I 

108TH CONGRESS 

1ST SESSION H. R. 6

To enhance energy conservation and research and development, to provide 

for security and diversity in the energy supply for the American people, 

and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

APRIL 7, 2003

Mr. TAUZIN (for himself, Mr. THOMAS, Mr. BOEHLERT, Mr. POMBO, and Mr. 

OXLEY) introduced the following bill; which was referred to the Committee on Energy and Commerce, and in addition to the Committees on 

Science, Ways and Means, Resources, Education and the Workforce, 

Transportation and Infrastructure, Financial Services, and Agriculture, 

for a period to be subsequently determined by the Speaker, in each case 

for consideration of such provisions as fall within the jurisdiction of the 

committee concerned 

A BILL

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

supply for the American people, and for other purposes.

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

3 SECTION 1. TABLE OF CONTENTS. 

4 The table of contents for this Act is as follows:

DIVISION A—ENERGY AND COMMERCE 

Sec. 10001. Short title. 

TITLE I—ENERGY CONSERVATION 
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Subtitle A—Federal Leadership in Energy Conservation 

Sec. 11001. Energy and water saving measures in congressional buildings. 

Sec. 11002. Energy management requirements. 

Sec. 11003. Energy use measurement and accountability. 

Sec. 11004. Federal building performance standards. 

Sec. 11005. Procurement of energy efficient products. 

Sec. 11006. Energy savings performance contracts. 

Sec. 11007. Voluntary commitments to reduce industrial energy intensity. 

Sec. 11008. Federal agency participation in demand reduction programs. 

Sec. 11009. Advanced Building Efficiency Testbed. 

Sec. 11010. Increased use of recovered mineral component in federally funded 

projects involving procurement of cement or concrete. 

Subtitle B—Energy Assistance and State Programs 

Sec. 11021. LIHEAP and weatherization assistance. 

Sec. 11022. State energy programs. 

Sec. 11023. Energy efficient appliance rebate programs. 

Sec. 11024. Energy efficient public buildings. 

Sec. 11025. Low income community energy efficiency pilot program. 

Subtitle C—Energy Efficient Products 

Sec. 11041. Energy Star program. 

Sec. 11042. Consumer education on energy efficiency benefits of air conditioning, heating, and ventilation maintenance. 

Sec. 11043. Additional definitions. 

Sec. 11044. Additional test procedures. 

Sec. 11045. Energy conservation standards for additional consumer and commercial products. 

Sec. 11046. Energy labeling. 

Sec. 11047. Study of energy efficiency standards. 

TITLE II—OIL AND GAS 

Subtitle A—Alaska Natural Gas Pipeline 

Sec. 12001. Short title. 

Sec. 12002. Findings and purposes. 

Sec. 12003. Definitions. 

Sec. 12004. Issuance of certificate of public convenience and necessity. 

Sec. 12005. Environmental reviews. 

Sec. 12006. Pipeline expansion. 

Sec. 12007. Federal Coordinator. 

Sec. 12008. Judicial review. 

Sec. 12009. State jurisdiction over in-State delivery of natural gas. 

Sec. 12010. Study of alternative means of construction. 

Sec. 12011. Clarification of ANGTA status and authorities. 

Sec. 12012. Sense of Congress. 

Sec. 12013. Participation of small business concerns. 

Sec. 12014. Alaska pipeline construction training program. 

Subtitle B—Strategic Petroleum Reserve 

Sec. 12101. Full capacity of Strategic Petroleum Reserve. 

Sec. 12102. Strategic Petroleum Reserve expansion. 
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Sec. 12103. Permanent authority to operate the Strategic Petroleum Reserve 

and other energy programs. 

Subtitle C—Hydraulic Fracturing 

Sec. 12201. Hydraulic fracturing. 

Subtitle D—Unproven Oil and Natural Gas Reserves Recovery Program 

Sec. 12301. Program. 

Sec. 12302. Eligible reservoirs. 

Sec. 12303. Focus areas. 

Sec. 12304. Limitation on location of activities. 

Sec. 12305. Program administration. 

Sec. 12306. Advisory Committee. 

Sec. 12307. Limits on participation. 

Sec. 12308. Payments to Federal Government. 

Sec. 12309. Authorization of appropriations. 

Sec. 12310. Public availability of project results and methodologies. 

Sec. 12311. Sunset. 

Sec. 12312. Definitions. 

Subtitle E—Miscellaneous 

Sec. 12401. Appeals relating to pipeline construction projects. 

Sec. 12402. Natural gas market data transparency. 

Sec. 12403. Oil and gas exploration and production defined. 

Sec. 12404. Complex well technology testing facility. 

TITLE III—HYDROELECTRIC 

Subtitle A—Alternative Conditions 

Sec. 13001. Alternative conditions and fishways. 

Subtitle B—Additional Hydropower 

Sec. 13201. Hydroelectric production incentives. 

Sec. 13202. Hydroelectric efficiency improvement. 

Sec. 13203. Small hydroelectric power projects. 

Sec. 13204. Increased hydroelectric generation at existing Federal facilities. 

TITLE IV—NUCLEAR MATTERS 

Subtitle A—Price-Anderson Act Amendments 

Sec. 14001. Short title. 

Sec. 14002. Extension of indemnification authority. 

Sec. 14003. Maximum assessment. 

Sec. 14004. Department of Energy liability limit. 

Sec. 14005. Incidents outside the United States. 

Sec. 14006. Reports. 

Sec. 14007. Inflation adjustment. 

Sec. 14008. Price-Anderson treatment of modular reactors. 

Sec. 14009. Applicability. 

Sec. 14010. Prohibition on assumption by United States Government of liability 

for certain foreign accidents. 

Sec. 14011. Secure transfer of nuclear materials. 
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Sec. 14012. Nuclear facility threats. 

Sec. 14013. Unreasonable risk consultation. 

Sec. 14014. Financial accountability. 

Sec. 14015. Civil penalties. 

Subtitle B—Miscellaneous Matters 

Sec. 14021. Licenses. 

Sec. 14022. Nuclear Regulatory Commission meetings. 

Sec. 14023. NRC training program. 

Sec. 14024. Cost recovery from Government agencies. 

Sec. 14025. Elimination of pension offset. 

Sec. 14026. Carrying of firearms by licensee employees. 

Sec. 14027. Unauthorized introduction of dangerous weapons. 

Sec. 14028. Sabotage of nuclear facilities or fuel. 

Sec. 14029. Cooperative research and development and special demonstration 

projects for the uranium mining industry. 

Sec. 14030. Uranium sales. 

Sec. 14031. Medical isotope production. 

Sec. 14032. Highly enriched uranium diversion threat report. 

Sec. 14033. Whistleblower protection. 

Sec. 14034. Preventing the misuse of nuclear materials and technology. 

Sec. 14035. Limitation on legal fee reimbursement. 

TITLE V—VEHICLES AND FUELS 

Subtitle A—Energy Policy Act Amendments 

Sec. 15011. Credit for substantial contribution toward noncovered fleets. 

Sec. 15012. Credit for alternative fuel infrastructure. 

Sec. 15013. Alternative fueled vehicle report. 

Sec. 15014. Allocation of incremental costs. 

Subtitle B—Advanced Vehicles 

Sec. 15021. Definitions. 

Sec. 15022. Pilot program. 

Sec. 15023. Reports to Congress. 

Sec. 15024. Authorization of appropriations. 

Subtitle C—Hydrogen Fuel Cell Heavy-Duty Vehicles 

Sec. 15031. Definition. 

Sec. 15032. Findings. 

Sec. 15033. Hydrogen fuel cell buses. 

Sec. 15034. Authorization of appropriations. 

Subtitle D—Miscellaneous 

Sec. 15041. Railroad efficiency. 

Sec. 15042. Mobile emission reductions trading and crediting. 

Sec. 15043. Idle reduction technologies. 

Sec. 15044. Study of aviation fuel conservation and emissions. 

Sec. 15045. Diesel fueled vehicles. 

Sec. 15046. Waivers of alternative fueled vehicle fueling requirement. 

Sec. 15047. Total integrated thermal systems. 

Sec. 15048. Oil bypass filtration technology. 

Sec. 15049. Natural gas condensate study. 
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TITLE VI—ELECTRICITY 

Subtitle A—Transmission Capacity 

Sec. 16011. Transmission infrastructure improvement rulemaking. 

Sec. 16012. Siting of interstate electrical transmission facilities. 

Sec. 16013. Transmission technologies. 

Subtitle B—Transmission Operation 

Sec. 16021. Open access transmission by certain utilities. 

Sec. 16022. Regional transmission organizations. 

Sec. 16023. Native load. 

Subtitle C—Reliability 

Sec. 16031. Electric reliability standards. 

Subtitle D—PUHCA Amendments 

Sec. 16041. Short title. 

Sec. 16042. Definitions. 

Sec. 16043. Repeal of the Public Utility Holding Company Act of 1935. 

Sec. 16044. Federal access to books and records. 

Sec. 16045. State access to books and records. 

Sec. 16046. Exemption authority. 

Sec. 16047. Affiliate transactions. 

Sec. 16048. Applicability. 

Sec. 16049. Effect on other regulations. 

Sec. 16050. Enforcement. 

Sec. 16051. Savings provisions. 

Sec. 16052. Implementation. 

Sec. 16053. Transfer of resources. 

Sec. 16054. Effective date. 

Sec. 16055. Authorization of appropriations. 

Sec. 16056. Conforming amendments to the Federal Power Act. 

Subtitle E—PURPA Amendments 

Sec. 16061. Real-time pricing and time-of-use metering standards. 

Sec. 16062. Cogeneration and small power production purchase and sale requirements. 

Sec. 16063. Smart metering. 

Subtitle F—Renewable Energy 

Sec. 16071. Net metering. 

Sec. 16072. Renewable energy production incentive. 

Sec. 16073. Renewable energy on Federal lands. 

Sec. 16074. Assessment of renewable energy resources. 

Subtitle G—Market Transparency, Round Trip Trading Prohibition, and 

Enforcement 

Sec. 16081. Market transparency rules. 

Sec. 16082. Prohibition on round trip trading. 

Sec. 16083. Conforming changes. 

Sec. 16084. Enforcement. 
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Subtitle H—Consumer Protections 

Sec. 16091. Refund effective date. 

Sec. 16092. Jurisdiction over interstate sales. 

Sec. 16093. Consumer privacy. 

Sec. 16094. Unfair trade practices. 

Subtitle I—Merger Review Reform and Accountability 

Sec. 16101. Merger review reform and accountability. 

Subtitle J—Study of Economic Dispatch 

Sec. 16111. Study on the benefits of economic dispatch. 

TITLE VII—MOTOR FUELS 

Subtitle A—General Provisions 

Sec. 17101. Renewable content of motor vehicle fuel. 

Sec. 17102. Fuels safe harbor. 

Sec. 17103. Findings and MTBE transition assistance. 

Sec. 17104. Elimination of oxygen content requirement for reformulated gasoline. 

Sec. 17105. Analyses of motor vehicle fuel changes. 

Sec. 17106. Data collection. 

Sec. 17107. Fuel system requirements harmonization study. 

Sec. 17108. Commercial byproducts from municipal solid waste loan guarantee 

program. 

Subtitle B—MTBE Cleanup 

Sec. 17201. Funding for MTBE Contamination. 

TITLE VIII—AUTOMOBILE EFFICIENCY 

Sec. 18001. Authorization of appropriations for implementation and enforcement of fuel economy standards. 

Sec. 18002. Study of feasibility and effects of reducing use of fuel for automobiles. 

DIVISION B—SCIENCE 

Sec. 20001. Purposes. 

Sec. 20002. Goals. 

Sec. 20003. Definitions. 

TITLE I—RESEARCH AND DEVELOPMENT 

Subtitle A—Energy Efficiency 

PART 1—AUTHORIZATION OF APPROPRIATIONS

Sec. 21101. Energy efficiency. 

PART 2—LIGHTING SYSTEMS

Sec. 21111. Next Generation Lighting Initiative. 

PART 3—BUILDINGS
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Sec. 21121. National Building Performance Initiative. 

Sec. 21122. Electric motor control technology. 

PART 4—VEHICLES

Sec. 21131. Definitions. 

Sec. 21132. Establishment of secondary electric vehicle battery use program. 

PART 5—ENERGY EFFICIENCY SCIENCE INITIATIVE

Sec. 21141. Energy Efficiency Science Initiative. 

PART 6—ADVANCED ENERGY TECHNOLOGY TRANSFER CENTERS

Sec. 21151. Advanced Energy Technology Transfer Centers. 

Subtitle B—Distributed Energy and Electric Energy Systems 

PART 1—AUTHORIZATION OF APPROPRIATIONS

Sec. 21201. Distributed energy and electric energy systems. 

PART 2—DISTRIBUTED POWER

Sec. 21211. Strategy. 

Sec. 21212. High power density industry program. 

Sec. 21213. Micro-cogeneration energy technology. 

PART 3—TRANSMISSION SYSTEMS

Sec. 21221. Transmission infrastructure systems research, development, demonstration, and commercial application. 

Subtitle C—Renewable Energy 

PART 1—AUTHORIZATION OF APPROPRIATIONS

Sec. 21301. Renewable energy. 

PART 2—BIOENERGY

Sec. 21311. Bioenergy programs. 

PART 3—MISCELLANEOUS PROJECTS

Sec. 21321. Miscellaneous projects. 

Sec. 21322. Renewable energy in public buildings. 

Subtitle D—Nuclear Energy 

PART 1—AUTHORIZATION OF APPROPRIATIONS

Sec. 21401. Nuclear energy. 

PART 2—NUCLEAR ENERGY RESEARCH PROGRAMS

Sec. 21411. Nuclear energy research programs. 

PART 3—ADVANCED FUEL RECYCLING

Sec. 21421. Advanced fuel recycling program. 
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PART 4—UNIVERSITY PROGRAMS

Sec. 21431. University nuclear science and engineering support. 

PART 5—GEOLOGICAL ISOLATION OF SPENT FUEL

Sec. 21441. Geological isolation of spent fuel. 

Subtitle E—Fossil Energy 

PART 1—AUTHORIZATION OF APPROPRIATIONS

Sec. 21501. Fossil energy. 

PART 2—RESEARCH PROGRAMS

Sec. 21511. Fossil energy research programs. 

Sec. 21512. Research and development for coal mining technologies. 

PART 3—ULTRA-DEEPWATER AND UNCONVENTIONAL NATURAL GAS AND

OTHER PETROLEUM RESOURCES

Sec. 21521. Program authority. 

Sec. 21522. Ultra-deepwater program. 

Sec. 21523. Unconventional natural gas and other petroleum resources program. 

Sec. 21524. Additional requirements for awards. 

Sec. 21525. Advisory committees. 

Sec. 21526. Limits on participation. 

Sec. 21527. Fund. 

Sec. 21528. Transfer of advanced oil and gas exploration and production technologies. 

Sec. 21529. Sunset. 

Sec. 21530. Definitions. 

Subtitle F—Science 

PART 1—AUTHORIZATION OF APPROPRIATIONS

Sec. 21601. Science. 

PART 2—FUSION ENERGY SCIENCES

Sec. 21611. ITER. 

Sec. 21612. Plan for fusion experiment. 

Sec. 21613. Plan for fusion energy sciences program. 

PART 3—SPALLATION NEUTRON SOURCE

Sec. 21621. Definition. 

Sec. 21622. Report. 

Sec. 21623. Limitations. 

PART 4—MISCELLANEOUS

Sec. 21631. Facility and infrastructure support for nonmilitary energy laboratories. 

Sec. 21632. Research regarding precious metal catalysis. 

Sec. 21633. Nanotechnology research and development. 

Sec. 21634. Advanced scientific computing for energy missions. 
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Sec. 21635. Nitrogen fixation. 

Sec. 21636. Department of Energy Science and Technology Scholarship Program. 

PART 5—GENOMES TO LIFE

Sec. 21641. Genomes to life. 

Subtitle G—Energy and Environment 

Sec. 21701. Authorization of appropriations. 

Sec. 21702. United States-Mexico energy technology cooperation. 

Sec. 21703. Waste reduction and use of alternatives. 

Sec. 21704. Coal gasification. 

Sec. 21705. Petroleum coke gasification. 

Sec. 21706. Other biopower and bioenergy. 

Sec. 21707. Coal technology loan. 

Sec. 21708. Fuel cell test center. 

Sec. 21709. Fuel cell transit bus demonstration. 

Subtitle H—Management 

Sec. 21801. Availability of funds. 

Sec. 21802. Cost sharing. 

Sec. 21803. Merit review of proposals. 

Sec. 21804. External technical review of departmental programs. 

Sec. 21805. Improved coordination of technology transfer activities. 

Sec. 21806. Small business advocacy and assistance. 

Sec. 21807. Mobility of scientific and technical personnel. 

Sec. 21808. National Academy of Sciences report. 

Sec. 21809. Outreach. 

Sec. 21810. Limits on use of funds. 

Sec. 21811. Reprogramming. 

Sec. 21812. Construction with other laws. 

Sec. 21813. University collaboration. 

Sec. 21814. Federal laboratory educational partners. 

Sec. 21815. Interagency cooperation. 

TITLE II—DEPARTMENT OF ENERGY MANAGEMENT 

Sec. 22001. External regulation of Department of Energy. 

Sec. 22002. Improved coordination and management of civilian science and 

technology programs. 

TITLE III—CLEAN SCHOOL BUSES 

Sec. 23001. Establishment of pilot program. 

Sec. 23002. Fuel cell bus development and demonstration program. 

Sec. 23003. Diesel retrofit program. 

Sec. 23004. Authorization of appropriations. 

DIVISION C—RESOURCES 

TITLE I—INDIAN ENERGY 

Sec. 30101. Indian energy. 

TITLE II—OIL AND GAS 
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Sec. 30201. Program on oil and gas royalties in-kind. 

Sec. 30202. Clarification of fair market rental value determinations for public 

lands and Forest Service rights-of-way. 

Sec. 30203. USGS estimates of oil and gas resources underlying onshore Federal lands. 

Sec. 30204. Royalty incentives for certain offshore areas. 

Sec. 30205. Marginal property production incentives. 

Sec. 30206. Federal onshore oil and gas leasing and permitting practices. 

Sec. 30207. Management of Federal oil and gas leasing programs. 

Sec. 30208. Consultation regarding oil and gas leasing on public lands. 

Sec. 30209. Oil and gas lease acreage limitations. 

Sec. 30210. Federal reimbursement for orphan well reclamation. 

Sec. 30211. Preservation of geological and geophysical data. 

Sec. 30212. Compliance with Executive Order 13211; actions concerning regulations that significantly affect energy supply, distribution, or 

use. 

Sec. 30213. Reimbursement for costs of NEPA analyses, documentation, and 

studies. 

Sec. 30214. Alternate energy-related uses on the Outer Continental Shelf. 

Sec. 30215. Deadline for decision on appeals of consistency determinations 

under the Coastal Zone Management Act of 1972. 

Sec. 30216. Task force on energy project streamlining. 

Sec. 30217. Pilot program on Northern Rocky Mountains energy resource management. 

Sec. 30218. Energy development facilitator study. 

Sec. 30219. Combined hydrocarbon leasing. 

Sec. 30220. Comprehensive inventory of OCS oil and natural gas resources. 

Sec. 30221. Royalty payments under leases under the Outer Continental Shelf 

Lands Act. 

TITLE III—BIOMASS ENERGY 

Sec. 30301. Grants to improve the commercial value of forest biomass for electric energy, useful heat, transportation fuels, petroleum-based 

product substitutes, and other commercial purposes. 

TITLE IV—ARCTIC COASTAL PLAIN DOMESTIC ENERGY 

Sec. 30401. Short title. 

Sec. 30402. Definitions. 

Sec. 30403. Leasing program for lands within the Coastal Plain. 

Sec. 30404. Lease sales. 

Sec. 30405. Grant of leases by the Secretary. 

Sec. 30406. Lease terms and conditions. 

Sec. 30407. Coastal Plain environmental protection. 

Sec. 30408. Expedited judicial review. 

Sec. 30409. Federal and State distribution of revenues. 

Sec. 30410. Rights-of-way across the Coastal Plain. 

Sec. 30411. Conveyance. 

Sec. 30412. Local government impact aid and community service assistance. 

TITLE V—HYDROPOWER 

Sec. 30501. Study and report on increasing electric power production capability 

of existing facilities. 
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Sec. 30502. Study and implementation of increased operational efficiencies in 

hydroelectric power projects. 

Sec. 30503. Shift of project loads to off-peak periods. 

TITLE VI—GEOTHERMAL ENERGY 

Sec. 30601. Competitive lease sale requirements. 

Sec. 30602. Special provisions regarding direct use of low temperature geothermal energy resources. 

Sec. 30603. Royalties and near-term production incentives. 

Sec. 30604. Consultation regarding geothermal leasing and permitting on public lands. 

Sec. 30605. Review and report to Congress. 

Sec. 30606. Reimbursement for costs of NEPA analyses, documentation, and 

studies. 

Sec. 30607. Assessment of geothermal energy potential. 

Sec. 30608. Cooperative or unit plans. 

Sec. 30609. Royalty on byproducts. 

Sec. 30610. Repeal of authorities of Secretary to readjust terms, conditions, 

rentals, and royalties. 

Sec. 30611. Crediting of rental toward royalty. 

Sec. 30612. Lease duration and work commitment requirements. 

Sec. 30613. Advanced royalties required for suspension of production. 

Sec. 30614. Annual rental. 

TITLE VII—COAL 

Sec. 30701. Short title. 

Sec. 30702. Repeal of the 160-acre limitation for coal leases. 

Sec. 30703. Mining plans. 

Sec. 30704. Payment of advance royalties under coal leases. 

Sec. 30705. Elimination of deadline for submission of coal lease operation and 

reclamation plan. 

Sec. 30706. Amendments relating to financial assurances with respect to bonus 

bids. 

Sec. 30707. Inventory requirement. 

Sec. 30708. Application of amendments. 

TITLE VIII—INSULAR AREAS ENERGY SECURITY 

Sec. 30801. Insular areas energy security. 

TITLE IX—MISCELLANEOUS PROVISIONS 

Sec. 30901. Report on energy facility rights-of-way and corridors on Federal 

lands. 

Sec. 30902. Electricity transmission line right-of-way, Cleveland National Forest and adjacent public lands, California. 

Sec. 30903. Consultation regarding energy rights-of-way on public lands. 

Sec. 30904. Enhancing energy efficiency in management of Federal lands. 

Sec. 30905. Permitting of wind energy development projects on public lands. 

Sec. 30906. Sense of the Congress regarding generation capacity of electricity 

from renewable energy resources on public lands. 

Sec. 30907. Assessment of ocean thermal energy resources. 

Sec. 30908. Sense of the Congress regarding development of minerals under 

Padre Island National Seashore. 
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DIVISION D—TAX 

Sec. 40001. Short title; etc. 

TITLE I—CONSERVATION 

Sec. 41001. Credit for residential solar energy property. 

Sec. 41002. Extension and expansion of credit for electricity produced from renewable resources. 

Sec. 41003. Credit for qualified fuel cell power plants. 

Sec. 41004. Credit for energy efficiency improvements to existing homes. 

Sec. 41005. Business credit for construction of new energy efficient home. 

Sec. 41006. Energy credit for combined heat and power system property. 

Sec. 41007. New nonrefundable personal credits allowed against regular and 

minimum taxes. 

Sec. 41008. Repeal of 4.3-cent motor fuel excise taxes on railroads and inland 

waterway transportation which remain in general fund. 

Sec. 41009. Reduced motor fuel excise tax on certain mixtures of diesel fuel. 

Sec. 41010. Repeal of phaseouts for qualified electric vehicle credit and deduction for clean fuel-vehicles. 

Sec. 41011. Alternative motor vehicle credit. 

TITLE II—RELIABILITY 

Sec. 42001. Natural gas gathering lines treated as 7-year property. 

Sec. 42002. Natural gas distribution lines treated as 15-year property. 

Sec. 42003. Electric transmission property treated as 15-year property. 

Sec. 42004. Expensing of capital costs incurred in complying with environmental protection agency sulfur regulations. 

Sec. 42005. Credit for production of low sulfur diesel fuel. 

Sec. 42006. Determination of small refiner exception to oil depletion deduction. 

Sec. 42007. Sales or dispositions to implement Federal energy regulatory commission or State electric restructuring policy. 

Sec. 42008. Modifications to special rules for nuclear decommissioning costs. 

Sec. 42009. Treatment of certain income of cooperatives. 

Sec. 42010. Arbitrage rules not to apply to prepayments for natural gas. 

Sec. 42011. Prepayment of premium liability for coal industry health benefits. 

TITLE III—PRODUCTION 

Sec. 43001. Oil and gas from marginal wells. 

Sec. 43002. Temporary suspension of limitation based on 65 percent of taxable 

income and extension of suspension of taxable income limit 

with respect to marginal production. 

Sec. 43003. Amortization of delay rental payments. 

Sec. 43004. Amortization of geological and geophysical expenditures. 

Sec. 43005. Extension and modification of credit for producing fuel from a 

nonconventional source. 

Sec. 43006. Business related energy credits allowed against regular and minimum tax. 

Sec. 43007. Temporary repeal of alternative minimum tax preference for intangible drilling costs. 

Sec. 43008. Allowance of enhanced recovery credit against the alternative minimum tax. 

TITLE IV—CORPORATE EXPATRIATION 
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Sec. 44001. Tax treatment of corporate expatriation. 

Sec. 44002. Expressing the sense of the Congress that tax reform is needed to 

address the issue of corporate expatriation. 

DIVISION E—CLEAN COAL 

Sec. 50001. Authorization of appropriations. 

Sec. 50002. Project criteria. 

Sec. 50003. Report. 

Sec. 50004. Clean coal Centers of Excellence. 

DIVISION F—HYDROGEN 

Sec. 60001. Definitions. 

Sec. 60002. Plan. 

Sec. 60003. Program. 

Sec. 60004. Interagency task force. 

Sec. 60005. Advisory Committee. 

Sec. 60006. External review. 

Sec. 60007. Miscellaneous provisions. 

Sec. 60008. Authorization of appropriations. 

Sec. 60009. Fuel cell program at National Parks. 

Sec. 60010. Advanced power system technology incentive program. 

DIVISION G—HOUSING 

Sec. 70001. Capacity building for energy-efficient, affordable housing. 

Sec. 70002. Increase of CDBG public services cap for energy conservation and 

efficiency activities. 

Sec. 70003. FHA mortgage insurance incentives for energy efficient housing. 

Sec. 70004. Public Housing Capital Fund. 

Sec. 70005. Grants for energy-conserving improvements for assisted housing. 

Sec. 70006. North American Development Bank. 

Sec. 70007. Energy-efficient appliances. 

Sec. 70008. Energy efficiency standards. 

Sec. 70009. Energy strategy for HUD.

1 DIVISION A—ENERGY AND 

2 COMMERCE 

3 SEC. 10001. SHORT TITLE. 

4 This division may be cited as the ‘‘Energy Policy Act 

5 of 2003’’. 
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1 TITLE I—ENERGY 

2 CONSERVATION 

3 Subtitle A—Federal Leadership in 

4 Energy Conservation 

5 SEC. 11001. ENERGY AND WATER SAVING MEASURES IN 

6 CONGRESSIONAL BUILDINGS. 

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

8 Energy Conservation Policy Act is amended by adding at 

9 the end: 

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

11 CONGRESSIONAL BUILDINGS. 

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

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

14 cost-effective energy conservation and management 

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

16 facilities administered by the Congress (referred to 

17 in this section as ‘congressional buildings’) to meet 

18 the energy performance requirements for Federal 

19 buildings established under section 543(a)(1); and 

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

21 later than 180 days after the date of enactment of 

22 this section. 

23 ‘‘(b) PLAN REQUIREMENTS.—The plan shall in24 clude— 
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1 ‘‘(1) a description of the life cycle cost analysis 

2 used to determine the cost-effectiveness of proposed 

3 energy efficiency projects; 

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

5 complete surveys of all congressional buildings every 

6 5 years to determine the cost and payback period of 

7 energy and water conservation measures; 

8 ‘‘(3) a strategy for installation of life cycle cost9 effective energy and water conservation measures; 

10 ‘‘(4) the results of a study of the costs and ben11 efits of installation of submetering in congressional 

12 buildings; and 

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

14 for each Member and employing authority of Con15 gress that detail simple, cost-effective methods to 

16 save energy and taxpayer dollars in the workplace. 

17 ‘‘(c) ANNUAL REPORT.—The Architect shall submit 

18 to Congress annually a report on congressional energy 

19 management and conservation programs required under 

20 this section that describes in detail— 

21 ‘‘(1) energy expenditures and savings estimates 

22 for each facility; 

23 ‘‘(2) energy management and conservation 

24 projects; and 
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1 ‘‘(3) future priorities to ensure compliance with 

2 this section.’’. 

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

4 of contents of the National Energy Conservation Policy 

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

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

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

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

8 Appropriations Act, 1999 (40 U.S.C. 166i), is repealed. 

9 (d) ENERGY INFRASTRUCTURE.—The Architect of 

10 the Capitol, building on the Master Plan Study completed 

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

12 energy infrastructure of the Capital Complex to determine 

13 how the infrastructure could be augmented to become 

14 more energy efficient, using unconventional and renewable 

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

16 to have reliable utility service in the event of power fluc17 tuations, shortages, or outages. 

18 (e) AUTHORIZATION.—There are authorized to be ap19 propriated to the Architect of the Capitol to carry out sub20 section (d), not more than $2,000,000 for fiscal years 

21 after the enactment of this Act. 

22 SEC. 11002. ENERGY MANAGEMENT REQUIREMENTS. 

23 (a) ENERGY REDUCTION GOALS.—

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

25 National Energy Conservation Policy Act (42 U.S.C. 
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1 8253(a)(1)) is amended by striking ‘‘its Federal 

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

3 end and inserting ‘‘the Federal buildings of the 

4 agency (including each industrial or laboratory facil5 ity) so that the energy consumption per gross square 

6 foot of the Federal buildings of the agency in fiscal 

7 years 2004 through 2013 is reduced, as compared 

8 with the energy consumption per gross square foot 

9 of the Federal buildings of the agency in fiscal year 

10 2001, by the percentage specified in the following 

11 table:

‘‘Fiscal Year Percentage reduction 

2004 ..................................................................................... 2

2005 ..................................................................................... 4

2006 ..................................................................................... 6

2007 ..................................................................................... 8

2008 ..................................................................................... 10

2009 ..................................................................................... 12

2010 ..................................................................................... 14

2011 ..................................................................................... 16

2012 ..................................................................................... 18

2013 ..................................................................................... 20.’’.

12 (2) REPORTING BASELINE.—The energy reduc13 tion goals and baseline established in paragraph (1) 

14 of section 543(a) of the National Energy Conserva15 tion Policy Act, as amended by paragraph (1) of this 

16 subsection, supersede all previous goals and base17 lines under such paragraph, and related reporting 

18 requirements. 

19 (b) REVIEW AND REVISION OF ENERGY PERFORM20 ANCE REQUIREMENT.—Section 543(a) of the National 
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1 Energy Conservation Policy Act (42 U.S.C. 8253(a)) is 

2 further amended by adding at the end the following: 

3 ‘‘(3) Not later than December 31, 2012, the Sec4 retary shall review the results of the implementation of 

5 the energy performance requirement established under 

6 paragraph (1) and submit to Congress recommendations 

7 concerning energy performance requirements for fiscal 

8 years 2014 through 2023.’’. 

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

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

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

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

13 may exclude, from the energy performance requirement 

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

15 energy management requirement established under sub16 section (b), any Federal building or collection of Federal 

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

18 ‘‘(i) compliance with those requirements would 

19 be impracticable; 

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

21 all federally required energy management reports; 

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

23 the energy efficiency requirements of this Act, the 

24 Energy Policy Act of 1992, Executive Orders, and 

25 other Federal law; and 
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1 ‘‘(iv) the agency has implemented all prac2 ticable, life cycle cost-effective projects with respect 

3 to the Federal building or collection of Federal 

4 buildings to be excluded. 

5 ‘‘(B) A finding of impracticability under subpara6 graph (A)(i) shall be based on— 

7 ‘‘(i) the energy intensiveness of activities car8 ried out in the Federal building or collection of Fed9 eral buildings; or 

10 ‘‘(ii) the fact that the Federal building or col11 lection of Federal buildings is used in the perform12 ance of a national security function.’’. 

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

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

15 8253(c)(2)) is amended— 

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

17 inserting ‘‘standards for exclusion’’; and 

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

19 and inserting ‘‘the exclusion’’. 

20 (e) CRITERIA.—Section 543(c) of the National En21 ergy Conservation Policy Act (42 U.S.C. 8253(c)) is fur22 ther amended by adding at the end the following: 

23 ‘‘(3) Not later than 180 days after the date of enact24 ment of this paragraph, the Secretary shall issue guide-
20

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1 lines that establish criteria for exclusions under paragraph 

2 (1).’’. 

3 (f) RETENTION OF ENERGY SAVINGS.—Section 546 

4 of the National Energy Conservation Policy Act (42 

5 U.S.C. 8256) is amended by adding at the end the fol6 lowing new subsection: 

7 ‘‘(e) RETENTION OF ENERGY SAVINGS.—An agency 

8 may retain any funds appropriated to that agency for en9 ergy expenditures, at buildings subject to the requirements 

10 of section 543(a) and (b), that are not made because of 

11 energy savings. Except as otherwise provided by law, such 

12 funds may be used only for energy efficiency or unconven13 tional and renewable energy resources projects.’’. 

14 (g) REPORTS.—Section 548(b) of the National En15 ergy Conservation Policy Act (42 U.S.C. 8258(b)) is 

16 amended—

17 (1) in the subsection heading, by inserting 

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

19 (2) by inserting ‘‘President and’’ before ‘‘Con20 gress’’. 

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

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

23 8258b(d)) is amended in the second sentence by striking 

24 ‘‘the 20 percent reduction goal established under section 

25 543(a) of the National Energy Conservation Policy Act 
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1 (42 U.S.C. 8253(a)).’’ and inserting ‘‘each of the energy 

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

3 SEC. 11003. ENERGY USE MEASUREMENT AND ACCOUNT4 ABILITY. 

5 Section 543 of the National Energy Conservation 

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

7 at the end the following: 

8 ‘‘(e) METERING OF ENERGY USE.—

9 ‘‘(1) DEADLINE.—By October 1, 2010, in ac10 cordance with guidelines established by the Sec11 retary under paragraph (2), all Federal buildings 

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

13 reduction in the cost of electricity used in such 

14 buildings, be metered or submetered. Each agency 

15 shall use, to the maximum extent practicable, ad16 vanced meters or advanced metering devices that 

17 provide data at least daily and that measure at least 

18 hourly consumption of electricity in the Federal 

19 buildings of the agency. Such data shall be incor20 porated into existing Federal energy tracking sys21 tems and made available to Federal facility energy 

22 managers. 

23 ‘‘(2) GUIDELINES.—

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

25 days after the date of enactment of this sub-
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1 section, the Secretary, in consultation with the 

2 Department of Defense, the General Services 

3 Administration, representatives from the meter4 ing industry, utility industry, energy services in5 dustry, energy efficiency industry, national lab6 oratories, universities, and Federal facility en7 ergy managers, shall establish guidelines for 

8 agencies to carry out paragraph (1). 

9 ‘‘(B) REQUIREMENTS FOR GUIDELINES.—

10 The guidelines shall—

11 ‘‘(i) take into consideration—

12 ‘‘(I) the cost of metering and 

13 submetering and the reduced cost of 

14 operation and maintenance expected 

15 to result from metering and sub16 metering; 

17 ‘‘(II) the extent to which meter18 ing and submetering are expected to 

19 result in increased potential for en20 ergy management, increased potential 

21 for energy savings and energy effi22 ciency improvement, and cost and en23 ergy savings due to utility contract 

24 aggregation; and 
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1 ‘‘(III) the measurement and 

2 verification protocols of the Depart3 ment of Energy; 

4 ‘‘(ii) include recommendations con5 cerning the amount of funds and the num6 ber of trained personnel necessary to gath7 er and use the metering information to 

8 track and reduce energy use; 

9 ‘‘(iii) establish priorities for types and 

10 locations of buildings to be metered and 

11 submetered based on cost-effectiveness and 

12 a schedule of one or more dates, not later 

13 than 1 year after the date of issuance of 

14 the guidelines, on which the requirements 

15 specified in paragraph (1) shall take effect; 

16 and 

17 ‘‘(iv) establish exclusions from the re18 quirements specified in paragraph (1) 

19 based on the de minimis quantity of energy 

20 use of a Federal building, industrial proc21 ess, or structure. 

22 ‘‘(3) PLAN.—No later than 6 months after the 

23 date guidelines are established under paragraph (2), 

24 in a report submitted by the agency under section 

25 548(a), each agency shall submit to the Secretary a 
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1 plan describing how the agency will implement the 

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

3 the agency will designate personnel primarily respon4 sible for achieving the requirements and (B) dem5 onstration by the agency, complete with documenta6 tion, of any finding that advanced meters or ad7 vanced metering devices, as defined in paragraph 

8 (1), are not practicable.’’.

9 SEC. 11004. FEDERAL BUILDING PERFORMANCE STAND10 ARDS. 

11 Section 305(a) of the Energy Conservation and Pro12 duction Act (42 U.S.C. 6834(a)) is amended— 

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

14 Model Energy Code, 1992’’ and inserting ‘‘the 2000 

15 International Energy Conservation Code’’; and 

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

17 ‘‘(3) REVISED FEDERAL BUILDING ENERGY EFFI18 CIENCY PERFORMANCE STANDARDS.—

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

20 the date of enactment of this paragraph, the Sec21 retary of Energy shall establish, by rule, revised 

22 Federal building energy efficiency performance 

23 standards that require that, if cost-effective, for new 

24 Federal buildings—
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1 ‘‘(i) such buildings be designed so as to 

2 achieve energy consumption levels at least 30 

3 percent below those of the most recent 

4 ASHRAE Standard 90.1 or the most recent 

5 version of the International Energy Conserva6 tion Code, as appropriate; and 

7 ‘‘(ii) sustainable design principles are ap8 plied to the siting, design, and construction of 

9 all new and replacement buildings. 

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

11 1 year after the date of approval of amendments to 

12 ASHRAE Standard 90.1 or the 2000 International 

13 Energy Conservation Code, the Secretary of Energy 

14 shall determine, based on the cost-effectiveness of 

15 the requirements under the amendments, whether 

16 the revised standards established under this para17 graph should be updated to reflect the amendments. 

18 ‘‘(C) STATEMENT ON COMPLIANCE OF NEW

19 BUILDINGS.—In the budget request of the Federal 

20 agency for each fiscal year and each report sub21 mitted by the Federal agency under section 548(a) 

22 of the National Energy Conservation Policy Act (42 

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

24 shall include— 
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1 ‘‘(i) a list of all new Federal buildings 

2 owned, operated, or controlled by the Federal 

3 agency; and 

4 ‘‘(ii) a statement concerning whether the 

5 Federal buildings meet or exceed the revised 

6 standards established under this paragraph.’’.

7 SEC. 11005. PROCUREMENT OF ENERGY EFFICIENT PROD8 UCTS. 

9 (a) REQUIREMENTS.—Part 3 of title V of the Na10 tional Energy Conservation Policy Act is amended by add11 ing at the end the following: 

12 ‘‘SEC. 553. FEDERAL PROCUREMENT OF ENERGY EFFI13 CIENT PRODUCTS. 

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

15 ‘‘(1) ENERGY STAR PRODUCT.—The term ‘En16 ergy Star product’ means a product that is rated for 

17 energy efficiency under an Energy Star program. 

18 ‘‘(2) ENERGY STAR PROGRAM.—The term ‘En19 ergy Star program’ means the program established 

20 by section 324A of the Energy Policy and Conserva21 tion Act. 

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

23 agency’ has the meaning given the term in section 

24 4 of the Office of Federal Procurement Policy Act 

25 (41 U.S.C. 403). 
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1 ‘‘(4) FEMP DESIGNATED PRODUCT.—The term 

2 ‘FEMP designated product’ means a product that is 

3 designated under the Federal Energy Management 

4 Program of the Department of Energy as being 

5 among the highest 25 percent of equivalent products 

6 for energy efficiency. 

7 ‘‘(b) PROCUREMENT OF ENERGY EFFICIENT PROD8 UCTS.— 

9 ‘‘(1) REQUIREMENT.—To meet the require10 ments of an executive agency for an energy con11 suming product, the head of the executive agency 

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

13 ‘‘(A) an Energy Star product; or 

14 ‘‘(B) a FEMP designated product. 

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

16 agency is not required to procure an Energy Star 

17 product or FEMP designated product under para18 graph (1) if the head of the executive agency finds 

19 in writing that— 

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

21 designated product is not cost-effective over the 

22 life of the product taking energy cost savings 

23 into account; or 

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

25 designated product is reasonably available that 
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1 meets the functional requirements of the execu2 tive agency. 

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

4 an executive agency shall incorporate into the speci5 fications for all procurements involving energy con6 suming products and systems, including guide speci7 fications, project specifications, and construction, 

8 renovation, and services contracts that include provi9 sion of energy consuming products and systems, and 

10 into the factors for the evaluation of offers received 

11 for the procurement, criteria for energy efficiency 

12 that are consistent with the criteria used for rating 

13 Energy Star products and for rating FEMP des14 ignated products. 

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

16 FEDERAL CATALOGS.—Energy Star products and FEMP 

17 designated products shall be clearly identified and promi18 nently displayed in any inventory or listing of products 

19 by the General Services Administration or the Defense Lo20 gistics Agency. The General Services Administration or 

21 the Defense Logistics Agency shall supply only Energy 

22 Star products or FEMP designated products for all prod23 uct categories covered by the Energy Star program or the 

24 Federal Energy Management Program, except in cases 

25 where the agency ordering a product specifies in writing 
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•HR 6 IH 

1 that no Energy Star product or FEMP designated product 

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

3 or that no Energy Star product or FEMP designated 

4 product is cost-effective for the intended application over 

5 the life of the product, taking energy cost savings into ac6 count. 

7 ‘‘(d) DESIGNATION OF ELECTRIC MOTORS.—In the 

8 case of electric motors of 1 to 500 horsepower, agencies 

9 shall select only premium efficient motors that meet a 

10 standard designated by the Secretary. The Secretary shall 

11 designate such a standard within 120 days after the date 

12 of the enactment of this section, after considering the rec13 ommendations of associated electric motor manufacturers 

14 and energy efficiency groups. 

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

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

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

18 (b) CONFORMING AMENDMENT.—The table of con19 tents in section 101(b) of the National Energy Conserva20 tion Policy Act (42 U.S.C. 8201 note), as amended by sec21 tion 11001(b) of this division, is further amended by in22 serting after the item relating to section 552 the following:

‘‘Sec. 553. Federal procurement of energy efficient products.’’.
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1 SEC. 11006. ENERGY SAVINGS PERFORMANCE CONTRACTS. 

2 (a) PERMANENT EXTENSION.—Section 801(c) of the 

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

4 8287(c)) is repealed. 

5 (b) REPLACEMENT FACILITIES.—Section 801(a) of 

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

7 8287(a)) is amended by adding at the end the following 

8 new paragraph: 

9 ‘‘(3)(A) In the case of an energy savings con10 tract or energy savings performance contract pro11 viding for energy savings through the construction 

12 and operation of one or more buildings or facilities 

13 to replace one or more existing buildings or facilities, 

14 benefits ancillary to the purpose of such contract 

15 under paragraph (1) may include savings resulting 

16 from reduced costs of operation and maintenance at 

17 such replacement buildings or facilities when com18 pared with costs of operation and maintenance at 

19 the buildings or facilities being replaced, established 

20 through a methodology set forth in the contract. 

21 ‘‘(B) Notwithstanding paragraph (2)(B), aggre22 gate annual payments by an agency under an energy 

23 savings contract or energy savings performance con24 tract referred to in subparagraph (A) may take into 

25 account (through the procedures developed pursuant 

26 to this section) savings resulting from reduced costs 
31

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1 of operation and maintenance as described in that 

2 subparagraph.’’. 

3 (c) ENERGY SAVINGS.—Section 804(2) of the Na4 tional Energy Conservation Policy Act (42 U.S.C. 

5 8287c(2)) is amended to read as follows: 

6 ‘‘(2) The term ‘energy savings’ means—

7 ‘‘(A) a reduction in the cost of energy or 

8 water, from a base cost established through a 

9 methodology set forth in the contract, used in 

10 an existing federally owned building or build11 ings or other federally owned facilities as a re12 sult of—

13 ‘‘(i) the lease or purchase of operating 

14 equipment, improvements, altered oper15 ation and maintenance, or technical serv16 ices; 

17 ‘‘(ii) the increased efficient use of ex18 isting energy sources by cogeneration or 

19 heat recovery, excluding any cogeneration 

20 process for other than a federally owned 

21 building or buildings or other federally 

22 owned facilities; or 

23 ‘‘(iii) the increased efficient use of ex24 isting water sources; or 
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1 ‘‘(B) in the case of a replacement building 

2 or facility described in section 801(a)(3), a re3 duction in the cost of energy, from a base cost 

4 established through a methodology set forth in 

5 the contract, that would otherwise be utilized in 

6 one or more existing federally owned buildings 

7 or other federally owned facilities by reason of 

8 the construction and operation of the replace9 ment building or facility.’’. 

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

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

12 8287c(3)) is amended to read as follows: 

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

14 ‘energy savings performance contract’ mean a con15 tract which provides for—

16 ‘‘(A) the performance of services for the 

17 design, acquisition, installation, testing, oper18 ation, and, where appropriate, maintenance and 

19 repair, of an identified energy or water con20 servation measure or series of measures at one 

21 or more locations; or 

22 ‘‘(B) energy savings through the construc23 tion and operation of one or more buildings or 

24 facilities to replace one or more existing build25 ings or facilities. 
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1 Such contracts shall, with respect to an agency facil2 ity that is a public building as such term is defined 

3 in section 13(1) of the Public Buildings Act of 1959 

4 (40 U.S.C. 3301), be in compliance with the pro5 spectus requirements and procedures of section 7 of 

6 the Public Buildings Act of 1959 (40 U.S.C. 

7 3307).’’. 

8 (e) ENERGY OR WATER CONSERVATION MEASURE.—

9 Section 804(4) of the National Energy Conservation Pol10 icy Act (42 U.S.C. 8287c(4)) is amended to read as fol11 lows: 

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

13 measure’ means—

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

15 defined in section 551(4) (42 U.S.C. 8259(4)); 

16 or 

17 ‘‘(B) a water conservation measure that 

18 improves water efficiency, is life cycle cost-effec19 tive, and involves water conservation, water re20 cycling or reuse, more efficient treatment of 

21 wastewater or stormwater, improvements in op22 eration or maintenance efficiencies, retrofit ac23 tivities, or other related activities, not at a Fed24 eral hydroelectric facility.’’. 
34

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1 (f) REVIEW.—Within 180 days after the date of the 

2 enactment of this section, the Secretary of Energy shall 

3 complete a review of the Energy Savings Performance 

4 Contract program to identify statutory, regulatory, and 

5 administrative obstacles that prevent Federal agencies 

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

7 shall identify all areas for increasing program flexibility 

8 and effectiveness, including audit and measurement 

9 verification requirements, accounting for energy use in de10 termining savings, contracting requirements, and energy 

11 efficiency services covered. The Secretary shall report 

12 these findings to the Committee on Energy and Commerce 

13 of the House of Representatives and the Committee on 

14 Energy and Natural Resources of the Senate, and shall 

15 implement identified administrative and regulatory 

16 changes to increase program flexibility and effectiveness 

17 to the extent that such changes are consistent with statu18 tory authority.

19 SEC. 11007. VOLUNTARY COMMITMENTS TO REDUCE INDUS20 TRIAL ENERGY INTENSITY. 

21 (a) VOLUNTARY AGREEMENTS.—The Secretary of 

22 Energy shall enter into voluntary agreements with one or 

23 more persons in industrial sectors that consume signifi24 cant amounts of primary energy per unit of physical out-
35

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1 put to reduce the energy intensity of their production ac2 tivities. 

3 (b) GOAL.—Voluntary agreements under this section 

4 shall have a goal of reducing energy intensity by not less 

5 than 2.5 percent each year from 2004 through 2014. 

6 (c) RECOGNITION.—The Secretary of Energy, in co7 operation with the Administrator of the Environmental 

8 Protection Agency and other appropriate Federal agen9 cies, shall develop mechanisms to recognize and publicize 

10 the achievements of participants in voluntary agreements 

11 under this section. 

12 (d) DEFINITION.—In this section, the term ‘‘energy 

13 intensity’’ means the primary energy consumed per unit 

14 of physical output in an industrial process. 

15 (e) TECHNICAL ASSISTANCE.—An entity that enters 

16 into an agreement under this section and continues to 

17 make a good faith effort to achieve the energy efficiency 

18 goals specified in the agreement shall be eligible to receive 

19 from the Secretary a grant or technical assistance as ap20 propriate to assist in the achievement of those goals. 

21 (f) REPORT.—Not later than June 30, 2010 and 

22 June 30, 2014, the Secretary shall submit to Congress a 

23 report that evaluates the success of the voluntary agree24 ments, with independent verification of a sample of the 

25 energy savings estimates provided by participating firms. 
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1 SEC. 11008. FEDERAL AGENCY PARTICIPATION IN DEMAND 

2 REDUCTION PROGRAMS. 

3 Section 546(c) of the National Energy Conservation 

4 Policy Act (42 U.S.C. 8256(c)) is amended by adding at 

5 the end of the following new paragraph: 

6 ‘‘(6) Federal agencies are encouraged to participate 

7 in State or regional demand side reduction programs. The 

8 availability of such programs, including measures employ9 ing onsite generation, and the savings resulting from such 

10 participation, should be included in the evaluation of en11 ergy options for Federal facilities.’’. 

12 SEC. 11009. ADVANCED BUILDING EFFICIENCY TESTBED. 

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

14 consultation with the Administrator of the General Serv15 ices Administration, shall establish an Advanced Building 

16 Efficiency Testbed program for the development, testing, 

17 and demonstration of advanced engineering systems, com18 ponents, and materials to enable innovations in building 

19 technologies. The program shall evaluate efficiency con20 cepts for government and industry buildings, and dem21 onstrate the ability of next generation buildings to support 

22 individual and organizational productivity and health as 

23 well as flexibility and technological change to improve en24 vironmental sustainability. Such program shall com25 plement and not duplicate existing national programs. 
37

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1 (b) PARTICIPANTS.—The program established under 

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

3 to combine the expertise from numerous academic fields 

4 including, at a minimum, intelligent workplaces and ad5 vanced building systems and engineering, electrical and 

6 computer engineering, computer science, architecture, 

7 urban design, and environmental and mechanical engi8 neering. Such university shall partner with other univer9 sities and entities who have established programs and the 

10 capability of advancing innovative building efficiency tech11 nologies. 

12 (c) AUTHORIZATION OF APPROPRIATIONS.—There 

13 are authorized to be appropriated to the Secretary of En14 ergy to carry out this section $6,000,000 for each of the 

15 fiscal years 2004 through 2006, to remain available until 

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

17 under this section, the Secretary shall provide one-third 

18 of the total amount to the lead university described in sub19 section (b), and provide the remaining two-thirds to the 

20 other participants referred to in subsection (b) on an equal 

21 basis.
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1 SEC. 11010. INCREASED USE OF RECOVERED MINERAL 

2 COMPONENT IN FEDERALLY FUNDED 

3 PROJECTS INVOLVING PROCUREMENT OF 

4 CEMENT OR CONCRETE. 

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

6 Disposal Act (42 U.S.C. 6961 et seq.) is amended by add7 ing at the end the following new section: 

8 ‘‘INCREASED USE OF RECOVERED MINERAL COMPONENT

9 IN FEDERALLY FUNDED PROJECTS INVOLVING PRO10 CUREMENT OF CEMENT OR CONCRETE

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

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

13 means—

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

15 ‘‘(B) the head of each other Federal agen16 cy that on a regular basis procures, or provides 

17 Federal funds to pay or assist in paying the 

18 cost of procuring, material for cement or con19 crete projects. 

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

21 term ‘cement or concrete project’ means a project 

22 for the construction or maintenance of a highway or 

23 other transportation facility or a Federal, State, or 

24 local government building or other public facility 

25 that—
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1 ‘‘(A) involves the procurement of cement 

2 or concrete; and 

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

4 using Federal funds. 

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

6 term ‘recovered mineral component’ means—

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

8 ‘‘(B) coal combustion fly ash; and 

9 ‘‘(C) any other waste material or byprod10 uct recovered or diverted from solid waste that 

11 the Administrator, in consultation with an 

12 agency head, determines should be treated as 

13 recovered mineral component under this section 

14 for use in cement or concrete projects paid for, 

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

16 ‘‘(b) IMPLEMENTATION OF REQUIREMENTS.—

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

18 the date of enactment of this section, the Adminis19 trator and each agency head shall take such actions 

20 as are necessary to implement fully all procurement 

21 requirements and incentives in effect as of the date 

22 of enactment of this section (including guidelines 

23 under section 6002) that provide for the use of ce24 ment and concrete incorporating recovered mineral 

25 component in cement or concrete projects. 
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1 ‘‘(2) PRIORITY.—In carrying out paragraph (1) 

2 an agency head shall give priority to achieving great3 er use of recovered mineral component in cement or 

4 concrete projects for which recovered mineral compo5 nents historically have not been used or have been 

6 used only minimally. 

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

8 each agency head shall carry out this subsection in 

9 accordance with section 6002. 

10 ‘‘(c) FULL IMPLEMENTATION STUDY.—

11 ‘‘(1) IN GENERAL.—The Administrator, in co12 operation with the Secretary of Transportation and 

13 the Secretary of Energy, shall conduct a study to de14 termine the extent to which current procurement re15 quirements, when fully implemented in accordance 

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

17 environmental benefits attainable with substitution 

18 of recovered mineral component in cement used in 

19 cement or concrete projects. 

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

21 shall—

22 ‘‘(A) quantify the extent to which recov23 ered mineral components are being substituted 

24 for Portland cement, particularly as a result of 

25 current procurement requirements, and the en-
41

•HR 6 IH 

1 ergy savings and environmental benefits associ2 ated with that substitution; 

3 ‘‘(B) identify all barriers in procurement 

4 requirements to fuller realization of energy sav5 ings and environmental benefits, including bar6 riers resulting from exceptions from current 

7 law; and 

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

9 achieve greater substitution of recovered min10 eral component in types of cement or concrete 

11 projects for which recovered mineral compo12 nents historically have not been used or have 

13 been used only minimally; 

14 ‘‘(ii) evaluate the feasibility of establishing 

15 guidelines or standards for optimized substi16 tution rates of recovered mineral component in 

17 those cement or concrete projects; and 

18 ‘‘(iii) identify any potential environmental 

19 or economic effects that may result from great20 er substitution of recovered mineral component 

21 in those cement or concrete projects. 

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

23 the date of enactment of this section, the Adminis24 trator shall submit to the Committee on Appropria25 tions and Committee on Environment and Public 
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1 Works of the Senate and the Committee on Appro2 priations, Committee on Energy and Commerce, and 

3 Committee on Transportation and Infrastructure of 

4 the House of Representatives a report on the study. 

5 ‘‘(d) ADDITIONAL PROCUREMENT REQUIREMENTS.—

6 Unless the study conducted under subsection (c) identifies 

7 any effects or other problems described in subsection 

8 (c)(2)(C)(iii) that warrant further review or delay, the Ad9 ministrator and each agency head shall, within 1 year of 

10 the release of the report in accordance with subsection 

11 (c)(3), take additional actions authorized under this Act 

12 to establish procurement requirements and incentives that 

13 provide for the use of cement and concrete with increased 

14 substitution of recovered mineral component in the con15 struction and maintenance of cement or concrete projects, 

16 so as to—

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

18 environmental benefits associated with increased 

19 substitution; and 

20 ‘‘(2) eliminate barriers identified under sub21 section (c). 

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

23 affects the requirements of section 6002 (including the 

24 guidelines and specifications for implementing those re25 quirements).’’. 
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1 (b) TABLE OF CONTENTS AMENDMENT.—The table 

2 of contents of the Solid Waste Disposal Act is amended 

3 by adding after the item relating to section 6004 the fol4 lowing new item:

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

projects involving procurement of cement or concrete.’’.

5 Subtitle B—Energy Assistance and 

6 State Programs 

7 SEC. 11021. LIHEAP AND WEATHERIZATION ASSISTANCE. 

8 (a) LOW-INCOME HOME ENERGY ASSISTANCE PRO9 GRAM.—Section 2602(b) of the Low-Income Home Energy 

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

11 by striking ‘‘each of fiscal years 2002 through 2004’’ and 

12 inserting ‘‘each of fiscal years 2002 and 2003, and 

13 $3,400,000,000 for each of fiscal years 2004 through 

14 2006’’. 

15 (b) WEATHERIZATION.—Section 422 of the Energy 

16 Conservation and Production Act (42 U.S.C. 6872) is 

17 amended by striking ‘‘for fiscal years 1999 through 2003 

18 such sums as may be necessary’’ and inserting 

19 ‘‘$325,000,000 for fiscal year 2004, $400,000,000 for fis20 cal year 2005, and $500,000,000 for fiscal year 2006’’. 

21 (c) REPORT TO CONGRESS.—Not later than 1 year 

22 after the date of enactment of this Act, the Secretary of 

23 Health and Human Services shall transmit to the Con24 gress a report on how the Low-Income Home Energy As-
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1 sistance Program could be used more effectively to prevent 

2 loss of life from extreme temperatures. In preparing such 

3 report, the Secretary shall consult with appropriate offi4 cials in all 50 States and the District of Columbia. 

5 SEC. 11022. STATE ENERGY PROGRAMS. 

6 (a) STATE ENERGY CONSERVATION PLANS.—Section 

7 362 of the Energy Policy and Conservation Act (42 U.S.C. 

8 6322) is amended by inserting at the end the following 

9 new subsection: 

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

11 invite the Governor of each State to review and, if nec12 essary, revise the energy conservation plan of such State 

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

14 consider the energy conservation plans of other States 

15 within the region, and identify opportunities and actions 

16 carried out in pursuit of common energy conservation 

17 goals.’’. 

18 (b) STATE ENERGY EFFICIENCY GOALS.—Section 

19 364 of the Energy Policy and Conservation Act (42 U.S.C. 

20 6324) is amended to read as follows: 

21 ‘‘STATE ENERGY EFFICIENCY GOALS

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

23 respect to which assistance is made available under this 

24 part on or after the date of enactment of the Energy Pol25 icy Act of 2003 shall contain a goal, consisting of an im26 provement of 25 percent or more in the efficiency of use 
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1 of energy in the State concerned in calendar year 2010 

2 as compared to calendar year 1990, and may contain in3 terim goals.’’. 

4 (c) AUTHORIZATION OF APPROPRIATIONS.—Section 

5 365(f) of the Energy Policy and Conservation Act (42 

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

7 1999 through 2003 such sums as may be necessary’’ and 

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

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

10 SEC. 11023. ENERGY EFFICIENT APPLIANCE REBATE PRO11 GRAMS. 

12 (a) DEFINITIONS.—In this section: 

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

14 State’’ means a State that meets the requirements 

15 of subsection (b). 

16 (2) ENERGY STAR PROGRAM.—The term ‘‘En17 ergy Star program’’ means the program established 

18 by section 324A of the Energy Policy and Conserva19 tion Act. 

20 (3) RESIDENTIAL ENERGY STAR PRODUCT.—

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

22 a product for a residence that is rated for energy ef23 ficiency under the Energy Star program. 

24 (4) STATE ENERGY OFFICE.—The term ‘‘State 

25 energy office’’ means the State agency responsible 
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1 for developing State energy conservation plans under 

2 section 362 of the Energy Policy and Conservation 

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

4 (5) STATE PROGRAM.—The term ‘‘State pro5 gram’’ means a State energy efficient appliance re6 bate program described in subsection (b)(1). 

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

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

9 (1) establishes (or has established) a State en10 ergy efficient appliance rebate program to provide 

11 rebates to residential consumers for the purchase of 

12 residential Energy Star products to replace used ap13 pliances of the same type; 

14 (2) submits an application for the allocation at 

15 such time, in such form, and containing such infor16 mation as the Secretary may require; and 

17 (3) provides assurances satisfactory to the Sec18 retary that the State will use the allocation to sup19 plement, but not supplant, funds made available to 

20 carry out the State program. 

21 (c) AMOUNT OF ALLOCATIONS.—

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

23 for each fiscal year, the Secretary shall allocate to 

24 the State energy office of each eligible State to carry 

25 out subsection (d) an amount equal to the product 
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1 obtained by multiplying the amount made available 

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

3 that the population of the State in the most recent 

4 calendar year for which data are available bears to 

5 the total population of all eligible States in that cal6 endar year. 

7 (2) MINIMUM ALLOCATIONS.—For each fiscal 

8 year, the amounts allocated under this subsection 

9 shall be adjusted proportionately so that no eligible 

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

11 determined by the Secretary. 

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

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

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

15 carrying out a State program. 

16 (e) ISSUANCE OF REBATES.—Rebates may be pro17 vided to residential consumers that meet the requirements 

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

19 determined by the State energy office, taking into consid20 eration—

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

22 energy office under subsection (c); 

23 (2) the amount of any Federal or State tax in24 centive available for the purchase of the residential 

25 Energy Star product; and 
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1 (3) the difference between the cost of the resi2 dential Energy Star product and the cost of an ap3 pliance that is not a residential Energy Star prod4 uct, but is of the same type as, and is the nearest 

5 capacity, performance, and other relevant character6 istics (as determined by the State energy office) to 

7 the residential Energy Star product. 

8 (f) AUTHORIZATION OF APPROPRIATIONS.—There 

9 are authorized to be appropriated to carry out this section 

10 $50,000,000 for each of the fiscal years 2004 through 

11 2008.

12 SEC. 11024. ENERGY EFFICIENT PUBLIC BUILDINGS. 

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

14 grants to the State agency responsible for developing State 

15 energy conservation plans under section 362 of the Energy 

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

17 such agency exists, a State agency designated by the Gov18 ernor of the State, to assist units of local government in 

19 the State in improving the energy efficiency of public 

20 buildings and facilities—

21 (1) through construction of new energy efficient 

22 public buildings that use at least 30 percent less en23 ergy than a comparable public building constructed 

24 in compliance with standards prescribed in chapter 

25 8 of the 2000 International Energy Conservation 
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1 Code, or a similar State code intended to achieve 

2 substantially equivalent efficiency levels; or 

3 (2) through renovation of existing public build4 ings to achieve reductions in energy use of at least 

5 30 percent as compared to the baseline energy use 

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

7 year, weather-normalized average for calculating 

8 such baseline. 

9 (b) ADMINISTRATION.—State energy offices receiving 

10 grants under this section shall—

11 (1) maintain such records and evidence of com12 pliance as the Secretary may require; and 

13 (2) develop and distribute information and ma14 terials and conduct programs to provide technical 

15 services and assistance to encourage planning, fi16 nancing, and design of energy efficient public build17 ings by units of local government. 

18 (c) AUTHORIZATION OF APPROPRIATIONS.—For the 

19 purposes of this section, there are authorized to be appro20 priated to the Secretary of Energy such sums as may be 

21 necessary for each of fiscal years 2004 through 2013. Not 

22 more than 30 percent of appropriated funds shall be used 

23 for administration.
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1 SEC. 11025. LOW INCOME COMMUNITY ENERGY EFFICIENCY 

2 PILOT PROGRAM. 

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

4 to make grants to units of local government, private, non5 profit community development organizations, and Indian 

6 tribe economic development entities to improve energy effi7 ciency, identify and develop alternative renewable and dis8 tributed energy supplies, and increase energy conservation 

9 in low income rural and urban communities. 

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

11 grants on a competitive basis for—

12 (1) investments that develop alternative renew13 able and distributed energy supplies; 

14 (2) energy efficiency projects and energy con15 servation programs; 

16 (3) studies and other activities that improve en17 ergy efficiency in low income rural and urban com18 munities; 

19 (4) planning and development assistance for in20 creasing the energy efficiency of buildings and facili21 ties; and 

22 (5) technical and financial assistance to local 

23 government and private entities on developing new 

24 renewable and distributed sources of power or com25 bined heat and power generation. 
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1 (c) DEFINITION.—For purposes of this section, the 

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

3 or other organized group or community, including any 

4 Alaskan Native village or regional or village corporation 

5 as defined in or established pursuant to the Alaska Native 

6 Claims Settlement Act (43 U.S.C. 1601 et seq.), which 

7 is recognized as eligible for the special programs and serv8 ices provided by the United States to Indians because of 

9 their status as Indians. 

10 (d) AUTHORIZATION OF APPROPRIATIONS.—For the 

11 purposes of this section there are authorized to be appro12 priated to the Secretary of Energy $20,000,000 for fiscal 

13 year 2004 and each fiscal year thereafter through fiscal 

14 year 2006. 

15 Subtitle C—Energy Efficient 

16 Products 

17 SEC. 11041. ENERGY STAR PROGRAM. 

18 (a) AMENDMENT.—The Energy Policy and Conserva19 tion Act (42 U.S.C. 6201 and following) is amended by 

20 inserting the following after section 324: 

21 ‘‘SEC. 324A. ENERGY STAR PROGRAM. 

22 ‘‘There is established at the Department of Energy 

23 and the Environmental Protection Agency a program to 

24 identify and promote energy-efficient products and build25 ings in order to reduce energy consumption, improve en-
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1 ergy security, and reduce pollution through labeling of and 

2 other forms of communication about products and build3 ings that meet the highest energy efficiency standards. Re4 sponsibilities under the program shall be divided between 

5 the Department of Energy and the Environmental Protec6 tion Agency consistent with the terms of agreements be7 tween the two agencies. The Administrator and the Sec8 retary shall—

9 ‘‘(1) promote Energy Star compliant tech10 nologies as the preferred technologies in the market11 place for achieving energy efficiency and to reduce 

12 pollution; 

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

14 Energy Star label, including special outreach to 

15 small businesses; 

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

17 label; and 

18 ‘‘(4) solicit the comments of interested parties 

19 in establishing a new Energy Star product category 

20 or in revising a product category, and upon adoption 

21 of a new or revised product category provide an ex22 planation of the decision that responds to significant 

23 public comments.’’. 

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

25 of contents of the Energy Policy and Conservation Act is 
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1 amended by inserting after the item relating to section 

2 324 the following new item:

‘‘Sec. 324A. Energy Star program.’’.

3 SEC. 11042. CONSUMER EDUCATION ON ENERGY EFFI4 CIENCY BENEFITS OF AIR CONDITIONING, 

5 HEATING, AND VENTILATION MAINTENANCE. 

6 Section 337 of the Energy Policy and Conservation 

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

8 the following: 

9 ‘‘(c) HVAC MAINTENANCE.—(1) For the purpose of 

10 ensuring that installed air conditioning and heating sys11 tems operate at their maximum rated efficiency levels, the 

12 Secretary shall, within 180 days of the date of enactment 

13 of this subsection, carry out a program to educate home14 owners and small business owners concerning the energy 

15 savings resulting from properly conducted maintenance of 

16 air conditioning, heating, and ventilating systems. 

17 ‘‘(2) The Secretary shall carry out the program in 

18 cooperation with the Administrator of the Environmental 

19 Protection Agency and such other entities as the Secretary 

20 considers appropriate, including industry trade associa21 tions, industry members, and energy efficiency organiza22 tions. 

23 ‘‘(d) SMALL BUSINESS EDUCATION AND ASSIST24 ANCE.—The Administrator of the Small Business Admin-
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1 istration, in consultation with the Secretary of Energy and 

2 the Administrator of the Environmental Protection Agen3 cy, shall develop and coordinate a Government-wide pro4 gram, building on the existing Energy Star for Small 

5 Business Program, to assist small business to become 

6 more energy efficient, understand the cost savings obtain7 able through efficiencies, and identify financing options 

8 for energy efficiency upgrades. The Secretary and the Ad9 ministrator shall make the program information available 

10 directly to small businesses and through other Federal 

11 agencies, including the Federal Emergency Management 

12 Agency, and the Department of Agriculture.’’.

13 SEC. 11043. ADDITIONAL DEFINITIONS. 

14 Section 321 of the Energy Policy and Conservation 

15 Act (42 U.S.C. 6291) is amended by adding at the end 

16 the following: 

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

19 ‘‘(33) The term ‘commercial refrigerator, freez20 er and refrigerator-freezer’ means a refrigerator, 

21 freezer or refrigerator-freezer that— 

22 ‘‘(A) is not a consumer product regulated 

23 under this Act; and 
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1 ‘‘(B) incorporates most components in2 volved in the vapor-compression cycle and the 

3 refrigerated compartment in a single package. 

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

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

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

10 sign that— 

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

12 place to identify an exit; and 

13 ‘‘(B) consists of— 

14 ‘‘(i) an electrically powered integral 

15 light source that illuminates the legend 

16 ‘EXIT’ and any directional indicators; and 

17 ‘‘(ii) provides contrast between the 

18 legend, any directional indicators, and the 

19 background. 

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

21 (B), the term ‘low-voltage dry-type transformer’ 

22 means a transformer that— 

23 ‘‘(i) has an input voltage of 600 volts or 

24 less; 

25 ‘‘(ii) is air-cooled; 
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1 ‘‘(iii) does not use oil as a coolant; and 

2 ‘‘(iv) is rated for operation at a frequency 

3 of 60 Hertz. 

4 ‘‘(B) The term ‘low-voltage dry-type trans5 former’ does not include—

6 ‘‘(i) transformers with multiple voltage 

7 taps, with the highest voltage tap equaling at 

8 least 20 percent more than the lowest voltage 

9 tap; 

10 ‘‘(ii) transformers that are designed to be 

11 used in a special purpose application, such as 

12 transformers commonly known as drive trans13 formers, rectifier transformers, 

14 autotransformers, Uninterruptible Power Sys15 tem transformers, impedance transformers, har16 monic transformers, regulating transformers, 

17 sealed and nonventilating transformers, ma18 chine tool transformers, welding transformers, 

19 grounding transformers, or testing trans20 formers; or 

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

22 (ii) that is excluded by the Secretary by rule be23 cause the transformer is designed for a special 

24 application and the application of standards to 
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1 the transformer would not result in significant 

2 energy savings. 

3 ‘‘(37) The term ‘standby mode’ means the low4 est amount of electric power used by a household ap5 pliance when not performing its active functions, as 

6 defined on an individual product basis by the Sec7 retary. 

8 ‘‘(38) The term ‘torchiere’ means a portable 

9 electric lamp with a reflector bowl that directs light 

10 upward so as to give indirect illumination. 

11 ‘‘(39) The term ‘transformer’ means a device 

12 consisting of two or more coils of insulated wire that 

13 transfers alternating current by electromagnetic in14 duction from one coil to another to change the origi15 nal voltage or current value. 

16 ‘‘(40) The term ‘unit heater’ means a self-con17 tained fan-type heater designed to be installed with18 in the heated space, except that such term does not 

19 include a warm air furnace. 

20 ‘‘(41) The term ‘traffic signal module’ means a 

21 standard 8-inch (200mm) or 12-inch (300mm) traf22 fic signal indication, consisting of a light source, a 

23 lens, and all other parts necessary for operation, 

24 that communicates movement messages to drivers 

25 through red, amber, and green colors.’’. 
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1 SEC. 11044. ADDITIONAL TEST PROCEDURES. 

2 (a) EXIT SIGNS.—Section 323(b) of the Energy Pol3 icy and Conservation Act (42 U.S.C. 6293) is amended 

4 by adding at the end the following: 

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

6 shall be based on the test method used under 

7 Version 2.0 of the Energy Star program of the Envi8 ronmental Protection Agency for illuminated exit 

9 signs. 

10 ‘‘(10) Test procedures for low voltage dry-type 

11 distribution transformers shall be based on the 

12 ‘Standard Test Method for Measuring the Energy 

13 Consumption of Distribution Transformers’ pre14 scribed by the National Electrical Manufacturers As15 sociation (NEMA TP 2–1998). The Secretary may 

16 review and revise this test procedure based on future 

17 revisions to such standard test method. 

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

19 shall be based on the test method used under the 

20 Energy Star program of the Environmental Protec21 tion Agency for traffic signal modules, as in effect 

22 on the date of enactment of this paragraph.’’. 

23 (b) ADDITIONAL CONSUMER AND COMMERCIAL

24 PRODUCTS.—Section 323 of the Energy Policy and Con25 servation Act (42 U.S.C. 6293) is further amended by 

26 adding at the end the following: 
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1 ‘‘(f) ADDITIONAL CONSUMER AND COMMERCIAL

2 PRODUCTS.—The Secretary shall within 24 months after 

3 the date of enactment of this subsection prescribe testing 

4 requirements for suspended ceiling fans, refrigerated bot5 tled or canned beverage vending machines, commercial 

6 unit heaters, and commercial refrigerators, freezers and 

7 refrigerator-freezers. Such testing requirements shall be 

8 based on existing test procedures used in industry to the 

9 extent practical and reasonable. In the case of suspended 

10 ceiling fans, such test procedures shall include efficiency 

11 at both maximum output and at an output no more than 

12 50 percent of the maximum output.’’. 

13 SEC. 11045. ENERGY CONSERVATION STANDARDS FOR AD14 DITIONAL CONSUMER AND COMMERCIAL 

15 PRODUCTS. 

16 Section 325 of the Energy Policy and Conservation 

17 Act (42 U.S.C. 6295) is amended by adding at the end 

18 the following: 

19 ‘‘(u) STANDBY MODE ELECTRIC ENERGY CONSUMP20 TION.—

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

22 shall, within 18 months after the date of enactment 

23 of this subsection, prescribe by notice and comment, 

24 definitions of standby mode and test procedures for 

25 the standby mode power use of battery chargers and 
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1 external power supplies. In establishing these test 

2 procedures, the Secretary shall consider, among 

3 other factors, existing test procedures used for meas4 uring energy consumption in standby mode and as5 sess the current and projected future market for 

6 battery chargers and external power supplies. This 

7 assessment shall include estimates of the significance 

8 of potential energy savings from technical improve9 ments to these products and suggested product 

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

11 period, the Secretary shall hold a scoping workshop 

12 to discuss and receive comments on plans for devel13 oping energy conservation standards for standby 

14 mode energy use for these products. 

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

16 the date of enactment of this subsection, issue a 

17 final rule that determines whether energy conserva18 tion standards shall be promulgated for battery 

19 chargers and external power supplies or classes 

20 thereof. For each product class, any such standards 

21 shall be set at the lowest level of standby energy use 

22 that— 

23 ‘‘(i) meets the criteria of subsections (o), 

24 (p), (q), (r), (s) and (t); and 
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1 ‘‘(ii) will result in significant overall an2 nual energy savings, considering both standby 

3 mode and other operating modes. 

4 ‘‘(2) DESIGNATION OF ADDITIONAL COVERED

5 PRODUCTS.—(A) Not later than 180 days after the 

6 date of enactment of this subsection, the Secretary 

7 shall publish for public comment and public hearing 

8 a notice to determine whether any noncovered prod9 ucts should be designated as covered products for 

10 the purpose of instituting a rulemaking under this 

11 section to determine whether an energy conservation 

12 standard restricting standby mode energy consump13 tion, should be promulgated; except that any restric14 tion on standby mode energy consumption shall be 

15 limited to major sources of such consumption. 

16 ‘‘(B) In making the determinations pursuant to 

17 subparagraph (A) of whether to designate new cov18 ered products and institute rulemakings, the Sec19 retary shall, among other relevant factors and in ad20 dition to the criteria in section 322(b), consider— 

21 ‘‘(i) standby mode power consumption 

22 compared to overall product energy consump23 tion; and 

24 ‘‘(ii) the priority and energy savings poten25 tial of standards which may be promulgated 
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1 under this subsection compared to other re2 quired rulemakings under this section and the 

3 available resources of the Department to con4 duct such rulemakings. 

5 ‘‘(C) Not later than 1 year after the date of en6 actment of this subsection, the Secretary shall issue 

7 a determination of any new covered products for 

8 which he intends to institute rulemakings on standby 

9 mode pursuant to this section and he shall state the 

10 dates by which he intends to initiate those 

11 rulemakings. 

12 ‘‘(3) REVIEW OF STANDBY ENERGY USE IN

13 COVERED PRODUCTS.—In determining pursuant to 

14 section 323 whether test procedures and energy con15 servation standards pursuant to this section should 

16 be revised, the Secretary shall consider for covered 

17 products which are major sources of standby mode 

18 energy consumption whether to incorporate standby 

19 mode into such test procedures and energy conserva20 tion standards, taking into account, among other 

21 relevant factors, the criteria for non-covered prod22 ucts in subparagraph (B) of paragraph (2) of this 

23 subsection. 

24 ‘‘(4) RULEMAKING FOR STANDBY MODE.—(A) 

25 Any rulemaking instituted under this subsection or 
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1 for covered products under this section which re2 stricts standby mode power consumption shall be 

3 subject to the criteria and procedures for issuing en4 ergy conservation standards set forth in this section 

5 and the criteria set forth in subparagraph (B) of 

6 paragraph (2) of this subsection. 

7 ‘‘(B) No standard can be proposed for new cov8 ered products or covered products in a standby mode 

9 unless the Secretary has promulgated applicable test 

10 procedures for each product pursuant to section 323. 

11 ‘‘(C) The provisions of section 327 shall apply 

12 to new covered products which are subject to the 

13 rulemakings for standby mode after a final rule has 

14 been issued. 

15 ‘‘(5) EFFECTIVE DATE.—Any standard promul16 gated under this subsection shall be applicable to 

17 products manufactured or imported 3 years after the 

18 date of promulgation. 

19 ‘‘(6) VOLUNTARY PROGRAMS TO REDUCE

20 STANDBY MODE ENERGY USE.—The Secretary and 

21 the Administrator shall collaborate and develop pro22 grams, including programs pursuant to section 324A 

23 (relating to Energy Star Programs) and other vol24 untary industry agreements or codes of conduct, 
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1 which are designed to reduce standby mode energy 

2 use. 

3 ‘‘(v) SUSPENDED CEILING FANS, VENDING MA4 CHINES, UNIT HEATERS, AND COMMERCIAL REFRIG5 ERATORS, FREEZERS AND REFRIGERATOR-FREEZERS.—

6 The Secretary shall within 24 months after the date on 

7 which testing requirements are prescribed by the Sec8 retary pursuant to section 323(f), prescribe, by rule, en9 ergy conservation standards for suspended ceiling fans, re10 frigerated bottled or canned beverage vending machines, 

11 unit heaters, and commercial refrigerators, freezers and 

12 refrigerator-freezers. In establishing standards under this 

13 subsection, the Secretary shall use the criteria and proce14 dures contained in subsections (l) and (m). Any standard 

15 prescribed under this subsection shall apply to products 

16 manufactured 3 years after the date of publication of a 

17 final rule establishing such standard. 

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

19 signs manufactured on or after January 1, 2005 shall 

20 meet the Version 2.0 Energy Star Program performance 

21 requirements for illuminated exit signs prescribed by the 

22 Environmental Protection Agency 

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

24 after January 1, 2005— 
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1 ‘‘(1) shall consume not more than 190 watts of 

2 power; and 

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

4 lamps that total more than 190 watts. 

5 ‘‘(y) LOW VOLTAGE DRY-TYPE TRANSFORMERS.—

6 The efficiency of low voltage dry-type transformers manu7 factured on or after January 1, 2005 shall be the Class 

8 I Efficiency Levels for low voltage dry-type transformers 

9 specified in Table 4–2 of the ‘Guide for Determining En10 ergy Efficiency for Distribution Transformers’ published 

11 by the National Electrical Manufacturers Association 

12 (NEMA TP–1–1996). 

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

14 modules manufactured on or after January 1, 2006 shall 

15 meet the performance requirements used under the En16 ergy Star program of the Environmental Protection Agen17 cy for traffic signals, as in effect on the date of enactment 

18 of this paragraph, and shall be installed with compatible, 

19 electrically-connected signal control interface devices and 

20 conflict monitoring systems. 

21 ‘‘(aa) EFFECTIVE DATE OF SECTION 327.—The pro22 visions of section 327 shall apply to products for which 

23 standards are set in subsections (v) through (z) of this 

24 section after the effective date for such standards.’’.
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1 SEC. 11046. ENERGY LABELING. 

2 (a) RULEMAKING ON EFFECTIVENESS OF CONSUMER

3 PRODUCT LABELING.—Paragraph (2) of section 324(a) of 

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

5 6294(a)(2)) is amended by adding at the end the fol6 lowing: 

7 ‘‘(F) Not later than 3 months after the date of enact8 ment of this subparagraph, the Commission shall initiate 

9 a rulemaking to consider the effectiveness of the current 

10 consumer products labeling program in assisting con11 sumers in making purchasing decisions and improving en12 ergy efficiency and to consider changes to the labeling 

13 rules that would improve the effectiveness of consumer 

14 product labels. Such rulemaking shall be completed within 

15 2 years after the date of enactment of this subpara16 graph.’’. 

17 (b) RULEMAKING ON LABELING FOR ADDITIONAL

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

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

20 by adding at the end the following: 

21 ‘‘(5) The Secretary or the Commission, as appro22 priate, may for covered products referred to in subsections 

23 (u) through (z) of section 325, prescribe, by rule, pursuant 

24 to this section, labeling requirements for such products 

25 after a test procedure has been set pursuant to section 

26 323.’’.
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1 SEC. 11047. STUDY OF ENERGY EFFICIENCY STANDARDS. 

2 The Secretary of Energy shall contract with the Na3 tional Academy of Sciences for a study, to be completed 

4 within 1 year of enactment of this Act, to examine whether 

5 the goals of energy efficiency standards are best served 

6 by measurement of energy consumed, and efficiency im7 provements, at the actual site of energy consumption, or 

8 through the full fuel cycle, beginning at the source of en9 ergy production. The Secretary shall submit the report to 

10 the Congress.

11 TITLE II—OIL AND GAS 

12 Subtitle A—Alaska Natural Gas 

13 Pipeline 

14 SEC. 12001. SHORT TITLE. 

15 This subtitle may be cited as the ‘‘Alaska Natural 

16 Gas Pipeline Act of 2003’’. 

17 SEC. 12002. FINDINGS AND PURPOSES. 

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

19 (1) Construction of a natural gas pipeline sys20 tem from the Alaskan North Slope to United States 

21 markets is in the national interest and will enhance 

22 national energy security by providing access to the 

23 significant gas reserves in Alaska needed to meet the 

24 anticipated demand for natural gas. 

25 (2) The Commission issued a conditional certifi26 cate of public convenience and necessity for the 
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1 Alaska natural gas transportation system, which re2 mains in effect. 

3 (b) PURPOSES.—The purposes of this subtitle are as 

4 follows: 

5 (1) To provide a statutory framework for the 

6 expedited approval, construction, and initial oper7 ation of an Alaska natural gas transportation 

8 project, as an alternative to the framework provided 

9 in the Alaska Natural Gas Transportation Act of 

10 1976 (15 U.S.C. 719 et seq.), which remains in ef11 fect. 

12 (2) To establish a process for providing access 

13 to such transportation project in order to promote 

14 competition in the exploration, development, and 

15 production of Alaska natural gas. 

16 (3) To clarify Federal authorities under the 

17 Alaska Natural Gas Transportation Act of 1976. 

18 SEC. 12003. DEFINITIONS. 

19 In this subtitle, the following definitions apply: 

20 (1) ALASKA NATURAL GAS.—The term ‘‘Alaska 

21 natural gas’’ means natural gas derived from the 

22 area of the State of Alaska lying north of 64 degrees 

23 North latitude. 

24 (2) ALASKA NATURAL GAS TRANSPORTATION

25 PROJECT.—The term ‘‘Alaska natural gas transpor-
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1 tation project’’ means any natural gas pipeline sys2 tem that carries Alaska natural gas to the border 

3 between Alaska and Canada (including related facili4 ties subject to the jurisdiction of the Commission) 

5 that is authorized under either—

6 (A) the Alaska Natural Gas Transpor7 tation Act of 1976 (15 U.S.C. 719 et seq.); or 

8 (B) section 12004. 

9 (3) ALASKA NATURAL GAS TRANSPORTATION

10 SYSTEM.—The term ‘‘Alaska natural gas transpor11 tation system’’ means the Alaska natural gas trans12 portation project authorized under the Alaska Nat13 ural Gas Transportation Act of 1976 and designated 

14 and described in section 2 of the President’s deci15 sion. 

16 (4) COMMISSION.—The term ‘‘Commission’’ 

17 means the Federal Energy Regulatory Commission. 

18 (5) PRESIDENT’S DECISION.—The term ‘‘Presi19 dent’s decision’’ means the decision and report to 

20 Congress on the Alaska natural gas transportation 

21 system issued by the President on September 22, 

22 1977, pursuant to section 7 of the Alaska Natural 

23 Gas Transportation Act of 1976 (15 U.S.C. 719e) 

24 and approved by Public Law 95–158 (91 Stat. 

25 1268). 
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1 SEC. 12004. ISSUANCE OF CERTIFICATE OF PUBLIC CON2 VENIENCE AND NECESSITY. 

3 (a) AUTHORITY OF THE COMMISSION.—Notwith4 standing the provisions of the Alaska Natural Gas Trans5 portation Act of 1976 (15 U.S.C. 719 et seq.), the Com6 mission may, pursuant to section 7(c) of the Natural Gas 

7 Act (15 U.S.C. 717f(c)), consider and act on an applica8 tion for the issuance of a certificate of public convenience 

9 and necessity authorizing the construction and operation 

10 of an Alaska natural gas transportation project other than 

11 the Alaska natural gas transportation system. 

12 (b) ISSUANCE OF CERTIFICATE.—

13 (1) IN GENERAL.—The Commission shall issue 

14 a certificate of public convenience and necessity au15 thorizing the construction and operation of an Alas16 ka natural gas transportation project under this sec17 tion if the applicant has satisfied the requirements 

18 of section 7(e) of the Natural Gas Act (15 U.S.C. 

19 717f(e)). 

20 (2) CONSIDERATIONS.—In considering an appli21 cation under this section, the Commission shall pre22 sume that—

23 (A) a public need exists to construct and 

24 operate the proposed Alaska natural gas trans25 portation project; and 
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1 (B) sufficient downstream capacity will 

2 exist to transport the Alaska natural gas mov3 ing through such project to markets in the con4 tiguous United States. 

5 (c) EXPEDITED APPROVAL PROCESS.—The Commis6 sion shall issue a final order granting or denying any ap7 plication for a certificate of public convenience and neces8 sity under section 7(c) of the Natural Gas Act (15 U.S.C. 

9 717f(c)) and this section not more than 60 days after the 

10 issuance of the final environmental impact statement for 

11 that project pursuant to section 12005. 

12 (d) PROHIBITION ON CERTAIN PIPELINE ROUTE.—

13 No license, permit, lease, right-of-way, authorization, or 

14 other approval required under Federal law for the con15 struction of any pipeline to transport natural gas from 

16 lands within the Prudhoe Bay oil and gas lease area may 

17 be granted for any pipeline that follows a route that tra18 verses—

19 (1) the submerged lands (as defined by the 

20 Submerged Lands Act) beneath, or the adjacent 

21 shoreline of, the Beaufort Sea; and 

22 (2) enters Canada at any point north of 68 de23 grees North latitude. 

24 (e) OPEN SEASON.—Except where an expansion is 

25 ordered pursuant to section 12006, initial or expansion ca-
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1 pacity on any Alaska natural gas transportation project 

2 shall be allocated in accordance with procedures to be es3 tablished by the Commission in regulations governing the 

4 conduct of open seasons for such project. Such procedures 

5 shall include the criteria for and timing of any open sea6 sons, be consistent with the purposes set forth in section 

7 12002(b)(2), and, for any open season for capacity beyond 

8 the initial capacity, provide the opportunity for the trans9 portation of natural gas other than from the Prudhoe Bay 

10 and Point Thompson units. The Commission shall issue 

11 such regulations not later than 120 days after the date 

12 of enactment of this Act. 

13 (f) PROJECTS IN THE CONTIGUOUS UNITED

14 STATES.—Applications for additional or expanded pipeline 

15 facilities that may be required to transport Alaska natural 

16 gas from Canada to markets in the contiguous United 

17 States may be made pursuant to the Natural Gas Act. 

18 To the extent such pipeline facilities include the expansion 

19 of any facility constructed pursuant to the Alaska Natural 

20 Gas Transportation Act of 1976, the provisions of that 

21 Act shall continue to apply. 

22 (g) STUDY OF IN-STATE NEEDS.—The holder of the 

23 certificate of public convenience and necessity issued, 

24 modified, or amended by the Commission for an Alaska 

25 natural gas transportation project shall demonstrate that 
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1 it has conducted a study of Alaska in-State needs, includ2 ing tie-in points along the Alaska natural gas transpor3 tation project for in-State access. 

4 (h) ALASKA ROYALTY GAS.—The Commission, upon 

5 the request of the State of Alaska and after a hearing, 

6 may provide for reasonable access to the Alaska natural 

7 gas transportation project for the State of Alaska or its 

8 designee for the transportation of the State’s royalty gas 

9 for local consumption needs within the State; except that 

10 the rates of existing shippers of subscribed capacity on 

11 such project shall not be increased as a result of such ac12 cess. 

13 (i) REGULATIONS.—The Commission may issue regu14 lations to carry out the provisions of this section. 

15 SEC. 12005. ENVIRONMENTAL REVIEWS. 

16 (a) COMPLIANCE WITH NEPA.—The issuance of a 

17 certificate of public convenience and necessity authorizing 

18 the construction and operation of any Alaska natural gas 

19 transportation project under section 12004 shall be treat20 ed as a major Federal action significantly affecting the 

21 quality of the human environment within the meaning of 

22 section 102(2)(C) of the National Environmental Policy 

23 Act of 1969 (42 U.S.C. 4332(2)(C)). 

24 (b) DESIGNATION OF LEAD AGENCY.—The Commis25 sion shall be the lead agency for purposes of complying 
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1 with the National Environmental Policy Act of 1969, and 

2 shall be responsible for preparing the statement required 

3 by section 102(2)(c) of that Act (42 U.S.C. 4332(2)(c)) 

4 with respect to an Alaska natural gas transportation 

5 project under section 12004. The Commission shall pre6 pare a single environmental statement under this section, 

7 which shall consolidate the environmental reviews of all 

8 Federal agencies considering any aspect of the project. 

9 (c) OTHER AGENCIES.—All Federal agencies consid10 ering aspects of the construction and operation of an Alas11 ka natural gas transportation project under section 12004 

12 shall cooperate with the Commission, and shall comply 

13 with deadlines established by the Commission in the prep14 aration of the statement under this section. The statement 

15 prepared under this section shall be used by all such agen16 cies to satisfy their responsibilities under section 

17 102(2)(C) of the National Environmental Policy Act of 

18 1969 (42 U.S.C. 4332(2)(C)) with respect to such project. 

19 (d) EXPEDITED PROCESS.—The Commission shall 

20 issue a draft statement under this section not later than 

21 12 months after the Commission determines the applica22 tion to be complete and shall issue the final statement not 

23 later than 6 months after the Commission issues the draft 

24 statement, unless the Commission for good cause finds 

25 that additional time is needed. 
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1 SEC. 12006. PIPELINE EXPANSION. 

2 (a) AUTHORITY.—With respect to any Alaska natural 

3 gas transportation project, upon the request of one or 

4 more persons and after giving notice and an opportunity 

5 for a hearing, the Commission may order the expansion 

6 of such project if it determines that such expansion is re7 quired by the present and future public convenience and 

8 necessity. 

9 (b) REQUIREMENTS.—Before ordering an expansion, 

10 the Commission shall—

11 (1) approve or establish rates for the expansion 

12 service that are designed to ensure the recovery, on 

13 an incremental or rolled-in basis, of the cost associ14 ated with the expansion (including a reasonable rate 

15 of return on investment); 

16 (2) ensure that the rates as established do not 

17 require existing shippers on the Alaska natural gas 

18 transportation project to subsidize expansion ship19 pers; 

20 (3) find that the proposed shipper will comply 

21 with, and the proposed expansion and the expansion 

22 of service will be undertaken and implemented based 

23 on, terms and conditions consistent with the then-ef24 fective tariff of the Alaska natural gas transpor25 tation project; 
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1 (4) find that the proposed facilities will not ad2 versely affect the financial or economic viability of 

3 the Alaska natural gas transportation project; 

4 (5) find that the proposed facilities will not ad5 versely affect the overall operations of the Alaska 

6 natural gas transportation project; 

7 (6) find that the proposed facilities will not di8 minish the contract rights of existing shippers to 

9 previously subscribed certificated capacity; 

10 (7) ensure that all necessary environmental re11 views have been completed; and 

12 (8) find that adequate downstream facilities 

13 exist or are expected to exist to deliver incremental 

14 Alaska natural gas to market. 

15 (c) REQUIREMENT FOR A FIRM TRANSPORTATION

16 AGREEMENT.—Any order of the Commission issued pur17 suant to this section shall be null and void unless the per18 son or persons requesting the order executes a firm trans19 portation agreement with the Alaska natural gas transpor20 tation project within a reasonable period of time as speci21 fied in such order. 

22 (d) LIMITATION.—Nothing in this section shall be 

23 construed to expand or otherwise affect any authorities of 

24 the Commission with respect to any natural gas pipeline 

25 located outside the State of Alaska. 
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1 (e) REGULATIONS.—The Commission may issue reg2 ulations to carry out the provisions of this section. 

3 SEC. 12007. FEDERAL COORDINATOR. 

4 (a) ESTABLISHMENT.—There is established, as an 

5 independent office in the executive branch, the Office of 

6 the Federal Coordinator for Alaska Natural Gas Trans7 portation Projects. 

8 (b) FEDERAL COORDINATOR.—The Office shall be 

9 headed by a Federal Coordinator for Alaska Natural Gas 

10 Transportation Projects, who shall—

11 (1) be appointed by the President, by and with 

12 the advice of the Senate; 

13 (2) hold office at the pleasure of the President; 

14 and 

15 (3) be compensated at the rate prescribed for 

16 level III of the Executive Schedule (5 U.S.C. 5314). 

17 (c) DUTIES.—The Federal Coordinator shall be re18 sponsible for—

19 (1) coordinating the expeditious discharge of all 

20 activities by Federal agencies with respect to an 

21 Alaska natural gas transportation project; and 

22 (2) ensuring the compliance of Federal agencies 

23 with the provisions of this subtitle. 

24 (d) REVIEWS AND ACTIONS OF OTHER FEDERAL

25 AGENCIES.—
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1 (1) EXPEDITED REVIEWS AND ACTIONS.—All 

2 reviews conducted and actions taken by any Federal 

3 officer or agency relating to an Alaska natural gas 

4 transportation project authorized under this section 

5 shall be expedited, in a manner consistent with com6 pletion of the necessary reviews and approvals by the 

7 deadlines set forth in this subtitle. 

8 (2) PROHIBITION ON CERTAIN TERMS AND CON9 DITIONS.—Except with respect to Commission ac10 tions under sections 12004, 12005, and 12006, no 

11 Federal officer or agency shall have the authority to 

12 include terms and conditions that are permitted, but 

13 not required, by law on any certificate, right-of-way, 

14 permit, lease, or other authorization issued to an 

15 Alaska natural gas transportation project if the Fed16 eral Coordinator determines that the terms and con17 ditions would prevent or impair in any significant re18 spect the expeditious construction and operation of 

19 the project. 

20 (3) PROHIBITION ON CERTAIN ACTIONS.—Ex21 cept with respect to Commission actions under sec22 tions 12004, 12005, and 12006, unless required by 

23 law, no Federal officer or agency shall add to, 

24 amend, or abrogate any certificate, right-of-way, per25 mit, lease, or other authorization issued to an Alas-
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1 ka natural gas transportation project if the Federal 

2 Coordinator determines that such action would pre3 vent or impair in any significant respect the expedi4 tious construction and operation of the project. 

5 (e) STATE COORDINATION.—The Federal Coordi6 nator shall enter into a Joint Surveillance and Monitoring 

7 Agreement, approved by the President and the Governor 

8 of Alaska, with the State of Alaska similar to that in effect 

9 during construction of the Trans-Alaska Oil Pipeline to 

10 monitor the construction of the Alaska natural gas trans11 portation project. The Federal Government shall have pri12 mary surveillance and monitoring responsibility where the 

13 Alaska natural gas transportation project crosses Federal 

14 lands and private lands, and the State government shall 

15 have primary surveillance and monitoring responsibility 

16 where the Alaska natural gas transportation project 

17 crosses State lands. 

18 (f) TRANSFER OF FEDERAL INSPECTOR FUNCTIONS

19 AND AUTHORITY.—Upon appointment of the Federal Co20 ordinator by the President, all of the functions and au21 thority of the Office of Federal Inspector of Construction 

22 for the Alaska Natural Gas Transportation System vested 

23 in the Secretary of Energy pursuant to section 3012(b) 

24 of Public Law 102–486 (15 U.S.C. 719e(b)), including all 

25 functions and authority described and enumerated in the 
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1 Reorganization Plan No. 1 of 1979 (44 Fed. Reg. 33,663), 

2 Executive Order No. 12142 of June 21, 1979 (44 Fed. 

3 Reg. 36,927), and section 5 of the President’s decision, 

4 shall be transferred to the Federal Coordinator. 

5 SEC. 12008. JUDICIAL REVIEW. 

6 (a) EXCLUSIVE JURISDICTION.—Except for review by 

7 the Supreme Court of the United States on writ of certio8 rari, the United States Court of Appeals for the District 

9 of Columbia Circuit shall have original and exclusive juris10 diction to determine—

11 (1) the validity of any final order or action (in12 cluding a failure to act) of any Federal agency or of13 ficer under this subtitle; 

14 (2) the constitutionality of any provision of this 

15 subtitle, or any decision made or action taken under 

16 this subtitle; or 

17 (3) the adequacy of any environmental impact 

18 statement prepared under the National Environ19 mental Policy Act of 1969 with respect to any action 

20 under this subtitle. 

21 (b) DEADLINE FOR FILING CLAIM.—Claims arising 

22 under this subtitle may be brought not later than 60 days 

23 after the date of the decision or action giving rise to the 

24 claim. 
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1 (c) EXPEDITED CONSIDERATION.—The United 

2 States Court of Appeals for the District of Columbia Cir3 cuit shall set any action brought under subsection (a) for 

4 expedited consideration, taking into account the national 

5 interest as described in section 12002(a). 

6 (d) AMENDMENT TO ANGTA.—Section 10(c) of the 

7 Alaska Natural Gas Transportation Act of 1976 (15 

8 U.S.C. 719h) is amended by inserting after paragraph (1) 

9 the following: 

10 ‘‘(2) The United States Court of Appeals for the Dis11 trict of Columbia Circuit shall set any action brought 

12 under this section for expedited consideration, taking into 

13 account the national interest described in section 2.’’. 

14 SEC. 12009. STATE JURISDICTION OVER IN-STATE DELIV15 ERY OF NATURAL GAS. 

16 (a) LOCAL DISTRIBUTION.—Any facility receiving 

17 natural gas from the Alaska natural gas transportation 

18 project for delivery to consumers within the State of Alas19 ka shall be deemed to be a local distribution facility within 

20 the meaning of section 1(b) of the Natural Gas Act (15 

21 U.S.C. 717(b)), and therefore not subject to the jurisdic22 tion of the Commission. 

23 (b) ADDITIONAL PIPELINES.—Nothing in this sub24 title, except as provided in section 12004(d), shall preclude 

25 or affect a future gas pipeline that may be constructed 
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1 to deliver natural gas to Fairbanks, Anchorage, 

2 Matanuska-Susitna Valley, or the Kenai peninsula or 

3 Valdez or any other site in the State of Alaska for con4 sumption within or distribution outside the State of Alas5 ka. 

6 (c) RATE COORDINATION.—Pursuant to the Natural 

7 Gas Act, the Commission shall establish rates for the 

8 transportation of natural gas on the Alaska natural gas 

9 transportation project. In exercising such authority, the 

10 Commission, pursuant to section 17(b) of the Natural Gas 

11 Act (15 U.S.C. 717p(b)), shall confer with the State of 

12 Alaska regarding rates (including rate settlements) appli13 cable to natural gas transported on and delivered from the 

14 Alaska natural gas transportation project for use within 

15 the State of Alaska. 

16 SEC. 12010. STUDY OF ALTERNATIVE MEANS OF CONSTRUC17 TION. 

18 (a) REQUIREMENT OF STUDY.—If no application for 

19 the issuance of a certificate or amended certificate of pub20 lic convenience and necessity authorizing the construction 

21 and operation of an Alaska natural gas transportation 

22 project has been filed with the Commission not later than 

23 18 months after the date of enactment of this Act, the 

24 Secretary of Energy shall conduct a study of alternative 
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1 approaches to the construction and operation of the 

2 project. 

3 (b) SCOPE OF STUDY.—The study shall consider the 

4 feasibility of establishing a Government corporation to 

5 construct an Alaska natural gas transportation project, 

6 and alternative means of providing Federal financing and 

7 ownership (including alternative combinations of Govern8 ment and private corporate ownership) of the project. 

9 (c) CONSULTATION.—In conducting the study, the 

10 Secretary of Energy shall consult with the Secretary of 

11 the Treasury and the Secretary of the Army (acting 

12 through the Commanding General of the Corps of Engi13 neers). 

14 (d) REPORT.—If the Secretary of Energy is required 

15 to conduct a study under subsection (a), the Secretary 

16 shall submit a report containing the results of the study, 

17 the Secretary’s recommendations, and any proposals for 

18 legislation to implement the Secretary’s recommendations 

19 to Congress. 

20 SEC. 12011. CLARIFICATION OF ANGTA STATUS AND AU21 THORITIES. 

22 (a) SAVINGS CLAUSE.—Nothing in this subtitle af23 fects any decision, certificate, permit, right-of-way, lease, 

24 or other authorization issued under section 9 of the Alaska 

25 Natural Gas Transportation Act of 1976 (15 U.S.C. 
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1 719g) or any Presidential findings or waivers issued in 

2 accordance with that Act. 

3 (b) CLARIFICATION OF AUTHORITY TO AMEND

4 TERMS AND CONDITIONS TO MEET CURRENT PROJECT

5 REQUIREMENTS.—Any Federal officer or agency respon6 sible for granting or issuing any certificate, permit, right7 of-way, lease, or other authorization under section 9 of 

8 the Alaska Natural Gas Transportation Act of 1976 (15 

9 U.S.C. 719g) may add to, amend, or abrogate any term 

10 or condition included in such certificate, permit, right-of11 way, lease, or other authorization to meet current project 

12 requirements (including the physical design, facilities, and 

13 tariff specifications), so long as such action does not com14 pel a change in the basic nature and general route of the 

15 Alaska natural gas transportation system as designated 

16 and described in section 2 of the President’s decision, or 

17 would otherwise prevent or impair in any significant re18 spect the expeditious construction and initial operation of 

19 such transportation system. 

20 (c) UPDATED ENVIRONMENTAL REVIEWS.—The Sec21 retary of Energy shall require the sponsor of the Alaska 

22 natural gas transportation system to submit such updated 

23 environmental data, reports, permits, and impact analyses 

24 as the Secretary determines are necessary to develop de-
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1 tailed terms, conditions, and compliance plans required by 

2 section 5 of the President’s decision. 

3 SEC. 12012. SENSE OF CONGRESS. 

4 It is the sense of Congress that an Alaska natural 

5 gas transportation project will provide significant eco6 nomic benefits to the United States and Canada. In order 

7 to maximize those benefits, Congress urges the sponsors 

8 of the pipeline project to make every effort to use steel 

9 that is manufactured or produced in North America and 

10 to negotiate a project labor agreement to expedite con11 struction of the pipeline. 

12 SEC. 12013. PARTICIPATION OF SMALL BUSINESS CON13 CERNS. 

14 (a) SENSE OF CONGRESS.—It is the sense of Con15 gress that an Alaska natural gas transportation project 

16 will provide significant economic benefits to the United 

17 States and Canada. In order to maximize those benefits, 

18 Congress urges the sponsors of the pipeline project to 

19 maximize the participation of small business concerns in 

20 contracts and subcontracts awarded in carrying out the 

21 project. 

22 (b) STUDY.—

23 (1) IN GENERAL.—The Comptroller General 

24 shall conduct a study on the extent to which small 
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1 business concerns participate in the construction of 

2 oil and gas pipelines in the United States. 

3 (2) REPORT.—Not later that 1 year after the 

4 date of enactment of this Act, the Comptroller Gen5 eral shall transmit to Congress a report containing 

6 the results of the study. 

7 (3) UPDATES.—The Comptroller General shall 

8 update the study at least once every 5 years and 

9 transmit to Congress a report containing the results 

10 of the update. 

11 (4) APPLICABILITY.—After the date of comple12 tion of the construction of an Alaska natural gas 

13 transportation project, this subsection shall no 

14 longer apply. 

15 (c) SMALL BUSINESS CONCERN DEFINED.—In this 

16 section, the term ‘‘small business concern’’ has the mean17 ing given such term in section 3(a) of the Small Business 

18 Act (15 U.S.C. 632(a)). 

19 SEC. 12014. ALASKA PIPELINE CONSTRUCTION TRAINING 

20 PROGRAM. 

21 (a) ESTABLISHMENT OF PROGRAM.—The Secretary 

22 of Labor (in this section referred to as the ‘‘Secretary’’) 

23 may make grants to the Alaska Department of Labor and 

24 Workforce Development to—
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1 (1) develop a plan to train, through the work2 force investment system established in the State of 

3 Alaska under the Workforce Investment Act of 1998 

4 (112 Stat. 936 et seq.), adult and dislocated work5 ers, including Alaska Natives, in urban and rural 

6 Alaska in the skills required to construct and oper7 ate an Alaska gas pipeline system; and 

8 (2) implement the plan developed pursuant to 

9 paragraph (1). 

10 (b) REQUIREMENTS FOR PLANNING GRANTS.—The 

11 Secretary may make a grant under subsection (a)(1) only 

12 if—

13 (1) the Governor of Alaska certifies in writing 

14 to the Secretary that there is a reasonable expecta15 tion that construction of an Alaska gas pipeline will 

16 commence within 3 years after the date of such cer17 tification; and 

18 (2) the Secretary of the Interior concurs in 

19 writing to the Secretary with the certification made 

20 under paragraph (1). 

21 (c) REQUIREMENTS FOR IMPLEMENTATION

22 GRANTS.—The Secretary may make a grant under sub23 section (a)(2) only if—

24 (1) the Secretary has approved a plan developed 

25 pursuant to subsection (a)(1); 
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1 (2) the Governor of Alaska requests the grant 

2 funds and certifies in writing to the Secretary that 

3 there is a reasonable expectation that the construc4 tion of an Alaska gas pipeline system will commence 

5 within 2 years after the date of such certification; 

6 (3) the Secretary of the Interior concurs in 

7 writing to the Secretary with the certification made 

8 under paragraph (2) after considering—

9 (A) the status of necessary State and Fed10 eral permits; 

11 (B) the availability of financing for the 

12 pipeline project; and 

13 (C) other relevant factors and cir14 cumstances. 

15 (d) AUTHORIZATION OF APPROPRIATIONS.—There 

16 are authorized to be appropriated to the Secretary of 

17 Labor such sums as may be necessary, but not to exceed 

18 $20,000,000, to carry out this section.

19 Subtitle B—Strategic Petroleum 

20 Reserve 

21 SEC. 12101. FULL CAPACITY OF STRATEGIC PETROLEUM 

22 RESERVE. 

23 The President shall— 

24 (1) fill the Strategic Petroleum Reserve estab25 lished pursuant to part B of title I of the Energy 
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1 Policy and Conservation Act (42 U.S.C. 6231 et 

2 seq.) to full capacity as soon as practicable; 

3 (2) acquire petroleum for the Strategic Petro4 leum Reserve by the most practicable and cost-effec5 tive means, with consideration being given to domes6 tically produced petroleum, including the acquisition 

7 of crude oil the United States is entitled to receive 

8 in kind as royalties from production on Federal 

9 lands; and 

10 (3) ensure that the fill rate minimizes impacts 

11 on petroleum markets. 

12 SEC. 12102. STRATEGIC PETROLEUM RESERVE EXPANSION. 

13 (a) PLAN.—Not later than 180 days after the date 

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

15 transmit to the Congress a plan for the expansion of the 

16 Strategic Petroleum Reserve to 1,000,000,000 barrels, in17 cluding—

18 (1) plans for the elimination of infrastructure 

19 impediments to maximum drawdown capability; 

20 (2) a schedule for the completion of all required 

21 environmental reviews; 

22 (3) provision for consultation with Federal and 

23 State environmental agencies; 

24 (4) a schedule and procedures for site selection; 

25 and 
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1 (5) anticipated annual budget requests. 

2 (b) CONSTRUCTION OF ADDITIONAL CAPACITY.—The 

3 Secretary of Energy shall acquire property and complete 

4 construction for the expansion of the Strategic Petroleum 

5 Reserve in accordance with the plan transmitted under 

6 subsection (a). 

7 (c) AUTHORIZATION OF APPROPRIATIONS.—There 

8 are authorized to be appropriated to the Secretary of En9 ergy $1,500,000,000 for carrying out this section, to re10 main available until expended.

11 SEC. 12103. PERMANENT AUTHORITY TO OPERATE THE 

12 STRATEGIC PETROLEUM RESERVE AND 

13 OTHER ENERGY PROGRAMS. 

14 (a) AMENDMENT TO TITLE I OF THE ENERGY POL15 ICY AND CONSERVATION ACT.—Title I of the Energy Pol16 icy and Conservation Act (42 U.S.C. 6211 et seq.) is 

17 amended—

18 (1) by striking section 166 (42 U.S.C. 6246) 

19 and inserting—

20 ‘‘AUTHORIZATION OF APPROPRIATIONS

21 ‘‘SEC. 166. There are authorized to be appropriated 

22 to the Secretary such sums as may be necessary to carry 

23 out this part and part D, to remain available until ex24 pended.’’; 

25 (2) by striking section 186 (42 U.S.C. 6250e); 

26 and 
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1 (3) by striking part E (42 U.S.C. 6251; relat2 ing to the expiration of title I of the Act). 

3 (b) AMENDMENT TO TITLE II OF THE ENERGY POL4 ICY AND CONSERVATION ACT.—Title II of the Energy 

5 Policy and Conservation Act (42 U.S.C. 6271 et seq.) is 

6 amended—

7 (1) by inserting before section 273 (42 U.S.C. 

8 6283) the following: 

9 ‘‘PART C—SUMMER FILL AND FUEL BUDGETING

10 PROGRAMS’’;

11 (2) by striking section 273(e) (42 U.S.C. 

12 6283(e); relating to the expiration of summer fill 

13 and fuel budgeting programs); and 

14 (3) by striking part D (42 U.S.C. 6285; relat15 ing to the expiration of title II of the Act). 

16 (c) TECHNICAL AMENDMENTS.—The table of con17 tents for the Energy Policy and Conservation Act is 

18 amended—

19 (1) by inserting after the items relating to part 

20 C of title I the following:

‘‘PART D—NORTHEAST HOME HEATING OIL RESERVE

‘‘Sec. 181. Establishment. 

‘‘Sec. 182. Authority. 

‘‘Sec. 183. Conditions for release; plan. 

‘‘Sec. 184. Northeast Home Heating Oil Reserve Account. 

‘‘Sec. 185. Exemptions.’’;

21 (2) by amending the items relating to part C of 

22 title II to read as follows:
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‘‘PART C—SUMMER FILL AND FUEL BUDGETING PROGRAMS

‘‘Sec. 273. Summer fill and fuel budgeting programs.’’; and

1 (3) by striking the items relating to part D of 

2 title II. 

3 (d) AMENDMENT TO THE ENERGY POLICY AND CON4 SERVATION ACT.—Section 183(b)(1) of the Energy Policy 

5 and Conservation Act (42 U.S.C. 6250b(b)(1)) is amended 

6 by inserting ‘‘(considered as a heating season average)’’ 

7 after ‘‘mid-October through March’’. 

8 Subtitle C—Hydraulic Fracturing 

9 SEC. 12201. HYDRAULIC FRACTURING. 

10 Paragraph (1) of section 1421(d) of the Safe Drink11 ing Water Act (42 U.S.C. 300h(d)) is amended to read 

12 as follows: 

13 ‘‘(1) The term ‘underground injection’—

14 ‘‘(A) means the subsurface emplacement of 

15 fluids by well injection; and 

16 ‘‘(B) 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 oil 

22 or gas production activities.’’. 
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1 Subtitle D—Unproven Oil and Nat2 ural Gas Reserves Recovery 

3 Program 

4 SEC. 12301. PROGRAM. 

5 The Secretary shall carry out a program to dem6 onstrate technologies for the recovery of oil and natural 

7 gas reserves from reservoirs described in section 12302. 

8 SEC. 12302. ELIGIBLE RESERVOIRS. 

9 The program under this subtitle shall only address 

10 oil and natural gas reservoirs with 1 or more of the fol11 lowing characteristics: 

12 (1) Complex geology involving rapid changes in 

13 the type and quality of the oil reservoir across the 

14 reservoir. 

15 (2) Low reservoir pressure. 

16 (3) Unconventional natural gas reservoirs in 

17 coalbeds, tight sands, or shales. 

18 SEC. 12303. FOCUS AREAS. 

19 The program under this subtitle may focus on areas 

20 including coal-bed methane, deep drilling, natural gas pro21 duction from tight sands, natural gas production from gas 

22 shales, innovative production techniques (including hori23 zontal drilling, fracture detection methodologies, and 

24 three-dimensional seismic), and enhanced recovery tech25 niques. 
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1 SEC. 12304. LIMITATION ON LOCATION OF ACTIVITIES. 

2 Activities under this subtitle shall be carried out 

3 only—

4 (1) in—

5 (A) areas onshore in the United States on 

6 public land administered by the Secretary of the 

7 Interior available for oil and gas leasing, where 

8 consistent with applicable law and land use 

9 plans; and 

10 (B) areas onshore in the United States on 

11 State or private land, subject to applicable law; 

12 and 

13 (2) with the approval of the appropriate Fed14 eral or State land management agency or private 

15 land owner. 

16 SEC. 12305. PROGRAM ADMINISTRATION. 

17 (a) ROLE OF THE SECRETARY.—The Secretary shall 

18 have ultimate responsibility for, and oversight of, all as19 pects of the program under this subtitle. 

20 (b) ROLE OF THE PROGRAM CONSORTIUM.—

21 (1) IN GENERAL.—The Secretary shall contract 

22 with a consortium to—

23 (A) manage awards pursuant to subsection 

24 (e)(4); 

25 (B) make recommendations to the Sec26 retary for project solicitations; 
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1 (C) disburse funds awarded under sub2 section (e) as directed by the Secretary in ac3 cordance with the annual plan under subsection 

4 (d); and 

5 (D) carry out other activities assigned to 

6 the program consortium by this section. 

7 (2) LIMITATION.—The Secretary may not as8 sign any activities to the program consortium except 

9 as specifically authorized under this section. 

10 (3) CONFLICT OF INTEREST.—(A) The Sec11 retary shall establish procedures—

12 (i) to ensure that each board member, offi13 cer, or employee of the program consortium 

14 who is in a decisionmaking capacity under sub15 section (e)(3) or (4) shall disclose to the Sec16 retary any financial interests in, or financial re17 lationships with, applicants for or recipients of 

18 awards under this section, including those of 

19 his or her spouse or minor child, unless such re20 lationships or interests would be considered to 

21 be remote or inconsequential; and 

22 (ii) to require any board member, officer, 

23 or employee with a financial relationship or in24 terest disclosed under clause (i) to recuse him25 self or herself from any review under subsection 
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1 (e)(3) or oversight under subsection (e)(4) with 

2 respect to such applicant or recipient. 

3 (B) The Secretary may disqualify an applica4 tion or revoke an award under this section if a board 

5 member, officer, or employee has failed to comply 

6 with procedures required under subparagraph 

7 (A)(ii). 

8 (c) SELECTION OF THE PROGRAM CONSORTIUM.—

9 (1) IN GENERAL.—The Secretary shall select 

10 the program consortium through an open, competi11 tive process. 

12 (2) MEMBERS.—The program consortium may 

13 include corporations and institutions of higher edu14 cation. The Secretary shall give preference in the se15 lection of the program consortium to applicants with 

16 broad representation from the various major oil and 

17 natural gas basins in the United States. After sub18 mitting a proposal under paragraph (4), the pro19 gram consortium may not add members without the 

20 consent of the Secretary. 

21 (3) TAX STATUS.—The program consortium 

22 shall be an entity that is exempt from tax under sec23 tion 501(c)(3) of the Internal Revenue Code of 

24 1986. 
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1 (4) SCHEDULE.—Not later than 90 days after 

2 the date of enactment of this Act, the Secretary 

3 shall solicit proposals for the creation of the pro4 gram consortium, which must be submitted not less 

5 than 180 days after the date of enactment of this 

6 Act. The Secretary shall select the program consor7 tium not later than 240 days after such date of en8 actment. 

9 (5) APPLICATION.—Applicants shall submit a 

10 proposal including such information as the Secretary 

11 may require. At a minimum, each proposal shall—

12 (A) list all members of the consortium; 

13 (B) fully describe the structure of the con14 sortium, including any provisions relating to in15 tellectual property; and –

16 (C) describe how the applicant would carry 

17 out the activities of the program consortium 

18 under this section. 

19 (6) ELIGIBILITY.—To be eligible to be selected 

20 as the program consortium, an applicant must be an 

21 entity whose members collectively have demonstrated 

22 capabilities in planning and managing programs for 

23 the production of oil or natural gas. 

24 (7) CRITERION.—The Secretary may consider 

25 the amount of the fee an applicant proposes to re-
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1 ceive under subsection (f) in selecting a consortium 

2 under this section. 

3 (d) ANNUAL PLAN.—

4 (1) IN GENERAL.—The program under this 

5 subtitle shall be carried out pursuant to an annual 

6 plan prepared by the Secretary in accordance with 

7 paragraph (2). 

8 (2) DEVELOPMENT.—(A) Before drafting an 

9 annual plan under this subsection, the Secretary 

10 shall solicit specific written recommendations from 

11 the program consortium for each element to be ad12 dressed in the plan, including those described in 

13 paragraph (4). The Secretary may request that the 

14 program consortium submit its recommendations in 

15 the form of a draft annual plan. 

16 (B) The Secretary shall submit the rec17 ommendations of the program consortium under 

18 subparagraph (A) to the Advisory Committee for re19 view, and the Advisory Committee shall provide to 

20 the Secretary written comments by a date deter21 mined by the Secretary. The Secretary may also so22 licit comments from any other experts. 

23 (C) The Secretary shall consult regularly with 

24 the program consortium throughout the preparation 

25 of the annual plan. 
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1 (3) PUBLICATION.—The Secretary shall trans2 mit to the Congress and publish in the Federal Reg3 ister the annual plan, along with any written com4 ments received under paragraph (2)(A) and (B). 

5 The annual plan shall be transmitted and published 

6 not later than 60 days after the date of enactment 

7 of an Act making appropriations for a fiscal year for 

8 the program under this subtitle. 

9 (4) CONTENTS.—The annual plan shall describe 

10 the ongoing and prospective activities of the pro11 gram under this subtitle and shall include—

12 (A) a list of any solicitations for awards 

13 that the Secretary plans to issue to carry out 

14 activities, including the topics for such work, 

15 who would be eligible to apply, selection cri16 teria, and the duration of awards; and 

17 (B) a description of the activities expected 

18 of the program consortium to carry out sub19 section (e)(4). 

20 (e) AWARDS.—

21 (1) IN GENERAL.—The Secretary shall make 

22 awards to carry out activities under the program 

23 under this subtitle. The program consortium shall 

24 not be eligible to receive such awards, but members 

25 of the program consortium may receive such awards. 
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1 (2) PROPOSALS.—

2 (A) SOLICITATION.—The Secretary shall 

3 solicit proposals for awards under this sub4 section in such manner and at such time as the 

5 Secretary may prescribe, in consultation with 

6 the program consortium. 

7 (B) CONTENTS.—Each proposal submitted 

8 shall include the following: 

9 (i) An estimate of the potential 

10 unproven reserves in the reservoir, estab11 lished by a registered petroleum engineer. 

12 (ii) An estimate of the potential for 

13 success of the project. 

14 (iii) A detailed project plan. 

15 (iv) A detailed analysis of the costs 

16 associated with the project. 

17 (v) A time frame for project comple18 tion. 

19 (vi) Evidence that any lienholder on 

20 the project will subordinate its interests to 

21 the extent necessary to ensure that the 

22 Federal government receives its portion of 

23 any revenues pursuant to section 12308. 

24 (vii) Such other matters as the Sec25 retary considers appropriate. 
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1 (3) REVIEW.—The Secretary shall make awards 

2 under this subsection through a competitive process, 

3 which shall include a review by individuals selected 

4 by the Secretary. Such individuals shall include, for 

5 each application, Federal officials, the program con6 sortium, and non-Federal experts who are not board 

7 members, officers, or employees of the program con8 sortium or of a member of the program consortium. 

9 (4) OVERSIGHT.—(A) The program consortium 

10 shall oversee the implementation of awards under 

11 this subsection, consistent with the annual plan 

12 under subsection (d), including disbursing funds and 

13 monitoring activities carried out under such awards 

14 for compliance with the terms and conditions of the 

15 awards. 

16 (B) Nothing in subparagraph (A) shall limit the 

17 authority or responsibility of the Secretary to over18 see awards, or limit the authority of the Secretary 

19 to review or revoke awards. 

20 (C) The Secretary shall provide to the program 

21 consortium the information necessary for the pro22 gram consortium to carry out its responsibilities 

23 under this paragraph. 

24 (f) FEE.—To compensate the program consortium 

25 for carrying out its activities under this section, the Sec-
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1 retary shall provide to the program consortium a fee in 

2 an amount not to exceed 7.5 percent of the amounts 

3 awarded under subsection (e) for each fiscal year. 

4 (g) DISALLOWED EXPENSES.—No portion of any 

5 award shall be used by a recipient for general or adminis6 trative expenses of any kind. 

7 (h) AUDIT.—The Secretary shall retain an inde8 pendent, commercial auditor to determine the extent to 

9 which funds provided to the program consortium, and 

10 funds provided under awards made under subsection (e), 

11 have been expended in a manner consistent with the pur12 poses and requirements of this subtitle. The auditor shall 

13 transmit a report annually to the Secretary, who shall 

14 transmit the report to Congress, along with a plan to rem15 edy any deficiencies cited in the report. 

16 SEC. 12306. ADVISORY COMMITTEE. 

17 (a) ESTABLISHMENT.—Not later than 270 days after 

18 the date of enactment of this Act, the Secretary shall es19 tablish an Advisory Committee. 

20 (b) MEMBERSHIP.—The Advisory Committee shall be 

21 composed of members appointed by the Secretary and in22 cluding—

23 (1) individuals with extensive experience or 

24 operational knowledge of oil and natural gas produc25 tion, including independent oil and gas producers; 
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1 (2) individuals broadly representative of oil and 

2 natural gas production; and 

3 (3) no individuals who are Federal employees. 

4 (c) DUTIES.—The Advisory Committee shall advise 

5 the Secretary on the development and implementation of 

6 activities under this subtitle. 

7 (d) COMPENSATION.—A member of the Advisory 

8 Committee shall serve without compensation but shall re9 ceive travel expenses, including per diem in lieu of subsist10 ence, in accordance with applicable provisions under sub11 chapter I of chapter 57 of title 5, United States Code. 

12 (e) PROHIBITION.—The Advisory Committee shall 

13 not make recommendations on funding awards to con14 sortia or for specific projects. 

15 SEC. 12307. LIMITS ON PARTICIPATION. 

16 An entity shall be eligible to receive an award under 

17 this subtitle only if the Secretary finds—

18 (1) that the entity’s participation in the pro19 gram under this subtitle would be in the economic 

20 interest of the United States; 

21 (2) that the entity is a United States-owned en22 tity organized under the laws of the United States 

23 with production levels of less than 1,000 barrels per 

24 day of oil equivalent; and 
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1 (3) that the entity has demonstrated that non2 governmental third party sources of financing are 

3 not available for the proposal project. 

4 SEC. 12308. PAYMENTS TO FEDERAL GOVERNMENT. 

5 (a) INITIAL RATE.—Until the amount of a grant 

6 under this subtitle has been fully repaid to the Federal 

7 Government under this subsection, 95 percent of all reve8 nues derived from increased incremental production at9 tributable to participation in the program under this sub10 title shall be paid to the Secretary by the purchaser of 

11 such increased production. 

12 (b) RATE AFTER REPAYMENT.—After the Federal 

13 Government has been fully repaid under subsection (a), 

14 5 percent of all revenues derived from increased incre15 mental production attributable to participation in the pro16 gram under this subtitle shall be paid to the Secretary 

17 by the purchaser of such increased production. 

18 SEC. 12309. AUTHORIZATION OF APPROPRIATIONS. 

19 There are authorized to be appropriated to the Sec20 retary for carrying out this subtitle $100,000,000, to re21 main available until expended. 

22 SEC. 12310. PUBLIC AVAILABILITY OF PROJECT RESULTS 

23 AND METHODOLOGIES. 

24 The results of any project undertaken pursuant to 

25 this subtitle and the methodologies used to achieve those 
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1 results shall be made public by the Secretary. The meth2 odologies used shall not be proprietary so that such meth3 odologies may be used for other projects by persons not 

4 seeking awards pursuant to this subtitle. 

5 SEC. 12311. SUNSET. 

6 The authority provided by this subtitle shall termi7 nate on September 30, 2010. 

8 SEC. 12312. DEFINITIONS. 

9 In this subtitle: 

10 (1) PROGRAM CONSORTIUM.—The term ‘‘pro11 gram consortium’’ means the consortium selected 

12 under section 12305(c). 

13 (2) REMOTE OR INCONSEQUENTIAL.—The term 

14 ‘‘remote or inconsequential’’ has the meaning given 

15 that term in regulations issued by the Office of Gov16 ernment Ethics under section 208(b)(2) of title 18, 

17 United States Code. 

18 (3) SECRETARY.—The term ‘‘Secretary’’ means 

19 the Secretary of Energy.

20 Subtitle E—Miscellaneous 

21 SEC. 12401. APPEALS RELATING TO PIPELINE CONSTRUC22 TION PROJECTS. 

23 (a) AGENCY OF RECORD.—Any Federal administra24 tive agency proceeding that is an appeal or review of Fed25 eral authority for an interstate natural gas pipeline con-
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1 struction project, including construction of natural gas 

2 storage and liquefied natural gas facilities, shall use as 

3 its exclusive record for all purposes the record compiled 

4 by the Federal Energy Regulatory Commission pursuant 

5 to such Commission’s proceeding under section 7 of the 

6 Natural Gas Act. 

7 (b) SENSE OF THE CONGRESS.—It is the sense of 

8 the Congress that all Federal and State agencies with ju9 risdiction over interstate natural gas pipeline construction 

10 activities should coordinate their proceedings within the 

11 time frames established by the Federal Energy Regulatory 

12 Commission while it is acting pursuant to section 7 of the 

13 Natural Gas Act to determine whether a proposed inter14 state natural gas pipeline is in the public convenience and 

15 necessity. 

16 SEC. 12402. NATURAL GAS MARKET DATA TRANSPARENCY. 

17 (a) ESTABLISHMENT OF SYSTEM.—Not later than 

18 180 days after the date of enactment of this Act, the Fed19 eral Energy Regulatory Commission shall issue rules au20 thorizing or establishing an electronic information system 

21 to provide the Commission and the public with timely ac22 cess to such information as is necessary or appropriate 

23 to facilitate price transparency and participation in nat24 ural gas markets. Such system shall provide information 
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1 about the market price of natural gas sold in interstate 

2 commerce. 

3 (b) DATA SUBJECT TO DISCLOSURE.—Rules issued 

4 under subsection (a) shall require public availability only 

5 of—

6 (1) aggregate data; and 

7 (2) transaction-specific data that is otherwise 

8 required by the Federal Energy Regulatory Commis9 sion to be made public. 

10 (c) CIVIL PENALTY.—Any person who violates any 

11 provision of a rule issued under subsection (a) shall be 

12 subject to a civil penalty of not more than $1,000,000 for 

13 each day that such violation continues. Such penalty shall 

14 be assessed by the Federal Energy Regulatory Commis15 sion, after notice and opportunity for public hearing. In 

16 determining the amount of a proposed penalty, the Com17 mission shall take into consideration the seriousness of the 

18 violation and the efforts of such person to remedy the vio19 lation in a timely manner. 

20 SEC. 12403. OIL AND GAS EXPLORATION AND PRODUCTION 

21 DEFINED. 

22 Section 502 of the Federal Water Pollution Control 

23 Act (33 U.S.C. 1362) is amended by adding at the end 

24 the following:
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1 ‘‘(24) The term ‘oil and gas exploration and produc2 tion’ means all field operations necessary for both explo3 ration and production of oil and gas, including activities 

4 necessary to prepare a site for drilling and for the move5 ment and placement of drilling equipment, whether or not 

6 such activities may be considered construction activities.’’.

7 SEC. 12404. COMPLEX WELL TECHNOLOGY TESTING FACIL8 ITY. 

9 The Secretary, in coordination with industry leaders 

10 in extended reach drilling technology, shall establish a 

11 Complex Well Technology Testing Facility at the Rocky 

12 Mountain Oilfield Testing Center to increase the range of 

13 extended drilling technology to 50,000 feet, so that more 

14 energy resources can be realized with fewer drilling facili15 ties.

16 TITLE III—HYDROELECTRIC 

17 Subtitle A—Alternative Conditions 

18 SEC. 13001. ALTERNATIVE CONDITIONS AND FISHWAYS. 

19 (a) FEDERAL RESERVATIONS.—Section 4(e) of the 

20 Federal Power Act (16 U.S.C. 797(e)) is amended by in21 serting after ‘‘adequate protection and utilization of such 

22 reservation.’’ at the end of the first proviso the following: 

23 ‘‘The license applicant shall be entitled to a determination 

24 on the record, after opportunity for an agency trial-type 
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1 hearing of any disputed issues of material fact, with re2 spect to such conditions.’’. 

3 (b) FISHWAYS.—Section 18 of the Federal Power Act 

4 (16 U.S.C. 811) is amended by inserting after ‘‘and such 

5 fishways as may be prescribed by the Secretary of Com6 merce.’’ the following: ‘‘The license applicant shall be enti7 tled to a determination on the record, after opportunity 

8 for an agency trial-type hearing of any disputed issues of 

9 material fact, with respect to such fishways.’’. 

10 (c) ALTERNATIVE CONDITIONS AND PRESCRIP11 TIONS.—Part I of the Federal Power Act (16 U.S.C. 791a 

12 et seq.) is amended by adding the following new section 

13 at the end thereof: 

14 ‘‘SEC. 33. ALTERNATIVE CONDITIONS AND PRESCRIPTIONS. 

15 ‘‘(a) ALTERNATIVE CONDITIONS.—(1) Whenever any 

16 person applies for a license for any project works within 

17 any reservation of the United States, and the Secretary 

18 of the department under whose supervision such reserva19 tion falls (referred to in this subsection as ‘the Secretary’) 

20 deems a condition to such license to be necessary under 

21 the first proviso of section 4(e), the license applicant may 

22 propose an alternative condition. 

23 ‘‘(2) Notwithstanding the first proviso of section 4(e), 

24 the Secretary shall accept the proposed alternative condi25 tion referred to in paragraph (1), and the Commission 
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1 shall include in the license such alternative condition, if 

2 the Secretary determines, based on substantial evidence 

3 provided by the license applicant or otherwise available to 

4 the Secretary, that such alternative condition—

5 ‘‘(A) provides for the adequate protection and 

6 utilization of the reservation; and 

7 ‘‘(B) will either—

8 ‘‘(i) cost less to implement; or 

9 ‘‘(ii) result in improved operation of the 

10 project works for electricity production, 

11 as compared to the condition initially deemed nec12 essary by the Secretary. 

13 ‘‘(3) The Secretary shall submit into the public 

14 record of the Commission proceeding with any condition 

15 under section 4(e) or alternative condition it accepts under 

16 this section, a written statement explaining the basis for 

17 such condition, and reason for not accepting any alter18 native condition under this section. The written statement 

19 must demonstrate that the Secretary gave equal consider20 ation to the effects of the condition adopted and alter21 natives not accepted on energy supply, distribution, cost, 

22 and use; flood control; navigation; water supply; and air 

23 quality (in addition to the preservation of other aspects 

24 of environmental quality); based on such information as 

25 may be available to the Secretary, including information 
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1 voluntarily provided in a timely manner by the applicant 

2 and others. The Secretary shall also submit, together with 

3 the aforementioned written statement, all studies, data, 

4 and other factual information available to the Secretary 

5 and relevant to the Secretary’s decision. 

6 ‘‘(4) Nothing in this section shall prohibit other inter7 ested parties from proposing alternative conditions. 

8 ‘‘(5) If the Secretary does not accept an applicant’s 

9 alternative condition under this section, and the Commis10 sion finds that the Secretary’s condition would be incon11 sistent with the purposes of this part, or other applicable 

12 law, the Commission may refer the dispute to the Commis13 sion’s Dispute Resolution Service. The Dispute Resolution 

14 Service shall consult with the Secretary and the Commis15 sion and issue a non-binding advisory within 90 days. The 

16 Secretary may accept the Dispute Resolution Service advi17 sory unless the Secretary finds that the recommendation 

18 will not adequately protect the reservation. The Secretary 

19 shall submit the advisory and the Secretary’s final written 

20 determination into the record of the Commission’s pro21 ceeding. 

22 ‘‘(b) ALTERNATIVE PRESCRIPTIONS.—(1) Whenever 

23 the Secretary of the Interior or the Secretary of Commerce 

24 prescribes a fishway under section 18, the license appli25 cant or licensee may propose an alternative to such pre-
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1 scription to construct, maintain, or operate a fishway. The 

2 alternative may include a fishway or an alternative to a 

3 fishway. 

4 ‘‘(2) Notwithstanding section 18, the Secretary of the 

5 Interior or the Secretary of Commerce, as appropriate, 

6 shall accept and prescribe, and the Commission shall re7 quire, the proposed alternative referred to in paragraph 

8 (1), if the Secretary of the appropriate department deter9 mines, based on substantial evidence provided by the li10 censee or otherwise available to the Secretary, that such 

11 alternative—

12 ‘‘(A) will be no less protective of the fish re13 sources than the fishway initially prescribed by the 

14 Secretary; and 

15 ‘‘(B) will either—

16 ‘‘(i) cost less to implement; or 

17 ‘‘(ii) result in improved operation of the 

18 project works for electricity production, 

19 as compared to the fishway initially deemed nec20 essary by the Secretary. 

21 ‘‘(3) The Secretary concerned shall submit into the 

22 public record of the Commission proceeding with any pre23 scription under section 18 or alternative prescription it ac24 cepts under this section, a written statement explaining 

25 the basis for such prescription, and reason for not accept-
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1 ing any alternative prescription under this section. The 

2 written statement must demonstrate that the Secretary 

3 gave equal consideration to the effects of the condition 

4 adopted and alternatives not accepted on energy supply, 

5 distribution, cost, and use; flood control; navigation; water 

6 supply; and air quality (in addition to the preservation of 

7 other aspects of environmental quality); based on such in8 formation as may be available to the Secretary, including 

9 information voluntarily provided in a timely manner by the 

10 applicant and others. The Secretary shall also submit, to11 gether with the aforementioned written statement, all 

12 studies, data, and other factual information available to 

13 the Secretary and relevant to the Secretary’s decision. 

14 ‘‘(4) Nothing in this section shall prohibit other inter15 ested parties from proposing alternative prescriptions. 

16 ‘‘(5) If the Secretary concerned does not accept an 

17 applicant’s alternative prescription under this section, and 

18 the Commission finds that the Secretary’s prescription 

19 would be inconsistent with the purposes of this part, or 

20 other applicable law, the Commission may refer the dis21 pute to the Commission’s Dispute Resolution Service. The 

22 Dispute Resolution Service shall consult with the Sec23 retary and the Commission and issue a non-binding advi24 sory within 90 days. The Secretary may accept the Dis25 pute Resolution Service advisory unless the Secretary 
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1 finds that the recommendation will not adequately protect 

2 the fish resources. The Secretary shall submit the advisory 

3 and the Secretary’s final written determination into the 

4 record of the Commission’s proceeding.’’.

5 Subtitle B—Additional Hydropower 

6 SEC. 13201. HYDROELECTRIC PRODUCTION INCENTIVES. 

7 (a) INCENTIVE PAYMENTS.—For electric energy gen8 erated and sold by a qualified hydroelectric facility during 

9 the incentive period, the Secretary of Energy (referred to 

10 in this section as the ‘‘Secretary’’) shall make, subject to 

11 the availability of appropriations, incentive payments to 

12 the owner or operator of such facility. The amount of such 

13 payment made to any such owner or operator shall be as 

14 determined under subsection (e) of this section. Payments 

15 under this section may only be made upon receipt by the 

16 Secretary of an incentive payment application which estab17 lishes that the applicant is eligible to receive such payment 

18 and which satisfies such other requirements as the Sec19 retary deems necessary. Such application shall be in such 

20 form, and shall be submitted at such time, as the Sec21 retary shall establish. 

22 (b) DEFINITIONS.—For purposes of this section: 

23 (1) QUALIFIED HYDROELECTRIC FACILITY.—

24 The term ‘‘qualified hydroelectric facility’’ means a 

25 turbine or other generating device owned or solely 
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1 operated by a non-Federal entity which generates 

2 hydroelectric energy for sale and which is added to 

3 an existing dam or conduit. 

4 (2) EXISTING DAM OR CONDUIT.—The term 

5 ‘‘existing dam or conduit’’ means any dam or con6 duit the construction of which was completed before 

7 the date of the enactment of this section and which 

8 does not require any construction or enlargement of 

9 impoundment or diversion structures (other than re10 pair or reconstruction) in connection with the instal11 lation of a turbine or other generating device. 

12 (3) CONDUIT.—The term ‘‘conduit’’ has the 

13 same meaning as when used in section 30(a)(2) of 

14 the Federal Power Act. 

15 The terms defined in this subsection shall apply without 

16 regard to the hydroelectric kilowatt capacity of the facility 

17 concerned, without regard to whether the facility uses a 

18 dam owned by a governmental or nongovernmental entity, 

19 and without regard to whether the facility begins oper20 ation on or after the date of the enactment of this section. 

21 (c) ELIGIBILITY WINDOW.—Payments may be made 

22 under this section only for electric energy generated from 

23 a qualified hydroelectric facility which begins operation 

24 during the period of 10 fiscal years beginning with the 
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1 first full fiscal year occurring after the date of enactment 

2 of this subtitle. 

3 (d) INCENTIVE PERIOD.—A qualified hydroelectric 

4 facility may receive payments under this section for a pe5 riod of 10 fiscal years (referred to in this section as the 

6 ‘‘incentive period’’). Such period shall begin with the fiscal 

7 year in which electric energy generated from the facility 

8 is first eligible for such payments. 

9 (e) AMOUNT OF PAYMENT.—

10 (1) IN GENERAL.—Payments made by the Sec11 retary under this section to the owner or operator of 

12 a qualified hydroelectric facility shall be based on 

13 the number of kilowatt hours of hydroelectric energy 

14 generated by the facility during the incentive period. 

15 For any such facility, the amount of such payment 

16 shall be 1.8 cents per kilowatt hour (adjusted as 

17 provided in paragraph (2)), subject to the avail18 ability of appropriations under subsection (g), except 

19 that no facility may receive more than $750,000 in 

20 one calendar year. 

21 (2) ADJUSTMENTS.—The amount of the pay22 ment made to any person under this section as pro23 vided in paragraph (1) shall be adjusted for inflation 

24 for each fiscal year beginning after calendar year 

25 2003 in the same manner as provided in the provi-
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1 sions of section 29(d)(2)(B) of the Internal Revenue 

2 Code of 1986, except that in applying such provi3 sions the calendar year 2003 shall be substituted for 

4 calendar year 1979. 

5 (f) SUNSET.—No payment may be made under this 

6 section to any qualified hydroelectric facility after the ex7 piration of the period of 20 fiscal years beginning with 

8 the first full fiscal year occurring after the date of enact9 ment of this subtitle, and no payment may be made under 

10 this section to any such facility after a payment has been 

11 made with respect to such facility for a period of 10 fiscal 

12 years. 

13 (g) AUTHORIZATION OF APPROPRIATIONS.—There 

14 are authorized to be appropriated to the Secretary to carry 

15 out the purposes of this section $10,000,000 for each of 

16 the fiscal years 2004 through 2013. 

17 SEC. 13202. HYDROELECTRIC EFFICIENCY IMPROVEMENT. 

18 (a) INCENTIVE PAYMENTS.—The Secretary of En19 ergy shall make incentive payments to the owners or oper20 ators of hydroelectric facilities at existing dams to be used 

21 to make capital improvements in the facilities that are di22 rectly related to improving the efficiency of such facilities 

23 by at least 3 percent. 

24 (b) LIMITATIONS.—Incentive payments under this 

25 section shall not exceed 10 percent of the costs of the cap-
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1 ital improvement concerned and not more than one pay2 ment may be made with respect to improvements at a sin3 gle facility. No payment in excess of $750,000 may be 

4 made with respect to improvements at a single facility. 

5 (c) AUTHORIZATION.—There is authorized to be ap6 propriated to carry out this section not more than 

7 $10,000,000 for each of the fiscal years 2004 through 

8 2013. 

9 SEC. 13203. SMALL HYDROELECTRIC POWER PROJECTS. 

10 Section 408(a)(6) of the Public Utility Regulatory 

11 Policies Act of 1978 is amended by striking ‘‘April 20, 

12 1977’’ and inserting ‘‘March 4, 2003’’. 

13 SEC. 13204. INCREASED HYDROELECTRIC GENERATION AT 

14 EXISTING FEDERAL FACILITIES. 

15 (a) IN GENERAL.—The Secretary of Energy, in con16 sultation with the Secretary of the Interior and Secretary 

17 of the Army, shall conduct studies of the cost-effective op18 portunities to increase hydropower generation at existing 

19 federally-owned or operated water regulation, storage, and 

20 conveyance facilities. Such studies shall be completed with21 in two years after the date of enactment of this subtitle 

22 and transmitted to the Committee on Commerce of the 

23 House of Representatives and the Committee on Energy 

24 and Natural Resources of the Senate. An individual study 

25 shall be prepared for each of the Nation’s principal river 
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1 basins. Each such study shall identify and describe with 

2 specificity the following matters: 

3 (1) Opportunities to improve the efficiency of 

4 hydropower generation at such facilities through, but 

5 not limited to, mechanical, structural, or operational 

6 changes. 

7 (2) Opportunities to improve the efficiency of 

8 the use of water supplied or regulated by Federal 

9 projects where such improvement could, in the ab10 sence of legal or administrative constraints, make 

11 additional water supplies available for hydropower 

12 generation or reduce project energy use. 

13 (3) Opportunities to create additional hydro14 power generating capacity at existing facilities 

15 through, but not limited to, the construction of addi16 tional generating facilities, the uprating of genera17 tors and turbines, and the construction of pumped 

18 storage facilities. 

19 (4) Preliminary assessment of the costs and the 

20 economic and environmental consequences of such 

21 measures. 

22 (b) PREVIOUS STUDIES.—If studies of the type re23 quired by subsection (a) have been prepared by any agency 

24 of the United States and published within the five years 

25 prior to the date of enactment of this subtitle, the Sec-
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1 retary of Energy may choose not to perform new studies 

2 and incorporate the information in such studies into the 

3 studies required by subsection (a). 

4 (c) AUTHORIZATION.—There is authorized to be ap5 propriated such sums as may be necessary to carry out 

6 the purposes of this section.

7 TITLE IV—NUCLEAR MATTERS 

8 Subtitle A—Price-Anderson Act 

9 Amendments 

10 SEC. 14001. SHORT TITLE. 

11 This subtitle may be cited as the ‘‘Price-Anderson 

12 Amendments Act of 2003’’. 

13 SEC. 14002. EXTENSION OF INDEMNIFICATION AUTHORITY. 

14 (a) INDEMNIFICATION OF NUCLEAR REGULATORY

15 COMMISSION LICENSEES.—Section 170 c. of the Atomic 

16 Energy Act of 1954 (42 U.S.C. 2210(c)) is amended—

17 (1) in the subsection heading, by striking ‘‘LI18 CENSES’’ and inserting ‘‘LICENSEES’’; and 

19 (2) by striking ‘‘December 31, 2003’’ each 

20 place it appears and inserting ‘‘August 1, 2017’’. 

21 (b) INDEMNIFICATION OF DEPARTMENT OF ENERGY

22 CONTRACTORS.—Section 170 d.(1)(A) of the Atomic En23 ergy Act of 1954 (42 U.S.C. 2210(d)(1)(A)) is amended 

24 by striking ‘‘December 31, 2004’’ and inserting ‘‘August 

25 1, 2017’’. 
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1 (c) INDEMNIFICATION OF NONPROFIT EDUCATIONAL

2 INSTITUTIONS.—Section 170 k. of the Atomic Energy Act 

3 of 1954 (42 U.S.C. 2210(k)) is amended by striking ‘‘Au4 gust 1, 2002’’ each place it appears and inserting ‘‘August 

5 1, 2017’’. 

6 SEC. 14003. MAXIMUM ASSESSMENT. 

7 Section 170 of the Atomic Energy Act of 1954 (42 

8 U.S.C. 2210) is amended—

9 (1) in subsection b.(1), in the second proviso of 

10 the third sentence—

11 (A) by striking ‘‘$63,000,000’’ and insert12 ing ‘‘$94,000,000’’; and 

13 (B) by striking ‘‘$10,000,000 in any 1 

14 year’’ and inserting ‘‘$15,000,000 in any 1 year 

15 (subject to adjustment for inflation under sub16 section t.)’’; and 

17 (2) in subsection t.—

18 (A) by inserting ‘‘total and annual’’ after 

19 ‘‘amount of the maximum’’; 

20 (B) by striking ‘‘the date of the enactment 

21 of the Price-Anderson Amendments Act of 

22 1988’’ and inserting ‘‘July 1, 2002’’; and 

23 (C) by striking ‘‘such date of enactment’’ 

24 and inserting ‘‘July 1, 2002’’. 
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1 SEC. 14004. DEPARTMENT OF ENERGY LIABILITY LIMIT. 

2 (a) INDEMNIFICATION OF DEPARTMENT OF ENERGY

3 CONTRACTORS.—Section 170 d. of the Atomic Energy Act 

4 of 1954 (42 U.S.C. 2210(d)) is amended by striking para5 graph (2) and inserting the following: 

6 ‘‘(2) In an agreement of indemnification entered into 

7 under paragraph (1), the Secretary—

8 ‘‘(A) may require the contractor to provide and 

9 maintain the financial protection of such a type and 

10 in such amounts as the Secretary shall determine to 

11 be appropriate to cover public liability arising out of 

12 or in connection with the contractual activity; and 

13 ‘‘(B) shall indemnify the persons indemnified 

14 against such liability above the amount of the finan15 cial protection required, in the amount of 

16 $10,000,000,000 (subject to adjustment for inflation 

17 under subsection t.), in the aggregate, for all per18 sons indemnified in connection with the contract and 

19 for each nuclear incident, including such legal costs 

20 of the contractor as are approved by the Secretary.’’. 

21 (b) CONTRACT AMENDMENTS.—Section 170 d. of the 

22 Atomic Energy Act of 1954 (42 U.S.C. 2210(d)) is 

23 amended by striking paragraph (3) and inserting the fol24 lowing: 

25 ‘‘(3) All agreements of indemnification under which 

26 the Department of Energy (or its predecessor agencies) 
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1 may be required to indemnify any person under this sec2 tion shall be deemed to be amended, on the date of enact3 ment of the Price-Anderson Amendments Act of 2003, to 

4 reflect the amount of indemnity for public liability and any 

5 applicable financial protection required of the contractor 

6 under this subsection.’’. 

7 (c) LIABILITY LIMIT.—Section 170 e.(1)(B) of the 

8 Atomic Energy Act of 1954 (42 U.S.C. 2210(e)(1)(B)) is 

9 amended—

10 (1) by striking ‘‘the maximum amount of finan11 cial protection required under subsection b. or’’; and 

12 (2) by striking ‘‘paragraph (3) of subsection d., 

13 whichever amount is more’’ and inserting ‘‘para14 graph (2) of subsection d.’’. 

15 SEC. 14005. INCIDENTS OUTSIDE THE UNITED STATES. 

16 (a) AMOUNT OF INDEMNIFICATION.—Section 170 

17 d.(5) of the Atomic Energy Act of 1954 (42 U.S.C. 

18 2210(d)(5)) is amended by striking ‘‘$100,000,000’’ and 

19 inserting ‘‘$500,000,000’’. 

20 (b) LIABILITY LIMIT.—Section 170 e.(4) of the 

21 Atomic Energy Act of 1954 (42 U.S.C. 2210(e)(4)) is 

22 amended by striking ‘‘$100,000,000’’ and inserting 

23 ‘‘$500,000,000’’. 
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1 SEC. 14006. REPORTS. 

2 Section 170 p. of the Atomic Energy Act of 1954 (42 

3 U.S.C. 2210(p)) is amended by striking ‘‘August 1, 1998’’ 

4 and inserting ‘‘August 1, 2013’’. 

5 SEC. 14007. INFLATION ADJUSTMENT. 

6 Section 170 t. of the Atomic Energy Act of 1954 (42 

7 U.S.C. 2210(t)) is amended—

8 (1) by redesignating paragraph (2) as para9 graph (3); and 

10 (2) by adding after paragraph (1) the following:

11 ‘‘(2) The Secretary shall adjust the amount of indem12 nification provided under an agreement of indemnification 

13 under subsection d. not less than once during each 5-year 

14 period following July 1, 2002, in accordance with the ag15 gregate percentage change in the Consumer Price Index 

16 since—

17 ‘‘(A) that date, in the case of the first adjust18 ment under this paragraph; or 

19 ‘‘(B) the previous adjustment under this para20 graph.’’. 

21 SEC. 14008. PRICE-ANDERSON TREATMENT OF MODULAR 

22 REACTORS. 

23 Section 170 b. of the Atomic Energy Act of 1954 (42 

24 U.S.C. 2210(b)) is amended by adding at the end the fol25 lowing new paragraph: 
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1 ‘‘(5)(A) For purposes of this section only, the Com2 mission shall consider a combination of facilities described 

3 in subparagraph (B) to be a single facility having a rated 

4 capacity of 100,000 electrical kilowatts or more. 

5 ‘‘(B) A combination of facilities referred to in sub6 paragraph (A) is 2 or more facilities located at a single 

7 site, each of which has a rated capacity of 100,000 elec8 trical kilowatts or more but not more than 300,000 elec9 trical kilowatts, with a combined rated capacity of not 

10 more than 1,300,000 electrical kilowatts.’’. 

11 SEC. 14009. APPLICABILITY. 

12 The amendments made by sections 14003, 14004, 

13 and 14005 do not apply to a nuclear incident that occurs 

14 before the date of enactment of this Act.

15 SEC. 14010. PROHIBITION ON ASSUMPTION BY UNITED 

16 STATES GOVERNMENT OF LIABILITY FOR 

17 CERTAIN FOREIGN ACCIDENTS. 

18 Section 170 of the Atomic Energy Act of 1954 (42 

19 U.S.C. 2210) is amended by adding at the end the fol20 lowing new subsection: 

21 ‘‘u. PROHIBITION ON ASSUMPTION OF LIABILITY FOR

22 CERTAIN FOREIGN ACCIDENTS.—Notwithstanding this 

23 section or any other provision of law, no officer of the 

24 United States or of any department, agency, or instrumen25 tality of the United States Government may enter into any 
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1 contract or other arrangement, or into any amendment or 

2 modification of a contract or other arrangement, the pur3 pose or effect of which would be to directly or indirectly 

4 impose liability on the United States Government, or any 

5 department, agency, or instrumentality of the United 

6 States Government, or to otherwise directly or indirectly 

7 require an indemnity by the United States Government, 

8 for nuclear accidents occurring in connection with the de9 sign, construction, or operation of a production facility or 

10 utilization facility in any country whose government has 

11 been identified by the Secretary of State as engaged in 

12 state sponsorship of terrorist activities (specifically includ13 ing any country the government of which, as of September 

14 11, 2001, had been determined by the Secretary of State 

15 under section 620A(a) of the Foreign Assistance Act of 

16 1961, section 6(j)(1) of the Export Administration Act of 

17 1979, or section 40(d) of the Arms Export Control Act 

18 to have repeatedly provided support for acts of inter19 national terrorism).’’.

20 SEC. 14011. SECURE TRANSFER OF NUCLEAR MATERIALS. 

21 (a) AMENDMENT.—Chapter 14 of the Atomic Energy 

22 Act of 1954 (42 U.S.C. 2201–2210b) is amended by add23 ing at the end the following new section: 

24 ‘‘SEC. 170C. SECURE TRANSFER OF NUCLEAR MA25 TERIALS.—
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1 ‘‘a. The Nuclear Regulatory Commission shall estab2 lish a system to ensure that, with respect to activities by 

3 any party pursuant to a license issued under this Act—

4 ‘‘(1) materials described in subsection b., when 

5 transferred or received in the United States—

6 ‘‘(A) from a facility licensed by the Nu7 clear Regulatory Commission; 

8 ‘‘(B) from a facility licensed by an agree9 ment State; or 

10 ‘‘(C) from a country with whom the United 

11 States has an agreement for cooperation under 

12 section 123, 

13 are accompanied by a manifest describing the type 

14 and amount of materials being transferred; 

15 ‘‘(2) each individual transferring or accom16 panying the transfer of such materials has been sub17 ject to a security background check by appropriate 

18 Federal entities; and 

19 ‘‘(3) such materials are not transferred to or 

20 received at a destination other than a facility li21 censed by the Nuclear Regulatory Commission or an 

22 agreement State under this Act or other appropriate 

23 Federal facility, or a destination outside the United 

24 States in a country with whom the United States 

25 has an agreement for cooperation under section 123. 
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1 ‘‘b. Except as otherwise provided by the Commission 

2 by regulation, the materials referred to in subsection a. 

3 are byproduct materials, source materials, special nuclear 

4 materials, high-level radioactive waste, spent nuclear fuel, 

5 transuranic waste, and low-level radioactive waste (as de6 fined in section 2(16) of the Nuclear Waste Policy Act 

7 of 1982 (42 U.S.C. 10101(16))).’’. 

8 (b) REGULATIONS.—Not later than 1 year after the 

9 date of the enactment of this Act, and from time to time 

10 thereafter as it considers necessary, the Nuclear Regu11 latory Commission shall issue regulations identifying ra12 dioactive materials that, consistent with the protection of 

13 public health and safety and the common defense and se14 curity, are appropriate exceptions to the requirements of 

15 section 170C of the Atomic Energy Act of 1954, as added 

16 by subsection (a) of this section. 

17 (c) EFFECTIVE DATE.—The amendment made by 

18 subsection (a) shall take effect upon the issuance of regu19 lations under subsection (b). 

20 (d) EFFECT ON OTHER LAW.—Nothing in this sec21 tion or the amendment made by this section shall waive, 

22 modify, or affect the application of chapter 51 of title 49, 

23 United States Code, part A of subtitle V of title 49, 

24 United States Code, part B of subtitle VI of title 49, 

25 United States Code, and title 23, United States Code. 
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1 (e) TABLE OF SECTIONS AMENDMENT.—The table of 

2 sections for chapter 14 of the Atomic Energy Act of 1954 

3 is amended by adding at the end the following new item:

‘‘Sec. 170C. Secure transfer of nuclear materials.’’.

4 SEC. 14012. NUCLEAR FACILITY THREATS. 

5 (a) STUDY.—The President, in consultation with the 

6 Nuclear Regulatory Commission and other appropriate 

7 Federal, State, and local agencies and private entities, 

8 shall conduct a study to identify the types of threats that 

9 pose an appreciable risk to the security of the various 

10 classes of facilities licensed by the Nuclear Regulatory 

11 Commission under the Atomic Energy Act of 1954. Such 

12 study shall take into account, but not be limited to—

13 (1) the events of September 11, 2001; 

14 (2) an assessment of physical, cyber, bio15 chemical, and other terrorist threats; 

16 (3) the potential for attack on facilities by mul17 tiple coordinated teams of a large number of individ18 uals; 

19 (4) the potential for assistance in an attack 

20 from several persons employed at the facility; 

21 (5) the potential for suicide attacks; 

22 (6) the potential for water-based and air-based 

23 threats; 

24 (7) the potential use of explosive devices of con25 siderable size and other modern weaponry; 
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1 (8) the potential for attacks by persons with a 

2 sophisticated knowledge of facility operations; 

3 (9) the potential for fires, especially fires of 

4 long duration; and 

5 (10) the potential for attacks on spent fuel 

6 shipments by multiple coordinated teams of a large 

7 number of individuals. 

8 (b) SUMMARY AND CLASSIFICATION REPORT.—Not 

9 later than 180 days after the date of the enactment of 

10 this Act, the President shall transmit to the Congress and 

11 the Nuclear Regulatory Commission a report—

12 (1) summarizing the types of threats identified 

13 under subsection (a); and 

14 (2) classifying each type of threat identified 

15 under subsection (a), in accordance with existing 

16 laws and regulations, as either—

17 (A) involving attacks and destructive acts, 

18 including sabotage, directed against the facility 

19 by an enemy of the United States, whether a 

20 foreign government or other person, or other21 wise falling under the responsibilities of the 

22 Federal Government; or 

23 (B) involving the type of risks that Nu24 clear Regulatory Commission licensees should 

25 be responsible for guarding against. 
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1 (c) FEDERAL ACTION REPORT.—Not later than 90 

2 days after the date on which a report is transmitted under 

3 subsection (b), the President shall transmit to the Con4 gress a report on actions taken, or to be taken, to address 

5 the types of threats identified under subsection (b)(2)(A). 

6 Such report may include a classified annex as appropriate. 

7 (d) REGULATIONS.—Not later than 270 days after 

8 the date on which a report is transmitted under subsection 

9 (b), the Nuclear Regulatory Commission shall issue regu10 lations, including changes to the design basis threat, to 

11 ensure that licensees address the threats identified under 

12 subsection (b)(2)(B). 

13 (e) PHYSICAL SECURITY PROGRAM.—The Nuclear 

14 Regulatory Commission shall establish an operational 

15 safeguards response evaluation program that ensures that 

16 the physical protection capability and operational safe17 guards response for sensitive nuclear facilities, as deter18 mined by the Commission consistent with the protection 

19 of public health and the common defense and security, 

20 shall be tested periodically through Commission approved 

21 or designed, observed, and evaluated force-on-force exer22 cises to determine whether the ability to defeat the design 

23 basis threat is being maintained. For purposes of this sub24 section, the term ‘‘sensitive nuclear facilities’’ includes at 

25 a minimum commercial nuclear power plants, including 
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1 associated spent fuel storage facilities, spent fuel storage 

2 pools and dry cask storage at closed reactors, independent 

3 spent fuel storage facilities and geologic repository oper4 ations areas, category I fuel cycle facilities, and gaseous 

5 diffusion plants. 

6 (f) CONTROL OF INFORMATION.—In carrying out this 

7 section, the President and the Nuclear Regulatory Com8 mission shall control the dissemination of restricted data, 

9 safeguards information, and other classified national secu10 rity information in a manner so as to ensure the common 

11 defense and security, consistent with chapter 12 of the 

12 Atomic Energy Act of 1954. 

13 SEC. 14013. UNREASONABLE RISK CONSULTATION. 

14 Section 170 of the Atomic Energy Act of 1954 (42 

15 U.S.C. 2210) is amended by adding at the end the fol16 lowing new subsection:

17 ‘‘v. UNREASONABLE RISK CONSULTATION.—(1) Be18 fore entering into an agreement of indemnification under 

19 this section with respect to a utilization facility, the Nu20 clear Regulatory Commission shall consult with the Assist21 ant to the President for Homeland Security (or any suc22 cessor official) concerning whether the location of the pro23 posed facility and the design of that type of facility ensure 

24 that the facility provides for adequate protection of public 

25 health and safety if subject to a terrorist attack. 
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1 ‘‘(2) Before issuing a license or a license renewal for 

2 a sensitive nuclear facility, the Nuclear Regulatory Com3 mission shall consult with the Secretary of Homeland Se4 curity or his designee concerning the emergency evacu5 ation plan for the communities living near the sensitive 

6 nuclear facility. For purposes of this paragraph, the term 

7 ‘sensitive nuclear facility’ has the meaning given that term 

8 in section 14012 of the Energy Policy Act of 2003.’’.

9 SEC. 14014. FINANCIAL ACCOUNTABILITY. 

10 (a) AMENDMENT.—Section 170 of the Atomic En11 ergy Act of 1954 (42 U.S.C. 2210) is amended by adding 

12 at the end the following new subsection: 

13 ‘‘w. FINANCIAL ACCOUNTABILITY.—(1) Notwith14 standing subsection d., the Attorney General may bring 

15 an action in the appropriate United States district court 

16 to recover from a contractor of the Secretary (or subcon17 tractor or supplier of such contractor) amounts paid by 

18 the Federal Government under an agreement of indem19 nification under subsection d. for public liability resulting 

20 from conduct which constitutes intentional misconduct of 

21 any corporate officer, manager, or superintendent of such 

22 contractor (or subcontractor or supplier of such con23 tractor). 
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1 ‘‘(2) The Attorney General may recover under para2 graph (1) an amount not to exceed the amount of the prof3 it derived by the defendant from the contract. 

4 ‘‘(3) No amount recovered from any contractor (or 

5 subcontractor or supplier of such contractor) under para6 graph (1) may be reimbursed directly or indirectly by the 

7 Department of Energy. 

8 ‘‘(4) Paragraph (1) shall not apply to any nonprofit 

9 entity conducting activities under contract for the Sec10 retary. 

11 ‘‘(5) No waiver of a defense required under this sec12 tion shall prevent a defendant from asserting such defense 

13 in an action brought under this subsection. 

14 ‘‘(6) The Secretary shall, by rule, define the terms 

15 ‘profit’ and ‘nonprofit entity’ for purposes of this sub16 section. Such rulemaking shall be completed not later than 

17 180 days after the date of the enactment of this sub18 section.’’. 

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

20 this section shall not apply to any agreement of indem21 nification entered into under section 170 d. of the Atomic 

22 Energy Act of 1954 (42 U.S.C. 2210(d)) before the date 

23 of the enactment of this Act. 
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1 SEC. 14015. CIVIL PENALTIES. 

2 (a) REPEAL OF AUTOMATIC REMISSION.—Section 

3 234A b. (2) of the Atomic Energy Act of 1954 (42 U.S.C. 

4 2282a(b)(2)) is amended by striking the last sentence. 

5 (b) LIMITATION FOR NONPROFIT INSTITUTIONS.—

6 Subsection d. of section 234A of the Atomic Energy Act 

7 of 1954 (42 U.S.C. 2282a(d)) is amended to read as fol8 lows: 

9 ‘‘d. Notwithstanding subsection a., a civil penalty for 

10 a violation under subsection a. shall not exceed the amount 

11 of any discretionary fee paid under the contract under 

12 which such violation occurs for any nonprofit contractor, 

13 subcontractor, or supplier—

14 ‘‘(1) described in section 501(c)(3) of the Inter15 nal Revenue Code of 1986 and exempt from tax 

16 under section 501(a) of such Code; or 

17 ‘‘(2) identified by the Secretary by rule as ap18 propriate to be treated the same under this sub19 section as an entity described in paragraph (1), con20 sistent with the purposes of this section.’’. 

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

22 this section shall not apply to any violation of the Atomic 

23 Energy Act of 1954 occurring under a contract entered 

24 into before the date of the enactment of this Act. 

25 (d) RULEMAKING.—Not later than 6 months after 

26 the date of the enactment of this Act, the Secretary of 
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1 Energy shall issue a rule for the implementation of the 

2 amendment made by subsection (b). 

3 Subtitle B—Miscellaneous Matters 

4 SEC. 14021. LICENSES. 

5 Section 103 c. of the Atomic Energy Act of 1954 (42 

6 U.S.C. 2133(c)) is amended by inserting ‘‘from the au7 thorization to commence operations’’ after ‘‘forty years’’. 

8 SEC. 14022. NUCLEAR REGULATORY COMMISSION MEET9 INGS. 

10 If a quorum of the Nuclear Regulatory Commission 

11 gathers to discuss official Commission business the discus12 sions shall be recorded, and the Commission shall notify 

13 the public of such discussions within 15 days after they 

14 occur. The Commission shall promptly make a transcript 

15 of the recording available to the public on request, except 

16 to the extent that public disclosure is exempted or prohib17 ited by law. This section shall not apply to a meeting, 

18 within the meaning of that term under section 552b(a)(2) 

19 of title 5, United States Code.

20 SEC. 14023. NRC TRAINING PROGRAM. 

21 (a) IN GENERAL.—In order to maintain the human 

22 resource investment and infrastructure of the United 

23 States in the nuclear sciences, health physics, and engi24 neering fields, in accordance with the statutory authorities 

25 of the Commission relating to the civilian nuclear energy 
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1 program, the Nuclear Regulatory Commission shall carry 

2 out a training and fellowship program to address short3 ages of individuals with critical nuclear safety regulatory 

4 skills. 

5 (b) AUTHORIZATION OF APPROPRIATIONS.—

6 (1) IN GENERAL.—There are authorized to be 

7 appropriated to carry out this section $1,000,000 for 

8 each of fiscal years 2004 through 2007. 

9 (2) AVAILABILITY.—Funds made available 

10 under paragraph (1) shall remain available until ex11 pended.

12 SEC. 14024. COST RECOVERY FROM GOVERNMENT AGEN13 CIES. 

14 Section 161 w. of the Atomic Energy Act of 1954 

15 (42 U.S.C. 2201(w)) is amended—

16 (1) by striking ‘‘for or is issued’’ and all that 

17 follows through ‘‘1702’’ and inserting ‘‘to the Com18 mission for, or is issued by the Commission, a li19 cense or certificate’’; 

20 (2) by striking ‘‘483a’’ and inserting ‘‘9701’’; 

21 and 

22 (3) by striking ‘‘, of applicants for, or holders 

23 of, such licenses or certificates’’.
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1 SEC. 14025. ELIMINATION OF PENSION OFFSET. 

2 Section 161 of the Atomic Energy Act of 1954 (42 

3 U.S.C. 2201) is amended by adding at the end the fol4 lowing: 

5 ‘‘y. exempt from the application of sections 

6 8344 and 8468 of title 5, United States Code, an 

7 annuitant who was formerly an employee of the 

8 Commission who is hired by the Commission as a 

9 consultant, if the Commission finds that the annu10 itant has a skill that is critical to the performance 

11 of the duties of the Commission.’’.

12 SEC. 14026. CARRYING OF FIREARMS BY LICENSEE EM13 PLOYEES. 

14 Section 161 k. of the Atomic Energy Act of 1954 (42 

15 U.S.C. 2201(k)) is amended to read as follows: 

16 ‘‘k. authorize such of its members, officers, and 

17 employees as it deems necessary in the interest of 

18 the common defense and security to carry firearms 

19 while in the discharge of their official duties. The 

20 Commission may also authorize—

21 ‘‘(1) such of those employees of its con22 tractors and subcontractors (at any tier) en23 gaged in the protection of property under the 

24 jurisdiction of the United States located at fa25 cilities owned by or contracted to the United 

26 States or being transported to or from such fa-
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1 cilities as it deems necessary in the interests of 

2 the common defense and security; and 

3 ‘‘(2) such of those employees of persons li4 censed or certified by the Commission (includ5 ing employees of contractors of licensees or cer6 tificate holders) engaged in the protection of 

7 property of (A) facilities owned or operated by 

8 a Commission licensee or certificate holder that 

9 are designated by the Commission, or (B) prop10 erty of significance to the common defense and 

11 security located at facilities owned or operated 

12 by a Commission licensee or certificate holder 

13 or being transported to or from such facilities; 

14 to carry firearms while in the discharge of their offi15 cial duties. A person authorized to carry firearms 

16 under this subsection may, while in the performance 

17 of, and in connection with, official duties, make ar18 rests without warrant for any offense against the 

19 United States committed in that person’s presence 

20 or for any felony cognizable under the laws of the 

21 United States if that person has reasonable grounds 

22 to believe that the individual to be arrested has com23 mitted or is committing such felony. An employee of 

24 a contractor or subcontractor or of a Commission li25 censee or certificate holder (or a contractor of a li-
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1 censee or certificate holder) authorized to carry fire2 arms under this subsection may make such arrests 

3 only when the individual to be arrested is within, or 

4 in direct flight from, the area of such offense. A per5 son granted authority to make arrests by this sub6 section may exercise that authority only in the en7 forcement of laws regarding the property of the 

8 United States in the custody of the Department of 

9 Energy, the Nuclear Regulatory Commission, or a 

10 contractor of the Department of Energy or Nuclear 

11 Regulatory Commission or of a licensee or certificate 

12 holder of the Commission, laws applicable to facili13 ties owned or operated by a Commission licensee or 

14 certificate holder that are designated by the Com15 mission pursuant to this subsection and property of 

16 significance to the common defense and security that 

17 is in the custody of a licensee or certificate holder 

18 or a contractor of a licensee or certificate holder of 

19 the Commission, or any provision of this Act that 

20 may subject an offender to a fine, imprisonment, or 

21 both. The arrest authority conferred by this sub22 section is in addition to any arrest authority under 

23 other laws. The Secretary and the Commission, with 

24 the approval of the Attorney General, shall issue 

25 guidelines to implement this subsection;’’. 
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1 SEC. 14027. UNAUTHORIZED INTRODUCTION OF DAN2 GEROUS WEAPONS. 

3 Section 229 a. of the Atomic Energy Act of 1954 (42 

4 U.S.C. 2278a(a)) is amended by adding after ‘‘custody of 

5 the Commission’’ the following: ‘‘or subject to its licensing 

6 authority or to certification by the Commission under this 

7 Act or any other Act’’. 

8 SEC. 14028. SABOTAGE OF NUCLEAR FACILITIES OR FUEL. 

9 Section 236 a. of the Atomic Energy Act of 1954 (42 

10 U.S.C. 2284(a)) is amended to read as follows: 

11 ‘‘a. Any person who intentionally and willfully de12 stroys or causes physical damage to, or who intentionally 

13 and willfully attempts to destroy or cause physical damage 

14 to—

15 ‘‘(1) any production facility or utilization facil16 ity licensed under this Act; 

17 ‘‘(2) any nuclear waste storage, treatment, or 

18 disposal facility licensed under this Act; 

19 ‘‘(3) any nuclear fuel for a utilization facility li20 censed under this Act or any spent nuclear fuel from 

21 such a facility; 

22 ‘‘(4) any uranium enrichment or nuclear fuel 

23 fabrication facility licensed or certified by the Nu24 clear Regulatory Commission; or 

25 ‘‘(5) any production, utilization, waste storage, 

26 waste treatment, waste disposal, uranium enrich-
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1 ment, or nuclear fuel fabrication facility subject to 

2 licensing or certification under this Act during its 

3 construction where the destruction or damage 

4 caused or attempted to be caused could affect public 

5 health and safety during the operation of the facil6 ity, 

7 shall be fined not more than $1,000,000 or imprisoned 

8 for up to life in prison without parole, or both.’’. 

9 SEC. 14029. COOPERATIVE RESEARCH AND DEVELOPMENT 

10 AND SPECIAL DEMONSTRATION PROJECTS 

11 FOR THE URANIUM MINING INDUSTRY. 

12 (a) AUTHORIZATION OF APPROPRIATIONS.—There 

13 are authorized to be appropriated to the Secretary of En14 ergy $10,000,000 for each of fiscal years 2004, 2005, and 

15 2006 for—

16 (1) cooperative, cost-shared agreements between 

17 the Department of Energy and domestic uranium 

18 producers to identify, test, and develop improved in 

19 situ leaching mining technologies, including low-cost 

20 environmental restoration technologies that may be 

21 applied to sites after completion of in situ leaching 

22 operations; and 

23 (2) funding for competitively selected dem24 onstration projects with domestic uranium producers 

25 relating to—
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1 (A) enhanced production with minimal en2 vironmental impacts; 

3 (B) restoration of well fields; and 

4 (C) decommissioning and decontamination 

5 activities. 

6 (b) DOMESTIC URANIUM PRODUCER.—For purposes 

7 of this section, the term ‘‘domestic uranium producer’’ has 

8 the meaning given that term in section 1018(4) of the En9 ergy Policy Act of 1992 (42 U.S.C. 2296b–7(4)), except 

10 that the term shall not include any producer that has not 

11 produced uranium from domestic reserves on or after July 

12 30, 1998, in Colorado, Nebraska, Texas, Utah, or Wyo13 ming. 

14 SEC. 14030. URANIUM SALES. 

15 (a) RESTRICTIONS ON INVENTORY SALES.—Section 

16 3112(d) of the USEC Privatization Act (42 U.S.C. 

17 2297h–10(d)) is amended to read as follows: 

18 ‘‘(d) INVENTORY SALES.—(1) In addition to the 

19 transfers and sales authorized under subsections (b), (c), 

20 and (e), the Secretary of Energy or the Secretary of the 

21 Army may transfer or sell uranium subject to paragraph 

22 (2). 

23 ‘‘(2) Except as provided in subsections (b), (c), and 

24 (e), no sale or transfer of uranium shall be made under 
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1 this subsection by the Secretary of Energy or the Sec2 retary of the Army unless—

3 ‘‘(A) the President determines that the material 

4 is not necessary for national security needs; 

5 ‘‘(B) the price paid to the appropriate Sec6 retary, if the transaction is a sale, will not be less 

7 that the fair market value of the material; and 

8 ‘‘(C) the sale or transfer to end users is made 

9 pursuant to a contract of at least 3 years duration. 

10 ‘‘(3) The Secretary of Energy shall not make any 

11 transfer or sale of uranium under this subsection that 

12 would cause the total amount of uranium transferred or 

13 sold pursuant to this subsection that is delivered for con14 sumption by end users to exceed—

15 ‘‘(A) 3 million pounds of U3O8 equivalent in fis16 cal year 2004, 2005, 2006, 2007, 2008, or 2009; 

17 ‘‘(B) 5 million pounds of U3O8 equivalent in 

18 fiscal year 2010 or 2011; 

19 ‘‘(C) 7 million pounds of U3O8 equivalent in fis20 cal year 2012; and 

21 ‘‘(D) 10 million pounds of U3O8 equivalent in 

22 fiscal year 2013 or any fiscal year thereafter. 

23 ‘‘(4) For the purposes of this subsection, the recovery 

24 of uranium from uranium bearing materials transferred 

25 or sold by the Secretary of Energy or the Secretary of 
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1 the Army to the domestic uranium industry shall be the 

2 preferred method of making uranium available. The recov3 ered uranium shall be counted against the annual max4 imum deliveries set for in this section, when such uranium 

5 is sold to end users.’’. 

6 (b) TRANSFERS TO CORPORATION.—Section 3112 of 

7 the USEC Privatization Act (42 U.S.C. 2297h–10) is fur8 ther amended by adding at the end the following new sub9 section: 

10 ‘‘(g) TRANSFERS TO CORPORATION.—Notwith11 standing subsection (b)(2) and subsection (d)(2), the Sec12 retary may transfer up to 9,550 metric tons of uranium 

13 to the Corporation to replace uranium that the Secretary 

14 transferred to the Corporation on or about June 30, 1993, 

15 April 20, 1998, and May 18, 1998, and that does not meet 

16 commercial specifications.’’.

17 (c) SERVICES.—Section 3112 of the USEC Privatiza18 tion Act (42 U.S.C. 2297h–10) is further amended by 

19 adding at the end the following new subsection: 

20 ‘‘(h) SERVICES.—(1) Notwithstanding any other pro21 vision of this section, if the Secretary determines that if 

22 the Corporation has failed, or may fail, to perform any 

23 obligation under the Agreement between the Department 

24 of Energy and the Corporation dated June 17, 2002, and 

25 as amended thereafter, which failure could result in termi-
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1 nation of the Agreement, the Secretary shall notify the 

2 Committee on Energy and Commerce of the House of 

3 Representatives and the Committee on Energy and Nat4 ural Resources of the Senate, in such a manner that af5 fords the Committees an opportunity to comment, prior 

6 to a determination by the Secretary whether termination, 

7 waiver, or modification of the Agreement is required. The 

8 Secretary is authorized to take such action as he deter9 mines necessary under the Agreement to terminate, waive, 

10 or modify provisions of the Agreement to achieve its pur11 poses. 

12 ‘‘(2) Notwithstanding any other provision of this sec13 tion, if the Secretary determines in accordance with Arti14 cle 2D of the Agreement between the Department of En15 ergy and the Corporation dated June 17, 2002, and as 

16 amended thereafter, to transition operation of the Padu17 cah gaseous diffusion plant, the Secretary may provide 

18 uranium enrichment services in a manner consistent with 

19 Article 2D of such Agreement.’’. 

20 (d) REPORT.—Within 3 years after the date of enact21 ment of this Act, the Secretary shall report to the Con22 gress on the implementation of this section. The report 

23 shall include a discussion of available excess uranium in24 ventories, all sales or transfers made by the Secretary of 

25 Energy or the Secretary of the Army, the impact of such 
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1 sales or transfers on the domestic uranium industry, the 

2 spot market uranium price, and the national security in3 terests of the United States, and any steps taken to reme4 diate any adverse impacts of such sales or transfers. 

5 SEC. 14031. MEDICAL ISOTOPE PRODUCTION. 

6 Section 134 of the Atomic Energy Act of 1954 (42 

7 U.S.C. 2160d) is amended—

8 (1) by redesignating subsection b. as subsection 

9 f.; 

10 (2) by inserting after subsection a. the fol11 lowing: 

12 ‘‘b. The Commission may issue a license authorizing 

13 the export (including shipment to and use at intermediate 

14 and ultimate consignees specified in the license) to a Re15 cipient Country of highly enriched uranium for medical 

16 isotope production if, in addition to any other require17 ments of this Act, the Commission determines that—

18 ‘‘(1) a Recipient Country that supplies an as19 surance letter to the United States Government in 

20 connection with the Commission’s consideration of 

21 the export license application has informed the 

22 United States Government that any intermediate 

23 consignees and the ultimate consignee specified in 

24 the application are required to use such highly en-
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1 riched uranium solely to produce medical isotopes; 

2 and 

3 ‘‘(2) the highly enriched uranium for medical 

4 isotope production will be irradiated only in a reac5 tor in a Recipient Country that—

6 ‘‘(A) uses an alternative nuclear reactor 

7 fuel; or 

8 ‘‘(B) is the subject of an agreement with 

9 the United States Government to convert to an 

10 alternative nuclear reactor fuel when such fuel 

11 can be used in that reactor. 

12 ‘‘c. Applications to the Commission for licenses au13 thorizing the export to a Recipient Country of highly en14 riched uranium for medical isotope production shall be 

15 subject to subsection b., and subsection a. shall not be ap16 plicable to such exports. 

17 ‘‘d. The Commission is authorized to specify, by rule18 making or decision in connection with an export license 

19 application, that a country other than a Recipient Country 

20 may receive exports of highly enriched uranium for med21 ical isotope production in accordance with the same cri22 teria established by subsection b. for exports to a Recipi23 ent Country, upon the Commission’s finding that such ad24 ditional country is a party to the Treaty on the Non25 proliferation of Nuclear Weapons and the Convention on 
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1 the Physical Protection of Nuclear Material and will re2 ceive such highly enriched uranium pursuant to an agree3 ment with the United States concerning peaceful uses of 

4 nuclear energy. 

5 ‘‘e. The Commission shall review the adequacy of 

6 physical protection requirements that are currently appli7 cable to the transportation of highly enriched uranium for 

8 medical isotope production. If it determines that addi9 tional physical protection measures are necessary, includ10 ing any limits that the Commission finds are necessary 

11 on the quantity of highly enriched uranium contained in 

12 a single shipment for medical isotope production, the Com13 mission shall impose such requirements, as license condi14 tions or through other appropriate means.’’; and 

15 (3) in subsection f., as so redesignated by para16 graph (1) of this section—

17 (A) by striking ‘‘and’’ at the end of para18 graph (2); 

19 (B) by striking the period at the end of 

20 paragraph (3)(B) and inserting a semicolon; 

21 and 

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

23 ‘‘(4) the term ‘medical isotopes’ means radio24 active isotopes, including Molybdenum 99, Iodine 

25 131, and Xenon 133, that are used to produce radio-
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1 pharmaceuticals for diagnostic or therapeutic proce2 dures on patients, or in connection with research 

3 and development of radiopharmaceuticals; 

4 ‘‘(5) the term ‘highly enriched uranium for 

5 medical isotope production’ means highly enriched 

6 uranium contained in, or for use in, targets to be ir7 radiated for the sole purpose of producing medical 

8 isotopes; –

9 ‘‘(6) the term ‘radiopharmaceuticals’ means ra10 dioactive isotopes containing byproduct material 

11 combined with chemical or biological material that 

12 are designed to accumulate temporarily in a part of 

13 the body, for therapeutic purposes or for enabling 

14 the production of a useful image of the appropriate 

15 body organ or function for use in diagnosis of med16 ical conditions; and 

17 ‘‘(7) the term ‘Recipient Country’ means Can18 ada, Belgium, France, Germany, and the Nether19 lands.’’.

20 SEC. 14032. HIGHLY ENRICHED URANIUM DIVERSION 

21 THREAT REPORT. 

22 Section 307 of the Energy Reorganization Act of 

23 1974 (42 U.S.C. 5877) is amended by adding at the end 

24 the following new subsection: 
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1 ‘‘(d) Not later than 6 months after the date of the 

2 enactment of this Act, the Secretary of Energy shall trans3 mit to the Congress a report with recommendations on re4 ducing the threat resulting from the theft or diversion of 

5 highly enriched uranium. Such report shall address—

6 ‘‘(1) monitoring of highly enriched uranium 

7 supplies at any commercial companies who have ac8 cess to substantial amounts of highly enriched ura9 nium; 

10 ‘‘(2) assistance to companies described in para11 graph (1) with security and personnel checks; 

12 ‘‘(3) acceleration of the process of blending 

13 down excess highly enriched uranium into low-en14 riched uranium; 

15 ‘‘(4) purchasing highly enriched uranium (ex16 cept for production of medical isotopes); 

17 ‘‘(5) paying the cost of shipping highly enriched 

18 uranium; 

19 ‘‘(6) accelerating the conversion of commercial 

20 research reactors and energy reactors to the use of 

21 low-enriched uranium fuel where they now use high22 ly enriched uranium fuel; and 

23 ‘‘(7) minimizing, and encouraging transparency 

24 in, the further enrichment of low-enriched uranium 

25 to highly enriched uranium.’’. 
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1 SEC. 14033. WHISTLEBLOWER PROTECTION. 

2 (a) DEFINITION OF EMPLOYER.—Section 211(a)(2) 

3 of the Energy Reorganization Act of 1974 (42 U.S.C. 

4 5851(a)(2)) is amended—

5 (1) by striking ‘‘and’’ at the end of subpara6 graph (C); 

7 (2) in subparagraph (D), by striking ‘‘that is 

8 indemnified’’ and all that follows through ‘‘12344.’’ 

9 and inserting ‘‘or the Commission; and’’; and 

10 (3) by adding at the end the following new sub11 paragraph: 

12 ‘‘(E) the Department of Energy and the Com13 mission.’’. 

14 (b) DE NOVO REVIEW.—Subsection (b) of such sec15 tion 211 is amended by adding at the end the following 

16 new paragraph: 

17 ‘‘(4) If the Secretary has not issued a final decision 

18 within 180 days after the filing of a complaint under para19 graph (1), and there is no showing that such delay is due 

20 to the bad faith of the claimant, the claimant may bring 

21 an action at law or equity for de novo review in the appro22 priate district court of the United States, which shall have 

23 jurisdiction over such an action without regard to the 

24 amount in controversy.’’. 
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1 SEC. 14034. PREVENTING THE MISUSE OF NUCLEAR MATE2 RIALS AND TECHNOLOGY. 

3 (a) AMENDMENT.—Chapter 14 of the Atomic Energy 

4 Act of 1954 (42 U.S.C. 2201 et seq.) is amended by add5 ing at the end the following new section: 

6 ‘‘SEC. 170D. PREVENTING THE MISUSE OF NU7 CLEAR MATERIALS AND TECHNOLOGY.—

8 ‘‘a. In order to successfully promote the development 

9 of nuclear energy as a safe and reliable source of electrical 

10 energy, it is the policy of the United States to prevent 

11 any nuclear materials, technology, components, sub12 stances, technical information, or related goods or services 

13 from being misused or diverted from peaceful nuclear en14 ergy purposes. 

15 ‘‘b. In order to further advance the policy set forth 

16 in subsection a., notwithstanding any other provision of 

17 law, no Federal agency shall issue any license, approval, 

18 or authorization for the export or reexport, or the transfer 

19 or retransfer, either directly or indirectly, to any country 

20 whose government has been identified by the Secretary of 

21 State as engaged in state sponsorship of terrorist activities 

22 (specifically including any country the government of 

23 which, as of September 11, 2001, had been determined 

24 by the Secretary of State under section 620A(a) of the 

25 Foreign Assistance Act of 1961, section 6(j)(1) of the Ex26 port Administration Act of 1979, or section 40(d) of the 
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1 Arms Export Control Act to have repeatedly provided sup2 port for acts of international terrorism) of—

3 ‘‘(1) any special nuclear material or byproduct 

4 material; 

5 ‘‘(2) any nuclear production or utilization facili6 ties; or 

7 ‘‘(3) any components, technologies, substances, 

8 technical information, or related goods or services 

9 used (or which could be used) in a nuclear produc10 tion or utilization facility. 

11 ‘‘c. Any license, approval, or authorization described 

12 in subsection b. made prior to the date of enactment of 

13 this section is hereby revoked.’’. 

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

15 of contents of such chapter 14 is amended by adding at 

16 the end the following item:

‘‘Sec. 170D. Preventing the misuse of nuclear materials and technology.’’.

17 SEC. 14035. LIMITATION ON LEGAL FEE REIMBURSEMENT. 

18 The Department of Energy shall not, except as re19 quired under a contract entered into before the date of 

20 enactment of this Act, reimburse any contractor or sub21 contractor of the Department for any legal fees or ex22 penses incurred with respect to a complaint subsequent 

23 to—

24 (1) an adverse determination on the merits with 

25 respect to such complaint against the contractor or 
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1 subcontractor by the Director of the Department of 

2 Energy’s Office of Hearings and Appeals pursuant 

3 to section 708 of title 10, Code of Federal Regula4 tions, or by a Department of Labor Administrative 

5 Law Judge pursuant to section 211 of the Energy 

6 Reorganization Act of 1974 (42 U.S.C. 5851); or 

7 (2) an adverse final judgment by any State or 

8 Federal court with respect to such complaint against 

9 the contractor or subcontractor for wrongful termi10 nation or retaliation due to the making of disclo11 sures protected under chapter 12 of title 5, United 

12 States Code, section 211 of the Energy Reorganiza13 tion Act of 1974 (42 U.S.C. 5851), or any com14 parable State law, 

15 unless the adverse determination or final judgment is re16 versed upon further administrative or judicial review.

17 TITLE V—VEHICLES AND FUELS 

18 Subtitle A—Energy Policy Act 

19 Amendments 

20 SEC. 15011. CREDIT FOR SUBSTANTIAL CONTRIBUTION TO21 WARD NONCOVERED FLEETS. 

22 Section 508 of the Energy Policy Act of 1992 (42 

23 U.S.C. 13258) is amended by adding at the end the fol24 lowing new subsection: 
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1 ‘‘(e) CREDIT FOR SUBSTANTIAL CONTRIBUTION TO2 WARD USE OF DEDICATED VEHICLES IN NONCOVERED

3 FLEETS.—

4 ‘‘(1) DEFINITIONS.—In this subsection: 

5 ‘‘(A) MEDIUM OR HEAVY DUTY VEHI6 CLE.—The term ‘medium or heavy duty vehicle’ 

7 means a dedicated vehicle that—

8 ‘‘(i) in the case of a medium duty ve9 hicle, has a gross vehicle weight rating of 

10 more than 8,500 pounds but not more 

11 than 14,000 pounds; or 

12 ‘‘(ii) in the case of a heavy duty vehi13 cle, has a gross vehicle weight rating of 

14 more than 14,000 pounds. 

15 ‘‘(B) SUBSTANTIAL CONTRIBUTION.—The 

16 term ‘substantial contribution’ means not less 

17 than $15,000 in cash or in kind services, as de18 termined by the Secretary. 

19 ‘‘(2) ALLOCATION OF CREDITS.—The Secretary 

20 shall allocate a credit to a fleet or covered person 

21 under this section if the fleet or person makes a sub22 stantial contribution toward the acquisition and use 

23 of dedicated vehicles or neighborhood electric vehi24 cles by a person that owns, operates, leases, or oth-
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1 erwise controls a fleet that is not covered by this 

2 title. 

3 ‘‘(3) MULTIPLE CREDITS FOR MEDIUM AND

4 HEAVY DUTY VEHICLES.—The Secretary shall issue 

5 2 full credits to a fleet or covered person under this 

6 section if the fleet or person makes a substantial 

7 contribution toward the acquisition and use of a me8 dium or heavy duty vehicle. 

9 ‘‘(4) USE OF CREDITS.—At the request of a 

10 fleet or covered person allocated a credit under this 

11 subsection, the Secretary shall, for the year in which 

12 the acquisition of the dedicated vehicle or neighbor13 hood electric vehicle is made, treat that credit as the 

14 acquisition of 1 alternative fueled vehicle that the 

15 fleet or covered person is required to acquire under 

16 this title. 

17 ‘‘(5) LIMITATION.—Except as provided in para18 graph (3), no more than 1 credit shall be allocated 

19 under this subsection for each vehicle.’’. 

20 SEC. 15012. CREDIT FOR ALTERNATIVE FUEL INFRASTRUC21 TURE. 

22 Section 508 of the Energy Policy Act of 1992 (42 

23 U.S.C. 13258), as amended by this division, is further 

24 amended by adding at the end the following new sub25 section: 
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1 ‘‘(f) CREDIT FOR INVESTMENT IN ALTERNATIVE

2 FUEL INFRASTRUCTURE.—

3 ‘‘(1) DEFINITION.—In this subsection, the term 

4 ‘qualifying infrastructure’ means—

5 ‘‘(A) equipment required to refuel or re6 charge alternative fueled vehicles; 

7 ‘‘(B) facilities or equipment required to 

8 maintain, repair, or operate alternative fueled 

9 vehicles; 

10 ‘‘(C) training programs, educational mate11 rials, or other activities necessary to provide in12 formation regarding the operation, mainte13 nance, or benefits associated with alternative 

14 fueled vehicles; and 

15 ‘‘(D) such other activities the Secretary 

16 considers to constitute an appropriate expendi17 ture in support of the operation, maintenance, 

18 or further widespread adoption of or utilization 

19 of alternative fueled vehicles. 

20 ‘‘(2) ALLOCATION OF CREDITS.—The Secretary 

21 shall allocate a credit to a fleet or covered person 

22 under this section for investment in qualifying infra23 structure if the qualifying infrastructure is open to 

24 the general public during regular business hours. 
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1 ‘‘(3) AMOUNT.—For the purposes of credits 

2 under this subsection—

3 ‘‘(A) 1 credit shall be equal to a minimum 

4 investment of $25,000 in cash or in kind serv5 ices, as determined by the Secretary; and 

6 ‘‘(B) except in the case of a Federal or 

7 State fleet, no part of the investment may be 

8 provided by Federal or State funds. 

9 ‘‘(4) USE OF CREDITS.—At the request of a 

10 fleet or covered person allocated a credit under this 

11 subsection, the Secretary shall, for the year in which 

12 the investment is made, treat that credit as the ac13 quisition of 1 alternative fueled vehicle that the fleet 

14 or covered person is required to acquire under this 

15 title.’’. 

16 SEC. 15013. ALTERNATIVE FUELED VEHICLE REPORT. 

17 (a) DEFINITIONS.—In this section: 

18 (1) ALTERNATIVE FUEL.—The term ‘‘alter19 native fuel’’ has the meaning given the term in sec20 tion 301 of the Energy Policy Act of 1992 (42 

21 U.S.C. 13211). 

22 (2) ALTERNATIVE FUELED VEHICLE.—The 

23 term ‘‘alternative fueled vehicle’’ has the meaning 

24 given the term in section 301 of the Energy Policy 

25 Act of 1992 (42 U.S.C. 13211). 
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1 (3) LIGHT DUTY MOTOR VEHICLE.—The term 

2 ‘‘light duty motor vehicle’’ has the meaning given 

3 the term in section 301 of the Energy Policy Act of 

4 1992 (42 U.S.C. 13211). 

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

6 the Secretary of Energy. 

7 (b) REPORT.—Not later than 1 year after the date 

8 of enactment of this Act, the Secretary shall submit to 

9 Congress a report on the effect that titles III, IV, and 

10 V of the Energy Policy Act of 1992 have had on the devel11 opment of alternative fueled vehicle technology, the avail12 ability of alternative fueled vehicles in the market, the cost 

13 of light duty motor vehicles that are alternative fueled ve14 hicles, and the availability, cost, and use of alternative 

15 fuels and biodiesel. Such report shall include any rec16 ommendations of the Secretary for legislation concerning 

17 the alternative fueled vehicle requirements under the En18 ergy Policy Act of 1992, and shall examine, discuss, and 

19 determine the following: 

20 (1) The number of alternative fueled vehicles 

21 acquired by fleets or covered persons required to ac22 quire alternative fueled vehicles. 

23 (2) The extent to which fleets subject to alter24 native fueled vehicle acquisition requirements have 

25 met those requirements through the use of fuel mix-
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1 tures that contain at least 20 percent biodiesel pur2 suant to section 312 of the Energy Policy Act of 

3 1992 (42 U.S.C. 13220). 

4 (3) The amount of alternative fuel used in al5 ternative fueled vehicles acquired by fleets required 

6 to acquire alternative fueled vehicles under the En7 ergy Policy Act of 1992. 

8 (4) The amount of petroleum displaced by the 

9 use of alternative fueled vehicles acquired by fleets 

10 or covered persons. 

11 (5) The cost of compliance with vehicle acquisi12 tion requirements under the Energy Policy Act of 

13 1992, and the benefits of using such fuel and vehi14 cles. 

15 (6) Projections of the amount of biodiesel, the 

16 number of alternative fueled vehicles, and the 

17 amount of alternative fuel that will be used over the 

18 next decade by fleets required to acquire alternative 

19 fueled vehicles under the Energy Policy Act of 1992. 

20 (7) The existence of any obstacles to increased 

21 use of alternative fuel and biodiesel in vehicles ac22 quired or maintained by fleets required to acquire al23 ternative fueled vehicles under the Energy Policy 

24 Act of 1992, and the benefits of using such fuel and 

25 vehicles. 
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1 SEC. 15014. ALLOCATION OF INCREMENTAL COSTS. 

2 Section 303(c) of the Energy Policy Act of 1992 (42 

3 U.S.C. 13212(c)) is amended by striking ‘‘may’’ and in4 serting ‘‘shall’’. 

5 Subtitle B—Advanced Vehicles 

6 SEC. 15021. DEFINITIONS. 

7 For the purposes of this subtitle, the following defini8 tions apply: 

9 (1) ALTERNATIVE FUELED VEHICLE..—The 

10 term ‘‘alternative fueled vehicle’’ means a vehicle 

11 propelled solely on an alternative fuel as defined in 

12 section 301 of the Energy Policy Act of 1992 (42 

13 U.S.C. 13211), except the term does not include any 

14 vehicle that the Secretary determines, by rule, does 

15 not yield substantial environmental benefits over a 

16 vehicle operating solely on gasoline or diesel derived 

17 from fossil fuels. 

18 (2) FUEL CELL VEHICLE.—The term ‘‘fuel cell 

19 vehicle’’ means a vehicle propelled by an electric 

20 motor powered by a fuel cell system that converts 

21 chemical energy into electricity by combining oxygen 

22 (from air) with hydrogen fuel that is stored on the 

23 vehicle or is produced onboard by reformation of a 

24 hydrocarbon fuel. Such fuel cell system may or may 

25 not include the use of auxiliary energy storage sys26 tems to enhance vehicle performance. 
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1 (3) HYBRID VEHICLE.—The term ‘‘hybrid vehi2 cle’’ means a medium or heavy duty vehicle propelled 

3 by an internal combustion engine or heat engine 

4 using any combustible fuel and an onboard recharge5 able energy storage device. 

6 (4) NEIGHBORHOOD ELECTRIC VEHICLE.—The 

7 term ‘‘neighborhood electric vehicle’’ means a motor 

8 vehicle capable of traveling at speeds of 25 miles per 

9 hour that is—

10 (A) a low-speed vehicle, as such term is de11 fined in section 571.3(b) of title 49, Code of 

12 Federal Regulations; 

13 (B) a zero-emission vehicle, as such term is 

14 defined in section 86.1702–99 of title 40, Code 

15 of Federal Regulations; and 

16 (C) otherwise lawful to use on local streets. 

17 (5) PILOT PROGRAM.—The term ‘‘pilot pro18 gram’’ means the competitive grant program estab19 lished under section 15022. 

20 (6) ULTRA-LOW SULFUR DIESEL VEHICLE.—

21 The term ‘‘ultra-low sulfur diesel vehicle’’ means a 

22 vehicle manufactured in model years 2002 through 

23 2006 powered by a heavy-duty diesel engine that—
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1 (A) is fueled by diesel fuel which contains 

2 sulfur at not more than 15 parts per million; 

3 and 

4 (B) emits not more than the lesser of—

5 (i) for vehicles manufactured in—

6 (I) model years 2002 and 2003, 

7 3.0 grams per brake horsepower-hour 

8 of oxides of nitrogen and .01 grams 

9 per brake horsepower-hour of particu10 late matter; and 

11 (II) model years 2004 through 

12 2006, 2.5 grams per brake horse13 power-hour of nonmethane hydro14 carbons and oxides of nitrogen and 

15 .01 grams per brake horsepower-hour 

16 of particulate matter; or 

17 (ii) the emissions of nonmethane hy18 drocarbons, oxides of nitrogen, and partic19 ulate matter of the best performing tech20 nology of ultra-low sulfur diesel vehicles of 

21 the same class and application that are 

22 commercially available. 

23 SEC. 15022. PILOT PROGRAM. 

24 (a) ESTABLISHMENT.—The Secretary shall establish 

25 a competitive grant pilot program, to be administered 
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1 through the Clean Cities Program of the Department of 

2 Energy, to provide not more than 10 geographically dis3 persed project grants to State governments, local govern4 ments, or metropolitan transportation authorities to carry 

5 out a project or projects for the purposes described in sub6 section (b). 

7 (b) GRANT PURPOSES.—Grants under this section 

8 may be used for the following purposes: 

9 (1) The acquisition of alternative fueled vehicles 

10 or fuel cell vehicles, including—

11 (A) passenger vehicles including neighbor12 hood electric vehicles; and 

13 (B) motorized two-wheel bicycles, scooters, 

14 or other vehicles for use by law enforcement 

15 personnel or other State or local government or 

16 metropolitan transportation authority employ17 ees. 

18 (2) The acquisition of alternative fueled vehi19 cles, hybrid vehicles, or fuel cell vehicles, including—

20 (A) buses used for public transportation or 

21 transportation to and from schools; 

22 (B) delivery vehicles for goods or services; 

23 and 
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1 (C) ground support vehicles at public air2 ports, including vehicles to carry baggage or 

3 push airplanes away from terminal gates. 

4 (3) The acquisition of ultra-low sulfur diesel ve5 hicles. 

6 (4) Infrastructure necessary to directly support 

7 an alternative fueled vehicle, fuel cell vehicle, or hy8 brid vehicle project funded by the grant, including 

9 fueling and other support equipment. 

10 (5) Operation and maintenance of vehicles, in11 frastructure, and equipment acquired as part of a 

12 project funded by the grant. 

13 (c) APPLICATIONS.—

14 (1) REQUIREMENTS.—The Secretary shall issue 

15 requirements for applying for grants under the pilot 

16 program. At a minimum, the Secretary shall require 

17 that applications be submitted by the head of a 

18 State or local government or a metropolitan trans19 portation authority, or any combination thereof, and 

20 a registered participant in the Clean Cities Program 

21 of the Department of Energy, and shall include—

22 (A) a description of the projects proposed 

23 in the application, including how they meet the 

24 requirements of this subtitle; 
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1 (B) an estimate of the ridership or degree 

2 of use of the projects proposed in the applica3 tion; 

4 (C) an estimate of the air pollution emis5 sions reduced and fossil fuel displaced as a re6 sult of the projects proposed in the application, 

7 and a plan to collect and disseminate environ8 mental data, related to the projects to be fund9 ed under the grant, over the life of the projects; 

10 (D) a description of how the projects pro11 posed in the application will be sustainable 

12 without Federal assistance after the completion 

13 of the term of the grant; 

14 (E) a complete description of the costs of 

15 each project proposed in the application, includ16 ing acquisition, construction, operation, and 

17 maintenance costs over the expected life of the 

18 project; 

19 (F) a description of which costs of the 

20 projects proposed in the application will be sup21 ported by Federal assistance under this subtitle; 

22 and 

23 (G) documentation to the satisfaction of 

24 the Secretary that diesel fuel containing sulfur 

25 at not more than 15 parts per million is avail-
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1 able for carrying out the projects, and a com2 mitment by the applicant to use such fuel in 

3 carrying out the projects. 

4 (2) PARTNERS.—An applicant under paragraph 

5 (1) may carry out projects under the pilot program 

6 in partnership with public and private entities. 

7 (d) SELECTION CRITERIA.—In evaluating applica8 tions under the pilot program, the Secretary shall consider 

9 each applicant’s previous experience with similar projects 

10 and shall give priority consideration to applications that—

11 (1) are most likely to maximize protection of 

12 the environment; 

13 (2) demonstrate the greatest commitment on 

14 the part of the applicant to ensure funding for the 

15 proposed projects and the greatest likelihood that 

16 each project proposed in the application will be 

17 maintained or expanded after Federal assistance 

18 under this subtitle is completed; and 

19 (3) exceed the minimum requirements of sub20 section (c)(1)(A). 

21 (e) PILOT PROJECT REQUIREMENTS.—

22 (1) MAXIMUM AMOUNT.—The Secretary shall 

23 not provide more than $20,000,000 in Federal as24 sistance under the pilot program to any applicant. 
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1 (2) COST SHARING.—The Secretary shall not 

2 provide more than 50 percent of the cost, incurred 

3 during the period of the grant, of any project under 

4 the pilot program. 

5 (3) MAXIMUM PERIOD OF GRANTS.—The Sec6 retary shall not fund any applicant under the pilot 

7 program for more than 5 years. 

8 (4) DEPLOYMENT AND DISTRIBUTION.—The 

9 Secretary shall seek to the maximum extent prac10 ticable to ensure a broad geographic distribution of 

11 project sites. 

12 (5) TRANSFER OF INFORMATION AND KNOWL13 EDGE.—The Secretary shall establish mechanisms to 

14 ensure that the information and knowledge gained 

15 by participants in the pilot program are transferred 

16 among the pilot program participants and to other 

17 interested parties, including other applicants that 

18 submitted applications. 

19 (f) SCHEDULE.—

20 (1) PUBLICATION.—Not later than 3 months 

21 after the date of the enactment of this Act, the Sec22 retary shall publish in the Federal Register, Com23 merce Business Daily, and elsewhere as appropriate, 

24 a request for applications to undertake projects 
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1 under the pilot program. Applications shall be due 

2 within 6 months of the publication of the notice. 

3 (2) SELECTION.—Not later than 6 months after 

4 the date by which applications for grants are due, 

5 the Secretary shall select by competitive, peer review 

6 all applications for projects to be awarded a grant 

7 under the pilot program. 

8 (g) LIMIT ON FUNDING.—The Secretary shall pro9 vide not less than 20 percent and not more than 25 per10 cent of the grant funding made available under this sec11 tion for the acquisition of ultra-low sulfur diesel vehicles. 

12 SEC. 15023. REPORTS TO CONGRESS. 

13 (a) INITIAL REPORT.—Not later than 2 months after 

14 the date grants are awarded under this subtitle, the Sec15 retary shall transmit to the Congress a report con16 taining—

17 (1) an identification of the grant recipients and 

18 a description of the projects to be funded; 

19 (2) an identification of other applicants that 

20 submitted applications for the pilot program; and 

21 (3) a description of the mechanisms used by the 

22 Secretary to ensure that the information and knowl23 edge gained by participants in the pilot program are 

24 transferred among the pilot program participants 
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1 and to other interested parties, including other ap2 plicants that submitted applications. 

3 (b) EVALUATION.—Not later than 3 years after the 

4 date of the enactment of this Act, and annually thereafter 

5 until the pilot program ends, the Secretary shall transmit 

6 to the Congress a report containing an evaluation of the 

7 effectiveness of the pilot program, including an assessment 

8 of the benefits to the environment derived from the 

9 projects included in the pilot program as well as an esti10 mate of the potential benefits to the environment to be 

11 derived from widespread application of alternative fueled 

12 vehicles and ultra-low sulfur diesel vehicles. 

13 SEC. 15024. AUTHORIZATION OF APPROPRIATIONS. 

14 There are authorized to be appropriated to the Sec15 retary $200,000,000 to carry out this subtitle, to remain 

16 available until expended. 

17 Subtitle C—Hydrogen Fuel Cell 

18 Heavy-Duty Vehicles 

19 SEC. 15031. DEFINITION. 

20 For the purposes of this subtitle, the term ‘‘advanced 

21 vehicle technologies program’’ means the program created 

22 pursuant to section 5506 of title 49, United States Code. 

23 SEC. 15032. FINDINGS. 

24 The Congress makes the following findings: 
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1 (1) The Department of Energy and the Depart2 ment of Transportation jointly developed the consor3 tium-based advanced vehicle technologies program to 

4 develop energy efficient and clean heavy-duty vehi5 cles in 1998. 

6 (2) The majority of clean fuel vehicles in oper7 ation today are transit buses. 

8 (3) Hydrogen fuel cell heavy-duty vehicle bus 

9 deployments can most appropriately advance hydro10 gen fuel cell technology development due to central11 ized refueling, stable duty cycles, and fixed routes. 

12 (4) Hydrogen fuel cell heavy-duty vehicle bus 

13 deployments are the most effective manner in which 

14 to advance technology developments for public 

15 awareness, consumption, and acceptance. 

16 SEC. 15033. HYDROGEN FUEL CELL BUSES. 

17 The Secretary of Energy, through the advanced vehi18 cle technologies program, in coordination with the Sec19 retary of Transportation, shall advance the development 

20 of fuel cell bus technologies by providing funding for 4 

21 demonstration sites that—

22 (1) have or will soon have hydrogen infrastruc23 ture for fuel cell bus operation; and 

24 (2) are operated by entities with experience in 

25 the development of fuel cell bus technologies, 
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1 to enable the widespread utilization of fuel cell buses. Such 

2 demonstrations shall address the reliability of fuel cell 

3 heavy-duty vehicles, expense, infrastructure, containment, 

4 storage, safety, training, and other issues. 

5 SEC. 15034. AUTHORIZATION OF APPROPRIATIONS. 

6 There are authorized to be appropriated to the Sec7 retary of Energy $10,000,000 for each of the fiscal years 

8 2004 through 2008 for carrying out this subtitle. 

9 Subtitle D—Miscellaneous 

10 SEC. 15041. RAILROAD EFFICIENCY. 

11 (a) ESTABLISHMENT.—The Secretary shall, in con12 junction with the Secretary of Transportation and the Ad13 ministrator of the Environmental Protection Agency, es14 tablish a public-private research partnership involving the 

15 Federal Government, the railroad industry, locomotive 

16 manufacturers and equipment suppliers, and the research 

17 facility owned by the Federal Railroad Administration and 

18 operated by contract. The goal of the research partnership 

19 shall include developing and demonstrating locomotive 

20 technologies that increase fuel economy, reduce emissions, 

21 and lower costs. 

22 (b) AUTHORIZATION OF APPROPRIATIONS.—There 

23 are authorized to be appropriated to carry out the require24 ments of this section $25,000,000 for fiscal year 2004, 
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1 $30,000,000 for fiscal year 2005, and $35,000,000 for fis2 cal year 2006. 

3 SEC. 15042. MOBILE EMISSION REDUCTIONS TRADING AND 

4 CREDITING. 

5 Within 180 days after the date of enactment of this 

6 Act, the Administrator of the Environmental Protection 

7 Agency shall provide a report to the Congress on the Envi8 ronmental Protection Agency’s experience with the trading 

9 of mobile source emission reduction credits for use by own10 ers and operators of stationary source emission sources 

11 to meet emission offset requirements within a nonattain12 ment area. The report shall describe—

13 (1) projects approved by the Environmental 

14 Protection Agency that include the trading of mobile 

15 source emission reduction credits for use by sta16 tionary sources in complying with offset require17 ments, including project and stationary sources loca18 tion, volumes of emissions offset and traded, a de19 scription of the sources of mobile emission reduction 

20 credits, and, if available, the cost of the credits; 

21 (2) the significant issues identified by the Envi22 ronmental Protection Agency in its consideration 

23 and approval of trading in such projects; 

24 (3) the requirements for monitoring and assess25 ing the air quality benefits of any approved project; 
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1 (4) the statutory authority upon which the En2 vironmental Protection Agency has based approval 

3 of such projects; 

4 (5) an evaluation of how the resolution of issues 

5 in approved projects could be utilized in other 

6 projects; and 

7 (6) any other issues the Environmental Protec8 tion Agency considers relevant to the trading and 

9 generation of mobile source emission reduction cred10 its for use by stationary sources or for other pur11 poses. 

12 SEC. 15043. IDLE REDUCTION TECHNOLOGIES. 

13 (a) DEFINITIONS.—For purposes of this section: 

14 (1) IDLE REDUCTION TECHNOLOGY.—The term 

15 ‘‘idle reduction technology’’ means a device or sys16 tem of devices utilized to reduce long-duration idling 

17 of a heavy-duty vehicle. 

18 (2) HEAVY-DUTY VEHICLE.—The term ‘‘heavy19 duty vehicle’’ means a vehicle that has a gross vehi20 cle weight rating greater than 26,000 pounds and is 

21 powered by a diesel engine. 

22 (3) LONG-DURATION IDLING.—The term ‘‘long23 duration idling’’ means the operation of a main drive 

24 engine, for a period greater than 15 consecutive 

25 minutes, where the main drive engine is not engaged 
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1 in gear. Such term does not apply to routine stop2 pages associated with traffic movement or conges3 tion. 

4 (b) STUDIES OF THE BENEFITS OF IDLE REDUCTION

5 TECHNOLOGIES.—

6 (1) POTENTIAL FUEL SAVINGS.—Not later than 

7 90 days after the date of enactment of this section, 

8 the Secretary of Energy shall, in consultation with 

9 the Secretary of Transportation, commence a study 

10 to analyze the potential fuel savings resulting from 

11 use of idle reduction technologies. 

12 (2) RECOGNITION OF BENEFITS OF ADVANCED

13 IDLE REDUCTION TECHNOLOGIES.—Within 90 days 

14 after the date of enactment of this section, the Ad15 ministrator of the Environmental Protection Agency 

16 is directed to commence a review of the Agency’s 

17 mobile source air emissions models used under the 

18 Clean Air Act to determine whether such models ac19 curately reflect the emissions resulting from long-du20 ration idling of heavy-duty trucks and other vehicles 

21 and engines, and shall update those models as the 

22 Administrator deems appropriate. Additionally, with23 in 90 days after the date of enactment of this sec24 tion, the Administrator shall commence a review as 

25 to the appropriate emissions reductions credit that 
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1 should be allotted under the Clean Air Act for the 

2 use of advanced idle reduction technologies, and 

3 whether such credits should be subject to an emis4 sions trading system, and shall revise Agency regula5 tions and guidance as the Administrator deems ap6 propriate. 

7 (3) IDLING TECHNOLOGIES.—Not later than 

8 180 days after the date of the enactment of this sec9 tion, the Secretary of Energy, in consultation with 

10 the Secretary of Transportation and the Adminis11 trator of the Environmental Protection Agency, shall 

12 commence a study to analyze where heavy duty and 

13 other vehicles stop for long duration idling. 

14 (c) VEHICLE WEIGHT EXEMPTION.—Section 127(a) 

15 of title 23, United States Code, is amended by adding at 

16 the end the following: ‘‘In instances where an idle reduc17 tion technology is installed onboard a motor vehicle, the 

18 maximum gross vehicle weight limit and the axle weight 

19 limit for any motor vehicle equipped with an idling reduc20 tion system may be increased by an amount necessary to 

21 compensate for the additional weight of the idling reduc22 tion system, except that the weight limit increase shall be 

23 no greater than 400 pounds.’’. 
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1 SEC. 15044. STUDY OF AVIATION FUEL CONSERVATION AND 

2 EMISSIONS. 

3 The Administrator of the Federal Aviation Adminis4 tration and the Administrator of the Environmental Pro5 tection Agency shall jointly commence a study within 60 

6 days after the date of enactment of this Act to identify 

7 the impact of aircraft emissions on air quality in non8 attainment areas and to identify ways to promote fuel con9 servation measures for aviation, enhance fuel efficiency, 

10 and reduce emissions. As part of this study, the Adminis11 trator of the Federal Aviation Administration and the Ad12 ministrator of the Environmental Protection Agency shall 

13 focus on how air traffic management inefficiencies, such 

14 as aircraft idling at airports, result in unnecessary fuel 

15 burn and air emissions. Within 180 days after the com16 mencement of the study, the Administrator of the Federal 

17 Aviation Administration and the Administrator of the En18 vironmental Protection Agency shall submit a report to 

19 the Committees on Energy and Commerce and Transpor20 tation and Infrastructure of the House of Representatives 

21 and the Committees on Environment and Public Works 

22 and Commerce, Science, and Transportation of the Senate 

23 containing the results of the study and recommendations 

24 as to how unnecessary fuel use and emissions affecting 

25 air quality may be reduced, without impacting safety and 

26 security, increasing individual aircraft noise, and taking 
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1 into account all aircraft emissions and their relative im2 pact on human health. 

3 SEC. 15045. DIESEL FUELED VEHICLES. 

4 (a) DIESEL COMBUSTION AND AFTER TREATMENT

5 TECHNOLOGIES.—The Secretary of Energy shall accel6 erate efforts to improve diesel combustion and after-treat7 ment technologies for use in diesel fueled motor vehicles. 

8 (b) GOAL.—

9 (1) COMPLIANCE WITH TIER 2 EMISSION

10 STANDARDS BY 2010.—The Secretary shall carry out 

11 subsection (a) with a view to developing and dem12 onstrating diesel technology meeting tier 2 emission 

13 standards not later than 2010. 

14 (2) TIER 2 EMISSION STANDARDS DEFINED.—

15 In this subsection, the term ‘‘tier 2 emission stand16 ards’’ means the motor vehicle emission standards 

17 promulgated by the Administrator of the Environ18 mental Protection Agency on February 10, 2000, 

19 under sections 202 and 211 of the Clean Air Act to 

20 apply to passenger cars, light trucks, and larger pas21 senger vehicles of model years after the 2003 vehicle 

22 model year. 
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1 SEC. 15046. WAIVERS OF ALTERNATIVE FUELED VEHICLE 

2 FUELING REQUIREMENT. 

3 Section 400AA(a)(3)(E) of the Energy Policy and 

4 Conservation Act (42 U.S.C. 6374(a)(3)(E)) is amended 

5 to read as follows: 

6 ‘‘(E)(i) Dual fueled vehicles acquired pursuant to this 

7 section shall be operated on alternative fuels unless the 

8 Secretary determines that an agency needs a waiver of 

9 such requirement for vehicles in the fleet of the agency 

10 in a particular geographic area where—

11 ‘‘(I) the alternative fuel otherwise required to 

12 be used in the vehicle is not reasonably available to 

13 retail purchasers of the fuel, as certified to the Sec14 retary by the head of the agency; or 

15 ‘‘(II) the cost of the alternative fuel otherwise 

16 required to be used in the vehicle is unreasonably 

17 more expensive compared to gasoline, as certified by 

18 the head of the agency. 

19 ‘‘(ii) The Secretary shall monitor compliance with 

20 this subparagraph by all such fleets and shall report annu21 ally to the Congress on the extent to which the require22 ments of this subparagraph are being achieved. The report 

23 shall include information on annual reductions achieved 

24 of petroleum-based fuels and the problems, if any, encoun25 tered in acquiring alternative fuels.’’. 
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1 SEC. 15047. TOTAL INTEGRATED THERMAL SYSTEMS. 

2 The Secretary shall—

3 (1) conduct a study of the benefits of total inte4 grated thermal systems in reducing demand for oil 

5 and protecting the environment; and 

6 (2) examine the feasibility of using total inte7 grated thermal systems in Department of Defense 

8 and other Federal motor vehicle fleets. 

9 SEC. 15048. OIL BYPASS FILTRATION TECHNOLOGY. 

10 The Secretary of Energy and the Administrator of 

11 the Environmental Protection Agency shall—

12 (1) conduct a joint study of the benefits of oil 

13 bypass filtration technology in reducing demand for 

14 oil and protecting the environment; and 

15 (2) examine the feasibility of using oil bypass 

16 filtration technology in Federal motor vehicle fleets.

17 SEC. 15049. NATURAL GAS CONDENSATE STUDY. 

18 Not later than 18 months after the date of enactment 

19 of this Act, the Secretary of Energy, in consultation with 

20 the Administrator of the Environmental Protection Agen21 cy, shall transmit to the Congress the results of a study 

22 to consider fuels derived from natural gas condensate and 

23 the appropriate blending of such condensates. The study 

24 shall consider—

25 (1) usage options; 

26 (2) potential volume capacities; 
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1 (3) costs; 

2 (4) air emissions; 

3 (5) fuel efficiencies; and 

4 (6) potential use in the Federal fleet program 

5 under title III of the Energy Policy Act of 1992 (42 

6 U.S.C. 13201 et seq.).

7 TITLE VI—ELECTRICITY 

8 Subtitle A—Transmission Capacity 

9 SEC. 16011. TRANSMISSION INFRASTRUCTURE IMPROVE10 MENT RULEMAKING. 

11 Part II of the Federal Power Act (16 U.S.C. 824 et 

12 seq.) is amended by adding the following new section at 

13 the end thereof: 

14 ‘‘SEC. 215. TRANSMISSION INFRASTRUCTURE IMPROVE15 MENT RULEMAKING. 

16 ‘‘(a) RULEMAKING REQUIREMENT.—Within 1 year 

17 after the enactment of this section, the Commission shall 

18 establish, by rule, incentive-based (including but not lim19 ited to performance-based) transmission rate treatments 

20 to promote capital investment in the enlargement and im21 provement of facilities for the transmission of electric en22 ergy in interstate commerce as appropriate to—

23 ‘‘(1) promote economically efficient trans24 mission and generation of electricity; 
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1 ‘‘(2) provide a return on equity that attracts 

2 new investment in transmission facilities and reason3 ably reflects the risks taken by public utilities in re4 structuring control of transmission assets; and 

5 ‘‘(3) encourage deployment of transmission 

6 technologies and other measures to increase the ca7 pacity and efficiency of existing transmission facili8 ties and improve the operation of such facilities. 

9 The Commission may, from time to time, revise such rule. 

10 ‘‘(b) FUNDING OF CERTAIN FACILITIES.—The rule 

11 promulgated pursuant to this section shall provide that, 

12 upon the request of a regional transmission organization 

13 or other Commission-approved transmission organization, 

14 new transmission facilities that increase the transfer capa15 bility of the transmission system shall be participant fund16 ed. In such rules, the Commission shall also provide guid17 ance as to what types of facilities may be participant fund18 ed. 

19 ‘‘(c) JUST AND REASONABLE RATES.—With respect 

20 to any transmission rate filed with the Commission on or 

21 after the effective date of the rule promulgated under this 

22 section, the Commission shall, in its review of such rate 

23 under sections 205 and 206, apply the rules adopted pur24 suant to this section, including any revisions thereto. 

25 Nothing in this section shall be construed to override, 
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1 weaken, or conflict with the procedural and other require2 ments of this part, including the requirement of sections 

3 205 and 206 that all rates, charges, terms, and conditions 

4 be just and reasonable and not unduly discriminatory or 

5 preferential.’’.

6 SEC. 16012. SITING OF INTERSTATE ELECTRICAL TRANS7 MISSION FACILITIES. 

8 (a) AMENDMENT OF FEDERAL POWER ACT.—Part 

9 II of the Federal Power Act is amended by adding at the 

10 end the following: 

11 ‘‘SEC. 216. SITING OF INTERSTATE ELECTRICAL TRANS12 MISSION FACILITIES 

13 ‘‘(a) TRANSMISSION STUDIES.—Within one year 

14 after the enactment of this section, and every 3 years 

15 thereafter, the Secretary of Energy shall conduct a study 

16 of electric transmission congestion. After considering al17 ternatives and recommendations from interested parties 

18 the Secretary shall issue a report, based on such study, 

19 which may designate one or more geographic areas experi20 encing electric energy transmission congestion as ‘inter21 state congestion areas’. 

22 ‘‘(b) CONSTRUCTION PERMIT.—The Commission is 

23 authorized, after notice and an opportunity for hearing, 

24 to issue permits for the construction or modification of 

25 electric transmission facilities in interstate congestion 
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1 areas designated by the Secretary under subsection (a) if 

2 the Commission makes each of the following findings: 

3 ‘‘(1) A finding that—

4 ‘‘(A) the State in which the transmission 

5 facilities are to be constructed or modified is 

6 without authority to approve the siting of the 

7 facilities, or 

8 ‘‘(B) a State commission or body in the 

9 State in which the transmission facilities are to 

10 be constructed or modified that has authority to 

11 approve the siting of the facilities has withheld 

12 approval, conditioned its approval in such a 

13 manner that the proposed construction or modi14 fication will not significantly reduce trans15 mission congestion in interstate commerce and 

16 is otherwise not economically feasible, or de17 layed final approval for more than one year 

18 after the filing of an application seeking ap19 proval or one year after the designation of the 

20 relevant interstate congestion area, whichever is 

21 later. 

22 ‘‘(2) A finding that the facilities to be author23 ized by the permit will be used for the transmission 

24 of electric energy in interstate commerce. 
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1 ‘‘(3) A finding that the proposed construction 

2 or modification is consistent with the public interest. 

3 ‘‘(4) A finding that the proposed construction 

4 or modification will significantly reduce transmission 

5 congestion in interstate commerce. 

6 The Commission may include in a permit issued under this 

7 section conditions consistent with the public interest. 

8 ‘‘(c) PERMIT APPLICATIONS.—Permit applications 

9 under subsection (b) shall be made in writing to the Com10 mission and verified under oath. The Commission shall 

11 issue rules setting forth the form of the application, the 

12 information it is to contain, and the manner of service of 

13 notice of the permit application upon interested persons. 

14 ‘‘(d) COMMENTS.—In any proceeding before the 

15 Commission under subsection (b), the Commission shall 

16 afford each State in which a transmission facility covered 

17 by the permit is or will be located, each affected Federal 

18 agency and Indian tribe, private property owners, and 

19 other interested persons, a reasonable opportunity to 

20 present their views and recommendations with respect to 

21 the need for and impact of a facility covered by the permit. 

22 ‘‘(e) RIGHTS-OF-WAY.—In the case of a permit under 

23 subsection (b) for electric transmission facilities to be lo24 cated on property other than property owned by the 

25 United States or a State, if the permit holder cannot ac-
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1 quire by contract, or is unable to agree with the owner 

2 of the property to the compensation to be paid for, the 

3 necessary right-of-way to construct or modify such trans4 mission facilities, the permit holder may acquire the right5 of-way by the exercise of the right of eminent domain in 

6 the district court of the United States for the district in 

7 which the property concerned is located, or in the appro8 priate court of the State in which the property is located. 

9 The practice and procedure in any action or proceeding 

10 for that purpose in the district court of the United States 

11 shall conform as nearly as may be with the practice and 

12 procedure in similar action or proceeding in the courts of 

13 the State where the property is situated. 

14 ‘‘(f) STATE LAW.—Nothing in this section shall pre15 clude any person from constructing any transmission fa16 cilities pursuant to State law. 

17 ‘‘(g) COMPLIANCE WITH OTHER LAWS.—Commis18 sion action under this section shall be subject to the Na19 tional Environmental Policy Act of 1969 (42 U.S.C. 4321 

20 et seq.) and all other applicable Federal laws. 

21 ‘‘(h) COMPENSATION.—Any exercise of eminent do22 main authority pursuant to this section shall be considered 

23 a taking of private property for which just compensation 

24 is due. Just compensation shall be an amount equal to 

25 the full fair market value of the property taken on the 
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1 date of the exercise of eminent domain authority, except 

2 that the compensation shall exceed fair market value if 

3 necessary to make the landowner whole for decreases in 

4 the value of any portion of the land not subject to eminent 

5 domain. Any parcel of land acquired by eminent domain 

6 under this subsection shall be transferred back to the 

7 owner from whom it was acquired (or his heirs or assigns) 

8 if the land is not used for power line construction or modi9 fication within a reasonable period of time after the acqui10 sition. Property acquired under this subsection may not 

11 be used for any heritage area, recreational trail, or park, 

12 or for any other purpose (other than power line construc13 tion or modification, and for power line operation and 

14 maintenance) without the consent of the owner of the par15 cel from whom the property was acquired (or his heirs or 

16 assigns). 

17 ‘‘(i) ERCOT.—Nothing in this section shall be con18 strued to authorize any interconnection with any facility 

19 owned or operated by an entity referred to in section 

20 212(k)(2)(B). 

21 ‘‘(j) RIGHTS OF WAY ON FEDERAL LANDS.—

22 ‘‘(1) LEAD AGENCY.—If an applicant, or pro23 spective applicant, for Federal authorization related 

24 to an electricity transmission or distribution facility 

25 so requests, the Department of Energy (DOE) shall 
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1 act as the lead agency for purposes of coordinating 

2 all applicable Federal authorization and related envi3 ronmental review of the facility. The term ‘Federal 

4 authorization’ shall mean any authorization required 

5 under Federal law in order to site a transmission or 

6 distribution facility, including but not limited to 

7 such permits, special use authorizations, certifi8 cations, opinions, or other approvals as may be re9 quired, whether issued by a Federal or a State agen10 cy. To the maximum extent practicable under appli11 cable Federal law, the Secretary of Energy shall co12 ordinate this Federal authorization and review proc13 ess with any Indian tribes, multi-State entities, and 

14 State agencies that are responsible for conducting 

15 any separate permitting and environmental reviews 

16 of the facility, to ensure timely and efficient review 

17 and permit decisions. 

18 ‘‘(2) AUTHORITY TO SET DEADLINES.—As lead 

19 agency, the Department of Energy, in consultation 

20 with other Federal and, as appropriate, with Indian 

21 tribes, multi-State entities, and State agencies that 

22 are willing to coordinate their own separate permit23 ting and environmental reviews with the Federal au24 thorization and environmental reviews, shall estab25 lish prompt and binding intermediate milestones and 
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1 ultimate deadlines for the review of and Federal au2 thorization decisions relating to the proposed facil3 ity. The Secretary of Energy shall ensure that once 

4 an application has been submitted with such data as 

5 the Secretary deems necessary, all permit decisions 

6 and related environmental reviews under all applica7 ble Federal laws shall be completed within 1 year or, 

8 if a requirement of another provision of Federal law 

9 makes this impossible, as soon thereafter as is prac10 ticable. The Secretary of Energy also shall provide 

11 an expeditious pre-application mechanism for pro12 spective applicants to confer with the agencies in13 volved to have each such agency determine and com14 municate to the prospective applicant within 60 days 

15 of when the prospective applicant submits a request 

16 for such information concerning—

17 ‘‘(A) the likelihood of approval for a poten18 tial facility; and 

19 ‘‘(B) key issues of concern to the agencies 

20 and public. 

21 ‘‘(3) CONSOLIDATED ENVIRONMENTAL REVIEW

22 AND RECORD OF DECISION.—The Secretary of En23 ergy, in consultation with the affected agencies, shall 

24 prepare a single environmental review document, 

25 which shall be used as the basis for all decisions on 
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1 the proposed project under Federal law. The docu2 ment may be an environmental assessment or envi3 ronmental impact statement under the National En4 vironmental Policy Act of 1969 if warranted, or such 

5 other form of analysis as may be warranted. DOE 

6 and other agencies shall streamline the review and 

7 permitting of transmission and distribution facilities 

8 within corridors designated under section 503 of the 

9 Federal Land Policy and Management Act (43 

10 U.S.C. 1763) by fully taking into account prior anal11 yses and decisions as to the corridors. The document 

12 under this section may consist of or include an envi13 ronmental assessment, if allowed by law, or an envi14 ronmental impact statement, if warranted or re15 quired by law, or such other form of analysis as war16 ranted, consistent with any requirement of the Na17 tional Environmental Policy Act, the Federal Land 

18 Policy and Management Act, or any other applicable 

19 law. Such document shall include consideration by 

20 the relevant agencies of any applicable criteria or 

21 other matters as required under applicable laws. 

22 ‘‘(4) APPEALS.—In the event that any agency 

23 has denied a Federal authorization required for a 

24 transmission or distribution facility, or has failed to 

25 act by the deadline established by the Secretary pur-
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1 suant to this section for deciding whether to issue 

2 the authorization, the applicant or any State in 

3 which the facility would be located may file an ap4 peal with the Secretary of Energy, who shall, in con5 sultation with the affected agency, review the denial 

6 or take action on the pending application. Based on 

7 the overall record and in consultation with the af8 fected agency, the Secretary may then either issue 

9 the necessary authorization with any appropriate 

10 conditions, or deny the application. The Secretary 

11 shall issue a decision within 90 days of the filing of 

12 the appeal. In making a decision under this para13 graph, the Secretary shall comply with all applicable 

14 requirements of Federal law, including any require15 ments of the Endangered Species Act, the Clean 

16 Water Act, the National Forest Management Act, 

17 the National Environmental Policy Act, and the 

18 Federal Land Management and Policy Act. 

19 ‘‘(5) CONFORMING REGULATIONS AND MEMO20 RANDA OF AGREEMENT.—Not later than 18 months 

21 after the date of enactment of this section, the Sec22 retary of Energy shall issue any regulations nec23 essary to implement the foregoing provisions. Not 

24 later than 1 year after the date of enactment of this 

25 section, the Secretary and the heads of all relevant 
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1 Federal departments and non-departmental agencies 

2 shall, and interested Indian tribes, multi-State enti3 ties, and State agencies may, enter into Memoranda 

4 of Agreement to ensure the timely and coordinated 

5 review and permitting of electricity transmission and 

6 distribution facilities. The head of each Federal de7 partment or non-departmental agency with approval 

8 authority shall designate a senior responsible official 

9 and dedicate sufficient other staff and resources to 

10 ensure that the DOE regulations and any Memo11 randa are fully implemented. 

12 ‘‘(6) MISCELLANEOUS.—Each Federal author13 ization for an electricity transmission or distribution 

14 facility shall be issued for a duration, as determined 

15 by the Secretary of Energy, commensurate with the 

16 anticipated use of the facility and with appropriate 

17 authority to manage the right-of-way for reliability 

18 and environmental protection. Further, when such 

19 authorizations expire, they shall be reviewed for re20 newal taking fully into account reliance on such elec21 tricity infrastructure, recognizing its importance for 

22 public health, safety and economic welfare and as a 

23 legitimate use of Federal lands. 

24 ‘‘(7) MAINTAINING AND ENHANCING THE

25 TRANSMISSION INFRASTRUCTURE.—In exercising the 
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1 responsibilities under this section, the Secretary of 

2 Energy shall consult regularly with the Federal En3 ergy Regulatory Commission (FERC) and FERC4 approved Regional Transmission Organizations and 

5 Independent System Operators. 

6 ‘‘(k) INTERSTATE COMPACTS.—The consent of Con7 gress is hereby given for States to enter into interstate 

8 compacts establishing regional transmission siting agen9 cies to facilitate coordination among the States within 

10 such areas for purposes of siting future electric energy 

11 transmission facilities and to carry out State electric en12 ergy transmission siting responsibilities. The Secretary of 

13 Energy may provide technical assistance to regional trans14 mission siting agencies established under this subsection. 

15 ‘‘(l) SAVINGS CLAUSE.—Nothing in this section shall 

16 be construed to affect any requirement of the environ17 mental laws of the United States, including, but not lim18 ited to, the National Environmental Policy Act of 1969. 

19 This section shall not apply to any component of the Na20 tional Wilderness Preservation System, the National Wild 

21 and Scenic Rivers System, or the National Park system 

22 (including National Monuments therein).’’. 

23 (b) FEDERAL CORRIDORS.—The Secretary of the In24 terior, the Secretary of Energy, the Secretary of Agri25 culture, and the Chairman of the Council on Environ-
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1 mental Quality shall, within 90 days of the date of enact2 ment of this subsection, submit a joint report to Congress 

3 identifying the following: 

4 (1) all existing designated transmission and dis5 tribution corridors on Federal land and the status of 

6 work related to proposed transmission and distribu7 tion corridor designations, the schedule for com8 pleting such work, any impediments to completing 

9 the work, and steps that Congress could take to ex10 pedite the process; 

11 (2) the number of pending applications to lo12 cate transmission and distribution facilities on Fed13 eral lands, key information relating to each such fa14 cility, how long each application has been pending, 

15 the schedule for issuing a timely decision as to each 

16 facility, and progress in incorporating existing and 

17 new such rights-of-way into relevant land use and 

18 resource management plans or their equivalent; and 

19 (3) the number of existing transmission and 

20 distribution rights-of-way on Federal lands that will 

21 come up for renewal within the following 5, 10, and 

22 15 year periods, and a description of how the Secre23 taries plan to manage such renewals. 
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1 SEC. 16013. TRANSMISSION TECHNOLOGIES. 

2 The Federal Energy Regulatory Commission shall 

3 shall take affirmative steps in the exercise of its authori4 ties under the Federal Power Act to encourage the deploy5 ment of transmission technologies that utilize real time 

6 monitoring and analytical software to increase and maxi7 mize the capacity and efficiency of transmission networks 

8 and to reduce line losses. 

9 Subtitle B—Transmission 

10 Operation 

11 SEC. 16021. OPEN ACCESS TRANSMISSION BY CERTAIN 

12 UTILITIES. 

13 Part II of the Federal Power Act (16 U.S.C. 824 et 

14 seq.) is amended by inserting after section 211 the fol15 lowing: 

16 ‘‘SEC. 211A. OPEN ACCESS BY UNREGULATED TRANSMIT17 TING UTILITIES. 

18 ‘‘(a) IN GENERAL.—Subject to section 212(h), the 

19 Commission may, by rule or order, require an unregulated 

20 transmitting utility to provide transmission services—

21 ‘‘(1) at rates that are comparable to those that 

22 the unregulated transmitting utility charges itself, 

23 and 

24 ‘‘(2) on terms and conditions (not relating to 

25 rates) that are comparable to those under which 

26 such unregulated transmitting utility provides trans-
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1 mission services to itself and that are not unduly 

2 discriminatory or preferential. 

3 ‘‘(b) EXEMPTIONS.—

4 ‘‘(1) IN GENERAL.—The Commission shall ex5 empt from any rule or order under this subsection 

6 any unregulated transmitting utility that—

7 ‘‘(A)(i) sells no more than 4,000,000 

8 megawatt hours of electricity per year; and 

9 ‘‘(ii) is a distribution utility; or 

10 ‘‘(B) does not own or operate any trans11 mission facilities that are necessary for oper12 ating an interconnected transmission system (or 

13 any portion thereof); or 

14 ‘‘(C) meets other criteria the Commission 

15 determines to be in the public interest. 

16 ‘‘(2) LOCAL DISTRIBUTION.— The requirements 

17 of subsection (a) shall not apply to facilities used in 

18 local distribution. 

19 ‘‘(c) RATE CHANGING PROCEDURES.—The rate 

20 changing procedures applicable to public utilities under 

21 subsections (c) and (d) of section 205 are applicable to 

22 unregulated transmitting utilities for purposes of this sec23 tion. 

24 ‘‘(d) REMAND.—In exercising its authority under 

25 paragraph (1), the Commission may remand transmission 
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1 rates to an unregulated transmitting utility for review and 

2 revision where necessary to meet the requirements of sub3 section (a). 

4 ‘‘(e) SECTION 211 REQUESTS.—The provision of 

5 transmission services under subsection (a) does not pre6 clude a request for transmission services under section 

7 211. 

8 ‘‘(f) DEFINITIONS.—For purposes of this section—

9 ‘‘(1) The term ‘unregulated transmitting utility’ 

10 means an entity that—

11 ‘‘(A) owns or operates facilities used for 

12 the transmission of electric energy in interstate 

13 commerce, and 

14 ‘‘(B) is either an entity described in sec15 tion 201(f) or a rural electric cooperative. 

16 ‘‘(2) The term ‘distribution utility’ means an 

17 unregulated transmitting utility that serves at least 

18 ninety percent of its electric customers at retail.’’. 

19 SEC. 16022. REGIONAL TRANSMISSION ORGANIZATIONS. 

20 (a) SENSE OF THE CONGRESS ON RTOS.—It is the 

21 sense of Congress that, in order to promote fair, open ac22 cess to electric transmission service, benefit retail con23 sumers, facilitate wholesale competition, improve effi24 ciencies in transmission grid management, promote grid 

25 reliability, remove opportunities for unduly discriminatory 
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1 or preferential transmission practices, and provide for the 

2 efficient development of transmission infrastructure need3 ed to meet the growing demands of competitive wholesale 

4 power markets, all transmitting utilities in interstate com5 merce should voluntarily become members of independ6 ently administered regional transmission organizations 

7 that have operational control of interstate transmission fa8 cilities and do not own or control generation facilities used 

9 to supply electric energy for sale at wholesale. 

10 (b) SENSE OF THE CONGRESS ON CAPITAL INVEST11 MENT.—It is the sense of the Congress that the Federal 

12 Energy Regulatory Commission should provide to any 

13 transmitting utility that becomes a member of an oper14 ational regional transmitting organization approved by the 

15 Commission a return on equity sufficient to attract new 

16 investment capital for expansion of transmission capacity, 

17 in accordance with sections 205 and 206 of the Federal 

18 Power Act (16 U.S.C. 824d and 824e), including the re19 quirement that rates be just and reasonable. 

20 (c) REPORT ON PENDING APPLICATIONS.—Not later 

21 than 120 days after the date of enactment of this section, 

22 the Federal Energy Regulatory Commission shall submit 

23 to the Committee on Energy and Commerce of the United 

24 States House of Representatives and the Committee on 
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1 Energy and Natural Resources of the United States Sen2 ate a report containing the following: 

3 (1) A list of all regional transmission organiza4 tion applications filed at the Commission pursuant 

5 to the Commission’s Order No. 2000, including an 

6 identification of each public utility and other entity 

7 included within the proposed membership of the re8 gional transmission organization. 

9 (2) A table showing the date each such applica10 tion was filed, the date of any revised filings of such 

11 application, the date of each preliminary or final 

12 Commission order regarding such application, and a 

13 statement of whether the application has been re14 jected, preliminarily approved, finally approved, or 

15 has some other status (including a description of 

16 that status). 

17 (3) For any application that has not been fi18 nally approved by the Commission, a detailed de19 scription of every aspect of the application that the 

20 Commission has determined does not conform to the 

21 requirements of Order No. 2000. 

22 (4) For any application that has not been fi23 nally approved by the Commission, an explanation 

24 by the Commission of why the items described pur25 suant to paragraph (3) constitute material non-
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1 compliance with the requirements of the Commis2 sion’s Order No. 2000 sufficient to justify denial of 

3 approval by the Commission. 

4 (5) For all regional transmission organization 

5 applications filed pursuant to the Commission’s 

6 Order No. 2000, whether finally approved or not—

7 (A) a discussion of that regional trans8 mission organization’s efforts to minimize rate 

9 seams between itself and—

10 (i) other regional transmission organi11 zations; and 

12 (ii) entities not participating in a re13 gional transmission organization; and 

14 (B) a discussion of the impact of such 

15 seams on consumers and wholesale competition; 

16 and 

17 (C) a discussion of minimizing cost-shifting 

18 on consumers. 

19 (d) FEDERAL UTILITY PARTICIPATION IN RTOS.—

20 (1) DEFINITIONS.—For purposes of this sec21 tion—

22 (A) The term ‘‘appropriate Federal regu23 latory authority’’ means— 

24 (i) with respect to a Federal power 

25 marketing agency, the Secretary of En-
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1 ergy, except that the Secretary may des2 ignate the Administrator of a Federal 

3 power marketing agency to act as the ap4 propriate Federal regulatory authority with 

5 respect to the transmission system of that 

6 Federal power marketing agency; and 

7 (ii) with respect to the Tennessee Val8 ley Authority, the Board of Directors of 

9 the Tennessee Valley Authority. 

10 (B) The term ‘‘Federal utility’’ means a 

11 Federal power marketing agency or the Ten12 nessee Valley Authority. 

13 (C) The term ‘‘transmission system’’ 

14 means electric transmission facilities owned, 

15 leased, or contracted for by the United States 

16 and operated by a Federal utility. 

17 (2) TRANSFER.—The appropriate Federal regu18 latory authority is authorized to enter into a con19 tract, agreement or other arrangement transferring 

20 control and use of all or part of the Federal utility’s 

21 transmission system to a regional transmission orga22 nization approved by the Federal Energy Regulatory 

23 Commission. Such contract, agreement or arrange24 ment shall include—
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1 (A) performance standards for operation 

2 and use of the transmission system that the 

3 head of the Federal utility determines necessary 

4 or appropriate, including standards that assure 

5 recovery of all the Federal utility’s costs and 

6 expenses related to the transmission facilities 

7 that are the subject of the contract, agreement 

8 or other arrangement, consistency with existing 

9 contracts and third-party financing arrange10 ments, and consistency with said Federal util11 ity’s statutory authorities, obligations, and limi12 tations; 

13 (B) provisions for monitoring and over14 sight by the Federal utility of the regional 

15 transmission organization’s fulfillment of the 

16 terms and conditions of the contract, agreement 

17 or other arrangement, including a provision 

18 that may provide for the resolution of disputes 

19 through arbitration or other means with the re20 gional transmission organization or with other 

21 participants, notwithstanding the obligations 

22 and limitations of any other law regarding arbi23 tration; and 

24 (C) a provision that allows the Federal 

25 utility to withdraw from the regional trans-
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1 mission organization and terminate the con2 tract, agreement or other arrangement in ac3 cordance with its terms. 

4 Neither this section, actions taken pursuant to it, 

5 nor any other transaction of a Federal utility using 

6 a regional transmission organization shall serve to 

7 confer upon the Federal Energy Regulatory Com8 mission jurisdiction or authority over the Federal 

9 utility’s electric generation assets, electric capacity 

10 or energy that the Federal utility is authorized by 

11 law to market, or the Federal utility’s power sales 

12 activities. 

13 (3) EXISTING STATUTORY AND OTHER OBLIGA14 TIONS.—

15 (A) SYSTEM OPERATION REQUIRE16 MENTS.—Any statutory provision requiring or 

17 authorizing a Federal utility to transmit electric 

18 power or to construct, operate or maintain its 

19 transmission system shall not be construed to 

20 prohibit a transfer of control and use of its 

21 transmission system pursuant to, and subject to 

22 all requirements of paragraph (2). 

23 (B) OTHER OBLIGATIONS.—This sub24 section shall not be construed to—
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1 (i) suspend, or exempt any Federal 

2 utility from, any provision of existing Fed3 eral law, including but not limited to any 

4 requirement or direction relating to the use 

5 of the Federal utility’s transmission sys6 tem, environmental protection, fish and 

7 wildlife protection, flood control, naviga8 tion, water delivery, or recreation; or 

9 (ii) authorize abrogation of any con10 tract or treaty obligation. 

11 SEC. 16023. NATIVE LOAD. 

12 Part II of the Federal Power Act (16 U.S.C. 824 et 

13 seq.) is amended by adding the following new section at 

14 the end thereof: 

15 ‘‘SEC. 217. SERVICE OBLIGATIONS OF LOAD-SERVING ENTI16 TIES. 

17 ‘‘(a) IN GENERAL.—In exercising authority under 

18 this Act, the Commission shall ensure that any load-serv19 ing entity that either—

20 ‘‘(1) owns transmission facilities for the trans21 mission of electric energy in interstate commerce 

22 used to purchase or deliver electric energy to meet—

23 ‘‘(A) a service obligation to customers; or 

24 ‘‘(B) an existing wholesale contractual obli25 gation; or 
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1 ‘‘(2) holds a contract or service agreement for 

2 firm transmission service used to purchase or deliver 

3 electric energy to meet—

4 ‘‘(A) a service obligation to customers; or 

5 ‘‘(B) an existing wholesale contractual obli6 gation 

7 shall be entitled to use such transmission facilities or 

8 equivalent transmission rights to meet such obligations be9 fore transmission capacity is made available for other 

10 uses. 

11 ‘‘(b) USE BY SUCCESSOR IN INTEREST.—To the ex12 tent that all or a portion of the service obligation or con13 tractual obligation covered by subsection (a) is transferred 

14 to another load serving entity, the successor shall be enti15 tled to use such transmission facilities or firm trans16 mission rights associated with the transferred service obli17 gation consistent with subsection (a). Subsequent trans18 fers to another load serving entity, or back to the original 

19 load-serving entity, shall be entitled to the same rights. 

20 ‘‘(c) OTHER ENTITIES.—The Commission may exer21 cise authority under this Act to make transmission rights 

22 not used to meet an obligation covered by subsection (a) 

23 available to other entities in a manner determined by the 

24 Commission to be not unduly discriminatory or pref25 erential. 
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1 ‘‘(d) DEFINITIONS.—For the purposes of this section: 

2 ‘‘(1) The term ‘load-serving entity’ means an 

3 electric utility, transmitting utility or Federal power 

4 marketing agency that has an obligation under Fed5 eral, State, or local law, or under long-term con6 tracts, to provide electric service to either—

7 ‘‘(A) electric consumers (as defined in sec8 tion 3(5) of the Public Utility Regulatory Poli9 cies Act of 1978 (16 U.S.C. 2602(5)); or 

10 ‘‘(B) an electric utility as defined in sec11 tion 3(4) of the Public Utility Regulatory Poli12 cies Act of 1978 (16 U.S.C. 2602(5)) that has 

13 an obligation to provide electric service to elec14 tric consumers. 

15 Such obligations shall be deemed ‘service obliga16 tions’. 

17 ‘‘(2) The term ‘existing wholesale contractual 

18 obligation’ means an obligation under a firm long19 term wholesale contract that was in effect on March 

20 28, 2003. A contract modification after March 28, 

21 2003 (other than one that increases the quantity of 

22 electric energy sold under the contract) shall not af23 fect the status of such contract as an existing whole24 sale contractual obligation. 
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1 ‘‘(e) RELATIONSHIP TO OTHER PROVISIONS.—To the 

2 extent that a transmitting utility reserves transmission ca3 pacity (or reserves the equivalent amount of tradable 

4 transmission rights) to provide firm transmission service 

5 to meet service obligations or firm long-term wholesale 

6 contractual obligations pursuant to subsection (a), that 

7 transmitting utility shall not be considered as engaging 

8 in undue discrimination or preference under this Act. 

9 ‘‘(f) JURISDICTION.—This section shall not apply to 

10 an entity located in an area referred to in section 

11 212(k)(2)(A).

12 ‘‘(g) SAVINGS CLAUSE.—Nothing in this section shall 

13 affect any allocation of transmission rights by the PJM 

14 Interconnection, the New York Independent System Oper15 ator, the New England Independent System Operator, the 

16 Midwest Independent System Operator, or the California 

17 Independent System Operator. Nothing in this section 

18 shall provide a basis for abrogating any contract for firm 

19 transmission service or rights in effect as of the date of 

20 enactment of this section.’’.

21 Subtitle C—Reliability 

22 SEC. 16031. ELECTRIC RELIABILITY STANDARDS. 

23 Part II of the Federal Power Act (16 U.S.C 824 et 

24 seq.) is amended by inserting the following new section 

25 at the end thereof: 
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1 ‘‘SEC. 218. ELECTRIC RELIABILITY. 

2 ‘‘(a) DEFINITIONS.—For purposes of this section—

3 ‘‘(1) The term ‘bulk-power system’ means—

4 ‘‘(A) facilities and control systems nec5 essary for operating an interconnected electric 

6 energy transmission network (or any portion 

7 thereof); and 

8 ‘‘(B) electric energy from generation facili9 ties needed to maintain transmission system re10 liability. 

11 The term does not include facilities used in the local 

12 distribution of electric energy. 

13 ‘‘(2) The terms ‘Electric Reliability Organiza14 tion’ and ‘ERO’ mean the organization certified by 

15 the Commission under subsection (c) the purpose of 

16 which is to establish and enforce reliability stand17 ards for the bulk-power system, subject to Commis18 sion review. 

19 ‘‘(3) The term ‘reliability standard’ means a re20 quirement, approved by the Commission under this 

21 section, to provide for reliable operation of the bulk22 power system. The term includes requirements for 

23 the operation of existing bulk-power system facilities 

24 and the design of planned additions or modifications 

25 to such facilities to the extent necessary to provide 

26 for reliable operation of the bulk-power system, but 
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1 the term does not include any requirement to en2 large such facilities or to construct new transmission 

3 capacity or generation capacity. 

4 ‘‘(4) The term ‘reliable operation’ means oper5 ating the elements of the bulk-power system within 

6 equipment and electric system thermal, voltage, and 

7 stability limits so that instability, uncontrolled sepa8 ration, or cascading failures of such system will not 

9 occur as a result of a sudden disturbance or unan10 ticipated failure of system elements. 

11 ‘‘(5) The term ‘Interconnection’ means a geo12 graphic area in which the operation of bulk-power 

13 system components is synchronized such that the 

14 failure of one or more of such components may ad15 versely affect the ability of the operators of other 

16 components within the system to maintain reliable 

17 operation of the facilities within their control. 

18 ‘‘(6) The term ‘transmission organization’ 

19 means a regional transmission organization, inde20 pendent system operator, independent transmission 

21 provider, or other transmission organization finally 

22 approved by the Commission for the operation of 

23 transmission facilities. 
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1 ‘‘(7) The term ‘regional entity’ means an entity 

2 having enforcement authority pursuant to subsection 

3 (e)(4). 

4 ‘‘(b) JURISDICTION AND APPLICABILITY.—(1) The 

5 Commission shall have jurisdiction, within the United 

6 States, over the ERO certified by the Commission under 

7 subsection (c), any regional entities, and all users, owners 

8 and operators of the bulk-power system, including but not 

9 limited to the entities described in section 201(f), for pur10 poses of approving reliability standards established under 

11 this section and enforcing compliance with this section. All 

12 users, owners and operators of the bulk-power system 

13 shall comply with reliability standards that take effect 

14 under this section. 

15 ‘‘(2) The Commission shall issue a final rule to imple16 ment the requirements of this section not later than 180 

17 days after the date of enactment of this section. 

18 ‘‘(c) CERTIFICATION.—Following the issuance of a 

19 Commission rule under subsection (b)(2), any person may 

20 submit an application to the Commission for certification 

21 as the Electric Reliability Organization (ERO). The Com22 mission may certify one such ERO if the Commission de23 termines that such ERO—

24 ‘‘(1) has the ability to develop and enforce, sub25 ject to subsection (e)(2), reliability standards that 
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1 provide for an adequate level of reliability of the 

2 bulk-power system; 

3 ‘‘(2) has established rules that—

4 ‘‘(A) assure its independence of the users 

5 and owners and operators of the bulk-power 

6 system, while assuring fair stakeholder rep7 resentation in the selection of its directors and 

8 balanced decisionmaking in any ERO com9 mittee or subordinate organizational structure; 

10 ‘‘(B) allocate equitably reasonable dues, 

11 fees, and other charges among end users for all 

12 activities under this section; 

13 ‘‘(C) provide fair and impartial procedures 

14 for enforcement of reliability standards through 

15 the imposition of penalties in accordance with 

16 subsection (e) (including limitations on activi17 ties, functions, or operations, or other appro18 priate sanctions); 

19 ‘‘(D) provide for reasonable notice and op20 portunity for public comment, due process, 

21 openness, and balance of interests in developing 

22 reliability standards and otherwise exercising its 

23 duties; and 
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1 ‘‘(E) provide for taking, after certification, 

2 appropriate steps to gain recognition in Canada 

3 and Mexico. 

4 ‘‘(d) RELIABILITY STANDARDS.—(1) The Electric 

5 Reliability Organization shall file each reliability standard 

6 or modification to a reliability standard that it proposes 

7 to be made effective under this section with the Commis8 sion. 

9 ‘‘(2) The Commission may approve, by rule or order, 

10 a proposed reliability standard or modification to a reli11 ability standard if it determines that the standard is just, 

12 reasonable, not unduly discriminatory or preferential, and 

13 in the public interest. The Commission shall give due 

14 weight to the technical expertise of the Electric Reliability 

15 Organization with respect to the content of a proposed 

16 standard or modification to a reliability standard and to 

17 the technical expertise of a regional entity organized on 

18 an Interconnection-wide basis with respect to a reliability 

19 standard to be applicable within that Interconnection, but 

20 shall not defer with respect to the effect of a standard 

21 on competition. A proposed standard or modification shall 

22 take effect upon approval by the Commission. 

23 ‘‘(3) The Electric Reliability Organization shall 

24 rebuttably presume that a proposal from a regional entity 

25 organized on an Interconnection-wide basis for a reliability 
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1 standard or modification to a reliability standard to be ap2 plicable on an Interconnection-wide basis is just, reason3 able, and not unduly discriminatory or preferential, and 

4 in the public interest. 

5 ‘‘(4) The Commission shall remand to the Electric 

6 Reliability Organization for further consideration a pro7 posed reliability standard or a modification to a reliability 

8 standard that the Commission disapproves in whole or in 

9 part. 

10 ‘‘(5) The Commission, upon its own motion or upon 

11 complaint, may order the Electric Reliability Organization 

12 to submit to the Commission a proposed reliability stand13 ard or a modification to a reliability standard that ad14 dresses a specific matter if the Commission considers such 

15 a new or modified reliability standard appropriate to carry 

16 out this section. 

17 ‘‘(6) The final rule adopted under subsection (b)(2) 

18 shall include fair processes for the identification and time19 ly resolution of any conflict between a reliability standard 

20 and any function, rule, order, tariff, rate schedule, or 

21 agreement accepted, approved, or ordered by the Commis22 sion applicable to a transmission organization. Such trans23 mission organization shall continue to comply with such 

24 function, rule, order, tariff, rate schedule or agreement ac25 cepted approved, or ordered by the Commission until—
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1 ‘‘(A) the Commission finds a conflict exists be2 tween a reliability standard and any such provision; 

3 ‘‘(B) the Commission orders a change to such 

4 provision pursuant to section 206 of this part; and 

5 ‘‘(C) the ordered change becomes effective 

6 under this part. 

7 If the Commission determines that a reliability standard 

8 needs to be changed as a result of such a conflict, it shall 

9 order the ERO to develop and file with the Commission 

10 a modified reliability standard under paragraph (4) or (5) 

11 of this subsection. 

12 ‘‘(e) ENFORCEMENT.—(1) The ERO may impose, 

13 subject to paragraph (2), a penalty on a user or owner 

14 or operator of the bulk-power system for a violation of a 

15 reliability standard approved by the Commission under 

16 subsection (d) if the ERO, after notice and an opportunity 

17 for a hearing—

18 ‘‘(A) finds that the user or owner or operator 

19 has violated a reliability standard approved by the 

20 Commission under subsection (d); and 

21 ‘‘(B) files notice and the record of the pro22 ceeding with the Commission. 

23 ‘‘(2) A penalty imposed under paragraph (1) may 

24 take effect not earlier than the 31st day after the electric 

25 reliability organization files with the Commission notice of 
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1 the penalty and the record of proceedings. Such penalty 

2 shall be subject to review by the Commission, on its own 

3 motion or upon application by the user, owner or operator 

4 that is the subject of the penalty filed within 30 days after 

5 the date such notice is filed with the Commission. Applica6 tion to the Commission for review, or the initiation of re7 view by the Commission on its own motion, shall not oper8 ate as a stay of such penalty unless the Commission other9 wise orders upon its own motion or upon application by 

10 the user, owner or operator that is the subject of such 

11 penalty. In any proceeding to review a penalty imposed 

12 under paragraph (1), the Commission, after notice and op13 portunity for hearing (which hearing may consist solely 

14 of the record before the electric reliability organization and 

15 opportunity for the presentation of supporting reasons to 

16 affirm, modify, or set aside the penalty), shall by order 

17 affirm, set aside, reinstate, or modify the penalty, and, 

18 if appropriate, remand to the electric reliability organiza19 tion for further proceedings. The Commission shall imple20 ment expedited procedures for such hearings. 

21 ‘‘(3) On its own motion or upon complaint, the Com22 mission may order compliance with a reliability standard 

23 and may impose a penalty against a user or owner or oper24 ator of the bulk-power system, if the Commission finds, 

25 after notice and opportunity for a hearing, that the user 
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1 or owner or operator of the bulk-power system has en2 gaged or is about to engage in any acts or practices that 

3 constitute or will constitute a violation of a reliability 

4 standard. 

5 ‘‘(4) The Commission shall establish regulations au6 thorizing the ERO to enter into an agreement to delegate 

7 authority to a regional entity for the purpose of proposing 

8 reliability standards to the ERO and enforcing reliability 

9 standards under paragraph (1) if—

10 ‘‘(A) the regional entity is governed by—

11 ‘‘(i) an independent board; 

12 ‘‘(ii) a balanced stakeholder board; or 

13 ‘‘(iii) a combination independent and bal14 anced stakeholder board. 

15 ‘‘(B) the regional entity otherwise satisfies the 

16 provisions of subsection (c)(1) and (2); and 

17 ‘‘(C) the agreement promotes effective and effi18 cient administration of bulk-power system reliability. 

19 The Commission may modify such delegation. The ERO 

20 and the Commission shall rebuttably presume that a pro21 posal for delegation to a regional entity organized on an 

22 Interconnection-wide basis promotes effective and efficient 

23 administration of bulk-power system reliability and should 

24 be approved. Such regulation may provide that the Com25 mission may assign the ERO’s authority to enforce reli-
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1 ability standards under paragraph (1) directly to a re2 gional entity consistent with the requirements of this para3 graph. 

4 ‘‘(5) The Commission may take such action as is nec5 essary or appropriate against the ERO or a regional entity 

6 to ensure compliance with a reliability standard or any 

7 Commission order affecting the ERO or a regional entity. 

8 ‘‘(6) Any penalty imposed under this section shall 

9 bear a reasonable relation to the seriousness of the viola10 tion and shall take into consideration the efforts of such 

11 user, owner, or operator to remedy the violation in a time12 ly manner. 

13 ‘‘(f) CHANGES IN ELECTRICITY RELIABILITY ORGA14 NIZATION RULES.—The Electric Reliability Organization 

15 shall file with the Commission for approval any proposed 

16 rule or proposed rule change, accompanied by an expla17 nation of its basis and purpose. The Commission, upon 

18 its own motion or complaint, may propose a change to the 

19 rules of the Electric Reliability Organization. A proposed 

20 rule or proposed rule change shall take effect upon a find21 ing by the Commission, after notice and opportunity for 

22 comment, that the change is just, reasonable, not unduly 

23 discriminatory or preferential, is in the public interest, and 

24 satisfies the requirements of subsection (c). 
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1 ‘‘(g) RELIABILITY REPORTS.—The Electric Reli2 ability Organization shall conduct periodic assessments of 

3 the reliability and adequacy of the bulk-power system in 

4 North America. 

5 ‘‘(h) COORDINATION WITH CANADA AND MEXICO.—

6 The President is urged to negotiate international agree7 ments with the governments of Canada and Mexico to pro8 vide for effective compliance with reliability standards and 

9 the effectiveness of the Electric Reliability Organization 

10 in the United States and Canada or Mexico. 

11 ‘‘(i) SAVINGS PROVISIONS.—(1) The Electric Reli12 ability Organization shall have authority to develop and 

13 enforce compliance with reliability standards for only the 

14 bulk-power system. 

15 ‘‘(2) This section does not authorize the Electric Reli16 ability Organization or the Commission to order the con17 struction of additional generation or transmission capacity 

18 or to set and enforce compliance with standards for ade19 quacy or safety of electric facilities or services. 

20 ‘‘(3) Nothing in this section shall be construed to pre21 empt any authority of any State to take action to ensure 

22 the safety, adequacy, and reliability of electric service 

23 within that State, as long as such action is not incon24 sistent with any reliability standard, except that the State 

25 of New York may establish rules that result in greater 
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1 reliability within that State, as long as such action does 

2 not result in lesser reliability outside the State than that 

3 provided by the reliability standards. 

4 ‘‘(4) Within 90 days of the application of the Electric 

5 Reliability Organization or other affected party, and after 

6 notice and opportunity for comment, the Commission shall 

7 issue a final order determining whether a State action is 

8 inconsistent with a reliability standard, taking into consid9 eration any recommendation of the Electric Reliability Or10 ganization. 

11 ‘‘(5) The Commission, after consultation with the 

12 Electric Reliability Organization and the State taking ac13 tion, may stay the effectiveness of any State action, pend14 ing the Commission’s issuance of a final order. 

15 ‘‘(j) REGIONAL ADVISORY BODIES.—The Commis16 sion shall establish a regional advisory body on the petition 

17 of at least two-thirds of the States within a region that 

18 have more than one-half of their electric load served within 

19 the region. A regional advisory body shall be composed or 

20 of one member from each participating State in the region, 

21 appointed by the Governor of each State, and may include 

22 representatives of agencies, States, and provinces outside 

23 the United States. A regional advisory body may provide 

24 advice to the Electric Reliability Organization, a regional 

25 entity, or the Commission regarding the governance of an 
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1 existing or proposed regional entity within the same re2 gion, whether a standard proposed to apply within the re3 gion is just, reasonable, not unduly discriminatory or pref4 erential, and in the public interest, whether fees proposed 

5 to be assessed within the region are just, reasonable, not 

6 unduly discriminatory or preferential, and in the public 

7 interest and any other responsibilities requested by the 

8 Commission. The Commission may give deference to the 

9 advice of any such regional advisory body if that body is 

10 organized on an Interconnection-wide basis. 

11 ‘‘(k) APPLICATION TO ALASKA AND HAWAII.—The 

12 provisions of this section do not apply to Alaska or Ha13 waii.’’. 

14 Subtitle D—PUHCA Amendments 

15 SEC. 16041. SHORT TITLE. 

16 This subtitle may be cited as the ‘‘Public Utility 

17 Holding Company Act of 2003’’. 

18 SEC. 16042. DEFINITIONS. 

19 For purposes of this subtitle: 

20 (1) The term ‘‘affiliate’’ of a company means 

21 any company, 5 percent or more of the outstanding 

22 voting securities of which are owned, controlled, or 

23 held with power to vote, directly or indirectly, by 

24 such company. 
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1 (2) The term ‘‘associate company’’ of a com2 pany means any company in the same holding com3 pany system with such company. 

4 (3) The term ‘‘Commission’’ means the Federal 

5 Energy Regulatory Commission. 

6 (4) The term ‘‘company’’ means a corporation, 

7 partnership, association, joint stock company, busi8 ness trust, or any organized group of persons, 

9 whether incorporated or not, or a receiver, trustee, 

10 or other liquidating agent of any of the foregoing. 

11 (5) The term ‘‘electric utility company’’ means 

12 any company that owns or operates facilities used 

13 for the generation, transmission, or distribution of 

14 electric energy for sale. 

15 (6) The terms ‘‘exempt wholesale generator’’ 

16 and ‘‘foreign utility company’’ have the same mean17 ings as in sections 32 and 33, respectively, of the 

18 Public Utility Holding Company Act of 1935 (15 

19 U.S.C. 79z–5a, 79z–5b), as those sections existed on 

20 the day before the effective date of this subtitle. 

21 (7) The term ‘‘gas utility company’’ means any 

22 company that owns or operates facilities used for 

23 distribution at retail (other than the distribution 

24 only in enclosed portable containers or distribution 

25 to tenants or employees of the company operating 
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1 such facilities for their own use and not for resale) 

2 of natural or manufactured gas for heat, light, or 

3 power. 

4 (8) The term ‘‘holding company’’ means— 

5 (A) any company that directly or indirectly 

6 owns, controls, or holds, with power to vote, 10 

7 percent or more of the outstanding voting secu8 rities of a public utility company or of a holding 

9 company of any public utility company; and 

10 (B) any person, determined by the Com11 mission, after notice and opportunity for hear12 ing, to exercise directly or indirectly (either 

13 alone or pursuant to an arrangement or under14 standing with one or more persons) such a con15 trolling influence over the management or poli16 cies of any public utility company or holding 

17 company as to make it necessary or appropriate 

18 for the rate protection of utility customers with 

19 respect to rates that such person be subject to 

20 the obligations, duties, and liabilities imposed 

21 by this subtitle upon holding companies. 

22 (9) The term ‘‘holding company system’’ means 

23 a holding company, together with its subsidiary com24 panies. 
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1 (10) The term ‘‘jurisdictional rates’’ means 

2 rates established by the Commission for the trans3 mission of electric energy in interstate commerce, 

4 the sale of electric energy at wholesale in interstate 

5 commerce, the transportation of natural gas in inter6 state commerce, and the sale in interstate commerce 

7 of natural gas for resale for ultimate public con8 sumption for domestic, commercial, industrial, or 

9 any other use. 

10 (11) The term ‘‘natural gas company’’ means a 

11 person engaged in the transportation of natural gas 

12 in interstate commerce or the sale of such gas in 

13 interstate commerce for resale. 

14 (12) The term ‘‘person’’ means an individual or 

15 company. 

16 (13) The term ‘‘public utility’’ means any per17 son who owns or operates facilities used for trans18 mission of electric energy in interstate commerce or 

19 sales of electric energy at wholesale in interstate 

20 commerce. 

21 (14) The term ‘‘public utility company’’ means 

22 an electric utility company or a gas utility company. 

23 (15) The term ‘‘State commission’’ means any 

24 commission, board, agency, or officer, by whatever 

25 name designated, of a State, municipality, or other 
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1 political subdivision of a State that, under the laws 

2 of such State, has jurisdiction to regulate public util3 ity companies. 

4 (16) The term ‘‘subsidiary company’’ of a hold5 ing company means— 

6 (A) any company, 10 percent or more of 

7 the outstanding voting securities of which are 

8 directly or indirectly owned, controlled, or held 

9 with power to vote, by such holding company; 

10 and 

11 (B) any person, the management or poli12 cies of which the Commission, after notice and 

13 opportunity for hearing, determines to be sub14 ject to a controlling influence, directly or indi15 rectly, by such holding company (either alone or 

16 pursuant to an arrangement or understanding 

17 with one or more other persons) so as to make 

18 it necessary for the rate protection of utility 

19 customers with respect to rates that such per20 son be subject to the obligations, duties, and li21 abilities imposed by this subtitle upon sub22 sidiary companies of holding companies. 

23 (17) The term ‘‘voting security’’ means any se24 curity presently entitling the owner or holder thereof 
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1 to vote in the direction or management of the affairs 

2 of a company. 

3 SEC. 16043. REPEAL OF THE PUBLIC UTILITY HOLDING 

4 COMPANY ACT OF 1935. 

5 The Public Utility Holding Company Act of 1935 (15 

6 U.S.C. 79 et seq.) is repealed. 

7 SEC. 16044. FEDERAL ACCESS TO BOOKS AND RECORDS. 

8 (a) IN GENERAL.—Each holding company and each 

9 associate company thereof shall maintain, and shall make 

10 available to the Commission, such books, accounts, memo11 randa, and other records as the Commission deems to be 

12 relevant to costs incurred by a public utility or natural 

13 gas company that is an associate company of such holding 

14 company and necessary or appropriate for the protection 

15 of utility customers with respect to jurisdictional rates. 

16 (b) AFFILIATE COMPANIES.—Each affiliate of a hold17 ing company or of any subsidiary company of a holding 

18 company shall maintain, and shall make available to the 

19 Commission, such books, accounts, memoranda, and other 

20 records with respect to any transaction with another affil21 iate, as the Commission deems to be relevant to costs in22 curred by a public utility or natural gas company that is 

23 an associate company of such holding company and nec24 essary or appropriate for the protection of utility cus25 tomers with respect to jurisdictional rates. 
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1 (c) HOLDING COMPANY SYSTEMS.—The Commission 

2 may examine the books, accounts, memoranda, and other 

3 records of any company in a holding company system, or 

4 any affiliate thereof, as the Commission deems to be rel5 evant to costs incurred by a public utility or natural gas 

6 company within such holding company system and nec7 essary or appropriate for the protection of utility cus8 tomers with respect to jurisdictional rates. 

9 (d) CONFIDENTIALITY.—No member, officer, or em10 ployee of the Commission shall divulge any fact or infor11 mation that may come to his or her knowledge during the 

12 course of examination of books, accounts, memoranda, or 

13 other records as provided in this section, except as may 

14 be directed by the Commission or by a court of competent 

15 jurisdiction. 

16 SEC. 16045. STATE ACCESS TO BOOKS AND RECORDS. 

17 (a) In GENERAL.—Upon the written request of a 

18 State commission having jurisdiction to regulate a public 

19 utility company in a holding company system, the holding 

20 company or any associate company or affiliate thereof, 

21 other than such public utility company, wherever located, 

22 shall produce for inspection books, accounts, memoranda, 

23 and other records that—

24 (1) have been identified in reasonable detail by 

25 the State commission; 
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1 (2) the State commission deems are relevant to 

2 costs incurred by such public utility company; and 

3 (3) are necessary for the effective discharge of 

4 the responsibilities of the State commission with re5 spect to such proceeding. 

6 (b) LIMITATION.—Subsection (a) does not apply to 

7 any person that is a holding company solely by reason of 

8 ownership of one or more qualifying facilities under the 

9 Public Utility Regulatory Policies Act of 1978 (16 U.S.C. 

10 2601 et seq.). 

11 (c) CONFIDENTIALITY OF INFORMATION.—The pro12 duction of books, accounts, memoranda, and other records 

13 under subsection (a) shall be subject to such terms and 

14 conditions as may be necessary and appropriate to safe15 guard against unwarranted disclosure to the public of any 

16 trade secrets or sensitive commercial information. 

17 (d) EFFECT ON STATE LAW.—Nothing in this sec18 tion shall preempt applicable State law concerning the pro19 vision of books, accounts, memoranda, and other records, 

20 or in any way limit the rights of any State to obtain books, 

21 accounts, memoranda, and other records under any other 

22 Federal law, contract, or otherwise. 

23 (e) COURT JURISDICTION.—Any United States dis24 trict court located in the State in which the State commis-
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1 sion referred to in subsection (a) is located shall have ju2 risdiction to enforce compliance with this section. 

3 SEC. 16046. EXEMPTION AUTHORITY. 

4 (a) RULEMAKING.—Not later than 90 days after the 

5 effective date of this subtitle, the Commission shall pro6 mulgate a final rule to exempt from the requirements of 

7 section 16044 (relating to Federal access to books and 

8 records) any person that is a holding company, solely with 

9 respect to one or more—

10 (1) qualifying facilities under the Public Utility 

11 Regulatory Policies Act of 1978 (16 U.S.C. 2601 et 

12 seq.); 

13 (2) exempt wholesale generators; or 

14 (3) foreign utility companies. 

15 (b) OTHER AUTHORITY.—The Commission shall ex16 empt a person or transaction from the requirements of 

17 section 16044 (relating to Federal access to books and 

18 records) if, upon application or upon the motion of the 

19 Commission— 

20 (1) the Commission finds that the books, ac21 counts, memoranda, and other records of any person 

22 are not relevant to the jurisdictional rates of a pub23 lic utility or natural gas company; or 
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1 (2) the Commission finds that any class of 

2 transactions is not relevant to the jurisdictional 

3 rates of a public utility or natural gas company. 

4 SEC. 16047. AFFILIATE TRANSACTIONS. 

5 (a) COMMISSION AUTHORITY UNAFFECTED.—Noth6 ing in this subtitle shall limit the authority of the Commis7 sion under the Federal Power Act (16 U.S.C. 791a et seq.) 

8 to require that jurisdictional rates are just and reasonable, 

9 including the ability to deny or approve the pass through 

10 of costs, the prevention of cross-subsidization, and the pro11 mulgation of such rules and regulations as are necessary 

12 or appropriate for the protection of utility consumers. 

13 (b) RECOVERY OF COSTS.—Nothing in this subtitle 

14 shall preclude the Commission or a State commission from 

15 exercising its jurisdiction under otherwise applicable law 

16 to determine whether a public utility company, public util17 ity, or natural gas company may recover in rates any costs 

18 of an activity performed by an associate company, or any 

19 costs of goods or services acquired by such public utility 

20 company from an associate company. 

21 SEC. 16048. APPLICABILITY. 

22 Except as otherwise specifically provided in this sub23 title, no provision of this subtitle shall apply to, or be 

24 deemed to include— 

25 (1) the United States; 
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1 (2) a State or any political subdivision of a 

2 State; 

3 (3) any foreign governmental authority not op4 erating in the United States; 

5 (4) any agency, authority, or instrumentality of 

6 any entity referred to in paragraph (1), (2), or (3); 

7 or 

8 (5) any officer, agent, or employee of any entity 

9 referred to in paragraph (1), (2), or (3) acting as 

10 such in the course of his or her official duty. 

11 SEC. 16049. EFFECT ON OTHER REGULATIONS. 

12 Nothing in this subtitle precludes the Commission or 

13 a State commission from exercising its jurisdiction under 

14 otherwise applicable law to protect utility customers. 

15 SEC. 16050. ENFORCEMENT. 

16 The Commission shall have the same powers as set 

17 forth in sections 306 through 317 of the Federal Power 

18 Act (16 U.S.C. 825e–825p) to enforce the provisions of 

19 this subtitle. 

20 SEC. 16051. SAVINGS PROVISIONS. 

21 (a) IN GENERAL.—Nothing in this subtitle prohibits 

22 a person from engaging in or continuing to engage in ac23 tivities or transactions in which it is legally engaged or 

24 authorized to engage on the date of enactment of this Act, 
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1 so long as that person continues to comply with the terms 

2 of any such authorization, whether by rule or by order. 

3 (b) EFFECT ON OTHER COMMISSION AUTHORITY.—

4 Nothing in this subtitle limits the authority of the Com5 mission under the Federal Power Act (16 U.S.C. 791a et 

6 seq.) (including section 301 of that Act) or the Natural 

7 Gas Act (15 U.S.C. 717 et seq.) (including section 8 of 

8 that Act). 

9 SEC. 16052. IMPLEMENTATION. 

10 Not later than 12 months after the date of enactment 

11 of this subtitle, the Commission shall— 

12 (1) promulgate such regulations as may be nec13 essary or appropriate to implement this subtitle 

14 (other than section 16045, relating to State access 

15 to books and records); and 

16 (2) submit to the Congress detailed rec17 ommendations on technical and conforming amend18 ments to Federal law necessary to carry out this 

19 subtitle and the amendments made by this subtitle. 

20 SEC. 16053. TRANSFER OF RESOURCES. 

21 All books and records that relate primarily to the 

22 functions transferred to the Commission under this sub23 title shall be transferred from the Securities and Exchange 

24 Commission to the Commission. 
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1 SEC. 16054. EFFECTIVE DATE. 

2 This subtitle shall take effect 12 months after the 

3 date of enactment of this subtitle. 

4 SEC. 16055. AUTHORIZATION OF APPROPRIATIONS. 

5 There are authorized to be appropriated such funds 

6 as may be necessary to carry out this subtitle. 

7 SEC. 16056. CONFORMING AMENDMENTS TO THE FEDERAL 

8 POWER ACT. 

9 (a) CONFLICT OF JURISDICTION.—Section 318 of the 

10 Federal Power Act (16 U.S.C. 825q) is repealed. 

11 (b) DEFINITIONS.—(1) Section 201(g)(5) of the Fed12 eral Power Act (16 U.S.C. 824(g)(5)) is amended by strik13 ing ‘‘1935’’ and inserting ‘‘2003’’. 

14 (2) Section 214 of the Federal Power Act (16 U.S.C. 

15 824m) is amended by striking ‘‘1935’’ and inserting 

16 ‘‘2003’’. 

17 Subtitle E—PURPA Amendments 

18 SEC. 16061. REAL-TIME PRICING AND TIME-OF-USE METER19 ING STANDARDS. 

20 (a) ADOPTION OF STANDARDS.—Section 111(d) of 

21 the Public Utility Regulatory Policies Act of 1978 (16 

22 U.S.C. 2621(d)) is amended by adding at the end the fol23 lowing: 

24 ‘‘(11) REAL-TIME PRICING.—(A) Each electric 

25 utility shall, at the request of an electric consumer, 

26 provide electric service under a real-time rate sched-
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1 ule, under which the rate charged by the electric 

2 utility varies by the hour (or smaller time interval) 

3 according to changes in the electric utility’s whole4 sale power cost. The real-time pricing service shall 

5 enable the electric consumer to manage energy use 

6 and cost through real-time metering and commu7 nications technology. 

8 ‘‘(B) For purposes of implementing this para9 graph, any reference contained in this section to the 

10 date of enactment of the Public Utility Regulatory 

11 Policies Act of 1978 shall be deemed to be a ref12 erence to the date of enactment of this paragraph. 

13 ‘‘(C) Notwithstanding subsections (b) and (c) of 

14 section 112, each State regulatory authority shall 

15 consider and make a determination concerning 

16 whether it is appropriate to implement the standard 

17 set out in subparagraph (A) not later than 1 year 

18 after the date of enactment of this paragraph. 

19 ‘‘(12) TIME-OF-USE METERING.—(A) Each elec20 tric utility shall, at the request of an electric con21 sumer, provide electric service under a time-of-use 

22 rate schedule which enables the electric consumer to 

23 manage energy use and cost through time-of-use me24 tering and technology. 
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1 ‘‘(B) For purposes of implementing this para2 graph, any reference contained in this section to the 

3 date of enactment of the Public Utility Regulatory 

4 Policies Act of 1978 shall be deemed to be a ref5 erence to the date of enactment of this paragraph. 

6 ‘‘(C) Notwithstanding subsections (b) and (c) of 

7 section 112, each State regulatory authority shall 

8 consider and make a determination concerning 

9 whether it is appropriate to implement the standards 

10 set out in subparagraph (A) not later than 1 year 

11 after the date of enactment of this paragraph.’’. 

12 (b) SPECIAL RULES.—Section 115 of the Public Util13 ity Regulatory Policies Act of 1978 (16 U.S.C. 2625) is 

14 amended by adding at the end the following: 

15 ‘‘(i) REAL-TIME PRICING.—In a State that permits 

16 third-party marketers to sell electric energy to retail elec17 tric consumers, the electric consumer shall be entitled to 

18 receive the same real-time metering and communication 

19 service as a direct retail electric consumer of the electric 

20 utility. 

21 ‘‘(j) TIME-OF-USE METERING.—In a State that per22 mits third-party marketers to sell electric energy to retail 

23 electric consumers, the electric consumer shall be entitled 

24 to receive the same time-of-use metering and communica-
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1 tion service as a direct retail electric consumer of the elec2 tric utility.’’. 

3 SEC. 16062. COGENERATION AND SMALL POWER PRODUC4 TION PURCHASE AND SALE REQUIREMENTS. 

5 (a) TERMINATION OF MANDATORY PURCHASE AND

6 SALE REQUIREMENTS.—Section 210 of the Public Utility 

7 Regulatory Policies Act of 1978 (16 U.S.C. 824a–3) is 

8 amended by adding at the end the following: 

9 ‘‘(m) TERMINATION OF MANDATORY PURCHASE AND

10 SALE REQUIREMENTS.—

11 ‘‘(1) OBLIGATION TO PURCHASE.—After the 

12 date of enactment of this subsection, no electric util13 ity shall be required to enter into a new contract or 

14 obligation to purchase electric energy from a quali15 fying cogeneration facility or a qualifying small 

16 power production facility under this section if the 

17 Commission finds that— 

18 ‘‘(A) the qualifying cogeneration facility or 

19 qualifying small power production facility has 

20 access to 

21 ‘‘(i) independently administered, auc22 tion-based day ahead and real time whole23 sale markets for the sale of electric energy, 

24 and 
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1 ‘‘(ii) long-term wholesale markets for 

2 the sale of capacity and electric energy; 

3 ‘‘(B) the qualifying cogeneration facility or 

4 qualifying small power production facility has 

5 access to a competitive wholesale market for the 

6 sale of electric energy that provides such quali7 fying cogeneration facility or qualifying small 

8 power production facility with opportunities to 

9 sell electric energy that, at a minimum, are 

10 comparable to the opportunities provided by the 

11 markets, or some minimum combination there12 of, described in subparagraph (A); or 

13 ‘‘(C) the qualifying cogeneration facility 

14 does not meet criteria established by the Com15 mission pursuant to the rulemaking set forth in 

16 subparagraph (n) and has not filed with the 

17 Commission a notice of self-certification or an 

18 application for Commission certification under 

19 18 C.F.R. 292.207 prior to the date of enact20 ment of this subsection. 

21 ‘‘(2) COMMISSION REVIEW.—(A) Any electric 

22 utility may file an application with the Commission 

23 for relief from the mandatory purchase obligation 

24 pursuant to this subsection on a utility-wide basis. 

25 Such application shall set forth the reasons why 
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1 such relief is appropriate and describe how the con2 ditions set forth in subparagraphs (A) and (B) of 

3 paragraph (1) of this subsection have been met. 

4 ‘‘(B) After notice, including sufficient notice to 

5 potentially affected qualifying facilities, and an op6 portunity for comment, and within 90 days of the 

7 filing of an application under subparagraph (A), the 

8 Commission shall make a final determination as to 

9 whether the conditions set forth in subparagraphs 

10 (A) and (B) of paragraph (1) have been met. The 

11 Commission shall not be authorized to issue a tolling 

12 order regarding such application or otherwise delay 

13 a final decision regarding such application. 

14 ‘‘(3) REINSTATEMENT OF OBLIGATION TO PUR15 CHASE.—(A) At any time after the Commission 

16 makes a finding under paragraph (2) relieving an 

17 electric utility of its obligation to purchase electric 

18 energy, a qualifying cogeneration facility or a quali19 fying small power production facility may apply to 

20 the Commission for an order reinstating the electric 

21 utility’s obligation to purchase electric energy under 

22 this section. Such application shall set forth the rea23 sons why such relief is no longer appropriate and de24 scribe how the tests set forth in subparagraphs (A) 
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1 and (B) of paragraph (1) of this subsection are no 

2 longer met. 

3 ‘‘(B) After notice, including sufficient notice to 

4 potentially affected utilities, and opportunity for 

5 comment, and within 90 days of the filing of an ap6 plication under subparagraph (A), the Commission 

7 shall issue an order reinstating the electric utility’s 

8 obligation to purchase electric energy under this sec9 tion if the Commission finds that the condition in 

10 paragraph (1), which relieved the obligation to pur11 chase, is no longer met. The Commission shall not 

12 be authorized to issue a tolling order regarding such 

13 application or otherwise delay a final decision re14 garding such application. 

15 ‘‘(4) OBLIGATION TO SELL.—After the date of 

16 enactment of this subsection, no electric utility shall 

17 be required to enter into a new contract or obliga18 tion to sell electric energy to a qualifying cogenera19 tion facility or a qualifying small power production 

20 facility if—

21 ‘‘(A) competing retail electric suppliers are 

22 willing and able to provide electric energy to the 

23 qualifying cogeneration facility or qualifying 

24 small power production facility, and 
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1 ‘‘(B) the electric utility is not required by 

2 State law to sell electric energy in its service 

3 territory. 

4 ‘‘(5) NO EFFECT ON EXISTING RIGHTS AND

5 REMEDIES.—Nothing in this subsection affects the 

6 rights or remedies of any party under any contract 

7 or obligation, in effect or pending approval before 

8 the appropriate State regulatory authority or non9 regulated electric utility on the date of enactment of 

10 this subsection, to purchase electric energy or capac11 ity from or to sell electric energy or capacity to a 

12 facility under this Act (including the right to recover 

13 costs of purchasing electric energy or capacity). 

14 ‘‘(6) RECOVERY OF COSTS.—

15 ‘‘(A) REGULATION.—To ensure recovery 

16 by an electric utility that purchases electric en17 ergy or capacity from a qualifying facility pur18 suant to any legally enforceable obligation en19 tered into or imposed under this section of all 

20 prudently incurred costs associated with the 

21 purchases, the Commission shall issue and en22 force such regulations as may be required to en23 sure that the electric utility shall recover the 

24 prudently incurred costs associated with such 

25 purchases. 
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1 ‘‘(B) ENFORCEMENT.—A regulation under 

2 subparagraph (A) shall be enforceable in ac3 cordance with the provisions of law applicable 

4 to enforcement of regulations under the Federal 

5 Power Act (16 U.S.C. 791a et seq.). 

6 ‘‘(n) RULEMAKING FOR NEW FACILITIES.—

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

8 after the date of enactment of this subsection, the 

9 Commission shall issue a rule revising the criteria 

10 for qualifying cogeneration facilities in 18 C.F.R. 

11 292.205. In particular, the Commission shall evalu12 ate the rules regarding qualifying facility criteria 

13 and revise such rules, as necessary, to ensure—

14 ‘‘(A) that the thermal energy output of a 

15 new qualifying cogeneration facility is used in a 

16 productive and beneficial manner; 

17 ‘‘(B) the electrical and thermal output of 

18 the cogeneration facility is used predominantly 

19 for commercial or industrial processes and not 

20 intended predominantly for sale to an electric 

21 utility; and–

22 ‘‘(C) continuing progress in the develop23 ment of efficient electric energy generating 

24 technology. 
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1 ‘‘(2) APPLICABILITY.—Any revisions made to 

2 operating and efficiency standards shall be applica3 ble only to a cogeneration facility that—

4 ‘‘(A) was not a qualifying cogeneration fa5 cility, or–

6 ‘‘(B) had not filed with the Commission a 

7 notice of self-certification or an application for 

8 Commission certification under 18 C.F.R. 

9 292.207

10 prior to the date of enactment of this subsection. 

11 ‘‘(3) DEFINITION.—For purposes of this sub12 section, the term ‘commercial processes’ includes 

13 uses of thermal and electric energy for educational 

14 and healthcare facilities. 

15 ‘‘(o) RULES FOR EXISTING FACILITIES.— Notwith16 standing rule revisions under subsection (n), the Commis17 sion’s rules in effect prior to the effective date of any re18 vised rules prescribed under subsection (n) shall continue 

19 to apply to any cogeneration facility or small power pro20 duction facility that—

21 ‘‘(1) was a qualifying cogeneration facility or a 

22 qualifying small power production facility, or 

23 ‘‘(2) had filed with the Commission a notice of 

24 self-certification or an application for Commission 

25 certification under 18 C.F.R. 292.207
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1 prior to the date of enactment of subsections (m) and 

2 (n).’’. 

3 (b) ELIMINATION OF OWNERSHIP LIMITATIONS.—

4 (1) Section 3(17)(C) of the Federal Power Act (16 U.S.C. 

5 796(17)(C)) is amended to read as follows: 

6 ‘‘(C) ‘qualifying small power production fa7 cility’ means a small power production facility 

8 that the Commission determines, by rule, meets 

9 such requirements (including requirements re10 specting minimum size, fuel use, and fuel effi11 ciency) as the Commission may, by rule, pre12 scribe.’’. 

13 (2) Section 3(18)(B) of the Federal Power Act (16 

14 U.S.C. 796(18)(B)) is amended to read as follows: 

15 ‘‘(B) ‘qualifying cogeneration facility’ 

16 means a cogeneration facility that the Commis17 sion determines, by rule, meets such require18 ments (including requirements respecting min19 imum size, fuel use, and fuel efficiency) as the 

20 Commission may, by rule, prescribe.’’. 

21 SEC. 16063. SMART METERING. 

22 (a) IN GENERAL.—Section 111(d) of the Public Utili23 ties Regulatory Policies Act of 1978 (16 U.S.C. 2621(d)) 

24 is amended by adding at the end the following: 
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1 ‘‘(13) TIME-BASED METERING AND COMMU2 NICATIONS.—(A) Not later than eighteen (18) 

3 months after the date of enactment of this para4 graph, each electric utility shall offer each of its cus5 tomer classes, and provide individual customers upon 

6 customer request, a time-based rate schedule under 

7 which the rate charged by the electric utility varies 

8 during different time periods and reflects the vari9 ance in the costs of generating and purchasing elec10 tricity at the wholesale level. The time-based rate 

11 schedule shall enable the electric consumer to man12 age energy use and cost through advanced metering 

13 and communications technology. 

14 ‘‘(B) The types of time-based rate schedules 

15 that may be offered under the schedule referred to 

16 in subparagraph (A) include, among others, each the 

17 following: 

18 ‘‘(i) Time-Of-Use pricing whereby elec19 tricity prices are set for a specific time period 

20 on an advance or forward basis, typically not 

21 changing more often than twice a year. Prices 

22 paid for energy consumed during these periods 

23 shall be pre-established and known to con24 sumers in advance of such consumption, allow25 ing them to vary their demand and usage in re-
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1 sponse to such prices and manage their energy 

2 costs by shifting usage to a lower cost period or 

3 reducing their consumption overall. 

4 ‘‘(ii) Critical Peak Pricing whereby time5 of-use prices are in effect except for certain 

6 peak days, when prices may reflect the costs of 

7 generating and purchasing electricity at the 

8 wholesale level and when consumers may receive 

9 additional discounts for reducing peak period 

10 energy consumption. 

11 ‘‘(iii) Real-Time pricing whereby electricity 

12 prices are set for a specific time period on an 

13 advanced or forward basis and may change as 

14 often as hourly. 

15 ‘‘(C) Each electric utility subject to subpara16 graph (A) shall provide each customer requesting a 

17 time-based rate with a time-based meter capable of 

18 enabling the utility and customer to offer and re19 ceive such rate, respectively. 

20 ‘‘(D) For purposes of implementing this para21 graph, any reference contained in this section to the 

22 date of enactment of the Public Utility Regulatory 

23 Policies Act of 1978 shall be deemed to be a ref24 erence to the date of enactment of this paragraph. 
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1 ‘‘(E) In a State that permits third-party mar2 keters to sell electric energy to retail electric con3 sumers, such consumers shall be entitled to receive 

4 that same time-based metering and communications 

5 device and service as a retail electric consumer of 

6 the electric utility. 

7 ‘‘(F) Notwithstanding subsections (b) and (c) of 

8 section 112, each State regulatory authority shall, 

9 not later than twelve (12) months after enactment 

10 of this paragraph conduct an investigation in accord11 ance with section 115(i) and issue a decision wheth12 er it is appropriate to implement the standards set 

13 out in subparagraphs (A) and (C).’’. 

14 (b) STATE INVESTIGATION OF DEMAND RESPONSE

15 AND TIME-BASED METERING.—

16 Section 115 of the Public Utilities Regulatory Poli17 cies Act of 1978 (16 U.S.C. 2625) is amended by adding 

18 the at the end the following: 

19 ‘‘(k) TIME-BASED METERING AND COMMUNICA20 TIONS.—Each State regulatory authority shall, not later 

21 than twelve (12) months after enactment of this sub22 section, conduct an investigation and issue a decision 

23 whether or not it is appropriate for electric utilities to pro24 vide and install time-based meters and communications 

25 devices for each of their customers which enable such cus-
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1 tomers to participate in time-based pricing rate schedules 

2 and other demand response programs.’’. 

3 (c) FEDERAL ASSISTANCE ON DEMAND RE4 SPONSE.—Section 132(a) of the Public Utility Regulatory 

5 Polices Act of 1978 (16 U.S.C. 2642(a)) is amended by 

6 striking ‘‘and’’ at the end of paragraph (3), striking the 

7 period at the end of paragraph (4) and inserting ‘‘; and’’, 

8 and by adding the following at the end thereof: 

9 ‘‘(5) technologies, techniques and rate-making 

10 methods related to advanced metering and commu11 nications and the use of these technologies, tech12 niques and methods in demand response programs.’’. 

13 (d) FEDERAL GUIDANCE.—Section 132 of the Public 

14 Utility Regulatory Policies Act of 1978 (16 U.S.C. 2643) 

15 is amended by adding the following at the end thereof: 

16 ‘‘(d) DEMAND RESPONSE.—The Secretary shall be 

17 responsible for each of the following: 

18 ‘‘(1) Educating consumers on the availability, 

19 advantages and benefits of advanced metering and 

20 communications technologies including the funding 

21 of demonstration or pilot projects. 

22 ‘‘(2) Working with States, utilities, other energy 

23 providers and advanced metering and communica24 tions experts to identify and address barriers to the 

25 adoption of demand response programs, and 
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1 ‘‘(3) Within 6 months of enactment, provide the 

2 Congress with a report that identifies and quantifies 

3 the national benefits of demand response and pro4 vides policy recommendations as to how to achieve 

5 specific levels of such benefits by January 1, 2005.’’. 

6 (e) DEMAND RESPONSE AND REGIONAL COORDINA7 TION.—

8 (1) POLICY.—It is the policy of the United 

9 States to encourage States to coordinate, on a re10 gional basis, State energy policies to provide reliable 

11 and affordable demand response services to the pub12 lic. 

13 (2) TECHNICAL ASSISTANCE.—The Secretary of 

14 Energy shall provide technical assistance to States 

15 and regional organizations formed by two or more 

16 States to assist them in—

17 (A) identifying the areas with the greatest 

18 demand response potential; 

19 (B) identifying and resolving problems in 

20 transmission and distribution networks, includ21 ing through the use of demand response; and 

22 (C) developing plans and programs to use 

23 demand response to respond to peak demand or 

24 emergency needs. 
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1 (3) REPORT.—The Federal Energy Regulatory 

2 Commission shall prepare and publish an annual re3 port, by appropriate region, that assesses demand 

4 response resources, including those available from all 

5 consumer classes, and which identifies and reviews 

6 each of the following: 

7 (A) Saturation and penetration rate of ad8 vanced meters and communications tech9 nologies, devices and systems. 

10 (B) Existing demand response programs 

11 and time-based rate programs. 

12 (C) The annual resource contribution of 

13 demand resources, including the prior year and 

14 following years. 

15 (D) The potential for demand response as 

16 a quantifiable, reliable resource for regional 

17 planning purposes. 

18 (E) Steps taken to ensure that, in regional 

19 transmission planning and operations, that de20 mand resources are provided equitable treat21 ment as a quantifiable, reliable resource relative 

22 to the resource obligations of any load-serving 

23 entity, transmission provider or transmitting 

24 party. 
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1 (f) COST RECOVERY OF DEMAND RESPONSE DE2 VICES.—It is the policy of the United States that time3 based pricing and other forms of demand response, where4 by electricity customers are provided with electricity price 

5 signals and the ability to benefit by responding to them, 

6 shall be encouraged and the deployment of such tech7 nology and devices that enable electricity customers to 

8 participate in such pricing and demand response systems 

9 shall be facilitated. It is further the policy of the United 

10 States that the benefits of such demand response that ac11 crue to those not deploying such technology and devices, 

12 but who are part of the same regional electricity entity, 

13 shall be recognized. 

14 Subtitle F—Renewable Energy 

15 SEC. 16071. NET METERING. 

16 (a) ADOPTION OF STANDARD.—Section 111(d) of the 

17 Public Utility Regulatory Policies Act of 1978 (16 U.S.C. 

18 2621(d)) is amended by adding at the end the following: 

19 ‘‘(14) NET METERING.—(A) Each electric util20 ity shall make available upon request net metering 

21 service to any electric consumer that the electric 

22 utility serves. 

23 ‘‘(B) For purposes of implementing this para24 graph, any reference contained in this section to the 

25 date of enactment of the Public Utility Regulatory 
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1 Policies Act of 1978 shall be deemed to be a ref2 erence to the date of enactment of this paragraph. 

3 ‘‘(C) Notwithstanding subsections (b) and (c) of 

4 section 112, each State regulatory authority shall 

5 consider and make a determination concerning 

6 whether it is appropriate to implement the standard 

7 set out in subparagraph (A) not later than 1 year 

8 after the date of enactment of this paragraph.’’. 

9 (b) SPECIAL RULES FOR NET METERING.—Section 

10 115 of the Public Utility Regulatory Policies Act of 1978 

11 (16 U.S.C. 2625) is amended by adding at the end the 

12 following: 

13 ‘‘(l) NET METERING.—In undertaking the consider14 ation and making the determination under section 111 

15 with respect to the standard concerning net metering es16 tablished by section 111(d)(14), the term ‘net metering 

17 service’ shall mean a service provided in accordance with 

18 the following standards: 

19 ‘‘(1) RATES AND CHARGES.—An electric util20 ity—

21 ‘‘(A) shall charge the owner or operator of 

22 an on-site generating facility rates and charges 

23 that are identical to those that would be 

24 charged other electric consumers of the electric 

25 utility in the same rate class; and 
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1 ‘‘(B) shall not charge the owner or oper2 ator of an on-site generating facility any addi3 tional standby, capacity, interconnection, or 

4 other rate or charge. 

5 ‘‘(2) MEASUREMENT.—An electric utility that 

6 sells electric energy to the owner or operator of an 

7 on-site generating facility shall measure the quantity 

8 of electric energy produced by the on-site facility 

9 and the quantity of electric energy consumed by the 

10 owner or operator of an on-site generating facility 

11 during a billing period in accordance with normal 

12 metering practices. 

13 ‘‘(3) ELECTRIC ENERGY SUPPLIED EXCEEDING

14 ELECTRIC ENERGY GENERATED.—If the quantity of 

15 electric energy sold by the electric utility to an on16 site generating facility exceeds the quantity of elec17 tric energy supplied by the on-site generating facility 

18 to the electric utility during the billing period, the 

19 electric utility may bill the owner or operator for the 

20 net quantity of electric energy sold, in accordance 

21 with normal metering practices. 

22 ‘‘(4) ELECTRIC ENERGY GENERATED EXCEED23 ING ELECTRIC ENERGY SUPPLIED.—If the quantity 

24 of electric energy supplied by the on-site generating 

25 facility to the electric utility exceeds the quantity of 
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1 electric energy sold by the electric utility to the on2 site generating facility during the billing period—

3 ‘‘(A) the electric utility may bill the owner 

4 or operator of the on-site generating facility for 

5 the appropriate charges for the billing period in 

6 accordance with paragraph (2); and 

7 ‘‘(B) the owner or operator of the on-site 

8 generating facility shall be credited for the ex9 cess kilowatt-hours generated during the billing 

10 period, with the kilowatt-hour credit appearing 

11 on the bill for the following billing period. 

12 ‘‘(5) SAFETY AND PERFORMANCE STAND13 ARDS.—An eligible on-site generating facility and 

14 net metering system used by an electric consumer 

15 shall meet all applicable safety, performance, reli16 ability, and interconnection standards established by 

17 the National Electrical Code, the Institute of Elec18 trical and Electronics Engineers, and Underwriters 

19 Laboratories. 

20 ‘‘(6) ADDITIONAL CONTROL AND TESTING RE21 QUIREMENTS.—The Commission, after consultation 

22 with State regulatory authorities and nonregulated 

23 electric utilities and after notice and opportunity for 

24 comment, may adopt, by rule, additional control and 

25 testing requirements for on-site generating facilities 
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1 and net metering systems that the Commission de2 termines are necessary to protect public safety and 

3 system reliability. 

4 ‘‘(7) DEFINITIONS.—For purposes of this sub5 section: 

6 ‘‘(A) The term ‘eligible on-site generating 

7 facility’ means—

8 ‘‘(i) a facility on the site of a residen9 tial electric consumer with a maximum 

10 generating capacity of 10 kilowatts or less 

11 that is fueled by solar energy, wind energy, 

12 or fuel cells; or 

13 ‘‘(ii) a facility on the site of a com14 mercial electric consumer with a maximum 

15 generating capacity of 500 kilowatts or 

16 less that is fueled solely by a renewable en17 ergy resource, landfill gas, or a high effi18 ciency system. 

19 ‘‘(B) The term ‘renewable energy resource’ 

20 means solar, wind, biomass, or geothermal en21 ergy. 

22 ‘‘(C) The term ‘high efficiency system’ 

23 means service fuel cells or combined heat and 

24 power. 
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1 ‘‘(D) The term ‘net metering’ means serv2 ice to an electric consumer under which electric 

3 energy generated by that electric consumer 

4 from an eligible on-site generating facility and 

5 delivered to the local distribution facilities may 

6 be used to offset electric energy provided by the 

7 electric utility to the electric consumer during 

8 the applicable billing period.’’

9 SEC. 16072. RENEWABLE ENERGY PRODUCTION INCENTIVE. 

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

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

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

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

14 ‘‘. If there are insufficient appropriations to make full pay15 ments for electric production from all qualified renewable 

16 energy facilities in any given year, the Secretary shall as17 sign 60 percent of appropriated funds for that year to fa18 cilities that use solar, wind, geothermal, or closed-loop 

19 (dedicated energy crops) biomass technologies to generate 

20 electricity, and assign the remaining 40 percent to other 

21 projects. The Secretary may, after transmitting to the 

22 Congress an explanation of the reasons therefor, alter the 

23 percentage requirements of the preceding sentence.’’. 
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1 (b) QUALIFIED RENEWABLE ENERGY FACILITY.—

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

3 U.S.C. 13317(b)) is amended—

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

5 all that follows through ‘‘nonprofit electrical cooper6 ative’’ and inserting ‘‘a not-for-profit electric cooper7 ative, a public utility described in section 115 of the 

8 Internal Revenue Code of 1986, a State, Common9 wealth, territory, or possession of the United States 

10 or the District of Columbia, or a political subdivision 

11 thereof, or an Indian tribal government of subdivi12 sion thereof,’’; and 

13 (2) by inserting ‘‘landfill gas,’’ after ‘‘wind, bio14 mass,’’. 

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

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

17 amended by striking ‘‘during the 10-fiscal year period be18 ginning with the first full fiscal year occurring after the 

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

20 1, 2003, and before October 1, 2013’’. 

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

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

23 is amended by inserting ‘‘landfill gas,’’ after ‘‘wind, bio24 mass,’’. 
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1 (e) SUNSET.—Section 1212(f) of the Energy Policy 

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

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

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

5 (f) AUTHORIZATION OF APPROPRIATIONS.—Section 

6 1212(g) of the Energy Policy Act of 1992 (42 U.S.C. 

7 13317(g)) is amended to read as follows: 

8 ‘‘(g) AUTHORIZATION OF APPROPRIATIONS.—

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

10 there are authorized to be appropriated such sums 

11 as may be necessary to carry out this section for fis12 cal years 2003 through 2023. 

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

14 available under paragraph (1) shall remain available 

15 until expended.’’. 

16 SEC. 16073. RENEWABLE ENERGY ON FEDERAL LANDS. 

17 (a) REPORT TO CONGRESS.—Within 24 months after 

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

19 Interior, in cooperation with the Secretary of Agriculture, 

20 shall develop and report to the Congress recommendations 

21 on opportunities to develop renewable energy on public 

22 lands under the jurisdiction of the Secretary of the Inte23 rior and National Forest System lands under the jurisdic24 tion of the Secretary of Agriculture. The report shall in25 clude—
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1 (1) 5-year plans developed by the Secretary of 

2 the Interior and the Secretary of Agriculture, re3 spectively, for encouraging the development of wind 

4 and solar energy consistent with applicable law and 

5 management plans; and 

6 (2) an analysis of—

7 (A) the use of rights-of-ways, leases, or 

8 other methods to develop wind and solar energy 

9 on such lands; 

10 (B) the anticipated benefits of grants, 

11 loans, tax credits, or other provisions to pro12 mote wind and solar energy development on 

13 such lands; and 

14 (C) any issues that the Secretary of the 

15 Interior or the Secretary of Agriculture have 

16 encountered in managing wind or solar energy 

17 projects on such lands, or believe are likely to 

18 arise in relation to the development of wind or 

19 solar energy on such lands; 

20 (3) a list, developed in consultation with the 

21 Secretary of Energy and the Secretary of Defense, 

22 of lands under the jurisdiction of the Department of 

23 Energy or Defense that would be suitable for devel24 opment for wind or solar energy, and any rec-
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1 ommended statutory and regulatory mechanisms for 

2 such development; and 

3 (4) any recommendations pertaining to the 

4 issues addressed in the report. 

5 (b) NATIONAL ACADEMY OF SCIENCES STUDY.—

6 (1) IN GENERAL.—Within 90 days after the 

7 date of the enactment of this Act, the Secretary of 

8 the Interior shall contract with the National Acad9 emy of Sciences to—

10 (A) study the potential for the development 

11 of wind, solar, and ocean energy on the Outer 

12 Continental Shelf; 

13 (B) assess existing Federal authorities for 

14 the development of such resources; and 

15 (C) recommend statutory and regulatory 

16 mechanisms for such development. 

17 (2) TRANSMITTAL OF RESULTS.—The results of 

18 the study shall be transmitted to the Congress with19 in 24 months after the date of the enactment of this 

20 Act.

21 SEC. 16074. ASSESSMENT OF RENEWABLE ENERGY RE22 SOURCES. 

23 (a) RESOURCE ASSESSMENT.—Not later than 3 

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

25 year thereafter, the Secretary of Energy shall review the 
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1 available assessments of renewable energy resources avail2 able within the United States, including solar, wind, bio3 mass, ocean, geothermal, and hydroelectric energy re4 sources, and undertake new assessments as necessary, 

5 taking into account changes in market conditions, avail6 able technologies, and other relevant factors. 

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

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

9 thereafter, the Secretary shall publish a report based on 

10 the assessment under subsection (a). The report shall con11 tain—

12 (1) a detailed inventory describing the available 

13 amount and characteristics of the renewable energy 

14 resources; and 

15 (2) such other information as the Secretary be16 lieves would be useful in developing such renewable 

17 energy resources, including descriptions of sur18 rounding terrain, population and load centers, near19 by energy infrastructure, location of energy and 

20 water resources, and available estimates of the costs 

21 needed to develop each resource, together with an 

22 identification of any barriers to providing adequate 

23 transmission for remote sources of renewable energy 

24 resources to current and emerging markets, rec25 ommendations for removing or addressing such bar-
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1 riers, and ways to provide access to the grid that do 

2 not unfairly disadvantage renewable or other energy 

3 producers. 

4 Subtitle G—Market Transparency, 

5 Round Trip Trading Prohibi6 tion, and Enforcement 

7 SEC. 16081. MARKET TRANSPARENCY RULES. 

8 Part II of the Federal Power Act is amended by add9 ing the following new section at the end thereof: 

10 ‘‘SEC. 219. MARKET TRANSPARENCY RULES. 

11 ‘‘(a) COMMISSION RULES.—Not later than 180 days 

12 after the date of enactment of this section, the Commis13 sion shall issue rules establishing an electronic information 

14 system to provide the Commission and the public with ac15 cess to such information as is necessary or appropriate 

16 to facilitate price transparency and participation in mar17 kets subject to the Commission’s jurisdiction. Such sys18 tems shall provide information about the availability and 

19 market price of sales of electric energy at wholesale in 

20 interstate commerce and transmission of electric energy 

21 in interstate commerce to the Commission, State commis22 sions, buyers and sellers of wholesale electric energy, users 

23 of transmission services, and the public on a timely basis. 

24 The Commission shall have authority to obtain such infor25 mation from any person, and any entity described in sec-
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1 tion 201(f), who sells electric energy at wholesale in inter2 state commerce or provides transmission services in inter3 state commerce. 

4 ‘‘(b) EXEMPTIONS.—The Commission shall exempt 

5 from disclosure information it determines would, if dis6 closed, (1) be detrimental to the operation of an effective 

7 market; or (2) jeopardize system security. This section 

8 shall not apply to an entity described in section 

9 212(k)(2)(B) with respect to transactions for the purchase 

10 or sale of wholesale electric energy and transmission serv11 ices within the area described in section 212(k)(2)(A).’’. 

12 SEC. 16082. PROHIBITION ON ROUND TRIP TRADING. 

13 Part II of the Federal Power Act is amended by add14 ing the following new section at the end thereof: 

15 ‘‘SEC. 220. PROHIBITION ON ROUND TRIP TRADING. 

16 ‘‘(a) PROHIBITION.—It shall be a violation of this Act 

17 for any person, and any entity described in section 201(f), 

18 willfully and knowingly to enter into any contract or other 

19 arrangement to execute a round-trip trade for the pur20 chase or sale of electric energy at wholesale. 

21 ‘‘(b) DEFINITION OF ROUND-TRIP TRADE.—For the 

22 purposes of this section, the term ‘round-trip trade’ means 

23 a transaction, or combination of transactions, in which a 

24 person or other entity—
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1 ‘‘(1) enters into a contract or other arrange2 ment to purchase from, or sell to, any other person 

3 or other entity electric energy at wholesale; 

4 ‘‘(2) simultaneously with entering into the con5 tract described in paragraph (1), arranges a finan6 cially offsetting trade with such other person or enti7 ty for the same quantity of electric energy so that, 

8 collectively, the purchase and sale transactions in 

9 themselves result in no financial gain or loss; and 

10 ‘‘(3) has a specific intent to distort reported 

11 revenues, trading volumes, or prices.’’. 

12 SEC. 16083. CONFORMING CHANGES. 

13 Section 201(e) of the Federal Power Act is amended 

14 by striking ‘‘or 212’’ and inserting ‘‘212, 215, 216, 217, 

15 218, 219, or 220’’. Section 201(b)(2) of such Act is 

16 amended by striking ‘‘and 212’’ and inserting ‘‘212, 215, 

17 216, 217, 218, 219, and 220’’. 

18 SEC. 16084. ENFORCEMENT. 

19 (a) COMPLAINTS.—Section 306 of the Federal Power 

20 Act (16 U.S.C. 825e) is amended by—

21 (1) inserting ‘‘electric utility,’’ after ‘‘Any per22 son,’’; and 

23 (2) inserting ‘‘, transmitting utility,’’ after ‘‘li24 censee’’ each place it appears. 
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1 (b) REVIEW OF COMMISSION ORDERS.—Section 

2 313(a) of the Federal Power Act (16 U.S.C. 8251) is 

3 amended by inserting ‘‘electric utility,’’ after ‘‘person,’’ in 

4 the first place it appears and by striking ‘‘any person un5 less such person’’ and inserting ‘‘any entity unless such 

6 entity’’. 

7 (c) CRIMINAL PENALTIES.—Section 316 of the Fed8 eral Power Act (16 U.S.C. 825o) is amended—

9 (1) in subsection (a), by striking ‘‘$5,000’’ and 

10 inserting ‘‘$1,000,000’’, and by striking ‘‘two years’’ 

11 and inserting ‘‘five years’’; 

12 (2) in subsection (b), by striking ‘‘$500’’ and 

13 inserting ‘‘$25,000’’; and 

14 (3) by striking subsection (c). 

15 (d) CIVIL PENALTIES.—Section 316A of the Federal 

16 Power Act (16 U.S.C. 825–1) is amended—

17 (1) in subsections (a) and (b), by striking ‘‘sec18 tion 211, 212, 213, or 214’’ each place it appears 

19 and inserting ‘‘Part II’’; and 

20 (2) in subsection (b), by striking ‘‘$10,000’’ 

21 and inserting ‘‘$1,000,000’’. 

22 Subtitle H—Consumer Protections 

23 SEC. 16091. REFUND EFFECTIVE DATE. 

24 Section 206(b) of the Federal Power Act (16 U.S.C. 

25 824e(b)) is amended by—
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1 (1) striking ‘‘the date 60 days after the filing 

2 of such complaint nor later than 5 months after the 

3 expiration of such 60-day period’’ in the second sen4 tence and inserting ‘‘the date of the filing of such 

5 complaint nor later than 5 months after the filing of 

6 such complaint’’; 

7 (2) striking ‘‘60 days after’’ in the third sen8 tence and inserting ‘‘of’’; 

9 (3) striking ‘‘expiration of such 60-day period’’ 

10 in the third sentence and inserting ‘‘publication 

11 date’’; and 

12 (4) in the fifth sentence after ‘‘rendered by the’’ 

13 insert ‘‘date 60 days after the’’. 

14 SEC. 16092. JURISDICTION OVER INTERSTATE SALES. 

15 (a) SCOPE OF AUTHORITY.—Section 206 of the Fed16 eral Power Act (16 U.S.C. 824e) is amended by adding 

17 the following new subsection at the end thereof: 

18 ‘‘(e)(1) If an entity that is not a public utility (includ19 ing an entity referred to in section 201(f)) voluntarily 

20 makes a spot market sale of electric energy and such sale 

21 violates Commission rules in effect at the time of such 

22 sale, such entity shall be subject to the Commission’s re23 fund authority under this section with respect to such vio24 lation. 
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1 ‘‘(2) This section shall not apply to any entity that 

2 is either—

3 ‘‘(A) an entity described in section 201(f); or 

4 ‘‘(B) a rural electric cooperative 

5 that does not sell more than 4,000,000 megawatt hours 

6 of electricity per year. 

7 ‘‘(3) For purposes of this subsection, the term ‘spot 

8 market sale’ means an agreement for the sale of electric 

9 energy at wholesale in interstate commerce that is for 24 

10 hours or less and that is entered into the day of, or the 

11 day prior to, delivery.’’. 

12 (b) CONFORMING AMENDMENTS.—(1) Section 206 of 

13 the Federal Power Act (16 U.S.C. 824e) is amended as 

14 follows: 

15 (A) In subsection (b), in the seventh sentence, 

16 by striking ‘‘the public utility to make’’. 

17 (B) In the first sentence of subsection (a), by 

18 striking ‘‘hearing had’’ and inserting ‘‘hearing held’’. 

19 (2) Section 201(b)(2) of such Act (16 U.S.C. 

20 824(b)(2)) is amended as follows: 

21 (A) In the first sentence by striking ‘‘sections 

22 210’’ and inserting ‘‘sections 206(f), 210’’. 

23 (B) In the second sentence by striking ‘‘section 

24 210’’ and inserting ‘‘section 206(f), 210,’’. 
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1 (3) Section 201(e) of the Federal Power Act is 

2 amended by striking ‘‘section 210’’ and inserting ‘‘section 

3 206(f), 210’’. 

4 (c) UNIFORM INVESTIGATION AUTHORITY.—Section 

5 307(a) of the Federal Power Act (16 U.S.C. 825f(a)) is 

6 amended as follows: 

7 (1) By inserting ‘‘, electric utility, transmitting 

8 utility, or other entity’’ after ‘‘person’’ each time it 

9 appears. 

10 (2) By striking the period at the end of the 

11 first sentence and inserting the following: ‘‘or in ob12 taining information about the sale of electric energy 

13 at wholesale in interstate commerce and the trans14 mission of electric energy in interstate commerce.’’. 

15 (d) SANCTITY OF CONTRACT.—(1) The Federal En16 ergy Regulatory Commission shall have no authority to ab17 rogate or modify any provision of a contract, except upon 

18 a finding, after notice and opportunity for a hearing, that 

19 such action is necessary to protect the public interest, un20 less such contract expressly provides for a different stand21 ard of review. 

22 (2) For purposes of this subsection, a contract is any 

23 agreement, in effect and subject to the jurisdiction of the 

24 Commission—
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1 (A) under section 4 of the Natural Gas Act or 

2 section 205 of the Federal Power Act; and 

3 (B) that is not for sales in an organized ex4 change or auction spot market. 

5 (3) This subsection shall not apply to any contract 

6 executed before the date of enactment of this section un7 less such contract is an interconnection agreement, nor 

8 shall this subsection affect the outcome in any proceeding 

9 regarding any contract for sales of electric power executed 

10 before the date of enactment of this section. 

11 SEC. 16093. CONSUMER PRIVACY. 

12 (a) IN GENERAL.—The Federal Trade Commission 

13 shall issue rules protecting the privacy of electric con14 sumers from the disclosure of consumer information ob15 tained in connection with the sale or delivery of electric 

16 energy to electric consumers. The Federal Trade Commis17 sion shall proceed in accordance with section 553 of title 

18 5, United States Code, when prescribing a rule under this 

19 section. 

20 (b) STATE AUTHORITY.—If the Federal Trade Com21 mission determines that a State’s regulations provide 

22 equivalent or greater protection than the provisions of this 

23 section, such State regulations shall apply in that State 

24 in lieu of the regulations issued by the Commission under 

25 this section. 
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1 SEC. 16094. UNFAIR TRADE PRACTICES. 

2 (a) SLAMMING.—The Federal Trade Commission 

3 shall issue rules prohibiting the change of selection of an 

4 electric utility except with the informed consent of the 

5 electric consumer or if approved by the appropriate State 

6 regulatory authority. 

7 (b) CRAMMING.—The Federal Trade Commission 

8 shall issue rules prohibiting the sale of goods and services 

9 to an electric consumer unless expressly authorized by law 

10 or the electric consumer. 

11 (c) RULEMAKING.—The Federal Trade Commission 

12 shall proceed in accordance with section 553 of title 5, 

13 United States Code, when prescribing a rule under this 

14 section. 

15 (d) STATE AUTHORITY.—If the Federal Trade Com16 mission determines that a State’s regulations provide 

17 equivalent or greater protection than the provisions of this 

18 section, such State regulations shall apply in that State 

19 in lieu of the regulations issued by the Commission under 

20 this section. 

21 Subtitle I—Merger Review Reform 

22 and Accountability 

23 SEC. 16101. MERGER REVIEW REFORM AND ACCOUNT24 ABILITY. 

25 (a) MERGER REVIEW REFORM.—Within 180 days 

26 after the date of enactment of this Act, the Secretary of 
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1 Energy, in consultation with the Federal Energy Regu2 latory Commission and the Department of Justice, shall 

3 prepare, and transmit to the Committee on Energy and 

4 Commerce of the House of Representatives and the Com5 mittee on Energy and Natural Resources of the Senate 

6 each of the following: 

7 (1) A study of the extent to which the authori8 ties vested in the Federal Energy Regulatory Com9 mission under section 203 of the Federal Power Act 

10 are duplicative of authorities vested in—

11 (A) other agencies of Federal and State 

12 government; and 

13 (B) the Federal Energy Regulatory Com14 mission, including under sections 205 and 206 

15 of the Federal Power Act. 

16 (2) Recommendations on reforms to the Fed17 eral Power Act that would eliminate any unneces18 sary duplication in the exercise of regulatory author19 ity or unnecessary delays in the approval (or dis20 approval) of applications for the sale, lease, or other 

21 disposition of public utility facilities. 

22 (b) MERGER REVIEW ACCOUNTABILITY.—Not later 

23 than 1 year after the date of enactment of this Act and 

24 annually thereafter, with respect to all orders issued with25 in the preceding year that impose a condition on a sale, 
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1 lease, or other disposition of public utility facilities under 

2 section 203(b) of the Federal Power Act, the Federal En3 ergy Regulatory Commission shall transmit a report to the 

4 Committee on Energy and Commerce of the House of 

5 Representatives and the Committee on Energy and Nat6 ural Resources of the Senate explaining each of the fol7 lowing: 

8 (1) The condition imposed. 

9 (2) Whether the Commission could have im10 posed such condition by exercising its authority 

11 under any provision of the Federal Power Act other 

12 than under section 203(b). 

13 (3) If the Commission could not have imposed 

14 such condition other than under section 203(b), why 

15 the Commission determined that such condition was 

16 consistent with the public interest.

17 Subtitle J—Study of Economic 

18 Dispatch 

19 SEC. 16111. STUDY ON THE BENEFITS OF ECONOMIC DIS20 PATCH. 

21 (a) STUDY.—The Secretary of Energy, in coordina22 tion and consultation with the States, shall conduct a 

23 study on—

24 (1) the procedures currently used by electric 

25 utilities to perform economic dispatch, 
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1 (2) identifying possible revisions to those proce2 dures to improve the ability of nonutility generation 

3 resources to offer their output for sale for the pur4 pose of inclusion in economic dispatch; and 

5 (3) the potential benefits to residential, com6 mercial, and industrial electricity consumers nation7 ally and in each state if economic dispatch proce8 dures were revised to improve the ability of non9 utility generation resources to offer their output for 

10 inclusion in economic dispatch. 

11 (b) DEFINITION.—The term ‘‘economic dispatch’’ 

12 when used in this section means the operation of genera13 tion facilities to produce energy at the lowest cost to reli14 ably serve consumers, recognizing any operational limits 

15 of generation and transmission facilities. 

16 (c) REPORT TO CONGRESS AND THE STATES.—Not 

17 later than 90 days after the date of enactment of this Act, 

18 and on a yearly basis following, the Secretary of Energy 

19 shall submit a report to the Congress and the States on 

20 the results of the study conducted under subsection (a), 

21 including recommendations to the Congress and the States 

22 for any suggested legislative or regulatory changes.
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1 TITLE VII—MOTOR FUELS 

2 Subtitle A—General Provisions 

3 SEC. 17101. RENEWABLE CONTENT OF MOTOR VEHICLE 

4 FUEL. 

5 (a) IN GENERAL.—Section 211 of the Clean Air Act 

6 (42 U.S.C. 7545) is amended—

7 (1) by redesignating subsection (o) as sub8 section (q); and 

9 (2) by inserting after subsection (n) the fol10 lowing: 

11 ‘‘(o) RENEWABLE FUEL PROGRAM.—

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

13 ‘‘(A) CELLULOSIC BIOMASS ETHANOL.—

14 The term ‘cellulosic biomass ethanol’ means 

15 ethanol derived from any lignocellulosic or 

16 hemicellulosic matter that is available on a re17 newable or recurring basis, including—

18 ‘‘(i) dedicated energy crops and trees; 

19 ‘‘(ii) wood and wood residues; 

20 ‘‘(iii) plants; 

21 ‘‘(iv) grasses; 

22 ‘‘(v) agricultural residues; 

23 ‘‘(vi) fibers; 
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1 ‘‘(vii) animal wastes, including poultry 

2 fats and poultry wastes, and other waste 

3 materials; and 

4 ‘‘(viii) municipal solid waste. 

5 ‘‘(B) RENEWABLE FUEL.—

6 ‘‘(i) IN GENERAL.—The term ‘renew7 able fuel’ means motor vehicle fuel that—

8 ‘‘(I)(aa) is produced from grain, 

9 starch, oilseeds, or other biomass; or 

10 ‘‘(bb) is natural gas produced 

11 from a biogas source, including a 

12 landfill, sewage waste treatment plant, 

13 feedlot, or other place where decaying 

14 organic material is found; and 

15 ‘‘(II) is used to replace or reduce 

16 the quantity of fossil fuel present in a 

17 fuel mixture used to operate a motor 

18 vehicle. 

19 ‘‘(ii) INCLUSION.—The term ‘renew20 able fuel’ includes cellulosic biomass eth21 anol and biodiesel (as defined in section 

22 312(f) of the Energy Policy Act of 1992 

23 (42 U.S.C. 13220(f)) and any blending 

24 components derived from renewable fuel 

25 (provided that only the renewable fuel por-
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1 tion of any such blending component shall 

2 be considered part of the applicable volume 

3 under the renewable fuel program estab4 lished by this subsection). 

5 ‘‘(C) SMALL REFINERY.—The term ‘small 

6 refinery’ means a refinery for which average ag7 gregate daily crude oil throughput for the cal8 endar year (as determined by dividing the ag9 gregate throughput for the calendar year by the 

10 number of days in the calendar year) does not 

11 exceed 75,000 barrels. 

12 ‘‘(2) RENEWABLE FUEL PROGRAM.—

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

14 from enactment of this provision, the Adminis15 trator shall promulgate regulations ensuring 

16 that gasoline sold or dispensed to consumers in 

17 the contiguous United States, on an annual av18 erage basis, contains the applicable volume of 

19 renewable fuel as specified in subparagraph 

20 (B). Regardless of the date of promulgation, 

21 such regulations shall contain compliance provi22 sions for refiners, blenders, and importers, as 

23 appropriate, to ensure that the requirements of 

24 this section are met, but shall not restrict where 

25 renewables can be used, or impose any per-gal-
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1 lon obligation for the use of renewables. If the 

2 Administrator does not promulgate such regula3 tions, the applicable percentage, on a volume 

4 percentage of gasoline basis, shall be 1.62 in 

5 2005. 

6 ‘‘(B) APPLICABLE VOLUME.—

7 ‘‘(i) CALENDAR YEARS 2005 THROUGH

8 2015.—For the purpose of subparagraph 

9 (A), the applicable volume for any of cal10 endar years 2005 through 2015 shall be 

11 determined in accordance with the fol12 lowing table:

Applicable volume of renewable fuel 

‘‘Calendar year: (In billions of gallons) 

2005 ..................................................................................... 2.7

2006 ..................................................................................... 2.7

2007 ..................................................................................... 2.9

2008 ..................................................................................... 2.9

2009 ..................................................................................... 3.4

2010 ..................................................................................... 3.4

2011 ..................................................................................... 3.4

2012 ..................................................................................... 4.2

2013 ..................................................................................... 4.2

2014 ..................................................................................... 4.2

2015 ..................................................................................... 5.0.

13 ‘‘(ii) CALENDAR YEAR 2016 AND

14 THEREAFTER.—For the purpose of sub15 paragraph (A), the applicable volume for 

16 calendar year 2016 and each calendar year 

17 thereafter shall be equal to the product ob18 tained by multiplying—
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1 ‘‘(I) the number of gallons of 

2 gasoline that the Administrator esti3 mates will be sold or introduced into 

4 commerce in the calendar year; and 

5 ‘‘(II) the ratio that—

6 ‘‘(aa) 5.0 billion gallons of 

7 renewable fuels; bears to 

8 ‘‘(bb) the number of gallons 

9 of gasoline sold or introduced 

10 into commerce in calendar year 

11 2015. 

12 ‘‘(3) APPLICABLE PERCENTAGES.—Not later 

13 than October 31 of each calendar year after 2002, 

14 the Administrator of the Energy Information Ad15 ministration shall provide the Administrator an esti16 mate of the volumes of gasoline sales in the United 

17 States for the coming calendar year. Based on such 

18 estimates, the Administrator shall, by November 30 

19 of each calendar year after 2003, determine and 

20 publish in the Federal Register, the renewable fuel 

21 obligation, on a volume percentage of gasoline basis, 

22 applicable to refiners, blenders, and importers, as 

23 appropriate, for the coming calendar year, to ensure 

24 that the requirements of paragraph (2) are met. For 

25 each calendar year, the Administrator shall establish 
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1 a single applicable percentage that applies to all par2 ties, and make provision to avoid redundant obliga3 tions. In determining the applicable percentages, the 

4 Administrator shall make adjustments to account for 

5 the use of renewable fuels by exempt small refineries 

6 during the previous year. 

7 ‘‘(4) CELLULOSIC BIOMASS ETHANOL.—For the 

8 purpose of paragraph (2), 1 gallon of cellulosic bio9 mass ethanol shall be considered to be the equivalent 

10 of 1.5 gallon of renewable fuel. 

11 ‘‘(5) CREDIT PROGRAM.—

12 ‘‘(A) IN GENERAL.—The regulations pro13 mulgated to carry out this subsection shall pro14 vide for the generation of an appropriate 

15 amount of credits by any person that refines, 

16 blends, or imports gasoline that contains a 

17 quantity of renewable fuel that is greater than 

18 the quantity required under paragraph (2). 

19 Such regulations shall provide for the genera20 tion of an appropriate amount of credits for 

21 biodiesel fuel. If a small refinery notifies the 

22 Administrator that it waives the exemption pro23 vided by this Act, the regulations shall provide 

24 for the generation of credits by the small refin-
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1 ery beginning in the year following such notifi2 cation. 

3 ‘‘(B) USE OF CREDITS.—A person that 

4 generates credits under subparagraph (A) may 

5 use the credits, or transfer all or a portion of 

6 the credits to another person, for the purpose 

7 of complying with paragraph (2). 

8 ‘‘(C) LIFE OF CREDITS.—A credit gen9 erated under this paragraph shall be valid to 

10 show compliance: 

11 ‘‘(i) in the calendar year in which the 

12 credit was generated or the next calendar 

13 year, or 

14 ‘‘(ii) in the calendar year in which the 

15 credit was generated or next two consecu16 tive calendar years if the Administrator 

17 promulgates regulations under paragraph 

18 (6). 

19 ‘‘(D) INABILITY TO PURCHASE SUFFICIENT

20 CREDITS.—The regulations promulgated to 

21 carry out this subsection shall include provi22 sions allowing any person that is unable to gen23 erate or purchase sufficient credits to meet the 

24 requirements under paragraph (2) to carry for25 ward a renewables deficit provided that, in the 
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1 calendar year following the year in which the 

2 renewables deficit is created, such person shall 

3 achieve compliance with the renewables require4 ment under paragraph (2), and shall generate 

5 or purchase additional renewables credits to off6 set the renewables deficit of the previous year. 

7 ‘‘(6) SEASONAL VARIATIONS IN RENEWABLE

8 FUEL USE.—

9 ‘‘(A) STUDY.—For each of calendar years 

10 2005 through 2015, the Administrator of the 

11 Energy Information Administration, shall con12 duct a study of renewable fuels blending to de13 termine whether there are excessive seasonal 

14 variations in the use of renewable fuels. 

15 ‘‘(B) REGULATION OF EXCESSIVE SEA16 SONAL VARIATIONS.—If, for any calendar year, 

17 the Administrator of the Energy Information 

18 Administration, based on the study under sub19 paragraph (A), makes the determinations speci20 fied in subparagraph (C), the Administrator 

21 shall promulgate regulations to ensure that 35 

22 percent or more of the quantity of renewable 

23 fuels necessary to meet the requirement of 

24 paragraph (2) is used during each of the peri-
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1 ods specified in subparagraph (D) of each sub2 sequent calendar year. 

3 ‘‘(C) DETERMINATIONS.—The determina4 tions referred to in subparagraph (B) are 

5 that—

6 ‘‘(i) less than 35 percent of the quan7 tity of renewable fuels necessary to meet 

8 the requirement of paragraph (2) has been 

9 used during one of the periods specified in 

10 subparagraph (D) of the calendar year; 

11 ‘‘(ii) a pattern of excessive seasonal 

12 variation described in clause (i) will con13 tinue in subsequent calendar years; and 

14 ‘‘(iii) promulgating regulations or 

15 other requirements to impose a 35% or 

16 more seasonal use of renewable fuels will 

17 not prevent or interfere with the attain18 ment of national ambient air quality stand19 ards or significantly increase the price of 

20 motor fuels to the consumer. 

21 ‘‘(D) PERIODS.—The two periods referred 

22 to in this paragraph are—

23 ‘‘(i) April through September; and 

24 ‘‘(ii) January through March and Oc25 tober through December. 
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1 ‘‘(E) EXCLUSIONS.—Renewable fuels 

2 blended or consumed in 2005 in a State which 

3 has received a waiver under section 209(b) shall 

4 not be included in the study in subparagraph 

5 (A). 

6 ‘‘(7) WAIVERS.—

7 ‘‘(A) IN GENERAL.—The Administrator, in 

8 consultation with the Secretary of Agriculture 

9 and the Secretary of Energy, may waive the re10 quirement of paragraph (2) in whole or in part 

11 on petition by one or more States by reducing 

12 the national quantity of renewable fuel required 

13 under this subsection—

14 ‘‘(i) based on a determination by the 

15 Administrator, after public notice and op16 portunity for comment, that implementa17 tion of the requirement would have a sig18 nificant and meaningful adverse impact on 

19 the economy or environment of a State, a 

20 region, or the United States, or will pre21 vent or interfere with the attainment of a 

22 national ambient air quality standard in 

23 any area of a State; or 

24 ‘‘(ii) based on a determination by the 

25 Administrator, after public notice and op-
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1 portunity for comment, that there is an in2 adequate domestic supply or distribution 

3 capacity to meet the requirement. 

4 ‘‘(B) PETITIONS FOR WAIVERS.—The Ad5 ministrator, in consultation with the Secretary 

6 of Agriculture and the Secretary of Energy, 

7 shall approve or disapprove a State petition for 

8 a waiver of the requirement of paragraph (2) 

9 within 90 days after the date on which the peti10 tion is received by the Administrator. If the Ad11 ministrator does not act to approve or dis12 approve a State petition for a waiver within 90 

13 days, the Administrator shall publish a notice 

14 setting forth the reasons for not acting within 

15 the required 90-day period. 

16 ‘‘(C) TERMINATION OF WAIVERS.—A waiv17 er granted under subparagraph (A) shall termi18 nate after 1 year, but may be renewed by the 

19 Administrator after consultation with the Sec20 retary of Agriculture and the Secretary of En21 ergy. 

22 ‘‘(8) STUDY AND WAIVER FOR INITIAL YEAR OF

23 PROGRAM.—Not later than 180 days from enact24 ment, the Secretary of Energy shall complete for the 

25 Administrator a study assessing whether the renew-
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1 able fuels requirement under paragraph (2) will like2 ly result in significant adverse consumer impacts in 

3 2005, on a national, regional or State basis. Such 

4 study shall evaluate renewable fuel supplies and 

5 prices, blendstock supplies, and supply and distribu6 tion system capabilities. Based on such study, the 

7 Secretary shall make specific recommendations to 

8 the Administrator regarding waiver of the require9 ments of paragraph (2), in whole or in part, to avoid 

10 any such adverse impacts. Within 270 days from en11 actment, the Administrator shall, consistent with the 

12 recommendations of the Secretary waive, in whole or 

13 in part, the renewable fuels requirement under para14 graph (2) by reducing the national quantity of re15 newable fuel required under this subsection in 2005. 

16 This provision shall not be interpreted as limiting 

17 the Administrator’s authority to waive the require18 ments of paragraph (2) in whole, or in part, under 

19 paragraph (7) or paragraph (9), pertaining to waiv20 ers. 

21 ‘‘(9) ASSESSMENT AND WAIVER.—The Sec22 retary of Energy, in consultation with the Adminis23 trator of the Environmental Protection Agency and 

24 the Secretary of Agriculture on his own motion, or 

25 upon petition of any State shall evaluate the require-
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1 ment of paragraph (2) and determine, prior to Janu2 ary 1, 2007, or prior to January 1 of any subse3 quent year in which the applicable volume of renew4 able fuel is increased under paragraph (2)(B), 

5 whether the requirement of paragraph (2), including 

6 the applicable volume of renewable fuel contained in 

7 paragraph (2)(B) should remain in effect, in whole 

8 or in part, during 2007 or any year or years subse9 quent to 2007. In evaluating the requirement of 

10 paragraph (2) and in making any determination 

11 under this section, the Secretary shall consider the 

12 best available information and data collected by ac13 cepted methods or best available means regarding—

14 ‘‘(A) the capacity of renewable fuel pro15 ducers to supply an adequate amount of renew16 able fuel at competitive prices to fulfill the re17 quirement in paragraph (2); 

18 ‘‘(B) the potential of the requirement in 

19 paragraph (2) to significantly raise the price of 

20 gasoline, food or heating oil for consumers in 

21 any significant area or region of the country 

22 above the price that would otherwise apply to 

23 such commodities in the absence of the require24 ment; 
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1 ‘‘(C) the potential of the requirement in 

2 paragraph (2) to interfere with the supply of 

3 fuel in any significant gasoline market or region 

4 of the country, including interference with the 

5 efficient operation of refiners, blenders, import6 ers, wholesale suppliers, and retail vendors of 

7 gasoline, and other motor fuels; and 

8 ‘‘(D) the potential of the requirement to 

9 cause or promote exceedences of Federal, State, 

10 or local air quality standards. 

11 If the Secretary determines, after public notice and 

12 the opportunity for comment, that the requirement 

13 of paragraph (2) would have significant and mean14 ingful adverse impact on the supply of fuel and re15 lated infrastructure or on the economy, environment, 

16 public health or environment of any significant area 

17 or region of the country, the Secretary may waive, 

18 in whole or in part, the requirement of paragraph 

19 (2) in any one year or period of years as well as re20 duce the applicable volume of renewable fuel con21 tained in paragraph (2)(B) in any one year or period 

22 of years. 

23 ‘‘(10) SMALL REFINERIES.—

24 ‘‘(A) IN GENERAL.—The requirement of 

25 paragraph (2) shall not apply to small refineries 
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1 until the first calendar year beginning more 

2 than 5 years after the first year set forth in the 

3 table in paragraph (2)(B)(i). Not later than De4 cember 31, 2006, the Secretary of Energy shall 

5 complete for the Administrator a study to de6 termine whether the requirement of paragraph 

7 (2) would impose a disproportionate economic 

8 hardship on small refineries. For any small re9 finery that the Secretary of Energy determines 

10 would experience a disproportionate economic 

11 hardship, the Administrator shall extend the 

12 small refinery exemption for such small refinery 

13 for no less than two additional years. 

14 ‘‘(B) ECONOMIC HARDSHIP.—

15 ‘‘(i) EXTENSION OF EXEMPTION.—A 

16 small refinery may at any time petition the 

17 Administrator for an extension of the ex18 emption from the requirement of para19 graph (2) for the reason of dispropor20 tionate economic hardship. In evaluating a 

21 hardship petition, the Administrator, in 

22 consultation with the Secretary of Energy, 

23 shall consider the findings of the study in 

24 addition to other economic factors. 
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1 ‘‘(ii) DEADLINE FOR ACTION ON PETI2 TIONS.—The Administrator shall act on 

3 any petition submitted by a small refinery 

4 for a hardship exemption not later than 90 

5 days after the receipt of the petition. 

6 ‘‘(C) CREDIT PROGRAM.—If a small refin7 ery notifies the Administrator that it waives the 

8 exemption provided by this Act, the regulations 

9 shall provide for the generation of credits by 

10 the small refinery beginning in the year fol11 lowing such notification. 

12 ‘‘(D) OPT-IN FOR SMALL REFINERS.—A 

13 small refinery shall be subject to the require14 ments of this section if it notifies the Adminis15 trator that it waives the exemption under sub16 paragraph (A).’’. 

17 (b) PENALTIES AND ENFORCEMENT.—Section 

18 211(d) of the Clean Air Act (42 U.S.C. 7545(d)) is 

19 amended—

20 (1) in paragraph (1)—

21 (A) in the first sentence, by striking ‘‘or 

22 (n)’’ each place it appears and inserting ‘‘(n) or 

23 (o)’’; and 

24 (B) in the second sentence, by striking ‘‘or 

25 (m)’’ and inserting ‘‘(m), or (o)’’; and 
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1 (2) in the first sentence of paragraph (2), by 

2 striking ‘‘and (n)’’ each place it appears and insert3 ing ‘‘(n), and (o)’’. 

4 (c) SURVEY OF RENEWABLE FUEL MARKET.—

5 (1) SURVEY AND REPORT.—Not later than De6 cember 1, 2006, and annually thereafter, the Admin7 istrator of the Environmental Protection Agency (in 

8 consultation with the Secretary of Energy acting 

9 through the Administrator of the Energy Informa10 tion Administration) shall—

11 (A) conduct, with respect to each conven12 tional gasoline use area and each reformulated 

13 gasoline use area in each State, a survey to de14 termine the market shares of—

15 (i) conventional gasoline containing 

16 ethanol; 

17 (ii) reformulated gasoline containing 

18 ethanol; 

19 (iii) conventional gasoline containing 

20 renewable fuel; and 

21 (iv) reformulated gasoline containing 

22 renewable fuel; and 

23 (B) submit to Congress, and make publicly 

24 available, a report on the results of the survey 

25 under subparagraph (A). 
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1 (2) RECORDKEEPING AND REPORTING RE2 QUIREMENTS.—The Administrator may require any 

3 refiner, blender, or importer to keep such records 

4 and make such reports as are necessary to ensure 

5 that the survey conducted under paragraph (1) is 

6 accurate. The Administrator shall rely, to the extent 

7 practicable, on existing reporting and recordkeeping 

8 requirements to avoid duplicative requirements. 

9 (3) APPLICABLE LAW.—Activities carried out 

10 under this subsection shall be conducted in a man11 ner designed to protect confidentiality of individual 

12 responses. 

13 (4) CALCULATION OF MARKET SHARES.—Mar14 ket shares for conventional gasoline and reformu15 lated gasoline use areas will be calculated on a state16 wide basis using information collected under para17 graph (2) and other information available to the Ad18 ministrator. Market share information may be based 

19 upon gasoline distribution patterns that include 

20 multistate use areas. 

21 SEC. 17102. FUELS SAFE HARBOR. 

22 (a) IN GENERAL.—Notwithstanding any other provi23 sion of Federal or State law, no renewable fuel, as defined 

24 by section 211(o)(1) of the Clean Air Act, or fuel con25 taining MTBE, used or intended to be used as a motor 
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1 vehicle fuel, nor any motor vehicle fuel containing such 

2 renewable fuel or MTBE, shall be deemed defective in de3 sign or manufacture by virtue of the fact that it is, or 

4 contains, such a renewable fuel or MTBE, if it does not 

5 violate a control or prohibition imposed by the Adminis6 trator under section 211 of such Act, and the manufac7 turer is in compliance with all requests for information 

8 under subsection (b) of such section 211(b) of the Clean 

9 Air Act. If the safe harbor provided by this section does 

10 not apply, the existence of a design defect or manufac11 turing defect shall be determined under otherwise applica12 ble law. Nothing in this paragraph shall be construed to 

13 affect the liability of any person for environmental remedi14 ation costs, drinking water contamination, negligence, 

15 public nuisance or any other liability other than liability 

16 for a defect in design or manufacture of a motor vehicle 

17 fuel. 

18 (b) EFFECTIVE DATE.—This section shall be effec19 tive as of the date of enactment and shall apply with re20 spect to all claims filed on or after that date. 

21 SEC. 17103. FINDINGS AND MTBE TRANSITION ASSISTANCE. 

22 (a) FINDINGS.—Congress finds that—

23 (1) since 1979, methyl tertiary butyl ether (re24 ferred to in this section as ‘‘MTBE’’) has been used 
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1 nationwide at low levels in gasoline to replace lead 

2 as an octane booster or anti-knocking agent; 

3 (2) Public Law 101–549 (commonly known as 

4 the ‘‘Clean Air Act Amendments of 1990’’) (42 

5 U.S.C. 7401 et seq.) established a fuel oxygenate 

6 standard under which reformulated gasoline must 

7 contain at least 2 percent oxygen by weight; 

8 (3) at the time of the adoption of the fuel oxy9 gen standard, Congress was aware that significant 

10 use of MTBE would result from the adoption of that 

11 standard, and that the use of MTBE would likely be 

12 important to the cost-effective implementation of 

13 that program; 

14 (4) Congress was aware that gasoline and its 

15 component additives can and do leak from storage 

16 tanks; 

17 (5) the fuel industry responded to the fuel oxy18 genate standard established by Public Law 101–549 

19 by making substantial investments in—

20 (A) MTBE production capacity; and 

21 (B) systems to deliver MTBE-containing 

22 gasoline to the marketplace; 

23 (6) Congress has—
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1 (A) reconsidered the relative value of the 

2 oxygenate requirement for reformulated gaso3 line; and 

4 (B) decided to provide for the elimination 

5 of the oxygenate requirement for reformulated 

6 gasoline and to provide for a renewable content 

7 requirement for motor fuel; and 

8 (7) it is appropriate for Congress to provide 

9 some limited transition assistance—

10 (A) to merchant producers of MTBE who 

11 produced MTBE in response to a market cre12 ated by the oxygenate requirement contained in 

13 the Clean Air Act; and 

14 (B) for the purpose of mitigating any fuel 

15 supply problems that may result from the elimi16 nation of the oxygenate requirement for refor17 mulated gasoline. 

18 (b) PURPOSES.—The purpose of this section is to 

19 provide assistance to merchant producers of MTBE in 

20 making the transition from producing MTBE to producing 

21 other fuel additives. 

22 (c) MTBE MERCHANT PRODUCER CONVERSION AS23 SISTANCE.—Section 211(c) of the Clean Air Act (42 

24 U.S.C. 7545(c)) is amended by adding at the end the fol25 lowing: 
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1 ‘‘(5) MTBE MERCHANT PRODUCER CONVER2 SION ASSISTANCE.—

3 ‘‘(A) IN GENERAL.—

4 ‘‘(i) GRANTS.—The Secretary of En5 ergy, in consultation with the Adminis6 trator, may make grants to merchant pro7 ducers of methyl tertiary butyl ether in the 

8 United States to assist the producers in 

9 the conversion of eligible production facili10 ties described in subparagraph (C) to the 

11 production of iso-octane and alkylates. 

12 ‘‘(ii) DETERMINATION.—The Admin13 istrator, in consultation with the Secretary 

14 of Energy, may determine that transition 

15 assistance for the production of iso-octane 

16 and alkylates is inconsistent with the pro17 visions of subparagraph (B) and, on that 

18 basis, may deny applications for grants au19 thorized by this provision. 

20 ‘‘(B) FURTHER GRANTS.—The Secretary 

21 of Energy, in consultation with the Adminis22 trator, may also further make grants to mer23 chant producers of MTBE in the United States 

24 to assist the producers in the conversion of eli25 gible production facilities described in subpara-
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1 graph (C) to the production of such other fuel 

2 additives that, consistent with this subsection—

3 ‘‘(i) unless the Administrator deter4 mines that such fuel additives may reason5 ably be anticipated to endanger public 

6 health or the environment; 

7 ‘‘(ii) have been registered and have 

8 been tested or are being tested in accord9 ance with the requirements of this section; 

10 and 

11 ‘‘(iii) will contribute to replacing gaso12 line volumes lost as a result of paragraph 

13 (5). 

14 ‘‘(C) ELIGIBLE PRODUCTION FACILI15 TIES.—A production facility shall be eligible to 

16 receive a grant under this paragraph if the pro17 duction facility—

18 ‘‘(i) is located in the United States; 

19 and 

20 ‘‘(ii) produced methyl tertiary butyl 

21 ether for consumption before April 1, 2003 

22 and ceased production at any time after 

23 the date of enactment. 

24 ‘‘(D) AUTHORIZATION OF APPROPRIA25 TIONS.—There is authorized to be appropriated 
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1 to carry out this paragraph $250,000,000 for 

2 each of fiscal years 2004 through 2006, to re3 main available until expended.’’.

4 (d) EFFECT ON STATE LAW.—The amendments 

5 made to the Clean Air Act by this title have no effect re6 garding any available authority of States to limit the use 

7 of methyl tertiary butyl ether in motor vehicle fuel.

8 SEC. 17104. ELIMINATION OF OXYGEN CONTENT REQUIRE9 MENT FOR REFORMULATED GASOLINE. 

10 (a) ELIMINATION.—

11 (1) IN GENERAL.—Section 211(k) of the Clean 

12 Air Act (42 U.S.C. 7545(k)) is amended—

13 (A) in paragraph (2)—

14 (i) in the second sentence of subpara15 graph (A), by striking ‘‘(including the oxy16 gen content requirement contained in sub17 paragraph (B))’’; 

18 (ii) by striking subparagraph (B); and 

19 (iii) by redesignating subparagraphs 

20 (C) and (D) as subparagraphs (B) and 

21 (C), respectively; 

22 (B) in paragraph (3)(A), by striking clause 

23 (v); 

24 (C) in paragraph (7)—

25 (i) in subparagraph (A)—
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1 (I) by striking clause (i); and 

2 (II) by redesignating clauses (ii) 

3 and (iii) as clauses (i) and (ii), respec4 tively; and 

5 (ii) in subparagraph (C)—

6 (I) by striking clause (ii); and 

7 (II) by redesignating clause (iii) 

8 as clause (ii); and 

9 (2) EFFECTIVE DATE.—The amendments made 

10 by paragraph (1) take effect 270 days after the date 

11 of enactment of this Act, except that such amend12 ments shall take effect upon enactment in any State 

13 that has received a waiver under section 209(b) of 

14 the Clean Air Act. 

15 (b) MAINTENANCE OF TOXIC AIR POLLUTANT EMIS16 SION REDUCTIONS.—Section 211(k)(1) of the Clean Air 

17 Act (42 U.S.C. 7545(k)(1)) is amended—

18 (1) by striking ‘‘Within 1 year after the enact19 ment of the Clean Air Act Amendments of 1990,’’ 

20 and inserting the following: 

21 ‘‘(A) IN GENERAL.—Not later than No22 vember 15, 1991,’’; and 

23 (2) by adding at the end the following: 
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1 ‘‘(B) MAINTENANCE OF TOXIC AIR POL2 LUTANT EMISSIONS REDUCTIONS FROM REFOR3 MULATED GASOLINE.—

4 ‘‘(i) DEFINITIONS.—In this subpara5 graph the term ‘PADD’ means a Petro6 leum Administration for Defense District. 

7 ‘‘(ii) REGULATIONS REGARDING EMIS8 SIONS OF TOXIC AIR POLLUTANTS.—Not 

9 later than 270 days after the date of en10 actment of this subparagraph the Adminis11 trator shall establish, for each refinery or 

12 importer, standards for toxic air pollutants 

13 from use of the reformulated gasoline pro14 duced or distributed by the refinery or im15 porter that maintain the reduction of the 

16 average annual aggregate emissions of 

17 toxic air pollutants for reformulated gaso18 line produced or distributed by the refinery 

19 or importer during calendar years 1999 

20 and 2000, determined on the basis of data 

21 collected by the Administrator with respect 

22 to the refinery or importer. 

23 ‘‘(iii) STANDARDS APPLICABLE TO

24 SPECIFIC REFINERIES OR IMPORTERS.—
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1 ‘‘(I) APPLICABILITY OF STAND2 ARDS.—For any calendar year, the 

3 standards applicable to a refinery or 

4 importer under clause (ii) shall apply 

5 to the quantity of gasoline produced 

6 or distributed by the refinery or im7 porter in the calendar year only to the 

8 extent that the quantity is less than 

9 or equal to the average annual quan10 tity of reformulated gasoline produced 

11 or distributed by the refinery or im12 porter during calendar years 1999 

13 and 2000. 

14 ‘‘(II) APPLICABILITY OF OTHER

15 STANDARDS.—For any calendar year, 

16 the quantity of gasoline produced or 

17 distributed by a refinery or importer 

18 that is in excess of the quantity sub19 ject to subclause (I) shall be subject 

20 to standards for toxic air pollutants 

21 promulgated under subparagraph (A) 

22 and paragraph (3)(B). 

23 ‘‘(iv) CREDIT PROGRAM.—The Admin24 istrator shall provide for the granting and 

25 use of credits for emissions of toxic air pol-
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1 lutants in the same manner as provided in 

2 paragraph (7). 

3 ‘‘(v) REGIONAL PROTECTION OF

4 TOXICS REDUCTION BASELINES.—

5 ‘‘(I) IN GENERAL.—Not later 

6 than 60 days after the date of enact7 ment of this subparagraph, and not 

8 later than April 1 of each calendar 

9 year that begins after that date of en10 actment, the Administrator shall pub11 lish in the Federal Register a report 

12 that specifies, with respect to the pre13 vious calendar year—

14 ‘‘(aa) the quantity of refor15 mulated gasoline produced that is 

16 in excess of the average annual 

17 quantity of reformulated gasoline 

18 produced in 1999 and 2000; and 

19 ‘‘(bb) the reduction of the 

20 average annual aggregate emis21 sions of toxic air pollutants in 

22 each PADD, based on retail sur23 vey data or data from other ap24 propriate sources. 
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1 ‘‘(II) EFFECT OF FAILURE TO

2 MAINTAIN AGGREGATE TOXICS RE3 DUCTIONS.—If, in any calendar year, 

4 the reduction of the average annual 

5 aggregate emissions of toxic air pol6 lutants in a PADD fails to meet or 

7 exceed the reduction of the average 

8 annual aggregate emissions of toxic 

9 air pollutants in the PADD in cal10 endar years 1999 and 2000, the Ad11 ministrator, not later than 90 days 

12 after the date of publication of the re13 port for the calendar year under sub14 clause (I), shall—

15 ‘‘(aa) identify, to the max16 imum extent practicable, the rea17 sons for the failure, including the 

18 sources, volumes, and character19 istics of reformulated gasoline 

20 that contributed to the failure; 

21 and 

22 ‘‘(bb) promulgate revisions 

23 to the regulations promulgated 

24 under clause (ii), to take effect 

25 not earlier than 180 days but not 
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1 later than 270 days after the 

2 date of promulgation, to provide 

3 that, notwithstanding clause 

4 (iii)(II), all reformulated gasoline 

5 produced or distributed at each 

6 refinery or importer shall meet 

7 the standards applicable under 

8 clause (ii) not later than April 1 

9 of the year following the report 

10 in subclause (II) and for subse11 quent years. 

12 ‘‘(vi) REGULATIONS TO CONTROL

13 HAZARDOUS AIR POLLUTANTS FROM

14 MOTOR VEHICLES AND MOTOR VEHICLE

15 FUELS.—Not later than July 1, 2004, the 

16 Administrator shall promulgate final regu17 lations to control hazardous air pollutants 

18 from motor vehicles and motor vehicle 

19 fuels, as provided for in section 80.1045 of 

20 title 40, Code of Federal Regulations (as 

21 in effect on the date of enactment of this 

22 subparagraph).’’. 

23 (c) CONSOLIDATION IN REFORMULATED GASOLINE

24 REGULATIONS.—Not later than 180 days after the date 

25 of enactment of this Act, the Administrator shall revise 
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1 the reformulated gasoline regulations under subpart D of 

2 part 80 of title 40, Code of Federal Regulations, to con3 solidate the regulations applicable to VOC-Control Re4 gions 1 and 2 under section 80.41 of that title by elimi5 nating the less stringent requirements applicable to gaso6 line designated for VOC-Control Region 2 and instead ap7 plying the more stringent requirements applicable to gaso8 line designated for VOC-Control Region 1. 

9 (d) SAVINGS CLAUSE.—Nothing in this section is in10 tended to affect or prejudice either any legal claims or ac11 tions with respect to regulations promulgated by the Ad12 ministrator prior to enactment of this Act regarding emis13 sions of toxic air pollutants from motor vehicles or the 

14 adjustment of standards applicable to a specific refinery 

15 or importer made under such prior regulations and the 

16 Administrator may apply such adjustments to the stand17 ards applicable to such refinery or importer under clause 

18 (iii)(I) of section 211(k)(1)(B) of the Clean Air Act, ex19 cept that— 

20 (1) the Administrator shall revise such adjust21 ments to be based only on calendar years 1999–

22 2000, and 

23 (2) for adjustments based on toxic air pollutant 

24 emissions from reformulated gasoline significantly 

25 below the national annual average emissions of toxic 
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1 air pollutants from all reformulated gasoline, the 

2 Administrator may revise such adjustments to take 

3 account of the scope of any lawful and enforceable 

4 Federal or State prohibition on methyl tertiary butyl 

5 ether imposed after the effective date of the enact6 ment of this paragraph, except that any such adjust7 ment shall require such refiner or importer, to the 

8 greatest extent practicable, to maintain the reduc9 tion achieved during calendar year 1999–2000 in the 

10 average annual aggregate emissions of toxic air pol11 lutants from reformulated gasoline produced or dis12 tributed by the refinery or importer. Any such ad13 justment shall not be made at a level below the aver14 age percentage of reductions of emissions of toxic air 

15 pollutants for reformulated gasoline supplied to 

16 PADD I during calendar years 1999–2000. 

17 SEC. 17105. ANALYSES OF MOTOR VEHICLE FUEL CHANGES. 

18 Section 211 of the Clean Air Act (42 U.S.C. 7545) 

19 is amended by inserting after subsection (o) the following: 

20 ‘‘(p) ANALYSES OF MOTOR VEHICLE FUEL CHANGES

21 AND EMISSIONS MODEL.—

22 ‘‘(1) ANTI-BACKSLIDING ANALYSIS.—

23 ‘‘(A) DRAFT ANALYSIS.—Not later than 4 

24 years after the date of enactment of this para25 graph, the Administrator shall publish for pub-
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1 lic comment a draft analysis of the changes in 

2 emissions of air pollutants and air quality due 

3 to the use of motor vehicle fuel and fuel addi4 tives resulting from implementation of the 

5 amendments made by title VII of the Energy 

6 Policy Act of 2003. 

7 ‘‘(B) FINAL ANALYSIS.—After providing a 

8 reasonable opportunity for comment but not 

9 later than 5 years after the date of enactment 

10 of this paragraph, the Administrator shall pub11 lish the analysis in final form. 

12 ‘‘(2) EMISSIONS MODEL.—For the purposes of 

13 this subsection, as soon as the necessary data are 

14 available, the Administrator shall develop and final15 ize an emissions model that reasonably reflects the 

16 effects of gasoline characteristics or components on 

17 emissions from vehicles in the motor vehicle fleet 

18 during calendar year 2005.’’. 

19 SEC. 17106. DATA COLLECTION. 

20 Section 205 of the Department of Energy Organiza21 tion Act (42 U.S.C. 7135) is amended by adding at the 

22 end the following: 

23 ‘‘(m) RENEWABLE FUELS SURVEY.—(1) In order to 

24 improve the ability to evaluate the effectiveness of the Na25 tion’s renewable fuels mandate, the Administrator shall 
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1 conduct and publish the results of a survey of renewable 

2 fuels demand in the motor vehicle fuels market in the 

3 United States monthly, and in a manner designed to pro4 tect the confidentiality of individual responses. In con5 ducting the survey, the Administrator shall collect infor6 mation both on a national and regional basis, including—

7 ‘‘(A) the quantity of renewable fuels produced; 

8 ‘‘(B) the quantity of renewable fuels blended; 

9 ‘‘(C) the quantity of renewable fuels imported; 

10 ‘‘(D) the quantity of renewable fuels demanded; 

11 ‘‘(E) market price data; and 

12 ‘‘(F) such other analyses or evaluations as the 

13 Administrator finds is necessary to achieve the pur14 poses of this section. 

15 ‘‘(2) The Administrator shall also collect or estimate 

16 information both on a national and regional basis, pursu17 ant to subparagraphs (A) through (F) of paragraph (1), 

18 for the five years prior to implementation of this sub19 section. 

20 ‘‘(3) This subsection does not affect the authority of 

21 the Administrator to collect data under section 52 of the 

22 Federal Energy Administration Act of 1974 (15 U.S.C. 

23 790a).’’. 
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1 SEC. 17107. FUEL SYSTEM REQUIREMENTS HARMONI2 ZATION STUDY. 

3 (a) STUDY.—

4 (1) IN GENERAL.—The Administrator of the 

5 Environmental Protection Agency and the Secretary 

6 of Energy shall jointly conduct a study of Federal, 

7 State, and local requirements concerning motor vehi8 cle fuels, including—

9 (A) requirements relating to reformulated 

10 gasoline, volatility (measured in Reid vapor 

11 pressure), oxygenated fuel, and diesel fuel; and 

12 (B) other requirements that vary from 

13 State to State, region to region, or locality to 

14 locality. 

15 (2) REQUIRED ELEMENTS.—The study shall as16 sess—

17 (A) the effect of the variety of require18 ments described in paragraph (1) on the supply, 

19 quality, and price of motor vehicle fuels avail20 able to consumers in various States and local21 ities; 

22 (B) the effect of the requirements de23 scribed in paragraph (1) on achievement of—

24 (i) national, regional, and local air 

25 quality standards and goals; and 
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1 (ii) related environmental and public 

2 health protection standards and goals; 

3 (C) the effect of Federal, State, and local 

4 motor vehicle fuel regulations, including mul5 tiple motor vehicle fuel requirements, on—

6 (i) domestic refineries; 

7 (ii) the fuel distribution system; and 

8 (iii) industry investment in new capac9 ity; 

10 (D) the effect of the requirements de11 scribed in paragraph (1) on emissions from ve12 hicles, refineries, and fuel handling facilities; 

13 (E) the feasibility of developing national or 

14 regional motor vehicle fuel slates for the 48 

15 contiguous States that, while improving air 

16 quality at the national, regional and local levels 

17 consistent with the attainment of national am18 bient air quality standards, could—

19 (i) enhance flexibility in the fuel dis20 tribution infrastructure and improve fuel 

21 fungibility; 

22 (ii) reduce price volatility and costs to 

23 consumers and producers; 

24 (iii) provide increased liquidity to the 

25 gasoline market; and 
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1 (iv) enhance fuel quality, consistency, 

2 and supply; 

3 (F) the feasibility of providing incentives, 

4 to promote cleaner burning motor vehicle fuel; 

5 and 

6 (G) the extent to which improvements in 

7 air quality and any increases or decreases in 

8 the price of motor fuel can be projected to re9 sult from the Environmental Protection Agen10 cy’s Tier II requirements for conventional gaso11 line and vehicle emission systems, the reformu12 lated gasoline program, the renewable content 

13 requirements established by this subtitle, State 

14 programs regarding gasoline volatility, and any 

15 other requirements imposed by States or local16 ities affecting the composition of motor fuel. 

17 (b) REPORT.—

18 (1) IN GENERAL.—Not later than December 31, 

19 2006, the Administrator of the Environmental Pro20 tection Agency and the Secretary of Energy shall 

21 submit to Congress a report on the results of the 

22 study conducted under subsection (a). 

23 (2) RECOMMENDATIONS.—
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1 (A) IN GENERAL.—The report shall con2 tain recommendations for legislative and admin3 istrative actions that may be taken—

4 (i) to improve air quality; 

5 (ii) to reduce costs to consumers and 

6 producers; and 

7 (iii) to increase supply liquidity. 

8 (B) REQUIRED CONSIDERATIONS.—The 

9 recommendations under subparagraph (A) shall 

10 take into account the need to provide advance 

11 notice of required modifications to refinery and 

12 fuel distribution systems in order to ensure an 

13 adequate supply of motor vehicle fuel in all 

14 States. 

15 (3) CONSULTATION.—In developing the report, 

16 the Administrator of the Environmental Protection 

17 Agency and the Secretary of Energy shall consult 

18 with—

19 (A) the Governors of the States; 

20 (B) automobile manufacturers; 

21 (C) motor vehicle fuel producers and dis22 tributors; and 

23 (D) the public.
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1 SEC. 17108. COMMERCIAL BYPRODUCTS FROM MUNICIPAL 

2 SOLID WASTE LOAN GUARANTEE PROGRAM. 

3 (a) DEFINITION OF MUNICIPAL SOLID WASTE.—In 

4 this section, the term ‘‘municipal solid waste’’ has the 

5 meaning given the term ‘‘solid waste’’ in section 1004 of 

6 the Solid Waste Disposal Act (42 U.S.C. 6903). 

7 (b) ESTABLISHMENT OF PROGRAM.—The Secretary 

8 of Energy shall establish a program to provide guarantees 

9 of loans by private institutions for the construction of fa10 cilities for the processing and conversion of municipal solid 

11 waste into fuel ethanol and other commercial byproducts. 

12 (c) REQUIREMENTS.—The Secretary may provide a 

13 loan guarantee under subsection (b) to an applicant if—

14 (1) without a loan guarantee, credit is not 

15 available to the applicant under reasonable terms or 

16 conditions sufficient to finance the construction of a 

17 facility described in subsection (b); 

18 (2) the prospective earning power of the appli19 cant and the character and value of the security 

20 pledged provide a reasonable assurance of repayment 

21 of the loan to be guaranteed in accordance with the 

22 terms of the loan; and 

23 (3) the loan bears interest at a rate determined 

24 by the Secretary to be reasonable, taking into ac25 count the current average yield on outstanding obli-
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1 gations of the United States with remaining periods 

2 of maturity comparable to the maturity of the loan. 

3 (d) CRITERIA.—In selecting recipients of loan guar4 antees from among applicants, the Secretary shall give 

5 preference to proposals that—

6 (1) meet all applicable Federal and State per7 mitting requirements; 

8 (2) are most likely to be successful; and 

9 (3) are located in local markets that have the 

10 greatest need for the facility because of—

11 (A) the limited availability of land for 

12 waste disposal; or 

13 (B) a high level of demand for fuel ethanol 

14 or other commercial byproducts of the facility. 

15 (e) MATURITY.—A loan guaranteed under subsection 

16 (b) shall have a maturity of not more than 20 years. 

17 (f) TERMS AND CONDITIONS.—The loan agreement 

18 for a loan guaranteed under subsection (b) shall provide 

19 that no provision of the loan agreement may be amended 

20 or waived without the consent of the Secretary. 

21 (g) ASSURANCE OF REPAYMENT.—The Secretary 

22 shall require that an applicant for a loan guarantee under 

23 subsection (b) provide an assurance of repayment in the 

24 form of a performance bond, insurance, collateral, or other 
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1 means acceptable to the Secretary in an amount equal to 

2 not less than 20 percent of the amount of the loan. 

3 (h) GUARANTEE FEE.—The recipient of a loan guar4 antee under subsection (b) shall pay the Secretary an 

5 amount determined by the Secretary to be sufficient to 

6 cover the administrative costs of the Secretary relating to 

7 the loan guarantee. 

8 (i) FULL FAITH AND CREDIT.—The full faith and 

9 credit of the United States is pledged to the payment of 

10 all guarantees made under this section. Any such guar11 antee made by the Secretary shall be conclusive evidence 

12 of the eligibility of the loan for the guarantee with respect 

13 to principal and interest. The validity of the guarantee 

14 shall be incontestable in the hands of a holder of the guar15 anteed loan. 

16 (j) REPORTS.—Until each guaranteed loan under this 

17 section has been repaid in full, the Secretary shall annu18 ally submit to Congress a report on the activities of the 

19 Secretary under this section. 

20 (k) AUTHORIZATION OF APPROPRIATIONS.—There 

21 are authorized to be appropriated such sums as are nec22 essary to carry out this section. 

23 (l) TERMINATION OF AUTHORITY.—The authority of 

24 the Secretary to issue a loan guarantee under subsection 
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1 (b) terminates on the date that is 10 years after the date 

2 of enactment of this Act.

3 Subtitle B—MTBE Cleanup 

4 SEC. 17201. FUNDING FOR MTBE CONTAMINATION. 

5 Notwithstanding any other provision of law, there is 

6 authorized to be appropriated to the Administrator of the 

7 United States Environmental Protection Agency from the 

8 Leaking Underground Storage Tank Trust Fund not more 

9 than $850,000,000 to be used for taking such action lim10 ited to site assessment (including exposure assessment), 

11 corrective action, inspection of underground storage tank 

12 systems, and groundwater monitoring as the Adminis13 trator deems necessary to protect human health, welfare, 

14 and the environment from underground storage tank re15 leases of fuel containing fuel oxygenates.

16 TITLE VIII—AUTOMOBILE 

17 EFFICIENCY 

18 SEC. 18001. AUTHORIZATION OF APPROPRIATIONS FOR IM19 PLEMENTATION AND ENFORCEMENT OF 

20 FUEL ECONOMY STANDARDS. 

21 In addition to any other funds authorized by law, 

22 there are authorized to be appropriated to the National 

23 Highway Traffic Safety Administration to implement and 

24 enforce average fuel economy standards $5,000,000 for 

25 fiscal years 2004 through 2006. 
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1 SEC. 18002. STUDY OF FEASIBILITY AND EFFECTS OF RE2 DUCING USE OF FUEL FOR AUTOMOBILES. 

3 (a) IN GENERAL.—Not later than 30 days after the 

4 date of the enactment of this Act, the Administrator of 

5 the National Highway Traffic Safety Administration shall 

6 study the feasibility and effects of reducing by model year 

7 2012, by a significant percentage, the use of fuel for auto8 mobiles. 

9 (b) SUBJECTS OF STUDY.—The study under this sec10 tion shall include—

11 (1) examination of, and recommendation of al12 ternatives to, the policy under current Federal law 

13 of establishing average fuel economy standards for 

14 automobiles and requiring each automobile manufac15 turer to comply with average fuel economy standards 

16 that apply to the automobiles it manufactures; 

17 (2) examination of how automobile manufactur18 ers could contribute toward achieving the reduction 

19 referred to in subsection (a); 

20 (3) examination of the potential of fuel cell 

21 technology in motor vehicles in order to determine 

22 the extent to which such technology may contribute 

23 to achieving the reduction referred to in subsection 

24 (a); and 

25 (4) examination of the effects of the reduction 

26 referred to in subsection (a) on—
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1 (A) gasoline supplies; 

2 (B) the automobile industry, including 

3 sales of automobiles manufactured in the 

4 United States; 

5 (C) motor vehicle safety; and 

6 (D) air quality. 

7 (c) REPORT.—The Administrator shall submit to the 

8 Congress a report on the findings, conclusion, and rec9 ommendations of the study under this section by not later 

10 than 1 year after the date of the enactment of this Act.

11 DIVISION B—SCIENCE 

12 SEC. 20001. PURPOSES. 

13 The purposes of this division are to—

14 (1) contribute to a national energy strategy 

15 through an energy research and development pro16 gram that supports basic energy research and pro17 vides mechanisms to develop, demonstrate, and pro18 mote the commercial application of new energy tech19 nologies in partnership with industry; 

20 (2) protect and strengthen the Nation’s econ21 omy, standard of living, and national security by re22 ducing dependence on imported energy; 

23 (3) meet future needs for energy services at the 

24 lowest total cost to the Nation, giving balanced and 

25 comprehensive consideration to technologies that im-
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1 prove the efficiency of energy end uses and that en2 hance energy supply; 

3 (4) reduce the environmental impacts of energy 

4 production, distribution, transportation, and use; 

5 (5) help increase domestic production of energy, 

6 increase the availability of hydrocarbon reserves, and 

7 lower energy prices; and 

8 (6) stimulate economic growth and enhance the 

9 ability of United States companies to compete in fu10 ture markets for advanced energy technologies. 

11 SEC. 20002. GOALS. 

12 (a) IN GENERAL.—In order to achieve the purposes 

13 of this division, the Secretary shall conduct a balanced set 

14 of programs of energy research, development, demonstra15 tion, and commercial application, guided by the following 

16 goals: 

17 (1) ENERGY EFFICIENCY.—

18 (A) BUILDINGS.—Develop, in partnership 

19 with industry, technologies, designs, and pro20 duction methods that will enable an average 25 

21 percent increase by 2010 in the energy effi22 ciency of all new buildings, as compared to a 

23 new building in 1996. 

24 (B) INDUSTRY.—Develop, in partnership 

25 with industry, technologies, designs, and pro-
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1 duction methods that will enable the energy in2 tensity of the major energy-consuming indus3 tries to improve by at least 25 percent by 2010 

4 as compared to 1991. 

5 (C) VEHICLES.—Develop, in partnership 

6 with industry, technologies that will enable—

7 (i) by 2010, mid-sized passenger auto8 mobiles with a fuel economy of 80 miles 

9 per gallon; 

10 (ii) by 2010, light trucks (classes 1 

11 and 2a) with a fuel economy of 60 miles 

12 per gallon; 

13 (iii) by 2010, medium trucks and 

14 buses (classes 2b through 6 and class 8 

15 transit buses) with a fuel economy, in ton16 miles per gallon for trucks and passenger 

17 miles per gallon for buses, that is 3 times 

18 that of year 2000 equivalent vehicles; 

19 (iv) by 2010, heavy trucks (classes 7 

20 and 8) with a fuel economy, in ton-miles 

21 per gallon, that is 2 times that of year 

22 2000 equivalent vehicles; and 

23 (v) by 2020, meeting the goal of the 

24 President’s Hydrogen Initiative. 
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1 (2) DISTRIBUTED ENERGY AND ELECTRIC EN2 ERGY SYSTEMS.—

3 (A) DISTRIBUTED GENERATION.—Develop, 

4 in partnership with industry, technologies based 

5 on natural gas that achieve electricity gener6 ating efficiencies greater than 40 percent by 

7 2015 for on-site, or distributed, generation 

8 technologies. 

9 (B) ELECTRIC ENERGY SYSTEMS AND

10 STORAGE.—Develop, in partnership with indus11 try—

12 (i) technologies for generators and 

13 transmission, distribution, and storage sys14 tems that combine high capacity with high 

15 efficiency (particularly for electric trans16 mission facilities in rural and remote 

17 areas); 

18 (ii) new transmission and distribution 

19 technologies, including flexible alternating 

20 current transmission systems, composite 

21 conductor materials, advanced protection 

22 devices, and controllers; 

23 (iii) technologies for interconnection 

24 of distributed energy resources with elec25 tric power systems; 
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1 (iv) high-temperature superconducting 

2 materials for power delivery equipment 

3 such as transmission and distribution ca4 bles, transformers, and generators; and

5 (v) real-time transmission and dis6 tribution system control technologies that 

7 provide for continual exchange of informa8 tion between generation, transmission, dis9 tribution, and end-user facilities. 

10 (3) RENEWABLE ENERGY.—

11 (A) WIND POWER.—Develop, in partner12 ship with industry, technologies and designs 

13 that will—

14 (i) reduce the cost of wind power by 

15 40 percent by 2012 as compared to 2000; 

16 and 

17 (ii) expand utilization of class 3 and 4 

18 winds. 

19 (B) PHOTOVOLTAICS.—Develop, in part20 nership with industry, total photovoltaic sys21 tems with installed costs of $5,000 per peak kil22 owatt by 2005 and $2000 per peak kilowatt by 

23 2015. 

24 (C) SOLAR THERMAL SYSTEMS.—Develop, 

25 in partnership with industry, solar power tech-
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1 nologies (including baseload solar power) that 

2 combine high-efficiency and high-temperature 

3 receivers with advanced thermal storage and 

4 power cycles to accommodate peak loads and 

5 reduce lifecycle costs. 

6 (D) GEOTHERMAL ENERGY.—Develop, in 

7 partnership with industry, technologies and 

8 processes based on advanced hydrothermal sys9 tems and advanced heat and power systems, in10 cluding geothermal or ground source heat pump 

11 technology, with a specific focus on—

12 (i) improving exploration and charac13 terization technology to increase the prob14 ability of drilling successful wells from 20 

15 percent to 40 percent by 2010; 

16 (ii) reducing the cost of drilling by 

17 2008 to an average cost of $225 per foot; 

18 (iii) developing enhanced geothermal 

19 systems technology with the potential to 

20 double the usable geothermal resource 

21 base, as compared to the date of enact22 ment of this Act; and 

23 (iv) reducing the cost of installing the 

24 ground loop of ground-source heat pumps 
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1 by 30 percent by 2007 compared to the 

2 cost in 2000. 

3 (E) BIOMASS-BASED POWER SYSTEMS.—

4 Develop, in partnership with industry, inte5 grated power generating systems, advanced con6 version, and feedstock technologies capable of 

7 producing electric power that is cost-competitive 

8 with fossil-fuel generated electricity by 2010, 

9 through co-production of fuels, chemicals, and 

10 other products under subparagraph (F). 

11 (F) BIOFUELS.—Develop, in partnership 

12 with industry, new and emerging technologies 

13 and biotechnology processes capable of mak14 ing—

15 (i) gaseous and liquid biofuels that 

16 are price-competitive, by 2010, with gaso17 line or diesel in either internal combustion 

18 engines or fuel cells; and 

19 (ii) biofuels, biobased polymers, and 

20 chemicals, including those derived from 

21 lignocellulosic feedstock, with particular 

22 emphasis on developing biorefineries that 

23 use enzyme-based processing systems. 

24 (G) HYDROPOWER.—Develop, in partner25 ship with industry, a new generation of turbine 
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1 technologies that will increase generating capac2 ity and be less damaging to fish and aquatic 

3 ecosystems. 

4 (4) FOSSIL ENERGY.— 

5 (A) POWER GENERATION.—Develop, in 

6 partnership with industry, technologies, includ7 ing precombustion technologies, by 2015 with 

8 the capability of realizing—

9 (i) electricity generating efficiencies of 

10 75 percent (lower heating value) for nat11 ural gas; and 

12 (ii) widespread commercial application 

13 of combined heat and power with thermal 

14 efficiencies of more than 85 percent (high15 er heating value). 

16 (B) OFFSHORE OIL AND GAS RE17 SOURCES.—Develop, in partnership with indus18 try, technologies to—

19 (i) extract methane hydrates in coast20 al waters of the United States; and 

21 (ii) develop natural gas and oil re22 serves in the ultra-deepwater of the Cen23 tral and Western Gulf of Mexico, with a 

24 focus on improving, while lowering costs 
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1 and reducing environmental impacts, the 

2 safety and efficiency of—

3 (I) the recovery of ultra-deep4 water resources; and 

5 (II) sub-sea production tech6 nology used for such recovery. 

7 (C) ONSHORE OIL AND GAS RESOURCES.—

8 Advance the science and technology available to 

9 domestic onshore petroleum producers, particu10 larly independent producers of oil or gas, 

11 through—

12 (i) advances in technology for explo13 ration and production of domestic petro14 leum resources, particularly those not ac15 cessible with current technology; 

16 (ii) improvement in the ability to ex17 tract hydrocarbons (including heavy oil) 

18 from known reservoirs and classes of res19 ervoirs; and 

20 (iii) development of technologies and 

21 practices that reduce the impact on the en22 vironment from petroleum exploration and 

23 production. 
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1 (D) TRANSPORTATION FUELS.—Increase 

2 the availability of transportation fuels by focus3 ing research on—

4 (i) reducing the cost of producing 

5 transportation fuels from coal and natural 

6 gas; and 

7 (ii) indirect liquefaction of coal and 

8 biomass. 

9 (5) NUCLEAR ENERGY.—

10 (A) EXISTING REACTORS.—Support re11 search to extend the lifetimes of existing United 

12 States nuclear power reactors, and increase 

13 their reliability while optimizing their current 

14 operations for greater efficiencies. 

15 (B) ADVANCED REACTORS.—Develop, in 

16 partnership with industry—

17 (i) advanced, efficient, lower cost, and 

18 passively safe reactor designs; 

19 (ii) proliferation-resistant and high20 burn-up nuclear fuels; and 

21 (iii) technologies to minimize genera22 tion of radioactive materials and improve 

23 the management of nuclear waste. 

24 (C) NUCLEAR SCIENTISTS AND ENGI25 NEERS.—Attract new students and faculty to 
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1 the nuclear sciences, nuclear engineering, and 

2 related fields (including health physics, nuclear 

3 medicine, nuclear chemistry, and 

4 radiochemistry). 

5 (6) HYDROGEN.—Carry out programs related 

6 to hydrogen in the Fossil Fuel Program and the Nu7 clear Energy Program. 

8 (b) REVIEW AND ASSESSMENT OF GOALS.—

9 (1) EVALUATION AND MODIFICATION.—Based 

10 on amounts appropriated and developments in 

11 science and technology, the Secretary shall evaluate 

12 the goals set forth in subsection (a) at least once 

13 every 5 years, and shall report to the Congress any 

14 proposed modifications to the goals. 

15 (2) CONSULTATION.—In evaluating and pro16 posing modifications to the goals as provided in 

17 paragraph (1), the Secretary shall solicit public 

18 input. 

19 (3) PUBLIC COMMENT.—(A) After consultation 

20 under paragraph (2), the Secretary shall publish in 

21 the Federal Register a set of draft modifications to 

22 the goals for public comment. 

23 (B) Not later than 60 days after the date of 

24 publication of draft modifications under subpara25 graph (A), and after consideration of any public 
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1 comments received, the Secretary shall publish the 

2 final modifications, including a summary of the pub3 lic comments received, in the Federal Register. 

4 (4) EFFECTIVE DATE.—No modification to 

5 goals under this section shall take effect before the 

6 date which is 5 years after the date of enactment of 

7 this Act. 

8 (c) EFFECT OF GOALS.—(1) Nothing in paragraphs 

9 (1) through (6) of subsection (a), or any subsequent modi10 fication to the goals therein pursuant to subsection (b), 

11 shall—

12 (A) create any new—

13 (i) authority for any Federal agency; or 

14 (ii) requirement for any other person; 

15 (B) be used by a Federal agency to support the 

16 establishment of regulatory standards or regulatory 

17 requirements; or 

18 (C) alter the authority of the Secretary to make 

19 grants or other awards. 

20 (2) Nothing in this subsection shall be construed to 

21 limit the authority of the Secretary to impose conditions 

22 on grants or other awards based on the goals in subsection 

23 (a) or any subsequent modification thereto. 

24 SEC. 20003. DEFINITIONS. 

25 For purposes of this division: 
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1 (1) DEPARTMENT.—The term ‘‘Department’’ 

2 means the Department of Energy. 

3 (2) DEPARTMENTAL MISSION.—The term ‘‘de4 partmental mission’’ means any of the functions 

5 vested in the Secretary of Energy by the Depart6 ment of Energy Organization Act (42 U.S.C. 7101 

7 et seq.) or other law. 

8 (3) INDEPENDENT PRODUCER OF OIL OR

9 GAS.—

10 (A) IN GENERAL.—The term ‘‘independent 

11 producer of oil or gas’’ means any person who 

12 produces oil or gas other than a person to 

13 whom subsection (c) of section 613A of the In14 ternal Revenue Code of 1986 does not apply by 

15 reason of paragraph (2) (relating to certain re16 tailers) or paragraph (4) (relating to certain re17 finers) of section 613A(d) of such Code. 

18 (B) RULES FOR APPLYING PARAGRAPHS (2)

19 AND (4) OF SECTION 613A(d).—For purposes of 

20 subparagraph (A), paragraphs (2) and (4) of 

21 section 613A(d) of the Internal Revenue Code 

22 of 1986 shall be applied by substituting ‘‘cal23 endar year’’ for ‘‘taxable year’’ each place it ap24 pears in such paragraphs. 
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1 (4) INSTITUTION OF HIGHER EDUCATION.—The 

2 term ‘‘institution of higher education’’ has the 

3 meaning given that term in section 101(a) of the 

4 Higher Education Act of 1965 (20 U.S.C. 1001(a)). 

5 (5) JOINT VENTURE.—The term ‘‘joint ven6 ture’’ has the meaning given that term under section 

7 2 of the National Cooperative Research and Produc8 tion Act of 1993 (15 U.S.C. 4301). 

9 (6) NATIONAL LABORATORY.—The term ‘‘Na10 tional Laboratory’’ means any of the following lab11 oratories owned by the Department: 

12 (A) Ames National Laboratory. 

13 (B) Argonne National Laboratory. 

14 (C) Brookhaven National Laboratory. 

15 (D) Fermi National Laboratory. 

16 (E) Idaho National Engineering and Envi17 ronmental Laboratory. 

18 (F) Lawrence Berkeley National Labora19 tory. 

20 (G) Lawrence Livermore National Labora21 tory. 

22 (H) Los Alamos National Laboratory. 

23 (I) National Energy Technology Labora24 tory. 
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1 (J) National Renewable Energy Labora2 tory. 

3 (K) Oak Ridge National Laboratory. 

4 (L) Pacific Northwest National Labora5 tory. 

6 (M) Princeton Plasma Physics Laboratory. 

7 (N) Sandia National Laboratories.

8 (O) Thomas Jefferson National Accel9 erator Facility. 

10 (7) NONMILITARY ENERGY LABORATORY.—The 

11 term ‘‘nonmilitary energy laboratory’’ means any of 

12 the following laboratories of the Department: 

13 (A) Ames National Laboratory. 

14 (B) Argonne National Laboratory. 

15 (C) Brookhaven National Laboratory. 

16 (D) Fermi National Laboratory. 

17 (E) Lawrence Berkeley National Labora18 tory. 

19 (F) Oak Ridge National Laboratory. 

20 (G) Pacific Northwest National Labora21 tory. 

22 (H) Princeton Plasma Physics Laboratory. 

23 (I) Stanford Linear Accelerator Center. 

24 (J) Thomas Jefferson National Accelerator 

25 Facility. 
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1 (8) SECRETARY.—The term ‘‘Secretary’’ means 

2 the Secretary of Energy. 

3 (9) SINGLE-PURPOSE RESEARCH FACILITY.—

4 The term ‘‘single-purpose research facility’’ means 

5 any of the following primarily single-purpose entities 

6 owned by the Department: 

7 (A) East Tennessee Technology Park. 

8 (B) Fernald Environmental Management 

9 Project. 

10 (C) Kansas City Plant. 

11 (D) Nevada Test Site. 

12 (E) New Brunswick Laboratory. 

13 (F) Pantex Weapons Facility. 

14 (G) Savannah River Technology Center. 

15 (H) Stanford Linear Accelerator Center. 

16 (I) Y–12 facility at Oak Ridge National 

17 Laboratory. 

18 (J) Waste Isolation Pilot Plant. 

19 (K) Any other similar organization of the 

20 Department designated by the Secretary that 

21 engages in technology transfer, partnering, or 

22 licensing activities. 
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1 TITLE I—RESEARCH AND 

2 DEVELOPMENT 

3 Subtitle A—Energy Efficiency 

4 PART 1—AUTHORIZATION OF APPROPRIATIONS 

5 SEC. 21101. ENERGY EFFICIENCY. 

6 (a) IN GENERAL.—The following sums are author7 ized to be appropriated to the Secretary for energy effi8 ciency and conservation research, development, dem9 onstration, and commercial application activities, includ10 ing activities authorized under this subtitle: 

11 (1) For fiscal year 2004, $616,000,000. 

12 (2) For fiscal year 2005, $695,000,000. 

13 (3) For fiscal year 2006, $772,000,000. 

14 (4) For fiscal year 2007, $865,000,000. 

15 (b) ALLOCATIONS.—From amounts authorized under 

16 subsection (a), the following sums are authorized: 

17 (1) LIGHTING SYSTEMS.—For activities under 

18 section 21111, $50,000,000 for each of fiscal years 

19 2004 through 2007. 

20 (2) ELECTRIC MOTOR CONTROL TECH21 NOLOGY.—For activities under section 21122, 

22 $2,000,000 for each of fiscal years 2004 through 

23 2007. 
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1 (3) SECONDARY ELECTRIC VEHICLE BATTERY

2 USE PROGRAM.—For activities under section 

3 21132—

4 (A) for fiscal year 2004, $4,000,000; 

5 (B) for fiscal year 2005, $7,000,000; 

6 (C) for fiscal year 2006, $7,000,000; and 

7 (D) for fiscal year 2007, $7,000,000. 

8 (4) ENERGY EFFICIENCY SCIENCE INITIA9 TIVE.—For activities under section 21141—

10 (A) for fiscal year 2004, $20,000,000; 

11 (B) for fiscal year 2005, $25,000,000; 

12 (C) for fiscal year 2006, $30,000,000; and 

13 (D) for fiscal year 2007, $35,000,000. 

14 (c) EXTENDED AUTHORIZATION.—There are author15 ized to be appropriated to the Secretary for activities 

16 under section 21111, $50,000,000 for each of fiscal years 

17 2008 through 2012. 

18 (d) LIMITS ON USE OF FUNDS.—None of the funds 

19 authorized to be appropriated under this section may be 

20 used for—

21 (1) the promulgation and implementation of en22 ergy efficiency regulations; 

23 (2) the Weatherization Assistance Program 

24 under part A of title IV of the Energy Conservation 

25 and Production Act; 
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1 (3) the State Energy Program under part D of 

2 title III of the Energy Policy and Conservation Act; 

3 or 

4 (4) the Federal Energy Management Program 

5 under part 3 of title V of the National Energy Con6 servation Policy Act. 

7 PART 2—LIGHTING SYSTEMS

8 SEC. 21111. NEXT GENERATION LIGHTING INITIATIVE. 

9 (a) IN GENERAL.—The Secretary shall carry out a 

10 Next Generation Lighting Initiative in accordance with 

11 this section to support research, development, demonstra12 tion, and commercial application activities related to ad13 vanced solid-state lighting technologies based on white 

14 light emitting diodes. 

15 (b) OBJECTIVES.—The objectives of the initiative 

16 shall be—

17 (1) to develop, by 2012, advanced solid-state 

18 lighting technologies based on white light emitting 

19 diodes that, compared to incandescent and fluores20 cent lighting technologies, are—

21 (A) longer lasting; 

22 (B) more energy-efficient; and 

23 (C) cost-competitive; 
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1 (2) to develop an inorganic white light emitting 

2 diode that has an efficiency of 160 lumens per watt 

3 and a 10-year lifetime; and 

4 (3) to develop an organic white light emitting 

5 diode with an efficiency of 100 lumens per watt with 

6 a 5-year lifetime that—

7 (A) illuminates over a full color spectrum; 

8 (B) covers large areas over flexible sur9 faces; and 

10 (C) does not contain harmful pollutants, 

11 such as mercury, typical of fluorescent lamps. 

12 (c) FUNDAMENTAL RESEARCH.—

13 (1) CONSORTIUM.—The Secretary shall carry 

14 out the fundamental research activities of the Next 

15 Generation Lighting Initiative through a private 

16 consortium (which may include private firms, trade 

17 associations and institutions of higher education), 

18 which the Secretary shall select through a competi19 tive process. Each proposed consortium shall submit 

20 to the Secretary such information as the Secretary 

21 may require, including a program plan agreed to by 

22 all participants of the consortium. 

23 (2) JOINT VENTURE.—The consortium shall be 

24 structured as a joint venture among the participants 
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1 of the consortium. The Secretary shall serve on the 

2 governing council of the consortium. 

3 (3) ELIGIBILITY.—To be eligible to be selected 

4 as the consortium under paragraph (1), an applicant 

5 must be broadly representative of United States 

6 solid-state lighting research, development, and man7 ufacturing expertise as a whole. 

8 (4) GRANTS.—(A) The Secretary shall award 

9 grants for fundamental research to the consortium, 

10 which the consortium may disburse to researchers, 

11 including those who are not participants of the con12 sortium. 

13 (B) To receive a grant, the consortium must 

14 provide a description to the Secretary of the pro15 posed research and list the parties that will receive 

16 funding. 

17 (C) Grants shall be matched by the consortium 

18 pursuant to section 21802. 

19 (5) NATIONAL LABORATORIES.—National Lab20 oratories may participate in the research described 

21 in this section, and may receive funds from the con22 sortium. 

23 (6) INTELLECTUAL PROPERTY.—Participants in 

24 the consortium and the Federal Government shall 

25 have royalty-free nonexclusive rights to use intellec-
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1 tual property derived from research funded pursuant 

2 to this subsection. 

3 (d) DEVELOPMENT, DEMONSTRATION, AND COM4 MERCIAL APPLICATION.—The Secretary shall carry out 

5 the development, demonstration, and commercial applica6 tion activities of the Next Generation Lighting Initiative 

7 through awards to private firms, trade associations, and 

8 institutions of higher education. In selecting awardees, the 

9 Secretary may give preference to members of the consor10 tium selected pursuant to subsection (c). 

11 (e) PLANS AND ASSESSMENTS.—(1) The consortium 

12 shall formulate an annual operating plan which shall in13 clude research priorities, technical milestones, and plans 

14 for technology transfer, and which shall be subject to ap15 proval by the Secretary. 

16 (2) The Secretary shall enter into an arrangement 

17 with the National Academy of Sciences to conduct periodic 

18 reviews of the Next Generation Lighting Initiative. The 

19 Academy shall review the research priorities, technical 

20 milestones, and plans for technology transfer established 

21 under paragraph (1) and evaluate the progress toward 

22 achieving them. The Secretary shall consider the results 

23 of such reviews in evaluating the plans submitted under 

24 paragraph (1). 
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1 (f) AUDIT.—The Secretary shall retain an inde2 pendent, commercial auditor to perform an audit of the 

3 consortium to determine the extent to which the funds au4 thorized by this section have been expended in a manner 

5 consistent with the purposes of this section. The auditor 

6 shall transmit a report annually to the Secretary, who 

7 shall transmit the report to the Congress, along with a 

8 plan to remedy any deficiencies cited in the report. 

9 (g) SUNSET.—The Next Generation Lighting Initia10 tive shall terminate no later than September 30, 2013. 

11 (h) DEFINITIONS.—As used in this section: 

12 (1) ADVANCED SOLID-STATE LIGHTING.—The 

13 term ‘‘advanced solid-state lighting’’ means a 

14 semiconducting device package and delivery system 

15 that produces white light using externally applied 

16 voltage. 

17 (2) FUNDAMENTAL RESEARCH.—The term 

18 ‘‘fundamental research’’ includes basic research on 

19 both solid-state materials and manufacturing proc20 esses. 

21 (3) INORGANIC WHITE LIGHT EMITTING

22 DIODE.—The term ‘‘inorganic white light emitting 

23 diode’’ means an inorganic semiconducting package 

24 that produces white light using externally applied 

25 voltage. 
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1 (4) ORGANIC WHITE LIGHT EMITTING DIODE.—

2 The term ‘‘organic white light emitting diode’’ 

3 means an organic semiconducting compound that 

4 produces white light using externally applied voltage. 

5 PART 3—BUILDINGS

6 SEC. 21121. NATIONAL BUILDING PERFORMANCE INITIA7 TIVE. 

8 (a) INTERAGENCY GROUP.—Not later than 3 months 

9 after the date of enactment of this Act, the Director of 

10 the Office of Science and Technology Policy shall establish 

11 an interagency group to develop, in coordination with the 

12 advisory committee established under subsection (e), a 

13 National Building Performance Initiative (in this section 

14 referred to as the ‘‘Initiative’’). The interagency group 

15 shall be cochaired by appropriate officials of the Depart16 ment and the Department of Commerce, who shall jointly 

17 arrange for the provision of necessary administrative sup18 port to the group. 

19 (b) INTEGRATION OF EFFORTS.—The Initiative, 

20 working with the National Institute of Building Sciences, 

21 shall integrate Federal, State, and voluntary private sector 

22 efforts to reduce the costs of construction, operation, 

23 maintenance, and renovation of commercial, industrial, in24 stitutional, and residential buildings. 
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1 (c) PLAN.—Not later than 1 year after the date of 

2 enactment of this Act, the interagency group shall submit 

3 to Congress a plan for carrying out the appropriate Fed4 eral role in the Initiative. The plan shall be based on whole 

5 building principles and shall include—

6 (1) research, development, demonstration, and 

7 commercial application of systems and materials for 

8 new construction and retrofit relating to the building 

9 envelope and building system components; and 

10 (2) the collection, analysis, and dissemination of 

11 research results and other pertinent information on 

12 enhancing building performance to industry, govern13 ment entities, and the public. 

14 (d) DEPARTMENT OF ENERGY ROLE.—Within the 

15 Federal portion of the Initiative, the Department shall be 

16 the lead agency for all aspects of building performance re17 lated to use and conservation of energy. 

18 (e) ADVISORY COMMITTEE.—

19 (1) ESTABLISHMENT.—The Director of the Of20 fice of Science and Technology Policy shall establish 

21 an advisory committee to—

22 (A) analyze and provide recommendations 

23 on potential private sector roles and participa24 tion in the Initiative; and 
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1 (B) review and provide recommendations 

2 on the plan described in subsection (c). 

3 (2) MEMBERSHIP.—Membership of the advisory 

4 committee shall include representatives with a broad 

5 range of appropriate expertise, including expertise 

6 in—

7 (A) building research and technology; 

8 (B) architecture, engineering, and building 

9 materials and systems; and 

10 (C) the residential, commercial, and indus11 trial sectors of the construction industry. 

12 (f) CONSTRUCTION.—Nothing in this section provides 

13 any Federal agency with new authority to regulate build14 ing performance. 

15 SEC. 21122. ELECTRIC MOTOR CONTROL TECHNOLOGY. 

16 The Secretary shall conduct a research, development, 

17 demonstration, and commercial application program on 

18 advanced control devices to improve the energy efficiency 

19 of electric motors used in heating, ventilation, air condi20 tioning, and comparable systems. 

21 PART 4—VEHICLES 

22 SEC. 21131. DEFINITIONS. 

23 For purposes of this part, the term—

24 (1) ‘‘battery’’ means an energy storage device 

25 that previously has been used to provide motive 
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1 power in a vehicle powered in whole or in part by 

2 electricity; and 

3 (2) ‘‘associated equipment’’ means equipment 

4 located where the batteries will be used that is nec5 essary to enable the use of the energy stored in the 

6 batteries. 

7 SEC. 21132. ESTABLISHMENT OF SECONDARY ELECTRIC VE8 HICLE BATTERY USE PROGRAM. 

9 (a) PROGRAM.—The Secretary shall establish and 

10 conduct a research, development, demonstration, and com11 mercial application program for the secondary use of bat12 teries. Such program shall be—

13 (1) designed to demonstrate the use of batteries 

14 in secondary application, including utility and com15 mercial power storage and power quality; 

16 (2) structured to evaluate the performance, in17 cluding useful service life and costs, of such bat18 teries in field operations, and evaluate the necessary 

19 supporting infrastructure, including reuse and dis20 posal of batteries; and 

21 (3) coordinated with ongoing secondary battery 

22 use programs at the National Laboratories and in 

23 industry. 

24 (b) SOLICITATION.—(1) Not later than 6 months 

25 after the date of the enactment of this Act, the Secretary 
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1 shall solicit proposals to demonstrate the secondary use 

2 of batteries and associated equipment and supporting in3 frastructure in geographic locations throughout the 

4 United States. The Secretary may make additional solici5 tations for proposals if the Secretary determines that such 

6 solicitations are necessary to carry out this section. 

7 (2)(A) Proposals submitted in response to a solicita8 tion under this section shall include—

9 (i) a description of the project, including the 

10 batteries to be used in the project, the proposed lo11 cations and applications for the batteries, the num12 ber of batteries to be demonstrated, and the type, 

13 characteristics, and estimated life-cycle costs of the 

14 batteries compared to other energy storage devices 

15 currently used; 

16 (ii) the contribution, if any, of State or local 

17 governments and other persons to the demonstration 

18 project; 

19 (iii) the type of associated equipment and sup20 porting infrastructure to be demonstrated; and 

21 (iv) any other information the Secretary con22 siders appropriate. 

23 (B) If the proposal includes a lease arrangement, the 

24 proposal shall indicate the terms of such lease arrange25 ment for the batteries and associated equipment. 
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1 (c) SELECTION OF PROPOSALS.—(1)(A) The Sec2 retary shall, not later than 3 months after the closing date 

3 established by the Secretary for receipt of proposals under 

4 subsection (b), select at least 5 proposals to receive finan5 cial assistance under this section. 

6 (B) No one project selected under this section shall 

7 receive more than 25 percent of the funds authorized 

8 under this section. No more than 3 projects selected under 

9 this section shall demonstrate the same battery type. 

10 (2) In selecting a proposal under this section, the 

11 Secretary shall consider—

12 (A) the ability of the proposer to acquire the 

13 batteries and associated equipment and to success14 fully manage and conduct the demonstration project, 

15 including satisfying the reporting requirements set 

16 forth in paragraph (3)(B); 

17 (B) the geographic and climatic diversity of the 

18 projects selected; 

19 (C) the long-term technical and competitive via20 bility of the batteries to be used in the project and 

21 of the original manufacturer of such batteries; 

22 (D) the suitability of the batteries for their in23 tended uses; 
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1 (E) the technical performance of the batteries, 

2 including the expected additional useful life and the 

3 batteries’ ability to retain energy; 

4 (F) the environmental effects of the use of and 

5 disposal of the batteries proposed to be used in the 

6 project selected; 

7 (G) the extent of involvement of State or local 

8 government and other persons in the demonstration 

9 project and whether such involvement will—

10 (i) permit a reduction of the Federal cost 

11 share per project; or 

12 (ii) otherwise be used to allow the Federal 

13 contribution to be provided to demonstrate a 

14 greater number of batteries; and 

15 (H) such other criteria as the Secretary con16 siders appropriate. 

17 (3) CONDITIONS.—The Secretary shall require that—

18 (A) as a part of a demonstration project, the 

19 users of the batteries provide to the proposer infor20 mation regarding the operation, maintenance, per21 formance, and use of the batteries, and the proposer 

22 provide such information to the battery manufac23 turer, for 3 years after the beginning of the dem24 onstration project;
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1 (B) the proposer provide to the Secretary such 

2 information regarding the operation, maintenance, 

3 performance, and use of the batteries as the Sec4 retary may request; 

5 (C) the proposer provide to the Secretary such 

6 information regarding the disposal of the batteries 

7 as the Secretary may require to ensure that the pro8 poser disposes of the batteries in accordance with 

9 applicable law; and 

10 (D) the proposer provide at least 50 percent of 

11 the costs associated with the proposal. 

12 PART 5—ENERGY EFFICIENCY SCIENCE 

13 INITIATIVE 

14 SEC. 21141. ENERGY EFFICIENCY SCIENCE INITIATIVE. 

15 (a) ESTABLISHMENT.—The Secretary shall establish 

16 an Energy Efficiency Science Initiative to be managed by 

17 the Assistant Secretary in the Department with responsi18 bility for energy conservation under section 203(a)(9) of 

19 the Department of Energy Organization Act (42 U.S.C. 

20 7133(a)(9)), in consultation with the Director of the Of21 fice of Science, for grants to be competitively awarded and 

22 subject to peer review for research relating to energy effi23 ciency. 

24 (b) REPORT.—The Secretary shall submit to the Con25 gress, along with the President’s annual budget request 
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1 under section 1105(a) of title 31, United States Code, a 

2 report on the activities of the Energy Efficiency Science 

3 Initiative, including a description of the process used to 

4 award the funds and an explanation of how the research 

5 relates to energy efficiency. 

6 PART 6—ADVANCED ENERGY TECHNOLOGY 

7 TRANSFER CENTERS 

8 SEC. 21151. ADVANCED ENERGY TECHNOLOGY TRANSFER 

9 CENTERS. 

10 (a) GRANTS.—Not later than 18 months after the 

11 date of the enactment of this Act, the Secretary shall 

12 make grants to nonprofit institutions, State and local gov13 ernments, or universities (or consortia thereof), to estab14 lish a geographically dispersed network of Advanced En15 ergy Technology Transfer Centers, to be located in areas 

16 the Secretary determines have the greatest need of the 

17 services of such Centers. 

18 (b) ACTIVITIES.—(1) Each Center shall operate a 

19 program to encourage demonstration and commercial ap20 plication of advanced energy methods and technologies 

21 through education and outreach to building and industrial 

22 professionals, and to other individuals and organizations 

23 with an interest in efficient energy use. 
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1 (2) Each Center shall establish an advisory panel to 

2 advise the Center on how best to accomplish the activities 

3 under paragraph (1). 

4 (c) APPLICATION.—A person seeking a grant under 

5 this section shall submit to the Secretary an application 

6 in such form and containing such information as the Sec7 retary may require. The Secretary may award a grant 

8 under this section to an entity already in existence if the 

9 entity is otherwise eligible under this section. 

10 (d) SELECTION CRITERIA.—The Secretary shall 

11 award grants under this section on the basis of the fol12 lowing criteria, at a minimum: 

13 (1) The ability of the applicant to carry out the 

14 activities in subsection (b). 

15 (2) The extent to which the applicant will co16 ordinate the activities of the Center with other enti17 ties, such as State and local governments, utilities, 

18 and educational and research institutions. 

19 (e) MATCHING FUNDS.—The Secretary shall require 

20 a non-Federal matching requirement of at least 50 percent 

21 of the costs of establishing and operating each Center. 

22 (f) ADVISORY COMMITTEE.—The Secretary shall es23 tablish an advisory committee to advise the Secretary on 

24 the establishment of Centers under this section. The advi25 sory committee shall be composed of individuals with ex-
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1 pertise in the area of advanced energy methods and tech2 nologies, including at least 1 representative from—

3 (1) State or local energy offices; 

4 (2) energy professionals; 

5 (3) trade or professional associations; 

6 (4) architects, engineers, or construction profes7 sionals; 

8 (5) manufacturers; 

9 (6) the research community; and 

10 (7) nonprofit energy or environmental organiza11 tions. 

12 (g) DEFINITIONS.—For purposes of this section—

13 (1) the term ‘‘advanced energy methods and 

14 technologies’’ means all methods and technologies 

15 that promote energy efficiency and conservation, in16 cluding distributed generation technologies, and life17 cycle analysis of energy use; 

18 (2) the term ‘‘Center’’ means an Advanced En19 ergy Technology Transfer Center established pursu20 ant to this section; and 

21 (3) the term ‘‘distributed generation’’ means an 

22 electric power generation facility that is designed to 

23 serve retail electric consumers at or near the facility 

24 site. 
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1 Subtitle B—Distributed Energy and 

2 Electric Energy Systems 

3 PART 1—AUTHORIZATION OF APPROPRIATIONS 

4 SEC. 21201. DISTRIBUTED ENERGY AND ELECTRIC ENERGY 

5 SYSTEMS. 

6 (a) IN GENERAL.—The following sums are author7 ized to be appropriated to the Secretary for distributed 

8 energy and electric energy systems activities, including ac9 tivities authorized under this subtitle: 

10 (1) For fiscal year 2004, $190,000,000. 

11 (2) For fiscal year 2005, $200,000,000. 

12 (3) For fiscal year 2006, $220,000,000. 

13 (4) For fiscal year 2007, $240,000,000. 

14 (b) MICRO-COGENERATION ENERGY TECH15 NOLOGY.—From amounts authorized under subsection 

16 (a), the following sums shall be available for activities 

17 under section 21213: 

18 (1) For fiscal year 2004, $5,000,000. 

19 (2) For fiscal year 2005, $5,500,000. 

20 (3) For fiscal year 2006, $6,000,000. 

21 (4) For fiscal year 2007, $6,500,000. 

22 PART 2—DISTRIBUTED POWER

23 SEC. 21211. STRATEGY. 

24 (a) REQUIREMENT.—Not later than 1 year after the 

25 date of enactment of this Act, the Secretary shall develop 
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1 and transmit to the Congress a strategy for a comprehen2 sive research, development, demonstration, and commer3 cial application program to develop hybrid distributed 

4 power systems that combine—

5 (1) one or more renewable electric power gen6 eration technologies of 10 megawatts or less located 

7 near the site of electric energy use; and 

8 (2) nonintermittent electric power generation 

9 technologies suitable for use in a distributed power 

10 system. 

11 (b) CONTENTS.—The strategy shall—

12 (1) identify the needs best met with such hybrid 

13 distributed power systems and the technological bar14 riers to the use of such systems; 

15 (2) provide for the development of methods to 

16 design, test, integrate into systems, and operate 

17 such hybrid distributed power systems; 

18 (3) include, as appropriate, research, develop19 ment, demonstration, and commercial application on 

20 related technologies needed for the adoption of such 

21 hybrid distributed power systems, including energy 

22 storage devices and environmental control tech23 nologies; 

24 (4) include research, development, demonstra25 tion, and commercial application of interconnection 
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1 technologies for communications and controls of dis2 tributed generation architectures, particularly tech3 nologies promoting real-time response to power mar4 ket information and physical conditions on the elec5 trical grid; and 

6 (5) describe how activities under the strategy 

7 will be integrated with other research, development, 

8 demonstration, and commercial application activities 

9 supported by the Department of Energy related to 

10 electric power technologies. 

11 SEC. 21212. HIGH POWER DENSITY INDUSTRY PROGRAM. 

12 The Secretary shall establish a comprehensive re13 search, development, demonstration, and commercial ap14 plication program to improve energy efficiency of high 

15 power density facilities, including data centers, server 

16 farms, and telecommunications facilities. Such program 

17 shall consider technologies that provide significant im18 provement in thermal controls, metering, load manage19 ment, peak load reduction, or the efficient cooling of elec20 tronics. 

21 SEC. 21213. MICRO-COGENERATION ENERGY TECHNOLOGY. 

22 The Secretary shall make competitive, merit-based 

23 grants to consortia for the development of micro-cogenera24 tion energy technology. The consortia shall explore the use 
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1 of small-scale combined heat and power in residential 

2 heating appliances. 

3 PART 3—TRANSMISSION SYSTEMS

4 SEC. 21221. TRANSMISSION INFRASTRUCTURE SYSTEMS RE5 SEARCH, DEVELOPMENT, DEMONSTRATION, 

6 AND COMMERCIAL APPLICATION. 

7 (a) PROGRAM AUTHORIZED.—The Secretary shall de8 velop and implement a comprehensive research, develop9 ment, demonstration, and commercial application program 

10 to promote improved reliability and efficiency of electrical 

11 transmission systems. Such program may include—

12 (1) advanced energy technologies, materials, 

13 and systems; 

14 (2) advanced grid reliability and efficiency tech15 nology development; 

16 (3) technologies contributing to significant load 

17 reductions; 

18 (4) advanced metering, load management, and 

19 control technologies; 

20 (5) technologies to enhance existing grid compo21 nents; 

22 (6) the development and use of high-tempera23 ture superconductors to—
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1 (A) enhance the reliability, operational 

2 flexibility, or power-carrying capability of elec3 tric transmission or distribution systems; or 

4 (B) increase the efficiency of electric en5 ergy generation, transmission, distribution, or 

6 storage systems; 

7 (7) integration of power systems, including sys8 tems to deliver high-quality electric power, electric 

9 power reliability, and combined heat and power; 

10 (8) any other infrastructure technologies, as ap11 propriate; and 

12 (9) technology transfer and education. 

13 (b) PROGRAM PLAN.—Not later than 1 year after the 

14 date of the enactment of this Act, the Secretary, in con15 sultation with other appropriate Federal agencies, shall 

16 prepare and transmit to Congress a 5-year program plan 

17 to guide activities under this section. In preparing the pro18 gram plan, the Secretary shall consult with utilities, en19 ergy services providers, manufacturers, institutions of 

20 higher education, other appropriate State and local agen21 cies, environmental organizations, professional and tech22 nical societies, and any other persons the Secretary con23 siders appropriate. 

24 (c) REPORT.—Not later than 2 years after the trans25 mittal of the plan under subsection (b), the Secretary shall 
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1 transmit a report to Congress describing the progress 

2 made under this section and identifying any additional re3 sources needed to continue the development and commer4 cial application of transmission infrastructure tech5 nologies. 

6 Subtitle C—Renewable Energy 

7 PART 1—AUTHORIZATION OF APPROPRIATIONS 

8 SEC. 21301. RENEWABLE ENERGY. 

9 (a) IN GENERAL.—The following sums are author10 ized to be appropriated to the Secretary for renewable en11 ergy research, development, demonstration, and commer12 cial application activities, including activities authorized 

13 under this subtitle: 

14 (1) For fiscal year 2004, $380,000,000. 

15 (2) For fiscal year 2005, $420,000,000. 

16 (3) For fiscal year 2006, $460,000,000. 

17 (4) For fiscal year 2007, $499,000,000. 

18 (b) BIOENERGY.—From the amounts authorized 

19 under subsection (a), the following sums are authorized 

20 to be appropriated to carry out section 21311 and section 

21 21706: 

22 (1) For fiscal year 2004, $135,425,000. 

23 (2) For fiscal year 2005, $155,600,000. 

24 (3) For fiscal year 2006, $167,650,000. 

25 (4) For fiscal year 2007, $180,000,000. 
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1 (c) PUBLIC BUILDINGS.—From the amounts author2 ized under subsection (a), $30,000,000 for each of the fis3 cal years 2004 through 2007 are authorized to be appro4 priated to carry out section 21322. 

5 (d) LIMITS ON USE OF FUNDS.—

6 (1) EXCLUSION.—None of the funds authorized 

7 to be appropriated under this section may be used 

8 for Renewable Support and Implementation. 

9 (2) BIOENERGY.—Of the funds authorized 

10 under subsection (b), not less than $5,000,000 for 

11 each fiscal year shall be made available for grants to 

12 Historically Black Colleges and Universities, Tribal 

13 Colleges, and Hispanic-Serving Institutions. 

14 (3) RURAL AND REMOTE LOCATIONS.—In car15 rying out this section, the Secretary, in consultation 

16 with the Secretary of Agriculture, shall demonstrate 

17 the use of advanced wind power technology, biomass, 

18 geothermal energy systems, and other renewable en19 ergy technologies to assist in delivering electricity to 

20 rural and remote locations. 

21 (4) REGIONAL FIELD VERIFICATION.—Of the 

22 funds authorized under subsection (a), not less than 

23 $4,000,000 for each fiscal year shall be made avail24 able for the Regional Field Verification Program of 

25 the Department. 
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1 (5) HYDROPOWER DEMONSTRATION

2 PROJECTS.—Of the funds authorized under sub3 section (a), such sums as may be necessary shall be 

4 made available for demonstration projects of off5 stream pumped storage hydropower. 

6 PART 2—BIOENERGY 

7 SEC. 21311. BIOENERGY PROGRAMS. 

8 The Secretary shall conduct a program of research, 

9 development, demonstration, and commercial application 

10 for bioenergy, including—

11 (1) biopower energy systems; 

12 (2) biofuels; 

13 (3) integrated applications of both biopower and 

14 biofuels; 

15 (4) cross-cutting research and development in 

16 feedstocks; and 

17 (5) economic analysis. 

18 PART 3—MISCELLANEOUS PROJECTS 

19 SEC. 21321. MISCELLANEOUS PROJECTS. 

20 (a) PROGRAMS.—The Secretary shall conduct re21 search, development, demonstration, and commercial ap22 plication programs for—

23 (1) ocean energy, including wave energy; 

24 (2) the combined use of renewable energy tech25 nologies with one another and with other energy 
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1 technologies, including the combined use of wind 

2 power and coal gasification technologies; and 

3 (3) hydrogen carrier fuels. 

4 (b) STUDY.—(1) The Secretary shall enter into an 

5 arrangement with the National Academy of Sciences to 

6 conduct a study on—

7 (A) the feasibility of various methods of renew8 able generation of energy from the ocean, including 

9 energy from waves, tides, currents, and thermal gra10 dients; and 

11 (B) the research, development, demonstration, 

12 and commercial application activities required to 

13 make marine renewable energy generation competi14 tive with other forms of electricity generation. 

15 (2) Not later than 1 year after the date of the enact16 ment of this Act, the Secretary shall transmit the study 

17 to the Congress along with the Secretary’s recommenda18 tions for implementing the results of the study. 

19 SEC. 21322. RENEWABLE ENERGY IN PUBLIC BUILDINGS. 

20 (a) DEMONSTRATION AND TECHNOLOGY TRANSFER

21 PROGRAM.—The Secretary shall establish a program for 

22 the demonstration of innovative technologies for solar and 

23 other renewable energy sources in buildings owned or op24 erated by a State or local government, and for the dissemi-
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1 nation of information resulting from such demonstration 

2 to interested parties. 

3 (b) LIMIT ON FEDERAL FUNDING.—The Secretary 

4 shall provide under this section no more than 40 percent 

5 of the incremental costs of the solar or other renewable 

6 energy source project funded. 

7 (c) REQUIREMENT.—As part of the application for 

8 awards under this section, the Secretary shall require all 

9 applicants—

10 (1) to demonstrate a continuing commitment to 

11 the use of solar and other renewable energy sources 

12 in buildings they own or operate; and 

13 (2) to state how they expect any award to fur14 ther their transition to the significant use of renew15 able energy. 

16 Subtitle D—Nuclear Energy 

17 PART 1—AUTHORIZATION OF APPROPRIATIONS 

18 SEC. 21401. NUCLEAR ENERGY. 

19 (a) IN GENERAL.—The following sums are author20 ized to be appropriated to the Secretary for nuclear energy 

21 research, development, demonstration, and commercial ap22 plication activities, including activities authorized under 

23 this subtitle: 

24 (1) For fiscal year 2004, $388,000,000. 

25 (2) For fiscal year 2005, $416,000,000. 
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1 (3) For fiscal year 2006, $445,000,000. 

2 (4) For fiscal year 2007, $474,000,000. 

3 (b) ALLOCATIONS.—From amounts authorized under 

4 subsection (a), the following sums are authorized:

5 (1) NUCLEAR INFRASTRUCTURE SUPPORT.—

6 For activities under section 21411(e)—

7 (A) for fiscal year 2004, $125,000,000; 

8 (B) for fiscal year 2005, $130,000,000; 

9 (C) for fiscal year 2006, $135,000,000; 

10 and 

11 (D) for fiscal year 2007, $140,000,000. 

12 (2) ADVANCED FUEL RECYCLING PROGRAM.—

13 For activities under section 21421—

14 (A) for fiscal year 2004, $80,000,000; 

15 (B) for fiscal year 2005, $93,000,000; 

16 (C) for fiscal year 2006, $106,000,000; 

17 and 

18 (D) for fiscal year 2007, $120,000,000. 

19 (3) UNIVERSITY PROGRAMS.—For activities 

20 under section 21431—

21 (A) for fiscal year 2004, $35,200,000, of 

22 which—

23 (i) $3,000,000 shall be for activities 

24 under subsection (b)(1) of that section; 
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1 (ii) $4,275,000 shall be for activities 

2 under subsection (b)(2) of that section; 

3 (iii) $8,000,000 shall be for activities 

4 under subsection (b)(3) of that section; 

5 (iv) $500,000 shall be for activities 

6 under subsection (b)(5) of that section; 

7 (v) $7,000,000 shall be for activities 

8 under subsection (c)(1) of that section; 

9 (vi) $700,000 shall be for activities 

10 under subsection (c)(2) of that section; 

11 (vii) $10,000,000 shall be for activi12 ties under subsection (c)(3) of that section; 

13 (viii) $1,000,000 shall be for activities 

14 under subsection (d)(1) of that section; 

15 and 

16 (ix) $725,000 shall be for activities 

17 under subsection (d)(2) of that section; 

18 (B) for fiscal year 2005, $44,350,000, of 

19 which—

20 (i) $3,100,000 shall be for activities 

21 under subsection (b)(1) of that section; 

22 (ii) $6,275,000 shall be for activities 

23 under subsection (b)(2) of that section; 

24 (iii) $12,000,000 shall be for activities 

25 under subsection (b)(3) of that section; 
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1 (iv) $550,000 shall be for activities 

2 under subsection (b)(5) of that section; 

3 (v) $7,500,000 shall be for activities 

4 under subsection (c)(1) of that section; 

5 (vi) $1,100,000 shall be for activities 

6 under subsection (c)(2) of that section; 

7 (vii) $12,000,000 shall be for activi8 ties under subsection (c)(3) of that section; 

9 (viii) $1,100,000 shall be for activities 

10 under subsection (d)(1) of that section; 

11 and 

12 (ix) $725,000 shall be for activities 

13 under subsection (d)(2) of that section; 

14 (C) for fiscal year 2006, $49,200,000, of 

15 which—

16 (i) $3,200,000 shall be for activities 

17 under subsection (b)(1) of that section; 

18 (ii) $7,150,000 shall be for activities 

19 under subsection (b)(2) of that section; 

20 (iii) $13,000,000 shall be for activities 

21 under subsection (b)(3) of that section; 

22 (iv) $600,000 shall be for activities 

23 under subsection (b)(5) of that section; 

24 (v) $8,000,000 shall be for activities 

25 under subsection (c)(1) of that section; 
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1 (vi) $1,200,000 shall be for activities 

2 under subsection (c)(2) of that section; 

3 (vii) $14,000,000 shall be for activi4 ties under subsection (c)(3) of that section; 

5 (viii) $1,200,000 shall be for activities 

6 under subsection (d)(1) of that section; 

7 and 

8 (ix) $850,000 shall be for activities 

9 under subsection (d)(2) of that section; 

10 and 

11 (D) for fiscal year 2007, $54,950,000, of 

12 which—

13 (i) $3,200,000 shall be for activities 

14 under subsection (b)(1) of that section; 

15 (ii) $8,150,000 shall be for activities 

16 under subsection (b)(2) of that section; 

17 (iii) $15,000,000 shall be for activities 

18 under subsection (b)(3) of that section; 

19 (iv) $650,000 shall be for activities 

20 under subsection (b)(5) of that section; 

21 (v) $8,500,000 shall be for activities 

22 under subsection (c)(1); of that section; 

23 (vi) $1,300,000 shall be for activities 

24 under subsection (c)(2) of that section; 
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1 (vii) $16,000,000 shall be for activi2 ties under subsection (c)(3) of that section; 

3 (viii) $1,300,000 shall be for activities 

4 under subsection (d)(1) of that section; 

5 and 

6 (ix) $850,000 shall be for activities 

7 under subsection (d)(2) of that section. 

8 (c) LIMIT ON USE OF FUNDS.—None of the funds 

9 authorized under this section may be used for decommis10 sioning the Fast Flux Test Facility. 

11 PART 2—NUCLEAR ENERGY RESEARCH 

12 PROGRAMS

13 SEC. 21411. NUCLEAR ENERGY RESEARCH PROGRAMS. 

14 (a) NUCLEAR ENERGY RESEARCH INITIATIVE.—The 

15 Secretary shall carry out a Nuclear Energy Research Ini16 tiative for research and development related to nuclear en17 ergy. 

18 (b) NUCLEAR ENERGY PLANT OPTIMIZATION PRO19 GRAM.—The Secretary shall carry out a Nuclear Energy 

20 Plant Optimization Program to support research and de21 velopment activities addressing reliability, availability, pro22 ductivity, and component aging in existing nuclear power 

23 plants. 

24 (c) NUCLEAR POWER 2010 PROGRAM.—The Sec25 retary shall carry out a Nuclear Power 2010 Program, 
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1 consistent with recommendations in the October 2001 re2 port entitled ‘‘A Roadmap to Deploy New Nuclear Power 

3 Plants in the United States by 2010’’ issued by the Nu4 clear Energy Research Advisory Committee of the Depart5 ment. The Program shall—

6 (1) rely on the expertise and capabilities of the 

7 National Laboratories in the areas of advanced nu8 clear fuels cycles and fuels testing; 

9 (2) pursue an approach that considers a variety 

10 of reactor designs; 

11 (3) include participation of international col12 laborators in research, development, and design ef13 forts as appropriate; and 

14 (4) encourage industry participation. 

15 (d) GENERATION IV NUCLEAR ENERGY SYSTEMS

16 INITIATIVE.—The Secretary shall carry out a Generation 

17 IV Nuclear Energy Systems Initiative to develop an over18 all technology plan and to support research and develop19 ment necessary to make an informed technical decision 

20 about the most promising candidates for eventual commer21 cial application. The Initiative shall examine advanced 

22 proliferation-resistant and passively safe reactor designs, 

23 including designs that—

24 (1) are economically competitive with other elec25 tric power generation plants; 
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1 (2) have higher efficiency, lower cost, and im2 proved safety compared to reactors in operation on 

3 the date of enactment of this Act;

4 (3) use fuels that are proliferation resistant and 

5 have substantially reduced production of high-level 

6 waste per unit of output; and 

7 (4) utilize improved instrumentation. 

8 (e) NUCLEAR INFRASTRUCTURE SUPPORT.—The 

9 Secretary shall develop and implement a strategy for the 

10 facilities of the Office of Nuclear Energy, Science, and 

11 Technology and shall transmit a report containing the 

12 strategy along with the President’s budget request to the 

13 Congress for fiscal year 2005. Such strategy shall provide 

14 a cost-effective means for—

15 (1) maintaining existing facilities and infra16 structure, as needed; 

17 (2) closing unneeded facilities; 

18 (3) making facility upgrades and modifications; 

19 and 

20 (4) building new facilities. 

21 PART 3—ADVANCED FUEL RECYCLING 

22 SEC. 21421. ADVANCED FUEL RECYCLING PROGRAM. 

23 (a) IN GENERAL.—The Secretary, through the Direc24 tor of the Office of Nuclear Energy, Science and Tech25 nology, shall conduct an advanced fuel recycling tech-
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1 nology research and development program to evaluate pro2 liferation-resistant fuel recycling and transmutation tech3 nologies which minimize environmental or public health 

4 and safety impacts as an alternative to aqueous reprocess5 ing technologies deployed as of the date of enactment of 

6 this Act in support of evaluation of alternative national 

7 strategies for spent nuclear fuel and the Generation IV 

8 advanced reactor concepts, subject to annual review by the 

9 Secretary’s Nuclear Energy Research Advisory Committee 

10 or other independent entity, as appropriate. Opportunities 

11 to enhance progress of this program through international 

12 cooperation should be sought. 

13 (b) REPORTS.—The Secretary shall report on the ac14 tivities of the advanced fuel recycling technology research 

15 and development program, as part of the Department’s 

16 annual budget submission. 

17 PART 4—UNIVERSITY PROGRAMS 

18 SEC. 21431. UNIVERSITY NUCLEAR SCIENCE AND ENGI19 NEERING SUPPORT. 

20 (a) ESTABLISHMENT.—The Secretary shall support 

21 a program to invest in human resources and infrastructure 

22 in the nuclear sciences and engineering and related fields 

23 (including health physics and nuclear and radiochemistry), 

24 consistent with departmental missions related to civilian 

25 nuclear research and development. 
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1 (b) DUTIES.—In carrying out the program under this 

2 section, the Secretary shall—

3 (1) establish a graduate and undergraduate fel4 lowship program to attract new and talented stu5 dents; 

6 (2) establish a Junior Faculty Research Initi7 ation Grant Program to assist institutions of higher 

8 education in recruiting and retaining new faculty in 

9 the nuclear sciences and engineering; 

10 (3) support fundamental nuclear sciences and 

11 engineering research through the Nuclear Engineer12 ing Education Research Program; 

13 (4) encourage collaborative nuclear research 

14 among industry, National Laboratories, and institu15 tions of higher education through the Nuclear En16 ergy Research Initiative; and 

17 (5) support communication and outreach re18 lated to nuclear science and engineering. 

19 (c) STRENGTHENING UNIVERSITY RESEARCH AND

20 TRAINING REACTORS AND ASSOCIATED INFRASTRUC21 TURE.—Activities under this section may include—

22 (1) converting research reactors currently using 

23 high-enrichment fuels to low-enrichment fuels, up24 grading operational instrumentation, and sharing of 

25 reactors among institutions of higher education; 
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1 (2) providing technical assistance, in collabora2 tion with the United States nuclear industry, in reli3 censing and upgrading training reactors as part of 

4 a student training program; and 

5 (3) providing funding, through the Innovations 

6 in Nuclear Infrastructure and Education Program, 

7 for reactor improvements as part of a focused effort 

8 that emphasizes research, training, and education. 

9 (d) UNIVERSITY-NATIONAL LABORATORY INTER10 ACTIONS.—The Secretary shall develop—

11 (1) a sabbatical fellowship program for profes12 sors at institutions of higher education to spend ex13 tended periods of time at National Laboratories in 

14 the areas of nuclear science and technology; and 

15 (2) a visiting scientist program in which Na16 tional Laboratory staff can spend time in academic 

17 nuclear science and engineering departments. 

18 The Secretary may provide fellowships for students to 

19 spend time at National Laboratories in the area of nuclear 

20 science with a member of the Laboratory staff acting as 

21 a mentor. 

22 (e) OPERATING AND MAINTENANCE COSTS.—Fund23 ing for a research project provided under this section may 

24 be used to offset a portion of the operating and mainte-
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1 nance costs of a research reactor at an institution of high2 er education used in the research project. 

3 PART 5—GEOLOGICAL ISOLATION OF SPENT 

4 FUEL 

5 SEC. 21441. GEOLOGICAL ISOLATION OF SPENT FUEL. 

6 The Secretary shall conduct a study to determine the 

7 feasibility of deep borehole disposal of spent nuclear fuel 

8 and high-level radioactive waste. The study shall empha9 size geological, chemical, and hydrological characterization 

10 of, and design of engineered structures for, deep borehole 

11 environments. Not later than 1 year after the date of en12 actment of this Act, the Secretary shall transmit the study 

13 to the Congress. 

14 Subtitle E—Fossil Energy 

15 PART 1—AUTHORIZATION OF APPROPRIATIONS 

16 SEC. 21501. FOSSIL ENERGY. 

17 (a) IN GENERAL.—The following sums are author18 ized to be appropriated to the Secretary for fossil energy 

19 research, development, demonstration, and commercial ap20 plication activities, other than those described in sub21 section (b), including activities authorized under this sub22 title but not including activities authorized under division 

23 E: 

24 (1) For fiscal year 2004, $530,000,000. 

25 (2) For fiscal year 2005, $556,000,000. 
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1 (3) For fiscal year 2006, $583,000,000. 

2 (4) For fiscal year 2007, $611,000,000. 

3 No less than 60 percent of the amount appropriated for 

4 each fiscal year under this subsection shall be available 

5 for activities related to the coal research program under 

6 section 21511(a). 

7 (b) ULTRA-DEEPWATER AND UNCONVENTIONAL RE8 SOURCES.—

9 (1) OIL AND GAS LEASE INCOME.—For each of 

10 fiscal years 2004 through 2010, from any royalties, 

11 rents, and bonuses derived from Federal onshore 

12 and offshore oil and gas leases issued under the 

13 Outer Continental Shelf Lands Act and the Mineral 

14 Leasing Act which are deposited in the Treasury, 

15 and after distribution of any such funds as described 

16 in paragraph (2), an amount equal to 7.5 percent of 

17 the amount of royalties, rents, and bonuses derived 

18 from those leases deposited in the Treasury shall be 

19 deposited into the Ultra-Deepwater and Unconven20 tional Natural Gas and Other Petroleum Research 

21 Fund (in this subsection referred to as the Fund). 

22 For purposes of this subsection, the term ‘‘royalties’’ 

23 excludes proceeds from the sale of royalty production 

24 taken in kind and royalty production that is trans25 ferred under section 27(a)(3) of the Outer Conti-
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1 nental Shelf Lands Act (43 U.S.C. 1353(a)(3)). 

2 Monies in the Fund shall be available to the Sec3 retary for obligation under part 3, without fiscal 

4 year limitation, to the extent provided in advance in 

5 appropriations Acts. 

6 (2) PRIOR DISTRIBUTIONS.—The distributions 

7 described in paragraph (1) are those required by 

8 law—

9 (A) to States and to the Reclamation Fund 

10 under the Mineral Leasing Act (30 U.S.C. 

11 191(a)); and 

12 (B) to other funds receiving monies from 

13 Federal oil and gas leasing programs, includ14 ing—

15 (i) any recipients pursuant to section 

16 8(g) of the Outer Continental Shelf Lands 

17 Act (43 U.S.C. 1337(g)); 

18 (ii) the Land and Water Conservation 

19 Fund, pursuant to section 2(c) of the Land 

20 and Water Conservation Fund Act of 1965 

21 (16 U.S.C. 4601–5(c)); and 

22 (iii) the Historic Preservation Fund, 

23 pursuant to section 108 of the National 

24 Historic Preservation Act (16 U.S.C. 

25 470h). 
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1 (3) ALLOCATION.—Amounts made available 

2 under this subsection in each fiscal year shall be al3 located as follows: 

4 (A) 67.5 percent shall be for ultra-deep5 water natural gas and other petroleum activities 

6 under section 21522; 

7 (B) 22.5 percent shall be for unconven8 tional natural gas and other petroleum resource 

9 activities under section 21523; and 

10 (C) 10 percent shall be for research com11 plementary to research under section 

12 21521(b)(1) through (3). 

13 (c) ALLOCATIONS.—From amounts authorized under 

14 subsection (a), the following sums are authorized: 

15 (1) FUEL CELL PROTON EXCHANGE MEMBRANE

16 TECHNOLOGY.—For activities under section 

17 21511(c)(2), $28,000,000 for each of the fiscal 

18 years 2004 through 2007. 

19 (2) COAL MINING TECHNOLOGIES.—For activi20 ties under section 21512—

21 (A) for fiscal year 2004, $12,000,000; and 

22 (B) for fiscal year 2005, $15,000,000. 

23 (3) OFFICE OF ARCTIC ENERGY.—For the Of24 fice of Arctic Energy under section 3197 of the 

25 Floyd D. Spence National Defense Authorization 
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1 Act for Fiscal Year 2001 (Public Law 106–398), 

2 $25,000,000 for each of fiscal years 2004 through 

3 2007. 

4 (d) EXTENDED AUTHORIZATION.—There are author5 ized to be appropriated to the Secretary for the Office of 

6 Arctic Energy under section 3197 of the Floyd D. Spence 

7 National Defense Authorization Act for Fiscal Year 2001 

8 (Public Law 106–398), $25,000,000 for each of fiscal 

9 years 2008 through 2011. 

10 (e) LIMITS ON USE OF FUNDS.—

11 (1) EXCLUSIONS.—None of the funds author12 ized under this section may be used for—

13 (A) Fossil Energy Environmental Restora14 tion; or 

15 (B) Import/Export Authorization. 

16 (2) UNIVERSITY COAL MINING RESEARCH.—Of 

17 the funds authorized under subsection (c)(2), not 

18 less than 20 percent of the funds appropriated for 

19 each fiscal year shall be dedicated to research and 

20 development carried out at institutions of higher 

21 education. 

22 PART 2—RESEARCH PROGRAMS 

23 SEC. 21511. FOSSIL ENERGY RESEARCH PROGRAMS. 

24 (a) COAL RESEARCH.—(1) In addition to the Clean 

25 Coal Power Initiative authorized under division E, the 
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1 Secretary shall conduct a program of research, develop2 ment, demonstration, and commercial application for coal 

3 and power systems, including—

4 (A) central systems; 

5 (B) sequestration research and development; 

6 (C) fuels; 

7 (D) advanced research; and 

8 (E) advanced separation technologies. 

9 (2) Not later than 6 months after the date of enact10 ment of this Act, the Secretary shall transmit to the Con11 gress a report providing—

12 (A) a detailed description of how proposals will 

13 be solicited and evaluated;

14 (B) a list of activities and technical milestones; 

15 and 

16 (C) a description of how these activities will 

17 complement and not duplicate the Clean Coal Power 

18 Initiative authorized under division E. 

19 (b) OIL AND GAS RESEARCH.—The Secretary shall 

20 conduct a program of research, development, demonstra21 tion, and commercial application on oil and gas, includ22 ing—

23 (1) exploration and production; 

24 (2) gas hydrates; 

25 (3) reservoir life and extension; 
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1 (4) transportation and distribution infrastruc2 ture; 

3 (5) ultraclean fuels; 

4 (6) heavy oil and oil shale; and 

5 (7) environmental research. 

6 (c) FUEL CELLS.—(1) The Secretary shall conduct 

7 a program of research, development, demonstration, and 

8 commercial application on fuel cells for low-cost, high-effi9 ciency, fuel-flexible, modular power systems. 

10 (2) The demonstrations shall include fuel cell proton 

11 exchange membrane technology for commercial, residen12 tial, and transportation applications, and distributed gen13 eration systems, utilizing improved manufacturing produc14 tion and processes. 

15 (d) TECHNOLOGY TRANSFER.—To the maximum ex16 tent practicable, existing technology transfer mechanisms 

17 shall be used to implement oil and gas exploration and 

18 production technology transfer programs. 

19 SEC. 21512. RESEARCH AND DEVELOPMENT FOR COAL MIN20 ING TECHNOLOGIES. 

21 (a) ESTABLISHMENT.—The Secretary shall carry out 

22 a program of research and development on coal mining 

23 technologies. The Secretary shall cooperate with appro24 priate Federal agencies, coal producers, trade associations, 

25 equipment manufacturers, institutions of higher education 
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1 with mining engineering departments, and other relevant 

2 entities. 

3 (b) PROGRAM.—The research and development activi4 ties carried out under this section shall—

5 (1) be based on the mining research and devel6 opment priorities identified by the Mining Industry 

7 of the Future Program and in the recommendations 

8 from relevant reports of the National Academy of 

9 Sciences on mining technologies; and 

10 (2) expand mining research capabilities at insti11 tutions of higher education.

12 PART 3—ULTRA-DEEPWATER AND UNCONVEN13 TIONAL NATURAL GAS AND OTHER PETRO14 LEUM RESOURCES 

15 SEC. 21521. PROGRAM AUTHORITY. 

16 (a) IN GENERAL.—The Secretary shall carry out a 

17 program under this part of research, development, dem18 onstration, and commercial application of technologies for 

19 ultra-deepwater and unconventional natural gas and other 

20 petroleum resource exploration and production, including 

21 safe operations and environmental mitigation (including 

22 reduction of greenhouse gas emissions and sequestration 

23 of carbon). 

24 (b) PROGRAM ELEMENTS.—The program under this 

25 part shall address the following areas, including improving 
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1 safety and minimizing environmental impacts of activities 

2 within each area: 

3 (1) Ultra-deepwater technology. 

4 (2) Ultra-deepwater architecture. 

5 (3) Unconventional natural gas and other petro6 leum resource exploration and production tech7 nology. 

8 (c) LIMITATION ON LOCATION OF FIELD ACTIVI9 TIES.—Field activities under the program under this part 

10 shall be carried out only—

11 (1) in—

12 (A) areas in the territorial waters of the 

13 United States not under any Outer Continental 

14 Shelf moratorium as of September 30, 2002; 

15 (B) areas onshore in the United States on 

16 public land administered by the Secretary of the 

17 Interior available for oil and gas leasing, where 

18 consistent with applicable law and land use 

19 plans; and 

20 (C) areas onshore in the United States on 

21 State or private land, subject to applicable law; 

22 and 

23 (2) with the approval of the appropriate Fed24 eral or State land management agency or private 

25 land owner. 
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1 (d) RESEARCH AT NATIONAL ENERGY TECHNOLOGY

2 LABORATORY.—The Secretary, through the National En3 ergy Technology Laboratory, shall carry out research com4 plementary to research under subsection (b).

5 (e) CONSULTATION WITH SECRETARY OF THE INTE6 RIOR.—In carrying out this part, the Secretary shall con7 sult regularly with the Secretary of the Interior. 

8 SEC. 21522. ULTRA-DEEPWATER PROGRAM. 

9 (a) IN GENERAL.—The Secretary shall carry out the 

10 activities under paragraphs (1) and (2) of section 

11 21521(b), to maximize the value of the ultra-deepwater 

12 natural gas and other petroleum resources of the United 

13 States by increasing the supply of such resources and by 

14 reducing the cost and increasing the efficiency of explo15 ration for and production of such resources, while improv16 ing safety and minimizing environmental impacts. 

17 (b) ROLE OF THE SECRETARY.—The Secretary shall 

18 have ultimate responsibility for, and oversight of, all as19 pects of the program under this section. 

20 (c) ROLE OF THE PROGRAM CONSORTIUM.—

21 (1) IN GENERAL.—The Secretary shall contract 

22 with a consortium to—

23 (A) manage awards pursuant to subsection 

24 (f)(4); 
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1 (B) make recommendations to the Sec2 retary for project solicitations; 

3 (C) disburse funds awarded under sub4 section (f) as directed by the Secretary in ac5 cordance with the annual plan under subsection 

6 (e); and 

7 (D) carry out other activities assigned to 

8 the program consortium by this section. 

9 (2) LIMITATION.—The Secretary may not as10 sign any activities to the program consortium except 

11 as specifically authorized under this section. 

12 (3) CONFLICT OF INTEREST.—(A) The Sec13 retary shall establish procedures—

14 (i) to ensure that each board member, offi15 cer, or employee of the program consortium 

16 who is in a decisionmaking capacity under sub17 section (f)(3) or (4) shall disclose to the Sec18 retary any financial interests in, or financial re19 lationships with, applicants for or recipients of 

20 awards under this section, including those of 

21 his or her spouse or minor child, unless such re22 lationships or interests would be considered to 

23 be remote or inconsequential; and 

24 (ii) to require any board member, officer, 

25 or employee with a financial relationship or in-
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1 terest disclosed under clause (i) to recuse him2 self or herself from any review under subsection 

3 (f)(3) or oversight under subsection (f)(4) with 

4 respect to such applicant or recipient. 

5 (B) The Secretary may disqualify an applica6 tion or revoke an award under this section if a board 

7 member, officer, or employee has failed to comply 

8 with procedures required under subparagraph 

9 (A)(ii). 

10 (d) SELECTION OF THE PROGRAM CONSORTIUM.—

11 (1) IN GENERAL.—The Secretary shall select 

12 the program consortium through an open, competi13 tive process. 

14 (2) MEMBERS.—The program consortium may 

15 include corporations, institutions of higher edu16 cation, National Laboratories, or other research in17 stitutions. After submitting a proposal under para18 graph (4), the program consortium may not add 

19 members without the consent of the Secretary. 

20 (3) TAX STATUS.—The program consortium 

21 shall be an entity that is exempt from tax under sec22 tion 501(c)(3) of the Internal Revenue Code of 

23 1986. 

24 (4) SCHEDULE.—Not later than 90 days after 

25 the date of enactment of this Act, the Secretary 
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1 shall solicit proposals for the creation of the pro2 gram consortium, which must be submitted not less 

3 than 180 days after the date of enactment of this 

4 Act. The Secretary shall select the program consor5 tium not later than 240 days after such date of en6 actment. 

7 (5) APPLICATION.—Applicants shall submit a 

8 proposal including such information as the Secretary 

9 may require. At a minimum, each proposal shall—

10 (A) list all members of the consortium; 

11 (B) fully describe the structure of the con12 sortium, including any provisions relating to in13 tellectual property; and –

14 (C) describe how the applicant would carry 

15 out the activities of the program consortium 

16 under this section. 

17 (6) ELIGIBILITY.—To be eligible to be selected 

18 as the program consortium, an applicant must be an 

19 entity whose members collectively have demonstrated 

20 capabilities in planning and managing research, de21 velopment, demonstration, and commercial applica22 tion programs in natural gas or other petroleum ex23 ploration or production. 

24 (7) CRITERION.—The Secretary may consider 

25 the amount of the fee an applicant proposes to re-
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1 ceive under subsection (g) in selecting a consortium 

2 under this section. 

3 (e) ANNUAL PLAN.—

4 (1) IN GENERAL.—The program under this sec5 tion shall be carried out pursuant to an annual plan 

6 prepared by the Secretary in accordance with para7 graph (2). 

8 (2) DEVELOPMENT.—(A) Before drafting an 

9 annual plan under this subsection, the Secretary 

10 shall solicit specific written recommendations from 

11 the program consortium for each element to be ad12 dressed in the plan, including those described in 

13 paragraph (4). The Secretary may request that the 

14 program consortium submit its recommendations in 

15 the form of a draft annual plan. 

16 (B) The Secretary shall submit the rec17 ommendations of the program consortium under 

18 subparagraph (A) to the Ultra-Deepwater Advisory 

19 Committee established under section 21525(a) for 

20 review, and such Advisory Committee shall provide 

21 to the Secretary written comments by a date deter22 mined by the Secretary. The Secretary may also so23 licit comments from any other experts. 
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1 (C) The Secretary shall consult regularly with 

2 the program consortium throughout the preparation 

3 of the annual plan. 

4 (3) PUBLICATION.—The Secretary shall trans5 mit to the Congress and publish in the Federal Reg6 ister the annual plan, along with any written com7 ments received under paragraph (2)(A) and (B). 

8 The annual plan shall be transmitted and published 

9 not later than 60 days after the date of enactment 

10 of an Act making appropriations for a fiscal year for 

11 the program under this section. 

12 (4) CONTENTS.—The annual plan shall describe 

13 the ongoing and prospective activities of the pro14 gram under this section and shall include—

15 (A) a list of any solicitations for awards 

16 that the Secretary plans to issue to carry out 

17 research, development, demonstration, or com18 mercial application activities, including the top19 ics for such work, who would be eligible to 

20 apply, selection criteria, and the duration of 

21 awards; and 

22 (B) a description of the activities expected 

23 of the program consortium to carry out sub24 section (f)(4). 

25 (f) AWARDS.—
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1 (1) IN GENERAL.—The Secretary shall make 

2 awards to carry out research, development, dem3 onstration, and commercial application activities 

4 under the program under this section. The program 

5 consortium shall not be eligible to receive such 

6 awards, but members of the program consortium 

7 may receive such awards. 

8 (2) PROPOSALS.—The Secretary shall solicit 

9 proposals for awards under this subsection in such 

10 manner and at such time as the Secretary may pre11 scribe, in consultation with the program consortium. 

12 (3) REVIEW.—The Secretary shall make awards 

13 under this subsection through a competitive process, 

14 which shall include a review by individuals selected 

15 by the Secretary. Such individuals shall include, for 

16 each application, Federal officials, the program con17 sortium, and non-Federal experts who are not board 

18 members, officers, or employees of the program con19 sortium or of a member of the program consortium. 

20 (4) OVERSIGHT.—(A) The program consortium 

21 shall oversee the implementation of awards under 

22 this subsection, consistent with the annual plan 

23 under subsection (e), including disbursing funds and 

24 monitoring activities carried out under such awards 
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1 for compliance with the terms and conditions of the 

2 awards. 

3 (B) Nothing in subparagraph (A) shall limit the 

4 authority or responsibility of the Secretary to over5 see awards, or limit the authority of the Secretary 

6 to review or revoke awards. 

7 (C) The Secretary shall provide to the program 

8 consortium the information necessary for the pro9 gram consortium to carry out its responsibilities 

10 under this paragraph. 

11 (g) FEE.—

12 (1) IN GENERAL.—To compensate the program 

13 consortium for carrying out its activities under this 

14 section, the Secretary shall provide to the program 

15 consortium a fee in an amount not to exceed 7.5 

16 percent of the amounts awarded under subsection (f) 

17 for each fiscal year. 

18 (2) ADVANCE.—The Secretary shall advance 

19 funds to the program consortium upon selection of 

20 the consortium, which shall be deducted from 

21 amounts to be provided under paragraph (1). 

22 (h) AUDIT.—The Secretary shall retain an inde23 pendent, commercial auditor to determine the extent to 

24 which funds provided to the program consortium, and 

25 funds provided under awards made under subsection (f), 
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1 have been expended in a manner consistent with the pur2 poses and requirements of this part. The auditor shall 

3 transmit a report annually to the Secretary, who shall 

4 transmit the report to Congress, along with a plan to rem5 edy any deficiencies cited in the report. 

6 SEC. 21523. UNCONVENTIONAL NATURAL GAS AND OTHER 

7 PETROLEUM RESOURCES PROGRAM. 

8 (a) IN GENERAL.—The Secretary shall carry out ac9 tivities under section 21521(b)(3), to maximize the value 

10 of the onshore unconventional natural gas and other petro11 leum resources of the United States by increasing the sup12 ply of such resources and by reducing the cost and increas13 ing the efficiency of exploration for and production of such 

14 resources, while improving safety and minimizing environ15 mental impacts. 

16 (b) AWARDS.—

17 (1) IN GENERAL.—The Secretary shall carry 

18 out this section through awards made through an 

19 open, competitive process. 

20 (2) CONSORTIA.—In carrying out paragraph 

21 (1), the Secretary shall give preference to making 

22 awards to consortia. 

23 (c) AUDIT.—The Secretary shall retain an inde24 pendent, commercial auditor to determine the extent to 

25 which funds provided under awards made under this sec-
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1 tion have been expended in a manner consistent with the 

2 purposes and requirements of this part. The auditor shall 

3 transmit a report annually to the Secretary, who shall 

4 transmit the report to Congress, along with a plan to rem5 edy any deficiencies cited in the report.

6 (d) FOCUS AREAS.—Awards under this section may 

7 focus on areas including advanced coal-bed methane, deep 

8 drilling, natural gas production from tight sands, natural 

9 gas production from gas shales, innovative exploration and 

10 production techniques, enhanced recovery techniques, and 

11 environmental mitigation of unconventional natural gas 

12 and other petroleum resources exploration and production. 

13 (e) ACTIVITIES BY THE UNITED STATES GEOLOGI14 CAL SURVEY.—The Secretary of the Interior, through the 

15 United States Geological Survey, shall, where appropriate, 

16 carry out programs of long-term research to complement 

17 the programs under this section. 

18 SEC. 21524. ADDITIONAL REQUIREMENTS FOR AWARDS. 

19 (a) DEMONSTRATION PROJECTS.—An application for 

20 an award under this part for a demonstration project shall 

21 describe with specificity the intended commercial use of 

22 the technology to be demonstrated. 

23 (b) FLEXIBILITY IN LOCATING DEMONSTRATION

24 PROJECTS.—Subject to the limitation in section 21521(c), 

25 a demonstration project under this part relating to an 
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1 ultra-deepwater technology or an ultra-deepwater architec2 ture may be conducted in deepwater depths. 

3 (c) INTELLECTUAL PROPERTY AGREEMENTS.—If an 

4 award under this part is made to a consortium (other than 

5 the program consortium), the consortium shall provide to 

6 the Secretary a signed contract agreed to by all members 

7 of the consortium describing the rights of each member 

8 to intellectual property used or developed under the award. 

9 (d) TECHNOLOGY TRANSFER.—Each recipient of an 

10 award under this part shall conduct technology transfer 

11 activities, as appropriate, and outreach activities pursuant 

12 to section 21809. 

13 (e) COST-SHARING REDUCTION FOR INDEPENDENT

14 PRODUCERS.—In applying the cost-sharing requirements 

15 under section 21802 to an award under this part made 

16 solely to an independent producer of oil or gas, the Sec17 retary may reduce the applicable non-Federal requirement 

18 in such section to a level not less than 10 percent of the 

19 cost of the project. 

20 SEC. 21525. ADVISORY COMMITTEES. 

21 (a) ULTRA-DEEPWATER ADVISORY COMMITTEE.—

22 (1) ESTABLISHMENT.—Not later than 270 days 

23 after the date of enactment of this section, the Sec24 retary shall establish an advisory committee to be 

25 known as the Ultra-Deepwater Advisory Committee. 
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1 (2) MEMBERSHIP.—The advisory committee 

2 under this subsection shall be composed of members 

3 appointed by the Secretary and including—

4 (A) individuals with extensive research ex5 perience or operational knowledge of offshore 

6 natural gas and other petroleum exploration 

7 and production; 

8 (B) individuals broadly representative of 

9 the affected interests in ultra-deepwater natural 

10 gas and other petroleum production, including 

11 interests in environmental protection and safe 

12 operations; 

13 (C) no individuals who are Federal employ14 ees; and 

15 (D) no individuals who are board members, 

16 officers, or employees of the program consor17 tium. 

18 (3) DUTIES.—The advisory committee under 

19 this subsection shall—

20 (A) advise the Secretary on the develop21 ment and implementation of programs under 

22 this part related to ultra-deepwater natural gas 

23 and other petroleum resources; and 

24 (B) carry out section 21522(e)(2)(B). 
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1 (4) COMPENSATION.—A member of the advi2 sory committee under this subsection shall serve 

3 without compensation but shall receive travel ex4 penses, including per diem in lieu of subsistence, in 

5 accordance with applicable provisions under sub6 chapter I of chapter 57 of title 5, United States 

7 Code. 

8 (b) UNCONVENTIONAL RESOURCES TECHNOLOGY

9 ADVISORY COMMITTEE.—

10 (1) ESTABLISHMENT.—Not later than 270 days 

11 after the date of enactment of this section, the Sec12 retary shall establish an advisory committee to be 

13 known as the Unconventional Resources Technology 

14 Advisory Committee. 

15 (2) MEMBERSHIP.—The advisory committee 

16 under this subsection shall be composed of members 

17 appointed by the Secretary and including—

18 (A) individuals with extensive research ex19 perience or operational knowledge of unconven20 tional natural gas and other petroleum resource 

21 exploration and production, including inde22 pendent oil and gas producers; 

23 (B) individuals broadly representative of 

24 the affected interests in unconventional natural 

25 gas and other petroleum resource exploration 
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1 and production, including interests in environ2 mental protection and safe operations; and 

3 (C) no individuals who are Federal employ4 ees. 

5 (3) DUTIES.—The advisory committee under 

6 this subsection shall advise the Secretary on the de7 velopment and implementation of activities under 

8 this part related to unconventional natural gas and 

9 other petroleum resources. 

10 (4) COMPENSATION.—A member of the advi11 sory committee under this subsection shall serve 

12 without compensation but shall receive travel ex13 penses, including per diem in lieu of subsistence, in 

14 accordance with applicable provisions under sub15 chapter I of chapter 57 of title 5, United States 

16 Code. 

17 (c) PROHIBITION.—No advisory committee estab18 lished under this section shall make recommendations on 

19 funding awards to consortia or for specific projects. 

20 SEC. 21526. LIMITS ON PARTICIPATION. 

21 (a) IN GENERAL.—An entity shall be eligible to re22 ceive an award under this part only if the Secretary 

23 finds—
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1 (1) that the entity’s participation in the pro2 gram under this part would be in the economic in3 terest of the United States; and 

4 (2) that either—

5 (A) the entity is a United States-owned en6 tity organized under the laws of the United 

7 States; or 

8 (B) the entity is organized under the laws 

9 of the United States and has a parent entity or10 ganized under the laws of a country which af11 fords—

12 (i) to United States-owned entities op13 portunities, comparable to those afforded 

14 to any other entity, to participate in any 

15 cooperative research venture similar to 

16 those authorized under this part; 

17 (ii) to United States-owned entities 

18 local investment opportunities comparable 

19 to those afforded to any other entity; and 

20 (iii) adequate and effective protection 

21 for the intellectual property rights of 

22 United States-owned entities. 

23 (b) SENSE OF CONGRESS AND REPORT.—It is the 

24 Sense of the Congress that ultra-deepwater technology de25 veloped under this part is to be developed primarily for 
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1 production of ultra-deepwater natural gas and other petro2 leum resources of the United States, and that this priority 

3 is to be reflected in the terms of grants, contracts, and 

4 cooperative agreements entered under this part. As part 

5 of the annual Departmental budget submission, the Sec6 retary shall report on all steps taken to implement the pol7 icy described in this subsection. 

8 SEC. 21527. FUND. 

9 There is hereby established in the Treasury of the 

10 United States a separate fund to be known as the ‘‘Ultra11 Deepwater and Unconventional Natural Gas and Other 

12 Petroleum Research Fund’’.

13 SEC. 21528. TRANSFER OF ADVANCED OIL AND GAS EXPLO14 RATION AND PRODUCTION TECHNOLOGIES. 

15 (a) ASSESSMENT.—The Secretary shall review tech16 nology programs throughout the Federal Government to 

17 assess the suitability of technologies developed thereunder 

18 for use in ultradeep drilling research, development, dem19 onstration, and commercial application. 

20 (b) TECHNOLOGY TRANSFER.—Not later than 1 year 

21 after the date of enactment of this Act, the Secretary shall 

22 issue a solicitation seeking organizations knowledgeable of 

23 the technology needs of the ultradeep drilling industry. 

24 The Secretary shall select the most qualified applicant to 

25 manage a program to transfer technologies the Secretary 
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1 determines suitable under subsection (a) to appropriate 

2 entities. The organization selected under section 21522(d) 

3 shall not be eligible for selection under this subsection. 

4 (c) FUNDING.—From the funds available under sec5 tion 21501(b)(3)(C), $1,000,000 shall be available to 

6 carry out this section in each of the fiscal years 2004 

7 through 2007. 

8 SEC. 21529. SUNSET. 

9 The authority provided by this part shall terminate 

10 on September 30, 2010. 

11 SEC. 21530. DEFINITIONS. 

12 In this part: 

13 (1) DEEPWATER.—The term ‘‘deepwater’’ 

14 means a water depth that is greater than 200 but 

15 less than 1,500 meters. 

16 (2) PROGRAM CONSORTIUM.—The term ‘‘pro17 gram consortium’’ means the consortium selected 

18 under section 21522(d). 

19 (3) REMOTE OR INCONSEQUENTIAL.—The term 

20 ‘‘remote or inconsequential’’ has the meaning given 

21 that term in regulations issued by the Office of Gov22 ernment Ethics under section 208(b)(2) of title 18, 

23 United States Code. 
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1 (4) ULTRA-DEEPWATER.—The term ‘‘ultra2 deepwater’’ means a water depth that is equal to or 

3 greater than 1,500 meters. 

4 (5) ULTRA-DEEPWATER ARCHITECTURE.—The 

5 term ‘‘ultra-deepwater architecture’’ means the inte6 gration of technologies for the exploration for, or 

7 production of, natural gas or other petroleum re8 sources located at ultra-deepwater depths. 

9 (6) ULTRA-DEEPWATER TECHNOLOGY.—The 

10 term ‘‘ultra-deepwater technology’’ means a discrete 

11 technology that is specially suited to address one or 

12 more challenges associated with the exploration for, 

13 or production of, natural gas or other petroleum re14 sources located at ultra-deepwater depths. 

15 (7) UNCONVENTIONAL NATURAL GAS AND

16 OTHER PETROLEUM RESOURCE.—The term ‘‘uncon17 ventional natural gas and other petroleum resource’’ 

18 means natural gas and other petroleum resource lo19 cated onshore in an economically inaccessible geo20 logical formation. 

21 Subtitle F—Science 

22 PART 1—AUTHORIZATION OF APPROPRIATIONS 

23 SEC. 21601. SCIENCE. 

24 (a) IN GENERAL.—The following sums are author25 ized to be appropriated to the Secretary for research, de-
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1 velopment, demonstration, and commercial application ac2 tivities of the Office of Science, including activities author3 ized under this subtitle, including the amounts authorized 

4 under the amendment made by section 21634(c)(2)(C), 

5 and including basic energy sciences, advanced scientific 

6 and computing research, biological and environmental re7 search, fusion energy sciences, high energy physics, nu8 clear physics, and research analysis and infrastructure 

9 support: 

10 (1) For fiscal year 2004, $3,785,000,000. 

11 (2) For fiscal year 2005, $4,153,000,000. 

12 (3) For fiscal year 2006, $4,618,000,000. 

13 (4) For fiscal year 2007, $5,310,000,000. 

14 (b) ALLOCATIONS.—From amounts authorized under 

15 subsection (a), the following sums are authorized: 

16 (1) FUSION ENERGY SCIENCES.—(A) For the 

17 Fusion Energy Sciences Program, excluding activi18 ties under sections 21611 and 21612—

19 (i) for fiscal year 2004, $276,000,000; 

20 (ii) for fiscal year 2005, $300,000,000;. 

21 (iii) for fiscal year 2006, $340,000,000; 

22 and 

23 (iv) for fiscal year 2007, $350,000,000. 

24 (B) For activities under section 21611 and for 

25 the project described in section 21612—
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1 (i) for fiscal year 2004, $12,000,000; 

2 (ii) for fiscal year 2005, $20,000,000; 

3 (iii) for fiscal year 2006, $50,000,000; and 

4 (iv) for fiscal year 2007, $75,000,000. 

5 (2) SPALLATION NEUTRON SOURCE.—

6 (A) CONSTRUCTION.—For construction of 

7 the Spallation Neutron Source—

8 (i) for fiscal year 2004, $124,600,000; 

9 (ii) for fiscal year 2005, $79,800,000; 

10 and 

11 (iii) for fiscal year 2006, $41,100,000 

12 for completion of construction. 

13 (B) OTHER PROJECT FUNDING.—For 

14 other project costs (including research and de15 velopment necessary to complete the project, 

16 preoperations costs, and capital equipment re17 lated to construction) of the Spallation Neutron 

18 Source, $103,279,000 for the period encom19 passing fiscal years 2003 through 2006, to re20 main available until expended through Sep21 tember 30, 2006. 

22 (3) NANOTECHNOLOGY RESEARCH AND DEVEL23 OPMENT.—For activities under section 21633—

24 (A) for fiscal year 2004, $265,000,000; 

25 (B) for fiscal year 2005, $292,000,000; 
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1 (C) for fiscal year 2006, $322,000,000; 

2 and 

3 (D) for fiscal year 2007, $355,000,000. 

4 (4) SCIENCE AND TECHNOLOGY SCHOLARSHIP

5 PROGRAM.—For activities under section 21636—

6 (A) for fiscal year 2004, $800,000; 

7 (B) for fiscal year 2005, $1,600,000; 

8 (C) for fiscal year 2006, $2,000,000; and 

9 (D) for fiscal year 2007, $2,000,000. 

10 (5) GENOMES TO LIFE.—For activities under 

11 section 21641—

12 (A) $100,000,000 for fiscal year 2004; and 

13 (B) such sums as may be necessary for fis14 cal years 2005 through 2007. 

15 (c) LIMITS ON USE OF FUNDS.—Of the funds au16 thorized under subsection (b)(1), no funds shall be avail17 able for implementation of the plan described in section 

18 21612. 

19 PART 2—FUSION ENERGY SCIENCES 

20 SEC. 21611. ITER. 

21 (a) IN GENERAL.—The United States is authorized 

22 to participate in ITER in accordance with the provisions 

23 of this section. 
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1 (b) AGREEMENT.—(1) The Secretary is authorized to 

2 negotiate an agreement for United States participation in 

3 ITER. 

4 (2) Any agreement for United States participation in 

5 ITER shall, at a minimum—

6 (A) clearly define the United States financial 

7 contribution to construction and operating costs; 

8 (B) ensure that the share of ITER’s high-tech9 nology components manufactured in the United 

10 States is at least proportionate to the United States 

11 financial contribution to ITER; 

12 (C) ensure that the United States will not be fi13 nancially responsible for cost overruns in compo14 nents manufactured in other ITER participating 

15 countries; 

16 (D) guarantee the United States full access to 

17 all data generated by ITER; 

18 (E) enable United States researchers to propose 

19 and carry out an equitable share of the experiments 

20 at ITER; 

21 (F) provide the United States with a role in all 

22 collective decisionmaking related to ITER; and 

23 (G) describe the process for discontinuing or 

24 decommissioning ITER and any United States role 

25 in those processes. 
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1 (c) PLAN.—The Secretary, in consultation with the 

2 Fusion Energy Sciences Advisory Committee, shall de3 velop a plan for the participation of United States sci4 entists in ITER that shall include the United States re5 search agenda for ITER, methods to evaluate whether 

6 ITER is promoting progress toward making fusion a reli7 able and affordable source of power, and a description of 

8 how work at ITER will relate to other elements of the 

9 United States fusion program. The Secretary shall request 

10 a review of the plan by the National Academy of Sciences. 

11 (d) LIMITATION.—No funds shall be expended for the 

12 construction of ITER until the Secretary has transmitted 

13 to the Congress—

14 (1) the agreement negotiated pursuant to sub15 section (b) and 120 days have elapsed since that 

16 transmission; 

17 (2) a report describing the management struc18 ture of ITER and providing a fixed dollar estimate 

19 of the cost of United States participation in the con20 struction of ITER, and 120 days have elapsed since 

21 that transmission; 

22 (3) a report describing how United States par23 ticipation in ITER will be funded without reducing 

24 funding for other programs in the Office of Science, 
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1 including other fusion programs, and 60 days have 

2 elapsed since that transmission; and 

3 (4) the plan required by subsection (c) (but not 

4 the National Academy of Sciences review of that 

5 plan), and 60 days have elapsed since that trans6 mission. 

7 (e) DEFINITIONS.—In this section—

8 (1) the term ‘‘construction’’ means the physical 

9 construction of the ITER facility, and the physical 

10 construction, purchase, or manufacture of equipment 

11 or components that are specifically designed for the 

12 ITER facility, but does not mean the design of the 

13 facility, equipment, or components; and 

14 (2) the term ‘‘ITER’’ means the international 

15 burning plasma fusion research project in which the 

16 President announced United States participation on 

17 January 30, 2003.

18 SEC. 21612. PLAN FOR FUSION EXPERIMENT. 

19 (a) IN GENERAL.—If at any time during the negotia20 tions on ITER, the Secretary determines that construction 

21 and operation of ITER is unlikely or infeasible, the Sec22 retary shall send to Congress, as part of the budget re23 quest for the following year, a plan for implementing the 

24 domestic burning plasma experiment known as FIRE, in25 cluding costs and schedules for such a plan. The Secretary 
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1 shall refine such plan in full consultation with the Fusion 

2 Energy Sciences Advisory Committee and shall also trans3 mit such plan to the National Academy of Sciences for 

4 review. 

5 (b) DEFINITIONS.—As used in this section—

6 (1) the term ‘‘ITER’’ has the meaning given 

7 that term in section 21611; and 

8 (2) the term ‘‘FIRE’’ means the Fusion Igni9 tion Research Experiment, the fusion research ex10 periment for which design work has been supported 

11 by the Department as a possible alternative burning 

12 plasma experiment in the event that ITER fails to 

13 move forward. 

14 SEC. 21613. PLAN FOR FUSION ENERGY SCIENCES PRO15 GRAM. 

16 (a) DECLARATION OF POLICY.—It shall be the policy 

17 of the United States to conduct research, development, 

18 demonstration, and commercial application to provide for 

19 the scientific, engineering, and commercial infrastructure 

20 necessary to ensure that the United States is competitive 

21 with other nations in providing fusion energy for its own 

22 needs and the needs of other nations, including by dem23 onstrating electric power or hydrogen production for the 

24 United States energy grid utilizing fusion energy at the 

25 earliest date possible. 
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1 (b) FUSION ENERGY PLAN.—

2 (1) IN GENERAL.—Within 6 months after the 

3 date of enactment of this Act, the Secretary shall 

4 transmit to Congress a plan for carrying out the pol5 icy set forth in subsection (a), including cost esti6 mates, proposed budgets, potential international 

7 partners, and specific programs for implementing 

8 such policy. 

9 (2) REQUIREMENTS OF PLAN.—Such plan shall 

10 also ensure that—

11 (A) existing fusion research facilities are 

12 more fully utilized; 

13 (B) fusion science, technology, theory, ad14 vanced computation, modeling, and simulation 

15 are strengthened; 

16 (C) new magnetic and inertial fusion re17 search facilities are selected based on scientific 

18 innovation, cost effectiveness, and their poten19 tial to advance the goal of practical fusion en20 ergy at the earliest date possible; 

21 (D) such facilities that are selected are 

22 funded at a cost-effective rate; 

23 (E) communication of scientific results and 

24 methods between the fusion energy science com-
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1 munity and the broader scientific and tech2 nology communities is improved; 

3 (F) inertial confinement fusion facilities 

4 are utilized to the extent practicable for the 

5 purpose of inertial fusion energy research and 

6 development; and 

7 (G) attractive alternative inertial and mag8 netic fusion energy approaches are more fully 

9 explored. 

10 (3) REPORT ON FUSION MATERIALS AND TECH11 NOLOGY PROJECT.—In addition, the plan required 

12 by this subsection shall also address the status of, 

13 and to the degree possible, the costs and schedules 

14 for—

15 (A) the design and implementation of 

16 international or national facilities for the test17 ing of fusion materials; and 

18 (B) the design and implementation of 

19 international or national facilities for the test20 ing and development of key fusion technologies. 

21 PART 3—SPALLATION NEUTRON SOURCE 

22 SEC. 21621. DEFINITION. 

23 For the purposes of this part, the term ‘‘Spallation 

24 Neutron Source’’ means Department Project 99–E–334, 

25 Oak Ridge National Laboratory, Oak Ridge, Tennessee. 
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1 SEC. 21622. REPORT. 

2 The Secretary shall report on the Spallation Neutron 

3 Source as part of the Department’s annual budget submis4 sion, including a description of the achievement of mile5 stones, a comparison of actual costs to estimated costs, 

6 and any changes in estimated project costs or schedule. 

7 SEC. 21623. LIMITATIONS. 

8 The total amount obligated by the Department, in9 cluding prior year appropriations, for the Spallation Neu10 tron Source may not exceed—

11 (1) $1,192,700,000 for costs of construction; 

12 (2) $219,000,000 for other project costs; and 

13 (3) $1,411,700,000 for total project cost. 

14 PART 4—MISCELLANEOUS 

15 SEC. 21631. FACILITY AND INFRASTRUCTURE SUPPORT 

16 FOR NONMILITARY ENERGY LABORATORIES. 

17 (a) FACILITY POLICY.—The Secretary shall develop 

18 and implement a strategy for the nonmilitary energy lab19 oratories and facilities of the Office of Science. Such strat20 egy shall provide a cost-effective means for—

21 (1) maintaining existing facilities and infra22 structure, as needed; 

23 (2) closing unneeded facilities; 

24 (3) making facility modifications; and 

25 (4) building new facilities. 

26 (b) REPORT.—
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1 (1) TRANSMITTAL.—The Secretary shall pre2 pare and transmit, along with the President’s budget 

3 request to the Congress for fiscal year 2005, a re4 port containing the strategy developed under sub5 section (a). 

6 (2) CONTENTS.—For each nonmilitary energy 

7 laboratory and facility, such report shall contain—

8 (A) the current priority list of proposed fa9 cilities and infrastructure projects, including 

10 cost and schedule requirements; 

11 (B) a current ten-year plan that dem12 onstrates the reconfiguration of its facilities and 

13 infrastructure to meet its missions and to ad14 dress its long-term operational costs and return 

15 on investment; 

16 (C) the total current budget for all facili17 ties and infrastructure funding; and 

18 (D) the current status of each facilities 

19 and infrastructure project compared to the 

20 original baseline cost, schedule, and scope. 

21 SEC. 21632. RESEARCH REGARDING PRECIOUS METAL CA22 TALYSIS. 

23 From the amounts authorized to be appropriated to 

24 the Secretary under section 21601, such sums as may be 

25 necessary for each of the fiscal years 2004, 2005, and 
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1 2006 may be used to carry out research in the use of pre2 cious metals (excluding platinum, palladium, and rho3 dium) in catalysis. 

4 SEC. 21633. NANOTECHNOLOGY RESEARCH AND DEVELOP5 MENT. 

6 (a) IN GENERAL.—The Secretary, acting through the 

7 Office of Science, shall implement a Nanotechnology Re8 search and Development Program to promote 

9 nanotechnology research, development, demonstration, 

10 education, technology transfer, and commercial applica11 tion activities as necessary to ensure continued United 

12 States leadership in nanotechnology across scientific and 

13 engineering disciplines. 

14 (b) PROGRAM ACTIVITIES.—The activities of the 

15 Nanotechnology Research and Development Program shall 

16 be designed to—

17 (1) provide sustained support for 

18 nanotechnology research and development through—

19 (A) grants to individual investigators and 

20 interdisciplinary teams of investigators; and 

21 (B) establishment of interdisciplinary re22 search centers and advanced technology user fa23 cilities; 
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1 (2) ensure that solicitation and evaluation of 

2 proposals under the Program encourage interdiscipli3 nary research; 

4 (3) expand education and training of under5 graduate and graduate students in interdisciplinary 

6 nanotechnology science and engineering; 

7 (4) accelerate the commercial application of 

8 nanotechnology innovations in the private sector; 

9 (5) ensure that societal and ethical concerns 

10 will be addressed as the technology is developed by—

11 (A) establishing a research program to 

12 identify societal and ethical concerns related to 

13 nanotechnology, and ensuring that the results 

14 of such research are widely disseminated; and 

15 (B) integrating, insofar as possible, re16 search on societal and ethical concerns with 

17 nanotechnology research and development; and 

18 (6) ensure that the potential of nanotechnology 

19 to produce or facilitate the production of clean, inex20 pensive energy is realized by supporting 

21 nanotechnology energy applications research and de22 velopment. 

23 (c) DEFINITIONS.—For the purposes of this sec24 tion—
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1 (1) the term ‘‘nanotechnology’’ means science 

2 and engineering aimed at creating materials, devices, 

3 and systems at the atomic and molecular level; and 

4 (2) the term ‘‘advanced technology user facil5 ity’’ means a nanotechnology research and develop6 ment facility supported, in whole or in part, by Fed7 eral funds that is open to all United States research8 ers on a competitive, merit-reviewed basis.

9 (d) REPORT.—Within 2 years after the date of enact10 ment of this Act, the Secretary shall transmit to the Con11 gress a report describing the projects to identify societal 

12 and ethical concerns related to nanotechnology and the 

13 funding provided to support these projects. 

14 SEC. 21634. ADVANCED SCIENTIFIC COMPUTING FOR EN15 ERGY MISSIONS. 

16 (a) IN GENERAL.—The Secretary, acting through the 

17 Office of Science, shall support a program to advance the 

18 Nation’s computing capability across a diverse set of 

19 grand challenge computationally based science problems 

20 related to departmental missions. 

21 (b) DUTIES OF THE OFFICE OF SCIENCE.—In car22 rying out the program under this section, the Office of 

23 Science shall—

24 (1) advance basic science through computation 

25 by developing software to solve grand challenge 
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1 science problems on new generations of computing 

2 platforms; 

3 (2) enhance the foundations for scientific com4 puting by developing the basic mathematical and 

5 computing systems software needed to take full ad6 vantage of the computing capabilities of computers 

7 with peak speeds of 100 teraflops or more, some of 

8 which may be unique to the scientific problem of in9 terest; 

10 (3) enhance national collaboratory and net11 working capabilities by developing software to inte12 grate geographically separated researchers into ef13 fective research teams and to facilitate access to and 

14 movement and analysis of large (petabyte) data sets; 

15 (4) develop and maintain a robust scientific 

16 computing hardware infrastructure to ensure that 

17 the computing resources needed to address depart18 mental missions are available; and 

19 (5) explore new computing approaches and 

20 technologies that promise to advance scientific com21 puting. 

22 (c) HIGH-PERFORMANCE COMPUTING ACT OF 1991 

23 AMENDMENTS.—The High-Performance Computing Act 

24 of 1991 is amended—

25 (1) in section 4 (15 U.S.C. 5503)—
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1 (A) in paragraph (3)—

2 (i) by striking ‘‘means’’ and inserting 

3 ‘‘and ‘networking and information tech4 nology’ mean’’; and 

5 (ii) by striking ‘‘(including vector 

6 supercomputers and large scale parallel 

7 systems)’’; and 

8 (B) in paragraph (4), by striking ‘‘packet 

9 switched’’; and 

10 (2) in section 203 (15 U.S.C. 5523)—

11 (A) in subsection (a), by striking all after 

12 ‘‘As part of the’’ and inserting ‘‘Networking 

13 and Information Technology Research and De14 velopment Program, the Secretary of Energy 

15 shall conduct basic and applied research in net16 working and information technology, with em17 phasis on—

18 ‘‘(1) supporting fundamental research in the 

19 physical sciences and engineering, and energy appli20 cations; 

21 ‘‘(2) providing supercomputer access and ad22 vanced communication capabilities and facilities to 

23 scientific researchers; and 

24 ‘‘(3) developing tools for distributed scientific 

25 collaboration.’’; 
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1 (B) in subsection (b), by striking ‘‘Pro2 gram’’ and inserting ‘‘Networking and Informa3 tion Technology Research and Development 

4 Program’’; and 

5 (C) by amending subsection (e) to read as 

6 follows: 

7 ‘‘(e) AUTHORIZATION OF APPROPRIATIONS.—There 

8 are authorized to be appropriated to the Secretary of En9 ergy to carry out the Networking and Information Tech10 nology Research and Development Program such sums as 

11 may be necessary for fiscal years 2004 through 2007.’’. 

12 (d) COORDINATION.—The Secretary shall ensure that 

13 the program under this section is integrated and con14 sistent with—

15 (1) the Accelerated Strategic Computing Initia16 tive of the National Nuclear Security Administra17 tion; and 

18 (2) other national efforts related to advanced 

19 scientific computing for science and engineering.

20 (e) REPORT.—(1) Before undertaking any new initia21 tive to develop new advanced architecture for high-speed 

22 computing, the Secretary, through the Director of the Of23 fice of Science, shall transmit a report to the Congress 

24 describing—
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1 (A) the expected duration and cost of the initia2 tive; 

3 (B) the technical milestones the initiative is de4 signed to achieve; 

5 (C) how institutions of higher education and 

6 private firms will participate in the initiative; and 

7 (D) why the goals of the initiative could not be 

8 achieved through existing programs. 

9 (2) No funds may be expended on any initiative de10 scribed in paragraph (1) until 30 days after the report 

11 required by that paragraph is transmitted to the Congress. 

12 SEC. 21635. NITROGEN FIXATION. 

13 The Secretary, acting through the Office of Science, 

14 shall support a program of research, development, dem15 onstration, and commercial application on biological nitro16 gen fixation, including plant genomics research relevant 

17 to the development of commercial crop varieties with en18 hanced nitrogen fixation efficiency and ability.

19 SEC. 21636. DEPARTMENT OF ENERGY SCIENCE AND TECH20 NOLOGY SCHOLARSHIP PROGRAM. 

21 (a) ESTABLISHMENT OF PROGRAM.—

22 (1) IN GENERAL.—The Secretary shall establish 

23 a Department of Energy Science and Technology 

24 Scholarship Program to award scholarships to indi-
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1 viduals that is designed to recruit and prepare stu2 dents for careers in the Department. 

3 (2) COMPETITIVE PROCESS.—Individuals shall 

4 be selected to receive scholarships under this section 

5 through a competitive process primarily on the basis 

6 of academic merit, with consideration given to finan7 cial need and the goal of promoting the participation 

8 of individuals identified in section 33 or 34 of the 

9 Science and Engineering Equal Opportunities Act 

10 (42 U.S.C. 1885a or 1885b). 

11 (3) SERVICE AGREEMENTS.—To carry out the 

12 Program the Secretary shall enter into contractual 

13 agreements with individuals selected under para14 graph (2) under which the individuals agree to serve 

15 as full-time employees of the Department, for the 

16 period described in subsection (f)(1), in positions 

17 needed by the Department and for which the individ18 uals are qualified, in exchange for receiving a schol19 arship. 

20 (b) SCHOLARSHIP ELIGIBILITY.—In order to be eligi21 ble to participate in the Program, an individual must—

22 (1) be enrolled or accepted for enrollment as a 

23 full-time student at an institution of higher edu24 cation in an academic program or field of study de-
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1 scribed in the list made available under subsection 

2 (d); 

3 (2) be a United States citizen; and 

4 (3) at the time of the initial scholarship award, 

5 not be a Federal employee as defined in section 

6 2105 of title 5 of the United States Code. 

7 (c) APPLICATION REQUIRED.—An individual seeking 

8 a scholarship under this section shall submit an applica9 tion to the Secretary at such time, in such manner, and 

10 containing such information, agreements, or assurances as 

11 the Secretary may require. 

12 (d) ELIGIBLE ACADEMIC PROGRAMS.—The Secretary 

13 shall make publicly available a list of academic programs 

14 and fields of study for which scholarships under the Pro15 gram may be utilized, and shall update the list as nec16 essary. 

17 (e) SCHOLARSHIP REQUIREMENT.—

18 (1) IN GENERAL.—The Secretary may provide a 

19 scholarship under the Program for an academic year 

20 if the individual applying for the scholarship has 

21 submitted to the Secretary, as part of the applica22 tion required under subsection (c), a proposed aca23 demic program leading to a degree in a program or 

24 field of study on the list made available under sub25 section (d). 
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1 (2) DURATION OF ELIGIBILITY.—An individual 

2 may not receive a scholarship under this section for 

3 more than 4 academic years, unless the Secretary 

4 grants a waiver. 

5 (3) SCHOLARSHIP AMOUNT.—The dollar 

6 amount of a scholarship under this section for an 

7 academic year shall be determined under regulations 

8 issued by the Secretary, but shall in no case exceed 

9 the cost of attendance. 

10 (4) AUTHORIZED USES.—A scholarship pro11 vided under this section may be expended for tuition, 

12 fees, and other authorized expenses as established by 

13 the Secretary by regulation. 

14 (5) CONTRACTS REGARDING DIRECT PAYMENTS

15 TO INSTITUTIONS.—The Secretary may enter into a 

16 contractual agreement with an institution of higher 

17 education under which the amounts provided for a 

18 scholarship under this section for tuition, fees, and 

19 other authorized expenses are paid directly to the in20 stitution with respect to which the scholarship is 

21 provided. 

22 (f) PERIOD OF OBLIGATED SERVICE.—

23 (1) DURATION OF SERVICE.—The period of 

24 service for which an individual shall be obligated to 

25 serve as an employee of the Department is, except 
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1 as provided in subsection (h)(2), 24 months for each 

2 academic year for which a scholarship under this 

3 section is provided. 

4 (2) SCHEDULE FOR SERVICE.—(A) Except as 

5 provided in subparagraph (B), obligated service 

6 under paragraph (1) shall begin not later than 60 

7 days after the individual obtains the educational de8 gree for which the scholarship was provided. 

9 (B) The Secretary may defer the obligation of 

10 an individual to provide a period of service under 

11 paragraph (1) if the Secretary determines that such 

12 a deferral is appropriate. The Secretary shall pre13 scribe the terms and conditions under which a serv14 ice obligation may be deferred through regulation. 

15 (g) PENALTIES FOR BREACH OF SCHOLARSHIP

16 AGREEMENT.—

17 (1) FAILURE TO COMPLETE ACADEMIC TRAIN18 ING.—Scholarship recipients who fail to maintain a 

19 high level of academic standing, as defined by the 

20 Secretary by regulation, who are dismissed from 

21 their educational institutions for disciplinary rea22 sons, or who voluntarily terminate academic training 

23 before graduation from the educational program for 

24 which the scholarship was awarded, shall be in 

25 breach of their contractual agreement and, in lieu of 
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1 any service obligation arising under such agreement, 

2 shall be liable to the United States for repayment 

3 within 1 year after the date of default of all scholar4 ship funds paid to them and to the institution of 

5 higher education on their behalf under the agree6 ment, except as provided in subsection (h)(2). The 

7 repayment period may be extended by the Secretary 

8 when determined to be necessary, as established by 

9 regulation. 

10 (2) FAILURE TO BEGIN OR COMPLETE THE

11 SERVICE OBLIGATION OR MEET THE TERMS AND

12 CONDITIONS OF DEFERMENT.—Scholarship recipi13 ents who, for any reason, fail to begin or complete 

14 their service obligation after completion of academic 

15 training, or fail to comply with the terms and condi16 tions of deferment established by the Secretary pur17 suant to subsection (f)(2)(B), shall be in breach of 

18 their contractual agreement. When recipients breach 

19 their agreements for the reasons stated in the pre20 ceding sentence, the recipient shall be liable to the 

21 United States for an amount equal to—

22 (A) the total amount of scholarships re23 ceived by such individual under this section; 

24 plus 
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1 (B) the interest on the amounts of such 

2 awards which would be payable if at the time 

3 the awards were received they were loans bear4 ing interest at the maximum legal prevailing 

5 rate, as determined by the Treasurer of the 

6 United States, 

7 multiplied by 3. 

8 (h) WAIVER OR SUSPENSION OF OBLIGATION.—

9 (1) DEATH OF INDIVIDUAL.—Any obligation of 

10 an individual incurred under the Program (or a con11 tractual agreement thereunder) for service or pay12 ment shall be canceled upon the death of the indi13 vidual. 

14 (2) IMPOSSIBILITY OR EXTREME HARDSHIP.—

15 The Secretary shall by regulation provide for the 

16 partial or total waiver or suspension of any obliga17 tion of service or payment incurred by an individual 

18 under the Program (or a contractual agreement 

19 thereunder) whenever compliance by the individual is 

20 impossible or would involve extreme hardship to the 

21 individual, or if enforcement of such obligation with 

22 respect to the individual would be contrary to the 

23 best interests of the Government. 

24 (i) DEFINITIONS.—In this section the following defi25 nitions apply: 
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1 (1) COST OF ATTENDANCE.—The term ‘‘cost of 

2 attendance’’ has the meaning given that term in sec3 tion 472 of the Higher Education Act of 1965 (20 

4 U.S.C. 1087ll). 

5 (2) INSTITUTION OF HIGHER EDUCATION.—The 

6 term ‘‘institution of higher education’’ has the 

7 meaning given that term in section 101(a) of the 

8 Higher Education Act of 1965 (20 U.S.C. 1001(a)). 

9 (3) PROGRAM.—The term ‘‘Program’’ means 

10 the Department of Energy Science and Technology 

11 Scholarship Program established under this section.

12 PART 5—GENOMES TO LIFE 

13 SEC. 21641. GENOMES TO LIFE. 

14 (a) PROGRAM.—

15 (1) ESTABLISHMENT.—The Secretary shall es16 tablish a research, development, and demonstration 

17 program in genetics, protein science, and computa18 tional biology of microbes and plants to support the 

19 energy and environmental mission of the Depart20 ment. 

21 (2) GRANTS.—The program shall support indi22 vidual investigators and multidisciplinary teams of 

23 investigators through competitive, merit-reviewed 

24 grants. 
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1 (3) CONSULTATION.—In carrying out the pro2 gram, the Secretary shall consult with other Federal 

3 agencies that conduct genetic and protein research. 

4 (b) GOALS.—The program shall have the goal of de5 veloping technologies and methods based on the biological 

6 functions of microbes and plants that —

7 (1) can facilitate the production of fuels, includ8 ing hydrogen; 

9 (2) convert carbon dioxide to organic carbon; 

10 and 

11 (3) detoxify soils and water at Department fa12 cilities contaminated with heavy metals and radio13 logical materials. 

14 (c) PLAN.—

15 (1) DEVELOPMENT OF PLAN.—Within one year 

16 after the date of enactment of this Act, the Sec17 retary shall prepare and transmit to the Congress a 

18 research plan describing how the program author19 ized pursuant to this section will be undertaken to 

20 accomplish the program goals established in sub21 section (b). 

22 (2) REVIEW OF PLAN.—The Secretary shall 

23 contract with the National Academy of Sciences to 

24 review the research plan developed under this sub25 section. The Secretary shall transmit the review to 
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1 the Congress not later than 6 months after trans2 mittal of the research plan under paragraph (1), 

3 along with the Secretary’s response to the rec4 ommendations contained in the review. 

5 (d) FACILITIES.—In carrying out the program under 

6 this section, the Secretary may construct, acquire, and op7 erate facilities necessary to carry out this section. 

8 (e) PROHIBITION ON BIOMEDICAL OR HUMAN SUB9 JECT RESEARCH.—(1) In carrying out this program, the 

10 Secretary shall not conduct biomedical research. 

11 (2) Nothing in this section shall authorize the Sec12 retary to conduct any research or demonstrations—

13 (A) on human cells or human subjects; or 

14 (B) designed to have any application with re15 spect to human cells or human subjects. 

16 Subtitle G—Energy and 

17 Environment 

18 SEC. 21701. AUTHORIZATION OF APPROPRIATIONS. 

19 (a) UNITED STATES-MEXICO ENERGY TECHNOLOGY

20 COOPERATION.—The following sums are authorized to be 

21 appropriated to the Secretary to carry out activities under 

22 section 21702: 

23 (1) For fiscal year 2004, $5,000,000. 

24 (2) For fiscal year 2005, $6,000,000. 

25 (3) For fiscal year 2006, $6,000,000. 
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1 (4) For fiscal year 2007, $6,000,000. 

2 (b) WASTE REDUCTION AND USE OF ALTER3 NATIVES.—There are authorized to be appropriated to the 

4 Secretary to carry out activities under section 21703, 

5 $500,000 for fiscal year 2004. 

6 SEC. 21702. UNITED STATES-MEXICO ENERGY TECHNOLOGY 

7 COOPERATION. 

8 (a) PROGRAM.—The Secretary shall establish a re9 search, development, demonstration, and commercial ap10 plication program to be carried out in collaboration with 

11 entities in Mexico and the United States to promote en12 ergy efficient, environmentally sound economic develop13 ment along the United States-Mexico border. 

14 (b) PROGRAM MANAGEMENT.—The program under 

15 subsection (a) shall be managed by the Department of En16 ergy Carlsbad Environmental Management Field Office. 

17 (c) TECHNOLOGY TRANSFER.—In carrying out 

18 projects and activities under this section, the Secretary 

19 shall assess the applicability of technology developed under 

20 the Environmental Management Science Program of the 

21 Department. 

22 (d) INTELLECTUAL PROPERTY.—In carrying out this 

23 section, the Secretary shall comply with the requirements 

24 of any agreement entered into between the United States 

25 and Mexico regarding intellectual property protection. 
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1 SEC. 21703. WASTE REDUCTION AND USE OF ALTER2 NATIVES. 

3 (a) GRANT AUTHORITY.—The Secretary is author4 ized to make a single grant to a qualified institution to 

5 examine and develop the feasibility of burning post-con6 sumer carpet in cement kilns as an alternative energy 

7 source. The purposes of the grant shall include deter8 mining—

9 (1) how post-consumer carpet can be burned 

10 without disrupting kiln operations; 

11 (2) the extent to which overall kiln emissions 

12 may be reduced; 

13 (3) the emissions of air pollutants and other 

14 relevant environmental impacts; and 

15 (4) how this process provides benefits to both 

16 cement kiln operations and carpet suppliers. 

17 (b) QUALIFIED INSTITUTION.—For the purposes of 

18 subsection (a), a qualified institution is a research-inten19 sive institution of higher education with demonstrated ex20 pertise in the fields of fiber recycling and logistical mod21 eling of carpet waste collection and preparation. 

22 SEC. 21704. COAL GASIFICATION. 

23 The Secretary is authorized to provide loan guaran24 tees for a project to produce energy from a plant using 

25 integrated gasification combined cycle technology of at 

26 least 400 megawatts in capacity that produces power at 
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1 competitive rates in deregulated energy generation mar2 kets and that does not receive any subsidy (direct or indi3 rect) from ratepayers. 

4 SEC. 21705. PETROLEUM COKE GASIFICATION. 

5 The Secretary is authorized to provide loan guaran6 tees for at least one petroleum coke gasification 

7 polygeneration project. 

8 SEC. 21706. OTHER BIOPOWER AND BIOENERGY. 

9 The Secretary shall conduct a program to assist in 

10 the planning, design, and implementation of projects to 

11 convert rice straw, rice hulls, soybean matter, poultry fat, 

12 poultry waste, sugarcane bagasse, forest thinnings, and 

13 barley grain into biopower and biofuels.

14 SEC. 21707. COAL TECHNOLOGY LOAN. 

15 There are authorized to be appropriated to the Sec16 retary $125,000,000 to provide a loan to the owner of the 

17 experimental plant constructed under United States De18 partment of Energy cooperative agreement number DE–

19 FC22–91PC99544 on such terms and conditions as the 

20 Secretary determines, including interest rates and upfront 

21 payments. 

22 SEC. 21708. FUEL CELL TEST CENTER. 

23 (a) STUDY.—Not later than 1 year after the date of 

24 enactment of this Act, the Secretary shall transmit to the 

25 Congress a report on the results of a study of the estab-
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1 lishment of a test center for next-generation fuel cells at 

2 an institution of higher education that has available a con3 tinuous source of hydrogen and access to the electric 

4 transmission grid. Such report shall include a conceptual 

5 design for such test center and a projection of the costs 

6 of establishing the test center. 

7 (b) AUTHORIZATION OF APPROPRIATIONS.—There 

8 are authorized to be appropriated to the Secretary for car9 rying out this section $500,000. 

10 SEC. 21709. FUEL CELL TRANSIT BUS DEMONSTRATION. 

11 The Secretary shall establish a transit bus dem12 onstration program to make competitive, merit-based 

13 awards for five-year projects to demonstrate not more 

14 than 12 fuel cell transit buses (and necessary infrastruc15 ture) in three geographically dispersed localities. In select16 ing projects under this section, the Secretary shall give 

17 preference to projects that are most likely to mitigate con18 gestion and improve air quality. There are authorized to 

19 be appropriated to the Secretary $10,000,000 for each of 

20 the fiscal years 2004 through 2007 for carrying out this 

21 section. 

22 Subtitle H—Management 

23 SEC. 21801. AVAILABILITY OF FUNDS. 

24 Funds authorized to be appropriated to the Depart25 ment under this title shall remain available until expended. 
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1 SEC. 21802. COST SHARING. 

2 (a) RESEARCH AND DEVELOPMENT.—Except as oth3 erwise provided in this title, for research and development 

4 programs carried out under this title, the Secretary shall 

5 require a commitment from non-Federal sources of at 

6 least 20 percent of the cost of the project. The Secretary 

7 may reduce or eliminate the non-Federal requirement 

8 under this subsection if the Secretary determines that the 

9 research and development is of a basic or fundamental na10 ture. 

11 (b) DEMONSTRATION AND COMMERCIAL APPLICA12 TION.—Except as otherwise provided in this title, the Sec13 retary shall require at least 50 percent of the costs directly 

14 and specifically related to any demonstration or commer15 cial application project under this title to be provided from 

16 non-Federal sources. The Secretary may reduce the non17 Federal requirement under this subsection if the Secretary 

18 determines that the reduction is necessary and appropriate 

19 considering the technological risks involved in the project 

20 and is necessary to meet the objectives of this title. 

21 (c) CALCULATION OF AMOUNT.—In calculating the 

22 amount of the non-Federal commitment under subsection 

23 (a) or (b), the Secretary may include personnel, services, 

24 equipment, and other resources. 
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1 SEC. 21803. MERIT REVIEW OF PROPOSALS. 

2 Awards of funds authorized under this title shall be 

3 made only after an impartial review of the scientific and 

4 technical merit of the proposals for such awards has been 

5 carried out by or for the Department. 

6 SEC. 21804. EXTERNAL TECHNICAL REVIEW OF DEPART7 MENTAL PROGRAMS. 

8 (a) NATIONAL ENERGY RESEARCH AND DEVELOP9 MENT ADVISORY BOARDS.—(1) The Secretary shall estab10 lish one or more advisory boards to review Department 

11 research, development, demonstration, and commercial ap12 plication programs in the following areas: 

13 (A) Energy efficiency. 

14 (B) Renewable energy. 

15 (C) Nuclear energy. 

16 (D) Fossil energy. 

17 (2) The Secretary may designate an existing advisory 

18 board within the Department to fulfill the responsibilities 

19 of an advisory board under this subsection, and may enter 

20 into appropriate arrangements with the National Academy 

21 of Sciences to establish such an advisory board. 

22 (b) OFFICE OF SCIENCE ADVISORY COMMITTEES.—

23 (1) UTILIZATION OF EXISTING COMMITTEES.—

24 The Secretary shall continue to use the scientific 

25 program advisory committees chartered under the 

26 Federal Advisory Committee Act by the Office of 
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1 Science to oversee research and development pro2 grams under that Office. 

3 (2) SCIENCE ADVISORY COMMITTEE.—

4 (A) ESTABLISHMENT.—There shall be in 

5 the Office of Science a Science Advisory Com6 mittee that includes the chairs of each of the 

7 advisory committees described in paragraph (1). 

8 (B) RESPONSIBILITIES.—The Science Ad9 visory Committee shall—

10 (i) serve as the science advisor to the 

11 Assistant Secretary for Science created 

12 under section 209 of the Department of 

13 Energy Organization Act, as added by sec14 tion 22001 of this Act; 

15 (ii) advise the Assistant Secretary 

16 with respect to the well-being and manage17 ment of the National Laboratories and sin18 gle-purpose research facilities; 

19 (iii) advise the Assistant Secretary 

20 with respect to education and workforce 

21 training activities required for effective 

22 short-term and long-term basic and applied 

23 research activities of the Office of Science; 

24 and 
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1 (iv) advise the Assistant Secretary 

2 with respect to the well being of the uni3 versity research programs supported by the 

4 Office of Science. 

5 (c) MEMBERSHIP.—Each advisory board under this 

6 section shall consist of persons with appropriate expertise 

7 representing a diverse range of interests. 

8 (d) MEETINGS AND PURPOSES.—Each advisory 

9 board under this section shall meet at least semi-annually 

10 to review and advise on the progress made by the respec11 tive research, development, demonstration, and commer12 cial application program or programs. The advisory board 

13 shall also review the measurable cost and performance14 based goals for such programs as established under sec15 tion 20002, and the progress on meeting such goals. 

16 (e) PERIODIC REVIEWS AND ASSESSMENTS.—The 

17 Secretary shall enter into appropriate arrangements with 

18 the National Academy of Sciences to conduct periodic re19 views and assessments of the programs authorized by this 

20 title, the measurable cost and performance-based goals for 

21 such programs as established under section 20002, if any, 

22 and the progress on meeting such goals. Such reviews and 

23 assessments shall be conducted every 5 years, or more 

24 often as the Secretary considers necessary, and the Sec-
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1 retary shall transmit to the Congress reports containing 

2 the results of all such reviews and assessments. 

3 SEC. 21805. IMPROVED COORDINATION OF TECHNOLOGY 

4 TRANSFER ACTIVITIES. 

5 (a) TECHNOLOGY TRANSFER COORDINATOR.—The 

6 Secretary shall designate a Technology Transfer Coordi7 nator to perform oversight of and policy development for 

8 technology transfer activities at the Department. The 

9 Technology Transfer Coordinator shall coordinate the ac10 tivities of the Technology Transfer Working Group, and 

11 shall oversee the expenditure of funds allocated to the 

12 Technology Transfer Working Group, and shall coordinate 

13 with each technology partnership ombudsman appointed 

14 under section 11 of the Technology Transfer Commer15 cialization Act of 2000 (42 U.S.C. 7261c). 

16 (b) TECHNOLOGY TRANSFER WORKING GROUP.—

17 The Secretary shall establish a Technology Transfer 

18 Working Group, which shall consist of representatives of 

19 the National Laboratories and single-purpose research fa20 cilities, to— 

21 (1) coordinate technology transfer activities oc22 curring at National Laboratories and single-purpose 

23 research facilities; 

24 (2) exchange information about technology 

25 transfer practices, including alternative approaches 
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1 to resolution of disputes involving intellectual prop2 erty rights and other technology transfer matters; 

3 and 

4 (3) develop and disseminate to the public and 

5 prospective technology partners information about 

6 opportunities and procedures for technology transfer 

7 with the Department, including those related to al8 ternative approaches to resolution of disputes involv9 ing intellectual property rights and other technology 

10 transfer matters.

11 (c) TECHNOLOGY TRANSFER RESPONSIBILITY.—

12 Nothing in this section shall affect the technology transfer 

13 responsibilities of Federal employees under the Stevenson14 Wydler Technology Innovation Act of 1980. 

15 SEC. 21806. SMALL BUSINESS ADVOCACY AND ASSISTANCE. 

16 (a) SMALL BUSINESS ADVOCATE.—The Secretary 

17 shall require the Director of each National Laboratory, 

18 and may require the Director of a single-purpose research 

19 facility, to designate a small business advocate to— 

20 (1) increase the participation of small business 

21 concerns, including socially and economically dis22 advantaged small business concerns, in procurement, 

23 collaborative research, technology licensing, and 

24 technology transfer activities conducted by the Na25 tional Laboratory or single-purpose research facility; 
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1 (2) report to the Director of the National Lab2 oratory or single-purpose research facility on the ac3 tual participation of small business concerns in pro4 curement and collaborative research along with rec5 ommendations, if appropriate, on how to improve 

6 participation; 

7 (3) make available to small business concerns 

8 training, mentoring, and clear, up-to-date informa9 tion on how to participate in the procurement and 

10 collaborative research, including how to submit effec11 tive proposals, and information related to alternative 

12 approaches to resolution of disputes involving intel13 lectual property rights and other technology transfer 

14 matters; 

15 (4) increase the awareness inside the National 

16 Laboratory or single-purpose research facility of the 

17 capabilities and opportunities presented by small 

18 business concerns; and 

19 (5) establish guidelines for the program under 

20 subsection (b) and report on the effectiveness of 

21 such program to the Director of the National Lab22 oratory or single-purpose research facility. 

23 (b) ESTABLISHMENT OF SMALL BUSINESS ASSIST24 ANCE PROGRAM.—The Secretary shall require the Direc25 tor of each National Laboratory, and may require the Di-
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1 rector of a single-purpose research facility, to establish a 

2 program to provide small business concerns— 

3 (1) assistance directed at making them more ef4 fective and efficient subcontractors or suppliers to 

5 the National Laboratory or single-purpose research 

6 facility; or 

7 (2) general technical assistance, the cost of 

8 which shall not exceed $10,000 per instance of as9 sistance, to improve the small business concern’s 

10 products or services. 

11 (c) USE OF FUNDS.—None of the funds expended 

12 under subsection (b) may be used for direct grants to the 

13 small business concerns. 

14 (d) DEFINITIONS.—In this section: 

15 (1) SMALL BUSINESS CONCERN.—The term 

16 ‘‘small business concern’’ has the meaning given 

17 such term in section 3 of the Small Business Act 

18 (15 U.S.C. 632). 

19 (2) SOCIALLY AND ECONOMICALLY DISADVAN20 TAGED SMALL BUSINESS CONCERNS.—The term ‘‘so21 cially and economically disadvantaged small business 

22 concerns’’ has the meaning given such term in sec23 tion 8(a)(4) of the Small Business Act (15 U.S.C. 

24 637(a)(4)). 
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1 SEC. 21807. MOBILITY OF SCIENTIFIC AND TECHNICAL PER2 SONNEL. 

3 Not later than 2 years after the date of enactment 

4 of this section, the Secretary shall transmit a report to 

5 the Congress identifying any policies or procedures of a 

6 contractor operating a National Laboratory or single-pur7 pose research facility that create disincentives to the tem8 porary transfer of scientific and technical personnel 

9 among the contractor-operated National Laboratories or 

10 contractor-operated single-purpose research facilities.

11 SEC. 21808. NATIONAL ACADEMY OF SCIENCES REPORT. 

12 Within 90 days after the date of enactment of this 

13 Act, the Secretary shall enter into an arrangement with 

14 the National Academy of Sciences for the Academy to—

15 (1) conduct studies on—

16 (A) the obstacles to accelerating the com17 mercial application of energy technology; and 

18 (B) the adequacy of Department policies 

19 and procedures for, and oversight of, technology 

20 transfer-related disputes between contractors of 

21 the Department and the private sector; and 

22 (2) report to the Congress on recommendations 

23 developed as a result of the studies. 

24 SEC. 21809. OUTREACH. 

25 The Secretary shall ensure that each program au26 thorized by this title includes an outreach component to 
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1 provide information, as appropriate, to manufacturers, 

2 consumers, engineers, architects, builders, energy service 

3 companies, institutions of higher education, facility plan4 ners and managers, State and local governments, and 

5 other entities. 

6 SEC. 21810. LIMITS ON USE OF FUNDS. 

7 (a) COMPETITIVE PROCEDURE REQUIREMENT.—

8 None of the funds authorized to be appropriated to the 

9 Secretary by this title may be used to award a manage10 ment and operating contract for a nonmilitary energy lab11 oratory of the Department unless such contract is com12 petitively awarded or the Secretary grants, on a case-by13 case basis, a waiver to allow for such a deviation. The Sec14 retary may not delegate the authority to grant such a 

15 waiver. 

16 (b) CONGRESSIONAL NOTICE.—At least 2 months be17 fore a contract award for which the Secretary intends to 

18 grant such a waiver, the Secretary shall submit to the 

19 Congress a report notifying the Congress of the waiver 

20 and setting forth the reasons for the waiver. 

21 SEC. 21811. REPROGRAMMING. 

22 (a) DISTRIBUTION REPORT.—Not later than 60 days 

23 after the date of the enactment of an Act appropriating 

24 amounts authorized under this title, the Secretary shall 

25 transmit to the appropriate authorizing committees of the 
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1 Congress a report explaining how such amounts will be 

2 distributed among the authorizations contained in this 

3 title. 

4 (b) PROHIBITION.—(1) No amount identified under 

5 subsection (a) shall be reprogrammed if such reprogram6 ming would result in an obligation which changes an indi7 vidual distribution required to be reported under sub8 section (a) by more than 5 percent unless the Secretary 

9 has transmitted to the appropriate authorizing committees 

10 of the Congress a report described in subsection (c) and 

11 a period of 30 days has elapsed after such committees re12 ceive the report. 

13 (2) In the computation of the 30-day period described 

14 in paragraph (1), there shall be excluded any day on which 

15 either House of Congress is not in session because of an 

16 adjournment of more than 3 days to a day certain. 

17 (c) REPROGRAMMING REPORT.—A report referred to 

18 in subsection (b)(1) shall contain a full and complete 

19 statement of the action proposed to be taken and the facts 

20 and circumstances relied on in support of the proposed 

21 action. 

22 SEC. 21812. CONSTRUCTION WITH OTHER LAWS. 

23 Except as otherwise provided in this title, the Sec24 retary shall carry out the research, development, dem25 onstration, and commercial application programs, 
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1 projects, and activities authorized by this title in accord2 ance with the applicable provisions of the Atomic Energy 

3 Act of 1954 (42 U.S.C. et seq.), the Federal Nonnuclear 

4 Research and Development Act of 1974 (42 U.S.C. 5901 

5 et seq.), the Energy Policy Act of 1992 (42 U.S.C. 13201 

6 et seq.), the Stevenson-Wydler Technology Innovation Act 

7 of 1980 (15 U.S.C. 3701 et seq.), chapter 18 of title 35, 

8 United States Code (commonly referred to as the Bayh9 Dole Act), and any other Act under which the Secretary 

10 is authorized to carry out such activities.

11 SEC. 21813. UNIVERSITY COLLABORATION. 

12 Not later than 2 years after the date of enactment 

13 of this Act, the Secretary shall transmit to the Congress 

14 a report that examines the feasibility of promoting collabo15 rations between large institutions of higher education and 

16 small institutions of higher education through grants, con17 tracts, and cooperative agreements made by the Secretary 

18 for energy projects. The Secretary shall also consider pro19 viding incentives for the inclusion of small institutions of 

20 higher education, including minority-serving institutions, 

21 in energy research grants, contracts, and cooperative 

22 agreements. 
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1 SEC. 21814. FEDERAL LABORATORY EDUCATIONAL PART2 NERS. 

3 (a) DISTRIBUTION OF ROYALTIES RECEIVED BY

4 FEDERAL AGENCIES.—Section 14(a)(1)(B)(v) of the Ste5 venson-Wydler Technology Innovation Act of 1980 (15 

6 U.S.C. 3710c(a)(1)(B)(v)), is amended to read as follows: 

7 ‘‘(v) for scientific research and develop8 ment and for educational assistance and other 

9 purposes consistent with the missions and ob10 jectives of the Department of Energy and the 

11 laboratory.’’. 

12 (b) COOPERATIVE RESEARCH AND DEVELOPMENT

13 AGREEMENTS.—Section 12(b)(5)(C) of the Stevenson14 Wydler Technology Innovation Act of 1980 (15 U.S.C. 

15 3710a(b)(5)(C)) is amended to read as follows: 

16 ‘‘(C) for scientific research and development 

17 and for educational assistance consistent with the 

18 missions and objectives of the Department of Energy 

19 and the laboratory.’’.

20 SEC. 21815. INTERAGENCY COOPERATION. 

21 The Secretary shall enter into discussions with the 

22 Administrator of the National Aeronautics and Space Ad23 ministration with the goal of reaching an interagency 

24 working agreement between the 2 agencies that would 

25 make the National Aeronautics and Space Administra26 tion’s expertise in energy, gained from its existing and 
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1 planned programs, more readily available to the relevant 

2 research, development, demonstration, and commercial ap3 plications programs of the Department. Technologies to 

4 be discussed should include the National Aeronautics and 

5 Space Administration’s modeling, research, development, 

6 testing, and evaluation of new energy technologies, includ7 ing solar, wind, fuel cells, and hydrogen storage and dis8 tribution.

9 TITLE II—DEPARTMENT OF 

10 ENERGY MANAGEMENT

11 SEC. 22001. EXTERNAL REGULATION OF DEPARTMENT OF 

12 ENERGY. 

13 (a) DEPARTMENT OF ENERGY REPORT.—Not later 

14 than 18 months after the date of enactment of this Act, 

15 the Secretary shall transmit to the Congress a report on 

16 the assumption by the Nuclear Regulatory Commission of 

17 the Department’s regulatory and enforcement responsibil18 ities with respect to nuclear safety, and the assumption 

19 by the Occupational Safety and Health Administration of 

20 the Department’s regulatory and enforcement responsibil21 ities with respect to occupational safety and health, at any 

22 nonmilitary energy laboratory owned or operated by the 

23 Department. The report shall include—

24 (1) a detailed transition plan, drafted in coordi25 nation with the Nuclear Regulatory Commission and 
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1 the Occupational Safety and Health Administration, 

2 for termination of self-regulation authority, includ3 ing the activities to be coordinated with the Nuclear 

4 Regulatory Commission and the Occupational Safety 

5 and Health Administration; 

6 (2) a description of any issues that would re7 quire resolution with the Nuclear Regulatory Com8 mission, the Occupational Safety and Health Admin9 istration, or other external regulators; and 

10 (3) an estimate of—

11 (A) the annual cost of administering and 

12 implementing external regulation of the nuclear 

13 safety and occupational safety and health re14 sponsibilities at nonmilitary energy laboratories 

15 owned or operated by the Department; 

16 (B) the number of Federal and contractor 

17 employees required to administer and imple18 ment such external regulation; and 

19 (C) the extent and schedule by which the 

20 Department and the staffs at its nonmilitary 

21 energy laboratories would be reduced, and the 

22 anticipated cost savings from that reduction. 

23 (b) GENERAL ACCOUNTING OFFICE REPORTING RE24 QUIREMENT.—The Comptroller General shall provide a re25 port not later than 20 months after the date of enactment 
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1 of this Act that compares the Department’s transition 

2 plan with the Department’s implementation of nuclear 

3 safety and occupational safety and health responsibilities 

4 under sections 234A and 234C of the Atomic Energy Act 

5 of 1954.

6 SEC. 22002. IMPROVED COORDINATION AND MANAGEMENT 

7 OF CIVILIAN SCIENCE AND TECHNOLOGY 

8 PROGRAMS. 

9 (a) RECONFIGURATION OF POSITION OF DIRECTOR

10 OF THE OFFICE OF SCIENCE.—Section 209 of the Depart11 ment of Energy Organization Act (42 U.S.C. 7139) is 

12 amended by—

13 (1) striking ‘‘a Director’’ and inserting ‘‘an As14 sistant Secretary, in addition to those appointed 

15 under section 203(a),’’; and 

16 (2) striking ‘‘Director’’ and inserting ‘‘Assistant 

17 Secretary’’. 

18 (b) TECHNICAL AND CONFORMING AMENDMENTS.—

19 (1) Section 5315 of title 5, United States Code, is amend20 ed by—

21 (A) striking ‘‘Director, Office of Science, De22 partment of Energy.’’; and 

23 (B) striking ‘‘Assistant Secretaries of Energy 

24 (6)’’ and inserting ‘‘Assistant Secretaries of Energy 

25 (7)’’. 
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1 (2) The table of contents for the Department of En2 ergy Organization Act (42 U.S.C. 7101 note) is amend3 ed— 

4 (A) by striking ‘‘Section 209’’ and inserting 

5 ‘‘Sec. 209’’; 

6 (B) by striking ‘‘213.’’ and inserting ‘‘Sec. 

7 213.’’; 

8 (C) by striking ‘‘214.’’ and inserting ‘‘Sec. 

9 214.’’; 

10 (D) by striking ‘‘215.’’ and inserting ‘‘Sec. 

11 215.’’; and 

12 (E) by striking ‘‘216.’’ and inserting ‘‘Sec. 

13 216.’’. 

14 TITLE III—CLEAN SCHOOL 

15 BUSES 

16 SEC. 23001. ESTABLISHMENT OF PILOT PROGRAM. 

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

18 consultation with the Administrator of the Environmental 

19 Protection Agency, shall establish a pilot program for 

20 awarding grants on a competitive basis to eligible entities 

21 for the demonstration and commercial application of alter22 native fuel school buses and ultra-low sulfur diesel school 

23 buses. 

24 (b) REQUIREMENTS.—Not later than 3 months after 

25 the date of the enactment of this Act, the Secretary shall 
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1 establish and publish in the Federal register grant require2 ments on eligibility for assistance, and on implementation 

3 of the program established under subsection (a), including 

4 certification requirements to ensure compliance with this 

5 title. 

6 (c) SOLICITATION.—Not later than 6 months after 

7 the date of the enactment of this Act, the Secretary shall 

8 solicit proposals for grants under this section. 

9 (d) ELIGIBLE RECIPIENTS.—A grant shall be award10 ed under this section only—

11 (1) to a local or State governmental entity re12 sponsible for providing school bus service to one or 

13 more public school systems or responsible for the 

14 purchase of school buses; or 

15 (2) to a contracting entity that provides school 

16 bus service to one or more public school systems, if 

17 the grant application is submitted jointly with the 

18 school system or systems which the buses will serve. 

19 (e) TYPES OF GRANTS.—

20 (1) IN GENERAL.—Grants under this section 

21 shall be for the demonstration and commercial appli22 cation of technologies to facilitate the use of alter23 native fuel school buses and ultra-low sulfur diesel 

24 school buses in lieu of buses manufactured before 
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1 model year 1977 and diesel-powered buses manufac2 tured before model year 1991. 

3 (2) NO ECONOMIC BENEFIT.—Other than the 

4 receipt of the grant, a recipient of a grant under this 

5 section may not receive any economic benefit in con6 nection with the receipt of the grant. 

7 (3) PRIORITY OF GRANT APPLICATIONS.—The 

8 Secretary shall give priority to awarding grants to 

9 applicants who can demonstrate the use of alter10 native fuel buses and ultra-low sulfur diesel school 

11 buses in lieu of buses manufactured before model 

12 year 1977. 

13 (f) CONDITIONS OF GRANT.—A grant provided under 

14 this section shall include the following conditions: 

15 (1) All buses acquired with funds provided 

16 under the grant shall be operated as part of the 

17 school bus fleet for which the grant was made for a 

18 minimum of 5 years. 

19 (2) Funds provided under the grant may only 

20 be used—

21 (A) to pay the cost, except as provided in 

22 paragraph (3), of new alternative fuel school 

23 buses or ultra-low sulfur diesel school buses, in24 cluding State taxes and contract fees; and 

25 (B) to provide—
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1 (i) up to 10 percent of the price of the 

2 alternative fuel buses acquired, for nec3 essary alternative fuel infrastructure if the 

4 infrastructure will only be available to the 

5 grant recipient; and 

6 (ii) up to 15 percent of the price of 

7 the alternative fuel buses acquired, for nec8 essary alternative fuel infrastructure if the 

9 infrastructure will be available to the grant 

10 recipient and to other bus fleets. 

11 (3) The grant recipient shall be required to pro12 vide at least the lesser of 15 percent of the total cost 

13 of each bus received or $15,000 per bus. 

14 (4) In the case of a grant recipient receiving a 

15 grant to demonstrate ultra-low sulfur diesel school 

16 buses, the grant recipient shall be required to pro17 vide documentation to the satisfaction of the Sec18 retary that diesel fuel containing sulfur at not more 

19 than 15 parts per million is available for carrying 

20 out the purposes of the grant, and a commitment by 

21 the applicant to use such fuel in carrying out the 

22 purposes of the grant. 

23 (g) BUSES.—Funding under a grant made under this 

24 section may be used to demonstrate the use only of new 
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1 alternative fuel school buses or ultra-low sulfur diesel 

2 school buses—

3 (1) with a gross vehicle weight of greater than 

4 14,000 pounds; 

5 (2) that are powered by a heavy duty engine; 

6 (3) that, in the case of alternative fuel school 

7 buses manufactured in model years 2003 through 

8 2006, emit not more than 1.8 grams per brake 

9 horsepower-hour of nonmethane hydrocarbons and 

10 oxides of nitrogen and .01 grams per brake horse11 power-hour of particulate matter; and 

12 (4) that, in the case of ultra-low sulfur diesel 

13 school buses, emit not more than—

14 (A) for buses manufactured in model year 

15 2003, 3.0 grams per brake horsepower-hour of 

16 oxides of nitrogen and .01 grams per brake 

17 horsepower-hour of particulate matter; and 

18 (B) for buses manufactured in model years 

19 2004 through 2006, 2.5 grams per brake horse20 power-hour of nonmethane hydrocarbons and 

21 oxides of nitrogen and .01 grams per brake 

22 horsepower-hour of particulate matter, 

23 except that under no circumstances shall buses be 

24 acquired under this section that emit nonmethane 

25 hydrocarbons, oxides of nitrogen, or particulate mat-
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1 ter at a rate greater than the best performing tech2 nology of the same class of ultra-low sulfur diesel 

3 school buses commercially available at the time the 

4 grant is made. 

5 (h) DEPLOYMENT AND DISTRIBUTION.—The Sec6 retary shall seek to the maximum extent practicable to 

7 achieve nationwide deployment of alternative fuel school 

8 buses and ultra-low sulfur diesel school buses through the 

9 program under this section, and shall ensure a broad geo10 graphic distribution of grant awards, with a goal of no 

11 State receiving more than 10 percent of the grant funding 

12 made available under this section for a fiscal year. 

13 (i) LIMIT ON FUNDING.—The Secretary shall provide 

14 not less than 20 percent and not more than 25 percent 

15 of the grant funding made available under this section for 

16 any fiscal year for the acquisition of ultra-low sulfur diesel 

17 school buses. 

18 (j) REDUCTION OF SCHOOL BUS IDLING.—Each 

19 local educational agency (as defined in section 9101 of the 

20 Elementary and Secondary Education Act of 1965 (20 

21 U.S.C. 7801)) that receives Federal funds under the Ele22 mentary and Secondary Education Act of 1965 (20 U.S.C. 

23 6301 et seq.) is encouraged to develop a policy, consistent 

24 with the health, safety, and welfare of students and the 

25 proper operation and maintenance of school buses, to re-
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1 duce the incidence of unnecessary school bus idling at 

2 schools when picking up and unloading students. 

3 (k) ANNUAL REPORT.—Not later than January 31 

4 of each year, the Secretary of Energy shall provide a re5 port evaluating implementation of the program under this 

6 title to the Congress. Such report shall include the total 

7 number of grant applications received, the number and 

8 types of alternative fuel buses and ultra-low sulfur diesel 

9 school buses requested in grant applications, a list of 

10 grants awarded and the criteria used to select the grant 

11 recipients, certified engine emission levels of all buses pur12 chased under the program, and any other information the 

13 Secretary considers appropriate. 

14 (l) DEFINITIONS.—For purposes of this section—

15 (1) the term ‘‘alternative fuel school bus’’ 

16 means a bus powered substantially by electricity (in17 cluding electricity supplied by a fuel cell), or by liq18 uefied natural gas, compressed natural gas, liquefied 

19 petroleum gas, hydrogen, propane, or methanol or 

20 ethanol at no less than 85 percent by volume; 

21 (2) the term ‘‘idling’’ means operating an en22 gine while remaining stationary for more than ap23 proximately 15 minutes, except that such term does 

24 not apply to routine stoppages associated with traf25 fic movement or congestion; and 
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1 (3) the term ‘‘ultra-low sulfur diesel school 

2 bus’’ means a school bus powered by diesel fuel 

3 which contains sulfur at not more than 15 parts per 

4 million. 

5 SEC. 23002. FUEL CELL BUS DEVELOPMENT AND DEM6 ONSTRATION PROGRAM. 

7 (a) ESTABLISHMENT OF PROGRAM.—The Secretary 

8 shall establish a program for entering into cooperative 

9 agreements with private sector fuel cell bus developers for 

10 the development of fuel cell-powered school buses, and 

11 subsequently with not less than 2 units of local govern12 ment using natural gas-powered school buses and such 

13 private sector fuel cell bus developers to demonstrate the 

14 use of fuel cell-powered school buses. 

15 (b) COST SHARING.—The non-Federal contribution 

16 for activities funded under this section shall be not less 

17 than—

18 (1) 20 percent for fuel infrastructure develop19 ment activities; and 

20 (2) 50 percent for demonstration activities and 

21 for development activities not described in paragraph 

22 (1). 

23 (c) FUNDING.—No more than $25,000,000 of the 

24 amounts authorized under section 23004(a) may be used 
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1 for carrying out this section for the period encompassing 

2 fiscal years 2004 through 2006. 

3 (d) REPORTS TO CONGRESS.—Not later than 3 years 

4 after the date of the enactment of this Act, and not later 

5 than October 1, 2006, the Secretary shall transmit to the 

6 Congress a report that—

7 (1) evaluates the process of converting natural 

8 gas infrastructure to accommodate fuel cell-powered 

9 school buses; and 

10 (2) assesses the results of the development and 

11 demonstration program under this section. 

12 SEC. 23003. DIESEL RETROFIT PROGRAM. 

13 (a) ESTABLISHMENT.—The Administrator of the En14 vironmental Protection Agency and the Secretary shall es15 tablish a pilot program for awarding grants on a competi16 tive basis to eligible recipients for the demonstration and 

17 commercial application of retrofit technologies for diesel 

18 school buses. 

19 (b) ELIGIBLE RECIPIENTS.—A grant shall be award20 ed under this section only—

21 (1) to a local or State governmental entity re22 sponsible for providing school bus service to one or 

23 more public school systems; or 

24 (2) to a contracting entity that provides school 

25 bus service to one or more public school systems, if 
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1 the grant application is submitted jointly with the 

2 school system or systems which the buses will serve. 

3 (c) CONDITIONS OF GRANT.—A grant provided under 

4 this section may be used only to demonstrate the use of 

5 retrofit emissions-control technology on diesel buses 

6 that—

7 (1) operate on ultra-low sulfur diesel fuel; and 

8 (2) were manufactured in model year 1991 or 

9 later. 

10 (d) VERIFICATION.—Not later than 3 months after 

11 the date of enactment of this Act, the Administrator shall 

12 publish in the Federal Register procedures to verify—

13 (1) the retrofit emissions-control technology to 

14 be demonstrated; and 

15 (2) that buses on which retrofit emissions-con16 trol technology are to be demonstrated will operate 

17 on diesel fuel containing not more than 15 parts per 

18 million of sulfur. 

19 SEC. 23004. AUTHORIZATION OF APPROPRIATIONS. 

20 (a) SCHOOL BUS GRANTS.—There are authorized to 

21 be appropriated to the Secretary for carrying out this title, 

22 to remain available until expended—

23 (1) $90,000,000 for fiscal year 2004; 

24 (2) $100,000,000 for fiscal year 2005; and 

25 (3) $110,000,000 for fiscal year 2006. 
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1 (b) RETROFIT GRANTS.—There are authorized to be 

2 appropriated to the Administrator of the Environmental 

3 Protection Agency and the Secretary such sums as may 

4 be necessary for carrying out section 23003.

5 DIVISION C—RESOURCES

6 TITLE I—INDIAN ENERGY 

7 SEC. 30101. INDIAN ENERGY. 

8 Title XXVI of the Energy Policy Act of 1992 (25 

9 U.S.C. 3501 et seq.) is amended to read as follows: 

10 ‘‘TITLE XXVI—INDIAN ENERGY 

11 ‘‘SEC. 2601. DEFINITIONS. 

12 ‘‘In this title: 

13 ‘‘(1) INDIAN.—The term ‘Indian’ means an in14 dividual member of an Indian tribe who owns land 

15 or an interest in land, the title to which land—

16 ‘‘(A) is held in trust by the United States; 

17 or 

18 ‘‘(B) is subject to a restriction against 

19 alienation imposed by the United States. 

20 ‘‘(2) INDIAN LAND.—The term ‘Indian land’ 

21 means—

22 ‘‘(A) any land located within the bound23 aries of an Indian reservation, pueblo, or 

24 rancheria; or 
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1 ‘‘(B) any land not located within the 

2 boundaries of an Indian reservation, pueblo, or 

3 rancheria, the title to which is held—

4 ‘‘(i) in trust by the United States for 

5 the benefit of an Indian tribe; 

6 ‘‘(ii) by an Indian tribe, subject to re7 striction by the United States against 

8 alienation; or 

9 ‘‘(iii) by a dependent Indian commu10 nity. 

11 ‘‘(3) INDIAN RESERVATION.—The term ‘Indian 

12 reservation’ includes—

13 ‘‘(A) an Indian reservation in existence as 

14 of the date of the enactment of this paragraph; 

15 ‘‘(B) a public domain Indian allotment; 

16 ‘‘(C) a former reservation in the State of 

17 Oklahoma; and 

18 ‘‘(D) a dependent Indian community lo19 cated within the borders of the United States, 

20 regardless of whether the community is lo21 cated—

22 ‘‘(i) on original or acquired territory 

23 of the community; or 

24 ‘‘(ii) within or outside the boundaries 

25 of any particular State. 
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1 ‘‘(4) INDIAN TRIBE.—The term ‘Indian tribe’ 

2 has the meaning given that term in section 4 of the 

3 Indian Self-Determination and Education Assistance 

4 Act (25 U.S.C. 450b), except the term, for the pur5 poses of this title, shall not include any Native Cor6 poration. 

7 ‘‘(5) NATIVE CORPORATION.—The term ‘Native 

8 Corporation’ has the meaning given the term in sec9 tion 3 of the Alaska Native Claims Settlement Act 

10 (43 U.S.C. 1602). 

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

12 the Secretary of the Interior. 

13 ‘‘(7) TRIBAL CONSORTIUM.—The term ‘tribal 

14 consortium’ means an organization that consists of 

15 at least 3 entities, at least 1 of which is an Indian 

16 tribe. 

17 ‘‘SEC. 2602. INDIAN TRIBAL RESOURCE REGULATION. 

18 ‘‘To the maximum extent practicable, the Secretary 

19 and the Secretary of Energy shall make available to In20 dian tribes, tribal consortia, and Native Corporations sci21 entific and technical data for use in the development and 

22 management of energy resources on Indian land and on 

23 land conveyed to a Native Corporation. 
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•HR 6 IH 

1 ‘‘SEC. 2603. LEASES, BUSINESS AGREEMENTS, AND RIGHTS2 OF-WAY INVOLVING ENERGY DEVELOPMENT 

3 OR TRANSMISSION. 

4 ‘‘(a) IN GENERAL.—Notwithstanding any other pro5 vision of law—

6 ‘‘(1) an Indian or Indian tribe may enter into 

7 a lease or business agreement for the purpose of en8 ergy development, including a lease or business 

9 agreement for—

10 ‘‘(A) exploration for, extraction of, proc11 essing of, or other development of energy re12 sources; and 

13 ‘‘(B) construction or operation of—

14 ‘‘(i) an electric generation, trans15 mission, or distribution facility located on 

16 Indian land; or 

17 ‘‘(ii) a facility to process or refine en18 ergy resources developed on Indian land; 

19 and 

20 ‘‘(2) a lease or business agreement described in 

21 paragraph (1) shall not require the approval of the 

22 Secretary if—

23 ‘‘(A) the lease or business agreement is ex24 ecuted under tribal regulations approved by the 

25 Secretary under subsection (e); and 
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1 ‘‘(B) the term of the lease or business 

2 agreement does not exceed 30 years. 

3 ‘‘(b) RIGHTS-OF-WAY FOR PIPELINES OR ELECTRIC

4 TRANSMISSION OR DISTRIBUTION LINES.—An Indian 

5 tribe may grant a right-of-way over the Indian land of the 

6 Indian tribe for a pipeline or an electric transmission or 

7 distribution line without specific approval by the Secretary 

8 if—

9 ‘‘(1) the right-of-way is executed under and 

10 complies with tribal regulations approved by the Sec11 retary under subsection (e); 

12 ‘‘(2) the term of the right-of-way does not ex13 ceed 30 years; and 

14 ‘‘(3) the pipeline or electric transmission or dis15 tribution line serves—

16 ‘‘(A) an electric generation, transmission, 

17 or distribution facility located on Indian land; 

18 or 

19 ‘‘(B) a facility located on Indian land that 

20 processes or refines renewable or nonrenewable 

21 energy resources developed on Indian land. 

22 ‘‘(c) RENEWALS.—A lease or business agreement en23 tered into or a right-of-way granted by an Indian tribe 

24 under this section may be renewed at the discretion of the 

25 Indian tribe, in accordance with this section. 
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1 ‘‘(d) VALIDITY.—No lease, business agreement, or 

2 right-of-way under this section shall be valid unless the 

3 lease, business agreement, or right-of-way is authorized in 

4 accordance with tribal regulations approved by the Sec5 retary under subsection (e). 

6 ‘‘(e) TRIBAL REGULATORY REQUIREMENTS.—

7 ‘‘(1) IN GENERAL.—An Indian tribe may sub8 mit to the Secretary for approval tribal regulations 

9 governing leases, business agreements, and rights-of10 way under this section. 

11 ‘‘(2) APPROVAL OR DISAPPROVAL.—

12 ‘‘(A) IN GENERAL.—Not later than 120 

13 days after the date on which the Secretary re14 ceives tribal regulations submitted by an Indian 

15 tribe under paragraph (1) (or such later date as 

16 may be agreed to by the Secretary and the In17 dian tribe), the Secretary shall approve or dis18 approve the regulations. 

19 ‘‘(B) CONDITIONS FOR APPROVAL.—The 

20 Secretary shall approve tribal regulations sub21 mitted under paragraph (1) only if the regula22 tions include provisions that, with respect to a 

23 lease, business agreement, or right-of-way 

24 under this section—
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1 ‘‘(i) ensure the acquisition of nec2 essary information from the applicant for 

3 the lease, business agreement, or right-of4 way; 

5 ‘‘(ii) address the term of the lease or 

6 business agreement or the term of convey7 ance of the right-of-way; 

8 ‘‘(iii) address amendments and renew9 als; 

10 ‘‘(iv) address consideration for the 

11 lease, business agreement, or right-of-way; 

12 ‘‘(v) address technical or other rel13 evant requirements; 

14 ‘‘(vi) establish requirements for envi15 ronmental review in accordance with sub16 paragraph (C); 

17 ‘‘(vii) ensure compliance with all ap18 plicable environmental laws; 

19 ‘‘(viii) identify final approval author20 ity; 

21 ‘‘(ix) provide for public notification of 

22 final approvals; and 

23 ‘‘(x) establish a process for consulta24 tion with any affected States concerning 

25 potential off-reservation impacts associated 
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•HR 6 IH 

1 with the lease, business agreement, or 

2 right-of-way. 

3 ‘‘(C) ENVIRONMENTAL REVIEW PROC4 ESS.—Tribal regulations submitted under para5 graph (1) shall establish, and include provisions 

6 to ensure compliance with, an environmental re7 view process that, with respect to a lease, busi8 ness agreement, or right-of-way under this sec9 tion, provides for—

10 ‘‘(i) the identification and evaluation 

11 of all significant environmental impacts (as 

12 compared with a no-action alternative); 

13 ‘‘(ii) the identification of proposed 

14 mitigation; 

15 ‘‘(iii) a process for ensuring that the 

16 public is informed of and has an oppor17 tunity to comment on any proposed lease, 

18 business agreement, or right-of-way before 

19 tribal approval of the lease, business agree20 ment, or right-of-way (or any amendment 

21 to or renewal of a lease, business agree22 ment, or right-of-way); and 

23 ‘‘(iv) sufficient administrative support 

24 and technical capability to carry out the 

25 environmental review process. 
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•HR 6 IH 

1 ‘‘(3) PUBLIC PARTICIPATION.—The Secretary 

2 may provide notice and opportunity for public com3 ment on tribal regulations submitted under para4 graph (1). 

5 ‘‘(4) DISAPPROVAL.—If the Secretary dis6 approves tribal regulations submitted by an Indian 

7 tribe under paragraph (1), the Secretary shall—

8 ‘‘(A) notify the Indian tribe in writing of 

9 the basis for the disapproval; 

10 ‘‘(B) identify what changes or other ac11 tions are required to address the concerns of 

12 the Secretary; and 

13 ‘‘(C) provide the Indian tribe with an op14 portunity to revise and resubmit the regula15 tions. 

16 ‘‘(5) EXECUTION OF LEASE OR BUSINESS

17 AGREEMENT OR GRANTING OF RIGHT-OF-WAY.—If 

18 an Indian tribe executes a lease or business agree19 ment or grants a right-of-way in accordance with 

20 tribal regulations approved under this subsection, 

21 the Indian tribe shall provide to the Secretary—

22 ‘‘(A) a copy of the lease, business agree23 ment, or right-of-way document (including all 

24 amendments to and renewals of the document); 

25 and 
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1 ‘‘(B) in the case of tribal regulations or a 

2 lease, business agreement, or right-of-way that 

3 permits payment to be made directly to the In4 dian tribe, documentation of those payments 

5 sufficient to enable the Secretary to discharge 

6 the trust responsibility of the United States as 

7 appropriate under applicable law. 

8 ‘‘(6) LIABILITY.—The United States shall not 

9 be liable for any loss or injury sustained by any 

10 party (including an Indian tribe or any member of 

11 an Indian tribe) to a lease, business agreement, or 

12 right-of-way executed in accordance with tribal regu13 lations approved under this subsection. 

14 ‘‘(7) COMPLIANCE REVIEW.—

15 ‘‘(A) IN GENERAL.—After exhaustion of 

16 tribal remedies, any person may submit to the 

17 Secretary, in a timely manner, a petition to re18 view compliance of an Indian tribe with tribal 

19 regulations of the Indian tribe approved under 

20 this subsection. 

21 ‘‘(B) ACTION BY SECRETARY.—The Sec22 retary shall—

23 ‘‘(i) not later than 60 days after the 

24 date on which the Secretary receives a pe25 tition under subparagraph (A), review 
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•HR 6 IH 

1 compliance of an Indian tribe described in 

2 subparagraph (A); and 

3 ‘‘(ii) on completion of the review, if 

4 the Secretary determines that an Indian 

5 tribe is not in compliance with tribal regu6 lations approved under this subsection, 

7 take such action as is necessary to compel 

8 compliance, including—

9 ‘‘(I)(aa) rescinding a lease, busi10 ness agreement, or right-of-way under 

11 this section; or 

12 ‘‘(bb) suspending a lease, busi13 ness agreement, or right-of-way under 

14 this section until an Indian tribe is in 

15 compliance with tribal regulations; 

16 and 

17 ‘‘(II) rescinding approval of the 

18 tribal regulations and reassuming the 

19 responsibility for approval of leases, 

20 business agreements, or rights-of-way 

21 associated with an energy pipeline or 

22 distribution line described in sub23 section (b). 

24 ‘‘(C) COMPLIANCE.—If the Secretary seeks 

25 to compel compliance of an Indian tribe with 
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•HR 6 IH 

1 tribal regulations under subparagraph (B)(ii), 

2 the Secretary shall—

3 ‘‘(i) make a written determination 

4 that describes the manner in which the 

5 tribal regulations have been violated; 

6 ‘‘(ii) provide the Indian tribe with a 

7 written notice of the violation together 

8 with the written determination; and 

9 ‘‘(iii) before taking any action de10 scribed in subparagraph (B)(ii) or seeking 

11 any other remedy, provide the Indian tribe 

12 with a hearing and a reasonable oppor13 tunity to attain compliance with the tribal 

14 regulations. 

15 ‘‘(D) APPEAL.—An Indian tribe described 

16 in subparagraph (C) shall retain all rights to 

17 appeal as provided in regulations promulgated 

18 by the Secretary. 

19 ‘‘(f) AGREEMENTS.—

20 ‘‘(1) IN GENERAL.—Any agreement by an In21 dian tribe that relates to the development of an elec22 tric generation, transmission, or distribution facility, 

23 or a facility to process or refine renewable or non24 renewable energy resources developed on Indian 

25 land, shall not require the specific approval of the 
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1 Secretary under section 2103 of the Revised Stat2 utes (25 U.S.C. 81) if the activity that is the subject 

3 of the agreement is carried out in accordance with 

4 this section. 

5 ‘‘(2) LIABILITY.—The United States shall not 

6 be liable for any loss or injury sustained by any per7 son (including an Indian tribe or any member of an 

8 Indian tribe) resulting from an action taken in per9 formance of an agreement entered into under this 

10 subsection. 

11 ‘‘(g) NO EFFECT ON OTHER LAW.—Nothing in this 

12 section affects the application of any provision of—

13 ‘‘(1) the Act of May 11, 1938 (commonly 

14 known as the Indian Mineral Leasing Act of 1938; 

15 25 U.S.C. 396a et seq.); 

16 ‘‘(2) the Indian Mineral Development Act of 

17 1982 (25 U.S.C. 2101 et seq.); 

18 ‘‘(3) the Surface Mining Control and Reclama19 tion Act of 1977 (30 U.S.C. 1201 et seq.); or 

20 ‘‘(4) any Federal environmental law. 

21 ‘‘(h) AUTHORIZATION OF APPROPRIATIONS.—There 

22 are authorized to be appropriated such sums as are nec23 essary to carry out this section, to remain available until 

24 expended.’’. 
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•HR 6 IH 

1 TITLE II—OIL AND GAS 

2 SEC. 30201. PROGRAM ON OIL AND GAS ROYALTIES IN3 KIND. 

4 (a) APPLICABILITY OF SECTION.—Notwithstanding 

5 any other provision of law, the provisions of this section 

6 shall apply to all royalty in-kind accepted by the Secretary 

7 of the Interior on or after the date of the enactment of 

8 this Act under any Federal oil or gas lease or permit under 

9 section 36 of the Mineral Leasing Act (30 U.S.C. 192), 

10 section 27 of the Outer Continental Shelf Lands Act (43 

11 U.S.C. 1353), or any other Federal law governing leasing 

12 of Federal lands for oil and gas development. 

13 (b) TERMS AND CONDITIONS.—All royalty accruing 

14 to the United States shall, on the demand of the Secretary 

15 of the Interior, be paid in oil or gas. If the Secretary of 

16 the Interior makes such a demand, the following provi17 sions apply to such payment: 

18 (1) Delivery by, or on behalf of, the lessee of 

19 the royalty amount and quality due under the lease 

20 satisfies the lessee’s royalty obligation for the 

21 amount delivered, except that transportation and 

22 processing reimbursements paid to, or deductions 

23 claimed by, the lessee shall be subject to review and 

24 audit. 
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•HR 6 IH 

1 (2)(A) Royalty production shall be placed in 

2 marketable condition by the lessee at no cost to the 

3 United States. 

4 (B) In this paragraph, the term ‘‘in marketable 

5 condition’’ means sufficiently free from impurities 

6 and otherwise in a condition that it will be accepted 

7 by a purchaser under a sales contract typical of the 

8 field or area in which the royalty production was 

9 produced. 

10 (3) The Secretary of the Interior may—

11 (A) sell or otherwise dispose of any royalty 

12 production taken in-kind (other than oil or gas 

13 transferred under section 27(a)(3) of the Outer 

14 Continental Shelf Lands Act (43 U.S.C. 

15 1353(a)(3)) for not less than the market price; 

16 and 

17 (B) transport or process (or both) any roy18 alty production taken in-kind. 

19 (4) The Secretary of the Interior may, notwith20 standing section 3302 of title 31, United States 

21 Code, retain and use a portion of the revenues from 

22 the sale of oil and gas royalties taken in-kind that 

23 otherwise would be deposited to miscellaneous re24 ceipts, without regard to fiscal year limitation, or 

25 may use royalty production, to pay the cost of—
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1 (A) transporting the royalty production; 

2 (B) processing the royalty production; 

3 (C) disposing of the royalty production; or 

4 (D) any combination of transporting, proc5 essing, and disposing of the royalty production. 

6 (5) The Secretary of the Interior may use a 

7 portion of the revenues from the sale of oil royalties 

8 taken in-kind, without fiscal year limitation, to pay 

9 transportation costs, salaries, and other administra10 tive costs directly related to filling the Strategic Pe11 troleum Reserve. 

12 (c) REIMBURSEMENT OF COST.—If the lessee, pursu13 ant to an agreement with the United States or as provided 

14 in the lease, processes the royalty gas or delivers the roy15 alty oil or gas at a point not on or adjacent to the lease 

16 area, the Secretary of the Interior shall—

17 (1) reimburse the lessee for the reasonable costs 

18 of transportation (not including gathering) from the 

19 lease to the point of delivery or for processing costs; 

20 or 

21 (2) at the discretion of the Secretary of the In22 terior, allow the lessee to deduct such transportation 

23 or processing costs in reporting and paying royalties 

24 in value for other Federal oil and gas leases. 
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1 (d) BENEFIT TO THE UNITED STATES REQUIRED.—

2 The Secretary of the Interior may receive oil or gas royal3 ties in-kind only if the Secretary determines that receiving 

4 such royalties provides benefits to the United States great5 er than or equal to those likely to have been received had 

6 royalties been taken in value. 

7 (e) REPORT TO CONGRESS.—By June 30, 2004, the 

8 Secretary of the Interior shall provide a report to the Con9 gress that describes actions taken to develop an organiza10 tion, business processes, and automated systems to sup11 port a full royalty in-kind capability to be used in tandem 

12 with the royalty in value approach to managing Federal 

13 oil and gas revenues.

14 (f) DEDUCTION OF EXPENSES.—

15 (1) IN GENERAL.—Before making payments 

16 under section 35 of the Mineral Leasing Act (30 

17 U.S.C. 191) or section 8(g) of the Outer Continental 

18 Shelf Lands Act (43 U.S.C. 1337(g)) of revenues 

19 derived from the sale of royalty production taken in20 kind from a lease, the Secretary of the Interior shall 

21 deduct amounts paid or deducted under subsections 

22 (b)(4) and (c), and shall deposit such amounts to 

23 miscellaneous receipts. 

24 (2) ACCOUNTING FOR DEDUCTIONS.—If the 

25 Secretary of the Interior allows the lessee to deduct 
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1 transportation or processing costs under subsection 

2 (c), the Secretary may not reduce any payments to 

3 recipients of revenues derived from any other Fed4 eral oil and gas lease as a consequence of that de5 duction. 

6 (g) CONSULTATION WITH STATES.—The Secretary 

7 of the Interior—

8 (1) shall consult with a State before conducting 

9 a royalty in-kind program under this title within the 

10 State, and may delegate management of any portion 

11 of the Federal royalty in-kind program to such State 

12 except as otherwise prohibited by Federal law; and 

13 (2) shall consult annually with any State from 

14 which Federal oil or gas royalty is being taken in15 kind to ensure to the maximum extent practicable 

16 that the royalty in-kind program provides revenues 

17 to the State greater than or equal to those likely to 

18 have been received had royalties been taken in-value. 

19 (h) PROVISIONS FOR SMALL REFINERIES.—

20 (1) PREFERENCE.—If the Secretary of the In21 terior determines that sufficient supplies of crude oil 

22 are not available in the open market to refineries not 

23 having their own source of supply for crude oil, the 

24 Secretary may grant preference to such refineries in 

25 the sale of any royalty oil accruing or reserved to the 
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•HR 6 IH 

1 United States under Federal oil and gas leases 

2 issued under any mineral leasing law, for processing 

3 or use in such refineries at private sale at not less 

4 than the market price. 

5 (2) PRORATION AMONG REFINERIES IN PRO6 DUCTION AREA.—In disposing of oil under this sub7 section, the Secretary of the Interior may, at the 

8 discretion of the Secretary, prorate such oil among 

9 such refineries in the area in which the oil is pro10 duced. 

11 (i) DISPOSITION TO FEDERAL AGENCIES.—

12 (1) ONSHORE ROYALTY.—Any royalty oil or gas 

13 taken by the Secretary of the Interior in-kind from 

14 onshore oil and gas leases may be sold at not less 

15 than the market price to any department or agency 

16 of the United States. 

17 (2) OFFSHORE ROYALTY.—Any royalty oil or 

18 gas taken in-kind from Federal oil and gas leases on 

19 the outer Continental Shelf may be disposed of only 

20 under section 27 of the Outer Continental Shelf 

21 Lands Act (43 U.S.C. 1353). 

22 (j) PREFERENCE FOR FEDERAL LOW-INCOME EN23 ERGY ASSISTANCE PROGRAMS.—In disposing of royalty oil 

24 or gas taken in-kind under this section, the Secretary may 

25 grant a preference to any person, including any State or 
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•HR 6 IH 

1 Federal agency, for the purpose of providing additional re2 sources to any Federal low-income energy assistance pro3 gram. 

4 SEC. 30202. CLARIFICATION OF FAIR MARKET RENTAL 

5 VALUE DETERMINATIONS FOR PUBLIC 

6 LANDS AND FOREST SERVICE RIGHTS-OF7 WAY. 

8 (a) LINEAR RIGHTS-OF-WAY UNDER FEDERAL

9 LAND POLICY AND MANAGEMENT ACT.—Section 504 of 

10 the Federal Land Policy and Management Act of 1976 

11 (43 U.S.C. 1764) is amended by adding at the end the 

12 following: 

13 ‘‘(k) DETERMINATION OF FAIR MARKET VALUE OF

14 LINEAR RIGHTS-OF-WAY.—(1) Effective upon the 

15 issuance of the rules required by paragraph (2), for pur16 poses of subsection (g), the Secretary concerned shall de17 termine the fair market rental for the use of land encum18 bered by a linear right-of-way granted, issued, or renewed 

19 under this title using the valuation method described in 

20 paragraphs (2), (3), and (4). 

21 ‘‘(2) Not later than 1 year after the date of enact22 ment of this subsection, and in accordance with subsection 

23 (k), the Secretary of the Interior shall amend section 

24 2803.1–2 of title 43, Code of Federal Regulations, as in 

25 effect on the date of enactment of this subsection, to revise 
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•HR 6 IH 

1 the per acre rental fee zone value schedule by State, coun2 ty, and type of linear right-of-way use to reflect current 

3 values of land in each zone. The Secretary of Agriculture 

4 shall make the same revisions for linear rights-of-way 

5 granted, issued, or renewed under this title on National 

6 Forest System lands. 

7 ‘‘(3) The Secretary concerned shall update annually 

8 the schedule revised under paragraph (2) by multiplying 

9 the current year’s rental per acre by the annual change, 

10 second quarter to the second quarter (June 30 to June 

11 30) in the Gross National Product Implicit Price Deflator 

12 Index published in the Survey of Current Business of the 

13 Department of Commerce, Bureau of Economic Analysis. 

14 ‘‘(4) Whenever the cumulative change in the index 

15 referred to in paragraph (3) exceeds 30 percent, or the 

16 change in the 3-year average of the 1-year Treasury inter17 est rate used to determine per acre rental fee zone values 

18 exceeds plus or minus 50 percent, the Secretary concerned 

19 shall conduct a review of the zones and rental per acre 

20 figures to determine whether the value of Federal land has 

21 differed sufficiently from the index referred to in para22 graph (3) to warrant a revision in the base zones and rent23 al per acre figures. If, as a result of the review, the Sec24 retary concerned determines that such a revision is war-
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1 ranted, the Secretary concerned shall revise the base zones 

2 and rental per acre figures accordingly.’’. 

3 (b) RIGHTS-OF-WAY UNDER MINERAL LEASING

4 ACT.—Section 28(l) of the Mineral Leasing Act (30 

5 U.S.C. 185(l)) is amended by inserting before the period 

6 at the end the following: ‘‘using the valuation method de7 scribed in section 2803.1–2 of title 43, Code of Federal 

8 Regulations, as revised pursuant to section 504(k) of the 

9 Federal Land Policy and Management Act of 1976 (43 

10 U.S.C. 1764(k))’’.

11 SEC. 30203. USGS ESTIMATES OF OIL AND GAS RESOURCES 

12 UNDERLYING ONSHORE FEDERAL LANDS. 

13 Section 604(a) of the Energy Act of 2000 (42 U.S.C. 

14 6217) is amended—

15 (1) in subsection (a)(1)—

16 (A) by striking ‘‘reserve’’; and 

17 (B) by striking ‘‘and’’ after the semicolon; 

18 (2) by striking subsection (a)(2) and inserting 

19 the following: 

20 ‘‘(2) the extent and nature of any restrictions 

21 or impediments to the development of such re22 sources, including—

23 ‘‘(A) impediments to the timely granting of 

24 leases; and 
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1 ‘‘(B) post-lease restrictions, impediments, 

2 or delays on development, involving conditions 

3 of approval, applications for permits to drill, or 

4 processing of environmental permits; and 

5 ‘‘(C) permits or restrictions associated with 

6 transporting the resources for entry into com7 merce; and 

8 ‘‘(3) the amount of resources not produced or 

9 introduced into commerce because of those restric10 tions.’’; and 

11 (3) in subsection (b)—

12 (A) by striking ‘‘reserve’’ and inserting 

13 ‘‘resource’’; and 

14 (B) by striking ‘‘publically’’ and inserting 

15 ‘‘publicly’’.

16 SEC. 30204. ROYALTY INCENTIVES FOR CERTAIN OFF17 SHORE AREAS.

18 (a) OUTER CONTINENTAL SHELF SHALLOW WATER

19 DEEP GAS ROYALTY RELIEF.—

20 (1) SHORT TITLE.—This subsection may be 

21 cited as the ‘‘Outer Continental Shelf Shallow Water 

22 Deep Gas Royalty Relief Act’’. 

23 (2) PURPOSES.—The purposes of this sub24 section are the following: 
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1 (A) To accelerate natural gas exploration, 

2 development, and production from wells drilled 

3 to deep depths on existing shallow water lease 

4 tracts on the Outer Continental Shelf. 

5 (B) To provide royalty incentives for the 

6 production of natural gas from such tracts. 

7 (C) To provide royalty incentives for devel8 opment of new technologies and the exploration 

9 and development of the new frontier of deep 

10 drilling on the Outer Continental Shelf. 

11 (3) ROYALTY INCENTIVES UNDER EXISTING

12 LEASES FOR PRODUCTION OF DEEP GAS IN SHAL13 LOW WATER IN THE GULF OF MEXICO.—

14 (A) SUSPENSION OF ROYALTIES.—

15 (i) IN GENERAL.—The Secretary of 

16 the Interior shall grant royalty relief for 

17 natural gas produced under leases issued 

18 under the Outer Continental Shelf Lands 

19 Act (43 U.S.C. 1301 et seq.) prior to Jan20 uary 1, 2001, from deep wells on oil and 

21 gas lease tracts in shallow waters of the 

22 Gulf of Mexico located wholly west of 87 

23 degrees, 30 minutes west longitude. 
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1 (ii) AMOUNT OF RELIEF.—The Sec2 retary shall grant royalty relief to eligible 

3 leases in the following amounts: 

4 (I) A suspension volume of at 

5 least 15 billion cubic feet of natural 

6 gas produced from a successful deep 

7 well with a total vertical depth of 

8 15,000 feet to 17,999 feet. 

9 (II) A suspension volume of at 

10 least 25 billion cubic feet of natural 

11 gas produced from a successful deep 

12 well with a total vertical depth of 

13 18,000 feet to 19,999 feet. 

14 (III) A suspension volume of at 

15 least 35 billion cubic feet of natural 

16 gas produced from any ultra deep 

17 well. 

18 (IV) A suspension volume of at 

19 least 5 billion cubic feet of natural gas 

20 per well for up to 2 unsuccessful wells 

21 drilled to a depth of at least 18,000 

22 feet on a lease tract that subsequently 

23 produces natural gas from a success24 ful deep well. 
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•HR 6 IH 

1 (iii) LIMITATION.—The Secretary 

2 shall not grant the royalty incentives out3 lined in this subparagraph if the average 

4 annual NYMEX natural gas price exceeds 

5 for one full calendar year the threshold 

6 price of $5 per million Btu, adjusted from 

7 the year 2000 for inflation.

8 (B) DEFINITIONS.—For purposes of this 

9 paragraph: 

10 (i) The term ‘‘deep well’’ means a well 

11 drilled with a perforated interval, the top 

12 of which is at least 15,000 feet true 

13 vertical depth below the datum at mean 

14 sea level. 

15 (ii) The term ‘‘eligible lease’’ means a 

16 lease that—

17 (I) was issued in a lease sale held 

18 before January 1, 2001;

19 (II) is for a tract located in the 

20 Gulf of Mexico entirely in water 

21 depths less than 200 meters on a 

22 block wholly west of 87 degrees, 30 

23 minutes west longitude; and

24 (III) is for a tract that has not 

25 produced gas or oil from a well that 
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1 commenced drilling before March 26, 

2 2003, with a completion 15,000 feet 

3 true vertical depth below the datum at 

4 mean sea level or deeper. 

5 (iii) The term ‘‘shallow water’’ means 

6 water less than 200 meters deep. 

7 (iv) The term ‘‘ultra deep well’’ means 

8 a well drilled with a perforated interval, 

9 the top of which is at least 20,000 feet 

10 true vertical depth below the datum at 

11 mean sea level. 

12 (4) SUNSET.—This subsection shall have no 

13 force or effect after the end of the 5-year period be14 ginning on the date of the enactment of this Act. 

15 (b) DEEP WATER AREAS.—Section 8(a) of the Outer 

16 Continental Shelf Lands Act (43 U.S.C. 1337(a)) is 

17 amended by adding at the end the following: 

18 ‘‘(9)(A) For all tracts located in water depths of 

19 greater than 400 meters in the Western and Central Plan20 ning Area of the Gulf of Mexico, including that portion 

21 of the Eastern Planning Area of the Gulf of Mexico en22 compassing whole lease blocks lying west of 87 degrees, 

23 30 minutes West longitude, and for all tracts in a frontier 

24 area offshore Alaska, any oil or gas lease sale under this 

25 Act occurring after the date of the enactment of this para-
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1 graph and before July 1, 2007, shall use the bidding sys2 tem authorized in paragraph (1)(H), except that the sus3 pension of royalties shall be set at a volume of not less 

4 than the following: 

5 ‘‘(i) 5 million barrels of oil equivalent for each 

6 lease in water depths of 400 to 800 meters. 

7 ‘‘(ii) 9 million barrels of oil equivalent for each 

8 lease in water depths of 800 to 1,600 meters. 

9 ‘‘(iii) 12 million barrels of oil equivalent for 

10 each lease in water depths greater than 1,600 me11 ters. 

12 ‘‘(B) For purposes of this paragraph, the term ‘fron13 tier area offshore Alaska’ includes, at a minimum, those 

14 areas offshore Alaska with seasonal ice, long distances to 

15 existing pipelines and ports, or a lack of production infra16 structure.’’.

17 (c) APPLICATION OF OTHER EXISTING AUTHORITY

18 TO OFFSHORE ALASKA.—Section 8(a)(3)(B) of the Outer 

19 Continental Shelf Lands Act (43 U.S.C. 1337(a)(3)(B)) 

20 is amended—

21 (1) by striking ‘‘and the portion’’ and inserting 

22 ‘‘, the portion’’; and 

23 (2) by inserting after ‘‘longitude,’’ the fol24 lowing: ‘‘and in the planning areas offshore Alas25 ka,’’. 
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1 (d) RELATIONSHIP TO EXISTING AUTHORITY.—Ex2 cept as expressly provided in this section, nothing in this 

3 section is intended to limit the authority of the Secretary 

4 of the Interior under the Outer Continental Shelf Lands 

5 Act (43 U.S.C. 1331 et seq.) to provide royalty suspen6 sion. 

7 (e) SAVINGS CLAUSE.—Nothing in this section shall 

8 be construed to affect any offshore preleasing, leasing, or 

9 development moratorium, including any moratorium appli10 cable to the Eastern Planning Area of the Gulf of Mexico 

11 located off the Gulf Coast of Florida. 

12 SEC. 30205. MARGINAL PROPERTY PRODUCTION INCEN13 TIVES. 

14 (a) PURPOSE.—The purpose of this section is to pro15 vide to independent producers incentives for extended pro16 duction from Federal oil and gas leases that are still pro17 ducible but approaching abandonment due to economic 

18 factors. 

19 (b) MARGINAL PROPERTY DEFINED.—

20 (1) IN GENERAL.—Until such time as the Sec21 retary of the Interior promulgates rules under sub22 section (f) that prescribe a different definition, for 

23 purposes of the royalty relief granted under this sec24 tion the term ‘‘marginal property’’ means an on25 shore unit, communitization agreement, or lease not 
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1 within a unit or communitization agreement, that 

2 produces on average the combined equivalent of less 

3 than 15 barrels of oil per well per day or 90 million 

4 British thermal units of gas per well per day. 

5 (2) CALCULATION OF AVERAGE PER WELL PRO6 DUCTION.—In calculating the average per well pro7 duction under paragraph (1), the lessee and the Sec8 retary shall—

9 (A) include those wells that produce more 

10 than half the days in the three most recent pro11 duction months; and 

12 (B) calculate the average over the three 

13 most recent production months. 

14 (c) CONDITIONS FOR REDUCTION OF ROYALTY

15 RATE.—Until such time as the Secretary of the Interior 

16 promulgates rules under subsection (f) that prescribe dif17 ferent thresholds or standards— 

18 (1) the Secretary shall, upon request by the op19 erator of a marginal property who is an independent 

20 producer, reduce the royalty rate on oil production 

21 from the marginal property as prescribed in sub22 section (d) when the spot price of West Texas Inter23 mediate crude oil at Cushing, Oklahoma, is, on aver24 age, less than $15 per barrel for 90 consecutive 

25 trading days; and 
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1 (2) the Secretary shall, upon request by the op2 erator of a marginal property who is an independent 

3 producer, reduce the royalty rate on gas production 

4 from the marginal property to the rate prescribed in 

5 subsection (d) when the spot price of natural gas de6 livered at Henry Hub, Louisiana, is, on average, less 

7 than $2 per million British thermal units for 90 con8 secutive trading days. 

9 (d) REDUCED ROYALTY RATE.—

10 (1) IN GENERAL.—The reduced royalty rate 

11 under this subsection shall be the lesser of—

12 (A) 5 percent; or 

13 (B) the applicable rate under any other 

14 statutory or regulatory royalty relief provision 

15 that applies to the affected production. 

16 (2) EFFECTIVE DATE.—The reduced royalty 

17 rate under this subsection shall be effective on the 

18 first day of the production month following the date 

19 on which the applicable price standard prescribed in 

20 subsection (c) is met. 

21 (e) TERMINATION OF REDUCED ROYALTY RATE.—

22 A royalty rate prescribed in subsection (d)(1) shall termi23 nate—
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1 (1) for oil production from a marginal property, 

2 on the first day of the production month following 

3 the date on which—

4 (A) the spot price of West Texas Inter5 mediate crude oil at Cushing, Oklahoma, on av6 erage, exceeds $15 per barrel for 90 consecutive 

7 trading days, or 

8 (B) the property no longer qualifies as a 

9 marginal property under subsection (b); and 

10 (2) for gas production from a marginal prop11 erty, on the first day of the production month fol12 lowing the date on which—

13 (A) the spot price of natural gas delivered 

14 at Henry Hub, Louisiana, on average, exceeds 

15 $2 per million British thermal units for 90 con16 secutive trading days, or 

17 (B) the property no longer qualifies as a 

18 marginal property under subsection (b). 

19 (f) RULES PRESCRIBING DIFFERENT RELIEF.—

20 (1) IN GENERAL.—The Secretary of the Inte21 rior, after consultation with the Secretary of Energy, 

22 may by rule prescribe different parameters, stand23 ards, and requirements for, and a different degree or 

24 extent of, royalty relief for marginal properties in 
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1 lieu of those prescribed in subsections (b) through 

2 (d). 

3 (2) MARGINAL PROPERTIES.—The Secretary of 

4 the Interior, after consultation with the Secretary of 

5 Energy, and within 1 year after the date of enact6 ment of this Act, shall—

7 (A) by rule prescribe standards and re8 quirements for, and the extent of royalty relief 

9 for, marginal properties for oil and gas leases 

10 on the outer Continental Shelf; and 

11 (B) by rule define what constitutes a mar12 ginal property on the outer Continental Shelf 

13 for purposes of this section. 

14 (3) CONSIDERATIONS.—In promulgating rules 

15 under this subsection, the Secretary of the Interior 

16 may consider—

17 (A) oil and gas prices and market trends; 

18 (B) production costs; 

19 (C) abandonment costs; 

20 (D) Federal and State tax provisions and 

21 their effects on production economics; 

22 (E) other royalty relief programs; 

23 (F) regional differences in average well24 head prices; 

25 (G) national energy security issues; and 
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1 (H) other relevant matters. 

2 (g) SAVINGS PROVISION.—Nothing in this section 

3 shall prevent a lessee from receiving royalty relief or a roy4 alty reduction pursuant to any other law or regulation that 

5 provides more relief than the amounts provided by this 

6 section.

7 (h) INDEPENDENT PRODUCER DEFINED.—In this 

8 section the term ‘‘independent producer’’ means a person 

9 who is not an integrated oil company, as that term is de10 fined in section 219(b)(4) of the Internal Revenue Code 

11 of 1986 (26 U.S.C. 291(b)(4)).

12 SEC. 30206. FEDERAL ONSHORE OIL AND GAS LEASING AND 

13 PERMITTING PRACTICES. 

14 (a) REVIEW OF ONSHORE OIL AND GAS LEASING

15 PRACTICES.—The Secretary of the Interior, in cooperation 

16 with the Secretary of Agriculture with respect to National 

17 Forest System lands under the jurisdiction of the Depart18 ment of Agriculture, shall perform an internal review of 

19 Federal onshore oil and gas leasing and permitting prac20 tices. The review shall include the following: 

21 (1) The process by which Federal land man22 agers accept or reject an offer to lease, including the 

23 timeframes in which such offers are acted upon, and 

24 any recommendations for improving and expediting 

25 the process. 
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1 (2) The process for considering applications for 

2 permits to drill, including the timeframes in which 

3 such applications are considered, and any rec4 ommendations for improving and expediting the 

5 process. 

6 (3) The process for considering surface use 

7 plans of operation, including the timeframes in 

8 which such plans are considered, and any rec9 ommendations for improving and expediting the 

10 process. 

11 (4) The process for administrative appeal of de12 cisions or orders of officers or employees of the Bu13 reau of Land Management with respect to a Federal 

14 oil or gas lease, including the timeframes in which 

15 such appeals are heard and decided, and any rec16 ommendations for improving and expediting the 

17 process. 

18 (5) The process by which Federal land man19 agers identify stipulations to address site-specific 

20 concerns and conditions, including those relating to 

21 the environment and resource use conflicts, whether 

22 stipulations are effective in addressing resource val23 ues, and any recommendations for expediting and 

24 improving the identification and effectiveness of stip25 ulations. 
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1 (6) The process by which the Federal land 

2 management agencies coordinate planning and anal3 ysis with planning of Federal, State, and local agen4 cies having jurisdiction over adjacent areas and 

5 other land uses, and any recommendations for im6 proving and expediting the process. 

7 (7) The documentation provided to lease appli8 cants and lessees with respect to determinations to 

9 reject lease applications or to require modification of 

10 proposed surface use plans of operation and rec11 ommendations regarding improvement of such docu12 mentation to more clearly set forth the basis for the 

13 decision. 

14 (b) REPORT.—The Secretaries shall report to the 

15 Committee on Resources of the House of Representatives 

16 and to the Committee on Energy and Natural Resources 

17 of the Senate no later than 1 year after the date of the 

18 enactment of this Act, summarizing the findings of their 

19 respective reviews undertaken pursuant to this section and 

20 the actions they have taken or plan to take to improve 

21 the Federal onshore oil and gas leasing program.

22 SEC. 30207. MANAGEMENT OF FEDERAL OIL AND GAS LEAS23 ING PROGRAMS. 

24 (a) TIMELY ACTION ON LEASES AND PERMITS.—To 

25 ensure timely action on oil and gas leases and applications 
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1 for permits to drill on lands otherwise available for leasing, 

2 the Secretary of the Interior shall—

3 (1) ensure expeditious compliance with the re4 quirements of section 102(2)(C) of the National En5 vironmental Policy Act of 1969 (42 U.S.C. 

6 4332(2)(C)); 

7 (2) improve consultation and coordination with 

8 the States and the public; and 

9 (3) improve the collection, storage, and retrieval 

10 of information related to such leasing activities. 

11 (b) BEST MANAGEMENT PRACTICES.—

12 (1) IN GENERAL.—Within 18 months after the 

13 date of enactment of this Act, the Secretary of the 

14 Interior shall develop and implement best manage15 ment practices to improve the administration of the 

16 onshore oil and gas leasing program pursuant to the 

17 Mineral Leasing Act (30 U.S.C. 181, et seq.) and 

18 ensure timely action on oil and gas leases and appli19 cations for permits to drill on lands otherwise avail20 able for leasing. 

21 (2) CONSIDERATION AND CONSULTATION.—In 

22 developing such best management practices the Sec23 retary shall consider the recommendations resulting 

24 from the review under section 30206.
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1 (3) REGULATIONS.—Within 180 days after the 

2 development of best management practices under 

3 paragraph (1), the Secretary shall publish for public 

4 comment proposed regulations that set forth specific 

5 timeframes for processing leases and applications in 

6 accordance with those practices, including deadlines 

7 for—

8 (A) approving or disapproving—

9 (i) resource management plans and 

10 related documents; 

11 (ii) lease applications; 

12 (iii) applications for permits to drill; 

13 and 

14 (iv) surface use plans; and 

15 (B) related administrative appeals.

16 SEC. 30208. CONSULTATION REGARDING OIL AND GAS 

17 LEASING ON PUBLIC LANDS. 

18 (a) IN GENERAL.—Not later than six months after 

19 the date of enactment of this Act, the Secretary of the 

20 Interior and the Secretary of Agriculture shall enter into, 

21 and submit to the Congress, a memorandum of under22 standing in accordance with this section regarding oil and 

23 gas leasing on public lands within the jurisdiction of the 

24 Secretary of the Interior and National Forest System 
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1 lands within the jurisdiction of the Secretary of Agri2 culture. 

3 (b) CONTENTS.—The memorandum of understanding 

4 shall include provisions that—

5 (1) establish an administrative procedure for 

6 timely processing of oil and gas lease applications, 

7 including lines of authority, steps in application 

8 processing, and timeframes for application proc9 essing; 

10 (2) establish an administrative procedure for 

11 timely processing of surface use plans of operation 

12 and applications for permits to drill, including lines 

13 of authority and steps for processing such plans and 

14 applications within 30 days after receipt by the Sec15 retary concerned; 

16 (3) provide for coordination of planning relating 

17 to oil and gas development; 

18 (4) provide for coordination of environmental 

19 compliance efforts to avoid duplication of effort; 

20 (5) provide for coordination of use of lease stip21 ulations to achieve consistency; 

22 (6) ensure that lease stipulations are only as re23 strictive as is necessary to protect the resource for 

24 which the stipulations are applied; and 
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1 (7) establish reasonable timeframes to process 

2 applications for permits to drill. 

3 (c) DATA RETRIEVAL SYSTEM.—

4 (1) IN GENERAL.—The Secretary of the Inte5 rior and the Secretary of Agriculture shall establish 

6 a joint data retrieval system that is capable of track7 ing applications and formal requests made pursuant 

8 to procedures of the Federal onshore oil and gas 

9 leasing program and providing information as to the 

10 status of such applications and requests within the 

11 Department of the Interior and the Department of 

12 Agriculture. 

13 (2) AVAILABILITY OF DATA.—Data in the joint 

14 data retrieval system shall be made available to the 

15 public, consistent with applicable laws and regula16 tions regarding confidentiality and proprietary data. 

17 (3) RESOURCE MAPPING.—The Secretary of the 

18 Interior and the Secretary of Agriculture shall estab19 lish a joint GIS mapping system for use in tracking 

20 surface resource values to aid in resource manage21 ment and processing of surface use plans of oper22 ation and applications for permits to drill.

23 SEC. 30209. OIL AND GAS LEASE ACREAGE LIMITATIONS. 

24 Section 27(d)(1) of the Mineral Leasing Act (30 

25 U.S.C. 184(d)(1)) is amended by inserting after ‘‘acreage 
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1 held in special tar sand areas’’ the following: ‘‘as well as 

2 acreage under any lease any portion of which has been 

3 committed to a federally approved unit or cooperative plan 

4 or communitization agreement, or for which royalty, in5 cluding compensatory royalty or royalty in kind, was paid 

6 in the preceding calendar year,’’.

7 SEC. 30210. FEDERAL REIMBURSEMENT FOR ORPHAN WELL 

8 RECLAMATION. 

9 (a) DEFINITIONS.—In this section: 

10 (1) LESSEE.—The term ‘‘lessee’’ means a per11 son who owns a lease, working interest, or operating 

12 rights in an oil and gas lease on lands owned by the 

13 United States. 

14 (2) ORPHAN WELL.—The term ‘‘orphan well’’ 

15 means any oil or gas well—

16 (A) that is located on lands owned by the 

17 United States; 

18 (B) that requires plugging and abandon19 ment under the regulations of the Department 

20 of the Interior; and 

21 (C) for which the Secretary is unable to 

22 find any person who is legally responsible and 

23 has the financial resources to reclaim the well. 
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1 (3) SECRETARY.—The term ‘‘Secretary’’ means 

2 the Secretary of the Interior or the Secretary’s des3 ignee. 

4 (b) REIMBURSEMENT FOR RECLAIMING WELLS ON

5 LANDS SUBJECT TO NEW LEASES.—If the Secretary 

6 issues a new oil and gas lease on federally owned lands 

7 on which 1 or more orphaned wells are located, the Sec8 retary—

9 (1) may require, as a condition of the lease, 

10 that the lessee reclaim pursuant to the Secretary’s 

11 standards all orphaned wells on the land leased; and 

12 (2) shall provide to the lessee a credit against 

13 royalties due under the lease for 100 percent of the 

14 reasonable actual costs of reclaiming the orphaned 

15 well pursuant to such requirement. 

16 (c) ROYALTY CREDITS FOR RECLAIMING ORPHAN

17 WELLS ON OTHER LANDS.—The Secretary—

18 (1) may authorize any lessee under an oil and 

19 gas lease on federally owned lands to reclaim pursu20 ant to the Secretary’s standards—

21 (A) an orphan well on unleased federally 

22 owned lands or unleased lands on the outer 

23 Continental Shelf; or 

24 (B) an orphan well located on an existing 

25 lease on federally owned lands or the outer Con-
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1 tinental Shelf for the reclamation of which the 

2 lessee is not legally responsible; and 

3 (2) shall provide to the lessee a credit against 

4 royalties under the lessee’s lease of 115 percent of 

5 the reasonable actual costs of reclaiming the orphan 

6 well. 

7 (d) REPORTING AND APPLICATION OF ROYALTY

8 CREDITS.—

9 (1) IN GENERAL.—Any credit against royalties 

10 required to be provided to a lessee under this section 

11 may be reported against royalties on production 

12 from any oil and gas lease on federally owned lands, 

13 or on the outer Continental Shelf, administered by 

14 the Secretary, that are owed by—

15 (A) a lessee; 

16 (B) any wholly owned affiliate or wholly 

17 commonly owned affiliate of a lessee; or 

18 (C) any wholly owned affiliate or wholly 

19 commonly owned affiliate of the person con20 ducting the reclamation work on an orphan 

21 well. 

22 (2) REPORTING BY DESIGNEES.—Credits 

23 against royalties required to be provided to a lessee 

24 under this section may be reported by a designee (as 

25 defined in section 3 of the Federal Oil and Gas Roy-
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1 alty Simplification and Fairness Act of 1982 (30 

2 U.S.C. 1702)), when the designee reports and pays 

3 royalty on behalf of the lessee. 

4 (e) IMPLEMENTING REGULATIONS.—The Secretary 

5 may promulgate such regulations as may be necessary and 

6 appropriate to implement this section. 

7 (f) PROTECTION AGAINST LIABILITY.—No person 

8 who reclaims an orphan well under this section shall be 

9 liable under any provision of Federal law for any costs 

10 or damages as a result of action taken or omitted in the 

11 course of carrying out a reclamation plan approved by the 

12 Secretary under this section. This section shall not pre13 clude liability for costs or damages as a result of a gross 

14 negligence or intentional misconduct by the person car15 rying out an approved reclamation plan. For purposes of 

16 the preceding sentence, reckless, willful, or wanton mis17 conduct shall constitute gross negligence. 

18 SEC. 30211. PRESERVATION OF GEOLOGICAL AND GEO19 PHYSICAL DATA. 

20 (a) SHORT TITLE.—This section may be cited as the 

21 ‘‘National Geological and Geophysical Data Preservation 

22 Program Act of 2003’’. 

23 (b) PROGRAM.—The Secretary of the Interior shall 

24 carry out a National Geological and Geophysical Data 

25 Preservation Program in accordance with this section—
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1 (1) to archive geologic, geophysical, and engi2 neering data, maps, well logs, and samples; 

3 (2) to provide a national catalog of such archi4 val material; and 

5 (3) to provide technical and financial assistance 

6 related to the archival material. 

7 (c) PLAN.—Within 1 year after the date of the enact8 ment of this Act, the Secretary shall develop and submit 

9 to the Committee on Resources of the House of Represent10 atives and the Committee on Energy and Natural Re11 sources of the Senate a plan for the implementation of 

12 the Program. 

13 (d) DATA ARCHIVE SYSTEM.— 

14 (1) ESTABLISHMENT.—The Secretary shall es15 tablish, as a component of the Program, a data ar16 chive system, which shall provide for the storage, 

17 preservation, and archiving of subsurface, surface, 

18 geological, geophysical and engineering data and 

19 samples. The Secretary, in consultation with the Ad20 visory Committee, shall develop guidelines relating to 

21 the data archive system, including the types of data 

22 and samples to be preserved. 

23 (2) SYSTEM COMPONENTS.—The system shall 

24 be comprised of State agencies and agencies within 

25 the Department of the Interior that maintain geo-
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1 logical and geophysical data and samples that are 

2 designated by the Secretary in accordance with this 

3 subsection. The Program shall provide for the stor4 age of data and samples through data repositories 

5 operated by such agencies. 

6 (3) LIMITATION OF DESIGNATION.—The Sec7 retary may not designate a State agency as a com8 ponent of the data archive system unless it is the 

9 agency that acts as the geological survey in the 

10 State. 

11 (4) DATA FROM FEDERAL LANDS.—The data 

12 archive system shall provide for the archiving of rel13 evant subsurface data and samples obtained from 

14 Federal lands—

15 (A) in the most appropriate repository des16 ignated under paragraph (2), with preference 

17 being given to archiving data in the State in 

18 which the data was collected; and 

19 (B) consistent with all applicable law and 

20 requirements relating to confidentiality and pro21 prietary data. 

22 (e) NATIONAL CATALOG.—

23 (1) IN GENERAL.—As soon as practicable after 

24 the date of the enactment of this section, the Sec-
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1 retary shall develop and maintain, as a component 

2 of the Program, a national catalog that identifies—

3 (A) data and samples available in the data 

4 archive system established under subsection (d); 

5 (B) the repository for particular material 

6 in such system; and 

7 (C) the means of accessing the material. 

8 (2) AVAILABILITY.—The Secretary shall make 

9 the national catalog accessible to the public on the 

10 site of the Survey on the World Wide Web, con11 sistent with all applicable requirements related to 

12 confidentiality and proprietary data.

13 (f) ADVISORY COMMITTEE.—

14 (1) IN GENERAL.—The Advisory Committee 

15 shall advise the Secretary on planning and imple16 mentation of the Program. 

17 (2) NEW DUTIES.—In addition to its duties 

18 under the National Geologic Mapping Act of 1992 

19 (43 U.S.C. 31b et seq.), the Advisory Committee 

20 shall perform the following duties: 

21 (A) Advise the Secretary on developing 

22 guidelines and procedures for providing assist23 ance for facilities in subsection (g)(1). 
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1 (B) Review and critique the draft imple2 mentation plan prepared by the Secretary pur3 suant to subsection (c). 

4 (C) Identify useful studies of data archived 

5 under the Program that will advance under6 standing of the Nation’s energy and mineral re7 sources, geologic hazards, and engineering geol8 ogy. 

9 (D) Review the progress of the Program in 

10 archiving significant data and preventing the 

11 loss of such data, and the scientific progress of 

12 the studies funded under the Program. 

13 (E) Include in the annual report to the 

14 Secretary required under section 5(b)(3) of the 

15 National Geologic Mapping Act of 1992 (43 

16 U.S.C. 31d(b)(3)) an evaluation of the progress 

17 of the Program toward fulfilling the purposes of 

18 the Program under subsection (b). 

19 (g) FINANCIAL ASSISTANCE.—

20 (1) ARCHIVE FACILITIES.—Subject to the avail21 ability of appropriations, the Secretary shall provide 

22 financial assistance to a State agency that is des23 ignated under subsection (d)(2), for providing facili24 ties to archive energy material. 
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1 (2) STUDIES.—Subject to the availability of ap2 propriations, the Secretary shall provide financial as3 sistance to any State agency designated under sub4 section (d)(2) for studies that enhance under5 standing, interpretation, and use of materials 

6 archived in the data archive system established 

7 under subsection (d).

8 (3) FEDERAL SHARE.—The Federal share of 

9 the cost of an activity carried out with assistance 

10 under this subsection shall be no more than 50 per11 cent of the total cost of that activity. 

12 (4) PRIVATE CONTRIBUTIONS.—The Secretary 

13 shall apply to the non-Federal share of the cost of 

14 an activity carried out with assistance under this 

15 subsection the value of private contributions of prop16 erty and services used for that activity. 

17 (h) REPORT.—The Secretary shall include in each re18 port under section 8 of the National Geologic Mapping Act 

19 of 1992 (43 U.S.C. 31g)—

20 (1) a description of the status of the Program; 

21 (2) an evaluation of the progress achieved in 

22 developing the Program during the period covered by 

23 the report; and 

24 (3) any recommendations for legislative or other 

25 action the Secretary considers necessary and appro-
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1 priate to fulfill the purposes of the Program under 

2 subsection (b). 

3 (i) DEFINITIONS.—As used in this section: 

4 (1) ADVISORY COMMITTEE.—The term ‘‘Advi5 sory Committee’’ means the advisory committee es6 tablished under section 5 of the National Geologic 

7 Mapping Act of 1992 (43 U.S.C. 31d). 

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

9 the Secretary of the Interior acting through the Di10 rector of the United States Geological Survey. 

11 (3) PROGRAM.—The term ‘‘Program’’ means 

12 the National Energy Data Preservation Program 

13 carried out under this section. 

14 (4) SURVEY.—The term ‘‘Survey’’ means the 

15 United States Geological Survey. 

16 (j) MAINTENANCE OF STATE EFFORT.—It is the in17 tent of the Congress that the States not use this section 

18 as an opportunity to reduce State resources applied to the 

19 activities that are the subject of the Program. 

20 (k) AUTHORIZATION OF APPROPRIATIONS.—There is 

21 authorized to be appropriated to the Secretary 

22 $30,000,000 for each of fiscal years 2004 through 2008 

23 for carrying out this section.–
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1 SEC. 30212. COMPLIANCE WITH EXECUTIVE ORDER 13211; 

2 ACTIONS CONCERNING REGULATIONS THAT 

3 SIGNIFICANTLY AFFECT ENERGY SUPPLY, 

4 DISTRIBUTION, OR USE. 

5 (a) REQUIREMENT.—The Secretary of the Interior 

6 shall—

7 (1) require that before any person takes any ac8 tion that could have a significant adverse effect on 

9 the supply of domestic energy resources from Fed10 eral public lands, the person shall comply with Exec11 utive Order 13211; and 

12 (2) within 180 days after the date of the enact13 ment of this Act, publish guidance for purposes of 

14 this section describing what constitutes a significant 

15 adverse effect on the supply of domestic energy re16 sources under Executive Order 13211. 

17 (b) MOU.—The Secretary of the Interior and the 

18 Secretary of Agriculture shall include in the memorandum 

19 of understanding under section 30208 provisions regard20 ing implementation of subsection (a)(1) of this section. 

21 SEC. 30213. REIMBURSEMENT FOR COSTS OF NEPA ANAL22 YSES, DOCUMENTATION, AND STUDIES. 

23 (a) IN GENERAL.—The Mineral Leasing Act (30 

24 U.S.C. 181 et seq.) is amended by inserting after section 

25 37 the following: 
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1 ‘‘REIMBURSEMENT FOR COSTS OF CERTAIN ANALYSES, 

2 DOCUMENTATION, AND STUDIES

3 ‘‘SEC. 38. (a) IN GENERAL.—The Secretary of the 

4 Interior may, through royalty credits, reimburse a person 

5 who is a lessee, operator, operating rights owner, or appli6 cant for any lease under this Act for reasonable amounts 

7 paid by the person for preparation by the Secretary (or 

8 a contractor or other person selected by the Secretary) of 

9 any project-level analysis, documentation, or related study 

10 required under the National Environmental Policy Act of 

11 1969 (42 U.S.C. 4321 et seq.) with respect to the lease. 

12 ‘‘(b) CONDITIONS.—The Secretary may provide reim13 bursement under subsection (b) only if—

14 ‘‘(1) adequate funding to enable the Secretary 

15 to timely prepare the analysis, documentation, or re16 lated study is not appropriated; 

17 ‘‘(2) the person paid the costs voluntarily; and 

18 ‘‘(3) the person maintains records of its costs 

19 in accordance with regulations prescribed by the 

20 Secretary.’’. 

21 (b) APPLICATION.—The amendment made by this 

22 section shall apply with respect to any lease entered into 

23 before, on, or after the date of the enactment of this Act. 

24 (c) DEADLINE FOR REGULATIONS.—The Secretary of 

25 the Interior shall issue regulations implementing the 
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1 amendment made by this section by not later than 90 days 

2 after the date of the enactment of this Act.

3 SEC. 30214. ALTERNATE ENERGY-RELATED USES ON THE 

4 OUTER CONTINENTAL SHELF. 

5 (a) PURPOSES.—The purposes of this section are as 

6 follows: 

7 (1) To protect the economic and land use inter8 ests of the Federal Government in the management 

9 of the Outer Continental Shelf for energy-related 

10 and certain other purposes. 

11 (2) To provide an administrative framework for 

12 the oversight and management of energy-related ac13 tivities on the Outer Continental Shelf, consistent 

14 with other applicable laws. 

15 (3) To expedite projects to increase the produc16 tion, transmission, or conservation of energy on the 

17 Outer Continental Shelf. 

18 (4) To provide for interagency coordination in 

19 the siting and permitting of energy-related activities 

20 on the Outer Continental Shelf. 

21 (5) To ensure that energy-related activities on 

22 the Outer Continental Shelf are conducted in a man23 ner that provides for safety, protection of the envi24 ronment, prevention of waste, conservation of nat-
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1 ural resources, protection of correlative rights, and 

2 protection of national security interests. 

3 (6) To authorize alternate uses of existing 

4 structures and facilities previously permitted under 

5 the Outer Continental Shelf Lands Act (43 U.S.C. 

6 1331 note). 

7 (7) To ensure that the Federal Government re8 ceives a fair return for any easement or right-of-way 

9 granted under section 8(p) of the Outer Continental 

10 Shelf Lands Act. 

11 (b) AMENDMENT TO OUTER CONTINENTAL SHELF

12 LANDS ACT.—Section 8 of the Outer Continental Shelf 

13 Lands Act (43 U.S.C. 1337) is amended by adding at the 

14 end the following new subsection: 

15 ‘‘(p) EASEMENTS OR RIGHTS-OF-WAY FOR ENERGY

16 AND RELATED PURPOSES.—

17 ‘‘(1) The Secretary, in consultation with the 

18 Secretary of the Department in which the Coast 

19 Guard is operating and other relevant departments 

20 and agencies of the Federal Government, may grant 

21 an easement or right-of-way on the Outer Conti22 nental Shelf for activities not otherwise authorized 

23 in this Act, the Deepwater Port Act of 1974 (33 

24 U.S.C. 1501 et seq.), or the Ocean Thermal Energy 
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1 Conversion Act of 1980 (42 U.S.C. 9101 et seq.), or 

2 other applicable law when such activities—

3 ‘‘(A) support exploration, development, 

4 production, transportation, or storage of oil, 

5 natural gas, or other minerals; 

6 ‘‘(B) produce or support production, trans7 portation, or transmission of energy from 

8 sources other than oil and gas; or 

9 ‘‘(C) use facilities currently or previously 

10 used for activities authorized under this Act. 

11 ‘‘(2)(A) The Secretary shall establish reason12 able forms of annual or one-time payments for any 

13 easement or right-of-way granted under this sub14 section. Such payments shall not be assessed on the 

15 basis of throughput or production. The Secretary 

16 may establish fees, rentals, bonus, or other payments 

17 by rule or by agreement with the party to whom the 

18 easement or right-of-way is granted. 

19 ‘‘(B) Before exercising the authority granted 

20 under this subsection, the Secretary shall consult 

21 with the Secretary of Defense and other appropriate 

22 agencies concerning issues related to national secu23 rity and navigational obstruction. 

24 ‘‘(C) The Secretary is authorized to issue an 

25 easement or right-of-way for energy and related pur-
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1 poses as described in paragraph (1) on a competitive 

2 or noncompetitive basis. In determining whether 

3 such easement or right-of-way shall be granted com4 petitively or noncompetitively, the Secretary shall 

5 consider such factors as prevention of waste and 

6 conservation of natural resources, economic viability 

7 of an energy project, protection of the environment, 

8 national interest, national security, human safety, 

9 protection of correlative rights, and potential return 

10 for the easement or right-of-way. 

11 ‘‘(3) The Secretary, in consultation with the 

12 Secretary of the Department in which the Coast 

13 Guard is operating and other relevant departments 

14 and agencies of the Federal Government and af15 fected States, shall prescribe any necessary regula16 tions to assure safety, protection of the environment, 

17 prevention of waste, and conservation of the natural 

18 resources of the Outer Continental Shelf, protection 

19 of national security interests, and protection of cor20 relative rights therein. 

21 ‘‘(4) The Secretary shall require the holder of 

22 an easement or right-of-way granted under this sub23 section to furnish a surety bond or other form of se24 curity, as prescribed by the Secretary, and to comply 

25 with such other requirements as the Secretary may 
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1 deem necessary to protect the interests of the United 

2 States. 

3 ‘‘(5) Nothing in this subsection shall be con4 strued to displace, supersede, limit, or modify the ju5 risdiction, responsibility, or authority of any Federal 

6 or State agency under any other Federal law. 

7 ‘‘(6) This subsection shall not apply to any area 

8 on the Outer Continental Shelf designated as a Na9 tional Marine Sanctuary.’’. 

10 (c) CONFORMING AMENDMENT.—The text of the 

11 heading for section 8 of the Outer Continental Shelf 

12 Lands Act is amended to read as follows: ‘‘LEASES, EASE13 MENTS, AND RIGHTS-OF-WAY ON THE OUTER CONTI14 NENTAL SHELF.’’.

15 SEC. 30215. DEADLINE FOR DECISION ON APPEALS OF CON16 SISTENCY DETERMINATIONS UNDER THE 

17 COASTAL ZONE MANAGEMENT ACT OF 1972. 

18 (a) IN GENERAL.—Section 319 of the Coastal Zone 

19 Management Act of 1972 (16 U.S.C. 1465) is amended 

20 to read as follows: 

21 ‘‘APPEALS TO THE SECRETARY

22 ‘‘SEC. 319. (a) NOTICE.—The Secretary shall publish 

23 an initial notice in the Federal Register within 30 days 

24 after the date of the filing of any appeal to the Secretary 

25 of a consistency determination under section 307. 
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1 ‘‘(b) CLOSURE OF RECORD.—(1) No later than the 

2 end of 360-day period beginning on the date of publication 

3 of an initial notice under subsection (a), the Secretary 

4 shall receive no more filings on the appeal and the record 

5 of decision regarding the appeal shall be closed. 

6 ‘‘(2) Upon the closure of the record of decision, the 

7 Secretary shall immediately publish a notice that the 

8 record of decision has been closed. 

9 ‘‘(3) The Secretary may extend the period specified 

10 in paragraph (1) with respect to an appeal—

11 ‘‘(A) in accordance with the mutual agreement 

12 of the parties to the appeal; or 

13 ‘‘(B) as needed to complete the development of 

14 any environmental analyses required under the Na15 tional Environmental Policy Act of 1969 (42 U.S.C. 

16 4331 et seq.). 

17 ‘‘(c) DEADLINE FOR DECISION.—The Secretary shall 

18 issue a decision in any appeal filed under section 307 no 

19 later than 90 days after the publication of a notice under 

20 subsection (b)(2). 

21 ‘‘(d) APPLICATION.— This section applies to appeals 

22 initiated by the Secretary and appeals filed by an appli23 cant.’’. 

24 (b) APPLICATION.—The amendment made by sub25 section (a)—
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1 (1) shall apply with respect to any appeal initi2 ated or filed on or after the date of the enactment 

3 of this Act; and 

4 (2) shall not affect any appeal initiated or filed 

5 before the date of the enactment of this Act.

6 SEC. 30216. TASK FORCE ON ENERGY PROJECT STREAM7 LINING. 

8 (a) FINDINGS.—The Congress finds that—

9 (1) increased production and transmission of 

10 energy in a safe and environmentally sound manner 

11 is essential to the well-being of the American people; 

12 (2) on May 18, 2001, President George W. 

13 Bush signed Executive Order 13212 requiring agen14 cies to expedite their review of permits of other ac15 tions as necessary to accelerate the completion of en16 ergy-related projects, while maintaining safety, pub17 lic health, and environmental protections; and 

18 (3) Executive Order 13212 established an inter19 agency task force chaired by the Chairman of the 

20 Council on Environmental Quality to monitor and 

21 assist agencies in their efforts to expedite review of 

22 actions consistent with the Executive order, and to 

23 monitor and assist agencies in setting up appro24 priate mechanisms to coordinate Federal, State, 
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1 tribal, and local permitting in geographic areas 

2 where increased permitting activity is expected. 

3 (b) SENSE OF CONGRESS.—It is the sense of the 

4 Congress that the Task Force established pursuant to Ex5 ecutive Order 13212 should remain in existence until such 

6 time as the President finds that the needs for which it 

7 was established have been met. 

8 SEC. 30217. PILOT PROGRAM ON NORTHERN ROCKY MOUN9 TAINS ENERGY RESOURCE MANAGEMENT. 

10 (a) FINDINGS.—The Congress finds that the task 

11 force established by President George W. Bush by the 

12 issuance of Executive Order 13212, and headed by the 

13 Chairman of the Council on Environmental Quality, has 

14 developed a pilot project the goals of which are—

15 (1) to reduce conflict, uncertainty, and the time 

16 involved in making decisions on energy resource 

17 management in the Northern Rocky Mountains; 

18 (2) to establish a mechanism to provide for the 

19 coordination of Federal and State policy guidance 

20 regarding the development of regional energy re21 sources and their transmission to markets; 

22 (3) to institutionalize early collaboration and 

23 participation of all parties involved in regional deci24 sions on environmental, economic and energy issues 
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1 related to the exploration, development, and produc2 tion of energy resources; and 

3 (4) to take a long-term and regional view on 

4 how best to manage the energy resources in the 

5 Northern Rocky Mountains. 

6 (b) SENSE OF THE CONGRESS.—It is the sense of 

7 the Congress that the task force should carry out this pilot 

8 project and report to the Congress no later than 36 

9 months after the date of enactment of this Act on the 

10 progress it has made in accomplishing the goals set forth 

11 in subsection (a) of this section. 

12 SEC. 30218. ENERGY DEVELOPMENT FACILITATOR STUDY. 

13 (a) IN GENERAL.—The Chairman of the Council on 

14 Environmental Quality shall conduct a study to determine 

15 the feasibility of establishing under the Council the posi16 tion of Facilitator for Energy Development, to coordinate 

17 Federal agency actions relating to energy project permit18 ting. The study shall consider, among other matters—

19 (1) the ways in which a facilitator can facilitate 

20 the long-term coordination of energy projects on 

21 Federal lands; and 

22 (2) the role of a facilitator in ensuring that the 

23 questions or concerns of permit applicants and other 

24 persons involved in energy projects are addressed in 

25 the agency. 
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1 (b) REPORT.—Not later than 12 months after the 

2 date of enactment of this section, the Chairman shall sub3 mit a report to the Committee on Resources of the House 

4 of Representatives and the Committee on Energy and 

5 Natural Resources of the Senate detailing the findings of 

6 the study required by subsection (a), and including any 

7 legislative recommendations of the Chairman with respect 

8 to the establishment of the position studied.

9 SEC. 30219. COMBINED HYDROCARBON LEASING. 

10 (a) SPECIAL PROVISIONS REGARDING LEASING.—

11 Section 17(b)(2) of the Mineral Leasing Act (30 U.S.C. 

12 226(b)(2)) is amended—

13 (1) by inserting ‘‘(A)’’ after ‘‘(2)’’; and 

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

15 ‘‘(B) For any area that contains any combination of 

16 tar sand and oil or gas (or both), the Secretary may issue 

17 under this Act, separately—

18 ‘‘(i) a lease for exploration for and extraction of 

19 tar sand; and 

20 ‘‘(ii) a lease for exploration for and development 

21 of oil and gas. 

22 ‘‘(C) A lease issued for tar sand shall be issued using 

23 the same bidding process, annual rental, and posting pe24 riod as a lease issued for oil and gas, except that the min-
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1 imum acceptable bid required for a lease issued for tar 

2 sand shall be $2 per acre. 

3 ‘‘(D) The Secretary may waive, suspend, or alter any 

4 requirement under section 26 that a permittee under a 

5 permit authorizing prospecting for tar sand must exercise 

6 due diligence, to promote any resource covered by a com7 bined hydrocarbon lease.’’. 

8 (b) CONFORMING AMENDMENT.—Section 

9 17(b)(1)(B) of the Mineral Leasing Act (30 U.S.C. 

10 226(b)(1)(B)) is amended in the second sentence by in11 serting ‘‘, subject to paragraph (2)(B),’’ after ‘‘The Sec12 retary’’.

13 (c) REGULATIONS.—Within 45 days after the date of 

14 the enactment of this Act, the Secretary of the Interior 

15 shall issue final regulations to implement this section. 

16 SEC. 30220. COMPREHENSIVE INVENTORY OF OCS OIL AND 

17 NATURAL GAS RESOURCES. 

18 (a) IN GENERAL.—The Secretary of the Interior, in 

19 consultation with the Secretary of Energy, key stake20 holders including coastal States, and the oil and gas indus21 try, shall conduct an inventory and analysis of oil and nat22 ural gas resources for areas beneath all of the United 

23 States waters of the Outer Continental Shelf. The inven24 tory and analysis shall—
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1 (1) provide resource estimates of oil and gas re2 sources underlying those waters and estimate how 

3 those resource estimates may change if—

4 (A) geological and geophysical data could 

5 be gathered and analyzed; 

6 (B) targeted exploration was allowed; and 

7 (C) full resource development was allowed 

8 following successful exploration; 

9 (2) analyze how resource estimates for such 

10 areas, including areas such as the deepwater and 

11 subsalt areas in the Gulf of Mexico, have changed 

12 over time as—

13 (A) geological and geophysical data was 

14 gathered; 

15 (B) initial exploration occurred; and 

16 (C) full field development occurred; 

17 (3) identify and explain how legislative, regu18 latory, and administrative programs or processes re19 strict or impede the development of identified re20 sources and the extent to which they will affect do21 mestic supply, including with respect to—

22 (A) leasing moratoria; 

23 (B) lease terms and conditions; 

24 (C) operational stipulations and require25 ments; 
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1 (D) approval delays by the Federal govern2 ment and coastal States; and 

3 (E) local zoning restrictions for onshore 

4 processing facilities and pipeline landings; and 

5 (4) analyze the effect that understated oil and 

6 gas resource inventories have on domestic energy in7 vestments. 

8 (b) PROCESS RECOMMENDATIONS.—In conjunction 

9 with the inventory and analysis, the Secretary of the Inte10 rior, in consultation with the Secretary of Energy, shall 

11 consult with key stakeholders to make recommendations 

12 for achieving a more balanced and environmentally sound 

13 energy policy for the Outer Continental Shelf. Key stake14 holders to be consulted include Governors, conservation 

15 and environmental organizations, academia, the oil and 

16 gas industry, and the scientific and business communities. 

17 The Secretary of the Interior shall also make rec18 ommendations regarding processes that could be imple19 mented that would lead to additional Outer Continental 

20 Shelf leasing and development of those resources for the 

21 benefit of the American public. 

22 (c) REGULAR UPDATES.—After completion of the in23 ventory, the Secretary shall regularly update estimates 

24 and identifications of restrictions to offshore development 
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1 included in the inventory, and make such updates publicly 

2 available. 

3 (d) SUBMISSION TO CONGRESS.—The inventory, 

4 analysis, and recommendations shall be provided to the 

5 Committee on Resources of the House of Representatives 

6 and the Committee on Energy and Natural Resources of 

7 the Senate within 6 months after the date of enactment 

8 of this section. 

9 (e) METHANE HYDRATE STUDY.—

10 (1) IN GENERAL.—The Secretary of the Inte11 rior shall study the occurrence and distribution of 

12 methane hydrates in the United States. 

13 (2) REPORT.—The Secretary of the Interior 

14 shall submit a report to the Congress on the results 

15 of the study by not later than 3 years after the date 

16 of the enactment of this Act, including an estimate 

17 of the methane hydrate resources in the United 

18 States.

19 SEC. 30221. ROYALTY PAYMENTS UNDER LEASES UNDER 

20 THE OUTER CONTINENTAL SHELF LANDS 

21 ACT. 

22 (a) ROYALTY RELIEF.—

23 (1) IN GENERAL.—For purposes of providing 

24 compensation for lessees and a State for which 

25 amounts are authorized by section 6004(c) of the Oil 
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1 Pollution Act of 1980 (Public Law 101–380), a les2 see may withhold from payment any royalty due and 

3 owing to the United States under any lease under 

4 the Outer Continental Shelf Lands Act (43 U.S.C. 

5 1301 et seq.) for offshore oil or gas production from 

6 a covered lease tract if, on or before the date that 

7 the payment is due and payable to the United 

8 States, the lessee makes a payment to the State of 

9 44 cents for every $1 of royalty withheld. 

10 (2) TREATMENT OF WITHHELD AMOUNTS.—

11 Any royalty withheld by a lessee in accordance with 

12 this section shall be treated as paid for purposes of 

13 satisfaction of the royalty obligations of the lessee to 

14 the United States. 

15 (3) CERTIFICATION OF WITHHELD AMOUNTS.—

16 The Secretary of the Treasury shall—

17 (A) determine the amount of royalty with18 held by a lessee under this section; and 

19 (B) promptly publish a certification when 

20 the total amount of royalty withheld by the les21 see under this section is equal to the lessee’s 

22 share of the total drainage claim for the West 

23 Delta field (with interest) as described at page 

24 47 of Senate Report number 101–534. 
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1 (b) PERIOD OF ROYALTY RELIEF.—Subsection (a) 

2 shall apply to royalty amounts that are due and payable 

3 in the period beginning on January 1, 2003, and ending 

4 on the date on which the Secretary publishes a certifi5 cation under subsection (a)(3)(B). 

6 (c) DEFINITIONS.—As used in this section: 

7 (1) COVERED LEASE TRACT.—The term ‘‘cov8 ered lease tract’’ means a leased tract (or portion of 

9 a leased tract)—

10 (A) lying seaward of the zone defined and 

11 governed by section 8(g) of the Outer Conti12 nental Shelf Lands Act (43 U.S.C. 1337(g)); or 

13 (B) lying within such zone but to which 

14 such section does not apply. 

15 (2) LESSEE.—The term ‘‘lessee’’ means a per16 son (including a successor or assign of a person) 

17 that, on the date of the enactment of the Oil Pollu18 tion Act of 1980, was a lessee referred to in section 

19 6004(c) of that Act (as in effect on that date of the 

20 enactment), but did not hold lease rights in Federal 

21 offshore lease OCS–G–5669.
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1 TITLE III—BIOMASS ENERGY 

2 SEC. 30301. GRANTS TO IMPROVE THE COMMERCIAL VALUE 

3 OF FOREST BIOMASS FOR ELECTRIC ENERGY, 

4 USEFUL HEAT, TRANSPORTATION FUELS, PE5 TROLEUM-BASED PRODUCT SUBSTITUTES, 

6 AND OTHER COMMERCIAL PURPOSES. 

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

8 (1) Thousands of communities in the United 

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

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

11 managed by the Secretary of Agriculture and the 

12 Secretary of the Interior are at risk of catastrophic 

13 fire in the near future. The accumulation of heavy 

14 forest fuel loads continues to increase as a result of 

15 disease, insect infestations, and drought, further 

16 raising the risk of fire each year. 

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

18 across all land ownerships are at risk to higher than 

19 normal mortality over the next 15 years from insect 

20 infestation and disease. High levels of tree mortality 

21 from insects and disease result in increased fire risk, 

22 loss of old growth, degraded watershed conditions, 

23 and changes in species diversity and productivity, as 

24 well as diminished fish and wildlife habitat and de25 creased timber values. 
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1 (3) Preventive treatments such as removing fuel 

2 loading, ladder fuels, and hazard trees, planting 

3 proper species mix and restoring and protecting 

4 early successional habitat, and other specific restora5 tion treatments designed to reduce the susceptibility 

6 of forest land, woodland, and rangeland to insect 

7 outbreaks, disease, and catastrophic fire present the 

8 greatest opportunity for long-term forest health by 

9 creating a mosaic of species-mix and age distribu10 tion. Such prevention treatments are widely acknowl11 edged to be more successful and cost effective than 

12 suppression treatments in the case of insects, dis13 ease, and fire. 

14 (4) The by-products of preventive treatment 

15 (wood, brush, thinnings, chips, slash, and other haz16 ardous fuels) removed from forest lands, woodlands 

17 and rangelands represent an abundant supply of bio18 mass for biomass-to-energy facilities and raw mate19 rial for business. There are currently few markets 

20 for the extraordinary volumes of by-products being 

21 generated as a result of the necessary large-scale 

22 preventive treatment activities. 

23 (5) The United States should—

24 (A) promote economic and entrepreneurial 

25 opportunities in using by-products removed 
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1 through preventive treatment activities related 

2 to hazardous fuels reduction, disease, and insect 

3 infestation; and 

4 (B) develop and expand markets for tradi5 tionally underused wood and biomass as an out6 let for by-products of preventive treatment ac7 tivities. 

8 (b) DEFINITIONS.—In this section: 

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

10 trees and woody plants, including limbs, tops, nee11 dles, and other woody parts, and by-products of pre12 ventive treatment, such as wood, brush, thinnings, 

13 chips, and slash, that are removed—

14 (A) to reduce hazardous fuels; or 

15 (B) to reduce the risk of or to contain dis16 ease or insect infestation. 

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

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

19 the Indian Self-Determination and Education Assist20 ance Act (25 U.S.C. 450b(e)). 

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

22 (A) an individual; 

23 (B) a community (as determined by the 

24 Secretary concerned); 

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

2 corporation that is incorporated in the United 

3 States; and 

4 (E) a nonprofit organization. 

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

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

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

10 (i) has a population of not more than 

11 50,000 individuals; and 

12 (ii) the Secretary concerned, in the 

13 sole discretion of the Secretary concerned, 

14 determines contains or is located near 

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

17 or insect infestation or which suffers from 

18 disease or insect infestation; or 

19 (B) any county that—

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

22 (ii) the Secretary concerned, in the 

23 sole discretion of the Secretary concerned, 

24 determines contains or is located near 

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

2 or insect infestation or which suffers from 

3 disease or insect infestation. 

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

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

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

10 the Secretary of the Interior and Indian lands. 

11 (c) BIOMASS COMMERCIAL USE GRANT PROGRAM.—

12 (1) IN GENERAL.—The Secretary concerned 

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

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

18 for use by such facility. 

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

21 delivered. 

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

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

2 transactions involved in the purchase of biomass. 

3 Upon notice by a representative of the Secretary 

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

8 (d) IMPROVED BIOMASS USE GRANT PROGRAM.—

9 (1) IN GENERAL.—The Secretary concerned 

10 may make grants to persons to offset the cost of 

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

14 preference to persons in preferred communities. 

15 (2) SELECTION.—The Secretary concerned shall 

16 select a grant recipient under paragraph (1) after 

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

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

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

23 (3) GRANT AMOUNT.—A grant under this sub24 section may not exceed $100,000. 
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1 (e) AUTHORIZATION OF APPROPRIATIONS.—There is 

2 authorized to be appropriated $50,000,000 for each of the 

3 fiscal years 2004 through 2014 to carry out this section. 

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

5 Secretary of Agriculture, in consultation with the Sec6 retary of the Interior, shall submit to the Committee on 

7 Energy and Natural Resources and the Committee on Ag8 riculture, Nutrition, and Forestry of the Senate and the 

9 Committee on Resources and the Committee on Agri10 culture of the House of Representatives a report describ11 ing the results of the grant programs authorized by this 

12 section. The report shall include the following: 

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

14 use of biomass by persons that receive grants under 

15 this section. 

16 (2) The distance between the land from which 

17 the biomass was removed and the facility that used 

18 the biomass. 

19 (3) The economic impacts, particularly new job 

20 creation, resulting from the grants to and operation 

21 of the eligible operations.
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1 TITLE IV—ARCTIC COASTAL 

2 PLAIN DOMESTIC ENERGY 

3 SEC. 30401. SHORT TITLE. 

4 This title may be cited as the ‘‘Arctic Coastal Plain 

5 Domestic Energy Security Act of 2003’’. 

6 SEC. 30402. DEFINITIONS. 

7 In this title: 

8 (1) COASTAL PLAIN.—The term ‘‘Coastal 

9 Plain’’ means that area identified as such in the 

10 map entitled ‘‘Arctic National Wildlife Refuge’’, 

11 dated August 1980, as referenced in section 1002(b) 

12 of the Alaska National Interest Lands Conservation 

13 Act of 1980 (16 U.S.C. 3142(b)(1)), comprising ap14 proximately 1,549,000 acres, and as described in ap15 pendix I to part 37 of title 50, Code of Federal Reg16 ulations. 

17 (2) SECRETARY.—The term ‘‘Secretary’’, except 

18 as otherwise provided, means the Secretary of the 

19 Interior or the Secretary’s designee. 

20 SEC. 30403. LEASING PROGRAM FOR LANDS WITHIN THE 

21 COASTAL PLAIN. 

22 (a) IN GENERAL.—The Secretary shall take such ac23 tions as are necessary—

24 (1) to establish and implement in accordance 

25 with this Act a competitive oil and gas leasing pro-
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1 gram under the Mineral Leasing Act (30 U.S.C. 181 

2 et seq.) that will result in an environmentally sound 

3 program for the exploration, development, and pro4 duction of the oil and gas resources of the Coastal 

5 Plain; and 

6 (2) to administer the provisions of this title 

7 through regulations, lease terms, conditions, restric8 tions, prohibitions, stipulations, and other provisions 

9 that ensure the oil and gas exploration, development, 

10 and production activities on the Coastal Plain will 

11 result in no significant adverse effect on fish and 

12 wildlife, their habitat, subsistence resources, and the 

13 environment, and including, in furtherance of this 

14 goal, by requiring the application of the best com15 mercially available technology for oil and gas explo16 ration, development, and production to all explo17 ration, development, and production operations 

18 under this title in a manner that ensures the receipt 

19 of fair market value by the public for the mineral re20 sources to be leased. 

21 (b) REPEAL.—Section 1003 of the Alaska National 

22 Interest Lands Conservation Act of 1980 (16 U.S.C. 

23 3143) is repealed. 

24 (c) COMPLIANCE WITH REQUIREMENTS UNDER CER25 TAIN OTHER LAWS.—
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1 (1) COMPATIBILITY.—For purposes of the Na2 tional Wildlife Refuge System Administration Act of 

3 1966, the oil and gas leasing program and activities 

4 authorized by this section in the Coastal Plain are 

5 deemed to be compatible with the purposes for which 

6 the Arctic National Wildlife Refuge was established, 

7 and that no further findings or decisions are re8 quired to implement this determination. 

9 (2) ADEQUACY OF THE DEPARTMENT OF THE

10 INTERIOR’S LEGISLATIVE ENVIRONMENTAL IMPACT

11 STATEMENT.—The ‘‘Final Legislative Environ12 mental Impact Statement’’ (April 1987) on the 

13 Coastal Plain prepared pursuant to section 1002 of 

14 the Alaska National Interest Lands Conservation 

15 Act of 1980 (16 U.S.C. 3142) and section 102(2)(C) 

16 of the National Environmental Policy Act of 1969 

17 (42 U.S.C. 4332(2)(C)) is deemed to satisfy the re18 quirements under the National Environmental Policy 

19 Act of 1969 that apply with respect to actions au20 thorized to be taken by the Secretary to develop and 

21 promulgate the regulations for the establishment of 

22 a leasing program authorized by this title before the 

23 conduct of the first lease sale. 

24 (3) COMPLIANCE WITH NEPA FOR OTHER AC25 TIONS.—Before conducting the first lease sale under 
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1 this title, the Secretary shall prepare an environ2 mental impact statement under the National Envi3 ronmental Policy Act of 1969 with respect to the ac4 tions authorized by this title that are not referred to 

5 in paragraph (2). Notwithstanding any other law, 

6 the Secretary is not required to identify nonleasing 

7 alternative courses of action or to analyze the envi8 ronmental effects of such courses of action. The Sec9 retary shall only identify a preferred action for such 

10 leasing and a single leasing alternative, and analyze 

11 the environmental effects and potential mitigation 

12 measures for those two alternatives. The identifica13 tion of the preferred action and related analysis for 

14 the first lease sale under this title shall be completed 

15 within 18 months after the date of the enactment of 

16 this Act. The Secretary shall only consider public 

17 comments that specifically address the Secretary’s 

18 preferred action and that are filed within 20 days 

19 after publication of an environmental analysis. Not20 withstanding any other law, compliance with this 

21 paragraph is deemed to satisfy all requirements for 

22 the analysis and consideration of the environmental 

23 effects of proposed leasing under this title. 
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1 (d) RELATIONSHIP TO STATE AND LOCAL AUTHOR2 ITY.—Nothing in this title shall be considered to expand 

3 or limit State and local regulatory authority. 

4 (e) SPECIAL AREAS.—

5 (1) IN GENERAL.—The Secretary, after con6 sultation with the State of Alaska, the city of 

7 Kaktovik, and the North Slope Borough, may des8 ignate up to a total of 45,000 acres of the Coastal 

9 Plain as a Special Area if the Secretary determines 

10 that the Special Area is of such unique character 

11 and interest so as to require special management 

12 and regulatory protection. The Secretary shall des13 ignate as such a Special Area the Sadlerochit Spring 

14 area, comprising approximately 4,000 acres as de15 picted on the map referred to in section 402(1). 

16 (2) MANAGEMENT.—Each such Special Area 

17 shall be managed so as to protect and preserve the 

18 area’s unique and diverse character including its 

19 fish, wildlife, and subsistence resource values. 

20 (3) EXCLUSION FROM LEASING OR SURFACE

21 OCCUPANCY.—The Secretary may exclude any Spe22 cial Area from leasing. If the Secretary leases a Spe23 cial Area, or any part thereof, for purposes of oil 

24 and gas exploration, development, production, and 
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•HR 6 IH 

1 related activities, there shall be no surface occu2 pancy of the lands comprising the Special Area. 

3 (4) DIRECTIONAL DRILLING.—Notwithstanding 

4 the other provisions of this subsection, the Secretary 

5 may lease all or a portion of a Special Area under 

6 terms that permit the use of horizontal drilling tech7 nology from sites on leases located outside the area. 

8 (f) LIMITATION ON CLOSED AREAS.—The Sec9 retary’s sole authority to close lands within the Coastal 

10 Plain to oil and gas leasing and to exploration, develop11 ment, and production is that set forth in this title. 

12 (g) REGULATIONS.—

13 (1) IN GENERAL.—The Secretary shall pre14 scribe such regulations as may be necessary to carry 

15 out this title, including rules and regulations relating 

16 to protection of the fish and wildlife, their habitat, 

17 subsistence resources, and environment of the Coast18 al Plain, by no later than 15 months after the date 

19 of the enactment of this Act. 

20 (2) REVISION OF REGULATIONS.—The Sec21 retary shall periodically review and, if appropriate, 

22 revise the rules and regulations issued under sub23 section (a) to reflect any significant biological, envi24 ronmental, or engineering data that come to the Sec25 retary’s attention. 
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•HR 6 IH 

1 SEC. 30404. LEASE SALES. 

2 (a) IN GENERAL.—Lands may be leased pursuant to 

3 this title to any person qualified to obtain a lease for de4 posits of oil and gas under the Mineral Leasing Act (30 

5 U.S.C. 181 et seq.). 

6 (b) PROCEDURES.—The Secretary shall, by regula7 tion, establish procedures for—

8 (1) receipt and consideration of sealed nomina9 tions for any area in the Coastal Plain for inclusion 

10 in, or exclusion (as provided in subsection (c)) from, 

11 a lease sale; 

12 (2) the holding of lease sales after such nomina13 tion process; and 

14 (3) public notice of and comment on designa15 tion of areas to be included in, or excluded from, a 

16 lease sale. 

17 (c) LEASE SALE BIDS.—Bidding for leases under 

18 this title shall be by sealed competitive cash bonus bids. 

19 (d) ACREAGE MINIMUM IN FIRST SALE.—In the first 

20 lease sale under this title, the Secretary shall offer for 

21 lease those tracts the Secretary considers to have the 

22 greatest potential for the discovery of hydrocarbons, tak23 ing into consideration nominations received pursuant to 

24 subsection (b)(1), but in no case less than 200,000 acres. 

25 (e) TIMING OF LEASE SALES.—The Secretary 

26 shall—
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•HR 6 IH 

1 (1) conduct the first lease sale under this title 

2 within 22 months after the date of the enactment of 

3 this Act; and 

4 (2) conduct additional sales so long as sufficient 

5 interest in development exists to warrant, in the Sec6 retary’s judgment, the conduct of such sales. 

7 SEC. 30405. GRANT OF LEASES BY THE SECRETARY. 

8 (a) IN GENERAL.—The Secretary may grant to the 

9 highest responsible qualified bidder in a lease sale con10 ducted pursuant to section 30404 any lands to be leased 

11 on the Coastal Plain upon payment by the lessee of such 

12 bonus as may be accepted by the Secretary. 

13 (b) SUBSEQUENT TRANSFERS.—No lease issued 

14 under this title may be sold, exchanged, assigned, sublet, 

15 or otherwise transferred except with the approval of the 

16 Secretary. Prior to any such approval the Secretary shall 

17 consult with, and give due consideration to the views of, 

18 the Attorney General. 

19 SEC. 30406. LEASE TERMS AND CONDITIONS. 

20 (a) IN GENERAL.—An oil or gas lease issued pursu21 ant to this title shall—

22 (1) provide for the payment of a royalty of not 

less than 121 23 ⁄2 percent in amount or value of the 

24 production removed or sold from the lease, as deter-
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•HR 6 IH 

1 mined by the Secretary under the regulations appli2 cable to other Federal oil and gas leases; 

3 (2) provide that the Secretary may close, on a 

4 seasonal basis, portions of the Coastal Plain to ex5 ploratory drilling activities as necessary to protect 

6 caribou calving areas and other species of fish and 

7 wildlife;

8 (3) require that the lessee of lands within the 

9 Coastal Plain shall be fully responsible and liable for 

10 the reclamation of lands within the Coastal Plain 

11 and any other Federal lands that are adversely af12 fected in connection with exploration, development, 

13 production, or transportation activities conducted 

14 under the lease and within the Coastal Plain by the 

15 lessee or by any of the subcontractors or agents of 

16 the lessee; 

17 (4) provide that the lessee may not delegate or 

18 convey, by contract or otherwise, the reclamation re19 sponsibility and liability to another person without 

20 the express written approval of the Secretary; 

21 (5) provide that the standard of reclamation for 

22 lands required to be reclaimed under this title shall 

23 be, as nearly as practicable, a condition capable of 

24 supporting the uses which the lands were capable of 

25 supporting prior to any exploration, development, or 
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•HR 6 IH 

1 production activities, or upon application by the les2 see, to a higher or better use as approved by the 

3 Secretary; 

4 (6) contain terms and conditions relating to 

5 protection of fish and wildlife, their habitat, and the 

6 environment as required pursuant to section 

7 30403(a)(2); 

8 (7) provide that the lessee, its agents, and its 

9 contractors use best efforts to provide a fair share, 

10 as determined by the level of obligation previously 

11 agreed to in the 1974 agreement implementing sec12 tion 29 of the Federal Agreement and Grant of 

13 Right of Way for the Operation of the Trans-Alaska 

14 Pipeline, of employment and contracting for Alaska 

15 Natives and Alaska Native Corporations from 

16 throughout the State; 

17 (8) prohibit the export of oil produced under 

18 the lease; and 

19 (9) contain such other provisions as the Sec20 retary determines necessary to ensure compliance 

21 with the provisions of this title and the regulations 

22 issued under this title. 

23 (b) PROJECT LABOR AGREEMENTS.—The Secretary, 

24 as a term and condition of each lease under this title and 

25 in recognizing the Government’s proprietary interest in 
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•HR 6 IH 

1 labor stability and in the ability of construction labor and 

2 management to meet the particular needs and conditions 

3 of projects to be developed under the leases issued pursu4 ant to this title and the special concerns of the parties 

5 to such leases, shall require that the lessee and its agents 

6 and contractors negotiate to obtain a project labor agree7 ment for the employment of laborers and mechanics on 

8 production, maintenance, and construction under the 

9 lease. 

10 SEC. 30407. COASTAL PLAIN ENVIRONMENTAL PROTEC11 TION. 

12 (a) NO SIGNIFICANT ADVERSE EFFECT STANDARD

13 TO GOVERN AUTHORIZED COASTAL PLAIN ACTIVITIES.—

14 The Secretary shall, consistent with the requirements of 

15 section 30403, administer the provisions of this title 

16 through regulations, lease terms, conditions, restrictions, 

17 prohibitions, stipulations, and other provisions that—

18 (1) ensure the oil and gas exploration, develop19 ment, and production activities on the Coastal Plain 

20 will result in no significant adverse effect on fish 

21 and wildlife, their habitat, and the environment; and 

22 (2) require the application of the best commer23 cially available technology for oil and gas explo24 ration, development, and production on all new ex25 ploration, development, and production operations. 
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•HR 6 IH 

1 (b) SITE-SPECIFIC ASSESSMENT AND MITIGATION.—

2 The Secretary shall also require, with respect to any pro3 posed drilling and related activities, that—

4 (1) a site-specific analysis be made of the prob5 able effects, if any, that the drilling or related activi6 ties will have on fish and wildlife, their habitat, and 

7 the environment; 

8 (2) a plan be implemented to avoid, minimize, 

9 and mitigate (in that order and to the extent prac10 ticable) any significant adverse effect identified 

11 under paragraph (1); and 

12 (3) the development of the plan shall occur 

13 after consultation with the agency or agencies hav14 ing jurisdiction over matters mitigated by the plan. 

15 (c) REGULATIONS TO PROTECT COASTAL PLAIN

16 FISH AND WILDLIFE RESOURCES, SUBSISTENCE USERS, 

17 AND THE ENVIRONMENT.—Before implementing the leas18 ing program authorized by this title, the Secretary shall 

19 prepare and promulgate regulations, lease terms, condi20 tions, restrictions, prohibitions, stipulations, and other 

21 measures designed to ensure that the activities undertaken 

22 on the Coastal Plain under this title are conducted in a 

23 manner consistent with the purposes and environmental 

24 requirements of this title. 
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•HR 6 IH 

1 (d) COMPLIANCE WITH FEDERAL AND STATE ENVI2 RONMENTAL LAWS AND OTHER REQUIREMENTS.—The 

3 proposed regulations, lease terms, conditions, restrictions, 

4 prohibitions, and stipulations for the leasing program 

5 under this title shall require compliance with all applicable 

6 provisions of Federal and State environmental law and 

7 shall also require the following: 

8 (1) Standards at least as effective as the safety 

9 and environmental mitigation measures set forth in 

10 items 1 through 29 at pages 167 through 169 of the 

11 ‘‘Final Legislative Environmental Impact State12 ment’’ (April 1987) on the Coastal Plain. 

13 (2) Seasonal limitations on exploration, develop14 ment, and related activities, where necessary, to 

15 avoid significant adverse effects during periods of 

16 concentrated fish and wildlife breeding, denning, 

17 nesting, spawning, and migration. 

18 (3) That exploration activities, except for sur19 face geological studies, be limited to the period be20 tween approximately November 1 and May 1 each 

21 year and that exploration activities shall be sup22 ported by ice roads, winter trails with adequate snow 

23 cover, ice pads, ice airstrips, and air transport meth24 ods, except that such exploration activities may 

25 occur at other times, if the Secretary finds that such 
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•HR 6 IH 

1 exploration will have no significant adverse effect on 

2 the fish and wildlife, their habitat, and the environ3 ment of the Coastal Plain. 

4 (4) Design safety and construction standards 

5 for all pipelines and any access and service roads, 

6 that—

7 (A) minimize, to the maximum extent pos8 sible, adverse effects upon the passage of mi9 gratory species such as caribou; and 

10 (B) minimize adverse effects upon the flow 

11 of surface water by requiring the use of cul12 verts, bridges, and other structural devices. 

13 (5) Prohibitions on public access and use on all 

14 pipeline access and service roads. 

15 (6) Stringent reclamation and rehabilitation re16 quirements, consistent with the standards set forth 

17 in this title, requiring the removal from the Coastal 

18 Plain of all oil and gas development and production 

19 facilities, structures, and equipment upon completion 

20 of oil and gas production operations, except that the 

21 Secretary may exempt from the requirements of this 

22 paragraph those facilities, structures, or equipment 

23 that the Secretary determines would assist in the 

24 management of the Arctic National Wildlife Refuge 
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•HR 6 IH 

1 and that are donated to the United States for that 

2 purpose. 

3 (7) Appropriate prohibitions or restrictions on 

4 access by all modes of transportation. 

5 (8) Appropriate prohibitions or restrictions on 

6 sand and gravel extraction. 

7 (9) Consolidation of facility siting. 

8 (10) Appropriate prohibitions or restrictions on 

9 use of explosives. 

10 (11) Avoidance, to the extent practicable, of 

11 springs, streams, and river system; the protection of 

12 natural surface drainage patterns, wetlands, and ri13 parian habitats; and the regulation of methods or 

14 techniques for developing or transporting adequate 

15 supplies of water for exploratory drilling. 

16 (12) Avoidance or reduction of air traffic-re17 lated disturbance to fish and wildlife. 

18 (13) Treatment and disposal of hazardous and 

19 toxic wastes, solid wastes, reserve pit fluids, drilling 

20 muds and cuttings, and domestic wastewater, includ21 ing an annual waste management report, a haz22 ardous materials tracking system, and a prohibition 

23 on chlorinated solvents, in accordance with applica24 ble Federal and State environmental law. 
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•HR 6 IH 

1 (14) Fuel storage and oil spill contingency plan2 ning. 

3 (15) Research, monitoring, and reporting re4 quirements. 

5 (16) Field crew environmental briefings. 

6 (17) Avoidance of significant adverse effects 

7 upon subsistence hunting, fishing, and trapping by 

8 subsistence users. 

9 (18) Compliance with applicable air and water 

10 quality standards. 

11 (19) Appropriate seasonal and safety zone des12 ignations around well sites, within which subsistence 

13 hunting and trapping shall be limited. 

14 (20) Reasonable stipulations for protection of 

15 cultural and archeological resources. 

16 (21) All other protective environmental stipula17 tions, restrictions, terms, and conditions deemed 

18 necessary by the Secretary. 

19 (e) CONSIDERATIONS.—In preparing and promul20 gating regulations, lease terms, conditions, restrictions, 

21 prohibitions, and stipulations under this section, the Sec22 retary shall consider the following: 

23 (1) The stipulations and conditions that govern 

24 the National Petroleum Reserve-Alaska leasing pro25 gram, as set forth in the 1999 Northeast National 
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•HR 6 IH 

1 Petroleum Reserve-Alaska Final Integrated Activity 

2 Plan/Environmental Impact Statement. 

3 (2) The environmental protection standards 

4 that governed the initial Coastal Plain seismic explo5 ration program under parts 37.31 to 37.33 of title 

6 50, Code of Federal Regulations. 

7 (3) The land use stipulations for exploratory 

8 drilling on the KIC–ASRC private lands that are set 

9 forth in Appendix 2 of the August 9, 1983, agree10 ment between Arctic Slope Regional Corporation and 

11 the United States. 

12 (f) FACILITY CONSOLIDATION PLANNING.—

13 (1) IN GENERAL.—The Secretary shall, after 

14 providing for public notice and comment, prepare 

15 and update periodically a plan to govern, guide, and 

16 direct the siting and construction of facilities for the 

17 exploration, development, production, and transpor18 tation of Coastal Plain oil and gas resources. 

19 (2) OBJECTIVES.—The plan shall have the fol20 lowing objectives: 

21 (A) Avoiding unnecessary duplication of fa22 cilities and activities. 

23 (B) Encouraging consolidation of common 

24 facilities and activities. 
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•HR 6 IH 

1 (C) Locating or confining facilities and ac2 tivities to areas that will minimize impact on 

3 fish and wildlife, their habitat, and the environ4 ment. 

5 (D) Utilizing existing facilities wherever 

6 practicable. 

7 (E) Enhancing compatibility between wild8 life values and development activities. 

9 (g) ACCESS TO PUBLIC LANDS.—The Secretary 

10 shall—

11 (1) manage public lands in the Coastal Plain 

12 subject to section subsections (a) and (b) of section 

13 811 of the Alaska National Interest Lands Con14 servation Act (16 U.S.C. 3121); and 

15 (2) ensure that local residents shall have rea16 sonable access to public lands in the Coastal Plain 

17 for traditional uses. 

18 SEC. 30408. EXPEDITED JUDICIAL REVIEW. 

19 (a) FILING OF COMPLAINT.—

20 (1) DEADLINE.—Subject to paragraph (2), any 

21 complaint seeking judicial review of any provision of 

22 this title or any action of the Secretary under this 

23 title shall be filed in any appropriate district court 

24 of the United States—
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•HR 6 IH 

1 (A) except as provided in subparagraph 

2 (B), within the 90-day period beginning on the 

3 date of the action being challenged; or 

4 (B) in the case of a complaint based solely 

5 on grounds arising after such period, within 90 

6 days after the complainant knew or reasonably 

7 should have known of the grounds for the com8 plaint. 

9 (2) VENUE.—Any complaint seeking judicial re10 view of an action of the Secretary under this title 

11 may be filed only in the United States Court of Ap12 peals for the District of Columbia.

13 (3) LIMITATION ON SCOPE OF CERTAIN RE14 VIEW.—Judicial review of a Secretarial decision to 

15 conduct a lease sale under this title, including the 

16 environmental analysis thereof, shall be limited to 

17 whether the Secretary has complied with the terms 

18 of this title and shall be based upon the administra19 tive record of that decision. The Secretary’s identi20 fication of a preferred course of action to enable 

21 leasing to proceed and the Secretary’s analysis of 

22 environmental effects under this title shall be pre23 sumed to be correct unless shown otherwise by clear 

24 and convincing evidence to the contrary. 
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•HR 6 IH 

1 (b) LIMITATION ON OTHER REVIEW.—Actions of the 

2 Secretary with respect to which review could have been 

3 obtained under this section shall not be subject to judicial 

4 review in any civil or criminal proceeding for enforcement. 

5 SEC. 30409. FEDERAL AND STATE DISTRIBUTION OF REVE6 NUES. 

7 (a) IN GENERAL.—Notwithstanding any other provi8 sion of law, of the amount of adjusted bonus, rental, and 

9 royalty revenues from oil and gas leasing and operations 

10 authorized under this title—

11 (1) 50 percent shall be paid to the State of 

12 Alaska; and 

13 (2) except as provided in section 30412(d) the 

14 balance shall be deposited into the Treasury as mis15 cellaneous receipts. 

16 (b) PAYMENTS TO ALASKA.—Payments to the 

17 State of Alaska under this section shall be made 

18 semiannually. 

19 SEC. 30410. RIGHTS-OF-WAY ACROSS THE COASTAL PLAIN. 

20 (a) EXEMPTION.—Title XI of the Alaska National In21 terest Lands Conservation Act of 1980 (16 U.S.C. 3161 

22 et seq.) shall not apply to the issuance by the Secretary 

23 under section 28 of the Mineral Leasing Act (30 U.S.C. 

24 185) of rights-of-way and easements across the Coastal 

25 Plain for the transportation of oil and gas. 
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•HR 6 IH 

1 (b) TERMS AND CONDITIONS.—The Secretary shall 

2 include in any right-of-way or easement referred to in sub3 section (a) such terms and conditions as may be necessary 

4 to ensure that transportation of oil and gas does not result 

5 in a significant adverse effect on the fish and wildlife, sub6 sistence resources, their habitat, and the environment of 

7 the Coastal Plain, including requirements that facilities be 

8 sited or designed so as to avoid unnecessary duplication 

9 of roads and pipelines. 

10 (c) REGULATIONS.—The Secretary shall include in 

11 regulations under section 30403(g) provisions granting 

12 rights-of-way and easements described in subsection (a) 

13 of this section. 

14 SEC. 30411. CONVEYANCE. 

15 In order to maximize Federal revenues by removing 

16 clouds on title to lands and clarifying land ownership pat17 terns within the Coastal Plain, the Secretary, notwith18 standing the provisions of section 1302(h)(2) of the Alas19 ka National Interest Lands Conservation Act (16 U.S.C. 

20 3192(h)(2)), shall convey—

21 (1) to the Kaktovik Inupiat Corporation the 

22 surface estate of the lands described in paragraph 1 

23 of Public Land Order 6959, to the extent necessary 

24 to fulfill the Corporation’s entitlement under section 

25 12 of the Alaska Native Claims Settlement Act (43 
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•HR 6 IH 

1 U.S.C. 1611) in accordance with the terms and con2 ditions of the Agreement between the Department of 

3 the Interior, the United States Fish and Wildlife 

4 Service, the Bureau of Land Management, and the 

5 Kaktovik Inupiat Corporation effective January 22, 

6 1993; and 

7 (2) to the Arctic Slope Regional Corporation 

8 the remaining subsurface estate to which it is enti9 tled pursuant to the August 9, 1983, agreement be10 tween the Arctic Slope Regional Corporation and the 

11 United States of America. 

12 SEC. 30412. LOCAL GOVERNMENT IMPACT AID AND COMMU13 NITY SERVICE ASSISTANCE. 

14 (a) FINANCIAL ASSISTANCE AUTHORIZED.—

15 (1) IN GENERAL.—The Secretary may use 

16 amounts available from the Coastal Plain Local Gov17 ernment Impact Aid Assistance Fund established by 

18 subsection (d) to provide timely financial assistance 

19 to entities that are eligible under paragraph (2) and 

20 that are directly impacted by the exploration for or 

21 production of oil and gas on the Coastal Plain under 

22 this title. 

23 (2) ELIGIBLE ENTITIES.—The North Slope 

24 Borough, Kaktovik, and other boroughs, municipal 

25 subdivisions, villages, and any other community or-
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•HR 6 IH 

1 ganized under Alaska State law shall be eligible for 

2 financial assistance under this section. 

3 (b) USE OF ASSISTANCE.—Financial assistance 

4 under this section may be used only for—

5 (1) planning for mitigation of the potential ef6 fects of oil and gas exploration and development on 

7 environmental, social, cultural, recreational and sub8 sistence values; 

9 (2) implementing mitigation plans and main10 taining mitigation projects; 

11 (3) developing, carrying out, and maintaining 

12 projects and programs that provide new or expanded 

13 public facilities and services to address needs and 

14 problems associated with such effects, including fire15 fighting, police, water, waste treatment, medivac, 

16 and medical services; and 

17 (4) establishment of a coordination office, by 

18 the North Slope Borough, in the City of Kaktovik, 

19 which shall—

20 (A) coordinate with and advise developers 

21 on local conditions, impact, and history of the 

22 areas utilized for development; and 

23 (B) provide to the Committee on Resources 

24 of the Senate and the Committee on Energy 

25 and Resources of the Senate an annual report 
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•HR 6 IH 

1 on the status of coordination between devel2 opers and the communities affected by develop3 ment. 

4 (c) APPLICATION.—

5 (1) IN GENERAL.—Any community that is eligi6 ble for assistance under this section may submit an 

7 application for such assistance to the Secretary, in 

8 such form and under such procedures as the Sec9 retary may prescribe by regulation. 

10 (2) NORTH SLOPE BOROUGH COMMUNITIES.—A 

11 community located in the North Slope Borough may 

12 apply for assistance under this section either directly 

13 to the Secretary or through the North Slope Bor14 ough. 

15 (3) APPLICATION ASSISTANCE.—The Secretary 

16 shall work closely with and assist the North Slope 

17 Borough and other communities eligible for assist18 ance under this section in developing and submitting 

19 applications for assistance under this section. 

20 (d) ESTABLISHMENT OF FUND.—

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

22 Treasury the Coastal Plain Local Government Im23 pact Aid Assistance Fund. 
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•HR 6 IH 

1 (2) USE.—Amounts in the fund may be used 

2 only for providing financial assistance under this 

3 section. 

4 (3) DEPOSITS.—Subject to paragraph (4), there 

5 shall be deposited into the fund amounts received by 

6 the United States as revenues derived from rents, 

7 bonuses, and royalties under on leases and lease 

8 sales authorized under this title. 

9 (4) LIMITATION ON DEPOSITS.—The total 

10 amount in the fund may not exceed $11,000,000. 

11 (5) INVESTMENT OF BALANCES.—The Sec12 retary of the Treasury shall invest amounts in the 

13 fund in interest bearing government securities. 

14 (e) AUTHORIZATION OF APPROPRIATIONS.—To pro15 vide financial assistance under this section there is author16 ized to be appropriated to the Secretary from the Coastal 

17 Plain Local Government Impact Aid Assistance Fund 

18 $5,000,000 for each fiscal year.

19 TITLE V—HYDROPOWER 

20 SEC. 30501. STUDY AND REPORT ON INCREASING ELECTRIC 

21 POWER PRODUCTION CAPABILITY OF EXIST22 ING FACILITIES. 

23 (a) IN GENERAL.—The Secretary of the Interior, in 

24 consultation with the Administrator of each Federal power 

25 marketing administration, shall conduct a study of the po-
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•HR 6 IH 

1 tential for increasing electric power production capability 

2 at existing facilities under the administrative jurisdiction 

3 of the Secretary. 

4 (b) CONTENT.—The study under this section shall in5 clude identification and description in detail of each facil6 ity that is capable, with or without modification, of pro7 ducing additional hydroelectric power, including esti8 mation of the existing potential for the facility to generate 

9 hydroelectric power. 

10 (c) REPORT.—The Secretary shall submit to the Con11 gress a report on the findings, conclusions, and rec12 ommendations of the study under this section by not later 

13 than 12 months after the date of the enactment of this 

14 Act. The Secretary shall include in the report the fol15 lowing: 

16 (1) The identifications, descriptions, and esti17 mations referred to in subsection (b). 

18 (2) A description of activities the Secretary is 

19 currently conducting or considering, or that could be 

20 considered, to produce additional hydroelectric power 

21 from each identified facility. 

22 (3) A summary of action that has already been 

23 taken by the Secretary to produce additional hydro24 electric power from each identified facility. 
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•HR 6 IH 

1 (4) The costs to install, upgrade, or modify 

2 equipment or take other actions to produce addi3 tional hydroelectric power from each identified facil4 ity and the level of Federal power customer involve5 ment in the Secretary’s determination of such costs. 

6 (5) The benefits that would be achieved by such 

7 installation, upgrade, modification, or other action, 

8 including quantified estimates of any additional en9 ergy or capacity from each facility identified under 

10 subsection (b). 

11 (6) A description of actions that are planned, 

12 underway, or might reasonably be considered to in13 crease hydroelectric power production by replacing 

14 turbine runners. 

15 (7) A description of actions that are planned, 

16 underway, or might reasonably be considered to in17 crease hydroelectric power production by performing 

18 generator uprates and rewinds. 

19 (8) The impact of increased hydroelectric power 

20 production on irrigation, fish, wildlife, Indian tribes, 

21 river health, water quality, navigation, recreation, 

22 fishing, and flood control. 

23 (9) Any additional recommendations the Sec24 retary considers advisable to increase hydroelectric 

25 power production from, and reduce costs and im-
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•HR 6 IH 

1 prove efficiency at, facilities under the jurisdiction of 

2 the Secretary. 

3 SEC. 30502. STUDY AND IMPLEMENTATION OF INCREASED 

4 OPERATIONAL EFFICIENCIES IN HYDRO5 ELECTRIC POWER PROJECTS. 

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

7 conduct a study of operational methods and water sched8 uling techniques at all hydroelectric power plants under 

9 the administrative jurisdiction of the Secretary that have 

10 an electric power production capacity greater than 50 

11 megawatts, to—

12 (1) determine whether such power plants and 

13 associated river systems are operated so as to opti14 mize energy and capacity capabilities; and 

15 (2) identify measures that can be taken to im16 prove operational flexibility at such plants to achieve 

17 such optimization. 

18 (b) REPORT.—The Secretary shall submit a report on 

19 the findings, conclusions, and recommendations of the 

20 study under this section by not later than 18 months after 

21 the date of the enactment of this Act, including a sum22 mary of the determinations and identifications under 

23 paragraphs (1) and (2) of subsection (a). The Secretary 

24 shall include in the report the impact of optimized hydro25 electric power production on irrigation, fish, wildlife, In-
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•HR 6 IH 

1 dian tribes, river health, water quality, navigation, recre2 ation, fishing, and flood control. 

3 (c) COOPERATION WITH FEDERAL POWER MAR4 KETING ADMINISTRATIONS.—The Secretary shall coordi5 nate with the Administrator of each Federal power mar6 keting administration in determining how the value of 

7 electric power produced by each hydroelectric power facil8 ity that produces power marketed by the administration 

9 can be optimized. 

10 SEC. 30503. SHIFT OF PROJECT LOADS TO OFF-PEAK PERI11 ODS. 

12 (a) IN GENERAL.—The Secretary of the Interior 

13 shall—

14 (1) review electric power consumption by Bu15 reau of Reclamation facilities for water pumping 

16 purposes; and 

17 (2) make such adjustments in such pumping as 

18 possible to minimize the amount of electric power 

19 consumed for such pumping during periods of peak 

20 electric power consumption, including by performing 

21 as much of such pumping as possible during off22 peak hours at night. 

23 (b) CONSENT OF AFFECTED IRRIGATION CUSTOMERS

24 REQUIRED.—The Secretary may not under this section 

25 make any adjustment in pumping at a facility without the 
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•HR 6 IH 

1 consent of each person that has contracted with the 

2 United States for delivery of water from the facility for 

3 use for irrigation and that would be affected by such ad4 justment. 

5 (c) EXISTING OBLIGATIONS NOT AFFECTED.—This 

6 section shall not be construed to affect any existing obliga7 tion of the Secretary to provide electric power, water, or 

8 other benefits from Bureau of Reclamation facilities.

9 TITLE VI—GEOTHERMAL 

10 ENERGY 

11 SEC. 30601. COMPETITIVE LEASE SALE REQUIREMENTS. 

12 (a) IN GENERAL.—Section 4 of the Geothermal 

13 Steam Act of 1970 (30 U.S.C. 1003) is amended to read 

14 as follows: 

15 ‘‘LEASING PROCEDURES

16 ‘‘SEC. 4. (a) IN GENERAL.—

17 ‘‘(1) NOMINATIONS.—The Secretary shall ac18 cept nominations at any time from qualified compa19 nies and individuals of areas to be leased under this 

20 Act. 

21 ‘‘(2) COMPETITIVE LEASE SALE REQUIRED.—

22 The Secretary shall hold a competitive lease sale at 

23 least once every 2 years for lands in a State in that 

24 are located areas with respect to which there are 

25 nominations pending under paragraph (1). 
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1 ‘‘(3) NONCOMPETITIVE LEASING.—The Sec2 retary shall make available for a period of 2 years 

3 for noncompetitive leasing any lands for which a 

4 competitive lease sale is held, but for which the Sec5 retary does not receive any bids in a competitive 

6 lease sale.’’. 

7 (b) PENDING LEASE APPLICATIONS.—Not later than 

8 6 months after the date of the enactment of this Act, the 

9 Secretary of the Interior shall initiate competitive lease 

10 sales under the Geothermal Steam Act of 1970 (30 U.S.C. 

11 1001 et seq.), as amended by this Act, for areas with re12 spect to which applications for leasing are pending on the 

13 date of the enactment of this Act. 

14 SEC. 30602. SPECIAL PROVISIONS REGARDING DIRECT USE 

15 OF LOW TEMPERATURE GEOTHERMAL EN16 ERGY RESOURCES. 

17 (a) LEASING PROCEDURE.—Section 4 of the Geo18 thermal Steam Act of 1970 (30 U.S.C. 1003) is further 

19 amended by adding at the end the following: 

20 ‘‘(b) LEASING OF LOW TEMPERATURE GEOTHERMAL

21 RESOURCES.—Lands leased under this Act exclusively for 

22 qualified development and direct utilization of low tem23 perature geothermal resources shall be leased to any quali24 fied applicant who first applies for such lease under regu25 lations formulated by the Secretary.’’. 
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1 (b) LIMITATION ON LEASE AREA.—Section 7 of the 

2 Geothermal Steam Act of 1970 (30 U.S.C. 1006) is 

3 amended—

4 (1) in the first sentence by striking ‘‘A geo5 thermal lease’’ and inserting ‘‘(a) IN GENERAL.—

6 Except as provided in subsection (b), a geothermal 

7 lease’’; and 

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

9 ‘‘(b) LEASING OF LOW TEMPERATURE GEOTHERMAL

10 RESOURCES.—A geothermal lease for qualified develop11 ment and direct utilization of low temperature geothermal 

12 resources shall embrace not more than the minimum 

13 amount of acreage determined by the Secretary to be rea14 sonably necessary for such utilization.’’. 

15 (c) ANNUAL PAYMENT.—Section 5 of the Geothermal 

16 Steam Act of 1970 (30 U.S.C. 1004) is amended—

17 (1) in paragraph (c) by redesignating subpara18 graphs (1) and (2) as subparagraphs (A) and (B); 

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

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

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

22 ‘‘SEC. 5.’’; and 

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

24 ‘‘(b) EXEMPTION FOR USE OF LOW TEMPERATURE

25 RESOURCES.—
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1 ‘‘(1) IN GENERAL.—In lieu of any royalty or 

2 rental under subsection (a), a lease for qualified de3 velopment and direct utilization of low temperature 

4 geothermal resources shall provide for payment by 

5 the lessee of an annual fee per well of not less than 

6 $100, and not more than $1,000, in accordance with 

7 the schedule issued under paragraph (2). 

8 ‘‘(2) SCHEDULE.—The Secretary shall issue a 

9 schedule of fees under this section under which a fee 

10 is based on the scale of development and utilization 

11 to which the fee applies.’’. 

12 (d) DEFINITIONS.—Section 2 of the Geothermal 

13 Steam Act of 1970 (30 U.S.C. 1001) is amended—

14 (1) in paragraph (f) by redesignating subpara15 graphs (1) through (4) in order as subparagraphs 

16 (A) through (D); 

17 (2) by redesignating paragraphs (a) through (f) 

18 in order as paragraphs (1) through (6); and 

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

20 ‘‘(7) LOW TEMPERATURE GEOTHERMAL RE21 SOURCES.—The term ‘low temperature geothermal 

22 resources’ means geothermal steam and associated 

23 geothermal resources having a wellhead temperature 

24 of less than 195 degrees Fahrenheit. 
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1 ‘‘(8) QUALIFIED DEVELOPMENT AND DIRECT

2 UTILIZATION.—The term ‘qualified development and 

3 direct utilization’ means development and utilization 

4 in which all products of geothermal resources, other 

5 than any heat utilized, are returned to the geo6 thermal formation from which they are produced.’’. 

7 (e) EXISTING LEASES.—

8 (1) APPLICATION TO CONVERT.—Any lessee 

9 under a lease under the Geothermal Steam Act of 

10 1970 that was issued before the date of the enact11 ment of this Act may apply to the Secretary of the 

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

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

14 to a lease for qualified development and direct utili15 zation of low temperature geothermal resources in 

16 accordance with the amendments made by this sec17 tion. 

18 (2) CONVERSION.—The Secretary shall approve 

19 such an application and convert such a lease to a 

20 lease in accordance with the amendments by not 

21 later than 180 days after receipt of such application, 

22 unless the Secretary determines that the applicant is 

23 not a qualified applicant with respect to the lease. 
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1 SEC. 30603. ROYALTIES AND NEAR-TERM PRODUCTION IN2 CENTIVES. 

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

4 Act of 1970 (30 U.S.C. 1004) is further amended in sub5 section (a) by striking paragraph (1) and inserting the fol6 lowing: 

7 ‘‘(1) a royalty on direct use of geothermal 

8 steam and associated geothermal resources, other 

9 than low temperature geothermal resources, which 

10 shall be—

11 ‘‘(A) 3.5 percent of the gross proceeds 

12 from the sale of electricity produced by such re13 sources; and 

14 ‘‘(B) 0.75 percent of the gross proceeds 

15 from the sale of items produced by the direct 

16 use of such resources;’’. 

17 (b) NEAR-TERM PRODUCTION INCENTIVE.—

18 (1) IN GENERAL.—Notwithstanding section 

19 5(a) of the Geothermal Steam Act of 1970, as 

20 amended by subsection (a), or any provision of any 

21 lease under that Act, the royalty required to be 

22 paid—

23 (A) under any qualified geothermal energy 

24 lease with respect to commercial production of 

25 heat or energy from a facility that begins such 
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1 production in the 6-year period beginning on 

2 the date of the enactment of this Act; or 

3 (B) on qualified expansion geothermal en4 ergy; 

5 shall be 50 percent of the amount of royalty other6 wise required to be paid under those provisions. 

7 (2) STATE SHARE.—Notwithstanding section 20 

8 of the Geothermal Steam Act of 1970 (30 U.S.C. 

9 1019), section 35 of the Mineral Leasing Act (30 

10 U.S.C.191), or section 6 of the Mineral Leasing Act 

11 for Acquired Lands (30 U.S.C. 355), in the case of 

12 monies received by the United States from royalty 

13 described in subparagraph (A) or (B) of paragraph 

14 (1), the percentage required to be paid by the Sec15 retary of the Treasury to a State under those sec16 tions shall be 100 percent. 

17 (3) 4-YEAR APPLICATION.—Paragraphs (1) and 

18 (2) apply only to commercial production of heat or 

19 energy from a facility in the first 4 years of such 

20 production. 

21 (4) NO EFFECT ON STATE PORTION.—This sub22 section shall not be construed to reduce the amount 

23 of royalty required to be paid to a State. 

24 (c) DEFINITIONS.—In this section: 
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1 (1) QUALIFIED EXPANSION GEOTHERMAL EN2 ERGY.—The term ‘‘qualified expansion geothermal 

3 energy’’ means geothermal energy produced from a 

4 generation facility for which—

5 (A) the production is increased by more 

6 than 10 percent as a result of expansion of the 

7 facility carried out in the 6-year period begin8 ning on the date of the enactment of this Act; 

9 and 

10 (B) such production increase is greater 

11 than 10 percent of the average production by 

12 the facility during the 5-year period preceding 

13 the expansion of the facility. 

14 (2) QUALIFIED GEOTHERMAL ENERGY

15 LEASE.—The term ‘‘qualified geothermal energy 

16 lease’’ means a lease under the Geothermal Steam 

17 Act of 1970 (30 U.S.C. 1001 et seq.)—

18 (A) that was executed before the end of 

19 the 6-year period beginning on the date of the 

20 enactment of this Act; and 

21 (B) under which no commercial production 

22 of any form of heat or energy occurred before 

23 the date of the enactment of this Act. 

24 (d) ROYALTY EXISTING LEASES.—
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1 (1) IN GENERAL.—Any lessee under a lease 

2 issued under the Geothermal Steam Act of 1970 be3 fore the date of the enactment of this Act may mod4 ify the terms of the lease relating to payment of roy5 alties to comply with the amendment made by sub6 section (a), by applying to the Secretary of the Inte7 rior by not later than 18 months after the date of 

8 the enactment of this Act. 

9 (2) APPLICATION OF MODIFICATION.—Such 

10 modification shall apply to any use of geothermal 

11 steam and associated geothermal resources to which 

12 the amendment applies that occurs after the date of 

13 that application. 

14 SEC. 30604. CONSULTATION REGARDING GEOTHERMAL 

15 LEASING AND PERMITTING ON PUBLIC 

16 LANDS. 

17 (a) IN GENERAL.—Not later than 6 months after the 

18 date of the enactment of this Act, the Secretary of the 

19 Interior and the Secretary of Agriculture shall enter into 

20 and submit to the Congress a memorandum of under21 standing in accordance with this section regarding leasing 

22 and permitting, for geothermal development, of public 

23 lands under their respective administrative jurisdictions. 

24 (b) LEASE AND PERMIT APPLICATIONS.—The memo25 randum of understanding shall include provisions that—
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1 (1) identify known geothermal areas on public 

2 lands within the National Forest System and when 

3 necessary review management plans to consider leas4 ing under the Geothermal Steam Act of 1970 (30 

5 U.S.C. 1001 et seq.) as a land use; 

6 (2) establish an administrative procedure for 

7 processing geothermal lease applications, including 

8 lines of authority, steps in application processing, 

9 and timeframes for application processing; 

10 (3) provide that the Secretary concerned 

11 shall—

12 (A) within 14 days after receiving an ap13 plication for a lease, determine whether the ap14 plication contains sufficient information to 

15 allow processing of the application; and 

16 (B) if the application is found not to con17 tain sufficient information to allow processing 

18 the application the Secretary shall, before the 

19 end of such 14-day period, provide written noti20 fication to the lease applicant that the applica21 tion is being returned to the applicant without 

22 processing and itemizing the deficiencies in the 

23 application that prevent processing; 

24 (4) provide that the Secretary concerned shall 

25 within 30 days after receiving a lease application, 
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1 provide written notice to the lease applicant regard2 ing the status of the application, including an esti3 mation of the time that will be required to complete 

4 action on the application; and 

5 (5) establish an administrative procedure for 

6 processing geothermal development permits, includ7 ing lines of authority, steps in permit processing, 

8 and timeframes for permit processing. 

9 (c) FIVE-YEAR LEASING PLAN.—The memorandum 

10 of understanding shall develop a 5-year plan for leasing 

11 under the Geothermal Steam Act of 1970 (30 U.S.C. 1001 

12 et seq.) of public land in the National Forest System. The 

13 plan for geothermal leasing shall be updated every 5 years. 

14 (d) DATA RETRIEVAL SYSTEM.—The memorandum 

15 of understanding shall establish a joint data retrieval sys16 tem that is capable of tracking lease and permit applica17 tions and requests and providing to the applicant or re18 quester information as to their status within the Depart19 ments of the Interior and Agriculture, including an esti20 mate of the time required for administrative action. 

21 SEC. 30605. REVIEW AND REPORT TO CONGRESS. 

22 The Secretary of the Interior shall promptly review 

23 and report to the Congress within 3 years after the date 

24 of the enactment of this Act regarding the status of all 

25 moratoria on and withdrawals from leasing under the Geo-
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1 thermal Steam Act of 1970 (30 U.S.C. 1001 et seq.) of 

2 known geothermal resources areas (as that term is defined 

3 in section 2 of that Act (30 U.S.C. 1001), specifying for 

4 each such area whether the basis for such moratoria or 

5 withdrawal still applies. 

6 SEC. 30606. REIMBURSEMENT FOR COSTS OF NEPA ANAL7 YSES, DOCUMENTATION, AND STUDIES. 

8 (a) IN GENERAL.—The Geothermal Steam Act of 

9 1970 (30 U.S.C. 1001 et seq.) is amended by adding at 

10 the end the following: 

11 ‘‘REIMBURSEMENT FOR COSTS OF CERTAIN ANALYSES, 

12 DOCUMENTATION, AND STUDIES

13 ‘‘SEC. 30. (a) IN GENERAL.—The Secretary of the 

14 Interior may, through royalty credits, reimburse a person 

15 who is a lessee, operator, operating rights owner, or appli16 cant for a lease under this Act for reasonable amounts 

17 paid by the person for preparation by the Secretary (or 

18 a contractor or other person selected by the Secretary) of 

19 any project-level analysis, documentation, or related study 

20 required under the National Environmental Policy Act of 

21 1969 (42 U.S.C. 4321 et seq.) with respect to the lease. 

22 ‘‘(b) CONDITIONS.—The Secretary may provide reim23 bursement under subsection (a) only if—

24 ‘‘(1) adequate funding to enable the Secretary 

25 to timely prepare the analysis, documentation, or re26 lated study is not appropriated; 
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1 ‘‘(2) the person paid the amounts voluntarily; 

2 and 

3 ‘‘(3) the person maintains records of its costs 

4 in accordance with regulations prescribed by the 

5 Secretary.’’. 

6 (b) APPLICATION.—The amendments made by this 

7 section shall apply with respect to any lease entered into 

8 before, on, or after the date of the enactment of this Act. 

9 (c) DEADLINE FOR REGULATIONS.—The Secretary 

10 shall issue regulations implementing the amendments 

11 made by this section by not later than 90 days after the 

12 date of the enactment of this Act. 

13 SEC. 30607. ASSESSMENT OF GEOTHERMAL ENERGY PO14 TENTIAL. 

15 The Secretary of Interior, acting through the Direc16 tor of the United States Geological Survey, shall update 

17 the 1978 Assessment of Geothermal Resources, and sub18 mit that updated assessment to the Committee on Re19 sources of the House of Representatives and the Com20 mittee on Energy and Natural Resources of the Senate—

21 (1) within 3 years after the date of enactment 

22 of this Act; and 

23 (2) thereafter as the availability of data and de24 velopments in technology warrant. 
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1 SEC. 30608. COOPERATIVE OR UNIT PLANS. 

2 (a) IN GENERAL.—Section 18 of the Geothermal 

3 Steam Act of 1970 (30 U.S.C. 1017) is amended to read 

4 as follows: 

5 ‘‘COOPERATIVE OR UNIT PLANS

6 ‘‘SEC. 18. (a) ADOPTION OF PLAN BY LESSEES.—

7 ‘‘(1) IN GENERAL.—For the purpose of more 

8 properly conserving the natural resources of any 

9 geothermal field, or like area, or any part thereof 

10 (whether or not any part of the geothermal field, or 

11 like area, is then subject to any cooperative or unit 

12 plan of development or operation), lessees thereof 

13 and their representatives may unite with each other, 

14 or jointly or separately with others, in collectively 

15 adopting and operating under a cooperative or unit 

16 plan of development or operation of such field, or 

17 like area, or any part thereof, if determined and cer18 tified by the Secretary to be necessary or advisable 

19 in the public interest. 

20 ‘‘(2) MODIFICATION OF LEASE REQUIREMENTS

21 BY SECRETARY.—The Secretary may, in the discre22 tion of the Secretary, and with the consent of the 

23 holders of leases involved, establish, alter, change, or 

24 revoke drilling, producing, rental, minimum royalty, 

25 and royalty requirements of such leases and to make 

26 such regulations with reference to such leases, with 
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1 the consent of the lessees, in connection with the in2 stitution and operation of any such cooperative or 

3 unit plan as the Secretary may deem necessary or 

4 proper to secure the proper protection of the public 

5 interest. 

6 ‘‘(b) REQUIREMENT OF PLANS UNDER NEW

7 LEASES.—The Secretary—

8 ‘‘(1) may provide that geothermal leases issued 

9 under this Act after the date of the enactment of 

10 this section shall contain a provision requiring the 

11 lessee to operate under such a reasonable coopera12 tive or unit plan; and 

13 ‘‘(2) may prescribe such a plan under which 

14 such lessee shall operate, which shall adequately pro15 tect the rights of all parties in interest, including the 

16 United States. 

17 ‘‘(c) MODIFICATION OF RATE OF PROSPECTING, DE18 VELOPMENT, AND PRODUCTION.—The Secretary may re19 quire that any plan authorized by the this section that 

20 applies to lands owned by the United States contain a pro21 vision under which authority is vested in the Secretary, 

22 or any person, committee, or State or Federal officer or 

23 agency as may be designated in the plan, to alter or mod24 ify from time to time the rate of prospecting and develop-
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1 ment and the quantity and rate of production under such 

2 plan. 

3 ‘‘(d) EXCLUSION FROM DETERMINATION OF HOLD4 ING OR CONTROL.—Any lands that are subject to any plan 

5 approved or prescribed by the Secretary under this section 

6 shall not be considered in determining holdings or control 

7 under any provision of this Act. 

8 ‘‘(e) POOLING OF CERTAIN LANDS.—If separate 

9 tracts of lands cannot be independently developed and op10 erated to use geothermal steam and associated geothermal 

11 resources pursuant to this Act in conformity with an es12 tablished development program—

13 ‘‘(1) any such lands, or a portion thereof, may 

14 be pooled with other lands, whether or not owned by 

15 the United States, for purposes of such development 

16 and operation under a communitization agreement 

17 providing for an apportionment of production or roy18 alties among the separate tracts of land comprising 

19 the production unit, if such pooling is determined by 

20 the Secretary to be in the public interest; and 

21 ‘‘(2) operation or production pursuant to such 

22 an agreement shall be treated as operation or pro23 duction with respect to each tract of land that is 

24 subject to the agreement. 
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1 ‘‘(f) PLAN REVIEW.—No more than 5 years after ap2 proval of any cooperative or unit plan of development or 

3 operation, and at least every 5 years thereafter, the Sec4 retary shall review each such plan and, after notice and 

5 opportunity for comment, eliminate from inclusion in such 

6 plan any lands that the Secretary determines are not rea7 sonably necessary for cooperative or unit operations under 

8 the plan. Such elimination shall be based on scientific evi9 dence, and shall occur only if it is determined by the Sec10 retary to be for the purpose of conserving and properly 

11 managing the geothermal resource. Any land so eliminated 

12 shall be eligible for an extension under subsection (c) or 

13 (g) of section 6 if it meets the requirements for such an 

14 extension. 

15 ‘‘(g) APPROVAL BY SECRETARY.—The Secretary 

16 may, on such conditions as the Secretary may prescribe, 

17 approve operating, drilling, or development contracts made 

18 by one or more lessees of geothermal leases, with one or 

19 more persons, associations, or corporations if, in the dis20 cretion of the Secretary, the conservation of natural re21 sources or the public convenience or necessity may require 

22 or the interests of the United States may be best served 

23 thereby. All leases operated under such approved oper24 ating, drilling, or development contracts, and interests 
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1 thereunder, shall be excepted in determining holdings or 

2 control under section 7 of this Act.’’.

3 SEC. 30609. ROYALTY ON BYPRODUCTS. 

4 Section 5 of the Geothermal Steam Act of 1970 (30 

5 U.S.C. 1004) is further amended in subsection (a) by 

6 striking paragraph (2) and inserting the following: 

7 ‘‘(2) a royalty on any byproduct that is a min8 eral named in the first section of the Mineral Leas9 ing Act (30 U.S.C. 181), and that is derived from 

10 production under the lease, at the rate of the royalty 

11 that applies under that Act to production of such 

12 mineral under a lease under that Act;’’. 

13 SEC. 30610. REPEAL OF AUTHORITIES OF SECRETARY TO 

14 READJUST TERMS, CONDITIONS, RENTALS, 

15 AND ROYALTIES. 

16 Section 8 of the Geothermal Steam Act of 1970 (30 

17 U.S.C. 1007) is amended by repealing subsections (a) and 

18 (b), and by striking ‘‘(c)’’. 

19 SEC. 30611. CREDITING OF RENTAL TOWARD ROYALTY. 

20 Section 5 of the Geothermal Steam Act of 1970 (30 

21 U.S.C. 1004) is further amended—

22 (1) in subsection (a)(2) by inserting ‘‘and’’ 

23 after the semicolon at the end; 

24 (2) in subsection (a)(3) by striking ‘‘; and’’ and 

25 inserting a period; 
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1 (3) by striking paragraph (4) of subsection (a); 

2 and 

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

4 ‘‘(c) CREDITING OF RENTAL TOWARD ROYALTY.—

5 Any annual rental under this section that is paid with re6 spect to a lease before the first day of the year for which 

7 the annual rental is owed shall be credited to the amount 

8 of royalty that is required to be paid under the lease for 

9 that year.’’. 

10 SEC. 30612. LEASE DURATION AND WORK COMMITMENT RE11 QUIREMENTS. 

12 (a) IN GENERAL.—Section 6 of the Geothermal 

13 Steam Act of 1970 (30 U.S.C. 1005) is amended—

14 (1) by striking so much as precedes subsection 

15 (c), and striking subsections (e), (g), (h), (i), and 

16 (j); 

17 (2) by redesignating subsections (c), (d), and 

18 (f) in order as subsections (g), (h), and (i); 

19 (3) by inserting before subsection (g), as so re20 designated, the following: 

21 ‘‘LEASE TERM AND WORK COMMITMENT REQUIREMENTS

22 ‘‘SEC. 6. (a) PRIMARY TERM.—

23 ‘‘(1) IN GENERAL.—A geothermal lease shall be 

24 for a primary term of ten years. 

25 ‘‘(2) INITIAL EXTENSION.—The Secretary shall 

26 extend the primary term of a geothermal lease for 
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1 5 years if, for each year after the fifth year of the 

2 lease—

3 ‘‘(A) the Secretary determined under sub4 section (c) that the lessee satisfied the work 

5 commitment requirements that applied to the 

6 lease for that year; or 

7 ‘‘(B) the lessee paid in accordance with 

8 subsection (d) the value of any work that was 

9 not completed in accordance with those require10 ments. 

11 ‘‘(3) ADDITIONAL EXTENSION.—The Secretary 

12 shall extend the primary term of a geothermal lease 

13 (after an extension under paragraph (2)) for an ad14 ditional 5 years if, for each year after the fifteenth 

15 year of the lease, the Secretary determined under 

16 subsection (c) that the lessee satisfied the work com17 mitment requirements that applied to the lease for 

18 that year. 

19 ‘‘(b) REQUIREMENT TO SATISFY ANNUAL WORK

20 COMMITMENT REQUIREMENT.—

21 ‘‘(1) IN GENERAL.—The lessee for a geothermal 

22 lease shall, for each year after the fifth year of the 

23 lease, satisfy work commitment requirements pre24 scribed by the Secretary that apply to the lease for 

25 that year. 
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1 ‘‘(2) PRESCRIPTION OF WORK COMMITMENT RE2 QUIREMENTS.—The Secretary shall issue regulations 

3 prescribing minimum work commitment require4 ments for geothermal leases, that—

5 ‘‘(A) require that a lessee, in each year 

6 after the fifth year of the primary term of a 

7 geothermal lease, diligently work to achieve 

8 commercial production or utilization of steam 

9 under the lease; 

10 ‘‘(B) require that in each year to which 

11 work commitment requirements under the regu12 lations apply, the lessee shall significantly re13 duce the amount of work that remains to be 

14 done to achieve such production or utilization; 

15 ‘‘(C) describe specific work that must be 

16 completed by a lessee by the end of each year 

17 to which the work commitment requirements 

18 apply; 

19 ‘‘(D) carry forward and apply to work 

20 commitment requirements for a year, work 

21 completed in any year in the preceding 3-year 

22 period that was in excess of the work required 

23 to be performed in that preceding year; and 
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1 ‘‘(E) establish transition rules for leases 

2 issued before the date of the enactment of this 

3 subsection. 

4 ‘‘(3) TERMINATION OF APPLICATION OF RE5 QUIREMENTS.—Work commitment requirements pre6 scribed under this subsection shall not apply to a 

7 geothermal lease after the date on which geothermal 

8 steam is produced or utilized under the lease in com9 mercial quantities. 

10 ‘‘(c) DETERMINATION OF WHETHER REQUIREMENTS

11 SATISFIED.—The Secretary shall, by not later than 21 

12 days after the end of each year for which work commit13 ment requirements under subsection (b) apply to a geo14 thermal lease—

15 ‘‘(1) determine whether the lessee has satisfied 

16 the requirements that apply for that year; 

17 ‘‘(2) notify the lessee of that determination; and 

18 ‘‘(3) in the case of a notification that the lessee 

19 did not satisfy work commitment requirements for 

20 the year, include in the notification—

21 ‘‘(A) a description of the specific work that 

22 was not completed by the lessee in accordance 

23 with the requirements; and 

24 ‘‘(B) the amount of the dollar value of 

25 such work that was not completed, reduced by 
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1 the amount of expenditures made for work com2 pleted in a prior year that is carried forward 

3 pursuant to subsection (b)(2)(D). 

4 ‘‘(d) PAYMENT OF VALUE OF UNCOMPLETED

5 WORK.—

6 ‘‘(1) IN GENERAL.—If the Secretary notifies a 

7 lessee that the lessee failed to satisfy work commit8 ment requirements under subsection (b), the lessee 

9 shall pay to the Secretary, by not later than the end 

10 of the 60-day period beginning on the date of the 

11 notification, the dollar value of work that was not 

12 completed by the lessee, in the amount stated in the 

13 notification (as reduced under subsection (c)(3)(B)). 

14 ‘‘(2) FAILURE TO PAY VALUE OF

15 UNCOMPLETED WORK.—If a lessee fails to pay such 

16 amount to the Secretary before the end of that pe17 riod, the lease shall terminate upon the expiration of 

18 the period. 

19 ‘‘(e) CONTINUATION AFTER COMMERCIAL PRODUC20 TION OR UTILIZATION.—If geothermal steam is produced 

21 or utilized in commercial quantities within the primary 

22 term of the lease under subsection (a) (including any ex23 tension of the lease under subsection (a)), such lease shall 

24 continue until the date on which geothermal steam is no 

25 longer produced or utilized in commercial quantities. 
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1 ‘‘(f) CONVERSION OF GEOTHERMAL LEASE TO MIN2 ERAL LEASE.—The lessee under a lease that has produced 

3 geothermal steam for electrical generation, has been deter4 mined by the Secretary to be incapable of any further com5 mercial production or utilization of geothermal steam, and 

6 that is producing any valuable byproduct in payable quan7 tities may, within 6 months after such determination—

8 ‘‘(1) convert the lease to a mineral lease under 

9 the Mineral Leasing Act (30 U.S.C. 181 et seq.) or 

10 under the Mineral Leasing Act for Acquired Lands 

11 (30 U.S.C. 351 et seq.), if the lands that are subject 

12 to the lease can be leased under that Act for the 

13 production of such byproduct; or 

14 ‘‘(2) convert the lease to a mining claim under 

15 the general mining laws, if the byproduct is a 

16 locatable mineral.’’. 

17 (b) CONFORMING AMENDMENT.—

18 (1) Section 18 of the Geothermal Steam Act of 

19 1970 (30 U.S.C. 1017) is amended by striking ‘‘sub20 section (c) or (g)’’ and inserting ‘‘subsection (g)’’. 

21 (2) Section 20 of the Geothermal Steam Act of 

22 1970 (30 U.S.C. 1019) is amended by striking ‘‘, in23 cluding the payments referred to in section 6(i),’’. 
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1 SEC. 30613. ADVANCED ROYALTIES REQUIRED FOR SUS2 PENSION OF PRODUCTION. 

3 Section 5 of the Geothermal Steam Act of 1970 (30 

4 U.S.C. 1004) is further amended by adding at the end 

5 the following: 

6 ‘‘(d) ADVANCED ROYALTIES REQUIRED FOR SUS7 PENSION OF PRODUCTION.—(1) If production of heat or 

8 energy under a geothermal lease is suspended after the 

9 date of any such production for which royalty is required 

10 under section 5(a), the Secretary shall require the lessee, 

11 until the end of such suspension, to pay royalty in advance 

12 at the monthly pro-rata rate of the average annual rate 

13 at which such royalty was paid each year in the 5-year14 period preceding the date of suspension. 

15 ‘‘(2) Paragraph (1) shall not apply if the suspension 

16 is required or otherwise caused by the Secretary, the Sec17 retary of a military department, or a State or local govern18 ment.’’.

19 SEC. 30614. ANNUAL RENTAL. 

20 (a) ANNUAL RENTAL RATE.—Section 5 of the Geo21 thermal Steam Act of 1970 (30 U.S.C. 1004) is further 

22 amended in subsection (a) in paragraph (3) by striking 

23 ‘‘$1 per acre or fraction thereof for each year of the lease’’ 

24 and all that follows through the end of the paragraph and 

25 inserting ‘‘$1 per acre or fraction thereof for each year 

26 of the lease in the case of a lease awarded in a noncompeti-
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1 tive lease sale; or $2 per acre or fraction thereof for the 

2 first year, $3 per acre or fraction thereof for each of the 

3 second through tenth years, and $5 per acre or fraction 

4 thereof for each year after the 10th year thereof, in the 

5 case of a lease awarded in a competitive lease sale; and’’. 

6 (b) TERMINATION OF LEASE FOR FAILURE TO PAY

7 RENTAL.—Section 5 of the Geothermal Steam Act of 

8 1970 (30 U.S.C. 1004) is further amended by adding at 

9 the end the following: 

10 ‘‘(e) TERMINATION OF LEASE FOR FAILURE TO PAY

11 RENTAL.—

12 ‘‘(1) IN GENERAL.—The Secretary shall termi13 nate any lease with respect to which rental is not 

14 paid in accordance with this Act and the terms of 

15 the lease under which the rental is required, upon 

16 the expiration of the 45-day period beginning on the 

17 date of the failure to pay such rental. 

18 ‘‘(2) NOTIFICATION.—The Secretary shall 

19 promptly notify a lessee that has not paid rental re20 quired under the lease that the lease will be termi21 nated at the end of the period referred to in para22 graph (1). 

23 ‘‘(3) REINSTATEMENT.—A lease that would 

24 otherwise terminate under paragraph (1) shall not 

25 terminate under that paragraph if the lessee pays to 
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1 the Secretary, before the end of the period referred 

2 to in paragraph (1), the amount of rental due plus 

3 a late fee equal to 10 percent of such amount.’’.

4 TITLE VII—COAL 

5 SEC. 30701. SHORT TITLE. 

6 This title may be cited as the ‘‘Coal Leasing Amend7 ments Act of 2003’’. 

8 SEC. 30702. REPEAL OF THE 160-ACRE LIMITATION FOR 

9 COAL LEASES. 

10 Section 3 of the Mineral Leasing Act (30 U.S.C. 203) 

11 is amended in the first sentence by striking ‘‘such lease,’’ 

12 and all that follows through the end of the sentence and 

13 inserting ‘‘such lease.’’. 

14 SEC. 30703. MINING PLANS. 

15 Section 2(d)(2) of the Mineral Leasing Act (30 

16 U.S.C. 202a(2)) is amended—

17 (1) by inserting ‘‘(A)’’ after ‘‘(2)’’; and 

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

19 ‘‘(B) The Secretary may establish a period of more 

20 than 40 years if the Secretary determines that the longer 

21 period—

22 ‘‘(i) will ensure the maximum economic recovery 

23 of a coal deposit; or 
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1 ‘‘(ii) the longer period is in the interest of the 

2 orderly, efficient, or economic development of a coal 

3 resource.’’. 

4 SEC. 30704. PAYMENT OF ADVANCE ROYALTIES UNDER 

5 COAL LEASES. 

6 (a) IN GENERAL.—Section 7(b) of the Mineral Leas7 ing Act of 1920 (30 U.S.C. 207(b)) is amended to read 

8 as follows: 

9 ‘‘(b)(1) Each lease shall be subjected to the condition 

10 of diligent development and continued operation of the 

11 mine or mines, except where operations under the lease 

12 are interrupted by strikes, the elements, or casualties not 

13 attributable to the lessee. 

14 ‘‘(2)(A) The Secretary of the Interior, upon deter15 mining that the public interest will be served thereby, may 

16 suspend the condition of continued operation upon the 

17 payment of advance royalties. 

18 ‘‘(B) Such advance royalties shall be computed based 

19 on the average price for coal sold in the spot market from 

20 the same region during the last month of each applicable 

21 continued operation year. 

22 ‘‘(C) The aggregate number of years during the ini23 tial and any extended term of any lease for which advance 

24 royalties may be accepted in lieu of the condition of contin25 ued operation shall not exceed 20. 
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1 ‘‘(3) The amount of any production royalty paid for 

2 any year shall be reduced (but not below zero) by the 

3 amount of any advance royalties paid under such lease to 

4 the extent that such advance royalties have not been used 

5 to reduce production royalties for a prior year. 

6 ‘‘(4) This subsection shall be applicable to any lease 

7 or logical mining unit in existence on the date of the enact8 ment of this paragraph or issued or approved after such 

9 date. 

10 ‘‘(5) Nothing in this subsection shall be construed to 

11 affect the requirement contained in the second sentence 

12 of subsection (a) relating to commencement of production 

13 at the end of 10 years.’’. 

14 (b) AUTHORITY TO WAIVE, SUSPEND, OR REDUCE

15 ADVANCE ROYALTIES.—Section 39 of the Mineral Leas16 ing Act (30 U.S.C. 209) is amended by striking the last 

17 sentence. 

18 SEC. 30705. ELIMINATION OF DEADLINE FOR SUBMISSION 

19 OF COAL LEASE OPERATION AND RECLAMA20 TION PLAN. 

21 Section 7(c) of the Mineral Leasing Act (30 U.S.C. 

22 207(c)) is amended by striking ‘‘and not later than three 

23 years after a lease is issued,’’. 
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1 SEC. 30706. AMENDMENTS RELATING TO FINANCIAL ASSUR2 ANCES WITH RESPECT TO BONUS BIDS. 

3 (a) PROHIBITION ON REQUIRING SURETY BONDS.—

4 Section 2(a) of the Mineral Leasing Act (30 U.S.C. 

5 201(a)) is amended by adding at the end the following: 

6 ‘‘(4) The Secretary shall not require a surety bond 

7 or any other financial assurance to guarantee payment of 

8 deferred bonus bid installments with respect to any coal 

9 lease issued based upon a cash bonus bid. 

10 ‘‘(5) Notwithstanding any other provision of law, if 

11 the lessee under a coal lease fails to pay any installment 

12 of a deferred cash bonus bid within 10 days after the Sec13 retary provides written notice that payment of such in14 stallment is past due—

15 ‘‘(A) such lease shall automatically terminate; 

16 ‘‘(B) any deferred bonus payments that have 

17 not been paid to the United States with respect to 

18 such lease shall no longer be owed to the United 

19 States; and 

20 ‘‘(C) any bonus payments already made to the 

21 United States with respect to such lease shall not be 

22 returned to the lessee or credited in any future lease 

23 sale.’’. 

24 (b) CONFORMING AMENDMENT.—Section 2(a)(1) of 

25 the Mineral Leasing Act (30 U.S.C. 201(a)(1)) is amend26 ed by striking ‘‘Upon default or cancellation of any coal 
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1 lease for which bonus payments are due, any unpaid re2 mainder of the bid shall be immediately payable to the 

3 United States.’’. 

4 SEC. 30707. INVENTORY REQUIREMENT. 

5 (a) REVIEW OF ASSESSMENTS.—

6 (1) IN GENERAL.—The Secretary of the Inte7 rior, in consultation with the Secretary of Agri8 culture and the Secretary of Energy, shall review 

9 coal assessments and other available data to iden10 tify—

11 (A) public lands with coal resources; 

12 (B) the extent and nature of any restric13 tions or impediments to the development of coal 

14 resources on public lands identified under para15 graph (1); and 

16 (C) with respect to areas of such lands for 

17 which sufficient data exists, resources of com18 pliant coal and supercompliant coal. 

19 (2) DEFINITIONS.—For purposes of this sub20 section—

21 (A) the term ‘‘compliant coal’’ means coal 

22 that contains not less than 1.0 and not more 

23 than 1.2 pounds of sulfur dioxide per million 

24 Btu; and 
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1 (B) the term ‘‘supercompliant coal’’ means 

2 coal that contains less than 1.0 pounds of sul3 fur dioxide per million Btu. 

4 (b) COMPLETION AND UPDATING OF THE INVEN5 TORY.—The Secretary—

6 (1) shall complete the inventory under sub7 section (a) by not later than 2 years after the date 

8 of the enactment of this Act; and 

9 (2) shall update the inventory as the availability 

10 of data and developments in technology warrant. 

11 (c) REPORT.—The Secretary shall submit to the 

12 Committee on Resources of the House of Representatives 

13 and to the Committee on Energy and Natural Resources 

14 of the Senate and make publicly available—

15 (1) a report containing the inventory under this 

16 section, by not later than 2 years after the effective 

17 date of this section; and 

18 (2) each update of such inventory. 

19 SEC. 30708. APPLICATION OF AMENDMENTS. 

20 The amendments made by this title apply with re21 spect to any coal lease issued before, on, or after the date 

22 of the enactment of this Act.
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1 TITLE VIII—INSULAR AREAS 

2 ENERGY SECURITY 

3 SEC. 30801. INSULAR AREAS ENERGY SECURITY. 

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

5 appropriations for certain insular areas of the United 

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

7 1980 (Public Law 96–597; 94 Stat. 3480–3481), is 

8 amended—

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

10 and inserting a semicolon; 

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

12 following new paragraphs: 

13 ‘‘(5) electric power transmission and distribu14 tion lines in insular areas are inadequate to with15 stand damage caused by the hurricanes and ty16 phoons which frequently occur in insular areas and 

17 such damage often costs millions of dollars to repair; 

18 and 

19 ‘‘(6) the refinement of renewable energy tech20 nologies since the publication of the 1982 Territorial 

21 Energy Assessment prepared pursuant to subsection 

22 (c) reveals the need to reassess the state of energy 

23 production, consumption, infrastructure, reliance on 

24 imported energy, and indigenous sources in regard 

25 to the insular areas.’’; 
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1 (3) by amending subsection (e) to read as fol2 lows: 

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

4 with the Secretary of Energy and the chief executive offi5 cer of each insular area, shall update the plans required 

6 under subsection (c) by—

7 ‘‘(A) updating the contents required by sub8 section (c); 

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

10 insular areas with the objective of reducing, to the 

11 extent feasible, their reliance on energy imports by 

12 the year 2010 and maximizing, to the extent fea13 sible, use of indigenous energy sources; and 

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

15 line plans for such insular areas with the objective 

16 that the maximum percentage feasible of electric 

17 power transmission and distribution lines in each in18 sular area be protected from damage caused by hur19 ricanes and typhoons. 

20 ‘‘(2) Not later than May 31, 2004, the Secretary of 

21 the Interior shall submit to the Congress the updated 

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

23 and 

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

25 follows: 
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1 ‘‘(4) POWER LINE GRANTS FOR TERRI2 TORIES.—

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

4 Interior is authorized to make grants to govern5 ments of territories of the United States to 

6 carry out eligible projects to protect electric 

7 power transmission and distribution lines in 

8 such territories from damage caused by hurri9 canes and typhoons. 

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

11 may award grants under subparagraph (A) only 

12 to governments of territories of the United 

13 States that submit written project plans to the 

14 Secretary for projects that meet the following 

15 criteria: 

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

17 electric power transmission and distribu18 tion lines located in one or more of the ter19 ritories of the United States from damage 

20 caused by hurricanes and typhoons. 

21 ‘‘(ii) The project is likely to substan22 tially reduce the risk of future damage, 

23 hardship, loss, or suffering. 

24 ‘‘(iii) The project addresses one or 

25 more problems that have been repetitive or 
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1 that pose a significant risk to public health 

2 and safety. 

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

4 more than the value of the reduction in di5 rect damage and other negative impacts 

6 that the project is designed to prevent or 

7 mitigate. The cost benefit analysis required 

8 by this criterion shall be computed on a 

9 net present value basis. 

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

11 consideration long-term changes to the 

12 areas and persons it is designed to protect 

13 and has manageable future maintenance 

14 and modification requirements. 

15 ‘‘(vi) The project plan includes an 

16 analysis of a range of options to address 

17 the problem it is designed to prevent or 

18 mitigate and a justification for the selec19 tion of the project in light of that analysis. 

20 ‘‘(vii) The applicant has demonstrated 

21 to the Secretary that the matching funds 

22 required by subparagraph (D) are avail23 able. 

24 ‘‘(C) PRIORITY.—When making grants 

25 under this paragraph, the Secretary shall give 
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1 priority to grants for projects which are likely 

2 to—

3 ‘‘(i) have the greatest impact on re4 ducing future disaster losses; and 

5 ‘‘(ii) best conform with plans that 

6 have been approved by the Federal Govern7 ment or the government of the territory 

8 where the project is to be carried out for 

9 development or hazard mitigation for that 

10 territory. 

11 ‘‘(D) MATCHING REQUIREMENT.—The 

12 Federal share of the cost for a project for which 

13 a grant is provided under this paragraph shall 

14 not exceed 75 percent of the total cost of that 

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

16 be provided in the form of cash or services. 

17 ‘‘(E) TREATMENT OF FUNDS FOR CERTAIN

18 PURPOSES.—Grants provided under this para19 graph shall not be considered as income, a re20 source, or a duplicative program when deter21 mining eligibility or benefit levels for Federal 

22 major disaster and emergency assistance. 

23 ‘‘(F) AUTHORIZATION OF APPROPRIA24 TIONS.—There is authorized to be appropriated 

25 to carry out this paragraph $5,000,000 for each 
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1 fiscal year beginning after the date of the en2 actment of this paragraph.’’.

3 TITLE IX—MISCELLANEOUS 

4 PROVISIONS 

5 SEC. 30901. REPORT ON ENERGY FACILITY RIGHTS-OF-WAY 

6 AND CORRIDORS ON FEDERAL LANDS. 

7 (a) REPORT TO CONGRESS.—

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

9 the date of the enactment of this section, the Sec10 retary of Agriculture and the Secretary of the Inte11 rior, in consultation with the Secretaries of Com12 merce, Defense, and Energy and the Federal Energy 

13 Regulatory Commission, shall submit to the Commit14 tees on Energy and Commerce and Resources of the 

15 House of Representatives and the Committee on En16 ergy and Natural Resources of the Senate a joint re17 port—

18 (A) addressing—

19 (i) the location of existing rights-of20 way and designated and de facto corridors 

21 for oil and gas pipelines and electric trans22 mission and distribution facilities on Fed23 eral lands; and 

24 (ii) opportunities for additional oil 

25 and gas pipeline and electric transmission 
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1 capacity within such rights-of-way and cor2 ridors; and 

3 (B) containing a plan for making available, 

4 upon request, to the appropriate Federal, State, 

5 and local agencies, tribal governments, and 

6 other persons involved in the siting of oil and 

7 gas pipelines and electricity transmission facili8 ties Geographic Information System-based in9 formation regarding the location of such exist10 ing rights-of-way and corridors and any planned 

11 rights-of-way and corridors. 

12 (2) CONSULTATIONS AND CONSIDERATIONS.—

13 In undertaking the report, the Secretary of the Inte14 rior and the Secretary of Agriculture shall consult 

15 with—

16 (A) other agencies of Federal, State, tribal, 

17 or local units of government as appropriate; 

18 (B) persons involved in the siting of oil 

19 and gas pipelines and electric transmission fa20 cilities; and 

21 (C) other interested members of the public. 

22 (3) LIMITATION.—The Secretary of the Interior 

23 and the Secretary of Agriculture shall limit the dis24 tribution of the report and Geographic Information 

25 System-based information referred to in paragraph 
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1 (1) as necessary for national and infrastructure se2 curity reasons, if either Secretary determines that 

3 such information is authorized to be withheld from 

4 public disclosure pursuant to a national security or 

5 other exception under section 552(b) of title 5, 

6 United States Code (popularly known as the ‘‘Free7 dom of Information Act’’). 

8 (b) CORRIDOR DESIGNATIONS.—

9 (1) WITHIN THE 11 CONTIGUOUS WESTERN

10 STATES.—Not later than 24 months after the date 

11 of the enactment of this section, the Secretaries of 

12 Agriculture, Commerce, Defense, Energy, and the 

13 Interior, in consultation with the Federal Energy 

14 Regulatory Commission and the affected utility in15 dustries, jointly shall—

16 (A) designate, pursuant to title 5 of the 

17 Federal Land Policy and Management Act of 

18 1976 (43 U.S.C. 1761 et seq.), and other appli19 cable Federal laws, corridors needed or useful 

20 for oil and gas pipelines and electricity trans21 mission and facilities on Federal lands in the 

22 eleven contiguous Western States as that term 

23 is defined in section 103(o) of the Federal Land 

24 Policy and Management Act of 1976 (43 U.S.C. 

25 1702(o)); 
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1 (B) perform any environmental reviews 

2 that may be required to complete the designa3 tions of corridors for such facilities on Federal 

4 lands in those States; and 

5 (C) incorporate the designated corridors 

6 into the relevant departmental and agency land 

7 use and resource management plans or the 

8 equivalent. 

9 (2) WITHIN THE REMAINING STATES.—Not 

10 later than 4 years after the date of the enactment 

11 of this section, the Secretaries of Agriculture, Com12 merce, Defense, Energy, and the Interior, in con13 sultation with the Federal Energy Regulatory Com14 mission and the affected utility industries, jointly 

15 shall identify corridors needed or useful for oil and 

16 gas pipelines and electricity transmission and dis17 tribution facilities on Federal lands in the States 

18 other than those described in paragraph (1), and 

19 shall schedule prompt action to identify, designate, 

20 and incorporate these corridors into the land use 

21 plan. 

22 (3) ONGOING RESPONSIBILITIES.—The Secre23 taries of Agriculture, Commerce, Defense, Energy, 

24 and the Interior, in consultation with the Federal 

25 Energy Regulatory Commission and the affected 
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1 utility industries, shall ensure that additional cor2 ridors as may be needed or useful for oil and gas 

3 pipelines and electricity transmission and distribu4 tion facilities on Federal lands are promptly des5 ignated. The Secretaries shall provide a process for 

6 the prompt review of applications for such corridors. 

7 (c) FACTORS TO CONSIDER.—When carrying out this 

8 section, the Secretaries shall take into account the need 

9 for upgraded and new electricity transmission and dis10 tribution facilities to improve reliability, relieve congestion, 

11 and enhance the capability of the national grid to deliver 

12 electricity. 

13 (d) DEFINITION OF CORRIDOR.—As used in this sec14 tion and for purposes of title V of the Federal Land Policy 

15 and Management Act of 1976, the term ‘corridor’ shall 

16 mean a linear strip of land without definite width, but lim17 ited by technological, environmental, and topographical 

18 factors, and that contains or may in the future contain 

19 one or more utility, communication, or transportation fa20 cilities. A corridor is a land use designation identified for 

21 the purpose of establishing policy direction as to the pre22 ferred location of compatible linear facilities and compat23 ible and conflicting land uses. It does not imply entitle24 ment of use or limits as to siting facilities in additional 

25 locations. Appropriate environmental review and regu-
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1 latory permitting reflecting work already undertaken in 

2 the designation of a corridor shall precede occupancy on 

3 a project-specific basis. 

4 SEC. 30902. ELECTRICITY TRANSMISSION LINE RIGHT-OF5 WAY, CLEVELAND NATIONAL FOREST AND 

6 ADJACENT PUBLIC LANDS, CALIFORNIA. 

7 (a) ISSUANCE.—Subject to subsection (c), the Sec8 retary of the Interior and the Secretary of Agriculture 

9 shall issue all necessary grants, easements, permits, plan 

10 amendments, and other approvals to allow for the siting 

11 and construction of a high-voltage electricity transmission 

12 line right-of-way running approximately north to south 

13 through the Trabuco Ranger District of the Cleveland Na14 tional Forest in the State of California and adjacent lands 

15 under the jurisdiction of the Bureau of Land Management 

16 and the Forest Service. The right-of-way approvals shall 

17 provide all necessary Federal authorization from the Sec18 retary of the Interior and the Secretary of Agriculture for 

19 the routing, construction, operation, and maintenance of 

20 a 500 KV transmission line capable of meeting the long21 term electricity transmission needs of the region between 

22 the existing Valley-Serrano transmission line to the north 

23 and the Telega–Escondido transmission line to the south, 

24 and for connecting to future generating capacity that may 

25 be developed in the region. 
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1 (b) PROTECTION OF WILDERNESS AREAS.—The Sec2 retary of the Interior and the Secretary of Agriculture 

3 shall not allow any portion of a transmission line right4 of-way corridor identified in subsection (a) to enter any 

5 identified wilderness area in existence as of the date of 

6 the enactment of this section. 

7 (c) ENVIRONMENTAL AND ADMINISTRATIVE RE8 VIEWS.—

9 (1) DEPARTMENT OF INTERIOR OR LOCAL

10 AGENCY.—The Secretary of the Interior, acting 

11 through the Bureau of Land Management, shall be 

12 the lead Federal agency with overall responsibility to 

13 ensure completion of required environmental and 

14 other reviews of the approvals to be issued under 

15 subsection (a). 

16 (2) NATIONAL FOREST SYSTEM LAND.—For the 

17 portions of the corridor on National Forest System 

18 lands, the Secretary of Agriculture shall complete all 

19 required environmental reviews and administrative 

20 actions in coordination with the Secretary of the In21 terior. 

22 (3) EXPEDITIOUS COMPLETION.—The reviews 

23 required for issuance of the approvals under sub24 section (a) shall be completed not later than 1 year 

25 after the date of the enactment of this Act. 
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1 (d) TIME FOR ISSUANCE.—The necessary grants, 

2 easements, permits, plan amendments, and other approv3 als for the transmission line right-of-way shall be issued 

4 not later than 60 days after the completion of the environ5 mental reviews under subsection (c). 

6 (e) OTHER TERMS AND CONDITIONS.—The trans7 mission line right-of-way shall be subject to such terms 

8 and conditions as the Secretary of the Interior and the 

9 Secretary of Agriculture consider necessary, as a result 

10 of the environmental reviews under subsection (c), to pro11 tect the value of historic, cultural, and natural resources 

12 under the jurisdiction of the Department of the Interior 

13 or the Department of Agriculture. 

14 (f) PREFERENCE AMONG PROPOSALS.—The Sec15 retary of the Interior and the Secretary of Agriculture 

16 shall give a preference to any application or preapplication 

17 proposal for a transmission line right-of-way, as described 

18 in subsection (a), that was submitted before December 31, 

19 2002, over all other applications and proposals for the 

20 same or similar right-of-way submitted on or after that 

21 date. 

22 SEC. 30903. CONSULTATION REGARDING ENERGY RIGHTS23 OF-WAY ON PUBLIC LANDS. 

24 (a) IN GENERAL.—Not later than 6 months after the 

25 date of the enactment of this Act, the Secretary of the 
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1 Interior and the Secretary of Agriculture shall enter into, 

2 and submit to the Congress, a memorandum of under3 standing in accordance with this section regarding the 

4 processing of new applications for linear rights of way for 

5 electrical transmission lines and oil or gas pipelines on 

6 public lands within the jurisdiction of the Secretary of the 

7 Interior and National Forest System lands within the ju8 risdiction of the Secretary of Agriculture. 

9 (b) CONTENTS.—The memorandum of understanding 

10 shall include provisions that—

11 (1) establish an administrative procedure for 

12 processing right-of-way applications, including lines 

13 of authority, steps in application processing, and 

14 timeframes for application processing; 

15 (2) provide for coordination of planning relating 

16 to the granting of these rights-of-way; 

17 (3) provide for coordination of environmental 

18 compliance efforts to avoid duplication of effort; and 

19 (4) provide for coordination of use of right-of20 way stipulations to achieve consistency.

21 SEC. 30904. ENHANCING ENERGY EFFICIENCY IN MANAGE22 MENT OF FEDERAL LANDS. 

23 (a) SENSE OF THE CONGRESS.—It is the sense of the 

24 Congress that Federal agencies should enhance the use of 
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1 energy efficient technologies in the management of natural 

2 resources. 

3 (b) ENERGY EFFICIENT BUILDINGS.—To the extent 

4 practicable, the Secretary of the Interior, the Secretary 

5 of Commerce, and the Secretary of Agriculture shall seek 

6 to incorporate energy efficient technologies in public and 

7 administrative buildings associated with management of 

8 the National Park System, National Wildlife Refuge Sys9 tem, National Forest System, National Marine Sanc10 tuaries System, and other public lands and resources man11 aged by the Secretaries. 

12 (c) ENERGY EFFICIENT VEHICLES.—To the extent 

13 practicable, the Secretary of the Interior, the Secretary 

14 of Commerce, and the Secretary of Agriculture shall seek 

15 to use energy efficient motor vehicles, including vehicles 

16 equipped with biodiesel or hybrid engine technologies, in 

17 the management of the National Park System, National 

18 Wildlife Refuge System, National Forest System, National 

19 Marine Sanctuaries System, and other public lands and 

20 resources managed by the Secretaries.

21 SEC. 30905. PERMITTING OF WIND ENERGY DEVELOPMENT 

22 PROJECTS ON PUBLIC LANDS. 

23 (a) REQUIRED POLICIES AND PROCEDURES.—The 

24 Secretary of the Interior shall process right-of-way appli25 cations for wind energy site testing and monitoring facili-
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1 ties on public lands administered by the Bureau of Land 

2 Management in accordance with policies and procedures 

3 that are substantially the same as those set forth in Bu4 reau of Land Management Instruction Memorandum No. 

5 2003-020, dated October 16, 2002. 

6 (b) LIMITATION ON RENT AND OTHER CHARGES.—

7 (1) IN GENERAL.—The Secretary of the Inte8 rior may not impose rent and other charges with re9 spect to any wind energy development project on 

10 public lands that, in the aggregate, exceed 50 per11 cent of the maximum amount of rent that could be 

12 charged with respect to that project under the terms 

13 of the Bureau of Land Management Instruction 

14 Memorandum referred to in subsection (a). 

15 (2) TERMINATION.—Paragraph (1) shall not 

16 apply after the earlier of—

17 (A) the date on which the Secretary of the 

18 Interior determines there exists at least 10,000 

19 megawatts of electricity generating capacity 

20 from non-hydropower renewable energy re21 sources on public lands; or 

22 (B) the end of the 10-year period begin23 ning on the date of the enactment of this Act. 

24 (3) STATE SHARE NOT AFFECTED.—This sub25 section shall not affect any State share of rent and 
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1 other charges with respect to any wind energy devel2 opment project on public lands. 

3 SEC. 30906. SENSE OF THE CONGRESS REGARDING GEN4 ERATION CAPACITY OF ELECTRICITY FROM 

5 RENEWABLE ENERGY RESOURCES ON PUB6 LIC LANDS. 

7 It is the sense of the Congress that the Secretary of 

8 the Interior shall, within the next 10 years after the date 

9 of the enactment of this Act, seek to have approved non10 hydropower renewable energy projects located on the pub11 lic lands with a generation capacity of at least 10,000 

12 megawatts of electricity. 

13 SEC. 30907. ASSESSMENT OF OCEAN THERMAL ENERGY RE14 SOURCES. 

15 (a) RESOURCE ASSESSMENT.—Not later than 3 

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

17 each year thereafter, the Secretary of the Interior shall—

18 (1) review assessments of ocean thermal energy 

19 resources, other than resources of any area of the 

20 Outer Continental Shelf that is subject to a morato21 rium on leasing for energy exploration or develop22 ment, that are available in the United States and its 

23 territories and possessions; and 

24 (2) undertake new assessments of such re25 sources as necessary. 
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1 (b) CONSIDERATIONS.—In reviewing and under2 taking assessments under subsection (a), the Secretary 

3 shall take into account changes in market conditions, 

4 available technologies, and other relevant factors. 

5 (c) REPORTS.—Not later than 1 year after the date 

6 of the enactment of this Act, and each year thereafter, 

7 the Secretary shall publish a report on reviews and assess8 ments under subsection (a). Each report shall contain—

9 (1) a detailed inventory of the available amount 

10 and characteristics of ocean thermal energy re11 sources; 

12 (2) estimates of the costs of actions needed to 

13 develop and accelerate efforts to commercialize ocean 

14 thermal energy conversion; and 

15 (3) such other information as the Secretary 

16 considers would be useful in developing ocean ther17 mal energy resources. 

18 SEC. 30908. SENSE OF THE CONGRESS REGARDING DEVEL19 OPMENT OF MINERALS UNDER PADRE IS20 LAND NATIONAL SEASHORE. 

21 (a) FINDINGS.—The Congress finds the following: 

22 (1) Pursuant to Public Law 87–712 (16 U.S.C. 

23 459d et seq.; popularly known as the ‘‘Federal Ena24 bling Act’’) and various deeds and actions there25 under, the United States is the owner of the surface 
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1 estate only of certain lands constituting the Padre 

2 Island National Seashore. 

3 (2) Ownership of the oil, gas, and other min4 erals in the subsurface estate of the lands consti5 tuting the Padre Island National Seashore was never 

6 acquired by the United States and ownership of 

7 those interests are held by the State of Texas and 

8 private parties. 

9 (3) The Federal Enabling Act expressly con10 templated that the United States would recognize 

11 the ownership and future development of the oil, 

12 gas, and other minerals in the subsurface estate of 

13 the lands constituting the Padre Island National 

14 Seashore by the owners and their mineral lessees 

15 and recognized that approval of the State of Texas 

16 was required to create Padre Island National Sea17 shore. 

18 (4) Approval was given for the creation of 

19 Padre Island National Seashore by the State of 

20 Texas through TEX. REV. CIV. STAT. ANN. Art. 

21 6077(t) (Vernon 1970), which expressly recognized 

22 that development of the oil, gas, and other minerals 

23 in the subsurface of the lands constituting Padre Is24 land National Seashore would be conducted with full 
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1 rights of ingress and egress under the laws of the 

2 State of Texas. 

3 (b) SENSE OF THE CONGRESS.—With regard to Fed4 eral law, any regulation of the development of oil, gas, or 

5 other minerals in the subsurface of the lands constituting 

6 Padre Island National Seashore should be made as if those 

7 lands retained the status that they had on September 27, 

8 1962.

9 DIVISION D—TAX

10 SEC. 40001. SHORT TITLE; ETC. 

11 (a) SHORT TITLE.—This division may be cited as the 

12 ‘‘Energy Tax Policy Act of 2003’’. 

13 (b) AMENDMENT OF 1986 CODE.—Except as other14 wise expressly provided, whenever in this division an 

15 amendment or repeal is expressed in terms of an amend16 ment to, or repeal of, a section or other provision, the ref17 erence shall be considered to be made to a section or other 

18 provision of the Internal Revenue Code of 1986.

19 TITLE I—CONSERVATION 

20 SEC. 41001. CREDIT FOR RESIDENTIAL SOLAR ENERGY 

21 PROPERTY. 

22 (a) IN GENERAL.—Subpart A of part IV of sub23 chapter A of chapter 1 (relating to nonrefundable personal 

24 credits) is amended by inserting after section 25B the fol25 lowing new section: 
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1 ‘‘SEC. 25C. RESIDENTIAL SOLAR ENERGY PROPERTY. 

2 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in3 dividual, there shall be allowed as a credit against the tax 

4 imposed by this chapter for the taxable year an amount 

5 equal to the sum of—

6 ‘‘(1) 15 percent of the qualified photovoltaic 

7 property expenditures made by the taxpayer during 

8 such year, and 

9 ‘‘(2) 15 percent of the qualified solar water 

10 heating property expenditures made by the taxpayer 

11 during the taxable year. 

12 ‘‘(b) LIMITATIONS.—

13 ‘‘(1) MAXIMUM CREDIT.—The credit allowed 

14 under subsection (a) shall not exceed—

15 ‘‘(A) $2,000 for each system of property 

16 described in subsection (c)(1), and 

17 ‘‘(B) $2,000 for each system of property 

18 described in subsection (c)(2). 

19 ‘‘(2) SAFETY CERTIFICATIONS.—No credit shall 

20 be allowed under this section for an item of property 

21 unless—

22 ‘‘(A) in the case of solar water heating 

23 equipment, such equipment is certified for per24 formance and safety by the non-profit Solar 

25 Rating Certification Corporation or a com26 parable entity endorsed by the government of 
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1 the State in which such property is installed, 

2 and 

3 ‘‘(B) in the case of a photovoltaic system, 

4 such system meets appropriate fire and electric 

5 code requirements. 

6 ‘‘(c) DEFINITIONS.—For purposes of this section—

7 ‘‘(1) QUALIFIED SOLAR WATER HEATING PROP8 ERTY EXPENDITURE.—The term ‘qualified solar 

9 water heating property expenditure’ means an ex10 penditure for property to heat water for use in a 

11 dwelling unit located in the United States and used 

12 as a residence if at least half of the energy used by 

13 such property for such purpose is derived from the 

14 sun. 

15 ‘‘(2) QUALIFIED PHOTOVOLTAIC PROPERTY EX16 PENDITURE.—The term ‘qualified photovoltaic prop17 erty expenditure’ means an expenditure for property 

18 which uses solar energy to generate electricity for 

19 use in a dwelling unit. 

20 ‘‘(3) SOLAR PANELS.—No expenditure relating 

21 to a solar panel or other property installed as a roof 

22 (or portion thereof) shall fail to be treated as prop23 erty described in paragraph (1) or (2) solely because 

24 it constitutes a structural component of the struc25 ture on which it is installed. 
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1 ‘‘(4) LABOR COSTS.—Expenditures for labor 

2 costs properly allocable to the onsite preparation, as3 sembly, or original installation of the property de4 scribed in paragraph (1) or (2) and for piping or 

5 wiring to interconnect such property to the dwelling 

6 unit shall be taken into account for purposes of this 

7 section. 

8 ‘‘(5) SWIMMING POOLS, ETC., USED AS STOR9 AGE MEDIUM.—Expenditures which are properly al10 locable to a swimming pool, hot tub, or any other 

11 energy storage medium which has a function other 

12 than the function of such storage shall not be taken 

13 into account for purposes of this section. 

14 ‘‘(d) SPECIAL RULES.—

15 ‘‘(1) DOLLAR AMOUNTS IN CASE OF JOINT OC16 CUPANCY.—In the case of any dwelling unit which is 

17 jointly occupied and used during any calendar year 

18 as a residence by 2 or more individuals the following 

19 shall apply: 

20 ‘‘(A) The amount of the credit allowable 

21 under subsection (a) by reason of expenditures 

22 made during such calendar year by any of such 

23 individuals with respect to such dwelling unit 

24 shall be determined by treating all of such indi-
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1 viduals as 1 taxpayer whose taxable year is 

2 such calendar year. 

3 ‘‘(B) There shall be allowable with respect 

4 to such expenditures to each of such individ5 uals, a credit under subsection (a) for the tax6 able year in which such calendar year ends in 

7 an amount which bears the same ratio to the 

8 amount determined under subparagraph (A) as 

9 the amount of such expenditures made by such 

10 individual during such calendar year bears to 

11 the aggregate of such expenditures made by all 

12 of such individuals during such calendar year. 

13 ‘‘(C) Subparagraphs (A) and (B) shall be 

14 applied separately with respect to qualified 

15 solar water heating property expenditures and 

16 qualified photovoltaic property expenditures. 

17 ‘‘(2) TENANT-STOCKHOLDER IN COOPERATIVE

18 HOUSING CORPORATION.—In the case of an indi19 vidual who is a tenant-stockholder (as defined in sec20 tion 216) in a cooperative housing corporation (as 

21 defined in such section), such individual shall be 

22 treated as having made his tenant-stockholder’s pro23 portionate share (as defined in section 216(b)(3)) of 

24 any expenditures of such corporation. 

25 ‘‘(3) CONDOMINIUMS.—
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1 ‘‘(A) IN GENERAL.—In the case of an indi2 vidual who is a member of a condominium man3 agement association with respect to a condo4 minium which he owns, such individual shall be 

5 treated as having made his proportionate share 

6 of any expenditures of such association. 

7 ‘‘(B) CONDOMINIUM MANAGEMENT ASSO8 CIATION.—For purposes of this paragraph, the 

9 term ‘condominium management association’ 

10 means an organization which meets the require11 ments of paragraph (1) of section 528(c) (other 

12 than subparagraph (E) thereof) with respect to 

13 a condominium project substantially all of the 

14 units of which are used as residences. 

15 ‘‘(4) ALLOCATION IN CERTAIN CASES.—If less 

16 than 80 percent of the use of an item is for nonbusi17 ness purposes, only that portion of the expenditures 

18 for such item which is properly allocable to use for 

19 nonbusiness purposes shall be taken into account. 

20 ‘‘(5) WHEN EXPENDITURE MADE; AMOUNT OF

21 EXPENDITURE.—

22 ‘‘(A) IN GENERAL.—Except as provided in 

23 subparagraph (B), an expenditure with respect 

24 to an item shall be treated as made when the 

25 original installation of the item is completed. 
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1 ‘‘(B) EXPENDITURES PART OF BUILDING

2 CONSTRUCTION.—In the case of an expenditure 

3 in connection with the construction or recon4 struction of a structure, such expenditure shall 

5 be treated as made when the original use of the 

6 constructed or reconstructed structure by the 

7 taxpayer begins. 

8 ‘‘(C) AMOUNT.—The amount of any ex9 penditure shall be the cost thereof. 

10 ‘‘(6) PROPERTY FINANCED BY SUBSIDIZED EN11 ERGY FINANCING.—For purposes of determining the 

12 amount of expenditures made by any individual with 

13 respect to any dwelling unit, there shall not be taken 

14 into account expenditures which are made from sub15 sidized energy financing (as defined in section 

16 48(a)(4)(A)). 

17 ‘‘(e) BASIS ADJUSTMENTS.—For purposes of this 

18 subtitle, if a credit is allowed under this section for any 

19 expenditure with respect to any property, the increase in 

20 the basis of such property which would (but for this sub21 section) result from such expenditure shall be reduced by 

22 the amount of the credit so allowed. 

23 ‘‘(f) TERMINATION.—The credit allowed under this 

24 section shall not apply to taxable years beginning after 
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1 December 31, 2006 (December 31, 2008, with respect to 

2 qualified photovoltaic property expenditures).’’. 

3 (b) CONFORMING AMENDMENTS.—

4 (1) Subsection (a) of section 1016 is amended 

5 by striking ‘‘and’’ at the end of paragraph (27), by 

6 striking the period at the end of paragraph (28) and 

7 inserting ‘‘, and’’, and by adding at the end the fol8 lowing new paragraph: 

9 ‘‘(29) to the extent provided in section 25C(e), 

10 in the case of amounts with respect to which a credit 

11 has been allowed under section 25C.’’. 

12 (2) The table of sections for subpart A of part 

13 IV of subchapter A of chapter 1 is amended by in14 serting after the item relating to section 25B the fol15 lowing new item:

‘‘Sec. 25C. Residential solar energy property.’’.

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

17 this section shall apply to taxable years ending after De18 cember 31, 2003. 

19 SEC. 41002. EXTENSION AND EXPANSION OF CREDIT FOR 

20 ELECTRICITY PRODUCED FROM RENEWABLE 

21 RESOURCES. 

22 (a) EXTENSION OF CREDIT FOR WIND AND CLOSED23 LOOP BIOMASS FACILITIES.—Subparagraphs (A) and (B) 

24 of section 45(c)(3) are each amended by striking ‘‘2004’’ 

25 and inserting ‘‘2007’’. 
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1 (b) EXPANSION OF CREDIT FOR OPEN-LOOP BIO2 MASS, LANDFILL GAS FACILITIES, AND TRASH COMBUS3 TION FACILITIES.—Paragraph (3) of section 45(c) is 

4 amended by adding at the end the following new subpara5 graphs: 

6 ‘‘(D) OPEN-LOOP BIOMASS FACILITIES.—

7 In the case of a facility using open-loop biomass 

8 to produce electricity, the term ‘qualified facil9 ity’ means any facility owned by the taxpayer 

10 which is originally placed in service before Jan11 uary 1, 2007. 

12 ‘‘(E) LANDFILL GAS FACILITIES.—In the 

13 case of a facility producing electricity from gas 

14 derived from the biodegradation of municipal 

15 solid waste, the term ‘qualified facility’ means 

16 any facility owned by the taxpayer which is 

17 originally placed in service before January 1, 

18 2007. 

19 ‘‘(F) TRASH COMBUSTION FACILITIES.—In 

20 the case of a facility which burns municipal 

21 solid waste to produce electricity, the term 

22 ‘qualified facility’ means any facility owned by 

23 the taxpayer which is originally placed in serv24 ice after the date of the enactment of this sub25 paragraph and before January 1, 2007.’’. 
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1 (c) DEFINITION AND SPECIAL RULES.—Subsection 

2 (c) of section 45 is amended by adding at the end the 

3 following new paragraphs: 

4 ‘‘(5) OPEN-LOOP BIOMASS.—The term ‘open5 loop biomass’ means any solid, nonhazardous, cel6 lulosic waste material which is segregated from other 

7 waste materials and which is derived from—

8 ‘‘(A) any of the following forest-related re9 sources: mill residues, precommercial thinnings, 

10 slash, and brush, 

11 ‘‘(B) solid wood waste materials, including 

12 waste pallets, crates, dunnage, manufacturing 

13 and construction wood wastes (other than pres14 sure-treated, chemically-treated, or painted 

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

16 tree trimmings, but not including municipal 

17 solid waste (garbage), gas derived from the bio18 degradation of solid waste, or paper that is 

19 commonly recycled, or 

20 ‘‘(C) agriculture sources, including orchard 

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

22 other crop by-products or residues. 

23 Such term shall not include closed-loop biomass. 

24 ‘‘(6) REDUCED CREDIT FOR CERTAIN

25 PREEFFECTIVE DATE FACILITIES.—In the case of 
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1 any facility described in subparagraph (D) or (E) of 

2 paragraph (3) which is placed in service before the 

3 date of the enactment of this paragraph—

4 ‘‘(A) subsection (a)(1) shall be applied by 

5 substituting ‘1.0 cents’ for ‘1.5 cents’, and 

6 ‘‘(B) the 5-year period beginning on the 

7 date of the enactment of this paragraph shall 

8 be substituted in lieu of the 10-year period in 

9 subsection (a)(2)(A)(ii). 

10 ‘‘(7) CREDIT ELIGIBILITY FOR OPEN-LOOP BIO11 MASS FACILITIES.—In the case of any facility de12 scribed in paragraph (3)(D) which is placed in serv13 ice before the date of enactment of this paragraph, 

14 if the owner of such facility is not the producer of 

15 the electricity, the person eligible for the credit al16 lowable under subsection (a) is the lessee or the op17 erator of such facility. 

18 ‘‘(8) LIMIT ON REDUCTIONS FOR GRANTS, ETC., 

19 FOR OPEN-LOOP BIOMASS FACILITIES.—If the 

20 amount of the credit determined under subsection 

21 (a) with respect to any open-loop biomass facility is 

22 required to be reduced under paragraph (3) of sub23 section (b), the fraction under such paragraph shall 

in no event be greater than 1 24 ⁄2. 
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1 ‘‘(9) COORDINATION WITH SECTION 29.—The 

2 term ‘qualified facility’ shall not include any facility 

3 the production from which is allowed as a credit 

4 under section 29 for the taxable year or any prior 

5 taxable year.’’. 

6 (d) QUALIFIED ENERGY RESOURCES.—Paragraph 

7 (1) of section 45(c) (relating to qualified energy resources) 

8 is amended to read as follows: 

9 ‘‘(1) QUALIFIED ENERGY RESOURCES.—The 

10 term ‘qualified energy resources’ means any resource 

11 described in paragraph (3) which is used to generate 

12 electricity at a qualified facility.’’. 

13 (e) EFFECTIVE DATE.—The amendments made by 

14 this section shall apply to electricity sold after the date 

15 of the enactment of this Act, in taxable years ending after 

16 such date. 

17 SEC. 41003. CREDIT FOR QUALIFIED FUEL CELL POWER 

18 PLANTS. 

19 (a) BUSINESS PROPERTY.—

20 (1) IN GENERAL.—Subparagraph (A) of section 

21 48(a)(3) (defining energy property) is amended by 

22 striking ‘‘or’’ at the end of clause (i), by adding 

23 ‘‘or’’ at the end of clause (ii), and by inserting after 

24 clause (ii) the following new clause: 
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1 ‘‘(iii) equipment which is part of a 

2 qualified fuel cell power plant,’’. 

3 (2) QUALIFIED FUEL CELL POWER PLANT.—

4 Subsection (a) of section 48 is amended by redesig5 nating paragraphs (4) and (5) as paragraphs (5) 

6 and (6), respectively, and by inserting after para7 graph (3) the following new paragraph: 

8 ‘‘(4) QUALIFIED FUEL CELL POWER PLANT.—

9 For purposes of this subsection—

10 ‘‘(A) IN GENERAL.—The term ‘qualified 

11 fuel cell power plant’ means a fuel cell power 

12 plant that has an electricity-only generation ef13 ficiency greater than 30 percent. 

14 ‘‘(B) LIMITATION.—The energy credit with 

15 respect to any qualified fuel cell power plant for 

16 any taxable year shall not exceed—

‘‘(i) $500 for each 1 17 ⁄2 kilowatt of ca18 pacity of the power plant, reduced by 

19 ‘‘(ii) the aggregate energy credits al20 lowed with respect to such power plant for 

21 all prior taxable years. 

22 ‘‘(C) FUEL CELL POWER PLANT.—The 

23 term ‘fuel cell power plant’ means an integrated 

24 system comprised of a fuel cell stack assembly 

25 and associated balance of plant components 
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1 that converts a fuel into electricity using elec2 trochemical means. 

3 ‘‘(D) TERMINATION.—Such term shall not 

4 include any property placed in service after De5 cember 31, 2006.’’. 

6 (3) EFFECTIVE DATE.—The amendments made 

7 by this subsection shall apply to property placed in 

8 service after December 31, 2003, under rules similar 

9 to the rules of section 48(m) of the Internal Revenue 

10 Code of 1986 (as in effect on the day before the 

11 date of the enactment of the Revenue Reconciliation 

12 Act of 1990). 

13 (b) NONBUSINESS PROPERTY.—

14 (1) IN GENERAL.—Subpart A of part IV of sub15 chapter A of chapter 1 (relating to nonrefundable 

16 personal credits) is amended by inserting after sec17 tion 25C the following new section: 

18 ‘‘SEC. 25D. NONBUSINESS QUALIFIED FUEL CELL POWER 

19 PLANT. 

20 ‘‘(a) IN GENERAL.—In the case of an individual, 

21 there shall be allowed as a credit against the tax imposed 

22 by this chapter for the taxable year an amount equal to 

23 10 percent of the qualified fuel cell power plant expendi24 tures which are paid or incurred during such year. 
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1 ‘‘(b) LIMITATIONS.—The credit allowed under sub2 section (a) with respect to any qualified fuel cell power 

3 plant for any taxable year shall not exceed—

‘‘(1) $500 for each 1 4 ⁄2 kilowatt of capacity of 

5 the power plant, reduced by 

6 ‘‘(2) the aggregate energy credits allowed with 

7 respect to such power plant for all prior taxable 

8 years. 

9 ‘‘(c) QUALIFIED FUEL CELL POWER PLANT EX10 PENDITURES.—For purposes of this section, the term 

11 ‘qualified fuel cell power plant expenditures’ means ex12 penditures by the taxpayer for any qualified fuel cell power 

13 plant (as defined in section 48(a)(4))—

14 ‘‘(1) which meets the requirements of subpara15 graphs (B) and (D) of section 48(a)(3), and 

16 ‘‘(2) which is installed on or in connection with 

17 a dwelling unit—

18 ‘‘(A) which is located in the United States, 

19 and 

20 ‘‘(B) which is used by the taxpayer as a 

21 residence. 

22 Such term includes expenditures for labor costs properly 

23 allocable to the onsite preparation, assembly, or original 

24 installation of the property. 
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1 ‘‘(d) SPECIAL RULES.—For purposes of this section, 

2 rules similar to the rules of section 25C(d) shall apply. 

3 ‘‘(e) BASIS ADJUSTMENTS.—For purposes of this 

4 subtitle, if a credit is allowed under this section for any 

5 expenditure with respect to any property, the increase in 

6 the basis of such property which would (but for this sub7 section) result from such expenditure shall be reduced by 

8 the amount of the credit so allowed. 

9 ‘‘(f) TERMINATION.—This section shall not apply to 

10 any expenditure made after December 31, 2006.’’. 

11 (2) CONFORMING AMENDMENTS.—

12 (A) Subsection (a) of section 1016 is 

13 amended by striking ‘‘and’’ at the end of para14 graph (28), by striking the period at the end of 

15 paragraph (29) and inserting ‘‘, and’’, and by 

16 adding at the end the following new paragraph: 

17 ‘‘(30) to the extent provided in section 25D(e), 

18 in the case of amounts with respect to which a credit 

19 has been allowed under section 25D.’’. 

20 (B) The table of sections for subpart A of 

21 part IV of subchapter A of chapter 1 is amend22 ed by inserting after the item relating to section 

23 25C the following new item:

‘‘Sec. 25D. Nonbusiness qualified fuel cell power plant.’’.

24 (3) EFFECTIVE DATE.—The amendments made 

25 by this subsection shall apply to expenditures paid 
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1 or incurred after December 31, 2003, in taxable 

2 years ending after such date. 

3 SEC. 41004. CREDIT FOR ENERGY EFFICIENCY IMPROVE4 MENTS TO EXISTING HOMES. 

5 (a) IN GENERAL.—Subpart A of part IV of sub6 chapter A of chapter 1 (relating to nonrefundable personal 

7 credits) is amended by inserting after section 25D the fol8 lowing new section: 

9 ‘‘SEC. 25E. ENERGY EFFICIENCY IMPROVEMENTS TO EXIST10 ING HOMES. 

11 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in12 dividual, there shall be allowed as a credit against the tax 

13 imposed by this chapter for the taxable year an amount 

14 equal to 20 percent of the amount paid or incurred by 

15 the taxpayer for qualified energy efficiency improvements 

16 installed during such taxable year. 

17 ‘‘(b) LIMITATIONS.—

18 ‘‘(1) MAXIMUM CREDIT.—The credit allowed by 

19 this section with respect to a dwelling shall not ex20 ceed $2,000. 

21 ‘‘(2) PRIOR CREDIT AMOUNTS FOR TAXPAYER

22 ON SAME DWELLING TAKEN INTO ACCOUNT.—If a 

23 credit was allowed to the taxpayer under subsection 

24 (a) with respect to a dwelling in 1 or more prior tax25 able years, the amount of the credit otherwise allow-
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1 able for the taxable year with respect to that dwell2 ing shall not exceed the amount of $2,000 reduced 

3 by the sum of the credits allowed under subsection 

4 (a) to the taxpayer with respect to the dwelling for 

5 all prior taxable years. 

6 ‘‘(c) CARRYFORWARD OF UNUSED CREDIT.—If the 

7 credit allowable under subsection (a) exceeds the limita8 tion imposed by section 26(a) for such taxable year re9 duced by the sum of the credits allowable under this sub10 part (other than this section) for such taxable year, such 

11 excess shall be carried to the succeeding taxable year and 

12 added to the credit allowable under subsection (a) for such 

13 succeeding taxable year. 

14 ‘‘(d) QUALIFIED ENERGY EFFICIENCY IMPROVE15 MENTS.—For purposes of this section, the term ‘qualified 

16 energy efficiency improvements’ means any energy effi17 cient building envelope component which meets the pre18 scriptive criteria for such component established by the 

19 2000 International Energy Conservation Code (or, in the 

20 case of metal roofs with appropriate pigmented coatings, 

21 meets the Energy Star program requirements), if—

22 ‘‘(1) such component is installed in or on a 

23 dwelling—

24 ‘‘(A) located in the United States, and 
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1 ‘‘(B) owned and used by the taxpayer as 

2 the taxpayer’s principal residence (within the 

3 meaning of section 121), 

4 ‘‘(2) the original use of such component com5 mences with the taxpayer, and 

6 ‘‘(3) such component reasonably can be ex7 pected to remain in use for at least 5 years. 

8 If the aggregate cost of such components with respect to 

9 any dwelling exceeds $1,000, such components shall be 

10 treated as qualified energy efficiency improvements only 

11 if such components are also certified in accordance with 

12 subsection (e) as meeting such criteria. 

13 ‘‘(e) CERTIFICATION.—The certification described in 

14 subsection (d) shall be—

15 ‘‘(1) determined on the basis of the technical 

16 specifications or applicable ratings (including prod17 uct labeling requirements) for the measurement of 

18 energy efficiency, based upon energy use or building 

19 envelope component performance, for the energy effi20 cient building envelope component, 

21 ‘‘(2) provided by a local building regulatory au22 thority, a utility, a manufactured home production 

23 inspection primary inspection agency (IPIA), or an 

24 accredited home energy rating system provider who 

25 is accredited by or otherwise authorized to use ap-
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1 proved energy performance measurement methods by 

2 the Residential Energy Services Network 

3 (RESNET), and 

4 ‘‘(3) made in writing in a manner that specifies 

5 in readily verifiable fashion the energy efficient 

6 building envelope components installed and their re7 spective energy efficiency levels. 

8 ‘‘(f) DEFINITIONS AND SPECIAL RULES.—

9 ‘‘(1) TENANT-STOCKHOLDER IN COOPERATIVE

10 HOUSING CORPORATION.—In the case of an indi11 vidual who is a tenant-stockholder (as defined in sec12 tion 216) in a cooperative housing corporation (as 

13 defined in such section), such individual shall be 

14 treated as having paid his tenant-stockholder’s pro15 portionate share (as defined in section 216(b)(3)) of 

16 the cost of qualified energy efficiency improvements 

17 made by such corporation. 

18 ‘‘(2) CONDOMINIUMS.—

19 ‘‘(A) IN GENERAL.—In the case of an indi20 vidual who is a member of a condominium man21 agement association with respect to a condo22 minium which he owns, such individual shall be 

23 treated as having paid his proportionate share 

24 of the cost of qualified energy efficiency im25 provements made by such association. 
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1 ‘‘(B) CONDOMINIUM MANAGEMENT ASSO2 CIATION.—For purposes of this paragraph, the 

3 term ‘condominium management association’ 

4 means an organization which meets the require5 ments of paragraph (1) of section 528(c) (other 

6 than subparagraph (E) thereof) with respect to 

7 a condominium project substantially all of the 

8 units of which are used as residences. 

9 ‘‘(3) BUILDING ENVELOPE COMPONENT.—The 

10 term ‘building envelope component’ means insulation 

11 material or system which is specifically and pri12 marily designed to reduce the heat loss or gain of a 

13 dwelling when installed in or on such dwelling, exte14 rior windows (including skylights) and doors, and 

15 metal roofs with appropriate pigmented coatings 

16 which are specifically and primarily designed to re17 duce the heat gain of a dwelling when installed in 

18 or on such dwelling. 

19 ‘‘(4) MANUFACTURED HOMES INCLUDED.—For 

20 purposes of this section, the term ‘dwelling’ includes 

21 a manufactured home which conforms to Federal 

22 Manufactured Home Construction and Safety Stand23 ards (section 3280 of title 24, Code of Federal Reg24 ulations, as in effect on April 3, 2003). 
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1 ‘‘(g) BASIS ADJUSTMENT.—For purposes of this sub2 title, if a credit is allowed under this section for any ex3 penditure with respect to any property, the increase in the 

4 basis of such property which would (but for this sub5 section) result from such expenditure shall be reduced by 

6 the amount of the credit so allowed. 

7 ‘‘(h) APPLICATION OF SECTION.—This section shall 

8 apply to qualified energy efficiency improvements installed 

9 after December 31, 2003, and before January 1, 2007.’’. 

10 (b) CONFORMING AMENDMENTS.—

11 (1) Subsection (c) of section 23 is amended by 

12 striking ‘‘section 1400C’’ and inserting ‘‘sections 

13 25E and 1400C’’. 

14 (2) Subsection (a) of section 1016 is amended 

15 by striking ‘‘and’’ at the end of paragraph (29), by 

16 striking the period at the end of paragraph (30) and 

17 inserting ‘‘, and’’, and by adding at the end the fol18 lowing new paragraph: 

19 ‘‘(31) to the extent provided in section 25E(g), 

20 in the case of amounts with respect to which a credit 

21 has been allowed under section 25E.’’. 

22 (3) Subsection (d) of section 1400C is amended 

23 by inserting ‘‘and section 25E’’ after ‘‘this section’’. 

24 (4) The table of sections for subpart A of part 

25 IV of subchapter A of chapter 1 is amended by in-
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1 serting after the item relating to section 25D the 

2 following new item:

‘‘Sec. 25E. Energy efficiency improvements to existing homes.’’.

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

4 this section shall apply to taxable years ending after De5 cember 31, 2003. 

6 SEC. 41005. BUSINESS CREDIT FOR CONSTRUCTION OF NEW 

7 ENERGY EFFICIENT HOME. 

8 (a) IN GENERAL.—Subpart D of part IV of sub9 chapter A of chapter 1 (relating to business related cred10 its) is amended by inserting after section 45F the fol11 lowing new section: 

12 ‘‘SEC. 45G. NEW ENERGY EFFICIENT HOME CREDIT. 

13 ‘‘(a) IN GENERAL.—For purposes of section 38, in 

14 the case of an eligible contractor, the credit determined 

15 under this section for the taxable year is an amount equal 

16 to the aggregate adjusted bases of all energy efficient 

17 property installed in a qualified new energy efficient home 

18 during construction of such home. 

19 ‘‘(b) LIMITATIONS.—

20 ‘‘(1) MAXIMUM CREDIT.—

21 ‘‘(A) IN GENERAL.—The credit allowed by 

22 this section with respect to a dwelling shall not 

23 exceed $2,000. 

24 ‘‘(B) PRIOR CREDIT AMOUNTS ON SAME

25 DWELLING TAKEN INTO ACCOUNT.—If a credit 
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1 was allowed under subsection (a) with respect 

2 to a dwelling in 1 or more prior taxable years, 

3 the amount of the credit otherwise allowable for 

4 the taxable year with respect to that dwelling 

5 shall not exceed the amount of $2,000 reduced 

6 by the sum of the credits allowed under sub7 section (a) with respect to the dwelling for all 

8 prior taxable years. 

9 ‘‘(2) COORDINATION WITH REHABILITATION

10 AND ENERGY CREDITS.—For purposes of this sec11 tion—

12 ‘‘(A) the basis of any property referred to 

13 in subsection (a) shall be reduced by that por14 tion of the basis of any property which is attrib15 utable to qualified rehabilitation expenditures 

16 (as defined in section 47(c)(2)) or to the energy 

17 percentage of energy property (as determined 

18 under section 48(a)), and 

19 ‘‘(B) expenditures taken into account 

20 under either section 47 or 48(a) shall not be 

21 taken into account under this section. 

22 ‘‘(c) DEFINITIONS.—For purposes of this section—

23 ‘‘(1) ELIGIBLE CONTRACTOR.—The term ‘eligi24 ble contractor’ means the person who constructed 

25 the new energy efficient home, or in the case of a 
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1 manufactured home which conforms to Federal 

2 Manufactured Home Construction and Safety Stand3 ards (section 3280 of title 24, Code of Federal Reg4 ulations, as in effect on April 3, 2003), the manufac5 tured home producer of such home. 

6 ‘‘(2) ENERGY EFFICIENT PROPERTY.—The 

7 term ‘energy efficient property’ means any energy 

8 efficient building envelope component, and any en9 ergy efficient heating or cooling appliance. 

10 ‘‘(3) QUALIFIED NEW ENERGY EFFICIENT

11 HOME.—The term ‘qualified new energy efficient 

12 home’ means a dwelling—

13 ‘‘(A) located in the United States, 

14 ‘‘(B) the construction of which is substan15 tially completed after December 31, 2003, 

16 ‘‘(C) the original use of which is as a prin17 cipal residence (within the meaning of section 

18 121) which commences with the person who ac19 quires such dwelling from the eligible con20 tractor, and 

21 ‘‘(D) which is certified to have a level of 

22 annual heating and cooling energy consumption 

23 that is at least 30 percent below the annual 

24 level of heating and cooling energy consumption 

25 of a comparable dwelling constructed in accord-
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1 ance with the standards of the 2000 Inter2 national Energy Conservation Code and to have 

3 building envelope component improvements account for 1 4 ⁄3 of such 30 percent. 

5 ‘‘(4) CONSTRUCTION.—The term ‘construction’ 

6 includes reconstruction and rehabilitation. 

7 ‘‘(5) ACQUIRE.—The term ‘acquire’ includes 

8 purchase and, in the case of reconstruction and re9 habilitation, such term includes a binding written 

10 contract for such reconstruction or rehabilitation. 

11 ‘‘(6) BUILDING ENVELOPE COMPONENT.—The 

12 term ‘building envelope component’ means insulation 

13 material or system which is specifically and pri14 marily designed to reduce the heat loss or gain of a 

15 dwelling when installed in or on such dwelling, exte16 rior windows (including skylights) and doors, and 

17 metal roofs with appropriate pigmented coatings 

18 which are specifically and primarily designed to re19 duce the heat gain of a dwelling when installed in 

20 or on such dwelling. 

21 ‘‘(7) MANUFACTURED HOME INCLUDED.—The 

22 term ‘dwelling’ includes a manufactured home con23 forming to Federal Manufactured Home Construc24 tion and Safety Standards (section 3280 of title 24, 
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1 Code of Federal Regulations, as in effect on April 3, 

2 2003). 

3 ‘‘(d) CERTIFICATION.—

4 ‘‘(1) METHOD.—A certification described in 

5 subsection (c)(3)(D) shall be determined on the 

6 basis of one of the following methods: 

7 ‘‘(A) The technical specifications or appli8 cable ratings (including product labeling re9 quirements) for the measurement of energy effi10 ciency for the energy efficient building envelope 

11 component or energy efficient heating or cooling 

12 appliance, based upon energy use or building 

13 envelope component performance. 

14 ‘‘(B) An energy performance measurement 

15 method that utilizes computer software ap16 proved by organizations designated by the Sec17 retary. 

18 ‘‘(2) PROVIDER.—Such certification shall be 

19 provided by—

20 ‘‘(A) in the case of a method described in 

21 paragraph (1)(A), a local building regulatory 

22 authority, a utility, a manufactured home pro23 duction inspection primary inspection agency 

24 (IPIA), or an accredited home energy rating 

25 systems provider who is accredited by, or other-
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1 wise authorized to use, approved energy per2 formance measurement methods by the Home 

3 Energy Ratings Systems Council or the Na4 tional Association of State Energy Officials, or 

5 ‘‘(B) in the case of a method described in 

6 paragraph (1)(B), an individual recognized by 

7 an organization designated by the Secretary for 

8 such purposes. 

9 ‘‘(3) FORM.—Such certification shall be made 

10 in writing in a manner that specifies in readily 

11 verifiable fashion the energy efficient building enve12 lope components and energy efficient heating or 

13 cooling appliances installed and their respective en14 ergy efficiency levels, and in the case of a method 

15 described in subparagraph (B) of paragraph (1), ac16 companied by written analysis documenting the 

17 proper application of a permissible energy perform18 ance measurement method to the specific cir19 cumstances of such dwelling. 

20 ‘‘(4) REGULATIONS.—

21 ‘‘(A) IN GENERAL.—In prescribing regula22 tions under this subsection for energy perform23 ance measurement methods, the Secretary shall 

24 prescribe procedures for calculating annual en25 ergy costs for heating and cooling and cost sav-
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1 ings and for the reporting of the results. Such 

2 regulations shall—

3 ‘‘(i) be based on the National Home 

4 Energy Rating Technical Guidelines of the 

5 National Association of State Energy Offi6 cials, the Home Energy Rating Guidelines 

7 of the Home Energy Rating Systems 

8 Council, or the modified 2001 California 

9 Residential ACM manual, 

10 ‘‘(ii) provide that any calculation pro11 cedures be developed such that the same 

12 energy efficiency measures allow a home to 

13 qualify for the credit under this section re14 gardless of whether the house uses a gas 

15 or oil furnace or boiler or an electric heat 

16 pump, and 

17 ‘‘(iii) require that any computer soft18 ware allow for the printing of the Federal 

19 tax forms necessary for the credit under 

20 this section and explanations for the home21 buyer of the energy efficient features that 

22 were used to comply with the requirements 

23 of this section. 

24 ‘‘(B) PROVIDERS.—For purposes of para25 graph (2)(B), the Secretary shall establish re-
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1 quirements for the designation of individuals 

2 based on the requirements for energy consult3 ants and home energy raters specified by the 

4 National Association of State Energy Officials. 

5 ‘‘(e) BASIS ADJUSTMENT.—For purposes of this sub6 title, if a credit is determined under this section for any 

7 expenditure with respect to any property, the increase in 

8 the basis of such property which would (but for this sub9 section) result from such expenditure shall be reduced by 

10 the amount of the credit so determined. 

11 ‘‘(f) APPLICATION OF SECTION.—Subsection (a) shall 

12 apply to dwellings purchased during the period beginning 

13 on January 1, 2004, and ending on December 31, 2006.’’. 

14 (b) CREDIT MADE PART OF GENERAL BUSINESS

15 CREDIT.—Subsection (b) of section 38 (relating to current 

16 year business credit) is amended by striking ‘‘plus’’ at the 

17 end of paragraph (14), by striking the period at the end 

18 of paragraph (15) and inserting ‘‘, plus’’, and by adding 

19 at the end thereof the following new paragraph: 

20 ‘‘(16) the new energy efficient home credit de21 termined under section 45G.’’. 

22 (c) DENIAL OF DOUBLE BENEFIT.—Section 280C 

23 (relating to certain expenses for which credits are allow24 able) is amended by adding at the end thereof the fol25 lowing new subsection: 
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1 ‘‘(d) NEW ENERGY EFFICIENT HOME EXPENSES.—

2 No deduction shall be allowed for that portion of expenses 

3 for a new energy efficient home otherwise allowable as a 

4 deduction for the taxable year which is equal to the 

5 amount of the credit determined for such taxable year 

6 under section 45G.’’. 

7 (d) LIMITATION ON CARRYBACK.—Subsection (d) of 

8 section 39 is amended by adding at the end the following 

9 new paragraph: 

10 ‘‘(11) NO CARRYBACK OF NEW ENERGY EFFI11 CIENT HOME CREDIT BEFORE EFFECTIVE DATE.—

12 No portion of the unused business credit for any 

13 taxable year which is attributable to the credit deter14 mined under section 45G may be carried back to any 

15 taxable year ending before January 1, 2004.’’. 

16 (e) DEDUCTION FOR CERTAIN UNUSED BUSINESS

17 CREDITS.—Subsection (c) of section 196 is amended by 

18 striking ‘‘and’’ at the end of paragraph (9), by striking 

19 the period at the end of paragraph (10) and inserting ‘‘, 

20 and’’, and by adding after paragraph (10) the following 

21 new paragraph: 

22 ‘‘(11) the new energy efficient home credit de23 termined under section 45G.’’. 

24 (f) CLERICAL AMENDMENT.—The table of sections 

25 for subpart D of part IV of subchapter A of chapter 1 
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1 is amended by inserting after the item relating to section 

2 45F the following new item:

‘‘Sec. 45G. New energy efficient home credit.’’.

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

4 this section shall apply to taxable years ending after De5 cember 31, 2003. 

6 SEC. 41006. ENERGY CREDIT FOR COMBINED HEAT AND 

7 POWER SYSTEM PROPERTY. 

8 (a) IN GENERAL.—Subparagraph (A) of section 

9 48(a)(3) (defining energy property) is amended by strik10 ing ‘‘or’’ at the end of clause (ii), by adding ‘‘or’’ at the 

11 end of clause (iii), and by inserting after clause (iii) the 

12 following new clause: 

13 ‘‘(iv) combined heat and power system 

14 property,’’. 

15 (b) COMBINED HEAT AND POWER SYSTEM PROP16 ERTY.—Subsection (a) of section 48 is amended by redes17 ignating paragraphs (5) and (6) as paragraphs (6) and 

18 (7), respectively, and by inserting after paragraph (4) the 

19 following new paragraph: 

20 ‘‘(5) COMBINED HEAT AND POWER SYSTEM

21 PROPERTY.—For purposes of this subsection—

22 ‘‘(A) COMBINED HEAT AND POWER SYS23 TEM PROPERTY.—The term ‘combined heat and 

24 power system property’ means property com25 prising a system—
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1 ‘‘(i) which uses the same energy 

2 source for the simultaneous or sequential 

3 generation of electrical power, mechanical 

4 shaft power, or both, in combination with 

5 the generation of steam or other forms of 

6 useful thermal energy (including heating 

7 and cooling applications), 

8 ‘‘(ii) which has an electrical capacity 

9 of more than 50 kilowatts or a mechanical 

10 energy capacity of more than 67 horse11 power or an equivalent combination of elec12 trical and mechanical energy capacities, 

13 ‘‘(iii) which produces—

14 ‘‘(I) at least 20 percent of its 

15 total useful energy in the form of 

16 thermal energy, and 

17 ‘‘(II) at least 20 percent of its 

18 total useful energy in the form of elec19 trical or mechanical power (or com20 bination thereof), 

21 ‘‘(iv) the energy efficiency percentage 

22 of which exceeds 60 percent (70 percent in 

23 the case of a system with an electrical ca24 pacity in excess of 50 megawatts or a me25 chanical energy capacity in excess of 
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1 67,000 horsepower, or an equivalent com2 bination of electrical and mechanical en3 ergy capacities), and 

4 ‘‘(v) which is placed in service after 

5 December 31, 2003, and before January 1, 

6 2007. 

7 ‘‘(B) SPECIAL RULES.—

8 ‘‘(i) ENERGY EFFICIENCY PERCENT9 AGE.—For purposes of subparagraph 

10 (A)(iv), the energy efficiency percentage of 

11 a system is the fraction—

12 ‘‘(I) the numerator of which is 

13 the total useful electrical, thermal, 

14 and mechanical power produced by 

15 the system at normal operating rates, 

16 and 

17 ‘‘(II) the denominator of which is 

18 the lower heating value of the primary 

19 fuel source for the system. 

20 ‘‘(ii) DETERMINATIONS MADE ON BTU

21 BASIS.—The energy efficiency percentage 

22 and the percentages under subparagraph 

23 (A)(iii) shall be determined on a Btu basis. 

24 ‘‘(iii) INPUT AND OUTPUT PROPERTY

25 NOT INCLUDED.—The term ‘combined heat 
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1 and power system property’ does not in2 clude property used to transport the en3 ergy source to the facility or to distribute 

4 energy produced by the facility. 

5 ‘‘(iv) PUBLIC UTILITY PROPERTY.—

6 ‘‘(I) ACCOUNTING RULE FOR

7 PUBLIC UTILITY PROPERTY.—If the 

8 combined heat and power system 

9 property is public utility property (as 

10 defined in section 168(i)(1)), the tax11 payer may only claim the credit under 

12 the subsection if, with respect to such 

13 property, the taxpayer uses a normal14 ization method of accounting. 

15 ‘‘(II) CERTAIN EXCEPTION NOT

16 TO APPLY.—The matter in paragraph 

17 (3) which follows subparagraph (D) 

18 shall not apply to combined heat and 

19 power system property. 

20 ‘‘(C) EXTENSION OF DEPRECIATION RE21 COVERY PERIOD.—If a taxpayer is allowed cred22 it under this section for combined heat and 

23 power system property and such property would 

24 (but for this subparagraph) have a class life of 

25 15 years or less under section 168, such prop-
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1 erty shall be treated as having a 22-year class 

2 life for purposes of section 168.’’. 

3 (c) NO CARRYBACK OF ENERGY CREDIT BEFORE

4 EFFECTIVE DATE.—Subsection (d) of section 39 is 

5 amended by adding at the end the following new para6 graph: 

7 ‘‘(12) NO CARRYBACK OF ENERGY CREDIT BE8 FORE EFFECTIVE DATE.—No portion of the unused 

9 business credit for any taxable year which is attrib10 utable to the energy credit with respect to property 

11 described in section 48(a)(5) may be carried back to 

12 a taxable year ending before January 1, 2004.’’. 

13 (d) EFFECTIVE DATE.—The amendments made by 

14 this section shall apply to property placed in service after 

15 December 31, 2003, in taxable years ending after such 

16 date. 

17 SEC. 41007. NEW NONREFUNDABLE PERSONAL CREDITS AL18 LOWED AGAINST REGULAR AND MINIMUM 

19 TAXES. 

20 (a) IN GENERAL.—

21 (1) SECTION 25C.—Section 25C(b), as added 

22 by section 41001, is amended by adding at the end 

23 the following new paragraph: 
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1 ‘‘(3) LIMITATION BASED ON AMOUNT OF

2 TAX.—The credit allowed under subsection (a) for 

3 the taxable year shall not exceed the excess of—

4 ‘‘(A) the sum of the regular tax liability 

5 (as defined in section 26(b)) plus the tax im6 posed by section 55, over 

7 ‘‘(B) the sum of the credits allowable 

8 under this subpart (other than this section and 

9 section 25D and 25E) and section 27 for the 

10 taxable year.’’. 

11 (2) SECTION 25D.—Section 25D(b), as added 

12 by section 103, is amended to read as follows: 

13 ‘‘(b) LIMITATIONS.—

14 ‘‘(1) IN GENERAL.—The credit allowed under 

15 subsection (a) with respect to any qualified fuel cell 

16 power plant for any taxable year shall not exceed—

‘‘(A) $500 for each 1 17 ⁄2 kilowatt of capacity 

18 of the power plant, reduced by 

19 ‘‘(B) the aggregate energy credits allowed 

20 with respect to such power plant for all prior 

21 taxable years. 

22 ‘‘(2) LIMITATION BASED ON AMOUNT OF

23 TAX.—The credit allowed under subsection (a) for 

24 the taxable year shall not exceed the excess of—
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1 ‘‘(A) the sum of the regular tax liability 

2 (as defined in section 26(b)) plus the tax im3 posed by section 55, over 

4 ‘‘(B) the sum of the credits allowable 

5 under this subpart (other than this section and 

6 section 25E) and section 27 for the taxable 

7 year.’’. 

8 (3) SECTION 25E.—Section 25E(b), as added 

9 by section 41004, is amended by adding at the end 

10 the following new paragraph: 

11 ‘‘(3) LIMITATION BASED ON AMOUNT OF

12 TAX.—The credit allowed under subsection (a) for 

13 the taxable year shall not exceed the excess of—

14 ‘‘(A) the sum of the regular tax liability 

15 (as defined in section 26(b)) plus the tax im16 posed by section 55, over 

17 ‘‘(B) the sum of the credits allowable 

18 under this subpart (other than this section) and 

19 section 27 for the taxable year.’’. 

20 (b) CONFORMING AMENDMENTS.—

21 (1) Section 23(b)(4)(B) is amended by inserting 

22 ‘‘and sections 25C, 25D, and 25E’’ after ‘‘this sec23 tion’’. 
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1 (2) Section 24(b)(3)(B) is amended by striking 

2 ‘‘and 25B’’ and inserting ‘‘, 25B, 25C, 25D, and 

3 25E’’. 

4 (3) Section 25(e)(1)(C) is amended by inserting 

5 ‘‘25C, 25D, and 25E’’ after ‘‘25B,’’. 

6 (4) Section 25B(g)(2) is amended by striking 

7 ‘‘section 23’’ and inserting ‘‘sections 23, 25C, 25D, 

8 and 25E’’. 

9 (5) Section 25E(c), as added by section 41004, 

10 is amended by striking ‘‘section 26(a) for such tax11 able year reduced by the sum of the credits allowable 

12 under this subpart (other than this section)’’ and in13 serting ‘‘subsection (b)(3)’’. 

14 (6) Section 26(a)(1) is amended by striking 

15 ‘‘and 25B’’ and inserting ‘‘25B, 25C, 25D, and 

16 25E’’. 

17 (7) Section 904(h) is amended by striking ‘‘and 

18 25B’’ and inserting ‘‘25B, 25C, 25D, and 25E’’. 

19 (8) Section 1400C(d) is amended by striking 

20 ‘‘and 25B’’ and inserting ‘‘25B, 25C, 25D, and 

21 25E’’. 

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

23 this section shall apply to taxable years beginning after 

24 December 31, 2003. 
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1 SEC. 41008. REPEAL OF 4.3-CENT MOTOR FUEL EXCISE 

2 TAXES ON RAILROADS AND INLAND WATER3 WAY TRANSPORTATION WHICH REMAIN IN 

4 GENERAL FUND. 

5 (a) TAXES ON TRAINS.—

6 (1) IN GENERAL.—Subparagraph (A) of section 

7 4041(a)(1) is amended by striking ‘‘or a diesel-pow8 ered train’’ each place it appears and by striking ‘‘or 

9 train’’. 

10 (2) CONFORMING AMENDMENTS.—

11 (A) Subparagraph (C) of section 

12 4041(a)(1) is amended by striking clause (ii) 

13 and by redesignating clause (iii) as clause (ii). 

14 (B) Subparagraph (C) of section 

15 4041(b)(1) is amended by striking all that fol16 lows ‘‘section 6421(e)(2)’’ and inserting a pe17 riod. 

18 (C) Subsection (d) of section 4041 is 

19 amended by redesignating paragraph (3) as 

20 paragraph (4) and by inserting after paragraph 

21 (2) the following new paragraph: 

22 ‘‘(3) DIESEL FUEL USED IN TRAINS.—There is 

23 hereby imposed a tax of 0.1 cent per gallon on any 

24 liquid other than gasoline (as defined in section 

25 4083)—
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1 ‘‘(A) sold by any person to an owner, les2 see, or other operator of a diesel-powered train 

3 for use as a fuel in such train, or 

4 ‘‘(B) used by any person as a fuel in a die5 sel-powered train unless there was a taxable 

6 sale of such fuel under subparagraph (A). 

7 No tax shall be imposed by this paragraph on the 

8 sale or use of any liquid if tax was imposed on such 

9 liquid under section 4081.’’

10 (D) Subsection (f) of section 4082 is 

11 amended by striking ‘‘section 4041(a)(1)’’ and 

12 inserting ‘‘subsections (d)(3) and (a)(1) of sec13 tion 4041, respectively’’. 

14 (E) Paragraph (3) of section 4083(a) is 

15 amended by striking ‘‘or a diesel-powered 

16 train’’. 

17 (F) Paragraph (3) of section 6421(f) is 

18 amended to read as follows: 

19 ‘‘(3) GASOLINE USED IN TRAINS.—In the case 

20 of gasoline used as a fuel in a train, this section 

21 shall not apply with respect to the Leaking Under22 ground Storage Tank Trust Fund financing rate 

23 under section 4081.’’

24 (G) Paragraph (3) of section 6427(l) is 

25 amended to read as follows: 
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1 ‘‘(3) REFUND OF CERTAIN TAXES ON FUEL

2 USED IN DIESEL-POWERED TRAINS.—For purposes 

3 of this subsection, the term ‘nontaxable use’ includes 

4 fuel used in a diesel-powered train. The preceding 

5 sentence shall not apply to the tax imposed by sec6 tion 4041(d) and the Leaking Underground Storage 

7 Tank Trust Fund financing rate under section 4081 

8 except with respect to fuel sold for exclusive use by 

9 a State or any political subdivision thereof.’’

10 (b) FUEL USED ON INLAND WATERWAYS.—

11 (1) IN GENERAL.—Paragraph (1) of section 

12 4042(b) is amended by adding ‘‘and’’ at the end of 

13 subparagraph (A), by striking ‘‘, and’’ at the end of 

14 subparagraph (B) and inserting a period, and by 

15 striking subparagraph (C). 

16 (2) CONFORMING AMENDMENT.—Paragraph (2) 

17 of section 4042(b) is amended by striking subpara18 graph (C). 

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

20 this section shall take effect on January 1, 2004. 

21 SEC. 41009. REDUCED MOTOR FUEL EXCISE TAX ON CER22 TAIN MIXTURES OF DIESEL FUEL. 

23 (a) IN GENERAL.—Paragraph (2) of section 4081(a) 

24 is amended by adding at the end the following: 
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1 ‘‘(C) DIESEL-WATER FUEL EMULSION.—In 

2 the case of diesel-water fuel emulsion at least 

3 14 percent of which is water and with respect 

4 to which the emulsion additive is registered by 

5 a United States manufacturer with the Envi6 ronmental Protection Agency pursuant to sec7 tion 211 of the Clean Air Act (as in effect on 

8 March 31, 2003), subparagraph (A)(iii) shall be 

9 applied by substituting ‘19.7 cents’ for ‘24.3 

10 cents’.’’. 

11 (b) SPECIAL RULES FOR DIESEL-WATER FUEL

12 EMULSIONS.—

13 (1) REFUNDS FOR TAX-PAID PURCHASES.—Sec14 tion 6427 is amended by redesignating subsections 

15 (m) through (p) as subsections (n) through (q), re16 spectively, and by inserting after subsection (l) the 

17 following new subsection: 

18 ‘‘(m) DIESEL FUEL USED TO PRODUCE EMUL19 SION.—

20 ‘‘(1) IN GENERAL.—Except as provided in sub21 section (k), if any diesel fuel on which tax was im22 posed by section 4081 at the regular tax rate is used 

23 by any person in producing an emulsion described in 

24 section 4081(a)(2)(C) which is sold or used in such 

25 person’s trade or business, the Secretary shall pay 
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1 (without interest) to such person an amount equal to 

2 the excess of the regular tax rate over the incentive 

3 tax rate with respect to such fuel. 

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

5 (1)—

6 ‘‘(A) REGULAR TAX RATE.—The term ‘reg7 ular tax rate’ means the aggregate rate of tax 

8 imposed by section 4081 determined without re9 gard to section 4081(a)(2)(C). 

10 ‘‘(B) INCENTIVE TAX RATE.—The term 

11 ‘incentive tax rate’ means the aggregate rate of 

12 tax imposed by section 4081 determined with 

13 regard to section 4081(a)(2)(C).’’. 

14 (2) LATER SEPARATION OF FUEL.—

15 (A) IN GENERAL.—Section 4081 (relating 

16 to imposition of tax) is amended by redesig17 nating subsections (d) and (e) as subsections 

18 (e) and (f), respectively, and by inserting after 

19 subsection (c) the following new subsection: 

20 ‘‘(d) LATER SEPARATION OF FUEL FROM DIESEL21 WATER FUEL EMULSION.—If any person separates the 

22 taxable fuel from a diesel-water fuel emulsion on which 

23 tax was imposed under subsection (a) at a rate determined 

24 under subsection (a)(2)(C) (or with respect to which a 

25 credit or payment was allowed or made by reason of sec-
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1 tion 6427), such person shall be treated as the refiner of 

2 such taxable fuel. The amount of tax imposed on any re3 moval of such fuel by such person shall be reduced by the 

4 amount of tax imposed (and not credited or refunded) on 

5 any prior removal or entry of such fuel.’’. 

6 (B) CONFORMING AMENDMENT.—Sub7 section (d) of section 6416 is amended by strik8 ing ‘‘section 4081(e)’’ and inserting ‘‘section 

9 4081(f)’’. 

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

11 this section shall take effect on October 1, 2003. 

12 SEC. 41010. REPEAL OF PHASEOUTS FOR QUALIFIED ELEC13 TRIC VEHICLE CREDIT AND DEDUCTION FOR 

14 CLEAN FUEL-VEHICLES. 

15 (a) CREDIT FOR QUALIFIED ELECTRIC VEHICLES.—

16 Subsection (b) of section 30 (relating to limitations) is 

17 amended by striking paragraph (2) and redesignating 

18 paragraph (3) as paragraph (2). 

19 (b) DEDUCTION FOR CLEAN-FUEL VEHICLES AND

20 CERTAIN REFUELING PROPERTY.—Paragraph (1) of sec21 tion 179A(b) (relating to qualified clean-fuel vehicle prop22 erty) is amended to read as follows: 

23 ‘‘(1) QUALIFIED CLEAN-FUEL VEHICLE PROP24 ERTY.— The cost which may be taken into account 
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1 under subsection (a)(1)(A) with respect to any 

2 motor vehicle shall not exceed— 

3 ‘‘(A) in the case of a motor vehicle not de4 scribed in subparagraph (B) or (C), $2,000, 

5 ‘‘(B) in the case of any truck or van with 

6 a gross vehicle weight rating greater than 

7 10,000 pounds but not greater than 26,000 

8 pounds, $5,000, or 

9 ‘‘(C) $50,000 in the case of— 

10 ‘‘(i) a truck or van with a gross vehi11 cle weight rating greater than 26,000 

12 pounds, or 

13 ‘‘(ii) any bus which has a seating ca14 pacity of at least 20 adults (not including 

15 the driver).’’. 

16 SEC. 41011. ALTERNATIVE MOTOR VEHICLE CREDIT. 

17 (a) IN GENERAL.—Subpart B of part IV of sub18 chapter A of chapter 1 (relating to foreign tax credit, etc.) 

19 is amended by adding at the end the following: 

20 ‘‘SEC. 30B. ALTERNATIVE MOTOR VEHICLE CREDIT. 

21 ‘‘(a) ALLOWANCE OF CREDIT.—There shall be al22 lowed as a credit against the tax imposed by this chapter 

23 for the taxable year an amount equal to the sum of—

24 ‘‘(1) the new qualified fuel cell motor vehicle 

25 credit determined under subsection (b), and 
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1 ‘‘(2) the advanced lean burn technology motor 

2 vehicle credit determined under subsection (c). 

3 ‘‘(b) NEW QUALIFIED FUEL CELL MOTOR VEHICLE

4 CREDIT.—

5 ‘‘(1) IN GENERAL.—For purposes of subsection 

6 (a), the new qualified fuel cell motor vehicle credit 

7 determined under this subsection with respect to a 

8 new qualified fuel cell motor vehicle placed in service 

9 by the taxpayer during the taxable year is—

10 ‘‘(A) $4,000, if such vehicle has a gross ve11 hicle weight rating of not more than 8,500 

12 pounds, 

13 ‘‘(B) $10,000, if such vehicle has a gross 

14 vehicle weight rating of more than 8,500 

15 pounds but not more than 14,000 pounds, 

16 ‘‘(C) $20,000, if such vehicle has a gross 

17 vehicle weight rating of more than 14,000 

18 pounds but not more than 26,000 pounds, and 

19 ‘‘(D) $40,000, if such vehicle has a gross 

20 vehicle weight rating of more than 26,000 

21 pounds. 

22 ‘‘(2) INCREASE FOR FUEL EFFICIENCY.—

23 ‘‘(A) IN GENERAL.—The amount deter24 mined under paragraph (1)(A) with respect to 

25 a new qualified fuel cell motor vehicle which is 
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1 a passenger automobile or light truck shall be 

2 increased by—

3 ‘‘(i) $1,000, if such vehicle achieves at 

4 least 150 percent but less than 175 per5 cent of the 2000 model year city fuel econ6 omy, 

7 ‘‘(ii) $1,500, if such vehicle achieves 

8 at least 175 percent but less than 200 per9 cent of the 2000 model year city fuel econ10 omy, 

11 ‘‘(iii) $2,000, if such vehicle achieves 

12 at least 200 percent but less than 225 per13 cent of the 2000 model year city fuel econ14 omy, 

15 ‘‘(iv) $2,500, if such vehicle achieves 

16 at least 225 percent but less than 250 per17 cent of the 2000 model year city fuel econ18 omy, 

19 ‘‘(v) $3,000, if such vehicle achieves 

20 at least 250 percent but less than 275 per21 cent of the 2000 model year city fuel econ22 omy, 

23 ‘‘(vi) $3,500, if such vehicle achieves 

24 at least 275 percent but less than 300 per-
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1 cent of the 2000 model year city fuel econ2 omy, and 

3 ‘‘(vii) $4,000, if such vehicle achieves 

4 at least 300 percent of the 2000 model 

5 year city fuel economy. 

6 ‘‘(B) 2000 MODEL YEAR CITY FUEL ECON7 OMY.—For purposes of subparagraph (A), the 

8 2000 model year city fuel economy with respect 

9 to a vehicle shall be determined in accordance 

10 with the following tables: 

11 ‘‘(i) In the case of a passenger auto12 mobile:

‘‘If vehicle inertia weight 

class is: 

The 2000 model year city fuel 

economy is: 

1,500 or 1,750 lbs .................................................................... 43.7 mpg

2,000 lbs .................................................................................. 38.3 mpg

2,250 lbs .................................................................................. 34.1 mpg

2,500 lbs .................................................................................. 30.7 mpg

2,750 lbs .................................................................................. 27.9 mpg

3,000 lbs .................................................................................. 25.6 mpg

3,500 lbs .................................................................................. 22.0 mpg

4,000 lbs .................................................................................. 19.3 mpg

4,500 lbs .................................................................................. 17.2 mpg

5,000 lbs .................................................................................. 15.5 mpg

5,500 lbs .................................................................................. 14.1 mpg

6,000 lbs .................................................................................. 12.9 mpg

6,500 lbs .................................................................................. 11.9 mpg

7,000 or 8,500 lbs .................................................................... 11.1 mpg.

13 ‘‘(ii) In the case of a light truck:

‘‘If vehicle inertia weight 

class is: 

The 2000 model year city fuel 

economy is: 

1,500 or 1,750 lbs .................................................................... 37.6 mpg

2,000 lbs .................................................................................. 33.7 mpg

2,250 lbs .................................................................................. 30.6 mpg

2,500 lbs .................................................................................. 28.0 mpg

2,750 lbs .................................................................................. 25.9 mpg

3,000 lbs .................................................................................. 24.1 mpg

3,500 lbs .................................................................................. 21.3 mpg

4,000 lbs .................................................................................. 19.0 mpg
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‘‘If vehicle inertia weight 

class is: 

The 2000 model year city fuel 

economy is: 

4,500 lbs .................................................................................. 17.3 mpg

5,000 lbs .................................................................................. 15.8 mpg

5,500 lbs .................................................................................. 14.6 mpg

6,000 lbs .................................................................................. 13.6 mpg

6,500 lbs .................................................................................. 12.8 mpg

7,000 or 8,500 lbs .................................................................... 12.0 mpg.

1 ‘‘(C) VEHICLE INERTIA WEIGHT CLASS.—

2 For purposes of subparagraph (B), the term 

3 ‘vehicle inertia weight class’ has the same 

4 meaning as when defined in regulations pre5 scribed by the Administrator of the Environ6 mental Protection Agency for purposes of the 

7 administration of title II of the Clean Air Act 

8 (42 U.S.C. 7521 et seq.). 

9 ‘‘(3) NEW QUALIFIED FUEL CELL MOTOR VEHI10 CLE.—For purposes of this subsection, the term 

11 ‘new qualified fuel cell motor vehicle’ means a motor 

12 vehicle—

13 ‘‘(A) which is propelled by power derived 

14 from one or more cells which convert chemical 

15 energy directly into electricity by combining ox16 ygen with hydrogen fuel which is stored on 

17 board the vehicle in any form and may or may 

18 not require reformation prior to use, 

19 ‘‘(B) which, in the case of a passenger 

20 automobile or light truck—
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1 ‘‘(i) for 2004 and later model vehicles, 

2 has received a certificate of conformity 

3 under the Clean Air Act and meets or ex4 ceeds the equivalent qualifying California 

5 low emission vehicle standard under sec6 tion 243(e)(2) of the Clean Air Act for 

7 that make and model year, and 

8 ‘‘(ii) for 2004 and later model vehi9 cles, has received a certificate that such ve10 hicle meets or exceeds the Bin 5 Tier II 

11 emission level established in regulations 

12 prescribed by the Administrator of the En13 vironmental Protection Agency under sec14 tion 202(i) of the Clean Air Act for that 

15 make and model year vehicle, 

16 ‘‘(C) the original use of which commences 

17 with the taxpayer, 

18 ‘‘(D) which is acquired for use or lease by 

19 the taxpayer and not for resale, and 

20 ‘‘(E) which is made by a manufacturer. 

21 ‘‘(c) ADVANCED LEAN BURN TECHNOLOGY MOTOR

22 VEHICLE CREDIT.—

23 ‘‘(1) IN GENERAL.—For purposes of subsection 

24 (a), the advanced lean burn technology motor vehicle 

25 credit determined under this subsection with respect 
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1 to a new qualified advanced lean burn technology 

2 motor vehicle placed in service by the taxpayer dur3 ing the taxable year is the credit amount determined 

4 under paragraph (2). 

5 ‘‘(2) CREDIT AMOUNT.—

6 ‘‘(A) INCREASE FOR FUEL EFFICIENCY.—

7 The credit amount determined under this para8 graph shall be—

9 ‘‘(i) $500, if such vehicle achieves at 

10 least 125 percent but less than 150 per11 cent of the 2000 model year city fuel econ12 omy, 

13 ‘‘(ii) $1,000, if such vehicle achieves 

14 at least 150 percent but less than 175 per15 cent of the 2000 model year city fuel econ16 omy, 

17 ‘‘(iii) $1,500, if such vehicle achieves 

18 at least 175 percent but less than 200 per19 cent of the 2000 model year city fuel econ20 omy, 

21 ‘‘(iv) $2,000, if such vehicle achieves 

22 at least 200 percent but less than 225 per23 cent of the 2000 model year city fuel econ24 omy, 
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1 ‘‘(v) $2,500, if such vehicle achieves 

2 at least 225 percent but less than 250 per3 cent of the 2000 model year city fuel econ4 omy, and 

5 ‘‘(vi) $3,000, if such vehicle achieves 

6 at least 250 percent of the 2000 model 

7 year city fuel economy. 

8 For purposes of clause (i), the 2000 model year 

9 city fuel economy with respect to a vehicle shall 

10 be determined using the tables provided in sub11 section (b)(2)(B) with respect to such vehicle. 

12 ‘‘(B) CONSERVATION CREDIT.—The 

13 amount determined under subparagraph (A) 

14 with respect to an advanced lean burn tech15 nology motor vehicle shall be increased by—

16 ‘‘(i) $250, if such vehicle achieves a 

17 lifetime fuel savings of at least 1,500 gal18 lons of gasoline, and 

19 ‘‘(ii) $500, if such vehicle achieves a 

20 lifetime fuel savings of at least 2,500 gal21 lons of gasoline. 

22 ‘‘(C) OPTION TO USE LIKE VEHICLE.—At 

23 the option of the vehicle manufacturer, the in24 crease for fuel efficiency and conservation credit 

25 may be calculated by comparing the new ad-
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1 vanced lean-burn technology motor vehicle to a 

2 like vehicle. 

3 ‘‘(3) DEFINITIONS.—For purposes of this sub4 section—

5 ‘‘(A) ADVANCED LEAN BURN TECHNOLOGY

6 MOTOR VEHICLE.—The term ‘advanced lean 

7 burn technology motor vehicle’ means a motor 

8 vehicle with an internal combustion engine 

9 that—

10 ‘‘(i) is designed to operate primarily 

11 using more air than is necessary for com12 plete combustion of the fuel, 

13 ‘‘(ii) incorporates direct injection, 

14 ‘‘(iii) achieves at least 125 percent of 

15 the 2000 model year city fuel economy, 

16 and 

17 ‘‘(iv) for 2004 and later model vehi18 cles, has received a certificate that such ve19 hicle meets or exceeds the Bin 8 Tier II 

20 emission level established in regulations 

21 prescribed by the Administrator of the En22 vironmental Protection Agency under sec23 tion 202(i) of the Clean Air Act for that 

24 make and model year vehicle. 
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1 ‘‘(B) LIKE VEHICLE.—The term ‘like vehi2 cle’ for an advanced lean burn technology motor 

3 vehicle derived from a conventional production 

4 vehicle produced in the same model year means 

5 a model that is equivalent in the following 

6 areas: 

7 ‘‘(i) Body style (2-door or 4-door). 

8 ‘‘(ii) Transmission (automatic or man9 ual). 

10 ‘‘(iii) Acceleration performance (±

11 0.05 seconds). 

12 ‘‘(iv) Drivetrain (2-wheel drive or 4-

13 wheel drive). 

14 ‘‘(v) Certification by the Adminis15 trator of the Environmental Protection 

16 Agency. 

17 ‘‘(C) LIFETIME FUEL SAVINGS.—The term 

18 ‘lifetime fuel savings’ shall be calculated by di19 viding 120,000 by the difference between the 

20 2000 model year city fuel economy for the vehi21 cle inertia weight class and the city fuel econ22 omy for the new qualified hybrid motor vehicle. 

23 ‘‘(d) LIMITATION BASED ON AMOUNT OF TAX.—The 

24 credit allowed under subsection (a) for the taxable year 

25 shall not exceed the excess of—
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1 ‘‘(1) the sum of the regular tax liability (as de2 fined in section 26(b)) plus the tax imposed by sec3 tion 55, over 

4 ‘‘(2) the sum of the credits allowable under sub5 part A and sections 27, 29, and 30A for the taxable 

6 year. 

7 ‘‘(e) OTHER DEFINITIONS AND SPECIAL RULES.—

8 For purposes of this section—

9 ‘‘(1) CONSUMABLE FUEL.—The term 

10 ‘consumable fuel’ means any solid, liquid, or gaseous 

11 matter which releases energy when consumed by an 

12 auxiliary power unit. 

13 ‘‘(2) MOTOR VEHICLE.—The term ‘motor vehi14 cle’ has the meaning given such term by section 

15 30(c)(2). 

16 ‘‘(3) 2000 MODEL YEAR CITY FUEL ECON17 OMY.—The 2000 model year city fuel economy with 

18 respect to any vehicle shall be measured under rules 

19 similar to the rules under section 4064(c). 

20 ‘‘(4) OTHER TERMS.—The terms ‘automobile’, 

21 ‘passenger automobile’, ‘light truck’, and ‘manufac22 turer’ have the meanings given such terms in regula23 tions prescribed by the Administrator of the Envi24 ronmental Protection Agency for purposes of the ad-
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1 ministration of title II of the Clean Air Act (42 

2 U.S.C. 7521 et seq.). 

3 ‘‘(5) REDUCTION IN BASIS.—For purposes of 

4 this subtitle, if a credit is allowed under this section 

5 for any expenditure with respect to any property, the 

6 increase in the basis of such property which would 

7 (but for this paragraph) result from such expendi8 ture shall be reduced by the amount of the credit so 

9 allowed. 

10 ‘‘(6) NO DOUBLE BENEFIT.—The amount of 

11 any deduction or credit allowable under this chapter 

12 (other than the credit allowable under this section), 

13 with respect to a vehicle described under subsection 

14 (b), shall be reduced by the amount of credit allowed 

15 under subsection (a) for such vehicle for the taxable 

16 year. 

17 ‘‘(7) PROPERTY USED BY TAX-EXEMPT ENTI18 TIES.—In the case of a credit amount which is al19 lowable with respect to a motor vehicle which is ac20 quired by an entity exempt from tax under this 

21 chapter, the person which sells or leases such vehicle 

22 to the entity shall be treated as the taxpayer with 

23 respect to the vehicle for purposes of this section 

24 and the credit shall be allowed to such person, but 

25 only if the person clearly discloses to the entity in 
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1 any sale or lease document the specific amount of 

2 any credit otherwise allowable to the entity under 

3 this section. 

4 ‘‘(8) RECAPTURE.—The Secretary shall, by reg5 ulations, provide for recapturing the benefit of any 

6 credit allowable under subsection (a) with respect to 

7 any property which ceases to be property eligible for 

8 such credit (including recapture in the case of a 

9 lease period of less than the economic life of a vehi10 cle). 

11 ‘‘(9) PROPERTY USED OUTSIDE UNITED

12 STATES, ETC., NOT QUALIFIED.—No credit shall be 

13 allowed under subsection (a) with respect to any 

14 property referred to in section 50(b) or with respect 

15 to the portion of the cost of any property taken into 

16 account under section 179. 

17 ‘‘(10) ELECTION TO NOT TAKE CREDIT.—No 

18 credit shall be allowed under subsection (a) for any 

19 vehicle if the taxpayer elects to not have this section 

20 apply to such vehicle. 

21 ‘‘(11) CARRYFORWARD ALLOWED.—

22 ‘‘(A) IN GENERAL.—If the credit amount 

23 allowable under subsection (a) for a taxable 

24 year exceeds the amount of the limitation under 

25 subsection (d) for such taxable year (referred to 
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1 as the ‘unused credit year’ in this paragraph), 

2 such excess shall be allowed as a credit 

3 carryforward for each of the 20 taxable years 

4 following the unused credit year. 

5 ‘‘(B) RULES.—Rules similar to the rules of 

6 section 39 shall apply with respect to the credit 

7 carryforward under subparagraph (A). 

8 ‘‘(12) INTERACTION WITH AIR QUALITY AND

9 MOTOR VEHICLE SAFETY STANDARDS.—Unless oth10 erwise provided in this section, a motor vehicle shall 

11 not be considered eligible for a credit under this sec12 tion unless such vehicle is in compliance with—

13 ‘‘(A) the applicable provisions of the Clean 

14 Air Act for the applicable make and model year 

15 of the vehicle (or applicable air quality provi16 sions of State law in the case of a State which 

17 has adopted such provision under a waiver 

18 under section 209(b) of the Clean Air Act), and 

19 ‘‘(B) the motor vehicle safety provisions of 

20 sections 30101 through 30169 of title 49, 

21 United States Code. 

22 ‘‘(f) REGULATIONS.—

23 ‘‘(1) IN GENERAL.—The Secretary shall pro24 mulgate such regulations as necessary to carry out 

25 the provisions of this section. 
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1 ‘‘(2) DETERMINATION OF MOTOR VEHICLE ELI2 GIBILITY.—The Secretary, in coordination with the 

3 Secretary of Transportation and the Administrator 

4 of the Environmental Protection Agency, shall pre5 scribe such regulations as necessary to determine 

6 whether a motor vehicle meets the requirements to 

7 be eligible for a credit under this section. 

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

9 any property placed in service after—

10 ‘‘(1) in the case of a new qualified fuel cell 

11 motor vehicle (as described in subsection (b)), De12 cember 31, 2012, and 

13 ‘‘(2) in the case of any other property, Decem14 ber 31, 2006.’’. 

15 (b) CONFORMING AMENDMENTS.—

16 (1) Section 1016(a) is amended by striking 

17 ‘‘and’’ at the end of paragraph (30), by striking the 

18 period at the end of paragraph (31) and inserting ‘‘, 

19 and’’, and by adding at the end the following: 

20 ‘‘(32) to the extent provided in section 

21 30B(e)(5).’’. 

22 (2) Section 6501(m) is amended by inserting 

23 ‘‘30B(e)(10),’’ after ‘‘30(d)(4),’’. 

24 (3) The table of sections for subpart B of part 

25 IV of subchapter A of chapter 1 is amended by in-
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1 serting after the item relating to section 30A the fol2 lowing:

‘‘Sec. 30B. Alternative motor vehicle credit.’’.

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

4 this section shall apply to property placed in service after 

5 December 31, 2003, in taxable years ending after such 

6 date. 

7 TITLE II—RELIABILITY 

8 SEC. 42001. NATURAL GAS GATHERING LINES TREATED AS 

9 7-YEAR PROPERTY. 

10 (a) IN GENERAL.—Subparagraph (C) of section 

11 168(e)(3) (relating to classification of certain property) is 

12 amended by striking ‘‘and’’ at the end of clause (i), by 

13 redesignating clause (ii) as clause (iii), and by inserting 

14 after clause (i) the following new clause: 

15 ‘‘(ii) any natural gas gathering line, 

16 and’’. 

17 (b) NATURAL GAS GATHERING LINE.—Subsection (i) 

18 of section 168 is amended by adding after paragraph (15) 

19 the following new paragraph: 

20 ‘‘(16) NATURAL GAS GATHERING LINE.—The 

21 term ‘natural gas gathering line’ means—

22 ‘‘(A) the pipe, equipment, and appur23 tenances determined to be a gathering line by 

24 the Federal Energy Regulatory Commission, or 
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1 ‘‘(B) the pipe, equipment, and appur2 tenances used to deliver natural gas from the 

3 wellhead or a commonpoint to the point at 

4 which such gas first reaches—

5 ‘‘(i) a gas processing plant, 

6 ‘‘(ii) an interconnection with a trans7 mission pipeline certificated by the Federal 

8 Energy Regulatory Commission as an 

9 interstate transmission pipeline, 

10 ‘‘(iii) an interconnection with an 

11 intrastate transmission pipeline, or 

12 ‘‘(iv) a direct interconnection with a 

13 local distribution company, a gas storage 

14 facility, or an industrial consumer.’’. 

15 (c) ALTERNATIVE SYSTEM.—The table contained in 

16 section 168(g)(3)(B) is amended by inserting after the 

17 item relating to subparagraph (C)(i) the following:

‘‘(C)(ii) ....................................................................................................... 10’’.

18 (d) ALTERNATIVE MINIMUM TAX EXCEPTION.—Sub19 paragraph (B) of section 56(a)(1) is amended by inserting 

20 before the period the following: ‘‘, or in section 

21 168(e)(3)(C)(ii)’’. 

22 (e) EFFECTIVE DATE.—The amendments made by 

23 this section shall apply to property placed in service after 

24 the date of the enactment of this Act, in taxable years 

25 ending after such date. 
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1 SEC. 42002. NATURAL GAS DISTRIBUTION LINES TREATED 

2 AS 15-YEAR PROPERTY. 

3 (a) IN GENERAL.—Subparagraph (E) of section 

4 168(e)(3) (relating to classification of certain property) is 

5 amended by striking ‘‘and’’ at the end of clause (ii), by 

6 striking the period at the end of clause (iii) and by insert7 ing ‘‘, and’’, and by adding at the end the following new 

8 clause: 

9 ‘‘(iv) any natural gas distribution 

10 line.’’. 

11 (b) ALTERNATIVE SYSTEM.—The table contained in 

12 section 168(g)(3)(B) is amended by inserting after the 

13 item relating to subparagraph (E)(iii) the following:

‘‘(E)(iv) ...................................................................................................... 20’’.

14 (c) ALTERNATIVE MINIMUM TAX EXCEPTION.—Sub15 paragraph (B) of section 56(a)(1) is amended by inserting 

16 before the period the following: ‘‘, or in section 

17 168(e)(3)(E)(iv)’’. 

18 (d) EFFECTIVE DATE.—The amendments made by 

19 this section shall apply to property placed in service after 

20 the date of the enactment of this Act, in taxable years 

21 ending after such date. 

22 SEC. 42003. ELECTRIC TRANSMISSION PROPERTY TREATED 

23 AS 15-YEAR PROPERTY. 

24 (a) IN GENERAL.—Subparagraph (E) of section 

25 168(e)(3) (relating to classification of certain property) is 
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1 amended by striking ‘‘and’’ at the end of clause (iii), by 

2 striking the period at the end of clause (iv) and by insert3 ing ‘‘, and’’, and by adding at the end the following new 

4 clause: 

5 ‘‘(v) any section 1245 property (as de6 fined in section 1245(a)(3)) used in the 

7 transmission at 69 or more kilovolts of 

8 electricity for sale.’’. 

9 (b) ALTERNATIVE SYSTEM.—The table contained in 

10 section 168(g)(3)(B) is amended by inserting after the 

11 item relating to subparagraph (E)(iv) the following:

‘‘(E)(v) ....................................................................................................... 20’’.

12 (c) ALTERNATIVE MINIMUM TAX EXCEPTION.—Sub13 paragraph (B) of section 56(a)(1) is amended by inserting 

14 before the period the following: ‘‘, or in section 

15 168(e)(3)(E)(v)’’. 

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

17 this section shall apply to property placed in service after 

18 the date of the enactment of this Act, in taxable years 

19 ending after such date. 

20 SEC. 42004. EXPENSING OF CAPITAL COSTS INCURRED IN 

21 COMPLYING WITH ENVIRONMENTAL PROTEC22 TION AGENCY SULFUR REGULATIONS. 

23 (a) IN GENERAL.—Part VI of subchapter B of chap24 ter 1 (relating to itemized deductions for individuals and 
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1 corporations) is amended by inserting after section 179A 

2 the following new section: 

3 ‘‘SEC. 179B. DEDUCTION FOR CAPITAL COSTS INCURRED IN 

4 COMPLYING WITH ENVIRONMENTAL PROTEC5 TION AGENCY SULFUR REGULATIONS. 

6 ‘‘(a) TREATMENT AS EXPENSES.—A small business 

7 refiner (as defined in section 45H(c)(1)) may elect to treat 

8 75 percent of qualified capital costs (as defined in section 

9 45H(c)(2)) which are paid or incurred by the taxpayer 

10 during the taxable year as expenses which are not charge11 able to capital account. Any cost so treated shall be al12 lowed as a deduction for the taxable year in which paid 

13 or incurred. 

14 ‘‘(b) REDUCED PERCENTAGE.—In the case of a small 

15 business refiner with average daily domestic refinery runs 

16 for the 1-year period ending on March 31, 2003, in excess 

17 of 155,000 barrels, the number of percentage points de18 scribed in subsection (a) shall be reduced (not below zero) 

19 by the product of such number (before the application of 

20 this subsection) and the ratio of such excess to 50,000 

21 barrels. 

22 ‘‘(c) BASIS REDUCTION.—

23 ‘‘(1) IN GENERAL.—For purposes of this title, 

24 the basis of any property shall be reduced by the 
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1 portion of the cost of such property taken into ac2 count under subsection (a). 

3 ‘‘(2) ORDINARY INCOME RECAPTURE.—For 

4 purposes of section 1245, the amount of the deduc5 tion allowable under subsection (a) with respect to 

6 any property which is of a character subject to the 

7 allowance for depreciation shall be treated as a de8 duction allowed for depreciation under section 167.’’. 

9 (b) CONFORMING AMENDMENTS.—

10 (1) Section 263(a)(1) is amended by striking 

11 ‘‘or’’ at the end of subparagraph (G), by striking the 

12 period at the end of subparagraph (H) and inserting 

13 ‘‘; or’’, and by adding at the end the following new 

14 subparagraph: 

15 ‘‘(I) expenditures for which a deduction is 

16 allowed under section 179B.’’. 

17 (2) Section 312(k)(3)(B) is amended—

18 (A) by striking ‘‘section 179 or 179A’’ 

19 each place it appears and inserting ‘‘section 

20 179, 179A, or 179B’’, and 

21 (B) in the heading, by striking ‘‘179 OR

22 179A’’ and inserting ‘‘179, 179A, OR 179B’’. 

23 (3) Section 1016(a) is amended by striking 

24 ‘‘and’’ at the end of paragraph (31), by striking the 

25 period at the end of paragraph (32) and inserting ‘‘, 
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1 and’’, and by adding at the end the following new 

2 paragraph: 

3 ‘‘(33) to the extent provided in section 

4 179B(c).’’

5 (4) Paragraphs (2)(C) and (3)(C) of section 

6 1245(a) are each amended by inserting ‘‘179B,’’ 

7 after ‘‘179A,’’. 

8 (5) The table of sections for part VI of sub9 chapter B of chapter 1 is amended by inserting after 

10 the item relating to section 179A the following new 

11 item:

‘‘Sec. 179B. Deduction for capital costs incurred in complying 

with Environmental Protection Agency sulfur regulations.’’.

12 (c) EFFECTIVE DATE.—The amendment made by 

13 this section shall apply to expenses paid or incurred after 

14 March 31, 2003, in taxable years ending after such date. 

15 SEC. 42005. CREDIT FOR PRODUCTION OF LOW SULFUR 

16 DIESEL FUEL. 

17 (a) IN GENERAL.—Subpart D of part IV of sub18 chapter A of chapter 1 (relating to business-related cred19 its) is amended by adding at the end the following new 

20 section: 

21 ‘‘SEC. 45H. CREDIT FOR PRODUCTION OF LOW SULFUR DIE22 SEL FUEL. 

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

24 amount of the low sulfur diesel fuel production credit de-
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1 termined under this section with respect to any facility 

2 of a small business refiner is an amount equal to 5 cents 

3 for each gallon of low sulfur diesel fuel produced during 

4 the taxable year by such small business refiner at such 

5 facility. 

6 ‘‘(b) MAXIMUM CREDIT.—

7 ‘‘(1) IN GENERAL.—The aggregate credit deter8 mined under subsection (a) for any taxable year with 

9 respect to any facility shall not exceed—

10 ‘‘(A) 25 percent of the qualified capital 

11 costs incurred by the small business refiner 

12 with respect to such facility, reduced by 

13 ‘‘(B) the aggregate credits determined 

14 under this section for all prior taxable years 

15 with respect to such facility. 

16 ‘‘(2) REDUCED PERCENTAGE.—In the case of a 

17 small business refiner with average daily domestic 

18 refinery runs for the 1-year period ending on March 

19 31, 2003, in excess of 155,000 barrels, the number 

20 of percentage points described in paragraph (1) shall 

21 be reduced (not below zero) by the product of such 

22 number (before the application of this paragraph) 

23 and the ratio of such excess to 50,000 barrels. 

24 ‘‘(c) DEFINITIONS.—For purposes of this section—
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1 ‘‘(1) SMALL BUSINESS REFINER.—The term 

2 ‘small business refiner’ means, with respect to any 

3 taxable year, a refiner of crude oil with respect to 

4 which not more than 1,500 persons are engaged in 

5 the refinery operations of the business on any day 

6 during such taxable year and whose average daily 

7 domestic refinery run for the 1-year period ending 

8 on March 31, 2003, did not exceed 205,000 barrels. 

9 ‘‘(2) QUALIFIED CAPITAL COSTS.—The term 

10 ‘qualified capital costs’ means, with respect to any 

11 facility, those costs paid or incurred during the ap12 plicable period for compliance with the applicable 

13 EPA regulations with respect to such facility, includ14 ing expenditures for the construction of new process 

15 operation units or the dismantling and reconstruc16 tion of existing process units to be used in the pro17 duction of low sulfur diesel fuel, associated adjacent 

18 or offsite equipment (including tankage, catalyst, 

19 and power supply), engineering, construction period 

20 interest, and sitework. 

21 ‘‘(3) APPLICABLE EPA REGULATIONS.—The 

22 term ‘applicable EPA regulations’ means the High23 way Diesel Fuel Sulfur Control Requirements of the 

24 Environmental Protection Agency. 
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1 ‘‘(4) APPLICABLE PERIOD.—The term ‘applica2 ble period’ means, with respect to any facility, the 

3 period beginning on April 1, 2003, and ending with 

4 the date which is 1 year after the date on which the 

5 taxpayer must comply with the applicable EPA regu6 lations with respect to such facility. 

7 ‘‘(5) LOW SULFUR DIESEL FUEL.—The term 

8 ‘low sulfur diesel fuel’ means diesel fuel with a sul9 fur content of 15 parts per million or less. 

10 ‘‘(d) REDUCTION IN BASIS.—For purposes of this 

11 subtitle, if a credit is determined under this section for 

12 any expenditure with respect to any property, the increase 

13 in basis of such property which would (but for this sub14 section) result from such expenditure shall be reduced by 

15 the amount of the credit so determined. 

16 ‘‘(e) CERTIFICATION.—

17 ‘‘(1) REQUIRED.—Not later than the date 

18 which is 30 months after the first day of the first 

19 taxable year in which the low sulfur diesel fuel pro20 duction credit is allowed with respect to a facility, 

21 the small business refiner must obtain certification 

22 from the Secretary, in consultation with the Admin23 istrator of the Environmental Protection Agency, 

24 that the taxpayer’s qualified capital costs with re-
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1 spect to such facility will result in compliance with 

2 the applicable EPA regulations. 

3 ‘‘(2) CONTENTS OF APPLICATION.—An applica4 tion for certification shall include relevant informa5 tion regarding unit capacities and operating charac6 teristics sufficient for the Secretary, in consultation 

7 with the Administrator of the Environmental Protec8 tion Agency, to determine that such qualified capital 

9 costs are necessary for compliance with the applica10 ble EPA regulations. 

11 ‘‘(3) REVIEW PERIOD.—Any application shall 

12 be reviewed and notice of certification, if applicable, 

13 shall be made within 60 days of receipt of such ap14 plication. 

15 ‘‘(4) STATUTE OF LIMITATIONS.—With respect 

16 to the credit allowed under this section—

17 ‘‘(A) the statutory period for the assess18 ment of any deficiency attributable to such 

19 credit shall not expire before the end of the 3-

20 year period ending on the date that the review 

21 period described in paragraph (3) ends, and 

22 ‘‘(B) such deficiency may be assessed be23 fore the expiration of such 3-year period not24 withstanding the provisions of any other law or 
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1 rule of law which would otherwise prevent such 

2 assessment. 

3 ‘‘(f) CONTROLLED GROUPS.—For purposes of this 

4 section, all persons treated as a single employer under sub5 section (b), (c), (m), or (o) of section 414 shall be treated 

6 as 1 taxpayer.’’. 

7 (b) CREDIT MADE PART OF GENERAL BUSINESS

8 CREDIT.—Subsection (b) of section 38 (relating to general 

9 business credit) is amended by striking ‘‘plus’’ at the end 

10 of paragraph (15), by striking the period at the end of 

11 paragraph (16) and inserting ‘‘, plus’’, and by adding at 

12 the end the following new paragraph: 

13 ‘‘(17) in the case of a small business refiner, 

14 the low sulfur diesel fuel production credit deter15 mined under section 45H(a).’’. 

16 (c) DENIAL OF DOUBLE BENEFIT.—Section 280C 

17 (relating to certain expenses for which credits are allow18 able) is amended by adding after subsection (d) the fol19 lowing new subsection: 

20 ‘‘(e) LOW SULFUR DIESEL FUEL PRODUCTION

21 CREDIT.—No deduction shall be allowed for that portion 

22 of the expenses otherwise allowable as a deduction for the 

23 taxable year which is equal to the amount of the credit 

24 determined for the taxable year under section 45H(a).’’. 
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1 (d) BASIS ADJUSTMENT.—Section 1016(a) (relating 

2 to adjustments to basis) is amended by striking ‘‘and’’ at 

3 the end of paragraph (32), by striking the period at the 

4 end of paragraph (33) and inserting ‘‘, and’’, and by add5 ing at the end the following new paragraph: 

6 ‘‘(34) in the case of a facility with respect to 

7 which a credit was allowed under section 45H, to 

8 the extent provided in section 45H(d).’’. 

9 (e) CLERICAL AMENDMENT.—The table of sections 

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

11 is amended by adding at the end the following new item:

‘‘Sec. 45H. Credit for production of low sulfur diesel fuel.’’.

12 (f) EFFECTIVE DATE.—The amendments made by 

13 this section shall apply to expenses paid or incurred after 

14 March 31, 2003, in taxable years ending after such date. 

15 SEC. 42006. DETERMINATION OF SMALL REFINER EXCEP16 TION TO OIL DEPLETION DEDUCTION. 

17 (a) IN GENERAL.—Paragraph (4) of section 613A(d) 

18 (relating to certain refiners excluded) is amended to read 

19 as follows: 

20 ‘‘(4) CERTAIN REFINERS EXCLUDED.—If the 

21 taxpayer or a related person engages in the refining 

22 of crude oil, subsection (c) shall not apply to the 

23 taxpayer for a taxable year if the average daily refin24 ery runs of the taxpayer and the related person for 

25 the taxable year exceed 75,000 barrels. For purposes 
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1 of this paragraph, the average daily refinery runs for 

2 any taxable year shall be determined by dividing the 

3 aggregate refinery runs for the taxable year by the 

4 number of days in the taxable year.’’. 

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

6 this section shall apply to taxable years beginning after 

7 December 31, 2003.

8 SEC. 42007. SALES OR DISPOSITIONS TO IMPLEMENT FED9 ERAL ENERGY REGULATORY COMMISSION 

10 OR STATE ELECTRIC RESTRUCTURING POL11 ICY. 

12 (a) IN GENERAL.—Section 451 (relating to general 

13 rule for taxable year of inclusion) is amended by adding 

14 at the end the following new subsection: 

15 ‘‘(i) SPECIAL RULE FOR SALES OR DISPOSITIONS TO

16 IMPLEMENT FEDERAL ENERGY REGULATORY COMMIS17 SION OR STATE ELECTRIC RESTRUCTURING POLICY.—

18 ‘‘(1) IN GENERAL.—In the case of any quali19 fying electric transmission transaction to which the 

20 taxpayer elects the application of this section, quali21 fied gain from such transaction shall be recog22 nized—

23 ‘‘(A) in the taxable year which includes the 

24 date of such transaction to the extent the 
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1 amount realized from such transaction ex2 ceeds—

3 ‘‘(i) the cost of exempt utility property 

4 which is purchased by the taxpayer during 

5 the 4-year period beginning on such date, 

6 reduced (but not below zero) by 

7 ‘‘(ii) any portion of such cost pre8 viously taken into account under this sub9 section, and 

10 ‘‘(B) ratably over the 8-taxable year period 

11 beginning with the taxable year which includes 

12 the date of such transaction, in the case of any 

13 such gain not recognized under subparagraph 

14 (A). 

15 ‘‘(2) QUALIFIED GAIN.—For purposes of this 

16 subsection, the term ‘qualified gain’ means, with re17 spect to any qualifying electric transmission trans18 action in any taxable year— 

19 ‘‘(A) any ordinary income derived from 

20 such transaction which would be required to be 

21 recognized under section 1245 or 1250 for such 

22 taxable year (determined without regard to this 

23 subsection), and 

24 ‘‘(B) any income derived from such trans25 action in excess of the amount described in sub-
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1 paragraph (A) which is required to be included 

2 in gross income for such taxable year (deter3 mined without regard to this subsection). 

4 ‘‘(3) QUALIFYING ELECTRIC TRANSMISSION

5 TRANSACTION.—For purposes of this subsection, the 

6 term ‘qualifying electric transmission transaction’ 

7 means any sale or other disposition before January 

8 1, 2007, of—

9 ‘‘(A) property used in the trade or business 

10 of providing electric transmission services, or 

11 ‘‘(B) any stock or partnership interest in a 

12 corporation or partnership, as the case may be, 

13 whose principal trade or business consists of 

14 providing electric transmission services, 

15 but only if such sale or disposition is to an inde16 pendent transmission company. 

17 ‘‘(4) INDEPENDENT TRANSMISSION COM18 PANY.—For purposes of this subsection, the term 

19 ‘independent transmission company’ means—

20 ‘‘(A) an independent transmission provider 

21 approved by the Federal Energy Regulatory 

22 Commission, 

23 ‘‘(B) a person—

24 ‘‘(i) who the Federal Energy Regu25 latory Commission determines in its au-
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1 thorization of the transaction under section 

2 203 of the Federal Power Act (16 U.S.C. 

3 824b) or by declaratory order is not a 

4 market participant within the meaning of 

5 such Commission’s rules applicable to inde6 pendent transmission providers, and 

7 ‘‘(ii) whose transmission facilities to 

8 which the election under this subsection 

9 applies are under the operational control of 

10 a Federal Energy Regulatory Commission11 approved independent transmission pro12 vider before the close of the period speci13 fied in such authorization, but not later 

14 than the close of the period applicable 

15 under subsection (a)(2)(B) as extended 

16 under paragraph (2), or 

17 ‘‘(C) in the case of facilities subject to the 

18 jurisdiction of the Public Utility Commission of 

19 Texas—

20 ‘‘(i) a person which is approved by 

21 that Commission as consistent with Texas 

22 State law regarding an independent trans23 mission provider, or 

24 ‘‘(ii) a political subdivision or affiliate 

25 thereof whose transmission facilities are 
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1 under the operational control of a person 

2 described in clause (i). 

3 ‘‘(5) EXEMPT UTILITY PROPERTY.—For pur4 poses of this subsection—

5 ‘‘(A) IN GENERAL.—The term ‘exempt 

6 utility property’ means property used in the 

7 trade or business of—

8 ‘‘(i) generating, transmitting, distrib9 uting, or selling electricity, or 

10 ‘‘(ii) producing, transmitting, distrib11 uting, or selling natural gas. 

12 ‘‘(B) NONRECOGNITION OF GAIN BY REA13 SON OF ACQUISITION OF STOCK.—Acquisition of 

14 control of a corporation shall be taken into ac15 count under this subsection with respect to a 

16 qualifying electric transmission transaction only 

17 if the principal trade or business of such cor18 poration is a trade or business referred to in 

19 subparagraph (A). 

20 ‘‘(6) SPECIAL RULE FOR CONSOLIDATED

21 GROUPS.—In the case of a corporation which is a 

22 member of an affiliated group filing a consolidated 

23 return, any exempt utility property purchased by an24 other member of such group shall be treated as pur-
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1 chased by such corporation for purposes of applying 

2 paragraph (1)(A). 

3 ‘‘(7) TIME FOR ASSESSMENT OF DEFI4 CIENCIES.—If the taxpayer has made the election 

5 under paragraph (1) and any gain is recognized by 

6 such taxpayer as provided in paragraph (1)(B), 

7 then—

8 ‘‘(A) the statutory period for the assess9 ment of any deficiency, for any taxable year in 

10 which any part of the gain on the transaction 

11 is realized, attributable to such gain shall not 

12 expire prior to the expiration of 3 years from 

13 the date the Secretary is notified by the tax14 payer (in such manner as the Secretary may by 

15 regulations prescribe) of the purchase of exempt 

16 utility property or of an intention not to pur17 chase such property, and 

18 ‘‘(B) such deficiency may be assessed be19 fore the expiration of such 3-year period not20 withstanding any law or rule of law which 

21 would otherwise prevent such assessment. 

22 ‘‘(8) PURCHASE.—For purposes of this sub23 section, the taxpayer shall be considered to have 

24 purchased any property if the unadjusted basis of 
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1 such property is its cost within the meaning of sec2 tion 1012. 

3 ‘‘(9) ELECTION.—An election under paragraph 

4 (1) shall be made at such time and in such manner 

5 as the Secretary may require and, once made, shall 

6 be irrevocable.’’. 

7 (b) EFFECTIVE DATE.—The amendments made by 

8 this section shall apply to transactions occurring after the 

9 date of the enactment of this Act, in taxable years ending 

10 after such date. 

11 SEC. 42008. MODIFICATIONS TO SPECIAL RULES FOR NU12 CLEAR DECOMMISSIONING COSTS. 

13 (a) REPEAL OF LIMITATION ON DEPOSITS INTO

14 FUND BASED ON COST OF SERVICE; CONTRIBUTIONS

15 AFTER FUNDING PERIOD.—Subsection (b) of section 

16 468A is amended to read as follows: 

17 ‘‘(b) LIMITATION ON AMOUNTS PAID INTO FUND.—

18 ‘‘(1) IN GENERAL.—The amount which a tax19 payer may pay into the Fund for any taxable year 

20 shall not exceed the ruling amount applicable to 

21 such taxable year. 

22 ‘‘(2) CONTRIBUTIONS AFTER FUNDING PE23 RIOD.—Notwithstanding any other provision of this 

24 section, a taxpayer may pay into the Fund in any 

25 taxable year after the last taxable year to which the 
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1 ruling amount applies. Payments may not be made 

2 under the preceding sentence to the extent such pay3 ments would cause the assets of the Fund to exceed 

4 the nuclear decommissioning costs allocable to the 

5 taxpayer’s current or former interest in the nuclear 

6 power plant to which the Fund relates. The limita7 tion under the preceding sentence shall be deter8 mined by taking into account a reasonable rate of 

9 inflation for the nuclear decommissioning costs and 

10 a reasonable after-tax rate of return on the assets 

11 of the Fund until such assets are anticipated to be 

12 expended.’’. 

13 (b) CLARIFICATION OF TREATMENT OF FUND

14 TRANSFERS.—Subsection (e) of section 468A is amended 

15 by adding at the end the following new paragraph: 

16 ‘‘(8) TREATMENT OF FUND TRANSFERS.—If, in 

17 connection with the transfer of the taxpayer’s inter18 est in a nuclear power plant, the taxpayer transfers 

19 the Fund with respect to such power plant to the 

20 transferee of such interest and the transferee elects 

21 to continue the application of this section to such 

22 Fund—

23 ‘‘(A) the transfer of such Fund shall not 

24 cause such Fund to be disqualified from the ap25 plication of this section, and 
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1 ‘‘(B) no amount shall be treated as distrib2 uted from such Fund, or be includible in gross 

3 income, by reason of such transfer.’’. 

4 (c) TREATMENT OF CERTAIN DECOMMISSIONING

5 COSTS.—

6 (1) IN GENERAL.—Section 468A is amended by 

7 redesignating subsections (f) and (g) as subsections 

8 (g) and (h), respectively, and by inserting after sub9 section (e) the following new subsection: 

10 ‘‘(f) TRANSFERS INTO QUALIFIED FUNDS.—

11 ‘‘(1) IN GENERAL.—Notwithstanding subsection 

12 (b), any taxpayer maintaining a Fund to which this 

13 section applies with respect to a nuclear power plant 

14 may transfer into such Fund up to an amount equal 

15 to the excess of the total nuclear decommissioning 

16 costs with respect to such nuclear power plant over 

17 the portion of such costs taken into account in de18 termining the ruling amount in effect immediately 

19 before the transfer. 

20 ‘‘(2) DEDUCTION FOR AMOUNTS TRANS21 FERRED.—

22 ‘‘(A) IN GENERAL.—Except as provided in 

23 subparagraph (C), the deduction allowed by 

24 subsection (a) for any transfer permitted by 

25 this subsection shall be allowed ratably over the 
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1 remaining estimated useful life (within the 

2 meaning of subsection (d)(2)(A)) of the nuclear 

3 power plant beginning with the taxable year 

4 during which the transfer is made. 

5 ‘‘(B) DENIAL OF DEDUCTION FOR PRE6 VIOUSLY DEDUCTED AMOUNTS.—No deduction 

7 shall be allowed for any transfer under this sub8 section of an amount for which a deduction was 

9 previously allowed or a corresponding amount 

10 was not included in gross income. For purposes 

11 of the preceding sentence, a ratable portion of 

12 each transfer shall be treated as being from 

13 previously deducted or excluded amounts to the 

14 extent thereof. 

15 ‘‘(C) TRANSFERS OF QUALIFIED FUNDS.—

16 If—

17 ‘‘(i) any transfer permitted by this 

18 subsection is made to any Fund to which 

19 this section applies, and 

20 ‘‘(ii) such Fund is transferred there21 after, 

22 any deduction under this subsection for taxable 

23 years ending after the date that such Fund is 

24 transferred shall be allowed to the transferor 

25 for the taxable year which includes such date. 
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1 ‘‘(D) SPECIAL RULES.—

2 ‘‘(i) GAIN OR LOSS NOT RECOG3 NIZED.—No gain or loss shall be recog4 nized on any transfer permitted by this 

5 subsection. 

6 ‘‘(ii) TRANSFERS OF APPRECIATED

7 PROPERTY.—If appreciated property is 

8 transferred in a transfer permitted by this 

9 subsection, the amount of the deduction 

10 shall be the adjusted basis of such prop11 erty. 

12 ‘‘(3) NEW RULING AMOUNT REQUIRED.—Para13 graph (1) shall not apply to any transfer unless the 

14 taxpayer requests from the Secretary a new schedule 

15 of ruling amounts in connection with such transfer. 

16 ‘‘(4) NO BASIS IN QUALIFIED FUNDS.—Not17 withstanding any other provision of law, the tax18 payer’s basis in any Fund to which this section ap19 plies shall not be increased by reason of any transfer 

20 permitted by this subsection.’’. 

21 (2) NEW RULING AMOUNT TO TAKE INTO AC22 COUNT TOTAL COSTS.—Subparagraph (A) of section 

23 468A(d)(2) is amended to read as follows: 

24 ‘‘(A) fund the total nuclear decommis25 sioning costs with respect to such power plant 
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1 over the estimated useful life of such power 

2 plant, and’’. 

3 (d) EFFECTIVE DATE.—The amendments made by 

4 this section shall apply to taxable years beginning after 

5 December 31, 2003. 

6 SEC. 42009. TREATMENT OF CERTAIN INCOME OF CO7 OPERATIVES. 

8 (a) INCOME FROM OPEN ACCESS AND NUCLEAR DE9 COMMISSIONING TRANSACTIONS.—

10 (1) IN GENERAL.—Subparagraph (C) of section 

11 501(c)(12) is amended by striking ‘‘or’’ at the end 

12 of clause (i), by striking clause (ii), and by adding 

13 at the end the following new clauses: 

14 ‘‘(ii) from any provision or sale of 

15 transmission service or ancillary services if 

16 such services are provided on a non17 discriminatory open access basis under an 

18 independent transmission provider agree19 ment approved by FERC (other than in20 come received or accrued directly or indi21 rectly from a member), 

22 ‘‘(iii) from any nuclear decommis23 sioning transaction, or 

24 ‘‘(iv) from any asset exchange or con25 version transaction.’’. 
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1 (2) DEFINITIONS AND SPECIAL RULES.—Para2 graph (12) of section 501(c) is amended by adding 

3 at the end the following new subparagraphs: 

4 ‘‘(E) For purposes of subparagraph (C)(ii), 

5 the term ‘FERC’ means the Federal Energy 

6 Regulatory Commission and references to such 

7 term shall be treated as including the Public 

8 Utility Commission of Texas with respect to 

9 any ERCOT utility (as defined in section 

10 212(k)(2)(B) of the Federal Power Act (16 

11 U.S.C. 824k(k)(2)(B))). 

12 ‘‘(F) For purposes of subparagraph 

13 (C)(iii), the term ‘nuclear decommissioning 

14 transaction’ means—

15 ‘‘(i) any transfer into a trust, fund, or 

16 instrument established to pay any nuclear 

17 decommissioning costs if the transfer is in 

18 connection with the transfer of the mutual 

19 or cooperative electric company’s interest 

20 in a nuclear power plant or nuclear power 

21 plant unit, 

22 ‘‘(ii) any distribution from any trust, 

23 fund, or instrument established to pay any 

24 nuclear decommissioning costs, or 
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1 ‘‘(iii) any earnings from any trust, 

2 fund, or instrument established to pay any 

3 nuclear decommissioning costs. 

4 ‘‘(G) For purposes of subparagraph 

5 (C)(iv), the term ‘asset exchange or conversion 

6 transaction’ means any voluntary exchange or 

7 involuntary conversion of any property related 

8 to generating, transmitting, distributing, or sell9 ing electric energy by a mutual or cooperative 

10 electric company, the gain from which qualifies 

11 for deferred recognition under section 1031 or 

12 1033, but only if the replacement property ac13 quired by such company pursuant to such sec14 tion constitutes property which is used, or to be 

15 used, for—

16 ‘‘(i) generating, transmitting, distrib17 uting, or selling electric energy, or 

18 ‘‘(ii) producing, transmitting, distrib19 uting, or selling natural gas.’’. 

20 (b) TREATMENT OF INCOME FROM LOAD LOSS

21 TRANSACTIONS, ETC.—Paragraph (12) of section 501(c), 

22 as amended by subsection (a)(2), is amended by adding 

23 after subparagraph (G) the following new subparagraph: 

24 ‘‘(H)(i) In the case of a mutual or coopera25 tive electric company described in this para-
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1 graph or an organization described in section 

2 1381(a)(2)(C), income received or accrued from 

3 a load loss transaction shall be treated as an 

4 amount collected from members for the sole 

5 purpose of meeting losses and expenses. 

6 ‘‘(ii) For purposes of clause (i), the term 

7 ‘load loss transaction’ means any wholesale or 

8 retail sale of electric energy (other than to 

9 members) to the extent that the aggregate sales 

10 during the recovery period do not exceed the 

11 load loss mitigation sales limit for such period. 

12 ‘‘(iii) For purposes of clause (ii), the load 

13 loss mitigation sales limit for the recovery pe14 riod is the sum of the annual load losses for 

15 each year of such period. 

16 ‘‘(iv) For purposes of clause (iii), a mutual 

17 or cooperative electric company’s annual load 

18 loss for each year of the recovery period is the 

19 amount (if any) by which—

20 ‘‘(I) the megawatt hours of electric 

21 energy sold during such year to members 

22 of such electric company are less than 

23 ‘‘(II) the megawatt hours of electric 

24 energy sold during the base year to such 

25 members.
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1 ‘‘(v) For purposes of clause (iv)(II), the 

2 term ‘base year’ means—

3 ‘‘(I) the calendar year preceding the 

4 start-up year, or 

5 ‘‘(II) at the election of the electric 

6 company, the second or third calendar 

7 years preceding the start-up year. 

8 ‘‘(vi) For purposes of this subparagraph, 

9 the recovery period is the 7-year period begin10 ning with the start-up year. 

11 ‘‘(vii) For purposes of this subparagraph, 

12 the start-up year is the calendar year which in13 cludes the date of the enactment of this sub14 paragraph or, if later, at the election of the mu15 tual or cooperative electric company—

16 ‘‘(I) the first year that such electric 

17 company offers nondiscriminatory open ac18 cess, or 

19 ‘‘(II) the first year in which at least 

20 10 percent of such electric company’s sales 

21 are not to members of such electric com22 pany. 

23 ‘‘(viii) A company shall not fail to be treat24 ed as a mutual or cooperative company for pur25 poses of this paragraph or as a corporation op-
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1 erating on a cooperative basis for purposes of 

2 section 1381(a)(2)(C) by reason of the treat3 ment under clause (i). 

4 ‘‘(ix) For purposes of subparagraph (A), in 

5 the case of a mutual or cooperative electric 

6 company, income received, or accrued, indirectly 

7 from a member shall be treated as an amount 

8 collected from members for the sole purpose of 

9 meeting losses and expenses.’’. 

10 (c) EXCEPTION FROM UNRELATED BUSINESS TAX11 ABLE INCOME.—Subsection (b) of section 512 (relating to 

12 modifications) is amended by adding at the end the fol13 lowing new paragraph: 

14 ‘‘(18) TREATMENT OF MUTUAL OR COOPERA15 TIVE ELECTRIC COMPANIES.—In the case of a mu16 tual or cooperative electric company described in sec17 tion 501(c)(12), there shall be excluded income 

18 which is treated as member income under subpara19 graph (H) thereof.’’. 

20 (d) CROSS REFERENCE.—Section 1381 is amended 

21 by adding at the end the following new subsection:
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1 ‘‘(c) CROSS REFERENCE.—

‘‘For treatment of income from load loss transactions of organizations described in subsection 

(a)(2)(C), see section 501(c)(12)(H).’’.

2 (e) EFFECTIVE DATE.—The amendments made by 

3 this section shall apply to taxable years beginning after 

4 the date of the enactment of this Act. 

5 SEC. 42010. ARBITRAGE RULES NOT TO APPLY TO PREPAY6 MENTS FOR NATURAL GAS. 

7 (a) IN GENERAL.—Subsection (b) of section 148 (re8 lating to higher yielding investments) is amended by add9 ing at the end the following new paragraph: 

10 ‘‘(4) SAFE HARBOR FOR PREPAID NATURAL

11 GAS.—

12 ‘‘(A) IN GENERAL.—The term ‘investment13 type property’ does not include a prepayment 

14 under a qualified natural gas supply contract. 

15 ‘‘(B) QUALIFIED NATURAL GAS SUPPLY

16 CONTRACT.—For purposes of this paragraph, 

17 the term ‘qualified natural gas supply contract’ 

18 means any contract to acquire natural gas for 

19 resale by a utility owned by a governmental 

20 unit if the amount of gas permitted to be ac21 quired under the contract by the utility during 

22 any year does not exceed the sum of—

23 ‘‘(i) the annual average amount dur24 ing the testing period of natural gas pur-
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1 chased (other than for resale) by cus2 tomers of such utility who are located 

3 within the service area of such utility, and 

4 ‘‘(ii) the amount of natural gas to be 

5 used to transport the prepaid natural gas 

6 to the utility during such year. 

7 ‘‘(C) NATURAL GAS USED TO GENERATE

8 ELECTRICITY.—Natural gas used to generate 

9 electricity shall be taken into account in deter10 mining the average under subparagraph 

11 (B)(i)—

12 ‘‘(i) only if the electricity is generated 

13 by a utility owned by a governmental unit, 

14 and 

15 ‘‘(ii) only to the extent that the elec16 tricity is sold (other than for resale) to 

17 customers of such utility who are located 

18 within the service area of such utility. 

19 ‘‘(D) ADJUSTMENTS FOR CHANGES IN

20 CUSTOMER BASE.—

21 ‘‘(i) NEW BUSINESS CUSTOMERS.—

22 If—

23 ‘‘(I) after the close of the testing 

24 period and before the date of issuance 

25 of the issue, the utility owned by a 
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1 governmental unit enters into a con2 tract to supply natural gas (other 

3 than for resale) for a business use at 

4 a property within the service area of 

5 such utility, and 

6 ‘‘(II) the utility did not supply 

7 natural gas to such property during 

8 the testing period or the ratable 

9 amount of natural gas to be supplied 

10 under the contract is significantly 

11 greater than the ratable amount of 

12 gas supplied to such property during 

13 the testing period, 

14 then a contract shall not fail to be treated 

15 as a qualified natural gas supply contract 

16 by reason of supplying the additional nat17 ural gas under the contract referred to in 

18 subclause (I). 

19 ‘‘(ii) LOST CUSTOMERS.—The average 

20 under subparagraph (B)(i) shall not exceed 

21 the annual amount of natural gas reason22 ably expected to be purchased (other than 

23 for resale) by persons who are located 

24 within the service area of such utility and 
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1 who, as of the date of issuance of the 

2 issue, are customers of such utility. 

3 ‘‘(E) RULING REQUESTS.—The Secretary 

4 may increase the average under subparagraph 

5 (B)(i) for any period if the utility owned by the 

6 governmental unit establishes to the satisfaction 

7 of the Secretary that, based on objective evi8 dence of growth in natural gas consumption or 

9 population, such average would otherwise be in10 sufficient for such period. 

11 ‘‘(F) ADJUSTMENT FOR NATURAL GAS

12 OTHERWISE ON HAND.—

13 ‘‘(i) IN GENERAL.—The amount oth14 erwise permitted to be acquired under the 

15 contract for any period shall be reduced 

16 by—

17 ‘‘(I) the applicable share of nat18 ural gas held by the utility on the 

19 date of issuance of the issue, and 

20 ‘‘(II) the natural gas (not taken 

21 into account under subclause (I)) 

22 which the utility has a right to ac23 quire during such period (determined 

24 as of the date of issuance of the 

25 issue). 
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1 ‘‘(ii) APPLICABLE SHARE.—For pur2 poses of the clause (i), the term ‘applicable 

3 share’ means, with respect to any period, 

4 the natural gas allocable to such period if 

5 the gas were allocated ratably over the pe6 riod to which the prepayment relates. 

7 ‘‘(G) INTENTIONAL ACTS.—Subparagraph 

8 (A) shall cease to apply to any issue if the util9 ity owned by the governmental unit engages in 

10 any intentional act to render the volume of nat11 ural gas acquired by such prepayment to be in 

12 excess of the sum of—

13 ‘‘(i) the amount of natural gas needed 

14 (other than for resale) by customers of 

15 such utility who are located within the 

16 service area of such utility, and 

17 ‘‘(ii) the amount of natural gas used 

18 to transport such natural gas to the utility. 

19 ‘‘(H) TESTING PERIOD.—For purposes of 

20 this paragraph, the term ‘testing period’ means, 

21 with respect to an issue, the most recent 5 cal22 endar years ending before the date of issuance 

23 of the issue. 
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1 ‘‘(I) SERVICE AREA.—For purposes of this 

2 paragraph, the service area of a utility owned 

3 by a governmental unit shall be comprised of—

4 ‘‘(i) any area throughout which such 

5 utility provided at all times during the 

6 testing period—

7 ‘‘(I) in the case of a natural gas 

8 utility, natural gas transmission or 

9 distribution services, and 

10 ‘‘(II) in the case of an electric 

11 utility, electricity distribution services, 

12 ‘‘(ii) any area within a county contig13 uous to the area described in clause (i) in 

14 which retail customers of such utility are 

15 located if such area is not also served by 

16 another utility providing natural gas or 

17 electricity services, as the case may be, and 

18 ‘‘(iii) any area recognized as the serv19 ice area of such utility under State or Fed20 eral law.’’. 

21 (b) PRIVATE LOAN FINANCING TEST NOT TO APPLY

22 TO PREPAYMENTS FOR NATURAL GAS.—Paragraph (2) of 

23 section 141(c) (providing exceptions to the private loan fi24 nancing test) is amended by striking ‘‘or’’ at the end of 

25 subparagraph (A), by striking the period at the end of 
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1 subparagraph (B) and inserting ‘‘, or’’, and by adding at 

2 the end the following new subparagraph: 

3 ‘‘(C) is a qualified natural gas supply con4 tract (as defined in section 148(b)(4)).’’. 

5 (c) EFFECTIVE DATE.—The amendment made by 

6 this section shall apply to obligations issued after the date 

7 of the enactment of this Act. 

8 SEC. 42011. PREPAYMENT OF PREMIUM LIABILITY FOR 

9 COAL INDUSTRY HEALTH BENEFITS. 

10 (a) IN GENERAL.—Section 9704 (relating to liability 

11 of assigned operators) is amended by adding at the end 

12 the following new subsection: 

13 ‘‘(j) PREPAYMENT OF PREMIUM LIABILITY.—

14 ‘‘(1) IN GENERAL.—If—

15 ‘‘(A) any assigned operator who is a mem16 ber of a controlled group of corporations (with17 in the meaning of section 52(a)) makes a pay18 ment meeting the requirements of paragraph 

19 (2) to the Combined Fund, and 

20 ‘‘(B) the common parent of such group—

21 ‘‘(i) is jointly and severally liable for 

22 any premium which would (but for this 

23 subsection) be required to be paid by such 

24 operator, and 
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1 ‘‘(ii) provides security which meets the 

2 requirements of paragraph (3), 

3 then no person (other than such common parent) 

4 shall be liable for any premium for which such oper5 ator would otherwise be liable. 

6 ‘‘(2) REQUIREMENTS.—A payment meets the 

7 requirements of this paragraph if—

8 ‘‘(A) the amount of the payment is not less 

9 than the present value of the total premium li10 ability of the assigned operator for its assignees 

11 under this chapter with respect to the Com12 bined Fund (as determined by the operator’s 

13 enrolled actuary, as defined in section 

14 7701(a)(35)), using actuarial methods and as15 sumptions each of which is reasonable and 

16 which are reasonable in the aggregate, as deter17 mined by such enrolled actuary, 

18 ‘‘(B) a signed actuarial report is filed with 

19 the Secretary of Labor by such enrolled actuary 

20 containing—

21 ‘‘(i) the date of the actuarial valuation 

22 applicable to the report, and 

23 ‘‘(ii) a statement by the enrolled actu24 ary signing the report that to the best of 

25 the actuary’s knowledge the report is com-
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1 plete and accurate and that in the actu2 ary’s opinion the actuarial assumptions 

3 used are in the aggregate reasonably re4 lated to the experience of the operator and 

5 to reasonable expectations, 

6 ‘‘(C) a description of the security described 

7 in paragraph (3) is filed with the Secretary of 

8 Labor by the common parent, and 

9 ‘‘(D) 30 calendar days have elapsed after 

10 the report required by subparagraph (B), and 

11 the description required by subparagraph (C), 

12 are filed with the Secretary of Labor, and the 

13 Secretary of Labor has not notified the as14 signed operator in writing that the require15 ments of this paragraph have not been satisfied. 

16 ‘‘(3) SECURITY.—Security meets the require17 ments of this paragraph if—

18 ‘‘(A) the security (in the form of a bond, 

19 letter of credit, or cash escrow) is provided to 

20 the trustees of the 1992 UMWA Benefit Plan, 

21 solely for the purpose of paying premiums for 

22 beneficiaries described in section 9712(b)(2)(B), 

23 equal in amount to one year’s liability of the as24 signed operator under section 9711, determined 
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1 by using the average cost of such operator’s li2 ability during its prior 3 calendar years; and 

3 ‘‘(B) the security will remain in place for 

4 5 years. 

5 ‘‘(4) USE OF PREPAYMENT.—Any payment to 

6 which this subsection applies (and earnings thereon) 

7 shall be used exclusively to pay premiums which 

8 would (but for this subsection) be required to be 

9 paid by the assigned operator making such pay10 ment.’’

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

12 this section shall take effect on the date of the enactment 

13 of this Act. 

14 TITLE III—PRODUCTION 

15 SEC. 43001. OIL AND GAS FROM MARGINAL WELLS. 

16 (a) IN GENERAL.—Subpart D of part IV of sub17 chapter A of chapter 1 (relating to business credits) is 

18 amended by adding at the end the following: 

19 ‘‘SEC. 45I. CREDIT FOR PRODUCING OIL AND GAS FROM 

20 MARGINAL WELLS. 

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

22 the marginal well production credit for any taxable year 

23 is an amount equal to the product of—

24 ‘‘(1) the credit amount, and 
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1 ‘‘(2) the qualified credit oil production and the 

2 qualified natural gas production which is attrib3 utable to the taxpayer. 

4 ‘‘(b) CREDIT AMOUNT.—For purposes of this sec5 tion—

6 ‘‘(1) IN GENERAL.—The credit amount is—

7 ‘‘(A) $3 per barrel of qualified crude oil 

8 production, and 

9 ‘‘(B) 50 cents per 1,000 cubic feet of 

10 qualified natural gas production. 

11 ‘‘(2) REDUCTION AS OIL AND GAS PRICES IN12 CREASE.—

13 ‘‘(A) IN GENERAL.—The $3 and 50 cents 

14 amounts under paragraph (1) shall each be re15 duced (but not below zero) by an amount which 

16 bears the same ratio to such amount (deter17 mined without regard to this paragraph) as—

18 ‘‘(i) the excess (if any) of the applica19 ble reference price over $15 ($1.67 for 

20 qualified natural gas production), bears to 

21 ‘‘(ii) $3 ($0.33 for qualified natural 

22 gas production). 

23 The applicable reference price for a taxable 

24 year is the reference price of the calendar year 
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1 preceding the calendar year in which the tax2 able year begins. 

3 ‘‘(B) INFLATION ADJUSTMENT.—In the 

4 case of any taxable year beginning in a calendar 

5 year after 2003, each of the dollar amounts 

6 contained in subparagraph (A) shall be in7 creased to an amount equal to such dollar 

8 amount multiplied by the inflation adjustment 

9 factor for such calendar year (determined under 

10 section 43(b)(3)(B) by substituting ‘2002’ for 

11 ‘1990’). 

12 ‘‘(C) REFERENCE PRICE.—For purposes of 

13 this paragraph, the term ‘reference price’ 

14 means, with respect to any calendar year—

15 ‘‘(i) in the case of qualified crude oil 

16 production, the reference price determined 

17 under section 29(d)(2)(C), and 

18 ‘‘(ii) in the case of qualified natural 

19 gas production, the Secretary’s estimate of 

20 the annual average wellhead price per 

21 1,000 cubic feet for all domestic natural 

22 gas. 

23 ‘‘(c) QUALIFIED CRUDE OIL AND NATURAL GAS

24 PRODUCTION.—For purposes of this section—
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1 ‘‘(1) IN GENERAL.—The terms ‘qualified crude 

2 oil production’ and ‘qualified natural gas production’ 

3 mean domestic crude oil or natural gas which is pro4 duced from a qualified marginal well. 

5 ‘‘(2) LIMITATION ON AMOUNT OF PRODUCTION

6 WHICH MAY QUALIFY.—

7 ‘‘(A) IN GENERAL.—Crude oil or natural 

8 gas produced during any taxable year from any 

9 well shall not be treated or qualified crude oil 

10 production or qualified natural gas production 

11 to the extent production from the well during 

12 the taxable year exceeds 1,095 barrels or barrel 

13 equivalents. 

14 ‘‘(B) PROPORTIONATE REDUCTIONS.—

15 ‘‘(i) SHORT TAXABLE YEARS.—In the 

16 case of a short taxable year, the limitations 

17 under this paragraph shall be proportion18 ately reduced to reflect the ratio which the 

19 number of days in such taxable year bears 

20 to 365. 

21 ‘‘(ii) WELLS NOT IN PRODUCTION EN22 TIRE YEAR.—In the case of a well which is 

23 not capable of production during each day 

24 of a taxable year, the limitations under 

25 this paragraph applicable to the well shall 
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1 be proportionately reduced to reflect the 

2 ratio which the number of days of produc3 tion bears to the total number of days in 

4 the taxable year. 

5 ‘‘(3) DEFINITIONS.—

6 ‘‘(A) QUALIFIED MARGINAL WELL.—The 

7 term ‘qualified marginal well’ means a domestic 

8 well—

9 ‘‘(i) the production from which during 

10 the taxable year is treated as marginal 

11 production under section 613A(c)(6), or 

12 ‘‘(ii) which, during the taxable year—

13 ‘‘(I) has average daily production 

14 of not more than 25 barrel equiva15 lents, and 

16 ‘‘(II) produces water at a rate 

17 not less than 95 percent of total well 

18 effluent. 

19 ‘‘(B) CRUDE OIL, ETC.—The terms ‘crude 

20 oil’, ‘natural gas’, ‘domestic’, and ‘barrel’ have 

21 the meanings given such terms by section 

22 613A(e). 

23 ‘‘(C) BARREL EQUIVALENT.—The term 

24 ‘barrel equivalent’ means, with respect to nat-
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1 ural gas, a conversation ratio of 6,000 cubic 

2 feet of natural gas to 1 barrel of crude oil. 

3 ‘‘(d) OTHER RULES.—

4 ‘‘(1) PRODUCTION ATTRIBUTABLE TO THE TAX5 PAYER.—In the case of a qualified marginal well in 

6 which there is more than one owner of operating in7 terests in the well and the crude oil or natural gas 

8 production exceeds the limitation under subsection 

9 (c)(2), qualifying crude oil production or qualifying 

10 natural gas production attributable to the taxpayer 

11 shall be determined on the basis of the ratio which 

12 taxpayer’s revenue interest in the production bears 

13 to the aggregate of the revenue interests of all oper14 ating interest owners in the production. 

15 ‘‘(2) OPERATING INTEREST REQUIRED.—Any 

16 credit under this section may be claimed only on 

17 production which is attributable to the holder of an 

18 operating interest. 

19 ‘‘(3) PRODUCTION FROM NONCONVENTIONAL

20 SOURCES EXCLUDED.—In the case of production 

21 from a qualified marginal well which is eligible for 

22 the credit allowed under section 29 for the taxable 

23 year, no credit shall be allowable under this section 

24 unless the taxpayer elects not to claim the credit 

25 under section 29 with respect to the well.’’. 
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1 (b) CREDIT TREATED AS BUSINESS CREDIT.—Sec2 tion 38(b) is amended by striking ‘‘plus’’ at the end of 

3 paragraph (16), by striking the period at the end of para4 graph (17) and inserting ‘‘, plus’’, and by adding at the 

5 end the following: 

6 ‘‘(18) the marginal oil and gas well production 

7 credit determined under section 45I(a).’’. 

8 (c) CARRYBACK.—Subsection (a) of section 39 (relat9 ing to carryback and carryforward of unused credits gen10 erally) is amended by adding at the end the following: 

11 ‘‘(3) 10-YEAR CARRYBACK FOR MARGINAL OIL

12 AND GAS WELL PRODUCTION CREDIT.—In the case 

13 of the marginal oil and gas well production credit—

14 ‘‘(A) this section shall be applied sepa15 rately from the business credit (other than the 

16 marginal oil and gas well production credit), 

17 ‘‘(B) paragraph (1) shall be applied by 

18 substituting ‘10 taxable years’ for ‘1 taxable 

19 years’ in subparagraph (A) thereof, and 

20 ‘‘(C) paragraph (2) shall be applied—

21 ‘‘(i) by substituting ‘31 taxable years’ 

22 for ‘21 taxable years’ in subparagraph (A) 

23 thereof, and 
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1 ‘‘(ii) by substituting ‘30 taxable years’ 

2 for ‘20 taxable years’ in subparagraph (A) 

3 thereof.’’. 

4 (d) COORDINATION WITH SECTION 29.—Section 

5 29(a) is amended by striking ‘‘There’’ and inserting ‘‘At 

6 the election of the taxpayer, there’’. 

7 (e) CLERICAL AMENDMENT.—The table of sections 

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

9 is amended by adding at the end the following:

‘‘Sec. 45I. Credit for producing oil and gas from marginal wells.’’.

10 (f) EFFECTIVE DATE.—The amendments made by 

11 this section shall apply to production in taxable years be12 ginning after December 31, 2003. 

13 SEC. 43002. TEMPORARY SUSPENSION OF LIMITATION 

14 BASED ON 65 PERCENT OF TAXABLE INCOME 

15 AND EXTENSION OF SUSPENSION OF TAX16 ABLE INCOME LIMIT WITH RESPECT TO MAR17 GINAL PRODUCTION. 

18 (a) LIMITATION BASED ON 65 PERCENT OF TAX19 ABLE INCOME.—Subsection (d) of section 613A (relating 

20 to limitation on percentage depletion in case of oil and 

21 gas wells) is amended by adding at the end the following 

22 new paragraph: 

23 ‘‘(6) TEMPORARY SUSPENSION OF TAXABLE IN24 COME LIMIT.—Paragraph (1) shall not apply to tax25 able years beginning after December 31, 2003, and 
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1 before January 1, 2007, including with respect to 

2 amounts carried under the second sentence of para3 graph (1) to such taxable years.’’. 

4 (b) EXTENSION OF SUSPENSION OF TAXABLE IN5 COME LIMIT WITH RESPECT TO MARGINAL PRODUC6 TION.—Subparagraph (H) of section 613A(c)(6) (relating 

7 to temporary suspension of taxable income limit with re8 spect to marginal production) is amended by striking 

9 ‘‘2004’’ and inserting ‘‘2007’’. 

10 (c) EFFECTIVE DATE.—The amendment made by 

11 subsection (a) shall apply to taxable years beginning after 

12 December 31, 2003. 

13 SEC. 43003. AMORTIZATION OF DELAY RENTAL PAYMENTS. 

14 (a) IN GENERAL.—Section 167 (relating to deprecia15 tion) is amended by redesignating subsection (h) as sub16 section (i) and by inserting after subsection (g) the fol17 lowing new subsection: 

18 ‘‘(h) AMORTIZATION OF DELAY RENTAL PAYMENTS

19 FOR DOMESTIC OIL AND GAS WELLS.—

20 ‘‘(1) IN GENERAL.—Any delay rental payment 

21 paid or incurred in connection with the development 

22 of oil or gas wells within the United States (as de23 fined in section 638) shall be allowed as a deduction 

24 ratably over the 24-month period beginning on the 

25 date that such payment was paid or incurred. 
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1 ‘‘(2) HALF-YEAR CONVENTION.—For purposes 

2 of paragraph (1), any payment paid or incurred dur3 ing the taxable year shall be treated as paid or in4 curred on the mid-point of such taxable year. 

5 ‘‘(3) EXCLUSIVE METHOD.—Except as provided 

6 in this subsection, no depreciation or amortization 

7 deduction shall be allowed with respect to such pay8 ments. 

9 ‘‘(4) TREATMENT UPON ABANDONMENT.—If 

10 any property to which a delay rental payment relates 

11 is retired or abandoned during the 24-month period 

12 described in paragraph (1), no deduction shall be al13 lowed on account of such retirement or abandon14 ment and the amortization deduction under this sub15 section shall continue with respect to such payment. 

16 ‘‘(5) DELAY RENTAL PAYMENTS.—For purposes 

17 of this subsection, the term ‘delay rental payment’ 

18 means an amount paid for the privilege of deferring 

19 development of an oil or gas well under an oil or gas 

20 lease.’’. 

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

22 this section shall apply to amounts paid or incurred in tax23 able years beginning after December 31, 2003. 
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1 SEC. 43004. AMORTIZATION OF GEOLOGICAL AND GEO2 PHYSICAL EXPENDITURES. 

3 (a) IN GENERAL.—Section 167 (relating to deprecia4 tion) is amended by redesignating subsection (i) as sub5 section (j) and by inserting after subsection (h) the fol6 lowing new subsection: 

7 ‘‘(i) AMORTIZATION OF GEOLOGICAL AND GEO8 PHYSICAL EXPENDITURES.—

9 ‘‘(1) IN GENERAL.—Any geological and geo10 physical expenses paid or incurred in connection 

11 with the exploration for, or development of, oil or 

12 gas within the United States (as defined in section 

13 638) shall be allowed as a deduction ratably over the 

14 24-month period beginning on the date that such ex15 pense was paid or incurred. 

16 ‘‘(2) SPECIAL RULES.—For purposes of this 

17 subsection, rules similar to the rules of paragraphs 

18 (2), (3), and (4) of subsection (h) shall apply.’’. 

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

20 this section shall apply to costs paid or incurred in taxable 

21 years beginning after December 31, 2003. 

22 SEC. 43005. EXTENSION AND MODIFICATION OF CREDIT 

23 FOR PRODUCING FUEL FROM A NONCONVEN24 TIONAL SOURCE. 

25 (a) IN GENERAL.—Section 29 is amended by adding 

26 at the end the following new subsection: 
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1 ‘‘(h) EXTENSION FOR OTHER FACILITIES.—

2 ‘‘(1) EXTENSION FOR OIL AND CERTAIN GAS.—

3 In the case of a well for producing qualified fuels de4 scribed in subparagraph (A) or (B)(i) of subsection 

5 (c)(1)—

6 ‘‘(A) APPLICATION OF CREDIT FOR NEW

7 WELLS.—Notwithstanding subsection (f), this 

8 section shall apply with respect to such fuels—

9 ‘‘(i) which are produced from a well 

10 drilled after the date of the enactment of 

11 this subsection and before January 1, 

12 2007, and 

13 ‘‘(ii) which are sold not later than the 

14 close of the 4-year period beginning on the 

15 date that such well is drilled, or, if earlier, 

16 January 1, 2010. 

17 ‘‘(B) EXTENSION OF CREDIT FOR OLD

18 WELLS.—Subsection (f)(2) shall be applied by 

19 substituting ‘2007’ for ‘2003’ with respect to 

20 wells described in subsection (f)(1)(A) with re21 spect to such fuels. 

22 ‘‘(2) EXTENSION FOR FACILITIES PRODUCING

23 QUALIFIED FUEL FROM LANDFILL GAS.—

24 ‘‘(A) IN GENERAL.—In the case of a facil25 ity for producing qualified fuel from landfill gas 
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1 which was placed in service after June 30, 

2 1998, and before January 1, 2007, this section 

3 shall apply to fuel produced at such facility dur4 ing the 5-year period beginning on the later 

5 of—

6 ‘‘(i) the date such facility was placed 

7 in service, or 

8 ‘‘(ii) the date of the enactment of this 

9 subsection. 

10 ‘‘(B) REDUCTION OF CREDIT FOR CERTAIN

11 LANDFILL FACILITIES.—In the case of a facility 

12 to which paragraph (1) applies and which is lo13 cated at a landfill which is required pursuant to 

14 section 60.751(b)(2) or section 60.33c of title 

15 40, Code of Federal Regulations (as in effect on 

16 April 3, 2003) to install and operate a collec17 tion and control system which captures gas gen18 erated within the landfill, subsection (a)(1) 

19 shall be applied to gas so captured by sub20 stituting ‘$2’ for ‘$3’ for the taxable year dur21 ing which such system is required to be in22 stalled and operated. 

23 ‘‘(3) SPECIAL RULES.—In determining the 

24 amount of credit allowable under this section solely 

25 by reason of this subsection—
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1 ‘‘(A) DAILY LIMIT.—The amount of quali2 fied fuels sold during any taxable year which 

3 may be taken into account by reason of this 

4 subsection with respect to any project shall not 

5 exceed an average barrel-of-oil equivalent of 

6 200,000 cubic feet of natural gas per day. Days 

7 before the date the project is placed in service 

8 shall not be taken into account in determining 

9 such average. 

10 ‘‘(B) EXTENSION PERIOD TO COMMENCE

11 WITH UNADJUSTED CREDIT AMOUNT.—In the 

12 case of fuels sold during 2003, the dollar 

13 amount applicable under subsection (a)(1) shall 

14 be $3 (without regard to subsection (b)(2)). In 

15 the case of fuels sold after 2003, subparagraph 

16 (B) of subsection (d)(2) shall be applied by sub17 stituting ‘2003’ for ‘1979’.’’. 

18 (b) TREATMENT AS BUSINESS CREDIT.—

19 (1) CREDIT MOVED TO SUBPART RELATING TO

20 BUSINESS RELATED CREDITS.—The Internal Rev21 enue Code of 1986 is amended by redesignating sec22 tion 29 as section 45J and by moving section 45J 

23 (as so redesignated) from subpart B of part IV of 

24 subchapter A of chapter 1 to the end of subpart D 

25 of part IV of subchapter A of chapter 1. 
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1 (2) CREDIT TREATED AS BUSINESS CREDIT.—

2 Section 38(b) is amended by striking ‘‘plus’’ at the 

3 end of paragraph (17), by striking the period at the 

4 end of paragraph (18) and inserting ‘‘, plus’’, and 

5 by adding at the end the following: 

6 ‘‘(19) the nonconventional source production 

7 credit determined under section 45J(a).’’. 

8 (3) CONFORMING AMENDMENTS.—

9 (A) Section 30(b)(2)(A), as redesignated 

10 by section 110(a), is amended by striking ‘‘sec11 tions 27 and 29’’ and inserting ‘‘section 27’’. 

12 (B) Section 30B(d), as added by section 

13 41011, is amended by striking ‘‘, 29,’’. 

14 (C) Section 39(d) is amended by adding at 

15 the end the following new paragraph: 

16 ‘‘(13) NO CARRYBACK FOR NONCONVENTIONAL

17 SOURCE PRODUCTION CREDIT.—No portion of the 

18 unused business credit for any taxable year which is 

19 attributable to the credit under section 45J may be 

20 carried back to a taxable year ending before April 1, 

21 2003.’’. 

22 (D) Sections 43(b)(2), 45I(b)(2)(C) (as 

23 added by section 43001), and 613A(c)(6)(C) 

24 are each amended by striking ‘‘section 
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1 29(d)(2)(C)’’ and inserting ‘‘section 

2 45J(d)(2)(C)’’. 

3 (E) Paragraph (9) of section 45(c), as 

4 added by section 41002(c), is amended by strik5 ing ‘‘section 29’’ and inserting ‘‘section 45J’’ 

6 and by striking ‘‘SECTION 29’’ in the heading of 

7 such paragraph and inserting ‘‘SECTION 45J’’. 

8 (F) Section 45I(d)(3), as added by section 

9 43001, is amended by striking ‘‘section 29’’ 

10 each place it appears and inserting ‘‘section 

11 45J’’. 

12 (G) Section 45J(a), as amended by section 

13 43001(d) and redesignated by paragraph (1), is 

14 amended by striking ‘‘At the election of the tax15 payer, there shall be allowed as a credit against 

16 the tax imposed by this chapter for the taxable 

17 year’’ and inserting ‘‘For purposes of section 

18 38, if the taxpayer elects to have this section 

19 apply, the nonconventional source production 

20 credit determined under this section for the tax21 able year is’’. 

22 (H) Section 45J(b), as so redesignated, is 

23 amended by striking paragraph (6). 
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1 (I) Section 53(d)(1)(B)(iii) is amended by 

2 striking ‘‘under section 29’’ and all that follows 

3 through ‘‘or not allowed’’. 

4 (J) Section 55(c)(2) is amended by strik5 ing ‘‘29(b)(6),’’. 

6 (K) Subsection (a) of section 772 is 

7 amended by inserting ‘‘and’’ at the end of para8 graph (9), by striking paragraph (10), and by 

9 redesignating paragraph (11) as paragraph 

10 (10). 

11 (L) Paragraph (5) of section 772(d) is 

12 amended by striking ‘‘the foreign tax credit, 

13 and the credit allowable under section 29’’ and 

14 inserting ‘‘and the foreign tax credit’’. 

15 (M) The table of sections for subpart B of 

16 part IV of subchapter A of chapter 1 is amend17 ed by striking the item relating to section 29. 

18 (N) The table of sections for subpart D of 

19 part IV of subchapter A of chapter 1 is amend20 ed by inserting after the item relating to section 

21 45I the following new item:

‘‘Sec. 45J. Credit for producing fuel from a nonconventional 

source.’’.

22 (c) EFFECTIVE DATES.—
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1 (1) IN GENERAL.—The amendment made by 

2 subsection (a) shall apply to fuel sold after March 

3 31, 2003, in taxable years ending after such date. 

4 (2) TREATMENT AS BUSINESS CREDIT.—The 

5 amendments made by subsection (b) shall apply to 

6 taxable years ending after March 31, 2003. 

7 SEC. 43006. BUSINESS RELATED ENERGY CREDITS AL8 LOWED AGAINST REGULAR AND MINIMUM 

9 TAX. 

10 (a) IN GENERAL.—Subsection (c) of section 38 (re11 lating to limitation based on amount of tax) is amended 

12 by redesignating paragraph (4) as paragraph (5) and by 

13 inserting after paragraph (3) the following new paragraph: 

14 ‘‘(4) SPECIAL RULES FOR SPECIFIED ENERGY

15 CREDITS.—

16 ‘‘(A) IN GENERAL.—In the case of speci17 fied energy credits—

18 ‘‘(i) this section and section 39 shall 

19 be applied separately with respect to such 

20 credits, and 

21 ‘‘(ii) in applying paragraph (1) to 

22 such credits—

23 ‘‘(I) the tentative minimum tax 

24 shall be treated as being zero, and 
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1 ‘‘(II) the limitation under para2 graph (1) (as modified by subclause 

3 (I)) shall be reduced by the credit al4 lowed under subsection (a) for the 

5 taxable year (other than the specified 

6 energy credits). 

7 ‘‘(B) SPECIFIED ENERGY CREDITS.—For 

8 purposes of this subsection, the term ‘specified 

9 energy credits’ means the credits determined 

10 under sections 45G, 45H, and 45I. 

11 ‘‘(C) SPECIAL RULE FOR QUALIFIED WIND

12 FACILITIES.—For purposes of this subsection, 

13 the term ‘specified energy credits’ shall include 

14 the credit determined under section 45 to the 

15 extent that such credit is attributable to elec16 tricity produced—

17 ‘‘(i) at a facility using wind to 

18 produce electricity which is originally 

19 placed in service after the date of the en20 actment of this paragraph, and 

21 ‘‘(ii) during the 4-year period begin22 ning on the date that such facility was 

23 originally placed in service.’’. 

24 (b) CONFORMING AMENDMENTS.—Paragraphs 

25 (2)(A)(ii)(II) and (3)(A)(ii)(II) of section 38(c) are each 
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1 amended by inserting ‘‘or the specified energy credits’’ 

2 after ‘‘employee credit’’. 

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

4 this section shall apply to taxable years ending after the 

5 date of the enactment of this Act. 

6 SEC. 43007. TEMPORARY REPEAL OF ALTERNATIVE MIN7 IMUM TAX PREFERENCE FOR INTANGIBLE 

8 DRILLING COSTS. 

9 (a) IN GENERAL.—Clause (ii) of section 57(a)(2)(E) 

10 is amended by adding at the end the following new sen11 tence: ‘‘The preceding sentence shall not apply to taxable 

12 years beginning after December 31, 2003, and before Jan13 uary 1, 2006.’’. 

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

15 this section shall apply to taxable years beginning after 

16 December 31, 2003. 

17 SEC. 43008. ALLOWANCE OF ENHANCED RECOVERY CREDIT 

18 AGAINST THE ALTERNATIVE MINIMUM TAX. 

19 (a) IN GENERAL.—Subparagraph (B) of section 

20 38(c)(4), as amended by section 43006, is amended by 

21 adding at the end the following new sentence: ‘‘For taxable 

22 years beginning after December 31, 2003, and before Jan23 uary 1, 2006, such term includes the credit determined 

24 under section 43.’’. 
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1 (b) EFFECTIVE DATE.—The amendment made by 

2 this section shall apply to taxable years beginning after 

3 December 31, 2003. 

4 TITLE IV—CORPORATE 

5 EXPATRIATION

6 SEC. 44001. TAX TREATMENT OF CORPORATE EXPATRIA7 TION. 

8 (a) IN GENERAL.—Subchapter C of chapter 80 (re9 lating to provisions affecting more than one subtitle) is 

10 amended by adding at the end the following new section: 

11 ‘‘SEC. 7874. TAX TREATMENT OF CORPORATE EXPATRIA12 TION. 

13 ‘‘(a) INVERTED CORPORATIONS TREATED AS DOMES14 TIC CORPORATIONS.—

15 ‘‘(1) IN GENERAL.—If a foreign incorporated 

16 entity is treated as an inverted domestic corporation, 

17 then, notwithstanding section 7701(a)(4), such enti18 ty shall be treated for purposes of this title as a do19 mestic corporation. 

20 ‘‘(2) INVERTED DOMESTIC CORPORATION.—For 

21 purposes of this section, a foreign incorporated enti22 ty shall be treated as an inverted domestic corpora23 tion if, pursuant to a plan (or a series of related 

24 transactions)—
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1 ‘‘(A) the entity completes after March 4, 

2 2003, the direct or indirect acquisition of sub3 stantially all of the properties held directly or 

4 indirectly by a domestic corporation or substan5 tially all of the properties constituting a trade 

6 or business of a domestic partnership, 

7 ‘‘(B) after the acquisition at least 80 per8 cent of the stock (by vote or value) of the entity 

9 is held—

10 ‘‘(i) in the case of an acquisition with 

11 respect to a domestic corporation, by 

12 former shareholders of the domestic cor13 poration by reason of holding stock in the 

14 domestic corporation, or 

15 ‘‘(ii) in the case of an acquisition with 

16 respect to a domestic partnership, by 

17 former partners of the domestic partner18 ship by reason of holding a capital or prof19 its interest in the domestic partnership, 

20 and 

21 ‘‘(C) the expanded affiliated group which 

22 after the acquisition includes the entity does 

23 not have substantial business activities in the 

24 foreign country in which or under the law of 

25 which the entity is created or organized when 
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1 compared to the total business activities of such 

2 expanded affiliated group. 

3 ‘‘(3) TERMINATION.—This subsection shall not 

4 apply to any acquisition completed after December 

5 31, 2004. 

6 ‘‘(b) DEFINITIONS AND SPECIAL RULES.—For pur7 poses of this section—

8 ‘‘(1) FOREIGN INCORPORATED ENTITY.—The 

9 term ‘foreign incorporated entity’ means any entity 

10 which is, or but for subsection (a) would be, treated 

11 as a foreign corporation for purposes of this title. 

12 ‘‘(2) EXPANDED AFFILIATED GROUP.—The 

13 term ‘expanded affiliated group’ means an affiliated 

14 group as defined in section 1504(a) but without re15 gard to paragraphs (2), (3), and (4) of section 

16 1504(b), except that section 1504(a) shall be applied 

17 by substituting ‘more than 50 percent’ for ‘at least 

18 80 percent’ each place it appears. 

19 ‘‘(3) CERTAIN STOCK DISREGARDED.—There 

20 shall not be taken into account in determining own21 ership under subsection (a)(3)(B)—

22 ‘‘(A) stock held by members of the ex23 panded affiliated group which includes the for24 eign incorporated entity, or 
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1 ‘‘(B) stock of such foreign incorporated en2 tity which is sold in a public offering related to 

3 the acquisition described in subsection 

4 (a)(3)(A). 

5 ‘‘(4) PLAN DEEMED IN CERTAIN CASES.—If a 

6 foreign incorporated entity acquires directly or indi7 rectly substantially all of the properties of a domes8 tic corporation or partnership during the 4-year pe9 riod beginning on the date which is 2 years before 

10 the ownership requirements of subsection (a)(3)(B) 

11 are met, such actions shall be treated as pursuant 

12 to a plan. 

13 ‘‘(5) CERTAIN TRANSFERS DISREGARDED.—The 

14 transfer of properties or liabilities (including by con15 tribution or distribution) shall be disregarded if such 

16 transfers are part of a plan a principal purpose of 

17 which is to avoid the purposes of this section. 

18 ‘‘(6) SPECIAL RULE FOR RELATED PARTNER19 SHIPS.—For purposes of applying subsection 

20 (a)(3)(B) to the acquisition of a domestic partner21 ship, except as provided in regulations, all partner22 ships which are under common control (within the 

23 meaning of section 482) shall be treated as 1 part24 nership. 
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1 ‘‘(7) REGULATIONS.—The Secretary shall pre2 scribe such regulations as may be appropriate to de3 termine whether a corporation is an inverted domes4 tic corporation, including regulations—

5 ‘‘(A) to treat warrants, options, contracts 

6 to acquire stock, convertible debt interests, and 

7 other similar interests as stock, and 

8 ‘‘(B) to treat stock as not stock. 

9 ‘‘(c) SPECIAL RULE FOR TREATIES.—Nothing in sec10 tion 894 or 7852(d) or in any other provision of law shall 

11 be construed as permitting an exemption, by reason of any 

12 treaty obligation of the United States heretofore or here13 after entered into, from the provisions of this section. 

14 ‘‘(d) REGULATIONS.—The Secretary shall provide 

15 such regulations as are necessary to carry out this section, 

16 including regulations providing for such adjustments to 

17 the application of this section as are necessary to prevent 

18 the avoidance of the purposes of this section, including the 

19 avoidance of such purposes through—

20 ‘‘(1) the use of related persons, pass-through or 

21 other noncorporate entities, or other intermediaries, 

22 or 

23 ‘‘(2) transactions designed to have persons 

24 cease to be (or not become) members of expanded 

25 affiliated groups or related persons.’’. 
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1 (b) CONFORMING AMENDMENT.—The table of sec2 tions for subchapter C of chapter 80 is amended by adding 

3 at the end the following new item:

‘‘Sec. 7874. Tax treatment of corporate expatriation.’’

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

5 this section shall apply to taxable years ending after 

6 March 4, 2003.

7 SEC. 44002. EXPRESSING THE SENSE OF THE CONGRESS 

8 THAT TAX REFORM IS NEEDED TO ADDRESS 

9 THE ISSUE OF CORPORATE EXPATRIATION. 

10 (a) FINDINGS.—The Congress finds that—

11 (1) the tax laws of the United States are overly 

12 complex; 

13 (2) the tax laws of the United States are among 

14 the most burdensome and uncompetitive in the 

15 world; 

16 (3) the tax laws of the United States make it 

17 difficult for domestically-owned United States com18 panies to compete abroad and in the United States; 

19 (4) a domestically-owned corporation is dis20 advantaged compared to a United States subsidiary 

21 of a foreign-owned corporation; and 

22 (5) international competitiveness is forcing 

23 many United States corporations to make a choice 

24 they do not want to make–go out of business, sell 

25 the business to a foreign competitor, or become a 
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1 subsidiary of a foreign corporation (i.e., engage in 

2 an inversion transaction). 

3 (b) SENSE OF CONGRESS.—It is the sense of Con4 gress that passage of legislation to fix the underlying prob5 lems with our tax laws is essential and should occur as 

6 soon as possible, so United States corporations will not 

7 face the current pressures to engage in inversion trans8 actions.

9 DIVISION E—CLEAN COAL

10 SEC. 50001. AUTHORIZATION OF APPROPRIATIONS. 

11 (a) CLEAN COAL POWER INITIATIVE.—Except as 

12 provided in subsection (b), there are authorized to be ap13 propriated to the Secretary to carry out the activities au14 thorized by this division $200,000,000 for each of the fis15 cal years 2004 through 2012, to remain available until ex16 pended. 

17 (b) LIMIT ON USE OF FUNDS.—The Secretary shall 

18 transmit to the Committee on Energy and Commerce and 

19 the Committee on Science of the House of Representa20 tives, and to the Senate, the report required by this sub21 section not later than March 31, 2005. Notwithstanding 

22 subsection (a), no funds may be used to carry out the ac23 tivities authorized by this division after September 30, 

24 2005, unless the report has been transmitted and one 

25 month has elapsed since that transmission. The report 
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1 shall include, with respect to subsection (a), a 10-year 

2 plan containing—

3 (1) a detailed assessment of whether the aggre4 gate funding levels provided under subsection (a) are 

5 the appropriate funding levels for that program; 

6 (2) a detailed description of how proposals will 

7 be solicited and evaluated, including a list of all ac8 tivities expected to be undertaken; 

9 (3) a detailed list of technical milestones for 

10 each coal and related technology that will be pur11 sued; and 

12 (4) a detailed description of how the program 

13 will avoid problems enumerated in General Account14 ing Office reports on the Clean Coal Technology 

15 Program, including problems that have resulted in 

16 unspent funds and projects that failed either finan17 cially or scientifically. 

18 (c) APPLICABILITY.—Subsection (b) shall not apply 

19 to any project begun before September 30, 2005. 

20 SEC. 50002. PROJECT CRITERIA. 

21 (a) IN GENERAL.—The Secretary shall not provide 

22 funding under this division for any project that does not 

23 advance efficiency, environmental performance, and cost 

24 competitiveness well beyond the level of technologies that 

25 are in commercial service or have been demonstrated on 
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1 a scale that the Secretary determines is sufficient to dem2 onstrate that commercial service is viable as of the date 

3 of the enactment of this Act. 

4 (b) TECHNICAL CRITERIA FOR CLEAN COAL POWER

5 INITIATIVE.—

6 (1) GASIFICATION.—(A) In allocating the funds 

7 made available under section 50001(a), the Sec8 retary shall ensure that at least 60 percent of the 

9 funds are used only for projects on coal-based gasifi10 cation technologies, including gasification combined 

11 cycle, gasification fuel cells, gasification coproduc12 tion, and hybrid gasification/combustion. 

13 (B) The Secretary shall periodically set tech14 nical milestones specifying the emission and thermal 

15 efficiency levels that coal gasification projects must 

16 be designed to and reasonably expected to achieve. 

17 The technical milestones shall get more restrictive 

18 during the life of the program. The Secretary shall 

19 set the periodic milestones so as to achieve by 2020 

20 coal gasification projects able—

21 (i) to remove 99 percent of sulfur dioxide; 

22 (ii) to emit no more than .05 lbs of NOx 

23 per million BTU; 

24 (iii) to achieve substantial reductions in 

25 mercury emissions; and 
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1 (iv) to achieve a thermal efficiency of— 

2 (I) 60 percent for coal of more than 

3 9,000 Btu; 

4 (II) 59 percent for coal of 7,000 to 

5 9,000 Btu; and 

6 (III) 50 percent for coal of less than 

7 7,000 Btu. 

8 (2) OTHER PROJECTS.—The Secretary shall pe9 riodically set technical milestones for projects not 

10 described in paragraph (1). The milestones shall 

11 specify the emission and thermal efficiency levels 

12 that projects funded under this paragraph must be 

13 designed to and reasonably expected to achieve. The 

14 technical milestones shall get more restrictive during 

15 the life of the program. The Secretary shall set the 

16 periodic milestones so as to achieve by 2010 projects 

17 able—

18 (A) to remove 97 percent of sulfur dioxide; 

19 (B) to emit no more than .08 lbs of NOx 

20 per million BTU; 

21 (C) to achieve substantial reductions in 

22 mercury emissions; and 

23 (D) to achieve a thermal efficiency of—

24 (i) 45 percent for coal of more than 

25 9,000 Btu;
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1 (ii) 44 percent for coal of 7,000 to 

2 9,000 Btu; and 

3 (iii) 40 percent for coal of less than 

4 7,000 Btu. 

5 (3) CONSULTATION.—Before setting the tech6 nical milestones under paragraphs (1)(B) and (2), 

7 the Secretary shall consult with the Administrator of 

8 the Environmental Protection Agency and interested 

9 entities, including coal producers, industries using 

10 coal, organizations to promote coal or advanced coal 

11 technologies, environmental organizations, and orga12 nizations representing workers. 

13 (4) EXISTING UNITS.—In the case of projects 

14 at existing units, in lieu of the thermal efficiency re15 quirements set forth in paragraph (1)(B)(iv) and 

16 (2)(D), the milestones shall be designed to achieve 

17 an overall thermal design efficiency improvement 

18 compared to the efficiency of the unit as operated, 

19 of not less than— 

20 (A) 7 percent for coal of more than 9,000 

21 Btu; 

22 (B) 6 percent for coal of 7,000 to 9,000 

23 Btu; or 

24 (C) 4 percent for coal of less than 7,000 

25 Btu. 
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1 (5) PERMITTED USES.—In allocating funds 

2 made available under section 50001, the Secretary 

3 may fund projects that include, as part of the 

4 project, the separation and capture of carbon diox5 ide. 

6 (c) FINANCIAL CRITERIA.—The Secretary shall not 

7 provide a funding award under this division unless the re8 cipient has documented to the satisfaction of the Secretary 

9 that—

10 (1) the award recipient is financially viable 

11 without the receipt of additional Federal funding; 

12 (2) the recipient will provide sufficient informa13 tion to the Secretary for the Secretary to ensure 

14 that the award funds are spent efficiently and effec15 tively; and 

16 (3) a market exists for the technology being 

17 demonstrated or applied, as evidenced by statements 

18 of interest in writing from potential purchasers of 

19 the technology. 

20 (d) FINANCIAL ASSISTANCE.—The Secretary shall 

21 provide financial assistance to projects that meet the re22 quirements of subsections (a), (b), and (c) and are likely 

23 to—

24 (1) achieve overall cost reductions in the utiliza25 tion of coal to generate useful forms of energy; 
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1 (2) improve the competitiveness of coal among 

2 various forms of energy in order to maintain a diver3 sity of fuel choices in the United States to meet elec4 tricity generation requirements; and 

5 (3) demonstrate methods and equipment that 

6 are applicable to 25 percent of the electricity gener7 ating facilities, using different types of coal, that use 

8 coal as the primary feedstock as of the date of the 

9 enactment of this Act. 

10 (e) FEDERAL SHARE.—The Federal share of the cost 

11 of a coal or related technology project funded by the Sec12 retary under this division shall not exceed 50 percent. 

13 (f) APPLICABILITY.—No technology, or level of emis14 sion reduction, shall be treated as adequately dem15 onstrated for purposes of section 111 of the Clean Air Act, 

16 achievable for purposes of section 169 of that Act, or 

17 achievable in practice for purposes of section 171 of that 

18 Act solely by reason of the use of such technology, or the 

19 achievement of such emission reduction, by one or more 

20 facilities receiving assistance under this division. 

21 SEC. 50003. REPORT. 

22 Not later than 1 year after the date of the enactment 

23 of this Act, and once every 2 years thereafter through 

24 2011, the Secretary, in consultation with other appro25 priate Federal agencies, shall transmit to the Committee 
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1 on Energy and Commerce and the Committee on Science 

2 of the House of Representatives, and to the Senate, a re3 port describing—

4 (1) the technical milestones set forth in section 

5 50002 and how those milestones ensure progress to6 ward meeting the requirements of subsections 

7 (b)(1)(B) and (b)(2) of section 50002; and 

8 (2) the status of projects funded under this di9 vision. 

10 SEC. 50004. CLEAN COAL CENTERS OF EXCELLENCE. 

11 As part of the program authorized in section 50001, 

12 the Secretary shall award competitive, merit-based grants 

13 to universities for the establishment of Centers of Excel14 lence for Energy Systems of the Future. The Secretary 

15 shall provide grants to universities that can show the 

16 greatest potential for advancing new clean coal tech17 nologies.

18 DIVISION F—HYDROGEN 

19 SEC. 60001. DEFINITIONS. 

20 In this division: 

21 (1) The term ‘‘Advisory Committee’’ means the 

22 Hydrogen Technical and Fuel Cell Advisory Com23 mittee established under section 60005 of this Act. 

24 (2) The term ‘‘Department’’ means the Depart25 ment of Energy. 
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1 (3) The term ‘‘fuel cell’’ means a device that di2 rectly converts the chemical energy of a fuel and an 

3 oxidant into electricity by an electrochemical process 

4 taking place at separate electrodes in the device. 

5 (4) The term ‘‘infrastructure’’ means the equip6 ment, systems, or facilities used to produce, dis7 tribute, deliver, or store hydrogen and other ad8 vanced clean fuels. 

9 (5) The term ‘‘light duty vehicle’’ means a car 

10 or truck, classified by the Department of Transpor11 tation as a Class I or IIA vehicle. 

12 (6) The term ‘‘Secretary’’ means the Secretary 

13 of Energy. 

14 SEC. 60002. PLAN. 

15 Not later than six months after the date of enactment 

16 of this Act, the Secretary shall transmit to the Congress 

17 a coordinated plan for the programs described in this divi18 sion and any other programs of the Department that are 

19 directly related to fuel cells or hydrogen. The plan shall 

20 describe, at a minimum—

21 (1) the agenda for the next five years for the 

22 programs authorized under this division, including 

23 the agenda for each activity enumerated in section 

24 60003(a); 
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1 (2) the types of entities that will carry out the 

2 activities under this division and what role each enti3 ty is expected to play; 

4 (3) the milestones that will be used to evaluate 

5 the programs for the next five years; 

6 (4) the most significant technical and nontech7 nical hurdles that stand in the way of achieving the 

8 goals described in section 60003(b), and how the 

9 programs will address those hurdles; and 

10 (5) the policy assumptions that are implicit in 

11 the plan, including any assumptions that would af12 fect the sources of hydrogen or the marketability of 

13 hydrogen-related products. 

14 SEC. 60003. PROGRAM. 

15 (a) ACTIVITIES.—The Secretary, in partnership with 

16 the private sector, shall conduct a program to address—

17 (1) production of hydrogen from diverse energy 

18 sources, including—

19 (A) fossil fuels, which may include carbon 

20 capture and sequestration; 

21 (B) hydrogen-carrier fuels (including eth22 anol and methanol); 

23 (C) renewable energy resources; and 

24 (D) nuclear energy; 
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1 (2) the safe delivery of hydrogen or hydrogen2 carrier fuels, including—

3 (A) transmission by pipeline and other dis4 tribution methods; and 

5 (B) convenient and economic refueling of 

6 vehicles either at central refueling stations or 

7 through distributed on-site generation; 

8 (3) advanced vehicle technologies, including—

9 (A) engine and emission control systems; 

10 (B) energy storage, electric propulsion, and 

11 hybrid systems; 

12 (C) automotive materials; 

13 (D) clean fuels in addition to hydrogen; 

14 and 

15 (E) other advanced vehicle technologies; 

16 (4) storage of hydrogen or hydrogen-carrier 

17 fuels, including development of materials for safe 

18 and economic storage in gaseous, liquid, or solid 

19 form at refueling facilities and onboard vehicles; 

20 (5) development of safe, durable, affordable, 

21 and efficient fuel cells, including research and devel22 opment on fuel-flexible fuel cell power systems, im23 proved manufacturing processes, high-temperature 

24 membranes, cost-effective fuel processing for natural 
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1 gas, fuel cell stack and system reliability, low tem2 perature operation, and cold start capability; and 

3 (6) development of necessary codes and stand4 ards (including international codes and standards) 

5 and safety practices for the production, distribution, 

6 storage, and use of hydrogen, hydrogen-carrier fuels 

7 and related products. 

8 (b) PROGRAM GOALS.—

9 (1) VEHICLES.—For vehicles, the goals of the 

10 program are—

11 (A) to enable a commitment by auto12 makers no later than year 2015 to offer safe, 

13 affordable, and technically viable hydrogen fuel 

14 cell vehicles in the mass consumer market; and 

15 (B) to enable production, delivery, and ac16 ceptance by consumers of model year 2020 hy17 drogen fuel cell and other vehicles that will 

18 have—

19 (i) a range of at least three hundred 

20 miles; 

21 (ii) improved performance and ease of 

22 driving; 

23 (iii) safety and performance com24 parable to vehicle technologies in the mar25 ket; 
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1 (iv) when compared to light duty vehi2 cles in model year 2003—

3 (I) a fuel economy that is two 

4 and one half times the equivalent fuel 

5 economy of comparable light duty ve6 hicles in model year 2003; and 

7 (II) near zero emissions of air 

8 pollutants; and 

9 (v) vehicle fuel system crash integrity 

10 and occupant protection. 

11 (2) HYDROGEN ENERGY AND ENERGY INFRA12 STRUCTURE.—For hydrogen energy and energy in13 frastructure, the goals of the program are to enable 

14 a commitment not later than 2015 that will lead to 

15 infrastructure by 2020 that will provide—

16 (A) safe and convenient refueling; 

17 (B) improved overall efficiency; 

18 (C) widespread availability of hydrogen 

19 from domestic energy sources through—

20 (i) production, with consideration of 

21 emissions levels; 

22 (ii) delivery, including transmission by 

23 pipeline and other distribution methods for 

24 hydrogen; and 
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1 (iii) storage, including storage in sur2 face transportation vehicles; 

3 (D) hydrogen for fuel cells, internal com4 bustion engines, and other energy conversion 

5 devices for portable, stationary, and transpor6 tation applications; and 

7 (E) other technologies consistent with the 

8 Department’s plan. 

9 (3) FUEL CELLS.—The goals for fuel cells and 

10 their portable, stationary, and transportation appli11 cations are to enable—

12 (A) safe, economical, and environmentally 

13 sound hydrogen fuel cells; 

14 (B) fuel cells for light duty and other vehi15 cles; and 

16 (C) other technologies consistent with the 

17 Department’s plan. 

18 (c) DEMONSTRATION.—In carrying out the program 

19 under this section, the Secretary shall fund a limited num20 ber of demonstration projects. In selecting projects under 

21 this subsection, the Secretary shall, to the extent prac22 ticable and in the public interest, select projects that—

23 (1) involve using hydrogen and related products 

24 at facilities or installations that would exist without 

25 the demonstration program, such as existing office 
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1 buildings, military bases, vehicle fleet centers, tran2 sit bus authorities, or parks; 

3 (2) depend on reliable power from hydrogen to 

4 carry out essential activities; 

5 (3) lead to the replication of hydrogen tech6 nologies and draw such technologies into the market7 place; 

8 (4) integrate in a single project both mobile and 

9 stationary applications of hydrogen fuel cells; 

10 (5) address the interdependency of demand for 

11 hydrogen fuel cell applications and hydrogen fuel in12 frastructure; and 

13 (6) raise awareness of hydrogen technology 

14 among the public. 

15 (d) DEPLOYMENT.—In carrying out the program 

16 under this section, the Secretary shall, in partnership with 

17 the private sector, conduct activities to facilitate the de18 ployment of—

19 (1) hydrogen energy and energy infrastructure; 

20 (2) fuel cells; 

21 (3) advanced vehicle technologies; and 

22 (4) clean fuels in addition to hydrogen. 

23 (e) FUNDING.—(1) The Secretary shall carry out the 

24 program under this section using a competitive, merit-re25 view process and consistent with the generally applicable 
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1 Federal laws and regulations governing awards of finan2 cial assistance, contracts, or other agreements. 

3 (2) Activities under this section may be carried out 

4 by funding nationally recognized university-based research 

5 centers. 

6 (3) The Secretary shall endeavor to avoid duplication 

7 or displacement of other research and development pro8 grams and activities. 

9 (f) COST SHARING.—

10 (1) REQUIREMENT.—For projects carried out 

11 through grants, cooperative agreements, or contracts 

12 under this section, the Secretary shall require a 

13 commitment from non-Federal sources of at least—

14 (A) 20 percent of the cost of a project, ex15 cept projects carried out under subsections (c) 

16 and (d); and 

17 (B) 50 percent of the cost of a project car18 ried out under subsection (c) or (d). 

19 (2) REDUCTION.—The Secretary may reduce 

20 the non-Federal requirement under paragraph (1) if 

21 the Secretary determines that—

22 (A) the reduction is appropriate consid23 ering the technological risks involved; or 
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1 (B) the project is for technical analyses or 

2 other activities that the Secretary does not ex3 pect to result in a marketable product. 

4 (3) SIZE OF NON-FEDERAL SHARE.—The Sec5 retary may consider the size of the non-Federal 

6 share in selecting projects. 

7 SEC. 60004. INTERAGENCY TASK FORCE. 

8 (a) ESTABLISHMENT.—Not later than 120 days after 

9 the date of enactment of this Act, the President shall es10 tablish an interagency task force chaired by the Secretary 

11 or his designee with representatives from each of the fol12 lowing: 

13 (1) The Office of Science and Technology Pol14 icy within the Executive Office of the President. 

15 (2) The Department of Transportation. 

16 (3) The Department of Defense. 

17 (4) The Department of Commerce (including 

18 the National Institute of Standards and Tech19 nology). 

20 (5) The Environmental Protection Agency. 

21 (6) The National Aeronautics and Space Ad22 ministration. 

23 (7) Other Federal agencies as the Secretary de24 termines appropriate. 

25 (b) DUTIES.—
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1 (1) PLANNING.—The interagency task force 

2 shall work toward—

3 (A) a safe, economical, and environ4 mentally sound fuel infrastructure for hydrogen 

5 and hydrogen-carrier fuels, including an infra6 structure that supports buses and other fleet 

7 transportation; 

8 (B) fuel cells in government and other ap9 plications, including portable, stationary, and 

10 transportation applications; 

11 (C) distributed power generation, including 

12 the generation of combined heat, power, and 

13 clean fuels including hydrogen; 

14 (D) uniform hydrogen codes, standards, 

15 and safety protocols; and 

16 (E) vehicle hydrogen fuel system integrity 

17 safety performance. 

18 (2) ACTIVITIES.—The interagency task force 

19 may organize workshops and conferences, may issue 

20 publications, and may create databases to carry out 

21 its duties. The interagency task force shall—

22 (A) foster the exchange of generic, non23 proprietary information and technology among 

24 industry, academia, and government; 
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1 (B) develop and maintain an inventory and 

2 assessment of hydrogen, fuel cells, and other 

3 advanced technologies, including the commercial 

4 capability of each technology for the economic 

5 and environmentally safe production, distribu6 tion, delivery, storage, and use of hydrogen; 

7 (C) integrate technical and other informa8 tion made available as a result of the programs 

9 and activities under this division; 

10 (D) promote the marketplace introduction 

11 of infrastructure for hydrogen and other clean 

12 fuel vehicles; and 

13 (E) conduct an education program to pro14 vide hydrogen and fuel cell information to po15 tential end-users. 

16 (c) AGENCY COOPERATION.—The heads of all agen17 cies, including those whose agencies are not represented 

18 on the interagency task force, shall cooperate with and 

19 furnish information to the interagency task force, the Ad20 visory Committee, and the Department. 

21 SEC. 60005. ADVISORY COMMITTEE. 

22 (a) ESTABLISHMENT.—The Hydrogen Technical and 

23 Fuel Cell Advisory Committee is established to advise the 

24 Secretary on the programs and activities under this divi25 sion. 
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1 (b) MEMBERSHIP.—

2 (1) MEMBERS.—The Advisory Committee is 

3 comprised of not fewer than 12 nor more than 25 

4 members. These members shall be appointed by the 

5 Secretary to represent domestic industry, academia, 

6 professional societies, government agencies, and fi7 nancial, environmental, and other appropriate orga8 nizations based on the Department’s assessment of 

9 the technical and other qualifications of committee 

10 members and the needs of the Advisory Committee. 

11 (2) TERMS.—The term of a member of the Ad12 visory Committee shall not be more than 3 years. 

13 The Secretary may appoint members of the Advisory 

14 Committee in a manner that allows the terms of the 

15 members serving at any time to expire at spaced in16 tervals so as to ensure continuity in the functioning 

17 of the Advisory Committee. A member of the Advi18 sory Committee whose term is expiring may be re19 appointed. 

20 (3) CHAIRPERSON.—The Advisory Committee 

21 shall have a chairperson, who is elected by the mem22 bers from among their number. 

23 (c) REVIEW.—The Advisory Committee shall review 

24 and make recommendations to the Secretary on—
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1 (1) the implementation of programs and activi2 ties under this division; 

3 (2) the safety, economical, and environmental 

4 consequences of technologies for the production, dis5 tribution, delivery, storage, or use of hydrogen en6 ergy and fuel cells; and 

7 (3) the plan under section 60002. 

8 (d) RESPONSE.—(1) The Secretary shall consider, 

9 but need not adopt, any recommendations of the Advisory 

10 Committee under subsection (c). 

11 (2) The Secretary shall transmit a biennial report to 

12 the Congress describing any recommendations made by 

13 the Advisory Committee since the previous report. The re14 port shall include a description of how the Secretary has 

15 implemented or plans to implement the recommendations, 

16 or an explanation of the reasons that a recommendation 

17 will not be implemented. The report shall be transmitted 

18 along with the President’s budget proposal. 

19 (e) SUPPORT.—The Secretary shall provide resources 

20 necessary in the judgment of the Secretary for the Advi21 sory Committee to carry out its responsibilities under this 

22 division. 

23 SEC. 60006. EXTERNAL REVIEW. 

24 (a) PLAN.—The Secretary shall enter into an ar25 rangement with a competitively selected nongovernmental 
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1 entity, such as the National Academy of Sciences, to re2 view the plan prepared under section 60002, which shall 

3 be completed not later than six months after the entity 

4 receives the plan. Not later than 45 days after receiving 

5 the review, the Secretary shall transmit the review to the 

6 Congress along with a plan to implement the review’s rec7 ommendations or an explanation of the reasons that a rec8 ommendation will not be implemented. 

9 (b) ADDITIONAL REVIEW.—The Secretary shall enter 

10 into an arrangement with a competitively selected non11 governmental entity, such as the National Academy of 

12 Sciences, under which the entity will review the program 

13 under section 60003 during the fourth year following the 

14 date of enactment of this Act. The entity’s review shall 

15 include the research priorities and technical milestones, 

16 and evaluate the progress toward achieving them. The re17 view shall be completed no later than five years after the 

18 date of enactment of this Act. Not later than 45 days after 

19 receiving the review, the Secretary shall transmit the re20 view to the Congress along with a plan to implement the 

21 review’s recommendations or an explanation for the rea22 sons that a recommendation will not be implemented. 

23 SEC. 60007. MISCELLANEOUS PROVISIONS. 

24 (a) REPRESENTATION.—The Secretary may rep25 resent the United States interests with respect to activities 
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1 and programs under this division, in coordination with the 

2 Department of Transportation, the National Institute of 

3 Standards and Technology, and other relevant Federal 

4 agencies, before governments and nongovernmental orga5 nizations including—

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

7 governments and their representatives; 

8 (2) industry and its representatives, including 

9 members of the energy and transportation indus10 tries; and 

11 (3) in consultation with the Department of 

12 State, foreign governments and their representatives 

13 including international organizations. 

14 (b) REGULATORY AUTHORITY.—Nothing in this divi15 sion shall be construed to alter the regulatory authority 

16 of the Department. 

17 SEC. 60008. AUTHORIZATION OF APPROPRIATIONS. 

18 There are authorized to be appropriated to carry out 

19 this division, in addition to any amounts made available 

20 for these purposes under other Acts—

21 (1) $273,500,000 for fiscal year 2004; 

22 (2) $325,000,000 for fiscal year 2005; 

23 (3) $375,000,000 for fiscal year 2006; 

24 (4) $400,000,000 for fiscal year 2007; and 

25 (5) $425,000,000 for fiscal year 2008.’’. 
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1 SEC. 60009. FUEL CELL PROGRAM AT NATIONAL PARKS. 

2 The Secretary of Energy, in cooperation with the Sec3 retary of Interior and the National Park Service, is au4 thorized to establish a program to provide matching funds 

5 to assist in the deployment of fuel cells at one or more 

6 prominent National Parks. The Secretary of Energy shall 

7 transmit to Congress within 1 year, and annually there8 after, a report describing any activities taken pursuant to 

9 such program. The report shall address whether activities 

10 taken pursuant to such program reduce the environmental 

11 impacts of energy use at National Parks. There are au12 thorized to be appropriated $2,000,000 for each of fiscal 

13 years 2004 through 2010 to carry out the purposes of this 

14 section. 

15 SEC. 60010. ADVANCED POWER SYSTEM TECHNOLOGY IN16 CENTIVE PROGRAM. 

17 (a) PROGRAM.—The Secretary of Energy is author18 ized to establish an Advanced Power System Technology 

19 Incentive Program to support the deployment of certain 

20 advanced power system technologies and to improve and 

21 protect certain critical governmental, industrial, and com22 mercial processes. Funds provided under this section shall 

23 be used by the Secretary to make incentive payments to 

24 eligible owners or operators of advanced power system 

25 technologies to increase power generation through en26 hanced operational, economic, and environmental perform-
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1 ance. Payments under this section may only be made upon 

2 receipt by the Secretary of an incentive payment applica3 tion establishing an applicant as either—

4 (1) a qualifying advanced power system tech5 nology facility; or 

6 (2) a qualifying security and assured power fa7 cility. 

8 (b) INCENTIVES.—Subject to availability of funds, a 

9 payment of 1.8 cents per kilowatt-hour shall be paid to 

10 the owner or operator of a qualifying advanced power sys11 tem technology facility under this section for electricity 

12 generated at such facility. An additional 0.7 cents per kilo13 watt-hour shall be paid to the owner or operator of a quali14 fying security and assured power facility for electricity 

15 generated at such facility. Any facility qualifying under 

16 this section shall be eligible for an incentive payment for 

17 up to, but not more than, the first 10,000,000 kilowatt18 hours produced in any fiscal year. 

19 (c) ELIGIBILITY.—For purposes of this section—

20 (1) the term ‘‘qualifying advanced power system 

21 technology facility’’ means a facility using an ad22 vanced fuel cell, turbine, or hybrid power system or 

23 power storage system to generate or store electric 

24 energy; and 
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1 (2) the term ‘‘qualifying security and assured 

2 power facility’’ means a qualifying advanced power 

3 system technology facility determined by the Sec4 retary of Energy, in consultation with the Secretary 

5 of Homeland Security, to be in critical need of se6 cure, reliable, rapidly available, high-quality power 

7 for critical governmental, industrial, or commercial 

8 applications. 

9 (d) AUTHORIZATION.—There are authorized to be ap10 propriated to the Secretary of Energy for the purposes 

11 of this section, $10,000,000 for each of the fiscal years 

12 2004 through 2010.

13 DIVISION G—HOUSING

14 SEC. 70001. CAPACITY BUILDING FOR ENERGY-EFFICIENT, 

15 AFFORDABLE HOUSING. 

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

17 (42 U.S.C. 9816 note) is amended—

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

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

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

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

24 semicolon the following: ‘‘, including such activities 

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

2 measures that benefit low-income families’’. 

3 SEC. 70002. INCREASE OF CDBG PUBLIC SERVICES CAP FOR 

4 ENERGY CONSERVATION AND EFFICIENCY 

5 ACTIVITIES. 

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

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

8 amended—

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

10 conservation’’; 

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

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

14 following: ‘‘; and except that each percentage limita15 tion under this paragraph on the amount of assist16 ance provided under this title that may be used for 

17 the provision of public services is hereby increased 

18 by 10 percent, but such percentage increase may be 

19 used only for the provision of public services con20 cerning energy conservation or efficiency’’. 

21 SEC. 70003. FHA MORTGAGE INSURANCE INCENTIVES FOR 

22 ENERGY EFFICIENT HOUSING. 

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

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

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

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

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

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

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

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

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

14 and inserting ‘‘30 percent’’. 

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

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

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

19 ‘‘20 per centum’’ and inserting ‘‘30 percent’’. 

20 (e) LOW-INCOME MULTIFAMILY HOUSING MORT21 GAGE INSURANCE.—Section 221(k) of the National Hous22 ing Act (12 U.S.C. 1715l(k)) is amended by striking ‘‘20 

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

24 (f) ELDERLY HOUSING MORTGAGE INSURANCE.—

25 Section 231(c)(2)(C) of the National Housing Act (12 
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1 U.S.C. 1715v(c)(2)(C)) is amended by striking ‘‘20 per 

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

3 (g) CONDOMINIUM HOUSING MORTGAGE INSUR4 ANCE.—Section 234(j) of the National Housing Act (12 

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

6 and inserting ‘‘30 percent’’. 

7 SEC. 70004. PUBLIC HOUSING CAPITAL FUND. 

8 Section 9 of the United States Housing Act of 1937 

9 (42 U.S.C. 1437g) is amended—

10 (1) in subsection (d)(1)—

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

12 at the end; 

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

14 period at the end and inserting a semicolon; 

15 and 

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

17 subparagraphs: 

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

19 efficiency by installing fixtures and fittings that 

20 conform to the American Society of Mechanical 

21 Engineers/American National Standards Insti22 tute standards A112.19.2-1998 and A112.18.1-

23 2000, or any revision thereto, applicable at the 

24 time of installation, and by increasing energy 

25 efficiency and water conservation by such other 
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1 means as the Secretary determines are appro2 priate; and 

3 ‘‘(L) integrated utility management and 

4 capital planning to maximize energy conserva5 tion and efficiency measures.’’; and 

6 (2) in subsection (e)(2)(C)—

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

8 following: 

9 ‘‘(i) IN GENERAL.—The’’; and 

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

11 ‘‘(ii) THIRD PARTY CONTRACTS.—

12 Contracts described in clause (i) may in13 clude contracts for equipment conversions 

14 to less costly utility sources, projects with 

15 resident-paid utilities, and adjustments to 

16 frozen base year consumption, including 

17 systems repaired to meet applicable build18 ing and safety codes and adjustments for 

19 occupancy rates increased by rehabilita20 tion. 

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

22 term of a contract described in clause (i) 

23 shall not exceed 20 years to allow longer 

24 payback periods for retrofits, including 

25 windows, heating system replacements, 
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1 wall insulation, site-based generations, ad2 vanced energy savings technologies, includ3 ing renewable energy generation, and other 

4 such retrofits.’’. 

5 SEC. 70005. GRANTS FOR ENERGY-CONSERVING IMPROVE6 MENTS FOR ASSISTED HOUSING. 

7 Section 251(b)(1) of the National Energy Conserva8 tion Policy Act (42 U.S.C. 8231(1)) is amended—

9 (1) by striking ‘‘financed with loans’’ and in10 serting ‘‘assisted’’; 

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

12 ‘‘which are eligible multifamily housing projects (as 

13 such term is defined in section 512 of the Multi14 family Assisted Housing Reform and Affordability 

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

16 to mortgage restructuring and rental assistance suf17 ficiency plans under such Act,’’; and 

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

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

20 improvements may also include the installation of 

21 energy and water conserving fixtures and fittings 

22 that conform to the American Society of Mechanical 

23 Engineers/American National Standards Institute 

24 standards A112.19.2-1998 and A112.18.1-2000, or 
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1 any revision thereto, applicable at the time of instal2 lation.’’. 

3 SEC. 70006. NORTH AMERICAN DEVELOPMENT BANK. 

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

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

6 290m–290m-3) is amended by adding at the end the fol7 lowing: 

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

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

10 environmental infrastructure projects, the Board members 

11 representing the United States should use their voice and 

12 vote to encourage the Bank to finance projects related to 

13 clean and efficient energy, including energy conservation, 

14 that prevent, control, or reduce environmental pollutants 

15 or contaminants.’’. 

16 SEC. 70007. ENERGY-EFFICIENT APPLIANCES. 

17 In purchasing appliances, a public housing agency 

18 shall purchase energy-efficient appliances that are Energy 

19 Star products or FEMP-designated products, as such 

20 terms are defined in section 552 of the National Energy 

21 Policy and Conservation Act (as amended by this Act), 

22 unless the purchase of energy-efficient appliances is not 

23 cost-effective to the agency. 
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1 SEC. 70008. ENERGY EFFICIENCY STANDARDS. 

2 Section 109 of the Cranston-Gonzalez National Af3 fordable Housing Act (42 U.S.C. 12709) is amended—

4 (1) in subsection (a)—

5 (A) in paragraph (1)—

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

7 of the enactment of the Energy Policy Act 

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

9 2004’’; 

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

11 ‘‘and’’ at the end; 

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

13 the period at the end and inserting ‘‘; 

14 and’’; and 

15 (iv) by adding at the end the fol16 lowing: 

17 ‘‘(C) rehabilitation and new construction of 

18 public and assisted housing funded by HOPE 

19 VI revitalization grants under section 24 of the 

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

21 1437v), where such standards are determined 

22 to be cost effective by the Secretary of Housing 

23 and Urban Development.’’; and 

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

25 of American’’ and all that follows through 
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1 ‘‘90.1–1989’)’’ and inserting ‘‘2000 Inter2 national Energy Conservation Code’’; 

3 (2) in subsection (b)—

4 (A) by striking ‘‘1 year after the date of 

5 the enactment of the Energy Policy Act of 

6 1992’’ and inserting ‘‘September 30, 2004’’; 

7 and 

8 (B) by striking ‘‘CABO’’ and all that fol9 lows through ‘‘1989’’ and inserting ‘‘the 2000 

10 International Energy Conservation Code’’; and 

11 (3) in subsection (c)—

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

13 ENERGY CODE’’ and inserting ‘‘THE INTER14 NATIONAL ENERGY CONSERVATION CODE’’; 

15 and 

16 (B) by striking ‘‘CABO’’ and all that fol17 lows through ‘‘1989’’ and inserting ‘‘the 2000 

18 International Energy Conservation Code’’. 

19 SEC. 70009. ENERGY STRATEGY FOR HUD. 

20 The Secretary of Housing and Urban Development 

21 shall develop and implement an integrated strategy to re22 duce utility expenses through cost-effective energy con23 servation and efficiency measures and energy efficient de24 sign and construction of public and assisted housing. The 

25 energy strategy shall include the development of energy 
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1 reduction goals and incentives for public housing agencies. 

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

3 than one year after the date of the enactment of this Act, 

4 on the energy strategy and the actions taken by the De5 partment of Housing and Urban Development to monitor 

6 the energy usage of public housing agencies and shall sub7 mit an update every two years thereafter on progress in 

8 implementing the strategy.

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