5 latory Commission throughout the project to develop 

6 risk-based criteria for any future commercial devel7 opment of a similar reactor architecture. 

8 (j) REPORT—The Secretary shall develop and trans9 mit to Congress a comprehensive project plan not later 

10 than April 30, 2004. The project plan shall be updated 

11 annually with each annual budget submission. 

12 SEC. 655. AUTHORIZATION OF APPROPRIATIONS. 

13 (a) RESEARCH, DEVELOPMENT, AND DESIGN PRO14 GRAMS.—The following sums are authorized to be appro15 priated to the Secretary for all activities under this sub16 title except for construction activities described in sub17 section (b): 

18 (1) For fiscal year 2004, $35,000,000. 

19 (2) For each of fiscal years 2005 through 2008, 

20 $150,000,000. 

21 (3) For fiscal years beyond 2008, such sums as 

22 are necessary. 

23 (b) CONSTRUCTION.—There are authorized to be ap24 propriated to the Secretary for all project-related con-
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1 struction activities, to be available until expended, 

2 $500,000,000. 

3 Subtitle D—Nuclear Security 

4 SEC. 661. NUCLEAR FACILITY THREATS. 

5 (a) STUDY.—The President, in consultation with the 

6 Nuclear Regulatory Commission (referred to in this sub7 title as the ‘‘Commission’’) and other appropriate Federal, 

8 State, and local agencies and private entities, shall con9 duct a study to identify the types of threats that pose an 

10 appreciable risk to the security of the various classes of 

11 facilities licensed by the Commission under the Atomic 

12 Energy Act of 1954 (42 U.S.C. 2011 et seq.). Such study 

13 shall take into account, but not be limited to—

14 (1) the events of September 11, 2001; 

15 (2) an assessment of physical, cyber, bio16 chemical, and other terrorist threats; 

17 (3) the potential for attack on facilities by mul18 tiple coordinated teams of a large number of individ19 uals; 

20 (4) the potential for assistance in an attack 

21 from several persons employed at the facility; 

22 (5) the potential for suicide attacks; 

23 (6) the potential for water-based and air-based 

24 threats; 
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1 (7) the potential use of explosive devices of con2 siderable size and other modern weaponry; 

3 (8) the potential for attacks by persons with a 

4 sophisticated knowledge of facility operations; 

5 (9) the potential for fires, especially fires of 

6 long duration; 

7 (10) the potential for attacks on spent fuel 

8 shipments by multiple coordinated teams of a large 

9 number of individuals; 

10 (11) the adequacy of planning to protect the 

11 public health and safety at and around nuclear fa12 cilities, as appropriate, in the event of a terrorist at13 tack against a nuclear facility; and 

14 (12) the potential for theft and diversion of nu15 clear materials from such facilities. 

16 (b) SUMMARY AND CLASSIFICATION REPORT.—Not 

17 later than 180 days after the date of the enactment of 

18 this Act, the President shall transmit to Congress and the 

19 Commission a report—

20 (1) summarizing the types of threats identified 

21 under subsection (a); and 

22 (2) classifying each type of threat identified 

23 under subsection (a), in accordance with existing 

24 laws and regulations, as either—
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1 (A) involving attacks and destructive acts, 

2 including sabotage, directed against the facility 

3 by an enemy of the United States, whether a 

4 foreign government or other person, or other5 wise falling under the responsibilities of the 

6 Federal Government; or 

7 (B) involving the type of risks that Com8 mission licensees should be responsible for 

9 guarding against. 

10 (c) FEDERAL ACTION REPORT.—Not later than 90 

11 days after the date on which a report is transmitted under 

12 subsection (b), the President shall transmit to Congress 

13 a report on actions taken, or to be taken, to address the 

14 types of threats identified under subsection (b)(2)(A), in15 cluding identification of the Federal, State, and local 

16 agencies responsible for carrying out the obligations and 

17 authorities of the United States. Such report may include 

18 a classified annex, as appropriate. 

19 (d) REGULATIONS.—Not later than 180 days after 

20 the date on which a report is transmitted under subsection 

21 (b), the Commission may revise, by rule, the design basis 

22 threats issued before the date of enactment of this section 

23 as the Commission considers appropriate based on the 

24 summary and classification report. 
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1 (e) PHYSICAL SECURITY PROGRAM.—The Commis2 sion shall establish an operational safeguards response 

3 evaluation program that ensures that the physical protec4 tion capability and operational safeguards response for 

5 sensitive nuclear facilities, as determined by the Commis6 sion consistent with the protection of public health and 

7 the common defense and security, shall be tested periodi8 cally through Commission approved or designed, observed, 

9 and evaluated force-on-force exercises to determine wheth10 er the ability to defeat the design basis threat is being 

11 maintained. For purposes of this subsection, the term 

12 ‘‘sensitive nuclear facilities’’ includes at a minimum com13 mercial nuclear power plants and category I fuel cycle fa14 cilities. 

15 (f) CONTROL OF INFORMATION.—Notwithstanding 

16 any other provision of law, the Commission may undertake 

17 any rulemaking under this subtitle in a manner that will 

18 fully protect safeguards and classified national security in19 formation. 

20 (g) FEDERAL SECURITY COORDINATORS.—

21 (1) REGIONAL OFFICES.—Not later than 18 

22 months after the date of enactment of this Act, the 

23 Commission shall assign a Federal security coordi24 nator, under the employment of the Commission, to 

25 each region of the Commission. 
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1 (2) RESPONSIBILITIES.—The Federal security 

2 coordinator shall be responsible for—

3 (A) communicating with the Commission 

4 and other Federal, State, and local authorities 

5 concerning threats, including threats against 

6 such classes of facilities as the Commission de7 termines to be appropriate; 

8 (B) ensuring that such classes of facilities 

9 as the Commission determines to be appropriate 

10 maintain security consistent with the security 

11 plan in accordance with the appropriate threat 

12 level; and 

13 (C) assisting in the coordination of secu14 rity measures among the private security forces 

15 at such classes of facilities as the Commission 

16 determines to be appropriate and Federal, 

17 State, and local authorities, as appropriate. 

18 (h) TRAINING PROGRAM.—The President shall estab19 lish a program to provide technical assistance and training 

20 to Federal agencies, the National Guard, and State and 

21 local law enforcement and emergency response agencies in 

22 responding to threats against a designated nuclear facility. 
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1 SEC. 662. FINGERPRINTING FOR CRIMINAL HISTORY 

2 RECORD CHECKS. 

3 (a) IN GENERAL.—Subsection a. of section 149 of 

4 the Atomic Energy Act of 1954 (42 U.S.C. 2169(a)) is 

5 amended—

6 (1) by striking ‘‘a. The Nuclear’’ and all that 

7 follows through ‘‘section 147.’’ and inserting the fol8 lowing: 

9 ‘‘a. IN GENERAL.—

10 ‘‘(1) REQUIREMENTS.—

11 ‘‘(A) IN GENERAL.— The Commission 

12 shall require each individual or entity—

13 ‘‘(i) that is licensed or certified to en14 gage in an activity subject to regulation by 

15 the Commission; 

16 ‘‘(ii) that has filed an application for 

17 a license or certificate to engage in an ac18 tivity subject to regulation by the Commis19 sion; or 

20 ‘‘(iii) that has notified the Commis21 sion, in writing, of an intent to file an ap22 plication for licensing, certification, permit23 ting, or approval of a product or activity 

24 subject to regulation by the Commission, 

25 to fingerprint each individual described in sub26 paragraph (B) before the individual is per-
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1 mitted unescorted access or access, whichever is 

2 applicable, as described in subparagraph (B). 

3 ‘‘(B) INDIVIDUALS REQUIRED TO BE

4 FINGERPRINTED.—The Commission shall re5 quire to be fingerprinted each individual who—

6 ‘‘(i) is permitted unescorted access 

7 to—

8 ‘‘(I) a utilization facility; or 

9 ‘‘(II) radioactive material or 

10 other property subject to regulation 

11 by the Commission that the Commis12 sion determines to be of such signifi13 cance to the public health and safety 

14 or the common defense and security 

15 as to warrant fingerprinting and back16 ground checks; or 

17 ‘‘(ii) is permitted access to safeguards 

18 information under section 147.’’; 

19 (2) by striking ‘‘All fingerprints obtained by a 

20 licensee or applicant as required in the preceding 

21 sentence’’ and inserting the following: 

22 ‘‘(2) SUBMISSION TO THE ATTORNEY GEN23 ERAL.—All fingerprints obtained by an individual or 

24 entity as required in paragraph (1)’’; 
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1 (3) by striking ‘‘The costs of any identification 

2 and records check conducted pursuant to the pre3 ceding sentence shall be paid by the licensee or ap4 plicant.’’ and inserting the following: 

5 ‘‘(3) COSTS.—The costs of any identification 

6 and records check conducted pursuant to paragraph 

7 (1) shall be paid by the individual or entity required 

8 to conduct the fingerprinting under paragraph 

9 (1)(A).’’; and 

10 (4) by striking ‘‘Notwithstanding any other pro11 vision of law, the Attorney General may provide all 

12 the results of the search to the Commission, and, in 

13 accordance with regulations prescribed under this 

14 section, the Commission may provide such results to 

15 licensee or applicant submitting such fingerprints.’’ 

16 and inserting the following: 

17 ‘‘(4) PROVISION TO INDIVIDUAL OR ENTITY RE18 QUIRED TO CONDUCT FINGERPRINTING.—Notwith19 standing any other provision of law, the Attorney 

20 General may provide all the results of the search to 

21 the Commission, and, in accordance with regulations 

22 prescribed under this section, the Commission may 

23 provide such results to the individual or entity re24 quired to conduct the fingerprinting under para25 graph (1)(A).’’.
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1 (b) ADMINISTRATION.—Subsection c. of section 149 

2 of the Atomic Energy Act of 1954 (42 U.S.C. 2169(c)) 

3 is amended—

4 (1) by striking ‘‘, subject to public notice and 

5 comment, regulations—’’ and inserting ‘‘require6 ments—’’; and 

7 (2) by striking, in paragraph (2)(B), 

8 ‘‘unescorted access to the facility of a licensee or ap9 plicant’’ and inserting ‘‘unescorted access to a utili10 zation facility, radioactive material, or other prop11 erty described in subsection a.(1)(B)’’. 

12 (c) BIOMETRIC METHODS.—Subsection d. of section 

13 149 of the Atomic Energy Act of 1954 (42 U.S.C. 

14 2169(d)) is redesignated as subsection e., and the fol15 lowing is inserted after subsection c.: 

16 ‘‘d. USE OF OTHER BIOMETRIC METHODS.—The 

17 Commission may satisfy any requirement for a person to 

18 conduct fingerprinting under this section using any other 

19 biometric method for identification approved for use by 

20 the Attorney General, after the Commission has approved 

21 the alternative method by rule.’’.
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1 SEC. 663. USE OF FIREARMS BY SECURITY PERSONNEL OF 

2 LICENSEES AND CERTIFICATE HOLDERS OF 

3 THE COMMISSION. 

4 Section 161 of the Atomic Energy Act of 1954 (42 

5 U.S.C. 2201) is amended by adding at the end the fol6 lowing subsection: 

7 ‘‘(z)(1) notwithstanding section 922(o), (v), and 

8 (w) of title 18, United States Code, or any similar 

9 provision of any State law or any similar rule or reg10 ulation of a State or any political subdivision of a 

11 State prohibiting the transfer or possession of a 

12 handgun, a rifle or shotgun, a short-barreled shot13 gun, a short-barreled rifle, a machinegun, a semi14 automatic assault weapon, ammunition for the fore15 going, or a large capacity ammunition feeding de16 vice, authorize security personnel of licensees and 

17 certificate holders of the Commission (including em18 ployees of contractors of licensees and certificate 

19 holders) to receive, possess, transport, import, and 

20 use 1 or more of those weapons, ammunition, or de21 vices, if the Commission determines that—

22 ‘‘(A) such authorization is necessary to the 

23 discharge of the security personnel’s official du24 ties; and 

25 ‘‘(B) the security personnel—
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1 ‘‘(i) are not otherwise prohibited from 

2 possessing or receiving a firearm under 

3 Federal or State laws pertaining to posses4 sion of firearms by certain categories of 

5 persons; 

6 ‘‘(ii) have successfully completed re7 quirements established through guidelines 

8 implementing this subsection for training 

9 in use of firearms and tactical maneuvers; 

10 ‘‘(iii) are engaged in the protection 

11 of—

12 ‘‘(I) facilities owned or operated 

13 by a Commission licensee or certifi14 cate holder that are designated by the 

15 Commission; or 

16 ‘‘(II) radioactive material or 

17 other property owned or possessed by 

18 a person that is a licensee or certifi19 cate holder of the Commission, or that 

20 is being transported to or from a fa21 cility owned or operated by such a li22 censee or certificate holder, and that 

23 has been determined by the Commis24 sion to be of significance to the com-
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1 mon defense and security or public 

2 health and safety; and 

3 ‘‘(iv) are discharging their official du4 ties. 

5 ‘‘(2) Such receipt, possession, transportation, 

6 importation, or use shall be subject to—

7 ‘‘(A) chapter 44 of title 18, United States 

8 Code, except for section 922(a)(4), (o), (v), and 

9 (w); 

10 ‘‘(B) chapter 53 of title 26, United States 

11 Code, except for section 5844; and 

12 ‘‘(C) a background check by the Attorney 

13 General, based on fingerprints and including a 

14 check of the system established under section 

15 103(b) of the Brady Handgun Violence Preven16 tion Act (18 U.S.C. 922 note) to determine 

17 whether the person applying for the authority is 

18 prohibited from possessing or receiving a fire19 arm under Federal or State law. 

20 ‘‘(3) This subsection shall become effective 

21 upon the issuance of guidelines by the Commission, 

22 with the approval of the Attorney General, to govern 

23 the implementation of this subsection. 

24 ‘‘(4) In this subsection, the terms ‘‘handgun’’, 

25 ‘‘rifle’’, ‘‘shotgun’’, ‘‘firearm’’, ‘‘ammunition’’, ‘‘ma-
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1 chinegun’’, ‘‘semiautomatic assault weapon’’, ‘‘large 

2 capacity ammunition feeding device’’, ‘‘short-bar3 reled shotgun’’, and ‘‘short-barreled rifle’’ shall have 

4 the meanings given those terms in section 921(a) of 

5 title 18, United States Code.’’. 

6 SEC. 664. UNAUTHORIZED INTRODUCTION OF DANGEROUS 

7 WEAPONS. 

8 Section 229 a. of the Atomic Energy Act of 1954 (42 

9 U.S.C. 2278a(a)) is amended in the first sentence by in10 serting ‘‘or subject to the licensing authority of the Com11 mission or to certification by the Commission under this 

12 Act or any other Act’’ before the period at the end.

13 SEC. 665. SABOTAGE OF NUCLEAR FACILITIES OR FUEL. 

14 (a) IN GENERAL.—Section 236 a. of the Atomic En15 ergy Act of 1954 (42 U.S.C. 2284(a)) is amended—

16 (1) in paragraph (2), by striking ‘‘storage facil17 ity’’ and inserting ‘‘storage, treatment, or disposal 

18 facility’’; 

19 (2) in paragraph (3)—

20 (A) by striking ‘‘such a utilization facility’’ 

21 and inserting ‘‘a utilization facility licensed 

22 under this Act’’; and 

23 (B) by striking ‘‘or’’ at the end; 

24 (3) in paragraph (4)—
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1 (A) by striking ‘‘facility licensed’’ and in2 serting ‘‘, uranium conversion, or nuclear fuel 

3 fabrication facility licensed or certified’’; and 

4 (B) by striking the comma at the end and 

5 inserting a semicolon; and 

6 (4) by inserting after paragraph (4) the fol7 lowing: 

8 ‘‘(5) any production, utilization, waste storage, 

9 waste treatment, waste disposal, uranium enrich10 ment, uranium conversion, or nuclear fuel fabrica11 tion facility subject to licensing or certification 

12 under this Act during construction of the facility, if 

13 the destruction or damage caused or attempted to be 

14 caused could adversely affect public health and safe15 ty during the operation of the facility; 

16 ‘‘(6) any primary facility or backup facility 

17 from which a radiological emergency preparedness 

18 alert and warning system is activated; or 

19 ‘‘(7) any radioactive material or other property 

20 subject to regulation by the Nuclear Regulatory 

21 Commission that, before the date of the offense, the 

22 Nuclear Regulatory Commission determines, by 

23 order or regulation published in the Federal Reg24 ister, is of significance to the public health and safe25 ty or to common defense and security,’’.
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1 (b) PENALTIES.—Section 236 of the Atomic Energy 

2 Act of 1954 (42 U.S.C. 2284) is amended by striking 

3 ‘‘$10,000 or imprisoned for not more than 20 years, or 

4 both, and, if death results to any person, shall be impris5 oned for any term of years or for life’’ both places it ap6 pears and inserting ‘‘$1,000,000 or imprisoned for up to 

7 life without parole’’.

8 SEC. 666. SECURE TRANSFER OF NUCLEAR MATERIALS. 

9 (a) AMENDMENT.—Chapter 14 of the Atomic Energy 

10 Act of 1954 (42 U.S.C. 2201–2210b) is amended by add11 ing at the end the following new section: 

12 ‘‘SEC. 170C. SECURE TRANSFER OF NUCLEAR MATERIALS. 

13 ‘‘a. The Nuclear Regulatory Commission shall estab14 lish a system to ensure that materials described in sub15 section b., when transferred or received in the United 

16 States by any party pursuant to an import or export li17 cense issued pursuant to this Act, are accompanied by a 

18 manifest describing the type and amount of materials 

19 being transferred or received. Each individual receiving or 

20 accompanying the transfer of such materials shall be sub21 ject to a security background check conducted by appro22 priate Federal entities. 

23 ‘‘b. Except as otherwise provided by the Commission 

24 by regulation, the materials referred to in subsection a. 

25 are byproduct materials, source materials, special nuclear 
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1 materials, high-level radioactive waste, spent nuclear fuel, 

2 transuranic waste, and low-level radioactive waste (as de3 fined in section 2(16) of the Nuclear Waste Policy Act 

4 of 1982 (42 U.S.C. 10101(16))).’’. 

5 (b) REGULATIONS.—Not later than 1 year after the 

6 date of the enactment of this Act, and from time to time 

7 thereafter as it considers necessary, the Nuclear Regu8 latory Commission shall issue regulations identifying ra9 dioactive materials or classes of individuals that, con10 sistent with the protection of public health and safety and 

11 the common defense and security, are appropriate excep12 tions to the requirements of section 170C of the Atomic 

13 Energy Act of 1954, as added by subsection (a) of this 

14 section. 

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

16 subsection (a) shall take effect upon the issuance of regu17 lations under subsection (b), except that the background 

18 check requirement shall become effective on a date estab19 lished by the Commission. 

20 (d) EFFECT ON OTHER LAW.—Nothing in this sec21 tion or the amendment made by this section shall waive, 

22 modify, or affect the application of chapter 51 of title 49, 

23 United States Code, part A of subtitle V of title 49, 

24 United States Code, part B of subtitle VI of title 49, 

25 United States Code, and title 23, United States Code. 
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1 (e) TABLE OF SECTIONS AMENDMENT.—The table of 

2 sections for chapter 14 of the Atomic Energy Act of 1954 

3 is amended by adding at the end the following new item:

‘‘Sec. 170C. Secure transfer of nuclear materials.’’.

4 SEC. 667. DEPARTMENT OF HOMELAND SECURITY CON5 SULTATION. 

6 Before issuing a license for a utilization facility, the 

7 Nuclear Regulatory Commission shall consult with the De8 partment of Homeland Security concerning the potential 

9 vulnerabilities of the location of the proposed facility to 

10 terrorist attack.

11 SEC. 668. AUTHORIZATION OF APPROPRIATIONS. 

12 (a) IN GENERAL.—There are authorized to be appro13 priated such sums as are necessary to carry out this sub14 title and the amendments made by this subtitle. 

15 (b) AGGREGATE AMOUNT OF CHARGES.—Section 

16 6101(c)(2)(A) of the Omnibus Budget Reconciliation Act 

17 of 1990 (42 U.S.C. 2214(c)(2)(A)) is amended—

18 (1) in clause (i), by striking ‘‘and’’ at the end; 

19 (2) in clause (ii), by striking the period at the 

20 end and inserting ‘‘; and’’ and 

21 (3) by adding at the end the following: 

22 ‘‘(iii) amounts appropriated to the 

23 Commission for homeland security activi24 ties of the Commission for the fiscal year, 

25 except for the costs of fingerprinting and 
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1 background checks required by section 149 

2 of the Atomic Energy Act of 1954 (42 

3 U.S.C. 2169) and the costs of conducting 

4 security inspections.’’.

5 TITLE VII—VEHICLES AND 

6 FUELS 

7 Subtitle A—Existing Programs 

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

9 VEHICLES. 

10 Section 400AA(a)(3)(E) of the Energy Policy and 

11 Conservation Act (42 U.S.C. 6374(a)(3)(E)) is amended 

12 to read as follows: 

13 ‘‘(E)(i) Dual fueled vehicles acquired pursuant to this 

14 section shall be operated on alternative fuels unless the 

15 Secretary determines that an agency qualifies for a waiver 

16 of such requirement for vehicles operated by the agency 

17 in a particular geographic area in which— 

18 ‘‘(I) the alternative fuel otherwise required to 

19 be used in the vehicle is not reasonably available to 

20 retail purchasers of the fuel, as certified to the Sec21 retary by the head of the agency; or 

22 ‘‘(II) the cost of the alternative fuel otherwise 

23 required to be used in the vehicle is unreasonably 

24 more expensive compared to gasoline, as certified to 

25 the Secretary by the head of the agency. 
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1 ‘‘(ii) The Secretary shall monitor compliance with 

2 this subparagraph by all such fleets and shall report annu3 ally to Congress on the extent to which the requirements 

4 of this subparagraph are being achieved. The report shall 

5 include information on annual reductions achieved from 

6 the use of petroleum-based fuels and the problems, if any, 

7 encountered in acquiring alternative fuels.’’. 

8 SEC. 702. NEIGHBORHOOD ELECTRIC VEHICLES. 

9 (a) AMENDMENTS.—Section 301 of the Energy Pol10 icy Act of 1992 (42 U.S.C. 13211) is amended— 

11 (1) in paragraph (3), by striking ‘‘or a dual 

12 fueled vehicle’’ and inserting ‘‘, a dual fueled vehicle, 

13 or a neighborhood electric vehicle’’; 

14 (2) in paragraph (13), by striking ‘‘and’’ at the 

15 end; 

16 (3) in paragraph (14), by striking the period at 

17 the end and inserting ‘‘; and’’; and 

18 (4) by adding at the end the following: 

19 ‘‘(15) the term ‘neighborhood electric vehicle’ 

20 means a motor vehicle that— 

21 ‘‘(A) meets the definition of a low-speed 

22 vehicle (as defined in part 571 of title 49, Code 

23 of Federal Regulations); 
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1 ‘‘(B) meets the definition of a zero-emis2 sion vehicle (as defined in section 86.1702–99 

3 of title 40, Code of Federal Regulations); 

4 ‘‘(C) meets the requirements of Federal 

5 Motor Vehicle Safety Standard No. 500; and

6 ‘‘(D) has a maximum speed of not greater 

7 than 25 miles per hour.’’. 

8 (b) CREDITS.—Notwithstanding section 508 of the 

9 Energy Policy Act of 1992 (42 U.S.C. 13258) or any other 

10 provision of law, a neighborhood electric vehicle shall not 

11 be allocated credit as more than 1 vehicle for purposes 

12 of determining compliance with any requirement under 

13 title III or title V of such Act. 

14 SEC. 703. CREDITS FOR MEDIUM AND HEAVY DUTY DEDI15 CATED VEHICLES. 

16 Section 508 of the Energy Policy Act of 1992 (42 

17 U.S.C. 13258) is amended by adding at the end the fol18 lowing: 

19 ‘‘(e) CREDIT FOR PURCHASE OF MEDIUM AND

20 HEAVY DUTY DEDICATED VEHICLES.— 

21 ‘‘(1) DEFINITIONS.—In this subsection: 

22 ‘‘(A) HEAVY DUTY DEDICATED VEHI23 CLE.—The term ‘heavy duty dedicated vehicle’ 

24 means a dedicated vehicle that has a gross vehi25 cle weight rating of more than 14,000 pounds. 
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1 ‘‘(B) MEDIUM DUTY DEDICATED VEHI2 CLE.—The term ‘medium duty dedicated vehi3 cle’ means a dedicated vehicle that has a gross 

4 vehicle weight rating of more than 8,500 

5 pounds but not more than 14,000 pounds. 

6 ‘‘(2) CREDITS FOR MEDIUM DUTY VEHICLES.—

7 The Secretary shall issue 2 full credits to a fleet or 

8 covered person under this title, if the fleet or covered 

9 person acquires a medium duty dedicated vehicle. 

10 ‘‘(3) CREDITS FOR HEAVY DUTY VEHICLES.—

11 The Secretary shall issue 3 full credits to a fleet or 

12 covered person under this title, if the fleet or covered 

13 person acquires a heavy duty dedicated vehicle. 

14 ‘‘(4) USE OF CREDITS.—At the request of a 

15 fleet or covered person allocated a credit under this 

16 subsection, the Secretary shall, for the year in which 

17 the acquisition of the dedicated vehicle is made, 

18 treat that credit as the acquisition of 1 alternative 

19 fueled vehicle that the fleet or covered person is re20 quired to acquire under this title.’’. 

21 SEC. 704. INCREMENTAL COST ALLOCATION. 

22 Section 303(c) of the Energy Policy Act of 1992 (42 

23 U.S.C. 13212(c)) is amended by striking ‘‘may’’ and in24 serting ‘‘shall’’. 
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1 SEC. 705. ALTERNATIVE COMPLIANCE AND FLEXIBILITY. 

2 (a) ALTERNATIVE COMPLIANCE.—

3 (1) IN GENERAL.—Title V of the Energy Policy 

4 Act of 1992 (42 U.S.C. 13251 et seq.) is amended—

5 (A) by redesignating section 514 as section 

6 515; and 

7 (B) by inserting after section 513 the fol8 lowing: 

9 ‘‘SEC. 514. ALTERNATIVE COMPLIANCE. 

10 ‘‘(a) APPLICATION FOR WAIVER.—Any covered per11 son subject to section 501 and any State subject to section 

12 507(o) may petition the Secretary for a waiver of the ap13 plicable requirements of section 501 or 507(o). 

14 ‘‘(b) GRANT OF WAIVER.—The Secretary may grant 

15 a waiver of the requirements of section 501 or 507(o) 

16 upon a showing that the fleet owned, operated, leased, or 

17 otherwise controlled by the State or covered person— 

18 ‘‘(1) will achieve a reduction in its annual con19 sumption of petroleum fuels equal to the reduction 

20 in consumption of petroleum that would result from 

21 100 percent compliance with fuel use requirements 

22 in section 501, or, for entities covered under section 

23 507(o), a reduction equal to the covered State enti24 ty’s consumption of alternative fuels if all its alter25 native fuel vehicles given credit under section 508 
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1 were to use alternative fuel 100 percent of the time; 

2 and 

3 ‘‘(2) is in compliance with all applicable vehicle 

4 emission standards established by the Administrator 

5 under the Clean Air Act (42 U.S.C. 7401 et seq.). 

6 ‘‘(c) REVOCATION OF WAIVER.—The Secretary shall 

7 revoke any waiver granted under this section if the State 

8 or covered person fails to comply with subsection (b).’’. 

9 (2) TABLE OF CONTENTS AMENDMENT.—The 

10 table of contents of the Energy Policy Act of 1992 

11 (42 U.S.C. prec. 13201) is amended by striking the 

12 item relating to section 514 and inserting the fol13 lowing:

‘‘Sec. 514. Alternative compliance. 

‘‘Sec. 515. Authorization of appropriations.’’.

14 (b) CREDITS.—Section 508 of the Energy Policy Act 

15 of 1992 (42 U.S.C. 13258) (as amended by section 703) 

16 is amended—

17 (1) by redesignating subsections (b) through (e) 

18 as subsections (c) through (f), respectively; 

19 (2) by striking subsection (a) and inserting the 

20 following: 

21 ‘‘(a) IN GENERAL.—The Secretary shall allocate a 

22 credit to a fleet or covered person that is required to ac23 quire an alternative fueled vehicle under this title, if that 

24 fleet or person acquires an alternative fueled vehicle—
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1 ‘‘(1) in excess of the number that fleet or per2 son is required to acquire under this title; 

3 ‘‘(2) before the date on which that fleet or per4 son is required to acquire an alternative fueled vehi5 cle under this title; or 

6 ‘‘(3) that is eligible to receive credit under sub7 section (b). 

8 ‘‘(b) MAXIMUM AVAILABLE POWER.—The Secretary 

9 shall allocate credit to a fleet under subsection (a)(3) for 

10 the acquisition by the fleet of a hybrid vehicle as follows: 

11 ‘‘(1) For a hybrid vehicle with at least 4 per12 cent but less than 10 percent maximum available 

13 power, the Secretary shall allocate 25 percent of 1 

14 credit. 

15 ‘‘(2) For a hybrid vehicle with at least 10 per16 cent but less than 20 percent maximum available 

17 power, the Secretary shall allocate 50 percent of 1 

18 credit. 

19 ‘‘(3) For a hybrid vehicle with at least 20 per20 cent but less than 30 percent maximum available 

21 power, the Secretary shall allocate 75 percent of 1 

22 credit. 

23 ‘‘(4) For a hybrid vehicle with 30 percent or 

24 more maximum available power, the Secretary shall 

25 allocate 1 credit.’’; and 
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1 (3) by adding at the end the following: 

2 ‘‘(g) CREDIT FOR INVESTMENT IN ALTERNATIVE

3 FUEL INFRASTRUCTURE.— 

4 ‘‘(1) DEFINITION OF QUALIFYING INFRASTRUC5 TURE.—In this subsection, the term ‘qualifying in6 frastructure’ means— 

7 ‘‘(A) equipment required to refuel or re8 charge alternative fueled vehicles; 

9 ‘‘(B) facilities or equipment required to 

10 maintain, repair, or operate alternative fueled 

11 vehicles; and 

12 ‘‘(C) such other activities as the Secretary 

13 considers to constitute an appropriate expendi14 ture in support of the operation, maintenance, 

15 or further widespread adoption of or utilization 

16 of alternative fueled vehicles. 

17 ‘‘(2) ISSUANCE OF CREDITS.—The Secretary 

18 shall issue a credit to a fleet or covered person under 

19 this title for investment in qualifying infrastructure 

20 if the qualifying infrastructure is open to the general 

21 public during regular business hours. 

22 ‘‘(3) AMOUNT.—For the purpose of credits 

23 under this subsection— 
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1 ‘‘(A) 1 credit shall be equal to a minimum 

2 investment of $25,000 in cash or equivalent ex3 penditure, as determined by the Secretary; and

4 ‘‘(B) except in the case of a Federal or 

5 State fleet, no part of the investment may be 

6 provided by Federal or State funds. 

7 ‘‘(4) USE OF CREDITS.—At the request of a 

8 fleet or covered person allocated a credit under this 

9 subsection, the Secretary shall, for the year in which 

10 the investment is made, treat that credit as the ac11 quisition of 1 alternative fueled vehicle that the fleet 

12 or covered person is required to acquire under this 

13 title. 

14 ‘‘(h) DEFINITION OF MAXIMUM AVAILABLE

15 POWER.—In this section, the term ‘maximum available 

16 power’ means the quotient obtained by dividing—

17 ‘‘(1) the maximum power available from the en18 ergy storage device of a hybrid vehicle, during a 

19 standard 10-second pulse power or equivalent test; 

20 by 

21 ‘‘(2) the sum of—

22 ‘‘(A) the maximum power described in sub23 paragraph (A); and 

24 ‘‘(B) the net power of the internal combus25 tion or heat engine, as determined in accord-
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1 ance with standards established by the Society 

2 of Automobile Engineers.’’. 

3 (c) LEASE CONDENSATE FUELS.—Section 301 of the 

4 Energy Policy Act of 1992 (42 U.S.C. 13211) (as amend5 ed by section 702) is amended—

6 (1) in paragraph (2), by inserting ‘‘mixtures 

7 containing 50 percent or more by volume of lease 

8 condensate or fuels extracted from lease conden9 sate;’’ after ‘‘liquefied petroleum gas;’’; 

10 (2) in paragraph (14)—

11 (A) by inserting ‘‘mixtures containing 50 

12 percent or more by volume of lease condensate 

13 or fuels extracted from lease condensate,’’ after 

14 ‘‘liquefied petroleum gas,’’; and 

15 (B) by striking ‘‘and’’ at the end; 

16 (3) in paragraph (15), by striking the period at 

17 the end and inserting ‘‘; and’’; and 

18 (4) by adding at the end the following: 

19 ‘‘(16) the term ‘lease condensate’ means a mix20 ture, primarily of pentanes and heavier hydro21 carbons, that is recovered as a liquid from natural 

22 gas in lease separation facilities.’’. 

23 (d) LEASE CONDENSATE USE CREDITS.—
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1 (1) IN GENERAL.—Title III of the Energy Pol2 icy Act of 1992 (42 U.S.C. 13211 et seq.) is amend3 ed by adding at the end the following: 

4 ‘‘SEC. 313. LEASE CONDENSATE USE CREDITS. 

5 ‘‘(a) IN GENERAL.—Subject to subsection (d), the 

6 Secretary shall allocate 1 credit under this section to a 

7 fleet or covered person for each qualifying volume of the 

8 lease condensate component of fuel containing at least 50 

9 percent lease condensate, or fuels extracted from lease 

10 condensate, after the date of enactment of this section for 

11 use by the fleet or covered person in vehicles owned or 

12 operated by the fleet or covered person that weigh more 

13 than 8,500 pounds gross vehicle weight rating. 

14 ‘‘(b) REQUIREMENTS.—A credit allocated under this 

15 section—

16 ‘‘(1) shall be subject to the same exceptions, 

17 authority, documentation, and use of credits that are 

18 specified for qualifying volumes of biodiesel in sec19 tion 312; and 

20 ‘‘(2) shall not be considered a credit under sec21 tion 508. 

22 ‘‘(c) REGULATION.—

23 ‘‘(1) IN GENERAL.—Subject to subsection (d), 

24 not later than January 1, 2004, after the collection 

25 of appropriate information and data that consider 
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1 usage options, uses in other industries, products, or 

2 processes, potential volume capacities, costs, air 

3 emissions, and fuel efficiencies, the Secretary shall 

4 issue a regulation establishing requirements and pro5 cedures for the implementation of this section. 

6 ‘‘(2) QUALIFYING VOLUME.—The regulation 

7 shall include a determination of an appropriate 

8 qualifying volume for lease condensate, except that 

9 in no case shall the Secretary determine that the 

10 qualifying volume for lease condensate is less than 

11 1,125 gallons. 

12 ‘‘(d) APPLICABILITY.—This section applies unless the 

13 Secretary finds that the use of lease condensate as an al14 ternative fuel would adversely affect public health or safe15 ty or ambient air quality or the environment.’’. 

16 (2) TABLE OF CONTENTS AMENDMENT.—The 

17 table of contents of the Energy Policy Act of 1992 

18 (42 U.S.C. prec. 13201) is amended by adding at 

19 the end of the items relating to title III the fol20 lowing:

‘‘Sec. 313. Lease condensate use credits.’’.

21 (e) EMERGENCY EXEMPTION.—Section 301 of the 

22 Energy Policy Act of 1992 (42 U.S.C. 13211) (as amend23 ed by section 702 and this section) is amended in para24 graph (9)(E) by inserting before the semicolon at the end 

25 ‘‘, including vehicles directly used in the emergency repair 
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1 of transmission lines and in the restoration of electricity 

2 service following power outages, as determined by the Sec3 retary’’.

4 SEC. 706. REVIEW OF ENERGY POLICY ACT OF 1992 PRO5 GRAMS. 

6 (a) IN GENERAL.—Not later than 180 days after the 

7 date of enactment of this section, the Secretary of Energy 

8 shall complete a study to determine the effect that titles 

9 III, IV, and V of the Energy Policy Act of 1992 (42 

10 U.S.C. 13211 et seq.) have had on—

11 (1) the development of alternative fueled vehicle 

12 technology; 

13 (2) the availability of that technology in the 

14 market; and 

15 (3) the cost of alternative fueled vehicles. 

16 (b) TOPICS.—As part of the study under subsection 

17 (a), the Secretary shall specifically identify— 

18 (1) the number of alternative fueled vehicles ac19 quired by fleets or covered persons required to ac20 quire alternative fueled vehicles; 

21 (2) the quantity, by type, of alternative fuel ac22 tually used in alternative fueled vehicles acquired by 

23 fleets or covered persons; 
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1 (3) the quantity of petroleum displaced by the 

2 use of alternative fuels in alternative fueled vehicles 

3 acquired by fleets or covered persons; 

4 (4) the direct and indirect costs of compliance 

5 with requirements under titles III, IV, and V of the 

6 Energy Policy Act of 1992 (42 U.S.C. 13211 et 

7 seq.), including—

8 (A) vehicle acquisition requirements im9 posed on fleets or covered persons; 

10 (B) administrative and recordkeeping ex11 penses; 

12 (C) fuel and fuel infrastructure costs; 

13 (D) associated training and employee ex14 penses; and 

15 (E) any other factors or expenses the Sec16 retary determines to be necessary to compile re17 liable estimates of the overall costs and benefits 

18 of complying with programs under those titles 

19 for fleets, covered persons, and the national 

20 economy; 

21 (5) the existence of obstacles preventing compli22 ance with vehicle acquisition requirements and in23 creased use of alternative fuel in alternative fueled 

24 vehicles acquired by fleets or covered persons; and 
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1 (6) the projected impact of amendments to the 

2 Energy Policy Act of 1992 made by this title. 

3 (c) REPORT.—Upon completion of the study under 

4 this section, the Secretary shall submit to Congress a re5 port that describes the results of the study and includes 

6 any recommendations of the Secretary for legislative or

7 administrative changes concerning the alternative fueled 

8 vehicle requirements under titles III, IV and V of the En9 ergy Policy Act of 1992 (42 U.S.C. 13211 et seq.). 

10 SEC. 707. REPORT CONCERNING COMPLIANCE WITH AL11 TERNATIVE FUELED VEHICLE PURCHASING 

12 REQUIREMENTS. 

13 Section 310(b)(1) of the Energy Policy Act of 1992 

14 (42 U.S.C. 13218(b)(1)) is amended by striking ‘‘1 year 

15 after the date of enactment of this subsection’’ and insert16 ing ‘‘February 15, 2004’’. 

17 Subtitle B—Hybrid Vehicles, Ad18 vanced Vehicles, and Fuel Cell 

19 Buses 

20 PART 1—HYBRID VEHICLES 

21 SEC. 711. HYBRID VEHICLES. 

22 The Secretary of Energy shall accelerate efforts di23 rected toward the improvement of batteries and other re24 chargeable energy storage systems, power electronics, hy-
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1 brid systems integration, and other technologies for use 

2 in hybrid vehicles. 

3 PART 2—ADVANCED VEHICLES 

4 SEC. 721. DEFINITIONS. 

5 In this part: 

6 (1) ALTERNATIVE FUELED VEHICLE.—

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

8 fueled vehicle’’ means a vehicle propelled solely 

9 on an alternative fuel (as defined in section 301 

10 of the Energy Policy Act of 1992 (42 U.S.C. 

11 13211)). 

12 (B) EXCLUSION.—The term ‘‘alternative 

13 fueled vehicle’’ does not include a vehicle that 

14 the Secretary determines, by regulation, does 

15 not yield substantial environmental benefits 

16 over a vehicle operating solely on gasoline or 

17 diesel derived from fossil fuels. 

18 (2) FUEL CELL VEHICLE.—The term ‘‘fuel cell 

19 vehicle’’ means a vehicle propelled by an electric 

20 motor powered by a fuel cell system that converts 

21 chemical energy into electricity by combining oxygen 

22 (from air) with hydrogen fuel that is stored on the 

23 vehicle or is produced onboard by reformation of a 

24 hydrocarbon fuel. Such fuel cell system may or may 
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1 not include the use of auxiliary energy storage sys2 tems to enhance vehicle performance. 

3 (3) HYBRID VEHICLE.—The term ‘‘hybrid vehi4 cle’’ means a medium or heavy duty vehicle propelled 

5 by an internal combustion engine or heat engine 

6 using any combustible fuel and an onboard recharge7 able energy storage device. 

8 (4) NEIGHBORHOOD ELECTRIC VEHICLE.—The 

9 term ‘‘neighborhood electric vehicle’’ means a motor 

10 vehicle that—

11 (A) meets the definition of a low-speed ve12 hicle (as defined in part 571 of title 49, Code 

13 of Federal Regulations); 

14 (B) meets the definition of a zero-emission 

15 vehicle (as defined in section 86.1702–99 of 

16 title 40, Code of Federal Regulations); 

17 (C) meets the requirements of Federal 

18 Motor Vehicle Safety Standard No. 500; and 

19 (D) has a maximum speed of not greater 

20 than 25 miles per hour. 

21 (5) PILOT PROGRAM.—The term ‘‘pilot pro22 gram’’ means the competitive grant program estab23 lished under section 722. 

24 (6) SECRETARY.—The term ‘‘Secretary’’ means 

25 the Secretary of Energy. 
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1 (7) ULTRA-LOW SULFUR DIESEL VEHICLE.—

2 The term ‘‘ultra-low sulfur diesel vehicle’’ means a 

3 vehicle manufactured in any of model years 2003 

4 through 2006 powered by a heavy-duty diesel engine 

5 that—

6 (A) is fueled by diesel fuel that contains 

7 sulfur at not more than 15 parts per million; 

8 and 

9 (B) emits not more than the lesser of—

10 (i) for vehicles manufactured in—

11 (I) model year 2003, 3.0 grams 

12 per brake horsepower-hour of oxides 

13 of nitrogen and .01 grams per brake 

14 horsepower-hour of particulate matter; 

15 and 

16 (II) model years 2004 through 

17 2006, 2.5 grams per brake horse18 power-hour of nonmethane hydro19 carbons and oxides of nitrogen and 

20 .01 grams per brake horsepower-hour 

21 of particulate matter; or 

22 (ii) the quantity of emissions of non23 methane hydrocarbons, oxides of nitrogen, 

24 and particulate matter of the best-per25 forming technology of ultra-low sulfur die-
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1 sel vehicles of the same class and applica2 tion that are commercially available. 

3 SEC. 722. PILOT PROGRAM. 

4 (a) ESTABLISHMENT.—The Secretary, in consulta5 tion with the Secretary of Transportation, shall establish 

6 a competitive grant pilot program, to be administered 

7 through the Clean Cities Program of the Department of 

8 Energy, to provide not more than 15 geographically dis9 persed project grants to State governments, local govern10 ments, or metropolitan transportation authorities to carry 

11 out a project or projects for the purposes described in sub12 section (b). 

13 (b) GRANT PURPOSES.—A grant under this section 

14 may be used for the following purposes: 

15 (1) The acquisition of alternative fueled vehicles 

16 or fuel cell vehicles, including—

17 (A) passenger vehicles (including neighbor18 hood electric vehicles); and 

19 (B) motorized 2-wheel bicycles, scooters, or 

20 other vehicles for use by law enforcement per21 sonnel or other State or local government or 

22 metropolitan transportation authority employ23 ees. 

24 (2) The acquisition of alternative fueled vehi25 cles, hybrid vehicles, or fuel cell vehicles, including—
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1 (A) buses used for public transportation or 

2 transportation to and from schools; 

3 (B) delivery vehicles for goods or services; 

4 and 

5 (C) ground support vehicles at public air6 ports (including vehicles to carry baggage or 

7 push or pull airplanes toward or away from ter8 minal gates). 

9 (3) The acquisition of ultra-low sulfur diesel ve10 hicles. 

11 (4) Installation or acquisition of infrastructure 

12 necessary to directly support an alternative fueled 

13 vehicle, fuel cell vehicle, or hybrid vehicle project 

14 funded by the grant, including fueling and other 

15 support equipment. 

16 (5) Operation and maintenance of vehicles, in17 frastructure, and equipment acquired as part of a 

18 project funded by the grant. 

19 (c) APPLICATIONS.—

20 (1) REQUIREMENTS.—

21 (A) IN GENERAL.—The Secretary shall 

22 issue requirements for applying for grants 

23 under the pilot program. 
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1 (B) MINIMUM REQUIREMENTS.—At a min2 imum, the Secretary shall require that an appli3 cation for a grant—

4 (i) be submitted by the head of a 

5 State or local government or a metropoli6 tan transportation authority, or any com7 bination thereof, and a registered partici8 pant in the Clean Cities Program of the 

9 Department of Energy; and 

10 (ii) include—

11 (I) a description of the project 

12 proposed in the application, including 

13 how the project meets the require14 ments of this part; 

15 (II) an estimate of the ridership 

16 or degree of use of the project; 

17 (III) an estimate of the air pollu18 tion emissions reduced and fossil fuel 

19 displaced as a result of the project, 

20 and a plan to collect and disseminate 

21 environmental data, related to the 

22 project to be funded under the grant, 

23 over the life of the project; 

24 (IV) a description of how the 

25 project will be sustainable without 
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1 Federal assistance after the comple2 tion of the term of the grant; 

3 (V) a complete description of the 

4 costs of the project, including acquisi5 tion, construction, operation, and 

6 maintenance costs over the expected 

7 life of the project; 

8 (VI) a description of which costs 

9 of the project will be supported by 

10 Federal assistance under this part; 

11 and 

12 (VII) documentation to the satis13 faction of the Secretary that diesel 

14 fuel containing sulfur at not more 

15 than 15 parts per million is available 

16 for carrying out the project, and a 

17 commitment by the applicant to use 

18 such fuel in carrying out the project. 

19 (2) PARTNERS.—An applicant under paragraph 

20 (1) may carry out a project under the pilot program 

21 in partnership with public and private entities. 

22 (d) SELECTION CRITERIA.—In evaluating applica23 tions under the pilot program, the Secretary shall—

24 (1) consider each applicant’s previous experi25 ence with similar projects; and 
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1 (2) give priority consideration to applications 

2 that—

3 (A) are most likely to maximize protection 

4 of the environment; 

5 (B) demonstrate the greatest commitment 

6 on the part of the applicant to ensure funding 

7 for the proposed project and the greatest likeli8 hood that the project will be maintained or ex9 panded after Federal assistance under this part 

10 is completed; and 

11 (C) exceed the minimum requirements of 

12 subsection (c)(1)(B)(ii). 

13 (e) PILOT PROJECT REQUIREMENTS.—

14 (1) MAXIMUM AMOUNT.—The Secretary shall 

15 not provide more than $20,000,000 in Federal as16 sistance under the pilot program to any applicant. 

17 (2) COST SHARING.—The Secretary shall not 

18 provide more than 50 percent of the cost, incurred 

19 during the period of the grant, of any project under 

20 the pilot program. 

21 (3) MAXIMUM PERIOD OF GRANTS.—The Sec22 retary shall not fund any applicant under the pilot 

23 program for more than 5 years. 

24 (4) DEPLOYMENT AND DISTRIBUTION.—The 

25 Secretary shall seek to the maximum extent prac-
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1 ticable to ensure a broad geographic distribution of 

2 project sites. 

3 (5) TRANSFER OF INFORMATION AND KNOWL4 EDGE.—The Secretary shall establish mechanisms to 

5 ensure that the information and knowledge gained 

6 by participants in the pilot program are transferred 

7 among the pilot program participants and to other 

8 interested parties, including other applicants that 

9 submitted applications. 

10 (f) SCHEDULE.—

11 (1) PUBLICATION.—Not later than 90 days 

12 after the date of enactment of this Act, the Sec13 retary shall publish in the Federal Register, Com14 merce Business Daily, and elsewhere as appropriate, 

15 a request for applications to undertake projects 

16 under the pilot program. Applications shall be due 

17 not later than 180 days after the date of publication 

18 of the notice. 

19 (2) SELECTION.—Not later than 180 days after 

20 the date by which applications for grants are due, 

21 the Secretary shall select by competitive, peer re22 viewed proposal, all applications for projects to be 

23 awarded a grant under the pilot program. 

24 (g) LIMIT ON FUNDING.—The Secretary shall pro25 vide not less than 20 nor more than 25 percent of the 
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1 grant funding made available under this section for the 

2 acquisition of ultra-low sulfur diesel vehicles. 

3 SEC. 723. REPORTS TO CONGRESS. 

4 (a) INITIAL REPORT.—Not later than 60 days after 

5 the date on which grants are awarded under this part, 

6 the Secretary shall submit to Congress a report con7 taining—

8 (1) an identification of the grant recipients and 

9 a description of the projects to be funded; 

10 (2) an identification of other applicants that 

11 submitted applications for the pilot program; and 

12 (3) a description of the mechanisms used by the 

13 Secretary to ensure that the information and knowl14 edge gained by participants in the pilot program are 

15 transferred among the pilot program participants 

16 and to other interested parties, including other ap17 plicants that submitted applications. 

18 (b) EVALUATION.—Not later than 3 years after the 

19 date of enactment of this Act, and annually thereafter 

20 until the pilot program ends, the Secretary shall submit 

21 to Congress a report containing an evaluation of the effec22 tiveness of the pilot program, including—

23 (1) an assessment of the benefits to the envi24 ronment derived from the projects included in the 

25 pilot program; and 
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1 (2) an estimate of the potential benefits to the 

2 environment to be derived from widespread applica3 tion of alternative fueled vehicles and ultra-low sul4 fur diesel vehicles. 

5 SEC. 724. AUTHORIZATION OF APPROPRIATIONS. 

6 There are authorized to be appropriated to the Sec7 retary to carry out this part $200,000,000, to remain 

8 available until expended. 

9 PART 3—FUEL CELL BUSES 

10 SEC. 731. FUEL CELL TRANSIT BUS DEMONSTRATION. 

11 (a) IN GENERAL.—The Secretary of Energy, in con12 sultation with the Secretary of Transportation, shall es13 tablish a transit bus demonstration program to make com14 petitive, merit-based awards for 5-year projects to dem15 onstrate not more than 25 fuel cell transit buses (and nec16 essary infrastructure) in 5 geographically dispersed local17 ities. 

18 (b) PREFERENCE.—In selecting projects under this 

19 section, the Secretary of Energy shall give preference to 

20 projects that are most likely to mitigate congestion and 

21 improve air quality. 

22 (c) AUTHORIZATION OF APPROPRIATIONS.—There 

23 are authorized to be appropriated to the Secretary of En24 ergy to carry out this section $10,000,000 for each of fis25 cal years 2004 through 2008.
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1 Subtitle C—Clean School Buses 

2 SEC. 741. DEFINITIONS. 

3 In this subtitle: 

4 (1) ADMINISTRATOR.—The term ‘‘Adminis5 trator’’ means the Administrator of the Environ6 mental Protection Agency. 

7 (2) ALTERNATIVE FUEL.—The term ‘‘alter8 native fuel’’ means liquefied natural gas, compressed 

9 natural gas, liquefied petroleum gas, hydrogen, pro10 pane, or methanol or ethanol at no less than 85 per11 cent by volume. 

12 (3) ALTERNATIVE FUEL SCHOOL BUS.—The 

13 term ‘‘alternative fuel school bus’’ means a school 

14 bus that meets all of the requirements of this sub15 title and is operated solely on an alternative fuel. 

16 (4) EMISSIONS CONTROL RETROFIT TECH17 NOLOGY.—The term ‘‘emissions control retrofit tech18 nology’’ means a particulate filter or other emissions 

19 control equipment that is verified or certified by the 

20 Administrator or the California Air Resources Board 

21 as an effective emission reduction technology when 

22 installed on an existing school bus. 

23 (5) IDLING.—The term ‘‘idling’’ means oper24 ating an engine while remaining stationary for more 

25 than approximately 15 minutes, except that the term 
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1 does not apply to routine stoppages associated with 

2 traffic movement or congestion. 

3 (6) SECRETARY.—The term ‘‘Secretary’’ means 

4 the Secretary of Energy. 

5 (7) ULTRA-LOW SULFUR DIESEL FUEL.—The 

6 term ‘‘ultra-low sulfur diesel fuel’’ means diesel fuel 

7 that contains sulfur at not more than 15 parts per 

8 million. 

9 (8) ULTRA-LOW SULFUR DIESEL FUEL SCHOOL

10 BUS.—The term ‘‘ultra-low sulfur diesel fuel school 

11 bus’’ means a school bus that meets all of the re12 quirements of this subtitle and is operated solely on 

13 ultra-low sulfur diesel fuel. 

14 SEC. 742. PROGRAM FOR REPLACEMENT OF CERTAIN 

15 SCHOOL BUSES WITH CLEAN SCHOOL BUSES. 

16 (a) ESTABLISHMENT.—The Administrator, in con17 sultation with the Secretary and other appropriate Federal 

18 departments and agencies, shall establish a program for 

19 awarding grants on a competitive basis to eligible entities 

20 for the replacement of existing school buses manufactured 

21 before model year 1991 with alternative fuel school buses 

22 and ultra-low sulfur diesel fuel school buses. 

23 (b) REQUIREMENTS.—

24 (1) IN GENERAL.—Not later than 90 days after 

25 the date of enactment of this Act, the Administrator 
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1 shall establish and publish in the Federal Register 

2 grant requirements on eligibility for assistance, and 

3 on implementation of the program established under 

4 subsection (a), including instructions for the submis5 sion of grant applications and certification require6 ments to ensure compliance with this subtitle. 

7 (2) APPLICATION DEADLINES.—The require8 ments established under paragraph (1) shall require 

9 submission of grant applications not later than—

10 (A) in the case of the first year of program 

11 implementation, the date that is 180 days after 

12 the publication of the requirements in the Fed13 eral Register; and 

14 (B) in the case of each subsequent year, 

15 June 1 of the year. 

16 (c) ELIGIBLE RECIPIENTS.—A grant shall be award17 ed under this section only—

18 (1) to 1 or more local or State governmental 

19 entities responsible for providing school bus service 

20 to 1 or more public school systems or responsible for 

21 the purchase of school buses; 

22 (2) to 1 or more contracting entities that pro23 vide school bus service to 1 or more public school 

24 systems, if the grant application is submitted jointly 

25 with the 1 or more school systems to be served by 
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1 the buses, except that the application may provide 

2 that buses purchased using funds awarded shall be 

3 owned, operated, and maintained exclusively by the 

4 1 or more contracting entities; or 

5 (3) to a nonprofit school transportation associa6 tion representing private contracting entities, if the 

7 association has notified and received approval from 

8 the 1 or more school systems to be served by the 

9 buses. 

10 (d) AWARD DEADLINES.—

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

12 the Administrator shall award a grant made to a 

13 qualified applicant for a fiscal year—

14 (A) in the case of the first fiscal year of 

15 program implementation, not later than the 

16 date that is 90 days after the application dead17 line established under subsection (b)(2); and 

18 (B) in the case of each subsequent fiscal 

19 year, not later than August 1 of the fiscal year. 

20 (2) INSUFFICIENT NUMBER OF QUALIFIED

21 GRANT APPLICATIONS.—If the Administrator does 

22 not receive a sufficient number of qualified grant ap23 plications to meet the requirements of subsection 

24 (i)(1) for a fiscal year, the Administrator shall 

25 award a grant made to a qualified applicant under 
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1 subsection (i)(2) not later than September 30 of the 

2 fiscal year. 

3 (e) TYPES OF GRANTS.—

4 (1) IN GENERAL.—A grant under this section 

5 shall be used for the replacement of school buses 

6 manufactured before model year 1991 with alter7 native fuel school buses and ultra-low sulfur diesel 

8 fuel school buses. 

9 (2) NO ECONOMIC BENEFIT.—Other than the 

10 receipt of the grant, a recipient of a grant under this 

11 section may not receive any economic benefit in con12 nection with the receipt of the grant. 

13 (3) PRIORITY OF GRANT APPLICATIONS.—The 

14 Administrator shall give priority to applicants that 

15 propose to replace school buses manufactured before 

16 model year 1977. 

17 (f) CONDITIONS OF GRANT.—A grant provided under 

18 this section shall include the following conditions: 

19 (1) SCHOOL BUS FLEET.—All buses acquired 

20 with funds provided under the grant shall be oper21 ated as part of the school bus fleet for which the 

22 grant was made for a minimum of 5 years. 

23 (2) USE OF FUNDS.—Funds provided under the 

24 grant may only be used—
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1 (A) to pay the cost, except as provided in 

2 paragraph (3), of new alternative fuel school 

3 buses or ultra-low sulfur diesel fuel school 

4 buses, including State taxes and contract fees 

5 associated with the acquisition of such buses; 

6 and 

7 (B) to provide—

8 (i) up to 20 percent of the price of the 

9 alternative fuel school buses acquired, for 

10 necessary alternative fuel infrastructure if 

11 the infrastructure will only be available to 

12 the grant recipient; and 

13 (ii) up to 25 percent of the price of 

14 the alternative fuel school buses acquired, 

15 for necessary alternative fuel infrastructure 

16 if the infrastructure will be available to the 

17 grant recipient and to other bus fleets. 

18 (3) GRANT RECIPIENT FUNDS.—The grant re19 cipient shall be required to provide at least—

20 (A) in the case of a grant recipient de21 scribed in paragraph (1) or (3) of subsection 

22 (c), the lesser of—

23 (i) an amount equal to 15 percent of 

24 the total cost of each bus received; or 

25 (ii) $15,000 per bus; and
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1 (B) in the case of a grant recipient de2 scribed in subsection (c)(2), the lesser of—

3 (i) an amount equal to 20 percent of 

4 the total cost of each bus received; or 

5 (ii) $20,000 per bus. 

6 (4) ULTRA-LOW SULFUR DIESEL FUEL.—In the 

7 case of a grant recipient receiving a grant for ultra8 low sulfur diesel fuel school buses, the grant recipi9 ent shall be required to provide documentation to 

10 the satisfaction of the Administrator that diesel fuel 

11 containing sulfur at not more than 15 parts per mil12 lion is available for carrying out the purposes of the 

13 grant, and a commitment by the applicant to use 

14 such fuel in carrying out the purposes of the grant. 

15 (5) TIMING.—All alternative fuel school buses, 

16 ultra-low sulfur diesel fuel school buses, or alter17 native fuel infrastructure acquired under a grant 

18 awarded under this section shall be purchased and 

19 placed in service as soon as practicable. 

20 (g) BUSES.—

21 (1) IN GENERAL.—Except as provided in para22 graph (2), funding under a grant made under this 

23 section for the acquisition of new alternative fuel 

24 school buses or ultra-low sulfur diesel fuel school 

25 buses shall only be used to acquire school buses—
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1 (A) with a gross vehicle weight of greater 

2 than 14,000 pounds; 

3 (B) that are powered by a heavy duty en4 gine; 

5 (C) in the case of alternative fuel school 

6 buses manufactured in model years 2004 

7 through 2006, that emit not more than 1.8 

8 grams per brake horsepower-hour of non9 methane hydrocarbons and oxides of nitrogen 

10 and .01 grams per brake horsepower-hour of 

11 particulate matter; and 

12 (D) in the case of ultra-low sulfur diesel 

13 fuel school buses manufactured in model years 

14 2004 through 2006, that emit not more than 

15 2.5 grams per brake horsepower-hour of non16 methane hydrocarbons and oxides of nitrogen 

17 and .01 grams per brake horsepower-hour of 

18 particulate matter. 

19 (2) LIMITATIONS.—A bus shall not be acquired 

20 under this section that emits nonmethane hydro21 carbons, oxides of nitrogen, or particulate matter at 

22 a rate greater than the best performing technology 

23 of the same class of ultra-low sulfur diesel fuel 

24 school buses commercially available at the time the 

25 grant is made. 
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1 (h) DEPLOYMENT AND DISTRIBUTION.—The Admin2 istrator shall— 

3 (1) seek, to the maximum extent practicable, to 

4 achieve nationwide deployment of alternative fuel 

5 school buses and ultra-low sulfur diesel fuel school 

6 buses through the program under this section; and 

7 (2) ensure a broad geographic distribution of 

8 grant awards, with a goal of no State receiving more 

9 than 10 percent of the grant funding made available 

10 under this section for a fiscal year. 

11 (i) ALLOCATION OF FUNDS.—

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

13 the amount of grant funding made available to carry 

14 out this section for any fiscal year, the Adminis15 trator shall use—

16 (A) 70 percent for the acquisition of alter17 native fuel school buses or supporting infra18 structure; and 

19 (B) 30 percent for the acquisition of ultra20 low sulfur diesel fuel school buses. 

21 (2) INSUFFICIENT NUMBER OF QUALIFIED

22 GRANT APPLICATIONS.—After the first fiscal year in 

23 which this program is in effect, if the Administrator 

24 does not receive a sufficient number of qualified 

25 grant applications to meet the requirements of sub-
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1 paragraph (A) or (B) of paragraph (1) for a fiscal 

2 year, effective beginning on August 1 of the fiscal 

3 year, the Administrator shall make the remaining 

4 funds available to other qualified grant applicants 

5 under this section. 

6 (j) REDUCTION OF SCHOOL BUS IDLING.—Each 

7 local educational agency (as defined in section 9101 of the 

8 Elementary and Secondary Education Act of 1965 (20 

9 U.S.C. 7801)) that receives Federal funds under the Ele10 mentary and Secondary Education Act of 1965 (20 U.S.C. 

11 6301 et seq.) is encouraged to develop a policy, consistent 

12 with the health, safety, and welfare of students and the 

13 proper operation and maintenance of school buses, to re14 duce the incidence of unnecessary school bus idling at 

15 schools when picking up and unloading students. 

16 (k) ANNUAL REPORT.—

17 (1) IN GENERAL.—Not later than January 31 

18 of each year, the Administrator shall transmit to 

19 Congress a report evaluating implementation of the 

20 programs under this section and section 743. 

21 (2) COMPONENTS.—The reports shall include a 

22 description of—

23 (A) the total number of grant applications 

24 received; 
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1 (B) the number and types of alternative 

2 fuel school buses, ultra-low sulfur diesel fuel 

3 school buses, and retrofitted buses requested in 

4 grant applications; 

5 (C) grants awarded and the criteria used 

6 to select the grant recipients; 

7 (D) certified engine emission levels of all 

8 buses purchased or retrofitted under the pro9 grams under this section and section 743; 

10 (E) an evaluation of the in-use emission 

11 level of buses purchased or retrofitted under the 

12 programs under this section and section 743; 

13 and 

14 (F) any other information the Adminis15 trator considers appropriate. 

16 (l) AUTHORIZATION OF APPROPRIATIONS.—There 

17 are authorized to be appropriated to the Administrator to 

18 carry out this section, to remain available until ex19 pended—

20 (1) $45,000,000 for fiscal year 2005; 

21 (2) $65,000,000 for fiscal year 2006; 

22 (3) $90,000,000 for fiscal year 2007; and 

23 (4) such sums as are necessary for each of fis24 cal years 2008 and 2009. 
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1 SEC. 743. DIESEL RETROFIT PROGRAM. 

2 (a) ESTABLISHMENT.—The Administrator, in con3 sultation with the Secretary, shall establish a program for 

4 awarding grants on a competitive basis to entities for the 

5 installation of retrofit technologies for diesel school buses. 

6 (b) ELIGIBLE RECIPIENTS.—A grant shall be award7 ed under this section only—

8 (1) to a local or State governmental entity re9 sponsible for providing school bus service to 1 or 

10 more public school systems; 

11 (2) to 1 or more contracting entities that pro12 vide school bus service to 1 or more public school 

13 systems, if the grant application is submitted jointly 

14 with the 1 or more school systems that the buses 

15 will serve, except that the application may provide 

16 that buses purchased using funds awarded shall be 

17 owned, operated, and maintained exclusively by the 

18 1 or more contracting entities; or 

19 (3) to a nonprofit school transportation associa20 tion representing private contracting entities, if the 

21 association has notified and received approval from 

22 the 1 or more school systems to be served by the 

23 buses. 

24 (c) AWARDS.—

25 (1) IN GENERAL.—The Administrator shall 

26 seek, to the maximum extent practicable, to ensure
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1 a broad geographic distribution of grants under this 

2 section. 

3 (2) PREFERENCES.—In making awards of 

4 grants under this section, the Administrator shall 

5 give preference to proposals that—

6 (A) will achieve the greatest reductions in 

7 emissions of nonmethane hydrocarbons, oxides 

8 of nitrogen, or particulate matter per proposal 

9 or per bus; or 

10 (B) involve the use of emissions control 

11 retrofit technology on diesel school buses that 

12 operate solely on ultra-low sulfur diesel fuel. 

13 (d) CONDITIONS OF GRANT.—A grant shall be pro14 vided under this section on the conditions that—

15 (1) buses on which retrofit emissions-control 

16 technology are to be demonstrated—

17 (A) will operate on ultra-low sulfur diesel 

18 fuel where such fuel is reasonably available or 

19 required for sale by State or local law or regula20 tion; 

21 (B) were manufactured in model year 1991 

22 or later; and 

23 (C) will be used for the transportation of 

24 school children to and from school for a min25 imum of 5 years; 
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1 (2) grant funds will be used for the purchase of 

2 emission control retrofit technology, including State 

3 taxes and contract fees; and 

4 (3) grant recipients will provide at least 15 per5 cent of the total cost of the retrofit, including the 

6 purchase of emission control retrofit technology and 

7 all necessary labor for installation of the retrofit. 

8 (e) VERIFICATION.—Not later than 90 days after the 

9 date of enactment of this Act, the Administrator shall 

10 publish in the Federal Register procedures to verify—

11 (1) the retrofit emissions-control technology to 

12 be demonstrated; 

13 (2) that buses powered by ultra-low sulfur die14 sel fuel on which retrofit emissions-control tech15 nology are to be demonstrated will operate on diesel 

16 fuel containing not more than 15 parts per million 

17 of sulfur; and 

18 (3) that grants are administered in accordance 

19 with this section. 

20 (f) AUTHORIZATION OF APPROPRIATIONS.—There 

21 are authorized to be appropriated to the Administrator to 

22 carry out this section, to remain available until ex23 pended—

24 (1) $20,000,000 for fiscal year 2005; 

25 (2) $35,000,000 for fiscal year 2006; 
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1 (3) $45,000,000 for fiscal year 2007; and 

2 (4) such sums as are necessary for each of fis3 cal years 2008 and 2009. 

4 SEC. 744. FUEL CELL SCHOOL BUSES. 

5 (a) ESTABLISHMENT.—The Secretary shall establish 

6 a program for entering into cooperative agreements—

7 (1) with private sector fuel cell bus developers 

8 for the development of fuel cell-powered school 

9 buses; and 

10 (2) subsequently, with not less than 2 units of 

11 local government using natural gas-powered school 

12 buses and such private sector fuel cell bus developers 

13 to demonstrate the use of fuel cell-powered school 

14 buses. 

15 (b) COST SHARING.—The non-Federal contribution 

16 for activities funded under this section shall be not less 

17 than—

18 (1) 20 percent for fuel infrastructure develop19 ment activities; and 

20 (2) 50 percent for demonstration activities and 

21 for development activities not described in paragraph 

22 (1). 

23 (c) REPORTS TO CONGRESS.—Not later than 3 years 

24 after the date of enactment of this Act, the Secretary shall 

25 transmit to Congress a report that—
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1 (1) evaluates the process of converting natural 

2 gas infrastructure to accommodate fuel cell-powered 

3 school buses; and 

4 (2) assesses the results of the development and 

5 demonstration program under this section. 

6 (d) AUTHORIZATION OF APPROPRIATIONS.—There 

7 are authorized to be appropriated to the Secretary to carry 

8 out this section $25,000,000 for the period of fiscal years 

9 2004 through 2006. 

10 Subtitle D—Miscellaneous 

11 SEC. 751. RAILROAD EFFICIENCY. 

12 (a) ESTABLISHMENT.—The Secretary of Energy 

13 shall, in cooperation with the Secretary of Transportation 

14 and the Administrator of the Environmental Protection 

15 Agency, establish a cost-shared, public-private research 

16 partnership involving the Federal Government, railroad 

17 carriers, locomotive manufacturers and equipment sup18 pliers, and the Association of American Railroads, to de19 velop and demonstrate railroad locomotive technologies 

20 that increase fuel economy, reduce emissions, and lower 

21 costs of operation. 

22 (b) AUTHORIZATION OF APPROPRIATIONS.—There 

23 are authorized to be appropriated to the Secretary of En24 ergy to carry out this section—

25 (1) $25,000,000 for fiscal year 2005; 
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1 (2) $35,000,000 for fiscal year 2006; and 

2 (3) $50,000,000 for fiscal year 2007. 

3 SEC. 752. MOBILE EMISSION REDUCTIONS TRADING AND 

4 CREDITING. 

5 (a) IN GENERAL.—Not later than 180 days after the 

6 date of enactment of this Act, the Administrator of the 

7 Environmental Protection Agency shall submit to Con8 gress a report on the experience of the Administrator with 

9 the trading of mobile source emission reduction credits for 

10 use by owners and operators of stationary source emission 

11 sources to meet emission offset requirements within a non12 attainment area. 

13 (b) CONTENTS.—The report shall describe—

14 (1) projects approved by the Administrator that 

15 include the trading of mobile source emission reduc16 tion credits for use by stationary sources in com17 plying with offset requirements, including a descrip18 tion of—

19 (A) project and stationary sources location; 

20 (B) volumes of emissions offset and trad21 ed; 

22 (C) the sources of mobile emission reduc23 tion credits; and 

24 (D) if available, the cost of the credits; 
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1 (2) the significant issues identified by the Ad2 ministrator in consideration and approval of trading 

3 in the projects; 

4 (3) the requirements for monitoring and assess5 ing the air quality benefits of any approved project; 

6 (4) the statutory authority on which the Admin7 istrator has based approval of the projects; 

8 (5) an evaluation of how the resolution of issues 

9 in approved projects could be used in other projects; 

10 and 

11 (6) any other issues that the Administrator con12 siders relevant to the trading and generation of mo13 bile source emission reduction credits for use by sta14 tionary sources or for other purposes. 

15 SEC. 753. AVIATION FUEL CONSERVATION AND EMISSIONS. 

16 (a) IN GENERAL.—Not later than 60 days after the 

17 date of enactment of this Act, the Administrator of the 

18 Federal Aviation Administration and the Administrator of 

19 the Environmental Protection Agency shall jointly initiate 

20 a study to identify—

21 (1) the impact of aircraft emissions on air qual22 ity in nonattainment areas; and 

23 (2) ways to promote fuel conservation measures 

24 for aviation to—

25 (A) enhance fuel efficiency; and
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1 (B) reduce emissions. 

2 (b) FOCUS.—The study under subsection (a) shall 

3 focus on how air traffic management inefficiencies, such 

4 as aircraft idling at airports, result in unnecessary fuel 

5 burn and air emissions. 

6 (c) REPORT.—Not later than 1 year after the date 

7 of the initiation of the study under subsection (a), the Ad8 ministrator of the Federal Aviation Administration and 

9 the Administrator of the Environmental Protection Agen10 cy shall jointly submit to the Committee on Energy and 

11 Commerce and the Committee on Transportation and In12 frastructure of the House of Representatives and the Com13 mittee on Environment and Public Works and the Com14 mittee on Commerce, Science, and Transportation of the 

15 Senate a report that—

16 (1) describes the results of the study; and 

17 (2) includes any recommendations on ways in 

18 which unnecessary fuel use and emissions affecting 

19 air quality may be reduced—

20 (A) without adversely affecting safety and 

21 security and increasing individual aircraft noise; 

22 and 

23 (B) while taking into account all aircraft 

24 emissions and the impact of the emissions on 

25 human health. 
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1 SEC. 754. DIESEL FUELED VEHICLES. 

2 (a) DEFINITION OF TIER 2 EMISSION STANDARDS.—

3 In this section, the term ‘‘tier 2 emission standards’’ 

4 means the motor vehicle emission standards that apply to 

5 passenger cars, light trucks, and larger passenger vehicles 

6 manufactured after the 2003 model year, as issued on 

7 February 10, 2000, by the Administrator of the Environ8 mental Protection Agency under sections 202 and 211 of 

9 the Clean Air Act (42 U.S.C. 7521, 7545). 

10 (b) DIESEL COMBUSTION AND AFTER-TREATMENT

11 TECHNOLOGIES.—The Secretary of Energy shall accel12 erate efforts to improve diesel combustion and after-treat13 ment technologies for use in diesel fueled motor vehicles. 

14 (c) GOALS.—The Secretary shall carry out subsection 

15 (b) with a view toward achieving the following goals: 

16 (1) Developing and demonstrating diesel tech17 nologies that, not later than 2010, meet the fol18 lowing standards: 

19 (A) Tier 2 emission standards. 

20 (B) The heavy-duty emissions standards of 

21 2007 that are applicable to heavy-duty vehicles 

22 under regulations issued by the Administrator 

23 of the Environmental Protection Agency as of 

24 the date of enactment of this Act. 

25 (2) Developing the next generation of low-emis26 sion, high-efficiency diesel engine technologies, in-
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1 cluding homogeneous charge compression ignition 

2 technology. 

3 SEC. 755. CONSERVE BY BICYCLING PROGRAM. 

4 (a) DEFINITIONS.—In this section: 

5 (1) PROGRAM.—The term ‘‘program’’ means 

6 the Conserve by Bicycling Program established by 

7 subsection (b). 

8 (2) SECRETARY.—The term ‘‘Secretary’’ means 

9 the Secretary of Transportation. 

10 (b) ESTABLISHMENT.—There is established within 

11 the Department of Transportation a program to be known 

12 as the ‘‘Conserve by Bicycling Program’’. 

13 (c) PROJECTS.—

14 (1) IN GENERAL.—In carrying out the program, 

15 the Secretary shall establish not more than 10 pilot 

16 projects that are—

17 (A) dispersed geographically throughout 

18 the United States; and 

19 (B) designed to conserve energy resources 

20 by encouraging the use of bicycles in place of 

21 motor vehicles. 

22 (2) REQUIREMENTS.—A pilot project described 

23 in paragraph (1) shall—

24 (A) use education and marketing to con25 vert motor vehicle trips to bicycle trips; 
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1 (B) document project results and energy 

2 savings (in estimated units of energy con3 served); 

4 (C) facilitate partnerships among inter5 ested parties in at least 2 of the fields of—

6 (i) transportation; 

7 (ii) law enforcement; 

8 (iii) education; 

9 (iv) public health; 

10 (v) environment; and 

11 (vi) energy; 

12 (D) maximize bicycle facility investments; 

13 (E) demonstrate methods that may be 

14 used in other regions of the United States; and 

15 (F) facilitate the continuation of ongoing 

16 programs that are sustained by local resources. 

17 (3) COST SHARING.—At least 20 percent of the 

18 cost of each pilot project described in paragraph (1) 

19 shall be provided from State or local sources. 

20 (d) ENERGY AND BICYCLING RESEARCH STUDY.—

21 (1) IN GENERAL.—Not later than 2 years after 

22 the date of enactment of this Act, the Secretary 

23 shall enter into a contract with the National Acad24 emy of Sciences for, and the National Academy of 

25 Sciences shall conduct and submit to Congress a re-
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1 port on, a study on the feasibility of converting 

2 motor vehicle trips to bicycle trips. 

3 (2) COMPONENTS.—The study shall—

4 (A) document the results or progress of 

5 the pilot projects under subsection (c); 

6 (B) determine the type and duration of 

7 motor vehicle trips that people in the United 

8 States may feasibly make by bicycle, taking into 

9 consideration factors such as—

10 (i) weather; 

11 (ii) land use and traffic patterns; 

12 (iii) the carrying capacity of bicycles; 

13 and 

14 (iv) bicycle infrastructure; 

15 (C) determine any energy savings that 

16 would result from the conversion of motor vehi17 cle trips to bicycle trips; 

18 (D) include a cost-benefit analysis of bicy19 cle infrastructure investments; and 

20 (E) include a description of any factors 

21 that would encourage more motor vehicle trips 

22 to be replaced with bicycle trips. 

23 (e) AUTHORIZATION OF APPROPRIATIONS.—There 

24 are authorized to be appropriated to the Secretary to carry 
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1 out this section $6,200,000, to remain available until ex2 pended, of which—

3 (1) $5,150,000 shall be used to carry out pilot 

4 projects described in subsection (c); 

5 (2) $300,000 shall be used by the Secretary to 

6 coordinate, publicize, and disseminate the results of 

7 the program; and 

8 (3) $750,000 shall be used to carry out sub9 section (d). 

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

11 VEHICLES. 

12 (a) DEFINITIONS.—In this section: 

13 (1) ADMINISTRATOR.—The term ‘‘Adminis14 trator’’ means the Administrator of the Environ15 mental Protection Agency. 

16 (2) ADVANCED TRUCK STOP ELECTRIFICATION

17 SYSTEM.—The term ‘‘advanced truck stop elec18 trification system’’ means a stationary system that 

19 delivers heat, air conditioning, electricity, and com20 munications, and is capable of providing verifiable 

21 and auditable evidence of use of those services, to a 

22 heavy-duty vehicle and any occupants of the heavy23 duty vehicle without relying on components mounted 

24 onboard the heavy-duty vehicle for delivery of those 

25 services.
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1 (3) AUXILIARY POWER UNIT.—The term ‘‘auxil2 iary power unit’’ means an integrated system that—

3 (A) provides heat, air conditioning, engine 

4 warming, and electricity to the factory-installed 

5 components on a heavy-duty vehicle as if the 

6 main drive engine of the heavy-duty vehicle 

7 were running; and 

8 (B) is certified by the Administrator under 

9 part 89 of title 40, Code of Federal Regulations 

10 (or any successor regulation), as meeting appli11 cable emission standards. 

12 (4) HEAVY-DUTY VEHICLE.—The term ‘‘heavy13 duty vehicle’’ means a vehicle that—

14 (A) has a gross vehicle weight rating great15 er than 12,500 pounds; and 

16 (B) is powered by a diesel engine. 

17 (5) IDLE REDUCTION TECHNOLOGY.—The term 

18 ‘‘idle reduction technology’’ means an advanced 

19 truck stop electrification system, auxiliary power 

20 unit, or other device or system of devices that—

21 (A) is used to reduce long-duration idling 

22 of a heavy-duty vehicle; and 

23 (B) allows for the main drive engine or 

24 auxiliary refrigeration engine of a heavy-duty 

25 vehicle to be shut down. 
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1 (6) LONG-DURATION IDLING.—

2 (A) IN GENERAL.—The term ‘‘long-dura3 tion idling’’ means the operation of a main 

4 drive engine or auxiliary refrigeration engine of 

5 a heavy-duty vehicle, for a period greater than 

6 15 consecutive minutes, at a time at which the 

7 main drive engine is not engaged in gear. 

8 (B) EXCLUSIONS.—The term ‘‘long-dura9 tion idling’’ does not include the operation of a 

10 main drive engine or auxiliary refrigeration en11 gine of a heavy-duty vehicle during a routine 

12 stoppage associated with traffic movement or 

13 congestion. 

14 (b) IDLE REDUCTION TECHNOLOGY BENEFITS, PRO15 GRAMS, AND STUDIES.—

16 (1) IN GENERAL.—Not later than 90 days after 

17 the date of enactment of this Act, the Administrator 

18 shall—

19 (A)(i) commence a review of the mobile 

20 source air emission models of the Environ21 mental Protection Agency used under the Clean 

22 Air Act (42 U.S.C. 7401 et seq.) to determine 

23 whether the models accurately reflect the emis24 sions resulting from long-duration idling of 
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1 heavy-duty vehicles and other vehicles and en2 gines; and 

3 (ii) update those models as the Adminis4 trator determines to be appropriate; and 

5 (B)(i) commence a review of the emission 

6 reductions achieved by the use of idle reduction 

7 technology; and 

8 (ii) complete such revisions of the regula9 tions and guidance of the Environmental Pro10 tection Agency as the Administrator determines 

11 to be appropriate. 

12 (2) DEADLINE FOR COMPLETION.—Not later 

13 than 180 days after the date of enactment of this 

14 Act, the Administrator shall—

15 (A) complete the reviews under subpara16 graphs (A)(i) and (B)(i) of paragraph (1); and 

17 (B) prepare and make publicly available 1 

18 or more reports on the results of the reviews. 

19 (3) DISCRETIONARY INCLUSIONS.—The reviews 

20 under subparagraphs (A)(i) and (B)(i) of paragraph 

21 (1) and the reports under paragraph (2)(B) may ad22 dress the potential fuel savings resulting from use of 

23 idle reduction technology. 

24 (4) IDLE REDUCTION DEPLOYMENT PRO25 GRAM.—
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1 (A) ESTABLISHMENT.—

2 (i) IN GENERAL.—Not later than 90 

3 days after the date of enactment of this 

4 Act, the Administrator, in consultation 

5 with the Secretary of Transportation, shall 

6 establish a program to support deployment 

7 of idle reduction technology. 

8 (ii) PRIORITY.—The Administrator 

9 shall give priority to the deployment of idle 

10 reduction technology based on beneficial ef11 fects on air quality and ability to lessen 

12 the emission of criteria air pollutants. 

13 (B) FUNDING.—

14 (i) AUTHORIZATION OF APPROPRIA15 TIONS.—There are authorized to be appro16 priated to the Administrator to carry out 

17 subparagraph (A) $19,500,000 for fiscal 

18 year 2004, $30,000,000 for fiscal year 

19 2005, and $45,000,000 for fiscal year 

20 2006. 

21 (ii) COST SHARING.—Subject to clause 

22 (iii), the Administrator shall require at 

23 least 50 percent of the costs directly and 

24 specifically related to any project under 
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1 this section to be provided from non-Fed2 eral sources. 

3 (iii) NECESSARY AND APPROPRIATE

4 REDUCTIONS.—The Administrator may re5 duce the non-Federal requirement under 

6 clause (ii) if the Administrator determines 

7 that the reduction is necessary and appro8 priate to meet the objectives of this sec9 tion. 

10 (5) IDLING LOCATION STUDY.—

11 (A) IN GENERAL.—Not later than 90 days 

12 after the date of enactment of this Act, the Ad13 ministrator, in consultation with the Secretary 

14 of Transportation, shall commence a study to 

15 analyze all locations at which heavy-duty vehi16 cles stop for long-duration idling, including—

17 (i) truck stops; 

18 (ii) rest areas; 

19 (iii) border crossings; 

20 (iv) ports; 

21 (v) transfer facilities; and 

22 (vi) private terminals. 

23 (B) DEADLINE FOR COMPLETION.—Not 

24 later than 180 days after the date of enactment 

25 of this Act, the Administrator shall—
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1 (i) complete the study under subpara2 graph (A); and 

3 (ii) prepare and make publicly avail4 able 1 or more reports of the results of the 

5 study. 

6 (c) VEHICLE WEIGHT EXEMPTION.—Section 127(a) 

7 of title 23, United States Code, is amended—

8 (1) by designating the first through eleventh 

9 sentences as paragraphs (1) through (11), respec10 tively; and 

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

12 ‘‘(12) HEAVY DUTY VEHICLES.—

13 ‘‘(A) IN GENERAL.—Subject to subpara14 graphs (B) and (C), in order to promote reduc15 tion of fuel use and emissions because of engine 

16 idling, the maximum gross vehicle weight limit 

17 and the axle weight limit for any heavy-duty ve18 hicle equipped with an idle reduction technology 

19 shall be increased by a quantity necessary to 

20 compensate for the additional weight of the idle 

21 reduction system. 

22 ‘‘(B) MAXIMUM WEIGHT INCREASE.—The 

23 weight increase under subparagraph (A) shall 

24 be not greater than 250 pounds.
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1 ‘‘(C) PROOF.—On request by a regulatory 

2 agency or law enforcement agency, the vehicle 

3 operator shall provide proof (through dem4 onstration or certification) that—

5 ‘‘(i) the idle reduction technology is 

6 fully functional at all times; and 

7 ‘‘(ii) the 250-pound gross weight in8 crease is not used for any purpose other 

9 than the use of idle reduction technology 

10 described in subparagraph (A).’’. 

11 SEC. 757. BIODIESEL ENGINE TESTING PROGRAM. 

12 (a) IN GENERAL.—Not later that 180 days after the 

13 date of enactment of this Act, the Secretary shall initiate 

14 a partnership with diesel engine, diesel fuel injection sys15 tem, and diesel vehicle manufacturers and diesel and bio16 diesel fuel providers, to include biodiesel testing in ad17 vanced diesel engine and fuel system technology. 

18 (b) SCOPE.—The program shall provide for testing 

19 to determine the impact of biodiesel from different sources 

20 on current and future emission control technologies, with 

21 emphasis on—

22 (1) the impact of biodiesel on emissions war23 ranty, in-use liability, and antitampering provisions; 

24 (2) the impact of long-term use of biodiesel on 

25 engine operations; 
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1 (3) the options for optimizing these technologies 

2 for both emissions and performance when switching 

3 between biodiesel and diesel fuel; and 

4 (4) the impact of using biodiesel in these fuel5 ing systems and engines when used as a blend with 

6 2006 Environmental Protection Agency-mandated 

7 diesel fuel containing a maximum of 15-parts-per8 million sulfur content. 

9 (c) REPORT.—Not later than 2 years after the date 

10 of enactment of this Act, the Secretary shall provide an 

11 interim report to Congress on the findings of the program, 

12 including a comprehensive analysis of impacts from bio13 diesel on engine operation for both existing and expected 

14 future diesel technologies, and recommendations for en15 suring optimal emissions reductions and engine perform16 ance with biodiesel. 

17 (d) AUTHORIZATION OF APPROPRIATIONS.—There 

18 are authorized to be appropriated $5,000,000 for each of 

19 fiscal years 2004 through 2008 to carry out this section. 

20 (e) DEFINITION.—For purposes of this section, the 

21 term ‘‘biodiesel’’ means a diesel fuel substitute produced 

22 from nonpetroleum renewable resources that meets the 

23 registration requirements for fuels and fuel additives es24 tablished by the Environmental Protection Agency under 

25 section 211 of the Clean Air Act (42 U.S.C. 7545) and 
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1 that meets the American Society for Testing and Materials 

2 D6751-02a Standard Specification for Biodiesel Fuel 

3 (B100) Blend Stock for Distillate Fuels. 

4 SEC. 758. HIGH OCCUPANCY VEHICLE EXCEPTION. 

5 Notwithstanding section 102(a) of title 23, United 

6 States Code, a State may permit a vehicle with fewer than 

7 2 occupants to operate in high occupancy vehicle lanes if 

8 the vehicle—

9 (1) is a dedicated vehicle (as defined in section 

10 301 of the Energy Policy Act of 1992 (42 U.S.C. 

11 13211)); or 

12 (2) is a hybrid vehicle (as defined by the State 

13 for the purpose of this section). 

14 Subtitle E—Automobile Efficiency 

15 SEC. 771. AUTHORIZATION OF APPROPRIATIONS FOR IM16 PLEMENTATION AND ENFORCEMENT OF 

17 FUEL ECONOMY STANDARDS. 

18 In addition to any other funds authorized by law, 

19 there are authorized to be appropriated to the National 

20 Highway Traffic Safety Administration to carry out its ob21 ligations with respect to average fuel economy standards 

22 $2,000,000 for each of fiscal years 2004 through 2008.
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1 SEC. 772. REVISED CONSIDERATIONS FOR DECISIONS ON 

2 MAXIMUM FEASIBLE AVERAGE FUEL ECON3 OMY. 

4 Section 32902(f) of title 49, United States Code, is 

5 amended to read as follows: 

6 ‘‘(f) CONSIDERATIONS FOR DECISIONS ON MAXIMUM

7 FEASIBLE AVERAGE FUEL ECONOMY.—When deciding 

8 maximum feasible average fuel economy under this sec9 tion, the Secretary of Transportation shall consider the 

10 following matters: 

11 ‘‘(1) Technological feasibility. 

12 ‘‘(2) Economic practicability. 

13 ‘‘(3) The effect of other motor vehicle standards 

14 of the Government on fuel economy. 

15 ‘‘(4) The need of the United States to conserve 

16 energy. 

17 ‘‘(5) The effects of fuel economy standards on 

18 passenger automobiles, nonpassenger automobiles, 

19 and occupant safety. 

20 ‘‘(6) The effects of compliance with average fuel 

21 economy standards on levels of automobile industry 

22 employment in the United States.’’.
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1 SEC. 773. EXTENSION OF MAXIMUM FUEL ECONOMY IN2 CREASE FOR ALTERNATIVE FUELED VEHI3 CLES. 

4 (a) MANUFACTURING INCENTIVES.—Section 32905 

5 of title 49, United States Code, is amended—

6 (1) in each of subsections (b) and (d), by strik7 ing ‘‘1993–2004’’ and inserting ‘‘1993–2008’’; 

8 (2) in subsection (f), by striking ‘‘2001’’ and 

9 inserting ‘‘2005’’; and 

10 (3) in subsection (f)(1), by striking ‘‘2004’’ and 

11 inserting ‘‘2008’’. 

12 (b) MAXIMUM FUEL ECONOMY INCREASE.—Sub13 section (a)(1) of section 32906 of title 49, United States 

14 Code, is amended—

15 (1) in subparagraph (A), by striking ‘‘the model 

16 years 1993–2004’’ and inserting ‘‘model years 

17 1993–2008’’; and 

18 (2) in subparagraph (B), by striking ‘‘the model 

19 years 2005–2008’’ and inserting ‘‘model years 

20 2009–2012’’. 

21 SEC. 774. STUDY OF FEASIBILITY AND EFFECTS OF REDUC22 ING USE OF FUEL FOR AUTOMOBILES. 

23 (a) IN GENERAL.—Not later than 30 days after the 

24 date of the enactment of this Act, the Administrator of 

25 the National Highway Traffic Safety Administration shall 

26 initiate a study of the feasibility and effects of reducing 
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1 by model year 2012, by a significant percentage, the 

2 amount of fuel consumed by automobiles. 

3 (b) SUBJECTS OF STUDY.—The study under this sec4 tion shall include—

5 (1) examination of, and recommendation of al6 ternatives to, the policy under current Federal law 

7 of establishing average fuel economy standards for 

8 automobiles and requiring each automobile manufac9 turer to comply with average fuel economy standards 

10 that apply to the automobiles it manufactures; 

11 (2) examination of how automobile manufactur12 ers could contribute toward achieving the reduction 

13 referred to in subsection (a); 

14 (3) examination of the potential of fuel cell 

15 technology in motor vehicles in order to determine 

16 the extent to which such technology may contribute 

17 to achieving the reduction referred to in subsection 

18 (a); and 

19 (4) examination of the effects of the reduction 

20 referred to in subsection (a) on—

21 (A) gasoline supplies; 

22 (B) the automobile industry, including 

23 sales of automobiles manufactured in the 

24 United States; 

25 (C) motor vehicle safety; and
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1 (D) air quality. 

2 (c) REPORT.—The Administrator shall submit to 

3 Congress a report on the findings, conclusion, and rec4 ommendations of the study under this section by not later 

5 than 1 year after the date of the enactment of this Act.

6 TITLE VIII—HYDROGEN 

7 SEC. 801. DEFINITIONS. 

8 In this title: 

9 (1) ADVISORY COMMITTEE.—The term ‘‘Advi10 sory Committee’’ means the Hydrogen Technical and 

11 Fuel Cell Advisory Committee established under sec12 tion 805. 

13 (2) DEPARTMENT.—The term ‘‘Department’’ 

14 means the Department of Energy. 

15 (3) FUEL CELL.—The term ‘‘fuel cell’’ means a 

16 device that directly converts the chemical energy of 

17 a fuel and an oxidant into electricity by an electro18 chemical process taking place at separate electrodes 

19 in the device. 

20 (4) INFRASTRUCTURE.—The term ‘‘infrastruc21 ture’’ means the equipment, systems, or facilities 

22 used to produce, distribute, deliver, or store hydro23 gen. 

24 (5) LIGHT DUTY VEHICLE.—The term ‘‘light 

25 duty vehicle’’ means a car or truck classified by the 
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1 Department of Transportation as a Class I or IIA 

2 vehicle. 

3 (6) SECRETARY.—The term ‘‘Secretary’’ means 

4 the Secretary of Energy. 

5 SEC. 802. PLAN. 

6 Not later than 6 months after the date of enactment 

7 of this Act, the Secretary shall transmit to Congress a 

8 coordinated plan for the programs described in this title 

9 and any other programs of the Department that are di10 rectly related to fuel cells or hydrogen. The plan shall de11 scribe, at a minimum—

12 (1) the agenda for the next 5 years for the pro13 grams authorized under this title, including the 

14 agenda for each activity enumerated in section 

15 803(a); 

16 (2) the types of entities that will carry out the 

17 activities under this title and what role each entity 

18 is expected to play; 

19 (3) the milestones that will be used to evaluate 

20 the programs for the next 5 years; 

21 (4) the most significant technical and nontech22 nical hurdles that stand in the way of achieving the 

23 goals described in section 803(b), and how the pro24 grams will address those hurdles; and 
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1 (5) the policy assumptions that are implicit in 

2 the plan, including any assumptions that would af3 fect the sources of hydrogen or the marketability of 

4 hydrogen-related products. 

5 SEC. 803. PROGRAMS. 

6 (a) ACTIVITIES.—The Secretary, in partnership with 

7 the private sector, shall conduct programs to address—

8 (1) production of hydrogen from diverse energy 

9 sources, including—

10 (A) fossil fuels, which may include carbon 

11 capture and sequestration; 

12 (B) hydrogen-carrier fuels (including eth13 anol and methanol); 

14 (C) renewable energy resources, including 

15 biomass; and 

16 (D) nuclear energy; 

17 (2) use of hydrogen for commercial, industrial, 

18 and residential electric power generation; 

19 (3) safe delivery of hydrogen or hydrogen-car20 rier fuels, including— 

21 (A) transmission by pipeline and other dis22 tribution methods; and 

23 (B) convenient and economic refueling of 

24 vehicles either at central refueling stations or 

25 through distributed on-site generation; 
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1 (4) advanced vehicle technologies, including—

2 (A) engine and emission control systems; 

3 (B) energy storage, electric propulsion, and 

4 hybrid systems; 

5 (C) automotive materials; and 

6 (D) other advanced vehicle technologies; 

7 (5) storage of hydrogen or hydrogen-carrier 

8 fuels, including development of materials for safe 

9 and economic storage in gaseous, liquid, or solid 

10 form at refueling facilities and onboard vehicles; 

11 (6) development of safe, durable, affordable, 

12 and efficient fuel cells, including fuel-flexible fuel cell 

13 power systems, improved manufacturing processes, 

14 high-temperature membranes, cost-effective fuel 

15 processing for natural gas, fuel cell stack and system 

16 reliability, low temperature operation, and cold start 

17 capability; 

18 (7) development, after consultation with the pri19 vate sector, of necessary codes and standards (in20 cluding international codes and standards and vol21 untary consensus standards adopted in accordance 

22 with OMB Circular A–119) and safety practices for 

23 the production, distribution, storage, and use of hy24 drogen, hydrogen-carrier fuels, and related products; 

25 and 
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1 (8) a public education program to develop im2 proved knowledge and acceptability of hydrogen3 based systems. 

4 (b) PROGRAM GOALS.—

5 (1) VEHICLES.—For vehicles, the goals of the 

6 program are—

7 (A) to enable a commitment by auto8 makers no later than year 2015 to offer safe, 

9 affordable, and technically viable hydrogen fuel 

10 cell vehicles in the mass consumer market; and 

11 (B) to enable production, delivery, and ac12 ceptance by consumers of model year 2020 hy13 drogen fuel cell and other hydrogen-powered ve14 hicles that will have—

15 (i) a range of at least 300 miles; 

16 (ii) improved performance and ease of 

17 driving; 

18 (iii) safety and performance com19 parable to vehicle technologies in the mar20 ket; and 

21 (iv) when compared to light duty vehi22 cles in model year 2003—

23 (I) fuel economy that is substan24 tially higher; 
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1 (II) substantially lower emissions 

2 of air pollutants; and 

3 (III) equivalent or improved vehi4 cle fuel system crash integrity and oc5 cupant protection.

6 (2) HYDROGEN ENERGY AND ENERGY INFRA7 STRUCTURE.—For hydrogen energy and energy in8 frastructure, the goals of the program are to enable 

9 a commitment not later than 2015 that will lead to 

10 infrastructure by 2020 that will provide—

11 (A) safe and convenient refueling; 

12 (B) improved overall efficiency; 

13 (C) widespread availability of hydrogen 

14 from domestic energy sources through—

15 (i) production, with consideration of 

16 emissions levels; 

17 (ii) delivery, including transmission by 

18 pipeline and other distribution methods for 

19 hydrogen; and 

20 (iii) storage, including storage in sur21 face transportation vehicles; 

22 (D) hydrogen for fuel cells, internal com23 bustion engines, and other energy conversion 

24 devices for portable, stationary, and transpor25 tation applications; and 
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1 (E) other technologies consistent with the 

2 Department’s plan. 

3 (3) FUEL CELLS.—The goals for fuel cells and 

4 their portable, stationary, and transportation appli5 cations are to enable—

6 (A) safe, economical, and environmentally 

7 sound hydrogen fuel cells; 

8 (B) fuel cells for light duty and other vehi9 cles; and 

10 (C) other technologies consistent with the 

11 Department’s plan. 

12 (c) DEMONSTRATION.—In carrying out the programs 

13 under this section, the Secretary shall fund a limited num14 ber of demonstration projects, consistent with a deter15 mination of the maturity, cost-effectiveness, and environ16 mental impacts of technologies supporting each project. In 

17 selecting projects under this subsection, the Secretary 

18 shall, to the extent practicable and in the public interest, 

19 select projects that—

20 (1) involve using hydrogen and related products 

21 at existing facilities or installations, such as existing 

22 office buildings, military bases, vehicle fleet centers, 

23 transit bus authorities, or units of the National Park 

24 System; 
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1 (2) depend on reliable power from hydrogen to 

2 carry out essential activities; 

3 (3) lead to the replication of hydrogen tech4 nologies and draw such technologies into the market5 place; 

6 (4) include vehicle, portable, and stationary 

7 demonstrations of fuel cell and hydrogen-based en8 ergy technologies; 

9 (5) address the interdependency of demand for 

10 hydrogen fuel cell applications and hydrogen fuel in11 frastructure; 

12 (6) raise awareness of hydrogen technology 

13 among the public; 

14 (7) facilitate identification of an optimum tech15 nology among competing alternatives; 

16 (8) address distributed generation using renew17 able sources; and 

18 (9) address applications specific to rural or re19 mote locations, including isolated villages and is20 lands, the National Park System, and tribal entities. 

21 The Secretary shall give preference to projects which ad22 dress multiple elements contained in paragraphs (1) 

23 through (9). 

24 (d) DEPLOYMENT.—In carrying out the programs 

25 under this section, the Secretary shall, in partnership with 
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1 the private sector, conduct activities to facilitate the de2 ployment of hydrogen energy and energy infrastructure, 

3 fuel cells, and advanced vehicle technologies. 

4 (e) FUNDING.—

5 (1) IN GENERAL.—The Secretary shall carry 

6 out the programs under this section using a competi7 tive, merit-based review process and consistent with 

8 the generally applicable Federal laws and regulations 

9 governing awards of financial assistance, contracts, 

10 or other agreements. 

11 (2) RESEARCH CENTERS.—Activities under this 

12 section may be carried out by funding nationally rec13 ognized university-based or Federal laboratory re14 search centers. 

15 (f) COST SHARING.—

16 (1) RESEARCH AND DEVELOPMENT.—Except as 

17 otherwise provided in this title, for research and de18 velopment programs carried out under this title the 

19 Secretary shall require a commitment from non-Fed20 eral sources of at least 20 percent of the cost of the 

21 project. The Secretary may reduce or eliminate the 

22 non-Federal requirement under this paragraph if the 

23 Secretary determines that the research and develop24 ment is of a basic or fundamental nature or involves 

25 technical analyses or educational activities. 
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1 (2) DEMONSTRATION AND COMMERCIAL APPLI2 CATION.—Except as otherwise provided in this title, 

3 the Secretary shall require at least 50 percent of the 

4 costs directly and specifically related to any dem5 onstration or commercial application project under 

6 this title to be provided from non-Federal sources. 

7 The Secretary may reduce the non-Federal require8 ment under this paragraph if the Secretary deter9 mines that the reduction is necessary and appro10 priate considering the technological risks involved in 

11 the project and is necessary to meet the objectives 

12 of this title. 

13 (3) CALCULATION OF AMOUNT.—In calculating 

14 the amount of the non-Federal commitment under 

15 paragraph (1) or (2), the Secretary may include per16 sonnel, services, equipment, and other resources. 

17 (4) SIZE OF NON-FEDERAL SHARE.—The Sec18 retary may consider the size of the non-Federal 

19 share in selecting projects. 

20 (g) DISCLOSURE.—Section 623 of the Energy Policy 

21 Act of 1992 (42 U.S.C. 13293) relating to the protection 

22 of information shall apply to projects carried out through 

23 grants, cooperative agreements, or contracts under this 

24 title. 
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1 SEC. 804. INTERAGENCY TASK FORCE. 

2 (a) ESTABLISHMENT.—Not later than 120 days after 

3 the date of enactment of this Act, the President shall es4 tablish an interagency task force chaired by the Secretary 

5 with representatives from each of the following: 

6 (1) The Office of Science and Technology Pol7 icy within the Executive Office of the President. 

8 (2) The Department of Transportation. 

9 (3) The Department of Defense. 

10 (4) The Department of Commerce (including 

11 the National Institute of Standards and Tech12 nology). 

13 (5) The Department of State. 

14 (6) The Environmental Protection Agency. 

15 (7) The National Aeronautics and Space Ad16 ministration. 

17 (8) Other Federal agencies as the Secretary de18 termines appropriate. 

19 (b) DUTIES.—

20 (1) PLANNING.—The interagency task force 

21 shall work toward—

22 (A) a safe, economical, and environ23 mentally sound fuel infrastructure for hydrogen 

24 and hydrogen-carrier fuels, including an infra25 structure that supports buses and other fleet 

26 transportation; 
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1 (B) fuel cells in government and other ap2 plications, including portable, stationary, and 

3 transportation applications;

4 (C) distributed power generation, including 

5 the generation of combined heat, power, and 

6 clean fuels including hydrogen; 

7 (D) uniform hydrogen codes, standards, 

8 and safety protocols; and 

9 (E) vehicle hydrogen fuel system integrity 

10 safety performance. 

11 (2) ACTIVITIES.—The interagency task force 

12 may organize workshops and conferences, may issue 

13 publications, and may create databases to carry out 

14 its duties. The interagency task force shall—

15 (A) foster the exchange of generic, non16 proprietary information and technology among 

17 industry, academia, and government; 

18 (B) develop and maintain an inventory and 

19 assessment of hydrogen, fuel cells, and other 

20 advanced technologies, including the commercial 

21 capability of each technology for the economic 

22 and environmentally safe production, distribu23 tion, delivery, storage, and use of hydrogen; 
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1 (C) integrate technical and other informa2 tion made available as a result of the programs 

3 and activities under this title; 

4 (D) promote the marketplace introduction 

5 of infrastructure for hydrogen fuel vehicles; and 

6 (E) conduct an education program to pro7 vide hydrogen and fuel cell information to po8 tential end-users. 

9 (c) AGENCY COOPERATION.—The heads of all agen10 cies, including those whose agencies are not represented 

11 on the interagency task force, shall cooperate with and 

12 furnish information to the interagency task force, the Ad13 visory Committee, and the Department. 

14 SEC. 805. ADVISORY COMMITTEE. 

15 (a) ESTABLISHMENT.—The Hydrogen Technical and 

16 Fuel Cell Advisory Committee is established to advise the 

17 Secretary on the programs and activities under this title. 

18 (b) MEMBERSHIP.—

19 (1) MEMBERS.—The Advisory Committee shall 

20 be comprised of not fewer than 12 nor more than 25 

21 members. The members shall be appointed by the 

22 Secretary to represent domestic industry, academia, 

23 professional societies, government agencies, Federal 

24 laboratories, previous advisory panels, and financial, 

25 environmental, and other appropriate organizations 
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1 based on the Department’s assessment of the tech2 nical and other qualifications of committee members 

3 and the needs of the Advisory Committee. 

4 (2) TERMS.—The term of a member of the Ad5 visory Committee shall not be more than 3 years. 

6 The Secretary may appoint members of the Advisory 

7 Committee in a manner that allows the terms of the 

8 members serving at any time to expire at spaced in9 tervals so as to ensure continuity in the functioning 

10 of the Advisory Committee. A member of the Advi11 sory Committee whose term is expiring may be re12 appointed. 

13 (3) CHAIRPERSON.—The Advisory Committee 

14 shall have a chairperson, who is elected by the mem15 bers from among their number. 

16 (c) REVIEW.—The Advisory Committee shall review 

17 and make recommendations to the Secretary on—

18 (1) the implementation of programs and activi19 ties under this title; 

20 (2) the safety, economical, and environmental 

21 consequences of technologies for the production, dis22 tribution, delivery, storage, or use of hydrogen en23 ergy and fuel cells; and 

24 (3) the plan under section 802. 

25 (d) RESPONSE.—
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1 (1) CONSIDERATION OF RECOMMENDATIONS.—

2 The Secretary shall consider, but need not adopt, 

3 any recommendations of the Advisory Committee 

4 under subsection (c). 

5 (2) BIENNIAL REPORT.—The Secretary shall 

6 transmit a biennial report to Congress describing 

7 any recommendations made by the Advisory Com8 mittee since the previous report. The report shall in9 clude a description of how the Secretary has imple10 mented or plans to implement the recommendations, 

11 or an explanation of the reasons that a recommenda12 tion will not be implemented. The report shall be 

13 transmitted along with the President’s budget pro14 posal. 

15 (e) SUPPORT.—The Secretary shall provide resources 

16 necessary in the judgment of the Secretary for the Advi17 sory Committee to carry out its responsibilities under this 

18 title. 

19 SEC. 806. EXTERNAL REVIEW. 

20 (a) PLAN.—The Secretary shall enter into an ar21 rangement with the National Academy of Sciences to re22 view the plan prepared under section 802, which shall be 

23 completed not later than 6 months after the Academy re24 ceives the plan. Not later than 45 days after receiving the 

25 review, the Secretary shall transmit the review to Congress 
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1 along with a plan to implement the review’s recommenda2 tions or an explanation of the reasons that a recommenda3 tion will not be implemented. 

4 (b) ADDITIONAL REVIEW.—The Secretary shall enter 

5 into an arrangement with the National Academy of 

6 Sciences under which the Academy will review the pro7 grams under section 803 during the fourth year following 

8 the date of enactment of this Act. The Academy’s review 

9 shall include the research priorities and technical mile10 stones, and evaluate the progress toward achieving them. 

11 The review shall be completed not later than 5 years after 

12 the date of enactment of this Act. Not later than 45 days 

13 after receiving the review, the Secretary shall transmit the 

14 review to Congress along with a plan to implement the 

15 review’s recommendations or an explanation for the rea16 sons that a recommendation will not be implemented. 

17 SEC. 807. MISCELLANEOUS PROVISIONS. 

18 (a) REPRESENTATION.—The Secretary may rep19 resent the United States interests with respect to activities 

20 and programs under this title, in coordination with the 

21 Department of Transportation, the National Institute of 

22 Standards and Technology, and other relevant Federal 

23 agencies, before governments and nongovernmental orga24 nizations including—
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1 (1) other Federal, State, regional, and local 

2 governments and their representatives; 

3 (2) industry and its representatives, including 

4 members of the energy and transportation indus5 tries; and 

6 (3) in consultation with the Department of 

7 State, foreign governments and their representatives 

8 including international organizations. 

9 (b) REGULATORY AUTHORITY.—Nothing in this title 

10 shall be construed to alter the regulatory authority of the 

11 Department. 

12 SEC. 808. SAVINGS CLAUSE. 

13 Nothing in this title shall be construed to affect the 

14 authority of the Secretary of Transportation that may 

15 exist prior to the date of enactment of this Act with re16 spect to—

17 (1) research into, and regulation of, hydrogen18 powered vehicles fuel systems integrity, standards, 

19 and safety under subtitle VI of title 49, United 

20 States Code; 

21 (2) regulation of hazardous materials transpor22 tation under chapter 51 of title 49, United States 

23 Code; 

24 (3) regulation of pipeline safety under chapter 

25 601 of title 49, United States Code; 
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1 (4) encouragement and promotion of research, 

2 development, and deployment activities relating to 

3 advanced vehicle technologies under section 5506 of 

4 title 49, United States Code;

5 (5) regulation of motor vehicle safety under 

6 chapter 301 of title 49, United States Code; 

7 (6) automobile fuel economy under chapter 329 

8 of title 49, United States Code; or 

9 (7) representation of the interests of the United 

10 States with respect to the activities and programs 

11 under the authority of title 49, United States Code. 

12 SEC. 809. AUTHORIZATION OF APPROPRIATIONS. 

13 There are authorized to be appropriated to the Sec14 retary to carry out this title, in addition to any amounts 

15 made available for these purposes under other Acts—

16 (1) $273,500,000 for fiscal year 2004; 

17 (2) $375,000,000 for fiscal year 2005; 

18 (3) $450,000,000 for fiscal year 2006; 

19 (4) $500,000,000 for fiscal year 2007; and 

20 (5) $550,000,000 for fiscal year 2008.

21 TITLE IX—RESEARCH AND 

22 DEVELOPMENT 

23 SEC. 901. GOALS. 

24 (a) IN GENERAL.—The Secretary shall conduct a bal25 anced set of programs of energy research, development, 
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1 demonstration, and commercial application to support 

2 Federal energy policy and programs by the Department. 

3 Such programs shall be focused on—

4 (1) increasing the efficiency of all energy inten5 sive sectors through conservation and improved tech6 nologies; 

7 (2) promoting diversity of energy supply; 

8 (3) decreasing the Nation’s dependence on for9 eign energy supplies; 

10 (4) improving United States energy security; 

11 and 

12 (5) decreasing the environmental impact of en13 ergy-related activities. 

14 (b) GOALS.—The Secretary shall publish measurable 

15 5-year cost and performance-based goals with each annual 

16 budget submission in at least the following areas: 

17 (1) Energy efficiency for buildings, energy-con18 suming industries, and vehicles. 

19 (2) Electric energy generation (including dis20 tributed generation), transmission, and storage. 

21 (3) Renewable energy technologies including 

22 wind power, photovoltaics, solar thermal systems, 

23 geothermal energy, hydrogen-fueled systems, bio24 mass-based systems, biofuels, and hydropower. 
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1 (4) Fossil energy including power generation, 

2 onshore and offshore oil and gas resource recovery, 

3 and transportation. 

4 (5) Nuclear energy including programs for ex5 isting and advanced reactors and education of future 

6 specialists. 

7 (c) PUBLIC COMMENT.—The Secretary shall provide 

8 mechanisms for input on the annually published goals 

9 from industry, university, and other public sources. 

10 (d) EFFECT OF GOALS.—

11 (1) NO NEW AUTHORITY OR REQUIREMENT.—

12 Nothing in subsection (a) or the annually published 

13 goals shall—

14 (A) create any new—

15 (i) authority for any Federal agency; 

16 or 

17 (ii) requirement for any other person; 

18 (B) be used by a Federal agency to sup19 port the establishment of regulatory standards 

20 or regulatory requirements; or 

21 (C) alter the authority of the Secretary to 

22 make grants or other awards. 

23 (2) NO LIMITATION.—Nothing in this sub24 section shall be construed to limit the authority of 

25 the Secretary to impose conditions on grants or 
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1 other awards based on the goals in subsection (a) or 

2 any subsequent modification thereto. 

3 SEC. 902. DEFINITIONS. 

4 For purposes of this title: 

5 (1) DEPARTMENT.—The term ‘‘Department’’ 

6 means the Department of Energy. 

7 (2) DEPARTMENTAL MISSION.—The term ‘‘de8 partmental mission’’ means any of the functions 

9 vested in the Secretary of Energy by the Depart10 ment of Energy Organization Act (42 U.S.C. 7101 

11 et seq.) or other law. 

12 (3) INSTITUTION OF HIGHER EDUCATION.—The 

13 term ‘‘institution of higher education’’ has the 

14 meaning given that term in section 101(a) of the 

15 Higher Education Act of 1965 (20 U.S.C. 1001(a)). 

16 (4) NATIONAL LABORATORY.—The term ‘‘Na17 tional Laboratory’’ means any of the following lab18 oratories owned by the Department: 

19 (A) Ames Laboratory. 

20 (B) Argonne National Laboratory. 

21 (C) Brookhaven National Laboratory. 

22 (D) Fermi National Accelerator Labora23 tory. 

24 (E) Idaho National Engineering and Envi25 ronmental Laboratory. 
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1 (F) Lawrence Berkeley National Labora2 tory. 

3 (G) Lawrence Livermore National Labora4 tory. 

5 (H) Los Alamos National Laboratory. 

6 (I) National Energy Technology Labora7 tory. 

8 (J) National Renewable Energy Labora9 tory. 

10 (K) Oak Ridge National Laboratory. 

11 (L) Pacific Northwest National Labora12 tory. 

13 (M) Princeton Plasma Physics Laboratory. 

14 (N) Sandia National Laboratories. 

15 (O) Stanford Linear Accelerator Center. 

16 (P) Thomas Jefferson National Accelerator 

17 Facility. 

18 (5) NONMILITARY ENERGY LABORATORY.—The 

19 term ‘‘nonmilitary energy laboratory’’ means the lab20 oratories listed in paragraph (4), except for those 

21 listed in subparagraphs (G), (H), and (N). 

22 (6) SECRETARY.—The term ‘‘Secretary’’ means 

23 the Secretary of Energy. 

24 (7) SINGLE-PURPOSE RESEARCH FACILITY.—

25 The term ‘‘single-purpose research facility’’ means 
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1 any of the primarily single-purpose entities owned by 

2 the Department or any other organization of the De3 partment designated by the Secretary. 

4 Subtitle A—Energy Efficiency 

5 SEC. 904. ENERGY EFFICIENCY. 

6 (a) IN GENERAL.—The following sums are author7 ized to be appropriated to the Secretary for energy effi8 ciency and conservation research, development, dem9 onstration, and commercial application activities, includ10 ing activities authorized under this subtitle: 

11 (1) For fiscal year 2004, $616,000,000. 

12 (2) For fiscal year 2005, $695,000,000. 

13 (3) For fiscal year 2006, $772,000,000. 

14 (4) For fiscal year 2007, $865,000,000. 

15 (5) For fiscal year 2008, $920,000,000. 

16 (b) ALLOCATIONS.—From amounts authorized under 

17 subsection (a), the following sums are authorized: 

18 (1) For activities under section 905—

19 (A) for fiscal year 2004, $20,000,000;

20 (B) for fiscal year 2005, $30,000,000; 

21 (C) for fiscal year 2006, $50,000,000; 

22 (D) for fiscal year 2007, $50,000,000; and 

23 (E) for fiscal year 2008, $50,000,000. 

24 (2) For activities under section 907— 

25 (A) for fiscal year 2004, $4,000,000; and 
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1 (B) for each of fiscal years 2005 through 

2 2008, $7,000,000. 

3 (3) For activities under section 908—

4 (A) for fiscal year 2004, $20,000,000; 

5 (B) for fiscal year 2005, $25,000,000; 

6 (C) for fiscal year 2006, $30,000,000; 

7 (D) for fiscal year 2007, $35,000,000; and 

8 (E) for fiscal year 2008, $40,000,000. 

9 (4) For activities under section 909, 

10 $2,000,000 for each of fiscal years 2005 through 

11 2008. 

12 (c) EXTENDED AUTHORIZATION.—There are author13 ized to be appropriated to the Secretary for activities 

14 under section 905, $50,000,000 for each of fiscal years 

15 2009 through 2013. 

16 (d) LIMITATION ON USE OF FUNDS.—None of the 

17 funds authorized to be appropriated under this section 

18 may be used for—

19 (1) the issuance and implementation of energy 

20 efficiency regulations; 

21 (2) the Weatherization Assistance Program 

22 under part A of title IV of the Energy Conservation 

23 and Production Act (42 U.S.C. 6861 et seq.); 
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1 (3) the State Energy Program under part D of 

2 title III of the Energy Policy and Conservation Act 

3 (42 U.S.C. 6321 et seq.); or 

4 (4) the Federal Energy Management Program 

5 under part 3 of title V of the National Energy Con6 servation Policy Act (42 U.S.C. 8251 et seq.). 

7 SEC. 905. NEXT GENERATION LIGHTING INITIATIVE. 

8 (a) IN GENERAL.—The Secretary shall carry out a 

9 Next Generation Lighting Initiative in accordance with 

10 this section to support research, development, demonstra11 tion, and commercial application activities related to ad12 vanced solid-state lighting technologies based on white 

13 light emitting diodes. 

14 (b) OBJECTIVES.—The objectives of the initiative 

15 shall be to develop advanced solid-state organic and inor16 ganic lighting technologies based on white light emitting 

17 diodes that, compared to incandescent and fluorescent 

18 lighting technologies, are longer lasting; more energy-effi19 cient; and cost-competitive, and have less environmental 

20 impact. 

21 (c) INDUSTRY ALLIANCE.—The Secretary shall, not 

22 later than 3 months after the date of enactment of this 

23 section, competitively select an Industry Alliance to rep24 resent participants that are private, for-profit firms which, 

25 as a group, are broadly representative of United States 
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1 solid state lighting research, development, infrastructure, 

2 and manufacturing expertise as a whole. 

3 (d) RESEARCH.—

4 (1) IN GENERAL.—The Secretary shall carry 

5 out the research activities of the Next Generation 

6 Lighting Initiative through competitively awarded 

7 grants to researchers, including Industry Alliance 

8 participants, National Laboratories, and institutions 

9 of higher education. 

10 (2) ASSISTANCE FROM THE INDUSTRY ALLI11 ANCE.—The Secretary shall annually solicit from the 

12 Industry Alliance—

13 (A) comments to identify solid-state light14 ing technology needs; 

15 (B) assessment of the progress of the Ini16 tiative’s research activities; and 

17 (C) assistance in annually updating solid18 state lighting technology roadmaps. 

19 (3) AVAILABILITY OF INFORMATION AND ROAD20 MAPS.—The information and roadmaps under para21 graph (2) shall be available to the public and public 

22 response shall be solicited by the Secretary. 

23 (e) DEVELOPMENT, DEMONSTRATION, AND COMMER24 CIAL APPLICATION.—The Secretary shall carry out a de25 velopment, demonstration, and commercial application 
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1 program for the Next Generation Lighting Initiative 

2 through competitively selected awards. The Secretary may 

3 give preference to participants of the Industry Alliance se4 lected pursuant to subsection (c). 

5 (f) INTELLECTUAL PROPERTY.—The Secretary may 

6 require, in accordance with the authorities provided in sec7 tion 202(a)(ii) of title 35, United States Code, section 152 

8 of the Atomic Energy Act of 1954 (42 U.S.C. 2182), and 

9 section 9 of the Federal Nonnuclear Energy Research and 

10 Development Act of 1974 (42 U.S.C. 5908), that—

11 (1) for any new invention resulting from activi12 ties under subsection (d)—

13 (A) the Industry Alliance members that 

14 are active participants in research, development, 

15 and demonstration activities related to the ad16 vanced solid-state lighting technologies that are 

17 the subject of this section shall be granted first 

18 option to negotiate with the invention owner 

19 nonexclusive licenses and royalties for uses of 

20 the invention related to solid-state lighting on 

21 terms that are reasonable under the cir22 cumstances; and 

23 (B)(i) for 1 year after a United States pat24 ent is issued for the invention, the patent hold25 er shall not negotiate any license or royalty 
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1 with any entity that is not a participant in the 

2 Industry Alliance described in subparagraph 

3 (A); and 

4 (ii) during the year described in clause (i), 

5 the invention owner shall negotiate nonexclusive 

6 licenses and royalties in good faith with any in7 terested participant in the Industry Alliance de8 scribed in subparagraph (A); and 

9 (2) such other terms as the Secretary deter10 mines are required to promote accelerated commer11 cialization of inventions made under the Initiative. 

12 (g) NATIONAL ACADEMY REVIEW.—The Secretary 

13 shall enter into an arrangement with the National Acad14 emy of Sciences to conduct periodic reviews of the Next 

15 Generation Lighting Initiative. The Academy shall review 

16 the research priorities, technical milestones, and plans for 

17 technology transfer and progress towards achieving them. 

18 The Secretary shall consider the results of such reviews 

19 in evaluating the information obtained under subsection 

20 (d)(2). 

21 (h) DEFINITIONS.—As used in this section: 

22 (1) ADVANCED SOLID-STATE LIGHTING.—The 

23 term ‘‘advanced solid-state lighting’’ means a 

24 semiconducting device package and delivery system 
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1 that produces white light using externally applied 

2 voltage. 

3 (2) RESEARCH.—The term ‘‘research’’ includes 

4 research on the technologies, materials, and manu5 facturing processes required for white light emitting 

6 diodes. 

7 (3) INDUSTRY ALLIANCE.—The term ‘‘Industry 

8 Alliance’’ means an entity selected by the Secretary 

9 under subsection (c). 

10 (4) WHITE LIGHT EMITTING DIODE.—The term 

11 ‘‘white light emitting diode’’ means a 

12 semiconducting package, utilizing either organic or 

13 inorganic materials, that produces white light using 

14 externally applied voltage. 

15 SEC. 906. NATIONAL BUILDING PERFORMANCE INITIATIVE. 

16 (a) INTERAGENCY GROUP.—Not later than 90 days 

17 after the date of enactment of this Act, the Director of 

18 the Office of Science and Technology Policy shall establish 

19 an interagency group to develop, in coordination with the 

20 advisory committee established under subsection (e), a 

21 National Building Performance Initiative (in this section

22 referred to as the ‘‘Initiative’’). The interagency group 

23 shall be co-chaired by appropriate officials of the Depart24 ment and the Department of Commerce, who shall jointly 
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1 arrange for the provision of necessary administrative sup2 port to the group. 

3 (b) INTEGRATION OF EFFORTS.—The Initiative, 

4 working with the National Institute of Building Sciences, 

5 shall integrate Federal, State, and voluntary private sector 

6 efforts to reduce the costs of construction, operation, 

7 maintenance, and renovation of commercial, industrial, in8 stitutional, and residential buildings. 

9 (c) PLAN.—Not later than 1 year after the date of 

10 enactment of this Act, the interagency group shall submit 

11 to Congress a plan for carrying out the appropriate Fed12 eral role in the Initiative. The plan shall include—

13 (1) research, development, demonstration, and 

14 commercial application of systems and materials for 

15 new construction and retrofit relating to the building 

16 envelope and building system components; and 

17 (2) the collection, analysis, and dissemination of 

18 research results and other pertinent information on 

19 enhancing building performance to industry, govern20 ment entities, and the public. 

21 (d) DEPARTMENT OF ENERGY ROLE.—Within the 

22 Federal portion of the Initiative, the Department shall be 

23 the lead agency for all aspects of building performance re24 lated to use and conservation of energy. 

25 (e) ADVISORY COMMITTEE.—
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1 (1) ESTABLISHMENT.—The Secretary, in con2 sultation with the Secretary of Commerce and the 

3 Director of the Office of Science and Technology 

4 Policy, shall establish an advisory committee to— 

5 (A) analyze and provide recommendations 

6 on potential private sector roles and participa7 tion in the Initiative; and 

8 (B) review and provide recommendations 

9 on the plan described in subsection (c). 

10 (2) MEMBERSHIP.—Membership of the advisory 

11 committee shall include representatives with a broad 

12 range of appropriate expertise, including expertise 

13 in—

14 (A) building research and technology; 

15 (B) architecture, engineering, and building 

16 materials and systems; and 

17 (C) the residential, commercial, and indus18 trial sectors of the construction industry. 

19 (f) CONSTRUCTION.—Nothing in this section provides 

20 any Federal agency with new authority to regulate build21 ing performance. 

22 SEC. 907. SECONDARY ELECTRIC VEHICLE BATTERY USE 

23 PROGRAM. 

24 (a) DEFINITIONS.—For purposes of this section: 
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1 (1) ASSOCIATED EQUIPMENT.—The term ‘‘asso2 ciated equipment’’ means equipment located where 

3 the batteries will be used that is necessary to enable 

4 the use of the energy stored in the batteries. 

5 (2) BATTERY.—The term ‘battery’’ means an 

6 energy storage device that previously has been used 

7 to provide motive power in a vehicle powered in 

8 whole or in part by electricity. 

9 (b) PROGRAM.—The Secretary shall establish and 

10 conduct a research, development, demonstration, and com11 mercial application program for the secondary use of bat12 teries if the Secretary finds that there are sufficient num13 bers of such batteries to support the program. The pro14 gram shall be—

15 (1) designed to demonstrate the use of batteries 

16 in secondary applications, including utility and com17 mercial power storage and power quality; 

18 (2) structured to evaluate the performance, in19 cluding useful service life and costs, of such bat20 teries in field operations, and the necessary sup21 porting infrastructure, including reuse and disposal 

22 of batteries; and 

23 (3) coordinated with ongoing secondary battery 

24 use programs at the National Laboratories and in 

25 industry. 
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1 (c) SOLICITATION.—Not later than 180 days after 

2 the date of enactment of this Act, if the Secretary finds 

3 under subsection (b) that there are sufficient numbers of 

4 batteries to support the program, the Secretary shall so5 licit proposals to demonstrate the secondary use of bat6 teries and associated equipment and supporting infra7 structure in geographic locations throughout the United 

8 States. The Secretary may make additional solicitations 

9 for proposals if the Secretary determines that such solici10 tations are necessary to carry out this section. 

11 (d) SELECTION OF PROPOSALS.—

12 (1) IN GENERAL.—The Secretary shall, not 

13 later than 90 days after the closing date established 

14 by the Secretary for receipt of proposals under sub15 section (c), select up to 5 proposals which may re16 ceive financial assistance under this section, subject 

17 to the availability of appropriations. 

18 (2) DIVERSITY; ENVIRONMENTAL EFFECT.—In 

19 selecting proposals, the Secretary shall consider di20 versity of battery type, geographic and climatic di21 versity, and life-cycle environmental effects of the 

22 approaches. 

23 (3) LIMITATION.—No 1 project selected under 

24 this section shall receive more than 25 percent of the 

25 funds authorized for the program under this section. 
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1 (4) OPTIMIZATION OF FEDERAL RESOURCES.—

2 The Secretary shall consider the extent of involve3 ment of State or local government and other persons 

4 in each demonstration project to optimize use of 

5 Federal resources. 

6 (5) OTHER CRITERIA.—The Secretary may con7 sider such other criteria as the Secretary considers 

8 appropriate. 

9 (e) CONDITIONS.—The Secretary shall require that—

10 (1) relevant information be provided to the De11 partment, the users of the batteries, the proposers, 

12 and the battery manufacturers; 

13 (2) the proposer provide at least 50 percent of 

14 the costs associated with the proposal; and 

15 (3) the proposer provide to the Secretary such 

16 information regarding the disposal of the batteries 

17 as the Secretary may require to ensure that the pro18 poser disposes of the batteries in accordance with 

19 applicable law. 

20 SEC. 908. ENERGY EFFICIENCY SCIENCE INITIATIVE. 

21 (a) ESTABLISHMENT.—The Secretary shall establish 

22 an Energy Efficiency Science Initiative to be managed by 

23 the Assistant Secretary in the Department with responsi24 bility for energy conservation under section 203(a)(9) of 

25 the Department of Energy Organization Act (42 U.S.C. 
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1 7133(a)(9)), in consultation with the Director of the Of2 fice of Science, for grants to be competitively awarded and 

3 subject to peer review for research relating to energy effi4 ciency. 

5 (b) REPORT.—The Secretary shall submit to Con6 gress, along with the President’s annual budget request 

7 under section 1105(a) of title 31, United States Code, a 

8 report on the activities of the Energy Efficiency Science 

9 Initiative, including a description of the process used to 

10 award the funds and an explanation of how the research 

11 relates to energy efficiency. 

12 SEC. 909. ELECTRIC MOTOR CONTROL TECHNOLOGY. 

13 The Secretary shall conduct a research, development, 

14 demonstration, and commercial application program on 

15 advanced control devices to improve the energy efficiency 

16 of electric motors used in heating, ventilation, air condi17 tioning, and comparable systems. 

18 SEC. 910. ADVANCED ENERGY TECHNOLOGY TRANSFER 

19 CENTERS. 

20 (a) GRANTS.—Not later than 18 months after the 

21 date of enactment of this Act, the Secretary shall make 

22 grants to nonprofit institutions, State and local govern23 ments, or universities (or consortia thereof), to establish 

24 a geographically dispersed network of Advanced Energy 

25 Technology Transfer Centers, to be located in areas the 
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1 Secretary determines have the greatest need of the serv2 ices of such Centers. 

3 (b) ACTIVITIES.—

4 (1) IN GENERAL.—Each Center shall operate a 

5 program to encourage demonstration and commer6 cial application of advanced energy methods and 

7 technologies through education and outreach to 

8 building and industrial professionals, and to other 

9 individuals and organizations with an interest in ef10 ficient energy use. 

11 (2) ADVISORY PANEL.—Each Center shall es12 tablish an advisory panel to advise the Center on 

13 how best to accomplish the activities under para14 graph (1). 

15 (c) APPLICATION.—A person seeking a grant under 

16 this section shall submit to the Secretary an application 

17 in such form and containing such information as the Sec18 retary may require. The Secretary may award a grant 

19 under this section to an entity already in existence if the 

20 entity is otherwise eligible under this section. 

21 (d) SELECTION CRITERIA.—The Secretary shall 

22 award grants under this section on the basis of the fol23 lowing criteria, at a minimum: 

24 (1) The ability of the applicant to carry out the 

25 activities in subsection (b). 
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1 (2) The extent to which the applicant will co2 ordinate the activities of the Center with other enti3 ties, such as State and local governments, utilities, 

4 and educational and research institutions. 

5 (e) MATCHING FUNDS.—The Secretary shall require 

6 a non-Federal matching requirement of at least 50 percent 

7 of the costs of establishing and operating each Center. 

8 (f) ADVISORY COMMITTEE.—The Secretary shall es9 tablish an advisory committee to advise the Secretary on 

10 the establishment of Centers under this section. The advi11 sory committee shall be composed of individuals with ex12 pertise in the area of advanced energy methods and tech13 nologies, including at least 1 representative from—

14 (1) State or local energy offices; 

15 (2) energy professionals; 

16 (3) trade or professional associations; 

17 (4) architects, engineers, or construction profes18 sionals; 

19 (5) manufacturers; 

20 (6) the research community; and 

21 (7) nonprofit energy or environmental organiza22 tions. 

23 (g) DEFINITIONS.—For purposes of this section: 

24 (1) ADVANCED ENERGY METHODS AND TECH25 NOLOGIES.—The term ‘‘advanced energy methods 
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1 and technologies’’ means all methods and tech2 nologies that promote energy efficiency and con3 servation, including distributed generation tech4 nologies, and life-cycle analysis of energy use. 

5 (2) CENTER.—The term ‘‘Center’’ means an 

6 Advanced Energy Technology Transfer Center estab7 lished pursuant to this section. 

8 (3) DISTRIBUTED GENERATION.—The term 

9 ‘‘distributed generation’’ means an electric power 

10 generation facility that is designed to serve retail 

11 electric consumers at or near the facility site. 

12 Subtitle B—Distributed Energy and 

13 Electric Energy Systems 

14 SEC. 911. DISTRIBUTED ENERGY AND ELECTRIC ENERGY 

15 SYSTEMS. 

16 (a) IN GENERAL.—The following sums are author17 ized to be appropriated to the Secretary for distributed 

18 energy and electric energy systems activities, including ac19 tivities authorized under this subtitle: 

20 (1) For fiscal year 2004, $190,000,000. 

21 (2) For fiscal year 2005, $200,000,000. 

22 (3) For fiscal year 2006, $220,000,000. 

23 (4) For fiscal year 2007, $240,000,000. 

24 (5) For fiscal year 2008, $260,000,000. 
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1 (b) MICRO-COGENERATION ENERGY TECH2 NOLOGY.—From amounts authorized under subsection 

3 (a), $20,000,000 for each of fiscal years 2004 and 2005 

4 is authorized for activities under section 914. 

5 SEC. 912. HYBRID DISTRIBUTED POWER SYSTEMS. 

6 (a) REQUIREMENT.—Not later than 1 year after the 

7 date of enactment of this Act, the Secretary shall develop 

8 and transmit to Congress a strategy for a comprehensive 

9 research, development, demonstration, and commercial ap10 plication program to develop hybrid distributed power sys11 tems that combine—

12 (1) 1 or more renewable electric power genera13 tion technologies of 10 megawatts or less located 

14 near the site of electric energy use; and 

15 (2) nonintermittent electric power generation 

16 technologies suitable for use in a distributed power 

17 system. 

18 (b) CONTENTS.—The strategy shall—

19 (1) identify the needs best met with such hybrid 

20 distributed power systems and the technological bar21 riers to the use of such systems; 

22 (2) provide for the development of methods to 

23 design, test, integrate into systems, and operate 

24 such hybrid distributed power systems; 
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1 (3) include, as appropriate, research, develop2 ment, demonstration, and commercial application on 

3 related technologies needed for the adoption of such 

4 hybrid distributed power systems, including energy 

5 storage devices and environmental control tech6 nologies; 

7 (4) include research, development, demonstra8 tion, and commercial application of interconnection 

9 technologies for communications and controls of dis10 tributed generation architectures, particularly tech11 nologies promoting real-time response to power mar12 ket information and physical conditions on the elec13 trical grid; and 

14 (5) describe how activities under the strategy 

15 will be integrated with other research, development, 

16 demonstration, and commercial application activities 

17 supported by the Department related to electric 

18 power technologies. 

19 SEC. 913. HIGH POWER DENSITY INDUSTRY PROGRAM. 

20 The Secretary shall establish a comprehensive re21 search, development, demonstration, and commercial ap22 plication program to improve energy efficiency of high 

23 power density facilities, including data centers, server 

24 farms, and telecommunications facilities. Such program 

25 shall consider technologies that provide significant im-
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1 provement in thermal controls, metering, load manage2 ment, peak load reduction, or the efficient cooling of elec3 tronics. 

4 SEC. 914. MICRO-COGENERATION ENERGY TECHNOLOGY. 

5 The Secretary shall make competitive, merit-based 

6 grants to consortia for the development of micro-cogenera7 tion energy technology. The consortia shall explore—

8 (1) the use of small-scale combined heat and 

9 power in residential heating appliances; and 

10 (2) the use of excess power to operate other ap11 pliances within the residence and supply excess gen12 erated power to the power grid. 

13 SEC. 915. DISTRIBUTED ENERGY TECHNOLOGY DEM14 ONSTRATION PROGRAM. 

15 The Secretary, within the sums authorized under sec16 tion 911(a), may provide financial assistance to coordi17 nating consortia of interdisciplinary participants for dem18 onstrations designed to accelerate the utilization of dis19 tributed energy technologies, such as fuel cells, microtur20 bines, reciprocating engines, thermally activated tech21 nologies, and combined heat and power systems, in highly 

22 energy intensive commercial applications.

23 SEC. 916. RECIPROCATING POWER. 

24 The Secretary shall conduct a research, development, 

25 and demonstration program regarding fuel system optimi-
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1 zation and emissions reduction after-treatment tech2 nologies for industrial reciprocating engines. Such after3 treatment technologies shall use processes that reduce 

4 emissions by recirculating exhaust gases and shall be de5 signed to be retrofitted to any new or existing diesel or 

6 natural gas engine used for power generation, peaking 

7 power generation, combined heat and power, or compres8 sion.

9 Subtitle C—Renewable Energy 

10 SEC. 918. RENEWABLE ENERGY. 

11 (a) IN GENERAL.—The following sums are author12 ized to be appropriated to the Secretary for renewable en13 ergy research, development, demonstration, and commer14 cial application activities, including activities authorized 

15 under this subtitle: 

16 (1) For fiscal year 2004, $480,000,000. 

17 (2) For fiscal year 2005, $550,000,000. 

18 (3) For fiscal year 2006, $610,000,000. 

19 (4) For fiscal year 2007, $659,000,000. 

20 (5) For fiscal year 2008, $710,000,000. 

21 (b) BIOENERGY.—From the amounts authorized 

22 under subsection (a), the following sums are authorized 

23 to be appropriated to carry out section 919: 

24 (1) For fiscal year 2004, $135,425,000. 

25 (2) For fiscal year 2005, $155,600,000. 
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1 (3) For fiscal year 2006, $167,650,000. 

2 (4) For fiscal year 2007, $180,000,000. 

3 (5) For fiscal year 2008, $192,000,000. 

4 (c) CONCENTRATING SOLAR POWER.—From 

5 amounts authorized under subsection (a), the following 

6 sums are authorized to be appropriated to carry out sec7 tion 920: 

8 (1) For fiscal year 2004, $20,000,000. 

9 (2) For fiscal year 2005, $40,000,000. 

10 (3) For each of fiscal years 2006, 2007 and 

11 2008, $50,000,000. 

12 (d) PUBLIC BUILDINGS.—From the amounts author13 ized under subsection (a), $30,000,000 for each of the fis14 cal years 2004 through 2008 are authorized to be appro15 priated to carry out section 922. 

16 (e) LIMITS ON USE OF FUNDS.— 

17 (1) NO FUNDS FOR RENEWABLE SUPPORT AND

18 IMPLEMENTATION.—None of the funds authorized to 

19 be appropriated under this section may be used for 

20 Renewable Support and Implementation. 

21 (2) GRANTS.—Of the funds authorized under 

22 subsection (b), not less than $5,000,000 for each fis23 cal year shall be made available for grants to His24 torically Black Colleges and Universities, Tribal Col25 leges, and Hispanic-Serving Institutions. 
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1 (3) REGIONAL FIELD VERIFICATION PRO2 GRAM.—Of the funds authorized under subsection 

3 (a), not less than $4,000,000 for each fiscal year 

4 shall be made available for the Regional Field 

5 Verification Program of the Department. 

6 (4) OFF-STREAM PUMPED STORAGE HYDRO7 POWER.—Of the funds authorized under subsection 

8 (a), such sums as may be necessary shall be made 

9 available for demonstration projects of off-stream 

10 pumped storage hydropower. 

11 (f) CONSULTATION.—In carrying out this subtitle, 

12 the Secretary, in consultation with the Secretary of Agri13 culture, shall demonstrate the use of advanced wind power 

14 technology, including combined use with coal gasification; 

15 biomass; geothermal energy systems; and other renewable 

16 energy technologies to assist in delivering electricity to 

17 rural and remote locations. 

18 SEC. 919. BIOENERGY PROGRAMS. 

19 (a) DEFINITIONS.—For the purposes of this section: 

20 (1) The term ‘‘agricultural byproducts’’ in21 cludes waste products, including poultry fat and 

22 poultry waste. 

23 (2) The term ‘‘cellulosic biomass’’ means any 

24 portion of a crop containing lignocellulose or hemi25 cellulose, including barley grain, grapeseed, forest 
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1 thinnings, rice bran, rice hulls, rice straw, soybean 

2 matter, and sugarcane bagasse, or any crop grown 

3 specifically for the purpose of producing cellulosic 

4 feedstocks. 

5 (b) PROGRAM.—The Secretary shall conduct a pro6 gram of research, development, demonstration, and com7 mercial application for bioenergy, including—

8 (1) biopower energy systems; 

9 (2) biofuels; 

10 (3) bio-based products; 

11 (4) integrated biorefineries that may produce 

12 biopower, biofuels, and bio-based products; 

13 (5) cross-cutting research and development in 

14 feedstocks and enzymes; and 

15 (6) economic analysis. 

16 (c) BIOFUELS AND BIO-BASED PRODUCTS.—The 

17 goals of the biofuels and bio-based products programs 

18 shall be to develop, in partnership with industry—

19 (1) advanced biochemical and thermochemical 

20 conversion technologies capable of making biofuels 

21 that are price-competitive with gasoline or diesel in 

22 either internal combustion engines or fuel cell-pow23 ered vehicles, and bio-based products from a variety 

24 of feedstocks, including grains, cellulosic biomass, 

25 and other agricultural byproducts; and 
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1 (2) advanced biotechnology processes capable of 

2 making biofuels and bio-based products with empha3 sis on development of biorefinery technologies using 

4 enzyme-based processing systems. 

5 SEC. 920. CONCENTRATING SOLAR POWER RESEARCH AND 

6 DEVELOPMENT PROGRAM. 

7 (a) IN GENERAL.—The Secretary shall conduct a 

8 program of research and development to evaluate the po9 tential of concentrating solar power for hydrogen produc10 tion, including cogeneration approaches for both hydrogen 

11 and electricity. Such program shall take advantage of ex12 isting facilities to the extent possible and shall include—

13 (1) development of optimized technologies that 

14 are common to both electricity and hydrogen produc15 tion; 

16 (2) evaluation of thermochemical cycles for hy17 drogen production at the temperatures attainable 

18 with concentrating solar power; 

19 (3) evaluation of materials issues for the 

20 thermochemical cycles described in paragraph (2); 

21 (4) system architectures and economics studies; 

22 and

23 (5) coordination with activities in the Advanced 

24 Reactor Hydrogen Cogeneration Project on high 
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1 temperature materials, thermochemical cycles, and 

2 economic issues. 

3 (b) ASSESSMENT.—In carrying out the program 

4 under this section, the Secretary shall—

5 (1) assess conflicting guidance on the economic 

6 potential of concentrating solar power for electricity 

7 production received from the National Research 

8 Council report entitled ‘‘Renewable Power Pathways: 

9 A Review of the U.S. Department of Energy’s Re10 newable Energy Programs’’ in 2000 and subsequent 

11 Department-funded reviews of that report; and 

12 (2) provide an assessment of the potential im13 pact of the technology before, or concurrent with, 

14 submission of the fiscal year 2006 budget. 

15 (c) REPORT.—Not later than 5 years after the date 

16 of enactment of this Act, the Secretary shall provide a re17 port to Congress on the economic and technical potential 

18 for electricity or hydrogen production, with or without co19 generation, with concentrating solar power, including the 

20 economic and technical feasibility of potential construction 

21 of a pilot demonstration facility suitable for commercial 

22 production of electricity or hydrogen from concentrating 

23 solar power. 
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1 SEC. 921. MISCELLANEOUS PROJECTS. 

2 The Secretary may conduct research, development, 

3 demonstration, and commercial application programs 

4 for—

5 (1) ocean energy, including wave energy; and 

6 (2) the combined use of renewable energy tech7 nologies with one another and with other energy 

8 technologies, including the combined use of wind 

9 power and coal gasification technologies. 

10 SEC. 922. RENEWABLE ENERGY IN PUBLIC BUILDINGS. 

11 (a) DEMONSTRATION AND TECHNOLOGY TRANSFER

12 PROGRAM.—The Secretary shall establish a program for 

13 the demonstration of innovative technologies for solar and 

14 other renewable energy sources in buildings owned or op15 erated by a State or local government, and for the dissemi16 nation of information resulting from such demonstration 

17 to interested parties. 

18 (b) LIMIT ON FEDERAL FUNDING.—The Secretary 

19 shall provide under this section no more than 40 percent 

20 of the incremental costs of the solar or other renewable 

21 energy source project funded. 

22 (c) REQUIREMENT.—As part of the application for 

23 awards under this section, the Secretary shall require all 

24 applicants—
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1 (1) to demonstrate a continuing commitment to 

2 the use of solar and other renewable energy sources 

3 in buildings they own or operate; and 

4 (2) to state how they expect any award to fur5 ther their transition to the significant use of renew6 able energy. 

7 SEC. 923. STUDY OF MARINE RENEWABLE ENERGY OP8 TIONS. 

9 (a) IN GENERAL.—The Secretary shall enter into an 

10 arrangement with the National Academy of Sciences to 

11 conduct a study on—

12 (1) the feasibility of various methods of renew13 able generation of energy from the ocean, including 

14 energy from waves, tides, currents, and thermal gra15 dients; and 

16 (2) the research, development, demonstration, 

17 and commercial application activities required to 

18 make marine renewable energy generation competi19 tive with other forms of electricity generation. 

20 (b) TRANSMITTAL.—Not later than 1 year after the 

21 date of enactment of this Act, the Secretary shall transmit 

22 the study to Congress along with the Secretary’s rec23 ommendations for implementing the results of the study. 
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1 Subtitle D—Nuclear Energy 

2 SEC. 924. NUCLEAR ENERGY. 

3 (a) CORE PROGRAMS.—The following sums are au4 thorized to be appropriated to the Secretary for nuclear 

5 energy research, development, demonstration, and com6 mercial application activities, including activities author7 ized under this subtitle, other than those described in sub8 section (b): 

9 (1) For fiscal year 2004, $273,000,000. 

10 (2) For fiscal year 2005, $355,000,000. 

11 (3) For fiscal year 2006, $430,000,000. 

12 (4) For fiscal year 2007, $455,000,000. 

13 (5) For fiscal year 2008, $545,000,000. 

14 (b) NUCLEAR INFRASTRUCTURE SUPPORT.—The fol15 lowing sums are authorized to be appropriated to the Sec16 retary for activities under section 925(e): 

17 (1) For fiscal year 2004, $125,000,000. 

18 (2) For fiscal year 2005, $130,000,000. 

19 (3) For fiscal year 2006, $135,000,000. 

20 (4) For fiscal year 2007, $140,000,000. 

21 (5) For fiscal year 2008, $145,000,000. 

22 (c) ALLOCATIONS.—From amounts authorized under 

23 subsection (a), the following sums are authorized: 

24 (1) For activities under section 926—

25 (A) for fiscal year 2004, $140,000,000; 
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1 (B) for fiscal year 2005, $145,000,000; 

2 (C) for fiscal year 2006, $150,000,000; 

3 (D) for fiscal year 2007, $155,000,000; 

4 and 

5 (E) for fiscal year 2008, $275,000,000. 

6 (2) For activities under section 927—

7 (A) for fiscal year 2004, $35,200,000; 

8 (B) for fiscal year 2005, $44,350,000; 

9 (C) for fiscal year 2006, $49,200,000; 

10 (D) for fiscal year 2007, $54,950,000; and 

11 (E) for fiscal year 2008, $60,000,000. 

12 (3) For activities under section 929, for each of 

13 fiscal years 2004 through 2008, $6,000,000. 

14 (d) LIMITATION ON USE OF FUNDS.—None of the 

15 funds authorized under this section may be used for de16 commissioning the Fast Flux Test Facility. 

17 SEC. 925. NUCLEAR ENERGY RESEARCH AND DEVELOP18 MENT PROGRAMS. 

19 (a) NUCLEAR ENERGY RESEARCH INITIATIVE.—The 

20 Secretary shall carry out a Nuclear Energy Research Ini21 tiative for research and development related to nuclear en22 ergy. 

23 (b) NUCLEAR ENERGY PLANT OPTIMIZATION PRO24 GRAM.—The Secretary shall carry out a Nuclear Energy 

25 Plant Optimization Program to support research and de-
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1 velopment activities addressing reliability, availability, pro2 ductivity, component aging, safety, and security of existing 

3 nuclear power plants. 

4 (c) NUCLEAR POWER 2010 PROGRAM.—The Sec5 retary shall carry out a Nuclear Power 2010 Program, 

6 consistent with recommendations in the October 2001 re7 port entitled ‘‘A Roadmap to Deploy New Nuclear Power 

8 Plants in the United States by 2010’’ issued by the Nu9 clear Energy Research Advisory Committee of the Depart10 ment. Whatever type of reactor is chosen for the hydrogen 

11 cogeneration project under subtitle C of title VI, that type 

12 shall not be addressed in the Program under this section. 

13 The Program shall include—

14 (1) support for first-of-a-kind engineering de15 sign and certification expenses of advanced nuclear 

16 power plant designs, which offer improved safety 

17 and economics over current conventional plants and 

18 the promise of near-term to medium-term commer19 cial deployment; 

20 (2) action by the Secretary to encourage domes21 tic power companies to install new nuclear plant ca22 pacity as soon as possible; 

23 (3) utilization of the expertise and capabilities 

24 of industry, universities, and National Laboratories
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1 in evaluation of advanced nuclear fuel cycles and 

2 fuels testing; 

3 (4) consideration of proliferation-resistant pas4 sively-safe, small reactors suitable for long-term elec5 tricity production without refueling and suitable for 

6 use in remote installations; 

7 (5) participation of international collaborators 

8 in research, development, design, and deployment ef9 forts as appropriate and consistent with United 

10 States interests in nonproliferation of nuclear weap11 ons; 

12 (6) encouragement for university and industry 

13 participation; and 

14 (7) selection of projects such as to strengthen 

15 the competitive position of the domestic nuclear 

16 power industrial infrastructure. 

17 (d) GENERATION IV NUCLEAR ENERGY SYSTEMS

18 INITIATIVE.—The Secretary shall carry out a Generation 

19 IV Nuclear Energy Systems Initiative to develop an over20 all technology plan and to support research and develop21 ment necessary to make an informed technical decision 

22 about the most promising candidates for eventual commer23 cial application. The Initiative shall examine advanced 

24 proliferation-resistant and passively safe reactor designs, 

25 including designs that—
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1 (1) are economically competitive with other elec2 tric power generation plants; 

3 (2) have higher efficiency, lower cost, and im4 proved safety compared to reactors in operation on 

5 the date of enactment of this Act; 

6 (3) use fuels that are proliferation-resistant and 

7 have substantially reduced production of high-level 

8 waste per unit of output; and 

9 (4) use improved instrumentation. 

10 (e) NUCLEAR INFRASTRUCTURE SUPPORT.—The 

11 Secretary shall develop and implement a strategy for the 

12 facilities of the Office of Nuclear Energy, Science, and 

13 Technology and shall transmit a report containing the 

14 strategy along with the President’s budget request to Con15 gress for fiscal year 2006. 

16 SEC. 926. ADVANCED FUEL CYCLE INITIATIVE. 

17 (a) IN GENERAL.—The Secretary, through the Direc18 tor of the Office of Nuclear Energy, Science, and Tech19 nology, shall conduct an advanced fuel recycling tech20 nology research and development program to evaluate pro21 liferation-resistant fuel recycling and transmutation tech22 nologies that minimize environmental or public health and 

23 safety impacts as an alternative to aqueous reprocessing 

24 technologies deployed as of the date of enactment of this 

25 Act in support of evaluation of alternative national strate-
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1 gies for spent nuclear fuel and the Generation IV ad2 vanced reactor concepts, subject to annual review by the 

3 Secretary’s Nuclear Energy Research Advisory Committee 

4 or other independent entity, as appropriate. Opportunities 

5 to enhance progress of the program through international 

6 cooperation should be sought. 

7 (b) REPORTS.—The Secretary shall report on the ac8 tivities of the advanced fuel recycling technology research 

9 and development program as part of the Department’s an10 nual budget submission. 

11 SEC. 927. UNIVERSITY NUCLEAR SCIENCE AND ENGINEER12 ING SUPPORT. 

13 (a) ESTABLISHMENT.—The Secretary shall support 

14 a program to invest in human resources and infrastructure 

15 in the nuclear sciences and engineering and related fields 

16 (including health physics and nuclear and radiochemistry), 

17 consistent with departmental missions related to civilian 

18 nuclear research and development. 

19 (b) DUTIES.—In carrying out the program under this 

20 section, the Secretary shall establish fellowship and faculty 

21 assistance programs, as well as provide support for funda22 mental research and encourage collaborative research 

23 among industry, National Laboratories, and universities 

24 through the Nuclear Energy Research Initiative. The Sec25 retary is encouraged to support activities addressing the 
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1 entire fuel cycle through involvement of both the Office 

2 of Nuclear Energy, Science, and Technology and the Of3 fice of Civilian Radioactive Waste Management. The Sec4 retary shall support communication and outreach related 

5 to nuclear science, engineering, and nuclear waste man6 agement, consistent with interests of the United States in 

7 nonproliferation of nuclear weapons capabilities. 

8 (c) STRENGTHENING UNIVERSITY RESEARCH AND

9 TRAINING REACTORS AND ASSOCIATED INFRASTRUC10 TURE.—Activities under this section may include—

11 (1) converting research and training reactors 

12 currently using high-enrichment fuels to low-enrich13 ment fuels, upgrading operational instrumentation, 

14 and sharing of reactors among institutions of higher 

15 education; 

16 (2) providing technical assistance, in collabora17 tion with the United States nuclear industry, in reli18 censing and upgrading research and training reac19 tors as part of a student training program; and 

20 (3) providing funding, through the Innovations 

21 in Nuclear Infrastructure and Education Program, 

22 for reactor improvements as part of a focused effort 

23 that emphasizes research, training, and education. 

24 (d) UNIVERSITY NATIONAL LABORATORY INTER25 ACTIONS.—The Secretary shall develop sabbatical fellow-
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1 ship and visiting scientist programs to encourage sharing 

2 of personnel between National Laboratories and univer3 sities. 

4 (e) OPERATING AND MAINTENANCE COSTS.—Fund5 ing for a research project provided under this section may 

6 be used to offset a portion of the operating and mainte7 nance costs of a research and training reactor at an insti8 tution of higher education used in the research project. 

9 SEC. 928. SECURITY OF REACTOR DESIGNS. 

10 The Secretary, through the Director of the Office of 

11 Nuclear Energy, Science, and Technology, shall conduct 

12 a research and development program on cost-effective 

13 technologies for increasing the safety of reactor designs 

14 from natural phenomena and the security of reactor de15 signs from deliberate attacks. 

16 SEC. 929. ALTERNATIVES TO INDUSTRIAL RADIOACTIVE 

17 SOURCES. 

18 (a) STUDY.—The Secretary shall conduct a study and 

19 provide a report to Congress not later than August 1, 

20 2004. The study shall—

21 (1) survey industrial applications of large radio22 active sources, including well-logging sources; 

23 (2) review current domestic and international 

24 Department, Department of Defense, Department of 
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1 State, and commercial programs to manage and dis2 pose of radioactive sources; 

3 (3) discuss disposal options and practices for 

4 currently deployed or future sources and, if defi5 ciencies are noted in existing disposal options or 

6 practices for either deployed or future sources, rec7 ommend options to remedy deficiencies; and 

8 (4) develop a program plan for research and de9 velopment to develop alternatives to large industrial 

10 sources that reduce safety, environmental, or pro11 liferation risks to either workers using the sources or 

12 the public. 

13 (b) PROGRAM.—The Secretary shall establish a re14 search and development program to implement the pro15 gram plan developed under subsection (a)(4). The pro16 gram shall include miniaturized particle accelerators for 

17 well-logging or other industrial applications and portable 

18 accelerators for production of short-lived radioactive mate19 rials at an industrial site. 

20 SEC. 930. GEOLOGICAL ISOLATION OF SPENT FUEL. 

21 The Secretary shall conduct a study to determine the 

22 feasibility of deep borehole disposal of spent nuclear fuel 

23 and high-level radioactive waste. The study shall empha24 size geological, chemical, and hydrological characterization 

25 of, and design of engineered structures for, deep borehole
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1 environments. Not later than 1 year after the date of en2 actment of this Act, the Secretary shall transmit the study 

3 to Congress. 

4 Subtitle E—Fossil Energy 

5 PART I—RESEARCH PROGRAMS 

6 SEC. 931. FOSSIL ENERGY. 

7 (a) IN GENERAL.—The following sums are author8 ized to be appropriated to the Secretary for fossil energy 

9 research, development, demonstration, and commercial ap10 plication activities, including activities authorized under 

11 this part: 

12 (1) For fiscal year 2004, $530,000,000. 

13 (2) For fiscal year 2005, $556,000,000. 

14 (3) For fiscal year 2006, $583,000,000. 

15 (4) For fiscal year 2007, $611,000,000. 

16 (5) For fiscal year 2008, $626,000,000. 

17 (b) ALLOCATIONS.—From amounts authorized under 

18 subsection (a), the following sums are authorized: 

19 (1) For activities under section 932(b)(2), 

20 $28,000,000 for each of the fiscal years 2004 

21 through 2008. 

22 (2) For activities under section 934—

23 (A) for fiscal year 2004, $12,000,000; 

24 (B) for fiscal year 2005, $15,000,000; and 
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1 (C) for each of fiscal years 2006 through 

2 2008, $20,000,000. 

3 (3) For activities under section 935—

4 (A) for fiscal year 2004, $259,000,000; 

5 (B) for fiscal year 2005, $272,000,000; 

6 (C) for fiscal year 2006, $285,000,000; 

7 (D) for fiscal year 2007, $298,000,000; 

8 and 

9 (E) for fiscal year 2008, $308,000,000. 

10 (4) For the Office of Arctic Energy under sec11 tion 3197 of the Floyd D. Spence National Defense 

12 Authorization Act for Fiscal Year 2001 (42 U.S.C. 

13 7144d), $25,000,000 for each of fiscal years 2004 

14 through 2008. 

15 (5) For activities under section 933, 

16 $4,000,000 for fiscal year 2004 and $2,000,000 for 

17 each of fiscal years 2005 through 2008. 

18 (c) EXTENDED AUTHORIZATION.—There are author19 ized to be appropriated to the Secretary for the Office of 

20 Arctic Energy under section 3197 of the Floyd D. Spence 

21 National Defense Authorization Act for Fiscal Year 2001 

22 (42 U.S.C. 7144d), $25,000,000 for each of fiscal years 

23 2009 through 2012. 

24 (d) LIMITS ON USE OF FUNDS.—
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1 (1) NO FUNDS FOR CERTAIN PROGRAMS.—None 

2 of the funds authorized under this section may be 

3 used for Fossil Energy Environmental Restoration 

4 or Import/Export Authorization. 

5 (2) INSTITUTIONS OF HIGHER EDUCATION.—Of 

6 the funds authorized under subsection (b)(2), not 

7 less than 20 percent of the funds appropriated for 

8 each fiscal year shall be dedicated to research and 

9 development carried out at institutions of higher 

10 education. 

11 SEC. 932. OIL AND GAS RESEARCH PROGRAMS. 

12 (a) OIL AND GAS RESEARCH.—The Secretary shall 

13 conduct a program of research, development, demonstra14 tion, and commercial application on oil and gas, includ15 ing—

16 (1) exploration and production; 

17 (2) gas hydrates; 

18 (3) reservoir life and extension; 

19 (4) transportation and distribution infrastruc20 ture; 

21 (5) ultraclean fuels; 

22 (6) heavy oil and oil shale; 

23 (7) related environmental research; and 

24 (8) compressed natural gas marine transport. 

25 (b) FUEL CELLS.—
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1 (1) IN GENERAL.—The Secretary shall conduct 

2 a program of research, development, demonstration, 

3 and commercial application on fuel cells for low-cost, 

4 high-efficiency, fuel-flexible, modular power systems. 

5 (2) IMPROVED MANUFACTURING PRODUCTION

6 AND PROCESSES.—The demonstrations under para7 graph (1) shall include fuel cell technology for com8 mercial, residential, and transportation applications, 

9 and distributed generation systems, utilizing im10 proved manufacturing production and processes. 

11 (c) NATURAL GAS AND OIL DEPOSITS REPORT.—

12 Not later than 2 years after the date of enactment of this 

13 Act, and every 2 years thereafter, the Secretary of the In14 terior, in consultation with other appropriate Federal 

15 agencies, shall transmit a report to Congress of the latest 

16 estimates of natural gas and oil reserves, reserves growth, 

17 and undiscovered resources in Federal and State waters 

18 off the coast of Louisiana and Texas. 

19 (d) INTEGRATED CLEAN POWER AND ENERGY RE20 SEARCH.—

21 (1) NATIONAL CENTER OR CONSORTIUM OF EX22 CELLENCE.—The Secretary shall establish a na23 tional center or consortium of excellence in clean en24 ergy and power generation, utilizing the resources of 

25 the existing Clean Power and Energy Research Con-
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1 sortium, to address the Nation’s critical dependence 

2 on energy and the need to reduce emissions. 

3 (2) PROGRAM.—The center or consortium shall 

4 conduct a program of research, development, dem5 onstration, and commercial application on inte6 grating the following focus areas: 

7 (A) Efficiency and reliability of gas tur8 bines for power generation. 

9 (B) Reduction in emissions from power 

10 generation. 

11 (C) Promotion of energy conservation 

12 issues. 

13 (D) Effectively utilizing alternative fuels 

14 and renewable energy. 

15 (E) Development of advanced materials 

16 technology for oil and gas exploration and utili17 zation in harsh environments. 

18 (F) Education on energy and power gen19 eration issues. 

20 SEC. 933. TECHNOLOGY TRANSFER. 

21 The Secretary shall establish a competitive program 

22 to award a contract to a nonprofit entity for the purpose 

23 of transferring technologies developed with public funds. 

24 The entity selected under this section shall have experi25 ence in offshore oil and gas technology research manage-
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1 ment, in the transfer of technologies developed with public 

2 funds to the offshore and maritime industry, and in man3 agement of an offshore and maritime industry consortium. 

4 The program consortium selected under section 942 shall 

5 not be eligible for selection under this section. When ap6 propriate, the Secretary shall consider utilizing the entity 

7 selected under this section when implementing the activi8 ties authorized by section 975. 

9 SEC. 934. RESEARCH AND DEVELOPMENT FOR COAL MIN10 ING TECHNOLOGIES. 

11 (a) ESTABLISHMENT.—The Secretary shall carry out 

12 a program of research and development on coal mining 

13 technologies. The Secretary shall cooperate with appro14 priate Federal agencies, coal producers, trade associations, 

15 equipment manufacturers, institutions of higher education 

16 with mining engineering departments, and other relevant 

17 entities. 

18 (b) PROGRAM.—The research and development activi19 ties carried out under this section shall—

20 (1) be guided by the mining research and devel21 opment priorities identified by the Mining Industry 

22 of the Future Program and in the recommendations 

23 from relevant reports of the National Academy of 

24 Sciences on mining technologies;
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1 (2) include activities exploring minimization of 

2 contaminants in mined coal that contribute to envi3 ronmental concerns including development and dem4 onstration of electromagnetic wave imaging ahead of 

5 mining operations; 

6 (3) develop and demonstrate electromagnetic 

7 wave imaging and radar techniques for horizontal 

8 drilling in coal beds in order to increase methane re9 covery efficiency, prevent spoilage of domestic coal 

10 reserves, and minimize water disposal associated 

11 with methane extraction; and 

12 (4) expand mining research capabilities at insti13 tutions of higher education. 

14 SEC. 935. COAL AND RELATED TECHNOLOGIES PROGRAM. 

15 (a) IN GENERAL.—In addition to the programs au16 thorized under title IV, the Secretary shall conduct a pro17 gram of technology research, development, demonstration, 

18 and commercial application for coal and power systems, 

19 including programs to facilitate production and generation 

20 of coal-based power through—

21 (1) innovations for existing plants; 

22 (2) integrated gasification combined cycle; 

23 (3) advanced combustion systems; 

24 (4) turbines for synthesis gas derived from coal; 
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1 (5) carbon capture and sequestration research 

2 and development; 

3 (6) coal-derived transportation fuels and chemi4 cals; 

5 (7) solid fuels and feedstocks; 

6 (8) advanced coal-related research; 

7 (9) advanced separation technologies; and 

8 (10) a joint project for permeability enhance9 ment in coals for natural gas production and carbon 

10 dioxide sequestration. 

11 (b) COST AND PERFORMANCE GOALS.—In carrying 

12 out programs authorized by this section, the Secretary 

13 shall identify cost and performance goals for coal-based 

14 technologies that would permit the continued cost-com15 petitive use of coal for electricity generation, as chemical 

16 feedstocks, and as transportation fuel in 2007, 2015, and 

17 the years after 2020. In establishing such cost and per18 formance goals, the Secretary shall—

19 (1) consider activities and studies undertaken 

20 to date by industry in cooperation with the Depart21 ment in support of such assessment; 

22 (2) consult with interested entities, including 

23 coal producers, industries using coal, organizations 

24 to promote coal and advanced coal technologies, en-
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1 vironmental organizations, and organizations rep2 resenting workers; 

3 (3) not later than 120 days after the date of 

4 enactment of this Act, publish in the Federal Reg5 ister proposed draft cost and performance goals for 

6 public comments; and 

7 (4) not later than 180 days after the date of 

8 enactment of this Act and every 4 years thereafter, 

9 submit to Congress a report describing final cost 

10 and performance goals for such technologies that in11 cludes a list of technical milestones as well as an ex12 planation of how programs authorized in this section 

13 will not duplicate the activities authorized under the 

14 Clean Coal Power Initiative authorized under sub15 title A of title IV. 

16 SEC. 936. COMPLEX WELL TECHNOLOGY TESTING FACIL17 ITY. 

18 The Secretary, in coordination with industry leaders 

19 in extended research drilling technology, shall establish a 

20 Complex Well Technology Testing Facility at the Rocky 

21 Mountain Oilfield Testing Center to increase the range of 

22 extended drilling technologies. 
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1 SEC. 937. FISCHER-TROPSCH DIESEL FUEL LOAN GUAR2 ANTEE PROGRAM. 

3 (a) DEFINITION OF FISCHER-TROPSCH DIESEL

4 FUEL.—In this section, the term ‘‘Fischer-Tropsch diesel 

5 fuel’’ means diesel fuel that—

6 (1) contains less than 10 parts per million sul7 fur; and 

8 (2) is produced through the Fischer-Tropsch 

9 liquification process from coal or waste from coal 

10 that was mined in the United States. 

11 (b) LOAN GUARANTEES.—

12 (1) ESTABLISHMENT OF PROGRAM.—The Sec13 retary of Energy shall establish a program to pro14 vide guarantees of loans by private lending institu15 tions for the construction of facilities for the produc16 tion of Fischer-Tropsch diesel fuel and commercial 

17 byproducts of that production. 

18 (2) REQUIREMENTS.—The Secretary may pro19 vide a loan guarantee under paragraph (1) if—

20 (A) without a loan guarantee, credit is not 

21 available to the applicant under reasonable 

22 terms or conditions sufficient to finance the 

23 construction of a facility described in paragraph 

24 (1); 

25 (B) the prospective earning power of the 

26 applicant and the character and value of the se-
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1 curity pledged provide a reasonable assurance 

2 of repayment of the loan to be guaranteed in 

3 accordance with the terms of the loan; and 

4 (C) the loan bears interest at a rate deter5 mined by the Secretary to be reasonable, taking 

6 into account the current average yield on out7 standing obligations of the United States with 

8 remaining periods of maturity comparable to 

9 the maturity of the loan. 

10 (3) CRITERIA.—In selecting recipients of loan 

11 guarantees from among applicants, the Secretary 

12 shall give preference to proposals that—

13 (A) meet all Federal and State permitting 

14 requirements; 

15 (B) are most likely to be successful; and 

16 (C) are located in local markets that have 

17 the greatest need for the facility because of—

18 (i) the availability of domestic coal or 

19 coal waste for conversion; or 

20 (ii) a projected high level of demand 

21 for Fischer-Tropsch diesel fuel or other 

22 commercial byproducts of the facility. 

23 (4) MATURITY.—A loan guaranteed under 

24 paragraph (1) shall have a maturity of not more 

25 than 25 years. 
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1 (5) TERMS AND CONDITIONS.—The loan agree2 ment for a loan guaranteed under paragraph (1) 

3 shall provide that no provision of the loan may be 

4 amended or waived without the consent of the Sec5 retary. 

6 (6) GUARANTEE FEE.—A recipient of a loan 

7 guarantee under paragraph (1) shall pay the Sec8 retary an amount to be determined by the Secretary 

9 to be sufficient to cover the administrative costs of 

10 the Secretary relating to the loan guarantee. 

11 (7) FULL FAITH AND CREDIT.—

12 (A) IN GENERAL.—The full faith and cred13 it of the United States is pledged to payment 

14 of loan guarantees made under this section. 

15 (B) CONCLUSIVE EVIDENCE.—Any loan 

16 guarantee made by the Secretary under this 

17 section shall be conclusive evidence of the eligi18 bility of the loan for the guarantee with respect 

19 to principal and interest. 

20 (C) VALIDITY.—The validity of a loan 

21 guarantee shall be incontestable in the hands of 

22 a holder of the guaranteed loan. 

23 (8) REPORTS.—Until each guaranteed loan 

24 under this section is repaid in full, the Secretary
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1 shall annually submit to Congress a report on the 

2 activities of the Secretary under this section. 

3 (9) AUTHORIZATION OF APPROPRIATIONS.—

4 There are authorized to be appropriated such sums 

5 as are necessary to carry out this section. 

6 (10) TERMINATION OF AUTHORITY.—The au7 thority of the Secretary to issue a new loan guar8 antee under paragraph (1) terminates on the date 

9 that is 5 years after the date of enactment of this 

10 Act. 

11 PART II—ULTRA-DEEPWATER AND UNCONVEN12 TIONAL NATURAL GAS AND OTHER PETRO13 LEUM RESOURCES 

14 SEC. 941. PROGRAM AUTHORITY. 

15 (a) IN GENERAL.—The Secretary shall carry out a 

16 program under this part of research, development, dem17 onstration, and commercial application of technologies for 

18 ultra-deepwater and unconventional natural gas and other 

19 petroleum resource exploration and production, including 

20 addressing the technology challenges for small producers, 

21 safe operations, and environmental mitigation (including 

22 reduction of greenhouse gas emissions and sequestration 

23 of carbon). 

24 (b) PROGRAM ELEMENTS.—The program under this 

25 part shall address the following areas, including improving 
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1 safety and minimizing environmental impacts of activities 

2 within each area: 

3 (1) Ultra-deepwater technology, including drill4 ing to formations in the Outer Continental Shelf to 

5 depths greater than 15,000 feet. 

6 (2) Ultra-deepwater architecture. 

7 (3) Unconventional natural gas and other petro8 leum resource exploration and production tech9 nology, including the technology challenges of small 

10 producers. 

11 (c) LIMITATION ON LOCATION OF FIELD ACTIVI12 TIES.—Field activities under the program under this part 

13 shall be carried out only—

14 (1) in—

15 (A) areas in the territorial waters of the 

16 United States not under any Outer Continental 

17 Shelf moratorium as of September 30, 2002; 

18 (B) areas onshore in the United States on 

19 public land administered by the Secretary of the 

20 Interior available for oil and gas leasing, where 

21 consistent with applicable law and land use 

22 plans; and 

23 (C) areas onshore in the United States on 

24 State or private land, subject to applicable law; 

25 and 
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1 (2) with the approval of the appropriate Fed2 eral or State land management agency or private 

3 land owner. 

4 (d) RESEARCH AT NATIONAL ENERGY TECHNOLOGY

5 LABORATORY.—The Secretary, through the National En6 ergy Technology Laboratory, shall carry out research com7 plementary to research under subsection (b). 

8 (e) CONSULTATION WITH SECRETARY OF THE INTE9 RIOR.—In carrying out this part, the Secretary shall con10 sult regularly with the Secretary of the Interior. 

11 SEC. 942. ULTRA-DEEPWATER PROGRAM. 

12 (a) IN GENERAL.—The Secretary shall carry out the 

13 activities under section 941(a), to maximize the use of the 

14 ultra-deepwater natural gas and other petroleum resources 

15 of the United States by increasing the supply of such re16 sources, through reducing the cost and increasing the effi17 ciency of exploration for and production of such resources, 

18 while improving safety and minimizing environmental im19 pacts. 

20 (b) ROLE OF THE SECRETARY.—The Secretary shall 

21 have ultimate responsibility for, and oversight of, all as22 pects of the program under this section. 

23 (c) ROLE OF THE PROGRAM CONSORTIUM.—

24 (1) IN GENERAL.—The Secretary may contract 

25 with a consortium to—
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1 (A) manage awards pursuant to subsection 

2 (f)(4); 

3 (B) make recommendations to the Sec4 retary for project solicitations; 

5 (C) disburse funds awarded under sub6 section (f) as directed by the Secretary in ac7 cordance with the annual plan under subsection 

8 (e); and 

9 (D) carry out other activities assigned to 

10 the program consortium by this section. 

11 (2) LIMITATION.—The Secretary may not as12 sign any activities to the program consortium except 

13 as specifically authorized under this section. 

14 (3) CONFLICT OF INTEREST.—

15 (A) PROCEDURES.—The Secretary shall 

16 establish procedures—

17 (i) to ensure that each board member, 

18 officer, or employee of the program consor19 tium who is in a decision-making capacity 

20 under subsection (f)(3) or (4) shall disclose 

21 to the Secretary any financial interests in, 

22 or financial relationships with, applicants 

23 for or recipients of awards under this sec24 tion, including those of his or her spouse 

25 or minor child, unless such relationships or 
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1 interests would be considered to be remote 

2 or inconsequential; and 

3 (ii) to require any board member, offi4 cer, or employee with a financial relation5 ship or interest disclosed under clause (i) 

6 to recuse himself or herself from any re7 view under subsection (f)(3) or oversight 

8 under subsection (f)(4) with respect to 

9 such applicant or recipient. 

10 (B) FAILURE TO COMPLY.—The Secretary 

11 may disqualify an application or revoke an 

12 award under this section if a board member, of13 ficer, or employee has failed to comply with pro14 cedures required under subparagraph (A)(ii). 

15 (d) SELECTION OF THE PROGRAM CONSORTIUM.—

16 (1) IN GENERAL.—The Secretary shall select 

17 the program consortium through an open, competi18 tive process. 

19 (2) MEMBERS.—The program consortium may 

20 include corporations, trade associations, institutions 

21 of higher education, National Laboratories, or other 

22 research institutions. After submitting a proposal 

23 under paragraph (4), the program consortium may 

24 not add members without the consent of the Sec25 retary. 
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1 (3) TAX STATUS.—The program consortium 

2 shall be an entity that is exempt from tax under sec3 tion 501(c)(3) of the Internal Revenue Code of 

4 1986. 

5 (4) SCHEDULE.—Not later than 180 days after 

6 the date of enactment of this Act, the Secretary 

7 shall solicit proposals from eligible consortia to per8 form the duties in subsection (c)(1), which shall be 

9 submitted not later than 360 days after the date of 

10 enactment of this Act. The Secretary shall select the 

11 program consortium not later than 18 months after 

12 such date of enactment. 

13 (5) APPLICATION.—Applicants shall submit a 

14 proposal including such information as the Secretary 

15 may require. At a minimum, each proposal shall—

16 (A) list all members of the consortium; 

17 (B) fully describe the structure of the con18 sortium, including any provisions relating to in19 tellectual property; and 

20 (C) describe how the applicant would carry 

21 out the activities of the program consortium 

22 under this section. 

23 (6) ELIGIBILITY.—To be eligible to be selected 

24 as the program consortium, an applicant must be an 

25 entity whose members collectively have demonstrated
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1 capabilities in planning and managing research, de2 velopment, demonstration, and commercial applica3 tion programs in natural gas or other petroleum ex4 ploration or production. 

5 (7) CRITERION.—The Secretary shall consider 

6 the amount of the fee an applicant proposes to re7 ceive under subsection (g) in selecting a consortium 

8 under this section. 

9 (e) ANNUAL PLAN.—

10 (1) IN GENERAL.—The program under this sec11 tion shall be carried out pursuant to an annual plan 

12 prepared by the Secretary in accordance with para13 graph (2). 

14 (2) DEVELOPMENT.—

15 (A) SOLICITATION OF RECOMMENDA16 TIONS.—Before drafting an annual plan under 

17 this subsection, the Secretary shall solicit spe18 cific written recommendations from the pro19 gram consortium for each element to be ad20 dressed in the plan, including those described in 

21 paragraph (4). The Secretary may request that 

22 the program consortium submit its rec23 ommendations in the form of a draft annual 

24 plan. 
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1 (B) SUBMISSION OF RECOMMENDATIONS; 

2 OTHER COMMENT.—The Secretary shall submit 

3 the recommendations of the program consor4 tium under subparagraph (A) to the Ultra5 Deepwater Advisory Committee established 

6 under section 945(a) for review, and such Advi7 sory Committee shall provide to the Secretary 

8 written comments by a date determined by the 

9 Secretary. The Secretary may also solicit com10 ments from any other experts. 

11 (C) CONSULTATION.—The Secretary shall 

12 consult regularly with the program consortium 

13 throughout the preparation of the annual plan. 

14 (3) PUBLICATION.—The Secretary shall trans15 mit to Congress and publish in the Federal Register 

16 the annual plan, along with any written comments 

17 received under paragraph (2)(A) and (B). 

18 (4) CONTENTS.—The annual plan shall describe 

19 the ongoing and prospective activities of the pro20 gram under this section and shall include—

21 (A) a list of any solicitations for awards 

22 that the Secretary plans to issue to carry out 

23 research, development, demonstration, or com24 mercial application activities, including the top25 ics for such work, who would be eligible to 
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1 apply, selection criteria, and the duration of 

2 awards; and 

3 (B) a description of the activities expected 

4 of the program consortium to carry out sub5 section (f)(4). 

6 (5) ESTIMATES OF INCREASED ROYALTY RE7 CEIPTS.—The Secretary, in consultation with the 

8 Secretary of the Interior, shall provide an annual re9 port to Congress with the President’s budget on the 

10 estimated cumulative increase in Federal royalty re11 ceipts (if any) resulting from the implementation of 

12 this part. The initial report under this paragraph 

13 shall be submitted in the first President’s budget fol14 lowing the completion of the first annual plan re15 quired under this subsection. 

16 (f) AWARDS.—

17 (1) IN GENERAL.—The Secretary shall make 

18 awards to carry out research, development, dem19 onstration, and commercial application activities 

20 under the program under this section. The program 

21 consortium shall not be eligible to receive such 

22 awards, but members of the program consortium 

23 may receive such awards. 

24 (2) PROPOSALS.—The Secretary shall solicit 

25 proposals for awards under this subsection in such 
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1 manner and at such time as the Secretary may pre2 scribe, in consultation with the program consortium. 

3 (3) REVIEW.—The Secretary shall make awards 

4 under this subsection through a competitive process, 

5 which shall include a review by individuals selected 

6 by the Secretary. Such individuals shall include, for 

7 each application, Federal officials, the program con8 sortium, and non-Federal experts who are not board 

9 members, officers, or employees of the program con10 sortium or of a member of the program consortium. 

11 (4) OVERSIGHT.—

12 (A) IN GENERAL.—The program consor13 tium shall oversee the implementation of 

14 awards under this subsection, consistent with 

15 the annual plan under subsection (e), including 

16 disbursing funds and monitoring activities car17 ried out under such awards for compliance with 

18 the terms and conditions of the awards. 

19 (B) EFFECT.—Nothing in subparagraph 

20 (A) shall limit the authority or responsibility of 

21 the Secretary to oversee awards, or limit the 

22 authority of the Secretary to review or revoke 

23 awards. 

24 (C) PROVISION OF INFORMATION.—The 

25 Secretary shall provide to the program consor-
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1 tium the information necessary for the program 

2 consortium to carry out its responsibilities 

3 under this paragraph. 

4 (g) ADMINISTRATIVE COSTS.—

5 (1) IN GENERAL.—To compensate the program 

6 consortium for carrying out its activities under this 

7 section, the Secretary shall provide to the program 

8 consortium funds sufficient to administer the pro9 gram. This compensation may include a manage10 ment fee consistent with Department of Energy con11 tracting practices and procedures. 

12 (2) ADVANCE.—The Secretary shall advance 

13 funds to the program consortium upon selection of 

14 the consortium, which shall be deducted from 

15 amounts to be provided under paragraph (1). 

16 (h) AUDIT.—The Secretary shall retain an inde17 pendent, commercial auditor to determine the extent to 

18 which funds provided to the program consortium, and 

19 funds provided under awards made under subsection (f), 

20 have been expended in a manner consistent with the pur21 poses and requirements of this part. The auditor shall 

22 transmit a report annually to the Secretary, who shall 

23 transmit the report to Congress, along with a plan to rem24 edy any deficiencies cited in the report. 
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1 SEC. 943. UNCONVENTIONAL NATURAL GAS AND OTHER PE2 TROLEUM RESOURCES PROGRAM. 

3 (a) IN GENERAL.—The Secretary shall carry out ac4 tivities under subsection 941(b)(3), to maximize the use 

5 of the onshore unconventional natural gas and other petro6 leum resources of the United States, by increasing the 

7 supply of such resources, through reducing the cost and 

8 increasing the efficiency of exploration for and production 

9 of such resources, while improving safety and minimizing 

10 environmental impacts. 

11 (b) AWARDS.—

12 (1) IN GENERAL.—The Secretary shall carry 

13 out this section through awards to research con14 sortia made through an open, competitive process. 

15 As a condition of award of funds, qualified research 

16 consortia shall—

17 (A) demonstrate capability and experience 

18 in unconventional onshore natural gas or other 

19 petroleum research and development; 

20 (B) provide a research plan that dem21 onstrates how additional natural gas or oil pro22 duction will be achieved; and 

23 (C) at the request of the Secretary, provide 

24 technical advice to the Secretary for the pur25 poses of developing the annual plan required 

26 under subsection (e).
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1 (2) PRODUCTION POTENTIAL.—The Secretary 

2 shall seek to ensure that the number and types of 

3 awards made under this subsection have reasonable 

4 potential to lead to additional oil and natural gas 

5 production on Federal lands. 

6 (3) SCHEDULE.—To carry out this subsection, 

7 not later than 180 days after the date of enactment 

8 of this Act, the Secretary shall solicit proposals from 

9 research consortia, which shall be submitted not 

10 later than 360 days after the date of enactment of 

11 this Act. The Secretary shall select the first group 

12 of research consortia to receive awards under this 

13 subsection not later than 18 months after such date 

14 of enactment. 

15 (c) AUDIT.—The Secretary shall retain an inde16 pendent, commercial auditor to determine the extent to 

17 which funds provided under awards made under this sec18 tion have been expended in a manner consistent with the 

19 purposes and requirements of this part. The auditor shall 

20 transmit a report annually to the Secretary, who shall 

21 transmit the report to Congress, along with a plan to rem22 edy any deficiencies cited in the report. 

23 (d) FOCUS AREAS FOR AWARDS.—

24 (1) UNCONVENTIONAL RESOURCES.—Awards 

25 from allocations under section 949(d)(2) shall focus 
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1 on areas including advanced coalbed methane, deep 

2 drilling, natural gas production from tight sands, 

3 natural gas production from gas shales, stranded 

4 gas, innovative exploration and production tech5 niques, enhanced recovery techniques, and environ6 mental mitigation of unconventional natural gas and 

7 other petroleum resources exploration and produc8 tion. 

9 (2) SMALL PRODUCERS.—Awards from alloca10 tions under section 949(d)(3) shall be made to con11 sortia consisting of small producers or organized pri12 marily for the benefit of small producers, and shall 

13 focus on areas including complex geology involving 

14 rapid changes in the type and quality of the oil and 

15 gas reservoirs across the reservoir; low reservoir 

16 pressure; unconventional natural gas reservoirs in 

17 coalbeds, deep reservoirs, tight sands, or shales; and 

18 unconventional oil reservoirs in tar sands and oil 

19 shales. 

20 (e) ANNUAL PLAN.—

21 (1) IN GENERAL.—The program under this sec22 tion shall be carried out pursuant to an annual plan 

23 prepared by the Secretary in accordance with para24 graph (2). 

25 (2) DEVELOPMENT.—
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1 (A) WRITTEN RECOMMENDATIONS.—Be2 fore drafting an annual plan under this sub3 section, the Secretary shall solicit specific writ4 ten recommendations from the research con5 sortia receiving awards under subsection (b) 

6 and the Unconventional Resources Technology 

7 Advisory Committee for each element to be ad8 dressed in the plan, including those described in 

9 subparagraph (D). 

10 (B) CONSULTATION.—The Secretary shall 

11 consult regularly with the research consortia 

12 throughout the preparation of the annual plan. 

13 (C) PUBLICATION.—The Secretary shall 

14 transmit to Congress and publish in the Fed15 eral Register the annual plan, along with any 

16 written comments received under subparagraph 

17 (A). 

18 (D) CONTENTS.—The annual plan shall 

19 describe the ongoing and prospective activities 

20 under this section and shall include a list of any 

21 solicitations for awards that the Secretary plans 

22 to issue to carry out research, development, 

23 demonstration, or commercial application activi24 ties, including the topics for such work, who 
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1 would be eligible to apply, selection criteria, and 

2 the duration of awards. 

3 (3) ESTIMATES OF INCREASED ROYALTY RE4 CEIPTS.—The Secretary, in consultation with the 

5 Secretary of the Interior, shall provide an annual re6 port to Congress with the President’s budget on the 

7 estimated cumulative increase in Federal royalty re8 ceipts (if any) resulting from the implementation of 

9 this part. The initial report under this paragraph 

10 shall be submitted in the first President’s budget fol11 lowing the completion of the first annual plan re12 quired under this subsection. 

13 (f) ACTIVITIES BY THE UNITED STATES GEOLOGI14 CAL SURVEY.—The Secretary of the Interior, through the 

15 United States Geological Survey, shall, where appropriate, 

16 carry out programs of long-term research to complement 

17 the programs under this section. 

18 SEC. 944. ADDITIONAL REQUIREMENTS FOR AWARDS. 

19 (a) DEMONSTRATION PROJECTS.—An application for 

20 an award under this part for a demonstration project shall 

21 describe with specificity the intended commercial use of 

22 the technology to be demonstrated. 

23 (b) FLEXIBILITY IN LOCATING DEMONSTRATION

24 PROJECTS.—Subject to the limitation in section 941(c), 

25 a demonstration project under this part relating to an 
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1 ultra-deepwater technology or an ultra-deepwater architec2 ture may be conducted in deepwater depths. 

3 (c) INTELLECTUAL PROPERTY AGREEMENTS.—If an 

4 award under this part is made to a consortium (other than 

5 the program consortium), the consortium shall provide to 

6 the Secretary a signed contract agreed to by all members 

7 of the consortium describing the rights of each member 

8 to intellectual property used or developed under the award. 

9 (d) TECHNOLOGY TRANSFER.—2.5 percent of the 

10 amount of each award made under this part shall be des11 ignated for technology transfer and outreach activities 

12 under this title. 

13 (e) COST SHARING REDUCTION FOR INDEPENDENT

14 PRODUCERS.—In applying the cost sharing requirements 

15 under section 972 to an award under this part the Sec16 retary may reduce or eliminate the non-Federal require17 ment if the Secretary determines that the reduction is nec18 essary and appropriate considering the technological risks 

19 involved in the project. 

20 SEC. 945. ADVISORY COMMITTEES. 

21 (a) ULTRA-DEEPWATER ADVISORY COMMITTEE.—

22 (1) ESTABLISHMENT.—Not later than 270 days 

23 after the date of enactment of this Act, the Sec24 retary shall establish an advisory committee to be 

25 known as the Ultra-Deepwater Advisory Committee. 
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1 (2) MEMBERSHIP.—The advisory committee 

2 under this subsection shall be composed of members 

3 appointed by the Secretary including—

4 (A) individuals with extensive research ex5 perience or operational knowledge of offshore 

6 natural gas and other petroleum exploration 

7 and production; 

8 (B) individuals broadly representative of 

9 the affected interests in ultra-deepwater natural 

10 gas and other petroleum production, including 

11 interests in environmental protection and safe 

12 operations; 

13 (C) no individuals who are Federal employ14 ees; and 

15 (D) no individuals who are board members, 

16 officers, or employees of the program consor17 tium. 

18 (3) DUTIES.—The advisory committee under 

19 this subsection shall—

20 (A) advise the Secretary on the develop21 ment and implementation of programs under 

22 this part related to ultra-deepwater natural gas 

23 and other petroleum resources; and 

24 (B) carry out section 942(e)(2)(B).
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1 (4) COMPENSATION.—A member of the advi2 sory committee under this subsection shall serve 

3 without compensation but shall receive travel ex4 penses in accordance with applicable provisions 

5 under subchapter I of chapter 57 of title 5, United 

6 States Code. 

7 (b) UNCONVENTIONAL RESOURCES TECHNOLOGY

8 ADVISORY COMMITTEE.—

9 (1) ESTABLISHMENT.—Not later than 270 days 

10 after the date of enactment of this Act, the Sec11 retary shall establish an advisory committee to be 

12 known as the Unconventional Resources Technology 

13 Advisory Committee. 

14 (2) MEMBERSHIP.—The advisory committee 

15 under this subsection shall be composed of members 

16 appointed by the Secretary including—

17 (A) a majority of members who are em18 ployees or representatives of independent pro19 ducers of natural gas and other petroleum, in20 cluding small producers; 

21 (B) individuals with extensive research ex22 perience or operational knowledge of unconven23 tional natural gas and other petroleum resource 

24 exploration and production; 
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1 (C) individuals broadly representative of 

2 the affected interests in unconventional natural 

3 gas and other petroleum resource exploration 

4 and production, including interests in environ5 mental protection and safe operations; and 

6 (D) no individuals who are Federal em7 ployees. 

8 (3) DUTIES.—The advisory committee under 

9 this subsection shall advise the Secretary on the de10 velopment and implementation of activities under 

11 this part related to unconventional natural gas and 

12 other petroleum resources. 

13 (4) COMPENSATION.—A member of the advi14 sory committee under this subsection shall serve 

15 without compensation but shall receive travel ex16 penses in accordance with applicable provisions 

17 under subchapter I of chapter 57 of title 5, United 

18 States Code. 

19 (c) PROHIBITION.—No advisory committee estab20 lished under this section shall make recommendations on 

21 funding awards to particular consortia or other entities, 

22 or for specific projects. 

23 SEC. 946. LIMITS ON PARTICIPATION. 

24 An entity shall be eligible to receive an award under 

25 this part only if the Secretary finds—
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1 (1) that the entity’s participation in the pro2 gram under this part would be in the economic in3 terest of the United States; and 

4 (2) that either—

5 (A) the entity is a United States-owned en6 tity organized under the laws of the United 

7 States; or 

8 (B) the entity is organized under the laws 

9 of the United States and has a parent entity or10 ganized under the laws of a country that af11 fords—

12 (i) to United States-owned entities op13 portunities, comparable to those afforded 

14 to any other entity, to participate in any 

15 cooperative research venture similar to 

16 those authorized under this part; 

17 (ii) to United States-owned entities 

18 local investment opportunities comparable 

19 to those afforded to any other entity; and 

20 (iii) adequate and effective protection 

21 for the intellectual property rights of 

22 United States-owned entities. 

23 SEC. 947. SUNSET. 

24 The authority provided by this part shall terminate 

25 on September 30, 2011. 
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1 SEC. 948. DEFINITIONS. 

2 In this part: 

3 (1) DEEPWATER.—The term ‘‘deepwater’’ 

4 means a water depth that is greater than 200 but 

5 less than 1,500 meters. 

6 (2) INDEPENDENT PRODUCER OF OIL OR

7 GAS.—

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

9 producer of oil or gas’’ means any person that 

10 produces oil or gas other than a person to 

11 whom subsection (c) of section 613A of the In12 ternal Revenue Code of 1986 does not apply by 

13 reason of paragraph (2) (relating to certain re14 tailers) or paragraph (4) (relating to certain re15 finers) of section 613A(d) of such Code. 

16 (B) RULES FOR APPLYING PARAGRAPHS (2)

17 AND (4) OF SECTION 613A(d).—For purposes of 

18 subparagraph (A), paragraphs (2) and (4) of 

19 section 613A(d) of the Internal Revenue Code 

20 of 1986 shall be applied by substituting ‘‘cal21 endar year’’ for ‘‘taxable year’’ each place it ap22 pears in such paragraphs. 

23 (3) PROGRAM CONSORTIUM.—The term ‘‘pro24 gram consortium’’ means the consortium selected 

25 under section 942(d). 
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1 (4) REMOTE OR INCONSEQUENTIAL.—The term 

2 ‘‘remote or inconsequential’’ has the meaning given 

3 that term in regulations issued by the Office of Gov4 ernment Ethics under section 208(b)(2) of title 18, 

5 United States Code. 

6 (5) SMALL PRODUCER.—The term ‘‘small pro7 ducer’’ means an entity organized under the laws of 

8 the United States with production levels of less than 

9 1,000 barrels per day of oil equivalent. 

10 (6) ULTRA-DEEPWATER.—The term ‘‘ultra11 deepwater’’ means a water depth that is equal to or 

12 greater than 1,500 meters. 

13 (7) ULTRA-DEEPWATER ARCHITECTURE.—The 

14 term ‘‘ultra-deepwater architecture’’ means the inte15 gration of technologies for the exploration for, or 

16 production of, natural gas or other petroleum re17 sources located at ultra-deepwater depths. 

18 (8) ULTRA-DEEPWATER TECHNOLOGY.—The 

19 term ‘‘ultra-deepwater technology’’ means a discrete 

20 technology that is specially suited to address 1 or 

21 more challenges associated with the exploration for, 

22 or production of, natural gas or other petroleum re23 sources located at ultra-deepwater depths. 

24 (9) UNCONVENTIONAL NATURAL GAS AND

25 OTHER PETROLEUM RESOURCE.—The term ‘‘uncon-
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1 ventional natural gas and other petroleum resource’’ 

2 means natural gas and other petroleum resource lo3 cated onshore in an economically inaccessible geo4 logical formation, including resources of small pro5 ducers. 

6 SEC. 949. FUNDING. 

7 (a) AUTHORIZATION OF APPROPRIATIONS.—There 

8 are authorized to be appropriated to the Secretary, to be 

9 deposited in the Fund, such sums as are necessary for 

10 each of the fiscal years 2004 through 2013, to remain 

11 available until expended. 

12 (b) OBLIGATIONAL AUTHORITY.—Monies in the 

13 Fund shall be available to the Secretary for obligation 

14 under this part without fiscal year limitation, to remain 

15 available until expended. 

16 (c) ALLOCATION.—Amounts obligated from the Fund 

17 under this section in each fiscal year shall be allocated 

18 as follows: 

19 (1) 50 percent shall be for activities under sec20 tion 942. 

21 (2) 35 percent shall be for activities under sec22 tion 943(d)(1). 

23 (3) 10 percent shall be for activities under sec24 tion 943(d)(2).
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1 (4) 5 percent shall be for research under section 

2 941(d). 

3 (d) FUND.—There is hereby established in the Treas4 ury of the United States a separate fund to be known as 

5 the ‘‘Ultra-Deepwater and Unconventional Natural Gas 

6 and Other Petroleum Research Fund’’. 

7 Subtitle F—Science 

8 SEC. 951. SCIENCE. 

9 (a) IN GENERAL.—The following sums are author10 ized to be appropriated to the Secretary for research, de11 velopment, demonstration, and commercial application ac12 tivities of the Office of Science, including activities author13 ized under this subtitle, including the amounts authorized 

14 under the amendment made by section 958(c)(2)(C), and 

15 including basic energy sciences, advanced scientific com16 puting research, biological and environmental research, fu17 sion energy sciences, high energy physics, nuclear physics, 

18 and research analysis and infrastructure support: 

19 (1) For fiscal year 2004, $3,785,000,000. 

20 (2) For fiscal year 2005, $4,153,000,000. 

21 (3) For fiscal year 2006, $4,618,000,000. 

22 (4) For fiscal year 2007, $5,310,000,000. 

23 (5) For fiscal year 2008, $5,800,000,000. 

24 (b) ALLOCATIONS.—From amounts authorized under 

25 subsection (a), the following sums are authorized: 
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1 (1) For activities of the Fusion Energy Sciences 

2 Program, including activities under sections 952 and 

3 953— 

4 (A) for fiscal year 2004, $335,000,000; 

5 (B) for fiscal year 2005, $349,000,000; 

6 (C) for fiscal year 2006, $362,000,000; 

7 (D) for fiscal year 2007, $377,000,000; 

8 and 

9 (E) for fiscal year 2008, $393,000,000. 

10 (2) For the Spallation Neutron Source—

11 (A) for construction in fiscal year 2004, 

12 $124,600,000; 

13 (B) for construction in fiscal year 2005, 

14 $79,800,000; 

15 (C) for completion of construction in fiscal 

16 year 2006, $41,100,000; and 

17 (D) for other project costs (including re18 search and development necessary to complete 

19 the project, preoperations costs, and capital 

20 equipment related to construction), 

21 $103,279,000 for the period encompassing fis22 cal years 2003 through 2006, to remain avail23 able until expended through September 30, 

24 2006. 
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1 (3) For Catalysis Research activities under sec2 tion 956— 

3 (A) for fiscal year 2004, $33,000,000; 

4 (B) for fiscal year 2005, $35,000,000; 

5 (C) for fiscal year 2006, $36,500,000; 

6 (D) for fiscal year 2007, $38,200,000; and 

7 (E) for fiscal year 2008, $40,100,000. 

8 (4) For Nanoscale Science and Engineering Re9 search activities under section 957—

10 (A) for fiscal year 2004, $270,000,000; 

11 (B) for fiscal year 2005, $292,000,000; 

12 (C) for fiscal year 2006, $322,000,000; 

13 (D) for fiscal year 2007, $355,000,000; 

14 and 

15 (E) for fiscal year 2008, $390,000,000. 

16 (5) For activities under section 957(c), from 

17 the amounts authorized under paragraph (4) of this 

18 subsection—

19 (A) for fiscal year 2004, $135,000,000; 

20 (B) for fiscal year 2005, $150,000,000; 

21 (C) for fiscal year 2006, $120,000,000; 

22 (D) for fiscal year 2007, $100,000,000; 

23 and 

24 (E) for fiscal year 2008, $125,000,000. 
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1 (6) For activities in the Genomes to Life Pro2 gram under section 959— 

3 (A) for fiscal year 2004, $100,000,000; 

4 and 

5 (B) for fiscal years 2005 through 2008, 

6 such sums as may be necessary. 

7 (7) For activities in the Energy-Water Supply 

8 Program under section 961, $30,000,000 for each of 

9 fiscal years 2004 through 2008. 

10 (c) ITER CONSTRUCTION.—In addition to the funds 

11 authorized under subsection (b)(1), such sums as may be 

12 necessary for costs associated with ITER construction, 

13 consistent with limitations under section 952. 

14 SEC. 952. UNITED STATES PARTICIPATION IN ITER. 

15 (a) IN GENERAL.—The United States may partici16 pate in ITER in accordance with the provisions of this 

17 section. 

18 (b) AGREEMENT.—

19 (1) IN GENERAL.—The Secretary is authorized 

20 to negotiate an agreement for United States partici21 pation in ITER. 

22 (2) CONTENTS.—Any agreement for United 

23 States participation in ITER shall, at a minimum—
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1 (A) clearly define the United States finan2 cial contribution to construction and operating 

3 costs; 

4 (B) ensure that the share of ITER’s high5 technology components manufactured in the 

6 United States is at least proportionate to the 

7 United States financial contribution to ITER; 

8 (C) ensure that the United States will not 

9 be financially responsible for cost overruns in 

10 components manufactured in other ITER par11 ticipating countries; 

12 (D) guarantee the United States full ac13 cess to all data generated by ITER; 

14 (E) enable United States researchers to 

15 propose and carry out an equitable share of the 

16 experiments at ITER; 

17 (F) provide the United States with a role 

18 in all collective decisionmaking related to ITER; 

19 and 

20 (G) describe the process for discontinuing 

21 or decommissioning ITER and any United 

22 States role in those processes. 

23 (c) PLAN.—The Secretary, in consultation with the 

24 Fusion Energy Sciences Advisory Committee, shall de25 velop a plan for the participation of United States sci-
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1 entists in ITER that shall include the United States re2 search agenda for ITER, methods to evaluate whether 

3 ITER is promoting progress toward making fusion a reli4 able and affordable source of power, and a description of 

5 how work at ITER will relate to other elements of the 

6 United States fusion program. The Secretary shall request 

7 a review of the plan by the National Academy of Sciences. 

8 (d) LIMITATION.—No funds shall be expended for the 

9 construction of ITER until the Secretary has transmitted 

10 to Congress—

11 (1) the agreement negotiated pursuant to sub12 section (b) and 120 days have elapsed since that 

13 transmission; 

14 (2) a report describing the management struc15 ture of ITER and providing a fixed dollar estimate 

16 of the cost of United States participation in the con17 struction of ITER, and 120 days have elapsed since 

18 that transmission; 

19 (3) a report describing how United States par20 ticipation in ITER will be funded without reducing 

21 funding for other programs in the Office of Science, 

22 including other fusion programs, and 60 days have 

23 elapsed since that transmission; and 

24 (4) the plan required by subsection (c) (but not 

25 the National Academy of Sciences review of that
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1 plan), and 60 days have elapsed since that trans2 mission. 

3 (e) ALTERNATIVE TO ITER.—If at any time during 

4 the negotiations on ITER, the Secretary determines that 

5 construction and operation of ITER is unlikely or infeasi6 ble, the Secretary shall send to Congress, as part of the 

7 budget request for the following year, a plan for imple8 menting the domestic burning plasma experiment known 

9 as FIRE, including costs and schedules for such a plan. 

10 The Secretary shall refine such plan in full consultation 

11 with the Fusion Energy Sciences Advisory Committee and 

12 shall also transmit such plan to the National Academy of 

13 Sciences for review. 

14 (f) DEFINITIONS.—In this section and sections 

15 951(b)(1) and (c): 

16 (1) CONSTRUCTION.—The term ‘‘construction’’ 

17 means the physical construction of the ITER facil18 ity, and the physical construction, purchase, or man19 ufacture of equipment or components that are spe20 cifically designed for the ITER facility, but does not 

21 mean the design of the facility, equipment, or com22 ponents. 

23 (2) FIRE.—The term ‘‘FIRE’’ means the Fu24 sion Ignition Research Experiment, the fusion re25 search experiment for which design work has been 
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1 supported by the Department as a possible alter2 native burning plasma experiment in the event that 

3 ITER fails to move forward. 

4 (3) ITER.—The term ‘‘ITER’’ means the 

5 international burning plasma fusion research project 

6 in which the President announced United States 

7 participation on January 30, 2003. 

8 SEC. 953. PLAN FOR FUSION ENERGY SCIENCES PROGRAM. 

9 (a) DECLARATION OF POLICY.—It shall be the policy 

10 of the United States to conduct research, development, 

11 demonstration, and commercial application to provide for 

12 the scientific, engineering, and commercial infrastructure 

13 necessary to ensure that the United States is competitive 

14 with other nations in providing fusion energy for its own 

15 needs and the needs of other nations, including by dem16 onstrating electric power or hydrogen production for the 

17 United States energy grid utilizing fusion energy at the 

18 earliest date possible. 

19 (b) PLANNING.—

20 (1) IN GENERAL.—Not later than 180 days 

21 after the date of enactment of this Act, the Sec22 retary shall present to Congress a plan, with pro23 posed cost estimates, budgets, and potential inter24 national partners, for the implementation of the pol-
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1 icy described in subsection (a). The plan shall ensure 

2 that— 

3 (A) existing fusion research facilities are 

4 more fully utilized; 

5 (B) fusion science, technology, theory, ad6 vanced computation, modeling, and simulation 

7 are strengthened; 

8 (C) new magnetic and inertial fusion re9 search facilities are selected based on scientific 

10 innovation, cost effectiveness, and their poten11 tial to advance the goal of practical fusion en12 ergy at the earliest date possible, and those that 

13 are selected are funded at a cost-effective rate; 

14 (D) communication of scientific results and 

15 methods between the fusion energy science com16 munity and the broader scientific and tech17 nology communities is improved; 

18 (E) inertial confinement fusion facilities 

19 are utilized to the extent practicable for the 

20 purpose of inertial fusion energy research and 

21 development; and 

22 (F) attractive alternative inertial and mag23 netic fusion energy approaches are more fully 

24 explored. 
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1 (2) COSTS AND SCHEDULES.—Such plan shall 

2 also address the status of and, to the degree pos3 sible, costs and schedules for—

4 (A) in coordination with the program 

5 under section 960, the design and implementa6 tion of international or national facilities for the 

7 testing of fusion materials; and 

8 (B) the design and implementation of 

9 international or national facilities for the test10 ing and development of key fusion technologies. 

11 SEC. 954. SPALLATION NEUTRON SOURCE. 

12 (a) DEFINITION.—For the purposes of this section, 

13 the term ‘‘Spallation Neutron Source’’ means Department 

14 Project 99–E–334, Oak Ridge National Laboratory, Oak 

15 Ridge, Tennessee. 

16 (b) REPORT.—The Secretary shall report on the 

17 Spallation Neutron Source as part of the Department’s 

18 annual budget submission, including a description of the 

19 achievement of milestones, a comparison of actual costs 

20 to estimated costs, and any changes in estimated project 

21 costs or schedule. 

22 (c) LIMITATIONS.—The total amount obligated by the 

23 Department, including prior year appropriations, for the 

24 Spallation Neutron Source shall not exceed— 

25 (1) $1,192,700,000 for costs of construction; 
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1 (2) $219,000,000 for other project costs; and 

2 (3) $1,411,700,000 for total project cost. 

3 SEC. 955. SUPPORT FOR SCIENCE AND ENERGY FACILITIES 

4 AND INFRASTRUCTURE. 

5 (a) FACILITY AND INFRASTRUCTURE POLICY.—The 

6 Secretary shall develop and implement a strategy for fa7 cilities and infrastructure supported primarily from the 

8 Office of Science, the Office of Energy Efficiency and Re9 newable Energy, the Office of Fossil Energy, or the Office 

10 of Nuclear Energy, Science, and Technology Programs at 

11 all National Laboratories and single-purpose research fa12 cilities. Such strategy shall provide cost-effective means 

13 for—

14 (1) maintaining existing facilities and infra15 structure, as needed; 

16 (2) closing unneeded facilities; 

17 (3) making facility modifications; and 

18 (4) building new facilities. 

19 (b) REPORT.—

20 (1) IN GENERAL.—The Secretary shall prepare 

21 and transmit, along with the President’s budget re22 quest to Congress for fiscal year 2006, a report con23 taining the strategy developed under subsection (a). 

24 (2) CONTENTS.—For each National Laboratory 

25 and single-purpose research facility, for the facilities 
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1 primarily used for science and energy research, such 

2 report shall contain—

3 (A) the current priority list of proposed fa4 cilities and infrastructure projects, including 

5 cost and schedule requirements; 

6 (B) a current 10-year plan that dem7 onstrates the reconfiguration of its facilities and 

8 infrastructure to meet its missions and to ad9 dress its long-term operational costs and return 

10 on investment; 

11 (C) the total current budget for all facili12 ties and infrastructure funding; and 

13 (D) the current status of each facility and 

14 infrastructure project compared to the original 

15 baseline cost, schedule, and scope. 

16 SEC. 956. CATALYSIS RESEARCH AND DEVELOPMENT PRO17 GRAM. 

18 (a) ESTABLISHMENT.—The Secretary, through the 

19 Office of Science, shall support a program of research and 

20 development in catalysis science consistent with the De21 partment’s statutory authorities related to research and 

22 development. The program shall include efforts to— 

23 (1) enable catalyst design using combinations of 

24 experimental and mechanistic methodologies coupled
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1 with computational modeling of catalytic reactions at 

2 the molecular level; 

3 (2) develop techniques for high throughput syn4 thesis, assay, and characterization at nanometer and 

5 subnanometer scales in situ under actual operating 

6 conditions; 

7 (3) synthesize catalysts with specific site archi8 tectures; 

9 (4) conduct research on the use of precious 

10 metals for catalysis; and 

11 (5) translate molecular understanding to the 

12 design of catalytic compounds. 

13 (b) DUTIES OF THE OFFICE OF SCIENCE.—In car14 rying out the program under this section, the Director of 

15 the Office of Science shall—

16 (1) support both individual investigators and 

17 multidisciplinary teams of investigators to pioneer 

18 new approaches in catalytic design; 

19 (2) develop, plan, construct, acquire, share, or 

20 operate special equipment or facilities for the use of 

21 investigators in collaboration with national user fa22 cilities such as nanoscience and engineering centers; 

23 (3) support technology transfer activities to 

24 benefit industry and other users of catalysis science 

25 and engineering; and 
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1 (4) coordinate research and development activi2 ties with industry and other Federal agencies. 

3 (c) TRIENNIAL ASSESSMENT.—The National Acad4 emy of Sciences shall review the catalysis program every 

5 3 years to report on gains made in the fundamental 

6 science of catalysis and its progress towards developing 

7 new fuels for energy production and material fabrication 

8 processes. 

9 SEC. 957. NANOSCALE SCIENCE AND ENGINEERING RE10 SEARCH, DEVELOPMENT, DEMONSTRATION, 

11 AND COMMERCIAL APPLICATION. 

12 (a) ESTABLISHMENT.—The Secretary, acting 

13 through the Office of Science, shall support a program of 

14 research, development, demonstration, and commercial ap15 plication in nanoscience and nanoengineering. The pro16 gram shall include efforts to further the understanding of 

17 the chemistry, physics, materials science, and engineering 

18 of phenomena on the scale of nanometers and to apply 

19 that knowledge to the Department’s mission areas. 

20 (b) DUTIES OF THE OFFICE OF SCIENCE.—In car21 rying out the program under this section, the Office of 

22 Science shall—

23 (1) support both individual investigators and 

24 teams of investigators, including multidisciplinary 

25 teams; 
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1 (2) carry out activities under subsection (c); 

2 (3) support technology transfer activities to 

3 benefit industry and other users of nanoscience and 

4 nanoengineering; 

5 (4) coordinate research and development activi6 ties with other Department programs, industry, and 

7 other Federal agencies; 

8 (5) ensure that societal and ethical concerns 

9 will be addressed as the technology is developed by—

10 (A) establishing a research program to 

11 identify societal and ethical concerns related to 

12 nanotechnology, and ensuring that the results 

13 of such research are widely disseminated; and 

14 (B) integrating, insofar as possible, re15 search on societal and ethical concerns with 

16 nanotechnology research and development; and 

17 (6) ensure that the potential of nanotechnology 

18 to produce or facilitate the production of clean, inex19 pensive energy is realized by supporting 

20 nanotechnology energy applications research and de21 velopment. 

22 (c) NANOSCIENCE AND NANOENGINEERING RE23 SEARCH CENTERS AND MAJOR INSTRUMENTATION.—

24 (1) IN GENERAL.—The Secretary shall carry 

25 out projects to develop, plan, construct, acquire, op-
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1 erate, or support special equipment, instrumenta2 tion, or facilities for investigators conducting re3 search and development in nanoscience and 

4 nanoengineering. 

5 (2) ACTIVITIES.—Projects under paragraph (1) 

6 may include the measurement of properties at the 

7 scale of nanometers, manipulation at such scales, 

8 and the integration of technologies based on 

9 nanoscience or nanoengineering into bulk materials 

10 or other technologies. 

11 (3) FACILITIES.—Facilities under paragraph 

12 (1) may include electron microcharacterization facili13 ties, microlithography facilities, scanning probe fa14 cilities, and related instrumentation. 

15 (4) COLLABORATIONS.—The Secretary shall en16 courage collaborations among Department programs, 

17 institutions of higher education, laboratories, and in18 dustry at facilities under this subsection. 

19 SEC. 958. ADVANCED SCIENTIFIC COMPUTING FOR ENERGY 

20 MISSIONS. 

21 (a) IN GENERAL.—The Secretary, acting through the 

22 Office of Science, shall support a program to advance the 

23 Nation’s computing capability across a diverse set of 

24 grand challenge, computationally based, science problems 

25 related to departmental missions. 
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1 (b) DUTIES OF THE OFFICE OF SCIENCE.—In car2 rying out the program under this section, the Office of 

3 Science shall—

4 (1) advance basic science through computation 

5 by developing software to solve grand challenge 

6 science problems on new generations of computing 

7 platforms in collaboration with other Department 

8 program offices; 

9 (2) enhance the foundations for scientific com10 puting by developing the basic mathematical and 

11 computing systems software needed to take full ad12 vantage of the computing capabilities of computers 

13 with peak speeds of 100 teraflops or more, some of 

14 which may be unique to the scientific problem of in15 terest; 

16 (3) enhance national collaboratory and net17 working capabilities by developing software to inte18 grate geographically separated researchers into ef19 fective research teams and to facilitate access to and 

20 movement and analysis of large (petabyte) data sets; 

21 (4) develop and maintain a robust scientific 

22 computing hardware infrastructure to ensure that 

23 the computing resources needed to address depart24 mental missions are available; and 
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1 (5) explore new computing approaches and 

2 technologies that promise to advance scientific com3 puting, including developments in quantum com4 puting. 

5 (c) HIGH-PERFORMANCE COMPUTING ACT OF 1991 

6 AMENDMENTS.—The High-Performance Computing Act 

7 of 1991 is amended— 

8 (1) in section 4 (15 U.S.C. 5503)—

9 (A) in paragraph (3) by striking ‘‘means’’ 

10 and inserting ‘‘and networking and information 

11 technology mean’’, and by striking ‘‘(including 

12 vector supercomputers and large scale parallel 

13 systems)’’; and 

14 (B) in paragraph (4), by striking ‘‘packet 

15 switched’’; and 

16 (2) in section 203 (15 U.S.C. 5523)—

17 (A) in subsection (a), by striking all after 

18 ‘‘As part of the’’ and inserting ‘‘Networking 

19 and Information Technology Research and De20 velopment Program, the Secretary of Energy 

21 shall conduct basic and applied research in net22 working and information technology, with em23 phasis on supporting fundamental research in 

24 the physical sciences and engineering, and en25 ergy applications; providing supercomputer ac-
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1 cess and advanced communication capabilities 

2 and facilities to scientific researchers; and de3 veloping tools for distributed scientific collabo4 ration.’’; 

5 (B) in subsection (b), by striking ‘‘Pro6 gram’’ and inserting ‘‘Networking and Informa7 tion Technology Research and Development 

8 Program’’; and 

9 (C) by amending subsection (e) to read as 

10 follows: 

11 ‘‘(e) AUTHORIZATION OF APPROPRIATIONS.—There 

12 are authorized to be appropriated to the Secretary of En13 ergy to carry out the Networking and Information Tech14 nology Research and Development Program such sums as 

15 may be necessary for fiscal years 2004 through 2008.’’. 

16 (d) COORDINATION.—The Secretary shall ensure that 

17 the program under this section is integrated and con18 sistent with—

19 (1) the Advanced Simulation and Computing 

20 Program, formerly known as the Accelerated Stra21 tegic Computing Initiative, of the National Nuclear 

22 Security Administration; and 

23 (2) other national efforts related to advanced 

24 scientific computing for science and engineering. 

25 (e) REPORT.—
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1 (1) IN GENERAL.—Before undertaking any new 

2 initiative to develop any new advanced architecture 

3 for high-speed computing, the Secretary, through the 

4 Director of the Office of Science, shall transmit a re5 port to Congress describing—

6 (A) the expected duration and cost of the 

7 initiative; 

8 (B) the technical milestones the initiative 

9 is designed to achieve; 

10 (C) how institutions of higher education 

11 and private firms will participate in the initia12 tive; and 

13 (D) why the goals of the initiative could 

14 not be achieved through existing programs. 

15 (2) LIMITATION.—No funds may be expended 

16 on any initiative described in paragraph (1) until 30 

17 days after the report required by that paragraph is 

18 transmitted to Congress. 

19 SEC. 959. GENOMES TO LIFE PROGRAM. 

20 (a) PROGRAM.—

21 (1) ESTABLISHMENT.—The Secretary shall es22 tablish a research, development, and demonstration 

23 program in genetics, protein science, and computa24 tional biology to support the energy, national secu25 rity, and environmental mission of the Department. 
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1 (2) GRANTS.—The program shall support indi2 vidual investigators and multidisciplinary teams of 

3 investigators through competitive, merit-reviewed 

4 grants. 

5 (3) CONSULTATION.—In carrying out the pro6 gram, the Secretary shall consult with other Federal 

7 agencies that conduct genetic and protein research. 

8 (b) GOALS.—The program shall have the goal of de9 veloping technologies and methods based on the biological 

10 functions of genomes, microbes, and plants that—

11 (1) can facilitate the production of fuels, includ12 ing hydrogen; 

13 (2) convert carbon dioxide to organic carbon; 

14 (3) improve national security and combat ter15 rorism; 

16 (4) detoxify soils and water at Department fa17 cilities contaminated with heavy metals and radio18 logical materials; and 

19 (5) address other Department missions as iden20 tified by the Secretary. 

21 (c) PLAN.—

22 (1) DEVELOPMENT OF PLAN.—Not later than 1 

23 year after the date of enactment of this Act, the 

24 Secretary shall prepare and transmit to Congress a 

25 research plan describing how the program author-
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1 ized pursuant to this section will be undertaken to 

2 accomplish the program goals established in sub3 section (b). 

4 (2) REVIEW OF PLAN.—The Secretary shall 

5 contract with the National Academy of Sciences to 

6 review the research plan developed under this sub7 section. The Secretary shall transmit the review to 

8 Congress not later than 18 months after transmittal 

9 of the research plan under paragraph (1), along with 

10 the Secretary’s response to the recommendations 

11 contained in the review. 

12 (d) GENOMES TO LIFE USER FACILITIES AND AN13 CILLARY EQUIPMENT.—

14 (1) IN GENERAL.—Within the funds authorized 

15 to be appropriated pursuant to this Act, the 

16 amounts specified under section 951(b)(6) shall, 

17 subject to appropriations, be available for projects to 

18 develop, plan, construct, acquire, or operate special 

19 equipment, instrumentation, or facilities for inves20 tigators conducting research, development, dem21 onstration, and commercial application in systems 

22 biology and proteomics and associated biological dis23 ciplines. 
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1 (2) FACILITIES.—Facilities under paragraph 

2 (1) may include facilities, equipment, or instrumen3 tation for— 

4 (A) the production and characterization of 

5 proteins; 

6 (B) whole proteome analysis; 

7 (C) characterization and imaging of molec8 ular machines; and 

9 (D) analysis and modeling of cellular sys10 tems. 

11 (3) COLLABORATIONS.—The Secretary shall en12 courage collaborations among universities, labora13 tories, and industry at facilities under this sub14 section. All facilities under this subsection shall have 

15 a specific mission of technology transfer to other in16 stitutions. 

17 (e) PROHIBITION ON BIOMEDICAL AND HUMAN CELL

18 AND HUMAN SUBJECT RESEARCH.—

19 (1) NO BIOMEDICAL RESEARCH.—In carrying 

20 out the program under this section, the Secretary 

21 shall not conduct biomedical research. 

22 (2) LIMITATIONS.—Nothing in this section shall 

23 authorize the Secretary to conduct any research or 

24 demonstrations—

25 (A) on human cells or human subjects; or 
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1 (B) designed to have direct application 

2 with respect to human cells or human subjects. 

3 SEC. 960. FISSION AND FUSION ENERGY MATERIALS RE4 SEARCH PROGRAM. 

5 In the President’s fiscal year 2006 budget request, 

6 the Secretary shall establish a research and development 

7 program on material science issues presented by advanced 

8 fission reactors and the Department’s fusion energy pro9 gram. The program shall develop a catalog of material 

10 properties required for these applications, develop theo11 retical models for materials possessing the required prop12 erties, benchmark models against existing data, and de13 velop a roadmap to guide further research and develop14 ment in this area. 

15 SEC. 961. ENERGY-WATER SUPPLY PROGRAM. 

16 (a) ESTABLISHMENT.—There is established within 

17 the Department the Energy-Water Supply Program, to 

18 study energy-related and certain other issues associated 

19 with the supply of drinking water and operation of com20 munity water systems and to study water supply issues 

21 related to energy. 

22 (b) DEFINITIONS.—For the purposes of this section: 

23 (1) ADMINISTRATOR.—The term ‘‘Adminis24 trator’’ means the Administrator of the Environ25 mental Protection Agency.
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1 (2) AGENCY.—The term ‘‘Agency’’ means the 

2 Environmental Protection Agency. 

3 (3) FOUNDATION.—The term ‘‘Foundation’’ 

4 means the American Water Works Association Re5 search Foundation. 

6 (4) INDIAN TRIBE.—The term ‘‘Indian tribe’’ 

7 has the meaning given the term in section 4 of the 

8 Indian Self-Determination and Education Assistance 

9 Act (25 U.S.C. 450b). 

10 (5) PROGRAM.—The term ‘‘Program’’ means 

11 the Energy-Water Supply Program established by 

12 this section. 

13 (c) PROGRAM AREAS.—The Program shall develop 

14 methods, means, procedures, equipment, and improved 

15 technologies relating to—

16 (1) the arsenic removal program under sub17 section (d); 

18 (2) the desalination program under subsection 

19 (e); and 

20 (3) the water and energy sustainability program 

21 under subsection (f). 

22 (d) ARSENIC REMOVAL PROGRAM.—

23 (1) IN GENERAL.—As soon as practicable after 

24 the date of enactment of this Act, the Secretary, in 

25 coordination with the Administrator and in partner-
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1 ship with the Foundation, shall utilize the facilities, 

2 institutions, and relationships established in the 

3 Consolidated Appropriations Resolution, 2003 as de4 scribed in Senate Report 107–220 to carry out a re5 search program to provide innovative methods and 

6 means for removal of arsenic. 

7 (2) REQUIRED EVALUATIONS.—The program 

8 shall, to the maximum extent practicable, evaluate 

9 the means of—

10 (A) reducing energy costs incurred in 

11 using arsenic removal technologies; 

12 (B) minimizing materials, operating, and 

13 maintenance costs; and 

14 (C) minimizing any quantities of waste (es15 pecially hazardous waste) that result from use 

16 of arsenic removal technologies. 

17 (3) PEER REVIEW.—Where applicable and rea18 sonably available, projects undertaken under this 

19 subsection shall be peer-reviewed. 

20 (4) COMMUNITY WATER SYSTEMS.—In carrying 

21 out the program under this subsection, the Sec22 retary, in coordination with the Administrator, 

23 shall—

24 (A) select projects involving a geographi25 cally and hydrologically diverse group of com-
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1 munity water systems (as defined in section 

2 1003 of the Public Health Service Act (42 

3 U.S.C. 300)) and water chemistries, that have 

4 experienced technical or economic difficulties in 

5 providing drinking water with levels of arsenic 

6 at 10 parts-per-billion or lower, which projects 

7 shall be designed to develop innovative methods 

8 and means to deliver drinking water that con9 tains less than 10 parts per billion of arsenic; 

10 and 

11 (B) provide not less than 40 percent of all 

12 funds spent pursuant to this subsection to ad13 dress the needs of, and in collaboration with, 

14 rural communities or Indian tribes. 

15 (5) COST EFFECTIVENESS.—The Foundation 

16 shall create methods for determining cost effective17 ness of arsenic removal technologies used in the pro18 gram. 

19 (6) EDUCATION, TRAINING, AND TECH20 NOLOGY.—The Foundation shall include education, 

21 training, and technology transfer as part of the pro22 gram. 

23 (7) COORDINATION.—The Secretary shall con24 sult with the Administrator to ensure that all activi25 ties conducted under the program are coordinated 
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1 with the Agency and do not duplicate other pro2 grams in the Agency and other Federal agencies, 

3 State programs, and academia. 

4 (8) REPORTS.—Not later than 1 year after the 

5 date of commencement of the program under this 

6 subsection, and once every year thereafter, the Sec7 retary shall submit to the Committee on Energy and 

8 Commerce of the House of Representatives and the 

9 Committee on Environment and Public Works and 

10 the Committee on Energy and Natural Resources of 

11 the Senate a report on the results of the program 

12 under this subsection. 

13 (e) DESALINATION PROGRAM.—

14 (1) IN GENERAL.—The Secretary, in coopera15 tion with the Commissioner of Reclamation of the 

16 Department of the Interior, shall carry out a pro17 gram to conduct research and develop methods and 

18 means for desalination in accordance with the desali19 nation technology progress plan developed under 

20 title II of the Energy and Water Development Ap21 propriations Act, 2002 (115 Stat. 498), and de22 scribed in Senate Report 107–39 under the heading 

23 ‘‘WATER AND RELATED RESOURCES’’ in the ‘‘BU24 REAU OF RECLAMATION’’ section. 
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1 (2) REQUIREMENTS.—The desalination pro2 gram shall—

3 (A) use the resources of the Department 

4 and the Department of the Interior that were 

5 involved in the development of the 2003 Na6 tional Desalination and Water Purification 

7 Technology Roadmap for next-generation de8 salination technology; 

9 (B) focus on technologies that are appro10 priate for use in desalinating brackish ground11 water, drinking water, wastewater and other sa12 line water supplies, or disposal of residual brine 

13 or salt; and 

14 (C) consider the use of renewable energy 

15 sources. 

16 (3) CONSTRUCTION PROJECTS.—Funds made 

17 available to carry out this subsection may be used 

18 for construction projects, including completion of the 

19 National Desalination Research Center for brackish 

20 groundwater and ongoing operational costs of this 

21 facility. 

22 (4) STEERING COMMITTEE.—The Secretary and 

23 the Commissioner of Reclamation of the Department 

24 of the Interior shall jointly establish a steering com25 mittee for activities conducted under this subsection. 
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1 The steering committee shall be jointly chaired by 1 

2 representative from the program and 1 representa3 tive from the Bureau of Reclamation. 

4 (f) WATER AND ENERGY SUSTAINABILITY PRO5 GRAM.—

6 (1) IN GENERAL.—The Secretary shall develop 

7 a program to identify methods, means, procedures, 

8 equipment, and improved technologies necessary to 

9 ensure that sufficient quantities of water are avail10 able to meet energy needs and sufficient energy is 

11 available to meet water needs. 

12 (2) ASSESSMENTS.—In order to acquire infor13 mation and avoid duplication, the Secretary shall 

14 work in collaboration with the Secretary of the Inte15 rior, the Army Corps of Engineers, the Adminis16 trator, the Secretary of Commerce, the Secretary of 

17 Defense, relevant State agencies, nongovernmental 

18 organizations, and academia, to assess—

19 (A) future water resources needed to sup20 port energy development and production within 

21 the United States including water used for hy22 dropower, and production of, or electricity gen23 eration by, hydrogen, biomass, fossil fuels, and 

24 nuclear fuel;
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1 (B) future energy resources needed to sup2 port water purification and wastewater treat3 ment, including desalination and water convey4 ance; 

5 (C) use of impaired and nontraditional 

6 water supplies for energy production other than 

7 oil and gas extraction; 

8 (D) technology and programs for improv9 ing water use efficiency; and 

10 (E) technologies to reduce water use in en11 ergy development and production. 

12 (3) ROADMAP; TOOLS.—The Secretary shall—

13 (A) develop a program plan and technology 

14 development roadmap for the Water and En15 ergy Sustainability Program to identify sci16 entific and technical requirements and activities 

17 that are required to support planning for en18 ergy sustainability under current and potential 

19 future conditions of water availability, use of 

20 impaired water for energy production and other 

21 uses, and reduction of water use in energy de22 velopment and production; 

23 (B) develop tools for national and local en24 ergy and water sustainability planning, includ25 ing numerical models, decision analysis tools, 
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1 economic analysis tools, databases, and plan2 ning methodologies and strategies; 

3 (C) implement at least 3 planning projects 

4 involving energy development or production that 

5 use the tools described in subparagraph (B) 

6 and assess the viability of those tools at the 

7 scale of river basins with at least 1 demonstra8 tion involving an international border; and 

9 (D) transfer those tools to other Federal 

10 agencies, State agencies, nonprofit organiza11 tions, industry, and academia. 

12 (4) REPORT.—Not later than 1 year after the 

13 date of enactment of this Act, the Secretary shall 

14 submit to Congress a report on the Water and En15 ergy Sustainability Program that—

16 (A) includes the results of the assessment 

17 under paragraph (2) and the program plan and 

18 technology development roadmap; and 

19 (B) identifies policy, legal, and institu20 tional issues related to water and energy sus21 tainability. 

22 SEC. 962. NITROGEN FIXATION. 

23 The Secretary, acting through the Office of Science, 

24 shall support a program of research, development, dem25 onstration, and commercial application on biological nitro-
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1 gen fixation, including plant genomics research relevant 

2 to the development of commercial crop varieties with en3 hanced nitrogen fixation efficiency and ability. 

4 Subtitle G—Energy and 

5 Environment 

6 SEC. 964. UNITED STATES-MEXICO ENERGY TECHNOLOGY 

7 COOPERATION. 

8 (a) PROGRAM.—The Secretary shall establish a re9 search, development, demonstration, and commercial ap10 plication program to be carried out in collaboration with 

11 entities in Mexico and the United States to promote en12 ergy efficient, environmentally sound economic develop13 ment along the United States-Mexico border that mini14 mizes public health risks from industrial activities in the 

15 border region. 

16 (b) PROGRAM MANAGEMENT.—The program under 

17 subsection (a) shall be managed by the Department of En18 ergy Carlsbad Environmental Management Field Office. 

19 (c) TECHNOLOGY TRANSFER.—In carrying out 

20 projects and activities under this section, the Secretary 

21 shall assess the applicability of technology developed under 

22 the Environmental Management Science Program of the 

23 Department. 

24 (d) INTELLECTUAL PROPERTY.—In carrying out this 

25 section, the Secretary shall comply with the requirements 
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1 of any agreement entered into between the United States 

2 and Mexico regarding intellectual property protection. 

3 (e) AUTHORIZATION OF APPROPRIATIONS.—The fol4 lowing sums are authorized to be appropriated to the Sec5 retary to carry out activities under this section: 

6 (1) For each of fiscal years 2004 and 2005, 

7 $5,000,000. 

8 (2) For each of fiscal years 2006, 2007, and 

9 2008, $6,000,000. 

10 SEC. 965. WESTERN HEMISPHERE ENERGY COOPERATION. 

11 (a) PROGRAM.—The Secretary shall carry out a pro12 gram to promote cooperation on energy issues with West13 ern Hemisphere countries. 

14 (b) ACTIVITIES.—Under the program, the Secretary 

15 shall fund activities to work with Western Hemisphere 

16 countries to—

17 (1) assist the countries in formulating and 

18 adopting changes in economic policies and other poli19 cies to—

20 (A) increase the production of energy sup21 plies; and 

22 (B) improve energy efficiency; and 

23 (2) assist in the development and transfer of 

24 energy supply and efficiency technologies that would 

25 have a beneficial impact on world energy markets. 
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1 (c) UNIVERSITY PARTICIPATION.—To the extent 

2 practicable, the Secretary shall carry out the program 

3 under this section with the participation of universities so 

4 as to take advantage of the acceptance of universities by 

5 Western Hemisphere countries as sources of unbiased 

6 technical and policy expertise when assisting the Secretary 

7 in—

8 (1) evaluating new technologies; 

9 (2) resolving technical issues; 

10 (3) working with those countries in the develop11 ment of new policies; and 

12 (4) training policymakers, particularly in the 

13 case of universities that involve the participation of 

14 minority students, such as Hispanic-serving institu15 tions and Historically Black Colleges and Univer16 sities. 

17 (d) AUTHORIZATION OF APPROPRIATIONS.—There 

18 are authorized to be appropriated to carry out this sec19 tion—

20 (1) $8,000,000 for fiscal year 2004; 

21 (2) $10,000,000 for fiscal year 2005; 

22 (3) $13,000,000 for fiscal year 2006; 

23 (4) $16,000,000 for fiscal year 2007; and 

24 (5) $19,000,000 for fiscal year 2008. 
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1 SEC. 966. WASTE REDUCTION AND USE OF ALTERNATIVES. 

2 (a) GRANT AUTHORITY.—The Secretary may make 

3 a single grant to a qualified institution to examine and 

4 develop the feasibility of burning post-consumer carpet in 

5 cement kilns as an alternative energy source. The pur6 poses of the grant shall include determining—

7 (1) how post-consumer carpet can be burned 

8 without disrupting kiln operations; 

9 (2) the extent to which overall kiln emissions 

10 may be reduced; 

11 (3) the emissions of air pollutants and other 

12 relevant environmental impacts; and 

13 (4) how this process provides benefits to both 

14 cement kiln operations and carpet suppliers. 

15 (b) QUALIFIED INSTITUTION.—For the purposes of 

16 subsection (a), a qualified institution is a research-inten17 sive institution of higher education with demonstrated ex18 pertise in the fields of fiber recycling and logistical mod19 eling of carpet waste collection and preparation. 

20 (c) AUTHORIZATION OF APPROPRIATIONS.—There 

21 are authorized to be appropriated to the Secretary for car22 rying out this section $500,000. 

23 SEC. 967. REPORT ON FUEL CELL TEST CENTER. 

24 (a) REPORT.—Not later than 1 year after the date 

25 of enactment of this Act, the Secretary shall transmit to 

26 Congress a report on the results of a study of the estab-
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1 lishment of a test center for next-generation fuel cells at 

2 an institution of higher education that has available a con3 tinuous source of hydrogen and access to the electric 

4 transmission grid. Such report shall include a conceptual 

5 design for such test center and a projection of the costs 

6 of establishing the test center. 

7 (b) AUTHORIZATION OF APPROPRIATIONS.—There 

8 are authorized to be appropriated to the Secretary for car9 rying out this section $500,000. 

10 SEC. 968. ARCTIC ENGINEERING RESEARCH CENTER. 

11 (a) IN GENERAL.—The Secretary of Energy (referred 

12 to in this section as the ‘‘Secretary’’) in consultation with 

13 the Secretary of Transportation and the United States 

14 Arctic Research Commission shall provide annual grants 

15 to a university located adjacent to the Arctic Energy Of16 fice of the Department of Energy, to establish and operate 

17 a university research center to be headquartered in Fair18 banks and to be known as the ‘‘Arctic Engineering Re19 search Center’’ (referred to in this section as the ‘‘Cen20 ter’’). 

21 (b) PURPOSE.—The purpose of the Center shall be 

22 to conduct research on, and develop improved methods of, 

23 construction and use of materials to improve the overall 

24 performance of roads, bridges, residential, commercial, 
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1 and industrial structures, and other infrastructure in the 

2 Arctic region, with an emphasis on developing—

3 (1) new construction techniques for roads, 

4 bridges, rail, and related transportation infrastruc5 ture and residential, commercial, and industrial in6 frastructure that are capable of withstanding the 

7 Arctic environment and using limited energy re8 sources as efficiently as possible; 

9 (2) technologies and procedures for increasing 

10 road, bridge, rail, and related transportation infra11 structure and residential, commercial, and industrial 

12 infrastructure safety, reliability, and integrity in the 

13 Arctic region; 

14 (3) new materials and improving the perform15 ance and energy efficiency of existing materials for 

16 the construction of roads, bridges, rail, and related 

17 transportation infrastructure and residential, com18 mercial, and industrial infrastructure in the Arctic 

19 region; and 

20 (4) recommendations for new local, regional, 

21 and State permitting and building codes to ensure 

22 transportation and building safety and efficient en23 ergy use when constructing, using, and occupying 

24 such infrastructure in the Arctic region. 

25 (c) OBJECTIVES.—The Center shall carry out—
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1 (1) basic and applied research in the subjects 

2 described in subsection (b), the products of which 

3 shall be judged by peers or other experts in the field 

4 to advance the body of knowledge in road, bridge, 

5 rail, and infrastructure engineering in the Arctic re6 gion; and 

7 (2) an ongoing program of technology transfer 

8 that makes research results available to potential 

9 users in a form that can be implemented. 

10 (d) AMOUNT OF GRANT.—For each of fiscal years 

11 2004 through 2009, the Secretary shall provide a grant 

12 in the amount of $3,000,000 to the institution specified 

13 in subsection (a) to carry out this section. 

14 (e) AUTHORIZATION OF APPROPRIATIONS.—There 

15 are authorized to be appropriated to carry out this section 

16 $3,000,000 for each of fiscal years 2004 through 2009. 

17 SEC. 969. BARROW GEOPHYSICAL RESEARCH FACILITY. 

18 (a) ESTABLISHMENT.—The Secretary of Commerce, 

19 in consultation with the Secretaries of Energy and the In20 terior, the Director of the National Science Foundation, 

21 and the Administrator of the Environmental Protection 

22 Agency, shall establish a joint research facility in Barrow, 

23 Alaska, to be known as the ‘‘Barrow Geophysical Research 

24 Facility’’, to support scientific research activities in the 

25 Arctic. 
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1 (b) AUTHORIZATION OF APPROPRIATIONS.—There 

2 are authorized to be appropriated to the Secretaries of 

3 Commerce, Energy, and the Interior, the Director of the 

4 National Science Foundation, and the Administrator of 

5 the Environmental Protection Agency for the planning, 

6 design, construction, and support of the Barrow Geo7 physical Research Facility $61,000,000.

8 SEC. 970. WESTERN MICHIGAN DEMONSTRATION PROJECT. 

9 The Administrator of the Environmental Protection 

10 Agency, in consultation with the State of Michigan and 

11 affected local officials, shall conduct a demonstration 

12 project to address the effect of transported ozone and 

13 ozone precursors in Southwestern Michigan. The dem14 onstration program shall address projected nonattainment 

15 areas in Southwestern Michigan that include counties with 

16 design values for ozone of less than .095 based on years 

17 2000 to 2002 or the most current 3-year period of air 

18 quality data. The Administrator shall assess any difficul19 ties such areas may experience in meeting the 8-hour na20 tional ambient air quality standard for ozone due to the 

21 effect of transported ozone or ozone precursors into the 

22 areas. The Administrator shall work with State and local 

23 officials to determine the extent of ozone and ozone pre24 cursor transport, to assess alternatives to achieve compli25 ance with the 8-hour standard apart from local controls, 
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1 and to determine the timeframe in which such compliance 

2 could take place. The Administrator shall complete this 

3 demonstration project no later than 2 years after the date 

4 of enactment of this section and shall not impose any re5 quirement or sanction that might otherwise apply during 

6 the pendency of the demonstration project. 

7 Subtitle H—Management 

8 SEC. 971. AVAILABILITY OF FUNDS. 

9 Funds authorized to be appropriated to the Depart10 ment under this title shall remain available until expended. 

11 SEC. 972. COST SHARING. 

12 (a) RESEARCH AND DEVELOPMENT.—Except as oth13 erwise provided in this title, for research and development 

14 programs carried out under this title the Secretary shall 

15 require a commitment from non-Federal sources of at 

16 least 20 percent of the cost of the project. The Secretary 

17 may reduce or eliminate the non-Federal requirement 

18 under this subsection if the Secretary determines that the 

19 research and development is of a basic or fundamental na20 ture or involves technical analyses or educational activi21 ties. 

22 (b) DEMONSTRATION AND COMMERCIAL APPLICA23 TION.—Except as otherwise provided in this title, the Sec24 retary shall require at least 50 percent of the costs directly 

25 and specifically related to any demonstration or commer-
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1 cial application project under this title to be provided from 

2 non-Federal sources. The Secretary may reduce the non3 Federal requirement under this subsection if the Secretary 

4 determines that the reduction is necessary and appropriate 

5 considering the technological risks involved in the project 

6 and is necessary to meet the objectives of this title. 

7 (c) CALCULATION OF AMOUNT.—In calculating the 

8 amount of the non-Federal commitment under subsection 

9 (a) or (b), the Secretary may include personnel, services, 

10 equipment, and other resources. 

11 (d) SIZE OF NON-FEDERAL SHARE.—The Secretary 

12 may consider the size of the non-Federal share in selecting 

13 projects. 

14 SEC. 973. MERIT REVIEW OF PROPOSALS. 

15 Awards of funds authorized under this title shall be 

16 made only after an impartial review of the scientific and 

17 technical merit of the proposals for such awards has been 

18 carried out by or for the Department. 

19 SEC. 974. EXTERNAL TECHNICAL REVIEW OF DEPART20 MENTAL PROGRAMS. 

21 (a) NATIONAL ENERGY RESEARCH AND DEVELOP22 MENT ADVISORY BOARDS.—

23 (1) IN GENERAL.—The Secretary shall establish 

24 1 or more advisory boards to review Department re25 search, development, demonstration, and commercial
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1 application programs in energy efficiency, renewable 

2 energy, nuclear energy, and fossil energy. 

3 (2) EXISTING ADVISORY BOARDS.—The Sec4 retary may designate an existing advisory board 

5 within the Department to fulfill the responsibilities 

6 of an advisory board under this subsection, and may 

7 enter into appropriate arrangements with the Na8 tional Academy of Sciences to establish such an ad9 visory board. 

10 (b) OFFICE OF SCIENCE ADVISORY COMMITTEES.—

11 (1) UTILIZATION OF EXISTING COMMITTEES.—

12 The Secretary shall continue to use the scientific 

13 program advisory committees chartered under the 

14 Federal Advisory Committee Act (5 U.S.C. App.) by 

15 the Office of Science to oversee research and devel16 opment programs under that Office. 

17 (2) SCIENCE ADVISORY COMMITTEE.—

18 (A) ESTABLISHMENT.—There shall be in 

19 the Office of Science a Science Advisory Com20 mittee that includes the chairs of each of the 

21 advisory committees described in paragraph (1). 

22 (B) RESPONSIBILITIES.—The Science Ad23 visory Committee shall—

24 (i) serve as the science advisor to the 

25 Director of the Office of Science; 
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1 (ii) advise the Director with respect to 

2 the well-being and management of the Na3 tional Laboratories and single-purpose re4 search facilities; 

5 (iii) advise the Director with respect 

6 to education and workforce training activi7 ties required for effective short-term and 

8 long-term basic and applied research ac9 tivities of the Office of Science; and 

10 (iv) advise the Director with respect 

11 to the well being of the university research 

12 programs supported by the Office of 

13 Science. 

14 (c) MEMBERSHIP.—Each advisory board under this 

15 section shall consist of persons with appropriate expertise 

16 representing a diverse range of interests. 

17 (d) MEETINGS AND PURPOSES.—Each advisory 

18 board under this section shall meet at least semiannually 

19 to review and advise on the progress made by the respec20 tive research, development, demonstration, and commer21 cial application program or programs. The advisory board 

22 shall also review the measurable cost and performance23 based goals for such programs as established under sec24 tion 901(b), and the progress on meeting such goals. 
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1 (e) PERIODIC REVIEWS AND ASSESSMENTS.—The 

2 Secretary shall enter into appropriate arrangements with 

3 the National Academy of Sciences to conduct periodic re4 views and assessments of the programs authorized by this 

5 title, the measurable cost and performance-based goals for 

6 such programs as established under section 901(b), if any, 

7 and the progress on meeting such goals. Such reviews and 

8 assessments shall be conducted every 5 years, or more 

9 often as the Secretary considers necessary, and the Sec10 retary shall transmit to Congress reports containing the 

11 results of all such reviews and assessments. 

12 SEC. 975. IMPROVED COORDINATION OF TECHNOLOGY 

13 TRANSFER ACTIVITIES. 

14 (a) TECHNOLOGY TRANSFER COORDINATOR.—The 

15 Secretary shall designate a Technology Transfer Coordi16 nator to perform oversight of and policy development for 

17 technology transfer activities at the Department. The 

18 Technology Transfer Coordinator shall—

19 (1) coordinate the activities of the Technology 

20 Transfer Working Group; 

21 (2) oversee the expenditure of funds allocated 

22 to the Technology Transfer Working Group; and 

23 (3) coordinate with each technology partnership 

24 ombudsman appointed under section 11 of the Tech-
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1 nology Transfer Commercialization Act of 2000 (42 

2 U.S.C. 7261c). 

3 (b) TECHNOLOGY TRANSFER WORKING GROUP.—

4 The Secretary shall establish a Technology Transfer 

5 Working Group, which shall consist of representatives of 

6 the National Laboratories and single-purpose research fa7 cilities, to—

8 (1) coordinate technology transfer activities oc9 curring at National Laboratories and single-purpose 

10 research facilities; 

11 (2) exchange information about technology 

12 transfer practices, including alternative approaches 

13 to resolution of disputes involving intellectual prop14 erty rights and other technology transfer matters; 

15 and 

16 (3) develop and disseminate to the public and 

17 prospective technology partners information about 

18 opportunities and procedures for technology transfer 

19 with the Department, including those related to al20 ternative approaches to resolution of disputes involv21 ing intellectual property rights and other technology 

22 transfer matters. 

23 (c) TECHNOLOGY TRANSFER RESPONSIBILITY.—

24 Nothing in this section shall affect the technology transfer 

25 responsibilities of Federal employees under the Stevenson-
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1 Wydler Technology Innovation Act of 1980 (15 U.S.C. 

2 3701 et seq.). 

3 SEC. 976. FEDERAL LABORATORY EDUCATIONAL PART4 NERS. 

5 (a) DISTRIBUTION OF ROYALTIES RECEIVED BY

6 FEDERAL AGENCIES.—Section 14(a)(1)(B)(v) of the Ste7 venson-Wydler Technology Innovation Act of 1980 (15 

8 U.S.C. 3710c(a)(1)(B)(v)), is amended to read as follows: 

9 ‘‘(v) for scientific research and develop10 ment and for educational assistance and other 

11 purposes consistent with the missions and ob12 jectives of the agency and the laboratory.’’. 

13 (b) COOPERATIVE RESEARCH AND DEVELOPMENT

14 AGREEMENTS.—Section 12(b)(5)(C) of the Stevenson15 Wydler Technology Innovation Act of 1980 (15 U.S.C. 

16 3710a(b)(5)(C)) is amended to read as follows: 

17 ‘‘(C) for scientific research and development 

18 and for educational assistance consistent with the 

19 missions and objectives of the agency and the lab20 oratory.’’. 

21 SEC. 977. INTERAGENCY COOPERATION. 

22 The Secretary shall enter into discussions with the 

23 Administrator of the National Aeronautics and Space Ad24 ministration with the goal of reaching an interagency 

25 working agreement between the 2 agencies that would 
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1 make the National Aeronautics and Space Administra2 tion’s expertise in energy, gained from its existing and 

3 planned programs, more readily available to the relevant 

4 research, development, demonstration, and commercial ap5 plications programs of the Department. Technologies to 

6 be discussed should include the National Aeronautics and 

7 Space Administration’s modeling, research, development, 

8 testing, and evaluation of new energy technologies, includ9 ing solar, wind, fuel cells, and hydrogen storage and dis10 tribution. 

11 SEC. 978. TECHNOLOGY INFRASTRUCTURE PROGRAM. 

12 (a) ESTABLISHMENT.—The Secretary shall establish 

13 a Technology Infrastructure Program in accordance with 

14 this section. 

15 (b) PURPOSE.—The purpose of the Technology Infra16 structure Program shall be to improve the ability of Na17 tional Laboratories and single-purpose research facilities 

18 to support departmental missions by—

19 (1) stimulating the development of technology 

20 clusters that can support departmental missions at 

21 the National Laboratories or single-purpose research 

22 facilities; 

23 (2) improving the ability of National Labora24 tories and single-purpose research facilities to lever-
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1 age and benefit from commercial research, tech2 nology, products, processes, and services; and 

3 (3) encouraging the exchange of scientific and 

4 technological expertise between National Labora5 tories or single-purpose research facilities and enti6 ties that can support departmental missions at the 

7 National Laboratories or single-purpose research fa8 cilities, such as institutions of higher education; 

9 technology-related business concerns; nonprofit insti10 tutions; and agencies of State, tribal, or local gov11 ernments. 

12 (c) PROJECTS.—The Secretary shall authorize the 

13 Director of each National Laboratory or single-purpose re14 search facility to implement the Technology Infrastructure 

15 Program at such National Laboratory or facility through 

16 projects that meet the requirements of subsections (d) and 

17 (e). 

18 (d) PROGRAM REQUIREMENTS.—Each project funded 

19 under this section shall meet the following requirements: 

20 (1) Each project shall include at least 1 of each 

21 of the following entities: A business; an institution of 

22 higher education; a nonprofit institution; and an 

23 agency of a State, local, or tribal government. 

24 (2) Not less than 50 percent of the costs of 

25 each project funded under this section shall be pro-
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1 vided from non-Federal sources. The calculation of 

2 costs paid by the non-Federal sources to a project 

3 shall include cash, personnel, services, equipment, 

4 and other resources expended on the project after 

5 start of the project. Independent research and devel6 opment expenses of Government contractors that 

7 qualify for reimbursement under section 31.205–

8 18(e) of the Federal Acquisition Regulation issued 

9 pursuant to section 25(c)(1) of the Office of Federal 

10 Procurement Policy Act (41 U.S.C. 421(c)(1)) may 

11 be credited toward costs paid by non-Federal sources 

12 to a project, if the expenses meet the other require13 ments of this section. 

14 (3) All projects under this section shall be com15 petitively selected using procedures determined by 

16 the Secretary. 

17 (4) Any participant that receives funds under 

18 this section may use generally accepted accounting 

19 principles for maintaining accounts, books, and 

20 records relating to the project. 

21 (5) No Federal funds shall be made available 

22 under this section for construction or any project for 

23 more than 5 years. 

24 (e) SELECTION CRITERIA.—
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1 (1) IN GENERAL.—The Secretary shall allocate 

2 funds under this section only if the Director of the 

3 National Laboratory or single-purpose research facil4 ity managing the project determines that the project 

5 is likely to improve the ability of the National Lab6 oratory or single-purpose research facility to achieve 

7 technical success in meeting departmental missions. 

8 (2) CRITERIA.—The Secretary shall consider 

9 the following criteria in selecting a project to receive 

10 Federal funds: 

11 (A) The potential of the project to promote 

12 the development of a commercially sustainable 

13 technology cluster following the period of De14 partment investment, which will derive most of 

15 the demand for its products or services from 

16 the private sector, and which will support de17 partmental missions at the participating Na18 tional Laboratory or single-purpose research fa19 cility. 

20 (B) The potential of the project to promote 

21 the use of commercial research, technology, 

22 products, processes, and services by the partici23 pating National Laboratory or single-purpose 

24 research facility to achieve its mission or the 

25 commercial development of technological inno-
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1 vations made at the participating National Lab2 oratory or single-purpose research facility. 

3 (C) The extent to which the project in4 volves a wide variety and number of institutions 

5 of higher education, nonprofit institutions, and 

6 technology-related business concerns that can 

7 support the missions of the participating Na8 tional Laboratory or single-purpose research fa9 cility and that will make substantive contribu10 tions to achieving the goals of the project. 

11 (D) The extent to which the project fo12 cuses on promoting the development of tech13 nology-related business concerns that are small 

14 businesses or involves such small businesses 

15 substantively in the project. 

16 (E) Such other criteria as the Secretary 

17 determines to be appropriate. 

18 (f) ALLOCATION.—In allocating funds for projects 

19 approved under this section, the Secretary shall provide—

20 (1) the Federal share of the project costs; and 

21 (2) additional funds to the National Laboratory 

22 or single-purpose research facility managing the 

23 project to permit the National Laboratory or single24 purpose research facility to carry out activities relat-
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1 ing to the project, and to coordinate such activities 

2 with the project. 

3 (g) REPORT TO CONGRESS.—Not later than July 1, 

4 2006, the Secretary shall report to Congress on whether 

5 the Technology Infrastructure Program should be contin6 ued and, if so, how the program should be managed. 

7 (h) DEFINITIONS.—In this section: 

8 (1) TECHNOLOGY CLUSTER.—The term ‘‘tech9 nology cluster’’ means a concentration of technology10 related business concerns, institutions of higher edu11 cation, or nonprofit institutions that reinforce each 

12 other’s performance in the areas of technology devel13 opment through formal or informal relationships. 

14 (2) TECHNOLOGY-RELATED BUSINESS CON15 CERN.—The term ‘‘technology-related business con16 cern’’ means a for-profit corporation, company, asso17 ciation, firm, partnership, or small business concern 

18 that conducts scientific or engineering research; de19 velops new technologies; manufactures products 

20 based on new technologies; or performs technological 

21 services. 

22 (i) AUTHORIZATION OF APPROPRIATIONS.—There 

23 are authorized to be appropriated to the Secretary for ac24 tivities under this section $10,000,000 for each of fiscal 

25 years 2004, 2005, and 2006. 
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1 SEC. 979. REPROGRAMMING. 

2 (a) DISTRIBUTION REPORT.—Not later than 60 days 

3 after the date of the enactment of an Act appropriating 

4 amounts authorized under this title, the Secretary shall 

5 transmit to the appropriate authorizing committees of 

6 Congress a report explaining how such amounts will be 

7 distributed among the authorizations contained in this 

8 title. 

9 (b) PROHIBITION.—

10 (1) IN GENERAL.—No amount identified under 

11 subsection (a) shall be reprogrammed if such re12 programming would result in an obligation which 

13 changes an individual distribution required to be re14 ported under subsection (a) by more than 5 percent 

15 unless the Secretary has transmitted to the appro16 priate authorizing committees of Congress a report 

17 described in subsection (c) and a period of 30 days 

18 has elapsed after such committees receive the report. 

19 (2) COMPUTATION.—In the computation of the 

20 30-day period described in paragraph (1), there shall 

21 be excluded any day on which either House of Con22 gress is not in session because of an adjournment of 

23 more than 3 days to a day certain. 

24 (c) REPROGRAMMING REPORT.—A report referred to 

25 in subsection (b)(1) shall contain a full and complete 

26 statement of the action proposed to be taken and the facts
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1 and circumstances relied on in support of the proposed 

2 action. 

3 SEC. 980. CONSTRUCTION WITH OTHER LAWS. 

4 Except as otherwise provided in this title, the Sec5 retary shall carry out the research, development, dem6 onstration, and commercial application programs, 

7 projects, and activities authorized by this title in accord8 ance with the applicable provisions of the Atomic Energy 

9 Act of 1954 (42 U.S.C. 2011 et seq.), the Federal Non10 nuclear Research and Development Act of 1974 (42 

11 U.S.C. 5901 et seq.), the Energy Policy Act of 1992 (42 

12 U.S.C. 13201 et seq.), the Stevenson-Wydler Technology 

13 Innovation Act of 1980 (15 U.S.C. 3701 et seq.), chapter 

14 18 of title 35, United States Code (commonly referred to 

15 as the Bayh-Dole Act), and any other Act under which 

16 the Secretary is authorized to carry out such activities. 

17 SEC. 981. REPORT ON RESEARCH AND DEVELOPMENT PRO18 GRAM EVALUATION METHODOLOGIES. 

19 Not later than 180 days after the date of enactment 

20 of this Act, the Secretary shall enter into appropriate ar21 rangements with the National Academy of Sciences to in22 vestigate and report on the scientific and technical merits 

23 of any evaluation methodology currently in use or pro24 posed for use in relation to the scientific and technical pro25 grams of the Department by the Secretary or other Fed-
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1 eral official. Not later than 6 months after receiving the 

2 report of the National Academy, the Secretary shall sub3 mit such report to Congress, along with any other views 

4 or plans of the Secretary with respect to the future use 

5 of such evaluation methodology.

6 SEC. 982. DEPARTMENT OF ENERGY SCIENCE AND TECH7 NOLOGY SCHOLARSHIP PROGRAM. 

8 (a) ESTABLISHMENT OF PROGRAM.—

9 (1) IN GENERAL.—The Secretary is authorized 

10 to establish a Department of Energy Science and 

11 Technology Scholarship Program to award scholar12 ships to individuals that is designed to recruit and 

13 prepare students for careers in the Department. 

14 (2) COMPETITIVE PROCESS.—Individuals shall 

15 be selected to receive scholarships under this section 

16 through a competitive process primarily on the basis 

17 of academic merit, with consideration given to finan18 cial need and the goal of promoting the participation 

19 of individuals identified in section 33 or 34 of the 

20 Science and Engineering Equal Opportunities Act 

21 (42 U.S.C. 1885a or 1885b). 

22 (3) SERVICE AGREEMENTS.—To carry out the 

23 Program the Secretary shall enter into contractual 

24 agreements with individuals selected under para25 graph (2) under which the individuals agree to serve 
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1 as full-time employees of the Department, for the 

2 period described in subsection (f)(1), in positions 

3 needed by the Department and for which the individ4 uals are qualified, in exchange for receiving a schol5 arship. 

6 (b) SCHOLARSHIP ELIGIBILITY.—In order to be eligi7 ble to participate in the Program, an individual must—

8 (1) be enrolled or accepted for enrollment as a 

9 full-time student at an institution of higher edu10 cation in an academic program or field of study de11 scribed in the list made available under subsection 

12 (d); 

13 (2) be a United States citizen; and 

14 (3) at the time of the initial scholarship award, 

15 not be a Federal employee as defined in section 

16 2105 of title 5 of the United States Code. 

17 (c) APPLICATION REQUIRED.—An individual seeking 

18 a scholarship under this section shall submit an applica19 tion to the Secretary at such time, in such manner, and 

20 containing such information, agreements, or assurances as 

21 the Secretary may require. 

22 (d) ELIGIBLE ACADEMIC PROGRAMS.—The Secretary 

23 shall make publicly available a list of academic programs 

24 and fields of study for which scholarships under the Pro-
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1 gram may be utilized, and shall update the list as nec2 essary. 

3 (e) SCHOLARSHIP REQUIREMENT.—

4 (1) IN GENERAL.—The Secretary may provide a 

5 scholarship under the Program for an academic year 

6 if the individual applying for the scholarship has 

7 submitted to the Secretary, as part of the applica8 tion required under subsection (c), a proposed aca9 demic program leading to a degree in a program or 

10 field of study on the list made available under sub11 section (d). 

12 (2) DURATION OF ELIGIBILITY.—An individual 

13 may not receive a scholarship under this section for 

14 more than 4 academic years, unless the Secretary 

15 grants a waiver. 

16 (3) SCHOLARSHIP AMOUNT.—The dollar 

17 amount of a scholarship under this section for an 

18 academic year shall be determined under regulations 

19 issued by the Secretary, but shall in no case exceed 

20 the cost of attendance. 

21 (4) AUTHORIZED USES.—A scholarship pro22 vided under this section may be expended for tuition, 

23 fees, and other authorized expenses as established by 

24 the Secretary by regulation.
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1 (5) CONTRACTS REGARDING DIRECT PAYMENTS

2 TO INSTITUTIONS.—The Secretary may enter into a 

3 contractual agreement with an institution of higher 

4 education under which the amounts provided for a 

5 scholarship under this section for tuition, fees, and 

6 other authorized expenses are paid directly to the in7 stitution with respect to which the scholarship is 

8 provided. 

9 (f) PERIOD OF OBLIGATED SERVICE.—

10 (1) DURATION OF SERVICE.—The period of 

11 service for which an individual shall be obligated to 

12 serve as an employee of the Department is, except 

13 as provided in subsection (h)(2), 24 months for each 

14 academic year for which a scholarship under this 

15 section is provided. 

16 (2) SCHEDULE FOR SERVICE.—

17 (A) IN GENERAL.—Except as provided in 

18 subparagraph (B), obligated service under para19 graph (1) shall begin not later than 60 days 

20 after the individual obtains the educational de21 gree for which the scholarship was provided. 

22 (B) DEFERRAL.—The Secretary may defer 

23 the obligation of an individual to provide a pe24 riod of service under paragraph (1) if the Sec25 retary determines that such a deferral is appro-
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1 priate. The Secretary shall prescribe the terms 

2 and conditions under which a service obligation 

3 may be deferred through regulation. 

4 (g) PENALTIES FOR BREACH OF SCHOLARSHIP

5 AGREEMENT.—

6 (1) FAILURE TO COMPLETE ACADEMIC TRAIN7 ING.—Scholarship recipients who fail to maintain a 

8 high level of academic standing, as defined by the 

9 Secretary by regulation, who are dismissed from 

10 their educational institutions for disciplinary rea11 sons, or who voluntarily terminate academic training 

12 before graduation from the educational program for 

13 which the scholarship was awarded, shall be in 

14 breach of their contractual agreement and, in lieu of 

15 any service obligation arising under such agreement, 

16 shall be liable to the United States for repayment 

17 not later than 1 year after the date of default of all 

18 scholarship funds paid to them and to the institution 

19 of higher education on their behalf under the agree20 ment, except as provided in subsection (h)(2). The 

21 repayment period may be extended by the Secretary 

22 when determined to be necessary, as established by 

23 regulation. 

24 (2) FAILURE TO BEGIN OR COMPLETE THE

25 SERVICE OBLIGATION OR MEET THE TERMS AND
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1 CONDITIONS OF DEFERMENT.—A scholarship recipi2 ent who, for any reason, fails to begin or complete 

3 a service obligation under this section after comple4 tion of academic training, or fails to comply with the 

5 terms and conditions of deferment established by the 

6 Secretary pursuant to subsection (f)(2)(B), shall be 

7 in breach of the contractual agreement. When a re8 cipient breaches an agreement for the reasons stated 

9 in the preceding sentence, the recipient shall be lia10 ble to the United States for an amount equal to—

11 (A) the total amount of scholarships re12 ceived by such individual under this section; 

13 plus 

14 (B) the interest on the amounts of such 

15 awards which would be payable if at the time 

16 the awards were received they were loans bear17 ing interest at the maximum legal prevailing 

18 rate, as determined by the Treasurer of the 

19 United States, 

20 multiplied by 3. 

21 (h) WAIVER OR SUSPENSION OF OBLIGATION.—

22 (1) DEATH OF INDIVIDUAL.—Any obligation of 

23 an individual incurred under the Program (or a con24 tractual agreement thereunder) for service or pay-
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1 ment shall be canceled upon the death of the indi2 vidual. 

3 (2) IMPOSSIBILITY OR EXTREME HARDSHIP.—

4 The Secretary shall by regulation provide for the 

5 partial or total waiver or suspension of any obliga6 tion of service or payment incurred by an individual 

7 under the Program (or a contractual agreement 

8 thereunder) whenever compliance by the individual is 

9 impossible or would involve extreme hardship to the 

10 individual, or if enforcement of such obligation with 

11 respect to the individual would be contrary to the 

12 best interests of the Government. 

13 (i) DEFINITIONS.—In this section the following defi14 nitions apply: 

15 (1) COST OF ATTENDANCE.—The term ‘‘cost of 

16 attendance’’ has the meaning given that term in sec17 tion 472 of the Higher Education Act of 1965 (20 

18 U.S.C. 1087ll). 

19 (2) PROGRAM.—The term ‘‘Program’’ means 

20 the Department of Energy Science and Technology 

21 Scholarship Program established under this section. 

22 (j) AUTHORIZATION OF APPROPRIATIONS.—There 

23 are authorized to be appropriated to the Secretary for ac24 tivities under this section—

25 (1) for fiscal year 2004, $800,000; 
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1 (2) for fiscal year 2005, $1,600,000; 

2 (3) for fiscal year 2006, $2,000,000; 

3 (4) for fiscal year 2007, $2,000,000; and 

4 (5) for fiscal year 2008, $2,000,000. 

5 SEC. 983. REPORT ON EQUAL EMPLOYMENT OPPORTUNITY 

6 PRACTICES. 

7 Not later than 12 months after the date of enactment 

8 of this Act, and biennially thereafter, the Secretary shall 

9 transmit to Congress a report on the equal employment 

10 opportunity practices at National Laboratories. Such re11 port shall include—

12 (1) a thorough review of each laboratory con13 tractor’s equal employment opportunity policies, in14 cluding promotion to management and professional 

15 positions and pay raises; 

16 (2) a statistical report on complaints and their 

17 disposition in the laboratories; 

18 (3) a description of how equal employment op19 portunity practices at the laboratories are treated in 

20 the contract and in calculating award fees for each 

21 contractor; 

22 (4) a summary of disciplinary actions and their 

23 disposition by either the Department or the relevant 

24 contractors for each laboratory; 
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1 (5) a summary of outreach efforts to attract 

2 women and minorities to the laboratories; 

3 (6) a summary of efforts to retain women and 

4 minorities in the laboratories; and 

5 (7) a summary of collaboration efforts with the 

6 Office of Federal Contract Compliance Programs to 

7 improve equal employment opportunity practices at 

8 the laboratories. 

9 SEC. 984. SMALL BUSINESS ADVOCACY AND ASSISTANCE. 

10 (a) SMALL BUSINESS ADVOCATE.—The Secretary 

11 shall require the Director of each National Laboratory, 

12 and may require the Director of a single-purpose research 

13 facility, to designate a small business advocate to—

14 (1) increase the participation of small business 

15 concerns, including socially and economically dis16 advantaged small business concerns, in procurement, 

17 collaborative research, technology licensing, and 

18 technology transfer activities conducted by the Na19 tional Laboratory or single-purpose research facility; 

20 (2) report to the Director of the National Lab21 oratory or single-purpose research facility on the ac22 tual participation of small business concerns, includ23 ing socially and economically disadvantaged small 

24 business concerns, in procurement, collaborative re25 search, technology licensing, and technology transfer
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1 activities along with recommendations, if appro2 priate, on how to improve participation; 

3 (3) make available to small businesses training, 

4 mentoring, and information on how to participate in 

5 procurement and collaborative research activities; 

6 (4) increase the awareness inside the National 

7 Laboratory or single-purpose research facility of the 

8 capabilities and opportunities presented by small 

9 business concerns; and 

10 (5) establish guidelines for the program under 

11 subsection (b) and report on the effectiveness of 

12 such program to the Director of the National Lab13 oratory or single-purpose research facility. 

14 (b) ESTABLISHMENT OF SMALL BUSINESS ASSIST15 ANCE PROGRAM.—The Secretary shall require the Direc16 tor of each National Laboratory, and may require the Di17 rector of a single-purpose research facility, to establish a 

18 program to provide small business concerns—

19 (1) assistance directed at making them more ef20 fective and efficient subcontractors or suppliers to 

21 the National Laboratory or single-purpose research 

22 facility; or 

23 (2) general technical assistance, the cost of 

24 which shall not exceed $10,000 per instance of as-
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1 sistance, to improve the small business concerns’ 

2 products or services. 

3 (c) USE OF FUNDS.—None of the funds expended 

4 under subsection (b) may be used for direct grants to the 

5 small business concerns. 

6 (d) DEFINITIONS.—In this section: 

7 (1) SMALL BUSINESS CONCERN.—The term 

8 ‘‘small business concern’’ has the meaning given 

9 such term in section 3 of the Small Business Act 

10 (15 U.S.C. 632). 

11 (2) SOCIALLY AND ECONOMICALLY DISADVAN12 TAGED SMALL BUSINESS CONCERNS.—The term ‘‘so13 cially and economically disadvantaged small business 

14 concerns’’ has the meaning given such term in sec15 tion 8(a)(4) of the Small Business Act (15 U.S.C. 

16 637(a)(4)). 

17 (e) AUTHORIZATION OF APPROPRIATIONS.—There 

18 are authorized to be appropriated to the Secretary for ac19 tivities under this section $5,000,000 for each of fiscal 

20 years 2004 through 2008. 

21 SEC. 985. REPORT ON MOBILITY OF SCIENTIFIC AND TECH22 NICAL PERSONNEL. 

23 Not later than 2 years after the date of enactment 

24 of this Act, the Secretary shall transmit a report to Con25 gress identifying any policies or procedures of a contractor 
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1 operating a National Laboratory or single-purpose re2 search facility that create disincentives to the temporary 

3 transfer of scientific and technical personnel among the 

4 contractor-operated National Laboratories or contractor5 operated single-purpose research facilities and provide 

6 suggestions for improving interlaboratory exchange of sci7 entific and technical personnel. 

8 SEC. 986. NATIONAL ACADEMY OF SCIENCES REPORT. 

9 Not later than 90 days after the date of enactment 

10 of this Act, the Secretary shall enter into an arrangement 

11 with the National Academy of Sciences for the Academy 

12 to—

13 (1) conduct a study on—

14 (A) the obstacles to accelerating the com15 mercial application of energy technology; and 

16 (B) the adequacy of Department policies 

17 and procedures for, and oversight of, technology 

18 transfer-related disputes between contractors of 

19 the Department and the private sector; and 

20 (2) transmit a report to Congress on rec21 ommendations developed as a result of the study. 

22 SEC. 987. OUTREACH. 

23 The Secretary shall ensure that each program au24 thorized by this title includes an outreach component to 

25 provide information, as appropriate, to manufacturers, 
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1 consumers, engineers, architects, builders, energy service 

2 companies, institutions of higher education, small busi3 nesses, facility planners and managers, State and local 

4 governments, and other entities. 

5 SEC. 988. COMPETITIVE AWARD OF MANAGEMENT CON6 TRACTS. 

7 None of the funds authorized to be appropriated to 

8 the Secretary by this title may be used to award a manage9 ment and operating contract for a nonmilitary energy lab10 oratory of the Department unless such contract is com11 petitively awarded or the Secretary grants, on a case-by12 case basis, a waiver to allow for such a deviation. The Sec13 retary may not delegate the authority to grant such a 

14 waiver and shall submit to Congress a report notifying 

15 Congress of the waiver and setting forth the reasons for 

16 the waiver at least 60 days prior to the date of the award 

17 of such a contract. 

18 SEC. 989. EDUCATIONAL PROGRAMS IN SCIENCE AND 

19 MATHEMATICS. 

20 (a) ACTIVITIES.—Section 3165(a) of the Department 

21 of Energy Science Education Enhancement Act (42 

22 U.S.C. 7381b(a)) is amended by adding at the end the 

23 following: 

24 ‘‘(14) Support competitive events for students, 

25 under supervision of teachers, designed to encourage 
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1 student interest and knowledge in science and math2 ematics.’’. 

3 (b) AUTHORIZATION OF APPROPRIATIONS.—Section 

4 3169 of the Department of Energy Science Education En5 hancement Act (42 U.S.C. 7381e), as so redesignated by 

6 section 1102(b), is amended by inserting before the period 

7 ‘‘; and $40,000,000 for each of fiscal years 2004 through 

8 2008’’.

9 TITLE X—DEPARTMENT OF 

10 ENERGY MANAGEMENT 

11 SEC. 1001. ADDITIONAL ASSISTANT SECRETARY POSITION. 

12 (a) ADDITIONAL ASSISTANT SECRETARY POSITION

13 TO ENABLE IMPROVED MANAGEMENT OF NUCLEAR EN14 ERGY ISSUES.—

15 (1) IN GENERAL.—Section 203(a) of the De16 partment of Energy Organization Act (42 U.S.C. 

17 7133(a)) is amended by striking ‘‘six Assistant Sec18 retaries’’ and inserting ‘‘7 Assistant Secretaries’’. 

19 (2) SENSE OF CONGRESS.—It is the sense of 

20 Congress that the leadership for departmental mis21 sions in nuclear energy should be at the Assistant 

22 Secretary level. 

23 (b) TECHNICAL AND CONFORMING AMENDMENTS.—

24 (1) TITLE 5.—Section 5315 of title 5, United 

25 States Code, is amended by striking ‘‘Assistant Sec-
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1 retaries of Energy (6)’’ and inserting ‘‘Assistant 

2 Secretaries of Energy (7)’’. 

3 (2) DEPARTMENT OF ENERGY ORGANIZATION

4 ACT.—The table of contents for the Department of 

5 Energy Organization Act (42 U.S.C. 7101 note) is 

6 amended—

7 (A) by striking ‘‘Section 209’’ and insert8 ing ‘‘Sec. 209’’;

9 (B) by striking ‘‘213.’’ and inserting ‘‘Sec. 

10 213.’’; 

11 (C) by striking ‘‘214.’’ and inserting ‘‘Sec. 

12 214.’’; 

13 (D) by striking ‘‘215.’’ and inserting ‘‘Sec. 

14 215.’’; and 

15 (E) by striking ‘‘216.’’ and inserting ‘‘Sec. 

16 216.’’. 

17 SEC. 1002. OTHER TRANSACTIONS AUTHORITY. 

18 Section 646 of the Department of Energy Organiza19 tion Act (42 U.S.C. 7256) is amended by adding at the 

20 end the following: 

21 ‘‘(g)(1) In addition to other authorities granted to the 

22 Secretary under law, the Secretary may enter into other 

23 transactions on such terms as the Secretary may deem 

24 appropriate in furtherance of research, development, or 

25 demonstration functions vested in the Secretary. Such 
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1 other transactions shall not be subject to the provisions 

2 of section 9 of the Federal Nonnuclear Energy Research 

3 and Development Act of 1974 (42 U.S.C. 5908) or section 

4 152 of the Atomic Energy Act of 1954 (42 U.S.C. 2182). 

5 ‘‘(2)(A) The Secretary shall ensure that—

6 ‘‘(i) to the maximum extent the Secretary de7 termines practicable, no transaction entered into 

8 under paragraph (1) provides for research, develop9 ment, or demonstration that duplicates research, de10 velopment, or demonstration being conducted under 

11 existing projects carried out by the Department; 

12 ‘‘(ii) to the extent the Secretary determines 

13 practicable, the funds provided by the Government 

14 under a transaction authorized by paragraph (1) do 

15 not exceed the total amount provided by other par16 ties to the transaction; and 

17 ‘‘(iii) to the extent the Secretary determines 

18 practicable, competitive, merit-based selection proce19 dures shall be used when entering into transactions 

20 under paragraph (1). 

21 ‘‘(B) A transaction authorized by paragraph (1) may 

22 be used for a research, development, or demonstration 

23 project only if the Secretary makes a written determina24 tion that the use of a standard contract, grant, or coopera-
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1 tive agreement for the project is not feasible or appro2 priate. 

3 ‘‘(3)(A) The Secretary shall protect from disclosure, 

4 including disclosure under section 552 of title 5, United 

5 States Code, for up to 5 years after the date the informa6 tion is received by the Secretary—

7 ‘‘(i) a proposal, proposal abstract, and sup8 porting documents submitted to the Department in 

9 a competitive or noncompetitive process having the 

10 potential for resulting in an award under paragraph 

11 (1) to the party submitting the information; and 

12 ‘‘(ii) a business plan and technical information 

13 relating to a transaction authorized by paragraph 

14 (1) submitted to the Department as confidential 

15 business information. 

16 ‘‘(B) The Secretary may protect from disclosure, for 

17 up to 5 years after the information was developed, any 

18 information developed pursuant to a transaction under 

19 paragraph (1) which developed information is of a char20 acter that it would be protected from disclosure under sec21 tion 552(b)(4) of title 5, United States Code, if obtained 

22 from a person other than a Federal agency. 

23 ‘‘(4) Not later than 90 days after the date of enact24 ment of this subsection, the Secretary shall prescribe 

25 guidelines for using other transactions authorized by para-
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1 graph (1). Such guidelines shall be published in the Fed2 eral Register for public comment under rulemaking proce3 dures of the Department. 

4 ‘‘(5) The authority of the Secretary under this sub5 section may be delegated only to an officer of the Depart6 ment who is appointed by the President by and with the 

7 advice and consent of the Senate and may not be delegated 

8 to any other person. 

9 ‘‘(6)(A) Not later than September 31, 2005, the 

10 Comptroller General of the United States shall report to 

11 Congress on the Department’s use of the authorities 

12 granted under this section, including the ability to attract 

13 nontraditional government contractors and whether addi14 tional safeguards are needed with respect to the use of 

15 such authorities. 

16 ‘‘(B) In this section, the term ‘nontraditional Govern17 ment contractor’ has the same meaning as the term ‘non18 traditional defense contractor’ as defined in section 845(e) 

19 of the National Defense Authorization Act for Fiscal Year 

20 1994 (Public Law 103–160; 10 U.S.C. 2371 note).’’.
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1 TITLE XI—PERSONNEL AND 

2 TRAINING 

3 SEC. 1101. TRAINING GUIDELINES FOR ELECTRIC ENERGY 

4 INDUSTRY PERSONNEL. 

5 The Secretary of Energy, in consultation with the 

6 Secretary of Labor and jointly with the electric industry 

7 and recognized employee representatives, shall develop 

8 model personnel training guidelines to support electric sys9 tem reliability and safety. The training guidelines shall, 

10 at a minimum—

11 (1) include training requirements for workers 

12 engaged in the construction, operation, inspection, 

13 and maintenance of electric generation, trans14 mission, and distribution, including competency and 

15 certification requirements, and assessment require16 ments that include initial and ongoing evaluation of 

17 workers, recertification assessment procedures, and 

18 methods for examining or testing the qualification of 

19 individuals performing covered tasks; and 

20 (2) consolidate existing training guidelines on 

21 the construction, operation, maintenance, and in22 spection of electric generation, transmission, and 

23 distribution facilities, such as those established by 

24 the National Electric Safety Code and other indus25 try consensus standards. 
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1 SEC. 1102. IMPROVED ACCESS TO ENERGY-RELATED SCI2 ENTIFIC AND TECHNICAL CAREERS. 

3 (a) DEPARTMENT OF ENERGY SCIENCE EDUCATION

4 PROGRAMS.—Section 3164 of the Department of Energy 

5 Science Education Enhancement Act (42 U.S.C. 7381a) 

6 is amended by adding at the end the following: 

7 ‘‘(c) PROGRAMS FOR STUDENTS FROM UNDERREP8 RESENTED GROUPS.—In carrying out a program under 

9 subsection (a), the Secretary shall give priority to activi10 ties that are designed to encourage students from under11 represented groups to pursue scientific and technical ca12 reers.’’. 

13 (b) PARTNERSHIPS WITH HISTORICALLY BLACK

14 COLLEGES AND UNIVERSITIES, HISPANIC-SERVICING IN15 STITUTIONS, AND TRIBAL COLLEGES.—The Department 

16 of Energy Science Education Enhancement Act (42 

17 U.S.C. 7381 et seq.) is amended—

18 (1) by redesignating sections 3167 and 3168 as 

19 sections 3168 and 3169, respectively; and 

20 (2) by inserting after section 3166 the fol21 lowing: 

22 ‘‘SEC. 3167. PARTNERSHIPS WITH HISTORICALLY BLACK 

23 COLLEGES AND UNIVERSITIES, HISPANIC24 SERVING INSTITUTIONS, AND TRIBAL COL25 LEGES. 

26 ‘‘(a) DEFINITIONS.—In this section:
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1 ‘‘(1) HISPANIC-SERVING INSTITUTION.—The 

2 term ‘Hispanic-serving institution’ has the meaning 

3 given that term in section 502(a) of the Higher 

4 Education Act of 1965 (20 U.S.C. 1101a(a)). 

5 ‘‘(2) HISTORICALLY BLACK COLLEGE OR UNI6 VERSITY.—The term ‘historically Black college or 

7 university’ has the meaning given the term ‘part B 

8 institution’ in section 322 of the Higher Education 

9 Act of 1965 (20 U.S.C. 1061). 

10 ‘‘(3) NATIONAL LABORATORY.—The term ‘Na11 tional Laboratory’ has the meaning given that term 

12 in section 902 of the Energy Policy Act of 2003. 

13 ‘‘(4) SCIENCE FACILITY.—The term ‘science fa14 cility’ has the meaning given the term ‘single-pur15 pose research facility’ in section 902 of the Energy 

16 Policy Act of 2003. 

17 ‘‘(5) TRIBAL COLLEGE.—The term ‘tribal col18 lege’ has the meaning given the term ‘Tribal College 

19 or University’ in section 316(b)(3) of the Higher 

20 Education Act of 1965 (20 U.S.C. 1059c(b)(3)). 

21 ‘‘(b) EDUCATION PARTNERSHIP.—The Secretary 

22 shall direct the Director of each National Laboratory and, 

23 to the extent practicable, the head of any science facility 

24 to increase the participation of historically Black colleges 

25 or universities, Hispanic-serving institutions, or tribal col-
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1 leges in activities that increase the capacity of the histori2 cally Black colleges or universities, Hispanic-serving insti3 tutions, or tribal colleges to train personnel in science or 

4 engineering. 

5 ‘‘(c) ACTIVITIES.—An activity under subsection (b) 

6 may include—

7 ‘‘(1) collaborative research; 

8 ‘‘(2) equipment transfer; 

9 ‘‘(3) training activities conducted at a National 

10 Laboratory or science facility; and 

11 ‘‘(4) mentoring activities conducted at a Na12 tional Laboratory or science facility. 

13 ‘‘(d) REPORT.—Not later than 2 years after the date 

14 of enactment of the Energy Policy Act of 2003, the Sec15 retary shall submit to Congress a report on the activities 

16 carried out under this section.’’. 

17 SEC. 1103. NATIONAL POWER PLANT OPERATIONS TECH18 NOLOGY AND EDUCATION CENTER. 

19 (a) ESTABLISHMENT.—The Secretary shall support 

20 the establishment of a National Power Plant Operations 

21 Technology and Education Center (in this section referred 

22 to as the ‘‘Center’’), to address the need for training and 

23 educating certified operators for nonnuclear electric power 

24 generation plants. 
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1 (b) ROLE.—The Center shall provide both training 

2 and continuing education relating to nonnuclear electric 

3 power generation plant technologies and operations. The 

4 Center shall conduct training and education activities on 

5 site and through Internet-based information technologies 

6 that allow for learning at remote sites. 

7 (c) CRITERIA FOR COMPETITIVE SELECTION.—The 

8 Secretary shall support the establishment of the Center 

9 at an institution of higher education with expertise in 

10 power plant technology and operation and with the ability 

11 to provide onsite as well as Internet-based training. 

12 SEC. 1104. INTERNATIONAL ENERGY TRAINING. 

13 (a) IN GENERAL.—The Secretary of Energy, in con14 sultation with the Secretaries of Commerce, Interior, and 

15 State and the Federal Energy Regulatory Commission, 

16 shall coordinate training and outreach efforts for inter17 national commercial energy markets in countries with de18 veloping and restructuring economies. 

19 (b) COMPONENTS.—The efforts may address—

20 (1) production-related fiscal regimes; 

21 (2) grid and network issues; 

22 (3) energy user and demand side response; 

23 (4) international trade of energy; and 

24 (5) international transportation of energy. 
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1 (c) AUTHORIZATION OF APPROPRIATIONS.—There 

2 are authorized to be appropriated to carry out this section 

3 $1,500,000 for each of fiscal years 2004 through 2007.

4 TITLE XII—ELECTRICITY 

5 SEC. 1201. SHORT TITLE. 

6 This title may be cited as the ‘‘Electric Reliability 

7 Act of 2003’’. 

8 Subtitle A—Reliability Standards 

9 SEC. 1211. ELECTRIC RELIABILITY STANDARDS. 

10 (a) IN GENERAL.—Part II of the Federal Power Act 

11 (16 U.S.C 824 et seq.) is amended by adding at the end 

12 the following: 

13 ‘‘SEC. 215. ELECTRIC RELIABILITY. 

14 ‘‘(a) DEFINITIONS.—For purposes of this section: 

15 ‘‘(1) The term ‘bulk-power system’ means—

16 ‘‘(A) facilities and control systems nec17 essary for operating an interconnected electric 

18 energy transmission network (or any portion 

19 thereof); and 

20 ‘‘(B) electric energy from generation facili21 ties needed to maintain transmission system re22 liability. 

23 The term does not include facilities used in the local 

24 distribution of electric energy. 
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1 ‘‘(2) The terms ‘Electric Reliability Organiza2 tion’ and ‘ERO’ mean the organization certified by 

3 the Commission under subsection (c) the purpose of 

4 which is to establish and enforce reliability stand5 ards for the bulk-power system, subject to Commis6 sion review. 

7 ‘‘(3) The term ‘reliability standard’ means a re8 quirement, approved by the Commission under this 

9 section, to provide for reliable operation of the bulk10 power system. The term includes requirements for 

11 the operation of existing bulk-power system facilities 

12 and the design of planned additions or modifications 

13 to such facilities to the extent necessary to provide 

14 for reliable operation of the bulk-power system, but 

15 the term does not include any requirement to en16 large such facilities or to construct new transmission 

17 capacity or generation capacity. 

18 ‘‘(4) The term ‘reliable operation’ means oper19 ating the elements of the bulk-power system within 

20 equipment and electric system thermal, voltage, and 

21 stability limits so that instability, uncontrolled sepa22 ration, or cascading failures of such system will not 

23 occur as a result of a sudden disturbance or unan24 ticipated failure of system elements. 
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1 ‘‘(5) The term ‘Interconnection’ means a geo2 graphic area in which the operation of bulk-power 

3 system components is synchronized such that the 

4 failure of 1 or more of such components may ad5 versely affect the ability of the operators of other

6 components within the system to maintain reliable 

7 operation of the facilities within their control. 

8 ‘‘(6) The term ‘transmission organization’ 

9 means a Regional Transmission Organization, Inde10 pendent System Operator, independent transmission 

11 provider, or other transmission organization finally 

12 approved by the Commission for the operation of 

13 transmission facilities. 

14 ‘‘(7) The term ‘regional entity’ means an entity 

15 having enforcement authority pursuant to subsection 

16 (e)(4). 

17 ‘‘(b) JURISDICTION AND APPLICABILITY.—(1) The 

18 Commission shall have jurisdiction, within the United 

19 States, over the ERO certified by the Commission under 

20 subsection (c), any regional entities, and all users, owners 

21 and operators of the bulk-power system, including but not 

22 limited to the entities described in section 201(f), for pur23 poses of approving reliability standards established under 

24 this section and enforcing compliance with this section. All 

25 users, owners and operators of the bulk-power system 
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1 shall comply with reliability standards that take effect 

2 under this section. 

3 ‘‘(2) The Commission shall issue a final rule to imple4 ment the requirements of this section not later than 180 

5 days after the date of enactment of this section. 

6 ‘‘(c) CERTIFICATION.—Following the issuance of a 

7 Commission rule under subsection (b)(2), any person may 

8 submit an application to the Commission for certification 

9 as the Electric Reliability Organization. The Commission 

10 may certify 1 such ERO if the Commission determines 

11 that such ERO—

12 ‘‘(1) has the ability to develop and enforce, sub13 ject to subsection (e)(2), reliability standards that 

14 provide for an adequate level of reliability of the 

15 bulk-power system; and 

16 ‘‘(2) has established rules that—

17 ‘‘(A) assure its independence of the users 

18 and owners and operators of the bulk-power 

19 system, while assuring fair stakeholder rep20 resentation in the selection of its directors and 

21 balanced decisionmaking in any ERO com22 mittee or subordinate organizational structure; 

23 ‘‘(B) allocate equitably reasonable dues, 

24 fees, and other charges among end users for all 

25 activities under this section; 
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1 ‘‘(C) provide fair and impartial procedures 

2 for enforcement of reliability standards through 

3 the imposition of penalties in accordance with 

4 subsection (e) (including limitations on activi5 ties, functions, or operations, or other appro6 priate sanctions); 

7 ‘‘(D) provide for reasonable notice and op8 portunity for public comment, due process, 

9 openness, and balance of interests in developing 

10 reliability standards and otherwise exercising its 

11 duties; and 

12 ‘‘(E) provide for taking, after certification, 

13 appropriate steps to gain recognition in Canada 

14 and Mexico. 

15 ‘‘(d) RELIABILITY STANDARDS.—(1) The Electric 

16 Reliability Organization shall file each reliability standard 

17 or modification to a reliability standard that it proposes 

18 to be made effective under this section with the Commis19 sion. 

20 ‘‘(2) The Commission may approve, by rule or order, 

21 a proposed reliability standard or modification to a reli22 ability standard if it determines that the standard is just, 

23 reasonable, not unduly discriminatory or preferential, and 

24 in the public interest. The Commission shall give due 

25 weight to the technical expertise of the Electric Reliability 
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1 Organization with respect to the content of a proposed 

2 standard or modification to a reliability standard and to 

3 the technical expertise of a regional entity organized on 

4 an Interconnection-wide basis with respect to a reliability 

5 standard to be applicable within that Interconnection, but 

6 shall not defer with respect to the effect of a standard 

7 on competition. A proposed standard or modification shall 

8 take effect upon approval by the Commission. 

9 ‘‘(3) The Electric Reliability Organization shall 

10 rebuttably presume that a proposal from a regional entity 

11 organized on an Interconnection-wide basis for a reliability 

12 standard or modification to a reliability standard to be ap13 plicable on an Interconnection-wide basis is just, reason14 able, and not unduly discriminatory or preferential, and 

15 in the public interest. 

16 ‘‘(4) The Commission shall remand to the Electric 

17 Reliability Organization for further consideration a pro18 posed reliability standard or a modification to a reliability 

19 standard that the Commission disapproves in whole or in 

20 part. 

21 ‘‘(5) The Commission, upon its own motion or upon 

22 complaint, may order the Electric Reliability Organization 

23 to submit to the Commission a proposed reliability stand24 ard or a modification to a reliability standard that ad25 dresses a specific matter if the Commission considers such 
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1 a new or modified reliability standard appropriate to carry 

2 out this section. 

3 ‘‘(6) The final rule adopted under subsection (b)(2) 

4 shall include fair processes for the identification and time5 ly resolution of any conflict between a reliability standard 

6 and any function, rule, order, tariff, rate schedule, or 

7 agreement accepted, approved, or ordered by the Commis8 sion applicable to a transmission organization. Such trans9 mission organization shall continue to comply with such 

10 function, rule, order, tariff, rate schedule or agreement ac11 cepted approved, or ordered by the Commission until—

12 ‘‘(A) the Commission finds a conflict exists be13 tween a reliability standard and any such provision; 

14 ‘‘(B) the Commission orders a change to such 

15 provision pursuant to section 206 of this part; and 

16 ‘‘(C) the ordered change becomes effective 

17 under this part. 

18 If the Commission determines that a reliability standard 

19 needs to be changed as a result of such a conflict, it shall 

20 order the ERO to develop and file with the Commission 

21 a modified reliability standard under paragraph (4) or (5) 

22 of this subsection. 

23 ‘‘(e) ENFORCEMENT.—(1) The ERO may impose, 

24 subject to paragraph (2), a penalty on a user or owner 

25 or operator of the bulk-power system for a violation of a 
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1 reliability standard approved by the Commission under 

2 subsection (d) if the ERO, after notice and an opportunity 

3 for a hearing—

4 ‘‘(A) finds that the user or owner or operator 

5 has violated a reliability standard approved by the 

6 Commission under subsection (d); and 

7 ‘‘(B) files notice and the record of the pro8 ceeding with the Commission. 

9 ‘‘(2) A penalty imposed under paragraph (1) may 

10 take effect not earlier than the 31st day after the ERO 

11 files with the Commission notice of the penalty and the 

12 record of proceedings. Such penalty shall be subject to re13 view by the Commission, on its own motion or upon appli14 cation by the user, owner or operator that is the subject 

15 of the penalty filed within 30 days after the date such 

16 notice is filed with the Commission. Application to the 

17 Commission for review, or the initiation of review by the 

18 Commission on its own motion, shall not operate as a stay 

19 of such penalty unless the Commission otherwise orders 

20 upon its own motion or upon application by the user, 

21 owner or operator that is the subject of such penalty. In 

22 any proceeding to review a penalty imposed under para23 graph (1), the Commission, after notice and opportunity 

24 for hearing (which hearing may consist solely of the record 

25 before the ERO and opportunity for the presentation of 
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1 supporting reasons to affirm, modify, or set aside the pen2 alty), shall by order affirm, set aside, reinstate, or modify 

3 the penalty, and, if appropriate, remand to the ERO for

4 further proceedings. The Commission shall implement ex5 pedited procedures for such hearings. 

6 ‘‘(3) On its own motion or upon complaint, the Com7 mission may order compliance with a reliability standard 

8 and may impose a penalty against a user or owner or oper9 ator of the bulk-power system if the Commission finds, 

10 after notice and opportunity for a hearing, that the user 

11 or owner or operator of the bulk-power system has en12 gaged or is about to engage in any acts or practices that 

13 constitute or will constitute a violation of a reliability 

14 standard. 

15 ‘‘(4) The Commission shall issue regulations author16 izing the ERO to enter into an agreement to delegate au17 thority to a regional entity for the purpose of proposing 

18 reliability standards to the ERO and enforcing reliability 

19 standards under paragraph (1) if—

20 ‘‘(A) the regional entity is governed by—

21 ‘‘(i) an independent board; 

22 ‘‘(ii) a balanced stakeholder board; or 

23 ‘‘(iii) a combination independent and bal24 anced stakeholder board. 
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1 ‘‘(B) the regional entity otherwise satisfies the 

2 provisions of subsection (c)(1) and (2); and 

3 ‘‘(C) the agreement promotes effective and effi4 cient administration of bulk-power system reliability. 

5 The Commission may modify such delegation. The ERO 

6 and the Commission shall rebuttably presume that a pro7 posal for delegation to a regional entity organized on an 

8 Interconnection-wide basis promotes effective and efficient 

9 administration of bulk-power system reliability and should 

10 be approved. Such regulation may provide that the Com11 mission may assign the ERO’s authority to enforce reli12 ability standards under paragraph (1) directly to a re13 gional entity consistent with the requirements of this para14 graph. 

15 ‘‘(5) The Commission may take such action as is nec16 essary or appropriate against the ERO or a regional entity 

17 to ensure compliance with a reliability standard or any 

18 Commission order affecting the ERO or a regional entity. 

19 ‘‘(6) Any penalty imposed under this section shall 

20 bear a reasonable relation to the seriousness of the viola21 tion and shall take into consideration the efforts of such 

22 user, owner, or operator to remedy the violation in a time23 ly manner. 

24 ‘‘(f) CHANGES IN ELECTRIC RELIABILITY ORGANIZA25 TION RULES.—The Electric Reliability Organization shall 
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1 file with the Commission for approval any proposed rule 

2 or proposed rule change, accompanied by an explanation 

3 of its basis and purpose. The Commission, upon its own 

4 motion or complaint, may propose a change to the rules 

5 of the ERO. A proposed rule or proposed rule change shall 

6 take effect upon a finding by the Commission, after notice 

7 and opportunity for comment, that the change is just, rea8 sonable, not unduly discriminatory or preferential, is in 

9 the public interest, and satisfies the requirements of sub10 section (c). 

11 ‘‘(g) RELIABILITY REPORTS.—The ERO shall con12 duct periodic assessments of the reliability and adequacy 

13 of the bulk-power system in North America. 

14 ‘‘(h) COORDINATION WITH CANADA AND MEXICO.—

15 The President is urged to negotiate international agree16 ments with the governments of Canada and Mexico to pro17 vide for effective compliance with reliability standards and 

18 the effectiveness of the ERO in the United States and 

19 Canada or Mexico. 

20 ‘‘(i) SAVINGS PROVISIONS.—(1) The ERO shall have 

21 authority to develop and enforce compliance with reli22 ability standards for only the bulk-power system. 

23 ‘‘(2) This section does not authorize the ERO or the 

24 Commission to order the construction of additional gen25 eration or transmission capacity or to set and enforce com-
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1 pliance with standards for adequacy or safety of electric 

2 facilities or services. 

3 ‘‘(3) Nothing in this section shall be construed to pre4 empt any authority of any State to take action to ensure 

5 the safety, adequacy, and reliability of electric service 

6 within that State, as long as such action is not incon7 sistent with any reliability standard. 

8 ‘‘(4) Within 90 days of the application of the Electric 

9 Reliability Organization or other affected party, and after 

10 notice and opportunity for comment, the Commission shall 

11 issue a final order determining whether a State action is 

12 inconsistent with a reliability standard, taking into consid13 eration any recommendation of the ERO. 

14 ‘‘(5) The Commission, after consultation with the 

15 ERO and the State taking action, may stay the effective16 ness of any State action, pending the Commission’s 

17 issuance of a final order. 

18 ‘‘(j) REGIONAL ADVISORY BODIES.—The Commis19 sion shall establish a regional advisory body on the petition 

of at least 2 20 ⁄3 of the States within a region that have more 

than 1 21 ⁄2 of their electric load served within the region. A 

22 regional advisory body shall be composed of 1 member 

23 from each participating State in the region, appointed by 

24 the Governor of each State, and may include representa25 tives of agencies, States, and provinces outside the United 
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1 States. A regional advisory body may provide advice to the 

2 Electric Reliability Organization, a regional entity, or the 

3 Commission regarding the governance of an existing or 

4 proposed regional entity within the same region, whether 

5 a standard proposed to apply within the region is just, 

6 reasonable, not unduly discriminatory or preferential, and 

7 in the public interest, whether fees proposed to be assessed 

8 within the region are just, reasonable, not unduly discrimi9 natory or preferential, and in the public interest and any 

10 other responsibilities requested by the Commission. The 

11 Commission may give deference to the advice of any such 

12 regional advisory body if that body is organized on an 

13 Interconnection-wide basis. 

14 ‘‘(k) ALASKA AND HAWAII.—The provisions of this 

15 section do not apply to Alaska or Hawaii.’’. 

16 (b) STATUS OF ERO.—The Electric Reliability Orga17 nization certified by the Federal Energy Regulatory Com18 mission under section 215(c) of the Federal Power Act 

19 and any regional entity delegated enforcement authority 

20 pursuant to section 215(e)(4) of that Act are not depart21 ments, agencies, or instrumentalities of the United States 

22 Government. 
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1 Subtitle B—Transmission 

2 Infrastructure Modernization 

3 SEC. 1221. SITING OF INTERSTATE ELECTRIC TRANS4 MISSION FACILITIES. 

5 (a) AMENDMENT OF FEDERAL POWER ACT.—Part 

6 II of the Federal Power Act is amended by adding at the 

7 end the following: 

8 ‘‘SEC. 216. SITING OF INTERSTATE ELECTRIC TRANS9 MISSION FACILITIES. 

10 ‘‘(a) DESIGNATION OF NATIONAL INTEREST ELEC11 TRIC TRANSMISSION CORRIDORS.—

12 ‘‘(1) TRANSMISSION CONGESTION STUDY.—

13 Within 1 year after the enactment of this section, 

14 and every 3 years thereafter, the Secretary of En15 ergy, in consultation with affected States, shall con16 duct a study of electric transmission congestion. 

17 After considering alternatives and recommendations 

18 from interested parties, including an opportunity for 

19 comment from affected States, the Secretary shall 

20 issue a report, based on such study, which may des21 ignate any geographic area experiencing electric en22 ergy transmission capacity constraints or congestion 

23 that adversely affects consumers as a national inter24 est electric transmission corridor. The Secretary 

25 shall conduct the study and issue the report in con-
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1 sultation with any appropriate regional entity ref2 erenced in section 215 of this Act. 

3 ‘‘(2) CONSIDERATIONS.—In determining wheth4 er to designate a national interest electric trans5 mission corridor referred to in paragraph (1) under 

6 this section, the Secretary may consider whether—

7 ‘‘(A) the economic vitality and development 

8 of the corridor, or the end markets served by

9 the corridor, may be constrained by lack of ade10 quate or reasonably priced electricity; 

11 ‘‘(B)(i) economic growth in the corridor, or 

12 the end markets served by the corridor, may be 

13 jeopardized by reliance on limited sources of en14 ergy; and 

15 ‘‘(ii) a diversification of supply is war16 ranted; 

17 ‘‘(C) the energy independence of the 

18 United States would be served by the designa19 tion; 

20 ‘‘(D) the designation would be in the inter21 est of national energy policy; and 

22 ‘‘(E) the designation would enhance na23 tional defense and homeland security. 

24 ‘‘(b) CONSTRUCTION PERMIT.—Except as provided 

25 in subsection (i), the Commission is authorized, after no-
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1 tice and an opportunity for hearing, to issue a permit or 

2 permits for the construction or modification of electric 

3 transmission facilities in a national interest electric trans4 mission corridor designated by the Secretary under sub5 section (a) if the Commission finds that—

6 ‘‘(1)(A) a State in which the transmission fa7 cilities are to be constructed or modified is without 

8 authority to—

9 ‘‘(i) approve the siting of the facilities; or 

10 ‘‘(ii) consider the interstate benefits ex11 pected to be achieved by the proposed construc12 tion or modification of transmission facilities in 

13 the State; 

14 ‘‘(B) the applicant for a permit is a transmit15 ting utility under this Act but does not qualify to 

16 apply for a permit or siting approval for the pro17 posed project in a State because the applicant does 

18 not serve end-use customers in the State; or 

19 ‘‘(C) a State commission or other entity that 

20 has authority to approve the siting of the facilities 

21 has—

22 ‘‘(i) withheld approval for more than 1 

23 year after the filing of an application pursuant 

24 to applicable law seeking approval or 1 year 

25 after the designation of the relevant national in-
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1 terest electric transmission corridor, whichever 

2 is later; or 

3 ‘‘(ii) conditioned its approval in such a 

4 manner that the proposed construction or modi5 fication will not significantly reduce trans6 mission congestion in interstate commerce or is 

7 not economically feasible; 

8 ‘‘(2) the facilities to be authorized by the per9 mit will be used for the transmission of electric en10 ergy in interstate commerce; 

11 ‘‘(3) the proposed construction or modification 

12 is consistent with the public interest; 

13 ‘‘(4) the proposed construction or modification 

14 will significantly reduce transmission congestion in 

15 interstate commerce and protects or benefits con16 sumers; and 

17 ‘‘(5) the proposed construction or modification 

18 is consistent with sound national energy policy and 

19 will enhance energy independence. 

20 ‘‘(c) PERMIT APPLICATIONS.—Permit applications 

21 under subsection (b) shall be made in writing to the Com22 mission. The Commission shall issue rules setting forth 

23 the form of the application, the information to be con24 tained in the application, and the manner of service of no25 tice of the permit application upon interested persons. 
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1 ‘‘(d) COMMENTS.—In any proceeding before the 

2 Commission under subsection (b), the Commission shall 

3 afford each State in which a transmission facility covered 

4 by the permit is or will be located, each affected Federal 

5 agency and Indian tribe, private property owners, and 

6 other interested persons, a reasonable opportunity to 

7 present their views and recommendations with respect to 

8 the need for and impact of a facility covered by the permit. 

9 ‘‘(e) RIGHTS-OF-WAY.—In the case of a permit under 

10 subsection (b) for electric transmission facilities to be lo11 cated on property other than property owned by the 

12 United States or a State, if the permit holder cannot ac13 quire by contract, or is unable to agree with the owner 

14 of the property to the compensation to be paid for, the 

15 necessary right-of-way to construct or modify such trans16 mission facilities, the permit holder may acquire the right17 of-way by the exercise of the right of eminent domain in 

18 the district court of the United States for the district in 

19 which the property concerned is located, or in the appro20 priate court of the State in which the property is located. 

21 The practice and procedure in any action or proceeding 

22 for that purpose in the district court of the United States 

23 shall conform as nearly as may be with the practice and 

24 procedure in similar action or proceeding in the courts of 

25 the State where the property is situated. 
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1 ‘‘(f) STATE LAW.—Nothing in this section shall pre2 clude any person from constructing or modifying any 

3 transmission facility pursuant to State law. 

4 ‘‘(g) COMPENSATION.—Any exercise of eminent do5 main authority pursuant to this section shall be considered 

6 a taking of private property for which just compensation 

7 is due. Just compensation shall be an amount equal to 

8 the full fair market value of the property taken on the 

9 date of the exercise of eminent domain authority, except 

10 that the compensation shall exceed fair market value if 

11 necessary to make the landowner whole for decreases in 

12 the value of any portion of the land not subject to eminent 

13 domain. Any parcel of land acquired by eminent domain 

14 under this subsection shall be transferred back to the 

15 owner from whom it was acquired (or his heirs or assigns) 

16 if the land is not used for the construction or modification 

17 of electric transmission facilities within a reasonable pe18 riod of time after the acquisition. Other than construction, 

19 modification, operation, or maintenance of electric trans20 mission facilities and related facilities, property acquired 

21 under subsection (e) may not be used for any purpose (in22 cluding use for any heritage area, recreational trail, or 

23 park) without the consent of the owner of the parcel from 

24 whom the property was acquired (or the owner’s heirs or 

25 assigns). 
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1 ‘‘(h) COORDINATION OF FEDERAL AUTHORIZATIONS

2 FOR TRANSMISSION AND DISTRIBUTION FACILITIES.—

3 ‘‘(1) LEAD AGENCY.—If an applicant, or pro4 spective applicant, for a Federal authorization re5 lated to an electric transmission or distribution facil6 ity so requests, the Department of Energy (DOE) 

7 shall act as the lead agency for purposes of coordi8 nating all applicable Federal authorizations and re9 lated environmental reviews of the facility. For pur10 poses of this subsection, the term ‘Federal author11 ization’ means any authorization required under 

12 Federal law in order to site a transmission or dis13 tribution facility, including but not limited to such 

14 permits, special use authorizations, certifications, 

15 opinions, or other approvals as may be required, 

16 whether issued by a Federal or a State agency. To 

17 the maximum extent practicable under applicable 

18 Federal law, the Secretary of Energy shall coordi19 nate this Federal authorization and review process 

20 with any Indian tribes, multi-State entities, and 

21 State agencies that are responsible for conducting 

22 any separate permitting and environmental reviews 

23 of the facility, to ensure timely and efficient review 

24 and permit decisions. 
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1 ‘‘(2) AUTHORITY TO SET DEADLINES.—As lead 

2 agency, the Department of Energy, in consultation 

3 with agencies responsible for Federal authorizations 

4 and, as appropriate, with Indian tribes, multi-State 

5 entities, and State agencies that are willing to co6 ordinate their own separate permitting and environ7 mental reviews with the Federal authorization and

8 environmental reviews, shall establish prompt and 

9 binding intermediate milestones and ultimate dead10 lines for the review of, and Federal authorization de11 cisions relating to, the proposed facility. The Sec12 retary of Energy shall ensure that once an applica13 tion has been submitted with such data as the Sec14 retary considers necessary, all permit decisions and 

15 related environmental reviews under all applicable 

16 Federal laws shall be completed within 1 year or, 

17 if a requirement of another provision of Federal law 

18 makes this impossible, as soon thereafter as is prac19 ticable. The Secretary of Energy also shall provide 

20 an expeditious pre-application mechanism for pro21 spective applicants to confer with the agencies in22 volved to have each such agency determine and com23 municate to the prospective applicant within 60 days 

24 of when the prospective applicant submits a request 

25 for such information concerning—
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1 ‘‘(A) the likelihood of approval for a poten2 tial facility; and 

3 ‘‘(B) key issues of concern to the agencies 

4 and public. 

5 ‘‘(3) CONSOLIDATED ENVIRONMENTAL REVIEW

6 AND RECORD OF DECISION.—As lead agency head, 

7 the Secretary of Energy, in consultation with the af8 fected agencies, shall prepare a single environmental 

9 review document, which shall be used as the basis 

10 for all decisions on the proposed project under Fed11 eral law. The document may be an environmental as12 sessment or environmental impact statement under 

13 the National Environmental Policy Act of 1969 if 

14 warranted, or such other form of analysis as may be 

15 warranted. The Secretary of Energy and the heads 

16 of other agencies shall streamline the review and 

17 permitting of transmission and distribution facilities 

18 within corridors designated under section 503 of the 

19 Federal Land Policy and Management Act (43 

20 U.S.C. 1763) by fully taking into account prior anal21 yses and decisions relating to the corridors. Such 

22 document shall include consideration by the relevant 

23 agencies of any applicable criteria or other matters 

24 as required under applicable laws. 
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1 ‘‘(4) APPEALS.—In the event that any agency 

2 has denied a Federal authorization required for a 

3 transmission or distribution facility, or has failed to 

4 act by the deadline established by the Secretary pur5 suant to this section for deciding whether to issue 

6 the authorization, the applicant or any State in 

7 which the facility would be located may file an ap8 peal with the Secretary, who shall, in consultation 

9 with the affected agency, review the denial or take 

10 action on the pending application. Based on the 

11 overall record and in consultation with the affected 

12 agency, the Secretary may then either issue the nec13 essary authorization with any appropriate condi14 tions, or deny the application. The Secretary shall 

15 issue a decision within 90 days of the filing of the 

16 appeal. In making a decision under this paragraph, 

17 the Secretary shall comply with applicable require18 ments of Federal law, including any requirements of 

19 the Endangered Species Act, the Clean Water Act, 

20 the National Forest Management Act, the National 

21 Environmental Policy Act of 1969, and the Federal 

22 Land Policy and Management Act. 

23 ‘‘(5) CONFORMING REGULATIONS AND MEMO24 RANDA OF UNDERSTANDING.—Not later than 18 

25 months after the date of enactment of this section, 
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1 the Secretary of Energy shall issue any regulations 

2 necessary to implement this subsection. Not later 

3 than 1 year after the date of enactment of this sec4 tion, the Secretary and the heads of all Federal 

5 agencies with authority to issue Federal authoriza6 tions shall enter into Memoranda of Understanding 

7 to ensure the timely and coordinated review and per8 mitting of electricity transmission and distribution 

9 facilities. The head of each Federal agency with au10 thority to issue a Federal authorization shall des11 ignate a senior official responsible for, and dedicate 

12 sufficient other staff and resources to ensure, full 

13 implementation of the DOE regulations and any 

14 Memoranda. Interested Indian tribes, multi-State 

15 entities, and State agencies may enter such Memo16 randa of Understanding. 

17 ‘‘(6) DURATION AND RENEWAL.—Each Federal 

18 land use authorization for an electricity transmission 

19 or distribution facility shall be issued—

20 ‘‘(A) for a duration, as determined by the 

21 Secretary of Energy, commensurate with the 

22 anticipated use of the facility, and 

23 ‘‘(B) with appropriate authority to manage 

24 the right-of-way for reliability and environ25 mental protection. 
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1 Upon the expiration of any such authorization (in2 cluding an authorization issued prior to enactment 

3 of this section), the authorization shall be reviewed 

4 for renewal taking fully into account reliance on 

5 such electricity infrastructure, recognizing its impor6 tance for public health, safety and economic welfare 

7 and as a legitimate use of Federal lands. 

8 ‘‘(7) MAINTAINING AND ENHANCING THE

9 TRANSMISSION INFRASTRUCTURE.—In exercising the 

10 responsibilities under this section, the Secretary of 

11 Energy shall consult regularly with the Federal En12 ergy Regulatory Commission (FERC), FERC-ap13 proved electric reliability organizations (including re14 lated regional entities), and FERC-approved Re15 gional Transmission Organizations and Independent 

16 System Operators. 

17 ‘‘(i) INTERSTATE COMPACTS.—The consent of Con18 gress is hereby given for 3 or more contiguous States to 

19 enter into an interstate compact, subject to approval by 

20 Congress, establishing regional transmission siting agen21 cies to facilitate siting of future electric energy trans22 mission facilities within such States and to carry out the 

23 electric energy transmission siting responsibilities of such 

24 States. The Secretary of Energy may provide technical as25 sistance to regional transmission siting agencies estab-
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1 lished under this subsection. Such regional transmission 

2 siting agencies shall have the authority to review, certify, 

3 and permit siting of transmission facilities, including fa4 cilities in national interest electric transmission corridors 

5 (other than facilities on property owned by the United 

6 States). The Commission shall have no authority to issue 

7 a permit for the construction or modification of electric 

8 transmission facilities within a State that is a party to 

9 a compact, unless the members of a compact are in dis10 agreement and the Secretary makes, after notice and an 

11 opportunity for a hearing, the finding described in section 

12 (b)(1)(C). 

13 ‘‘(j) SAVINGS CLAUSE.—Nothing in this section shall 

14 be construed to affect any requirement of the environ15 mental laws of the United States, including, but not lim16 ited to, the National Environmental Policy Act of 1969. 

17 Subsection (h)(4) of this section shall not apply to any 

18 Congressionally-designated components of the National 

19 Wilderness Preservation System, the National Wild and 

20 Scenic Rivers System, or the National Park system (in21 cluding National Monuments therein). 

22 ‘‘(k) ERCOT.—This section shall not apply within 

23 the area referred to in section 212(k)(2)(A).’’. 

24 (b) REPORTS TO CONGRESS ON CORRIDORS AND

25 RIGHTS OF WAY ON FEDERAL LANDS.—The Secretary of 
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1 the Interior, the Secretary of Energy, the Secretary of Ag2 riculture, and the Chairman of the Council on Environ3 mental Quality shall, within 90 days of the date of enact4 ment of this subsection, submit a joint report to Congress 

5 identifying each of the following: 

6 (1) All existing designated transmission and 

7 distribution corridors on Federal land and the status

8 of work related to proposed transmission and dis9 tribution corridor designations under Title V of the 

10 Federal Land Policy and Management Act (43 

11 U.S.C. 1761 et seq.), the schedule for completing 

12 such work, any impediments to completing the work, 

13 and steps that Congress could take to expedite the 

14 process. 

15 (2) The number of pending applications to lo16 cate transmission and distribution facilities on Fed17 eral lands, key information relating to each such fa18 cility, how long each application has been pending, 

19 the schedule for issuing a timely decision as to each 

20 facility, and progress in incorporating existing and 

21 new such rights-of-way into relevant land use and 

22 resource management plans or their equivalent. 

23 (3) The number of existing transmission and 

24 distribution rights-of-way on Federal lands that will 

25 come up for renewal within the following 5-, 10-, 
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1 and 15-year periods, and a description of how the 

2 Secretaries plan to manage such renewals.

3 SEC. 1222. THIRD-PARTY FINANCE. 

4 (a) EXISTING FACILITIES.—The Secretary of Energy 

5 (hereinafter in this section referred to as the ‘‘Secretary’’), 

6 acting through the Administrator of the Western Area 

7 Power Administration (hereinafter in this section referred 

8 to as ‘‘WAPA’’), or through the Administrator of the 

9 Southwestern Power Administration (hereinafter in this 

10 section referred to as ‘‘SWPA’’), or both, may design, de11 velop, construct, operate, maintain, or own, or participate 

12 with other entities in designing, developing, constructing, 

13 operating, maintaining, or owning, an electric power 

14 transmission facility and related facilities (‘‘Project’’) 

15 needed to upgrade existing transmission facilities owned 

16 by SWPA or WAPA if the Secretary of Energy, in con17 sultation with the applicable Administrator, determines 

18 that the proposed Project—

19 (1)(A) is located in a national interest electric 

20 transmission corridor designated under section 

21 216(a) of the Federal Power Act and will reduce 

22 congestion of electric transmission in interstate com23 merce; or 
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1 (B) is necessary to accommodate an actual or 

2 projected increase in demand for electric trans3 mission capacity; 

4 (2) is consistent with—

5 (A) transmission needs identified, in a 

6 transmission expansion plan or otherwise, by 

7 the appropriate Regional Transmission Organi8 zation or Independent System Operator (as de9 fined in the Federal Power Act), if any, or ap10 proved regional reliability organization; and 

11 (B) efficient and reliable operation of the 

12 transmission grid; and 

13 (3) would be operated in conformance with pru14 dent utility practice. 

15 (b) NEW FACILITIES.—The Secretary, acting 

16 through WAPA or SWPA, or both, may design, develop, 

17 construct, operate, maintain, or own, or participate with 

18 other entities in designing, developing, constructing, oper19 ating, maintaining, or owning, a new electric power trans20 mission facility and related facilities (‘‘Project’’) located 

21 within any State in which WAPA or SWPA operates if 

22 the Secretary, in consultation with the applicable Adminis23 trator, determines that the proposed Project—

24 (1)(A) is located in an area designated under 

25 section 216(a) of the Federal Power Act and will re-
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1 duce congestion of electric transmission in interstate 

2 commerce; or 

3 (B) is necessary to accommodate an actual or 

4 projected increase in demand for electric trans5 mission capacity; 

6 (2) is consistent with—

7 (A) transmission needs identified, in a 

8 transmission expansion plan or otherwise, by 

9 the appropriate Regional Transmission Organi10 zation or Independent System Operator, if any, 

11 or approved regional reliability organization; 

12 and 

13 (B) efficient and reliable operation of the 

14 transmission grid; 

15 (3) will be operated in conformance with pru16 dent utility practice; 

17 (4) will be operated by, or in conformance with 

18 the rules of, the appropriate (A) Regional Trans19 mission Organization or Independent System Oper20 ator, if any, or (B) if such an organization does not 

21 exist, regional reliability organization; and 

22 (5) will not duplicate the functions of existing 

23 transmission facilities or proposed facilities which 

24 are the subject of ongoing or approved siting and re25 lated permitting proceedings. 
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1 (c) OTHER FUNDS.—

2 (1) IN GENERAL.—In carrying out a Project 

3 under subsection (a) or (b), the Secretary may ac4 cept and use funds contributed by another entity for 

5 the purpose of carrying out the Project. 

6 (2) AVAILABILITY.—The contributed funds 

7 shall be available for expenditure for the purpose of 

8 carrying out the Project—

9 (A) without fiscal year limitation; and 

10 (B) as if the funds had been appropriated 

11 specifically for that Project. 

12 (3) ALLOCATION OF COSTS.—In carrying out a 

13 Project under subsection (a) or (b), any costs of the 

14 Project not paid for by contributions from another 

15 entity shall be collected through rates charged to 

16 customers using the new transmission capability pro17 vided by the Project and allocated equitably among 

18 these project beneficiaries using the new trans19 mission capability. 

20 (d) RELATIONSHIP TO OTHER LAWS.—Nothing in 

21 this section affects any requirement of—

22 (1) any Federal environmental law, including 

23 the National Environmental Policy Act of 1969 (42 

24 U.S.C. 4321 et seq.); 
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1 (2) any Federal or State law relating to the 

2 siting of energy facilities; or 

3 (3) any existing authorizing statutes. 

4 (e) SAVINGS CLAUSE.—Nothing in this section shall 

5 constrain or restrict an Administrator in the utilization 

6 of other authority delegated to the Administrator of 

7 WAPA or SWPA. 

8 (f) SECRETARIAL DETERMINATIONS.—Any deter9 mination made pursuant to subsection (a) or (b) shall be 

10 based on findings by the Secretary using the best available 

11 data. 

12 (g) LIMITATIONS.—The Secretary shall not accept 

13 and use more than $100,000,000 under subsection (c)(1) 

14 for the period encompassing fiscal years 2005 through 

15 2013. 

16 (h) EFFECTIVE DATE.—This section takes effect on 

17 October 1, 2004. 

18 SEC. 1223. TRANSMISSION SYSTEM MONITORING. 

19 Within 6 months after the date of enactment of this 

20 Act, the Secretary of Energy and the Federal Energy Reg21 ulatory Commission shall study and report to Congress on 

22 the steps which must be taken to establish a system to 

23 make available to all transmission system owners and Re24 gional Transmission Organizations (as defined in the Fed25 eral Power Act) within the Eastern and Western Inter-
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1 connections real-time information on the functional status 

2 of all transmission lines within such Interconnections. In 

3 such study, the Commission shall assess technical means 

4 for implementing such transmission information system 

5 and identify the steps the Commission or Congress must 

6 take to require the implementation of such system. 

7 SEC. 1224. ADVANCED TRANSMISSION TECHNOLOGIES. 

8 (a) AUTHORITY.—The Federal Energy Regulatory 

9 Commission, in the exercise of its authorities under the

10 Federal Power Act and the Public Utility Regulatory Poli11 cies Act of 1978, shall encourage the deployment of ad12 vanced transmission technologies. 

13 (b) DEFINITION.—For the purposes of this section, 

14 the term ‘‘advanced transmission technologies’’ means 

15 technologies that increase the capacity, efficiency, or reli16 ability of existing or new transmission facilities, including, 

17 but not limited to—

18 (1) high-temperature lines (including super19 conducting cables); 

20 (2) underground cables; 

21 (3) advanced conductor technology (including 

22 advanced composite conductors, high-temperature 

23 low-sag conductors, and fiber optic temperature 

24 sensing conductors); 
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1 (4) high-capacity ceramic electric wire, connec2 tors, and insulators; 

3 (5) optimized transmission line configurations 

4 (including multiple phased transmission lines); 

5 (6) modular equipment; 

6 (7) wireless power transmission; 

7 (8) ultra-high voltage lines; 

8 (9) high-voltage DC technology; 

9 (10) flexible AC transmission systems; 

10 (11) energy storage devices (including pumped 

11 hydro, compressed air, superconducting magnetic en12 ergy storage, flywheels, and batteries); 

13 (12) controllable load; 

14 (13) distributed generation (including PV, fuel 

15 cells, microturbines); 

16 (14) enhanced power device monitoring; 

17 (15) direct system state sensors; 

18 (16) fiber optic technologies; 

19 (17) power electronics and related software (in20 cluding real time monitoring and analytical soft21 ware); and 

22 (18) any other technologies the Commission 

23 considers appropriate. 

24 (c) OBSOLETE OR IMPRACTICABLE TECH25 NOLOGIES.—The Commission is authorized to cease en-
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1 couraging the deployment of any technology described in 

2 this section on a finding that such technology has been 

3 rendered obsolete or otherwise impracticable to deploy. 

4 SEC. 1225. ELECTRIC TRANSMISSION AND DISTRIBUTION 

5 PROGRAMS. 

6 (a) ELECTRIC TRANSMISSION AND DISTRIBUTION

7 PROGRAM.—The Secretary of Energy (hereinafter in this 

8 section referred to as the ‘‘Secretary’’) acting through the 

9 Director of the Office of Electric Transmission and Dis10 tribution shall establish a comprehensive research, devel11 opment, demonstration and commercial application pro12 gram to promote improved reliability and efficiency of 

13 electrical transmission and distribution systems. This pro14 gram shall include—

15 (1) advanced energy delivery and storage tech16 nologies, materials, and systems, including new 

17 transmission technologies, such as flexible alter18 nating current transmission systems, composite con19 ductor materials and other technologies that enhance 

20 reliability, operational flexibility, or power-carrying 

21 capability; 

22 (2) advanced grid reliability and efficiency tech23 nology development; 

24 (3) technologies contributing to significant load 

25 reductions; 
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1 (4) advanced metering, load management, and 

2 control technologies; 

3 (5) technologies to enhance existing grid compo4 nents; 

5 (6) the development and use of high-tempera6 ture superconductors to—

7 (A) enhance the reliability, operational 

8 flexibility, or power-carrying capability of elec9 tric transmission or distribution systems; or 

10 (B) increase the efficiency of electric en11 ergy generation, transmission, distribution, or 

12 storage systems; 

13 (7) integration of power systems, including sys14 tems to deliver high-quality electric power, electric 

15 power reliability, and combined heat and power; 

16 (8) supply of electricity to the power grid by 

17 small scale, distributed and residential-based power 

18 generators; 

19 (9) the development and use of advanced grid 

20 design, operation and planning tools; 

21 (10) any other infrastructure technologies, as 

22 appropriate; and 

23 (11) technology transfer and education. 

24 (b) PROGRAM PLAN.—Not later than 1 year after the 

25 date of the enactment of this legislation, the Secretary, 
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1 in consultation with other appropriate Federal agencies, 

2 shall prepare and transmit to Congress a 5-year program 

3 plan to guide activities under this section. In preparing 

4 the program plan, the Secretary may consult with utilities, 

5 energy services providers, manufacturers, institutions of 

6 higher education, other appropriate State and local agen7 cies, environmental organizations, professional and tech8 nical societies, and any other persons the Secretary con9 siders appropriate. 

10 (c) IMPLEMENTATION.—The Secretary shall consider 

11 implementing this program using a consortium of indus12 try, university and national laboratory participants. 

13 (d) REPORT.—Not later than 2 years after the trans14 mittal of the plan under subsection (b), the Secretary shall 

15 transmit a report to Congress describing the progress 

16 made under this section and identifying any additional re17 sources needed to continue the development and commer18 cial application of transmission and distribution infra19 structure technologies. 

20 (e) POWER DELIVERY RESEARCH INITIATIVE.—

21 (1) IN GENERAL.—The Secretary shall establish 

22 a research, development, demonstration, and com23 mercial application initiative specifically focused on 

24 power delivery utilizing components incorporating 

25 high temperature superconductivity. 
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1 (2) GOALS.—The goals of this initiative shall be 

2 to—

3 (A) establish facilities to develop high tem4 perature superconductivity power applications 

5 in partnership with manufacturers and utilities; 

6 (B) provide technical leadership for estab7 lishing reliability for high temperature super8 conductivity power applications including suit9 able modeling and analysis; 

10 (C) facilitate commercial transition toward 

11 direct current power transmission, storage, and 

12 use for high power systems utilizing high tem13 perature superconductivity; and 

14 (D) facilitate the integration of very low 

15 impedance high temperature superconducting 

16 wires and cables in existing electric networks to 

17 improve system performance, power flow control 

18 and reliability. 

19 (3) REQUIREMENTS.—The initiative shall in20 clude—

21 (A) feasibility analysis, planning, research, 

22 and design to construct demonstrations of 

23 superconducting links in high power, direct cur24 rent and controllable alternating current trans25 mission systems; 
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1 (B) public-private partnerships to dem2 onstrate deployment of high temperature super3 conducting cable into testbeds simulating a re4 alistic transmission grid and under varying 

5 transmission conditions, including actual grid 

6 insertions; and 

7 (C) testbeds developed in cooperation with 

8 national laboratories, industries, and univer9 sities to demonstrate these technologies, pre10 pare the technologies for commercial introduc11 tion, and address cost or performance road12 blocks to successful commercial use. 

13 (4) AUTHORIZATION OF APPROPRIATIONS.—For 

14 purposes of carrying out this subsection, there are 

15 authorized to be appropriated—

16 (A) for fiscal year 2004, $15,000,000; 

17 (B) for fiscal year 2005, $20,000,000; 

18 (C) for fiscal year 2006, $30,000,000; 

19 (D) for fiscal year 2007, $35,000,000; and 

20 (E) for fiscal year 2008, $40,000,000. 

21 SEC. 1226. ADVANCED POWER SYSTEM TECHNOLOGY IN22 CENTIVE PROGRAM. 

23 (a) PROGRAM.—The Secretary of Energy is author24 ized to establish an Advanced Power System Technology 

25 Incentive Program to support the deployment of certain 
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1 advanced power system technologies and to improve and 

2 protect certain critical governmental, industrial, and com3 mercial processes. Funds provided under this section shall 

4 be used by the Secretary to make incentive payments to 

5 eligible owners or operators of advanced power system 

6 technologies to increase power generation through en7 hanced operational, economic, and environmental perform8 ance. Payments under this section may only be made upon 

9 receipt by the Secretary of an incentive payment applica10 tion establishing an applicant as either—

11 (1) a qualifying advanced power system tech12 nology facility; or 

13 (2) a qualifying security and assured power fa14 cility. 

15 (b) INCENTIVES.—Subject to availability of funds, a 

16 payment of 1.8 cents per kilowatt-hour shall be paid to 

17 the owner or operator of a qualifying advanced power sys18 tem technology facility under this section for electricity 

19 generated at such facility. An additional 0.7 cents per kilo20 watt-hour shall be paid to the owner or operator of a quali21 fying security and assured power facility for electricity 

22 generated at such facility. Any facility qualifying under 

23 this section shall be eligible for an incentive payment for 

24 up to, but not more than, the first 10,000,000 kilowatt25 hours produced in any fiscal year. 
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1 (c) ELIGIBILITY.—For purposes of this section: 

2 (1) QUALIFYING ADVANCED POWER SYSTEM

3 TECHNOLOGY FACILITY.—The term ‘‘qualifying ad4 vanced power system technology facility’’ means a 

5 facility using an advanced fuel cell, turbine, or hy6 brid power system or power storage system to gen7 erate or store electric energy. 

8 (2) QUALIFYING SECURITY AND ASSURED

9 POWER FACILITY.—The term ‘‘qualifying security 

10 and assured power facility’’ means a qualifying ad11 vanced power system technology facility determined 

12 by the Secretary of Energy, in consultation with the 

13 Secretary of Homeland Security, to be in critical 

14 need of secure, reliable, rapidly available, high-qual15 ity power for critical governmental, industrial, or 

16 commercial applications. 

17 (d) AUTHORIZATION.—There are authorized to be ap18 propriated to the Secretary of Energy for the purposes 

19 of this section, $10,000,000 for each of the fiscal years 

20 2004 through 2010. 

21 SEC. 1227. OFFICE OF ELECTRIC TRANSMISSION AND DIS22 TRIBUTION. 

23 (a) CREATION OF AN OFFICE OF ELECTRIC TRANS24 MISSION AND DISTRIBUTION.—Title II of the Department 

25 of Energy Organization Act (42 U.S.C. 7131 et seq.) (as 
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1 amended by section 502(a)) is amended by inserting the 

2 following after section 217, as added by title V: 

3 ‘‘SEC. 218. OFFICE OF ELECTRIC TRANSMISSION AND DIS4 TRIBUTION. 

5 ‘‘(a) ESTABLISHMENT.—There is established within 

6 the Department an Office of Electric Transmission and 

7 Distribution. This Office shall be headed by a Director, 

8 subject to the authority of the Secretary. The Director 

9 shall be appointed by the Secretary. The Director shall 

10 be compensated at the annual rate prescribed for level IV 

11 of the Executive Schedule under section 5315 of title 5, 

12 United States Code. 

13 ‘‘(b) DIRECTOR.—The Director shall—

14 ‘‘(1) coordinate and develop a comprehensive, 

15 multi-year strategy to improve the Nation’s elec16 tricity transmission and distribution; 

17 ‘‘(2) implement or, where appropriate, coordi18 nate the implementation of, the recommendations 

19 made in the Secretary’s May 2002 National Trans20 mission Grid Study; 

21 ‘‘(3) oversee research, development, and dem22 onstration to support Federal energy policy related 

23 to electricity transmission and distribution; 
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1 ‘‘(4) grant authorizations for electricity import 

2 and export pursuant to section 202(c), (d), (e), and 

3 (f) of the Federal Power Act (16 U.S.C. 824a); 

4 ‘‘(5) perform other functions, assigned by the 

5 Secretary, related to electricity transmission and dis6 tribution; and 

7 ‘‘(6) develop programs for workforce training in 

8 power and transmission engineering.’’. 

9 (b) CONFORMING AMENDMENTS.—(1) The table of 

10 contents of the Department of Energy Organization Act 

11 (42 U.S.C. 7101 note) is amended by inserting after the 

12 item relating to section 217 the following new item:

‘‘Sec. 218. Office of Electric Transmission and Distribution.’’.

13 (2) Section 5315 of title 5, United States Code, is 

14 amended by inserting after the item relating to ‘‘Inspector 

15 General, Department of Energy.’’ the following: 

16 ‘‘Director, Office of Electric Transmission and 

17 Distribution, Department of Energy.’’. 

18 Subtitle C—Transmission 

19 Operation Improvements 

20 SEC. 1231. OPEN NONDISCRIMINATORY ACCESS. 

21 Part II of the Federal Power Act (16 U.S.C. 824 et 

22 seq.) is amended by inserting after section 211 the fol23 lowing new section: 
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1 ‘‘SEC. 211A. OPEN ACCESS BY UNREGULATED TRANSMIT2 TING UTILITIES. 

3 ‘‘(a) TRANSMISSION SERVICES.—Subject to section 

4 212(h), the Commission may, by rule or order, require an 

5 unregulated transmitting utility to provide transmission 

6 services—

7 ‘‘(1) at rates that are comparable to those that 

8 the unregulated transmitting utility charges itself; 

9 and 

10 ‘‘(2) on terms and conditions (not relating to 

11 rates) that are comparable to those under which 

12 such unregulated transmitting utility provides trans13 mission services to itself and that are not unduly 

14 discriminatory or preferential. 

15 ‘‘(b) EXEMPTION.—The Commission shall exempt 

16 from any rule or order under this section any unregulated 

17 transmitting utility that—

18 ‘‘(1) sells no more than 4,000,000 megawatt 

19 hours of electricity per year; or 

20 ‘‘(2) does not own or operate any transmission 

21 facilities that are necessary for operating an inter22 connected transmission system (or any portion 

23 thereof); or 

24 ‘‘(3) meets other criteria the Commission deter25 mines to be in the public interest. 
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1 ‘‘(c) LOCAL DISTRIBUTION FACILITIES.—The re2 quirements of subsection (a) shall not apply to facilities 

3 used in local distribution. 

4 ‘‘(d) EXEMPTION TERMINATION.—Whenever the 

5 Commission, after an evidentiary hearing held upon a 

6 complaint and after giving consideration to reliability 

7 standards established under section 215, finds on the 

8 basis of a preponderance of the evidence that any exemp9 tion granted pursuant to subsection (b) unreasonably im10 pairs the continued reliability of an interconnected trans11 mission system, it shall revoke the exemption granted to 

12 that transmitting utility. 

13 ‘‘(e) APPLICATION TO UNREGULATED TRANSMIT14 TING UTILITIES.—The rate changing procedures applica15 ble to public utilities under subsections (c) and (d) of sec16 tion 205 are applicable to unregulated transmitting utili17 ties for purposes of this section. 

18 ‘‘(f) REMAND.—In exercising its authority under 

19 paragraph (1) of subsection (a), the Commission may re20 mand transmission rates to an unregulated transmitting 

21 utility for review and revision where necessary to meet the 

22 requirements of subsection (a). 

23 ‘‘(g) OTHER REQUESTS.—The provision of trans24 mission services under subsection (a) does not preclude a 

25 request for transmission services under section 211. 
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1 ‘‘(h) LIMITATION.—The Commission may not require 

2 a State or municipality to take action under this section 

3 that would violate a private activity bond rule for purposes 

4 of section 141 of the Internal Revenue Code of 1986 (26 

5 U.S.C. 141). 

6 ‘‘(i) TRANSFER OF CONTROL OF TRANSMITTING FA7 CILITIES.—Nothing in this section authorizes the Commis8 sion to require an unregulated transmitting utility to 

9 transfer control or operational control of its transmitting 

10 facilities to an RTO or any other Commission-approved 

11 independent transmission organization designated to pro12 vide nondiscriminatory transmission access. 

13 ‘‘(j) DEFINITION.—For purposes of this section, the 

14 term ‘unregulated transmitting utility’ means an entity 

15 that—

16 ‘‘(1) owns or operates facilities used for the 

17 transmission of electric energy in interstate com18 merce; and 

19 ‘‘(2) is an entity described in section 201(f).’’. 

20 SEC. 1232. SENSE OF CONGRESS ON REGIONAL TRANS21 MISSION ORGANIZATIONS. 

22 It is the sense of Congress that, in order to promote 

23 fair, open access to electric transmission service, benefit 

24 retail consumers, facilitate wholesale competition, improve 

25 efficiencies in transmission grid management, promote 
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1 grid reliability, remove opportunities for unduly discrimi2 natory or preferential transmission practices, and provide 

3 for the efficient development of transmission infrastruc4 ture needed to meet the growing demands of competitive 

5 wholesale power markets, all transmitting utilities in inter6 state commerce should voluntarily become members of Re7 gional Transmission Organizations as defined in section 

8 3 of the Federal Power Act. 

9 SEC. 1233. REGIONAL TRANSMISSION ORGANIZATION AP10 PLICATIONS PROGRESS REPORT. 

11 Not later than 120 days after the date of enactment 

12 of this section, the Federal Energy Regulatory Commis13 sion shall submit to Congress a report containing each of 

14 the following: 

15 (1) A list of all regional transmission organiza16 tion applications filed at the Commission pursuant 

17 to subpart F of part 35 of title 18, Code of Federal 

18 Regulations (in this section referred to as ‘‘Order 

19 No. 2000’’), including an identification of each pub20 lic utility and other entity included within the pro21 posed membership of the regional transmission orga22 nization. 

23 (2) A brief description of the status of each 

24 pending regional transmission organization applica25 tion, including a precise explanation of how each 
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1 fails to comply with the minimal requirements of 

2 Order No. 2000 and what steps need to be taken to 

3 bring each application into such compliance. 

4 (3) For any application that has not been fi5 nally approved by the Commission, a detailed de6 scription of every aspect of the application that the 

7 Commission has determined does not conform to the 

8 requirements of Order No. 2000. 

9 (4) For any application that has not been fi10 nally approved by the Commission, an explanation 

11 by the Commission of why the items described pur12 suant to paragraph (3) constitute material non13 compliance with the requirements of the Commis14 sion’s Order No. 2000 sufficient to justify denial of 

15 approval by the Commission. 

16 (5) For all regional transmission organization 

17 applications filed pursuant to the Commission’s 

18 Order No. 2000, whether finally approved or not—

19 (A) a discussion of that regional trans20 mission organization’s efforts to minimize rate 

21 seams between itself and—

22 (i) other regional transmission organi23 zations; and 

24 (ii) entities not participating in a re25 gional transmission organization; 
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1 (B) a discussion of the impact of such 

2 seams on consumers and wholesale competition; 

3 and 

4 (C) a discussion of minimizing cost-shifting 

5 on consumers. 

6 SEC. 1234. FEDERAL UTILITY PARTICIPATION IN REGIONAL 

7 TRANSMISSION ORGANIZATIONS. 

8 (a) DEFINITIONS.—For purposes of this section—

9 (1) APPROPRIATE FEDERAL REGULATORY AU10 THORITY.—The term ‘‘appropriate Federal regu11 latory authority’’ means—

12 (A) with respect to a Federal power mar13 keting agency (as defined in the Federal Power 

14 Act), the Secretary of Energy, except that the 

15 Secretary may designate the Administrator of a 

16 Federal power marketing agency to act as the 

17 appropriate Federal regulatory authority with 

18 respect to the transmission system of that Fed19 eral power marketing agency; and 

20 (B) with respect to the Tennessee Valley 

21 Authority, the Board of Directors of the Ten22 nessee Valley Authority. 

23 (2) FEDERAL UTILITY.—The term ‘‘Federal 

24 utility’’ means a Federal power marketing agency or 

25 the Tennessee Valley Authority. 
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1 (3) TRANSMISSION SYSTEM.—The term ‘‘trans2 mission system’’ means electric transmission facili3 ties owned, leased, or contracted for by the United 

4 States and operated by a Federal utility. 

5 (b) TRANSFER.—The appropriate Federal regulatory 

6 authority is authorized to enter into a contract, agreement 

7 or other arrangement transferring control and use of all 

8 or part of the Federal utility’s transmission system to an 

9 RTO or ISO (as defined in the Federal Power Act), ap10 proved by the Federal Energy Regulatory Commission. 

11 Such contract, agreement or arrangement shall include—

12 (1) performance standards for operation and 

13 use of the transmission system that the head of the 

14 Federal utility determines necessary or appropriate, 

15 including standards that assure recovery of all the 

16 Federal utility’s costs and expenses related to the 

17 transmission facilities that are the subject of the 

18 contract, agreement or other arrangement; consist19 ency with existing contracts and third-party financ20 ing arrangements; and consistency with said Federal 

21 utility’s statutory authorities, obligations, and limi22 tations; 

23 (2) provisions for monitoring and oversight by 

24 the Federal utility of the RTO’s or ISO’s fulfillment 

25 of the terms and conditions of the contract, agree-
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1 ment or other arrangement, including a provision for 

2 the resolution of disputes through arbitration or 

3 other means with the regional transmission organi4 zation or with other participants, notwithstanding 

5 the obligations and limitations of any other law re6 garding arbitration; and 

7 (3) a provision that allows the Federal utility to 

8 withdraw from the RTO or ISO and terminate the

9 contract, agreement or other arrangement in accord10 ance with its terms. 

11 Neither this section, actions taken pursuant to it, nor any 

12 other transaction of a Federal utility using an RTO or 

13 ISO shall confer upon the Federal Energy Regulatory 

14 Commission jurisdiction or authority over the Federal util15 ity’s electric generation assets, electric capacity or energy 

16 that the Federal utility is authorized by law to market, 

17 or the Federal utility’s power sales activities. 

18 (c) EXISTING STATUTORY AND OTHER OBLIGA19 TIONS.—

20 (1) SYSTEM OPERATION REQUIREMENTS.—No 

21 statutory provision requiring or authorizing a Fed22 eral utility to transmit electric power or to construct, 

23 operate or maintain its transmission system shall be 

24 construed to prohibit a transfer of control and use 
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1 of its transmission system pursuant to, and subject 

2 to all requirements of subsection (b). 

3 (2) OTHER OBLIGATIONS.—This subsection 

4 shall not be construed to—

5 (A) suspend, or exempt any Federal utility 

6 from, any provision of existing Federal law, in7 cluding but not limited to any requirement or 

8 direction relating to the use of the Federal util9 ity’s transmission system, environmental protec10 tion, fish and wildlife protection, flood control, 

11 navigation, water delivery, or recreation; or 

12 (B) authorize abrogation of any contract 

13 or treaty obligation. 

14 (3) REPEAL.—Section 311 of title III of Appen15 dix B of the Act of October 27, 2000 (Public Law 

16 106–377, section 1(a)(2); 114 Stat. 1441, 1441A–

17 80; 16 U.S.C. 824n) is repealed. 

18 SEC. 1235. STANDARD MARKET DESIGN.

19 (a) REMAND.—The Commission’s proposed rule20 making entitled ‘‘Remedying Undue Discrimination 

21 through Open Access Transmission Service and Standard 

22 Electricity Market Design’’ (Docket No. RM01–12–000) 

23 (‘‘SMD NOPR’’) is remanded to the Commission for re24 consideration. No final rule mandating a standard elec25 tricity market design pursuant to the proposed rule-
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1 making, including any rule or order of general applica2 bility within the scope of the proposed rulemaking, may 

3 be issued before October 31, 2006, or take effect before 

4 December 31, 2006. Any final rule issued by the Commis5 sion pursuant to the proposed rulemaking shall be pre6 ceded by a second notice of proposed rulemaking issued 

7 after the date of enactment of this Act and an opportunity 

8 for public comment. 

9 (b) SAVINGS CLAUSE.—This section shall not be con10 strued to modify or diminish any authority or obligation 

11 the Commission has under this division, the Federal 

12 Power Act, or other applicable law, including, but not lim13 ited to, any authority to—

14 (1) issue any rule or order (of general or par15 ticular applicability) pursuant to any such authority 

16 or obligation; or 

17 (2) act on a filing or filings by 1 or more trans18 mitting utilities for the voluntary formation of a Re19 gional Transmission Organization or Independent 

20 System Operator (as defined in the Federal Power 

21 Act) (and related market structures or rules) or vol22 untary modification of an existing Regional Trans23 mission Organization or Independent System Oper24 ator (and related market structures or rules). 
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1 SEC. 1236. NATIVE LOAD SERVICE OBLIGATION. 

2 Part II of the Federal Power Act (16 U.S.C. 824 et 

3 seq.) is amended by adding at the end the following: 

4 ‘‘SEC. 217. NATIVE LOAD SERVICE OBLIGATION. 

5 ‘‘(a) MEETING SERVICE OBLIGATIONS.—(1) Any 

6 load-serving entity that, as of the date of enactment of 

7 this section—

8 ‘‘(A) owns generation facilities, markets the 

9 output of Federal generation facilities, or holds 

10 rights under 1 or more wholesale contracts to pur11 chase electric energy, for the purpose of meeting a 

12 service obligation, and 

13 ‘‘(B) by reason of ownership of transmission fa14 cilities, or 1 or more contracts or service agreements 

15 for firm transmission service, holds firm trans16 mission rights for delivery of the output of such gen17 eration facilities or such purchased energy to meet 

18 such service obligation, 

19 is entitled to use such firm transmission rights, or, equiva20 lent tradable or financial transmission rights, in order to 

21 deliver such output or purchased energy, or the output of 

22 other generating facilities or purchased energy to the ex23 tent deliverable using such rights, to the extent required 

24 to meet its service obligation. 

25 ‘‘(2) To the extent that all or a portion of the service 

26 obligation covered by such firm transmission rights or 
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1 equivalent tradable or financial transmission rights is 

2 transferred to another load-serving entity, the successor 

3 load-serving entity shall be entitled to use the firm trans4 mission rights or equivalent tradable or financial trans5 mission rights associated with the transferred service obli6 gation. Subsequent transfers to another load-serving enti7 ty, or back to the original load-serving entity, shall be enti8 tled to the same rights. 

9 ‘‘(3) The Commission shall exercise its authority 

10 under this Act in a manner that facilitates the planning 

11 and expansion of transmission facilities to meet the rea12 sonable needs of load-serving entities to satisfy their serv13 ice obligations. 

14 ‘‘(b) ALLOCATION OF TRANSMISSION RIGHTS.—

15 Nothing in this section shall affect any methodology ap16 proved by the Commission prior to September 15, 2003, 

17 for the allocation of transmission rights by an RTO or 

18 ISO that has been authorized by the Commission to allo19 cate transmission rights. 

20 ‘‘(c) CERTAIN TRANSMISSION RIGHTS.—The Com21 mission may exercise authority under this Act to make 

22 transmission rights not used to meet an obligation covered 

23 by subsection (a) available to other entities in a manner 

24 determined by the Commission to be just, reasonable, and 

25 not unduly discriminatory or preferential. 
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1 ‘‘(d) OBLIGATION TO BUILD.—Nothing in this Act 

2 shall relieve a load-serving entity from any obligation 

3 under State or local law to build transmission or distribu4 tion facilities adequate to meet its service obligations. 

5 ‘‘(e) CONTRACTS.—Nothing in this section shall pro6 vide a basis for abrogating any contract or service agree7 ment for firm transmission service or rights in effect as 

8 of the date of the enactment of this subsection. 

9 ‘‘(f) WATER PUMPING FACILITIES.—The Commis10 sion shall ensure that any entity described in section 

11 201(f) that owns transmission facilities used predomi12 nately to support its own water pumping facilities shall 

13 have, with respect to such facilities, protections for trans14 mission service comparable to those provided to load-serv15 ing entities pursuant to this section. 

16 ‘‘(g) ERCOT.—This section shall not apply within 

17 the area referred to in section 212(k)(2)(A). 

18 ‘‘(h) JURISDICTION.—This section does not authorize 

19 the Commission to take any action not otherwise within 

20 its jurisdiction. 

21 ‘‘(i) EFFECT OF EXERCISING RIGHTS.—An entity 

22 that lawfully exercises rights granted under subsection (a) 

23 shall not be considered by such action as engaging in 

24 undue discrimination or preference under this Act. 
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1 ‘‘(j) TVA AREA.—For purposes of subsection 

2 (a)(1)(B), a load-serving entity that is located within the 

3 service area of the Tennessee Valley Authority and that 

4 has a firm wholesale power supply contract with the Ten5 nessee Valley Authority shall be deemed to hold firm 

6 transmission rights for the transmission of such power. 

7 ‘‘(k) DEFINITIONS.—For purposes of this section: 

8 ‘‘(1) The term ‘distribution utility’ means an 

9 electric utility that has a service obligation to end10 users or to a State utility or electric cooperative 

11 that, directly or indirectly, through 1 or more addi12 tional State utilities or electric cooperatives, provides 

13 electric service to end-users. 

14 ‘‘(2) The term ‘load-serving entity’ means a dis15 tribution utility or an electric utility that has a serv16 ice obligation. 

17 ‘‘(3) The term ‘service obligation’ means a re18 quirement applicable to, or the exercise of authority 

19 granted to, an electric utility under Federal, State 

20 or local law or under long-term contracts to provide 

21 electric service to end-users or to a distribution util22 ity. 

23 ‘‘(4) The term ‘State utility’ means a State or 

24 any political subdivision of a State, or any agency, 

25 authority, or instrumentality of any 1 or more of the 
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1 foregoing, or a corporation which is wholly owned, 

2 directly or indirectly, by any 1 or more of the fore3 going, competent to carry on the business of devel4 oping, transmitting, utilizing or distributing power.’’. 

5 SEC. 1237. STUDY ON THE BENEFITS OF ECONOMIC DIS6 PATCH. 

7 (a) STUDY.—The Secretary of Energy, in coordina8 tion and consultation with the States, shall conduct a 

9 study on—

10 (1) the procedures currently used by electric 

11 utilities to perform economic dispatch; 

12 (2) identifying possible revisions to those proce13 dures to improve the ability of nonutility generation 

14 resources to offer their output for sale for the pur15 pose of inclusion in economic dispatch; and 

16 (3) the potential benefits to residential, com17 mercial, and industrial electricity consumers nation18 ally and in each State if economic dispatch proce19 dures were revised to improve the ability of non20 utility generation resources to offer their output for 

21 inclusion in economic dispatch. 

22 (b) DEFINITION.—The term ‘‘economic dispatch’’ 

23 when used in this section means the operation of genera24 tion facilities to produce energy at the lowest cost to reli-
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1 ably serve consumers, recognizing any operational limits 

2 of generation and transmission facilities. 

3 (c) REPORT TO CONGRESS AND THE STATES.—Not 

4 later than 90 days after the date of enactment of this Act, 

5 and on a yearly basis following, the Secretary of Energy 

6 shall submit a report to Congress and the States on the 

7 results of the study conducted under subsection (a), in8 cluding recommendations to Congress and the States for 

9 any suggested legislative or regulatory changes. 

10 Subtitle D—Transmission Rate 

11 Reform 

12 SEC. 1241. TRANSMISSION INFRASTRUCTURE INVESTMENT. 

13 Part II of the Federal Power Act (16 U.S.C. 824 et 

14 seq.) is amended by adding at the end the following: 

15 ‘‘SEC. 218. TRANSMISSION INFRASTRUCTURE INVESTMENT. 

16 ‘‘(a) RULEMAKING REQUIREMENT.—Within 1 year 

17 after the enactment of this section, the Commission shall 

18 establish, by rule, incentive-based (including, but not lim19 ited to performance-based) rate treatments for the trans20 mission of electric energy in interstate commerce by public 

21 utilities for the purpose of benefiting consumers by ensur22 ing reliability and reducing the cost of delivered power by 

23 reducing transmission congestion. Such rule shall—

24 ‘‘(1) promote reliable and economically efficient 

25 transmission and generation of electricity by pro-
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1 moting capital investment in the enlargement, im2 provement, maintenance and operation of facilities 

3 for the transmission of electric energy in interstate 

4 commerce; 

5 ‘‘(2) provide a return on equity that attracts 

6 new investment in transmission facilities (including 

7 related transmission technologies); 

8 ‘‘(3) encourage deployment of transmission 

9 technologies and other measures to increase the ca10 pacity and efficiency of existing transmission facili11 ties and improve the operation of such facilities; and 

12 ‘‘(4) allow recovery of all prudently incurred 

13 costs necessary to comply with mandatory reliability 

14 standards issued pursuant to section 215 of this 

15 Act. 

16 The Commission may, from time to time, revise such rule. 

17 ‘‘(b) ADDITIONAL INCENTIVES FOR RTO PARTICIPA18 TION.—In the rule issued under this section, the Commis19 sion shall, to the extent within its jurisdiction, provide for 

20 incentives to each transmitting utility or electric utility 

21 that joins a Regional Transmission Organization or Inde22 pendent System Operator. Incentives provided by the 

23 Commission pursuant to such rule shall include—
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1 ‘‘(1) recovery of all prudently incurred costs to 

2 develop and participate in any proposed or approved 

3 RTO, ISO, or independent transmission company; 

4 ‘‘(2) recovery of all costs previously approved by 

5 a State commission which exercised jurisdiction over 

6 the transmission facilities prior to the utility’s par7 ticipation in the RTO or ISO, including costs nec8 essary to honor preexisting transmission service con9 tracts, in a manner which does not reduce the reve10 nues the utility receives for transmission services for 

11 a reasonable transition period after the utility joins 

12 the RTO or ISO; 

13 ‘‘(3) recovery as an expense in rates of the 

14 costs prudently incurred to conduct transmission 

15 planning and reliability activities, including the costs 

16 of participating in RTO, ISO and other regional 

17 planning activities and design, study and other 

18 precertification costs involved in seeking permits and 

19 approvals for proposed transmission facilities; 

20 ‘‘(4) a current return in rates for construction 

21 work in progress for transmission facilities and full 

22 recovery of prudently incurred costs for constructing 

23 transmission facilities; 

24 ‘‘(5) formula transmission rates; and 
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1 ‘‘(6) a maximum 15-year accelerated deprecia2 tion on new transmission facilities for rate treatment 

3 purposes. 

4 The Commission shall ensure that any costs recoverable 

5 pursuant to this subsection may be recovered by such util6 ity through the transmission rates charged by such utility 

7 or through the transmission rates charged by the RTO 

8 or ISO that provides transmission service to such utility. 

9 ‘‘(c) JUST AND REASONABLE RATES.—All rates ap10 proved under the rules adopted pursuant to this section, 

11 including any revisions to such rules, are subject to the 

12 requirement of sections 205 and 206 that all rates, 

13 charges, terms, and conditions be just and reasonable and 

14 not unduly discriminatory or preferential.’’.

15 SEC. 1242. VOLUNTARY TRANSMISSION PRICING PLANS. 

16 Part II of the Federal Power Act (16 U.S.C. 824 et 

17 seq.) is amended by adding at the end the following: 

18 ‘‘SEC. 219. VOLUNTARY TRANSMISSION PRICING PLANS. 

19 ‘‘(a) IN GENERAL.—Any transmission provider, in20 cluding an RTO or ISO, may submit to the Commission 

21 a plan or plans under section 205 containing the criteria 

22 for determining the person or persons that will be required 

23 to pay for any construction of new transmission facilities 

24 or expansion, modification or upgrade of transmission fa-
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1 cilities (in this section referred to as ‘transmission service 

2 related expansion’) or new generator interconnection. 

3 ‘‘(b) VOLUNTARY TRANSMISSION PRICING PLANS.—

4 (1) Any plan or plans submitted under subsection (a) shall 

5 specify the method or methods by which costs may be allo6 cated or assigned. Such methods may include, but are not 

7 limited to: 

8 ‘‘(A) directly assigned; 

9 ‘‘(B) participant funded; or 

10 ‘‘(C) rolled into regional or sub-regional rates.

11 ‘‘(2) FERC shall approve a plan or plans submitted 

12 under subparagraph (B) of paragraph (1) if such plan or 

13 plans—

14 ‘‘(A) result in rates that are just and reason15 able and not unduly discriminatory or preferential 

16 consistent with section 205; and 

17 ‘‘(B) ensure that the costs of any transmission 

18 service related expansion or new generator inter19 connection not required to meet applicable reliability 

20 standards established under section 215 are assigned 

21 in a fair manner, meaning that those who benefit 

22 from the transmission service related expansion or 

23 new generator interconnection pay an appropriate 

24 share of the associated costs, provided that—
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1 ‘‘(i) costs may not be assigned or allocated 

2 to an electric utility if the native load customers 

3 of that utility would not have required such 

4 transmission service related expansion or new 

5 generator interconnection absent the request for 

6 transmission service related expansion or new 

7 generator interconnection that necessitated the 

8 investment; 

9 ‘‘(ii) the party requesting such trans10 mission service related expansion or new gener11 ator interconnection shall not be required to 

12 pay for both—

13 ‘‘(I) the assigned cost of the upgrade; 

14 and 

15 ‘‘(II) the difference between—

16 ‘‘(aa) the embedded cost paid for 

17 transmission services (including the 

18 cost of the requested upgrade); and 

19 ‘‘(bb) the embedded cost that 

20 would have been paid absent the up21 grade; and 

22 ‘‘(iii) the party or parties who pay for fa23 cilities necessary for the transmission service 

24 related expansion or new generator interconnec25 tion receives full compensation for its costs for 
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1 the participant funded facilities in the form 

2 of—

3 ‘‘(I) monetary credit equal to the cost 

4 of the participant funded facilities (ac5 counting for the time value of money at 

6 the Gross Domestic Product deflator), 

7 which credit shall be pro-rated in equal in8 stallments over a period of not more than 

9 30 years and shall not exceed in total the 

10 amount of the initial investment, against 

11 the transmission charges that the funding 

12 entity or its assignee is otherwise assessed 

13 by the transmission provider; 

14 ‘‘(II) appropriate financial or physical 

15 rights; or 

16 ‘‘(III) any other method of cost recov17 ery or compensation approved by the Com18 mission. 

19 ‘‘(3) A plan submitted under this section shall apply 

20 only to—

21 ‘‘(A) a contract or interconnection agreement 

22 executed or filed with the Commission after the date 

23 of enactment of this section; or 

24 ‘‘(B) an interconnection agreement pending re25 hearing as of November 1, 2003. 
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1 ‘‘(4) Nothing in this section diminishes or alters the 

2 rights of individual members of an RTO or ISO under 

3 this Act. 

4 ‘‘(5) Nothing in this section shall affect the allocation 

5 of costs or the cost methodology employed by an RTO or 

6 ISO authorized by the Commission to allocate costs (in7 cluding costs for transmission service related expansion or 

8 new generator interconnection) prior to the date of enact9 ment of this section. 

10 ‘‘(6) This section shall not apply within the area re11 ferred to in section 212(k)(2)(A). 

12 ‘‘(7) The term ‘transmission provider’ means a public 

13 utility that owns or operates facilities that provide inter14 connection or transmission service in interstate com15 merce.’’. 

16 Subtitle E—Amendments to PURPA 

17 SEC. 1251. NET METERING AND ADDITIONAL STANDARDS. 

18 (a) ADOPTION OF STANDARDS.—Section 111(d) of 

19 the Public Utility Regulatory Policies Act of 1978 (16 

20 U.S.C. 2621(d)) is amended by adding at the end the fol21 lowing: 

22 ‘‘(11) NET METERING.—Each electric utility 

23 shall make available upon request net metering serv24 ice to any electric consumer that the electric utility 

25 serves. For purposes of this paragraph, the term 
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1 ‘net metering service’ means service to an electric 

2 consumer under which electric energy generated by 

3 that electric consumer from an eligible on-site gener4 ating facility and delivered to the local distribution 

5 facilities may be used to offset electric energy pro6 vided by the electric utility to the electric consumer 

7 during the applicable billing period. 

8 ‘‘(12) FUEL SOURCES.—Each electric utility 

9 shall develop a plan to minimize dependence on 1 

10 fuel source and to ensure that the electric energy it 

11 sells to consumers is generated using a diverse range 

12 of fuels and technologies, including renewable tech13 nologies. 

14 ‘‘(13) FOSSIL FUEL GENERATION EFFI15 CIENCY.—Each electric utility shall develop and im16 plement a 10-year plan to increase the efficiency of 

17 its fossil fuel generation.’’. 

18 (b) COMPLIANCE.—

19 (1) TIME LIMITATIONS.—Section 112(b) of the 

20 Public Utility Regulatory Policies Act of 1978 (16 

21 U.S.C. 2622(b)) is amended by adding at the end 

22 the following: 

23 ‘‘(3)(A) Not later than 2 years after the enactment 

24 of this paragraph, each State regulatory authority (with 

25 respect to each electric utility for which it has ratemaking 
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1 authority) and each nonregulated electric utility shall com2 mence the consideration referred to in section 111, or set 

3 a hearing date for such consideration, with respect to each 

4 standard established by paragraphs (11) through (13) of 

5 section 111(d). 

6 ‘‘(B) Not later than 3 years after the date of the en7 actment of this paragraph, each State regulatory authority 

8 (with respect to each electric utility for which it has rate9 making authority), and each nonregulated electric utility, 

10 shall complete the consideration, and shall make the deter11 mination, referred to in section 111 with respect to each 

12 standard established by paragraphs (11) through (13) of 

13 section 111(d).’’. 

14 (2) FAILURE TO COMPLY.—Section 112(c) of 

15 the Public Utility Regulatory Policies Act of 1978 

16 (16 U.S.C. 2622(c)) is amended by adding at the 

17 end the following: 

18 ‘‘In the case of each standard established by paragraphs 

19 (11) through (13) of section 111(d), the reference con20 tained in this subsection to the date of enactment of this 

21 Act shall be deemed to be a reference to the date of enact22 ment of such paragraphs (11) through (13).’’. 

23 (3) PRIOR STATE ACTIONS.—

24 (A) IN GENERAL.—Section 112 of the 

25 Public Utility Regulatory Policies Act of 1978 
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1 (16 U.S.C. 2622) is amended by adding at the 

2 end the following: 

3 ‘‘(d) PRIOR STATE ACTIONS.—Subsections (b) and 

4 (c) of this section shall not apply to the standards estab5 lished by paragraphs (11) through (13) of section 111(d) 

6 in the case of any electric utility in a State if, before the 

7 enactment of this subsection—

8 ‘‘(1) the State has implemented for such utility 

9 the standard concerned (or a comparable standard);

10 ‘‘(2) the State regulatory authority for such 

11 State or relevant nonregulated electric utility has 

12 conducted a proceeding to consider implementation 

13 of the standard concerned (or a comparable stand14 ard) for such utility; or 

15 ‘‘(3) the State legislature has voted on the im16 plementation of such standard (or a comparable 

17 standard) for such utility.’’. 

18 (B) CROSS REFERENCE.—Section 124 of 

19 such Act (16 U.S.C. 2634) is amended by add20 ing the following at the end thereof: ‘‘In the 

21 case of each standard established by paragraphs 

22 (11) through (13) of section 111(d), the ref23 erence contained in this subsection to the date 

24 of enactment of this Act shall be deemed to be 
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1 a reference to the date of enactment of such 

2 paragraphs (11) through (13).’’. 

3 SEC. 1252. SMART METERING. 

4 (a) IN GENERAL.—Section 111(d) of the Public Utili5 ties Regulatory Policies Act of 1978 (16 U.S.C. 2621(d)) 

6 is amended by adding at the end the following: 

7 ‘‘(14) TIME-BASED METERING AND COMMU8 NICATIONS.—

9 ‘‘(A) Not later than 18 months after the 

10 date of enactment of this paragraph, each elec11 tric utility shall offer each of its customer class12 es, and provide individual customers upon cus13 tomer request, a time-based rate schedule under 

14 which the rate charged by the electric utility 

15 varies during different time periods and reflects 

16 the variance, if any, in the utility’s costs of gen17 erating and purchasing electricity at the whole18 sale level. The time-based rate schedule shall 

19 enable the electric consumer to manage energy 

20 use and cost through advanced metering and 

21 communications technology. 

22 ‘‘(B) The types of time-based rate sched23 ules that may be offered under the schedule re24 ferred to in subparagraph (A) include, among 

25 others—
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1 ‘‘(i) time-of-use pricing whereby elec2 tricity prices are set for a specific time pe3 riod on an advance or forward basis, typi4 cally not changing more often than twice a 

5 year, based on the utility’s cost of gener6 ating and/or purchasing such electricity at 

7 the wholesale level for the benefit of the 

8 consumer. Prices paid for energy consumed 

9 during these periods shall be pre-estab10 lished and known to consumers in advance 

11 of such consumption, allowing them to 

12 vary their demand and usage in response 

13 to such prices and manage their energy 

14 costs by shifting usage to a lower cost pe15 riod or reducing their consumption overall; 

16 ‘‘(ii) critical peak pricing whereby 

17 time-of-use prices are in effect except for 

18 certain peak days, when prices may reflect 

19 the costs of generating and/or purchasing 

20 electricity at the wholesale level and when 

21 consumers may receive additional discounts 

22 for reducing peak period energy consump23 tion; and 

24 ‘‘(iii) real-time pricing whereby elec25 tricity prices are set for a specific time pe-
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1 riod on an advanced or forward basis, re2 flecting the utility’s cost of generating and/

3 or purchasing electricity at the wholesale 

4 level, and may change as often as hourly. 

5 ‘‘(C) Each electric utility subject to sub6 paragraph (A) shall provide each customer re7 questing a time-based rate with a time-based 

8 meter capable of enabling the utility and cus9 tomer to offer and receive such rate, respec10 tively. 

11 ‘‘(D) For purposes of implementing this 

12 paragraph, any reference contained in this sec13 tion to the date of enactment of the Public Util14 ity Regulatory Policies Act of 1978 shall be 

15 deemed to be a reference to the date of enact16 ment of this paragraph. 

17 ‘‘(E) In a State that permits third-party 

18 marketers to sell electric energy to retail elec19 tric consumers, such consumers shall be entitled 

20 to receive the same time-based metering and 

21 communications device and service as a retail 

22 electric consumer of the electric utility. 

23 ‘‘(F) Notwithstanding subsections (b) and 

24 (c) of section 112, each State regulatory au25 thority shall, not later than 18 months after the 
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1 date of enactment of this paragraph conduct an 

2 investigation in accordance with section 115(i) 

3 and issue a decision whether it is appropriate to 

4 implement the standards set out in subpara5 graphs (A) and (C).’’. 

6 (b) STATE INVESTIGATION OF DEMAND RESPONSE

7 AND TIME-BASED METERING.—Section 115 of the Public 

8 Utilities Regulatory Policies Act of 1978 (16 U.S.C. 2625) 

9 is amended as follows: 

10 (1) By inserting in subsection (b) after the 

11 phrase ‘‘the standard for time-of-day rates estab12 lished by section 111(d)(3)’’ the following: ‘‘and the 

13 standard for time-based metering and communica14 tions established by section 111(d)(14)’’. 

15 (2) By inserting in subsection (b) after the 

16 phrase ‘‘are likely to exceed the metering’’ the fol17 lowing: ‘‘and communications’’. 

18 (3) By adding at the end the following: 

19 ‘‘(i) TIME-BASED METERING AND COMMUNICA20 TIONS.—In making a determination with respect to the 

21 standard established by section 111(d)(14), the investiga22 tion requirement of section 111(d)(14)(F) shall be as fol23 lows: Each State regulatory authority shall conduct an in24 vestigation and issue a decision whether or not it is appro25 priate for electric utilities to provide and install time-based 
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1 meters and communications devices for each of their cus2 tomers which enable such customers to participate in time3 based pricing rate schedules and other demand response 

4 programs.’’. 

5 (c) FEDERAL ASSISTANCE ON DEMAND RE6 SPONSE.—Section 132(a) of the Public Utility Regulatory 

7 Policies Act of 1978 (16 U.S.C. 2642(a)) is amended by 

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

9 period at the end of paragraph (4) and inserting ‘‘; and’’, 

10 and by adding the following at the end thereof: 

11 ‘‘(5) technologies, techniques, and rate-making 

12 methods related to advanced metering and commu13 nications and the use of these technologies, tech14 niques and methods in demand response programs.’’. 

15 (d) FEDERAL GUIDANCE.—Section 132 of the Public 

16 Utility Regulatory Policies Act of 1978 (16 U.S.C. 2642) 

17 is amended by adding the following at the end thereof: 

18 ‘‘(d) DEMAND RESPONSE.—The Secretary shall be 

19 responsible for—

20 ‘‘(1) educating consumers on the availability, 

21 advantages, and benefits of advanced metering and 

22 communications technologies, including the funding 

23 of demonstration or pilot projects; 

24 ‘‘(2) working with States, utilities, other energy 

25 providers and advanced metering and communica-
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1 tions experts to identify and address barriers to the 

2 adoption of demand response programs; and 

3 ‘‘(3) not later than 180 days after the date of 

4 enactment of the Energy Policy Act of 2003, pro5 viding Congress with a report that identifies and 

6 quantifies the national benefits of demand response 

7 and makes a recommendation on achieving specific 

8 levels of such benefits by January 1, 2005.’’. 

9 (e) DEMAND RESPONSE AND REGIONAL COORDINA10 TION.—

11 (1) IN GENERAL.—It is the policy of the United 

12 States to encourage States to coordinate, on a re13 gional basis, State energy policies to provide reliable 

14 and affordable demand response services to the pub15 lic. 

16 (2) TECHNICAL ASSISTANCE.—The Secretary of 

17 Energy shall provide technical assistance to States 

18 and regional organizations formed by 2 or more 

19 States to assist them in—

20 (A) identifying the areas with the greatest 

21 demand response potential; 

22 (B) identifying and resolving problems in 

23 transmission and distribution networks, includ24 ing through the use of demand response; 
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1 (C) developing plans and programs to use 

2 demand response to respond to peak demand or 

3 emergency needs; and 

4 (D) identifying specific measures con5 sumers can take to participate in these demand 

6 response programs. 

7 (3) REPORT.—Not later than 1 year after the 

8 date of enactment of the Energy Policy Act of 2003, 

9 the Commission shall prepare and publish an annual 

10 report, by appropriate region, that assesses demand 

11 response resources, including those available from all 

12 consumer classes, and which identifies and reviews—

13 (A) saturation and penetration rate of ad14 vanced meters and communications tech15 nologies, devices and systems; 

16 (B) existing demand response programs 

17 and time-based rate programs; 

18 (C) the annual resource contribution of de19 mand resources; 

20 (D) the potential for demand response as 

21 a quantifiable, reliable resource for regional 

22 planning purposes; and 

23 (E) steps taken to ensure that, in regional 

24 transmission planning and operations, demand 

25 resources are provided equitable treatment as a 
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1 quantifiable, reliable resource relative to the re2 source obligations of any load-serving entity, 

3 transmission provider, or transmitting party. 

4 (f) FEDERAL ENCOURAGEMENT OF DEMAND RE5 SPONSE DEVICES.—It is the policy of the United States 

6 that time-based pricing and other forms of demand re7 sponse, whereby electricity customers are provided with 

8 electricity price signals and the ability to benefit by re9 sponding to them, shall be encouraged, and the deploy10 ment of such technology and devices that enable electricity 

11 customers to participate in such pricing and demand re12 sponse systems shall be facilitated. It is further the policy 

13 of the United States that the benefits of such demand re14 sponse that accrue to those not deploying such technology 

15 and devices, but who are part of the same regional elec16 tricity entity, shall be recognized. 

17 (g) TIME LIMITATIONS.—Section 112(b) of the Pub18 lic Utility Regulatory Policies Act of 1978 (16 U.S.C. 

19 2622(b)) is amended by adding at the end the following: 

20 ‘‘(4)(A) Not later than 1 year after the enact21 ment of this paragraph, each State regulatory au22 thority (with respect to each electric utility for which 

23 it has ratemaking authority) and each nonregulated 

24 electric utility shall commence the consideration re25 ferred to in section 111, or set a hearing date for 
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1 such consideration, with respect to the standard es2 tablished by paragraph (14) of section 111(d). 

3 ‘‘(B) Not later than 2 years after the date of 

4 the enactment of this paragraph, each State regu5 latory authority (with respect to each electric utility 

6 for which it has ratemaking authority), and each 

7 nonregulated electric utility, shall complete the con8 sideration, and shall make the determination, re9 ferred to in section 111 with respect to the standard 

10 established by paragraph (14) of section 111(d).’’. 

11 (h) FAILURE TO COMPLY.—Section 112(c) of the 

12 Public Utility Regulatory Policies Act of 1978 (16 U.S.C. 

13 2622(c)) is amended by adding at the end the following: 

14 ‘‘In the case of the standard established by paragraph (14) 

15 of section 111(d), the reference contained in this sub16 section to the date of enactment of this Act shall be 

17 deemed to be a reference to the date of enactment of such 

18 paragraph (14).’’. 

19 (i) PRIOR STATE ACTIONS REGARDING SMART ME20 TERING STANDARDS.—

21 (1) IN GENERAL.—Section 112 of the Public 

22 Utility Regulatory Policies Act of 1978 (16 U.S.C. 

23 2622) is amended by adding at the end the fol24 lowing: 
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1 ‘‘(e) PRIOR STATE ACTIONS.—Subsections (b) and 

2 (c) of this section shall not apply to the standard estab3 lished by paragraph (14) of section 111(d) in the case of 

4 any electric utility in a State if, before the enactment of 

5 this subsection—

6 ‘‘(1) the State has implemented for such utility 

7 the standard concerned (or a comparable standard); 

8 ‘‘(2) the State regulatory authority for such 

9 State or relevant nonregulated electric utility has 

10 conducted a proceeding to consider implementation 

11 of the standard concerned (or a comparable stand12 ard) for such utility within the previous 3 years; or 

13 ‘‘(3) the State legislature has voted on the im14 plementation of such standard (or a comparable 

15 standard) for such utility within the previous 3 

16 years.’’. 

17 (2) CROSS REFERENCE.—Section 124 of such 

18 Act (16 U.S.C. 2634) is amended by adding the fol19 lowing at the end thereof: ‘‘In the case of the stand20 ard established by paragraph (14) of section 111(d), 

21 the reference contained in this subsection to the date 

22 of enactment of this Act shall be deemed to be a ref23 erence to the date of enactment of such paragraph 

24 (14).’’. 
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1 SEC. 1253. COGENERATION AND SMALL POWER PRODUC2 TION PURCHASE AND SALE REQUIREMENTS. 

3 (a) TERMINATION OF MANDATORY PURCHASE AND

4 SALE REQUIREMENTS.—Section 210 of the Public Utility 

5 Regulatory Policies Act of 1978 (16 U.S.C. 824a–3) is 

6 amended by adding at the end the following: 

7 ‘‘(m) TERMINATION OF MANDATORY PURCHASE AND

8 SALE REQUIREMENTS.—

9 ‘‘(1) OBLIGATION TO PURCHASE.—After the 

10 date of enactment of this subsection, no electric util11 ity shall be required to enter into a new contract 

12 or obligation to purchase electric energy from a 

13 qualifying cogeneration facility or a qualifying small 

14 power production facility under this section if the 

15 Commission finds that the qualifying cogeneration 

16 facility or qualifying small power production facility 

17 has nondiscriminatory access to—

18 ‘‘(A)(i) independently administered, auc19 tion-based day ahead and real time wholesale 

20 markets for the sale of electric energy; and (ii) 

21 wholesale markets for long-term sales of capac22 ity and electric energy; or 

23 ‘‘(B)(i) transmission and interconnection 

24 services that are provided by a Commission-ap25 proved regional transmission entity and admin26 istered pursuant to an open access transmission 
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1 tariff that affords nondiscriminatory treatment 

2 to all customers; and (ii) competitive wholesale 

3 markets that provide a meaningful opportunity 

4 to sell capacity, including long-term and short5 term sales, and electric energy, including long6 term, short-term and real-time sales, to buyers 

7 other than the utility to which the qualifying fa8 cility is interconnected. In determining whether 

9 a meaningful opportunity to sell exists, the 

10 Commission shall consider, among other fac11 tors, evidence of transactions within the rel12 evant market; or 

13 ‘‘(C) wholesale markets for the sale of ca14 pacity and electric energy that are, at a min15 imum, of comparable competitive quality as 

16 markets described in subparagraphs (A) and 

17 (B). 

18 ‘‘(2) REVISED PURCHASE AND SALE OBLIGA19 TION FOR NEW FACILITIES.—(A) After the date of 

20 enactment of this subsection, no electric utility shall 

21 be required pursuant to this section to enter into a 

22 new contract or obligation to purchase from or sell 

23 electric energy to a facility that is not an existing 

24 qualifying cogeneration facility unless the facility 

25 meets the criteria for qualifying cogeneration facili-
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1 ties established by the Commission pursuant to the 

2 rulemaking required by subsection (n). 

3 ‘‘(B) For the purposes of this paragraph, the 

4 term ‘existing qualifying cogeneration facility’ means 

5 a facility that—

6 ‘‘(i) was a qualifying cogeneration facility 

7 on the date of enactment of subsection (m); or 

8 ‘‘(ii) had filed with the Commission a no9 tice of self-certification, self recertification or 

10 an application for Commission certification 

11 under 18 CFR 292.207 prior to the date on 

12 which the Commission issues the final rule re13 quired by subsection (n). 

14 ‘‘(3) COMMISSION REVIEW.—Any electric utility 

15 may file an application with the Commission for re16 lief from the mandatory purchase obligation pursu17 ant to this subsection on a service territory-wide 

18 basis. Such application shall set forth the factual 

19 basis upon which relief is requested and describe 

20 why the conditions set forth in subparagraphs (A), 

21 (B) or (C) of paragraph (1) of this subsection have 

22 been met. After notice, including sufficient notice to 

23 potentially affected qualifying cogeneration facilities 

24 and qualifying small power production facilities, and 

25 an opportunity for comment, the Commission shall 
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1 make a final determination within 90 days of such 

2 application regarding whether the conditions set 

3 forth in subparagraphs (A), (B) or (C) of paragraph 

4 (1) have been met. 

5 ‘‘(4) REINSTATEMENT OF OBLIGATION TO PUR6 CHASE.—At any time after the Commission makes a 

7 finding under paragraph (3) relieving an electric 

8 utility of its obligation to purchase electric energy, 

9 a qualifying cogeneration facility, a qualifying small 

10 power production facility, a State agency, or any 

11 other affected person may apply to the Commission 

12 for an order reinstating the electric utility’s obliga13 tion to purchase electric energy under this section. 

14 Such application shall set forth the factual basis 

15 upon which the application is based and describe 

16 why the conditions set forth in subparagraphs (A), 

17 (B) or (C) of paragraph (1) of this subsection are 

18 no longer met. After notice, including sufficient no19 tice to potentially affected utilities, and opportunity 

20 for comment, the Commission shall issue an order 

21 within 90 days of such application reinstating the 

22 electric utility’s obligation to purchase electric en23 ergy under this section if the Commission finds that 

24 the conditions set forth in subparagraphs (A), (B) or 
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1 (C) of paragraph (1) which relieved the obligation to 

2 purchase, are no longer met. 

3 ‘‘(5) OBLIGATION TO SELL.—After the date of 

4 enactment of this subsection, no electric utility shall 

5 be required to enter into a new contract or obliga6 tion to sell electric energy to a qualifying cogenera7 tion facility or a qualifying small power production 

8 facility under this section if the Commission finds 

9 that—

10 ‘‘(A) competing retail electric suppliers are 

11 willing and able to sell and deliver electric en12 ergy to the qualifying cogeneration facility or 

13 qualifying small power production facility; and 

14 ‘‘(B) the electric utility is not required by 

15 State law to sell electric energy in its service 

16 territory. 

17 ‘‘(6) NO EFFECT ON EXISTING RIGHTS AND

18 REMEDIES.—Nothing in this subsection affects the 

19 rights or remedies of any party under any contract 

20 or obligation, in effect or pending approval before 

21 the appropriate State regulatory authority or non22 regulated electric utility on the date of enactment of 

23 this subsection, to purchase electric energy or capac24 ity from or to sell electric energy or capacity to a 

25 qualifying cogeneration facility or qualifying small 
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1 power production facility under this Act (including 

2 the right to recover costs of purchasing electric en3 ergy or capacity). 

4 ‘‘(7) RECOVERY OF COSTS.—(A) The Commis5 sion shall issue and enforce such regulations as are 

6 necessary to ensure that an electric utility that pur7 chases electric energy or capacity from a qualifying 

8 cogeneration facility or qualifying small power pro9 duction facility in accordance with any legally en10 forceable obligation entered into or imposed under 

11 this section recovers all prudently incurred costs as12 sociated with the purchase. 

13 ‘‘(B) A regulation under subparagraph (A) shall 

14 be enforceable in accordance with the provisions of 

15 law applicable to enforcement of regulations under 

16 the Federal Power Act (16 U.S.C. 791a et seq.). 

17 ‘‘(n) RULEMAKING FOR NEW QUALIFYING FACILI18 TIES.—(1)(A) Not later than 180 days after the date of 

19 enactment of this section, the Commission shall issue a 

20 rule revising the criteria in 18 CFR 292.205 for new 

21 qualifying cogeneration facilities seeking to sell electric en22 ergy pursuant to section 210 of this Act to ensure—

23 ‘‘(i) that the thermal energy output of a new 

24 qualifying cogeneration facility is used in a produc25 tive and beneficial manner; 
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1 ‘‘(ii) the electrical, thermal, and chemical out2 put of the cogeneration facility is used fundamen3 tally for industrial, commercial, or institutional pur4 poses and is not intended fundamentally for sale to 

5 an electric utility, taking into account technological, 

6 efficiency, economic, and variable thermal energy re7 quirements, as well as State laws applicable to sales 

8 of electric energy from a qualifying facility to its 

9 host facility; and

10 ‘‘(iii) continuing progress in the development of 

11 efficient electric energy generating technology. 

12 ‘‘(B) The rule issued pursuant to section (n)(1)(A) 

13 shall be applicable only to facilities that seek to sell electric 

14 energy pursuant to section 210 of this Act. For all other 

15 purposes, except as specifically provided in section 

16 (m)(2)(A), qualifying facility status shall be determined 

17 in accordance with the rules and regulations of this Act. 

18 ‘‘(2) Notwithstanding rule revisions under paragraph 

19 (1), the Commission’s criteria for qualifying cogeneration 

20 facilities in effect prior to the date on which the Commis21 sion issues the final rule required by paragraph (1) shall 

22 continue to apply to any cogeneration facility that—

23 ‘‘(A) was a qualifying cogeneration facility on 

24 the date of enactment of subsection (m), or 
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1 ‘‘(B) had filed with the Commission a notice of 

2 self-certification, self-recertification or an application 

3 for Commission certification under 18 CFR 292.207 

4 prior to the date on which the Commission issues 

5 the final rule required by paragraph (1).’’. 

6 (b) ELIMINATION OF OWNERSHIP LIMITATIONS.—

7 (1) QUALIFYING SMALL POWER PRODUCTION

8 FACILITY.—Section 3(17)(C) of the Federal Power 

9 Act (16 U.S.C. 796(17)(C)) is amended to read as 

10 follows: 

11 ‘‘(C) ‘qualifying small power production fa12 cility’ means a small power production facility 

13 that the Commission determines, by rule, meets 

14 such requirements (including requirements re15 specting fuel use, fuel efficiency, and reliability) 

16 as the Commission may, by rule, prescribe;’’. 

17 (2) QUALIFYING COGENERATION FACILITY.—

18 Section 3(18)(B) of the Federal Power Act (16 

19 U.S.C. 796(18)(B)) is amended to read as follows: 

20 ‘‘(B) ‘qualifying cogeneration facility’ 

21 means a cogeneration facility that the Commis22 sion determines, by rule, meets such require23 ments (including requirements respecting min24 imum size, fuel use, and fuel efficiency) as the 

25 Commission may, by rule, prescribe;’’. 
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1 Subtitle F—Repeal of PUHCA 

2 SEC. 1261. SHORT TITLE. 

3 This subtitle may be cited as the ‘‘Public Utility 

4 Holding Company Act of 2003’’. 

5 SEC. 1262. DEFINITIONS. 

6 For purposes of this subtitle: 

7 (1) AFFILIATE.—The term ‘‘affiliate’’ of a com8 pany means any company, 5 percent or more of the 

9 outstanding voting securities of which are owned, 

10 controlled, or held with power to vote, directly or in11 directly, by such company. 

12 (2) ASSOCIATE COMPANY.—The term ‘‘associate 

13 company’’ of a company means any company in the 

14 same holding company system with such company. 

15 (3) COMMISSION.—The term ‘‘Commission’’ 

16 means the Federal Energy Regulatory Commission. 

17 (4) COMPANY.—The term ‘‘company’’ means a 

18 corporation, partnership, association, joint stock 

19 company, business trust, or any organized group of 

20 persons, whether incorporated or not, or a receiver, 

21 trustee, or other liquidating agent of any of the fore22 going. 

23 (5) ELECTRIC UTILITY COMPANY.—The term 

24 ‘‘electric utility company’’ means any company that 

25 owns or operates facilities used for the generation, 
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1 transmission, or distribution of electric energy for 

2 sale. 

3 (6) EXEMPT WHOLESALE GENERATOR AND

4 FOREIGN UTILITY COMPANY.—The terms ‘‘exempt 

5 wholesale generator’’ and ‘‘foreign utility company’’ 

6 have the same meanings as in sections 32 and 33, 

7 respectively, of the Public Utility Holding Company 

8 Act of 1935 (15 U.S.C. 79z–5a, 79z–5b), as those 

9 sections existed on the day before the effective date 

10 of this subtitle. 

11 (7) GAS UTILITY COMPANY.—The term ‘‘gas 

12 utility company’’ means any company that owns or 

13 operates facilities used for distribution at retail 

14 (other than the distribution only in enclosed portable 

15 containers or distribution to tenants or employees of 

16 the company operating such facilities for their own 

17 use and not for resale) of natural or manufactured 

18 gas for heat, light, or power. 

19 (8) HOLDING COMPANY.—The term ‘‘holding 

20 company’’ means— 

21 (A) any company that directly or indirectly 

22 owns, controls, or holds, with power to vote, 10 

23 percent or more of the outstanding voting secu24 rities of a public-utility company or of a holding 

25 company of any public-utility company; and 
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1 (B) any person, determined by the Com2 mission, after notice and opportunity for hear3 ing, to exercise directly or indirectly (either 

4 alone or pursuant to an arrangement or under5 standing with 1 or more persons) such a con6 trolling influence over the management or poli7 cies of any public-utility company or holding 

8 company as to make it necessary or appropriate 

9 for the rate protection of utility customers with 

10 respect to rates that such person be subject to 

11 the obligations, duties, and liabilities imposed 

12 by this subtitle upon holding companies. 

13 (9) HOLDING COMPANY SYSTEM.—The term 

14 ‘‘holding company system’’ means a holding com15 pany, together with its subsidiary companies. 

16 (10) JURISDICTIONAL RATES.—The term ‘‘ju17 risdictional rates’’ means rates accepted or estab18 lished by the Commission for the transmission of 

19 electric energy in interstate commerce, the sale of 

20 electric energy at wholesale in interstate commerce, 

21 the transportation of natural gas in interstate com22 merce, and the sale in interstate commerce of nat23 ural gas for resale for ultimate public consumption 

24 for domestic, commercial, industrial, or any other 

25 use. 
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1 (11) NATURAL GAS COMPANY.—The term ‘‘nat2 ural gas company’’ means a person engaged in the 

3 transportation of natural gas in interstate commerce 

4 or the sale of such gas in interstate commerce for 

5 resale. 

6 (12) PERSON.—The term ‘‘person’’ means an 

7 individual or company. 

8 (13) PUBLIC UTILITY.—The term ‘‘public util9 ity’’ means any person who owns or operates facili10 ties used for transmission of electric energy in inter11 state commerce or sales of electric energy at whole12 sale in interstate commerce. 

13 (14) PUBLIC-UTILITY COMPANY.—The term 

14 ‘‘public-utility company’’ means an electric utility 

15 company or a gas utility company. 

16 (15) STATE COMMISSION.—The term ‘‘State 

17 commission’’ means any commission, board, agency, 

18 or officer, by whatever name designated, of a State, 

19 municipality, or other political subdivision of a State 

20 that, under the laws of such State, has jurisdiction 

21 to regulate public utility companies. 

22 (16) SUBSIDIARY COMPANY.—The term ‘‘sub23 sidiary company’’ of a holding company means— 

24 (A) any company, 10 percent or more of 

25 the outstanding voting securities of which are 
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1 directly or indirectly owned, controlled, or held 

2 with power to vote, by such holding company; 

3 and 

4 (B) any person, the management or poli5 cies of which the Commission, after notice and 

6 opportunity for hearing, determines to be sub7 ject to a controlling influence, directly or indi8 rectly, by such holding company (either alone 

9 or pursuant to an arrangement or under10 standing with 1 or more other persons) so as 

11 to make it necessary for the rate protection of 

12 utility customers with respect to rates that such 

13 person be subject to the obligations, duties, and 

14 liabilities imposed by this subtitle upon sub15 sidiary companies of holding companies. 

16 (17) VOTING SECURITY.—The term ‘‘voting se17 curity’’ means any security presently entitling the 

18 owner or holder thereof to vote in the direction or 

19 management of the affairs of a company. 

20 SEC. 1263. REPEAL OF THE PUBLIC UTILITY HOLDING COM21 PANY ACT OF 1935. 

22 The Public Utility Holding Company Act of 1935 (15 

23 U.S.C. 79 et seq.) is repealed. 
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1 SEC. 1264. FEDERAL ACCESS TO BOOKS AND RECORDS. 

2 (a) IN GENERAL.—Each holding company and each 

3 associate company thereof shall maintain, and shall make 

4 available to the Commission, such books, accounts, memo5 randa, and other records as the Commission determines 

6 are relevant to costs incurred by a public utility or natural 

7 gas company that is an associate company of such holding 

8 company and necessary or appropriate for the protection 

9 of utility customers with respect to jurisdictional rates. 

10 (b) AFFILIATE COMPANIES.—Each affiliate of a hold11 ing company or of any subsidiary company of a holding 

12 company shall maintain, and shall make available to the 

13 Commission, such books, accounts, memoranda, and other 

14 records with respect to any transaction with another affil15 iate, as the Commission determines are relevant to costs 

16 incurred by a public utility or natural gas company that 

17 is an associate company of such holding company and nec18 essary or appropriate for the protection of utility cus19 tomers with respect to jurisdictional rates. 

20 (c) HOLDING COMPANY SYSTEMS.—The Commission 

21 may examine the books, accounts, memoranda, and other 

22 records of any company in a holding company system, or 

23 any affiliate thereof, as the Commission determines are 

24 relevant to costs incurred by a public utility or natural 

25 gas company within such holding company system and 
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1 necessary or appropriate for the protection of utility cus2 tomers with respect to jurisdictional rates. 

3 (d) CONFIDENTIALITY.—No member, officer, or em4 ployee of the Commission shall divulge any fact or infor5 mation that may come to his or her knowledge during the 

6 course of examination of books, accounts, memoranda, or 

7 other records as provided in this section, except as may 

8 be directed by the Commission or by a court of competent 

9 jurisdiction. 

10 SEC. 1265. STATE ACCESS TO BOOKS AND RECORDS. 

11 (a) IN GENERAL.—Upon the written request of a 

12 State commission having jurisdiction to regulate a public13 utility company in a holding company system, the holding 

14 company or any associate company or affiliate thereof, 

15 other than such public-utility company, wherever located, 

16 shall produce for inspection books, accounts, memoranda, 

17 and other records that—

18 (1) have been identified in reasonable detail in 

19 a proceeding before the State commission; 

20 (2) the State commission determines are rel21 evant to costs incurred by such public-utility com22 pany; and 

23 (3) are necessary for the effective discharge of 

24 the responsibilities of the State commission with re25 spect to such proceeding. 
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1 (b) LIMITATION.—Subsection (a) does not apply to 

2 any person that is a holding company solely by reason of 

3 ownership of 1 or more qualifying facilities under the Pub4 lic Utility Regulatory Policies Act of 1978 (16 U.S.C. 

5 2601 et seq.). 

6 (c) CONFIDENTIALITY OF INFORMATION.—The pro7 duction of books, accounts, memoranda, and other records 

8 under subsection (a) shall be subject to such terms and 

9 conditions as may be necessary and appropriate to safe10 guard against unwarranted disclosure to the public of any 

11 trade secrets or sensitive commercial information. 

12 (d) EFFECT ON STATE LAW.—Nothing in this sec13 tion shall preempt applicable State law concerning the pro14 vision of books, accounts, memoranda, and other records, 

15 or in any way limit the rights of any State to obtain books, 

16 accounts, memoranda, and other records under any other 

17 Federal law, contract, or otherwise. 

18 (e) COURT JURISDICTION.—Any United States dis19 trict court located in the State in which the State commis20 sion referred to in subsection (a) is located shall have ju21 risdiction to enforce compliance with this section. 

22 SEC. 1266. EXEMPTION AUTHORITY. 

23 (a) RULEMAKING.—Not later than 90 days after the 

24 effective date of this subtitle, the Commission shall issue 

25 a final rule to exempt from the requirements of section 
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1 1264 (relating to Federal access to books and records) any 

2 person that is a holding company, solely with respect to 

3 1 or more—

4 (1) qualifying facilities under the Public Utility 

5 Regulatory Policies Act of 1978 (16 U.S.C. 2601 et 

6 seq.); 

7 (2) exempt wholesale generators; or 

8 (3) foreign utility companies. 

9 (b) OTHER AUTHORITY.—The Commission shall ex10 empt a person or transaction from the requirements of 

11 section 1264 (relating to Federal access to books and 

12 records) if, upon application or upon the motion of the 

13 Commission— 

14 (1) the Commission finds that the books, ac15 counts, memoranda, and other records of any person 

16 are not relevant to the jurisdictional rates of a pub17 lic utility or natural gas company; or 

18 (2) the Commission finds that any class of 

19 transactions is not relevant to the jurisdictional 

20 rates of a public utility or natural gas company. 

21 SEC. 1267. AFFILIATE TRANSACTIONS. 

22 (a) COMMISSION AUTHORITY UNAFFECTED.—Noth23 ing in this subtitle shall limit the authority of the Commis24 sion under the Federal Power Act (16 U.S.C. 791a et seq.) 

25 to require that jurisdictional rates are just and reasonable, 
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1 including the ability to deny or approve the pass through 

2 of costs, the prevention of cross-subsidization, and the 

3 issuance of such rules and regulations as are necessary 

4 or appropriate for the protection of utility consumers. 

5 (b) RECOVERY OF COSTS.—Nothing in this subtitle 

6 shall preclude the Commission or a State commission from 

7 exercising its jurisdiction under otherwise applicable law 

8 to determine whether a public-utility company, public util9 ity, or natural gas company may recover in rates any costs 

10 of an activity performed by an associate company, or any 

11 costs of goods or services acquired by such public-utility 

12 company from an associate company. 

13 SEC. 1268. APPLICABILITY. 

14 Except as otherwise specifically provided in this sub15 title, no provision of this subtitle shall apply to, or be 

16 deemed to include— 

17 (1) the United States; 

18 (2) a State or any political subdivision of a 

19 State; 

20 (3) any foreign governmental authority not op21 erating in the United States; 

22 (4) any agency, authority, or instrumentality of 

23 any entity referred to in paragraph (1), (2), or (3); 

24 or 
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1 (5) any officer, agent, or employee of any entity 

2 referred to in paragraph (1), (2), (3), or (4) acting 

3 as such in the course of his or her official duty. 

4 SEC. 1269. EFFECT ON OTHER REGULATIONS. 

5 Nothing in this subtitle precludes the Commission or 

6 a State commission from exercising its jurisdiction under 

7 otherwise applicable law to protect utility customers.

8 SEC. 1270. ENFORCEMENT. 

9 The Commission shall have the same powers as set 

10 forth in sections 306 through 317 of the Federal Power 

11 Act (16 U.S.C. 825e–825p) to enforce the provisions of 

12 this subtitle. 

13 SEC. 1271. SAVINGS PROVISIONS. 

14 (a) IN GENERAL.—Nothing in this subtitle, or other15 wise in the Public Utility Holding Company Act of 1935, 

16 or rules, regulations, or orders thereunder, prohibits a per17 son from engaging in or continuing to engage in activities 

18 or transactions in which it is legally engaged or authorized 

19 to engage on the date of enactment of this Act, if that 

20 person continues to comply with the terms (other than an 

21 expiration date or termination date) of any such author22 ization, whether by rule or by order. 

23 (b) EFFECT ON OTHER COMMISSION AUTHORITY.—

24 Nothing in this subtitle limits the authority of the Com-
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1 mission under the Federal Power Act (16 U.S.C. 791a et 

2 seq.) or the Natural Gas Act (15 U.S.C. 717 et seq.). 

3 SEC. 1272. IMPLEMENTATION. 

4 Not later than 12 months after the date of enactment 

5 of this subtitle, the Commission shall— 

6 (1) issue such regulations as may be necessary 

7 or appropriate to implement this subtitle (other than 

8 section 1265, relating to State access to books and 

9 records); and 

10 (2) submit to Congress detailed recommenda11 tions on technical and conforming amendments to 

12 Federal law necessary to carry out this subtitle and 

13 the amendments made by this subtitle. 

14 SEC. 1273. TRANSFER OF RESOURCES. 

15 All books and records that relate primarily to the 

16 functions transferred to the Commission under this sub17 title shall be transferred from the Securities and Exchange 

18 Commission to the Commission. 

19 SEC. 1274. EFFECTIVE DATE. 

20 (a) IN GENERAL.—Except for section 1272 (relating 

21 to implementation), this subtitle shall take effect 12 

22 months after the date of enactment of this subtitle. 

23 (b) COMPLIANCE WITH CERTAIN RULES.—If the 

24 Commission approves and makes effective any final rule25 making modifying the standards of conduct governing en-
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1 tities that own, operate, or control facilities for trans2 mission of electricity in interstate commerce or transpor3 tation of natural gas in interstate commerce prior to the 

4 effective date of this subtitle, any action taken by a public5 utility company or utility holding company to comply with 

6 the requirements of such rulemaking shall not subject 

7 such public-utility company or utility holding company to 

8 any regulatory requirement applicable to a holding com9 pany under the Public Utility Holding Company Act of 

10 1935 (15 U.S.C. 79 et seq.).

11 SEC. 1275. SERVICE ALLOCATION.

12 (a) FERC REVIEW.—In the case of non-power goods 

13 or administrative or management services provided by an 

14 associate company organized specifically for the purpose 

15 of providing such goods or services to any public utility 

16 in the same holding company system, at the election of 

17 the system or a State commission having jurisdiction over 

18 the public utility, the Commission, after the effective date 

19 of this subtitle, shall review and authorize the allocation 

20 of the costs for such goods or services to the extent rel21 evant to that associate company in order to assure that 

22 each allocation is appropriate for the protection of inves23 tors and consumers of such public utility. 

24 (b) COST ALLOCATION.—Nothing in this section shall 

25 preclude the Commission or a State commission from exer-
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1 cising its jurisdiction under other applicable law with re2 spect to the review or authorization of any costs allocated 

3 to a public utility in a holding company system located 

4 in the affected State as a result of the acquisition of non5 power goods or administrative and management services 

6 by such public utility from an associate company orga7 nized specifically for that purpose. 

8 (c) RULES.—Not later than 6 months after the date 

9 of enactment of this Act, the Commission shall issue rules 

10 (which rules shall be effective no earlier than the effective 

11 date of this subtitle) to exempt from the requirements of 

12 this section any company in a holding company system 

13 whose public utility operations are confined substantially 

14 to a single State and any other class of transactions that 

15 the Commission finds is not relevant to the jurisdictional 

16 rates of a public utility. 

17 (d) PUBLIC UTILITY.—As used in this section, the 

18 term ‘‘public utility’’ has the meaning given that term in 

19 section 201(e) of the Federal Power Act. 

20 SEC. 1276. AUTHORIZATION OF APPROPRIATIONS. 

21 There are authorized to be appropriated such funds 

22 as may be necessary to carry out this subtitle. 
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1 SEC. 1277. CONFORMING AMENDMENTS TO THE FEDERAL 

2 POWER ACT. 

3 (a) CONFLICT OF JURISDICTION.—Section 318 of the 

4 Federal Power Act (16 U.S.C. 825q) is repealed. 

5 (b) DEFINITIONS.—(1) Section 201(g)(5) of the Fed6 eral Power Act (16 U.S.C. 824(g)(5)) is amended by strik7 ing ‘‘1935’’ and inserting ‘‘2003’’. 

8 (2) Section 214 of the Federal Power Act (16 U.S.C. 

9 824m) is amended by striking ‘‘1935’’ and inserting 

10 ‘‘2003’’. 

11 Subtitle G—Market Transparency, 

12 Enforcement, and Consumer 

13 Protection 

14 SEC. 1281. MARKET TRANSPARENCY RULES. 

15 Part II of the Federal Power Act (16 U.S.C. 824 et 

16 seq.) is amended by adding at the end the following: 

17 ‘‘SEC. 220. MARKET TRANSPARENCY RULES. 

18 ‘‘(a) IN GENERAL.—Not later than 180 days after 

19 the date of enactment of this section, the Commission 

20 shall issue rules establishing an electronic information sys21 tem to provide the Commission and the public with access 

22 to such information as is necessary or appropriate to fa23 cilitate price transparency and participation in markets 

24 subject to the Commission’s jurisdiction under this Act. 

25 Such systems shall provide information about the avail26 ability and market price of wholesale electric energy and 
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1 transmission services to the Commission, State commis2 sions, buyers and sellers of wholesale electric energy, users 

3 of transmission services, and the public on a timely basis. 

4 The Commission shall have authority to obtain such infor5 mation from any electric utility or transmitting utility, in6 cluding any entity described in section 201(f). 

7 ‘‘(b) EXEMPTIONS.—The Commission shall exempt 

8 from disclosure information it determines would, if dis9 closed, be detrimental to the operation of an effective mar10 ket or jeopardize system security. This section shall not 

11 apply to transactions for the purchase or sale of wholesale 

12 electric energy or transmission services within the area de13 scribed in section 212(k)(2)(A). In determining the infor14 mation to be made available under this section and time 

15 to make such information available, the Commission shall 

16 seek to ensure that consumers and competitive markets 

17 are protected from the adverse effects of potential collu18 sion or other anti-competitive behaviors that can be facili19 tated by untimely public disclosure of transaction-specific 

20 information. 

21 ‘‘(c) COMMODITY FUTURES TRADING COMMIS22 SION.—This section shall not affect the exclusive jurisdic23 tion of the Commodity Futures Trading Commission with 

24 respect to accounts, agreements, contracts, or transactions 

25 in commodities under the Commodity Exchange Act (7 
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1 U.S.C. 1 et seq.). Any request for information to a des2 ignated contract market, registered derivatives transaction 

3 execution facility, board of trade, exchange, or market in4 volving accounts, agreements, contracts, or transactions in 

5 commodities (including natural gas, electricity and other 

6 energy commodities) within the exclusive jurisdiction of 

7 the Commodity Futures Trading Commission shall be di8 rected to the Commodity Futures Trading Commission. 

9 ‘‘(d) SAVINGS PROVISION.—In exercising its author10 ity under this section, the Commission shall not—

11 ‘‘(1) compete with, or displace from the market 

12 place, any price publisher; or 

13 ‘‘(2) regulate price publishers or impose any re14 quirements on the publication of information.’’.

15 SEC. 1282. MARKET MANIPULATION. 

16 Part II of the Federal Power Act (16 U.S.C. 824 et 

17 seq.) is amended by adding at the end the following: 

18 ‘‘SEC. 221. PROHIBITION ON FILING FALSE INFORMATION. 

19 ‘‘No person or other entity (including an entity de20 scribed in section 201(f)) shall willfully and knowingly re21 port any information relating to the price of electricity 

22 sold at wholesale or availability of transmission capacity, 

23 which information the person or any other entity knew to 

24 be false at the time of the reporting, to a Federal agency 
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1 with intent to fraudulently affect the data being compiled 

2 by such Federal agency. 

3 ‘‘SEC. 222. PROHIBITION ON ROUND TRIP TRADING. 

4 ‘‘(a) PROHIBITION.—No person or other entity (in5 cluding an entity described in section 201(f)) shall willfully 

6 and knowingly enter into any contract or other arrange7 ment to execute a ‘round trip trade’ for the purchase or 

8 sale of electric energy at wholesale. 

9 ‘‘(b) DEFINITION.—For the purposes of this section, 

10 the term ‘round trip trade’ means a transaction, or com11 bination of transactions, in which a person or any other 

12 entity—

13 ‘‘(1) enters into a contract or other arrange14 ment to purchase from, or sell to, any other person 

15 or other entity electric energy at wholesale; 

16 ‘‘(2) simultaneously with entering into the con17 tract or arrangement described in paragraph (1), ar18 ranges a financially offsetting trade with such other 

19 person or entity for the same such electric energy, 

20 at the same location, price, quantity and terms so 

21 that, collectively, the purchase and sale transactions 

22 in themselves result in no financial gain or loss; and 

23 ‘‘(3) enters into the contract or arrangement 

24 with a specific intent to fraudulently affect reported 

25 revenues, trading volumes, or prices.’’. 
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1 SEC. 1283. ENFORCEMENT. 

2 (a) COMPLAINTS.—Section 306 of the Federal Power 

3 Act (16 U.S.C. 825e) is amended as follows: 

4 (1) By inserting ‘‘electric utility,’’ after ‘‘Any 

5 person,’’. 

6 (2) By inserting ‘‘, transmitting utility,’’ after 

7 ‘‘licensee’’ each place it appears. 

8 (b) REVIEW OF COMMISSION ORDERS.—Section 

9 313(a) of the Federal Power Act (16 U.S.C. 8251) is 

10 amended by inserting ‘electric utility,’ after ‘person,’ in 

11 the first 2 places it appears and by striking ‘any person 

12 unless such person’ and inserting ‘any entity unless such 

13 entity’. 

14 (c) INVESTIGATIONS.—Section 307(a) of the Federal 

15 Power Act (16 U.S.C. 825f(a)) is amended as follows: 

16 (1) By inserting ‘, electric utility, transmitting 

17 utility, or other entity’ after ‘person’ each time it ap18 pears. 

19 (2) By striking the period at the end of the 

20 first sentence and inserting the following: ‘‘or in ob21 taining information about the sale of electric energy 

22 at wholesale in interstate commerce and the trans23 mission of electric energy in interstate commerce.’’. 

24 (d) CRIMINAL PENALTIES.—Section 316 of the Fed25 eral Power Act (16 U.S.C. 825o) is amended—
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1 (1) in subsection (a), by striking ‘‘$5,000’’ and 

2 inserting ‘‘$1,000,000’’, and by striking ‘‘two years’’ 

3 and inserting ‘‘5 years’’; 

4 (2) in subsection (b), by striking ‘‘$500’’ and 

5 inserting ‘‘$25,000’’; and 

6 (3) by striking subsection (c). 

7 (e) CIVIL PENALTIES.—Section 316A of the Federal 

8 Power Act (16 U.S.C. 825o–1) is amended as follows: 

9 (1) In subsections (a) and (b), by striking ‘‘sec10 tion 211, 212, 213, or 214’’ each place it appears 

11 and inserting ‘‘Part II’’. 

12 (2) In subsection (b), by striking ‘‘$10,000’’ 

13 and inserting ‘‘$1,000,000’’. 

14 SEC. 1284. REFUND EFFECTIVE DATE. 

15 Section 206(b) of the Federal Power Act (16 U.S.C. 

16 824e(b)) is amended as follows: 

17 (1) By striking ‘‘the date 60 days after the fil18 ing of such complaint nor later than 5 months after 

19 the expiration of such 60-day period’’ in the second 

20 sentence and inserting ‘‘the date of the filing of such 

21 complaint nor later than 5 months after the filing of 

22 such complaint’’. 

23 (2) By striking ‘‘60 days after’’ in the third 

24 sentence and inserting ‘‘of’’. 
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1 (3) By striking ‘‘expiration of such 60-day pe2 riod’’ in the third sentence and inserting ‘‘publica3 tion date’’. 

4 (4) By striking the fifth sentence and inserting 

5 the following: ‘‘If no final decision is rendered by the 

6 conclusion of the 180-day period commencing upon 

7 initiation of a proceeding pursuant to this section, 

8 the Commission shall state the reasons why it has 

9 failed to do so and shall state its best estimate as 

10 to when it reasonably expects to make such deci11 sion.’’. 

12 SEC. 1285. REFUND AUTHORITY. 

13 Section 206 of the Federal Power Act (16 U.S.C. 

14 824e) is amended by adding the following new subsection 

15 at the end thereof: 

16 ‘‘(e)(1) Except as provided in paragraph (2), if an 

17 entity described in section 201(f) voluntarily makes a 

18 short-term sale of electric energy and the sale violates 

19 Commission rules in effect at the time of the sale, such 

20 entity shall be subject to the Commission’s refund author21 ity under this section with respect to such violation. 

22 ‘‘(2) This section shall not apply to—

23 ‘‘(A) any entity that sells less than 8,000,000 

24 megawatt hours of electricity per year; or 

25 ‘‘(B) any electric cooperative. 
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1 ‘‘(3) For purposes of this subsection, the term ‘short2 term sale’ means an agreement for the sale of electric en3 ergy at wholesale in interstate commerce that is for a pe4 riod of 31 days or less (excluding monthly contracts sub5 ject to automatic renewal). 

6 ‘‘(4) The Commission shall have refund authority 

7 under subsection (e)(1) with respect to a voluntary short8 term sale of electric energy by the Bonneville Power Ad9 ministration (in this section ‘Bonneville’) only if the sale 

10 is at an unjust and unreasonable rate and, in that event, 

11 may order a refund only for short-term sales made by 

12 Bonneville at rates that are higher than the highest just 

13 and reasonable rate charged by any other entity for a 

14 short-term sale of electric energy in the same geographic 

15 market for the same, or most nearly comparable, period 

16 as the sale by Bonneville. 

17 ‘‘(5) With respect to any Federal power marketing 

18 agency or the Tennessee Valley Authority, the Commission 

19 shall not assert or exercise any regulatory authority or 

20 powers under subsection (e)(1) other than the ordering of 

21 refunds to achieve a just and reasonable rate.’’. 

22 SEC. 1286. SANCTITY OF CONTRACT. 

23 (a) IN GENERAL.—The Federal Energy Regulatory 

24 Commission (in this section, ‘‘the Commission’’) shall have 

25 no authority to abrogate or modify any provision of an 
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1 executed contract or executed contract amendment de2 scribed in subsection (b) that has been entered into or 

3 taken effect, except upon a finding that failure to take 

4 such action would be contrary to the public interest. 

5 (b) LIMITATION.—Except as provided in subsection 

6 (c), this section shall apply only to a contract or contract 

7 amendment—

8 (1) executed on or after the date of enactment 

9 of this Act; and 

10 (2) entered into—

11 (A) for the purchase or sale of electric en12 ergy under section 205 of the Federal Power 

13 Act (16 U.S.C. 824d) where the seller has been 

14 authorized by the Commission to charge mar15 ket-based rates; or 

16 (B) under section 4 of the Natural Gas 

17 Act (15 U.S.C. 717c) where the natural gas 

18 company has been authorized by the Commis19 sion to charge market-based rates for the serv20 ice described in the contract. 

21 (c) EXCLUSION.—This section shall not apply to an 

22 executed contract or executed contract amendment that 

23 expressly provides for a standard of review other than the 

24 public interest standard. 
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1 (d) SAVINGS PROVISION.—With respect to contracts 

2 to which this section does not apply, nothing in this sec3 tion alters existing law regarding the applicable standard 

4 of review for a contract subject to the jurisdiction of the 

5 Commission. 

6 SEC. 1287. CONSUMER PRIVACY AND UNFAIR TRADE PRAC7 TICES. 

8 (a) PRIVACY.—The Federal Trade Commission may 

9 issue rules protecting the privacy of electric consumers 

10 from the disclosure of consumer information obtained in 

11 connection with the sale or delivery of electric energy to 

12 electric consumers. 

13 (b) SLAMMING.—The Federal Trade Commission 

14 may issue rules prohibiting the change of selection of an 

15 electric utility except with the informed consent of the 

16 electric consumer or if approved by the appropriate State 

17 regulatory authority. 

18 (c) CRAMMING.—The Federal Trade Commission 

19 may issue rules prohibiting the sale of goods and services 

20 to an electric consumer unless expressly authorized by law 

21 or the electric consumer. 

22 (d) RULEMAKING.—The Federal Trade Commission 

23 shall proceed in accordance with section 553 of title 5, 

24 United States Code, when prescribing a rule under this 

25 section. 
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1 (e) STATE AUTHORITY.—If the Federal Trade Com2 mission determines that a State’s regulations provide 

3 equivalent or greater protection than the provisions of this 

4 section, such State regulations shall apply in that State 

5 in lieu of the regulations issued by the Commission under 

6 this section. 

7 (f) DEFINITIONS.—For purposes of this section: 

8 (1) STATE REGULATORY AUTHORITY.—The 

9 term ‘‘State regulatory authority’’ has the meaning 

10 given that term in section 3(21) of the Federal 

11 Power Act (16 U.S.C. 796(21)). 

12 (2) ELECTRIC CONSUMER AND ELECTRIC UTIL13 ITY.—The terms ‘‘electric consumer’’ and ‘‘electric 

14 utility’’ have the meanings given those terms in sec15 tion 3 of the Public Utility Regulatory Policies Act 

16 of 1978 (16 U.S.C. 2602). 

17 Subtitle H—Merger Reform 

18 SEC. 1291. MERGER REVIEW REFORM AND ACCOUNT19 ABILITY. 

20 (a) MERGER REVIEW REFORM.—Within 180 days 

21 after the date of enactment of this Act, the Secretary of 

22 Energy, in consultation with the Federal Energy Regu23 latory Commission and the Attorney General of the United 

24 States, shall prepare, and transmit to Congress each of 

25 the following: 
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1 (1) A study of the extent to which the authori2 ties vested in the Federal Energy Regulatory Com3 mission under section 203 of the Federal Power Act 

4 are duplicative of authorities vested in—

5 (A) other agencies of Federal and State 

6 Government; and 

7 (B) the Federal Energy Regulatory Com8 mission, including under sections 205 and 206 

9 of the Federal Power Act. 

10 (2) Recommendations on reforms to the Fed11 eral Power Act that would eliminate any unneces12 sary duplication in the exercise of regulatory author13 ity or unnecessary delays in the approval (or dis14 approval) of applications for the sale, lease, or other 

15 disposition of public utility facilities. 

16 (b) MERGER REVIEW ACCOUNTABILITY.—Not later 

17 than 1 year after the date of enactment of this Act and 

18 annually thereafter, with respect to all orders issued with19 in the preceding year that impose a condition on a sale, 

20 lease, or other disposition of public utility facilities under 

21 section 203(b) of the Federal Power Act, the Federal En22 ergy Regulatory Commission shall transmit a report to 

23 Congress explaining each of the following: 

24 (1) The condition imposed. 
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1 (2) Whether the Commission could have im2 posed such condition by exercising its authority 

3 under any provision of the Federal Power Act other 

4 than under section 203(b). 

5 (3) If the Commission could not have imposed 

6 such condition other than under section 203(b), why 

7 the Commission determined that such condition was 

8 consistent with the public interest. 

9 SEC. 1292. ELECTRIC UTILITY MERGERS. 

10 (a) AMENDMENT.—Section 203(a) of the Federal 

11 Power Act (16 U.S.C. 824b(a)) is amended to read as fol12 lows: 

13 ‘‘(a)(1) No public utility shall, without first having 

14 secured an order of the Commission authorizing it to do 

15 so—

16 ‘‘(A) sell, lease, or otherwise dispose of the 

17 whole of its facilities subject to the jurisdiction of 

18 the Commission, or any part thereof of a value in 

19 excess of $10,000,000; 

20 ‘‘(B) merge or consolidate, directly or indi21 rectly, such facilities or any part thereof with those 

22 of any other person, by any means whatsoever; or 

23 ‘‘(C) purchase, acquire, or take any security 

24 with a value in excess of $10,000,000 of any other 

25 public utility. 
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1 ‘‘(2) No holding company in a holding company sys2 tem that includes a public utility shall purchase, acquire, 

3 or take any security with a value in excess of $10,000,000 

4 of, or, by any means whatsoever, directly or indirectly, 

5 merge or consolidate with, a public utility or a holding 

6 company in a holding company system that includes a 

7 public utility with a value in excess of $10,000,000 with8 out first having secured an order of the Commission au9 thorizing it to do so. 

10 ‘‘(3) Upon receipt of an application for such approval 

11 the Commission shall give reasonable notice in writing to 

12 the Governor and State commission of each of the States 

13 in which the physical property affected, or any part there14 of, is situated, and to such other persons as it may deem 

15 advisable. 

16 ‘‘(4) After notice and opportunity for hearing, the 

17 Commission shall approve the proposed disposition, con18 solidation, acquisition, or change in control, if it finds that 

19 the proposed transaction will be consistent with the public 

20 interest. In evaluating whether a transaction will be con21 sistent with the public interest, the Commission shall con22 sider whether the proposed transaction—

23 ‘‘(A) will adequately protect consumer interests; 

24 ‘‘(B) will be consistent with competitive whole25 sale markets; 
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1 ‘‘(C) will impair the financial integrity of any 

2 public utility that is a party to the transaction or an 

3 associate company of any party to the transaction; 

4 and 

5 ‘‘(D) satisfies such other criteria as the Com6 mission considers consistent with the public interest.

7 ‘‘(5) The Commission shall, by rule, adopt procedures 

8 for the expeditious consideration of applications for the 

9 approval of dispositions, consolidations, or acquisitions 

10 under this section. Such rules shall identify classes of 

11 transactions, or specify criteria for transactions, that nor12 mally meet the standards established in paragraph (4). 

13 The Commission shall provide expedited review for such 

14 transactions. The Commission shall grant or deny any 

15 other application for approval of a transaction not later 

16 than 180 days after the application is filed. If the Com17 mission does not act within 180 days, such application 

18 shall be deemed granted unless the Commission finds, 

19 based on good cause, that further consideration is required 

20 to determine whether the proposed transaction meets the 

21 standards of paragraph (4) and issues an order tolling the 

22 time for acting on the application for not more than 180 

23 days, at the end of which additional period the Commis24 sion shall grant or deny the application. 
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1 ‘‘(6) For purposes of this subsection, the terms ‘asso2 ciate company’, ‘holding company’, and ‘holding company 

3 system’ have the meaning given those terms in the Public 

4 Utility Holding Company Act of 2003.’’. 

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

6 this section shall take effect 12 months after the date of 

7 enactment of this section. 

8 Subtitle I—Definitions 

9 SEC. 1295. DEFINITIONS. 

10 (a) ELECTRIC UTILITY.—Section 3(22) of the Fed11 eral Power Act (16 U.S.C. 796(22)) is amended to read 

12 as follows: 

13 ‘‘(22) ELECTRIC UTILITY.—The term ‘electric 

14 utility’ means any person or Federal or State agency 

15 (including any entity described in section 201(f)) 

16 that sells electric energy; such term includes the 

17 Tennessee Valley Authority and each Federal power 

18 marketing administration.’’. 

19 (b) TRANSMITTING UTILITY.—Section 3(23) of the 

20 Federal Power Act (16 U.S.C. 796(23)) is amended to 

21 read as follows: 

22 ‘‘(23) TRANSMITTING UTILITY.—The term 

23 ‘transmitting utility’ means an entity, including any 

24 entity described in section 201(f), that owns, oper-
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1 ates, or controls facilities used for the transmission 

2 of electric energy—

3 ‘‘(A) in interstate commerce; or 

4 ‘‘(B) for the sale of electric energy at 

5 wholesale.’’. 

6 (c) ADDITIONAL DEFINITIONS.—Section 3 of the 

7 Federal Power Act (16 U.S.C. 796) is amended by adding 

8 at the end the following: 

9 ‘‘(26) ELECTRIC COOPERATIVE.—The term 

10 ‘electric cooperative’ means a cooperatively owned 

11 electric utility. 

12 ‘‘(27) RTO.—The term ‘Regional Transmission 

13 Organization’ or ‘RTO’ means an entity of sufficient 

14 regional scope approved by the Commission to exer15 cise operational or functional control of facilities 

16 used for the transmission of electric energy in inter17 state commerce and to ensure nondiscriminatory ac18 cess to such facilities. 

19 ‘‘(28) ISO.—The term ‘Independent System 

20 Operator’ or ‘ISO’ means an entity approved by the 

21 Commission to exercise operational or functional 

22 control of facilities used for the transmission of elec23 tric energy in interstate commerce and to ensure 

24 nondiscriminatory access to such facilities.’’. 
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1 (d) COMMISSION.—For the purposes of this title, the 

2 term ‘‘Commission’’ means the Federal Energy Regu3 latory Commission. 

4 (e) APPLICABILITY.—Section 201(f) of the Federal 

5 Power Act (16 U.S.C. 824(f)) is amended by adding after 

6 ‘‘political subdivision of a state,’’ the following: ‘‘an elec7 tric cooperative that has financing under the Rural Elec8 trification Act of 1936 (7 U.S.C. 901 et seq.) or that sells 

9 less than 4,000,000 megawatt hours of electricity per 

10 year,’’. 

11 Subtitle J—Technical and 

12 Conforming Amendments 

13 SEC. 1297. CONFORMING AMENDMENTS. 

14 The Federal Power Act is amended as follows: 

15 (1) Section 201(b)(2) of such Act (16 U.S.C. 

16 824(b)(2)) is amended as follows: 

17 (A) In the first sentence by striking ‘‘210, 

18 211, and 212’’ and inserting ‘‘203(a)(2), 

19 206(e), 210, 211, 211A, 212, 215, 216, 217, 

20 218, 219, 220, 221, and 222’’. 

21 (B) In the second sentence by striking 

22 ‘‘210 or 211’’ and inserting ‘‘203(a)(2), 206(e), 

23 210, 211, 211A, 212, 215, 216, 217, 218, 219, 

24 220, 221, and 222’’. 
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1 (C) Section 201(b)(2) of such Act is 

2 amended by striking ‘‘The’’ in the first place it 

3 appears and inserting ‘‘Notwithstanding section 

4 201(f), the’’ and in the second sentence after 

5 ‘‘any order’’ by inserting ‘‘or rule’’. 

6 (2) Section 201(e) of such Act is amended by 

7 striking ‘‘210, 211, or 212’’ and inserting ‘‘206(e), 

8 206(f), 210, 211, 211A, 212, 215, 216, 217, 218, 

9 219, 220, 221, and 222’’. 

10 (3) Section 206 of such Act (16 U.S.C. 824e) 

11 is amended as follows: 

12 (A) In subsection (b), in the seventh sen13 tence, by striking ‘‘the public utility to make’’. 

14 (B) In the first sentence of subsection (a), 

15 by striking ‘hearing had’ and inserting ‘‘hearing 

16 held’’. 

17 (4) Section 211(c) of such Act (16 U.S.C. 

18 824j(c)) is amended by— 

19 (A) striking ‘‘(2)’’; 

20 (B) striking ‘‘(A)’’ and inserting ‘‘(1)’’ 

21 (C) striking ‘‘(B)’’ and inserting ‘‘(2)’’; 

22 and 

23 (D) striking ‘‘termination of modification’’ 

24 and inserting ‘‘termination or modification’’. 
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1 (5) Section 211(d)(1) of such Act (16 U.S.C. 

2 824j(d)(1)) is amended by striking ‘‘electric utility’’ 

3 the second time it appears and inserting ‘‘transmit4 ting utility’’. 

5 (6) Section 315 (c) of such Act (16 U.S.C. 

6 825n(c)) is amended by striking ‘‘subsection’’ and 

7 inserting ‘‘section’’.

8 TITLE XIII—ENERGY TAX 

9 INCENTIVES 

10 SEC. 1300. SHORT TITLE; ETC. 

11 (a) SHORT TITLE.—This title may be cited as the 

12 ‘‘Energy Tax Incentives Act’’. 

13 (b) AMENDMENT OF 1986 CODE.—Except as other14 wise expressly provided, whenever in this title an amend15 ment or repeal is expressed in terms of an amendment 

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

17 shall be considered to be made to a section or other provi18 sion of the Internal Revenue Code of 1986. 

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

20 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. 
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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. 
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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.

1 Subtitle A—Renewable Electricity 

2 Production Tax Credit 

3 SEC. 1301. EXTENSION AND EXPANSION OF CREDIT FOR 

4 ELECTRICITY PRODUCED FROM CERTAIN RE5 NEWABLE RESOURCES. 

6 (a) EXPANSION OF QUALIFIED ENERGY RE7 SOURCES.—Subsection (c) of section 45 (relating to elec-
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1 tricity produced from certain renewable resources) is 

2 amended to read as follows: 

3 ‘‘(c) QUALIFIED ENERGY RESOURCES.—For pur4 poses of this section—

5 ‘‘(1) IN GENERAL.—The term ‘qualified energy 

6 resources’ means—

7 ‘‘(A) wind, 

8 ‘‘(B) closed-loop biomass, 

9 ‘‘(C) biomass (other than closed-loop bio10 mass), 

11 ‘‘(D) geothermal energy, 

12 ‘‘(E) solar energy, 

13 ‘‘(F) small irrigation power, 

14 ‘‘(G) biosolids and sludge, and 

15 ‘‘(H) municipal solid waste.’’. 

16 ‘‘(2) CLOSED-LOOP BIOMASS.—The term 

17 ‘closed-loop biomass’ means any organic material 

18 from a plant which is planted exclusively for pur19 poses of being used at a qualified facility to produce 

20 electricity. 

21 ‘‘(3) BIOMASS.—

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

23 means—

24 ‘‘(i) any agricultural livestock waste 

25 nutrients, or 
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1 ‘‘(ii) any solid, nonhazardous, cel2 lulosic waste material which is segregated 

3 from other waste materials and which is 

4 derived from—

5 ‘‘(I) any of the following forest6 related resources: mill and harvesting 

7 residues, precommercial thinnings, 

8 slash, and brush, 

9 ‘‘(II) solid wood waste materials, 

10 including waste pallets, crates, 

11 dunnage, manufacturing and con12 struction wood wastes (other than 

13 pressure-treated, chemically-treated, 

14 or painted wood wastes), and land15 scape or right-of-way tree trimmings, 

16 but not including municipal solid 

17 waste, gas derived from the bio18 degradation of solid waste, or paper 

19 which is commonly recycled, or 

20 ‘‘(III) agriculture sources, includ21 ing orchard tree crops, vineyard, 

22 grain, legumes, sugar, and other crop 

23 by-products or residues. 

24 ‘‘(B) AGRICULTURAL LIVESTOCK WASTE

25 NUTRIENTS.—
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1 ‘‘(i) IN GENERAL.—The term ‘agricul2 tural livestock waste nutrients’ means agri3 cultural livestock manure and litter, includ4 ing wood shavings, straw, rice hulls, and

5 other bedding material for the disposition 

6 of manure. 

7 ‘‘(ii) AGRICULTURAL LIVESTOCK.—

8 The term ‘agricultural livestock’ includes 

9 bovine, swine, poultry, and sheep. 

10 ‘‘(4) GEOTHERMAL ENERGY.—The term ‘geo11 thermal energy’ means energy derived from a geo12 thermal deposit (within the meaning of section 

13 613(e)(2)). 

14 ‘‘(5) SMALL IRRIGATION POWER.—The term 

15 ‘small irrigation power’ means power—

16 ‘‘(A) generated without any dam or im17 poundment of water through an irrigation sys18 tem canal or ditch, and 

19 ‘‘(B) the installed capacity of which is less 

20 than 5 megawatts. 

21 ‘‘(6) BIOSOLIDS AND SLUDGE.—The term ‘bio22 solids and sludge’ means the residue or solids re23 moved in the treatment of commercial, industrial, or 

24 municipal wastewater. 
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1 ‘‘(7) MUNICIPAL SOLID WASTE.—The term 

2 ‘municipal solid waste’ has the meaning given the 

3 term ‘solid waste’ under section 2(27) of the Solid 

4 Waste Disposal Act (42 U.S.C. 6903).’’. 

5 (b) EXTENSION AND EXPANSION OF QUALIFIED FA6 CILITIES.—

7 (1) IN GENERAL.—Section 45 is amended by 

8 redesignating subsection (d) as subsection (e) and by 

9 inserting after subsection (c) the following new sub10 section: 

11 ‘‘(d) QUALIFIED FACILITIES.—For purposes of this 

12 section—

13 ‘‘(1) WIND FACILITY.—In the case of a facility 

14 using wind to produce electricity, the term ‘qualified 

15 facility’ means any facility owned by the taxpayer 

16 which is originally placed in service after December 

17 31, 1993, and before January 1, 2007. 

18 ‘‘(2) CLOSED-LOOP BIOMASS FACILITY.—

19 ‘‘(A) IN GENERAL.—In the case of a facil20 ity using closed-loop biomass to produce elec21 tricity, the term ‘qualified facility’ means any 

22 facility—

23 ‘‘(i) owned by the taxpayer which is 

24 originally placed in service after December 

25 31, 1992, and before January 1, 2007, or 
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1 ‘‘(ii) owned by the taxpayer which be2 fore January 1, 2007, is originally placed 

3 in service and modified to use closed-loop 

4 biomass to co-fire with coal, with other bio5 mass, or with both, but only if the modi6 fication is approved under the Biomass 

7 Power for Rural Development Programs or 

8 is part of a pilot project of the Commodity 

9 Credit Corporation as described in 65 Fed. 

10 Reg. 63052. 

11 ‘‘(B) SPECIAL RULES.—In the case of a 

12 qualified facility described in subparagraph 

13 (A)(ii)—

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

15 subsection (a) shall be treated as beginning 

16 no earlier than October 1, 2004, 

17 ‘‘(ii) the amount of the credit deter18 mined under subsection (a) with respect to 

19 the facility shall be an amount equal to the 

20 amount determined without regard to this 

21 clause multiplied by the ratio of the ther22 mal content of the closed-loop biomass 

23 used in such facility to the thermal content 

24 of all fuels used in such facility, and 
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1 ‘‘(iii) if the owner of such facility is 

2 not the producer of the electricity, the per3 son eligible for the credit allowable under 

4 subsection (a) shall be the lessee or the op5 erator of such facility. 

6 ‘‘(3) BIOMASS FACILITY.—

7 ‘‘(A) IN GENERAL.—In the case of a facil8 ity using biomass (other than closed-loop bio9 mass) to produce electricity, the term ‘qualified 

10 facility’ means any facility owned by the tax11 payer which—

12 ‘‘(i) in the case of a facility using ag13 ricultural livestock waste nutrients, is 

14 originally placed in service after September 

15 30, 2004 and before January 1, 2007, and 

16 ‘‘(ii) in the case of any other facility, 

17 is originally placed in service before Janu18 ary 1, 2005. 

19 ‘‘(B) SPECIAL RULES FOR PREEFFECTIVE

20 DATE FACILITIES.—In the case of any facility 

21 described in subparagraph (A)(ii) which is 

22 placed in service before October 1, 2004—

23 ‘‘(i) subsection (a)(1) shall be applied 

24 by substituting ‘1.2 cents’ for ‘1.5 cents’, 

25 and 
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1 ‘‘(ii) the 5-year period beginning on 

2 October 1, 2004, shall be substituted for 

3 the 10-year period in subsection 

4 (a)(2)(A)(ii). 

5 ‘‘(C) CREDIT ELIGIBILITY.—In the case of 

6 any facility described in subparagraph (A), if 

7 the owner of such facility is not the producer of 

8 the electricity, the person eligible for the credit 

9 allowable under subsection (a) shall be the les10 see or the operator of such facility.

11 ‘‘(4) GEOTHERMAL OR SOLAR ENERGY FACIL12 ITY.—

13 ‘‘(A) IN GENERAL.—In the case of a facil14 ity using geothermal or solar energy to produce 

15 electricity, the term ‘qualified facility’ means 

16 any facility owned by the taxpayer which is 

17 originally placed in service after September 30, 

18 2004, and before January 1, 2007. 

19 ‘‘(B) SPECIAL RULE.—In the case of any 

20 facility described in subparagraph (A), the 5-

21 year period beginning on the date the facility 

22 was originally placed in service shall be sub23 stituted for the 10-year period in subsection 

24 (a)(2)(A)(ii). 
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1 ‘‘(5) SMALL IRRIGATION POWER FACILITY.—In 

2 the case of a facility using small irrigation power to 

3 produce electricity, the term ‘qualified facility’ 

4 means any facility owned by the taxpayer which is 

5 originally placed in service after September 30, 

6 2004, and before January 1, 2007. 

7 ‘‘(6) BIOSOLIDS AND SLUDGE FACILITY.—In 

8 the case of a facility using waste heat from the in9 cineration of biosolids and sludge to produce elec10 tricity, the term ‘qualified facility’ means any facility 

11 owned by the taxpayer which is originally placed in 

12 service after September 30, 2004, and before Janu13 ary 1, 2007. Such term shall not include any prop14 erty described in section 48(a)(6) the basis of which 

15 is taken into account for purposes of the energy 

16 credit under section 46. 

17 ‘‘(7) MUNICIPAL SOLID WASTE FACILITY.—

18 ‘‘(A) IN GENERAL.—In the case of a facil19 ity or unit incinerating municipal solid waste to 

20 produce electricity, the term ‘qualified facility’ 

21 means any facility or unit owned by the tax22 payer which is originally placed in service after 

23 September 30, 2004, and before January 1, 

24 2007. 
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1 ‘‘(B) SPECIAL RULE.—In the case of any 

2 facility or unit described in subparagraph (A), 

3 the 5-year period beginning on the date the fa4 cility or unit was originally placed in service

5 shall be substituted for the 10-year period in 

6 subsection (a)(2)(A)(ii). 

7 ‘‘(C) CREDIT ELIGIBILITY.—In the case of 

8 any qualified facility described in subparagraph 

9 (A), if the owner of such facility is not the pro10 ducer of the electricity, the person eligible for 

11 the credit allowable under subsection (a) shall 

12 be the lessee or the operator of such facility.’’. 

13 (2) NO CREDIT FOR CERTAIN PRODUCTION.—

14 Section 45(e) (relating to definitions and special 

15 rules), as redesignated by paragraph (1), is amended 

16 by striking paragraph (6) and inserting the following 

17 new paragraph: 

18 ‘‘(6) OPERATIONS INCONSISTENT WITH SOLID

19 WASTE DISPOSAL ACT.—In the case of a qualified fa20 cility described in subsection (d)(6)(A), subsection 

21 (a) shall not apply to electricity produced at such fa22 cility during any taxable year if, during a portion of 

23 such year, there is a certification in effect by the 

24 Administrator of the Environmental Protection 

25 Agency that such facility was permitted to operate 
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1 in a manner inconsistent with section 4003(d) of the 

2 Solid Waste Disposal Act (42 U.S.C. 6943(d)).’’. 

3 (3) CONFORMING AMENDMENT.—Section 45(e), 

4 as so redesignated, is amended by striking ‘‘sub5 section (c)(3)(A)’’ in paragraph (7)(A)(i) and insert6 ing ‘‘subsection (d)(1)’’. 

7 (c) CREDIT RATE FOR ELECTRICITY PRODUCED

8 FROM NEW FACILITIES.—

9 (1) IN GENERAL.—Section 45(a) is amended by 

10 adding at the end the following new flush sentence: 

11 ‘‘In the case of electricity produced after September 30, 

12 2004, at any qualified facility originally placed in service 

13 after such date, paragraph (1) shall be applied by sub14 stituting ‘1.8 cents’ for ‘1.5 cents’.’’. 

15 (2) NEW RATE NOT SUBJECT TO INFLATION

16 ADJUSTMENT.—Section 45(b)(2) (relating to credit 

17 and phaseout adjustment based on inflation) is 

18 amended by adding at the end the following new 

19 sentence: ‘‘This paragraph shall not apply to any 

20 amount which is substituted for the 1.5 cent amount 

21 in subsection (a) by reason of any provision of this 

22 section.’’. 

23 (d) ELIMINATION OF CERTAIN CREDIT REDUC24 TIONS.—Section 45(b)(3)(A) (relating to credit reduced 
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1 for grants, tax-exempt bonds, subsidized energy financing, 

2 and other credits) is amended—

3 (1) by striking clause (ii), 

4 (2) by redesignating clauses (iii) and (iv) as 

5 clauses (ii) and (iii), 

6 (3) by inserting ‘‘(other than proceeds of an 

7 issue of State or local government obligations the in8 terest on which is exempt from tax under section 

9 103, or any loan, debt, or other obligation incurred 

10 under subchapter I of chapter 31 of title 7 of the 

11 Rural Electrification Act of 1936 (7 U.S.C. 901 et 

12 seq.), as in effect on the date of the enactment of 

13 the Energy Tax Incentives Act)’’ after ‘‘project’’ in 

14 clause (ii) (as so redesignated), 

15 (4) by adding at the end the following new sen16 tence: ‘‘This paragraph shall not apply with respect 

17 to any facility described in subsection (d)(2)(A)(ii).’’, 

18 and 

19 (5) by striking ‘‘TAX-EXEMPT BONDS,’’ in the 

20 heading and inserting ‘‘CERTAIN’’. 

21 (e) TREATMENT OF PERSONS NOT ABLE TO USE

22 ENTIRE CREDIT.—Section 45(e) (relating to definitions 

23 and special rules), as redesignated by subsection (b)(1), 

24 is amended by adding at the end the following new para25 graph: 
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1 ‘‘(8) TREATMENT OF PERSONS NOT ABLE TO

2 USE ENTIRE CREDIT.—

3 ‘‘(A) ALLOWANCE OF CREDIT.—

4 ‘‘(i) IN GENERAL.—Except as other5 wise provided in this subsection—

6 ‘‘(I) any credit allowable under 

7 subsection (a) with respect to a quali8 fied facility owned by a person de9 scribed in clause (ii) may be trans10 ferred or used as provided in this 

11 paragraph, and 

12 ‘‘(II) the determination as to 

13 whether the credit is allowable shall 

14 be made without regard to the tax-ex15 empt status of the person. 

16 ‘‘(ii) PERSONS DESCRIBED.—A person 

17 is described in this clause if the person 

18 is—

19 ‘‘(I) an organization described in 

20 section 501(c)(12)(C) and exempt 

21 from tax under section 501(a), 

22 ‘‘(II) an organization described 

23 in section 1381(a)(2)(C), 

24 ‘‘(III) a public utility (as defined 

25 in section 136(c)(2)(B)), which is ex-
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1 empt from income tax under this sub2 title, 

3 ‘‘(IV) any State or political sub4 division thereof, the District of Co5 lumbia, any possession of the United 

6 States, or any agency or instrumen7 tality of any of the foregoing, or

8 ‘‘(V) any Indian tribal govern9 ment (within the meaning of section 

10 7871) or any agency or instrumen11 tality thereof. 

12 ‘‘(B) TRANSFER OF CREDIT.—

13 ‘‘(i) IN GENERAL.—A person de14 scribed in subparagraph (A)(ii) may trans15 fer any credit to which subparagraph 

16 (A)(i) applies through an assignment to 

17 any other person not described in subpara18 graph (A)(ii). Such transfer may be re19 voked only with the consent of the Sec20 retary. 

21 ‘‘(ii) REGULATIONS.—The Secretary 

22 shall prescribe such regulations as nec23 essary to ensure that any credit described 

24 in clause (i) is assigned once and not reas25 signed by such other person. 
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1 ‘‘(iii) TRANSFER PROCEEDS TREATED

2 AS ARISING FROM ESSENTIAL GOVERN3 MENT FUNCTION.—Any proceeds derived 

4 by a person described in subclause (III), 

5 (IV), or (V) of subparagraph (A)(ii) from 

6 the transfer of any credit under clause (i) 

7 shall be treated as arising from the exer8 cise of an essential government function. 

9 ‘‘(C) USE OF CREDIT AS AN OFFSET.—

10 Notwithstanding any other provision of law, in 

11 the case of a person described in subclause (I), 

12 (II), or (V) of subparagraph (A)(ii), any credit 

13 to which subparagraph (A)(i) applies may be 

14 applied by such person, to the extent provided 

15 by the Secretary of Agriculture, as a prepay16 ment of any loan, debt, or other obligation the 

17 entity has incurred under subchapter I of chap18 ter 31 of title 7 of the Rural Electrification Act 

19 of 1936 (7 U.S.C. 901 et seq.), as in effect on 

20 the date of the enactment of the Energy Tax 

21 Incentives Act. 

22 ‘‘(D) CREDIT NOT INCOME.—Any transfer 

23 under subparagraph (B) or use under subpara24 graph (C) of any credit to which subparagraph 
781

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1 (A)(i) applies shall not be treated as income for 

2 purposes of section 501(c)(12). 

3 ‘‘(E) TREATMENT OF UNRELATED PER4 SONS.—For purposes of subsection (a)(2)(B), 

5 sales of electricity among and between persons

6 described in subparagraph (A)(ii) shall be treat7 ed as sales between unrelated parties.’’. 

8 (f) EFFECTIVE DATES.—

9 (1) IN GENERAL.—Except as otherwise pro10 vided in this subsection, the amendments made by 

11 this section shall apply to electricity produced and 

12 sold—

13 (A) with respect to facilities described in 

14 paragraphs (1) and (2)(A)(i) of section 45(d), 

15 as amended by this section, after December 31, 

16 2003, in taxable years ending after such date, 

17 and 

18 (B) with respect to all other facilities de19 scribed in section 45(d), as amended by this 

20 section, after September 30, 2004, in taxable 

21 years ending after such date. 

22 (2) CERTAIN BIOMASS FACILITIES.—With re23 spect to any facility described in section 

24 45(d)(3)(A)(ii) of the Internal Revenue Code of 

25 1986, as added by subsection (b)(1), which is placed 
782

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1 in service before the date of the enactment of this 

2 Act, the amendments made by this section shall 

3 apply to electricity produced and sold after Sep4 tember 30, 2004, in taxable years ending after such 

5 date. 

6 (3) CREDIT RATE FOR NEW FACILITIES.—The 

7 amendments made by subsection (c) shall apply to 

8 electricity produced and sold after September 30, 

9 2004, in taxable years ending after such date. 

10 (4) NONAPPLICATION OF AMENDMENTS TO

11 PREEFFECTIVE DATE POULTRY WASTE FACILI12 TIES.—The amendments made by this section shall 

13 not apply with respect to any poultry waste facility 

14 (within the meaning of section 45(c)(3)(C), as in ef15 fect on September 30, 2004) placed in service on or 

16 before such date.

17 Subtitle B—Alternative Motor 

18 Vehicles and Fuels Incentives 

19 SEC. 1311. ALTERNATIVE MOTOR VEHICLE CREDIT. 

20 (a) IN GENERAL.—Subpart B of part IV of sub21 chapter A of chapter 1 (relating to foreign tax credit, etc.) 

22 is amended by adding at the end the following new section: 
783

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1 ‘‘SEC. 30B. ALTERNATIVE MOTOR VEHICLE CREDIT. 

2 ‘‘(a) ALLOWANCE OF CREDIT.—There shall be al3 lowed as a credit against the tax imposed by this chapter 

4 for the taxable year an amount equal to the sum of—

5 ‘‘(1) the new qualified fuel cell motor vehicle 

6 credit determined under subsection (b), 

7 ‘‘(2) the new qualified hybrid motor vehicle 

8 credit determined under subsection (c), and 

9 ‘‘(3) the new qualified alternative fuel motor ve10 hicle credit determined under subsection (d). 

11 ‘‘(b) NEW QUALIFIED FUEL CELL MOTOR VEHICLE

12 CREDIT.—

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

14 (a), the new qualified fuel cell motor vehicle credit 

15 determined under this subsection with respect to a 

16 new qualified fuel cell motor vehicle placed in service 

17 by the taxpayer during the taxable year is—

18 ‘‘(A) $4,000, if such vehicle has a gross ve19 hicle weight rating of not more than 8,500 

20 pounds, 

21 ‘‘(B) $10,000, if such vehicle has a gross 

22 vehicle weight rating of more than 8,500 

23 pounds but not more than 14,000 pounds, 

24 ‘‘(C) $20,000, if such vehicle has a gross 

25 vehicle weight rating of more than 14,000 

26 pounds but not more than 26,000 pounds, and 
784

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1 ‘‘(D) $40,000, if such vehicle has a gross 

2 vehicle weight rating of more than 26,000 

3 pounds. 

4 ‘‘(2) INCREASE FOR FUEL EFFICIENCY.—

5 ‘‘(A) IN GENERAL.—The amount deter6 mined under paragraph (1)(A) with respect to 

7 a new qualified fuel cell motor vehicle which is 

8 a passenger automobile or light truck shall be 

9 increased by—

10 ‘‘(i) $1,000, if such vehicle achieves at 

11 least 150 percent but less than 175 per12 cent of the 2002 model year city fuel econ13 omy, 

14 ‘‘(ii) $1,500, if such vehicle achieves 

15 at least 175 percent but less than 200 per16 cent of the 2002 model year city fuel econ17 omy, 

18 ‘‘(iii) $2,000, if such vehicle achieves 

19 at least 200 percent but less than 225 per20 cent of the 2002 model year city fuel econ21 omy, 

22 ‘‘(iv) $2,500, if such vehicle achieves 

23 at least 225 percent but less than 250 per24 cent of the 2002 model year city fuel econ25 omy, 
785

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1 ‘‘(v) $3,000, if such vehicle achieves 

2 at least 250 percent but less than 275 per3 cent of the 2002 model year city fuel econ4 omy, 

5 ‘‘(vi) $3,500, if such vehicle achieves 

6 at least 275 percent but less than 300 per7 cent of the 2002 model year city fuel econ8 omy, and 

9 ‘‘(vii) $4,000, if such vehicle achieves 

10 at least 300 percent of the 2002 model 

11 year city fuel economy. 

12 ‘‘(B) 2002 MODEL YEAR CITY FUEL ECON13 OMY.—For purposes of subparagraph (A), the 

14 2002 model year city fuel economy with respect 

15 to a vehicle shall be determined in accordance 

16 with the following tables: 

17 ‘‘(i) In the case of a passenger auto18 mobile:

The 2002 model year city 

‘‘If vehicle inertia weight class is: fuel economy 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.
786

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1 ‘‘(ii) In the case of a light truck:

The 2002 model year city 

‘‘If vehicle inertia weight class is: fuel economy 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.

2 ‘‘(C) VEHICLE INERTIA WEIGHT CLASS.—

3 For purposes of subparagraph (B), the term 

4 ‘vehicle inertia weight class’ has the same 

5 meaning as when defined in regulations pre6 scribed by the Administrator of the Environ7 mental Protection Agency for purposes of the 

8 administration of title II of the Clean Air Act 

9 (42 U.S.C. 7521 et seq.). 

10 ‘‘(3) NEW QUALIFIED FUEL CELL MOTOR VEHI11 CLE.—For purposes of this subsection, the term 

12 ‘new qualified fuel cell motor vehicle’ means a motor 

13 vehicle—

14 ‘‘(A) which is propelled by power derived 

15 from 1 or more cells which convert chemical en16 ergy directly into electricity by combining oxy17 gen with hydrogen fuel which is stored on board 
787

S 2095 PCS 

1 the vehicle in any form and may or may not re2 quire reformation prior to use, 

3 ‘‘(B) which, in the case of a passenger 

4 automobile or light truck—

5 ‘‘(i) for 2002 and later model vehicles, 

6 has received a certificate of conformity 

7 under the Clean Air Act and meets or ex8 ceeds the equivalent qualifying California 

9 low emission vehicle standard under sec10 tion 243(e)(2) of the Clean Air Act for 

11 that make and model year, and 

12 ‘‘(ii) for 2004 and later model vehi13 cles, has received a certificate that such ve14 hicle meets or exceeds the Bin 5 Tier II 

15 emission level established in regulations 

16 prescribed by the Administrator of the En17 vironmental Protection Agency under sec18 tion 202(i) of the Clean Air Act for that 

19 make and model year vehicle, 

20 ‘‘(C) the original use of which commences 

21 with the taxpayer, 

22 ‘‘(D) which is acquired for use or lease by 

23 the taxpayer and not for resale, and 

24 ‘‘(E) which is made by a manufacturer. 
788

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1 ‘‘(c) NEW QUALIFIED HYBRID MOTOR VEHICLE

2 CREDIT.—

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

4 (a), the new qualified hybrid motor vehicle credit de5 termined under this subsection with respect to a new 

6 qualified hybrid motor vehicle placed in service by 

7 the taxpayer during the taxable year is the credit 

8 amount determined under paragraph (2). 

9 ‘‘(2) CREDIT AMOUNT.—

10 ‘‘(A) IN GENERAL.—The credit amount de11 termined under this paragraph shall be deter12 mined in accordance with the following tables: 

13 ‘‘(i) In the case of a new qualified hy14 brid motor vehicle which is a passenger 

15 automobile, medium duty passenger vehi16 cle, or light truck and which provides the 

17 following percentage of the maximum 

18 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.

19 ‘‘(ii) In the case of a new qualified hy20 brid motor vehicle which is a heavy duty 

21 hybrid motor vehicle and which provides 
789

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1 the following percentage of the maximum 

2 available power: 

3 ‘‘(I) If such vehicle has a gross 

4 vehicle weight rating of not more than 

5 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.

6 ‘‘(II) If such vehicle has a gross 

7 vehicle weight rating of more than 

8 14,000 but not more than 26,000 

9 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.

10 ‘‘(III) If such vehicle has a gross 

11 vehicle weight rating of more than 

12 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.

13 ‘‘(B) INCREASE FOR FUEL EFFICIENCY.—

14 ‘‘(i) AMOUNT.—The amount deter15 mined under subparagraph (A)(i) with re-
790

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1 spect to a new qualified hybrid motor vehi2 cle which is a passenger automobile or 

3 light truck shall be increased by—

4 ‘‘(I) $500, if such vehicle 

5 achieves at least 125 percent but less

6 than 150 percent of the 2002 model 

7 year city fuel economy, 

8 ‘‘(II) $1,000, if such vehicle 

9 achieves at least 150 percent but less 

10 than 175 percent of the 2002 model 

11 year city fuel economy, 

12 ‘‘(III) $1,500, if such vehicle 

13 achieves at least 175 percent but less 

14 than 200 percent of the 2002 model 

15 year city fuel economy, 

16 ‘‘(IV) $2,000, if such vehicle 

17 achieves at least 200 percent but less 

18 than 225 percent of the 2002 model 

19 year city fuel economy, 

20 ‘‘(V) $2,500, if such vehicle 

21 achieves at least 225 percent but less 

22 than 250 percent of the 2002 model 

23 year city fuel economy, and 
791

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1 ‘‘(VI) $3,000, if such vehicle 

2 achieves at least 250 percent of the 

3 2002 model year city fuel economy. 

4 ‘‘(ii) 2002 MODEL YEAR CITY FUEL

5 ECONOMY.—For purposes of clause (i), the 

6 2002 model year city fuel economy with re7 spect to a vehicle shall be determined on a 

8 gasoline gallon equivalent basis as deter9 mined by the Administrator of the Envi10 ronmental Protection Agency using the ta11 bles provided in subsection (b)(2)(B) with 

12 respect to such vehicle. 

13 ‘‘(C) INCREASE FOR ACCELERATED EMIS14 SIONS PERFORMANCE.—The amount deter15 mined under subparagraph (A)(ii) with respect 

16 to an applicable heavy duty hybrid motor vehi17 cle shall be increased by the increased credit 

18 amount determined in accordance with the fol19 lowing tables: 

20 ‘‘(i) In the case of a vehicle which has 

21 a gross vehicle weight rating of not more 

22 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.
792

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1 ‘‘(ii) In the case of a vehicle which 

2 has a gross vehicle weight rating of more 

3 than 14,000 pounds but not more than 

4 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.

5 ‘‘(iii) In the case of a vehicle which 

6 has a gross vehicle weight rating of more 

7 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.

8 ‘‘(D) DEFINITIONS RELATING TO CREDIT

9 AMOUNT.—

10 ‘‘(i) APPLICABLE HEAVY DUTY HY11 BRID MOTOR VEHICLE.—For purposes of 

12 subparagraph (C), the term ‘applicable 

13 heavy duty hybrid motor vehicle’ means a 

14 heavy duty hybrid motor vehicle which is 

15 powered by an internal combustion or heat 

16 engine which is certified as meeting the 

17 emission standards set in the regulations 

18 prescribed by the Administrator of the En19 vironmental Protection Agency for 2007 

20 and later model year diesel heavy duty en-
793

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1 gines, or for 2008 and later model year 

2 ottocycle heavy duty engines, as applicable. 

3 ‘‘(ii) MAXIMUM AVAILABLE POWER.—

4 ‘‘(I) PASSENGER AUTOMOBILE, 

5 MEDIUM DUTY PASSENGER VEHICLE, 

6 OR LIGHT TRUCK.—For purposes of 

7 subparagraph (A)(i), the term ‘max8 imum available power’ means the 

9 maximum power available from the re10 chargeable energy storage system, 

11 during a standard 10 second pulse 

12 power or equivalent test, divided by 

13 such maximum power and the SAE 

14 net power of the heat engine. 

15 ‘‘(II) HEAVY DUTY HYBRID

16 MOTOR VEHICLE.—For purposes of 

17 subparagraph (A)(ii), the term ‘max18 imum available power’ means the 

19 maximum power available from the re20 chargeable energy storage system, 

21 during a standard 10 second pulse 

22 power or equivalent test, divided by 

23 the vehicle’s total traction power. The 

24 term ‘total traction power’ means the 

25 sum of the peak power from the re-
794

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1 chargeable energy storage system and 

2 the heat engine peak power of the ve3 hicle, except that if such storage sys4 tem is the sole means by which the ve5 hicle can be driven, the total traction 

6 power is the peak power of such stor7 age system. 

8 ‘‘(3) NEW QUALIFIED HYBRID MOTOR VEHI9 CLE.—For purposes of this subsection—

10 ‘‘(A) IN GENERAL.—The term ‘new quali11 fied hybrid motor vehicle’ means a motor vehi12 cle—

13 ‘‘(i) which draws propulsion energy 

14 from onboard sources of stored energy 

15 which are both—

16 ‘‘(I) an internal combustion or 

17 heat engine using consumable fuel, 

18 and 

19 ‘‘(II) a rechargeable energy stor20 age system, 

21 ‘‘(ii) which, in the case of a passenger 

22 automobile, medium duty passenger vehi23 cle, or light truck—

24 ‘‘(I) for 2002 and later model ve25 hicles, has received a certificate of 
795

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1 conformity under the Clean Air Act 

2 and meets or exceeds the equivalent 

3 qualifying California low emission ve4 hicle standard under section 243(e)(2) 

5 of the Clean Air Act for that make 

6 and model year, and

7 ‘‘(II) for 2004 and later model 

8 vehicles, has received a certificate that 

9 such vehicle meets or exceeds the Bin 

10 5 Tier II emission level established in 

11 regulations prescribed by the Adminis12 trator of the Environmental Protec13 tion Agency under section 202(i) of 

14 the Clean Air Act for that make and 

15 model year vehicle, 

16 ‘‘(iii) which, in the case of a heavy 

17 duty hybrid motor vehicle, has an internal 

18 combustion or heat engine which has re19 ceived a certificate of conformity under the 

20 Clean Air Act as meeting the emission 

21 standards set in the regulations prescribed 

22 by the Administrator of the Environmental 

23 Protection Agency for 2004 through 2007 

24 model year diesel heavy duty engines or 

25 ottocycle heavy duty engines, as applicable, 
796

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1 ‘‘(iv) the original use of which com2 mences with the taxpayer, 

3 ‘‘(v) which is acquired for use or lease 

4 by the taxpayer and not for resale, and 

5 ‘‘(vi) which is made by a manufac6 turer. 

7 ‘‘(B) CONSUMABLE FUEL.—For purposes 

8 of subparagraph (A)(i)(I), the term ‘consumable 

9 fuel’ means any solid, liquid, or gaseous matter 

10 which releases energy when consumed by an 

11 auxiliary power unit. 

12 ‘‘(4) HEAVY DUTY HYBRID MOTOR VEHICLE.—

13 For purposes of this subsection, the term ‘heavy 

14 duty hybrid motor vehicle’ means a new qualified hy15 brid motor vehicle which has a gross vehicle weight 

16 rating of more than 8,500 pounds. Such term does 

17 not include a medium duty passenger vehicle. 

18 ‘‘(d) NEW QUALIFIED ALTERNATIVE FUEL MOTOR

19 VEHICLE CREDIT.—

20 ‘‘(1) ALLOWANCE OF CREDIT.—Except as pro21 vided in paragraph (5), the new qualified alternative 

22 fuel motor vehicle credit determined under this sub23 section is an amount equal to the applicable percent24 age of the incremental cost of any new qualified al-
797

S 2095 PCS 

1 ternative fuel motor vehicle placed in service by the 

2 taxpayer during the taxable year. 

3 ‘‘(2) APPLICABLE PERCENTAGE.—For purposes 

4 of paragraph (1), the applicable percentage with re5 spect to any new qualified alternative fuel motor ve6 hicle is—

7 ‘‘(A) 40 percent, plus 

8 ‘‘(B) 30 percent, if such vehicle—

9 ‘‘(i) has received a certificate of con10 formity under the Clean Air Act and meets 

11 or exceeds the most stringent standard 

12 available for certification under the Clean 

13 Air Act for that make and model year vehi14 cle (other than a zero emission standard), 

15 or 

16 ‘‘(ii) has received an order certifying 

17 the vehicle as meeting the same require18 ments as vehicles which may be sold or 

19 leased in California and meets or exceeds 

20 the most stringent standard available for 

21 certification under the State laws of Cali22 fornia (enacted in accordance with a waiv23 er granted under section 209(b) of the 

24 Clean Air Act) for that make and model 
798

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1 year vehicle (other than a zero emission 

2 standard). 

3 For purposes of the preceding sentence, in the case 

4 of any new qualified alternative fuel motor vehicle 

5 which weighs more than 14,000 pounds gross vehicle 

6 weight rating, the most stringent standard available 

7 shall be such standard available for certification on 

8 the date of the enactment of the Energy Tax Incen9 tives Act. 

10 ‘‘(3) INCREMENTAL COST.—For purposes of 

11 this subsection, the incremental cost of any new 

12 qualified alternative fuel motor vehicle is equal to 

13 the amount of the excess of the manufacturer’s sug14 gested retail price for such vehicle over such price 

15 for a gasoline or diesel fuel motor vehicle of the 

16 same model, to the extent such amount does not ex17 ceed—

18 ‘‘(A) $5,000, if such vehicle has a gross ve19 hicle weight rating of not more than 8,500 

20 pounds, 

21 ‘‘(B) $10,000, if such vehicle has a gross 

22 vehicle weight rating of more than 8,500 

23 pounds but not more than 14,000 pounds, 
799

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1 ‘‘(C) $25,000, if such vehicle has a gross 

2 vehicle weight rating of more than 14,000 

3 pounds but not more than 26,000 pounds, and 

4 ‘‘(D) $40,000, if such vehicle has a gross 

5 vehicle weight rating of more than 26,000 

6 pounds. 

7 ‘‘(4) NEW QUALIFIED ALTERNATIVE FUEL

8 MOTOR VEHICLE.—For purposes of this sub9 section—

10 ‘‘(A) IN GENERAL.—The term ‘new quali11 fied alternative fuel motor vehicle’ means any 

12 motor vehicle—

13 ‘‘(i) which is only capable of operating 

14 on an alternative fuel, 

15 ‘‘(ii) the original use of which com16 mences with the taxpayer, 

17 ‘‘(iii) which is acquired by the tax18 payer for use or lease, but not for resale, 

19 and 

20 ‘‘(iv) which is made by a manufac21 turer. 

22 ‘‘(B) ALTERNATIVE FUEL.—The term ‘al23 ternative fuel’ means compressed natural gas, 

24 liquefied natural gas, liquefied petroleum gas, 
800

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1 hydrogen, and any liquid at least 85 percent of 

2 the volume of which consists of methanol. 

3 ‘‘(5) CREDIT FOR MIXED-FUEL VEHICLES.—

4 ‘‘(A) IN GENERAL.—In the case of a 

5 mixed-fuel vehicle placed in service by the tax6 payer during the taxable year, the credit deter7 mined under this subsection is an amount equal 

8 to—

9 ‘‘(i) in the case of a 75/25 mixed-fuel 

10 vehicle, 70 percent of the credit which

11 would have been allowed under this sub12 section if such vehicle was a qualified alter13 native fuel motor vehicle, and 

14 ‘‘(ii) in the case of a 90/10 mixed-fuel 

15 vehicle, 90 percent of the credit which 

16 would have been allowed under this sub17 section if such vehicle was a qualified alter18 native fuel motor vehicle. 

19 ‘‘(B) MIXED-FUEL VEHICLE.—For pur20 poses of this subsection, the term ‘mixed-fuel 

21 vehicle’ means any motor vehicle described in 

22 subparagraph (C) or (D) of paragraph (3), 

23 which—

24 ‘‘(i) is certified by the manufacturer 

25 as being able to perform efficiently in nor-
801

S 2095 PCS 

1 mal operation on a combination of an al2 ternative fuel and a petroleum-based fuel, 

3 ‘‘(ii) either—

4 ‘‘(I) has received a certificate of 

5 conformity under the Clean Air Act, 

6 or 

7 ‘‘(II) has received an order certi8 fying the vehicle as meeting the same 

9 requirements as vehicles which may be 

10 sold or leased in California and meets 

11 or exceeds the low emission vehicle 

12 standard under section 88.105–94 of 

13 title 40, Code of Federal Regulations, 

14 for that make and model year vehicle, 

15 ‘‘(iii) the original use of which com16 mences with the taxpayer, 

17 ‘‘(iv) which is acquired by the tax18 payer for use or lease, but not for resale, 

19 and 

20 ‘‘(v) which is made by a manufac21 turer. 

22 ‘‘(C) 75/25 MIXED-FUEL VEHICLE.—For 

23 purposes of this subsection, the term ‘75/25 

24 mixed-fuel vehicle’ means a mixed-fuel vehicle 

25 which operates using at least 75 percent alter-
802

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1 native fuel and not more than 25 percent petro2 leum-based fuel. 

3 ‘‘(D) 90/10 MIXED-FUEL VEHICLE.—For 

4 purposes of this subsection, the term ‘90/10 

5 mixed-fuel vehicle’ means a mixed-fuel vehicle 

6 which operates using at least 90 percent alter7 native fuel and not more than 10 percent petro8 leum-based fuel. 

9 ‘‘(e) APPLICATION WITH OTHER CREDITS.—The 

10 credit allowed under subsection (a) for any taxable year 

11 shall not exceed the excess (if any) of—

12 ‘‘(1) the regular tax for the taxable year re13 duced by the sum of the credits allowable under sub14 part A and sections 27, 29, and 30, over 

15 ‘‘(2) the tentative minimum tax for the taxable 

16 year. 

17 ‘‘(f) OTHER DEFINITIONS AND SPECIAL RULES.—

18 For purposes of this section—

19 ‘‘(1) MOTOR VEHICLE.—The term ‘motor vehi20 cle’ has the meaning given such term by section 

21 30(c)(2). 

22 ‘‘(2) CITY FUEL ECONOMY.—The city fuel econ23 omy with respect to any vehicle shall be measured in 

24 a manner which is substantially similar to the man25 ner city fuel economy is measured in accordance 
803

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1 with procedures under part 600 of subchapter Q of 

2 chapter I of title 40, Code of Federal Regulations, 

3 as in effect on the date of the enactment of this sec4 tion. 

5 ‘‘(3) OTHER TERMS.—The terms ‘automobile’, 

6 ‘passenger automobile’, ‘medium duty passenger ve7 hicle’, ‘light truck’, and ‘manufacturer’ have the 

8 meanings given such terms in regulations prescribed 

9 by the Administrator of the Environmental Protec10 tion Agency for purposes of the administration of 

11 title II of the Clean Air Act (42 U.S.C. 7521 et 

12 seq.). 

13 ‘‘(4) REDUCTION IN BASIS.—For purposes of 

14 this subtitle, the basis of any property for which a 

15 credit is allowable under subsection (a) shall be re16 duced by the amount of such credit so allowed (de17 termined without regard to subsection (e)). 

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

19 any deduction or other credit allowable under this 

20 chapter—

21 ‘‘(A) for any incremental cost taken into 

22 account in computing the amount of the credit 

23 determined under subsection (d) shall be re24 duced by the amount of such credit attributable 

25 to such cost, and 
804

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1 ‘‘(B) with respect to a vehicle described 

2 under subsection (b) or (c), shall be reduced by 

3 the amount of credit allowed under subsection 

4 (a) for such vehicle for the taxable year. 

5 ‘‘(6) PROPERTY USED BY TAX-EXEMPT ENTI6 TIES.—In the case of a credit amount which is al7 lowable with respect to a motor vehicle which is ac8 quired by an entity exempt from tax under this 

9 chapter, the person which sells or leases such vehicle 

10 to the entity shall be treated as the taxpayer with 

11 respect to the vehicle for purposes of this section 

12 and the credit shall be allowed to such person, but 

13 only if the person clearly discloses to the entity at 

14 the time of any sale or lease the specific amount of 

15 any credit otherwise allowable to the entity under 

16 this section. 

17 ‘‘(7) RECAPTURE.—The Secretary shall, by reg18 ulations, provide for recapturing the benefit of any 

19 credit allowable under subsection (a) with respect to 

20 any property which ceases to be property eligible for 

21 such credit (including recapture in the case of a 

22 lease period of less than the economic life of a vehi23 cle). 

24 ‘‘(8) PROPERTY USED OUTSIDE UNITED

25 STATES, ETC., NOT QUALIFIED.—No credit shall be 
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1 allowed under subsection (a) with respect to any 

2 property referred to in section 50(b) or with respect 

3 to the portion of the cost of any property taken into 

4 account under section 179. 

5 ‘‘(9) ELECTION TO NOT TAKE CREDIT.—No 

6 credit shall be allowed under subsection (a) for any 

7 vehicle if the taxpayer elects to not have this section 

8 apply to such vehicle.

9 ‘‘(10) CARRYBACK AND CARRYFORWARD AL10 LOWED.—

11 ‘‘(A) IN GENERAL.—If the credit allowable 

12 under subsection (a) for a taxable year exceeds 

13 the amount of the limitation under subsection 

14 (e) for such taxable year (in this paragraph re15 ferred to as the ‘unused credit year’), such ex16 cess shall be a credit carryback to each of the 

17 3 taxable years preceding the unused credit 

18 year and a credit carryforward to each of the 

19 20 taxable years following the unused credit 

20 year, except that no excess may be carried to a 

21 taxable year beginning before October 1, 2004. 

22 ‘‘(B) RULES.—Rules similar to the rules of 

23 section 39 shall apply with respect to the credit 

24 carryback and credit carryforward under sub25 paragraph (A). 
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1 ‘‘(11) INTERACTION WITH AIR QUALITY AND

2 MOTOR VEHICLE SAFETY STANDARDS.—Unless oth3 erwise provided in this section, a motor vehicle shall 

4 not be considered eligible for a credit under this sec5 tion unless such vehicle is in compliance with—

6 ‘‘(A) the applicable provisions of the Clean 

7 Air Act for the applicable make and model year 

8 of the vehicle (or applicable air quality provi9 sions of State law in the case of a State which 

10 has adopted such provision under a waiver 

11 under section 209(b) of the Clean Air Act), and 

12 ‘‘(B) the motor vehicle safety provisions of 

13 sections 30101 through 30169 of title 49, 

14 United States Code. 

15 ‘‘(g) REGULATIONS.—

16 ‘‘(1) IN GENERAL.—Except as provided in para17 graph (2), the Secretary shall promulgate such regu18 lations as necessary to carry out the provisions of 

19 this section. 

20 ‘‘(2) COORDINATION IN PRESCRIPTION OF CER21 TAIN REGULATIONS.—The Secretary of the Treas22 ury, in coordination with the Secretary of Transpor23 tation and the Administrator of the Environmental 

24 Protection Agency, shall prescribe such regulations 

25 as necessary to determine whether a motor vehicle 
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1 meets the requirements to be eligible for a credit 

2 under this section. 

3 ‘‘(h) TERMINATION.—This section shall not apply to 

4 any property purchased after—

5 ‘‘(1) in the case of a new qualified fuel cell 

6 motor vehicle (as described in subsection (b)), De7 cember 31, 2011, and 

8 ‘‘(2) in the case of any other property, Decem9 ber 31, 2006.’’. 

10 (b) CONFORMING AMENDMENTS.—

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

12 ‘‘and’’ at the end of paragraph (27), by striking the 

13 period at the end of paragraph (28) and inserting ‘‘, 

14 and’’, and by adding at the end the following new 

15 paragraph: 

16 ‘‘(29) to the extent provided in section 

17 30B(f)(4).’’. 

18 (2) Section 55(c)(2) is amended by inserting 

19 ‘‘30B(e),’’ after ‘‘30(b)(3),’’. 

20 (3) Section 6501(m) is amended by inserting 

21 ‘‘30B(f)(9),’’ after ‘‘30(d)(4),’’. 

22 (4) The table of sections for subpart B of part 

23 IV of subchapter A of chapter 1 is amended by in24 serting after the item relating to section 30A the fol25 lowing new item:

‘‘Sec. 30B. Alternative motor vehicle credit.’’.
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1 (c) EFFECTIVE DATE.—The amendments made by 

2 this section shall apply to property placed in service after 

3 September 30, 2004, in taxable years ending after such 

4 date. 

5 SEC. 1312. MODIFICATION OF CREDIT FOR QUALIFIED 

6 ELECTRIC VEHICLES. 

7 (a) AMOUNT OF CREDIT.—

8 (1) IN GENERAL.—Section 30(a) (relating to al9 lowance of credit) is amended by striking ‘‘10 per10 cent of’’.

11 (2) LIMITATION OF CREDIT ACCORDING TO

12 TYPE OF VEHICLE.—Section 30(b) (relating to limi13 tations) is amended—

14 (A) by striking paragraphs (1) and (2) and 

15 inserting the following new paragraph: 

16 ‘‘(1) LIMITATION ACCORDING TO TYPE OF VE17 HICLE.—The amount of the credit allowed under 

18 subsection (a) for any vehicle shall not exceed the 

19 greatest of the following amounts applicable to such 

20 vehicle: 

21 ‘‘(A) In the case of a vehicle with a gross 

22 vehicle weight rating not exceeding 8,500 

23 pounds—

24 ‘‘(i) except as provided in clause (ii) 

25 or (iii), $3,500, 
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1 ‘‘(ii) $6,000, if such vehicle is—

2 ‘‘(I) capable of a driving range of 

3 at least 100 miles on a single charge 

4 of the vehicle’s rechargeable batteries 

5 as measured pursuant to the urban 

6 dynamometer schedules under appen7 dix I to part 86 of title 40, Code of 

8 Federal Regulations, or 

9 ‘‘(II) capable of a payload capac10 ity of at least 1,000 pounds, and 

11 ‘‘(iii) if such vehicle is a low-speed ve12 hicle which conforms to Standard 500 pre13 scribed by the Secretary of Transportation 

14 (49 CFR 571.500), as in effect on the date 

15 of the enactment of the Energy Tax Incen16 tives Act, the lesser of—

17 ‘‘(I) 10 percent of the manufac18 turer’s suggested retail price of the 

19 vehicle, or 

20 ‘‘(II) $1,500. 

21 ‘‘(B) In the case of a vehicle with a gross 

22 vehicle weight rating exceeding 8,500 but not 

23 exceeding 14,000 pounds, $10,000. 
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1 ‘‘(C) In the case of a vehicle with a gross 

2 vehicle weight rating exceeding 14,000 but not 

3 exceeding 26,000 pounds, $20,000. 

4 ‘‘(D) In the case of a vehicle with a gross 

5 vehicle weight rating exceeding 26,000 pounds, 

6 $40,000.’’, and 

7 (B) by redesignating paragraph (3) as 

8 paragraph (2).

9 (3) CONFORMING AMENDMENTS.—

10 (A) Section 53(d)(1)(B)(iii) is amended by 

11 striking ‘‘section 30(b)(3)(B)’’ and inserting 

12 ‘‘section 30(b)(2)(B)’’. 

13 (B) Section 55(c)(2), as amended by this 

14 Act, is amended by striking ‘‘30(b)(3)’’ and in15 serting ‘‘30(b)(2)’’. 

16 (b) QUALIFIED BATTERY ELECTRIC VEHICLE.—

17 (1) IN GENERAL.—Section 30(c)(1)(A) (defin18 ing qualified electric vehicle) is amended to read as 

19 follows: 

20 ‘‘(A) which is—

21 ‘‘(i) operated solely by use of a bat22 tery or battery pack, or 

23 ‘‘(ii) powered primarily through the 

24 use of an electric battery or battery pack 

25 using a flywheel or capacitor which stores 
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1 energy produced by an electric motor 

2 through regenerative braking to assist in 

3 vehicle operation,’’. 

4 (2) LEASED VEHICLES.—Section 30(c)(1)(C) is 

5 amended by inserting ‘‘or lease’’ after ‘‘use’’. 

6 (3) CONFORMING AMENDMENTS.—

7 (A) Subsections (a), (b)(2), and (c) of sec8 tion 30 are each amended by inserting ‘‘bat9 tery’’ after ‘‘qualified’’ each place it appears. 

10 (B) The heading of subsection (c) of sec11 tion 30 is amended by inserting ‘‘BATTERY’’ 

12 after ‘‘QUALIFIED’’. 

13 (C) The heading of section 30 is amended 

14 by inserting ‘‘BATTERY’’ after ‘‘QUALIFIED’’. 

15 (D) The item relating to section 30 in the 

16 table of sections for subpart B of part IV of 

17 subchapter A of chapter 1 is amended by in18 serting ‘‘battery’’ after ‘‘qualified’’. 

19 (E) Section 179A(c)(3) is amended by in20 serting ‘‘battery’’ before ‘‘electric’’. 

21 (F) The heading of paragraph (3) of sec22 tion 179A(c) is amended by inserting ‘‘BAT23 TERY’’ before ‘‘ELECTRIC’’. 
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1 (c) ADDITIONAL SPECIAL RULES.—Section 30(d) 

2 (relating to special rules) is amended by adding at the end 

3 the following new paragraphs: 

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

5 any deduction or other credit allowable under this 

6 chapter for any cost taken into account in com7 puting the amount of the credit determined under 

8 subsection (a) shall be reduced by the amount of 

9 such credit attributable to such cost. 

10 ‘‘(6) PROPERTY USED BY TAX-EXEMPT ENTI11 TIES.—In the case of a credit amount which is al12 lowable with respect to a vehicle which is acquired 

13 by an entity exempt from tax under this chapter, the 

14 person which sells or leases such vehicle to the entity 

15 shall be treated as the taxpayer with respect to the 

16 vehicle for purposes of this section and the credit 

17 shall be allowed to such person, but only if the per18 son clearly discloses to the entity at the time of any 

19 sale or lease the specific amount of any credit other20 wise allowable to the entity under this section. 

21 ‘‘(7) CARRYBACK AND CARRYFORWARD AL22 LOWED.—

23 ‘‘(A) IN GENERAL.—If the credit allowable 

24 under subsection (a) for a taxable year exceeds 

25 the amount of the limitation under subsection 
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1 (b)(2) for such taxable year (in this paragraph 

2 referred to as the ‘unused credit year’), such 

3 excess shall be a credit carryback to each of the 

4 3 taxable years preceding the unused credit 

5 year and a credit carryforward to each of the 

6 20 taxable years following the unused credit 

7 year, except that no excess may be carried to a 

8 taxable year beginning before October 1, 2004. 

9 ‘‘(B) RULES.—Rules similar to the rules of 

10 section 39 shall apply with respect to the credit 

11 carryback and credit carryforward under sub12 paragraph (A).’’.

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

14 this section shall apply to property placed in service after 

15 September 30, 2004, in taxable years ending after such 

16 date. 

17 SEC. 1313. CREDIT FOR INSTALLATION OF ALTERNATIVE 

18 FUELING STATIONS. 

19 (a) IN GENERAL.—Subpart B of part IV of sub20 chapter A of chapter 1 (relating to foreign tax credit, etc.), 

21 as amended by this Act, is amended by adding at the end 

22 the following new section: 
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1 ‘‘SEC. 30C. CLEAN-FUEL VEHICLE REFUELING PROPERTY 

2 CREDIT. 

3 ‘‘(a) CREDIT ALLOWED.—There shall be allowed as 

4 a credit against the tax imposed by this chapter for the 

5 taxable year an amount equal to 50 percent of the amount 

6 paid or incurred by the taxpayer during the taxable year 

7 for the installation of qualified clean-fuel vehicle refueling 

8 property.

9 ‘‘(b) LIMITATION.—The credit allowed under sub10 section (a)—

11 ‘‘(1) with respect to any retail clean-fuel vehicle 

12 refueling property, shall not exceed $30,000, and 

13 ‘‘(2) with respect to any residential clean-fuel 

14 vehicle refueling property, shall not exceed $1,000. 

15 ‘‘(c) YEAR CREDIT ALLOWED.—Notwithstanding 

16 subsection (a), no credit shall be allowed under subsection 

17 (a) with respect to any qualified clean-fuel vehicle refuel18 ing property before the taxable year in which the property 

19 is placed in service by the taxpayer. 

20 ‘‘(d) DEFINITIONS.—For purposes of this section—

21 ‘‘(1) QUALIFIED CLEAN-FUEL VEHICLE RE22 FUELING PROPERTY.—The term ‘qualified clean-fuel 

23 vehicle refueling property’ has the same meaning 

24 given such term by section 179A(d). 

25 ‘‘(2) RESIDENTIAL CLEAN-FUEL VEHICLE RE26 FUELING PROPERTY.—The term ‘residential clean-
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1 fuel vehicle refueling property’ means qualified 

2 clean-fuel vehicle refueling property which is in3 stalled on property which is used as the principal 

4 residence (within the meaning of section 121) of the 

5 taxpayer.

6 ‘‘(3) RETAIL CLEAN-FUEL VEHICLE REFUELING

7 PROPERTY.—The term ‘retail clean-fuel vehicle re8 fueling property’ means qualified clean-fuel vehicle 

9 refueling property which is installed on property 

10 (other than property described in paragraph (2)) 

11 used in a trade or business of the taxpayer. 

12 ‘‘(e) APPLICATION WITH OTHER CREDITS.—The 

13 credit allowed under subsection (a) for any taxable year 

14 shall not exceed the excess (if any) of—

15 ‘‘(1) the regular tax for the taxable year re16 duced by the sum of the credits allowable under sub17 part A and sections 27, 29, 30, and 30B, over 

18 ‘‘(2) the tentative minimum tax for the taxable 

19 year. 

20 ‘‘(f) BASIS REDUCTION.—For purposes of this title, 

21 the basis of any property shall be reduced by the portion 

22 of the cost of such property taken into account under sub23 section (a). 

24 ‘‘(g) NO DOUBLE BENEFIT.—
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1 ‘‘(1) COORDINATION WITH OTHER DEDUCTIONS

2 AND CREDITS.—Except as provided in paragraph 

3 (2), the amount of any deduction or other credit al4 lowable under this chapter for any cost taken into 

5 account in computing the amount of the credit de6 termined under subsection (a) shall be reduced by 

7 the amount of such credit attributable to such cost. 

8 ‘‘(2) NO DEDUCTION ALLOWED UNDER SECTION

9 179A.—No deduction shall be allowed under section 

10 179A with respect to any property with respect to 

11 which a credit is allowed under subsection (a). 

12 ‘‘(h) REFUELING PROPERTY INSTALLED FOR TAX13 EXEMPT ENTITIES.—In the case of qualified clean-fuel ve14 hicle refueling property installed on property owned or 

15 used by an entity exempt from tax under this chapter, the 

16 person which installs such refueling property for the entity 

17 shall be treated as the taxpayer with respect to the refuel18 ing property for purposes of this section (and such refuel19 ing property shall be treated as retail clean-fuel vehicle 

20 refueling property) and the credit shall be allowed to such 

21 person, but only if the person clearly discloses to the entity 

22 in any installation contract the specific amount of the 

23 credit allowable under this section. 

24 ‘‘(i) CARRYFORWARD ALLOWED.—
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1 ‘‘(1) IN GENERAL.—If the credit allowable 

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

3 amount of the limitation under subsection (e) for 

4 such taxable year, such excess shall be a credit 

5 carryforward to each of the 20 taxable years fol6 lowing such taxable year. 

7 ‘‘(2) RULES.—Rules similar to the rules of sec8 tion 39 shall apply with respect to the credit 

9 carryforward under paragraph (1). 

10 ‘‘(j) SPECIAL RULES.—Rules similar to the rules of 

11 paragraphs (4) and (5) of section 179A(e) shall apply. 

12 ‘‘(k) REGULATIONS.—The Secretary shall prescribe 

13 such regulations as necessary to carry out the provisions 

14 of this section. 

15 ‘‘(l) TERMINATION.—This section shall not apply to 

16 any property placed in service—

17 ‘‘(1) in the case of property relating to hydro18 gen, after December 31, 2011, and 

19 ‘‘(2) in the case of any other property, after 

20 December 31, 2007.’’. 

21 (b) MODIFICATIONS TO EXTENSION OF DEDUCTION

22 FOR CERTAIN REFUELING PROPERTY.—

23 (1) IN GENERAL.—Subsection (f) of section 

24 179A is amended to read as follows: 
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1 ‘‘(f) TERMINATION.—This section shall not apply to 

2 any property placed in service—

3 ‘‘(1) in the case of property relating to hydro4 gen, after December 31, 2011, and 

5 ‘‘(2) in the case of any other property, after 

6 December 31, 2007.’’. 

7 (2) EXTENSION OF PHASEOUT.—Section 

8 179A(b)(1)(B) is amended—

9 (A) by striking ‘‘calendar year 2004’’ in 

10 clause (i) and inserting ‘‘calendar years 2004 

11 and 2005 (calendar years 2004 through 2009 

12 in the case of property relating to hydrogen) ’’,

13 (B) by striking ‘‘2005’’ in clause (ii) and 

14 inserting ‘‘2006 (calendar year 2010 in the case 

15 of property relating to hydrogen)’’, and 

16 (C) by striking ‘‘2006’’ in clause (iii) and 

17 inserting ‘‘2007 (calendar year 2011 in the case 

18 of property relating to hydrogen)’’. 

19 (c) INCENTIVE FOR PRODUCTION OF HYDROGEN AT

20 QUALIFIED CLEAN-FUEL VEHICLE REFUELING PROP21 ERTY.—Section 179A(d) (defining qualified clean-fuel ve22 hicle refueling property) is amended by adding at the end 

23 the following new flush sentence: 

24 ‘‘In the case of clean-burning fuel which is hydrogen pro25 duced from another clean-burning fuel, paragraph (3)(A) 
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1 shall be applied by substituting ‘production, storage, or 

2 dispensing’ for ‘storage or dispensing’ both places it ap3 pears.’’. 

4 (d) CONFORMING AMENDMENTS.—

5 (1) Section 1016(a), as amended by this Act, is 

6 amended by striking ‘‘and’’ at the end of paragraph

7 (28), by striking the period at the end of paragraph 

8 (29) and inserting ‘‘, and’’, and by adding at the 

9 end the following new paragraph: 

10 ‘‘(30) to the extent provided in section 

11 30C(f).’’. 

12 (2) Section 55(c)(2), as amended by this Act, is 

13 amended by inserting ‘‘30C(e),’’ after ‘‘30B(e),’’. 

14 (3) The table of sections for subpart B of part 

15 IV of subchapter A of chapter 1, as amended by this 

16 Act, is amended by inserting after the item relating 

17 to section 30B the following new item:

‘‘Sec. 30C. Clean-fuel vehicle refueling property credit.’’.

18 (e) EFFECTIVE DATE.—

19 (1) IN GENERAL.—Except as provided in para20 graph (2), the amendments made by this section 

21 shall apply to property placed in service after Sep22 tember 30, 2004, in taxable years ending after such 

23 date. 

24 (2) EXTENSION OF PHASEOUT.—The amend25 ments made by subsection (b)(2) shall apply to prop-
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1 erty placed in service after December 31, 2003, in 

2 taxable years ending after such date. 

3 SEC. 1314. CREDIT FOR RETAIL SALE OF ALTERNATIVE 

4 FUELS AS MOTOR VEHICLE FUEL. 

5 (a) IN GENERAL.—Subpart D of part IV of sub6 chapter A of chapter 1 (relating to business related cred7 its) is amended by inserting after section 40 the following 

8 new section: 

9 ‘‘SEC. 40A. CREDIT FOR RETAIL SALE OF ALTERNATIVE 

10 FUELS AS MOTOR VEHICLE FUEL. 

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

12 the alternative fuel retail sales credit for any taxable year 

13 is the applicable amount for each gasoline gallon equiva14 lent of alternative fuel sold at retail by the taxpayer during 

15 such year as a fuel to propel any qualified motor vehicle. 

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

17 ‘‘(1) APPLICABLE AMOUNT.—The term ‘applica18 ble amount’ means the amount determined in ac19 cordance 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.

20 ‘‘(2) ALTERNATIVE FUEL.—The term ‘alter21 native fuel’ means compressed natural gas, liquefied 

22 natural gas, liquefied petroleum gas, hydrogen, or 
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1 any liquid at least 85 percent of the volume of which 

2 consists of methanol or ethanol. 

3 ‘‘(3) GASOLINE GALLON EQUIVALENT.—The 

4 term ‘gasoline gallon equivalent’ means, with respect 

5 to any alternative fuel, the amount (determined by 

6 the Secretary) of such fuel having a Btu content of 

7 114,000. 

8 ‘‘(4) QUALIFIED MOTOR VEHICLE.—The term 

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

10 defined in section 30(c)(2)) which meets any appli11 cable Federal or State emissions standards with re12 spect to each fuel by which such vehicle is designed 

13 to be propelled. 

14 ‘‘(5) SOLD AT RETAIL.—

15 ‘‘(A) IN GENERAL.—The term ‘sold at re16 tail’ means the sale, for a purpose other than 

17 resale, after manufacture, production, or impor18 tation. 

19 ‘‘(B) USE TREATED AS SALE.—If any per20 son uses alternative fuel (including any use 

21 after importation) as a fuel to propel any new 

22 qualified alternative fuel motor vehicle (as de23 fined in section 30B(d)(4)) before such fuel is 

24 sold at retail, then such use shall be treated in 

25 the same manner as if such fuel were sold at 
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1 retail as a fuel to propel such a vehicle by such 

2 person. 

3 ‘‘(c) NO DOUBLE BENEFIT.—The amount of any de4 duction or other credit allowable under this chapter for 

5 any fuel taken into account in computing the amount of 

6 the credit determined under subsection (a) shall be re7 duced by the amount of such credit attributable to such 

8 fuel. 

9 ‘‘(d) PASS-THRU IN THE CASE OF ESTATES AND

10 TRUSTS.—Under regulations prescribed by the Secretary, 

11 rules similar to the rules of subsection (d) of section 52 

12 shall apply. 

13 ‘‘(e) TERMINATION.—This section shall not apply to 

14 any fuel sold at retail after December 31, 2006.’’. 

15 (b) CREDIT TREATED AS BUSINESS CREDIT.—Sec16 tion 38(b) (relating to current year business credit) is 

17 amended by striking ‘‘plus’’ at the end of paragraph (14), 

18 by striking the period at the end of paragraph (15) and 

19 inserting ‘‘, plus’’, and by adding at the end the following 

20 new paragraph: 

21 ‘‘(16) the alternative fuel retail sales credit de22 termined under section 40A(a).’’. 

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

24 transitional rules) is amended by adding at the end the 

25 following new paragraph: 
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1 ‘‘(11) NO CARRYBACK OF SECTION 40A CREDIT

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

4 attributable to the alternative fuel retail sales credit 

5 determined under section 40A(a) may be carried 

6 back to a taxable year ending before October 1, 

7 2004.’’. 

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

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

10 is amended by inserting after the item relating to section 

11 40 the following new item:

‘‘Sec. 40A. Credit for retail sale of alternative fuels as motor vehicle fuel.’’.

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

13 this section shall apply to fuel sold at retail after Sep14 tember 30, 2004, in taxable years ending after such date.

15 SEC. 1315. SMALL ETHANOL PRODUCER CREDIT. 

16 (a) ALLOCATION OF ALCOHOL FUELS CREDIT TO

17 PATRONS OF A COOPERATIVE.—Section 40(g) (relating to 

18 definitions and special rules for eligible small ethanol pro19 ducer credit) is amended by adding at the end the fol20 lowing new paragraph: 

21 ‘‘(6) ALLOCATION OF SMALL ETHANOL PRO22 DUCER CREDIT TO PATRONS OF COOPERATIVE.—

23 ‘‘(A) ELECTION TO ALLOCATE.—

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

25 cooperative organization described in sec-
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1 tion 1381(a), any portion of the credit de2 termined under subsection (a)(3) for the 

3 taxable year may, at the election of the or4 ganization, be apportioned pro rata among 

5 patrons of the organization on the basis of

6 the quantity or value of business done with 

7 or for such patrons for the taxable year. 

8 ‘‘(ii) FORM AND EFFECT OF ELEC9 TION.—An election under clause (i) for any 

10 taxable year shall be made on a timely 

11 filed return for such year. Such election, 

12 once made, shall be irrevocable for such 

13 taxable year. 

14 ‘‘(B) TREATMENT OF ORGANIZATIONS AND

15 PATRONS.—The amount of the credit appor16 tioned to patrons under subparagraph (A)—

17 ‘‘(i) shall not be included in the 

18 amount determined under subsection (a) 

19 with respect to the organization for the 

20 taxable year, and 

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

22 determined under subsection (a) for the 

23 taxable year of each patron for which the 

24 patronage dividends for the taxable year 
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1 described in subparagraph (A) are included 

2 in gross income. 

3 ‘‘(C) SPECIAL RULES FOR DECREASE IN

4 CREDITS FOR TAXABLE YEAR.—If the amount 

5 of the credit of a cooperative organization de6 termined under subsection (a)(3) for a taxable 

7 year is less than the amount of such credit 

8 shown on the return of the cooperative organi9 zation for such year, an amount equal to the 

10 excess of—

11 ‘‘(i) such reduction, over 

12 ‘‘(ii) the amount not apportioned to 

13 such patrons under subparagraph (A) for 

14 the taxable year, 

15 shall be treated as an increase in tax imposed 

16 by this chapter on the organization. Such in17 crease shall not be treated as tax imposed by 

18 this chapter for purposes of determining the 

19 amount of any credit under this chapter or for 

20 purposes of section 55.’’. 

21 (b) IMPROVEMENTS TO SMALL ETHANOL PRODUCER

22 CREDIT.—

23 (1) DEFINITION OF SMALL ETHANOL PRO24 DUCER.—Section 40(g) (relating to definitions and 

25 special rules for eligible small ethanol producer cred-
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1 it) is amended by striking ‘‘30,000,000’’ each place 

2 it appears and inserting ‘‘60,000,000’’. 

3 (2) SMALL ETHANOL PRODUCER CREDIT NOT A

4 PASSIVE ACTIVITY CREDIT.—Clause (i) of section 

5 469(d)(2)(A) is amended by striking ‘‘subpart D’’ 

6 and inserting ‘‘subpart D, other than section 

7 40(a)(3),’’. 

8 (3) ALLOWING CREDIT AGAINST ENTIRE REG9 ULAR TAX AND MINIMUM TAX.—

10 (A) IN GENERAL.—Subsection (c) of sec11 tion 38 (relating to limitation based on amount 

12 of tax) is amended by redesignating paragraph 

13 (4) as paragraph (5) and by inserting after 

14 paragraph (3) the following new paragraph: 

15 ‘‘(4) SPECIAL RULES FOR SMALL ETHANOL

16 PRODUCER CREDIT.—

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

18 small ethanol producer credit—

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

20 be applied separately with respect to the 

21 credit, and 

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

23 credit—
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1 ‘‘(I) the amounts in subpara2 graphs (A) and (B) thereof shall be 

3 treated as being zero, and 

4 ‘‘(II) the limitation under para5 graph (1) (as modified by subclause 

6 (I)) shall be reduced by the credit al7 lowed under subsection (a) for the 

8 taxable year (other than the small 

9 ethanol producer credit). 

10 ‘‘(B) SMALL ETHANOL PRODUCER CRED11 IT.—For purposes of this subsection, the term 

12 ‘small ethanol producer credit’ means the credit 

13 allowable under subsection (a) by reason of sec14 tion 40(a)(3).’’. 

15 (B) CONFORMING AMENDMENTS.—Sub16 clause (II) of section 38(c)(2)(A)(ii) and sub17 clause (II) of section 38(c)(3)(A)(ii) are each 

18 amended by inserting ‘‘or the small ethanol pro19 ducer credit’’ after ‘‘employee credit’’. 

20 (4) SMALL ETHANOL PRODUCER CREDIT NOT

21 ADDED BACK TO INCOME UNDER SECTION 87.—Sec22 tion 87 (relating to income inclusion of alcohol fuel 

23 credit) is amended to read as follows: 
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1 ‘‘SEC. 87. ALCOHOL FUEL CREDIT. 

2 ‘‘Gross income includes an amount equal to the sum 

3 of—

4 ‘‘(1) the amount of the alcohol mixture credit 

5 determined with respect to the taxpayer for the tax6 able year under section 40(a)(1), and 

7 ‘‘(2) the alcohol credit determined with respect 

8 to the taxpayer for the taxable year under section 

9 40(a)(2).’’. 

10 (c) CONFORMING AMENDMENT.—Section 1388 (re11 lating to definitions and special rules for cooperative orga12 nizations) is amended by adding at the end the following 

13 new subsection: 

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

15 the apportionment of the alcohol fuels credit between coop16 erative organizations and their patrons, see section 

17 40(g)(6).’’.

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

19 this section shall apply to taxable years beginning after 

20 September 30, 2004. 

21 SEC. 1316. INCENTIVES FOR BIODIESEL. 

22 (a) IN GENERAL.—Subpart D of part IV of sub23 chapter A of chapter 1 (relating to business related cred24 its), as amended by this Act, is amended by inserting after 

25 section 40A the following new section: 
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1 ‘‘SEC. 40B. BIODIESEL USED AS FUEL. 

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

3 the biodiesel fuels credit determined under this section for 

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

5 ‘‘(1) the biodiesel mixture credit, plus 

6 ‘‘(2) the biodiesel credit. 

7 ‘‘(b) DEFINITION OF BIODIESEL MIXTURE CREDIT

8 AND BIODIESEL CREDIT.—For purposes of this section—

9 ‘‘(1) BIODIESEL MIXTURE CREDIT.—

10 ‘‘(A) IN GENERAL.—The biodiesel mixture 

11 credit of any taxpayer for any taxable year is 

12 50 cents for each gallon of biodiesel used by the 

13 taxpayer in the production of a qualified bio14 diesel mixture. 

15 ‘‘(B) QUALIFIED BIODIESEL MIXTURE.—

16 The term ‘qualified biodiesel mixture’ means a 

17 mixture of biodiesel and diesel fuel which—

18 ‘‘(i) is sold by the taxpayer producing 

19 such mixture to any person for use as a 

20 fuel, or 

21 ‘‘(ii) is used as a fuel by the taxpayer 

22 producing such mixture. 

23 ‘‘(C) SALE OR USE MUST BE IN TRADE OR

24 BUSINESS, ETC.—Biodiesel used in the produc25 tion of a qualified biodiesel mixture shall be 

26 taken into account—
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1 ‘‘(i) only if the sale or use described 

2 in subparagraph (B) is in a trade or busi3 ness of the taxpayer, and 

4 ‘‘(ii) for the taxable year in which 

5 such sale or use occurs. 

6 ‘‘(D) CASUAL OFF-FARM PRODUCTION NOT

7 ELIGIBLE.—No credit shall be allowed under 

8 this section with respect to any casual off-farm 

9 production of a qualified biodiesel mixture. 

10 ‘‘(2) BIODIESEL CREDIT.—

11 ‘‘(A) IN GENERAL.—The biodiesel credit of 

12 any taxpayer for any taxable year is 50 cents 

13 for each gallon of biodiesel which is not in a 

14 mixture with diesel fuel and which during the 

15 taxable year—

16 ‘‘(i) is used by the taxpayer as a fuel 

17 in a trade or business, or 

18 ‘‘(ii) is sold by the taxpayer at retail 

19 to a person and placed in the fuel tank of 

20 such person’s vehicle. 

21 ‘‘(B) USER CREDIT NOT TO APPLY TO BIO22 DIESEL SOLD AT RETAIL.—No credit shall be 

23 allowed under subparagraph (A)(i) with respect 

24 to any biodiesel which was sold in a retail sale 

25 described in subparagraph (A)(ii). 
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1 ‘‘(3) CREDIT FOR AGRI-BIODIESEL.—

2 ‘‘(A) IN GENERAL.—Subject to subpara3 graph (B), in the case of any biodiesel which is 

4 agri-biodiesel, paragraphs (1)(A) and (2)(A) 

5 shall be applied by substituting ‘$1.00’ for ‘50 

6 cents’. 

7 ‘‘(B) CERTIFICATION FOR AGRI-BIO8 DIESEL.—Subparagraph (A) shall apply only if 

9 the taxpayer described in paragraph (1)(A) or 

10 (2)(A) obtains a certification (in such form and 

11 manner as prescribed by the Secretary) from 

12 the producer of the agri-biodiesel which identi13 fies the product produced. 

14 ‘‘(c) COORDINATION WITH CREDIT AGAINST EXCISE

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

16 section with respect to any agri-biodiesel shall, under regu17 lations prescribed by the Secretary, be properly reduced 

18 to take into account any benefit provided with respect to 

19 such agri-biodiesel solely by reason of the application of 

20 section 6426 or 6427(e). 

21 ‘‘(d) DEFINITIONS AND SPECIAL RULES.—For pur22 poses of this section—

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

24 the monoalkyl esters of long chain fatty acids de-
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1 rived from plant or animal matter for use in diesel2 powered engines which meet—

3 ‘‘(A) the registration requirements for 

4 fuels and fuel additives established by the Envi5 ronmental Protection Agency under section 211 

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

7 ‘‘(B) the requirements of the American So8 ciety of Testing and Materials D6751. 

9 ‘‘(2) AGRI-BIODIESEL.—The term ‘agri-bio10 diesel’ means biodiesel derived solely from virgin oils. 

11 Such term shall include esters derived from vege12 table oils from corn, soybeans, sunflower seeds, cot13 tonseeds, canola, crambe, rapeseeds, safflowers, 

14 flaxseeds, rice bran, and mustard seeds, and from 

15 animal fats.

16 ‘‘(3) BIODIESEL MIXTURE NOT USED AS A

17 FUEL, ETC.—

18 ‘‘(A) IMPOSITION OF TAX.—If—

19 ‘‘(i) any credit was determined under 

20 this section with respect to biodiesel used 

21 in the production of any qualified biodiesel 

22 mixture, and 

23 ‘‘(ii) any person— 

24 ‘‘(I) separates such biodiesel 

25 from the mixture, or
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1 ‘‘(II) without separation, uses the 

2 mixture other than as a fuel, 

3 then there is hereby imposed on such per4 son a tax equal to the product of the rate 

5 applicable under subsection (b)(1)(A) and 

6 the number of gallons of the mixture. 

7 ‘‘(B) APPLICABLE LAWS.—All provisions of 

8 law, including penalties, shall, insofar as appli9 cable and not inconsistent with this section, 

10 apply in respect of any tax imposed under sub11 paragraph (A) as if such tax were imposed by 

12 section 4081 and not by this chapter. 

13 ‘‘(4) PASS-THRU IN THE CASE OF ESTATES AND

14 TRUSTS.—Under regulations prescribed by the Sec15 retary, rules similar to the rules of subsection (d) of 

16 section 52 shall apply. 

17 ‘‘(e) TERMINATION.—This section shall not apply to 

18 any fuel sold after December 31, 2005.’’. 

19 (b) CREDIT TREATED AS PART OF GENERAL BUSI20 NESS CREDIT.—Section 38(b) (relating to current year 

21 business credit), as amended by this Act, is amended by 

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

23 the period at the end of paragraph (16) and inserting ‘‘, 

24 plus’’, and by adding at the end the following new para25 graph: 
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S 2095 PCS 

1 ‘‘(17) the biodiesel fuels credit determined 

2 under section 40B(a).’’. 

3 (c) CONFORMING AMENDMENTS.—

4 (1) Section 39(d), as amended by this Act, is 

5 amended by adding at the end the following new 

6 paragraph:

7 ‘‘(12) NO CARRYBACK OF BIODIESEL FUELS

8 CREDIT BEFORE EFFECTIVE DATE.—No portion of 

9 the unused business credit for any taxable year 

10 which is attributable to the biodiesel fuels credit de11 termined under section 40B may be carried back to 

12 a taxable year ending before October 1, 2004.’’. 

13 (2)(A) Section 87, as amended by this Act, is 

14 amended—

15 (i) by striking ‘‘and’’ at the end of para16 graph (1), 

17 (ii) by striking the period at the end of 

18 paragraph (2) and inserting ‘‘, and’’, 

19 (iii) by adding at the end the following new 

20 paragraph: 

21 ‘‘(3) the biodiesel fuels credit determined with 

22 respect to the taxpayer for the taxable year under 

23 section 40B(a).’’, and 
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S 2095 PCS 

1 (iv) by striking ‘‘FUEL CREDIT’’ in the head2 ing and inserting ‘‘AND BIODIESEL FUELS CRED3 ITS’’. 

4 (B) The item relating to section 87 in the table 

5 of sections for part II of subchapter B of chapter 1 

6 is amended by striking ‘‘fuel credit’’ and inserting 

7 ‘‘and biodiesel fuels credits’’. 

8 (3) Section 196(c) is amended by striking 

9 ‘‘and’’ at the end of paragraph (9), by striking the 

10 period at the end of paragraph (10) and inserting ‘‘, 

11 and’’, and by adding at the end the following new 

12 paragraph: 

13 ‘‘(11) the biodiesel fuels credit determined 

14 under section 40B(a).’’. 

15 (4) The table of sections for subpart D of part 

16 IV of subchapter A of chapter 1, as amended by this 

17 Act, is amended by adding after the item relating to 

18 section 40A the following new item:

‘‘Sec. 40B. Biodiesel used as fuel.’’.

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

20 this section shall apply to fuel sold after September 30, 

21 2004, in taxable years ending after such date. 
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1 SEC. 1317. ALCOHOL FUEL AND BIODIESEL MIXTURES EX2 CISE TAX CREDIT. 

3 (a) IN GENERAL.—Subchapter B of chapter 65 (re4 lating to rules of special application) is amended by insert5 ing after section 6425 the following new section: 

6 ‘‘SEC. 6426. CREDIT FOR ALCOHOL FUEL AND BIODIESEL 

7 MIXTURES. 

8 ‘‘(a) ALLOWANCE OF CREDITS.—There shall be al9 lowed as a credit against the tax imposed by section 4081 

10 an amount equal to the sum of—

11 ‘‘(1) the alcohol fuel mixture credit, plus 

12 ‘‘(2) the biodiesel mixture credit. 

13 ‘‘(b) ALCOHOL FUEL MIXTURE CREDIT.—

14 ‘‘(1) IN GENERAL.—For purposes of this sec15 tion, the alcohol fuel mixture credit is the applicable 

16 amount for each gallon of alcohol used by the tax17 payer in producing an alcohol fuel mixture. 

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

19 this subsection—

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

21 subparagraph (B), the applicable amount is 52 

22 cents (51 cents in the case of any sale or use 

23 after 2004). 

24 ‘‘(B) MIXTURES NOT CONTAINING ETH25 ANOL.—In the case of an alcohol fuel mixture 
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S 2095 PCS 

1 in which none of the alcohol consists of ethanol, 

2 the applicable amount is 60 cents. 

3 ‘‘(3) ALCOHOL FUEL MIXTURE.—For purposes 

4 of this subsection, the term ‘alcohol fuel mixture’ is 

5 a mixture which—

6 ‘‘(A) consists of alcohol and a taxable fuel, 

7 and 

8 ‘‘(B) is sold for use or used as a fuel by 

9 the taxpayer producing the mixture. 

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

11 this subsection—

12 ‘‘(A) ALCOHOL.—The term ‘alcohol’ in13 cludes methanol and ethanol but does not in14 clude—

15 ‘‘(i) alcohol produced from petroleum, 

16 natural gas, or coal (including peat), or 

17 ‘‘(ii) alcohol with a proof of less than 

18 190 (determined without regard to any 

19 added denaturants). 

20 Such term also includes an alcohol gallon equiv21 alent of ethyl tertiary butyl ether or other 

22 ethers produced from such alcohol. 

23 ‘‘(B) TAXABLE FUEL.—The term ‘taxable 

24 fuel’ has the meaning given such term by sec25 tion 4083(a)(1). 
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1 ‘‘(5) TERMINATION.—This subsection shall not 

2 apply to any sale or use for any period after Decem3 ber 31, 2010. 

4 ‘‘(c) BIODIESEL MIXTURE CREDIT.—

5 ‘‘(1) IN GENERAL.—For purposes of this sec6 tion, the biodiesel mixture credit is the product of 

7 the applicable amount and the number of gallons of 

8 biodiesel used by the taxpayer in producing any 

9 qualified biodiesel mixture. 

10 ‘‘(2) APPLICABLE AMOUNT.—

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

12 subparagraph (B), the applicable amount is 50 

13 cents. 

14 ‘‘(B) AMOUNT FOR AGRI-BIODIESEL.—

15 ‘‘(i) IN GENERAL.—Subject to clause 

16 (ii), in the case of any biodiesel which is 

17 agri-biodiesel, the applicable amount is 

18 $1.00. 

19 ‘‘(ii) CERTIFICATION FOR AGRI-BIO20 DIESEL.—Clause (i) shall apply only if the 

21 taxpayer described in paragraph (1) ob22 tains a certification (in such form and 

23 manner as prescribed by the Secretary) 

24 from the producer of the agri-biodiesel 

25 which identifies the product produced. 
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1 ‘‘(3) DEFINITIONS.—Any term used in this sub2 section which is also used in section 40B shall have 

3 the meaning given such term by section 40B. 

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

5 apply to any sale or use for any period after Decem6 ber 31, 2005. 

7 ‘‘(d) MIXTURE NOT USED AS A FUEL, ETC.—

8 ‘‘(1) IMPOSITION OF TAX.—If—

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

10 section with respect to alcohol or biodiesel used

11 in the production of any alcohol fuel mixture 

12 or qualified biodiesel mixture, respectively, and 

13 ‘‘(B) any person— 

14 ‘‘(i) separates such alcohol or biodiesel 

15 from the mixture, or

16 ‘‘(ii) without separation, uses the mix17 ture other than as a fuel, 

18 then there is hereby imposed on such person a 

19 tax equal to the product of the applicable 

20 amount and the number of gallons of such alco21 hol or biodiesel. 

22 ‘‘(2) APPLICABLE LAWS.—All provisions of law, 

23 including penalties, shall, insofar as applicable and 

24 not inconsistent with this section, apply in respect of 

25 any tax imposed under paragraph (1) as if such tax 
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S 2095 PCS 

1 were imposed by section 4081 and not by this sec2 tion.’’. 

3 (b) REGISTRATION REQUIREMENT.—Section 4101(a) 

4 (relating to registration) is amended by inserting ‘‘and 

5 every person producing biodiesel (as defined in section 

6 40B(d)(1)) or alcohol (as defined in section 

7 6426(b)(4)(A))’’ after ‘‘4091’’. 

8 (c) CONFORMING AMENDMENTS.—

9 (1) Section 40(c) is amended by striking ‘‘sec10 tion 4081(c), or section 4091(c)’’ and inserting ‘‘sec11 tion 4091(c), section 6426, section 6427(e), or sec12 tion 6427(f)’’. 

13 (2) Section 40(d)(4)(B) is amended by striking 

14 ‘‘or 4081(c)’’. 

15 (3) Section 40(e)(1) is amended—

16 (A) by striking ‘‘2007’’ in subparagraph 

17 (A) and inserting ‘‘2010’’, and 

18 (B) by striking ‘‘2008’’ in subparagraph 

19 (B) and inserting ‘‘2011’’. 

20 (4) Section 40(h) is amended—

21 (A) by striking ‘‘2007’’ in paragraph (1) 

22 and inserting ‘‘2010’’, and 

23 (B) by striking ‘‘, 2006, or 2007’’ in the 

24 table contained in paragraph (2) and inserting 

25 ‘‘through 2010’’. 
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S 2095 PCS 

1 (5) Section 4041(b)(2)(B) is amended by strik2 ing ‘‘a substance other than petroleum or natural 

3 gas’’ and inserting ‘‘coal (including peat)’’. 

4 (6) Paragraph (1) of section 4041(k) is amend5 ed to read as follows: 

6 ‘‘(1) IN GENERAL.—Under regulations pre7 scribed by the Secretary, in the case of the sale or 

8 use of any liquid at least 10 percent of which con9 sists of alcohol (as defined in section 

10 6426(b)(4)(A)), the rate of the tax imposed by sub11 section (c)(1) shall be the comparable rate under 

12 section 4091(c).’’. 

13 (7) Section 4081 is amended by striking sub14 section (c). 

15 (8) Paragraph (2) of section 4083(a) is amend16 ed to read as follows: 

17 ‘‘(2) GASOLINE.—The term ‘gasoline’—

18 ‘‘(A) includes any gasoline blend, other 

19 than qualified methanol or ethanol fuel (as de20 fined in section 4041(b)(2)(B)) or a denaturant 

21 of alcohol (as defined in section 6426(b)(4)(A)), 

22 and 

23 ‘‘(B) includes, to the extent prescribed in 

24 regulations—

25 ‘‘(i) any gasoline blend stock, and 
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S 2095 PCS 

1 ‘‘(ii) any product commonly used as 

2 an additive in gasoline. 

3 For purposes of subparagraph (B)(i), the term ‘gas4 oline blend stock’ means any petroleum product 

5 component of gasoline.’’. 

6 (9) Section 6427 is amended by inserting after 

7 subsection (d) the following new subsection: 

8 ‘‘(e) ALCOHOL OR BIODIESEL USED TO PRODUCE

9 ALCOHOL FUEL AND BIODIESEL MIXTURES OR USED AS

10 FUELS.—Except as provided in subsection (k)—

11 ‘‘(1) USED TO PRODUCE A MIXTURE.—If any 

12 person produces a mixture described in section 6426 

13 in such person’s trade or business, the Secretary 

14 shall pay (without interest) to such person an 

15 amount equal to the alcohol fuel mixture credit or 

16 the biodiesel mixture credit with respect to such mix17 ture. 

18 ‘‘(2) USED AS FUEL.—If alcohol (as defined in 

19 section 40(d)(1)) or biodiesel (as defined in section 

20 40B(d)(1)) or agri-biodiesel (as defined in section 

21 40B(d)(2)) which is not in a mixture with a taxable 

22 fuel (as defined in section 4083(a)(1))—

23 ‘‘(A) is used by any person as a fuel in a 

24 trade or business, or 
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S 2095 PCS 

1 ‘‘(B) is sold by any person at retail to an2 other person and placed in the fuel tank of such 

3 person’s vehicle, 

4 the Secretary shall pay (without interest) to such 

5 person an amount equal to the alcohol credit (as de6 termined under section 40(b)(2)) or the biodiesel 

7 credit (as determined under section 40B(b)(2)) with 

8 respect to such fuel. 

9 ‘‘(3) COORDINATION WITH OTHER REPAYMENT

10 PROVISIONS.—No amount shall be payable under 

11 paragraph (1) with respect to any mixture with re12 spect to which an amount is allowed as a credit 

13 under section 6426. 

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

15 apply with respect to—

16 ‘‘(A) any alcohol fuel mixture (as defined 

17 in section 6426(b)(3)) or alcohol (as so defined) 

18 sold or used after December 31, 2010, and 

19 ‘‘(B) any qualified biodiesel mixture (with20 in the meaning of section 6426(c)(1)) or bio21 diesel (as so defined) or agri-biodiesel (as so de22 fined) sold or used after December 31, 2005.’’. 

23 (10) Subsection (f) of section 6427 is amended 

24 to read as follows: 
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1 ‘‘(f) AVIATION FUEL USED TO PRODUCE CERTAIN

2 ALCOHOL FUELS.—

3 ‘‘(1) IN GENERAL.—Except as provided in sub4 section (k), if any aviation fuel on which tax was im5 posed by section 4091 at the regular tax rate is used 

6 by any person in producing a mixture described in 

7 section 4091(c)(1)(A) which is sold or used in such 

8 person’s trade or business, the Secretary shall pay 

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

10 the excess of the regular tax rate over the incentive 

11 tax rate with respect to such fuel.

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

13 (1)—

14 ‘‘(A) REGULAR TAX RATE.—The term ‘reg15 ular tax rate’ means the aggregate rate of tax 

16 imposed by section 4091 determined without re17 gard to subsection (c) thereof. 

18 ‘‘(B) INCENTIVE TAX RATE.—The term 

19 ‘incentive tax rate’ means the aggregate rate of 

20 tax imposed by section 4091 with respect to 

21 fuel described in subsection (c)(2) thereof. 

22 ‘‘(3) COORDINATION WITH OTHER REPAYMENT

23 PROVISIONS.—No amount shall be payable under 

24 paragraph (1) with respect to any aviation fuel with 
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S 2095 PCS 

1 respect to which an amount is payable under sub2 section (d) or (l). 

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

4 apply with respect to any mixture sold or used after 

5 September 30, 2007.’’. 

6 (11) Paragraphs (1) and (2) of section 6427(i) 

7 are amended by inserting ‘‘(f),’’ after ‘‘(d),’’. 

8 (12) Section 6427(i)(3) is amended—

9 (A) by striking ‘‘subsection (f)’’ both 

10 places it appears in subparagraph (A) and in11 serting ‘‘subsection (e)(1)’’, 

12 (B) by striking ‘‘gasoline, diesel fuel, or 

13 kerosene used to produce a qualified alcohol 

14 mixture (as defined in section 4081(c)(3))’’ in 

15 subparagraph (A) and inserting ‘‘a mixture de16 scribed in section 6426’’, 

17 (C) by striking ‘‘subsection (f)(1)’’ in sub18 paragraph (B) and inserting ‘‘subsection 

19 (e)(1)’’, 

20 (D) by striking ‘‘20 days of the date of the 

21 filing of such claim’’ in subparagraph (B) and 

22 inserting ‘‘45 days of the date of the filing of 

23 such claim (20 days in the case of an electronic 

24 claim)’’, and 
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S 2095 PCS 

1 (E) by striking ‘‘ALCOHOL MIXTURE’’ in 

2 the heading and inserting ‘‘ALCOHOL FUEL AND

3 BIODIESEL MIXTURE’’. 

4 (13) Section 6427(o) is amended—

5 (A) by striking paragraph (1) and insert6 ing the following new paragraph: 

7 ‘‘(1) any tax is imposed by section 4081, and’’, 

8 (B) by striking ‘‘such gasohol’’ in para9 graph (2) and inserting ‘‘the alcohol fuel mix10 ture (as defined in section 6426(b)(3))’’, 

11 (C) by striking ‘‘gasohol’’ both places it 

12 appears in the matter following paragraph (2) 

13 and inserting ‘‘alcohol fuel mixture’’, and 

14 (D) by striking ‘‘GASOHOL’’ in the heading 

15 and inserting ‘‘ALCOHOL FUEL MIXTURE’’. 

16 (14) Section 9503(b)(1) is amended by adding 

17 at the end the following new flush sentence: 

18 ‘‘For purposes of this paragraph, taxes received 

19 under sections 4041 and 4081 shall be determined 

20 without reduction for credits under section 6426.’’. 

21 (15) Section 9503(b)(4) is amended—

22 (A) by adding ‘‘or’’ at the end of subpara23 graph (C), 
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S 2095 PCS 

1 (B) by striking the comma at the end of 

2 subparagraph (D)(iii) and inserting a period, 

3 and 

4 (C) by striking subparagraphs (E) and 

5 (F). 

6 (16) Section 9503(c)(2)(A)(i)(III) is amended 

7 by inserting ‘‘(other than subsection (e) thereof)’’ 

8 after ‘‘section 6427’’. 

9 (17) Section 9503(e)(2) is amended by striking 

10 subparagraph (B) and by redesignating subpara11 graphs (C), (D), and (E) as subparagraphs (B), (C), 

12 and (D), respectively. 

13 (18) The table of sections for subchapter B of 

14 chapter 65 is amended by inserting after the item 

15 relating to section 6425 the following new item:

‘‘Sec. 6426. Credit for alcohol fuel and biodiesel mixtures.’’.

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

17 this section shall apply to fuel sold or used after Sep18 tember 30, 2004. 

19 (e) FORMAT FOR FILING.—The Secretary of the 

20 Treasury shall describe the electronic format for filing 

21 claims described in section 6427(i)(3)(B) of the Internal 

22 Revenue Code of 1986 (as amended by subsection 

23 (b)(12)(D)) not later than September 30, 2004. 
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1 SEC. 1318. SALE OF GASOLINE AND DIESEL FUEL AT DUTY2 FREE SALES ENTERPRISES. 

3 (a) PROHIBITION.—Section 555(b) of the Tariff Act 

4 of 1930 (19 U.S.C. 1555(b)) is amended—

5 (1) by redesignating paragraphs (6) through 

6 (8) as paragraphs (7) through (9), respectively; and 

7 (2) by inserting after paragraph (5) the fol8 lowing: 

9 ‘‘(6) Any gasoline or diesel fuel sold at a duty10 free sales enterprise shall be considered to be en11 tered for consumption into the customs territory of 

12 the United States.’’. 

13 (b) CONSTRUCTION.—The amendments made by this 

14 section shall not be construed to create any inference with 

15 respect to the interpretation of any provision of law as 

16 such provision was in effect on the day before the date 

17 of enactment of this Act. 

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

19 this section shall take effect on the date of enactment of 

20 this Act.

21 Subtitle C—Conservation and 

22 Energy Efficiency Provisions 

23 SEC. 1321. CREDIT FOR CONSTRUCTION OF NEW ENERGY 

24 EFFICIENT HOME. 

25 (a) IN GENERAL.—Subpart D of part IV of sub26 chapter A of chapter 1 (relating to business related cred-
849

S 2095 PCS 

1 its), as amended by this Act, is amended by adding at 

2 the end the following new section: 

3 ‘‘SEC. 45G. NEW ENERGY EFFICIENT HOME CREDIT. 

4 ‘‘(a) IN GENERAL.—For purposes of section 38, in 

5 the case of an eligible contractor, the credit determined 

6 under this section for the taxable year is an amount equal 

7 to the aggregate adjusted bases of all energy efficient 

8 property installed in a qualifying new home during con9 struction of such home. 

10 ‘‘(b) LIMITATIONS.—

11 ‘‘(1) MAXIMUM CREDIT.—

12 ‘‘(A) IN GENERAL.—The credit allowed by 

13 this section with respect to a qualifying new 

14 home shall not exceed—

15 ‘‘(i) in the case of a 30-percent home, 

16 $1,000, and 

17 ‘‘(ii) in the case of a 50-percent home, 

18 $2,000.

19 ‘‘(B) 30- OR 50-PERCENT HOME.—For pur20 poses of subparagraph (A)—

21 ‘‘(i) 30-PERCENT HOME.—The term 

22 ‘30-percent home’ means—

23 ‘‘(I) a qualifying new home which 

24 is certified to have a projected level of 

25 annual heating and cooling energy 
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S 2095 PCS 

1 consumption, measured in terms of 

2 average annual energy cost to the 

3 homeowner, which is at least 30 per4 cent less than the annual level of 

5 heating and cooling energy consump6 tion of a qualifying new home con7 structed in accordance with the latest 

8 standards of chapter 4 of the Inter9 national Energy Conservation Code 

10 approved by the Department of En11 ergy before the construction of such 

12 qualifying new home and any applica13 ble Federal minimum efficiency stand14 ards for equipment, or 

15 ‘‘(II) in the case of a qualifying 

16 new home which is a manufactured 

17 home, a home which meets the appli18 cable standards required by the Ad19 ministrator of the Environmental Pro20 tection Agency under the Energy Star 

21 Labeled Homes program. 

22 ‘‘(ii) 50-PERCENT HOME.—The term 

23 ‘50-percent home’ means a qualifying new 

24 home which would be described in clause 
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1 (i)(I) if 50 percent were substituted for 30 

2 percent. 

3 ‘‘(C) PRIOR CREDIT AMOUNTS ON SAME

4 HOME TAKEN INTO ACCOUNT.—The amount of 

5 the credit otherwise allowable for the taxable 

6 year with respect to a qualifying new home 

7 under clause (i) or (ii) of subparagraph (A) 

8 shall be reduced by the sum of the credits al9 lowed under subsection (a) to any taxpayer with 

10 respect to the home for all preceding taxable 

11 years. 

12 ‘‘(2) COORDINATION WITH CERTAIN CREDITS.—

13 For purposes of this section—

14 ‘‘(A) the basis of any property referred to 

15 in subsection (a) shall be reduced by that por16 tion of the basis of any property which is attrib17 utable to the rehabilitation credit (as deter18 mined under section 47(a)) or to the energy 

19 credit (as determined under section 48(a)), and 

20 ‘‘(B) expenditures taken into account 

21 under section 25D, 47, or 48(a) shall not be 

22 taken into account under this section. 

23 ‘‘(3) PROVIDER LIMITATION.—Any eligible con24 tractor who directly or indirectly provides the guar25 antee of energy savings under a guarantee-based 
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1 method of certification described in subsection 

2 (d)(1)(D) shall not be eligible to receive the credit 

3 allowed by this section. 

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

5 ‘‘(1) ELIGIBLE CONTRACTOR.—The term ‘eligi6 ble contractor’ means—

7 ‘‘(A) the person who constructed the quali8 fying new home, or 

9 ‘‘(B) in the case of a qualifying new home 

10 which is a manufactured home, the manufac11 tured home producer of such home. 

12 If more than 1 person is described in subparagraph 

13 (A) or (B) with respect to any qualifying new home, 

14 such term means the person designated as such by 

15 the owner of such home. 

16 ‘‘(2) ENERGY EFFICIENT PROPERTY.—The 

17 term ‘energy efficient property’ means any energy 

18 efficient building envelope component, and any en19 ergy efficient heating or cooling equipment or system 

20 which can, individually or in combination with other 

21 components, meet the requirements of this section. 

22 ‘‘(3) QUALIFYING NEW HOME.—

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

24 new home’ means a dwelling—

25 ‘‘(i) located in the United States, 
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1 ‘‘(ii) the construction of which is sub2 stantially completed after September 30, 

3 2004, and 

4 ‘‘(iii) the first use of which after con5 struction is as a principal residence (within 

6 the meaning of section 121). 

7 ‘‘(B) MANUFACTURED HOME INCLUDED.—

8 The term ‘qualifying new home’ includes a 

9 manufactured home conforming to Federal 

10 Manufactured Home Construction and Safety 

11 Standards (24 CFR 3280). 

12 ‘‘(4) CONSTRUCTION.—The term ‘construction’ 

13 includes reconstruction and rehabilitation. 

14 ‘‘(5) BUILDING ENVELOPE COMPONENT.—The 

15 term ‘building envelope component’ means—

16 ‘‘(A) any insulation material or system 

17 which is specifically and primarily designed to 

18 reduce the heat loss or gain of a qualifying new 

19 home when installed in or on such home, 

20 ‘‘(B) exterior windows (including sky21 lights), and 

22 ‘‘(C) exterior doors. 

23 ‘‘(d) CERTIFICATION.—

24 ‘‘(1) METHOD OF CERTIFICATION.—
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1 ‘‘(A) IN GENERAL.—A certification de2 scribed in subsection (b)(1)(B) shall be deter3 mined either by a component-based method, a 

4 performance-based method, or a guarantee5 based method, or, in the case of a qualifying 

6 new home which is a manufactured home, by a 

7 method prescribed by the Administrator of the 

8 Environmental Protection Agency under the 

9 Energy Star Labeled Homes program. 

10 ‘‘(B) COMPONENT-BASED METHOD.—A 

11 component-based method is a method which 

12 uses the applicable technical energy efficiency

13 specifications or ratings (including product la14 beling requirements) for the energy efficient 

15 building envelope component or energy efficient 

16 heating or cooling equipment. The Secretary 

17 shall, in consultation with the Administrator of 

18 the Environmental Protection Agency, develop 

19 prescriptive component-based packages which 

20 are equivalent in energy performance to prop21 erties which qualify under subparagraph (C). 

22 ‘‘(C) PERFORMANCE-BASED METHOD.—

23 ‘‘(i) IN GENERAL.—A performance24 based method is a method which calculates 

25 projected energy usage and cost reductions 
855

S 2095 PCS 

1 in the qualifying new home in relation to 

2 a new home—

3 ‘‘(I) heated by the same fuel 

4 type, and 

5 ‘‘(II) constructed in accordance 

6 with the latest standards of chapter 4 

7 of the International Energy Conserva8 tion Code approved by the Depart9 ment of Energy before the construc10 tion of such qualifying new home and 

11 any applicable Federal minimum effi12 ciency standards for equipment.

13 ‘‘(ii) COMPUTER SOFTWARE.—Com14 puter software shall be used in support of 

15 a performance-based method certification 

16 under clause (i). Such software shall meet 

17 procedures and methods for calculating en18 ergy and cost savings in regulations pro19 mulgated by the Secretary of Energy. 

20 ‘‘(D) GUARANTEE-BASED METHOD.—

21 ‘‘(i) IN GENERAL.—A guarantee-based 

22 method is a method which guarantees in 

23 writing to the homeowner energy savings 

24 of either 30 percent or 50 percent over the 

25 2000 International Energy Conservation 
856

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1 Code for heating and cooling costs. The 

2 guarantee shall be provided for a minimum 

3 of 2 years and shall fully reimburse the 

4 homeowner any heating and cooling costs 

5 in excess of the guaranteed amount. 

6 ‘‘(ii) COMPUTER SOFTWARE.—Com7 puter software shall be selected by the pro8 vider to support the guarantee-based meth9 od certification under clause (i). Such soft10 ware shall meet procedures and methods 

11 for calculating energy and cost savings in 

12 regulations promulgated by the Secretary 

13 of Energy. 

14 ‘‘(2) PROVIDER.—A certification described in 

15 subsection (b)(1)(B) shall be provided by—

16 ‘‘(A) in the case of a component-based 

17 method, a local building regulatory authority, a 

18 utility, or a home energy rating organization, 

19 ‘‘(B) in the case of a performance-based 

20 method or a guarantee-based method, an indi21 vidual recognized by an organization designated 

22 by the Secretary for such purposes, or 

23 ‘‘(C) in the case of a qualifying new home 

24 which is a manufactured home, a manufactured 

25 home primary inspection agency. 
857

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1 ‘‘(3) FORM.—

2 ‘‘(A) IN GENERAL.—A certification de3 scribed in subsection (b)(1)(B) shall be made in 

4 writing in a manner which specifies in readily 

5 verifiable fashion the energy efficient building 

6 envelope components and energy efficient heat7 ing or cooling equipment installed and their re8 spective rated energy efficiency performance, 

9 and 

10 ‘‘(i) in the case of a performance11 based method, accompanied by a written 

12 analysis documenting the proper applica13 tion of a permissible energy performance 

14 calculation method to the specific cir15 cumstances of such qualifying new home, 

16 and 

17 ‘‘(ii) in the case of a qualifying new 

18 home which is a manufactured home, ac19 companied by such documentation as re20 quired by the Administrator of the Envi21 ronmental Protection Agency under the 

22 Energy Star Labeled Homes program. 

23 ‘‘(B) FORM PROVIDED TO BUYER.—A form 

24 documenting the energy efficient building enve25 lope components and energy efficient heating or 
858

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1 cooling equipment installed and their rated en2 ergy efficiency performance shall be provided to 

3 the buyer of the qualifying new home. The form 

4 shall include labeled R-value for insulation 

5 products, NFRC-labeled U-factor and solar 

6 heat gain coefficient for windows, skylights, and 

7 doors, labeled annual fuel utilization efficiency 

8 (AFUE) ratings for furnaces and boilers, la9 beled heating seasonal performance factor 

10 (HSPF) ratings for electric heat pumps, and la11 beled seasonal energy efficiency ratio (SEER) 

12 ratings for air conditioners. 

13 ‘‘(C) RATINGS LABEL AFFIXED IN DWELL14 ING.—A permanent label documenting the rat15 ings in subparagraph (B) shall be affixed to the 

16 front of the electrical distribution panel of the 

17 qualifying new home, or shall be otherwise per18 manently displayed in a readily inspectable loca19 tion in such home. 

20 ‘‘(4) REGULATIONS.—

21 ‘‘(A) IN GENERAL.—In prescribing regula22 tions under this subsection for performance23 based and guarantee-based certification meth24 ods, the Secretary shall prescribe procedures for 

25 calculating annual energy usage and cost reduc-
859

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1 tions for heating and cooling and for the report2 ing of the results. Such regulations shall—

3 ‘‘(i) provide that any calculation pro4 cedures be fuel neutral such that the same 

5 energy efficiency measures allow a quali6 fying new home to be eligible for the credit 

7 under this section regardless of whether 

8 such home uses a gas or oil furnace or 

9 boiler or an electric heat pump, and 

10 ‘‘(ii) require that any computer soft11 ware allow for the printing of the Federal 

12 tax forms necessary for the credit under 

13 this section and for the printing of forms 

14 for disclosure to the homebuyer. 

15 ‘‘(B) PROVIDERS.—For purposes of para16 graph (2)(B), the Secretary shall establish re17 quirements for the designation of individuals 

18 based on the requirements for energy consult19 ants and home energy raters specified by the 

20 Mortgage Industry National Home Energy Rat21 ing Standards. 

22 ‘‘(e) APPLICATION.—Subsection (a) shall apply to 

23 qualifying new homes the construction of which is substan24 tially completed after September 30, 2004, and purchased 

25 during the period beginning on such date and ending on—
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1 ‘‘(1) in the case of any 30-percent home, De2 cember 31, 2005, and 

3 ‘‘(2) in the case of any 50-percent home, De4 cember 31, 2007.’’. 

5 (b) CREDIT MADE PART OF GENERAL BUSINESS

6 CREDIT.—Section 38(b) (relating to current year business 

7 credit), as amended by this Act, is amended by striking 

8 ‘‘plus’’ at the end of paragraph (16), by striking the period 

9 at the end of paragraph (17) and inserting ‘‘, plus’’, and 

10 by adding at the end the following new paragraph: 

11 ‘‘(18) the new energy efficient home credit de12 termined under section 45G(a).’’. 

13 (c) DENIAL OF DOUBLE BENEFIT.—Section 280C 

14 (relating to certain expenses for which credits are allow15 able) is amended by adding at the end the following new 

16 subsection: 

17 ‘‘(d) NEW ENERGY EFFICIENT HOME EXPENSES.—

18 No deduction shall be allowed for that portion of expenses 

19 for a qualifying new home otherwise allowable as a deduc20 tion for the taxable year which is equal to the amount 

21 of the credit determined for such taxable year under sec22 tion 45G(a).’’. 

23 (d) LIMITATION ON CARRYBACK.—Section 39(d) (re24 lating to transition rules), as amended by this Act, is 
861

S 2095 PCS 

1 amended by adding at the end the following new para2 graph: 

3 ‘‘(13) NO CARRYBACK OF NEW ENERGY EFFI4 CIENT HOME CREDIT BEFORE EFFECTIVE DATE.—

5 No portion of the unused business credit for any 

6 taxable year which is attributable to the credit deter7 mined under section 45G may be carried back to any 

8 taxable year ending before October 1, 2004.’’.

9 (e) DEDUCTION FOR CERTAIN UNUSED BUSINESS

10 CREDITS.—Section 196(c) (defining qualified business 

11 credits), as amended by this Act, is amended by striking 

12 ‘‘and’’ at the end of paragraph (10), by striking the period 

13 at the end of paragraph (11) and inserting ‘‘, and’’, and 

14 by adding after paragraph (11) the following new para15 graph: 

16 ‘‘(12) the new energy efficient home credit de17 termined under section 45G(a).’’. 

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

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

20 as amended by this Act, is amended by adding at the end 

21 the following new item:

‘‘Sec. 45G. New energy efficient home credit.’’.

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

23 this section shall apply to homes the construction of which 

24 is substantially completed after September 30, 2004. 
862

S 2095 PCS 

1 SEC. 1322. CREDIT FOR ENERGY EFFICIENT APPLIANCES. 

2 (a) IN GENERAL.—Subpart D of part IV of sub3 chapter A of chapter 1 (relating to business-related cred4 its), as amended by this Act, is amended by adding at 

5 the end the following new section: 

6 ‘‘SEC. 45H. ENERGY EFFICIENT APPLIANCE CREDIT. 

7 ‘‘(a) ALLOWANCE OF CREDIT.—

8 ‘‘(1) IN GENERAL.—For purposes of section 38, 

9 the energy efficient appliance credit determined 

10 under this section for the taxable year is an amount 

11 equal to the sum of the amounts determined under 

12 paragraph (2) for qualified energy efficient appli13 ances produced by the taxpayer during the calendar 

14 year ending with or within the taxable year. 

15 ‘‘(2) AMOUNT.—The amount determined under 

16 this paragraph for any category described in sub17 section (b)(2)(B) shall be the product of the applica18 ble amount for appliances in the category and the el19 igible production for the category.

20 ‘‘(b) APPLICABLE AMOUNT; ELIGIBLE PRODUC21 TION.—For purposes of subsection (a)—

22 ‘‘(1) APPLICABLE AMOUNT.—The applicable 

23 amount is—

24 ‘‘(A) $50, in the case of—

25 ‘‘(i) a clothes washer which is manu26 factured with at least a 1.42 MEF, or 
863

S 2095 PCS 

1 ‘‘(ii) a refrigerator which consumes at 

2 least 10 percent less kilowatt hours per 

3 year than the energy conservation stand4 ards for refrigerators promulgated by the 

5 Department of Energy and effective on 

6 July 1, 2001, 

7 ‘‘(B) $100, in the case of—

8 ‘‘(i) a clothes washer which is manu9 factured with at least a 1.50 MEF, or 

10 ‘‘(ii) a refrigerator which consumes at 

11 least 15 percent (20 percent in the case of 

12 a refrigerator manufactured after 2006) 

13 less kilowatt hours per year than such en14 ergy conservation standards, and 

15 ‘‘(C) $150, in the case of a refrigerator 

16 manufactured before 2007 which consumes at 

17 least 20 percent less kilowatt hours per year 

18 than such energy conservation standards. 

19 ‘‘(2) ELIGIBLE PRODUCTION.—

20 ‘‘(A) IN GENERAL.—The eligible produc21 tion of each category of qualified energy effi22 cient appliances is the excess of—

23 ‘‘(i) the number of appliances in such 

24 category which are produced by the tax25 payer during such calendar year, over 
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S 2095 PCS 

1 ‘‘(ii) the average number of appliances 

2 in such category which were produced by 

3 the taxpayer during calendar years 2000, 

4 2001, and 2002. 

5 ‘‘(B) CATEGORIES.—For purposes of sub6 paragraph (A), the categories are—

7 ‘‘(i) clothes washers described in para8 graph (1)(A)(i), 

9 ‘‘(ii) clothes washers described in 

10 paragraph (1)(B)(i), 

11 ‘‘(iii) refrigerators described in para12 graph (1)(A)(ii), 

13 ‘‘(iv) refrigerators described in para14 graph (1)(B)(ii), and 

15 ‘‘(v) refrigerators described in para16 graph (1)(C). 

17 ‘‘(c) LIMITATION ON MAXIMUM CREDIT.—

18 ‘‘(1) IN GENERAL.—The amount of credit al19 lowed under subsection (a) with respect to a tax20 payer for all taxable years shall not exceed 

21 $60,000,000, of which not more than $30,000,000 

22 may be allowed with respect to the credit determined 

23 by using the applicable amount under subsection 

24 (b)(1)(A). 
865

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1 ‘‘(2) LIMITATION BASED ON GROSS RE2 CEIPTS.—The credit allowed under subsection (a) 

3 with respect to a taxpayer for the taxable year shall 

4 not exceed an amount equal to 2 percent of the aver5 age annual gross receipts of the taxpayer for the 3 

6 taxable years preceding the taxable year in which 

7 the credit is determined.

8 ‘‘(3) GROSS RECEIPTS.—For purposes of this 

9 subsection, the rules of paragraphs (2) and (3) of 

10 section 448(c) shall apply. 

11 ‘‘(d) DEFINITIONS.—For purposes of this section—

12 ‘‘(1) QUALIFIED ENERGY EFFICIENT APPLI13 ANCE.—The term ‘qualified energy efficient appli14 ance’ means—

15 ‘‘(A) a clothes washer described in sub16 paragraph (A)(i) or (B)(i) of subsection (b)(1), 

17 or 

18 ‘‘(B) a refrigerator described in subpara19 graph (A)(ii), (B)(ii), or (C) of subsection 

20 (b)(1). 

21 ‘‘(2) CLOTHES WASHER.—The term ‘clothes 

22 washer’ means a residential clothes washer, includ23 ing a residential style coin operated washer. 

24 ‘‘(3) REFRIGERATOR.—The term ‘refrigerator’ 

25 means an automatic defrost refrigerator-freezer 
866

S 2095 PCS 

1 which has an internal volume of at least 16.5 cubic 

2 feet. 

3 ‘‘(4) MEF.—The term ‘MEF’ means Modified 

4 Energy Factor (as determined by the Secretary of 

5 Energy). 

6 ‘‘(e) SPECIAL RULES.—

7 ‘‘(1) IN GENERAL.—Rules similar to the rules 

8 of subsections (c), (d), and (e) of section 52 shall 

9 apply for purposes of this section. 

10 ‘‘(2) AGGREGATION RULES.—All persons treat11 ed as a single employer under subsection (a) or (b) 

12 of section 52 or subsection (m) or (o) of section 414 

13 shall be treated as 1 person for purposes of sub14 section (a). 

15 ‘‘(f) VERIFICATION.—The taxpayer shall submit such 

16 information or certification as the Secretary, in consulta17 tion with the Secretary of Energy, determines necessary 

18 to claim the credit amount under subsection (a). 

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

20 ‘‘(1) with respect to refrigerators described in 

21 subsection (b)(1)(A)(ii) produced after December 31, 

22 2004, and 

23 ‘‘(2) with respect to all other qualified energy 

24 efficient appliances produced after December 31, 

25 2007.’’. 
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1 (b) CREDIT MADE PART OF GENERAL BUSINESS

2 CREDIT.—Section 38(b) (relating to current year business 

3 credit), as amended by this Act, is amended by striking 

4 ‘‘plus’’ at the end of paragraph (17), by striking the period 

5 at the end of paragraph (18) and inserting ‘‘, plus’’, and 

6 by adding at the end the following new paragraph: 

7 ‘‘(19) the energy efficient appliance credit de8 termined under section 45H(a).’’. 

9 (c) LIMITATION ON CARRYBACK.—Section 39(d) (re10 lating to transition rules), as amended by this Act, is 

11 amended by adding at the end the following new para12 graph: 

13 ‘‘(14) NO CARRYBACK OF ENERGY EFFICIENT

14 APPLIANCE CREDIT BEFORE EFFECTIVE DATE.—No 

15 portion of the unused business credit for any taxable 

16 year which is attributable to the energy efficient ap17 pliance credit determined under section 45H may be 

18 carried to a taxable year ending before October 1, 

19 2004.’’. 

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

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

22 as amended by this Act, is amended by adding at the end 

23 the following new item:

‘‘Sec. 45H. Energy efficient appliance credit.’’.
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S 2095 PCS 

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

2 this section shall apply to appliances produced after Sep3 tember 30, 2004, in taxable years ending after such date. 

4 SEC. 1323. CREDIT FOR RESIDENTIAL ENERGY EFFICIENT 

5 PROPERTY. 

6 (a) IN GENERAL.—Subpart A of part IV of sub7 chapter A of chapter 1 (relating to nonrefundable personal 

8 credits) is amended by inserting after section 25B the fol9 lowing new section: 

10 ‘‘SEC. 25C. RESIDENTIAL ENERGY EFFICIENT PROPERTY. 

11 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in12 dividual, there shall be allowed as a credit against the tax 

13 imposed by this chapter for the taxable year an amount 

14 equal to the sum of—

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

16 property expenditures made by the taxpayer during 

17 such year, 

18 ‘‘(2) 15 percent of the qualified solar water 

19 heating property expenditures made by the taxpayer 

20 during such year, 

21 ‘‘(3) 30 percent of the qualified fuel cell prop22 erty expenditures made by the taxpayer during such 

23 year, 
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1 ‘‘(4) 30 percent of the qualified wind energy 

2 property expenditures made by the taxpayer during 

3 such year, and 

4 ‘‘(5) the sum of the qualified Tier 2 energy effi5 cient building property expenditures made by the 

6 taxpayer during such year. 

7 ‘‘(b) LIMITATIONS.—

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

9 under subsection (a) shall not exceed—

10 ‘‘(A) $2,000 for property described in 

11 paragraph (1), (2), or (5) of subsection (d), 

12 ‘‘(B) $500 for each 0.5 kilowatt of capac13 ity of property described in subsection (d)(4), 

14 and 

15 ‘‘(C) for property described in subsection 

16 (d)(6)—

17 ‘‘(i) $150 for each electric heat pump 

18 water heater, 

19 ‘‘(ii) $125 for each advanced natural 

20 gas, oil, propane furnace, or hot water boil21 er, 

22 ‘‘(iii) $150 for each advanced natural 

23 gas, oil, or propane water heater, 

24 ‘‘(iv) $50 for each natural gas, oil, or 

25 propane water heater, 
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S 2095 PCS 

1 ‘‘(v) $50 for an advanced main air 

2 circulating fan, 

3 ‘‘(vi) $150 for each advanced com4 bination space and water heating system, 

5 ‘‘(vii) $50 for each combination space 

6 and water heating system, and 

7 ‘‘(viii) $250 for each geothermal heat 

8 pump.

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

10 be allowed under this section for an item of property 

11 unless—

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

13 property, such property is certified for perform14 ance and safety by the non-profit Solar Rating 

15 Certification Corporation or a comparable enti16 ty endorsed by the government of the State in 

17 which such property is installed, 

18 ‘‘(B) in the case of a photovoltaic property, 

19 a fuel cell property, or a wind energy property, 

20 such property meets appropriate fire and elec21 tric code requirements, and 

22 ‘‘(C) in the case of property described in 

23 subsection (d)(6), such property meets the per24 formance and quality standards, and the certifi25 cation requirements (if any), which—
871

S 2095 PCS 

1 ‘‘(i) have been prescribed by the Sec2 retary by regulations (after consultation 

3 with the Secretary of Energy or the Ad4 ministrator of the Environmental Protec5 tion Agency, as appropriate), 

6 ‘‘(ii) in the case of the energy effi7 ciency ratio (EER) for property described 

8 in subsection (d)(6)(B)(viii)—

9 ‘‘(I) require measurements to be 

10 based on published data which is test11 ed by manufacturers at 95 degrees 

12 Fahrenheit, and 

13 ‘‘(II) do not require ratings to be 

14 based on certified data of the Air 

15 Conditioning and Refrigeration Insti16 tute, and 

17 ‘‘(iii) are in effect at the time of the 

18 acquisition of the property. 

19 ‘‘(c) CARRYFORWARD OF UNUSED CREDIT.—If the 

20 credit allowable under subsection (a) exceeds the limita21 tion imposed by section 26(a) for such taxable year re22 duced by the sum of the credits allowable under this sub23 part (other than this section and section 25D), such excess 

24 shall be carried to the succeeding taxable year and added 
872

S 2095 PCS 

1 to the credit allowable under subsection (a) for such suc2 ceeding taxable year. 

3 ‘‘(d) DEFINITIONS.—For purposes of this section—

4 ‘‘(1) QUALIFIED SOLAR WATER HEATING PROP5 ERTY EXPENDITURE.—The term ‘qualified solar 

6 water heating property expenditure’ means an ex7 penditure for property to heat water for use in a 

8 dwelling unit located in the United States and used 

9 as a residence by the taxpayer if at least half of the 

10 energy used by such property for such purpose is de11 rived from the sun. 

12 ‘‘(2) QUALIFIED PHOTOVOLTAIC PROPERTY EX13 PENDITURE.—The term ‘qualified photovoltaic prop14 erty expenditure’ means an expenditure for property 

15 which uses solar energy to generate electricity for 

16 use in a dwelling unit located in the United States 

17 and used as a residence by the taxpayer. 

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

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

20 (or portion thereof) shall fail to be treated as prop21 erty described in paragraph (1) or (2) solely because 

22 it constitutes a structural component of the struc23 ture on which it is installed. 

24 ‘‘(4) QUALIFIED FUEL CELL PROPERTY EX25 PENDITURE.—The term ‘qualified fuel cell property 
873

S 2095 PCS 

1 expenditure’ means an expenditure for qualified fuel 

2 cell property (as defined in section 48(a)(4)) in3 stalled on or in connection with a dwelling unit lo4 cated in the United States and used as a principal 

5 residence (within the meaning of section 121) by the 

6 taxpayer. 

7 ‘‘(5) QUALIFIED WIND ENERGY PROPERTY EX8 PENDITURE.—The term ‘qualified wind energy prop9 erty expenditure’ means an expenditure for property 

10 which uses wind energy to generate electricity for 

11 use in a dwelling unit located in the United States 

12 and used as a residence by the taxpayer. 

13 ‘‘(6) QUALIFIED TIER 2 ENERGY EFFICIENT

14 BUILDING PROPERTY EXPENDITURE.—

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

16 Tier 2 energy efficient building property ex17 penditure’ means an expenditure for any Tier 2 

18 energy efficient building property. 

19 ‘‘(B) TIER 2 ENERGY EFFICIENT BUILDING

20 PROPERTY.—The term ‘Tier 2 energy efficient 

21 building property’ means—

22 ‘‘(i) an electric heat pump water heat23 er which yields an energy factor of at least 

24 1.7 in the standard Department of Energy 

25 test procedure, 
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S 2095 PCS 

1 ‘‘(ii) an advanced natural gas, oil, 

2 propane furnace, or hot water boiler which 

3 achieves at least 95 percent annual fuel 

4 utilization efficiency (AFUE), 

5 ‘‘(iii) an advanced natural gas, oil, or 

6 propane water heater which has an energy 

7 factor of at least 0.80 in the standard De8 partment of Energy test procedure, 

9 ‘‘(iv) a natural gas, oil, or propane 

10 water heater which has an energy factor of 

11 at least 0.65 but less than 0.80 in the 

12 standard Department of Energy test proce13 dure, 

14 ‘‘(v) an advanced main air circulating 

15 fan used in a new natural gas, propane, or 

16 oil-fired furnace, including main air circu17 lating fans that use a brushless permanent 

18 magnet motor or another type of motor 

19 which achieves similar or higher efficiency 

20 at half and full speed, as determined by 

21 the Secretary, 

22 ‘‘(vi) an advanced combination space 

23 and water heating system which has a 

24 combined energy factor of at least 0.80 

25 and a combined annual fuel utilization effi-
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S 2095 PCS 

1 ciency (AFUE) of at least 78 percent in 

2 the standard Department of Energy test 

3 procedure, 

4 ‘‘(vii) a combination space and water 

5 heating system which has a combined en6 ergy factor of at least 0.65 but less than 

7 0.80 and a combined annual fuel utiliza8 tion efficiency (AFUE) of at least 78 per9 cent in the standard Department of En10 ergy test procedure, and 

11 ‘‘(viii) a geothermal heat pump which 

12 has an energy efficiency ratio (EER) of at 

13 least 21. 

14 ‘‘(7) LABOR COSTS.—Expenditures for labor 

15 costs properly allocable to the onsite preparation, as16 sembly, or original installation of the property de17 scribed in paragraph (1), (2), (4), (5), or (6) and for 

18 piping or wiring to interconnect such property to the 

19 dwelling unit shall be taken into account for pur20 poses of this section. 

21 ‘‘(8) SWIMMING POOLS, ETC., USED AS STOR22 AGE MEDIUM.—Expenditures which are properly al23 locable to a swimming pool, hot tub, or any other 

24 energy storage medium which has a function other 
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S 2095 PCS 

1 than the function of such storage shall not be taken 

2 into account for purposes of this section. 

3 ‘‘(e) SPECIAL RULES.—For purposes of this sec4 tion—

5 ‘‘(1) DOLLAR AMOUNTS IN CASE OF JOINT OC6 CUPANCY.—In the case of any dwelling unit which is 

7 jointly occupied and used during any calendar year 

8 as a residence by 2 or more individuals the following 

9 rules shall apply:

10 ‘‘(A) The amount of the credit allowable, 

11 under subsection (a) by reason of expenditures 

12 (as the case may be) made during such cal13 endar year by any of such individuals with re14 spect to such dwelling unit shall be determined 

15 by treating all of such individuals as 1 taxpayer 

16 whose taxable year is such calendar year. 

17 ‘‘(B) There shall be allowable, with respect 

18 to such expenditures to each of such individ19 uals, a credit under subsection (a) for the tax20 able year in which such calendar year ends in 

21 an amount which bears the same ratio to the 

22 amount determined under subparagraph (A) as 

23 the amount of such expenditures made by such 

24 individual during such calendar year bears to 
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1 the aggregate of such expenditures made by all 

2 of such individuals during such calendar year. 

3 ‘‘(2) TENANT-STOCKHOLDER IN COOPERATIVE

4 HOUSING CORPORATION.—In the case of an indi5 vidual who is a tenant-stockholder (as defined in sec6 tion 216) in a cooperative housing corporation (as 

7 defined in such section), such individual shall be 

8 treated as having made his tenant-stockholder’s pro9 portionate share (as defined in section 216(b)(3)) of 

10 any expenditures of such corporation. 

11 ‘‘(3) CONDOMINIUMS.—

12 ‘‘(A) IN GENERAL.—In the case of an indi13 vidual who is a member of a condominium man14 agement association with respect to a condo15 minium which the individual owns, such indi16 vidual shall be treated as having made the indi17 vidual’s proportionate share of any expenditures 

18 of such association. 

19 ‘‘(B) CONDOMINIUM MANAGEMENT ASSO20 CIATION.—For purposes of this paragraph, the 

21 term ‘condominium management association’ 

22 means an organization which meets the require23 ments of paragraph (1) of section 528(c) (other 

24 than subparagraph (E) thereof) with respect to 
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1 a condominium project substantially all of the 

2 units of which are used as residences. 

3 ‘‘(4) ALLOCATION IN CERTAIN CASES.—Except 

4 in the case of qualified wind energy property expend5 itures, if less than 80 percent of the use of an item 

6 is for nonbusiness purposes, only that portion of the 

7 expenditures for such item which is properly allo8 cable to use for nonbusiness purposes shall be taken 

9 into account.

10 ‘‘(5) WHEN EXPENDITURE MADE; AMOUNT OF

11 EXPENDITURE.—

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

13 subparagraph (B), an expenditure with respect 

14 to an item shall be treated as made when the 

15 original installation of the item is completed. 

16 ‘‘(B) EXPENDITURES PART OF BUILDING

17 CONSTRUCTION.—In the case of an expenditure 

18 in connection with the construction or recon19 struction of a structure, such expenditure shall 

20 be treated as made when the original use of the 

21 constructed or reconstructed structure by the 

22 taxpayer begins. 

23 ‘‘(C) AMOUNT.—The amount of any ex24 penditure shall be the cost thereof. 
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1 ‘‘(6) PROPERTY FINANCED BY SUBSIDIZED EN2 ERGY FINANCING.—For purposes of determining the 

3 amount of expenditures made by any individual with 

4 respect to any dwelling unit, there shall not be taken 

5 into account expenditures which are made from sub6 sidized energy financing (as defined in section 

7 48(a)(5)(C)). 

8 ‘‘(f) BASIS ADJUSTMENTS.—For purposes of this 

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

10 expenditure with respect to any property, the increase in 

11 the basis of such property which would (but for this sub12 section) result from such expenditure shall be reduced by 

13 the amount of the credit so allowed. 

14 ‘‘(g) TERMINATION.—The credit allowed under this 

15 section shall not apply to expenditures after December 31, 

16 2007.’’. 

17 (b) CREDIT ALLOWED AGAINST REGULAR TAX AND

18 ALTERNATIVE MINIMUM TAX.—

19 (1) IN GENERAL.—Section 25C(b), as added by 

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

21 following new paragraph: 

22 ‘‘(3) LIMITATION BASED ON AMOUNT OF

23 TAX.—The credit allowed under subsection (a) for 

24 the taxable year shall not exceed the excess of—
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1 ‘‘(A) the sum of the regular tax liability 

2 (as defined in section 26(b)) plus the tax im3 posed by section 55, over

4 ‘‘(B) the sum of the credits allowable 

5 under this subpart (other than this section and 

6 section 25D) and section 27 for the taxable 

7 year.’’. 

8 (2) CONFORMING AMENDMENTS.—

9 (A) Section 25C(c), as added by subsection 

10 (a), is amended by striking ‘‘section 26(a) for 

11 such taxable year reduced by the sum of the 

12 credits allowable under this subpart (other than 

13 this section and section 25D)’’ and inserting 

14 ‘‘subsection (b)(3)’’. 

15 (B) Section 23(b)(4)(B) is amended by in16 serting ‘‘and section 25C’’ after ‘‘this section’’. 

17 (C) Section 24(b)(3)(B) is amended by 

18 striking ‘‘23 and 25B’’ and inserting ‘‘23, 25B, 

19 and 25C’’. 

20 (D) Section 25(e)(1)(C) is amended by in21 serting ‘‘25C,’’ after ‘‘25B,’’. 

22 (E) Section 25B(g)(2) is amended by 

23 striking ‘‘section 23’’ and inserting ‘‘sections 23 

24 and 25C’’. 
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1 (F) Section 26(a)(1) is amended by strik2 ing ‘‘and 25B’’ and inserting ‘‘25B, and 25C’’. 

3 (G) Section 904(h) is amended by striking 

4 ‘‘and 25B’’ and inserting ‘‘25B, and 25C’’. 

5 (H) Section 1400C(d) is amended by strik6 ing ‘‘and 25B’’ and inserting ‘‘25B, and 25C’’. 

7 (c) ADDITIONAL CONFORMING AMENDMENTS.—

8 (1) Section 1016(a), as amended by this Act, is 

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

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

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

12 end the following new paragraph:

13 ‘‘(31) to the extent provided in section 25C(f), 

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

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

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

17 IV of subchapter A of chapter 1 is amended by in18 serting after the item relating to section 25B the fol19 lowing new item:

‘‘Sec. 25C. Residential energy efficient property.’’.

20 (d) EFFECTIVE DATES.—

21 (1) IN GENERAL.—Except as provided by para22 graph (2), the amendments made by this section 

23 shall apply to expenditures after September 30, 

24 2004, in taxable years ending after such date. 
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1 (2) SUBSECTION (b).—The amendments made 

2 by subsection (b) shall apply to taxable years begin3 ning after September 30, 2004. 

4 SEC. 1324. CREDIT FOR BUSINESS INSTALLATION OF 

5 QUALIFIED FUEL CELLS AND STATIONARY 

6 MICROTURBINE POWER PLANTS. 

7 (a) IN GENERAL.—Section 48(a)(3)(A) (defining en8 ergy property) is amended by striking ‘‘or’’ at the end of 

9 clause (i), by adding ‘‘or’’ at the end of clause (ii), and 

10 by inserting after clause (ii) the following new clause: 

11 ‘‘(iii) qualified fuel cell property or 

12 qualified microturbine property,’’. 

13 (b) QUALIFIED FUEL CELL PROPERTY; QUALIFIED

14 MICROTURBINE PROPERTY.—Section 48(a) (relating to 

15 energy credit) is amended by redesignating paragraphs (4) 

16 and (5) as paragraphs (5) and (6), respectively, and by 

17 inserting after paragraph (3) the following new paragraph: 

18 ‘‘(4) QUALIFIED FUEL CELL PROPERTY; QUALI19 FIED MICROTURBINE PROPERTY.—For purposes of 

20 this subsection—

21 ‘‘(A) QUALIFIED FUEL CELL PROPERTY.—

22 ‘‘(i) IN GENERAL.—The term ‘quali23 fied fuel cell property’ means a fuel cell 

24 power plant which—
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1 ‘‘(I) generates at least 0.5 kilo2 watt of electricity using an electro3 chemical process, and 

4 ‘‘(II) has an electricity-only gen5 eration efficiency greater than 30 per6 cent. 

7 ‘‘(ii) LIMITATION.—In the case of 

8 qualified fuel cell property placed in service 

9 during the taxable year, the credit other10 wise determined under paragraph (1) for 

11 such year with respect to such property 

12 shall not exceed an amount equal to $500 

13 for each 0.5 kilowatt of capacity of such 

14 property. 

15 ‘‘(iii) FUEL CELL POWER PLANT.—

16 The term ‘fuel cell power plant’ means an 

17 integrated system comprised of a fuel cell 

18 stack assembly and associated balance of 

19 plant components which converts a fuel 

20 into electricity using electrochemical 

21 means. 

22 ‘‘(iv) TERMINATION.—The term 

23 ‘qualified fuel cell property’ shall not in24 clude any property placed in service after 

25 December 31, 2007. 
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1 ‘‘(B) QUALIFIED MICROTURBINE PROP2 ERTY.—

3 ‘‘(i) IN GENERAL.—The term ‘quali4 fied microturbine property’ means a sta5 tionary microturbine power plant which—

6 ‘‘(I) has a capacity of less than 

7 2,000 kilowatts, and 

8 ‘‘(II) has an electricity-only gen9 eration efficiency of not less than 26 

10 percent at International Standard Or11 ganization conditions. 

12 ‘‘(ii) LIMITATION.—In the case of 

13 qualified microturbine property placed in 

14 service during the taxable year, the credit 

15 otherwise determined under paragraph (1) 

16 for such year with respect to such property 

17 shall not exceed an amount equal to $200 

18 for each kilowatt of capacity of such prop19 erty. 

20 ‘‘(iii) STATIONARY MICROTURBINE

21 POWER PLANT.—The term ‘stationary 

22 microturbine power plant’ means an inte23 grated system comprised of a gas turbine 

24 engine, a combustor, a recuperator or re25 generator, a generator or alternator, and 
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1 associated balance of plant components 

2 which converts a fuel into electricity and 

3 thermal energy. Such term also includes all 

4 secondary components located between the 

5 existing infrastructure for fuel delivery and 

6 the existing infrastructure for power dis7 tribution, including equipment and controls 

8 for meeting relevant power standards, such 

9 as voltage, frequency, and power factors. 

10 ‘‘(iv) TERMINATION.—The term 

11 ‘qualified microturbine property’ shall not 

12 include any property placed in service after 

13 December 31, 2006.’’. 

14 (c) ENERGY PERCENTAGE.—Section 48(a)(2)(A) (re15 lating to energy percentage) is amended to read as follows: 

16 ‘‘(A) IN GENERAL.—The energy percent17 age is—

18 ‘‘(i) in the case of qualified fuel cell 

19 property, 30 percent, and 

20 ‘‘(ii) in the case of any other energy 

21 property, 10 percent.’’. 

22 (d) CONFORMING AMENDMENTS.—

23 (A) Section 29(b)(3)(A)(i)(III) is amended 

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

25 ‘‘section 48(a)(5)(C)’’. 
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1 (B) Section 48(a)(1) is amended by insert2 ing ‘‘except as provided in subparagraph (A)(ii) 

3 or (B)(ii) of paragraph (4),’’ before ‘‘the en4 ergy’’. 

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

6 this section shall apply to property placed in service after 

7 September 30, 2004, in taxable years ending after such 

8 date, under rules similar to the rules of section 48(m) of 

9 the Internal Revenue Code of 1986 (as in effect on the 

10 day before the date of the enactment of the Revenue Rec11 onciliation Act of 1990).

12 SEC. 1325. ENERGY EFFICIENT COMMERCIAL BUILDINGS 

13 DEDUCTION. 

14 (a) IN GENERAL.—Part VI of subchapter B of chap15 ter 1 (relating to itemized deductions for individuals and 

16 corporations) is amended by inserting after section 179A 

17 the following new section: 

18 ‘‘SEC. 179B. ENERGY EFFICIENT COMMERCIAL BUILDINGS 

19 DEDUCTION. 

20 ‘‘(a) IN GENERAL.—There shall be allowed as a de21 duction for the taxable year in which a building is placed 

22 in service by a taxpayer, an amount equal to the energy 

23 efficient commercial building property expenditures made 

24 by such taxpayer with respect to the construction or recon-
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1 struction of such building for the taxable year or any pre2 ceding taxable year. 

3 ‘‘(b) MAXIMUM AMOUNT OF DEDUCTION.—The 

4 amount of energy efficient commercial building property 

5 expenditures taken into account under subsection (a) shall 

6 not exceed an amount equal to the product of—

7 ‘‘(1) $2.25, and 

8 ‘‘(2) the square footage of the building with re9 spect to which the expenditures are made. 

10 ‘‘(c) ENERGY EFFICIENT COMMERCIAL BUILDING

11 PROPERTY EXPENDITURES.—For purposes of this sec12 tion—

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

14 commercial building property expenditures’ means 

15 amounts paid or incurred for energy efficient prop16 erty installed on or in connection with the construc17 tion or reconstruction of a building—

18 ‘‘(A) for which depreciation is allowable 

19 under section 167, 

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

21 and 

22 ‘‘(C) which is the type of structure to 

23 which the Standard 90.1–2001 of the American 

24 Society of Heating, Refrigerating, and Air Con-
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1 ditioning Engineers and the Illuminating Engi2 neering Society of North America is applicable. 

3 Such term includes expenditures for labor costs 

4 properly allocable to the onsite preparation, assem5 bly, or original installation of the property. 

6 ‘‘(2) ENERGY EFFICIENT PROPERTY.—For pur7 poses of paragraph (1)—

8 ‘‘(A) IN GENERAL.—The term ‘energy effi9 cient property’ means any property which re10 duces total annual energy and power costs with 

11 respect to the lighting, heating, cooling, ventila12 tion, and hot water supply systems of the build13 ing by 50 percent or more in comparison to a 

14 building which meets the minimum require15 ments of Standard 90.1–2001 of the American 

16 Society of Heating, Refrigerating, and Air Con17 ditioning Engineers and the Illuminating Engi18 neering Society of North America, using meth19 ods of calculation described in subparagraph 

20 (B) and certified by qualified individuals as 

21 provided under paragraph (5). 

22 ‘‘(B) METHODS OF CALCULATION.—The 

23 Secretary, in consultation with the Secretary of 

24 Energy, shall promulgate regulations which de-
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1 scribe in detail methods for calculating and 

2 verifying energy and power costs. 

3 ‘‘(C) COMPUTER SOFTWARE.—

4 ‘‘(i) IN GENERAL.—Any calculation 

5 described in subparagraph (B) shall be 

6 prepared by qualified computer software. 

7 ‘‘(ii) QUALIFIED COMPUTER SOFT8 WARE.—For purposes of this subpara9 graph, the term ‘qualified computer soft10 ware’ means software—

11 ‘‘(I) for which the software de12 signer has certified that the software 

13 meets all procedures and detailed 

14 methods for calculating energy and 

15 power costs as required by the Sec16 retary, 

17 ‘‘(II) which provides such forms 

18 as required to be filed by the Sec19 retary in connection with energy effi20 ciency of property and the deduction 

21 allowed under this section, and 

22 ‘‘(III) which provides a notice 

23 form which summarizes the energy ef24 ficiency features of the building and 

25 its projected annual energy costs.
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1 ‘‘(3) ALLOCATION OF DEDUCTION FOR PUBLIC

2 PROPERTY.—In the case of energy efficient commer3 cial building property expenditures made by a public 

4 entity with respect to the construction or reconstruc5 tion of a public building, the Secretary shall promul6 gate regulations under which the value of the deduc7 tion with respect to such expenditures which would 

8 be allowable to the public entity under this section 

9 (determined without regard to the tax-exempt status 

10 of such entity) may be allocated to the person pri11 marily responsible for designing the energy efficient 

12 property. Such person shall be treated as the tax13 payer for purposes of this section. 

14 ‘‘(4) NOTICE TO OWNER.—Any qualified indi15 vidual providing a certification under paragraph (5) 

16 shall provide an explanation to the owner of the 

17 building regarding the energy efficiency features of 

18 the building and its projected annual energy costs as 

19 provided in the notice under paragraph 

20 (2)(C)(ii)(III). 

21 ‘‘(5) CERTIFICATION.—

22 ‘‘(A) IN GENERAL.—The Secretary shall 

23 prescribe procedures for the inspection and test24 ing for compliance of buildings by qualified in-
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1 dividuals described in subparagraph (B). Such 

2 procedures shall be—

3 ‘‘(i) comparable, given the difference 

4 between commercial and residential build5 ings, to the requirements in the Mortgage 

6 Industry National Home Energy Rating 

7 Standards, and 

8 ‘‘(ii) fuel neutral such that the same 

9 energy efficiency measures allow a building 

10 to be eligible for the credit under this sec11 tion regardless of whether such building 

12 uses a gas or oil furnace or boiler or an 

13 electric heat pump.

14 ‘‘(B) QUALIFIED INDIVIDUALS.—Individ15 uals qualified to determine compliance shall be 

16 only those individuals who are recognized by an 

17 organization certified by the Secretary for such 

18 purposes. The Secretary may qualify a home 

19 energy ratings organization, a local building 

20 regulatory authority, a State or local energy of21 fice, a utility, or any other organization which 

22 meets the requirements prescribed under this 

23 paragraph. 

24 ‘‘(C) PROFICIENCY OF QUALIFIED INDIVID25 UALS.—The Secretary shall consult with non-
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1 profit organizations and State agencies with ex2 pertise in energy efficiency calculations and in3 spections to develop proficiency tests and train4 ing programs to qualify individuals to determine 

5 compliance. 

6 ‘‘(d) BASIS REDUCTION.—For purposes of this sub7 title, if a deduction is allowed under this section with re8 spect to any energy efficient property, the basis of such 

9 property shall be reduced by the amount of the deduction 

10 so allowed. 

11 ‘‘(e) REGULATIONS.—The Secretary shall promulgate 

12 such regulations as necessary to take into account new 

13 technologies regarding energy efficiency and renewable en14 ergy for purposes of determining energy efficiency and 

15 savings under this section. 

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

17 with respect to any energy efficient commercial building 

18 property expenditures in connection with a building the 

19 construction of which is not completed on or before De20 cember 31, 2009.’’. 

21 (b) CONFORMING AMENDMENTS.—

22 (1) Section 1016(a), as amended by this Act, is 

23 amended by striking ‘‘and’’ at the end of paragraph 

24 (30), by striking the period at the end of paragraph 
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1 (31) and inserting ‘‘, and’’, and by adding at the 

2 end the following new paragraph: 

3 ‘‘(32) to the extent provided in section 

4 179B(d).’’. 

5 (2) Section 1245(a) is amended by inserting 

6 ‘‘179B,’’ after ‘‘179A,’’ both places it appears in 

7 paragraphs (2)(C) and (3)(C). 

8 (3) Section 1250(b)(3) is amended by inserting 

9 before the period at the end of the first sentence ‘‘or 

10 by section 179B’’. 

11 (4) Section 263(a)(1) is amended by striking 

12 ‘‘or’’ at the end of subparagraph (G), by striking the 

13 period at the end of subparagraph (H) and inserting 

14 ‘‘, or’’, and by inserting after subparagraph (H) the 

15 following new subparagraph: 

16 ‘‘(I) expenditures for which a deduction is 

17 allowed under section 179B.’’. 

18 (5) Section 312(k)(3)(B) is amended by strik19 ing ‘‘or 179A’’ each place it appears in the heading 

20 and text and inserting ‘‘, 179A, or 179B’’. 

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

22 for part VI of subchapter B of chapter 1 is amended by 

23 inserting after section 179A the following new item:

‘‘Sec. 179B. Energy efficient commercial buildings deduction.’’.
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1 (d) EFFECTIVE DATE.—The amendments made by 

2 this section shall apply to taxable years beginning after 

3 September 30, 2004. 

4 SEC. 1326. THREE-YEAR APPLICABLE RECOVERY PERIOD 

5 FOR DEPRECIATION OF QUALIFIED ENERGY 

6 MANAGEMENT DEVICES. 

7 (a) IN GENERAL.—Section 168(e)(3)(A) (defining 3-

8 year property) is amended by striking ‘‘and’’ at the end 

9 of clause (ii), by striking the period at the end of clause 

10 (iii) and inserting ‘‘, and’’, and by adding at the end the 

11 following new clause: 

12 ‘‘(iv) any qualified energy manage13 ment device.’’. 

14 (b) DEFINITION OF QUALIFIED ENERGY MANAGE15 MENT DEVICE.—Section 168(i) (relating to definitions 

16 and special rules) is amended by inserting at the end the 

17 following new paragraph: 

18 ‘‘(15) QUALIFIED ENERGY MANAGEMENT DE19 VICE.—

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

21 energy management device’ means any energy 

22 management device which is placed in service 

23 before January 1, 2008, by a taxpayer who is 

24 a supplier of electric energy or a provider of 

25 electric energy services.
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1 ‘‘(B) ENERGY MANAGEMENT DEVICE.—

2 For purposes of subparagraph (A), the term 

3 ‘energy management device’ means any meter 

4 or metering device which is used by the tax5 payer—

6 ‘‘(i) to measure and record electricity 

7 usage data on a time-differentiated basis 

8 in at least 4 separate time segments per 

9 day, and 

10 ‘‘(ii) to provide such data on at least 

11 a monthly basis to both consumers and the 

12 taxpayer.’’. 

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

14 this section shall apply to property placed in service after 

15 September 30, 2004, in taxable years ending after such 

16 date. 

17 SEC. 1327. THREE-YEAR APPLICABLE RECOVERY PERIOD 

18 FOR DEPRECIATION OF QUALIFIED WATER 

19 SUBMETERING DEVICES. 

20 (a) IN GENERAL.—Section 168(e)(3)(A) (defining 3-

21 year property), as amended by this Act, is amended by 

22 striking ‘‘and’’ at the end of clause (iii), by striking the 

23 period at the end of clause (iv) and inserting ‘‘, and’’, and 

24 by adding at the end the following new clause: 
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1 ‘‘(v) any qualified water submetering 

2 device.’’. 

3 (b) DEFINITION OF QUALIFIED WATER SUB4 METERING DEVICE.—Section 168(i) (relating to defini5 tions and special rules), as amended by this Act, is amend6 ed by inserting at the end the following new paragraph:

7 ‘‘(16) QUALIFIED WATER SUBMETERING DE8 VICE.—

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

10 water submetering device’ means any water 

11 submetering device which is placed in service 

12 before January 1, 2008, by a taxpayer who is 

13 an eligible resupplier with respect to the unit 

14 for which the device is placed in service.

15 ‘‘(B) WATER SUBMETERING DEVICE.—For 

16 purposes of this paragraph, the term ‘water 

17 submetering device’ means any submetering de18 vice which is used by the taxpayer—

19 ‘‘(i) to measure and record water 

20 usage data, and 

21 ‘‘(ii) to provide such data on at least 

22 a monthly basis to both consumers and the 

23 taxpayer. 

24 ‘‘(C) ELIGIBLE RESUPPLIER.—For pur25 poses of subparagraph (A), the term ‘eligible re-
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1 supplier’ means any taxpayer who purchases 

2 and installs qualified water submetering devices 

3 in every unit in any multi-unit property.’’. 

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

5 this section shall apply to property placed in service after 

6 September 30, 2004, in taxable years ending after such 

7 date. 

8 SEC. 1328. ENERGY CREDIT FOR COMBINED HEAT AND 

9 POWER SYSTEM PROPERTY. 

10 (a) IN GENERAL.—Section 48(a)(3)(A) (defining en11 ergy property), as amended by this Act, is amended by 

12 striking ‘‘or’’ at the end of clause (ii), by adding ‘‘or’’ at 

13 the end of clause (iii), and by inserting after clause (iii) 

14 the following new clause: 

15 ‘‘(iv) combined heat and power system 

16 property,’’. 

17 (b) COMBINED HEAT AND POWER SYSTEM PROP18 ERTY.—Section 48(a) (relating to energy credit), as 

19 amended by this Act, is amended by redesignating para20 graphs (5) and (6) as paragraphs (6) and (7), respectively, 

21 and by inserting after paragraph (4) the following new 

22 paragraph: 

23 ‘‘(5) COMBINED HEAT AND POWER SYSTEM

24 PROPERTY.—For purposes of this subsection—
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1 ‘‘(A) COMBINED HEAT AND POWER SYS2 TEM PROPERTY.—The term ‘combined heat and 

3 power system property’ means property com4 prising a system—

5 ‘‘(i) which uses the same energy 

6 source for the simultaneous or sequential 

7 generation of electrical power, mechanical 

8 shaft power, or both, in combination with 

9 the generation of steam or other forms of 

10 useful thermal energy (including heating 

11 and cooling applications), 

12 ‘‘(ii) which has an electrical capacity 

13 of more than 50 kilowatts or a mechanical 

14 energy capacity of more than 67 horse15 power or an equivalent combination of elec16 trical and mechanical energy capacities, 

17 ‘‘(iii) which produces—

18 ‘‘(I) at least 20 percent of its 

19 total useful energy in the form of 

20 thermal energy which is not used to 

21 produce electrical or mechanical power 

22 (or combination thereof), and 

23 ‘‘(II) at least 20 percent of its 

24 total useful energy in the form of elec-
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1 trical or mechanical power (or com2 bination thereof), 

3 ‘‘(iv) the energy efficiency percentage 

4 of which exceeds 60 percent (70 percent in 

5 the case of a system with an electrical ca6 pacity in excess of 50 megawatts or a me7 chanical energy capacity in excess of 

8 67,000 horsepower, or an equivalent com9 bination of electrical and mechanical en10 ergy capacities), and 

11 ‘‘(v) which is placed in service before 

12 January 1, 2007. 

13 ‘‘(B) SPECIAL RULES.—

14 ‘‘(i) ENERGY EFFICIENCY PERCENT15 AGE.—For purposes of subparagraph 

16 (A)(iv), the energy efficiency percentage of 

17 a system is the fraction—

18 ‘‘(I) the numerator of which is 

19 the total useful electrical, thermal, 

20 and mechanical power produced by 

21 the system at normal operating rates, 

22 and expected to be consumed in its 

23 normal application, and 
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1 ‘‘(II) the denominator of which is 

2 the lower heating value of the primary 

3 fuel source for the system. 

4 ‘‘(ii) DETERMINATIONS MADE ON BTU

5 BASIS.—The energy efficiency percentage 

6 and the percentages under subparagraph 

7 (A)(iii) shall be determined on a Btu basis. 

8 ‘‘(iii) INPUT AND OUTPUT PROPERTY

9 NOT INCLUDED.—The term ‘combined heat 

10 and power system property’ does not in11 clude property used to transport the en12 ergy source to the facility or to distribute 

13 energy produced by the facility. 

14 ‘‘(iv) PUBLIC UTILITY PROPERTY.—

15 ‘‘(I) ACCOUNTING RULE FOR

16 PUBLIC UTILITY PROPERTY.—If the 

17 combined heat and power system 

18 property is public utility property (as 

19 defined in section 168(i)(10)), the 

20 taxpayer may only claim the credit 

21 under this subsection if, with respect 

22 to such property, the taxpayer uses a 

23 normalization method of accounting. 

24 ‘‘(II) CERTAIN EXCEPTION NOT

25 TO APPLY.—The matter following 
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1 paragraph (3)(D) shall not apply to 

2 combined heat and power system 

3 property. 

4 ‘‘(v) NONAPPLICATION OF CERTAIN

5 RULES.—For purposes of determining if 

6 the term ‘combined heat and power system 

7 property’ includes technologies which gen8 erate electricity or mechanical power using 

9 back-pressure steam turbines in place of 

10 existing pressure-reducing valves or which 

11 make use of waste heat from industrial 

12 processes such as by using organic rankin, 

13 stirling, or kalina heat engine systems, 

14 subparagraph (A) shall be applied without 

15 regard to clauses (i), (iii), and (iv) thereof. 

16 ‘‘(C) EXTENSION OF DEPRECIATION RE17 COVERY PERIOD.—If a taxpayer is allowed a

18 credit under this section for a combined heat 

19 and power system property which has a class 

20 life of 15 years or less under section 168, such 

21 property shall be treated as having a 22-year 

22 class life for purposes of section 168.’’. 

23 (c) LIMITATION ON CARRYBACK.—Section 39(d) (re24 lating to transition rules), as amended by this Act, is 
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1 amended by adding at the end the following new para2 graph: 

3 ‘‘(15) NO CARRYBACK OF ENERGY CREDIT BE4 FORE EFFECTIVE DATE.—No portion of the unused 

5 business credit for any taxable year which is attrib6 utable to the energy credit with respect to property 

7 described in section 48(a)(5) may be carried back to 

8 a taxable year ending before October 1, 2004.’’. 

9 (d) CONFORMING AMENDMENTS.—

10 (A) Section 25C(e)(6), as added by this 

11 Act, is amended by striking ‘‘section 

12 48(a)(5)(C)’’ and inserting ‘‘section 

13 48(a)(6)(C)’’. 

14 (B) Section 29(b)(3)(A)(i)(III), as amend15 ed by this Act, is amended by striking ‘‘section 

16 48(a)(5)(C)’’ and inserting ‘‘section 

17 48(a)(6)(C)’’. 

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

19 this subsection shall apply to property placed in service 

20 after September 30, 2004, in taxable years ending after 

21 such date, under rules similar to the rules of section 48(m) 

22 of the Internal Revenue Code of 1986 (as in effect on the 

23 day before the date of the enactment of the Revenue Rec24 onciliation Act of 1990). 
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1 SEC. 1329. CREDIT FOR ENERGY EFFICIENCY IMPROVE2 MENTS TO EXISTING HOMES. 

3 (a) IN GENERAL.—Subpart A of part IV of sub4 chapter A of chapter 1 (relating to nonrefundable personal 

5 credits), as amended by this Act, is amended by inserting 

6 after section 25C the following new section:

7 ‘‘SEC. 25D. ENERGY EFFICIENCY IMPROVEMENTS TO EXIST8 ING HOMES. 

9 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in10 dividual, there shall be allowed as a credit against the tax 

11 imposed by this chapter for the taxable year an amount 

12 equal to 10 percent of the amount paid or incurred by 

13 the taxpayer for qualified energy efficiency improvements 

14 installed during such taxable year. 

15 ‘‘(b) LIMITATION.—The credit allowed by this section 

16 with respect to a dwelling for any taxable year shall not 

17 exceed $300, reduced (but not below zero) by the sum of 

18 the credits allowed under subsection (a) to the taxpayer 

19 with respect to the dwelling for all preceding taxable years. 

20 ‘‘(c) CARRYFORWARD OF UNUSED CREDIT.—If the 

21 credit allowable under subsection (a) exceeds the limita22 tion imposed by section 26(a) for such taxable year re23 duced by the sum of the credits allowable under this sub24 part (other than this section) for such taxable year, such 

25 excess shall be carried to the succeeding taxable year and 
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1 added to the credit allowable under subsection (a) for such 

2 succeeding taxable year. 

3 ‘‘(d) QUALIFIED ENERGY EFFICIENCY IMPROVE4 MENTS.—For purposes of this section, the term ‘qualified 

5 energy efficiency improvements’ means any energy effi6 cient building envelope component which is certified to 

7 meet or exceed the latest prescriptive criteria for such 

8 component in the International Energy Conservation Code 

9 approved by the Department of Energy before the installa10 tion of such component, or any combination of energy effi11 ciency measures which are certified as achieving at least 

12 a 30 percent reduction in heating and cooling energy 

13 usage for the dwelling (as measured in terms of energy 

14 cost to the taxpayer), if—

15 ‘‘(1) such component or combination of meas16 ures is installed in or on a dwelling which—

17 ‘‘(A) is located in the United States, 

18 ‘‘(B) has not been treated as a qualifying 

19 new home for purposes of any credit allowed 

20 under section 45G, and 

21 ‘‘(C) is owned and used by the taxpayer as 

22 the taxpayer’s principal residence (within the 

23 meaning of section 121), 
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1 ‘‘(2) the original use of such component or com2 bination of measures commences with the taxpayer, 

3 and 

4 ‘‘(3) such component or combination of meas5 ures reasonably can be expected to remain in use for 

6 at least 5 years. 

7 ‘‘(e) CERTIFICATION.—

8 ‘‘(1) METHODS OF CERTIFICATION.—

9 ‘‘(A) COMPONENT-BASED METHOD.—The 

10 certification described in subsection (d) for any 

11 component described in such subsection shall be 

12 determined on the basis of applicable energy ef13 ficiency ratings (including product labeling re14 quirements) for affected building envelope com15 ponents. 

16 ‘‘(B) PERFORMANCE-BASED METHOD.—

17 ‘‘(i) IN GENERAL.—The certification 

18 described in subsection (d) for any com19 bination of measures described in such 

20 subsection shall be—

21 ‘‘(I) determined by comparing 

22 the projected heating and cooling en23 ergy usage for the dwelling to such 

24 usage for such dwelling in its original 

25 condition, and 
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1 ‘‘(II) accompanied by a written 

2 analysis documenting the proper ap3 plication of a permissible energy per4 formance calculation method to the 

5 specific circumstances of such dwell6 ing. 

7 ‘‘(ii) COMPUTER SOFTWARE.—Com8 puter software shall be used in support of 

9 a performance-based method certification 

10 under clause (i). Such software shall meet 

11 procedures and methods for calculating en12 ergy and cost savings in regulations pro13 mulgated by the Secretary of Energy. 

14 ‘‘(2) PROVIDER.—A certification described in 

15 subsection (d) shall be provided by—

16 ‘‘(A) in the case of the method described 

17 in paragraph (1)(A), a third party, such as a 

18 local building regulatory authority, a utility, a

19 manufactured home primary inspection agency, 

20 or a home energy rating organization, or 

21 ‘‘(B) in the case of the method described 

22 in paragraph (1)(B), an individual recognized 

23 by an organization designated by the Secretary 

24 for such purposes. 
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1 ‘‘(3) FORM.—A certification described in sub2 section (d) shall be made in writing on forms which 

3 specify in readily inspectable fashion the energy effi4 cient components and other measures and their re5 spective efficiency ratings, and which include a per6 manent label affixed to the electrical distribution 

7 panel of the dwelling. 

8 ‘‘(4) REGULATIONS.—

9 ‘‘(A) IN GENERAL.—In prescribing regula10 tions under this subsection for certification 

11 methods described in paragraph (1)(B), the 

12 Secretary, after examining the requirements for 

13 energy consultants and home energy ratings 

14 providers specified by the Mortgage Industry 

15 National Home Energy Rating Standards, shall 

16 prescribe procedures for calculating annual en17 ergy usage and cost reductions for heating and 

18 cooling and for the reporting of the results. 

19 Such regulations shall—

20 ‘‘(i) provide that any calculation pro21 cedures be fuel neutral such that the same 

22 energy efficiency measures allow a dwelling 

23 to be eligible for the credit under this sec24 tion regardless of whether such dwelling 
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1 uses a gas or oil furnace or boiler or an 

2 electric heat pump, and 

3 ‘‘(ii) require that any computer soft4 ware allow for the printing of the Federal 

5 tax forms necessary for the credit under 

6 this section and for the printing of forms 

7 for disclosure to the owner of the dwelling. 

8 ‘‘(B) PROVIDERS.—For purposes of para9 graph (2)(B), the Secretary shall establish re10 quirements for the designation of individuals 

11 based on the requirements for energy consult12 ants and home energy raters specified by the 

13 Mortgage Industry National Home Energy Rat14 ing Standards. 

15 ‘‘(f) DEFINITIONS AND SPECIAL RULES.—For pur16 poses of this section—

17 ‘‘(1) DOLLAR AMOUNTS IN CASE OF JOINT OC18 CUPANCY.—In the case of any dwelling unit which is 

19 jointly occupied and used during any calendar year 

20 as a residence by 2 or more individuals the following 

21 rules shall apply: 

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

23 under subsection (a) by reason of expenditures 

24 for the qualified energy efficiency improvements 

25 made during such calendar year by any of such 
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1 individuals with respect to such dwelling unit 

2 shall be determined by treating all of such indi3 viduals as 1 taxpayer whose taxable year is 

4 such calendar year. 

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

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

9 an amount which bears the same ratio to the 

10 amount determined under subparagraph (A) as 

11 the amount of such expenditures made by such 

12 individual during such calendar year bears to 

13 the aggregate of such expenditures made by all 

14 of such individuals during such calendar year. 

15 ‘‘(2) TENANT-STOCKHOLDER IN COOPERATIVE

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

19 defined in such section), such individual shall be 

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

22 the cost of qualified energy efficiency improvements 

23 made by such corporation. 

24 ‘‘(3) CONDOMINIUMS.—
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1 ‘‘(A) IN GENERAL.—In the case of an indi2 vidual who is a member of a condominium man3 agement association with respect to a condo4 minium which the individual owns, such indi5 vidual shall be treated as having paid the indi6 vidual’s proportionate share of the cost of quali7 fied energy efficiency improvements made by 

8 such association. 

9 ‘‘(B) CONDOMINIUM MANAGEMENT ASSO10 CIATION.—For purposes of this paragraph, the 

11 term ‘condominium management association’ 

12 means an organization which meets the require13 ments of paragraph (1) of section 528(c) (other 

14 than subparagraph (E) thereof) with respect to 

15 a condominium project substantially all of the 

16 units of which are used as residences. 

17 ‘‘(4) BUILDING ENVELOPE COMPONENT.—The 

18 term ‘building envelope component’ means—

19 ‘‘(A) any insulation material or system 

20 which is specifically and primarily designed to 

21 reduce the heat loss or gain or a dwelling when 

22 installed in or on such dwelling, 

23 ‘‘(B) exterior windows (including sky24 lights), and 

25 ‘‘(C) exterior doors. 
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1 ‘‘(5) MANUFACTURED HOMES INCLUDED.—For 

2 purposes of this section, the term ‘dwelling’ includes 

3 a manufactured home which conforms to Federal 

4 Manufactured Home Construction and Safety Stand5 ards (24 CFR 3280). 

6 ‘‘(g) BASIS ADJUSTMENT.—For purposes of this sub7 title, if a credit is allowed under this section for any ex8 penditure with respect to any property, the increase in the 

9 basis of such property which would (but for this sub10 section) result from such expenditure shall be reduced by 

11 the amount of the credit so allowed. 

12 ‘‘(h) TERMINATION.—Subsection (a) shall not apply 

13 to qualified energy efficiency improvements installed after 

14 December 31, 2006.’’. 

15 (b) CREDIT ALLOWED AGAINST REGULAR TAX AND

16 ALTERNATIVE MINIMUM TAX.—

17 (1) IN GENERAL.—Section 25D(b), as added by 

18 subsection (a), is amended—

19 (A) by striking ‘‘The credit’’ and inserting 

20 the following:

21 ‘‘(1) DOLLAR AMOUNT.—The credit’’, and 

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

23 paragraph: 
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1 ‘‘(2) LIMITATION BASED ON AMOUNT OF

2 TAX.—The credit allowed under subsection (a) for 

3 the taxable year shall not exceed the excess of—

4 ‘‘(A) the sum of the regular tax liability 

5 (as defined in section 26(b)) plus the tax im6 posed by section 55, over

7 ‘‘(B) the sum of the credits allowable 

8 under this subpart (other than this section) and 

9 section 27 for the taxable year.’’. 

10 (2) CONFORMING AMENDMENTS.—

11 (A) Section 25D(c), as added by subsection 

12 (a), is amended by striking ‘‘section 26(a) for 

13 such taxable year reduced by the sum of the 

14 credits allowable under this subpart (other than 

15 this section)’’ and inserting ‘‘subsection (b)(2)’’. 

16 (B) Section 23(b)(4)(B), as amended by 

17 this Act, is amended by striking ‘‘section 25C’’ 

18 and inserting ‘‘sections 25C and 25D’’. 

19 (C) Section 24(b)(3)(B), as amended by 

20 this Act, is amended by striking ‘‘and 25C’’ and 

21 inserting ‘‘25C, and 25D’’. 

22 (D) Section 25(e)(1)(C), as amended by 

23 this Act, is amended by inserting ‘‘25D,’’ after 

24 ‘‘25C,’’. 
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1 (E) Section 25B(g)(2), as amended by this 

2 Act, is amended by striking ‘‘23 and 25C’’ and 

3 inserting ‘‘23, 25C, and 25D’’. 

4 (F) Section 26(a)(1), as amended by this 

5 Act, is amended by striking ‘‘and 25C’’ and in6 serting ‘‘25C, and 25D’’. 

7 (G) Section 904(h), as amended by this 

8 Act, is amended by striking ‘‘and 25C’’ and in9 serting ‘‘25C, and 25D’’. 

10 (H) Section 1400C(d), as amended by this 

11 Act, is amended by striking ‘‘and 25C’’ and in12 serting ‘‘25C, and 25D’’. 

13 (c) ADDITIONAL CONFORMING AMENDMENTS.—

14 (1) Section 1016(a), as amended by this Act, is 

15 amended by striking ‘‘and’’ at the end of paragraph 

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

17 (32) and inserting ‘‘; and’’, and by adding at the 

18 end the following new paragraph: 

19 ‘‘(33) to the extent provided in section 25D(g), 

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

21 has been allowed under section 25D.’’. 

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

23 IV of subchapter A of chapter 1, as amended by this 

24 Act, is amended by inserting after the item relating 

25 to section 25C the following new item:

‘‘Sec. 25D. Energy efficiency improvements to existing homes.’’.
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1 (d) EFFECTIVE DATES.—

2 (1) IN GENERAL.—Except as provided by para3 graph (2), the amendments made by this section 

4 shall apply to property installed after September 30, 

5 2004, in taxable years ending after such date. 

6 (2) SUBSECTION (b).—The amendments made 

7 by subsection (b) shall apply to taxable years begin8 ning after September 30, 2004.

9 Subtitle D—Clean Coal Incentives 

10 PART I—CREDIT FOR EMISSION REDUCTIONS 

11 AND EFFICIENCY IMPROVEMENTS IN EXIST12 ING COAL-BASED ELECTRICITY GENERATION 

13 FACILITIES 

14 SEC. 1341. CREDIT FOR PRODUCTION FROM A QUALIFYING 

15 CLEAN COAL TECHNOLOGY UNIT. 

16 (a) CREDIT FOR PRODUCTION FROM A QUALIFYING

17 CLEAN COAL TECHNOLOGY UNIT.—Subpart D of part IV 

18 of subchapter A of chapter 1 (relating to business related 

19 credits), as amended by this Act, is amended by adding 

20 at the end the following new section: 

21 ‘‘SEC. 45I. CREDIT FOR PRODUCTION FROM A QUALIFYING 

22 CLEAN COAL TECHNOLOGY UNIT. 

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

24 the qualifying clean coal technology production credit of 

25 any taxpayer for any taxable year is equal to—
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1 ‘‘(1) the applicable amount of clean coal tech2 nology production credit, multiplied by 

3 ‘‘(2) the applicable percentage of the sum of—

4 ‘‘(A) the kilowatt hours of electricity, plus 

5 ‘‘(B) each 3,413 Btu of fuels or chemicals, 

6 produced by the taxpayer during such taxable year 

7 at a qualifying clean coal technology unit, but only 

8 if such production occurs during the 10-year period 

9 beginning on the date the unit was returned to serv10 ice after becoming a qualifying clean coal technology 

11 unit. 

12 ‘‘(b) APPLICABLE AMOUNT.—

13 ‘‘(1) IN GENERAL.—For purposes of this sec14 tion, the applicable amount of clean coal technology 

15 production credit is equal to $0.0034. 

16 ‘‘(2) INFLATION ADJUSTMENT.—For calendar 

17 years after 2004, the applicable amount of clean coal 

18 technology production credit shall be adjusted by 

19 multiplying such amount by the inflation adjustment 

20 factor for the calendar year in which the amount is 

21 applied. If any amount as increased under the pre22 ceding sentence is not a multiple of 0.01 cent, such 

23 amount shall be rounded to the nearest multiple of 

24 0.01 cent. 
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1 ‘‘(c) APPLICABLE PERCENTAGE.—For purposes of 

2 this section, with respect to any qualifying clean coal tech3 nology unit, the applicable percentage is the percentage 

4 equal to the ratio which the portion of the national mega5 watt capacity limitation allocated to the taxpayer with re6 spect to such unit under subsection (e) bears to the total 

7 megawatt capacity of such unit. 

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

10 ‘‘(1) QUALIFYING CLEAN COAL TECHNOLOGY

11 UNIT.—The term ‘qualifying clean coal technology 

12 unit’ means a clean coal technology unit of the tax13 payer which—

14 ‘‘(A) on October 1, 2004—

15 ‘‘(i) was a coal-based electricity gener16 ating steam generator-turbine unit which 

17 was not a clean coal technology unit, and 

18 ‘‘(ii) had a nameplate capacity rating 

19 of not more than 300 megawatts, 

20 ‘‘(B) becomes a clean coal technology unit 

21 as the result of the retrofitting, repowering, or 

22 replacement of the unit with clean coal tech23 nology during the 10-year period beginning on 

24 October 1, 2004, 
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1 ‘‘(C) is not receiving nor is scheduled to 

2 receive funding under the Clean Coal Tech3 nology Program, the Power Plant Improvement 

4 Initiative, or the Clean Coal Power Initiative 

5 administered by the Secretary of Energy, and

6 ‘‘(D) receives an allocation of a portion of 

7 the national megawatt capacity limitation under 

8 subsection (e). 

9 ‘‘(2) CLEAN COAL TECHNOLOGY UNIT.—The 

10 term ‘clean coal technology unit’ means a unit 

11 which—

12 ‘‘(A) uses clean coal technology, including 

13 advanced pulverized coal or atmospheric fluid14 ized bed combustion, pressurized fluidized bed 

15 combustion, integrated gasification combined 

16 cycle, or any other technology, for the produc17 tion of electricity, 

18 ‘‘(B) uses an input of at least 75 percent 

19 coal to produce at least 50 percent of its ther20 mal output as electricity, 

21 ‘‘(C) has a design net heat rate of at least 

22 500 less than that of such unit as described in 

23 paragraph (1)(A),

24 ‘‘(D) has a maximum design net heat rate 

25 of not more than 9,500, and 
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1 ‘‘(E) meets the pollution control require2 ments of paragraph (3). 

3 ‘‘(3) POLLUTION CONTROL REQUIREMENTS.—

4 ‘‘(A) IN GENERAL.—A unit meets the re5 quirements of this paragraph if—

6 ‘‘(i) its emissions of sulfur dioxide, ni7 trogen oxide, or particulates meet the 

8 lower of the emission levels for each such 

9 emission specified in—

10 ‘‘(I) subparagraph (B), or 

11 ‘‘(II) the new source performance 

12 standards of the Clean Air Act (42 

13 U.S.C. 7411) which are in effect for 

14 the category of source at the time of 

15 the retrofitting, repowering, or re16 placement of the unit, and 

17 ‘‘(ii) its emissions do not exceed any 

18 relevant emission level specified by regula19 tion pursuant to the hazardous air pollut20 ant requirements of the Clean Air Act (42 

21 U.S.C. 7412) in effect at the time of the 

22 retrofitting, repowering, or replacement.

23 ‘‘(B) SPECIFIC LEVELS.—The levels speci24 fied in this subparagraph are—
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1 ‘‘(i) in the case of sulfur dioxide emis2 sions, 50 percent of the sulfur dioxide 

3 emission levels specified in the new source 

4 performance standards of the Clean Air 

5 Act (42 U.S.C. 7411) in effect on the date 

6 of the enactment of this section for the 

7 category of source, 

8 ‘‘(ii) in the case of nitrogen oxide 

9 emissions—

10 ‘‘(I) 0.1 pound per million Btu of 

11 heat input if the unit is not a cyclone12 fired boiler, and 

13 ‘‘(II) if the unit is a cyclone-fired 

14 boiler, 15 percent of the uncontrolled 

15 nitrogen oxide emissions from such 

16 boilers, and 

17 ‘‘(iii) in the case of particulate emis18 sions, 0.02 pound per million Btu of heat 

19 input. 

20 ‘‘(4) DESIGN NET HEAT RATE.—The design net 

21 heat rate with respect to any unit, measured in Btu 

22 per kilowatt hour (HHV)— 

23 ‘‘(A) shall be based on the design annual 

24 heat input to and the design annual net elec25 trical power, fuels, and chemicals output from 
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1 such unit (determined without regard to such 

2 unit’s co-generation of steam), 

3 ‘‘(B) shall be adjusted for the heat content 

4 of the design coal to be used by the unit if it 

5 is less than 12,000 Btu per pound according to 

6 the following formula: 

7 Design net heat rate = Unit net heat rate × [l¥

8 {((12,000-design coal heat content, Btu per pound)/

9 1,000) × 0.013}], 

10 ‘‘(C) shall be corrected for the site ref11 erence conditions of—

12 ‘‘(i) elevation above sea level of 500 

13 feet, 

14 ‘‘(ii) air pressure of 14.4 pounds per 

15 square inch absolute (psia), 

16 ‘‘(iii) temperature, dry bulb of 63°F, 

17 ‘‘(iv) temperature, wet bulb of 54°F, 

18 and 

19 ‘‘(v) relative humidity of 55 percent, 

20 and 

21 ‘‘(D) if carbon capture controls have been 

22 installed with respect to any qualifying unit and 

23 such controls remove at least 50 percent of the 

24 unit’s carbon dioxide emissions, shall be ad25 justed up to the design heat rate level which 
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1 would have resulted without the installation of 

2 such controls. 

3 ‘‘(5) HHV.—The term ‘HHV’ means higher 

4 heating value. 

5 ‘‘(6) APPLICATION OF CERTAIN RULES.—The 

6 rules of paragraphs (3), (4), and (5) of section 45(e) 

7 shall apply. 

8 ‘‘(7) INFLATION ADJUSTMENT FACTOR.—

9 ‘‘(A) IN GENERAL.—The term ‘inflation 

10 adjustment factor’ means, with respect to a cal11 endar year, a fraction the numerator of which 

12 is the GDP implicit price deflator for the pre13 ceding calendar year and the denominator of 

14 which is the GDP implicit price deflator for the 

15 calendar year 2003. 

16 ‘‘(B) GDP IMPLICIT PRICE DEFLATOR.—

17 The term ‘GDP implicit price deflator’ means, 

18 for any calendar year, the most recent revision 

19 of the implicit price deflator for the gross do20 mestic product as of June 30 of such calendar 

21 year as computed by the Department of Com22 merce before October 1 of such calendar year. 

23 ‘‘(8) NONCOMPLIANCE WITH POLLUTION

24 LAWS.—For purposes of this section, a unit which is 

25 not in compliance with the applicable State and Fed-
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1 eral pollution prevention, control, and permit re2 quirements for any period of time shall not be con3 sidered to be a qualifying clean coal technology unit 

4 during such period. 

5 ‘‘(e) NATIONAL LIMITATION ON THE AGGREGATE CA6 PACITY OF QUALIFYING CLEAN COAL TECHNOLOGY

7 UNITS.—

8 ‘‘(1) IN GENERAL.—For purposes of this sec9 tion, the national megawatt capacity limitation for 

10 qualifying clean coal technology units is 4,000 

11 megawatts. 

12 ‘‘(2) ALLOCATION OF LIMITATION.—The Sec13 retary shall allocate the national megawatt capacity 

14 limitation for qualifying clean coal technology units 

15 in such manner as the Secretary may prescribe 

16 under the regulations under paragraph (3). 

17 ‘‘(3) REGULATIONS.—Not later than 6 months 

18 after the date of the enactment of this section, the 

19 Secretary shall prescribe such regulations as may be 

20 necessary or appropriate—

21 ‘‘(A) to carry out the purposes of this sub22 section,

23 ‘‘(B) to limit the capacity of any qualifying 

24 clean coal technology unit to which this section 

25 applies so that the megawatt capacity allocated 
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1 to any unit under this subsection does not ex2 ceed 300 megawatts and the combined mega3 watt capacity allocated to all such units when 

4 all such units are placed in service during the 

5 10-year period described in subsection 

6 (d)(1)(B), does not exceed 4,000 megawatts, 

7 ‘‘(C) to provide a certification process 

8 under which the Secretary, in consultation with 

9 the Secretary of Energy, shall approve and allo10 cate the national megawatt capacity limita11 tion—

12 ‘‘(i) to encourage that units with the 

13 highest thermal efficiencies, when adjusted 

14 for the heat content of the design coal and 

15 site reference conditions described in sub16 section (d)(4)(C), and environmental per17 formance, be placed in service as soon as 

18 possible, and 

19 ‘‘(ii) to allocate capacity to taxpayers 

20 which have a definite and credible plan for 

21 placing into commercial operation a quali22 fying clean coal technology unit, includ23 ing—

24 ‘‘(I) a site, 
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1 ‘‘(II) contractual commitments 

2 for procurement and construction or, 

3 in the case of regulated utilities, the 

4 agreement of the State utility commis5 sion, 

6 ‘‘(III) filings for all necessary 

7 preconstruction approvals, 

8 ‘‘(IV) a demonstrated record of 

9 having successfully completed com10 parable projects on a timely basis, and

11 ‘‘(V) such other factors that the 

12 Secretary determines are appropriate, 

13 ‘‘(D) to allocate the national megawatt ca14 pacity limitation to a portion of the capacity of 

15 a qualifying clean coal technology unit if the 

16 Secretary determines that such an allocation 

17 would maximize the amount of efficient produc18 tion encouraged with the available tax credits, 

19 ‘‘(E) to set progress requirements and con20 ditional approvals so that capacity allocations 

21 for clean coal technology units which become 

22 unlikely to meet the necessary conditions for 

23 qualifying can be reallocated by the Secretary 

24 to other clean coal technology units, and 
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1 ‘‘(F) to provide taxpayers with opportuni2 ties to correct administrative errors and omis3 sions with respect to allocations and record 

4 keeping within a reasonable period after dis5 covery, taking into account the availability of 

6 regulations and other administrative guidance 

7 from the Secretary.’’. 

8 (b) CREDIT TREATED AS BUSINESS CREDIT.—Sec9 tion 38(b) (relating to current year business credit), as 

10 amended by this Act, is amended by striking ‘‘plus’’ at 

11 the end of paragraph (18), by striking the period at the 

12 end of paragraph (19) and inserting ‘‘, plus’’, and by add13 ing at the end the following new paragraph: 

14 ‘‘(20) the qualifying clean coal technology pro15 duction credit determined under section 45I(a).’’. 

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

17 transitional rules), as amended by this Act, is amended 

18 by adding at the end the following new paragraph: 

19 ‘‘(16) NO CARRYBACK OF SECTION 45I CREDIT

20 BEFORE EFFECTIVE DATE.—No portion of the un21 used business credit for any taxable year which is 

22 attributable to the qualifying clean coal technology 

23 production credit determined under section 45I may 

24 be carried back to a taxable year ending before Oc25 tober 1, 2004.’’. 
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1 (d) CLERICAL AMENDMENT.—The table of sections 

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

3 as amended by this Act, is amended by adding at the end 

4 the following new item:

‘‘Sec. 45I. Credit for production from a qualifying clean coal technology unit.’’.

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

6 this section shall apply to production after September 30, 

7 2004, in taxable years ending after such date. 

8 PART II—INCENTIVES FOR EARLY COMMERCIAL 

9 APPLICATIONS OF ADVANCED CLEAN COAL 

10 TECHNOLOGIES 

11 SEC. 1342. CREDIT FOR INVESTMENT IN QUALIFYING AD12 VANCED CLEAN COAL TECHNOLOGY. 

13 (a) ALLOWANCE OF QUALIFYING ADVANCED CLEAN

14 COAL TECHNOLOGY UNIT CREDIT.—Section 46 (relating 

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

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

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

18 at the end the following new paragraph: 

19 ‘‘(4) the qualifying advanced clean coal tech20 nology unit credit.’’. 

21 (b) AMOUNT OF QUALIFYING ADVANCED CLEAN

22 COAL TECHNOLOGY UNIT CREDIT.—Subpart E of part 

23 IV of subchapter A of chapter 1 (relating to rules for com24 puting investment credit) is amended by inserting after 

25 section 48 the following new section: 
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1 ‘‘SEC. 48A. QUALIFYING ADVANCED CLEAN COAL TECH2 NOLOGY UNIT CREDIT. 

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

4 qualifying advanced clean coal technology unit credit for 

5 any taxable year is an amount equal to 10 percent of the 

6 applicable percentage of the qualified investment in a 

7 qualifying advanced clean coal technology unit for such 

8 taxable year. 

9 ‘‘(b) QUALIFYING ADVANCED CLEAN COAL TECH10 NOLOGY UNIT.—

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

12 (a), the term ‘qualifying advanced clean coal tech13 nology unit’ means an advanced clean coal tech14 nology unit of the taxpayer—

15 ‘‘(A)(i) in the case of a unit first placed in 

16 service after September 30, 2004, the original 

17 use of which commences with the taxpayer, or 

18 ‘‘(ii) in the case of the retrofitting or 

19 repowering of a unit first placed in service be20 fore October 1, 2004, the retrofitting or 

21 repowering of which is completed by the tax22 payer after such date, or

23 ‘‘(B) which is depreciable under section 

24 167,

25 ‘‘(C) which has a useful life of not less 

26 than 4 years, 
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1 ‘‘(D) which is located in the United States, 

2 ‘‘(E) which is not receiving nor is sched3 uled to receive funding under the Clean Coal 

4 Technology Program, the Power Plant Improve5 ment Initiative, or the Clean Coal Power Initia6 tive administered by the Secretary of Energy, 

7 ‘‘(F) which is not a qualifying clean coal 

8 technology unit, and 

9 ‘‘(G) which receives an allocation of a por10 tion of the national megawatt capacity limita11 tion under subsection (f). 

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

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

14 in the case of a unit which—

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

16 person, and 

17 ‘‘(B) is sold and leased back by such per18 son, or is leased to such person, within 3 

19 months after the date such unit was originally 

20 placed in service, for a period of not less than 

21 12 years—

22 such unit shall be treated as originally placed in 

23 service not earlier than the date on which such unit 

24 is used under the leaseback (or lease) referred to in 

25 subparagraph (B). The preceding sentence shall not 
929

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1 apply to any property if the lessee and lessor of such 

2 property make an election under this sentence. Such 

3 an election, once made, may be revoked only with 

4 the consent of the Secretary. 

5 ‘‘(3) NONCOMPLIANCE WITH POLLUTION

6 LAWS.—For purposes of this subsection, a unit 

7 which is not in compliance with the applicable State 

8 and Federal pollution prevention, control, and per9 mit requirements for any period of time shall not be 

10 considered to be a qualifying advanced clean coal 

11 technology unit during such period. 

12 ‘‘(c) APPLICABLE PERCENTAGE.—For purposes of 

13 this section, with respect to any qualifying advanced clean 

14 coal technology unit, the applicable percentage is the per15 centage equal to the ratio which the portion of the national 

16 megawatt capacity limitation allocated to the taxpayer 

17 with respect to such unit under subsection (f) bears to 

18 the total megawatt capacity of such unit. 

19 ‘‘(d) ADVANCED CLEAN COAL TECHNOLOGY UNIT.—

20 For purposes of this section—

21 ‘‘(1) IN GENERAL.—The term ‘advanced clean 

22 coal technology unit’ means a new, retrofit, or 

23 repowering unit of the taxpayer which—

24 ‘‘(A) is—
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1 ‘‘(i) an eligible advanced pulverized 

2 coal or atmospheric fluidized bed combus3 tion technology unit, 

4 ‘‘(ii) an eligible pressurized fluidized 

5 bed combustion technology unit, 

6 ‘‘(iii) an eligible integrated gasifi7 cation combined cycle technology unit, or 

8 ‘‘(iv) an eligible other technology unit, 

9 and 

10 ‘‘(B) meets the carbon emission rate re11 quirements of paragraph (6). 

12 ‘‘(2) ELIGIBLE ADVANCED PULVERIZED COAL

13 OR ATMOSPHERIC FLUIDIZED BED COMBUSTION

14 TECHNOLOGY UNIT.—The term ‘eligible advanced 

15 pulverized coal or atmospheric fluidized bed combus16 tion technology unit’ means a clean coal technology 

17 unit using advanced pulverized coal or atmospheric 

18 fluidized bed combustion technology which—

19 ‘‘(A) is placed in service after September 

20 30, 2004, and before January 1, 2013, and 

21 ‘‘(B) has a design net heat rate of not 

22 more than 8,500 (8,900 in the case of units 

23 placed in service before 2009). 

24 ‘‘(3) ELIGIBLE PRESSURIZED FLUIDIZED BED

25 COMBUSTION TECHNOLOGY UNIT.—The term ‘eligi-
931

S 2095 PCS 

1 ble pressurized fluidized bed combustion technology 

2 unit’ means a clean coal technology unit using pres3 surized fluidized bed combustion technology which—

4 ‘‘(A) is placed in service after September 

5 30, 2004, and before January 1, 2017, and 

6 ‘‘(B) has a design net heat rate of not 

7 more than 7,720 (8,900 in the case of units 

8 placed in service before 2009, and 8,500 in the 

9 case of units placed in service after 2008 and 

10 before 2013). 

11 ‘‘(4) ELIGIBLE INTEGRATED GASIFICATION

12 COMBINED CYCLE TECHNOLOGY UNIT.—The term 

13 ‘eligible integrated gasification combined cycle tech14 nology unit’ means a clean coal technology unit 

15 using integrated gasification combined cycle tech16 nology, with or without fuel or chemical co-produc17 tion, which—

18 ‘‘(A) is placed in service after September 

19 30, 2004, and before January 1, 2017, 

20 ‘‘(B) has a design net heat rate of not 

21 more than 7,720 (8,900 in the case of units 

22 placed in service before 2009, and 8,500 in the 

23 case of units placed in service after 2008 and 

24 before 2013), and 
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1 ‘‘(C) has a net thermal efficiency (HHV) 

2 using coal with fuel or chemical co-production 

3 of not less than 44.2 percent (38.4 percent in 

4 the case of units placed in service before 2009, 

5 and 40.2 percent in the case of units placed in 

6 service after 2008 and before 2013). 

7 ‘‘(5) ELIGIBLE OTHER TECHNOLOGY UNIT.—

8 The term ‘eligible other technology unit’ means a 

9 clean coal technology unit using any other tech10 nology for the production of electricity which is 

11 placed in service after September 30, 2004, and be12 fore January 1, 2017. 

13 ‘‘(6) CARBON EMISSION RATE REQUIRE14 MENTS.—

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

16 subparagraph (B), a unit meets the require17 ments of this paragraph if—

18 ‘‘(i) in the case of a unit using design 

19 coal with a heat content of not more than 

20 9,000 Btu per pound, the carbon emission

21 rate is less than 0.60 pound of carbon per 

22 kilowatt hour, and 

23 ‘‘(ii) in the case of a unit using design 

24 coal with a heat content of more than 

25 9,000 Btu per pound, the carbon emission 
933

S 2095 PCS 

1 rate is less than 0.54 pound of carbon per 

2 kilowatt hour. 

3 ‘‘(B) ELIGIBLE OTHER TECHNOLOGY

4 UNIT.—In the case of an eligible other tech5 nology unit, subparagraph (A) shall be applied 

6 by substituting ‘0.51’ and ‘0.459’ for ‘0.60’ and 

7 ‘0.54’, respectively. 

8 ‘‘(e) GENERAL DEFINITIONS.—Any term used in this 

9 section which is also used in section 45I shall have the 

10 meaning given such term in section 45I. 

11 ‘‘(f) NATIONAL LIMITATION ON THE AGGREGATE CA12 PACITY OF ADVANCED CLEAN COAL TECHNOLOGY

13 UNITS.—

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

15 (b)(1)(G), the national megawatt capacity limitation 

16 is—

17 ‘‘(A) for qualifying advanced clean coal 

18 technology units using advanced pulverized coal 

19 or atmospheric fluidized bed combustion tech20 nology, not more than 1,000 megawatts (not 

21 more than 500 megawatts in the case of units 

22 placed in service before 2009),

23 ‘‘(B) for such units using pressurized flu24 idized bed combustion technology, not more 

25 than 500 megawatts (not more than 250 
934

S 2095 PCS 

1 megawatts in the case of units placed in service 

2 before 2009), 

3 ‘‘(C) for such units using integrated gasifi4 cation combined cycle technology, with or with5 out fuel or chemical co-production, not more 

6 than 2,000 megawatts (not more than 750 

7 megawatts in the case of units placed in service 

8 before 2009), and 

9 ‘‘(D) for such units using other technology 

10 for the production of electricity, not more than 

11 500 megawatts (not more than 250 megawatts 

12 in the case of units placed in service before 

13 2009). 

14 ‘‘(2) ALLOCATION OF LIMITATION.—The Sec15 retary shall allocate the national megawatt capacity 

16 limitation for qualifying advanced clean coal tech17 nology units in such manner as the Secretary may 

18 prescribe under the regulations under paragraph (3). 

19 ‘‘(3) REGULATIONS.—Not later than 6 months 

20 after the date of the enactment of this section, the 

21 Secretary shall prescribe such regulations as may be 

22 necessary or appropriate—

23 ‘‘(A) to carry out the purposes of this sub24 section and section 45J, 
935

S 2095 PCS 

1 ‘‘(B) to limit the capacity of any qualifying 

2 advanced clean coal technology unit to which 

3 this section applies so that the combined mega4 watt capacity of all such units to which this sec5 tion applies does not exceed 4,000 megawatts, 

6 ‘‘(C) to provide a certification process de7 scribed in section 45I(e)(3)(C), 

8 ‘‘(D) to carry out the purposes described 

9 in subparagraphs (D), (E), and (F) of section 

10 45I(e)(3), and 

11 ‘‘(E) to reallocate capacity which is not al12 located to any technology described in subpara13 graphs (A) through (D) of paragraph (1) be14 cause an insufficient number of qualifying units 

15 request an allocation for such technology, to an16 other technology described in such subpara17 graphs in order to maximize the amount of en18 ergy efficient production encouraged with the 

19 available tax credits. 

20 ‘‘(4) SELECTION CRITERIA.—For purposes of 

21 this subsection, the selection criteria for allocating 

22 the national megawatt capacity limitation to quali23 fying advanced clean coal technology units—

24 ‘‘(A) shall be established by the Secretary 

25 of Energy as part of a competitive solicitation, 
936

S 2095 PCS 

1 ‘‘(B) shall include primary criteria of min2 imum design net heat rate, maximum design 

3 thermal efficiency, environmental performance, 

4 and lowest cost to the Government, and 

5 ‘‘(C) shall include supplemental criteria as 

6 determined appropriate by the Secretary of En7 ergy. 

8 ‘‘(g) QUALIFIED INVESTMENT.—For purposes of 

9 subsection (a), the term ‘qualified investment’ means, with 

10 respect to any taxable year, the basis of a qualifying ad11 vanced clean coal technology unit placed in service by the 

12 taxpayer during such taxable year (in the case of a unit 

13 described in subsection (b)(1)(A)(ii), only that portion of 

14 the basis of such unit which is properly attributable to 

15 the retrofitting or repowering of such unit). 

16 ‘‘(h) QUALIFIED PROGRESS EXPENDITURES.—

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

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

19 under paragraph (5), the amount of the qualified in20 vestment of such taxpayer for the taxable year (de21 termined under subsection (g) without regard to this 

22 subsection) shall be increased by an amount equal to 

23 the aggregate of each qualified progress expenditure 

24 for the taxable year with respect to progress expend25 iture property. 
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1 ‘‘(2) PROGRESS EXPENDITURE PROPERTY DE2 FINED.—For purposes of this subsection, the term 

3 ‘progress expenditure property’ means any property 

4 being constructed by or for the taxpayer and which 

5 it is reasonable to believe will qualify as a qualifying 

6 advanced clean coal technology unit which is being 

7 constructed by or for the taxpayer when it is placed 

8 in service. 

9 ‘‘(3) QUALIFIED PROGRESS EXPENDITURES DE10 FINED.—For purposes of this subsection—

11 ‘‘(A) SELF-CONSTRUCTED PROPERTY.—In 

12 the case of any self-constructed property, the 

13 term ‘qualified progress expenditures’ means 

14 the amount which, for purposes of this subpart, 

15 is properly chargeable (during such taxable 

16 year) to capital account with respect to such 

17 property. 

18 ‘‘(B) NONSELF-CONSTRUCTED PROP19 ERTY.—In the case of nonself-constructed prop20 erty, the term ‘qualified progress expenditures’ 

21 means the amount paid during the taxable year

22 to another person for the construction of such 

23 property. 

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

25 this subsection—
938

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1 ‘‘(A) SELF-CONSTRUCTED PROPERTY.—

2 The term ‘self-constructed property’ means 

3 property for which it is reasonable to believe 

4 that more than half of the construction expendi5 tures will be made directly by the taxpayer. 

6 ‘‘(B) NONSELF-CONSTRUCTED PROP7 ERTY.—The term ‘nonself-constructed property’ 

8 means property which is not self-constructed 

9 property. 

10 ‘‘(C) CONSTRUCTION, ETC.—The term 

11 ‘construction’ includes reconstruction and erec12 tion, and the term ‘constructed’ includes recon13 structed and erected. 

14 ‘‘(D) ONLY CONSTRUCTION OF QUALI15 FYING ADVANCED CLEAN COAL TECHNOLOGY

16 UNIT TO BE TAKEN INTO ACCOUNT.—Construc17 tion shall be taken into account only if, for pur18 poses of this subpart, expenditures therefor are 

19 properly chargeable to capital account with re20 spect to the property.

21 ‘‘(5) ELECTION.—An election under this sub22 section may be made at such time and in such man23 ner as the Secretary may by regulations prescribe. 

24 Such an election shall apply to the taxable year for 

25 which made and to all subsequent taxable years. 
939

S 2095 PCS 

1 Such an election, once made, may not be revoked ex2 cept with the consent of the Secretary. 

3 ‘‘(i) COORDINATION WITH OTHER CREDITS.—This 

4 section shall not apply to any property with respect to 

5 which the rehabilitation credit under section 47 or the en6 ergy credit under section 48 is allowed unless the taxpayer 

7 elects to waive the application of such credit to such prop8 erty.’’. 

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

10 special rules) is amended by adding at the end the fol11 lowing new paragraph: 

12 ‘‘(6) SPECIAL RULES RELATING TO QUALIFYING

13 ADVANCED CLEAN COAL TECHNOLOGY UNIT.—For 

14 purposes of applying this subsection in the case of 

15 any credit allowable by reason of section 48A, the 

16 following rules shall apply: 

17 ‘‘(A) GENERAL RULE.—In lieu of the 

18 amount of the increase in tax under paragraph 

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

20 equal to the investment tax credit allowed under 

21 section 38 for all prior taxable years with re22 spect to a qualifying advanced clean coal tech23 nology unit (as defined by section 48A(b)(1)) 

24 multiplied by a fraction the numerator of which 

25 is the number of years remaining to fully depre-
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S 2095 PCS 

1 ciate under this title the qualifying advanced 

2 clean coal technology unit disposed of, and the 

3 denominator of which is the total number of 

4 years over which such unit would otherwise 

5 have been subject to depreciation. For purposes 

6 of the preceding sentence, the year of disposi7 tion of the qualifying advanced clean coal tech8 nology unit shall be treated as a year of re9 maining depreciation. 

10 ‘‘(B) PROPERTY CEASES TO QUALIFY FOR

11 PROGRESS EXPENDITURES.—Rules similar to 

12 the rules of paragraph (2) shall apply in the 

13 case of qualified progress expenditures for a 

14 qualifying advanced clean coal technology unit 

15 under section 48A, except that the amount of 

16 the increase in tax under subparagraph (A) of 

17 this paragraph shall be substituted for the 

18 amount described in such paragraph (2). 

19 ‘‘(C) APPLICATION OF PARAGRAPH.—This 

20 paragraph shall be applied separately with re21 spect to the credit allowed under section 38 re22 garding a qualifying advanced clean coal tech23 nology unit.’’. 
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1 (d) TRANSITIONAL RULE.—Section 39(d) (relating to 

2 transitional rules), as amended by this Act, is amended 

3 by adding at the end the following new paragraph: 

4 ‘‘(17) NO CARRYBACK OF SECTION 48A CREDIT

5 BEFORE EFFECTIVE DATE.—No portion of the un6 used business credit for any taxable year which is 

7 attributable to the qualifying advanced clean coal 

8 technology unit credit determined under section 48A 

9 may be carried back to a taxable year ending before 

10 October 1, 2004.’’. 

11 (e) TECHNICAL AMENDMENTS.—

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

13 ‘‘and’’ at the end of clause (ii), by striking the pe14 riod at the end of clause (iii) and inserting ‘‘, and’’, 

15 and by adding at the end the following new clause: 

16 ‘‘(iv) the portion of the basis of any 

17 qualifying advanced clean coal technology 

18 unit attributable to any qualified invest19 ment (as defined by section 48A(g)).’’. 

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

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

22 (3) Section 50(c) is amended by adding at the 

23 end the following new paragraph: 
942

S 2095 PCS 

1 ‘‘(6) NONAPPLICATION.—Paragraphs (1) and 

2 (2) shall not apply to any qualifying advanced clean 

3 coal technology unit credit under section 48A.’’. 

4 (4) The table of sections for subpart E of part 

5 IV of subchapter A of chapter 1 is amended by in6 serting after the item relating to section 48 the fol7 lowing new item:

‘‘Sec. 48A. Qualifying advanced clean coal technology unit credit.’’.

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

9 this section shall apply to periods after September 30, 

10 2004, under rules similar to the rules of section 48(m) 

11 of the Internal Revenue Code of 1986 (as in effect on the 

12 day before the date of the enactment of the Revenue Rec13 onciliation Act of 1990). 

14 SEC. 1343. CREDIT FOR PRODUCTION FROM A QUALIFYING 

15 ADVANCED CLEAN COAL TECHNOLOGY UNIT. 

16 (a) IN GENERAL.—Subpart D of part IV of sub17 chapter A of chapter 1 (relating to business related cred18 its), as amended by this Act, is amended by adding at 

19 the end the following new section:

20 ‘‘SEC. 45J. CREDIT FOR PRODUCTION FROM A QUALIFYING 

21 ADVANCED CLEAN COAL TECHNOLOGY UNIT. 

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

23 the qualifying advanced clean coal technology production 

24 credit of any taxpayer for any taxable year is equal to—
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1 ‘‘(1) the applicable amount of advanced clean 

2 coal technology production credit, multiplied by 

3 ‘‘(2) the applicable percentage (as determined 

4 under section 48A(c)) of the sum of—

5 ‘‘(A) the kilowatt hours of electricity, plus 

6 ‘‘(B) each 3,413 Btu of fuels or chemi7 cals—

8 produced by the taxpayer during such taxable year 

9 at a qualifying advanced clean coal technology unit, 

10 but only if such production occurs during the 10-

11 year period beginning on the date the unit was origi12 nally placed in service (or returned to service after 

13 becoming a qualifying advanced clean coal tech14 nology unit). 

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

16 section—

17 ‘‘(1) IN GENERAL.—Except as provided in para18 graph (2), the applicable amount of advanced clean 

19 coal technology production credit with respect to 

20 production from a qualifying advanced clean coal 

21 technology unit shall be determined as follows: 

22 ‘‘(A) If the qualifying advanced clean coal 

23 technology unit is producing electricity only:

24 ‘‘(i) In the case of a unit originally 

25 placed in service before 2009, if—
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S 2095 PCS 

‘‘The design net heat rate is: 

The applicable amount is: 

For 1st 5 

years of such 

service 

For 2d 5 years 

of such service 

Not more than 8,500 ...................................... $.0060 $.0038

More than 8,500 but not more than 8,750 .... $.0025 $.0010

More than 8,750 but less than 8,900 ............ $.0010 $.0010. 

1 ‘‘(ii) In the case of a unit originally 

2 placed in service after 2008 and before 

3 2013, if—

‘‘The design net heat rate is: 

The applicable amount is: 

For 1st 5 

years of such 

service 

For 2d 5 years 

of such service 

Not more than 7,770 ...................................... $.0105 $.0090

More than 7,770 but not more than 8,125 .... $.0085 $.0068

More than 8,125 but less than 8,500 ............ $.0075 $.0055. 

4 ‘‘(iii) In the case of a unit originally 

5 placed in service after 2012 and before 

6 2017, if—

‘‘The design net heat rate is: 

The applicable amount is: 

For 1st 5 

years of such 

service 

For 2d 5 years 

of such service 

Not more than 7,380 ...................................... $.0140 $.0115

More than 7,380 but not more than 7,720 .... $.0120 $.0090. 

7 ‘‘(B) If the qualifying advanced clean coal 

8 technology unit is producing fuel or chemicals: 
945

S 2095 PCS 

1 ‘‘(i) In the case of a unit originally 

2 placed in service before 2009, if—

‘‘The unit design net thermal efficiency 

(HHV) is: 

The applicable amount is: 

For 1st 5 

years of such 

service 

For 2d 5 years 

of such service 

Not less than 40.2 percent ............................. $.0060 $.0038

Less than 40.2 but not less than 39 percent $.0025 $.0010

Less than 39 but not less than 38.4 percent $.0010 $.0010. 

3 ‘‘(ii) In the case of a unit originally 

4 placed in service after 2008 and before 

5 2013, if—

‘‘The unit design net thermal efficiency 

(HHV) is: 

The applicable amount is: 

For 1st 5 

years of such 

service 

For 2d 5 years 

of such service 

Not less than 43.9 percent ............................. $.0105 $.0090

Less than 43.9 but not less than 42 percent $.0085 $.0068

Less than 42 but not less than 40.2 percent $.0075 $.0055. 

6 ‘‘(iii) In the case of a unit originally 

7 placed in service after 2012 and before 

8 2017, if—

‘‘The unit design net thermal efficiency 

(HHV) is: 

The applicable amount is: 

For 1st 5 

years of such 

service 

For 2d 5 years 

of such service 

Not less than 46.3 percent ............................. $.0140 $.0115

Less than 46.3 but not less than 44.2 percent ............................................................. $.0120 $.0090. 
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1 ‘‘(2) SPECIAL RULE FOR UNITS QUALIFYING

2 FOR GREATER APPLICABLE AMOUNT WHEN PLACED

3 IN SERVICE.—If, at the time a qualifying advanced 

4 clean coal technology unit is placed in service, pro5 duction from the unit would be entitled to a greater 

6 applicable amount if such unit had been placed in 

7 service at a later date, the applicable amount for 

8 such unit shall be such greater amount. 

9 ‘‘(c) INFLATION ADJUSTMENT.—For calendar years 

10 after 2004, each dollar amount in subsection (b)(1) shall 

11 be adjusted by multiplying such amount by the inflation 

12 adjustment factor for the calendar year in which the 

13 amount is applied. If any amount as increased under the 

14 preceding sentence is not a multiple of 0.01 cent, such 

15 amount shall be rounded to the nearest multiple of 0.01 

16 cent. 

17 ‘‘(d) DEFINITIONS AND SPECIAL RULES.—For pur18 poses of this section—

19 ‘‘(1) IN GENERAL.—Any term used in this sec20 tion which is also used in section 45I or 48A shall 

21 have the meaning given such term in such section. 

22 ‘‘(2) APPLICABLE RULES.—The rules of para23 graphs (3), (4), and (5) of section 45(e) shall 

24 apply.’’. 
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1 (b) CREDIT TREATED AS BUSINESS CREDIT.—Sec2 tion 38(b) (relating to current year business credit), as 

3 amended by this Act, is amended by striking ‘‘plus’’ at 

4 the end of paragraph (19), by striking the period at the 

5 end of paragraph (20) and inserting ‘‘, plus’’, and by add6 ing at the end the following new paragraph: 

7 ‘‘(21) the qualifying advanced clean coal tech8 nology production credit determined under section 

9 45J(a).’’. 

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

11 transitional rules), as amended by this Act, is amended 

12 by adding at the end the following new paragraph: 

13 ‘‘(18) NO CARRYBACK OF SECTION 45J CREDIT

14 BEFORE EFFECTIVE DATE.—No portion of the un15 used business credit for any taxable year which is 

16 attributable to the qualifying advanced clean coal 

17 technology production credit determined under sec18 tion 45J may be carried back to a taxable year end19 ing before October 1, 2004.’’. 

20 (d) DENIAL OF DOUBLE BENEFIT.—Section 29(d) 

21 (relating to other definitions and special rules) is amended 

22 by adding at the end the following new paragraph: 

23 ‘‘(9) DENIAL OF DOUBLE BENEFIT.—This sec24 tion shall not apply with respect to any qualified fuel 

25 the production of which may be taken into account 
948

S 2095 PCS 

1 for purposes of determining the credit under section 

2 45J.’’. 

3 (e) CLERICAL AMENDMENT.—The table of sections 

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

5 as amended by this Act, is amended by adding at the end 

6 the following new item:

‘‘Sec. 45J. Credit for production from a qualifying advanced clean coal technology unit.’’.

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

8 this section shall apply to production after September 30, 

9 2004, in taxable years ending after such date. 

10 PART III—TREATMENT OF PERSONS NOT ABLE 

11 TO USE ENTIRE CREDIT 

12 SEC. 1344. TREATMENT OF PERSONS NOT ABLE TO USE EN13 TIRE CREDIT. 

14 (a) IN GENERAL.—Section 45I, as added by this Act, 

15 is amended by adding at the end the following new sub16 section: 

17 ‘‘(f) TREATMENT OF PERSON NOT ABLE TO USE

18 ENTIRE CREDIT.—

19 ‘‘(1) ALLOWANCE OF CREDITS.—

20 ‘‘(A) IN GENERAL.—Any credit allowable 

21 under this section, section 45J, or section 48A 

22 with respect to a facility owned by a person de23 scribed in subparagraph (B) may be transferred 

24 or used as provided in this subsection, and the 
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S 2095 PCS 

1 determination as to whether the credit is allow2 able shall be made without regard to the tax3 exempt status of the person. 

4 ‘‘(B) PERSONS DESCRIBED.—A person is 

5 described in this subparagraph if the person 

6 is—

7 ‘‘(i) an organization described in sec8 tion 501(c)(12)(C) and exempt from tax 

9 under section 501(a),

10 ‘‘(ii) an organization described in sec11 tion 1381(a)(2)(C), 

12 ‘‘(iii) a public utility (as defined in 

13 section 136(c)(2)(B)), 

14 ‘‘(iv) any State or political subdivision 

15 thereof, the District of Columbia, or any 

16 agency or instrumentality of any of the 

17 foregoing, 

18 ‘‘(v) any Indian tribal government 

19 (within the meaning of section 7871) or 

20 any agency or instrumentality thereof, or 

21 ‘‘(vi) the Tennessee Valley Authority. 

22 ‘‘(2) TRANSFER OF CREDIT.—

23 ‘‘(A) IN GENERAL.—A person described in 

24 clause (i), (ii), (iii), (iv), or (v) of paragraph 

25 (1)(B) may transfer any credit to which para-
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S 2095 PCS 

1 graph (1)(A) applies through an assignment to 

2 any other person not described in paragraph 

3 (1)(B). Such transfer may be revoked only with 

4 the consent of the Secretary. 

5 ‘‘(B) REGULATIONS.—The Secretary shall 

6 prescribe such regulations as necessary to en7 sure that any credit described in subparagraph 

8 (A) is claimed once and not reassigned by such 

9 other person.

10 ‘‘(C) TRANSFER PROCEEDS TREATED AS

11 ARISING FROM ESSENTIAL GOVERNMENT FUNC12 TION.—Any proceeds derived by a person de13 scribed in clause (iii), (iv), or (v) of paragraph 

14 (1)(B) from the transfer of any credit under 

15 subparagraph (A) shall be treated as arising 

16 from the exercise of an essential government 

17 function. 

18 ‘‘(3) USE OF CREDIT AS AN OFFSET.—Notwith19 standing any other provision of law, in the case of 

20 a person described in clause (i), (ii), or (v) of para21 graph (1)(B), any credit to which paragraph (1)(A) 

22 applies may be applied by such person, to the extent 

23 provided by the Secretary of Agriculture, as a pre24 payment of any loan, debt, or other obligation the 

25 entity has incurred under subchapter I of chapter 31 
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1 of title 7 of the Rural Electrification Act of 1936 (7 

2 U.S.C. 901 et seq.), as in effect on the date of the 

3 enactment of this section. 

4 ‘‘(4) USE BY TVA.—

5 ‘‘(A) IN GENERAL.—Notwithstanding any 

6 other provision of law, in the case of a person 

7 described in paragraph (1)(B)(vi), any credit to 

8 which paragraph (1)(A) applies may be applied 

9 as a credit against the payments required to be 

10 made in any fiscal year under section 15d(e) of 

11 the Tennessee Valley Authority Act of 1933 (16 

12 U.S.C. 831n–4(e)) as an annual return on the 

13 appropriations investment and an annual repay14 ment sum. 

15 ‘‘(B) TREATMENT OF CREDITS.—The ag16 gregate amount of credits described in para17 graph (1)(A) with respect to such person shall 

18 be treated in the same manner and to the same 

19 extent as if such credits were a payment in cash 

20 and shall be applied first against the annual re21 turn on the appropriations investment. 

22 ‘‘(C) CREDIT CARRYOVER.—With respect 

23 to any fiscal year, if the aggregate amount of 

24 credits described in paragraph (1)(A) with re25 spect to such person exceeds the aggregate 
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1 amount of payment obligations described in 

2 subparagraph (A), the excess amount shall re3 main available for application as credits against 

4 the amounts of such payment obligations in 

5 succeeding fiscal years in the same manner as 

6 described in this paragraph. 

7 ‘‘(5) CREDIT NOT INCOME.—Any transfer 

8 under paragraph (2) or use under paragraph (3) of 

9 any credit to which paragraph (1)(A) applies shall 

10 not be treated as income for purposes of section 

11 501(c)(12). 

12 ‘‘(6) TREATMENT OF UNRELATED PERSONS.—

13 For purposes of this subsection, transfers among 

14 and between persons described in clauses (i), (ii), 

15 (iii), (iv), and (v) of paragraph (1)(B) shall be treat16 ed as transfers between unrelated parties.’’. 

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

18 this section shall apply to production after September 30, 

19 2004, in taxable years ending after such date.

20 Subtitle E—Oil and Gas Provisions 

21 SEC. 1351. OIL AND GAS FROM MARGINAL WELLS. 

22 (a) IN GENERAL.—Subpart D of part IV of sub23 chapter A of chapter 1 (relating to business credits), as 

24 amended by this Act, is amended by adding at the end 

25 the following new section: 
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1 ‘‘SEC. 45K. CREDIT FOR PRODUCING OIL AND GAS FROM 

2 MARGINAL WELLS. 

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

4 the marginal well production credit for any taxable year 

5 is an amount equal to the product of—

6 ‘‘(1) the credit amount, and

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

8 qualified natural gas production which is attrib9 utable to the taxpayer. 

10 ‘‘(b) CREDIT AMOUNT.—For purposes of this sec11 tion—

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

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

14 production, and 

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

16 qualified natural gas production. 

17 ‘‘(2) REDUCTION AS OIL AND GAS PRICES IN18 CREASE.—

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

20 amounts under paragraph (1) shall each be re21 duced (but not below zero) by an amount which 

22 bears the same ratio to such amount (deter23 mined without regard to this paragraph) as—

24 ‘‘(i) the excess (if any) of the applica25 ble reference price over $15 ($1.67 for 

26 qualified natural gas production), bears to 
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1 ‘‘(ii) $3 ($0.33 for qualified natural 

2 gas production). 

3 The applicable reference price for a taxable 

4 year is the reference price of the calendar year 

5 preceding the calendar year in which the tax6 able year begins. 

7 ‘‘(B) INFLATION ADJUSTMENT.—

8 ‘‘(i) IN GENERAL.—In the case of any 

9 taxable year beginning in a calendar year 

10 after 2004, each of the dollar amounts 

11 contained in subparagraph (A) shall be in12 creased to an amount equal to such dollar 

13 amount multiplied by the inflation adjust14 ment factor for such calendar year. 

15 ‘‘(ii) INFLATION ADJUSTMENT FAC16 TOR.—For purposes of clause (i)—

17 ‘‘(I) IN GENERAL.—The term ‘in18 flation adjustment factor’ means, with 

19 respect to a calendar year, a fraction 

20 the numerator of which is the GDP 

21 implicit price deflator for the pre22 ceding calendar year and the denomi23 nator of which is the GDP implicit 

24 price deflator for the calendar year 

25 2003. 
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1 ‘‘(II) GDP IMPLICIT PRICE

2 DEFLATOR.—The term ‘GDP implicit 

3 price deflator’ means, for any cal4 endar year, the most recent revision of 

5 the implicit price deflator for the 

6 gross domestic product as of June 30 

7 of such calendar year as computed by 

8 the Department of Commerce before 

9 October 1 of such calendar year. 

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

11 this paragraph, the term ‘reference price’ 

12 means, with respect to any calendar year—

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

14 production, the reference price determined 

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

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

17 gas production, the Secretary’s estimate of 

18 the annual average wellhead price per 

19 1,000 cubic feet for all domestic natural 

20 gas. 

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

22 PRODUCTION.—For purposes of this section—

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

24 oil production’ and ‘qualified natural gas production’ 
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1 mean domestic crude oil or domestic natural gas 

2 which is produced from a qualified marginal well. 

3 ‘‘(2) LIMITATION ON AMOUNT OF PRODUCTION

4 WHICH MAY QUALIFY.—

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

6 gas produced during any taxable year from any 

7 well shall not be treated as qualified crude oil 

8 production or qualified natural gas production 

9 to the extent production from the well during 

10 the taxable year exceeds 1,095 barrels or barrel 

11 equivalents. 

12 ‘‘(B) PROPORTIONATE REDUCTIONS.—

13 ‘‘(i) SHORT TAXABLE YEARS.—In the 

14 case of a short taxable year, the limitations 

15 under this paragraph shall be proportion16 ately reduced to reflect the ratio which the 

17 number of days in such taxable year bears 

18 to 365. 

19 ‘‘(ii) WELLS NOT IN PRODUCTION EN20 TIRE YEAR.—In the case of a well which is 

21 not capable of production during each day 

22 of a taxable year, the limitations under 

23 this paragraph applicable to the well shall 

24 be proportionately reduced to reflect the 

25 ratio which the number of days of produc-
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1 tion bears to the total number of days in 

2 the taxable year. 

3 ‘‘(3) NONCOMPLIANCE WITH POLLUTION

4 LAWS.—Production from any well during any period 

5 in which such well is not in compliance with applica6 ble Federal pollution prevention, control, and permit 

7 requirements shall not be treated as qualified crude 

8 oil production or qualified natural gas production. 

9 ‘‘(4) DEFINITIONS.—

10 ‘‘(A) QUALIFIED MARGINAL WELL.—The 

11 term ‘qualified marginal well’ means a domestic 

12 well—

13 ‘‘(i) the production from which during 

14 the taxable year is treated as marginal 

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

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

17 ‘‘(I) has average daily production 

18 of not more than 25 barrel equiva19 lents, and 

20 ‘‘(II) produces water at a rate 

21 not less than 95 percent of total well 

22 effluent. 

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

24 oil’, ‘natural gas’, ‘domestic’, and ‘barrel’ have 
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1 the meanings given such terms by section 

2 613A(e). 

3 ‘‘(C) BARREL EQUIVALENT.—The term 

4 ‘barrel equivalent’ means, with respect to nat5 ural gas, a conversation ratio of 6,000 cubic 

6 feet of natural gas to 1 barrel of crude oil. 

7 ‘‘(D) DOMESTIC NATURAL GAS.—The term 

8 ‘domestic natural gas’ does not include Alaska 

9 natural gas (as defined in section 45M(c)(1)). 

10 ‘‘(d) OTHER RULES.—

11 ‘‘(1) PRODUCTION ATTRIBUTABLE TO THE TAX12 PAYER.—In the case of a qualified marginal well in 

13 which there is more than 1 owner of operating inter14 ests in the well and the crude oil or natural gas pro15 duction exceeds the limitation under subsection 

16 (c)(2), qualifying crude oil production or qualifying 

17 natural gas production attributable to the taxpayer 

18 shall be determined on the basis of the ratio which 

19 taxpayer’s revenue interest in the production bears 

20 to the aggregate of the revenue interests of all oper21 ating interest owners in the production. 

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

23 credit under this section may be claimed only on 

24 production which is attributable to the holder of an 

25 operating interest. 
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1 ‘‘(3) PRODUCTION FROM NONCONVENTIONAL

2 SOURCES EXCLUDED.—In the case of production 

3 from a qualified marginal well which is eligible for 

4 the credit allowed under section 29 for the taxable

5 year, no credit shall be allowable under this section 

6 unless the taxpayer elects not to claim the credit 

7 under section 29 with respect to the well.’’. 

8 (b) CREDIT TREATED AS BUSINESS CREDIT.—Sec9 tion 38(b) (relating to current year business credit), as 

10 amended by this Act, is amended by striking ‘‘plus’’ at 

11 the end of paragraph (20), by striking the period at the 

12 end of paragraph (21) and inserting ‘‘, plus’’, and by add13 ing at the end the following new paragraph: 

14 ‘‘(22) the marginal oil and gas well production 

15 credit determined under section 45K(a).’’. 

16 (c) NO CARRYBACK OF MARGINAL OIL AND GAS

17 WELL PRODUCTION CREDIT BEFORE EFFECTIVE

18 DATE.—Section 39(d) (relating to transition rules), as 

19 amended by this Act, is amended by adding at the end 

20 the following new paragraph: 

21 ‘‘(19) NO CARRYBACK OF MARGINAL OIL AND

22 GAS WELL PRODUCTION CREDIT BEFORE EFFECTIVE

23 DATE.—No portion of the unused business credit for 

24 any taxable year which is attributable to the mar25 ginal oil and gas well production credit determined 
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1 under section 45K may be carried back to a taxable 

2 year ending before October 1, 2004.’’. 

3 (d) COORDINATION WITH SECTION 29.—Section 

4 29(a) (relating to allowance of credit) is amended by strik5 ing ‘‘There’’ and inserting ‘‘At the election of the tax6 payer, there’’. 

7 (e) CLERICAL AMENDMENT.—The table of sections 

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

9 as amended by this Act, is amended by adding at the end 

10 the following new item:

‘‘Sec. 45K. Credit for producing oil and gas from marginal 

wells.’’.

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

12 this section shall apply to production in taxable years be13 ginning after September 30, 2004. 

14 SEC. 1352. NATURAL GAS GATHERING LINES TREATED AS 7-

15 YEAR PROPERTY. 

16 (a) IN GENERAL.—Section 168(e)(3)(C) (defining 7-

17 year property) is amended by striking ‘‘and’’ at the end 

18 of clause (i), by redesignating clause (ii) as clause (iii), 

19 and by inserting after clause (i) the following new clause: 

20 ‘‘(ii) any natural gas gathering line, 

21 and’’. 

22 (b) NATURAL GAS GATHERING LINE.—Section 

23 168(i) (relating to definitions and special rules), as 
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1 amended by this Act, is amended by adding at the end 

2 the following new paragraph: 

3 ‘‘(17) NATURAL GAS GATHERING LINE.—The 

4 term ‘natural gas gathering line’ means—

5 ‘‘(A) the pipe, equipment, and appur6 tenances used to deliver natural gas from the 

7 wellhead or a commonpoint to the point at 

8 which such gas first reaches—

9 ‘‘(i) a gas processing plant, 

10 ‘‘(ii) an interconnection with a trans11 mission pipeline certificated by the Federal 

12 Energy Regulatory Commission as an 

13 interstate transmission pipeline, 

14 ‘‘(iii) an interconnection with an 

15 intrastate transmission pipeline, or 

16 ‘‘(iv) a direct interconnection with a 

17 local distribution company, a gas storage 

18 facility, or an industrial consumer, or 

19 ‘‘(B) any other pipe, equipment, or appur20 tenances determined to be a gathering line by 

21 the Federal Energy Regulatory Commission. 

22 (c) ALTERNATIVE SYSTEM.—The table contained in 

23 section 168(g)(3)(B) (relating to special rule for certain 

24 property assigned to classes) is amended by inserting after 
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1 the item relating to subparagraph (C)(i) the following new 

2 item:

‘‘(C)(ii) ....................................................................................................... 14’’.

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

4 this section shall apply to property placed in service after 

5 September 30, 2004, in taxable years ending after such 

6 date. 

7 SEC. 1353. EXPENSING OF CAPITAL COSTS INCURRED IN 

8 COMPLYING WITH ENVIRONMENTAL PROTEC9 TION AGENCY SULFUR REGULATIONS. 

10 (a) IN GENERAL.—Part VI of subchapter B of chap11 ter 1 (relating to itemized deductions for individuals and 

12 corporations), as amended by this Act, is amended by in13 serting after section 179B the following new section: 

14 ‘‘SEC. 179C. DEDUCTION FOR CAPITAL COSTS INCURRED IN 

15 COMPLYING WITH ENVIRONMENTAL PROTEC16 TION AGENCY SULFUR REGULATIONS. 

17 ‘‘(a) TREATMENT AS EXPENSE.—

18 ‘‘(1) IN GENERAL.—A small business refiner 

19 may elect to treat any qualified capital costs as an 

20 expense which is not chargeable to capital account. 

21 Any qualified cost which is so treated shall be al22 lowed as a deduction for the taxable year in which 

23 the cost is paid or incurred. 

24 ‘‘(2) LIMITATION.—
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1 ‘‘(A) IN GENERAL.—The aggregate costs 

2 which may be taken into account under this 

3 subsection for any taxable year with respect to 

4 any facility may not exceed the applicable per5 centage of the qualified capital costs paid or in6 curred for the taxable year with respect to such 

7 facility. 

8 ‘‘(B) APPLICABLE PERCENTAGE.—For 

9 purposes of subparagraph (A)—

10 ‘‘(i) IN GENERAL.—Except as pro11 vided in clause (ii), the applicable percent12 age is 75 percent. 

13 ‘‘(ii) REDUCED PERCENTAGE.—In the 

14 case of any facility with average daily re15 finery runs or average retained production 

16 for the period described in subsection 

17 (b)(2) in excess of 155,000 barrels, the 

18 percentage described in clause (i) shall be 

19 reduced (but not below zero) by the prod20 uct of—

21 ‘‘(I) such percentage (before the 

22 application of this clause), and 

23 ‘‘(II) the ratio of such excess to 

24 50,000 barrels. 

25 ‘‘(b) DEFINITIONS.—For purposes of this section—
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1 ‘‘(1) QUALIFIED CAPITAL COSTS.—The term 

2 ‘qualified capital costs’ means any costs which—

3 ‘‘(A) are otherwise chargeable to capital 

4 account, and

5 ‘‘(B) are paid or incurred for the purpose 

6 of complying with the Highway Diesel Fuel Sul7 fur Control Requirement of the Environmental 

8 Protection Agency, as in effect on the date of 

9 the enactment of this section, with respect to a 

10 facility placed in service by the taxpayer before 

11 such date. 

12 ‘‘(2) SMALL BUSINESS REFINER.—The term 

13 ‘small business refiner’ means, with respect to any 

14 taxable year, a refiner of crude oil—

15 ‘‘(A) which, within the refinery operations 

16 of the business, employs not more than 1,500 

17 employees on any day during such taxable year, 

18 and 

19 ‘‘(B) the average daily refinery run or av20 erage retained production of which for all facili21 ties of the taxpayer for the 1-year period ending 

22 on the date of the enactment of this section did 

23 not exceed 410,000 barrels. 
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1 ‘‘(c) COORDINATION WITH OTHER PROVISIONS.—

2 Section 280B shall not apply to amounts which are treated 

3 as expenses under this section. 

4 ‘‘(d) BASIS REDUCTION.—For purposes of this title, 

5 the basis of any property shall be reduced by the portion 

6 of the cost of such property taken into account under sub7 section (a). 

8 ‘‘(e) CONTROLLED GROUPS.—For purposes of this 

9 section, all persons treated as a single employer under sub10 section (b), (c), (m), or (o) of section 414 shall be treated 

11 as a single employer.’’. 

12 (b) CONFORMING AMENDMENTS.—

13 (1) Section 263(a)(1), as amended by this Act, 

14 is amended by striking ‘‘or’’ at the end of subpara15 graph (H), by striking the period at the end of sub16 paragraph (I) and inserting ‘‘, or’’, and by inserting 

17 after subparagraph (I) the following new subpara18 graph: 

19 ‘‘(J) expenditures for which a deduction is 

20 allowed under section 179C.’’. 

21 (2) Section 263A(c)(3) is amended by inserting 

22 ‘‘179C,’’ after ‘‘section’’. 

23 (3) Section 312(k)(3)(B), as amended by this 

24 Act, is amended by striking ‘‘or 179B’’ each place 
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S 2095 PCS 

1 it appears in the heading and text and inserting 

2 ‘‘179B, or 179C’’. 

3 (4) Section 1016(a), as amended by this Act, is 

4 amended by striking ‘‘and’’ at the end of paragraph 

5 (32), by striking the period at the end of paragraph 

6 (33) and inserting ‘‘, and’’, and by adding at the 

7 end the following new paragraph: 

8 ‘‘(34) to the extent provided in section 

9 179C(d).’’. 

10 (5) Section 1245(a), as amended by this Act, is 

11 amended by inserting ‘‘179C,’’ after ‘‘179B,’’ both 

12 places it appears in paragraphs (2)(C) and (3)(C). 

13 (6) The table of sections for part VI of sub14 chapter B of chapter 1, as amended by this Act, is 

15 amended by inserting after the item relating to sec16 tion 179B the following new item:

‘‘Sec. 179C. Deduction for capital costs incurred in complying with Environmental Protection Agency sulfur regulations.’’.

17 (c) EFFECTIVE DATE.—The amendment made by 

18 this section shall apply to expenses paid or incurred after 

19 December 31, 2002, in taxable years ending after such 

20 date. 

21 SEC. 1354. ENVIRONMENTAL TAX CREDIT. 

22 (a) IN GENERAL.—Subpart D of part IV of sub23 chapter A of chapter 1 (relating to business-related cred-
967

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1 its), as amended by this Act, is amended by adding at 

2 the end the following new section: 

3 ‘‘SEC. 45L. ENVIRONMENTAL TAX CREDIT. 

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

5 amount of the environmental tax credit determined under 

6 this section with respect to any small business refiner for 

7 any taxable year is an amount equal to 5 cents for every 

8 gallon of low-sulfur diesel fuel produced at a facility by 

9 such small business refiner during such taxable year. 

10 ‘‘(b) MAXIMUM CREDIT.—

11 ‘‘(1) IN GENERAL.—For any small business re12 finer, the aggregate amount determined under sub13 section (a) for any taxable year with respect to any 

14 facility shall not exceed the applicable percentage of 

15 the qualified capital costs paid or incurred by such 

16 small business refiner with respect to such facility 

17 during the applicable period, reduced by the credit 

18 allowed under subsection (a) with respect to such fa19 cility for any preceding year. 

20 ‘‘(2) APPLICABLE PERCENTAGE.—For purposes 

21 of paragraph (1)—

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

23 subparagraph (B), the applicable percentage is 

24 25 percent. 
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1 ‘‘(B) REDUCED PERCENTAGE.—The per2 centage described in subparagraph (A) shall be 

3 reduced in the same manner as under section 

4 179C(a)(2)(B)(ii). 

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

6 ‘‘(1) IN GENERAL.—The terms ‘small business 

7 refiner’ and ‘qualified capital costs’ have the same 

8 meaning as given in section 179C. 

9 ‘‘(2) LOW-SULFUR DIESEL FUEL.—The term 

10 ‘low-sulfur diesel fuel’ means diesel fuel containing 

11 not more than 15 parts per million of sulfur. 

12 ‘‘(3) APPLICABLE PERIOD.—The term ‘applica13 ble period’ means, with respect to any facility, the 

14 period beginning on the day after the date of the en15 actment of this section and ending with the date 

16 which is 1 year after the date on which the taxpayer 

17 must comply with the applicable EPA regulations 

18 with respect to such facility. 

19 ‘‘(4) APPLICABLE EPA REGULATIONS.—The 

20 term ‘applicable EPA regulations’ means the High21 way Diesel Fuel Sulfur Control Requirements of the 

22 Environmental Protection Agency, as in effect on 

23 the date of the enactment of this section. 

24 ‘‘(d) CERTIFICATION.—
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1 ‘‘(1) REQUIRED.—Not later than the date 

2 which is 30 months after the first day of the first 

3 taxable year in which a credit is allowed under this 

4 section with respect to a facility, the small business 

5 refiner shall obtain a certification from the Sec6 retary, in consultation with the Administrator of the

7 Environmental Protection Agency, that the tax8 payer’s qualified capital costs with respect to such 

9 facility will result in compliance with the applicable 

10 EPA regulations. 

11 ‘‘(2) CONTENTS OF APPLICATION.—An applica12 tion for certification shall include relevant informa13 tion regarding unit capacities and operating charac14 teristics sufficient for the Secretary, in consultation 

15 with the Administrator of the Environmental Protec16 tion Agency, to determine that such qualified capital 

17 costs are necessary for compliance with the applica18 ble EPA regulations. 

19 ‘‘(3) REVIEW PERIOD.—Any application shall 

20 be reviewed and notice of certification, if applicable, 

21 shall be made within 60 days of receipt of such ap22 plication. In the event the Secretary does not notify 

23 the taxpayer of the results of such certification with24 in such period, the taxpayer may presume the cer25 tification to be issued until so notified. 
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S 2095 PCS 

1 ‘‘(4) STATUTE OF LIMITATIONS.—With respect 

2 to the credit allowed under this section—

3 ‘‘(A) the statutory period for the assess4 ment of any deficiency attributable to such 

5 credit shall not expire before the end of the 3-

6 year period ending on the date that the period 

7 described in paragraph (3) ends with respect to 

8 the taxpayer, and 

9 ‘‘(B) such deficiency may be assessed be10 fore the expiration of such 3-year period not11 withstanding the provisions of any other law or 

12 rule of law which would otherwise prevent such 

13 assessment. 

14 ‘‘(e) CONTROLLED GROUPS.—For purposes of this 

15 section, all persons treated as a single employer under sub16 section (b), (c), (m), or (o) of section 414 shall be treated 

17 as a single employer. 

18 ‘‘(f) COOPERATIVE ORGANIZATIONS.—

19 ‘‘(1) APPORTIONMENT OF CREDIT.—

20 ‘‘(A) IN GENERAL.—In the case of a coop21 erative organization described in section 

22 1381(a), any portion of the credit determined 

23 under subsection (a) for the taxable year may, 

24 at the election of the organization, be appor25 tioned among patrons eligible to share in pa-
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1 tronage dividends on the basis of the quantity 

2 or value of business done with or for such pa3 trons for the taxable year. 

4 ‘‘(B) FORM AND EFFECT OF ELECTION.—

5 An election under subparagraph (A) for any 

6 taxable year shall be made on a timely filed re7 turn for such year. Such election, once made, 

8 shall be irrevocable for such taxable year. 

9 ‘‘(2) TREATMENT OF ORGANIZATIONS AND PA10 TRONS.—

11 ‘‘(A) ORGANIZATIONS.—The amount of the 

12 credit not apportioned to patrons pursuant to 

13 paragraph (1) shall be included in the amount 

14 determined under subsection (a) for the taxable 

15 year of the organization. 

16 ‘‘(B) PATRONS.—The amount of the credit 

17 apportioned to patrons pursuant to paragraph 

18 (1) shall be included in the amount determined 

19 under subsection (a) for the first taxable year 

20 of each patron ending on or after the last day 

21 of the payment period (as defined in section 

22 1382(d)) for the taxable year of the organiza23 tion or, if earlier, for the taxable year of each 

24 patron ending on or after the date on which the 
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1 patron receives notice from the cooperative of 

2 the apportionment. 

3 ‘‘(3) SPECIAL RULES FOR DECREASE IN CRED4 ITS FOR TAXABLE YEAR.—If the amount of the cred5 it of a cooperative organization determined under 

6 subsection (a) for a taxable year is less than the 

7 amount of such credit shown on the return of the co8 operative organization for such year, an amount 

9 equal to the excess of—

10 ‘‘(A) such reduction, over 

11 ‘‘(B) the amount not apportioned to such 

12 patrons under paragraph (1) for the taxable 

13 year—

14 shall be treated as an increase in tax imposed by 

15 this chapter on the organization. Such increase shall 

16 not be treated as tax imposed by this chapter for 

17 purposes of determining the amount of any credit 

18 under this chapter or for purposes of section 55.’’. 

19 (b) CREDIT MADE PART OF GENERAL BUSINESS

20 CREDIT.—Section 38(b) (relating to current year business 

21 credit), as amended by this Act, is amended by striking 

22 ‘‘plus’’ at the end of paragraph (21), by striking the period 

23 at the end of paragraph (22) and inserting ‘‘, plus’’, and 

24 by adding at the end the following new paragraph: 
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S 2095 PCS 

1 ‘‘(23) in the case of a small business refiner, 

2 the environmental tax credit determined under sec3 tion 45L(a).’’. 

4 (c) DENIAL OF DOUBLE BENEFIT.—Section 280C 

5 (relating to certain expenses for which credits are allow6 able), as amended by this Act, is amended by adding at 

7 the end the following new subsection: 

8 ‘‘(e) ENVIRONMENTAL TAX CREDIT.—No deduction 

9 shall be allowed for that portion of the expenses otherwise 

10 allowable as a deduction for the taxable year which is 

11 equal to the amount of the credit determined for the tax12 able year under section 45L(a).’’. 

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

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

15 as amended by this Act, is amended by adding at the end 

16 the following new item:

‘‘Sec. 45L. Environmental tax credit.’’.

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

18 this section shall apply to expenses paid or incurred after 

19 December 31, 2002, in taxable years ending after such 

20 date. 

21 SEC. 1355. DETERMINATION OF SMALL REFINER EXCEP22 TION TO OIL DEPLETION DEDUCTION. 

23 (a) IN GENERAL.—Paragraph (4) of section 613A(d) 

24 (relating to limitations on application of subsection (c)) 

25 is amended to read as follows: 
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1 ‘‘(4) CERTAIN REFINERS EXCLUDED.—If the 

2 taxpayer or 1 or more related persons engages in the 

3 refining of crude oil, subsection (c) shall not apply 

4 to the taxpayer for a taxable year if the average 

5 daily refinery runs of the taxpayer and such persons 

6 for the taxable year exceed 60,000 barrels. For pur7 poses of this paragraph, the average daily refinery

8 runs for any taxable year shall be determined by di9 viding the aggregate refinery runs for the taxable 

10 year by the number of days in the taxable year.’’. 

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

12 this section shall apply to taxable years ending after Sep13 tember 30, 2004. 

14 SEC. 1356. MARGINAL PRODUCTION INCOME LIMIT EXTEN15 SION. 

16 Section 613A(c)(6)(H) (relating to temporary sus17 pension of taxable income limit with respect to marginal 

18 production) is amended by striking ‘‘2004’’ and inserting 

19 ‘‘2007’’. 

20 SEC. 1357. AMORTIZATION OF DELAY RENTAL PAYMENTS. 

21 (a) IN GENERAL.—Section 167 (relating to deprecia22 tion) is amended by redesignating subsection (h) as sub23 section (i) and by inserting after subsection (g) the fol24 lowing new subsection: 
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1 ‘‘(h) AMORTIZATION OF DELAY RENTAL PAYMENTS

2 FOR DOMESTIC OIL AND GAS WELLS.—

3 ‘‘(1) IN GENERAL.—Any delay rental payment 

4 paid or incurred in connection with the development 

5 of oil or gas wells within the United States (as de6 fined in section 638) shall be allowed as a deduction 

7 ratably over the 24-month period beginning on the 

8 date that such payment was paid or incurred. 

9 ‘‘(2) HALF-YEAR CONVENTION.—For purposes 

10 of paragraph (1), any payment paid or incurred dur11 ing the taxable year shall be treated as paid or in12 curred on the mid-point of such taxable year. 

13 ‘‘(3) EXCLUSIVE METHOD.—Except as provided 

14 in this subsection, no depreciation or amortization 

15 deduction shall be allowed with respect to such pay16 ments. 

17 ‘‘(4) TREATMENT UPON ABANDONMENT.—If 

18 any property to which a delay rental payment relates 

19 is retired or abandoned during the 24-month period 

20 described in paragraph (1), no deduction shall be al21 lowed on account of such retirement or abandon22 ment and the amortization deduction under this sub23 section shall continue with respect to such payment. 

24 ‘‘(5) DELAY RENTAL PAYMENTS.—For purposes 

25 of this subsection, the term ‘delay rental payment’ 
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1 means an amount paid for the privilege of deferring 

2 development of an oil or gas well under an oil or gas 

3 lease.’’. 

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

5 this section shall apply to amounts paid or incurred in tax6 able years beginning after September 30, 2004. 

7 SEC. 1358. AMORTIZATION OF GEOLOGICAL AND GEO8 PHYSICAL EXPENDITURES. 

9 (a) IN GENERAL.—Section 167 (relating to deprecia10 tion), as amended by this Act, is amended by redesig11 nating subsection (i) as subsection (j) and by inserting 

12 after subsection (h) the following new subsection: 

13 ‘‘(i) AMORTIZATION OF GEOLOGICAL AND GEO14 PHYSICAL EXPENDITURES.—

15 ‘‘(1) IN GENERAL.—Any geological and geo16 physical expenses paid or incurred in connection 

17 with the exploration for, or development of, oil or 

18 gas within the United States (as defined in section 

19 638) shall be allowed as a deduction ratably over the 

20 24-month period beginning on the date that such ex21 pense was paid or incurred. 

22 ‘‘(2) SPECIAL RULES.—For purposes of this 

23 subsection, rules similar to the rules of paragraphs 

24 (2), (3), and (4) of subsection (h) shall apply.’’. 
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1 (b) CONFORMING AMENDMENT.—Section 263A(c)(3) 

2 is amended by inserting ‘‘167(h), 167(i),’’ after ‘‘under 

3 section’’. 

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

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

6 years beginning after September 30, 2004. 

7 SEC. 1359. EXTENSION AND MODIFICATION OF CREDIT FOR 

8 PRODUCING FUEL FROM A NONCONVEN9 TIONAL SOURCE. 

10 (a) IN GENERAL.—Section 29 (relating to credit for 

11 producing fuel from a nonconventional source) is amended 

12 by adding at the end the following new subsection: 

13 ‘‘(h) EXTENSION FOR OTHER FACILITIES.—

14 ‘‘(1) OIL AND GAS.—In the case of a well or fa15 cility for producing qualified fuels described in sub16 paragraph (A) or (B) of subsection (c)(1) which was 

17 drilled or placed in service after September 30, 

18 2004, and before January 1, 2007, notwithstanding 

19 subsection (f), this section shall apply with respect 

20 to such fuels produced at such well or facility before 

21 the close of the 3-year period beginning on the date 

22 that such well is drilled or such facility is placed in 

23 service. 

24 ‘‘(2) FACILITIES PRODUCING FUELS FROM AG25 RICULTURAL AND ANIMAL WASTE.—
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1 ‘‘(A) IN GENERAL.—In the case of facility 

2 for producing liquid, gaseous, or solid fuels 

3 from qualified agricultural and animal wastes, 

4 including such fuels when used as feedstocks, 

5 which was placed in service after September 30, 

6 2004, and before January 1, 2007, this section 

7 shall apply with respect to fuel produced at 

8 such facility before the close of the 3-year pe9 riod beginning on the date such facility is 

10 placed in service. 

11 ‘‘(B) QUALIFIED AGRICULTURAL AND ANI12 MAL WASTE.—For purposes of this paragraph, 

13 the term ‘qualified agricultural and animal 

14 waste’ means agriculture and animal waste, in15 cluding by-products, packaging, and any mate16 rials associated with the processing, feeding, 

17 selling, transporting, or disposal of agricultural 

18 or animal products or wastes. 

19 ‘‘(3) WELLS PRODUCING VISCOUS OIL.—

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

21 for producing viscous oil which was placed in 

22 service after September 30, 2004, and before 

23 January 1, 2007, this section shall apply with 

24 respect to fuel produced at such well before the 
979

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1 close of the 3-year period beginning on the date 

2 such well is placed in service. 

3 ‘‘(B) VISCOUS OIL.—The term ‘viscous oil’ 

4 means heavy oil, as defined in section 

5 613A(c)(6), except that—

6 ‘‘(i) ‘22 degrees’ shall be substituted 

7 for ‘20 degrees’ in applying subparagraph 

8 (F) thereof, and

9 ‘‘(ii) in all cases, the oil gravity shall 

10 be measured from the initial well-head 

11 samples, drill cuttings, or down hole sam12 ples. 

13 ‘‘(C) WAIVER OF UNRELATED PERSON RE14 QUIREMENT.—In the case of viscous oil, the re15 quirement under subsection (a)(2)(A) of a sale 

16 to an unrelated person shall not apply to any 

17 sale to the extent that the viscous oil is not con18 sumed in the immediate vicinity of the wellhead. 

19 ‘‘(4) FACILITIES PRODUCING REFINED COAL.—

20 ‘‘(A) IN GENERAL.—In the case of a facil21 ity described in subparagraph (C) for producing 

22 refined coal which was placed in service after 

23 September 30, 2004, and before January 1, 

24 2007, this section shall apply with respect to 

25 fuel produced at such facility before the close of 
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1 the 5-year period beginning on the date such 

2 facility is placed in service. 

3 ‘‘(B) REFINED COAL.—For purposes of 

4 this paragraph, the term ‘refined coal’ means a 

5 fuel which is a liquid, gaseous, or solid syn6 thetic fuel produced from coal (including lig7 nite) or high carbon fly ash, including such fuel 

8 used as a feedstock. 

9 ‘‘(C) COVERED FACILITIES.—

10 ‘‘(i) IN GENERAL.—A facility is de11 scribed in this subparagraph if such facil12 ity produces refined coal using a tech13 nology which results in—

14 ‘‘(I) a qualified emission reduc15 tion, and 

16 ‘‘(II) a qualified enhanced value. 

17 ‘‘(ii) QUALIFIED EMISSION REDUC18 TION.—For purposes of this subparagraph, 

19 the term ‘qualified emission reduction’ 

20 means a reduction of at least 20 percent of 

21 the emissions of nitrogen oxide and either 

22 sulfur dioxide or mercury released when 

23 burning the refined coal (excluding any di24 lution caused by materials combined or 

25 added during the production process), as 
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1 compared to the emissions released when 

2 burning the feedstock coal or comparable 

3 coal predominantly available in the market4 place as of January 1, 2003. 

5 ‘‘(iii) QUALIFIED ENHANCED

6 VALUE.—For purposes of this subpara7 graph, the term ‘qualified enhanced value’ 

8 means an increase of at least 50 percent in 

9 the market value of the refined coal (ex10 cluding any increase caused by materials 

11 combined or added during the production 

12 process), as compared to the value of the 

13 feedstock coal. 

14 ‘‘(iv) QUALIFYING ADVANCED CLEAN

15 COAL TECHNOLOGY UNITS EXCLUDED.—A 

16 facility described in this subparagraph 

17 shall not include a qualifying advanced 

18 clean coal technology unit (as defined in 

19 section 48A(b)). 

20 ‘‘(5) COALMINE GAS.—

21 ‘‘(A) IN GENERAL.—This section shall 

22 apply to coalmine gas—

23 ‘‘(i) captured or extracted by the tax24 payer during the period beginning after 
982

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1 September 30, 2004, and ending before 

2 January 1, 2007, and 

3 ‘‘(ii) utilized as a fuel source or sold 

4 by or on behalf of the taxpayer to an unre5 lated person during such period. 

6 ‘‘(B) COALMINE GAS.—For purposes of 

7 this paragraph, the term ‘coalmine gas’ means 

8 any methane gas which is—

9 ‘‘(i) liberated during or as a result of 

10 coal mining operations, or 

11 ‘‘(ii) extracted up to 10 years in ad12 vance of coal mining operations as part of 

13 a specific plan to mine a coal deposit. 

14 ‘‘(C) SPECIAL RULE FOR ADVANCED EX15 TRACTION.—In the case of coalmine gas which 

16 is captured in advance of coal mining oper17 ations, the credit under subsection (a) shall be 

18 allowed only after the date the coal extraction 

19 occurs in the immediate area where the 

20 coalmine gas was removed.

21 ‘‘(D) NONCOMPLIANCE WITH POLLUTION

22 LAWS.—This paragraph shall not apply to the 

23 capture or extraction of coalmine gas from coal 

24 mining operations with respect to any period in 

25 which such coal mining operations are not in 
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1 compliance with applicable State and Federal 

2 pollution prevention, control, and permit re3 quirements.

4 ‘‘(6) SPECIAL RULES.—In determining the 

5 amount of credit allowable under this section solely 

6 by reason of this subsection—

7 ‘‘(A) FUELS TREATED AS QUALIFIED

8 FUELS.—Any fuel described in paragraph (2), 

9 (3), (4), or (5) shall be treated as a qualified 

10 fuel for purposes of this section. 

11 ‘‘(B) DAILY LIMIT.—The amount of quali12 fied fuels sold during any taxable year which 

13 may be taken into account by reason of this 

14 subsection with respect to any project shall not 

15 exceed an average barrel-of-oil equivalent of 

16 200,000 cubic feet of natural gas per day. Days 

17 before the date the project is placed in service 

18 shall not be taken into account in determining 

19 such average. 

20 ‘‘(C) CREDIT AMOUNT.—The dollar 

21 amount applicable under subsection (a)(1) shall 

22 be $3 (and the inflation adjustment under sub23 section (b)(2) shall not apply to such 

24 amount).’’. 
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1 (b) CLARIFICATION OF PLACED IN SERVICE DATE

2 FOR CERTAIN LANDFILL GAS FACILITIES.—Section 29(d) 

3 (relating to other definitions and special rules), as amend4 ed by this Act, is amended by adding at the end the fol5 lowing new paragraph: 

6 ‘‘(10) CLARIFICATION OF PLACED IN SERVICE

7 DATE FOR CERTAIN LANDFILL GAS FACILITIES.—

8 ‘‘(A) IN GENERAL.—In the case of a land9 fill placed in service on or before the date of the 

10 enactment of this paragraph—

11 ‘‘(i) a facility for producing qualified 

12 fuel from such landfill shall include all 

13 wells, pipes, and related components used 

14 to collect landfill gas, and 

15 ‘‘(ii) production of landfill gas from 

16 such landfill attributable to wells, pipes, 

17 and related components placed in service 

18 after such date of enactment shall be treat19 ed as produced from a facility placed in 

20 service on the date such wells, pipes, and 

21 related components were placed in service. 

22 ‘‘(B) LANDFILL GAS.—The term ‘landfill 

23 gas’ means gas described in subsection 

24 (c)(1)(B)(ii) and derived from the biodegrada25 tion of municipal solid waste.’’. 
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1 (c) EXTENSION FOR CERTAIN FUEL PRODUCED AT

2 EXISTING FACILITIES.—Section 29(f)(2) (relating to ap3 plication of section) is amended by inserting ‘‘(January 

4 1, 2006, in the case of any coke, coke gas, or natural gas 

5 and byproducts produced by coal gasification from lignite 

6 in a facility described in paragraph (1)(B))’’ after ‘‘Janu7 ary 1, 2003’’.

8 (d) STUDY OF COALBED METHANE.—

9 (1) IN GENERAL.—The Secretary of the Treas10 ury shall conduct a study regarding the effect of sec11 tion 29 of the Internal Revenue Code of 1986 on the 

12 production of coalbed methane. 

13 (2) CONTENTS OF STUDY.—The study under 

14 paragraph (1) shall estimate the total amount of 

15 credits under section 29 of the Internal Revenue 

16 Code of 1986 claimed annually and in the aggregate 

17 which are related to the production of coalbed meth18 ane since the date of the enactment of such section 

19 29. Such study shall report the annual value of such 

20 credits allowable for coalbed methane compared to 

21 the average annual wellhead price of natural gas 

22 (per thousand cubic feet of natural gas). Such study 

23 shall also estimate the incremental increase in pro24 duction of coalbed methane which has resulted from 

25 the enactment of such section 29, and the cost to 
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1 the Federal Government, in terms of the net tax 

2 benefits claimed, per thousand cubic feet of incre3 mental coalbed methane produced annually and in 

4 the aggregate since such enactment. 

5 (e) EFFECTIVE DATES.—

6 (1) IN GENERAL.—Except as provided in para7 graph (2), the amendments made by this section 

8 shall apply to fuel sold after September 30, 2004, in 

9 taxable years ending after such date. 

10 (2) EXISTING FACILITIES.—The amendments 

11 made by subsection (c) shall apply to fuel sold after 

12 December 31, 2002, in taxable years ending after 

13 such date. 

14 SEC. 1360. NATURAL GAS DISTRIBUTION LINES TREATED 

15 AS 15-YEAR PROPERTY. 

16 (a) IN GENERAL.—Section 168(e)(3)(E) (defining 

17 15-year property) is amended by striking ‘‘and’’ at the end 

18 of clause (ii), by striking the period at the end of clause 

19 (iii) and by inserting ‘‘, and’’, and by adding at the end 

20 the following new clause: 

21 ‘‘(iv) any natural gas distribution 

22 line.’’. 

23 (b) ALTERNATIVE SYSTEM.—The table contained in 

24 section 168(g)(3)(B) (relating to special rule for certain 

25 property assigned to classes), as amended by this Act, is 
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1 amended by adding after the item relating to subpara2 graph (E)(iii) the following new item:

‘‘(E)(iv) ...................................................................................................... 35’’.

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

4 this section shall apply to property placed in service after 

5 September 30, 2004, in taxable years ending after such 

6 date. 

7 SEC. 1361. CREDIT FOR ALASKA NATURAL GAS. 

8 (a) IN GENERAL.—Subpart D of part IV of sub9 chapter A of chapter 1 (relating to business related cred10 its), as amended by this Act, is amended by adding at 

11 the end the following new section: 

12 ‘‘SEC. 45M. ALASKA NATURAL GAS. 

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

14 Alaska natural gas credit for any taxable year is an 

15 amount equal to the product of—

16 ‘‘(1) the credit amount, and 

17 ‘‘(2) Alaska natural gas the production of which 

18 is attributable to the taxpayer. 

19 ‘‘(b) CREDIT AMOUNT.—For purposes of this sec20 tion—

21 ‘‘(1) IN GENERAL.—The credit amount is $0.52 

22 per 1,000,000 Btu of Alaska natural gas. 

23 ‘‘(2) REDUCTION AS GAS PRICES INCREASE.—

24 ‘‘(A) IN GENERAL.—The dollar amount 

25 under paragraph (1) shall be reduced (but not 
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1 below zero) by an amount which bears the same 

2 ratio to such amount (determined without re3 gard to this paragraph) as—

4 ‘‘(i) the excess (if any) of the applica5 ble reference price over $0.83, bears to 

6 ‘‘(ii) $0.52. 

7 ‘‘(B) APPLICABLE REFERENCE PRICE.—

8 For purposes of this paragraph—

9 ‘‘(i) IN GENERAL.—The applicable 

10 reference price for any calendar month in 

11 a taxable year is the reference price for the 

12 calendar month in which production oc13 curs. 

14 ‘‘(ii) REFERENCE PRICE.—The term 

15 ‘reference price’ means, with respect to any 

16 calendar month, a published market price 

17 for natural gas in United States dollars 

18 per 1,000,000 Btu (reduced by any gas 

19 transportation costs and gas processing 

20 costs as determined by the appropriate na21 tional regulatory body for natural gas 

22 transportation) as determined under regu23 lations by the Secretary. 

24 ‘‘(C) INFLATION ADJUSTMENT.—
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1 ‘‘(i) IN GENERAL.—In the case of any 

2 taxable year beginning in a calendar year 

3 after 2004, each of the dollar amounts 

4 contained in paragraph (1) and subpara5 graph (A) of this paragraph shall be in6 creased to an amount equal to such dollar 

7 amount multiplied by the inflation adjust8 ment factor for such calendar year.

9 ‘‘(ii) INFLATION ADJUSTMENT FAC10 TOR.—For purposes of clause (i)—

11 ‘‘(I) IN GENERAL.—The term ‘in12 flation adjustment factor’ means, with 

13 respect to a calendar year, a fraction 

14 the numerator of which is the GDP 

15 implicit price deflator for the pre16 ceding calendar year and the denomi17 nator of which is the GDP implicit 

18 price deflator for the calendar year 

19 2003. 

20 ‘‘(II) GDP IMPLICIT PRICE

21 DEFLATOR.—The term ‘GDP implicit 

22 price deflator’ means, for any cal23 endar year, the most recent revision of 

24 the implicit price deflator for the 

25 gross domestic product as of June 30 
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1 of such calendar year as computed by 

2 the Department of Commerce before 

3 October 1 of such calendar year. 

4 ‘‘(c) ALASKA NATURAL GAS.—For purposes of this 

5 section—

6 ‘‘(1) IN GENERAL.—The term ‘Alaska natural 

7 gas’ means natural gas entering the Alaska natural 

8 gas pipeline (as defined in section 168(i)(18) (deter9 mined without regard to subparagraph (B) thereof)) 

10 which is produced from a well—

11 ‘‘(A) located in the area of the State of 

12 Alaska lying north of 64 degrees North lati13 tude, determined by excluding the area of the 

14 Alaska National Wildlife Refuge (including the 

15 continental shelf thereof within the meaning of 

16 section 638(1)), and 

17 ‘‘(B) pursuant to the applicable State and 

18 Federal pollution prevention, control, and per19 mit requirements from such area (including the 

20 continental shelf thereof within the meaning of 

21 section 638(1)). 

22 ‘‘(2) NATURAL GAS.—The term ‘natural gas’ 

23 has the meaning given such term by section 

24 613A(e)(2). 
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1 ‘‘(d) SPECIAL RULES.—For purposes of this sec2 tion—

3 ‘‘(1) PRODUCTION ATTRIBUTABLE TO THE TAX4 PAYER.—

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

6 in which there is more than 1 person or enti7 ty—

8 ‘‘(i) entitled to production of Alaska 

9 natural gas, or 

10 ‘‘(ii) at the election of such person or 

11 entity, entitled to the value of production 

12 as either an operating interest owner or a 

13 royalty interest owner—

14 the portion of such production attributable to 

15 such person or entity shall be determined on 

16 the basis of the ratio which the person’s or enti17 ty’s interest in the production or the value of 

18 production bears to the aggregate of the inter19 ests of all such persons or entities. Production 

20 otherwise attributable to a United States tax21 exempt person or entity by reason of a royalty 

22 interest shall be attributable to such person or 

23 entity with respect to whom royalty-in-value 

24 production remains or to whom royalty-in-kind 

25 production is sold. 
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1 ‘‘(B) PARTNERSHIP PROPERTIES.—In the 

2 case of a partnership, for purposes of applying 

3 subparagraph (A), production shall be attrib4 utable to its partners based on each partner’s 

5 distributive share of Alaska natural gas which 

6 is produced from partnership properties and at7 tributable to the partnership or its partners 

8 under subparagraph (A). 

9 ‘‘(2) PASS-THRU IN THE CASE OF ESTATES

10 AND TRUSTS.—Under regulations prescribed by the 

11 Secretary, rules similar to the rules of subsection (d) 

12 of section 52 shall apply. 

13 ‘‘(e) APPLICATION OF SECTION.—This section shall 

14 apply to Alaska natural gas during the period—

15 ‘‘(1) beginning with the later of—

16 ‘‘(A) January 1, 2010, or 

17 ‘‘(B) the initial date for the interstate 

18 transportation of such Alaska natural gas, and 

19 ‘‘(2) ending with the date which is 25 years 

20 after the date described in paragraph (1).’’. 

21 (b) CREDIT TREATED AS BUSINESS CREDIT.—Sec22 tion 38(b) (relating to current year business credit), as 

23 amended by this Act, is amended by striking ‘‘plus’’ at 

24 the end of paragraph (22), by striking the period at the 
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1 end of paragraph (23) and inserting ‘‘, plus’’, and by add2 ing at the end the following new paragraph: 

3 ‘‘(24) The Alaska natural gas credit determined 

4 under section 45M(a).’’. 

5 (c) ALLOWING CREDIT AGAINST ENTIRE REGULAR

6 TAX AND MINIMUM TAX.—

7 (1) IN GENERAL.—Section 38(c) (relating to 

8 limitation based on amount of tax), as amended by 

9 this Act, is amended by redesignating paragraph (5) 

10 as paragraph (6) and by inserting after paragraph 

11 (4) the following new paragraph: 

12 ‘‘(5) SPECIAL RULES FOR ALASKA NATURAL

13 GAS CREDIT.—

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

15 Alaska natural gas credit—

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

17 be applied separately with respect to the 

18 credit, and 

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

20 credit—

21 ‘‘(I) the amounts in subpara22 graphs (A) and (B) thereof shall be 

23 treated as being zero, and 

24 ‘‘(II) the limitation under para25 graph (1) (as modified by subclause 
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1 (I)) shall be reduced by the credit al2 lowed under subsection (a) for the 

3 taxable year (other than the Alaska 

4 natural gas credit). 

5 ‘‘(B) ALASKA NATURAL GAS CREDIT.—

6 For purposes of this subsection, the term ‘Alas7 ka natural gas credit’ means the credit allow8 able under subsection (a) by reason of section 

9 45M(a).’’. 

10 (2) CONFORMING AMENDMENTS.—Subclause 

11 (II) of section 38(c)(2)(A)(ii), as amended by this 

12 Act, subclause (II) of section 38(c)(3)(A)(ii), as 

13 amended by this Act, and subclause (II) of section 

14 38(c)(4)(A)(ii), as added by this Act, are each 

15 amended by inserting ‘‘or the Alaska natural gas 

16 credit’’ after ‘‘producer credit’’. 

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

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

19 as amended by this Act, is amended by adding at the end 

20 the following new item:

‘‘Sec. 45M. Alaska natural gas.’’.

21 SEC. 1362. CERTAIN ALASKA NATURAL GAS PIPELINE 

22 PROPERTY TREATED AS 7-YEAR PROPERTY. 

23 (a) IN GENERAL.—Section 168(e)(3)(C) (defining 7-

24 year property), as amended by this Act, is amended by 

25 striking ‘‘and’’ at the end of clause (ii), by redesignating 
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1 clause (iii) as clause (iv), and by inserting after clause (ii) 

2 the following new clause: 

3 ‘‘(iii) any Alaska natural gas pipeline, 

4 and’’. 

5 (b) ALASKA NATURAL GAS PIPELINE.—Section 

6 168(i) (relating to definitions and special rules), as 

7 amended by this Act, is amended by adding at the end 

8 the following new paragraph: 

9 ‘‘(18) ALASKA NATURAL GAS PIPELINE.—The 

10 term ‘Alaska natural gas pipeline’ means the natural 

11 gas pipeline system located in the State of Alaska 

12 which—

13 ‘‘(A) has a capacity of more than 

14 500,000,000,000 Btu of natural gas per day, 

15 and 

16 ‘‘(B) is—

17 ‘‘(i) placed in service after December 

18 31, 2012, or 

19 ‘‘(ii) treated as placed in service on 

20 January 1, 2013, if the taxpayer who 

21 places such system in service before Janu22 ary 1, 2013, elects such treatment. 

23 Such term includes the pipe, trunk lines, related 

24 equipment, and appurtenances used to carry natural 

25 gas, but does not include any gas processing plant.’’. 
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1 (c) ALTERNATIVE SYSTEM.—The table contained in 

2 section 168(g)(3)(B) (relating to special rule for certain 

3 property assigned to classes), as amended by this Act, is 

4 amended by inserting after the item relating to subpara5 graph (C)(ii) the following new item:

‘‘(C)(iii) ...................................................................................................... 14’’.

6 ‘‘(d) EFFECTIVE DATE.—The amendments made by 

7 this section shall apply to property placed in service after 

8 September 30, 2004. 

9 SEC. 1363. ARBITRAGE RULES NOT TO APPLY TO PREPAY10 MENTS FOR NATURAL GAS. 

11 (a) IN GENERAL.—Section 148(b) (relating to higher 

12 yielding investments) is amended by adding at the end the 

13 following new paragraph: 

14 ‘‘(4) SAFE HARBOR FOR PREPAID NATURAL

15 GAS.—

16 ‘‘(A) IN GENERAL.—The term ‘investment17 type property’ does not include a prepayment 

18 under a qualified natural gas supply contract. 

19 ‘‘(B) QUALIFIED NATURAL GAS SUPPLY

20 CONTRACT.—For purposes of this paragraph, 

21 the term ‘qualified natural gas supply contract’ 

22 means any contract to acquire natural gas for 

23 resale by or for a utility owned by a govern24 mental unit if the amount of gas permitted to 
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1 be acquired under the contract for the utility 

2 during any year does not exceed the sum of—

3 ‘‘(i) the annual average amount dur4 ing the testing period of natural gas pur5 chased (other than for resale) by cus6 tomers of such utility who are located 

7 within the service area of such utility, and 

8 ‘‘(ii) the amount of natural gas to be 

9 used to transport the prepaid natural gas 

10 to the utility during such year. 

11 ‘‘(C) NATURAL GAS USED TO GENERATE

12 ELECTRICITY.—Natural gas used to generate 

13 electricity shall be taken into account in deter14 mining the average under subparagraph 

15 (B)(i)—

16 ‘‘(i) only if the electricity is generated 

17 by a utility owned by a governmental unit, 

18 and 

19 ‘‘(ii) only to the extent that the elec20 tricity is sold (other than for resale) to 

21 customers of such utility who are located 

22 within the service area of such utility. 

23 ‘‘(D) ADJUSTMENTS FOR CHANGES IN

24 CUSTOMER BASE.—
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1 ‘‘(i) NEW BUSINESS CUSTOMERS.—

2 If—

3 ‘‘(I) after the close of the testing 

4 period and before the date of issuance 

5 of the issue, the utility owned by a 

6 governmental unit enters into a con7 tract to supply natural gas (other 

8 than for resale) for use by a business 

9 at a property within the service area 

10 of such utility, and 

11 ‘‘(II) the utility did not supply 

12 natural gas to such property during 

13 the testing period or the ratable 

14 amount of natural gas to be supplied 

15 under the contract is significantly 

16 greater than the ratable amount of 

17 gas supplied to such property during 

18 the testing period—

19 then a contract shall not fail to be treated 

20 as a qualified natural gas supply contract 

21 by reason of supplying the additional nat22 ural gas under the contract referred to in 

23 subclause (I). 

24 ‘‘(ii) OVERALL LIMITATION.—The av25 erage under subparagraph (B)(i) shall not 
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1 exceed the annual amount of natural gas 

2 reasonably expected to be purchased (other 

3 than for resale) by persons who are located 

4 within the service area of such utility and 

5 who, as of the date of issuance of the 

6 issue, are customers of such utility. 

7 ‘‘(E) RULING REQUESTS.—The Secretary 

8 may increase the average under subparagraph 

9 (B)(i) for any period if the utility owned by the 

10 governmental unit establishes to the satisfaction 

11 of the Secretary that, based on objective evi12 dence of growth in natural gas consumption or 

13 population, such average would otherwise be in14 sufficient for such period. 

15 ‘‘(F) ADJUSTMENT FOR NATURAL GAS

16 OTHERWISE ON HAND.—

17 ‘‘(i) IN GENERAL.—The amount oth18 erwise permitted to be acquired under the 

19 contract for any period shall be reduced 

20 by—

21 ‘‘(I) the applicable share of nat22 ural gas held by the utility on the 

23 date of issuance of the issue, and 

24 ‘‘(II) the natural gas (not taken 

25 into account under subclause (I)) 
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1 which the utility has a right to ac2 quire during such period (determined 

3 as of the date of issuance of the 

4 issue). 

5 ‘‘(ii) APPLICABLE SHARE.—For pur6 poses of clause (i), the term ‘applicable 

7 share’ means, with respect to any period, 

8 the natural gas allocable to such period if 

9 the gas were allocated ratably over the pe10 riod to which the prepayment relates. 

11 ‘‘(G) INTENTIONAL ACTS.—Subparagraph 

12 (A) shall cease to apply to any issue if the util13 ity owned by the governmental unit engages in 

14 any intentional act to render the volume of nat15 ural gas acquired by such prepayment to be in 

16 excess of the sum of—

17 ‘‘(i) the amount of natural gas needed 

18 (other than for resale) by customers of 

19 such utility who are located within the 

20 service area of such utility, and 

21 ‘‘(ii) the amount of natural gas used 

22 to transport such natural gas to the utility. 

23 ‘‘(H) TESTING PERIOD.—For purposes of 

24 this paragraph, the term ‘testing period’ means, 

25 with respect to an issue, the most recent 5 cal-
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1 endar years ending before the date of issuance 

2 of the issue.

3 ‘‘(I) SERVICE AREA.—For purposes of this 

4 paragraph, the service area of a utility owned 

5 by a governmental unit shall be comprised of—

6 ‘‘(i) any area throughout which such 

7 utility provided at all times during the 

8 testing period—

9 ‘‘(I) in the case of a natural gas 

10 utility, natural gas transmission or 

11 distribution services, and 

12 ‘‘(II) in the case of an electric 

13 utility, electricity distribution services, 

14 ‘‘(ii) any area within a county contig15 uous to the area described in clause (i) in 

16 which retail customers of such utility are 

17 located if such area is not also served by 

18 another utility providing natural gas or 

19 electricity services, as the case may be, and 

20 ‘‘(iii) any area recognized as the serv21 ice area of such utility under State or Fed22 eral law.’’. 

23 (b) PRIVATE LOAN FINANCING TEST NOT TO APPLY

24 TO PREPAYMENTS FOR NATURAL GAS.—Section 

25 141(c)(2) (providing exceptions to the private loan financ-
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1 ing test) is amended by striking ‘‘or’’ at the end of sub2 paragraph (A), by striking the period at the end of sub3 paragraph (B) and inserting ‘‘, or’’, and by adding at the 

4 end the following new subparagraph: 

5 ‘‘(C) is a qualified natural gas supply con6 tract (as defined in section 148(b)(4)).’’. 

7 (c) EFFECTIVE DATE.—The amendment made by 

8 this section shall apply to obligations issued after Sep9 tember 30, 2004. 

10 SEC. 1364. EXTENSION OF ENHANCED OIL RECOVERY 

11 CREDIT TO CERTAIN ALASKA FACILITIES. 

12 (a) IN GENERAL.—Section 43(c)(1) (defining quali13 fied enhanced oil recovery costs) is amended by adding at 

14 the end the following new subparagraph: 

15 ‘‘(D) Any amount which is paid or in16 curred during the taxable year to construct a 

17 gas treatment plant which—

18 ‘‘(i) is located in the area of the 

19 United States (within the meaning of sec20 tion 638(1)) lying north of 64 degrees 

21 North latitude, 

22 ‘‘(ii) prepares Alaska natural gas (as 

23 defined in section 45M(c)(1)) for transpor24 tation through a pipeline with a capacity of 
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1 at least 2,000,000,000,000 Btu of natural 

2 gas per day, and 

3 ‘‘(iii) produces carbon dioxide which is 

4 injected into hydrocarbon-bearing geologi5 cal formations.’’. 

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

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

8 years beginning after September 30, 2004.

9 Subtitle F—Electric Utility 

10 Restructuring Provisions 

11 SEC. 1371. MODIFICATIONS TO SPECIAL RULES FOR NU12 CLEAR DECOMMISSIONING COSTS. 

13 (a) REPEAL OF LIMITATION ON DEPOSITS INTO

14 FUND BASED ON COST OF SERVICE; CONTRIBUTIONS

15 AFTER FUNDING PERIOD.—Subsection (b) of section 

16 468A (relating to special rules for nuclear decommis17 sioning costs) is amended to read as follows: 

18 ‘‘(b) LIMITATION ON AMOUNTS PAID INTO FUND.—

19 The amount which a taxpayer may pay into the Fund for 

20 any taxable year shall not exceed the ruling amount appli21 cable to such taxable year.’’. 

22 (b) CLARIFICATION OF TREATMENT OF FUND

23 TRANSFERS.—Section 468A(e) (relating to Nuclear De24 commissioning Reserve Fund) is amended by adding at 

25 the end the following new paragraph: 
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1 ‘‘(8) TREATMENT OF FUND TRANSFERS.—If, in 

2 connection with the transfer of the taxpayer’s inter3 est in a nuclear power plant, the taxpayer transfers 

4 the Fund with respect to such power plant to the 

5 transferee of such interest and the transferee elects 

6 to continue the application of this section to such 

7 Fund—

8 ‘‘(A) the transfer of such Fund shall not 

9 cause such Fund to be disqualified from the ap10 plication of this section, and 

11 ‘‘(B) no amount shall be treated as distrib12 uted from such Fund, or be includable in gross 

13 income, by reason of such transfer.’’. 

14 (c) TREATMENT OF CERTAIN DECOMMISSIONING

15 COSTS.—

16 (1) IN GENERAL.—Section 468A is amended by 

17 redesignating subsections (f) and (g) as subsections 

18 (g) and (h), respectively, and by inserting after sub19 section (e) the following new subsection: 

20 ‘‘(f) TRANSFERS INTO QUALIFIED FUNDS.—

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

22 (b), any taxpayer maintaining a Fund to which this 

23 section applies with respect to a nuclear power plant 

24 may transfer into such Fund not more than an 

25 amount equal to the present value of the excess of 
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1 the total nuclear decommissioning costs with respect 

2 to such nuclear power plant over the portion of such 

3 costs taken into account in determining the ruling 

4 amount in effect immediately before the transfer. 

5 ‘‘(2) DEDUCTION FOR AMOUNTS TRANS6 FERRED.—

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

8 subparagraph (C), the deduction allowed by 

9 subsection (a) for any transfer permitted by 

10 this subsection shall be allowed ratably over the 

11 remaining estimated useful life (within the 

12 meaning of subsection (d)(2)(A)) of the nuclear 

13 power plant beginning with the taxable year 

14 during which the transfer is made. 

15 ‘‘(B) DENIAL OF DEDUCTION FOR PRE16 VIOUSLY DEDUCTED AMOUNTS.—No deduction 

17 shall be allowed for any transfer under this sub18 section of an amount for which a deduction was 

19 previously allowed or a corresponding amount 

20 was not included in gross income. For purposes 

21 of the preceding sentence, a ratable portion of 

22 each transfer shall be treated as being from 

23 previously deducted or excluded amounts to the 

24 extent thereof. 
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1 ‘‘(C) TRANSFERS OF QUALIFIED FUNDS.—

2 If—

3 ‘‘(i) any transfer permitted by this 

4 subsection is made to any Fund to which 

5 this section applies, and 

6 ‘‘(ii) such Fund is transferred there7 after—

8 any deduction under this subsection for taxable 

9 years ending after the date that such Fund is 

10 transferred shall be allowed to the transferee 

11 and not the transferor. The preceding sentence 

12 shall not apply if the transferor is an entity ex13 empt from tax under this chapter. 

14 ‘‘(D) SPECIAL RULES.—

15 ‘‘(i) GAIN OR LOSS NOT RECOG16 NIZED.—No gain or loss shall be recog17 nized on any transfer permitted by this 

18 subsection. 

19 ‘‘(ii) TRANSFERS OF APPRECIATED

20 PROPERTY.—If appreciated property is 

21 transferred in a transfer permitted by this 

22 subsection, the amount of the deduction 

23 shall not exceed the adjusted basis of such 

24 property. 
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1 ‘‘(3) NEW RULING AMOUNT REQUIRED.—Para2 graph (1) shall not apply to any transfer unless the

3 taxpayer requests from the Secretary a new schedule 

4 of ruling amounts in connection with such transfer. 

5 ‘‘(4) NO BASIS IN QUALIFIED FUNDS.—Not6 withstanding any other provision of law, the tax7 payer’s basis in any Fund to which this section ap8 plies shall not be increased by reason of any transfer 

9 permitted by this subsection.’’. 

10 (2) NEW RULING AMOUNT TO TAKE INTO AC11 COUNT TOTAL COSTS.—Subparagraph (A) of section 

12 468A(d)(2) (defining ruling amount) is amended to 

13 read as follows: 

14 ‘‘(A) fund the total nuclear decommis15 sioning costs with respect to such power plant 

16 over the estimated useful life of such power 

17 plant, and’’. 

18 (d) TECHNICAL AMENDMENT.—Section 468A(e)(2) 

19 (relating to taxation of Fund) is amended—

20 (1) by striking ‘‘rate set forth in subparagraph 

21 (B)’’ in subparagraph (A) and inserting ‘‘rate of 20 

22 percent’’, 

23 (2) by striking subparagraph (B), and 

24 (3) by redesignating subparagraphs (C) and 

25 (D) as subparagraphs (B) and (C), respectively. 
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1 (e) EFFECTIVE DATE.—The amendments made by 

2 this section shall apply to taxable years beginning after 

3 September 30, 2004. 

4 SEC. 1372. TREATMENT OF CERTAIN INCOME OF COOPERA5 TIVES. 

6 (a) INCOME FROM OPEN ACCESS AND NUCLEAR DE7 COMMISSIONING TRANSACTIONS.—

8 (1) IN GENERAL.—Section 501(c)(12)(C) (re9 lating to list of exempt organizations) is amended by 

10 striking ‘‘or’’ at the end of clause (i), by striking 

11 clause (ii), and by adding at the end the following 

12 new clauses: 

13 ‘‘(ii) from any open access transaction 

14 (other than income received or accrued di15 rectly or indirectly from a member), 

16 ‘‘(iii) from any nuclear decommis17 sioning transaction, 

18 ‘‘(iv) from any asset exchange or con19 version transaction, or 

20 ‘‘(v) from the prepayment of any loan, 

21 debt, or obligation made, insured, or guar22 anteed under the Rural Electrification Act 

23 of 1936.’’. 
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1 (2) DEFINITIONS AND SPECIAL RULES.—Sec2 tion 501(c)(12) is amended by adding at the end the 

3 following new subparagraphs: 

4 ‘‘(E) For purposes of subparagraph 

5 (C)(ii)—

6 ‘‘(i) The term ‘open access trans7 action’ means any transaction meeting the 

8 open access requirements of any of the fol9 lowing subclauses with respect to a mutual 

10 or cooperative electric company: 

11 ‘‘(I) The provision or sale of elec12 tric transmission service or ancillary 

13 services meets the open access re14 quirements of this subclause only if 

15 such services are provided on a non16 discriminatory open access basis pur17 suant to an open access transmission 

18 tariff filed with and approved by 

19 FERC, including an acceptable reci20 procity tariff, or under a regional 

21 transmission organization agreement 

22 approved by FERC. 

23 ‘‘(II) The provision or sale of 

24 electric energy distribution services or 

25 ancillary services meets the open ac-
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1 cess requirements of this subclause 

2 only if such services are provided on a 

3 nondiscriminatory open access basis to 

4 end-users served by distribution facili5 ties owned by the mutual or coopera6 tive electric company (or its mem7 bers). 

8 ‘‘(III) The delivery or sale of 

9 electric energy generated by a genera10 tion facility meets the open access re11 quirements of this subclause only if 

12 such facility is directly connected to 

13 distribution facilities owned by the 

14 mutual or cooperative electric com15 pany (or its members) which owns the 

16 generation facility, and such distribu17 tion facilities meet the open access re18 quirements of subclause (II). 

19 ‘‘(ii) Clause (i)(I) shall apply in the 

20 case of a voluntarily filed tariff only if the 

21 mutual or cooperative electric company 

22 files a report with FERC within 90 days 

23 after the date of the enactment of this sub24 paragraph relating to whether or not such 
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1 company will join a regional transmission 

2 organization. 

3 ‘‘(iii) A mutual or cooperative electric 

4 company shall be treated as meeting the 

5 open access requirements of clause (i)(I) if 

6 a regional transmission organization con7 trols the transmission facilities. 

8 ‘‘(iv) References to FERC in this sub9 paragraph shall be treated as including 

10 references to the Public Utility Commis11 sion of Texas with respect to any ERCOT 

12 utility (as defined in section 212(k)(2)(B) 

13 of the Federal Power Act (16 U.S.C. 

14 824k(k)(2)(B))) or references to the Rural 

15 Utilities Service with respect to any other 

16 facility not subject to FERC jurisdiction. 

17 ‘‘(v) For purposes of this subpara18 graph—

19 ‘‘(I) The term ‘transmission facil20 ity’ means an electric output facility 

21 (other than a generation facility) 

22 which operates at an electric voltage 

23 of 69 kilovolts or greater. To the ex24 tent provided in regulations, such 

25 term includes any output facility 
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1 which FERC determines is a trans2 mission facility under standards ap3 plied by FERC under the Federal 

4 Power Act (as in effect on the date of 

5 the enactment of the Energy Tax In6 centives Act). 

7 ‘‘(II) The term ‘regional trans8 mission organization’ includes an 

9 independent system operator. 

10 ‘‘(III) The term ‘FERC’ means 

11 the Federal Energy Regulatory Com12 mission. 

13 ‘‘(F) The term ‘nuclear decommissioning 

14 transaction’ means—

15 ‘‘(i) any transfer into a trust, fund, or 

16 instrument established to pay any nuclear 

17 decommissioning costs if the transfer is in 

18 connection with the transfer of the mutual 

19 or cooperative electric company’s interest 

20 in a nuclear power plant or nuclear power 

21 plant unit, 

22 ‘‘(ii) any distribution from any trust, 

23 fund, or instrument established to pay any 

24 nuclear decommissioning costs, or
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1 ‘‘(iii) any earnings from any trust, 

2 fund, or instrument established to pay any 

3 nuclear decommissioning costs. 

4 ‘‘(G) The term ‘asset exchange or conver5 sion transaction’ means any voluntary exchange 

6 or involuntary conversion of any property re7 lated to generating, transmitting, distributing, 

8 or selling electric energy by a mutual or cooper9 ative electric company, the gain from which 

10 qualifies for deferred recognition under section 

11 1031 or 1033, but only if the replacement prop12 erty acquired by such company pursuant to 

13 such section constitutes property which is used, 

14 or to be used, for—

15 ‘‘(i) generating, transmitting, distrib16 uting, or selling electric energy, or

17 ‘‘(ii) producing, transmitting, distrib18 uting, or selling natural gas.’’. 

19 (b) TREATMENT OF INCOME FROM LOAD LOSS

20 TRANSACTIONS.—Section 501(c)(12), as amended by sub21 section (a)(2), is amended by adding after subparagraph 

22 (G) the following new subparagraph: 

23 ‘‘(H)(i) In the case of a mutual or coopera24 tive electric company described in this para25 graph or an organization described in section 
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1 1381(a)(2)(C), income received or accrued from 

2 a load loss transaction shall be treated as an 

3 amount collected from members for the sole 

4 purpose of meeting losses and expenses. 

5 ‘‘(ii) For purposes of clause (i), the term 

6 ‘load loss transaction’ means any wholesale or 

7 retail sale of electric energy (other than to 

8 members) to the extent that the aggregate sales 

9 during the recovery period do not exceed the 

10 load loss mitigation sales limit for such period. 

11 ‘‘(iii) For purposes of clause (ii), the load 

12 loss mitigation sales limit for the recovery pe13 riod is the sum of the annual load losses for 

14 each year of such period. 

15 ‘‘(iv) For purposes of clause (iii), a mutual 

16 or cooperative electric company’s annual load 

17 loss for each year of the recovery period is the 

18 amount (if any) by which—

19 ‘‘(I) the megawatt hours of electric 

20 energy sold during such year to members 

21 of such electric company are less than 

22 ‘‘(II) the megawatt hours of electric 

23 energy sold during the base year to such 

24 members. 
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1 ‘‘(v) For purposes of clause (iv)(II), the 

2 term ‘base year’ means—

3 ‘‘(I) the calendar year preceding the 

4 start-up year, or 

5 ‘‘(II) at the election of the electric 

6 company, the second or third calendar 

7 years preceding the start-up year. 

8 ‘‘(vi) For purposes of this subparagraph, 

9 the recovery period is the 7-year period begin10 ning with the start-up year. 

11 ‘‘(vii) For purposes of this subparagraph, 

12 the start-up year is the calendar year which in13 cludes October 1, 2004, or, if later, at the elec14 tion of the mutual or cooperative electric com15 pany—

16 ‘‘(I) the first year that such electric 

17 company offers nondiscriminatory open ac18 cess, or 

19 ‘‘(II) the first year in which at least 

20 10 percent of such electric company’s sales 

21 are not to members of such electric com22 pany. 

23 ‘‘(viii) A company shall not fail to be treat24 ed as a mutual or cooperative company for pur25 poses of this paragraph or as a corporation op-
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1 erating on a cooperative basis for purposes of 

2 section 1381(a)(2)(C) by reason of the treat3 ment under clause (i). 

4 ‘‘(ix) In the case of a mutual or coopera5 tive electric company, income from any open ac6 cess transaction received, or accrued, indirectly 

7 from a member shall be treated as an amount 

8 collected from members for the sole purpose of 

9 meeting losses and expenses.’’. 

10 (c) EXCEPTION FROM UNRELATED BUSINESS TAX11 ABLE INCOME.—Section 512(b) (relating to modifications) 

12 is amended by adding at the end the following new para13 graph: 

14 ‘‘(18) TREATMENT OF MUTUAL OR COOPERA15 TIVE ELECTRIC COMPANIES.—In the case of a mu16 tual or cooperative electric company described in sec17 tion 501(c)(12), there shall be excluded income 

18 which is treated as member income under subpara19 graph (H) thereof.’’. 

20 (d) CROSS REFERENCE.—Section 1381 is amended 

21 by adding at the end the following new subsection:
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1 ‘‘(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).’’.

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

3 this section shall apply to taxable years beginning after 

4 September 30, 2004. 

5 SEC. 1373. SALES OR DISPOSITIONS TO IMPLEMENT FED6 ERAL ENERGY REGULATORY COMMISSION 

7 OR STATE ELECTRIC RESTRUCTURING POL8 ICY. 

9 (a) IN GENERAL.—Section 451 (relating to general 

10 rule for taxable year of inclusion) is amended by adding 

11 at the end the following new subsection: 

12 ‘‘(i) SPECIAL RULE FOR SALES OR DISPOSITIONS TO

13 IMPLEMENT FEDERAL ENERGY REGULATORY COMMIS14 SION OR STATE ELECTRIC RESTRUCTURING POLICY.—

15 ‘‘(1) IN GENERAL.—For purposes of this sub16 title, if a taxpayer elects the application of this sub17 section to a qualifying electric transmission trans18 action in any taxable year—

19 ‘‘(A) any ordinary income derived from 

20 such transaction which would be required to be 

21 recognized under section 1245 or 1250 for such 

22 taxable year (determined without regard to this 

23 subsection), and
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1 ‘‘(B) any income derived from such trans2 action in excess of such ordinary income which 

3 is required to be included in gross income for 

4 such taxable year (determined without regard to 

5 this subsection)—

6 shall be so recognized and included ratably over the 

7 8-taxable year period beginning with such taxable 

8 year. 

9 ‘‘(2) QUALIFYING ELECTRIC TRANSMISSION

10 TRANSACTION.—For purposes of this subsection, the 

11 term ‘qualifying electric transmission transaction’ 

12 means any sale or other disposition before January 

13 1, 2008, of—

14 ‘‘(A) property used by the taxpayer in the 

15 trade or business of providing electric trans16 mission services, or 

17 ‘‘(B) any stock or partnership interest in a 

18 corporation or partnership, as the case may be, 

19 whose principal trade or business consists of 

20 providing electric transmission services,

21 but only if such sale or disposition is to an inde22 pendent transmission company. 

23 ‘‘(3) INDEPENDENT TRANSMISSION COM24 PANY.—For purposes of this subsection, the term 

25 ‘independent transmission company’ means—
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1 ‘‘(A) a regional transmission organization 

2 approved by the Federal Energy Regulatory 

3 Commission, 

4 ‘‘(B) a person—

5 ‘‘(i) who the Federal Energy Regu6 latory Commission determines in its au7 thorization of the transaction under section 

8 203 of the Federal Power Act (16 U.S.C. 

9 824b) is not a market participant within 

10 the meaning of such Commission’s rules 

11 applicable to regional transmission organi12 zations, and 

13 ‘‘(ii) whose transmission facilities to 

14 which the election under this subsection 

15 applies are under the operational control of 

16 a Federal Energy Regulatory Commission17 approved regional transmission organiza18 tion before the close of the period specified 

19 in such authorization, but not later than 

20 January 1, 2008, or

21 ‘‘(C) in the case of facilities subject to the 

22 exclusive jurisdiction of the Public Utility Com23 mission of Texas, a person which is approved by 

24 that Commission as consistent with Texas State 
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1 law regarding an independent transmission or2 ganization. 

3 ‘‘(4) ELECTION.—An election under paragraph 

4 (1), once made, shall be irrevocable. 

5 ‘‘(5) NONAPPLICATION OF INSTALLMENT SALES

6 TREATMENT.—Section 453 shall not apply to any 

7 qualifying electric transmission transaction with re8 spect to which an election to apply this subsection 

9 is made.’’. 

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

11 this section shall apply to transactions occurring after 

12 September 30, 2004.

13 Subtitle G—Additional Provisions 

14 SEC. 1381. EXTENSION OF ACCELERATED DEPRECIATION 

15 AND WAGE CREDIT BENEFITS ON INDIAN 

16 RESERVATIONS. 

17 (a) SPECIAL RECOVERY PERIOD FOR PROPERTY ON

18 INDIAN RESERVATIONS.—Section 168(j)(8) (relating to 

19 termination) is amended by striking ‘‘2004’’ and inserting 

20 ‘‘2005’’. 

21 (b) INDIAN EMPLOYMENT CREDIT.—Section 45A(f) 

22 (relating to termination) is amended by striking ‘‘2004’’ 

23 and inserting ‘‘2005’’. 
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1 SEC. 1382. STUDY OF EFFECTIVENESS OF CERTAIN PROVI2 SIONS BY GAO. 

3 (a) STUDY.—The Comptroller General of the United 

4 States shall undertake an ongoing analysis of—

5 (1) the effectiveness of the alternative motor ve6 hicles and fuel incentives provisions under title II 

7 and the conservation and energy efficiency provisions 

8 under title III, and 

9 (2) the recipients of the tax benefits contained 

10 in such provisions, including an identification of 

11 such recipients by income and other appropriate 

12 measurements. 

13 Such analysis shall quantify the effectiveness of such pro14 visions by examining and comparing the Federal Govern15 ment’s forgone revenue to the aggregate amount of energy 

16 actually conserved and tangible environmental benefits 

17 gained as a result of such provisions. 

18 (b) REPORTS.—The Comptroller General of the 

19 United States shall report the analysis required under sub20 section (a) to Congress not later than December 31, 2004, 

21 and annually thereafter. 

22 SEC. 1383. REPEAL OF 4.3-CENT MOTOR FUEL EXCISE 

23 TAXES ON RAILROADS AND INLAND WATER24 WAY TRANSPORTATION WHICH REMAIN IN 

25 GENERAL FUND. 

26 (a) TAXES ON TRAINS.—
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1 (1) IN GENERAL.—Subparagraph (A) of section 

2 4041(a)(1) is amended by striking ‘‘or a diesel-pow3 ered train’’ each place it appears and by striking ‘‘or 

4 train’’. 

5 (2) CONFORMING AMENDMENTS.—

6 (A) Subparagraph (C) of section 

7 4041(a)(1) is amended by striking clause (ii) 

8 and by redesignating clause (iii) as clause (ii). 

9 (B) Subparagraph (C) of section 

10 4041(b)(1) is amended by striking all that fol11 lows ‘‘section 6421(e)(2)’’ and inserting a pe12 riod. 

13 (C) Subsection (d) of section 4041 is 

14 amended by redesignating paragraph (3) as 

15 paragraph (4) and by inserting after paragraph 

16 (2) the following new paragraph: 

17 ‘‘(3) DIESEL FUEL USED IN TRAINS.—There is 

18 hereby imposed a tax of 0.1 cent per gallon on any 

19 liquid other than gasoline (as defined in section 

20 4083)—

21 ‘‘(A) sold by any person to an owner, les22 see, or other operator of a diesel-powered train 

23 for use as a fuel in such train, or
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1 ‘‘(B) used by any person as a fuel in a die2 sel-powered train unless there was a taxable 

3 sale of such fuel under subparagraph (A). 

4 No tax shall be imposed by this paragraph on the 

5 sale or use of any liquid if tax was imposed on such 

6 liquid under section 4081.’’

7 (D) Subsection (f) of section 4082 is 

8 amended by striking ‘‘section 4041(a)(1)’’ and 

9 inserting ‘‘subsections (d)(3) and (a)(1) of sec10 tion 4041, respectively’’. 

11 (E) Paragraph (3) of section 4083(a) is 

12 amended by striking ‘‘or a diesel-powered 

13 train’’. 

14 (F) Paragraph (3) of section 6421(f) is 

15 amended to read as follows: 

16 ‘‘(3) GASOLINE USED IN TRAINS.—In the case 

17 of gasoline used as a fuel in a train, this section 

18 shall not apply with respect to the Leaking Under19 ground Storage Tank Trust Fund financing rate 

20 under section 4081.’’

21 (G) Paragraph (3) of section 6427(l) is 

22 amended to read as follows: 

23 ‘‘(3) REFUND OF CERTAIN TAXES ON FUEL

24 USED IN DIESEL-POWERED TRAINS.—For purposes 

25 of this subsection, the term ‘nontaxable use’ includes 
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1 fuel used in a diesel-powered train. The preceding 

2 sentence shall not apply to the tax imposed by sec3 tion 4041(d) and the Leaking Underground Storage 

4 Tank Trust Fund financing rate under section 4081 

5 except with respect to fuel sold for exclusive use by 

6 a State or any political subdivision thereof.’’

7 (b) FUEL USED ON INLAND WATERWAYS.—

8 (1) IN GENERAL.—Paragraph (1) of section 

9 4042(b) is amended by adding ‘‘and’’ at the end of 

10 subparagraph (A), by striking ‘‘, and’’ at the end of 

11 subparagraph (B) and inserting a period, and by 

12 striking subparagraph (C). 

13 (2) CONFORMING AMENDMENT.—Paragraph (2) 

14 of section 4042(b) is amended by striking subpara15 graph (C). 

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

17 this section shall take effect on October 1, 2004. 

18 SEC. 1384. EXPANSION OF RESEARCH CREDIT. 

19 (a) CREDIT FOR EXPENSES ATTRIBUTABLE TO CER20 TAIN COLLABORATIVE ENERGY RESEARCH CONSORTIA.—

21 (1) IN GENERAL.—Section 41(a) (relating to 

22 credit for increasing research activities) is amended 

23 by striking ‘‘and’’ at the end of paragraph (1), by 

24 striking the period at the end of paragraph (2) and 
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1 inserting ‘‘, and’’, and by adding at the end the fol2 lowing new paragraph: 

3 ‘‘(3) 20 percent of the amounts paid or in4 curred by the taxpayer in carrying on any trade or 

5 business of the taxpayer during the taxable year (in6 cluding as contributions) to an energy research con7 sortium.’’. 

8 (2) ENERGY RESEARCH CONSORTIUM DE9 FINED.—Section 41(f) (relating to special rules) is 

10 amended by adding at the end the following new 

11 paragraph: 

12 ‘‘(6) ENERGY RESEARCH CONSORTIUM.—

13 ‘‘(A) IN GENERAL.—The term ‘energy re14 search consortium’ means any organization— 

15 ‘‘(i) which is—

16 ‘‘(I) described in section 

17 501(c)(3) and is exempt from tax 

18 under section 501(a) and is organized 

19 and operated primarily to conduct en20 ergy research, or 

21 ‘‘(II) organized and operated pri22 marily to conduct energy research in 

23 the public interest (within the mean24 ing of section 501(c)(3)), 
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1 ‘‘(ii) which is not a private founda2 tion, 

3 ‘‘(iii) to which at least 5 unrelated 

4 persons paid or incurred during the cal5 endar year in which the taxable year of the 

6 organization begins amounts (including as 

7 contributions) to such organization for en8 ergy research, and 

9 ‘‘(iv) to which no single person paid 

10 or incurred (including as contributions) 

11 during such calendar year an amount 

12 equal to more than 50 percent of the total 

13 amounts received by such organization 

14 during such calendar year for energy re15 search. 

16 ‘‘(B) TREATMENT OF PERSONS.—All per17 sons treated as a single employer under sub18 section (a) or (b) of section 52 shall be treated 

19 as related persons for purposes of subparagraph 

20 (A)(iii) and as a single person for purposes of 

21 subparagraph (A)(iv).’’. 

22 (3) CONFORMING AMENDMENT.—Section 

23 41(b)(3)(C) is amended by inserting ‘‘(other than an 

24 energy research consortium)’’ after ‘‘organization’’. 
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1 (b) REPEAL OF LIMITATION ON CONTRACT RE2 SEARCH EXPENSES PAID TO SMALL BUSINESSES, UNI3 VERSITIES, AND FEDERAL LABORATORIES.—Section 

4 41(b)(3) (relating to contract research expenses) is 

5 amended by adding at the end the following new subpara6 graph: 

7 ‘‘(D) AMOUNTS PAID TO ELIGIBLE SMALL

8 BUSINESSES, UNIVERSITIES, AND FEDERAL

9 LABORATORIES.—

10 ‘‘(i) IN GENERAL.—In the case of 

11 amounts paid by the taxpayer to—

12 ‘‘(I) an eligible small business, 

13 ‘‘(II) an institution of higher 

14 education (as defined in section 

15 3304(f)), or 

16 ‘‘(III) an organization which is a 

17 Federal laboratory—

18 for qualified research which is energy re19 search, subparagraph (A) shall be applied 

20 by substituting ‘100 percent’ for ‘65 per21 cent’. 

22 ‘‘(ii) ELIGIBLE SMALL BUSINESS.—

23 For purposes of this subparagraph, the 

24 term ‘eligible small business’ means a 

25 small business with respect to which the 
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1 taxpayer does not own (within the meaning 

2 of section 318) 50 percent or more of—

3 ‘‘(I) in the case of a corporation, 

4 the outstanding stock of the corpora5 tion (either by vote or value), and 

6 ‘‘(II) in the case of a small busi7 ness which is not a corporation, the 

8 capital and profits interests of the 

9 small business. 

10 ‘‘(iii) SMALL BUSINESS.—For pur11 poses of this subparagraph—

12 ‘‘(I) IN GENERAL.—The term 

13 ‘small business’ means, with respect 

14 to any calendar year, any person if 

15 the annual average number of employ16 ees employed by such person during 

17 either of the 2 preceding calendar 

18 years was 500 or fewer. For purposes 

19 of the preceding sentence, a preceding 

20 calendar year may be taken into ac21 count only if the person was in exist22 ence throughout the year. 

23 ‘‘(II) STARTUPS, CONTROLLED

24 GROUPS, AND PREDECESSORS.—Rules 

25 similar to the rules of subparagraphs
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1 (B) and (D) of section 220(c)(4) shall 

2 apply for purposes of this clause. 

3 ‘‘(iv) FEDERAL LABORATORY.—For 

4 purposes of this subparagraph, the term 

5 ‘Federal laboratory’ has the meaning given 

6 such term by section 4(6) of the Steven7 son-Wydler Technology Innovation Act of 

8 1980 (15 U.S.C. 3703(6)), as in effect on 

9 the date of the enactment of the Energy 

10 Tax Incentives Act.’’. 

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

12 this section shall apply to amounts paid or incurred after 

13 the date of the enactment of this Act.

14 Subtitle H—Revenue Provisions

15 PART I—PROVISIONS DESIGNED TO CURTAIL TAX 

16 SHELTERS 

17 SEC. 1385. PENALTY FOR FAILING TO DISCLOSE REPORT18 ABLE TRANSACTION. 

19 (a) IN GENERAL.—Part I of subchapter B of chapter 

20 68 (relating to assessable penalties) is amended by insert21 ing after section 6707 the following new section: 
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1 ‘‘SEC. 6707A. PENALTY FOR FAILURE TO INCLUDE REPORT2 ABLE TRANSACTION INFORMATION WITH RE3 TURN OR STATEMENT. 

4 ‘‘(a) IMPOSITION OF PENALTY.—Any person who 

5 fails to include on any return or statement any informa6 tion with respect to a reportable transaction which is re7 quired under section 6011 to be included with such return 

8 or statement shall pay a penalty in the amount determined 

9 under subsection (b). 

10 ‘‘(b) AMOUNT OF PENALTY.—

11 ‘‘(1) IN GENERAL.—Except as provided in para12 graphs (2) and (3), the amount of the penalty under 

13 subsection (a) shall be $50,000. 

14 ‘‘(2) LISTED TRANSACTION.—The amount of 

15 the penalty under subsection (a) with respect to a 

16 listed transaction shall be $100,000.

17 ‘‘(3) INCREASE IN PENALTY FOR LARGE ENTI18 TIES AND HIGH NET WORTH INDIVIDUALS.—

19 ‘‘(A) IN GENERAL.—In the case of a fail20 ure under subsection (a) by—

21 ‘‘(i) a large entity, or 

22 ‘‘(ii) a high net worth individual—

23 the penalty under paragraph (1) or (2) shall be 

24 twice the amount determined without regard to 

25 this paragraph. 
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1 ‘‘(B) LARGE ENTITY.—For purposes of 

2 subparagraph (A), the term ‘large entity’ 

3 means, with respect to any taxable year, a per4 son (other than a natural person) with gross re5 ceipts in excess of $10,000,000 for the taxable 

6 year in which the reportable transaction occurs 

7 or the preceding taxable year. Rules similar to 

8 the rules of paragraph (2) and subparagraphs 

9 (B), (C), and (D) of paragraph (3) of section 

10 448(c) shall apply for purposes of this subpara11 graph. 

12 ‘‘(C) HIGH NET WORTH INDIVIDUAL.—For 

13 purposes of subparagraph (A), the term ‘high 

14 net worth individual’ means, with respect to a 

15 reportable transaction, a natural person whose 

16 net worth exceeds $2,000,000 immediately be17 fore the transaction. 

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

19 ‘‘(1) REPORTABLE TRANSACTION.—The term 

20 ‘reportable transaction’ means any transaction with 

21 respect to which information is required to be in22 cluded with a return or statement because, as deter23 mined under regulations prescribed under section 

24 6011, such transaction is of a type which the Sec-
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1 retary determines as having a potential for tax 

2 avoidance or evasion. 

3 ‘‘(2) LISTED TRANSACTION.—Except as pro4 vided in regulations, the term ‘listed transaction’ 

5 means a reportable transaction which is the same as, 

6 or substantially similar to, a transaction specifically 

7 identified by the Secretary as a tax avoidance trans8 action for purposes of section 6011. 

9 ‘‘(d) AUTHORITY TO RESCIND PENALTY.—

10 ‘‘(1) IN GENERAL.—The Commissioner of In11 ternal Revenue may rescind all or any portion of any 

12 penalty imposed by this section with respect to any 

13 violation if—

14 ‘‘(A) the violation is with respect to a re15 portable transaction other than a listed trans16 action, 

17 ‘‘(B) the person on whom the penalty is 

18 imposed has a history of complying with the re19 quirements of this title, 

20 ‘‘(C) it is shown that the violation is due 

21 to an unintentional mistake of fact; 

22 ‘‘(D) imposing the penalty would be 

23 against equity and good conscience, and 
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1 ‘‘(E) rescinding the penalty would promote 

2 compliance with the requirements of this title 

3 and effective tax administration. 

4 ‘‘(2) DISCRETION.—The exercise of authority 

5 under paragraph (1) shall be at the sole discretion 

6 of the Commissioner and may be delegated only to 

7 the head of the Office of Tax Shelter Analysis. The 

8 Commissioner, in the Commissioner’s sole discretion, 

9 may establish a procedure to determine if a penalty 

10 should be referred to the Commissioner or the head 

11 of such Office for a determination under paragraph 

12 (1). 

13 ‘‘(3) NO APPEAL.—Notwithstanding any other 

14 provision of law, any determination under this sub15 section may not be reviewed in any administrative or 

16 judicial proceeding. 

17 ‘‘(4) RECORDS.—If a penalty is rescinded under 

18 paragraph (1), the Commissioner shall place in the 

19 file in the Office of the Commissioner the opinion of 

20 the Commissioner or the head of the Office of Tax 

21 Shelter Analysis with respect to the determination, 

22 including—

23 ‘‘(A) the facts and circumstances of the 

24 transaction, 

25 ‘‘(B) the reasons for the rescission, and 
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1 ‘‘(C) the amount of the penalty rescinded. 

2 ‘‘(5) REPORT.—The Commissioner shall each 

3 year report to the Committee on Ways and Means 

4 of the House of Representatives and the Committee 

5 on Finance of the Senate—

6 ‘‘(A) a summary of the total number and 

7 aggregate amount of penalties imposed, and re8 scinded, under this section, and 

9 ‘‘(B) a description of each penalty re10 scinded under this subsection and the reasons 

11 therefor. 

12 ‘‘(e) PENALTY REPORTED TO SEC.—In the case of 

13 a person—

14 ‘‘(1) which is required to file periodic reports 

15 under section 13 or 15(d) of the Securities Ex16 change Act of 1934 or is required to be consolidated 

17 with another person for purposes of such reports, 

18 and 

19 ‘‘(2) which— 

20 ‘‘(A) is required to pay a penalty under 

21 this section with respect to a listed transaction, 

22 or 

23 ‘‘(B) is required to pay a penalty under 

24 section 6662A with respect to any reportable
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1 transaction at a rate prescribed under section 

2 6662A(c)—

3 the requirement to pay such penalty shall be disclosed in 

4 such reports filed by such person for such periods as the 

5 Secretary shall specify. Failure to make a disclosure in 

6 accordance with the preceding sentence shall be treated 

7 as a failure to which the penalty under subsection (b)(2) 

8 applies.

9 ‘‘(f) COORDINATION WITH OTHER PENALTIES.—The 

10 penalty imposed by this section is in addition to any pen11 alty imposed under this title.’’. 

12 (b) CONFORMING AMENDMENT.—The table of sec13 tions for part I of subchapter B of chapter 68 is amended 

14 by inserting after the item relating to section 6707 the 

15 following:

‘‘Sec. 6707A. Penalty for failure to include reportable transaction 

information with return or statement.’’.

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

17 this section shall apply to returns and statements the due 

18 date for which is after the date of the enactment of this 

19 Act.
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1 SEC. 1386. ACCURACY-RELATED PENALTY FOR LISTED 

2 TRANSACTIONS AND OTHER REPORTABLE 

3 TRANSACTIONS HAVING A SIGNIFICANT TAX 

4 AVOIDANCE PURPOSE. 

5 (a) IN GENERAL.—Subchapter A of chapter 68 is 

6 amended by inserting after section 6662 the following new 

7 section: 

8 ‘‘SEC. 6662A. IMPOSITION OF ACCURACY-RELATED PEN9 ALTY ON UNDERSTATEMENTS WITH RESPECT 

10 TO REPORTABLE TRANSACTIONS. 

11 ‘‘(a) IMPOSITION OF PENALTY.—If a taxpayer has a 

12 reportable transaction understatement for any taxable 

13 year, there shall be added to the tax an amount equal to 

14 20 percent of the amount of such understatement. 

15 ‘‘(b) REPORTABLE TRANSACTION UNDERSTATE16 MENT.—For purposes of this section—

17 ‘‘(1) IN GENERAL.—The term ‘reportable trans18 action understatement’ means the sum of—

19 ‘‘(A) the product of—

20 ‘‘(i) the amount of the increase (if 

21 any) in taxable income which results from 

22 a difference between the proper tax treat23 ment of an item to which this section ap24 plies and the taxpayer’s treatment of such 

25 item (as shown on the taxpayer’s return of 

26 tax), and 
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1 ‘‘(ii) the highest rate of tax imposed 

2 by section 1 (section 11 in the case of a 

3 taxpayer which is a corporation), and 

4 ‘‘(B) the amount of the decrease (if any) 

5 in the aggregate amount of credits determined 

6 under subtitle A which results from a difference 

7 between the taxpayer’s treatment of an item to 

8 which this section applies (as shown on the tax9 payer’s return of tax) and the proper tax treat10 ment of such item. 

11 For purposes of subparagraph (A), any reduction of 

12 the excess of deductions allowed for the taxable year 

13 over gross income for such year, and any reduction 

14 in the amount of capital losses which would (without 

15 regard to section 1211) be allowed for such year, 

16 shall be treated as an increase in taxable income. 

17 ‘‘(2) ITEMS TO WHICH SECTION APPLIES.—This 

18 section shall apply to any item which is attributable 

19 to—

20 ‘‘(A) any listed transaction, and 

21 ‘‘(B) any reportable transaction (other 

22 than a listed transaction) if a significant pur23 pose of such transaction is the avoidance or 

24 evasion of Federal income tax. 
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1 ‘‘(c) HIGHER PENALTY FOR NONDISCLOSED LISTED

2 AND OTHER AVOIDANCE TRANSACTIONS.—

3 ‘‘(1) IN GENERAL.—Subsection (a) shall be ap4 plied by substituting ‘30 percent’ for ‘20 percent’ 

5 with respect to the portion of any reportable trans6 action understatement with respect to which the re7 quirement of section 6664(d)(2)(A) is not met. 

8 ‘‘(2) RULES APPLICABLE TO COMPROMISE OF

9 PENALTY.—

10 ‘‘(A) IN GENERAL.—If the 1st letter of 

11 proposed deficiency which allows the taxpayer 

12 an opportunity for administrative review in the 

13 Internal Revenue Service Office of Appeals has 

14 been sent with respect to a penalty to which 

15 paragraph (1) applies, only the Commissioner 

16 of Internal Revenue may compromise all or any 

17 portion of such penalty. 

18 ‘‘(B) APPLICABLE RULES.—The rules of 

19 paragraphs (2), (3), (4), and (5) of section 

20 6707A(d) shall apply for purposes of subpara21 graph (A). 

22 ‘‘(d) DEFINITIONS OF REPORTABLE AND LISTED

23 TRANSACTIONS.—For purposes of this section, the terms 

24 ‘reportable transaction’ and ‘listed transaction’ have the 
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1 respective meanings given to such terms by section 

2 6707A(c). 

3 ‘‘(e) SPECIAL RULES.—

4 ‘‘(1) COORDINATION WITH PENALTIES, ETC., 

5 ON OTHER UNDERSTATEMENTS.—In the case of an 

6 understatement (as defined in section 6662(d)(2))—

7 ‘‘(A) the amount of such understatement 

8 (determined without regard to this paragraph) 

9 shall be increased by the aggregate amount of 

10 reportable transaction understatements for pur11 poses of determining whether such understate12 ment is a substantial understatement under 

13 section 6662(d)(1), and 

14 ‘‘(B) the addition to tax under section 

15 6662(a) shall apply only to the excess of the 

16 amount of the substantial understatement (if 

17 any) after the application of subparagraph (A) 

18 over the aggregate amount of reportable trans19 action understatements. 

20 ‘‘(2) COORDINATION WITH OTHER PEN21 ALTIES.—

22 ‘‘(A) APPLICATION OF FRAUD PENALTY.—

23 References to an underpayment in section 6663 

24 shall be treated as including references to a re25 portable transaction understatement. 
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1 ‘‘(B) NO DOUBLE PENALTY.—This section 

2 shall not apply to any portion of an understate3 ment on which a penalty is imposed under sec4 tion 6663. 

5 ‘‘(3) SPECIAL RULE FOR AMENDED RE6 TURNS.—Except as provided in regulations, in no 

7 event shall any tax treatment included with an 

8 amendment or supplement to a return of tax be 

9 taken into account in determining the amount of any 

10 reportable transaction understatement if the amend11 ment or supplement is filed after the earlier of the 

12 date the taxpayer is first contacted by the Secretary 

13 regarding the examination of the return or such 

14 other date as is specified by the Secretary. 

15 ‘‘(4) CROSS REFERENCE.—

‘‘For reporting of section 6662A(c) penalty to the 

Securities and Exchange Commission, see section 

6707A(e).’’.

16 (b) DETERMINATION OF OTHER UNDERSTATE17 MENTS.—Subparagraph (A) of section 6662(d)(2) is 

18 amended by adding at the end the following flush sen19 tence: 

20 ‘‘The excess under the preceding sentence shall 

21 be determined without regard to items to which 

22 section 6662A applies.’’.

23 (c) REASONABLE CAUSE EXCEPTION.—
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1 (1) IN GENERAL.—Section 6664 is amended by 

2 adding at the end the following new subsection: 

3 ‘‘(d) REASONABLE CAUSE EXCEPTION FOR REPORT4 ABLE TRANSACTION UNDERSTATEMENTS.— 

5 ‘‘(1) IN GENERAL.—No penalty shall be im6 posed under section 6662A with respect to any por7 tion of a reportable transaction understatement if it 

8 is shown that there was a reasonable cause for such 

9 portion and that the taxpayer acted in good faith 

10 with respect to such portion. 

11 ‘‘(2) SPECIAL RULES.—Paragraph (1) shall not 

12 apply to any reportable transaction understatement 

13 unless—

14 ‘‘(A) the relevant facts affecting the tax 

15 treatment of the item are adequately disclosed 

16 in accordance with the regulations prescribed 

17 under section 6011, 

18 ‘‘(B) there is or was substantial authority 

19 for such treatment, and 

20 ‘‘(C) the taxpayer reasonably believed that 

21 such treatment was more likely than not the 

22 proper treatment. 

23 A taxpayer failing to adequately disclose in accord24 ance with section 6011 shall be treated as meeting 

25 the requirements of subparagraph (A) if the penalty 
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1 for such failure was rescinded under section 

2 6707A(d). 

3 ‘‘(3) RULES RELATING TO REASONABLE BE4 LIEF.—For purposes of paragraph (2)(C)—

5 ‘‘(A) IN GENERAL.—A taxpayer shall be 

6 treated as having a reasonable belief with re7 spect to the tax treatment of an item only if 

8 such belief—

9 ‘‘(i) is based on the facts and law that 

10 exist at the time the return of tax which 

11 includes such tax treatment is filed, and 

12 ‘‘(ii) relates solely to the taxpayer’s 

13 chances of success on the merits of such 

14 treatment and does not take into account 

15 the possibility that a return will not be au16 dited, such treatment will not be raised on 

17 audit, or such treatment will be resolved 

18 through settlement if it is raised. 

19 ‘‘(B) CERTAIN OPINIONS MAY NOT BE RE20 LIED UPON.—

21 ‘‘(i) IN GENERAL.—An opinion of a 

22 tax advisor may not be relied upon to es23 tablish the reasonable belief of a taxpayer 

24 if—
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1 ‘‘(I) the tax advisor is described 

2 in clause (ii), or 

3 ‘‘(II) the opinion is described in 

4 clause (iii). 

5 ‘‘(ii) DISQUALIFIED TAX ADVISORS.—

6 A tax advisor is described in this clause if 

7 the tax advisor—

8 ‘‘(I) is a material advisor (within 

9 the meaning of section 6111(b)(1)) 

10 who participates in the organization, 

11 management, promotion, or sale of 

12 the transaction or who is related 

13 (within the meaning of section 267(b) 

14 or 707(b)(1)) to any person who so 

15 participates, 

16 ‘‘(II) is compensated directly or 

17 indirectly by a material advisor with 

18 respect to the transaction, 

19 ‘‘(III) has a fee arrangement 

20 with respect to the transaction which 

21 is contingent on all or part of the in22 tended tax benefits from the trans23 action being sustained, or 

24 ‘‘(IV) as determined under regu25 lations prescribed by the Secretary, 
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1 has a continuing financial interest 

2 with respect to the transaction. 

3 ‘‘(iii) DISQUALIFIED OPINIONS.—For 

4 purposes of clause (i), an opinion is dis5 qualified if the opinion—

6 ‘‘(I) is based on unreasonable 

7 factual or legal assumptions (includ8 ing assumptions as to future events), 

9 ‘‘(II) unreasonably relies on rep10 resentations, statements, findings, or 

11 agreements of the taxpayer or any 

12 other person, 

13 ‘‘(III) does not identify and con14 sider all relevant facts, or 

15 ‘‘(IV) fails to meet any other re16 quirement as the Secretary may pre17 scribe.’’. 

18 (2) CONFORMING AMENDMENT.—The heading 

19 for subsection (c) of section 6664 is amended by in20 serting ‘‘FOR UNDERPAYMENTS’’ after ‘‘EXCEP21 TION’’. 

22 (d) CONFORMING AMENDMENTS.—

23 (1) Subparagraph (C) of section 461(i)(3) is 

24 amended by striking ‘‘section 6662(d)(2)(C)(iii)’’ 

25 and inserting ‘‘section 1274(b)(3)(C)’’. 
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1 (2) Paragraph (3) of section 1274(b) is amend2 ed—

3 (A) by striking ‘‘(as defined in section 

4 6662(d)(2)(C)(iii))’’ in subparagraph (B)(i), 

5 and 

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

7 subparagraph: 

8 ‘‘(C) TAX SHELTER.—For purposes of sub9 paragraph (B), the term ‘tax shelter’ means—

10 ‘‘(i) a partnership or other entity, 

11 ‘‘(ii) any investment plan or arrange12 ment, or 

13 ‘‘(iii) any other plan or arrange14 ment—

15 if a significant purpose of such partnership, en16 tity, plan, or arrangement is the avoidance or 

17 evasion of Federal income tax.’’. 

18 (3) Section 6662(d) is amended—

19 (A) by striking subparagraphs (C) and (D) 

20 of paragraph (2), and 

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

22 ‘‘(3) SECRETARIAL LIST.—For purposes of this 

23 subsection, section 6664(d)(2), and section 

24 6694(a)(1), the Secretary may prescribe a list of po25 sitions for which the Secretary believes there is not 
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1 substantial authority or there is no reasonable belief 

2 that the tax treatment is more likely than not the 

3 proper tax treatment. Such list (and any revisions 

4 thereof) shall be published in the Federal Register 

5 or the Internal Revenue Bulletin.’’. 

6 (4) Section 6664(c)(1) is amended by striking 

7 ‘‘this part’’ and inserting ‘‘section 6662 or 6663’’. 

8 (5) Subsection (b) of section 7525 is amended 

9 by striking ‘‘section 6662(d)(2)(C)(iii)’’ and insert10 ing ‘‘section 1274(b)(3)(C)’’. 

11 (6)(A) The heading for section 6662 is amend12 ed to read as follows: 

13 ‘‘SEC. 6662. IMPOSITION OF ACCURACY-RELATED PENALTY 

14 ON UNDERPAYMENTS.’’. 

15 (B) The table of sections for part II of sub16 chapter A of chapter 68 is amended by striking the 

17 item relating to section 6662 and inserting the fol18 lowing 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.’’.

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

20 this section shall apply to taxable years ending after the 

21 date of the enactment of this Act.
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1 SEC. 1387. TAX SHELTER EXCEPTION TO CONFIDENTIALITY 

2 PRIVILEGES RELATING TO TAXPAYER COM3 MUNICATIONS. 

4 (a) IN GENERAL.—Section 7525(b) (relating to sec5 tion not to apply to communications regarding corporate 

6 tax shelters) is amended to read as follows: 

7 ‘‘(b) SECTION NOT TO APPLY TO COMMUNICATIONS

8 REGARDING TAX SHELTERS.—The privilege under sub9 section (a) shall not apply to any written communication 

10 which is—

11 ‘‘(1) between a federally authorized tax practi12 tioner and—

13 ‘‘(A) any person, 

14 ‘‘(B) any director, officer, employee, agent, 

15 or representative of the person, or 

16 ‘‘(C) any other person holding a capital or 

17 profits interest in the person, and 

18 ‘‘(2) in connection with the promotion of the di19 rect or indirect participation of the person in any 

20 tax shelter (as defined in section 1274(b)(3)(C)).’’. 

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

22 this section shall apply to communications made on or 

23 after the date of the enactment of this Act. 

24 SEC. 1388. DISCLOSURE OF REPORTABLE TRANSACTIONS. 

25 (a) IN GENERAL.—Section 6111 (relating to registra26 tion of tax shelters) is amended to read as follows: 
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1 ‘‘SEC. 6111. DISCLOSURE OF REPORTABLE TRANSACTIONS. 

2 ‘‘(a) IN GENERAL.—Each material advisor with re3 spect to any reportable transaction shall make a return 

4 (in such form as the Secretary may prescribe) setting 

5 forth—

6 ‘‘(1) information identifying and describing the 

7 transaction, 

8 ‘‘(2) information describing any potential tax 

9 benefits expected to result from the transaction, and 

10 ‘‘(3) such other information as the Secretary 

11 may prescribe. 

12 Such return shall be filed not later than the date specified 

13 by the Secretary. 

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

15 ‘‘(1) MATERIAL ADVISOR.—

16 ‘‘(A) IN GENERAL.—The term ‘material 

17 advisor’ means any person—

18 ‘‘(i) who provides any material aid, 

19 assistance, or advice with respect to orga20 nizing, promoting, selling, implementing, 

21 or carrying out any reportable transaction, 

22 and 

23 ‘‘(ii) who directly or indirectly derives 

24 gross income in excess of the threshold 

25 amount for such aid, assistance, or advice. 
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1 ‘‘(B) THRESHOLD AMOUNT.—For purposes 

2 of subparagraph (A), the threshold amount is—

3 ‘‘(i) $50,000 in the case of a report4 able transaction substantially all of the tax 

5 benefits from which are provided to nat6 ural persons, and 

7 ‘‘(ii) $250,000 in any other case. 

8 ‘‘(2) REPORTABLE TRANSACTION.—The term 

9 ‘reportable transaction’ has the meaning given to 

10 such term by section 6707A(c). 

11 ‘‘(c) REGULATIONS.—The Secretary may prescribe 

12 regulations which provide—

13 ‘‘(1) that only 1 person shall be required to 

14 meet the requirements of subsection (a) in cases in 

15 which 2 or more persons would otherwise be re16 quired to meet such requirements, 

17 ‘‘(2) exemptions from the requirements of this 

18 section, and 

19 ‘‘(3) such rules as may be necessary or appro20 priate to carry out the purposes of this section.’’. 

21 (b) CONFORMING AMENDMENTS.—

22 (1) The item relating to section 6111 in the 

23 table of sections for subchapter B of chapter 61 is 

24 amended to read as follows:

‘‘Sec. 6111. Disclosure of reportable transactions.’’.
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1 (2)(A) So much of section 6112 as precedes 

2 subsection (c) thereof is amended to read as follows: 

3 ‘‘SEC. 6112. MATERIAL ADVISORS OF REPORTABLE TRANS4 ACTIONS MUST KEEP LISTS OF ADVISEES. 

5 ‘‘(a) IN GENERAL.—Each material advisor (as de6 fined in section 6111) with respect to any reportable 

7 transaction (as defined in section 6707A(c)) shall main8 tain, in such manner as the Secretary may by regulations 

9 prescribe, a list—

10 ‘‘(1) identifying each person with respect to 

11 whom such advisor acted as such a material advisor 

12 with respect to such transaction, and 

13 ‘‘(2) containing such other information as the 

14 Secretary may by regulations require. 

15 This section shall apply without regard to whether a mate16 rial advisor is required to file a return under section 6111 

17 with respect to such transaction.’’. 

18 (B) Section 6112 is amended by redesignating 

19 subsection (c) as subsection (b).

20 (C) Section 6112(b), as redesignated by sub21 paragraph (B), is amended—

22 (i) by inserting ‘‘written’’ before ‘‘request’’ 

23 in paragraph (1)(A), and 

24 (ii) by striking ‘‘shall prescribe’’ in para25 graph (2) and inserting ‘‘may prescribe’’.
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1 (D) The item relating to section 6112 in the 

2 table of sections for subchapter B of chapter 61 is 

3 amended to read as follows:

‘‘Sec. 6112. Material advisors of reportable transactions must 

keep lists of advisees.’’.

4 (3)(A) The heading for section 6708 is amend5 ed to read as follows: 

6 ‘‘SEC. 6708. FAILURE TO MAINTAIN LISTS OF ADVISEES 

7 WITH RESPECT TO REPORTABLE TRANS8 ACTIONS.’’. 

9 (B) The item relating to section 6708 in the 

10 table of sections for part I of subchapter B of chap11 ter 68 is amended to read as follows:

‘‘Sec. 6708. Failure to maintain lists of advisees with respect to 

reportable transactions.’’.

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

13 this section shall apply to transactions with respect to 

14 which material aid, assistance, or advice referred to in sec15 tion 6111(b)(1)(A)(i) of the Internal Revenue Code of 

16 1986 (as added by this section) is provided after the date 

17 of the enactment of this Act. 

18 SEC. 1389. MODIFICATIONS TO PENALTY FOR FAILURE TO 

19 REGISTER TAX SHELTERS. 

20 (a) IN GENERAL.—Section 6707 (relating to failure 

21 to furnish information regarding tax shelters) is amended 

22 to read as follows:
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1 ‘‘SEC. 6707. FAILURE TO FURNISH INFORMATION REGARD2 ING REPORTABLE TRANSACTIONS. 

3 ‘‘(a) IN GENERAL.—If a person who is required to 

4 file a return under section 6111(a) with respect to any 

5 reportable transaction—

6 ‘‘(1) fails to file such return on or before the 

7 date prescribed therefor, or 

8 ‘‘(2) files false or incomplete information with 

9 the Secretary with respect to such transaction—

10 such person shall pay a penalty with respect to such return 

11 in the amount determined under subsection (b). 

12 ‘‘(b) AMOUNT OF PENALTY.—

13 ‘‘(1) IN GENERAL.—Except as provided in para14 graph (2), the penalty imposed under subsection (a) 

15 with respect to any failure shall be $50,000. 

16 ‘‘(2) LISTED TRANSACTIONS.—The penalty im17 posed under subsection (a) with respect to any listed 

18 transaction shall be an amount equal to the greater 

19 of—

20 ‘‘(A) $200,000, or 

21 ‘‘(B) 50 percent of the gross income de22 rived by such person with respect to aid, assist23 ance, or advice which is provided with respect 

24 to the listed transaction before the date the re25 turn including the transaction is filed under 

26 section 6111. 
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1 Subparagraph (B) shall be applied by substituting 

2 ‘75 percent’ for ‘50 percent’ in the case of an inten3 tional failure or act described in subsection (a). 

4 ‘‘(c) RESCISSION AUTHORITY.—The provisions of 

5 section 6707A(d) (relating to authority of Commissioner 

6 to rescind penalty) shall apply to any penalty imposed 

7 under this section. 

8 ‘‘(d) REPORTABLE AND LISTED TRANSACTIONS.—

9 The terms ‘reportable transaction’ and ‘listed transaction’ 

10 have the respective meanings given to such terms by sec11 tion 6707A(c).’’. 

12 (b) CLERICAL AMENDMENT.—The item relating to 

13 section 6707 in the table of sections for part I of sub14 chapter B of chapter 68 is amended by striking ‘‘tax shel15 ters’’ and inserting ‘‘reportable transactions’’. 

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

17 this section shall apply to returns the due date for which 

18 is after the date of the enactment of this Act. 

19 SEC. 1390. MODIFICATION OF PENALTY FOR FAILURE TO 

20 MAINTAIN LISTS OF INVESTORS. 

21 (a) IN GENERAL.—Subsection (a) of section 6708 is 

22 amended to read as follows: 

23 ‘‘(a) IMPOSITION OF PENALTY.—

24 ‘‘(1) IN GENERAL.—If any person who is re25 quired to maintain a list under section 6112(a) fails 
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1 to make such list available upon written request to 

2 the Secretary in accordance with section 

3 6112(b)(1)(A) within 20 business days after the 

4 date of the Secretary’s request, such person shall 

5 pay a penalty of $10,000 for each day of such fail6 ure after such 20th day. 

7 ‘‘(2) REASONABLE CAUSE EXCEPTION.—No 

8 penalty shall be imposed by paragraph (1) with re9 spect to the failure on any day if such failure is due 

10 to reasonable cause.’’. 

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

12 this section shall apply to requests made after the date 

13 of the enactment of this Act. 

14 SEC. 1391. PENALTY ON PROMOTERS OF TAX SHELTERS. 

15 (a) PENALTY ON PROMOTING ABUSIVE TAX SHEL16 TERS.—Section 6700(a) is amended by adding at the end 

17 the following new sentence: ‘‘Notwithstanding the first 

18 sentence, if an activity with respect to which a penalty 

19 imposed under this subsection involves a statement de20 scribed in paragraph (2)(A), the amount of the penalty 

21 shall be equal to 50 percent of the gross income derived 

22 (or to be derived) from such activity by the person on 

23 which the penalty is imposed.’’. 
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1 (b) EFFECTIVE DATE.—The amendment made by 

2 this section shall apply to activities after the date of the 

3 enactment of this Act. 

4 PART II—PROVISIONS TO DISCOURAGE 

5 CORPORATE EXPATRIATION 

6 SEC. 1392. TAX TREATMENT OF INVERTED CORPORATE EN7 TITIES. 

8 (a) IN GENERAL.—Subchapter C of chapter 80 (re9 lating to provisions affecting more than one subtitle) is 

10 amended by adding at the end the following new section: 

11 ‘‘SEC. 7874. RULES RELATING TO INVERTED CORPORATE 

12 ENTITIES. 

13 ‘‘(a) INVERTED CORPORATIONS TREATED AS DOMES14 TIC CORPORATIONS.—

15 ‘‘(1) IN GENERAL.—If a foreign incorporated 

16 entity is treated as an inverted domestic corporation, 

17 then, notwithstanding section 7701(a)(4), such enti18 ty shall be treated for purposes of this title as a do19 mestic corporation. 

20 ‘‘(2) INVERTED DOMESTIC CORPORATION.—For 

21 purposes of this section, a foreign incorporated enti22 ty shall be treated as an inverted domestic corpora23 tion if, pursuant to a plan (or a series of related 

24 transactions)—
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1 ‘‘(A) the entity completes after March 20, 

2 2002, the direct or indirect acquisition of sub3 stantially all of the properties held directly or 

4 indirectly by a domestic corporation or substan5 tially all of the properties constituting a trade 

6 or business of a domestic partnership, 

7 ‘‘(B) after the acquisition at least 80 per8 cent of the stock (by vote or value) of the entity 

9 is held—

10 ‘‘(i) in the case of an acquisition with 

11 respect to a domestic corporation, by 

12 former shareholders of the domestic cor13 poration by reason of holding stock in the 

14 domestic corporation, or 

15 ‘‘(ii) in the case of an acquisition with 

16 respect to a domestic partnership, by 

17 former partners of the domestic partner18 ship by reason of holding a capital or prof19 its interest in the domestic partnership, 

20 and 

21 ‘‘(C) the expanded affiliated group which 

22 after the acquisition includes the entity does 

23 not have substantial business activities in the 

24 foreign country in which or under the law of 

25 which the entity is created or organized when
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1 compared to the total business activities of such 

2 expanded affiliated group. 

3 Except as provided in regulations, an acquisition of 

4 properties of a domestic corporation shall not be 

5 treated as described in subparagraph (A) if none of 

6 the corporation’s stock was readily tradeable on an 

7 established securities market at any time during the 

8 4-year period ending on the date of the acquisition. 

9 ‘‘(b) PRESERVATION OF DOMESTIC TAX BASE IN

10 CERTAIN INVERSION TRANSACTIONS TO WHICH SUB11 SECTION (a) DOES NOT APPLY.—

12 ‘‘(1) IN GENERAL.—If a foreign incorporated 

13 entity would be treated as an inverted domestic cor14 poration with respect to an acquired entity if ei15 ther—

16 ‘‘(A) subsection (a)(2)(A) were applied by 

17 substituting ‘after December 31, 1996, and on 

18 or before March 20, 2002’ for ‘after March 20, 

19 2002’ and subsection (a)(2)(B) were applied by 

20 substituting ‘more than 50 percent’ for ‘at least 

21 80 percent’, or 

22 ‘‘(B) subsection (a)(2)(B) were applied by 

23 substituting ‘more than 50 percent’ for ‘at least 

24 80 percent’—
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1 then the rules of subsection (c) shall apply to any 

2 inversion gain of the acquired entity during the ap3 plicable period and the rules of subsection (d) shall 

4 apply to any related party transaction of the ac5 quired entity during the applicable period. This sub6 section shall not apply for any taxable year if sub7 section (a) applies to such foreign incorporated enti8 ty for such taxable year. 

9 ‘‘(2) ACQUIRED ENTITY.—For purposes of this 

10 section—

11 ‘‘(A) IN GENERAL.—The term ‘acquired 

12 entity’ means the domestic corporation or part13 nership substantially all of the properties of 

14 which are directly or indirectly acquired in an 

15 acquisition described in subsection (a)(2)(A) to 

16 which this subsection applies. 

17 ‘‘(B) AGGREGATION RULES.—Any domes18 tic person bearing a relationship described in 

19 section 267(b) or 707(b) to an acquired entity 

20 shall be treated as an acquired entity with re21 spect to the acquisition described in subpara22 graph (A). 

23 ‘‘(3) APPLICABLE PERIOD.—For purposes of 

24 this section—
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1 ‘‘(A) IN GENERAL.—The term ‘applicable 

2 period’ means the period—

3 ‘‘(i) beginning on the first date prop4 erties are acquired as part of the acquisi5 tion described in subsection (a)(2)(A) to 

6 which this subsection applies, and 

7 ‘‘(ii) ending on the date which is 10 

8 years after the last date properties are ac9 quired as part of such acquisition. 

10 ‘‘(B) SPECIAL RULE FOR INVERSIONS OC11 CURRING BEFORE MARCH 21, 2002.—In the case 

12 of any acquired entity to which paragraph 

13 (1)(A) applies, the applicable period shall be the 

14 10-year period beginning on January 1, 2003. 

15 ‘‘(c) TAX ON INVERSION GAINS MAY NOT BE OFF16 SET.—If subsection (b) applies—

17 ‘‘(1) IN GENERAL.—The taxable income of an 

18 acquired entity (or any expanded affiliated group 

19 which includes such entity) for any taxable year 

20 which includes any portion of the applicable period 

21 shall in no event be less than the inversion gain of 

22 the entity for the taxable year. 

23 ‘‘(2) CREDITS NOT ALLOWED AGAINST TAX ON

24 INVERSION GAIN.—Credits shall be allowed against 

25 the tax imposed by this chapter on an acquired enti-
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1 ty for any taxable year described in paragraph (1) 

2 only to the extent such tax exceeds the product of—

3 ‘‘(A) the amount of the inversion gain for 

4 the taxable year, and 

5 ‘‘(B) the highest rate of tax specified in 

6 section 11(b)(1). 

7 For purposes of determining the credit allowed by 

8 section 901 inversion gain shall be treated as from 

9 sources within the United States. 

10 ‘‘(3) SPECIAL RULES FOR PARTNERSHIPS.—In 

11 the case of an acquired entity which is a partner12 ship—

13 ‘‘(A) the limitations of this subsection shall 

14 apply at the partner rather than the partner15 ship level, 

16 ‘‘(B) the inversion gain of any partner for 

17 any taxable year shall be equal to the sum of—

18 ‘‘(i) the partner’s distributive share of 

19 inversion gain of the partnership for such 

20 taxable year, plus 

21 ‘‘(ii) income or gain required to be 

22 recognized for the taxable year by the part23 ner under section 367(a), 741, or 1001, or 

24 under any other provision of chapter 1, by 

25 reason of the transfer during the applica-
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1 ble period of any partnership interest of 

2 the partner in such partnership to the for3 eign incorporated entity, and 

4 ‘‘(C) the highest rate of tax specified in 

5 the rate schedule applicable to the partner 

6 under chapter 1 shall be substituted for the 

7 rate of tax under paragraph (2)(B). 

8 ‘‘(4) INVERSION GAIN.—For purposes of this 

9 section, the term ‘inversion gain’ means any income 

10 or gain required to be recognized under section 304, 

11 311(b), 367, 1001, or 1248, or under any other pro12 vision of chapter 1, by reason of the transfer during 

13 the applicable period of stock or other properties by 

14 an acquired entity—

15 ‘‘(A) as part of the acquisition described in 

16 subsection (a)(2)(A) to which subsection (b) ap17 plies, or 

18 ‘‘(B) after such acquisition to a foreign re19 lated person. 

20 The Secretary may provide that income or gain from 

21 the sale of inventories or other transactions in the 

22 ordinary course of a trade or business shall not be 

23 treated as inversion gain under subparagraph (B) to 

24 the extent the Secretary determines such treatment
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1 would not be inconsistent with the purposes of this 

2 section. 

3 ‘‘(5) COORDINATION WITH SECTION 172 AND

4 MINIMUM TAX.—Rules similar to the rules of para5 graphs (3) and (4) of section 860E(a) shall apply 

6 for purposes of this section. 

7 ‘‘(6) STATUTE OF LIMITATIONS.—

8 ‘‘(A) IN GENERAL.—The statutory period 

9 for the assessment of any deficiency attrib10 utable to the inversion gain of any taxpayer for 

11 any pre-inversion year shall not expire before 

12 the expiration of 3 years from the date the Sec13 retary is notified by the taxpayer (in such man14 ner as the Secretary may prescribe) of the ac15 quisition described in subsection (a)(2)(A) to 

16 which such gain relates and such deficiency 

17 may be assessed before the expiration of such 

18 3-year period notwithstanding the provisions of 

19 any other law or rule of law which would other20 wise prevent such assessment. 

21 ‘‘(B) PRE-INVERSION YEAR.—For purposes 

22 of subparagraph (A), the term ‘pre-inversion 

23 year’ means any taxable year if—

24 ‘‘(i) any portion of the applicable pe25 riod is included in such taxable year, and 
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1 ‘‘(ii) such year ends before the taxable 

2 year in which the acquisition described in 

3 subsection (a)(2)(A) is completed. 

4 ‘‘(d) SPECIAL RULES APPLICABLE TO RELATED

5 PARTY TRANSACTIONS.—

6 ‘‘(1) ANNUAL APPLICATION FOR AGREEMENTS

7 ON RETURN POSITIONS.—

8 ‘‘(A) IN GENERAL.—Each acquired entity 

9 to which subsection (b) applies shall file with 

10 the Secretary an application for an approval 

11 agreement under subparagraph (D) for each 

12 taxable year which includes a portion of the ap13 plicable period. Such application shall be filed 

14 at such time and manner, and shall contain 

15 such information, as the Secretary may pre16 scribe. 

17 ‘‘(B) SECRETARIAL ACTION.—Within 90 

18 days of receipt of an application under subpara19 graph (A) (or such longer period as the Sec20 retary and entity may agree upon), the Sec21 retary shall—

22 ‘‘(i) enter into an agreement described 

23 in subparagraph (D) for the taxable year 

24 covered by the application, 
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1 ‘‘(ii) notify the entity that the Sec2 retary has determined that the application 

3 was filed in good faith and substantially 

4 complies with the requirements for the ap5 plication under subparagraph (A), or 

6 ‘‘(iii) notify the entity that the Sec7 retary has determined that the application 

8 was not filed in good faith or does not sub9 stantially comply with such requirements. 

10 If the Secretary fails to act within the time pre11 scribed under the preceding sentence, the entity 

12 shall be treated for purposes of this paragraph 

13 as having received notice under clause (ii). 

14 ‘‘(C) FAILURES TO COMPLY.—If an ac15 quired entity fails to file an application under 

16 subparagraph (A), or the acquired entity re17 ceives a notice under subparagraph (B)(iii), for 

18 any taxable year, then for such taxable year—

19 ‘‘(i) there shall not be allowed any de20 duction, or addition to basis or cost of 

21 goods sold, for amounts paid or incurred, 

22 or losses incurred, by reason of a trans23 action between the acquired entity and a 

24 foreign related person, 
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1 ‘‘(ii) any transfer or license of intan2 gible property (as defined in section 

3 936(h)(3)(B)) between the acquired entity 

4 and a foreign related person shall be dis5 regarded, and 

6 ‘‘(iii) any cost-sharing arrangement 

7 between the acquired entity and a foreign 

8 related person shall be disregarded. 

9 ‘‘(D) APPROVAL AGREEMENT.—For pur10 poses of subparagraph (A), the term ‘approval 

11 agreement’ means a prefiling, advance pricing, 

12 or other agreement specified by the Secretary 

13 which contains such provisions as the Secretary 

14 determines necessary to ensure that the require15 ments of sections 163(j), 267(a)(3), 482, and 

16 845, and any other provision of this title appli17 cable to transactions between related persons 

18 and specified by the Secretary, are met. 

19 ‘‘(E) TAX COURT REVIEW.—

20 ‘‘(i) IN GENERAL.—The Tax Court 

21 shall have jurisdiction over any action 

22 brought by an acquired entity receiving a 

23 notice under subparagraph (B)(iii) to de24 termine whether the issuance of the notice 

25 was an abuse of discretion, but only if the 
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1 action is brought within 30 days after the 

2 date of the mailing (determined under 

3 rules similar to section 6213) of the notice. 

4 ‘‘(ii) COURT ACTION.—The Tax Court 

5 shall issue its decision within 30 days after 

6 the filing of the action under clause (i) and 

7 may order the Secretary to issue a notice 

8 described in subparagraph (B)(ii). 

9 ‘‘(iii) REVIEW.—An order of the Tax 

10 Court under this subparagraph shall be re11 viewable in the same manner as any other 

12 decision of the Tax Court. 

13 ‘‘(2) MODIFICATIONS OF LIMITATION ON INTER14 EST DEDUCTION.—In the case of an acquired entity 

15 to which subsection (b) applies, section 163(j) shall 

16 be applied—

17 ‘‘(A) without regard to paragraph 

18 (2)(A)(ii) thereof, and 

19 ‘‘(B) by substituting ‘25 percent’ for ‘50 

20 percent’ each place it appears in paragraph 

21 (2)(B) thereof. 

22 ‘‘(e) OTHER DEFINITIONS AND SPECIAL RULES.—

23 For purposes of this section—

24 ‘‘(1) RULES FOR APPLICATION OF SUBSECTION

25 (a)(2).—In applying subsection (a)(2) for purposes of
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1 subsections (a) and (b), the following rules shall 

2 apply: 

3 ‘‘(A) CERTAIN STOCK DISREGARDED.—

4 There shall not be taken into account in deter5 mining ownership for purposes of subsection 

6 (a)(2)(B)—

7 ‘‘(i) stock held by members of the ex8 panded affiliated group which includes the 

9 foreign incorporated entity, or 

10 ‘‘(ii) stock of such entity which is sold 

11 in a public offering or private placement 

12 related to the acquisition described in sub13 section (a)(2)(A). 

14 ‘‘(B) PLAN DEEMED IN CERTAIN CASES.—

15 If a foreign incorporated entity acquires directly 

16 or indirectly substantially all of the properties 

17 of a domestic corporation or partnership during 

18 the 4-year period beginning on the date which 

19 is 2 years before the ownership requirements of 

20 subsection (a)(2)(B) are met with respect to 

21 such domestic corporation or partnership, such 

22 actions shall be treated as pursuant to a plan. 

23 ‘‘(C) CERTAIN TRANSFERS DIS24 REGARDED.—The transfer of properties or li25 abilities (including by contribution or distribu-
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1 tion) shall be disregarded if such transfers are 

2 part of a plan a principal purpose of which is 

3 to avoid the purposes of this section. 

4 ‘‘(D) SPECIAL RULE FOR RELATED PART5 NERSHIPS.—For purposes of applying sub6 section (a)(2) to the acquisition of a domestic 

7 partnership, except as provided in regulations, 

8 all partnerships which are under common con9 trol (within the meaning of section 482) shall 

10 be treated as 1 partnership. 

11 ‘‘(E) TREATMENT OF CERTAIN RIGHTS.—

12 The Secretary shall prescribe such regulations 

13 as may be necessary— 

14 ‘‘(i) to treat warrants, options, con15 tracts to acquire stock, convertible debt in16 struments, and other similar interests as 

17 stock, and 

18 ‘‘(ii) to treat stock as not stock. 

19 ‘‘(2) EXPANDED AFFILIATED GROUP.—The 

20 term ‘expanded affiliated group’ means an affiliated 

21 group as defined in section 1504(a) but without re22 gard to section 1504(b)(3), except that section 

23 1504(a) shall be applied by substituting ‘more than 

24 50 percent’ for ‘at least 80 percent’ each place it ap25 pears. 
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1 ‘‘(3) FOREIGN INCORPORATED ENTITY.—The 

2 term ‘foreign incorporated entity’ means any entity 

3 which is, or but for subsection (a)(1) would be, 

4 treated as a foreign corporation for purposes of this 

5 title. 

6 ‘‘(4) FOREIGN RELATED PERSON.—The term 

7 ‘foreign related person’ means, with respect to any 

8 acquired entity, a foreign person which—

9 ‘‘(A) bears a relationship to such entity de10 scribed in section 267(b) or 707(b), or 

11 ‘‘(B) is under the same common control 

12 (within the meaning of section 482) as such en13 tity. 

14 ‘‘(5) SUBSEQUENT ACQUISITIONS BY UNRE15 LATED DOMESTIC CORPORATIONS.—

16 ‘‘(A) IN GENERAL.—Subject to such condi17 tions, limitations, and exceptions as the Sec18 retary may prescribe, if, after an acquisition de19 scribed in subsection (a)(2)(A) to which sub20 section (b) applies, a domestic corporation stock 

21 of which is traded on an established securities 

22 market acquires directly or indirectly any prop23 erties of one or more acquired entities in a 

24 transaction with respect to which the require25 ments of subparagraph (B) are met, this sec-
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1 tion shall cease to apply to any such acquired 

2 entity with respect to which such requirements 

3 are met. 

4 ‘‘(B) REQUIREMENTS.—The requirements 

5 of the subparagraph are met with respect to a 

6 transaction involving any acquisition described 

7 in subparagraph (A) if—

8 ‘‘(i) before such transaction the do9 mestic corporation did not have a relation10 ship described in section 267(b) or 707(b), 

11 and was not under common control (within 

12 the meaning of section 482), with the ac13 quired entity, or any member of an ex14 panded affiliated group including such en15 tity, and 

16 ‘‘(ii) after such transaction, such ac17 quired entity—

18 ‘‘(I) is a member of the same ex19 panded affiliated group which includes 

20 the domestic corporation or has such 

21 a relationship or is under such com22 mon control with any member of such 

23 group, and 

24 ‘‘(II) is not a member of, and 

25 does not have such a relationship and 
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1 is not under such common control 

2 with any member of, the expanded af3 filiated group which before such ac4 quisition included such entity. 

5 ‘‘(f) REGULATIONS.—The Secretary shall provide 

6 such regulations as are necessary to carry out this section, 

7 including regulations providing for such adjustments to 

8 the application of this section as are necessary to prevent 

9 the avoidance of the purposes of this section, including the 

10 avoidance of such purposes through—

11 ‘‘(1) the use of related persons, pass-through or 

12 other noncorporate entities, or other intermediaries, 

13 or 

14 ‘‘(2) transactions designed to have persons 

15 cease to be (or not become) members of expanded 

16 affiliated groups or related persons.’’. 

17 (b) TREATMENT OF AGREEMENTS.—

18 (1) CONFIDENTIALITY.—

19 (A) TREATMENT AS RETURN INFORMA20 TION.—Section 6103(b)(2) (relating to return 

21 information) is amended by striking ‘‘and’’ at 

22 the end of subparagraph (C), by inserting 

23 ‘‘and’’ at the end of subparagraph (D), and by 

24 inserting after subparagraph (D) the following 

25 new subparagraph:
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1 ‘‘(E) any approval agreement under section 

2 7874(d)(1) to which any preceding subpara3 graph does not apply and any background in4 formation related to the agreement or any ap5 plication for the agreement,’’. 

6 (B) EXCEPTION FROM PUBLIC INSPECTION

7 AS WRITTEN DETERMINATION.—Section 

8 6110(b)(1)(B) is amended by striking ‘‘or (D)’’ 

9 and inserting ‘‘, (D), or (E)’’. 

10 (2) REPORTING.—The Secretary of the Treas11 ury shall include with any report on advance pricing 

12 agreements required to be submitted after the date 

13 of the enactment of this Act under section 521(b) of 

14 the Ticket to Work and Work Incentives Improve15 ment Act of 1999 (Public Law 106–170) a report 

16 regarding approval agreements under section 

17 7874(d)(1) of the Internal Revenue Code of 1986. 

18 Such report shall include information similar to the 

19 information required with respect to advance pricing 

20 agreements and shall be treated for confidentiality 

21 purposes in the same manner as the reports on ad22 vance pricing agreements are treated under section 

23 521(b)(3) of such Act. 

24 (c) INFORMATION REPORTING.—The Secretary of the 

25 Treasury shall exercise the Secretary’s authority under the 
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1 Internal Revenue Code of 1986 to require entities involved 

2 in transactions to which section 7874 of such Code (as 

3 added by subsection (a)) applies to report to the Secretary, 

4 shareholders, partners, and such other persons as the Sec5 retary may prescribe such information as is necessary to 

6 ensure the proper tax treatment of such transactions. 

7 (d) CONFORMING AMENDMENT.—The table of sec8 tions for subchapter C of chapter 80 is amended by adding 

9 at the end the following new item:

‘‘Sec. 7874. Rules relating to inverted corporate entities.’’.

10 (e) TRANSITION RULE FOR CERTAIN REGULATED

11 INVESTMENT COMPANIES AND UNIT INVESTMENT

12 TRUSTS.—Notwithstanding section 7874 of the Internal 

13 Revenue Code of 1986 (as added by subsection (a)), a reg14 ulated investment company, or other pooled fund or trust 

15 specified by the Secretary of the Treasury, may elect to 

16 recognize gain by reason of section 367(a) of such Code 

17 with respect to a transaction under which a foreign incor18 porated entity is treated as an inverted domestic corpora19 tion under section 7874(a) of such Code by reason of an 

20 acquisition completed after March 20, 2002, and before 

21 January 1, 2004. 

22 SEC. 1393. EXCISE TAX ON STOCK COMPENSATION OF IN23 SIDERS IN INVERTED CORPORATIONS. 

24 (a) IN GENERAL.—Subtitle D is amended by adding 

25 at the end the following new chapter: 
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1 ‘‘CHAPTER 48—STOCK COMPENSATION OF 

2 INSIDERS IN INVERTED CORPORATIONS

‘‘Sec. 5000A. Stock compensation of insiders in inverted corporations entities.

3 ‘‘SEC. 5000A. STOCK COMPENSATION OF INSIDERS IN IN4 VERTED CORPORATIONS. 

5 ‘‘(a) IMPOSITION OF TAX.—In the case of an indi6 vidual who is a disqualified individual with respect to any 

7 inverted corporation, there is hereby imposed on such per8 son a tax equal to 20 percent of the value (determined 

9 under subsection (b)) of the specified stock compensation 

10 held (directly or indirectly) by or for the benefit of such 

11 individual or a member of such individual’s family (as de12 fined in section 267) at any time during the 12-month 

13 period beginning on the date which is 6 months before 

14 the inversion date. 

15 ‘‘(b) VALUE.—For purposes of subsection (a)—

16 ‘‘(1) IN GENERAL.—The value of specified stock 

17 compensation shall be—

18 ‘‘(A) in the case of a stock option (or other 

19 similar right) or any stock appreciation right, 

20 the fair value of such option or right, and 

21 ‘‘(B) in any other case, the fair market 

22 value of such compensation. 

23 ‘‘(2) DATE FOR DETERMINING VALUE.—The 

24 determination of value shall be made—
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1 ‘‘(A) in the case of specified stock com2 pensation held on the inversion date, on such 

3 date, 

4 ‘‘(B) in the case of such compensation 

5 which is canceled during the 6 months before 

6 the inversion date, on the day before such can7 cellation, and 

8 ‘‘(C) in the case of such compensation 

9 which is granted after the inversion date, on the 

10 date such compensation is granted. 

11 ‘‘(c) TAX TO APPLY ONLY IF SHAREHOLDER GAIN

12 RECOGNIZED.—Subsection (a) shall apply to any disquali13 fied individual with respect to an inverted corporation only 

14 if gain (if any) on any stock in such corporation is recog15 nized in whole or part by any shareholder by reason of 

16 the acquisition referred to in section 7874(a)(2)(A) (deter17 mined by substituting ‘July 10, 2002’ for ‘March 20, 

18 2002’) with respect to such corporation. 

19 ‘‘(d) EXCEPTION WHERE GAIN RECOGNIZED ON

20 COMPENSATION.—Subsection (a) shall not apply to—

21 ‘‘(1) any stock option which is exercised on the 

22 inversion date or during the 6-month period before 

23 such date and to the stock acquired in such exercise, 

24 and 
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1 ‘‘(2) any specified stock compensation which is 

2 sold, exchanged, or distributed during such period in 

3 a transaction in which gain or loss is recognized in 

4 full. 

5 ‘‘(e) DEFINITIONS.—For purposes of this section—

6 ‘‘(1) DISQUALIFIED INDIVIDUAL.—The term 

7 ‘disqualified individual’ means, with respect to a cor8 poration, any individual who, at any time during the 

9 12-month period beginning on the date which is 6 

10 months before the inversion date—

11 ‘‘(A) is subject to the requirements of sec12 tion 16(a) of the Securities Exchange Act of 

13 1934 with respect to such corporation or any 

14 member of the expanded affiliated group which 

15 includes such corporation, or 

16 ‘‘(B) would be subject to such require17 ments if such corporation or member were an 

18 issuer of equity securities referred to in such 

19 section. 

20 ‘‘(2) INVERTED CORPORATION; INVERSION

21 DATE.—

22 ‘‘(A) INVERTED CORPORATION.—The term 

23 ‘inverted corporation’ means any corporation to 

24 which subsection (a) or (b) of section 7874 ap25 plies determined—
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1 ‘‘(i) by substituting ‘July 10, 2002’ 

2 for ‘March 20, 2002’ in section 

3 7874(a)(2)(A), and 

4 ‘‘(ii) without regard to subsection 

5 (b)(1)(A). 

6 Such term includes any predecessor or suc7 cessor of such a corporation. 

8 ‘‘(B) INVERSION DATE.—The term ‘inver9 sion date’ means, with respect to a corporation, 

10 the date on which the corporation first becomes 

11 an inverted corporation. 

12 ‘‘(3) SPECIFIED STOCK COMPENSATION.—

13 ‘‘(A) IN GENERAL.—The term ‘specified 

14 stock compensation’ means payment (or right 

15 to payment) granted by the inverted corpora16 tion (or by any member of the expanded affili17 ated group which includes such corporation) to 

18 any person in connection with the performance 

19 of services by a disqualified individual for such 

20 corporation or member if the value of such pay21 ment or right is based on (or determined by ref22 erence to) the value (or change in value) of 

23 stock in such corporation (or any such mem24 ber). 
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1 ‘‘(B) EXCEPTIONS.—Such term shall not 

2 include—

3 ‘‘(i) any option to which part II of 

4 subchapter D of chapter 1 applies, or 

5 ‘‘(ii) any payment or right to payment 

6 from a plan referred to in section 

7 280G(b)(6). 

8 ‘‘(4) EXPANDED AFFILIATED GROUP.—The 

9 term ‘expanded affiliated group’ means an affiliated 

10 group (as defined in section 1504(a) without regard 

11 to section 1504(b)(3)); except that section 1504(a) 

12 shall be applied by substituting ‘more than 50 per13 cent’ for ‘at least 80 percent’ each place it appears. 

14 ‘‘(f) SPECIAL RULES.—For purposes of this sec15 tion—

16 ‘‘(1) CANCELLATION OF RESTRICTION.—The 

17 cancellation of a restriction which by its terms will 

18 never lapse shall be treated as a grant. 

19 ‘‘(2) PAYMENT OR REIMBURSEMENT OF TAX BY

20 CORPORATION TREATED AS SPECIFIED STOCK COM21 PENSATION.—Any payment of the tax imposed by 

22 this section directly or indirectly by the inverted cor23 poration or by any member of the expanded affili24 ated group which includes such corporation—
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1 ‘‘(A) shall be treated as specified stock 

2 compensation, and 

3 ‘‘(B) shall not be allowed as a deduction 

4 under any provision of chapter 1. 

5 ‘‘(3) CERTAIN RESTRICTIONS IGNORED.—

6 Whether there is specified stock compensation, and 

7 the value thereof, shall be determined without regard 

8 to any restriction other than a restriction which by 

9 its terms will never lapse. 

10 ‘‘(4) PROPERTY TRANSFERS.—Any transfer of 

11 property shall be treated as a payment and any right 

12 to a transfer of property shall be treated as a right 

13 to a payment. 

14 ‘‘(5) OTHER ADMINISTRATIVE PROVISIONS.—

15 For purposes of subtitle F, any tax imposed by this 

16 section shall be treated as a tax imposed by subtitle 

17 A. 

18 ‘‘(g) REGULATIONS.—The Secretary shall prescribe 

19 such regulations as may be necessary or appropriate to 

20 carry out the purposes of this section.’’. 

21 (b) DENIAL OF DEDUCTION.—

22 (1) IN GENERAL.—Paragraph (6) of section 

23 275(a) is amended by inserting ‘‘48,’’ after ‘‘46,’’. 

24 (2) $1,000,000 LIMIT ON DEDUCTIBLE COM25 PENSATION REDUCED BY PAYMENT OF EXCISE TAX
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1 ON SPECIFIED STOCK COMPENSATION.—Paragraph 

2 (4) of section 162(m) is amended by adding at the 

3 end the following new subparagraph: 

4 ‘‘(G) COORDINATION WITH EXCISE TAX ON

5 SPECIFIED STOCK COMPENSATION.—The dollar 

6 limitation contained in paragraph (1) with re7 spect to any covered employee shall be reduced 

8 (but not below zero) by the amount of any pay9 ment (with respect to such employee) of the tax 

10 imposed by section 5000A directly or indirectly 

11 by the inverted corporation (as defined in such 

12 section) or by any member of the expanded af13 filiated group (as defined in such section) which 

14 includes such corporation.’’. 

15 (c) CONFORMING AMENDMENTS.—

16 (1) The last sentence of section 3121(v)(2)(A) 

17 is amended by inserting before the period ‘‘or to any 

18 specified stock compensation (as defined in section 

19 5000A) on which tax is imposed by section 5000A’’. 

20 (2) The table of chapters for subtitle D is 

21 amended by adding at the end the following new 

22 item:

‘‘Chapter 48. Stock compensation of insiders in inverted corporations.’’.

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

24 this section shall take effect on July 11, 2002; except that 
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1 periods before such date shall not be taken into account 

2 in applying the periods in subsections (a) and (e)(1) of 

3 section 5000A of the Internal Revenue Code of 1986, as 

4 added by this section. 

5 SEC. 1394. REINSURANCE OF UNITED STATES RISKS IN 

6 FOREIGN JURISDICTIONS. 

7 (a) IN GENERAL.—Section 845(a) (relating to alloca8 tion in case of reinsurance agreement involving tax avoid9 ance or evasion) is amended by striking ‘‘source and char10 acter’’ and inserting ‘‘amount, source, or character’’. 

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

12 this section shall apply to any risk reinsured after April 

13 11, 2002. 

14 PART III—OTHER REVENUE PROVISIONS 

15 SEC. 1395. EXTENSION OF INTERNAL REVENUE SERVICE 

16 USER FEES. 

17 Section 7528(c) is amended by striking ‘‘December 

18 31, 2004’’ and inserting ‘‘September 30, 2013’’. 

19 SEC. 1396. ADDITION OF VACCINES AGAINST HEPATITIS A 

20 TO LIST OF TAXABLE VACCINES. 

21 (a) IN GENERAL.—Section 4132(a)(1) (defining tax22 able vaccine) is amended by redesignating subparagraphs 

23 (I), (J), (K), and (L) as subparagraphs (J), (K), (L), and 

24 (M), respectively, and by inserting after subparagraph (H) 

25 the following new subparagraph:
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1 ‘‘(I) Any vaccine against hepatitis A.’’.

2 (b) CONFORMING AMENDMENT.—Section 

3 9510(c)(1)(A) is amended by striking ‘‘October 18, 2000’’ 

4 and inserting ‘‘April 2, 2003’’. 

5 (c) EFFECTIVE DATE.—

6 (1) SALES, ETC.—The amendments made by 

7 this section shall apply to sales and uses on or after 

8 the first day of the first month which begins more 

9 than 4 weeks after the date of the enactment of this 

10 Act. 

11 (2) DELIVERIES.—For purposes of paragraph 

12 (1) and section 4131 of the Internal Revenue Code 

13 of 1986, in the case of sales on or before the effec14 tive date described in such paragraph for which de15 livery is made after such date, the delivery date shall 

16 be considered the sale date.

17 SEC. 1397. INDIVIDUAL EXPATRIATION TO AVOID TAX. 

18 (a) EXPATRIATION TO AVOID TAX.—

19 (1) IN GENERAL.—Subsection (a) of section 

20 877 (relating to treatment of expatriates) is amend21 ed to read as follows: 

22 ‘‘(a) TREATMENT OF EXPATRIATES.—

23 ‘‘(1) IN GENERAL.—Every nonresident alien in24 dividual to whom this section applies and who, with25 in the 10-year period immediately preceding the 
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1 close of the taxable year, lost United States citizen2 ship shall be taxable for such taxable year in the 

3 manner provided in subsection (b) if the tax imposed 

4 pursuant to such subsection (after any reduction in 

5 such tax under the last sentence of such subsection) 

6 exceeds the tax which, without regard to this section, 

7 is imposed pursuant to section 871. 

8 ‘‘(2) INDIVIDUALS SUBJECT TO THIS SEC9 TION.—This section shall apply to any individual 

10 if—

11 ‘‘(A) the average annual net income tax 

12 (as defined in section 38(c)(1)) of such indi13 vidual for the period of 5 taxable years ending 

14 before the date of the loss of United States citi15 zenship is greater than $122,000, 

16 ‘‘(B) the net worth of the individual as of 

17 such date is $2,000,000 or more, or 

18 ‘‘(C) such individual fails to certify under 

19 penalty of perjury that he has met the require20 ments of this title for the 5 preceding taxable 

21 years or fails to submit such evidence of such 

22 compliance as the Secretary may require. 

23 In the case of the loss of United States citizenship 

24 in any calendar year after 2003, such $122,000 

25 amount shall be increased by an amount equal to 
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1 such dollar amount multiplied by the cost-of-living 

2 adjustment determined under section 1(f)(3) for 

3 such calendar year by substituting ‘2002’ for ‘1992’ 

4 in subparagraph (B) thereof. Any increase under the 

5 preceding sentence shall be rounded to the nearest 

6 multiple of $1,000.’’. 

7 (2) REVISION OF EXCEPTIONS FROM ALTER8 NATIVE TAX.—Subsection (c) of section 877 (relat9 ing to tax avoidance not presumed in certain cases) 

10 is amended to read as follows: 

11 ‘‘(c) EXCEPTIONS.—

12 ‘‘(1) IN GENERAL.—Subparagraphs (A) and 

13 (B) of subsection (a)(2) shall not apply to an indi14 vidual described in paragraph (2) or (3). 

15 ‘‘(2) DUAL CITIZENS.—

16 ‘‘(A) IN GENERAL.—An individual is de17 scribed in this paragraph if—

18 ‘‘(i) the individual became at birth a 

19 citizen of the United States and a citizen 

20 of another country and continues to be a 

21 citizen of such other country, and 

22 ‘‘(ii) the individual has had no sub23 stantial contacts with the United States. 

24 ‘‘(B) SUBSTANTIAL CONTACTS.—An indi25 vidual shall be treated as having no substantial 
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1 contacts with the United States only if the indi2 vidual—

3 ‘‘(i) was never a resident of the 

4 United States (as defined in section 

5 7701(b)), 

6 ‘‘(ii) has never held a United States 

7 passport, and 

8 ‘‘(iii) was not present in the United 

9 States for more than 30 days during any 

10 calendar year which is 1 of the 10 calendar 

11 years preceding the individual’s loss of 

12 United States citizenship. 

13 ‘‘(3) CERTAIN MINORS.—An individual is de14 scribed in this paragraph if—

15 ‘‘(A) the individual became at birth a cit16 izen of the United States, 

17 ‘‘(B) neither parent of such individual was 

18 a citizen of the United States at the time of 

19 such birth, 

20 ‘‘(C) the individual’s loss of United States 

21 citizenship occurs before such individual attains 

age 181 22 ⁄2, and 

23 ‘‘(D) the individual was not present in the 

24 United States for more than 30 days during 

25 any calendar year which is 1 of the 10 calendar 
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1 years preceding the individual’s loss of United 

2 States citizenship.’’. 

3 (3) CONFORMING AMENDMENT.—Section 

4 2107(a) is amended to read as follows: 

5 ‘‘(a) TREATMENT OF EXPATRIATES.—A tax com6 puted in accordance with the table contained in section 

7 2001 is hereby imposed on the transfer of the taxable es8 tate, determined as provided in section 2106, of every de9 cedent nonresident not a citizen of the United States if 

10 the date of death occurs during a taxable year with respect 

11 to which the decedent is subject to tax under section 

12 877(b).’’. 

13 (b) SPECIAL RULES FOR DETERMINING WHEN AN

14 INDIVIDUAL IS NO LONGER A UNITED STATES CITIZEN

15 OR LONG-TERM RESIDENT.—Section 7701 (relating to 

16 definitions) is amended by redesignating subsection (n) as 

17 subsection (o) and by inserting after subsection (m) the 

18 following new subsection: 

19 ‘‘(n) SPECIAL RULES FOR DETERMINING WHEN AN

20 INDIVIDUAL IS NO LONGER A UNITED STATES CITIZEN

21 OR LONG-TERM RESIDENT.—An individual who would not 

22 (but for this subsection) be treated as a citizen or resident 

23 of the United States shall continue to be treated as a cit24 izen or resident of the United States until such indi25 vidual—
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1 ‘‘(1) gives notice of an expatriating act or ter2 mination of residency (with the requisite intent to 

3 relinquish citizenship or terminate residency) to the 

4 Secretary of State or the Secretary of Homeland Se5 curity, and 

6 ‘‘(2) provides a statement in accordance with 

7 section 6039G.’’. 

8 (c) PHYSICAL PRESENCE IN THE UNITED STATES

9 FOR MORE THAN 30 DAYS.—Section 877 (relating to ex10 patriation to avoid tax) is amended by adding at the end 

11 the following new subsection: 

12 ‘‘(g) PHYSICAL PRESENCE.—This section shall not 

13 apply to any individual for any taxable year during the 

14 10-year period referred to in subsection (a) in which such 

15 individual is present (within the meaning of section 

16 7701(b)(7) without regard to subparagraphs (B), (C), and 

17 (D) thereof) in the United States for more than 30 days 

18 in the calendar year ending in such taxable year, and such 

19 individual shall be treated for purposes of this title as a 

20 citizen or resident of the United States for such taxable 

21 year.’’. 

22 (d) TRANSFERS SUBJECT TO GIFT TAX.—Subsection 

23 (a) of section 2501 (relating to taxable transfers) is 

24 amended by adding at the end the following: 

25 ‘‘(6) TRANSFERS OF CERTAIN STOCK.—
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1 ‘‘(A) IN GENERAL.—Paragraph (3) shall 

2 not apply to the transfer of stock described in 

3 subparagraph (B) by any individual to whom 

4 section 877(b) applies, and section 2511(a) 

5 shall be applied without regard to whether such 

6 stock is property which is situated within the 

7 United States. 

8 ‘‘(B) VALUATION.—For purposes of sub9 paragraph (A), the value of stock shall be deter10 mined as provided in section 2103, except 

11 that—

12 ‘‘(i) if the donor owned (within the 

13 meaning of section 958(a)) at the time of 

14 such transfer 10 percent or more of the 

15 total combined voting power of all classes 

16 of stock entitled to vote of a foreign cor17 poration, and 

18 ‘‘(ii) if such donor owned (within the 

19 meaning of section 958(a)), or is consid20 ered to have owned (by applying the own21 ership rules of section 958(b)), at the time 

22 of such transfer, more than 50 percent 

23 of—
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1 ‘‘(I) the total combined voting 

2 power of all classes of stock entitled 

3 to vote of such corporation, or 

4 ‘‘(II) the total value of the stock 

5 of such corporation—

6 then the portion of the fair market value of the 

7 stock of such foreign corporation transferred by 

8 such donor which is included for purposes of 

9 subparagraph (A) shall be the amount which 

10 bears the same ratio to such value as the fair 

11 market value of any assets owned by such for12 eign corporation and situated in the United 

13 States at the time of such transfer bears to the 

14 total fair market value of all assets owned by 

15 such foreign corporation at such time. For pur16 poses of the preceding sentence, a donor shall 

17 be treated as owning stock of a foreign corpora18 tion at the time of such transfer if, at such 

19 time, by trust or otherwise, within the meaning 

20 of sections 2035 to 2038, inclusive, he owned 

21 such stock.’’. 

22 (e) ENHANCED INFORMATION REPORTING FROM IN23 DIVIDUALS LOSING UNITED STATES CITIZENSHIP.—

24 (1) IN GENERAL.—Subsection (a) of section 

25 6039G is amended to read as follows: 
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1 ‘‘(a) IN GENERAL.—Notwithstanding any other pro2 vision of law, any individual to whom section 877(b) ap3 plies for any taxable year shall provide a statement for 

4 such taxable year which includes the information described 

5 in subsection (b).’’. 

6 (2) INFORMATION TO BE PROVIDED.—Sub7 section (b) of section 6039G is amended to read as 

8 follows: 

9 ‘‘(b) INFORMATION TO BE PROVIDED.—Information 

10 required under subsection (a) shall include—

11 ‘‘(1) the taxpayer’s TIN, 

12 ‘‘(2) the mailing address of such individual’s 

13 principal foreign residence, 

14 ‘‘(3) the foreign country, in which such indi15 vidual is residing, 

16 ‘‘(4) the foreign country of which such indi17 vidual is a citizen, 

18 ‘‘(5) information detailing the income, assets, 

19 and liabilities of such individual, 

20 ‘‘(6) the number of days that the individual was 

21 present in the United States during the taxable year, 

22 and 

23 ‘‘(7) such other information as the Secretary 

24 may prescribe.’’. 
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1 (3) INCREASE IN PENALTY.—Subsection (d) of 

2 section 6039G is amended to read as follows: 

3 ‘‘(d) PENALTY.—If—

4 ‘‘(1) an individual is required to file a state5 ment under subsection (a) for any taxable year, and 

6 ‘‘(2) fails to file such a statement with the Sec7 retary on or before the date such statement is re8 quired to be filed or fails to include all the informa9 tion required to be shown on the statement or in10 cludes incorrect information—

11 such individual shall pay a penalty of $5,000 unless it is 

12 shown that such failure is due to reasonable cause and 

13 not to willful neglect.’’. 

14 (4) CONFORMING AMENDMENT.—Section 

15 6039G is amended by striking subsections (c), (f), 

16 and (g) and by redesignating subsections (d) and (e) 

17 as subsection (c) and (d), respectively. 

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

19 this section shall apply to individuals who expatriate after 

20 February 27, 2003.
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1 TITLE XIV—MISCELLANEOUS 

2 Subtitle A—Rural and Remote 

3 Electricity Construction 

4 SEC. 1401. DENALI COMMISSION PROGRAMS. 

5 (a) POWER COST EQUALIZATION PROGRAM.—There 

6 are authorized to be appropriated to the Denali Commis7 sion established by the Denali Commission Act of 1998 

8 (42 U.S.C. 3121 note) not more than $5,000,000 for each 

9 of fiscal years 2005 through 2011 for the purposes of 

10 funding the power cost equalization program established 

11 under section 42.45.100 of the Alaska Statutes.

12 (b) AVAILABILITY OF FUNDS.—

13 (1) PURPOSE.—Amounts authorized in para14 graph (2) shall be available to the Denali Commis15 sion to permit energy generation and development 

16 (including fuel cells, hydroelectric, solar, wind, wave, 

17 and tidal energy, and alternative energy sources), 

18 energy transmission (including interties), fuel tank 

19 replacement and clean-up, fuel transportation net20 works and related facilities, power cost equalization 

21 programs, and other energy programs, notwith22 standing any other provision of law. 

23 (2) AUTHORIZATION OF APPROPRIATIONS.—

24 There are authorized to be appropriated to the 

25 Denali Commission to carry out paragraph (1) 
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1 $50,000,000 for each of fiscal years 2004 through 

2 2013. 

3 SEC. 1402. RURAL AND REMOTE COMMUNITY ASSISTANCE. 

4 (a) PROGRAM.—Section 19 of the Rural Electrifica5 tion Act of 1936 (7 U.S.C. 918a) is amended by striking 

6 all that precedes subsection (b) and inserting the fol7 lowing: 

8 ‘‘SEC. 19. ELECTRIC GENERATION, TRANSMISSION, AND 

9 DISTRIBUTION FACILITIES EFFICIENCY 

10 GRANTS AND LOANS TO RURAL AND REMOTE 

11 COMMUNITIES WITH EXTREMELY HIGH ELEC12 TRICITY COSTS. 

13 ‘‘(a) IN GENERAL.—The Secretary, acting through 

14 the Rural Utilities Service, may—

15 ‘‘(1) in coordination with State rural develop16 ment initiatives, make grants and loans to persons, 

17 States, political subdivisions of States, and other en18 tities organized under the laws of States, to acquire, 

19 construct, extend, upgrade, and otherwise improve 

20 electric generation, transmission, and distribution fa21 cilities serving communities in which the average 

22 revenue per kilowatt hour of electricity for all con23 sumers is greater than 150 percent of the average 

24 revenue per kilowatt hour of electricity for all con25 sumers in the United States (as determined by the 
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1 Energy Information Administration using the most 

2 recent data available); 

3 ‘‘(2) make grants and loans to the Denali Com4 mission established by the Denali Commission Act of 

5 1998 (42 U.S.C. 3121 note; Public 105–277) to be 

6 used for the purpose of providing funds to acquire, 

7 construct, extend, upgrade, finance, and otherwise 

8 improve electric generation, transmission, and dis9 tribution facilities serving communities described in 

10 paragraph (1); and 

11 ‘‘(3) make grants to State entities to establish 

12 and support a revolving fund to provide a more cost13 effective means of purchasing fuel in areas where 

14 the fuel cannot be shipped by means of surface 

15 transportation.’’. 

16 (b) DEFINITION OF PERSON.—Section 13 of the 

17 Rural Electrification Act of 1936 (7 U.S.C. 913) is 

18 amended by striking ‘‘or association’’ and inserting ‘‘asso19 ciation, or Indian tribe (as defined in section 4 of the In20 dian Self-Determination and Education Assistance Act)’’. 

21 Subtitle B—Coastal Programs 

22 SEC. 1411. ROYALTY PAYMENTS UNDER LEASES UNDER 

23 THE OUTER CONTINENTAL SHELF LANDS 

24 ACT. 

25 (a) ROYALTY RELIEF.—
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1 (1) IN GENERAL.—For purposes of providing 

2 compensation for lessees and a State for which 

3 amounts are authorized by section 6004(c) of the Oil 

4 Pollution Act of 1990 (Public Law 101–380), effec5 tive beginning October 1, 2008, a lessee may with6 hold from payment any royalty due and owing to the 

7 United States under any leases under the Outer 

8 Continental Shelf Lands Act (43 U.S.C. 1301 et 

9 seq.) for offshore oil or gas production from a cov10 ered lease tract if, on or before the date that the 

11 payment is due and payable to the United States, 

12 the lessee makes a payment to the Secretary of the 

13 Interior of 44 cents for every $1 of royalty withheld. 

14 (2) USE OF AMOUNTS PAID TO SECRETARY.—

15 Within 30 days after the Secretary of the Interior 

16 receives payments under paragraph (1), the Sec17 retary of the Interior shall—

18 (A) make 47.5 percent of such payments 

19 available to the State referred to in section 

20 6004(c) of the Oil Pollution Act of 1990; and 

21 (B) make 52.5 percent of such payments 

22 available equally, only for the programs and 

23 purposes identified as number 282 at page 

24 1389 of House Report number 108–10 and for 

25 a program described at page 1159 of that Re-
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1 port in the State referred to in such section 

2 6004(c). 

3 (3) TREATMENT OF AMOUNTS.—Any royalty 

4 withheld by a lessee in accordance with this section 

5 (including any portion thereof that is paid to the 

6 Secretary of the Interior under paragraph (1)) shall 

7 be treated as paid for purposes of satisfaction of the 

8 royalty obligations of the lessee to the United States. 

9 (4) CERTIFICATION OF WITHHELD AMOUNTS.—

10 The Secretary of the Treasury shall—

11 (A) determine the amount of royalty with12 held by a lessee under this section; and 

13 (B) promptly publish a certification when 

14 the total amount of royalty withheld by the les15 see under this section is equal to—

16 (i) the dollar amount stated at page 

17 47 of Senate Report number 101–534, 

18 which is designated therein as the total 

19 drainage claim for the West Delta field; 

20 plus 

21 (ii) interest as described at page 47 of 

22 that Report. 

23 (b) PERIOD OF ROYALTY RELIEF.—Subsection (a) 

24 shall apply to royalty amounts that are due and payable 

25 in the period beginning on January 1, 2008, and ending 
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1 on the date on which the Secretary of the Treasury pub2 lishes a certification under subsection (a)(4)(B). 

3 (c) DEFINITIONS.—As used in this section: 

4 (1) COVERED LEASE TRACT.—The term ‘‘cov5 ered lease tract’’ means a leased tract (or portion of 

6 a leased tract)—

7 (A) lying seaward of the zone defined and 

8 governed by section 8(g) of the Outer Conti9 nental Shelf Lands Act (43 U.S.C. 1337(g)); or 

10 (B) lying within such zone but to which 

11 such section does not apply. 

12 (2) LESSEE.—The term ‘‘lessee’’—

13 (A) means a person or entity that, on the 

14 date of the enactment of the Oil Pollution Act 

15 of 1990, was a lessee referred to in section 

16 6004(c) of that Act (as in effect on that date 

17 of the enactment), but did not hold lease rights 

18 in Federal offshore lease OCS–G–5669; and 

19 (B) includes successors and affiliates of a 

20 person or entity described in subparagraph (A).

21 SEC. 1412. DOMESTIC OFFSHORE ENERGY REINVESTMENT. 

22 (a) DOMESTIC OFFSHORE ENERGY REINVESTMENT

23 PROGRAM.—The Outer Continental Shelf Lands Act (43 

24 U.S.C. 1331 et seq.) is amended by adding at the end 

25 the following:
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1 ‘‘SEC. 32. DOMESTIC OFFSHORE ENERGY REINVESTMENT 

2 PROGRAM. 

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

4 ‘‘(1) APPROVED PLAN.—The term ‘approved 

5 plan’ means a Secure Energy Reinvestment Plan ap6 proved by the Secretary under this section. 

7 ‘‘(2) COASTAL ENERGY STATE.—The term 

8 ‘Coastal Energy State’ means a Coastal State off 

9 the coastline of which, within the seaward lateral 

10 boundary as determined by the map referenced in 

11 subsection (c)(2)(A), Outer Continental Shelf bonus 

12 bids or royalties are generated, other than bonus 

13 bids or royalties from a leased tract within any area 

14 of the Outer Continental Shelf for which a morato15 rium on new leasing was in effect as of January 1, 

16 2002, unless the lease was issued before the estab17 lishment of the moratorium and was in production 

18 on such date. 

19 ‘‘(3) COASTAL POLITICAL SUBDIVISION.—The 

20 term ‘coastal political subdivision’ means a county, 

21 parish, or other equivalent subdivision of a Coastal 

22 Energy State, all or part of which lies within the 

23 boundaries of the coastal zone of the State, as iden24 tified in the State’s approved coastal zone manage25 ment program under the Coastal Zone Management 
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1 Act of 1972 (16 U.S.C. 1451 et seq.) on the date 

2 of the enactment of this section. 

3 ‘‘(4) COASTAL POPULATION.—The term ‘coastal 

4 population’ means the population of a coastal polit5 ical subdivision, as determined by the most recent 

6 official data of the Census Bureau. 

7 ‘‘(5) COASTLINE.—The term ‘coastline’ has the 

8 same meaning as the term ‘coast line’ in subsection 

9 2(c) of the Submerged Lands Act (43 U.S.C. 

10 1301(c)). 

11 ‘‘(6) FUND.—The term ‘Fund’ means the Se12 cure Energy Reinvestment Fund established by this 

13 section. 

14 ‘‘(7) LEASED TRACT.—The term ‘leased tract’ 

15 means a tract maintained under section 6 or leased 

16 under section 8 for the purpose of drilling for, devel17 oping, and producing oil and natural gas resources. 

18 ‘‘(8) QUALIFIED OUTER CONTINENTAL SHELF

19 REVENUES.—(A) Except as provided in subpara20 graph (B), the term ‘qualified Outer Continental 

21 Shelf revenues’ means all amounts received by the 

22 United States on or after October 1, 2003, from 

23 each leased tract or portion of a leased tract lying 

24 seaward of the zone defined and governed by section 

25 8(g), or lying within such zone but to which section 
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1 8(g) does not apply, including bonus bids, rents, roy2 alties (including payments for royalties taken in kind 

3 and sold), net profit share payments, and related in4 terest. 

5 ‘‘(B) Such term does not include any revenues 

6 from a leased tract or portion of a leased tract that 

7 is included within any area of the Outer Continental 

8 Shelf for which a moratorium on new leasing was in 

9 effect as of January 1, 2002, unless the lease was 

10 issued before the establishment of the moratorium 

11 and was in production on such date. 

12 ‘‘(9) SECRETARY.—The term ‘Secretary’ means 

13 the Secretary of the Interior. 

14 ‘‘(b) SECURE ENERGY REINVESTMENT FUND.—

15 ‘‘(1) ESTABLISHMENT.—There is established in 

16 the Treasury of the United States a separate ac17 count which shall be known as the ‘Secure Energy 

18 Reinvestment Fund’. The Fund shall consist of 

19 amounts deposited under paragraph (2), and such 

20 other amounts as may be appropriated to the Fund. 

21 ‘‘(2) DEPOSITS.—For each fiscal year after fis22 cal year 2003, the Secretary of the Treasury shall 

23 deposit into the Fund the following: 

24 ‘‘(A) Notwithstanding section 9, all quali25 fied Outer Continental Shelf revenues attrib-
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1 utable to royalties received by the United States 

2 in the fiscal year that are in excess of the fol3 lowing amount: 

4 ‘‘(i) $3,455,000,000 in the case of 

5 royalties received in fiscal year 2004. 

6 ‘‘(ii) $3,726,000,000 in the case of 

7 royalties received in fiscal year 2005. 

8 ‘‘(iii) $4,613,000,000 in the case of 

9 royalties received in fiscal year 2006. 

10 ‘‘(iv) $5,226,000,000 in the case of 

11 royalties received in fiscal year 2007. 

12 ‘‘(v) $5,841,000,000 in the case of 

13 royalties received in fiscal year 2008. 

14 ‘‘(vi) $5,763,000,000 in the case of 

15 royalties received in fiscal year 2009. 

16 ‘‘(vii) $6,276,000,000 in the case of 

17 royalties received in fiscal year 2010. 

18 ‘‘(viii) $6,351,000,000 in the case of 

19 royalties received in fiscal year 2011. 

20 ‘‘(ix) $6,551,000,000 in the case of 

21 royalties received in fiscal year 2012. 

22 ‘‘(x) $5,120,000,000 in the case of 

23 royalties received in fiscal year 2013.

24 ‘‘(B) Notwithstanding section 9, all quali25 fied Outer Continental shelf revenues attrib-
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1 utable to bonus bids received by the United 

2 States in each of the fiscal years 2004 through 

3 2013 that are in excess of $1,000,000,000. 

4 ‘‘(C) Notwithstanding section 9, in addi5 tion to amounts deposited under subparagraphs 

6 (A) and (B), $35,000,000 of amounts received 

7 by the United States each fiscal year as royal8 ties for oil or gas production on the Outer Con9 tinental Shelf, except that no amounts shall be 

10 deposited under this subparagraph before fiscal 

11 year 2004 or after fiscal year 2013. 

12 ‘‘(D) All interest earned under paragraph 

13 (4). 

14 ‘‘(E) All repayments under subsection (f). 

15 ‘‘(3) REDUCTION IN DEPOSIT.—(A) For each 

16 fiscal year after fiscal year 2013 in which amounts 

17 received by the United States as royalties for oil or 

18 gas production on the Outer Continental Shelf are 

19 less than the sum of the amounts described in sub20 paragraph (B) (before the application of this sub21 paragraph), the Secretary of the Treasury shall re22 duce each of the amounts described in subparagraph 

23 (B) proportionately. 

24 ‘‘(B) The amounts referred to in subparagraph 

25 (A) are the following: 
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1 ‘‘(i) The amount required to be covered 

2 into the Historic Preservation Fund under sec3 tion 108 of the National Historic Preservation 

4 Act (16 U.S.C. 470h) on the date of the enact5 ment of this paragraph. 

6 ‘‘(ii) The amount required to be credited to 

7 the Land and Water Conservation Fund under 

8 section 2(c)(2) of the Land and Water Con9 servation Fund Act of 1965 (16 U.S.C. 4601–

10 5(c)(2)) on the date of the enactment of this 

11 paragraph. 

12 ‘‘(iii) The amount required to be deposited 

13 under subparagraph (C) of paragraph (2) of 

14 this subsection. 

15 ‘‘(4) INVESTMENT.—The Secretary of the 

16 Treasury shall invest moneys in the Fund (including 

17 interest) in public debt securities with maturities 

18 suitable to the needs of the Fund, as determined by 

19 the Secretary of the Treasury, and bearing interest 

20 at rates determined by the Secretary of the Treas21 ury, taking into consideration current market yields 

22 on outstanding marketable obligations of the United 

23 States of comparable maturity. Such invested mon24 eys shall remain invested until needed to meet re25 quirements for disbursement under this section.
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1 ‘‘(5) REVIEW AND REVISION OF BASELINE

2 AMOUNTS.—Not later than December 31, 2008, the 

3 Secretary of the Interior, in consultation with the 

4 Secretary of the Treasury, shall—

5 ‘‘(A) determine the amount and composi6 tion of Outer Continental Shelf revenues that 

7 were received by the United States in each of 

8 the fiscal years 2004 through 2008; 

9 ‘‘(B) project the amount and composition 

10 of Outer Continental Shelf revenues that will be 

11 received in the United States in each of the fis12 cal years 2009 through 2013; and 

13 ‘‘(C) submit to the Congress a report re14 garding whether any of the dollar amounts set 

15 forth in clauses (v) through (x) of paragraph 

16 (2)(A) or paragraph (2)(B) should be modified 

17 to reflect those projections. 

18 ‘‘(6) AUTHORIZATION OF APPROPRIATION OF

19 ADDITIONAL AMOUNTS.—In addition to the amounts 

20 deposited into the Fund under paragraph (2) there 

21 are authorized to be appropriated to the Fund—

22 ‘‘(A) for each of fiscal years 2004 through 

23 2013 up to $500,000,000; and 

24 ‘‘(B) for each fiscal year after fiscal year 

25 2013 up to 25 percent of qualified Outer Conti-
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1 nental Shelf revenues received by the United 

2 States in the preceding fiscal year. 

3 ‘‘(c) USE OF SECURE ENERGY REINVESTMENT

4 FUND.—

5 ‘‘(1) IN GENERAL.—(A) Amounts into the Fund 

6 shall be available for obligation or expenditure only 

7 for the purposes of this section, and only as provided 

8 for in an appropriations Act. The appropriations 

9 may be made without fiscal year limitation. 

10 ‘‘(B) Of amounts made available under sub11 section (m), the Secretary shall use amounts remain12 ing after the application of subsections (h) and (i) 

13 to pay to each Coastal Energy State that has a Se14 cure Energy Reinvestment Plan approved by the 

15 Secretary under this section, and to coastal political 

16 subdivisions of such State, the amount allocated to 

17 the State or coastal political subdivision, respec18 tively, under this subsection. 

19 ‘‘(C) The Secretary shall make payments under 

20 this paragraph in December of 2004, and of each 

21 year thereafter, or as soon as practicable thereafter. 

22 ‘‘(2) ALLOCATION.—The Secretary shall allo23 cate amounts made available under subsection (m) 

24 in a fiscal year, and other amounts determined by 

25 the Secretary to be available to carry out this sec-
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1 tion, among Coastal Energy States that have an ap2 proved plan, and to coastal political subdivisions of 

3 such States, as follows:

4 ‘‘(A)(i) Of the amounts made available for 

5 each of the first 10 fiscal years for which 

6 amounts are available for allocation under this 

7 paragraph, the allocation for each Coastal En8 ergy State shall be calculated based on the ratio 

9 of qualified Outer Continental Shelf revenues 

10 generated off the coastline of the Coastal En11 ergy State to the qualified Outer Continental 

12 Shelf revenues generated off the coastlines of 

13 all Coastal Energy States for the period begin14 ning January 1, 1992, and ending December 

15 31, 2001. 

16 ‘‘(ii) Of the amounts available for a fiscal 

17 year in a subsequent 10-fiscal-year period, the 

18 allocation for each Coastal Energy State shall 

19 be calculated based on such ratio determined by 

20 the Secretary with respect to qualified Outer 

21 Continental Shelf revenues generated in each 

22 subsequent corresponding 10-year period. 

23 ‘‘(iii) For purposes of this subparagraph, 

24 qualified Outer Continental Shelf revenues shall 

25 be considered to be generated off the coastline 
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1 of a Coastal Energy State if the geographic 

2 center of the lease tract from which the reve3 nues are generated is located within the area 

4 formed by the extension of the State’s seaward 

5 lateral boundaries, calculated using the strict 

6 and scientifically derived conventions estab7 lished to delimit international lateral boundaries 

8 under the Law of the Sea, as indicated on the 

9 map entitled ‘Calculated Seaward Lateral 

10 Boundaries’ and dated October 2003, on file in 

11 the Office of the Director, Minerals Manage12 ment Service. 

13 ‘‘(B) 35 percent of each Coastal Energy 

14 State’s allocable share as determined under 

15 subparagraph (A) shall be allocated among and 

16 paid directly to the coastal political subdivisions 

17 of the State by the Secretary based on the fol18 lowing formula: 

19 ‘‘(i) 25 percent shall be allocated 

20 based on the ratio of each coastal political 

21 subdivision’s coastal population to the 

22 coastal population of all coastal political 

23 subdivisions of the Coastal Energy State. 

24 ‘‘(ii) 25 percent shall be allocated 

25 based on the ratio of each coastal political 
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1 subdivision’s coastline miles to the coast2 line miles of all coastal political subdivi3 sions of the State. In the case of a coastal 

4 political subdivision without a coastline, 

5 the coastline of the political subdivision for 

6 purposes of this clause shall be one-third 

7 the average length of the coastline of the 

8 other coastal political subdivisions of the 

9 State. 

10 ‘‘(iii) 50 percent shall be allocated 

11 based on a formula that allocates 75 per12 cent of the funds based on such coastal po13 litical subdivision’s relative distance from 

14 any leased tract used to calculate that 

15 State’s allocation and 25 percent of the 

16 funds based on the relative level of Outer 

17 Continental Shelf oil and gas activities in 

18 a coastal political subdivision to the level of 

19 Outer Continental Shelf oil and gas activi20 ties in all coastal political subdivisions in 

21 such State, as determined by the Sec22 retary, except that in the case of a coastal 

23 political subdivision in the State of Cali24 fornia that has a coastal shoreline, that is 

25 not within 200 miles of the geographic cen-
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1 ter of a leased tract or portion of a leased 

2 tract, and in which there is located one or 

3 more oil refineries the allocation under this 

4 clause shall be determined as if that coast5 al political subdivision were located within 

6 a distance of 50 miles from the geographic 

7 center of the closest leased tract with 

8 qualified Outer Continental Shelf revenues. 

9 ‘‘(3) REALLOCATION.—Any amount allocated to 

10 a Coastal Energy State or coastal political subdivi11 sion of such a State but not disbursed because of a 

12 failure of a Coastal Energy State to have an ap13 proved plan shall be reallocated by the Secretary 

14 among all other Coastal Energy States in a manner 

15 consistent with this subsection, except that the Sec16 retary—

17 ‘‘(A) shall hold the amount in escrow with18 in the Fund until the earlier of the end of the 

19 next fiscal year in which the allocation is made 

20 or the final resolution of any appeal regarding 

21 the disapproval of a plan submitted by the 

22 State under this section; and 

23 ‘‘(B) shall continue to hold such amount in 

24 escrow until the end of the subsequent fiscal 

25 year thereafter, if the Secretary determines that
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1 such State is making a good faith effort to de2 velop and submit, or update, a Secure Energy 

3 Reinvestment Plan under subsection (d). 

4 ‘‘(4) MINIMUM SHARE.—Notwithstanding any 

5 other provision of this subsection, the amount allo6 cated under this subsection to each Coastal Energy 

7 State each fiscal year shall be not less than 5 per8 cent of the total amount available for that fiscal year 

9 for allocation under this subsection to Coastal En10 ergy States, except that for any Coastal Energy 

11 State determined by the Secretary to have an area 

12 formed by the extension of the State’s seaward lat13 eral boundary, as designated by the map referenced 

14 in paragraph (2)(A)(iii), of less than 490 square 

15 statute miles, the amount allocated to such State 

16 shall not be less than 10 percent of the total amount 

17 available for that fiscal year for allocation under this 

18 subsection. 

19 ‘‘(5) RECOMPUTATION.—If the allocation to one 

20 or more Coastal Energy States under paragraph (4) 

21 with respect to a fiscal year is greater than the 

22 amount that would be allocated to such States under 

23 this subsection if paragraph (4) did not apply, then 

24 the allocations under this subsection to all other 

25 Coastal Energy States shall be paid from the 
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1 amount remaining after deduction of the amounts 

2 allocated under paragraph (4), but shall be reduced 

3 on a pro rata basis by the sum of the allocations 

4 under paragraph (4) so that not more than 100 per5 cent of the funds available in the Fund for allocation 

6 with respect to that fiscal year is allocated. 

7 ‘‘(d) SECURE ENERGY REINVESTMENT PLAN.—

8 ‘‘(1) DEVELOPMENT AND SUBMISSION OF

9 STATE PLANS.—The Governor of each State seeking 

10 to receive funds under this section shall prepare, and 

11 submit to the Secretary, a Secure Energy Reinvest12 ment Plan describing planned expenditures of funds 

13 received under this section. The Governor shall in14 clude in the State plan submitted to the Secretary 

15 plans prepared by the coastal political subdivisions 

16 of the State. The Governor and the coastal political 

17 subdivision shall solicit local input and provide for 

18 public participation in the development of the State 

19 plan. In describing the planned expenditures, the 

20 State and coastal political subdivisions shall include 

21 only items that are uses authorized under subsection 

22 (e). 

23 ‘‘(2) APPROVAL OR DISAPPROVAL.—

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

25 not disburse funds to a State or coastal political 
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1 subdivision of a State under this section before 

2 the date the State has an approved plan. The 

3 Secretary shall approve a Secure Energy Rein4 vestment Plan submitted by a State under 

5 paragraph (1) if the Secretary determines that 

6 the expenditures provided for in the plan are 

7 uses authorized under subsection (e), and that 

8 the plan contains each of the following: 

9 ‘‘(i) The name of the State agency 

10 that will have the authority to represent 

11 and act for the State in dealing with the 

12 Secretary for purposes of this section. 

13 ‘‘(ii) A program for the implementa14 tion of the plan, that (I) has as a goal im15 proving the environment, (II) has as a goal 

16 addressing the impacts of oil and gas pro17 duction from the Outer Continental Shelf, 

18 and (III) includes a description of how the 

19 State and coastal political subdivisions of 

20 the State will evaluate the effectiveness of 

21 the plan. 

22 ‘‘(iii) Certification by the Governor 

23 that ample opportunity has been accorded 

24 for public participation in the development 

25 and revision of the plan. 
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1 ‘‘(iv) Measures for taking into account 

2 other relevant Federal resources and pro3 grams. The plan shall be correlated so far 

4 as practicable with other State, regional, 

5 and local plans. 

6 ‘‘(v) For any State for which the ratio 

7 determined under subsection (c)(2)(A)(i) 

8 or (c)(2)(A)(ii), as appropriate, expressed 

9 as a percentage, exceeds 25 percent, a plan 

10 to spend not less than 30 percent of the 

11 total funds provided under this section 

12 each fiscal year to that State and appro13 priate coastal political subdivisions, to ad14 dress the socioeconomic or environmental 

15 impacts identified in the plan that remain 

16 significant or progressive after implemen17 tation of mitigation measures identified in 

18 the most current environmental impact 

19 statement (as of the date of the enactment 

20 of this clause) required under the National 

21 Environmental Protection Act of 1969 for 

22 lease sales under this Act. 

23 ‘‘(vi) A plan to utilize at least one-half 

24 of the funds provided pursuant to sub25 section (c)(2)(B), and a portion of other 
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1 funds provided to such State under this 

2 section, on programs or projects that are 

3 coordinated and conducted in partnership 

4 between the State and coastal political sub5 division. 

6 ‘‘(B) PROCEDURE AND TIMING.—The Sec7 retary shall approve or disapprove each plan 

8 submitted in accordance with this subsection 

9 within 90 days after its submission.

10 ‘‘(3) AMENDMENT OR REVISION.—Any amend11 ment to or revision of an approved plan shall be pre12 pared and submitted in accordance with the require13 ments under this paragraph for the submittal of 

14 plans, and shall be approved or disapproved by the 

15 Secretary in accordance with paragraph (2)(B). 

16 ‘‘(e) AUTHORIZED USES.—A Coastal Energy State, 

17 and a coastal political subdivision of such a State, shall 

18 use amounts paid under this section (including any such 

19 amounts deposited into a trust fund administered by the 

20 State or coastal political subdivision dedicated to uses con21 sistent with this subsection), in compliance with Federal 

22 and State law and the approved plan of the State, only 

23 for one or more of the following purposes: 
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1 ‘‘(1) Projects and activities, including edu2 cational activities, for the conservation, protection, 

3 or restoration of coastal areas including wetlands. 

4 ‘‘(2) Mitigating damage to, or the protection of, 

5 fish, wildlife, or natural resources. 

6 ‘‘(3) To the extent of such sums as are consid7 ered reasonable by the Secretary, planning assist8 ance and administrative costs of complying with this 

9 section. 

10 ‘‘(4) Implementation of federally approved 

11 plans or programs for marine, coastal, subsidence, 

12 or conservation management or for protection of re13 sources from natural disasters. 

14 ‘‘(5) Mitigating impacts of Outer Continental 

15 Shelf activities through funding onshore infrastruc16 ture and public service needs. 

17 ‘‘(f) COMPLIANCE WITH AUTHORIZED USES.—If the 

18 Secretary determines that an expenditure of an amount 

19 made by a Coastal Energy State or coastal political sub20 division is not in accordance with the approved plan of 

21 the State (including the plans of coastal political subdivi22 sions included in such plan), the Secretary shall not dis23 burse any further amounts under this section to that 

24 Coastal Energy State or coastal political subdivision 

25 until—
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1 ‘‘(1) the amount is repaid to the Secretary; or 

2 ‘‘(2) the Secretary approves an amendment to 

3 the plan that authorizes the expenditure. 

4 ‘‘(g) ARBITRATION OF STATE AND LOCAL DIS5 PUTES.—The Secretary may require, as a condition of any 

6 payment under this section, that a State or coastal polit7 ical subdivision in a State must submit to arbitration—

8 ‘‘(1) any dispute between the State or coastal 

9 political subdivision (or both) and the Secretary re10 garding implementation of this section; and 

11 ‘‘(2) any dispute between the State and political 

12 subdivision regarding implementation of this section, 

13 including any failure to include, in the plan sub14 mitted by the State for purposes of subsection (d), 

15 any spending plan of the coastal political subdivi16 sion. 

17 ‘‘(h) ADMINISTRATIVE EXPENSES.—Of amounts 

18 made available under subsection (m) for each fiscal year, 

19 the Secretary may use up to one-half of one percent for 

20 the administrative costs of implementing this section. 

21 ‘‘(i) FUNDING FOR CONSORTIUM.—

22 ‘‘(1) IN GENERAL.—Of amounts made available 

23 under subsection (m) for each of fiscal year 2004 

24 through 2013, 2 percent shall be used by the Sec25 retary of the Interior to provide funding for the 
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1 Coastal Restoration and Enhancement through 

2 Science and Technology program. 

3 ‘‘(2) TREATMENT.—Any amount provided by 

4 the Secretary of the Interior under this subsection 

5 for a fiscal year shall, for purposes of determining 

6 the amount appropriated under any other provision 

7 of law that authorizes appropriations to carry out 

8 the program referred to in paragraph (1), be treated 

9 as appropriated under that other provision. 

10 ‘‘(j) DISPOSITION OF FUNDS.—A Coastal Energy 

11 State or coastal political subdivision may use funds pro12 vided to such entity under this section, subject to sub13 section (e), for any payment that is eligible to be made 

14 with funds provided to States under section 35 of the Min15 eral Leasing Act (30 U.S.C. 191). 

16 ‘‘(k) REPORTS.—Each fiscal year following a fiscal 

17 year in which a Coastal Energy State or coastal political 

18 subdivision of a Coastal Energy State receives funds under 

19 this section, the Governor of the Coastal Energy State, 

20 in coordination with such State’s coastal political subdivi21 sions, shall account for all funds so received for the pre22 vious fiscal year in a written report to the Secretary. The 

23 report shall include, in accordance with regulations pre24 scribed by the Secretary, a description of all projects and 

25 activities that received such funds. In order to avoid dupli-
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1 cation, such report may incorporate, by reference, any 

2 other reports required to be submitted under other provi3 sions of law. 

4 ‘‘(l) SIGNS.—The Secretary shall require, as a condi5 tion of any allocation of funds provided with amounts 

6 made available by this section, that each State and coastal 

7 political subdivision shall include on any sign otherwise in8 stalled at any site at or near an entrance or public use 

9 focal point area for which such funds are used, a state10 ment that the existence or development of the site (or 

11 both), as appropriate, is a product of such funds. 

12 ‘‘(m) AUTHORIZATION OF APPROPRIATIONS.—There 

13 are authorized to be appropriated from the Fund to the 

14 Secretary to carry out this section, for fiscal year 2004 

15 and each fiscal year thereafter, the amounts deposited into 

16 the Fund during the preceding fiscal year.’’. 

17 (b) ADDITIONAL AMENDMENTS.—Section 31 of the 

18 Outer Continental Shelf Lands Act (43 U.S.C. 1356a) is 

19 amended—

20 (1) by striking subsection (a); 

21 (2) in subsection (c) by striking ‘‘For fiscal 

22 year 2001, $150,000,000 is’’ and inserting ‘‘Such 

23 sums as may be necessary to carry out this section 

24 are’’; 
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1 (3) in subsection (d)(1)(B) by striking ‘‘, ex2 cept’’ and all that follows through the end of the 

3 sentence and inserting a period; 

4 (4) by redesignating subsections (b) through (g) 

5 in order as subsection (a) through (f); and 

6 (5) by striking ‘‘subsection (f)’’ each place it 

7 appears and inserting ‘‘subsection (e)’’. 

8 (c) UTILIZATION OF COASTAL RESTORATION AND

9 ENHANCEMENT THROUGH SCIENCE AND TECHNOLOGY

10 PROGRAM.—

11 (1) AUTHORIZATION.—The Secretary of the In12 terior and the Secretary of Commerce may each use 

13 the Coastal Restoration and Enhancement through 

14 Science and Technology program for the purposes 

15 of—

16 (A) assessing the effects of coastal habitat 

17 restoration techniques; 

18 (B) developing improved ecosystem mod19 eling capabilities for improved predictions of 

20 coastal conditions and habitat change and for 

21 developing new technologies for restoration ac22 tivities; and 

23 (C) identifying economic options to address 

24 socioeconomic consequences of coastal degrada25 tion. 
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1 (2) CONDITION.—The Secretary of the Interior, 

2 in consultation with the Secretary of Commerce, 

3 shall ensure that the program—

4 (A) establishes procedures designed to 

5 avoid duplicative activities among Federal agen6 cies and entities receiving Federal funds; 

7 (B) coordinates with persons involved in 

8 similar activities; and 

9 (C) establishes a mechanism to collect, or10 ganize, and make available information and 

11 findings on coastal restoration. 

12 (3) REPORT.—Not later than September 30, 

13 2008, the Secretary of the Interior, in consultation 

14 with the Secretary of Commerce, shall transmit a re15 port to the Congress on the effectiveness of any Fed16 eral and State restoration efforts conducted pursu17 ant to this subsection and make recommendations to 

18 improve coordinated coastal restoration efforts. 

19 (4) FUNDING.—For each of fiscal years 2004 

20 through 2013, there is authorized to be appropriated 

21 to the Secretary $10,000,000 to carry out activities 

22 under this subsection. 
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1 Subtitle C—Reforms to the Board 

2 of Directors of the Tennessee 

3 Valley Authority 

4 SEC. 1431. CHANGE IN COMPOSITION, OPERATION, AND DU5 TIES OF THE BOARD OF DIRECTORS OF THE 

6 TENNESSEE VALLEY AUTHORITY. 

7 The Tennessee Valley Authority Act of 1933 (16 

8 U.S.C. 831 et seq.) is amended by striking section 2 and 

9 inserting the following: 

10 ‘‘SEC. 2. MEMBERSHIP, OPERATION, AND DUTIES OF THE 

11 BOARD OF DIRECTORS. 

12 ‘‘(a) MEMBERSHIP.—

13 ‘‘(1) APPOINTMENT.—The Board of Directors 

14 of the Corporation (referred to in this Act as the 

15 ‘Board’) shall be composed of 9 members appointed 

16 by the President by and with the advice and consent 

17 of the Senate, at least 5 of whom shall be a legal 

18 resident of a State any part of which is in the serv19 ice area of the Corporation. 

20 ‘‘(2) CHAIRMAN.—The members of the Board 

21 shall select 1 of the members to act as Chairman of 

22 the Board. 

23 ‘‘(b) QUALIFICATIONS.—To be eligible to be ap24 pointed as a member of the Board, an individual—

25 ‘‘(1) shall be a citizen of the United States;
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1 ‘‘(2) shall have management expertise relative 

2 to a large for-profit or nonprofit corporate, govern3 ment, or academic structure; 

4 ‘‘(3) shall not be an employee of the Corpora5 tion; and 

6 ‘‘(4) shall make full disclosure to Congress of 

7 any investment or other financial interest that the 

8 individual holds in the energy industry. 

9 ‘‘(c) RECOMMENDATIONS.—In appointing members 

10 of the Board, the President shall—

11 ‘‘(1) consider recommendations from such pub12 lic officials as—

13 ‘‘(A) the Governors of States in the service 

14 area; 

15 ‘‘(B) individual citizens; 

16 ‘‘(C) business, industrial, labor, electric 

17 power distribution, environmental, civic, and 

18 service organizations; and 

19 ‘‘(D) the congressional delegations of the 

20 States in the service area; and 

21 ‘‘(2) seek qualified members from among per22 sons who reflect the diversity, including the geo23 graphical diversity, and needs of the service area of 

24 the Corporation. 

25 ‘‘(d) TERMS.—
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1 ‘‘(1) IN GENERAL.—A member of the Board 

2 shall serve a term of 5 years. A member of the 

3 Board whose term has expired may continue to serve 

4 after the member’s term has expired until the date 

5 on which a successor takes office, except that the 

6 member shall not serve beyond the end of the ses7 sion of Congress in which the term of the member 

8 expires. 

9 ‘‘(2) VACANCIES.—A member appointed to fill a 

10 vacancy on the Board occurring before the expira11 tion of the term for which the predecessor of the 

12 member was appointed shall be appointed for the re13 mainder of that term. 

14 ‘‘(e) QUORUM.—

15 ‘‘(1) IN GENERAL.—Five of the members of the 

16 Board shall constitute a quorum for the transaction 

17 of business. 

18 ‘‘(2) VACANCIES.—A vacancy on the Board 

19 shall not impair the power of the Board to act. 

20 ‘‘(f) COMPENSATION.—

21 ‘‘(1) IN GENERAL.—A member of the Board 

22 shall be entitled to receive—

23 ‘‘(A) a stipend of—

24 ‘‘(i) $45,000 per year; or 
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1 ‘‘(ii)(I) in the case of the chairman of 

2 any committee of the Board created by the 

3 Board, $46,000 per year; or 

4 ‘‘(II) in the case of the chairman of 

5 the Board, $50,000 per year; and 

6 ‘‘(B) travel expenses, including per diem in 

7 lieu of subsistence, in the same manner as per8 sons employed intermittently in Government 

9 service under section 5703 of title 5, United 

10 States Code. 

11 ‘‘(2) ADJUSTMENTS IN STIPENDS.—The 

12 amount of the stipend under paragraph (1)(A)(i) 

13 shall be adjusted by the same percentage, at the 

14 same time and manner, and subject to the same lim15 itations as are applicable to adjustments under sec16 tion 5318 of title 5, United States Code. 

17 ‘‘(g) DUTIES.—

18 ‘‘(1) IN GENERAL.—The Board shall—

19 ‘‘(A) establish the broad goals, objectives, 

20 and policies of the Corporation that are appro21 priate to carry out this Act; 

22 ‘‘(B) develop long-range plans to guide the 

23 Corporation in achieving the goals, objectives, 

24 and policies of the Corporation and provide as-
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1 sistance to the chief executive officer to achieve 

2 those goals, objectives, and policies; 

3 ‘‘(C) ensure that those goals, objectives, 

4 and policies are achieved; 

5 ‘‘(D) approve an annual budget for the 

6 Corporation; 

7 ‘‘(E) adopt and submit to Congress a con8 flict-of-interest policy applicable to members of 

9 the Board and employees of the Corporation; 

10 ‘‘(F) establish a compensation plan for em11 ployees of the Corporation in accordance with 

12 subsection (i); 

13 ‘‘(G) approve all compensation (including 

14 salary or any other pay, bonuses, benefits, in15 centives, and any other form of remuneration) 

16 of all managers and technical personnel that re17 port directly to the chief executive officer (in18 cluding any adjustment to compensation); 

19 ‘‘(H) ensure that all activities of the Cor20 poration are carried out in compliance with ap21 plicable law; 

22 ‘‘(I) create an audit committee, composed 

23 solely of Board members independent of the 

24 management of the Corporation, which shall—
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1 ‘‘(i) in consultation with the inspector 

2 general of the Corporation, recommend to 

3 the Board an external auditor; 

4 ‘‘(ii) receive and review reports from 

5 the external auditor of the Corporation and 

6 inspector general of the Corporation; and 

7 ‘‘(iii) make such recommendations to 

8 the Board as the audit committee con9 siders necessary; 

10 ‘‘(J) create such other committees of 

11 Board members as the Board considers to be 

12 appropriate; 

13 ‘‘(K) conduct such public hearings as it 

14 deems appropriate on issues that could have a 

15 substantial effect on—

16 ‘‘(i) the electric ratepayers in the serv17 ice area; or 

18 ‘‘(ii) the economic, environmental, so19 cial, or physical well-being of the people of 

20 the service area; 

21 ‘‘(L) establish the electricity rates charged 

22 by the Corporation; and 

23 ‘‘(M) engage the services of an external 

24 auditor for the Corporation. 
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1 ‘‘(2) MEETINGS.—The Board shall meet at 

2 least 4 times each year. 

3 ‘‘(h) CHIEF EXECUTIVE OFFICER.—

4 ‘‘(1) APPOINTMENT.—The Board shall appoint 

5 a person to serve as chief executive officer of the 

6 Corporation. 

7 ‘‘(2) QUALIFICATIONS.—

8 ‘‘(A) IN GENERAL.—To serve as chief exec9 utive officer of the Corporation, a person—

10 ‘‘(i) shall have senior executive-level 

11 management experience in large, complex 

12 organizations; 

13 ‘‘(ii) shall not be a current member of 

14 the Board or have served as a member of 

15 the Board within 2 years before being ap16 pointed chief executive officer; and 

17 ‘‘(iii) shall comply with the conflict-of18 interest policy adopted by the Board. 

19 ‘‘(B) EXPERTISE.—In appointing a chief 

20 executive officer, the Board shall give particular 

21 consideration to appointing an individual with 

22 expertise in the electric industry and with 

23 strong financial skills. 

24 ‘‘(3) TENURE.—The chief executive officer shall 

25 serve at the pleasure of the Board.
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1 ‘‘(i) COMPENSATION PLAN.—

2 ‘‘(1) IN GENERAL.—The Board shall approve a 

3 compensation plan that specifies all compensation 

4 (including salary or any other pay, bonuses, benefits, 

5 incentives, and any other form of remuneration) for 

6 the chief executive officer and employees of the Cor7 poration. 

8 ‘‘(2) ANNUAL SURVEY.—The compensation plan 

9 shall be based on an annual survey of the prevailing 

10 compensation for similar positions in private indus11 try, including engineering and electric utility compa12 nies, publicly owned electric utilities, and Federal, 

13 State, and local governments. 

14 ‘‘(3) CONSIDERATIONS.—The compensation 

15 plan shall provide that education, experience, level of 

16 responsibility, geographic differences, and retention 

17 and recruitment needs will be taken into account in 

18 determining compensation of employees. 

19 ‘‘(4) POSITIONS AT OR BELOW LEVEL IV.—The 

20 chief executive officer shall determine the salary and 

21 benefits of employees whose annual salary is not 

22 greater than the annual rate payable for positions at 

23 level IV of the Executive Schedule under section 

24 5315 of title 5, United States Code. 
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1 ‘‘(5) POSITIONS ABOVE LEVEL IV.—On the rec2 ommendation of the chief executive officer, the 

3 Board shall approve the salaries of employees whose 

4 annual salaries would be in excess of the annual rate 

5 payable for positions at level IV of the Executive 

6 Schedule under section 5315 of title 5, United 

7 States Code.’’. 

8 SEC. 1432. CHANGE IN MANNER OF APPOINTMENT OF 

9 STAFF. 

10 Section 3 of the Tennessee Valley Authority Act of 

11 1933 (16 U.S.C. 831b) is amended—

12 (1) by striking the first undesignated paragraph 

13 and inserting the following: 

14 ‘‘(a) APPOINTMENT BY THE CHIEF EXECUTIVE OF15 FICER.—The chief executive officer shall appoint, with the 

16 advice and consent of the Board, and without regard to 

17 the provisions of the civil service laws applicable to officers 

18 and employees of the United States, such managers, as19 sistant managers, officers, employees, attorneys, and 

20 agents as are necessary for the transaction of the business 

21 of the Corporation.’’; and 

22 (2) by striking ‘‘All contracts’’ and inserting 

23 the following: 

24 ‘‘(b) WAGE RATES.—All contracts’’. 
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1 SEC. 1433. CONFORMING AMENDMENTS. 

2 (a) The Tennessee Valley Authority Act of 1933 (16 

3 U.S.C. 831 et seq.) is amended—

4 (1) by striking ‘‘board of directors’’ each place 

5 it appears and inserting ‘‘Board of Directors’’; and 

6 (2) by striking ‘‘board’’ each place it appears 

7 and inserting ‘‘Board’’. 

8 (b) Section 9 of the Tennessee Valley Authority Act 

9 of 1933 (16 U.S.C. 831h) is amended—

10 (1) by striking ‘‘The Comptroller General of the 

11 United States shall audit’’ and inserting the fol12 lowing: 

13 ‘‘(c) AUDITS.—The Comptroller General of the 

14 United States shall audit’’; and 

15 (2) by striking ‘‘The Corporation shall deter16 mine’’ and inserting the following: 

17 ‘‘(d) ADMINISTRATIVE ACCOUNTS AND BUSINESS

18 DOCUMENTS.—The Corporation shall determine’’. 

19 (c) Title 5, United States Code, is amended—

20 (1) in section 5314, by striking ‘‘Chairman, 

21 Board of Directors of the Tennessee Valley Author22 ity.’’; and 

23 (2) in section 5315, by striking ‘‘Members, 

24 Board of Directors of the Tennessee Valley Author25 ity.’’. 
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1 SEC. 1434. APPOINTMENTS; EFFECTIVE DATE; TRANSITION. 

2 (a) APPOINTMENTS.—

3 (1) IN GENERAL.—As soon as practicable after 

4 the date of enactment of this Act, the President 

5 shall submit to the Senate nominations of 6 persons 

6 to serve as members of the Board of Directors of the 

7 Tennessee Valley Authority in addition to the mem8 bers serving on the date of enactment of this Act. 

9 (2) INITIAL TERMS.—Notwithstanding section 

10 2(d) of the Tennessee Valley Authority Act of 1933 

11 (as amended by this subtitle), in making the ap12 pointments under paragraph (1), the President shall 

13 appoint—

14 (A) 2 members for a term to expire on 

15 May 18, 2006; 

16 (B) 2 members for a term to expire on 

17 May 18, 2008; and 

18 (C) 2 members for a term to expire on 

19 May 18, 2010. 

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

21 this section and sections 1431, 1432, and 1433 take effect 

22 on the later of the date on which at least 3 persons nomi23 nated under subsection (a) take office or May 18, 2005. 

24 (c) SELECTION OF CHAIRMAN.—The Board of Direc25 tors of the Tennessee Valley Authority shall select 1 of 
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1 the members to act as Chairman of the Board not later 

2 than 30 days after the effective date of this section. 

3 (d) CONFLICT-OF-INTEREST POLICY.—The Board of 

4 Directors of the Tennessee Valley Authority shall adopt 

5 and submit to Congress a conflict-of-interest policy, as re6 quired by section 2(g)(1)(E) of the Tennessee Valley Au7 thority Act of 1933 (as amended by this subtitle), as soon 

8 as practicable after the effective date of this section. 

9 (e) TRANSITION.—A person who is serving as a mem10 ber of the Board of Directors of the Tennessee Valley Au11 thority on the date of enactment of this Act—

12 (1) shall continue to serve until the end of the 

13 current term of the member; but 

14 (2) after the effective date specified in sub15 section (b), shall serve under the terms of the Ten16 nessee Valley Authority Act of 1933 (as amended by 

17 this subtitle); and 

18 (3) may not be reappointed. 

19 Subtitle D—Other Provisions 

20 SEC. 1441. CONTINUATION OF TRANSMISSION SECURITY 

21 ORDER. 

22 Department of Energy Order No. 202–03–2, issued 

23 by the Secretary of Energy on August 28, 2003, shall re24 main in effect unless rescinded by Federal statute. 
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1 SEC. 1442. REVIEW OF AGENCY DETERMINATIONS. 

2 Section 7 of the Natural Gas Act (15 U.S.C. 717f) 

3 is amended by adding at the end the following: 

4 ‘‘(i)(1) The United States Court of Appeals for the 

5 District of Columbia Circuit shall have original and exclu6 sive jurisdiction over any civil action—

7 ‘‘(A) for review of any order or action of any 

8 Federal or State administrative agency or officer to 

9 issue, condition, or deny any permit, license, concur10 rence, or approval issued under authority of any 

11 Federal law, other than the Coastal Zone Manage12 ment Act of 1972 (16 U.S.C. 1451 et seq.), required 

13 for the construction of a natural gas pipeline for 

14 which a certificate of public convenience and neces15 sity is issued by the Commission under this section; 

16 ‘‘(B) alleging unreasonable delay by any Fed17 eral or State administrative agency or officer in en18 tering an order or taking other action described in 

19 subparagraph (A); or 

20 ‘‘(C) challenging any decision made or action 

21 taken under this subsection. 

22 ‘‘(2)(A) If the Court finds that the order, action, or 

23 failure to act is not consistent with the public convenience 

24 and necessity (as determined by the Commission under 

25 this section), or would prevent the construction and oper26 ation of natural gas facilities authorized by the certificate
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1 of public convenience and necessity, the permit, license, 

2 concurrence, or approval that is the subject of the order, 

3 action, or failure to act shall be deemed to have been 

4 issued subject to any conditions set forth in the reviewed 

5 order or action that the Court finds to be consistent with 

6 the public convenience and necessity. 

7 ‘‘(B) For purposes of paragraph (1)(B), the failure 

8 of an agency or officer to issue any such permit, license, 

9 concurrence, or approval within the later of 1 year after 

10 the date of filing of an application for the permit, license, 

11 concurrence, or approval or 60 days after the date of 

12 issuance of the certificate of public convenience and neces13 sity under this section, shall be considered to be unreason14 able delay unless the Court, for good cause shown, deter15 mines otherwise. 

16 ‘‘(C) The Court shall set any action brought under 

17 paragraph (1) for expedited consideration.’’. 

18 SEC. 1443. ATTAINMENT DATES FOR DOWNWIND OZONE 

19 NONATTAINMENT AREAS. 

20 Section 181 of the Clean Air Act (42 U.S.C. 7511) 

21 is amended by adding the following new subsection at the 

22 end thereof: 

23 ‘‘(d) EXTENDED ATTAINMENT DATE FOR CERTAIN

24 DOWNWIND AREAS.—
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1 ‘‘(1) DEFINITIONS.—(A) The term ‘upwind 

2 area’ means an area that—

3 ‘‘(i) significantly contributes to nonattain4 ment in another area, hereinafter referred to as 

5 a ‘downwind area’; and 

6 ‘‘(ii) is either—

7 ‘‘(I) a nonattainment area with a later 

8 attainment date than the downwind area, 

9 or 

10 ‘‘(II) an area in another State that 

11 the Administrator has found to be signifi12 cantly contributing to nonattainment in 

13 the downwind area in violation of section 

14 110(a)(2)(D) and for which the Adminis15 trator has established requirements 

16 through notice and comment rulemaking to 

17 eliminate the emissions causing such sig18 nificant contribution. 

19 ‘‘(B) The term ‘current classification’ means 

20 the classification of a downwind area under this sec21 tion at the time of the determination under para22 graph (2). 

23 ‘‘(2) EXTENSION.—If the Administrator—
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1 ‘‘(A) determines that any area is a down2 wind area with respect to a particular national 

3 ambient air quality standard for ozone; and 

4 ‘‘(B) approves a plan revision for such 

5 area as provided in paragraph (3) prior to a re6 classification under subsection (b)(2)(A)—

7 the Administrator, in lieu of such reclassification, 

8 shall extend the attainment date for such downwind 

9 area for such standard in accordance with paragraph 

10 (5). 

11 ‘‘(3) REQUIRED APPROVAL.—In order to extend 

12 the attainment date for a downwind area under this 

13 subsection, the Administrator must approve a revi14 sion of the applicable implementation plan for the 

15 downwind area for such standard that—

16 ‘‘(A) complies with all requirements of this 

17 Act applicable under the current classification 

18 of the downwind area, including any require19 ments applicable to the area under section 

20 172(c) for such standard; and 

21 ‘‘(B) includes any additional measures 

22 needed to demonstrate attainment by the ex23 tended attainment date provided under this 

24 subsection. 
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1 ‘‘(4) PRIOR RECLASSIFICATION DETERMINA2 TION.—If, no more than 18 months prior to the date 

3 of enactment of this subsection, the Administrator 

4 made a reclassification determination under sub5 section (b)(2)(A) for any downwind area, and the 

6 Administrator approves the plan revision referred to 

7 in paragraph (3) for such area within 12 months 

8 after the date of enactment of this subsection, the 

9 reclassification shall be withdrawn and the attain10 ment date extended in accordance with paragraph 

11 (5) upon such approval. The Administrator shall 

12 also withdraw a reclassification determination under 

13 subsection (b)(2)(A) made after the date of enact14 ment of this subsection and extend the attainment 

15 date in accordance with paragraph (5) if the Admin16 istrator approves the plan revision referred to in 

17 paragraph (3) within 12 months of the date the re18 classification determination under subsection 

19 (b)(2)(A) is issued. In such instances the ‘current 

20 classification’ used for evaluating the revision of the 

21 applicable implementation plan under paragraph (3) 

22 shall be the classification of the downwind area 

23 under this section immediately prior to such reclassi24 fication. 
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1 ‘‘(5) EXTENDED DATE.—The attainment date 

2 extended under this subsection shall provide for at3 tainment of such national ambient air quality stand4 ard for ozone in the downwind area as expeditiously 

5 as practicable but no later than the date on which 

6 the last reductions in pollution transport necessary 

7 for attainment in the downwind area are required to 

8 be achieved by the upwind area or areas.’’. 

9 SEC. 1444. ENERGY PRODUCTION INCENTIVES. 

10 (a) IN GENERAL.—A State may provide to any enti11 ty—

12 (1) a credit against any tax or fee owed to the 

13 State under a State law, or 

14 (2) any other tax incentive—

15 determined by the State to be appropriate, in the amount 

16 calculated under and in accordance with a formula deter17 mined by the State, for production described in subsection 

18 (b) in the State by the entity that receives such credit or 

19 such incentive. 

20 (b) ELIGIBLE ENTITIES.—Subsection (a) shall apply 

21 with respect to the production in the State of—

22 (1) electricity from coal mined in the State and 

23 used in a facility, if such production meets all appli24 cable Federal and State laws and if such facility 
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1 uses scrubbers or other forms of clean coal tech2 nology, 

3 (2) electricity from a renewable source such as 

4 wind, solar, or biomass, or 

5 (3) ethanol. 

6 (c) EFFECT ON INTERSTATE COMMERCE.—Any ac7 tion taken by a State in accordance with this section with 

8 respect to a tax or fee payable, or incentive applicable, 

9 for any period beginning after the date of the enactment 

10 of this Act shall—

11 (1) be considered to be a reasonable regulation 

12 of commerce; and 

13 (2) not be considered to impose an undue bur14 den on interstate commerce or to otherwise impair, 

15 restrain, or discriminate, against interstate com16 merce. 

17 SEC. 1445. USE OF GRANULAR MINE TAILINGS. 

18 (a) AMENDMENT.—Subtitle F of the Solid Waste 

19 Disposal Act (42 U.S.C. 6961 et seq.) is amended by add20 ing at the end the following: 

21 ‘‘SEC. 6006. USE OF GRANULAR MINE TAILINGS. 

22 ‘‘(a) MINE TAILINGS.—

23 ‘‘(1) IN GENERAL.—Not later than 180 days 

24 after the date of enactment of this section, the Ad25 ministrator, in consultation with the Secretary of
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1 Transportation and heads of other Federal agencies, 

2 shall establish criteria (including an evaluation of 

3 whether to establish a numerical standard for con4 centration of lead and other hazardous substances) 

5 for the safe and environmentally protective use of 

6 granular mine tailings from the Tar Creek, Okla7 homa Mining District, known as ‘chat’, for—

8 ‘‘(A) cement or concrete projects; and 

9 ‘‘(B) transportation construction projects 

10 (including transportation construction projects 

11 involving the use of asphalt) that are carried 

12 out, in whole or in part, using Federal funds. 

13 ‘‘(2) REQUIREMENTS.—In establishing criteria 

14 under paragraph (1), the Administrator shall con15 sider—

16 ‘‘(A) the current and previous uses of 

17 granular mine tailings as an aggregate for as18 phalt; and 

19 ‘‘(B) any environmental and public health 

20 risks and benefits derived from the removal, 

21 transportation, and use in transportation 

22 projects of granular mine tailings. 

23 ‘‘(3) PUBLIC PARTICIPATION.—In establishing 

24 the criteria under paragraph (1), the Administrator 

25 shall solicit and consider comments from the public. 
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1 ‘‘(4) APPLICABILITY OF CRITERIA.—On the es2 tablishment of the criteria under paragraph (1), any 

3 use of the granular mine tailings described in para4 graph (1) in a transportation project that is carried 

5 out, in whole or in part, using Federal funds, shall 

6 meet the criteria established under paragraph (1). 

7 ‘‘(b) EFFECT OF SECTIONS.—Nothing in this section 

8 or section 6005 affects any requirement of any law (in9 cluding a regulation) in effect on the date of enactment 

10 of this section.’’. 

11 (b) CONFORMING AMENDMENT.—The table of con12 tents of the Solid Waste Disposal Act (42 U.S.C. prec. 

13 6901) is amended by adding at the end of the items relat14 ing to subtitle F the following:

‘‘Sec. 6006. Use of granular mine tailings.’’.

15 TITLE XV—ETHANOL AND 

16 MOTOR FUELS 

17 Subtitle A—General Provisions 

18 SEC. 1501. RENEWABLE CONTENT OF MOTOR VEHICLE 

19 FUEL. 

20 (a) IN GENERAL.—Section 211 of the Clean Air Act 

21 (42 U.S.C. 7545) is amended—

22 (1) by redesignating subsection (o) as sub23 section (q); and 

24 (2) by inserting after subsection (n) the fol25 lowing: 
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1 ‘‘(o) RENEWABLE FUEL PROGRAM.—

2 ‘‘(1) DEFINITIONS.—In this section: 

3 ‘‘(A) ETHANOL.—(i) The term ‘cellulosic 

4 biomass ethanol’ means ethanol derived from 

5 any lignocellulosic or hemicellulosic matter that 

6 is available on a renewable or recurring basis, 

7 including—

8 ‘‘(I) dedicated energy crops and trees; 

9 ‘‘(II) wood and wood residues; 

10 ‘‘(III) plants; 

11 ‘‘(IV) grasses; 

12 ‘‘(V) agricultural residues; and 

13 ‘‘(VI) fibers. 

14 ‘‘(ii) The term ‘waste derived ethanol’ 

15 means ethanol derived from—

16 ‘‘(I) animal wastes, including poultry 

17 fats and poultry wastes, and other waste 

18 materials; or 

19 ‘‘(II) municipal solid waste. 

20 ‘‘(B) RENEWABLE FUEL.—

21 ‘‘(i) IN GENERAL.—The term ‘renew22 able fuel’ means motor vehicle fuel that—

23 ‘‘(I)(aa) is produced from grain, 

24 starch, oilseeds, or other biomass; or 
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1 ‘‘(bb) is natural gas produced 

2 from a biogas source, including a 

3 landfill, sewage waste treatment plant, 

4 feedlot, or other place where decaying 

5 organic material is found; and 

6 ‘‘(II) is used to replace or reduce 

7 the quantity of fossil fuel present in a 

8 fuel mixture used to operate a motor 

9 vehicle. 

10 ‘‘(ii) INCLUSION.—The term ‘renew11 able fuel’ includes cellulosic biomass eth12 anol, waste derived ethanol, and biodiesel 

13 (as defined in section 312(f) of the Energy 

14 Policy Act of 1992 (42 U.S.C. 13220(f)) 

15 and any blending components derived from 

16 renewable fuel (provided that only the re17 newable fuel portion of any such blending 

18 component shall be considered part of the 

19 applicable volume under the renewable fuel 

20 program established by this subsection). 

21 ‘‘(C) SMALL REFINERY.—The term ‘small 

22 refinery’ means a refinery for which average ag23 gregate daily crude oil throughput for the cal24 endar year (as determined by dividing the ag25 gregate throughput for the calendar year by the 
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1 number of days in the calendar year) does not 

2 exceed 75,000 barrels. 

3 ‘‘(2) RENEWABLE FUEL PROGRAM.—

4 ‘‘(A) IN GENERAL.—Not later than 1 year 

5 after the enactment of this subsection, the Ad6 ministrator shall promulgate regulations ensur7 ing that motor vehicle fuel sold or dispensed to 

8 consumers in the contiguous United States, on 

9 an annual average basis, contains the applicable 

10 volume of renewable fuel as specified in sub11 paragraph (B). Regardless of the date of pro12 mulgation, such regulations shall contain com13 pliance provisions for refiners, blenders, and 

14 importers, as appropriate, to ensure that the re15 quirements of this section are met, but shall not 

16 restrict where renewable fuel can be used, or 

17 impose any per-gallon obligation for the use of 

18 renewable fuel. If the Administrator does not 

19 promulgate such regulations, the applicable per20 centage referred to in paragraph (4), on a vol21 ume percentage of gasoline basis, shall be 2.2 

22 in 2005. 

23 ‘‘(B) APPLICABLE VOLUME.—

24 ‘‘(i) CALENDAR YEARS 2005 THROUGH

25 2012.—For the purpose of subparagraph 
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1 (A), the applicable volume for any of cal2 endar years 2005 through 2012 shall be 

3 determined in accordance with the fol4 lowing 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

5 ‘‘(ii) CALENDAR YEAR 2013 AND

6 THEREAFTER.—For the purpose of sub7 paragraph (A), the applicable volume for 

8 calendar year 2013 and each calendar year

9 thereafter shall be equal to the product ob10 tained by multiplying—

11 ‘‘(I) the number of gallons of 

12 gasoline that the Administrator esti13 mates will be sold or introduced into 

14 commerce in the calendar year; and 

15 ‘‘(II) the ratio that—

16 ‘‘(aa) 5.0 billion gallons of 

17 renewable fuels; bears to 

18 ‘‘(bb) the number of gallons 

19 of gasoline sold or introduced 
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1 into commerce in calendar year 

2 2012. 

3 ‘‘(3) NON-CONTIGUOUS STATE OPT-IN.—Upon 

4 the petition of a non-contiguous State, the Adminis5 trator may allow the renewable fuel program estab6 lished by subtitle A of title XV of the Energy Policy 

7 Act of 2003 to apply in such non-contiguous State 

8 at the same time or any time after the Adminis9 trator promulgates regulations under paragraph (2). 

10 The Administrator may promulgate or revise regula11 tions under paragraph (2), establish applicable per12 centages under paragraph (4), provide for the gen13 eration of credits under paragraph (6), and take 

14 such other actions as may be necessary to allow for 

15 the application of the renewable fuels program in a 

16 non-contiguous State. 

17 ‘‘(4) APPLICABLE PERCENTAGES.—

18 ‘‘(A) PROVISION OF ESTIMATE OF VOL19 UMES OF GASOLINE SALES.—Not later than Oc20 tober 31 of each of calendar years 2004 

21 through 2011, the Administrator of the Energy 

22 Information Administration shall provide to the 

23 Administrator of the Environmental Protection 

24 Agency an estimate of the volumes of gasoline 

25 that will be sold or introduced into commerce in 
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1 the United States during the following calendar 

2 year. 

3 ‘‘(B) DETERMINATION OF APPLICABLE

4 PERCENTAGES.—

5 ‘‘(i) IN GENERAL.—Not later than 

6 November 30 of each of the calendar years 

7 2004 through 2011, based on the estimate 

8 provided under subparagraph (A), the Ad9 ministrator shall determine and publish in 

10 the Federal Register, with respect to the 

11 following calendar year, the renewable fuel 

12 obligation that ensures that the require13 ments of paragraph (2) are met. 

14 ‘‘(ii) REQUIRED ELEMENTS.—The re15 newable fuel obligation determined for a 

16 calendar year under clause (i) shall—

17 ‘‘(I) be applicable to refiners, 

18 blenders, and importers, as appro19 priate; 

20 ‘‘(II) be expressed in terms of a 

21 volume percentage of gasoline sold or 

22 introduced into commerce; and 

23 ‘‘(III) subject to subparagraph 

24 (C)(i), consist of a single applicable 

25 percentage that applies to all cat-
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1 egories of persons specified in sub2 clause (I). 

3 ‘‘(C) ADJUSTMENTS.—In determining the 

4 applicable percentage for a calendar year, the 

5 Administrator shall make adjustments—

6 ‘‘(i) to prevent the imposition of re7 dundant obligations to any person specified 

8 in subparagraph (B)(ii)(I); and 

9 ‘‘(ii) to account for the use of renew10 able fuel during the previous calendar year 

11 by small refineries that are exempt under 

12 paragraph (11). 

13 ‘‘(5) EQUIVALENCY.—For the purpose of para14 graph (2), 1 gallon of either cellulosic biomass eth15 anol or waste derived ethanol—

16 ‘‘(A) shall be considered to be the equiva17 lent of 1.5 gallon of renewable fuel; or 

18 ‘‘(B) if the cellulosic biomass ethanol or 

19 waste derived ethanol is derived from agricul20 tural residue or is an agricultural byproduct (as 

21 that term is used in section 919 of the Energy 

22 Policy Act of 2003), shall be considered to be 

23 the equivalent of 2.5 gallons of renewable fuel. 

24 ‘‘(6) CREDIT PROGRAM.—
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1 ‘‘(A) IN GENERAL.—The regulations pro2 mulgated to carry out this subsection shall pro3 vide for the generation of an appropriate 

4 amount of credits by any person that refines, 

5 blends, or imports gasoline that contains a 

6 quantity of renewable fuel that is greater than 

7 the quantity required under paragraph (2). 

8 Such regulations shall provide for the genera9 tion of an appropriate amount of credits for 

10 biodiesel fuel. If a small refinery notifies the 

11 Administrator that it waives the exemption pro12 vided paragraph (11), the regulations shall pro13 vide for the generation of credits by the small 

14 refinery beginning in the year following such 

15 notification. 

16 ‘‘(B) USE OF CREDITS.—A person that 

17 generates credits under subparagraph (A) may 

18 use the credits, or transfer all or a portion of 

19 the credits to another person, for the purpose 

20 of complying with paragraph (2). 

21 ‘‘(C) LIFE OF CREDITS.—A credit gen22 erated under this paragraph shall be valid to 

23 show compliance—
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1 ‘‘(i) in the calendar year in which the 

2 credit was generated or the next calendar 

3 year; or 

4 ‘‘(ii) in the calendar year in which the 

5 credit was generated or next two consecu6 tive calendar years if the Administrator 

7 promulgates regulations under paragraph 

8 (7). 

9 ‘‘(D) INABILITY TO PURCHASE SUFFICIENT

10 CREDITS.—The regulations promulgated to 

11 carry out this subsection shall include provi12 sions allowing any person that is unable to gen13 erate or purchase sufficient credits to meet the 

14 requirements under paragraph (2) to carry for15 ward a renewable fuel deficit provided that, in 

16 the calendar year following the year in which 

17 the renewable fuel deficit is created, such per18 son shall achieve compliance with the renewable 

19 fuel requirement under paragraph (2), and shall 

20 generate or purchase additional renewable fuel 

21 credits to offset the renewable fuel deficit of the 

22 previous year. 

23 ‘‘(7) SEASONAL VARIATIONS IN RENEWABLE

24 FUEL USE.—
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1 ‘‘(A) STUDY.—For each of the calendar 

2 years 2005 through 2012, the Administrator of 

3 the Energy Information Administration shall 

4 conduct a study of renewable fuels blending to 

5 determine whether there are excessive seasonal 

6 variations in the use of renewable fuels. 

7 ‘‘(B) REGULATION OF EXCESSIVE SEA8 SONAL VARIATIONS.—If, for any calendar year, 

9 the Administrator of the Energy Information 

10 Administration, based on the study under sub11 paragraph (A), makes the determinations speci12 fied in subparagraph (C), the Administrator 

13 shall promulgate regulations to ensure that 35 

14 percent or more of the quantity of renewable 

15 fuels necessary to meet the requirement of 

16 paragraph (2) is used during each of the peri17 ods specified in subparagraph (D) of each sub18 sequent calendar year. 

19 ‘‘(C) DETERMINATIONS.—The determina20 tions referred to in subparagraph (B) are 

21 that—

22 ‘‘(i) less than 35 percent of the quan23 tity of renewable fuels necessary to meet 

24 the requirement of paragraph (2) has been 
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1 used during one of the periods specified in 

2 subparagraph (D) of the calendar year; 

3 ‘‘(ii) a pattern of excessive seasonal 

4 variation described in clause (i) will con5 tinue in subsequent calendar years; and 

6 ‘‘(iii) promulgating regulations or 

7 other requirements to impose a 35 percent 

8 or more seasonal use of renewable fuels 

9 will not prevent or interfere with the at10 tainment of national ambient air quality 

11 standards or significantly increase the 

12 price of motor fuels to the consumer. 

13 ‘‘(D) PERIODS.—The two periods referred 

14 to in this paragraph are—

15 ‘‘(i) April through September; and 

16 ‘‘(ii) January through March and Oc17 tober through December. 

18 ‘‘(E) EXCLUSIONS.—Renewable fuels 

19 blended or consumed in 2005 in a State which 

20 has received a waiver under section 209(b) shall 

21 not be included in the study in subparagraph 

22 (A). 

23 ‘‘(8) WAIVERS.—

24 ‘‘(A) IN GENERAL.—The Administrator, in 

25 consultation with the Secretary of Agriculture 
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1 and the Secretary of Energy, may waive the re2 quirement of paragraph (2) in whole or in part 

3 on petition by one or more States by reducing 

4 the national quantity of renewable fuel required 

5 under this subsection—

6 ‘‘(i) based on a determination by the 

7 Administrator, after public notice and op8 portunity for comment, that implementa9 tion of the requirement would severely 

10 harm the economy or environment of a 

11 State, a region, or the United States; or 

12 ‘‘(ii) based on a determination by the 

13 Administrator, after public notice and op14 portunity for comment, that there is an in15 adequate domestic supply or distribution 

16 capacity to meet the requirement. 

17 ‘‘(B) PETITIONS FOR WAIVERS.—The Ad18 ministrator, in consultation with the Secretary 

19 of Agriculture and the Secretary of Energy, 

20 shall approve or disapprove a State petition for 

21 a waiver of the requirement of paragraph (2) 

22 within 90 days after the date on which the peti23 tion is received by the Administrator. 

24 ‘‘(C) TERMINATION OF WAIVERS.—A waiv25 er granted under subparagraph (A) shall termi-
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1 nate after 1 year, but may be renewed by the 

2 Administrator after consultation with the Sec3 retary of Agriculture and the Secretary of En4 ergy. 

5 ‘‘(9) STUDY AND WAIVER FOR INITIAL YEAR OF

6 PROGRAM.—Not later than 180 days after the enact7 ment of this subsection, the Secretary of Energy 

8 shall complete for the Administrator a study assess9 ing whether the renewable fuels requirement under 

10 paragraph (2) will likely result in significant adverse 

11 consumer impacts in 2005, on a national, regional, 

12 or State basis. Such study shall evaluate renewable 

13 fuel supplies and prices, blendstock supplies, and 

14 supply and distribution system capabilities. Based 

15 on such study, the Secretary shall make specific rec16 ommendations to the Administrator regarding waiv17 er of the requirements of paragraph (2), in whole or 

18 in part, to avoid any such adverse impacts. Within 

19 270 days after the enactment of this subsection, the 

20 Administrator shall, consistent with the rec21 ommendations of the Secretary, waive, in whole or in 

22 part, the renewable fuels requirement under para23 graph (2) by reducing the national quantity of re24 newable fuel required under this subsection in 2005. 

25 This paragraph shall not be interpreted as limiting 
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1 the Administrator’s authority to waive the require2 ments of paragraph (2) in whole, or in part, under 

3 paragraph (8) or paragraph (10), pertaining to 

4 waivers. 

5 ‘‘(10) ASSESSMENT AND WAIVER.—The Admin6 istrator, in consultation with the Secretary of En7 ergy and the Secretary of Agriculture, shall evaluate 

8 the requirement of paragraph (2) and determine, 

9 prior to January 1, 2007, and prior to January 1 

10 of any subsequent year in which the applicable vol11 ume of renewable fuel is increased under paragraph 

12 (2)(B), whether the requirement of paragraph (2), 

13 including the applicable volume of renewable fuel 

14 contained in paragraph (2)(B) should remain in ef15 fect, in whole or in part, during 2007 or any year 

16 or years subsequent to 2007. In evaluating the re17 quirement of paragraph (2) and in making any de18 termination under this section, the Administrator 

19 shall consider the best available information and 

20 data collected by accepted methods or best available 

21 means regarding—

22 ‘‘(A) the capacity of renewable fuel pro23 ducers to supply an adequate amount of renew24 able fuel at competitive prices to fulfill the re25 quirement of paragraph (2); 
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1 ‘‘(B) the potential of the requirement of 

2 paragraph (2) to significantly raise the price of 

3 gasoline, food (excluding the net price impact 

4 on the requirement in paragraph (2) on com5 modities used in the production of ethanol), or 

6 heating oil for consumers in any significant 

7 area or region of the country above the price 

8 that would otherwise apply to such commodities 

9 in the absence of such requirement; 

10 ‘‘(C) the potential of the requirement of 

11 paragraph (2) to interfere with the supply of 

12 fuel in any significant gasoline market or region 

13 of the country, including interference with the 

14 efficient operation of refiners, blenders, import15 ers, wholesale suppliers, and retail vendors of 

16 gasoline, and other motor fuels; and 

17 ‘‘(D) the potential of the requirement of 

18 paragraph (2) to cause or promote exceedances 

19 of Federal, State, or local air quality standards. 

20 If the Administrator determines, by clear and con21 vincing information, after public notice and the op22 portunity for comment, that the requirement of 

23 paragraph (2) would have significant and meaning24 ful adverse impact on the supply of fuel and related 

25 infrastructure or on the economy, public health, or 
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1 environment of any significant area or region of the 

2 country, the Administrator may waive, in whole or 

3 in part, the requirement of paragraph (2) in any one 

4 year for which the determination is made for that 

5 area or region of the country, except that any such 

6 waiver shall not have the effect of reducing the ap7 plicable volume of renewable fuel specified in para8 graph (2)(B) with respect to any year for which the 

9 determination is made. In determining economic im10 pact under this paragraph, the Administrator shall 

11 not consider the reduced revenues available from the 

12 Highway Trust Fund (section 9503 of the Internal 

13 Revenue Code of 1986) as a result of the use of eth14 anol. 

15 ‘‘(11) SMALL REFINERIES.—

16 ‘‘(A) IN GENERAL.—The requirement of 

17 paragraph (2) shall not apply to small refineries 

18 until the first calendar year beginning more 

19 than 5 years after the first year set forth in the 

20 table in paragraph (2)(B)(i). Not later than De21 cember 31, 2007, the Secretary of Energy shall 

22 complete for the Administrator a study to de23 termine whether the requirement of paragraph 

24 (2) would impose a disproportionate economic 

25 hardship on small refineries. For any small re-
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1 finery that the Secretary of Energy determines 

2 would experience a disproportionate economic 

3 hardship, the Administrator shall extend the 

4 small refinery exemption for such small refinery 

5 for no less than two additional years. 

6 ‘‘(B) ECONOMIC HARDSHIP.—

7 ‘‘(i) EXTENSION OF EXEMPTION.—A 

8 small refinery may at any time petition the 

9 Administrator for an extension of the ex10 emption from the requirement of para11 graph (2) for the reason of dispropor12 tionate economic hardship. In evaluating a 

13 hardship petition, the Administrator, in 

14 consultation with the Secretary of Energy, 

15 shall consider the findings of the study in 

16 addition to other economic factors. 

17 ‘‘(ii) DEADLINE FOR ACTION ON PETI18 TIONS.—The Administrator shall act on 

19 any petition submitted by a small refinery 

20 for a hardship exemption not later than 90 

21 days after the receipt of the petition. 

22 ‘‘(C) CREDIT PROGRAM.—If a small refin23 ery notifies the Administrator that it waives the 

24 exemption provided by this Act, the regulations 

25 shall provide for the generation of credits by 
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1 the small refinery beginning in the year fol2 lowing such notification. 

3 ‘‘(D) OPT-IN FOR SMALL REFINERS.—A 

4 small refinery shall be subject to the require5 ments of this section if it notifies the Adminis6 trator that it waives the exemption under sub7 paragraph (A).

8 ‘‘(12) ETHANOL MARKET CONCENTRATION

9 ANALYSIS.—

10 ‘‘(A) ANALYSIS.—

11 ‘‘(i) IN GENERAL.—Not later than 

12 180 days after the date of enactment of 

13 this subsection, and annually thereafter, 

14 the Federal Trade Commission shall per15 form a market concentration analysis of 

16 the ethanol production industry using the 

17 Herfindahl-Hirschman Index to determine 

18 whether there is sufficient competition 

19 among industry participants to avoid price 

20 setting and other anticompetitive behavior. 

21 ‘‘(ii) SCORING.—For the purpose of 

22 scoring under clause (i) using the 

23 Herfindahl-Hirschman Index, all mar24 keting arrangements among industry par25 ticipants shall be considered. 
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1 ‘‘(B) REPORT.—Not later than December 

2 1, 2004, and annually thereafter, the Federal 

3 Trade Commission shall submit to Congress 

4 and the Administrator a report on the results 

5 of the market concentration analysis performed 

6 under subparagraph (A)(i).’’. 

7 (b) PENALTIES AND ENFORCEMENT.—Section 

8 211(d) of the Clean Air Act (42 U.S.C. 7545(d)) is 

9 amended as follows: 

10 (1) In paragraph (1)—

11 (A) in the first sentence, by striking ‘‘or 

12 (n)’’ each place it appears and inserting ‘‘(n), 

13 or (o)’’; and 

14 (B) in the second sentence, by striking ‘‘or 

15 (m)’’ and inserting ‘‘(m), or (o)’’. 

16 (2) In the first sentence of paragraph (2), by 

17 striking ‘‘and (n)’’ each place it appears and insert18 ing ‘‘(n), and (o)’’. 

19 (c) SURVEY OF RENEWABLE FUEL MARKET.—

20 (1) SURVEY AND REPORT.—Not later than De21 cember 1, 2006, and annually thereafter, the Admin22 istrator of the Environmental Protection Agency (in 

23 consultation with the Secretary of Energy acting 

24 through the Administrator of the Energy Informa25 tion Administration) shall—
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1 (A) conduct, with respect to each conven2 tional gasoline use area and each reformulated 

3 gasoline use area in each State, a survey to de4 termine the market shares of—

5 (i) conventional gasoline containing 

6 ethanol; 

7 (ii) reformulated gasoline containing 

8 ethanol; 

9 (iii) conventional gasoline containing 

10 renewable fuel; and 

11 (iv) reformulated gasoline containing 

12 renewable fuel; and 

13 (B) submit to Congress, and make publicly 

14 available, a report on the results of the survey 

15 under subparagraph (A). 

16 (2) RECORDKEEPING AND REPORTING RE17 QUIREMENTS.—The Administrator of the Environ18 mental Protection Agency (hereinafter in this sub19 section referred to as the ‘‘Administrator’’) may re20 quire any refiner, blender, or importer to keep such 

21 records and make such reports as are necessary to 

22 ensure that the survey conducted under paragraph 

23 (1) is accurate. The Administrator, to avoid duplica24 tive requirements, shall rely, to the extent prac25 ticable, on existing reporting and recordkeeping re-
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1 quirements and other information available to the 

2 Administrator including gasoline distribution pat3 terns that include multistate use areas. 

4 (3) APPLICABLE LAW.—Activities carried out 

5 under this subsection shall be conducted in a man6 ner designed to protect confidentiality of individual 

7 responses. 

8 SEC. 1502. FINDINGS AND MTBE TRANSITION ASSISTANCE. 

9 (a) FINDINGS.—Congress finds that—

10 (1) since 1979, methyl tertiary butyl ether 

11 (hereinafter in this section referred to as ‘‘MTBE’’) 

12 has been used nationwide at low levels in gasoline to 

13 replace lead as an octane booster or anti-knocking 

14 agent; 

15 (2) Public Law 101–549 (commonly known as 

16 the ‘‘Clean Air Act Amendments of 1990’’) (42 

17 U.S.C. 7401 et seq.) established a fuel oxygenate 

18 standard under which reformulated gasoline must 

19 contain at least 2 percent oxygen by weight; 

20 (3) at the time of the adoption of the fuel oxy21 gen standard, Congress was aware that significant 

22 use of MTBE would result from the adoption of that 

23 standard, and that the use of MTBE would likely be 

24 important to the cost-effective implementation of 

25 that program; 
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1 (4) Congress was aware that gasoline and its 

2 component additives can and do leak from storage 

3 tanks; 

4 (5) the fuel industry responded to the fuel oxy5 genate standard established by Public Law 101–549 

6 by making substantial investments in—

7 (A) MTBE production capacity; and 

8 (B) systems to deliver MTBE-containing 

9 gasoline to the marketplace; 

10 (6) having previously required oxygenates like 

11 MTBE for air quality purposes, Congress has—

12 (A) reconsidered the relative value of 

13 MTBE in gasoline; 

14 (B) decided to establish a date certain for 

15 action by the Environmental Protection Agency 

16 to prohibit the use of MTBE in gasoline; and 

17 (C) decided to provide for the elimination 

18 of the oxygenate requirement for reformulated 

19 gasoline and to provide for a renewable fuels 

20 content requirement for motor fuel; and 

21 (7) it is appropriate for Congress to provide 

22 some limited transition assistance—

23 (A) to merchant producers of MTBE who 

24 produced MTBE in response to a market cre-
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1 ated by the oxygenate requirement contained in 

2 the Clean Air Act; and 

3 (B) for the purpose of mitigating any fuel 

4 supply problems that may result from the elimi5 nation of the oxygenate requirement for refor6 mulated gasoline and from the decision to es7 tablish a date certain for action by the Environ8 mental Protection Agency to prohibit the use of 

9 MTBE in gasoline. 

10 (b) PURPOSES.—The purpose of this section is to 

11 provide assistance to merchant producers of MTBE in 

12 making the transition from producing MTBE to producing 

13 other fuel additives. 

14 (c) MTBE MERCHANT PRODUCER CONVERSION AS15 SISTANCE.—Section 211(c) of the Clean Air Act (42 

16 U.S.C. 7545(c)) is amended by adding at the end the fol17 lowing: 

18 ‘‘(5) MTBE MERCHANT PRODUCER CONVER19 SION ASSISTANCE.—

20 ‘‘(A) IN GENERAL.—

21 ‘‘(i) GRANTS.—The Secretary of En22 ergy, in consultation with the Adminis23 trator, may make grants to merchant pro24 ducers of methyl tertiary butyl ether (here25 inafter in this subsection referred to as 
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1 ‘MTBE’) in the United States to assist the 

2 producers in the conversion of eligible pro3 duction facilities described in subpara4 graph (C) to the production of iso-octane, 

5 iso-octene, alkylates, or renewable fuels. 

6 ‘‘(ii) DETERMINATION.—The Admin7 istrator, in consultation with the Secretary 

8 of Energy, may determine that transition 

9 assistance for the production of iso-octane, 

10 iso-octene, alkylates, or renewable fuels is 

11 inconsistent with the provisions of sub12 paragraph (B) and, on that basis, may 

13 deny applications for grants authorized by 

14 this paragraph.

15 ‘‘(B) FURTHER GRANTS.—The Secretary 

16 of Energy, in consultation with the Adminis17 trator, may also further make grants to mer18 chant producers of MTBE in the United States 

19 to assist the producers in the conversion of eli20 gible production facilities described in subpara21 graph (C) to the production of such other fuel 

22 additives (unless the Administrator determines 

23 that such fuel additives may reasonably be an24 ticipated to endanger public health or the envi25 ronment) that, consistent with this subsection—
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1 ‘‘(i) have been registered and have 

2 been tested or are being tested in accord3 ance with the requirements of this section; 

4 and 

5 ‘‘(ii) will contribute to replacing gaso6 line volumes lost as a result of amend7 ments made to subsection (k) of this sec8 tion by sections 1503(a) and 1505 of the 

9 Energy Policy Act of 2003. 

10 ‘‘(C) ELIGIBLE PRODUCTION FACILI11 TIES.—A production facility shall be eligible to 

12 receive a grant under this paragraph if the pro13 duction facility—

14 ‘‘(i) is located in the United States; 

15 and 

16 ‘‘(ii) produced MTBE for consump17 tion before April 1, 2003 and ceased pro18 duction at any time after the date of en19 actment of this paragraph. 

20 ‘‘(D) AUTHORIZATION OF APPROPRIA21 TIONS.—There are authorized to be appro22 priated to carry out this paragraph 

23 $250,000,000 for each of fiscal years 2005 

24 through 2012, to remain available until ex25 pended.’’.
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1 (d) EFFECT ON STATE LAW.—The amendments 

2 made to the Clean Air Act by this title have no effect re3 garding any available authority of States to limit the use 

4 of methyl tertiary butyl ether in motor vehicle fuel.

5 SEC. 1503. USE OF MTBE. 

6 (a) IN GENERAL.—Subject to subsections (e) and (f), 

7 not later than December 31, 2014, the use of methyl ter8 tiary butyl ether (hereinafter in this section referred to 

9 as ‘‘MTBE’’) in motor vehicle fuel in any State other than 

10 a State described in subsection (c) is prohibited. 

11 (b) REGULATIONS.—The Administrator of the Envi12 ronmental Protection Agency (hereafter referred to in this 

13 section as the ‘‘Administrator’’) shall promulgate regula14 tions to effect the prohibition in subsection (a). 

15 (c) STATES THAT AUTHORIZE USE.—A State de16 scribed in this subsection is a State in which the Governor 

17 of the State submits a notification to the Administrator 

18 authorizing the use of MTBE in motor vehicle fuel sold 

19 or used in the State. 

20 (d) PUBLICATION OF NOTICE.—The Administrator 

21 shall publish in the Federal Register each notice submitted 

22 by a State under subsection (c). 

23 (e) TRACE QUANTITIES.—In carrying out subsection 

24 (a), the Administrator may allow trace quantities of 

25 MTBE, not to exceed 0.5 percent by volume, to be present 
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1 in motor vehicle fuel in cases that the Administrator deter2 mines to be appropriate. 

3 (f) LIMITATION.—The Administrator, under author4 ity of subsection (a), shall not prohibit or control the pro5 duction of MTBE for export from the United States or 

6 for any other use other than for use in motor vehicle fuel. 

7 SEC. 1504. NATIONAL ACADEMY OF SCIENCES REVIEW AND 

8 PRESIDENTIAL DETERMINATION. 

9 (a) NAS REVIEW.—Not later than May 31, 2013, the 

10 Secretary shall enter into an arrangement with the Na11 tional Academy of Sciences to review the use of methyl 

12 tertiary butyl ether (hereafter referred to in this section 

13 as ‘‘MTBE’’) in fuel and fuel additives. The review shall 

14 only use the best available scientific information and data 

15 collected by accepted methods or the best available means. 

16 The review shall examine the use of MTBE in fuel and 

17 fuel additives, significant beneficial and detrimental ef18 fects of this use on environmental quality or public health 

19 or welfare including the costs and benefits of such effects, 

20 likely effects of controls or prohibitions on MTBE regard21 ing fuel availability and price, and other appropriate and 

22 reasonable actions that are available to protect the envi23 ronment or public health or welfare from any detrimental 

24 effects of the use of MTBE in fuel or fuel additives. The 

25 review shall be peer-reviewed prior to publication and all 
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1 supporting data and analytical models shall be available 

2 to the public. The review shall be completed no later than 

3 May 31, 2014. 

4 (b) PRESIDENTIAL DETERMINATION.—No later than 

5 June 30, 2014, the President may make a determination 

6 that restrictions on the use of MTBE to be implemented 

7 pursuant to section 1503 shall not take place and that 

8 the legal authority contained in section 1503 to prohibit 

9 the use of MTBE in motor vehicle fuel shall become null 

10 and void.

11 SEC. 1505. ELIMINATION OF OXYGEN CONTENT REQUIRE12 MENT FOR REFORMULATED GASOLINE. 

13 (a) ELIMINATION.—

14 (1) IN GENERAL.—Section 211(k) of the Clean 

15 Air Act (42 U.S.C. 7545(k)) is amended as follows: 

16 (A) In paragraph (2)—

17 (i) in the second sentence of subpara18 graph (A), by striking ‘‘(including the oxy19 gen content requirement contained in sub20 paragraph (B))’’; 

21 (ii) by striking subparagraph (B); and 

22 (iii) by redesignating subparagraphs 

23 (C) and (D) as subparagraphs (B) and 

24 (C), respectively. 
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1 (B) In paragraph (3)(A), by striking 

2 clause (v). 

3 (C) In paragraph (7)—

4 (i) in subparagraph (A)—

5 (I) by striking clause (i); and 

6 (II) by redesignating clauses (ii) 

7 and (iii) as clauses (i) and (ii), respec8 tively; and 

9 (ii) in subparagraph (C)—

10 (I) by striking clause (ii). 

11 (II) by redesignating clause (iii) 

12 as clause (ii). 

13 (2) EFFECTIVE DATE.—The amendments made 

14 by paragraph (1) take effect 270 days after the date 

15 of enactment of this Act, except that such amend16 ments shall take effect upon such date of enactment 

17 in any State that has received a waiver under sec18 tion 209(b) of the Clean Air Act. 

19 (b) MAINTENANCE OF TOXIC AIR POLLUTANT EMIS20 SION REDUCTIONS.—Section 211(k)(1) of the Clean Air 

21 Act (42 U.S.C. 7545(k)(1)) is amended as follows: 

22 (1) By striking ‘‘Within 1 year after the enact23 ment of the Clean Air Act Amendments of 1990,’’ 

24 and inserting the following: 
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1 ‘‘(A) IN GENERAL.—Not later than No2 vember 15, 1991,’’. 

3 (2) By adding at the end the following: 

4 ‘‘(B) MAINTENANCE OF TOXIC AIR POL5 LUTANT EMISSIONS REDUCTIONS FROM REFOR6 MULATED GASOLINE.— 

7 ‘‘(i) DEFINITIONS.—In this subpara8 graph the term ‘PADD’ means a Petro9 leum Administration for Defense District. 

10 ‘‘(ii) REGULATIONS REGARDING EMIS11 SIONS OF TOXIC AIR POLLUTANTS.—Not 

12 later than 270 days after the date of en13 actment of this subparagraph the Adminis14 trator shall establish, for each refinery or 

15 importer, standards for toxic air pollutants 

16 from use of the reformulated gasoline pro17 duced or distributed by the refinery or im18 porter that maintain the reduction of the 

19 average annual aggregate emissions of 

20 toxic air pollutants for reformulated gaso21 line produced or distributed by the refinery 

22 or importer during calendar years 1999 

23 and 2000, determined on the basis of data 

24 collected by the Administrator with respect 

25 to the refinery or importer. 
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1 ‘‘(iii) STANDARDS APPLICABLE TO

2 SPECIFIC REFINERIES OR IMPORTERS.—

3 ‘‘(I) APPLICABILITY OF STAND4 ARDS.—For any calendar year, the 

5 standards applicable to a refinery or 

6 importer under clause (ii) shall apply 

7 to the quantity of gasoline produced 

8 or distributed by the refinery or im9 porter in the calendar year only to the 

10 extent that the quantity is less than 

11 or equal to the average annual quan12 tity of reformulated gasoline produced 

13 or distributed by the refinery or im14 porter during calendar years 1999 

15 and 2000. 

16 ‘‘(II) APPLICABILITY OF OTHER

17 STANDARDS.—For any calendar year, 

18 the quantity of gasoline produced or 

19 distributed by a refinery or importer 

20 that is in excess of the quantity sub21 ject to subclause (I) shall be subject 

22 to standards for toxic air pollutants 

23 promulgated under subparagraph (A) 

24 and paragraph (3)(B). 
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1 ‘‘(iv) CREDIT PROGRAM.—The Admin2 istrator shall provide for the granting and 

3 use of credits for emissions of toxic air pol4 lutants in the same manner as provided in 

5 paragraph (7). 

6 ‘‘(v) REGIONAL PROTECTION OF

7 TOXICS REDUCTION BASELINES.—

8 ‘‘(I) IN GENERAL.—Not later 

9 than 60 days after the date of enact10 ment of this subparagraph, and not 

11 later than April 1 of each calendar 

12 year that begins after that date of en13 actment, the Administrator shall pub14 lish in the Federal Register a report 

15 that specifies, with respect to the pre16 vious calendar year—

17 ‘‘(aa) the quantity of refor18 mulated gasoline produced that is 

19 in excess of the average annual 

20 quantity of reformulated gasoline 

21 produced in 1999 and 2000; and 

22 ‘‘(bb) the reduction of the 

23 average annual aggregate emis24 sions of toxic air pollutants in 

25 each PADD, based on retail sur-
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1 vey data or data from other ap2 propriate sources. 

3 ‘‘(II) EFFECT OF FAILURE TO

4 MAINTAIN AGGREGATE TOXICS RE5 DUCTIONS.—If, in any calendar year, 

6 the reduction of the average annual 

7 aggregate emissions of toxic air pol8 lutants in a PADD fails to meet or 

9 exceed the reduction of the average 

10 annual aggregate emissions of toxic 

11 air pollutants in the PADD in cal12 endar years 1999 and 2000, the Ad13 ministrator, not later than 90 days 

14 after the date of publication of the re15 port for the calendar year under sub16 clause (I), shall—

17 ‘‘(aa) identify, to the max18 imum extent practicable, the rea19 sons for the failure, including the 

20 sources, volumes, and character21 istics of reformulated gasoline 

22 that contributed to the failure; 

23 and 

24 ‘‘(bb) promulgate revisions 

25 to the regulations promulgated 
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1 under clause (ii), to take effect 

2 not earlier than 180 days but not 

3 later than 270 days after the 

4 date of promulgation, to provide 

5 that, notwithstanding clause 

6 (iii)(II), all reformulated gasoline 

7 produced or distributed at each 

8 refinery or importer shall meet 

9 the standards applicable under 

10 clause (ii) not later than April 1 

11 of the year following the report 

12 in subclause (II) and for subse13 quent years.

14 ‘‘(vi) REGULATIONS TO CONTROL

15 HAZARDOUS AIR POLLUTANTS FROM

16 MOTOR VEHICLES AND MOTOR VEHICLE

17 FUELS.—Not later than July 1, 2004, the 

18 Administrator shall promulgate final regu19 lations to control hazardous air pollutants 

20 from motor vehicles and motor vehicle 

21 fuels, as provided for in section 80.1045 of 

22 title 40, Code of Federal Regulations (as 

23 in effect on the date of enactment of this 

24 subparagraph).’’. 
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1 (c) CONSOLIDATION IN REFORMULATED GASOLINE

2 REGULATIONS.—Not later than 180 days after the date 

3 of enactment of this Act, the Administrator of the Envi4 ronmental Protection Agency shall revise the reformulated 

5 gasoline regulations under subpart D of part 80 of title 

6 40, Code of Federal Regulations, to consolidate the regula7 tions applicable to VOC-Control Regions 1 and 2 under 

8 section 80.41 of that title by eliminating the less stringent 

9 requirements applicable to gasoline designated for VOC10 Control Region 2 and instead applying the more stringent 

11 requirements applicable to gasoline designated for VOC12 Control Region 1. 

13 (d) SAVINGS CLAUSE.—Nothing in this section is in14 tended to affect or prejudice either any legal claims or ac15 tions with respect to regulations promulgated by the Ad16 ministrator of the Environmental Protection Agency 

17 (hereinafter in this subsection referred to as the ‘‘Admin18 istrator’’) prior to the date of enactment of this Act re19 garding emissions of toxic air pollutants from motor vehi20 cles or the adjustment of standards applicable to a specific 

21 refinery or importer made under such prior regulations 

22 and the Administrator may apply such adjustments to the 

23 standards applicable to such refinery or importer under 

24 clause (iii)(I) of section 211(k)(1)(B) of the Clean Air Act, 

25 except that— 
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1 (1) the Administrator shall revise such adjust2 ments to be based only on calendar years 1999–

3 2000; and 

4 (2) for adjustments based on toxic air pollutant 

5 emissions from reformulated gasoline significantly 

6 below the national annual average emissions of toxic 

7 air pollutants from all reformulated gasoline, the 

8 Administrator may revise such adjustments to take 

9 account of the scope of Federal or State prohibitions 

10 on the use of methyl tertiary butyl ether imposed 

11 after the date of the enactment of this paragraph, 

12 except that any such adjustment shall require such 

13 refiner or importer, to the greatest extent prac14 ticable, to maintain the reduction achieved during 

15 calendar years 1999–2000 in the average annual ag16 gregate emissions of toxic air pollutants from refor17 mulated gasoline produced or distributed by the re18 finery or importer: Provided, That any such adjust19 ment shall not be made at a level below the average 

20 percentage of reductions of emissions of toxic air 

21 pollutants for reformulated gasoline supplied to 

22 PADD I during calendar years 1999–2000. 

23 SEC. 1506. ANALYSES OF MOTOR VEHICLE FUEL CHANGES. 

24 Section 211 of the Clean Air Act (42 U.S.C. 7545) 

25 is amended by inserting after subsection (o) the following: 
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1 ‘‘(p) ANALYSES OF MOTOR VEHICLE FUEL CHANGES

2 AND EMISSIONS MODEL.—

3 ‘‘(1) ANTI-BACKSLIDING ANALYSIS.—

4 ‘‘(A) DRAFT ANALYSIS.—Not later than 4 

5 years after the date of enactment of this sub6 section, the Administrator shall publish for pub7 lic comment a draft analysis of the changes in 

8 emissions of air pollutants and air quality due 

9 to the use of motor vehicle fuel and fuel addi10 tives resulting from implementation of the 

11 amendments made by subtitle A of title XV of 

12 the Energy Policy Act of 2003. 

13 ‘‘(B) FINAL ANALYSIS.—After providing a 

14 reasonable opportunity for comment but not 

15 later than 5 years after the date of enactment 

16 of this paragraph, the Administrator shall pub17 lish the analysis in final form. 

18 ‘‘(2) EMISSIONS MODEL.—For the purposes of 

19 this subsection, as soon as the necessary data are 

20 available, the Administrator shall develop and final21 ize an emissions model that reasonably reflects the 

22 effects of gasoline characteristics or components on 

23 emissions from vehicles in the motor vehicle fleet 

24 during calendar year 2005.’’. 
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1 SEC. 1507. DATA COLLECTION. 

2 Section 205 of the Department of Energy Organiza3 tion Act (42 U.S.C. 7135) is amended by adding at the 

4 end the following: 

5 ‘‘(m) RENEWABLE FUELS SURVEY.—(1) In order to 

6 improve the ability to evaluate the effectiveness of the Na7 tion’s renewable fuels mandate, the Administrator shall 

8 conduct and publish the results of a survey of renewable 

9 fuels demand in the motor vehicle fuels market in the 

10 United States monthly, and in a manner designed to pro11 tect the confidentiality of individual responses. In con12 ducting the survey, the Administrator shall collect infor13 mation both on a national and regional basis, including 

14 each of the following: 

15 ‘‘(A) The quantity of renewable fuels produced. 

16 ‘‘(B) The quantity of renewable fuels blended. 

17 ‘‘(C) The quantity of renewable fuels imported. 

18 ‘‘(D) The quantity of renewable fuels de19 manded. 

20 ‘‘(E) Market price data. 

21 ‘‘(F) Such other analyses or evaluations as the 

22 Administrator finds is necessary to achieve the pur23 poses of this section. 

24 ‘‘(2) The Administrator shall also collect or estimate 

25 information both on a national and regional basis, pursu-
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1 ant to subparagraphs (A) through (F) of paragraph (1), 

2 for the 5 years prior to implementation of this subsection. 

3 ‘‘(3) This subsection does not affect the authority of 

4 the Administrator to collect data under section 52 of the 

5 Federal Energy Administration Act of 1974 (15 U.S.C. 

6 790a).’’.

7 SEC. 1508. REDUCING THE PROLIFERATION OF STATE FUEL 

8 CONTROLS. 

9 (a) EPA APPROVAL OF STATE PLANS WITH FUEL

10 CONTROLS.—Section 211(c)(4)(C) of the Clean Air Act 

11 (42 U.S.C. 7545(c)(4)(C)) is amended by adding at the 

12 end the following: ‘‘The Administrator shall not approve 

13 a control or prohibition respecting the use of a fuel or fuel 

14 additive under this subparagraph unless the Adminis15 trator, after consultation with the Secretary of Energy, 

16 publishes in the Federal Register a finding that, in the 

17 Administrator’s judgment, such control or prohibition will 

18 not cause fuel supply or distribution interruptions or have 

19 a significant adverse impact on fuel producibility in the 

20 affected area or contiguous areas.’’. 

21 (b) STUDY.—The Administrator of the Environ22 mental Protection Agency (hereinafter in this subsection 

23 referred to as the ‘‘Administrator’’), in cooperation with 

24 the Secretary of Energy, shall undertake a study of the 

25 projected effects on air quality, the proliferation of fuel 
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1 blends, fuel availability, and fuel costs of providing a pref2 erence for each of the following: 

3 (A) Reformulated gasoline referred to in sub4 section (k) of section 211 of the Clean Air Act. 

5 (B) A low RVP gasoline blend that has been 

6 certified by the Administrator as having a Reid 

7 Vapor Pressure of 7.0 pounds per square inch (psi). 

8 (C) A low RVP gasoline blend that has been 

9 certified by the Administrator as having a Reid 

10 Vapor Pressure of 7.8 pounds per square inch (psi). 

11 In carrying out such study, the Administrator shall obtain 

12 comments from affected parties. The Administrator shall 

13 submit the results of such study to the Congress not later 

14 than 18 months after the date of enactment of this Act, 

15 together with any recommended legislative changes.

16 SEC. 1509. FUEL SYSTEM REQUIREMENTS HARMONIZATION 

17 STUDY. 

18 (a) STUDY.—

19 (1) IN GENERAL.—The Administrator of the 

20 Environmental Protection Agency (hereinafter in 

21 this section referred to as the ‘‘Administrator’’) and 

22 the Secretary of Energy shall jointly conduct a study 

23 of Federal, State, and local requirements concerning 

24 motor vehicle fuels, including—
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1 (A) requirements relating to reformulated 

2 gasoline, volatility (measured in Reid vapor 

3 pressure), oxygenated fuel, and diesel fuel; and 

4 (B) other requirements that vary from 

5 State to State, region to region, or locality to 

6 locality. 

7 (2) REQUIRED ELEMENTS.—The study shall as8 sess—

9 (A) the effect of the variety of require10 ments described in paragraph (1) on the supply, 

11 quality, and price of motor vehicle fuels avail12 able to consumers in various States and local13 ities; 

14 (B) the effect of the requirements de15 scribed in paragraph (1) on achievement of—

16 (i) national, regional, and local air 

17 quality standards and goals; and 

18 (ii) related environmental and public 

19 health protection standards and goals; 

20 (C) the effect of Federal, State, and local 

21 motor vehicle fuel regulations, including mul22 tiple motor vehicle fuel requirements, on—

23 (i) domestic refineries; 

24 (ii) the fuel distribution system; and 
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1 (iii) industry investment in new capac2 ity; 

3 (D) the effect of the requirements de4 scribed in paragraph (1) on emissions from ve5 hicles, refineries, and fuel handling facilities; 

6 (E) the feasibility of developing national or 

7 regional motor vehicle fuel slates for the 48 

8 contiguous States that, while improving air 

9 quality at the national, regional and local levels 

10 consistent with the attainment of national am11 bient air quality standards, could—

12 (i) enhance flexibility in the fuel dis13 tribution infrastructure and improve fuel 

14 fungibility; 

15 (ii) reduce price volatility and costs to 

16 consumers and producers; 

17 (iii) provide increased liquidity to the 

18 gasoline market; and 

19 (iv) enhance fuel quality, consistency, 

20 and supply; 

21 (F) the feasibility of providing incentives 

22 to promote cleaner burning motor vehicle fuel; 

23 and 

24 (G) the extent to which improvements in 

25 air quality and any increases or decreases in 
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1 the price of motor fuel can be projected to re2 sult from the Environmental Protection Agen3 cy’s Tier II requirements for conventional gaso4 line and vehicle emission systems, the reformu5 lated gasoline program, the renewable content 

6 requirements established by this subtitle, State 

7 programs regarding gasoline volatility, and any 

8 other requirements imposed by States or local9 ities affecting the composition of motor fuel. 

10 (b) REPORT.—

11 (1) IN GENERAL.—Not later than December 31, 

12 2007, the Administrator and the Secretary of En13 ergy shall submit to Congress a report on the results 

14 of the study conducted under subsection (a). 

15 (2) RECOMMENDATIONS.—

16 (A) IN GENERAL.—The report under this 

17 subsection shall contain recommendations for 

18 legislative and administrative actions that may 

19 be taken—

20 (i) to improve air quality; 

21 (ii) to reduce costs to consumers and 

22 producers; and 

23 (iii) to increase supply liquidity. 

24 (B) REQUIRED CONSIDERATIONS.—The 

25 recommendations under subparagraph (A) shall 
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1 take into account the need to provide advance 

2 notice of required modifications to refinery and 

3 fuel distribution systems in order to ensure an 

4 adequate supply of motor vehicle fuel in all 

5 States. 

6 (3) CONSULTATION.—In developing the report 

7 under this subsection, the Administrator and the 

8 Secretary of Energy shall consult with—

9 (A) the Governors of the States; 

10 (B) automobile manufacturers; 

11 (C) motor vehicle fuel producers and dis12 tributors; and 

13 (D) the public.

14 SEC. 1510. COMMERCIAL BYPRODUCTS FROM MUNICIPAL 

15 SOLID WASTE AND CELLULOSIC BIOMASS 

16 LOAN GUARANTEE PROGRAM. 

17 (a) DEFINITION OF MUNICIPAL SOLID WASTE.—In 

18 this section, the term ‘‘municipal solid waste’’ has the 

19 meaning given the term ‘‘solid waste’’ in section 1004 of 

20 the Solid Waste Disposal Act (42 U.S.C. 6903). 

21 (b) ESTABLISHMENT OF PROGRAM.—The Secretary 

22 of Energy (hereinafter in this section referred to as the 

23 ‘‘Secretary’’) shall establish a program to provide guaran24 tees of loans by private institutions for the construction 

25 of facilities for the processing and conversion of municipal 
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1 solid waste and cellulosic biomass into fuel ethanol and 

2 other commercial byproducts. 

3 (c) REQUIREMENTS.—The Secretary may provide a 

4 loan guarantee under subsection (b) to an applicant if—

5 (1) without a loan guarantee, credit is not 

6 available to the applicant under reasonable terms or 

7 conditions sufficient to finance the construction of a 

8 facility described in subsection (b); 

9 (2) the prospective earning power of the appli10 cant and the character and value of the security 

11 pledged provide a reasonable assurance of repayment 

12 of the loan to be guaranteed in accordance with the 

13 terms of the loan; and 

14 (3) the loan bears interest at a rate determined 

15 by the Secretary to be reasonable, taking into ac16 count the current average yield on outstanding obli17 gations of the United States with remaining periods 

18 of maturity comparable to the maturity of the loan. 

19 (d) CRITERIA.—In selecting recipients of loan guar20 antees from among applicants, the Secretary shall give 

21 preference to proposals that—

22 (1) meet all applicable Federal and State per23 mitting requirements; 

24 (2) are most likely to be successful; and 
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1 (3) are located in local markets that have the 

2 greatest need for the facility because of—

3 (A) the limited availability of land for 

4 waste disposal; 

5 (B) the availability of sufficient quantities 

6 of cellulosic biomass; or 

7 (C) a high level of demand for fuel ethanol 

8 or other commercial byproducts of the facility. 

9 (e) MATURITY.—A loan guaranteed under subsection 

10 (b) shall have a maturity of not more than 20 years. 

11 (f) TERMS AND CONDITIONS.—The loan agreement 

12 for a loan guaranteed under subsection (b) shall provide 

13 that no provision of the loan agreement may be amended 

14 or waived without the consent of the Secretary.

15 (g) ASSURANCE OF REPAYMENT.—The Secretary 

16 shall require that an applicant for a loan guarantee under 

17 subsection (b) provide an assurance of repayment in the 

18 form of a performance bond, insurance, collateral, or other 

19 means acceptable to the Secretary in an amount equal to 

20 not less than 20 percent of the amount of the loan. 

21 (h) GUARANTEE FEE.—The recipient of a loan guar22 antee under subsection (b) shall pay the Secretary an 

23 amount determined by the Secretary to be sufficient to 

24 cover the administrative costs of the Secretary relating to 

25 the loan guarantee. 
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1 (i) FULL FAITH AND CREDIT.—The full faith and 

2 credit of the United States is pledged to the payment of 

3 all guarantees made under this section. Any such guar4 antee made by the Secretary shall be conclusive evidence 

5 of the eligibility of the loan for the guarantee with respect 

6 to principal and interest. The validity of the guarantee 

7 shall be incontestable in the hands of a holder of the guar8 anteed loan. 

9 (j) REPORTS.—Until each guaranteed loan under this 

10 section has been repaid in full, the Secretary shall annu11 ally submit to Congress a report on the activities of the 

12 Secretary under this section. 

13 (k) AUTHORIZATION OF APPROPRIATIONS.—There 

14 are authorized to be appropriated such sums as are nec15 essary to carry out this section. 

16 (l) TERMINATION OF AUTHORITY.—The authority of 

17 the Secretary to issue a loan guarantee under subsection 

18 (b) terminates on the date that is 10 years after the date 

19 of enactment of this Act. 

20 SEC. 1511. RESOURCE CENTER. 

21 (a) DEFINITION.—In this section, the term ‘‘RFG 

22 State’’ means a State in which is located one or more cov23 ered areas (as defined in section 211(k)(10)(D) of the 

24 Clean Air Act (42 U.S.C. 7545(k)(10)(D)). 
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1 (b) AUTHORIZATION OF APPROPRIATIONS FOR RE2 SOURCE CENTER.—There are authorized to be appro3 priated, for a resource center to further develop bioconver4 sion technology using low-cost biomass for the production 

5 of ethanol at the Center for Biomass-Based Energy at the 

6 University of Mississippi and the University of Oklahoma, 

7 $4,000,000 for each of fiscal years 2004 through 2006. 

8 (c) RENEWABLE FUEL PRODUCTION RESEARCH AND

9 DEVELOPMENT GRANTS.—

10 (1) IN GENERAL.—The Administrator of the 

11 Environmental Protection Agency shall provide 

12 grants for the research into, and development and 

13 implementation of, renewable fuel production tech14 nologies in RFG States with low rates of ethanol 

15 production, including low rates of production of cel16 lulosic biomass ethanol. 

17 (2) ELIGIBILITY.—

18 (A) IN GENERAL.—The entities eligible to 

19 receive a grant under this subsection are aca20 demic institutions in RFG States, and consortia 

21 made up of combinations of academic institu22 tions, industry, State government agencies, or 

23 local government agencies in RFG States, that 

24 have proven experience and capabilities with 

25 relevant technologies. 
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1 (B) APPLICATION.—To be eligible to re2 ceive a grant under this subsection, an eligible 

3 entity shall submit to the Administrator an ap4 plication in such manner and form, and accom5 panied by such information, as the Adminis6 trator may specify. 

7 (3) AUTHORIZATION OF APPROPRIATIONS.—

8 There are authorized to be appropriated to carry out 

9 this subsection $25,000,000 for each of fiscal years 

10 2004 through 2008. 

11 SEC. 1512. CELLULOSIC BIOMASS AND WASTE-DERIVED 

12 ETHANOL CONVERSION ASSISTANCE. 

13 Section 211 of the Clean Air Act (42 U.S.C. 7545) 

14 is amended by adding at the end the following: 

15 ‘‘(r) CELLULOSIC BIOMASS AND WASTE-DERIVED

16 ETHANOL CONVERSION ASSISTANCE.—

17 ‘‘(1) IN GENERAL.—The Secretary of Energy 

18 may provide grants to merchant producers of cel19 lulosic biomass ethanol and waste-derived ethanol in 

20 the United States to assist the producers in building 

21 eligible production facilities described in paragraph 

22 (2) for the production of ethanol. 

23 ‘‘(2) ELIGIBLE PRODUCTION FACILITIES.—A 

24 production facility shall be eligible to receive a grant 

25 under this subsection if the production facility—
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1 ‘‘(A) is located in the United States; and 

2 ‘‘(B) uses cellulosic biomass or waste-de3 rived feedstocks derived from agricultural resi4 dues, municipal solid waste, or agricultural by5 products as that term is used in section 919 of 

6 the Energy Policy Act of 2003. 

7 ‘‘(3) AUTHORIZATION OF APPROPRIATIONS.—

8 There are authorized to be appropriated the fol9 lowing amounts to carry out this subsection: 

10 ‘‘(A) $100,000,000 for fiscal year 2004. 

11 ‘‘(B) $250,000,000 for fiscal year 2005. 

12 ‘‘(C) $400,000,000 for fiscal year 2006.’’. 

13 SEC. 1513. BLENDING OF COMPLIANT REFORMULATED GAS14 OLINES. 

15 Section 211 of the Clean Air Act (42 U.S.C. 7545) 

16 is amended by adding at the end the following: 

17 ‘‘(s) BLENDING OF COMPLIANT REFORMULATED

18 GASOLINES.—

19 ‘‘(1) IN GENERAL.—Notwithstanding sub20 sections (h) and (k) and subject to the limitations in 

21 paragraph (2) of this subsection, it shall not be a 

22 violation of this subtitle for a gasoline retailer, dur23 ing any month of the year, to blend at a retail loca24 tion batches of ethanol-blended and non-ethanol25 blended reformulated gasoline, provided that—
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1 ‘‘(A) each batch of gasoline to be blended 

2 has been individually certified as in compliance 

3 with subsections (h) and (k) prior to being 

4 blended; 

5 ‘‘(B) the retailer notifies the Administrator 

6 prior to such blending, and identifies the exact 

7 location of the retail station and the specific 

8 tank in which such blending will take place; 

9 ‘‘(C) the retailer retains and, as requested 

10 by the Administrator or the Administrator’s 

11 designee, makes available for inspection such 

12 certifications accounting for all gasoline at the 

13 retail outlet; and 

14 ‘‘(D) the retailer does not, between June 1 

15 and September 15 of each year, blend a batch 

16 of VOC-controlled, or ‘summer’, gasoline with a 

17 batch of non-VOC-controlled, or ‘winter’, gaso18 line (as these terms are defined under sub19 sections (h) and (k)). 

20 ‘‘(2) LIMITATIONS.—

21 ‘‘(A) FREQUENCY LIMITATION.—A retailer 

22 shall only be permitted to blend batches of com23 pliant reformulated gasoline under this sub24 section a maximum of two blending periods be-
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1 tween May 1 and September 15 of each cal2 endar year. 

3 ‘‘(B) DURATION OF BLENDING PERIOD.—

4 Each blending period authorized under sub5 paragraph (A) shall extend for a period of no 

6 more than 10 consecutive calendar days. 

7 ‘‘(3) SURVEYS.—A sample of gasoline taken 

8 from a retail location that has blended gasoline with9 in the past 30 days and is in compliance with sub10 paragraphs (A), (B), (C), and (D) of paragraph (1) 

11 shall not be used in a VOC survey mandated by 40 

12 CFR Part 80.

13 ‘‘(4) STATE IMPLEMENTATION PLANS.—A State 

14 shall be held harmless and shall not be required to 

15 revise its State implementation plan under section 

16 110 to account for the emissions from blended gaso17 line authorized under paragraph (1). 

18 ‘‘(5) PRESERVATION OF STATE LAW.—Nothing 

19 in this subsection shall—

20 ‘‘(A) preempt existing State laws or regu21 lations regulating the blending of compliant 

22 gasolines; or 

23 ‘‘(B) prohibit a State from adopting such 

24 restrictions in the future. 
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1 ‘‘(6) REGULATIONS.—The Administrator shall 

2 promulgate, after notice and comment, regulations 

3 implementing this subsection within one year after 

4 the date of enactment of this subsection. 

5 ‘‘(7) EFFECTIVE DATE.—This subsection shall 

6 become effective 15 months after the date of its en7 actment and shall apply to blended batches of refor8 mulated gasoline on or after that date, regardless of 

9 whether the implementing regulations required by 

10 paragraph (6) have been promulgated by the Admin11 istrator by that date. 

12 ‘‘(8) LIABILITY.—No person other than the 

13 person responsible for blending under this subsection 

14 shall be subject to an enforcement action or pen15 alties under subsection (d) solely arising from the 

16 blending of compliant reformulated gasolines by the 

17 retailers. 

18 ‘‘(9) FORMULATION OF GASOLINE.—This sub19 section does not grant authority to the Adminis20 trator or any State (or any subdivision thereof) to 

21 require reformulation of gasoline at the refinery to 

22 adjust for potential or actual emissions increases due 

23 to the blending authorized by this subsection.’’. 
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1 Subtitle B—Underground Storage 

2 Tank Compliance 

3 SEC. 1521. SHORT TITLE. 

4 This subtitle may be cited as the ‘‘Underground Stor5 age Tank Compliance Act of 2003’’. 

6 SEC. 1522. LEAKING UNDERGROUND STORAGE TANKS. 

7 (a) IN GENERAL.—Section 9004 of the Solid Waste 

8 Disposal Act (42 U.S.C. 6991c) is amended by adding at 

9 the end the following: 

10 ‘‘(f) TRUST FUND DISTRIBUTION.—

11 ‘‘(1) IN GENERAL.—

12 ‘‘(A) AMOUNT AND PERMITTED USES OF

13 DISTRIBUTION.—The Administrator shall dis14 tribute to States not less than 80 percent of the 

15 funds from the Trust Fund that are made 

16 available to the Administrator under section 

17 9014(2)(A) for each fiscal year for use in pay18 ing the reasonable costs, incurred under a coop19 erative agreement with any State for—

20 ‘‘(i) actions taken by the State under 

21 section 9003(h)(7)(A); 

22 ‘‘(ii) necessary administrative ex23 penses, as determined by the Adminis24 trator, that are directly related to State 
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1 fund or State assurance programs under 

2 subsection (c)(1); 

3 ‘‘(iii) any State fund or State assur4 ance program carried out under subsection 

5 (c)(1) for a release from an underground 

6 storage tank regulated under this subtitle 

7 to the extent that, as determined by the 

8 State in accordance with guidelines devel9 oped jointly by the Administrator and the 

10 States, the financial resources of the owner 

11 and operator of the underground storage 

12 tank (including resources provided by a 

13 program in accordance with subsection 

14 (c)(1)) are not adequate to pay the cost of 

15 a corrective action without significantly im16 pairing the ability of the owner or operator 

17 to continue in business; or 

18 ‘‘(iv) enforcement, by a State or a 

19 local government, of State or local regula20 tions pertaining to underground storage 

21 tanks regulated under this subtitle. 

22 ‘‘(B) USE OF FUNDS FOR ENFORCE23 MENT.—In addition to the uses of funds au24 thorized under subparagraph (A), the Adminis25 trator may use funds from the Trust Fund that 
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1 are not distributed to States under subpara2 graph (A) for enforcement of any regulation 

3 promulgated by the Administrator under this 

4 subtitle. 

5 ‘‘(C) PROHIBITED USES.—Funds provided 

6 to a State by the Administrator under subpara7 graph (A) shall not be used by the State to pro8 vide financial assistance to an owner or oper9 ator to meet any requirement relating to under10 ground storage tanks under subparts B, C, D, 

11 H, and G of part 280 of title 40, Code of Fed12 eral Regulations (as in effect on the date of en13 actment of this subsection). 

14 ‘‘(2) ALLOCATION.—

15 ‘‘(A) PROCESS.—Subject to subparagraphs 

16 (B) and (C), in the case of a State with which 

17 the Administrator has entered into a coopera18 tive agreement under section 9003(h)(7)(A), 

19 the Administrator shall distribute funds from 

20 the Trust Fund to the State using an allocation 

21 process developed by the Administrator. 

22 ‘‘(B) DIVERSION OF STATE FUNDS.—The 

23 Administrator shall not distribute funds under 

24 subparagraph (A)(iii) of subsection (f)(1) to 

25 any State that has diverted funds from a State 
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1 fund or State assurance program for purposes 

2 other than those related to the regulation of un3 derground storage tanks covered by this sub4 title, with the exception of those transfers that 

5 had been completed earlier than the date of en6 actment of this subsection. 

7 ‘‘(C) REVISIONS TO PROCESS.—The Ad8 ministrator may revise the allocation process re9 ferred to in subparagraph (A) after—

10 ‘‘(i) consulting with State agencies re11 sponsible for overseeing corrective action 

12 for releases from underground storage 

13 tanks; and 

14 ‘‘(ii) taking into consideration, at a 

15 minimum, each of the following: 

16 ‘‘(I) The number of confirmed re17 leases from federally regulated leaking 

18 underground storage tanks in the 

19 States. 

20 ‘‘(II) The number of federally 

21 regulated underground storage tanks 

22 in the States. 

23 ‘‘(III) The performance of the 

24 States in implementing and enforcing 

25 the program. 
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1 ‘‘(IV) The financial needs of the 

2 States. 

3 ‘‘(V) The ability of the States to 

4 use the funds referred to in subpara5 graph (A) in any year. 

6 ‘‘(3) DISTRIBUTIONS TO STATE AGENCIES.—

7 Distributions from the Trust Fund under this sub8 section shall be made directly to a State agency 

9 that—

10 ‘‘(A) enters into a cooperative agreement 

11 referred to in paragraph (2)(A); or 

12 ‘‘(B) is enforcing a State program ap13 proved under this section.

14 ‘‘(4) COST RECOVERY PROHIBITION.—Funds 

15 from the Trust Fund provided by States to owners 

16 or operators under paragraph (1)(A)(iii) shall not be 

17 subject to cost recovery by the Administrator under 

18 section 9003(h)(6).’’. 

19 (b) WITHDRAWAL OF APPROVAL OF STATE

20 FUNDS.—Section 9004(c) of the Solid Waste Disposal Act 

21 (42 U.S.C. 6991c(c)) is amended by inserting the fol22 lowing new paragraph at the end thereof: 

23 ‘‘(6) WITHDRAWAL OF APPROVAL.—After an 

24 opportunity for good faith, collaborative efforts to 

25 correct financial deficiencies with a State fund, the 
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1 Administrator may withdraw approval of any State 

2 fund or State assurance program to be used as a fi3 nancial responsibility mechanism without with4 drawing approval of a State underground storage 

5 tank program under section 9004(a).’’. 

6 SEC. 1523. INSPECTION OF UNDERGROUND STORAGE 

7 TANKS. 

8 (a) INSPECTION REQUIREMENTS.—Section 9005 of 

9 the Solid Waste Disposal Act (42 U.S.C. 6991d) is amend10 ed by inserting the following new subsection at the end 

11 thereof: 

12 ‘‘(c) INSPECTION REQUIREMENTS.—

13 ‘‘(1) UNINSPECTED TANKS.—In the case of un14 derground storage tanks regulated under this sub15 title that have not undergone an inspection since De16 cember 22, 1998, not later than 2 years after the 

17 date of enactment of this subsection, the Adminis18 trator or a State that receives funding under this 

19 subtitle, as appropriate, shall conduct on-site inspec20 tions of all such tanks to determine compliance with 

21 this subtitle and the regulations under this subtitle 

22 (40 CFR 280) or a requirement or standard of a 

23 State program developed under section 9004. 

24 ‘‘(2) PERIODIC INSPECTIONS.—After completion 

25 of all inspections required under paragraph (1), the 
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1 Administrator or a State that receives funding under 

2 this subtitle, as appropriate, shall conduct on-site in3 spections of each underground storage tank regu4 lated under this subtitle at least once every 3 years 

5 to determine compliance with this subtitle and the 

6 regulations under this subtitle (40 CFR 280) or a 

7 requirement or standard of a State program devel8 oped under section 9004. The Administrator may ex9 tend for up to one additional year the first 3-year 

10 inspection interval under this paragraph if the State 

11 demonstrates that it has insufficient resources to 

12 complete all such inspections within the first 3-year 

13 period. 

14 ‘‘(3) INSPECTION AUTHORITY.—Nothing in this 

15 section shall be construed to diminish the Adminis16 trator’s or a State’s authorities under section 

17 9005(a).’’. 

18 (b) STUDY OF ALTERNATIVE INSPECTION PRO19 GRAMS.—The Administrator of the Environmental Protec20 tion Agency, in coordination with a State, shall gather in21 formation on compliance assurance programs that could 

22 serve as an alternative to the inspection programs under 

23 section 9005(c) of the Solid Waste Disposal Act (42 

24 U.S.C. 6991d(c)) and shall, within 4 years after the date 
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1 of enactment of this Act, submit a report to the Congress 

2 containing the results of such study. 

3 SEC. 1524. OPERATOR TRAINING. 

4 (a) IN GENERAL.—Section 9010 of the Solid Waste 

5 Disposal Act (42 U.S.C. 6991i) is amended to read as fol6 lows: 

7 ‘‘SEC. 9010. OPERATOR TRAINING. 

8 ‘‘(a) GUIDELINES.—

9 ‘‘(1) IN GENERAL.—Not later than 2 years 

10 after the date of enactment of the Underground 

11 Storage Tank Compliance Act of 2003, in consulta12 tion and cooperation with States and after public no13 tice and opportunity for comment, the Administrator 

14 shall publish guidelines that specify training require15 ments for persons having primary daily on-site man16 agement responsibility for the operation and mainte17 nance of underground storage tanks. 

18 ‘‘(2) CONSIDERATIONS.—The guidelines de19 scribed in paragraph (1) shall take into account—

20 ‘‘(A) State training programs in existence 

21 as of the date of publication of the guidelines; 

22 ‘‘(B) training programs that are being em23 ployed by tank owners and tank operators as of 

24 the date of enactment of the Underground Stor25 age Tank Compliance Act of 2003; 
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1 ‘‘(C) the high turnover rate of tank opera2 tors and other personnel; 

3 ‘‘(D) the frequency of improvement in un4 derground storage tank equipment technology; 

5 ‘‘(E) the nature of the businesses in which 

6 the tank operators are engaged; and 

7 ‘‘(F) such other factors as the Adminis8 trator determines to be necessary to carry out 

9 this section. 

10 ‘‘(b) STATE PROGRAMS.—

11 ‘‘(1) IN GENERAL.—Not later than 2 years 

12 after the date on which the Administrator publishes 

13 the guidelines under subsection (a)(1), each State 

14 that receives funding under this subtitle shall de15 velop State-specific training requirements that are 

16 consistent with the guidelines developed under sub17 section (a)(1). 

18 ‘‘(2) REQUIREMENTS.—State requirements de19 scribed in paragraph (1) shall—

20 ‘‘(A) be consistent with subsection (a); 

21 ‘‘(B) be developed in cooperation with tank 

22 owners and tank operators; 

23 ‘‘(C) take into consideration training pro24 grams implemented by tank owners and tank 
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1 operators as of the date of enactment of this 

2 section; and 

3 ‘‘(D) be appropriately communicated to 

4 tank owners and operators. 

5 ‘‘(3) FINANCIAL INCENTIVE.—The Adminis6 trator may award to a State that develops and im7 plements requirements described in paragraph (1), 

8 in addition to any funds that the State is entitled to 

9 receive under this subtitle, not more than $200,000, 

10 to be used to carry out the requirements. 

11 ‘‘(c) OPERATORS.—All persons having primary daily 

12 on-site management responsibility for the operation and 

13 maintenance of any underground storage tank shall—

14 ‘‘(1) meet the training requirements developed 

15 under subsection (b); and 

16 ‘‘(2) repeat the applicable requirements devel17 oped under subsection (b), if the tank for which they 

18 have primary daily on-site management responsibil19 ities is determined to be out of compliance with—

20 ‘‘(A) a requirement or standard promul21 gated by the Administrator under section 9003; 

22 or 

23 ‘‘(B) a requirement or standard of a State 

24 program approved under section 9004.’’. 
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1 (b) STATE PROGRAM REQUIREMENT.—Section 

2 9004(a) of the Solid Waste Disposal Act (42 U.S.C. 

3 6991c(a)) is amended by striking ‘‘and’’ at the end of 

4 paragraph (7), by striking the period at the end of para5 graph (8) and inserting ‘‘; and’’, and by adding the fol6 lowing new paragraph at the end thereof: 

7 ‘‘(9) State-specific training requirements as re8 quired by section 9010.’’. 

9 (c) ENFORCEMENT.—Section 9006(d)(2) of such Act 

10 (42 U.S.C. 6991e) is amended as follows: 

11 (1) By striking ‘‘or’’ at the end of subpara12 graph (B). 

13 (2) By adding the following new subparagraph 

14 after subparagraph (C):

15 ‘‘(D) the training requirements established by 

16 States pursuant to section 9010 (relating to oper17 ator training); or’’. 

18 (d) TABLE OF CONTENTS.—The item relating to sec19 tion 9010 in table of contents for the Solid Waste Disposal 

20 Act is amended to read as follows:

‘‘Sec. 9010. Operator training.’’.

21 SEC. 1525. REMEDIATION FROM OXYGENATED FUEL ADDI22 TIVES. 

23 Section 9003(h) of the Solid Waste Disposal Act (42 

24 U.S.C. 6991b(h)) is amended as follows: 

25 (1) In paragraph (7)(A)—
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1 (A) by striking ‘‘paragraphs (1) and (2) of 

2 this subsection’’ and inserting ‘‘paragraphs (1), 

3 (2), and (12)’’ ; and 

4 (B) by striking ‘‘and including the authori5 ties of paragraphs (4), (6), and (8) of this sub6 section’’ and inserting ‘‘and the authority under 

7 sections 9011 and 9012 and paragraphs (4), 

8 (6), and (8),’’. 

9 (2) By adding at the end the following: 

10 ‘‘(12) REMEDIATION OF OXYGENATED FUEL

11 CONTAMINATION.—

12 ‘‘(A) IN GENERAL.—The Administrator 

13 and the States may use funds made available 

14 under section 9014(2)(B) to carry out correc15 tive actions with respect to a release of a fuel 

16 containing an oxygenated fuel additive that pre17 sents a threat to human health or welfare or 

18 the environment. 

19 ‘‘(B) APPLICABLE AUTHORITY.—The Ad20 ministrator or a State shall carry out subpara21 graph (A) in accordance with paragraph (2), 

22 and in the case of a State, in accordance with 

23 a cooperative agreement entered into by the Ad24 ministrator and the State under paragraph 

25 (7).’’. 
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1 SEC. 1526. RELEASE PREVENTION, COMPLIANCE, AND EN2 FORCEMENT. 

3 (a) RELEASE PREVENTION AND COMPLIANCE.—Sub4 title I of the Solid Waste Disposal Act (42 U.S.C. 6991 

5 et seq.) is amended by adding at the end the following: 

6 ‘‘SEC. 9011. USE OF FUNDS FOR RELEASE PREVENTION AND 

7 COMPLIANCE. 

8 ‘‘Funds made available under section 9014(2)(D) 

9 from the Trust Fund may be used to conduct inspections, 

10 issue orders, or bring actions under this subtitle— 

11 ‘‘(1) by a State, in accordance with a grant or 

12 cooperative agreement with the Administrator, of 

13 State regulations pertaining to underground storage 

14 tanks regulated under this subtitle; and 

15 ‘‘(2) by the Administrator, for tanks regulated 

16 under this subtitle (including under a State program 

17 approved under section 9004).’’. 

18 (b) GOVERNMENT-OWNED TANKS.—Section 9003 of 

19 the Solid Waste Disposal Act (42 U.S.C. 6991b) is amend20 ed by adding at the end the following: 

21 ‘‘(i) GOVERNMENT-OWNED TANKS.—

22 ‘‘(1) STATE COMPLIANCE REPORT.—(A) Not 

23 later than 2 years after the date of enactment of 

24 this subsection, each State that receives funding 

25 under this subtitle shall submit to the Administrator 

26 a State compliance report that—
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1 ‘‘(i) lists the location and owner of each 

2 underground storage tank described in subpara3 graph (B) in the State that, as of the date of 

4 submission of the report, is not in compliance 

5 with section 9003; and 

6 ‘‘(ii) specifies the date of the last inspec7 tion and describes the actions that have been 

8 and will be taken to ensure compliance of the 

9 underground storage tank listed under clause 

10 (i) with this subtitle. 

11 ‘‘(B) An underground storage tank described in 

12 this subparagraph is an underground storage tank 

13 that is—

14 ‘‘(i) regulated under this subtitle; and 

15 ‘‘(ii) owned or operated by the Federal, 

16 State, or local government. 

17 ‘‘(C) The Administrator shall make each report, 

18 received under subparagraph (A), available to the 

19 public through an appropriate media. 

20 ‘‘(2) FINANCIAL INCENTIVE.—The Adminis21 trator may award to a State that develops a report 

22 described in paragraph (1), in addition to any other 

23 funds that the State is entitled to receive under this 

24 subtitle, not more than $50,000, to be used to carry 

25 out the report. 
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1 ‘‘(3) NOT A SAFE HARBOR.—This subsection 

2 does not relieve any person from any obligation or 

3 requirement under this subtitle.’’. 

4 (c) PUBLIC RECORD.—Section 9002 of the Solid 

5 Waste Disposal Act (42 U.S.C. 6991a) is amended by add6 ing at the end the following: 

7 ‘‘(d) PUBLIC RECORD.—

8 ‘‘(1) IN GENERAL.—The Administrator shall re9 quire each State that receives Federal funds to carry 

10 out this subtitle to maintain, update at least annu11 ally, and make available to the public, in such man12 ner and form as the Administrator shall prescribe 

13 (after consultation with States), a record of under14 ground storage tanks regulated under this subtitle. 

15 ‘‘(2) CONSIDERATIONS.—To the maximum ex16 tent practicable, the public record of a State, respec17 tively, shall include, for each year—

18 ‘‘(A) the number, sources, and causes of 

19 underground storage tank releases in the State; 

20 ‘‘(B) the record of compliance by under21 ground storage tanks in the State with—

22 ‘‘(i) this subtitle; or 

23 ‘‘(ii) an applicable State program ap24 proved under section 9004; and 
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1 ‘‘(C) data on the number of underground 

2 storage tank equipment failures in the State.’’. 

3 (d) INCENTIVE FOR PERFORMANCE.—Section 9006 

4 of the Solid Waste Disposal Act (42 U.S.C. 6991e) is 

5 amended by adding at the end the following: 

6 ‘‘(e) INCENTIVE FOR PERFORMANCE.—Both of the 

7 following may be taken into account in determining the 

8 terms of a civil penalty under subsection (d): 

9 ‘‘(1) The compliance history of an owner or op10 erator in accordance with this subtitle or a program 

11 approved under section 9004. 

12 ‘‘(2) Any other factor the Administrator con13 siders appropriate.’’. 

14 (e) TABLE OF CONTENTS.—The table of contents for 

15 such subtitle I is amended by adding the following new 

16 item at the end thereof:

‘‘Sec. 9011. Use of funds for release prevention and compliance.’’.

17 SEC. 1527. DELIVERY PROHIBITION. 

18 (a) IN GENERAL.—Subtitle I of the Solid Waste Dis19 posal Act (42 U.S.C. 6991 et seq.) is amended by adding 

20 at the end the following: 

21 ‘‘SEC. 9012. DELIVERY PROHIBITION. 

22 ‘‘(a) REQUIREMENTS.—

23 ‘‘(1) PROHIBITION OF DELIVERY OR DE24 POSIT.—Beginning 2 years after the date of enact25 ment of this section, it shall be unlawful to deliver 
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1 to, deposit into, or accept a regulated substance into 

2 an underground storage tank at a facility which has 

3 been identified by the Administrator or a State im4 plementing agency to be ineligible for fuel delivery or 

5 deposit. 

6 ‘‘(2) GUIDANCE.—Within 1 year after the date 

7 of enactment of this section, the Administrator and 

8 States that receive funding under this subtitle shall, 

9 in consultation with the underground storage tank 

10 owner and product delivery industries, for territory 

11 for which they are the primary implementing agen12 cies, publish guidelines detailing the specific proc13 esses and procedures they will use to implement the

14 provisions of this section. The processes and proce15 dures include, at a minimum—

16 ‘‘(A) the criteria for determining which un17 derground storage tank facilities are ineligible 

18 for delivery or deposit; 

19 ‘‘(B) the mechanisms for identifying which 

20 facilities are ineligible for delivery or deposit to 

21 the underground storage tank owning and fuel 

22 delivery industries; 

23 ‘‘(C) the process for reclassifying ineligible 

24 facilities as eligible for delivery or deposit; and 
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1 ‘‘(D) a delineation of, or a process for de2 termining, the specified geographic areas sub3 ject to paragraph (4). 

4 ‘‘(3) DELIVERY PROHIBITION NOTICE.—

5 ‘‘(A) ROSTER.—The Administrator and 

6 each State implementing agency that receives 

7 funding under this subtitle shall establish with8 in 24 months after the date of enactment of 

9 this section a Delivery Prohibition Roster list10 ing underground storage tanks under the Ad11 ministrator’s or the State’s jurisdiction that are 

12 determined to be ineligible for delivery or de13 posit pursuant to paragraph (2). 

14 ‘‘(B) NOTIFICATION.—The Administrator 

15 and each State, as appropriate, shall make 

16 readily known, to underground storage tank 

17 owners and operators and to product delivery 

18 industries, the underground storage tanks listed 

19 on a Delivery Prohibition Roster by: 

20 ‘‘(i) posting such Rosters, including 

21 the physical location and street address of 

22 each listed underground storage tank, on 

23 official web sites and, if the Administrator 

24 or the State so chooses, other electronic 

25 means; 
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1 ‘‘(ii) updating these Rosters periodi2 cally; and 

3 ‘‘(iii) installing a tamper-proof tag, 

4 seal, or other device blocking the fill pipes 

5 of such underground storage tanks to pre6 vent the delivery of product into such un7 derground storage tanks. 

8 ‘‘(C) ROSTER UPDATES.—The Adminis9 trator and the State shall update the Delivery 

10 Prohibition Rosters as appropriate, but not less 

11 than once a month on the first day of the 

12 month. 

13 ‘‘(D) TAMPERING WITH DEVICE.—

14 ‘‘(i) PROHIBITION.—It shall be unlaw15 ful for any person, other than an author16 ized representative of the Administrator or 

17 a State, as appropriate, to remove, tamper 

18 with, destroy, or damage a device installed 

19 by the Administrator or a State, as appro20 priate, under subparagraph (B)(iii) of this 

21 subsection. 

22 ‘‘(ii) CIVIL PENALTIES.—Any person 

23 violating clause (i) of this subparagraph 

24 shall be subject to a civil penalty not to ex25 ceed $10,000 for each violation. 
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1 ‘‘(4) LIMITATION.—

2 ‘‘(A) RURAL AND REMOTE AREAS.—Sub3 ject to subparagraph (B), the Administrator or 

4 a State shall not include an underground stor5 age tank on a Delivery Prohibition Roster 

6 under paragraph (3) if an urgent threat to pub7 lic health, as determined by the Administrator, 

8 does not exist and if such a delivery prohibition 

9 would jeopardize the availability of, or access 

10 to, fuel in any rural and remote areas. 

11 ‘‘(B) APPLICABILITY OF LIMITATION.—

12 The limitation under subparagraph (A) shall 

13 apply only during the 180-day period following 

14 the date of a determination by the Adminis15 trator or the appropriate State that exercising 

16 the authority of paragraph (3) is limited by 

17 subparagraph (A). 

18 ‘‘(b) EFFECT ON STATE AUTHORITY.—Nothing in 

19 this section shall affect the authority of a State to prohibit 

20 the delivery of a regulated substance to an underground 

21 storage tank. 

22 ‘‘(c) DEFENSE TO VIOLATION.—A person shall not 

23 be in violation of subsection (a)(1) if the underground 

24 storage tank into which a regulated substance is delivered 

25 is not listed on the Administrator’s or the appropriate 
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1 State’s Prohibited Delivery Roster 7 calendar days prior 

2 to the delivery being made.’’. 

3 (b) ENFORCEMENT.—Section 9006(d)(2) of such Act 

4 (42 U.S.C. 6991e(d)(2)) is amended as follows: 

5 (1) By adding the following new subparagraph 

6 after subparagraph (D): 

7 ‘‘(E) the delivery prohibition requirement estab8 lished by section 9012,’’. 

9 (2) By adding the following new sentence at the 

10 end thereof: ‘‘Any person making or accepting a de11 livery or deposit of a regulated substance to an un12 derground storage tank at an ineligible facility in 

13 violation of section 9012 shall also be subject to the 

14 same civil penalty for each day of such violation.’’. 

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

16 such subtitle I is amended by adding the following new 

17 item at the end thereof:

‘‘Sec. 9012. Delivery prohibition.’’.

18 SEC. 1528. FEDERAL FACILITIES. 

19 Section 9007 of the Solid Waste Disposal Act (42 

20 U.S.C. 6991f) is amended to read as follows: 

21 ‘‘SEC. 9007. FEDERAL FACILITIES. 

22 ‘‘(a) IN GENERAL.—Each department, agency, and 

23 instrumentality of the executive, legislative, and judicial 

24 branches of the Federal Government (1) having jurisdic25 tion over any underground storage tank or underground 
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1 storage tank system, or (2) engaged in any activity result2 ing, or which may result, in the installation, operation, 

3 management, or closure of any underground storage tank, 

4 release response activities related thereto, or in the deliv5 ery, acceptance, or deposit of any regulated substance to 

6 an underground storage tank or underground storage tank 

7 system shall be subject to, and comply with, all Federal, 

8 State, interstate, and local requirements, both substantive 

9 and procedural (including any requirement for permits or 

10 reporting or any provisions for injunctive relief and such 

11 sanctions as may be imposed by a court to enforce such 

12 relief), respecting underground storage tanks in the same 

13 manner, and to the same extent, as any person is subject 

14 to such requirements, including the payment of reasonable 

15 service charges. The Federal, State, interstate, and local 

16 substantive and procedural requirements referred to in 

17 this subsection include, but are not limited to, all adminis18 trative orders and all civil and administrative penalties 

19 and fines, regardless of whether such penalties or fines 

20 are punitive or coercive in nature or are imposed for iso21 lated, intermittent, or continuing violations. The United 

22 States hereby expressly waives any immunity otherwise 

23 applicable to the United States with respect to any such 

24 substantive or procedural requirement (including, but not 

25 limited to, any injunctive relief, administrative order or 
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1 civil or administrative penalty or fine referred to in the 

2 preceding sentence, or reasonable service charge). The rea3 sonable service charges referred to in this subsection in4 clude, but are not limited to, fees or charges assessed in 

5 connection with the processing and issuance of permits, 

6 renewal of permits, amendments to permits, review of 

7 plans, studies, and other documents, and inspection and 

8 monitoring of facilities, as well as any other nondiscrim9 inatory charges that are assessed in connection with a 

10 Federal, State, interstate, or local underground storage 

11 tank regulatory program. Neither the United States, nor 

12 any agent, employee, or officer thereof, shall be immune

13 or exempt from any process or sanction of any State or 

14 Federal Court with respect to the enforcement of any such 

15 injunctive relief. No agent, employee, or officer of the 

16 United States shall be personally liable for any civil pen17 alty under any Federal, State, interstate, or local law con18 cerning underground storage tanks with respect to any act 

19 or omission within the scope of the official duties of the 

20 agent, employee, or officer. An agent, employee, or officer 

21 of the United States shall be subject to any criminal sanc22 tion (including, but not limited to, any fine or imprison23 ment) under any Federal or State law concerning under24 ground storage tanks, but no department, agency, or in25 strumentality of the executive, legislative, or judicial 
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1 branch of the Federal Government shall be subject to any 

2 such sanction. The President may exempt any under3 ground storage tank of any department, agency, or instru4 mentality in the executive branch from compliance with 

5 such a requirement if he determines it to be in the para6 mount interest of the United States to do so. No such 

7 exemption shall be granted due to lack of appropriation 

8 unless the President shall have specifically requested such 

9 appropriation as a part of the budgetary process and the 

10 Congress shall have failed to make available such re11 quested appropriation. Any exemption shall be for a period 

12 not in excess of one year, but additional exemptions may 

13 be granted for periods not to exceed one year upon the 

14 President’s making a new determination. The President 

15 shall report each January to the Congress all exemptions 

16 from the requirements of this section granted during the 

17 preceding calendar year, together with his reason for 

18 granting each such exemption. 

19 ‘‘(b) REVIEW OF AND REPORT ON FEDERAL UNDER20 GROUND STORAGE TANKS.—

21 ‘‘(1) REVIEW.—Not later than 12 months after 

22 the date of enactment of the Underground Storage 

23 Tank Compliance Act of 2003, each Federal agency 

24 that owns or operates 1 or more underground stor25 age tanks, or that manages land on which 1 or more 
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1 underground storage tanks are located, shall submit 

2 to the Administrator, the Committee on Energy and 

3 Commerce of the United States House of Represent4 atives, and the Committee on the Environment and 

5 Public Works of the United States Senate a compli6 ance strategy report that—

7 ‘‘(A) lists the location and owner of each 

8 underground storage tank described in this 

9 paragraph; 

10 ‘‘(B) lists all tanks that are not in compli11 ance with this subtitle that are owned or oper12 ated by the Federal agency; 

13 ‘‘(C) specifies the date of the last inspec14 tion by a State or Federal inspector of each un15 derground storage tank owned or operated by 

16 the agency; 

17 ‘‘(D) lists each violation of this subtitle re18 specting any underground storage tank owned 

19 or operated by the agency; 

20 ‘‘(E) describes the operator training that 

21 has been provided to the operator and other 

22 persons having primary daily on-site manage23 ment responsibility for the operation and main24 tenance of underground storage tanks owned or 

25 operated by the agency; and 
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1 ‘‘(F) describes the actions that have been 

2 and will be taken to ensure compliance for each 

3 underground storage tank identified under sub4 paragraph (B). 

5 ‘‘(2) NOT A SAFE HARBOR.—This subsection 

6 does not relieve any person from any obligation or 

7 requirement under this subtitle.’’. 

8 SEC. 1529. TANKS ON TRIBAL LANDS. 

9 (a) IN GENERAL.—Subtitle I of the Solid Waste Dis10 posal Act (42 U.S.C. 6991 et seq.) is amended by adding 

11 the following at the end thereof:

12 ‘‘SEC. 9013. TANKS ON TRIBAL LANDS. 

13 ‘‘(a) STRATEGY.—The Administrator, in coordination 

14 with Indian tribes, shall, not later than 1 year after the 

15 date of enactment of this section, develop and implement 

16 a strategy— 

17 ‘‘(1) giving priority to releases that present the 

18 greatest threat to human health or the environment, 

19 to take necessary corrective action in response to re20 leases from leaking underground storage tanks lo21 cated wholly within the boundaries of—

22 ‘‘(A) an Indian reservation; or 

23 ‘‘(B) any other area under the jurisdiction 

24 of an Indian tribe; and 
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1 ‘‘(2) to implement and enforce requirements 

2 concerning underground storage tanks located wholly 

3 within the boundaries of—

4 ‘‘(A) an Indian reservation; or 

5 ‘‘(B) any other area under the jurisdiction 

6 of an Indian tribe. 

7 ‘‘(b) REPORT.—Not later than 2 years after the date 

8 of enactment of this section, the Administrator shall sub9 mit to Congress a report that summarizes the status of 

10 implementation and enforcement of this subtitle in areas 

11 located wholly within—

12 ‘‘(1) the boundaries of Indian reservations; and 

13 ‘‘(2) any other areas under the jurisdiction of 

14 an Indian tribe. 

15 The Administrator shall make the report under this sub16 section available to the public. 

17 ‘‘(c) NOT A SAFE HARBOR.—This section does not 

18 relieve any person from any obligation or requirement 

19 under this subtitle. 

20 ‘‘(d) STATE AUTHORITY.—Nothing in this section 

21 applies to any underground storage tank that is located 

22 in an area under the jurisdiction of a State, or that is 

23 subject to regulation by a State, as of the date of enact24 ment of this section.’’. 
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1 (b) TABLE OF CONTENTS.—The table of contents for 

2 such subtitle I is amended by adding the following new 

3 item at the end thereof:

‘‘Sec. 9013. Tanks on Tribal lands.’’.

4 SEC. 1530. FUTURE RELEASE CONTAINMENT TECHNOLOGY. 

5 Not later than 2 years after the date of enactment 

6 of this Act, the Administrator of the Environmental Pro7 tection Agency, after consultation with States, shall make 

8 available to the public and to the Committee on Energy 

9 and Commerce of the House of Representatives and the 

10 Committee on Environment and Public Works of the Sen11 ate information on the effectiveness of alternative possible 

12 methods and means for containing releases from under13 ground storage tanks systems. 

14 SEC. 1531. AUTHORIZATION OF APPROPRIATIONS. 

15 (a) IN GENERAL.—Subtitle I of the Solid Waste Dis16 posal Act (42 U.S.C. 6991 et seq.) is amended by adding 

17 at the end the following: 

18 ‘‘SEC. 9014. AUTHORIZATION OF APPROPRIATIONS. 

19 ‘‘There are authorized to be appropriated to the Ad20 ministrator the following amounts: 

21 ‘‘(1) To carry out subtitle I (except sections 

22 9003(h), 9005(c), 9011 and 9012) $50,000,000 for 

23 each of fiscal years 2004 through 2008. 
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1 ‘‘(2) From the Trust Fund, notwithstanding 

2 section 9508(c)(1) of the Internal Revenue Code of 

3 1986: 

4 ‘‘(A) to carry out section 9003(h) (except 

5 section 9003(h)(12)) $200,000,000 for each of 

6 fiscal years 2004 through 2008; 

7 ‘‘(B) to carry out section 9003(h)(12), 

8 $200,000,000 for each of fiscal years 2004 

9 through 2008; 

10 ‘‘(C) to carry out sections 9004(f) and 

11 9005(c) $100,000,000 for each of fiscal years 

12 2004 through 2008; and 

13 ‘‘(D) to carry out sections 9011 and 9012 

14 $55,000,000 for each of fiscal years 2004 

15 through 2008.’’.

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

17 such subtitle I is amended by adding the following new 

18 item at the end thereof:

‘‘Sec. 9014. Authorization of appropriations.’’.

19 SEC. 1532. CONFORMING AMENDMENTS. 

20 (a) IN GENERAL.—Section 9001 of the Solid Waste 

21 Disposal Act (42 U.S.C. 6991) is amended as follows: 

22 (1) By striking ‘‘For the purposes of this sub23 title—’’ and inserting ‘‘In this subtitle:’’. 
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1 (2) By redesignating paragraphs (1), (2), (3), 

2 (4), (5), (6), (7), and (8) as paragraphs (10), (7), 

3 (4), (3), (8), (5), (2), and (6), respectively. 

4 (3) By inserting before paragraph (2) (as redes5 ignated by paragraph (2) of this subsection) the fol6 lowing: 

7 ‘‘(1) INDIAN TRIBE.—

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

9 tribe’ means any Indian tribe, band, nation, or 

10 other organized group or community that is rec11 ognized as being eligible for special programs 

12 and services provided by the United States to 

13 Indians because of their status as Indians. 

14 ‘‘(B) INCLUSIONS.—The term ‘Indian 

15 tribe’ includes an Alaska Native village, as de16 fined in or established under the Alaska Native 

17 Claims Settlement Act (43 U.S.C. 1601 et 

18 seq.); and’’. 

19 (4) By inserting after paragraph (8) (as redes20 ignated by paragraph (2) of this subsection) the fol21 lowing: 

22 ‘‘(9) TRUST FUND.— The term ‘Trust Fund’ 

23 means the Leaking Underground Storage Tank 

24 Trust Fund established by section 9508 of the Inter25 nal Revenue Code of 1986.’’. 
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1 (b) CONFORMING AMENDMENTS.—The Solid Waste 

2 Disposal Act (42 U.S.C. 6901 and following) is amended 

3 as follows: 

4 (1) Section 9003(f) (42 U.S.C. 6991b(f)) is 

5 amended—

6 (A) in paragraph (1), by striking 

7 ‘‘9001(2)(B)’’ and inserting ‘‘9001(7)(B)’’; and 

8 (B) in paragraphs (2) and (3), by striking 

9 ‘‘9001(2)(A)’’ each place it appears and insert10 ing ‘‘9001(7)(A)’’. 

11 (2) Section 9003(h) (42 U.S.C. 6991b(h)) is 

12 amended in paragraphs (1), (2)(C), (7)(A), and (11) 

13 by striking ‘‘Leaking Underground Storage Tank 

14 Trust Fund’’ each place it appears and inserting 

15 ‘‘Trust Fund’’. 

16 (3) Section 9009 (42 U.S.C. 6991h) is amend17 ed—

18 (A) in subsection (a), by striking 

19 ‘‘9001(2)(B)’’ and inserting ‘‘9001(7)(B)’’; and 

20 (B) in subsection (d), by striking ‘‘section 

21 9001(1) (A) and (B)’’ and inserting ‘‘subpara22 graphs (A) and (B) of section 9001(10)’’. 

23 SEC. 1533. TECHNICAL AMENDMENTS. 

24 The Solid Waste Disposal Act is amended as follows: 
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1 (1) Section 9001(4)(A) (42 U.S.C. 6991(4)(A)) 

2 is amended by striking ‘‘sustances’’ and inserting 

3 ‘‘substances’’. 

4 (2) Section 9003(f)(1) (42 U.S.C. 6991b(f)(1)) 

5 is amended by striking ‘‘subsection (c) and (d) of 

6 this section’’ and inserting ‘‘subsections (c) and 

7 (d)’’. 

8 (3) Section 9004(a) (42 U.S.C. 6991c(a)) is 

9 amended by striking ‘‘in 9001(2) (A) or (B) or 

10 both’’ and inserting ‘‘in subparagraph (A) or (B) of 

11 section 9001(7)’’. 

12 (4) Section 9005 (42 U.S.C. 6991d) is amend13 ed—

14 (A) in subsection (a), by striking ‘‘study 

15 taking’’ and inserting ‘‘study, taking’’; 

16 (B) in subsection (b)(1), by striking 

17 ‘‘relevent’’ and inserting ‘‘relevant’’; and 

18 (C) in subsection (b)(4), by striking 

19 ‘‘Evironmental’’ and inserting ‘‘Environ20 mental’’.
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1 TITLE XVI—STUDIES 

2 SEC. 1601. STUDY ON INVENTORY OF PETROLEUM AND 

3 NATURAL GAS STORAGE. 

4 (a) DEFINITION.—For purposes of this section ‘‘pe5 troleum’’ means crude oil, motor gasoline, jet fuel, dis6 tillates, and propane. 

7 (b) STUDY.—The Secretary of Energy shall conduct 

8 a study on petroleum and natural gas storage capacity and 

9 operational inventory levels, nationwide and by major geo10 graphical regions. 

11 (c) CONTENTS.—The study shall address—

12 (1) historical normal ranges for petroleum and 

13 natural gas inventory levels; 

14 (2) historical and projected storage capacity 

15 trends; 

16 (3) estimated operation inventory levels below 

17 which outages, delivery slowdown, rationing, inter18 ruptions in service, or other indicators of shortage 

19 begin to appear; 

20 (4) explanations for inventory levels dropping 

21 below normal ranges; and 

22 (5) the ability of industry to meet United 

23 States demand for petroleum and natural gas with24 out shortages or price spikes, when inventory levels 

25 are below normal ranges. 
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1 (d) REPORT TO CONGRESS.—Not later than 1 year 

2 after the date of enactment of this Act, the Secretary of 

3 Energy shall submit a report to Congress on the results 

4 of the study, including findings and any recommendations 

5 for preventing future supply shortages.

6 SEC. 1602. NATURAL GAS SUPPLY SHORTAGE REPORT. 

7 (a) REPORT.—Not later than 6 months after the date 

8 of enactment of this Act, the Secretary of Energy shall 

9 submit to Congress a report on natural gas supplies and 

10 demand. In preparing the report, the Secretary shall con11 sult with experts in natural gas supply and demand as 

12 well as representatives of State and local units of govern13 ment, tribal organizations, and consumer and other orga14 nizations. As the Secretary deems advisable, the Secretary 

15 may hold public hearings and provide other opportunities 

16 for public comment. The report shall contain recommenda17 tions for Federal actions that, if implemented, will result 

18 in a balance between natural gas supply and demand at 

19 a level that will ensure, to the maximum extent prac20 ticable, achievement of the objectives established in sub21 section (b). 

22 (b) OBJECTIVES OF REPORT.—In preparing the re23 port, the Secretary shall seek to develop a series of rec24 ommendations that will result in a balance between nat25 ural gas supply and demand adequate to—
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1 (1) provide residential consumers with natural 

2 gas at reasonable and stable prices; 

3 (2) accommodate long-term maintenance and 

4 growth of domestic natural gas-dependent industrial, 

5 manufacturing, and commercial enterprises; 

6 (3) facilitate the attainment of national ambient 

7 air quality standards under the Clean Air Act; 

8 (4) permit continued progress in reducing emis9 sions associated with electric power generation; and 

10 (5) support development of the preliminary 

11 phases of hydrogen-based energy technologies. 

12 (c) CONTENTS OF REPORT.—The report shall provide 

13 a comprehensive analysis of natural gas supply and de14 mand in the United States for the period from 2004 to 

15 2015. The analysis shall include, at a minimum—

16 (1) estimates of annual domestic demand for 

17 natural gas that take into account the effect of Fed18 eral policies and actions that are likely to increase 

19 and decrease demand for natural gas; 

20 (2) projections of annual natural gas supplies, 

21 from domestic and foreign sources, under existing 

22 Federal policies; 

23 (3) an identification of estimated natural gas 

24 supplies that are not available under existing Fed25 eral policies; 
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1 (4) scenarios for decreasing natural gas demand 

2 and increasing natural gas supplies comparing rel3 ative economic and environmental impacts of Fed4 eral policies that—

5 (A) encourage or require the use of natural 

6 gas to meet air quality, carbon dioxide emission 

7 reduction, or energy security goals; 

8 (B) encourage or require the use of energy 

9 sources other than natural gas, including coal, 

10 nuclear, and renewable sources; 

11 (C) support technologies to develop alter12 native sources of natural gas and synthetic gas, 

13 including coal gasification technologies; 

14 (D) encourage or require the use of energy 

15 conservation and demand side management 

16 practices; and 

17 (E) affect access to domestic natural gas 

18 supplies; and 

19 (5) recommendations for Federal actions to 

20 achieve the objectives of the report, including rec21 ommendations that—

22 (A) encourage or require the use of energy 

23 sources other than natural gas, including coal, 

24 nuclear, and renewable sources; 
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1 (B) encourage or require the use of energy 

2 conservation or demand side management prac3 tices; 

4 (C) support technologies for the develop5 ment of alternative sources of natural gas and 

6 synthetic gas, including coal gasification tech7 nologies; and 

8 (D) will improve access to domestic natural 

9 gas supplies. 

10 SEC. 1603. SPLIT-ESTATE FEDERAL OIL AND GAS LEASING 

11 AND DEVELOPMENT PRACTICES. 

12 (a) REVIEW.—In consultation with affected private 

13 surface owners, oil and gas industry, and other interested 

14 parties, the Secretary of the Interior shall undertake a re15 view of the current policies and practices with respect to 

16 management of Federal subsurface oil and gas develop17 ment activities and their effects on the privately owned 

18 surface. This review shall include—

19 (1) a comparison of the rights and responsibil20 ities under existing mineral and land law for the 

21 owner of a Federal mineral lease, the private surface 

22 owners and the Department; 

23 (2) a comparison of the surface owner consent 

24 provisions in section 714 of the Surface Mining Con25 trol and Reclamation Act of 1977 (30 U.S.C. 1304) 
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1 concerning surface mining of Federal coal deposits 

2 and the surface owner consent provisions for oil and 

3 gas development, including coalbed methane produc4 tion; and 

5 (3) recommendations for administrative or leg6 islative action necessary to facilitate reasonable ac7 cess for Federal oil and gas activities while address8 ing surface owner concerns and minimizing impacts 

9 to private surface. 

10 (b) REPORT.—The Secretary of the Interior shall re11 port the results of such review to Congress not later than 

12 180 days after the date of enactment of this Act. 

13 SEC. 1604. RESOLUTION OF FEDERAL RESOURCE DEVELOP14 MENT CONFLICTS IN THE POWDER RIVER 

15 BASIN. 

16 The Secretary of the Interior shall—

17 (1) undertake a review of existing authorities to 

18 resolve conflicts between the development of Federal 

19 coal and the development of Federal and non-Fed20 eral coalbed methane in the Powder River Basin in 

21 Wyoming and Montana; and 

22 (2) not later than 6 months after the date of 

23 enactment of this Act, report to Congress on alter24 natives to resolve these conflicts and identification of 

25 a preferred alternative with specific legislative lan-
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1 guage, if any, required to implement the preferred 

2 alternative.

3 SEC. 1605. STUDY OF ENERGY EFFICIENCY STANDARDS. 

4 The Secretary of Energy shall contract with the Na5 tional Academy of Sciences for a study, to be completed 

6 within 1 year after the date of enactment of this Act, to 

7 examine whether the goals of energy efficiency standards 

8 are best served by measurement of energy consumed, and 

9 efficiency improvements, at the actual site of energy con10 sumption, or through the full fuel cycle, beginning at the 

11 source of energy production. The Secretary shall submit 

12 the report to Congress. 

13 SEC. 1606. TELECOMMUTING STUDY. 

14 (a) STUDY REQUIRED.—The Secretary, in consulta15 tion with the Commission, the Director of the Office of 

16 Personnel Management, the Administrator of General 

17 Services, and the Administrator of NTIA, shall conduct 

18 a study of the energy conservation implications of the 

19 widespread adoption of telecommuting by Federal employ20 ees in the United States. 

21 (b) REQUIRED SUBJECTS OF STUDY.—The study re22 quired by subsection (a) shall analyze the following sub23 jects in relation to the energy saving potential of telecom24 muting by Federal employees: 
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1 (1) Reductions of energy use and energy costs 

2 in commuting and regular office heating, cooling, 

3 and other operations. 

4 (2) Other energy reductions accomplished by 

5 telecommuting. 

6 (3) Existing regulatory barriers that hamper 

7 telecommuting, including barriers to broadband tele8 communications services deployment. 

9 (4) Collateral benefits to the environment, fam10 ily life, and other values. 

11 (c) REPORT REQUIRED.—The Secretary shall submit 

12 to the President and Congress a report on the study re13 quired by this section not later than 6 months after the 

14 date of enactment of this Act. Such report shall include 

15 a description of the results of the analysis of each of the 

16 subject described in subsection (b). 

17 (d) DEFINITIONS.—As used in this section: 

18 (1) SECRETARY.—The term ‘‘Secretary’’ means 

19 the Secretary of Energy. 

20 (2) COMMISSION.—The term ‘‘Commission’’ 

21 means the Federal Communications Commission. 

22 (3) NTIA.—The term ‘‘NTIA’’ means the Na23 tional Telecommunications and Information Admin24 istration of the Department of Commerce.
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1 (4) TELECOMMUTING.—The term ‘‘telecom2 muting’’ means the performance of work functions 

3 using communications technologies, thereby elimi4 nating or substantially reducing the need to com5 mute to and from traditional worksites. 

6 (5) FEDERAL EMPLOYEE.—The term ‘‘Federal 

7 employee’’ has the meaning provided the term ‘‘em8 ployee’’ by section 2105 of title 5, United States 

9 Code. 

10 SEC. 1607. LIHEAP REPORT. 

11 Not later than 1 year after the date of enactment 

12 of this Act, the Secretary of Health and Human Services 

13 shall transmit to Congress a report on how the Low-In14 come Home Energy Assistance Program could be used 

15 more effectively to prevent loss of life from extreme tem16 peratures. In preparing such report, the Secretary shall 

17 consult with appropriate officials in all 50 States and the 

18 District of Columbia. 

19 SEC. 1608. OIL BYPASS FILTRATION TECHNOLOGY. 

20 The Secretary of Energy and the Administrator of 

21 the Environmental Protection Agency shall—

22 (1) conduct a joint study of the benefits of oil 

23 bypass filtration technology in reducing demand for 

24 oil and protecting the environment; 
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1 (2) examine the feasibility of using oil bypass 

2 filtration technology in Federal motor vehicle fleets; 

3 and 

4 (3) include in such study, prior to any deter5 mination of the feasibility of using oil bypass filtra6 tion technology, the evaluation of products and var7 ious manufacturers. 

8 SEC. 1609. TOTAL INTEGRATED THERMAL SYSTEMS. 

9 The Secretary of Energy shall—

10 (1) conduct a study of the benefits of total inte11 grated thermal systems in reducing demand for oil 

12 and protecting the environment; and 

13 (2) examine the feasibility of using total inte14 grated thermal systems in Department of Defense 

15 and other Federal motor vehicle fleets.

16 SEC. 1610. UNIVERSITY COLLABORATION. 

17 Not later than 2 years after the date of enactment 

18 of this Act, the Secretary of Energy shall transmit to Con19 gress a report that examines the feasibility of promoting 

20 collaborations between large institutions of higher edu21 cation and small institutions of higher education through 

22 grants, contracts, and cooperative agreements made by the 

23 Secretary for energy projects. The Secretary shall also 

24 consider providing incentives for the inclusion of small in25 stitutions of higher education, including minority-serving 
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1 institutions, in energy research grants, contracts, and co2 operative agreements. 

3 SEC. 1611. RELIABILITY AND CONSUMER PROTECTION AS4 SESSMENT. 

5 Not later than 5 years after the date of enactment 

6 of this Act, and each 5 years thereafter, the Federal En7 ergy Regulatory Commission shall assess the effects of the 

8 exemption of electric cooperatives and government-owned 

9 utilities from Commission regulation under section 201(f) 

10 of the Federal Power Act. The assessment shall include 

11 any effects on—

12 (1) reliability of interstate electric transmission 

13 networks; 

14 (2) benefit to consumers, and efficiency, of 

15 competitive wholesale electricity markets; 

16 (3) just and reasonable rates for electricity con17 sumers; and 

18 (4) the ability of the Commission to protect 

19 electricity consumers. 

20 If the Commission finds that the 201(f) exemption results 

21 in adverse effects on consumers or electric reliability, the 

22 Commission shall make appropriate recommendations to 

23 Congress pursuant to section 311 of the Federal Power 

24 Act. 
Calendar No. 432

108TH CONGRESS 

2D SESSION S. 2095

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. 

FEBRUARY 23, 2004

Read the second time and placed on the calendar