II 

109TH CONGRESS 

1ST SESSION S. 726 

To promote the conservation and production of natural gas. 

IN THE SENATE OF THE UNITED STATES 

APRIL 6, 2005 

Mr. ALEXANDER (for himself and Mr. JOHNSON) introduced the following bill; 

which was read twice and referred to the Committee on Energy and Natural Resources 

A BILL 

To promote the conservation and production of natural gas. 

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

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 

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

5 ‘‘Natural Gas Price Reduction Act of 2005’’. 

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

7 this Act is as follows: 

Sec. 1. Short title; table of contents. 

TITLE I—ENERGY CONSERVATION AND ENERGY EFFICIENCY 

Sec. 101. Public education and conservation initiative. 

Sec. 102. Reducing residential demand; appliance and equipment efficiency 

standards. 

Sec. 103. Deployment for distributed generation, solar energy technologies, and 

biomass. 
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Sec. 104. Hydrogen and fuel cell initiative. 

Sec. 105. Clarification of cogeneration contracts. 

Sec. 106. Cogeneration development. 

Sec. 107. Efficient dispatch of natural gas power plants. 

Sec. 108. Demand side management for industrials and utilities: net metering 

and other standards. 

Sec. 109. Demand side management for residential customers: smart metering. 

Sec. 110. Protecting industrial cogenerators. 

Sec. 111. Reduction of dependence on imported petroleum. 

Sec. 112. National gasification strategy for power sector. 

Sec. 113. Industrial gasification demonstration and deployment program. 

Sec. 114. Carbon capture and sequestration energy efficiency research and development. 

TITLE II—PRODUCTION 

Sec. 201. Gas only leases. 

Sec. 202. Eastern Gulf of Mexico. 

Sec. 203. Review of State requests to examine OCS energy areas. 

Sec. 204. Royalty relief for deep water production. 

Sec. 205. Coastal impact assistance program. 

Sec. 206. Rocky Mountain gas production. 

Sec. 207. Gas methane research. 

Sec. 208. Alaska Natural Gas Pipeline Act. 

Sec. 209. Gas hydrate production incentives. 

Sec. 210. Oil and gas exploration and production defined. 

Sec. 211. Marginal property production incentives. 

Sec. 212. Efficient government processing of permit applications. 

Sec. 213. Deadline for decision on appeals of consistency determination. 

Sec. 214. Outer Continental Shelf provisions. 

Sec. 215. Office of Federal Energy Project Coordination. 

Sec. 216. Federal onshore oil and gas leasing and permitting practices. 

Sec. 217. Management of Federal oil and gas leasing programs. 

Sec. 218. Consultation regarding oil and gas leasing on public land. 

Sec. 219. Pilot project to improve Federal permit coordination. 

Sec. 220. Deadline for consideration of applications for permits. 

TITLE III—ENERGY INFRASTRUCTURE 

Sec. 301. Exportation and importation of natural gas. 

Sec. 302. Exportation and importation of natural gas for offshore facilities. 

Sec. 303. Natural gas pipeline infrastructure. 

Sec. 304. Natural gas storage facilities. 

Sec. 305. Backup fuel capability study. 
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1 TITLE I—ENERGY CONSERVA2 TION AND ENERGY EFFI3 CIENCY 

4 SEC. 101. PUBLIC EDUCATION AND CONSERVATION INITIA5 TIVE. 

6 (a) IN GENERAL.—The Secretary of Energy shall 

7 carry out a comprehensive national program, including ad8 vertising and media awareness, to educate consumers and 

9 other persons with respect to— 

10 (1) the need to reduce consumption of elec11 tricity and natural gas during the 4-year period be12 ginning on the date of enactment of this Act; 

13 (2) the costs and benefits of reducing consump14 tion of electricity and natural gas; 

15 (3) methods for reducing consumption of elec16 tricity and natural gas, including the significant ben17 efits of maintaining and repairing heating and cool18 ing ducts and equipment, weatherization tech19 nologies, and energy smart purchases; 

20 (4) the importance of tire maintenance to con21 serving gasoline; 

22 (5) the relationship between gasoline prices and 

23 natural gas prices; and 
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1 (6) the importance of low energy costs to pre2 serving and keeping manufacturing jobs in the 

3 United States and maintaining economic growth. 

4 (b) INCLUSION.—The program described in sub5 section (a) shall include— 

6 (1) information regarding the need to reduce 

7 consumption of electricity and natural gas during 

8 peak use periods; 

9 (2) information regarding practicable, action10 able measures consumers can carry out to reduce the 

11 demand for natural gas, oil, and electricity. 

12 (3) if practicable, 1 or more examples of public 

13 education described in the State of California Execu14 tive Order D–18–01; and 

15 (4) if practicable, collaboration between Fed16 eral, State, and local government officials and local 

17 utilities. 

18 (c) REPORT.—Not later than July 1, 2009, the Sec19 retary of Energy shall submit to Congress a report de20 scribing the effectiveness of the program under this sec21 tion. 

22 (d) TERMINATION OF AUTHORITY.—The program 

23 carried out under this section shall terminate on December 

24 31, 2010. 
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1 (e) AUTHORIZATION OF APPROPRIATIONS.—There 

2 are authorized to be appropriated to carry out this section 

3 $90,000,000 for each of fiscal years 2007 through 2010. 

4 SEC. 102. REDUCING RESIDENTIAL DEMAND; APPLIANCE 

5 AND EQUIPMENT EFFICIENCY STANDARDS. 

6 (a) ENERGY CONSERVATION STANDARDS FOR ADDI7 TIONAL PRODUCTS.— 

8 (1) DEFINITIONS.—Section 321 of the Energy 

9 Policy and Conservation Act (42 U.S.C. 6291) is 

10 amended— 

11 (A) in paragraph (30)(S)— 

12 (i) by inserting ‘‘(i)’’ after ‘‘(S)’’; and 

13 (ii) by adding at the end the fol14 lowing: 

15 ‘‘(ii) The term ‘medium base fluorescent 

16 lamp’ does not include— 

17 ‘‘(I) any lamp specifically designed to 

18 be used for special purpose applications 

19 and that is unlikely to be used in general 

20 purpose applications such as those de21 scribed in subparagraph (D); or 

22 ‘‘(II) any lamp not described in sub23 paragraph (D) that is excluded by the Sec24 retary, by rule, because the lamp is de25 signed for special applications and is un-
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1 likely to be used in general purpose appli2 cations.’’; and 

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

4 ‘‘(32) The term ‘battery charger’ means a device that 

5 charges batteries for consumer products, including a bat6 tery charger embedded in another consumer product. 

7 ‘‘(33) The term ‘external power supply’ means an ex8 ternal power supply circuit that is used to convert house9 hold electric current into either DC current or lower-volt10 age alternating current to operate a consumer product. 

11 ‘‘(34) The term ‘illuminated exit sign’ means a sign 

12 that— 

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

14 place to identify an exit; and 

15 ‘‘(B) consists of an electrically powered integral 

16 light source that— 

17 ‘‘(i) illuminates the legend ‘EXIT’ and any 

18 directional indicators; and 

19 ‘‘(ii) provides contrast between the legend, 

20 any directional indicators, and the background. 

21 ‘‘(35)(A) The term ‘distribution transformer’ means 

22 a transformer that— 

23 ‘‘(i) has an input voltage of 34.5 kilovolts or 

24 less; 
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1 ‘‘(ii) has an output voltage of 600 volts or less; 

2 and 

3 ‘‘(iii) is rated for operation at a frequency of 60 

4 Hertz. 

5 ‘‘(B) The term ‘distribution transformer’ does not in6 clude— 

7 ‘‘(i) a transformer with multiple voltage taps, 

8 with the highest voltage tap equaling at least 20 per9 cent more than the lowest voltage tap; 

10 ‘‘(ii) a transformer (such as those commonly 

11 known as a drive transformer, rectifier transformer, 

12 auto-transformer, uninterruptible power system 

13 transformer, impedance transformer, regulating 

14 transformer, sealed or nonventilating transformer, 

15 machine tool transformer, welding transformer, 

16 grounding transformer, or testing transformer) that 

17 is designed to be used in a special purpose applica18 tion and is unlikely to be used in a general purpose 

19 application; or 

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

21 that is excluded by the Secretary by rule because— 

22 ‘‘(I) the transformer is designed for a spe23 cial application; 

24 ‘‘(II) the transformer is unlikely to be used 

25 in a general purpose application; and 
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1 ‘‘(III) the application of standards to the 

2 transformer would not result in significant en3 ergy savings. 

4 ‘‘(36) The term ‘low-voltage dry-type distribution 

5 transformer’ means a distribution transformer that— 

6 ‘‘(A) has an input voltage of 600 volts or less; 

7 ‘‘(B) is air-cooled; and 

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

9 ‘‘(37) The term ‘standby mode’ means the lowest 

10 power consumption mode that— 

11 ‘‘(A) cannot be switched off or influenced by 

12 the user; and 

13 ‘‘(B) may persist for an indefinite time when an 

14 appliance is connected to the main electricity supply 

15 and used in accordance with the instructions of the 

16 manufacturer, as defined on an individual product 

17 basis by the Secretary. 

18 ‘‘(38) The term ‘torchiere’ means a portable electric 

19 lamp with a reflector bowl that directs light upward so 

20 as to give indirect illumination. 

21 ‘‘(39) The term ‘traffic signal module’ means a 

22 standard 8-inch (200mm) or 12-inch (300mm) traffic sig23 nal indication, consisting of a light source, a lens, and all 

24 other parts necessary for operation, that communicates 
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1 movement messages to drivers through red, amber, and 

2 green colors. 

3 ‘‘(40) The term ‘pedestrian module’ means a light 

4 signal used to convey movement information to pedes5 trians. 

6 ‘‘(41) The term ‘transformer’ means a device con7 sisting of 2 or more coils of insulated wire that transfers 

8 alternating current by electromagnetic induction from 1 

9 coil to another to change the original voltage or current 

10 value. 

11 ‘‘(42) The term ‘unit heater’ means a self-contained 

12 fan-type heater designed to be installed within the heated 

13 space, except that the term does not include a warm-air 

14 furnace. 

15 ‘‘(43) The term ‘ceiling fan’ means a nonportable de16 vice that is suspended from a ceiling for circulating air 

17 via the rotation of fan blades. 

18 ‘‘(44) The term ‘ceiling fan light kit’ means equip19 ment designed to provide light from a ceiling fan that can 

20 be— 

21 ‘‘(A) integral, such that the equipment is at22 tached to the ceiling fan prior to the time of retail 

23 sale; or 

24 ‘‘(B) attachable, such that at the time of retail 

25 sale the equipment is not physically attached to the 
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1 ceiling fan, but may be included inside the ceiling 

2 fan package at the time of sale or sold separately for 

3 subsequent attachment to the fan. 

4 ‘‘(45) The term ‘dehumidifier’ means a self-con5 tained, electrically operated, and mechanically encased as6 sembly consisting of— 

7 ‘‘(A) a refrigerated surface (evaporator) that 

8 condenses moisture from the atmosphere; 

9 ‘‘(B) a refrigerating system, including an elec10 tric motor; 

11 ‘‘(C) an air-circulating fan; and 

12 ‘‘(D) means for collecting or disposing of the 

13 condensate. 

14 ‘‘(46)(A) The term ‘commercial prerinse spray valve’ 

15 means a handheld device designed and marketed for use 

16 with commercial dishwashing and ware washing equip17 ment that sprays water on dishes, flatware, and other food 

18 service items for the purpose of removing food residue be19 fore cleaning the items. 

20 ‘‘(B) The Secretary may modify the definition of 

21 ‘commercial prerinse spray valve’ by rule— 

22 ‘‘(i) to include products— 

23 ‘‘(I) that are extensively used in conjunc24 tion with commercial dishwashing and ware 

25 washing equipment; 
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1 ‘‘(II) the application of standards to which 

2 would result in significant energy savings; and 

3 ‘‘(III) the application of standards to 

4 which would meet the criteria specified in sub5 section (o)(4); and 

6 ‘‘(ii) to exclude products— 

7 ‘‘(I) that are used for special food service 

8 applications; 

9 ‘‘(II) that are unlikely to be widely used in 

10 conjunction with commercial dishwashing and 

11 ware washing equipment; and 

12 ‘‘(III) the application of standards to 

13 which would not result in significant energy 

14 savings. 

15 ‘‘(47) The term ‘digital television adapter’ means a 

16 commercially-available electronic product the sole purpose 

17 of which is to convert digital video broadcast signals to 

18 analog National Television Standards Committee video 

19 signals for use by a television or video cassette recorder. 

20 ‘‘(48)(A) The term ‘high intensity discharge lamp’ 

21 means an electric-discharge lamp in which— 

22 ‘‘(i) the light-producing arc is stabilized by bulb 

23 wall temperature; and 

24 ‘‘(ii) the arc tube has a bulb wall loading in ex25 cess of 3 watts per square centimeter. 
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1 ‘‘(B) The term ‘high intensity discharge lamp’ in2 cludes mercury vapor, metal halide, and high-pressure so3 dium lamps. 

4 ‘‘(49)(A) The term ‘mercury vapor lamp’ means a 

5 high-intensity discharge lamp in which the major portion 

6 of the light is produced by radiation from mercury oper7 ating at a partial pressure in excess of 100,000 Pascals 

8 (approximately 1 asynchronous transfer mode). 

9 ‘‘(B) The term ‘mercury vapor lamp’ includes clear, 

10 phosphor-coated, and self-ballasted lamps. 

11 ‘‘(50) The term ‘cold climate State’ means a State 

12 that experiences not less than 5,000 long-term population13 weighted average heating degree days, as determined by 

14 the National Oceanic and Atmospheric Administration.’’. 

15 (2) TEST PROCEDURES.—Section 323 of the 

16 Energy Policy and Conservation Act (42 U.S.C. 

17 6293) is amended— 

18 (A) in subsection (b), by adding at the end 

19 the following: 

20 ‘‘(9) Test procedures for illuminated exit signs shall 

21 be based on the test method used under Version 2.0 of 

22 the Energy Star program of the Environmental Protection 

23 Agency for illuminated exit signs. 

24 ‘‘(10)(A) Test procedures for distribution trans25 formers and low voltage dry-type distribution transformers 
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1 shall be based on the ‘Standard Test Method for Meas2 uring the Energy Consumption of Distribution Trans3 formers’ prescribed by the National Electrical Manufac4 turers Association (NEMA TP 2–1998). 

5 ‘‘(B) The Secretary may review and revise those test 

6 procedures. 

7 ‘‘(C) For purposes of section 346(a), those test proce8 dures shall be considered to be testing requirements pre9 scribed by the Secretary under section 346(a)(1) for dis10 tribution transformers for which the Secretary makes a 

11 determination that energy conservation standards would 

12 be technologically feasible and economically justified, and 

13 would result in significant energy savings. 

14 ‘‘(11) Test procedures for traffic signal modules and 

15 pedestrian modules shall be based on the test method used 

16 under the Energy Star program of the Environmental 

17 Protection Agency for traffic signal modules, as in effect 

18 on the date of enactment of this paragraph. 

19 ‘‘(12)(A) Test procedures for medium base compact 

20 fluorescent lamps shall be based on the test methods used 

21 under the August 9, 2001, version of the Energy Star pro22 gram of the Environmental Protection Agency and De23 partment of Energy for compact fluorescent lamps. 
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1 ‘‘(B)(i) Except as provided in clause (ii), covered 

2 products shall meet all test requirements for regulated pa3 rameters established under section 325(bb). 

4 ‘‘(ii) Covered products may be marketed prior to com5 pletion of lamp life and lumen maintenance at 40 percent 

6 of rated life testing provided manufacturers document en7 gineering predictions and analysis that support expected 

8 attainment of lumen maintenance at 40 percent rated life 

9 and lamp life time. 

10 ‘‘(13) Air movement test procedures for ceiling fans 

11 shall be based on the test procedure contained in the En12 ergy Star Program Requirements for Residential Ceiling 

13 Fans, version 2.0, developed by the Environmental Protec14 tion Agency, unless, pursuant to this section, the Sec15 retary promulgates an alternative test procedure. 

16 ‘‘(14) Test procedures for dehumidifiers shall be 

17 based on the test criteria used under the Energy Star Pro18 gram Requirements for Dehumidifiers developed by the 

19 Environmental Protection Agency, as in effect on the date 

20 of enactment of this paragraph unless revised by the Sec21 retary pursuant to this section. 

22 ‘‘(15) The test procedure for measuring flow rate for 

23 commercial prerinse spray valves shall be based on Amer24 ican Society for Testing and Materials Standard F2324, 
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1 entitled ‘Standard Test Method for Prerinse Spray 

2 Valves.’ 

3 ‘‘(16) The test procedure for digital television adapt4 ers shall be based on the International Electrotechnical 

5 Commissions Standard 62087:2002(E), entitled ‘Methods 

6 of Measurement for the Power Consumption of Audio, 

7 Video, and Related Equipment’. 

8 ‘‘(17) The test procedure for refrigerated bottled or 

9 canned beverage vending machines shall be based on 

10 American Society of Heating, Refrigerating and Air-Con11 ditioning Engineers Standard 32.1–2004, entitled ‘Meth12 ods of Testing for Rating Vending Machines for Bottled, 

13 Canned or Other Sealed Beverages’.’’; and 

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

15 ‘‘(f)(1) ADDITIONAL TESTING REQUIREMENTS.—Not 

16 later than 2 years after the date of enactment of this sub17 section, the Secretary shall prescribe testing requirements 

18 for any product for which— 

19 ‘‘(A) a standard is provided under the Natural 

20 Gas Price Reduction Act of 2005; and 

21 ‘‘(B) there was no testing requirement before 

22 the date of enactment of that Act. 

23 ‘‘(2) The testing requirements under paragraph (1) 

24 shall be based on test procedures used in industry to the 

25 maximum extent practicable and reasonable.’’. 
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1 (3) NEW LABELING.—Section 324(a)(2) of the 

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

3 6294(a)(2)) is amended by adding at the end the 

4 following: 

5 ‘‘(F)(i) Not later than 90 days after the date of en6 actment of this subparagraph, the Commission shall ini7 tiate a rulemaking to consider— 

8 ‘‘(I) the effectiveness of the consumer products 

9 labeling program in existence on the date of enact10 ment of this subparagraph in assisting consumers in 

11 making purchasing decisions and improving energy 

12 efficiency; and 

13 ‘‘(II) changes to the labeling rules that would 

14 improve the effectiveness of consumer product labels. 

15 ‘‘(ii) The rulemaking shall be completed not later 

16 than 2 years after the date of enactment of this subpara17 graph.’’. 

18 (4) NEW STANDARDS.—Section 325 of the En19 ergy Policy and Conservation Act (42 U.S.C. 6295) 

20 is amended— 

21 (A) in subsection (o), by adding at the end 

22 the following: 

23 ‘‘(5)(A) Notwithstanding any other provision in this 

24 section, the Secretary may set 2 standards for space heat25 ing and air conditioning equipment by dividing the United 
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1 States into 2 climate zones to achieve the maximum level 

2 of energy savings that are technically feasible and eco3 nomically justified. 

4 ‘‘(B) The climate zone boundaries described in sub5 paragraph (A)— 

6 ‘‘(i) shall follow State borders; and 

7 ‘‘(ii) shall include only contiguous States. 

8 ‘‘(C) In determining whether to set 2 standards as 

9 described in subparagraph (A), the Secretary shall con10 sider all factors described in paragraphs (1) through (4). 

11 ‘‘(D) If the Secretary sets 2 standards as described 

12 in subparagraph (A), it shall be illegal to transport non13 complying products into a State for retail sale or installa14 tion in that State. 

15 ‘‘(6) The Secretary may set more than 1 efficiency 

16 standard for products that serve more than 1 major func17 tion by setting 1 standard for each major function.’’; and 

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

19 ‘‘(u) BATTERY CHARGER AND EXTERNAL POWER

20 SUPPLY ELECTRIC ENERGY CONSUMPTION.—(1)(A)(i) 

21 Not later than 18 months after the date of enactment of 

22 this subsection, the Secretary shall prescribe by notice and 

23 comment, definitions and test procedures for the power 

24 use of battery chargers and external power supplies. 
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1 ‘‘(ii) In establishing the test procedures, the Sec2 retary shall consider, among other factors, definitions and 

3 test procedures used for measuring energy consumption 

4 in standby mode and other modes and assess the current 

5 and projected future market for battery chargers and ex6 ternal power supplies. 

7 ‘‘(iii) The assessment shall include estimates of the 

8 significance of potential energy savings from technical im9 provements to the products and suggested product classes 

10 for standards. 

11 ‘‘(iv) Not later than the end of the time period re12 ferred to in clause (i), the Secretary shall hold a scoping 

13 workshop to discuss and receive comments on plans for 

14 developing energy conservation standards for energy use 

15 for these products. 

16 ‘‘(B)(i) Not later than 3 years after the date of enact17 ment of this subsection, the Secretary shall promulgate 

18 a final rule that determines whether energy conservation 

19 standards shall be issued for battery chargers and external 

20 power supplies or classes thereof. 

21 ‘‘(ii) For each product class, any such standards shall 

22 be set at the lowest level of energy use that— 

23 ‘‘(I) meets the criteria and procedures of sub24 sections (o), (p), (q), (r), (s), and (t); and 
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1 ‘‘(II) will result in significant overall annual en2 ergy savings, considering both standby mode and 

3 other operating modes. 

4 ‘‘(2) In determining pursuant to section 323 whether 

5 test procedures and energy conservation standards pursu6 ant to this section should be revised, the Secretary shall 

7 consider, for covered products that are major sources of 

8 standby mode energy consumption, whether to incorporate 

9 standby mode into such test procedures and energy con10 servation standards, taking into account, among other rel11 evant factors, standby mode power consumption compared 

12 to overall product energy consumption. 

13 ‘‘(3) The Secretary shall not propose a standard 

14 under this section unless the Secretary has issued applica15 ble test procedures for each product pursuant to section 

16 323. 

17 ‘‘(4) Any standard issued under this subsection shall 

18 be applicable to products manufactured or imported on or 

19 after the date that is 3 years after the date of issuance. 

20 ‘‘(5) The Secretary and the Administrator shall col21 laborate and develop programs, including Energy Star 

22 Programs and other voluntary industry agreements or 

23 codes of conduct, that are designed to reduce standby 

24 mode energy use. 
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1 ‘‘(v) VENDING MACHINES.—(1) Not later than 36 

2 months after the date of enactment of this subsection, the 

3 Secretary shall prescribe, by rule, energy conservation 

4 standards for refrigerated bottled or canned beverage 

5 vending machines. 

6 ‘‘(2) In establishing standards under this subsection, 

7 the Secretary shall use the criteria and procedures de8 scribed in subsections (o) and (p). 

9 ‘‘(3) Any standard prescribed under this subsection 

10 shall apply to products manufactured on or after the date 

11 that is 3 years after the date of publication of a final rule 

12 establishing the standard. 

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

14 signs manufactured on or after January 1, 2006, shall 

15 meet the Version 2.0 Energy Star Program performance 

16 requirements for illuminated exit signs prescribed by the 

17 Environmental Protection Agency. 

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

19 after January 1, 2006— 

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

21 power; and 

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

23 lamps that total more than 190 watts. 

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

25 TRANSFORMERS.—The efficiency of low voltage dry-type 
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1 distribution transformers manufactured on or after Janu2 ary 1, 2006, shall be the Class I Efficiency Levels for dis3 tribution transformers specified in Table 4–2 of the ‘Guide 

4 for Determining Energy Efficiency for Distribution Trans5 formers’ published by the National Electrical Manufactur6 ers Association (NEMA TP–1–2002). 

7 ‘‘(z) TRAFFIC SIGNAL MODULES.—(1) Traffic signal 

8 modules manufactured on or after January 1, 2006, 

9 shall— 

10 ‘‘(A) meet the performance requirements used 

11 under the Energy Star program of the Environ12 mental Protection Agency for traffic signals, as in 

13 effect on the date of enactment of this subsection; 

14 and 

15 ‘‘(B) be installed with compatible, electrically 

16 connected signal control interface devices and con17 flict monitoring systems. 

18 ‘‘(2) Pedestrian modules manufactured on or after 

19 January 1, 2006, shall meet the performance require20 ments adopted by the California Energy Commission on 

21 December 15, 2004. 

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

23 on or after the date that is 3 years after the date of enact24 ment of this subsection shall be equipped with an intermit-
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1 tent ignition device and shall have either power venting 

2 or an automatic flue damper. 

3 ‘‘(bb) MEDIUM BASE COMPACT FLUORESCENT

4 LAMPS.—(1) Bare lamp and covered lamp (no reflector) 

5 medium base compact fluorescent lamps manufactured on 

6 or after January 1, 2006, shall meet the following require7 ments prescribed by the August 9, 2001, version of the 

8 Energy Star Program Requirements for Compact Fluores9 cent Lamps, Energy Star Eligibility Criteria, Energy-Effi10 ciency Specification issued by the Environmental Protec11 tion Agency and Department of Energy: 

12 ‘‘(A) Minimum initial efficacy. 

13 ‘‘(B) Lumen maintenance at 1000 hours. 

14 ‘‘(C) Lumen maintenance at 40 percent of 

15 rated life. 

16 ‘‘(D) Rapid cycle stress test. 

17 ‘‘(E) Lamp life. 

18 ‘‘(2) The Secretary may, by rule, establish require19 ments for— 

20 ‘‘(A) color quality (CRI); 

21 ‘‘(B) power factor; 

22 ‘‘(C) operating frequency; and 

23 ‘‘(D) maximum allowable start time based on 

24 the requirements prescribed by the August 9, 2001, 
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1 version of the Energy Star Program Requirements 

2 for Compact Fluorescent Lamps. 

3 ‘‘(3) The Secretary may, by rule, revise the require4 ments of this subsection or establish other requirements 

5 considering energy savings, cost effectiveness, and con6 sumer satisfaction. 

7 ‘‘(cc) CEILING FANS AND CEILING FAN LIGHT

8 KITS.—(1)(A) All ceiling fans manufactured on or after 

9 January 1, 2007, shall have the following features: 

10 ‘‘(i) Lighting controls separate from fan speed 

11 controls. 

12 ‘‘(ii) Adjustable speed controls (either more 

13 than 1 speed or variable speed). 

14 ‘‘(iii) The capability of reversible fan action, ex15 cept for fans sold for industrial applications, outdoor 

16 applications, and where safety standards would be 

17 violated by the use of the reversible mode. 

18 ‘‘(B) The Secretary may promulgate regulations to 

19 define in greater detail the exceptions provided under sub20 paragraph (A)(iii) but may not substantively expand the 

21 exceptions. 

22 ‘‘(2) Ceiling fan light kits manufactured on or after 

23 January 1, 2007, shall— 

24 ‘‘(A) meet the Energy Star Program Require25 ments for Residential Light Fixtures, version 3.1, 
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1 issued by the Environmental Protection Agency, and 

2 be packaged with lamps to fill all sockets; 

3 ‘‘(B) be packaged with screw-based compact 

4 fluorescent lamps to fill all sockets and meet the En5 ergy Star Program Requirements for Compact Fluo6 rescent Lamps, version 3.0, issued by the Depart7 ment of Energy; or 

8 ‘‘(C) use and be packaged with light sources 

9 other than compact fluorescent lamps that meet the 

10 minimum efficacy requirements, as measured in 

11 lumens per watt, of the Energy Star Program Re12 quirements for Compact Fluorescent Lamps, version 

13 3.0, issued by the Department of Energy. 

14 ‘‘(3)(A) Notwithstanding any provision of this Act, 

15 if the requirements of subsections (o) and (p) are met, 

16 the Secretary may consider and prescribe energy efficiency 

17 or energy use standards for electricity used by ceiling fans 

18 to circulate air in a room. 

19 ‘‘(B) If the Secretary sets the standards, the Sec20 retary shall consider— 

21 ‘‘(i) exempting or setting different standards 

22 for certain product classes for which the primary 

23 standards are not technically feasible or economically 

24 justified; and 
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1 ‘‘(ii) establishing separate exempted product 

2 classes for highly decorative fans for which air move3 ment performance is a secondary design feature. 

4 ‘‘(C) Any air movement standard prescribed under 

5 this subsection shall apply to products manufactured on 

6 or after the date that is 3 years after the date of publica7 tion of a final rule establishing the standard. 

8 ‘‘(dd) DEHUMIDIFIERS.—(1) Dehumidifiers manu9 factured on or after October 1, 2007, shall have an Energy 

10 Factor that meets or exceeds the following values: 

‘‘Product Capacity (pints/day): Minimum Energy Factor 

(Liters/kWh) 

≤ 25 .......................................................................................... 1.00

> 25 – ≥35 .............................................................................. 1.20

> 35 – ≥54 .............................................................................. 1.30

> 54 – < 75 ............................................................................ 1.50

≤ 75 .......................................................................................... 2.25. 

11 ‘‘(2)(A) Not later than October 1, 2009, the Sec12 retary shall publish a final rule in accordance with sub13 sections (o) and (p), to determine whether the standards 

14 established under paragraph (1) should be amended. 

15 ‘‘(B) The final rule shall contain any amendment by 

16 the Secretary and shall provide that the amendment shall 

17 apply to products manufactured on or after October 1, 

18 2012. 

19 ‘‘(C) If the Secretary does not publish an amendment 

20 that takes effect by October 1, ø2012¿, dehumidifiers 

21 manufactured on or after October 1, ø2012¿, shall have 
26 

•S 726 IS 

1 an Energy Factor that meets or exceeds the following val2 ues: 

‘‘Product Capacity (pints/day): Minimum Energy Factor 

(Liters/kWh) 

≤ 25 .......................................................................................... 1.20

> 25 – ≥35 .............................................................................. 1.30

> 35 – ≥45 .............................................................................. 1.40

> 45 – ≥54 .............................................................................. 1.50

> 54 – < 75 ............................................................................ 1.60

≤ 75 .......................................................................................... 2.5. 

3 ‘‘(ee) COMMERCIAL PRERINSE SPRAY VALVES.— 

4 Commercial prerinse spray valves manufactured on or 

5 after January 1, 2006, shall have a flow rate less than 

6 or equal to 1.6 gallons per minute. 

7 ‘‘(ff) DIGITAL TELEVISION ADAPTERS.—Digital tele8 vision adapters manufactured on or after January 1, 

9 2007, shall use— 

10 ‘‘(A) not more than 1 watt while in scan true 

11 bearing standby-passive mode; and 

12 ‘‘(B) not more than 8 watts while in scan true 

13 bearing on-mode. 

14 ‘‘(gg) HIGH-INTENSITY DISCHARGE LAMPS.—High15 intensity discharge lamp ballasts shall not be designed or 

16 marketed for operating a mercury vapor lamp. 

17 ‘‘(hh) STANDARDS FOR CERTAIN FURNACES.—(1) 

18 Notwithstanding subsection (f) and except as provided in 

19 paragraphs (2) and (3), a furnace (including a furnace 

20 designed solely for installation in a mobile home) manufac21 tured 3 or more years after the date of enactment of this 
27 

•S 726 IS 

1 subsection shall have an annual fuel utilization efficiency 

2 of— 

3 ‘‘(A) for natural gas- and propane-fired equip4 ment, not less than 80 percent; and 

5 ‘‘(B) for oil-fired equipment not less than 83 

6 percent. 

7 ‘‘(2)(A) Notwithstanding subsection (f) and except as 

8 provided in paragraph (3)— 

9 ‘‘(i) a boiler (other than a gas steam boiler) 

10 manufactured 3 or more years after the date of en11 actment of this subsection shall have an annual fuel 

12 utilization efficiency of not less than 84 percent; and 

13 ‘‘(ii) a gas steam boiler manufactured 3 or 

14 more years after the date of enactment of this sub15 section shall have an annual fuel utilization effi16 ciency of not less than 82 percent. 

17 ‘‘(B)(i) Notwithstanding subsection (f), if, after the 

18 date of enactment of this subsection, the Governor of a 

19 cold climate State files with the Secretary a notice that 

20 the State has implemented a requirement for an annual 

21 fuel utilization efficiency of not less than 90 percent for 

22 furnaces (other than boilers and furnaces designed solely 

23 for installation in a mobile home or boiler), the annual 

24 fuel utilization efficiency of a furnace sold in that State 

25 shall be not less than 90 percent. 
28 

•S 726 IS 

1 ‘‘(ii) If a State described in clause (i) fails to imple2 ment or reasonably enforce (as determined by the Sec3 retary) annual fuel utilization efficiency in accordance 

4 with that clause, the annual fuel use efficiency for fur5 naces (other than boilers and furnaces designed solely for 

6 installation in a mobile home or boiler) in that State shall 

7 be the fuel utilization efficiency established under para8 graph (1). 

9 ‘‘(3)(i) Not later than 5 years after the date on which 

10 a standard for a product under this subsection takes ef11 fect, the Secretary shall promulgate a final rule to deter12 mine whether that standard should be amended. 

13 ‘‘(ii) If the Secretary determines that a standard 

14 under clause (i) should be amended— 

15 ‘‘(I) the final rule promulgated pursuant to 

16 clause (i) shall contain the new standard; and 

17 ‘‘(II) the new standard shall apply to any prod18 uct manufactured after the date that is 5 years after 

19 the date on which the final rule is promulgated.’’. 

20 ‘‘(ii) APPLICATION DATE.—Section 327 applies— 

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

22 established under subsections (l), (u), and (v) begin23 ning on the date on which a final rule is promul24 gated by the Secretary of Energy, except that any 

25 State or local standards prescribed or enacted for 
29 

•S 726 IS 

1 any such product prior to the date on which the 

2 final rule is issued shall not be preempted until the 

3 standard established under subsection (l), (u), or (v) 

4 for that product takes effect; and 

5 ‘‘(2) to products for which standards are estab6 lished under subsections (w) through (ff) on the date 

7 of enactment of those subsections, except that any 

8 State or local standards prescribed or enacted prior 

9 to the date of enactment of those subsections shall 

10 not be preempted until the standards established 

11 under subsections (w) through (ff) take effect.’’. 

12 (5) RESIDENTIAL FURNACE FANS.—Section 

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

14 (42 U.S.C. 6295(f)(3)) is amended by adding at the 

15 end the following: 

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

17 Secretary may consider, and prescribe, if the requirements 

18 of subsection (o) are met, energy efficiency or energy use 

19 standards for electricity used for purposes of circulating 

20 air through duct work.’’. 

21 (6) GENERAL RULE OF PREEMPTION.—Section 

22 327(c) of the Energy Policy and Conservation Act 

23 (42 U.S.C. 6297(c)) is amended— 

24 (A) in paragraph (5), by striking ‘‘or’’ at 

25 the end; 
30 

•S 726 IS 

1 (B) in paragraph (6), by striking the pe2 riod at the end and inserting ‘‘; or’’; and 

3 (C) by adding at the end the following: 

4 ‘‘(7) is a regulation concerning standards for 

5 commercial prerinse spray valves adopted by the 

6 California Energy Commission before January 1, 

7 2005, or is an amendment to such a regulation de8 veloped to align California regulations with changes 

9 in American Society for Testing and Materials 

10 Standard F2324.’’. 

11 (b) ENERGY LABELING.—Section 324(a) of the En12 ergy Policy and Conservation Act (42 U.S.C. 6294(a)) is 

13 amended by adding at the end the following: 

14 ‘‘(5)(A) The Secretary or the Commission, as appro15 priate, may, for covered products referred to in sub16 sections (u) through (ff) of section 325, prescribe, by rule, 

17 pursuant to this section, labeling requirements for the 

18 products after a test procedure has been set pursuant to 

19 section 323. 

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

22 shall be based on the ‘Standard for the Labeling of Dis23 tribution Transformer Efficiency’ prescribed by the Na24 tional Electrical Manufacturers Association (NEMA TP– 

25 3) as in effect on the date of enactment of this paragraph. 
31 

•S 726 IS 

1 ‘‘(C) In the case of dehumidifiers covered under sec2 tion 325(dd), the Commission shall not require an Energy 

3 Guide label. 

4 ‘‘(6)(A) Not later than July 1, 2006, the Commission 

5 shall prescribe by rule, pursuant to this section, labeling 

6 requirements for the electricity used by ceiling fans to cir7 culate air in a room. 

8 ‘‘(B) The requirements shall be based on the test pro9 cedure and labeling requirements contained in the Energy 

10 Star Program Requirements for Residential Ceiling Fans, 

11 version 2.0, issued by the Environmental Protection Agen12 cy, except that third party testing and other non-labeling 

13 requirements shall not be promulgated unless the Commis14 sion determines the requirements are necessary to achieve 

15 compliance. 

16 ‘‘(C) The rule shall apply to products manufactured 

17 after the later of— 

18 ‘‘(i) January 1, 2007; or 

19 ‘‘(ii) the date that is 60 days after the final rule 

20 is prescribed.’’. 

21 (c) COMMERCIAL PACKAGE AIR CONDITIONING AND

22 HEATING EQUIPMENT.— 

23 (1) DEFINITIONS.—Section 340 of the Energy 

24 Policy and Conservation Act (42 U.S.C. 6311) is 

25 amended— 
32 

•S 726 IS 

1 (A) in paragraph (1)— 

2 (i) by redesignating subparagraphs 

3 (D) through (G) as subparagraphs (E) 

4 through (H), respectively; and 

5 (ii) by inserting after subparagraph 

6 (C) the following: 

7 ‘‘(D) Very large commercial package air 

8 conditioning and heating equipment.’’; 

9 (B) in paragraph (2)(B), by striking 

10 ‘‘small and large’’; 

11 (C) by striking paragraphs (8) and (9) and 

12 inserting the following: 

13 ‘‘(8)(A) The term ‘commercial package air con14 ditioning and heating equipment’ means air-cooled, 

15 water-cooled, evaporatively-cooled, or water source 

16 (not including ground water source) electrically oper17 ated, unitary central air conditioners and central air 

18 conditioning heat pumps for commercial application. 

19 ‘‘(B) The term ‘small commercial package air 

20 conditioning and heating equipment’ means commer21 cial package air conditioning and heating equipment 

22 that is rated below 135,000 Btu per hour (cooling 

23 capacity). 

24 ‘‘(C) The term ‘large commercial package air 

25 conditioning and heating equipment’ means commer-
33 

•S 726 IS 

1 cial package air conditioning and heating equipment 

2 that is rated at or above 135,000 Btu per hour and 

3 below 240,000 Btu per hour (cooling capacity). 

4 ‘‘(D) The term ‘very large commercial package 

5 air conditioning and heating equipment’ means com6 mercial package air conditioning and heating equip7 ment that is rated at or above 240,000 Btu per hour 

8 and below 760,000 Btu per hour (cooling capac9 ity).’’; 

10 (D) by redesignating paragraphs (10) 

11 through (18) as paragraphs (9) through (17), 

12 respectively; and 

13 (E) in paragraph (10) (as redesignated by 

14 subparagraph (D)), by inserting ‘‘, except for 

15 gas unit heaters and gas duct furnaces’’ after 

16 ‘‘furnaces’’. 

17 (2) STANDARDS.—Section 342(a) of the Energy 

18 Policy and Conservation Act (42 U.S.C. 6313(a)) is 

19 amended— 

20 (A) in the subsection heading, by striking 

21 ‘‘SMALL AND LARGE’’ and inserting ‘‘SMALL, 

22 LARGE, AND VERY LARGE’’; 

23 (B) in paragraph (1), by inserting ‘‘but be24 fore January 1, 2010,’’ after ‘‘January 1, 

25 1994,’’; 
34 

•S 726 IS 

1 (C) in paragraph (2), by inserting ‘‘but be2 fore January 1, 2010,’’ after ‘‘January 1, 

3 1995,’’; 

4 (D) in paragraph (4), by inserting ‘‘, ex5 cept for a gas unit heater or gas duct furnace,’’ 

6 after ‘‘boiler’’; 

7 (E) in paragraph (6)— 

8 (i) in subparagraph (A)— 

9 (I) by inserting ‘‘(i)’’ after ‘‘(A)’’; 

10 (II) by striking ‘‘the date of en11 actment of the Energy Policy Act of 

12 1992’’ and inserting ‘‘January 1, 

13 2010’’; 

14 (III) by inserting after ‘‘large 

15 commercial package air conditioning 

16 and heating equipment’’ the following: 

17 ‘‘and very large commercial package 

18 air conditioning and heating equip19 ment, or if ASHRAE/IES Standard 

20 90.1, as in effect on October 24, 

21 1992, is amended with respect to 

22 any’’; and 

23 (IV) by adding at the end the fol24 lowing: 
35 

•S 726 IS 

1 ‘‘(ii) If ASHRAE/IES Standard 90.1 is not amended 

2 with respect to small commercial package air conditioning 

3 and heating equipment, large commercial package air con4 ditioning and heating equipment, and very large commer5 cial package air conditioning and heating equipment dur6 ing the 5-year period beginning on the effective date of 

7 a standard, the Secretary may initiate a rulemaking to 

8 determine whether a more stringent standard would result 

9 in significant additional conservation of energy and is 

10 technologically feasible and economically justified. 

11 ‘‘(iii) This subparagraph does not apply to gas-fired 

12 warm-air furnaces, gas-fired package boilers, storage 

13 water heaters, gas unit heaters, or gas duct furnaces man14 ufactured 5 or more years after the date of enactment of 

15 the Natural Gas Price Reduction Act of 2005.’’; and 

16 (ii) in subparagraph (C)(ii), by insert17 ing ‘‘and very large commercial package 

18 air conditioning and heating equipment’’ 

19 after ‘‘large commercial package air condi20 tioning and heating equipment’’; and 

21 (F) by adding at the end the following: 

22 ‘‘(7) Each small commercial package air conditioning 

23 and heating equipment manufactured on or after January 

24 1, 2010, shall meet the following standards: 
36 

•S 726 IS 

1 ‘‘(A) The minimum energy efficiency ratio of 

2 air-cooled central air conditioners at or above 65,000 

3 Btu per hour (cooling capacity) and less than 

4 135,000 Btu per hour (cooling capacity) shall be— 

5 ‘‘(i) 11.2 for equipment with no heating or 

6 electric resistance heating; and 

7 ‘‘(ii) 11.0 for equipment with all other 

8 heating system types that are integrated into 

9 the equipment (at a standard rating of 95 de10 grees F db). 

11 ‘‘(B) The minimum energy efficiency ratio of 

12 air-cooled central air conditioner heat pumps at or 

13 above 65,000 Btu per hour (cooling capacity) and 

14 less than 135,000 Btu per hour (cooling capacity) 

15 shall be— 

16 ‘‘(i) 11.0 for equipment with no heating or 

17 electric resistance heating; and 

18 ‘‘(ii) 10.8 for equipment with all other 

19 heating system types that are integrated into 

20 the equipment (at a standard rating of 95 de21 grees F db). 

22 ‘‘(C) The minimum coefficient of performance 

23 in the heating mode of air-cooled central air condi24 tioning heat pumps at or above 65,000 Btu per hour 

25 (cooling capacity) and less than 135,000 Btu per 
37 

•S 726 IS 

1 hour (cooling capacity) shall be 3.3 (at a high tem2 perature rating of 47 degrees F db). 

3 ‘‘(8) Each large commercial package air conditioning 

4 and heating equipment manufactured on or after January 

5 1, 2010, shall meet the following standards: 

6 ‘‘(A) The minimum energy efficiency ratio of 

7 air-cooled central air conditioners at or above 

8 135,000 Btu per hour (cooling capacity) and less 

9 than 240,000 Btu per hour (cooling capacity) shall 

10 be— 

11 ‘‘(i) 11.0 for equipment with no heating or 

12 electric resistance heating; and 

13 ‘‘(ii) 10.8 for equipment with all other 

14 heating system types that are integrated into 

15 the equipment (at a standard rating of 95 de16 grees F db). 

17 ‘‘(B) The minimum energy efficiency ratio of 

18 air-cooled central air conditioner heat pumps at or 

19 above 135,000 Btu per hour (cooling capacity) and 

20 less than 240,000 Btu per hour (cooling capacity) 

21 shall be— 

22 ‘‘(i) 10.6 for equipment with no heating or 

23 electric resistance heating; and 

24 ‘‘(ii) 10.4 for equipment with all other 

25 heating system types that are integrated into 
38 

•S 726 IS 

1 the equipment (at a standard rating of 95 de2 grees F db). 

3 ‘‘(C) The minimum coefficient of performance 

4 in the heating mode of air-cooled central air condi5 tioning heat pumps at or above 135,000 Btu per 

6 hour (cooling capacity) and less than 240,000 Btu 

7 per hour (cooling capacity) shall be 3.2 (at a high 

8 temperature rating of 47 degrees F db). 

9 ‘‘(9) Each very large commercial package air condi10 tioning and heating equipment manufactured on or after 

11 January 1, 2010, shall meet the following standards: 

12 ‘‘(A) The minimum energy efficiency ratio of 

13 air-cooled central air conditioners at or above 

14 240,000 Btu per hour (cooling capacity) and less 

15 than 760,000 Btu per hour (cooling capacity) shall 

16 be— 

17 ‘‘(i) 10.0 for equipment with no heating or 

18 electric resistance heating; and 

19 ‘‘(ii) 9.8 for equipment with all other heat20 ing system types that are integrated into the 

21 equipment (at a standard rating of 95 degrees 

22 F db). 

23 ‘‘(B) The minimum energy efficiency ratio of 

24 air-cooled central air conditioner heat pumps at or 

25 above 240,000 Btu per hour (cooling capacity) and 
39 

•S 726 IS 

1 less than 760,000 Btu per hour (cooling capacity) 

2 shall be— 

3 ‘‘(i) 9.5 for equipment with no heating or 

4 electric resistance heating; and 

5 ‘‘(ii) 9.3 for equipment with all other heat6 ing system types that are integrated into the 

7 equipment (at a standard rating of 95 degrees 

8 F db). 

9 ‘‘(C) The minimum coefficient of performance 

10 in the heating mode of air-cooled central air condi11 tioning heat pumps at or above 240,000 Btu per 

12 hour (cooling capacity) and less than 760,000 Btu 

13 per hour (cooling capacity) shall be 3.2 (at a high 

14 temperature rating of 47 degrees F db). 

15 ‘‘(10) Notwithstanding paragraph (4) and except as 

16 provided in paragraph (14), the minimum thermal effi17 ciency at the maximum rated capacity of a gas-fired 

18 warm-air furnace with the capacity of 225,000 Btu per 

19 hour or more manufactured 4 or more years after the date 

20 of enactment of this paragraph shall be 79.5 percent. 

21 ‘‘(11) Notwithstanding paragraph (4) and except as 

22 provided in paragraph (14), the minimum thermal effi23 ciency at the maximum rated capacity of a gas-fired pack24 age boiler with the capacity of 300,000 Btu per hour or 
40 

•S 726 IS 

1 more manufactured 4 or more years after the date of en2 actment of this paragraph shall be 79 percent. 

3 ‘‘(12) Notwithstanding paragraph (5) (excluding 

4 paragraph (5)(G)), and except as provided in paragraph 

5 (14)— 

6 ‘‘(A) the maximum standby loss (expressed as 

7 a percent per hour) of a gas-fired storage water 

8 heater shall be 1.30 (expressed as a measurement of 

9 storage volume in gallons); and 

10 ‘‘(B) the minimal thermal efficiency of a gas11 fired storage water heater shall be 82 percent. 

12 ‘‘(13)(A) Not later than 5 years after the date on 

13 which a standard for a product under paragraph (10), 

14 (11), or (12) takes effect, the Secretary shall promulgate 

15 a final rule to determine whether the standard for that 

16 product should be amended. 

17 ‘‘(B) If the Secretary determines that a standard 

18 should be amended under subparagraph (A)— 

19 ‘‘(i) the final rule promulgated pursuant to sub20 paragraph (A) shall contain the new standard; and 

21 ‘‘(ii) the new standard shall apply to any prod22 uct manufactured 4 or more years after the date on 

23 which the final rule is promulgated.’’. 

24 (3) TEST PROCEDURES.—Section 343 of the 

25 Energy Policy and Conservation Act (42 U.S.C. 
41 

•S 726 IS 

1 6314) is amended in subsections (a)(4) and (d)(1), 

2 by inserting ‘‘very large commercial package air con3 ditioning and heating equipment,’’ after ‘‘large com4 mercial package air conditioning and heating equip5 ment,’’ each place it appears. 

6 (4) LABELING.—Section 344(e) of the Energy 

7 Policy and Conservation Act (42 U.S.C. 6315(e)) is 

8 amended in the first and second sentences, by in9 serting ‘‘very large commercial package air condi10 tioning and heating equipment,’’ after ‘‘large com11 mercial package air conditioning and heating equip12 ment,’’ each place it appears. 

13 (5) ADMINISTRATION, PENALTIES, ENFORCE14 MENT, AND PREEMPTION.—Section 345 of the En15 ergy Policy and Conservation Act (42 U.S.C. 6316) 

16 is amended by adding at the end the following: 

17 ‘‘(d)(1) Except as provided in paragraphs (2) and 

18 (3), section 327 shall apply with respect to the equipment 

19 specified in section 340(1)(D) to the same extent and in 

20 the same manner as section 327 applies under part A on 

21 the date of enactment of this subsection. 

22 ‘‘(2) Any State or local standard prescribed or en23 acted prior to the date of enactment of this subsection 

24 shall not be preempted until the standards established 

25 under section 342(a)(9) take effect on January 1, 2010. 
42 

•S 726 IS 

1 ‘‘(3) If the California Energy Commission adopts, not 

2 later than March 31, 2005, a regulation concerning the 

3 energy efficiency or energy use of the equipment specified 

4 in section 340(1)(D), the regulation shall be effective 

5 until, and shall no longer be effective after, the standards 

6 established under section 342(a)(9) take effect on January 

7 1, 2010.’’. 

8 (6) TECHNICAL AMENDMENT.—Section 

9 345(b)(1) of the Energy Policy and Conservation 

10 Act (42 U.S.C. 6316(b)(1)) is amended in the first 

11 sentence by striking ‘‘part B’’ and inserting ‘‘part 

12 A’’. 

13 (d) COMMERCIAL REFRIGERATORS, FREEZERS, AND

14 REFRIGERATOR-FREEZERS.— 

15 (1) DEFINITIONS.—Section 340 of the Energy 

16 Policy and Conservation Act (42 U.S.C. 6311) (as 

17 amended by subsection (c)(1)) is amended— 

18 (A) in paragraph (1)— 

19 (i) by redesignating subparagraph (H) 

20 as subparagraph (I); and 

21 (ii) by inserting after subparagraph 

22 (G) the following: 

23 ‘‘(H) Commercial refrigerators, freezers, and 

24 refrigerator-freezers.’’; and 

25 (B) by adding at the end the following: 
43 

•S 726 IS 

1 ‘‘(18)(A) The term ‘commercial refrigerator, 

2 freezer, and refrigerator-freezer’ means refrigeration 

3 equipment that— 

4 ‘‘(i) is not a consumer product (as defined 

5 in section 321); 

6 ‘‘(ii) operates at a chilled, frozen, combina7 tion chilled and frozen, or variable temperature; 

8 ‘‘(iii) displays or stores merchandise and 

9 other perishable materials horizontally, 

10 semivertically, or vertically; 

11 ‘‘(iv) has transparent or solid doors, sliding 

12 or hinged doors, a combination of hinged, slid13 ing, transparent, or solid doors, or no doors; 

14 ‘‘(v) is designed for pull-down temperature 

15 applications or holding temperature applica16 tions; and 

17 ‘‘(vi) is connected to a self-contained con18 densing unit or to a remote condensing unit. 

19 ‘‘(B) The term ‘holding temperature applica20 tion’ means a use of commercial refrigeration equip21 ment other than a pull-down temperature applica22 tion, except a blast chiller or freezer. 

23 ‘‘(C) The term ‘integrated average temperature’ 

24 means the average temperature of all test package 

25 measurements taken during the test. 
44 

•S 726 IS 

1 ‘‘(D) The term ‘pull-down temperature applica2 tion’ means a commercial refrigerator with doors 

3 that, when fully loaded with 12 ounce beverage cans 

4 at 90 degrees F, can cool those beverages to an av5 erage stable temperature of 38 degrees F in 12 

6 hours or less. 

7 ‘‘(E) The term ‘remote condensing unit’ means 

8 a factory-made assembly of refrigerating components 

9 designed to compress and liquefy a specific refrig10 erant that is remotely located from the refrigerated 

11 equipment and consists of 1 or more refrigerant 

12 compressors, refrigerant condensers, condenser fans 

13 and motors, and factory supplied accessories. 

14 ‘‘(F) The term ‘self-contained condensing unit’ 

15 means a factory-made assembly of refrigerating com16 ponents designed to compress and liquefy a specific 

17 refrigerant that is an integral part of the refrig18 erated equipment and consists of 1 or more refrig19 erant compressors, refrigerant condensers, condenser 

20 fans and motors, and factory supplied accessories.’’. 

21 (2) STANDARDS.— 

22 (A) IN GENERAL.—Section 342 of the En23 ergy Policy and Conservation Act (42 U.S.C. 

24 6313) is amended by adding at the end the fol25 lowing: 
45 

•S 726 IS 

1 ‘‘(c) COMMERCIAL REFRIGERATORS, FREEZERS, AND

2 REFRIGERATOR-FREEZERS.—(1) In this subsection: 

3 ‘‘(A) The term ‘AV’ means the adjusted volume 

(ft3 4 ) (defined as 1.63 x frozen temperature compartment volume (ft3 5 ) + chilled temperature compartment volume (ft3 6 )) with compartment volumes meas7 ured in accordance with the Association of Home 

8 Appliance Manufacturers Standard HRF1–1979. 

9 ‘‘(B) The term ‘V’ means the chilled or frozen 

compartment volume (ft3 10 ) (as defined in the Asso11 ciation of Home Appliance Manufacturers Standard 

12 HRF1–1979). 

13 ‘‘(C) Other terms have the meanings estab14 lished by the Secretary, based on industry-accepted 

15 definitions and practice. 

16 ‘‘(2) Each commercial refrigerator, freezer, and re17 frigerator-freezer with a self-contained condensing unit de18 signed for holding temperature applications manufactured 

19 on or after January 1, 2010, shall meet the following 

20 standard levels in kilowatt hours per day: 

‘‘Refrigerators with solid doors .............................. 0.10 V + 2.04 

Refrigerators with transparent doors ..................... 0.12 V + 3.34 

Freezers with solid doors ....................................... 0.40 V + 1.38 

Freezers with transparent doors ............................ 0.75 V + 4.10 

Refrigerators/freezers with solid doors...the greater of.0.27 AV ¥ 0.71 or 

0.70 
46 

•S 726 IS 

1 ‘‘(3) Each commercial refrigerator with a self-con2 tained condensing unit designed for pull-down tempera3 ture applications manufactured on or after January 1, 

4 2010, shall meet the following standard levels in kilowatt 

5 hours per day: Refrigerators with transparent doors 0.126 

6 V + 3.51.’’. 

7 (B) ESTABLISHMENT OF STANDARDS.— 

8 (i) SPECIFIED TYPES.—Not later than 

9 January 1, 2009, the Secretary of Energy 

10 may prescribe, by rule, standard levels for 

11 ice-cream freezers, self-contained commer12 cial refrigerators, freezers, and refrig13 erator-freezers without doors, and remote 

14 condensing commercial refrigerators, freez15 ers, and refrigerator-freezers, with the 

16 standard levels effective for equipment 

17 manufactured on or after January 1, 2012. 

18 (ii) OTHER TYPES.—Not later than 

19 January 1, 2009, the Secretary may pre20 scribe, by rule, standard levels for other 

21 types of commercial refrigerators, freezers, 

22 and refrigerator-freezers not covered by 

23 clause (i) or section 342(c) of the Energy 

24 Policy and Conservation Act (as added by 

25 subparagraph (A)), with the standard lev-
47 

•S 726 IS 

1 els effective for equipment manufactured 

2 on or after January 1, 2012. 

3 (C) REVISIONS TO STANDARDS.— 

4 (i) INITIAL REVISION OF STAND5 ARDS.— 

6 (I) IN GENERAL.—Not later than 

7 January 1, 2013, the Secretary shall 

8 publish a final rule to determine if the 

9 standards established under section 

10 342(c) of the Energy Policy and Con11 servation Act (as added by subpara12 graph (A)) should be amended. 

13 (II) APPLICATION DATE.—The 

14 rule shall provide that any amended 

15 standards shall apply to products 

16 manufactured on or after the date 

17 that is 3 years after the final amend18 ed standard is published unless the 

19 Secretary determines, by rule, that 3 

20 years is inadequate, in which case the 

21 Secretary may establish an application 

22 date for products manufactured not 

23 later than 5 years after the final 

24 amended standard is published. 
48 

•S 726 IS 

1 (ii) SUBSEQUENT REVISION OF

2 STANDARDS.— 

3 (I) IN GENERAL.—Not later than 

4 3 years after the amended final stand5 ard referred to in subparagraph (A) 

6 takes effect or after the Secretary 

7 publishes a final rule determining that 

8 the standard should not be amended, 

9 the Secretary shall publish a final rule 

10 to determine if the standards estab11 lished under section 342(c) of the En12 ergy Policy and Conservation Act (as 

13 added by subparagraph (A)) should be 

14 amended. 

15 (II) APPLICATION DATE.—The 

16 rule shall provide that any amended 

17 standards shall apply to products 

18 manufactured on or after the date 

19 that is 3 years after the final amend20 ed standard is published unless the 

21 Secretary determines, by rule, that 3 

22 years is inadequate, in which case the 

23 Secretary may establish an application 

24 date for products manufactured not 
49 

•S 726 IS 

1 later than 5 years after the final 

2 amended standard is published. 

3 (3) TEST PROCEDURES.—Section 343 of the 

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

5 6314) is amended— 

6 (A) in subsection (a), by adding at the end 

7 the following: 

8 ‘‘(6)(A)(i) In the case of commercial refrigerators, 

9 freezers, and refrigerator-freezers, the test procedures 

10 shall be the test procedures determined by the Secretary 

11 to be generally accepted industry testing procedures or 

12 rating procedures developed or recognized by the 

13 ASHRAE or by the American National Standards Insti14 tute. 

15 ‘‘(ii) In the case of self-contained refrigerators, freez16 ers, and refrigerator-freezers to which standards are appli17 cable under subsection 342(c)(1), the initial test proce18 dures shall be ASHRAE 117 that is in effect on January 

19 1, 2005. 

20 ‘‘(B) In the case of commercial refrigerators, freez21 ers, and refrigerators-freezers with doors covered by the 

22 standards adopted in February 2002, by the California 

23 Energy Commission, the rating temperatures shall be an 

24 integrated average temperature of 38 degrees F (+/¥ 2 
50 

•S 726 IS 

1 degrees F) for refrigerator compartments and 0 degrees 

2 F (+/¥ 2 degrees F) for freezer compartments. 

3 ‘‘(C) The Secretary shall prescribe a rule, that meets 

4 the requirements of paragraphs (2) and (3), to establish 

5 the appropriate rating temperatures for the other products 

6 for which standards will be established under subsection 

7 342(c)(2). 

8 ‘‘(D) In establishing the appropriate test tempera9 tures under this subparagraph, the Secretary shall follow 

10 the procedures and meet the requirements specified in sec11 tion 323(e). 

12 ‘‘(E)(i) Not later than 180 days after the publication 

13 of a new ASHRAE 117 test procedure, if the ASHRAE 

14 117 test procedure for commercial refrigerators, freezers, 

15 and refrigerator-freezers is amended, the Secretary shall, 

16 by rule, amend the test procedure for the product as nec17 essary to be consistent with the amended ASHRAE 117 

18 test procedure unless the Secretary makes a determina19 tion, by rule, and supported by clear and convincing evi20 dence, that to do so would not meet the requirements for 

21 test procedures described in paragraphs (2) and (3). 

22 ‘‘(ii) If the Secretary needs more than 180 days to 

23 review and adopt the amended test procedure or rating 

24 procedure, the Secretary shall publish a notice in the Fed25 eral Register stating the intent of the Secretary to take 
51 

•S 726 IS 

1 up to an additional 1 year before the amended test proce2 dure or rating procedure would become effective. 

3 ‘‘(F)(i) If another test procedure besides ASHRAE 

4 117 is approved by the American National Standards In5 stitute, the Secretary shall, by rule— 

6 ‘‘(I) review the relative strengths and weak7 nesses of the new test procedure relative to 

8 ASHRAE 117; and 

9 ‘‘(II) based on that review, adopt 1 of those test 

10 procedures for subsequent use in the standards pro11 gram. 

12 ‘‘(ii) If a new test procedure is adopted— 

13 ‘‘(I) section 323(e) shall apply; and 

14 ‘‘(II) subparagraph (B) shall apply to the 

15 adopted test procedure.’’; and 

16 (B) in subsection (d)(1), by striking ‘‘and 

17 unfired hot water storage tanks,’’ and inserting: 

18 ‘‘unfired hot water storage tanks, and commer19 cial refrigerators, freezers, and refrigerator20 freezers,’’. 

21 (4) LABELING.—Section 344(e) of the Energy 

22 Policy and Conservation Act (42 U.S.C. 6315(e)) is 

23 amended by striking ‘‘and unfired hot water storage 

24 tanks’’ each place it appears and inserting ‘‘unfired 
52 

•S 726 IS 

1 hot water storage tanks, and commercial refrig2 erators, freezers, and refrigerator-freezers’’. 

3 (5) ADMINISTRATION, PENALTIES, ENFORCE4 MENT, AND PREEMPTION.—Section 345 of the En5 ergy Policy and Conservation Act (42 U.S.C. 6316) 

6 (as amended by subsection (c)(5)) is amended by 

7 adding at the end the following: 

8 ‘‘(e)(1)(A) The provisions of subsections (a), (b), and 

9 (d) of section 326, subsections (m) through (s) of section 

10 325, and sections 328 through 336 shall apply with re11 spect to equipment specified in section 340(1)(G) to the 

12 same extent and in the same manner as those provisions 

13 apply under part A. 

14 ‘‘(B) In applying those provisions to that equipment, 

15 paragraphs (1), (2), (3), and (4) of subsection (a) shall 

16 apply. 

17 ‘‘(2)(A)(i) The provisions of section 327 shall apply 

18 with respect to the equipment specified in section 

19 340(1)(G) that have standards established under section 

20 342(c)(2) to the same extent and in the same manner as 

21 those provisions apply under part A on the date of enact22 ment of this subsection, except that any State or local 

23 standard prescribed or enacted before the date of enact24 ment of this subsection shall not be preempted until the 

25 standards established under section 342(c) take effect. 
53 

•S 726 IS 

1 ‘‘(ii) In applying those provisions to that equipment, 

2 paragraphs (1), (2), and (3) of subsection (a) shall apply. 

3 ‘‘(B) Notwithstanding subparagraph (A), if the Cali4 fornia Energy Commission adopts, not later than March 

5 31, 2005, a regulation concerning the energy efficiency or 

6 energy use of the equipment specified in section 340(1)(G) 

7 that have standards established under section 342(c)(2), 

8 those standards shall be effective until, and shall no longer 

9 be effective after, the standards established under section 

10 342(c)(2) take effect on January 1, 2010. 

11 ‘‘(3)(A) The provisions of section 327 shall apply 

12 with respect to the equipment specified in 340(1)(G) that 

13 have standards established under section 342(c)(3) to the 

14 same extent and in the same manner as they apply under 

15 part A on the date of publication of the final rule by the 

16 Secretary, except that any State or local standard pre17 scribed or enacted before the date of publication of the 

18 final rule by the Secretary shall not be preempted until 

19 the standards take effect. 

20 ‘‘(B) In applying those provisions for the purpose of 

21 that equipment, paragraphs (1), (2), and (3) of subsection 

22 (a) shall apply. 

23 ‘‘(4) If the Secretary does not issue a final rule for 

24 a specific type of equipment specified in section 340(1)(G) 

25 within the time frame specified in section 342(c)(3), the 
54 

•S 726 IS 

1 provisions of subsections (b) and (c) of section 327 shall 

2 no longer apply to that specific type of equipment begin3 ning on the date that is 2 years after the scheduled date 

4 for a final rule and until the Secretary publishes a final 

5 rule covering the specific type of equipment, at which time 

6 those provisions shall apply to the specific type of equip7 ment. 

8 ‘‘(5)(A) In the case of any commercial refrigerator, 

9 freezer, and refrigerator-freezer to which standards are 

10 applicable under section 342(c)(2), the Secretary shall re11 quire manufacturers to certify, through an independent 

12 testing or certification program nationally recognized in 

13 the United States, that the commercial refrigerator, freez14 er, and refrigerator-freezer meets the applicable standard. 

15 ‘‘(B) The Secretary shall, to the maximum extent 

16 practicable, encourage the establishment of at least 2 such 

17 independent testing and certification programs. 

18 ‘‘(C) As part of certification, information on equip19 ment energy use and interior volume shall be made avail20 able to the Secretary.’’. 

21 SEC. 103. DEPLOYMENT FOR DISTRIBUTED GENERATION, 

22 SOLAR ENERGY TECHNOLOGIES, AND BIO23 MASS. 

24 (a) DISTRIBUTED POWER SYSTEMS.— 
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•S 726 IS 

1 (1) REQUIREMENT.—Not later than 1 year 

2 after the date of enactment of this Act, the Sec3 retary of Energy shall develop and transmit to Con4 gress a strategy for a comprehensive research, devel5 opment, demonstration, and commercial application 

6 program to develop distributed power systems that 

7 use non-intermittent electric power generation tech8 nologies suitable for use in a distributed power sys9 tem. 

10 (2) CONTENTS.—The strategy shall— 

11 (A) identify the needs best met with such 

12 distributed power systems and the technological 

13 barriers to the use of the systems; 

14 (B) provide for the development of meth15 ods to design, test, integrate into systems, and 

16 operate the distributed power systems; 

17 (C) include, as appropriate, research, de18 velopment, demonstration, and commercial ap19 plication on related technologies needed for the 

20 adoption of the distributed power systems, in21 cluding energy storage devices and environ22 mental control technologies; 

23 (D) include research, development, dem24 onstration, and commercial application of inter25 connection technologies for communications and 
56 

•S 726 IS 

1 controls of distributed generation architectures, 

2 particularly technologies promoting real-time re3 sponse to power market information and phys4 ical conditions on the electrical grid; and 

5 (E) describe how activities under the strat6 egy will be integrated with other research, de7 velopment, demonstration, and commercial ap8 plication activities supported by the Department 

9 of Energy related to electric power technologies. 

10 (b) MICRO-COGENERATION ENERGY TECH11 NOLOGY.—The Secretary of Energy shall make competi12 tive, merit-based grants to consortia for the development 

13 of micro-cogeneration energy technology that explore— 

14 (1) the use of small-scale combined heat and 

15 power in residential heating appliances; and 

16 (2) the use of excess power to operate other ap17 pliances within the residence and supply excess gen18 erated power to the power grid. 

19 (c) SOLAR ENERGY TECHNOLOGIES DEMONSTRA20 TION PROGRAM.— 

21 (1) IN GENERAL.—The Secretary of Energy 

22 shall conduct a program under which the Secretary 

23 makes grants to State energy offices and other ap24 propriate State entities, as determined by the Sec25 retary, to provide the Federal share of the cost of 
57 

•S 726 IS 

1 demonstrating the use of advanced photovoltaic, 

2 solar water heating, and hybrid solar lighting tech3 nologies to generate and displace electricity. 

4 (2) FEDERAL SHARE.—The Federal share of 

5 the cost of an activity described in paragraph (7) 

6 shall be not more than 40 percent, as determined by 

7 the Secretary. 

8 (3) PROPOSALS.— 

9 (A) IN GENERAL.—Not later than 180 

10 days after the date of enactment of this Act, 

11 the Secretary shall solicit from State energy of12 fices and other appropriate State entities, as 

13 determined by the Secretary, proposals to re14 ceive grants under this subsection. 

15 (B) CONTENTS.—A proposal under this 

16 paragraph shall contain provisions that— 

17 (i) meet the cost-sharing requirement 

18 of this subsection; 

19 (ii) maximize the quantity of photo20 voltaic, solar water heating, and hybrid 

21 solar lighting technologies installed for 

22 each Federal dollar expended under this 

23 subsection, including by increasing the 

24 non-Federal share of the cost of an activity 

25 under this subsection; 
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•S 726 IS 

1 (iii) measure and verify the output of 

2 a photovoltaic, solar water heating, or hy3 brid solar lighting technology under this 

4 subsection for a period of not less than 20 

5 years after the date on which the tech6 nology is installed; and 

7 (iv) for each building on which a pho8 tovoltaic, solar water heating, or hybrid 

9 solar lighting technology is installed under 

10 this subsection, require that the building 

11 receive an energy efficiency audit not ear12 lier than 180 days before the date on 

13 which the technology is installed. 

14 (4) PREFERENCE.—In making a grant under 

15 this subsection, the Secretary shall give preference 

16 to a State energy office or entity if making a grant 

17 to that office or entity— 

18 (A) promotes the geographic diversity of 

19 demonstration sites, as determined by the Sec20 retary; or 

21 (B) limits overhead costs under this sub22 section, including the administrative costs to 

23 the Department of Energy or a State. 

24 (5) AMOUNTS.— 
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•S 726 IS 

1 (A) DISTRIBUTION.—Of the amount of 

2 funds made available to provide grants under 

3 this subsection for a fiscal year, the Secretary 

4 shall use 75 percent of that amount to dis5 tribute the grants described in paragraph (1)— 

6 (i) to State energy offices or entities 

7 based on the ratio that— 

8 (I) the percentage contribution of 

9 the State of the energy office or entity 

10 to the cost of an activity described in 

11 paragraph (7); bears to 

12 (II) the percentage contribution 

13 of all States to the cost of an activity 

14 described in paragraph (7); and 

15 (ii) if a recipient of a grant under this 

16 subsection is a commercial, industrial, or 

17 residential recipient, proportionally to the 

18 use of electricity by the recipient. 

19 (B) REMAINDER OF FUNDS.—Of the 

20 amount of funds made available to provide 

21 grants under this subsection for a fiscal year, 

22 the Secretary shall use 25 percent of that 

23 amount to distribute the grants described in 

24 paragraph (1) to any State energy office or en25 tity the proposal of which the Secretary con-
60 

•S 726 IS 

1 siders highly likely to encourage widespread 

2 adoption of solar energy technologies. 

3 (C) LIMITATION.—The amount of a grant 

4 under this subsection shall not exceed 

5 $5,000,000. 

6 (6) TERMINATION.— 

7 (A) INDIVIDUAL GRANTS.—If the Sec8 retary determines that the recipient of a grant 

9 under this subsection fails to act in accordance 

10 with the approved proposal of the recipient, the 

11 Secretary— 

12 (i) shall take such action as is nec13 essary to obtain repayment of the Federal 

14 share of the amount of the grant; and 

15 (ii) shall not provide any further 

16 grants to that recipient under this sub17 section. 

18 (B) ALL GRANTS.—Not later than 1 year 

19 after the date on which the United States 

20 achieves a total installed capacity of 10,000 

21 megawatts (or the equivalent of that capacity) 

22 under the program, the Secretary shall not 

23 make any further grants under this subsection. 
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•S 726 IS 

1 (7) USE OF FUNDS.—A State energy office or 

2 other appropriate entity may use a grant provided 

3 under paragraph (1) to— 

4 (A) demonstrate the commercial applica5 tion of using a concentrated solar power, ad6 vanced photovoltaic, solar water heating, or hy7 brid solar lighting technology to generate or 

8 displace not less than 10 kilowatts at a dem9 onstration site; 

10 (B) install a photovoltaic, solar water heat11 ing, or hybrid solar lighting technology on a 

12 public, private, commercial, industrial, or resi13 dential demonstration site; 

14 (C) monitor an installation described in 

15 paragraph (2) to ensure the successful oper16 ation, and quantify the results, of the tech17 nology; and 

18 (D) increase public awareness of the use of 

19 advanced photovoltaic, solar water heating, or 

20 hybrid solar lighting technology. 

21 (8) AUTHORIZATION OF APPROPRIATIONS.— 

22 There are authorized to be appropriated such sums 

23 as are necessary to carry out this subsection. 

24 (d) SOLAR LIGHTING DEVELOPMENT PROGRAM.— 

25 (1) DEFINITIONS.—In this subsection: 
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•S 726 IS 

1 (A) DEVELOPMENT ACTIVITY.—The term 

2 ‘‘development activity’’ includes the develop3 ment of a technology, material, or manufac4 turing process required— 

5 (i) to collect direct, nondiffuse sun6 light; 

7 (ii) to transmit or otherwise direct 

8 and distribute sunlight into buildings 

9 through any method (including through op10 tical fibers); 

11 (iii) to integrate sunlight with an elec12 tric lighting system in a hybrid configura13 tion with collocated electric lamps; 

14 (iv) to control the spatial, temporal, 

15 or spectral quality of sunlight to improve 

16 energy efficiency, worker productivity, or 

17 retail sales; or 

18 (v) to remotely monitor the perform19 ance of a solar energy system through web20 based metering. 

21 (B) FOR-PROFIT PARTICIPANT.—The term 

22 ‘‘for-profit participant’’ includes the following 

23 entities that operate for profit: 
63 

•S 726 IS 

1 (i) An organization that manufactures 

2 original equipment for emerging compo3 nents or systems used in solar lighting. 

4 (ii) A lighting designer. 

5 (iii) An illumination or architectural 

6 engineer. 

7 (C) SOLAR LIGHTING.— 

8 (i) IN GENERAL.—The term ‘‘solar 

9 lighting’’ means a lighting system that in10 corporates sunlight in accordance with 

11 paragraph (2) and offers the flexibility, 

12 convenience, reliability, and control avail13 able in electric-only lighting. 

14 (ii) EXCLUSIONS.—The term ‘‘solar 

15 lighting’’ does not include an 

16 architecturally-intrusive product in exist17 ence on the date of enactment of this Act, 

18 including— 

19 (I) a skylight; 

20 (II) a lightwell; 

21 (III) a light shelf; or 

22 (IV) a roof monitor. 

23 (2) PURPOSE.—The purpose of this subsection 

24 is to support the development of advanced solar 

25 lighting systems that are— 
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•S 726 IS 

1 (A) multifunctional; 

2 (B) compatible with different electric 

3 lamps and light fixtures used for direct, indi4 rect, ambient, task, or accent lighting; 

5 (C) reconfigurable; 

6 (D) easily added, removed, or modified as 

7 lighting needs change; 

8 (E) easily integrated with electric lights 

9 and controllable to— 

10 (i) ensure that disruptions in lighting 

11 quality or quantity do not occur on cloudy 

12 days or at night; and 

13 (ii) provide dimming and on/off 

14 switching capabilities; 

15 (F) designed to eliminate architectural de16 sign and maintenance problems that limit the 

17 conventional use of daylighting in most build18 ings; 

19 (G) more efficient than electric lighting 

20 systems used in the same lighting applications; 

21 and 

22 (H) more efficient and cost-efficient than 

23 solar generation technologies used in buildings 

24 to convert sunlight into electricity and reconvert 
65 

•S 726 IS 

1 the sunlight back into electrically-generated 

2 light through electric lamps. 

3 (3) DEVELOPMENT ACTIVITIES.— 

4 (A) IN GENERAL.—The Secretary shall 

5 conduct a program under which the Secretary 

6 makes grants to provide the Federal share of 

7 the cost of a development activity under this 

8 subsection to solar lighting technology devel9 opers, including— 

10 (i) for-profit participants; 

11 (ii) National Laboratories; and 

12 (iii) educational institutions. 

13 (B) FEDERAL SHARE.—The Federal share 

14 of the cost of a development activity under this 

15 subsection shall be not more than 50 percent, 

16 as determined by the Secretary. 

17 (C) PROPOSALS.— 

18 (i) IN GENERAL.—To receive a grant 

19 under this section, a solar lighting tech20 nology developer shall submit to the Sec21 retary an application at the time, in the 

22 manner, and containing any information 

23 that the Secretary requires. 

24 (ii) PREFERENCE.—In making a 

25 grant under this subsection, the Secretary 
66 

•S 726 IS 

1 may give preference to a development ac2 tivity led by a for-profit participant. 

3 (4) NATIONAL ACADEMY OF SCIENCES.— 

4 (A) IN GENERAL.—Not later than 2 years 

5 after the date of enactment of this Act, the Sec6 retary shall offer to enter into a contract with 

7 the National Academy of Sciences to conduct a 

8 biannual review of each development activity 

9 carried out during the preceding year under 

10 this subsection. 

11 (B) INCLUSIONS.—The review under this 

12 paragraph shall include, for each development 

13 activity— 

14 (i) an assessment of— 

15 (I) priorities; 

16 (II) technical milestones; and 

17 (III) if appropriate, plans for 

18 technology transfer and any progress 

19 made towards achieving the plans; 

20 and 

21 (ii) a comparison of the merits of 

22 solar lighting with other practicable uses of 

23 solar energy technologies in a building to 

24 reduce the use by the building of non25 renewable energy. 
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•S 726 IS 

1 (5) AUTHORIZATION OF APPROPRIATIONS.— 

2 There is authorized to be appropriated to carry out 

3 this subsection— 

4 (A) for fiscal year 2006, $10,000,000; 

5 (B) for fiscal year 2007, $15,000,000; 

6 (C) for fiscal year 2008, $20,000,000; 

7 (D) for fiscal year 2009, $15,000,000; and 

8 (E) for fiscal year 2010, $10,000,000. 

9 (e) DISTRIBUTED ENERGY.— 

10 (1) IN GENERAL.—The Secretary shall conduct 

11 program under which the Secretary provides grants 

12 to eligible consortia (as determined by the Secretary) 

13 to provide the Federal share of the cost of devel14 oping microcogeneration energy technology. 

15 (2) FEDERAL SHARE.—The Federal share of 

16 the cost of an activity under this subsection shall be 

17 not greater than 40 percent. 

18 (3) USE OF FUNDS.— 

19 (A) IN GENERAL.—A consortium may use 

20 funds provided under this subsection for a 

21 project relating to— 

22 (i) the use of small-scale combined 

23 heat and power in residential heating ap24 pliances; or 

25 (ii) the use of excess power to— 
68 

•S 726 IS 

1 (I) operate other appliances in a 

2 residence; and 

3 (II) supply power to a power 

4 grid. 

5 (B) INCLUSIONS.— A project under sub6 paragraph (A) shall include the use of— 

7 (i) a fuel cell; 

8 (ii) a combined heat and power sys9 tem; 

10 (iii) a microturbine; 

11 (iv) an advanced natural gas turbine; 

12 (v) an advanced internal combustion 

13 engine generator; 

14 (vi) an energy storage device; 

15 (vi) an interconnection standard, pro16 tocol, or piece of equipment; 

17 (vii) ancillary equipment for dispatch 

18 and control; or 

19 (ix) any other energy technologies, as 

20 appropriate. 

21 (4) REPORT.—Concurrent with the submission 

22 by the President of the annual budget request for 

23 fiscal year 2007, the Secretary shall submit to Con24 gress a report describing— 
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1 (A) the goals of the Secretary relating to 

2 microcogeneration energy technology projects 

3 under this subsection, including cost and energy 

4 savings targets for fiscal years 2007 through 

5 2012; 

6 (B) progress made during the preceding 

7 year toward achieving the goals of the Secretary 

8 relating to microcogeneration energy tech9 nology; and 

10 (C) the results of each project carried out 

11 by an eligible consortium under this subsection. 

12 (f) BIOENERGY PROGRAMS.— 

13 (1) IN GENERAL.—The Secretary shall conduct 

14 a program of research, development, and demonstra15 tion of commercial applications of cellulosic biomass, 

16 including— 

17 (A) converting biomass to heat and elec18 tricity; 

19 (B) converting biomass to liquid fuels; 

20 (C) biobased products; 

21 (D) the use of integrated biorefineries to 

22 produce heat, electricity, liquid fuels, and 

23 biobased products; 

24 (E) cross-cutting activities on feedstocks 

25 and enzymes; and 
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•S 726 IS 

1 (F) economic analysis of applications of 

2 cellulosic biomass. 

3 (2) BIOFUELS AND BIOBASED PRODUCTS.—In 

4 carrying out a program relating to a biofuel or 

5 biobased product under paragraph (1), the Sec6 retary, in cooperation with the energy industry, shall 

7 develop— 

8 (A) advanced biochemical and 

9 thermochemical conversion technologies to make 

10 high-value biobased chemical feedstocks and 

11 products, to substitute for petroleum-based 

12 feedstocks and products; 

13 (B) biofuels that are price-competitive with 

14 gasoline or diesel in— 

15 (i) internal combustion engines; or 

16 (ii) fuel cell-powered vehicles; 

17 (C) biobased products from a variety of 

18 feedstocks, including grains, cellulosic biomass, 

19 and agricultural byproducts; and 

20 (D) advanced biotechnology processes to 

21 make biofuels and biobased products, with em22 phasis on development of biorefinery tech23 nologies, including enzyme-based processing 

24 technologies. 
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•S 726 IS 

1 (3) BIOMASS INTEGRATED REFINERY DEM2 ONSTRATION.— 

3 (A) IN GENERAL.—The Secretary shall 

4 conduct a program under which the Secretary 

5 provides grants to advanced biorefineries to 

6 provide the Federal share of the cost of dem7 onstrating the commercial application of inte8 grated biorefineries. 

9 (B) LIMITATIONS.— 

10 (i) QUANTITY OF GRANTS.—The Sec11 retary shall provide grants under this 

12 paragraph to not fewer than 5 advanced 

13 biorefineries. 

14 (ii) FEDERAL SHARE.—The Federal 

15 share of the cost of a demonstration under 

16 this paragraph shall not exceed 40 percent. 

17 (iii) MAXIMUM AMOUNT.—The Sec18 retary shall provide not greater than 

19 $100,000,000 for a biorefinery demonstra20 tion under this paragraph. 

21 (C) FACTORS.—The Secretary shall select 

22 biorefinery demonstrations under this sub23 section in a manner that supports— 

24 (i) the geographic diversity of the 

25 demonstrations; 
72 

•S 726 IS 

1 (ii) the demonstration of a wide vari2 ety of cellulosic biomass feedstocks; 

3 (iii) the commercial application of bio4 mass technologies for a variety of uses, in5 cluding— 

6 (I) liquid transportation fuels; 

7 (II) high-value biobased chemi8 cals; 

9 (III) substitutes for petroleum10 based feedstocks and products; and 

11 (IV) energy in the form of elec12 tricity or useful heat; and 

13 (iv) the demonstration of the collec14 tion and treatment of a variety of biomass 

15 feedstocks. 

16 (D) PROPOSALS.— 

17 (i) IN GENERAL.—To obtain a grant 

18 under this subsection, not later than 180 

19 days after the date of enactment of this 

20 Act, an advanced biorefinery shall submit 

21 to the Secretary a proposal in the time and 

22 in the manner, and containing any infor23 mation, that the Secretary requires. 

24 (ii) CONSIDERATION.—In making a 

25 grant under this subsection, the Secretary 
73 

•S 726 IS 

1 shall select advanced biorefineries the pro2 posals of which— 

3 (I) demonstrate that the project 

4 of the biorefinery will operate profit5 ably without a direct Federal subsidy 

6 after initial construction costs are 

7 paid; and 

8 (II) allow for easy replication of 

9 the biorefinery, as determined by the 

10 Secretary. 

11 SEC. 104. HYDROGEN AND FUEL CELL INITIATIVE. 

12 (a) DEFINITIONS.—In this section: 

13 (1) ADVISORY COMMITTEE.—The term ‘‘Advi14 sory Committee’’ means the Hydrogen Technical and 

15 Fuel Cell Advisory Committee established by sub16 section (e)(1). 

17 (2) DEPARTMENT.—The term ‘‘Department’’ 

18 means the Department of Energy. 

19 (3) FUEL CELL.—The term ‘‘fuel cell’’ means a 

20 device that directly converts the chemical energy of 

21 a fuel and an oxidant into electricity by an electro22 chemical process that take place at separate elec23 trodes in the device. 
74 

•S 726 IS 

1 (4) INFRASTRUCTURE.—The term ‘‘infrastruc2 ture’’ means any equipment, system, or facility used 

3 to produce, distribute, deliver, or store hydrogen. 

4 (5) LIGHT DUTY VEHICLE.—The term ‘‘light 

5 duty vehicle’’ means a car or truck classified by the 

6 Department of Transportation as a Class I or IIA 

7 vehicle. 

8 (6) SECRETARY.—The term ‘‘Secretary’’ means 

9 the Secretary of Energy. 

10 (b) PLAN.— 

11 (1) IN GENERAL.—Not later than 180 days 

12 after the date of enactment of this Act, the Sec13 retary shall submit to Congress a coordinated plan 

14 for carrying out— 

15 (A) the programs described in this section; 

16 and 

17 (B) any other program of the Department 

18 that is directly related to fuel cells or hydrogen. 

19 (2) INCLUSIONS.—The plan shall include a de20 scription of— 

21 (A) for the first 5 years beginning on the 

22 date of enactment of this Act, an agenda for 

23 each program under this section, including the 

24 agenda for each activity under subsection 

25 (c)(1); 
75 

•S 726 IS 

1 (B) each type of entity that will carry out 

2 an activity under this section and the role each 

3 entity is expected to play; 

4 (C) any milestone that will be used to 

5 evaluate a program carried out during the first 

6 5 years beginning on the date of enactment of 

7 this Act; 

8 (D) the most significant technical and non9 technical obstacles to achieving the goals de10 scribed in subsection (c)(2) and the means by 

11 which each program under this section will ad12 dress the obstacles; and 

13 (E) any policy assumption that is implicit 

14 in the plan, including any assumption that af15 fects a source of hydrogen or the marketability 

16 of hydrogen-related products. 

17 (c) PROGRAMS.— 

18 (1) ACTIVITIES.—The Secretary, in partnership 

19 with the private sector, shall conduct programs to 

20 address— 

21 (A) the production of hydrogen from di22 verse energy sources, including— 

23 (i) fossil fuels (including carbon cap24 ture and sequestration); 
76 

•S 726 IS 

1 (ii) hydrogen-carrier fuels (including 

2 ethanol and methanol); 

3 (iii) renewable energy resources, in4 cluding biomass; and 

5 (iv) nuclear energy; 

6 (B) the use of hydrogen for commercial, 

7 industrial, and residential electric power genera8 tion; 

9 (C) safe delivery of hydrogen or hydrogen10 carrier fuels, including— 

11 (i) transmission by pipeline and other 

12 distribution methods; and 

13 (ii) convenient and economic refueling 

14 of vehicles— 

15 (I) at central refueling stations; 

16 or 

17 (II) through distributed on-site 

18 generation; 

19 (D) advanced vehicle technologies, includ20 ing— 

21 (i) engine and emission control sys22 tems; 

23 (ii) energy storage, electric propulsion, 

24 and hybrid systems; 

25 (iii) automotive materials; and 
77 

•S 726 IS 

1 (iv) other advanced vehicle tech2 nologies; 

3 (E) storage of hydrogen and hydrogen-car4 rier fuels, including development of materials 

5 for safe and economic storage in gaseous, liq6 uid, or solid form at refueling facilities and on7 board vehicles; 

8 (F) the development of safe, durable, af9 fordable, and efficient fuel cells, including— 

10 (i) fuel-flexible fuel cell power sys11 tems; 

12 (ii) improved manufacturing proc13 esses; 

14 (iii) high-temperature membranes; 

15 (iv) cost-effective fuel processing for 

16 natural gas; 

17 (v) fuel cell stack and system reli18 ability; 

19 (vi) low temperature operation; and 

20 (vii) cold start capability; 

21 (G) development, after consultation with 

22 the private sector, of necessary codes and 

23 standards (including international codes and 

24 standards and voluntary consensus standards 

25 adopted in accordance with Office of Manage-
78 

•S 726 IS 

1 ment and Budget Circular A–119) and safety 

2 practices for the production, distribution, stor3 age, and use of hydrogen, hydrogen-carrier 

4 fuels, and related products; and 

5 (H) a public information program to im6 prove the knowledge and acceptance of the pub7 lic of hydrogen-based systems. 

8 (2) PROGRAM GOALS.— 

9 (A) VEHICLES.—The goals of programs 

10 under this section relating to vehicles include 

11 the facilitation of— 

12 (i) the making of a commitment by 

13 automakers to offer safe, affordable, and 

14 technically viable hydrogen fuel cell vehi15 cles in the mass market in the United 

16 States by 2015; and 

17 (ii) the production, delivery, and ac18 ceptance by consumers in the United 

19 States of model year 2020 hydrogen fuel 

20 cell and other hydrogen-powered vehicles 

21 with— 

22 (I) a range of at least 300 miles; 

23 (II) improved performance and 

24 ease of driving; 
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•S 726 IS 

1 (III) safety and performance 

2 comparable to vehicle technologies in 

3 the market on the date of enactment 

4 of this Act; and 

5 (IV) compared to light duty vehi6 cles produced for model year 2005— 

7 (aa) substantially higher fuel 

8 economy; 

9 (bb) substantially lower 

10 emissions of air pollutants; and 

11 (cc) equivalent or improved 

12 vehicle fuel system crash integ13 rity and occupant protection. 

14 (B) HYDROGEN ENERGY AND ENERGY IN15 FRASTRUCTURE.—The goals of programs under 

16 this section relating to hydrogen energy and en17 ergy infrastructure include establishing infra18 structure by not later than 2020 that will pro19 vide— 

20 (i) safe and convenient refueling; 

21 (ii) improved overall efficiency; 

22 (iii) widespread availability of hydro23 gen from domestic energy sources 

24 through— 
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1 (I) production, taking into con2 sideration emissions levels; 

3 (II) delivery, including trans4 mission by pipeline and other distribu5 tion methods for hydrogen; and 

6 (III) storage, including storage in 

7 surface transportation vehicles; 

8 (iv) hydrogen for fuel cells, internal 

9 combustion engines, and other energy con10 version devices for portable, stationary, 

11 and transportation applications; and 

12 (v) other technologies in accordance 

13 with the plan of the Department under 

14 subsection (b). 

15 (C) FUEL CELLS.—The goals of programs 

16 under this section relating to fuel cells and the 

17 portable, stationary, and transportation applica18 tions of fuel cells include— 

19 (i) producing safe, economical, and 

20 environmentally sound hydrogen fuel cells; 

21 (ii) producing fuel cells for light duty 

22 vehicles and other vehicles; and 

23 (iii) producing other technologies in 

24 accordance with the plan of the Depart25 ment under subsection (b). 
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1 (3) DEMONSTRATION PROJECTS.— 

2 (A) IN GENERAL.—In carrying out pro3 grams under this section, the Secretary shall 

4 fund a limited number of demonstration 

5 projects, taking into consideration the maturity, 

6 cost-effectiveness, and environmental impacts of 

7 the technologies supporting each project. 

8 (B) PROJECT SELECTION.— 

9 (i) IN GENERAL.—In selecting 

10 projects under this paragraph, the Sec11 retary shall, to the maximum extent prac12 ticable and in accordance with public inter13 est, select projects that— 

14 (I) use hydrogen and related 

15 products at facilities or installations 

16 in existence on the date of enactment 

17 of this Act, including office buildings, 

18 military bases, vehicle fleet centers, 

19 transit bus authorities, and units of 

20 the National Park System; 

21 (II) depend on reliable power 

22 from hydrogen to carry out essential 

23 activities; 
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•S 726 IS 

1 (III) lead to the replication of hy2 drogen technologies and draw hydro3 gen technologies into the marketplace; 

4 (IV) include vehicle, portable, 

5 and stationary demonstrations of fuel 

6 cell and hydrogen-based energy tech7 nologies; 

8 (V) address the interdependency 

9 of demand for hydrogen fuel cell ap10 plications and hydrogen fuel infra11 structure; 

12 (VI) raise awareness of hydrogen 

13 technology among the public; 

14 (VII) facilitate the identification 

15 of an optimum technology among 

16 competing alternatives; 

17 (VIII) address distributed gen18 eration using renewable sources; and 

19 (IX) address applications specific 

20 to rural or remote locations, including 

21 isolated villages and islands, the Na22 tional Park System, and Indian res23 ervations. 

24 (ii) PREFERENCE.—The Secretary 

25 shall give preference to a project that ad-
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1 dresses more than 1 element described in 

2 clause (i). 

3 (4) DEPLOYMENT.—In carrying out programs 

4 under this section, the Secretary, in partnership with 

5 the private sector, shall conduct activities to facili6 tate the deployment of hydrogen energy and energy 

7 infrastructure, fuel cells, and advanced vehicle tech8 nologies. 

9 (5) FUNDING.— 

10 (A) IN GENERAL.—The Secretary shall 

11 carry out the programs under this section using 

12 a competitive, merit-based review process in ac13 cordance with the generally applicable Federal 

14 law (including regulations) governing awards of 

15 financial assistance, contracts, and other agree16 ments. 

17 (B) RESEARCH CENTERS.—The Secretary 

18 may carry out an activity under this section by 

19 funding a nationally recognized university-based 

20 or Federal laboratory research center. 

21 (6) COST SHARING.— 

22 (A) RESEARCH AND DEVELOPMENT.— 

23 (i) NON-FEDERAL SHARE.—Except as 

24 otherwise provided in this section, to be eli25 gible for assistance under this section, the 
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1 Secretary shall require each non-Federal 

2 source of a research and development pro3 gram under this section to provide at least 

4 20 percent of the cost of the project. 

5 (ii) REDUCING AND ELIMINATING

6 NON-FEDERAL SHARE.—The Secretary 

7 may reduce or eliminate the non-Federal 

8 share required under clause (i) if the Sec9 retary determines that the research and 

10 development— 

11 (I) is of a basic or fundamental 

12 nature; or 

13 (II) involves a technical analysis 

14 or an educational activity. 

15 (B) DEMONSTRATION AND COMMERCIAL

16 APPLICATION.— 

17 (i) NON-FEDERAL SHARE.—Except as 

18 otherwise provided in this section, to be eli19 gible for assistance under this section, the 

20 Secretary shall require that at least 50 

21 percent of the costs directly and specifi22 cally related to any demonstration or com23 mercial application project under this sec24 tion be provided by non-Federal sources. 
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•S 726 IS 

1 (ii) REDUCING NON-FEDERAL

2 SHARE.—The Secretary may reduce the 

3 non-Federal share required under clause 

4 (i) if the Secretary determines that the re5 duction— 

6 (I) is necessary and appropriate, 

7 taking into consideration any techno8 logical risk involved in the project; 

9 and 

10 (II) is necessary to achieve the 

11 goals of this section. 

12 (C) CALCULATION OF AMOUNT.—In calcu13 lating the amount of the non-Federal share pro14 vided under subparagraphs (A) and (B), the 

15 Secretary may include the costs of personnel, 

16 services, equipment, and other resources relat17 ing to a project. 

18 (D) SIZE OF NON-FEDERAL SHARE.—The 

19 Secretary may consider the amount of the non20 Federal share in selecting a project under this 

21 section. 

22 (7) DISCLOSURE.—Section 623 of the Energy 

23 Policy Act of 1992 (42 U.S.C. 13293) shall apply to 

24 any project carried out through a grant, a coopera25 tive agreement, or a contract under this section. 
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1 (d) INTERAGENCY TASK FORCE.— 

2 (1) ESTABLISHMENT.—Not later than 120 days 

3 after the date of enactment of this Act, the Presi4 dent shall establish an interagency task force— 

5 (A) the chairperson of which shall be the 

6 Secretary; and 

7 (B) that includes representatives from— 

8 (i) the Office of Science and Tech9 nology Policy within the Executive Office 

10 of the President; 

11 (ii) the Department of Transpor12 tation; 

13 (iii) the Department of Defense; 

14 (iv) the Department of Commerce (in15 cluding the National Institute of Standards 

16 and Technology); 

17 (v) the Department of State; 

18 (vi) the Environmental Protection 

19 Agency; 

20 (vii) the National Aeronautics and 

21 Space Administration; and 

22 (viii) other Federal agencies as the 

23 President determines appropriate. 

24 (2) GOALS.—The goals of the interagency task 

25 force shall be— 
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•S 726 IS 

1 (i) to provide a safe, economical, and 

2 environmentally sound fuel infrastructure 

3 for hydrogen and hydrogen-carrier fuels, 

4 including an infrastructure that supports 

5 buses and other fleet transportation; 

6 (ii) to support the use of fuel cells in 

7 government and other applications, includ8 ing portable, stationary, and transpor9 tation applications; 

10 (iii) to promote distributed power gen11 eration, including the generation of com12 bined heat, power, and clean fuels (includ13 ing hydrogen); 

14 (iv) to develop uniform hydrogen 

15 codes, standards, and safety protocols; and 

16 (v) to support the integrity, safety, 

17 and performance of vehicle hydrogen fuel 

18 systems. 

19 (B) DUTIES.— 

20 (i) IN GENERAL.—The interagency 

21 task force may organize workshops and 

22 conferences, issue publications, and create 

23 databases to carry out any activity de24 scribed in clause (ii). 
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•S 726 IS 

1 (ii) ACTIVITIES.—The activities re2 ferred to in clause (i) are— 

3 (I) to foster the exchange of ge4 neric, nonproprietary information and 

5 technology among industry, academia, 

6 and government; 

7 (II) to develop and maintain an 

8 inventory and assessment of hydrogen, 

9 fuel cells, and other advanced tech10 nologies, including the commercial ca11 pability of each technology for the 

12 economic and environmentally safe 

13 production, distribution, delivery, stor14 age, and use of hydrogen; 

15 (III) to integrate technical and 

16 other information made available as a 

17 result of the programs and activities 

18 under this section; 

19 (IV) to promote introduction to 

20 the market of infrastructure for hy21 drogen fuel vehicles; and 

22 (V) to conduct an informative 

23 program to provide hydrogen and fuel 

24 cell information to potential end-users. 
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•S 726 IS 

1 (3) AGENCY COOPERATION.—The head of each 

2 Federal agency shall cooperate with and furnish in3 formation to the interagency task force, the Advisory 

4 Committee, and the Department. 

5 (e) ADVISORY COMMITTEE.— 

6 (1) ESTABLISHMENT.—The Hydrogen Tech7 nical and Fuel Cell Advisory Committee is estab8 lished to advise the Secretary on programs and ac9 tivities under this section. 

10 (2) MEMBERSHIP.— 

11 (A) MEMBERS.— 

12 (i) IN GENERAL.—The Advisory Com13 mittee shall consist of not less than 12, 

14 and not more than 25, members. 

15 (ii) APPOINTMENT.—Each member of 

16 the Advisory Committee shall be appointed 

17 by the Secretary. 

18 (iii) REQUIREMENTS.—In making an 

19 appointment under clause (ii), the Sec20 retary shall appoint a member to rep21 resent— 

22 (I) domestic automobile industry; 

23 (II) academia; 

24 (III) professional societies; 

25 (IV) government agencies; 
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•S 726 IS 

1 (V) Federal laboratories; 

2 (VI) foreign automobile industry; 

3 and 

4 (VII) financial, environmental, 

5 and other organizations, as the Sec6 retary determines appropriated based 

7 on an assessment of the technical and 

8 other qualifications of each committee 

9 member and the needs of the Advisory 

10 Committee. 

11 (B) TERMS.— 

12 (i) IN GENERAL.—The term of a 

13 member of the Advisory Committee shall 

14 be not more than 3 years. 

15 (ii) INTERVALS.—The Secretary may 

16 appoint members of the Advisory Com17 mittee in a manner that allows the terms 

18 of the members serving at any time to ex19 pire at staggered intervals to ensure con20 tinuity in the functioning of the Advisory 

21 Committee. 

22 (iii) REAPPOINTMENT.—A member of 

23 the Advisory Committee may be re24 appointed when the term of the member 

25 expires. 
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•S 726 IS 

1 (C) CHAIRPERSON.—The Advisory Com2 mittee shall elect a chairperson at the initial 

3 meeting of the Advisory Committee. 

4 (3) DUTIES.—The Advisory Committee shall re5 view and make recommendations to the Secretary re6 garding— 

7 (A) carrying out programs and activities 

8 under this section; 

9 (B) the safety, economical, and environ10 mental consequences of technologies for the 

11 production, distribution, delivery, storage, or 

12 use of hydrogen energy and fuel cells; and 

13 (C) the plan established under subsection 

14 (b). 

15 (4) CONSIDERATION OF RECOMMENDATIONS.— 

16 The Secretary shall consider, but need not adopt, 

17 any recommendation of the Advisory Committee 

18 under paragraph (3). 

19 (5) BIENNIAL REPORT.— 

20 (A) IN GENERAL.—Not later than 2 years 

21 after the date of enactment of this Act, and bi22 ennially thereafter, concurrent with the submis23 sion to Congress by the President of a budget 

24 proposal, the Secretary shall submit to Con25 gress a biennial report describing any rec-
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•S 726 IS 

1 ommendation made by the Advisory Committee 

2 during the preceding 2 years. 

3 (B) INCLUSIONS.—The biennial report 

4 shall include— 

5 (i) a description of the means through 

6 which the Secretary has carried out or 

7 plans to carry out the recommendations 

8 described in the report; or 

9 (ii) if the Secretary decides not to 

10 carry out a recommendation described in 

11 the report, an explanation of that decision. 

12 (f) EXTERNAL REVIEW.— 

13 (1) PLAN.— 

14 (A) IN GENERAL.—The Secretary shall 

15 enter into an agreement with the National 

16 Academy of Sciences to review the plan under 

17 subsection (b). 

18 (B) TIMING OF REVIEW.—Not later than 

19 180 days after receipt of the plan from the Sec20 retary, the National Academy of Sciences shall 

21 submit to the Secretary the results of the re22 view under subparagraph (A). 

23 (C) TRANSMISSION OF REVIEW.—Not later 

24 than 45 days after receipt of the results of the 
93 

•S 726 IS 

1 review under subparagraph (B), the Secretary 

2 shall transmit to Congress— 

3 (i) a copy of the results of the review; 

4 and 

5 (ii)(I) a plan to carry out any rec6 ommendation described in the review; or 

7 (II) if the Secretary decides not to 

8 carry out a recommendation described in 

9 the review, an explanation of that decision. 

10 (2) ADDITIONAL REVIEW.— 

11 (A) IN GENERAL.—The Secretary shall 

12 enter into an agreement with the National 

13 Academy of Sciences to review the programs de14 scribed in subsection (c) during the fourth year 

15 after the date of enactment of this Act. 

16 (B) INCLUSIONS.—The review under sub17 paragraph (A) shall include— 

18 (i) a description of any research pri19 ority or technical milestone established 

20 during the preceding 3 years; and 

21 (ii) an evaluation of any progress 

22 made toward achieving a priority or mile23 stone described in clause (i) during the 

24 preceding 3 years. 
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•S 726 IS 

1 (C) TIMING OF REVIEW.—Not later than 5 

2 years after the date of enactment of this Act, 

3 the National Academy of Sciences shall— 

4 (i) complete the review under sub5 paragraph (A); and 

6 (ii) submit to the Secretary a report 

7 describing the results of the review. 

8 (D) TRANSMISSION.—Not later than 45 

9 days after receipt of the results of the review 

10 under subparagraph (C)(ii), the Secretary shall 

11 transmit to Congress— 

12 (i) a copy of the results of the review; 

13 and 

14 (ii)(I) a plan to carry out any rec15 ommendation described in the review; or 

16 (II) if the Secretary decides not to 

17 carry out a recommendation described in 

18 the review, an explanation of that decision. 

19 (g) REPRESENTATION.—The Secretary, in coordina20 tion with the Department of Transportation, the National 

21 Institute of Standards and Technology, and other relevant 

22 Federal agencies, may represent the interests of the 

23 United States with respect to any activity or program 

24 under this section before a government or nongovern25 mental organization, including— 
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•S 726 IS 

1 (1) other Federal, State, regional, and local 

2 governments; 

3 (2) industry (and industry representatives), in4 cluding members of the energy and transportation 

5 industries; and 

6 (3) in consultation with the Department of 

7 State, foreign governments and representatives of 

8 those governments, including international organiza9 tions. 

10 (h) EFFECT OF SECTION.—Nothing in this section 

11 decreases the authority of the Secretary of Transportation 

12 as in existence on the day before the date of enactment 

13 of this Act with respect to— 

14 (1) representation of the interests of the United 

15 States with respect to activities and programs under 

16 title 49, United States Code; 

17 (2) the regulation of hazardous materials trans18 portation under chapter 51 of title 49, United States 

19 Code; 

20 (3) the regulation of motor vehicle safety under 

21 chapter 301 of title 49, United States Code; 

22 (4) automobile fuel economy under chapter 329 

23 of title 49, United States Code; 

24 (5) the support and promotion of research, de25 velopment, and deployment activities relating to ad-
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•S 726 IS 

1 vanced vehicle technologies under section 5506 of 

2 title 49, United States Code; 

3 (6) research into, and regulation of, the fuel 

4 systems integrity, standards, and safety of hydrogen5 powered vehicles under subtitle VI of title 49, 

6 United States Code; or 

7 (7) the regulation of pipeline safety under chap8 ter 601 of title 49, United States Code. 

9 (i) AUTHORIZATION OF APPROPRIATIONS.—There is 

10 authorized to be appropriated to the Secretary to carry 

11 out this section— 

12 (1) $273,500,000 for fiscal year 2006; 

13 (2) $375,000,000 for fiscal year 2007; 

14 (3) $450,000,000 for fiscal year 2008; 

15 (4) $500,000,000 for fiscal year 2009; and 

16 (5) $550,000,000 for fiscal year 2010. 

17 SEC. 105. CLARIFICATION OF EXISTING COGENERATION 

18 CONTRACTS. 

19 (a) TERMINATION OF MANDATORY PURCHASE AND

20 SALE REQUIREMENTS.—Section 210 of the Public Utility 

21 Regulatory Policies Act of 1978 (16 U.S.C. 824a–3) is 

22 amended— 

23 (1) by redesignating subsections (k) and (l) as 

24 subsections (m) and (n), respectively; and 
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•S 726 IS 

1 (2) by inserting after subsection (j) the fol2 lowing: 

3 ‘‘(k) TERMINATION OF MANDATORY PURCHASE AND

4 SALE REQUIREMENTS.—(1) After the date of enactment 

5 of this subsection, no electric utility shall be required to 

6 enter into a new contract or obligation to purchase electric 

7 energy from a qualifying cogeneration facility or a quali8 fying small power production facility under this section if 

9 the Commission finds that the qualifying cogeneration fa10 cility or qualifying small power production facility has 

11 nondiscriminatory access to— 

12 ‘‘(A)(i) independently administered, auction13 based day ahead and real time wholesale markets for 

14 the sale of electric energy; and 

15 ‘‘(ii) wholesale markets for long-term sales of 

16 capacity and electric energy; or 

17 ‘‘(B)(i) transmission and interconnection serv18 ices that are provided by a Commission-approved re19 gional transmission entity and administered pursu20 ant to an open access transmission tariff that af21 fords nondiscriminatory treatment to all customers; 

22 and 

23 ‘‘(ii) competitive wholesale markets that provide 

24 a meaningful opportunity to sell capacity, including 

25 long-term and short-term sales, and electric energy, 
98 

•S 726 IS 

1 including long-term, short-term, and real-time sales, 

2 to buyers other than the utility to which the quali3 fying facility is interconnected, except that, in deter4 mining whether a meaningful opportunity to sell ex5 ists, the Commission shall consider, among other 

6 factors, evidence of transactions within the relevant 

7 market; or 

8 ‘‘(C) wholesale markets for the sale of capacity 

9 and electric energy that are, at a minimum, of com10 parable competitive quality as markets described in 

11 subparagraphs (A) and (B). 

12 ‘‘(2)(A) In this paragraph, the term ‘existing quali13 fying cogeneration facility’ means a facility that— 

14 ‘‘(i) was a qualifying cogeneration facility on 

15 the date of enactment of this paragraph; or 

16 ‘‘(ii) had filed with the Commission a notice of 

17 self-certification, a self-recertification, or an applica18 tion for Commission certification under section 

19 292.207 of title 18, Code of Federal Regulations (or 

20 a successor regulation), prior to the date on which 

21 the Commission issues the final rule required by 

22 subsection (l). 

23 ‘‘(B) After the date of enactment of this subpara24 graph, no electric utility shall be required pursuant to this 

25 section to enter into a new contract or obligation to pur-
99 

•S 726 IS 

1 chase from or sell electric energy to a facility that is not 

2 an existing qualifying cogeneration facility unless the facil3 ity meets the criteria for qualifying cogeneration facilities 

4 established by the Commission pursuant to the rulemaking 

5 required by subsection (l). 

6 ‘‘(3)(A) Any electric utility may file an application 

7 with the Commission for relief from the mandatory pur8 chase obligation pursuant to this subsection on a service 

9 territory-wide basis. 

10 ‘‘(B) The application shall set forth the factual basis 

11 on which relief is requested and describe why the condi12 tions set forth in subparagraphs (A), (B) or (C) of para13 graph (1) of this subsection have been met. 

14 ‘‘(C) After notice (including sufficient notice to po15 tentially affected qualifying cogeneration facilities and 

16 qualifying small power production facilities) and an oppor17 tunity for comment, the Commission shall make a final 

18 determination within 90 days of receipt of the application 

19 regarding whether the conditions set forth in subpara20 graphs (A), (B) or (C) of paragraph (1) have been met. 

21 ‘‘(4)(A) At any time after the Commission makes a 

22 finding under paragraph (3) relieving an electric utility 

23 of the obligation of the electric utility to purchase electric 

24 energy, a qualifying cogeneration facility, a qualifying 

25 small power production facility, a State agency, or any 
100 

•S 726 IS 

1 other affected person may apply to the Commission for 

2 an order reinstating the obligation of the electric utility 

3 to purchase electric energy under this section. 

4 ‘‘(B) The application shall set forth the factual basis 

5 on which the application is based and describe why the 

6 conditions set forth in subparagraphs (A), (B) or (C) of 

7 paragraph (1) of this subsection are no longer met. 

8 ‘‘(C) After notice (including sufficient notice to po9 tentially affected utilities) and opportunity for comment, 

10 the Commission shall issue an order within 90 days after 

11 receipt of the application reinstating the obligation of the 

12 electric utility to purchase electric energy under this sec13 tion if the Commission finds that the conditions set forth 

14 in subparagraph (A), (B), or (C) of paragraph (1) that 

15 relieved the obligation to purchase, are no longer met. 

16 ‘‘(5) After the date of enactment of this subsection, 

17 no electric utility shall be required to enter into a new 

18 contract or obligation to sell electric energy to a qualifying 

19 cogeneration facility or a qualifying small power produc20 tion facility under this section if the Commission finds 

21 that— 

22 ‘‘(A) competing retail electric suppliers are will23 ing and able to sell and deliver electric energy to the 

24 qualifying cogeneration facility or qualifying small 

25 power production facility; and 
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1 ‘‘(B) the electric utility is not required by State 

2 law to sell electric energy in the service territory of 

3 the electric utility. 

4 ‘‘(6) Nothing in this subsection affects the rights or 

5 remedies of any party under any contract or obligation, 

6 in effect or pending approval before the appropriate State 

7 regulatory authority or non-regulated electric utility on 

8 the date of enactment of this subsection, to purchase elec9 tric energy or capacity from or to sell electric energy or 

10 capacity to a qualifying cogeneration facility or qualifying 

11 small power production facility under this Act (including 

12 the right to recover costs of purchasing electric energy or 

13 capacity). 

14 ‘‘(7)(A) The Commission shall issue and enforce such 

15 regulations as are necessary to ensure that an electric util16 ity that purchases electric energy or capacity from a quali17 fying cogeneration facility or qualifying small power pro18 duction facility in accordance with any legally enforceable 

19 obligation entered into or imposed under this section re20 covers all prudently incurred costs associated with the pur21 chase. 

22 ‘‘(B) A regulation under subparagraph (A) shall be 

23 enforceable in accordance with the provisions of law appli24 cable to enforcement of regulations under the Federal 

25 Power Act (16 U.S.C. 791a et seq.). 
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1 ‘‘(l) RULEMAKING FOR NEW QUALIFYING FACILI2 TIES.—(1)(A) Not later than 180 days after the date of 

3 enactment of this subparagraph, the Commission shall 

4 issue a rule revising the criteria established under section 

5 292.205 of title 18, Code of Federal Regulations (or a suc6 cessor regulation), for new qualifying cogeneration facili7 ties seeking to sell electric energy pursuant to section 210 

8 to ensure that— 

9 ‘‘(i) the thermal energy output of a new quali10 fying cogeneration facility is used in a productive 

11 and beneficial manner; 

12 ‘‘(ii) the electrical, thermal, and chemical out13 put of the cogeneration facility is used fundamen14 tally for industrial, commercial, or institutional pur15 poses and is not intended fundamentally for sale to 

16 an electric utility, taking into account technological, 

17 efficiency, economic, and variable thermal energy re18 quirements, as well as State laws applicable to sales 

19 of electric energy from a qualifying facility to the 

20 host facility of the qualifying facility; and 

21 ‘‘(iii) continuing progress is made in the devel22 opment of efficient electric energy generating tech23 nology. 
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•S 726 IS 

1 ‘‘(B)(i) The rule issued pursuant to subparagraph 

2 (A) shall be applicable only to facilities that seek to sell 

3 electric energy pursuant to section 210. 

4 ‘‘(ii) For all other purposes, except as specifically pro5 vided in section (k)(2)(A), qualifying facility status shall 

6 be determined in accordance with this Act. 

7 ‘‘(2) Notwithstanding rule revisions under paragraph 

8 (1), the criteria of the Commission for qualifying cogen9 eration facilities in effect prior to the date on which the 

10 Commission issues the final rule required by paragraph 

11 (1) shall continue to apply to any cogeneration facility 

12 that— 

13 ‘‘(A) was a qualifying cogeneration facility on 

14 the date of enactment of this paragraph, or 

15 ‘‘(B) had filed with the Commission a notice of 

16 self-certification, self-recertification, or an applica17 tion for Commission certification under section 

18 292.207 of title 18, Code of Federal Regulations (or 

19 a successor regulation) prior to the date on which 

20 the Commission issues the final rule required by 

21 paragraph (1).’’. 

22 (b) ELIMINATION OF OWNERSHIP LIMITATIONS.— 

23 (1) QUALIFYING SMALL POWER PRODUCTION

24 FACILITY.—Section 3(17) of the Federal Power Act 
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1 (16 U.S.C. 796(17)) is amended by striking sub2 paragraph (C) and inserting the following: 

3 ‘‘(C) ‘qualifying small power production facility’ 

4 means a small power production facility that the Commis5 sion determines, by rule, meets such requirements (includ6 ing requirements respecting fuel use, fuel efficiency, and 

7 reliability) as the Commission may, by rule, prescribe;’’. 

8 (2) QUALIFYING COGENERATION FACILITY.— 

9 Section 3(18) of the Federal Power Act (16 U.S.C. 

10 796(18)) is amended by striking subparagraph (B) 

11 and inserting the following: 

12 ‘‘(B) ‘qualifying cogeneration facility’ means a cogen13 eration facility that the Commission determines, by rule, 

14 meets such requirements (including requirements respect15 ing minimum size, fuel use, and fuel efficiency) as the 

16 Commission may, by rule, prescribe;’’. 

17 SEC. 106. COGENERATION DEVELOPMENT. 

18 (a) ELECTRICAL GENERATION AND RATES.— 

19 (1) BENEFITS OF DISTRIBUTED GENERATION

20 OF ELECTRICITY.—Part II of the Federal Power Act 

21 (16 U.S.C. 824 et seq.) (as amended by section 105) 

22 is amended by adding at the end the following: 

23 ‘‘SEC. 215. BENEFITS OF DISTRIBUTED GENERATION OF 

24 ELECTRICITY. 

25 ‘‘(a) STUDY.— 
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1 ‘‘(1) IN GENERAL.— 

2 ‘‘(A) POTENTIAL BENEFITS.—The Sec3 retary, in consultation with the Commission, 

4 shall conduct a study of the potential benefits 

5 of cogeneration and small power production. 

6 ‘‘(B) RECIPIENTS.—The benefits described 

7 in subparagraph (A) include benefits that are 

8 received directly or indirectly by— 

9 ‘‘(i) an electricity distribution or 

10 transmission service provider; 

11 ‘‘(ii) other customers served by an 

12 electricity distribution or transmission 

13 service provider; and 

14 ‘‘(iii) the general public in the area 

15 served by the public utility in which the co16 generator or small power producer is lo17 cated. 

18 ‘‘(2) INCLUSIONS.—The study shall include an 

19 analysis of the potential benefits of— 

20 ‘‘(A) increased system reliability; 

21 ‘‘(B) improved power quality; 

22 ‘‘(C) the provision of ancillary services; 

23 ‘‘(D) reduction of peak power requirements 

24 through onsite generation; 
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1 ‘‘(E) the provision of reactive power or 

2 volt-ampere reactives; 

3 ‘‘(F) an emergency supply of power; 

4 ‘‘(G) offsets to investments in generation, 

5 transmission, or distribution facilities that 

6 would otherwise be recovered through rates; 

7 ‘‘(H) diminished land use effects and 

8 right-of-way acquisition costs; and 

9 ‘‘(I) reducing the vulnerability of a system 

10 to terrorism. 

11 ‘‘(3) VALUATION OF BENEFITS.—In carrying 

12 out the study, the Secretary shall determine an ap13 propriate method of valuing potential benefits under 

14 varying circumstances for individual cogeneration or 

15 small power production units. 

16 ‘‘(b) REPORT.—Not later than 18 months after the 

17 date of enactment of this section, the Secretary shall— 

18 ‘‘(1) complete the study; 

19 ‘‘(2) provide an opportunity for public comment 

20 on the results of the study; and 

21 ‘‘(3) submit to the President and Congress a 

22 report describing— 

23 ‘‘(A) the results of the study; and 

24 ‘‘(B) information relating to the public 

25 comments received under paragraph (2). 
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1 ‘‘(c) PUBLICATION.—After submission of the report 

2 under subsection (b) to the President and Congress, the 

3 Secretary shall publish the report.’’. 

4 (2) RATE AND CHARGES; SCHEDULES; SUSPEN5 SION OF NEW RATES.—Section 205 of the Federal 

6 Power Act (16 U.S.C. 824d) is amended by adding 

7 at the end the following: 

8 ‘‘(g)(1) Subject to paragraph (2), if a rate or charge 

9 made, demanded, or received by a public utility subject 

10 to regulation by the Commission varies because of (or in11 cludes any component reflecting) the existence or volume 

12 of any self-generation, cogeneration, or small power pro13 duction by the ratepayer (or by any third party wholly in14 side the premises of the ratepayer and on the side of the 

15 ratepayer of the meter that measures services received 

16 from that public utility), the rate or charge shall not be 

17 considered just, reasonable, or nondiscriminatory. 

18 ‘‘(2) If a rate or charge described in paragraph (1) 

19 varies because of (or a component of the rate or charge 

20 reflects) an actual difference in the cost to the public util21 ity of service relative to the cost to the utility of serving 

22 ratepayers without self-generation, cogeneration, or small23 power production, the rate or charge shall be considered 

24 just, reasonable, and nondiscriminatory. 
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1 ‘‘(3) Not later than the date of enactment of this sub2 section, any public utility in the jurisdiction of the Com3 mission shall— 

4 ‘‘(A) modify any tariff charged by the utility so 

5 that a customer that installs, owns, or operates self6 generation, cogeneration, or small power production 

7 is served under rates, rules, and requirements iden8 tical to those that apply to a customer of the same 

9 class that does not install, own, or operate self-gen10 eration, cogeneration, or small power production; 

11 and 

12 ‘‘(B) withdraw any provision that provides for 

13 punitive terms, rates, or rules if a customer installs, 

14 owns, or operates self-generation, cogeneration or 

15 small power production equipment.’’. 

16 (3) CERTAIN INTERCONNECTION AUTHORITY.— 

17 Section 210 of the Federal Power Act (16 U.S.C. 

18 824i) is amended— 

19 (A) by redesignating subsection (e) as sub20 section (f); and 

21 (B) by inserting after subsection (d) the 

22 following: 

23 ‘‘(e)(1) Notwithstanding any other provision of this 

24 section, to the extent any cogenerator or small power pro25 ducer seeks to interconnect the generator of the cogener-
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•S 726 IS 

1 ator or small power producer to the facilities of any public 

2 utility under the jurisdiction of the Commission for the 

3 purpose of engaging in a transaction under the jurisdic4 tion of the Commission, the cogenerator or small power 

5 producer shall be entitled to elect to apply— 

6 ‘‘(A) the interconnection rules and procedures 

7 adopted by the Commission by rule; or 

8 ‘‘(B) the interconnection rules and procedures 

9 adopted by the State in which the cogenerator or 

10 small power producer is located. 

11 ‘‘(2) The choice under paragraph (1) does not affect 

12 jurisdiction over the terms and conditions of services by 

13 the public utility to the cogenerator or small power pro14 ducer.’’. 

15 (b) TRANSPORTATION AND SALE OF NATURAL

16 GAS.—Section 4(b) of the Natural Gas Act (15 U.S.C. 

17 717c(b)) is amended by striking subsection (b) and insert18 ing the following: 

19 ‘‘(b)(1) No natural-gas company shall, with respect 

20 to any transportation or sale of natural gas subject to the 

21 jurisdiction of the Commission, as between localities or 

22 classes of service— 

23 ‘‘(A) make or grant any undue preference or 

24 advantage to any person or subject any person to 

25 undue prejudice or disadvantage; or 
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•S 726 IS 

1 ‘‘(B) maintain any unreasonable difference in 

2 rates, charges, service, facilities, or in any other re3 spect. 

4 ‘‘(2) A person using natural gas for cogeneration 

5 shall obtain from a natural-gas company rates and condi6 tions of service not less advantageous than the rates and 

7 conditions of service for a person using natural gas pri8 marily to generate electricity. 

9 ‘‘(3) Not later than 1 year after the date of enact10 ment of this paragraph, each natural gas company shall 

11 amend any existing schedule of rates and conditions of 

12 service as necessary to comply with this subsection.’’. 

13 SEC. 107. EFFICIENT USE OF NATURAL GAS FOR ELECTRIC 

14 ENERGY GENERATION. 

15 (a) FINDINGS.—Congress finds that it is in the na16 tional interest to ensure that electric energy is generated 

17 from natural gas in the most efficient manner practicable. 

18 (b) POLICY.—If 2 or more natural gas-fired electric 

19 energy generation facilities are capable of meeting demand 

20 for electric energy, the facility that generates electric en21 ergy at the greatest level of thermal efficiency, and at the 

22 lowest cost to consumers of electric energy, shall be used 

23 first, in accordance with any operational or reliability re24 quirement of an electric energy transmission system. 

25 (c) ACTION BY STATES.— 
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1 (1) IN GENERAL.—Not later than 1 year after 

2 the date of enactment of this Act, the Governor (or 

3 other appropriate regulatory authority) of each State 

4 may establish and carry out a program to achieve 

5 the policy described in subsection (b) with respect to 

6 electric energy generation facilities that are subject 

7 to the regulatory jurisdiction of the State. 

8 (2) CERTIFICATION.—If the Governor (or other 

9 appropriate regulatory authority) of a State deter10 mines that the policy described in subsection (b) is 

11 carried out appropriately in the State through a 

12 State program, or another program, in existence on 

13 the date of enactment of this Act, the Governor shall 

14 submit to the Secretary of Energy a certification of 

15 that determination. 

16 (d) ACTION BY FEDERAL GOVERNMENT.—The Sec17 retary of Energy shall promulgate regulations to carry out 

18 the policy described in subsection (b) to apply to any 

19 State— 

20 (1) the Governor (or other appropriate regu21 latory authority) of which fails to act in accordance 

22 with subsection (c); and 

23 (2) the electric energy generation facilities of 

24 which are not subject to State regulatory authority. 
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1 SEC. 108. DEMAND SIDE MANAGEMENT FOR INDUSTRIALS 

2 AND UTILITIES: NET METERING AND OTHER 

3 STANDARDS. 

4 (a) ADOPTION OF STANDARDS.—Section 111(d) of 

5 the Public Utility Regulatory Policies Act of 1978 (16 

6 U.S.C. 2621(d)) is amended by adding at the end the fol7 lowing: 

8 ‘‘(11) NET METERING.— 

9 ‘‘(A) DEFINITION OF NET METERING

10 SERVICE.—In this paragraph, the term ‘net me11 tering service’ means service to an electric con12 sumer under which electric energy generated by 

13 that electric consumer from an eligible on-site 

14 generating facility and delivered to the local dis15 tribution facilities may be used to offset electric 

16 energy provided by the electric utility to the 

17 electric consumer during the applicable billing 

18 period. 

19 ‘‘(B) AVAILABILITY.—Each electric utility 

20 shall make available on request net metering 

21 service to any electric consumer that the electric 

22 utility serves. 

23 ‘‘(12) FUEL SOURCES.—Each electric utility 

24 shall develop a plan to minimize dependence on 1 

25 fuel source and to ensure that the electric energy the 

26 electric utility sells to consumers is generated using 
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•S 726 IS 

1 a diverse range of fuels and technologies, including 

2 renewable technologies. 

3 ‘‘(13) FOSSIL FUEL GENERATION EFFI4 CIENCY.—Each electric utility shall develop and im5 plement a 10-year plan to increase the efficiency of 

6 the fossil fuel generation of the electric utility.’’. 

7 (b) COMPLIANCE.— 

8 (1) TIME LIMITATIONS.—Section 112(b) of the 

9 Public Utility Regulatory Policies Act of 1978 (16 

10 U.S.C. 2622(b)) is amended by adding at the end 

11 the following: 

12 ‘‘(3)(A) Not later than 2 years after the date of en13 actment of this paragraph, each State regulatory authority 

14 (with respect to each electric utility for which the state 

15 regulatory authority has ratemaking authority) and each 

16 nonregulated electric utility shall commence the consider17 ation referred to in section 111, or set a hearing date for 

18 the consideration, with respect to each standard estab19 lished under paragraphs (11) through (13) of section 

20 111(d). 

21 ‘‘(B) Not later than 3 years after the date of enact22 ment of this paragraph, each State regulatory authority 

23 (with respect to each electric utility for which the state 

24 regulatory authority has ratemaking authority), and each 

25 nonregulated electric utility, shall complete the consider-
114 

•S 726 IS 

1 ation, and shall make the determination, referred to in 

2 section 111 with respect to each standard established 

3 under paragraphs (11) through (13) of section 111(d).’’. 

4 (2) FAILURE TO COMPLY.—Section 112(c) of 

5 the Public Utility Regulatory Policies Act of 1978 

6 (16 U.S.C. 2622(c)) is amended— 

7 (A) by inserting ‘‘(1)’’ before ‘‘Each’’; and 

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

9 ‘‘(2) In the case of each standard established 

10 under paragraphs (11) through (13) of section 

11 111(d), the reference contained in this subsection to 

12 the date of enactment of this Act shall be deemed 

13 to be a reference to the date of enactment of those 

14 paragraphs.’’. 

15 (3) PRIOR STATE ACTIONS.— 

16 (A) IN GENERAL.—Section 112 of the 

17 Public Utility Regulatory Policies Act of 1978 

18 (16 U.S.C. 2622) is amended by adding at the 

19 end the following: 

20 ‘‘(d) PRIOR STATE ACTIONS.—Subsections (b) and 

21 (c) shall not apply to the standards established under 

22 paragraphs (11) through (13) of section 111(d) in the case 

23 of any electric utility in a State if, before the date of enact24 ment of this subsection— 
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•S 726 IS 

1 ‘‘(1) the State has implemented for the utility 

2 the standard concerned (or a comparable standard); 

3 ‘‘(2) the State regulatory authority for the 

4 State or relevant nonregulated electric utility has 

5 conducted a proceeding to consider implementation 

6 of the standard concerned (or a comparable stand7 ard) for the utility; or 

8 ‘‘(3) the State legislature has voted on the im9 plementation of the standard (or a comparable 

10 standard) for the utility.’’. 

11 (B) CROSS REFERENCE.—Section 124 of 

12 the Public Utility Regulatory Policies Act of 

13 1978 (16 U.S.C. 2634) is amended— 

14 (i) in the first sentence, by inserting 

15 ‘‘(A) COMPLETED PROCEEDINGS AND AC16 TIONS.—’’ before ‘‘For’’; 

17 (ii) in the second sentence, by insert18 ing ‘‘(B) INCOMPLETE PROCEEDINGS AND

19 ACTIONS.—’’ before ‘‘For’’; and 

20 (iii) by adding at the end the fol21 lowing: 

22 ‘‘(c) CROSS REFERENCE.—In the case of each stand23 ard established under paragraphs (11) through (13) of 

24 section 111(d), the reference contained in this subsection 

25 to the date of enactment of this Act shall be deemed to 
116 

•S 726 IS 

1 be a reference to the date of enactment of those para2 graphs.’’. 

3 SEC. 109. DEMAND SIDE MANAGEMENT FOR RESIDENTIAL 

4 CUSTOMERS: SMART METERING. 

5 (a) IN GENERAL.—Section 111(d) of the Public Utili6 ties Regulatory Policies Act of 1978 (16 U.S.C. 2621(d)) 

7 is amended by adding at the end the following: 

8 ‘‘(14) TIME-BASED METERING AND COMMU9 NICATIONS.—(A) Not later than 18 months after the 

10 date of enactment of this paragraph, each electric 

11 utility shall offer each customer class of the electric 

12 utility, and provide individual customers on customer 

13 request, a time-based rate schedule under which the 

14 rate charged by the electric utility varies during dif15 ferent time periods and reflects the variance, if any, 

16 in the costs of the electric utility of generating and 

17 purchasing electricity at the wholesale level. 

18 ‘‘(B) The time-based rate schedule shall enable 

19 the electric consumer to manage energy use and cost 

20 through advanced metering and communications 

21 technology. 

22 ‘‘(C) The types of time-based rate schedules 

23 that may be offered under the schedule referred to 

24 in subparagraph (A) include, among others— 

25 ‘‘(i) time-of-use pricing under which— 
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1 ‘‘(I) electricity prices are set for a 

2 specific time period on an advance or for3 ward basis, typically not changing more 

4 often than twice a year, based on the cost 

5 to the utility of generating or purchasing 

6 such electricity at the wholesale level for 

7 the benefit of the consumer; and 

8 ‘‘(II) policy prices paid for energy 

9 consumed during those periods shall be 

10 pre-established and known to consumers in 

11 advance of the consumption, allowing the 

12 consumers to vary the demand and usage 

13 of the consumers in response to such 

14 prices and manage the energy costs of the 

15 consumers by shifting usage to a lower 

16 cost period or reducing the overall con17 sumption of the consumers; 

18 ‘‘(ii) critical peak pricing under which 

19 time-of-use prices are in effect except for cer20 tain peak days, when prices may reflect the 

21 costs of generating or purchasing electricity at 

22 the wholesale level and when consumers may re23 ceive additional discounts for reducing peak pe24 riod energy consumption; and 
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•S 726 IS 

1 ‘‘(iii) real-time pricing under which elec2 tricity prices are set for a specific time period 

3 on an advanced or forward basis, reflecting the 

4 cost to the utility of generating or purchasing 

5 electricity at the wholesale level, and may 

6 change as often as hourly. 

7 ‘‘(D) Each electric utility subject to subpara8 graph (A) shall provide each customer requesting a 

9 time-based rate with a time-based meter capable of 

10 enabling the utility and customer to offer and re11 ceive that rate, respectively. 

12 ‘‘(E) For purposes of implementing this para13 graph, any reference contained in this section to the 

14 date of enactment of the Public Utility Regulatory 

15 Policies Act of 1978 (16 U.S.C. 2601 et seq.) shall 

16 be deemed to be a reference to the date of enact17 ment of this paragraph. 

18 ‘‘(F) In a State that permits third-party mar19 keters to sell electric energy to retail electric con20 sumers, the consumers shall be entitled to receive 

21 the same time-based metering and communications 

22 device and service as a retail electric consumer of 

23 the electric utility. 

24 ‘‘(G) Notwithstanding subsections (b) and (c) 

25 of section 112, not later than 18 months after the 
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•S 726 IS 

1 date of enactment of this paragraph, each State reg2 ulatory authority shall— 

3 ‘‘(i) conduct an investigation in accordance 

4 with section 115(i); and 

5 ‘‘(ii) issue a decision whether it is appro6 priate to implement the standards set out in 

7 subparagraphs (A) and (C).’’. 

8 (b) STATE INVESTIGATION OF DEMAND RESPONSE

9 AND TIME-BASED METERING.—Section 115 of the Public 

10 Utilities Regulatory Policies Act of 1978 (16 U.S.C. 2625) 

11 is amended— 

12 (1) in subsection (b)— 

13 (A) by inserting ‘‘and the standard for 

14 time-based metering and communications estab15 lished by section 111(d)(14)’’ after ‘‘the stand16 ard for time-of-day rates established by section 

17 111(d)(3)’’; and 

18 (B) by inserting ‘‘and communications’’ 

19 after ‘‘are likely to exceed the metering’’; and 

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

21 ‘‘(i) TIME-BASED METERING AND COMMUNICA22 TIONS.—(1) In making a determination with respect to 

23 the standard established by section 111(d)(14), the inves24 tigation requirement of section 111(d)(14)(F) shall apply 

25 in accordance with this subsection. 
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•S 726 IS 

1 ‘‘(2) A state regulatory authority shall conduct an in2 vestigation and issue a decision whether or not it is appro3 priate for electric utilities to provide and install time-based 

4 meters and communications devices for each of their cus5 tomers that enable the customers to participate in time6 based pricing rate schedules and other demand response 

7 programs.’’. 

8 (c) FEDERAL ASSISTANCE ON DEMAND RE9 SPONSE.—Section 132(a) of the Public Utility Regulatory 

10 Policies Act of 1978 (16 U.S.C. 2642(a)) is amended— 

11 (1) in paragraph (3), by striking ‘‘and’’ at the 

12 end; 

13 (2) by striking the period at the end of para14 graph (4) and inserting ‘‘; and’’; and 

15 (3) by adding at the end the following: 

16 ‘‘(5) technologies, techniques, and ratemaking 

17 methods relating to advanced metering and commu18 nications and the use of those technologies, tech19 niques, and methods in demand response pro20 grams.’’. 

21 (d) FEDERAL GUIDANCE.—Section 132 of the Public 

22 Utility Regulatory Policies Act of 1978 (16 U.S.C. 2642) 

23 is amended— 

24 (1) by redesignating subsection (c) as sub25 section (d); and 
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•S 726 IS 

1 (2) by inserting after subsection (b) the fol2 lowing: 

3 ‘‘(c) DEMAND RESPONSE.—The Secretary shall be 

4 responsible for— 

5 ‘‘(1) informing consumers of the availability, 

6 advantages, and benefits of advanced metering and 

7 communications technologies, including the funding 

8 of demonstration or pilot projects; 

9 ‘‘(2) working with States, utilities, other energy 

10 providers, and advanced metering and communica11 tions experts to identify and address barriers to the 

12 adoption of demand response programs; and 

13 ‘‘(3) not later than 180 days after the date of 

14 enactment of the Natural Gas Price Reduction Act 

15 of 2005, providing Congress with a report that iden16 tifies and quantifies the national benefits of demand 

17 response and makes a recommendation on achieving 

18 specific levels of those benefits by January 1, 

19 2008.’’. 

20 (e) DEMAND RESPONSE AND REGIONAL COORDINA21 TION.— 

22 (1) IN GENERAL.—It is the policy of the United 

23 States to encourage States to coordinate, on a re24 gional basis, State energy policies to provide reliable 
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•S 726 IS 

1 and affordable electricity demand response services 

2 to the public. 

3 (2) TECHNICAL ASSISTANCE.—The Secretary of 

4 Energy shall provide technical assistance to States 

5 and regional organizations formed by 2 or more 

6 States to assist the organizations in— 

7 (A) identifying the areas with the greatest 

8 electricity demand response potential; 

9 (B) identifying and resolving problems in 

10 transmission and distribution networks, includ11 ing through the use of demand response; 

12 (C) developing plans and programs to use 

13 demand response to respond to peak demand or 

14 emergency needs; and 

15 (D) identifying specific measures con16 sumers can take to participate in those demand 

17 response programs. 

18 (3) REPORT.—Not later than 1 year after the 

19 date of enactment of this Act, the Federal Energy 

20 Regulatory Commission shall prepare and publish an 

21 annual report, by appropriate region, that assesses 

22 electricity demand response resources, including 

23 those available from all consumer classes, and that 

24 identifies and reviews— 
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•S 726 IS 

1 (A) saturation and penetration rate of ad2 vanced meters and communications tech3 nologies, devices, and systems; 

4 (B) existing demand response programs 

5 and time-based rate programs; 

6 (C) the annual resource contribution of de7 mand resources; 

8 (D) the potential for demand response as 

9 a quantifiable, reliable resource for regional 

10 planning purposes; and 

11 (E) steps taken to ensure that, in regional 

12 transmission planning and operations, demand 

13 resources are provided equitable treatment as a 

14 quantifiable, reliable resource relative to the re15 source obligations of any load-serving entity, 

16 transmission provider, or transmitting party. 

17 (f) FEDERAL ENCOURAGEMENT OF DEMAND RE18 SPONSE DEVICES.—It is the policy of the United States 

19 that— 

20 (1) time-based pricing and other forms of elec21 tricity demand response, under which electricity cus22 tomers are provided with electricity price signals and 

23 the ability to benefit by responding to the con24 sumers, shall be encouraged, and the deployment of 

25 the technology and devices that enable electricity 
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•S 726 IS 

1 customers to participate in the pricing and demand 

2 response systems shall be facilitated; and 

3 (2) the benefits of the demand response that 

4 accrue to persons not deploying the technology and 

5 devices, but who are part of the same regional elec6 tricity entity, shall be recognized. 

7 (g) TIME LIMITATIONS.—Section 112(b) of the Pub8 lic Utility Regulatory Policies Act of 1978 (16 U.S.C. 

9 2622(b)) is amended by adding at the end the following: 

10 ‘‘(4)(A) Not later than 1 year after the date of enact11 ment of this paragraph, each State regulatory authority 

12 (with respect to each electric utility for which the author13 ity has ratemaking authority) and each nonregulated elec14 tric utility shall commence the consideration referred to 

15 in section 111, or set a hearing date for the consideration, 

16 with respect to the standard established by section 

17 111(d)(14). 

18 ‘‘(B) Not later than 2 years after the date of enact19 ment of this paragraph, each State regulatory authority 

20 (with respect to each electric utility for which the author21 ity has ratemaking authority), and each nonregulated elec22 tric utility, shall complete the consideration, and shall 

23 make the determination, referred to in section 111 with 

24 respect to the standard established by section 

25 111(d)(14).’’. 
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1 SEC. 110. PROTECTING INDUSTRIAL COGENERATORS. 

2 Nothing in subtitle D of the Energy Conference Re3 port (House of Representatives Report 108–375, 108th 

4 Congress, agreed to November 17, 2003) (relating to par5 ticipant funding) shall apply to a qualifying facility, as de6 termined under section 210(n) of the Public Utility Regu7 latory Policies Act of 1978 (16 U.S.C. 824a–3) (as added 

8 by section 104). 

9 SEC. 111. REDUCTION OF DEPENDENCE ON IMPORTED PE10 TROLEUM. 

11 (a) REPORT.— 

12 (1) IN GENERAL.—Not later than July 1, 2007, 

13 and annually thereafter, the President shall submit 

14 to Congress a report, based on the most recent edi15 tion of the Annual Energy Outlook published by the 

16 Energy Information Administration, assessing the 

17 progress made by the United States toward the goal 

18 of reducing dependence on imported petroleum 

19 sources by 2015. 

20 (2) CONTENTS.—The report under paragraph 

21 (1) shall— 

22 (A) include a description of the implemen23 tation, during the previous fiscal year, of provi24 sions of this Act and amendments made by this 

25 Act relating to domestic crude petroleum pro26 duction; 
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1 (B) assess the effectiveness of those provi2 sions in meeting the goal described in para3 graph (1); and 

4 (C) describe the progress in developing and 

5 implementing measures under subsection (b). 

6 (b) MEASURES TO REDUCE IMPORT DEPENDENCE

7 THROUGH INCREASED DOMESTIC PETROLEUM CON8 SERVATION.— 

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

10 the date of enactment of this Act, the President 

11 shall develop and implement measures to conserve 

12 petroleum in end-uses throughout the economy of 

13 the United States that are sufficient to reduce total 

14 demand for petroleum in the United States by 

15 1,750,000 barrels per day from the quantity pro16 jected for calendar year 2015 in the reference case 

17 contained in the report of the Energy Information 

18 Administration entitled ‘‘Annual Energy Outlook 

19 2005’’. 

20 (2) CONTENTS.—The measures under para21 graph (1) shall be designed to ensure continued reli22 able and affordable energy for consumers. 

23 (3) IMPLEMENTATION.—The measures under 

24 paragraph (1) shall be implemented under existing 
127 

•S 726 IS 

1 authorities of appropriate Federal executive agencies 

2 identified by the President. 

3 SEC. 112. NATIONAL GASIFICATION STRATEGY FOR POWER 

4 SECTOR. 

5 (a) STREAMLINED PERMITTING.— 

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

7 the date of enactment of this Act, the Administrator 

8 of the Environmental Protection Agency shall pro9 mulgate regulations to revise the requirements under 

10 section 111 of the Clean Air Act (42 U.S.C. 7411), 

11 and parts C and D of title I of that Act (42 U.S.C. 

12 7470 et seq.), in accordance with this section. 

13 (2) APPLICATION DATE.—The revised regula14 tions adopted pursuant to this section shall apply 

15 until January 1, 2017, but may continue to apply 

16 after that date if the Environmental Protection 

17 Agency determines that such regulations are author18 ized by another provision of the Clean Air Act (42 

19 U.S.C. 7401 et seq.). 

20 (b) APPLICABILITY.—A qualifying project shall not 

21 be considered to be a major stationary source that is sub22 ject to the preconstruction review requirements of parts 

23 C and D of title I of the Clean Air Act (42 U.S.C. 7470 

24 et seq.), for purposes of constructing such qualifying 
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•S 726 IS 

1 projects, provided each of the following requirements of 

2 this subsection is met: 

3 (1) Emissions reductions are achieved by other 

4 stationary sources located within the same air qual5 ity region, as determined by the Administrator based 

6 on best available air quality modeling, and such 

7 emissions reductions offset the emissions of the 

8 qualifying project on a pollutant-by-pollutant basis. 

9 (2) Such emissions reductions by other sta10 tionary sources are achieved through a federally en11 forceable limitation that is not otherwise required 

12 under the Clean Air Act, and occurred within a 5- 

13 year period prior to the date that the qualifying 

14 project commenced commercial operation. 

15 (3)(A) The owner or operator of qualifying 

16 project demonstrates the following requirements are 

17 met prior to the commencement of construction of 

18 the project: 

19 (i) In an area designated as attainment or 

20 unclassifiable under section 107(d) of the Clean 

21 Air Act (42 U.S.C. 7407(d)), the emissions in22 crease resulting from the qualifying project will 

23 not cause or contribute to air pollution in ex24 cess of any national ambient air quality stand25 ard. 
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•S 726 IS 

1 (ii) In an area designated as nonattain2 ment under section 107(d) of the Clean Air Act 

3 (42 U.S.C. 7407(d)), the emissions increase re4 sulting from the qualifying project will not 

5 interfere with any program to assure that the 

6 national ambient air quality standards are 

7 achieved and maintained. 

8 (B) Demonstrations performed under this para9 graph shall be based on the offsetting emissions re10 ductions achieved under paragraphs (1) and (2), as 

11 well as other design and emissions parameters that 

12 are relevant for assessing air quality impacts of the 

13 emissions increase from the project. 

14 (4) The qualifying project complies with the 

15 emissions standards that are established for inte16 grated gasification combined cycle plants under sec17 tion 111 of the Clean Air Act (42 U.S.C. 7411). 

18 (c) EXPEDITED PERMITTING.— 

19 (1) The permitting authority shall expedite the 

20 preconstruction review requirements of parts C and 

21 D of title I of the Clean Air Act (42 U.S.C. 7470 

22 et seq.) in the case of qualifying projects that do not 

23 obtain offsetting emissions reductions under sub24 section (a). 
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•S 726 IS 

1 (2) Expedited preconstruction review shall in2 clude the following: 

3 (A) Application of the emissions standards 

4 for integrated gasification combined cycle plants 

5 under section 111 of that Act (42 U.S.C. 

6 7411), instead of case-by-case performance 

7 standards based on best available control tech8 nology or lowest achievable emissions rate 

9 under parts C and D of title I of that Act (42 

10 U.S.C. 7470 et seq.). 

11 (B) Other appropriate measures to accel12 erate preconstruction review and issuance of all 

13 necessary air permits for the construction and 

14 operation of qualifying projects under parts C 

15 and D of title I of that Act (42 U.S.C. 7470 

16 et seq.). 

17 (d) DEFINITIONS.—In this section: 

18 (1) The term ‘‘biomass’’ means any animal, ag19 ricultural or plant waste, by-product of wood or 

20 paper mill operations such as lignin in spent pulping 

21 liquors, and other products of forestry maintenance, 

22 but does not include paper that is commonly recy23 cled. 
131 

•S 726 IS 

1 (2) The term ‘‘electric generation unit’’ means 

2 any facility at least 50 percent of the total annual 

3 net output of which is electrical power. 

4 (3) The term ‘‘industrial gasification tech5 nology’’ means any process that converts an eligible 

6 solid or liquid into a gaseous condition for direct use 

7 or subsequent chemical or physical conversion. An 

8 eligible solid or liquid shall include the following ma9 terials: coal, petroleum residue (such as carbon10 ization product of high-boiling hydrocarbon fractions 

11 obtained in petroleum processing), biomass, carbon12 ized or semi-carbonized matter (including peat) or 

13 other materials that are recovered for their feed14 stock, fuel, or other energy value. 

15 (4) The term ‘‘integrated gasification combined 

16 cycle technology’’ means any combination of equip17 ment, including all related power generation equip18 ment, that is used at a single location to convert 

19 coal or residuals into synthesis gas that is then used 

20 as a fuel to generate electricity. 

21 (5) The term ‘‘natural gas combined cycle’’ 

22 means a system that— 

23 (A) is comprised of 1 or more combustion 

24 turbines, heat recovery steam generators, and 

25 steam turbines; and 
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•S 726 IS 

1 (B) combusts only natural gas or fuel oil, 

2 with natural gas comprising at least 90 percent, 

3 and fuel oil not more than 10 percent, of the 

4 unit’s annual heat input in any year. 

5 (6) The term ‘‘qualifying electric generation 

6 project’’ means a project that meets each of the fol7 lowing eligibility requirements: 

8 (A) The project uses integrated gasifi9 cation combined cycle technology in the con10 struction of a new electric generating unit, the 

11 repowering of an existing coal-fired electric gen12 eration unit, or the conversion of an existing 

13 natural gas combined cycle unit to operate on 

14 coal instead of natural gas. 

15 (B) The project meets the emissions stand16 ards that are established for integrated gasifi17 cation combined cycle plants under section 111 

18 of the Clean Air Act (42 U.S.C. 7411). 

19 (C) The project commences commercial op20 eration after December 31, 2006. 

21 (7) The term ‘‘qualifying industrial project’’ 

22 means any project that uses an industrial gasifi23 cation technology that meets the following eligibility 

24 requirements: 
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•S 726 IS 

1 (A) The energy output of the project is 

2 primarily used for applications in one or more 

3 of the following industries: chemicals, fertilizer, 

4 glass, steel, petroleum coke, forest products, 

5 and agriculture-feedlots. 

6 (B) The gasification technology meets the 

7 emissions standards that are established for in8 tegrated gasification combined cycle plants 

9 under section 111 of the Clean Air Act (42 

10 U.S.C. 7411). 

11 (C) The gasification technology commenced 

12 commercial operation after December 31, 2006. 

13 (8) The term ‘‘qualifying project’’ means a 

14 qualifying electric generation project or a qualifying 

15 industrial project. 

16 (e) CONSTRUCTION INCENTIVES.— 

17 (1) DEFINITIONS.—In this subsection: 

18 (A) CARBON CAPTURE READY.—The term 

19 ‘‘carbon capture ready’’, with respect to a facil20 ity or equipment, means an industrial gasifi21 cation project design that is determined by the 

22 Secretary to be capable of accommodating the 

23 equipment likely to be necessary to capture, 

24 separate on a long-term basis, isolate, or re25 move carbon dioxide from the gaseous stream 
134 

•S 726 IS 

1 (for later use or sequestration) that would oth2 erwise be emitted during the generation of elec3 tricity. 

4 (B) GASIFICATION COMBINED CYCLE

5 TECHNOLOGY FACILITY.—The term ‘‘gasifi6 cation combined cycle technology facility’’ 

7 means an integrated gasification combined cycle 

8 facility that contains any combination of equip9 ment (including power generation equipment) 

10 that— 

11 (i) is used at a single location to con12 vert coal or a residual into synthesis gas to 

13 be used as a fuel to generate electricity; 

14 (ii) is carbon capture ready; 

15 (iii) is depreciable or that can be am16 ortized; and 

17 (iv) achieves— 

18 (I) a nitrogen emissions rate of 

19 at least 0.06 lbs/mmBtu; and 

20 (II) a sulfur dioxide emissions 

21 rate of at least 0.08 lbs/mmBtu. 

22 (C) SECRETARY.—The term ‘‘Secretary’’ 

23 means the Secretary of Energy. 

24 (2) INCENTIVES.—The Secretary shall establish 

25 a program under which construction incentives are 
135 

•S 726 IS 

1 provided for eligible facilities that are certified by 

2 the Secretary in accordance with this subsection. 

3 (3) CERTIFICATION.— 

4 (A) IN GENERAL.—Subject to subpara5 graph (D), the Secretary shall certify the first 

6 6 eligible facilities for which an application for 

7 certification is submitted to the Secretary. 

8 (B) ELIGIBLE FACILITIES.—To be eligible 

9 to receive certification under this subsection, a 

10 facility shall be permitted— 

11 (i) to be a gasification combined cycle 

12 technology facility; 

13 (ii) to be built and in continuous oper14 ation beginning not later than December 

15 31, 2013; 

16 (iii) to have a fuel input of coal of not 

17 less than 75 percent; and 

18 (iv) to have a design capability of not 

19 less than 500 megawatts. 

20 (v) to own or have all land rights for 

21 construction and for operation of the facil22 ity; and 

23 (vi) to demonstrate a financial condi24 tion that is necessary to achieve financial 

25 closing for the facility. 
136 

•S 726 IS 

1 (C) APPLICATION.— 

2 (i) IN GENERAL.—To receive certifi3 cation under subparagraph (A), on receipt 

4 for an eligible facility of a prevention of 

5 significant deterioration of air quality 

6 (PSD) permit from the Administrator of 

7 the Environmental Protection Agency and 

8 all other required Federal, State, and local 

9 permits, the owner or operator of the facil10 ity shall submit to the Secretary an appli11 cation in the manner required by the Sec12 retary. 

13 (ii) CONTENTS.—An application under 

14 this subparagraph shall contain— 

15 (I) a plan for the construction of 

16 the eligible facility; and 

17 (II) any other information the 

18 Secretary may require. 

19 (D) SELECTION.—The Secretary shall se20 lect for certification under subparagraph (A)— 

21 (i) 4 eligible facilities that are— 

22 (I) investor-owned utilities; or 

23 (II) independent power pro24 ducers; and 

25 (ii) 2 eligible facilities that are— 
137 

•S 726 IS 

1 (I) public utilities; or 

2 (II) rural power cooperatives. 

3 (4) GRANTS.— 

4 (A) IN GENERAL.—The Secretary shall es5 tablish a program under which the Secretary 

6 shall provide grants to the eligible facilities de7 scribed in paragraph (3)(D)(ii) to pay the Fed8 eral share of the costs of construction of those 

9 eligible facilities. 

10 (B) TIMING.—The Secretary shall make a 

11 grant under this paragraph commencing on the 

12 date the Secretary determines that an eligible 

13 facility has achieved financial closing and ob14 tained financing from 1 or more commercial 

15 lending institutions. 

16 (C) FEDERAL SHARE.—The Federal share 

17 of the certified costs of construction of an eligi18 ble facility under this paragraph shall be, as de19 termined by the Secretary— 

20 (i) in the case of an eligible entity 

21 that was among the first 3 eligible entities 

22 to receive certification under paragraph 

23 (3)(A), not more than 40 percent; and 

24 (ii) in the case of an eligible entity 

25 that was among the last 3 eligible entities 
138 

•S 726 IS 

1 to receive certification under paragraph 

2 (3)(A), not more than 30 percent. 

3 (5) AUTHORIZATION OF APPROPRIATIONS.— 

4 There are authorized such sums as are necessary to 

5 carry out this subsection, to remain available until 

6 expended. 

7 SEC. 113. INDUSTRIAL GASIFICATION DEMONSTRATION 

8 AND DEPLOYMENT PROGRAM. 

9 (a) DEFINITIONS.—In this section: 

10 (1) BIOMASS.— 

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

12 means— 

13 (i) any agricultural or plant waste; 

14 (ii) a byproduct of a wood or paper 

15 mill, such as lignin in spent pulping liq16 uors; and 

17 (iii) any other product of forestry 

18 maintenance. 

19 (B) EXCLUSION.—The term ‘‘biomass’’ 

20 does not include paper that is commonly recy21 cled. 

22 (2) CARBON-CAPTURE READY.—The term ‘‘car23 bon-capture ready’’ means an industrial gasification 

24 plant design that is determined by the Secretary to 

25 be capable of accommodating the equipment likely to 
139 

•S 726 IS 

1 be necessary to capture carbon dioxide from the gas2 eous stream, for later use or sequestration, that 

3 would otherwise be emitted in the flue gas from a 

4 project that uses a non-renewable fuel. 

5 (3) COAL.—The term ‘‘coal’’ means any carbon6 ized or semi-carbonized matter, including peat. 

7 (4) ELIGIBLE ENTITY.—The term ‘‘eligible enti8 ty’’ means any entity that applies for Federal assist9 ance that will principally be used for applications 

10 with a standard industrial classification relating par11 ticularly to chemicals, fertilizers, glass, steel, 

12 petcoke, forest products, or agriculture feedlots, as 

13 determined by the Secretary. 

14 (5) GASIFICATION TECHNOLOGY.—The term 

15 ‘‘gasification technology’’ means any process by 

16 which a solid or liquid product from coal, petroleum 

17 residue, biomass, or other material recovered for its 

18 energy or feedstock value is converted into a gaseous 

19 condition for— 

20 (A) direct use; or 

21 (B) subsequent chemical or physical con22 version. 

23 (6) INDUSTRIAL GASIFICATION PROJECT.—The 

24 term ‘‘industrial gasification project’’ means a 

25 project that— 
140 

•S 726 IS 

1 (A) is proposed by an eligible entity; and 

2 (B) employs gasification technology. 

3 (7) PETROLEUM RESIDUE.—The term ‘‘petro4 leum residue’’ means a carbonization product of 

5 high-boiling hydrocarbon fractions obtained through 

6 petroleum processing. 

7 (8) SECRETARY.—The term ‘‘Secretary’’ means 

8 the Secretary of Energy. 

9 (9) TOTAL PROJECT INVESTMENT.—The term 

10 ‘‘total project investment’’ means— 

11 (A) the total project cost for engineering, 

12 design, procurement, construction, project de13 velopment, and financing; and 

14 (B) reasonable contingency reserves (as de15 termined by the Secretary and the project spon16 sor). 

17 (b) FINDING; PURPOSE.— 

18 (1) FINDING.—Congress finds that widespread 

19 domestic use of gasification technologies can signifi20 cantly contribute to the economy, the environment, 

21 and the general welfare of the people of the United 

22 States. 

23 (2) PURPOSE.—The purpose of this section is 

24 to significantly accelerate the deployment of gasifi-
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•S 726 IS 

1 cation technologies for industrial application in order 

2 to— 

3 (A) to produce the natural gas equivalent 

4 of 1,000,000,000 cubic feet of natural gas an5 nually, or 5 percent of the total demand for 

6 natural gas; 

7 (B) to reduce imports of energy from for8 eign energy sources; 

9 (C) to preserve domestic jobs; 

10 (D) to reduce the demand pressure on do11 mestic natural gas prices and supply for all 

12 consumers by promoting the use of gas derived 

13 from— 

14 (i) domestic coal; 

15 (ii) biomass; and 

16 (iii) other domestic fuel sources for in17 dustrial use; 

18 (E) to avoid dependence on remote foreign 

19 sources for chemicals, ammonia-based fer20 tilizers, and other strategic products for which 

21 natural gas is traditionally a significant compo22 nent in the manufacturing process; 

23 (F) to promote the use of domestic coal, 

24 biomass, and other fuel sources in an environ25 mentally benign manner; 
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•S 726 IS 

1 (G) to promote the position of the United 

2 States as a global leader in advanced gasifi3 cation technology and related sales; and 

4 (H) to promote the potential for future use 

5 or sequestration of industrial carbon emissions 

6 in an efficient manner. 

7 (c) INDUSTRIAL GASIFICATION DEMONSTRATION

8 AND DEPLOYMENT PROGRAM.— 

9 (1) ESTABLISHMENT.—The Secretary shall es10 tablish and implement an industrial gasification 

11 demonstration and deployment program. 

12 (2) SOLICITATION OF APPLICATIONS.—Not less 

13 frequently than every 18 months, the Secretary, in 

14 consultation with the Secretary of the Treasury, 

15 shall solicit from eligible entities applications for 

16 Federal assistance described in subsection (e) for the 

17 construction and operation of facilities that gasify 

18 coal, petroleum residues, or biomass. 

19 (3) REGULATIONS.— 

20 (A) IN GENERAL.—Not later than 180 

21 days after the date of enactment of this Act, 

22 the Secretary, after consultation with the Sec23 retary of the Treasury, shall issue final regula24 tions to carry out this section. 
143 

•S 726 IS 

1 (B) LIMITATION.—The regulations shall 

2 be— 

3 (i) limited to the activities described 

4 in this section; and 

5 (ii) generally consistent with the Fed6 eral Nonnuclear Energy Research and De7 velopment Act of 1974 (42 U.S.C. 5901 et 

8 seq.). 

9 (4) STUDY OF REGULATORY BARRIERS.— 

10 (A) IN GENERAL.—The Secretary shall 

11 conduct a study of the barriers to timely de12 ployment of commercial gasification projects 

13 under this subsection. 

14 (B) CONSULTATION.—In carrying out the 

15 study, the Secretary shall consult with— 

16 (i) Federal and State regulatory agen17 cies; 

18 (ii) potential industrial and utility 

19 users and vendors of gasification tech20 nology; 

21 (iii) suppliers and transporters of any 

22 feedstock materials or plant products; 

23 (iv) financial institutions; and 

24 (v) knowledgeable public citizens. 
144 

•S 726 IS 

1 (5) REPORT.—Not later than 1 year after the 

2 date of enactment of this Act, the Secretary shall 

3 submit to the Committee on Energy and Natural 

4 Resources of the Senate a report describing— 

5 (A) the results of the study under para6 graph (4); and 

7 (B) recommendations of the Secretary that 

8 may facilitate the introduction of gasification 

9 technology. 

10 (d) PROJECT CRITERIA.— 

11 (1) IN GENERAL.—On evaluating an application 

12 for Federal financial assistance described in sub13 section (e), the Secretary, in consultation with the 

14 Secretary of the Treasury, shall consider— 

15 (A) the potential of the proposed project to 

16 surpass existing environmental standards in the 

17 proposed project area; 

18 (B) the likelihood of the project to preserve 

19 domestic jobs at the proposed site and through 

20 subsequent replications of the technology; 

21 (C) the degree to which the proposed 

22 project, and anticipated replications of the tech23 nology used in the project, may provide sub24 stitutes for natural gas on a cost-effective basis 
145 

•S 726 IS 

1 compared to other applications proposed by eli2 gible entities; 

3 (D) the technical and economic feasibility 

4 of the project; 

5 (E) the financial viability of the project; 

6 (F) an expectation that private equity in 

7 the project will equal at least 20 percent of 

8 total plant investment; 

9 (G) the likelihood that replications of the 

10 technology will create significant markets for 

11 domestic vendors of the technology; 

12 (H) the diversity of the technological ap13 proaches and regional locations of the projects 

14 selected, except that, unless no such project is 

15 proposed by an eligible entity— 

16 (i) at least 1 of the industrial gasifi17 cation projects selected shall use coal; and 

18 (ii) at least 1 of the industrial gasifi19 cation projects selected shall use biomass; 

20 (I) a determination that the plant will be 

21 carbon-capture ready, as applicable; and 

22 (J) any other criteria the Secretary pub23 lishes in a solicitation to achieve the purpose of 

24 this section. 
146 

•S 726 IS 

1 (2) FACTORS OF ADDITIONAL WEIGHT.—In 

2 evaluating a project that gasifies coal or petroleum 

3 residue, the Secretary shall give additional weight to 

4 a project proposal that contains separation, seques5 tration, or use of carbon or other gases in the proc6 ess waste stream that have a radiative index greater 

7 than or equal to that of carbon dioxide. 

8 (e) FINANCIAL ASSISTANCE.— 

9 (1) TYPES OF ASSISTANCE.— 

10 (A) IN GENERAL.—In carrying out this 

11 section, the Secretary may award to an eligible 

12 entity selected by the Secretary— 

13 (i) a loan; 

14 (ii) a loan guarantee; 

15 (iii) price supports; or 

16 (iv) goods the purchase prices of 

17 which are incurred by the Secretary. 

18 (B) LOANS AND LOAN GUARANTEES.— 

19 (i) IN GENERAL.—A loan or loan 

20 guarantee provided under clause (i) or (ii) 

21 of subparagraph (A)— 

22 (I) shall not exceed 80 percent of 

23 the total project investment; and 

24 (II) shall be backed by the full 

25 faith and credit of the United States. 
147 

•S 726 IS 

1 (ii) NON-FEDERAL EQUITY INVEST2 MENT.—An eligible entity shall— 

3 (I) provide a non-Federal equity 

4 investment equal to not less than 20 

5 percent of the total project invest6 ment; and 

7 (II) apply the non-Federal equity 

8 investment to the long-term debt obli9 gations of the project, which— 

10 (aa) may, at the discretion 

11 of the Secretary, be nonrecourse; 

12 and 

13 (bb) shall have a term not 

14 greater than 30 years. 

15 (2) ELIGIBILITY FOR MORE THAN 1 TYPE OF

16 ASSISTANCE.— 

17 (A) LIMITATIONS.—The Secretary may 

18 provide, or certify an eligible entity to receive, 

19 any financial incentive described in paragraph 

20 (1) for a project if the aggregate value of incen21 tives made available to an applicant (as deter22 mined by the Congressional Budget Office) does 

23 not exceed— 
148 

•S 726 IS 

1 (i) $175,000,000 for each incentive, 

2 as of the date of enactment of this Act; 

3 and 

4 (ii) 20 percent of the total capital cost 

5 of the project. 

6 (B) CONTRACTS BETWEEN THE SEC7 RETARY AND PROJECT SPONSORS.—A contract 

8 between the Secretary and a project sponsor re9 garding an industrial gasification project shall 

10 not count against the limitations described in 

11 subparagraph (A). 

12 (f) AUTHORIZATION OF APPROPRIATIONS.— 

13 (1) IN GENERAL.—There is authorized to be 

14 appropriated to the Secretary to carry out this sec15 tion $2,000,000,000, to remain available until ex16 pended. 

17 (2) SCHEDULE.—The amount authorized to be 

18 appropriated under paragraph (1) shall be available 

19 to the Secretary on the following schedule: 

20 (A) For fiscal year 2006, $400,000,000. 

21 (B) For fiscal year 2007, $300,000,000. 

22 (C) For fiscal year 2008, $300,000,000. 

23 (D) For fiscal year 2009, $300,000,000. 

24 (E) For fiscal year 2010, $200,000,000. 

25 (F) For fiscal year 2011, $125,000,000. 
149 

•S 726 IS 

1 (G) For fiscal year 2012, $100,000,000. 

2 (H) For fiscal year 2013, $75,000,000. 

3 (I) For fiscal year 2014, $50,000,000. 

4 (J) For fiscal year 2015, $50,000,000. 

5 SEC. 114. CARBON CAPTURE AND SEQUESTRATION ENERGY 

6 EFFICIENCY RESEARCH AND DEVELOPMENT. 

7 (a) RESEARCH AND DEVELOPMENT PROGRAM.—The 

8 Secretary shall carry out a program of research and devel9 opment to improve the efficiency and reduce the capital 

10 cost of processes used to capture and sequester carbon di11 oxide that is produced by coal-fired power plants to reduce 

12 the cost of carbon capture and sequestration. 

13 (b) GRANTS AND COOPERATIVE AGREEMENTS.—In 

14 carrying out the program under subsection (a), the Sec15 retary may make any grant or enter into any cooperative 

16 agreement that the Secretary determines to be appro17 priate, in accordance with the Federal Nonnuclear Energy 

18 Research and Development Act of 1974 (42 U.S.C. 5901 

19 et seq.) or any other Federal law. 

20 (c) AUTHORIZATION OF APPROPRIATIONS.—There 

21 are authorized to be appropriated such sums as are nec22 essary to carry out this section. 
150 

•S 726 IS 

1 TITLE II—PRODUCTION 

2 SEC. 201. GAS ONLY LEASES. 

3 Section 8 of the Outer Continental Shelf Lands Act 

4 (43 U.S.C. 1337) is amended by adding at the end the 

5 following: 

6 ‘‘(p)(1) The Secretary may issue a lease under this 

7 section beginning at the 2007–2012 plan period that au8 thorizes development and production only of gas and asso9 ciated condensate in accordance with regulations issued 

10 under paragraph (2). 

11 ‘‘(2) Before July 1, 2006, the Secretary shall issue 

12 regulations that, for purposes of this section— 

13 ‘‘(A) define what constitutes gas, condensate, 

14 and oil; 

15 ‘‘(B) establish the rights and obligations of a 

16 lessee regarding condensate produced in association 

17 with gas; 

18 ‘‘(C) prescribe procedures and requirements 

19 that the lessee shall follow if the lessee discovers oil 

20 deposits in the course of exploration or development; 

21 and 

22 ‘‘(D) establish any other requirements for gas23 only leases that the Secretary determines are appro24 priate. 
151 

•S 726 IS 

1 ‘‘(3) At the request of a lessee or the producing State, 

2 the Secretary may restrict development under such a lease 

3 to gas and associated condensate. 

4 ‘‘(4) Any Federal law (including a regulation) that 

5 applies to an oil and gas lease on the Outer Continental 

6 Shelf applies to a gas-only lease issued under this sec7 tion.’’. 

8 SEC. 202. EASTERN GULF OF MEXICO. 

9 Section 4(a)(2) of the Outer Continental Shelf Lands 

10 Act (43 U.S.C. 1333(a)(2)) is amended— 

11 (1) by inserting ‘‘(i)’’ after ‘‘(A)’’; 

12 (2) in the first sentence— 

13 (A) by striking ‘‘President’’ and inserting 

14 ‘‘Secretary’’; and 

15 (B) by inserting before the period at the 

16 end the following: ‘‘not later than 270 days 

17 after the date of enactment of the Natural Gas 

18 Price Reduction Act of 2005’’; and 

19 (3) by adding at the end the following: 

20 ‘‘(ii) For the purpose solely of determining bound21 aries for offshore oil and gas development and revenue 

22 sharing, the Secretary shall delimit the lateral boundaries 

23 between coastal States, to the extent of the exclusive eco24 nomic zone of the United States, in accordance with— 
152 

•S 726 IS 

1 ‘‘(I) any judicial decree or interstate compact 

2 delimiting lateral offshore boundaries between coast3 al States; 

4 ‘‘(II) any principles of domestic and inter5 national law governing the delimitation of lateral off6 shore boundaries; and 

7 ‘‘(III) to the maximum extent practicable, exist8 ing lease boundaries and block lines based on the of9 ficial protraction diagrams of the Secretary. 

10 ‘‘(iii) Not later than December 31, 2007, the Sec11 retary shall amend any 5-year leasing program relating 

12 to the outer Continental Shelf and offer for gas, or oil 

13 and gas, leasing the unleased blocks in the Lease Sale 181 

14 area if the lease sale— 

15 ‘‘(I) is not in the State of Florida; and 

16 ‘‘(II) does not conflict with training or oper17 ations of the United States military. 

18 ‘‘(iv) If a lease sale under clause (iii) is located more 

19 than 20 miles off the coast of the State of Alabama and 

20 the State of Florida, the lease shall be considered by the 

21 Secretary of Commerce and the Secretary of the Interior 

22 to be necessary to the interest of national security for pur23 poses of the Coastal Zone Management Act (16 U.S.C. 

24 1451 et seq.).’’. 
153 

•S 726 IS 

1 SEC. 203. REVIEW OF STATE REQUESTS TO EXAMINE OCS 

2 ENERGY AREAS. 

3 Section 18 of the Outer Continental Shelf Lands Act 

4 (43 U.S.C. 1344) is amended by adding at the end the 

5 following: 

6 ‘‘(i)(1) In this subsection: 

7 ‘‘(A) The term ‘lease’ includes a gas-only lease 

8 under section 8. 

9 ‘‘(B) The term ‘moratorium area’ means— 

10 ‘‘(i) any area withdrawn from disposition 

11 by leasing by the ‘Memorandum on Withdrawal 

12 of Certain Areas of the United States Outer 

13 Continental Shelf from Leasing Disposition’, 

14 from 34 Weekly Comp. Pres. Doc. 1111, dated 

15 June 12, 1998; and 

16 ‘‘(ii) any area of the outer Continental 

17 Shelf as to which Congress has denied the use 

18 of appropriated funds or other means for 

19 preleasing, leasing, or related activities. 

20 ‘‘(2)(A) A moratorium on gas, or oil and gas, leasing 

21 on the outer Continental Shelf shall be effective with re22 spect to the area off the coast of a State only if the Gov23 ernor of the State consents to the moratorium. 

24 ‘‘(B) At any time, the Governor of an affected State, 

25 acting on behalf of the State, may request the Secretary 

26 to provide a current estimate of proven and potential gas, 
154 

•S 726 IS 

1 or oil and gas, resources in any moratorium area (or any 

2 part of the area the Governor identifies) adjacent, or lying 

3 seaward of the coastline, to that State. 

4 ‘‘(C) Not later than the date that is 45 days after 

5 a Governor of a State requests an estimate under subpara6 graph (B), the Secretary shall provide— 

7 ‘‘(i) a delimitation of the lateral boundaries be8 tween the coastal States in accordance with section 

9 4(a)(2); 

10 ‘‘(ii) a current inventory of proven and potential 

11 gas, or oil and gas, resources in any moratorium 

12 areas in the State, as requested by the Governor; 

13 and 

14 ‘‘(iii) an explanation of the planning processes 

15 that could lead to the leasing, exploration, develop16 ment, and production of the gas, or oil and gas, re17 sources within the area identified. 

18 ‘‘(3)(A) On consideration of the information received 

19 from the Secretary, the Governor (acting on behalf of the 

20 State of the Governor) may decide— 

21 ‘‘(i) not to consent to a moratorium on gas, or 

22 oil and gas, leasing on the outer Continental Shelf 

23 off the coast of the State of the Governor; or 

24 ‘‘(ii) to repeal any restriction preventing spend25 ing appropriated funds for preleasing, leasing, and 
155 

•S 726 IS 

1 related activities as to the area identified in the re2 quest of the Governor. 

3 ‘‘(B) If the Governor makes a decision under sub4 paragraph (A), the Governor shall submit to the Presi5 dent, the Secretary, and Congress a notification of the de6 cision, including a description of— 

7 ‘‘(i) the area on which a moratorium on gas, or 

8 oil and gas, leasing would have been imposed; and 

9 ‘‘(ii) any restriction repealed under subpara10 graph (A)(ii). 

11 ‘‘(C) On receipt of notification by a Governor under 

12 subparagraph (B), the Secretary shall— 

13 ‘‘(i) treat the notification as a proposed revision 

14 to the leasing program maintained under this sec15 tion; and 

16 ‘‘(ii) give expedited consideration to the pro17 posed revision. 

18 ‘‘(D) For purposes of title III of the Coastal Zone 

19 Management Act of 1972 (16 U.S.C. 1451 et seq.), any 

20 activity relating to leasing and subsequent production in 

21 an area restored to consideration for gas, or oil and gas, 

22 leasing under this paragraph shall— 

23 ‘‘(i) if the leased area is located more than 20 

24 miles offshore of an adjacent State, be considered by 

25 the Secretary as necessary to the interest of national 
156 

•S 726 IS 

1 security and be carried out notwithstanding the ob2 jection of a State to a consistency certification under 

3 that Act; or 

4 ‘‘(ii) if the leased area is located not greater 

5 than 20 miles offshore of an adjacent State, be sub6 ject to section 307(c) of the Coastal Zone Manage7 ment Act (16 U.S.C. 1456(c)). 

8 ‘‘(E) An activity under subparagraph (C)(i) shall be 

9 carried out in accordance with any applicable approved 

10 State management program, to the maximum extent prac11 ticable. 

12 ‘‘(4)(A)(i) If the Governor of a State requests the 

13 President to allow gas, or oil or natural gas, leasing in 

14 the moratorium area and the President allows that leas15 ing, the State shall, without further appropriation or ac16 tion, receive 100 percent of any bonus bid paid for leasing 

17 rights in the area. 

18 ‘‘(ii) The payments under clause (i) shall end not 

19 later than the earlier of— 

20 ‘‘(I) the date that is 5 years after the first lease 

21 sale in the area; or 

22 ‘‘(II) the date on which production begins in 

23 the area. 

24 ‘‘(B)(i) On the commencement of production in an 

25 area under this subsection, the State shall share in any 
157 

•S 726 IS 

1 qualified revenues of the production without further action 

2 or appropriation in accordance with section 32(b). 

3 ‘‘(ii) The share of the State under clause (i) shall be 

4 not less than 12.5 percent of the total qualified revenues 

5 of the production. 

6 ‘‘(iii) For the purposes of section 32— 

7 ‘‘(I) the State shall be considered to be a coast8 al producing State; and 

9 ‘‘(II) the share of the State under clause (i) 

10 shall be considered to be qualified revenues. 

11 ‘‘(C) After making distributions in accordance with 

12 subparagraphs (A) and (B), and in accordance with sec13 tion 31, the Secretary shall, without further appropriation 

14 or action, distribute a conservation royalty of at least 12.5 

15 percent of any remaining qualified revenues from an area 

16 leased under this section in equal amounts, not to exceed 

17 $1,250,000,000 for any year, to— 

18 ‘‘(I) the Land and Water Conservation Fund to 

19 provide financial assistance to the Federal Govern20 ment under section 5 of the Land and Water Con21 servation Fund Act of 1965 (16 U.S.C. 460l–7); 

22 ‘‘(II) the Land and Water Conservation Fund 

23 to provide financial assistance to States under sec24 tion 6 of that Act (16 U.S.C. 460l–8); and 
158 

•S 726 IS 

1 ‘‘(III) the wildlife restoration fund established 

2 under section 3 of the Pittman-Robertson Wildlife 

3 Restoration Act (16 U.S.C. 669b). 

4 ‘‘(4) The State shall be entitled to any revenues that 

5 a coastal State would be entitled to receive under section 

6 8(g). 

7 ‘‘(5) This subsection shall not apply to any area des8 ignated as a national marine sanctuary or a national wild9 life refuge.’’. 

10 SEC. 204. 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— 
159 

•S 726 IS 

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 of the Interior may 

8 place limitations on the suspension of royalty relief grant9 ed based on market price. 

10 SEC. 205. COASTAL IMPACT ASSISTANCE PROGRAM. 

11 The Outer Continental Shelf Lands Act (43 U.S.C. 

12 1331 et seq.) is amended by adding at the end the fol13 lowing: 

14 ‘‘SEC. 32. COASTAL IMPACT ASSISTANCE PROGRAM. 

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

16 ‘‘(1) COASTAL POLITICAL SUBDIVISION.—The 

17 term ‘coastal political subdivision’ means a political 

18 subdivision of a coastal State, any part of which— 

19 ‘‘(A) is within the coastal zone (as defined 

20 in section 304 of the Coastal Zone Management 

21 Act of 1972 (16 U.S.C. 1453)) of the State; 

22 and 

23 ‘‘(B) is not more than 200 miles from the 

24 geographic center of a leased tract. 
160 

•S 726 IS 

1 ‘‘(2) COASTAL POPULATION.—The term ‘coastal 

2 population’ means the population, as determined by 

3 the most recent official data of the Census Bureau, 

4 of each political subdivision, any part of which lies 

5 within the designated coastal boundary of a State 

6 (as defined in a coastal zone management program 

7 of the State under the Coastal Zone Management 

8 Act of 1972 (16 U.S.C. 1451 et seq.)). 

9 ‘‘(3) COASTAL STATE.—The term ‘coastal 

10 State’ has the meaning given the term in section 

11 304 of the Coastal Zone Management Act of 1972 

12 (16 U.S.C. 1453). 

13 ‘‘(4) COASTLINE.—The term ‘coastline’ has the 

14 meaning given the term in section 2 of the Sub15 merged Lands Act (43 U.S.C. 1301). 

16 ‘‘(5) DISTANCE.—The term ‘distance’ means 

17 the minimum great circle distance, measured in stat18 ute miles. 

19 ‘‘(6) LEASED TRACT.—The term ‘leased tract’ 

20 means a tract that is subject to a lease under section 

21 6 or 8 for the purpose of drilling for, developing, 

22 and producing oil or natural gas resources. 

23 ‘‘(7) POLITICAL SUBDIVISION.—The term ‘polit24 ical subdivision’ means the local political jurisdiction 
161 

•S 726 IS 

1 immediately below the level of State government, in2 cluding counties, parishes, and boroughs. 

3 ‘‘(8) PRODUCING STATE.— 

4 ‘‘(A) IN GENERAL.—The term ‘producing 

5 State’ means a coastal State with a coastal sea6 ward boundary within 200 miles of the geo7 graphic center of a leased tract. 

8 ‘‘(B) EXCLUSION.—The term ‘producing 

9 State’ does not include a leased tract or portion 

10 of a leased tract that is located in a geographic 

11 area subject to a leasing moratorium on Janu12 ary 1, 2005, unless the lease was in production 

13 on that date. 

14 ‘‘(9) QUALIFIED OUTER CONTINENTAL SHELF

15 REVENUES.— 

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

17 Outer Continental Shelf revenues’ means all 

18 amounts received by the United States from 

19 each leased tract or portion of a leased tract— 

20 ‘‘(i) lying— 

21 ‘‘(I) seaward of the zone covered 

22 by section 8(g); or 

23 ‘‘(II) within the zone covered by 

24 section 8(g), but to which section 8(g) 

25 does not apply; and 
162 

•S 726 IS 

1 ‘‘(ii) the geographic center of which 

2 lies within 200 miles of any part of the 

3 coastline of any coastal State. 

4 ‘‘(B) INCLUSIONS.—The term ‘qualified 

5 Outer Continental Shelf revenues’ includes 

6 bonus bids, rents, royalties (including payments 

7 for royalty taken in kind and sold), net profit 

8 share payments, and related late-payment inter9 est from natural gas and oil leases issued under 

10 this Act. 

11 ‘‘(C) EXCLUSION.—The term ‘qualified 

12 Outer Continental Shelf revenues’ does not in13 clude any revenues (other than revenues re14 ceived under section 18(i)) from a leased tract 

15 or portion of a leased tract that is located in a 

16 geographic area subject to a leasing moratorium 

17 on January 1, 2005, unless the lease was in 

18 production on that date. 

19 ‘‘(b) PAYMENTS TO PRODUCING STATES AND COAST20 AL POLITICAL SUBDIVISIONS.— 

21 ‘‘(1) IN GENERAL.—For each of fiscal years 

22 2006 through 2011, the Secretary shall, without fur23 ther appropriation, disburse an amount equal to not 

24 more than 12.5 percent of qualified outer Conti25 nental Shelf revenues among producing States and 
163 

•S 726 IS 

1 coastal political subdivisions, in accordance with this 

2 section. 

3 ‘‘(2) DISBURSEMENT.—In each fiscal year, the 

4 Secretary shall, without further appropriation, dis5 burse to each producing State for which the Sec6 retary has approved a plan under subsection (c), and 

7 to coastal political subdivisions under paragraph (4), 

8 the funds allocated to the producing State or coastal 

9 political subdivision under this section for the fiscal 

10 year. 

11 ‘‘(3) ALLOCATION AMONG PRODUCING

12 STATES.— 

13 ‘‘(A) IN GENERAL.—The transferred 

14 amount shall be allocated to each producing 

15 State based on the ratio that— 

16 ‘‘(i) the amount of qualified outer 

17 Continental Shelf revenues generated off 

18 the coastline of the producing State; bears 

19 to 

20 ‘‘(ii) the amount of qualified outer 

21 Continental Shelf revenues generated off 

22 the coastline of all producing States. 

23 ‘‘(B) QUALIFIED OUTER CONTINENTAL

24 SHELF REVENUES.— 
164 

•S 726 IS 

1 ‘‘(i) FISCAL YEARS 2006 THROUGH

2 2008.—For each of fiscal years 2006 

3 through 2008, a calculation of a payment 

4 under this subsection shall be based on 

5 qualified outer Continental Shelf revenues 

6 received during fiscal year 2005. 

7 ‘‘(ii) FISCAL YEARS 2009 THROUGH

8 2011.—For each of fiscal years 2009 

9 through 2011, a calculation of a payment 

10 under this subsection shall be based on 

11 qualified outer Continental Shelf revenues 

12 received during fiscal year 2008. 

13 ‘‘(C) MULTIPLE PRODUCING STATES.—If 

14 more than 1 producing State is located within 

15 200 miles of any portion of a leased tract, the 

16 amount allocated to each producing State for 

17 the leased tract shall be inversely proportional 

18 to the distance between— 

19 ‘‘(i) the nearest point on the coastline 

20 of the producing State; and 

21 ‘‘(ii) the geographic center of the 

22 leased tract. 

23 ‘‘(D) MINIMUM ALLOCATION.—An amount 

24 allocated to a producing State under this para-
165 

•S 726 IS 

1 graph shall be not less than 1 percent of the 

2 transferred amount. 

3 ‘‘(4) PAYMENTS TO COASTAL POLITICAL SUB4 DIVISIONS.— 

5 ‘‘(A) IN GENERAL.—The Secretary shall 

6 pay 35 percent of the amount allocated under 

7 paragraph (3) to the coastal political subdivi8 sions in the producing State. 

9 ‘‘(B) FORMULA.—Of the amount paid by 

10 the Secretary to coastal political subdivisions 

11 under subparagraph (A)— 

12 ‘‘(i) 25 percent shall be allocated to 

13 each coastal political subdivision in the 

14 proportion that— 

15 ‘‘(I) the coastal population of the 

16 coastal political subdivision; bears to 

17 ‘‘(II) the coastal population of all 

18 coastal political subdivisions in the 

19 producing State; 

20 ‘‘(ii) 25 percent shall be allocated to 

21 each coastal political subdivision in the 

22 proportion that— 

23 ‘‘(I) the number of miles of 

24 coastline of the coastal political sub25 division; bears to 
166 

•S 726 IS 

1 ‘‘(II) the number of miles of 

2 coastline of all coastal political sub3 divisions in the producing State; and 

4 ‘‘(iii) 50 percent shall be allocated in 

5 amounts that are inversely proportional to 

6 the respective distances between the points 

7 in each coastal political subdivision that 

8 are closest to the geographic center of each 

9 leased tract, as determined by the Sec10 retary. 

11 ‘‘(C) EXCEPTION FOR LOUISIANA.—For 

12 the purposes of subparagraph (B)(ii), the coast13 line for coastal political subdivisions in the 

14 State of Louisiana without a coastline shall be 

15 the average length of the coastline of all other 

16 coastal political subdivisions in the State of 

17 Louisiana. 

18 ‘‘(D) EXCEPTION FOR ALASKA.—For the 

19 purposes of carrying out subparagraph (B)(iii) 

20 in the State of Alaska, the amount allocated 

21 shall be divided equally among the 2 coastal po22 litical subdivisions that are closest to the geo23 graphic center of a leased tract. 

24 ‘‘(E) EXCLUSION OF CERTAIN LEASED

25 TRACTS.—For purposes of subparagraph 
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•S 726 IS 

1 (B)(iii), a leased tract or portion of a leased 

2 tract shall be excluded if the tract or portion of 

3 a leased tract is located in a geographic area 

4 subject to a leasing moratorium on January 1, 

5 2005, unless the lease was in production on 

6 that date. 

7 ‘‘(5) NO APPROVED PLAN.— 

8 ‘‘(A) IN GENERAL.—Subject to subpara9 graph (B) and except as provided in subpara10 graph (C), if any amount allocated to a pro11 ducing State or coastal political subdivision 

12 under paragraph (3) or (4) is not disbursed be13 cause the producing State does not have in ef14 fect a plan that has been approved by the Sec15 retary under subsection (c), the Secretary shall 

16 allocate the undisbursed amount equally among 

17 all other producing States. 

18 ‘‘(B) RETENTION OF ALLOCATION.—The 

19 Secretary shall hold in escrow an undisbursed 

20 amount described in subparagraph (A) until the 

21 date that the final appeal regarding the dis22 approval of a plan submitted under subsection 

23 (c) is decided. 

24 ‘‘(C) WAIVER.—The Secretary may waive 

25 the requirements of subparagraph (A) with re-
168 

•S 726 IS 

1 spect to an allocated share of a producing State 

2 and hold the allocable share in escrow if the 

3 Secretary determines that the producing State 

4 is making a good faith effort to develop and 

5 submit, or update, a plan in accordance with 

6 subsection (c). 

7 ‘‘(c) COASTAL IMPACT ASSISTANCE PLAN.— 

8 ‘‘(1) SUBMISSION OF STATE PLAN.— 

9 ‘‘(A) IN GENERAL.—Not later than July 1, 

10 2008, the Governor of a producing State shall 

11 submit to the Secretary a coastal impact assist12 ance plan. 

13 ‘‘(B) PUBLIC PARTICIPATION.—In carrying 

14 out subparagraph (A), the Governor shall solicit 

15 local input and provide for public participation 

16 in the development of the plan. 

17 ‘‘(2) APPROVAL.— 

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

19 approve a plan of a producing State submitted 

20 under paragraph (1) before disbursing any 

21 amount to the producing State, or to a coastal 

22 political subdivision located in the producing 

23 State, under this section. 
169 

•S 726 IS 

1 ‘‘(B) COMPONENTS.—The Secretary shall 

2 approve a plan submitted under paragraph (1) 

3 if— 

4 ‘‘(i) the Secretary determines that the 

5 plan is consistent with the uses described 

6 in subsection (d); and 

7 ‘‘(ii) the plan contains— 

8 ‘‘(I) the name of the State agen9 cy that will have the authority to rep10 resent and act on behalf of the pro11 ducing State in dealing with the Sec12 retary for purposes of this section; 

13 ‘‘(II) a program for the imple14 mentation of the plan that describes 

15 how the amounts provided under this 

16 section to the producing State will be 

17 used; 

18 ‘‘(III) for each coastal political 

19 subdivision that receives an amount 

20 under this section— 

21 ‘‘(aa) the name of a contact 

22 person; and 

23 ‘‘(bb) a description of how 

24 the coastal political subdivision 
170 

•S 726 IS 

1 will use amounts provided under 

2 this section; 

3 ‘‘(IV) a certification by the Gov4 ernor that ample opportunity has been 

5 provided for public participation in 

6 the development and revision of the 

7 plan; and 

8 ‘‘(V) a description of measures 

9 that will be taken to determine the 

10 availability of assistance from other 

11 relevant Federal resources and pro12 grams. 

13 ‘‘(3) AMENDMENT TO A PLAN.—Any amend14 ment to a plan submitted under paragraph (1) shall 

15 be— 

16 ‘‘(A) developed in accordance with this 

17 subsection; and 

18 ‘‘(B) submitted to the Secretary for ap19 proval or disapproval under paragraph (4). 

20 ‘‘(4) PROCEDURE.—Except as provided in sub21 paragraph (B), not later than 90 days after the date 

22 on which a plan or amendment to a plan is sub23 mitted under paragraph (1) or (3), the Secretary 

24 shall approve or disapprove the plan or amendment. 

25 ‘‘(d) AUTHORIZED USES.— 
171 

•S 726 IS 

1 ‘‘(1) IN GENERAL.—A producing State or coast2 al political subdivision shall use any amount received 

3 under this section, including any amount deposited 

4 in a trust fund that is administered by the State or 

5 coastal political subdivision and dedicated to a use 

6 consistent with this section, in accordance with all 

7 applicable Federal and State law, only for 1 or more 

8 of the following purposes: 

9 ‘‘(A) Projects and activities for the con10 servation, protection, or restoration of coastal 

11 areas, including wetland. 

12 ‘‘(B) Mitigation of damage to fish, wildlife, 

13 or natural resources. 

14 ‘‘(C) Planning assistance and the adminis15 trative costs of complying with this section. 

16 ‘‘(D) Implementation of a federally-ap17 proved marine, coastal, or comprehensive con18 servation management plan. 

19 ‘‘(E) Mitigation of the impact of outer 

20 Continental Shelf activities through funding of 

21 onshore infrastructure, education, health care, 

22 and public service needs. 

23 ‘‘(2) COMPLIANCE WITH AUTHORIZED USES.— 

24 If the Secretary determines that any expenditure 

25 made by a producing State or coastal political sub-
172 

•S 726 IS 

1 division is not consistent with this subsection, the 

2 Secretary shall not disburse any additional amount 

3 under this section to the producing State or the 

4 coastal political subdivision until all amounts obli5 gated for unauthorized uses have been repaid or re6 obligated for authorized uses.’’. 

7 SEC. 206. ROCKY MOUNTAIN GAS PRODUCTION. 

8 Section 1421(d) of the Safe Drinking Water Act (42 

9 U.S.C. 300h(d) is amended by striking paragraph (1) and 

10 inserting the following: 

11 ‘‘(1) UNDERGROUND INJECTION.— 

12 ‘‘(A) IN GENERAL.—The term ‘under13 ground injection’ means the subsurface em14 placement of fluids by well injection. 

15 ‘‘(B) EXCLUSIONS.—The term ‘under16 ground injection’ excludes— 

17 ‘‘(i) the underground injection of nat18 ural gas for purposes of storage; and 

19 ‘‘(ii) the underground injection of 

20 fluids or propping agents pursuant to hy21 draulic fracturing operations related to an 

22 oil or gas production activity.’’. 
173 

•S 726 IS 

1 SEC. 207. GAS METHANE RESEARCH. 

2 (a) RESEARCH CENTER.—Section 3(b)(1) of the 

3 Methane Hydrate Research and Development Act of 2000 

4 (30 U.S.C. 1902 note) is amended— 

5 (1) in subparagraph (F), by striking ‘‘and’’ at 

6 the end; 

7 (2) in subparagraph (G), by striking the period 

8 at the end and inserting ‘‘; and’’; and 

9 (3) by adding at the end the following: 

10 ‘‘(H) establish a Virginia Beach Methane 

11 Hydrates Research Center in Virginia Beach, 

12 Virginia.’’. 

13 (b) AUTHORIZATION OF APPROPRIATIONS.—Section 

14 5 of the Methane Hydrate Research and Development Act 

15 of 2000 (30 U.S.C. 1902 note) is amended to read as fol16 lows: 

17 ‘‘SEC. 5. AUTHORIZATION OF APPROPRIATIONS. 

18 ‘‘There is authorized to be appropriated to the Sec19 retary of Energy to carry out this Act $50,000,000 for 

20 each of fiscal years 2006 through 2009, to remain avail21 able until expended.’’. 

22 (c) SUNSET.—Section 6 of the Methane Hydrate Re23 search and Development Act of 2000 (30 U.S.C. 1902 

24 note) is amended by striking ‘‘2005’’ and inserting 

25 ‘‘2009’’. 
174 

•S 726 IS 

1 SEC. 208. ALASKA NATURAL GAS PIPELINE ACT. 

2 The Alaska Natural Gas Pipeline Act (15 U.S.C. 720 

3 et seq.) is amended— 

4 (1) in section 103 (15 U.S.C. 720a), by adding 

5 at the end the following: 

6 ‘‘(j) REPORT.—Not later than the date that is 180 

7 days after the date of enactment of the Natural Gas Price 

8 Reduction Act of 2005 and every 180 days thereafter until 

9 the Alaska natural gas pipeline begins operation, the Com10 mission shall submit to Congress a report describing the 

11 progress made in licensing and constructing such pipeline 

12 and any issues impeding that progress.’’; and 

13 (2) in section 107(a) (15 (U.S.C. 720e(a)), by 

14 striking paragraph (3) and inserting the following: 

15 ‘‘(3) the validity of any determination, permit, 

16 approval, authorization, review, or other such action 

17 taken under any provision of law (including sub18 chapter II of chapter 5, and chapter 7, of title 5, 

19 United States Code (commonly known as the Admin20 istrative Procedure Act), the Endangered Species 

21 Act of 1973 (16 U.S.C. 1531 et seq.), the National 

22 Environmental Policy Act of 1969 (42 U.S.C. 4231 

23 et seq.), and the National Historic Preservation Act 

24 (16 U.S.C. 470 et seq.)) that relates to a gas trans25 portation project under section 103.’’. 
175 

•S 726 IS 

1 SEC. 209. GAS HYDRATE PRODUCTION INCENTIVES. 

2 (a) PURPOSE.—The purpose of this section is to pro3 mote natural gas production from the abundant natural 

4 gas hydrate resources on the outer Continental Shelf and 

5 Federal land in Alaska by providing royalty incentives for 

6 the production. 

7 (b) SUSPENSION OF ROYALTIES.— 

8 (1) DEFINITIONS.—In this subsection: 

9 (A) ELIGIBLE LEASE.—The term ‘‘eligible 

10 lease’’ means a lease— 

11 (i) that is issued under the Outer 

12 Continental Shelf Lands Act (43 U.S.C. 

13 1331 et seq.); 

14 (ii) that is issued before January 1, 

15 2016; and 

16 (iii) in the case of a lease of natural 

17 gas, production from the gas hydrate re18 source under that begins not later than 

19 December 31, 2017. 

20 (B) GAS HYDRATE RESOURCE.—The term 

21 ‘‘gas hydrate resource’’ includes— 

22 (i) the natural gas content of a gas 

23 hydrate within the hydrate stability zone; 

24 and 

25 (ii) free natural gas trapped by and 

26 beneath the hydrate stability zone. 
176 

•S 726 IS 

1 (2) SUSPENSION OF ROYALTIES.— 

2 (A) IN GENERAL.—The Secretary of the 

3 Interior shall suspend royalties under this sec4 tion for gas hydrate resources with a suspen5 sion volume of not less than 50,000,000,000 

6 cubic feet of natural gas produced from the re7 source per square mile of the leased tract. 

8 (B) SIZE OF LEASED TRACTS.—The min9 imum suspension volume under this section for 

10 a leased tract that is smaller or larger than 9 

11 square miles shall be adjusted proportionally. 

12 (3) EFFECT OF SUSPENSION.—The suspension 

13 of royalties under this section shall be in addition to 

14 royalty relief under any law that does not grant a 

15 gas hydrate production incentive. 

16 (c) RULEMAKING.—Not later than 1 year after the 

17 date of enactment of this Act, the Secretary shall complete 

18 any rulemaking necessary to carry out this section. 

19 SEC. 210. OIL AND GAS EXPLORATION AND PRODUCTION 

20 DEFINED. 

21 Section 502 of the Federal Water Pollution Control 

22 Act (33 U.S.C. 1362) is amended by adding at the end 

23 the following: 

24 ‘‘(24) OIL AND GAS EXPLORATION AND PRO25 DUCTION, PROCESSING, OR TREATMENT OPERATIONS
177 

•S 726 IS 

1 OR TRANSMISSION FACILITIES.—The term ‘oil and 

2 gas exploration and production, processing, or treat3 ment operations or transmission facilities’ means all 

4 field activities or operations associated with oil or 

5 gas exploration, production, processing, or treatment 

6 operations, or with oil or gas transmission facilities, 

7 including activities necessary to prepare a site for 

8 drilling and for the movement and placement of 

9 drilling equipment, whether or not such field activi10 ties or operations may be considered to be construc11 tion activities.’’. 

12 SEC. 211. MARGINAL PROPERTY PRODUCTION INCENTIVES. 

13 (a) DEFINITION OF MARGINAL PROPERTY.— 

14 (1) IN GENERAL.—Until the Secretary of the 

15 Interior promulgates regulations under subsection 

16 (e) that prescribe a different definition, in this sec17 tion the term ‘‘marginal property’’ means an on18 shore unit, communitization agreement, or lease not 

19 within a unit or communitization agreement, that 

20 produces on average the combined equivalent of less 

21 than 15 barrels of oil per well per day or 90 million 

22 British thermal units of gas per well per day cal23 culated based on the average over the 3 most recent 

24 production months, including only wells that produce 
178 

•S 726 IS 

1 on more than half of the days during those 3 pro2 duction months. 

3 (b) CONDITIONS FOR REDUCTION OF ROYALTY

4 RATE.—Until the Secretary of the Interior promulgates 

5 regulations under subsection (e) that prescribe different 

6 thresholds or standards, the Secretary of the Interior shall 

7 reduce the royalty rate on— 

8 (1) oil production from marginal properties as 

9 described in subsection (c) if the spot price of West 

10 Texas Intermediate crude oil at Cushing, Oklahoma, 

11 is, on average, less than $15 per barrel for 90 con12 secutive trading days; and 

13 (2) gas production from marginal properties as 

14 described in subsection (c) if the spot price of nat15 ural gas delivered at Henry Hub, Louisiana, is, on 

16 average, less than $2 per million British thermal 

17 units for 90 consecutive trading days. 

18 (c) REDUCED ROYALTY RATE.— 

19 (1) IN GENERAL.—When a marginal property 

20 meets the conditions described in subsection (b), the 

21 royalty rate shall be the lesser of— 

22 (A) 5 percent; or 

23 (B) the rate under any other statutory or 

24 regulatory royalty relief provision that applies 

25 to the affected production. 
179 

•S 726 IS 

1 (2) PERIOD OF EFFECTIVENESS.—The reduced 

2 royalty rate under this subsection shall be effective 

3 beginning on the first day of the production month 

4 following the date on which the applicable condition 

5 specified in subsection (b) is met. 

6 (d) TERMINATION OF REDUCED ROYALTY RATE.— 

7 A royalty rate described in subsection (c)(1)(A) shall ter8 minate— 

9 (1) with respect to oil production from a mar10 ginal property, on the first day of the production 

11 month following the date on which— 

12 (A) the spot price of West Texas Inter13 mediate crude oil at Cushing, Oklahoma, on av14 erage, exceeds $15 per barrel for 90 consecutive 

15 trading days; or 

16 (B) the property no longer qualifies as a 

17 marginal property; and 

18 (2) with respect to gas production from a mar19 ginal property, on the first day of the production 

20 month following the date on which— 

21 (A) the spot price of natural gas delivered 

22 at Henry Hub, Louisiana, on average, exceeds 

23 $2 per million British thermal units for 90 con24 secutive trading days; or 
180 

•S 726 IS 

1 (B) the property no longer qualifies as a 

2 marginal property. 

3 (e) REGULATIONS PRESCRIBING DIFFERENT RE4 LIEF.— 

5 (1) DISCRETIONARY REGULATIONS.—The Sec6 retary of the Interior may by regulation prescribe 

7 different parameters, standards, and requirements 

8 for, and a different degree or extent of royalty relief 

9 for, marginal properties in lieu of those prescribed in 

10 subsections (a) through (d). 

11 (2) MANDATORY REGULATIONS.—Not later 

12 than 18 months after the date of enactment of this 

13 Act, the Secretary of the Interior shall by regula14 tion— 

15 (A) prescribe standards and requirements 

16 for, and the extent of royalty relief for, mar17 ginal properties for oil and gas leases on the 

18 Outer Continental Shelf; and 

19 (B) define what constitutes a marginal 

20 property on the Outer Continental Shelf for the 

21 purposes of this section. 

22 (3) CONSIDERATIONS.—In promulgating regu23 lations under this subsection, the Secretary of the 

24 Interior may consider— 

25 (A) oil and gas prices and market trends; 
181 

•S 726 IS 

1 (B) production costs; 

2 (C) abandonment costs; 

3 (D) Federal and State tax provisions and 

4 the effects of those provisions on production ec5 onomics; 

6 (E) other royalty relief programs; 

7 (F) regional differences in average well8 head prices; 

9 (G) national energy security issues; and 

10 (H) other relevant matters. 

11 (f) SAVINGS PROVISION.—Nothing in this section 

12 prevents a lessee from receiving royalty relief or a royalty 

13 reduction pursuant to any other law (including a regula14 tion) that provides more relief than the amounts provided 

15 by this section. 

16 SEC. 212. EFFICIENT GOVERNMENT PROCESSING OF PER17 MIT APPLICATIONS. 

18 (a) EXECUTIVE ORDERS CODIFIED.—Executive Or19 ders numbered 13211 and 13212, issued on May 18, 2001 

20 (66 Fed. Reg. 28,355; 66 Fed. Reg. 28,357), are enacted 

21 into law. 

22 (b) PROCESSING PERFORMANCE REPORT.— 

23 (1) IN GENERAL.—Not later than December 31, 

24 2006, and annually thereafter, the Secretary of En25 ergy shall submit to Congress a report evaluating 
182 

•S 726 IS 

1 the performance of the task force established under 

2 Executive Order number 13212 (66 Fed. Reg. 

3 28,357) in carrying out the duties of the task force. 

4 (2) INCLUSION.—The report described in para5 graph (1) shall include— 

6 (A) the number of permits processed by 

7 the task force in the preceding year; 

8 (B) the average time required by the task 

9 force to take a final action; 

10 (C) a description of any environmental 

11 variance issued by the task force; 

12 (D) an identification of any impediment to 

13 efficient processing of permits by the task force; 

14 and 

15 (E) any incentive created to reduce proc16 essing time of the task force. 

17 SEC. 213. DEADLINE FOR DECISION ON APPEALS OF CON18 SISTENCY DETERMINATION. 

19 (a) IN GENERAL.—Section 319 of the Coastal Zone 

20 Management Act of 1972 (16 U.S.C. 1465) is amended 

21 to read as follows: 

22 ‘‘APPEALS TO THE SECRETARY

23 ‘‘SEC. 319. (a) NOTICE.—The Secretary shall publish 

24 an initial notice in the Federal Register not later than 30 

25 days after the date of the filing of any appeal to the Sec26 retary of a consistency determination under section 307. 
183 

•S 726 IS 

1 ‘‘(b) CLOSURE OF RECORD.—(1) Not later than the 

2 end of the 120-day period beginning on the date of publi3 cation of an initial notice under subsection (a)— 

4 ‘‘(A) the Secretary shall receive no more filings 

5 on the appeal; and 

6 ‘‘(B) the administrative record regarding the 

7 appeal shall be closed. 

8 ‘‘(2) On the closure of the administrative record, the 

9 Secretary shall publish a notice that the administrative 

10 record has been closed. 

11 ‘‘(c) DEADLINE FOR DECISION.—Not later than 120 

12 days after the closure of the administrative record, the 

13 Secretary shall issue a decision in any appeal filed under 

14 section 307. 

15 ‘‘(d) APPLICATION.—This section applies to— 

16 ‘‘(1) any appeal initiated by the Secretary; and 

17 ‘‘(2) any appeal filed by an applicant.’’. 

18 (b) APPLICATION.—Section 319(a) of the Coastal 

19 Zone Management Act of 1972 (as amended by this sub20 section (a)) shall not apply to an appeal initiated or filed 

21 before the date of enactment of this Act. 

22 (c) CLOSURE OF RECORD FOR APPEAL FILED BE23 FORE DATE OF ENACTMENT.—Notwithstanding section 

24 319(b)(1) of the Coastal Zone Management Act of 1972 

25 (as amended by subsection (a)), in the case of an appeal 
184 

•S 726 IS 

1 of a consistency determination under section 307 of that 

2 Act initiated or filed before the date of enactment of this 

3 Act— 

4 (1) the Secretary of Commerce shall receive no 

5 more filings on the appeal; and 

6 (2) not later than 120 days after the date of 

7 enactment of this Act, the administrative record re8 garding the appeal shall be closed. 

9 SEC. 214. OUTER CONTINENTAL SHELF PROVISIONS. 

10 (a) STORAGE ON THE OUTER CONTINENTAL

11 SHELF.—Section 5(a)(5) of the Outer Continental Shelf 

12 Lands Act (43 U.S.C. 1334(a)(5)) is amended by insert13 ing ‘‘from any source’’ after ‘‘oil and gas’’. 

14 (b) DEEPWATER PROJECTS.—Section 6 of the Deep15 water Port Act of 1974 (33 U.S.C. 1505) is amended by 

16 adding at the end the following: 

17 ‘‘(d) In carrying out section 5(f)— 

18 ‘‘(1) to the extent that other Federal agencies 

19 have prepared environmental impact statements, are 

20 conducting studies, or are monitoring the affected 

21 human, marine, or coastal environment, the Sec22 retary may use the information derived from those 

23 activities in lieu of directly conducting the activities; 

24 and 
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1 ‘‘(2) the Secretary may use information ob2 tained from any State or local government or from 

3 any person.’’. 

4 (c) NATURAL GAS DEFINED.—Section 3 of the Deep5 water Port Act of 1974 (33 U.S.C. 1502) is amended by 

6 striking paragraph (13) and inserting the following: 

7 ‘‘(13) ‘natural gas’ means— 

8 ‘‘(A) natural gas unmixed; or 

9 ‘‘(B) any mixture of natural or artificial 

10 gas, including compressed or liquefied natural 

11 gas, natural gas liquids, liquefied petroleum 

12 gas, and condensate recovered from natural 

13 gas;’’. 

14 SEC. 215. OFFICE OF FEDERAL ENERGY PROJECT COORDI15 NATION. 

16 (a) ESTABLISHMENT.—The President shall establish 

17 the Office of Federal Energy Project Coordination (re18 ferred to in this section as the ‘‘Office’’) within the Execu19 tive Office of the President in the same manner and with 

20 the same mission as the White House Energy Projects 

21 Task Force established by Executive Order No. 13212 (42 

22 U.S.C. 13201 note). 

23 (b) STAFF.—The Office shall be staffed by functional 

24 experts from relevant Federal agencies on a nonreimburs25 able basis to carry out the mission of the Office. 
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1 (c) REPORT.— 

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

3 the date of enactment of this Act, and annually 

4 thereafter, the Office shall submit to Congress a re5 port that describes any activity carried out under 

6 this section to coordinate and expedite Federal deci7 sions on energy projects. 

8 (2) INCLUSIONS.—The report shall include a 

9 description of— 

10 (A) any progress made toward improving 

11 the Federal decisionmaking process; and 

12 (B) any additional recommendation of the 

13 Office relating to a change required to establish 

14 a more effective and efficient Federal permit15 ting process. 

16 SEC. 216. FEDERAL ONSHORE OIL AND GAS LEASING AND 

17 PERMITTING PRACTICES. 

18 (a) REVIEW OF ONSHORE OIL AND GAS LEASING

19 PRACTICES.— 

20 (1) IN GENERAL.—The Secretary of the Inte21 rior, in consultation with the Secretary of Agri22 culture with respect to National Forest System land 

23 under the jurisdiction of the Department of Agri24 culture, shall perform an internal review of current 
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1 Federal onshore oil and gas leasing and permitting 

2 practices. 

3 (2) INCLUSIONS.—The review shall include the 

4 process for— 

5 (A) accepting or rejecting an offer to lease; 

6 (B) an administrative appeal of a decision 

7 or order of an officer or employee of the Bu8 reau of Land Management with respect to a 

9 Federal oil or gas lease; 

10 (C) considering a surface use plan of oper11 ation, including the timeframe during which a 

12 plan shall be considered and any recommenda13 tion of the Secretary of the Interior for improv14 ing and expediting the process; and 

15 (D) identifying a stipulation to address a 

16 site-specific concern or condition, including a 

17 stipulation relating to an environment or re18 source use conflict. 

19 (b) REPORT.—Not later than 180 days after the date 

20 of enactment of this Act, the Secretary of the Interior and 

21 the Secretary of Agriculture shall submit to Congress a 

22 report that describes— 

23 (1) any action taken under section 3 of Execu24 tive Order No. 13212 (42 U.S.C. 13201 note); and 
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1 (2) any action taken relating to, or any plan to 

2 improve, the Federal onshore oil and gas leasing 

3 program. 

4 SEC. 217. MANAGEMENT OF FEDERAL OIL AND GAS LEAS5 ING PROGRAMS. 

6 (a) TIMELY ACTION ON LEASES AND PERMITS.—To 

7 ensure timely action relating to oil and gas leases and ap8 plications for permits to drill on land otherwise available 

9 for leasing, the Secretary of the Interior shall— 

10 (1) ensure expeditious compliance with section 

11 102(2)(C) of the National Environmental Policy Act 

12 of 1969 (42 U.S.C. 4332(2)(C)); 

13 (2) improve consultation and coordination with 

14 the States and the public; and 

15 (3) improve the collection, storage, and retrieval 

16 of information relating to a leasing activity. 

17 (b) BEST MANAGEMENT PRACTICES.— 

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

19 after the date of enactment of this Act, the Sec20 retary shall develop and implement best manage21 ment practices to— 

22 (A) improve the administration of the on23 shore oil and gas leasing program under the 

24 Mineral Leasing Act (30 U.S.C. 181 et seq.); 

25 and 
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1 (B) ensure timely action on any oil or gas 

2 lease or application for a permit to drill on land 

3 otherwise available for leasing. 

4 (2) CONSIDERATIONS.—In developing the best 

5 management practices under paragraph (1), the Sec6 retary shall consider any recommendations from the 

7 review under section 216. 

8 (3) REGULATIONS.—Not later than 180 days 

9 after the development of best management practices 

10 under paragraph (1), the Secretary shall publish, for 

11 public comment, proposed regulations that set forth 

12 specific timeframes for processing leases and appli13 cations in accordance with the practices, including 

14 deadlines for— 

15 (A) approving or disapproving resource 

16 management plans and related documents, lease 

17 applications, and surface use plans; and 

18 (B) related administrative appeals. 

19 (c) IMPROVED ENFORCEMENT.—The Secretary shall 

20 improve inspection and enforcement of oil and gas activi21 ties, including enforcement of terms and conditions in per22 mits to drill. 

23 (d) AUTHORIZATION OF APPROPRIATIONS.—In addi24 tion to amounts authorized to be appropriated to carry 

25 out section 17 of the Mineral Leasing Act (30 U.S.C. 
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•S 726 IS 

1 226), there are authorized to be appropriated to the Sec2 retary for each of fiscal years 2006 through 2009— 

3 (1) $40,000,000 to carry out subsections (a) 

4 and (b); and 

5 (2) $20,000,000 to carry out subsection (c). 

6 SEC. 218. CONSULTATION REGARDING OIL AND GAS LEAS7 ING ON PUBLIC LAND. 

8 (a) IN GENERAL.—Not later than 180 days after the 

9 date of enactment of this Act, the Secretary of the Interior 

10 and the Secretary of Agriculture shall enter into a memo11 randum of understanding regarding oil and gas leasing 

12 on— 

13 (1) public land under the jurisdiction of the 

14 Secretary of the Interior; and 

15 (2) National Forest System land under the ju16 risdiction of the Secretary of Agriculture. 

17 (b) CONTENTS.—The memorandum of understanding 

18 shall include provisions that— 

19 (1) establish administrative procedures and 

20 lines of authority that ensure timely processing of oil 

21 and gas lease applications, surface use plans of oper22 ation, and applications for permits to drill, including 

23 steps for processing surface use plans and applica24 tions for permits to drill consistent with the 
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1 timelines established by the amendment made by 

2 section 220; 

3 (2) eliminate duplication of effort by providing 

4 for coordination of planning and environmental com5 pliance efforts; and 

6 (3) ensure that any stipulation in a lease is— 

7 (A) applied consistently; 

8 (B) coordinated between agencies; and 

9 (C) only as restrictive as necessary to pro10 tect the resource for which the stipulation is ap11 plied. 

12 (c) DATA RETRIEVAL SYSTEM.— 

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

14 the date of enactment of this Act, the Secretary of 

15 the Interior and the Secretary of Agriculture shall 

16 establish a joint data retrieval system to— 

17 (A) track applications and formal requests 

18 made in accordance with the Federal onshore 

19 oil and gas leasing program; and 

20 (B) provide information regarding the sta21 tus of an application or request in the Depart22 ment of the Interior and the Department of Ag23 riculture. 

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 to— 

4 (A) track surface resource values to aid in 

5 resource management; and 

6 (B) process surface use plans of operation 

7 and applications for permits to drill. 

8 SEC. 219. PILOT PROJECT TO IMPROVE FEDERAL PERMIT 

9 COORDINATION. 

10 (a) DEFINITIONS.—In this section: 

11 (1) MEMORANDUM OF UNDERSTANDING.—The 

12 term ‘‘memorandum of understanding’’ means the 

13 memorandum of understanding entered into under 

14 subsection (c). 

15 (2) PILOT PROJECT.—The term ‘‘pilot project’’ 

16 means the Federal permit streamline pilot project 

17 established under subsection (b). 

18 (3) PILOT PROJECT OFFICE.—The term ‘‘pilot 

19 project office’’ means each of the following field of20 fices of the Bureau of Land Management: 

21 (A) Rawlins, Wyoming. 

22 (B) Buffalo, Wyoming. 

23 (C) Miles City, Montana 

24 (D) Farmington, New Mexico. 

25 (E) Carlsbad, New Mexico. 
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1 (F) Glenwood Springs, Colorado. 

2 (G) Vernal, Utah. 

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

4 the Secretary of the Interior. 

5 (b) ESTABLISHMENT.—The Secretary shall establish 

6 a Federal permit streamlining pilot project. 

7 (c) MEMORANDUM OF UNDERSTANDING.— 

8 (1) IN GENERAL.—Not later than 90 days after 

9 the date of enactment of this Act, the Secretary 

10 shall enter into a memorandum of understanding 

11 with the Secretary of Agriculture, the Administrator 

12 of the Environmental Protection Agency, and the 

13 Chief of Engineers of the Corps of Engineers to 

14 carry out the pilot project. 

15 (2) STATE PARTICIPATION.—The Secretary 

16 may request that the Governors of Wyoming, Mon17 tana, Colorado, Utah, and New Mexico enter into 

18 the memorandum of understanding. 

19 (d) PILOT PROJECT PERSONNEL.— 

20 (1) DESIGNATION OF INITIAL PERSONNEL.— 

21 (A) IN GENERAL.—Not later than 30 days 

22 after the date on which the memorandum of un23 derstanding is entered into under subsection 

24 (c), each of the Federal signatories to the 

25 memorandum of understanding referred to in 
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1 subsection (c)(1) shall assign to each of the 

2 pilot project offices, on a nonreimbursable 

3 basis, an employee who has expertise in the reg4 ulatory issues relating to the office in which the 

5 employee is employed, including, as applicable, 

6 the areas of expertise described in subpara7 graph (B). 

8 (B) AREAS OF EXPERTISE.—The areas of 

9 expertise referred to in subparagraph (A) in10 clude expertise in— 

11 (i) the consultations and the prepara12 tion of biological opinions under section 7 

13 of the Endangered Species Act of 1973 (16 

14 U.S.C. 1536); 

15 (ii) permits under section 404 of Fed16 eral Water Pollution Control Act (33 

17 U.S.C. 1344); 

18 (iii) regulatory matters under the 

19 Clean Air Act (42 U.S.C. 7401 et seq.); 

20 (iv) planning under the National For21 est Management Act of 1976 (16 U.S.C. 

22 472a et seq.); and 

23 (v) the preparation of analyses under 

24 the National Environmental Policy Act of 

25 1969 (42 U.S.C. 4321 et seq.). 
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1 (C) DUTIES.—Each employee assigned 

2 under subparagraph (A) shall— 

3 (i) not later than 90 days after the 

4 date of assignment, report to the field 

5 manager of the pilot project office to which 

6 the employee is assigned; 

7 (ii) be responsible for all issues relat8 ing to the jurisdiction of the assigning 

9 agency or office; and 

10 (iii) participate as part of the team of 

11 personnel working on proposed energy 

12 projects, planning, and environmental anal13 yses. 

14 (2) ADDITIONAL PERSONNEL.—The Secretary 

15 shall assign to each pilot project office any addi16 tional personnel the Secretary determines are nec17 essary to ensure the effective implementation of— 

18 (A) the pilot project; and 

19 (B) other programs administered by the 

20 pilot project offices, including inspection and 

21 enforcement activities relating to energy devel22 opment on Federal land, in accordance with the 

23 multiple use mandate of the Federal Land Pol24 icy and Management Act of 1976 (43 U.S.C. 

25 1701 et seq). 
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1 (e) REPORTS.—Not later than 3 years after the date 

2 of enactment of this Act, the Secretary shall submit to 

3 the appropriate committees of Congress a report that— 

4 (1) outlines the results of the pilot project; and 

5 (2) makes a recommendation to the President 

6 on whether the pilot project should be carried out 

7 throughout the United States. 

8 (f) EFFECT.—Nothing in this section affects— 

9 (1) the operation of any Federal or State law; 

10 or 

11 (2) any delegation of authority made by the 

12 head of a Federal agency, the employees of which 

13 are participating in the pilot project. 

14 SEC. 220. DEADLINE FOR CONSIDERATION OF APPLICA15 TIONS FOR PERMITS. 

16 Section 17 of the Mineral Leasing Act (30 U.S.C. 

17 226) is amended by adding at the end the following: 

18 ‘‘(p)(1) Not later than 10 days after the date on 

19 which the Secretary receives an application for a permit 

20 to drill, the Secretary shall— 

21 ‘‘(A) notify the applicant that the application is 

22 complete; or 

23 ‘‘(B)(i) notify the applicant that information is 

24 missing from the application; and 
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1 ‘‘(ii) specify any information that is required to 

2 be submitted for the application to be complete. 

3 ‘‘(2) Not later than 30 days after an applicant has 

4 submitted a complete application for a permit to drill, the 

5 Secretary shall— 

6 ‘‘(A) issue the permit; or 

7 ‘‘(B)(i) defer making a decision on the permit; 

8 and 

9 ‘‘(ii) provide notice to the applicant that speci10 fies any steps that the applicant needs to take for 

11 the permit to drill to be issued. 

12 ‘‘(3)(A) If the Secretary provides notice under para13 graph (2)(B)(ii), the applicant shall have a period of 2 

14 years from the date of receipt of the notice in which to 

15 complete all requirements specified by the Secretary, in16 cluding providing information needed for compliance with 

17 the National Environmental Policy Act of 1969 (42 U.S.C. 

18 4321 et seq.). 

19 ‘‘(B) If the applicant completes the requirements 

20 within the period specified in subparagraph (A), the Sec21 retary shall issue a decision on the permit not later than 

22 10 days after the date of completion of the requirements. 

23 ‘‘(C) If the applicant does not complete the require24 ments within the period specified in subparagraph (A), the 

25 Secretary shall deny the permit. 
198 

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1 ‘‘(q) On a quarterly basis, each field office of the Bu2 reau of Land Management and the Forest Service shall 

3 submit to the Secretary of the Interior or the Secretary 

4 of Agriculture, respectively, a report that— 

5 ‘‘(1) specifies the number of applications for 

6 permits to drill received by the field office during the 

7 period covered by the report; and 

8 ‘‘(2) describes how each of the applications was 

9 disposed of by the field office.’’. 

10 TITLE III—ENERGY 

11 INFRASTRUCTURE 

12 SEC. 301. EXPORTATION AND IMPORTATION OF NATURAL 

13 GAS. 

14 Section 3 of the Natural Gas Act (15 U.S.C. 717b) 

15 is amended by adding at the end the following: 

16 ‘‘(d) Nothing in subsections (e) through (h) affects 

17 the rights of a State under— 

18 ‘‘(1) the Coastal Zone Management Act of 1972 

19 (16 U.S.C. 1451 et seq.); 

20 ‘‘(2) the Clean Air Act (42 U.S.C. 7401); or 

21 ‘‘(3) section 401 of the Federal Water Pollution 

22 Control Act (33 U.S.C. 1341). 

23 ‘‘(e)(1) The Commission shall have the exclusive au24 thority to approve or disapprove the siting, construction, 

25 expansion, or operation of particular facilities (onshore or 
199 

•S 726 IS 

1 in State waters) for the import or export of natural gas 

2 from a foreign country. 

3 ‘‘(2) No person shall site, construct, expand, or oper4 ate a natural gas import or export facility (onshore or in 

5 State waters) unless the Commission has authorized the 

6 activity. 

7 ‘‘(3) Approval of an application under paragraph (1) 

8 shall not be conditioned on— 

9 ‘‘(A) a requirement that a liquefied natural gas 

10 import terminal shall offer service to any person 

11 other than the person to whom approval under para12 graph (1) is granted (including an affiliate of such 

13 a person); 

14 ‘‘(B) any regulation relating to the rates, 

15 charges, terms, or conditions of service of a liquefied 

16 natural gas import terminal; or 

17 ‘‘(C) a requirement that any schedule or con18 tract relating to the rates, charges, terms, or condi19 tions of service of a liquefied natural gas import ter20 minal be filed with the Commission. 

21 ‘‘(4) Notwithstanding paragraph (3), a determination 

22 of the Commission under paragraph (1) relating to the 

23 expansion of an existing liquefied natural gas import ter24 minal that offers service to customers on an open-access 

25 basis shall not result in a subsidy by existing customers 
200 

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1 of expansion capacity, degradation of service to existing 

2 customers, or undue discrimination against existing cus3 tomers as to the terms or conditions of service of those 

4 customers at the terminal, as determined by the Commis5 sion. 

6 ‘‘(f)(1) Not later than 1 year after the application 

7 to site, construct, expand, or operate a natural gas import 

8 or export facility under subsection (d) is complete (as de9 termined by the Commission) the Commission shall ap10 prove or deny an application . 

11 ‘‘(2) On the date on which approval is received from 

12 the Commission under paragraph (1), a natural gas devel13 opment zone shall be deemed to exist in the immediate 

14 vicinity of the facility. 

15 ‘‘(3)(A) With respect to each application approved 

16 under paragraph (1), the Commission shall establish, con17 sistent with paragraph (1), a schedule for all Federal and 

18 State administrative proceedings commenced under Fed19 eral law that are required to be completed before a person 

20 may site, construct, expand, or operate a natural gas im21 port or export facility to ensure timely progress toward 

22 any such siting, construction, expansion, or operation. 

23 ‘‘(B) The schedule shall include all Federal and State 

24 administrative proceedings authorized by Federal law for 

25 the siting, construction, expansion, or operation of natural 
201 

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1 gas pipelines and facilities relating to the transportation 

2 of natural gas from the import or export facility. 

3 ‘‘(C) In establishing the schedule, the Commission 

4 shall, to the maximum extent practicable, accommodate 

5 the applicable schedules established by Federal law for the 

6 proceedings. 

7 ‘‘(D) If a Federal or State administrative agency or 

8 officer fails to complete a proceeding in accordance with 

9 the schedule established by the Commission— 

10 ‘‘(i) the action of the Federal or State adminis11 trative agency or officer that is required before a 

12 person may site, construct, expand, or operate the 

13 natural gas import or export facility shall be conclu14 sively presumed; and 

15 ‘‘(ii) the siting, construction, expansion, or op16 eration shall proceed without further condition. 

17 ‘‘(4) With respect to the siting, construction, expan18 sion, or operation of a natural gas import or export facil19 ity, the Commission shall compile a single, exclusive ad20 ministrative record that consolidates the records of the 

21 proceedings described in paragraph (3). 

22 ‘‘(5) Any Federal administrative proceeding that is 

23 an appeal or review of a decision made or action taken 

24 by a Federal administrative agency or officer (or State ad25 ministrative agency or officer acting under delegated Fed-
202 

•S 726 IS 

1 eral authority) with respect to the siting, construction, ex2 pansion, or operation of a natural gas import or export 

3 facility shall use as the exclusive record for all purposes 

4 the administrative record compiled by the Commission 

5 under paragraph (4). 

6 ‘‘(g) With respect to the siting, construction, expan7 sion, or operation of natural gas import or export facili8 ties, the Commission shall be the lead Federal agency for 

9 purposes of complying with the National Environmental 

10 Policy Act of 1969 (42 U.S.C. 4321 et seq.). 

11 ‘‘(h) The Commission shall grant the request of any 

12 State or local agency that requests cooperating agency sta13 tus in accordance with regulations promulgated pursuant 

14 to the National Environmental Policy Act (42 U.S.C. 

15 4321 et seq.) with respect to a facility that imports or 

16 exports natural gas. 

17 ‘‘(i) Nothing in this section grants the Commission 

18 any right of eminent domain with respect to the siting, 

19 construction, expansion, or operation of a natural gas im20 port or export facility.’’. 

21 SEC. 302. EXPORTATION AND IMPORTATION OF NATURAL 

22 GAS FOR OFFSHORE FACILITIES. 

23 (a) PROCEDURE.—Section 5(e) of the Deepwater 

24 Port Act of 1974 (33 U.S.C. 1504(e)) is amended by add25 ing at the end the following: 
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1 ‘‘(3) COORDINATION OF APPROVAL PROCESSES.— 

2 ‘‘(A) IN GENERAL.—The Secretary, in coopera3 tion with the Federal Energy Regulatory Commis4 sion, shall develop a procedure to coordinate the 

5 processing of all approvals required by the Secretary 

6 or the Federal Energy Regulatory Commission for 

7 an offshore transmission facility, or a related facil8 ity, that is— 

9 ‘‘(i) used to transport natural gas from a 

10 deepwater port; and 

11 ‘‘(ii) within the jurisdiction of the Federal 

12 Energy Regulatory Commission under the Nat13 ural Gas Act (15 U.S.C. 717 et seq.). 

14 ‘‘(B) INCLUSION.—The procedure developed 

15 under subparagraph (A) shall include a requirement 

16 that, on receiving an application relating to the 

17 siting, construction, expansion, or operation or an 

18 offshore transmission facility, or a related facility, in 

19 accordance with the Natural Gas Act (15 U.S.C. 

20 717 et seq.), the Federal Energy Regulatory Com21 mission shall approve or deny the application under 

22 that Act in accordance with the timeline of the Sec23 retary relating to a similar application under sub24 sections (g) and (i)(1).’’. 
204 

•S 726 IS 

1 (b) ADJACENT COASTAL STATES.—Section 9(b)(1) of 

2 the Deepwater Port Act of 1974 (33 U.S.C. 1508(b)(1)) 

3 is amended— 

4 (1) in the second sentence, by striking ‘‘The 

5 Secretary’’ and inserting ‘‘Except in the case of a li6 cense for a deepwater port for natural gas, the Sec7 retary’’; and 

8 (2) by adding at the end the following: ‘‘In the 

9 case of a license for a deepwater port for natural gas 

10 located more than 20 miles from the coast of a 

11 State, a condition on the license shall not negatively 

12 affect the construction or operation of the project.’’ 

13 SEC. 303. NATURAL GAS PIPELINE INFRASTRUCTURE. 

14 (a) EXTENSION OF FACILITIES; ABANDONMENT OF

15 SERVICE.—Section 7 of the Natural Gas Act (15 U.S.C. 

16 717f) is amended by adding at the end the following: 

17 ‘‘(i)(1)(A) With respect to each application under 

18 subsection (d) for authorization to undertake the construc19 tion or expansion of a facility under the jurisdiction of 

20 the Commission, the Commission shall establish a schedule 

21 for all Federal and State administrative proceedings com22 menced under Federal law that are required to be com23 pleted before a person may site, construct, expand, or op24 erate a natural gas facility to ensure timely progress to-
205 

•S 726 IS 

1 ward any such siting, construction, expansion, or oper2 ation. 

3 ‘‘(B) In establishing the schedule, the Commission 

4 shall, to the maximum extent practicable, accommodate 

5 the applicable schedules established by Federal law for the 

6 proceedings. 

7 ‘‘(C) If a Federal or State administrative agency or 

8 officer fails to complete a proceeding in accordance with 

9 the schedule established by the Commission— 

10 ‘‘(i) the action of the Federal or State adminis11 trative agency or officer that is required before a 

12 person may site, construct, expand, or operate the 

13 natural gas facility shall be conclusively presumed; 

14 and 

15 ‘‘(ii) the siting, construction, expansion, or op16 eration shall proceed without further condition. 

17 ‘‘(2) With respect to the siting, construction, expan18 sion, or operation of a natural gas facility subject to the 

19 jurisdiction of the Commission, the Commission shall com20 pile a single administrative record that consolidates the 

21 records of the proceedings described in paragraph (1). 

22 ‘‘(3) Any Federal administrative proceeding that is 

23 an appeal or review of a decision made or action taken 

24 by a Federal administrative agency or officer (or State ad25 ministrative agency or officer acting under delegated Fed-
206 

•S 726 IS 

1 eral authority) with respect to the siting, construction, ex2 pansion, or operation of a natural gas facility subject to 

3 the jurisdiction of the Commission shall use as the exclu4 sive record for all purposes the administrative record com5 piled by the Commission under paragraph (2). 

6 ‘‘(j) With respect to the siting, construction, expan7 sion, or operation of natural gas facilities subject to the 

8 jurisdiction of the Commission, the Commission shall be 

9 the lead Federal agency for purposes of complying with 

10 the National Environmental Policy Act of 1969 (42 U.S.C. 

11 4321 et seq.).’’. 

12 (b) REHEARING; COURT REVIEW OF ORDERS.—Sec13 tion 19 of the Natural Gas Act (15 U.S.C. 717r) is 

14 amended by adding at the end the following: 

15 ‘‘(d)(1) The United States Court of Appeals for the 

16 District of Columbia Circuit shall have original and exclu17 sive jurisdiction over any civil action— 

18 ‘‘(A) for review of an order or action issued by 

19 the Commission under section 3; 

20 ‘‘(B) for review of an order or action of a Fed21 eral or State administrative agency or officer to 

22 issue, condition, or deny any permit, license, concur23 rence, or approval issued under a Federal law re24 quired for the siting, construction, expansion, or op25 eration of a natural gas facility for which a certifi-
207 

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1 cate of public convenience and necessity is issued by 

2 the Commission under this Act; 

3 ‘‘(C) alleging unreasonable delay or condi4 tioning by a Federal or State administrative agency 

5 or officer in entering an order or taking other action 

6 described in subparagraph (B); or 

7 ‘‘(D) challenging a decision made or action 

8 taken under this subsection. 

9 ‘‘(2)(A) If the Court finds that an order, action, or 

10 failure to act is not consistent with the public convenience 

11 or necessity (as determined by the Commission under this 

12 Act), or would prevent the siting, construction, expansion, 

13 or operation of natural gas facilities authorized by a cer14 tificate of public convenience or necessity, the permit, li15 cense, concurrence, or approval that is the subject of the 

16 order, action, or failure to act shall be deemed to have 

17 been issued subject to any conditions set forth in the re18 viewed order or action that the Court finds to be con19 sistent with the public convenience or necessity. 

20 ‘‘(B) For purposes of paragraph (1)(B), the failure 

21 of an agency or officer to issue a permit, license, concur22 rence, or approval by the later of the date that is 1 year 

23 after the date of filing of an application for the permit, 

24 license, concurrence, or approval or the date that is 60 

25 days after the date of issuance of the certificate of public 
208 

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1 convenience or necessity under this section, shall be con2 sidered unreasonable delay unless the Court, for good 

3 cause shown, determines otherwise. 

4 ‘‘(C) The Court shall expedite the consideration of 

5 any action brought under paragraph (1).’’. 

6 SEC. 304. NATURAL GAS STORAGE FACILITIES. 

7 Section 4 of the Natural Gas Act (15 U.S.C. 717c) 

8 is amended by adding at the end the following: 

9 ‘‘(f)(1) On receiving an application from a natural 

10 gas company that is the owner or operator of a natural 

11 gas storage facility, the Commission may allow the com12 pany to charge a market-based rate for natural gas stor13 age and storage-related services at the facility even if the 

14 Commission finds that the facility may have the ability 

15 to exercise market power, if, in the sole discretion of the 

16 Commission, allowing market-based rates is in the public 

17 interest. 

18 ‘‘(2) The Commission may place reasonable condi19 tions on the allowance of the Commission of market-based 

20 rates under this subsection, such as requiring the storage 

21 capacity to be sold through an open and transparent auc22 tion. 

23 ‘‘(3) If the Commission allows market-based rates 

24 under this subsection, the Commission shall review peri-
209 

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1 odically whether the storage facility continues to qualify 

2 under this subsection to charge market-based rates.’’. 

3 SEC. 305. BACKUP FUEL CAPABILITY STUDY. 

4 (a) STUDY.—The Secretary of Energy shall conduct 

5 a study on the effect of having liquid and other fuel 

6 backup capability for gas-fired power generation facilities 

7 and for other gas-fired industrial facilities. 

8 (b) CONTENTS.—The study shall address— 

9 (1) the costs and benefits of adding a different 

10 fuel capability to power gas-fired power generating 

11 and industrial facilities, taking into consideration re12 gional differences; 

13 (2) Federal and State government methods of 

14 encouraging gas-fired power generators and indus15 tries to develop a capability to power the facilities of 

16 the generators and industries by another fuel; 

17 (3) the effect on the supply and cost of natural 

18 gas of a balanced portfolio of fuel choices in power 

19 generation and industrial applications; 

20 (4) the effect on the supply and cost of natural 

21 gas of a State that permits agencies to carry out 

22 policies that encourage other fuel backup for gas23 fired power generation; and 
210 

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1 (5) changes required in the Clean Air Act (42 

2 U.S.C. 7401 et seq.) to allow natural gas generators 

3 to add clean backup fuel capabilities. 

4 (c) REPORT TO CONGRESS.—Not later than 1 year 

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

6 Energy shall submit to Congress a report on the results 

7 of the study, including recommendations regarding further 

8 Federal Government activity regarding backup fuel capa9 bility. 

Æ