108TH CONGRESS

2D SESSION H. R. 4503

AN ACT

To enhance energy conservation and research and

and for other purposes.in the energy supply for the American people,development, to provide for security and diversity

108TH CONGRESS

2D SESSION H. R. 4503

AN ACT

To enhance energy conservation and research and development, to provide for security and diversity in the energy

supply for the American people, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,
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1 SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

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

3 ‘‘Energy Policy Act of 2004’’.

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

5 this Act is as follows:

Sec. 1. Short title; table of contents.

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. Energy Savings Performance Contracts.

Sec. 106. Energy Savings Performance Contracts pilot program for nonbuilding

applications.

Sec. 107. Voluntary commitments to reduce industrial energy intensity.

Sec. 108. Advanced Building Efficiency Testbed.

Sec. 109. Federal building performance standards.

Sec. 110. 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.
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TITLE II—RENEWABLE ENERGY

Subtitle A—General provisions

Sec. 201. Assessment of renewable energy resources.

Sec. 202. Renewable energy production incentive.

Sec. 203. Federal purchase requirement.

Sec. 204. Insular areas energy security.

Sec. 205. Use of photovoltaic energy in public buildings.

Sec. 206. Grants to improve the commercial value of forest biomass for electric

energy, useful heat, transportation fuels, petroleum-based product substitutes, and other commercial purposes.

Sec. 207. Biobased products.

Subtitle B—Geothermal energy

Sec. 211. Short title.

Sec. 212. Competitive lease sale requirements.

Sec. 213. Direct use.

Sec. 214. Royalties and near-term production incentives.

Sec. 215. Geothermal leasing and permitting on Federal lands.

Sec. 216. Review and report to Congress.

Sec. 217. Reimbursement for costs of NEPA analyses, documentation, and

studies.

Sec. 218. Assessment of Geothermal energy potential.

Sec. 219. Cooperative or Unit plans.

Sec. 220. Royalty on byproducts.

Sec. 221. Repeal of authorities of Secretary to readjust terms, conditions, rentals, and royalties.

Sec. 222. Crediting of rental toward royalty.

Sec. 223. Lease duration and work commitment requirements.

Sec. 224. Advanced royalties required for suspension of production.

Sec. 225. Annual rental.

Sec. 226. Leasing and permitting on Federal lands withdrawn for military purposes.

Sec. 227. Technical amendments.

Subtitle C—Hydroelectric

PART I—ALTERNATIVE CONDITIONS

Sec. 231. Alternative conditions and fishways.

PART II—ADDITIONAL HYDROPOWER

Sec. 241. Hydroelectric production incentives.

Sec. 242. Hydroelectric efficiency improvement.

Sec. 243. Small hydroelectric power projects.

Sec. 244. Increased hydroelectric generation at existing Federal facilities.

Sec. 245. Shift of project loads to off-peak periods.

Sec. 246. Corps of Engineers hydropower operation and maintenance funding.

Sec. 247. Limitation on certain charges assessed to the flint creek project,

Montana.

Sec. 248. Reinstatement and transfer.

TITLE III—OIL AND GAS
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Subtitle A—Petroleum Reserve and home heating oil

Sec. 301. Permanent authority to operate the Strategic Petroleum Reserve and

other energy programs.

Sec. 302. National Oilheat Research Alliance.

Subtitle B—Production incentives

Sec. 311. Definition of Secretary.

Sec. 312. Program on oil and gas royalties in-kind.

Sec. 313. Marginal property production incentives.

Sec. 314. Incentives for natural gas production from deep wells in the shallow

waters of the Gulf of Mexico.

Sec. 315. Royalty Relief for deep water production.

Sec. 316. Alaska offshore royalty suspension.

Sec. 317. Oil and gas leasing in the National Petroleum Reserve in Alaska.

Sec. 318. Orphaned, abandoned, or idled wells on Federal land.

Sec. 319. Combined hydrocarbon leasing.

Sec. 320. Liquified natural gas.

Sec. 321. Alternate energy-related uses on the outer Continental Shelf.

Sec. 322. Preservation of geological and geophysical data.

Sec. 323. Oil and gas lease acreage limitations.

Sec. 324. Assessment of dependence of State of Hawaii on oil.

Sec. 325. Deadline for decision on appeals of consistency determination under

the Coastal Zone Management Act of 1972.

Sec. 326. Reimbursement for costs of NEPA analyses, documentation, and

studies.

Sec. 327. Hydraulic fracturing.

Sec. 328. Oil and gas exploration and production defined.

Sec. 329. Outer Continental Shelf provisions.

Sec. 330. Appeals relating to pipeline construction or offshore mineral development projects.

Sec. 331. Bilateral international oil supply agreements.

Sec. 332. Natural gas market reform.

Sec. 333. Natural gas market transparency.

Subtitle C—Access to Federal land

Sec. 341. Office of Federal Energy Project Coordination.

Sec. 342. Federal onshore oil and gas leasing and permitting practices.

Sec. 343. Management of Federal oil and gas leasing programs.

Sec. 344. Consultation regarding oil and gas leasing on public land.

Sec. 345. Estimates of oil and gas resources underlying onshore Federal land.

Sec. 346. Compliance with Executive Order No. 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.
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Sec. 354. Sense of Congress regarding development of MINERALS under

Padre Island National Seashore.

Sec. 355. Encouraging prohibition of off-shore Drilling in the Great Lakes.

Sec. 356. Finger Lakes National Forest withdrawal.

Sec. 357. Study on lease exchanges in the rocky mountain front.

Sec. 358. Federal coalbed methane regulation.

Sec. 359. Livingston parish mineral rights transfer.

Subtitle D—Alaska Natural Gas Pipeline

Sec. 371. Short title.

Sec. 372. Definitions.

Sec. 373. Issuance of certificate of public convenience and necessity.

Sec. 374. Environmental reviews.

Sec. 375. Pipeline expansion.

Sec. 376. Federal Coordinator.

Sec. 377. Judicial review.

Sec. 378. State jurisdiction over in-State delivery of natural gas.

Sec. 379. Study of alternative means of construction.

Sec. 380. Clarification of angta status and authorities.

Sec. 381. Sense of Congress concerning use of steel manufactured in North

America negotiation of a project labor Agreement.

Sec. 382. Sense of Congress and study concerning participation by small business concerns.

Sec. 383. Alaska pipeline construction training Program.

Sec. 384. Sense of Congress concerning natural gas demand.

Sec. 385. Sense of Congress concerning Alaskan ownership.

Sec. 386. Loan guarantees.

TITLE IV—COAL

Subtitle A—Clean Coal Power Initiative

Sec. 401. Authorization of appropriations.

Sec. 402. Project criteria.

Sec. 403. Report.

Sec. 404. Clean coal centers of excellence.

Subtitle B—Clean Power Projects

Sec. 411. Coal technology loan.

Sec. 412. Coal gasification.

Sec. 413. Integrated gasification combined cycle technology.

Sec. 414. Petroleum coke gasification.

Sec. 415. Integrated coal/renewable energy system.

Sec. 416. Electron scrubbing demonstration.

Subtitle C—Federal Coal Leases

Sec. 421. Repeal of the 160-acre limitation for coal leases.

Sec. 422. Mining plans.

Sec. 423. Payment of advance royalties under coal leases.

Sec. 424. Elimination of deadline for submission of coal lease operation and

reclamation plan.

Sec. 425. Amendment relating to financial assurances with respect to bonus

bids.

Sec. 426. Inventory requirement.
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Sec. 427. Application of amendments.

Subtitle D—Coal and related programs

Sec. 441. Clean air coal program.

TITLE V—INDIAN ENERGY

Sec. 501. Short title.

Sec. 502. Office of Indian Energy Policy and Programs.

Sec. 503. Indian energy.

Sec. 504. Four corners transmission line project.

Sec. 505. Energy efficiency in federally assisted housing.

Sec. 506. Consultation with Indian tribes.

TITLE VI—NUCLEAR MATTERS

Subtitle A—Price-Anderson Act Amendments

Sec. 601. Short title.

Sec. 602. Extension of indemnification authority.

Sec. 603. Maximum assessment.

Sec. 604. Department of energy liability limit.

Sec. 605. Incidents outside the United States.

Sec. 606. Reports.

Sec. 607. Inflation adjustment.

Sec. 608. Treatment of modular reactors.

Sec. 609. Applicability.

Sec. 610. Prohibition on assumption by United States government of liability

for certain foreign incidents.

Sec. 611. Civil penalties.

Subtitle B—General Nuclear Matters

Sec. 621. Licenses.

Sec. 622. NRC training program.

Sec. 623. Cost recovery from government agencies.

Sec. 624. Elimination of pension offset.

Sec. 625. Antitrust review.

Sec. 626. Decommissioning.

Sec. 627. Limitation on legal fee reimbursement.

Sec. 628. Decommissioning pilot program.

Sec. 629. Report on feasibility of developing commercial nuclear energy generation facilities at existing Department of Energy sites.

Sec. 630. Uranium sales.

Sec. 631. Cooperative research and development and special demonstration

projects for the uranium mining industry.

Sec. 632. Whistleblower protection.

Sec. 633. Medical isotope production.

Sec. 634. Fernald byproduct material.

Sec. 635. Safe disposal of greater-than-class c radioactive waste.

Sec. 636. Prohibition on nuclear exports to countries that sponsor terrorism.

Sec. 637. Uranium enrichment facilities.

Sec. 638. National uranium stockpile.

Subtitle C—Advanced Reactor Hydrogen Cogeneration Project

Sec. 651. Project establishment.
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Sec. 652. Project definition.

Sec. 653. Project management.

Sec. 654. Project requirements.

Sec. 655. Authorization of appropriations.

Subtitle D—Nuclear Security

Sec. 661. Nuclear facility threats.

Sec. 662. Fingerprinting for criminal history record checks.

Sec. 663. Use of firearms by security personnel of licensees and certificate holders of the commission.

Sec. 664. Unauthorized introduction of dangerous weapons.

Sec. 665. Sabotage of nuclear facilities or fuel.

Sec. 666. Secure transfer of nuclear materials.

Sec. 667. Department of homeland security consultation.

Sec. 668. Authorization of appropriations.

TITLE VII—VEHICLES AND FUELS

Subtitle A—Existing programs

Sec. 701. Use of alternative fuels by dual-fueled vehicles.

Sec. 702. Neighborhood electric vehicles.

Sec. 703. Credits for medium and heavy duty dedicated vehicles.

Sec. 704. Incremental cost allocation.

Sec. 705. Alternative compliance and flexibility.

Sec. 706. Review of Energy Policy Act of 1992 programs.

Sec. 707. Report concerning compliance with alternative fueled vehicle purchasing requirements.

Subtitle B—Hybrid vehicles, advanced vehicles, and fuel cell buses

PART I—HYBRID VEHICLES

Sec. 711. Hybrid vehicles.

PART II—ADVANCED VEHICLES

Sec. 721. Definitions.

Sec. 722. Pilot program.

Sec. 723. Reports to Congress.

Sec. 724. Authorization of appropriations.

PART III—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.
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Sec. 753. Aviation fuel conservation and emissions.

Sec. 754. Diesel fueled vehicles.

Sec. 755. Conserve by Bicycling Program.

Sec. 756. Reduction of engine idling of heavy-duty vehicles.

Sec. 757. Biodiesel engine testing program.

Sec. 758. High occupancy vehicle exception.

Subtitle E—Automobile efficiency

Sec. 771. Authorization of appropriations for implementation and enforcement

of fuel economy standards.

Sec. 772. Revised considerations for decisions on maximum feasible average

fuel economy.

Sec. 773. Extension of maximum fuel economy increase for alternative fueled

vehicles.

Sec. 774. Study of feasibility and effects of reducing use of fuel for automobiles.

TITLE VIII—HYDROGEN

Sec. 801. Definitions.

Sec. 802. Plan.

Sec. 803. Programs.

Sec. 804. Interagency task force.

Sec. 805. Advisory Committee.

Sec. 806. External review.

Sec. 807. Miscellaneous provisions.

Sec. 808. Savings clause.

Sec. 809. Authorization of appropriations.

TITLE IX—RESEARCH AND DEVELOPMENT

Sec. 901. Goals.

Sec. 902. Definitions.

Subtitle A—Energy Efficiency

Sec. 904. Energy efficiency.

Sec. 905. Next generation lighting initiative.

Sec. 906. National building performance initiative.

Sec. 907. Secondary electric vehicle battery use program.

Sec. 908. Energy efficiency science initiative.

Sec. 909. Electric motor control technology.

Sec. 910. Advanced energy technology transfer centers.

Subtitle B—Distributed Energy and Electric Energy Systems

Sec. 911. Distributed energy and electric energy systems.

Sec. 912. Hybrid distributed power systems.

Sec. 913. High power density industry program.

Sec. 914. Micro-cogeneration energy technology.

Sec. 915. Distributed energy technology demonstration program.

Sec. 916. Reciprocating power.

Subtitle C—Renewable energy

Sec. 918. Renewable energy.

Sec. 919. Bioenergy programs.
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Sec. 920. Concentrating solar power research and development Program.

Sec. 921. Miscellaneous projects.

Sec. 922. Renewable energy in public buildings.

Sec. 923. Study of marine renewable energy options.

Subtitle D—Nuclear energy

Sec. 924. Nuclear energy.

Sec. 925. Nuclear energy research and development programs.

Sec. 926. Advanced fuel cycle Initiative.

Sec. 927. University nuclear science and engineering support.

Sec. 928. Security of reactor designs.

Sec. 929. Alternatives to industrial radioactive sources.

Sec. 930. Geological isolation of spent fuel.

Subtitle E—Fossil energy

PART I—RESEARCH PROGRAMS

Sec. 931. Fossil energy.

Sec. 932. Oil and gas research programs.

Sec. 933. Technology transfer.

Sec. 934. Research and development for coal mining technologies.

Sec. 935. Coal and related technologies Program.

Sec. 936. Complex Well Technology Testing Facility.

Sec. 937. Fischer-Tropsch diesel fuel loan guarantee Program.

PART II—ULTRA-DEEPWATER AND UNCONVENTIONAL NATURAL GAS AND

OTHER PETROLEUM RESOURCES

Sec. 941. Program authority.

Sec. 942. Ultra-deepwater Program.

Sec. 943. Unconventional natural gas and other petroleum resources Program.

Sec. 944. Additional requirements for awards.

Sec. 945. Advisory committees.

Sec. 946. Limits on participation.

Sec. 947. Sunset.

Sec. 948. Definitions.

Sec. 949. Funding.

Subtitle F—Science

Sec. 951. Science.

Sec. 952. United States participation in ITER.

Sec. 953. Plan for Fusion Energy Sciences Program.

Sec. 954. Spallation Neutron Source.

Sec. 955. Support for science and energy facilities and infrastructure.

Sec. 956. Catalysis Research and development Program.

Sec. 957. Nanoscale Science and Engineering Research, development, demonstration, and commercial application.

Sec. 958. Advanced scientific computing for energy missions.

Sec. 959. Genomes to Life Program.

Sec. 960. Fission and fusion energy materials research Program.

Sec. 961. Energy-Water Supply Program.

Sec. 962. Nitrogen fixation.

Subtitle G—Energy and environment
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Sec. 964. United States-Mexico energy Technology cooperation.

Sec. 965. Western Hemisphere energy cooperation.

Sec. 966. Waste reduction and use of alternatives.

Sec. 967. Report on fuel cell test Center.

Sec. 968. Arctic Engineering Research Center.

Sec. 969. Barrow Geophysical Research Facility.

Sec. 970. Western Michigan demonstration project.

Subtitle H—Management

Sec. 971. Availability of funds.

Sec. 972. Cost sharing.

Sec. 973. Merit review of proposals.

Sec. 974. External technical review of departmental programs.

Sec. 975. Improved coordination of Technology transfer activities.

Sec. 976. Federal laboratory educational partners.

Sec. 977. Interagency cooperation.

Sec. 978. Technology Infrastructure Program.

Sec. 979. Reprogramming.

Sec. 980. Construction with other laws.

Sec. 981. Report on research and development Program evaluation methodologies.

Sec. 982. Department of Energy Science and Technology Scholarship Program.

Sec. 983. Report on equal employment opportunity practices.

Sec. 984. Small business advocacy and assistance.

Sec. 985. Report on mobility of scientific and technical personnel.

Sec. 986. National Academy of Sciences report.

Sec. 987. Outreach.

Sec. 988. Competitive award of management contracts.

Sec. 989. Educational programs in science and mathematics.

TITLE X—DEPARTMENT OF ENERGY MANAGEMENT

Sec. 1001. Additional Assistant Secretary position.

Sec. 1002. Other transactions authority.

TITLE XI—PERSONNEL AND TRAINING

Sec. 1101. Training guidelines for electric energy industry personnel.

Sec. 1102. Improved access to energy-related scientific and technical careers.

Sec. 1103. National Power Plant Operations Technology and Education Center.

Sec. 1104. International energy training.

TITLE XII—ELECTRICITY

Sec. 1201. Short title.

Subtitle A—Reliability standards

Sec. 1211. Electric reliability standards.

Subtitle B—Transmission infrastructure modernization

Sec. 1221. Siting of interstate electric transmission facilities.

Sec. 1222. Third-party finance.

Sec. 1223. Transmission system monitoring.

Sec. 1224. Advanced transmission technologies.

Sec. 1225. Electric transmission and distribution programs.
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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 Congress on Regional Transmission Organizations.

Sec. 1233. Regional Transmission Organization applications progress report.

Sec. 1234. Federal utility participation in Regional Transmission Organizations.

Sec. 1235. Standard market design.

Sec. 1236. Native load service obligation.

Sec. 1237. Study on the benefits of economic dispatch.

Subtitle D—Transmission rate reform

Sec. 1241. Transmission infrastructure investment.

Sec. 1242. Voluntary transmission pricing plans.

Subtitle E—Amendments to PURPA

Sec. 1251. Net metering and additional standards.

Sec. 1252. Smart metering.

Sec. 1253. Cogeneration and small power production purchase and sale requirements.

Subtitle F—Repeal of PUHCA

Sec. 1261. Short title.

Sec. 1262. Definitions.

Sec. 1263. Repeal of the Public Utility Holding Company Act of 1935.

Sec. 1264. Federal access to books and records.

Sec. 1265. State access to books and records.

Sec. 1266. Exemption authority.

Sec. 1267. Affiliate transactions.

Sec. 1268. Applicability.

Sec. 1269. Effect on other regulations.

Sec. 1270. Enforcement.

Sec. 1271. Savings provisions.

Sec. 1272. Implementation.

Sec. 1273. Transfer of resources.

Sec. 1274. Effective date.

Sec. 1275. Service allocation.

Sec. 1276. Authorization of appropriations.

Sec. 1277. Conforming amendments to the Federal Power Act.

Subtitle G—Market transparency, enforcement, and consumer protection

Sec. 1281. Market transparency rules.

Sec. 1282. Market manipulation.

Sec. 1283. Enforcement.

Sec. 1284. Refund effective date.

Sec. 1285. Refund authority.

Sec. 1286. Sanctity of contract.

Sec. 1287. Consumer privacy and unfair trade practices.

Subtitle H—Merger reform
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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; amendment of 1986 Code.

Subtitle A—Conservation

PART I—RESIDENTIAL AND BUSINESS PROPERTY

Sec. 1301. Credit for residential energy efficient property.

Sec. 1302. Extension and expansion of credit for electricity produced from certain renewable resources.

Sec. 1303. Credit for business installation of qualified fuel cells.

Sec. 1304. Credit for energy efficiency improvements to existing homes.

Sec. 1305. Credit for construction of new energy efficient homes.

Sec. 1306. Energy credit for combined heat and power system property.

Sec. 1307. Credit for energy efficient appliances.

Sec. 1308. Energy efficient commercial buildings deduction.

Sec. 1309. Three-year applicable recovery period for depreciation of qualified

energy management devices.

Sec. 1310. Credit for production from advanced nuclear power facilities.

PART II—FUELS AND ALTERNATIVE MOTOR VEHICLES

Sec. 1311. Repeal of 4.3-cent motor fuel excise taxes on railroads and inland

waterway transportation which remain in general Fund.

Sec. 1312. Reduced motor fuel excise tax on certain mixtures of diesel fuel.

Sec. 1313. Small ethanol producer credit.

Sec. 1314. Incentives for biodiesel.

Sec. 1315. Alcohol fuel and biodiesel mixtures excise tax credit.

Sec. 1316. Nonapplication of export exemption to delivery of fuel to motor vehicles removed from United States.

Sec. 1317. Repeal of phaseouts for qualified electric vehicle credit and deduction for clean fuel-vehicles.

Sec. 1318. Alternative motor vehicle credit.

Sec. 1319. Modifications of deduction for certain refueling property.

Subtitle B—Reliability

Sec. 1321. Natural gas gathering lines treated as 7–YEAR property.

Sec. 1322. Natural gas distribution lines treated as 15-year property.

Sec. 1323. Electric transmission property treated as 15-year property.

Sec. 1324. Expensing of capital costs incurred in complying with Environmental Protection Agency sulfur regulations.

Sec. 1325. Credit for production of low sulfur diesel fuel.

Sec. 1326. Determination of small refiner exception to oil depletion deduction.

Sec. 1327. Sales or dispositions to implement Federal Energy Regulatory Commission or State electric restructuring policy.
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Sec. 1328. Modifications to special rules for nuclear decommissioning costs.

Sec. 1329. Treatment of certain income of cooperatives.

Sec. 1330. Arbitrage rules not to apply to prepayments for natural gas.

Subtitle C—Production

PART I—OIL AND GAS PROVISIONS

Sec. 1341. Oil and gas from marginal wells.

Sec. 1342. Temporary suspension of limitation based on 65 percent of taxable

income and extension of suspension of taxable income limit

with respect to marginal production.

Sec. 1343. Amortization of delay rental payments.

Sec. 1344. Amortization of geological and geophysical expenditures.

Sec. 1345. Extension and modification of credit for producing fuel from a nonconventional source.

PART II—ALTERNATIVE MINIMUM TAX PROVISIONS

Sec. 1346. New nonrefundable personal credits allowed against regular and

minimum taxes.

Sec. 1347. Business related energy credits allowed against regular and minimum tax.

Sec. 1348. Temporary repeal of alternative minimum tax preference for intangible drilling costs.

PART III—CLEAN COAL INCENTIVES

Sec. 1351. Credit for clean coal technology units.

Sec. 1352. Expansion of amortization for certain pollution control facilities.

Sec. 1353. 5-year recovery period for eligible integrated gasification combined

cycle technology unit eligible for credit.

PART IV—HIGH VOLUME NATURAL GAS PROVISIONS

Sec. 1355. High volume natural gas pipe treated as 7-year property.

Sec. 1356. Extension of enhanced oil recovery credit to high volume natural gas

facilities.

Subtitle D—Additional provisions

Sec. 1361. Extension of accelerated depreciation benefit for energy-related businesses on indian reservations.

Sec. 1362. Payment of dividends on stock of cooperatives without reducing patronage dividends.

Sec. 1363. Distributions from publicly traded partnerships treated as qualifying

income of regulated investment companies.

Sec. 1364. Ceiling fans.

Sec. 1365. Certain steam generators, and certain reactor vessel heads, used in

nuclear facilities.

Sec. 1366. Brownfields demonstration program for qualified green building and

sustainable design projects.

TITLE XIV—MISCELLANEOUS

Subtitle A—Rural and Remote Electricity Construction

Sec. 1401. Denali Commission programs.
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Sec. 1402. Rural and remote community assistance.

Subtitle B—Coastal programs

Sec. 1411. Royalty payments under leases under the Outer Continental Shelf

Lands Act.

Sec. 1412. Domestic offshore energy reinvestment.

Subtitle C—Reforms to the Board of Directors of the Tennessee Valley

Authority

Sec. 1431. Change in composition, operation, and duties of the Board of Directors of the Tennessee Valley Authority.

Sec. 1432. Change in manner of appointment of staff.

Sec. 1433. Conforming amendments.

Sec. 1434. Appointments; effective date; transition.

Subtitle D—Other provisions

Sec. 1441. Continuation of transmission security order.

Sec. 1442. Review of agency determinations.

Sec. 1443. Attainment dates for downwind ozone nonattainment areas.

Sec. 1444. Energy production incentives.

Sec. 1445. Use of granular mine tailings.

TITLE XV—ETHANOL AND MOTOR FUELS

Subtitle A—General provisions

Sec. 1501. Renewable content of motor vehicle fuel.

Sec. 1502. Fuels safe harbor.

Sec. 1503. Findings and MTBE transition assistance.

Sec. 1504. Use of MTBE.

Sec. 1505. National Academy of Sciences review and presidential determination.

Sec. 1506. Elimination of oxygen content requirement for reformulated gasoline.

Sec. 1507. Analyses of motor vehicle fuel changes.

Sec. 1508. Data collection.

Sec. 1509. Reducing the proliferation of State fuel controls.

Sec. 1510. Fuel system requirements harmonization study.

Sec. 1511. Commercial byproducts from municipal solid waste and cellulosic

biomass loan guarantee program.

Sec. 1512. Resource Center.

Sec. 1513. Cellulosic biomass and waste-derived ethanol conversion assistance.

Sec. 1514. 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.
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Sec. 1530. Future release containment technology.

Sec. 1531. Authorization of appropriations.

Sec. 1532. Conforming amendments.

Sec. 1533. Technical amendments.

TITLE XVI—STUDIES

Sec. 1601. Study on inventory of petroleum and natural gas storage.

Sec. 1602. Natural gas supply shortage report.

Sec. 1603. Split-estate Federal oil and gas leasing and development practices.

Sec. 1604. Resolution of Federal resource development conflicts in the Powder

River Basin.

Sec. 1605. Study of energy efficiency standards.

Sec. 1606. Telecommuting study.

Sec. 1607. Liheap report.

Sec. 1608. Oil bypass filtration technology.

Sec. 1609. Total integrated thermal systems.

Sec. 1610. University collaboration.

Sec. 1611. Reliability and consumer protection assessment.

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

2 later than 180 days after the date of enactment of

3 this section.

4 ‘‘(b) PLAN REQUIREMENTS.—The plan shall

5 include—

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

7 used to determine the cost-effectiveness of proposed

8 energy efficiency projects;

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

10 complete surveys of all congressional buildings every

11 5 years to determine the cost and payback period of

12 energy and water conservation measures;

13 ‘‘(3) a strategy for installation of life cycle cost14 effective energy and water conservation measures;

15 ‘‘(4) the results of a study of the costs and ben16 efits of installation of submetering in congressional

17 buildings; and

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

19 for each Member and employing authority of Con20 gress that detail simple, cost-effective methods to

21 save energy and taxpayer dollars in the workplace.

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

23 shall submit to Congress annually a report on congres24 sional energy management and conservation programs re25 quired under this section that describes in detail—
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1 ‘‘(1) energy expenditures and savings estimates

2 for each facility;

3 ‘‘(2) energy management and conservation

4 projects; and

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

6 this section.’’.

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

8 of contents of the National Energy Conservation Policy

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

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

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

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

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

13 (d) ENERGY INFRASTRUCTURE.—The Architect of

14 the Capitol, building on the Master Plan Study completed

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

16 energy infrastructure of the Capital Complex to determine

17 how the infrastructure could be augmented to become

18 more energy efficient, using unconventional and renewable

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

20 to have reliable utility service in the event of power fluc21 tuations, shortages, or outages.

22 (e) AUTHORIZATION OF APPROPRIATIONS.—There

23 are authorized to be appropriated to the Architect of the

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

25 of fiscal years 2004 through 2008.
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1 SEC. 102. ENERGY MANAGEMENT REQUIREMENTS.

2 (a) ENERGY REDUCTION GOALS.—

3 (1) AMENDMENT.—Section 543(a)(1) of the

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

5 8253(a)(1)) is amended by striking ‘‘its Federal

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

7 end and inserting ‘‘the Federal buildings of the

8 agency (including each industrial or laboratory facil9 ity) so that the energy consumption per gross square

10 foot of the Federal buildings of the agency in fiscal

11 years 2004 through 2013 is reduced, as compared

12 with the energy consumption per gross square foot

13 of the Federal buildings of the agency in fiscal year

14 2001, by the percentage specified in the following

15 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.’’.

16 (2) REPORTING BASELINE.—The energy reduc17 tion goals and baseline established in paragraph (1)

18 of section 543(a) of the National Energy Conserva19 tion Policy Act (42 U.S.C. 8253(a)(1)), as amended

20 by this subsection, supersede all previous goals and
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1 baselines under such paragraph, and related report2 ing requirements.

3 (b) REVIEW AND REVISION OF ENERGY PERFORM4 ANCE REQUIREMENT.—Section 543(a) of the National

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

6 further amended by adding at the end the following:

7 ‘‘(3) Not later than December 31, 2012, the Sec8 retary shall review the results of the implementation of

9 the energy performance requirement established under

10 paragraph (1) and submit to Congress recommendations

11 concerning energy performance requirements for fiscal

12 years 2014 through 2023.’’.

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

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

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

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

17 may exclude, from the energy performance requirement

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

19 energy management requirement established under sub20 section (b), any Federal building or collection of Federal

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

22 ‘‘(i) compliance with those requirements would

23 be impracticable;

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

25 all federally required energy management reports;
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1 ‘‘(iii) the agency has achieved compliance with

2 the energy efficiency requirements of this Act, the

3 Energy Policy Act of 1992, Executive orders, and

4 other Federal law; and

5 ‘‘(iv) the agency has implemented all prac6 ticable, life cycle cost-effective projects with respect

7 to the Federal building or collection of Federal

8 buildings to be excluded.

9 ‘‘(B) A finding of impracticability under subpara10 graph (A)(i) shall be based on—

11 ‘‘(i) the energy intensiveness of activities car12 ried out in the Federal building or collection of Fed13 eral buildings; or

14 ‘‘(ii) the fact that the Federal building or col15 lection of Federal buildings is used in the perform16 ance of a national security function.’’.

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

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

19 8253(c)(2)) is amended—

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

21 inserting ‘‘standards for exclusion’’;

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

23 and inserting ‘‘the exclusion’’; and
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1 (3) by striking ‘‘energy consumption require2 ments’’ and inserting ‘‘requirements of subsections

3 (a) and (b)(1)’’.

4 (e) CRITERIA.—Section 543(c) of the National En5 ergy Conservation Policy Act (42 U.S.C. 8253(c)) is fur6 ther amended by adding at the end the following:

7 ‘‘(3) Not later than 180 days after the date of enact8 ment of this paragraph, the Secretary shall issue guide9 lines that establish criteria for exclusions under paragraph

10 (1).’’.

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

12 Section 546 of the National Energy Conservation Policy

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

14 the following new subsection:

15 ‘‘(e) RETENTION OF ENERGY AND WATER SAV16 INGS.—An agency may retain any funds appropriated to

17 that agency for energy expenditures, water expenditures,

18 or wastewater treatment expenditures, at buildings subject

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

20 not made because of energy savings or water savings. Ex21 cept as otherwise provided by law, such funds may be used

22 only for energy efficiency, water conservation, or uncon23 ventional and renewable energy resources projects.’’.
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1 (g) REPORTS.—Section 548(b) of the National En2 ergy Conservation Policy Act (42 U.S.C. 8258(b)) is

3 amended—

4 (1) in the subsection heading, by inserting

5 ‘‘THE PRESIDENT AND’’ before ‘‘CONGRESS’’; and

6 (2) by inserting ‘‘President and’’ before ‘‘Con7 gress’’.

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

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

10 8258b(d)) is amended in the second sentence by striking

11 ‘‘the 20 percent reduction goal established under section

12 543(a) of the National Energy Conservation Policy Act

13 (42 U.S.C. 8253(a)).’’ and inserting ‘‘each of the energy

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

15 SEC. 103. ENERGY USE MEASUREMENT AND ACCOUNT16 ABILITY.

17 Section 543 of the National Energy Conservation

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

19 at the end the following:

20 ‘‘(e) METERING OF ENERGY USE.—

21 ‘‘(1) DEADLINE.—By October 1, 2010, in ac22 cordance with guidelines established by the Sec23 retary under paragraph (2), all Federal buildings

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

25 reduction in the cost of electricity used in such
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1 buildings, be metered or submetered. Each agency

2 shall use, to the maximum extent practicable, ad3 vanced meters or advanced metering devices that

4 provide data at least daily and that measure at least

5 hourly consumption of electricity in the Federal

6 buildings of the agency. Such data shall be incor7 porated into existing Federal energy tracking sys8 tems and made available to Federal facility energy

9 managers.

10 ‘‘(2) GUIDELINES.—

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

12 days after the date of enactment of this sub13 section, the Secretary, in consultation with the

14 Department of Defense, the General Services

15 Administration, representatives from the meter16 ing industry, utility industry, energy services in17 dustry, energy efficiency industry, energy effi18 ciency advocacy organizations, national labora19 tories, universities, and Federal facility energy

20 managers, shall establish guidelines for agencies

21 to carry out paragraph (1).

22 ‘‘(B) REQUIREMENTS FOR GUIDELINES.—

23 The guidelines shall—

24 ‘‘(i) take into consideration—
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1 ‘‘(I) the cost of metering and

2 submetering and the reduced cost of

3 operation and maintenance expected

4 to result from metering and sub5 metering;

6 ‘‘(II) the extent to which meter7 ing and submetering are expected to

8 result in increased potential for en9 ergy management, increased potential

10 for energy savings and energy effi11 ciency improvement, and cost and en12 ergy savings due to utility contract

13 aggregation; and

14 ‘‘(III) the measurement and

15 verification protocols of the Depart16 ment of Energy;

17 ‘‘(ii) include recommendations con18 cerning the amount of funds and the num19 ber of trained personnel necessary to gath20 er and use the metering information to

21 track and reduce energy use;

22 ‘‘(iii) establish priorities for types and

23 locations of buildings to be metered and

24 submetered based on cost-effectiveness and

25 a schedule of 1 or more dates, not later
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1 than 1 year after the date of issuance of

2 the guidelines, on which the requirements

3 specified in paragraph (1) shall take effect;

4 and

5 ‘‘(iv) establish exclusions from the re6 quirements specified in paragraph (1)

7 based on the de minimis quantity of energy

8 use of a Federal building, industrial proc9 ess, or structure.

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

11 date guidelines are established under paragraph (2),

12 in a report submitted by the agency under section

13 548(a), each agency shall submit to the Secretary a

14 plan describing how the agency will implement the

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

16 the agency will designate personnel primarily respon17 sible for achieving the requirements and (B) dem18 onstration by the agency, complete with documenta19 tion, of any finding that advanced meters or ad20 vanced metering devices, as defined in paragraph

21 (1), are not practicable.’’.

22 SEC. 104. PROCUREMENT OF ENERGY EFFICIENT PROD23 UCTS.

24 (a) REQUIREMENTS.—Part 3 of title V of the Na25 tional Energy Conservation Policy Act (42 U.S.C. 8251
26

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1 et seq.), as amended by section 101, is amended by adding

2 at the end the following:

3 ‘‘SEC. 553. FEDERAL PROCUREMENT OF ENERGY EFFI4 CIENT PRODUCTS.

5 ‘‘(a) DEFINITIONS.—In this section:

6 ‘‘(1) ENERGY STAR PRODUCT.—The term ‘En7 ergy Star product’ means a product that is rated for

8 energy efficiency under an Energy Star program.

9 ‘‘(2) ENERGY STAR PROGRAM.—The term ‘En10 ergy Star program’ means the program established

11 by section 324A of the Energy Policy and Conserva12 tion Act.

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

14 agency’ has the meaning given the term in section

15 4 of the Office of Federal Procurement Policy Act

16 (41 U.S.C. 403).

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

18 ‘FEMP designated product’ means a product that is

19 designated under the Federal Energy Management

20 Program of the Department of Energy as being

21 among the highest 25 percent of equivalent products

22 for energy efficiency.

23 ‘‘(b) PROCUREMENT OF ENERGY EFFICIENT PROD24 UCTS.—
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1 ‘‘(1) REQUIREMENT.—To meet the require2 ments of an executive agency for an energy con3 suming product, the head of the executive agency

4 shall, except as provided in paragraph (2), procure—

5 ‘‘(A) an Energy Star product; or

6 ‘‘(B) a FEMP designated product.

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

8 agency is not required to procure an Energy Star

9 product or FEMP designated product under para10 graph (1) if the head of the executive agency finds

11 in writing that—

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

13 designated product is not cost-effective over the

14 life of the product taking energy cost savings

15 into account; or

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

17 designated product is reasonably available that

18 meets the functional requirements of the execu19 tive agency.

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

21 an executive agency shall incorporate into the speci22 fications for all procurements involving energy con23 suming products and systems, including guide speci24 fications, project specifications, and construction,

25 renovation, and services contracts that include provi-
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1 sion of energy consuming products and systems, and

2 into the factors for the evaluation of offers received

3 for the procurement, criteria for energy efficiency

4 that are consistent with the criteria used for rating

5 Energy Star products and for rating FEMP des6 ignated products.

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

8 FEDERAL CATALOGS.—Energy Star products and FEMP

9 designated products shall be clearly identified and promi10 nently displayed in any inventory or listing of products

11 by the General Services Administration or the Defense Lo12 gistics Agency. The General Services Administration or

13 the Defense Logistics Agency shall supply only Energy

14 Star products or FEMP designated products for all prod15 uct categories covered by the Energy Star program or the

16 Federal Energy Management Program, except in cases

17 where the agency ordering a product specifies in writing

18 that no Energy Star product or FEMP designated product

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

20 or that no Energy Star product or FEMP designated

21 product is cost-effective for the intended application over

22 the life of the product, taking energy cost savings into ac23 count.

24 ‘‘(d) SPECIFIC PRODUCTS.—(1) In the case of elec25 tric motors of 1 to 500 horsepower, agencies shall select
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1 only premium efficient motors that meet a standard des2 ignated by the Secretary. The Secretary shall designate

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

4 of the enactment of this section, after considering the rec5 ommendations of associated electric motor manufacturers

6 and energy efficiency groups.

7 ‘‘(2) All Federal agencies are encouraged to take ac8 tions to maximize the efficiency of air conditioning and

9 refrigeration equipment, including appropriate cleaning

10 and maintenance, including the use of any system treat11 ment or additive that will reduce the electricity consumed

12 by air conditioning and refrigeration equipment. Any such

13 treatment or additive must be—

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

15 in increasing the efficiency of air conditioning and

16 refrigeration equipment without having an adverse

17 impact on air conditioning performance (including

18 cooling capacity) or equipment useful life;

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

20 Environmental Protection Agency to be environ21 mentally safe; and

22 ‘‘(C) shown to increase seasonal energy effi23 ciency ratio (SEER) or energy efficiency ratio

24 (EER) when tested by the National Institute of

25 Standards and Technology according to Department
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1 of Energy test procedures without causing any ad2 verse impact on the system, system components, the

3 refrigerant or lubricant, or other materials in the

4 system.

5 Results of testing described in subparagraph (C) shall be

6 published in the Federal Register for public review and

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

8 or primary refrigerant shall not be considered an additive.

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

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

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

12 (b) CONFORMING AMENDMENT.—The table of con13 tents of the National Energy Conservation Policy Act is

14 further amended by inserting after the item relating to

15 section 552 the following new item:

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

16 SEC. 105. ENERGY SAVINGS PERFORMANCE CONTRACTS.

17 (a) PERMANENT EXTENSION.—Effective September

18 30, 2003, section 801(c) of the National Energy Conserva19 tion Policy Act (42 U.S.C. 8287(c)) is repealed.

20 (b) PAYMENT OF COSTS.—Section 802 of the Na21 tional Energy Conservation Policy Act (42 U.S.C. 8287a)

22 is amended by inserting ‘‘, water, or wastewater treat23 ment’’ after ‘‘payment of energy’’.
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1 (c) ENERGY SAVINGS.—Section 804(2) of the Na2 tional Energy Conservation Policy Act (42 U.S.C.

3 8287c(2)) is amended to read as follows:

4 ‘‘(2) The term ‘energy savings’ means a reduc5 tion in the cost of energy, water, or wastewater

6 treatment, from a base cost established through a

7 methodology set forth in the contract, used in an ex8 isting federally owned building or buildings or other

9 federally owned facilities as a result of—

10 ‘‘(A) the lease or purchase of operating

11 equipment, improvements, altered operation and

12 maintenance, or technical services;

13 ‘‘(B) the increased efficient use of existing

14 energy sources by cogeneration or heat recov15 ery, excluding any cogeneration process for

16 other than a federally owned building or build17 ings or other federally owned facilities; or

18 ‘‘(C) the increased efficient use of existing

19 water sources in either interior or exterior ap20 plications.’’.

21 (d) ENERGY SAVINGS CONTRACT.—Section 804(3) of

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

23 8287c(3)) is amended to read as follows:

24 ‘‘(3) The terms ‘energy savings contract’ and

25 ‘energy savings performance contract’ mean a con-
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1 tract that provides for the performance of services

2 for the design, acquisition, installation, testing, and,

3 where appropriate, operation, maintenance, and re4 pair, of an identified energy or water conservation

5 measure or series of measures at 1 or more loca6 tions. Such contracts shall, with respect to an agen7 cy facility that is a public building (as such term is

8 defined in section 3301 of title 40, United States

9 Code), be in compliance with the prospectus require10 ments and procedures of section 3307 of title 40,

11 United States Code.’’.

12 (e) ENERGY OR WATER CONSERVATION MEASURE.—

13 Section 804(4) of the National Energy Conservation Pol14 icy Act (42 U.S.C. 8287c(4)) is amended to read as fol15 lows:

16 ‘‘(4) The term ‘energy or water conservation

17 measure’ means—

18 ‘‘(A) an energy conservation measure, as

19 defined in section 551; or

20 ‘‘(B) a water conservation measure that

21 improves the efficiency of water use, is life-cycle

22 cost-effective, and involves water conservation,

23 water recycling or reuse, more efficient treat24 ment of wastewater or stormwater, improve25 ments in operation or maintenance efficiencies,
33

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1 retrofit activities, or other related activities, not

2 at a Federal hydroelectric facility.’’.

3 (f) REVIEW.—Not later than 180 days after the date

4 of the enactment of this Act, the Secretary of Energy shall

5 complete a review of the Energy Savings Performance

6 Contract program to identify statutory, regulatory, and

7 administrative obstacles that prevent Federal agencies

8 from fully utilizing the program. In addition, this review

9 shall identify all areas for increasing program flexibility

10 and effectiveness, including audit and measurement

11 verification requirements, accounting for energy use in de12 termining savings, contracting requirements, including the

13 identification of additional qualified contractors, and en14 ergy efficiency services covered. The Secretary shall report

15 these findings to Congress and shall implement identified

16 administrative and regulatory changes to increase pro17 gram flexibility and effectiveness to the extent that such

18 changes are consistent with statutory authority.

19 (g) EXTENSION OF AUTHORITY.—Any energy sav20 ings performance contract entered into under section 801

21 of the National Energy Conservation Policy Act (42

22 U.S.C. 8287) after October 1, 2003, and before the date

23 of enactment of this Act, shall be deemed to have been

24 entered into pursuant to such section 801 as amended by

25 subsection (a) of this section.
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1 SEC. 106. ENERGY SAVINGS PERFORMANCE CONTRACTS

2 PILOT PROGRAM FOR NONBUILDING APPLI3 CATIONS.

4 (a) IN GENERAL.—The Secretary of Defense and the

5 heads of other interested Federal agencies are authorized

6 to enter into up to 10 energy savings performance con7 tracts using procedures, established under subsection (b),

8 based on the procedures under title VIII of the National

9 Energy Conservation Policy Act (42 U.S.C. 8287 et seq.),

10 for the purpose of achieving energy or water savings, sec11 ondary savings, and benefits incidental to those purposes,

12 in nonbuilding applications. The payments to be made by

13 the Federal Government under such contracts shall not

14 exceed a total of $200,000,000 for all such contracts com15 bined.

16 (b) PROCEDURES.—The Secretary of Energy, in con17 sultation with the Administrator of General Services and

18 the Secretary of Defense, shall establish procedures based

19 on the procedures under title VIII of the National Energy

20 Conservation Policy Act (42 U.S.C. 8287 et seq.), for im21 plementing this section.

22 (c) DEFINITIONS.—In this section:

23 (1) NONBUILDING APPLICATION.—The term

24 ‘‘nonbuilding application’’ means—

25 (A) any class of vehicles, devices, or equip26 ment that are transportable under their own
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1 power by land, sea, or air that consume energy

2 from any fuel source for the purpose of such

3 transportability, or to maintain a controlled en4 vironment within such vehicle, device, or equip5 ment; or

6 (B) any Federally owned equipment used

7 to generate electricity or transport water.

8 (2) SECONDARY SAVINGS.—The term ‘‘sec9 ondary savings’’ means additional energy or cost

10 savings that are a direct consequence of the energy

11 or water savings that result from the financing and

12 implementation of the energy savings performance

13 contract, including, but not limited to, energy or cost

14 savings that result from a reduction in the need for

15 fuel delivery and logistical support, or the increased

16 efficiency in the production of electricity.

17 (d) REPORT.—Not later than 3 years after the date

18 of enactment of this section, the Secretary of Energy shall

19 report to Congress on the progress and results of the

20 projects funded pursuant to this section. Such report shall

21 include a description of projects undertaken; the energy,

22 water, and cost savings, secondary savings, and other ben23 efits that resulted from such projects; and recommenda24 tions on whether the pilot program should be extended,

25 expanded, or authorized permanently as a part of the pro-
36

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1 gram authorized under title VIII of the National Energy

2 Conservation Policy Act (42 U.S.C. 8287 et seq.).

3 SEC. 107. VOLUNTARY COMMITMENTS TO REDUCE INDUS4 TRIAL ENERGY INTENSITY.

5 (a) VOLUNTARY AGREEMENTS.—The Secretary of

6 Energy is authorized to enter into voluntary agreements

7 with 1 or more persons in industrial sectors that consume

8 significant amounts of primary energy per unit of physical

9 output to reduce the energy intensity of their production

10 activities by a significant amount relative to improvements

11 in each sector in recent years.

12 (b) RECOGNITION.—The Secretary of Energy, in co13 operation with the Administrator of the Environmental

14 Protection Agency and other appropriate Federal agen15 cies, shall recognize and publicize the achievements of par16 ticipants in voluntary agreements under this section.

17 (c) DEFINITION.—In this section, the term ‘‘energy

18 intensity’’ means the primary energy consumed per unit

19 of physical output in an industrial process.

20 SEC. 108. ADVANCED BUILDING EFFICIENCY TESTBED.

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

22 consultation with the Administrator of General Services,

23 shall establish an Advanced Building Efficiency Testbed

24 program for the development, testing, and demonstration

25 of advanced engineering systems, components, and mate-
37

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1 rials to enable innovations in building technologies. The

2 program shall evaluate efficiency concepts for government

3 and industry buildings, and demonstrate the ability of

4 next generation buildings to support individual and orga5 nizational productivity and health (including by improving

6 indoor air quality) as well as flexibility and technological

7 change to improve environmental sustainability. Such pro8 gram shall complement and not duplicate existing national

9 programs.

10 (b) PARTICIPANTS.—The program established under

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

12 to combine the expertise from numerous academic fields

13 including, at a minimum, intelligent workplaces and ad14 vanced building systems and engineering, electrical and

15 computer engineering, computer science, architecture,

16 urban design, and environmental and mechanical engi17 neering. Such university shall partner with other univer18 sities and entities who have established programs and the

19 capability of advancing innovative building efficiency tech20 nologies.

21 (c) AUTHORIZATION OF APPROPRIATIONS.—There

22 are authorized to be appropriated to the Secretary of En23 ergy to carry out this section $6,000,000 for each of the

24 fiscal years 2004 through 2006, to remain available until

25 expended. For any fiscal year in which funds are expended
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under this section, the Secretary shall provide 1 1 ⁄3 of the

2 total amount to the lead university described in subsection

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

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

5 SEC. 109. FEDERAL BUILDING PERFORMANCE STANDARDS.

6 Section 305(a) of the Energy Conservation and Pro7 duction Act (42 U.S.C. 6834(a)) is amended—

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

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

10 International Energy Conservation Code’’; and

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

12 ‘‘(3) REVISED FEDERAL BUILDING ENERGY EFFI13 CIENCY PERFORMANCE STANDARDS.—

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

15 the date of enactment of this paragraph, the Sec16 retary of Energy shall establish, by rule, revised

17 Federal building energy efficiency performance

18 standards that require that—

19 ‘‘(i) if life-cycle cost-effective, for new Fed20 eral buildings—

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

22 to achieve energy consumption levels at

23 least 30 percent below those of the version

24 current as of the date of enactment of this

25 paragraph of the ASHRAE Standard or
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1 the International Energy Conservation

2 Code, as appropriate; and

3 ‘‘(II) sustainable design principles are

4 applied to the siting, design, and construc5 tion of all new and replacement buildings;

6 and

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

8 efficiency, water conservation technologies shall

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

10 effective.

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

12 1 year after the date of approval of each subsequent

13 revision of the ASHRAE Standard or the Inter14 national Energy Conservation Code, as appropriate,

15 the Secretary of Energy shall determine, based on

16 the cost-effectiveness of the requirements under the

17 amendments, whether the revised standards estab18 lished under this paragraph should be updated to re19 flect the amendments.

20 ‘‘(C) STATEMENT ON COMPLIANCE OF NEW

21 BUILDINGS.—In the budget request of the Federal

22 agency for each fiscal year and each report sub23 mitted by the Federal agency under section 548(a)

24 of the National Energy Conservation Policy Act (42
40

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

2 shall include—

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

4 owned, operated, or controlled by the Federal

5 agency; and

6 ‘‘(ii) a statement concerning whether the

7 Federal buildings meet or exceed the revised

8 standards established under this paragraph.’’.

9 SEC. 110. INCREASED USE OF RECOVERED MINERAL COM10 PONENT IN FEDERALLY FUNDED PROJECTS

11 INVOLVING PROCUREMENT OF CEMENT OR

12 CONCRETE.

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

14 Disposal Act (42 U.S.C. 6961 et seq.) is amended by add15 ing at the end the following new section:

16 ‘‘INCREASED USE OF RECOVERED MINERAL COMPONENT

17 IN FEDERALLY FUNDED PROJECTS INVOLVING PRO18 CUREMENT OF CEMENT OR CONCRETE

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

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

21 means—

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

23 ‘‘(B) the head of each other Federal agen24 cy that on a regular basis procures, or provides

25 Federal funds to pay or assist in paying the
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1 cost of procuring, material for cement or con2 crete projects.

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

4 term ‘cement or concrete project’ means a project

5 for the construction or maintenance of a highway or

6 other transportation facility or a Federal, State, or

7 local government building or other public facility

8 that—

9 ‘‘(A) involves the procurement of cement

10 or concrete; and

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

12 using Federal funds.

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

14 term ‘recovered mineral component’ means—

15 ‘‘(A) ground granulated blast furnace slag;

16 ‘‘(B) coal combustion fly ash; and

17 ‘‘(C) any other waste material or byprod18 uct recovered or diverted from solid waste that

19 the Administrator, in consultation with an

20 agency head, determines should be treated as

21 recovered mineral component under this section

22 for use in cement or concrete projects paid for,

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

24 ‘‘(b) IMPLEMENTATION OF REQUIREMENTS.—
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1 ‘‘(1) IN GENERAL.—Not later than 1 year after

2 the date of enactment of this section, the Adminis3 trator and each agency head shall take such actions

4 as are necessary to implement fully all procurement

5 requirements and incentives in effect as of the date

6 of enactment of this section (including guidelines

7 under section 6002) that provide for the use of ce8 ment and concrete incorporating recovered mineral

9 component in cement or concrete projects.

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

11 an agency head shall give priority to achieving great12 er use of recovered mineral component in cement or

13 concrete projects for which recovered mineral compo14 nents historically have not been used or have been

15 used only minimally.

16 ‘‘(3) CONFORMANCE.—The Administrator and

17 each agency head shall carry out this subsection in

18 accordance with section 6002.

19 ‘‘(c) FULL IMPLEMENTATION STUDY.—

20 ‘‘(1) IN GENERAL.—The Administrator, in co21 operation with the Secretary of Transportation and

22 the Secretary of Energy, shall conduct a study to de23 termine the extent to which current procurement re24 quirements, when fully implemented in accordance

25 with subsection (b), may realize energy savings and
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1 environmental benefits attainable with substitution

2 of recovered mineral component in cement used in

3 cement or concrete projects.

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

5 shall—

6 ‘‘(A) quantify the extent to which recov7 ered mineral components are being substituted

8 for Portland cement, particularly as a result of

9 current procurement requirements, and the en10 ergy savings and environmental benefits associ11 ated with that substitution;

12 ‘‘(B) identify all barriers in procurement

13 requirements to greater realization of energy

14 savings and environmental benefits, including

15 barriers resulting from exceptions from current

16 law; and

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

18 achieve greater substitution of recovered min19 eral component in types of cement or concrete

20 projects for which recovered mineral compo21 nents historically have not been used or have

22 been used only minimally;

23 ‘‘(ii) evaluate the feasibility of establishing

24 guidelines or standards for optimized substi-
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1 tution rates of recovered mineral component in

2 those cement or concrete projects; and

3 ‘‘(iii) identify any potential environmental

4 or economic effects that may result from great5 er substitution of recovered mineral component

6 in those cement or concrete projects.

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

8 the date of enactment of this section, the Adminis9 trator shall submit to Congress a report on the

10 study.

11 ‘‘(d) ADDITIONAL PROCUREMENT REQUIREMENTS.—

12 Unless the study conducted under subsection (c) identifies

13 any effects or other problems described in subsection

14 (c)(2)(C)(iii) that warrant further review or delay, the Ad15 ministrator and each agency head shall, not later than 1

16 year after the release of the report in accordance with sub17 section (c)(3), take additional actions authorized under

18 this Act to establish procurement requirements and incen19 tives that provide for the use of cement and concrete with

20 increased substitution of recovered mineral component in

21 the construction and maintenance of cement or concrete

22 projects, so as to—

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

24 environmental benefits associated with increased

25 substitution; and
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1 ‘‘(2) eliminate barriers identified under sub2 section (c).

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

4 affects the requirements of section 6002 (including the

5 guidelines and specifications for implementing those re6 quirements).’’.

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

8 of contents of the Solid Waste Disposal Act is amended

9 by adding after the item relating to section 6004 the fol10 lowing new item:

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

projects involving procurement of cement or concrete.’’.

11 Subtitle B—Energy Assistance and

12 State Programs

13 SEC. 121. LOW INCOME HOME ENERGY ASSISTANCE PRO14 GRAM.

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

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

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

18 2002 through 2004’’ and inserting ‘‘$2,000,000,000 for

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

20 of fiscal years 2004 through 2006’’.

21 SEC. 122. WEATHERIZATION ASSISTANCE.

22 Section 422 of the Energy Conservation and Produc23 tion Act (42 U.S.C. 6872) is amended by striking ‘‘for

24 fiscal years 1999 through 2003 such sums as may be nec-
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1 essary’’ and inserting ‘‘$325,000,000 for fiscal year 2004,

2 $400,000,000 for fiscal year 2005, and $500,000,000 for

3 fiscal year 2006’’.

4 SEC. 123. STATE ENERGY PROGRAMS.

5 (a) STATE ENERGY CONSERVATION PLANS.—Section

6 362 of the Energy Policy and Conservation Act (42 U.S.C.

7 6322) is amended by inserting at the end the following

8 new subsection:

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

10 invite the Governor of each State to review and, if nec11 essary, revise the energy conservation plan of such State

12 submitted under subsection (b) or (e). Such reviews should

13 consider the energy conservation plans of other States

14 within the region, and identify opportunities and actions

15 carried out in pursuit of common energy conservation

16 goals.’’.

17 (b) STATE ENERGY EFFICIENCY GOALS.—Section

18 364 of the Energy Policy and Conservation Act (42 U.S.C.

19 6324) is amended to read as follows:

20 ‘‘STATE ENERGY EFFICIENCY GOALS

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

22 respect to which assistance is made available under this

23 part on or after the date of enactment of the Energy Pol24 icy Act of 2003 shall contain a goal, consisting of an im25 provement of 25 percent or more in the efficiency of use

26 of energy in the State concerned in calendar year 2010
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1 as compared to calendar year 1990, and may contain in2 terim goals.’’.

3 (c) AUTHORIZATION OF APPROPRIATIONS.—Section

4 365(f) of the Energy Policy and Conservation Act (42

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

6 1999 through 2003 such sums as may be necessary’’ and

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

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

9 SEC. 124. ENERGY EFFICIENT APPLIANCE REBATE PRO10 GRAMS.

11 (a) DEFINITIONS.—In this section:

12 (1) ELIGIBLE STATE.—The term ‘‘eligible

13 State’’ means a State that meets the requirements

14 of subsection (b).

15 (2) ENERGY STAR PROGRAM.—The term ‘‘En16 ergy Star program’’ means the program established

17 by section 324A of the Energy Policy and Conserva18 tion Act.

19 (3) RESIDENTIAL ENERGY STAR PRODUCT.—

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

21 a product for a residence that is rated for energy ef22 ficiency under the Energy Star program.

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

24 the Secretary of Energy.
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1 (5) STATE ENERGY OFFICE.—The term ‘‘State

2 energy office’’ means the State agency responsible

3 for developing State energy conservation plans under

4 section 362 of the Energy Policy and Conservation

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

6 (6) STATE PROGRAM.—The term ‘‘State pro7 gram’’ means a State energy efficient appliance re8 bate program described in subsection (b)(1).

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

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

11 (1) establishes (or has established) a State en12 ergy efficient appliance rebate program to provide

13 rebates to residential consumers for the purchase of

14 residential Energy Star products to replace used ap15 pliances of the same type;

16 (2) submits an application for the allocation at

17 such time, in such form, and containing such infor18 mation as the Secretary may require; and

19 (3) provides assurances satisfactory to the Sec20 retary that the State will use the allocation to sup21 plement, but not supplant, funds made available to

22 carry out the State program.

23 (c) AMOUNT OF ALLOCATIONS.—

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

25 for each fiscal year, the Secretary shall allocate to
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1 the State energy office of each eligible State to carry

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

3 obtained by multiplying the amount made available

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

5 that the population of the State in the most recent

6 calendar year for which data are available bears to

7 the total population of all eligible States in that cal8 endar year.

9 (2) MINIMUM ALLOCATIONS.—For each fiscal

10 year, the amounts allocated under this subsection

11 shall be adjusted proportionately so that no eligible

12 State is allocated a sum that is less than an amount

13 determined by the Secretary.

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

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

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

17 carrying out a State program.

18 (e) ISSUANCE OF REBATES.—Rebates may be pro19 vided to residential consumers that meet the requirements

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

21 determined by the State energy office, taking into

22 consideration—

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

24 energy office under subsection (c);
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1 (2) the amount of any Federal or State tax in2 centive available for the purchase of the residential

3 Energy Star product; and

4 (3) the difference between the cost of the resi5 dential Energy Star product and the cost of an ap6 pliance that is not a residential Energy Star prod7 uct, but is of the same type as, and is the nearest

8 capacity, performance, and other relevant character9 istics (as determined by the State energy office) to,

10 the residential Energy Star product.

11 (f) AUTHORIZATION OF APPROPRIATIONS.—There

12 are authorized to be appropriated to the Secretary to carry

13 out this section $50,000,000 for each of the fiscal years

14 2004 through 2008.

15 SEC. 125. ENERGY EFFICIENT PUBLIC BUILDINGS.

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

17 grants to the State agency responsible for developing State

18 energy conservation plans under section 362 of the Energy

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

20 such agency exists, a State agency designated by the Gov21 ernor of the State, to assist units of local government in

22 the State in improving the energy efficiency of public

23 buildings and facilities—

24 (1) through construction of new energy efficient

25 public buildings that use at least 30 percent less en-
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1 ergy than a comparable public building constructed

2 in compliance with standards prescribed in the most

3 recent version of the International Energy Conserva4 tion Code, or a similar State code intended to

5 achieve substantially equivalent efficiency levels; or

6 (2) through renovation of existing public build7 ings to achieve reductions in energy use of at least

8 30 percent as compared to the baseline energy use

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

10 year, weather-normalized average for calculating

11 such baseline.

12 (b) ADMINISTRATION.—State energy offices receiving

13 grants under this section shall—

14 (1) maintain such records and evidence of com15 pliance as the Secretary may require; and

16 (2) develop and distribute information and ma17 terials and conduct programs to provide technical

18 services and assistance to encourage planning, fi19 nancing, and design of energy efficient public build20 ings by units of local government.

21 (c) AUTHORIZATION OF APPROPRIATIONS.—For the

22 purposes of this section, there are authorized to be appro23 priated to the Secretary of Energy $30,000,000 for each

24 of fiscal years 2004 through 2008. Not more than 10 per-
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1 cent of appropriated funds shall be used for administra2 tion.

3 SEC. 126. LOW INCOME COMMUNITY ENERGY EFFICIENCY

4 PILOT PROGRAM.

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

6 to make grants to units of local government, private, non7 profit community development organizations, and Indian

8 tribe economic development entities to improve energy effi9 ciency; identify and develop alternative, renewable, and

10 distributed energy supplies; and increase energy conserva11 tion in low income rural and urban communities.

12 (b) PURPOSE OF GRANTS.—The Secretary may make

13 grants on a competitive basis for—

14 (1) investments that develop alternative, renew15 able, and distributed energy supplies;

16 (2) energy efficiency projects and energy con17 servation programs;

18 (3) studies and other activities that improve en19 ergy efficiency in low income rural and urban com20 munities;

21 (4) planning and development assistance for in22 creasing the energy efficiency of buildings and facili23 ties; and

24 (5) technical and financial assistance to local

25 government and private entities on developing new
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1 renewable and distributed sources of power or com2 bined heat and power generation.

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

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

5 or other organized group or community, including any

6 Alaskan Native village or regional or village corporation

7 as defined in or established pursuant to the Alaska Native

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

9 recognized as eligible for the special programs and services

10 provided by the United States to Indians because of their

11 status as Indians.

12 (d) AUTHORIZATION OF APPROPRIATIONS.—For the

13 purposes of this section there are authorized to be appro14 priated to the Secretary of Energy $20,000,000 for each

15 of fiscal years 2004 through 2006.

16 Subtitle C—Energy Efficient

17 Products

18 SEC. 131. ENERGY STAR PROGRAM.

19 (a) AMENDMENT.—The Energy Policy and Conserva20 tion Act (42 U.S.C. 6201 et seq.) is amended by inserting

21 the following after section 324:

22 ‘‘SEC. 324A. ENERGY STAR PROGRAM.

23 ‘‘There is established at the Department of Energy

24 and the Environmental Protection Agency a voluntary

25 program to identify and promote energy-efficient products
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1 and buildings in order to reduce energy consumption, im2 prove energy security, and reduce pollution through vol3 untary labeling of or other forms of communication about

4 products and buildings that meet the highest energy effi5 ciency standards. Responsibilities under the program shall

6 be divided between the Department of Energy and the En7 vironmental Protection Agency consistent with the terms

8 of agreements between the 2 agencies. The Administrator

9 and the Secretary shall—

10 ‘‘(1) promote Energy Star compliant tech11 nologies as the preferred technologies in the market12 place for achieving energy efficiency and to reduce

13 pollution;

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

15 Energy Star label, including special outreach to

16 small businesses;

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

18 label;

19 ‘‘(4) solicit comments from interested parties

20 prior to establishing or revising an Energy Star

21 product category, specification, or criterion (or effec22 tive dates for any of the foregoing);

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

24 category, specification, or criterion, provide reason25 able notice to interested parties of any changes (in-
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1 cluding effective dates) in product categories, speci2 fications, or criteria along with an explanation of

3 such changes and, where appropriate, responses to

4 comments submitted by interested parties; and

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

6 be 9 months, unless the Agency or Department de7 termines otherwise) prior to the effective date for a

8 new or a significant revision to a product category,

9 specification, or criterion, taking into account the

10 timing requirements of the manufacturing, product

11 marketing, and distribution process for the specific

12 product addressed.’’.

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

14 of contents of the Energy Policy and Conservation Act is

15 amended by inserting after the item relating to section

16 324 the following new item:

‘‘Sec. 324A. Energy Star program.’’.

17 SEC. 132. HVAC MAINTENANCE CONSUMER EDUCATION

18 PROGRAM.

19 Section 337 of the Energy Policy and Conservation

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

21 the following:

22 ‘‘(c) HVAC MAINTENANCE.—For the purpose of en23 suring that installed air conditioning and heating systems

24 operate at their maximum rated efficiency levels, the Sec25 retary shall, not later than 180 days after the date of en-
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1 actment of this subsection, carry out a program to educate

2 homeowners and small business owners concerning the en3 ergy savings resulting from properly conducted mainte4 nance of air conditioning, heating, and ventilating sys5 tems. The Secretary shall carry out the program in a cost6 shared manner in cooperation with the Administrator of

7 the Environmental Protection Agency and such other enti8 ties as the Secretary considers appropriate, including in9 dustry trade associations, industry members, and energy

10 efficiency organizations.

11 ‘‘(d) SMALL BUSINESS EDUCATION AND ASSIST12 ANCE.—The Administrator of the Small Business Admin13 istration, in consultation with the Secretary of Energy and

14 the Administrator of the Environmental Protection Agen15 cy, shall develop and coordinate a Government-wide pro16 gram, building on the existing Energy Star for Small

17 Business Program, to assist small businesses to become

18 more energy efficient, understand the cost savings obtain19 able through efficiencies, and identify financing options

20 for energy efficiency upgrades. The Secretary and the Ad21 ministrator of the Small Business Administration shall

22 make the program information available directly to small

23 businesses and through other Federal agencies, including

24 the Federal Emergency Management Program and the

25 Department of Agriculture.’’.
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1 SEC. 133. ENERGY CONSERVATION STANDARDS FOR ADDI2 TIONAL PRODUCTS.

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

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

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

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

7 include any lamp specifically designed to be used for

8 special purpose applications and that is unlikely to

9 be used in general purpose applications such as

10 those described in subparagraph (D), and also does

11 not include any lamp not described in subparagraph

12 (D) that is excluded by the Secretary, by rule, be13 cause the lamp is designed for special applications

14 and is unlikely to be used in general purpose appli15 cations.’’; and

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

17 ‘‘(32) The term ‘battery charger’ means a de18 vice that charges batteries for consumer products

19 and includes battery chargers embedded in other

20 consumer products.

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

22 freezers, and refrigerator-freezers’ means refrig23 erators, freezers, or refrigerator-freezers that—

24 ‘‘(A) are not consumer products regulated

25 under this Act; and
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1 ‘‘(B) incorporate most components involved

2 in the vapor-compression cycle and the refrig3 erated compartment in a single package.

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

5 an external power supply circuit that is used to con6 vert household electric current into either DC cur7 rent or lower-voltage AC current to operate a con8 sumer product.

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

10 sign that—

11 ‘‘(A) is designed to be permanently fixed in

12 place to identify an exit; and

13 ‘‘(B) consists of an electrically powered in14 tegral light source that illuminates the legend

15 ‘EXIT’ and any directional indicators and pro16 vides contrast between the legend, any direc17 tional indicators, and the background.

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

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

20 transformer that—

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

22 or less;

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

24 less; and
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1 ‘‘(iii) is rated for operation at a frequency

2 of 60 Hertz.

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

4 not include—

5 ‘‘(i) transformers with multiple voltage

6 taps, with the highest voltage tap equaling at

7 least 20 percent more than the lowest voltage

8 tap;

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

10 known as drive transformers, rectifier trans11 formers, auto-transformers, Uninterruptible

12 Power System transformers, impedance trans13 formers, harmonic transformers, regulating

14 transformers, sealed and nonventilating trans15 formers, machine tool transformers, welding

16 transformers, grounding transformers, or test17 ing transformers, that are designed to be used

18 in a special purpose application and are unlikely

19 to be used in general purpose applications; or

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

21 (ii) that is excluded by the Secretary by rule

22 because—

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

24 special application;
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1 ‘‘(II) the transformer is unlikely to be

2 used in general purpose applications; and

3 ‘‘(III) the application of standards to

4 the transformer would not result in signifi5 cant energy savings.

6 ‘‘(37) The term ‘low-voltage dry-type distribu7 tion transformer’ means a distribution transformer

8 that—

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

10 less;

11 ‘‘(B) is air-cooled; and

12 ‘‘(C) does not use oil as a coolant.

13 ‘‘(38) The term ‘standby mode’ means the low14 est power consumption mode that—

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

16 by the user; and

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

18 when an appliance is connected to the main

19 electricity supply and used in accordance with

20 the manufacturer’s instructions,

21 as defined on an individual product basis by the Sec22 retary.

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

24 electric lamp with a reflector bowl that directs light

25 upward so as to give indirect illumination.
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1 ‘‘(40) The term ‘traffic signal module’ means a

2 standard 8-inch (200mm) or 12-inch (300mm) traf3 fic signal indication, consisting of a light source, a

4 lens, and all other parts necessary for operation,

5 that communicates movement messages to drivers

6 through red, amber, and green colors.

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

8 consisting of 2 or more coils of insulated wire that

9 transfers alternating current by electromagnetic in10 duction from 1 coil to another to change the original

11 voltage or current value.

12 ‘‘(42) The term ‘unit heater’ means a self-con13 tained fan-type heater designed to be installed with14 in the heated space, except that such term does not

15 include a warm air furnace.’’.

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

17 Policy and Conservation Act (42 U.S.C. 6293) is

18 amended—

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

20 following:

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

22 shall be based on the test method used under

23 Version 2.0 of the Energy Star program of the Envi24 ronmental Protection Agency for illuminated exit

25 signs.
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1 ‘‘(10) Test procedures for distribution trans2 formers and low voltage dry-type distribution trans3 formers shall be based on the ‘Standard Test Meth4 od for Measuring the Energy Consumption of Dis5 tribution Transformers’ prescribed by the National

6 Electrical Manufacturers Association (NEMA TP 2–

7 1998). The Secretary may review and revise this test

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

9 procedure shall be deemed to be testing require10 ments prescribed by the Secretary under section

11 346(a)(1) for distribution transformers for which the

12 Secretary makes a determination that energy con13 servation standards would be technologically feasible

14 and economically justified, and would result in sig15 nificant energy savings.

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

17 shall be based on the test method used under the

18 Energy Star program of the Environmental Protec19 tion Agency for traffic signal modules, as in effect

20 on the date of enactment of this paragraph.

21 ‘‘(12) Test procedures for medium base com22 pact fluorescent lamps shall be based on the test

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

24 the Energy Star program of the Environmental Pro25 tection Agency and Department of Energy for com-
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1 pact fluorescent lamps. Covered products shall meet

2 all test requirements for regulated parameters in

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

4 marketed prior to completion of lamp life and lumen

5 maintenance at 40 percent of rated life testing pro6 vided manufacturers document engineering pre7 dictions and analysis that support expected attain8 ment of lumen maintenance at 40 percent rated life

9 and lamp life time.’’; and

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

11 ‘‘(f) ADDITIONAL CONSUMER AND COMMERCIAL

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

13 months after the date of enactment of this subsection, pre14 scribe testing requirements for suspended ceiling fans, re15 frigerated bottled or canned beverage vending machines,

16 and commercial refrigerators, freezers, and refrigerator17 freezers. Such testing requirements shall be based on ex18 isting test procedures used in industry to the extent prac19 tical and reasonable. In the case of suspended ceiling fans,

20 such test procedures shall include efficiency at both max21 imum output and at an output no more than 50 percent

22 of the maximum output.’’.

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

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

25 by adding at the end the following:
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1 ‘‘(u) BATTERY CHARGER AND EXTERNAL POWER

2 SUPPLY ELECTRIC ENERGY CONSUMPTION.—

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

4 shall, within 18 months after the date of enactment

5 of this subsection, prescribe by notice and comment,

6 definitions and test procedures for the power use of

7 battery chargers and external power supplies. In es8 tablishing these test procedures, the Secretary shall

9 consider, among other factors, existing definitions

10 and test procedures used for measuring energy con11 sumption in standby mode and other modes and as12 sess the current and projected future market for

13 battery chargers and external power supplies. This

14 assessment shall include estimates of the significance

15 of potential energy savings from technical improve16 ments to these products and suggested product

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

18 period, the Secretary shall hold a scoping workshop

19 to discuss and receive comments on plans for devel20 oping energy conservation standards for energy use

21 for these products.

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

23 the date of enactment of this subsection, issue a

24 final rule that determines whether energy conserva25 tion standards shall be issued for battery chargers
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1 and external power supplies or classes thereof. For

2 each product class, any such standards shall be set

3 at the lowest level of energy use that—

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

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

6 ‘‘(ii) will result in significant overall an7 nual energy savings, considering both standby

8 mode and other operating modes.

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

10 COVERED PRODUCTS.—In determining pursuant to

11 section 323 whether test procedures and energy con12 servation standards pursuant to this section should

13 be revised, the Secretary shall consider, for covered

14 products that are major sources of standby mode en15 ergy consumption, whether to incorporate standby

16 mode into such test procedures and energy conserva17 tion standards, taking into account, among other

18 relevant factors, standby mode power consumption

19 compared to overall product energy consumption.

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

21 propose a standard under this section unless the

22 Secretary has issued applicable test procedures for

23 each product pursuant to section 323.

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

25 under this subsection shall be applicable to products
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1 manufactured or imported 3 years after the date of

2 issuance.

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

4 and the Administrator shall collaborate and develop

5 programs, including programs pursuant to section

6 324A (relating to Energy Star Programs) and other

7 voluntary industry agreements or codes of conduct,

8 that are designed to reduce standby mode energy

9 use.

10 ‘‘(v) SUSPENDED CEILING FANS, VENDING MA11 CHINES, AND COMMERCIAL REFRIGERATORS, FREEZERS,

12 AND REFRIGERATOR-FREEZERS.—The Secretary shall not

13 later than 36 months after the date on which testing re14 quirements are prescribed by the Secretary pursuant to

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

16 standards for suspended ceiling fans, refrigerated bottled

17 or canned beverage vending machines, and commercial re18 frigerators, freezers, and refrigerator-freezers. In estab19 lishing standards under this subsection, the Secretary

20 shall use the criteria and procedures contained in sub21 sections (o) and (p). Any standard prescribed under this

22 subsection shall apply to products manufactured 3 years

23 after the date of publication of a final rule establishing

24 such standard.
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1 ‘‘(w) ILLUMINATED EXIT SIGNS.—Illuminated exit

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

3 meet the Version 2.0 Energy Star Program performance

4 requirements for illuminated exit signs prescribed by the

5 Environmental Protection Agency.

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

7 after January 1, 2005—

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

9 power; and

10 ‘‘(2) shall not be capable of operating with

11 lamps that total more than 190 watts.

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

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

14 distribution transformers manufactured on or after Janu15 ary 1, 2005, shall be the Class I Efficiency Levels for dis16 tribution transformers specified in Table 4–2 of the ‘Guide

17 for Determining Energy Efficiency for Distribution Trans18 formers’ published by the National Electrical Manufactur19 ers Association (NEMA TP–1–2002).

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

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

22 meet the performance requirements used under the En23 ergy Star program of the Environmental Protection Agen24 cy for traffic signals, as in effect on the date of enactment

25 of this subsection, and shall be installed with compatible,
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1 electrically connected signal control interface devices and

2 conflict monitoring systems.

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

4 on or after the date that is 3 years after the date of enact5 ment of this subsection shall be equipped with an intermit6 tent ignition device and shall have either power venting

7 or an automatic flue damper.

8 ‘‘(bb) MEDIUM BASE COMPACT FLUORESCENT

9 LAMPS.—Bare lamp and covered lamp (no reflector) me10 dium base compact fluorescent lamps manufactured on or

11 after January 1, 2005, shall meet the following require12 ments prescribed by the August 9, 2001, version of the

13 Energy Star Program Requirements for Compact Fluores14 cent Lamps, Energy Star Eligibility Criteria, Energy-Effi15 ciency Specification issued by the Environmental Protec16 tion Agency and Department of Energy: minimum initial

17 efficacy; lumen maintenance at 1000 hours; lumen mainte18 nance at 40 percent of rated life; rapid cycle stress test;

19 and lamp life. The Secretary may, by rule, establish re20 quirements for color quality (CRI); power factor; oper21 ating frequency; and maximum allowable start time based

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

23 version of the Energy Star Program Requirements for

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

25 revise these requirements or establish other requirements
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1 considering energy savings, cost effectiveness, and con2 sumer satisfaction.

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

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

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

6 date on which a final rule is issued by the Depart7 ment of Energy, except that any State or local

8 standards prescribed or enacted for any such prod9 uct prior to the date on which such final rule is

10 issued shall not be preempted until the standard es11 tablished under subsection (u) or (v) for that prod12 uct takes effect; and

13 ‘‘(2) to products for which standards are estab14 lished under subsections (w) through (bb) on the

15 date of enactment of those subsections, except that

16 any State or local standards prescribed or enacted

17 prior to the date of enactment of those subsections

18 shall not be preempted until the standards estab19 lished under subsections (w) through (bb) take ef20 fect.’’.

21 (d) RESIDENTIAL FURNACE FANS.—Section

22 325(f)(3) of the Energy Policy and Conservation Act (42

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

24 new subparagraph at the end:
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1 ‘‘(D) Notwithstanding any provision of this Act, the

2 Secretary may consider, and prescribe, if the requirements

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

4 or energy use standards for electricity used for purposes

5 of circulating air through duct work.’’.

6 SEC. 134. ENERGY LABELING.

7 (a) RULEMAKING ON EFFECTIVENESS OF CONSUMER

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

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

10 amended by adding at the end the following:

11 ‘‘(F) Not later than 3 months after the date of enact12 ment of this subparagraph, the Commission shall initiate

13 a rulemaking to consider the effectiveness of the current

14 consumer products labeling program in assisting con15 sumers in making purchasing decisions and improving en16 ergy efficiency and to consider changes to the labeling

17 rules that would improve the effectiveness of consumer

18 product labels. Such rulemaking shall be completed not

19 later than 2 years after the date of enactment of this sub20 paragraph.’’.

21 (b) RULEMAKING ON LABELING FOR ADDITIONAL

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

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

24 by adding at the end the following:
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1 ‘‘(5) The Secretary or the Commission, as appro2 priate, may, for covered products referred to in sub3 sections (u) through (aa) of section 325, prescribe, by rule,

4 pursuant to this section, labeling requirements for such

5 products after a test procedure has been set pursuant to

6 section 323. In the case of products to which TP–1 stand7 ards under section 325(y) apply, labeling requirements

8 shall be based on the ‘Standard for the Labeling of Dis9 tribution Transformer Efficiency’ prescribed by the Na10 tional Electrical Manufacturers Association (NEMA TP–

11 3) as in effect upon the date of enactment of this para12 graph.’’.

13 Subtitle D—Public Housing

14 SEC. 141. CAPACITY BUILDING FOR ENERGY-EFFICIENT, AF15 FORDABLE HOUSING.

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

17 (42 U.S.C. 9816 note) is amended—

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

19 semicolon at the end the following: ‘‘, including ca20 pabilities regarding the provision of energy efficient,

21 affordable housing and residential energy conserva22 tion measures’’; and

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

24 semicolon the following: ‘‘, including such activities

25 relating to the provision of energy efficient, afford-
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1 able housing and residential energy conservation

2 measures that benefit low-income families’’.

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

4 ENERGY CONSERVATION AND EFFICIENCY

5 ACTIVITIES.

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

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

8 amended—

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

10 conservation’’;

11 (2) by striking ‘‘, and except that’’ and insert12 ing ‘‘; except that’’; and

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

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

15 limitation under this paragraph on the amount of

16 assistance provided under this title that may be used

17 for the provision of public services is hereby in18 creased by 10 percent, but such percentage increase

19 may be used only for the provision of public services

20 concerning energy conservation or efficiency’’.

21 SEC. 143. FHA MORTGAGE INSURANCE INCENTIVES FOR

22 ENERGY EFFICIENT HOUSING.

23 (a) SINGLE FAMILY HOUSING MORTGAGE INSUR24 ANCE.—Section 203(b)(2) of the National Housing Act

25 (12 U.S.C. 1709(b)(2)) is amended, in the first undesig-
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1 nated paragraph beginning after subparagraph (B)(ii)(IV)

2 (relating to solar energy systems), by striking ‘‘20 per3 cent’’ and inserting ‘‘30 percent’’.

4 (b) MULTIFAMILY HOUSING MORTGAGE INSUR5 ANCE.—Section 207(c) of the National Housing Act (12

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

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

8 energy systems and residential energy conservation meas9 ures), by striking ‘‘20 percent’’ and inserting ‘‘30 per10 cent’’.

11 (c) COOPERATIVE HOUSING MORTGAGE INSUR12 ANCE.—Section 213(p) of the National Housing Act (12

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

14 and inserting ‘‘30 percent’’.

15 (d) REHABILITATION AND NEIGHBORHOOD CON16 SERVATION HOUSING MORTGAGE INSURANCE.—Section

17 220(d)(3)(B)(iii)(IV) of the National Housing Act (12

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

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

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

21 and

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

23 ‘‘30 percent’’.

24 (e) LOW-INCOME MULTIFAMILY HOUSING MORT25 GAGE INSURANCE.—Section 221(k) of the National Hous-
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1 ing Act (12 U.S.C. 1715l(k)) is amended by striking ‘‘20

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

3 (f) ELDERLY HOUSING MORTGAGE INSURANCE.—

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

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

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

7 (g) CONDOMINIUM HOUSING MORTGAGE INSUR8 ANCE.—Section 234(j) of the National Housing Act (12

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

10 and inserting ‘‘30 percent’’.

11 SEC. 144. PUBLIC HOUSING CAPITAL FUND.

12 Section 9 of the United States Housing Act of 1937

13 (42 U.S.C. 1437g) is amended—

14 (1) in subsection (d)(1)—

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

16 at the end;

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

18 period at the end and inserting a semicolon;

19 and

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

21 subparagraphs:

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

23 efficiency by installing fixtures and fittings that

24 conform to the American Society of Mechanical

25 Engineers/American National Standards Insti-
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1 tute standards A112.19.2–1998 and

2 A112.18.1–2000, or any revision thereto, appli3 cable at the time of installation, and by increas4 ing energy efficiency and water conservation by

5 such other means as the Secretary determines

6 are appropriate; and

7 ‘‘(L) integrated utility management and

8 capital planning to maximize energy conserva9 tion and efficiency measures.’’; and

10 (2) in subsection (e)(2)(C)—

11 (A) by striking ‘‘The’’ and inserting the

12 following:

13 ‘‘(i) IN GENERAL.—The’’; and

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

15 ‘‘(ii) THIRD PARTY CONTRACTS.—

16 Contracts described in clause (i) may in17 clude contracts for equipment conversions

18 to less costly utility sources, projects with

19 resident-paid utilities, and adjustments to

20 frozen base year consumption, including

21 systems repaired to meet applicable build22 ing and safety codes and adjustments for

23 occupancy rates increased by rehabilita24 tion.
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1 ‘‘(iii) TERM OF CONTRACT.—The total

2 term of a contract described in clause (i)

3 shall not exceed 20 years to allow longer

4 payback periods for retrofits, including

5 windows, heating system replacements,

6 wall insulation, site-based generation, ad7 vanced energy savings technologies, includ8 ing renewable energy generation, and other

9 such retrofits.’’.

10 SEC. 145. GRANTS FOR ENERGY-CONSERVING IMPROVE11 MENTS FOR ASSISTED HOUSING.

12 Section 251(b)(1) of the National Energy Conserva13 tion Policy Act (42 U.S.C. 8231(1)) is amended—

14 (1) by striking ‘‘financed with loans’’ and in15 serting ‘‘assisted’’;

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

17 ‘‘which are eligible multifamily housing projects (as

18 such term is defined in section 512 of the Multi19 family Assisted Housing Reform and Affordability

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

21 to mortgage restructuring and rental assistance suf22 ficiency plans under such Act,’’; and

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

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

25 improvements may also include the installation of
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1 energy and water conserving fixtures and fittings

2 that conform to the American Society of Mechanical

3 Engineers/American National Standards Institute

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

5 any revision thereto, applicable at the time of instal6 lation.’’.

7 SEC. 146. NORTH AMERICAN DEVELOPMENT BANK.

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

9 Free Trade Agreement Implementation Act (22 U.S.C.

10 290m–290m-3) is amended by adding at the end the fol11 lowing:

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

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

14 environmental infrastructure projects, the Board members

15 representing the United States should use their voice and

16 vote to encourage the Bank to finance projects related to

17 clean and efficient energy, including energy conservation,

18 that prevent, control, or reduce environmental pollutants

19 or contaminants.’’.

20 SEC. 147. ENERGY-EFFICIENT APPLIANCES.

21 In purchasing appliances, a public housing agency

22 shall purchase energy-efficient appliances that are Energy

23 Star products or FEMP-designated products, as such

24 terms are defined in section 553 of the National Energy

25 Conservation Policy Act (as amended by this title), unless
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1 the purchase of energy-efficient appliances is not cost-ef2 fective to the agency.

3 SEC. 148. ENERGY EFFICIENCY STANDARDS.

4 Section 109 of the Cranston-Gonzalez National Af5 fordable Housing Act (42 U.S.C. 12709) is amended—

6 (1) in subsection (a)—

7 (A) in paragraph (1)—

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

9 of the enactment of the Energy Policy Act

10 of 1992’’ and inserting ‘‘September 30,

11 2004’’;

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

13 ‘‘and’’ at the end;

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

15 the period at the end and inserting ‘‘;

16 and’’; and

17 (iv) by adding at the end the fol18 lowing:

19 ‘‘(C) rehabilitation and new construction of

20 public and assisted housing funded by HOPE

21 VI revitalization grants under section 24 of the

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

23 1437v), where such standards are determined

24 to be cost effective by the Secretary of Housing

25 and Urban Development.’’; and
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1 (B) in paragraph (2), by striking ‘‘Council

2 of American’’ and all that follows through

3 ‘‘90.1–1989’)’’ and inserting ‘‘2003 Inter4 national Energy Conservation Code’’;

5 (2) in subsection (b)—

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

7 date of the enactment of the Energy Policy Act

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

9 2004’’; and

10 (B) by striking ‘‘CABO’’ and all that fol11 lows through ‘‘1989’’ and inserting ‘‘the 2003

12 International Energy Conservation Code’’; and

13 (3) in subsection (c)—

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

15 ENERGY CODE’’ and inserting ‘‘THE INTER16 NATIONAL ENERGY CONSERVATION CODE’’;

17 and

18 (B) by striking ‘‘CABO’’ and all that fol19 lows through ‘‘1989’’ and inserting ‘‘the 2003

20 International Energy Conservation Code’’.

21 SEC. 149. ENERGY STRATEGY FOR HUD.

22 The Secretary of Housing and Urban Development

23 shall develop and implement an integrated strategy to re24 duce utility expenses through cost-effective energy con25 servation and efficiency measures and energy efficient de-
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1 sign and construction of public and assisted housing. The

2 energy strategy shall include the development of energy

3 reduction goals and incentives for public housing agencies.

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

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

6 on the energy strategy and the actions taken by the De7 partment of Housing and Urban Development to monitor

8 the energy usage of public housing agencies and shall sub9 mit an update every 2 years thereafter on progress in im10 plementing the strategy.

11 TITLE II—RENEWABLE ENERGY

12 Subtitle A—General Provisions

13 SEC. 201. ASSESSMENT OF RENEWABLE ENERGY RE14 SOURCES.

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

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

17 year thereafter, the Secretary of Energy shall review the

18 available assessments of renewable energy resources with19 in the United States, including solar, wind, biomass, ocean

20 (tidal, wave, current, and thermal), geothermal, and hy21 droelectric energy resources, and undertake new assess22 ments as necessary, taking into account changes in market

23 conditions, available technologies, and other relevant fac24 tors.
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1 (b) CONTENTS OF REPORTS.—Not later than 1 year

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

3 thereafter, the Secretary shall publish a report based on

4 the assessment under subsection (a). The report shall

5 contain—

6 (1) a detailed inventory describing the available

7 amount and characteristics of the renewable energy

8 resources; and

9 (2) such other information as the Secretary be10 lieves would be useful in developing such renewable

11 energy resources, including descriptions of sur12 rounding terrain, population and load centers, near13 by energy infrastructure, location of energy and

14 water resources, and available estimates of the costs

15 needed to develop each resource, together with an

16 identification of any barriers to providing adequate

17 transmission for remote sources of renewable energy

18 resources to current and emerging markets, rec19 ommendations for removing or addressing such bar20 riers, and ways to provide access to the grid that do

21 not unfairly disadvantage renewable or other energy

22 producers.

23 (c) AUTHORIZATION OF APPROPRIATIONS.—For the

24 purposes of this section, there are authorized to be appro-
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1 priated to the Secretary of Energy $10,000,000 for each

2 of fiscal years 2004 through 2008.

3 SEC. 202. RENEWABLE ENERGY PRODUCTION INCENTIVE.

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

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

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

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

8 ‘‘. If there are insufficient appropriations to make full pay9 ments for electric production from all qualified renewable

10 energy facilities in any given year, the Secretary shall as11 sign 60 percent of appropriated funds for that year to fa12 cilities that use solar, wind, geothermal, or closed-loop

13 (dedicated energy crops) biomass technologies to generate

14 electricity, and assign the remaining 40 percent to other

15 projects. The Secretary may, after transmitting to Con16 gress an explanation of the reasons therefor, alter the per17 centage requirements of the preceding sentence.’’.

18 (b) QUALIFIED RENEWABLE ENERGY FACILITY.—

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

20 U.S.C. 13317(b)) is amended—

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

22 all that follows through ‘‘nonprofit electrical cooper23 ative’’ and inserting ‘‘a not-for-profit electric cooper24 ative, a public utility described in section 115 of the

25 Internal Revenue Code of 1986, a State, Common-
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1 wealth, territory, or possession of the United States

2 or the District of Columbia, or a political subdivision

3 thereof, or an Indian tribal government or subdivi4 sion thereof,’’; and

5 (2) by inserting ‘‘landfill gas,’’ after ‘‘wind, bio6 mass,’’.

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

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

9 amended by striking ‘‘during the 10-fiscal year period be10 ginning with the first full fiscal year occurring after the

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

12 1, 2003, and before October 1, 2013’’.

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

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

15 is amended by inserting ‘‘landfill gas,’’ after ‘‘wind, bio16 mass,’’.

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

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

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

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

21 (f) AUTHORIZATION OF APPROPRIATIONS.—Section

22 1212(g) of the Energy Policy Act of 1992 (42 U.S.C.

23 13317(g)) is amended to read as follows:

24 ‘‘(g) AUTHORIZATION OF APPROPRIATIONS.—
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1 ‘‘(1) IN GENERAL.—Subject to paragraph (2),

2 there are authorized to be appropriated such sums

3 as may be necessary to carry out this section for fis4 cal years 2003 through 2023.

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

6 available under paragraph (1) shall remain available

7 until expended.’’.

8 SEC. 203. FEDERAL PURCHASE REQUIREMENT.

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

10 the Secretary of Energy, shall seek to ensure that, to the

11 extent economically feasible and technically practicable, of

12 the total amount of electric energy the Federal Govern13 ment consumes during any fiscal year, the following

14 amounts shall be renewable energy:

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

16 through 2007.

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

18 through 2010.

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

20 2011 and each fiscal year thereafter.

21 (b) DEFINITIONS.—In this section:

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

23 solid, nonhazardous, cellulosic material that is de24 rived from—
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1 (A) any of the following forest-related re2 sources: mill residues, precommercial thinnings,

3 slash, and brush, or nonmerchantable material;

4 (B) solid wood waste materials, including

5 waste pallets, crates, dunnage, manufacturing

6 and construction wood wastes (other than pres7 sure-treated, chemically-treated, or painted

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

9 tree trimmings, but not including municipal

10 solid waste (garbage), gas derived from the bio11 degradation of solid waste, or paper that is

12 commonly recycled;

13 (C) agriculture wastes, including orchard

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

15 other crop by-products or residues, and live16 stock waste nutrients; or

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

18 fuel for the production of electricity.

19 (2) RENEWABLE ENERGY.—The term ‘‘renew20 able energy’’ means electric energy generated from

21 solar, wind, biomass, landfill gas, geothermal, munic22 ipal solid waste, or new hydroelectric generation ca23 pacity achieved from increased efficiency or addi24 tions of new capacity at an existing hydroelectric

25 project.
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1 (c) CALCULATION.—For purposes of determining

2 compliance with the requirement of this section, the

3 amount of renewable energy shall be doubled if—

4 (1) the renewable energy is produced and used

5 on-site at a Federal facility;

6 (2) the renewable energy is produced on Fed7 eral lands and used at a Federal facility; or

8 (3) the renewable energy is produced on Indian

9 land as defined in title XXVI of the Energy Policy

10 Act of 1992 (25 U.S.C. 3501 et. seq.) and used at

11 a Federal facility.

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

13 every 2 years thereafter, the Secretary of Energy shall

14 provide a report to Congress on the progress of the Fed15 eral Government in meeting the goals established by this

16 section.

17 SEC. 204. INSULAR AREAS ENERGY SECURITY.

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

19 appropriations for certain insular areas of the United

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

21 1980 (48 U.S.C. 1492), is amended—

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

23 and inserting a semicolon;

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

25 following new paragraphs:
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1 ‘‘(5) electric power transmission and distribu2 tion lines in insular areas are inadequate to with3 stand damage caused by the hurricanes and ty4 phoons which frequently occur in insular areas and

5 such damage often costs millions of dollars to repair;

6 and

7 ‘‘(6) the refinement of renewable energy tech8 nologies since the publication of the 1982 Territorial

9 Energy Assessment prepared pursuant to subsection

10 (c) reveals the need to reassess the state of energy

11 production, consumption, infrastructure, reliance on

12 imported energy, opportunities for energy conserva13 tion and increased energy efficiency, and indigenous

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

15 (3) by amending subsection (e) to read as fol16 lows:

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

18 with the Secretary of Energy and the head of government

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

20 subsection (c) by—

21 ‘‘(A) updating the contents required by sub22 section (c);

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

24 insular areas with the objective of reducing, to the

25 extent feasible, their reliance on energy imports by
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1 the year 2010, increasing energy conservation and

2 energy efficiency, and maximizing, to the extent fea3 sible, use of indigenous energy sources; and

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

5 line plans for such insular areas with the objective

6 that the maximum percentage feasible of electric

7 power transmission and distribution lines in each in8 sular area be protected from damage caused by hur9 ricanes and typhoons.

10 ‘‘(2) Not later than December 31, 2005, the Sec11 retary of the Interior shall submit to Congress the updated

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

13 and

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

15 follows:

16 ‘‘(4) POWER LINE GRANTS FOR INSULAR

17 AREAS.—

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

19 Interior is authorized to make grants to govern20 ments of insular areas of the United States to

21 carry out eligible projects to protect electric

22 power transmission and distribution lines in

23 such insular areas from damage caused by hur24 ricanes and typhoons.
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1 ‘‘(B) ELIGIBLE PROJECTS.—The Secretary

2 may award grants under subparagraph (A) only

3 to governments of insular areas of the United

4 States that submit written project plans to the

5 Secretary for projects that meet the following

6 criteria:

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

8 electric power transmission and distribu9 tion lines located in 1 or more of the insu10 lar areas of the United States from dam11 age caused by hurricanes and typhoons.

12 ‘‘(ii) The project is likely to substan13 tially reduce the risk of future damage,

14 hardship, loss, or suffering.

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

16 problems that have been repetitive or that

17 pose a significant risk to public health and

18 safety.

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

20 more than the value of the reduction in di21 rect damage and other negative impacts

22 that the project is designed to prevent or

23 mitigate. The cost benefit analysis required

24 by this criterion shall be computed on a

25 net present value basis.
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1 ‘‘(v) The project design has taken into

2 consideration long-term changes to the

3 areas and persons it is designed to protect

4 and has manageable future maintenance

5 and modification requirements.

6 ‘‘(vi) The project plan includes an

7 analysis of a range of options to address

8 the problem it is designed to prevent or

9 mitigate and a justification for the selec10 tion of the project in light of that analysis.

11 ‘‘(vii) The applicant has demonstrated

12 to the Secretary that the matching funds

13 required by subparagraph (D) are avail14 able.

15 ‘‘(C) PRIORITY.—When making grants

16 under this paragraph, the Secretary shall give

17 priority to grants for projects which are likely

18 to—

19 ‘‘(i) have the greatest impact on re20 ducing future disaster losses; and

21 ‘‘(ii) best conform with plans that

22 have been approved by the Federal Govern23 ment or the government of the insular area

24 where the project is to be carried out for
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1 development or hazard mitigation for that

2 insular area.

3 ‘‘(D) MATCHING REQUIREMENT.—The

4 Federal share of the cost for a project for which

5 a grant is provided under this paragraph shall

6 not exceed 75 percent of the total cost of that

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

8 be provided in the form of cash or services.

9 ‘‘(E) TREATMENT OF FUNDS FOR CERTAIN

10 PURPOSES.—Grants provided under this para11 graph shall not be considered as income, a re12 source, or a duplicative program when deter13 mining eligibility or benefit levels for Federal

14 major disaster and emergency assistance.

15 ‘‘(F) AUTHORIZATION OF APPROPRIA16 TIONS.—There are authorized to be appro17 priated to carry out this paragraph $5,000,000

18 for each fiscal year beginning after the date of

19 the enactment of this paragraph.’’.

20 SEC. 205. USE OF PHOTOVOLTAIC ENERGY IN PUBLIC

21 BUILDINGS.

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

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

24 end the following:
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1 ‘‘§ 3177. Use of photovoltaic energy in public build2 ings

3 ‘‘(a) PHOTOVOLTAIC ENERGY COMMERCIALIZATION

4 PROGRAM.—

5 ‘‘(1) IN GENERAL.—The Administrator of Gen6 eral Services may establish a photovoltaic energy

7 commercialization program for the procurement and

8 installation of photovoltaic solar electric systems for

9 electric production in new and existing public build10 ings.

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

12 shall be to accomplish the following:

13 ‘‘(A) To accelerate the growth of a com14 mercially viable photovoltaic industry to make

15 this energy system available to the general pub16 lic as an option which can reduce the national

17 consumption of fossil fuel.

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

19 and costs of the Federal Government.

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

21 energy systems in 20,000 Federal buildings by

22 2010, as contained in the Federal Government’s

23 Million Solar Roof Initiative of 1997.

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

25 the Federal Government of life-cycle costing

26 and innovative procurement methods.
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1 ‘‘(E) To develop program performance

2 data to support policy decisions on future incen3 tive programs with respect to energy.

4 ‘‘(3) ACQUISITION OF PHOTOVOLTAIC SOLAR

5 ELECTRIC SYSTEMS.—

6 ‘‘(A) IN GENERAL.—The program shall

7 provide for the acquisition of photovoltaic solar

8 electric systems and associated storage capa9 bility for use in public buildings.

10 ‘‘(B) ACQUISITION LEVELS.—The acquisi11 tion of photovoltaic electric systems shall be at

12 a level substantial enough to allow use of low13 cost production techniques with at least 150

14 megawatts (peak) cumulative acquired during

15 the 5 years of the program.

16 ‘‘(4) ADMINISTRATION.—The Administrator

17 shall administer the program and shall—

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

19 may be appropriate to monitor and assess the

20 performance and operation of photovoltaic solar

21 electric systems installed pursuant to this sub22 section;

23 ‘‘(B) develop innovative procurement strat24 egies for the acquisition of such systems; and
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1 ‘‘(C) transmit to Congress an annual re2 port on the results of the program.

3 ‘‘(b) PHOTOVOLTAIC SYSTEMS EVALUATION PRO4 GRAM.—

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

6 after the date of enactment of this section, the Ad7 ministrator, in consultation with the Secretary of

8 Energy, shall establish a photovoltaic solar energy

9 systems evaluation program to evaluate such photo10 voltaic solar energy systems as are required in public

11 buildings.

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

13 photovoltaic solar energy systems under the pro14 gram, the Administrator shall ensure that such sys15 tems reflect the most advanced technology.

16 ‘‘(c) AUTHORIZATION OF APPROPRIATIONS.—

17 ‘‘(1) PHOTOVOLTAIC ENERGY COMMERCIALIZA18 TION PROGRAM.—There are authorized to be appro19 priated to carry out subsection (a) $50,000,000 for

20 each of fiscal years 2004 through 2008. Such sums

21 shall remain available until expended.

22 ‘‘(2) PHOTOVOLTAIC SYSTEMS EVALUATION

23 PROGRAM.—There are authorized to be appropriated

24 to carry out subsection (b) $10,000,000 for each of
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1 fiscal years 2004 through 2008. Such sums shall re2 main available until expended.’’.

3 (b) CONFORMING AMENDMENT.—The section anal4 ysis for such chapter is amended by inserting after the

5 item relating to section 3176 the following:

‘‘3177. Use of photovoltaic energy in public buildings.’’.

6 SEC. 206. GRANTS TO IMPROVE THE COMMERCIAL VALUE

7 OF FOREST BIOMASS FOR ELECTRIC ENERGY,

8 USEFUL HEAT, TRANSPORTATION FUELS, PE9 TROLEUM-BASED PRODUCT SUBSTITUTES,

10 AND OTHER COMMERCIAL PURPOSES.

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

12 (1) Thousands of communities in the United

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

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

15 managed by the Secretary of Agriculture and the

16 Secretary of the Interior are at risk of catastrophic

17 fire in the near future. The accumulation of heavy

18 forest fuel loads continues to increase as a result of

19 disease, insect infestations, and drought, further

20 raising the risk of fire each year.

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

22 across all land ownerships are at risk to higher than

23 normal mortality over the next 15 years from insect

24 infestation and disease. High levels of tree mortality

25 from insects and disease result in increased fire risk,
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1 loss of old growth, degraded watershed conditions,

2 and changes in species diversity and productivity, as

3 well as diminished fish and wildlife habitat and de4 creased timber values.

5 (3) Preventive treatments such as removing fuel

6 loading, ladder fuels, and hazard trees, planting

7 proper species mix and restoring and protecting

8 early successional habitat, and other specific restora9 tion treatments designed to reduce the susceptibility

10 of forest land, woodland, and rangeland to insect

11 outbreaks, disease, and catastrophic fire present the

12 greatest opportunity for long-term forest health by

13 creating a mosaic of species-mix and age distribu14 tion. Such prevention treatments are widely acknowl15 edged to be more successful and cost effective than

16 suppression treatments in the case of insects, dis17 ease, and fire.

18 (4) The byproducts of preventive treatment

19 (wood, brush, thinnings, chips, slash, and other haz20 ardous fuels) removed from forest lands, woodlands

21 and rangelands represent an abundant supply of bio22 mass for biomass-to-energy facilities and raw mate23 rial for business. There are currently few markets

24 for the extraordinary volumes of byproducts being
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1 generated as a result of the necessary large-scale

2 preventive treatment activities.

3 (5) The United States should—

4 (A) promote economic and entrepreneurial

5 opportunities in using byproducts removed

6 through preventive treatment activities related

7 to hazardous fuels reduction, disease, and insect

8 infestation; and

9 (B) develop and expand markets for tradi10 tionally underused wood and biomass as an out11 let for byproducts of preventive treatment ac12 tivities.

13 (b) DEFINITIONS.—In this section:

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

15 trees and woody plants, including limbs, tops, nee16 dles, and other woody parts, and byproducts of pre17 ventive treatment, such as wood, brush, thinnings,

18 chips, and slash, that are removed—

19 (A) to reduce hazardous fuels; or

20 (B) to reduce the risk of or to contain dis21 ease or insect infestation.

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

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

24 the Indian Self-Determination and Education Assist25 ance Act (25 U.S.C. 450b(e)).
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1 (3) PERSON.—The term ‘‘person’’ includes—

2 (A) an individual;

3 (B) a community (as determined by the

4 Secretary concerned);

5 (C) an Indian tribe;

6 (D) a small business, micro-business, or a

7 corporation that is incorporated in the United

8 States; and

9 (E) a nonprofit organization.

10 (4) PREFERRED COMMUNITY.—The term ‘‘pre11 ferred community’’ means—

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

13 other similar unit of local government (as deter14 mined by the Secretary concerned) that—

15 (i) has a population of not more than

16 50,000 individuals; and

17 (ii) the Secretary concerned, in the

18 sole discretion of the Secretary concerned,

19 determines contains or is located near

20 land, the condition of which is at signifi21 cant risk of catastrophic wildfire, disease,

22 or insect infestation or which suffers from

23 disease or insect infestation; or

24 (B) any county that—
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1 (i) is not contained within a metro2 politan statistical area; and

3 (ii) the Secretary concerned, in the

4 sole discretion of the Secretary concerned,

5 determines contains or is located near

6 land, the condition of which is at signifi7 cant risk of catastrophic wildfire, disease,

8 or insect infestation or which suffers from

9 disease or insect infestation.

10 (5) SECRETARY CONCERNED.—The term ‘‘Sec11 retary concerned’’ means—

12 (A) the Secretary of Agriculture with re13 spect to National Forest System lands; and

14 (B) the Secretary of the Interior with re15 spect to Federal lands under the jurisdiction of

16 the Secretary of the Interior and Indian lands.

17 (c) BIOMASS COMMERCIAL USE GRANT PROGRAM.—

18 (1) IN GENERAL.—The Secretary concerned

19 may make grants to any person that owns or oper20 ates a facility that uses biomass as a raw material

21 to produce electric energy, sensible heat, transpor22 tation fuels, or substitutes for petroleum-based prod23 ucts to offset the costs incurred to purchase biomass

24 for use by such facility.
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1 (2) GRANT AMOUNTS.—A grant under this sub2 section may not exceed $20 per green ton of biomass

3 delivered.

4 (3) MONITORING OF GRANT RECIPIENT ACTIVI5 TIES.—As a condition of a grant under this sub6 section, the grant recipient shall keep such records

7 as the Secretary concerned may require to fully and

8 correctly disclose the use of the grant funds and all

9 transactions involved in the purchase of biomass.

10 Upon notice by a representative of the Secretary

11 concerned, the grant recipient shall afford the rep12 resentative reasonable access to the facility that pur13 chases or uses biomass and an opportunity to exam14 ine the inventory and records of the facility.

15 (d) IMPROVED BIOMASS USE GRANT PROGRAM.—

16 (1) IN GENERAL.—The Secretary concerned

17 may make grants to persons to offset the cost of

18 projects to develop or research opportunities to im19 prove the use of, or add value to, biomass. In mak20 ing such grants, the Secretary concerned shall give

21 preference to persons in preferred communities.

22 (2) SELECTION.—The Secretary concerned shall

23 select a grant recipient under paragraph (1) after

24 giving consideration to the anticipated public bene25 fits of the project, including the potential to develop
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1 thermal or electric energy resources or affordable en2 ergy, opportunities for the creation or expansion of

3 small businesses and micro-businesses, and the po4 tential for new job creation.

5 (3) GRANT AMOUNT.—A grant under this sub6 section may not exceed $500,000.

7 (e) AUTHORIZATION OF APPROPRIATIONS.—There

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

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

10 section.

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

12 Secretary of Agriculture, in consultation with the Sec13 retary of the Interior, shall submit to the Committee on

14 Energy and Natural Resources and the Committee on Ag15 riculture, Nutrition, and Forestry of the Senate and the

16 Committee on Resources, the Committee on Energy and

17 Commerce, and the Committee on Agriculture of the

18 House of Representatives a report describing the results

19 of the grant programs authorized by this section. The re20 port shall include the following:

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

22 use of biomass by persons that receive grants under

23 this section.
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1 (2) The distance between the land from which

2 the biomass was removed and the facility that used

3 the biomass.

4 (3) The economic impacts, particularly new job

5 creation, resulting from the grants to and operation

6 of the eligible operations.

7 SEC. 207. BIOBASED PRODUCTS.

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

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

10 by inserting ‘‘or such items that comply with the regula11 tions issued under section 103 of Public Law 100–556 (42

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

13 Subtitle B—Geothermal Energy

14 SEC. 211. SHORT TITLE.

15 This subtitle may be cited as the ‘‘John Rishel Geo16 thermal Steam Act Amendments of 2004’’.

17 SEC. 212. COMPETITIVE LEASE SALE REQUIREMENTS.

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

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

20 ‘‘SEC. 4. LEASING PROCEDURES.

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

22 nominations of lands to be leased at any time from quali23 fied companies and individuals under this Act.

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

25 Secretary shall hold a competitive lease sale at least once
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1 every 2 years for lands in a State which has nominations

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

3 available for leasing.

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

5 shall make available for a period of 2 years for non6 competitive leasing any tract for which a competitive lease

7 sale is held, but for which the Secretary does not receive

8 any bids in a competitive lease sale.

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

10 available to the Secretary indicating a geothermal resource

11 that could be produced as 1 unit can reasonably be ex12 pected to underlie more than 1 parcel to be offered in a

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

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

15 sale.

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

17 2003.—It shall be a priority for the Secretary of the Inte18 rior, and for the Secretary of Agriculture with respect to

19 National Forest Systems lands, to ensure timely comple20 tion of administrative actions necessary to process applica21 tions for geothermal leasing pending on April 1, 2003.

22 Such an application, and any lease issued pursuant to

23 such an application—
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1 ‘‘(1) except as provided in paragraph (2), shall

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

3 2003; or

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

5 subject to this section as in effect on the effective

6 date of this paragraph.’’.

7 SEC. 213. DIRECT USE.

8 (a) FEES FOR DIRECT USE.—Section 5 of the Geo9 thermal Steam Act of 1970 (30 U.S.C. 1004) is

10 amended—

11 (1) in paragraph (c) by redesignating subpara12 graphs (1) and (2) as subparagraphs (A) and (B);

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

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

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

16 ‘‘SEC. 5.’’; and

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

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

19 (a)(1), with respect to the direct use of geothermal re20 sources for purposes other than the commercial generation

21 of electricity, the Secretary of the Interior shall establish

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

23 schedule in lieu of royalties based upon the total amount

24 of the geothermal resources used. The schedule of fees

25 shall ensure that there is a fair return to the public for
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1 the use of a geothermal resource based upon comparable

2 fees charged for direct use of geothermal resources by

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

4 local government for public purposes there shall be no roy5 alty and the fee charged shall be nominal. Leases in exist6 ence on the date of enactment of the Energy Policy Act

7 of 2003 shall be modified in order to reflect the provisions

8 of this subsection.’’.

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

10 Geothermal Steam Act of 1970 (30 U.S.C. 1003) is fur11 ther amended by adding at the end the following:

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

13 RESOURCES.—Lands leased under this Act exclusively for

14 direct use of geothermal resources shall be leased to any

15 qualified applicant who first applies for such a lease under

16 regulations issued by the Secretary, if—

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

18 lands proposed for leasing 60 days before the date

19 of the issuance of the lease; and

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

21 day period beginning on the date of such publication

22 any nomination to include the lands concerned in the

23 next competitive lease sale.

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

25 A geothermal lease for the direct use of geothermal re-
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1 sources shall embrace not more than the amount of acre2 age determined by the Secretary to be reasonably nec3 essary for such proposed utilization.’’.

4 (c) EXISTING LEASES WITH A DIRECT USE FACIL5 ITY.—

6 (1) APPLICATION TO CONVERT.—Any lessee

7 under a lease under the Geothermal Steam Act of

8 1970 that was issued before the date of the enact9 ment of this Act may apply to the Secretary of the

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

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

12 to a lease for direct utilization of geothermal re13 sources in accordance with the amendments made by

14 this section.

15 (2) CONVERSION.—The Secretary shall approve

16 such an application and convert such a lease to a

17 lease in accordance with the amendments by not

18 later than 180 days after receipt of such application,

19 unless the Secretary determines that the applicant is

20 not a qualified applicant with respect to the lease.

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

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

23 with respect to payments under a lease converted

24 under this subsection that are due and owing to the

25 United States on or after July 16, 2003.
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1 SEC. 214. ROYALTIES AND NEAR-TERM PRODUCTION IN2 CENTIVES.

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

4 Act of 1970 (30 U.S.C. 1004) is further amended—

5 (1) in subsection (a) by striking paragraph (1)

6 and inserting the following:

7 ‘‘(1) a royalty on electricity produced using geo8 thermal steam and associated geothermal resources,

9 other than direct use of geothermal resources, that

10 shall be—

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

12 than 2.5 percent of the gross proceeds from the

13 sale of electricity produced from such resources

14 during the first 10 years of production under

15 the lease; and

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

17 percent of the gross proceeds from the sale of

18 electricity produced from such resources during

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

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

21 ‘‘(c) FINAL REGULATION ESTABLISHING ROYALTY

22 RATES.—In issuing any final regulation establishing roy23 alty rates under this section, the Secretary shall seek—

24 ‘‘(1) to provide lessees a simplified administra25 tive system;

26 ‘‘(2) to encourage new development; and
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1 ‘‘(3) to achieve the same long-term level of roy2 alty revenues to States and counties as the regula3 tion in effect on the date of enactment of this sub4 section.

5 ‘‘(d) CREDITS FOR IN-KIND PAYMENTS OF ELEC6 TRICITY.—The Secretary may provide to a lessee a credit

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

8 to the value of electricity provided under contract to a

9 State or county government that is entitled to a portion

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

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

12 6 of the Mineral Leasing Act for Acquired Lands (30

13 U.S.C. 355), if—

14 ‘‘(1) the Secretary has approved in advance the

15 contract between the lessee and the State or county

16 government for such in-kind payments;

17 ‘‘(2) the contract establishes a specific method18 ology to determine the value of such credits; and

19 ‘‘(3) the maximum credit will be equal to the

20 royalty value owed to the State or county that is a

21 party to the contract and the electricity received will

22 serve as the royalty payment from the Federal Gov23 ernment to that entity.’’.

24 (b) DISPOSAL OF MONEYS FROM SALES, BONUSES,

25 ROYALTIES, AND RENTALS.—Section 20 of the Geo-
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1 thermal Steam Act of 1970 (30 U.S.C. 1019) is amended

2 to read as follows:

3 ‘‘SEC. 20. DISPOSAL OF MONEYS FROM SALES, BONUSES,

4 RENTALS, AND ROYALTIES.

5 ‘‘(a) IN GENERAL.—Except with respect to lands in

6 the State of Alaska, all monies received by the United

7 States from sales, bonuses, rentals, and royalties under

8 this Act shall be paid into the Treasury of the United

9 States. Of amounts deposited under this subsection, sub10 ject to the provisions of section 35 of the Mineral Leasing

11 Act (30 U.S.C. 191(b)) and section 5(a)(2) of this Act—

12 ‘‘(1) 50 percent shall be paid to the State with13 in the boundaries of which the leased lands or geo14 thermal resources are or were located; and

15 ‘‘(2) 25 percent shall be paid to the County

16 within the boundaries of which the leased lands or

17 geothermal resources are or were located.

18 ‘‘(b) USE OF PAYMENTS.—Amounts paid to a State

19 or county under subsection (a) shall be used consistent

20 with the terms of section 35 of the Mineral Leasing Act

21 (30 U.S.C. 191).’’.

22 (c) NEAR-TERM PRODUCTION INCENTIVE FOR EX23 ISTING LEASES.—

24 (1) IN GENERAL.—Notwithstanding section

25 5(a) of the Geothermal Steam Act of 1970, the roy-
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1 alty required to be paid shall be 50 percent of the

2 amount of the royalty otherwise required, on any

3 lease issued before the date of enactment of this Act

4 that does not convert to new royalty terms under

5 subsection (e)—

6 (A) with respect to commercial production

7 of energy from a facility that begins such pro8 duction in the 6-year period beginning on the

9 date of the enactment of this Act; or

10 (B) on qualified expansion geothermal en11 ergy.

12 (2) 4-YEAR APPLICATION.—Paragraph (1) ap13 plies only to new commercial production of energy

14 from a facility in the first 4 years of such produc15 tion.

16 (d) DEFINITION OF QUALIFIED EXPANSION GEO17 THERMAL ENERGY.—In this section, the term ‘‘qualified

18 expansion geothermal energy’’ means geothermal energy

19 produced from a generation facility for which—

20 (1) the production is increased by more than 10

21 percent as a result of expansion of the facility car22 ried out in the 6-year period beginning on the date

23 of the enactment of this Act; and

24 (2) such production increase is greater than 10

25 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 the date

8 of enactment of this Act for any lease entered into before,

9 on, or after the 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 ‘‘SEC. 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. CORPS OF ENGINEERS HYDROPOWER OPERATION

17 AND MAINTENANCE FUNDING.

18 (a) IN GENERAL.—Notwithstanding the last sentence

19 of section 5 of the Act of December 22, 1944 (commonly

20 known as the ‘‘Flood Control Act of 1944’’) (58 Stat. 890,

21 chapter 665; 16 U.S.C. 825s), the 11th paragraph under

22 the heading ‘‘OFFICE OF THE SECRETARY’’ in title I of

23 the Act of October 12, 1949 (63 Stat. 767, chapter 680;

24 16 U.S.C. 825s–1), the matter under the heading ‘‘CON25 TINUING FUND, SOUTHEASTERN POWER ADMINISTRA-
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1 TION’’ in title I of the Act of August 31, 1951 (65 Stat.

2 249, chapter 375; 16 U.S.C. 825s–2), section 3302 of title

3 31, United States Code, or any other law, and without

4 further appropriation or fiscal year limitation, for fiscal

5 year 2004, the Administrator of the Southeastern Power

6 Administration, the Administrator of the Southwestern

7 Power Administration, and the Administrator of the West8 ern Area Power Administration may credit to the Sec9 retary of the Army (referred to in this section as the ‘‘Sec10 retary’’), receipts, in an amount determined under sub11 section (c), from the sale of power and related services.

12 (b) USE OF FUNDS.—

13 (1) IN GENERAL.—The Secretary—

14 (A) shall, except as provided in paragraph

15 (2), use the amounts credited under subsection

16 (a) to fund only the Corps of Engineers annual

17 operation and maintenance activities that are

18 allocated exclusively to the power function and

19 assigned to the respective power marketing ad20 ministration and respective project system as

21 applicable for repayment; and

22 (B) shall not use the amounts for any

23 costs allocated to non-power functions of Corps

24 of Engineer operations.
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1 (2) EXCEPTION.—The Secretary may use

2 amounts credited by the Southwestern Power Ad3 ministration under subsection (a) for capital and

4 nonrecurring costs.

5 (c) AMOUNT.—The amount of the receipts credited

6 under subsection (a) shall be equal to such amount as—

7 (1) the Secretary of the Army requests; and

8 (2) the appropriate Administrator, in consulta9 tion with the power customers of the Administrator’s

10 power marketing administration, determines to be

11 appropriate to apply to the costs referred to in sub12 section (b).

13 (d) APPLICABLE LAW.—The amounts credited under

14 subsection (a) are exempt from sequestration under the

15 Balanced Budget and Emergency Deficit Control Act of

16 1985 (2 U.S.C. 901 et seq.).

17 SEC. 247. LIMITATION ON CERTAIN CHARGES ASSESSED TO

18 THE FLINT CREEK PROJECT, MONTANA.

19 Notwithstanding section 10(e)(1) of the Federal

20 Power Act (16 U.S.C. 803(e)(1)) or any other provision

21 of Federal law providing for the payment to the United

22 States of charges for the use of Federal land for the pur23 poses of operating and maintaining a hydroelectric devel24 opment licensed by the Federal Energy Regulatory Com25 mission (referred to in this section as the ‘‘Commission’’),
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1 any political subdivision of the State of Montana that

2 holds a license for Commission Project No. 1473 in Gran3 ite and Deer Lodge Counties, Montana, shall be required

4 to pay to the United States for the use of that land for

5 each year during which the political subdivision continues

6 to hold the license for the project, the lesser of—

7 (1) $25,000; or

8 (2) such annual charge as the Commission or

9 any other department or agency of the Federal Gov10 ernment may assess.

11 SEC. 248. REINSTATEMENT AND TRANSFER.

12 (a) REINSTATEMENT AND TRANSFER OF FEDERAL

13 LICENSE FOR PROJECT NUMBERED 2696.—Notwith14 standing section 8 of the Federal Power Act (16 U.S.C.

15 801) or any other provision of such Act, the Federal En16 ergy Regulatory Commission shall reinstate the license for

17 Project No. 2696 and transfer the license, without delay

18 or the institution of any proceedings, to the Town of

19 Stuyvesant, New York, holder of Federal Energy Regu20 latory Commission Preliminary Permit No. 11787, within

21 30 days after the date of enactment of this Act.

22 (b) HYDROELECTRIC INCENTIVES.—Project No.

23 2696 shall be entitled to the full benefit of any Federal

24 legislation that promotes hydroelectric development that
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1 is enacted within 2 years either before or after the date

2 of enactment of this Act.

3 (c) PROJECT DEVELOPMENT AND FINANCING.—The

4 Federal Energy Regulatory Commission shall permit the

5 Town of Stuyvesant to add as a colicensee any private or

6 public entity or entities to the reinstated license at any

7 time, notwithstanding the issuance of a preliminary permit

8 to the Town of Stuyvesant and any consideration of mu9 nicipal preference. The town shall be entitled, to the extent

10 that funds are available or shall be made available, to re11 ceive loans under sections 402 and 403 of the Public Util12 ity Regulatory Policies Act of 1978 (16 U.S.C. 2702 and

13 2703), or similar programs, for the reimbursement of fea14 sibility studies or development costs, or both, incurred

15 since January 1, 2001, through and including December

16 31, 2006. All power produced by the project shall be

17 deemed incremental hydropower for purpose of qualifying

18 for any energy credit or similar benefits.
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1 TITLE III—OIL AND GAS

2 Subtitle A—Petroleum Reserve and

3 Home Heating Oil

4 SEC. 301. PERMANENT AUTHORITY TO OPERATE THE STRA5 TEGIC PETROLEUM RESERVE AND OTHER

6 ENERGY PROGRAMS.

7 (a) AMENDMENT TO TITLE I OF THE ENERGY POL8 ICY AND CONSERVATION ACT.—Title I of the Energy Pol9 icy and Conservation Act (42 U.S.C. 6211 et seq.) is

10 amended—

11 (1) by striking section 166 (42 U.S.C. 6246)

12 and inserting the following:

13 ‘‘AUTHORIZATION OF APPROPRIATIONS

14 ‘‘SEC. 166. There are authorized to be appropriated

15 to the Secretary such sums as may be necessary to carry

16 out this part and part D, to remain available until ex17 pended.’’;

18 (2) by striking section 186 (42 U.S.C. 6250e);

19 and

20 (3) by striking part E (42 U.S.C. 6251; relat21 ing to the expiration of title I of the Act).

22 (b) AMENDMENT TO TITLE II OF THE ENERGY POL23 ICY AND CONSERVATION ACT.—Title II of the Energy

24 Policy and Conservation Act (42 U.S.C. 6271 et seq.) is

25 amended—
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1 (1) by inserting before section 273 (42 U.S.C.

2 6283) the following:

3 ‘‘PART C—SUMMER FILL AND FUEL BUDGETING

4 PROGRAMS’’;

5 (2) by striking section 273(e) (42 U.S.C.

6 6283(e); relating to the expiration of summer fill

7 and fuel budgeting programs); and

8 (3) by striking part D (42 U.S.C. 6285; relat9 ing to the expiration of title II of the Act).

10 (c) TECHNICAL AMENDMENTS.—The table of con11 tents for the Energy Policy and Conservation Act is

12 amended—

13 (1) by inserting after the items relating to part

14 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.’’;

15 (2) by amending the items relating to part C of

16 title II to read as follows:

‘‘PART C—SUMMER FILL AND FUEL BUDGETING PROGRAMS

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

17 (3) by striking the items relating to part D of

18 title II.

19 (d) AMENDMENT TO THE ENERGY POLICY AND CON20 SERVATION ACT.—Section 183(b)(1) of the Energy Policy
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1 and Conservation Act (42 U.S.C. 6250(b)(1)) is amended

2 by striking all after ‘‘increases’’ through to ‘‘mid-October

3 through March’’ and inserting ‘‘by more than 60 percent

4 over its 5-year rolling average for the months of mid-Octo5 ber through March (considered as a heating season aver6 age)’’.

7 (e) FILL STRATEGIC PETROLEUM RESERVE TO CA8 PACITY.—The Secretary of Energy shall, as expeditiously

9 as practicable, acquire petroleum in amounts sufficient to

10 fill the Strategic Petroleum Reserve to the 1,000,000,000

11 barrel capacity authorized under section 154(a) of the En12 ergy Policy and Conservation Act (42 U.S.C. 6234(a)),

13 consistent with the provisions of sections 159 and 160 of

14 such Act (42 U.S.C. 6239, 6240).

15 SEC. 302. NATIONAL OILHEAT RESEARCH ALLIANCE.

16 Section 713 of the Energy Act of 2000 (42 U.S.C.

17 6201 note) is amended by striking ‘‘4’’ and inserting ‘‘9’’.

18 Subtitle B—Production Incentives

19 SEC. 311. DEFINITION OF SECRETARY.

20 In this subtitle, the term ‘‘Secretary’’ means the Sec21 retary of the Interior.

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

23 (a) APPLICABILITY OF SECTION.—Notwithstanding

24 any other provision of law, this section applies to all roy25 alty in-kind accepted by the Secretary on or after the date
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1 of enactment of this Act under any Federal oil or gas lease

2 or permit under section 36 of the Mineral Leasing Act

3 (30 U.S.C. 192), section 27 of the Outer Continental Shelf

4 Lands Act (43 U.S.C. 1353), or any other Federal law

5 governing leasing of Federal land for oil and gas develop6 ment.

7 (b) TERMS AND CONDITIONS.—All royalty accruing

8 to the United States shall, on the demand of the Sec9 retary, be paid in oil or gas. If the Secretary makes such

10 a demand, the following provisions apply to such payment:

11 (1) SATISFACTION OF ROYALTY OBLIGATION.—

12 Delivery by, or on behalf of, the lessee of the royalty

13 amount and quality due under the lease satisfies the

14 lessee’s royalty obligation for the amount delivered,

15 except that transportation and processing reimburse16 ments paid to, or deductions claimed by, the lessee

17 shall be subject to review and audit.

18 (2) MARKETABLE CONDITION.—

19 (A) IN GENERAL.—Royalty production

20 shall be placed in marketable condition by the

21 lessee at no cost to the United States.

22 (B) DEFINITION OF MARKETABLE CONDI23 TION.—In this paragraph, the term ‘‘in market24 able condition’’ means sufficiently free from im25 purities and otherwise in a condition that the
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1 royalty production will be accepted by a pur2 chaser under a sales contract typical of the field

3 or area in which the royalty production was

4 produced.

5 (3) DISPOSITION BY THE SECRETARY.—The

6 Secretary may—

7 (A) sell or otherwise dispose of any royalty

8 production taken in-kind (other than oil or gas

9 transferred under section 27(a)(3) of the Outer

10 Continental Shelf Lands Act (43 U.S.C.

11 1353(a)(3)) for not less than the market price;

12 and

13 (B) transport or process (or both) any roy14 alty production taken in-kind.

15 (4) RETENTION BY THE SECRETARY.—The Sec16 retary may, notwithstanding section 3302 of title 31,

17 United States Code, retain and use a portion of the

18 revenues from the sale of oil and gas taken in-kind

19 that otherwise would be deposited to miscellaneous

20 receipts, without regard to fiscal year limitation, or

21 may use oil or gas received as royalty taken in-kind

22 (in this paragraph referred to as ‘‘royalty produc23 tion’’) to pay the cost of—

24 (A) transporting the royalty production;

25 (B) processing the royalty production;
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1 (C) disposing of the royalty production; or

2 (D) any combination of transporting, proc3 essing, and disposing of the royalty production.

4 (5) LIMITATION.—

5 (A) IN GENERAL.—Except as provided in

6 subparagraph (B), the Secretary may not use

7 revenues from the sale of oil and gas taken in8 kind to pay for personnel, travel, or other ad9 ministrative costs of the Federal Government.

10 (B) EXCEPTION.—Notwithstanding sub11 paragraph (A), the Secretary may use a portion

12 of the revenues from the sale of oil taken in13 kind, without fiscal year limitation, to pay

14 transportation costs, salaries, and other admin15 istrative costs directly related to filling the

16 Strategic Petroleum Reserve.

17 (c) REIMBURSEMENT OF COST.—If the lessee, pursu18 ant to an agreement with the United States or as provided

19 in the lease, processes the royalty gas or delivers the roy20 alty oil or gas at a point not on or adjacent to the lease

21 area, the Secretary shall—

22 (1) reimburse the lessee for the reasonable costs

23 of transportation (not including gathering) from the

24 lease to the point of delivery or for processing costs;

25 or
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1 (2) allow the lessee to deduct the transportation

2 or processing costs in reporting and paying royalties

3 in-value for other Federal oil and gas leases.

4 (d) BENEFIT TO THE UNITED STATES REQUIRED.—

5 The Secretary may receive oil or gas royalties in-kind only

6 if the Secretary determines that receiving royalties in-kind

7 provides benefits to the United States that are greater

8 than or equal to the benefits that are likely to have been

9 received had royalties been taken in-value.

10 (e) REPORTS.—

11 (1) IN GENERAL.—Not later than September

12 30, 2005, the Secretary shall submit to Congress a

13 report that addresses—

14 (A) actions taken to develop businesses

15 processes and automated systems to fully sup16 port the royalty-in-kind capability to be used in

17 tandem with the royalty-in-value approach in

18 managing Federal oil and gas revenue; and

19 (B) future royalty-in-kind businesses oper20 ation plans and objectives.

21 (2) REPORTS ON OIL OR GAS ROYALTIES TAKEN

22 IN-KIND.—For each of fiscal years 2004 through

23 2013 in which the United States takes oil or gas

24 royalties in-kind from production in any State or

25 from the outer Continental Shelf, excluding royalties
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1 taken in-kind and sold to refineries under subsection

2 (h), the Secretary shall submit to Congress a report

3 that describes—

4 (A) the methodology or methodologies used

5 by the Secretary to determine compliance with

6 subsection (d), including the performance

7 standard for comparing amounts received by

8 the United States derived from royalties in-kind

9 to amounts likely to have been received had roy10 alties been taken in-value;

11 (B) an explanation of the evaluation that

12 led the Secretary to take royalties in-kind from

13 a lease or group of leases, including the ex14 pected revenue effect of taking royalties in-kind;

15 (C) actual amounts received by the United

16 States derived from taking royalties in-kind and

17 costs and savings incurred by the United States

18 associated with taking royalties in-kind, includ19 ing, but not limited to, administrative savings

20 and any new or increased administrative costs;

21 and

22 (D) an evaluation of other relevant public

23 benefits or detriments associated with taking

24 royalties in-kind.

25 (f) DEDUCTION OF EXPENSES.—
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1 (1) IN GENERAL.—Before making payments

2 under section 35 of the Mineral Leasing Act (30

3 U.S.C. 191) or section 8(g) of the Outer Continental

4 Shelf Lands Act (43 U.S.C. 1337(g)) of revenues

5 derived from the sale of royalty production taken in6 kind from a lease, the Secretary shall deduct

7 amounts paid or deducted under subsections (b)(4)

8 and (c) and deposit the amount of the deductions in

9 the miscellaneous receipts of the United States

10 Treasury.

11 (2) ACCOUNTING FOR DEDUCTIONS.—When the

12 Secretary allows the lessee to deduct transportation

13 or processing costs under subsection (c), the Sec14 retary may not reduce any payments to recipients of

15 revenues derived from any other Federal oil and gas

16 lease as a consequence of that deduction.

17 (g) CONSULTATION WITH STATES.—The

18 Secretary—

19 (1) shall consult with a State before conducting

20 a royalty in-kind program under this subtitle within

21 the State, and may delegate management of any

22 portion of the Federal royalty in-kind program to

23 the State except as otherwise prohibited by Federal

24 law; and
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1 (2) shall consult annually with any State from

2 which Federal oil or gas royalty is being taken in3 kind to ensure, to the maximum extent practicable,

4 that the royalty in-kind program provides revenues

5 to the State greater than or equal to those likely to

6 have been received had royalties been taken in-value.

7 (h) SMALL REFINERIES.—

8 (1) PREFERENCE.—If the Secretary finds that

9 sufficient supplies of crude oil are not available in

10 the open market to refineries that do not have their

11 own source of supply for crude oil, the Secretary

12 may grant preference to such refineries in the sale

13 of any royalty oil accruing or reserved to the United

14 States under Federal oil and gas leases issued under

15 any mineral leasing law, for processing or use in

16 such refineries at private sale at not less than the

17 market price.

18 (2) PRORATION AMONG REFINERIES IN PRO19 DUCTION AREA.—In disposing of oil under this sub20 section, the Secretary of Energy may, at the discre21 tion of the Secretary, prorate the oil among refin22 eries described in paragraph (1) in the area in which

23 the oil is produced.

24 (i) DISPOSITION TO FEDERAL AGENCIES.—
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1 (1) ONSHORE ROYALTY.—Any royalty oil or gas

2 taken by the Secretary in-kind from onshore oil and

3 gas leases may be sold at not less than the market

4 price to any Federal agency.

5 (2) OFFSHORE ROYALTY.—Any royalty oil or

6 gas taken in-kind from a Federal oil or gas lease on

7 the outer Continental Shelf may be disposed of only

8 under section 27 of the Outer Continental Shelf

9 Lands Act (43 U.S.C. 1353).

10 (j) FEDERAL LOW-INCOME ENERGY ASSISTANCE

11 PROGRAMS.—

12 (1) PREFERENCE.—In disposing of royalty oil

13 or gas taken in-kind under this section, the Sec14 retary may grant a preference to any person, includ15 ing any Federal or State agency, for the purpose of

16 providing additional resources to any Federal low-in17 come energy assistance program.

18 (2) REPORT.—Not later than 3 years after the

19 date of enactment of this Act, the Secretary shall

20 transmit a report to Congress, assessing the effec21 tiveness of granting preferences specified in para22 graph (1) and providing a specific recommendation

23 on the continuation of authority to grant pref24 erences.
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1 SEC. 313. MARGINAL PROPERTY PRODUCTION INCENTIVES.

2 (a) DEFINITION OF MARGINAL PROPERTY.—Until

3 such time as the Secretary issues regulations under sub4 section (e) that prescribe a different definition, in this sec5 tion the term ‘‘marginal property’’ means an onshore unit,

6 communitization agreement, or lease not within a unit or

7 communitization agreement, that produces on average the

8 combined equivalent of less than 15 barrels of oil per well

9 per day or 90 million British thermal units of gas per well

10 per day calculated based on the average over the 3 most

11 recent production months, including only wells that

12 produce on more than half of the days during those 3 pro13 duction months.

14 (b) CONDITIONS FOR REDUCTION OF ROYALTY

15 RATE.—Until such time as the Secretary issues regula16 tions under subsection (e) that prescribe different thresh17 olds or standards, the Secretary shall reduce the royalty

18 rate on—

19 (1) oil production from marginal properties as

20 prescribed in subsection (c) when the spot price of

21 West Texas Intermediate crude oil at Cushing, Okla22 homa, is, on average, less than $15 per barrel for 90

23 consecutive trading days; and

24 (2) gas production from marginal properties as

25 prescribed in subsection (c) when the spot price of

26 natural gas delivered at Henry Hub, Louisiana, is,
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1 on average, less than $2.00 per million British ther2 mal units for 90 consecutive trading days.

3 (c) REDUCED ROYALTY RATE.—

4 (1) IN GENERAL.—When a marginal property

5 meets the conditions specified in subsection (b), the

6 royalty rate shall be the lesser of—

7 (A) 5 percent; or

8 (B) the applicable rate under any other

9 statutory or regulatory royalty relief provision

10 that applies to the affected production.

11 (2) PERIOD OF EFFECTIVENESS.—The reduced

12 royalty rate under this subsection shall be effective

13 beginning on the first day of the production month

14 following the date on which the applicable condition

15 specified in subsection (b) is met.

16 (d) TERMINATION OF REDUCED ROYALTY RATE.—

17 A royalty rate prescribed in subsection (d)(1)(A) shall

18 terminate—

19 (1) with respect to oil production from a mar20 ginal property, on the first day of the production

21 month following the date on which—

22 (A) the spot price of West Texas Inter23 mediate crude oil at Cushing, Oklahoma, on av24 erage, exceeds $15 per barrel for 90 consecutive

25 trading days; or
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1 (B) the property no longer qualifies as a

2 marginal property; and

3 (2) with respect to gas production from a mar4 ginal property, on the first day of the production

5 month following the date on which—

6 (A) the spot price of natural gas delivered

7 at Henry Hub, Louisiana, on average, exceeds

8 $2.00 per million British thermal units for 90

9 consecutive trading days; or

10 (B) the property no longer qualifies as a

11 marginal property.

12 (e) REGULATIONS PRESCRIBING DIFFERENT RE13 LIEF.—

14 (1) DISCRETIONARY REGULATIONS.—The Sec15 retary may by regulation prescribe different param16 eters, standards, and requirements for, and a dif17 ferent degree or extent of, royalty relief for marginal

18 properties in lieu of those prescribed in subsections

19 (a) through (d).

20 (2) MANDATORY REGULATIONS.—Not later

21 than 18 months after the date of enactment of this

22 Act, the Secretary shall by regulation—

23 (A) prescribe standards and requirements

24 for, and the extent of royalty relief for, mar-
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1 ginal properties for oil and gas leases on the

2 outer Continental Shelf; and

3 (B) define what constitutes a marginal

4 property on the outer Continental Shelf for pur5 poses of this section.

6 (3) CONSIDERATIONS.—In promulgating regu7 lations under this subsection, the Secretary may

8 consider—

9 (A) oil and gas prices and market trends;

10 (B) production costs;

11 (C) abandonment costs;

12 (D) Federal and State tax provisions and

13 the effects of those provisions on production ec14 onomics;

15 (E) other royalty relief programs;

16 (F) regional differences in average well17 head prices;

18 (G) national energy security issues; and

19 (H) other relevant matters.

20 (f) SAVINGS PROVISION.—Nothing in this section

21 prevents a lessee from receiving royalty relief or a royalty

22 reduction pursuant to any other law (including a regula23 tion) that provides more relief than the amounts provided

24 by this section.
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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 Act, in addition

15 to any other regulations that may provide royalty in16 centives for natural gas produced from deep wells on

17 oil and gas leases issued pursuant to the Outer Con18 tinental Shelf Lands Act (43 U.S.C. 1331 et seq.),

19 the Secretary shall issue regulations, in accordance

20 with the regulations published pursuant to sub21 section (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 SEC. 315. ROYALTY RELIEF FOR DEEP WATER PRODUC11 TION.

12 (a) IN GENERAL.—For all tracts located in water

13 depths of greater than 400 meters in the Western and

14 Central Planning Area of the Gulf of Mexico, including

15 the portion of the Eastern Planning Area of the Gulf of

16 Mexico encompassing whole lease blocks lying west of 87

17 degrees, 30 minutes West longitude, any oil or gas lease

18 sale under the Outer Continental Shelf Lands Act (43

19 U.S.C. 1331 et seq.) occurring within 5 years after the

20 date of enactment of this Act shall use the bidding system

21 authorized in section 8(a)(1)(H) of the Outer Continental

22 Shelf Lands Act (43 U.S.C. 1337(a)(1)(H)), except that

23 the suspension of royalties shall be set at a volume of not

24 less than—
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1 (1) 5,000,000 barrels of oil equivalent for each

2 lease in water depths of 400 to 800 meters;

3 (2) 9,000,000 barrels of oil equivalent for each

4 lease in water depths of 800 to 1,600 meters; and

5 (3) 12,000,000 barrels of oil equivalent for each

6 lease in water depths greater than 1,600 meters.

7 (b) LIMITATION.—The Secretary may place limita8 tions on the suspension of royalty relief granted based on

9 market price.

10 SEC. 316. ALASKA OFFSHORE ROYALTY SUSPENSION.

11 Section 8(a)(3)(B) of the Outer Continental Shelf

12 Lands Act (43 U.S.C. 1337(a)(3)(B)) is amended by in13 serting ‘‘and in the Planning Areas offshore Alaska’’ after

14 ‘‘West longitude’’.

15 SEC. 317. OIL AND GAS LEASING IN THE NATIONAL PETRO16 LEUM RESERVE IN ALASKA.

17 (a) TRANSFER OF AUTHORITY.—

18 (1) REDESIGNATION.—The Naval Petroleum

19 Reserves Production Act of 1976 (42 U.S.C. 6501

20 et seq.) is amended by redesignating section 107 (42

21 U.S.C. 6507) as section 108.

22 (2) TRANSFER.—The matter under the heading

23 ‘‘EXPLORATION OF NATIONAL PETROLEUM RESERVE

24 IN ALASKA’’ under the heading ‘‘ENERGY AND
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1 MINERALS’’ of title I of Public Law 96–514 (42

2 U.S.C. 6508) is—

3 (A) transferred to the Naval Petroleum

4 Reserves Production Act of 1976 (42 U.S.C.

5 6501 et seq.);

6 (B) redesignated as section 107 of that

7 Act; and

8 (C) moved so as to appear after section

9 106 of that Act (42 U.S.C. 6506).

10 (b) COMPETITIVE LEASING.—Section 107 of the

11 Naval Petroleum Reserves Production Act of 1976 (as

12 amended by subsection (a) of this section) is amended—

13 (1) by striking the heading and all that follows

14 through ‘‘Provided, That (1) activities’’ and insert15 ing the following:

16 ‘‘SEC. 107. COMPETITIVE LEASING OF OIL AND GAS.

17 ‘‘(a) IN GENERAL.—Notwithstanding any other pro18 vision of law and pursuant to regulations issued by the

19 Secretary, the Secretary shall conduct an expeditious pro20 gram of competitive leasing of oil and gas in the National

21 Petroleum Reserve in Alaska (referred to in this section

22 as the ‘Reserve’).

23 ‘‘(b) MITIGATION OF ADVERSE EFFECTS.—Activi24 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

15 standards—

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

13 activities—

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 2004’’.

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 the date
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1 of enactment of this Act for any lease entered into before,

2 on, or after the 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 Exchange

14 Act (7 U.S.C. 13) is amended by redesignating sub15 section (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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•HR 4503 EH

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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•HR 4503 EH

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 NO. 13211;

2 ACTIONS 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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•HR 4503 EH

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

9 affects—

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

20 established—

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

22 address—

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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•HR 4503 EH

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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•HR 4503 EH

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

7 affects—

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 that 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 of this Act or section 9 of the Alaska Natural Gas Trans10 portation Act of 1976 (15 U.S.C. 719g) to issue Federal

11 guarantee instruments with respect to loans and other

12 debt obligations 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) of this Act or an

10 amended certificate under section 9 of the Alaska Natural

11 Gas Transportation Act of 1976 (15 U.S.C. 719g) has

12 been issued for 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 DE20 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 7000

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 1280 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 values,

9 except that energy used for coproduction or cogen10 eration shall not be counted in calculating the ther11 mal efficiency under this paragraph; and

12 ‘‘(5) equipment and processes beginning in

13 2011 and 2012 that are projected to achieve an

14 thermal efficiency of—

15 ‘‘(A) 45 percent for coal of more than

16 9,000 Btu per pound based on higher heating

17 values;

18 ‘‘(B) 44 percent for coal of 7,000 to 9,000

19 Btu per pound based on higher heating values;

20 and

21 ‘‘(C) 40 percent for coal of less than 7,000

22 Btu per pound based on higher heating values,

23 except that energy used for coproduction or cogen24 eration shall not be counted in calculating the ther25 mal efficiency under this paragraph.
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1 ‘‘(b) SELECTION.—(1) In selecting the projects, up

2 to 25 percent of the projects selected may be either co3 production or cogeneration or other gasification projects,

4 but at least 25 percent of the projects shall be for the

5 sole purpose of electrical generation, and priority should

6 be given to equipment and projects less than 600 MW to

7 foster and promote standard designs.

8 ‘‘(2) The Secretary shall give priority to projects that

9 have been developed and demonstrated that are not yet

10 cost competitive, and for coal energy generation projects

11 that advance efficiency, environmental performance, or

12 cost competitiveness significantly beyond the level of pollu13 tion control equipment that is in operation on a full scale.

14 ‘‘SEC. 3106. FINANCIAL CRITERIA.

15 ‘‘(a) IN GENERAL.—The Secretary shall only provide

16 financial assistance to projects that meet the requirements

17 of sections 3103 and 3104 and are likely to—

18 ‘‘(1) achieve overall cost reductions in the utili19 zation of coal to generate useful forms of energy;

20 and

21 ‘‘(2) improve the competitiveness of coal in

22 order to maintain a diversity of domestic fuel choices

23 in the United States to meet electricity generation

24 requirements.
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1 ‘‘(b) CONDITIONS.—The Secretary shall not provide

2 a funding award under this title unless—

3 ‘‘(1) the award recipient is financially viable

4 without the receipt of additional Federal funding;

5 and

6 ‘‘(2) the recipient provides sufficient informa7 tion to the Secretary for the Secretary to ensure

8 that the award funds are spent efficiently and effec9 tively.

10 ‘‘(c) EQUAL ACCESS.—The Secretary shall, to the ex11 tent practical, utilize cooperative agreement, loan guar12 antee, and direct Federal loan mechanisms designed to en13 sure that all electrical generation owners have equal access

14 to these technology deployment incentives. The Secretary

15 shall develop and direct a competitive solicitation process

16 for the selection of technologies and projects under this

17 title.

18 ‘‘SEC. 3107. FEDERAL SHARE.

19 ‘‘The Federal share of the cost of a coal or related

20 technology project funded by the Secretary under this title

21 shall not exceed 50 percent. For purposes of this title,

22 Federal funding includes only appropriated funds.

23 ‘‘SEC. 3108. APPLICABILITY.

24 ‘‘No technology, or level of emission reduction, shall

25 be treated as adequately demonstrated for purposes of sec-
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1 tion 111 of the Clean Air Act (42 U.S.C. 7411), achievable

2 for purposes of section 169 of the Clean Air Act (42

3 U.S.C. 7479), or achievable in practice for purposes of

4 section 171 of the Clean Air Act (42 U.S.C. 7501) solely

5 by reason of the use of such technology, or the achieve6 ment of such emission reduction, by one or more facilities

7 receiving assistance under this title.’’.

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

9 of contents of the Energy Policy Act of 1992 is amended

10 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.’’.

11 TITLE V—INDIAN ENERGY

12 SEC. 501. SHORT TITLE.

13 This title may be cited as the ‘‘Indian Tribal Energy

14 Development and Self-Determination Act of 2004’’.

15 SEC. 502. OFFICE OF INDIAN ENERGY POLICY AND PRO16 GRAMS.

17 (a) IN GENERAL.—Title II of the Department of En18 ergy Organization Act (42 U.S.C. 7131 et seq.) is amend19 ed by adding at the end the following:
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1 ‘‘OFFICE OF INDIAN ENERGY POLICY AND PROGRAMS

2 ‘‘SEC. 217. (a) ESTABLISHMENT.—There is estab3 lished within the Department an Office of Indian Energy

4 Policy and Programs (referred to in this section as the

5 ‘Office’). The Office shall be headed by a Director, who

6 shall be appointed by the Secretary and compensated at

7 a rate equal to that of level IV of the Executive Schedule

8 under section 5315 of title 5, United States Code.

9 ‘‘(b) DUTIES OF DIRECTOR.—The Director, in ac10 cordance with Federal policies promoting Indian self-de11 termination and the purposes of this Act, shall provide,

12 direct, foster, coordinate, and implement energy planning,

13 education, management, conservation, and delivery pro14 grams of the Department that—

15 ‘‘(1) promote Indian tribal energy development,

16 efficiency, and use;

17 ‘‘(2) reduce or stabilize energy costs;

18 ‘‘(3) enhance and strengthen Indian tribal en19 ergy and economic infrastructure relating to natural

20 resource development and electrification; and

21 ‘‘(4) bring electrical power and service to In22 dian land and the homes of tribal members located

23 on Indian lands or acquired, constructed, or im24 proved (in whole or in part) with Federal funds.’’.

25 (b) CONFORMING AMENDMENTS.—
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1 (1) The table of contents of the Department of

2 Energy Organization Act (42 U.S.C. prec. 7101) is

3 amended—

4 (A) in the item relating to section 209, by

5 striking ‘‘Section’’ and inserting ‘‘Sec.’’; and

6 (B) by striking the items relating to sec7 tions 213 through 216 and inserting the fol8 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.’’.

9 (2) Section 5315 of title 5, United States Code,

10 is amended by inserting ‘‘Director, Office of Indian

11 Energy Policy and Programs, Department of En12 ergy.’’ after ‘‘Inspector General, Department of En13 ergy.’’.

14 SEC. 503. INDIAN ENERGY.

15 (a) IN GENERAL.—Title XXVI of the Energy Policy

16 Act of 1992 (25 U.S.C. 3501 et seq.) is amended to read

17 as follows:

18 ‘‘TITLE XXVI—INDIAN ENERGY

19 ‘‘SEC. 2601. DEFINITIONS.

20 ‘‘For purposes of this title:
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1 ‘‘(1) The term ‘Director’ means the Director of

2 the Office of Indian Energy Policy and Programs,

3 Department of Energy.

4 ‘‘(2) The term ‘Indian land’ means—

5 ‘‘(A) any land located within the bound6 aries of an Indian reservation, pueblo, or

7 rancheria;

8 ‘‘(B) any land not located within the

9 boundaries of an Indian reservation, pueblo, or

10 rancheria, the title to which is held—

11 ‘‘(i) in trust by the United States for

12 the benefit of an Indian tribe or an indi13 vidual Indian;

14 ‘‘(ii) by an Indian tribe or an indi15 vidual Indian, subject to restriction against

16 alienation under laws of the United States;

17 or

18 ‘‘(iii) by a dependent Indian commu19 nity; and

20 ‘‘(C) land that is owned by an Indian tribe

21 and was conveyed by the United States to a

22 Native Corporation pursuant to the Alaska Na23 tive Claims Settlement Act (43 U.S.C. 1601 et

24 seq.), or that was conveyed by the United
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1 States to a Native Corporation in exchange for

2 such land.

3 ‘‘(3) The term ‘Indian reservation’ includes—

4 ‘‘(A) an Indian reservation in existence in

5 any State or States as of the date of enactment

6 of this paragraph;

7 ‘‘(B) a public domain Indian allotment;

8 and

9 ‘‘(C) a dependent Indian community lo10 cated within the borders of the United States,

11 regardless of whether the community is

12 located—

13 ‘‘(i) on original or acquired territory

14 of the community; or

15 ‘‘(ii) within or outside the boundaries

16 of any particular State.

17 ‘‘(4) The term ‘Indian tribe’ has the meaning

18 given the term in section 4 of the Indian Self-Deter19 mination and Education Assistance Act (25 U.S.C.

20 450b), except that the term ‘Indian tribe’, for the

21 purpose of paragraph (11) and sections 2603(b)(3)

22 and 2604, shall not include any Native Corporation.

23 ‘‘(5) The term ‘integration of energy resources’

24 means any project or activity that promotes the loca25 tion and operation of a facility (including any pipe-
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•HR 4503 EH

1 line, gathering system, transportation system or fa2 cility, or electric transmission or distribution facility)

3 on or near Indian land to process, refine, generate

4 electricity from, or otherwise develop energy re5 sources on, Indian land.

6 ‘‘(6) The term ‘Native Corporation’ has the

7 meaning given the term in section 3 of the Alaska

8 Native Claims Settlement Act (43 U.S.C. 1602).

9 ‘‘(7) The term ‘organization’ means a partner10 ship, joint venture, limited liability company, or

11 other unincorporated association or entity that is es12 tablished to develop Indian energy resources.

13 ‘‘(8) The term ‘Program’ means the Indian en14 ergy resource development program established

15 under section 2602(a).

16 ‘‘(9) The term ‘Secretary’ means the Secretary

17 of the Interior.

18 ‘‘(10) The term ‘tribal energy resource develop19 ment organization’ means an organization of 2 or

20 more entities, at least 1 of which is an Indian tribe,

21 that has the written consent of the governing bodies

22 of all Indian tribes participating in the organization

23 to apply for a grant, loan, or other assistance au24 thorized by section 2602.
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1 ‘‘(11) The term ‘tribal land’ means any land or

2 interests in land owned by any Indian tribe, title to

3 which is held in trust by the United States or which

4 is subject to a restriction against alienation under

5 laws of the United States.

6 ‘‘SEC. 2602. INDIAN TRIBAL ENERGY RESOURCE DEVELOP7 MENT.

8 ‘‘(a) DEPARTMENT OF THE INTERIOR PROGRAM.—

9 ‘‘(1) To assist Indian tribes in the development

10 of energy resources and further the goal of Indian

11 self-determination, the Secretary shall establish and

12 implement an Indian energy resource development

13 program to assist consenting Indian tribes and tribal

14 energy resource development organizations in achiev15 ing the purposes of this title.

16 ‘‘(2) In carrying out the Program, the Sec17 retary shall—

18 ‘‘(A) provide development grants to Indian

19 tribes and tribal energy resource development

20 organizations for use in developing or obtaining

21 the managerial and technical capacity needed to

22 develop energy resources on Indian land, and to

23 properly account for resulting energy produc24 tion and revenues;
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•HR 4503 EH

1 ‘‘(B) provide grants to Indian tribes and

2 tribal energy resource development organiza3 tions for use in carrying out projects to pro4 mote the integration of energy resources, and to

5 process, use, or develop those energy resources,

6 on Indian land; and

7 ‘‘(C) provide low-interest loans to Indian

8 tribes and tribal energy resource development

9 organizations for use in the promotion of en10 ergy resource development on Indian land and

11 integration of energy resources.

12 ‘‘(3) There are authorized to be appropriated to

13 carry out this subsection such sums as are necessary

14 for each of fiscal years 2004 through 2014.

15 ‘‘(b) DEPARTMENT OF ENERGY INDIAN ENERGY

16 EDUCATION PLANNING AND MANAGEMENT ASSISTANCE

17 PROGRAM.—

18 ‘‘(1) The Director shall establish programs to

19 assist consenting Indian tribes in meeting energy

20 education, research and development, planning, and

21 management needs.

22 ‘‘(2) In carrying out this subsection, the Direc23 tor may provide grants, on a competitive basis, to an

24 Indian tribe or tribal energy resource development

25 organization for use in carrying out—
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•HR 4503 EH

1 ‘‘(A) energy, energy efficiency, and energy

2 conservation programs;

3 ‘‘(B) studies and other activities sup4 porting tribal acquisitions of energy supplies,

5 services, and facilities;

6 ‘‘(C) planning, construction, development,

7 operation, maintenance, and improvement of

8 tribal electrical generation, transmission, and

9 distribution facilities located on Indian land;

10 and

11 ‘‘(D) development, construction, and inter12 connection of electric power transmission facili13 ties located on Indian land with other electric

14 transmission facilities.

15 ‘‘(3)(A) The Director may develop, in consulta16 tion with Indian tribes, a formula for providing

17 grants under this subsection.

18 ‘‘(B) In providing a grant under this sub19 section, the Director shall give priority to an applica20 tion received from an Indian tribe with inadequate

21 electric service (as determined by the Director).

22 ‘‘(4) The Secretary of Energy may issue such

23 regulations as necessary to carry out this subsection.
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•HR 4503 EH

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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•HR 4503 EH

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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•HR 4503 EH

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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•HR 4503 EH

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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•HR 4503 EH

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 2004, 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 2004, 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 2004,

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,

23 including—

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 by the

6 Secretary in carrying out this section shall be non7 reimbursable.’’.

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

21 following—

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 ‘‘(3) The Secretary may transfer to the Corporation,

23 notwithstanding subsections (b)(2) and (d), natural ura24 nium in amounts sufficient to fulfill the Department of

25 Energy’s commitments under Article 4(B) of the Agree-
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1 ment between the Department and the Corporation dated

2 June 17, 2002.

3 ‘‘(d) INVENTORY SALES.—(1) In addition to the

4 transfers and sales authorized under subsections (b) and

5 (c) and under paragraph (5) of this subsection, the United

6 States Government may transfer or sell uranium in any

7 form subject to paragraphs (2), (3), and (4).

8 ‘‘(2) Except as provided in subsections (b) and (c)

9 and paragraph (5) of this subsection, no sale or transfer

10 of uranium shall be made under this subsection by the

11 United States Government unless—

12 ‘‘(A) the President determines that the material

13 is not necessary for national security needs and the

14 sale or transfer has no adverse impact on implemen15 tation of existing government-to-government agree16 ments;

17 ‘‘(B) the price paid to the appropriate Federal

18 agency, if the transaction is a sale, will not be less

19 than the fair market value of the material; and

20 ‘‘(C) the sale or transfer to commercial nuclear

21 power end users is made pursuant to a contract of

22 at least 3 years’ duration.

23 ‘‘(3) Except as provided in paragraph (5), the United

24 States Government shall not make any transfer or sale

25 of uranium in any form under this subsection that would
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1 cause the total amount of uranium transferred or sold pur2 suant to this subsection that is delivered for consumption

3 by commercial nuclear power end users to exceed—

4 ‘‘(A) 3,000,000 pounds of U3 O8 equivalent in

5 fiscal year 2004, 2005, 2006, 2007, 2008, or 2009;

6 ‘‘(B) 5,000,000 pounds of U3O8 equivalent in

7 fiscal year 2010 or 2011;

8 ‘‘(C) 7,000,000 pounds of U3O8 equivalent in

9 fiscal year 2012; and

10 ‘‘(D) 10,000,000 pounds of U3O8 equivalent in

11 fiscal year 2013 or any fiscal year thereafter.

12 ‘‘(4) Except for sales or transfers under paragraph

13 (5), for the purposes of this subsection, the recovery of

14 uranium from uranium bearing materials transferred or

15 sold by the United States Government to the domestic

16 uranium industry shall be the preferred method of making

17 uranium available. The recovered uranium shall be count18 ed against the annual maximum deliveries set forth in this

19 section, when such uranium is sold to end users.

20 ‘‘(5) The United States Government may make the

21 following sales and transfers:

22 ‘‘(A) Sales or transfers to a Federal agency if

23 the material is transferred for the use of the receiv24 ing agency without any resale or transfer to another
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1 entity and the material does not meet commercial

2 specifications.

3 ‘‘(B) Sales or transfers to any person for na4 tional security purposes, as determined by the Sec5 retary.

6 ‘‘(C) Sales or transfers to any State or local

7 agency or nonprofit, charitable, or educational insti8 tution for use other than the generation of electricity

9 for commercial use.

10 ‘‘(D) Sales or transfers to the Department of

11 Energy research reactor sales program.

12 ‘‘(E) Sales or transfers, at fair market value,

13 for emergency purposes in the event of a disruption

14 in supply to commercial nuclear power end users in

15 the United States.

16 ‘‘(F) Sales or transfers, at fair market value,

17 for use in a commercial reactor in the United States

18 with nonstandard fuel requirements.

19 ‘‘(G) Sales or transfers provided for under law

20 for use by the Tennessee Valley Authority in relation

21 to the Department of Energy’s highly enriched ura22 nium or tritium programs.

23 ‘‘(6) For purposes of this subsection, the term

24 ‘United States Government’ does not include the Ten25 nessee Valley Authority.
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1 ‘‘(e) SAVINGS PROVISION.—Nothing in this sub2 chapter modifies the terms of the Russian HEU Agree3 ment.

4 ‘‘(f) SERVICES.—Notwithstanding any other provi5 sion of this section, if the Secretary determines that the

6 Corporation has failed, or may fail, to perform any obliga7 tion under the Agreement between the Department of En8 ergy and the Corporation dated June 17, 2002, and as

9 amended thereafter, which failure could result in termi10 nation of the Agreement, the Secretary shall notify Con11 gress, in such a manner that affords Congress an oppor12 tunity to comment, prior to a determination by the Sec13 retary whether termination, waiver, or modification of the

14 Agreement is required. The Secretary is authorized to take

15 such action as he determines necessary under the Agree16 ment to terminate, waive, or modify provisions of the

17 Agreement to achieve its purposes.’’.

18 (b) REPORT.—Not later than 3 years after the date

19 of enactment of this Act, the Secretary of Energy shall

20 report to Congress on the implementation of this section.

21 The report shall include a discussion of available excess

22 uranium inventories; all sales or transfers made by the

23 United States Government; the impact of such sales or

24 transfers on the domestic uranium industry, the spot mar25 ket uranium price, and the national security interests of
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1 the United States; and any steps taken to remediate any

2 adverse impacts of such sales or transfers.

3 SEC. 631. COOPERATIVE RESEARCH AND DEVELOPMENT

4 AND SPECIAL DEMONSTRATION PROJECTS

5 FOR THE URANIUM MINING INDUSTRY.

6 (a) AUTHORIZATION OF APPROPRIATIONS.—There

7 are authorized to be appropriated to the Secretary of En8 ergy $10,000,000 for each of fiscal years 2004, 2005, and

9 2006 for—

10 (1) cooperative, cost-shared agreements between

11 the Department of Energy and domestic uranium

12 producers to identify, test, and develop improved in

13 situ leaching mining technologies, including low-cost

14 environmental restoration technologies that may be

15 applied to sites after completion of in situ leaching

16 operations; and

17 (2) funding for competitively selected dem18 onstration projects with domestic uranium producers

19 relating to—

20 (A) enhanced production with minimal en21 vironmental impacts;

22 (B) restoration of well fields; and

23 (C) decommissioning and decontamination

24 activities.
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1 (b) DOMESTIC URANIUM PRODUCER.—For purposes

2 of this section, the term ‘‘domestic uranium producer’’ has

3 the meaning given that term in section 1018(4) of the En4 ergy Policy Act of 1992 (42 U.S.C. 2296b–7(4)), except

5 that the term shall not include any producer that has not

6 produced uranium from domestic reserves on or after July

7 30, 1998.

8 (c) LIMITATION.—No activities funded under this

9 section may be carried out in the State of New Mexico.

10 SEC. 632. WHISTLEBLOWER PROTECTION.

11 (a) DEFINITION OF EMPLOYER.—Section 211(a)(2)

12 of the Energy Reorganization Act of 1974 (42 U.S.C.

13 5851(a)(2)) is amended—

14 (1) in subparagraph (C), by striking ‘‘and’’ at

15 the end;

16 (2) in subparagraph (D), by striking the period

17 at the end and inserting ‘‘; and’’ and

18 (3) by adding at the end the following:

19 ‘‘(E) a contractor or subcontractor of the

20 Commission.’’.

21 (b) DE NOVO REVIEW.—Subsection (b) of such sec22 tion 211 is amended by adding at the end the following

23 new paragraph:

24 ‘‘(4) If the Secretary has not issued a final de25 cision within 540 days after the filing of a complaint
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1 under paragraph (1), and there is no showing that

2 such delay is due to the bad faith of the person

3 seeking relief under this paragraph, such person

4 may bring an action at law or equity for de novo re5 view in the appropriate district court of the United

6 States, which shall have jurisdiction over such an ac7 tion without regard to the amount in controversy.’’.

8 SEC. 633. MEDICAL ISOTOPE PRODUCTION.

9 Section 134 of the Atomic Energy Act of 1954 (42

10 U.S.C. 2160d) is amended—

11 (1) in subsection a., by striking ‘‘a. The Com12 mission’’ and inserting ‘‘a. IN GENERAL.—Except as

13 provided in subsection b., the Commission’’;

14 (2) by redesignating subsection b. as subsection

15 c.; and

16 (3) by inserting after subsection a. the fol17 lowing:

18 ‘‘b. MEDICAL ISOTOPE PRODUCTION.—

19 ‘‘(1) DEFINITIONS.—In this subsection:

20 ‘‘(A) HIGHLY ENRICHED URANIUM.—The

21 term ‘highly enriched uranium’ means uranium

22 enriched to include concentration of U–235

23 above 20 percent.

24 ‘‘(B) MEDICAL ISOTOPE.—The term ‘med25 ical isotope’ includes Molybdenum 99, Iodine
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1 131, Xenon 133, and other radioactive mate2 rials used to produce a radiopharmaceutical for

3 diagnostic, therapeutic procedures or for re4 search and development.

5 ‘‘(C) RADIOPHARMACEUTICAL.—The term

6 ‘radiopharmaceutical’ means a radioactive iso7 tope that—

8 ‘‘(i) contains byproduct material com9 bined with chemical or biological material;

10 and

11 ‘‘(ii) is designed to accumulate tempo12 rarily in a part of the body for therapeutic

13 purposes or for enabling the production of

14 a useful image for use in a diagnosis of a

15 medical condition.

16 ‘‘(D) RECIPIENT COUNTRY.—The term ‘re17 cipient country’ means Canada, Belgium,

18 France, Germany, and the Netherlands.

19 ‘‘(2) LICENSES.—The Commission may issue a

20 license authorizing the export (including shipment to

21 and use at intermediate and ultimate consignees

22 specified in the license) to a recipient country of

23 highly enriched uranium for medical isotope produc24 tion if, in addition to any other requirements of this
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1 Act (except subsection a.), the Commission deter2 mines that—

3 ‘‘(A) a recipient country that supplies an

4 assurance letter to the United States Govern5 ment in connection with the consideration by

6 the Commission of the export license applica7 tion has informed the United States Govern8 ment that any intermediate consignees and the

9 ultimate consignee specified in the application

10 are required to use the highly enriched uranium

11 solely to produce medical isotopes; and

12 ‘‘(B) the highly enriched uranium for med13 ical isotope production will be irradiated only in

14 a reactor in a recipient country that—

15 ‘‘(i) uses an alternative nuclear reac16 tor fuel; or

17 ‘‘(ii) is the subject of an agreement

18 with the United States Government to con19 vert to an alternative nuclear reactor fuel

20 when alternative nuclear reactor fuel can

21 be used in the reactor.

22 ‘‘(3) REVIEW OF PHYSICAL PROTECTION RE23 QUIREMENTS.—

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

25 review the adequacy of physical protection re-
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1 quirements that, as of the date of an applica2 tion under paragraph (2), are applicable to the

3 transportation and storage of highly enriched

4 uranium for medical isotope production or con5 trol of residual material after irradiation and

6 extraction of medical isotopes.

7 ‘‘(B) IMPOSITION OF ADDITIONAL RE8 QUIREMENTS.—If the Commission determines

9 that additional physical protection requirements

10 are necessary (including a limit on the quantity

11 of highly enriched uranium that may be con12 tained in a single shipment), the Commission

13 shall impose such requirements as license condi14 tions or through other appropriate means.

15 ‘‘(4) FIRST REPORT TO CONGRESS.—

16 ‘‘(A) NAS STUDY.—The Secretary shall

17 enter into an arrangement with the National

18 Academy of Sciences to conduct a study to

19 determine—

20 ‘‘(i) the feasibility of procuring sup21 plies of medical isotopes from commercial

22 sources that do not use highly enriched

23 uranium;
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1 ‘‘(ii) the current and projected de2 mand and availability of medical isotopes

3 in regular current domestic use;

4 ‘‘(iii) the progress that is being made

5 by the Department of Energy and others

6 to eliminate all use of highly enriched ura7 nium in reactor fuel, reactor targets, and

8 medical isotope production facilities; and

9 ‘‘(iv) the potential cost differential in

10 medical isotope production in the reactors

11 and target processing facilities if the prod12 ucts were derived from production systems

13 that do not involve fuels and targets with

14 highly enriched uranium.

15 ‘‘(B) FEASIBILITY.—For the purpose of

16 this subsection, the use of low enriched uranium

17 to produce medical isotopes shall be determined

18 to be feasible if—

19 ‘‘(i) low enriched uranium targets

20 have been developed and demonstrated for

21 use in the reactors and target processing

22 facilities that produce significant quantities

23 of medical isotopes to serve United States

24 needs for such isotopes;
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1 ‘‘(ii) sufficient quantities of medical

2 isotopes are available from low enriched

3 uranium targets and fuel to meet United

4 States domestic needs; and

5 ‘‘(iii) the average anticipated total

6 cost increase from production of medical

7 isotopes in such facilities without use of

8 highly enriched uranium is less than 10

9 percent.

10 ‘‘(C) REPORT BY THE SECRETARY.—Not

11 later than 5 years after the date of enactment

12 of the Energy Policy Act of 2003, the Secretary

13 shall submit to Congress a report that—

14 ‘‘(i) contains the findings of the Na15 tional Academy of Sciences made in the

16 study under subparagraph (A); and

17 ‘‘(ii) discloses the existence of any

18 commitments from commercial producers

19 to provide domestic requirements for med20 ical isotopes without use of highly enriched

21 uranium consistent with the feasibility cri22 teria described in subparagraph (B) not

23 later than the date that is 4 years after

24 the date of submission of the report.
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1 ‘‘(5) SECOND REPORT TO CONGRESS.—If the

2 study of the National Academy of Sciences deter3 mines under paragraph (4)(A)(i) that the procure4 ment of supplies of medical isotopes from commer5 cial sources that do not use highly enriched uranium

6 is feasible, but the Secretary is unable to report the

7 existence of commitments under paragraph

8 (4)(C)(ii), not later than the date that is 6 years

9 after the date of enactment of the Energy Policy Act

10 of 2003, the Secretary shall submit to Congress a

11 report that describes options for developing domestic

12 supplies of medical isotopes in quantities that are

13 adequate to meet domestic demand without the use

14 of highly enriched uranium consistent with the cost

15 increase described in paragraph (4)(B)(iii).

16 ‘‘(6) CERTIFICATION.—At such time as com17 mercial facilities that do not use highly enriched

18 uranium are capable of meeting domestic require19 ments for medical isotopes, within the cost increase

20 described in paragraph (4)(B)(iii) and without im21 pairing the reliable supply of medical isotopes for

22 domestic utilization, the Secretary shall submit to

23 Congress a certification to that effect.

24 ‘‘(7) SUNSET PROVISION.—After the Secretary

25 submits a certification under paragraph (6), the
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1 Commission shall, by rule, terminate its review of

2 export license applications under this subsection.’’.

3 SEC. 634. FERNALD BYPRODUCT MATERIAL.

4 Notwithstanding any other law, the material in the

5 concrete silos at the Fernald uranium processing facility

6 managed on the date of enactment of this Act by the De7 partment of Energy shall be considered byproduct mate8 rial (as defined by section 11 e.(2) of the Atomic Energy

9 Act of 1954 (42 U.S.C. 2014(e)(2))). The Department of

10 Energy may dispose of the material in a facility regulated

11 by the Nuclear Regulatory Commission or by an Agree12 ment State. If the Department of Energy disposes of the

13 material in such a facility, the Nuclear Regulatory Com14 mission or the Agreement State shall regulate the material

15 as byproduct material under that Act. This material shall

16 remain subject to the jurisdiction of the Department of

17 Energy until it is received at a commercial, Nuclear Regu18 latory Commission-licensed, or Agreement State-licensed

19 facility, at which time the material shall be subject to the

20 health and safety requirements of the Nuclear Regulatory

21 Commission or the Agreement State with jurisdiction over

22 the disposal site.
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1 SEC. 635. SAFE DISPOSAL OF GREATER-THAN-CLASS C RA2 DIOACTIVE WASTE.

3 (a) DESIGNATION OF RESPONSIBILITY.—The Sec4 retary of Energy shall designate an Office within the De5 partment of Energy to have the responsibility for activities

6 needed to develop a new, or use an existing, facility for

7 safely disposing of all low-level radioactive waste with con8 centrations of radionuclides that exceed the limits estab9 lished by the Nuclear Regulatory Commission for Class

10 C radioactive waste (referred to in this section as ‘‘GTCC

11 waste’’).

12 (b) COMPREHENSIVE PLAN.—The Secretary of En13 ergy shall develop a comprehensive plan for permanent

14 disposal of GTCC waste which includes plans for a dis15 posal facility. This plan shall be transmitted to Congress

16 in a series of reports, including the following:

17 (1) REPORT ON SHORT-TERM PLAN.—Not later

18 than 180 days after the date of enactment of this

19 Act, the Secretary of Energy shall submit to Con20 gress a plan describing the Secretary’s operational

21 strategy for continued recovery and storage of

22 GTCC waste until a permanent disposal facility is

23 available.

24 (2) UPDATE OF 1987 REPORT.—

25 (A) IN GENERAL.—Not later than 1 year

26 after the date of enactment of this Act, the Sec-
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1 retary of Energy shall submit to Congress an

2 update of the Secretary’s February 1987 report

3 submitted to Congress that made comprehen4 sive recommendations for the disposal of GTCC

5 waste.

6 (B) CONTENTS.—The update under this

7 paragraph shall contain—

8 (i) a detailed description and identi9 fication of the GTCC waste that is to be

10 disposed;

11 (ii) a description of current domestic

12 and international programs, both Federal

13 and commercial, for management and dis14 position of GTCC waste;

15 (iii) an identification of the Federal

16 and private options and costs for the safe

17 disposal of GTCC waste;

18 (iv) an identification of the options for

19 ensuring that, wherever possible, genera20 tors and users of GTCC waste bear all rea21 sonable costs of waste disposal;

22 (v) an identification of any new statu23 tory authority required for disposal of

24 GTCC waste; and
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1 (vi) in coordination with the Environ2 mental Protection Agency and the Nuclear

3 Regulatory Commission, an identification

4 of any new regulatory guidance needed for

5 the disposal of GTCC waste.

6 (3) REPORT ON COST AND SCHEDULE FOR

7 COMPLETION OF ENVIRONMENTAL IMPACT STATE8 MENT AND RECORD OF DECISION.—Not later than

9 180 days after the date of submission of the update

10 required under paragraph (2), the Secretary of En11 ergy shall submit to Congress a report containing an

12 estimate of the cost and schedule to complete a draft

13 and final environmental impact statement and to

14 issue a record of decision for a permanent disposal

15 facility, utilizing either a new or existing facility, for

16 GTCC waste.

17 SEC. 636. PROHIBITION ON NUCLEAR EXPORTS TO COUN18 TRIES THAT SPONSOR TERRORISM.

19 (a) IN GENERAL.—Section 129 of the Atomic Energy

20 Act of 1954 (42 U.S.C. 2158) is amended—

21 (1) by inserting ‘‘a.’’ before ‘‘No nuclear mate22 rials and equipment’’; and

23 (2) by adding at the end the following new sub24 section:
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1 ‘‘b.(1) Notwithstanding any other provision of law,

2 including specifically section 121 of this Act, and except

3 as provided in paragraphs (2) and (3), no nuclear mate4 rials and equipment or sensitive nuclear technology, in5 cluding items and assistance authorized by section 57 b.

6 of this Act and regulated under part 810 of title 10, Code

7 of Federal Regulations, and nuclear-related items on the

8 Commerce Control List maintained under part 774 of title

9 15 of the Code of Federal Regulations, shall be exported

10 or reexported, or transferred or retransferred whether di11 rectly or indirectly, and no Federal agency shall issue any

12 license, approval, or authorization for the export or reex13 port, or transfer, or retransfer, whether directly or indi14 rectly, of these items or assistance (as defined in this para15 graph) to any country whose government has been identi16 fied by the Secretary of State as engaged in state sponsor17 ship of terrorist activities (specifically including any coun18 try the government of which has been determined by the

19 Secretary of State under section 620A(a) of the Foreign

20 Assistance Act of 1961 (22 U.S.C. 2371(a)), section

21 6(j)(1) of the Export Administration Act of 1979 (50

22 U.S.C. App. 2405(j)(1)), or section 40(d) of the Arms Ex23 port Control Act (22 U.S.C. 2780(d)) to have repeatedly

24 provided support for acts of international terrorism).
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1 ‘‘(2) This subsection shall not apply to exports, reex2 ports, transfers, or retransfers of radiation monitoring

3 technologies, surveillance equipment, seals, cameras, tam4 per-indication devices, nuclear detectors, monitoring sys5 tems, or equipment necessary to safely store, transport,

6 or remove hazardous materials, whether such items, serv7 ices, or information are regulated by the Department of

8 Energy, the Department of Commerce, or the Nuclear

9 Regulatory Commission, except to the extent that such

10 technologies, equipment, seals, cameras, devices, detectors,

11 or systems are available for use in the design or construc12 tion of nuclear reactors or nuclear weapons.

13 ‘‘(3) The President may waive the application of

14 paragraph (1) to a country if the President determines

15 and certifies to Congress that the waiver will not result

16 in any increased risk that the country receiving the waiver

17 will acquire nuclear weapons, nuclear reactors, or any ma18 terials or components of nuclear weapons and—

19 ‘‘(A) the government of such country has not

20 within the preceding 12-month period willfully aided

21 or abetted the international proliferation of nuclear

22 explosive devices to individuals or groups or willfully

23 aided and abetted an individual or groups in acquir24 ing unsafeguarded nuclear materials;
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1 ‘‘(B) in the judgment of the President, the gov2 ernment of such country has provided adequate,

3 verifiable assurances that it will cease its support for

4 acts of international terrorism;

5 ‘‘(C) the waiver of that paragraph is in the vital

6 national security interest of the United States; or

7 ‘‘(D) such a waiver is essential to prevent or re8 spond to a serious radiological hazard in the country

9 receiving the waiver that may or does threaten pub10 lic health and safety.’’.

11 (b) APPLICABILITY TO EXPORTS APPROVED FOR

12 TRANSFER BUT NOT TRANSFERRED.—Subsection b. of

13 section 129 of Atomic Energy Act of 1954, as added by

14 subsection (a) of this section, shall apply with respect to

15 exports that have been approved for transfer as of the date

16 of the enactment of this Act but have not yet been trans17 ferred as of that date.

18 SEC. 637. URANIUM ENRICHMENT FACILITIES.

19 (a) NUCLEAR REGULATORY COMMISSION REVIEW OF

20 APPLICATIONS.—

21 (1) IN GENERAL.—In order to facilitate a time22 ly review and approval of an application in a pro23 ceeding for a license for the construction and oper24 ation of a uranium enrichment facility under sec25 tions 53 and 63 of the Atomic Energy Act of 1954
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1 (42 U.S.C. 2073, 2093) (referred to in this sub2 section as a ‘‘covered proceeding’’), the Nuclear Reg3 ulatory Commission shall, not later than 30 days

4 after the receipt of the application, establish, by

5 order, the schedule for the conduct of any hearing

6 that may be requested by any person whose interest

7 may be affected by the covered proceeding.

8 (2) FINAL AGENCY DECISION.—The schedule

9 shall provide that a final decision by the Commission

10 on the application shall be made not later than the

11 date that is 2 years after the date of submission of

12 the application by the applicant.

13 (3) COMPLIANCE WITH SCHEDULE.—

14 (A) IN GENERAL.—The Commission shall

15 establish a process to assess compliance with

16 the schedule established under paragraph (1)

17 on an ongoing basis during the course of the re18 view of the application, including ensuring com19 pliance with schedules and milestones that are

20 established for the conduct of any covered pro21 ceeding by the Atomic Safety and Licensing

22 Board.

23 (B) REPORT.—The Commission shall sub24 mit to Congress on a bimonthly basis a report

25 describing the status of compliance with the
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1 schedule established under paragraph (1), in2 cluding a description of the status of actions re3 quired to be completed pursuant to the schedule

4 by officers and employees of—

5 (i) the Commission in undertaking the

6 safety and environmental review of applica7 tions; and

8 (ii) the Atomic Safety and Licensing

9 Board in the conduct of any covered pro10 ceeding.

11 (4) ENVIRONMENTAL REVIEW.—

12 (A) IN GENERAL.—In evaluating an appli13 cation under the National Environmental Policy

14 Act of 1969 (42 U.S.C. 4321 et seq.) for licens15 ing of a facility in a covered proceeding, the

16 Commission shall limit the consideration of

17 need to whether the licensing of the facility

18 would advance the national interest of encour19 aging in the United States—

20 (i) additional secure, reliable uranium

21 enrichment capacity;

22 (ii) diverse supplies and suppliers of

23 uranium enrichment capacity; and

24 (iii) the deployment of advanced cen25 trifuge enrichment technology.
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1 (B) COMMENT.—In carrying out subpara2 graph (A), the Commission shall consider and

3 solicit the views of other affected Federal agen4 cies.

5 (C) ATOMIC SAFETY AND LICENSING

6 BOARD.—

7 (i) IN GENERAL.—Except as provided

8 in clause (ii), in any covered proceeding,

9 the Commission shall allow the litigation

10 and resolution by the Atomic Safety and

11 Licensing Board of issues arising under

12 the National Environmental Policy Act of

13 1969 (42 U.S.C. 4321 et seq.), on the

14 basis of information submitted by the ap15 plicant in its environmental report, prior to

16 publication of any required environmental

17 impact statement.

18 (ii) EXCEPTIONS.—On the publication

19 of any required environmental impact

20 statement, issues may be proffered for res21 olution by the Atomic Safety and Licensing

22 Board only if information or conclusions in

23 the environmental impact statement differ

24 significantly from the information or con-
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1 clusions in the environmental report sub2 mitted by the applicant.

3 (D) ENVIRONMENTAL JUSTICE.—In a cov4 ered proceeding, the Commission shall apply the

5 criteria in Appendix C of the final report enti6 tled ‘‘Environmental Review Guidance for Li7 censing Actions Associated with NMSS Pro8 grams’’ (NUREG–1748), published in August

9 2003, in any required review of environmental

10 justice.

11 (5) LOW-LEVEL WASTE.—In any covered pro12 ceeding, the Commission shall—

13 (A) deem the obligation of the Secretary of

14 Energy pursuant to section 3113 of the USEC

15 Privitization Act (42 U.S.C. 2297 h-11) to con16 stitute a plausible strategy with regard to the

17 disposition of depleted uranium generated by

18 such facility; and

19 (B) treat any residual material that re20 mains following the extraction of any usable re21 source value from depleted uranium as low-level

22 radioactive waste under part 61 of title 10,

23 Code of Federal Regulations.

24 (6) ADJUDICATORY HEARING ON LICENSING OF

25 URANIUM ENRICHMENT FACILITIES.—Section 193(b)
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1 of the Atomic Energy Act of 1954 (42 U.S.C.

2 2243(b)) is amended by striking paragraph (2) and

3 inserting the following:

4 ‘‘(2) TIMING.—On the issuance of a final deci5 sion on the application by the Atomic Safety and Li6 censing Board, the Commission shall issue and make

7 immediately effective any license for the construction

8 and operation of a uranium enrichment facility

9 under sections 53 and 63, on a determination by the

10 Commission that the issuance of the license would

11 not cause irreparable injury to the public health and

12 safety or the common defense and security, notwith13 standing the pendency before the Commission of any

14 appeal or petition for review of any decision of the

15 Atomic Safety and Licensing Board.’’.

16 (b) DEPARTMENT OF ENERGY RESPONSIBILITIES.—

17 (1) IN GENERAL.—Not later than 180 days

18 after a request is made to the Secretary of Energy

19 by an applicant for or recipient of a license for a

20 uranium enrichment facility under section 53, 63, or

21 193 of the Atomic Energy Act of 1954 ((42 U.S.C.

22 2073, 2093, 2243), the Secretary shall enter into a

23 memorandum of agreement with the applicant or li24 censee that provides a schedule for the transfer to

25 the Secretary, not later than 5 years after the gen-
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1 eration of any depleted uranium hexafluoride, of title

2 and possession of the depleted uranium hexafluoride

3 to be generated by the applicant or licensee.

4 (2) COST.—

5 (A) IN GENERAL.—Subject to subpara6 graphs (B) and (C), the memorandum of agree7 ment shall specify the cost to be assessed by the

8 Secretary for the transfer to the Secretary of

9 the depleted uranium hexafluoride.

10 (B) NONDISCRIMINATORY BASIS.—The

11 cost shall be determined by the Secretary on a

12 nondiscriminatory basis.

13 (C) COST.—Taking into account the phys14 ical and chemical characteristics of such de15 pleted uranium hexafluoride, the cost shall not

16 exceed the cost assessed by the Secretary for

17 the acceptance of depleted uranium hexafluoride

18 under—

19 (i) the memorandum of agreement be20 tween the United States Department of

21 Energy and the United States Enrichment

22 Corporation Relating to Depleted Ura23 nium, dated June 30, 1998; and
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1 (ii) the Agreement Between the U.S.

2 Department of Energy and USEC Inc.,

3 dated June 17, 2002.

4 SEC. 638. NATIONAL URANIUM STOCKPILE.

5 (a) STOCKPILE CREATION.—The Secretary of En6 ergy may create a national low-enriched uranium stockpile

7 with the goals to—

8 (1) enhance national energy security; and

9 (2) reduce global proliferation threats.

10 (b) SOURCE OF MATERIAL.—The Secretary shall ob11 tain material for the stockpile from—

12 (1) material derived from blend-down of Rus13 sian highly enriched uranium derived from weapons

14 materials; and

15 (2) domestically mined and enriched uranium.

16 (c) LIMITATION ON SALES OR TRANSFERS.—Sales or

17 transfer of materials in the stockpile shall occur pursuant

18 to section 3112 of the USEC Privitization Act (42 U.S.C.

19 2297h–10), as amended by section 630 of this Act.

20 Subtitle C—Advanced Reactor

21 Hydrogen Cogeneration Project

22 SEC. 651. PROJECT ESTABLISHMENT.

23 The Secretary of Energy (in this subtitle referred to

24 as the ‘‘Secretary’’) is directed to establish an Advanced

25 Reactor Hydrogen Cogeneration Project.
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1 SEC. 652. PROJECT DEFINITION.

2 The project shall consist of the research, develop3 ment, design, construction, and operation of a hydrogen

4 production cogeneration research facility that, relative to

5 the current commercial reactors, enhances safety features,

6 reduces waste production, enhances thermal efficiencies,

7 increases proliferation resistance, and has the potential for

8 improved economics and physical security in reactor siting.

9 This facility shall be constructed so as to enable research

10 and development on advanced reactors of the type selected

11 and on alternative approaches for reactor-based produc12 tion of hydrogen.

13 SEC. 653. PROJECT MANAGEMENT.

14 (a) MANAGEMENT.—The project shall be managed

15 within the Department by the Office of Nuclear Energy,

16 Science, and Technology.

17 (b) LEAD LABORATORY.—The lead laboratory for the

18 project, providing the site for the reactor construction,

19 shall be the Idaho National Engineering and Environ20 mental Laboratory (in this subtitle referred to as

21 ‘‘INEEL’’).

22 (c) STEERING COMMITTEE.—The Secretary shall es23 tablish a national steering committee with membership

24 from the national laboratories, universities, and industry

25 to provide advice to the Secretary and the Director of the
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1 Office of Nuclear Energy, Science, and Technology on

2 technical and program management aspects of the project.

3 (d) COLLABORATION.—Project activities shall be con4 ducted at INEEL, other national laboratories, univer5 sities, domestic industry, and international partners.

6 SEC. 654. PROJECT REQUIREMENTS.

7 (a) RESEARCH AND DEVELOPMENT.—

8 (1) IN GENERAL.—The project shall include

9 planning, research and development, design, and

10 construction of an advanced, next-generation, nu11 clear energy system suitable for enabling further re12 search and development on advanced reactor tech13 nologies and alternative approaches for reactor-based

14 generation of hydrogen.

15 (2) REACTOR TEST CAPABILITIES AT INEEL.—

16 The project shall utilize, where appropriate, exten17 sive reactor test capabilities resident at INEEL.

18 (3) ALTERNATIVES.—The project shall be de19 signed to explore technical, environmental, and eco20 nomic feasibility of alternative approaches for reac21 tor-based hydrogen production.

22 (4) INDUSTRIAL LEAD.—The industrial lead for

23 the project shall be a company incorporated in the

24 United States.

25 (b) INTERNATIONAL COLLABORATION.—
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1 (1) IN GENERAL.—The Secretary shall seek

2 international cooperation, participation, and finan3 cial contribution in this project.

4 (2) ASSISTANCE FROM INTERNATIONAL PART5 NERS.—The Secretary may contract for assistance

6 from specialists or facilities from member countries

7 of the Generation IV International Forum, the Rus8 sian Federation, or other international partners

9 where such specialists or facilities provide access to

10 cost-effective and relevant skills or test capabilities.

11 (3) GENERATION IV INTERNATIONAL FORUM.—

12 International activities shall be coordinated with the

13 Generation IV International Forum.

14 (4) GENERATION IV NUCLEAR ENERGY SYS15 TEMS PROGRAM.—The Secretary may combine this

16 project with the Generation IV Nuclear Energy Sys17 tems Program.

18 (c) DEMONSTRATION.—The overall project, which

19 may involve demonstration of selected project objectives

20 in a partner nation, must demonstrate both electricity and

21 hydrogen production and may provide flexibility, where

22 technically and economically feasible in the design and

23 construction, to enable tests of alternative reactor core

24 and cooling configurations.
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1 (d) PARTNERSHIPS.—The Secretary shall establish

2 cost-shared partnerships with domestic industry or inter3 national participants for the research, development, de4 sign, construction, and operation of the research facility,

5 and preference in determining the final project structure

6 shall be given to an overall project which retains United

7 States leadership while maximizing cost sharing opportu8 nities and minimizing Federal funding responsibilities.

9 (e) TARGET DATE.—The Secretary shall select tech10 nologies and develop the project to provide initial testing

11 of either hydrogen production or electricity generation by

12 2010, or provide a report to Congress explaining why this

13 date is not feasible.

14 (f) WAIVER OF CONSTRUCTION TIMELINES.—The

15 Secretary is authorized to conduct the Advanced Reactor

16 Hydrogen Cogeneration Project without the constraints of

17 DOE Order 413.3, relating to program and project man18 agement for the acquisition of capital assets, as necessary

19 to meet the specified operational date.

20 (g) COMPETITION.—The Secretary may fund up to

21 2 teams for up to 1 year to develop detailed proposals for

22 competitive evaluation and selection of a single proposal

23 and concept for further progress. The Secretary shall de24 fine the format of the competitive evaluation of proposals.
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1 (h) USE OF FACILITIES.—Research facilities in in2 dustry, national laboratories, or universities either within

3 the United States or with cooperating international part4 ners may be used to develop the enabling technologies for

5 the research facility. Utilization of domestic university6 based facilities shall be encouraged to provide educational

7 opportunities for student development.

8 (i) ROLE OF NUCLEAR REGULATORY COMMISSION.—

9 (1) IN GENERAL.—The Nuclear Regulatory

10 Commission shall have licensing and regulatory au11 thority for any reactor authorized under this sub12 title, pursuant to section 202 of the Energy Reorga13 nization Act of 1974 (42 U.S.C. 5842).

14 (2) RISK-BASED CRITERIA.—The Secretary

15 shall seek active participation of the Nuclear Regu16 latory Commission throughout the project to develop

17 risk-based criteria for any future commercial devel18 opment of a similar reactor architecture.

19 (j) REPORT.—The Secretary shall develop and trans20 mit to Congress a comprehensive project plan not later

21 than April 30, 2004. The project plan shall be updated

22 annually with each annual budget submission.

23 SEC. 655. AUTHORIZATION OF APPROPRIATIONS.

24 (a) RESEARCH, DEVELOPMENT, AND DESIGN PRO25 GRAMS.—The following sums are authorized to be appro-
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1 priated to the Secretary for all activities under this sub2 title except for construction activities described in sub3 section (b):

4 (1) For fiscal year 2004, $35,000,000.

5 (2) For each of fiscal years 2005 through 2008,

6 $150,000,000.

7 (3) For fiscal years beyond 2008, such sums as

8 are necessary.

9 (b) CONSTRUCTION.—There are authorized to be ap10 propriated to the Secretary for all project-related con11 struction activities, to be available until expended,

12 $500,000,000.

13 Subtitle D—Nuclear Security

14 SEC. 661. NUCLEAR FACILITY THREATS.

15 (a) STUDY.—The President, in consultation with the

16 Nuclear Regulatory Commission (referred to in this sub17 title as the ‘‘Commission’’) and other appropriate Federal,

18 State, and local agencies and private entities, shall con19 duct a study to identify the types of threats that pose an

20 appreciable risk to the security of the various classes of

21 facilities licensed by the Commission under the Atomic

22 Energy Act of 1954 (42 U.S.C. 2011 et seq.). Such study

23 shall take into account, but not be limited to—

24 (1) the events of September 11, 2001;
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1 (2) an assessment of physical, cyber, bio2 chemical, and other terrorist threats;

3 (3) the potential for attack on facilities by mul4 tiple coordinated teams of a large number of individ5 uals;

6 (4) the potential for assistance in an attack

7 from several persons employed at the facility;

8 (5) the potential for suicide attacks;

9 (6) the potential for water-based and air-based

10 threats;

11 (7) the potential use of explosive devices of con12 siderable size and other modern weaponry;

13 (8) the potential for attacks by persons with a

14 sophisticated knowledge of facility operations;

15 (9) the potential for fires, especially fires of

16 long duration;

17 (10) the potential for attacks on spent fuel

18 shipments by multiple coordinated teams of a large

19 number of individuals;

20 (11) the adequacy of planning to protect the

21 public health and safety at and around nuclear fa22 cilities, as appropriate, in the event of a terrorist at23 tack against a nuclear facility; and

24 (12) the potential for theft and diversion of nu25 clear materials from such facilities.
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1 (b) SUMMARY AND CLASSIFICATION REPORT.—Not

2 later than 180 days after the date of the enactment of

3 this Act, the President shall transmit to Congress and the

4 Commission a report—

5 (1) summarizing the types of threats identified

6 under subsection (a); and

7 (2) classifying each type of threat identified

8 under subsection (a), in accordance with existing

9 laws and regulations, as either—

10 (A) involving attacks and destructive acts,

11 including sabotage, directed against the facility

12 by an enemy of the United States, whether a

13 foreign government or other person, or other14 wise falling under the responsibilities of the

15 Federal Government; or

16 (B) involving the type of risks that Com17 mission licensees should be responsible for

18 guarding against.

19 (c) FEDERAL ACTION REPORT.—Not later than 90

20 days after the date on which a report is transmitted under

21 subsection (b), the President shall transmit to Congress

22 a report on actions taken, or to be taken, to address the

23 types of threats identified under subsection (b)(2)(A), in24 cluding identification of the Federal, State, and local

25 agencies responsible for carrying out the obligations and
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1 authorities of the United States. Such report may include

2 a classified annex, as appropriate.

3 (d) REGULATIONS.—Not later than 180 days after

4 the date on which a report is transmitted under subsection

5 (b), the Commission may revise, by rule, the design basis

6 threats issued before the date of enactment of this section

7 as the Commission considers appropriate based on the

8 summary and classification report.

9 (e) PHYSICAL SECURITY PROGRAM.—The Commis10 sion shall establish an operational safeguards response

11 evaluation program that ensures that the physical protec12 tion capability and operational safeguards response for

13 sensitive nuclear facilities, as determined by the Commis14 sion consistent with the protection of public health and

15 the common defense and security, shall be tested periodi16 cally through Commission approved or designed, observed,

17 and evaluated force-on-force exercises to determine wheth18 er the ability to defeat the design basis threat is being

19 maintained. For purposes of this subsection, the term

20 ‘‘sensitive nuclear facilities’’ includes at a minimum com21 mercial nuclear power plants and category I fuel cycle fa22 cilities.

23 (f) CONTROL OF INFORMATION.—Notwithstanding

24 any other provision of law, the Commission may undertake

25 any rulemaking under this subtitle in a manner that will
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1 fully protect safeguards and classified national security in2 formation.

3 (g) FEDERAL SECURITY COORDINATORS.—

4 (1) REGIONAL OFFICES.—Not later than 18

5 months after the date of enactment of this Act, the

6 Commission shall assign a Federal security coordi7 nator, under the employment of the Commission, to

8 each region of the Commission.

9 (2) RESPONSIBILITIES.—The Federal security

10 coordinator shall be responsible for—

11 (A) communicating with the Commission

12 and other Federal, State, and local authorities

13 concerning threats, including threats against

14 such classes of facilities as the Commission de15 termines to be appropriate;

16 (B) ensuring that such classes of facilities

17 as the Commission determines to be appropriate

18 maintain security consistent with the security

19 plan in accordance with the appropriate threat

20 level; and

21 (C) assisting in the coordination of secu22 rity measures among the private security forces

23 at such classes of facilities as the Commission

24 determines to be appropriate and Federal,

25 State, and local authorities, as appropriate.
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1 (h) TRAINING PROGRAM.—The President shall estab2 lish a program to provide technical assistance and training

3 to Federal agencies, the National Guard, and State and

4 local law enforcement and emergency response agencies in

5 responding to threats against a designated nuclear facility.

6 SEC. 662. FINGERPRINTING FOR CRIMINAL HISTORY

7 RECORD CHECKS.

8 (a) IN GENERAL.—Subsection a. of section 149 of

9 the Atomic Energy Act of 1954 (42 U.S.C. 2169(a)) is

10 amended—

11 (1) by striking ‘‘a. The Nuclear’’ and all that

12 follows through ‘‘section 147.’’ and inserting the fol13 lowing:

14 ‘‘a. IN GENERAL.—

15 ‘‘(1) REQUIREMENTS.—

16 ‘‘(A) IN GENERAL.—The Commission shall

17 require each individual or entity—

18 ‘‘(i) that is licensed or certified to en19 gage in an activity subject to regulation by

20 the Commission;

21 ‘‘(ii) that has filed an application for

22 a license or certificate to engage in an ac23 tivity subject to regulation by the Commis24 sion; or
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1 ‘‘(iii) that has notified the Commis2 sion, in writing, of an intent to file an ap3 plication for licensing, certification, permit4 ting, or approval of a product or activity

5 subject to regulation by the Commission,

6 to fingerprint each individual described in sub7 paragraph (B) before the individual is per8 mitted unescorted access or access, whichever is

9 applicable, as described in subparagraph (B).

10 ‘‘(B) INDIVIDUALS REQUIRED TO BE

11 FINGERPRINTED.—The Commission shall re12 quire to be fingerprinted each individual who—

13 ‘‘(i) is permitted unescorted access

14 to—

15 ‘‘(I) a utilization facility; or

16 ‘‘(II) radioactive material or

17 other property subject to regulation

18 by the Commission that the Commis19 sion determines to be of such signifi20 cance to the public health and safety

21 or the common defense and security

22 as to warrant fingerprinting and

23 background checks; or

24 ‘‘(ii) is permitted access to safeguards

25 information under section 147.’’;
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1 (2) by striking ‘‘All fingerprints obtained by a

2 licensee or applicant as required in the preceding

3 sentence’’ and inserting the following:

4 ‘‘(2) SUBMISSION TO THE ATTORNEY GEN5 ERAL.—All fingerprints obtained by an individual or

6 entity as required in paragraph (1)’’;

7 (3) by striking ‘‘The costs of any identification

8 and records check conducted pursuant to the pre9 ceding sentence shall be paid by the licensee or ap10 plicant.’’ and inserting the following:

11 ‘‘(3) COSTS.—The costs of any identification

12 and records check conducted pursuant to paragraph

13 (1) shall be paid by the individual or entity required

14 to conduct the fingerprinting under paragraph

15 (1)(A).’’; and

16 (4) by striking ‘‘Notwithstanding any other pro17 vision of law, the Attorney General may provide all

18 the results of the search to the Commission, and, in

19 accordance with regulations prescribed under this

20 section, the Commission may provide such results to

21 licensee or applicant submitting such fingerprints.’’

22 and inserting the following:

23 ‘‘(4) PROVISION TO INDIVIDUAL OR ENTITY RE24 QUIRED TO CONDUCT FINGERPRINTING.—Notwith25 standing any other provision of law, the Attorney
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1 General may provide all the results of the search to

2 the Commission, and, in accordance with regulations

3 prescribed under this section, the Commission may

4 provide such results to the individual or entity re5 quired to conduct the fingerprinting under para6 graph (1)(A).’’.

7 (b) ADMINISTRATION.—Subsection c. of section 149

8 of the Atomic Energy Act of 1954 (42 U.S.C. 2169(c))

9 is amended—

10 (1) by striking ‘‘, subject to public notice and

11 comment, regulations—’’ and inserting ‘‘require12 ments—’’; and

13 (2) by striking, in paragraph (2)(B),

14 ‘‘unescorted access to the facility of a licensee or ap15 plicant’’ and inserting ‘‘unescorted access to a utili16 zation facility, radioactive material, or other prop17 erty described in subsection a.(1)(B)’’.

18 (c) BIOMETRIC METHODS.—Subsection d. of section

19 149 of the Atomic Energy Act of 1954 (42 U.S.C.

20 2169(d)) is redesignated as subsection e., and the fol21 lowing is inserted after subsection c.:

22 ‘‘d. USE OF OTHER BIOMETRIC METHODS.—The

23 Commission may satisfy any requirement for a person to

24 conduct fingerprinting under this section using any other

25 biometric method for identification approved for use by
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1 the Attorney General, after the Commission has approved

2 the alternative method by rule.’’.

3 SEC. 663. USE OF FIREARMS BY SECURITY PERSONNEL OF

4 LICENSEES AND CERTIFICATE HOLDERS OF

5 THE COMMISSION.

6 Section 161 of the Atomic Energy Act of 1954 (42

7 U.S.C. 2201) is amended by adding at the end the fol8 lowing subsection:

9 ‘‘(z)(1) notwithstanding section 922(o), (v), and

10 (w) of title 18, United States Code, or any similar

11 provision of any State law or any similar rule or reg12 ulation of a State or any political subdivision of a

13 State prohibiting the transfer or possession of a

14 handgun, a rifle or shotgun, a short-barreled shot15 gun, a short-barreled rifle, a machinegun, a semi16 automatic assault weapon, ammunition for the fore17 going, or a large capacity ammunition feeding de18 vice, authorize security personnel of licensees and

19 certificate holders of the Commission (including em20 ployees of contractors of licensees and certificate

21 holders) to receive, possess, transport, import, and

22 use 1 or more of those weapons, ammunition, or de23 vices, if the Commission determines that—
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1 ‘‘(A) such authorization is necessary to the

2 discharge of the security personnel’s official du3 ties; and

4 ‘‘(B) the security personnel—

5 ‘‘(i) are not otherwise prohibited from

6 possessing or receiving a firearm under

7 Federal or State laws pertaining to posses8 sion of firearms by certain categories of

9 persons;

10 ‘‘(ii) have successfully completed re11 quirements established through guidelines

12 implementing this subsection for training

13 in use of firearms and tactical maneuvers;

14 ‘‘(iii) are engaged in the protection

15 of—

16 ‘‘(I) facilities owned or operated

17 by a Commission licensee or certifi18 cate holder that are designated by the

19 Commission; or

20 ‘‘(II) radioactive material or

21 other property owned or possessed by

22 a person that is a licensee or certifi23 cate holder of the Commission, or that

24 is being transported to or from a fa25 cility owned or operated by such a li-
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1 censee or certificate holder, and that

2 has been determined by the Commis3 sion to be of significance to the com4 mon defense and security or public

5 health and safety; and

6 ‘‘(iv) are discharging their official du7 ties.

8 ‘‘(2) Such receipt, possession, transportation,

9 importation, or use shall be subject to—

10 ‘‘(A) chapter 44 of title 18, United States

11 Code, except for section 922(a)(4), (o), (v), and

12 (w);

13 ‘‘(B) chapter 53 of title 26, United States

14 Code, except for section 5844; and

15 ‘‘(C) a background check by the Attorney

16 General, based on fingerprints and including a

17 check of the system established under section

18 103(b) of the Brady Handgun Violence Preven19 tion Act (18 U.S.C. 922 note) to determine

20 whether the person applying for the authority is

21 prohibited from possessing or receiving a fire22 arm under Federal or State law.

23 ‘‘(3) This subsection shall become effective

24 upon the issuance of guidelines by the Commission,
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1 with the approval of the Attorney General, to govern

2 the implementation of this subsection.

3 ‘‘(4) In this subsection, the terms ‘handgun’,

4 ‘rifle’, ‘shotgun’, ‘firearm’, ‘ammunition’, ‘machine5 gun’, ‘semiautomatic assault weapon’, ‘large capacity

6 ammunition feeding device’, ‘short-barreled shotgun’,

7 and ‘short-barreled rifle’ shall have the meanings

8 given those terms in section 921(a) of title 18,

9 United States Code.’’.

10 SEC. 664. UNAUTHORIZED INTRODUCTION OF DANGEROUS

11 WEAPONS.

12 Section 229 a. of the Atomic Energy Act of 1954 (42

13 U.S.C. 2278a(a)) is amended in the first sentence by in14 serting ‘‘or subject to the licensing authority of the Com15 mission or to certification by the Commission under this

16 Act or any other Act’’ before the period at the end.

17 SEC. 665. SABOTAGE OF NUCLEAR FACILITIES OR FUEL.

18 (a) IN GENERAL.—Section 236 a. of the Atomic En19 ergy Act of 1954 (42 U.S.C. 2284(a)) is amended—

20 (1) in paragraph (2), by striking ‘‘storage facil21 ity’’ and inserting ‘‘storage, treatment, or disposal

22 facility’’;

23 (2) in paragraph (3)—
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1 (A) by striking ‘‘such a utilization facility’’

2 and inserting ‘‘a utilization facility licensed

3 under this Act’’; and

4 (B) by striking ‘‘or’’ at the end;

5 (3) in paragraph (4)—

6 (A) by striking ‘‘facility licensed’’ and in7 serting ‘‘, uranium conversion, or nuclear fuel

8 fabrication facility licensed or certified’’; and

9 (B) by striking the comma at the end and

10 inserting a semicolon; and

11 (4) by inserting after paragraph (4) the fol12 lowing:

13 ‘‘(5) any production, utilization, waste storage,

14 waste treatment, waste disposal, uranium enrich15 ment, uranium conversion, or nuclear fuel fabrica16 tion facility subject to licensing or certification

17 under this Act during construction of the facility, if

18 the destruction or damage caused or attempted to be

19 caused could adversely affect public health and safe20 ty during the operation of the facility;

21 ‘‘(6) any primary facility or backup facility

22 from which a radiological emergency preparedness

23 alert and warning system is activated; or

24 ‘‘(7) any radioactive material or other property

25 subject to regulation by the Nuclear Regulatory
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1 Commission that, before the date of the offense, the

2 Nuclear Regulatory Commission determines, by

3 order or regulation published in the Federal Reg4 ister, is of significance to the public health and safe5 ty or to common defense and security,’’.

6 (b) PENALTIES.—Section 236 of the Atomic Energy

7 Act of 1954 (42 U.S.C. 2284) is amended by striking

8 ‘‘$10,000 or imprisoned for not more than 20 years, or

9 both, and, if death results to any person, shall be impris10 oned for any term of years or for life’’ both places it ap11 pears and inserting ‘‘$1,000,000 or imprisoned for up to

12 life without parole’’.

13 SEC. 666. SECURE TRANSFER OF NUCLEAR MATERIALS.

14 (a) AMENDMENT.—Chapter 14 of the Atomic Energy

15 Act of 1954 (42 U.S.C. 2201–2210b) is amended by add16 ing at the end the following new section:

17 ‘‘SEC. 170C. SECURE TRANSFER OF NUCLEAR MATERIALS.

18 ‘‘a. The Nuclear Regulatory Commission shall estab19 lish a system to ensure that materials described in sub20 section b., when transferred or received in the United

21 States by any party pursuant to an import or export li22 cense issued pursuant to this Act, are accompanied by a

23 manifest describing the type and amount of materials

24 being transferred or received. Each individual receiving or

25 accompanying the transfer of such materials shall be sub-
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1 ject to a security background check conducted by appro2 priate Federal entities.

3 ‘‘b. Except as otherwise provided by the Commission

4 by regulation, the materials referred to in subsection a.

5 are byproduct materials, source materials, special nuclear

6 materials, high-level radioactive waste, spent nuclear fuel,

7 transuranic waste, and low-level radioactive waste (as de8 fined in section 2(16) of the Nuclear Waste Policy Act

9 of 1982 (42 U.S.C. 10101(16))).’’.

10 (b) REGULATIONS.—Not later than 1 year after the

11 date of the enactment of this Act, and from time to time

12 thereafter as it considers necessary, the Nuclear Regu13 latory Commission shall issue regulations identifying ra14 dioactive materials or classes of individuals that, con15 sistent with the protection of public health and safety and

16 the common defense and security, are appropriate excep17 tions to the requirements of section 170C of the Atomic

18 Energy Act of 1954, as added by subsection (a) of this

19 section.

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

21 subsection (a) shall take effect upon the issuance of regu22 lations under subsection (b), except that the background

23 check requirement shall become effective on a date estab24 lished by the Commission.
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1 (d) EFFECT ON OTHER LAW.—Nothing in this sec2 tion or the amendment made by this section shall waive,

3 modify, or affect the application of chapter 51 of title 49,

4 United States Code, part A of subtitle V of title 49,

5 United States Code, part B of subtitle VI of title 49,

6 United States Code, and title 23, United States Code.

7 (e) TABLE OF SECTIONS AMENDMENT.—The table of

8 sections for chapter 14 of the Atomic Energy Act of 1954

9 is amended by adding at the end the following new item:

‘‘Sec. 170C. Secure transfer of nuclear materials.’’.

10 SEC. 667. DEPARTMENT OF HOMELAND SECURITY CON11 SULTATION.

12 Before issuing a license for a utilization facility, the

13 Nuclear Regulatory Commission shall consult with the De14 partment of Homeland Security concerning the potential

15 vulnerabilities of the location of the proposed facility to

16 terrorist attack.

17 SEC. 668. AUTHORIZATION OF APPROPRIATIONS.

18 (a) IN GENERAL.—There are authorized to be appro19 priated such sums as are necessary to carry out this sub20 title and the amendments made by this subtitle.

21 (b) AGGREGATE AMOUNT OF CHARGES.—Section

22 6101(c)(2)(A) of the Omnibus Budget Reconciliation Act

23 of 1990 (42 U.S.C. 2214(c)(2)(A)) is amended—

24 (1) in clause (i), by striking ‘‘and’’ at the end;
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1 (2) in clause (ii), by striking the period at the

2 end and inserting ‘‘; and’’ and

3 (3) by adding at the end the following:

4 ‘‘(iii) amounts appropriated to the

5 Commission for homeland security activi6 ties of the Commission for the fiscal year,

7 except for the costs of fingerprinting and

8 background checks required by section 149

9 of the Atomic Energy Act of 1954 (42

10 U.S.C. 2169) and the costs of conducting

11 security inspections.’’.

12 TITLE VII—VEHICLES AND

13 FUELS

14 Subtitle A—Existing Programs

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

16 VEHICLES.

17 Section 400AA(a)(3)(E) of the Energy Policy and

18 Conservation Act (42 U.S.C. 6374(a)(3)(E)) is amended

19 to read as follows:

20 ‘‘(E)(i) Dual fueled vehicles acquired pursuant to this

21 section shall be operated on alternative fuels unless the

22 Secretary determines that an agency qualifies for a waiver

23 of such requirement for vehicles operated by the agency

24 in a particular geographic area in which—
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1 ‘‘(I) the alternative fuel otherwise required to

2 be used in the vehicle is not reasonably available to

3 retail purchasers of the fuel, as certified to the Sec4 retary by the head of the agency; or

5 ‘‘(II) the cost of the alternative fuel otherwise

6 required to be used in the vehicle is unreasonably

7 more expensive compared to gasoline, as certified to

8 the Secretary by the head of the agency.

9 ‘‘(ii) The Secretary shall monitor compliance with

10 this subparagraph by all such fleets and shall report annu11 ally to Congress on the extent to which the requirements

12 of this subparagraph are being achieved. The report shall

13 include information on annual reductions achieved from

14 the use of petroleum-based fuels and the problems, if any,

15 encountered in acquiring alternative fuels.’’.

16 SEC. 702. NEIGHBORHOOD ELECTRIC VEHICLES.

17 (a) AMENDMENTS.—Section 301 of the Energy Pol18 icy Act of 1992 (42 U.S.C. 13211) is amended—

19 (1) in paragraph (3), by striking ‘‘or a dual

20 fueled vehicle’’ and inserting ‘‘, a dual fueled vehicle,

21 or a neighborhood electric vehicle’’;

22 (2) in paragraph (13), by striking ‘‘and’’ at the

23 end;

24 (3) in paragraph (14), by striking the period at

25 the end and inserting ‘‘; and’’; and
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1 (4) by adding at the end the following:

2 ‘‘(15) the term ‘neighborhood electric vehicle’

3 means a motor vehicle that—

4 ‘‘(A) meets the definition of a low-speed

5 vehicle (as defined in part 571 of title 49, Code

6 of Federal Regulations);

7 ‘‘(B) meets the definition of a zero-emis8 sion vehicle (as defined in section 86.1702–99

9 of title 40, Code of Federal Regulations);

10 ‘‘(C) meets the requirements of Federal

11 Motor Vehicle Safety Standard No. 500; and

12 ‘‘(D) has a maximum speed of not greater

13 than 25 miles per hour.’’.

14 (b) CREDITS.—Notwithstanding section 508 of the

15 Energy Policy Act of 1992 (42 U.S.C. 13258) or any other

16 provision of law, a neighborhood electric vehicle shall not

17 be allocated credit as more than 1 vehicle for purposes

18 of determining compliance with any requirement under

19 title III or title V of such Act.

20 SEC. 703. CREDITS FOR MEDIUM AND HEAVY DUTY DEDI21 CATED VEHICLES.

22 Section 508 of the Energy Policy Act of 1992 (42

23 U.S.C. 13258) is amended by adding at the end the fol24 lowing:
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1 ‘‘(e) CREDIT FOR PURCHASE OF MEDIUM AND

2 HEAVY DUTY DEDICATED VEHICLES.—

3 ‘‘(1) DEFINITIONS.—In this subsection:

4 ‘‘(A) HEAVY DUTY DEDICATED VEHI5 CLE.—The term ‘heavy duty dedicated vehicle’

6 means a dedicated vehicle that has a gross vehi7 cle weight rating of more than 14,000 pounds.

8 ‘‘(B) MEDIUM DUTY DEDICATED VEHI9 CLE.—The term ‘medium duty dedicated vehi10 cle’ means a dedicated vehicle that has a gross

11 vehicle weight rating of more than 8,500

12 pounds but not more than 14,000 pounds.

13 ‘‘(2) CREDITS FOR MEDIUM DUTY VEHICLES.—

14 The Secretary shall issue 2 full credits to a fleet or

15 covered person under this title, if the fleet or covered

16 person acquires a medium duty dedicated vehicle.

17 ‘‘(3) CREDITS FOR HEAVY DUTY VEHICLES.—

18 The Secretary shall issue 3 full credits to a fleet or

19 covered person under this title, if the fleet or covered

20 person acquires a heavy duty dedicated vehicle.

21 ‘‘(4) USE OF CREDITS.—At the request of a

22 fleet or covered person allocated a credit under this

23 subsection, the Secretary shall, for the year in which

24 the acquisition of the dedicated vehicle is made,

25 treat that credit as the acquisition of 1 alternative
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1 fueled vehicle that the fleet or covered person is re2 quired to acquire under this title.’’.

3 SEC. 704. INCREMENTAL COST ALLOCATION.

4 Section 303(c) of the Energy Policy Act of 1992 (42

5 U.S.C. 13212(c)) is amended by striking ‘‘may’’ and in6 serting ‘‘shall’’.

7 SEC. 705. ALTERNATIVE COMPLIANCE AND FLEXIBILITY.

8 (a) ALTERNATIVE COMPLIANCE.—

9 (1) IN GENERAL.—Title V of the Energy Policy

10 Act of 1992 (42 U.S.C. 13251 et seq.) is amended—

11 (A) by redesignating section 514 as section

12 515; and

13 (B) by inserting after section 513 the fol14 lowing:

15 ‘‘SEC. 514. ALTERNATIVE COMPLIANCE.

16 ‘‘(a) APPLICATION FOR WAIVER.—Any covered per17 son subject to section 501 and any State subject to section

18 507(o) may petition the Secretary for a waiver of the ap19 plicable requirements of section 501 or 507(o).

20 ‘‘(b) GRANT OF WAIVER.—The Secretary may grant

21 a waiver of the requirements of section 501 or 507(o)

22 upon a showing that the fleet owned, operated, leased, or

23 otherwise controlled by the State or covered person—

24 ‘‘(1) will achieve a reduction in its annual con25 sumption of petroleum fuels equal to the reduction
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1 in consumption of petroleum that would result from

2 100 percent compliance with fuel use requirements

3 in section 501, or, for entities covered under section

4 507(o), a reduction equal to the covered State enti5 ty’s consumption of alternative fuels if all its alter6 native fuel vehicles given credit under section 508

7 were to use alternative fuel 100 percent of the time;

8 and

9 ‘‘(2) is in compliance with all applicable vehicle

10 emission standards established by the Administrator

11 under the Clean Air Act (42 U.S.C. 7401 et seq.).

12 ‘‘(c) REVOCATION OF WAIVER.—The Secretary shall

13 revoke any waiver granted under this section if the State

14 or covered person fails to comply with subsection (b).’’.

15 (2) TABLE OF CONTENTS AMENDMENT.—The

16 table of contents of the Energy Policy Act of 1992

17 (42 U.S.C. prec. 13201) is amended by striking the

18 item relating to section 514 and inserting the fol19 lowing:

‘‘Sec. 514. Alternative compliance.

‘‘Sec. 515. Authorization of appropriations.’’.

20 (b) CREDITS.—Section 508 of the Energy Policy Act

21 of 1992 (42 U.S.C. 13258) (as amended by section 703)

22 is amended—

23 (1) by redesignating subsections (b) through (e)

24 as subsections (c) through (f), respectively;
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1 (2) by striking subsection (a) and inserting the

2 following:

3 ‘‘(a) IN GENERAL.—The Secretary shall allocate a

4 credit to a fleet or covered person that is required to ac5 quire an alternative fueled vehicle under this title, if that

6 fleet or person acquires an alternative fueled vehicle—

7 ‘‘(1) in excess of the number that fleet or per8 son is required to acquire under this title;

9 ‘‘(2) before the date on which that fleet or per10 son is required to acquire an alternative fueled vehi11 cle under this title; or

12 ‘‘(3) that is eligible to receive credit under sub13 section (b).

14 ‘‘(b) MAXIMUM AVAILABLE POWER.—The Secretary

15 shall allocate credit to a fleet under subsection (a)(3) for

16 the acquisition by the fleet of a hybrid vehicle as follows:

17 ‘‘(1) For a hybrid vehicle with at least 4 per18 cent but less than 10 percent maximum available

19 power, the Secretary shall allocate 25 percent of 1

20 credit.

21 ‘‘(2) For a hybrid vehicle with at least 10 per22 cent but less than 20 percent maximum available

23 power, the Secretary shall allocate 50 percent of 1

24 credit.
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1 ‘‘(3) For a hybrid vehicle with at least 20 per2 cent but less than 30 percent maximum available

3 power, the Secretary shall allocate 75 percent of 1

4 credit.

5 ‘‘(4) For a hybrid vehicle with 30 percent or

6 more maximum available power, the Secretary shall

7 allocate 1 credit.’’; and

8 (3) by adding at the end the following:

9 ‘‘(g) CREDIT FOR INVESTMENT IN ALTERNATIVE

10 FUEL INFRASTRUCTURE.—

11 ‘‘(1) DEFINITION OF QUALIFYING INFRASTRUC12 TURE.—In this subsection, the term ‘qualifying in13 frastructure’ means—

14 ‘‘(A) equipment required to refuel or re15 charge alternative fueled vehicles;

16 ‘‘(B) facilities or equipment required to

17 maintain, repair, or operate alternative fueled

18 vehicles; and

19 ‘‘(C) such other activities as the Secretary

20 considers to constitute an appropriate expendi21 ture in support of the operation, maintenance,

22 or further widespread adoption of or utilization

23 of alternative fueled vehicles.

24 ‘‘(2) ISSUANCE OF CREDITS.—The Secretary

25 shall issue a credit to a fleet or covered person under
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1 this title for investment in qualifying infrastructure

2 if the qualifying infrastructure is open to the general

3 public during regular business hours.

4 ‘‘(3) AMOUNT.—For the purpose of credits

5 under this subsection—

6 ‘‘(A) 1 credit shall be equal to a minimum

7 investment of $25,000 in cash or equivalent ex8 penditure, as determined by the Secretary; and

9 ‘‘(B) except in the case of a Federal or

10 State fleet, no part of the investment may be

11 provided by Federal or State funds.

12 ‘‘(4) USE OF CREDITS.—At the request of a

13 fleet or covered person allocated a credit under this

14 subsection, the Secretary shall, for the year in which

15 the investment is made, treat that credit as the ac16 quisition of 1 alternative fueled vehicle that the fleet

17 or covered person is required to acquire under this

18 title.

19 ‘‘(h) DEFINITION OF MAXIMUM AVAILABLE

20 POWER.—In this section, the term ‘maximum available

21 power’ means the quotient obtained by dividing—

22 ‘‘(1) the maximum power available from the en23 ergy storage device of a hybrid vehicle, during a

24 standard 10-second pulse power or equivalent test;

25 by
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1 ‘‘(2) the sum of—

2 ‘‘(A) the maximum power described in sub3 paragraph (A); and

4 ‘‘(B) the net power of the internal combus5 tion or heat engine, as determined in accord6 ance with standards established by the Society

7 of Automobile Engineers.’’.

8 (c) LEASE CONDENSATE FUELS.—Section 301 of the

9 Energy Policy Act of 1992 (42 U.S.C. 13211) (as amend10 ed by section 702) is amended—

11 (1) in paragraph (2), by inserting ‘‘mixtures

12 containing 50 percent or more by volume of lease

13 condensate or fuels extracted from lease conden14 sate;’’ after ‘‘liquefied petroleum gas;’’;

15 (2) in paragraph (14)—

16 (A) by inserting ‘‘mixtures containing 50

17 percent or more by volume of lease condensate

18 or fuels extracted from lease condensate,’’ after

19 ‘‘liquefied petroleum gas,’’; and

20 (B) by striking ‘‘and’’ at the end;

21 (3) in paragraph (15), by striking the period at

22 the end and inserting ‘‘; and’’; and

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

24 ‘‘(16) the term ‘lease condensate’ means a mix25 ture, primarily of pentanes and heavier hydro-
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1 carbons, that is recovered as a liquid from natural

2 gas in lease separation facilities.’’.

3 (d) LEASE CONDENSATE USE CREDITS.—

4 (1) IN GENERAL.—Title III of the Energy Pol5 icy Act of 1992 (42 U.S.C. 13211 et seq.) is amend6 ed by adding at the end the following:

7 ‘‘SEC. 313. LEASE CONDENSATE USE CREDITS.

8 ‘‘(a) IN GENERAL.—Subject to subsection (d), the

9 Secretary shall allocate 1 credit under this section to a

10 fleet or covered person for each qualifying volume of the

11 lease condensate component of fuel containing at least 50

12 percent lease condensate, or fuels extracted from lease

13 condensate, after the date of enactment of this section for

14 use by the fleet or covered person in vehicles owned or

15 operated by the fleet or covered person that weigh more

16 than 8,500 pounds gross vehicle weight rating.

17 ‘‘(b) REQUIREMENTS.—A credit allocated under this

18 section—

19 ‘‘(1) shall be subject to the same exceptions,

20 authority, documentation, and use of credits that are

21 specified for qualifying volumes of biodiesel in sec22 tion 312; and

23 ‘‘(2) shall not be considered a credit under sec24 tion 508.

25 ‘‘(c) REGULATION.—
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1 ‘‘(1) IN GENERAL.—Subject to subsection (d),

2 not later than January 1, 2004, after the collection

3 of appropriate information and data that consider

4 usage options, uses in other industries, products, or

5 processes, potential volume capacities, costs, air

6 emissions, and fuel efficiencies, the Secretary shall

7 issue a regulation establishing requirements and pro8 cedures for the implementation of this section.

9 ‘‘(2) QUALIFYING VOLUME.—The regulation

10 shall include a determination of an appropriate

11 qualifying volume for lease condensate, except that

12 in no case shall the Secretary determine that the

13 qualifying volume for lease condensate is less than

14 1,125 gallons.

15 ‘‘(d) APPLICABILITY.—This section applies unless the

16 Secretary finds that the use of lease condensate as an al17 ternative fuel would adversely affect public health or safe18 ty or ambient air quality or the environment.’’.

19 (2) TABLE OF CONTENTS AMENDMENT.—The

20 table of contents of the Energy Policy Act of 1992

21 (42 U.S.C. prec. 13201) is amended by adding at

22 the end of the items relating to title III the fol23 lowing:

‘‘Sec. 313. Lease condensate use credits.’’.

24 (e) EMERGENCY EXEMPTION.—Section 301 of the

25 Energy Policy Act of 1992 (42 U.S.C. 13211) (as amend-
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1 ed by section 702 and this section) is amended in para2 graph (9)(E) by inserting before the semicolon at the end

3 ‘‘, including vehicles directly used in the emergency repair

4 of transmission lines and in the restoration of electricity

5 service following power outages, as determined by the Sec6 retary’’.

7 SEC. 706. REVIEW OF ENERGY POLICY ACT OF 1992 PRO8 GRAMS.

9 (a) IN GENERAL.—Not later than 180 days after the

10 date of enactment of this section, the Secretary of Energy

11 shall complete a study to determine the effect that titles

12 III, IV, and V of the Energy Policy Act of 1992 (42

13 U.S.C. 13211 et seq.) have had on—

14 (1) the development of alternative fueled vehicle

15 technology;

16 (2) the availability of that technology in the

17 market; and

18 (3) the cost of alternative fueled vehicles.

19 (b) TOPICS.—As part of the study under subsection

20 (a), the Secretary shall specifically identify—

21 (1) the number of alternative fueled vehicles ac22 quired by fleets or covered persons required to ac23 quire alternative fueled vehicles;
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1 (2) the quantity, by type, of alternative fuel ac2 tually used in alternative fueled vehicles acquired by

3 fleets or covered persons;

4 (3) the quantity of petroleum displaced by the

5 use of alternative fuels in alternative fueled vehicles

6 acquired by fleets or covered persons;

7 (4) the direct and indirect costs of compliance

8 with requirements under titles III, IV, and V of the

9 Energy Policy Act of 1992 (42 U.S.C. 13211 et

10 seq.), including—

11 (A) vehicle acquisition requirements im12 posed on fleets or covered persons;

13 (B) administrative and recordkeeping ex14 penses;

15 (C) fuel and fuel infrastructure costs;

16 (D) associated training and employee ex17 penses; and

18 (E) any other factors or expenses the Sec19 retary determines to be necessary to compile re20 liable estimates of the overall costs and benefits

21 of complying with programs under those titles

22 for fleets, covered persons, and the national

23 economy;

24 (5) the existence of obstacles preventing compli25 ance with vehicle acquisition requirements and in-
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1 creased use of alternative fuel in alternative fueled

2 vehicles acquired by fleets or covered persons; and

3 (6) the projected impact of amendments to the

4 Energy Policy Act of 1992 made by this title.

5 (c) REPORT.—Upon completion of the study under

6 this section, the Secretary shall submit to Congress a re7 port that describes the results of the study and includes

8 any recommendations of the Secretary for legislative or

9 administrative changes concerning the alternative fueled

10 vehicle requirements under titles III, IV and V of the En11 ergy Policy Act of 1992 (42 U.S.C. 13211 et seq.).

12 SEC. 707. REPORT CONCERNING COMPLIANCE WITH AL13 TERNATIVE FUELED VEHICLE PURCHASING

14 REQUIREMENTS.

15 Section 310(b)(1) of the Energy Policy Act of 1992

16 (42 U.S.C. 13218(b)(1)) is amended by striking ‘‘1 year

17 after the date of enactment of this subsection’’ and insert18 ing ‘‘February 15, 2004’’.

19 Subtitle B—Hybrid Vehicles, Ad20 vanced Vehicles, and Fuel Cell

21 Buses

22 PART I—HYBRID VEHICLES

23 SEC. 711. HYBRID VEHICLES.

24 The Secretary of Energy shall accelerate efforts di25 rected toward the improvement of batteries and other re-
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1 chargeable energy storage systems, power electronics, hy2 brid systems integration, and other technologies for use

3 in hybrid vehicles.

4 PART II—ADVANCED VEHICLES

5 SEC. 721. DEFINITIONS.

6 In this part:

7 (1) ALTERNATIVE FUELED VEHICLE.—

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

9 fueled vehicle’’ means a vehicle propelled solely

10 on an alternative fuel (as defined in section 301

11 of the Energy Policy Act of 1992 (42 U.S.C.

12 13211)).

13 (B) EXCLUSION.—The term ‘‘alternative

14 fueled vehicle’’ does not include a vehicle that

15 the Secretary determines, by regulation, does

16 not yield substantial environmental benefits

17 over a vehicle operating solely on gasoline or

18 diesel derived from fossil fuels.

19 (2) FUEL CELL VEHICLE.—The term ‘‘fuel cell

20 vehicle’’ means a vehicle propelled by an electric

21 motor powered by a fuel cell system that converts

22 chemical energy into electricity by combining oxygen

23 (from air) with hydrogen fuel that is stored on the

24 vehicle or is produced onboard by reformation of a

25 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

7 containing—

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 III—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

19 expended—

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

23 expended—

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.

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

25 balanced 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,

15 including—

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

11 affords—

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) IN GENERAL.—

8 (1) OIL AND GAS LEASE INCOME.—For each of

9 fiscal years 2004 through 2013, from any Federal

10 royalties, rents, and bonuses derived from Federal

11 onshore and offshore oil and gas leases issued under

12 the Outer Continental Shelf Lands Act and the Min13 eral Leasing Act which are deposited in the Treas14 ury, and after distribution of any such funds as de15 scribed in subsection (c), $150,000,000 shall be de16 posited into the Ultra-Deepwater and Unconven17 tional Natural Gas and Other Petroleum Research

18 Fund (in this section referred to as the Fund). For

19 purposes of this section, the term ‘‘royalties’’ ex20 cludes proceeds from the sale of royalty production

21 taken in kind and royalty production that is trans22 ferred under section 27(a)(3) of the Outer Conti23 nental Shelf Lands Act (43 U.S.C. 1353(a)(3)).

24 (2) AUTHORIZATION OF APPROPRIATIONS.—In

25 addition to amounts described in paragraph (1),
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1 there are authorized to be appropriated to the Sec2 retary, to be deposited in the Fund, $50,000,000 for

3 each of the fiscal years 2004 through 2013, to re4 main available until expended.

5 (b) OBLIGATIONAL AUTHORITY.—Monies in the

6 Fund shall be available to the Secretary for obligation

7 under this part without fiscal year limitation, to remain

8 available until expended.

9 (c) PRIOR DISTRIBUTIONS.—The distributions de10 scribed in subsection (a) are those required by law—

11 (1) to States and to the Reclamation Fund

12 under the Mineral Leasing Act (30 U.S.C. 191(a));

13 and

14 (2) to other funds receiving monies from Fed15 eral oil and gas leasing programs, including—

16 (A) any recipients pursuant to section 8(g)

17 of the Outer Continental Shelf Lands Act (43

18 U.S.C. 1337(g));

19 (B) the Land and Water Conservation

20 Fund, pursuant to section 2(c) of the Land and

21 Water Conservation Fund Act of 1965 (16

22 U.S.C. 4601–5(c));

23 (C) the Historic Preservation Fund, pursu24 ant to section 108 of the National Historic

25 Preservation Act (16 U.S.C. 470h); and
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1 (D) the Secure Energy Reinvestment

2 Fund.

3 (d) ALLOCATION.—Amounts obligated from the Fund

4 under this section in each fiscal year shall be allocated

5 as follows:

6 (1) 50 percent shall be for activities under sec7 tion 942.

8 (2) 35 percent shall be for activities under sec9 tion 943(d)(1).

10 (3) 10 percent shall be for activities under sec11 tion 943(d)(2).

12 (4) 5 percent shall be for research under section

13 941(d).

14 (e) FUND.—There is hereby established in the Treas15 ury of the United States a separate fund to be known as

16 the ‘‘Ultra-Deepwater and Unconventional Natural Gas

17 and Other Petroleum Research Fund’’.

18 Subtitle F—Science

19 SEC. 951. SCIENCE.

20 (a) IN GENERAL.—The following sums are author21 ized to be appropriated to the Secretary for research, de22 velopment, demonstration, and commercial application ac23 tivities of the Office of Science, including activities author24 ized under this subtitle, including the amounts authorized

25 under the amendment made by section 958(c)(2)(C), and
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1 including basic energy sciences, advanced scientific com2 puting research, biological and environmental research, fu3 sion energy sciences, high energy physics, nuclear physics,

4 and research analysis and infrastructure support:

5 (1) For fiscal year 2004, $3,785,000,000.

6 (2) For fiscal year 2005, $4,153,000,000.

7 (3) For fiscal year 2006, $4,618,000,000.

8 (4) For fiscal year 2007, $5,310,000,000.

9 (5) For fiscal year 2008, $5,800,000,000.

10 (b) ALLOCATIONS.—From amounts authorized under

11 subsection (a), the following sums are authorized:

12 (1) For activities of the Fusion Energy Sciences

13 Program, including activities under sections 952 and

14 953—

15 (A) for fiscal year 2004, $335,000,000;

16 (B) for fiscal year 2005, $349,000,000;

17 (C) for fiscal year 2006, $362,000,000;

18 (D) for fiscal year 2007, $377,000,000;

19 and

20 (E) for fiscal year 2008, $393,000,000.

21 (2) For the Spallation Neutron Source—

22 (A) for construction in fiscal year 2004,

23 $124,600,000;

24 (B) for construction in fiscal year 2005,

25 $79,800,000;
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1 (C) for completion of construction in fiscal

2 year 2006, $41,100,000; and

3 (D) for other project costs (including re4 search and development necessary to complete

5 the project, preoperations costs, and capital

6 equipment related to construction),

7 $103,279,000 for the period encompassing fis8 cal years 2003 through 2006, to remain avail9 able until expended through September 30,

10 2006.

11 (3) For Catalysis Research activities under sec12 tion 956—

13 (A) for fiscal year 2004, $33,000,000;

14 (B) for fiscal year 2005, $35,000,000;

15 (C) for fiscal year 2006, $36,500,000;

16 (D) for fiscal year 2007, $38,200,000; and

17 (E) for fiscal year 2008, $40,100,000.

18 (4) For Nanoscale Science and Engineering Re19 search activities under section 957—

20 (A) for fiscal year 2004, $270,000,000;

21 (B) for fiscal year 2005, $292,000,000;

22 (C) for fiscal year 2006, $322,000,000;

23 (D) for fiscal year 2007, $355,000,000;

24 and

25 (E) for fiscal year 2008, $390,000,000.
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1 (5) For activities under section 957(c), from

2 the amounts authorized under paragraph (4) of this

3 subsection—

4 (A) for fiscal year 2004, $135,000,000;

5 (B) for fiscal year 2005, $150,000,000;

6 (C) for fiscal year 2006, $120,000,000;

7 (D) for fiscal year 2007, $100,000,000;

8 and

9 (E) for fiscal year 2008, $125,000,000.

10 (6) For activities in the Genomes to Life Pro11 gram under section 959—

12 (A) for fiscal year 2004, $100,000,000;

13 and

14 (B) for fiscal years 2005 through 2008,

15 such sums as may be necessary.

16 (7) For activities in the Energy-Water Supply

17 Program under section 961, $30,000,000 for each of

18 fiscal years 2004 through 2008.

19 (c) ITER CONSTRUCTION.—In addition to the funds

20 authorized under subsection (b)(1), such sums as may be

21 necessary for costs associated with ITER construction,

22 consistent with limitations under section 952.
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1 SEC. 952. UNITED STATES PARTICIPATION IN ITER.

2 (a) IN GENERAL.—The United States may partici3 pate in ITER in accordance with the provisions of this

4 section.

5 (b) AGREEMENT.—

6 (1) IN GENERAL.—The Secretary is authorized

7 to negotiate an agreement for United States partici8 pation in ITER.

9 (2) CONTENTS.—Any agreement for United

10 States participation in ITER shall, at a minimum—

11 (A) clearly define the United States finan12 cial contribution to construction and operating

13 costs;

14 (B) ensure that the share of ITER’s high15 technology components manufactured in the

16 United States is at least proportionate to the

17 United States financial contribution to ITER;

18 (C) ensure that the United States will not

19 be financially responsible for cost overruns in

20 components manufactured in other ITER par21 ticipating countries;

22 (D) guarantee the United States full ac23 cess to all data generated by ITER;

24 (E) enable United States researchers to

25 propose and carry out an equitable share of the

26 experiments at ITER;
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1 (F) provide the United States with a role

2 in all collective decisionmaking related to ITER;

3 and

4 (G) describe the process for discontinuing

5 or decommissioning ITER and any United

6 States role in those processes.

7 (c) PLAN.—The Secretary, in consultation with the

8 Fusion Energy Sciences Advisory Committee, shall de9 velop a plan for the participation of United States sci10 entists in ITER that shall include the United States re11 search agenda for ITER, methods to evaluate whether

12 ITER is promoting progress toward making fusion a reli13 able and affordable source of power, and a description of

14 how work at ITER will relate to other elements of the

15 United States fusion program. The Secretary shall request

16 a review of the plan by the National Academy of Sciences.

17 (d) LIMITATION.—No funds shall be expended for the

18 construction of ITER until the Secretary has transmitted

19 to Congress—

20 (1) the agreement negotiated pursuant to sub21 section (b) and 120 days have elapsed since that

22 transmission;

23 (2) a report describing the management struc24 ture of ITER and providing a fixed dollar estimate

25 of the cost of United States participation in the con-
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1 struction of ITER, and 120 days have elapsed since

2 that transmission;

3 (3) a report describing how United States par4 ticipation in ITER will be funded without reducing

5 funding for other programs in the Office of Science,

6 including other fusion programs, and 60 days have

7 elapsed since that transmission; and

8 (4) the plan required by subsection (c) (but not

9 the National Academy of Sciences review of that

10 plan), and 60 days have elapsed since that trans11 mission.

12 (e) ALTERNATIVE TO ITER.—If at any time during

13 the negotiations on ITER, the Secretary determines that

14 construction and operation of ITER is unlikely or infeasi15 ble, the Secretary shall send to Congress, as part of the

16 budget request for the following year, a plan for imple17 menting the domestic burning plasma experiment known

18 as FIRE, including costs and schedules for such a plan.

19 The Secretary shall refine such plan in full consultation

20 with the Fusion Energy Sciences Advisory Committee and

21 shall also transmit such plan to the National Academy of

22 Sciences for review.

23 (f) DEFINITIONS.—In this section and sections

24 951(b)(1) and (c):
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1 (1) CONSTRUCTION.—The term ‘‘construction’’

2 means the physical construction of the ITER facil3 ity, and the physical construction, purchase, or man4 ufacture of equipment or components that are spe5 cifically designed for the ITER facility, but does not

6 mean the design of the facility, equipment, or com7 ponents.

8 (2) FIRE.—The term ‘‘FIRE’’ means the Fu9 sion Ignition Research Experiment, the fusion re10 search experiment for which design work has been

11 supported by the Department as a possible alter12 native burning plasma experiment in the event that

13 ITER fails to move forward.

14 (3) ITER.—The term ‘‘ITER’’ means the

15 international burning plasma fusion research project

16 in which the President announced United States

17 participation on January 30, 2003.

18 SEC. 953. PLAN FOR FUSION ENERGY SCIENCES PROGRAM.

19 (a) DECLARATION OF POLICY.—It shall be the policy

20 of the United States to conduct research, development,

21 demonstration, and commercial application to provide for

22 the scientific, engineering, and commercial infrastructure

23 necessary to ensure that the United States is competitive

24 with other nations in providing fusion energy for its own

25 needs and the needs of other nations, including by dem-
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1 onstrating electric power or hydrogen production for the

2 United States energy grid utilizing fusion energy at the

3 earliest date possible.

4 (b) PLANNING.—

5 (1) IN GENERAL.—Not later than 180 days

6 after the date of enactment of this Act, the Sec7 retary shall present to Congress a plan, with pro8 posed cost estimates, budgets, and potential inter9 national partners, for the implementation of the pol10 icy described in subsection (a). The plan shall ensure

11 that—

12 (A) existing fusion research facilities are

13 more fully utilized;

14 (B) fusion science, technology, theory, ad15 vanced computation, modeling, and simulation

16 are strengthened;

17 (C) new magnetic and inertial fusion re18 search facilities are selected based on scientific

19 innovation, cost effectiveness, and their poten20 tial to advance the goal of practical fusion en21 ergy at the earliest date possible, and those that

22 are selected are funded at a cost-effective rate;

23 (D) communication of scientific results and

24 methods between the fusion energy science com-
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1 munity and the broader scientific and tech2 nology communities is improved;

3 (E) inertial confinement fusion facilities

4 are utilized to the extent practicable for the

5 purpose of inertial fusion energy research and

6 development; and

7 (F) attractive alternative inertial and mag8 netic fusion energy approaches are more fully

9 explored.

10 (2) COSTS AND SCHEDULES.—Such plan shall

11 also address the status of and, to the degree pos12 sible, costs and schedules for—

13 (A) in coordination with the program

14 under section 960, the design and implementa15 tion of international or national facilities for the

16 testing of fusion materials; and

17 (B) the design and implementation of

18 international or national facilities for the test19 ing and development of key fusion technologies.

20 SEC. 954. SPALLATION NEUTRON SOURCE.

21 (a) DEFINITION.—For the purposes of this section,

22 the term ‘‘Spallation Neutron Source’’ means Department

23 Project 99–E–334, Oak Ridge National Laboratory, Oak

24 Ridge, Tennessee.
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1 (b) REPORT.—The Secretary shall report on the

2 Spallation Neutron Source as part of the Department’s

3 annual budget submission, including a description of the

4 achievement of milestones, a comparison of actual costs

5 to estimated costs, and any changes in estimated project

6 costs or schedule.

7 (c) LIMITATIONS.—The total amount obligated by the

8 Department, including prior year appropriations, for the

9 Spallation Neutron Source shall not exceed—

10 (1) $1,192,700,000 for costs of construction;

11 (2) $219,000,000 for other project costs; and

12 (3) $1,411,700,000 for total project cost.

13 SEC. 955. SUPPORT FOR SCIENCE AND ENERGY FACILITIES

14 AND INFRASTRUCTURE.

15 (a) FACILITY AND INFRASTRUCTURE POLICY.—The

16 Secretary shall develop and implement a strategy for fa17 cilities and infrastructure supported primarily from the

18 Office of Science, the Office of Energy Efficiency and Re19 newable Energy, the Office of Fossil Energy, or the Office

20 of Nuclear Energy, Science, and Technology Programs at

21 all National Laboratories and single-purpose research fa22 cilities. Such strategy shall provide cost-effective means

23 for—

24 (1) maintaining existing facilities and infra25 structure, as needed;
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1 (2) closing unneeded facilities;

2 (3) making facility modifications; and

3 (4) building new facilities.

4 (b) REPORT.—

5 (1) IN GENERAL.—The Secretary shall prepare

6 and transmit, along with the President’s budget re7 quest to Congress for fiscal year 2006, a report con8 taining the strategy developed under subsection (a).

9 (2) CONTENTS.—For each National Laboratory

10 and single-purpose research facility, for the facilities

11 primarily used for science and energy research, such

12 report shall contain—

13 (A) the current priority list of proposed fa14 cilities and infrastructure projects, including

15 cost and schedule requirements;

16 (B) a current 10-year plan that dem17 onstrates the reconfiguration of its facilities and

18 infrastructure to meet its missions and to ad19 dress its long-term operational costs and return

20 on investment;

21 (C) the total current budget for all facili22 ties and infrastructure funding; and

23 (D) the current status of each facility and

24 infrastructure project compared to the original

25 baseline cost, schedule, and scope.
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1 SEC. 956. CATALYSIS RESEARCH AND DEVELOPMENT PRO2 GRAM.

3 (a) ESTABLISHMENT.—The Secretary, through the

4 Office of Science, shall support a program of research and

5 development in catalysis science consistent with the De6 partment’s statutory authorities related to research and

7 development. The program shall include efforts to—

8 (1) enable catalyst design using combinations of

9 experimental and mechanistic methodologies coupled

10 with computational modeling of catalytic reactions at

11 the molecular level;

12 (2) develop techniques for high throughput syn13 thesis, assay, and characterization at nanometer and

14 subnanometer scales in situ under actual operating

15 conditions;

16 (3) synthesize catalysts with specific site archi17 tectures;

18 (4) conduct research on the use of precious

19 metals for catalysis; and

20 (5) translate molecular understanding to the

21 design of catalytic compounds.

22 (b) DUTIES OF THE OFFICE OF SCIENCE.—In car23 rying out the program under this section, the Director of

24 the Office of Science shall—
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1 (1) support both individual investigators and

2 multidisciplinary teams of investigators to pioneer

3 new approaches in catalytic design;

4 (2) develop, plan, construct, acquire, share, or

5 operate special equipment or facilities for the use of

6 investigators in collaboration with national user fa7 cilities such as nanoscience and engineering centers;

8 (3) support technology transfer activities to

9 benefit industry and other users of catalysis science

10 and engineering; and

11 (4) coordinate research and development activi12 ties with industry and other Federal agencies.

13 (c) TRIENNIAL ASSESSMENT.—The National Acad14 emy of Sciences shall review the catalysis program every

15 3 years to report on gains made in the fundamental

16 science of catalysis and its progress towards developing

17 new fuels for energy production and material fabrication

18 processes.

19 SEC. 957. NANOSCALE SCIENCE AND ENGINEERING RE20 SEARCH, DEVELOPMENT, DEMONSTRATION,

21 AND COMMERCIAL APPLICATION.

22 (a) ESTABLISHMENT.—The Secretary, acting

23 through the Office of Science, shall support a program of

24 research, development, demonstration, and commercial ap25 plication in nanoscience and nanoengineering. The pro-
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1 gram shall include efforts to further the understanding of

2 the chemistry, physics, materials science, and engineering

3 of phenomena on the scale of nanometers and to apply

4 that knowledge to the Department’s mission areas.

5 (b) DUTIES OF THE OFFICE OF SCIENCE.—In car6 rying out the program under this section, the Office of

7 Science shall—

8 (1) support both individual investigators and

9 teams of investigators, including multidisciplinary

10 teams;

11 (2) carry out activities under subsection (c);

12 (3) support technology transfer activities to

13 benefit industry and other users of nanoscience and

14 nanoengineering;

15 (4) coordinate research and development activi16 ties with other Department programs, industry, and

17 other Federal agencies;

18 (5) ensure that societal and ethical concerns

19 will be addressed as the technology is developed by—

20 (A) establishing a research program to

21 identify societal and ethical concerns related to

22 nanotechnology, and ensuring that the results

23 of such research are widely disseminated; and
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1 (B) integrating, insofar as possible, re2 search on societal and ethical concerns with

3 nanotechnology research and development; and

4 (6) ensure that the potential of nanotechnology

5 to produce or facilitate the production of clean, inex6 pensive energy is realized by supporting

7 nanotechnology energy applications research and de8 velopment.

9 (c) NANOSCIENCE AND NANOENGINEERING RE10 SEARCH CENTERS AND MAJOR INSTRUMENTATION.—

11 (1) IN GENERAL.—The Secretary shall carry

12 out projects to develop, plan, construct, acquire, op13 erate, or support special equipment, instrumenta14 tion, or facilities for investigators conducting re15 search and development in nanoscience and

16 nanoengineering.

17 (2) ACTIVITIES.—Projects under paragraph (1)

18 may include the measurement of properties at the

19 scale of nanometers, manipulation at such scales,

20 and the integration of technologies based on

21 nanoscience or nanoengineering into bulk materials

22 or other technologies.

23 (3) FACILITIES.—Facilities under paragraph

24 (1) may include electron microcharacterization facili-
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1 ties, microlithography facilities, scanning probe fa2 cilities, and related instrumentation.

3 (4) COLLABORATIONS.—The Secretary shall en4 courage collaborations among Department programs,

5 institutions of higher education, laboratories, and in6 dustry at facilities under this subsection.

7 SEC. 958. ADVANCED SCIENTIFIC COMPUTING FOR ENERGY

8 MISSIONS.

9 (a) IN GENERAL.—The Secretary, acting through the

10 Office of Science, shall support a program to advance the

11 Nation’s computing capability across a diverse set of

12 grand challenge, computationally based, science problems

13 related to departmental missions.

14 (b) DUTIES OF THE OFFICE OF SCIENCE.—In car15 rying out the program under this section, the Office of

16 Science shall—

17 (1) advance basic science through computation

18 by developing software to solve grand challenge

19 science problems on new generations of computing

20 platforms in collaboration with other Department

21 program offices;

22 (2) enhance the foundations for scientific com23 puting by developing the basic mathematical and

24 computing systems software needed to take full ad25 vantage of the computing capabilities of computers
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1 with peak speeds of 100 teraflops or more, some of

2 which may be unique to the scientific problem of in3 terest;

4 (3) enhance national collaboratory and net5 working capabilities by developing software to inte6 grate geographically separated researchers into ef7 fective research teams and to facilitate access to and

8 movement and analysis of large (petabyte) data sets;

9 (4) develop and maintain a robust scientific

10 computing hardware infrastructure to ensure that

11 the computing resources needed to address depart12 mental missions are available; and

13 (5) explore new computing approaches and

14 technologies that promise to advance scientific com15 puting, including developments in quantum com16 puting.

17 (c) HIGH-PERFORMANCE COMPUTING ACT OF 1991

18 AMENDMENTS.—The High-Performance Computing Act

19 of 1991 is amended—

20 (1) in section 4 (15 U.S.C. 5503)—

21 (A) in paragraph (3) by striking ‘‘means’’

22 and inserting ‘‘and networking and information

23 technology mean’’, and by striking ‘‘(including

24 vector supercomputers and large scale parallel

25 systems)’’; and
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1 (B) in paragraph (4), by striking ‘‘packet

2 switched’’; and

3 (2) in section 203 (15 U.S.C. 5523)—

4 (A) in subsection (a), by striking all after

5 ‘‘As part of the’’ and inserting ‘‘Networking

6 and Information Technology Research and De7 velopment Program, the Secretary of Energy

8 shall conduct basic and applied research in net9 working and information technology, with em10 phasis on supporting fundamental research in

11 the physical sciences and engineering, and en12 ergy applications; providing supercomputer ac13 cess and advanced communication capabilities

14 and facilities to scientific researchers; and de15 veloping tools for distributed scientific collabo16 ration.’’;

17 (B) in subsection (b), by striking ‘‘Pro18 gram’’ and inserting ‘‘Networking and Informa19 tion Technology Research and Development

20 Program’’; and

21 (C) by amending subsection (e) to read as

22 follows:

23 ‘‘(e) AUTHORIZATION OF APPROPRIATIONS.—There

24 are authorized to be appropriated to the Secretary of En25 ergy to carry out the Networking and Information Tech-
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1 nology Research and Development Program such sums as

2 may be necessary for fiscal years 2004 through 2008.’’.

3 (d) COORDINATION.—The Secretary shall ensure that

4 the program under this section is integrated and con5 sistent with—

6 (1) the Advanced Simulation and Computing

7 Program, formerly known as the Accelerated Stra8 tegic Computing Initiative, of the National Nuclear

9 Security Administration; and

10 (2) other national efforts related to advanced

11 scientific computing for science and engineering.

12 (e) REPORT.—

13 (1) IN GENERAL.—Before undertaking any new

14 initiative to develop any new advanced architecture

15 for high-speed computing, the Secretary, through the

16 Director of the Office of Science, shall transmit a re17 port to Congress describing—

18 (A) the expected duration and cost of the

19 initiative;

20 (B) the technical milestones the initiative

21 is designed to achieve;

22 (C) how institutions of higher education

23 and private firms will participate in the initia24 tive; and
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1 (D) why the goals of the initiative could

2 not be achieved through existing programs.

3 (2) LIMITATION.—No funds may be expended

4 on any initiative described in paragraph (1) until 30

5 days after the report required by that paragraph is

6 transmitted to Congress.

7 SEC. 959. GENOMES TO LIFE PROGRAM.

8 (a) PROGRAM.—

9 (1) ESTABLISHMENT.—The Secretary shall es10 tablish a research, development, and demonstration

11 program in genetics, protein science, and computa12 tional biology to support the energy, national secu13 rity, and environmental mission of the Department.

14 (2) GRANTS.—The program shall support indi15 vidual investigators and multidisciplinary teams of

16 investigators through competitive, merit-reviewed

17 grants.

18 (3) CONSULTATION.—In carrying out the pro19 gram, the Secretary shall consult with other Federal

20 agencies that conduct genetic and protein research.

21 (b) GOALS.—The program shall have the goal of de22 veloping technologies and methods based on the biological

23 functions of genomes, microbes, and plants that—

24 (1) can facilitate the production of fuels, includ25 ing hydrogen;
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1 (2) convert carbon dioxide to organic carbon;

2 (3) improve national security and combat ter3 rorism;

4 (4) detoxify soils and water at Department fa5 cilities contaminated with heavy metals and radio6 logical materials; and

7 (5) address other Department missions as iden8 tified by the Secretary.

9 (c) PLAN.—

10 (1) DEVELOPMENT OF PLAN.—Not later than 1

11 year after the date of enactment of this Act, the

12 Secretary shall prepare and transmit to Congress a

13 research plan describing how the program author14 ized pursuant to this section will be undertaken to

15 accomplish the program goals established in sub16 section (b).

17 (2) REVIEW OF PLAN.—The Secretary shall

18 contract with the National Academy of Sciences to

19 review the research plan developed under this sub20 section. The Secretary shall transmit the review to

21 Congress not later than 18 months after transmittal

22 of the research plan under paragraph (1), along with

23 the Secretary’s response to the recommendations

24 contained in the review.
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1 (d) GENOMES TO LIFE USER FACILITIES AND AN2 CILLARY EQUIPMENT.—

3 (1) IN GENERAL.—Within the funds authorized

4 to be appropriated pursuant to this Act, the

5 amounts specified under section 951(b)(6) shall,

6 subject to appropriations, be available for projects to

7 develop, plan, construct, acquire, or operate special

8 equipment, instrumentation, or facilities for inves9 tigators conducting research, development, dem10 onstration, and commercial application in systems

11 biology and proteomics and associated biological dis12 ciplines.

13 (2) FACILITIES.—Facilities under paragraph

14 (1) may include facilities, equipment, or instrumen15 tation for—

16 (A) the production and characterization of

17 proteins;

18 (B) whole proteome analysis;

19 (C) characterization and imaging of molec20 ular machines; and

21 (D) analysis and modeling of cellular sys22 tems.

23 (3) COLLABORATIONS.—The Secretary shall en24 courage collaborations among universities, labora25 tories, and industry at facilities under this sub-
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1 section. All facilities under this subsection shall have

2 a specific mission of technology transfer to other in3 stitutions.

4 (e) PROHIBITION ON BIOMEDICAL AND HUMAN CELL

5 AND HUMAN SUBJECT RESEARCH.—

6 (1) NO BIOMEDICAL RESEARCH.—In carrying

7 out the program under this section, the Secretary

8 shall not conduct biomedical research.

9 (2) LIMITATIONS.—Nothing in this section shall

10 authorize the Secretary to conduct any research or

11 demonstrations—

12 (A) on human cells or human subjects; or

13 (B) designed to have direct application

14 with respect to human cells or human subjects.

15 SEC. 960. FISSION AND FUSION ENERGY MATERIALS RE16 SEARCH PROGRAM.

17 In the President’s fiscal year 2006 budget request,

18 the Secretary shall establish a research and development

19 program on material science issues presented by advanced

20 fission reactors and the Department’s fusion energy pro21 gram. The program shall develop a catalog of material

22 properties required for these applications, develop theo23 retical models for materials possessing the required prop24 erties, benchmark models against existing data, and de-
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1 velop a roadmap to guide further research and develop2 ment in this area.

3 SEC. 961. ENERGY-WATER SUPPLY PROGRAM.

4 (a) ESTABLISHMENT.—There is established within

5 the Department the Energy-Water Supply Program, to

6 study energy-related and certain other issues associated

7 with the supply of drinking water and operation of com8 munity water systems and to study water supply issues

9 related to energy.

10 (b) DEFINITIONS.—For the purposes of this section:

11 (1) ADMINISTRATOR.—The term ‘‘Adminis12 trator’’ means the Administrator of the Environ13 mental Protection Agency.

14 (2) AGENCY.—The term ‘‘Agency’’ means the

15 Environmental Protection Agency.

16 (3) FOUNDATION.—The term ‘‘Foundation’’

17 means the American Water Works Association Re18 search Foundation.

19 (4) INDIAN TRIBE.—The term ‘‘Indian tribe’’

20 has the meaning given the term in section 4 of the

21 Indian Self-Determination and Education Assistance

22 Act (25 U.S.C. 450b).

23 (5) PROGRAM.—The term ‘‘Program’’ means

24 the Energy-Water Supply Program established by

25 this section.
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1 (c) PROGRAM AREAS.—The Program shall develop

2 methods, means, procedures, equipment, and improved

3 technologies relating to—

4 (1) the arsenic removal program under sub5 section (d);

6 (2) the desalination program under subsection

7 (e); and

8 (3) the water and energy sustainability program

9 under subsection (f).

10 (d) ARSENIC REMOVAL PROGRAM.—

11 (1) IN GENERAL.—As soon as practicable after

12 the date of enactment of this Act, the Secretary, in

13 coordination with the Administrator and in partner14 ship with the Foundation, shall utilize the facilities,

15 institutions, and relationships established in the

16 Consolidated Appropriations Resolution, 2003 as de17 scribed in Senate Report 107–220 to carry out a re18 search program to provide innovative methods and

19 means for removal of arsenic.

20 (2) REQUIRED EVALUATIONS.—The program

21 shall, to the maximum extent practicable, evaluate

22 the means of—

23 (A) reducing energy costs incurred in

24 using arsenic removal technologies;
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1 (B) minimizing materials, operating, and

2 maintenance costs; and

3 (C) minimizing any quantities of waste (es4 pecially hazardous waste) that result from use

5 of arsenic removal technologies.

6 (3) PEER REVIEW.—Where applicable and rea7 sonably available, projects undertaken under this

8 subsection shall be peer-reviewed.

9 (4) COMMUNITY WATER SYSTEMS.—In carrying

10 out the program under this subsection, the Sec11 retary, in coordination with the Administrator,

12 shall—

13 (A) select projects involving a geographi14 cally and hydrologically diverse group of com15 munity water systems (as defined in section

16 1003 of the Public Health Service Act (42

17 U.S.C. 300)) and water chemistries, that have

18 experienced technical or economic difficulties in

19 providing drinking water with levels of arsenic

20 at 10 parts-per-billion or lower, which projects

21 shall be designed to develop innovative methods

22 and means to deliver drinking water that con23 tains less than 10 parts per billion of arsenic;

24 and
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1 (B) provide not less than 40 percent of all

2 funds spent pursuant to this subsection to ad3 dress the needs of, and in collaboration with,

4 rural communities or Indian tribes.

5 (5) COST EFFECTIVENESS.—The Foundation

6 shall create methods for determining cost effective7 ness of arsenic removal technologies used in the pro8 gram.

9 (6) EDUCATION, TRAINING, AND TECH10 NOLOGY.—The Foundation shall include education,

11 training, and technology transfer as part of the pro12 gram.

13 (7) COORDINATION.—The Secretary shall con14 sult with the Administrator to ensure that all activi15 ties conducted under the program are coordinated

16 with the Agency and do not duplicate other pro17 grams in the Agency and other Federal agencies,

18 State programs, and academia.

19 (8) REPORTS.—Not later than 1 year after the

20 date of commencement of the program under this

21 subsection, and once every year thereafter, the Sec22 retary shall submit to the Committee on Energy and

23 Commerce of the House of Representatives and the

24 Committee on Environment and Public Works and

25 the Committee on Energy and Natural Resources of
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1 the Senate a report on the results of the program

2 under this subsection.

3 (e) DESALINATION PROGRAM.—

4 (1) IN GENERAL.—The Secretary, in coopera5 tion with the Commissioner of Reclamation of the

6 Department of the Interior, shall carry out a pro7 gram to conduct research and develop methods and

8 means for desalination in accordance with the desali9 nation technology progress plan developed under

10 title II of the Energy and Water Development Ap11 propriations Act, 2002 (115 Stat. 498), and de12 scribed in Senate Report 107–39 under the heading

13 ‘‘WATER AND RELATED RESOURCES’’ in the ‘‘BU14 REAU OF RECLAMATION’’ section.

15 (2) REQUIREMENTS.—The desalination pro16 gram shall—

17 (A) use the resources of the Department

18 and the Department of the Interior that were

19 involved in the development of the 2003 Na20 tional Desalination and Water Purification

21 Technology Roadmap for next-generation de22 salination technology;

23 (B) focus on technologies that are appro24 priate for use in desalinating brackish ground25 water, drinking water, wastewater and other sa-
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1 line water supplies, or disposal of residual brine

2 or salt; and

3 (C) consider the use of renewable energy

4 sources.

5 (3) CONSTRUCTION PROJECTS.—Funds made

6 available to carry out this subsection may be used

7 for construction projects, including completion of the

8 National Desalination Research Center for brackish

9 groundwater and ongoing operational costs of this

10 facility.

11 (4) STEERING COMMITTEE.—The Secretary and

12 the Commissioner of Reclamation of the Department

13 of the Interior shall jointly establish a steering com14 mittee for activities conducted under this subsection.

15 The steering committee shall be jointly chaired by 1

16 representative from the program and 1 representa17 tive from the Bureau of Reclamation.

18 (f) WATER AND ENERGY SUSTAINABILITY PRO19 GRAM.—

20 (1) IN GENERAL.—The Secretary shall develop

21 a program to identify methods, means, procedures,

22 equipment, and improved technologies necessary to

23 ensure that sufficient quantities of water are avail24 able to meet energy needs and sufficient energy is

25 available to meet water needs.
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1 (2) ASSESSMENTS.—In order to acquire infor2 mation and avoid duplication, the Secretary shall

3 work in collaboration with the Secretary of the Inte4 rior, the Army Corps of Engineers, the Adminis5 trator, the Secretary of Commerce, the Secretary of

6 Defense, relevant State agencies, nongovernmental

7 organizations, and academia, to assess—

8 (A) future water resources needed to sup9 port energy development and production within

10 the United States including water used for hy11 dropower, and production of, or electricity gen12 eration by, hydrogen, biomass, fossil fuels, and

13 nuclear fuel;

14 (B) future energy resources needed to sup15 port water purification and wastewater treat16 ment, including desalination and water convey17 ance;

18 (C) use of impaired and nontraditional

19 water supplies for energy production other than

20 oil and gas extraction;

21 (D) technology and programs for improv22 ing water use efficiency; and

23 (E) technologies to reduce water use in en24 ergy development and production.

25 (3) ROADMAP; TOOLS.—The Secretary shall—
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1 (A) develop a program plan and technology

2 development roadmap for the Water and En3 ergy Sustainability Program to identify sci4 entific and technical requirements and activities

5 that are required to support planning for en6 ergy sustainability under current and potential

7 future conditions of water availability, use of

8 impaired water for energy production and other

9 uses, and reduction of water use in energy de10 velopment and production;

11 (B) develop tools for national and local en12 ergy and water sustainability planning, includ13 ing numerical models, decision analysis tools,

14 economic analysis tools, databases, and plan15 ning methodologies and strategies;

16 (C) implement at least 3 planning projects

17 involving energy development or production that

18 use the tools described in subparagraph (B)

19 and assess the viability of those tools at the

20 scale of river basins with at least 1 demonstra21 tion involving an international border; and

22 (D) transfer those tools to other Federal

23 agencies, State agencies, nonprofit organiza24 tions, industry, and academia.
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1 (4) REPORT.—Not later than 1 year after the

2 date of enactment of this Act, the Secretary shall

3 submit to Congress a report on the Water and En4 ergy Sustainability Program that—

5 (A) includes the results of the assessment

6 under paragraph (2) and the program plan and

7 technology development roadmap; and

8 (B) identifies policy, legal, and institu9 tional issues related to water and energy sus10 tainability.

11 SEC. 962. NITROGEN FIXATION.

12 The Secretary, acting through the Office of Science,

13 shall support a program of research, development, dem14 onstration, and commercial application on biological nitro15 gen fixation, including plant genomics research relevant

16 to the development of commercial crop varieties with en17 hanced nitrogen fixation efficiency and ability.

18 Subtitle G—Energy and

19 Environment

20 SEC. 964. UNITED STATES-MEXICO ENERGY TECHNOLOGY

21 COOPERATION.

22 (a) PROGRAM.—The Secretary shall establish a re23 search, development, demonstration, and commercial ap24 plication program to be carried out in collaboration with

25 entities in Mexico and the United States to promote en-
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1 ergy efficient, environmentally sound economic develop2 ment along the United States-Mexico border that mini3 mizes public health risks from industrial activities in the

4 border region.

5 (b) PROGRAM MANAGEMENT.—The program under

6 subsection (a) shall be managed by the Department of En7 ergy Carlsbad Environmental Management Field Office.

8 (c) TECHNOLOGY TRANSFER.—In carrying out

9 projects and activities under this section, the Secretary

10 shall assess the applicability of technology developed under

11 the Environmental Management Science Program of the

12 Department.

13 (d) INTELLECTUAL PROPERTY.—In carrying out this

14 section, the Secretary shall comply with the requirements

15 of any agreement entered into between the United States

16 and Mexico regarding intellectual property protection.

17 (e) AUTHORIZATION OF APPROPRIATIONS.—The fol18 lowing sums are authorized to be appropriated to the Sec19 retary to carry out activities under this section:

20 (1) For each of fiscal years 2004 and 2005,

21 $5,000,000.

22 (2) For each of fiscal years 2006, 2007, and

23 2008, $6,000,000.
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1 SEC. 965. WESTERN HEMISPHERE ENERGY COOPERATION.

2 (a) PROGRAM.—The Secretary shall carry out a pro3 gram to promote cooperation on energy issues with West4 ern Hemisphere countries.

5 (b) ACTIVITIES.—Under the program, the Secretary

6 shall fund activities to work with Western Hemisphere

7 countries to—

8 (1) assist the countries in formulating and

9 adopting changes in economic policies and other poli10 cies to—

11 (A) increase the production of energy sup12 plies; and

13 (B) improve energy efficiency; and

14 (2) assist in the development and transfer of

15 energy supply and efficiency technologies that would

16 have a beneficial impact on world energy markets.

17 (c) UNIVERSITY PARTICIPATION.—To the extent

18 practicable, the Secretary shall carry out the program

19 under this section with the participation of universities so

20 as to take advantage of the acceptance of universities by

21 Western Hemisphere countries as sources of unbiased

22 technical and policy expertise when assisting the Secretary

23 in—

24 (1) evaluating new technologies;

25 (2) resolving technical issues;
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1 (3) working with those countries in the develop2 ment of new policies; and

3 (4) training policymakers, particularly in the

4 case of universities that involve the participation of

5 minority students, such as Hispanic-serving institu6 tions and Historically Black Colleges and Univer7 sities.

8 (d) AUTHORIZATION OF APPROPRIATIONS.—There

9 are authorized to be appropriated to carry out this

10 section—

11 (1) $8,000,000 for fiscal year 2004;

12 (2) $10,000,000 for fiscal year 2005;

13 (3) $13,000,000 for fiscal year 2006;

14 (4) $16,000,000 for fiscal year 2007; and

15 (5) $19,000,000 for fiscal year 2008.

16 SEC. 966. WASTE REDUCTION AND USE OF ALTERNATIVES.

17 (a) GRANT AUTHORITY.—The Secretary may make

18 a single grant to a qualified institution to examine and

19 develop the feasibility of burning post-consumer carpet in

20 cement kilns as an alternative energy source. The pur21 poses of the grant shall include determining—

22 (1) how post-consumer carpet can be burned

23 without disrupting kiln operations;

24 (2) the extent to which overall kiln emissions

25 may be reduced;
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1 (3) the emissions of air pollutants and other

2 relevant environmental impacts; and

3 (4) how this process provides benefits to both

4 cement kiln operations and carpet suppliers.

5 (b) QUALIFIED INSTITUTION.—For the purposes of

6 subsection (a), a qualified institution is a research-inten7 sive institution of higher education with demonstrated ex8 pertise in the fields of fiber recycling and logistical mod9 eling of carpet waste collection and preparation.

10 (c) AUTHORIZATION OF APPROPRIATIONS.—There

11 are authorized to be appropriated to the Secretary for car12 rying out this section $500,000.

13 SEC. 967. REPORT ON FUEL CELL TEST CENTER.

14 (a) REPORT.—Not later than 1 year after the date

15 of enactment of this Act, the Secretary shall transmit to

16 Congress a report on the results of a study of the estab17 lishment of a test center for next-generation fuel cells at

18 an institution of higher education that has available a con19 tinuous source of hydrogen and access to the electric

20 transmission grid. Such report shall include a conceptual

21 design for such test center and a projection of the costs

22 of establishing the test center.

23 (b) AUTHORIZATION OF APPROPRIATIONS.—There

24 are authorized to be appropriated to the Secretary for car25 rying out this section $500,000.
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1 SEC. 968. ARCTIC ENGINEERING RESEARCH CENTER.

2 (a) IN GENERAL.—The Secretary of Energy (referred

3 to in this section as the ‘‘Secretary’’) in consultation with

4 the Secretary of Transportation and the United States

5 Arctic Research Commission shall provide annual grants

6 to a university located adjacent to the Arctic Energy Of7 fice of the Department of Energy, to establish and operate

8 a university research center to be headquartered in Fair9 banks and to be known as the ‘‘Arctic Engineering Re10 search Center’’ (referred to in this section as the ‘‘Cen11 ter’’).

12 (b) PURPOSE.—The purpose of the Center shall be

13 to conduct research on, and develop improved methods of,

14 construction and use of materials to improve the overall

15 performance of roads, bridges, residential, commercial,

16 and industrial structures, and other infrastructure in the

17 Arctic region, with an emphasis on developing—

18 (1) new construction techniques for roads,

19 bridges, rail, and related transportation infrastruc20 ture and residential, commercial, and industrial in21 frastructure that are capable of withstanding the

22 Arctic environment and using limited energy re23 sources as efficiently as possible;

24 (2) technologies and procedures for increasing

25 road, bridge, rail, and related transportation infra26 structure and residential, commercial, and industrial
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1 infrastructure safety, reliability, and integrity in the

2 Arctic region;

3 (3) new materials and improving the perform4 ance and energy efficiency of existing materials for

5 the construction of roads, bridges, rail, and related

6 transportation infrastructure and residential, com7 mercial, and industrial infrastructure in the Arctic

8 region; and

9 (4) recommendations for new local, regional,

10 and State permitting and building codes to ensure

11 transportation and building safety and efficient en12 ergy use when constructing, using, and occupying

13 such infrastructure in the Arctic region.

14 (c) OBJECTIVES.—The Center shall carry out—

15 (1) basic and applied research in the subjects

16 described in subsection (b), the products of which

17 shall be judged by peers or other experts in the field

18 to advance the body of knowledge in road, bridge,

19 rail, and infrastructure engineering in the Arctic re20 gion; and

21 (2) an ongoing program of technology transfer

22 that makes research results available to potential

23 users in a form that can be implemented.

24 (d) AMOUNT OF GRANT.—For each of fiscal years

25 2004 through 2009, the Secretary shall provide a grant
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1 in the amount of $3,000,000 to the institution specified

2 in subsection (a) to carry out this section.

3 (e) AUTHORIZATION OF APPROPRIATIONS.—There

4 are authorized to be appropriated to carry out this section

5 $3,000,000 for each of fiscal years 2004 through 2009.

6 SEC. 969. BARROW GEOPHYSICAL RESEARCH FACILITY.

7 (a) ESTABLISHMENT.—The Secretary of Commerce,

8 in consultation with the Secretaries of Energy and the In9 terior, the Director of the National Science Foundation,

10 and the Administrator of the Environmental Protection

11 Agency, shall establish a joint research facility in Barrow,

12 Alaska, to be known as the ‘‘Barrow Geophysical Research

13 Facility’’, to support scientific research activities in the

14 Arctic.

15 (b) AUTHORIZATION OF APPROPRIATIONS.—There

16 are authorized to be appropriated to the Secretaries of

17 Commerce, Energy, and the Interior, the Director of the

18 National Science Foundation, and the Administrator of

19 the Environmental Protection Agency for the planning,

20 design, construction, and support of the Barrow Geo21 physical Research Facility $61,000,000.

22 SEC. 970. WESTERN MICHIGAN DEMONSTRATION PROJECT.

23 The Administrator of the Environmental Protection

24 Agency, in consultation with the State of Michigan and

25 affected local officials, shall conduct a demonstration
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1 project to address the effect of transported ozone and

2 ozone precursors in Southwestern Michigan. The dem3 onstration program shall address projected nonattainment

4 areas in Southwestern Michigan that include counties with

5 design values for ozone of less than .095 based on years

6 2000 to 2002 or the most current 3-year period of air

7 quality data. The Administrator shall assess any difficul8 ties such areas may experience in meeting the 8 hour na9 tional ambient air quality standard for ozone due to the

10 effect of transported ozone or ozone precursors into the

11 areas. The Administrator shall work with State and local

12 officials to determine the extent of ozone and ozone pre13 cursor transport, to assess alternatives to achieve compli14 ance with the 8 hour standard apart from local controls,

15 and to determine the timeframe in which such compliance

16 could take place. The Administrator shall complete this

17 demonstration project no later than 2 years after the date

18 of enactment of this section and shall not impose any re19 quirement or sanction that might otherwise apply during

20 the pendency of the demonstration project.

21 Subtitle H—Management

22 SEC. 971. AVAILABILITY OF FUNDS.

23 Funds authorized to be appropriated to the Depart24 ment under this title shall remain available until expended.
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1 SEC. 972. COST SHARING.

2 (a) RESEARCH AND DEVELOPMENT.—Except as oth3 erwise provided in this title, for research and development

4 programs carried out under this title the Secretary shall

5 require a commitment from non-Federal sources of at

6 least 20 percent of the cost of the project. The Secretary

7 may reduce or eliminate the non-Federal requirement

8 under this subsection if the Secretary determines that the

9 research and development is of a basic or fundamental na10 ture or involves technical analyses or educational activi11 ties.

12 (b) DEMONSTRATION AND COMMERCIAL APPLICA13 TION.—Except as otherwise provided in this title, the Sec14 retary shall require at least 50 percent of the costs directly

15 and specifically related to any demonstration or commer16 cial application project under this title to be provided from

17 non-Federal sources. The Secretary may reduce the non18 Federal requirement under this subsection if the Secretary

19 determines that the reduction is necessary and appropriate

20 considering the technological risks involved in the project

21 and is necessary to meet the objectives of this title.

22 (c) CALCULATION OF AMOUNT.—In calculating the

23 amount of the non-Federal commitment under subsection

24 (a) or (b), the Secretary may include personnel, services,

25 equipment, and other resources.
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1 (d) SIZE OF NON-FEDERAL SHARE.—The Secretary

2 may consider the size of the non-Federal share in selecting

3 projects.

4 SEC. 973. MERIT REVIEW OF PROPOSALS.

5 Awards of funds authorized under this title shall be

6 made only after an impartial review of the scientific and

7 technical merit of the proposals for such awards has been

8 carried out by or for the Department.

9 SEC. 974. EXTERNAL TECHNICAL REVIEW OF DEPART10 MENTAL PROGRAMS.

11 (a) NATIONAL ENERGY RESEARCH AND DEVELOP12 MENT ADVISORY BOARDS.—

13 (1) IN GENERAL.—The Secretary shall establish

14 1 or more advisory boards to review Department re15 search, development, demonstration, and commercial

16 application programs in energy efficiency, renewable

17 energy, nuclear energy, and fossil energy.

18 (2) EXISTING ADVISORY BOARDS.—The Sec19 retary may designate an existing advisory board

20 within the Department to fulfill the responsibilities

21 of an advisory board under this subsection, and may

22 enter into appropriate arrangements with the Na23 tional Academy of Sciences to establish such an ad24 visory board.

25 (b) OFFICE OF SCIENCE ADVISORY COMMITTEES.—
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1 (1) UTILIZATION OF EXISTING COMMITTEES.—

2 The Secretary shall continue to use the scientific

3 program advisory committees chartered under the

4 Federal Advisory Committee Act (5 U.S.C. App.) by

5 the Office of Science to oversee research and devel6 opment programs under that Office.

7 (2) SCIENCE ADVISORY COMMITTEE.—

8 (A) ESTABLISHMENT.—There shall be in

9 the Office of Science a Science Advisory Com10 mittee that includes the chairs of each of the

11 advisory committees described in paragraph (1).

12 (B) RESPONSIBILITIES.—The Science Ad13 visory Committee shall—

14 (i) serve as the science advisor to the

15 Director of the Office of Science;

16 (ii) advise the Director with respect to

17 the well-being and management of the Na18 tional Laboratories and single-purpose re19 search facilities;

20 (iii) advise the Director with respect

21 to education and workforce training activi22 ties required for effective short-term and

23 long-term basic and applied research ac24 tivities of the Office of Science; and
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1 (iv) advise the Director with respect

2 to the well being of the university research

3 programs supported by the Office of

4 Science.

5 (c) MEMBERSHIP.—Each advisory board under this

6 section shall consist of persons with appropriate expertise

7 representing a diverse range of interests.

8 (d) MEETINGS AND PURPOSES.—Each advisory

9 board under this section shall meet at least semiannually

10 to review and advise on the progress made by the respec11 tive research, development, demonstration, and commer12 cial application program or programs. The advisory board

13 shall also review the measurable cost and performance14 based goals for such programs as established under sec15 tion 901(b), and the progress on meeting such goals.

16 (e) PERIODIC REVIEWS AND ASSESSMENTS.—The

17 Secretary shall enter into appropriate arrangements with

18 the National Academy of Sciences to conduct periodic re19 views and assessments of the programs authorized by this

20 title, the measurable cost and performance-based goals for

21 such programs as established under section 901(b), if any,

22 and the progress on meeting such goals. Such reviews and

23 assessments shall be conducted every 5 years, or more

24 often as the Secretary considers necessary, and the Sec-
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1 retary shall transmit to Congress reports containing the

2 results of all such reviews and assessments.

3 SEC. 975. IMPROVED COORDINATION OF TECHNOLOGY

4 TRANSFER ACTIVITIES.

5 (a) TECHNOLOGY TRANSFER COORDINATOR.—The

6 Secretary shall designate a Technology Transfer Coordi7 nator to perform oversight of and policy development for

8 technology transfer activities at the Department. The

9 Technology Transfer Coordinator shall—

10 (1) coordinate the activities of the Technology

11 Transfer Working Group;

12 (2) oversee the expenditure of funds allocated

13 to the Technology Transfer Working Group; and

14 (3) coordinate with each technology partnership

15 ombudsman appointed under section 11 of the Tech16 nology Transfer Commercialization Act of 2000 (42

17 U.S.C. 7261c).

18 (b) TECHNOLOGY TRANSFER WORKING GROUP.—

19 The Secretary shall establish a Technology Transfer

20 Working Group, which shall consist of representatives of

21 the National Laboratories and single-purpose research fa22 cilities, to—

23 (1) coordinate technology transfer activities oc24 curring at National Laboratories and single-purpose

25 research facilities;
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1 (2) exchange information about technology

2 transfer practices, including alternative approaches

3 to resolution of disputes involving intellectual prop4 erty rights and other technology transfer matters;

5 and

6 (3) develop and disseminate to the public and

7 prospective technology partners information about

8 opportunities and procedures for technology transfer

9 with the Department, including those related to al10 ternative approaches to resolution of disputes involv11 ing intellectual property rights and other technology

12 transfer matters.

13 (c) TECHNOLOGY TRANSFER RESPONSIBILITY.—

14 Nothing in this section shall affect the technology transfer

15 responsibilities of Federal employees under the Stevenson16 Wydler Technology Innovation Act of 1980 (15 U.S.C.

17 3701 et seq.).

18 SEC. 976. FEDERAL LABORATORY EDUCATIONAL PART19 NERS.

20 (a) DISTRIBUTION OF ROYALTIES RECEIVED BY

21 FEDERAL AGENCIES.—Section 14(a)(1)(B)(v) of the Ste22 venson-Wydler Technology Innovation Act of 1980 (15

23 U.S.C. 3710c(a)(1)(B)(v)), is amended to read as follows:

24 ‘‘(v) for scientific research and develop25 ment and for educational assistance and other
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1 purposes consistent with the missions and ob2 jectives of the agency and the laboratory.’’.

3 (b) COOPERATIVE RESEARCH AND DEVELOPMENT

4 AGREEMENTS.—Section 12(b)(5)(C) of the Stevenson5 Wydler Technology Innovation Act of 1980 (15 U.S.C.

6 3710a(b)(5)(C)) is amended to read as follows:

7 ‘‘(C) for scientific research and development

8 and for educational assistance consistent with the

9 missions and objectives of the agency and the lab10 oratory.’’.

11 SEC. 977. INTERAGENCY COOPERATION.

12 The Secretary shall enter into discussions with the

13 Administrator of the National Aeronautics and Space Ad14 ministration with the goal of reaching an interagency

15 working agreement between the 2 agencies that would

16 make the National Aeronautics and Space Administra17 tion’s expertise in energy, gained from its existing and

18 planned programs, more readily available to the relevant

19 research, development, demonstration, and commercial ap20 plications programs of the Department. Technologies to

21 be discussed should include the National Aeronautics and

22 Space Administration’s modeling, research, development,

23 testing, and evaluation of new energy technologies, includ24 ing solar, wind, fuel cells, and hydrogen storage and dis25 tribution.
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1 SEC. 978. TECHNOLOGY INFRASTRUCTURE PROGRAM.

2 (a) ESTABLISHMENT.—The Secretary shall establish

3 a Technology Infrastructure Program in accordance with

4 this section.

5 (b) PURPOSE.—The purpose of the Technology Infra6 structure Program shall be to improve the ability of Na7 tional Laboratories and single-purpose research facilities

8 to support departmental missions by—

9 (1) stimulating the development of technology

10 clusters that can support departmental missions at

11 the National Laboratories or single-purpose research

12 facilities;

13 (2) improving the ability of National Labora14 tories and single-purpose research facilities to lever15 age and benefit from commercial research, tech16 nology, products, processes, and services; and

17 (3) encouraging the exchange of scientific and

18 technological expertise between National Labora19 tories or single-purpose research facilities and enti20 ties that can support departmental missions at the

21 National Laboratories or single-purpose research fa22 cilities, such as institutions of higher education;

23 technology-related business concerns; nonprofit insti24 tutions; and agencies of State, tribal, or local gov25 ernments.
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1 (c) PROJECTS.—The Secretary shall authorize the

2 Director of each National Laboratory or single-purpose re3 search facility to implement the Technology Infrastructure

4 Program at such National Laboratory or facility through

5 projects that meet the requirements of subsections (d) and

6 (e).

7 (d) PROGRAM REQUIREMENTS.—Each project funded

8 under this section shall meet the following requirements:

9 (1) Each project shall include at least 1 of each

10 of the following entities: a business; an institution of

11 higher education; a nonprofit institution; and an

12 agency of a State, local, or tribal government.

13 (2) Not less than 50 percent of the costs of

14 each project funded under this section shall be pro15 vided from non-Federal sources. The calculation of

16 costs paid by the non-Federal sources to a project

17 shall include cash, personnel, services, equipment,

18 and other resources expended on the project after

19 start of the project. Independent research and devel20 opment expenses of Government contractors that

21 qualify for reimbursement under section 31.205–

22 18(e) of the Federal Acquisition Regulation issued

23 pursuant to section 25(c)(1) of the Office of Federal

24 Procurement Policy Act (41 U.S.C. 421(c)(1)) may

25 be credited toward costs paid by non-Federal sources
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1 to a project, if the expenses meet the other require2 ments of this section.

3 (3) All projects under this section shall be com4 petitively selected using procedures determined by

5 the Secretary.

6 (4) Any participant that receives funds under

7 this section may use generally accepted accounting

8 principles for maintaining accounts, books, and

9 records relating to the project.

10 (5) No Federal funds shall be made available

11 under this section for construction or any project for

12 more than 5 years.

13 (e) SELECTION CRITERIA.—

14 (1) IN GENERAL.—The Secretary shall allocate

15 funds under this section only if the Director of the

16 National Laboratory or single-purpose research facil17 ity managing the project determines that the project

18 is likely to improve the ability of the National Lab19 oratory or single-purpose research facility to achieve

20 technical success in meeting departmental missions.

21 (2) CRITERIA.—The Secretary shall consider

22 the following criteria in selecting a project to receive

23 Federal funds:

24 (A) The potential of the project to promote

25 the development of a commercially sustainable
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1 technology cluster following the period of De2 partment investment, which will derive most of

3 the demand for its products or services from

4 the private sector, and which will support de5 partmental missions at the participating Na6 tional Laboratory or single-purpose research fa7 cility.

8 (B) The potential of the project to promote

9 the use of commercial research, technology,

10 products, processes, and services by the partici11 pating National Laboratory or single-purpose

12 research facility to achieve its mission or the

13 commercial development of technological inno14 vations made at the participating National Lab15 oratory or single-purpose research facility.

16 (C) The extent to which the project in17 volves a wide variety and number of institutions

18 of higher education, nonprofit institutions, and

19 technology-related business concerns that can

20 support the missions of the participating Na21 tional Laboratory or single-purpose research fa22 cility and that will make substantive contribu23 tions to achieving the goals of the project.

24 (D) The extent to which the project fo25 cuses on promoting the development of tech-
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1 nology-related business concerns that are small

2 businesses or involves such small businesses

3 substantively in the project.

4 (E) Such other criteria as the Secretary

5 determines to be appropriate.

6 (f) ALLOCATION.—In allocating funds for projects

7 approved under this section, the Secretary shall provide—

8 (1) the Federal share of the project costs; and

9 (2) additional funds to the National Laboratory

10 or single-purpose research facility managing the

11 project to permit the National Laboratory or single12 purpose research facility to carry out activities relat13 ing to the project, and to coordinate such activities

14 with the project.

15 (g) REPORT TO CONGRESS.—Not later than July 1,

16 2006, the Secretary shall report to Congress on whether

17 the Technology Infrastructure Program should be contin18 ued and, if so, how the program should be managed.

19 (h) DEFINITIONS.—In this section:

20 (1) TECHNOLOGY CLUSTER.—The term ‘‘tech21 nology cluster’’ means a concentration of technology22 related business concerns, institutions of higher edu23 cation, or nonprofit institutions that reinforce each

24 other’s performance in the areas of technology devel25 opment through formal or informal relationships.
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1 (2) TECHNOLOGY-RELATED BUSINESS CON2 CERN.—The term ‘‘technology-related business con3 cern’’ means a for-profit corporation, company, asso4 ciation, firm, partnership, or small business concern

5 that conducts scientific or engineering research; de6 velops new technologies; manufactures products

7 based on new technologies; or performs technological

8 services.

9 (i) AUTHORIZATION OF APPROPRIATIONS.—There

10 are authorized to be appropriated to the Secretary for ac11 tivities under this section $10,000,000 for each of fiscal

12 years 2004, 2005, and 2006.

13 SEC. 979. REPROGRAMMING.

14 (a) DISTRIBUTION REPORT.—Not later than 60 days

15 after the date of the enactment of an Act appropriating

16 amounts authorized under this title, the Secretary shall

17 transmit to the appropriate authorizing committees of

18 Congress a report explaining how such amounts will be

19 distributed among the authorizations contained in this

20 title.

21 (b) PROHIBITION.—

22 (1) IN GENERAL.—No amount identified under

23 subsection (a) shall be reprogrammed if such re24 programming would result in an obligation which

25 changes an individual distribution required to be re-
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1 ported under subsection (a) by more than 5 percent

2 unless the Secretary has transmitted to the appro3 priate authorizing committees of Congress a report

4 described in subsection (c) and a period of 30 days

5 has elapsed after such committees receive the report.

6 (2) COMPUTATION.—In the computation of the

7 30-day period described in paragraph (1), there shall

8 be excluded any day on which either House of Con9 gress is not in session because of an adjournment of

10 more than 3 days to a day certain.

11 (c) REPROGRAMMING REPORT.—A report referred to

12 in subsection (b)(1) shall contain a full and complete

13 statement of the action proposed to be taken and the facts

14 and circumstances relied on in support of the proposed

15 action.

16 SEC. 980. CONSTRUCTION WITH OTHER LAWS.

17 Except as otherwise provided in this title, the Sec18 retary shall carry out the research, development, dem19 onstration, and commercial application programs,

20 projects, and activities authorized by this title in accord21 ance with the applicable provisions of the Atomic Energy

22 Act of 1954 (42 U.S.C. 2011 et seq.), the Federal Non23 nuclear Research and Development Act of 1974 (42

24 U.S.C. 5901 et seq.), the Energy Policy Act of 1992 (42

25 U.S.C. 13201 et seq.), the Stevenson-Wydler Technology
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1 Innovation Act of 1980 (15 U.S.C. 3701 et seq.), chapter

2 18 of title 35, United States Code (commonly referred to

3 as the Bayh-Dole Act), and any other Act under which

4 the Secretary is authorized to carry out such activities.

5 SEC. 981. REPORT ON RESEARCH AND DEVELOPMENT PRO6 GRAM EVALUATION METHODOLOGIES.

7 Not later than 180 days after the date of enactment

8 of this Act, the Secretary shall enter into appropriate ar9 rangements with the National Academy of Sciences to in10 vestigate and report on the scientific and technical merits

11 of any evaluation methodology currently in use or pro12 posed for use in relation to the scientific and technical pro13 grams of the Department by the Secretary or other Fed14 eral official. Not later than 6 months after receiving the

15 report of the National Academy, the Secretary shall sub16 mit such report to Congress, along with any other views

17 or plans of the Secretary with respect to the future use

18 of such evaluation methodology.

19 SEC. 982. DEPARTMENT OF ENERGY SCIENCE AND TECH20 NOLOGY SCHOLARSHIP PROGRAM.

21 (a) ESTABLISHMENT OF PROGRAM.—

22 (1) IN GENERAL.—The Secretary is authorized

23 to establish a Department of Energy Science and

24 Technology Scholarship Program to award scholar-
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1 ships to individuals that is designed to recruit and

2 prepare students for careers in the Department.

3 (2) COMPETITIVE PROCESS.—Individuals shall

4 be selected to receive scholarships under this section

5 through a competitive process primarily on the basis

6 of academic merit, with consideration given to finan7 cial need and the goal of promoting the participation

8 of individuals identified in section 33 or 34 of the

9 Science and Engineering Equal Opportunities Act

10 (42 U.S.C. 1885a or 1885b).

11 (3) SERVICE AGREEMENTS.—To carry out the

12 Program the Secretary shall enter into contractual

13 agreements with individuals selected under para14 graph (2) under which the individuals agree to serve

15 as full-time employees of the Department, for the

16 period described in subsection (f)(1), in positions

17 needed by the Department and for which the individ18 uals are qualified, in exchange for receiving a schol19 arship.

20 (b) SCHOLARSHIP ELIGIBILITY.—In order to be eligi21 ble to participate in the Program, an individual must—

22 (1) be enrolled or accepted for enrollment as a

23 full-time student at an institution of higher edu24 cation in an academic program or field of study de-
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1 scribed in the list made available under subsection

2 (d);

3 (2) be a United States citizen; and

4 (3) at the time of the initial scholarship award,

5 not be a Federal employee as defined in section

6 2105 of title 5 of the United States Code.

7 (c) APPLICATION REQUIRED.—An individual seeking

8 a scholarship under this section shall submit an applica9 tion to the Secretary at such time, in such manner, and

10 containing such information, agreements, or assurances as

11 the Secretary may require.

12 (d) ELIGIBLE ACADEMIC PROGRAMS.—The Secretary

13 shall make publicly available a list of academic programs

14 and fields of study for which scholarships under the Pro15 gram may be utilized, and shall update the list as nec16 essary.

17 (e) SCHOLARSHIP REQUIREMENT.—

18 (1) IN GENERAL.—The Secretary may provide a

19 scholarship under the Program for an academic year

20 if the individual applying for the scholarship has

21 submitted to the Secretary, as part of the applica22 tion required under subsection (c), a proposed aca23 demic program leading to a degree in a program or

24 field of study on the list made available under sub25 section (d).
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1 (2) DURATION OF ELIGIBILITY.—An individual

2 may not receive a scholarship under this section for

3 more than 4 academic years, unless the Secretary

4 grants a waiver.

5 (3) SCHOLARSHIP AMOUNT.—The dollar

6 amount of a scholarship under this section for an

7 academic year shall be determined under regulations

8 issued by the Secretary, but shall in no case exceed

9 the cost of attendance.

10 (4) AUTHORIZED USES.—A scholarship pro11 vided under this section may be expended for tuition,

12 fees, and other authorized expenses as established by

13 the Secretary by regulation.

14 (5) CONTRACTS REGARDING DIRECT PAYMENTS

15 TO INSTITUTIONS.—The Secretary may enter into a

16 contractual agreement with an institution of higher

17 education under which the amounts provided for a

18 scholarship under this section for tuition, fees, and

19 other authorized expenses are paid directly to the in20 stitution with respect to which the scholarship is

21 provided.

22 (f) PERIOD OF OBLIGATED SERVICE.—

23 (1) DURATION OF SERVICE.—The period of

24 service for which an individual shall be obligated to

25 serve as an employee of the Department is, except
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1 as provided in subsection (h)(2), 24 months for each

2 academic year for which a scholarship under this

3 section is provided.

4 (2) SCHEDULE FOR SERVICE.—

5 (A) IN GENERAL.—Except as provided in

6 subparagraph (B), obligated service under para7 graph (1) shall begin not later than 60 days

8 after the individual obtains the educational de9 gree for which the scholarship was provided.

10 (B) DEFERRAL.—The Secretary may defer

11 the obligation of an individual to provide a pe12 riod of service under paragraph (1) if the Sec13 retary determines that such a deferral is appro14 priate. The Secretary shall prescribe the terms

15 and conditions under which a service obligation

16 may be deferred through regulation.

17 (g) PENALTIES FOR BREACH OF SCHOLARSHIP

18 AGREEMENT.—

19 (1) FAILURE TO COMPLETE ACADEMIC TRAIN20 ING.—Scholarship recipients who fail to maintain a

21 high level of academic standing, as defined by the

22 Secretary by regulation, who are dismissed from

23 their educational institutions for disciplinary rea24 sons, or who voluntarily terminate academic training

25 before graduation from the educational program for
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1 which the scholarship was awarded, shall be in

2 breach of their contractual agreement and, in lieu of

3 any service obligation arising under such agreement,

4 shall be liable to the United States for repayment

5 not later than 1 year after the date of default of all

6 scholarship funds paid to them and to the institution

7 of higher education on their behalf under the agree8 ment, except as provided in subsection (h)(2). The

9 repayment period may be extended by the Secretary

10 when determined to be necessary, as established by

11 regulation.

12 (2) FAILURE TO BEGIN OR COMPLETE THE

13 SERVICE OBLIGATION OR MEET THE TERMS AND

14 CONDITIONS OF DEFERMENT.—A scholarship recipi15 ent who, for any reason, fails to begin or complete

16 a service obligation under this section after comple17 tion of academic training, or fails to comply with the

18 terms and conditions of deferment established by the

19 Secretary pursuant to subsection (f)(2)(B), shall be

20 in breach of the contractual agreement. When a re21 cipient breaches an agreement for the reasons stated

22 in the preceding sentence, the recipient shall be lia23 ble to the United States for an amount equal to—
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1 (A) the total amount of scholarships re2 ceived by such individual under this section;

3 plus

4 (B) the interest on the amounts of such

5 awards which would be payable if at the time

6 the awards were received they were loans bear7 ing interest at the maximum legal prevailing

8 rate, as determined by the Treasurer of the

9 United States,

10 multiplied by 3.

11 (h) WAIVER OR SUSPENSION OF OBLIGATION.—

12 (1) DEATH OF INDIVIDUAL.—Any obligation of

13 an individual incurred under the Program (or a con14 tractual agreement thereunder) for service or pay15 ment shall be canceled upon the death of the indi16 vidual.

17 (2) IMPOSSIBILITY OR EXTREME HARDSHIP.—

18 The Secretary shall by regulation provide for the

19 partial or total waiver or suspension of any obliga20 tion of service or payment incurred by an individual

21 under the Program (or a contractual agreement

22 thereunder) whenever compliance by the individual is

23 impossible or would involve extreme hardship to the

24 individual, or if enforcement of such obligation with
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1 respect to the individual would be contrary to the

2 best interests of the Government.

3 (i) DEFINITIONS.—In this section the following defi4 nitions apply:

5 (1) COST OF ATTENDANCE.—The term ‘‘cost of

6 attendance’’ has the meaning given that term in sec7 tion 472 of the Higher Education Act of 1965 (20

8 U.S.C. 1087ll).

9 (2) PROGRAM.—The term ‘‘Program’’ means

10 the Department of Energy Science and Technology

11 Scholarship Program established under this section.

12 (j) AUTHORIZATION OF APPROPRIATIONS.—There

13 are authorized to be appropriated to the Secretary for ac14 tivities under this section—

15 (1) for fiscal year 2004, $800,000;

16 (2) for fiscal year 2005, $1,600,000;

17 (3) for fiscal year 2006, $2,000,000;

18 (4) for fiscal year 2007, $2,000,000; and

19 (5) for fiscal year 2008, $2,000,000.

20 SEC. 983. REPORT ON EQUAL EMPLOYMENT OPPORTUNITY

21 PRACTICES.

22 Not later than 12 months after the date of enactment

23 of this Act, and biennially thereafter, the Secretary shall

24 transmit to Congress a report on the equal employment
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1 opportunity practices at National Laboratories. Such re2 port shall include—

3 (1) a thorough review of each laboratory con4 tractor’s equal employment opportunity policies, in5 cluding promotion to management and professional

6 positions and pay raises;

7 (2) a statistical report on complaints and their

8 disposition in the laboratories;

9 (3) a description of how equal employment op10 portunity practices at the laboratories are treated in

11 the contract and in calculating award fees for each

12 contractor;

13 (4) a summary of disciplinary actions and their

14 disposition by either the Department or the relevant

15 contractors for each laboratory;

16 (5) a summary of outreach efforts to attract

17 women and minorities to the laboratories;

18 (6) a summary of efforts to retain women and

19 minorities in the laboratories; and

20 (7) a summary of collaboration efforts with the

21 Office of Federal Contract Compliance Programs to

22 improve equal employment opportunity practices at

23 the laboratories.
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1 SEC. 984. SMALL BUSINESS ADVOCACY AND ASSISTANCE.

2 (a) SMALL BUSINESS ADVOCATE.—The Secretary

3 shall require the Director of each National Laboratory,

4 and may require the Director of a single-purpose research

5 facility, to designate a small business advocate to—

6 (1) increase the participation of small business

7 concerns, including socially and economically dis8 advantaged small business concerns, in procurement,

9 collaborative research, technology licensing, and

10 technology transfer activities conducted by the Na11 tional Laboratory or single-purpose research facility;

12 (2) report to the Director of the National Lab13 oratory or single-purpose research facility on the ac14 tual participation of small business concerns, includ15 ing socially and economically disadvantaged small

16 business concerns, in procurement, collaborative re17 search, technology licensing, and technology transfer

18 activities along with recommendations, if appro19 priate, on how to improve participation;

20 (3) make available to small businesses training,

21 mentoring, and information on how to participate in

22 procurement and collaborative research activities;

23 (4) increase the awareness inside the National

24 Laboratory or single-purpose research facility of the

25 capabilities and opportunities presented by small

26 business concerns; and
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1 (5) establish guidelines for the program under

2 subsection (b) and report on the effectiveness of

3 such program to the Director of the National Lab4 oratory or single-purpose research facility.

5 (b) ESTABLISHMENT OF SMALL BUSINESS ASSIST6 ANCE PROGRAM.—The Secretary shall require the Direc7 tor of each National Laboratory, and may require the Di8 rector of a single-purpose research facility, to establish a

9 program to provide small business concerns—

10 (1) assistance directed at making them more ef11 fective and efficient subcontractors or suppliers to

12 the National Laboratory or single-purpose research

13 facility; or

14 (2) general technical assistance, the cost of

15 which shall not exceed $10,000 per instance of as16 sistance, to improve the small business concerns’

17 products or services.

18 (c) USE OF FUNDS.—None of the funds expended

19 under subsection (b) may be used for direct grants to the

20 small business concerns.

21 (d) DEFINITIONS.—In this section:

22 (1) SMALL BUSINESS CONCERN.—The term

23 ‘‘small business concern’’ has the meaning given

24 such term in section 3 of the Small Business Act

25 (15 U.S.C. 632).
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1 (2) SOCIALLY AND ECONOMICALLY DISADVAN2 TAGED SMALL BUSINESS CONCERNS.—The term ‘‘so3 cially and economically disadvantaged small business

4 concerns’’ has the meaning given such term in sec5 tion 8(a)(4) of the Small Business Act (15 U.S.C.

6 637(a)(4)).

7 (e) AUTHORIZATION OF APPROPRIATIONS.—There

8 are authorized to be appropriated to the Secretary for ac9 tivities under this section $5,000,000 for each of fiscal

10 years 2004 through 2008.

11 SEC. 985. REPORT ON MOBILITY OF SCIENTIFIC AND TECH12 NICAL PERSONNEL.

13 Not later than 2 years after the date of enactment

14 of this Act, the Secretary shall transmit a report to Con15 gress identifying any policies or procedures of a contractor

16 operating a National Laboratory or single-purpose re17 search facility that create disincentives to the temporary

18 transfer of scientific and technical personnel among the

19 contractor-operated National Laboratories or contractor20 operated single-purpose research facilities and provide

21 suggestions for improving interlaboratory exchange of sci22 entific and technical personnel.

23 SEC. 986. NATIONAL ACADEMY OF SCIENCES REPORT.

24 Not later than 90 days after the date of enactment

25 of this Act, the Secretary shall enter into an arrangement
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1 with the National Academy of Sciences for the Academy

2 to—

3 (1) conduct a study on—

4 (A) the obstacles to accelerating the com5 mercial application of energy technology; and

6 (B) the adequacy of Department policies

7 and procedures for, and oversight of, technology

8 transfer-related disputes between contractors of

9 the Department and the private sector; and

10 (2) transmit a report to Congress on rec11 ommendations developed as a result of the study.

12 SEC. 987. OUTREACH.

13 The Secretary shall ensure that each program au14 thorized by this title includes an outreach component to

15 provide information, as appropriate, to manufacturers,

16 consumers, engineers, architects, builders, energy service

17 companies, institutions of higher education, small busi18 nesses, facility planners and managers, State and local

19 governments, and other entities.

20 SEC. 988. COMPETITIVE AWARD OF MANAGEMENT CON21 TRACTS.

22 None of the funds authorized to be appropriated to

23 the Secretary by this title may be used to award a manage24 ment and operating contract for a nonmilitary energy lab25 oratory of the Department unless such contract is com-
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1 petitively awarded or the Secretary grants, on a case-by2 case basis, a waiver to allow for such a deviation. The Sec3 retary may not delegate the authority to grant such a

4 waiver and shall submit to Congress a report notifying

5 Congress of the waiver and setting forth the reasons for

6 the waiver at least 60 days prior to the date of the award

7 of such a contract.

8 SEC. 989. EDUCATIONAL PROGRAMS IN SCIENCE AND

9 MATHEMATICS.

10 (a) ACTIVITIES.—Section 3165(a) of the Department

11 of Energy Science Education Enhancement Act (42

12 U.S.C. 7381b(a)) is amended by adding at the end the

13 following:

14 ‘‘(14) Support competitive events for students,

15 under supervision of teachers, designed to encourage

16 student interest and knowledge in science and math17 ematics.’’.

18 (b) AUTHORIZATION OF APPROPRIATIONS.—Section

19 3169 of the Department of Energy Science Education En20 hancement Act (42 U.S.C. 7381e), as so redesignated by

21 section 1102(b), is amended by inserting before the period

22 ‘‘; and $40,000,000 for each of fiscal years 2004 through

23 2008’’.
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1 TITLE X—DEPARTMENT OF

2 ENERGY MANAGEMENT

3 SEC. 1001. ADDITIONAL ASSISTANT SECRETARY POSITION.

4 (a) ADDITIONAL ASSISTANT SECRETARY POSITION

5 TO ENABLE IMPROVED MANAGEMENT OF NUCLEAR EN6 ERGY ISSUES.—

7 (1) IN GENERAL.—Section 203(a) of the De8 partment of Energy Organization Act (42 U.S.C.

9 7133(a)) is amended by striking ‘‘six Assistant Sec10 retaries’’ and inserting ‘‘7 Assistant Secretaries’’.

11 (2) SENSE OF CONGRESS.—It is the sense of

12 Congress that the leadership for departmental mis13 sions in nuclear energy should be at the Assistant

14 Secretary level.

15 (b) TECHNICAL AND CONFORMING AMENDMENTS.—

16 (1) TITLE 5.—Section 5315 of title 5, United

17 States Code, is amended by striking ‘‘Assistant Sec18 retaries of Energy (6)’’ and inserting ‘‘Assistant

19 Secretaries of Energy (7)’’.

20 (2) DEPARTMENT OF ENERGY ORGANIZATION

21 ACT.—The table of contents for the Department of

22 Energy Organization Act (42 U.S.C. 7101 note) is

23 amended—

24 (A) by striking ‘‘Section 209’’ and insert25 ing ‘‘Sec. 209’’;
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1 (B) by striking ‘‘213.’’ and inserting ‘‘Sec.

2 213.’’;

3 (C) by striking ‘‘214.’’ and inserting ‘‘Sec.

4 214.’’;

5 (D) by striking ‘‘215.’’ and inserting ‘‘Sec.

6 215.’’; and

7 (E) by striking ‘‘216.’’ and inserting ‘‘Sec.

8 216.’’.

9 SEC. 1002. OTHER TRANSACTIONS AUTHORITY.

10 Section 646 of the Department of Energy Organiza11 tion Act (42 U.S.C. 7256) is amended by adding at the

12 end the following:

13 ‘‘(g)(1) In addition to other authorities granted to the

14 Secretary under law, the Secretary may enter into other

15 transactions on such terms as the Secretary may deem

16 appropriate in furtherance of research, development, or

17 demonstration functions vested in the Secretary. Such

18 other transactions shall not be subject to the provisions

19 of section 9 of the Federal Nonnuclear Energy Research

20 and Development Act of 1974 (42 U.S.C. 5908) or section

21 152 of the Atomic Energy Act of 1954 (42 U.S.C. 2182).

22 ‘‘(2)(A) The Secretary shall ensure that—

23 ‘‘(i) to the maximum extent the Secretary de24 termines practicable, no transaction entered into

25 under paragraph (1) provides for research, develop-
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1 ment, or demonstration that duplicates research, de2 velopment, or demonstration being conducted under

3 existing projects carried out by the Department;

4 ‘‘(ii) to the extent the Secretary determines

5 practicable, the funds provided by the Government

6 under a transaction authorized by paragraph (1) do

7 not exceed the total amount provided by other par8 ties to the transaction; and

9 ‘‘(iii) to the extent the Secretary determines

10 practicable, competitive, merit-based selection proce11 dures shall be used when entering into transactions

12 under paragraph (1).

13 ‘‘(B) A transaction authorized by paragraph (1) may

14 be used for a research, development, or demonstration

15 project only if the Secretary makes a written determina16 tion that the use of a standard contract, grant, or coopera17 tive agreement for the project is not feasible or appro18 priate.

19 ‘‘(3)(A) The Secretary shall protect from disclosure,

20 including disclosure under section 552 of title 5, United

21 States Code, for up to 5 years after the date the informa22 tion is received by the Secretary—

23 ‘‘(i) a proposal, proposal abstract, and sup24 porting documents submitted to the Department in

25 a competitive or noncompetitive process having the
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1 potential for resulting in an award under paragraph

2 (1) to the party submitting the information; and

3 ‘‘(ii) a business plan and technical information

4 relating to a transaction authorized by paragraph

5 (1) submitted to the Department as confidential

6 business information.

7 ‘‘(B) The Secretary may protect from disclosure, for

8 up to 5 years after the information was developed, any

9 information developed pursuant to a transaction under

10 paragraph (1) which developed information is of a char11 acter that it would be protected from disclosure under sec12 tion 552(b)(4) of title 5, United States Code, if obtained

13 from a person other than a Federal agency.

14 ‘‘(4) Not later than 90 days after the date of enact15 ment of this subsection, the Secretary shall prescribe

16 guidelines for using other transactions authorized by para17 graph (1). Such guidelines shall be published in the Fed18 eral Register for public comment under rulemaking proce19 dures of the Department.

20 ‘‘(5) The authority of the Secretary under this sub21 section may be delegated only to an officer of the Depart22 ment who is appointed by the President by and with the

23 advice and consent of the Senate and may not be delegated

24 to any other person.
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1 ‘‘(6)(A) Not later than September 31, 2005, the

2 Comptroller General of the United States shall report to

3 Congress on the Department’s use of the authorities

4 granted under this section, including the ability to attract

5 nontraditional government contractors and whether addi6 tional safeguards are needed with respect to the use of

7 such authorities.

8 ‘‘(B) In this section, the term ‘nontraditional Govern9 ment contractor’ has the same meaning as the term ‘non10 traditional defense contractor’ as defined in section 845(e)

11 of the National Defense Authorization Act for Fiscal Year

12 1994 (Public Law 103–160; 10 U.S.C. 2371 note).’’.

13 TITLE XI—PERSONNEL AND

14 TRAINING

15 SEC. 1101. TRAINING GUIDELINES FOR ELECTRIC ENERGY

16 INDUSTRY PERSONNEL.

17 The Secretary of Energy, in consultation with the

18 Secretary of Labor and jointly with the electric industry

19 and recognized employee representatives, shall develop

20 model personnel training guidelines to support electric sys21 tem reliability and safety. The training guidelines shall,

22 at a minimum—

23 (1) include training requirements for workers

24 engaged in the construction, operation, inspection,

25 and maintenance of electric generation, trans-
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1 mission, and distribution, including competency and

2 certification requirements, and assessment require3 ments that include initial and ongoing evaluation of

4 workers, recertification assessment procedures, and

5 methods for examining or testing the qualification of

6 individuals performing covered tasks; and

7 (2) consolidate existing training guidelines on

8 the construction, operation, maintenance, and in9 spection of electric generation, transmission, and

10 distribution facilities, such as those established by

11 the National Electric Safety Code and other indus12 try consensus standards.

13 SEC. 1102. IMPROVED ACCESS TO ENERGY-RELATED SCI14 ENTIFIC AND TECHNICAL CAREERS.

15 (a) DEPARTMENT OF ENERGY SCIENCE EDUCATION

16 PROGRAMS.—Section 3164 of the Department of Energy

17 Science Education Enhancement Act (42 U.S.C. 7381a)

18 is amended by adding at the end the following:

19 ‘‘(c) PROGRAMS FOR STUDENTS FROM UNDERREP20 RESENTED GROUPS.—In carrying out a program under

21 subsection (a), the Secretary shall give priority to activi22 ties that are designed to encourage students from under23 represented groups to pursue scientific and technical ca24 reers.’’.
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1 (b) PARTNERSHIPS WITH HISTORICALLY BLACK

2 COLLEGES AND UNIVERSITIES, HISPANIC-SERVICING IN3 STITUTIONS, AND TRIBAL COLLEGES.—The Department

4 of Energy Science Education Enhancement Act (42

5 U.S.C. 7381 et seq.) is amended—

6 (1) by redesignating sections 3167 and 3168 as

7 sections 3168 and 3169, respectively; and

8 (2) by inserting after section 3166 the fol9 lowing:

10 ‘‘SEC. 3167. PARTNERSHIPS WITH HISTORICALLY BLACK

11 COLLEGES AND UNIVERSITIES, HISPANIC12 SERVING INSTITUTIONS, AND TRIBAL COL13 LEGES.

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

15 ‘‘(1) HISPANIC-SERVING INSTITUTION.—The

16 term ‘Hispanic-serving institution’ has the meaning

17 given that term in section 502(a) of the Higher

18 Education Act of 1965 (20 U.S.C. 1101a(a)).

19 ‘‘(2) HISTORICALLY BLACK COLLEGE OR UNI20 VERSITY.—The term ‘historically Black college or

21 university’ has the meaning given the term ‘part B

22 institution’ in section 322 of the Higher Education

23 Act of 1965 (20 U.S.C. 1061).
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1 ‘‘(3) NATIONAL LABORATORY.—The term ‘Na2 tional Laboratory’ has the meaning given that term

3 in section 902 of the Energy Policy Act of 2003.

4 ‘‘(4) SCIENCE FACILITY.—The term ‘science fa5 cility’ has the meaning given the term ‘single-pur6 pose research facility’ in section 902 of the Energy

7 Policy Act of 2003.

8 ‘‘(5) TRIBAL COLLEGE.—The term ‘tribal col9 lege’ has the meaning given the term ‘Tribal College

10 or University’ in section 316(b)(3) of the Higher

11 Education Act of 1965 (20 U.S.C. 1059c(b)(3)).

12 ‘‘(b) EDUCATION PARTNERSHIP.—The Secretary

13 shall direct the Director of each National Laboratory and,

14 to the extent practicable, the head of any science facility

15 to increase the participation of historically Black colleges

16 or universities, Hispanic-serving institutions, or tribal col17 leges in activities that increase the capacity of the histori18 cally Black colleges or universities, Hispanic-serving insti19 tutions, or tribal colleges to train personnel in science or

20 engineering.

21 ‘‘(c) ACTIVITIES.—An activity under subsection (b)

22 may include—

23 ‘‘(1) collaborative research;

24 ‘‘(2) equipment transfer;
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1 ‘‘(3) training activities conducted at a National

2 Laboratory or science facility; and

3 ‘‘(4) mentoring activities conducted at a Na4 tional Laboratory or science facility.

5 ‘‘(d) REPORT.—Not later than 2 years after the date

6 of enactment of the Energy Policy Act of 2003, the Sec7 retary shall submit to Congress a report on the activities

8 carried out under this section.’’.

9 SEC. 1103. NATIONAL POWER PLANT OPERATIONS TECH10 NOLOGY AND EDUCATION CENTER.

11 (a) ESTABLISHMENT.—The Secretary shall support

12 the establishment of a National Power Plant Operations

13 Technology and Education Center (in this section referred

14 to as the ‘‘Center’’), to address the need for training and

15 educating certified operators for nonnuclear electric power

16 generation plants.

17 (b) ROLE.—The Center shall provide both training

18 and continuing education relating to nonnuclear electric

19 power generation plant technologies and operations. The

20 Center shall conduct training and education activities on

21 site and through Internet-based information technologies

22 that allow for learning at remote sites.

23 (c) CRITERIA FOR COMPETITIVE SELECTION.—The

24 Secretary shall support the establishment of the Center

25 at an institution of higher education with expertise in
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1 power plant technology and operation and with the ability

2 to provide onsite as well as Internet-based training.

3 SEC. 1104. INTERNATIONAL ENERGY TRAINING.

4 (a) IN GENERAL.—The Secretary of Energy, in con5 sultation with the Secretaries of Commerce, Interior, and

6 State and the Federal Energy Regulatory Commission,

7 shall coordinate training and outreach efforts for inter8 national commercial energy markets in countries with de9 veloping and restructuring economies.

10 (b) COMPONENTS.—The efforts may address—

11 (1) production-related fiscal regimes;

12 (2) grid and network issues;

13 (3) energy user and demand side response;

14 (4) international trade of energy; and

15 (5) international transportation of energy.

16 (c) AUTHORIZATION OF APPROPRIATIONS.—There

17 are authorized to be appropriated to carry out this section

18 $1,500,000 for each of fiscal years 2004 through 2007.

19 TITLE XII—ELECTRICITY

20 SEC. 1201. SHORT TITLE.

21 This title may be cited as the ‘‘Electric Reliability

22 Act of 2004’’.
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1 Subtitle A—Reliability Standards

2 SEC. 1211. ELECTRIC RELIABILITY STANDARDS.

3 (a) IN GENERAL.—Part II of the Federal Power Act

4 (16 U.S.C 824 et seq.) is amended by adding at the end

5 the following:

6 ‘‘SEC. 215. ELECTRIC RELIABILITY.

7 ‘‘(a) DEFINITIONS.—For purposes of this section:

8 ‘‘(1) The term ‘bulk-power system’ means—

9 ‘‘(A) facilities and control systems nec10 essary for operating an interconnected electric

11 energy transmission network (or any portion

12 thereof); and

13 ‘‘(B) electric energy from generation facili14 ties needed to maintain transmission system re15 liability.

16 The term does not include facilities used in the local

17 distribution of electric energy.

18 ‘‘(2) The terms ‘Electric Reliability Organiza19 tion’ and ‘ERO’ mean the organization certified by

20 the Commission under subsection (c) the purpose of

21 which is to establish and enforce reliability stand22 ards for the bulk-power system, subject to Commis23 sion review.

24 ‘‘(3) The term ‘reliability standard’ means a re25 quirement, approved by the Commission under this
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1 section, to provide for reliable operation of the bulk2 power system. The term includes requirements for

3 the operation of existing bulk-power system facilities

4 and the design of planned additions or modifications

5 to such facilities to the extent necessary to provide

6 for reliable operation of the bulk-power system, but

7 the term does not include any requirement to en8 large such facilities or to construct new transmission

9 capacity or generation capacity.

10 ‘‘(4) The term ‘reliable operation’ means oper11 ating the elements of the bulk-power system within

12 equipment and electric system thermal, voltage, and

13 stability limits so that instability, uncontrolled sepa14 ration, or cascading failures of such system will not

15 occur as a result of a sudden disturbance or unan16 ticipated failure of system elements.

17 ‘‘(5) The term ‘Interconnection’ means a geo18 graphic area in which the operation of bulk-power

19 system components is synchronized such that the

20 failure of 1 or more of such components may ad21 versely affect the ability of the operators of other

22 components within the system to maintain reliable

23 operation of the facilities within their control.

24 ‘‘(6) The term ‘transmission organization’

25 means a Regional Transmission Organization, Inde-
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1 pendent System Operator, independent transmission

2 provider, or other transmission organization finally

3 approved by the Commission for the operation of

4 transmission facilities.

5 ‘‘(7) The term ‘regional entity’ means an entity

6 having enforcement authority pursuant to subsection

7 (e)(4).

8 ‘‘(b) JURISDICTION AND APPLICABILITY.—(1) The

9 Commission shall have jurisdiction, within the United

10 States, over the ERO certified by the Commission under

11 subsection (c), any regional entities, and all users, owners

12 and operators of the bulk-power system, including but not

13 limited to the entities described in section 201(f), for pur14 poses of approving reliability standards established under

15 this section and enforcing compliance with this section. All

16 users, owners and operators of the bulk-power system

17 shall comply with reliability standards that take effect

18 under this section.

19 ‘‘(2) The Commission shall issue a final rule to imple20 ment the requirements of this section not later than 180

21 days after the date of enactment of this section.

22 ‘‘(c) CERTIFICATION.—Following the issuance of a

23 Commission rule under subsection (b)(2), any person may

24 submit an application to the Commission for certification

25 as the Electric Reliability Organization. The Commission
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1 may certify 1 such ERO if the Commission determines

2 that such ERO—

3 ‘‘(1) has the ability to develop and enforce, sub4 ject to subsection (e)(2), reliability standards that

5 provide for an adequate level of reliability of the

6 bulk-power system; and

7 ‘‘(2) has established rules that—

8 ‘‘(A) assure its independence of the users

9 and owners and operators of the bulk-power

10 system, while assuring fair stakeholder rep11 resentation in the selection of its directors and

12 balanced decisionmaking in any ERO com13 mittee or subordinate organizational structure;

14 ‘‘(B) allocate equitably reasonable dues,

15 fees, and other charges among end users for all

16 activities under this section;

17 ‘‘(C) provide fair and impartial procedures

18 for enforcement of reliability standards through

19 the imposition of penalties in accordance with

20 subsection (e) (including limitations on activi21 ties, functions, or operations, or other appro22 priate sanctions);

23 ‘‘(D) provide for reasonable notice and op24 portunity for public comment, due process,

25 openness, and balance of interests in developing
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1 reliability standards and otherwise exercising its

2 duties; and

3 ‘‘(E) provide for taking, after certification,

4 appropriate steps to gain recognition in Canada

5 and Mexico.

6 ‘‘(d) RELIABILITY STANDARDS.—(1) The Electric

7 Reliability Organization shall file each reliability standard

8 or modification to a reliability standard that it proposes

9 to be made effective under this section with the Commis10 sion.

11 ‘‘(2) The Commission may approve, by rule or order,

12 a proposed reliability standard or modification to a reli13 ability standard if it determines that the standard is just,

14 reasonable, not unduly discriminatory or preferential, and

15 in the public interest. The Commission shall give due

16 weight to the technical expertise of the Electric Reliability

17 Organization with respect to the content of a proposed

18 standard or modification to a reliability standard and to

19 the technical expertise of a regional entity organized on

20 an Interconnection-wide basis with respect to a reliability

21 standard to be applicable within that Interconnection, but

22 shall not defer with respect to the effect of a standard

23 on competition. A proposed standard or modification shall

24 take effect upon approval by the Commission.
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1 ‘‘(3) The Electric Reliability Organization shall

2 rebuttably presume that a proposal from a regional entity

3 organized on an Interconnection-wide basis for a reliability

4 standard or modification to a reliability standard to be ap5 plicable on an Interconnection-wide basis is just, reason6 able, and not unduly discriminatory or preferential, and

7 in the public interest.

8 ‘‘(4) The Commission shall remand to the Electric

9 Reliability Organization for further consideration a pro10 posed reliability standard or a modification to a reliability

11 standard that the Commission disapproves in whole or in

12 part.

13 ‘‘(5) The Commission, upon its own motion or upon

14 complaint, may order the Electric Reliability Organization

15 to submit to the Commission a proposed reliability stand16 ard or a modification to a reliability standard that ad17 dresses a specific matter if the Commission considers such

18 a new or modified reliability standard appropriate to carry

19 out this section.

20 ‘‘(6) The final rule adopted under subsection (b)(2)

21 shall include fair processes for the identification and time22 ly resolution of any conflict between a reliability standard

23 and any function, rule, order, tariff, rate schedule, or

24 agreement accepted, approved, or ordered by the Commis25 sion applicable to a transmission organization. Such trans-
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1 mission organization shall continue to comply with such

2 function, rule, order, tariff, rate schedule or agreement ac3 cepted approved, or ordered by the Commission until—

4 ‘‘(A) the Commission finds a conflict exists be5 tween a reliability standard and any such provision;

6 ‘‘(B) the Commission orders a change to such

7 provision pursuant to section 206 of this part; and

8 ‘‘(C) the ordered change becomes effective

9 under this part.

10 If the Commission determines that a reliability standard

11 needs to be changed as a result of such a conflict, it shall

12 order the ERO to develop and file with the Commission

13 a modified reliability standard under paragraph (4) or (5)

14 of this subsection.

15 ‘‘(e) ENFORCEMENT.—(1) The ERO may impose,

16 subject to paragraph (2), a penalty on a user or owner

17 or operator of the bulk-power system for a violation of a

18 reliability standard approved by the Commission under

19 subsection (d) if the ERO, after notice and an opportunity

20 for a hearing—

21 ‘‘(A) finds that the user or owner or operator

22 has violated a reliability standard approved by the

23 Commission under subsection (d); and

24 ‘‘(B) files notice and the record of the pro25 ceeding with the Commission.
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1 ‘‘(2) A penalty imposed under paragraph (1) may

2 take effect not earlier than the 31st day after the ERO

3 files with the Commission notice of the penalty and the

4 record of proceedings. Such penalty shall be subject to re5 view by the Commission, on its own motion or upon appli6 cation by the user, owner or operator that is the subject

7 of the penalty filed within 30 days after the date such

8 notice is filed with the Commission. Application to the

9 Commission for review, or the initiation of review by the

10 Commission on its own motion, shall not operate as a stay

11 of such penalty unless the Commission otherwise orders

12 upon its own motion or upon application by the user,

13 owner or operator that is the subject of such penalty. In

14 any proceeding to review a penalty imposed under para15 graph (1), the Commission, after notice and opportunity

16 for hearing (which hearing may consist solely of the record

17 before the ERO and opportunity for the presentation of

18 supporting reasons to affirm, modify, or set aside the pen19 alty), shall by order affirm, set aside, reinstate, or modify

20 the penalty, and, if appropriate, remand to the ERO for

21 further proceedings. The Commission shall implement ex22 pedited procedures for such hearings.

23 ‘‘(3) On its own motion or upon complaint, the Com24 mission may order compliance with a reliability standard

25 and may impose a penalty against a user or owner or oper-
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1 ator of the bulk-power system if the Commission finds,

2 after notice and opportunity for a hearing, that the user

3 or owner or operator of the bulk-power system has en4 gaged or is about to engage in any acts or practices that

5 constitute or will constitute a violation of a reliability

6 standard.

7 ‘‘(4) The Commission shall issue regulations author8 izing the ERO to enter into an agreement to delegate au9 thority to a regional entity for the purpose of proposing

10 reliability standards to the ERO and enforcing reliability

11 standards under paragraph (1) if—

12 ‘‘(A) the regional entity is governed by—

13 ‘‘(i) an independent board;

14 ‘‘(ii) a balanced stakeholder board; or

15 ‘‘(iii) a combination independent and

16 balanced stakeholder board.

17 ‘‘(B) the regional entity otherwise satisfies the

18 provisions of subsection (c)(1) and (2); and

19 ‘‘(C) the agreement promotes effective and effi20 cient administration of bulk-power system reliability.

21 The Commission may modify such delegation. The ERO

22 and the Commission shall rebuttably presume that a pro23 posal for delegation to a regional entity organized on an

24 Interconnection-wide basis promotes effective and efficient

25 administration of bulk-power system reliability and should
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1 be approved. Such regulation may provide that the Com2 mission may assign the ERO’s authority to enforce reli3 ability standards under paragraph (1) directly to a re4 gional entity consistent with the requirements of this para5 graph.

6 ‘‘(5) The Commission may take such action as is nec7 essary or appropriate against the ERO or a regional entity

8 to ensure compliance with a reliability standard or any

9 Commission order affecting the ERO or a regional entity.

10 ‘‘(6) Any penalty imposed under this section shall

11 bear a reasonable relation to the seriousness of the viola12 tion and shall take into consideration the efforts of such

13 user, owner, or operator to remedy the violation in a time14 ly manner.

15 ‘‘(f) CHANGES IN ELECTRIC RELIABILITY ORGANIZA16 TION RULES.—The Electric Reliability Organization shall

17 file with the Commission for approval any proposed rule

18 or proposed rule change, accompanied by an explanation

19 of its basis and purpose. The Commission, upon its own

20 motion or complaint, may propose a change to the rules

21 of the ERO. A proposed rule or proposed rule change shall

22 take effect upon a finding by the Commission, after notice

23 and opportunity for comment, that the change is just, rea24 sonable, not unduly discriminatory or preferential, is in
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1 the public interest, and satisfies the requirements of sub2 section (c).

3 ‘‘(g) RELIABILITY REPORTS.—The ERO shall con4 duct periodic assessments of the reliability and adequacy

5 of the bulk-power system in North America.

6 ‘‘(h) COORDINATION WITH CANADA AND MEXICO.—

7 The President is urged to negotiate international agree8 ments with the governments of Canada and Mexico to pro9 vide for effective compliance with reliability standards and

10 the effectiveness of the ERO in the United States and

11 Canada or Mexico.

12 ‘‘(i) SAVINGS PROVISIONS.—(1) The ERO shall have

13 authority to develop and enforce compliance with reli14 ability standards for only the bulk-power system.

15 ‘‘(2) This section does not authorize the ERO or the

16 Commission to order the construction of additional gen17 eration or transmission capacity or to set and enforce com18 pliance with standards for adequacy or safety of electric

19 facilities or services.

20 ‘‘(3) Nothing in this section shall be construed to pre21 empt any authority of any State to take action to ensure

22 the safety, adequacy, and reliability of electric service

23 within that State, as long as such action is not incon24 sistent with any reliability standard.
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1 ‘‘(4) Within 90 days of the application of the Electric

2 Reliability Organization or other affected party, and after

3 notice and opportunity for comment, the Commission shall

4 issue a final order determining whether a State action is

5 inconsistent with a reliability standard, taking into consid6 eration any recommendation of the ERO.

7 ‘‘(5) The Commission, after consultation with the

8 ERO and the State taking action, may stay the effective9 ness of any State action, pending the Commission’s

10 issuance of a final order.

11 ‘‘(j) REGIONAL ADVISORY BODIES.—The Commis12 sion shall establish a regional advisory body on the petition

of at least 2 13 ⁄3 of the States within a region that have more

than 1 14 ⁄2 of their electric load served within the region. A

15 regional advisory body shall be composed of 1 member

16 from each participating State in the region, appointed by

17 the Governor of each State, and may include representa18 tives of agencies, States, and provinces outside the United

19 States. A regional advisory body may provide advice to the

20 Electric Reliability Organization, a regional entity, or the

21 Commission regarding the governance of an existing or

22 proposed regional entity within the same region, whether

23 a standard proposed to apply within the region is just,

24 reasonable, not unduly discriminatory or preferential, and

25 in the public interest, whether fees proposed to be assessed
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1 within the region are just, reasonable, not unduly discrimi2 natory or preferential, and in the public interest and any

3 other responsibilities requested by the Commission. The

4 Commission may give deference to the advice of any such

5 regional advisory body if that body is organized on an

6 Interconnection-wide basis.

7 ‘‘(k) ALASKA AND HAWAII.—The provisions of this

8 section do not apply to Alaska or Hawaii.’’.

9 (b) STATUS OF ERO.—The Electric Reliability Orga10 nization certified by the Federal Energy Regulatory Com11 mission under section 215(c) of the Federal Power Act

12 and any regional entity delegated enforcement authority

13 pursuant to section 215(e)(4) of that Act are not depart14 ments, agencies, or instrumentalities of the United States

15 Government.

16 Subtitle B—Transmission

17 Infrastructure Modernization

18 SEC. 1221. SITING OF INTERSTATE ELECTRIC TRANS19 MISSION FACILITIES.

20 (a) AMENDMENT OF FEDERAL POWER ACT.—Part

21 II of the Federal Power Act is amended by adding at the

22 end the following:
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1 ‘‘SEC. 216. SITING OF INTERSTATE ELECTRIC TRANS2 MISSION FACILITIES.

3 ‘‘(a) DESIGNATION OF NATIONAL INTEREST ELEC4 TRIC TRANSMISSION CORRIDORS.—

5 ‘‘(1) TRANSMISSION CONGESTION STUDY.—

6 Within 1 year after the enactment of this section,

7 and every 3 years thereafter, the Secretary of En8 ergy, in consultation with affected States, shall con9 duct a study of electric transmission congestion.

10 After considering alternatives and recommendations

11 from interested parties, including an opportunity for

12 comment from affected States, the Secretary shall

13 issue a report, based on such study, which may des14 ignate any geographic area experiencing electric en15 ergy transmission capacity constraints or congestion

16 that adversely affects consumers as a national inter17 est electric transmission corridor. The Secretary

18 shall conduct the study and issue the report in con19 sultation with any appropriate regional entity ref20 erenced in section 215 of this Act.

21 ‘‘(2) CONSIDERATIONS.—In determining wheth22 er to designate a national interest electric trans23 mission corridor referred to in paragraph (1) under

24 this section, the Secretary may consider whether—

25 ‘‘(A) the economic vitality and development

26 of the corridor, or the end markets served by
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1 the corridor, may be constrained by lack of ade2 quate or reasonably priced electricity;

3 ‘‘(B)(i) economic growth in the corridor, or

4 the end markets served by the corridor, may be

5 jeopardized by reliance on limited sources of en6 ergy; and

7 ‘‘(ii) a diversification of supply is war8 ranted;

9 ‘‘(C) the energy independence of the

10 United States would be served by the designa11 tion;

12 ‘‘(D) the designation would be in the inter13 est of national energy policy; and

14 ‘‘(E) the designation would enhance na15 tional defense and homeland security.

16 ‘‘(b) CONSTRUCTION PERMIT.—Except as provided

17 in subsection (i), the Commission is authorized, after no18 tice and an opportunity for hearing, to issue a permit or

19 permits for the construction or modification of electric

20 transmission facilities in a national interest electric trans21 mission corridor designated by the Secretary under sub22 section (a) if the Commission finds that—

23 ‘‘(1)(A) a State in which the transmission fa24 cilities are to be constructed or modified is without

25 authority to—
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1 ‘‘(i) approve the siting of the facilities; or

2 ‘‘(ii) consider the interstate benefits ex3 pected to be achieved by the proposed construc4 tion or modification of transmission facilities in

5 the State;

6 ‘‘(B) the applicant for a permit is a transmit7 ting utility under this Act but does not qualify to

8 apply for a permit or siting approval for the pro9 posed project in a State because the applicant does

10 not serve end-use customers in the State; or

11 ‘‘(C) a State commission or other entity that

12 has authority to approve the siting of the facilities

13 has—

14 ‘‘(i) withheld approval for more than 1

15 year after the filing of an application pursuant

16 to applicable law seeking approval or 1 year

17 after the designation of the relevant national in18 terest electric transmission corridor, whichever

19 is later; or

20 ‘‘(ii) conditioned its approval in such a

21 manner that the proposed construction or modi22 fication will not significantly reduce trans23 mission congestion in interstate commerce or is

24 not economically feasible;
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1 ‘‘(2) the facilities to be authorized by the per2 mit will be used for the transmission of electric en3 ergy in interstate commerce;

4 ‘‘(3) the proposed construction or modification

5 is consistent with the public interest;

6 ‘‘(4) the proposed construction or modification

7 will significantly reduce transmission congestion in

8 interstate commerce and protects or benefits con9 sumers; and

10 ‘‘(5) the proposed construction or modification

11 is consistent with sound national energy policy and

12 will enhance energy independence.

13 ‘‘(c) PERMIT APPLICATIONS.—Permit applications

14 under subsection (b) shall be made in writing to the Com15 mission. The Commission shall issue rules setting forth

16 the form of the application, the information to be con17 tained in the application, and the manner of service of no18 tice of the permit application upon interested persons.

19 ‘‘(d) COMMENTS.—In any proceeding before the

20 Commission under subsection (b), the Commission shall

21 afford each State in which a transmission facility covered

22 by the permit is or will be located, each affected Federal

23 agency and Indian tribe, private property owners, and

24 other interested persons, a reasonable opportunity to
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1 present their views and recommendations with respect to

2 the need for and impact of a facility covered by the permit.

3 ‘‘(e) RIGHTS-OF-WAY.—In the case of a permit under

4 subsection (b) for electric transmission facilities to be lo5 cated on property other than property owned by the

6 United States or a State, if the permit holder cannot ac7 quire by contract, or is unable to agree with the owner

8 of the property to the compensation to be paid for, the

9 necessary right-of-way to construct or modify such trans10 mission facilities, the permit holder may acquire the right11 of-way by the exercise of the right of eminent domain in

12 the district court of the United States for the district in

13 which the property concerned is located, or in the appro14 priate court of the State in which the property is located.

15 The practice and procedure in any action or proceeding

16 for that purpose in the district court of the United States

17 shall conform as nearly as may be with the practice and

18 procedure in similar action or proceeding in the courts of

19 the State where the property is situated.

20 ‘‘(f) STATE LAW.—Nothing in this section shall pre21 clude any person from constructing or modifying any

22 transmission facility pursuant to State law.

23 ‘‘(g) COMPENSATION.—Any exercise of eminent do24 main authority pursuant to this section shall be considered

25 a taking of private property for which just compensation
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1 is due. Just compensation shall be an amount equal to

2 the full fair market value of the property taken on the

3 date of the exercise of eminent domain authority, except

4 that the compensation shall exceed fair market value if

5 necessary to make the landowner whole for decreases in

6 the value of any portion of the land not subject to eminent

7 domain. Any parcel of land acquired by eminent domain

8 under this subsection shall be transferred back to the

9 owner from whom it was acquired (or his heirs or assigns)

10 if the land is not used for the construction or modification

11 of electric transmission facilities within a reasonable pe12 riod of time after the acquisition. Other than construction,

13 modification, operation, or maintenance of electric trans14 mission facilities and related facilities, property acquired

15 under subsection (e) may not be used for any purpose (in16 cluding use for any heritage area, recreational trail, or

17 park) without the consent of the owner of the parcel from

18 whom the property was acquired (or the owner’s heirs or

19 assigns).

20 ‘‘(h) COORDINATION OF FEDERAL AUTHORIZATIONS

21 FOR TRANSMISSION AND DISTRIBUTION FACILITIES.—

22 ‘‘(1) LEAD AGENCY.—If an applicant, or pro23 spective applicant, for a Federal authorization re24 lated to an electric transmission or distribution facil25 ity so requests, the Department of Energy (DOE)
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1 shall act as the lead agency for purposes of coordi2 nating all applicable Federal authorizations and re3 lated environmental reviews of the facility. For pur4 poses of this subsection, the term ‘Federal author5 ization’ means any authorization required under

6 Federal law in order to site a transmission or dis7 tribution facility, including but not limited to such

8 permits, special use authorizations, certifications,

9 opinions, or other approvals as may be required,

10 whether issued by a Federal or a State agency. To

11 the maximum extent practicable under applicable

12 Federal law, the Secretary of Energy shall coordi13 nate this Federal authorization and review process

14 with any Indian tribes, multi-State entities, and

15 State agencies that are responsible for conducting

16 any separate permitting and environmental reviews

17 of the facility, to ensure timely and efficient review

18 and permit decisions.

19 ‘‘(2) AUTHORITY TO SET DEADLINES.—As lead

20 agency, the Department of Energy, in consultation

21 with agencies responsible for Federal authorizations

22 and, as appropriate, with Indian tribes, multi-State

23 entities, and State agencies that are willing to co24 ordinate their own separate permitting and environ25 mental reviews with the Federal authorization and
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1 environmental reviews, shall establish prompt and

2 binding intermediate milestones and ultimate dead3 lines for the review of, and Federal authorization de4 cisions relating to, the proposed facility. The Sec5 retary of Energy shall ensure that once an applica6 tion has been submitted with such data as the Sec7 retary considers necessary, all permit decisions and

8 related environmental reviews under all applicable

9 Federal laws shall be completed within 1 year or, if

10 a requirement of another provision of Federal law

11 makes this impossible, as soon thereafter as is prac12 ticable. The Secretary of Energy also shall provide

13 an expeditious pre-application mechanism for pro14 spective applicants to confer with the agencies in15 volved to have each such agency determine and com16 municate to the prospective applicant within 60 days

17 of when the prospective applicant submits a request

18 for such information concerning—

19 ‘‘(A) the likelihood of approval for a poten20 tial facility; and

21 ‘‘(B) key issues of concern to the agencies

22 and public.

23 ‘‘(3) CONSOLIDATED ENVIRONMENTAL REVIEW

24 AND RECORD OF DECISION.—As lead agency head,

25 the Secretary of Energy, in consultation with the af-
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1 fected agencies, shall prepare a single environmental

2 review document, which shall be used as the basis

3 for all decisions on the proposed project under Fed4 eral law. The document may be an environmental as5 sessment or environmental impact statement under

6 the National Environmental Policy Act of 1969 if

7 warranted, or such other form of analysis as may be

8 warranted. The Secretary of Energy and the heads

9 of other agencies shall streamline the review and

10 permitting of transmission and distribution facilities

11 within corridors designated under section 503 of the

12 Federal Land Policy and Management Act (43

13 U.S.C. 1763) by fully taking into account prior anal14 yses and decisions relating to the corridors. Such

15 document shall include consideration by the relevant

16 agencies of any applicable criteria or other matters

17 as required under applicable laws.

18 ‘‘(4) APPEALS.—In the event that any agency

19 has denied a Federal authorization required for a

20 transmission or distribution facility, or has failed to

21 act by the deadline established by the Secretary pur22 suant to this section for deciding whether to issue

23 the authorization, the applicant or any State in

24 which the facility would be located may file an ap25 peal with the Secretary, who shall, in consultation
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1 with the affected agency, review the denial or take

2 action on the pending application. Based on the

3 overall record and in consultation with the affected

4 agency, the Secretary may then either issue the nec5 essary authorization with any appropriate condi6 tions, or deny the application. The Secretary shall

7 issue a decision within 90 days of the filing of the

8 appeal. In making a decision under this paragraph,

9 the Secretary shall comply with applicable require10 ments of Federal law, including any requirements of

11 the Endangered Species Act, the Clean Water Act,

12 the National Forest Management Act, the National

13 Environmental Policy Act of 1969, and the Federal

14 Land Policy and Management Act.

15 ‘‘(5) CONFORMING REGULATIONS AND MEMO16 RANDA OF UNDERSTANDING.—Not later than 18

17 months after the date of enactment of this section,

18 the Secretary of Energy shall issue any regulations

19 necessary to implement this subsection. Not later

20 than 1 year after the date of enactment of this sec21 tion, the Secretary and the heads of all Federal

22 agencies with authority to issue Federal authoriza23 tions shall enter into Memoranda of Understanding

24 to ensure the timely and coordinated review and per25 mitting of electricity transmission and distribution
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1 facilities. The head of each Federal agency with au2 thority to issue a Federal authorization shall des3 ignate a senior official responsible for, and dedicate

4 sufficient other staff and resources to ensure, full

5 implementation of the DOE regulations and any

6 Memoranda. Interested Indian tribes, multi-State

7 entities, and State agencies may enter such Memo8 randa of Understanding.

9 ‘‘(6) DURATION AND RENEWAL.—Each Federal

10 land use authorization for an electricity transmission

11 or distribution facility shall be issued—

12 ‘‘(A) for a duration, as determined by the

13 Secretary of Energy, commensurate with the

14 anticipated use of the facility, and

15 ‘‘(B) with appropriate authority to manage

16 the right-of-way for reliability and environ17 mental protection.

18 Upon the expiration of any such authorization (in19 cluding an authorization issued prior to enactment

20 of this section), the authorization shall be reviewed

21 for renewal taking fully into account reliance on

22 such electricity infrastructure, recognizing its impor23 tance for public health, safety and economic welfare

24 and as a legitimate use of Federal lands.
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1 ‘‘(7) MAINTAINING AND ENHANCING THE

2 TRANSMISSION INFRASTRUCTURE.—In exercising the

3 responsibilities under this section, the Secretary of

4 Energy shall consult regularly with the Federal En5 ergy Regulatory Commission (FERC), FERC-ap6 proved electric reliability organizations (including re7 lated regional entities), and FERC-approved Re8 gional Transmission Organizations and Independent

9 System Operators.

10 ‘‘(i) INTERSTATE COMPACTS.—The consent of Con11 gress is hereby given for 3 or more contiguous States to

12 enter into an interstate compact, subject to approval by

13 Congress, establishing regional transmission siting agen14 cies to facilitate siting of future electric energy trans15 mission facilities within such States and to carry out the

16 electric energy transmission siting responsibilities of such

17 States. The Secretary of Energy may provide technical as18 sistance to regional transmission siting agencies estab19 lished under this subsection. Such regional transmission

20 siting agencies shall have the authority to review, certify,

21 and permit siting of transmission facilities, including fa22 cilities in national interest electric transmission corridors

23 (other than facilities on property owned by the United

24 States). The Commission shall have no authority to issue

25 a permit for the construction or modification of electric
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1 transmission facilities within a State that is a party to

2 a compact, unless the members of a compact are in dis3 agreement and the Secretary makes, after notice and an

4 opportunity for a hearing, the finding described in section

5 (b)(1)(C).

6 ‘‘(j) SAVINGS CLAUSE.—Nothing in this section shall

7 be construed to affect any requirement of the environ8 mental laws of the United States, including, but not lim9 ited to, the National Environmental Policy Act of 1969.

10 Subsection (h)(4) of this section shall not apply to any

11 Congressionally-designated components of the National

12 Wilderness Preservation System, the National Wild and

13 Scenic Rivers System, or the National Park system (in14 cluding National Monuments therein).

15 ‘‘(k) ERCOT.—This section shall not apply within

16 the area referred to in section 212(k)(2)(A).’’.

17 (b) REPORTS TO CONGRESS ON CORRIDORS AND

18 RIGHTS OF WAY ON FEDERAL LANDS.—The Secretary of

19 the Interior, the Secretary of Energy, the Secretary of Ag20 riculture, and the Chairman of the Council on Environ21 mental Quality shall, within 90 days of the date of enact22 ment of this subsection, submit a joint report to Congress

23 identifying each of the following:

24 (1) All existing designated transmission and

25 distribution corridors on Federal land and the status
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1 of work related to proposed transmission and dis2 tribution corridor designations under Title V of the

3 Federal Land Policy and Management Act (43

4 U.S.C. 1761 et. Seq.), the schedule for completing

5 such work, any impediments to completing the work,

6 and steps that Congress could take to expedite the

7 process.

8 (2) The number of pending applications to lo9 cate transmission and distribution facilities on Fed10 eral lands, key information relating to each such fa11 cility, how long each application has been pending,

12 the schedule for issuing a timely decision as to each

13 facility, and progress in incorporating existing and

14 new such rights-of-way into relevant land use and

15 resource management plans or their equivalent.

16 (3) The number of existing transmission and

17 distribution rights-of-way on Federal lands that will

18 come up for renewal within the following 5, 10, and

19 15 year periods, and a description of how the Secre20 taries plan to manage such renewals.

21 SEC. 1222. THIRD-PARTY FINANCE.

22 (a) EXISTING FACILITIES.—The Secretary of Energy

23 (hereinafter in this section referred to as the ‘‘Secretary’’),

24 acting through the Administrator of the Western Area

25 Power Administration (hereinafter in this section referred
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1 to as ‘‘WAPA’’), or through the Administrator of the

2 Southwestern Power Administration (hereinafter in this

3 section referred to as ‘‘SWPA’’), or both, may design, de4 velop, construct, operate, maintain, or own, or participate

5 with other entities in designing, developing, constructing,

6 operating, maintaining, or owning, an electric power

7 transmission facility and related facilities (‘‘Project’’)

8 needed to upgrade existing transmission facilities owned

9 by SWPA or WAPA if the Secretary of Energy, in con10 sultation with the applicable Administrator, determines

11 that the proposed Project—

12 (1)(A) is located in a national interest electric

13 transmission corridor designated under section

14 216(a) of the Federal Power Act and will reduce

15 congestion of electric transmission in interstate com16 merce; or

17 (B) is necessary to accommodate an actual or

18 projected increase in demand for electric trans19 mission capacity;

20 (2) is consistent with—

21 (A) transmission needs identified, in a

22 transmission expansion plan or otherwise, by

23 the appropriate Regional Transmission Organi24 zation or Independent System Operator (as de-
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1 fined in the Federal Power Act), if any, or ap2 proved regional reliability organization; and

3 (B) efficient and reliable operation of the

4 transmission grid; and

5 (3) would be operated in conformance with pru6 dent utility practice.

7 (b) NEW FACILITIES.—The Secretary, acting

8 through WAPA or SWPA, or both, may design, develop,

9 construct, operate, maintain, or own, or participate with

10 other entities in designing, developing, constructing, oper11 ating, maintaining, or owning, a new electric power trans12 mission facility and related facilities (‘‘Project’’) located

13 within any State in which WAPA or SWPA operates if

14 the Secretary, in consultation with the applicable Adminis15 trator, determines that the proposed Project—

16 (1)(A) is located in an area designated under

17 section 216(a) of the Federal Power Act and will re18 duce congestion of electric transmission in interstate

19 commerce; or

20 (B) is necessary to accommodate an actual or

21 projected increase in demand for electric trans22 mission capacity;

23 (2) is consistent with—

24 (A) transmission needs identified, in a

25 transmission expansion plan or otherwise, by
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1 the appropriate Regional Transmission Organi2 zation or Independent System Operator, if any,

3 or approved regional reliability organization;

4 and

5 (B) efficient and reliable operation of the

6 transmission grid;

7 (3) will be operated in conformance with pru8 dent utility practice;

9 (4) will be operated by, or in conformance with

10 the rules of, the appropriate (A) Regional Trans11 mission Organization or Independent System Oper12 ator, if any, or (B) if such an organization does not

13 exist, regional reliability organization; and

14 (5) will not duplicate the functions of existing

15 transmission facilities or proposed facilities which

16 are the subject of ongoing or approved siting and re17 lated permitting proceedings.

18 (c) OTHER FUNDS.—

19 (1) IN GENERAL.—In carrying out a Project

20 under subsection (a) or (b), the Secretary may ac21 cept and use funds contributed by another entity for

22 the purpose of carrying out the Project.

23 (2) AVAILABILITY.—The contributed funds

24 shall be available for expenditure for the purpose of

25 carrying out the Project—
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1 (A) without fiscal year limitation; and

2 (B) as if the funds had been appropriated

3 specifically for that Project.

4 (3) ALLOCATION OF COSTS.—In carrying out a

5 Project under subsection (a) or (b), any costs of the

6 Project not paid for by contributions from another

7 entity shall be collected through rates charged to

8 customers using the new transmission capability pro9 vided by the Project and allocated equitably among

10 these project beneficiaries using the new trans11 mission capability.

12 (d) RELATIONSHIP TO OTHER LAWS.—Nothing in

13 this section affects any requirement of—

14 (1) any Federal environmental law, including

15 the National Environmental Policy Act of 1969 (42

16 U.S.C. 4321 et seq.);

17 (2) any Federal or State law relating to the

18 siting of energy facilities; or

19 (3) any existing authorizing statutes.

20 (e) SAVINGS CLAUSE.—Nothing in this section shall

21 constrain or restrict an Administrator in the utilization

22 of other authority delegated to the Administrator of

23 WAPA or SWPA.

24 (f) SECRETARIAL DETERMINATIONS.—Any deter25 mination made pursuant to subsections (a) or (b) shall
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1 be based on findings by the Secretary using the best avail2 able data.

3 (g) MAXIMUM FUNDING AMOUNT.—The Secretary

4 shall not accept and use more than $100,000,000 under

5 subsection (c)(1) for the period encompassing fiscal years

6 2004 through 2013.

7 SEC. 1223. TRANSMISSION SYSTEM MONITORING.

8 Within 6 months after the date of enactment of this

9 Act, the Secretary of Energy and the Federal Energy Reg10 ulatory Commission shall study and report to Congress on

11 the steps which must be taken to establish a system to

12 make available to all transmission system owners and Re13 gional Transmission Organizations (as defined in the Fed14 eral Power Act) within the Eastern and Western Inter15 connections real-time information on the functional status

16 of all transmission lines within such Interconnections. In

17 such study, the Commission shall assess technical means

18 for implementing such transmission information system

19 and identify the steps the Commission or Congress must

20 take to require the implementation of such system.

21 SEC. 1224. ADVANCED TRANSMISSION TECHNOLOGIES.

22 (a) AUTHORITY.—The Federal Energy Regulatory

23 Commission, in the exercise of its authorities under the

24 Federal Power Act and the Public Utility Regulatory Poli-
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1 cies Act of 1978, shall encourage the deployment of ad2 vanced transmission technologies.

3 (b) DEFINITION.—For the purposes of this section,

4 the term ‘‘advanced transmission technologies’’ means

5 technologies that increase the capacity, efficiency, or reli6 ability of existing or new transmission facilities, including,

7 but not limited to—

8 (1) high-temperature lines (including super9 conducting cables);

10 (2) underground cables;

11 (3) advanced conductor technology (including

12 advanced composite conductors, high-temperature

13 low-sag conductors, and fiber optic temperature

14 sensing conductors);

15 (4) high-capacity ceramic electric wire, connec16 tors, and insulators;

17 (5) optimized transmission line configurations

18 (including multiple phased transmission lines);

19 (6) modular equipment;

20 (7) wireless power transmission;

21 (8) ultra-high voltage lines;

22 (9) high-voltage DC technology;

23 (10) flexible AC transmission systems;
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1 (11) energy storage devices (including pumped

2 hydro, compressed air, superconducting magnetic en3 ergy storage, flywheels, and batteries);

4 (12) controllable load;

5 (13) distributed generation (including PV, fuel

6 cells, microturbines);

7 (14) enhanced power device monitoring;

8 (15) direct system state sensors;

9 (16) fiber optic technologies;

10 (17) power electronics and related software (in11 cluding real time monitoring and analytical soft12 ware); and

13 (18) any other technologies the Commission

14 considers appropriate.

15 (c) OBSOLETE OR IMPRACTICABLE TECH16 NOLOGIES.—The Commission is authorized to cease en17 couraging the deployment of any technology described in

18 this section on a finding that such technology has been

19 rendered obsolete or otherwise impracticable to deploy.

20 SEC. 1225. ELECTRIC TRANSMISSION AND DISTRIBUTION

21 PROGRAMS.

22 (a) ELECTRIC TRANSMISSION AND DISTRIBUTION

23 PROGRAM.—The Secretary of Energy (hereinafter in this

24 section referred to as the ‘‘Secretary’’) acting through the

25 Director of the Office of Electric Transmission and Dis-
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1 tribution shall establish a comprehensive research, devel2 opment, demonstration and commercial application pro3 gram to promote improved reliability and efficiency of

4 electrical transmission and distribution systems. This pro5 gram shall include—

6 (1) advanced energy delivery and storage tech7 nologies, materials, and systems, including new

8 transmission technologies, such as flexible alter9 nating current transmission systems, composite con10 ductor materials and other technologies that enhance

11 reliability, operational flexibility, or power-carrying

12 capability;

13 (2) advanced grid reliability and efficiency tech14 nology development;

15 (3) technologies contributing to significant load

16 reductions;

17 (4) advanced metering, load management, and

18 control technologies;

19 (5) technologies to enhance existing grid compo20 nents;

21 (6) the development and use of high-tempera22 ture superconductors to—

23 (A) enhance the reliability, operational

24 flexibility, or power-carrying capability of elec25 tric transmission or distribution systems; or
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1 (B) increase the efficiency of electric en2 ergy generation, transmission, distribution, or

3 storage systems;

4 (7) integration of power systems, including sys5 tems to deliver high-quality electric power, electric

6 power reliability, and combined heat and power;

7 (8) supply of electricity to the power grid by

8 small scale, distributed and residential-based power

9 generators;

10 (9) the development and use of advanced grid

11 design, operation and planning tools;

12 (10) any other infrastructure technologies, as

13 appropriate; and

14 (11) technology transfer and education.

15 (b) PROGRAM PLAN.—Not later than 1 year after the

16 date of the enactment of this legislation, the Secretary,

17 in consultation with other appropriate Federal agencies,

18 shall prepare and transmit to Congress a 5-year program

19 plan to guide activities under this section. In preparing

20 the program plan, the Secretary may consult with utilities,

21 energy services providers, manufacturers, institutions of

22 higher education, other appropriate State and local agen23 cies, environmental organizations, professional and tech24 nical societies, and any other persons the Secretary con25 siders appropriate.
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1 (c) IMPLEMENTATION.—The Secretary shall consider

2 implementing this program using a consortium of indus3 try, university and national laboratory participants.

4 (d) REPORT.—Not later than 2 years after the trans5 mittal of the plan under subsection (b), the Secretary shall

6 transmit a report to Congress describing the progress

7 made under this section and identifying any additional re8 sources needed to continue the development and commer9 cial application of transmission and distribution infra10 structure technologies.

11 (e) POWER DELIVERY RESEARCH INITIATIVE.—

12 (1) IN GENERAL.—The Secretary shall establish

13 a research, development, demonstration, and com14 mercial application initiative specifically focused on

15 power delivery utilizing components incorporating

16 high temperature superconductivity.

17 (2) GOALS.—The goals of this initiative shall be

18 to—

19 (A) establish facilities to develop high tem20 perature superconductivity power applications

21 in partnership with manufacturers and utilities;

22 (B) provide technical leadership for estab23 lishing reliability for high temperature super24 conductivity power applications including suit25 able modeling and analysis;
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1 (C) facilitate commercial transition toward

2 direct current power transmission, storage, and

3 use for high power systems utilizing high tem4 perature superconductivity; and

5 (D) facilitate the integration of very low

6 impedance high temperature superconducting

7 wires and cables in existing electric networks to

8 improve system performance, power flow control

9 and reliability.

10 (3) REQUIREMENTS.—The initiative shall

11 include—

12 (A) feasibility analysis, planning, research,

13 and design to construct demonstrations of

14 superconducting links in high power, direct cur15 rent and controllable alternating current trans16 mission systems;

17 (B) public-private partnerships to dem18 onstrate deployment of high temperature super19 conducting cable into testbeds simulating a re20 alistic transmission grid and under varying

21 transmission conditions, including actual grid

22 insertions; and

23 (C) testbeds developed in cooperation with

24 national laboratories, industries, and univer25 sities to demonstrate these technologies, pre-
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1 pare the technologies for commercial introduc2 tion, and address cost or performance road3 blocks to successful commercial use.

4 (4) AUTHORIZATION OF APPROPRIATIONS.—For

5 purposes of carrying out this subsection, there are

6 authorized to be appropriated—

7 (A) for fiscal year 2004, $15,000,000;

8 (B) for fiscal year 2005, $20,000,000;

9 (C) for fiscal year 2006, $30,000,000;

10 (D) for fiscal year 2007, $35,000,000; and

11 (E) for fiscal year 2008, $40,000,000.

12 SEC. 1226. ADVANCED POWER SYSTEM TECHNOLOGY IN13 CENTIVE PROGRAM.

14 (a) PROGRAM.—The Secretary of Energy is author15 ized to establish an Advanced Power System Technology

16 Incentive Program to support the deployment of certain

17 advanced power system technologies and to improve and

18 protect certain critical governmental, industrial, and com19 mercial processes. Funds provided under this section shall

20 be used by the Secretary to make incentive payments to

21 eligible owners or operators of advanced power system

22 technologies to increase power generation through en23 hanced operational, economic, and environmental perform24 ance. Payments under this section may only be made upon
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1 receipt by the Secretary of an incentive payment applica2 tion establishing an applicant as either—

3 (1) a qualifying advanced power system tech4 nology facility; or

5 (2) a qualifying security and assured power fa6 cility.

7 (b) INCENTIVES.—Subject to availability of funds, a

8 payment of 1.8 cents per kilowatt-hour shall be paid to

9 the owner or operator of a qualifying advanced power sys10 tem technology facility under this section for electricity

11 generated at such facility. An additional 0.7 cents per kilo12 watt-hour shall be paid to the owner or operator of a quali13 fying security and assured power facility for electricity

14 generated at such facility. Any facility qualifying under

15 this section shall be eligible for an incentive payment for

16 up to, but not more than, the first 10,000,000 kilowatt17 hours produced in any fiscal year.

18 (c) ELIGIBILITY.—For purposes of this section:

19 (1) QUALIFYING ADVANCED POWER SYSTEM

20 TECHNOLOGY FACILITY.—The term ‘‘qualifying ad21 vanced power system technology facility’’ means a

22 facility using an advanced fuel cell, turbine, or hy23 brid power system or power storage system to gen24 erate or store electric energy.
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1 (2) QUALIFYING SECURITY AND ASSURED

2 POWER FACILITY.—The term ‘‘qualifying security

3 and assured power facility’’ means a qualifying ad4 vanced power system technology facility determined

5 by the Secretary of Energy, in consultation with the

6 Secretary of Homeland Security, to be in critical

7 need of secure, reliable, rapidly available, high-qual8 ity power for critical governmental, industrial, or

9 commercial applications.

10 (d) AUTHORIZATION.—There are authorized to be ap11 propriated to the Secretary of Energy for the purposes

12 of this section, $10,000,000 for each of the fiscal years

13 2004 through 2010.

14 SEC. 1227. OFFICE OF ELECTRIC TRANSMISSION AND DIS15 TRIBUTION.

16 (a) CREATION OF AN OFFICE OF ELECTRIC TRANS17 MISSION AND DISTRIBUTION.—Title II of the Department

18 of Energy Organization Act (42 U.S.C. 7131 et seq.) (as

19 amended by section 502(a) of this Act) is amended by in20 serting the following after section 217, as added by title

21 V of this Act:

22 ‘‘SEC. 218. OFFICE OF ELECTRIC TRANSMISSION AND DIS23 TRIBUTION.

24 ‘‘(a) ESTABLISHMENT.—There is established within

25 the Department an Office of Electric Transmission and
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1 Distribution. This Office shall be headed by a Director,

2 subject to the authority of the Secretary. The Director

3 shall be appointed by the Secretary. The Director shall

4 be compensated at the annual rate prescribed for level IV

5 of the Executive Schedule under section 5315 of title 5,

6 United States Code.

7 ‘‘(b) DIRECTOR.—The Director shall—

8 ‘‘(1) coordinate and develop a comprehensive,

9 multi-year strategy to improve the Nation’s elec10 tricity transmission and distribution;

11 ‘‘(2) implement or, where appropriate, coordi12 nate the implementation of, the recommendations

13 made in the Secretary’s May 2002 National Trans14 mission Grid Study;

15 ‘‘(3) oversee research, development, and dem16 onstration to support Federal energy policy related

17 to electricity transmission and distribution;

18 ‘‘(4) grant authorizations for electricity import

19 and export pursuant to section 202(c), (d), (e), and

20 (f) of the Federal Power Act (16 U.S.C. 824a);

21 ‘‘(5) perform other functions, assigned by the

22 Secretary, related to electricity transmission and dis23 tribution; and

24 ‘‘(6) develop programs for workforce training in

25 power and transmission engineering.’’.
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1 (b) CONFORMING AMENDMENTS.—(1) The table of

2 contents of the Department of Energy Organization Act

3 (42 U.S.C. 7101 note) is amended by inserting after the

4 item relating to section 217 the following new item:

‘‘Sec. 218. Office of Electric Transmission and Distribution.’’.

5 (2) Section 5315 of title 5, United States Code, is

6 amended by inserting after the item relating to ‘‘Inspector

7 General, Department of Energy.’’ the following:

8 ‘‘Director, Office of Electric Transmission and

9 Distribution, Department of Energy.’’.

10 Subtitle C—Transmission

11 Operation Improvements

12 SEC. 1231. OPEN NONDISCRIMINATORY ACCESS.

13 Part II of the Federal Power Act (16 U.S.C. 824 et

14 seq.) is amended by inserting after section 211 the fol15 lowing new section:

16 ‘‘SEC. 211A. OPEN ACCESS BY UNREGULATED TRANSMIT17 TING UTILITIES.

18 ‘‘(a) TRANSMISSION SERVICES.—Subject to section

19 212(h), the Commission may, by rule or order, require an

20 unregulated transmitting utility to provide transmission

21 services—

22 ‘‘(1) at rates that are comparable to those that

23 the unregulated transmitting utility charges itself;

24 and
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1 ‘‘(2) on terms and conditions (not relating to

2 rates) that are comparable to those under which

3 such unregulated transmitting utility provides trans4 mission services to itself and that are not unduly

5 discriminatory or preferential.

6 ‘‘(b) EXEMPTION.—The Commission shall exempt

7 from any rule or order under this section any unregulated

8 transmitting utility that—

9 ‘‘(1) sells no more than 4,000,000 megawatt

10 hours of electricity per year; or

11 ‘‘(2) does not own or operate any transmission

12 facilities that are necessary for operating an inter13 connected transmission system (or any portion

14 thereof); or

15 ‘‘(3) meets other criteria the Commission deter16 mines to be in the public interest.

17 ‘‘(c) LOCAL DISTRIBUTION FACILITIES.—The re18 quirements of subsection (a) shall not apply to facilities

19 used in local distribution.

20 ‘‘(d) EXEMPTION TERMINATION.—Whenever the

21 Commission, after an evidentiary hearing held upon a

22 complaint and after giving consideration to reliability

23 standards established under section 215, finds on the

24 basis of a preponderance of the evidence that any exemp25 tion granted pursuant to subsection (b) unreasonably im-
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1 pairs the continued reliability of an interconnected trans2 mission system, it shall revoke the exemption granted to

3 that transmitting utility.

4 ‘‘(e) APPLICATION TO UNREGULATED TRANSMIT5 TING UTILITIES.—The rate changing procedures applica6 ble to public utilities under subsections (c) and (d) of sec7 tion 205 are applicable to unregulated transmitting utili8 ties for purposes of this section.

9 ‘‘(f) REMAND.—In exercising its authority under

10 paragraph (1) of subsection (a), the Commission may re11 mand transmission rates to an unregulated transmitting

12 utility for review and revision where necessary to meet the

13 requirements of subsection (a).

14 ‘‘(g) OTHER REQUESTS.—The provision of trans15 mission services under subsection (a) does not preclude a

16 request for transmission services under section 211.

17 ‘‘(h) LIMITATION.—The Commission may not require

18 a State or municipality to take action under this section

19 that would violate a private activity bond rule for purposes

20 of section 141 of the Internal Revenue Code of 1986 (26

21 U.S.C. 141).

22 ‘‘(i) TRANSFER OF CONTROL OF TRANSMITTING FA23 CILITIES.—Nothing in this section authorizes the Commis24 sion to require an unregulated transmitting utility to

25 transfer control or operational control of its transmitting
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1 facilities to an RTO or any other Commission-approved

2 independent transmission organization designated to pro3 vide nondiscriminatory transmission access.

4 ‘‘(j) DEFINITION.—For purposes of this section, the

5 term ‘unregulated transmitting utility’ means an entity

6 that—

7 ‘‘(1) owns or operates facilities used for the

8 transmission of electric energy in interstate com9 merce; and

10 ‘‘(2) is an entity described in section 201(f).’’.

11 SEC. 1232. SENSE OF CONGRESS ON REGIONAL TRANS12 MISSION ORGANIZATIONS.

13 It is the sense of Congress that, in order to promote

14 fair, open access to electric transmission service, benefit

15 retail consumers, facilitate wholesale competition, improve

16 efficiencies in transmission grid management, promote

17 grid reliability, remove opportunities for unduly discrimi18 natory or preferential transmission practices, and provide

19 for the efficient development of transmission infrastruc20 ture needed to meet the growing demands of competitive

21 wholesale power markets, all transmitting utilities in inter22 state commerce should voluntarily become members of Re23 gional Transmission Organizations as defined in section

24 3 of the Federal Power Act.
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1 SEC. 1233. REGIONAL TRANSMISSION ORGANIZATION AP2 PLICATIONS PROGRESS REPORT.

3 Not later than 120 days after the date of enactment

4 of this section, the Federal Energy Regulatory Commis5 sion shall submit to Congress a report containing each of

6 the following:

7 (1) A list of all regional transmission organiza8 tion applications filed at the Commission pursuant

9 to subpart F of part 35 of title 18, Code of Federal

10 Regulations (in this section referred to as ‘‘Order

11 No. 2000’’), including an identification of each pub12 lic utility and other entity included within the pro13 posed membership of the regional transmission orga14 nization.

15 (2) A brief description of the status of each

16 pending regional transmission organization applica17 tion, including a precise explanation of how each

18 fails to comply with the minimal requirements of

19 Order No. 2000 and what steps need to be taken to

20 bring each application into such compliance.

21 (3) For any application that has not been fi22 nally approved by the Commission, a detailed de23 scription of every aspect of the application that the

24 Commission has determined does not conform to the

25 requirements of Order No. 2000.
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1 (4) For any application that has not been fi2 nally approved by the Commission, an explanation

3 by the Commission of why the items described pur4 suant to paragraph (3) constitute material non5 compliance with the requirements of the Commis6 sion’s Order No. 2000 sufficient to justify denial of

7 approval by the Commission.

8 (5) For all regional transmission organization

9 applications filed pursuant to the Commission’s

10 Order No. 2000, whether finally approved or not—

11 (A) a discussion of that regional trans12 mission organization’s efforts to minimize rate

13 seams between itself and—

14 (i) other regional transmission organi15 zations; and

16 (ii) entities not participating in a re17 gional transmission organization;

18 (B) a discussion of the impact of such

19 seams on consumers and wholesale competition;

20 and

21 (C) a discussion of minimizing cost-shifting

22 on consumers.

23 SEC. 1234. FEDERAL UTILITY PARTICIPATION IN REGIONAL

24 TRANSMISSION ORGANIZATIONS.

25 (a) DEFINITIONS.—For purposes of this section—
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1 (1) APPROPRIATE FEDERAL REGULATORY AU2 THORITY.—The term ‘‘appropriate Federal regu3 latory authority’’ means—

4 (A) with respect to a Federal power mar5 keting agency (as defined in the Federal Power

6 Act), the Secretary of Energy, except that the

7 Secretary may designate the Administrator of a

8 Federal power marketing agency to act as the

9 appropriate Federal regulatory authority with

10 respect to the transmission system of that Fed11 eral power marketing agency; and

12 (B) with respect to the Tennessee Valley

13 Authority, the Board of Directors of the Ten14 nessee Valley Authority.

15 (2) FEDERAL UTILITY.—The term ‘‘Federal

16 utility’’ means a Federal power marketing agency or

17 the Tennessee Valley Authority.

18 (3) TRANSMISSION SYSTEM.—The term ‘‘trans19 mission system’’ means electric transmission facili20 ties owned, leased, or contracted for by the United

21 States and operated by a Federal utility.

22 (b) TRANSFER.—The appropriate Federal regulatory

23 authority is authorized to enter into a contract, agreement

24 or other arrangement transferring control and use of all

25 or part of the Federal utility’s transmission system to an
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1 RTO or ISO (as defined in the Federal Power Act), ap2 proved by the Federal Energy Regulatory Commission.

3 Such contract, agreement or arrangement shall include—

4 (1) performance standards for operation and

5 use of the transmission system that the head of the

6 Federal utility determines necessary or appropriate,

7 including standards that assure recovery of all the

8 Federal utility’s costs and expenses related to the

9 transmission facilities that are the subject of the

10 contract, agreement or other arrangement; consist11 ency with existing contracts and third-party financ12 ing arrangements; and consistency with said Federal

13 utility’s statutory authorities, obligations, and limi14 tations;

15 (2) provisions for monitoring and oversight by

16 the Federal utility of the RTO’s or ISO’s fulfillment

17 of the terms and conditions of the contract, agree18 ment or other arrangement, including a provision for

19 the resolution of disputes through arbitration or

20 other means with the regional transmission organi21 zation or with other participants, notwithstanding

22 the obligations and limitations of any other law re23 garding arbitration; and

24 (3) a provision that allows the Federal utility to

25 withdraw from the RTO or ISO and terminate the
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1 contract, agreement or other arrangement in accord2 ance with its terms.

3 Neither this section, actions taken pursuant to it, nor any

4 other transaction of a Federal utility using an RTO or

5 ISO shall confer upon the Federal Energy Regulatory

6 Commission jurisdiction or authority over the Federal util7 ity’s electric generation assets, electric capacity or energy

8 that the Federal utility is authorized by law to market,

9 or the Federal utility’s power sales activities.

10 (c) EXISTING STATUTORY AND OTHER OBLIGA11 TIONS.—

12 (1) SYSTEM OPERATION REQUIREMENTS.—No

13 statutory provision requiring or authorizing a Fed14 eral utility to transmit electric power or to construct,

15 operate or maintain its transmission system shall be

16 construed to prohibit a transfer of control and use

17 of its transmission system pursuant to, and subject

18 to all requirements of subsection (b).

19 (2) OTHER OBLIGATIONS.—This subsection

20 shall not be construed to—

21 (A) suspend, or exempt any Federal utility

22 from, any provision of existing Federal law, in23 cluding but not limited to any requirement or

24 direction relating to the use of the Federal util25 ity’s transmission system, environmental protec-
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1 tion, fish and wildlife protection, flood control,

2 navigation, water delivery, or recreation; or

3 (B) authorize abrogation of any contract

4 or treaty obligation.

5 (3) REPEAL.—Section 311 of title III of Appen6 dix B of the Act of October 27, 2000 (P.L. 106–

7 377, section 1(a)(2); 114 Stat. 1441, 1441A–80; 16

8 U.S.C. 824n) is repealed.

9 SEC. 1235. STANDARD MARKET DESIGN.

10 (a) REMAND.—The Commission’s proposed rule11 making entitled ‘‘Remedying Undue Discrimination

12 through Open Access Transmission Service and Standard

13 Electricity Market Design’’ (Docket No. RM01–12–000)

14 (‘‘SMD NOPR’’) is remanded to the Commission for re15 consideration. No final rule mandating a standard elec16 tricity market design pursuant to the proposed rule17 making, including any rule or order of general applica18 bility within the scope of the proposed rulemaking, may

19 be issued before October 31, 2006, or take effect before

20 December 31, 2006. Any final rule issued by the Commis21 sion pursuant to the proposed rulemaking shall be pre22 ceded by a second notice of proposed rulemaking issued

23 after the date of enactment of this Act and an opportunity

24 for public comment.
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1 (b) SAVINGS CLAUSE.—This section shall not be con2 strued to modify or diminish any authority or obligation

3 the Commission has under this Act, the Federal Power

4 Act, or other applicable law, including, but not limited to,

5 any authority to—

6 (1) issue any rule or order (of general or par7 ticular applicability) pursuant to any such authority

8 or obligation; or

9 (2) act on a filing or filings by 1 or more trans10 mitting utilities for the voluntary formation of a Re11 gional Transmission Organization or Independent

12 System Operator (as defined in the Federal Power

13 Act) (and related market structures or rules) or vol14 untary modification of an existing Regional Trans15 mission Organization or Independent System Oper16 ator (and related market structures or rules).

17 SEC. 1236. NATIVE LOAD SERVICE OBLIGATION.

18 Part II of the Federal Power Act (16 U.S.C. 824 et

19 seq.) is amended by adding at the end the following:

20 ‘‘SEC. 217. NATIVE LOAD SERVICE OBLIGATION.

21 ‘‘(a) MEETING SERVICE OBLIGATIONS.—(1) Any

22 load-serving entity that, as of the date of enactment of

23 this section—

24 ‘‘(A) owns generation facilities, markets the

25 output of Federal generation facilities, or holds
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1 rights under 1 or more wholesale contracts to pur2 chase electric energy, for the purpose of meeting a

3 service obligation, and

4 ‘‘(B) by reason of ownership of transmission fa5 cilities, or 1 or more contracts or service agreements

6 for firm transmission service, holds firm trans7 mission rights for delivery of the output of such gen8 eration facilities or such purchased energy to meet

9 such service obligation,

10 is entitled to use such firm transmission rights, or, equiva11 lent tradable or financial transmission rights, in order to

12 deliver such output or purchased energy, or the output of

13 other generating facilities or purchased energy to the ex14 tent deliverable using such rights, to the extent required

15 to meet its service obligation.

16 ‘‘(2) To the extent that all or a portion of the service

17 obligation covered by such firm transmission rights or

18 equivalent tradable or financial transmission rights is

19 transferred to another load-serving entity, the successor

20 load-serving entity shall be entitled to use the firm trans21 mission rights or equivalent tradable or financial trans22 mission rights associated with the transferred service obli23 gation. Subsequent transfers to another load-serving enti24 ty, or back to the original load-serving entity, shall be enti25 tled to the same rights.
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1 ‘‘(3) The Commission shall exercise its authority

2 under this Act in a manner that facilitates the planning

3 and expansion of transmission facilities to meet the rea4 sonable needs of load-serving entities to satisfy their serv5 ice obligations.

6 ‘‘(b) ALLOCATION OF TRANSMISSION RIGHTS.—

7 Nothing in this section shall affect any methodology ap8 proved by the Commission prior to September 15, 2003,

9 for the allocation of transmission rights by an RTO or

10 ISO that has been authorized by the Commission to allo11 cate transmission rights.

12 ‘‘(c) CERTAIN TRANSMISSION RIGHTS.—The Com13 mission may exercise authority under this Act to make

14 transmission rights not used to meet an obligation covered

15 by subsection (a) available to other entities in a manner

16 determined by the Commission to be just, reasonable, and

17 not unduly discriminatory or preferential.

18 ‘‘(d) OBLIGATION TO BUILD.—Nothing in this Act

19 shall relieve a load-serving entity from any obligation

20 under State or local law to build transmission or distribu21 tion facilities adequate to meet its service obligations.

22 ‘‘(e) CONTRACTS.—Nothing in this section shall pro23 vide a basis for abrogating any contract or service agree24 ment for firm transmission service or rights in effect as

25 of the date of the enactment of this subsection.
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1 ‘‘(f) WATER PUMPING FACILITIES.—The Commis2 sion shall ensure that any entity described in section

3 201(f) that owns transmission facilities used predomi4 nately to support its own water pumping facilities shall

5 have, with respect to such facilities, protections for trans6 mission service comparable to those provided to load-serv7 ing entities pursuant to this section.

8 ‘‘(g) ERCOT.—This section shall not apply within

9 the area referred to in section 212(k)(2)(A).

10 ‘‘(h) JURISDICTION.—This section does not authorize

11 the Commission to take any action not otherwise within

12 its jurisdiction.

13 ‘‘(i) EFFECT OF EXERCISING RIGHTS.—An entity

14 that lawfully exercises rights granted under subsection (a)

15 shall not be considered by such action as engaging in

16 undue discrimination or preference under this Act.

17 ‘‘(j) TVA AREA.—For purposes of subsection

18 (a)(1)(B), a load-serving entity that is located within the

19 service area of the Tennessee Valley Authority and that

20 has a firm wholesale power supply contract with the Ten21 nessee Valley Authority shall be deemed to hold firm

22 transmission rights for the transmission of such power.

23 ‘‘(k) DEFINITIONS.—For purposes of this section:

24 ‘‘(1) The term ‘distribution utility’ means an

25 electric utility that has a service obligation to end-
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1 users or to a State utility or electric cooperative

2 that, directly or indirectly, through 1 or more addi3 tional State utilities or electric cooperatives, provides

4 electric service to end-users.

5 ‘‘(2) The term ‘load-serving entity’ means a dis6 tribution utility or an electric utility that has a serv7 ice obligation.

8 ‘‘(3) The term ‘service obligation’ means a re9 quirement applicable to, or the exercise of authority

10 granted to, an electric utility under Federal, State

11 or local law or under long-term contracts to provide

12 electric service to end-users or to a distribution util13 ity.

14 ‘‘(4) The term ‘State utility’ means a State or

15 any political subdivision of a State, or any agency,

16 authority, or instrumentality of any 1 or more of the

17 foregoing, or a corporation which is wholly owned,

18 directly or indirectly, by any 1 or more of the fore19 going, competent to carry on the business of devel20 oping, transmitting, utilizing or distributing power.’’.

21 SEC. 1237. STUDY ON THE BENEFITS OF ECONOMIC DIS22 PATCH.

23 (a) STUDY.—The Secretary of Energy, in coordina24 tion and consultation with the States, shall conduct a

25 study on—
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1 (1) the procedures currently used by electric

2 utilities to perform economic dispatch;

3 (2) identifying possible revisions to those proce4 dures to improve the ability of nonutility generation

5 resources to offer their output for sale for the pur6 pose of inclusion in economic dispatch; and

7 (3) the potential benefits to residential, com8 mercial, and industrial electricity consumers nation9 ally and in each state if economic dispatch proce10 dures were revised to improve the ability of non11 utility generation resources to offer their output for

12 inclusion in economic dispatch.

13 (b) DEFINITION.—The term ‘‘economic dispatch’’

14 when used in this section means the operation of genera15 tion facilities to produce energy at the lowest cost to reli16 ably serve consumers, recognizing any operational limits

17 of generation and transmission facilities.

18 (c) REPORT TO CONGRESS AND THE STATES.—Not

19 later than 90 days after the date of enactment of this Act,

20 and on a yearly basis following, the Secretary of Energy

21 shall submit a report to Congress and the States on the

22 results of the study conducted under subsection (a), in23 cluding recommendations to Congress and the States for

24 any suggested legislative or regulatory changes.
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1 Subtitle D—Transmission Rate

2 Reform

3 SEC. 1241. TRANSMISSION INFRASTRUCTURE INVESTMENT.

4 Part II of the Federal Power Act (16 U.S.C. 824 et

5 seq.) is amended by adding at the end the following:

6 ‘‘SEC. 218. TRANSMISSION INFRASTRUCTURE INVESTMENT.

7 ‘‘(a) RULEMAKING REQUIREMENT.—Within 1 year

8 after the enactment of this section, the Commission shall

9 establish, by rule, incentive-based (including, but not lim10 ited to performance-based) rate treatments for the trans11 mission of electric energy in interstate commerce by public

12 utilities for the purpose of benefiting consumers by ensur13 ing reliability and reducing the cost of delivered power by

14 reducing transmission congestion. Such rule shall—

15 ‘‘(1) promote reliable and economically efficient

16 transmission and generation of electricity by pro17 moting capital investment in the enlargement, im18 provement, maintenance and operation of facilities

19 for the transmission of electric energy in interstate

20 commerce;

21 ‘‘(2) provide a return on equity that attracts

22 new investment in transmission facilities (including

23 related transmission technologies);

24 ‘‘(3) encourage deployment of transmission

25 technologies and other measures to increase the ca-
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1 pacity and efficiency of existing transmission facili2 ties and improve the operation of such facilities; and

3 ‘‘(4) allow recovery of all prudently incurred

4 costs necessary to comply with mandatory reliability

5 standards issued pursuant to section 215 of this

6 Act.

7 The Commission may, from time to time, revise such rule.

8 ‘‘(b) ADDITIONAL INCENTIVES FOR RTO PARTICIPA9 TION.—In the rule issued under this section, the Commis10 sion shall, to the extent within its jurisdiction, provide for

11 incentives to each transmitting utility or electric utility

12 that joins a Regional Transmission Organization or Inde13 pendent System Operator. Incentives provided by the

14 Commission pursuant to such rule shall include—

15 ‘‘(1) recovery of all prudently incurred costs to

16 develop and participate in any proposed or approved

17 RTO, ISO, or independent transmission company;

18 ‘‘(2) recovery of all costs previously approved by

19 a State commission which exercised jurisdiction over

20 the transmission facilities prior to the utility’s par21 ticipation in the RTO or ISO, including costs nec22 essary to honor preexisting transmission service con23 tracts, in a manner which does not reduce the reve24 nues the utility receives for transmission services for
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1 a reasonable transition period after the utility joins

2 the RTO or ISO;

3 ‘‘(3) recovery as an expense in rates of the

4 costs prudently incurred to conduct transmission

5 planning and reliability activities, including the costs

6 of participating in RTO, ISO and other regional

7 planning activities and design, study and other

8 precertification costs involved in seeking permits and

9 approvals for proposed transmission facilities;

10 ‘‘(4) a current return in rates for construction

11 work in progress for transmission facilities and full

12 recovery of prudently incurred costs for constructing

13 transmission facilities;

14 ‘‘(5) formula transmission rates; and

15 ‘‘(6) a maximum 15 year accelerated deprecia16 tion on new transmission facilities for rate treatment

17 purposes.

18 The Commission shall ensure that any costs recoverable

19 pursuant to this subsection may be recovered by such util20 ity through the transmission rates charged by such utility

21 or through the transmission rates charged by the RTO

22 or ISO that provides transmission service to such utility.

23 ‘‘(c) JUST AND REASONABLE RATES.—All rates ap24 proved under the rules adopted pursuant to this section,

25 including any revisions to such rules, are subject to the
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1 requirement of sections 205 and 206 that all rates,

2 charges, terms, and conditions be just and reasonable and

3 not unduly discriminatory or preferential.’’.

4 SEC. 1242. VOLUNTARY TRANSMISSION PRICING PLANS.

5 Part II of the Federal Power Act (16 U.S.C. 824 et

6 seq.) is amended by adding at the end the following:

7 ‘‘SEC. 219. VOLUNTARY TRANSMISSION PRICING PLANS.

8 ‘‘(a) IN GENERAL.—Any transmission provider, in9 cluding an RTO or ISO, may submit to the Commission

10 a plan or plans under section 205 containing the criteria

11 for determining the person or persons that will be required

12 to pay for any construction of new transmission facilities

13 or expansion, modification or upgrade of transmission fa14 cilities (in this section referred to as ‘transmission service

15 related expansion’) or new generator interconnection.

16 ‘‘(b) VOLUNTARY TRANSMISSION PRICING PLANS.—

17 (1) Any plan or plans submitted under subsection (a) shall

18 specify the method or methods by which costs may be allo19 cated or assigned. Such methods may include, but are not

20 limited to:

21 ‘‘(A) directly assigned;

22 ‘‘(B) participant funded; or

23 ‘‘(C) rolled into regional or sub-regional rates.
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1 ‘‘(2) FERC shall approve a plan or plans submitted

2 under subparagraph (B) of paragraph (1) if such plan or

3 plans—

4 ‘‘(A) result in rates that are just and reason5 able and not unduly discriminatory or preferential

6 consistent with section 205; and

7 ‘‘(B) ensure that the costs of any transmission

8 service related expansion or new generator inter9 connection not required to meet applicable reliability

10 standards established under section 215 are assigned

11 in a fair manner, meaning that those who benefit

12 from the transmission service related expansion or

13 new generator interconnection pay an appropriate

14 share of the associated costs, provided that—

15 ‘‘(i) costs may not be assigned or allocated

16 to an electric utility if the native load customers

17 of that utility would not have required such

18 transmission service related expansion or new

19 generator interconnection absent the request for

20 transmission service related expansion or new

21 generator interconnection that necessitated the

22 investment;

23 ‘‘(ii) the party requesting such trans24 mission service related expansion or new gener-
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1 ator interconnection shall not be required to

2 pay for both—

3 ‘‘(I) the assigned cost of the upgrade;

4 and

5 ‘‘(II) the difference between—

6 ‘‘(aa) the embedded cost paid for

7 transmission services (including the

8 cost of the requested upgrade); and

9 ‘‘(bb) the embedded cost that

10 would have been paid absent the up11 grade; and

12 ‘‘(iii) the party or parties who pay for fa13 cilities necessary for the transmission service

14 related expansion or new generator interconnec15 tion receives full compensation for its costs for

16 the participant funded facilities in the form

17 of—

18 ‘‘(I) monetary credit equal to the cost

19 of the participant funded facilities (ac20 counting for the time value of money at

21 the Gross Domestic Product deflator),

22 which credit shall be pro-rated in equal in23 stallments over a period of not more than

24 30 years and shall not exceed in total the

25 amount of the initial investment, against
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1 the transmission charges that the funding

2 entity or its assignee is otherwise assessed

3 by the transmission provider;

4 ‘‘(II) appropriate financial or physical

5 rights; or

6 ‘‘(III) any other method of cost recov7 ery or compensation approved by the Com8 mission.

9 ‘‘(3) A plan submitted under this section shall apply

10 only to—

11 ‘‘(A) a contract or interconnection agreement

12 executed or filed with the Commission after the date

13 of enactment of this section; or

14 ‘‘(B) an interconnection agreement pending re15 hearing as of November 1, 2003.

16 ‘‘(4) Nothing in this section diminishes or alters the

17 rights of individual members of an RTO or ISO under

18 this Act.

19 ‘‘(5) Nothing in this section shall affect the allocation

20 of costs or the cost methodology employed by an RTO or

21 ISO authorized by the Commission to allocate costs (in22 cluding costs for transmission service related expansion or

23 new generator interconnection) prior to the date of enact24 ment of this section.
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1 ‘‘(6) This section shall not apply within the area re2 ferred to in section 212(k)(2)(A).

3 ‘‘(7) The term ‘transmission provider’ means a public

4 utility that owns or operates facilities that provide inter5 connection or transmission service in interstate com6 merce.’’.

7 Subtitle E—Amendments to PURPA

8 SEC. 1251. NET METERING AND ADDITIONAL STANDARDS.

9 (a) ADOPTION OF STANDARDS.—Section 111(d) of

10 the Public Utility Regulatory Policies Act of 1978 (16

11 U.S.C. 2621(d)) is amended by adding at the end the fol12 lowing:

13 ‘‘(11) NET METERING.—Each electric utility

14 shall make available upon request net metering serv15 ice to any electric consumer that the electric utility

16 serves. For purposes of this paragraph, the term

17 ‘net metering service’ means service to an electric

18 consumer under which electric energy generated by

19 that electric consumer from an eligible on-site gener20 ating facility and delivered to the local distribution

21 facilities may be used to offset electric energy pro22 vided by the electric utility to the electric consumer

23 during the applicable billing period.

24 ‘‘(12) FUEL SOURCES.—Each electric utility

25 shall develop a plan to minimize dependence on 1
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1 fuel source and to ensure that the electric energy it

2 sells to consumers is generated using a diverse range

3 of fuels and technologies, including renewable tech4 nologies.

5 ‘‘(13) FOSSIL FUEL GENERATION EFFI6 CIENCY.—Each electric utility shall develop and im7 plement a 10-year plan to increase the efficiency of

8 its fossil fuel generation.’’.

9 (b) COMPLIANCE.—

10 (1) TIME LIMITATIONS.—Section 112(b) of the

11 Public Utility Regulatory Policies Act of 1978 (16

12 U.S.C. 2622(b)) is amended by adding at the end

13 the following:

14 ‘‘(3)(A) Not later than 2 years after the enactment

15 of this paragraph, each State regulatory authority (with

16 respect to each electric utility for which it has ratemaking

17 authority) and each nonregulated electric utility shall com18 mence the consideration referred to in section 111, or set

19 a hearing date for such consideration, with respect to each

20 standard established by paragraphs (11) through (13) of

21 section 111(d).

22 ‘‘(B) Not later than 3 years after the date of the en23 actment of this paragraph, each State regulatory authority

24 (with respect to each electric utility for which it has rate25 making authority), and each nonregulated electric utility,
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1 shall complete the consideration, and shall make the deter2 mination, referred to in section 111 with respect to each

3 standard established by paragraphs (11) through (13) of

4 section 111(d).’’.

5 (2) FAILURE TO COMPLY.—Section 112(c) of

6 the Public Utility Regulatory Policies Act of 1978

7 (16 U.S.C. 2622(c)) is amended by adding at the

8 end the following:

9 ‘‘In the case of each standard established by paragraphs

10 (11) through (13) of section 111(d), the reference con11 tained in this subsection to the date of enactment of this

12 Act shall be deemed to be a reference to the date of enact13 ment of such paragraphs (11) through (13).’’.

14 (3) PRIOR STATE ACTIONS.—

15 (A) IN GENERAL.—Section 112 of the

16 Public Utility Regulatory Policies Act of 1978

17 (16 U.S.C. 2622) is amended by adding at the

18 end the following:

19 ‘‘(d) PRIOR STATE ACTIONS.—Subsections (b) and

20 (c) of this section shall not apply to the standards estab21 lished by paragraphs (11) through (13) of section 111(d)

22 in the case of any electric utility in a State if, before the

23 enactment of this subsection—

24 ‘‘(1) the State has implemented for such utility

25 the standard concerned (or a comparable standard);
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1 ‘‘(2) the State regulatory authority for such

2 State or relevant nonregulated electric utility has

3 conducted a proceeding to consider implementation

4 of the standard concerned (or a comparable stand5 ard) for such utility; or

6 ‘‘(3) the State legislature has voted on the im7 plementation of such standard (or a comparable

8 standard) for such utility.’’.

9 (B) CROSS REFERENCE.—Section 124 of

10 such Act (16 U.S.C. 2634) is amended by add11 ing the following at the end thereof: ‘‘In the

12 case of each standard established by paragraphs

13 (11) through (13) of section 111(d), the ref14 erence contained in this subsection to the date

15 of enactment of this Act shall be deemed to be

16 a reference to the date of enactment of such

17 paragraphs (11) through (13).’’.

18 SEC. 1252. SMART METERING.

19 (a) IN GENERAL.—Section 111(d) of the Public Utili20 ties Regulatory Policies Act of 1978 (16 U.S.C. 2621(d))

21 is amended by adding at the end the following:

22 ‘‘(14) TIME-BASED METERING AND COMMU23 NICATIONS.—

24 ‘‘(A) Not later than 18 months after the

25 date of enactment of this paragraph, each elec-
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1 tric utility shall offer each of its customer class2 es, and provide individual customers upon cus3 tomer request, a time-based rate schedule under

4 which the rate charged by the electric utility

5 varies during different time periods and reflects

6 the variance, if any, in the utility’s costs of gen7 erating and purchasing electricity at the whole8 sale level. The time-based rate schedule shall

9 enable the electric consumer to manage energy

10 use and cost through advanced metering and

11 communications technology.

12 ‘‘(B) The types of time-based rate sched13 ules that may be offered under the schedule re14 ferred to in subparagraph (A) include, among

15 others—

16 ‘‘(i) time-of-use pricing whereby elec17 tricity prices are set for a specific time pe18 riod on an advance or forward basis, typi19 cally not changing more often than twice a

20 year, based on the utility’s cost of gener21 ating and/or purchasing such electricity at

22 the wholesale level for the benefit of the

23 consumer. Prices paid for energy consumed

24 during these periods shall be pre-estab25 lished and known to consumers in advance
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1 of such consumption, allowing them to

2 vary their demand and usage in response

3 to such prices and manage their energy

4 costs by shifting usage to a lower cost pe5 riod or reducing their consumption overall;

6 ‘‘(ii) critical peak pricing whereby

7 time-of-use prices are in effect except for

8 certain peak days, when prices may reflect

9 the costs of generating and/or purchasing

10 electricity at the wholesale level and when

11 consumers may receive additional discounts

12 for reducing peak period energy consump13 tion; and

14 ‘‘(iii) real-time pricing whereby elec15 tricity prices are set for a specific time pe16 riod on an advanced or forward basis, re17 flecting the utility’s cost of generating and/

18 or purchasing electricity at the wholesale

19 level, and may change as often as hourly.

20 ‘‘(C) Each electric utility subject to sub21 paragraph (A) shall provide each customer re22 questing a time-based rate with a time-based

23 meter capable of enabling the utility and cus24 tomer to offer and receive such rate, respec25 tively.
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1 ‘‘(D) For purposes of implementing this

2 paragraph, any reference contained in this sec3 tion to the date of enactment of the Public Util4 ity Regulatory Policies Act of 1978 shall be

5 deemed to be a reference to the date of enact6 ment of this paragraph.

7 ‘‘(E) In a State that permits third-party

8 marketers to sell electric energy to retail elec9 tric consumers, such consumers shall be entitled

10 to receive the same time-based metering and

11 communications device and service as a retail

12 electric consumer of the electric utility.

13 ‘‘(F) Notwithstanding subsections (b) and

14 (c) of section 112, each State regulatory au15 thority shall, not later than 18 months after the

16 date of enactment of this paragraph conduct an

17 investigation in accordance with section 115(i)

18 and issue a decision whether it is appropriate to

19 implement the standards set out in subpara20 graphs (A) and (C).’’.

21 (b) STATE INVESTIGATION OF DEMAND RESPONSE

22 AND TIME-BASED METERING.—Section 115 of the Public

23 Utilities Regulatory Policies Act of 1978 (16 U.S.C. 2625)

24 is amended as follows:
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1 (1) By inserting in subsection (b) after the

2 phrase ‘‘the standard for time-of-day rates estab3 lished by section 111(d)(3)’’ the following: ‘‘and the

4 standard for time-based metering and communica5 tions established by section 111(d)(14)’’.

6 (2) By inserting in subsection (b) after the

7 phrase ‘‘are likely to exceed the metering’’ the fol8 lowing: ‘‘and communications’’.

9 (3) By adding the at the end the following:

10 ‘‘(i) TIME-BASED METERING AND COMMUNICA11 TIONS.—In making a determination with respect to the

12 standard established by section 111(d)(14), the investiga13 tion requirement of section 111(d)(14)(F) shall be as fol14 lows: Each State regulatory authority shall conduct an in15 vestigation and issue a decision whether or not it is appro16 priate for electric utilities to provide and install time-based

17 meters and communications devices for each of their cus18 tomers which enable such customers to participate in time19 based pricing rate schedules and other demand response

20 programs.’’.

21 (c) FEDERAL ASSISTANCE ON DEMAND RE22 SPONSE.—Section 132(a) of the Public Utility Regulatory

23 Policies Act of 1978 (16 U.S.C. 2642(a)) is amended by

24 striking ‘‘and’’ at the end of paragraph (3), striking the
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1 period at the end of paragraph (4) and inserting ‘‘; and’’,

2 and by adding the following at the end thereof:

3 ‘‘(5) technologies, techniques, and rate-making

4 methods related to advanced metering and commu5 nications and the use of these technologies, tech6 niques and methods in demand response programs.’’.

7 (d) FEDERAL GUIDANCE.—Section 132 of the Public

8 Utility Regulatory Policies Act of 1978 (16 U.S.C. 2642)

9 is amended by adding the following at the end thereof:

10 ‘‘(d) DEMAND RESPONSE.—The Secretary shall be

11 responsible for—

12 ‘‘(1) educating consumers on the availability,

13 advantages, and benefits of advanced metering and

14 communications technologies, including the funding

15 of demonstration or pilot projects;

16 ‘‘(2) working with States, utilities, other energy

17 providers and advanced metering and communica18 tions experts to identify and address barriers to the

19 adoption of demand response programs; and

20 ‘‘(3) not later than 180 days after the date of

21 enactment of the Energy Policy Act of 2003, pro22 viding Congress with a report that identifies and

23 quantifies the national benefits of demand response

24 and makes a recommendation on achieving specific

25 levels of such benefits by January 1, 2005.’’.
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1 (e) DEMAND RESPONSE AND REGIONAL COORDINA2 TION.—

3 (1) IN GENERAL.—It is the policy of the United

4 States to encourage States to coordinate, on a re5 gional basis, State energy policies to provide reliable

6 and affordable demand response services to the pub7 lic.

8 (2) TECHNICAL ASSISTANCE.—The Secretary of

9 Energy shall provide technical assistance to States

10 and regional organizations formed by 2 or more

11 States to assist them in—

12 (A) identifying the areas with the greatest

13 demand response potential;

14 (B) identifying and resolving problems in

15 transmission and distribution networks, includ16 ing through the use of demand response;

17 (C) developing plans and programs to use

18 demand response to respond to peak demand or

19 emergency needs; and

20 (D) identifying specific measures con21 sumers can take to participate in these demand

22 response programs.

23 (3) REPORT.—Not later than 1 year after the

24 date of enactment of the Energy Policy Act of 2003,

25 the Commission shall prepare and publish an annual
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1 report, by appropriate region, that assesses demand

2 response resources, including those available from all

3 consumer classes, and which identifies and reviews—

4 (A) saturation and penetration rate of ad5 vanced meters and communications tech6 nologies, devices and systems;

7 (B) existing demand response programs

8 and time-based rate programs;

9 (C) the annual resource contribution of de10 mand resources;

11 (D) the potential for demand response as

12 a quantifiable, reliable resource for regional

13 planning purposes; and

14 (E) steps taken to ensure that, in regional

15 transmission planning and operations, demand

16 resources are provided equitable treatment as a

17 quantifiable, reliable resource relative to the re18 source obligations of any load-serving entity,

19 transmission provider, or transmitting party.

20 (f) FEDERAL ENCOURAGEMENT OF DEMAND RE21 SPONSE DEVICES.—It is the policy of the United States

22 that time-based pricing and other forms of demand re23 sponse, whereby electricity customers are provided with

24 electricity price signals and the ability to benefit by re25 sponding to them, shall be encouraged, and the deploy-
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1 ment of such technology and devices that enable electricity

2 customers to participate in such pricing and demand re3 sponse systems shall be facilitated. It is further the policy

4 of the United States that the benefits of such demand re5 sponse that accrue to those not deploying such technology

6 and devices, but who are part of the same regional elec7 tricity entity, shall be recognized.

8 (g) TIME LIMITATIONS.—Section 112(b) of the Pub9 lic Utility Regulatory Policies Act of 1978 (16 U.S.C.

10 2622(b)) is amended by adding at the end the following:

11 ‘‘(4)(A) Not later than 1 year after the enact12 ment of this paragraph, each State regulatory au13 thority (with respect to each electric utility for which

14 it has ratemaking authority) and each nonregulated

15 electric utility shall commence the consideration re16 ferred to in section 111, or set a hearing date for

17 such consideration, with respect to the standard es18 tablished by paragraph (14) of section 111(d).

19 ‘‘(B) Not later than 2 years after the date of

20 the enactment of this paragraph, each State regu21 latory authority (with respect to each electric utility

22 for which it has ratemaking authority), and each

23 nonregulated electric utility, shall complete the con24 sideration, and shall make the determination, re-
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1 ferred to in section 111 with respect to the standard

2 established by paragraph (14) of section 111(d).’’.

3 (h) FAILURE TO COMPLY.—Section 112(c) of the

4 Public Utility Regulatory Policies Act of 1978 (16 U.S.C.

5 2622(c)) is amended by adding at the end the following:

6 ‘‘In the case of the standard established by paragraph (14)

7 of section 111(d), the reference contained in this sub8 section to the date of enactment of this Act shall be

9 deemed to be a reference to the date of enactment of such

10 paragraph (14).’’.

11 (i) PRIOR STATE ACTIONS REGARDING SMART ME12 TERING STANDARDS.—

13 (1) IN GENERAL.—Section 112 of the Public

14 Utility Regulatory Policies Act of 1978 (16 U.S.C.

15 2622) is amended by adding at the end the fol16 lowing:

17 ‘‘(e) PRIOR STATE ACTIONS.—Subsections (b) and

18 (c) of this section shall not apply to the standard estab19 lished by paragraph (14) of section 111(d) in the case of

20 any electric utility in a State if, before the enactment of

21 this subsection—

22 ‘‘(1) the State has implemented for such utility

23 the standard concerned (or a comparable standard);

24 ‘‘(2) the State regulatory authority for such

25 State or relevant nonregulated electric utility has
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1 conducted a proceeding to consider implementation

2 of the standard concerned (or a comparable stand3 ard) for such utility within the previous 3 years; or

4 ‘‘(3) the State legislature has voted on the im5 plementation of such standard (or a comparable

6 standard) for such utility within the previous 3

7 years.’’.

8 (2) CROSS REFERENCE.—Section 124 of such

9 Act (16 U.S.C. 2634) is amended by adding the fol10 lowing at the end thereof: ‘‘In the case of the stand11 ard established by paragraph (14) of section 111(d),

12 the reference contained in this subsection to the date

13 of enactment of this Act shall be deemed to be a ref14 erence to the date of enactment of such paragraph

15 (14).’’.

16 SEC. 1253. COGENERATION AND SMALL POWER PRODUC17 TION PURCHASE AND SALE REQUIREMENTS.

18 (a) TERMINATION OF MANDATORY PURCHASE AND

19 SALE REQUIREMENTS.—Section 210 of the Public Utility

20 Regulatory Policies Act of 1978 (16 U.S.C. 824a–3) is

21 amended by adding at the end the following:

22 ‘‘(m) TERMINATION OF MANDATORY PURCHASE AND

23 SALE REQUIREMENTS.—

24 ‘‘(1) OBLIGATION TO PURCHASE.—After the

25 date of enactment of this subsection, no electric util-
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1 ity shall be required to enter into a new contract or

2 obligation to purchase electric energy from a quali3 fying cogeneration facility or a qualifying small

4 power production facility under this section if the

5 Commission finds that the qualifying cogeneration

6 facility or qualifying small power production facility

7 has nondiscriminatory access to—

8 ‘‘(A)(i) independently administered, auc9 tion-based day ahead and real time wholesale

10 markets for the sale of electric energy; and (ii)

11 wholesale markets for long-term sales of capac12 ity and electric energy; or

13 ‘‘(B)(i) transmission and interconnection

14 services that are provided by a Commission-ap15 proved regional transmission entity and admin16 istered pursuant to an open access transmission

17 tariff that affords nondiscriminatory treatment

18 to all customers; and (ii) competitive wholesale

19 markets that provide a meaningful opportunity

20 to sell capacity, including long-term and short21 term sales, and electric energy, including long22 term, short-term and real-time sales, to buyers

23 other than the utility to which the qualifying fa24 cility is interconnected. In determining whether

25 a meaningful opportunity to sell exists, the
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1 Commission shall consider, among other fac2 tors, evidence of transactions within the rel3 evant market; or

4 ‘‘(C) wholesale markets for the sale of ca5 pacity and electric energy that are, at a min6 imum, of comparable competitive quality as

7 markets described in subparagraphs (A) and

8 (B).

9 ‘‘(2) REVISED PURCHASE AND SALE OBLIGA10 TION FOR NEW FACILITIES.—(A) After the date of

11 enactment of this subsection, no electric utility shall

12 be required pursuant to this section to enter into a

13 new contract or obligation to purchase from or sell

14 electric energy to a facility that is not an existing

15 qualifying cogeneration facility unless the facility

16 meets the criteria for qualifying cogeneration facili17 ties established by the Commission pursuant to the

18 rulemaking required by subsection (n).

19 ‘‘(B) For the purposes of this paragraph, the

20 term ‘existing qualifying cogeneration facility’ means

21 a facility that—

22 ‘‘(i) was a qualifying cogeneration facility

23 on the date of enactment of subsection (m); or

24 ‘‘(ii) had filed with the Commission a no25 tice of self-certification, self recertification or
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1 an application for Commission certification

2 under 18 C.F.R. 292.207 prior to the date on

3 which the Commission issues the final rule re4 quired by subsection (n).

5 ‘‘(3) COMMISSION REVIEW.—Any electric utility

6 may file an application with the Commission for re7 lief from the mandatory purchase obligation pursu8 ant to this subsection on a service territory-wide

9 basis. Such application shall set forth the factual

10 basis upon which relief is requested and describe

11 why the conditions set forth in subparagraphs (A),

12 (B) or (C) of paragraph (1) of this subsection have

13 been met. After notice, including sufficient notice to

14 potentially affected qualifying cogeneration facilities

15 and qualifying small power production facilities, and

16 an opportunity for comment, the Commission shall

17 make a final determination within 90 days of such

18 application regarding whether the conditions set

19 forth in subparagraphs (A), (B) or (C) of paragraph

20 (1) have been met.

21 ‘‘(4) REINSTATEMENT OF OBLIGATION TO PUR22 CHASE.—At any time after the Commission makes a

23 finding under paragraph (3) relieving an electric

24 utility of its obligation to purchase electric energy,

25 a qualifying cogeneration facility, a qualifying small
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1 power production facility, a State agency, or any

2 other affected person may apply to the Commission

3 for an order reinstating the electric utility’s obliga4 tion to purchase electric energy under this section.

5 Such application shall set forth the factual basis

6 upon which the application is based and describe

7 why the conditions set forth in subparagraphs (A),

8 (B) or (C) of paragraph (1) of this subsection are

9 no longer met. After notice, including sufficient no10 tice to potentially affected utilities, and opportunity

11 for comment, the Commission shall issue an order

12 within 90 days of such application reinstating the

13 electric utility’s obligation to purchase electric en14 ergy under this section if the Commission finds that

15 the conditions set forth in subparagraphs (A), (B) or

16 (C) of paragraph (1) which relieved the obligation to

17 purchase, are no longer met.

18 ‘‘(5) OBLIGATION TO SELL.—After the date of

19 enactment of this subsection, no electric utility shall

20 be required to enter into a new contract or obliga21 tion to sell electric energy to a qualifying cogenera22 tion facility or a qualifying small power production

23 facility under this section if the Commission finds

24 that—
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1 ‘‘(A) competing retail electric suppliers are

2 willing and able to sell and deliver electric en3 ergy to the qualifying cogeneration facility or

4 qualifying small power production facility; and

5 ‘‘(B) the electric utility is not required by

6 State law to sell electric energy in its service

7 territory.

8 ‘‘(6) NO EFFECT ON EXISTING RIGHTS AND

9 REMEDIES.—Nothing in this subsection affects the

10 rights or remedies of any party under any contract

11 or obligation, in effect or pending approval before

12 the appropriate State regulatory authority or non13 regulated electric utility on the date of enactment of

14 this subsection, to purchase electric energy or capac15 ity from or to sell electric energy or capacity to a

16 qualifying cogeneration facility or qualifying small

17 power production facility under this Act (including

18 the right to recover costs of purchasing electric en19 ergy or capacity).

20 ‘‘(7) RECOVERY OF COSTS.—(A) The Commis21 sion shall issue and enforce such regulations as are

22 necessary to ensure that an electric utility that pur23 chases electric energy or capacity from a qualifying

24 cogeneration facility or qualifying small power pro25 duction facility in accordance with any legally en-
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1 forceable obligation entered into or imposed under

2 this section recovers all prudently incurred costs as3 sociated with the purchase.

4 ‘‘(B) A regulation under subparagraph (A) shall

5 be enforceable in accordance with the provisions of

6 law applicable to enforcement of regulations under

7 the Federal Power Act (16 U.S.C. 791a et seq.).

8 ‘‘(n) RULEMAKING FOR NEW QUALIFYING FACILI9 TIES.—(1)(A) Not later than 180 days after the date of

10 enactment of this section, the Commission shall issue a

11 rule revising the criteria in 18 C.F.R. 292.205 for new

12 qualifying cogeneration facilities seeking to sell electric en13 ergy pursuant to section 210 of this Act to ensure—

14 ‘‘(i) that the thermal energy output of a new

15 qualifying cogeneration facility is used in a produc16 tive and beneficial manner;

17 ‘‘(ii) the electrical, thermal, and chemical out18 put of the cogeneration facility is used fundamen19 tally for industrial, commercial, or institutional pur20 poses and is not intended fundamentally for sale to

21 an electric utility, taking into account technological,

22 efficiency, economic, and variable thermal energy re23 quirements, as well as State laws applicable to sales

24 of electric energy from a qualifying facility to its

25 host facility; and
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1 ‘‘(iii) continuing progress in the development of

2 efficient electric energy generating technology.

3 ‘‘(B) The rule issued pursuant to section (n)(1)(A)

4 shall be applicable only to facilities that seek to sell electric

5 energy pursuant to section 210 of this Act. For all other

6 purposes, except as specifically provided in section

7 (m)(2)(A), qualifying facility status shall be determined

8 in accordance with the rules and regulations of this Act.

9 ‘‘(2) Notwithstanding rule revisions under paragraph

10 (1), the Commission’s criteria for qualifying cogeneration

11 facilities in effect prior to the date on which the Commis12 sion issues the final rule required by paragraph (1) shall

13 continue to apply to any cogeneration facility that—

14 ‘‘(A) was a qualifying cogeneration facility on

15 the date of enactment of subsection (m), or

16 ‘‘(B) had filed with the Commission a notice of

17 self-certification, self-recertification or an application

18 for Commission certification under 18 C.F.R.

19 292.207 prior to the date on which the Commission

20 issues the final rule required by paragraph (1).’’.

21 (b) ELIMINATION OF OWNERSHIP LIMITATIONS.—

22 (1) QUALIFYING SMALL POWER PRODUCTION

23 FACILITY.—Section 3(17)(C) of the Federal Power

24 Act (16 U.S.C. 796(17)(C)) is amended to read as

25 follows:
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1 ‘‘(C) ‘qualifying small power production fa2 cility’ means a small power production facility

3 that the Commission determines, by rule, meets

4 such requirements (including requirements re5 specting fuel use, fuel efficiency, and reliability)

6 as the Commission may, by rule, prescribe;’’.

7 (2) QUALIFYING COGENERATION FACILITY.—

8 Section 3(18)(B) of the Federal Power Act (16

9 U.S.C. 796(18)(B)) is amended to read as follows:

10 ‘‘(B) ‘qualifying cogeneration facility’

11 means a cogeneration facility that the Commis12 sion determines, by rule, meets such require13 ments (including requirements respecting min14 imum size, fuel use, and fuel efficiency) as the

15 Commission may, by rule, prescribe;’’.

16 Subtitle F—Repeal of PUHCA

17 SEC. 1261. SHORT TITLE.

18 This subtitle may be cited as the ‘‘Public Utility

19 Holding Company Act of 2004’’.

20 SEC. 1262. DEFINITIONS.

21 For purposes of this subtitle:

22 (1) AFFILIATE.—The term ‘‘affiliate’’ of a com23 pany means any company, 5 percent or more of the

24 outstanding voting securities of which are owned,
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1 controlled, or held with power to vote, directly or in2 directly, by such company.

3 (2) ASSOCIATE COMPANY.—The term ‘‘associate

4 company’’ of a company means any company in the

5 same holding company system with such company.

6 (3) COMMISSION.—The term ‘‘Commission’’

7 means the Federal Energy Regulatory Commission.

8 (4) COMPANY.—The term ‘‘company’’ means a

9 corporation, partnership, association, joint stock

10 company, business trust, or any organized group of

11 persons, whether incorporated or not, or a receiver,

12 trustee, or other liquidating agent of any of the fore13 going.

14 (5) ELECTRIC UTILITY COMPANY.—The term

15 ‘‘electric utility company’’ means any company that

16 owns or operates facilities used for the generation,

17 transmission, or distribution of electric energy for

18 sale.

19 (6) EXEMPT WHOLESALE GENERATOR AND

20 FOREIGN UTILITY COMPANY.—The terms ‘‘exempt

21 wholesale generator’’ and ‘‘foreign utility company’’

22 have the same meanings as in sections 32 and 33,

23 respectively, of the Public Utility Holding Company

24 Act of 1935 (15 U.S.C. 79z–5a, 79z–5b), as those
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1 sections existed on the day before the effective date

2 of this subtitle.

3 (7) GAS UTILITY COMPANY.—The term ‘‘gas

4 utility company’’ means any company that owns or

5 operates facilities used for distribution at retail

6 (other than the distribution only in enclosed portable

7 containers or distribution to tenants or employees of

8 the company operating such facilities for their own

9 use and not for resale) of natural or manufactured

10 gas for heat, light, or power.

11 (8) HOLDING COMPANY.—The term ‘‘holding

12 company’’ means—

13 (A) any company that directly or indirectly

14 owns, controls, or holds, with power to vote, 10

15 percent or more of the outstanding voting secu16 rities of a public-utility company or of a holding

17 company of any public-utility company; and

18 (B) any person, determined by the Com19 mission, after notice and opportunity for hear20 ing, to exercise directly or indirectly (either

21 alone or pursuant to an arrangement or under22 standing with 1 or more persons) such a con23 trolling influence over the management or poli24 cies of any public-utility company or holding

25 company as to make it necessary or appropriate
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1 for the rate protection of utility customers with

2 respect to rates that such person be subject to

3 the obligations, duties, and liabilities imposed

4 by this subtitle upon holding companies.

5 (9) HOLDING COMPANY SYSTEM.—The term

6 ‘‘holding company system’’ means a holding com7 pany, together with its subsidiary companies.

8 (10) JURISDICTIONAL RATES.—The term ‘‘ju9 risdictional rates’’ means rates accepted or estab10 lished by the Commission for the transmission of

11 electric energy in interstate commerce, the sale of

12 electric energy at wholesale in interstate commerce,

13 the transportation of natural gas in interstate com14 merce, and the sale in interstate commerce of nat15 ural gas for resale for ultimate public consumption

16 for domestic, commercial, industrial, or any other

17 use.

18 (11) NATURAL GAS COMPANY.—The term ‘‘nat19 ural gas company’’ means a person engaged in the

20 transportation of natural gas in interstate commerce

21 or the sale of such gas in interstate commerce for

22 resale.

23 (12) PERSON.—The term ‘‘person’’ means an

24 individual or company.
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1 (13) PUBLIC UTILITY.—The term ‘‘public util2 ity’’ means any person who owns or operates facili3 ties used for transmission of electric energy in inter4 state commerce or sales of electric energy at whole5 sale in interstate commerce.

6 (14) PUBLIC-UTILITY COMPANY.—The term

7 ‘‘public-utility company’’ means an electric utility

8 company or a gas utility company.

9 (15) STATE COMMISSION.—The term ‘‘State

10 commission’’ means any commission, board, agency,

11 or officer, by whatever name designated, of a State,

12 municipality, or other political subdivision of a State

13 that, under the laws of such State, has jurisdiction

14 to regulate public utility companies.

15 (16) SUBSIDIARY COMPANY.—The term ‘‘sub16 sidiary company’’ of a holding company means—

17 (A) any company, 10 percent or more of

18 the outstanding voting securities of which are

19 directly or indirectly owned, controlled, or held

20 with power to vote, by such holding company;

21 and

22 (B) any person, the management or poli23 cies of which the Commission, after notice and

24 opportunity for hearing, determines to be sub25 ject to a controlling influence, directly or indi-
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1 rectly, by such holding company (either alone or

2 pursuant to an arrangement or understanding

3 with 1 or more other persons) so as to make it

4 necessary for the rate protection of utility cus5 tomers with respect to rates that such person

6 be subject to the obligations, duties, and liabil7 ities imposed by this subtitle upon subsidiary

8 companies of holding companies.

9 (17) VOTING SECURITY.—The term ‘‘voting se10 curity’’ means any security presently entitling the

11 owner or holder thereof to vote in the direction or

12 management of the affairs of a company.

13 SEC. 1263. REPEAL OF THE PUBLIC UTILITY HOLDING COM14 PANY ACT OF 1935.

15 The Public Utility Holding Company Act of 1935 (15

16 U.S.C. 79 et seq.) is repealed.

17 SEC. 1264. FEDERAL ACCESS TO BOOKS AND RECORDS.

18 (a) IN GENERAL.—Each holding company and each

19 associate company thereof shall maintain, and shall make

20 available to the Commission, such books, accounts, memo21 randa, and other records as the Commission determines

22 are relevant to costs incurred by a public utility or natural

23 gas company that is an associate company of such holding

24 company and necessary or appropriate for the protection

25 of utility customers with respect to jurisdictional rates.
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1 (b) AFFILIATE COMPANIES.—Each affiliate of a hold2 ing company or of any subsidiary company of a holding

3 company shall maintain, and shall make available to the

4 Commission, such books, accounts, memoranda, and other

5 records with respect to any transaction with another affil6 iate, as the Commission determines are relevant to costs

7 incurred by a public utility or natural gas company that

8 is an associate company of such holding company and nec9 essary or appropriate for the protection of utility cus10 tomers with respect to jurisdictional rates.

11 (c) HOLDING COMPANY SYSTEMS.—The Commission

12 may examine the books, accounts, memoranda, and other

13 records of any company in a holding company system, or

14 any affiliate thereof, as the Commission determines are

15 relevant to costs incurred by a public utility or natural

16 gas company within such holding company system and

17 necessary or appropriate for the protection of utility cus18 tomers with respect to jurisdictional rates.

19 (d) CONFIDENTIALITY.—No member, officer, or em20 ployee of the Commission shall divulge any fact or infor21 mation that may come to his or her knowledge during the

22 course of examination of books, accounts, memoranda, or

23 other records as provided in this section, except as may

24 be directed by the Commission or by a court of competent

25 jurisdiction.
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1 SEC. 1265. STATE ACCESS TO BOOKS AND RECORDS.

2 (a) IN GENERAL.—Upon the written request of a

3 State commission having jurisdiction to regulate a public4 utility company in a holding company system, the holding

5 company or any associate company or affiliate thereof,

6 other than such public-utility company, wherever located,

7 shall produce for inspection books, accounts, memoranda,

8 and other records that—

9 (1) have been identified in reasonable detail in

10 a proceeding before the State commission;

11 (2) the State commission determines are rel12 evant to costs incurred by such public-utility com13 pany; and

14 (3) are necessary for the effective discharge of

15 the responsibilities of the State commission with re16 spect to such proceeding.

17 (b) LIMITATION.—Subsection (a) does not apply to

18 any person that is a holding company solely by reason of

19 ownership of 1 or more qualifying facilities under the Pub20 lic Utility Regulatory Policies Act of 1978 (16 U.S.C.

21 2601 et seq.).

22 (c) CONFIDENTIALITY OF INFORMATION.—The pro23 duction of books, accounts, memoranda, and other records

24 under subsection (a) shall be subject to such terms and

25 conditions as may be necessary and appropriate to safe-
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1 guard against unwarranted disclosure to the public of any

2 trade secrets or sensitive commercial information.

3 (d) EFFECT ON STATE LAW.—Nothing in this sec4 tion shall preempt applicable State law concerning the pro5 vision of books, accounts, memoranda, and other records,

6 or in any way limit the rights of any State to obtain books,

7 accounts, memoranda, and other records under any other

8 Federal law, contract, or otherwise.

9 (e) COURT JURISDICTION.—Any United States dis10 trict court located in the State in which the State commis11 sion referred to in subsection (a) is located shall have ju12 risdiction to enforce compliance with this section.

13 SEC. 1266. EXEMPTION AUTHORITY.

14 (a) RULEMAKING.—Not later than 90 days after the

15 effective date of this subtitle, the Commission shall issue

16 a final rule to exempt from the requirements of section

17 1264 (relating to Federal access to books and records) any

18 person that is a holding company, solely with respect to

19 1 or more—

20 (1) qualifying facilities under the Public Utility

21 Regulatory Policies Act of 1978 (16 U.S.C. 2601 et

22 seq.);

23 (2) exempt wholesale generators; or

24 (3) foreign utility companies.
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1 (b) OTHER AUTHORITY.—The Commission shall ex2 empt a person or transaction from the requirements of

3 section 1264 (relating to Federal access to books and

4 records) if, upon application or upon the motion of the

5 Commission—

6 (1) the Commission finds that the books, ac7 counts, memoranda, and other records of any person

8 are not relevant to the jurisdictional rates of a pub9 lic utility or natural gas company; or

10 (2) the Commission finds that any class of

11 transactions is not relevant to the jurisdictional

12 rates of a public utility or natural gas company.

13 SEC. 1267. AFFILIATE TRANSACTIONS.

14 (a) COMMISSION AUTHORITY UNAFFECTED.—Noth15 ing in this subtitle shall limit the authority of the Commis16 sion under the Federal Power Act (16 U.S.C. 791a et seq.)

17 to require that jurisdictional rates are just and reasonable,

18 including the ability to deny or approve the pass through

19 of costs, the prevention of cross-subsidization, and the

20 issuance of such rules and regulations as are necessary

21 or appropriate for the protection of utility consumers.

22 (b) RECOVERY OF COSTS.—Nothing in this subtitle

23 shall preclude the Commission or a State commission from

24 exercising its jurisdiction under otherwise applicable law

25 to determine whether a public-utility company, public util-
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1 ity, or natural gas company may recover in rates any costs

2 of an activity performed by an associate company, or any

3 costs of goods or services acquired by such public-utility

4 company from an associate company.

5 SEC. 1268. APPLICABILITY.

6 Except as otherwise specifically provided in this sub7 title, no provision of this subtitle shall apply to, or be

8 deemed to include—

9 (1) the United States;

10 (2) a State or any political subdivision of a

11 State;

12 (3) any foreign governmental authority not op13 erating in the United States;

14 (4) any agency, authority, or instrumentality of

15 any entity referred to in paragraph (1), (2), or (3);

16 or

17 (5) any officer, agent, or employee of any entity

18 referred to in paragraph (1), (2), (3), or (4) acting

19 as such in the course of his or her official duty.

20 SEC. 1269. EFFECT ON OTHER REGULATIONS.

21 Nothing in this subtitle precludes the Commission or

22 a State commission from exercising its jurisdiction under

23 otherwise applicable law to protect utility customers.
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1 SEC. 1270. ENFORCEMENT.

2 The Commission shall have the same powers as set

3 forth in sections 306 through 317 of the Federal Power

4 Act (16 U.S.C. 825e–825p) to enforce the provisions of

5 this subtitle.

6 SEC. 1271. SAVINGS PROVISIONS.

7 (a) IN GENERAL.—Nothing in this subtitle, or other8 wise in the Public Utility Holding Company Act of 1935,

9 or rules, regulations, or orders thereunder, prohibits a per10 son from engaging in or continuing to engage in activities

11 or transactions in which it is legally engaged or authorized

12 to engage on the date of enactment of this Act, if that

13 person continues to comply with the terms (other than an

14 expiration date or termination date) of any such author15 ization, whether by rule or by order.

16 (b) EFFECT ON OTHER COMMISSION AUTHORITY.—

17 Nothing in this subtitle limits the authority of the Com18 mission under the Federal Power Act (16 U.S.C. 791a et

19 seq.) or the Natural Gas Act (15 U.S.C. 717 et seq.).

20 SEC. 1272. IMPLEMENTATION.

21 Not later than 12 months after the date of enactment

22 of this subtitle, the Commission shall—

23 (1) issue such regulations as may be necessary

24 or appropriate to implement this subtitle (other than

25 section 1265, relating to State access to books and

26 records); and
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1 (2) submit to Congress detailed recommenda2 tions on technical and conforming amendments to

3 Federal law necessary to carry out this subtitle and

4 the amendments made by this subtitle.

5 SEC. 1273. TRANSFER OF RESOURCES.

6 All books and records that relate primarily to the

7 functions transferred to the Commission under this sub8 title shall be transferred from the Securities and Exchange

9 Commission to the Commission.

10 SEC. 1274. EFFECTIVE DATE.

11 (a) IN GENERAL.—Except for section 1272 (relating

12 to implementation), this subtitle shall take effect 12

13 months after the date of enactment of this subtitle.

14 (b) COMPLIANCE WITH CERTAIN RULES.—If the

15 Commission approves and makes effective any final rule16 making modifying the standards of conduct governing en17 tities that own, operate, or control facilities for trans18 mission of electricity in interstate commerce or transpor19 tation of natural gas in interstate commerce prior to the

20 effective date of this subtitle, any action taken by a public21 utility company or utility holding company to comply with

22 the requirements of such rulemaking shall not subject

23 such public-utility company or utility holding company to

24 any regulatory requirement applicable to a holding com-
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1 pany under the Public Utility Holding Company Act of

2 1935 (15 U.S.C. 79 et seq.).

3 SEC. 1275. SERVICE ALLOCATION.

4 (a) FERC REVIEW.—In the case of non-power goods

5 or administrative or management services provided by an

6 associate company organized specifically for the purpose

7 of providing such goods or services to any public utility

8 in the same holding company system, at the election of

9 the system or a State commission having jurisdiction over

10 the public utility, the Commission, after the effective date

11 of this subtitle, shall review and authorize the allocation

12 of the costs for such goods or services to the extent rel13 evant to that associate company in order to assure that

14 each allocation is appropriate for the protection of inves15 tors and consumers of such public utility.

16 (b) COST ALLOCATION.—Nothing in this section shall

17 preclude the Commission or a State commission from exer18 cising its jurisdiction under other applicable law with re19 spect to the review or authorization of any costs allocated

20 to a public utility in a holding company system located

21 in the affected State as a result of the acquisition of non22 power goods or administrative and management services

23 by such public utility from an associate company orga24 nized specifically for that purpose.
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1 (c) RULES.—Not later than 6 months after the date

2 of enactment of this Act, the Commission shall issue rules

3 (which rules shall be effective no earlier than the effective

4 date of this subtitle) to exempt from the requirements of

5 this section any company in a holding company system

6 whose public utility operations are confined substantially

7 to a single State and any other class of transactions that

8 the Commission finds is not relevant to the jurisdictional

9 rates of a public utility.

10 (d) PUBLIC UTILITY.—As used in this section, the

11 term ‘‘public utility’’ has the meaning given that term in

12 section 201(e) of the Federal Power Act.

13 SEC. 1276. AUTHORIZATION OF APPROPRIATIONS.

14 There are authorized to be appropriated such funds

15 as may be necessary to carry out this subtitle.

16 SEC. 1277. CONFORMING AMENDMENTS TO THE FEDERAL

17 POWER ACT.

18 (a) CONFLICT OF JURISDICTION.—Section 318 of the

19 Federal Power Act (16 U.S.C. 825q) is repealed.

20 (b) DEFINITIONS.—(1) Section 201(g)(5) of the Fed21 eral Power Act (16 U.S.C. 824(g)(5)) is amended by strik22 ing ‘‘1935’’ and inserting ‘‘2003’’.

23 (2) Section 214 of the Federal Power Act (16 U.S.C.

24 824m) is amended by striking ‘‘1935’’ and inserting

25 ‘‘2003’’.
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1 Subtitle G—Market Transparency,

2 Enforcement, and Consumer

3 Protection

4 SEC. 1281. MARKET TRANSPARENCY RULES.

5 Part II of the Federal Power Act (16 U.S.C. 824 et

6 seq.) is amended by adding at the end the following:

7 ‘‘SEC. 220. MARKET TRANSPARENCY RULES.

8 ‘‘(a) IN GENERAL.—Not later than 180 days after

9 the date of enactment of this section, the Commission

10 shall issue rules establishing an electronic information sys11 tem to provide the Commission and the public with access

12 to such information as is necessary or appropriate to fa13 cilitate price transparency and participation in markets

14 subject to the Commission’s jurisdiction under this Act.

15 Such systems shall provide information about the avail16 ability and market price of wholesale electric energy and

17 transmission services to the Commission, State commis18 sions, buyers and sellers of wholesale electric energy, users

19 of transmission services, and the public on a timely basis.

20 The Commission shall have authority to obtain such infor21 mation from any electric utility or transmitting utility, in22 cluding any entity described in section 201(f).

23 ‘‘(b) EXEMPTIONS.—The Commission shall exempt

24 from disclosure information it determines would, if dis25 closed, be detrimental to the operation of an effective mar-
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1 ket or jeopardize system security. This section shall not

2 apply to transactions for the purchase or sale of wholesale

3 electric energy or transmission services within the area de4 scribed in section 212(k)(2)(A). In determining the infor5 mation to be made available under this section and time

6 to make such information available, the Commission shall

7 seek to ensure that consumers and competitive markets

8 are protected from the adverse effects of potential collu9 sion or other anti-competitive behaviors that can be facili10 tated by untimely public disclosure of transaction-specific

11 information.

12 ‘‘(c) COMMODITY FUTURES TRADING COMMIS13 SION.—This section shall not affect the exclusive jurisdic14 tion of the Commodity Futures Trading Commission with

15 respect to accounts, agreements, contracts, or transactions

16 in commodities under the Commodity Exchange Act (7

17 U.S.C. 1 et seq.). Any request for information to a des18 ignated contract market, registered derivatives transaction

19 execution facility, board of trade, exchange, or market in20 volving accounts, agreements, contracts, or transactions in

21 commodities (including natural gas, electricity and other

22 energy commodities) within the exclusive jurisdiction of

23 the Commodity Futures Trading Commission shall be di24 rected to the Commodity Futures Trading Commission.
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1 ‘‘(d) SAVINGS PROVISION.—In exercising its author2 ity under this section, the Commission shall not—

3 ‘‘(1) compete with, or displace from the market

4 place, any price publisher; or

5 ‘‘(2) regulate price publishers or impose any re6 quirements on the publication of information.’’.

7 SEC. 1282. MARKET MANIPULATION.

8 Part II of the Federal Power Act (16 U.S.C. 824 et

9 seq.) is amended by adding at the end the following:

10 ‘‘SEC. 221. PROHIBITION ON FILING FALSE INFORMATION.

11 ‘‘No person or other entity (including an entity de12 scribed in section 201(f)) shall willfully and knowingly re13 port any information relating to the price of electricity

14 sold at wholesale or availability of transmission capacity,

15 which information the person or any other entity knew to

16 be false at the time of the reporting, to a Federal agency

17 with intent to fraudulently affect the data being compiled

18 by such Federal agency.

19 ‘‘SEC. 222. PROHIBITION ON ROUND TRIP TRADING.

20 ‘‘(a) PROHIBITION.—No person or other entity (in21 cluding an entity described in section 201(f)) shall willfully

22 and knowingly enter into any contract or other arrange23 ment to execute a ‘round trip trade’ for the purchase or

24 sale of electric energy at wholesale.
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1 ‘‘(b) DEFINITION.—For the purposes of this section,

2 the term ‘round trip trade’ means a transaction, or com3 bination of transactions, in which a person or any other

4 entity—

5 ‘‘(1) enters into a contract or other arrange6 ment to purchase from, or sell to, any other person

7 or other entity electric energy at wholesale;

8 ‘‘(2) simultaneously with entering into the con9 tract or arrangement described in paragraph (1), ar10 ranges a financially offsetting trade with such other

11 person or entity for the same such electric energy,

12 at the same location, price, quantity and terms so

13 that, collectively, the purchase and sale transactions

14 in themselves result in no financial gain or loss; and

15 ‘‘(3) enters into the contract or arrangement

16 with a specific intent to fraudulently affect reported

17 revenues, trading volumes, or prices.’’.

18 SEC. 1283. ENFORCEMENT.

19 (a) COMPLAINTS.—Section 306 of the Federal Power

20 Act (16 U.S.C. 825e) is amended as follows:

21 (1) By inserting ‘‘electric utility,’’ after ‘‘Any

22 person,’’.

23 (2) By inserting ‘‘, transmitting utility,’’ after

24 ‘‘licensee’’ each place it appears.
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1 (b) REVIEW OF COMMISSION ORDERS.—Section

2 313(a) of the Federal Power Act (16 U.S.C. 8251) is

3 amended by inserting ‘‘electric utility,’’ after ‘‘person,’’ in

4 the first 2 places it appears and by striking ‘‘any person

5 unless such person’’ and inserting ‘‘any entity unless such

6 entity’’.

7 (c) INVESTIGATIONS.—Section 307(a) of the Federal

8 Power Act (16 U.S.C. 825f(a)) is amended as follows:

9 (1) By inserting ‘‘, electric utility, transmitting

10 utility, or other entity’’ after ‘‘person’’ each time it

11 appears.

12 (2) By striking the period at the end of the

13 first sentence and inserting the following: ‘‘or in ob14 taining information about the sale of electric energy

15 at wholesale in interstate commerce and the trans16 mission of electric energy in interstate commerce.’’.

17 (d) CRIMINAL PENALTIES.—Section 316 of the Fed18 eral Power Act (16 U.S.C. 825o) is amended—

19 (1) in subsection (a), by striking ‘‘$5,000’’ and

20 inserting ‘‘$1,000,000’’, and by striking ‘‘two years’’

21 and inserting ‘‘5 years’’;

22 (2) in subsection (b), by striking ‘‘$500’’ and

23 inserting ‘‘$25,000’’; and

24 (3) by striking subsection (c).
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1 (e) CIVIL PENALTIES.—Section 316A of the Federal

2 Power Act (16 U.S.C. 825o–1) is amended as follows:

3 (1) In subsections (a) and (b), by striking ‘‘sec4 tion 211, 212, 213, or 214’’ each place it appears

5 and inserting ‘‘Part II’’.

6 (2) In subsection (b), by striking ‘‘$10,000’’

7 and inserting ‘‘$1,000,000’’.

8 SEC. 1284. REFUND EFFECTIVE DATE.

9 Section 206(b) of the Federal Power Act (16 U.S.C.

10 824e(b)) is amended as follows:

11 (1) By striking ‘‘the date 60 days after the fil12 ing of such complaint nor later than 5 months after

13 the expiration of such 60-day period’’ in the second

14 sentence and inserting ‘‘the date of the filing of such

15 complaint nor later than 5 months after the filing of

16 such complaint’’.

17 (2) By striking ‘‘60 days after’’ in the third

18 sentence and inserting ‘‘of’’.

19 (3) By striking ‘‘expiration of such 60-day pe20 riod’’ in the third sentence and inserting ‘‘publica21 tion date’’.

22 (4) By striking the fifth sentence and inserting

23 the following: ‘‘If no final decision is rendered by the

24 conclusion of the 180-day period commencing upon

25 initiation of a proceeding pursuant to this section,
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1 the Commission shall state the reasons why it has

2 failed to do so and shall state its best estimate as

3 to when it reasonably expects to make such deci4 sion.’’.

5 SEC. 1285. REFUND AUTHORITY.

6 Section 206 of the Federal Power Act (16 U.S.C.

7 824e) is amended by adding the following new subsection

8 at the end thereof:

9 ‘‘(e)(1) Except as provided in paragraph (2), if an

10 entity described in section 201(f) voluntarily makes a

11 short-term sale of electric energy and the sale violates

12 Commission rules in effect at the time of the sale, such

13 entity shall be subject to the Commission’s refund author14 ity under this section with respect to such violation.

15 ‘‘(2) This section shall not apply to—

16 ‘‘(A) any entity that sells less than 8,000,000

17 megawatt hours of electricity per year; or

18 ‘‘(B) any electric cooperative.

19 ‘‘(3) For purposes of this subsection, the term ‘short20 term sale’ means an agreement for the sale of electric en21 ergy at wholesale in interstate commerce that is for a pe22 riod of 31 days or less (excluding monthly contracts sub23 ject to automatic renewal).

24 ‘‘(4) The Commission shall have refund authority

25 under subsection (e)(1) with respect to a voluntary short-
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1 term sale of electric energy by the Bonneville Power Ad2 ministration (in this section ‘Bonneville’) only if the sale

3 is at an unjust and unreasonable rate and, in that event,

4 may order a refund only for short-term sales made by

5 Bonneville at rates that are higher than the highest just

6 and reasonable rate charged by any other entity for a

7 short-term sale of electric energy in the same geographic

8 market for the same, or most nearly comparable, period

9 as the sale by Bonneville.

10 ‘‘(5) With respect to any Federal power marketing

11 agency or the Tennessee Valley Authority, the Commission

12 shall not assert or exercise any regulatory authority or

13 powers under subsection (e)(1) other than the ordering of

14 refunds to achieve a just and reasonable rate.’’.

15 SEC. 1286. SANCTITY OF CONTRACT.

16 (a) IN GENERAL.—The Federal Energy Regulatory

17 Commission (in this section, ‘‘the Commission’’) shall have

18 no authority to abrogate or modify any provision of an

19 executed contract or executed contract amendment de20 scribed in subsection (b) that has been entered into or

21 taken effect, except upon a finding that failure to take

22 such action would be contrary to the public interest.

23 (b) LIMITATION.—Except as provided in subsection

24 (c), this section shall apply only to a contract or contract

25 amendment—
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1 (1) executed on or after the date of enactment

2 of this Act; and

3 (2) entered into—

4 (A) for the purchase or sale of electric en5 ergy under section 205 of the Federal Power

6 Act (16 U.S.C. 824d) where the seller has been

7 authorized by the Commission to charge mar8 ket-based rates; or

9 (B) under section 4 of the Natural Gas

10 Act (15 U.S.C. 717c) where the natural gas

11 company has been authorized by the Commis12 sion to charge market-based rates for the serv13 ice described in the contract.

14 (c) EXCLUSION.—This section shall not apply to an

15 executed contract or executed contract amendment that

16 expressly provides for a standard of review other than the

17 public interest standard.

18 (d) SAVINGS PROVISION.—With respect to contracts

19 to which this section does not apply, nothing in this sec20 tion alters existing law regarding the applicable standard

21 of review for a contract subject to the jurisdiction of the

22 Commission.
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1 SEC. 1287. CONSUMER PRIVACY AND UNFAIR TRADE PRAC2 TICES.

3 (a) PRIVACY.—The Federal Trade Commission may

4 issue rules protecting the privacy of electric consumers

5 from the disclosure of consumer information obtained in

6 connection with the sale or delivery of electric energy to

7 electric consumers.

8 (b) SLAMMING.—The Federal Trade Commission

9 may issue rules prohibiting the change of selection of an

10 electric utility except with the informed consent of the

11 electric consumer or if approved by the appropriate State

12 regulatory authority.

13 (c) CRAMMING.—The Federal Trade Commission

14 may issue rules prohibiting the sale of goods and services

15 to an electric consumer unless expressly authorized by law

16 or the electric consumer.

17 (d) RULEMAKING.—The Federal Trade Commission

18 shall proceed in accordance with section 553 of title 5,

19 United States Code, when prescribing a rule under this

20 section.

21 (e) STATE AUTHORITY.—If the Federal Trade Com22 mission determines that a State’s regulations provide

23 equivalent or greater protection than the provisions of this

24 section, such State regulations shall apply in that State

25 in lieu of the regulations issued by the Commission under

26 this section.
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1 (f) DEFINITIONS.—For purposes of this section:

2 (1) STATE REGULATORY AUTHORITY.—The

3 term ‘‘State regulatory authority’’ has the meaning

4 given that term in section 3(21) of the Federal

5 Power Act (16 U.S.C. 796(21)).

6 (2) ELECTRIC CONSUMER AND ELECTRIC UTIL7 ITY.—The terms ‘‘electric consumer’’ and ‘‘electric

8 utility’’ have the meanings given those terms in sec9 tion 3 of the Public Utility Regulatory Policies Act

10 of 1978 (16 U.S.C. 2602).

11 Subtitle H—Merger Reform

12 SEC. 1291. MERGER REVIEW REFORM AND ACCOUNT13 ABILITY.

14 (a) MERGER REVIEW REFORM.—Within 180 days

15 after the date of enactment of this Act, the Secretary of

16 Energy, in consultation with the Federal Energy Regu17 latory Commission and the Attorney General of the United

18 States, shall prepare, and transmit to Congress each of

19 the following:

20 (1) A study of the extent to which the authori21 ties vested in the Federal Energy Regulatory Com22 mission under section 203 of the Federal Power Act

23 are duplicative of authorities vested in—

24 (A) other agencies of Federal and State

25 Government; and
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1 (B) the Federal Energy Regulatory Com2 mission, including under sections 205 and 206

3 of the Federal Power Act.

4 (2) Recommendations on reforms to the Fed5 eral Power Act that would eliminate any unneces6 sary duplication in the exercise of regulatory author7 ity or unnecessary delays in the approval (or dis8 approval) of applications for the sale, lease, or other

9 disposition of public utility facilities.

10 (b) MERGER REVIEW ACCOUNTABILITY.—Not later

11 than 1 year after the date of enactment of this Act and

12 annually thereafter, with respect to all orders issued with13 in the preceding year that impose a condition on a sale,

14 lease, or other disposition of public utility facilities under

15 section 203(b) of the Federal Power Act, the Federal En16 ergy Regulatory Commission shall transmit a report to

17 Congress explaining each of the following:

18 (1) The condition imposed.

19 (2) Whether the Commission could have im20 posed such condition by exercising its authority

21 under any provision of the Federal Power Act other

22 than under section 203(b).

23 (3) If the Commission could not have imposed

24 such condition other than under section 203(b), why
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1 the Commission determined that such condition was

2 consistent with the public interest.

3 SEC. 1292. ELECTRIC UTILITY MERGERS.

4 (a) AMENDMENT.—Section 203(a) of the Federal

5 Power Act (16 U.S.C. 824b(a)) is amended to read as fol6 lows:

7 ‘‘(a)(1) No public utility shall, without first having

8 secured an order of the Commission authorizing it to do

9 so—

10 ‘‘(A) sell, lease, or otherwise dispose of the

11 whole of its facilities subject to the jurisdiction of

12 the Commission, or any part thereof of a value in

13 excess of $10,000,000;

14 ‘‘(B) merge or consolidate, directly or indi15 rectly, such facilities or any part thereof with those

16 of any other person, by any means whatsoever; or

17 ‘‘(C) purchase, acquire, or take any security

18 with a value in excess of $10,000,000 of any other

19 public utility.

20 ‘‘(2) No holding company in a holding company sys21 tem that includes a public utility shall purchase, acquire,

22 or take any security with a value in excess of $10,000,000

23 of, or, by any means whatsoever, directly or indirectly,

24 merge or consolidate with, a public utility or a holding

25 company in a holding company system that includes a
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1 public utility with a value in excess of $10,000,000 with2 out first having secured an order of the Commission au3 thorizing it to do so.

4 ‘‘(3) Upon receipt of an application for such approval

5 the Commission shall give reasonable notice in writing to

6 the Governor and State commission of each of the States

7 in which the physical property affected, or any part there8 of, is situated, and to such other persons as it may deem

9 advisable.

10 ‘‘(4) After notice and opportunity for hearing, the

11 Commission shall approve the proposed disposition, con12 solidation, acquisition, or change in control, if it finds that

13 the proposed transaction will be consistent with the public

14 interest. In evaluating whether a transaction will be con15 sistent with the public interest, the Commission shall con16 sider whether the proposed transaction—

17 ‘‘(A) will adequately protect consumer interests;

18 ‘‘(B) will be consistent with competitive whole19 sale markets;

20 ‘‘(C) will impair the financial integrity of any

21 public utility that is a party to the transaction or an

22 associate company of any party to the transaction;

23 and

24 ‘‘(D) satisfies such other criteria as the Com25 mission considers consistent with the public interest.
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1 ‘‘(5) The Commission shall, by rule, adopt procedures

2 for the expeditious consideration of applications for the

3 approval of dispositions, consolidations, or acquisitions

4 under this section. Such rules shall identify classes of

5 transactions, or specify criteria for transactions, that nor6 mally meet the standards established in paragraph (4).

7 The Commission shall provide expedited review for such

8 transactions. The Commission shall grant or deny any

9 other application for approval of a transaction not later

10 than 180 days after the application is filed. If the Com11 mission does not act within 180 days, such application

12 shall be deemed granted unless the Commission finds,

13 based on good cause, that further consideration is required

14 to determine whether the proposed transaction meets the

15 standards of paragraph (4) and issues an order tolling the

16 time for acting on the application for not more than 180

17 days, at the end of which additional period the Commis18 sion shall grant or deny the application.

19 ‘‘(6) For purposes of this subsection, the terms ‘asso20 ciate company’, ‘holding company’, and ‘holding company

21 system’ have the meaning given those terms in the Public

22 Utility Holding Company Act of 2004.’’.

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

24 this section shall take effect 12 months after the date of

25 enactment of this section.
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1 Subtitle I—Definitions

2 SEC. 1295. DEFINITIONS.

3 (a) ELECTRIC UTILITY.—Section 3(22) of the Fed4 eral Power Act (16 U.S.C. 796(22)) is amended to read

5 as follows:

6 ‘‘(22) ELECTRIC UTILITY.—The term ‘electric

7 utility’ means any person or Federal or State agency

8 (including any entity described in section 201(f))

9 that sells electric energy; such term includes the

10 Tennessee Valley Authority and each Federal power

11 marketing administration.’’.

12 (b) TRANSMITTING UTILITY.—Section 3(23) of the

13 Federal Power Act (16 U.S.C. 796(23)) is amended to

14 read as follows:

15 ‘‘(23) TRANSMITTING UTILITY.—The term

16 ‘transmitting utility’ means an entity, including any

17 entity described in section 201(f), that owns, oper18 ates, or controls facilities used for the transmission

19 of electric energy—

20 ‘‘(A) in interstate commerce; or

21 ‘‘(B) for the sale of electric energy at

22 wholesale.’’.

23 (c) ADDITIONAL DEFINITIONS.—Section 3 of the

24 Federal Power Act (16 U.S.C. 796) is amended by adding

25 at the end the following:
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1 ‘‘(26) ELECTRIC COOPERATIVE.—The term

2 ‘electric cooperative’ means a cooperatively owned

3 electric utility.

4 ‘‘(27) RTO.—The term ‘Regional Transmission

5 Organization’ or ‘RTO’ means an entity of sufficient

6 regional scope approved by the Commission to exer7 cise operational or functional control of facilities

8 used for the transmission of electric energy in inter9 state commerce and to ensure nondiscriminatory ac10 cess to such facilities.

11 ‘‘(28) ISO.—The term ‘Independent System

12 Operator’ or ‘ISO’ means an entity approved by the

13 Commission to exercise operational or functional

14 control of facilities used for the transmission of elec15 tric energy in interstate commerce and to ensure

16 nondiscriminatory access to such facilities.’’.

17 (d) COMMISSION.—For the purposes of this title, the

18 term ‘‘Commission’’ means the Federal Energy Regu19 latory Commission.

20 (e) APPLICABILITY.—Section 201(f) of the Federal

21 Power Act (16 U.S.C. 824(f)) is amended by adding after

22 ‘‘political subdivision of a state,’’ the following: ‘‘an elec23 tric cooperative that has financing under the Rural Elec24 trification Act of 1936 (7 U.S.C. 901 et seq.) or that sells
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1 less than 4,000,000 megawatt hours of electricity per

2 year,’’.

3 Subtitle J—Technical and

4 Conforming Amendments

5 SEC. 1297. CONFORMING AMENDMENTS.

6 The Federal Power Act is amended as follows:

7 (1) Section 201(b)(2) of such Act (16 U.S.C.

8 824(b)(2)) is amended as follows:

9 (A) In the first sentence by striking ‘‘210,

10 211, and 212’’ and inserting ‘‘203(a)(2),

11 206(e), 210, 211, 211A, 212, 215, 216, 217,

12 218, 219, 220, 221, and 222’’.

13 (B) In the second sentence by striking

14 ‘‘210 or 211’’ and inserting ‘‘203(a)(2), 206(e),

15 210, 211, 211A, 212, 215, 216, 217, 218, 219,

16 220, 221, and 222’’.

17 (C) Section 201(b)(2) of such Act is

18 amended by striking ‘‘The’’ in the first place it

19 appears and inserting ‘‘Notwithstanding section

20 201(f), the’’ and in the second sentence after

21 ‘‘any order’’ by inserting ‘‘or rule’’.

22 (2) Section 201(e) of such Act is amended by

23 striking ‘‘210, 211, or 212’’ and inserting ‘‘206(e),

24 206(f), 210, 211, 211A, 212, 215, 216, 217, 218,

25 219, 220, 221, and 222’’.
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1 (3) Section 206 of such Act (16 U.S.C. 824e)

2 is amended as follows:

3 (A) In subsection (b), in the seventh sen4 tence, by striking ‘‘the public utility to make’’.

5 (B) In the first sentence of subsection (a),

6 by striking ‘‘hearing had’’ and inserting ‘‘hear7 ing held’’.

8 (4) Section 211(c) of such Act (16 U.S.C.

9 824j(c)) is amended by—

10 (A) striking ‘‘(2)’’;

11 (B) striking ‘‘(A)’’ and inserting ‘‘(1)’’

12 (C) striking ‘‘(B)’’ and inserting ‘‘(2)’’;

13 and

14 (D) striking ‘‘termination of modification’’

15 and inserting ‘‘termination or modification’’.

16 (5) Section 211(d)(1) of such Act (16 U.S.C.

17 824j(d)(1)) is amended by striking ‘‘electric utility’’

18 the second time it appears and inserting ‘‘transmit19 ting utility’’.

20 (6) Section 315 (c) of such Act (16 U.S.C.

21 825n(c)) is amended by striking ‘‘subsection’’ and

22 inserting ‘‘section’’.
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1 TITLE XIII—ENERGY TAX

2 INCENTIVES

3 SEC. 1300. SHORT TITLE; AMENDMENT OF 1986 CODE.

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

5 ‘‘Energy Tax Policy Act of 2004’’.

6 (b) AMENDMENT OF 1986 CODE.—Except as other7 wise expressly provided, whenever in this title an amend8 ment or repeal is expressed in terms of an amendment

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

10 shall be considered to be made to a section or other provi11 sion of the Internal Revenue Code of 1986.

12 Subtitle A—Conservation

13 PART I—RESIDENTIAL AND BUSINESS PROPERTY

14 SEC. 1301. CREDIT FOR RESIDENTIAL ENERGY EFFICIENT

15 PROPERTY.

16 (a) IN GENERAL.—Subpart A of part IV of sub17 chapter A of chapter 1 (relating to nonrefundable personal

18 credits) is amended by inserting after section 25B the fol19 lowing new section:

20 ‘‘SEC. 25C. RESIDENTIAL ENERGY EFFICIENT PROPERTY.

21 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in22 dividual, there shall be allowed as a credit against the tax

23 imposed by this chapter for the taxable year an amount

24 equal to the sum of—
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1 ‘‘(1) 15 percent of the qualified solar water

2 heating property expenditures made by the taxpayer

3 during such year,

4 ‘‘(2) 15 percent of the qualified photovoltaic

5 property expenditures made by the taxpayer during

6 such year,

7 ‘‘(3) 15 percent of the qualified wind energy

8 property expenditures made by the taxpayer during

9 such year, and

10 ‘‘(4) 20 percent of the qualified fuel cell prop11 erty expenditures made by the taxpayer during such

12 year.

13 ‘‘(b) LIMITATIONS.—

14 ‘‘(1) MAXIMUM CREDIT.—

15 ‘‘(A) IN GENERAL.—The credit allowed

16 under subsection (a) shall not exceed—

17 ‘‘(i) $2,000 for property described in

18 paragraph (1), (2), or (3) of subsection

19 (c), and

20 ‘‘(ii) $500 for each 0.5 kilowatt of ca21 pacity of property described in subsection

22 (c)(4).

23 ‘‘(B) PRIOR EXPENDITURES BY TAXPAYER

24 ON SAME RESIDENCE TAKEN INTO ACCOUNT.—

25 In determining the amount of the credit allowed
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1 to a taxpayer with respect to any dwelling unit

2 under this section, the dollar amount under

3 subparagraph (A)(i) with respect to each type

4 of property described in such subparagraph

5 shall be reduced by the credit allowed to the

6 taxpayer under this section with respect to such

7 property for all preceding taxable years with re8 spect to such dwelling unit.

9 ‘‘(2) PROPERTY STANDARDS.—No credit shall

10 be allowed under this section for an item of property

11 unless—

12 ‘‘(A) the original use of such property com13 mences with the taxpayer,

14 ‘‘(B) such property reasonably can be ex15 pected to remain in use for at least 5 years,

16 ‘‘(C) such property is installed on or in

17 connection with a dwelling unit located in the

18 United States and used as a residence by the

19 taxpayer,

20 ‘‘(D) in the case of solar water heating

21 property, such property is certified for perform22 ance by the non-profit Solar Rating and Certifi23 cation Corporation or a comparable entity en24 dorsed by the government of the State in which

25 such property is installed,
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1 ‘‘(E) in the case of fuel cell property, such

2 property meets the performance and quality

3 standards (if any) which have been prescribed

4 by the Secretary by regulations (after consulta5 tion with the Secretary of Energy), and

6 ‘‘(F) in the case of any photovoltaic prop7 erty, fuel cell property, or wind energy property,

8 such property meets appropriate fire and elec9 tric code requirements.

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

11 ‘‘(1) QUALIFIED SOLAR WATER HEATING PROP12 ERTY EXPENDITURE.—The term ‘qualified solar

13 water heating property expenditure’ means an ex14 penditure for property which uses solar energy to

15 heat water for use in a dwelling unit.

16 ‘‘(2) QUALIFIED PHOTOVOLTAIC PROPERTY EX17 PENDITURE.—The term ‘qualified photovoltaic prop18 erty expenditure’ means an expenditure for property

19 which uses solar energy to generate electricity for

20 use in a dwelling unit and which is not described in

21 paragraph (1).

22 ‘‘(3) QUALIFIED WIND ENERGY PROPERTY EX23 PENDITURE.—The term ‘qualified wind energy prop24 erty expenditure’ means an expenditure for property
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1 which uses wind energy to generate electricity for

2 use in a dwelling unit.

3 ‘‘(4) QUALIFIED FUEL CELL PROPERTY EX4 PENDITURE.—The term ‘qualified fuel cell property

5 expenditure’ means an expenditure for any qualified

6 fuel cell property (as defined in section 48(c)(1)).

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

8 section—

9 ‘‘(1) SOLAR PANELS.—No expenditure relating

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

11 (or portion thereof) shall fail to be treated as prop12 erty described in paragraph (1) or (2) of subsection

13 (c) solely because it constitutes a structural compo14 nent of the structure on which it is installed.

15 ‘‘(2) SWIMMING POOLS, ETC., USED AS STOR16 AGE MEDIUM.—Expenditures which are properly al17 locable to a swimming pool, hot tub, or any other

18 energy storage medium which has a function other

19 than the function of such storage shall not be taken

20 into account for purposes of this section.

21 ‘‘(3) DOLLAR AMOUNTS IN CASE OF JOINT OC22 CUPANCY.—In the case of any dwelling unit which is

23 jointly occupied and used during any calendar year

24 as a residence by 2 or more individuals, the fol25 lowing rules shall apply:
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1 ‘‘(A) The amount of the credit allowable

2 under subsection (a) by reason of expenditures

3 made during such calendar year by any of such

4 individuals with respect to such dwelling unit

5 shall be determined by treating all of such indi6 viduals as 1 taxpayer whose taxable year is

7 such calendar year.

8 ‘‘(B) There shall be allowable, with respect

9 to such expenditures to each of such individ10 uals, a credit under subsection (a) for the tax11 able year in which such calendar year ends in

12 an amount which bears the same ratio to the

13 amount determined under subparagraph (A) as

14 the amount of such expenditures made by such

15 individual during such calendar year bears to

16 the aggregate of such expenditures made by all

17 of such individuals during such calendar year.

18 ‘‘(C) Subparagraphs (A) and (B) shall be

19 applied separately with respect to expenditures

20 described in paragraphs (1), (2), (3), and (4) of

21 subsection (c).

22 ‘‘(4) TENANT-STOCKHOLDER IN COOPERATIVE

23 HOUSING CORPORATION.—In the case of an indi24 vidual who is a tenant-stockholder (as defined in sec25 tion 216) in a cooperative housing corporation (as
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1 defined in such section), such individual shall be

2 treated as having made the individual’s tenant-stock3 holder’s proportionate share (as defined in section

4 216(b)(3)) of any expenditures of such corporation.

5 ‘‘(5) CONDOMINIUMS.—

6 ‘‘(A) IN GENERAL.—In the case of an indi7 vidual who is a member of a condominium man8 agement association with respect to a condo9 minium which the individual owns, such indi10 vidual shall be treated as having made the indi11 vidual’s proportionate share of any expenditures

12 of such association.

13 ‘‘(B) CONDOMINIUM MANAGEMENT ASSO14 CIATION.—For purposes of this paragraph, the

15 term ‘condominium management association’

16 means an organization which meets the require17 ments of paragraph (1) of section 528(c) (other

18 than subparagraph (E) thereof) with respect to

19 a condominium project substantially all of the

20 units of which are used as residences.

21 ‘‘(6) ALLOCATION IN CERTAIN CASES.—Except

22 in the case of qualified wind energy property expend23 itures, if less than 80 percent of the use of an item

24 is for nonbusiness purposes, only that portion of the

25 expenditures for such item which is properly allo-
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1 cable to use for nonbusiness purposes shall be taken

2 into account.

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

4 EXPENDITURE.—

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

6 subparagraph (B), an expenditure with respect

7 to an item shall be treated as made when the

8 original installation of the item is completed.

9 ‘‘(B) EXPENDITURES PART OF BUILDING

10 CONSTRUCTION.—In the case of an expenditure

11 in connection with the construction or recon12 struction of a structure, such expenditure shall

13 be treated as made when the original use of the

14 constructed or reconstructed structure by the

15 taxpayer begins.

16 ‘‘(C) AMOUNT.—The amount of any ex17 penditure shall be the cost thereof.

18 ‘‘(8) PROPERTY FINANCED BY SUBSIDIZED EN19 ERGY FINANCING.—For purposes of determining the

20 amount of expenditures made by any individual with

21 respect to any dwelling unit, there shall not be taken

22 into account expenditures which are made from sub23 sidized energy financing (as defined in section

24 48(a)(4)(C)).
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1 ‘‘(9) DENIAL OF DEPRECIATION ON WIND EN2 ERGY PROPERTY FOR WHICH CREDIT ALLOWED.—

3 No deduction shall be allowed under section 167 for

4 property which uses wind energy to generate elec5 tricity if the taxpayer is allowed a credit under this

6 section with respect to such property.

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

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

9 expenditure with respect to any property, the increase in

10 the basis of such property which would (but for this sub11 section) result from such expenditure shall be reduced by

12 the amount of the credit so allowed.

13 ‘‘(f) TERMINATION.—The credit allowed under this

14 section shall not apply to taxable years beginning after

15 December 31, 2006 (December 31, 2008, with respect to

16 qualified photovoltaic property expenditures).’’.

17 (b) CONFORMING AMENDMENTS.—

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

19 ‘‘and’’ at the end of paragraph (27), by striking the

20 period at the end of paragraph (28) and inserting ‘‘,

21 and’’, and by adding at the end the following new

22 paragraph:

23 ‘‘(29) to the extent provided in section 25C(e),

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

25 has been allowed under section 25C.’’.
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1 (2) The table of sections for subpart A of part

2 IV of subchapter A of chapter 1 is amended by in3 serting after the item relating to section 25B the fol4 lowing new item:

‘‘Sec. 25C. Residential energy efficient property.’’.

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

6 this section shall apply to taxable years ending after De7 cember 31, 2003.

8 SEC. 1302. EXTENSION AND EXPANSION OF CREDIT FOR

9 ELECTRICITY PRODUCED FROM CERTAIN RE10 NEWABLE RESOURCES.

11 (a) EXPANSION OF QUALIFIED ENERGY RE12 SOURCES.—Subsection (c) of section 45 (relating to elec13 tricity produced from certain renewable resources) is

14 amended to read as follows:

15 ‘‘(c) QUALIFIED ENERGY RESOURCES.—For pur16 poses of this section—

17 ‘‘(1) IN GENERAL.—The term ‘qualified energy

18 resources’ means—

19 ‘‘(A) wind,

20 ‘‘(B) closed-loop biomass,

21 ‘‘(C) open-loop biomass,

22 ‘‘(D) geothermal energy,

23 ‘‘(E) solar energy,

24 ‘‘(F) small irrigation power, and

25 ‘‘(G) municipal solid waste.
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1 ‘‘(2) CLOSED-LOOP BIOMASS.—The term

2 ‘closed-loop biomass’ means any organic material

3 from a plant which is planted exclusively for pur4 poses of being used at a qualified facility to produce

5 electricity.

6 ‘‘(3) OPEN-LOOP BIOMASS.—

7 ‘‘(A) IN GENERAL.—The term ‘open-loop

8 biomass’ means—

9 ‘‘(i) any agricultural livestock waste

10 nutrients, or

11 ‘‘(ii) any solid, nonhazardous, cel12 lulosic waste material which is segregated

13 from other waste materials and which is

14 derived from—

15 ‘‘(I) any of the following forest16 related resources: mill and harvesting

17 residues, precommercial thinnings,

18 slash, and brush,

19 ‘‘(II) solid wood waste materials,

20 including waste pallets, crates,

21 dunnage, manufacturing and con22 struction wood wastes (other than

23 pressure-treated, chemically-treated,

24 or painted wood wastes), and land25 scape or right-of-way tree trimmings,
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1 but not including municipal solid

2 waste, gas derived from the bio3 degradation of solid waste, or paper

4 which is commonly recycled, or

5 ‘‘(III) agriculture sources, includ6 ing orchard tree crops, vineyard,

7 grain, legumes, sugar, and other crop

8 by-products or residues.

9 Such term shall not include closed-loop biomass.

10 ‘‘(B) AGRICULTURAL LIVESTOCK WASTE

11 NUTRIENTS.—

12 ‘‘(i) IN GENERAL.—The term ‘agricul13 tural livestock waste nutrients’ means agri14 cultural livestock manure and litter, includ15 ing wood shavings, straw, rice hulls, and

16 other bedding material for the disposition

17 of manure.

18 ‘‘(ii) AGRICULTURAL LIVESTOCK.—

19 The term ‘agricultural livestock’ includes

20 bovine, swine, poultry, and sheep.

21 ‘‘(4) GEOTHERMAL ENERGY.—The term ‘geo22 thermal energy’ means energy derived from a geo23 thermal deposit (within the meaning of section

24 613(e)(2)).
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1 ‘‘(5) SMALL IRRIGATION POWER.—The term

2 ‘small irrigation power’ means power—

3 ‘‘(A) generated without any dam or im4 poundment of water through an irrigation sys5 tem canal or ditch, and

6 ‘‘(B) the nameplate capacity rating of

7 which is not less than 150 kilowatts but is less

8 than 5 megawatts.

9 ‘‘(6) MUNICIPAL SOLID WASTE.—The term

10 ‘municipal solid waste’ has the meaning given the

11 term ‘solid waste’ under section 2(27) of the Solid

12 Waste Disposal Act (42 U.S.C. 6903).’’.

13 (b) EXTENSION AND EXPANSION OF QUALIFIED FA14 CILITIES.—

15 (1) IN GENERAL.—Section 45 is amended by

16 redesignating subsection (d) as subsection (e) and by

17 inserting after subsection (c) the following new sub18 section:

19 ‘‘(d) QUALIFIED FACILITIES.—For purposes of this

20 section—

21 ‘‘(1) WIND FACILITY.—In the case of a facility

22 using wind to produce electricity, the term ‘qualified

23 facility’ means any facility owned by the taxpayer

24 which is originally placed in service after December

25 31, 1993, and before January 1, 2007.
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1 ‘‘(2) CLOSED-LOOP BIOMASS FACILITY.—

2 ‘‘(A) IN GENERAL.—In the case of a facil3 ity using closed-loop biomass to produce elec4 tricity, the term ‘qualified facility’ means any

5 facility—

6 ‘‘(i) owned by the taxpayer which is

7 originally placed in service after December

8 31, 1992, and before January 1, 2007, or

9 ‘‘(ii) owned by the taxpayer which be10 fore January 1, 2007, is originally placed

11 in service and modified to use closed-loop

12 biomass to co-fire with coal, with other bio13 mass, or with both, but only if the modi14 fication is approved under the Biomass

15 Power for Rural Development Programs or

16 is part of a pilot project of the Commodity

17 Credit Corporation as described in 65 Fed.

18 Reg. 63052.

19 ‘‘(B) SPECIAL RULES.—In the case of a

20 qualified facility described in subparagraph

21 (A)(ii)—

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

23 subsection (a) shall be treated as beginning

24 no earlier than the date of the enactment

25 of the Energy Tax Policy Act of 2004,
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1 ‘‘(ii) the amount of the credit deter2 mined under subsection (a) with respect to

3 the facility shall be an amount equal to the

4 amount determined without regard to this

5 clause multiplied by the ratio of the ther6 mal content of the closed-loop biomass

7 used in such facility to the thermal content

8 of all fuels used in such facility, and

9 ‘‘(iii) if the owner of such facility is

10 not the producer of the electricity, the per11 son eligible for the credit allowable under

12 subsection (a) shall be the lessee or the op13 erator of such facility.

14 ‘‘(3) OPEN-LOOP BIOMASS FACILITIES.—

15 ‘‘(A) IN GENERAL.—In the case of a facil16 ity using open-loop biomass to produce elec17 tricity, the term ‘qualified facility’ means any

18 facility owned by the taxpayer which—

19 ‘‘(i) in the case of a facility using ag20 ricultural livestock waste nutrients—

21 ‘‘(I) is originally placed in service

22 after the date of the enactment of the

23 Energy Tax Policy Act of 2004 and

24 before January 1, 2007, and
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1 ‘‘(II) the nameplate capacity rat2 ing of which is not less than 150 kilo3 watts, and

4 ‘‘(ii) in the case of any other facility,

5 is originally placed in service before Janu6 ary 1, 2007.

7 ‘‘(B) CREDIT ELIGIBILITY.—In the case of

8 any facility described in subparagraph (A), if

9 the owner of such facility is not the producer of

10 the electricity, the person eligible for the credit

11 allowable under subsection (a) shall be the les12 see or the operator of such facility.

13 ‘‘(4) GEOTHERMAL OR SOLAR ENERGY FACIL14 ITY.—In the case of a facility using geothermal or

15 solar energy to produce electricity, the term ‘quali16 fied facility’ means any facility owned by the tax17 payer which is originally placed in service after the

18 date of the enactment of the Energy Tax Policy Act

19 of 2004 and before January 1, 2007. Such term

20 shall not include any property described in section

21 48(a)(3) the basis of which is taken into account by

22 the taxpayer for purposes of determining the energy

23 credit under section 48.

24 ‘‘(5) SMALL IRRIGATION POWER FACILITY.—In

25 the case of a facility using small irrigation power to
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1 produce electricity, the term ‘qualified facility’

2 means any facility owned by the taxpayer which is

3 originally placed in service after the date of the en4 actment of the Energy Tax Policy Act of 2004 and

5 before January 1, 2007.

6 ‘‘(6) LANDFILL GAS FACILITIES.—In the case

7 of a facility producing electricity from gas derived

8 from the biodegradation of municipal solid waste,

9 the term ‘qualified facility’ means any facility owned

10 by the taxpayer which is originally placed in service

11 after the date of the enactment of the Energy Tax

12 Policy Act of 2004 and before January 1, 2007.

13 ‘‘(7) TRASH COMBUSTION FACILITIES.—In the

14 case of a facility which burns municipal solid waste

15 to produce electricity, the term ‘qualified facility’

16 means any facility owned by the taxpayer which is

17 originally placed in service after the date of the en18 actment of the Energy Tax Policy Act of 2004 and

19 before January 1, 2007.’’.

20 (2) CONFORMING AMENDMENT.—Section 45(e),

21 as so redesignated, is amended by striking ‘‘sub22 section (c)(3)(A)’’ in paragraph (7)(A)(i) and insert23 ing ‘‘subsection (d)(1)’’.

24 (c) SPECIAL CREDIT RATE AND PERIOD FOR ELEC25 TRICITY PRODUCED AND SOLD AFTER ENACTMENT
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1 DATE.—Section 45(b) is amended by adding at the end

2 the following new paragraph:

3 ‘‘(4) CREDIT RATE AND PERIOD FOR ELEC4 TRICITY PRODUCED AND SOLD FROM CERTAIN FA5 CILITIES.—

6 ‘‘(A) CREDIT RATE.—In the case of elec7 tricity produced and sold in any calendar year

8 after 2003 at any qualified facility described in

9 paragraph (3), (5), (6), or (7) of subsection (d),

10 the amount in effect under subsection (a)(1) for

11 such calendar year (determined before the ap12 plication of the last sentence of paragraph (2)

13 of this subsection) shall be reduced by one14 third.

15 ‘‘(B) CREDIT PERIOD.—

16 ‘‘(i) IN GENERAL.—Except as pro17 vided in clause (ii), in the case of any facil18 ity described in paragraph (3), (4), (5),

19 (6), or (7) of subsection (d), the 5-year pe20 riod beginning on the date the facility was

21 originally placed in service shall be sub22 stituted for the 10-year period in sub23 section (a)(2)(A)(ii).

24 ‘‘(ii) CERTAIN OPEN-LOOP BIOMASS

25 FACILITIES.—In the case of any facility de-
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1 scribed in subsection (d)(3)(A)(ii) placed in

2 service before the date of the enactment of

3 this paragraph, the 5-year period begin4 ning on January 1, 2004, shall be sub5 stituted for the 10-year period in sub6 section (a)(2)(A)(ii).’’.

7 (d) COORDINATION WITH OTHER CREDITS.—Section

8 45(e), as so redesignated, is amended by adding at the

9 end the following new paragraph:

10 ‘‘(8) COORDINATION WITH OTHER CREDITS.—

11 The term ‘qualified facility’ shall not include—

12 ‘‘(A) any property with respect to which a

13 credit is allowed under section 25C, and

14 ‘‘(B) any facility the production from

15 which is allowed as a credit under section 45K,

16 for the taxable year or any prior taxable year.’’.

17 (e) COORDINATION WITH SECTION 48.—Section

18 48(a)(3) (defining energy property) is amended by adding

19 at the end the following new sentence: ‘‘Such term shall

20 not include any property which is part of a facility the

21 production from which is allowed as a credit under section

22 45 for the taxable year or any prior taxable year.’’.

23 (f) ELIMINATION OF CERTAIN CREDIT REDUC24 TIONS.—Section 45(b)(3) (relating to credit reduced for
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1 grants, tax-exempt bonds, subsidized energy financing,

2 and other credits) is amended—

(1) by inserting ‘‘the lesser of 1 3 ⁄2 or’’ before ‘‘a

4 fraction’’ in the matter preceding subparagraph (A),

5 and

6 (2) by adding at the end the following new sen7 tence: ‘‘This paragraph shall not apply with respect

8 to any facility described in subsection (d)(2)(A)(ii).’’.

9 (g) EFFECTIVE DATES.—

10 (1) IN GENERAL.—Except as otherwise pro11 vided in this subsection, the amendments made by

12 this section shall apply to electricity produced and

13 sold after the date of the enactment of this Act, in

14 taxable years ending after such date.

15 (2) CERTAIN BIOMASS FACILITIES.—With re16 spect to any facility described in section

17 45(d)(3)(A)(ii) of the Internal Revenue Code of

18 1986, as added by subsection (b)(1), which is placed

19 in service before the date of the enactment of this

20 Act, the amendments made by this section shall

21 apply to electricity produced and sold after Decem22 ber 31, 2003, in taxable years ending after such

23 date.

24 (3) CREDIT RATE AND PERIOD FOR NEW FA25 CILITIES.—The amendments made by subsection (c)
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1 shall apply to electricity produced and sold after De2 cember 31, 2003, in taxable years ending after such

3 date.

4 (4) NONAPPLICATION OF AMENDMENTS TO

5 PREEFFECTIVE DATE POULTRY WASTE FACILI6 TIES.—The amendments made by this section shall

7 not apply with respect to any poultry waste facility

8 (within the meaning of section 45(c)(3)(C), as in ef9 fect on the day before the date of the enactment of

10 this Act) placed in service before January 1, 2004.

11 (h) GAO STUDY.—The Comptroller General of the

12 United States shall conduct a study on the market viabil13 ity of producing electricity from resources with respect to

14 which credit is allowed under section 45 of the Internal

15 Revenue Code of 1986 but without such credit. In the case

16 of open-loop biomass and municipal solid waste resources,

17 the study should take into account savings associated with

18 not having to dispose of such resources. In conducting

19 such study, the Comptroller shall estimate the dollar value

20 of the environmental impact of producing electricity from

21 such resources relative to producing electricity from fossil

22 fuels using the latest generation of technology. Not later

23 than June 30, 2006, the Comptroller shall report on such

24 study to the Committee on Ways and Means of the House
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1 of Representatives and the Committee on Finance of the

2 Senate.

3 SEC. 1303. CREDIT FOR BUSINESS INSTALLATION OF

4 QUALIFIED FUEL CELLS.

5 (a) IN GENERAL.—Section 48(a)(3)(A) (defining en6 ergy property) is amended by striking ‘‘or’’ at the end of

7 clause (i), by adding ‘‘or’’ at the end of clause (ii), and

8 by inserting after clause (ii) the following new clause:

9 ‘‘(iii) qualified fuel cell property,’’.

10 (b) QUALIFIED FUEL CELL PROPERTY.—Section 48

11 (relating to energy credit; reforestation credit) is amended

12 by adding at the end the following new subsection:

13 ‘‘(c) QUALIFIED FUEL CELL PROPERTY.—For pur14 poses of subsection (a)(3)(A)(iii)—

15 ‘‘(1) IN GENERAL.—The term ‘qualified fuel

16 cell property’ means a fuel cell power plant which

17 generates at least 0.5 kilowatt of electricity using an

18 electrochemical process.

19 ‘‘(2) LIMITATION.—The energy credit with re20 spect to any qualified fuel cell property shall not ex21 ceed an amount equal to $500 for each 0.5 kilowatt

22 of capacity of such property.

23 ‘‘(3) FUEL CELL POWER PLANT.—The term

24 ‘fuel cell power plant’ means an integrated system,

25 comprised of a fuel cell stack assembly and associ-
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1 ated balance of plant components, which converts a

2 fuel into electricity using electrochemical means.

3 ‘‘(4) TERMINATION.—The term ‘qualified fuel

4 cell property’ shall not include any property placed

5 in service after December 31, 2006.’’.

6 (c) ENERGY PERCENTAGE.—Subparagraph (A) of

7 section 48(a)(2) (relating to energy percentage) is amend8 ed to read as follows:

9 ‘‘(A) IN GENERAL.—The energy percent10 age is—

11 ‘‘(i) in the case of qualified fuel cell

12 property, 20 percent, and

13 ‘‘(ii) in the case of any other energy

14 property, 10 percent.’’.

15 (d) CONFORMING AMENDMENT.—Section 48(a)(1) is

16 amended by inserting ‘‘except as provided in subsection

17 (c)(2),’’ before ‘‘the energy’’.

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

19 this section shall apply to periods after December 31,

20 2003, under rules similar to the rules of section 48(m)

21 of the Internal Revenue Code of 1986 (as in effect on the

22 day before the date of the enactment of the Revenue Rec23 onciliation Act of 1990).
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1 SEC. 1304. 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 20 percent of the amount paid or incurred by

13 the taxpayer for qualified energy efficiency improvements

14 installed during such taxable year.

15 ‘‘(b) LIMITATIONS.—

16 ‘‘(1) MAXIMUM CREDIT.—The credit allowed by

17 this section with respect to a dwelling unit shall not

18 exceed $2,000.

19 ‘‘(2) PRIOR CREDIT AMOUNTS FOR TAXPAYER

20 ON SAME DWELLING TAKEN INTO ACCOUNT.—If a

21 credit was allowed to the taxpayer under subsection

22 (a) with respect to a dwelling unit in 1 or more prior

23 taxable years, the amount of the credit otherwise al24 lowable for the taxable year with respect to that

25 dwelling unit shall be reduced by the sum of the

26 credits allowed under subsection (a) to the taxpayer
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1 with respect to the dwelling unit for all prior taxable

2 years.

3 ‘‘(c) 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 meets the pre7 scriptive criteria for such component established by the

8 2000 International Energy Conservation Code, as such

9 Code (including supplements) is in effect on the date of

10 the enactment of this section (or, in the case of a metal

11 roof with appropriate pigmented coatings which meet the

12 Energy Star program requirements), if—

13 ‘‘(1) such component is installed in or on a

14 dwelling unit—

15 ‘‘(A) located in the United States,

16 ‘‘(B) owned and used by the taxpayer as

17 the taxpayer’s principal residence (within the

18 meaning of section 121), and

19 ‘‘(C) which has not been treated as a

20 qualified new energy efficient home for pur21 poses of any credit allowed under section 45G,

22 ‘‘(2) the original use of such component com23 mences with the taxpayer, and

24 ‘‘(3) such component reasonably can be ex25 pected to remain in use for at least 5 years.
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1 If the aggregate cost of such components with respect to

2 any dwelling unit exceeds $1,000, such components shall

3 be treated as qualified energy efficiency improvements

4 only if such components are also certified in accordance

5 with subsection (d) as meeting such prescriptive criteria.

6 ‘‘(d) CERTIFICATION.—The certification described in

7 subsection (c) shall be—

8 ‘‘(1) determined on the basis of the technical

9 specifications or applicable ratings (including prod10 uct labeling requirements) for the measurement of

11 energy efficiency (based upon energy use or building

12 envelope component performance) for the energy ef13 ficient building envelope component,

14 ‘‘(2) provided by a local building regulatory au15 thority, a utility, a manufactured home production

16 inspection primary inspection agency (IPIA), or an

17 accredited home energy rating system provider who

18 is accredited by or otherwise authorized to use ap19 proved energy performance measurement methods by

20 the Residential Energy Services Network

21 (RESNET), and

22 ‘‘(3) made in writing in a manner which speci23 fies in readily verifiable fashion the energy efficient

24 building envelope components installed and their re25 spective energy efficiency levels.
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1 ‘‘(e) DEFINITIONS AND SPECIAL RULES.—For pur2 poses of this section—

3 ‘‘(1) BUILDING ENVELOPE COMPONENT.—The

4 term ‘building envelope component’ means—

5 ‘‘(A) any insulation material or system

6 which is specifically and primarily designed to

7 reduce the heat loss or gain of a dwelling unit

8 when installed in or on such dwelling unit,

9 ‘‘(B) exterior windows (including sky10 lights),

11 ‘‘(C) exterior doors, and

12 ‘‘(D) any metal roof installed on a dwelling

13 unit, but only if such roof has appropriate pig14 mented coatings which are specifically and pri15 marily designed to reduce the heat gain of such

16 dwelling unit.

17 ‘‘(2) MANUFACTURED HOMES INCLUDED.—The

18 term ‘dwelling unit’ includes a manufactured home

19 which conforms to Federal Manufactured Home

20 Construction and Safety Standards (section 3280 of

21 title 24, Code of Federal Regulations).

22 ‘‘(3) APPLICATION OF RULES.—Rules similar to

23 the rules under paragraphs (3), (4), and (5) of sec24 tion 25C(d) shall apply.
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1 ‘‘(f) BASIS ADJUSTMENT.—For purposes of this sub2 title, if a credit is allowed under this section for any ex3 penditure with respect to any property, the increase in the

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

6 the amount of the credit so allowed.

7 ‘‘(g) APPLICATION OF SECTION.—This section shall

8 apply to qualified energy efficiency improvements installed

9 after December 31, 2003, and before January 1, 2007.’’.

10 (b) CONFORMING AMENDMENTS.—

11 (1) Subsection (a) of section 1016, as amended

12 by this Act, is amended by striking ‘‘and’’ at the end

13 of paragraph (28), by striking the period at the end

14 of paragraph (29) and inserting ‘‘, and’’, and by

15 adding at the end the following new paragraph:

16 ‘‘(30) to the extent provided in section 25D(f),

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

18 has been allowed under section 25D.’’.

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

20 IV of subchapter A of chapter 1, as amended by this

21 Act, is amended by inserting after the item relating

22 to section 25C the following new item:

‘‘Sec. 25D. Energy efficiency improvements to existing homes.’’.

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

24 this section shall apply to taxable years ending after De25 cember 31, 2003.
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1 SEC. 1305. CREDIT FOR CONSTRUCTION OF NEW ENERGY

2 EFFICIENT HOMES.

3 (a) IN GENERAL.—Subpart D of part IV of sub4 chapter A of chapter 1 (relating to business related cred5 its) is amended by adding at the end the following new

6 section:

7 ‘‘SEC. 45G. NEW ENERGY EFFICIENT HOME CREDIT.

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

9 the case of an eligible contractor with respect to a quali10 fied new energy efficient home, the credit determined

11 under this section for the taxable year with respect to such

12 home is an amount equal to the aggregate adjusted bases

13 of all energy efficient property installed in such home dur14 ing construction of such home.

15 ‘‘(b) LIMITATIONS.—

16 ‘‘(1) MAXIMUM CREDIT.—

17 ‘‘(A) IN GENERAL.—The credit allowed by

18 this section with respect to a dwelling unit shall

19 not exceed—

20 ‘‘(i) in the case of a dwelling unit de21 scribed in clause (i) or (iii) of subsection

22 (c)(3)(D), $1,000, and

23 ‘‘(ii) in the case of a dwelling unit de24 scribed in subsection (c)(3)(D)(ii), $2,000.

25 ‘‘(B) PRIOR CREDIT AMOUNTS ON SAME

26 DWELLING UNIT TAKEN INTO ACCOUNT.—If a
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1 credit was allowed under subsection (a) with re2 spect to a dwelling unit in 1 or more prior tax3 able years, the amount of the credit otherwise

4 allowable for the taxable year with respect to

5 such dwelling unit shall be reduced by the sum

6 of the credits allowed under subsection (a) with

7 respect to the dwelling unit for all prior taxable

8 years.

9 ‘‘(2) COORDINATION WITH CERTAIN CREDITS.—

10 For purposes of this section—

11 ‘‘(A) the basis of any property referred to

12 in subsection (a) shall be reduced by that por13 tion of the basis of any property which is attrib14 utable to qualified rehabilitation expenditures

15 (as defined in section 47(c)(2)) or to the energy

16 percentage of energy property (as determined

17 under section 48(a)), and

18 ‘‘(B) expenditures taken into account

19 under section 47 or 48(a) shall not be taken

20 into account under this section.

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

22 ‘‘(1) ELIGIBLE CONTRACTOR.—The term ‘eligi23 ble contractor’ means—

24 ‘‘(A) the person who constructed the quali25 fied new energy efficient home, or
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1 ‘‘(B) in the case of a qualified new energy

2 efficient home which is a manufactured home,

3 the manufactured home producer of such home.

4 If more than 1 person is described in subparagraph

5 (A) or (B) with respect to any qualified new energy

6 efficient home, such term means the person des7 ignated as such by the owner of such home.

8 ‘‘(2) ENERGY EFFICIENT PROPERTY.—The

9 term ‘energy efficient property’ means any energy

10 efficient building envelope component, and any en11 ergy efficient heating or cooling equipment or sys12 tem, which can, individually or in combination with

13 other components, result in a dwelling unit meeting

14 the requirements of this section.

15 ‘‘(3) QUALIFIED NEW ENERGY EFFICIENT

16 HOME.—The term ‘qualified new energy efficient

17 home’ means a dwelling unit—

18 ‘‘(A) located in the United States,

19 ‘‘(B) the construction of which is substan20 tially completed after December 31, 2003,

21 ‘‘(C) the original use of which, after such

22 construction, is reasonably expected to be as a

23 residence by the person who acquires such

24 dwelling unit from the eligible contractor,

25 ‘‘(D) which is—
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1 ‘‘(i) certified to have a level of annual

2 heating and cooling energy consumption

3 which is at least 30 percent below the an4 nual level of heating and cooling energy

5 consumption of a comparable dwelling unit

6 constructed in accordance with the stand7 ards of chapter 4 of the 2000 International

8 Energy Conservation Code, as such Code

9 (including supplements) is in effect on the

10 date of the enactment of this section, and

11 to have building envelope component improvements account for at least 1 12 ⁄3 of such

13 30 percent,

14 ‘‘(ii) certified to have a level of annual

15 heating and cooling energy consumption

16 which is at least 50 percent below such an17 nual level and to have building envelope

18 component improvements account for at

least 1 19 ⁄5 of such 50 percent, or

20 ‘‘(iii) a manufactured home which—

21 ‘‘(I) conforms to Federal Manu22 factured Home Construction and

23 Safety Standards (section 3280 of

24 title 24, Code of Federal Regulations),

25 and
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1 ‘‘(II) meets the applicable stand2 ards required by the Administrator of

3 the Environmental Protection Agency

4 under the Energy Star Labeled

5 Homes program.

6 ‘‘(4) CONSTRUCTION.—The term ‘construction’

7 includes substantial reconstruction and rehabilita8 tion.

9 ‘‘(5) ACQUIRE.—The term ‘acquire’ includes

10 purchase and, in the case of reconstruction and re11 habilitation, such term includes a binding written

12 contract for such reconstruction or rehabilitation.

13 ‘‘(6) BUILDING ENVELOPE COMPONENT.—The

14 term ‘building envelope component’ means—

15 ‘‘(A) any insulation material or system

16 which is specifically and primarily designed to

17 reduce the heat loss or gain of a dwelling unit

18 when installed in or on such dwelling unit,

19 ‘‘(B) exterior windows (including sky20 lights),

21 ‘‘(C) exterior doors, and

22 ‘‘(D) any metal roof installed on a dwelling

23 unit, but only if such roof has appropriate pig24 mented coatings which—
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1 ‘‘(i) are specifically and primarily de2 signed to reduce the heat gain of such

3 dwelling unit, and

4 ‘‘(ii) meet the Energy Star program

5 requirements.

6 ‘‘(d) CERTIFICATION.—

7 ‘‘(1) METHOD OF CERTIFICATION.—A certifi8 cation described in subsection (c)(3)(D) shall be de9 termined in accordance with guidance prescribed by

10 the Secretary. Such guidance shall specify proce11 dures and methods for calculating energy and cost

12 savings.

13 ‘‘(2) FORM.—A certification described in sub14 section (c)(3)(D) shall be made in writing—

15 ‘‘(A) in a manner which specifies in readily

16 verifiable fashion the energy efficient building

17 envelope components and energy efficient heat18 ing or cooling equipment installed and their re19 spective rated energy efficiency performance,

20 and

21 ‘‘(B) in the case of a qualified new energy

22 efficient home which is a manufactured home,

23 accompanied by such documentation as required

24 by the Administrator of the Environmental Pro-
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1 tection Agency under the Energy Star Labeled

2 Homes program.

3 ‘‘(e) BASIS ADJUSTMENT.—For purposes of this sub4 title, if a credit is determined under this section for any

5 expenditure with respect to any property, the increase in

6 the basis of such property which would (but for this sub7 section) result from such expenditure shall be reduced by

8 the amount of the credit so determined.

9 ‘‘(f) APPLICATION OF SECTION.—Subsection (a) shall

10 apply to qualified new energy efficient homes acquired

11 during the period beginning on January 1, 2004, and end12 ing on December 31, 2006.’’.

13 (b) CREDIT MADE PART OF GENERAL BUSINESS

14 CREDIT.—Section 38(b) (relating to current year business

15 credit) is amended by striking ‘‘plus’’ at the end of para16 graph (14), by striking the period at the end of paragraph

17 (15) and inserting ‘‘, plus’’, and by adding at the end the

18 following new paragraph:

19 ‘‘(16) the new energy efficient home credit de20 termined under section 45G(a).’’.

21 (c) BASIS ADJUSTMENT.—Subsection (a) of section

22 1016, as amended by this Act, is amended by striking

23 ‘‘and’’ at the end of paragraph (29), by striking the period

24 at the end of paragraph (30) and inserting ‘‘, and’’, and

25 by adding at the end the following new paragraph:
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1 ‘‘(31) to the extent provided in section 45G(e),

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

3 has been allowed under section 45G.’’.

4 (d) LIMITATION ON CARRYBACK.—

5 (1) IN GENERAL.—Subsection (d) of section 39

6 is amended to read as follows:

7 ‘‘(d) TRANSITIONAL RULE.—No portion of the un8 used business credit for any taxable year which is attrib9 utable to a credit specified in section 38(b) or any portion

10 thereof may be carried back to any taxable year before

11 the first taxable year for which such specified credit or

12 such portion is allowable (without regard to subsection

13 (a)).’’.

14 (2) EFFECTIVE DATE.—The amendment made

15 by paragraph (1) shall apply with respect to taxable

16 years ending after December 31, 2002.

17 (e) DEDUCTION FOR CERTAIN UNUSED BUSINESS

18 CREDITS.—Section 196(c) (defining qualified business

19 credits) is amended by striking ‘‘and’’ at the end of para20 graph (10), by striking the period at the end of paragraph

21 (11) and inserting ‘‘, and’’, and by adding after paragraph

22 (11) the following new paragraph:

23 ‘‘(12) the new energy efficient home credit de24 termined under section 45G(a).’’.
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1 (f) CLERICAL AMENDMENT.—The table of sections

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

3 is amended by adding at the end the following new item:

‘‘Sec. 45G. New energy efficient home credit.’’.

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

5 this section shall apply to taxable years ending after De6 cember 31, 2003.

7 SEC. 1306. ENERGY CREDIT FOR COMBINED HEAT AND

8 POWER SYSTEM PROPERTY.

9 (a) IN GENERAL.—Section 48(a)(3)(A) (defining en10 ergy property), as amended by this Act, is amended by

11 striking ‘‘or’’ at the end of clause (ii), by adding ‘‘or’’ at

12 the end of clause (iii), and by inserting after clause (iii)

13 the following new clause:

14 ‘‘(iv) combined heat and power system

15 property,’’.

16 (b) COMBINED HEAT AND POWER SYSTEM PROP17 ERTY.—Section 48 (relating to energy credit; reforestation

18 credit), as amended by this Act, is amended by adding

19 at the end the following new subsection:

20 ‘‘(d) COMBINED HEAT AND POWER SYSTEM PROP21 ERTY.—For purposes of subsection (a)(3)(A)(iv)—

22 ‘‘(1) COMBINED HEAT AND POWER SYSTEM

23 PROPERTY.—The term ‘combined heat and power

24 system property’ means property comprising a

25 system—
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1 ‘‘(A) which uses the same energy source

2 for the simultaneous or sequential generation of

3 electrical power, mechanical shaft power, or

4 both, in combination with the generation of

5 steam or other forms of useful thermal energy

6 (including heating and cooling applications),

7 ‘‘(B) which has an electrical capacity of

8 not more than 15 megawatts or a mechanical

9 energy capacity of not more than 2,000 horse10 power or an equivalent combination of electrical

11 and mechanical energy capacities,

12 ‘‘(C) which produces—

13 ‘‘(i) at least 20 percent of its total

14 useful energy in the form of thermal en15 ergy which is not used to produce electrical

16 or mechanical power (or combination

17 thereof), and

18 ‘‘(ii) at least 20 percent of its total

19 useful energy in the form of electrical or

20 mechanical power (or combination thereof),

21 ‘‘(D) the energy efficiency percentage of

22 which exceeds 60 percent, and

23 ‘‘(E) which is placed in service before Jan24 uary 1, 2007.

25 ‘‘(2) SPECIAL RULES.—
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1 ‘‘(A) ENERGY EFFICIENCY PERCENT2 AGE.—For purposes of this subsection, the en3 ergy efficiency percentage of a system is the

4 fraction—

5 ‘‘(i) the numerator of which is the

6 total useful electrical, thermal, and me7 chanical power produced by the system at

8 normal operating rates, and expected to be

9 consumed in its normal application, and

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

11 lower heating value of the fuel sources for

12 the system.

13 ‘‘(B) DETERMINATIONS MADE ON BTU

14 BASIS.—The energy efficiency percentage and

15 the percentages under paragraph (1)(C) shall

16 be determined on a Btu basis.

17 ‘‘(C) INPUT AND OUTPUT PROPERTY NOT

18 INCLUDED.—The term ‘combined heat and

19 power system property’ does not include prop20 erty used to transport the energy source to the

21 facility or to distribute energy produced by the

22 facility.

23 ‘‘(D) PUBLIC UTILITY PROPERTY.—

24 ‘‘(i) ACCOUNTING RULE FOR PUBLIC

25 UTILITY PROPERTY.—If the combined heat
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1 and power system property is public utility

2 property (as defined in section 168(i)(10)),

3 the taxpayer may only claim the credit

4 under subsection (a) if, with respect to

5 such property, the taxpayer uses a normal6 ization method of accounting.

7 ‘‘(ii) CERTAIN EXCEPTION NOT TO

8 APPLY.—The matter in subsection (a)(3)

9 which follows subparagraph (D) thereof

10 shall not apply to combined heat and

11 power system property.

12 ‘‘(3) SYSTEMS USING BAGASSE.—If a system is

13 designed to use bagasse for at least 90 percent of

14 the energy source—

15 ‘‘(A) paragraph (1)(D) shall not apply, but

16 ‘‘(B) the amount of credit determined

17 under subsection (a) with respect to such sys18 tem shall not exceed the amount which bears

19 the same ratio to such amount of credit (deter20 mined without regard to this paragraph) as the

21 energy efficiency percentage of such system

22 bears to 60 percent.’’.

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

24 this subsection shall apply to periods after December 31,

25 2003, in taxable years ending after such date, under rules
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1 similar to the rules of section 48(m) of the Internal Rev2 enue Code of 1986 (as in effect on the day before the date

3 of the enactment of the Revenue Reconciliation Act of

4 1990).

5 SEC. 1307. CREDIT FOR ENERGY EFFICIENT APPLIANCES.

6 (a) IN GENERAL.—Subpart D of part IV of sub7 chapter A of chapter 1 (relating to business-related cred8 its), as amended by this Act, is amended by adding at

9 the end the following new section:

10 ‘‘SEC. 45H. ENERGY EFFICIENT APPLIANCE CREDIT.

11 ‘‘(a) ALLOWANCE OF CREDIT.—For purposes of sec12 tion 38, the energy efficient appliance credit determined

13 under this section for the taxable year is an amount equal

14 to the sum of—

15 ‘‘(1) the tier I appliance amount, and

16 ‘‘(2) the tier II appliance amount,

17 with respect to qualified energy efficient appliances pro18 duced by the taxpayer during the calendar year ending

19 with or within the taxable year.

20 ‘‘(b) APPLIANCE AMOUNTS.—For purposes of sub21 section (a)—

22 ‘‘(1) TIER I APPLIANCE AMOUNT.—The tier I

23 appliance amount is equal to—

24 ‘‘(A) $100, multiplied by
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1 ‘‘(B) an amount (rounded to the nearest

2 whole number) equal to the applicable percent3 age of the eligible production.

4 ‘‘(2) TIER II APPLIANCE AMOUNT.—The tier II

5 appliance amount is equal to $150, multiplied by an

6 amount equal to the eligible production reduced by

7 the amount determined under paragraph (1)(B).

8 ‘‘(3) APPLICABLE PERCENTAGE.—The applica9 ble percentage is the percentage determined by di10 viding the tier I appliances produced by the taxpayer

11 during the calendar year by the sum of the tier I

12 and tier II appliances so produced.

13 ‘‘(4) ELIGIBLE PRODUCTION.—The eligible pro14 duction of qualified energy efficient appliances by

15 the taxpayer for any calendar year is the excess of—

16 ‘‘(A) the number of such appliances which

17 are produced by the taxpayer during such cal18 endar year, over

19 ‘‘(B) 110 percent of the average annual

20 number of such appliances which were produced

21 by the taxpayer (or any predecessor) during the

22 preceding 3-calendar year period.

23 ‘‘(c) QUALIFIED ENERGY EFFICIENT APPLIANCE.—

24 For purposes of this section—
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1 ‘‘(1) IN GENERAL.—The term ‘qualified energy

2 efficient appliance’ means any tier I appliance or tier

3 II appliance which is produced in the United States.

4 ‘‘(2) TIER I APPLIANCE.—The term ‘tier I ap5 pliance’ means—

6 ‘‘(A) a clothes washer which is produced

7 with at least a 1.50 MEF, and

8 ‘‘(B) a refrigerator which consumes at

9 least 15 percent (20 percent in the case of a re10 frigerator produced after 2006) less kilowatt

11 hours per year than the energy conservation

12 standards for refrigerators promulgated by the

13 Department of Energy and effective on July 1,

14 2001.

15 ‘‘(3) TIER II APPLIANCE.—The term ‘tier II ap16 pliance’ means a refrigerator produced before 2007

17 which consumes at least 20 percent less kilowatt

18 hours per year than the energy conservation stand19 ards described in paragraph (2)(B).

20 ‘‘(4) CLOTHES WASHER.—The term ‘clothes

21 washer’ means a residential clothes washer, includ22 ing a residential style coin operated washer.

23 ‘‘(5) REFRIGERATOR.—The term ‘refrigerator’

24 means an automatic defrost refrigerator-freezer
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1 which has an internal volume of at least 16.5 cubic

2 feet.

3 ‘‘(6) MEF.—The term ‘MEF’ means Modified

4 Energy Factor (as determined by the Secretary of

5 Energy).

6 ‘‘(7) PRODUCED.—The term ‘produced’ in7 cludes manufactured.

8 ‘‘(d) LIMITATION ON MAXIMUM CREDIT.—

9 ‘‘(1) IN GENERAL.—The amount of credit al10 lowed under subsection (a) with respect to a tax11 payer for any taxable year shall not exceed

12 $60,000,000, reduced by the amount of the credit

13 allowed under subsection (a) to the taxpayer (or any

14 predecessor) for any prior taxable year.

15 ‘‘(2) LIMITATION BASED ON GROSS RE16 CEIPTS.—The credit allowed under subsection (a)

17 with respect to a taxpayer for the taxable year shall

18 not exceed an amount equal to 2 percent of the aver19 age annual gross receipts of the taxpayer for the 3

20 taxable years preceding the taxable year for which

21 the credit is determined.

22 ‘‘(3) GROSS RECEIPTS.—For purposes of this

23 subsection, the rules of paragraphs (2) and (3) of

24 section 448(c) shall apply.
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1 ‘‘(e) SPECIAL RULES.—For purposes of this

2 section—

3 ‘‘(1) IN GENERAL.—Rules similar to the rules

4 of subsections (c), (d), and (e) of section 52 shall

5 apply.

6 ‘‘(2) CONTROLLED GROUPS.—

7 ‘‘(A) IN GENERAL.—All persons treated as

8 a single employer under subsection (a) or (b) of

9 section 52 or subsection (m) or (o) of section

10 414 shall be treated as a single manufacturer.

11 ‘‘(B) INCLUSION OF FOREIGN CORPORA12 TIONS.—For purposes of subparagraph (A), in

13 applying subsections (a) and (b) of section 52

14 to this section, section 1563 shall be applied

15 without regard to subsection (b)(2)(C) thereof.

16 ‘‘(f) VERIFICATION.—The taxpayer shall submit such

17 information or certification as the Secretary, after con18 sultation with the Secretary of Energy, determines nec19 essary to claim the credit amount under subsection (a).

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

21 with respect to appliances produced after December 31,

22 2007.’’.

23 (b) CREDIT MADE PART OF GENERAL BUSINESS

24 CREDIT.—Section 38(b) (relating to current year business

25 credit), as amended by this Act, is amended by striking
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1 ‘‘plus’’ at the end of paragraph (15), by striking the period

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

3 by adding at the end the following new paragraph:

4 ‘‘(17) the energy efficient appliance credit de5 termined under section 45H(a).’’.

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

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

8 as amended by this Act, is amended by adding at the end

9 the following new item:

‘‘Sec. 45H. Energy efficient appliance credit.’’.

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

11 this section shall apply to appliances produced after De12 cember 31, 2003, in taxable years ending after such date.

13 SEC. 1308. ENERGY EFFICIENT COMMERCIAL BUILDINGS

14 DEDUCTION.

15 (a) IN GENERAL.—Part VI of subchapter B of chap16 ter 1 (relating to itemized deductions for individuals and

17 corporations) is amended by inserting after section 179A

18 the following new section:

19 ‘‘SEC. 179B. ENERGY EFFICIENT COMMERCIAL BUILDINGS

20 DEDUCTION.

21 ‘‘(a) IN GENERAL.—There shall be allowed as a de22 duction an amount equal to the cost of energy efficient

23 commercial building property placed in service during the

24 taxable year.
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1 ‘‘(b) MAXIMUM AMOUNT OF DEDUCTION.—The de2 duction under subsection (a) with respect to any building

3 for the taxable year and all prior taxable years shall not

4 exceed an amount equal to the product of—

5 ‘‘(1) $1.50, and

6 ‘‘(2) the square footage of the building.

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

8 ‘‘(1) ENERGY EFFICIENT COMMERCIAL BUILD9 ING PROPERTY.—The term ‘energy efficient commer10 cial building property’ means property—

11 ‘‘(A) which is installed on or in a

12 building—

13 ‘‘(i) which is located in the United

14 States, and

15 ‘‘(ii) which is the type of structure to

16 which the Standard 90.1–2001 is applica17 ble,

18 ‘‘(B) which is installed as part of—

19 ‘‘(i) the lighting systems,

20 ‘‘(ii) the heating, cooling, ventilation,

21 and hot water systems, or

22 ‘‘(iii) the building envelope, and

23 ‘‘(C) which is certified in accordance with

24 subsection (d)(4) as being installed as part of

25 a plan designed to reduce the total annual en-
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1 ergy and power costs with respect to the light2 ing systems, heating, cooling, ventilation, and

3 hot water systems of the building by 50 percent

4 or more in comparison to a reference building

5 which meets the minimum requirements of

6 Standard 90.1–2001 using methods of calcula7 tion under subsection (d)(2).

8 ‘‘(2) STANDARD 90.1–2001.—The term ‘Stand9 ard 90.1–2001’ means Standard 90.1–2001 of the

10 American Society of Heating, Refrigerating, and Air

11 Conditioning Engineers and the Illuminating Engi12 neering Society of North America (as in effect on

13 April 2, 2003).

14 ‘‘(d) SPECIAL RULES.—

15 ‘‘(1) PARTIAL ALLOWANCE.—

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

17 subsection (f), in the case of a building placed

18 in service on or before the date of the enact19 ment of this section, if—

20 ‘‘(i) the requirement of subsection

21 (c)(1)(C) is not met, but

22 ‘‘(ii) there is a certification in accord23 ance with subsection (d)(4) that any sys24 tem referred to in subsection (c)(1)(B) sat25 isfies the energy-savings targets estab-
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1 lished by the Secretary under subpara2 graph (B) with respect to such system,

3 then the requirement of subsection (c)(1)(C)

4 shall be treated as met with respect to such sys5 tem, and the deduction under subsection (a)

6 shall be allowed with respect to energy efficient

7 commercial building property installed as part

8 of such system and as part of a plan to meet

9 such targets, except that subsection (b) shall be

10 applied to such property by substituting ‘$.50’

11 for ‘$1.50’.

12 ‘‘(B) REGULATIONS.—The Secretary, after

13 consultation with the Secretary of Energy, shall

14 establish a target for each system described in

15 subsection (c)(1)(B) which, if such targets were

16 met for all such systems, the building would

17 meet the requirements of subsection (c)(1)(C).

18 ‘‘(2) METHODS OF CALCULATION.—The Sec19 retary, after consultation with the Secretary of En20 ergy, shall promulgate regulations which describe in

21 detail methods for calculating and verifying energy

22 and power cost for purposes of this section.

23 ‘‘(3) NOTICE TO OWNER.—Each certification

24 required under this section shall include an expla25 nation to the building owner regarding the energy
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1 efficiency features of the building and its projected

2 annual energy costs.

3 ‘‘(4) CERTIFICATION.—

4 ‘‘(A) IN GENERAL.—The Secretary shall

5 prescribe the manner and method for the mak6 ing of certifications under this section.

7 ‘‘(B) PROCEDURES.—The Secretary shall

8 include as part of the certification process pro9 cedures for inspection and testing by qualified

10 individuals described in subparagraph (C) to

11 ensure compliance of buildings with energy-sav12 ings plans and targets. Such procedures shall

13 be—

14 ‘‘(i) comparable, given the difference

15 between commercial and residential build16 ings, to the requirements in the Mortgage

17 Industry National Accreditation Proce18 dures for Home Energy Rating Systems,

19 and

20 ‘‘(ii) fuel neutral such that the same

21 energy efficiency measures allow a building

22 to be eligible for the deduction under this

23 section regardless of whether such building

24 uses a gas or oil furnace or boiler, an elec25 tric heat pump, or other fuel source.
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1 ‘‘(C) QUALIFIED INDIVIDUALS.—Individ2 uals qualified to determine compliance shall be

3 only those individuals who are recognized by an

4 organization certified by the Secretary for such

5 purposes.

6 ‘‘(e) BASIS REDUCTION.—For purposes of this sub7 title, if a deduction is allowed under this section with re8 spect to any energy efficient commercial building property,

9 the basis of such property shall be reduced by the amount

10 of the deduction so allowed.

11 ‘‘(f) INTERIM RULES FOR LIGHTING SYSTEMS.—

12 Until such time as the Secretary issues final regulations

13 under subsection (d)(1)(B) with respect to property which

14 is part of a lighting system—

15 ‘‘(1) IN GENERAL.—The lighting system target

16 under subsection (d)(1)(A)(ii) shall be a reduction in

17 lighting power density of 25 percent (50 percent in

18 the case of a warehouse) of the minimum require19 ments in Table 9.3.1.1 or Table 9.3.1.2 (not includ20 ing additional interior lighting power allowances) of

21 Standard 90.1–2001.

22 ‘‘(2) REDUCTION IN DEDUCTION IF REDUCTION

23 LESS THAN 40 PERCENT.—

24 ‘‘(A) IN GENERAL.—If, with respect to the

25 lighting system of any building other than a
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1 warehouse, the reduction in lighting power den2 sity of the lighting system is not at least 40

3 percent, only the applicable percentage of the

4 amount of deduction otherwise allowable under

5 this section with respect to such property shall

6 be allowed.

7 ‘‘(B) APPLICABLE PERCENTAGE.—For

8 purposes of subparagraph (A), the applicable

9 percentage is the number of percentage points

10 (not greater than 100) equal to the sum of—

11 ‘‘(i) 50, and

12 ‘‘(ii) the amount which bears the same

13 ratio to 50 as the excess of the reduction

14 of lighting power density of the lighting

15 system over 25 percentage points bears to

16 15.

17 ‘‘(C) EXCEPTIONS.—This subsection shall

18 not apply to any system—

19 ‘‘(i) the controls and circuiting of

20 which do not comply fully with the manda21 tory and prescriptive requirements of

22 Standard 90.1–2001 and which do not in23 clude provision for bilevel switching in all

24 occupancies except hotel and motel guest
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1 rooms, store rooms, restrooms, and public

2 lobbies, or

3 ‘‘(ii) which does not meet the min4 imum requirements for calculated lighting

5 levels as set forth in the Illuminating Engi6 neering Society of North America Lighting

7 Handbook, Performance and Application,

8 Ninth Edition, 2000.

9 ‘‘(g) REGULATIONS.—The Secretary shall promul10 gate such regulations as necessary—

11 ‘‘(1) to take into account new technologies re12 garding energy efficiency and renewable energy for

13 purposes of determining energy efficiency and sav14 ings under this section, and

15 ‘‘(2) to provide for a recapture of the deduction

16 allowed under this section if the plan described in

17 subsection (c)(1)(C) or (d)(1)(A) is not fully imple18 mented.

19 ‘‘(h) TERMINATION.—This section shall not apply

20 with respect to property placed in service after December

21 31, 2007.’’.

22 (b) CONFORMING AMENDMENTS.—

23 (1) Section 1016(a), as amended by this sec24 tion, is amended by striking ‘‘and’’ at the end of

25 paragraph (30), by striking the period at the end of
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1 paragraph (31) and inserting ‘‘, and’’, and by add2 ing at the end the following new paragraph:

3 ‘‘(32) to the extent provided in section

4 179B(e).’’.

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.’’.

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

25 this section shall apply to property placed in service after
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1 the date of the enactment of this Act in taxable years end2 ing after such date.

3 SEC. 1309. THREE-YEAR APPLICABLE RECOVERY PERIOD

4 FOR DEPRECIATION OF QUALIFIED ENERGY

5 MANAGEMENT DEVICES.

6 (a) IN GENERAL.—Section 168(e)(3)(A) (defining 3-

7 year property) is amended by striking ‘‘and’’ at the end

8 of clause (ii), by striking the period at the end of clause

9 (iii) and inserting ‘‘, and’’, and by adding at the end the

10 following new clause:

11 ‘‘(iv) any qualified energy manage12 ment device.’’.

13 (b) DEFINITION OF QUALIFIED ENERGY MANAGE14 MENT DEVICE.—Section 168(i) (relating to definitions

15 and special rules) is amended by inserting at the end the

16 following new paragraph:

17 ‘‘(15) QUALIFIED ENERGY MANAGEMENT DE18 VICE.—

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

20 energy management device’ means any energy

21 management device which is placed in service

22 before January 1, 2008, by a taxpayer who is

23 a supplier of electric energy or a provider of

24 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

5 taxpayer—

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) ALTERNATIVE SYSTEM.—The table contained in

14 section 168(g)(3)(B) is amended by inserting after the

15 item relating to subparagraph (A)(iii) the following:

‘‘(A) (iv) .................................................................................................... 20’’.

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

17 this section shall apply to property placed in service after

18 the date of the enactment of this Act, in taxable years

19 ending after such date.

20 SEC. 1310. CREDIT FOR PRODUCTION FROM ADVANCED NU21 CLEAR POWER FACILITIES.

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 adding after

25 section 45K the following new section:
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1 ‘‘SEC. 45L. CREDIT FOR PRODUCTION FROM ADVANCED NU2 CLEAR POWER FACILITIES.

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

4 the advanced nuclear power facility production credit of

5 any taxpayer for any taxable year is equal to the product

6 of—

7 ‘‘(1) 1.8 cents, multiplied by

8 ‘‘(2) the kilowatt hours of electricity—

9 ‘‘(A) produced by the taxpayer at an ad10 vanced nuclear power facility during the 8-year

11 period beginning on the date the facility was

12 originally placed in service, and

13 ‘‘(B) sold by the taxpayer to an unrelated

14 person during the taxable year.

15 ‘‘(b) NATIONAL LIMITATION.—

16 ‘‘(1) IN GENERAL.—The amount of credit

17 which would (but for this subsection and subsection

18 (c)) be allowed with respect to any facility for any

19 taxable year shall not exceed the amount which

20 bears the same ratio to such amount of credit as—

21 ‘‘(A) the national megawatt capacity limi22 tation allocated to the facility, bears to

23 ‘‘(B) the total megawatt nameplate capac24 ity of such facility.
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1 ‘‘(2) AMOUNT OF NATIONAL LIMITATION.—The

2 national megawatt capacity limitation shall be 6,000

3 megawatts.

4 ‘‘(3) ALLOCATION OF LIMITATION.—The Sec5 retary shall allocate the national megawatt capacity

6 limitation in such manner as the Secretary may pre7 scribe.

8 ‘‘(4) REGULATIONS.—Not later than 6 months

9 after the date of the enactment of this section, the

10 Secretary shall prescribe such regulations as may be

11 necessary or appropriate to carry out the purposes

12 of this subsection. Such regulations shall provide a

13 certification process under which the Secretary, after

14 consultation with the Secretary of Energy, shall ap15 prove and allocate the national megawatt capacity

16 limitation.

17 ‘‘(c) OTHER LIMITATIONS.—

18 ‘‘(1) ANNUAL LIMITATION.—The amount of the

19 credit allowable under subsection (a) (after the ap20 plication of subsection (b)) for any taxable year with

21 respect to any facility shall not exceed an amount

22 which bears the same ratio to $125,000,000 as—

23 ‘‘(A) the national megawatt capacity limi24 tation allocated under subsection (b) to the fa25 cility, bears to
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1 ‘‘(B) 1,000.

2 ‘‘(2) OTHER LIMITATIONS.—Rules similar to

3 the rules of section 45(b) shall apply for purposes of

4 this section, except that paragraph (2) thereof shall

5 not apply to the 1.8 cents under subsection (a)(1).

6 ‘‘(d) ADVANCED NUCLEAR POWER FACILITY.—For

7 purposes of this section—

8 ‘‘(1) IN GENERAL.—The term ‘advanced nu9 clear power facility’ means any advanced nuclear

10 facility—

11 ‘‘(A) which is owned by the taxpayer and

12 which uses nuclear energy to produce elec13 tricity, and

14 ‘‘(B) which is placed in service after the

15 date of the enactment of this paragraph and be16 fore January 1, 2021.

17 ‘‘(2) ADVANCED NUCLEAR FACILITY.—For pur18 poses of paragraph (1), the term ‘advanced nuclear

19 facility’ means any nuclear facility the reactor design

20 for which is approved after the date of the enact21 ment of this paragraph by the Nuclear Regulatory

22 Commission (and such design or a substantially

23 similar design of comparable capacity was not ap24 proved on or before such date).
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1 ‘‘(e) OTHER RULES TO APPLY.—Rules similar to the

2 rules of paragraphs (1), (2), (3), (4), and (5) of section

3 45(e) shall apply for purposes of this section.’’.

4 (b) CREDIT TREATED AS BUSINESS CREDIT.—Sec5 tion 38(b), as amended by this Act, is amended by striking

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

7 at the end of paragraph (21) and inserting ‘‘, plus’’, and

8 by adding at the end the following:

9 ‘‘(22) the advanced nuclear power facility pro10 duction credit determined under section 45L(a).’’.

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

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

13 as amended by this Act, is amended by adding at the end

14 the following:

‘‘Sec. 45L. Credit for production from advanced nuclear power facilities.’’.

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

16 this section shall apply to production in taxable years be17 ginning after December 31, 2003.

18 PART II—FUELS AND ALTERNATIVE MOTOR

19 VEHICLES

20 SEC. 1311. REPEAL OF 4.3-CENT MOTOR FUEL EXCISE

21 TAXES ON RAILROADS AND INLAND WATER22 WAY TRANSPORTATION WHICH REMAIN IN

23 GENERAL FUND.

24 (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 January 1, 2004.

18 SEC. 1312. REDUCED MOTOR FUEL EXCISE TAX ON CER19 TAIN MIXTURES OF DIESEL FUEL.

20 (a) IN GENERAL.—Paragraph (2) of section 4081(a)

21 is amended by adding at the end the following:

22 ‘‘(C) DIESEL-WATER FUEL EMULSION.—In

23 the case of diesel-water fuel emulsion at least

24 14 percent of which is water and with respect

25 to which the emulsion additive is registered by
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1 a United States manufacturer with the Envi2 ronmental Protection Agency pursuant to sec3 tion 211 of the Clean Air Act (as in effect on

4 March 31, 2003), subparagraph (A)(iii) shall be

5 applied by substituting ‘19.7 cents’ for ‘24.3

6 cents’.’’.

7 (b) SPECIAL RULES FOR DIESEL-WATER FUEL

8 EMULSIONS.—

9 (1) REFUNDS FOR TAX-PAID PURCHASES.—Sec10 tion 6427 is amended by redesignating subsections

11 (m) through (p) as subsections (n) through (q), re12 spectively, and by inserting after subsection (l) the

13 following new subsection:

14 ‘‘(m) DIESEL FUEL USED TO PRODUCE EMUL15 SION.—

16 ‘‘(1) IN GENERAL.—Except as provided in sub17 section (k), if any diesel fuel on which tax was im18 posed by section 4081 at the regular tax rate is used

19 by any person in producing an emulsion described in

20 section 4081(a)(2)(C) which is sold or used in such

21 person’s trade or business, the Secretary shall pay

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

23 the excess of the regular tax rate over the incentive

24 tax rate with respect to such fuel.
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1 ‘‘(2) DEFINITIONS.—For purposes of paragraph

2 (1)—

3 ‘‘(A) REGULAR TAX RATE.—The term ‘reg4 ular tax rate’ means the aggregate rate of tax

5 imposed by section 4081 determined without re6 gard to section 4081(a)(2)(C).

7 ‘‘(B) INCENTIVE TAX RATE.—The term

8 ‘incentive tax rate’ means the aggregate rate of

9 tax imposed by section 4081 determined with

10 regard to section 4081(a)(2)(C).’’.

11 (2) LATER SEPARATION OF FUEL.—

12 (A) IN GENERAL.—Section 4081 (relating

13 to imposition of tax) is amended by redesig14 nating subsections (d) and (e) as subsections

15 (e) and (f), respectively, and by inserting after

16 subsection (c) the following new subsection:

17 ‘‘(d) LATER SEPARATION OF FUEL FROM DIESEL18 WATER FUEL EMULSION.—If any person separates the

19 taxable fuel from a diesel-water fuel emulsion on which

20 tax was imposed under subsection (a) at a rate determined

21 under subsection (a)(2)(C) (or with respect to which a

22 credit or payment was allowed or made by reason of sec23 tion 6427), such person shall be treated as the refiner of

24 such taxable fuel. The amount of tax imposed on any re25 moval of such fuel by such person shall be reduced by the
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1 amount of tax imposed (and not credited or refunded) on

2 any prior removal or entry of such fuel.’’.

3 (B) CONFORMING AMENDMENT.—Sub4 section (d) of section 6416 is amended by strik5 ing ‘‘section 4081(e)’’ and inserting ‘‘section

6 4081(f)’’.

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

8 this section shall take effect on January 1, 2004.

9 SEC. 1313. SMALL ETHANOL PRODUCER CREDIT.

10 (a) ALLOCATION OF ALCOHOL FUELS CREDIT TO

11 PATRONS OF A COOPERATIVE.—Section 40(g) (relating to

12 definitions and special rules for eligible small ethanol pro13 ducer credit) is amended by adding at the end the fol14 lowing new paragraph:

15 ‘‘(6) ALLOCATION OF SMALL ETHANOL PRO16 DUCER CREDIT TO PATRONS OF COOPERATIVE.—

17 ‘‘(A) ELECTION TO ALLOCATE.—

18 ‘‘(i) IN GENERAL.—In the case of a

19 cooperative organization described in sec20 tion 1381(a), any portion of the credit de21 termined under subsection (a)(3) for the

22 taxable year may, at the election of the or23 ganization, be apportioned pro rata among

24 patrons of the organization on the basis of
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1 the quantity or value of business done with

2 or for such patrons for the taxable year.

3 ‘‘(ii) FORM AND EFFECT OF ELEC4 TION.—An election under clause (i) for any

5 taxable year shall be made on a timely

6 filed return for such year. Such election,

7 once made, shall be irrevocable for such

8 taxable year.

9 ‘‘(B) TREATMENT OF ORGANIZATIONS AND

10 PATRONS.—The amount of the credit appor11 tioned to patrons under subparagraph (A)—

12 ‘‘(i) shall not be included in the

13 amount determined under subsection (a)

14 with respect to the organization for the

15 taxable year, and

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

17 determined under subsection (a) for the

18 taxable year of each patron for which the

19 patronage dividends for the taxable year

20 described in subparagraph (A) are included

21 in gross income.

22 ‘‘(C) SPECIAL RULE.—If the amount of a

23 credit which has been apportioned to any pa24 tron under this paragraph is decreased for any

25 reason—
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1 ‘‘(i) such amount shall not increase

2 the tax imposed on such patron, and

3 ‘‘(ii) the tax imposed by this chapter

4 on such organization shall be increased by

5 such amount.

6 The increase under clause (ii) shall not be

7 treated as tax imposed by this chapter for pur8 poses of determining the amount of any credit

9 under this chapter or for purposes of section

10 55.’’.

11 (b) DEFINITION OF SMALL ETHANOL PRODUCER.—

12 Section 40(g) (relating to definitions and special rules for

13 eligible small ethanol producer credit) is amended by strik14 ing ‘‘30,000,000’’ each place it appears and inserting

15 ‘‘60,000,000’’.

16 (c) CONFORMING AMENDMENT.—Section 1388 (re17 lating to definitions and special rules for cooperative orga18 nizations) is amended by adding at the end the following

19 new subsection:

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

21 the apportionment of the alcohol fuels credit between coop22 erative organizations and their patrons, see section

23 40(g)(6).’’.
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1 (d) EFFECTIVE DATE.—The amendments made by

2 this section shall apply to taxable years beginning after

3 December 31, 2003.

4 SEC. 1314. INCENTIVES FOR BIODIESEL.

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. BIODIESEL USED AS FUEL.

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

11 the biodiesel fuels credit determined under this section for

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

13 ‘‘(1) the biodiesel mixture credit, plus

14 ‘‘(2) the biodiesel credit.

15 ‘‘(b) DEFINITION OF BIODIESEL MIXTURE CREDIT

16 AND BIODIESEL CREDIT.—For purposes of this section—

17 ‘‘(1) BIODIESEL MIXTURE CREDIT.—

18 ‘‘(A) IN GENERAL.—The biodiesel mixture

19 credit of any taxpayer for any taxable year is

20 50 cents for each gallon of biodiesel used by the

21 taxpayer in the production of a qualified bio22 diesel mixture.

23 ‘‘(B) QUALIFIED BIODIESEL MIXTURE.—

24 The term ‘qualified biodiesel mixture’ means a
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1 mixture of biodiesel and a taxable fuel (within

2 the meaning of section 4083(a)(1)) which—

3 ‘‘(i) is sold by the taxpayer producing

4 such mixture to any person for use as a

5 fuel, or

6 ‘‘(ii) is used as a fuel by the taxpayer

7 producing such mixture.

8 ‘‘(C) SALE OR USE MUST BE IN TRADE OR

9 BUSINESS, ETC.—Biodiesel used in the produc10 tion of a qualified biodiesel mixture shall be

11 taken into account—

12 ‘‘(i) only if the sale or use described

13 in subparagraph (B) is in a trade or busi14 ness of the taxpayer, and

15 ‘‘(ii) for the taxable year in which

16 such sale or use occurs.

17 ‘‘(D) CASUAL OFF-FARM PRODUCTION NOT

18 ELIGIBLE.—No credit shall be allowed under

19 this section with respect to any casual off-farm

20 production of a qualified biodiesel mixture.

21 ‘‘(2) BIODIESEL CREDIT.—

22 ‘‘(A) IN GENERAL.—The biodiesel credit of

23 any taxpayer for any taxable year is 50 cents

24 for each gallon of biodiesel which is not in a

25 mixture and which during the taxable year—
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1 ‘‘(i) is used by the taxpayer as a fuel

2 in a trade or business, or

3 ‘‘(ii) is sold by the taxpayer at retail

4 to a person and placed in the fuel tank of

5 such person’s vehicle.

6 ‘‘(B) USER CREDIT NOT TO APPLY TO BIO7 DIESEL SOLD AT RETAIL.—No credit shall be

8 allowed under subparagraph (A)(i) with respect

9 to any biodiesel which was sold in a retail sale

10 described in subparagraph (A)(ii).

11 ‘‘(3) CREDIT FOR AGRI-BIODIESEL.—In the

12 case of any biodiesel which is agri-biodiesel, para13 graphs (1)(A) and (2)(A) shall be applied by sub14 stituting ‘$1.00’ for ‘50 cents’.

15 ‘‘(4) CERTIFICATION FOR BIODIESEL.—No

16 credit shall be allowed under this section unless the

17 taxpayer obtains a certification (in such form and

18 manner as prescribed by the Secretary) from the

19 producer of the biodiesel which identifies the product

20 produced and the percentage of biodiesel and agri21 biodiesel in the product.

22 ‘‘(c) COORDINATION WITH CREDIT AGAINST EXCISE

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

24 section with respect to any biodiesel shall be properly re25 duced to take into account any benefit provided with re-
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1 spect to such biodiesel solely by reason of the application

2 of section 6426.

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

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

6 the monoalkyl esters of long chain fatty acids de7 rived from plant or animal matter which meet—

8 ‘‘(A) the registration requirements for

9 fuels and fuel additives established by the Envi10 ronmental Protection Agency under section 211

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

12 ‘‘(B) the requirements of the American So13 ciety of Testing and Materials D6751.

14 ‘‘(2) AGRI-BIODIESEL.—The term ‘agri-bio15 diesel’ means biodiesel derived solely from virgin oils,

16 including esters derived from virgin vegetable oils

17 from corn, soybeans, sunflower seeds, cottonseeds,

18 canola, crambe, rapeseeds, safflowers, flaxseeds, rice

19 bran, and mustard seeds, and from animal fats.

20 ‘‘(3) MIXTURE OR BIODIESEL NOT USED AS A

21 FUEL, ETC.—

22 ‘‘(A) MIXTURES.—If—

23 ‘‘(i) any credit was determined under

24 this section with respect to biodiesel used
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1 in the production of any qualified biodiesel

2 mixture, and

3 ‘‘(ii) any person—

4 ‘‘(I) separates the biodiesel from

5 the mixture, or

6 ‘‘(II) without separation, uses the

7 mixture other than as a fuel,

8 then there is hereby imposed on such person a

9 tax equal to the product of the rate applicable

10 under subsection (b)(1)(A) and the number of

11 gallons of such biodiesel in such mixture.

12 ‘‘(B) BIODIESEL.—If—

13 ‘‘(i) any credit was determined under

14 this section with respect to the retail sale

15 of any biodiesel, and

16 ‘‘(ii) any person mixes such biodiesel

17 or uses such biodiesel other than as a fuel,

18 then there is hereby imposed on such person a

19 tax equal to the product of the rate applicable

20 under subsection (b)(2)(A) and the number of

21 gallons of such biodiesel.

22 ‘‘(C) APPLICABLE LAWS.—All provisions of

23 law, including penalties, shall, insofar as appli24 cable and not inconsistent with this section,

25 apply in respect of any tax imposed under sub-
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1 paragraph (A) or (B) as if such tax were im2 posed by section 4081 and not by this chapter.

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

4 TRUSTS.—Under regulations prescribed by the Sec5 retary, rules similar to the rules of subsection (d) of

6 section 52 shall apply.

7 ‘‘(e) TERMINATION.—This section shall not apply to

8 any sale or use after December 31, 2005.’’.

9 (b) CREDIT TREATED AS PART OF GENERAL BUSI10 NESS CREDIT.—Section 38(b) (relating to current year

11 business credit) is amended by striking ‘‘plus’’ at the end

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

13 paragraph (17) and inserting ‘‘, plus’’, and by adding at

14 the end the following new paragraph:

15 ‘‘(18) the biodiesel fuels credit determined

16 under section 40A(a).’’.

17 (c) CONFORMING AMENDMENTS.—

18 (1)(A) Section 87 is amended to read as fol19 lows:

20 ‘‘SEC. 87. ALCOHOL AND BIODIESEL FUELS CREDITS.

21 ‘‘Gross income includes—

22 ‘‘(1) the amount of the alcohol fuels credit de23 termined with respect to the taxpayer for the taxable

24 year under section 40(a), and
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1 ‘‘(2) the biodiesel fuels credit determined with

2 respect to the taxpayer for the taxable year under

3 section 40A(a).’’.

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 (2) Section 196(c), as amended by this Act, is

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

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

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

12 end the following new paragraph:

13 ‘‘(13) the biodiesel fuels credit determined

14 under section 40A(a).’’.

15 (3) The table of sections for subpart D of part

16 IV of subchapter A of chapter 1 is amended by add17 ing after the item relating to section 40 the fol18 lowing new item:

‘‘Sec. 40A. Biodiesel used as fuel.’’.

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

20 this section shall apply to fuel produced, and sold or used,

21 after December 31, 2003, in taxable years ending after

22 such date.
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1 SEC. 1315. 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 product

16 of the applicable amount and the number of gallons

17 of alcohol used by the taxpayer in producing any al18 cohol fuel mixture for sale or use in a trade or busi19 ness of the taxpayer.

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

21 this subsection—

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

23 subparagraph (B), the applicable amount is 52

24 cents (51 cents in the case of any sale or use

25 after 2004).
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1 ‘‘(B) MIXTURES NOT CONTAINING ETH2 ANOL.—In the case of an alcohol fuel mixture

3 in which none of the alcohol consists of ethanol,

4 the applicable amount is 60 cents.

5 ‘‘(3) ALCOHOL FUEL MIXTURE.—For purposes

6 of this subsection, the term ‘alcohol fuel mixture’

7 means a mixture of alcohol and a taxable fuel

8 which—

9 ‘‘(A) is sold by the taxpayer producing

10 such mixture to any person for use as a fuel,

11 ‘‘(B) is used as a fuel by the taxpayer pro12 ducing such mixture, or

13 ‘‘(C) is removed from the refinery by a

14 person producing such mixture.

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

16 this subsection—

17 ‘‘(A) ALCOHOL.—The term ‘alcohol’ in18 cludes methanol and ethanol but does not

19 include—

20 ‘‘(i) alcohol produced from petroleum,

21 natural gas, or coal (including peat), or

22 ‘‘(ii) alcohol with a proof of less than

23 190 (determined without regard to any

24 added denaturants).
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1 Such term also includes an alcohol gallon equiv2 alent of ethyl tertiary butyl ether or other

3 ethers produced from such alcohol.

4 ‘‘(B) TAXABLE FUEL.—The term ‘taxable

5 fuel’ has the meaning given such term by sec6 tion 4083(a)(1).

7 ‘‘(5) TERMINATION.—This subsection shall not

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

9 after December 31, 2010.

10 ‘‘(c) BIODIESEL MIXTURE CREDIT.—

11 ‘‘(1) IN GENERAL.—For purposes of this sec12 tion, the biodiesel mixture credit is the product of

13 the applicable amount and the number of gallons of

14 biodiesel used by the taxpayer in producing any bio15 diesel mixture for sale or use in a trade or business

16 of the taxpayer.

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

18 this subsection—

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

20 subparagraph (B), the applicable amount is 50

21 cents.

22 ‘‘(B) AMOUNT FOR AGRI-BIODIESEL.—In

23 the case of any biodiesel which is agri-biodiesel,

24 the applicable amount is $1.00.
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1 ‘‘(3) BIODIESEL MIXTURE.—For purposes of

2 this section, the term ‘biodiesel mixture’ means a

3 mixture of biodiesel and a taxable fuel which—

4 ‘‘(A) is sold by the taxpayer producing

5 such mixture to any person for use as a fuel,

6 ‘‘(B) is used as a fuel by the taxpayer pro7 ducing such mixture, or

8 ‘‘(C) is removed from the refinery by a

9 person producing such mixture.

10 ‘‘(4) CERTIFICATION FOR BIODIESEL.—No

11 credit shall be allowed under this section unless the

12 taxpayer obtains a certification (in such form and

13 manner as prescribed by the Secretary) from the

14 producer of the biodiesel which identifies the product

15 produced and the percentage of biodiesel and agri16 biodiesel in the product.

17 ‘‘(5) OTHER DEFINITIONS.—Any term used in

18 this subsection which is also used in section 40A

19 shall have the meaning given such term by section

20 40A.

21 ‘‘(6) TERMINATION.—This subsection shall not

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

23 after December 31, 2005.

24 ‘‘(d) MIXTURE NOT USED AS A FUEL, ETC.—

25 ‘‘(1) IMPOSITION OF TAX.—If—
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1 ‘‘(A) any credit was determined under this

2 section with respect to alcohol or biodiesel used

3 in the production of any alcohol fuel mixture or

4 biodiesel mixture, respectively, and

5 ‘‘(B) any person—

6 ‘‘(i) separates the alcohol or biodiesel

7 from the mixture, or

8 ‘‘(ii) without separation, uses the mix9 ture other than as a fuel,

10 then there is hereby imposed on such person a

11 tax equal to the product of the applicable

12 amount and the number of gallons of such alco13 hol or biodiesel.

14 ‘‘(2) APPLICABLE LAWS.—All provisions of law,

15 including penalties, shall, insofar as applicable and

16 not inconsistent with this section, apply in respect of

17 any tax imposed under paragraph (1) as if such tax

18 were imposed by section 4081 and not by this sec19 tion.

20 ‘‘(e) COORDINATION WITH EXEMPTION FROM EX21 CISE TAX.—Rules similar to the rules under section 40(c)

22 shall apply for purposes of this section.’’.

23 (b) REGISTRATION REQUIREMENT.—Section 4101(a)

24 (relating to registration) is amended by inserting ‘‘and

25 every person producing biodiesel (as defined in section
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1 40A(d)(1)) or alcohol (as defined in section

2 6426(b)(4)(A))’’ after ‘‘4091’’.

3 (c) ADDITIONAL AMENDMENTS.—

4 (1) Section 40(c) is amended by striking ‘‘or

5 section 4091(c)’’ and inserting ‘‘section 4091(c), or

6 section 6426’’.

7 (2) Section 40(e)(1) is amended—

8 (A) by striking ‘‘2007’’ in subparagraph

9 (A) and inserting ‘‘2010’’, and

10 (B) by striking ‘‘2008’’ in subparagraph

11 (B) and inserting ‘‘2011’’.

12 (3) Section 40(h) is amended—

13 (A) by striking ‘‘2007’’ in paragraph (1)

14 and inserting ‘‘2010’’, and

15 (B) by striking ‘‘, 2006, or 2007’’ in the

16 table contained in paragraph (2) and inserting

17 ‘‘through 2010’’.

18 (4)(A) Subpart C of part III of subchapter A

19 of chapter 32 is amended by adding at the end the

20 following new section:

21 ‘‘SEC. 4104. INFORMATION REPORTING FOR PERSONS

22 CLAIMING CERTAIN TAX BENEFITS.

23 ‘‘(a) IN GENERAL.—The Secretary shall require any

24 person claiming tax benefits under the provisions of sec25 tion 34, 40, 40A, 4041(b)(2), 4041(k), 4081(c), 6426, or
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1 6427(f) to file a quarterly return (in such manner as the

2 Secretary may prescribe) providing such information relat3 ing to such benefits and the coordination of such benefits

4 as the Secretary may require to ensure the proper admin5 istration and use of such benefits.

6 ‘‘(b) ENFORCEMENT.—With respect to any person

7 described in subsection (a) and subject to registration re8 quirements under this title, rules similar to rules of section

9 4222(c) shall apply with respect to any requirement under

10 this section.’’.

11 (B) The table of sections for subpart C of part

12 III of subchapter A of chapter 32 is amended by

13 adding at the end the following new item:

‘‘Sec. 4104. Information reporting for persons claiming certain tax benefits.’’.

14 (5) Section 6427(i)(3) is amended—

15 (A) by adding at the end of subparagraph

16 (A) the following new flush sentence:

17 ‘‘In the case of an electronic claim, this sub18 paragraph shall be applied without regard to

19 clause (i).’’, and

20 (B) 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)’’.
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1 (6) Section 9503(b)(1) is amended by adding at

2 the end the following new flush sentence:

3 ‘‘For purposes of this paragraph, taxes received

4 under sections 4041 and 4081 shall be determined

5 without reduction for credits under section 6426.’’.

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

7 for subchapter B of chapter 65 is amended by inserting

8 after the item relating to section 6425 the following new

9 item:

‘‘Sec. 6426. Credit for alcohol fuel and biodiesel mixtures.’’.

10 (e) EFFECTIVE DATES.—

11 (1) IN GENERAL.—Except as provided in para12 graphs (2) and (3), the amendments made by this

13 section shall apply to fuel sold, used, or removed

14 after December 31, 2003.

15 (2) SUBSECTION (c)(4).—The amendments

16 made by subsection (c)(4) shall take effect on Janu17 ary 1, 2004.

18 (3) SUBSECTION (c)(5).—The amendments

19 made by subsection (c)(5) shall apply to claims filed

20 after December 31, 2004.

21 (f) FORMAT FOR FILING.—The Secretary of the

22 Treasury shall prescribe the electronic format for filing

23 claims described in section 6427(i)(3)(B) of the Internal

24 Revenue Code of 1986 (as amended by subsection

25 (c)(5)(A)) not later than December 31, 2004.
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1 SEC. 1316. NONAPPLICATION OF EXPORT EXEMPTION TO

2 DELIVERY OF FUEL TO MOTOR VEHICLES RE3 MOVED FROM UNITED STATES.

4 (a) IN GENERAL.—Section 4221(d)(2) (defining ex5 port) is amended by adding at the end the following new

6 sentence: ‘‘Such term does not include the delivery of a

7 taxable fuel (as defined in section 4083(a)(1)) into a fuel

8 tank of a motor vehicle which is shipped or driven out

9 of the United States.’’.

10 (b) CONFORMING AMENDMENTS.—

11 (1) Section 4041(g) (relating to other exemp12 tions) is amended by adding at the end the following

13 new sentence: ‘‘Paragraph (3) shall not apply to the

14 sale for delivery of a liquid into a fuel tank of a

15 motor vehicle which is shipped or driven out of the

16 United States.’’.

17 (2) Clause (iv) of section 4081(a)(1)(A) (relat18 ing to tax on removal, entry, or sale) is amended by

19 inserting ‘‘or at a duty-free sales enterprise (as de20 fined in section 555(b)(8) of the Tariff Act of

21 1930)’’ after ‘‘section 4101’’.

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

23 this section shall apply to sales or deliveries made after

24 the date of the enactment of this Act.
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1 SEC. 1317. REPEAL OF PHASEOUTS FOR QUALIFIED ELEC2 TRIC VEHICLE CREDIT AND DEDUCTION FOR

3 CLEAN FUEL-VEHICLES.

4 (a) CREDIT FOR QUALIFIED ELECTRIC VEHICLES.—

5 Subsection (b) of section 30 (relating to limitations) is

6 amended by striking paragraph (2) and redesignating

7 paragraph (3) as paragraph (2).

8 (b) DEDUCTION FOR CLEAN-FUEL VEHICLES AND

9 CERTAIN REFUELING PROPERTY.—Paragraph (1) of sec10 tion 179A(b) (relating to qualified clean-fuel vehicle prop11 erty) is amended to read as follows:

12 ‘‘(1) QUALIFIED CLEAN-FUEL VEHICLE PROP13 ERTY.—The cost which may be taken into account

14 under subsection (a)(1)(A) with respect to any

15 motor vehicle shall not exceed—

16 ‘‘(A) in the case of a motor vehicle not de17 scribed in subparagraph (B) or (C), $2,000,

18 ‘‘(B) in the case of any truck or van with

19 a gross vehicle weight rating greater than

20 10,000 pounds but not greater than 26,000

21 pounds, $5,000, or

22 ‘‘(C) $50,000 in the case of—

23 ‘‘(i) a truck or van with a gross vehi24 cle weight rating greater than 26,000

25 pounds, or
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1 ‘‘(ii) any bus which has a seating ca2 pacity of at least 20 adults (not including

3 the driver).’’.

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

5 this section shall apply to property placed in service after

6 the date of the enactment of this Act.

7 SEC. 1318. ALTERNATIVE MOTOR VEHICLE CREDIT.

8 (a) IN GENERAL.—Subpart B of part IV of sub9 chapter A of chapter 1 (relating to foreign tax credit, etc.)

10 is amended by adding at the end the following:

11 ‘‘SEC. 30B. ALTERNATIVE MOTOR VEHICLE CREDIT.

12 ‘‘(a) ALLOWANCE OF CREDIT.—There shall be al13 lowed as a credit against the tax imposed by this chapter

14 for the taxable year an amount equal to the sum of—

15 ‘‘(1) the new qualified fuel cell motor vehicle

16 credit determined under subsection (b),

17 ‘‘(2) the new advanced lean burn technology

18 motor vehicle credit determined under subsection (c),

19 ‘‘(3) the new qualified hybrid motor vehicle

20 credit determined under subsection (d), and

21 ‘‘(4) the new qualified alternative fuel motor ve22 hicle credit determined under subsection (e).

23 ‘‘(b) NEW QUALIFIED FUEL CELL MOTOR VEHICLE

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

2 (a), the new qualified fuel cell motor vehicle credit

3 determined under this subsection with respect to a

4 new qualified fuel cell motor vehicle placed in service

5 by the taxpayer during the taxable year shall be de6 termined in accordance with the following table:

‘‘In the case of a vehicle which

has a gross vehicle weight rating of—

The new qualified fuel cell

motor vehicle credit is—

Not more than 8,500 lbs .................................................................... $4,000

More than 8,500 lbs but not more than 14,000 lbs ..........................$10,000

More than 14,000 lbs but not more than 26,000 lbs ........................$20,000

More than 26,000 lbs .........................................................................$40,000.

7 ‘‘(2) INCREASE FOR FUEL EFFICIENCY.—

8 ‘‘(A) IN GENERAL.—The amount deter9 mined under paragraph (1) with respect to a

10 new qualified fuel cell motor vehicle which is a

11 passenger automobile or light truck shall be in12 creased by the additional credit amount.

13 ‘‘(B) ADDITIONAL CREDIT AMOUNT.—For

14 purposes of subparagraph (A), the additional

15 credit amount shall be determined in accord16 ance with the following table:

‘‘In the case of a vehicle which

achieves a fuel economy (expressed as a percentage of the

2002 model year city fuel economy) of—

The additional credit

amount is—

At least 150 percent but less than 175 percent ................................ $1,000

At least 175 percent but less than 200 percent ................................ $1,500

At least 200 percent but less than 225 percent ................................ $2,000

At least 225 percent but less than 250 percent ................................ $2,500

At least 250 percent but less than 275 percent ................................ $3,000

At least 275 percent but less than 300 percent ................................ $3,500

At least 300 percent .......................................................................... $4,000.
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1 ‘‘(3) NEW QUALIFIED FUEL CELL MOTOR VEHI2 CLE.—For purposes of this subsection, the term

3 ‘new qualified fuel cell motor vehicle’ means a motor

4 vehicle—

5 ‘‘(A) which is propelled by power derived

6 from one or more cells which convert chemical

7 energy directly into electricity by combining ox8 ygen with hydrogen fuel which is stored on

9 board the vehicle in any form and may or may

10 not require reformation prior to use,

11 ‘‘(B) which, in the case of a passenger

12 automobile or light truck, has received—

13 ‘‘(i) a certificate of conformity under

14 the Clean Air Act and meets or exceeds the

15 equivalent qualifying California low emis16 sion vehicle standard under section

17 243(e)(2) of the Clean Air Act for that

18 make and model year, and

19 ‘‘(ii) a certificate that such vehicle

20 meets or exceeds the Bin 5 Tier II emis21 sion standard established in regulations

22 prescribed by the Administrator of the En23 vironmental Protection Agency under sec24 tion 202(i) of the Clean Air Act for that

25 make and model year vehicle,
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1 ‘‘(C) the original use of which commences

2 with the taxpayer,

3 ‘‘(D) which is acquired for use or lease by

4 the taxpayer and not for resale, and

5 ‘‘(E) which is made by a manufacturer.

6 ‘‘(c) NEW ADVANCED LEAN BURN TECHNOLOGY

7 MOTOR VEHICLE CREDIT.—

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

9 (a), the new advanced lean burn technology motor

10 vehicle credit determined under this subsection with

11 respect to a new advanced lean burn technology

12 motor vehicle placed in service by the taxpayer dur13 ing the taxable year is the credit amount determined

14 under paragraph (2).

15 ‘‘(2) CREDIT AMOUNT.—

16 ‘‘(A) FUEL ECONOMY.—The credit amount

17 determined under this paragraph shall be deter18 mined in accordance with the following table:

‘‘In the case of a vehicle which

achieves a fuel economy (expressed as a percentage of the

2002 model year city fuel economy) of—

The credit amount is—

At least 125 percent but less than 150 percent ................................ $400

At least 150 percent but less than 175 percent ................................ $800

At least 175 percent but less than 200 percent ................................ $1,200

At least 200 percent but less than 225 percent ................................ $1,600

At least 225 percent but less than 250 percent ................................ $2,000

At least 250 percent .......................................................................... $2,400.

19 ‘‘(B) CONSERVATION CREDIT.—The

20 amount determined under subparagraph (A)
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1 with respect to a new advanced lean burn tech2 nology motor vehicle shall be increased by the

3 conservation credit amount determined in ac4 cordance with the following table:

‘‘In the case of a vehicle which

achieves a lifetime fuel savings

(expressed in gallons of gasoline) of—

The conservation credit

amount is—

At least 1,200 but less than 1,800 .................................................... $250

At least 1,800 but less than 2,400 .................................................... $500

At least 2,400 but less than 3,000 .................................................... $750

At least 3,000 .................................................................................... $1,000.

5 ‘‘(3) NEW ADVANCED LEAN BURN TECHNOLOGY

6 MOTOR VEHICLE.—For purposes of this subsection,

7 the term ‘new advanced lean burn technology motor

8 vehicle’ means a passenger automobile or a light

9 truck—

10 ‘‘(A) with an internal combustion engine

11 which—

12 ‘‘(i) is designed to operate primarily

13 using more air than is necessary for com14 plete combustion of the fuel,

15 ‘‘(ii) incorporates direct injection,

16 ‘‘(iii) achieves at least 125 percent of

17 the 2002 model year city fuel economy,

18 ‘‘(iv) for 2004 and later model vehi19 cles, has received a certificate that such ve20 hicle meets or exceeds—
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1 ‘‘(I) in the case of a vehicle hav2 ing a gross vehicle weight rating of

3 6,000 pounds or less, the Bin 5 Tier

4 II emission standard established in

5 regulations prescribed by the Adminis6 trator of the Environmental Protec7 tion Agency under section 202(i) of

8 the Clean Air Act for that make and

9 model year vehicle, and

10 ‘‘(II) in the case of a vehicle hav11 ing a gross vehicle weight rating of

12 more than 6,000 pounds but not more

13 than 8,500 pounds, the Bin 8 Tier II

14 emission standard which is so estab15 lished.

16 ‘‘(B) the original use of which commences

17 with the taxpayer,

18 ‘‘(C) which is acquired for use or lease by

19 the taxpayer and not for resale, and

20 ‘‘(D) which is made by a manufacturer.

21 ‘‘(4) LIFETIME FUEL SAVINGS.—For purposes

22 of this subsection, the term ‘lifetime fuel savings’

23 means, in the case of any new advanced lean burn

24 technology motor vehicle, an amount equal to the ex25 cess (if any) of—
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1 ‘‘(A) 120,000 divided by the 2002 model

2 year city fuel economy for the vehicle inertia

3 weight class, over

4 ‘‘(B) 120,000 divided by the city fuel econ5 omy for such vehicle.

6 ‘‘(d) NEW QUALIFIED HYBRID MOTOR VEHICLE

7 CREDIT.—

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

9 (a), the new qualified hybrid motor vehicle credit de10 termined under this subsection with respect to a new

11 qualified hybrid motor vehicle placed in service by

12 the taxpayer during the taxable year is the credit

13 amount determined under paragraph (2).

14 ‘‘(2) CREDIT AMOUNT.—

15 ‘‘(A) CREDIT AMOUNT FOR PASSENGER

16 AUTOMOBILES AND LIGHT TRUCKS.—In the

17 case of a new qualified hybrid motor vehicle

18 which is a passenger automobile or light truck

19 and which has a gross vehicle weight rating of

20 not more than 8,500 pounds, the amount deter21 mined under this paragraph is the sum of the

22 amounts determined under clauses (i) and (ii).

23 ‘‘(i) FUEL ECONOMY.—The amount

24 determined under this clause is the amount

25 which would be determined under sub-
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1 section (c)(2)(A) if such vehicle were a ve2 hicle referred to in such subsection.

3 ‘‘(ii) CONSERVATION CREDIT.—The

4 amount determined under this clause is the

5 amount which would be determined under

6 subsection (c)(2)(B) if such vehicle were a

7 vehicle referred to in such subsection.

8 ‘‘(B) CREDIT AMOUNT FOR OTHER MOTOR

9 VEHICLES.—

10 ‘‘(i) IN GENERAL.—In the case of any

11 new qualified hybrid motor vehicle to which

12 subparagraph (A) does not apply, the

13 amount determined under this paragraph

14 is the amount equal to the applicable per15 centage of the qualified incremental hybrid

16 cost of the vehicle as certified under clause

17 (v).

18 ‘‘(ii) APPLICABLE PERCENTAGE.—For

19 purposes of clause (i), the applicable per20 centage is—

21 ‘‘(I) 20 percent if the vehicle

22 achieves an increase in city fuel econ23 omy relative to a comparable vehicle

24 of at least 30 percent but less than 40

25 percent,
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1 ‘‘(II) 30 percent if the vehicle

2 achieves such an increase of at least

3 40 percent but less than 50 percent,

4 and

5 ‘‘(III) 40 percent if the vehicle

6 achieves such an increase of at least

7 50 percent.

8 ‘‘(iii) QUALIFIED INCREMENTAL HY9 BRID COST.—For purposes of this subpara10 graph, the qualified incremental hybrid

11 cost of any vehicle is equal to the amount

12 of the excess of the manufacturer’s sug13 gested retail price for such vehicle over

14 such price for a comparable vehicle, to the

15 extent such amount does not exceed—

16 ‘‘(I) $7,500, if such vehicle has a

17 gross vehicle weight rating of not

18 more than 14,000 pounds,

19 ‘‘(II) $15,000, if such vehicle has

20 a gross vehicle weight rating of more

21 than 14,000 pounds but not more

22 than 26,000 pounds, and

23 ‘‘(III) $30,000, if such vehicle

24 has a gross vehicle weight rating of

25 more than 26,000 pounds.
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1 ‘‘(iv) COMPARABLE VEHICLE.—For

2 purposes of this subparagraph, the term

3 ‘comparable vehicle’ means, with respect to

4 any new qualified hybrid motor vehicle,

5 any vehicle which is powered solely by a

6 gasoline or diesel internal combustion en7 gine and which is comparable in weight,

8 size, and use to such vehicle.

9 ‘‘(v) CERTIFICATION.—A certification

10 described in clause (i) shall be made by the

11 manufacturer and shall be determined in

12 accordance with guidance prescribed by the

13 Secretary. Such guidance shall specify pro14 cedures and methods for calculating fuel

15 economy savings and incremental hybrid

16 costs.

17 ‘‘(3) NEW QUALIFIED HYBRID MOTOR VEHI18 CLE.—For purposes of this subsection—

19 ‘‘(A) IN GENERAL.—The term ‘new quali20 fied hybrid motor vehicle’ means a motor

21 vehicle—

22 ‘‘(i) which draws propulsion energy

23 from onboard sources of stored energy

24 which are both—
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1 ‘‘(I) an internal combustion or

2 heat engine using consumable fuel,

3 and

4 ‘‘(II) a rechargeable energy stor5 age system,

6 ‘‘(ii) which, in the case of a vehicle to

7 which paragraph (2)(A) applies, has re8 ceived a certificate of conformity under the

9 Clean Air Act and meets or exceeds the

10 equivalent qualifying California low emis11 sion vehicle standard under section

12 243(e)(2) of the Clean Air Act for that

13 make and model year, and

14 ‘‘(I) in the case of a vehicle hav15 ing a gross vehicle weight rating of

16 6,000 pounds or less, the Bin 5 Tier

17 II emission standard established in

18 regulations prescribed by the Adminis19 trator of the Environmental Protec20 tion Agency under section 202(i) of

21 the Clean Air Act for that make and

22 model year vehicle, and

23 ‘‘(II) in the case of a vehicle hav24 ing a gross vehicle weight rating of

25 more than 6,000 pounds but not more
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1 than 8,500 pounds, the Bin 8 Tier II

2 emission standard which is so estab3 lished,

4 ‘‘(iii) which has a maximum available

5 power of at least—

6 ‘‘(I) 4 percent in the case of a ve7 hicle to which paragraph (2)(A) ap8 plies,

9 ‘‘(II) 10 percent in the case of a

10 vehicle which has a gross vehicle

11 weight rating or more than 8,500

12 pounds and not than 14,000 pounds,

13 and

14 ‘‘(III) 15 percent in the case of a

15 vehicle in excess of 14,000 pounds,

16 ‘‘(iv) which, in the case of a vehicle to

17 which paragraph (2)(B) applies, has an in18 ternal combustion or heat engine which

19 has received a certificate of conformity

20 under the Clean Air Act as meeting the

21 emission standards set in the regulations

22 prescribed by the Administrator of the En23 vironmental Protection Agency for 2004

24 through 2007 model year diesel heavy duty
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1 engines or ottocycle heavy duty engines, as

2 applicable,

3 ‘‘(v) the original use of which com4 mences with the taxpayer,

5 ‘‘(vi) which is acquired for use or

6 lease by the taxpayer and not for resale,

7 and

8 ‘‘(vii) which is made by a manufac9 turer.

10 Such term shall not include any vehicle which

11 is not a passenger automobile or light truck if

12 such vehicle has a gross vehicle weight rating of

13 less than 8,500 pounds.

14 ‘‘(B) CONSUMABLE FUEL.—For purposes

15 of subparagraph (A)(i)(I), the term ‘consumable

16 fuel’ means any solid, liquid, or gaseous matter

17 which releases energy when consumed by an

18 auxiliary power unit.

19 ‘‘(C) MAXIMUM AVAILABLE POWER.—

20 ‘‘(i) CERTAIN PASSENGER AUTO21 MOBILES AND LIGHT TRUCKS.—In the case

22 of a vehicle to which paragraph (2)(A) ap23 plies, the term ‘maximum available power’

24 means the maximum power available from

25 the rechargeable energy storage system,
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1 during a standard 10 second pulse power

2 or equivalent test, divided by such max3 imum power and the SAE net power of the

4 heat engine.

5 ‘‘(ii) OTHER MOTOR VEHICLES.—In

6 the case of a vehicle to which paragraph

7 (2)(B) applies, the term ‘maximum avail8 able power’ means the maximum power

9 available from the rechargeable energy

10 storage system, during a standard 10 sec11 ond pulse power or equivalent test, divided

12 by the vehicle’s total traction power. For

13 purposes of the preceding sentence, the

14 term ‘total traction power’ means the sum

15 of the peak power from the rechargeable

16 energy storage system and the heat engine

17 peak power of the vehicle, except that if

18 such storage system is the sole means by

19 which the vehicle can be driven, the total

20 traction power is the peak power of such

21 storage system.

22 ‘‘(e) NEW QUALIFIED ALTERNATIVE FUEL MOTOR

23 VEHICLE CREDIT.—

24 ‘‘(1) ALLOWANCE OF CREDIT.—Except as pro25 vided in paragraph (5), the new qualified alternative
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1 fuel motor vehicle credit determined under this sub2 section is an amount equal to the applicable percent3 age of the incremental cost of any new qualified al4 ternative fuel motor vehicle placed in service by the

5 taxpayer during the taxable year.

6 ‘‘(2) APPLICABLE PERCENTAGE.—For purposes

7 of paragraph (1), the applicable percentage with re8 spect to any new qualified alternative fuel motor ve9 hicle is—

10 ‘‘(A) 40 percent, plus

11 ‘‘(B) 30 percent, if such vehicle—

12 ‘‘(i) has received a certificate of con13 formity under the Clean Air Act and meets

14 or exceeds the most stringent standard

15 available for certification under the Clean

16 Air Act for that make and model year vehi17 cle (other than a zero emission standard),

18 or

19 ‘‘(ii) has received an order certifying

20 the vehicle as meeting the same require21 ments as vehicles which may be sold or

22 leased in California and meets or exceeds

23 the most stringent standard available for

24 certification under the State laws of Cali25 fornia (enacted in accordance with a waiv-
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1 er granted under section 209(b) of the

2 Clean Air Act) for that make and model

3 year vehicle (other than a zero emission

4 standard).

5 For purposes of the preceding sentence, in the case

6 of any new qualified alternative fuel motor vehicle

7 which has a gross vehicle weight rating of more than

8 14,000 pounds, the most stringent standard avail9 able shall be such standard available for certification

10 on the date of the enactment of the Energy Tax Pol11 icy Act of 2003.

12 ‘‘(3) INCREMENTAL COST.—For purposes of

13 this subsection, the incremental cost of any new

14 qualified alternative fuel motor vehicle is equal to

15 the amount of the excess of the manufacturer’s sug16 gested retail price for such vehicle over such price

17 for a gasoline or diesel fuel motor vehicle of the

18 same model, to the extent such amount does not

19 exceed—

20 ‘‘(A) $5,000, if such vehicle has a gross ve21 hicle weight rating of not more than 8,500

22 pounds,

23 ‘‘(B) $10,000, if such vehicle has a gross

24 vehicle weight rating of more than 8,500

25 pounds but not more than 14,000 pounds,
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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

9 subsection—

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,
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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-
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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-
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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 ‘‘(f) LIMITATION ON NUMBER OF NEW QUALIFIED

10 HYBRID AND ADVANCED LEAN-BURN TECHNOLOGY VE11 HICLES ELIGIBLE FOR CREDIT.—

12 ‘‘(1) IN GENERAL.—In the case of a qualified

13 vehicle sold during the phaseout period, only the ap14 plicable percentage of the credit otherwise allowable

15 under subsection (c) or (d) shall be allowed.

16 ‘‘(2) PHASEOUT PERIOD.—For purposes of this

17 subsection, the phaseout period is the period begin18 ning with the second calendar quarter following the

19 calendar quarter which includes the first date on

20 which the number of qualified vehicles manufactured

21 by the manufacturer of the vehicle referred to in

22 paragraph (1) sold for use in the United States after

23 the date of the enactment of this section is at least

24 80,000.
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1 ‘‘(3) APPLICABLE PERCENTAGE.—For purposes

2 of paragraph (1), the applicable percentage is—

3 ‘‘(A) 50 percent for the first 2 calendar

4 quarters of the phaseout period,

5 ‘‘(B) 25 percent for the 3d and 4th cal6 endar quarters of the phaseout period, and

7 ‘‘(C) 0 percent for each calendar quarter

8 thereafter.

9 ‘‘(4) CONTROLLED GROUPS.—

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

11 subsection, all persons treated as a single em12 ployer under subsection (a) or (b) of section 52

13 or subsection (m) or (o) of section 414 shall be

14 treated as a single manufacturer.

15 ‘‘(B) INCLUSION OF FOREIGN CORPORA16 TIONS.—For purposes of subparagraph (A), in

17 applying subsections (a) and (b) of section 52

18 to this section, section 1563 shall be applied

19 without regard to subsection (b)(2)(C) thereof.

20 ‘‘(5) QUALIFIED VEHICLE.—For purposes of

21 this subsection, the term ‘qualified vehicle’ means

22 any new qualified hybrid motor vehicle and any new

23 advanced lean burn technology motor vehicle.
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1 ‘‘(g) LIMITATION BASED ON AMOUNT OF TAX.—The

2 credit allowed under subsection (a) for the taxable year

3 shall not exceed the excess of—

4 ‘‘(1) the sum of the regular tax liability (as de5 fined in section 26(b)) plus the tax imposed by sec6 tion 55, over

7 ‘‘(2) the sum of the credits allowable under sub8 part A and sections 27 and 30 for the taxable year.

9 ‘‘(h) OTHER DEFINITIONS AND SPECIAL RULES.—

10 For purposes of this section—

11 ‘‘(1) MOTOR VEHICLE.—The term ‘motor vehi12 cle’ has the meaning given such term by section

13 30(c)(2).

14 ‘‘(2) OTHER TERMS.—The terms ‘automobile’,

15 ‘passenger automobile’, ‘light truck’, and ‘manufac16 turer’ have the meanings given such terms in regula17 tions prescribed by the Administrator of the Envi18 ronmental Protection Agency for purposes of the ad19 ministration of title II of the Clean Air Act (42

20 U.S.C. 7521 et seq.).

21 ‘‘(3) 2002 MODEL YEAR CITY FUEL ECON22 OMY.—

23 ‘‘(A) IN GENERAL.—The 2002 model year

24 city fuel economy with respect to a vehicle shall
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1 be determined in accordance with the following

2 tables:

3 ‘‘(i) In the case of a passenger auto4 mobile:

5 ‘‘(ii) In the case of a light truck:

6 ‘‘(B) VEHICLE INERTIA WEIGHT CLASS.—

7 For purposes of subparagraph (A), the term

8 ‘vehicle inertia weight class’ has the same

9 meaning as when defined in regulations pre10 scribed by the Administrator of the Environ11 mental Protection Agency for purposes of the

12 administration of title II of the Clean Air Act

13 (42 U.S.C. 7521 et seq.).

14 ‘‘(4) FUEL ECONOMY.—Fuel economy with re15 spect to any vehicle shall be measured under rules

16 similar to the rules under section 4064(c).

17 ‘‘(5) REDUCTION IN BASIS.—For purposes of

18 this subtitle, if a credit is allowed under this section

19 for any expenditure with respect to any property, the

20 increase in the basis of such property which would

21 (but for this paragraph) result from such expendi22 ture shall be reduced by the amount of the credit so

23 allowed.

24 ‘‘(6) NO DOUBLE BENEFIT.—The amount of

25 any deduction or credit allowable under this chapter
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1 (other than the credits allowable under this section

2 and section 30) shall be reduced by the amount of

3 credit allowed under subsection (a) for such vehicle

4 for the taxable year.

5 ‘‘(7) RECAPTURE.—The Secretary shall, by reg6 ulations, provide for recapturing the benefit of any

7 credit allowable under subsection (a) with respect to

8 any property which ceases to be property eligible for

9 such credit (including recapture in the case of a

10 lease period of less than the economic life of a vehi11 cle).

12 ‘‘(8) PROPERTY USED OUTSIDE UNITED

13 STATES, ETC., NOT QUALIFIED.—No credit shall be

14 allowed under subsection (a) with respect to any

15 property referred to in section 50(b) or with respect

16 to the portion of the cost of any property taken into

17 account under section 179.

18 ‘‘(9) ELECTION NOT TO TAKE CREDIT.—No

19 credit shall be allowed under subsection (a) for any

20 vehicle if the taxpayer elects to not have this section

21 apply to such vehicle.

22 ‘‘(10) BUSINESS CARRYOVERS ALLOWED.—If

23 the credit allowable under subsection (a) for a tax24 able year exceeds the limitation under subsection (g)

25 for such taxable year, such excess (to the extent of
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1 the credit allowable with respect to property subject

2 to the allowance for depreciation) shall be allowed as

3 a credit carryback and carryforward under rules

4 similar to the rules of section 39.

5 ‘‘(11) INTERACTION WITH MOTOR VEHICLE

6 SAFETY STANDARDS.—Unless otherwise provided in

7 this section, a motor vehicle shall not be considered

8 eligible for a credit under this section unless such

9 vehicle is in compliance with the motor vehicle safety

10 provisions of sections 30101 through 30169 of title

11 49, United States Code.

12 ‘‘(i) REGULATIONS.—

13 ‘‘(1) IN GENERAL.—The Secretary shall pro14 mulgate such regulations as necessary to carry out

15 the provisions of this section.

16 ‘‘(2) DETERMINATION OF MOTOR VEHICLE ELI17 GIBILITY.—The Secretary, after coordination with

18 the Secretary of Transportation and the Adminis19 trator of the Environmental Protection Agency, shall

20 prescribe such regulations as necessary to determine

21 whether a motor vehicle meets the requirements to

22 be eligible for a credit under this section.

23 ‘‘(j) TERMINATION.—This section shall not apply to

24 any property placed in service after—
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1 ‘‘(1) in the case of a new qualified alternative

2 fuel motor vehicle, December 31, 2006,

3 ‘‘(2) in the case of a new advanced lean burn

4 technology motor vehicle or a new qualified hybrid

5 motor vehicle, December 31, 2008, and

6 ‘‘(3) in the case of a new qualified fuel cell

7 motor vehicle, December 31, 2012.’’.

8 (b) CONFORMING AMENDMENTS.—

9 (1) Section 30(d) (relating to special rules) is

10 amended by adding at the end the following new

11 paragraphs:

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

13 allowed under this section for any motor vehicle for

14 which a credit is also allowed under section 30B.’’.

15 (2) Section 1016(a), as amended by this Act, is

16 amended by striking ‘‘and’’ at the end of paragraph

17 (31), by striking the period at the end of paragraph

18 (32) and inserting ‘‘, and’’, and by adding at the

19 end the following:

20 ‘‘(33) to the extent provided in section

21 30B(h)(5).’’.

22 (3) Section 6501(m) is amended by inserting

23 ‘‘30B(h)(9),’’ after ‘‘30(d)(4),’’.

24 (4) The table of sections for subpart B of part

25 IV of subchapter A of chapter 1 is amended by in-
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1 serting after the item relating to section 30A the fol2 lowing:

‘‘Sec. 30B. Alternative motor vehicle credit.’’.

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

4 this section shall apply to property placed in service after

5 the date of the enactment of this Act, in taxable years

6 ending after such date.

7 (d) STICKER INFORMATION REQUIRED AT RETAIL

8 SALE.—

9 (1) IN GENERAL.—The Secretary of the Treas10 ury shall issue regulations under which each quali11 fied vehicle sold at retail shall display a notice—

12 (A) that such vehicle is a qualified vehicle,

13 and

14 (B) that the buyer may not benefit from

15 the credit allowed under section 30B of the In16 ternal Revenue Code of 1986 if such buyer has

17 insufficient tax liability.

18 (2) QUALIFIED VEHICLE.—For purposes of

19 paragraph (1), the term ‘‘qualified vehicle’’ means a

20 vehicle with respect to which a credit is allowed

21 under section 30B of the Internal Revenue Code of

22 1986.
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1 SEC. 1319. MODIFICATIONS OF DEDUCTION FOR CERTAIN

2 REFUELING PROPERTY.

3 (a) IN GENERAL.—Subsection (f) of section 179A is

4 amended to read as follows:

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

6 any property placed in service—

7 ‘‘(1) in the case of property relating to hydro8 gen, after December 31, 2011, and

9 ‘‘(2) in the case of any other property, after

10 December 31, 2008.’’.

11 (b) INCENTIVE FOR PRODUCTION OF HYDROGEN AT

12 QUALIFIED CLEAN-FUEL VEHICLE REFUELING PROP13 ERTY.—Section 179A(d) (defining qualified clean-fuel ve14 hicle refueling property) is amended by adding at the end

15 the following new flush sentence:

16 ‘‘In the case of clean-burning fuel which is hydrogen pro17 duced from another clean-burning fuel, paragraph (3)(A)

18 shall be applied by substituting ‘production, storage, or

19 dispensing’ for ‘storage or dispensing’ both places it ap20 pears.’’.

21 (c) INCREASE IN LOCATION EXPENDITURES.—Sec22 tion 179A(b)(2)(A)(i) is amended by striking ‘‘$100,000’’

23 and inserting ‘‘$150,000’’.

24 (d) NONBUSINESS USE OF QUALIFIED CLEAN-FUEL

25 VEHICLE REFUELING PROPERTY.—Section 179A(d) is

26 amended by striking paragraph (1) and by redesignating
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1 paragraphs (2) and (3) as paragraphs (1) and (2), respec2 tively.

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

4 this section shall apply to property placed in service after

5 the date of the enactment of this Act, in taxable years

6 ending after such date.

7 Subtitle B—Reliability

8 SEC. 1321. NATURAL GAS GATHERING LINES TREATED AS 7–

9 YEAR PROPERTY.

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

11 168(e)(3) (relating to classification of certain property) is

12 amended by striking ‘‘and’’ at the end of clause (i), by

13 redesignating clause (ii) as clause (iii), and by inserting

14 after clause (i) the following new clause:

15 ‘‘(ii) any natural gas gathering line,

16 and’’.

17 (b) NATURAL GAS GATHERING LINE.—Subsection (i)

18 of section 168, as amended by this Act, is amended by

19 adding after paragraph (15) the following new paragraph:

20 ‘‘(16) NATURAL GAS GATHERING LINE.—The

21 term ‘natural gas gathering line’ means—

22 ‘‘(A) the pipe, equipment, and appur23 tenances determined to be a gathering line by

24 the Federal Energy Regulatory Commission, or
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1 ‘‘(B) the pipe, equipment, and appur2 tenances used to deliver natural gas from the

3 wellhead or a commonpoint to the point at

4 which such gas first reaches—

5 ‘‘(i) a gas processing plant,

6 ‘‘(ii) an interconnection with a trans7 mission pipeline for which a certificate as

8 an interstate transmission pipeline has

9 been issued by the Federal Energy Regu10 latory Commission,

11 ‘‘(iii) an interconnection with an

12 intrastate transmission pipeline, or

13 ‘‘(iv) a direct interconnection with a

14 local distribution company, a gas storage

15 facility, or an industrial consumer.’’.

16 (c) ALTERNATIVE SYSTEM.—The table contained in

17 section 168(g)(3)(B) is amended by inserting after the

18 item relating to subparagraph (C)(i) the following:

‘‘(C) (ii) ..................................................................................................... 14’’.

19 (d) ALTERNATIVE MINIMUM TAX EXCEPTION.—Sub20 paragraph (B) of section 56(a)(1) is amended by inserting

21 before the period the following: ‘‘, or in section

22 168(e)(3)(C)(ii)’’.

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

24 this section shall apply to property placed in service after
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1 the date of the enactment of this Act, in taxable years

2 ending after such date.

3 SEC. 1322. NATURAL GAS DISTRIBUTION LINES TREATED

4 AS 15-YEAR PROPERTY.

5 (a) IN GENERAL.—Subparagraph (E) of section

6 168(e)(3) (relating to classification of certain property) is

7 amended by striking ‘‘and’’ at the end of clause (ii), by

8 striking the period at the end of clause (iii) and by insert9 ing ‘‘, and’’, and by adding at the end the following new

10 clause:

11 ‘‘(iv) any natural gas distribution

12 line.’’.

13 (b) ALTERNATIVE SYSTEM.—The table contained in

14 section 168(g)(3)(B) is amended by inserting after the

15 item relating to subparagraph (E)(iii) the following:

‘‘(E) (iv) .................................................................................................... 35’’.

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

17 this section shall apply to property placed in service after

18 the date of the enactment of this Act, in taxable years

19 ending after such date.

20 SEC. 1323. ELECTRIC TRANSMISSION PROPERTY TREATED

21 AS 15-YEAR PROPERTY.

22 (a) IN GENERAL.—Subparagraph (E) of section

23 168(e)(3) (relating to classification of certain property),

24 as amended by this Act, is amended by striking ‘‘and’’

25 at the end of clause (iii), by striking the period at the
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1 end of clause (iv) and by inserting ‘‘, and’’, and by adding

2 at the end the following new clause:

3 ‘‘(v) any section 1245 property (as de4 fined in section 1245(a)(3)) used in the

5 transmission at 69 or more kilovolts of

6 electricity for sale the original use of which

7 commences with the taxpayer after the

8 date of the enactment of this clause.’’.

9 (b) ALTERNATIVE SYSTEM.—The table contained in

10 section 168(g)(3)(B) is amended by inserting after the

11 item relating to subparagraph (E)(iv) the following:

‘‘(E) (v) ..................................................................................................... 30’’.

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

13 this section shall apply to property placed in service after

14 the date of the enactment of this Act, in taxable years

15 ending after such date.

16 SEC. 1324. EXPENSING OF CAPITAL COSTS INCURRED IN

17 COMPLYING WITH ENVIRONMENTAL PROTEC18 TION AGENCY SULFUR REGULATIONS.

19 (a) IN GENERAL.—Part VI of subchapter B of chap20 ter 1 (relating to itemized deductions for individuals and

21 corporations), as amended by this Act, is amended by in22 serting after section 179B the following new section:
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1 ‘‘SEC. 179C. DEDUCTION FOR CAPITAL COSTS INCURRED IN

2 COMPLYING WITH ENVIRONMENTAL PROTEC3 TION AGENCY SULFUR REGULATIONS.

4 ‘‘(a) TREATMENT AS EXPENSES.—A small business

5 refiner (as defined in section 45I(c)(1)) may elect to treat

6 75 percent of qualified capital costs (as defined in section

7 45I(c)(2)) which are paid or incurred by the taxpayer dur8 ing the taxable year as expenses which are not chargeable

9 to capital account. Any cost so treated shall be allowed

10 as a deduction for the taxable year in which paid or in11 curred.

12 ‘‘(b) REDUCED PERCENTAGE.—In the case of a small

13 business refiner with average daily domestic refinery runs

14 for the 1-year period ending on December 31, 2002, in

15 excess of 155,000 barrels, the number of percentage

16 points described in subsection (a) shall be reduced (not

17 below zero) by the product of such number (before the

18 application of this subsection) and the ratio of such excess

19 to 50,000 barrels.

20 ‘‘(c) BASIS REDUCTION.—

21 ‘‘(1) IN GENERAL.—For purposes of this title,

22 the basis of any property shall be reduced by the

23 portion of the cost of such property taken into ac24 count under subsection (a).

25 ‘‘(2) ORDINARY INCOME RECAPTURE.—For

26 purposes of section 1245, the amount of the deduc-
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1 tion allowable under subsection (a) with respect to

2 any property which is of a character subject to the

3 allowance for depreciation shall be treated as a de4 duction allowed for depreciation under section 167.’’.

5 ‘‘(d) COORDINATION WITH OTHER PROVISIONS.—

6 Section 280B shall not apply to amounts which are treated

7 as expenses under this section.’’.

8 (b) CONFORMING AMENDMENTS.—

9 (1) Section 263(a)(1), as amended by this Act,

10 is amended by striking ‘‘or’’ at the end of subpara11 graph (H), by striking the period at the end of sub12 paragraph (I) and inserting ‘‘; or’’, and by adding

13 at the end the following new subparagraph:

14 ‘‘(J) expenditures for which a deduction is

15 allowed under section 179C.’’.

16 (2) Section 263A(c)(3) is amended by inserting

17 ‘‘179C,’’ after ‘‘section’’.

18 (3) Section 312(k)(3)(B), as amended by this

19 Act, is amended by striking ‘‘or 179B’’ each place

20 it appears in the heading and text and inserting

21 ‘‘179B, or 179C’’.

22 (4) Section 1016(a), as amended by this Act, is

23 amended by striking ‘‘and’’ at the end of paragraph

24 (32), by striking the period at the end of paragraph
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1 (33) and inserting ‘‘, and’’, and by adding at the

2 end the following new paragraph:

3 ‘‘(34) to the extent provided in section

4 179C(c).’’.

5 (5) Paragraphs (2)(C) and (3)(C) of section

6 1245(a), as amended by this Act, are each amended

7 by inserting ‘‘179C,’’ after ‘‘179B,’’.

8 (6) The table of sections for part VI of sub9 chapter B of chapter 1, as amended by this Act, is

10 amended by inserting after the item relating to sec11 tion 179B the following new item:

‘‘Sec. 179C. Deduction for capital costs incurred in complying with Environmental Protection Agency sulfur regulations.’’.

12 (c) EFFECTIVE DATE.—The amendment made by

13 this section shall apply to expenses paid or incurred after

14 December 31, 2002, in taxable years ending after such

15 date.

16 SEC. 1325. CREDIT FOR PRODUCTION OF LOW SULFUR DIE17 SEL FUEL.

18 (a) IN GENERAL.—Subpart D of part IV of sub19 chapter A of chapter 1 (relating to business-related cred20 its), as amended by this Act, is amended by adding at

21 the end the following new section:
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1 ‘‘SEC. 45I. CREDIT FOR PRODUCTION OF LOW SULFUR DIE2 SEL FUEL.

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

4 amount of the low sulfur diesel fuel production credit de5 termined under this section with respect to any facility

6 of a small business refiner is an amount equal to 5 cents

7 for each gallon of low sulfur diesel fuel produced during

8 the taxable year by such small business refiner at such

9 facility.

10 ‘‘(b) MAXIMUM CREDIT.—

11 ‘‘(1) IN GENERAL.—The aggregate credit deter12 mined under subsection (a) for any taxable year with

13 respect to any facility shall not exceed—

14 ‘‘(A) 25 percent of the qualified capital

15 costs incurred by the small business refiner

16 with respect to such facility, reduced by

17 ‘‘(B) the aggregate credits determined

18 under this section for all prior taxable years

19 with respect to such facility.

20 ‘‘(2) REDUCED PERCENTAGE.—In the case of a

21 small business refiner with average daily domestic

22 refinery runs for the 1-year period ending on De23 cember 31, 2002, in excess of 155,000 barrels, the

24 number of percentage points described in paragraph

25 (1) shall be reduced (not below zero) by the product

26 of such number (before the application of this para-
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1 graph) and the ratio of such excess to 50,000 bar2 rels.

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

5 ‘‘(1) SMALL BUSINESS REFINER.—The term

6 ‘small business refiner’ means, with respect to any

7 taxable year, a refiner of crude oil—

8 ‘‘(A) with respect to which not more than

9 1,500 individuals are engaged in the refinery

10 operations of the business on any day during

11 such taxable year, and

12 ‘‘(B) the average daily domestic refinery

13 run or average retained production of which for

14 all facilities of the taxpayer for the 1-year pe15 riod ending on December 31, 2002, did not ex16 ceed 205,000 barrels.

17 ‘‘(2) QUALIFIED CAPITAL COSTS.—The term

18 ‘qualified capital costs’ means, with respect to any

19 facility, those costs paid or incurred during the ap20 plicable period for compliance with the applicable

21 EPA regulations with respect to such facility, includ22 ing expenditures for the construction of new process

23 operation units or the dismantling and reconstruc24 tion of existing process units to be used in the pro25 duction of low sulfur diesel fuel, associated adjacent
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1 or offsite equipment (including tankage, catalyst,

2 and power supply), engineering, construction period

3 interest, and sitework.

4 ‘‘(3) APPLICABLE EPA REGULATIONS.—The

5 term ‘applicable EPA regulations’ means the High6 way Diesel Fuel Sulfur Control Requirements of the

7 Environmental Protection Agency.

8 ‘‘(4) APPLICABLE PERIOD.—The term ‘applica9 ble period’ means, with respect to any facility, the

10 period beginning on January 1, 2003, and ending on

11 the earlier of the date which is 1 year after the date

12 on which the taxpayer must comply with the applica13 ble EPA regulations with respect to such facility or

14 December 31, 2009.

15 ‘‘(5) LOW SULFUR DIESEL FUEL.—The term

16 ‘low sulfur diesel fuel’ means diesel fuel with a sul17 fur content of 15 parts per million or less.

18 ‘‘(d) REDUCTION IN BASIS.—For purposes of this

19 subtitle, if a credit is determined under this section for

20 any expenditure with respect to any property, the increase

21 in basis of such property which would (but for this sub22 section) result from such expenditure shall be reduced by

23 the amount of the credit so determined.

24 ‘‘(e) SPECIAL RULE FOR DETERMINATION OF REFIN25 ERY RUNS.—For purposes this section and section
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1 179C(b), in the calculation of average daily domestic refin2 ery run or retained production, only refineries which on

3 April 1, 2003, were refineries of the refiner or a related

4 person (within the meaning of section 613A(d)(3)), shall

5 be taken into account.

6 ‘‘(f) CERTIFICATION.—

7 ‘‘(1) REQUIRED.—No credit shall be allowed

8 unless, not later than the date which is 30 months

9 after the first day of the first taxable year in which

10 the low sulfur diesel fuel production credit is allowed

11 with respect to a facility, the small business refiner

12 obtains certification from the Secretary, after con13 sultation with the Administrator of the Environ14 mental Protection Agency, that the taxpayer’s quali15 fied capital costs with respect to such facility will re16 sult in compliance with the applicable EPA regula17 tions.

18 ‘‘(2) CONTENTS OF APPLICATION.—An applica19 tion for certification shall include relevant informa20 tion regarding unit capacities and operating charac21 teristics sufficient for the Secretary, after consulta22 tion with the Administrator of the Environmental

23 Protection Agency, to determine that such qualified

24 capital costs are necessary for compliance with the

25 applicable EPA regulations.
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1 ‘‘(3) REVIEW PERIOD.—Any application shall

2 be reviewed and notice of certification, if applicable,

3 shall be made within 60 days of receipt of such ap4 plication. In the event the Secretary does not notify

5 the taxpayer of the results of such certification with6 in such period, the taxpayer may presume the cer7 tification to be issued until so notified.

8 ‘‘(4) STATUTE OF LIMITATIONS.—With respect

9 to the credit allowed under this section—

10 ‘‘(A) the statutory period for the assess11 ment of any deficiency attributable to such

12 credit shall not expire before the end of the 3-

13 year period ending on the date that the review

14 period described in paragraph (3) ends with re15 spect to the taxpayer, and

16 ‘‘(B) such deficiency may be assessed be17 fore the expiration of such 3-year period not18 withstanding the provisions of any other law or

19 rule of law which would otherwise prevent such

20 assessment.

21 ‘‘(g) COOPERATIVE ORGANIZATIONS.—

22 ‘‘(1) APPORTIONMENT OF CREDIT.—

23 ‘‘(A) IN GENERAL.—In the case of a coop24 erative organization described in section

25 1381(a), any portion of the credit determined
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1 under subsection (a) for the taxable year may,

2 at the election of the organization, be appor3 tioned among patrons eligible to share in pa4 tronage dividends on the basis of the quantity

5 or value of business done with or for such pa6 trons for the taxable year.

7 ‘‘(B) FORM AND EFFECT OF ELECTION.—

8 An election under subparagraph (A) for any

9 taxable year shall be made on a timely filed re10 turn for such year. Such election, once made,

11 shall be irrevocable for such taxable year.

12 ‘‘(2) TREATMENT OF ORGANIZATIONS AND PA13 TRONS.—

14 ‘‘(A) ORGANIZATIONS.—The amount of the

15 credit not apportioned to patrons pursuant to

16 paragraph (1) shall be included in the amount

17 determined under subsection (a) for the taxable

18 year of the organization.

19 ‘‘(B) PATRONS.—The amount of the credit

20 apportioned to patrons pursuant to paragraph

21 (1) shall be included in the amount determined

22 under subsection (a) for the first taxable year

23 of each patron ending on or after the last day

24 of the payment period (as defined in section

25 1382(d)) for the taxable year of the organiza-
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1 tion or, if earlier, for the taxable year of each

2 patron ending on or after the date on which the

3 patron receives notice from the cooperative of

4 the apportionment.

5 ‘‘(3) SPECIAL RULE.—If the amount of a credit

6 which has been apportioned to any patron under this

7 subsection is decreased for any reason—

8 ‘‘(A) such amount shall not increase the

9 tax imposed on such patron, and

10 ‘‘(B) the tax imposed by this chapter on

11 such organization shall be increased by such

12 amount.

13 The increase under subparagraph (B) shall not be

14 treated as tax imposed by this chapter for purposes

15 of determining the amount of any credit under this

16 chapter or for purposes of section 55.’’.

17 (b) CREDIT MADE PART OF GENERAL BUSINESS

18 CREDIT.—Subsection (b) of section 38 (relating to general

19 business credit), as amended by this Act, is amended by

20 striking ‘‘plus’’ at the end of paragraph (17), by striking

21 the period at the end of paragraph (18) and inserting ‘‘,

22 plus’’, and by adding at the end the following new para23 graph:
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1 ‘‘(19) in the case of a small business refiner,

2 the low sulfur diesel fuel production credit deter3 mined under section 45I(a).’’.

4 (c) DENIAL OF DOUBLE BENEFIT.—Section 280C

5 (relating to certain expenses for which credits are allow6 able) is amended by adding at the end the following new

7 subsection:

8 ‘‘(d) LOW SULFUR DIESEL FUEL PRODUCTION

9 CREDIT.—No deduction shall be allowed for that portion

10 of the expenses otherwise allowable as a deduction for the

11 taxable year which is equal to the amount of the credit

12 determined for the taxable year under section 45I(a).’’.

13 (d) BASIS ADJUSTMENT.—Section 1016(a) (relating

14 to adjustments to basis), as amended by this Act, is

15 amended by striking ‘‘and’’ at the end of paragraph (33),

16 by striking the period at the end of paragraph (34) and

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

18 new paragraph:

19 ‘‘(35) in the case of a facility with respect to

20 which a credit was allowed under section 45I, to the

21 extent provided in section 45I(d).’’.

22 (e) DEDUCTION FOR CERTAIN UNUSED BUSINESS

23 CREDITS.—Section 196(c) (defining qualified business

24 credits), as amended by this Act, is amended by striking

25 ‘‘and’’ at the end of paragraph (12), by striking the period
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1 at the end of paragraph (13) and inserting ‘‘, and’’, and

2 by adding after paragraph (13) the following new para3 graph:

4 ‘‘(14) the low sulfur diesel fuel production cred5 it determined under section 45I(a).’’.

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

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

8 as amended by this Act, is amended by adding at the end

9 the following new item:

‘‘Sec. 45I. Credit for production of low sulfur diesel fuel.’’.

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

11 this section shall apply to expenses paid or incurred after

12 December 31, 2002, in taxable years ending after such

13 date.

14 SEC. 1326. DETERMINATION OF SMALL REFINER EXCEP15 TION TO OIL DEPLETION DEDUCTION.

16 (a) IN GENERAL.—Paragraph (4) of section 613A(d)

17 (relating to limitations on application of subsection (c))

18 is amended to read as follows:

19 ‘‘(4) CERTAIN REFINERS EXCLUDED.—If the

20 taxpayer or 1 or more related persons engages in the

21 refining of crude oil, subsection (c) shall not apply

22 to the taxpayer for a taxable year if the average

23 daily refinery runs of the taxpayer and such persons

24 for the taxable year exceed 67,500 barrels. For pur25 poses of this paragraph, the average daily refinery
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1 runs for any taxable year shall be determined by di2 viding the aggregate refinery runs for the taxable

3 year by the number of days in the taxable year.’’.

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

5 this section shall apply to taxable years ending after the

6 date of the enactment of this Act.

7 SEC. 1327. SALES OR DISPOSITIONS TO IMPLEMENT FED8 ERAL ENERGY REGULATORY COMMISSION

9 OR STATE ELECTRIC RESTRUCTURING POL10 ICY.

11 (a) IN GENERAL.—Section 451 (relating to general

12 rule for taxable year of inclusion) is amended by adding

13 at the end the following new subsection:

14 ‘‘(i) SPECIAL RULE FOR SALES OR DISPOSITIONS TO

15 IMPLEMENT FEDERAL ENERGY REGULATORY COMMIS16 SION OR STATE ELECTRIC RESTRUCTURING POLICY.—

17 ‘‘(1) IN GENERAL.—In the case of any quali18 fying electric transmission transaction for which the

19 taxpayer elects the application of this section, quali20 fied gain from such transaction shall be

21 recognized—

22 ‘‘(A) in the taxable year which includes the

23 date of such transaction to the extent the

24 amount realized from such transaction

25 exceeds—
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1 ‘‘(i) the cost of exempt utility property

2 which is purchased by the taxpayer during

3 the 4-year period beginning on such date,

4 reduced (but not below zero) by

5 ‘‘(ii) any portion of such cost pre6 viously taken into account under this sub7 section, and

8 ‘‘(B) ratably over the 8-taxable year period

9 beginning with the taxable year which includes

10 the date of such transaction, in the case of any

11 such gain not recognized under subparagraph

12 (A).

13 ‘‘(2) QUALIFIED GAIN.—For purposes of this

14 subsection, the term ‘qualified gain’ means, with re15 spect to any qualifying electric transmission trans16 action in any taxable year—

17 ‘‘(A) any ordinary income derived from

18 such transaction which would be required to be

19 recognized under section 1245 or 1250 for such

20 taxable year (determined without regard to this

21 subsection), and

22 ‘‘(B) any income derived from such trans23 action in excess of the amount described in sub24 paragraph (A) which is required to be included
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1 in gross income for such taxable year (deter2 mined without regard to this subsection).

3 ‘‘(3) QUALIFYING ELECTRIC TRANSMISSION

4 TRANSACTION.—For purposes of this subsection, the

5 term ‘qualifying electric transmission transaction’

6 means any sale or other disposition before January

7 1, 2007, of—

8 ‘‘(A) property used in the trade or business

9 of providing electric transmission services, or

10 ‘‘(B) any stock or partnership interest in a

11 corporation or partnership, as the case may be,

12 whose principal trade or business consists of

13 providing electric transmission services,

14 but only if such sale or disposition is to an inde15 pendent transmission company.

16 ‘‘(4) INDEPENDENT TRANSMISSION COM17 PANY.—For purposes of this subsection, the term

18 ‘independent transmission company’ means—

19 ‘‘(A) an independent transmission provider

20 approved by the Federal Energy Regulatory

21 Commission,

22 ‘‘(B) a person—

23 ‘‘(i) who the Federal Energy Regu24 latory Commission determines in its au25 thorization of the transaction under section
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1 203 of the Federal Power Act (16 U.S.C.

2 824b) or by declaratory order is not a

3 market participant within the meaning of

4 such Commission’s rules applicable to inde5 pendent transmission providers, and

6 ‘‘(ii) whose transmission facilities to

7 which the election under this subsection

8 applies are under the operational control of

9 a Federal Energy Regulatory Commission10 approved independent transmission pro11 vider before the close of the period speci12 fied in such authorization, but not later

13 than the close of the period applicable

14 under subsection (a)(2)(B) as extended

15 under paragraph (2), or

16 ‘‘(C) in the case of facilities subject to the

17 jurisdiction of the Public Utility Commission of

18 Texas—

19 ‘‘(i) a person which is approved by

20 that Commission as consistent with Texas

21 State law regarding an independent trans22 mission provider, or

23 ‘‘(ii) a political subdivision or affiliate

24 thereof whose transmission facilities are
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1 under the operational control of a person

2 described in clause (i).

3 ‘‘(5) EXEMPT UTILITY PROPERTY.—For pur4 poses of this subsection—

5 ‘‘(A) IN GENERAL.—The term ‘exempt

6 utility property’ means property used in the

7 trade or business of—

8 ‘‘(i) generating, transmitting, distrib9 uting, or selling electricity, or

10 ‘‘(ii) producing, transmitting, distrib11 uting, or selling natural gas.

12 ‘‘(B) NONRECOGNITION OF GAIN BY REA13 SON OF ACQUISITION OF STOCK.—Acquisition of

14 control of a corporation shall be taken into ac15 count under this subsection with respect to a

16 qualifying electric transmission transaction only

17 if the principal trade or business of such cor18 poration is a trade or business referred to in

19 subparagraph (A).

20 ‘‘(6) SPECIAL RULE FOR CONSOLIDATED

21 GROUPS.—In the case of a corporation which is a

22 member of an affiliated group filing a consolidated

23 return, any exempt utility property purchased by an24 other member of such group shall be treated as pur-
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1 chased by such corporation for purposes of applying

2 paragraph (1)(A).

3 ‘‘(7) TIME FOR ASSESSMENT OF DEFI4 CIENCIES.—If the taxpayer has made the election

5 under paragraph (1) and any gain is recognized by

6 such taxpayer as provided in paragraph (1)(B),

7 then—

8 ‘‘(A) the statutory period for the assess9 ment of any deficiency, for any taxable year in

10 which any part of the gain on the transaction

11 is realized, attributable to such gain shall not

12 expire prior to the expiration of 3 years from

13 the date the Secretary is notified by the tax14 payer (in such manner as the Secretary may by

15 regulations prescribe) of the purchase of exempt

16 utility property or of an intention not to pur17 chase such property, and

18 ‘‘(B) such deficiency may be assessed be19 fore the expiration of such 3-year period not20 withstanding any law or rule of law which

21 would otherwise prevent such assessment.

22 ‘‘(8) PURCHASE.—For purposes of this sub23 section, the taxpayer shall be considered to have

24 purchased any property if the unadjusted basis of
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1 such property is its cost within the meaning of sec2 tion 1012.

3 ‘‘(9) ELECTION.—An election under paragraph

4 (1) shall be made at such time and in such manner

5 as the Secretary may require and, once made, shall

6 be irrevocable.

7 ‘‘(10) NONAPPLICATION OF INSTALLMENT

8 SALES TREATMENT.—Section 453 shall not apply to

9 any qualifying electric transmission transaction with

10 respect to which an election to apply this subsection

11 is made.’’.

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

13 this section shall apply to transactions occurring after the

14 date of the enactment of this Act, in taxable years ending

15 after such date.

16 SEC. 1328. MODIFICATIONS TO SPECIAL RULES FOR NU17 CLEAR DECOMMISSIONING COSTS.

18 (a) REPEAL OF LIMITATION ON DEPOSITS INTO

19 FUND BASED ON COST OF SERVICE; CONTRIBUTIONS

20 AFTER FUNDING PERIOD.—Subsection (b) of section

21 468A (relating to special rules for nuclear decommis22 sioning costs) is amended to read as follows:

23 ‘‘(b) LIMITATION ON AMOUNTS PAID INTO FUND.—

24 ‘‘(1) IN GENERAL.—The amount which a tax25 payer may pay into the Fund for any taxable year
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1 shall not exceed the ruling amount applicable to

2 such taxable year.

3 ‘‘(2) CONTRIBUTIONS AFTER FUNDING PE4 RIOD.—Notwithstanding any other provision of this

5 section, a taxpayer may pay into the Fund in any

6 taxable year after the last taxable year to which the

7 ruling amount applies. Payments may not be made

8 under the preceding sentence to the extent such pay9 ments would cause the assets of the Fund to exceed

10 the nuclear decommissioning costs allocable to the

11 taxpayer’s current or former interest in the nuclear

12 power plant to which the Fund relates. The limita13 tion under the preceding sentence shall be deter14 mined by taking into account a reasonable rate of

15 inflation for the nuclear decommissioning costs and

16 a reasonable after-tax rate of return on the assets

17 of the Fund until such assets are anticipated to be

18 expended.’’.

19 (b) CLARIFICATION OF TREATMENT OF FUND

20 TRANSFERS.—Section 468A(e) (relating to Nuclear De21 commissioning Reserve Fund) is amended by adding at

22 the end the following new paragraph:

23 ‘‘(8) TREATMENT OF FUND TRANSFERS.—

24 ‘‘(A) IN GENERAL.—If, in connection with

25 the transfer of the taxpayer’s interest in a nu-
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1 clear power plant, the taxpayer transfers the

2 Fund with respect to such power plant to the

3 transferee of such interest and the transferee

4 elects to continue the application of this section

5 to such Fund—

6 ‘‘(i) the transfer of such Fund shall

7 not cause such Fund to be disqualified

8 from the application of this section, and

9 ‘‘(ii) no amount shall be treated as

10 distributed from such Fund, or be includ11 able in gross income, by reason of such

12 transfer.

13 ‘‘(B) SPECIAL RULES IF TRANSFEROR IS

14 TAX-EXEMPT ENTITY.—

15 ‘‘(i) IN GENERAL.—If—

16 ‘‘(I) a person exempt from tax17 ation under this title transfers an in18 terest in a nuclear power plant,

19 ‘‘(II) such person has set aside

20 amounts for nuclear decommissioning

21 which are transferred to the trans22 feree of the interest, and

23 ‘‘(III) the transferee elects the

24 application of this subparagraph no

25 later than the due date (including ex-
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1 tensions) of its return of tax for the

2 taxable year in which the transfer oc3 curs,

4 the amounts so set aside shall be treated

5 as if contributed by such person to a Fund

6 immediately before the transfer and then

7 transferred in the Fund to the transferee.

8 ‘‘(ii) LIMITATION.—The amount treat9 ed as transferred to a Fund under clause

10 (i) shall not exceed the amount which

11 bears the same ratio to the present value

12 of the nuclear decommissioning costs of

13 the transferor with respect to the nuclear

14 power plant as the number of years the

15 nuclear power plant has been in service

16 bears to the estimated useful life of such

17 power plant.

18 ‘‘(iii) BASIS.—The transferee’s basis

19 in any asset treated as transferred in the

20 Fund shall be the same as the adjusted

21 basis of such asset in the hands of the

22 transferor.

23 ‘‘(iv) RULING AMOUNT REQUIRED.—

24 This subparagraph shall not apply to any

25 transfer unless the transferee requests
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1 from the Secretary a schedule of ruling

2 amounts.

3 ‘‘(v) ELECTION DISREGARDED.—An

4 election under this subparagraph shall be

5 disregarded in determining the Federal in6 come tax of the transferor.’’.

7 (c) TREATMENT OF CERTAIN DECOMMISSIONING

8 COSTS.—

9 (1) IN GENERAL.—Section 468A is amended by

10 redesignating subsections (f) and (g) as subsections

11 (g) and (h), respectively, and by inserting after sub12 section (e) the following new subsection:

13 ‘‘(f) TRANSFERS INTO QUALIFIED FUNDS.—

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

15 (b), any taxpayer maintaining a Fund to which this

16 section applies with respect to a nuclear power plant

17 may transfer into such Fund not more than an

18 amount equal to the present value of the portion of

19 the total nuclear decommissioning costs with respect

20 to such nuclear power plant previously excluded for

21 such nuclear power plant under subsection (d)(2)(A)

22 as in effect immediately before the date of the enact23 ment of the Energy Tax Policy Act of 2004.

24 ‘‘(2) DEDUCTION FOR AMOUNTS TRANS25 FERRED.—
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1 ‘‘(A) IN GENERAL.—Except as provided in

2 subparagraph (C), the deduction allowed by

3 subsection (a) for any transfer permitted by

4 this subsection shall be allowed ratably over the

5 remaining estimated useful life (within the

6 meaning of subsection (d)(2)(A)) of the nuclear

7 power plant beginning with the taxable year

8 during which the transfer is made.

9 ‘‘(B) DENIAL OF DEDUCTION FOR PRE10 VIOUSLY DEDUCTED AMOUNTS.—No deduction

11 shall be allowed for any transfer under this sub12 section of an amount for which a deduction was

13 previously allowed to the taxpayer (or a prede14 cessor) or a corresponding amount was not in15 cluded in gross income of the taxpayer (or a

16 predecessor). For purposes of the preceding

17 sentence, a ratable portion of each transfer

18 shall be treated as being from previously de19 ducted or excluded amounts to the extent there20 of.

21 ‘‘(C) TRANSFERS OF QUALIFIED FUNDS.—

22 If—

23 ‘‘(i) any transfer permitted by this

24 subsection is made to any Fund to which

25 this section applies, and
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1 ‘‘(ii) such Fund is transferred there2 after,

3 any deduction under this subsection for taxable

4 years ending after the date that such Fund is

5 transferred shall be allowed to the transferor

6 for the taxable year which includes such date.

7 ‘‘(D) SPECIAL RULES.—

8 ‘‘(i) GAIN OR LOSS NOT RECOG9 NIZED.—No gain or loss shall be recog10 nized on any transfer permitted by this

11 subsection.

12 ‘‘(ii) TRANSFERS OF APPRECIATED

13 PROPERTY.—If appreciated property is

14 transferred in a transfer permitted by this

15 subsection, the amount of the deduction

16 shall not exceed the adjusted basis of such

17 property.

18 ‘‘(3) NEW RULING AMOUNT REQUIRED.—Para19 graph (1) shall not apply to any transfer unless the

20 taxpayer requests from the Secretary a new schedule

21 of ruling amounts in connection with such transfer.

22 ‘‘(4) NO BASIS IN QUALIFIED FUNDS.—Not23 withstanding any other provision of law, the tax24 payer’s basis in any Fund to which this section ap-
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1 plies shall not be increased by reason of any transfer

2 permitted by this subsection.’’.

3 (2) NEW RULING AMOUNT TO TAKE INTO AC4 COUNT TOTAL COSTS.—Subparagraph (A) of section

5 468A(d)(2) (defining ruling amount) is amended to

6 read as follows:

7 ‘‘(A) fund the total nuclear decommis8 sioning costs with respect to such power plant

9 over the estimated useful life of such power

10 plant, and’’.

11 (d) TECHNICAL AMENDMENTS.—Section 468A(e)(2)

12 (relating to taxation of Fund) is amended—

13 (1) by striking ‘‘rate set forth in subparagraph

14 (B)’’ in subparagraph (A) and inserting ‘‘rate of 20

15 percent’’,

16 (2) by striking subparagraph (B), and

17 (3) by redesignating subparagraphs (C) and

18 (D) as subparagraphs (B) and (C), respectively.

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

20 this section shall apply to taxable years beginning after

21 December 31, 2003.

22 SEC. 1329. TREATMENT OF CERTAIN INCOME OF COOPERA23 TIVES.

24 (a) INCOME FROM OPEN ACCESS AND NUCLEAR DE25 COMMISSIONING TRANSACTIONS.—
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1 (1) IN GENERAL.—Subparagraph (C) of section

2 501(c)(12) is amended by striking ‘‘or’’ at the end

3 of clause (i), by striking clause (ii), and by adding

4 at the end the following new clauses:

5 ‘‘(ii) from any provision or sale of

6 electric energy transmission services or an7 cillary services if such services are provided

8 on a nondiscriminatory open access basis

9 under an open access transmission tariff

10 approved or accepted by FERC or under

11 an independent transmission provider

12 agreement approved or accepted by FERC

13 (other than income received or accrued di14 rectly or indirectly from a member),

15 ‘‘(iii) from the provision or sale of

16 electric energy distribution services or an17 cillary services if such services are provided

18 on a nondiscriminatory open access basis

19 to distribute electric energy not owned by

20 the mutual or electric cooperative

21 company—

22 ‘‘(I) to end-users who are served

23 by distribution facilities not owned by

24 such company or any of its members

25 (other than income received or ac-
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1 crued directly or indirectly from a

2 member), or

3 ‘‘(II) generated by a generation

4 facility not owned or leased by such

5 company or any of its members and

6 which is directly connected to dis7 tribution facilities owned by such com8 pany or any of its members (other

9 than income received or accrued di10 rectly or indirectly from a member),

11 ‘‘(iv) from any nuclear decommis12 sioning transaction, or

13 ‘‘(v) from any asset exchange or con14 version transaction.’’.

15 (2) DEFINITIONS AND SPECIAL RULES.—Para16 graph (12) of section 501(c) is amended by adding

17 at the end the following new subparagraphs:

18 ‘‘(E) For purposes of subparagraph (C)(ii),

19 the term ‘FERC’ means the Federal Energy

20 Regulatory Commission and references to such

21 term shall be treated as including the Public

22 Utility Commission of Texas with respect to

23 any ERCOT utility (as defined in section

24 212(k)(2)(B) of the Federal Power Act (16

25 U.S.C. 824k(k)(2)(B))).
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1 ‘‘(F) For purposes of subparagraph

2 (C)(iii), the term ‘nuclear decommissioning

3 transaction’ means—

4 ‘‘(i) any transfer into a trust, fund, or

5 instrument established to pay any nuclear

6 decommissioning costs if the transfer is in

7 connection with the transfer of the mutual

8 or cooperative electric company’s interest

9 in a nuclear power plant or nuclear power

10 plant unit,

11 ‘‘(ii) any distribution from any trust,

12 fund, or instrument established to pay any

13 nuclear decommissioning costs, or

14 ‘‘(iii) any earnings from any trust,

15 fund, or instrument established to pay any

16 nuclear decommissioning costs.

17 ‘‘(G) For purposes of subparagraph

18 (C)(iv), the term ‘asset exchange or conversion

19 transaction’ means any voluntary exchange or

20 involuntary conversion of any property related

21 to generating, transmitting, distributing, or sell22 ing electric energy by a mutual or cooperative

23 electric company, the gain from which qualifies

24 for deferred recognition under section 1031 or

25 1033, but only if the replacement property ac-
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1 quired by such company pursuant to such sec2 tion constitutes property which is used, or to be

3 used, for—

4 ‘‘(i) generating, transmitting, distrib5 uting, or selling electric energy, or

6 ‘‘(ii) producing, transmitting, distrib7 uting, or selling natural gas.’’.

8 (b) TREATMENT OF INCOME FROM LOAD LOSS

9 TRANSACTIONS, ETC.—Paragraph (12) of section 501(c),

10 as amended by subsection (a)(2), is amended by adding

11 after subparagraph (G) the following new subparagraph:

12 ‘‘(H)(i) In the case of a mutual or coopera13 tive electric company described in this para14 graph or an organization described in section

15 1381(a)(2)(C), income received or accrued from

16 a load loss transaction shall be treated as an

17 amount collected from members for the sole

18 purpose of meeting losses and expenses.

19 ‘‘(ii) For purposes of clause (i), the term

20 ‘load loss transaction’ means any wholesale or

21 retail sale of electric energy (other than to

22 members) to the extent that the aggregate sales

23 during the recovery period do not exceed the

24 load loss mitigation sales limit for such period.
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1 ‘‘(iii) For purposes of clause (ii), the load

2 loss mitigation sales limit for the recovery pe3 riod is the sum of the annual load losses for

4 each year of such period.

5 ‘‘(iv) For purposes of clause (iii), a mutual

6 or cooperative electric company’s annual load

7 loss for each year of the recovery period is the

8 amount (if any) by which—

9 ‘‘(I) the megawatt hours of electric

10 energy sold during such year to members

11 of such electric company are less than

12 ‘‘(II) the megawatt hours of electric

13 energy sold during the base year to such

14 members.

15 ‘‘(v) For purposes of clause (iv)(II), the

16 term ‘base year’ means—

17 ‘‘(I) the calendar year preceding the

18 start-up year, or

19 ‘‘(II) at the election of the mutual or

20 cooperative electric company, the second or

21 third calendar years preceding the start-up

22 year.

23 ‘‘(vi) For purposes of this subparagraph,

24 the recovery period is the 7-year period begin25 ning with the start-up year.
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1 ‘‘(vii) For purposes of this subparagraph,

2 the start-up year is the first year that the mu3 tual or cooperative electric company offers non4 discriminatory open access or the calendar year

5 which includes the date of the enactment of this

6 subparagraph, if later, at the election of such

7 company.

8 ‘‘(viii) A company shall not fail to be treat9 ed as a mutual or cooperative electric company

10 for purposes of this paragraph or as a corpora11 tion operating on a cooperative basis for pur12 poses of section 1381(a)(2)(C) by reason of the

13 treatment under clause (i).

14 ‘‘(ix) For purposes of subparagraph (A), in

15 the case of a mutual or cooperative electric

16 company, income received, or accrued, indirectly

17 from a member shall be treated as an amount

18 collected from members for the sole purpose of

19 meeting losses and expenses.’’.

20 (c) EXCEPTION FROM UNRELATED BUSINESS TAX21 ABLE INCOME.—Subsection (b) of section 512 (relating to

22 modifications) is amended by adding at the end the fol23 lowing new paragraph:

24 ‘‘(18) TREATMENT OF MUTUAL OR COOPERA25 TIVE ELECTRIC COMPANIES.—In the case of a mu-
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1 tual or cooperative electric company described in sec2 tion 501(c)(12), there shall be excluded income

3 which is treated as member income under subpara4 graph (H) thereof.’’.

5 (d) CROSS REFERENCE.—Section 1381 is amended

6 by adding at the end the following new subsection:

7 ‘‘(c) CROSS REFERENCE.—For treatment of income

8 from load loss transactions of organizations described in

9 subsection (a)(2)(C), see section 501(c)(12)(H).’’.

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

11 this section shall apply to taxable years beginning after

12 the date of the enactment of this Act.

13 SEC. 1330. ARBITRAGE RULES NOT TO APPLY TO PREPAY14 MENTS FOR NATURAL GAS.

15 (a) IN GENERAL.—Subsection (b) of section 148 (re16 lating to higher yielding investments) is amended by add17 ing at the end the following new paragraph:

18 ‘‘(4) SAFE HARBOR FOR PREPAID NATURAL

19 GAS.—

20 ‘‘(A) IN GENERAL.—The term ‘investment21 type property’ does not include a prepayment

22 under a qualified natural gas supply contract.

23 ‘‘(B) QUALIFIED NATURAL GAS SUPPLY

24 CONTRACT.—For purposes of this paragraph,

25 the term ‘qualified natural gas supply contract’
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1 means any contract to acquire natural gas for

2 resale by a utility owned by a governmental

3 unit if the amount of gas permitted to be ac4 quired under the contract by the utility during

5 any year does not exceed the sum of—

6 ‘‘(i) the annual average amount dur7 ing the testing period of natural gas pur8 chased (other than for resale) by cus9 tomers of such utility who are located

10 within the service area of such utility, and

11 ‘‘(ii) the amount of natural gas to be

12 used to transport the prepaid natural gas

13 to the utility during such year.

14 ‘‘(C) NATURAL GAS USED TO GENERATE

15 ELECTRICITY.—Natural gas used to generate

16 electricity shall be taken into account in deter17 mining the average under subparagraph

18 (B)(i)—

19 ‘‘(i) only if the electricity is generated

20 by a utility owned by a governmental unit,

21 and

22 ‘‘(ii) only to the extent that the elec23 tricity is sold (other than for resale) to

24 customers of such utility who are located

25 within the service area of such utility.
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1 ‘‘(D) ADJUSTMENTS FOR CHANGES IN

2 CUSTOMER BASE.—

3 ‘‘(i) NEW BUSINESS CUSTOMERS.—

4 If—

5 ‘‘(I) after the close of the testing

6 period and before the date of issuance

7 of the issue, the utility owned by a

8 governmental unit enters into a con9 tract to supply natural gas (other

10 than for resale) for a business use at

11 a property within the service area of

12 such utility, and

13 ‘‘(II) the utility did not supply

14 natural gas to such property during

15 the testing period or the ratable

16 amount of natural gas to be supplied

17 under the contract is significantly

18 greater than the ratable amount of

19 gas supplied to such property during

20 the testing period,

21 then a contract shall not fail to be treated

22 as a qualified natural gas supply contract

23 by reason of supplying the additional nat24 ural gas under the contract referred to in

25 subclause (I).
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1 ‘‘(ii) LOST CUSTOMERS.—The average

2 under subparagraph (B)(i) shall not exceed

3 the annual amount of natural gas reason4 ably expected to be purchased (other than

5 for resale) by persons who are located

6 within the service area of such utility and

7 who, as of the date of issuance of the

8 issue, are customers of such utility.

9 ‘‘(E) RULING REQUESTS.—The Secretary

10 may increase the average under subparagraph

11 (B)(i) for any period if the utility owned by the

12 governmental unit establishes to the satisfaction

13 of the Secretary that, based on objective evi14 dence of growth in natural gas consumption or

15 population, such average would otherwise be in16 sufficient for such period.

17 ‘‘(F) ADJUSTMENT FOR NATURAL GAS

18 OTHERWISE ON HAND.—

19 ‘‘(i) IN GENERAL.—The amount oth20 erwise permitted to be acquired under the

21 contract for any period shall be reduced

22 by—

23 ‘‘(I) the applicable share of nat24 ural gas held by the utility on the

25 date of issuance of the issue, and
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1 ‘‘(II) the natural gas (not taken

2 into account under subclause (I))

3 which the utility has a right to ac4 quire during such period (determined

5 as of the date of issuance of the

6 issue).

7 ‘‘(ii) APPLICABLE SHARE.—For pur8 poses of the clause (i), the term ‘applicable

9 share’ means, with respect to any period,

10 the natural gas allocable to such period if

11 the gas were allocated ratably over the pe12 riod to which the prepayment relates.

13 ‘‘(G) INTENTIONAL ACTS.—Subparagraph

14 (A) shall cease to apply to any issue if the util15 ity owned by the governmental unit engages in

16 any intentional act to render the volume of nat17 ural gas acquired by such prepayment to be in

18 excess of the sum of—

19 ‘‘(i) the amount of natural gas needed

20 (other than for resale) by customers of

21 such utility who are located within the

22 service area of such utility, and

23 ‘‘(ii) the amount of natural gas used

24 to transport such natural gas to the utility.
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1 ‘‘(H) TESTING PERIOD.—For purposes of

2 this paragraph, the term ‘testing period’ means,

3 with respect to an issue, the most recent 5 cal4 endar years ending before the date of issuance

5 of the issue.

6 ‘‘(I) SERVICE AREA.—For purposes of this

7 paragraph, the service area of a utility owned

8 by a governmental unit shall be comprised of—

9 ‘‘(i) any area throughout which such

10 utility provided at all times during the

11 testing period—

12 ‘‘(I) in the case of a natural gas

13 utility, natural gas transmission or

14 distribution services, and

15 ‘‘(II) in the case of an electric

16 utility, electricity distribution services,

17 ‘‘(ii) any area within a county contig18 uous to the area described in clause (i) in

19 which retail customers of such utility are

20 located if such area is not also served by

21 another utility providing natural gas or

22 electricity services, as the case may be, and

23 ‘‘(iii) any area recognized as the serv24 ice area of such utility under State or Fed25 eral law.’’.
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1 (b) PRIVATE LOAN FINANCING TEST NOT TO APPLY

2 TO PREPAYMENTS FOR NATURAL GAS.—Paragraph (2) of

3 section 141(c) (providing exceptions to the private loan fi4 nancing test) is amended by striking ‘‘or’’ at the end of

5 subparagraph (A), by striking the period at the end of

6 subparagraph (B) and inserting ‘‘, or’’, and by adding at

7 the end the following new subparagraph:

8 ‘‘(C) is a qualified natural gas supply con9 tract (as defined in section 148(b)(4)).’’.

10 (c) EXCEPTION FOR QUALIFIED ELECTRIC AND NAT11 URAL GAS SUPPLY CONTRACTS.—Section 141(d) is

12 amended by adding at the end the following new para13 graph:

14 ‘‘(7) EXCEPTION FOR QUALIFIED ELECTRIC

15 AND NATURAL GAS SUPPLY CONTRACTS.—The term

16 ‘nongovernmental output property’ shall not include

17 any contract for the prepayment of electricity or nat18 ural gas which is not investment property under sec19 tion 148(b)(2).’’.

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

21 this section shall apply to obligations issued after the date

22 of the enactment of this Act.
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1 Subtitle C—Production

2 PART I—OIL AND GAS PROVISIONS

3 SEC. 1341. OIL AND GAS FROM MARGINAL WELLS.

4 (a) IN GENERAL.—Subpart D of part IV of sub5 chapter A of chapter 1 (relating to business credits), as

6 amended by this Act, is amended by adding at the end

7 the following:

8 ‘‘SEC. 45J. CREDIT FOR PRODUCING OIL AND GAS FROM

9 MARGINAL WELLS.

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

11 the marginal well production credit for any taxable year

12 is an amount equal to the product of—

13 ‘‘(1) the credit amount, and

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

15 qualified natural gas production which is attrib16 utable to the taxpayer.

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

18 section—

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

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

21 production, and

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

23 qualified natural gas production.

24 ‘‘(2) REDUCTION AS OIL AND GAS PRICES IN25 CREASE.—
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1 ‘‘(A) IN GENERAL.—The $3 and 50 cents

2 amounts under paragraph (1) shall each be re3 duced (but not below zero) by an amount which

4 bears the same ratio to such amount (deter5 mined without regard to this paragraph) as—

6 ‘‘(i) the excess (if any) of the applica7 ble reference price over $15 ($1.67 for

8 qualified natural gas production), bears to

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

10 gas production).

11 The applicable reference price for a taxable

12 year is the reference price of the calendar year

13 preceding the calendar year in which the tax14 able year begins.

15 ‘‘(B) INFLATION ADJUSTMENT.—In the

16 case of any taxable year beginning in a calendar

17 year after 2003, each of the dollar amounts

18 contained in subparagraph (A) shall be in19 creased to an amount equal to such dollar

20 amount multiplied by the inflation adjustment

21 factor for such calendar year (determined under

22 section 43(b)(3)(B) by substituting ‘2002’ for

23 ‘1990’).
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1 ‘‘(C) REFERENCE PRICE.—For purposes of

2 this paragraph, the term ‘reference price’

3 means, with respect to any calendar year—

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

5 production, the reference price determined

6 under section 45K(d)(2)(C), and

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

8 gas production, the Secretary’s estimate of

9 the annual average wellhead price per

10 1,000 cubic feet for all domestic natural

11 gas.

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

13 PRODUCTION.—For purposes of this section—

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

15 oil production’ and ‘qualified natural gas production’

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

18 ‘‘(2) LIMITATION ON AMOUNT OF PRODUCTION

19 WHICH MAY QUALIFY.—

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

21 gas produced during any taxable year from any

22 well shall not be treated as qualified crude oil

23 production or qualified natural gas production

24 to the extent production from the well during

25 the taxable year exceeds 1,095 barrels or bar-
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1 rel-of-oil equivalents (as defined in section

2 45K(d)(5)).

3 ‘‘(B) PROPORTIONATE REDUCTIONS.—

4 ‘‘(i) SHORT TAXABLE YEARS.—In the

5 case of a short taxable year, the limitations

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

8 number of days in such taxable year bears

9 to 365.

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

12 not capable of production during each day

13 of a taxable year, the limitations under

14 this paragraph applicable to the well shall

15 be proportionately reduced to reflect the

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

18 the taxable year.

19 ‘‘(3) DEFINITIONS.—

20 ‘‘(A) QUALIFIED MARGINAL WELL.—The

21 term ‘qualified marginal well’ means a domestic

22 well—

23 ‘‘(i) the production from which during

24 the taxable year is treated as marginal

25 production under section 613A(c)(6), or
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1 ‘‘(ii) which, during the taxable year—

2 ‘‘(I) has average daily production

3 of not more than 25 barrel-of-oil

4 equivalents (as so defined), and

5 ‘‘(II) produces water at a rate

6 not less than 95 percent of total well

7 effluent.

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

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

10 the meanings given such terms by section

11 613A(e).

12 ‘‘(d) OTHER RULES.—

13 ‘‘(1) PRODUCTION ATTRIBUTABLE TO THE TAX14 PAYER.—In the case of a qualified marginal well in

15 which there is more than one owner of operating in16 terests in the well and the crude oil or natural gas

17 production exceeds the limitation under subsection

18 (c)(2), qualifying crude oil production or qualifying

19 natural gas production attributable to the taxpayer

20 shall be determined on the basis of the ratio which

21 taxpayer’s revenue interest in the production bears

22 to the aggregate of the revenue interests of all oper23 ating interest owners in the production.

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

25 credit under this section may be claimed only on
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1 production which is attributable to the holder of an

2 operating interest.

3 ‘‘(3) PRODUCTION FROM NONCONVENTIONAL

4 SOURCES EXCLUDED.—In the case of production

5 from a qualified marginal well which is eligible for

6 the credit allowed under section 45K for the taxable

7 year, no credit shall be allowable under this section

8 unless the taxpayer elects not to claim the credit

9 under section 45K with respect to the well.’’.

10 (b) CREDIT TREATED AS BUSINESS CREDIT.—Sec11 tion 38(b), as amended by this Act, is amended by striking

12 ‘‘plus’’ at the end of paragraph (18), by striking the period

13 at the end of paragraph (19) and inserting ‘‘, plus’’, and

14 by adding at the end the following:

15 ‘‘(20) the marginal oil and gas well production

16 credit determined under section 45J(a).’’.

17 (c) CARRYBACK.—Subsection (a) of section 39 (relat18 ing to carryback and carryforward of unused credits gen19 erally) is amended by adding at the end the following:

20 ‘‘(3) 5-YEAR CARRYBACK FOR MARGINAL OIL

21 AND GAS WELL PRODUCTION CREDIT.—Notwith22 standing subsection (d), in the case of the marginal

23 oil and gas well production credit—
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1 ‘‘(A) this section shall be applied sepa2 rately from the business credit (other than the

3 marginal oil and gas well production credit),

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

5 substituting ‘5 taxable years’ for ‘1 taxable

6 years’ in subparagraph (A) thereof, and

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

8 ‘‘(i) by substituting ‘25 taxable years’

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

10 thereof, and

11 ‘‘(ii) by substituting ‘24 taxable years’

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

13 thereof.’’.

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

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

16 as amended by this Act, is amended by adding at the end

17 the following:

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

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

19 this section shall apply to production in taxable years be20 ginning after December 31, 2003.
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1 SEC. 1342. TEMPORARY SUSPENSION OF LIMITATION

2 BASED ON 65 PERCENT OF TAXABLE INCOME

3 AND EXTENSION OF SUSPENSION OF TAX4 ABLE INCOME LIMIT WITH RESPECT TO MAR5 GINAL PRODUCTION.

6 (a) LIMITATION BASED ON 65 PERCENT OF TAX7 ABLE INCOME.—Subsection (d) of section 613A (relating

8 to limitation on percentage depletion in case of oil and

9 gas wells) is amended by adding at the end the following

10 new paragraph:

11 ‘‘(6) TEMPORARY SUSPENSION OF TAXABLE IN12 COME LIMIT.—Paragraph (1) shall not apply to tax13 able years beginning after December 31, 2003, and

14 before January 1, 2005, including with respect to

15 amounts carried under the second sentence of para16 graph (1) to such taxable years.’’.

17 (b) EXTENSION OF SUSPENSION OF TAXABLE IN18 COME LIMIT WITH RESPECT TO MARGINAL PRODUC19 TION.—Subparagraph (H) of section 613A(c)(6) (relating

20 to temporary suspension of taxable income limit with re21 spect to marginal production) is amended by striking

22 ‘‘2004’’ and inserting ‘‘2005’’.

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

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

25 December 31, 2003.
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1 SEC. 1343. AMORTIZATION OF DELAY RENTAL PAYMENTS.

2 (a) IN GENERAL.—Section 167 (relating to deprecia3 tion) is amended by redesignating subsection (h) as sub4 section (i) and by inserting after subsection (g) the fol5 lowing new subsection:

6 ‘‘(h) AMORTIZATION OF DELAY RENTAL PAYMENTS

7 FOR DOMESTIC OIL AND GAS WELLS.—

8 ‘‘(1) IN GENERAL.—Any delay rental payment

9 paid or incurred in connection with the development

10 of oil or gas wells within the United States (as de11 fined in section 638) shall be allowed as a deduction

12 ratably over the 24-month period beginning on the

13 date that such payment was paid or incurred.

14 ‘‘(2) HALF-YEAR CONVENTION.—For purposes

15 of paragraph (1), any payment paid or incurred dur16 ing the taxable year shall be treated as paid or in17 curred on the mid-point of such taxable year.

18 ‘‘(3) EXCLUSIVE METHOD.—Except as provided

19 in this subsection, no depreciation or amortization

20 deduction shall be allowed with respect to such pay21 ments.

22 ‘‘(4) TREATMENT UPON ABANDONMENT.—If

23 any property to which a delay rental payment relates

24 is retired or abandoned during the 24-month period

25 described in paragraph (1), no deduction shall be al26 lowed on account of such retirement or abandon-
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1 ment and the amortization deduction under this sub2 section shall continue with respect to such payment.

3 ‘‘(5) DELAY RENTAL PAYMENTS.—For purposes

4 of this subsection, the term ‘delay rental payment’

5 means an amount paid for the privilege of deferring

6 development of an oil or gas well under an oil or gas

7 lease.’’.

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

9 this section shall apply to amounts paid or incurred in tax10 able years beginning after the date of the enactment of

11 this Act.

12 SEC. 1344. AMORTIZATION OF GEOLOGICAL AND GEO13 PHYSICAL EXPENDITURES.

14 (a) IN GENERAL.—Section 167 (relating to deprecia15 tion), as amended by this Act, is amended by redesig16 nating subsection (i) as subsection (j) and by inserting

17 after subsection (h) the following new subsection:

18 ‘‘(i) AMORTIZATION OF GEOLOGICAL AND GEO19 PHYSICAL EXPENDITURES.—

20 ‘‘(1) IN GENERAL.—Any geological and geo21 physical expenses paid or incurred in connection

22 with the exploration for, or development of, oil or

23 gas within the United States (as defined in section

24 638) shall be allowed as a deduction ratably over the
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1 24-month period beginning on the date that such ex2 pense was paid or incurred.

3 ‘‘(2) SPECIAL RULES.—For purposes of this

4 subsection, rules similar to the rules of paragraphs

5 (2), (3), and (4) of subsection (h) shall apply.’’.

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

7 is amended by inserting ‘‘167(h), 167(i),’’ after ‘‘under

8 section’’.

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

10 this section shall apply to amounts paid or incurred in tax11 able years beginning after the date of the enactment of

12 this Act.

13 SEC. 1345. EXTENSION AND MODIFICATION OF CREDIT FOR

14 PRODUCING FUEL FROM A NONCONVEN15 TIONAL SOURCE.

16 (a) IN GENERAL.—Section 29 (relating to credit for

17 producing fuel from a nonconventional source) is amended

18 by adding at the end the following new subsection:

19 ‘‘(h) EXTENSION FOR OTHER FACILITIES.—Notwith20 standing subsection (f)—

21 ‘‘(1) NEW OIL AND GAS WELLS AND FACILI22 TIES.—In the case of a well or facility for producing

23 qualified fuels described in subparagraph (A) or (B)

24 of subsection (c)(1) which was drilled or placed in

25 service after the date of the enactment of this sub-
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1 section and before January 1, 2007, this section

2 shall apply with respect to such fuels produced at

3 such well or facility and sold during the period—

4 ‘‘(A) beginning on the later of January 1,

5 2004, or the date that such well is drilled or

6 such facility is placed in service, and

7 ‘‘(B) ending on the earlier of the date

8 which is 4 years after the date such period

9 began or December 31, 2009.

10 ‘‘(2) OLD OIL AND GAS WELLS AND FACILI11 TIES.—In the case of a well or facility producing

12 qualified fuels described in subparagraph (A) or

13 (B)(i) of subsection (c)(1) or a facility producing

14 natural gas and byproducts by coal gasification from

15 lignite, subsection (f)(2) shall be applied by sub16 stituting ‘2008’ for ‘2003’ with respect to wells and

17 facilities described in subsection (f)(1) with respect

18 to such fuels.

19 ‘‘(3) EXTENSION FOR FACILITIES PRODUCING

20 QUALIFIED FUEL FROM LANDFILL GAS.—

21 ‘‘(A) IN GENERAL.—In the case of a facil22 ity for producing qualified fuel from landfill gas

23 which was placed in service after June 30,

24 1998, and before January 1, 2007, this section
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1 shall apply to fuel produced at such facility and

2 sold during the period—

3 ‘‘(i) beginning on the later of January

4 1, 2004, or the date that such facility is

5 placed in service, and

6 ‘‘(ii) ending on the earlier of the date

7 which is 4 years after the date such period

8 began or December 31, 2009.

9 ‘‘(B) REDUCTION OF CREDIT FOR CERTAIN

10 LANDFILL FACILITIES.—In the case of a facility

11 to which subparagraph (A) applies and which is

12 located at a landfill which is required pursuant

13 to section 60.751(b)(2) or section 60.33c of

14 title 40, Code of Federal Regulations (as in ef15 fect on April 3, 2003) to install and operate a

16 collection and control system which captures

17 gas generated within the landfill, subsection

18 (a)(1) shall be applied to gas so captured by

19 substituting ‘$2’ for ‘$3’ for the taxable year

20 during which such system is required to be in21 stalled and operated.

22 ‘‘(4) FACILITIES PRODUCING FUELS FROM AG23 RICULTURAL AND ANIMAL WASTE.—

24 ‘‘(A) IN GENERAL.—In the case of any fa25 cility for producing liquid, gaseous, or solid
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1 fuels from qualified agricultural and animal

2 wastes, including such fuels when used as feed3 stocks, which is placed in service after the date

4 of the enactment of this subsection and before

5 January 1, 2007, this section shall apply with

6 respect to fuel produced at such facility and

7 sold during the period—

8 ‘‘(i) beginning on the later of January

9 1, 2004, or the date that such facility is

10 placed in service, and

11 ‘‘(ii) ending on the earlier of the date

12 which is 4 years after the date such period

13 began or December 31, 2009.

14 ‘‘(B) QUALIFIED AGRICULTURAL AND ANI15 MAL WASTE.—For purposes of this paragraph,

16 the term ‘qualified agricultural and animal

17 waste’ means agriculture and animal waste, in18 cluding by-products, packaging, and any mate19 rials associated with the processing, feeding,

20 selling, transporting, or disposal of agricultural

21 or animal products or wastes.

22 ‘‘(5) FACILITIES PRODUCING REFINED COAL.—

23 ‘‘(A) IN GENERAL.—In the case of a facil24 ity described in subparagraph (C) for producing

25 refined coal which is placed in service after the
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1 date of the enactment of this subsection and be2 fore January 1, 2008, this section shall apply

3 with respect to fuel produced at such facility

4 and sold before the close of the 5-year period

5 beginning on the date such facility is placed in

6 service.

7 ‘‘(B) REFINED COAL.—For purposes of

8 this paragraph, the term ‘refined coal’ means a

9 fuel which is a liquid, gaseous, or solid syn10 thetic fuel produced from coal (including lig11 nite) or high carbon fly ash, including such fuel

12 used as a feedstock.

13 ‘‘(C) COVERED FACILITIES.—

14 ‘‘(i) IN GENERAL.—A facility is de15 scribed in this subparagraph if such facil16 ity produces refined coal using a tech17 nology which the taxpayer certifies (in

18 such manner as the Secretary may pre19 scribe) results in—

20 ‘‘(I) a qualified emission reduc21 tion, and

22 ‘‘(II) a qualified enhanced value.

23 ‘‘(ii) QUALIFIED EMISSION REDUC24 TION.—For purposes of this subparagraph,

25 the term ‘qualified emission reduction’
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1 means a reduction of at least 20 percent of

2 the emissions of nitrogen oxide and either

3 sulfur dioxide or mercury released when

4 burning the refined coal (excluding any di5 lution caused by materials combined or

6 added during the production process), as

7 compared to the emissions released when

8 burning the feedstock coal or comparable

9 coal predominantly available in the market10 place as of January 1, 2003.

11 ‘‘(iii) QUALIFIED ENHANCED

12 VALUE.—For purposes of this subpara13 graph, the term ‘qualified enhanced value’

14 means an increase of at least 50 percent in

15 the market value of the refined coal (ex16 cluding any increase caused by materials

17 combined or added during the production

18 process), as compared to the value of the

19 feedstock coal.

20 ‘‘(iv) ADVANCED CLEAN COAL TECH21 NOLOGY UNITS EXCLUDED.—A facility de22 scribed in this subparagraph shall not in23 clude any advanced clean coal technology

24 unit (as defined in section 48A(e)).

25 ‘‘(6) COALMINE GAS.—
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1 ‘‘(A) IN GENERAL.—This section shall

2 apply to coalmine gas—

3 ‘‘(i) captured or extracted by the tax4 payer during the period beginning on the

5 day after the date of the enactment of this

6 subsection and ending on December 31,

7 2006, and

8 ‘‘(ii) utilized as a fuel source or sold

9 by or on behalf of the taxpayer to an unre10 lated person during such period.

11 ‘‘(B) COALMINE GAS.—For purposes of

12 this paragraph, the term ‘coalmine gas’ means

13 any methane gas which is—

14 ‘‘(i) liberated during or as a result of

15 coal mining operations, or

16 ‘‘(ii) extracted up to 10 years in ad17 vance of coal mining operations as part of

18 a specific plan to mine a coal deposit.

19 ‘‘(C) SPECIAL RULE FOR ADVANCED EX20 TRACTION.—In the case of coalmine gas which

21 is captured in advance of coal mining oper22 ations, the credit under subsection (a) shall be

23 allowed only after the date the coal extraction

24 occurs in the immediate area where the

25 coalmine gas was removed.
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1 ‘‘(D) NONCOMPLIANCE WITH POLLUTION

2 LAWS.—This paragraph shall not apply to the

3 capture or extraction of coalmine gas from coal

4 mining operations with respect to any period in

5 which such coal mining operations are not in

6 compliance with applicable Federal pollution

7 prevention, control, and permit requirements.

8 ‘‘(7) COKE AND COKE GAS.—In the case of a

9 facility for producing coke or coke gas which was

10 placed in service before January 1, 1993, or after

11 June 30, 1998, and before January 1, 2007, this

12 section shall apply with respect to coke and coke gas

13 produced in such facility and sold during the during

14 the period—

15 ‘‘(A) beginning on the later of January 1,

16 2004, or the date that such facility is placed in

17 service, and

18 ‘‘(B) ending on the earlier of the date

19 which is 4 years after the date such period

20 began or December 31, 2009.

21 ‘‘(8) SPECIAL RULES.—In determining the

22 amount of credit allowable under this section solely

23 by reason of this subsection—

24 ‘‘(A) FUELS TREATED AS QUALIFIED

25 FUELS.—Any fuel described in paragraph (3),
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1 (4), (5), or (6) shall be treated as a qualified

2 fuel for purposes of this section.

3 ‘‘(B) DAILY LIMIT.—The amount of quali4 fied fuels sold during any taxable year which

5 may be taken into account by reason of this

6 subsection with respect to any property or facil7 ity shall not exceed an average barrel-of-oil

8 equivalent of 200,000 cubic feet of natural gas

9 per day. Days before the date the property or

10 facility is placed in service shall not be taken

11 into account in determining such average.

12 ‘‘(C) EXTENSION PERIOD TO COMMENCE

13 WITH UNADJUSTED CREDIT AMOUNT AND NEW

14 PHASEOUT ADJUSTMENT.—For purposes of ap15 plying subsection (b)(2), in the case of fuels

16 sold after 2003—

17 ‘‘(i) paragraphs (1)(A) and (2) of sub18 section (b) shall be applied by substituting

19 ‘$35.00’ for ‘$23.50’, and

20 ‘‘(ii) subparagraph (B) of subsection

21 (d)(2) shall be applied by substituting

22 ‘2002’ for ‘1979’.

23 ‘‘(D) DENIAL OF DOUBLE BENEFIT.—This

24 subsection shall not apply to any facility pro25 ducing qualified fuels for which a credit was al-
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1 lowed under this section for the taxable year or

2 any preceding taxable year by reason of sub3 section (g).’’.

4 (b) TREATMENT AS BUSINESS CREDIT.—

5 (1) CREDIT MOVED TO SUBPART RELATING TO

6 BUSINESS RELATED CREDITS.—The Internal Rev7 enue Code of 1986 is amended by redesignating sec8 tion 29, as amended by this Act, as section 45K and

9 by moving section 45K (as so redesignated) from

10 subpart B of part IV of subchapter A of chapter 1

11 to the end of subpart D of part IV of subchapter A

12 of chapter 1.

13 (2) CREDIT TREATED AS BUSINESS CREDIT.—

14 Section 38(b) is amended by striking ‘‘plus’’ at the

15 end of paragraph (19), by striking the period at the

16 end of paragraph (20) and inserting ‘‘, plus’’, and

17 by adding at the end the following:

18 ‘‘(21) the nonconventional source production

19 credit determined under section 45K(a).’’.

20 (3) CONFORMING AMENDMENTS.—

21 (A) Section 30(b)(2)(A), as redesignated

22 by section 1317(a), is amended by striking

23 ‘‘sections 27 and 29’’ and inserting ‘‘section

24 27’’.
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1 (B) Sections 43(b)(2) and 613A(c)(6)(C)

2 are each amended by striking ‘‘section

3 29(d)(2)(C)’’ and inserting ‘‘section

4 45K(d)(2)(C)’’.

5 (C) Section 45K(a), as redesignated by

6 paragraph (1), is amended by striking ‘‘At the

7 election of the taxpayer, there shall be allowed

8 as a credit against the tax imposed by this

9 chapter for the taxable year’’ and inserting

10 ‘‘For purposes of section 38, if the taxpayer

11 elects to have this section apply, the nonconven12 tional source production credit determined

13 under this section for the taxable year is’’.

14 (D) Section 45K(b), as so redesignated, is

15 amended by striking paragraph (6).

16 (E) Section 53(d)(1)(B)(iii) is amended by

17 striking ‘‘under section 29’’ and all that follows

18 through ‘‘or not allowed’’.

19 (F) Section 55(c)(2) is amended by strik20 ing ‘‘29(b)(6),’’.

21 (G) Subsection (a) of section 772 is

22 amended by inserting ‘‘and’’ at the end of para23 graph (9), by striking paragraph (10), and by

24 redesignating paragraph (11) as paragraph

25 (10).
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1 (H) Paragraph (5) of section 772(d) is

2 amended by striking ‘‘the foreign tax credit,

3 and the credit allowable under section 29’’ and

4 inserting ‘‘and the foreign tax credit’’.

5 (I) The table of sections for subpart B of

6 part IV of subchapter A of chapter 1 is amend7 ed by striking the item relating to section 29.

8 (J) The table of sections for subpart D of

9 part IV of subchapter A of chapter 1, as

10 amended by this Act, is amended by inserting

11 after the item relating to section 45J the fol12 lowing new item:

‘‘Sec. 45K. Credit for producing fuel from a nonconventional source.’’.

13 (c) DETERMINATIONS UNDER NATURAL GAS POLICY

14 ACT OF 1978.—Subparagraph (A) of section 45K(c)(2),

15 as redesignated by subsection (b)(1), is amended—

16 (1) by inserting ‘‘by the Secretary, after con17 sultation with the Federal Energy Regulatory Com18 mission,’’ after ‘‘shall be made’’, and

19 (2) by inserting ‘‘(as in effect before the repeal

20 of such section)’’ after ‘‘1978’’.

21 (d) EFFECTIVE DATES.—

22 (1) IN GENERAL.—Except as provided in para23 graph (2), the amendments made by this section

24 shall apply to fuel produced and sold after December

25 31, 2003, in taxable years ending after such date.
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1 (2) DETERMINATIONS UNDER NATURAL GAS

2 POLICY ACT OF 1978.—The amendments made by

3 subsection (c) shall apply as if included in the provi4 sions repealing section 503 of the Natural Gas Pol5 icy Act of 1978.

6 PART II—ALTERNATIVE MINIMUM TAX

7 PROVISIONS

8 SEC. 1346. NEW NONREFUNDABLE PERSONAL CREDITS AL9 LOWED AGAINST REGULAR AND MINIMUM

10 TAXES.

11 (a) IN GENERAL.—

12 (1) SECTION 25C.—Section 25C(b), as added by

13 section 1301 of this Act, is amended by adding at

14 the end the following new paragraph:

15 ‘‘(3) LIMITATION BASED ON AMOUNT OF

16 TAX.—The credit allowed under subsection (a) for

17 the taxable year shall not exceed the excess of—

18 ‘‘(A) the sum of the regular tax liability

19 (as defined in section 26(b)) plus the tax im20 posed by section 55, over

21 ‘‘(B) the sum of the credits allowable

22 under this subpart (other than this section and

23 section 25D) and section 27 for the taxable

24 year.’’.
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1 (2) SECTION 25D.—Section 25D(b), as added

2 by section 1304 of this Act, is amended by adding

3 at the end the following new paragraph:

4 ‘‘(3) LIMITATION BASED ON AMOUNT OF

5 TAX.—The credit allowed under subsection (a) for

6 the taxable year shall not exceed the excess of—

7 ‘‘(A) the sum of the regular tax liability

8 (as defined in section 26(b)) plus the tax im9 posed by section 55, over

10 ‘‘(B) the sum of the credits allowable

11 under this subpart (other than this section) and

12 section 27 for the taxable year.’’.

13 (b) CONFORMING AMENDMENTS.—

14 (1) Section 23(b)(4)(B) is amended by inserting

15 ‘‘and sections 25C and 25D’’ after ‘‘this section’’.

16 (2) Section 24(b)(3)(B) is amended by striking

17 ‘‘and 25B’’ and inserting ‘‘, 25B, 25C, and 25D’’.

18 (3) Section 25(e)(1)(C) is amended by inserting

19 ‘‘25C, and 25D’’ after ‘‘25B,’’.

20 (4) Section 25B(g)(2) is amended by striking

21 ‘‘section 23’’ and inserting ‘‘sections 23, 25C, and

22 25D’’.

23 (5) Section 26(a)(1) is amended by striking

24 ‘‘and 25B’’ and inserting ‘‘25B, 25C, and 25D’’.
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1 (6) Section 904(h) is amended by striking ‘‘and

2 25B’’ and inserting ‘‘25B, 25C, and 25D’’.

3 (7) Section 1400C(d) is amended by striking

4 ‘‘and 25B’’ and inserting ‘‘25B, 25C, and 25D’’.

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

6 this section shall apply to taxable years beginning after

7 December 31, 2003.

8 SEC. 1347. BUSINESS RELATED ENERGY CREDITS ALLOWED

9 AGAINST REGULAR AND MINIMUM TAX.

10 (a) IN GENERAL.—Subsection (c) of section 38 (re11 lating to limitation based on amount of tax) is amended

12 by redesignating paragraph (4) as paragraph (5) and by

13 inserting after paragraph (3) the following new paragraph:

14 ‘‘(4) SPECIAL RULES FOR SPECIFIED ENERGY

15 CREDITS.—

16 ‘‘(A) IN GENERAL.—In the case of speci17 fied energy credits—

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

19 be applied separately with respect to such

20 credits, and

21 ‘‘(ii) in applying paragraph (1) to

22 such credits—

23 ‘‘(I) the tentative minimum tax

24 shall be treated as being zero, and
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1 ‘‘(II) the limitation under para2 graph (1) (as modified by subclause

3 (I)) shall be reduced by the credit al4 lowed under subsection (a) for the

5 taxable year (other than the specified

6 energy credits).

7 ‘‘(B) SPECIFIED ENERGY CREDITS.—For

8 purposes of this subsection, the term ‘specified

9 energy credits’ means the credits determined

10 under sections 45G, 45H, 45I, and 45J. For

11 taxable years beginning after December 31,

12 2003, such term includes the credit determined

13 under section 40. For taxable years beginning

14 after December 31, 2003, and before January

15 1, 2006, such term includes the credit deter16 mined under section 43.

17 ‘‘(C) SPECIAL RULE FOR ELECTRICITY

18 PRODUCED FROM QUALIFIED FACILITIES.—For

19 purposes of this subsection, the term ‘specified

20 energy credits’ shall include the credit deter21 mined under section 45 to the extent that such

22 credit is attributable to electricity produced—

23 ‘‘(i) at a facility which is originally

24 placed in service after the date of the en25 actment of this paragraph, and
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1 ‘‘(ii) during the 4-year period begin2 ning on the date that such facility was

3 originally placed in service.’’.

4 (b) CONFORMING AMENDMENTS.—

5 (1) Paragraph (2)(A)(ii)(II) of section 38(c) is

6 amended by striking ‘‘or’’ and inserting a comma

7 and by inserting ‘‘, and the specified energy credits’’

8 after ‘‘employee credit’’.

9 (2) Paragraph (3)(A)(ii)(II) of section 38(c) is

10 amended by inserting ‘‘and the specified energy

11 credits’’ after ‘‘employee credit’’.

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

13 this section shall apply to taxable years ending after the

14 date of the enactment of this Act.

15 SEC. 1348. TEMPORARY REPEAL OF ALTERNATIVE MIN16 IMUM TAX PREFERENCE FOR INTANGIBLE

17 DRILLING COSTS.

18 (a) IN GENERAL.—Clause (ii) of section 57(a)(2)(E)

19 is amended by adding at the end the following new sen20 tence: ‘‘The preceding sentence shall not apply to taxable

21 years beginning after December 31, 2003, and before Jan22 uary 1, 2006.’’.

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

24 this section shall apply to taxable years beginning after

25 December 31, 2003.
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1 PART III—CLEAN COAL INCENTIVES

2 SEC. 1351. CREDIT FOR CLEAN COAL TECHNOLOGY UNITS.

3 (a) IN GENERAL.—Subpart E of part IV of sub4 chapter A of chapter 1 (relating to rules for computing

5 investment credit) is amended by inserting after section

6 48 the following new section:

7 ‘‘SEC. 48A. CLEAN COAL TECHNOLOGY CREDIT.

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

9 clean coal technology credit for any taxable year is an

10 amount equal to the applicable percentage of the basis of

11 qualified clean coal property placed in service during such

12 year.

13 ‘‘(b) APPLICABLE PERCENTAGE.—For purposes of

14 this section, the applicable percentage is—

15 ‘‘(1) 15 percent in the case of property placed

16 in service in connection with any basic clean coal

17 technology unit, and

18 ‘‘(2) 17.5 percent in the case of property placed

19 in service in connection with any advanced clean coal

20 technology unit.

21 ‘‘(c) QUALIFIED CLEAN COAL PROPERTY.—For pur22 poses of this section—

23 ‘‘(1) IN GENERAL.—The term ‘qualified clean

24 coal property’ means section 1245 property—

25 ‘‘(A) which is installed in connection

26 with—
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1 ‘‘(i) an existing coal-based unit as

2 part of the conversion of such unit to any

3 basic or advanced clean coal technology

4 unit, or

5 ‘‘(ii) any new advanced clean coal

6 technology unit,

7 ‘‘(B) which is placed in service after De8 cember 31, 2003, and before—

9 ‘‘(i) in the case of property to which

10 subsection (b)(1) applies, January 1, 2014,

11 and

12 ‘‘(ii) in the case of property to which

13 subsection (b)(2) applies, January 1, 2017

14 (January 1, 2013, in the case of property

15 installed in connection with an eligible ad16 vanced pulverized coal or atmospheric flu17 idized bed combustion technology unit),

18 ‘‘(C) the original use of which commences

19 with the taxpayer, and

20 ‘‘(D) which has a useful life of not less

21 than 4 years.

22 ‘‘(2) EXISTING COAL-BASED UNIT.—The term

23 ‘existing coal-based unit’ means a coal-based elec24 tricity generating steam generator-turbine unit—
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1 ‘‘(A) which is not a basic or advanced

2 clean coal technology unit, and

3 ‘‘(B) which is in operation on or before

4 January 1, 2004.

5 In the case of a unit being converted to a basic clean

6 coal technology unit, such term shall not include a

7 unit having a nameplate capacity rating of more

8 than 300 megawatts.

9 ‘‘(3) NEW ADVANCED CLEAN COAL TECH10 NOLOGY UNIT.—The term ‘new advanced clean coal

11 technology unit’ means any advanced clean coal

12 technology unit which is placed in service after De13 cember 31, 2003, and the original use of which com14 mences with the taxpayer.

15 ‘‘(d) BASIC CLEAN COAL TECHNOLOGY UNIT.—For

16 purposes of this section—

17 ‘‘(1) IN GENERAL.—The term ‘basic clean coal

18 technology unit’ means a unit which—

19 ‘‘(A) uses clean coal technology (including

20 advanced pulverized coal or atmospheric fluid21 ized bed combustion, pressurized fluidized bed

22 combustion, and integrated gasification com23 bined cycle) for the production of electricity,
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1 ‘‘(B) uses an input of at least 75 percent

2 coal to produce at least 50 percent of its ther3 mal output as electricity,

4 ‘‘(C) has a design net heat rate of at least

5 500 less than that of the existing coal-based

6 unit prior to its conversion,

7 ‘‘(D) has a maximum design net heat rate

8 of not more than 9,500, and

9 ‘‘(E) meets the pollution control require10 ments of paragraph (2).

11 Such term shall not include an advanced clean coal

12 technology unit.

13 ‘‘(2) POLLUTION CONTROL REQUIREMENTS.—

14 ‘‘(A) IN GENERAL.—A unit meets the re15 quirements of this paragraph if—

16 ‘‘(i) its emissions of sulfur dioxide, ni17 trogen oxide, or particulates meet the

18 lower of the emission levels for each such

19 emission specified in—

20 ‘‘(I) subparagraph (B), or

21 ‘‘(II) the new source performance

22 standards of the Clean Air Act (42

23 U.S.C. 7411) which are in effect for

24 the category of source at the time of

25 the conversion of the unit, and
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1 ‘‘(ii) its emissions do not exceed any

2 relevant emission level specified by regula3 tion pursuant to the hazardous air pollut4 ant requirements of the Clean Air Act (42

5 U.S.C. 7412) in effect at the time of the

6 conversion of the unit.

7 ‘‘(B) SPECIFIC LEVELS.—The levels speci8 fied in this subparagraph are—

9 ‘‘(i) in the case of sulfur dioxide emis10 sions, 50 percent of the sulfur dioxide

11 emission levels specified in the new source

12 performance standards of the Clean Air

13 Act (42 U.S.C. 7411) in effect on the date

14 of the enactment of this section for the

15 category of source,

16 ‘‘(ii) in the case of nitrogen oxide

17 emissions—

18 ‘‘(I) 0.1 pound per million Btu of

19 heat input if the unit is not a cyclone20 fired boiler, and

21 ‘‘(II) if the unit is a cyclone-fired

22 boiler, 15 percent of the uncontrolled

23 nitrogen oxide emissions from such

24 boilers, and
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1 ‘‘(iii) in the case of particulate emis2 sions, 0.02 pound per million Btu of heat

3 input.

4 ‘‘(3) DESIGN NET HEAT RATE.—The design net

5 heat rate with respect to any unit, measured in Btu

6 per kilowatt hour (HHV)—

7 ‘‘(A) shall be based on the design annual

8 heat input to and the design annual net elec9 trical power, fuels, and chemicals output from

10 such unit (determined without regard to such

11 unit’s co-generation of steam),

12 ‘‘(B) shall be adjusted for the heat content

13 of the design coal to be used by the unit if it

14 is less than 12,000 Btu per pound according to

15 the following formula:

16 ‘‘(C) shall be corrected for the site ref17 erence conditions of—

18 ‘‘(i) elevation above sea level of 500

19 feet,

20 ‘‘(ii) air pressure of 14.4 pounds per

21 square inch absolute (psia),

22 ‘‘(iii) temperature, dry bulb of 63°F,

23 ‘‘(iv) temperature, wet bulb of 54°F,

24 and
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1 ‘‘(v) relative humidity of 55 percent,

2 and

3 ‘‘(D) if carbon capture controls have been

4 installed with respect to any existing coal-based

5 unit and such controls remove at least 50 per6 cent of the unit’s carbon dioxide emissions,

7 shall be adjusted up to the design heat rate

8 level which would have resulted without the in9 stallation of such controls.

10 ‘‘(4) HHV.—The term ‘HHV’ means higher

11 heating value.

12 ‘‘(e) ADVANCED CLEAN COAL TECHNOLOGY UNIT.—

13 For purposes of this section—

14 ‘‘(1) IN GENERAL.—The term ‘advanced clean

15 coal technology unit’ means any electricity gener16 ating unit of the taxpayer—

17 ‘‘(A) which is—

18 ‘‘(i) an eligible advanced pulverized

19 coal or atmospheric fluidized bed combus20 tion technology unit,

21 ‘‘(ii) an eligible pressurized fluidized

22 bed combustion technology unit,

23 ‘‘(iii) an eligible integrated gasifi24 cation combined cycle technology unit, or

25 ‘‘(iv) an eligible other technology unit,
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1 ‘‘(B) which uses an input of at least 75

2 percent coal to produce at least 50 percent of

3 its thermal output as electricity, and

4 ‘‘(C) which meets the carbon emission rate

5 requirements of paragraph (6).

6 ‘‘(2) ELIGIBLE ADVANCED PULVERIZED COAL

7 OR ATMOSPHERIC FLUIDIZED BED COMBUSTION

8 TECHNOLOGY UNIT.—The term ‘eligible advanced

9 pulverized coal or atmospheric fluidized bed combus10 tion technology unit’ means a clean coal technology

11 unit using advanced pulverized coal or atmospheric

12 fluidized bed combustion technology which has a de13 sign net heat rate of not more than 8,500 (8,900 in

14 the case of units placed in service before 2009).

15 ‘‘(3) ELIGIBLE PRESSURIZED FLUIDIZED BED

16 COMBUSTION TECHNOLOGY UNIT.—The term ‘eligi17 ble pressurized fluidized bed combustion technology

18 unit’ means a clean coal technology unit using pres19 surized fluidized bed combustion technology which

20 has a design net heat rate of not more than 7,720

21 (8,900 in the case of units placed in service before

22 2009, and 8,500 in the case of units placed in serv23 ice after 2008 and before 2013).

24 ‘‘(4) ELIGIBLE INTEGRATED GASIFICATION

25 COMBINED CYCLE TECHNOLOGY UNIT.—The term
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1 ‘eligible integrated gasification combined cycle tech2 nology unit’ means a clean coal technology unit

3 using integrated gasification combined cycle tech4 nology, with or without fuel or chemical co5 production—

6 ‘‘(A) which has a design net heat rate of

7 not 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), and

11 ‘‘(B) has a net thermal efficiency (HHV)

12 using coal with fuel or chemical co-production

13 of not less than 44.2 percent (38.4 percent in

14 the case of units placed in service before 2009,

15 and 40.2 percent in the case of units placed in

16 service after 2008 and before 2013).

17 ‘‘(5) ELIGIBLE OTHER TECHNOLOGY UNIT.—

18 The term ‘eligible other technology unit’ means a

19 clean coal technology unit—

20 ‘‘(A) which uses any other technology for

21 the production of electricity, and

22 ‘‘(B) which has a design net heat rate

23 which meets the requirement of paragraph (2).

24 ‘‘(6) CARBON EMISSION RATE REQUIRE25 MENTS.—
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1 ‘‘(A) IN GENERAL.—Except as provided in

2 subparagraph (B), a unit meets the require3 ments of this paragraph if—

4 ‘‘(i) in the case of a unit using design

5 coal with a heat content of not more than

6 9,000 Btu per pound, the carbon emission

7 rate is less than 0.60 pound of carbon per

8 kilowatt hour, and

9 ‘‘(ii) in the case of a unit using design

10 coal with a heat content of more than

11 9,000 Btu per pound, the carbon emission

12 rate is less than 0.54 pound of carbon per

13 kilowatt hour.

14 ‘‘(B) ELIGIBLE OTHER TECHNOLOGY

15 UNIT.—In the case of an eligible other tech16 nology unit, subparagraph (A) shall be applied

17 by substituting ‘0.51’ and ‘0.459’ for ‘0.60’ and

18 ‘0.54’, respectively.

19 ‘‘(f) NATIONAL LIMITATIONS ON CREDIT.—For pur20 poses of this section—

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

22 which would (but for this subsection) be allowed

23 with respect to any property shall not exceed the

24 amount which bears the same ratio to such amount

25 of credit as—
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1 ‘‘(A) the national megawatt capacity limi2 tation allocated to the taxpayer with respect to

3 the basic or advanced clean coal technology unit

4 to which such property relates, bears to

5 ‘‘(B) the total megawatt capacity of such

6 unit.

7 The capacity described in subparagraph (B) shall be

8 the reasonably expected capacity after the installa9 tion of the property.

10 ‘‘(2) AMOUNT OF NATIONAL LIMITATION.—

11 ‘‘(A) ADVANCED UNITS.—The national

12 megawatt capacity limitation for advanced clean

13 coal technology units shall be 6,000 megawatts.

14 Of such amount, the national megawatt capac15 ity limitation is—

16 ‘‘(i) for advanced clean coal tech17 nology units using advanced pulverized

18 coal or atmospheric fluidized bed combus19 tion technology, not more than 1,500

20 megawatts (not more than 750 megawatts

21 in the case of units placed in service before

22 2009),

23 ‘‘(ii) for such units using pressurized

24 fluidized bed combustion technology, not

25 more than 750 megawatts (not more than
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1 375 megawatts in the case of units placed

2 in service before 2009),

3 ‘‘(iii) for such units using integrated

4 gasification combined cycle technology,

5 with or without fuel or chemical co-produc6 tion, not more than 3,000 megawatts (not

7 more than 1,250 megawatts in the case of

8 units placed in service before 2009), and

9 ‘‘(iv) for such units using other tech10 nology for the production of electricity, not

11 more than 750 megawatts (not more than

12 375 megawatts in the case of units placed

13 in service before 2009).

14 ‘‘(B) BASIC UNITS.—The national mega15 watt capacity limitation for basic clean coal

16 technology units shall be 4,000 megawatts.

17 ‘‘(3) ALLOCATION OF LIMITATION.—The Sec18 retary shall allocate the national megawatt capacity

19 limitations in such manner as the Secretary may

20 prescribe, except that the Secretary may not allocate

21 more than 300 megawatts to any basic clean coal

22 technology unit.

23 ‘‘(4) REGULATIONS.—Not later than 6 months

24 after the date of the enactment of this section, the

25 Secretary shall prescribe such regulations as may be
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1 necessary or appropriate to carry out the purposes

2 of this subsection. Such regulations shall provide a

3 certification process under which the Secretary, after

4 consultation with the Secretary of Energy, shall ap5 prove and allocate the national megawatt capacity

6 limitations—

7 ‘‘(A) to encourage that units with the high8 est thermal efficiencies, when adjusted for the

9 heat content of the design coal and site ref10 erence conditions, and environmental perform11 ance, be placed in service as soon as possible,

12 and

13 ‘‘(B) to allocate capacity to taxpayers

14 which have a definite and credible plan for plac15 ing into commercial operation a basic or ad16 vanced clean coal technology unit, including—

17 ‘‘(i) a site,

18 ‘‘(ii) contractual commitments for

19 procurement and construction or, in the

20 case of regulated utilities, the agreement of

21 the State utility commission,

22 ‘‘(iii) filings for all necessary

23 preconstruction approvals,
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1 ‘‘(iv) a demonstrated record of having

2 successfully completed comparable projects

3 on a timely basis, and

4 ‘‘(v) such other factors which the Sec5 retary determines are appropriate.

6 ‘‘(g) SPECIAL RULES.—For purposes of this

7 section—

8 ‘‘(1) CERTAIN PROGRESS EXPENDITURE RULES

9 MADE APPLICABLE.—Rules similar to the rules of

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

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

12 Revenue Reconciliation Act of 1990) shall apply for

13 purposes of this section.

14 ‘‘(2) PROPERTY FINANCED BY SUBSIDIZED FI15 NANCING OR INDUSTRIAL DEVELOPMENT BONDS.—

16 Rules similar to the rules of section 45(b)(3) shall

17 apply for purposes of this section.

18 ‘‘(3) NONCOMPLIANCE WITH POLLUTION

19 LAWS.—The terms ‘basic clean coal technology unit’

20 and ‘advanced clean coal technology unit’ shall not

21 include any unit which is not in compliance with the

22 applicable Federal pollution prevention, control, and

23 permit requirements at any time during the period

24 applicable under subsection (c)(1)(B).
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1 ‘‘(4) DENIAL OF CREDIT FOR UNITS RECEIVING

2 CERTAIN OTHER FEDERAL ASSISTANCE.—The terms

3 ‘basic clean coal technology unit’ and ‘advanced

4 clean coal technology unit’ shall not include any unit

5 if, at any time during the period applicable under

6 subsection (c)(1)(B), any funding is provided to such

7 unit under the Clean Coal Technology Program, the

8 Power Plant Improvement Initiative, or the Clean

9 Coal Power Initiative administered by the Secretary

10 of Energy.

11 ‘‘(5) COORDINATION WITH OTHER CREDITS.—

12 This section shall not apply to any property with re13 spect to which the rehabilitation credit under section

14 47, the energy credit under section 48, or any credit

15 under section 45 or 45K is allowable unless the tax16 payer elects to waive the application of such credit

17 to such property.’’.

18 (b) SPECIAL RECAPTURE RULES.—

19 (1) Subsection (a) of section 50 is amended by

20 redesignating paragraph (3), (4), and (5) as para21 graphs (4), (5), and (6), respectively, and by insert22 ing after paragraph (2) the following new para23 graph:

24 ‘‘(3) SPECIAL RULES FOR CLEAN COAL TECH25 NOLOGY CREDITS.—
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1 ‘‘(A) EARLY DISPOSITION, ETC.—If, dur2 ing any taxable year, qualified clean coal prop3 erty is disposed of, or otherwise ceases to be

4 part of a basic or advanced clean coal tech5 nology unit with respect to the taxpayer, before

6 the close of the recovery period under section

7 168 for such unit, then the tax under this chap8 ter for such taxable year shall be increased

9 by—

10 ‘‘(i) the aggregate decrease in the

11 credits allowed under section 38 for all

12 prior taxable years which would have re13 sulted solely from reducing to zero any

14 credit determined under section 48A with

15 respect to such property, multiplied by

16 ‘‘(ii) a fraction—

17 ‘‘(I) the numerator of which is

18 the number of years in the period be19 ginning with the year of such disposi20 tion or cessation and ending with the

21 last year of such recovery period, and

22 ‘‘(II) the denominator of which is

23 the total number of years in such re24 covery period.
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1 ‘‘(B) PROPERTY CEASES TO QUALIFY FOR

2 PROGRESS EXPENDITURES.—Rules similar to

3 the rules of this paragraph shall apply in cases

4 where qualified progress expenditures were

5 taken into account under the rules referred to

6 in section 48A(g)(1).

7 ‘‘(C) INCREASED RECAPTURE IN CERTAIN

8 CASES.—The fraction in subparagraph (A)(ii)

9 shall be 1 in any case in which the property

10 ceases to be a basic or advanced clean coal

11 technology unit by reason of paragraph (3), (4),

12 or (5) of section 48A(g).

13 ‘‘(D) COORDINATION WITH OTHER RECAP14 TURE RULES.—Paragraphs (1) and (2) shall

15 not apply to qualified clean coal property.

16 ‘‘(E) DEFINITIONS.—Terms used in this

17 section which are also used in section 48A shall

18 have the meanings given to such terms in sec19 tion 48A.’’.

20 (2) Paragraph (4) of section 50(a), as redesig21 nated by paragraph (1), is amended by striking ‘‘or

22 (2)’’ and inserting ‘‘, (2), or (3)’’.

23 (3) Paragraph (5) of section 50(a), as so redes24 ignated, is amended by striking ‘‘and (2)’’ and in25 serting ‘‘, (2), and (3)’’.
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1 (4) Section 1371(d)(1) is amended by striking

2 ‘‘section 50(a)(4)’’ and inserting ‘‘section 50(a)(5)’’.

3 (c) TECHNICAL AMENDMENTS.—

4 (1) Section 46 (relating to amount of credit) is

5 amended by striking ‘‘and’’ at the end of paragraph

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

7 (3) and inserting ‘‘, and’’, and by adding at the end

8 the following new paragraph:

9 ‘‘(4) the clean coal technology credit.’’.

10 (2) Section 49(a)(1)(C) is amended by striking

11 ‘‘and’’ at the end of clause (ii), by striking the pe12 riod at the end of clause (iii) and inserting ‘‘, and’’,

13 and by adding at the end the following new clause:

14 ‘‘(iv) the portion of the basis of any

15 qualified clean coal property (as defined by

16 section 48A(c)).’’.

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

18 IV of subchapter A of chapter 1 is amended by in19 serting after the item relating to section 48 the fol20 lowing new item:

‘‘Sec. 48A. Clean coal technology credit.’’.

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

22 this section shall apply to periods after December 31,

23 2003, under rules similar to the rules of section 48(m)

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

3 SEC. 1352. EXPANSION OF AMORTIZATION FOR CERTAIN

4 POLLUTION CONTROL FACILITIES.

5 (a) ELIGIBILITY OF POST-1975 POLLUTION CON6 TROL FACILITIES.—

7 (1) IN GENERAL.—Paragraph (1) of section

8 169(d) is amended by striking ‘‘before January 1,

9 1976,’’ and by striking ‘‘a new identifiable’’ and in10 serting ‘‘an identifiable’’.

11 (2) IDENTIFIABLE TREATMENT FACILITY.—

12 Paragraph (4) of section 169(d) is amended to read

13 as follows:

14 ‘‘(4) IDENTIFIABLE TREATMENT FACILITY.—

15 For purposes of paragraph (1), the term ‘identifiable

16 treatment facility’ includes only tangible property

17 (not including a building and its structural compo18 nents, other than a building which is exclusively a

19 treatment facility) which is of a character subject to

20 the allowance for depreciation provided in section

21 167, which is identifiable as a treatment facility, and

22 which is property—

23 ‘‘(A) the construction, reconstruction, or

24 erection of which is completed by the taxpayer,

25 or
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1 ‘‘(B) the original use of the property com2 mences with the taxpayer.’’.

3 (3) TECHNICAL AMENDMENT.—Section

4 169(d)(3) is amended by striking ‘‘Health, Edu5 cation, and Welfare’’ and inserting ‘‘Health and

6 Human Services’’.

7 (b) COORDINATION WITH SECTION 48A INVEST8 MENT CREDIT.—Section 169 is amended by redesignating

9 subsections (e) though (j) as subsection (f) through (k),

10 respectively, and by inserting after subsection (d) the fol11 lowing new subsection:

12 ‘‘(e) COORDINATION WITH SECTION 48A INVEST13 MENT CREDIT.—

14 ‘‘(1) IN GENERAL.—In the case of any treat15 ment facility used in connection with a plant or

16 other property to which an amount is allocated

17 under section 48A(f), this section shall apply only if

18 such plant or other property was in operation before

19 January 1, 1976.

20 ‘‘(2) 36-MONTH AMORTIZATION WITH RESPECT

21 TO PRE-1976 PLANTS NOT ALLOCATED CREDIT.—

22 References in this section to 60 months shall be

23 treated as references to 36 months in the case of

24 treatment facilities used in connection with a plant

25 or other property in operation before January 1,
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1 1976, if no allocation is made under section 48A(f)

2 with respect to such plant or property.’’.

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

4 this section shall apply to facilities placed in service after

5 the date of the enactment of this Act.

6 SEC. 1353. 5-YEAR RECOVERY PERIOD FOR ELIGIBLE INTE7 GRATED GASIFICATION COMBINED CYCLE

8 TECHNOLOGY UNIT ELIGIBLE FOR CREDIT.

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

10 168(e)(3) (defining 5-year property) is amended by strik11 ing ‘‘and’’ at the end of clause (v), by striking the period

12 at the end of clause (vi) and inserting ‘‘, and’’, and by

13 inserting after clause (vi) the following new clause:

14 ‘‘(vii) any section 1245 property

15 which is part of an eligible integrated gas16 ification combined cycle technology unit (as

17 defined in section 48A(e)(4)) for which an

18 allocation is made under section 48A(f).’’.

19 (b) ALTERNATIVE SYSTEM.—The table contained in

20 section 168(g)(3)(B) (relating to special rule for certain

21 property assigned to classes) is amended by inserting after

22 the item relating to subparagraph (B)(iii) the following

23 new item:

‘‘(B) (vii) ................................................................................................... 20’’.

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

25 this section shall apply to property placed in service after
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1 the date of the enactment of this Act in taxable years end2 ing after such date.

3 PART IV—HIGH VOLUME NATURAL GAS

4 PROVISIONS

5 SEC. 1355. HIGH VOLUME NATURAL GAS PIPE TREATED AS

6 7-YEAR PROPERTY.

7 (a) IN GENERAL.—Section 168(e)(3)(C) (defining 7-

8 year property), as amended by this Act, is amended by

9 striking ‘‘and’’ at the end of clause (ii), by redesignating

10 clause (iii) as clause (iv), and by inserting after clause (ii)

11 the following new clause:

12 ‘‘(iii) any high volume natural gas

13 pipe the original use of which commences

14 with the taxpayer after the date of the en15 actment of this clause, and’’.

16 (b) HIGH VOLUME NATURAL GAS PIPE.—Section

17 168(i) (relating to definitions and special rules), as

18 amended by this Act, is amended by adding at the end

19 the following new paragraph:

20 ‘‘(17) HIGH VOLUME NATURAL GAS PIPE.—The

21 term ‘high volume natural gas pipe’ means—

22 ‘‘(A) pipe which has an interior diameter

23 of at least 42 inches and which is part of a nat24 ural gas pipeline system, and
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1 ‘‘(B) any related equipment and appur2 tenances used in connection with such pipe.’’.

3 (c) ALTERNATIVE SYSTEM.—The table contained in

4 section 168(g)(3)(B) (relating to special rule for certain

5 property assigned to classes), as amended by this Act, is

6 amended by inserting after the item relating to subpara7 graph (C)(ii) the following new item:

‘‘(C) (iii) .................................................................................................... 22’’.

8 (d) ALTERNATIVE MINIMUM TAX EXCEPTION.—Sub9 paragraph (B) of section 56(a)(1), as amended by this

10 Act, is amended by inserting before the period the fol11 lowing: ‘‘, or in section 168(e)(3)(C)(iii)’’.

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

13 this section shall apply to property placed in service on

14 or after the date of the enactment of this Act.

15 SEC. 1356. EXTENSION OF ENHANCED OIL RECOVERY

16 CREDIT TO HIGH VOLUME NATURAL GAS FA17 CILITIES.

18 (a) IN GENERAL.—Section 43(c)(1) (defining quali19 fied enhanced oil recovery costs) is amended by adding at

20 the end the following new subparagraph:

21 ‘‘(D) Any amount which is paid or in22 curred during the taxable year in connection

23 with the construction of a gas treatment plant

24 which—
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1 ‘‘(i) prepares natural gas for transpor2 tation through a pipeline with a capacity of

3 at least 1,000,000,000,000 Btu of natural

4 gas per day, and

5 ‘‘(ii) produces carbon dioxide which is

6 injected into hydrocarbon-bearing geologi7 cal formations.’’.

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

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

10 years beginning after December 31, 2003.

11 Subtitle D—Additional Provisions

12 SEC. 1361. EXTENSION OF ACCELERATED DEPRECIATION

13 BENEFIT FOR ENERGY-RELATED BUSINESSES

14 ON INDIAN RESERVATIONS.

15 Paragraph (8) of section 168(j) (relating to termi16 nation) is amended by adding at the end the following new

17 sentence: ‘‘The preceding sentence shall be applied by sub18 stituting ‘‘December 31, 2005’’ for ‘‘December 31, 2004’’

19 in the case of property placed in service as part of a facil20 ity for—

21 ‘‘(A) the generation or transmission of

22 electricity (including from any qualified energy

23 resource, as defined in section 45(c)),

24 ‘‘(B) an oil or gas well,
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1 ‘‘(C) the transmission or refining of oil or

2 gas, or

3 ‘‘(D) the production of any qualified fuel

4 (as defined in section 45K(c)).’’.

5 SEC. 1362. PAYMENT OF DIVIDENDS ON STOCK OF CO6 OPERATIVES WITHOUT REDUCING PATRON7 AGE DIVIDENDS.

8 (a) IN GENERAL.—Subsection (a) of section 1388

9 (relating to patronage dividend defined) is amended by

10 adding at the end the following: ‘‘For purposes of para11 graph (3), net earnings shall not be reduced by amounts

12 paid during the year as dividends on capital stock or other

13 proprietary capital interests of the organization to the ex14 tent that the articles of incorporation or bylaws of such

15 organization or other contract with patrons provide that

16 such dividends are in addition to amounts otherwise pay17 able to patrons which are derived from business done with

18 or for patrons during the taxable year.’’.

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

20 this section shall apply to distributions in taxable years

21 ending after the date of the enactment of this Act.
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1 SEC. 1363. DISTRIBUTIONS FROM PUBLICLY TRADED PART2 NERSHIPS TREATED AS QUALIFYING INCOME

3 OF REGULATED INVESTMENT COMPANIES.

4 (a) IN GENERAL.—Paragraph (2) of section 851(b)

5 (defining regulated investment company) is amended to

6 read as follows:

7 ‘‘(2) at least 90 percent of its gross income is

8 derived from—

9 ‘‘(A) dividends, interest, payments with re10 spect to securities loans (as defined in section

11 512(a)(5)), and gains from the sale or other

12 disposition of stock or securities (as defined in

13 section 2(a)(36) of the Investment Company

14 Act of 1940, as amended) or foreign currencies,

15 or other income (including but not limited to

16 gains from options, futures or forward con17 tracts) derived with respect to its business of

18 investing in such stock, securities, or currencies,

19 and

20 ‘‘(B) distributions or other income derived

21 from an interest in a qualified publicly traded

22 partnership (as defined in subsection (h));

23 and’’.

24 (b) SOURCE FLOW-THROUGH RULE NOT TO

25 APPLY.—The last sentence of section 851(b) is amended

26 by inserting ‘‘(other than a qualified publicly traded part-
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1 nership as defined in subsection (h))’’ after ‘‘derived from

2 a partnership’’.

3 (c) LIMITATION ON OWNERSHIP.—Subsection (c) of

4 section 851 is amended by redesignating paragraph (5)

5 as paragraph (6) and inserting after paragraph (4) the

6 following new paragraph:

7 ‘‘(5) The term ‘outstanding voting securities of

8 such issuer’ shall include the equity securities of a

9 qualified publicly traded partnership (as defined in

10 subsection (h)).’’.

11 (d) DEFINITION OF QUALIFIED PUBLICLY TRADED

12 PARTNERSHIP.—Section 851 is amended by adding at the

13 end the following new subsection:

14 ‘‘(h) QUALIFIED PUBLICLY TRADED PARTNER15 SHIP.—For purposes of this section, the term ‘qualified

16 publicly traded partnership’ means a publicly traded part17 nership described in section 7704(b) other than a partner18 ship which would satisfy the gross income requirements

19 of section 7704(c)(2) if qualifying income included only

20 income described in subsection (b)(2)(A).’’.

21 (e) DEFINITION OF QUALIFYING INCOME.—Section

22 7704(d)(4) is amended by striking ‘‘section 851(b)(2)’’

23 and inserting ‘‘section 851(b)(2)(A)’’.
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1 (f) LIMITATION ON COMPOSITION OF ASSETS.—Sub2 paragraph (B) of section 851(b)(3) is amended to read

3 as follows:

4 ‘‘(B) not more than 25 percent of the

5 value of its total assets is invested in—

6 ‘‘(i) the securities (other than Govern7 ment securities or the securities of other

8 regulated investment companies) of any

9 one issuer,

10 ‘‘(ii) the securities (other than the se11 curities of other regulated investment com12 panies) of two or more issuers which the

13 taxpayer controls and which are deter14 mined, under regulations prescribed by the

15 Secretary, to be engaged in the same or

16 similar trades or businesses or related

17 trades or businesses, or

18 ‘‘(iii) the securities of one or more

19 qualified publicly traded partnerships (as

20 defined in subsection (h)).’’.

21 (g) APPLICATION OF SPECIAL PASSIVE ACTIVITY

22 RULE TO REGULATED INVESTMENT COMPANIES.—Sub23 section (k) of section 469 (relating to separate application

24 of section in case of publicly traded partnerships) is
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1 amended by adding at the end the following new para2 graph:

3 ‘‘(4) APPLICATION TO REGULATED INVEST4 MENT COMPANIES.—For purposes of this section, a

5 regulated investment company (as defined in section

6 851) holding an interest in a qualified publicly trad7 ed partnership (as defined in section 851(h)) shall

8 be treated as a taxpayer described in subsection

9 (a)(2) with respect to items attributable to such in10 terest.’’.

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

12 this section shall apply to taxable years beginning after

13 the date of the enactment of this Act.

14 SEC. 1364. CEILING FANS.

15 (a) IN GENERAL.—Subchapter II of chapter 99 of

16 the Harmonized Tariff Schedule of the United States is

17 amended by inserting in numerical sequence the following

18 new heading:

‘‘ 9902.84.14 Ceiling fans for permanent

installation (provided for in

subheading 8414.51.00) ...... Free No change No change On or before

12/31/2005 ’’.

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

20 this section applies to goods entered, or withdrawn from

21 warehouse, for consumption on or after the 15th day after

22 the date of enactment of this Act.
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1 SEC. 1365. CERTAIN STEAM GENERATORS, AND CERTAIN

2 REACTOR VESSEL HEADS, USED IN NUCLEAR

3 FACILITIES.

4 (a) CERTAIN STEAM GENERATORS.—Heading

5 9902.84.02 of the Harmonized Tariff Schedule of the

6 United States is amended by striking ‘‘12/31/2006’’ and

7 inserting ‘‘12/31/2008’’.

8 (b) CERTAIN REACTOR VESSEL HEADS.—Sub9 chapter II of chapter 99 of the Harmonized Tariff Sched10 ule of the United States is amended by inserting in numer11 ical sequence the following new heading:

‘‘ 9902.84.03 Reactor vessel heads for nuclear reactors (provided for

in subheading 8401.40.00) .. Free No change No change On or before

12/31/2007 ’’.

12 (c) EFFECTIVE DATE.—

13 (1) SUBSECTION (a).—The amendment made

14 by subsection (a) shall take effect on the date of the

15 enactment of this Act.

16 (2) SUBSECTION (b).—The amendment made

17 by subsection (b) shall apply to goods entered, or

18 withdrawn from warehouse, for consumption on or

19 after the 15th day after the date of the enactment

20 of this Act.
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1 SEC. 1366. BROWNFIELDS DEMONSTRATION PROGRAM FOR

2 QUALIFIED GREEN BUILDING AND SUSTAIN3 ABLE DESIGN PROJECTS.

4 (a) TREATMENT AS EXEMPT FACILITY BOND.—Sub5 section (a) of section 142 (relating to the definition of ex6 empt facility bond) is amended by striking ‘‘or’’ at the

7 end of paragraph (12), by striking the period at the end

8 of paragraph (13) and inserting ‘‘, or’’, and by inserting

9 at the end the following new paragraph:

10 ‘‘(14) qualified green building and sustainable

11 design projects.’’.

12 (b) QUALIFIED GREEN BUILDING AND SUSTAINABLE

13 DESIGN PROJECTS.—Section 142 (relating to exempt fa14 cility bonds) is amended by adding at the end thereof the

15 following new subsection:

16 ‘‘(l) QUALIFIED GREEN BUILDING AND SUSTAIN17 ABLE DESIGN PROJECTS.—

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

19 (a)(14), the term ‘qualified green building and sus20 tainable design project’ means any project which is

21 designated by the Secretary, after consultation with

22 the Administrator of the Environmental Protection

23 Agency, as a qualified green building and sustain24 able design project and which meets the require25 ments of clauses (i), (ii), (iii), and (iv) of paragraph

26 (4)(A).
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1 ‘‘(2) DESIGNATIONS.—

2 ‘‘(A) IN GENERAL.—Within 60 days after

3 the end of the application period described in

4 paragraph (3)(A), the Secretary, after consulta5 tion with the Administrator of the Environ6 mental Protection Agency, shall designate quali7 fied green building and sustainable design

8 projects. At least one of the projects designated

9 shall be located in, or within a 10-mile radius

10 of, an empowerment zone as designated pursu11 ant to section 1391, and at least one of the

12 projects designated shall be located in a rural

13 State. No more than one project shall be des14 ignated in a State. A project shall not be des15 ignated if such project includes a stadium or

16 arena for professional sports exhibitions or

17 games.

18 ‘‘(B) MINIMUM CONSERVATION AND TECH19 NOLOGY INNOVATION OBJECTIVES.—The Sec20 retary, after consultation with the Adminis21 trator of the Environmental Protection Agency,

22 shall ensure that, in the aggregate, the projects

23 designated shall—
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1 ‘‘(i) reduce electric consumption by

2 more than 150 megawatts annually as

3 compared to conventional construction,

4 ‘‘(ii) reduce daily sulfur dioxide emis5 sions by at least 10 tons compared to coal

6 generation power,

7 ‘‘(iii) expand by 75 percent the do8 mestic solar photovoltaic market in the

9 United States (measured in megawatts) as

10 compared to the expansion of that market

11 from 2001 to 2002, and

12 ‘‘(iv) use at least 25 megawatts of

13 fuel cell energy generation.

14 ‘‘(3) LIMITED DESIGNATIONS.—A project may

15 not be designated under this subsection unless—

16 ‘‘(A) the project is nominated by a State

17 or local government within 180 days of the en18 actment of this subsection, and

19 ‘‘(B) such State or local government pro20 vides written assurances that the project will

21 satisfy the eligibility criteria described in para22 graph (4).

23 ‘‘(4) APPLICATION.—

24 ‘‘(A) IN GENERAL.—A project may not be

25 designated under this subsection unless the ap-
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1 plication for such designation includes a project

2 proposal which describes the energy efficiency,

3 renewable energy, and sustainable design fea4 tures of the project and demonstrates that the

5 project satisfies the following eligibility criteria:

6 ‘‘(i) GREEN BUILDING AND SUSTAIN7 ABLE DESIGN.—At least 75 percent of the

8 square footage of commercial buildings

9 which are part of the project is registered

10 for United States Green Building Council’s

11 LEED certification and is reasonably ex12 pected (at the time of the designation) to

13 receive such certification.

14 ‘‘(ii) BROWNFIELD REDEVELOP15 MENT.—The project includes a brownfield

16 site as defined by section 101(39) of the

17 Comprehensive Environmental Response,

18 Compensation, and Liability Act of 1980

19 (42 U.S.C. 9601), including a site de20 scribed in subparagraph (D)(ii)(II)(aa)

21 thereof.

22 ‘‘(iii) STATE AND LOCAL SUPPORT.—

23 The project receives specific State or local

24 government resources which will support

25 the project in an amount equal to at least
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1 $5,000,000. For purposes of the preceding

2 sentence, the term ‘resources’ includes tax

3 abatement benefits and contributions in

4 kind.

5 ‘‘(iv) SIZE.—The project includes at

6 least one of the following:

7 ‘‘(I) At least 1,000,000 square

8 feet of building.

9 ‘‘(II) At least 20 acres.

10 ‘‘(v) USE OF TAX BENEFIT.—The

11 project proposal includes a description of

12 the net benefit of the tax-exempt financing

13 provided under this subsection which will

14 be allocated for financing of one or more

15 of the following:

16 ‘‘(I) The purchase, construction,

17 integration, or other use of energy ef18 ficiency, renewable energy, and sus19 tainable design features of the project.

20 ‘‘(II) Compliance with LEED

21 certification standards.

22 ‘‘(III) The purchase, remediation,

23 and foundation construction and prep24 aration of the brownfields site.
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1 ‘‘(vi) EMPLOYMENT.—The project is

2 projected to provide permanent employ3 ment of at least 1,500 full time equivalents

4 (150 full time equivalents in rural States)

5 when completed and construction employ6 ment of at least 1,000 full time equivalents

7 (100 full time equivalents in rural States).

8 The application shall include an independent

9 analysis which describes the project’s economic

10 impact, including the amount of projected em11 ployment.

12 ‘‘(B) PROJECT DESCRIPTION.—Each appli13 cation described in subparagraph (A) shall con14 tain for each project a description of—

15 ‘‘(i) the amount of electric consump16 tion reduced as compared to conventional

17 construction,

18 ‘‘(ii) the amount of sulfur dioxide

19 daily emissions reduced compared to coal

20 generation,

21 ‘‘(iii) the amount of the gross in22 stalled capacity of the project’s solar pho23 tovoltaic capacity measured in megawatts,

24 and
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1 ‘‘(iv) the amount, in megawatts, of

2 the project’s fuel cell energy generation.

3 ‘‘(5) CERTIFICATION OF USE OF TAX BEN4 EFIT.—No later than 30 days after the completion

5 of the project, each project must certify to the Sec6 retary that the net benefit of the tax-exempt financ7 ing was used for the purposes described in para8 graph (4).

9 ‘‘(6) DEFINITIONS.—For purposes of this

10 subsection—

11 ‘‘(A) RURAL STATE.—The term ‘rural

12 State’ means any State which has—

13 ‘‘(i) a population of less than

14 4,500,000 according to the 2000 census,

15 ‘‘(ii) a population density of less than

16 150 people per square mile according to

17 the 2000 census, and

18 ‘‘(iii) increased in population by less

19 than half the rate of the national increase

20 between the 1990 and 2000 censuses.

21 ‘‘(B) LOCAL GOVERNMENT.—The term

22 ‘local government’ has the meaning given such

23 term by section 1393(a)(5).

24 ‘‘(C) NET BENEFIT OF TAX-EXEMPT FI25 NANCING.—The term ‘net benefit of tax-exempt
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1 financing’ means the present value of the inter2 est savings (determined by a calculation estab3 lished by the Secretary) which result from the

4 tax-exempt status of the bonds.

5 ‘‘(7) AGGREGATE FACE AMOUNT OF TAX-EX6 EMPT FINANCING.—

7 ‘‘(A) IN GENERAL.—An issue shall not be

8 treated as an issue described in subsection

9 (a)(14) if the aggregate face amount of bonds

10 issued by the State or local government pursu11 ant thereto for a project (when added to the ag12 gregate face amount of bonds previously so

13 issued for such project) exceeds an amount des14 ignated by the Secretary as part of the designa15 tion.

16 ‘‘(B) LIMITATION ON AMOUNT OF

17 BONDS.—The Secretary may not allocate au18 thority to issue qualified green building and

19 sustainable design project bonds in an aggre20 gate face amount exceeding $2,000,000,000.

21 ‘‘(8) TERMINATION.—Subsection (a)(14) shall

22 not apply with respect to any bond issued after Sep23 tember 30, 2009.

24 ‘‘(9) TREATMENT OF CURRENT REFUNDING

25 BONDS.—Paragraphs (7)(B) and (8) shall not apply
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1 to any bond (or series of bonds) issued to refund a

2 bond issued under subsection (a)(14) before October

3 1, 2009, if—

4 ‘‘(A) the average maturity date of the issue

5 of which the refunding bond is a part is not

6 later than the average maturity date of the

7 bonds to be refunded by such issue,

8 ‘‘(B) the amount of the refunding bond

9 does not exceed the outstanding amount of the

10 refunded bond, and

11 ‘‘(C) the net proceeds of the refunding

12 bond are used to redeem the refunded bond not

13 later than 90 days after the date of the

14 issuance of the refunding bond.

15 For purposes of subparagraph (A), average maturity shall

16 be determined in accordance with section 147(b)(2)(A).’’.

17 (c) EXEMPTION FROM GENERAL STATE VOLUME

18 CAPS.—Paragraph (3) of section 146(g) (relating to ex19 ception for certain bonds) is amended—

20 (1) by striking ‘‘or (13)’’ and inserting ‘‘(13),

21 or (14)’’, and

22 (2) by striking ‘‘and qualified public educational

23 facilities’’ and inserting ‘‘qualified public educational

24 facilities, and qualified green building and sustain25 able design projects’’.
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1 (d) SPECIAL RULE FOR ASSETS FINANCED UNDER

2 THIS SECTION AND ACCOUNTABILITY.—

3 (1) DENIAL OF DOUBLE BENEFIT.—Any asset

4 financed with bonds issued pursuant to this section

5 shall be ineligible for any credit or deduction estab6 lished under the Energy Tax Policy Act of 2004.

7 (2) ACCOUNTABILITY.—Each issuer shall main8 tain, on behalf of each project, an interest bearing

9 reserve account equal to 1 percent of the net pro10 ceeds of any bond issued under this section for such

11 project. Not later than 5 years after the date of

12 issuance, the Secretary of the Treasury, after con13 sultation with the Administrator of the Environ14 mental Protection Agency, shall determine whether

15 the project financed with such bonds has substan16 tially complied with the terms and conditions de17 scribed in section 142(l)(4) of the Internal Revenue

18 Code of 1986 (as added by this section). If the Sec19 retary, after such consultation, certifies that the

20 project has substantially complied with such terms

21 and conditions and meets the commitments set forth

22 in the application for such project described in sec23 tion 142(l)(4) of such Code, amounts in the reserve

24 account, including all interest, shall be released to

25 the project. If the Secretary determines that the
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1 project has not substantially complied with such

2 terms and conditions, amounts in the reserve ac3 count, including all interest, shall be paid to the

4 United States Treasury.

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

6 this section shall apply to bonds issues after the date of

7 the enactment of this Act.

8 TITLE XIV—MISCELLANEOUS

9 Subtitle A—Rural and Remote

10 Electricity Construction

11 SEC. 1401. DENALI COMMISSION PROGRAMS.

12 (a) POWER COST EQUALIZATION PROGRAM.—There

13 are authorized to be appropriated to the Denali Commis14 sion established by the Denali Commission Act of 1998

15 (42 U.S.C. 3121 note) not more than $5,000,000 for each

16 of fiscal years 2005 through 2011 for the purposes of

17 funding the power cost equalization program established

18 under section 42.45.100 of the Alaska Statutes.

19 (b) AVAILABILITY OF FUNDS.—

20 (1) PURPOSE.—Amounts described in para21 graph (2) shall be available to the Denali Commis22 sion to permit energy generation and development

23 (including fuel cells, hydroelectric, solar, wind, wave,

24 and tidal energy, and alternative energy sources),

25 energy transmission (including interties), fuel tank
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1 replacement and clean-up, fuel transportation net2 works and related facilities, power cost equalization

3 programs, and other energy programs, notwith4 standing any other provision of law.

5 (2) AMOUNTS.—(A) Except as provided in sub6 paragraph (B), the amounts referred to in para7 graph (1) shall be any Federal royalties, rents, and

8 bonuses derived from the Federal share of Federal

9 oil and gas leases in the National Petroleum Reserve

10 in Alaska, up to a maximum of $50,000,000, for

11 each of the fiscal years 2004 through 2013.

12 (B) If amounts available under subparagraph

13 (A) for one of the fiscal years 2004 through 2013

14 are less than $50,000,000, the Secretary of Energy

15 shall make available an amount sufficient to ensure

16 that the amount available under this subsection for

17 that fiscal year equals $50,000,000, from amounts

18 remaining after deposits are made under section

19 949(a)(1), from the same source from which those

20 deposits are made.

21 SEC. 1402. RURAL AND REMOTE COMMUNITY ASSISTANCE.

22 (a) PROGRAM.—Section 19 of the Rural Electrifica23 tion Act of 1936 (7 U.S.C 918a) is amended by striking

24 all that precedes subsection (b) and inserting the fol25 lowing:
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1 ‘‘SEC. 19. ELECTRIC GENERATION, TRANSMISSION, AND

2 DISTRIBUTION FACILITIES EFFICIENCY

3 GRANTS AND LOANS TO RURAL AND REMOTE

4 COMMUNITIES WITH EXTREMELY HIGH ELEC5 TRICITY COSTS.

6 ‘‘(a) IN GENERAL.—The Secretary, acting through

7 the Rural Utilities Service, may—

8 ‘‘(1) in coordination with State rural develop9 ment initiatives, make grants and loans to persons,

10 States, political subdivisions of States, and other en11 tities organized under the laws of States, to acquire,

12 construct, extend, upgrade, and otherwise improve

13 electric generation, transmission, and distribution fa14 cilities serving communities in which the average

15 revenue per kilowatt hour of electricity for all con16 sumers is greater than 150 percent of the average

17 revenue per kilowatt hour of electricity for all con18 sumers in the United States (as determined by the

19 Energy Information Administration using the most

20 recent data available);

21 ‘‘(2) make grants and loans to the Denali Com22 mission established by the Denali Commission Act of

23 1998 (42 U.S.C. 3121 note; Public 105–277) to be

24 used for the purpose of providing funds to acquire,

25 construct, extend, upgrade, finance, and otherwise

26 improve electric generation, transmission, and dis-
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1 tribution facilities serving communities described in

2 paragraph (1); and

3 ‘‘(3) make grants to State entities to establish

4 and support a revolving fund to provide a more cost5 effective means of purchasing fuel in areas where

6 the fuel cannot be shipped by means of surface

7 transportation.’’.

8 (b) DEFINITION OF PERSON.—Section 13 of the

9 Rural Electrification Act of 1936 (7 U.S.C. 913) is

10 amended by striking ‘‘or association’’ and inserting ‘‘asso11 ciation, or Indian tribe (as defined in section 4 of the In12 dian Self-Determination and Education Assistance Act)’’.

13 Subtitle B—Coastal Programs

14 SEC. 1411. ROYALTY PAYMENTS UNDER LEASES UNDER

15 THE OUTER CONTINENTAL SHELF LANDS

16 ACT.

17 (a) ROYALTY RELIEF.—

18 (1) IN GENERAL.—For purposes of providing

19 compensation for lessees and a State for which

20 amounts are authorized by section 6004(c) of the Oil

21 Pollution Act of 1990 (Public Law 101–380), a les22 see may withhold from payment any royalty due and

23 owing to the United States under any leases under

24 the Outer Continental Shelf Lands Act (43 U.S.C.

25 1301 et seq.) for offshore oil or gas production from
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1 a covered lease tract if, on or before the date that

2 the payment is due and payable to the United

3 States, the lessee makes a payment to the Secretary

4 of the Interior of 44 cents for every $1 of royalty

5 withheld.

6 (2) USE OF AMOUNTS PAID TO SECRETARY.—

7 Within 30 days after the Secretary of the Interior

8 receives payments under paragraph (1), the Sec9 retary of the Interior shall—

10 (A) make 47.5 percent of such payments

11 available to the State referred to in section

12 6004(c) of the Oil Pollution Act of 1990; and

13 (B) make 52.5 percent of such payments

14 available equally, only for the programs and

15 purposes identified as number 282 at page

16 1389 of House Report number 108–10 and for

17 a program described at page 1159 of that Re18 port in the State referred to in such section

19 6004(c).

20 (3) TREATMENT OF AMOUNTS.—Any royalty

21 withheld by a lessee in accordance with this section

22 (including any portion thereof that is paid to the

23 Secretary of the Interior under paragraph (1)) shall

24 be treated as paid for purposes of satisfaction of the

25 royalty obligations of the lessee to the United States.
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1 (4) CERTIFICATION OF WITHHELD AMOUNTS.—

2 The Secretary of the Treasury shall—

3 (A) determine the amount of royalty with4 held by a lessee under this section; and

5 (B) promptly publish a certification when

6 the total amount of royalty withheld by the les7 see under this section is equal to—

8 (i) the dollar amount stated at page

9 47 of Senate Report number 101–534,

10 which is designated therein as the total

11 drainage claim for the West Delta field;

12 plus

13 (ii) interest as described at page 47 of

14 that Report.

15 (b) PERIOD OF ROYALTY RELIEF.—Subsection (a)

16 shall apply to royalty amounts that are due and payable

17 in the period beginning on January 1, 2004, and ending

18 on the date on which the Secretary of the Treasury pub19 lishes a certification under subsection (a)(4)(B).

20 (c) DEFINITIONS.—As used in this section:

21 (1) COVERED LEASE TRACT.—The term ‘‘cov22 ered lease tract’’ means a leased tract (or portion of

23 a leased tract)—
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1 (A) lying seaward of the zone defined and

2 governed by section 8(g) of the Outer Conti3 nental Shelf Lands Act (43 U.S.C. 1337(g)); or

4 (B) lying within such zone but to which

5 such section does not apply.

6 (2) LESSEE.—The term ‘‘lessee’’—

7 (A) means a person or entity that, on the

8 date of the enactment of the Oil Pollution Act

9 of 1990, was a lessee referred to in section

10 6004(c) of that Act (as in effect on that date

11 of the enactment), but did not hold lease rights

12 in Federal offshore lease OCS–G–5669; and

13 (B) includes successors and affiliates of a

14 person or entity described in subparagraph (A).

15 SEC. 1412. DOMESTIC OFFSHORE ENERGY REINVESTMENT.

16 (a) DOMESTIC OFFSHORE ENERGY REINVESTMENT

17 PROGRAM.—The Outer Continental Shelf Lands Act (43

18 U.S.C. 1331 et seq.) is amended by adding at the end

19 the following:

20 ‘‘SEC. 32. DOMESTIC OFFSHORE ENERGY REINVESTMENT

21 PROGRAM.

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

23 ‘‘(1) APPROVED PLAN.—The term ‘approved

24 plan’ means a Secure Energy Reinvestment Plan ap25 proved by the Secretary under this section.
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1 ‘‘(2) COASTAL ENERGY STATE.—The term

2 ‘Coastal Energy State’ means a Coastal State off

3 the coastline of which, within the seaward lateral

4 boundary as determined by the map referenced in

5 subsection (c)(2)(A), outer Continental Shelf bonus

6 bids or royalties are generated, other than bonus

7 bids or royalties from a leased tract within any area

8 of the outer Continental Shelf for which a morato9 rium on new leasing was in effect as of January 1,

10 2002, unless the lease was issued before the estab11 lishment of the moratorium and was in production

12 on such date.

13 ‘‘(3) COASTAL POLITICAL SUBDIVISION.—The

14 term ‘coastal political subdivision’ means a county,

15 parish, or other equivalent subdivision of a Coastal

16 Energy State, all or part of which lies within the

17 boundaries of the coastal zone of the State, as iden18 tified in the State’s approved coastal zone manage19 ment program under the Coastal Zone Management

20 Act of 1972 (16 U.S.C. 1451 et seq.) on the date

21 of the enactment of this section.

22 ‘‘(4) COASTAL POPULATION.—The term ‘coastal

23 population’ means the population of a coastal polit24 ical subdivision, as determined by the most recent

25 official data of the Census Bureau.
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1 ‘‘(5) COASTLINE.—The term ‘coastline’ has the

2 same meaning as the term ‘coast line’ in subsection

3 2(c) of the Submerged Lands Act (43 U.S.C.

4 1301(c)).

5 ‘‘(6) FUND.—The term ‘Fund’ means the Se6 cure Energy Reinvestment Fund established by this

7 section.

8 ‘‘(7) LEASED TRACT.—The term ‘leased tract’

9 means a tract maintained under section 6 or leased

10 under section 8 for the purpose of drilling for, devel11 oping, and producing oil and natural gas resources.

12 ‘‘(8) QUALIFIED OUTER CONTINENTAL SHELF

13 REVENUES.—(A) Except as provided in subpara14 graph (B), the term ‘qualified outer Continental

15 Shelf revenues’ means all amounts received by the

16 United States on or after October 1, 2003, from

17 each leased tract or portion of a leased tract lying

18 seaward of the zone defined and governed by section

19 8(g), or lying within such zone but to which section

20 8(g) does not apply, including bonus bids, rents, roy21 alties (including payments for royalties taken in kind

22 and sold), net profit share payments, and related in23 terest.

24 ‘‘(B) Such term does not include any revenues

25 from a leased tract or portion of a leased tract that
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1 is included within any area of the outer Continental

2 Shelf for which a moratorium on new leasing was in

3 effect as of January 1, 2002, unless the lease was

4 issued before the establishment of the moratorium

5 and was in production on such date.

6 ‘‘(9) SECRETARY.—The term ‘Secretary’ means

7 the Secretary of the Interior.

8 ‘‘(b) SECURE ENERGY REINVESTMENT FUND.—

9 ‘‘(1) ESTABLISHMENT.—There is established in

10 the Treasury of the United States a separate ac11 count which shall be known as the ‘Secure Energy

12 Reinvestment Fund’. The Fund shall consist of

13 amounts deposited under paragraph (2), and such

14 other amounts as may be appropriated to the Fund.

15 ‘‘(2) DEPOSITS.—For each fiscal year after fis16 cal year 2003, the Secretary of the Treasury shall

17 deposit into the Fund the following:

18 ‘‘(A) Notwithstanding section 9, all quali19 fied outer Continental Shelf revenues attrib20 utable to royalties received by the United States

21 in the fiscal year that are in excess of the fol22 lowing amount:

23 ‘‘(i) $3,455,000,000 in the case of

24 royalties received in fiscal year 2004.
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1 ‘‘(ii) $3,726,000,000 in the case of

2 royalties received in fiscal year 2005.

3 ‘‘(iii) $4,613,000,000 in the case of

4 royalties received in fiscal year 2006.

5 ‘‘(iv) $5,226,000,000 in the case of

6 royalties received in fiscal year 2007.

7 ‘‘(v) $5,841,000,000 in the case of

8 royalties received in fiscal year 2008.

9 ‘‘(vi) $5,763,000,000 in the case of

10 royalties received in fiscal year 2009.

11 ‘‘(vii) $6,276,000,000 in the case of

12 royalties received in fiscal year 2010.

13 ‘‘(viii) $6,351,000,000 in the case of

14 royalties received in fiscal year 2011.

15 ‘‘(ix) $6,551,000,000 in the case of

16 royalties received in fiscal year 2012.

17 ‘‘(x) $5,120,000,000 in the case of

18 royalties received in fiscal year 2013.

19 ‘‘(B) Notwithstanding section 9, all quali20 fied outer Continental shelf revenues attrib21 utable to bonus bids received by the United

22 States in each of the fiscal years 2004 through

23 2013 that are in excess of $1,000,000,000.

24 ‘‘(C) Notwithstanding section 9, in addi25 tion to amounts deposited under subparagraphs
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1 (A) and (B), $35,000,000 of amounts received

2 by the United States each fiscal year as royal3 ties for oil or gas production on the outer Con4 tinental Shelf, except that no amounts shall be

5 deposited under this subparagraph before fiscal

6 year 2004 or after fiscal year 2013.

7 ‘‘(D) All interest earned under paragraph

8 (4).

9 ‘‘(E) All repayments under subsection (f).

10 ‘‘(3) REDUCTION IN DEPOSIT.—(A) For each

11 fiscal year after fiscal year 2013 in which amounts

12 received by the United States as royalties for oil or

13 gas production on the outer Continental Shelf are

14 less than the sum of the amounts described in sub15 paragraph (B) (before the application of this sub16 paragraph), the Secretary of the Treasury shall re17 duce each of the amounts described in subparagraph

18 (B) proportionately.

19 ‘‘(B) The amounts referred to in subparagraph

20 (A) are the following:

21 ‘‘(i) The amount required to be covered

22 into the Historic Preservation Fund under sec23 tion 108 of the National Historic Preservation

24 Act (16 U.S.C. 470h) on the date of the enact25 ment of this paragraph.
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1 ‘‘(ii) The amount required to be credited to

2 the Land and Water Conservation Fund under

3 section 2(c)(2) of the Land and Water Con4 servation Fund Act of 1965 (16 U.S.C. 4601–

5 5(c)(2)) on the date of the enactment of this

6 paragraph.

7 ‘‘(iii) The amount required to be deposited

8 under subparagraph (C) of paragraph (2) of

9 this subsection.

10 ‘‘(4) INVESTMENT.—The Secretary of the

11 Treasury shall invest moneys in the Fund (including

12 interest) in public debt securities with maturities

13 suitable to the needs of the Fund, as determined by

14 the Secretary of the Treasury, and bearing interest

15 at rates determined by the Secretary of the Treas16 ury, taking into consideration current market yields

17 on outstanding marketable obligations of the United

18 States of comparable maturity. Such invested mon19 eys shall remain invested until needed to meet re20 quirements for disbursement under this section.

21 ‘‘(5) REVIEW AND REVISION OF BASELINE

22 AMOUNTS.—Not later than December 31, 2008, the

23 Secretary of the Interior, in consultation with the

24 Secretary of the Treasury, shall—
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1 ‘‘(A) determine the amount and composi2 tion of outer Continental Shelf revenues that

3 were received by the United States in each of

4 the fiscal years 2004 through 2008;

5 ‘‘(B) project the amount and composition

6 of outer Continental Shelf revenues that will be

7 received in the United States in each of the fis8 cal years 2009 through 2013; and

9 ‘‘(C) submit to the Congress a report re10 garding whether any of the dollar amounts set

11 forth in clauses (v) though (x) of paragraph

12 (2)(A) or paragraph (2)(B) should be modified

13 to reflect those projections.

14 ‘‘(6) AUTHORIZATION OF APPROPRIATION OF

15 ADDITIONAL AMOUNTS.—In addition to the amounts

16 deposited into the Fund under paragraph (2) there

17 are authorized to be appropriated to the Fund—

18 ‘‘(A) for each of fiscal years 2004 through

19 2013 up to $500,000,000; and

20 ‘‘(B) for each fiscal year after fiscal year

21 2013 up to 25 percent of qualified outer Conti22 nental Shelf revenues received by the United

23 States in the preceding fiscal year.

24 ‘‘(c) USE OF SECURE ENERGY REINVESTMENT

25 FUND.—
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1 ‘‘(1) IN GENERAL.—(A) The Secretary shall use

2 amounts in the Fund remaining after the application

3 of subsections (h) and (i) to pay to each Coastal En4 ergy State that has a Secure Energy Reinvestment

5 Plan approved by the Secretary under this section,

6 and to coastal political subdivisions of such State,

7 the amount allocated to the State or coastal political

8 subdivision, respectively, under this subsection.

9 ‘‘(B) The Secretary shall make payments under

10 this paragraph in December of 2004, and of each

11 year thereafter, from revenues received by the

12 United States in the immediately preceding fiscal

13 year.

14 ‘‘(2) ALLOCATION.—The Secretary shall allo15 cate amounts deposited into the Fund in a fiscal

16 year, and other amounts determined by the Sec17 retary to be available, among Coastal Energy States

18 that have an approved plan, and to coastal political

19 subdivisions of such States, as follows:

20 ‘‘(A)(i) Of the amounts made available for

21 each of the first 10 fiscal years for which

22 amounts are available for allocation under this

23 paragraph, the allocation for each Coastal En24 ergy State shall be calculated based on the ratio

25 of qualified outer Continental Shelf revenues
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1 generated off the coastline of the Coastal En2 ergy State to the qualified outer Continental

3 Shelf revenues generated off the coastlines of

4 all Coastal Energy States for the period begin5 ning January 1, 1992, and ending December

6 31, 2001.

7 ‘‘(ii) Of the amounts available for a fiscal

8 year in a subsequent 10-fiscal-year period, the

9 allocation for each Coastal Energy State shall

10 be calculated based on such ratio determined by

11 the Secretary with respect to qualified outer

12 Continental Shelf revenues generated in each

13 subsequent corresponding 10-year period.

14 ‘‘(iii) For purposes of this subparagraph,

15 qualified outer Continental Shelf revenues shall

16 be considered to be generated off the coastline

17 of a Coastal Energy State if the geographic

18 center of the lease tract from which the reve19 nues are generated is located within the area

20 formed by the extension of the State’s seaward

21 lateral boundaries, calculated using the strict

22 and scientifically derived conventions estab23 lished to delimit international lateral boundaries

24 under the Law of the Sea, as indicated on the

25 map entitled ‘Calculated Seaward Lateral
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1 Boundaries’ and dated October 2003, on file in

2 the Office of the Director, Minerals Manage3 ment Service.

4 ‘‘(B) 35 percent of each Coastal Energy

5 State’s allocable share as determined under

6 subparagraph (A) shall be allocated among and

7 paid directly to the coastal political subdivisions

8 of the State by the Secretary based on the fol9 lowing formula:

10 ‘‘(i) 25 percent shall be allocated

11 based on the ratio of each coastal political

12 subdivision’s coastal population to the

13 coastal population of all coastal political

14 subdivisions of the Coastal Energy State.

15 ‘‘(ii) 25 percent shall be allocated

16 based on the ratio of each coastal political

17 subdivision’s coastline miles to the coast18 line miles of all coastal political subdivi19 sions of the State. In the case of a coastal

20 political subdivision without a coastline,

21 the coastline of the political subdivision for

22 purposes of this clause shall be one-third

23 the average length of the coastline of the

24 other coastal political subdivisions of the

25 State.
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1 ‘‘(iii) 50 percent shall be allocated

2 based on a formula that allocates 75 per3 cent of the funds based on such coastal po4 litical subdivision’s relative distance from

5 any leased tract used to calculate that

6 State’s allocation and 25 percent of the

7 funds based on the relative level of outer

8 Continental Shelf oil and gas activities in

9 a coastal political subdivision to the level of

10 outer Continental Shelf oil and gas activi11 ties in all coastal political subdivisions in

12 such State, as determined by the Sec13 retary, except that in the case of a coastal

14 political subdivision in the State of Cali15 fornia that has a coastal shoreline, that is

16 not within 200 miles of the geographic cen17 ter of a leased tract or portion of a leased

18 tract, and in which there is located one or

19 more oil refineries the allocation under this

20 clause shall be determined as if that coast21 al political subdivision were located within

22 a distance of 50 miles from the geographic

23 center of the closest leased tract with

24 qualified outer Continental Shelf revenues.
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1 ‘‘(3) REALLOCATION.—Any amount allocated to

2 a Coastal Energy State or coastal political subdivi3 sion of such a State but not disbursed because of a

4 failure of a Coastal Energy State to have an ap5 proved plan shall be reallocated by the Secretary

6 among all other Coastal Energy States in a manner

7 consistent with this subsection, except that the

8 Secretary—

9 ‘‘(A) shall hold the amount in escrow with10 in the Fund until the earlier of the end of the

11 next fiscal year in which the allocation is made

12 or the final resolution of any appeal regarding

13 the disapproval of a plan submitted by the

14 State under this section; and

15 ‘‘(B) shall continue to hold such amount in

16 escrow until the end of the subsequent fiscal

17 year thereafter, if the Secretary determines that

18 such State is making a good faith effort to de19 velop and submit, or update, a Secure Energy

20 Reinvestment Plan under subsection (d).

21 ‘‘(4) MINIMUM SHARE.—Notwithstanding any

22 other provision of this subsection, the amount allo23 cated under this subsection to each Coastal Energy

24 State each fiscal year shall be not less than 5 per25 cent of the total amount available for that fiscal year
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1 for allocation under this subsection to Coastal En2 ergy States, except that for any Coastal Energy

3 State determined by the Secretary to have an area

4 formed by the extension of the State’s seaward lat5 eral boundary, as designated by the map referenced

6 in paragraph (2)(A)(iii), of less than 490 square

7 statute miles, the amount allocated to such State

8 shall not be less than 10 percent of the total amount

9 available for that fiscal year for allocation under this

10 subsection.

11 ‘‘(5) RECOMPUTATION.—If the allocation to one

12 or more Coastal Energy States under paragraph (4)

13 with respect to a fiscal year is greater than the

14 amount that would be allocated to such States under

15 this subsection if paragraph (4) did not apply, then

16 the allocations under this subsection to all other

17 Coastal Energy States shall be paid from the

18 amount remaining after deduction of the amounts

19 allocated under paragraph (4), but shall be reduced

20 on a pro rata basis by the sum of the allocations

21 under paragraph (4) so that not more than 100 per22 cent of the funds available in the Fund for allocation

23 with respect to that fiscal year is allocated.

24 ‘‘(d) SECURE ENERGY REINVESTMENT PLAN.—
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1 ‘‘(1) DEVELOPMENT AND SUBMISSION OF

2 STATE PLANS.—The Governor of each State seeking

3 to receive funds under this section shall prepare, and

4 submit to the Secretary, a Secure Energy Reinvest5 ment Plan describing planned expenditures of funds

6 received under this section. The Governor shall in7 clude in the State plan submitted to the Secretary

8 plans prepared by the coastal political subdivisions

9 of the State. The Governor and the coastal political

10 subdivision shall solicit local input and provide for

11 public participation in the development of the State

12 plan. In describing the planned expenditures, the

13 State and coastal political subdivisions shall include

14 only items that are uses authorized under subsection

15 (e).

16 ‘‘(2) APPROVAL OR DISAPPROVAL.—

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

18 not disburse funds to a State or coastal political

19 subdivision of a State under this section before

20 the date the State has an approved plan. The

21 Secretary shall approve a Secure Energy Rein22 vestment Plan submitted by a State under

23 paragraph (1) if the Secretary determines that

24 the expenditures provided for in the plan are
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1 uses authorized under subsection (e), and that

2 the plan contains each of the following:

3 ‘‘(i) The name of the State agency

4 that will have the authority to represent

5 and act for the State in dealing with the

6 Secretary for purposes of this section.

7 ‘‘(ii) A program for the implementa8 tion of the plan, that (I) has as a goal im9 proving the environment, (II) has as a goal

10 addressing the impacts of oil and gas pro11 duction from the outer Continental Shelf,

12 and (III) includes a description of how the

13 State and coastal political subdivisions of

14 the State will evaluate the effectiveness of

15 the plan.

16 ‘‘(iii) Certification by the Governor

17 that ample opportunity has been accorded

18 for public participation in the development

19 and revision of the plan.

20 ‘‘(iv) Measures for taking into account

21 other relevant Federal resources and pro22 grams. The plan shall be correlated so far

23 as practicable with other State, regional,

24 and local plans.
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1 ‘‘(v) For any State for which the ratio

2 determined under subsection (c)(2)(A)(i)

3 or (c)(2)(A)(ii), as appropriate, expressed

4 as a percentage, exceeds 25 percent, a plan

5 to spend not less than 30 percent of the

6 total funds provided under this section

7 each fiscal year to that State and appro8 priate coastal political subdivisions, to ad9 dress the socioeconomic or environmental

10 impacts identified in the plan that remain

11 significant or progressive after implemen12 tation of mitigation measures identified in

13 the most current environmental impact

14 statement (as of the date of the enactment

15 of this clause) required under the National

16 Environmental Protection Act of 1969 for

17 lease sales under this Act.

18 ‘‘(vi) A plan to utilize at least one-half

19 of the funds provided pursuant to sub20 section (c)(2)(B), and a portion of other

21 funds provided to such State under this

22 section, on programs or projects that are

23 coordinated and conducted in partnership

24 between the State and coastal political sub25 division.
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1 ‘‘(B) PROCEDURE AND TIMING.—The Sec2 retary shall approve or disapprove each plan

3 submitted in accordance with this subsection

4 within 90 days after its submission.

5 ‘‘(3) AMENDMENT OR REVISION.—Any amend6 ment to or revision of an approved plan shall be pre7 pared and submitted in accordance with the require8 ments under this paragraph for the submittal of

9 plans, and shall be approved or disapproved by the

10 Secretary in accordance with paragraph (2)(B).

11 ‘‘(e) AUTHORIZED USES.—A Coastal Energy State,

12 and a coastal political subdivision of such a State, shall

13 use amounts paid under this section (including any such

14 amounts deposited into a trust fund administered by the

15 State or coastal political subdivision dedicated to uses con16 sistent with this subsection), in compliance with Federal

17 and State law and the approved plan of the State, only

18 for one or more of the following purposes:

19 ‘‘(1) Projects and activities, including edu20 cational activities, for the conservation, protection,

21 or restoration of coastal areas including wetlands.

22 ‘‘(2) Mitigating damage to, or the protection of,

23 fish, wildlife, or natural resources.

24 ‘‘(3) To the extent of such sums as are consid25 ered reasonable by the Secretary, planning assist-
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1 ance and administrative costs of complying with this

2 section.

3 ‘‘(4) Implementation of federally approved

4 plans or programs for marine, coastal, subsidence,

5 or conservation management or for protection of re6 sources from natural disasters.

7 ‘‘(5) Mitigating impacts of outer Continental

8 Shelf activities through funding onshore infrastruc9 ture and public service needs.

10 ‘‘(f) COMPLIANCE WITH AUTHORIZED USES.—If the

11 Secretary determines that an expenditure of an amount

12 made by a Coastal Energy State or coastal political sub13 division is not in accordance with the approved plan of

14 the State (including the plans of coastal political subdivi15 sions included in such plan), the Secretary shall not dis16 burse any further amounts under this section to that

17 Coastal Energy State or coastal political subdivision

18 until—

19 ‘‘(1) the amount is repaid to the Secretary; or

20 ‘‘(2) the Secretary approves an amendment to

21 the plan that authorizes the expenditure.

22 ‘‘(g) ARBITRATION OF STATE AND LOCAL DIS23 PUTES.—The Secretary may require, as a condition of any

24 payment under this section, that a State or coastal polit25 ical subdivision in a State must submit to arbitration—
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1 ‘‘(1) any dispute between the State or coastal

2 political subdivision (or both) and the Secretary re3 garding implementation of this section; and

4 ‘‘(2) any dispute between the State and political

5 subdivision regarding implementation of this section,

6 including any failure to include, in the plan sub7 mitted by the State for purposes of subsection (d),

8 any spending plan of the coastal political subdivi9 sion.

10 ‘‘(h) ADMINISTRATIVE EXPENSES.—Of amounts in

11 the Fund each fiscal year, the Secretary may use up to

12 one-half of one percent for the administrative costs of im13 plementing this section.

14 ‘‘(i) FUNDING FOR CONSORTIUM.—

15 ‘‘(1) IN GENERAL.—Of amounts deposited into

16 the Fund in each fiscal year 2004 through 2013, 2

17 percent shall be available to the Secretary of the In18 terior to provide funding for the Coastal Restoration

19 and Enhancement through Science and Technology

20 program.

21 ‘‘(2) TREATMENT.—Any amount available

22 under this subsection for a fiscal year shall, for pur23 poses of determining the amount appropriated under

24 any other provision of law that authorizes appropria25 tions to carry out the program referred to in para-
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1 graph (1), be treated as appropriated under that

2 other provision.

3 ‘‘(j) DISPOSITION OF FUNDS.—A Coastal Energy

4 State or coastal political subdivision may use funds pro5 vided to such entity under this section, subject to sub6 section (e), for any payment that is eligible to be made

7 with funds provided to States under section 35 of the Min8 eral Leasing Act (30 U.S.C. 191).

9 ‘‘(k) REPORTS.—Each fiscal year following a fiscal

10 year in which a Coastal Energy State or coastal political

11 subdivision of a Coastal Energy State receives funds under

12 this section, the Governor of the Coastal Energy State,

13 in coordination with such State’s coastal political subdivi14 sions, shall account for all funds so received for the pre15 vious fiscal year in a written report to the Secretary. The

16 report shall include, in accordance with regulations pre17 scribed by the Secretary, a description of all projects and

18 activities that received such funds. In order to avoid dupli19 cation, such report may incorporate, by reference, any

20 other reports required to be submitted under other provi21 sions of law.

22 ‘‘(l) SIGNS.—The Secretary shall require, as a condi23 tion of any allocation of funds provided with amounts

24 made available by this section, that each State and coastal

25 political subdivision shall include on any sign otherwise in-
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1 stalled at any site at or near an entrance or public use

2 focal point area for which such funds are used, a state3 ment that the existence or development of the site (or

4 both), as appropriate, is a product of such funds.’’.

5 (b) ADDITIONAL AMENDMENTS.—Section 31 of the

6 Outer Continental Shelf Lands Act (43 U.S.C. 1356a) is

7 amended—

8 (1) by striking subsection (a);

9 (2) in subsection (c) by striking ‘‘For fiscal

10 year 2001, $150,000,000 is’’ and inserting ‘‘Such

11 sums as may be necessary to carry out this section

12 are’’;

13 (3) in subsection (d)(1)(B) by striking ‘‘, ex14 cept’’ and all that follows through the end of the

15 sentence and inserting a period;

16 (4) by redesignating subsections (b) though (g)

17 in order as subsection (a) through (f); and

18 (5) by striking ‘‘subsection (f)’’ each place it

19 appears and inserting ‘‘subsection (e)’’.

20 (c) UTILIZATION OF COASTAL RESTORATION AND

21 ENHANCEMENT THROUGH SCIENCE AND TECHNOLOGY

22 PROGRAM.—

23 (1) AUTHORIZATION.—The Secretary of the In24 terior and the Secretary of Commerce may each use

25 the Coastal Restoration and Enhancement through
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1 Science and Technology program for the purposes

2 of—

3 (A) assessing the effects of coastal habitat

4 restoration techniques;

5 (B) developing improved ecosystem mod6 eling capabilities for improved predictions of

7 coastal conditions and habitat change and for

8 developing new technologies for restoration ac9 tivities; and

10 (C) identifying economic options to address

11 socioeconomic consequences of coastal degrada12 tion.

13 (2) CONDITION.—The Secretary of the Interior,

14 in consultation with the Secretary of Commerce,

15 shall ensure that the program—

16 (A) establishes procedures designed to

17 avoid duplicative activities among Federal agen18 cies and entities receiving Federal funds;

19 (B) coordinates with persons involved in

20 similar activities; and

21 (C) establishes a mechanism to collect, or22 ganize, and make available information and

23 findings on coastal restoration.

24 (3) REPORT.—Not later than September 30,

25 2008, the Secretary of the Interior, in consultation
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1 with the Secretary of Commerce, shall transmit a re2 port to the Congress on the effectiveness of any Fed3 eral and State restoration efforts conducted pursu4 ant to this subsection and make recommendations to

5 improve coordinated coastal restoration efforts.

6 (4) FUNDING.—For each of fiscal years 2004

7 through 2013, there is authorized to be appropriated

8 to the Secretary $10,000,000 to carry out activities

9 under this subsection.

10 Subtitle C—Reforms to the Board

11 of Directors of the Tennessee

12 Valley Authority

13 SEC. 1431. CHANGE IN COMPOSITION, OPERATION, AND DU14 TIES OF THE BOARD OF DIRECTORS OF THE

15 TENNESSEE VALLEY AUTHORITY.

16 The Tennessee Valley Authority Act of 1933 (16

17 U.S.C. 831 et seq.) is amended by striking section 2 and

18 inserting the following:

19 ‘‘SEC. 2. MEMBERSHIP, OPERATION, AND DUTIES OF THE

20 BOARD OF DIRECTORS.

21 ‘‘(a) MEMBERSHIP.—

22 ‘‘(1) APPOINTMENT.—The Board of Directors

23 of the Corporation (referred to in this Act as the

24 ‘Board’) shall be composed of 9 members appointed

25 by the President by and with the advice and consent
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1 of the Senate, at least 5 of whom shall be a legal

2 resident of a State any part of which is in the serv3 ice area of the Corporation.

4 ‘‘(2) CHAIRMAN.—The members of the Board

5 shall select 1 of the members to act as chairman of

6 the Board.

7 ‘‘(b) QUALIFICATIONS.—To be eligible to be ap8 pointed as a member of the Board, an individual—

9 ‘‘(1) shall be a citizen of the United States;

10 ‘‘(2) shall have management expertise relative

11 to a large for-profit or nonprofit corporate, govern12 ment, or academic structure;

13 ‘‘(3) shall not be an employee of the Corpora14 tion; and

15 ‘‘(4) shall make full disclosure to Congress of

16 any investment or other financial interest that the

17 individual holds in the energy industry.

18 ‘‘(c) RECOMMENDATIONS.—In appointing members

19 of the Board, the President shall—

20 ‘‘(1) consider recommendations from such pub21 lic officials as—

22 ‘‘(A) the Governors of States in the service

23 area;

24 ‘‘(B) individual citizens;
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1 ‘‘(C) business, industrial, labor, electric

2 power distribution, environmental, civic, and

3 service organizations; and

4 ‘‘(D) the congressional delegations of the

5 States in the service area; and

6 ‘‘(2) seek qualified members from among per7 sons who reflect the diversity, including the geo8 graphical diversity, and needs of the service area of

9 the Corporation.

10 ‘‘(d) TERMS.—

11 ‘‘(1) IN GENERAL.—A member of the Board

12 shall serve a term of 5 years. A member of the

13 Board whose term has expired may continue to serve

14 after the member’s term has expired until the date

15 on which a successor takes office, except that the

16 member shall not serve beyond the end of the ses17 sion of Congress in which the term of the member

18 expires.

19 ‘‘(2) VACANCIES.—A member appointed to fill a

20 vacancy on the Board occurring before the expira21 tion of the term for which the predecessor of the

22 member was appointed shall be appointed for the re23 mainder of that term.

24 ‘‘(e) QUORUM.—
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1 ‘‘(1) IN GENERAL.—Five of the members of the

2 Board shall constitute a quorum for the transaction

3 of business.

4 ‘‘(2) VACANCIES.—A vacancy on the Board

5 shall not impair the power of the Board to act.

6 ‘‘(f) COMPENSATION.—

7 ‘‘(1) IN GENERAL.—A member of the Board

8 shall be entitled to receive—

9 ‘‘(A) a stipend of—

10 ‘‘(i) $45,000 per year; or

11 ‘‘(ii)(I) in the case of the chairman of

12 any committee of the Board created by the

13 Board, $46,000 per year; or

14 ‘‘(II) in the case of the chairman of

15 the Board, $50,000 per year; and

16 ‘‘(B) travel expenses, including per diem in

17 lieu of subsistence, in the same manner as per18 sons employed intermittently in Government

19 service under section 5703 of title 5, United

20 States Code.

21 ‘‘(2) ADJUSTMENTS IN STIPENDS.—The

22 amount of the stipend under paragraph (1)(A)(i)

23 shall be adjusted by the same percentage, at the

24 same time and manner, and subject to the same lim-
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1 itations as are applicable to adjustments under sec2 tion 5318 of title 5, United States Code.

3 ‘‘(g) DUTIES.—

4 ‘‘(1) IN GENERAL.—The Board shall—

5 ‘‘(A) establish the broad goals, objectives,

6 and policies of the Corporation that are appro7 priate to carry out this Act;

8 ‘‘(B) develop long-range plans to guide the

9 Corporation in achieving the goals, objectives,

10 and policies of the Corporation and provide as11 sistance to the chief executive officer to achieve

12 those goals, objectives, and policies;

13 ‘‘(C) ensure that those goals, objectives,

14 and policies are achieved;

15 ‘‘(D) approve an annual budget for the

16 Corporation;

17 ‘‘(E) adopt and submit to Congress a con18 flict-of-interest policy applicable to members of

19 the Board and employees of the Corporation;

20 ‘‘(F) establish a compensation plan for em21 ployees of the Corporation in accordance with

22 subsection (i);

23 ‘‘(G) approve all compensation (including

24 salary or any other pay, bonuses, benefits, in25 centives, and any other form of remuneration)
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1 of all managers and technical personnel that re2 port directly to the chief executive officer (in3 cluding any adjustment to compensation);

4 ‘‘(H) ensure that all activities of the Cor5 poration are carried out in compliance with ap6 plicable law;

7 ‘‘(I) create an audit committee, composed

8 solely of Board members independent of the

9 management of the Corporation, which shall—

10 ‘‘(i) in consultation with the inspector

11 general of the Corporation, recommend to

12 the Board an external auditor;

13 ‘‘(ii) receive and review reports from

14 the external auditor of the Corporation and

15 inspector general of the Corporation; and

16 ‘‘(iii) make such recommendations to

17 the Board as the audit committee con18 siders necessary;

19 ‘‘(J) create such other committees of

20 Board members as the Board considers to be

21 appropriate;

22 ‘‘(K) conduct such public hearings as it

23 deems appropriate on issues that could have a

24 substantial effect on—
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1 ‘‘(i) the electric ratepayers in the serv2 ice area; or

3 ‘‘(ii) the economic, environmental, so4 cial, or physical well-being of the people of

5 the service area;

6 ‘‘(L) establish the electricity rates charged

7 by the Corporation; and

8 ‘‘(M) engage the services of an external

9 auditor for the Corporation.

10 ‘‘(2) MEETINGS.—The Board shall meet at

11 least 4 times each year.

12 ‘‘(h) CHIEF EXECUTIVE OFFICER.—

13 ‘‘(1) APPOINTMENT.—The Board shall appoint

14 a person to serve as chief executive officer of the

15 Corporation.

16 ‘‘(2) QUALIFICATIONS.—

17 ‘‘(A) IN GENERAL.—To serve as chief exec18 utive officer of the Corporation, a person—

19 ‘‘(i) shall have senior executive-level

20 management experience in large, complex

21 organizations;

22 ‘‘(ii) shall not be a current member of

23 the Board or have served as a member of

24 the Board within 2 years before being ap25 pointed chief executive officer; and
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1 ‘‘(iii) shall comply with the conflict-of2 interest policy adopted by the Board.

3 ‘‘(B) EXPERTISE.—In appointing a chief

4 executive officer, the Board shall give particular

5 consideration to appointing an individual with

6 expertise in the electric industry and with

7 strong financial skills.

8 ‘‘(3) TENURE.—The chief executive officer shall

9 serve at the pleasure of the Board.

10 ‘‘(i) COMPENSATION PLAN.—

11 ‘‘(1) IN GENERAL.—The Board shall approve a

12 compensation plan that specifies all compensation

13 (including salary or any other pay, bonuses, benefits,

14 incentives, and any other form of remuneration) for

15 the chief executive officer and employees of the Cor16 poration.

17 ‘‘(2) ANNUAL SURVEY.—The compensation plan

18 shall be based on an annual survey of the prevailing

19 compensation for similar positions in private indus20 try, including engineering and electric utility compa21 nies, publicly owned electric utilities, and Federal,

22 State, and local governments.

23 ‘‘(3) CONSIDERATIONS.—The compensation

24 plan shall provide that education, experience, level of

25 responsibility, geographic differences, and retention
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1 and recruitment needs will be taken into account in

2 determining compensation of employees.

3 ‘‘(4) POSITIONS AT OR BELOW LEVEL IV.—The

4 chief executive officer shall determine the salary and

5 benefits of employees whose annual salary is not

6 greater than the annual rate payable for positions at

7 level IV of the Executive Schedule under section

8 5315 of title 5, United States Code.

9 ‘‘(5) POSITIONS ABOVE LEVEL IV.—On the rec10 ommendation of the chief executive officer, the

11 Board shall approve the salaries of employees whose

12 annual salaries would be in excess of the annual rate

13 payable for positions at level IV of the Executive

14 Schedule under section 5315 of title 5, United

15 States Code.’’.

16 SEC. 1432. CHANGE IN MANNER OF APPOINTMENT OF

17 STAFF.

18 Section 3 of the Tennessee Valley Authority Act of

19 1933 (16 U.S.C. 831b) is amended—

20 (1) by striking the first undesignated paragraph

21 and inserting the following:

22 ‘‘(a) APPOINTMENT BY THE CHIEF EXECUTIVE OF23 FICER.—The chief executive officer shall appoint, with the

24 advice and consent of the Board, and without regard to

25 the provisions of the civil service laws applicable to officers
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1 and employees of the United States, such managers, as2 sistant managers, officers, employees, attorneys, and

3 agents as are necessary for the transaction of the business

4 of the Corporation.’’; and

5 (2) by striking ‘‘All contracts’’ and inserting

6 the following:

7 ‘‘(b) WAGE RATES.—All contracts’’.

8 SEC. 1433. CONFORMING AMENDMENTS.

9 (a) The Tennessee Valley Authority Act of 1933 (16

10 U.S.C. 831 et seq.) is amended—

11 (1) by striking ‘‘board of directors’’ each place

12 it appears and inserting ‘‘Board of Directors’’; and

13 (2) by striking ‘‘board’’ each place it appears

14 and inserting ‘‘Board’’.

15 (b) Section 9 of the Tennessee Valley Authority Act

16 of 1933 (16 U.S.C. 831h) is amended—

17 (1) by striking ‘‘The Comptroller General of the

18 United States shall audit’’ and inserting the fol19 lowing:

20 ‘‘(c) AUDITS.—The Comptroller General of the

21 United States shall audit’’; and

22 (2) by striking ‘‘The Corporation shall deter23 mine’’ and inserting the following:

24 ‘‘(d) ADMINISTRATIVE ACCOUNTS AND BUSINESS

25 DOCUMENTS.—The Corporation shall determine’’.
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1 (c) Title 5, United States Code, is amended—

2 (1) in section 5314, by striking ‘‘Chairman,

3 Board of Directors of the Tennessee Valley Author4 ity.’’; and

5 (2) in section 5315, by striking ‘‘Members,

6 Board of Directors of the Tennessee Valley Author7 ity.’’.

8 SEC. 1434. APPOINTMENTS; EFFECTIVE DATE; TRANSITION.

9 (a) APPOINTMENTS.—

10 (1) IN GENERAL.—As soon as practicable after

11 the date of enactment of this Act, the President

12 shall submit to the Senate nominations of 6 persons

13 to serve as members of the Board of Directors of the

14 Tennessee Valley Authority in addition to the mem15 bers serving on the date of enactment of this Act.

16 (2) INITIAL TERMS.—Notwithstanding section

17 2(d) of the Tennessee Valley Authority Act of 1933

18 (as amended by this subtitle), in making the ap19 pointments under paragraph (1), the President shall

20 appoint—

21 (A) 2 members for a term to expire on

22 May 18, 2006;

23 (B) 2 members for a term to expire on

24 May 18, 2008; and
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1 (C) 2 members for a term to expire on

2 May 18, 2010.

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

4 this section and sections 1431, 1432, and 1433 take effect

5 on the later of the date on which at least 3 persons nomi6 nated under subsection (a) take office or May 18, 2005.

7 (c) SELECTION OF CHAIRMAN.—The Board of Direc8 tors of the Tennessee Valley Authority shall select 1 of

9 the members to act as chairman of the Board not later

10 than 30 days after the effective date of this section.

11 (d) CONFLICT-OF-INTEREST POLICY.—The Board of

12 Directors of the Tennessee Valley Authority shall adopt

13 and submit to Congress a conflict-of-interest policy, as re14 quired by section 2(g)(1)(E) of the Tennessee Valley Au15 thority Act of 1933 (as amended by this subtitle), as soon

16 as practicable after the effective date of this section.

17 (e) TRANSITION.—A person who is serving as a mem18 ber of the board of directors of the Tennessee Valley Au19 thority on the date of enactment of this Act—

20 (1) shall continue to serve until the end of the

21 current term of the member; but

22 (2) after the effective date specified in sub23 section (b), shall serve under the terms of the Ten24 nessee Valley Authority Act of 1933 (as amended by

25 this subtitle); and
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1 (3) may not be reappointed.

2 Subtitle D—Other Provisions

3 SEC. 1441. CONTINUATION OF TRANSMISSION SECURITY

4 ORDER.

5 Department of Energy Order No. 202–03–2, issued

6 by the Secretary of Energy on August 28, 2003, shall re7 main in effect unless rescinded by Federal statute.

8 SEC. 1442. REVIEW OF AGENCY DETERMINATIONS.

9 Section 7 of the Natural Gas Act (15 U.S.C. 717f)

10 is amended by adding at the end the following:

11 ‘‘(i)(1) The United States Court of Appeals for the

12 District of Columbia Circuit shall have original and exclu13 sive jurisdiction over any civil action—

14 ‘‘(A) for review of any order or action of any

15 Federal or State administrative agency or officer to

16 issue, condition, or deny any permit, license, concur17 rence, or approval issued under authority of any

18 Federal law, other than the Coastal Zone Manage19 ment Act of 1972 (16 U.S.C. 1451 et seq.), required

20 for the construction of a natural gas pipeline for

21 which a certificate of public convenience and neces22 sity is issued by the Commission under this section;

23 ‘‘(B) alleging unreasonable delay by any Fed24 eral or State administrative agency or officer in en-
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1 tering an order or taking other action described in

2 subparagraph (A); or

3 ‘‘(C) challenging any decision made or action

4 taken under this subsection.

5 ‘‘(2)(A) If the Court finds that the order, action, or

6 failure to act is not consistent with the public convenience

7 and necessity (as determined by the Commission under

8 this section), or would prevent the construction and oper9 ation of natural gas facilities authorized by the certificate

10 of public convenience and necessity, the permit, license,

11 concurrence, or approval that is the subject of the order,

12 action, or failure to act shall be deemed to have been

13 issued subject to any conditions set forth in the reviewed

14 order or action that the Court finds to be consistent with

15 the public convenience and necessity.

16 ‘‘(B) For purposes of paragraph (1)(B), the failure

17 of an agency or officer to issue any such permit, license,

18 concurrence, or approval within the later of 1 year after

19 the date of filing of an application for the permit, license,

20 concurrence, or approval or 60 days after the date of

21 issuance of the certificate of public convenience and neces22 sity under this section, shall be considered to be unreason23 able delay unless the Court, for good cause shown, deter24 mines otherwise.
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1 ‘‘(C) The Court shall set any action brought under

2 paragraph (1) for expedited consideration.’’.

3 SEC. 1443. ATTAINMENT DATES FOR DOWNWIND OZONE

4 NONATTAINMENT AREAS.

5 Section 181 of the Clean Air Act (42 U.S.C.7511)

6 is amended by adding the following new subsection at the

7 end thereof:

8 ‘‘(d) EXTENDED ATTAINMENT DATE FOR CERTAIN

9 DOWNWIND AREAS.—

10 ‘‘(1) DEFINITIONS.—(A) The term ‘upwind

11 area’ means an area that—

12 ‘‘(i) significantly contributes to nonattain13 ment in another area, hereinafter referred to as

14 a ‘downwind area’; and

15 ‘‘(ii) is either—

16 ‘‘(I) a nonattainment area with a later

17 attainment date than the downwind area,

18 or

19 ‘‘(II) an area in another State that

20 the Administrator has found to be signifi21 cantly contributing to nonattainment in

22 the downwind area in violation of section

23 110(a)(2)(D) and for which the Adminis24 trator has established requirements

25 through notice and comment rulemaking to
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1 eliminate the emissions causing such sig2 nificant contribution.

3 ‘‘(B) The term ‘current classification’ means

4 the classification of a downwind area under this sec5 tion at the time of the determination under para6 graph (2).

7 ‘‘(2) EXTENSION.—If the Administrator—

8 ‘‘(A) determines that any area is a down9 wind area with respect to a particular national

10 ambient air quality standard for ozone; and

11 ‘‘(B) approves a plan revision for such

12 area as provided in paragraph (3) prior to a re13 classification under subsection (b)(2)(A),

14 the Administrator, in lieu of such reclassification,

15 shall extend the attainment date for such downwind

16 area for such standard in accordance with paragraph

17 (5).

18 ‘‘(3) REQUIRED APPROVAL.—In order to extend

19 the attainment date for a downwind area under this

20 subsection, the Administrator must approve a revi21 sion of the applicable implementation plan for the

22 downwind area for such standard that—

23 ‘‘(A) complies with all requirements of this

24 Act applicable under the current classification

25 of the downwind area, including any require-
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1 ments applicable to the area under section

2 172(c) for such standard; and

3 ‘‘(B) includes any additional measures

4 needed to demonstrate attainment by the ex5 tended attainment date provided under this

6 subsection.

7 ‘‘(4) PRIOR RECLASSIFICATION DETERMINA8 TION.—If, no more than 18 months prior to the date

9 of enactment of this subsection, the Administrator

10 made a reclassification determination under sub11 section (b)(2)(A) for any downwind area, and the

12 Administrator approves the plan revision referred to

13 in paragraph (3) for such area within 12 months

14 after the date of enactment of this subsection, the

15 reclassification shall be withdrawn and the attain16 ment date extended in accordance with paragraph

17 (5) upon such approval. The Administrator shall

18 also withdraw a reclassification determination under

19 subsection (b)(2)(A) made after the date of enact20 ment of this subsection and extend the attainment

21 date in accordance with paragraph (5) if the Admin22 istrator approves the plan revision referred to in

23 paragraph (3) within 12 months of the date the re24 classification determination under subsection

25 (b)(2)(A) is issued. In such instances the ‘current
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1 classification’ used for evaluating the revision of the

2 applicable implementation plan under paragraph (3)

3 shall be the classification of the downwind area

4 under this section immediately prior to such reclassi5 fication.

6 ‘‘(5) EXTENDED DATE.—The attainment date

7 extended under this subsection shall provide for at8 tainment of such national ambient air quality stand9 ard for ozone in the downwind area as expeditiously

10 as practicable but no later than the date on which

11 the last reductions in pollution transport necessary

12 for attainment in the downwind area are required to

13 be achieved by the upwind area or areas.’’.

14 SEC. 1444. ENERGY PRODUCTION INCENTIVES.

15 (a) IN GENERAL.—A State may provide to any

16 entity—

17 (1) a credit against any tax or fee owed to the

18 State under a State law, or

19 (2) any other tax incentive,

20 determined by the State to be appropriate, in the amount

21 calculated under and in accordance with a formula deter22 mined by the State, for production described in subsection

23 (b) in the State by the entity that receives such credit or

24 such incentive.
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1 (b) ELIGIBLE ENTITIES.—Subsection (a) shall apply

2 with respect to the production in the State of—

3 (1) electricity from coal mined in the State and

4 used in a facility, if such production meets all appli5 cable Federal and State laws and if such facility

6 uses scrubbers or other forms of clean coal tech7 nology,

8 (2) electricity from a renewable source such as

9 wind, solar, or biomass, or

10 (3) ethanol.

11 (c) EFFECT ON INTERSTATE COMMERCE.—Any ac12 tion taken by a State in accordance with this section with

13 respect to a tax or fee payable, or incentive applicable,

14 for any period beginning after the date of the enactment

15 of this Act shall—

16 (1) be considered to be a reasonable regulation

17 of commerce; and

18 (2) not be considered to impose an undue bur19 den on interstate commerce or to otherwise impair,

20 restrain, or discriminate, against interstate com21 merce.

22 SEC. 1445. USE OF GRANULAR MINE TAILINGS.

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

24 Disposal Act (42 U.S.C. 6961 et seq.) is amended by add25 ing at the end the following:
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1 ‘‘SEC. 6006. USE OF GRANULAR MINE TAILINGS.

2 ‘‘(a) MINE TAILINGS.—

3 ‘‘(1) IN GENERAL.—Not later than 180 days

4 after the date of enactment of this section, the Ad5 ministrator, in consultation with the Secretary of

6 Transportation and heads of other Federal agencies,

7 shall establish criteria (including an evaluation of

8 whether to establish a numerical standard for con9 centration of lead and other hazardous substances)

10 for the safe and environmentally protective use of

11 granular mine tailings from the Tar Creek, Okla12 homa Mining District, known as ‘chat’, for—

13 ‘‘(A) cement or concrete projects; and

14 ‘‘(B) transportation construction projects

15 (including transportation construction projects

16 involving the use of asphalt) that are carried

17 out, in whole or in part, using Federal funds.

18 ‘‘(2) REQUIREMENTS.—In establishing criteria

19 under paragraph (1), the Administrator shall

20 consider—

21 ‘‘(A) the current and previous uses of

22 granular mine tailings as an aggregate for as23 phalt; and

24 ‘‘(B) any environmental and public health

25 risks and benefits derived from the removal,
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1 transportation, and use in transportation

2 projects of granular mine tailings.

3 ‘‘(3) PUBLIC PARTICIPATION.—In establishing

4 the criteria under paragraph (1), the Administrator

5 shall solicit and consider comments from the public.

6 ‘‘(4) APPLICABILITY OF CRITERIA.—On the es7 tablishment of the criteria under paragraph (1), any

8 use of the granular mine tailings described in para9 graph (1) in a transportation project that is carried

10 out, in whole or in part, using Federal funds, shall

11 meet the criteria established under paragraph (1).

12 ‘‘(b) EFFECT OF SECTIONS.—Nothing in this section

13 or section 6005 affects any requirement of any law (in14 cluding a regulation) in effect on the date of enactment

15 of this section.’’.

16 (b) CONFORMING AMENDMENT.—The table of con17 tents of the Solid Waste Disposal Act (42 U.S.C. prec.

18 6901) is amended by adding at the end of the items relat19 ing to subtitle F the following:

‘‘Sec. 6006. Use of granular mine tailings.’’.
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1 TITLE XV—ETHANOL AND

2 MOTOR FUELS

3 Subtitle A—General Provisions

4 SEC. 1501. RENEWABLE CONTENT OF MOTOR VEHICLE

5 FUEL.

6 (a) IN GENERAL.—Section 211 of the Clean Air Act

7 (42 U.S.C. 7545) is amended—

8 (1) by redesignating subsection (o) as sub9 section (q); and

10 (2) by inserting after subsection (n) the fol11 lowing:

12 ‘‘(o) RENEWABLE FUEL PROGRAM.—

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

14 ‘‘(A) ETHANOL.—(i) The term ‘cellulosic

15 biomass ethanol’ means ethanol derived from

16 any lignocellulosic or hemicellulosic matter that

17 is available on a renewable or recurring basis,

18 including—

19 ‘‘(I) dedicated energy crops and trees;

20 ‘‘(II) wood and wood residues;

21 ‘‘(III) plants;

22 ‘‘(IV) grasses;

23 ‘‘(V) agricultural residues; and

24 ‘‘(VI) fibers.
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1 ‘‘(ii) The term ‘waste derived ethanol’

2 means ethanol derived from—

3 ‘‘(I) animal wastes, including poultry

4 fats and poultry wastes, and other waste

5 materials; or

6 ‘‘(II) municipal solid waste.

7 ‘‘(B) RENEWABLE FUEL.—

8 ‘‘(i) IN GENERAL.—The term ‘renew9 able fuel’ means motor vehicle fuel that—

10 ‘‘(I)(aa) is produced from grain,

11 starch, oilseeds, or other biomass; or

12 ‘‘(bb) is natural gas produced

13 from a biogas source, including a

14 landfill, sewage waste treatment plant,

15 feedlot, or other place where decaying

16 organic material is found; and

17 ‘‘(II) is used to replace or reduce

18 the quantity of fossil fuel present in a

19 fuel mixture used to operate a motor

20 vehicle.

21 ‘‘(ii) INCLUSION.—The term ‘renew22 able fuel’ includes cellulosic biomass eth23 anol, waste derived ethanol, and biodiesel

24 (as defined in section 312(f) of the Energy

25 Policy Act of 1992 (42 U.S.C. 13220(f))
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1 and any blending components derived from

2 renewable fuel (provided that only the re3 newable fuel portion of any such blending

4 component shall be considered part of the

5 applicable volume under the renewable fuel

6 program established by this subsection).

7 ‘‘(C) SMALL REFINERY.—The term ‘small

8 refinery’ means a refinery for which average ag9 gregate daily crude oil throughput for the cal10 endar year (as determined by dividing the ag11 gregate throughput for the calendar year by the

12 number of days in the calendar year) does not

13 exceed 75,000 barrels.

14 ‘‘(2) RENEWABLE FUEL PROGRAM.—

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

16 after the enactment of this subsection, the Ad17 ministrator shall promulgate regulations ensur18 ing that motor vehicle fuel sold or dispensed to

19 consumers in the contiguous United States, on

20 an annual average basis, contains the applicable

21 volume of renewable fuel as specified in sub22 paragraph (B). Regardless of the date of pro23 mulgation, such regulations shall contain com24 pliance provisions for refiners, blenders, and

25 importers, as appropriate, to ensure that the re-
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1 quirements of this section are met, but shall not

2 restrict where renewable fuel can be used, or

3 impose any per-gallon obligation for the use of

4 renewable fuel. If the Administrator does not

5 promulgate such regulations, the applicable per6 centage referred to in paragraph (4), on a vol7 ume percentage of gasoline basis, shall be 2.2

8 in 2005.

9 ‘‘(B) APPLICABLE VOLUME.—

10 ‘‘(i) CALENDAR YEARS 2005 THROUGH

11 2012.—For the purpose of subparagraph

12 (A), the applicable volume for any of cal13 endar years 2005 through 2012 shall be

14 determined in accordance with the fol15 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

16 ‘‘(ii) CALENDAR YEAR 2013 AND

17 THEREAFTER.—For the purpose of sub18 paragraph (A), the applicable volume for

19 calendar year 2013 and each calendar year
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1 thereafter shall be equal to the product ob2 tained by multiplying—

3 ‘‘(I) the number of gallons of

4 gasoline that the Administrator esti5 mates will be sold or introduced into

6 commerce in the calendar year; and

7 ‘‘(II) the ratio that—

8 ‘‘(aa) 5.0 billion gallons of

9 renewable fuels; bears to

10 ‘‘(bb) the number of gallons

11 of gasoline sold or introduced

12 into commerce in calendar year

13 2012.

14 ‘‘(3) NON-CONTIGUOUS STATE OPT-IN.—Upon

15 the petition of a non-contiguous State, the Adminis16 trator may allow the renewable fuel program estab17 lished by subtitle A of title XV of the Energy Policy

18 Act of 2003 to apply in such non-contiguous State

19 at the same time or any time after the Adminis20 trator promulgates regulations under paragraph (2).

21 The Administrator may promulgate or revise regula22 tions under paragraph (2), establish applicable per23 centages under paragraph (4), provide for the gen24 eration of credits under paragraph (6), and take

25 such other actions as may be necessary to allow for
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1 the application of the renewable fuels program in a

2 non-contiguous State.

3 ‘‘(4) APPLICABLE PERCENTAGES.—

4 ‘‘(A) PROVISION OF ESTIMATE OF VOL5 UMES OF GASOLINE SALES.—Not later than Oc6 tober 31 of each of calendar years 2004

7 through 2011, the Administrator of the Energy

8 Information Administration shall provide to the

9 Administrator of the Environmental Protection

10 Agency an estimate of the volumes of gasoline

11 that will be sold or introduced into commerce in

12 the United States during the following calendar

13 year.

14 ‘‘(B) DETERMINATION OF APPLICABLE

15 PERCENTAGES.—

16 ‘‘(i) IN GENERAL.—Not later than

17 November 30 of each of the calendar years

18 2004 through 2011, based on the estimate

19 provided under subparagraph (A), the Ad20 ministrator shall determine and publish in

21 the Federal Register, with respect to the

22 following calendar year, the renewable fuel

23 obligation that ensures that the require24 ments of paragraph (2) are met.
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1 ‘‘(ii) REQUIRED ELEMENTS.—The re2 newable fuel obligation determined for a

3 calendar year under clause (i) shall—

4 ‘‘(I) be applicable to refiners,

5 blenders, and importers, as appro6 priate;

7 ‘‘(II) be expressed in terms of a

8 volume percentage of gasoline sold or

9 introduced into commerce; and

10 ‘‘(III) subject to subparagraph

11 (C)(i), consist of a single applicable

12 percentage that applies to all cat13 egories of persons specified in sub14 clause (I).

15 ‘‘(C) ADJUSTMENTS.—In determining the

16 applicable percentage for a calendar year, the

17 Administrator shall make adjustments—

18 ‘‘(i) to prevent the imposition of re19 dundant obligations to any person specified

20 in subparagraph (B)(ii)(I); and

21 ‘‘(ii) to account for the use of renew22 able fuel during the previous calendar year

23 by small refineries that are exempt under

24 paragraph (11).
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1 ‘‘(5) EQUIVALENCY.—For the purpose of para2 graph (2), 1 gallon of either cellulosic biomass eth3 anol or waste derived ethanol—

4 ‘‘(A) shall be considered to be the equiva5 lent of 1.5 gallon of renewable fuel; or

6 ‘‘(B) if the cellulostic biomass ethanol or

7 waste derived ethanol is derived from agricul8 tural residue or is an agricultural byproduct (as

9 that term is used in section 919 of the Energy

10 Policy Act of 2003), shall be considered to be

11 the equivalent of 2.5 gallons of renewable fuel.

12 ‘‘(6) CREDIT PROGRAM.—

13 ‘‘(A) IN GENERAL.—The regulations pro14 mulgated to carry out this subsection shall pro15 vide for the generation of an appropriate

16 amount of credits by any person that refines,

17 blends, or imports gasoline that contains a

18 quantity of renewable fuel that is greater than

19 the quantity required under paragraph (2).

20 Such regulations shall provide for the genera21 tion of an appropriate amount of credits for

22 biodiesel fuel. If a small refinery notifies the

23 Administrator that it waives the exemption pro24 vided paragraph (11), the regulations shall pro25 vide for the generation of credits by the small
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1 refinery beginning in the year following such

2 notification.

3 ‘‘(B) USE OF CREDITS.—A person that

4 generates credits under subparagraph (A) may

5 use the credits, or transfer all or a portion of

6 the credits to another person, for the purpose

7 of complying with paragraph (2).

8 ‘‘(C) LIFE OF CREDITS.—A credit gen9 erated under this paragraph shall be valid to

10 show compliance—

11 ‘‘(i) in the calendar year in which the

12 credit was generated or the next calendar

13 year; or

14 ‘‘(ii) in the calendar year in which the

15 credit was generated or next two consecu16 tive calendar years if the Administrator

17 promulgates regulations under paragraph

18 (7).

19 ‘‘(D) INABILITY TO PURCHASE SUFFICIENT

20 CREDITS.—The regulations promulgated to

21 carry out this subsection shall include provi22 sions allowing any person that is unable to gen23 erate or purchase sufficient credits to meet the

24 requirements under paragraph (2) to carry for25 ward a renewable fuel deficit provided that, in
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1 the calendar year following the year in which

2 the renewable fuel deficit is created, such per3 son shall achieve compliance with the renewable

4 fuel requirement under paragraph (2), and shall

5 generate or purchase additional renewable fuel

6 credits to offset the renewable fuel deficit of the

7 previous year.

8 ‘‘(7) SEASONAL VARIATIONS IN RENEWABLE

9 FUEL USE.—

10 ‘‘(A) STUDY.—For each of the calendar

11 years 2005 through 2012, the Administrator of

12 the Energy Information Administration shall

13 conduct a study of renewable fuels blending to

14 determine whether there are excessive seasonal

15 variations in the use of renewable fuels.

16 ‘‘(B) REGULATION OF EXCESSIVE SEA17 SONAL VARIATIONS.—If, for any calendar year,

18 the Administrator of the Energy Information

19 Administration, based on the study under sub20 paragraph (A), makes the determinations speci21 fied in subparagraph (C), the Administrator

22 shall promulgate regulations to ensure that 35

23 percent or more of the quantity of renewable

24 fuels necessary to meet the requirement of

25 paragraph (2) is used during each of the peri-
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1 ods specified in subparagraph (D) of each sub2 sequent calendar year.

3 ‘‘(C) DETERMINATIONS.—The determina4 tions referred to in subparagraph (B) are

5 that—

6 ‘‘(i) less than 35 percent of the quan7 tity of renewable fuels necessary to meet

8 the requirement of paragraph (2) has been

9 used during one of the periods specified in

10 subparagraph (D) of the calendar year;

11 ‘‘(ii) a pattern of excessive seasonal

12 variation described in clause (i) will con13 tinue in subsequent calendar years; and

14 ‘‘(iii) promulgating regulations or

15 other requirements to impose a 35 percent

16 or more seasonal use of renewable fuels

17 will not prevent or interfere with the at18 tainment of national ambient air quality

19 standards or significantly increase the

20 price of motor fuels to the consumer.

21 ‘‘(D) PERIODS.—The two periods referred

22 to in this paragraph are—

23 ‘‘(i) April through September; and

24 ‘‘(ii) January through March and Oc25 tober through December.
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1 ‘‘(E) EXCLUSIONS.—Renewable fuels

2 blended or consumed in 2005 in a State which

3 has received a waiver under section 209(b) shall

4 not be included in the study in subparagraph

5 (A).

6 ‘‘(8) WAIVERS.—

7 ‘‘(A) IN GENERAL.—The Administrator, in

8 consultation with the Secretary of Agriculture

9 and the Secretary of Energy, may waive the re10 quirement of paragraph (2) in whole or in part

11 on petition by one or more States by reducing

12 the national quantity of renewable fuel required

13 under this subsection—

14 ‘‘(i) based on a determination by the

15 Administrator, after public notice and op16 portunity for comment, that implementa17 tion of the requirement would severely

18 harm the economy or environment of a

19 State, a region, or the United States; or

20 ‘‘(ii) based on a determination by the

21 Administrator, after public notice and op22 portunity for comment, that there is an in23 adequate domestic supply or distribution

24 capacity to meet the requirement.
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1 ‘‘(B) PETITIONS FOR WAIVERS.—The Ad2 ministrator, in consultation with the Secretary

3 of Agriculture and the Secretary of Energy,

4 shall approve or disapprove a State petition for

5 a waiver of the requirement of paragraph (2)

6 within 90 days after the date on which the peti7 tion is received by the Administrator.

8 ‘‘(C) TERMINATION OF WAIVERS.—A waiv9 er granted under subparagraph (A) shall termi10 nate after 1 year, but may be renewed by the

11 Administrator after consultation with the Sec12 retary of Agriculture and the Secretary of En13 ergy.

14 ‘‘(9) STUDY AND WAIVER FOR INITIAL YEAR OF

15 PROGRAM.—Not later than 180 days after the enact16 ment of this subsection, the Secretary of Energy

17 shall complete for the Administrator a study assess18 ing whether the renewable fuels requirement under

19 paragraph (2) will likely result in significant adverse

20 consumer impacts in 2005, on a national, regional,

21 or State basis. Such study shall evaluate renewable

22 fuel supplies and prices, blendstock supplies, and

23 supply and distribution system capabilities. Based

24 on such study, the Secretary shall make specific rec25 ommendations to the Administrator regarding waiv-
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1 er of the requirements of paragraph (2), in whole or

2 in part, to avoid any such adverse impacts. Within

3 270 days after the enactment of this subsection, the

4 Administrator shall, consistent with the rec5 ommendations of the Secretary, waive, in whole or in

6 part, the renewable fuels requirement under para7 graph (2) by reducing the national quantity of re8 newable fuel required under this subsection in 2005.

9 This paragraph shall not be interpreted as limiting

10 the Administrator’s authority to waive the require11 ments of paragraph (2) in whole, or in part, under

12 paragraph (8) or paragraph (10), pertaining to

13 waivers.

14 ‘‘(10) ASSESSMENT AND WAIVER.—The Admin15 istrator, in consultation with the Secretary of En16 ergy and the Secretary of Agriculture, shall evaluate

17 the requirement of paragraph (2) and determine,

18 prior to January 1, 2007, and prior to January 1

19 of any subsequent year in which the applicable vol20 ume of renewable fuel is increased under paragraph

21 (2)(B), whether the requirement of paragraph (2),

22 including the applicable volume of renewable fuel

23 contained in paragraph (2)(B) should remain in ef24 fect, in whole or in part, during 2007 or any year

25 or years subsequent to 2007. In evaluating the re-
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1 quirement of paragraph (2) and in making any de2 termination under this section, the Administrator

3 shall consider the best available information and

4 data collected by accepted methods or best available

5 means regarding—

6 ‘‘(A) the capacity of renewable fuel pro7 ducers to supply an adequate amount of renew8 able fuel at competitive prices to fulfill the re9 quirement of paragraph (2);

10 ‘‘(B) the potential of the requirement of

11 paragraph (2) to significantly raise the price of

12 gasoline, food (excluding the net price impact

13 on the requirement in paragraph (2) on com14 modities used in the production of ethanol), or

15 heating oil for consumers in any significant

16 area or region of the country above the price

17 that would otherwise apply to such commodities

18 in the absence of such requirement;

19 ‘‘(C) the potential of the requirement of

20 paragraph (2) to interfere with the supply of

21 fuel in any significant gasoline market or region

22 of the country, including interference with the

23 efficient operation of refiners, blenders, import24 ers, wholesale suppliers, and retail vendors of

25 gasoline, and other motor fuels; and
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1 ‘‘(D) the potential of the requirement of

2 paragraph (2) to cause or promote exceedances

3 of Federal, State, or local air quality standards.

4 If the Administrator determines, by clear and con5 vincing information, after public notice and the op6 portunity for comment, that the requirement of

7 paragraph (2) would have significant and meaning8 ful adverse impact on the supply of fuel and related

9 infrastructure or on the economy, public health, or

10 environment of any significant area or region of the

11 country, the Administrator may waive, in whole or

12 in part, the requirement of paragraph (2) in any one

13 year for which the determination is made for that

14 area or region of the country, except that any such

15 waiver shall not have the effect of reducing the ap16 plicable volume of renewable fuel specified in para17 graph (2)(B) with respect to any year for which the

18 determination is made. In determining economic im19 pact under this paragraph, the Administrator shall

20 not consider the reduced revenues available from the

21 Highway Trust Fund (section 9503 of the Internal

22 Revenue Code of 1986) as a result of the use of eth23 anol.

24 ‘‘(11) SMALL REFINERIES.—
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1 ‘‘(A) IN GENERAL.—The requirement of

2 paragraph (2) shall not apply to small refineries

3 until the first calendar year beginning more

4 than 5 years after the first year set forth in the

5 table in paragraph (2)(B)(i). Not later than De6 cember 31, 2007, the Secretary of Energy shall

7 complete for the Administrator a study to de8 termine whether the requirement of paragraph

9 (2) would impose a disproportionate economic

10 hardship on small refineries. For any small re11 finery that the Secretary of Energy determines

12 would experience a disproportionate economic

13 hardship, the Administrator shall extend the

14 small refinery exemption for such small refinery

15 for no less than two additional years.

16 ‘‘(B) ECONOMIC HARDSHIP.—

17 ‘‘(i) EXTENSION OF EXEMPTION.—A

18 small refinery may at any time petition the

19 Administrator for an extension of the ex20 emption from the requirement of para21 graph (2) for the reason of dispropor22 tionate economic hardship. In evaluating a

23 hardship petition, the Administrator, in

24 consultation with the Secretary of Energy,
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1 shall consider the findings of the study in

2 addition to other economic factors.

3 ‘‘(ii) DEADLINE FOR ACTION ON PETI4 TIONS.—The Administrator shall act on

5 any petition submitted by a small refinery

6 for a hardship exemption not later than 90

7 days after the receipt of the petition.

8 ‘‘(C) CREDIT PROGRAM.—If a small refin9 ery notifies the Administrator that it waives the

10 exemption provided by this Act, the regulations

11 shall provide for the generation of credits by

12 the small refinery beginning in the year fol13 lowing such notification.

14 ‘‘(D) OPT-IN FOR SMALL REFINERS.—A

15 small refinery shall be subject to the require16 ments of this section if it notifies the Adminis17 trator that it waives the exemption under sub18 paragraph (A).

19 ‘‘(12) ETHANOL MARKET CONCENTRATION

20 ANALYSIS.—

21 ‘‘(A) ANALYSIS.—

22 ‘‘(i) IN GENERAL.—Not later than

23 180 days after the date of enactment of

24 this subsection, and annually thereafter,

25 the Federal Trade Commission shall per-
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1 form a market concentration analysis of

2 the ethanol production industry using the

3 Herfindahl-Hirschman Index to determine

4 whether there is sufficient competition

5 among industry participants to avoid price

6 setting and other anticompetitive behavior.

7 ‘‘(ii) SCORING.—For the purpose of

8 scoring under clause (i) using the

9 Herfindahl-Hirschman Index, all mar10 keting arrangements among industry par11 ticipants shall be considered.

12 ‘‘(B) REPORT.—Not later than December

13 1, 2004, and annually thereafter, the Federal

14 Trade Commission shall submit to Congress

15 and the Administrator a report on the results

16 of the market concentration analysis performed

17 under subparagraph (A)(i).’’.

18 (b) PENALTIES AND ENFORCEMENT.—Section

19 211(d) of the Clean Air Act (42 U.S.C. 7545(d)) is

20 amended as follows:

21 (1) In paragraph (1)—

22 (A) in the first sentence, by striking ‘‘or

23 (n)’’ each place it appears and inserting ‘‘(n),

24 or (o)’’; and
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1 (B) in the second sentence, by striking ‘‘or

2 (m)’’ and inserting ‘‘(m), or (o)’’.

3 (2) In the first sentence of paragraph (2), by

4 striking ‘‘and (n)’’ each place it appears and insert5 ing ‘‘(n), and (o)’’.

6 (c) SURVEY OF RENEWABLE FUEL MARKET.—

7 (1) SURVEY AND REPORT.—Not later than De8 cember 1, 2006, and annually thereafter, the Admin9 istrator of the Environmental Protection Agency (in

10 consultation with the Secretary of Energy acting

11 through the Administrator of the Energy Informa12 tion Administration) shall—

13 (A) conduct, with respect to each conven14 tional gasoline use area and each reformulated

15 gasoline use area in each State, a survey to de16 termine the market shares of—

17 (i) conventional gasoline containing

18 ethanol;

19 (ii) reformulated gasoline containing

20 ethanol;

21 (iii) conventional gasoline containing

22 renewable fuel; and

23 (iv) reformulated gasoline containing

24 renewable fuel; and
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1 (B) submit to Congress, and make publicly

2 available, a report on the results of the survey

3 under subparagraph (A).

4 (2) RECORDKEEPING AND REPORTING RE5 QUIREMENTS.—The Administrator of the Environ6 mental Protection Agency (hereinafter in this sub7 section referred to as the ‘‘Administrator’’) may re8 quire any refiner, blender, or importer to keep such

9 records and make such reports as are necessary to

10 ensure that the survey conducted under paragraph

11 (1) is accurate. The Administrator, to avoid duplica12 tive requirements, shall rely, to the extent prac13 ticable, on existing reporting and recordkeeping re14 quirements and other information available to the

15 Administrator including gasoline distribution pat16 terns that include multistate use areas.

17 (3) APPLICABLE LAW.—Activities carried out

18 under this subsection shall be conducted in a man19 ner designed to protect confidentiality of individual

20 responses.

21 SEC. 1502. FUELS SAFE HARBOR.

22 (a) IN GENERAL.—Notwithstanding any other provi23 sion of Federal or State law, no renewable fuel, as defined

24 by section 211(o)(1) of the Clean Air Act, or methyl ter25 tiary butyl ether (hereinafterin this section referred to as
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1 ‘‘MTBE’’), used or intended to be used as a motor vehicle

2 fuel, nor any motor vehicle fuel containing such renewable

3 fuel or MTBE, shall be deemed a defective product by vir4 tue of the fact that it is, or contains, such a renewable

5 fuel or MTBE, if it does not violate a control or prohibi6 tion imposed by the Administrator of the Environmental

7 Protection Agency (hereinafter in this section referred to

8 as the ‘‘Administrator’’) under section 211 of such Act,

9 and the manufacturer is in compliance with all requests

10 for information under subsection (b) of such section 211

11 of such Act. If the safe harbor provided by this section

12 does not apply, the existence of a claim of defective prod13 uct shall be determined under otherwise applicable law.

14 Nothing in this subsection shall be construed to affect the

15 liability of any person for environmental remediation costs,

16 drinking water contamination, negligence for spills or

17 other reasonably foreseeable events, public or private nui18 sance, trespass, breach of warranty, breach of contract,

19 or any other liability other than liability based upon a

20 claim of defective product.

21 (b) EFFECTIVE DATE.—This section shall be effec22 tive as of September 5, 2003, and shall apply with respect

23 to all claims filed on or after that date.

24 SEC. 1503. FINDINGS AND MTBE TRANSITION ASSISTANCE.

25 (a) FINDINGS.—Congress finds that—
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1 (1) since 1979, methyl tertiary butyl ether

2 (hereinafter in this section referred to as ‘‘MTBE’’)

3 has been used nationwide at low levels in gasoline to

4 replace lead as an octane booster or anti-knocking

5 agent;

6 (2) Public Law 101–549 (commonly known as

7 the ‘‘Clean Air Act Amendments of 1990’’) (42

8 U.S.C. 7401 et seq.) established a fuel oxygenate

9 standard under which reformulated gasoline must

10 contain at least 2 percent oxygen by weight;

11 (3) at the time of the adoption of the fuel oxy12 gen standard, Congress was aware that significant

13 use of MTBE would result from the adoption of that

14 standard, and that the use of MTBE would likely be

15 important to the cost-effective implementation of

16 that program;

17 (4) Congress was aware that gasoline and its

18 component additives can and do leak from storage

19 tanks;

20 (5) the fuel industry responded to the fuel oxy21 genate standard established by Public Law 101–549

22 by making substantial investments in—

23 (A) MTBE production capacity; and

24 (B) systems to deliver MTBE-containing

25 gasoline to the marketplace;
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1 (6) having previously required oxygenates like

2 MTBE for air quality purposes, Congress has—

3 (A) reconsidered the relative value of

4 MTBE in gasoline;

5 (B) decided to establish a date certain for

6 action by the Environmental Protection Agency

7 to prohibit the use of MTBE in gasoline; and

8 (C) decided to provide for the elimination

9 of the oxygenate requirement for reformulated

10 gasoline and to provide for a renewable fuels

11 content requirement for motor fuel; and

12 (7) it is appropriate for Congress to provide

13 some limited transition assistance—

14 (A) to merchant producers of MTBE who

15 produced MTBE in response to a market cre16 ated by the oxygenate requirement contained in

17 the Clean Air Act; and

18 (B) for the purpose of mitigating any fuel

19 supply problems that may result from the elimi20 nation of the oxygenate requirement for refor21 mulated gasoline and from the decision to es22 tablish a date certain for action by the Environ23 mental Protection Agency to prohibit the use of

24 MTBE in gasoline.
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1 (b) PURPOSES.—The purpose of this section is to

2 provide assistance to merchant producers of MTBE in

3 making the transition from producing MTBE to producing

4 other fuel additives.

5 (c) MTBE MERCHANT PRODUCER CONVERSION AS6 SISTANCE.—Section 211(c) of the Clean Air Act (42

7 U.S.C. 7545(c)) is amended by adding at the end the fol8 lowing:

9 ‘‘(5) MTBE MERCHANT PRODUCER CONVER10 SION ASSISTANCE.—

11 ‘‘(A) IN GENERAL.—

12 ‘‘(i) GRANTS.—The Secretary of En13 ergy, in consultation with the Adminis14 trator, may make grants to merchant pro15 ducers of methyl tertiary butyl ether (here16 inafter in this subsection referred to as

17 ‘MTBE’) in the United States to assist the

18 producers in the conversion of eligible pro19 duction facilities described in subpara20 graph (C) to the production of iso-octane,

21 iso-octene, alkylates, or renewable fuels.

22 ‘‘(ii) DETERMINATION.—The Admin23 istrator, in consultation with the Secretary

24 of Energy, may determine that transition

25 assistance for the production of iso-octane,
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1 iso-octene, alkylates, or renewable fuels is

2 inconsistent with the provisions of sub3 paragraph (B) and, on that basis, may

4 deny applications for grants authorized by

5 this paragraph.

6 ‘‘(B) FURTHER GRANTS.—The Secretary

7 of Energy, in consultation with the Adminis8 trator, may also further make grants to mer9 chant producers of MTBE in the United States

10 to assist the producers in the conversion of eli11 gible production facilities described in subpara12 graph (C) to the production of such other fuel

13 additives (unless the Administrator determines

14 that such fuel additives may reasonably be an15 ticipated to endanger public health or the envi16 ronment) that, consistent with this subsection—

17 ‘‘(i) have been registered and have

18 been tested or are being tested in accord19 ance with the requirements of this section;

20 and

21 ‘‘(ii) will contribute to replacing gaso22 line volumes lost as a result of amend23 ments made to subsection (k) of this sec24 tion by section 1504(a) and 1506 of the

25 Energy Policy Act of 2003.
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1 ‘‘(C) ELIGIBLE PRODUCTION FACILI2 TIES.—A production facility shall be eligible to

3 receive a grant under this paragraph if the pro4 duction facility—

5 ‘‘(i) is located in the United States;

6 and

7 ‘‘(ii) produced MTBE for consump8 tion before April 1, 2003 and ceased pro9 duction at any time after the date of en10 actment of this paragraph.

11 ‘‘(D) AUTHORIZATION OF APPROPRIA12 TIONS.—There are authorized to be appro13 priated to carry out this paragraph

14 $250,000,000 for each of fiscal years 2005

15 through 2012, to remain available until ex16 pended.’’.

17 (d) EFFECT ON STATE LAW.—The amendments

18 made to the Clean Air Act by this title have no effect re19 garding any available authority of States to limit the use

20 of methyl tertiary butyl ether in motor vehicle fuel.

21 SEC. 1504. USE OF MTBE.

22 (a) IN GENERAL.—Subject to subsections (e) and (f),

23 not later than December 31, 2014, the use of methyl ter24 tiary butyl ether (hereinafter in this section referred to
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1 as ‘‘MTBE’’) in motor vehicle fuel in any State other than

2 a State described in subsection (c) is prohibited.

3 (b) REGULATIONS.—The Administrator of the Envi4 ronmental Protection Agency (hereafter referred to in this

5 section as the ‘‘Administrator’’) shall promulgate regula6 tions to effect the prohibition in subsection (a).

7 (c) STATES THAT AUTHORIZE USE.—A State de8 scribed in this subsection is a State in which the Governor

9 of the State submits a notification to the Administrator

10 authorizing the use of MTBE in motor vehicle fuel sold

11 or used in the State.

12 (d) PUBLICATION OF NOTICE.—The Administrator

13 shall publish in the Federal Register each notice submitted

14 by a State under subsection (c).

15 (e) TRACE QUANTITIES.—In carrying out subsection

16 (a), the Administrator may allow trace quantities of

17 MTBE, not to exceed 0.5 percent by volume, to be present

18 in motor vehicle fuel in cases that the Administrator deter19 mines to be appropriate.

20 (f) LIMITATION.—The Administrator, under author21 ity of subsection (a), shall not prohibit or control the pro22 duction of MTBE for export from the United States or

23 for any other use other than for use in motor vehicle fuel.
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1 SEC. 1505. NATIONAL ACADEMY OF SCIENCES REVIEW AND

2 PRESIDENTIAL DETERMINATION.

3 (a) NAS REVIEW.—Not later than May 31, 2013, the

4 Secretary shall enter into an arrangement with the Na5 tional Academy of Sciences to review the use of methyl

6 tertiary butyl ether (hereafter referred to in this section

7 as ‘‘MTBE’’) in fuel and fuel additives. The review shall

8 only use the best available scientific information and data

9 collected by accepted methods or the best available means.

10 The review shall examine the use of MTBE in fuel and

11 fuel additives, significant beneficial and detrimental ef12 fects of this use on environmental quality or public health

13 or welfare including the costs and benefits of such effects,

14 likely effects of controls or prohibitions on MTBE regard15 ing fuel availability and price, and other appropriate and

16 reasonable actions that are available to protect the envi17 ronment or public health or welfare from any detrimental

18 effects of the use of MTBE in fuel or fuel additives. The

19 review shall be peer-reviewed prior to publication and all

20 supporting data and analytical models shall be available

21 to the public. The review shall be completed no later than

22 May 31, 2014.

23 (b) PRESIDENTIAL DETERMINATION.—No later than

24 June 30, 2014, the President may make a determination

25 that restrictions on the use of MTBE to be implemented

26 pursuant to section 1504 shall not take place and that
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1 the legal authority contained in section 1504 to prohibit

2 the use of MTBE in motor vehicle fuel shall become null

3 and void.

4 SEC. 1506. ELIMINATION OF OXYGEN CONTENT REQUIRE5 MENT FOR REFORMULATED GASOLINE.

6 (a) ELIMINATION.—

7 (1) IN GENERAL.—Section 211(k) of the Clean

8 Air Act (42 U.S.C. 7545(k)) is amended as follows:

9 (A) In paragraph (2)—

10 (i) in the second sentence of subpara11 graph (A), by striking ‘‘(including the oxy12 gen content requirement contained in sub13 paragraph (B))’’;

14 (ii) by striking subparagraph (B); and

15 (iii) by redesignating subparagraphs

16 (C) and (D) as subparagraphs (B) and

17 (C), respectively.

18 (B) In paragraph (3)(A), by striking

19 clause (v).

20 (C) In paragraph (7)—

21 (i) in subparagraph (A)—

22 (I) by striking clause (i); and

23 (II) by redesignating clauses (ii)

24 and (iii) as clauses (i) and (ii), respec25 tively; and
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1 (ii) in subparagraph (C)—

2 (I) by striking clause (ii).

3 (II) by redesignating clause (iii)

4 as clause (ii).

5 (2) EFFECTIVE DATE.—The amendments made

6 by paragraph (1) take effect 270 days after the date

7 of enactment of this Act, except that such amend8 ments shall take effect upon such date of enactment

9 in any State that has received a waiver under sec10 tion 209(b) of the Clean Air Act.

11 (b) MAINTENANCE OF TOXIC AIR POLLUTANT EMIS12 SION REDUCTIONS.—Section 211(k)(1) of the Clean Air

13 Act (42 U.S.C. 7545(k)(1)) is amended as follows:

14 (1) By striking ‘‘Within 1 year after the enact15 ment of the Clean Air Act Amendments of 1990,’’

16 and inserting the following:

17 ‘‘(A) IN GENERAL.—Not later than No18 vember 15, 1991,’’.

19 (2) By adding at the end the following:

20 ‘‘(B) MAINTENANCE OF TOXIC AIR POL21 LUTANT EMISSIONS REDUCTIONS FROM REFOR22 MULATED GASOLINE.—

23 ‘‘(i) DEFINITIONS.—In this subpara24 graph the term ‘PADD’ means a Petro25 leum Administration for Defense District.
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1 ‘‘(ii) REGULATIONS REGARDING EMIS2 SIONS OF TOXIC AIR POLLUTANTS.—Not

3 later than 270 days after the date of en4 actment of this subparagraph the Adminis5 trator shall establish, for each refinery or

6 importer, standards for toxic air pollutants

7 from use of the reformulated gasoline pro8 duced or distributed by the refinery or im9 porter that maintain the reduction of the

10 average annual aggregate emissions of

11 toxic air pollutants for reformulated gaso12 line produced or distributed by the refinery

13 or importer during calendar years 1999

14 and 2000, determined on the basis of data

15 collected by the Administrator with respect

16 to the refinery or importer.

17 ‘‘(iii) STANDARDS APPLICABLE TO

18 SPECIFIC REFINERIES OR IMPORTERS.—

19 ‘‘(I) APPLICABILITY OF STAND20 ARDS.—For any calendar year, the

21 standards applicable to a refinery or

22 importer under clause (ii) shall apply

23 to the quantity of gasoline produced

24 or distributed by the refinery or im25 porter in the calendar year only to the
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1 extent that the quantity is less than

2 or equal to the average annual quan3 tity of reformulated gasoline produced

4 or distributed by the refinery or im5 porter during calendar years 1999

6 and 2000.

7 ‘‘(II) APPLICABILITY OF OTHER

8 STANDARDS.—For any calendar year,

9 the quantity of gasoline produced or

10 distributed by a refinery or importer

11 that is in excess of the quantity sub12 ject to subclause (I) shall be subject

13 to standards for toxic air pollutants

14 promulgated under subparagraph (A)

15 and paragraph (3)(B).

16 ‘‘(iv) CREDIT PROGRAM.—The Admin17 istrator shall provide for the granting and

18 use of credits for emissions of toxic air pol19 lutants in the same manner as provided in

20 paragraph (7).

21 ‘‘(v) REGIONAL PROTECTION OF

22 TOXICS REDUCTION BASELINES.—

23 ‘‘(I) IN GENERAL.—Not later

24 than 60 days after the date of enact25 ment of this subparagraph, and not
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1 later than April 1 of each calendar

2 year that begins after that date of en3 actment, the Administrator shall pub4 lish in the Federal Register a report

5 that specifies, with respect to the pre6 vious calendar year—

7 ‘‘(aa) the quantity of refor8 mulated gasoline produced that is

9 in excess of the average annual

10 quantity of reformulated gasoline

11 produced in 1999 and 2000; and

12 ‘‘(bb) the reduction of the

13 average annual aggregate emis14 sions of toxic air pollutants in

15 each PADD, based on retail sur16 vey data or data from other ap17 propriate sources.

18 ‘‘(II) EFFECT OF FAILURE TO

19 MAINTAIN AGGREGATE TOXICS RE20 DUCTIONS.—If, in any calendar year,

21 the reduction of the average annual

22 aggregate emissions of toxic air pol23 lutants in a PADD fails to meet or

24 exceed the reduction of the average

25 annual aggregate emissions of toxic
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1 air pollutants in the PADD in cal2 endar years 1999 and 2000, the Ad3 ministrator, not later than 90 days

4 after the date of publication of the re5 port for the calendar year under sub6 clause (I), shall—

7 ‘‘(aa) identify, to the max8 imum extent practicable, the rea9 sons for the failure, including the

10 sources, volumes, and character11 istics of reformulated gasoline

12 that contributed to the failure;

13 and

14 ‘‘(bb) promulgate revisions

15 to the regulations promulgated

16 under clause (ii), to take effect

17 not earlier than 180 days but not

18 later than 270 days after the

19 date of promulgation, to provide

20 that, notwithstanding clause

21 (iii)(II), all reformulated gasoline

22 produced or distributed at each

23 refinery or importer shall meet

24 the standards applicable under

25 clause (ii) not later than April 1
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1 of the year following the report

2 in subclause (II) and for subse3 quent years.

4 ‘‘(vi) REGULATIONS TO CONTROL

5 HAZARDOUS AIR POLLUTANTS FROM

6 MOTOR VEHICLES AND MOTOR VEHICLE

7 FUELS.—Not later than July 1, 2004, the

8 Administrator shall promulgate final regu9 lations to control hazardous air pollutants

10 from motor vehicles and motor vehicle

11 fuels, as provided for in section 80.1045 of

12 title 40, Code of Federal Regulations (as

13 in effect on the date of enactment of this

14 subparagraph).’’.

15 (c) CONSOLIDATION IN REFORMULATED GASOLINE

16 REGULATIONS.—Not later than 180 days after the date

17 of enactment of this Act, the Administrator of the Envi18 ronmental Protection Agency shall revise the reformulated

19 gasoline regulations under subpart D of part 80 of title

20 40, Code of Federal Regulations, to consolidate the regula21 tions applicable to VOC-Control Regions 1 and 2 under

22 section 80.41 of that title by eliminating the less stringent

23 requirements applicable to gasoline designated for VOC24 Control Region 2 and instead applying the more stringent
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1 requirements applicable to gasoline designated for VOC2 Control Region 1.

3 (d) SAVINGS CLAUSE.—Nothing in this section is in4 tended to affect or prejudice either any legal claims or ac5 tions with respect to regulations promulgated by the Ad6 ministrator of the Environmental Protection Agency

7 (hereinafter in this subsection referred to as the ‘‘Admin8 istrator’’) prior to the date of enactment of this Act re9 garding emissions of toxic air pollutants from motor vehi10 cles or the adjustment of standards applicable to a specific

11 refinery or importer made under such prior regulations

12 and the Administrator may apply such adjustments to the

13 standards applicable to such refinery or importer under

14 clause (iii)(I) of section 211(k)(1)(B) of the Clean Air Act,

15 except that—

16 (1) the Administrator shall revise such adjust17 ments to be based only on calendar years 1999–

18 2000; and

19 (2) for adjustments based on toxic air pollutant

20 emissions from reformulated gasoline significantly

21 below the national annual average emissions of toxic

22 air pollutants from all reformulated gasoline, the

23 Administrator may revise such adjustments to take

24 account of the scope of Federal or State prohibitions

25 on the use of methyl tertiary butyl ether imposed
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1 after the date of the enactment of this paragraph,

2 except that any such adjustment shall require such

3 refiner or importer, to the greatest extent prac4 ticable, to maintain the reduction achieved during

5 calendar years 1999–2000 in the average annual ag6 gregate emissions of toxic air pollutants from refor7 mulated gasoline produced or distributed by the re8 finery or importer; Provided, that any such adjust9 ment shall not be made at a level below the average

10 percentage of reductions of emissions of toxic air

11 pollutants for reformulated gasoline supplied to

12 PADD I during calendar years 1999–2000.

13 SEC. 1507. ANALYSES OF MOTOR VEHICLE FUEL CHANGES.

14 Section 211 of the Clean Air Act (42 U.S.C. 7545)

15 is amended by inserting after subsection (o) the following:

16 ‘‘(p) ANALYSES OF MOTOR VEHICLE FUEL CHANGES

17 AND EMISSIONS MODEL.—

18 ‘‘(1) ANTI-BACKSLIDING ANALYSIS.—

19 ‘‘(A) DRAFT ANALYSIS.—Not later than 4

20 years after the date of enactment of this sub21 section, the Administrator shall publish for pub22 lic comment a draft analysis of the changes in

23 emissions of air pollutants and air quality due

24 to the use of motor vehicle fuel and fuel addi25 tives resulting from implementation of the
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1 amendments made by subtitle A of title XV of

2 the Energy Policy Act of 2003.

3 ‘‘(B) FINAL ANALYSIS.—After providing a

4 reasonable opportunity for comment but not

5 later than 5 years after the date of enactment

6 of this paragraph, the Administrator shall pub7 lish the analysis in final form.

8 ‘‘(2) EMISSIONS MODEL.—For the purposes of

9 this subsection, as soon as the necessary data are

10 available, the Administrator shall develop and final11 ize an emissions model that reasonably reflects the

12 effects of gasoline characteristics or components on

13 emissions from vehicles in the motor vehicle fleet

14 during calendar year 2005.’’.

15 SEC. 1508. DATA COLLECTION.

16 Section 205 of the Department of Energy Organiza17 tion Act (42 U.S.C. 7135) is amended by adding at the

18 end the following:

19 ‘‘(m) RENEWABLE FUELS SURVEY.—(1) In order to

20 improve the ability to evaluate the effectiveness of the Na21 tion’s renewable fuels mandate, the Administrator shall

22 conduct and publish the results of a survey of renewable

23 fuels demand in the motor vehicle fuels market in the

24 United States monthly, and in a manner designed to pro25 tect the confidentiality of individual responses. In con-
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1 ducting the survey, the Administrator shall collect infor2 mation both on a national and regional basis, including

3 each of the following:

4 ‘‘(A) The quantity of renewable fuels produced.

5 ‘‘(B) The quantity of renewable fuels blended.

6 ‘‘(C) The quantity of renewable fuels imported.

7 ‘‘(D) The quantity of renewable fuels de8 manded.

9 ‘‘(E) Market price data.

10 ‘‘(F) Such other analyses or evaluations as the

11 Administrator finds is necessary to achieve the pur12 poses of this section.

13 ‘‘(2) The Administrator shall also collect or estimate

14 information both on a national and regional basis, pursu15 ant to subparagraphs (A) through (F) of paragraph (1),

16 for the 5 years prior to implementation of this subsection.

17 ‘‘(3) This subsection does not affect the authority of

18 the Administrator to collect data under section 52 of the

19 Federal Energy Administration Act of 1974 (15 U.S.C.

20 790a).’’.

21 SEC. 1509. REDUCING THE PROLIFERATION OF STATE FUEL

22 CONTROLS.

23 (a) EPA APPROVAL OF STATE PLANS WITH FUEL

24 CONTROLS.—Section 211(c)(4)(C) of the Clean Air Act

25 (42 U.S.C. 7545(c)(4)(C)) is amended by adding at the
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1 end the following: ‘‘The Administrator shall not approve

2 a control or prohibition respecting the use of a fuel or fuel

3 additive under this subparagraph unless the Adminis4 trator, after consultation with the Secretary of Energy,

5 publishes in the Federal Register a finding that, in the

6 Administrator’s judgment, such control or prohibition will

7 not cause fuel supply or distribution interruptions or have

8 a significant adverse impact on fuel producibility in the

9 affected area or contiguous areas.’’.

10 (b) STUDY.—The Administrator of the Environ11 mental Protection Agency (hereinafter in this subsection

12 referred to as the ‘‘Administrator’’), in cooperation with

13 the Secretary of Energy, shall undertake a study of the

14 projected effects on air quality, the proliferation of fuel

15 blends, fuel availability, and fuel costs of providing a pref16 erence for each of the following:

17 (A) Reformulated gasoline referred to in sub18 section (k) of section 211 of the Clean Air Act.

19 (B) A low RVP gasoline blend that has been

20 certified by the Administrator as having a Reid

21 Vapor Pressure of 7.0 pounds per square inch (psi).

22 (C) A low RVP gasoline blend that has been

23 certified by the Administrator as having a Reid

24 Vapor Pressure of 7.8 pounds per square inch (psi).
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1 In carrying out such study, the Administrator shall obtain

2 comments from affected parties. The Administrator shall

3 submit the results of such study to the Congress not later

4 than 18 months after the date of enactment of this Act,

5 together with any recommended legislative changes.

6 SEC. 1510. FUEL SYSTEM REQUIREMENTS HARMONIZATION

7 STUDY.

8 (a) STUDY.—

9 (1) IN GENERAL.—The Administrator of the

10 Environmental Protection Agency (hereinafter in

11 this section referred to as the ‘‘Administrator’’) and

12 the Secretary of Energy shall jointly conduct a study

13 of Federal, State, and local requirements concerning

14 motor vehicle fuels, including—

15 (A) requirements relating to reformulated

16 gasoline, volatility (measured in Reid vapor

17 pressure), oxygenated fuel, and diesel fuel; and

18 (B) other requirements that vary from

19 State to State, region to region, or locality to

20 locality.

21 (2) REQUIRED ELEMENTS.—The study shall

22 assess—

23 (A) the effect of the variety of require24 ments described in paragraph (1) on the supply,

25 quality, and price of motor vehicle fuels avail-
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1 able to consumers in various States and local2 ities;

3 (B) the effect of the requirements de4 scribed in paragraph (1) on achievement of—

5 (i) national, regional, and local air

6 quality standards and goals; and

7 (ii) related environmental and public

8 health protection standards and goals;

9 (C) the effect of Federal, State, and local

10 motor vehicle fuel regulations, including mul11 tiple motor vehicle fuel requirements, on—

12 (i) domestic refineries;

13 (ii) the fuel distribution system; and

14 (iii) industry investment in new capac15 ity;

16 (D) the effect of the requirements de17 scribed in paragraph (1) on emissions from ve18 hicles, refineries, and fuel handling facilities;

19 (E) the feasibility of developing national or

20 regional motor vehicle fuel slates for the 48

21 contiguous States that, while improving air

22 quality at the national, regional and local levels

23 consistent with the attainment of national am24 bient air quality standards, could—
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1 (i) enhance flexibility in the fuel dis2 tribution infrastructure and improve fuel

3 fungibility;

4 (ii) reduce price volatility and costs to

5 consumers and producers;

6 (iii) provide increased liquidity to the

7 gasoline market; and

8 (iv) enhance fuel quality, consistency,

9 and supply;

10 (F) the feasibility of providing incentives

11 to promote cleaner burning motor vehicle fuel;

12 and

13 (G) the extent to which improvements in

14 air quality and any increases or decreases in

15 the price of motor fuel can be projected to re16 sult from the Environmental Protection Agen17 cy’s Tier II requirements for conventional gaso18 line and vehicle emission systems, the reformu19 lated gasoline program, the renewable content

20 requirements established by this subtitle, State

21 programs regarding gasoline volatility, and any

22 other requirements imposed by States or local23 ities affecting the composition of motor fuel.

24 (b) REPORT.—
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1 (1) IN GENERAL.—Not later than December 31,

2 2007, the Administrator and the Secretary of En3 ergy shall submit to Congress a report on the results

4 of the study conducted under subsection (a).

5 (2) RECOMMENDATIONS.—

6 (A) IN GENERAL.—The report under this

7 subsection shall contain recommendations for

8 legislative and administrative actions that may

9 be taken—

10 (i) to improve air quality;

11 (ii) to reduce costs to consumers and

12 producers; and

13 (iii) to increase supply liquidity.

14 (B) REQUIRED CONSIDERATIONS.—The

15 recommendations under subparagraph (A) shall

16 take into account the need to provide advance

17 notice of required modifications to refinery and

18 fuel distribution systems in order to ensure an

19 adequate supply of motor vehicle fuel in all

20 States.

21 (3) CONSULTATION.—In developing the report

22 under this subsection, the Administrator and the

23 Secretary of Energy shall consult with—

24 (A) the Governors of the States;

25 (B) automobile manufacturers;
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1 (C) motor vehicle fuel producers and dis2 tributors; and

3 (D) the public.

4 SEC. 1511. COMMERCIAL BYPRODUCTS FROM MUNICIPAL

5 SOLID WASTE AND CELLULOSIC BIOMASS

6 LOAN GUARANTEE PROGRAM.

7 (a) DEFINITION OF MUNICIPAL SOLID WASTE.—In

8 this section, the term ‘‘municipal solid waste’’ has the

9 meaning given the term ‘‘solid waste’’ in section 1004 of

10 the Solid Waste Disposal Act (42 U.S.C. 6903).

11 (b) ESTABLISHMENT OF PROGRAM.—The Secretary

12 of Energy (hereinafter in this section referred to as the

13 ‘‘Secretary’’) shall establish a program to provide guaran14 tees of loans by private institutions for the construction

15 of facilities for the processing and conversion of municipal

16 solid waste and cellulosic biomass into fuel ethanol and

17 other commercial byproducts.

18 (c) REQUIREMENTS.—The Secretary may provide a

19 loan guarantee under subsection (b) to an applicant if—

20 (1) without a loan guarantee, credit is not

21 available to the applicant under reasonable terms or

22 conditions sufficient to finance the construction of a

23 facility described in subsection (b);

24 (2) the prospective earning power of the appli25 cant and the character and value of the security
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1 pledged provide a reasonable assurance of repayment

2 of the loan to be guaranteed in accordance with the

3 terms of the loan; and

4 (3) the loan bears interest at a rate determined

5 by the Secretary to be reasonable, taking into ac6 count the current average yield on outstanding obli7 gations of the United States with remaining periods

8 of maturity comparable to the maturity of the loan.

9 (d) CRITERIA.—In selecting recipients of loan guar10 antees from among applicants, the Secretary shall give

11 preference to proposals that—

12 (1) meet all applicable Federal and State per13 mitting requirements;

14 (2) are most likely to be successful; and

15 (3) are located in local markets that have the

16 greatest need for the facility because of—

17 (A) the limited availability of land for

18 waste disposal;

19 (B) the availability of sufficient quantities

20 of cellulosic biomass; or

21 (C) a high level of demand for fuel ethanol

22 or other commercial byproducts of the facility.

23 (e) MATURITY.—A loan guaranteed under subsection

24 (b) shall have a maturity of not more than 20 years.
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1 (f) TERMS AND CONDITIONS.—The loan agreement

2 for a loan guaranteed under subsection (b) shall provide

3 that no provision of the loan agreement may be amended

4 or waived without the consent of the Secretary.

5 (g) ASSURANCE OF REPAYMENT.—The Secretary

6 shall require that an applicant for a loan guarantee under

7 subsection (b) provide an assurance of repayment in the

8 form of a performance bond, insurance, collateral, or other

9 means acceptable to the Secretary in an amount equal to

10 not less than 20 percent of the amount of the loan.

11 (h) GUARANTEE FEE.—The recipient of a loan guar12 antee under subsection (b) shall pay the Secretary an

13 amount determined by the Secretary to be sufficient to

14 cover the administrative costs of the Secretary relating to

15 the loan guarantee.

16 (i) FULL FAITH AND CREDIT.—The full faith and

17 credit of the United States is pledged to the payment of

18 all guarantees made under this section. Any such guar19 antee made by the Secretary shall be conclusive evidence

20 of the eligibility of the loan for the guarantee with respect

21 to principal and interest. The validity of the guarantee

22 shall be incontestable in the hands of a holder of the guar23 anteed loan.

24 (j) REPORTS.—Until each guaranteed loan under this

25 section has been repaid in full, the Secretary shall annu-
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1 ally submit to Congress a report on the activities of the

2 Secretary under this section.

3 (k) AUTHORIZATION OF APPROPRIATIONS.—There

4 are authorized to be appropriated such sums as are nec5 essary to carry out this section.

6 (l) TERMINATION OF AUTHORITY.—The authority of

7 the Secretary to issue a loan guarantee under subsection

8 (b) terminates on the date that is 10 years after the date

9 of enactment of this Act.

10 SEC. 1512. RESOURCE CENTER.

11 (a) DEFINITION.—In this section, the term ‘‘RFG

12 State’’ means a State in which is located one or more cov13 ered areas (as defined in section 211(k)(10)(D) of the

14 Clean Air Act (42 U.S.C. 7545(k)(10)(D)).

15 (b) AUTHORIZATION OF APPROPRIATIONS FOR RE16 SOURCE CENTER.—There are authorized to be appro17 priated, for a resource center to further develop bioconver18 sion technology using low-cost biomass for the production

19 of ethanol at the Center for Biomass-Based Energy at the

20 University of Mississippi and the University of Oklahoma,

21 $4,000,000 for each of fiscal years 2004 through 2006.

22 (c) RENEWABLE FUEL PRODUCTION RESEARCH AND

23 DEVELOPMENT GRANTS.—

24 (1) IN GENERAL.—The Administrator of the

25 Environmental Protection Agency shall provide
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1 grants for the research into, and development and

2 implementation of, renewable fuel production tech3 nologies in RFG States with low rates of ethanol

4 production, including low rates of production of cel5 lulosic biomass ethanol.

6 (2) ELIGIBILITY.—

7 (A) IN GENERAL.—The entities eligible to

8 receive a grant under this subsection are aca9 demic institutions in RFG States, and consortia

10 made up of combinations of academic institu11 tions, industry, State government agencies, or

12 local government agencies in RFG States, that

13 have proven experience and capabilities with

14 relevant technologies.

15 (B) APPLICATION.—To be eligible to re16 ceive a grant under this subsection, an eligible

17 entity shall submit to the Administrator an ap18 plication in such manner and form, and accom19 panied by such information, as the Adminis20 trator may specify.

21 (3) AUTHORIZATION OF APPROPRIATIONS.—

22 There are authorized to be appropriated to carry out

23 this subsection $25,000,000 for each of fiscal years

24 2004 through 2008.
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1 SEC. 1513. CELLULOSIC BIOMASS AND WASTE-DERIVED

2 ETHANOL CONVERSION ASSISTANCE.

3 Section 211 of the Clean Air Act (42 U.S.C. 7545)

4 is amended by adding at the end the following:

5 ‘‘(r) CELLULOSIC BIOMASS AND WASTE-DERIVED

6 ETHANOL CONVERSION ASSISTANCE.—

7 ‘‘(1) IN GENERAL.—The Secretary of Energy

8 may provide grants to merchant producers of cel9 lulosic biomass ethanol and waste-derived ethanol in

10 the United States to assist the producers in building

11 eligible production facilities described in paragraph

12 (2) for the production of ethanol.

13 ‘‘(2) ELIGIBLE PRODUCTION FACILITIES.—A

14 production facility shall be eligible to receive a grant

15 under this subsection if the production facility—

16 ‘‘(A) is located in the United States; and

17 ‘‘(B) uses cellulosic biomass or waste-de18 rived feedstocks derived from agricultural resi19 dues, municipal solid waste, or agricultural by20 products as that term is used in section 919 of

21 the Energy Policy Act of 2003.

22 ‘‘(3) AUTHORIZATION OF APPROPRIATIONS.—

23 There are authorized to be appropriated the fol24 lowing amounts to carry out this subsection:

25 ‘‘(A) $100,000,000 for fiscal year 2004.

26 ‘‘(B) $250,000,000 for fiscal year 2005.
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1 ‘‘(C) $400,000,000 for fiscal year 2006.’’.

2 SEC. 1514. BLENDING OF COMPLIANT REFORMULATED GAS3 OLINES.

4 Section 211 of the Clean Air Act (42 U.S.C. 7545)

5 is amended by adding at the end the following:

6 ‘‘(s) BLENDING OF COMPLIANT REFORMULATED

7 GASOLINES.—

8 ‘‘(1) IN GENERAL.—Notwithstanding sub9 sections (h) and (k) and subject to the limitations in

10 paragraph (2) of this subsection, it shall not be a

11 violation of this subtitle for a gasoline retailer, dur12 ing any month of the year, to blend at a retail loca13 tion batches of ethanol-blended and non-ethanol14 blended reformulated gasoline, provided that—

15 ‘‘(A) each batch of gasoline to be blended

16 has been individually certified as in compliance

17 with subsections (h) and (k) prior to being

18 blended;

19 ‘‘(B) the retailer notifies the Administrator

20 prior to such blending, and identifies the exact

21 location of the retail station and the specific

22 tank in which such blending will take place;

23 ‘‘(C) the retailer retains and, as requested

24 by the Administrator or the Administrator’s

25 designee, makes available for inspection such
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1 certifications accounting for all gasoline at the

2 retail outlet; and

3 ‘‘(D) the retailer does not, between June 1

4 and September 15 of each year, blend a batch

5 of VOC-controlled, or ‘summer’, gasoline with a

6 batch of non-VOC-controlled, or ‘winter’, gaso7 line (as these terms are defined under sub8 sections (h) and (k)).

9 ‘‘(2) LIMITATIONS.—

10 ‘‘(A) FREQUENCY LIMITATION.—A retailer shall

11 only be permitted to blend batches of compliant re12 formulated gasoline under this subsection a max13 imum of two blending periods between May 1 and

14 September 15 of each calendar year.

15 ‘‘(B) DURATION OF BLENDING PERIOD.—Each

16 blending period authorized under subparagraph (A)

17 shall extend for a period of no more than 10 con18 secutive calendar days.

19 ‘‘(3) SURVEYS.—A sample of gasoline taken

20 from a retail location that has blended gasoline with21 in the past 30 days and is in compliance with sub22 paragraphs (A), (B), (C), and (D) of paragraph (1)

23 shall not be used in a VOC survey mandated by 40

24 C.F.R. Part 80.
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1 ‘‘(4) STATE IMPLEMENTATION PLANS.—A State

2 shall be held harmless and shall not be required to

3 revise its State implementation plan under section

4 110 to account for the emissions from blended gaso5 line authorized under paragraph (1).

6 ‘‘(5) PRESERVATION OF STATE LAW.—Nothing

7 in this subsection shall—

8 ‘‘(A) preempt existing State laws or regu9 lations regulating the blending of compliant

10 gasolines; or

11 ‘‘(B) prohibit a State from adopting such

12 restrictions in the future.

13 ‘‘(6) REGULATIONS.—The Administrator shall

14 promulgate, after notice and comment, regulations

15 implementing this subsection within one year after

16 the date of enactment of this subsection.

17 ‘‘(7) EFFECTIVE DATE.—This subsection shall

18 become effective 15 months after the date of its en19 actment and shall apply to blended batches of refor20 mulated gasoline on or after that date, regardless of

21 whether the implementing regulations required by

22 paragraph (6) have been promulgated by the Admin23 istrator by that date.

24 ‘‘(8) LIABILITY.—No person other than the

25 person responsible for blending under this subsection
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1 shall be subject to an enforcement action or pen2 alties under subsection (d) solely arising from the

3 blending of compliant reformulated gasolines by the

4 retailers.

5 ‘‘(9) FORMULATION OF GASOLINE.—This sub6 section does not grant authority to the Adminis7 trator or any State (or any subdivision thereof) to

8 require reformulation of gasoline at the refinery to

9 adjust for potential or actual emissions increases due

10 to the blending authorized by this subsection.’’.

11 Subtitle B—Underground Storage

12 Tank Compliance

13 SEC. 1521. SHORT TITLE.

14 This subtitle may be cited as the ‘‘Underground Stor15 age Tank Compliance Act of 2004’’.

16 SEC. 1522. LEAKING UNDERGROUND STORAGE TANKS.

17 (a) IN GENERAL.—Section 9004 of the Solid Waste

18 Disposal Act (42 U.S.C. 6991c) is amended by adding at

19 the end the following:

20 ‘‘(f) TRUST FUND DISTRIBUTION.—

21 ‘‘(1) IN GENERAL.—

22 ‘‘(A) AMOUNT AND PERMITTED USES OF

23 DISTRIBUTION.—The Administrator shall dis24 tribute to States not less than 80 percent of the

25 funds from the Trust Fund that are made
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1 available to the Administrator under section

2 9014(2)(A) for each fiscal year for use in pay3 ing the reasonable costs, incurred under a coop4 erative agreement with any State for—

5 ‘‘(i) actions taken by the State under

6 section 9003(h)(7)(A);

7 ‘‘(ii) necessary administrative ex8 penses, as determined by the Adminis9 trator, that are directly related to State

10 fund or State assurance programs under

11 subsection (c)(1);

12 ‘‘(iii) any State fund or State assur13 ance program carried out under subsection

14 (c)(1) for a release from an underground

15 storage tank regulated under this subtitle

16 to the extent that, as determined by the

17 State in accordance with guidelines devel18 oped jointly by the Administrator and the

19 States, the financial resources of the owner

20 and operator of the underground storage

21 tank (including resources provided by a

22 program in accordance with subsection

23 (c)(1)) are not adequate to pay the cost of

24 a corrective action without significantly im-
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1 pairing the ability of the owner or operator

2 to continue in business; or

3 ‘‘(iv) enforcement, by a State or a

4 local government, of State or local regula5 tions pertaining to underground storage

6 tanks regulated under this subtitle.

7 ‘‘(B) USE OF FUNDS FOR ENFORCE8 MENT.—In addition to the uses of funds au9 thorized under subparagraph (A), the Adminis10 trator may use funds from the Trust Fund that

11 are not distributed to States under subpara12 graph (A) for enforcement of any regulation

13 promulgated by the Administrator under this

14 subtitle.

15 ‘‘(C) PROHIBITED USES.—Funds provided

16 to a State by the Administrator under subpara17 graph (A) shall not be used by the State to pro18 vide financial assistance to an owner or oper19 ator to meet any requirement relating to under20 ground storage tanks under subparts B, C, D,

21 H, and G of part 280 of title 40, Code of Fed22 eral Regulations (as in effect on the date of en23 actment of this subsection).

24 ‘‘(2) ALLOCATION.—
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1 ‘‘(A) PROCESS.—Subject to subparagraphs

2 (B) and (C), in the case of a State with which

3 the Administrator has entered into a coopera4 tive agreement under section 9003(h)(7)(A),

5 the Administrator shall distribute funds from

6 the Trust Fund to the State using an allocation

7 process developed by the Administrator.

8 ‘‘(B) DIVERSION OF STATE FUNDS.—The

9 Administrator shall not distribute funds under

10 subparagraph (A)(iii) of subsection (f)(1) to

11 any State that has diverted funds from a State

12 fund or State assurance program for purposes

13 other than those related to the regulation of un14 derground storage tanks covered by this sub15 title, with the exception of those transfers that

16 had been completed earlier than the date of en17 actment of this subsection.

18 ‘‘(C) REVISIONS TO PROCESS.—The Ad19 ministrator may revise the allocation process re20 ferred to in subparagraph (A) after—

21 ‘‘(i) consulting with State agencies re22 sponsible for overseeing corrective action

23 for releases from underground storage

24 tanks; and
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1 ‘‘(ii) taking into consideration, at a

2 minimum, each of the following:

3 ‘‘(I) The number of confirmed re4 leases from federally regulated leaking

5 underground storage tanks in the

6 States.

7 ‘‘(II) The number of federally

8 regulated underground storage tanks

9 in the States.

10 ‘‘(III) The performance of the

11 States in implementing and enforcing

12 the program.

13 ‘‘(IV) The financial needs of the

14 States.

15 ‘‘(V) The ability of the States to

16 use the funds referred to in subpara17 graph (A) in any year.

18 ‘‘(3) DISTRIBUTIONS TO STATE AGENCIES.—

19 Distributions from the Trust Fund under this sub20 section shall be made directly to a State agency

21 that—

22 ‘‘(A) enters into a cooperative agreement

23 referred to in paragraph (2)(A); or

24 ‘‘(B) is enforcing a State program ap25 proved under this section.
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1 ‘‘(4) COST RECOVERY PROHIBITION.—Funds

2 from the Trust Fund provided by States to owners

3 or operators under paragraph (1)(A)(iii) shall not be

4 subject to cost recovery by the Administrator under

5 section 9003(h)(6).’’.

6 (b) WITHDRAWAL OF APPROVAL OF STATE

7 FUNDS.—Section 9004(c) of the Solid Waste Disposal Act

8 (42 U.S.C. 6991c(c)) is amended by inserting the fol9 lowing new paragraph at the end thereof:

10 ‘‘(6) WITHDRAWAL OF APPROVAL.—After an

11 opportunity for good faith, collaborative efforts to

12 correct financial deficiencies with a State fund, the

13 Administrator may withdraw approval of any State

14 fund or State assurance program to be used as a fi15 nancial responsibility mechanism without with16 drawing approval of a State underground storage

17 tank program under section 9004(a).’’.

18 SEC. 1523. INSPECTION OF UNDERGROUND STORAGE

19 TANKS.

20 (a) INSPECTION REQUIREMENTS.—Section 9005 of

21 the Solid Waste Disposal Act (42 U.S.C. 6991d) is amend22 ed by inserting the following new subsection at the end

23 thereof:

24 ‘‘(c) INSPECTION REQUIREMENTS.—
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1 ‘‘(1) UNINSPECTED TANKS.—In the case of un2 derground storage tanks regulated under this sub3 title that have not undergone an inspection since De4 cember 22, 1998, not later than 2 years after the

5 date of enactment of this subsection, the Adminis6 trator or a State that receives funding under this

7 subtitle, as appropriate, shall conduct on-site inspec8 tions of all such tanks to determine compliance with

9 this subtitle and the regulations under this subtitle

10 (40 C.F.R. 280) or a requirement or standard of a

11 State program developed under section 9004.

12 ‘‘(2) PERIODIC INSPECTIONS.—After completion

13 of all inspections required under paragraph (1), the

14 Administrator or a State that receives funding under

15 this subtitle, as appropriate, shall conduct on-site in16 spections of each underground storage tank regu17 lated under this subtitle at least once every 3 years

18 to determine compliance with this subtitle and the

19 regulations under this subtitle (40 C.F.R. 280) or a

20 requirement or standard of a State program devel21 oped under section 9004. The Administrator may ex22 tend for up to one additional year the first 3-year

23 inspection interval under this paragraph if the State

24 demonstrates that it has insufficient resources to
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1 complete all such inspections within the first 3-year

2 period.

3 ‘‘(3) INSPECTION AUTHORITY.—Nothing in this

4 section shall be construed to diminish the Adminis5 trator’s or a State’s authorities under section

6 9005(a).’’.

7 (b) STUDY OF ALTERNATIVE INSPECTION PRO8 GRAMS.—The Administrator of the Environmental Protec9 tion Agency, in coordination with a State, shall gather in10 formation on compliance assurance programs that could

11 serve as an alternative to the inspection programs under

12 section 9005(c) of the Solid Waste Disposal Act (42

13 U.S.C. 6991d(c)) and shall, within 4 years after the date

14 of enactment of this Act, submit a report to the Congress

15 containing the results of such study.

16 SEC. 1524. OPERATOR TRAINING.

17 (a) IN GENERAL.—Section 9010 of the Solid Waste

18 Disposal Act (42 U.S.C. 6991i) is amended to read as fol19 lows:

20 ‘‘SEC. 9010. OPERATOR TRAINING.

21 ‘‘(a) GUIDELINES.—

22 ‘‘(1) IN GENERAL.—Not later than 2 years

23 after the date of enactment of the Underground

24 Storage Tank Compliance Act of 2004, in consulta25 tion and cooperation with States and after public no-
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1 tice and opportunity for comment, the Administrator

2 shall publish guidelines that specify training require3 ments for persons having primary daily on-site man4 agement responsibility for the operation and mainte5 nance of underground storage tanks.

6 ‘‘(2) CONSIDERATIONS.—The guidelines de7 scribed in paragraph (1) shall take into account—

8 ‘‘(A) State training programs in existence

9 as of the date of publication of the guidelines;

10 ‘‘(B) training programs that are being em11 ployed by tank owners and tank operators as of

12 the date of enactment of the Underground Stor13 age Tank Compliance Act of 2004;

14 ‘‘(C) the high turnover rate of tank opera15 tors and other personnel;

16 ‘‘(D) the frequency of improvement in un17 derground storage tank equipment technology;

18 ‘‘(E) the nature of the businesses in which

19 the tank operators are engaged; and

20 ‘‘(F) such other factors as the Adminis21 trator determines to be necessary to carry out

22 this section.

23 ‘‘(b) STATE PROGRAMS.—

24 ‘‘(1) IN GENERAL.—Not later than 2 years

25 after the date on which the Administrator publishes
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1 the guidelines under subsection (a)(1), each State

2 that receives funding under this subtitle shall de3 velop State-specific training requirements that are

4 consistent with the guidelines developed under sub5 section (a)(1).

6 ‘‘(2) REQUIREMENTS.—State requirements de7 scribed in paragraph (1) shall—

8 ‘‘(A) be consistent with subsection (a);

9 ‘‘(B) be developed in cooperation with tank

10 owners and tank operators;

11 ‘‘(C) take into consideration training pro12 grams implemented by tank owners and tank

13 operators as of the date of enactment of this

14 section; and

15 ‘‘(D) be appropriately communicated to

16 tank owners and operators.

17 ‘‘(3) FINANCIAL INCENTIVE.—The Adminis18 trator may award to a State that develops and im19 plements requirements described in paragraph (1),

20 in addition to any funds that the State is entitled to

21 receive under this subtitle, not more than $200,000,

22 to be used to carry out the requirements.

23 ‘‘(c) OPERATORS.—All persons having primary daily

24 on-site management responsibility for the operation and

25 maintenance of any underground storage tank shall—
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1 ‘‘(1) meet the training requirements developed

2 under subsection (b); and

3 ‘‘(2) repeat the applicable requirements devel4 oped under subsection (b), if the tank for which they

5 have primary daily on-site management responsibil6 ities is determined to be out of compliance with—

7 ‘‘(A) a requirement or standard promul8 gated by the Administrator under section 9003;

9 or

10 ‘‘(B) a requirement or standard of a State

11 program approved under section 9004.’’.

12 (b) STATE PROGRAM REQUIREMENT.—Section

13 9004(a) of the Solid Waste Disposal Act (42 U.S.C.

14 6991c(a)) is amended by striking ‘‘and’’ at the end of

15 paragraph (7), by striking the period at the end of para16 graph (8) and inserting ‘‘; and’’, and by adding the fol17 lowing new paragraph at the end thereof:

18 ‘‘(9) State-specific training requirements as re19 quired by section 9010.’’.

20 (c) ENFORCEMENT.—Section 9006(d)(2) of such Act

21 (42 U.S.C. 6991e) is amended as follows:

22 (1) By striking ‘‘or’’ at the end of subpara23 graph (B).

24 (2) By adding the following new subparagraph

25 after subparagraph (C):
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1 ‘‘(D) the training requirements established by

2 States pursuant to section 9010 (relating to oper3 ator training); or’’.

4 (d) TABLE OF CONTENTS.—The item relating to sec5 tion 9010 in table of contents for the Solid Waste Disposal

6 Act is amended to read as follows:

‘‘Sec. 9010. Operator training.’’.

7 SEC. 1525. REMEDIATION FROM OXYGENATED FUEL ADDI8 TIVES.

9 Section 9003(h) of the Solid Waste Disposal Act (42

10 U.S.C. 6991b(h)) is amended as follows:

11 (1) In paragraph (7)(A)—

12 (A) by striking ‘‘paragraphs (1) and (2) of

13 this subsection’’ and inserting ‘‘paragraphs (1),

14 (2), and (12)’’ ; and

15 (B) by striking ‘‘and including the authori16 ties of paragraphs (4), (6), and (8) of this sub17 section’’ and inserting ‘‘and the authority under

18 sections 9011 and 9012 and paragraphs (4),

19 (6), and (8),’’.

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

21 ‘‘(12) REMEDIATION OF OXYGENATED FUEL

22 CONTAMINATION.—

23 ‘‘(A) IN GENERAL.—The Administrator

24 and the States may use funds made available

25 under section 9014(2)(B) to carry out correc-
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1 tive actions with respect to a release of a fuel

2 containing an oxygenated fuel additive that pre3 sents a threat to human health or welfare or

4 the environment.

5 ‘‘(B) APPLICABLE AUTHORITY.—The Ad6 ministrator or a State shall carry out subpara7 graph (A) in accordance with paragraph (2),

8 and in the case of a State, in accordance with

9 a cooperative agreement entered into by the Ad10 ministrator and the State under paragraph

11 (7).’’.

12 SEC. 1526. RELEASE PREVENTION, COMPLIANCE, AND EN13 FORCEMENT.

14 (a) RELEASE PREVENTION AND COMPLIANCE.—Sub15 title I of the Solid Waste Disposal Act (42 U.S.C. 6991

16 et seq.) is amended by adding at the end the following:

17 ‘‘SEC. 9011. USE OF FUNDS FOR RELEASE PREVENTION AND

18 COMPLIANCE.

19 ‘‘Funds made available under section 9014(2)(D)

20 from the Trust Fund may be used to conduct inspections,

21 issue orders, or bring actions under this subtitle—

22 ‘‘(1) by a State, in accordance with a grant or

23 cooperative agreement with the Administrator, of

24 State regulations pertaining to underground storage

25 tanks regulated under this subtitle; and
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1 ‘‘(2) by the Administrator, for tanks regulated

2 under this subtitle (including under a State program

3 approved under section 9004).’’.

4 (b) GOVERNMENT-OWNED TANKS.—Section 9003 of

5 the Solid Waste Disposal Act (42 U.S.C. 6991b) is amend6 ed by adding at the end the following:

7 ‘‘(i) GOVERNMENT-OWNED TANKS.—

8 ‘‘(1) STATE COMPLIANCE REPORT.—(A) Not

9 later than 2 years after the date of enactment of

10 this subsection, each State that receives funding

11 under this subtitle shall submit to the Administrator

12 a State compliance report that—

13 ‘‘(i) lists the location and owner of each

14 underground storage tank described in subpara15 graph (B) in the State that, as of the date of

16 submission of the report, is not in compliance

17 with section 9003; and

18 ‘‘(ii) specifies the date of the last inspec19 tion and describes the actions that have been

20 and will be taken to ensure compliance of the

21 underground storage tank listed under clause

22 (i) with this subtitle.

23 ‘‘(B) An underground storage tank described in

24 this subparagraph is an underground storage tank

25 that is—
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1 ‘‘(i) regulated under this subtitle; and

2 ‘‘(ii) owned or operated by the Federal,

3 State, or local government.

4 ‘‘(C) The Administrator shall make each report,

5 received under subparagraph (A), available to the

6 public through an appropriate media.

7 ‘‘(2) FINANCIAL INCENTIVE.—The Adminis8 trator may award to a State that develops a report

9 described in paragraph (1), in addition to any other

10 funds that the State is entitled to receive under this

11 subtitle, not more than $50,000, to be used to carry

12 out the report.

13 ‘‘(3) NOT A SAFE HARBOR.—This subsection

14 does not relieve any person from any obligation or

15 requirement under this subtitle.’’.

16 (c) PUBLIC RECORD.—Section 9002 of the Solid

17 Waste Disposal Act (42 U.S.C. 6991a) is amended by add18 ing at the end the following:

19 ‘‘(d) PUBLIC RECORD.—

20 ‘‘(1) IN GENERAL.—The Administrator shall re21 quire each State that receives Federal funds to carry

22 out this subtitle to maintain, update at least annu23 ally, and make available to the public, in such man24 ner and form as the Administrator shall prescribe
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1 (after consultation with States), a record of under2 ground storage tanks regulated under this subtitle.

3 ‘‘(2) CONSIDERATIONS.—To the maximum ex4 tent practicable, the public record of a State, respec5 tively, shall include, for each year—

6 ‘‘(A) the number, sources, and causes of

7 underground storage tank releases in the State;

8 ‘‘(B) the record of compliance by under9 ground storage tanks in the State with—

10 ‘‘(i) this subtitle; or

11 ‘‘(ii) an applicable State program ap12 proved under section 9004; and

13 ‘‘(C) data on the number of underground

14 storage tank equipment failures in the State.’’.

15 (d) INCENTIVE FOR PERFORMANCE.—Section 9006

16 of the Solid Waste Disposal Act (42 U.S.C. 6991e) is

17 amended by adding at the end the following:

18 ‘‘(e) INCENTIVE FOR PERFORMANCE.—Both of the

19 following may be taken into account in determining the

20 terms of a civil penalty under subsection (d):

21 ‘‘(1) The compliance history of an owner or op22 erator in accordance with this subtitle or a program

23 approved under section 9004.

24 ‘‘(2) Any other factor the Administrator con25 siders appropriate.’’.
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1 (e) 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. 9011. Use of funds for release prevention and compliance.’’.

4 SEC. 1527. DELIVERY PROHIBITION.

5 (a) IN GENERAL.—Subtitle I of the Solid Waste Dis6 posal Act (42 U.S.C. 6991 et seq.) is amended by adding

7 at the end the following:

8 ‘‘SEC. 9012. DELIVERY PROHIBITION.

9 ‘‘(a) REQUIREMENTS.—

10 ‘‘(1) PROHIBITION OF DELIVERY OR DE11 POSIT.—Beginning 2 years after the date of enact12 ment of this section, it shall be unlawful to deliver

13 to, deposit into, or accept a regulated substance into

14 an underground storage tank at a facility which has

15 been identified by the Administrator or a State im16 plementing agency to be ineligible for fuel delivery or

17 deposit.

18 ‘‘(2) GUIDANCE.—Within 1 year after the date

19 of enactment of this section, the Administrator and

20 States that receive funding under this subtitle shall,

21 in consultation with the underground storage tank

22 owner and product delivery industries, for territory

23 for which they are the primary implementing agen24 cies, publish guidelines detailing the specific proc25 esses and procedures they will use to implement the
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1 provisions of this section. The processes and proce2 dures include, at a minimum—

3 ‘‘(A) the criteria for determining which un4 derground storage tank facilities are ineligible

5 for delivery or deposit;

6 ‘‘(B) the mechanisms for identifying which

7 facilities are ineligible for delivery or deposit to

8 the underground storage tank owning and fuel

9 delivery industries;

10 ‘‘(C) the process for reclassifying ineligible

11 facilities as eligible for delivery or deposit; and

12 ‘‘(D) a delineation of, or a process for de13 termining, the specified geographic areas sub14 ject to paragraph (4).

15 ‘‘(3) DELIVERY PROHIBITION NOTICE.—

16 ‘‘(A) ROSTER.—The Administrator and

17 each State implementing agency that receives

18 funding under this subtitle shall establish with19 in 24 months after the date of enactment of

20 this section a Delivery Prohibition Roster list21 ing underground storage tanks under the Ad22 ministrator’s or the State’s jurisdiction that are

23 determined to be ineligible for delivery or de24 posit pursuant to paragraph (2).
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1 ‘‘(B) NOTIFICATION.—The Administrator

2 and each State, as appropriate, shall make

3 readily known, to underground storage tank

4 owners and operators and to product delivery

5 industries, the underground storage tanks listed

6 on a Delivery Prohibition Roster by:

7 ‘‘(i) posting such Rosters, including

8 the physical location and street address of

9 each listed underground storage tank, on

10 official web sites and, if the Administrator

11 or the State so chooses, other electronic

12 means;

13 ‘‘(ii) updating these Rosters periodi14 cally; and

15 ‘‘(iii) installing a tamper-proof tag,

16 seal, or other device blocking the fill pipes

17 of such underground storage tanks to pre18 vent the delivery of product into such un19 derground storage tanks.

20 ‘‘(C) ROSTER UPDATES.—The Adminis21 trator and the State shall update the Delivery

22 Prohibition Rosters as appropriate, but not less

23 than once a month on the first day of the

24 month.

25 ‘‘(D) TAMPERING WITH DEVICE.—
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1 ‘‘(i) PROHIBITION.—It shall be unlaw2 ful for any person, other than an author3 ized representative of the Administrator or

4 a State, as appropriate, to remove, tamper

5 with, destroy, or damage a device installed

6 by the Administrator or a State, as appro7 priate, under subparagraph (B)(iii) of this

8 subsection.

9 ‘‘(ii) CIVIL PENALTIES.—Any person

10 violating clause (i) of this subparagraph

11 shall be subject to a civil penalty not to ex12 ceed $10,000 for each violation.

13 ‘‘(4) LIMITATION.—

14 ‘‘(A) RURAL AND REMOTE AREAS.—Sub15 ject to subparagraph (B), the Administrator or

16 a State shall not include an underground stor17 age tank on a Delivery Prohibition Roster

18 under paragraph (3) if an urgent threat to pub19 lic health, as determined by the Administrator,

20 does not exist and if such a delivery prohibition

21 would jeopardize the availability of, or access

22 to, fuel in any rural and remote areas.

23 ‘‘(B) APPLICABILITY OF LIMITATION.—

24 The limitation under subparagraph (A) shall

25 apply only during the 180-day period following
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1 the date of a determination by the Adminis2 trator or the appropriate State that exercising

3 the authority of paragraph (3) is limited by

4 subparagraph (A).

5 ‘‘(b) EFFECT ON STATE AUTHORITY.—Nothing in

6 this section shall affect the authority of a State to prohibit

7 the delivery of a regulated substance to an underground

8 storage tank.

9 ‘‘(c) DEFENSE TO VIOLATION.—A person shall not

10 be in violation of subsection (a)(1) if the underground

11 storage tank into which a regulated substance is delivered

12 is not listed on the Administrator’s or the appropriate

13 State’s Prohibited Delivery Roster 7 calendar days prior

14 to the delivery being made.’’.

15 (b) ENFORCEMENT.—Section 9006(d)(2) of such Act

16 (42 U.S.C. 6991e(d)(2)) is amended as follows:

17 (1) By adding the following new subparagraph

18 after subparagraph (D):

19 ‘‘(E) the delivery prohibition requirement estab20 lished by section 9012,’’.

21 (2) By adding the following new sentence at the

22 end thereof: ‘‘Any person making or accepting a de23 livery or deposit of a regulated substance to an un24 derground storage tank at an ineligible facility in
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1 violation of section 9012 shall also be subject to the

2 same civil penalty for each day of such violation.’’.

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

4 such subtitle I is amended by adding the following new

5 item at the end thereof:

‘‘Sec. 9012. Delivery prohibition.’’.

6 SEC. 1528. FEDERAL FACILITIES.

7 Section 9007 of the Solid Waste Disposal Act (42

8 U.S.C. 6991f) is amended to read as follows:

9 ‘‘SEC. 9007. FEDERAL FACILITIES.

10 ‘‘(a) IN GENERAL.—Each department, agency, and

11 instrumentality of the executive, legislative, and judicial

12 branches of the Federal Government (1) having jurisdic13 tion over any underground storage tank or underground

14 storage tank system, or (2) engaged in any activity result15 ing, or which may result, in the installation, operation,

16 management, or closure of any underground storage tank,

17 release response activities related thereto, or in the deliv18 ery, acceptance, or deposit of any regulated substance to

19 an underground storage tank or underground storage tank

20 system shall be subject to, and comply with, all Federal,

21 State, interstate, and local requirements, both substantive

22 and procedural (including any requirement for permits or

23 reporting or any provisions for injunctive relief and such

24 sanctions as may be imposed by a court to enforce such

25 relief), respecting underground storage tanks in the same
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1 manner, and to the same extent, as any person is subject

2 to such requirements, including the payment of reasonable

3 service charges. The Federal, State, interstate, and local

4 substantive and procedural requirements referred to in

5 this subsection include, but are not limited to, all adminis6 trative orders and all civil and administrative penalties

7 and fines, regardless of whether such penalties or fines

8 are punitive or coercive in nature or are imposed for iso9 lated, intermittent, or continuing violations. The United

10 States hereby expressly waives any immunity otherwise

11 applicable to the United States with respect to any such

12 substantive or procedural requirement (including, but not

13 limited to, any injunctive relief, administrative order or

14 civil or administrative penalty or fine referred to in the

15 preceding sentence, or reasonable service charge). The rea16 sonable service charges referred to in this subsection in17 clude, but are not limited to, fees or charges assessed in

18 connection with the processing and issuance of permits,

19 renewal of permits, amendments to permits, review of

20 plans, studies, and other documents, and inspection and

21 monitoring of facilities, as well as any other nondiscrim22 inatory charges that are assessed in connection with a

23 Federal, State, interstate, or local underground storage

24 tank regulatory program. Neither the United States, nor

25 any agent, employee, or officer thereof, shall be immune
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1 or exempt from any process or sanction of any State or

2 Federal Court with respect to the enforcement of any such

3 injunctive relief. No agent, employee, or officer of the

4 United States shall be personally liable for any civil pen5 alty under any Federal, State, interstate, or local law con6 cerning underground storage tanks with respect to any act

7 or omission within the scope of the official duties of the

8 agent, employee, or officer. An agent, employee, or officer

9 of the United States shall be subject to any criminal sanc10 tion (including, but not limited to, any fine or imprison11 ment) under any Federal or State law concerning under12 ground storage tanks, but no department, agency, or in13 strumentality of the executive, legislative, or judicial

14 branch of the Federal Government shall be subject to any

15 such sanction. The President may exempt any under16 ground storage tank of any department, agency, or instru17 mentality in the executive branch from compliance with

18 such a requirement if he determines it to be in the para19 mount interest of the United States to do so. No such

20 exemption shall be granted due to lack of appropriation

21 unless the President shall have specifically requested such

22 appropriation as a part of the budgetary process and the

23 Congress shall have failed to make available such re24 quested appropriation. Any exemption shall be for a period

25 not in excess of one year, but additional exemptions may
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1 be granted for periods not to exceed one year upon the

2 President’s making a new determination. The President

3 shall report each January to the Congress all exemptions

4 from the requirements of this section granted during the

5 preceding calendar year, together with his reason for

6 granting each such exemption.

7 ‘‘(b) REVIEW OF AND REPORT ON FEDERAL UNDER8 GROUND STORAGE TANKS.—

9 ‘‘(1) REVIEW.—Not later than 12 months after

10 the date of enactment of the Underground Storage

11 Tank Compliance Act of 2004, each Federal agency

12 that owns or operates 1 or more underground stor13 age tanks, or that manages land on which 1 or more

14 underground storage tanks are located, shall submit

15 to the Administrator, the Committee on Energy and

16 Commerce of the United States House of Represent17 atives, and the Committee on the Environment and

18 Public Works of the United States Senate a compli19 ance strategy report that—

20 ‘‘(A) lists the location and owner of each

21 underground storage tank described in this

22 paragraph;

23 ‘‘(B) lists all tanks that are not in compli24 ance with this subtitle that are owned or oper25 ated by the Federal agency;
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1 ‘‘(C) specifies the date of the last inspec2 tion by a State or Federal inspector of each un3 derground storage tank owned or operated by

4 the agency;

5 ‘‘(D) lists each violation of this subtitle re6 specting any underground storage tank owned

7 or operated by the agency;

8 ‘‘(E) describes the operator training that

9 has been provided to the operator and other

10 persons having primary daily on-site manage11 ment responsibility for the operation and main12 tenance of underground storage tanks owned or

13 operated by the agency; and

14 ‘‘(F) describes the actions that have been

15 and will be taken to ensure compliance for each

16 underground storage tank identified under sub17 paragraph (B).

18 ‘‘(2) NOT A SAFE HARBOR.—This subsection

19 does not relieve any person from any obligation or

20 requirement under this subtitle.’’.

21 SEC. 1529. TANKS ON TRIBAL LANDS.

22 (a) IN GENERAL.—Subtitle I of the Solid Waste Dis23 posal Act (42 U.S.C. 6991 et seq.) is amended by adding

24 the following at the end thereof:
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1 ‘‘SEC. 9013. TANKS ON TRIBAL LANDS.

2 ‘‘(a) STRATEGY.—The Administrator, in coordination

3 with Indian tribes, shall, not later than 1 year after the

4 date of enactment of this section, develop and implement

5 a strategy—

6 ‘‘(1) giving priority to releases that present the

7 greatest threat to human health or the environment,

8 to take necessary corrective action in response to re9 leases from leaking underground storage tanks lo10 cated wholly within the boundaries of—

11 ‘‘(A) an Indian reservation; or

12 ‘‘(B) any other area under the jurisdiction

13 of an Indian tribe; and

14 ‘‘(2) to implement and enforce requirements

15 concerning underground storage tanks located wholly

16 within the boundaries of—

17 ‘‘(A) an Indian reservation; or

18 ‘‘(B) any other area under the jurisdiction

19 of an Indian tribe.

20 ‘‘(b) REPORT.—Not later than 2 years after the date

21 of enactment of this section, the Administrator shall sub22 mit to Congress a report that summarizes the status of

23 implementation and enforcement of this subtitle in areas

24 located wholly within—

25 ‘‘(1) the boundaries of Indian reservations; and
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1 ‘‘(2) any other areas under the jurisdiction of

2 an Indian tribe.

3 The Administrator shall make the report under this sub4 section available to the public.

5 ‘‘(c) NOT A SAFE HARBOR.—This section does not

6 relieve any person from any obligation or requirement

7 under this subtitle.

8 ‘‘(d) STATE AUTHORITY.—Nothing in this section

9 applies to any underground storage tank that is located

10 in an area under the jurisdiction of a State, or that is

11 subject to regulation by a State, as of the date of enact12 ment of this section.’’.

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

14 such subtitle I is amended by adding the following new

15 item at the end thereof:

‘‘Sec. 9013. Tanks on Tribal lands.’’.

16 SEC. 1530. FUTURE RELEASE CONTAINMENT TECHNOLOGY.

17 Not later than 2 years after the date of enactment

18 of this Act, the Administrator of the Environmental Pro19 tection Agency, after consultation with States, shall make

20 available to the public and to the Committee on Energy

21 and Commerce of the House of Representatives and the

22 Committee on Environment and Public Works of the Sen23 ate information on the effectiveness of alternative possible

24 methods and means for containing releases from under25 ground storage tanks systems.
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1 SEC. 1531. AUTHORIZATION OF APPROPRIATIONS.

2 (a) IN GENERAL.—Subtitle I of the Solid Waste Dis3 posal Act (42 U.S.C. 6991 et seq.) is amended by adding

4 at the end the following:

5 ‘‘SEC. 9014. AUTHORIZATION OF APPROPRIATIONS.

6 ‘‘There are authorized to be appropriated to the Ad7 ministrator the following amounts:

8 ‘‘(1) To carry out subtitle I (except sections

9 9003(h), 9005(c), 9011 and 9012) $50,000,000 for

10 each of fiscal years 2004 through 2008.

11 ‘‘(2) From the Trust Fund, notwithstanding

12 section 9508(c)(1) of the Internal Revenue Code of

13 1986:

14 ‘‘(A) to carry out section 9003(h) (except

15 section 9003(h)(12)) $200,000,000 for each of

16 fiscal years 2004 through 2008;

17 ‘‘(B) to carry out section 9003(h)(12),

18 $200,000,000 for each of fiscal years 2004

19 through 2008;

20 ‘‘(C) to carry out sections 9004(f) and

21 9005(c) $100,000,000 for each of fiscal years

22 2004 through 2008; and

23 ‘‘(D) to carry out sections 9011 and 9012

24 $55,000,000 for each of fiscal years 2004

25 through 2008.’’.
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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. 9014. Authorization of appropriations.’’.

4 SEC. 1532. CONFORMING AMENDMENTS.

5 (a) IN GENERAL.—Section 9001 of the Solid Waste

6 Disposal Act (42 U.S.C. 6991) is amended as follows:

7 (1) By striking ‘‘For the purposes of this sub8 title—’’ and inserting ‘‘In this subtitle:’’.

9 (2) By redesignating paragraphs (1), (2), (3),

10 (4), (5), (6), (7), and (8) as paragraphs (10), (7),

11 (4), (3), (8), (5), (2), and (6), respectively.

12 (3) By inserting before paragraph (2) (as redes13 ignated by paragraph (2) of this subsection) the fol14 lowing:

15 ‘‘(1) INDIAN TRIBE.—

16 ‘‘(A) IN GENERAL.—The term ‘Indian

17 tribe’ means any Indian tribe, band, nation, or

18 other organized group or community that is rec19 ognized as being eligible for special programs

20 and services provided by the United States to

21 Indians because of their status as Indians.

22 ‘‘(B) INCLUSIONS.—The term ‘Indian

23 tribe’ includes an Alaska Native village, as de24 fined in or established under the Alaska Native
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1 Claims Settlement Act (43 U.S.C. 1601 et

2 seq.); and’’.

3 (4) By inserting after paragraph (8) (as redes4 ignated by paragraph (2) of this subsection) the fol5 lowing:

6 ‘‘(9) TRUST FUND.—The term ‘Trust Fund’

7 means the Leaking Underground Storage Tank

8 Trust Fund established by section 9508 of the Inter9 nal Revenue Code of 1986.’’.

10 (b) CONFORMING AMENDMENTS.—The Solid Waste

11 Disposal Act (42 U.S.C. 6901 and following) is amended

12 as follows:

13 (1) Section 9003(f) (42 U.S.C. 6991b(f)) is

14 amended—

15 (A) in paragraph (1), by striking

16 ‘‘9001(2)(B)’’ and inserting ‘‘9001(7)(B)’’; and

17 (B) in paragraphs (2) and (3), by striking

18 ‘‘9001(2)(A)’’ each place it appears and insert19 ing ‘‘9001(7)(A)’’.

20 (2) Section 9003(h) (42 U.S.C. 6991b(h)) is

21 amended in paragraphs (1), (2)(C), (7)(A), and (11)

22 by striking ‘‘Leaking Underground Storage Tank

23 Trust Fund’’ each place it appears and inserting

24 ‘‘Trust Fund’’.
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1 (3) Section 9009 (42 U.S.C. 6991h) is

2 amended—

3 (A) in subsection (a), by striking

4 ‘‘9001(2)(B)’’ and inserting ‘‘9001(7)(B)’’; and

5 (B) in subsection (d), by striking ‘‘section

6 9001(1) (A) and (B)’’ and inserting ‘‘subpara7 graphs (A) and (B) of section 9001(10)’’.

8 SEC. 1533. TECHNICAL AMENDMENTS.

9 The Solid Waste Disposal Act is amended as follows:

10 (1) Section 9001(4)(A) (42 U.S.C. 6991(4)(A))

11 is amended by striking ‘‘sustances’’ and inserting

12 ‘‘substances’’.

13 (2) Section 9003(f)(1) (42 U.S.C. 6991b(f)(1))

14 is amended by striking ‘‘subsection (c) and (d) of

15 this section’’ and inserting ‘‘subsections (c) and

16 (d)’’.

17 (3) Section 9004(a) (42 U.S.C. 6991c(a)) is

18 amended by striking ‘‘in 9001(2) (A) or (B) or

19 both’’ and inserting ‘‘in subparagraph (A) or (B) of

20 section 9001(7)’’.

21 (4) Section 9005 (42 U.S.C. 6991d) is

22 amended—

23 (A) in subsection (a), by striking ‘‘study

24 taking’’ and inserting ‘‘study, taking’’;
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1 (B) in subsection (b)(1), by striking

2 ‘‘relevent’’ and inserting ‘‘relevant’’; and

3 (C) in subsection (b)(4), by striking

4 ‘‘Evironmental’’ and inserting ‘‘Environ5 mental’’.

6 TITLE XVI—STUDIES

7 SEC. 1601. STUDY ON INVENTORY OF PETROLEUM AND

8 NATURAL GAS STORAGE.

9 (a) DEFINITION.—For purposes of this section ‘‘pe10 troleum’’ means crude oil, motor gasoline, jet fuel, dis11 tillates, and propane.

12 (b) STUDY.—The Secretary of Energy shall conduct

13 a study on petroleum and natural gas storage capacity and

14 operational inventory levels, nationwide and by major geo15 graphical regions.

16 (c) CONTENTS.—The study shall address—

17 (1) historical normal ranges for petroleum and

18 natural gas inventory levels;

19 (2) historical and projected storage capacity

20 trends;

21 (3) estimated operation inventory levels below

22 which outages, delivery slowdown, rationing, inter23 ruptions in service, or other indicators of shortage

24 begin to appear;
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1 (4) explanations for inventory levels dropping

2 below normal ranges; and

3 (5) the ability of industry to meet United

4 States demand for petroleum and natural gas with5 out shortages or price spikes, when inventory levels

6 are below normal ranges.

7 (d) REPORT TO CONGRESS.—Not later than 1 year

8 after the date of enactment of this Act, the Secretary of

9 Energy shall submit a report to Congress on the results

10 of the study, including findings and any recommendations

11 for preventing future supply shortages.

12 SEC. 1602. NATURAL GAS SUPPLY SHORTAGE REPORT.

13 (a) REPORT.—Not later than 6 months after the date

14 of enactment of this Act, the Secretary of Energy shall

15 submit to Congress a report on natural gas supplies and

16 demand. In preparing the report, the Secretary shall con17 sult with experts in natural gas supply and demand as

18 well as representatives of State and local units of govern19 ment, tribal organizations, and consumer and other orga20 nizations. As the Secretary deems advisable, the Secretary

21 may hold public hearings and provide other opportunities

22 for public comment. The report shall contain recommenda23 tions for Federal actions that, if implemented, will result

24 in a balance between natural gas supply and demand at

25 a level that will ensure, to the maximum extent prac-
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1 ticable, achievement of the objectives established in sub2 section (b).

3 (b) OBJECTIVES OF REPORT.—In preparing the re4 port, the Secretary shall seek to develop a series of rec5 ommendations that will result in a balance between nat6 ural gas supply and demand adequate to—

7 (1) provide residential consumers with natural

8 gas at reasonable and stable prices;

9 (2) accommodate long-term maintenance and

10 growth of domestic natural gas-dependent industrial,

11 manufacturing, and commercial enterprises;

12 (3) facilitate the attainment of national ambient

13 air quality standards under the Clean Air Act;

14 (4) permit continued progress in reducing emis15 sions associated with electric power generation; and

16 (5) support development of the preliminary

17 phases of hydrogen-based energy technologies.

18 (c) CONTENTS OF REPORT.—The report shall provide

19 a comprehensive analysis of natural gas supply and de20 mand in the United States for the period from 2004 to

21 2015. The analysis shall include, at a minimum—

22 (1) estimates of annual domestic demand for

23 natural gas that take into account the effect of Fed24 eral policies and actions that are likely to increase

25 and decrease demand for natural gas;
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1 (2) projections of annual natural gas supplies,

2 from domestic and foreign sources, under existing

3 Federal policies;

4 (3) an identification of estimated natural gas

5 supplies that are not available under existing Fed6 eral policies;

7 (4) scenarios for decreasing natural gas demand

8 and increasing natural gas supplies comparing rel9 ative economic and environmental impacts of Fed10 eral policies that—

11 (A) encourage or require the use of natural

12 gas to meet air quality, carbon dioxide emission

13 reduction, or energy security goals;

14 (B) encourage or require the use of energy

15 sources other than natural gas, including coal,

16 nuclear, and renewable sources;

17 (C) support technologies to develop alter18 native sources of natural gas and synthetic gas,

19 including coal gasification technologies;

20 (D) encourage or require the use of energy

21 conservation and demand side management

22 practices; and

23 (E) affect access to domestic natural gas

24 supplies; and
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1 (5) recommendations for Federal actions to

2 achieve the objectives of the report, including rec3 ommendations that—

4 (A) encourage or require the use of energy

5 sources other than natural gas, including coal,

6 nuclear, and renewable sources;

7 (B) encourage or require the use of energy

8 conservation or demand side management prac9 tices;

10 (C) support technologies for the develop11 ment of alternative sources of natural gas and

12 synthetic gas, including coal gasification tech13 nologies; and

14 (D) will improve access to domestic natural

15 gas supplies.

16 SEC. 1603. SPLIT-ESTATE FEDERAL OIL AND GAS LEASING

17 AND DEVELOPMENT PRACTICES.

18 (a) REVIEW.—In consultation with affected private

19 surface owners, oil and gas industry, and other interested

20 parties, the Secretary of the Interior shall undertake a re21 view of the current policies and practices with respect to

22 management of Federal subsurface oil and gas develop23 ment activities and their effects on the privately owned

24 surface. This review shall include—
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1 (1) a comparison of the rights and responsibil2 ities under existing mineral and land law for the

3 owner of a Federal mineral lease, the private surface

4 owners and the Department;

5 (2) a comparison of the surface owner consent

6 provisions in section 714 of the Surface Mining Con7 trol and Reclamation Act of 1977 (30 U.S.C. 1304)

8 concerning surface mining of Federal coal deposits

9 and the surface owner consent provisions for oil and

10 gas development, including coalbed methane produc11 tion; and

12 (3) recommendations for administrative or leg13 islative action necessary to facilitate reasonable ac14 cess for Federal oil and gas activities while address15 ing surface owner concerns and minimizing impacts

16 to private surface.

17 (b) REPORT.—The Secretary of the Interior shall re18 port the results of such review to Congress not later than

19 180 days after the date of enactment of this Act.

20 SEC. 1604. RESOLUTION OF FEDERAL RESOURCE DEVELOP21 MENT CONFLICTS IN THE POWDER RIVER

22 BASIN.

23 The Secretary of the Interior shall—

24 (1) undertake a review of existing authorities to

25 resolve conflicts between the development of Federal
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1 coal and the development of Federal and non-Fed2 eral coalbed methane in the Powder River Basin in

3 Wyoming and Montana; and

4 (2) not later than 6 months after the date of

5 enactment of this Act, report to Congress on alter6 natives to resolve these conflicts and identification of

7 a preferred alternative with specific legislative lan8 guage, if any, required to implement the preferred

9 alternative.

10 SEC. 1605. STUDY OF ENERGY EFFICIENCY STANDARDS.

11 The Secretary of Energy shall contract with the Na12 tional Academy of Sciences for a study, to be completed

13 within 1 year after the date of enactment of this Act, to

14 examine whether the goals of energy efficiency standards

15 are best served by measurement of energy consumed, and

16 efficiency improvements, at the actual site of energy con17 sumption, or through the full fuel cycle, beginning at the

18 source of energy production. The Secretary shall submit

19 the report to Congress.

20 SEC. 1606. TELECOMMUTING STUDY.

21 (a) STUDY REQUIRED.—The Secretary, in consulta22 tion with the Commission, the Director of the Office of

23 Personnel Management, the Administrator of General

24 Services, and the Administrator of NTIA, shall conduct

25 a study of the energy conservation implications of the
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1 widespread adoption of telecommuting by Federal employ2 ees in the United States.

3 (b) REQUIRED SUBJECTS OF STUDY.—The study re4 quired by subsection (a) shall analyze the following sub5 jects in relation to the energy saving potential of telecom6 muting by Federal employees:

7 (1) Reductions of energy use and energy costs

8 in commuting and regular office heating, cooling,

9 and other operations.

10 (2) Other energy reductions accomplished by

11 telecommuting.

12 (3) Existing regulatory barriers that hamper

13 telecommuting, including barriers to broadband tele14 communications services deployment.

15 (4) Collateral benefits to the environment, fam16 ily life, and other values.

17 (c) REPORT REQUIRED.—The Secretary shall submit

18 to the President and Congress a report on the study re19 quired by this section not later than 6 months after the

20 date of enactment of this Act. Such report shall include

21 a description of the results of the analysis of each of the

22 subject described in subsection (b).

23 (d) DEFINITIONS.—As used in this section:

24 (1) SECRETARY.—The term ‘‘Secretary’’ means

25 the Secretary of Energy.
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1 (2) COMMISSION.—The term ‘‘Commission’’

2 means the Federal Communications Commission.

3 (3) NTIA.—The term ‘‘NTIA’’ means the Na4 tional Telecommunications and Information Admin5 istration of the Department of Commerce.

6 (4) TELECOMMUTING.—The term ‘‘telecom7 muting’’ means the performance of work functions

8 using communications technologies, thereby elimi9 nating or substantially reducing the need to com10 mute to and from traditional worksites.

11 (5) FEDERAL EMPLOYEE.—The term ‘‘Federal

12 employee’’ has the meaning provided the term ‘‘em13 ployee’’ by section 2105 of title 5, United States

14 Code.

15 SEC. 1607. LIHEAP REPORT.

16 Not later than 1 year after the date of enactment

17 of this Act, the Secretary of Health and Human Services

18 shall transmit to Congress a report on how the Low-In19 come Home Energy Assistance Program could be used

20 more effectively to prevent loss of life from extreme tem21 peratures. In preparing such report, the Secretary shall

22 consult with appropriate officials in all 50 States and the

23 District of Columbia.
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1 SEC. 1608. OIL BYPASS FILTRATION TECHNOLOGY.

2 The Secretary of Energy and the Administrator of

3 the Environmental Protection Agency shall—

4 (1) conduct a joint study of the benefits of oil

5 bypass filtration technology in reducing demand for

6 oil and protecting the environment;

7 (2) examine the feasibility of using oil bypass

8 filtration technology in Federal motor vehicle fleets;

9 and

10 (3) include in such study, prior to any deter11 mination of the feasibility of using oil bypass filtra12 tion technology, the evaluation of products and var13 ious manufacturers.

14 SEC. 1609. TOTAL INTEGRATED THERMAL SYSTEMS.

15 The Secretary of Energy shall—

16 (1) conduct a study of the benefits of total inte17 grated thermal systems in reducing demand for oil

18 and protecting the environment; and

19 (2) examine the feasibility of using total inte20 grated thermal systems in Department of Defense

21 and other Federal motor vehicle fleets.

22 SEC. 1610. UNIVERSITY COLLABORATION.

23 Not later than 2 years after the date of enactment

24 of this Act, the Secretary of Energy shall transmit to Con25 gress a report that examines the feasibility of promoting

26 collaborations between large institutions of higher edu-
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1 cation and small institutions of higher education through

2 grants, contracts, and cooperative agreements made by the

3 Secretary for energy projects. The Secretary shall also

4 consider providing incentives for the inclusion of small in5 stitutions of higher education, including minority-serving

6 institutions, in energy research grants, contracts, and co7 operative agreements.

8 SEC. 1611. RELIABILITY AND CONSUMER PROTECTION AS9 SESSMENT.

10 Not later than 5 years after the date of enactment

11 of this Act, and each 5 years thereafter, the Federal En12 ergy Regulatory Commission shall assess the effects of the

13 exemption of electric cooperatives and government-owned

14 utilities from Commission regulation under section 201(f)

15 of the Federal Power Act. The assessment shall include

16 any effects on—

17 (1) reliability of interstate electric transmission

18 networks;

19 (2) benefit to consumers, and efficiency, of

20 competitive wholesale electricity markets;

21 (3) just and reasonable rates for electricity con22 sumers; and

23 (4) the ability of the Commission to protect

24 electricity consumers.
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1 If the Commission finds that the 201(f) exemption results

2 in adverse effects on consumers or electric reliability, the

3 Commission shall make appropriate recommendations to

4 Congress pursuant to section 311 of the Federal Power

5 Act.

Passed the House of Representatives June 15, 2004.

Attest:

Clerk.