108TH CONGRESS

1ST SESSION H. R. 6

AN ACT

To enhance energy conservation and research and

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

108TH CONGRESS

1ST SESSION H. R. 6

AN ACT

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

supply for the American people, and for other purposes.

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

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

Sec. 1. Table of contents.

Sec. 2. Energy policy.

DIVISION A—ENERGY AND COMMERCE

Sec. 10001. Short title.

TITLE I—ENERGY CONSERVATION

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.

Sec. 11011. Use of photovoltaic energy in public buildings.

Sec. 11012. Telecommuting study.

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.
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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.

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
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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.

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.

Sec. 14036. Transfer.

Sec. 14037. Study to determine feasibility of developing commercial nuclear energy production facilities at existing Department of Energy

sites.

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.
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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.

Sec. 15050. Study on reducing petroleum consumption.

Sec. 15051. Conserve by Bicycling Program.

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.
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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.

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. 17107A. Reducing the proliferation boutique fuels.

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
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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

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
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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.

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.
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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.

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.
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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.

Sec. 22003. Report on equal employment opportunity practices.

Sec. 22004. Sense of Congress.

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

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 No. 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. Royalty payments under leases under the Outer Continental Shelf

Lands Act.
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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.

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.
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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.

Sec. 30909. Encouraging prohibition of off-shore drilling in the Great Lakes.

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.
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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.

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

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.
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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 SEC. 2. ENERGY POLICY.

2 It is the sense of the Congress that the United States

3 should take all actions necessary in the areas of conserva4 tion, efficiency, alternative source, technology develop5 ment, and domestic production to reduce the United

6 States dependence on foreign energy sources from 58 per7 cent to 45 percent by January 1, 2013.

8 DIVISION A—ENERGY AND

9 COMMERCE

10 SEC. 10001. SHORT TITLE.

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

12 of 2003’’.

13 TITLE I—ENERGY

14 CONSERVATION

15 Subtitle A—Federal Leadership in

16 Energy Conservation

17 SEC. 11001. ENERGY AND WATER SAVING MEASURES IN

18 CONGRESSIONAL BUILDINGS.

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

20 Energy Conservation Policy Act is amended by adding at

21 the end:
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1 ‘‘SEC. 552. ENERGY AND WATER SAVINGS MEASURES IN

2 CONGRESSIONAL BUILDINGS.

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

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

5 cost-effective energy conservation and management

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

7 facilities administered by the Congress (referred to

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

9 the energy performance requirements for Federal

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

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

12 later than 180 days after the date of enactment of

13 this section.

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

15 include—

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

17 used to determine the cost-effectiveness of proposed

18 energy efficiency projects;

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

20 complete surveys of all congressional buildings every

21 5 years to determine the cost and payback period of

22 energy and water conservation measures;

23 ‘‘(3) a strategy for installation of life cycle cost24 effective energy and water conservation measures;
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1 ‘‘(4) the results of a study of the costs and ben2 efits of installation of submetering in congressional

3 buildings; and

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

5 for each Member and employing authority of Con6 gress that detail simple, cost-effective methods to

7 save energy and taxpayer dollars in the workplace.

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

9 to Congress annually a report on congressional energy

10 management and conservation programs required under

11 this section that describes in detail—

12 ‘‘(1) energy expenditures and savings estimates

13 for each facility;

14 ‘‘(2) energy management and conservation

15 projects; and

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

17 this section.’’.

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

19 of contents of the National Energy Conservation Policy

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

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

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

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

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

24 (d) ENERGY INFRASTRUCTURE.—The Architect of

25 the Capitol, building on the Master Plan Study completed
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1 in July 2000, shall commission a study to evaluate the

2 energy infrastructure of the Capital Complex to determine

3 how the infrastructure could be augmented to become

4 more energy efficient, using unconventional and renewable

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

6 to have reliable utility service in the event of power fluc7 tuations, shortages, or outages.

8 (e) AUTHORIZATION.—There are authorized to be ap9 propriated to the Architect of the Capitol to carry out sub10 section (d), not more than $2,000,000 for fiscal years

11 after the enactment of this Act.

12 SEC. 11002. ENERGY MANAGEMENT REQUIREMENTS.

13 (a) ENERGY REDUCTION GOALS.—

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

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

16 8253(a)(1)) is amended by striking ‘‘its Federal

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

18 end and inserting ‘‘the Federal buildings of the

19 agency (including each industrial or laboratory facil20 ity) so that the energy consumption per gross square

21 foot of the Federal buildings of the agency in fiscal

22 years 2004 through 2013 is reduced, as compared

23 with the energy consumption per gross square foot

24 of the Federal buildings of the agency in fiscal year
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1 2001, by the percentage specified in the following

2 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.’’.

3 (2) REPORTING BASELINE.—The energy reduc4 tion goals and baseline established in paragraph (1)

5 of section 543(a) of the National Energy Conserva6 tion Policy Act, as amended by paragraph (1) of this

7 subsection, supersede all previous goals and base8 lines under such paragraph, and related reporting

9 requirements.

10 (b) REVIEW AND REVISION OF ENERGY PERFORM11 ANCE REQUIREMENT.—Section 543(a) of the National

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

13 further amended by adding at the end the following:

14 ‘‘(3) Not later than December 31, 2012, the Sec15 retary shall review the results of the implementation of

16 the energy performance requirement established under

17 paragraph (1) and submit to Congress recommendations

18 concerning energy performance requirements for fiscal

19 years 2014 through 2023.’’.
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1 (c) EXCLUSIONS.—Section 543(c)(1) of the National

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

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

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

5 may exclude, from the energy performance requirement

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

7 energy management requirement established under sub8 section (b), any Federal building or collection of Federal

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

10 ‘‘(i) compliance with those requirements would

11 be impracticable;

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

13 all federally required energy management reports;

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

15 the energy efficiency requirements of this Act, the

16 Energy Policy Act of 1992, Executive orders, and

17 other Federal law; and

18 ‘‘(iv) the agency has implemented all prac19 ticable, life cycle cost-effective projects with respect

20 to the Federal building or collection of Federal

21 buildings to be excluded.

22 ‘‘(B) A finding of impracticability under subpara23 graph (A)(i) shall be based on—
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1 ‘‘(i) the energy intensiveness of activities car2 ried out in the Federal building or collection of Fed3 eral buildings; or

4 ‘‘(ii) the fact that the Federal building or col5 lection of Federal buildings is used in the perform6 ance of a national security function.’’.

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

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

9 8253(c)(2)) is amended—

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

11 inserting ‘‘standards for exclusion’’; and

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

13 and inserting ‘‘the exclusion’’.

14 (e) CRITERIA.—Section 543(c) of the National En15 ergy Conservation Policy Act (42 U.S.C. 8253(c)) is fur16 ther amended by adding at the end the following:

17 ‘‘(3) Not later than 180 days after the date of enact18 ment of this paragraph, the Secretary shall issue guide19 lines that establish criteria for exclusions under paragraph

20 (1).’’.

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

22 of the National Energy Conservation Policy Act (42

23 U.S.C. 8256) is amended by adding at the end the fol24 lowing new subsection:
21

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

2 may retain any funds appropriated to that agency for en3 ergy expenditures, at buildings subject to the requirements

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

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

6 funds may be used only for energy efficiency or unconven7 tional and renewable energy resources projects.’’.

8 (g) REPORTS.—Section 548(b) of the National En9 ergy Conservation Policy Act (42 U.S.C. 8258(b)) is

10 amended—

11 (1) in the subsection heading, by inserting

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

13 (2) by inserting ‘‘President and’’ before ‘‘Con14 gress’’.

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

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

17 8258b(d)) is amended in the second sentence by striking

18 ‘‘the 20 percent reduction goal established under section

19 543(a) of the National Energy Conservation Policy Act

20 (42 U.S.C. 8253(a)).’’ and inserting ‘‘each of the energy

21 reduction goals established under section 543(a).’’.
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1 SEC. 11003. ENERGY USE MEASUREMENT AND ACCOUNT2 ABILITY.

3 Section 543 of the National Energy Conservation

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

5 at the end the following:

6 ‘‘(e) METERING OF ENERGY USE.—

7 ‘‘(1) DEADLINE.—By October 1, 2010, in ac8 cordance with guidelines established by the Sec9 retary under paragraph (2), all Federal buildings

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

11 reduction in the cost of electricity used in such

12 buildings, be metered or submetered. Each agency

13 shall use, to the maximum extent practicable, ad14 vanced meters or advanced metering devices that

15 provide data at least daily and that measure at least

16 hourly consumption of electricity in the Federal

17 buildings of the agency. Such data shall be incor18 porated into existing Federal energy tracking sys19 tems and made available to Federal facility energy

20 managers.

21 ‘‘(2) GUIDELINES.—

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

23 days after the date of enactment of this sub24 section, the Secretary, in consultation with the

25 Department of Defense, the General Services

26 Administration, representatives from the meter-
23

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1 ing industry, utility industry, energy services in2 dustry, energy efficiency industry, national lab3 oratories, universities, and Federal facility en4 ergy managers, shall establish guidelines for

5 agencies to carry out paragraph (1).

6 ‘‘(B) REQUIREMENTS FOR GUIDELINES.—

7 The guidelines shall—

8 ‘‘(i) take into consideration—

9 ‘‘(I) the cost of metering and

10 submetering and the reduced cost of

11 operation and maintenance expected

12 to result from metering and sub13 metering;

14 ‘‘(II) the extent to which meter15 ing and submetering are expected to

16 result in increased potential for en17 ergy management, increased potential

18 for energy savings and energy effi19 ciency improvement, and cost and en20 ergy savings due to utility contract

21 aggregation; and

22 ‘‘(III) the measurement and

23 verification protocols of the Depart24 ment of Energy;
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1 ‘‘(ii) include recommendations con2 cerning the amount of funds and the num3 ber of trained personnel necessary to gath4 er and use the metering information to

5 track and reduce energy use;

6 ‘‘(iii) establish priorities for types and

7 locations of buildings to be metered and

8 submetered based on cost-effectiveness and

9 a schedule of one or more dates, not later

10 than 1 year after the date of issuance of

11 the guidelines, on which the requirements

12 specified in paragraph (1) shall take effect;

13 and

14 ‘‘(iv) establish exclusions from the re15 quirements specified in paragraph (1)

16 based on the de minimis quantity of energy

17 use of a Federal building, industrial proc18 ess, or structure.

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

20 date guidelines are established under paragraph (2),

21 in a report submitted by the agency under section

22 548(a), each agency shall submit to the Secretary a

23 plan describing how the agency will implement the

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

25 the agency will designate personnel primarily respon-
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1 sible for achieving the requirements and (B) dem2 onstration by the agency, complete with documenta3 tion, of any finding that advanced meters or ad4 vanced metering devices, as defined in paragraph

5 (1), are not practicable.’’.

6 SEC. 11004. FEDERAL BUILDING PERFORMANCE STAND7 ARDS.

8 Section 305(a) of the Energy Conservation and Pro9 duction Act (42 U.S.C. 6834(a)) is amended—

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

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

12 International Energy Conservation Code’’; and

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

14 ‘‘(3) REVISED FEDERAL BUILDING ENERGY EFFI15 CIENCY PERFORMANCE STANDARDS.—

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

17 the date of enactment of this paragraph, the Sec18 retary of Energy shall establish, by rule, revised

19 Federal building energy efficiency performance

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

21 Federal buildings—

22 ‘‘(i) such buildings be designed so as to

23 achieve energy consumption levels at least 30

24 percent below those of the most recent

25 ASHRAE Standard 90.1 or the most recent
26

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1 version of the International Energy Conserva2 tion Code, as appropriate; and

3 ‘‘(ii) sustainable design principles are ap4 plied to the siting, design, and construction of

5 all new and replacement buildings.

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

7 1 year after the date of approval of amendments to

8 ASHRAE Standard 90.1 or the 2000 International

9 Energy Conservation Code, the Secretary of Energy

10 shall determine, based on the cost-effectiveness of

11 the requirements under the amendments, whether

12 the revised standards established under this para13 graph should be updated to reflect the amendments.

14 ‘‘(C) STATEMENT ON COMPLIANCE OF NEW

15 BUILDINGS.—In the budget request of the Federal

16 agency for each fiscal year and each report sub17 mitted by the Federal agency under section 548(a)

18 of the National Energy Conservation Policy Act (42

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

20 shall include—

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

22 owned, operated, or controlled by the Federal

23 agency; and
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1 ‘‘(ii) a statement concerning whether the

2 Federal buildings meet or exceed the revised

3 standards established under this paragraph.’’.

4 SEC. 11005. PROCUREMENT OF ENERGY EFFICIENT PROD5 UCTS.

6 (a) REQUIREMENTS.—Part 3 of title V of the Na7 tional Energy Conservation Policy Act is amended by add8 ing at the end the following:

9 ‘‘SEC. 553. FEDERAL PROCUREMENT OF ENERGY EFFI10 CIENT PRODUCTS.

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

12 ‘‘(1) ENERGY STAR PRODUCT.—The term ‘En13 ergy Star product’ means a product that is rated for

14 energy efficiency under an Energy Star program.

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

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

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

20 agency’ has the meaning given the term in section

21 4 of the Office of Federal Procurement Policy Act

22 (41 U.S.C. 403).

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

24 ‘FEMP designated product’ means a product that is

25 designated under the Federal Energy Management
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1 Program of the Department of Energy as being

2 among the highest 25 percent of equivalent products

3 for energy efficiency.

4 ‘‘(b) PROCUREMENT OF ENERGY EFFICIENT PROD5 UCTS.—

6 ‘‘(1) REQUIREMENT.—To meet the require7 ments of an executive agency for an energy con8 suming product, the head of the executive agency

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

10 ‘‘(A) an Energy Star product; or

11 ‘‘(B) a FEMP designated product.

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

13 agency is not required to procure an Energy Star

14 product or FEMP designated product under para15 graph (1) if the head of the executive agency finds

16 in writing that—

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

18 designated product is not cost-effective over the

19 life of the product taking energy cost savings

20 into account; or

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

22 designated product is reasonably available that

23 meets the functional requirements of the execu24 tive agency.
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1 ‘‘(3) PROCUREMENT PLANNING.—The head of

2 an executive agency shall incorporate into the speci3 fications for all procurements involving energy con4 suming products and systems, including guide speci5 fications, project specifications, and construction,

6 renovation, and services contracts that include provi7 sion of energy consuming products and systems, and

8 into the factors for the evaluation of offers received

9 for the procurement, criteria for energy efficiency

10 that are consistent with the criteria used for rating

11 Energy Star products and for rating FEMP des12 ignated products.

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

14 FEDERAL CATALOGS.—Energy Star products and FEMP

15 designated products shall be clearly identified and promi16 nently displayed in any inventory or listing of products

17 by the General Services Administration or the Defense Lo18 gistics Agency. The General Services Administration or

19 the Defense Logistics Agency shall supply only Energy

20 Star products or FEMP designated products for all prod21 uct categories covered by the Energy Star program or the

22 Federal Energy Management Program, except in cases

23 where the agency ordering a product specifies in writing

24 that no Energy Star product or FEMP designated product

25 is available to meet the buyer’s functional requirements,
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1 or that no Energy Star product or FEMP designated

2 product is cost-effective for the intended application over

3 the life of the product, taking energy cost savings into ac4 count.

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

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

7 shall select only premium efficient motors that meet a

8 standard designated by the Secretary. The Secretary shall

9 designate such a standard within 120 days after the date

10 of the enactment of this section, after considering the rec11 ommendations of associated electric motor manufacturers

12 and energy efficiency groups.

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

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

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

16 (b) CONFORMING AMENDMENT.—The table of con17 tents in section 101(b) of the National Energy Conserva18 tion Policy Act (42 U.S.C. 8201 note), as amended by sec19 tion 11001(b) of this division, is further amended by in20 serting after the item relating to section 552 the following:

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

21 SEC. 11006. ENERGY SAVINGS PERFORMANCE CONTRACTS.

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

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

24 8287(c)) is repealed.
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1 (b) REPLACEMENT FACILITIES.—Section 801(a) of

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

3 8287(a)) is amended by adding at the end the following

4 new paragraph:

5 ‘‘(3)(A) In the case of an energy savings con6 tract or energy savings performance contract pro7 viding for energy savings through the construction

8 and operation of one or more buildings or facilities

9 to replace one or more existing buildings or facilities,

10 benefits ancillary to the purpose of such contract

11 under paragraph (1) may include savings resulting

12 from reduced costs of operation and maintenance at

13 such replacement buildings or facilities when com14 pared with costs of operation and maintenance at

15 the buildings or facilities being replaced, established

16 through a methodology set forth in the contract.

17 ‘‘(B) Notwithstanding paragraph (2)(B), aggre18 gate annual payments by an agency under an energy

19 savings contract or energy savings performance con20 tract referred to in subparagraph (A) may take into

21 account (through the procedures developed pursuant

22 to this section) savings resulting from reduced costs

23 of operation and maintenance as described in that

24 subparagraph.’’.
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1 (c) ENERGY SAVINGS.—Section 804(2) of the Na2 tional Energy Conservation Policy Act (42 U.S.C.

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

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

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

6 water, from a base cost established through a

7 methodology set forth in the contract, used in

8 an existing federally owned building or build9 ings or other federally owned facilities as a re10 sult of—

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

12 equipment, improvements, altered oper13 ation and maintenance, or technical serv14 ices;

15 ‘‘(ii) the increased efficient use of ex16 isting energy sources by cogeneration or

17 heat recovery, excluding any cogeneration

18 process for other than a federally owned

19 building or buildings or other federally

20 owned facilities; or

21 ‘‘(iii) the increased efficient use of ex22 isting water sources; or

23 ‘‘(B) in the case of a replacement building

24 or facility described in section 801(a)(3), a re25 duction in the cost of energy, from a base cost
33

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1 established through a methodology set forth in

2 the contract, that would otherwise be utilized in

3 one or more existing federally owned buildings

4 or other federally owned facilities by reason of

5 the construction and operation of the replace6 ment building or facility.’’.

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

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

9 8287c(3)) is amended to read as follows:

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

11 ‘energy savings performance contract’ mean a con12 tract which provides for—

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

14 design, acquisition, installation, testing, oper15 ation, and, where appropriate, maintenance and

16 repair, of an identified energy or water con17 servation measure or series of measures at one

18 or more locations; or

19 ‘‘(B) energy savings through the construc20 tion and operation of one or more buildings or

21 facilities to replace one or more existing build22 ings or facilities.

23 Such contracts shall, with respect to an agency facil24 ity that is a public building as such term is defined

25 in section 13(1) of the Public Buildings Act of 1959
34

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1 (40 U.S.C. 3301), be in compliance with the pro2 spectus requirements and procedures of section 7 of

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

4 3307).’’.

5 (e) ENERGY OR WATER CONSERVATION MEASURE.—

6 Section 804(4) of the National Energy Conservation Pol7 icy Act (42 U.S.C. 8287c(4)) is amended to read as fol8 lows:

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

10 measure’ means—

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

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

13 or

14 ‘‘(B) a water conservation measure that

15 improves water efficiency, is life cycle cost-effec16 tive, and involves water conservation, water re17 cycling or reuse, more efficient treatment of

18 wastewater or stormwater, improvements in op19 eration or maintenance efficiencies, retrofit ac20 tivities, or other related activities, not at a Fed21 eral hydroelectric facility.’’.

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

23 enactment of this section, the Secretary of Energy shall

24 complete a review of the Energy Savings Performance

25 Contract program to identify statutory, regulatory, and
35

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1 administrative obstacles that prevent Federal agencies

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

3 shall identify all areas for increasing program flexibility

4 and effectiveness, including audit and measurement

5 verification requirements, accounting for energy use in de6 termining savings, contracting requirements, and energy

7 efficiency services covered. The Secretary shall report

8 these findings to Congress, and shall implement identified

9 administrative and regulatory changes to increase pro10 gram flexibility and effectiveness to the extent that such

11 changes are consistent with statutory authority.

12 SEC. 11007. VOLUNTARY COMMITMENTS TO REDUCE INDUS13 TRIAL ENERGY INTENSITY.

14 (a) VOLUNTARY AGREEMENTS.—The Secretary of

15 Energy shall enter into voluntary agreements with one or

16 more persons in industrial sectors that consume signifi17 cant amounts of primary energy per unit of physical out18 put to reduce the energy intensity of their production ac19 tivities.

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

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

22 than 2.5 percent each year from 2004 through 2014.

23 (c) RECOGNITION.—The Secretary of Energy, in co24 operation with the Administrator of the Environmental

25 Protection Agency and other appropriate Federal agen-
36

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1 cies, shall develop mechanisms to recognize and publicize

2 the achievements of participants in voluntary agreements

3 under this section.

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

5 intensity’’ means the primary energy consumed per unit

6 of physical output in an industrial process.

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

8 into an agreement under this section and continues to

9 make a good faith effort to achieve the energy efficiency

10 goals specified in the agreement shall be eligible to receive

11 from the Secretary a grant or technical assistance as ap12 propriate to assist in the achievement of those goals.

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

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

15 report that evaluates the success of the voluntary agree16 ments, with independent verification of a sample of the

17 energy savings estimates provided by participating firms.

18 SEC. 11008. FEDERAL AGENCY PARTICIPATION IN DEMAND

19 REDUCTION PROGRAMS.

20 Section 546(c) of the National Energy Conservation

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

22 the end of the following new paragraph:

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

24 in State or regional demand side reduction programs. The

25 availability of such programs, including measures employ-
37

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1 ing onsite generation, and the savings resulting from such

2 participation, should be included in the evaluation of en3 ergy options for Federal facilities.’’.

4 SEC. 11009. ADVANCED BUILDING EFFICIENCY TESTBED.

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

6 consultation with the Administrator of the General Serv7 ices Administration, shall establish an Advanced Building

8 Efficiency Testbed program for the development, testing,

9 and demonstration of advanced engineering systems, com10 ponents, and materials to enable innovations in building

11 technologies. The program shall evaluate efficiency con12 cepts for government and industry buildings, and dem13 onstrate the ability of next generation buildings to support

14 individual and organizational productivity and health as

15 well as flexibility and technological change to improve en16 vironmental sustainability. Such program shall com17 plement and not duplicate existing national programs.

18 (b) PARTICIPANTS.—The program established under

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

20 to combine the expertise from numerous academic fields

21 including, at a minimum, intelligent workplaces and ad22 vanced building systems and engineering, electrical and

23 computer engineering, computer science, architecture,

24 urban design, and environmental and mechanical engi25 neering. Such university shall partner with other univer-
38

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1 sities and entities who have established programs and the

2 capability of advancing innovative building efficiency tech3 nologies.

4 (c) AUTHORIZATION OF APPROPRIATIONS.—There

5 are authorized to be appropriated to the Secretary of En6 ergy to carry out this section $6,000,000 for each of the

7 fiscal years 2004 through 2006, to remain available until

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

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

10 of the total amount to the lead university described in sub11 section (b), and provide the remaining two-thirds to the

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

13 basis.

14 SEC. 11010. INCREASED USE OF RECOVERED MINERAL

15 COMPONENT IN FEDERALLY FUNDED

16 PROJECTS INVOLVING PROCUREMENT OF

17 CEMENT OR CONCRETE.

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

19 Disposal Act (42 U.S.C. 6961 et seq.) is amended by add20 ing at the end the following new section:

21 ‘‘INCREASED USE OF RECOVERED MINERAL COMPONENT

22 IN FEDERALLY FUNDED PROJECTS INVOLVING PRO23 CUREMENT OF CEMENT OR CONCRETE

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

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

26 means—
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1 ‘‘(A) the Secretary of Transportation; and

2 ‘‘(B) the head of each other Federal agen3 cy that on a regular basis procures, or provides

4 Federal funds to pay or assist in paying the

5 cost of procuring, material for cement or con6 crete projects.

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

8 term ‘cement or concrete project’ means a project

9 for the construction or maintenance of a highway or

10 other transportation facility or a Federal, State, or

11 local government building or other public facility

12 that—

13 ‘‘(A) involves the procurement of cement

14 or concrete; and

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

16 using Federal funds.

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

18 term ‘recovered mineral component’ means—

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

20 ‘‘(B) coal combustion fly ash; and

21 ‘‘(C) any other waste material or byprod22 uct recovered or diverted from solid waste that

23 the Administrator, in consultation with an

24 agency head, determines should be treated as

25 recovered mineral component under this section
40

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1 for use in cement or concrete projects paid for,

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

3 ‘‘(b) IMPLEMENTATION OF REQUIREMENTS.—

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

5 the date of enactment of this section, the Adminis6 trator and each agency head shall take such actions

7 as are necessary to implement fully all procurement

8 requirements and incentives in effect as of the date

9 of enactment of this section (including guidelines

10 under section 6002) that provide for the use of ce11 ment and concrete incorporating recovered mineral

12 component in cement or concrete projects.

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

14 an agency head shall give priority to achieving great15 er use of recovered mineral component in cement or

16 concrete projects for which recovered mineral compo17 nents historically have not been used or have been

18 used only minimally.

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

20 each agency head shall carry out this subsection in

21 accordance with section 6002.

22 ‘‘(c) FULL IMPLEMENTATION STUDY.—

23 ‘‘(1) IN GENERAL.—The Administrator, in co24 operation with the Secretary of Transportation and

25 the Secretary of Energy, shall conduct a study to de-
41

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1 termine the extent to which current procurement re2 quirements, when fully implemented in accordance

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

4 environmental benefits attainable with substitution

5 of recovered mineral component in cement used in

6 cement or concrete projects.

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

8 shall—

9 ‘‘(A) quantify the extent to which recov10 ered mineral components are being substituted

11 for Portland cement, particularly as a result of

12 current procurement requirements, and the en13 ergy savings and environmental benefits associ14 ated with that substitution;

15 ‘‘(B) identify all barriers in procurement

16 requirements to fuller realization of energy sav17 ings and environmental benefits, including bar18 riers resulting from exceptions from current

19 law; and

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

21 achieve greater substitution of recovered min22 eral component in types of cement or concrete

23 projects for which recovered mineral compo24 nents historically have not been used or have

25 been used only minimally;
42

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1 ‘‘(ii) evaluate the feasibility of establishing

2 guidelines or standards for optimized substi3 tution rates of recovered mineral component in

4 those cement or concrete projects; and

5 ‘‘(iii) identify any potential environmental

6 or economic effects that may result from great7 er substitution of recovered mineral component

8 in those cement or concrete projects.

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

10 the date of enactment of this section, the Adminis11 trator shall submit to Congress a report on the

12 study.

13 ‘‘(d) ADDITIONAL PROCUREMENT REQUIREMENTS.—

14 Unless the study conducted under subsection (c) identifies

15 any effects or other problems described in subsection

16 (c)(2)(C)(iii) that warrant further review or delay, the Ad17 ministrator and each agency head shall, within 1 year of

18 the release of the report in accordance with subsection

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

20 to establish procurement requirements and incentives that

21 provide for the use of cement and concrete with increased

22 substitution of recovered mineral component in the con23 struction and maintenance of cement or concrete projects,

24 so as to—
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1 ‘‘(1) realize more fully the energy savings and

2 environmental benefits associated with increased

3 substitution; and

4 ‘‘(2) eliminate barriers identified under sub5 section (c).

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

7 affects the requirements of section 6002 (including the

8 guidelines and specifications for implementing those re9 quirements).’’.

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

11 of contents of the Solid Waste Disposal Act is amended

12 by adding after the item relating to section 6004 the fol13 lowing new item:

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

projects involving procurement of cement or concrete.’’.

14 SEC. 11011. USE OF PHOTOVOLTAIC ENERGY IN PUBLIC

15 BUILDINGS.

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

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

18 end the following:

19 ‘‘§ 3177. Use of photovoltaic energy in public build20 ings

21 ‘‘(a) PHOTOVOLTAIC ENERGY COMMERCIALIZATION

22 PROGRAM.—

23 ‘‘(1) IN GENERAL.—The Administrator of Gen24 eral Services may establish a photovoltaic energy
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1 commercialization program for the procurement and

2 installation of photovoltaic solar electric systems for

3 electric production in new and existing public build4 ings.

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

6 shall be to accomplish the following:

7 ‘‘(A) To accelerate the growth of a com8 mercially viable photovoltaic industry to make

9 this energy system available to the general pub10 lic as an option which can reduce the national

11 consumption of fossil fuel.

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

13 and costs of the Federal Government.

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

15 energy systems in 20,000 Federal buildings by

16 2010, as contained in the Federal Government’s

17 Million Solar Roof Initiative of 1997.

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

19 the Federal Government of life-cycle costing

20 and innovative procurement methods.

21 ‘‘(E) To develop program performance

22 data to support policy decisions on future incen23 tive programs with respect to energy.

24 ‘‘(3) ACQUISITION OF PHOTOVOLTAIC SOLAR

25 ELECTRIC SYSTEMS.—
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1 ‘‘(A) IN GENERAL.—The program shall

2 provide for the acquisition of photovoltaic solar

3 electric systems and associated storage capa4 bility for use in public buildings.

5 ‘‘(B) ACQUISITION LEVELS.—The acquisi6 tion of photovoltaic electric systems shall be at

7 a level substantial enough to allow use of low8 cost production techniques with at least 150

9 megawatts (peak) cumulative acquired during

10 the 5 years of the program.

11 ‘‘(4) ADMINISTRATION.—The Administrator

12 shall administer the program and shall—

13 ‘‘(A) prescribe such rules and regulations

14 as may be appropriate to monitor and assess

15 the performance and operation of photovoltaic

16 solar electric systems installed pursuant to this

17 subsection;

18 ‘‘(B) develop innovative procurement strat19 egies for the acquisition of such systems; and

20 ‘‘(C) transmit to the Committee on Trans21 portation and Infrastructure of the House of

22 Representatives and to the Committee on Envi23 ronment and Public Works of the Senate an an24 nual report on the results of the program.
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1 ‘‘(b) PHOTOVOLTAIC SYSTEMS EVALUATION PRO2 GRAM.—

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

4 after the date of enactment of this section, the Ad5 ministrator, in consultation with the Secretary of

6 Energy, shall establish a photovoltaic solar energy

7 systems evaluation program to evaluate such photo8 voltaic solar energy systems as are required in public

9 buildings.

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

11 photovoltaic solar energy systems under the pro12 gram, the Administrator shall ensure that such sys13 tems reflect the most advanced technology.

14 ‘‘(c) AUTHORIZATION OF APPROPRIATIONS.—

15 ‘‘(1) PHOTOVOLTAIC ENERGY COMMERCIALIZA16 TION PROGRAM.—There is authorized to be appro17 priated to carry out subsection (a) $210,000,000 for

18 each of fiscal years 2004 through 2008. Such sums

19 shall remain available until expended.

20 ‘‘(2) PHOTOVOLTAIC SYSTEMS EVALUATION

21 PROGRAM.—There is authorized to be appropriated

22 to carry out subsection (b) $52,700,000 for each of

23 fiscal years 2004 through 2008. Such sums shall re24 main available until expended.’’.
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1 (b) CONFORMING AMENDMENT.—The analysis for

2 such chapter is amended by inserting after the item relat3 ing to section 3176 the following:

‘‘3177. Use of photovoltaic energy in public buildings’’.

4 SEC. 11012. TELECOMMUTING STUDY.

5 (a) STUDY REQUIRED.—The Secretary, in consulta6 tion with the Commission, the Director of the Office of

7 Personnel Management, the Administrator of General

8 Services, and the Administrator of NTIA, shall conduct

9 a study of the energy conservation implications of the

10 widespread adoption of telecommuting by Federal employ11 ees in the United States.

12 (b) REQUIRED SUBJECTS OF STUDY.—The study re13 quired by subsection (a) shall analyze the following sub14 jects in relation to the energy saving potential of telecom15 muting by Federal employees:

16 (1) Reductions of energy use and energy costs

17 in commuting and regular office heating, cooling,

18 and other operations.

19 (2) Other energy reductions accomplished by

20 telecommuting.

21 (3) Existing regulatory barriers that hamper

22 telecommuting, including barriers to broadband tele23 communications services deployment.

24 (4) Collateral benefits to the environment, fam25 ily life, and other values.
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1 (c) REPORT REQUIRED.—The Secretary shall submit

2 to the President and the Congress a report on the study

3 required by this section not later than 6 months after the

4 date of the enactment of this Act. Such report shall in5 clude a description of the results of the analysis of each

6 of the subject described in subsection (b).

7 (d) DEFINITIONS.—As used in this section:

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

9 the Secretary of Energy.

10 (2) COMMISSION.—The term ‘‘Commission’’

11 means the Federal Communications Commission.

12 (3) NTIA.—The term ‘‘NTIA’’ means the Na13 tional Telecommunications and Information Admin14 istration of the Department of Commerce.

15 (4) TELECOMMUTING.—The term ‘‘telecom16 muting’’ means the performance of work functions

17 using communications technologies, thereby elimi18 nating or substantially reducing the need to com19 mute to and from traditional worksites.

20 (5) FEDERAL EMPLOYEE.—The term ‘‘Federal

21 employee’’ has the meaning provided the term ‘‘em22 ployee’’ by section 2105 of title 5, United States

23 Code.
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1 Subtitle B—Energy Assistance and

2 State Programs

3 SEC. 11021. LIHEAP AND WEATHERIZATION ASSISTANCE.

4 (a) LOW-INCOME HOME ENERGY ASSISTANCE PRO5 GRAM.—Section 2602(b) of the Low-Income Home Energy

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

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

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

9 $3,400,000,000 for each of fiscal years 2004 through

10 2006’’.

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

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

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

14 such sums as may be necessary’’ and inserting

15 ‘‘$325,000,000 for fiscal year 2004, $400,000,000 for fis16 cal year 2005, and $500,000,000 for fiscal year 2006’’.

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

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

19 Health and Human Services shall transmit to the Con20 gress a report on how the Low-Income Home Energy As21 sistance Program could be used more effectively to prevent

22 loss of life from extreme temperatures. In preparing such

23 report, the Secretary shall consult with appropriate offi24 cials in all 50 States and the District of Columbia.
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1 SEC. 11022. STATE ENERGY PROGRAMS.

2 (a) STATE ENERGY CONSERVATION PLANS.—Section

3 362 of the Energy Policy and Conservation Act (42 U.S.C.

4 6322) is amended by inserting at the end the following

5 new subsection:

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

7 invite the Governor of each State to review and, if nec8 essary, revise the energy conservation plan of such State

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

10 consider the energy conservation plans of other States

11 within the region, and identify opportunities and actions

12 carried out in pursuit of common energy conservation

13 goals.’’.

14 (b) STATE ENERGY EFFICIENCY GOALS.—Section

15 364 of the Energy Policy and Conservation Act (42 U.S.C.

16 6324) is amended to read as follows:

17 ‘‘STATE ENERGY EFFICIENCY GOALS

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

19 respect to which assistance is made available under this

20 part on or after the date of enactment of the Energy Pol21 icy Act of 2003 shall contain a goal, consisting of an im22 provement of 25 percent or more in the efficiency of use

23 of energy in the State concerned in calendar year 2010

24 as compared to calendar year 1990, and may contain in25 terim goals.’’.
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1 (c) AUTHORIZATION OF APPROPRIATIONS.—Section

2 365(f) of the Energy Policy and Conservation Act (42

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

4 1999 through 2003 such sums as may be necessary’’ and

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

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

7 SEC. 11023. ENERGY EFFICIENT APPLIANCE REBATE PRO8 GRAMS.

9 (a) DEFINITIONS.—In this section:

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

11 State’’ means a State that meets the requirements

12 of subsection (b).

13 (2) ENERGY STAR PROGRAM.—The term ‘‘En14 ergy Star program’’ means the program established

15 by section 324A of the Energy Policy and Conserva16 tion Act.

17 (3) RESIDENTIAL ENERGY STAR PRODUCT.—

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

19 a product for a residence that is rated for energy ef20 ficiency under the Energy Star program.

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

22 energy office’’ means the State agency responsible

23 for developing State energy conservation plans under

24 section 362 of the Energy Policy and Conservation

25 Act (42 U.S.C. 6322).
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1 (5) STATE PROGRAM.—The term ‘‘State pro2 gram’’ means a State energy efficient appliance re3 bate program described in subsection (b)(1).

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

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

6 (1) establishes (or has established) a State en7 ergy efficient appliance rebate program to provide

8 rebates to residential consumers for the purchase of

9 residential Energy Star products to replace used ap10 pliances of the same type;

11 (2) submits an application for the allocation at

12 such time, in such form, and containing such infor13 mation as the Secretary may require; and

14 (3) provides assurances satisfactory to the Sec15 retary that the State will use the allocation to sup16 plement, but not supplant, funds made available to

17 carry out the State program.

18 (c) AMOUNT OF ALLOCATIONS.—

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

20 for each fiscal year, the Secretary shall allocate to

21 the State energy office of each eligible State to carry

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

23 obtained by multiplying the amount made available

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

25 that the population of the State in the most recent
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1 calendar year for which data are available bears to

2 the total population of all eligible States in that cal3 endar year.

4 (2) MINIMUM ALLOCATIONS.—For each fiscal

5 year, the amounts allocated under this subsection

6 shall be adjusted proportionately so that no eligible

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

8 determined by the Secretary.

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

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

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

12 carrying out a State program.

13 (e) ISSUANCE OF REBATES.—Rebates may be pro14 vided to residential consumers that meet the requirements

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

16 determined by the State energy office, taking into

17 consideration—

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

19 energy office under subsection (c);

20 (2) the amount of any Federal or State tax in21 centive available for the purchase of the residential

22 Energy Star product; and

23 (3) the difference between the cost of the resi24 dential Energy Star product and the cost of an ap25 pliance that is not a residential Energy Star prod-
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1 uct, but is of the same type as, and is the nearest

2 capacity, performance, and other relevant character3 istics (as determined by the State energy office) to

4 the residential Energy Star product.

5 (f) AUTHORIZATION OF APPROPRIATIONS.—There

6 are authorized to be appropriated to carry out this section

7 $50,000,000 for each of the fiscal years 2004 through

8 2008.

9 SEC. 11024. ENERGY EFFICIENT PUBLIC BUILDINGS.

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

11 grants to the State agency responsible for developing State

12 energy conservation plans under section 362 of the Energy

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

14 such agency exists, a State agency designated by the Gov15 ernor of the State, to assist units of local government in

16 the State in improving the energy efficiency of public

17 buildings and facilities—

18 (1) through construction of new energy efficient

19 public buildings that use at least 30 percent less en20 ergy than a comparable public building constructed

21 in compliance with standards prescribed in chapter

22 8 of the 2000 International Energy Conservation

23 Code, or a similar State code intended to achieve

24 substantially equivalent efficiency levels; or
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1 (2) through renovation of existing public build2 ings to achieve reductions in energy use of at least

3 30 percent as compared to the baseline energy use

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

5 year, weather-normalized average for calculating

6 such baseline.

7 (b) ADMINISTRATION.—State energy offices receiving

8 grants under this section shall—

9 (1) maintain such records and evidence of com10 pliance as the Secretary may require; and

11 (2) develop and distribute information and ma12 terials and conduct programs to provide technical

13 services and assistance to encourage planning, fi14 nancing, and design of energy efficient public build15 ings by units of local government.

16 (c) AUTHORIZATION OF APPROPRIATIONS.—For the

17 purposes of this section, there are authorized to be appro18 priated to the Secretary of Energy such sums as may be

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

20 more than 30 percent of appropriated funds shall be used

21 for administration.

22 SEC. 11025. LOW INCOME COMMUNITY ENERGY EFFICIENCY

23 PILOT PROGRAM.

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

25 to make grants to units of local government, private, non-
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1 profit community development organizations, and Indian

2 tribe economic development entities to improve energy effi3 ciency, identify and develop alternative renewable and dis4 tributed energy supplies, and increase energy conservation

5 in low income rural and urban communities.

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

7 grants on a competitive basis for—

8 (1) investments that develop alternative renew9 able and distributed energy supplies;

10 (2) energy efficiency projects and energy con11 servation programs;

12 (3) studies and other activities that improve en13 ergy efficiency in low income rural and urban com14 munities;

15 (4) planning and development assistance for in16 creasing the energy efficiency of buildings and facili17 ties; and

18 (5) technical and financial assistance to local

19 government and private entities on developing new

20 renewable and distributed sources of power or com21 bined heat and power generation.

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

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

24 or other organized group or community, including any

25 Alaskan Native village or regional or village corporation
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1 as defined in or established pursuant to the Alaska Native

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

3 is recognized as eligible for the special programs and serv4 ices provided by the United States to Indians because of

5 their status as Indians.

6 (d) AUTHORIZATION OF APPROPRIATIONS.—For the

7 purposes of this section there are authorized to be appro8 priated to the Secretary of Energy $20,000,000 for fiscal

9 year 2004 and each fiscal year thereafter through fiscal

10 year 2006.

11 Subtitle C—Energy Efficient

12 Products

13 SEC. 11041. ENERGY STAR PROGRAM.

14 (a) AMENDMENT.—The Energy Policy and Conserva15 tion Act (42 U.S.C. 6201 and following) is amended by

16 inserting the following after section 324:

17 ‘‘SEC. 324A. ENERGY STAR PROGRAM.

18 ‘‘There is established at the Department of Energy

19 and the Environmental Protection Agency a program to

20 identify and promote energy-efficient products and build21 ings in order to reduce energy consumption, improve en22 ergy security, and reduce pollution through labeling of and

23 other forms of communication about products and build24 ings that meet the highest energy efficiency standards. Re25 sponsibilities under the program shall be divided between
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1 the Department of Energy and the Environmental Protec2 tion Agency consistent with the terms of agreements be3 tween the two agencies. The Administrator and the Sec4 retary shall—

5 ‘‘(1) promote Energy Star compliant tech6 nologies as the preferred technologies in the market7 place for achieving energy efficiency and to reduce

8 pollution;

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

10 Energy Star label, including special outreach to

11 small businesses;

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

13 label; and

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

15 in establishing a new Energy Star product category

16 or in revising a product category, and upon adoption

17 of a new or revised product category provide an ex18 planation of the decision that responds to significant

19 public comments.’’.

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

21 of contents of the Energy Policy and Conservation Act is

22 amended by inserting after the item relating to section

23 324 the following new item:

‘‘Sec. 324A. Energy Star program.’’.
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1 SEC. 11042. CONSUMER EDUCATION ON ENERGY EFFI2 CIENCY BENEFITS OF AIR CONDITIONING,

3 HEATING, AND VENTILATION MAINTENANCE.

4 Section 337 of the Energy Policy and Conservation

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

6 the following:

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

8 ensuring that installed air conditioning and heating sys9 tems operate at their maximum rated efficiency levels, the

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

11 of this subsection, carry out a program to educate home12 owners and small business owners concerning the energy

13 savings resulting from properly conducted maintenance of

14 air conditioning, heating, and ventilating systems.

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

16 cooperation with the Administrator of the Environmental

17 Protection Agency and such other entities as the Secretary

18 considers appropriate, including industry trade associa19 tions, industry members, and energy efficiency organiza20 tions.

21 ‘‘(d) SMALL BUSINESS EDUCATION AND ASSIST22 ANCE.—The Administrator of the Small Business Admin23 istration, in consultation with the Secretary of Energy and

24 the Administrator of the Environmental Protection Agen25 cy, shall develop and coordinate a Government-wide pro26 gram, building on the existing Energy Star for Small
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1 Business Program, to assist small business to become

2 more energy efficient, understand the cost savings obtain3 able through efficiencies, and identify financing options

4 for energy efficiency upgrades. The Secretary and the Ad5 ministrator shall make the program information available

6 directly to small businesses and through other Federal

7 agencies, including the Federal Emergency Management

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

9 SEC. 11043. ADDITIONAL DEFINITIONS.

10 Section 321 of the Energy Policy and Conservation

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

12 the following:

13 ‘‘(32) The term ‘battery charger’ means a de14 vice that charges batteries for consumer products.

15 ‘‘(33) The term ‘commercial refrigerator, freez16 er and refrigerator-freezer’ means a refrigerator,

17 freezer or refrigerator-freezer that—

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

19 under this Act; and

20 ‘‘(B) incorporates most components in21 volved in the vapor-compression cycle and the

22 refrigerated compartment in a single package.

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

24 an external power supply circuit that is used to con25 vert household electric current into either DC cur-
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1 rent or lower-voltage AC current to operate a con2 sumer product.

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

4 sign that—

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

6 place to identify an exit; and

7 ‘‘(B) consists of—

8 ‘‘(i) an electrically powered integral

9 light source that illuminates the legend

10 ‘EXIT’ and any directional indicators; and

11 ‘‘(ii) provides contrast between the

12 legend, any directional indicators, and the

13 background.

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

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

16 means a transformer that—

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

18 less;

19 ‘‘(ii) is air-cooled;

20 ‘‘(iii) does not use oil as a coolant; and

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

22 of 60 Hertz.

23 ‘‘(B) The term ‘low-voltage dry-type trans24 former’ does not include—
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1 ‘‘(i) transformers with multiple voltage

2 taps, with the highest voltage tap equaling at

3 least 20 percent more than the lowest voltage

4 tap;

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

6 used in a special purpose application, such as

7 transformers commonly known as drive trans8 formers, rectifier transformers,

9 autotransformers, Uninterruptible Power Sys10 tem transformers, impedance transformers, har11 monic transformers, regulating transformers,

12 sealed and nonventilating transformers, ma13 chine tool transformers, welding transformers,

14 grounding transformers, or testing trans15 formers; or

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

17 (ii) that is excluded by the Secretary by rule be18 cause the transformer is designed for a special

19 application and the application of standards to

20 the transformer would not result in significant

21 energy savings.

22 ‘‘(37) The term ‘standby mode’ means the low23 est amount of electric power used by a household ap24 pliance when not performing its active functions, as
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1 defined on an individual product basis by the Sec2 retary.

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

4 electric lamp with a reflector bowl that directs light

5 upward so as to give indirect illumination.

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

7 consisting of two or more coils of insulated wire that

8 transfers alternating current by electromagnetic in9 duction from one coil to another to change the origi10 nal voltage or current value.

11 ‘‘(40) The term ‘unit heater’ means a self-con12 tained fan-type heater designed to be installed with13 in the heated space, except that such term does not

14 include a warm air furnace.

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

16 standard 8-inch (200mm) or 12-inch (300mm) traf17 fic signal indication, consisting of a light source, a

18 lens, and all other parts necessary for operation,

19 that communicates movement messages to drivers

20 through red, amber, and green colors.’’.

21 SEC. 11044. ADDITIONAL TEST PROCEDURES.

22 (a) EXIT SIGNS.—Section 323(b) of the Energy Pol23 icy and Conservation Act (42 U.S.C. 6293) is amended

24 by adding at the end the following:
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1 ‘‘(9) Test procedures for illuminated exit signs

2 shall be based on the test method used under

3 Version 2.0 of the Energy Star program of the Envi4 ronmental Protection Agency for illuminated exit

5 signs.

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

7 distribution transformers shall be based on the

8 ‘Standard Test Method for Measuring the Energy

9 Consumption of Distribution Transformers’ pre10 scribed by the National Electrical Manufacturers As11 sociation (NEMA TP 2–1998). The Secretary may

12 review and revise this test procedure based on future

13 revisions to such standard test method.

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

15 shall be based on the test method used under the

16 Energy Star program of the Environmental Protec17 tion Agency for traffic signal modules, as in effect

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

19 (b) ADDITIONAL CONSUMER AND COMMERCIAL

20 PRODUCTS.—Section 323 of the Energy Policy and Con21 servation Act (42 U.S.C. 6293) is further amended by

22 adding at the end the following:

23 ‘‘(f) ADDITIONAL CONSUMER AND COMMERCIAL

24 PRODUCTS.—The Secretary shall within 24 months after

25 the date of enactment of this subsection prescribe testing
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1 requirements for suspended ceiling fans, refrigerated bot2 tled or canned beverage vending machines, commercial

3 unit heaters, and commercial refrigerators, freezers and

4 refrigerator-freezers. Such testing requirements shall be

5 based on existing test procedures used in industry to the

6 extent practical and reasonable. In the case of suspended

7 ceiling fans, such test procedures shall include efficiency

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

9 50 percent of the maximum output.’’.

10 SEC. 11045. ENERGY CONSERVATION STANDARDS FOR AD11 DITIONAL CONSUMER AND COMMERCIAL

12 PRODUCTS.

13 Section 325 of the Energy Policy and Conservation

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

15 the following:

16 ‘‘(u) STANDBY MODE ELECTRIC ENERGY CONSUMP17 TION.—

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

19 shall, within 18 months after the date of enactment

20 of this subsection, prescribe by notice and comment,

21 definitions of standby mode and test procedures for

22 the standby mode power use of battery chargers and

23 external power supplies. In establishing these test

24 procedures, the Secretary shall consider, among

25 other factors, existing test procedures used for meas-
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1 uring energy consumption in standby mode and as2 sess the current and projected future market for

3 battery chargers and external power supplies. This

4 assessment shall include estimates of the significance

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

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

8 period, the Secretary shall hold a scoping workshop

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

11 mode energy use for these products.

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

13 the date of enactment of this subsection, issue a

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

16 chargers and external power supplies or classes

17 thereof. For each product class, any such standards

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

19 that—

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

21 (p), (q), (r), (s) and (t); and

22 ‘‘(ii) will result in significant overall an23 nual energy savings, considering both standby

24 mode and other operating modes.
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1 ‘‘(2) DESIGNATION OF ADDITIONAL COVERED

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

3 date of enactment of this subsection, the Secretary

4 shall publish for public comment and public hearing

5 a notice to determine whether any noncovered prod6 ucts should be designated as covered products for

7 the purpose of instituting a rulemaking under this

8 section to determine whether an energy conservation

9 standard restricting standby mode energy consump10 tion, should be promulgated; except that any restric11 tion on standby mode energy consumption shall be

12 limited to major sources of such consumption.

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

14 subparagraph (A) of whether to designate new cov15 ered products and institute rulemakings, the Sec16 retary shall, among other relevant factors and in ad17 dition to the criteria in section 322(b), consider—

18 ‘‘(i) standby mode power consumption

19 compared to overall product energy consump20 tion; and

21 ‘‘(ii) the priority and energy savings poten22 tial of standards which may be promulgated

23 under this subsection compared to other re24 quired rulemakings under this section and the
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1 available resources of the Department to con2 duct such rulemakings.

3 ‘‘(C) Not later than 1 year after the date of en4 actment of this subsection, the Secretary shall issue

5 a determination of any new covered products for

6 which he intends to institute rulemakings on standby

7 mode pursuant to this section and he shall state the

8 dates by which he intends to initiate those

9 rulemakings.

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

11 COVERED PRODUCTS.—In determining pursuant to

12 section 323 whether test procedures and energy con13 servation standards pursuant to this section should

14 be revised, the Secretary shall consider for covered

15 products which are major sources of standby mode

16 energy consumption whether to incorporate standby

17 mode into such test procedures and energy conserva18 tion standards, taking into account, among other

19 relevant factors, the criteria for non-covered prod20 ucts in subparagraph (B) of paragraph (2) of this

21 subsection.

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

23 Any rulemaking instituted under this subsection or

24 for covered products under this section which re25 stricts standby mode power consumption shall be
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1 subject to the criteria and procedures for issuing en2 ergy conservation standards set forth in this section

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

4 paragraph (2) of this subsection.

5 ‘‘(B) No standard can be proposed for new cov6 ered products or covered products in a standby mode

7 unless the Secretary has promulgated applicable test

8 procedures for each product pursuant to section 323.

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

10 to new covered products which are subject to the

11 rulemakings for standby mode after a final rule has

12 been issued.

13 ‘‘(5) EFFECTIVE DATE.—Any standard promul14 gated under this subsection shall be applicable to

15 products manufactured or imported 3 years after the

16 date of promulgation.

17 ‘‘(6) VOLUNTARY PROGRAMS TO REDUCE

18 STANDBY MODE ENERGY USE.—The Secretary and

19 the Administrator shall collaborate and develop pro20 grams, including programs pursuant to section 324A

21 (relating to Energy Star Programs) and other vol22 untary industry agreements or codes of conduct,

23 which are designed to reduce standby mode energy

24 use.
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1 ‘‘(v) SUSPENDED CEILING FANS, VENDING MA2 CHINES, UNIT HEATERS, AND COMMERCIAL REFRIG3 ERATORS, FREEZERS AND REFRIGERATOR-FREEZERS.—

4 The Secretary shall within 24 months after the date on

5 which testing requirements are prescribed by the Sec6 retary pursuant to section 323(f), prescribe, by rule, en7 ergy conservation standards for suspended ceiling fans, re8 frigerated bottled or canned beverage vending machines,

9 unit heaters, and commercial refrigerators, freezers and

10 refrigerator-freezers. In establishing standards under this

11 subsection, the Secretary shall use the criteria and proce12 dures contained in subsections (l) and (m). Any standard

13 prescribed under this subsection shall apply to products

14 manufactured 3 years after the date of publication of a

15 final rule establishing such standard.

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

17 signs manufactured on or after January 1, 2005 shall

18 meet the Version 2.0 Energy Star Program performance

19 requirements for illuminated exit signs prescribed by the

20 Environmental Protection Agency

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

22 after January 1, 2005—

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

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

2 lamps that total more than 190 watts.

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

4 The efficiency of low voltage dry-type transformers manu5 factured on or after January 1, 2005 shall be the Class

6 I Efficiency Levels for low voltage dry-type transformers

7 specified in Table 4–2 of the ‘Guide for Determining En8 ergy Efficiency for Distribution Transformers’ published

9 by the National Electrical Manufacturers Association

10 (NEMA TP–1–1996).

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

12 modules manufactured on or after January 1, 2006 shall

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

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

17 electrically-connected signal control interface devices and

18 conflict monitoring systems.

19 ‘‘(aa) EFFECTIVE DATE OF SECTION 327.—The pro20 visions of section 327 shall apply to products for which

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

22 section after the effective date for such standards.’’.

23 SEC. 11046. ENERGY LABELING.

24 (a) RULEMAKING ON EFFECTIVENESS OF CONSUMER

25 PRODUCT LABELING.—Paragraph (2) of section 324(a) of
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1 the Energy Policy and Conservation Act (42 U.S.C.

2 6294(a)(2)) is amended by adding at the end the fol3 lowing:

4 ‘‘(F) Not later than 3 months after the date of enact5 ment of this subparagraph, the Commission shall initiate

6 a rulemaking to consider the effectiveness of the current

7 consumer products labeling program in assisting con8 sumers in making purchasing decisions and improving en9 ergy efficiency and to consider changes to the labeling

10 rules that would improve the effectiveness of consumer

11 product labels. Such rulemaking shall be completed within

12 2 years after the date of enactment of this subpara13 graph.’’.

14 (b) RULEMAKING ON LABELING FOR ADDITIONAL

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

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

17 by adding at the end the following:

18 ‘‘(5) The Secretary or the Commission, as appro19 priate, may for covered products referred to in subsections

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

21 to this section, labeling requirements for such products

22 after a test procedure has been set pursuant to section

23 323.’’.
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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

18 traverses—

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,

17 including—

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

22 including—

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;

23 ‘‘(7) minimizing, and encouraging transparency

24 in, the further enrichment of low-enriched uranium

25 to highly enriched uranium; and
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1 ‘‘(8) accelerating the purchase of excess weap2 ons grade plutonium and uranium from Russia to

3 reduce the likelihood that such plutonium and ura4 nium could be stolen or sold to terrorists.’’.

5 SEC. 14033. WHISTLEBLOWER PROTECTION.

6 (a) DEFINITION OF EMPLOYER.—Section 211(a)(2)

7 of the Energy Reorganization Act of 1974 (42 U.S.C.

8 5851(a)(2)) is amended—

9 (1) by striking ‘‘and’’ at the end of subpara10 graph (C);

11 (2) in subparagraph (D), by striking ‘‘that is

12 indemnified’’ and all that follows through ‘‘12344.’’

13 and inserting ‘‘or the Commission; and’’; and

14 (3) by adding at the end the following new sub15 paragraph:

16 ‘‘(E) the Department of Energy and the Com17 mission.’’.

18 (b) DE NOVO REVIEW.—Subsection (b) of such sec19 tion 211 is amended by adding at the end the following

20 new paragraph:

21 ‘‘(4) If the Secretary has not issued a final decision

22 within 180 days after the filing of a complaint under para23 graph (1), and there is no showing that such delay is due

24 to the bad faith of the claimant, the claimant may bring

25 an action at law or equity for de novo review in the appro-
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1 priate district court of the United States, which shall have

2 jurisdiction over such an action without regard to the

3 amount in controversy.’’.

4 SEC. 14034. PREVENTING THE MISUSE OF NUCLEAR MATE5 RIALS AND TECHNOLOGY.

6 (a) AMENDMENT.—Chapter 14 of the Atomic Energy

7 Act of 1954 (42 U.S.C. 2201 et seq.) is amended by add8 ing at the end the following new section:

9 ‘‘SEC. 170D. PREVENTING THE MISUSE OF NU10 CLEAR MATERIALS AND TECHNOLOGY.—

11 ‘‘a. In order to successfully promote the development

12 of nuclear energy as a safe and reliable source of electrical

13 energy, it is the policy of the United States to prevent

14 any nuclear materials, technology, components, sub15 stances, technical information, or related goods or services

16 from being misused or diverted from peaceful nuclear en17 ergy purposes.

18 ‘‘b. In order to further advance the policy set forth

19 in subsection a., notwithstanding any other provision of

20 law, no Federal agency shall issue any license, approval,

21 or authorization for the export or reexport, or the transfer

22 or retransfer, either directly or indirectly, to any country

23 whose government has been identified by the Secretary of

24 State as engaged in state sponsorship of terrorist activities

25 (specifically including any country the government of
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1 which, as of September 11, 2001, had been determined

2 by the Secretary of State under section 620A(a) of the

3 Foreign Assistance Act of 1961, section 6(j)(1) of the Ex4 port Administration Act of 1979, or section 40(d) of the

5 Arms Export Control Act to have repeatedly provided sup6 port for acts of international terrorism) of—

7 ‘‘(1) any special nuclear material or byproduct

8 material;

9 ‘‘(2) any nuclear production or utilization facili10 ties; or

11 ‘‘(3) any components, technologies, substances,

12 technical information, or related goods or services

13 used (or which could be used) in a nuclear produc14 tion or utilization facility.

15 ‘‘c. Any license, approval, or authorization described

16 in subsection b. made prior to the date of enactment of

17 this section is hereby revoked.’’.

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

19 of contents of such chapter 14 is amended by adding at

20 the end the following item:

‘‘Sec. 170D. Preventing the misuse of nuclear materials and technology.’’.

21 SEC. 14035. LIMITATION ON LEGAL FEE REIMBURSEMENT.

22 The Department of Energy shall not, except as re23 quired under a contract entered into before the date of

24 enactment of this Act, reimburse any contractor or sub25 contractor of the Department for any legal fees or ex-
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1 penses incurred with respect to a complaint subsequent

2 to—

3 (1) an adverse determination on the merits with

4 respect to such complaint against the contractor or

5 subcontractor by the Director of the Department of

6 Energy’s Office of Hearings and Appeals pursuant

7 to section 708 of title 10, Code of Federal Regula8 tions, or by a Department of Labor Administrative

9 Law Judge pursuant to section 211 of the Energy

10 Reorganization Act of 1974 (42 U.S.C. 5851); or

11 (2) an adverse final judgment by any State or

12 Federal court with respect to such complaint against

13 the contractor or subcontractor for wrongful termi14 nation or retaliation due to the making of disclo15 sures protected under chapter 12 of title 5, United

16 States Code, section 211 of the Energy Reorganiza17 tion Act of 1974 (42 U.S.C. 5851), or any com18 parable State law,

19 unless the adverse determination or final judgment is re20 versed upon further administrative or judicial review.

21 SEC. 14036. TRANSFER.

22 Not later than December 31, 2003, the Secretary of

23 Energy shall transmit to the Congress a plan for the

24 transfer to the Secretary of title to, and full responsibility

25 for the possession, transportation, disposal, stewardship,
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1 maintenance, and monitoring of, all facilities, property,

2 and radioactive waste at the Western New York Service

3 Center in West Valley, New York. The Secretary shall con4 sult with the President of the New York State Energy Re5 search and Development Authority in developing such

6 plan.

7 SEC. 14037. STUDY TO DETERMINE FEASIBILITY OF DEVEL8 OPING COMMERCIAL NUCLEAR ENERGY PRO9 DUCTION FACILITIES AT EXISTING DEPART10 MENT OF ENERGY SITES.

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

12 conduct a study to determine the feasibility of developing

13 commercial nuclear energy production facilities at Depart14 ment of Energy sites in existence on the date of the enact15 ment of this Act, including—

16 (1) options for how and where nuclear power

17 plants can be developed on existing Department of

18 Energy sites;

19 (2) estimates on cost savings to the Federal

20 Government that may be realized by locating new

21 nuclear power plants on Federal sites;

22 (3) the feasibility of incorporating new tech23 nology into nuclear power plants located on Federal

24 sites;
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1 (4) potential improvements in the licensing and

2 safety oversight procedures of nuclear power plants

3 located on Federal sites;

4 (5) an assessment of the effects of nuclear

5 waste management policies and projects as a result

6 of locating nuclear power plants located on Federal

7 sites; and

8 (6) any other factors that the Secretary believes

9 would be relevant in making the determination.

10 (b) REPORT.—Not later than 90 days after the date

11 of the enactment of this Act, the Secretary shall submit

12 to Congress a report describing the results of the study

13 under subsection (a).

14 TITLE V—VEHICLES AND FUELS

15 Subtitle A—Energy Policy Act

16 Amendments

17 SEC. 15011. CREDIT FOR SUBSTANTIAL CONTRIBUTION TO18 WARD NONCOVERED FLEETS.

19 Section 508 of the Energy Policy Act of 1992 (42

20 U.S.C. 13258) is amended by adding at the end the fol21 lowing new subsection:

22 ‘‘(e) CREDIT FOR SUBSTANTIAL CONTRIBUTION TO23 WARD USE OF DEDICATED VEHICLES IN NONCOVERED

24 FLEETS.—

25 ‘‘(1) DEFINITIONS.—In this subsection:
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1 ‘‘(A) MEDIUM OR HEAVY DUTY VEHI2 CLE.—The term ‘medium or heavy duty vehicle’

3 means a dedicated vehicle that—

4 ‘‘(i) in the case of a medium duty ve5 hicle, has a gross vehicle weight rating of

6 more than 8,500 pounds but not more

7 than 14,000 pounds; or

8 ‘‘(ii) in the case of a heavy duty vehi9 cle, has a gross vehicle weight rating of

10 more than 14,000 pounds.

11 ‘‘(B) SUBSTANTIAL CONTRIBUTION.—The

12 term ‘substantial contribution’ means not less

13 than $15,000 in cash or in kind services, as de14 termined by the Secretary.

15 ‘‘(2) ALLOCATION OF CREDITS.—The Secretary

16 shall allocate a credit to a fleet or covered person

17 under this section if the fleet or person makes a sub18 stantial contribution toward the acquisition and use

19 of dedicated vehicles or neighborhood electric vehi20 cles by a person that owns, operates, leases, or oth21 erwise controls a fleet that is not covered by this

22 title.

23 ‘‘(3) MULTIPLE CREDITS FOR MEDIUM AND

24 HEAVY DUTY VEHICLES.—The Secretary shall issue

25 2 full credits to a fleet or covered person under this
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1 section if the fleet or person makes a substantial

2 contribution toward the acquisition and use of a me3 dium or heavy duty vehicle.

4 ‘‘(4) USE OF CREDITS.—At the request of a

5 fleet or covered person allocated a credit under this

6 subsection, the Secretary shall, for the year in which

7 the acquisition of the dedicated vehicle or neighbor8 hood electric vehicle is made, treat that credit as the

9 acquisition of 1 alternative fueled vehicle that the

10 fleet or covered person is required to acquire under

11 this title.

12 ‘‘(5) LIMITATION.—Except as provided in para13 graph (3), no more than 1 credit shall be allocated

14 under this subsection for each vehicle.’’.

15 SEC. 15012. CREDIT FOR ALTERNATIVE FUEL INFRASTRUC16 TURE.

17 Section 508 of the Energy Policy Act of 1992 (42

18 U.S.C. 13258), as amended by this division, is further

19 amended by adding at the end the following new sub20 section:

21 ‘‘(f) CREDIT FOR INVESTMENT IN ALTERNATIVE

22 FUEL INFRASTRUCTURE.—

23 ‘‘(1) DEFINITION.—In this subsection, the term

24 ‘qualifying infrastructure’ means—
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1 ‘‘(A) equipment required to refuel or re2 charge alternative fueled vehicles;

3 ‘‘(B) facilities or equipment required to

4 maintain, repair, or operate alternative fueled

5 vehicles;

6 ‘‘(C) training programs, educational mate7 rials, or other activities necessary to provide in8 formation regarding the operation, mainte9 nance, or benefits associated with alternative

10 fueled vehicles; and

11 ‘‘(D) such other activities the Secretary

12 considers to constitute an appropriate expendi13 ture in support of the operation, maintenance,

14 or further widespread adoption of or utilization

15 of alternative fueled vehicles.

16 ‘‘(2) ALLOCATION OF CREDITS.—The Secretary

17 shall allocate a credit to a fleet or covered person

18 under this section for investment in qualifying infra19 structure if the qualifying infrastructure is open to

20 the general public during regular business hours.

21 ‘‘(3) AMOUNT.—For the purposes of credits

22 under this subsection—

23 ‘‘(A) 1 credit shall be equal to a minimum

24 investment of $25,000 in cash or in kind serv25 ices, as determined by the Secretary; and
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1 ‘‘(B) except in the case of a Federal or

2 State fleet, no part of the investment may be

3 provided by Federal or State funds.

4 ‘‘(4) USE OF CREDITS.—At the request of a

5 fleet or covered person allocated a credit under this

6 subsection, the Secretary shall, for the year in which

7 the investment is made, treat that credit as the ac8 quisition of 1 alternative fueled vehicle that the fleet

9 or covered person is required to acquire under this

10 title.’’.

11 SEC. 15013. ALTERNATIVE FUELED VEHICLE REPORT.

12 (a) DEFINITIONS.—In this section:

13 (1) ALTERNATIVE FUEL.—The term ‘‘alter14 native fuel’’ has the meaning given the term in sec15 tion 301 of the Energy Policy Act of 1992 (42

16 U.S.C. 13211).

17 (2) ALTERNATIVE FUELED VEHICLE.—The

18 term ‘‘alternative fueled vehicle’’ has the meaning

19 given the term in section 301 of the Energy Policy

20 Act of 1992 (42 U.S.C. 13211).

21 (3) LIGHT DUTY MOTOR VEHICLE.—The term

22 ‘‘light duty motor vehicle’’ has the meaning given

23 the term in section 301 of the Energy Policy Act of

24 1992 (42 U.S.C. 13211).
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1 (4) SECRETARY.—The term ‘‘Secretary’’ means

2 the Secretary of Energy.

3 (b) REPORT.—Not later than 1 year after the date

4 of enactment of this Act, the Secretary shall submit to

5 Congress a report on the effect that titles III, IV, and

6 V of the Energy Policy Act of 1992 have had on the devel7 opment of alternative fueled vehicle technology, the avail8 ability of alternative fueled vehicles in the market, the cost

9 of light duty motor vehicles that are alternative fueled ve10 hicles, and the availability, cost, and use of alternative

11 fuels and biodiesel. Such report shall include any rec12 ommendations of the Secretary for legislation concerning

13 the alternative fueled vehicle requirements under the En14 ergy Policy Act of 1992, and shall examine, discuss, and

15 determine the following:

16 (1) The number of alternative fueled vehicles

17 acquired by fleets or covered persons required to ac18 quire alternative fueled vehicles.

19 (2) The extent to which fleets subject to alter20 native fueled vehicle acquisition requirements have

21 met those requirements through the use of fuel mix22 tures that contain at least 20 percent biodiesel pur23 suant to section 312 of the Energy Policy Act of

24 1992 (42 U.S.C. 13220).
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1 (3) The amount of alternative fuel used in al2 ternative fueled vehicles acquired by fleets required

3 to acquire alternative fueled vehicles under the En4 ergy Policy Act of 1992.

5 (4) The amount of petroleum displaced by the

6 use of alternative fueled vehicles acquired by fleets

7 or covered persons.

8 (5) The cost of compliance with vehicle acquisi9 tion requirements under the Energy Policy Act of

10 1992, and the benefits of using such fuel and vehi11 cles.

12 (6) Projections of the amount of biodiesel, the

13 number of alternative fueled vehicles, and the

14 amount of alternative fuel that will be used over the

15 next decade by fleets required to acquire alternative

16 fueled vehicles under the Energy Policy Act of 1992.

17 (7) The existence of any obstacles to increased

18 use of alternative fuel and biodiesel in vehicles ac19 quired or maintained by fleets required to acquire al20 ternative fueled vehicles under the Energy Policy

21 Act of 1992, and the benefits of using such fuel and

22 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

16 containing—

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 SEC. 15050. STUDY ON REDUCING PETROLEUM CONSUMP8 TION.

9 (a) IN GENERAL.—The Administrator of General

10 Services, in cooperation with the Secretary of Energy,

11 shall conduct a study to consider the merits of establishing

12 performance measures to guide the reduction of petroleum

13 consumption by Federal fleets.

14 (b) MATTERS TO BE ADDRESSED.—The study shall

15 assess the feasibility of performance measures—

16 (1) to enable agency and congressional decision17 makers to establish annual and long-term perform18 ance goals to define the level of petroleum consump19 tion reduction to be achieved by Federal fleets;

20 (2) to improve the effectiveness and account21 ability of Federal efforts to reduce petroleum con22 sumption and dependency;

23 (3) to enhance decisionmaking by providing ob24 jective information on achieving performance objec25 tives; and
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1 (4) to provide an alternative to the mandated

2 alternative fueled vehicle requirements in section

3 303 of the Energy Policy Act of 1992 (42 U.S.C.

4 13212).

5 (c) REPORT.—Not later than 12 months after the

6 date of enactment of this Act, the Administrator shall sub7 mit to the Committees on Environment and Public Works

8 and Governmental Affairs of the Senate and the Commit9 tees on Energy and Commerce and Government Reform

10 of the House of Representatives a report on the study.

11 SEC. 15051. CONSERVE BY BICYCLING PROGRAM.

12 (a) DEFINITIONS.—In this section:

13 (1) PROGRAM.—The term ‘‘program’’ means

14 the Conserve by Bicycling Program established by

15 subsection (b).

16 (2) SECRETARY.—The term ‘‘Secretary’’ means

17 the Secretary of Transportation.

18 (b) ESTABLISHMENT.—There is established within

19 the Department of Transportation a program to be known

20 as the ‘‘Conserve by Bicycling Program’’.

21 (c) PROJECTS.—

22 (1) IN GENERAL.—In carrying out the program,

23 the Secretary shall establish not more than 10 pilot

24 projects that are—
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1 (A) dispersed geographically throughout

2 the United States; and

3 (B) designed to conserve energy resources

4 by encouraging the use of bicycles in place of

5 motor vehicles.

6 (2) REQUIREMENTS.—A pilot project described

7 in paragraph (1) shall—

8 (A) use education and marketing to con9 vert motor vehicle trips to bicycle trips;

10 (B) document project results and energy

11 savings (in estimated units of energy con12 served);

13 (C) facilitate partnerships among inter14 ested parties in at least 2 of the fields of—

15 (i) transportation;

16 (ii) law enforcement;

17 (iii) education;

18 (iv) public health;

19 (v) environment; and

20 (vi) energy;

21 (D) maximize bicycle facility investments;

22 (E) demonstrate methods that may be

23 used in other regions of the United States; and

24 (F) facilitate the continuation of ongoing

25 programs that are sustained by local resources.
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1 (3) COST SHARING.—At least 20 percent of the

2 cost of each pilot project described in paragraph (1)

3 shall be provided from State or local sources.

4 (d) ENERGY AND BICYCLING RESEARCH STUDY.—

5 (1) IN GENERAL.—Not later than 2 years after

6 the date of enactment of this Act, the Secretary

7 shall enter into a contract with the National Acad8 emy of Sciences for, and the National Academy of

9 Sciences shall conduct and submit to Congress a re10 port on, a study on the feasibility of converting

11 motor vehicle trips to bicycle trips.

12 (2) COMPONENTS.—The study shall—

13 (A) document the results or progress of

14 the pilot projects under subsection (c);

15 (B) determine the type and duration of

16 motor vehicle trips that people in the United

17 States may feasibly make by bicycle, taking into

18 consideration factors such as—

19 (i) weather;

20 (ii) land use and traffic patterns;

21 (iii) the carrying capacity of bicycles;

22 and

23 (iv) bicycle infrastructure;
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1 (C) determine any energy savings that

2 would result from the conversion of motor vehi3 cle trips to bicycle trips;

4 (D) include a cost-benefit analysis of bicy5 cle infrastructure investments; and

6 (E) include a description of any factors

7 that would encourage more motor vehicle trips

8 to be replaced with bicycle trips.

9 (e) AUTHORIZATION OF APPROPRIATIONS.—There is

10 authorized to be appropriated to carry out this section

11 $6,200,000, to remain available until expended, of

12 which—

13 (1) $5,150,000 shall be used to carry out pilot

14 projects described in subsection (c);

15 (2) $300,000 shall be used by the Secretary to

16 coordinate, publicize, and disseminate the results of

17 the program; and

18 (3) $750,000 shall be used to carry out sub19 section (d).
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1 TITLE VI—ELECTRICITY

2 Subtitle A—Transmission Capacity

3 SEC. 16011. TRANSMISSION INFRASTRUCTURE IMPROVE4 MENT RULEMAKING.

5 Part II of the Federal Power Act (16 U.S.C. 824 et

6 seq.) is amended by adding the following new section at

7 the end thereof:

8 ‘‘SEC. 215. TRANSMISSION INFRASTRUCTURE IMPROVE9 MENT RULEMAKING.

10 ‘‘(a) RULEMAKING REQUIREMENT.—Within 1 year

11 after the enactment of this section, the Commission shall

12 establish, by rule, incentive-based (including but not lim13 ited to performance-based) transmission rate treatments

14 to promote capital investment in the enlargement and im15 provement of facilities for the transmission of electric en16 ergy in interstate commerce as appropriate to—

17 ‘‘(1) promote economically efficient trans18 mission and generation of electricity;

19 ‘‘(2) provide a return on equity that attracts

20 new investment in transmission facilities and reason21 ably reflects the risks taken by public utilities in re22 structuring control of transmission assets; and

23 ‘‘(3) encourage deployment of transmission

24 technologies and other measures to increase the ca-
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•HR 6 EH

1 pacity and efficiency of existing transmission facili2 ties and improve the operation of such facilities.

3 The Commission may, from time to time, revise such rule.

4 ‘‘(b) FUNDING OF CERTAIN FACILITIES.—The rule

5 promulgated pursuant to this section shall provide that,

6 upon the request of a regional transmission organization

7 or other Commission-approved transmission organization,

8 new transmission facilities that increase the transfer capa9 bility of the transmission system shall be participant fund10 ed. In such rules, the Commission shall also provide guid11 ance as to what types of facilities may be participant fund12 ed.

13 ‘‘(c) JUST AND REASONABLE RATES.—With respect

14 to any transmission rate filed with the Commission on or

15 after the effective date of the rule promulgated under this

16 section, the Commission shall, in its review of such rate

17 under sections 205 and 206, apply the rules adopted pur18 suant to this section, including any revisions thereto.

19 Nothing in this section shall be construed to override,

20 weaken, or conflict with the procedural and other require21 ments of this part, including the requirement of sections

22 205 and 206 that all rates, charges, terms, and conditions

23 be just and reasonable and not unduly discriminatory or

24 preferential.’’.
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•HR 6 EH

1 SEC. 16012. SITING OF INTERSTATE ELECTRICAL TRANS2 MISSION FACILITIES.

3 (a) AMENDMENT OF FEDERAL POWER ACT.—Part

4 II of the Federal Power Act is amended by adding at the

5 end the following:

6 ‘‘SEC. 216. SITING OF INTERSTATE ELECTRICAL TRANS7 MISSION FACILITIES.

8 ‘‘(a) TRANSMISSION STUDIES.—Within one year

9 after the enactment of this section, and every 3 years

10 thereafter, the Secretary of Energy shall conduct a study

11 of electric transmission congestion. After considering al12 ternatives and recommendations from interested parties

13 the Secretary shall issue a report, based on such study,

14 which may designate one or more geographic areas experi15 encing electric energy transmission congestion as ‘inter16 state congestion areas’.

17 ‘‘(b) CONSTRUCTION PERMIT.—The Commission is

18 authorized, after notice and an opportunity for hearing,

19 to issue permits for the construction or modification of

20 electric transmission facilities in interstate congestion

21 areas designated by the Secretary under subsection (a) if

22 the Commission makes each of the following findings:

23 ‘‘(1) A finding that—

24 ‘‘(A) the State in which the transmission

25 facilities are to be constructed or modified is
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•HR 6 EH

1 without authority to approve the siting of the

2 facilities, or

3 ‘‘(B) a State commission or body in the

4 State in which the transmission facilities are to

5 be constructed or modified that has authority to

6 approve the siting of the facilities has withheld

7 approval, conditioned its approval in such a

8 manner that the proposed construction or modi9 fication will not significantly reduce trans10 mission congestion in interstate commerce and

11 is otherwise not economically feasible, or de12 layed final approval for more than one year

13 after the filing of an application seeking ap14 proval or one year after the designation of the

15 relevant interstate congestion area, whichever is

16 later.

17 ‘‘(2) A finding that the facilities to be author18 ized by the permit will be used for the transmission

19 of electric energy in interstate commerce.

20 ‘‘(3) A finding that the proposed construction

21 or modification is consistent with the public interest.

22 ‘‘(4) A finding that the proposed construction

23 or modification will significantly reduce transmission

24 congestion in interstate commerce.
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•HR 6 EH

1 The Commission may include in a permit issued under this

2 section conditions consistent with the public interest.

3 ‘‘(c) PERMIT APPLICATIONS.—Permit applications

4 under subsection (b) shall be made in writing to the Com5 mission and verified under oath. The Commission shall

6 issue rules setting forth the form of the application, the

7 information it is to contain, and the manner of service of

8 notice of the permit application upon interested persons.

9 ‘‘(d) COMMENTS.—In any proceeding before the

10 Commission under subsection (b), the Commission shall

11 afford each State in which a transmission facility covered

12 by the permit is or will be located, each affected Federal

13 agency and Indian tribe, private property owners, and

14 other interested persons, a reasonable opportunity to

15 present their views and recommendations with respect to

16 the need for and impact of a facility covered by the permit.

17 ‘‘(e) RIGHTS-OF-WAY.—In the case of a permit under

18 subsection (b) for electric transmission facilities to be lo19 cated on property other than property owned by the

20 United States or a State, if the permit holder cannot ac21 quire by contract, or is unable to agree with the owner

22 of the property to the compensation to be paid for, the

23 necessary right-of-way to construct or modify such trans24 mission facilities, the permit holder may acquire the right25 of-way by the exercise of the right of eminent domain in
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•HR 6 EH

1 the district court of the United States for the district in

2 which the property concerned is located, or in the appro3 priate court of the State in which the property is located.

4 The practice and procedure in any action or proceeding

5 for that purpose in the district court of the United States

6 shall conform as nearly as may be with the practice and

7 procedure in similar action or proceeding in the courts of

8 the State where the property is situated.

9 ‘‘(f) STATE LAW.—Nothing in this section shall pre10 clude any person from constructing any transmission fa11 cilities pursuant to State law.

12 ‘‘(g) COMPLIANCE WITH OTHER LAWS.—Commis13 sion action under this section shall be subject to the Na14 tional Environmental Policy Act of 1969 (42 U.S.C. 4321

15 et seq.) and all other applicable Federal laws.

16 ‘‘(h) COMPENSATION.—Any exercise of eminent do17 main authority pursuant to this section shall be considered

18 a taking of private property for which just compensation

19 is due. Just compensation shall be an amount equal to

20 the full fair market value of the property taken on the

21 date of the exercise of eminent domain authority, except

22 that the compensation shall exceed fair market value if

23 necessary to make the landowner whole for decreases in

24 the value of any portion of the land not subject to eminent

25 domain. Any parcel of land acquired by eminent domain
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•HR 6 EH

1 under this subsection shall be transferred back to the

2 owner from whom it was acquired (or his heirs or assigns)

3 if the land is not used for power line construction or modi4 fication within a reasonable period of time after the acqui5 sition. Property acquired under this subsection may not

6 be used for any heritage area, recreational trail, or park,

7 or for any other purpose (other than power line construc8 tion or modification, and for power line operation and

9 maintenance) without the consent of the owner of the par10 cel from whom the property was acquired (or his heirs or

11 assigns).

12 ‘‘(i) ERCOT.—Nothing in this section shall be con13 strued to authorize any interconnection with any facility

14 owned or operated by an entity referred to in section

15 212(k)(2)(B).

16 ‘‘(j) RIGHTS OF WAY ON FEDERAL LANDS.—

17 ‘‘(1) LEAD AGENCY.—If an applicant, or pro18 spective applicant, for Federal authorization related

19 to an electricity transmission or distribution facility

20 so requests, the Department of Energy (DOE) shall

21 act as the lead agency for purposes of coordinating

22 all applicable Federal authorization and related envi23 ronmental review of the facility. The term ‘Federal

24 authorization’ shall mean any authorization required

25 under Federal law in order to site a transmission or
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•HR 6 EH

1 distribution facility, including but not limited to

2 such permits, special use authorizations, certifi3 cations, opinions, or other approvals as may be re4 quired, whether issued by a Federal or a State agen5 cy. To the maximum extent practicable under appli6 cable Federal law, the Secretary of Energy shall co7 ordinate this Federal authorization and review proc8 ess with any Indian tribes, multi-State entities, and

9 State agencies that are responsible for conducting

10 any separate permitting and environmental reviews

11 of the facility, to ensure timely and efficient review

12 and permit decisions.

13 ‘‘(2) AUTHORITY TO SET DEADLINES.—As lead

14 agency, the Department of Energy, in consultation

15 with other Federal and, as appropriate, with Indian

16 tribes, multi-State entities, and State agencies that

17 are willing to coordinate their own separate permit18 ting and environmental reviews with the Federal au19 thorization and environmental reviews, shall estab20 lish prompt and binding intermediate milestones and

21 ultimate deadlines for the review of and Federal au22 thorization decisions relating to the proposed facil23 ity. The Secretary of Energy shall ensure that once

24 an application has been submitted with such data as

25 the Secretary deems necessary, all permit decisions
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•HR 6 EH

1 and related environmental reviews under all applica2 ble Federal laws shall be completed within 1 year or,

3 if a requirement of another provision of Federal law

4 makes this impossible, as soon thereafter as is prac5 ticable. The Secretary of Energy also shall provide

6 an expeditious pre-application mechanism for pro7 spective applicants to confer with the agencies in8 volved to have each such agency determine and com9 municate to the prospective applicant within 60 days

10 of when the prospective applicant submits a request

11 for such information concerning—

12 ‘‘(A) the likelihood of approval for a poten13 tial facility; and

14 ‘‘(B) key issues of concern to the agencies

15 and public.

16 ‘‘(3) CONSOLIDATED ENVIRONMENTAL REVIEW

17 AND RECORD OF DECISION.—The Secretary of En18 ergy, in consultation with the affected agencies, shall

19 prepare a single environmental review document,

20 which shall be used as the basis for all decisions on

21 the proposed project under Federal law. The docu22 ment may be an environmental assessment or envi23 ronmental impact statement under the National En24 vironmental Policy Act of 1969 if warranted, or such

25 other form of analysis as may be warranted. DOE
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1 and other agencies shall streamline the review and

2 permitting of transmission and distribution facilities

3 within corridors designated under section 503 of the

4 Federal Land Policy and Management Act (43

5 U.S.C. 1763) by fully taking into account prior anal6 yses and decisions as to the corridors. The document

7 under this section may consist of or include an envi8 ronmental assessment, if allowed by law, or an envi9 ronmental impact statement, if warranted or re10 quired by law, or such other form of analysis as war11 ranted, consistent with any requirement of the Na12 tional Environmental Policy Act, the Federal Land

13 Policy and Management Act, or any other applicable

14 law. Such document shall include consideration by

15 the relevant agencies of any applicable criteria or

16 other matters as required under applicable laws.

17 ‘‘(4) APPEALS.—In the event that any agency

18 has denied a Federal authorization required for a

19 transmission or distribution facility, or has failed to

20 act by the deadline established by the Secretary pur21 suant to this section for deciding whether to issue

22 the authorization, the applicant or any State in

23 which the facility would be located may file an ap24 peal with the Secretary of Energy, who shall, in con25 sultation with the affected agency, review the denial
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•HR 6 EH

1 or take action on the pending application. Based on

2 the overall record and in consultation with the af3 fected agency, the Secretary may then either issue

4 the necessary authorization with any appropriate

5 conditions, or deny the application. The Secretary

6 shall issue a decision within 90 days of the filing of

7 the appeal. In making a decision under this para8 graph, the Secretary shall comply with all applicable

9 requirements of Federal law, including any require10 ments of the Endangered Species Act, the Clean

11 Water Act, the National Forest Management Act,

12 the National Environmental Policy Act, and the

13 Federal Land Management and Policy Act.

14 ‘‘(5) CONFORMING REGULATIONS AND MEMO15 RANDA OF AGREEMENT.—Not later than 18 months

16 after the date of enactment of this section, the Sec17 retary of Energy shall issue any regulations nec18 essary to implement the foregoing provisions. Not

19 later than 1 year after the date of enactment of this

20 section, the Secretary and the heads of all relevant

21 Federal departments and non-departmental agencies

22 shall, and interested Indian tribes, multi-State enti23 ties, and State agencies may, enter into Memoranda

24 of Agreement to ensure the timely and coordinated

25 review and permitting of electricity transmission and
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•HR 6 EH

1 distribution facilities. The head of each Federal de2 partment or non-departmental agency with approval

3 authority shall designate a senior responsible official

4 and dedicate sufficient other staff and resources to

5 ensure that the DOE regulations and any Memo6 randa are fully implemented.

7 ‘‘(6) MISCELLANEOUS.—Each Federal author8 ization for an electricity transmission or distribution

9 facility shall be issued for a duration, as determined

10 by the Secretary of Energy, commensurate with the

11 anticipated use of the facility and with appropriate

12 authority to manage the right-of-way for reliability

13 and environmental protection. Further, when such

14 authorizations expire, they shall be reviewed for re15 newal taking fully into account reliance on such elec16 tricity infrastructure, recognizing its importance for

17 public health, safety and economic welfare and as a

18 legitimate use of Federal lands.

19 ‘‘(7) MAINTAINING AND ENHANCING THE

20 TRANSMISSION INFRASTRUCTURE.—In exercising the

21 responsibilities under this section, the Secretary of

22 Energy shall consult regularly with the Federal En23 ergy Regulatory Commission (FERC) and FERC24 approved Regional Transmission Organizations and

25 Independent System Operators.
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•HR 6 EH

1 ‘‘(k) INTERSTATE COMPACTS.—The consent of Con2 gress is hereby given for States to enter into interstate

3 compacts establishing regional transmission siting agen4 cies to facilitate coordination among the States within

5 such areas for purposes of siting future electric energy

6 transmission facilities and to carry out State electric en7 ergy transmission siting responsibilities. The Secretary of

8 Energy may provide technical assistance to regional trans9 mission siting agencies established under this subsection.

10 ‘‘(l) SAVINGS CLAUSE.—Nothing in this section shall

11 be construed to affect any requirement of the environ12 mental laws of the United States, including, but not lim13 ited to, the National Environmental Policy Act of 1969.

14 This section shall not apply to any component of the Na15 tional Wilderness Preservation System, the National Wild

16 and Scenic Rivers System, or the National Park system

17 (including National Monuments therein).’’.

18 (b) FEDERAL CORRIDORS.—The Secretary of the In19 terior, the Secretary of Energy, the Secretary of Agri20 culture, and the Chairman of the Council on Environ21 mental Quality shall, within 90 days of the date of enact22 ment of this subsection, submit a joint report to Congress

23 identifying the following:

24 (1) all existing designated transmission and dis25 tribution corridors on Federal land and the status of
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•HR 6 EH

1 work related to proposed transmission and distribu2 tion corridor designations, the schedule for com3 pleting such work, any impediments to completing

4 the work, and steps that Congress could take to ex5 pedite the process;

6 (2) the number of pending applications to lo7 cate transmission and distribution facilities on Fed8 eral lands, key information relating to each such fa9 cility, how long each application has been pending,

10 the schedule for issuing a timely decision as to each

11 facility, and progress in incorporating existing and

12 new such rights-of-way into relevant land use and

13 resource management plans or their equivalent; and

14 (3) the number of existing transmission and

15 distribution rights-of-way on Federal lands that will

16 come up for renewal within the following 5, 10, and

17 15 year periods, and a description of how the Secre18 taries plan to manage such renewals.

19 SEC. 16013. TRANSMISSION TECHNOLOGIES.

20 The Federal Energy Regulatory Commission shall

21 shall take affirmative steps in the exercise of its authori22 ties under the Federal Power Act to encourage the deploy23 ment of transmission technologies that utilize real time

24 monitoring and analytical software to increase and maxi-
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1 mize the capacity and efficiency of transmission networks

2 and to reduce line losses.

3 Subtitle B—Transmission

4 Operation

5 SEC. 16021. OPEN ACCESS TRANSMISSION BY CERTAIN

6 UTILITIES.

7 Part II of the Federal Power Act (16 U.S.C. 824 et

8 seq.) is amended by inserting after section 211 the fol9 lowing:

10 ‘‘SEC. 211A. OPEN ACCESS BY UNREGULATED TRANSMIT11 TING UTILITIES.

12 ‘‘(a) IN GENERAL.—Subject to section 212(h), the

13 Commission may, by rule or order, require an unregulated

14 transmitting utility to provide transmission services—

15 ‘‘(1) at rates that are comparable to those that

16 the unregulated transmitting utility charges itself,

17 and

18 ‘‘(2) on terms and conditions (not relating to

19 rates) that are comparable to those under which

20 such unregulated transmitting utility provides trans21 mission services to itself and that are not unduly

22 discriminatory or preferential.

23 ‘‘(b) EXEMPTIONS.—
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1 ‘‘(1) IN GENERAL.—The Commission shall ex2 empt from any rule or order under this subsection

3 any unregulated transmitting utility that—

4 ‘‘(A)(i) sells no more than 4,000,000

5 megawatt hours of electricity per year; and

6 ‘‘(ii) is a distribution utility; or

7 ‘‘(B) does not own or operate any trans8 mission facilities that are necessary for oper9 ating an interconnected transmission system (or

10 any portion thereof); or

11 ‘‘(C) meets other criteria the Commission

12 determines to be in the public interest.

13 ‘‘(2) LOCAL DISTRIBUTION.— The requirements

14 of subsection (a) shall not apply to facilities used in

15 local distribution.

16 ‘‘(c) RATE CHANGING PROCEDURES.—The rate

17 changing procedures applicable to public utilities under

18 subsections (c) and (d) of section 205 are applicable to

19 unregulated transmitting utilities for purposes of this sec20 tion.

21 ‘‘(d) REMAND.—In exercising its authority under

22 paragraph (1), the Commission may remand transmission

23 rates to an unregulated transmitting utility for review and

24 revision where necessary to meet the requirements of sub25 section (a).
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1 ‘‘(e) SECTION 211 REQUESTS.—The provision of

2 transmission services under subsection (a) does not pre3 clude a request for transmission services under section

4 211.

5 ‘‘(f) DEFINITIONS.—For purposes of this section—

6 ‘‘(1) The term ‘unregulated transmitting utility’

7 means an entity that—

8 ‘‘(A) owns or operates facilities used for

9 the transmission of electric energy in interstate

10 commerce, and

11 ‘‘(B) is either an entity described in sec12 tion 201(f) or a rural electric cooperative.

13 ‘‘(2) The term ‘distribution utility’ means an

14 unregulated transmitting utility that serves at least

15 ninety percent of its electric customers at retail.’’.

16 SEC. 16022. REGIONAL TRANSMISSION ORGANIZATIONS.

17 (a) SENSE OF THE CONGRESS ON RTOS.—It is the

18 sense of Congress that, in order to promote fair, open ac19 cess to electric transmission service, benefit retail con20 sumers, facilitate wholesale competition, improve effi21 ciencies in transmission grid management, promote grid

22 reliability, remove opportunities for unduly discriminatory

23 or preferential transmission practices, and provide for the

24 efficient development of transmission infrastructure need25 ed to meet the growing demands of competitive wholesale
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1 power markets, all transmitting utilities in interstate com2 merce should voluntarily become members of independ3 ently administered regional transmission organizations

4 that have operational control of interstate transmission fa5 cilities and do not own or control generation facilities used

6 to supply electric energy for sale at wholesale.

7 (b) SENSE OF THE CONGRESS ON CAPITAL INVEST8 MENT.—It is the sense of the Congress that the Federal

9 Energy Regulatory Commission should provide to any

10 transmitting utility that becomes a member of an oper11 ational regional transmitting organization approved by the

12 Commission a return on equity sufficient to attract new

13 investment capital for expansion of transmission capacity,

14 in accordance with sections 205 and 206 of the Federal

15 Power Act (16 U.S.C. 824d and 824e), including the re16 quirement that rates be just and reasonable.

17 (c) REPORT ON PENDING APPLICATIONS.—Not later

18 than 120 days after the date of enactment of this section,

19 the Federal Energy Regulatory Commission shall submit

20 to the Committee on Energy and Commerce of the United

21 States House of Representatives and the Committee on

22 Energy and Natural Resources of the United States Sen23 ate a report containing the following:

24 (1) A list of all regional transmission organiza25 tion applications filed at the Commission pursuant
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1 to the Commission’s Order No. 2000, including an

2 identification of each public utility and other entity

3 included within the proposed membership of the re4 gional transmission organization.

5 (2) A table showing the date each such applica6 tion was filed, the date of any revised filings of such

7 application, the date of each preliminary or final

8 Commission order regarding such application, and a

9 statement of whether the application has been re10 jected, preliminarily approved, finally approved, or

11 has some other status (including a description of

12 that status).

13 (3) For any application that has not been fi14 nally approved by the Commission, a detailed de15 scription of every aspect of the application that the

16 Commission has determined does not conform to the

17 requirements of Order No. 2000.

18 (4) For any application that has not been fi19 nally approved by the Commission, an explanation

20 by the Commission of why the items described pur21 suant to paragraph (3) constitute material non22 compliance with the requirements of the Commis23 sion’s Order No. 2000 sufficient to justify denial of

24 approval by the Commission.
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1 (5) For all regional transmission organization

2 applications filed pursuant to the Commission’s

3 Order No. 2000, whether finally approved or not—

4 (A) a discussion of that regional trans5 mission organization’s efforts to minimize rate

6 seams between itself and—

7 (i) other regional transmission organi8 zations; and

9 (ii) entities not participating in a re10 gional transmission organization; and

11 (B) a discussion of the impact of such

12 seams on consumers and wholesale competition;

13 and

14 (C) a discussion of minimizing cost-shifting

15 on consumers.

16 (d) FEDERAL UTILITY PARTICIPATION IN RTOS.—

17 (1) DEFINITIONS.—For purposes of this

18 section—

19 (A) The term ‘‘appropriate Federal regu20 latory authority’’ means—

21 (i) with respect to a Federal power

22 marketing agency, the Secretary of En23 ergy, except that the Secretary may des24 ignate the Administrator of a Federal

25 power marketing agency to act as the ap-
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1 propriate Federal regulatory authority with

2 respect to the transmission system of that

3 Federal power marketing agency; and

4 (ii) with respect to the Tennessee Val5 ley Authority, the Board of Directors of

6 the Tennessee Valley Authority.

7 (B) The term ‘‘Federal utility’’ means a

8 Federal power marketing agency or the Ten9 nessee Valley Authority.

10 (C) The term ‘‘transmission system’’

11 means electric transmission facilities owned,

12 leased, or contracted for by the United States

13 and operated by a Federal utility.

14 (2) TRANSFER.—The appropriate Federal regu15 latory authority is authorized to enter into a con16 tract, agreement or other arrangement transferring

17 control and use of all or part of the Federal utility’s

18 transmission system to a regional transmission orga19 nization approved by the Federal Energy Regulatory

20 Commission. Such contract, agreement or arrange21 ment shall include—

22 (A) performance standards for operation

23 and use of the transmission system that the

24 head of the Federal utility determines necessary

25 or appropriate, including standards that assure
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1 recovery of all the Federal utility’s costs and

2 expenses related to the transmission facilities

3 that are the subject of the contract, agreement

4 or other arrangement, consistency with existing

5 contracts and third-party financing arrange6 ments, and consistency with said Federal util7 ity’s statutory authorities, obligations, and limi8 tations;

9 (B) provisions for monitoring and over10 sight by the Federal utility of the regional

11 transmission organization’s fulfillment of the

12 terms and conditions of the contract, agreement

13 or other arrangement, including a provision

14 that may provide for the resolution of disputes

15 through arbitration or other means with the re16 gional transmission organization or with other

17 participants, notwithstanding the obligations

18 and limitations of any other law regarding arbi19 tration; and

20 (C) a provision that allows the Federal

21 utility to withdraw from the regional trans22 mission organization and terminate the con23 tract, agreement or other arrangement in ac24 cordance with its terms.
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1 Neither this section, actions taken pursuant to it,

2 nor any other transaction of a Federal utility using

3 a regional transmission organization shall serve to

4 confer upon the Federal Energy Regulatory Com5 mission jurisdiction or authority over the Federal

6 utility’s electric generation assets, electric capacity

7 or energy that the Federal utility is authorized by

8 law to market, or the Federal utility’s power sales

9 activities.

10 (3) EXISTING STATUTORY AND OTHER OBLIGA11 TIONS.—

12 (A) SYSTEM OPERATION REQUIRE13 MENTS.—Any statutory provision requiring or

14 authorizing a Federal utility to transmit electric

15 power or to construct, operate or maintain its

16 transmission system shall not be construed to

17 prohibit a transfer of control and use of its

18 transmission system pursuant to, and subject to

19 all requirements of paragraph (2).

20 (B) OTHER OBLIGATIONS.—This sub21 section shall not be construed to—

22 (i) suspend, or exempt any Federal

23 utility from, any provision of existing Fed24 eral law, including but not limited to any

25 requirement or direction relating to the use
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1 of the Federal utility’s transmission sys2 tem, environmental protection, fish and

3 wildlife protection, flood control, naviga4 tion, water delivery, or recreation; or

5 (ii) authorize abrogation of any con6 tract or treaty obligation.

7 SEC. 16023. NATIVE LOAD.

8 Part II of the Federal Power Act (16 U.S.C. 824 et

9 seq.) is amended by adding the following new section at

10 the end thereof:

11 ‘‘SEC. 217. SERVICE OBLIGATIONS OF LOAD-SERVING ENTI12 TIES.

13 ‘‘(a) IN GENERAL.—In exercising authority under

14 this Act, the Commission shall ensure that any load-serv15 ing entity that either—

16 ‘‘(1) owns transmission facilities for the trans17 mission of electric energy in interstate commerce

18 used to purchase or deliver electric energy to meet—

19 ‘‘(A) a service obligation to customers; or

20 ‘‘(B) an existing wholesale contractual obli21 gation; or

22 ‘‘(2) holds a contract or service agreement for

23 firm transmission service used to purchase or deliver

24 electric energy to meet—

25 ‘‘(A) a service obligation to customers; or
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•HR 6 EH

1 ‘‘(B) an existing wholesale contractual obli2 gation,

3 shall be entitled to use such transmission facilities or

4 equivalent transmission rights to meet such obligations be5 fore transmission capacity is made available for other

6 uses.

7 ‘‘(b) USE BY SUCCESSOR IN INTEREST.—To the ex8 tent that all or a portion of the service obligation or con9 tractual obligation covered by subsection (a) is transferred

10 to another load serving entity, the successor shall be enti11 tled to use such transmission facilities or firm trans12 mission rights associated with the transferred service obli13 gation consistent with subsection (a). Subsequent trans14 fers to another load serving entity, or back to the original

15 load-serving entity, shall be entitled to the same rights.

16 ‘‘(c) OTHER ENTITIES.—The Commission may exer17 cise authority under this Act to make transmission rights

18 not used to meet an obligation covered by subsection (a)

19 available to other entities in a manner determined by the

20 Commission to be not unduly discriminatory or pref21 erential.

22 ‘‘(d) DEFINITIONS.—For the purposes of this section:

23 ‘‘(1) The term ‘load-serving entity’ means an

24 electric utility, transmitting utility or Federal power

25 marketing agency that has an obligation under Fed-
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1 eral, State, or local law, or under long-term con2 tracts, to provide electric service to either—

3 ‘‘(A) electric consumers (as defined in sec4 tion 3(5) of the Public Utility Regulatory Poli5 cies Act of 1978 (16 U.S.C. 2602(5)); or

6 ‘‘(B) an electric utility as defined in sec7 tion 3(4) of the Public Utility Regulatory Poli8 cies Act of 1978 (16 U.S.C. 2602(5)) that has

9 an obligation to provide electric service to elec10 tric consumers.

11 Such obligations shall be deemed ‘service obliga12 tions’.

13 ‘‘(2) The term ‘existing wholesale contractual

14 obligation’ means an obligation under a firm long15 term wholesale contract that was in effect on March

16 28, 2003. A contract modification after March 28,

17 2003 (other than one that increases the quantity of

18 electric energy sold under the contract) shall not af19 fect the status of such contract as an existing whole20 sale contractual obligation.

21 ‘‘(e) RELATIONSHIP TO OTHER PROVISIONS.—To the

22 extent that a transmitting utility reserves transmission ca23 pacity (or reserves the equivalent amount of tradable

24 transmission rights) to provide firm transmission service

25 to meet service obligations or firm long-term wholesale
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1 contractual obligations pursuant to subsection (a), that

2 transmitting utility shall not be considered as engaging

3 in undue discrimination or preference under this Act.

4 ‘‘(f) JURISDICTION.—This section shall not apply to

5 an entity located in an area referred to in section

6 212(k)(2)(A).

7 ‘‘(g) SAVINGS CLAUSE.—Nothing in this section shall

8 affect any allocation of transmission rights by the PJM

9 Interconnection, the New York Independent System Oper10 ator, the New England Independent System Operator, the

11 Midwest Independent System Operator, or the California

12 Independent System Operator. Nothing in this section

13 shall provide a basis for abrogating any contract for firm

14 transmission service or rights in effect as of the date of

15 enactment of this section.’’.

16 Subtitle C—Reliability

17 SEC. 16031. ELECTRIC RELIABILITY STANDARDS.

18 Part II of the Federal Power Act (16 U.S.C 824 et

19 seq.) is amended by inserting the following new section

20 at the end thereof:

21 ‘‘SEC. 218. ELECTRIC RELIABILITY.

22 ‘‘(a) DEFINITIONS.—For purposes of this section—

23 ‘‘(1) The term ‘bulk-power system’ means—

24 ‘‘(A) facilities and control systems nec25 essary for operating an interconnected electric
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1 energy transmission network (or any portion

2 thereof); and

3 ‘‘(B) electric energy from generation facili4 ties needed to maintain transmission system re5 liability.

6 The term does not include facilities used in the local

7 distribution of electric energy.

8 ‘‘(2) The terms ‘Electric Reliability Organiza9 tion’ and ‘ERO’ mean the organization certified by

10 the Commission under subsection (c) the purpose of

11 which is to establish and enforce reliability stand12 ards for the bulk-power system, subject to Commis13 sion review.

14 ‘‘(3) The term ‘reliability standard’ means a re15 quirement, approved by the Commission under this

16 section, to provide for reliable operation of the bulk17 power system. The term includes requirements for

18 the operation of existing bulk-power system facilities

19 and the design of planned additions or modifications

20 to such facilities to the extent necessary to provide

21 for reliable operation of the bulk-power system, but

22 the term does not include any requirement to en23 large such facilities or to construct new transmission

24 capacity or generation capacity.
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1 ‘‘(4) The term ‘reliable operation’ means oper2 ating the elements of the bulk-power system within

3 equipment and electric system thermal, voltage, and

4 stability limits so that instability, uncontrolled sepa5 ration, or cascading failures of such system will not

6 occur as a result of a sudden disturbance or unan7 ticipated failure of system elements.

8 ‘‘(5) The term ‘Interconnection’ means a geo9 graphic area in which the operation of bulk-power

10 system components is synchronized such that the

11 failure of one or more of such components may ad12 versely affect the ability of the operators of other

13 components within the system to maintain reliable

14 operation of the facilities within their control.

15 ‘‘(6) The term ‘transmission organization’

16 means a regional transmission organization, inde17 pendent system operator, independent transmission

18 provider, or other transmission organization finally

19 approved by the Commission for the operation of

20 transmission facilities.

21 ‘‘(7) The term ‘regional entity’ means an entity

22 having enforcement authority pursuant to subsection

23 (e)(4).

24 ‘‘(b) JURISDICTION AND APPLICABILITY.—(1) The

25 Commission shall have jurisdiction, within the United
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1 States, over the ERO certified by the Commission under

2 subsection (c), any regional entities, and all users, owners

3 and operators of the bulk-power system, including but not

4 limited to the entities described in section 201(f), for pur5 poses of approving reliability standards established under

6 this section and enforcing compliance with this section. All

7 users, owners and operators of the bulk-power system

8 shall comply with reliability standards that take effect

9 under this section.

10 ‘‘(2) The Commission shall issue a final rule to imple11 ment the requirements of this section not later than 180

12 days after the date of enactment of this section.

13 ‘‘(c) CERTIFICATION.—Following the issuance of a

14 Commission rule under subsection (b)(2), any person may

15 submit an application to the Commission for certification

16 as the Electric Reliability Organization (ERO). The Com17 mission may certify one such ERO if the Commission de18 termines that such ERO—

19 ‘‘(1) has the ability to develop and enforce, sub20 ject to subsection (e)(2), reliability standards that

21 provide for an adequate level of reliability of the

22 bulk-power system;

23 ‘‘(2) has established rules that—

24 ‘‘(A) assure its independence of the users

25 and owners and operators of the bulk-power
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1 system, while assuring fair stakeholder rep2 resentation in the selection of its directors and

3 balanced decisionmaking in any ERO com4 mittee or subordinate organizational structure;

5 ‘‘(B) allocate equitably reasonable dues,

6 fees, and other charges among end users for all

7 activities under this section;

8 ‘‘(C) provide fair and impartial procedures

9 for enforcement of reliability standards through

10 the imposition of penalties in accordance with

11 subsection (e) (including limitations on activi12 ties, functions, or operations, or other appro13 priate sanctions);

14 ‘‘(D) provide for reasonable notice and op15 portunity for public comment, due process,

16 openness, and balance of interests in developing

17 reliability standards and otherwise exercising its

18 duties; and

19 ‘‘(E) provide for taking, after certification,

20 appropriate steps to gain recognition in Canada

21 and Mexico.

22 ‘‘(d) RELIABILITY STANDARDS.—(1) The Electric

23 Reliability Organization shall file each reliability standard

24 or modification to a reliability standard that it proposes
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1 to be made effective under this section with the Commis2 sion.

3 ‘‘(2) The Commission may approve, by rule or order,

4 a proposed reliability standard or modification to a reli5 ability standard if it determines that the standard is just,

6 reasonable, not unduly discriminatory or preferential, and

7 in the public interest. The Commission shall give due

8 weight to the technical expertise of the Electric Reliability

9 Organization with respect to the content of a proposed

10 standard or modification to a reliability standard and to

11 the technical expertise of a regional entity organized on

12 an Interconnection-wide basis with respect to a reliability

13 standard to be applicable within that Interconnection, but

14 shall not defer with respect to the effect of a standard

15 on competition. A proposed standard or modification shall

16 take effect upon approval by the Commission.

17 ‘‘(3) The Electric Reliability Organization shall

18 rebuttably presume that a proposal from a regional entity

19 organized on an Interconnection-wide basis for a reliability

20 standard or modification to a reliability standard to be ap21 plicable on an Interconnection-wide basis is just, reason22 able, and not unduly discriminatory or preferential, and

23 in the public interest.

24 ‘‘(4) The Commission shall remand to the Electric

25 Reliability Organization for further consideration a pro-
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1 posed reliability standard or a modification to a reliability

2 standard that the Commission disapproves in whole or in

3 part.

4 ‘‘(5) The Commission, upon its own motion or upon

5 complaint, may order the Electric Reliability Organization

6 to submit to the Commission a proposed reliability stand7 ard or a modification to a reliability standard that ad8 dresses a specific matter if the Commission considers such

9 a new or modified reliability standard appropriate to carry

10 out this section.

11 ‘‘(6) The final rule adopted under subsection (b)(2)

12 shall include fair processes for the identification and time13 ly resolution of any conflict between a reliability standard

14 and any function, rule, order, tariff, rate schedule, or

15 agreement accepted, approved, or ordered by the Commis16 sion applicable to a transmission organization. Such trans17 mission organization shall continue to comply with such

18 function, rule, order, tariff, rate schedule or agreement ac19 cepted approved, or ordered by the Commission until—

20 ‘‘(A) the Commission finds a conflict exists be21 tween a reliability standard and any such provision;

22 ‘‘(B) the Commission orders a change to such

23 provision pursuant to section 206 of this part; and

24 ‘‘(C) the ordered change becomes effective

25 under this part.
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1 If the Commission determines that a reliability standard

2 needs to be changed as a result of such a conflict, it shall

3 order the ERO to develop and file with the Commission

4 a modified reliability standard under paragraph (4) or (5)

5 of this subsection.

6 ‘‘(e) ENFORCEMENT.—(1) The ERO may impose,

7 subject to paragraph (2), a penalty on a user or owner

8 or operator of the bulk-power system for a violation of a

9 reliability standard approved by the Commission under

10 subsection (d) if the ERO, after notice and an opportunity

11 for a hearing—

12 ‘‘(A) finds that the user or owner or operator

13 has violated a reliability standard approved by the

14 Commission under subsection (d); and

15 ‘‘(B) files notice and the record of the pro16 ceeding with the Commission.

17 ‘‘(2) A penalty imposed under paragraph (1) may

18 take effect not earlier than the 31st day after the electric

19 reliability organization files with the Commission notice of

20 the penalty and the record of proceedings. Such penalty

21 shall be subject to review by the Commission, on its own

22 motion or upon application by the user, owner or operator

23 that is the subject of the penalty filed within 30 days after

24 the date such notice is filed with the Commission. Applica25 tion to the Commission for review, or the initiation of re-
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1 view by the Commission on its own motion, shall not oper2 ate as a stay of such penalty unless the Commission other3 wise orders upon its own motion or upon application by

4 the user, owner or operator that is the subject of such

5 penalty. In any proceeding to review a penalty imposed

6 under paragraph (1), the Commission, after notice and op7 portunity for hearing (which hearing may consist solely

8 of the record before the electric reliability organization and

9 opportunity for the presentation of supporting reasons to

10 affirm, modify, or set aside the penalty), shall by order

11 affirm, set aside, reinstate, or modify the penalty, and,

12 if appropriate, remand to the electric reliability organiza13 tion for further proceedings. The Commission shall imple14 ment expedited procedures for such hearings.

15 ‘‘(3) On its own motion or upon complaint, the Com16 mission may order compliance with a reliability standard

17 and may impose a penalty against a user or owner or oper18 ator of the bulk-power system, if the Commission finds,

19 after notice and opportunity for a hearing, that the user

20 or owner or operator of the bulk-power system has en21 gaged or is about to engage in any acts or practices that

22 constitute or will constitute a violation of a reliability

23 standard.

24 ‘‘(4) The Commission shall establish regulations au25 thorizing the ERO to enter into an agreement to delegate
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1 authority to a regional entity for the purpose of proposing

2 reliability standards to the ERO and enforcing reliability

3 standards under paragraph (1) if—

4 ‘‘(A) the regional entity is governed by—

5 ‘‘(i) an independent board;

6 ‘‘(ii) a balanced stakeholder board; or

7 ‘‘(iii) a combination independent and

8 balanced stakeholder board.

9 ‘‘(B) the regional entity otherwise satisfies the

10 provisions of subsection (c)(1) and (2); and

11 ‘‘(C) the agreement promotes effective and effi12 cient administration of bulk-power system reliability.

13 The Commission may modify such delegation. The ERO

14 and the Commission shall rebuttably presume that a pro15 posal for delegation to a regional entity organized on an

16 Interconnection-wide basis promotes effective and efficient

17 administration of bulk-power system reliability and should

18 be approved. Such regulation may provide that the Com19 mission may assign the ERO’s authority to enforce reli20 ability standards under paragraph (1) directly to a re21 gional entity consistent with the requirements of this para22 graph.

23 ‘‘(5) The Commission may take such action as is nec24 essary or appropriate against the ERO or a regional entity
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1 to ensure compliance with a reliability standard or any

2 Commission order affecting the ERO or a regional entity.

3 ‘‘(6) Any penalty imposed under this section shall

4 bear a reasonable relation to the seriousness of the viola5 tion and shall take into consideration the efforts of such

6 user, owner, or operator to remedy the violation in a time7 ly manner.

8 ‘‘(f) CHANGES IN ELECTRICITY RELIABILITY ORGA9 NIZATION RULES.—The Electric Reliability Organization

10 shall file with the Commission for approval any proposed

11 rule or proposed rule change, accompanied by an expla12 nation of its basis and purpose. The Commission, upon

13 its own motion or complaint, may propose a change to the

14 rules of the Electric Reliability Organization. A proposed

15 rule or proposed rule change shall take effect upon a find16 ing by the Commission, after notice and opportunity for

17 comment, that the change is just, reasonable, not unduly

18 discriminatory or preferential, is in the public interest, and

19 satisfies the requirements of subsection (c).

20 ‘‘(g) RELIABILITY REPORTS.—The Electric Reli21 ability Organization shall conduct periodic assessments of

22 the reliability and adequacy of the bulk-power system in

23 North America.

24 ‘‘(h) COORDINATION WITH CANADA AND MEXICO.—

25 The President is urged to negotiate international agree-
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1 ments with the governments of Canada and Mexico to pro2 vide for effective compliance with reliability standards and

3 the effectiveness of the Electric Reliability Organization

4 in the United States and Canada or Mexico.

5 ‘‘(i) SAVINGS PROVISIONS.—(1) The Electric Reli6 ability Organization shall have authority to develop and

7 enforce compliance with reliability standards for only the

8 bulk-power system.

9 ‘‘(2) This section does not authorize the Electric Reli10 ability Organization or the Commission to order the con11 struction of additional generation or transmission capacity

12 or to set and enforce compliance with standards for ade13 quacy or safety of electric facilities or services.

14 ‘‘(3) Nothing in this section shall be construed to pre15 empt any authority of any State to take action to ensure

16 the safety, adequacy, and reliability of electric service

17 within that State, as long as such action is not incon18 sistent with any reliability standard, except that the State

19 of New York may establish rules that result in greater

20 reliability within that State, as long as such action does

21 not result in lesser reliability outside the State than that

22 provided by the reliability standards.

23 ‘‘(4) Within 90 days of the application of the Electric

24 Reliability Organization or other affected party, and after

25 notice and opportunity for comment, the Commission shall
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1 issue a final order determining whether a State action is

2 inconsistent with a reliability standard, taking into consid3 eration any recommendation of the Electric Reliability Or4 ganization.

5 ‘‘(5) The Commission, after consultation with the

6 Electric Reliability Organization and the State taking ac7 tion, may stay the effectiveness of any State action, pend8 ing the Commission’s issuance of a final order.

9 ‘‘(j) REGIONAL ADVISORY BODIES.—The Commis10 sion shall establish a regional advisory body on the petition

11 of at least two-thirds of the States within a region that

12 have more than one-half of their electric load served within

13 the region. A regional advisory body shall be composed or

14 of one member from each participating State in the region,

15 appointed by the Governor of each State, and may include

16 representatives of agencies, States, and provinces outside

17 the United States. A regional advisory body may provide

18 advice to the Electric Reliability Organization, a regional

19 entity, or the Commission regarding the governance of an

20 existing or proposed regional entity within the same re21 gion, whether a standard proposed to apply within the re22 gion is just, reasonable, not unduly discriminatory or pref23 erential, and in the public interest, whether fees proposed

24 to be assessed within the region are just, reasonable, not

25 unduly discriminatory or preferential, and in the public
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1 interest and any other responsibilities requested by the

2 Commission. The Commission may give deference to the

3 advice of any such regional advisory body if that body is

4 organized on an Interconnection-wide basis.

5 ‘‘(k) APPLICATION TO ALASKA AND HAWAII.—The

6 provisions of this section do not apply to Alaska or Ha7 waii.’’.

8 Subtitle D—PUHCA Amendments

9 SEC. 16041. SHORT TITLE.

10 This subtitle may be cited as the ‘‘Public Utility

11 Holding Company Act of 2003’’.

12 SEC. 16042. DEFINITIONS.

13 For purposes of this subtitle:

14 (1) The term ‘‘affiliate’’ of a company means

15 any company, 5 percent or more of the outstanding

16 voting securities of which are owned, controlled, or

17 held with power to vote, directly or indirectly, by

18 such company.

19 (2) The term ‘‘associate company’’ of a com20 pany means any company in the same holding com21 pany system with such company.

22 (3) The term ‘‘Commission’’ means the Federal

23 Energy Regulatory Commission.

24 (4) The term ‘‘company’’ means a corporation,

25 partnership, association, joint stock company, busi-
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1 ness trust, or any organized group of persons,

2 whether incorporated or not, or a receiver, trustee,

3 or other liquidating agent of any of the foregoing.

4 (5) The term ‘‘electric utility company’’ means

5 any company that owns or operates facilities used

6 for the generation, transmission, or distribution of

7 electric energy for sale.

8 (6) The terms ‘‘exempt wholesale generator’’

9 and ‘‘foreign utility company’’ have the same mean10 ings as in sections 32 and 33, respectively, of the

11 Public Utility Holding Company Act of 1935 (15

12 U.S.C. 79z–5a, 79z–5b), as those sections existed on

13 the day before the effective date of this subtitle.

14 (7) The term ‘‘gas utility company’’ means any

15 company that owns or operates facilities used for

16 distribution at retail (other than the distribution

17 only in enclosed portable containers or distribution

18 to tenants or employees of the company operating

19 such facilities for their own use and not for resale)

20 of natural or manufactured gas for heat, light, or

21 power.

22 (8) The term ‘‘holding company’’ means—

23 (A) any company that directly or indirectly

24 owns, controls, or holds, with power to vote, 10

25 percent or more of the outstanding voting secu-
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1 rities of a public utility company or of a holding

2 company of any public utility company; and

3 (B) any person, determined by the Com4 mission, after notice and opportunity for hear5 ing, to exercise directly or indirectly (either

6 alone or pursuant to an arrangement or under7 standing with one or more persons) such a con8 trolling influence over the management or poli9 cies of any public utility company or holding

10 company as to make it necessary or appropriate

11 for the rate protection of utility customers with

12 respect to rates that such person be subject to

13 the obligations, duties, and liabilities imposed

14 by this subtitle upon holding companies.

15 (9) The term ‘‘holding company system’’ means

16 a holding company, together with its subsidiary com17 panies.

18 (10) The term ‘‘jurisdictional rates’’ means

19 rates established by the Commission for the trans20 mission of electric energy in interstate commerce,

21 the sale of electric energy at wholesale in interstate

22 commerce, the transportation of natural gas in inter23 state commerce, and the sale in interstate commerce

24 of natural gas for resale for ultimate public con-
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1 sumption for domestic, commercial, industrial, or

2 any other use.

3 (11) The term ‘‘natural gas company’’ means a

4 person engaged in the transportation of natural gas

5 in interstate commerce or the sale of such gas in

6 interstate commerce for resale.

7 (12) The term ‘‘person’’ means an individual or

8 company.

9 (13) The term ‘‘public utility’’ means any per10 son who owns or operates facilities used for trans11 mission of electric energy in interstate commerce or

12 sales of electric energy at wholesale in interstate

13 commerce.

14 (14) The term ‘‘public utility company’’ means

15 an electric utility company or a gas utility company.

16 (15) The term ‘‘State commission’’ means any

17 commission, board, agency, or officer, by whatever

18 name designated, of a State, municipality, or other

19 political subdivision of a State that, under the laws

20 of such State, has jurisdiction to regulate public util21 ity companies.

22 (16) The term ‘‘subsidiary company’’ of a hold23 ing company means—

24 (A) any company, 10 percent or more of

25 the outstanding voting securities of which are
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1 directly or indirectly owned, controlled, or held

2 with power to vote, by such holding company;

3 and

4 (B) any person, the management or poli5 cies of which the Commission, after notice and

6 opportunity for hearing, determines to be sub7 ject to a controlling influence, directly or indi8 rectly, by such holding company (either alone or

9 pursuant to an arrangement or understanding

10 with one or more other persons) so as to make

11 it necessary for the rate protection of utility

12 customers with respect to rates that such per13 son be subject to the obligations, duties, and li14 abilities imposed by this subtitle upon sub15 sidiary companies of holding companies.

16 (17) The term ‘‘voting security’’ means any se17 curity presently entitling the owner or holder thereof

18 to vote in the direction or management of the affairs

19 of a company.

20 SEC. 16043. REPEAL OF THE PUBLIC UTILITY HOLDING

21 COMPANY ACT OF 1935.

22 The Public Utility Holding Company Act of 1935 (15

23 U.S.C. 79 et seq.) is repealed.
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1 SEC. 16044. FEDERAL ACCESS TO BOOKS AND RECORDS.

2 (a) IN GENERAL.—Each holding company and each

3 associate company thereof shall maintain, and shall make

4 available to the Commission, such books, accounts, memo5 randa, and other records as the Commission deems to be

6 relevant to costs incurred by a public utility or natural

7 gas company that is an associate company of such holding

8 company and necessary or appropriate for the protection

9 of utility customers with respect to jurisdictional rates.

10 (b) AFFILIATE COMPANIES.—Each affiliate of a hold11 ing company or of any subsidiary company of a holding

12 company shall maintain, and shall make available to the

13 Commission, such books, accounts, memoranda, and other

14 records with respect to any transaction with another affil15 iate, as the Commission deems to be relevant to costs in16 curred by a public utility or natural gas company that is

17 an associate company of such holding company and nec18 essary or appropriate for the protection of utility cus19 tomers with respect to jurisdictional rates.

20 (c) HOLDING COMPANY SYSTEMS.—The Commission

21 may examine the books, accounts, memoranda, and other

22 records of any company in a holding company system, or

23 any affiliate thereof, as the Commission deems to be rel24 evant to costs incurred by a public utility or natural gas

25 company within such holding company system and nec-
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1 essary or appropriate for the protection of utility cus2 tomers with respect to jurisdictional rates.

3 (d) CONFIDENTIALITY.—No member, officer, or em4 ployee of the Commission shall divulge any fact or infor5 mation that may come to his or her knowledge during the

6 course of examination of books, accounts, memoranda, or

7 other records as provided in this section, except as may

8 be directed by the Commission or by a court of competent

9 jurisdiction.

10 SEC. 16045. STATE ACCESS TO BOOKS AND RECORDS.

11 (a) In GENERAL.—Upon the written request of a

12 State commission having jurisdiction to regulate a public

13 utility company in a holding company system, the holding

14 company or any associate company or affiliate thereof,

15 other than such public utility company, wherever located,

16 shall produce for inspection books, accounts, memoranda,

17 and other records that—

18 (1) have been identified in reasonable detail by

19 the State commission;

20 (2) the State commission deems are relevant to

21 costs incurred by such public utility company; and

22 (3) are necessary for the effective discharge of

23 the responsibilities of the State commission with re24 spect to such proceeding.
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1 (b) LIMITATION.—Subsection (a) does not apply to

2 any person that is a holding company solely by reason of

3 ownership of one or more qualifying facilities under the

4 Public Utility Regulatory Policies Act of 1978 (16 U.S.C.

5 2601 et seq.).

6 (c) CONFIDENTIALITY OF INFORMATION.—The pro7 duction of books, accounts, memoranda, and other records

8 under subsection (a) shall be subject to such terms and

9 conditions as may be necessary and appropriate to safe10 guard against unwarranted disclosure to the public of any

11 trade secrets or sensitive commercial information.

12 (d) EFFECT ON STATE LAW.—Nothing in this sec13 tion shall preempt applicable State law concerning the pro14 vision of books, accounts, memoranda, and other records,

15 or in any way limit the rights of any State to obtain books,

16 accounts, memoranda, and other records under any other

17 Federal law, contract, or otherwise.

18 (e) COURT JURISDICTION.—Any United States dis19 trict court located in the State in which the State commis20 sion referred to in subsection (a) is located shall have ju21 risdiction to enforce compliance with this section.

22 SEC. 16046. EXEMPTION AUTHORITY.

23 (a) RULEMAKING.—Not later than 90 days after the

24 effective date of this subtitle, the Commission shall pro25 mulgate a final rule to exempt from the requirements of
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1 section 16044 (relating to Federal access to books and

2 records) any person that is a holding company, solely with

3 respect to one or more—

4 (1) qualifying facilities under the Public Utility

5 Regulatory Policies Act of 1978 (16 U.S.C. 2601 et

6 seq.);

7 (2) exempt wholesale generators; or

8 (3) foreign utility companies.

9 (b) OTHER AUTHORITY.—The Commission shall ex10 empt a person or transaction from the requirements of

11 section 16044 (relating to Federal access to books and

12 records) if, upon application or upon the motion of the

13 Commission—

14 (1) the Commission finds that the books, ac15 counts, memoranda, and other records of any person

16 are not relevant to the jurisdictional rates of a pub17 lic utility or natural gas company; or

18 (2) the Commission finds that any class of

19 transactions is not relevant to the jurisdictional

20 rates of a public utility or natural gas company.

21 SEC. 16047. AFFILIATE TRANSACTIONS.

22 (a) COMMISSION AUTHORITY UNAFFECTED.—Noth23 ing in this subtitle shall limit the authority of the Commis24 sion under the Federal Power Act (16 U.S.C. 791a et seq.)

25 to require that jurisdictional rates are just and reasonable,
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1 including the ability to deny or approve the pass through

2 of costs, the prevention of cross-subsidization, and the pro3 mulgation of such rules and regulations as are necessary

4 or appropriate for the protection of utility consumers.

5 (b) RECOVERY OF COSTS.—Nothing in this subtitle

6 shall preclude the Commission or a State commission from

7 exercising its jurisdiction under otherwise applicable law

8 to determine whether a public utility company, public util9 ity, or natural gas company may recover in rates any costs

10 of an activity performed by an associate company, or any

11 costs of goods or services acquired by such public utility

12 company from an associate company.

13 SEC. 16048. APPLICABILITY.

14 Except as otherwise specifically provided in this sub15 title, no provision of this subtitle shall apply to, or be

16 deemed to include—

17 (1) the United States;

18 (2) a State or any political subdivision of a

19 State;

20 (3) any foreign governmental authority not op21 erating in the United States;

22 (4) any agency, authority, or instrumentality of

23 any entity referred to in paragraph (1), (2), or (3);

24 or
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1 (5) any officer, agent, or employee of any entity

2 referred to in paragraph (1), (2), or (3) acting as

3 such in the course of his or her official duty.

4 SEC. 16049. EFFECT ON OTHER REGULATIONS.

5 Nothing in this subtitle precludes the Commission or

6 a State commission from exercising its jurisdiction under

7 otherwise applicable law to protect utility customers.

8 SEC. 16050. ENFORCEMENT.

9 The Commission shall have the same powers as set

10 forth in sections 306 through 317 of the Federal Power

11 Act (16 U.S.C. 825e–825p) to enforce the provisions of

12 this subtitle.

13 SEC. 16051. SAVINGS PROVISIONS.

14 (a) IN GENERAL.—Nothing in this subtitle prohibits

15 a person from engaging in or continuing to engage in ac16 tivities or transactions in which it is legally engaged or

17 authorized to engage on the date of enactment of this Act,

18 so long as that person continues to comply with the terms

19 of any such authorization, whether by rule or by order.

20 (b) EFFECT ON OTHER COMMISSION AUTHORITY.—

21 Nothing in this subtitle limits the authority of the Com22 mission under the Federal Power Act (16 U.S.C. 791a et

23 seq.) (including section 301 of that Act) or the Natural

24 Gas Act (15 U.S.C. 717 et seq.) (including section 8 of

25 that Act).
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1 SEC. 16052. IMPLEMENTATION.

2 Not later than 12 months after the date of enactment

3 of this subtitle, the Commission shall—

4 (1) promulgate such regulations as may be nec5 essary or appropriate to implement this subtitle

6 (other than section 16045, relating to State access

7 to books and records); and

8 (2) submit to the Congress detailed rec9 ommendations on technical and conforming amend10 ments to Federal law necessary to carry out this

11 subtitle and the amendments made by this subtitle.

12 SEC. 16053. TRANSFER OF RESOURCES.

13 All books and records that relate primarily to the

14 functions transferred to the Commission under this sub15 title shall be transferred from the Securities and Exchange

16 Commission to the Commission.

17 SEC. 16054. EFFECTIVE DATE.

18 This subtitle shall take effect 12 months after the

19 date of enactment of this subtitle.

20 SEC. 16055. AUTHORIZATION OF APPROPRIATIONS.

21 There are authorized to be appropriated such funds

22 as may be necessary to carry out this subtitle.

23 SEC. 16056. CONFORMING AMENDMENTS TO THE FEDERAL

24 POWER ACT.

25 (a) CONFLICT OF JURISDICTION.—Section 318 of the

26 Federal Power Act (16 U.S.C. 825q) is repealed.
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1 (b) DEFINITIONS.—(1) Section 201(g)(5) of the Fed2 eral Power Act (16 U.S.C. 824(g)(5)) is amended by strik3 ing ‘‘1935’’ and inserting ‘‘2003’’.

4 (2) Section 214 of the Federal Power Act (16 U.S.C.

5 824m) is amended by striking ‘‘1935’’ and inserting

6 ‘‘2003’’.

7 Subtitle E—PURPA Amendments

8 SEC. 16061. REAL-TIME PRICING AND TIME-OF-USE METER9 ING STANDARDS.

10 (a) ADOPTION OF STANDARDS.—Section 111(d) of

11 the Public Utility Regulatory Policies Act of 1978 (16

12 U.S.C. 2621(d)) is amended by adding at the end the fol13 lowing:

14 ‘‘(11) REAL-TIME PRICING.—(A) Each electric

15 utility shall, at the request of an electric consumer,

16 provide electric service under a real-time rate sched17 ule, under which the rate charged by the electric

18 utility varies by the hour (or smaller time interval)

19 according to changes in the electric utility’s whole20 sale power cost. The real-time pricing service shall

21 enable the electric consumer to manage energy use

22 and cost through real-time metering and commu23 nications technology.

24 ‘‘(B) For purposes of implementing this para25 graph, any reference contained in this section to the
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1 date of enactment of the Public Utility Regulatory

2 Policies Act of 1978 shall be deemed to be a ref3 erence to the date of enactment of this paragraph.

4 ‘‘(C) Notwithstanding subsections (b) and (c) of

5 section 112, each State regulatory authority shall

6 consider and make a determination concerning

7 whether it is appropriate to implement the standard

8 set out in subparagraph (A) not later than 1 year

9 after the date of enactment of this paragraph.

10 ‘‘(12) TIME-OF-USE METERING.—(A) Each elec11 tric utility shall, at the request of an electric con12 sumer, provide electric service under a time-of-use

13 rate schedule which enables the electric consumer to

14 manage energy use and cost through time-of-use me15 tering and technology.

16 ‘‘(B) For purposes of implementing this para17 graph, any reference contained in this section to the

18 date of enactment of the Public Utility Regulatory

19 Policies Act of 1978 shall be deemed to be a ref20 erence to the date of enactment of this paragraph.

21 ‘‘(C) Notwithstanding subsections (b) and (c) of

22 section 112, each State regulatory authority shall

23 consider and make a determination concerning

24 whether it is appropriate to implement the standards
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1 set out in subparagraph (A) not later than 1 year

2 after the date of enactment of this paragraph.’’.

3 (b) SPECIAL RULES.—Section 115 of the Public Util4 ity Regulatory Policies Act of 1978 (16 U.S.C. 2625) is

5 amended by adding at the end the following:

6 ‘‘(i) REAL-TIME PRICING.—In a State that permits

7 third-party marketers to sell electric energy to retail elec8 tric consumers, the electric consumer shall be entitled to

9 receive the same real-time metering and communication

10 service as a direct retail electric consumer of the electric

11 utility.

12 ‘‘(j) TIME-OF-USE METERING.—In a State that per13 mits third-party marketers to sell electric energy to retail

14 electric consumers, the electric consumer shall be entitled

15 to receive the same time-of-use metering and communica16 tion service as a direct retail electric consumer of the elec17 tric utility.’’.

18 SEC. 16062. COGENERATION AND SMALL POWER PRODUC19 TION PURCHASE AND SALE REQUIREMENTS.

20 (a) TERMINATION OF MANDATORY PURCHASE AND

21 SALE REQUIREMENTS.—Section 210 of the Public Utility

22 Regulatory Policies Act of 1978 (16 U.S.C. 824a–3) is

23 amended by adding at the end the following:

24 ‘‘(m) TERMINATION OF MANDATORY PURCHASE AND

25 SALE REQUIREMENTS.—
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1 ‘‘(1) OBLIGATION TO PURCHASE.—After the

2 date of enactment of this subsection, no electric util3 ity shall be required to enter into a new contract or

4 obligation to purchase electric energy from a quali5 fying cogeneration facility or a qualifying small

6 power production facility under this section if the

7 Commission finds that—

8 ‘‘(A) the qualifying cogeneration facility or

9 qualifying small power production facility has

10 access to—

11 ‘‘(i) independently administered, auc12 tion-based day ahead and real time whole13 sale markets for the sale of electric energy,

14 and

15 ‘‘(ii) long-term wholesale markets for

16 the sale of capacity and electric energy;

17 ‘‘(B) the qualifying cogeneration facility or

18 qualifying small power production facility has

19 access to a competitive wholesale market for the

20 sale of electric energy that provides such quali21 fying cogeneration facility or qualifying small

22 power production facility with opportunities to

23 sell electric energy that, at a minimum, are

24 comparable to the opportunities provided by the
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1 markets, or some minimum combination there2 of, described in subparagraph (A); or

3 ‘‘(C) the qualifying cogeneration facility

4 does not meet criteria established by the Com5 mission pursuant to the rulemaking set forth in

6 subparagraph (n) and has not filed with the

7 Commission a notice of self-certification or an

8 application for Commission certification under

9 18 C.F.R. 292.207 prior to the date of enact10 ment of this subsection.

11 ‘‘(2) COMMISSION REVIEW.—(A) Any electric

12 utility may file an application with the Commission

13 for relief from the mandatory purchase obligation

14 pursuant to this subsection on a utility-wide basis.

15 Such application shall set forth the reasons why

16 such relief is appropriate and describe how the con17 ditions set forth in subparagraphs (A) and (B) of

18 paragraph (1) of this subsection have been met.

19 ‘‘(B) After notice, including sufficient notice to

20 potentially affected qualifying facilities, and an op21 portunity for comment, and within 90 days of the

22 filing of an application under subparagraph (A), the

23 Commission shall make a final determination as to

24 whether the conditions set forth in subparagraphs

25 (A) and (B) of paragraph (1) have been met. The
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1 Commission shall not be authorized to issue a tolling

2 order regarding such application or otherwise delay

3 a final decision regarding such application.

4 ‘‘(3) REINSTATEMENT OF OBLIGATION TO PUR5 CHASE.—(A) At any time after the Commission

6 makes a finding under paragraph (2) relieving an

7 electric utility of its obligation to purchase electric

8 energy, a qualifying cogeneration facility or a quali9 fying small power production facility may apply to

10 the Commission for an order reinstating the electric

11 utility’s obligation to purchase electric energy under

12 this section. Such application shall set forth the rea13 sons why such relief is no longer appropriate and de14 scribe how the tests set forth in subparagraphs (A)

15 and (B) of paragraph (1) of this subsection are no

16 longer met.

17 ‘‘(B) After notice, including sufficient notice to

18 potentially affected utilities, and opportunity for

19 comment, and within 90 days of the filing of an ap20 plication under subparagraph (A), the Commission

21 shall issue an order reinstating the electric utility’s

22 obligation to purchase electric energy under this sec23 tion if the Commission finds that the condition in

24 paragraph (1), which relieved the obligation to pur25 chase, is no longer met. The Commission shall not
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1 be authorized to issue a tolling order regarding such

2 application or otherwise delay a final decision re3 garding such application.

4 ‘‘(4) OBLIGATION TO SELL.—After the date of

5 enactment of this subsection, no electric utility shall

6 be required to enter into a new contract or obliga7 tion to sell electric energy to a qualifying cogenera8 tion facility or a qualifying small power production

9 facility if—

10 ‘‘(A) competing retail electric suppliers are

11 willing and able to provide electric energy to the

12 qualifying cogeneration facility or qualifying

13 small power production facility, and

14 ‘‘(B) the electric utility is not required by

15 State law to sell electric energy in its service

16 territory.

17 ‘‘(5) NO EFFECT ON EXISTING RIGHTS AND

18 REMEDIES.—Nothing in this subsection affects the

19 rights or remedies of any party under any contract

20 or obligation, in effect or pending approval before

21 the appropriate State regulatory authority or non22 regulated electric utility on the date of enactment of

23 this subsection, to purchase electric energy or capac24 ity from or to sell electric energy or capacity to a
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1 facility under this Act (including the right to recover

2 costs of purchasing electric energy or capacity).

3 ‘‘(6) RECOVERY OF COSTS.—

4 ‘‘(A) REGULATION.—To ensure recovery

5 by an electric utility that purchases electric en6 ergy or capacity from a qualifying facility pur7 suant to any legally enforceable obligation en8 tered into or imposed under this section of all

9 prudently incurred costs associated with the

10 purchases, the Commission shall issue and en11 force such regulations as may be required to en12 sure that the electric utility shall recover the

13 prudently incurred costs associated with such

14 purchases.

15 ‘‘(B) ENFORCEMENT.—A regulation under

16 subparagraph (A) shall be enforceable in ac17 cordance with the provisions of law applicable

18 to enforcement of regulations under the Federal

19 Power Act (16 U.S.C. 791a et seq.).

20 ‘‘(n) RULEMAKING FOR NEW FACILITIES.—

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

22 after the date of enactment of this subsection, the

23 Commission shall issue a rule revising the criteria

24 for qualifying cogeneration facilities in 18 C.F.R.

25 292.205. In particular, the Commission shall evalu-
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1 ate the rules regarding qualifying facility criteria

2 and revise such rules, as necessary, to ensure—

3 ‘‘(A) that the thermal energy output of a

4 new qualifying cogeneration facility is used in a

5 productive and beneficial manner;

6 ‘‘(B) the electrical and thermal output of

7 the cogeneration facility is used predominantly

8 for commercial or industrial processes and not

9 intended predominantly for sale to an electric

10 utility; and

11 ‘‘(C) continuing progress in the develop12 ment of efficient electric energy generating

13 technology.

14 ‘‘(2) APPLICABILITY.—Any revisions made to

15 operating and efficiency standards shall be applica16 ble only to a cogeneration facility that—

17 ‘‘(A) was not a qualifying cogeneration fa18 cility, or

19 ‘‘(B) had not filed with the Commission a

20 notice of self-certification or an application for

21 Commission certification under 18 C.F.R.

22 292.207,

23 prior to the date of enactment of this subsection.

24 ‘‘(3) DEFINITION.—For purposes of this sub25 section, the term ‘commercial processes’ includes
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1 uses of thermal and electric energy for educational

2 and healthcare facilities.

3 ‘‘(o) RULES FOR EXISTING FACILITIES.— Notwith4 standing rule revisions under subsection (n), the Commis5 sion’s rules in effect prior to the effective date of any re6 vised rules prescribed under subsection (n) shall continue

7 to apply to any cogeneration facility or small power pro8 duction facility that—

9 ‘‘(1) was a qualifying cogeneration facility or a

10 qualifying small power production facility, or

11 ‘‘(2) had filed with the Commission a notice of

12 self-certification or an application for Commission

13 certification under 18 C.F.R. 292.207,

14 prior to the date of enactment of subsections (m) and

15 (n).’’.

16 (b) ELIMINATION OF OWNERSHIP LIMITATIONS.—

17 (1) Section 3(17)(C) of the Federal Power Act (16 U.S.C.

18 796(17)(C)) is amended to read as follows:

19 ‘‘(C) ‘qualifying small power production fa20 cility’ means a small power production facility

21 that the Commission determines, by rule, meets

22 such requirements (including requirements re23 specting minimum size, fuel use, and fuel effi24 ciency) as the Commission may, by rule, pre25 scribe.’’.
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1 (2) Section 3(18)(B) of the Federal Power Act (16

2 U.S.C. 796(18)(B)) is amended to read as follows:

3 ‘‘(B) ‘qualifying cogeneration facility’

4 means a cogeneration facility that the Commis5 sion determines, by rule, meets such require6 ments (including requirements respecting min7 imum size, fuel use, and fuel efficiency) as the

8 Commission may, by rule, prescribe.’’.

9 SEC. 16063. SMART METERING.

10 (a) IN GENERAL.—Section 111(d) of the Public Utili11 ties Regulatory Policies Act of 1978 (16 U.S.C. 2621(d))

12 is amended by adding at the end the following:

13 ‘‘(13) TIME-BASED METERING AND COMMU14 NICATIONS.—(A) Not later than eighteen (18)

15 months after the date of enactment of this para16 graph, each electric utility shall offer each of its cus17 tomer classes, and provide individual customers upon

18 customer request, a time-based rate schedule under

19 which the rate charged by the electric utility varies

20 during different time periods and reflects the vari21 ance in the costs of generating and purchasing elec22 tricity at the wholesale level. The time-based rate

23 schedule shall enable the electric consumer to man24 age energy use and cost through advanced metering

25 and communications technology.
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1 ‘‘(B) The types of time-based rate schedules

2 that may be offered under the schedule referred to

3 in subparagraph (A) include, among others, each the

4 following:

5 ‘‘(i) Time-Of-Use pricing whereby elec6 tricity prices are set for a specific time period

7 on an advance or forward basis, typically not

8 changing more often than twice a year. Prices

9 paid for energy consumed during these periods

10 shall be pre-established and known to con11 sumers in advance of such consumption, allow12 ing them to vary their demand and usage in re13 sponse to such prices and manage their energy

14 costs by shifting usage to a lower cost period or

15 reducing their consumption overall.

16 ‘‘(ii) Critical Peak Pricing whereby time17 of-use prices are in effect except for certain

18 peak days, when prices may reflect the costs of

19 generating and purchasing electricity at the

20 wholesale level and when consumers may receive

21 additional discounts for reducing peak period

22 energy consumption.

23 ‘‘(iii) Real-Time pricing whereby electricity

24 prices are set for a specific time period on an
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1 advanced or forward basis and may change as

2 often as hourly.

3 ‘‘(C) Each electric utility subject to subpara4 graph (A) shall provide each customer requesting a

5 time-based rate with a time-based meter capable of

6 enabling the utility and customer to offer and re7 ceive such rate, respectively.

8 ‘‘(D) 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 ‘‘(E) In a State that permits third-party mar14 keters to sell electric energy to retail electric con15 sumers, such consumers shall be entitled to receive

16 that same time-based metering and communications

17 device and service as a retail electric consumer of

18 the electric utility.

19 ‘‘(F) Notwithstanding subsections (b) and (c) of

20 section 112, each State regulatory authority shall,

21 not later than twelve (12) months after enactment

22 of this paragraph conduct an investigation in accord23 ance with section 115(i) and issue a decision wheth24 er it is appropriate to implement the standards set

25 out in subparagraphs (A) and (C).’’.
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1 (b) STATE INVESTIGATION OF DEMAND RESPONSE

2 AND TIME-BASED METERING.—Section 115 of the Public

3 Utilities Regulatory Policies Act of 1978 (16 U.S.C. 2625)

4 is amended by adding the at the end the following:

5 ‘‘(k) TIME-BASED METERING AND COMMUNICA6 TIONS.—Each State regulatory authority shall, not later

7 than twelve (12) months after enactment of this sub8 section, conduct an investigation and issue a decision

9 whether or not it is appropriate for electric utilities to pro10 vide and install time-based meters and communications

11 devices for each of their customers which enable such cus12 tomers to participate in time-based pricing rate schedules

13 and other demand response programs.’’.

14 (c) FEDERAL ASSISTANCE ON DEMAND RE15 SPONSE.—Section 132(a) of the Public Utility Regulatory

16 Polices Act of 1978 (16 U.S.C. 2642(a)) is amended by

17 striking ‘‘and’’ at the end of paragraph (3), striking the

18 period at the end of paragraph (4) and inserting ‘‘; and’’,

19 and by adding the following at the end thereof:

20 ‘‘(5) technologies, techniques and rate-making

21 methods related to advanced metering and commu22 nications and the use of these technologies, tech23 niques and methods in demand response programs.’’.
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1 (d) FEDERAL GUIDANCE.—Section 132 of the Public

2 Utility Regulatory Policies Act of 1978 (16 U.S.C. 2643)

3 is amended by adding the following at the end thereof:

4 ‘‘(d) DEMAND RESPONSE.—The Secretary shall be

5 responsible for each of the following:

6 ‘‘(1) Educating consumers on the availability,

7 advantages and benefits of advanced metering and

8 communications technologies including the funding

9 of demonstration or pilot projects.

10 ‘‘(2) Working with States, utilities, other energy

11 providers and advanced metering and communica12 tions experts to identify and address barriers to the

13 adoption of demand response programs.

14 ‘‘(3) Within 6 months of enactment, provide the

15 Congress with a report that identifies and quantifies

16 the national benefits of demand response and pro17 vides policy recommendations as to how to achieve

18 specific levels of such benefits by January 1, 2005.’’.

19 (e) DEMAND RESPONSE AND REGIONAL COORDINA20 TION.—

21 (1) POLICY.—It is the policy of the United

22 States to encourage States to coordinate, on a re23 gional basis, State energy policies to provide reliable

24 and affordable demand response services to the pub25 lic.
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1 (2) TECHNICAL ASSISTANCE.—The Secretary of

2 Energy shall provide technical assistance to States

3 and regional organizations formed by two or more

4 States to assist them in—

5 (A) identifying the areas with the greatest

6 demand response potential;

7 (B) identifying and resolving problems in

8 transmission and distribution networks, includ9 ing through the use of demand response; and

10 (C) developing plans and programs to use

11 demand response to respond to peak demand or

12 emergency needs.

13 (3) REPORT.—The Federal Energy Regulatory

14 Commission shall prepare and publish an annual re15 port, by appropriate region, that assesses demand

16 response resources, including those available from all

17 consumer classes, and which identifies and reviews

18 each of the following:

19 (A) Saturation and penetration rate of ad20 vanced meters and communications tech21 nologies, devices and systems.

22 (B) Existing demand response programs

23 and time-based rate programs.
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1 (C) The annual resource contribution of

2 demand resources, including the prior year and

3 following years.

4 (D) The potential for demand response as

5 a quantifiable, reliable resource for regional

6 planning purposes.

7 (E) Steps taken to ensure that, in regional

8 transmission planning and operations, that de9 mand resources are provided equitable treat10 ment as a quantifiable, reliable resource relative

11 to the resource obligations of any load-serving

12 entity, transmission provider or transmitting

13 party.

14 (f) COST RECOVERY OF DEMAND RESPONSE DE15 VICES.—It is the policy of the United States that time16 based pricing and other forms of demand response, where17 by electricity customers are provided with electricity price

18 signals and the ability to benefit by responding to them,

19 shall be encouraged and the deployment of such tech20 nology and devices that enable electricity customers to

21 participate in such pricing and demand response systems

22 shall be facilitated. It is further the policy of the United

23 States that the benefits of such demand response that ac24 crue to those not deploying such technology and devices,
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1 but who are part of the same regional electricity entity,

2 shall be recognized.

3 Subtitle F—Renewable Energy

4 SEC. 16071. NET METERING.

5 (a) ADOPTION OF STANDARD.—Section 111(d) of the

6 Public Utility Regulatory Policies Act of 1978 (16 U.S.C.

7 2621(d)) is amended by adding at the end the following:

8 ‘‘(14) NET METERING.—(A) Each electric util9 ity shall make available upon request net metering

10 service to any electric consumer that the electric

11 utility serves.

12 ‘‘(B) For purposes of implementing this para13 graph, any reference contained in this section to the

14 date of enactment of the Public Utility Regulatory

15 Policies Act of 1978 shall be deemed to be a ref16 erence to the date of enactment of this paragraph.

17 ‘‘(C) Notwithstanding subsections (b) and (c) of

18 section 112, each State regulatory authority shall

19 consider and make a determination concerning

20 whether it is appropriate to implement the standard

21 set out in subparagraph (A) not later than 1 year

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

23 (b) SPECIAL RULES FOR NET METERING.—Section

24 115 of the Public Utility Regulatory Policies Act of 1978
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1 (16 U.S.C. 2625) is amended by adding at the end the

2 following:

3 ‘‘(l) NET METERING.—In undertaking the consider4 ation and making the determination under section 111

5 with respect to the standard concerning net metering es6 tablished by section 111(d)(14), the term ‘net metering

7 service’ shall mean a service provided in accordance with

8 the following standards:

9 ‘‘(1) RATES AND CHARGES.—An electric

10 utility—

11 ‘‘(A) shall charge the owner or operator of

12 an on-site generating facility rates and charges

13 that are identical to those that would be

14 charged other electric consumers of the electric

15 utility in the same rate class; and

16 ‘‘(B) shall not charge the owner or oper17 ator of an on-site generating facility any addi18 tional standby, capacity, interconnection, or

19 other rate or charge.

20 ‘‘(2) MEASUREMENT.—An electric utility that

21 sells electric energy to the owner or operator of an

22 on-site generating facility shall measure the quantity

23 of electric energy produced by the on-site facility

24 and the quantity of electric energy consumed by the

25 owner or operator of an on-site generating facility
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1 during a billing period in accordance with normal

2 metering practices.

3 ‘‘(3) ELECTRIC ENERGY SUPPLIED EXCEEDING

4 ELECTRIC ENERGY GENERATED.—If the quantity of

5 electric energy sold by the electric utility to an on6 site generating facility exceeds the quantity of elec7 tric energy supplied by the on-site generating facility

8 to the electric utility during the billing period, the

9 electric utility may bill the owner or operator for the

10 net quantity of electric energy sold, in accordance

11 with normal metering practices.

12 ‘‘(4) ELECTRIC ENERGY GENERATED EXCEED13 ING ELECTRIC ENERGY SUPPLIED.—If the quantity

14 of electric energy supplied by the on-site generating

15 facility to the electric utility exceeds the quantity of

16 electric energy sold by the electric utility to the on17 site generating facility during the billing period—

18 ‘‘(A) the electric utility may bill the owner

19 or operator of the on-site generating facility for

20 the appropriate charges for the billing period in

21 accordance with paragraph (2); and

22 ‘‘(B) the owner or operator of the on-site

23 generating facility shall be credited for the ex24 cess kilowatt-hours generated during the billing
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1 period, with the kilowatt-hour credit appearing

2 on the bill for the following billing period.

3 ‘‘(5) SAFETY AND PERFORMANCE STAND4 ARDS.—An eligible on-site generating facility and

5 net metering system used by an electric consumer

6 shall meet all applicable safety, performance, reli7 ability, and interconnection standards established by

8 the National Electrical Code, the Institute of Elec9 trical and Electronics Engineers, and Underwriters

10 Laboratories.

11 ‘‘(6) ADDITIONAL CONTROL AND TESTING RE12 QUIREMENTS.—The Commission, after consultation

13 with State regulatory authorities and nonregulated

14 electric utilities and after notice and opportunity for

15 comment, may adopt, by rule, additional control and

16 testing requirements for on-site generating facilities

17 and net metering systems that the Commission de18 termines are necessary to protect public safety and

19 system reliability.

20 ‘‘(7) DEFINITIONS.—For purposes of this sub21 section:

22 ‘‘(A) The term ‘eligible on-site generating

23 facility’ means—

24 ‘‘(i) a facility on the site of a residen25 tial electric consumer with a maximum
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1 generating capacity of 10 kilowatts or less

2 that is fueled by solar energy, wind energy,

3 or fuel cells; or

4 ‘‘(ii) a facility on the site of a com5 mercial electric consumer with a maximum

6 generating capacity of 500 kilowatts or

7 less that is fueled solely by a renewable en8 ergy resource, landfill gas, or a high effi9 ciency system.

10 ‘‘(B) The term ‘renewable energy resource’

11 means solar, wind, biomass, or geothermal en12 ergy.

13 ‘‘(C) The term ‘high efficiency system’

14 means service fuel cells or combined heat and

15 power.

16 ‘‘(D) The term ‘net metering’ means serv17 ice to an electric consumer under which electric

18 energy generated by that electric consumer

19 from an eligible on-site generating facility and

20 delivered to the local distribution facilities may

21 be used to offset electric energy provided by the

22 electric utility to the electric consumer during

23 the applicable billing period.’’.
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1 SEC. 16072. RENEWABLE ENERGY PRODUCTION INCENTIVE.

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

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

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

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

6 ‘‘. If there are insufficient appropriations to make full pay7 ments for electric production from all qualified renewable

8 energy facilities in any given year, the Secretary shall as9 sign 60 percent of appropriated funds for that year to fa10 cilities that use solar, wind, geothermal, or closed-loop

11 (dedicated energy crops) biomass technologies to generate

12 electricity, and assign the remaining 40 percent to other

13 projects. The Secretary may, after transmitting to the

14 Congress an explanation of the reasons therefor, alter the

15 percentage requirements of the preceding sentence.’’.

16 (b) QUALIFIED RENEWABLE ENERGY FACILITY.—

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

18 U.S.C. 13317(b)) is amended—

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

20 all that follows through ‘‘nonprofit electrical cooper21 ative’’ and inserting ‘‘a not-for-profit electric cooper22 ative, a public utility described in section 115 of the

23 Internal Revenue Code of 1986, a State, Common24 wealth, territory, or possession of the United States

25 or the District of Columbia, or a political subdivision
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1 thereof, or an Indian tribal government of subdivi2 sion thereof,’’; and

3 (2) by inserting ‘‘landfill gas,’’ after ‘‘wind, bio4 mass,’’.

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

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

7 amended by striking ‘‘during the 10-fiscal year period be8 ginning with the first full fiscal year occurring after the

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

10 1, 2003, and before October 1, 2013’’.

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

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

13 is amended by inserting ‘‘landfill gas,’’ after ‘‘wind, bio14 mass,’’.

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

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

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

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

19 (f) AUTHORIZATION OF APPROPRIATIONS.—Section

20 1212(g) of the Energy Policy Act of 1992 (42 U.S.C.

21 13317(g)) is amended to read as follows:

22 ‘‘(g) AUTHORIZATION OF APPROPRIATIONS.—

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

24 there are authorized to be appropriated such sums
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1 as may be necessary to carry out this section for fis2 cal years 2003 through 2023.

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

4 available under paragraph (1) shall remain available

5 until expended.’’.

6 SEC. 16073. RENEWABLE ENERGY ON FEDERAL LANDS.

7 (a) REPORT TO CONGRESS.—Within 24 months after

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

9 Interior, in cooperation with the Secretary of Agriculture,

10 shall develop and report to the Congress recommendations

11 on opportunities to develop renewable energy on public

12 lands under the jurisdiction of the Secretary of the Inte13 rior and National Forest System lands under the jurisdic14 tion of the Secretary of Agriculture. The report shall

15 include—

16 (1) 5-year plans developed by the Secretary of

17 the Interior and the Secretary of Agriculture, re18 spectively, for encouraging the development of wind

19 and solar energy consistent with applicable law and

20 management plans; and

21 (2) an analysis of—

22 (A) the use of rights-of-ways, leases, or

23 other methods to develop wind and solar energy

24 on such lands;
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1 (B) the anticipated benefits of grants,

2 loans, tax credits, or other provisions to pro3 mote wind and solar energy development on

4 such lands; and

5 (C) any issues that the Secretary of the

6 Interior or the Secretary of Agriculture have

7 encountered in managing wind or solar energy

8 projects on such lands, or believe are likely to

9 arise in relation to the development of wind or

10 solar energy on such lands;

11 (3) a list, developed in consultation with the

12 Secretary of Energy and the Secretary of Defense,

13 of lands under the jurisdiction of the Department of

14 Energy or Defense that would be suitable for devel15 opment for wind or solar energy, and any rec16 ommended statutory and regulatory mechanisms for

17 such development; and

18 (4) any recommendations pertaining to the

19 issues addressed in the report.

20 (b) NATIONAL ACADEMY OF SCIENCES STUDY.—

21 (1) IN GENERAL.—Within 90 days after the

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

23 the Interior shall contract with the National Acad24 emy of Sciences to—
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1 (A) study the potential for the development

2 of wind, solar, and ocean energy on the Outer

3 Continental Shelf;

4 (B) assess existing Federal authorities for

5 the development of such resources; and

6 (C) recommend statutory and regulatory

7 mechanisms for such development.

8 (2) TRANSMITTAL OF RESULTS.—The results of

9 the study shall be transmitted to the Congress with10 in 24 months after the date of the enactment of this

11 Act.

12 SEC. 16074. ASSESSMENT OF RENEWABLE ENERGY RE13 SOURCES.

14 (a) RESOURCE ASSESSMENT.—Not later than 3

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

16 year thereafter, the Secretary of Energy shall review the

17 available assessments of renewable energy resources avail18 able within the United States, including solar, wind, bio19 mass, ocean, geothermal, and hydroelectric energy re20 sources, and undertake new assessments as necessary,

21 taking into account changes in market conditions, avail22 able technologies, and other relevant factors.

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

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

25 thereafter, the Secretary shall publish a report based on
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1 the assessment under subsection (a). The report shall

2 contain—

3 (1) a detailed inventory describing the available

4 amount and characteristics of the renewable energy

5 resources; and

6 (2) such other information as the Secretary be7 lieves would be useful in developing such renewable

8 energy resources, including descriptions of sur9 rounding terrain, population and load centers, near10 by energy infrastructure, location of energy and

11 water resources, and available estimates of the costs

12 needed to develop each resource, together with an

13 identification of any barriers to providing adequate

14 transmission for remote sources of renewable energy

15 resources to current and emerging markets, rec16 ommendations for removing or addressing such bar17 riers, and ways to provide access to the grid that do

18 not unfairly disadvantage renewable or other energy

19 producers.

20 Subtitle G—Market Transparency,

21 Round Trip Trading Prohibi22 tion, and Enforcement

23 SEC. 16081. MARKET TRANSPARENCY RULES.

24 Part II of the Federal Power Act is amended by add25 ing the following new section at the end thereof:
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1 ‘‘SEC. 219. MARKET TRANSPARENCY RULES.

2 ‘‘(a) COMMISSION RULES.—Not later than 180 days

3 after the date of enactment of this section, the Commis4 sion shall issue rules establishing an electronic information

5 system to provide the Commission and the public with ac6 cess to such information as is necessary or appropriate

7 to facilitate price transparency and participation in mar8 kets subject to the Commission’s jurisdiction. Such sys9 tems shall provide information about the availability and

10 market price of sales of electric energy at wholesale in

11 interstate commerce and transmission of electric energy

12 in interstate commerce to the Commission, State commis13 sions, buyers and sellers of wholesale electric energy, users

14 of transmission services, and the public on a timely basis.

15 The Commission shall have authority to obtain such infor16 mation from any person, and any entity described in sec17 tion 201(f), who sells electric energy at wholesale in inter18 state commerce or provides transmission services in inter19 state commerce.

20 ‘‘(b) EXEMPTIONS.—The Commission shall exempt

21 from disclosure information it determines would, if dis22 closed, (1) be detrimental to the operation of an effective

23 market; or (2) jeopardize system security. This section

24 shall not apply to an entity described in section

25 212(k)(2)(B) with respect to transactions for the purchase
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1 or sale of wholesale electric energy and transmission serv2 ices within the area described in section 212(k)(2)(A).’’.

3 SEC. 16082. PROHIBITION ON ROUND TRIP TRADING.

4 Part II of the Federal Power Act is amended by add5 ing the following new section at the end thereof:

6 ‘‘SEC. 220. PROHIBITION ON ROUND TRIP TRADING.

7 ‘‘(a) PROHIBITION.—It shall be a violation of this Act

8 for any person, and any entity described in section 201(f),

9 willfully and knowingly to enter into any contract or other

10 arrangement to execute a round-trip trade for the pur11 chase or sale of electric energy at wholesale.

12 ‘‘(b) DEFINITION OF ROUND-TRIP TRADE.—For the

13 purposes of this section, the term ‘round-trip trade’ means

14 a transaction, or combination of transactions, in which a

15 person or other entity—

16 ‘‘(1) enters into a contract or other arrange17 ment to purchase from, or sell to, any other person

18 or other entity electric energy at wholesale;

19 ‘‘(2) simultaneously with entering into the con20 tract described in paragraph (1), arranges a finan21 cially offsetting trade with such other person or enti22 ty for the same quantity of electric energy so that,

23 collectively, the purchase and sale transactions in

24 themselves result in no financial gain or loss; and
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1 ‘‘(3) has a specific intent to distort reported

2 revenues, trading volumes, or prices.’’.

3 SEC. 16083. CONFORMING CHANGES.

4 Section 201(e) of the Federal Power Act is amended

5 by striking ‘‘or 212’’ and inserting ‘‘212, 215, 216, 217,

6 218, 219, or 220’’. Section 201(b)(2) of such Act is

7 amended by striking ‘‘and 212’’ and inserting ‘‘212, 215,

8 216, 217, 218, 219, and 220’’.

9 SEC. 16084. ENFORCEMENT.

10 (a) COMPLAINTS.—Section 306 of the Federal Power

11 Act (16 U.S.C. 825e) is amended by—

12 (1) inserting ‘‘electric utility,’’ after ‘‘Any per13 son,’’; and

14 (2) inserting ‘‘, transmitting utility,’’ after ‘‘li15 censee’’ each place it appears.

16 (b) REVIEW OF COMMISSION ORDERS.—Section

17 313(a) of the Federal Power Act (16 U.S.C. 8251) is

18 amended by inserting ‘‘electric utility,’’ after ‘‘person,’’ in

19 the first place it appears and by striking ‘‘any person un20 less such person’’ and inserting ‘‘any entity unless such

21 entity’’.

22 (c) CRIMINAL PENALTIES.—Section 316 of the Fed23 eral Power Act (16 U.S.C. 825o) is amended—
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1 (1) in subsection (a), by striking ‘‘$5,000’’ and

2 inserting ‘‘$1,000,000’’, and by striking ‘‘two years’’

3 and inserting ‘‘five years’’;

4 (2) in subsection (b), by striking ‘‘$500’’ and

5 inserting ‘‘$25,000’’; and

6 (3) by striking subsection (c).

7 (d) CIVIL PENALTIES.—Section 316A of the Federal

8 Power Act (16 U.S.C. 825–1) is amended—

9 (1) in subsections (a) and (b), by striking ‘‘sec10 tion 211, 212, 213, or 214’’ each place it appears

11 and inserting ‘‘Part II’’; and

12 (2) in subsection (b), by striking ‘‘$10,000’’

13 and inserting ‘‘$1,000,000’’.

14 Subtitle H—Consumer Protections

15 SEC. 16091. REFUND EFFECTIVE DATE.

16 Section 206(b) of the Federal Power Act (16 U.S.C.

17 824e(b)) is amended by—

18 (1) striking ‘‘the date 60 days after the filing

19 of such complaint nor later than 5 months after the

20 expiration of such 60-day period’’ in the second sen21 tence and inserting ‘‘the date of the filing of such

22 complaint nor later than 5 months after the filing of

23 such complaint’’;

24 (2) striking ‘‘60 days after’’ in the third sen25 tence and inserting ‘‘of’’;
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1 (3) striking ‘‘expiration of such 60-day period’’

2 in the third sentence and inserting ‘‘publication

3 date’’; and

4 (4) in the fifth sentence after ‘‘rendered by the’’

5 insert ‘‘date 60 days after the’’.

6 SEC. 16092. JURISDICTION OVER INTERSTATE SALES.

7 (a) SCOPE OF AUTHORITY.—Section 206 of the Fed8 eral Power Act (16 U.S.C. 824e) is amended by adding

9 the following new subsection at the end thereof:

10 ‘‘(e)(1) If an entity that is not a public utility (includ11 ing an entity referred to in section 201(f)) voluntarily

12 makes a spot market sale of electric energy and such sale

13 violates Commission rules in effect at the time of such

14 sale, such entity shall be subject to the Commission’s re15 fund authority under this section with respect to such vio16 lation.

17 ‘‘(2) This section shall not apply to any entity that

18 is either—

19 ‘‘(A) an entity described in section 201(f); or

20 ‘‘(B) a rural electric cooperative,

21 that does not sell more than 4,000,000 megawatt hours

22 of electricity per year.

23 ‘‘(3) For purposes of this subsection, the term ‘spot

24 market sale’ means an agreement for the sale of electric

25 energy at wholesale in interstate commerce that is for 24
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1 hours or less and that is entered into the day of, or the

2 day prior to, delivery.’’.

3 (b) CONFORMING AMENDMENTS.—(1) Section 206 of

4 the Federal Power Act (16 U.S.C. 824e) is amended as

5 follows:

6 (A) In subsection (b), in the seventh sentence,

7 by striking ‘‘the public utility to make’’.

8 (B) In the first sentence of subsection (a), by

9 striking ‘‘hearing had’’ and inserting ‘‘hearing held’’.

10 (2) Section 201(b)(2) of such Act (16 U.S.C.

11 824(b)(2)) is amended as follows:

12 (A) In the first sentence by striking ‘‘sections

13 210’’ and inserting ‘‘sections 206(f), 210’’.

14 (B) In the second sentence by striking ‘‘section

15 210’’ and inserting ‘‘section 206(f), 210,’’.

16 (3) Section 201(e) of the Federal Power Act is

17 amended by striking ‘‘section 210’’ and inserting ‘‘section

18 206(f), 210’’.

19 (c) UNIFORM INVESTIGATION AUTHORITY.—Section

20 307(a) of the Federal Power Act (16 U.S.C. 825f(a)) is

21 amended as follows:

22 (1) By inserting ‘‘, electric utility, transmitting

23 utility, or other entity’’ after ‘‘person’’ each time it

24 appears.
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1 (2) By striking the period at the end of the

2 first sentence and inserting the following: ‘‘or in ob3 taining information about the sale of electric energy

4 at wholesale in interstate commerce and the trans5 mission of electric energy in interstate commerce.’’.

6 (d) SANCTITY OF CONTRACT.—(1) The Federal En7 ergy Regulatory Commission shall have no authority to ab8 rogate or modify any provision of a contract, except upon

9 a finding, after notice and opportunity for a hearing, that

10 such action is necessary to protect the public interest, un11 less such contract expressly provides for a different stand12 ard of review.

13 (2) For purposes of this subsection, a contract is any

14 agreement, in effect and subject to the jurisdiction of the

15 Commission—

16 (A) under section 4 of the Natural Gas Act or

17 section 205 of the Federal Power Act; and

18 (B) that is not for sales in an organized ex19 change or auction spot market.

20 (3) This subsection shall not apply to any contract

21 executed before the date of enactment of this section un22 less such contract is an interconnection agreement, nor

23 shall this subsection affect the outcome in any proceeding

24 regarding any contract for sales of electric power executed

25 before the date of enactment of this section.
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1 SEC. 16093. CONSUMER PRIVACY.

2 (a) IN GENERAL.—The Federal Trade Commission

3 shall issue rules protecting the privacy of electric con4 sumers from the disclosure of consumer information ob5 tained in connection with the sale or delivery of electric

6 energy to electric consumers. The Federal Trade Commis7 sion shall proceed in accordance with section 553 of title

8 5, United States Code, when prescribing a rule under this

9 section.

10 (b) STATE AUTHORITY.—If the Federal Trade Com11 mission determines that a State’s regulations provide

12 equivalent or greater protection than the provisions of this

13 section, such State regulations shall apply in that State

14 in lieu of the regulations issued by the Commission under

15 this section.

16 SEC. 16094. UNFAIR TRADE PRACTICES.

17 (a) SLAMMING.—The Federal Trade Commission

18 shall issue rules prohibiting the change of selection of an

19 electric utility except with the informed consent of the

20 electric consumer or if approved by the appropriate State

21 regulatory authority.

22 (b) CRAMMING.—The Federal Trade Commission

23 shall issue rules prohibiting the sale of goods and services

24 to an electric consumer unless expressly authorized by law

25 or the electric consumer.
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1 (c) RULEMAKING.—The Federal Trade Commission

2 shall proceed in accordance with section 553 of title 5,

3 United States Code, when prescribing a rule under this

4 section.

5 (d) STATE AUTHORITY.—If the Federal Trade Com6 mission determines that a State’s regulations provide

7 equivalent or greater protection than the provisions of this

8 section, such State regulations shall apply in that State

9 in lieu of the regulations issued by the Commission under

10 this section.

11 Subtitle I—Merger Review Reform

12 and Accountability

13 SEC. 16101. MERGER REVIEW REFORM AND ACCOUNT14 ABILITY.

15 (a) MERGER REVIEW REFORM.—Within 180 days

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

17 Energy, in consultation with the Federal Energy Regu18 latory Commission and the Department of Justice, shall

19 prepare, and transmit to the Committee on Energy and

20 Commerce of the House of Representatives and the Com21 mittee on Energy and Natural Resources of the Senate

22 each of the following:

23 (1) A study of the extent to which the authori24 ties vested in the Federal Energy Regulatory Com-
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1 mission under section 203 of the Federal Power Act

2 are duplicative of authorities vested in—

3 (A) other agencies of Federal and State

4 government; and

5 (B) the Federal Energy Regulatory Com6 mission, including under sections 205 and 206

7 of the Federal Power Act.

8 (2) Recommendations on reforms to the Fed9 eral Power Act that would eliminate any unneces10 sary duplication in the exercise of regulatory author11 ity or unnecessary delays in the approval (or dis12 approval) of applications for the sale, lease, or other

13 disposition of public utility facilities.

14 (b) MERGER REVIEW ACCOUNTABILITY.—Not later

15 than 1 year after the date of enactment of this Act and

16 annually thereafter, with respect to all orders issued with17 in the preceding year that impose a condition on a sale,

18 lease, or other disposition of public utility facilities under

19 section 203(b) of the Federal Power Act, the Federal En20 ergy Regulatory Commission shall transmit a report to the

21 Committee on Energy and Commerce of the House of

22 Representatives and the Committee on Energy and Nat23 ural Resources of the Senate explaining each of the fol24 lowing:

25 (1) The condition imposed.
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1 (2) Whether the Commission could have im2 posed such condition by exercising its authority

3 under any provision of the Federal Power Act other

4 than under section 203(b).

5 (3) If the Commission could not have imposed

6 such condition other than under section 203(b), why

7 the Commission determined that such condition was

8 consistent with the public interest.

9 Subtitle J—Study of Economic

10 Dispatch

11 SEC. 16111. STUDY ON THE BENEFITS OF ECONOMIC DIS12 PATCH.

13 (a) STUDY.—The Secretary of Energy, in coordina14 tion and consultation with the States, shall conduct a

15 study on—

16 (1) the procedures currently used by electric

17 utilities to perform economic dispatch;

18 (2) identifying possible revisions to those proce19 dures to improve the ability of nonutility generation

20 resources to offer their output for sale for the pur21 pose of inclusion in economic dispatch; and

22 (3) the potential benefits to residential, com23 mercial, and industrial electricity consumers nation24 ally and in each state if economic dispatch proce25 dures were revised to improve the ability of non-
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1 utility generation resources to offer their output for

2 inclusion in economic dispatch.

3 (b) DEFINITION.—The term ‘‘economic dispatch’’

4 when used in this section means the operation of genera5 tion facilities to produce energy at the lowest cost to reli6 ably serve consumers, recognizing any operational limits

7 of generation and transmission facilities.

8 (c) REPORT TO CONGRESS AND THE STATES.—Not

9 later than 90 days after the date of enactment of this Act,

10 and on a yearly basis following, the Secretary of Energy

11 shall submit a report to the Congress and the States on

12 the results of the study conducted under subsection (a),

13 including recommendations to the Congress and the States

14 for any suggested legislative or regulatory changes.

15 TITLE VII—MOTOR FUELS

16 Subtitle A—General Provisions

17 SEC. 17101. RENEWABLE CONTENT OF MOTOR VEHICLE

18 FUEL.

19 (a) IN GENERAL.—Section 211 of the Clean Air Act

20 (42 U.S.C. 7545) is amended—

21 (1) by redesignating subsection (o) as sub22 section (q); and

23 (2) by inserting after subsection (n) the fol24 lowing:

25 ‘‘(o) RENEWABLE FUEL PROGRAM.—
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1 ‘‘(1) DEFINITIONS.—In this section:

2 ‘‘(A) CELLULOSIC BIOMASS ETHANOL.—

3 The term ‘cellulosic biomass ethanol’ means

4 ethanol derived from any lignocellulosic or

5 hemicellulosic matter that is available on a re6 newable or recurring basis, including—

7 ‘‘(i) dedicated energy crops and trees;

8 ‘‘(ii) wood and wood residues;

9 ‘‘(iii) plants;

10 ‘‘(iv) grasses;

11 ‘‘(v) agricultural residues;

12 ‘‘(vi) fibers;

13 ‘‘(vii) animal wastes, including poultry

14 fats and poultry wastes, and other waste

15 materials; and

16 ‘‘(viii) municipal solid waste.

17 ‘‘(B) RENEWABLE FUEL.—

18 ‘‘(i) IN GENERAL.—The term ‘renew19 able fuel’ means motor vehicle fuel that—

20 ‘‘(I)(aa) is produced from grain,

21 starch, oilseeds, or other biomass; or

22 ‘‘(bb) is natural gas produced

23 from a biogas source, including a

24 landfill, sewage waste treatment plant,
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1 feedlot, or other place where decaying

2 organic material is found; and

3 ‘‘(II) is used to replace or reduce

4 the quantity of fossil fuel present in a

5 fuel mixture used to operate a motor

6 vehicle.

7 ‘‘(ii) INCLUSION.—The term ‘renew8 able fuel’ includes cellulosic biomass eth9 anol and biodiesel (as defined in section

10 312(f) of the Energy Policy Act of 1992

11 (42 U.S.C. 13220(f)) and any blending

12 components derived from renewable fuel

13 (provided that only the renewable fuel por14 tion of any such blending component shall

15 be considered part of the applicable volume

16 under the renewable fuel program estab17 lished by this subsection).

18 ‘‘(C) SMALL REFINERY.—The term ‘small

19 refinery’ means a refinery for which average ag20 gregate daily crude oil throughput for the cal21 endar year (as determined by dividing the ag22 gregate throughput for the calendar year by the

23 number of days in the calendar year) does not

24 exceed 75,000 barrels.

25 ‘‘(2) RENEWABLE FUEL PROGRAM.—
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1 ‘‘(A) IN GENERAL.—Not later than 1 year

2 from enactment of this provision, the Adminis3 trator shall promulgate regulations ensuring

4 that gasoline sold or dispensed to consumers in

5 the contiguous United States, on an annual av6 erage basis, contains the applicable volume of

7 renewable fuel as specified in subparagraph

8 (B). Regardless of the date of promulgation,

9 such regulations shall contain compliance provi10 sions for refiners, blenders, and importers, as

11 appropriate, to ensure that the requirements of

12 this section are met, but shall not restrict where

13 renewables can be used, or impose any per-gal14 lon obligation for the use of renewables. If the

15 Administrator does not promulgate such regula16 tions, the applicable percentage, on a volume

17 percentage of gasoline basis, shall be 1.62 in

18 2005.

19 ‘‘(B) APPLICABLE VOLUME.—

20 ‘‘(i) CALENDAR YEARS 2005 THROUGH

21 2015.—For the purpose of subparagraph

22 (A), the applicable volume for any of cal23 endar years 2005 through 2015 shall be

24 determined in accordance with the fol25 lowing table:

Applicable volume of renewable fuel
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‘‘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.

1 ‘‘(ii) CALENDAR YEAR 2016 AND

2 THEREAFTER.—For the purpose of sub3 paragraph (A), the applicable volume for

4 calendar year 2016 and each calendar year

5 thereafter shall be equal to the product ob6 tained by multiplying—

7 ‘‘(I) the number of gallons of

8 gasoline that the Administrator esti9 mates will be sold or introduced into

10 commerce in the calendar year; and

11 ‘‘(II) the ratio that—

12 ‘‘(aa) 5.0 billion gallons of

13 renewable fuels; bears to

14 ‘‘(bb) the number of gallons

15 of gasoline sold or introduced

16 into commerce in calendar year

17 2015.

18 ‘‘(3) APPLICABLE PERCENTAGES.—Not later

19 than October 31 of each calendar year after 2002,

20 the Administrator of the Energy Information Ad-
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1 ministration shall provide the Administrator an esti2 mate of the volumes of gasoline sales in the United

3 States for the coming calendar year. Based on such

4 estimates, the Administrator shall, by November 30

5 of each calendar year after 2003, determine and

6 publish in the Federal Register, the renewable fuel

7 obligation, on a volume percentage of gasoline basis,

8 applicable to refiners, blenders, and importers, as

9 appropriate, for the coming calendar year, to ensure

10 that the requirements of paragraph (2) are met. For

11 each calendar year, the Administrator shall establish

12 a single applicable percentage that applies to all par13 ties, and make provision to avoid redundant obliga14 tions. In determining the applicable percentages, the

15 Administrator shall make adjustments to account for

16 the use of renewable fuels by exempt small refineries

17 during the previous year.

18 ‘‘(4) CELLULOSIC BIOMASS ETHANOL.—For the

19 purpose of paragraph (2), 1 gallon of cellulosic bio20 mass ethanol shall be considered to be the equivalent

21 of 1.5 gallon of renewable fuel.

22 ‘‘(5) CREDIT PROGRAM.—

23 ‘‘(A) IN GENERAL.—The regulations pro24 mulgated to carry out this subsection shall pro25 vide for the generation of an appropriate
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1 amount of credits by any person that refines,

2 blends, or imports gasoline that contains a

3 quantity of renewable fuel that is greater than

4 the quantity required under paragraph (2).

5 Such regulations shall provide for the genera6 tion of an appropriate amount of credits for

7 biodiesel fuel. If a small refinery notifies the

8 Administrator that it waives the exemption pro9 vided by this Act, the regulations shall provide

10 for the generation of credits by the small refin11 ery beginning in the year following such notifi12 cation.

13 ‘‘(B) USE OF CREDITS.—A person that

14 generates credits under subparagraph (A) may

15 use the credits, or transfer all or a portion of

16 the credits to another person, for the purpose

17 of complying with paragraph (2).

18 ‘‘(C) LIFE OF CREDITS.—A credit gen19 erated under this paragraph shall be valid to

20 show compliance:

21 ‘‘(i) in the calendar year in which the

22 credit was generated or the next calendar

23 year, or

24 ‘‘(ii) in the calendar year in which the

25 credit was generated or next two consecu-
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1 tive calendar years if the Administrator

2 promulgates regulations under paragraph

3 (6).

4 ‘‘(D) INABILITY TO PURCHASE SUFFICIENT

5 CREDITS.—The regulations promulgated to

6 carry out this subsection shall include provi7 sions allowing any person that is unable to gen8 erate or purchase sufficient credits to meet the

9 requirements under paragraph (2) to carry for10 ward a renewables deficit provided that, in the

11 calendar year following the year in which the

12 renewables deficit is created, such person shall

13 achieve compliance with the renewables require14 ment under paragraph (2), and shall generate

15 or purchase additional renewables credits to off16 set the renewables deficit of the previous year.

17 ‘‘(6) SEASONAL VARIATIONS IN RENEWABLE

18 FUEL USE.—

19 ‘‘(A) STUDY.—For each of calendar years

20 2005 through 2015, the Administrator of the

21 Energy Information Administration, shall con22 duct a study of renewable fuels blending to de23 termine whether there are excessive seasonal

24 variations in the use of renewable fuels.
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1 ‘‘(B) REGULATION OF EXCESSIVE SEA2 SONAL VARIATIONS.—If, for any calendar year,

3 the Administrator of the Energy Information

4 Administration, based on the study under sub5 paragraph (A), makes the determinations speci6 fied in subparagraph (C), the Administrator

7 shall promulgate regulations to ensure that 35

8 percent or more of the quantity of renewable

9 fuels necessary to meet the requirement of

10 paragraph (2) is used during each of the peri11 ods specified in subparagraph (D) of each sub12 sequent calendar year.

13 ‘‘(C) DETERMINATIONS.—The determina14 tions referred to in subparagraph (B) are

15 that—

16 ‘‘(i) less than 35 percent of the quan17 tity of renewable fuels necessary to meet

18 the requirement of paragraph (2) has been

19 used during one of the periods specified in

20 subparagraph (D) of the calendar year;

21 ‘‘(ii) a pattern of excessive seasonal

22 variation described in clause (i) will con23 tinue in subsequent calendar years; and

24 ‘‘(iii) promulgating regulations or

25 other requirements to impose a 35% or
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1 more seasonal use of renewable fuels will

2 not prevent or interfere with the attain3 ment of national ambient air quality stand4 ards or significantly increase the price of

5 motor fuels to the consumer.

6 ‘‘(D) PERIODS.—The two periods referred

7 to in this paragraph are—

8 ‘‘(i) April through September; and

9 ‘‘(ii) January through March and Oc10 tober through December.

11 ‘‘(E) EXCLUSIONS.—Renewable fuels

12 blended or consumed in 2005 in a State which

13 has received a waiver under section 209(b) shall

14 not be included in the study in subparagraph

15 (A).

16 ‘‘(7) WAIVERS.—

17 ‘‘(A) IN GENERAL.—The Administrator, in

18 consultation with the Secretary of Agriculture

19 and the Secretary of Energy, may waive the re20 quirement of paragraph (2) in whole or in part

21 on petition by one or more States by reducing

22 the national quantity of renewable fuel required

23 under this subsection—

24 ‘‘(i) based on a determination by the

25 Administrator, after public notice and op-
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1 portunity for comment, that implementa2 tion of the requirement would have a sig3 nificant and meaningful adverse impact on

4 the economy or environment of a State, a

5 region, or the United States, or will pre6 vent or interfere with the attainment of a

7 national ambient air quality standard in

8 any area of a State; or

9 ‘‘(ii) based on a determination by the

10 Administrator, after public notice and op11 portunity for comment, that there is an in12 adequate domestic supply or distribution

13 capacity to meet the requirement.

14 ‘‘(B) PETITIONS FOR WAIVERS.—The Ad15 ministrator, in consultation with the Secretary

16 of Agriculture and the Secretary of Energy,

17 shall approve or disapprove a State petition for

18 a waiver of the requirement of paragraph (2)

19 within 90 days after the date on which the peti20 tion is received by the Administrator. If the Ad21 ministrator does not act to approve or dis22 approve a State petition for a waiver within 90

23 days, the Administrator shall publish a notice

24 setting forth the reasons for not acting within

25 the required 90-day period.
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1 ‘‘(C) TERMINATION OF WAIVERS.—A waiv2 er granted under subparagraph (A) shall termi3 nate after 1 year, but may be renewed by the

4 Administrator after consultation with the Sec5 retary of Agriculture and the Secretary of En6 ergy.

7 ‘‘(8) STUDY AND WAIVER FOR INITIAL YEAR OF

8 PROGRAM.—Not later than 180 days from enact9 ment, the Secretary of Energy shall complete for the

10 Administrator a study assessing whether the renew11 able fuels requirement under paragraph (2) will like12 ly result in significant adverse consumer impacts in

13 2005, on a national, regional or State basis. Such

14 study shall evaluate renewable fuel supplies and

15 prices, blendstock supplies, and supply and distribu16 tion system capabilities. Based on such study, the

17 Secretary shall make specific recommendations to

18 the Administrator regarding waiver of the require19 ments of paragraph (2), in whole or in part, to avoid

20 any such adverse impacts. Within 270 days from en21 actment, the Administrator shall, consistent with the

22 recommendations of the Secretary waive, in whole or

23 in part, the renewable fuels requirement under para24 graph (2) by reducing the national quantity of re25 newable fuel required under this subsection in 2005.
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1 This provision shall not be interpreted as limiting

2 the Administrator’s authority to waive the require3 ments of paragraph (2) in whole, or in part, under

4 paragraph (7) or paragraph (9), pertaining to waiv5 ers.

6 ‘‘(9) ASSESSMENT AND WAIVER.—The Sec7 retary of Energy, in consultation with the Adminis8 trator of the Environmental Protection Agency and

9 the Secretary of Agriculture on his own motion, or

10 upon petition of any State shall evaluate the require11 ment of paragraph (2) and determine, prior to Janu12 ary 1, 2007, or prior to January 1 of any subse13 quent year in which the applicable volume of renew14 able fuel is increased under paragraph (2)(B),

15 whether the requirement of paragraph (2), including

16 the applicable volume of renewable fuel contained in

17 paragraph (2)(B) should remain in effect, in whole

18 or in part, during 2007 or any year or years subse19 quent to 2007. In evaluating the requirement of

20 paragraph (2) and in making any determination

21 under this section, the Secretary shall consider the

22 best available information and data collected by ac23 cepted methods or best available means regarding—

24 ‘‘(A) the capacity of renewable fuel pro25 ducers to supply an adequate amount of renew-
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1 able fuel at competitive prices to fulfill the re2 quirement in paragraph (2);

3 ‘‘(B) the potential of the requirement in

4 paragraph (2) to significantly raise the price of

5 gasoline, food or heating oil for consumers in

6 any significant area or region of the country

7 above the price that would otherwise apply to

8 such commodities in the absence of the require9 ment;

10 ‘‘(C) the potential of the requirement in

11 paragraph (2) to interfere with the supply of

12 fuel in any significant gasoline market or region

13 of the country, including interference with the

14 efficient operation of refiners, blenders, import15 ers, wholesale suppliers, and retail vendors of

16 gasoline, and other motor fuels; and

17 ‘‘(D) the potential of the requirement to

18 cause or promote exceedences of Federal, State,

19 or local air quality standards.

20 If the Secretary determines, after public notice and

21 the opportunity for comment, that the requirement

22 of paragraph (2) would have significant and mean23 ingful adverse impact on the supply of fuel and re24 lated infrastructure or on the economy, environment,

25 public health or environment of any significant area
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1 or region of the country, the Secretary may waive,

2 in whole or in part, the requirement of paragraph

3 (2) in any one year or period of years as well as re4 duce the applicable volume of renewable fuel con5 tained in paragraph (2)(B) in any one year or period

6 of years.

7 ‘‘(10) SMALL REFINERIES.—

8 ‘‘(A) IN GENERAL.—The requirement of

9 paragraph (2) shall not apply to small refineries

10 until the first calendar year beginning more

11 than 5 years after the first year set forth in the

12 table in paragraph (2)(B)(i). Not later than De13 cember 31, 2006, the Secretary of Energy shall

14 complete for the Administrator a study to de15 termine whether the requirement of paragraph

16 (2) would impose a disproportionate economic

17 hardship on small refineries. For any small re18 finery that the Secretary of Energy determines

19 would experience a disproportionate economic

20 hardship, the Administrator shall extend the

21 small refinery exemption for such small refinery

22 for no less than two additional years.

23 ‘‘(B) ECONOMIC HARDSHIP.—

24 ‘‘(i) EXTENSION OF EXEMPTION.—A

25 small refinery may at any time petition the
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1 Administrator for an extension of the ex2 emption from the requirement of para3 graph (2) for the reason of dispropor4 tionate economic hardship. In evaluating a

5 hardship petition, the Administrator, in

6 consultation with the Secretary of Energy,

7 shall consider the findings of the study in

8 addition to other economic factors.

9 ‘‘(ii) DEADLINE FOR ACTION ON PETI10 TIONS.—The Administrator shall act on

11 any petition submitted by a small refinery

12 for a hardship exemption not later than 90

13 days after the receipt of the petition.

14 ‘‘(C) CREDIT PROGRAM.—If a small refin15 ery notifies the Administrator that it waives the

16 exemption provided by this Act, the regulations

17 shall provide for the generation of credits by

18 the small refinery beginning in the year fol19 lowing such notification.

20 ‘‘(D) OPT-IN FOR SMALL REFINERS.—A

21 small refinery shall be subject to the require22 ments of this section if it notifies the Adminis23 trator that it waives the exemption under sub24 paragraph (A).’’.
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1 (b) PENALTIES AND ENFORCEMENT.—Section

2 211(d) of the Clean Air Act (42 U.S.C. 7545(d)) is

3 amended—

4 (1) in paragraph (1)—

5 (A) in the first sentence, by striking ‘‘or

6 (n)’’ each place it appears and inserting ‘‘(n) or

7 (o)’’; and

8 (B) in the second sentence, by striking ‘‘or

9 (m)’’ and inserting ‘‘(m), or (o)’’; and

10 (2) in the first sentence of paragraph (2), by

11 striking ‘‘and (n)’’ each place it appears and insert12 ing ‘‘(n), and (o)’’.

13 (c) SURVEY OF RENEWABLE FUEL MARKET.—

14 (1) SURVEY AND REPORT.—Not later than De15 cember 1, 2006, and annually thereafter, the Admin16 istrator of the Environmental Protection Agency (in

17 consultation with the Secretary of Energy acting

18 through the Administrator of the Energy Informa19 tion Administration) shall—

20 (A) conduct, with respect to each conven21 tional gasoline use area and each reformulated

22 gasoline use area in each State, a survey to de23 termine the market shares of—

24 (i) conventional gasoline containing

25 ethanol;
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1 (ii) reformulated gasoline containing

2 ethanol;

3 (iii) conventional gasoline containing

4 renewable fuel; and

5 (iv) reformulated gasoline containing

6 renewable fuel; and

7 (B) submit to Congress, and make publicly

8 available, a report on the results of the survey

9 under subparagraph (A).

10 (2) RECORDKEEPING AND REPORTING RE11 QUIREMENTS.—The Administrator may require any

12 refiner, blender, or importer to keep such records

13 and make such reports as are necessary to ensure

14 that the survey conducted under paragraph (1) is

15 accurate. The Administrator shall rely, to the extent

16 practicable, on existing reporting and recordkeeping

17 requirements to avoid duplicative requirements.

18 (3) APPLICABLE LAW.—Activities carried out

19 under this subsection shall be conducted in a man20 ner designed to protect confidentiality of individual

21 responses.

22 (4) CALCULATION OF MARKET SHARES.—Mar23 ket shares for conventional gasoline and reformu24 lated gasoline use areas will be calculated on a state25 wide basis using information collected under para-
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1 graph (2) and other information available to the Ad2 ministrator. Market share information may be based

3 upon gasoline distribution patterns that include

4 multistate use areas.

5 SEC. 17102. FUELS SAFE HARBOR.

6 (a) IN GENERAL.—Notwithstanding any other provi7 sion of Federal or State law, no renewable fuel, as defined

8 by section 211(o)(1) of the Clean Air Act, or fuel con9 taining MTBE, used or intended to be used as a motor

10 vehicle fuel, nor any motor vehicle fuel containing such

11 renewable fuel or MTBE, shall be deemed defective in de12 sign or manufacture by virtue of the fact that it is, or

13 contains, such a renewable fuel or MTBE, if it does not

14 violate a control or prohibition imposed by the Adminis15 trator under section 211 of such Act, and the manufac16 turer is in compliance with all requests for information

17 under subsection (b) of such section 211(b) of the Clean

18 Air Act. If the safe harbor provided by this section does

19 not apply, the existence of a design defect or manufac20 turing defect shall be determined under otherwise applica21 ble law. Nothing in this paragraph shall be construed to

22 affect the liability of any person for environmental remedi23 ation costs, drinking water contamination, negligence,

24 public nuisance or any other liability other than liability
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1 for a defect in design or manufacture of a motor vehicle

2 fuel.

3 (b) EFFECTIVE DATE.—This section shall be effec4 tive as of the date of enactment and shall apply with re5 spect to all claims filed on or after that date.

6 SEC. 17103. FINDINGS AND MTBE TRANSITION ASSISTANCE.

7 (a) FINDINGS.—Congress finds that—

8 (1) since 1979, methyl tertiary butyl ether (re9 ferred to in this section as ‘‘MTBE’’) has been used

10 nationwide at low levels in gasoline to replace lead

11 as an octane booster or anti-knocking agent;

12 (2) Public Law 101–549 (commonly known as

13 the ‘‘Clean Air Act Amendments of 1990’’) (42

14 U.S.C. 7401 et seq.) established a fuel oxygenate

15 standard under which reformulated gasoline must

16 contain at least 2 percent oxygen by weight;

17 (3) at the time of the adoption of the fuel oxy18 gen standard, Congress was aware that significant

19 use of MTBE would result from the adoption of that

20 standard, and that the use of MTBE would likely be

21 important to the cost-effective implementation of

22 that program;

23 (4) Congress was aware that gasoline and its

24 component additives can and do leak from storage

25 tanks;
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1 (5) the fuel industry responded to the fuel oxy2 genate standard established by Public Law 101–549

3 by making substantial investments in—

4 (A) MTBE production capacity; and

5 (B) systems to deliver MTBE-containing

6 gasoline to the marketplace;

7 (6) Congress has—

8 (A) reconsidered the relative value of the

9 oxygenate requirement for reformulated gaso10 line; and

11 (B) decided to provide for the elimination

12 of the oxygenate requirement for reformulated

13 gasoline and to provide for a renewable content

14 requirement for motor fuel; and

15 (7) it is appropriate for Congress to provide

16 some limited transition assistance—

17 (A) to merchant producers of MTBE who

18 produced MTBE in response to a market cre19 ated by the oxygenate requirement contained in

20 the Clean Air Act; and

21 (B) for the purpose of mitigating any fuel

22 supply problems that may result from the elimi23 nation of the oxygenate requirement for refor24 mulated gasoline.
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1 (b) PURPOSES.—The purpose of this section is to

2 provide assistance to merchant producers of MTBE in

3 making the transition from producing MTBE to producing

4 other fuel additives.

5 (c) MTBE MERCHANT PRODUCER CONVERSION AS6 SISTANCE.—Section 211(c) of the Clean Air Act (42

7 U.S.C. 7545(c)) is amended by adding at the end the fol8 lowing:

9 ‘‘(5) MTBE MERCHANT PRODUCER CONVER10 SION ASSISTANCE.—

11 ‘‘(A) IN GENERAL.—

12 ‘‘(i) GRANTS.—The Secretary of En13 ergy, in consultation with the Adminis14 trator, may make grants to merchant pro15 ducers of methyl tertiary butyl ether in the

16 United States to assist the producers in

17 the conversion of eligible production facili18 ties described in subparagraph (C) to the

19 production of iso-octane and alkylates.

20 ‘‘(ii) DETERMINATION.—The Admin21 istrator, in consultation with the Secretary

22 of Energy, may determine that transition

23 assistance for the production of iso-octane

24 and alkylates is inconsistent with the pro25 visions of subparagraph (B) and, on that
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•HR 6 EH

1 basis, may deny applications for grants au2 thorized by this provision.

3 ‘‘(B) FURTHER GRANTS.—The Secretary

4 of Energy, in consultation with the Adminis5 trator, may also further make grants to mer6 chant producers of MTBE in the United States

7 to assist the producers in the conversion of eli8 gible production facilities described in subpara9 graph (C) to the production of such other fuel

10 additives that, consistent with this subsection—

11 ‘‘(i) unless the Administrator deter12 mines that such fuel additives may reason13 ably be anticipated to endanger public

14 health or the environment;

15 ‘‘(ii) have been registered and have

16 been tested or are being tested in accord17 ance with the requirements of this section;

18 and

19 ‘‘(iii) will contribute to replacing gaso20 line volumes lost as a result of paragraph

21 (5).

22 ‘‘(C) ELIGIBLE PRODUCTION FACILI23 TIES.—A production facility shall be eligible to

24 receive a grant under this paragraph if the pro25 duction facility—
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1 ‘‘(i) is located in the United States;

2 and

3 ‘‘(ii) produced methyl tertiary butyl

4 ether for consumption before April 1, 2003

5 and ceased production at any time after

6 the date of enactment.

7 ‘‘(D) AUTHORIZATION OF APPROPRIA8 TIONS.—There is authorized to be appropriated

9 to carry out this paragraph $250,000,000 for

10 each of fiscal years 2004 through 2006, to re11 main available until expended.’’.

12 (d) EFFECT ON STATE LAW.—The amendments

13 made to the Clean Air Act by this title have no effect re14 garding any available authority of States to limit the use

15 of methyl tertiary butyl ether in motor vehicle fuel.

16 SEC. 17104. ELIMINATION OF OXYGEN CONTENT REQUIRE17 MENT FOR REFORMULATED GASOLINE.

18 (a) ELIMINATION.—

19 (1) IN GENERAL.—Section 211(k) of the Clean

20 Air Act (42 U.S.C. 7545(k)) is amended—

21 (A) in paragraph (2)—

22 (i) in the second sentence of subpara23 graph (A), by striking ‘‘(including the oxy24 gen content requirement contained in sub25 paragraph (B))’’;
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1 (ii) by striking subparagraph (B); and

2 (iii) by redesignating subparagraphs

3 (C) and (D) as subparagraphs (B) and

4 (C), respectively;

5 (B) in paragraph (3)(A), by striking clause

6 (v);

7 (C) in paragraph (7)—

8 (i) in subparagraph (A)—

9 (I) by striking clause (i); and

10 (II) by redesignating clauses (ii)

11 and (iii) as clauses (i) and (ii), respec12 tively; and

13 (ii) in subparagraph (C)—

14 (I) by striking clause (ii); and

15 (II) by redesignating clause (iii)

16 as clause (ii); and

17 (2) EFFECTIVE DATE.—The amendments made

18 by paragraph (1) take effect 270 days after the date

19 of enactment of this Act, except that such amend20 ments shall take effect upon enactment in any State

21 that has received a waiver under section 209(b) of

22 the Clean Air Act.

23 (b) MAINTENANCE OF TOXIC AIR POLLUTANT EMIS24 SION REDUCTIONS.—Section 211(k)(1) of the Clean Air

25 Act (42 U.S.C. 7545(k)(1)) is amended—
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1 (1) by striking ‘‘Within 1 year after the enact2 ment of the Clean Air Act Amendments of 1990,’’

3 and inserting the following:

4 ‘‘(A) IN GENERAL.—Not later than No5 vember 15, 1991,’’; and

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

7 ‘‘(B) MAINTENANCE OF TOXIC AIR POL8 LUTANT EMISSIONS REDUCTIONS FROM REFOR9 MULATED GASOLINE.—

10 ‘‘(i) DEFINITIONS.—In this subpara11 graph the term ‘PADD’ means a Petro12 leum Administration for Defense District.

13 ‘‘(ii) REGULATIONS REGARDING EMIS14 SIONS OF TOXIC AIR POLLUTANTS.—Not

15 later than 270 days after the date of en16 actment of this subparagraph the Adminis17 trator shall establish, for each refinery or

18 importer, standards for toxic air pollutants

19 from use of the reformulated gasoline pro20 duced or distributed by the refinery or im21 porter that maintain the reduction of the

22 average annual aggregate emissions of

23 toxic air pollutants for reformulated gaso24 line produced or distributed by the refinery

25 or importer during calendar years 1999
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1 and 2000, determined on the basis of data

2 collected by the Administrator with respect

3 to the refinery or importer.

4 ‘‘(iii) STANDARDS APPLICABLE TO

5 SPECIFIC REFINERIES OR IMPORTERS.—

6 ‘‘(I) APPLICABILITY OF STAND7 ARDS.—For any calendar year, the

8 standards applicable to a refinery or

9 importer under clause (ii) shall apply

10 to the quantity of gasoline produced

11 or distributed by the refinery or im12 porter in the calendar year only to the

13 extent that the quantity is less than

14 or equal to the average annual quan15 tity of reformulated gasoline produced

16 or distributed by the refinery or im17 porter during calendar years 1999

18 and 2000.

19 ‘‘(II) APPLICABILITY OF OTHER

20 STANDARDS.—For any calendar year,

21 the quantity of gasoline produced or

22 distributed by a refinery or importer

23 that is in excess of the quantity sub24 ject to subclause (I) shall be subject

25 to standards for toxic air pollutants
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1 promulgated under subparagraph (A)

2 and paragraph (3)(B).

3 ‘‘(iv) CREDIT PROGRAM.—The Admin4 istrator shall provide for the granting and

5 use of credits for emissions of toxic air pol6 lutants in the same manner as provided in

7 paragraph (7).

8 ‘‘(v) REGIONAL PROTECTION OF

9 TOXICS REDUCTION BASELINES.—

10 ‘‘(I) IN GENERAL.—Not later

11 than 60 days after the date of enact12 ment of this subparagraph, and not

13 later than April 1 of each calendar

14 year that begins after that date of en15 actment, the Administrator shall pub16 lish in the Federal Register a report

17 that specifies, with respect to the pre18 vious calendar year—

19 ‘‘(aa) the quantity of refor20 mulated gasoline produced that is

21 in excess of the average annual

22 quantity of reformulated gasoline

23 produced in 1999 and 2000; and

24 ‘‘(bb) the reduction of the

25 average annual aggregate emis-
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1 sions of toxic air pollutants in

2 each PADD, based on retail sur3 vey data or data from other ap4 propriate sources.

5 ‘‘(II) EFFECT OF FAILURE TO

6 MAINTAIN AGGREGATE TOXICS RE7 DUCTIONS.—If, in any calendar year,

8 the reduction of the average annual

9 aggregate emissions of toxic air pol10 lutants in a PADD fails to meet or

11 exceed the reduction of the average

12 annual aggregate emissions of toxic

13 air pollutants in the PADD in cal14 endar years 1999 and 2000, the Ad15 ministrator, not later than 90 days

16 after the date of publication of the re17 port for the calendar year under sub18 clause (I), shall—

19 ‘‘(aa) identify, to the max20 imum extent practicable, the rea21 sons for the failure, including the

22 sources, volumes, and character23 istics of reformulated gasoline

24 that contributed to the failure;

25 and
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1 ‘‘(bb) promulgate revisions

2 to the regulations promulgated

3 under clause (ii), to take effect

4 not earlier than 180 days but not

5 later than 270 days after the

6 date of promulgation, to provide

7 that, notwithstanding clause

8 (iii)(II), all reformulated gasoline

9 produced or distributed at each

10 refinery or importer shall meet

11 the standards applicable under

12 clause (ii) not later than April 1

13 of the year following the report

14 in subclause (II) and for subse15 quent years.

16 ‘‘(vi) REGULATIONS TO CONTROL

17 HAZARDOUS AIR POLLUTANTS FROM

18 MOTOR VEHICLES AND MOTOR VEHICLE

19 FUELS.—Not later than July 1, 2004, the

20 Administrator shall promulgate final regu21 lations to control hazardous air pollutants

22 from motor vehicles and motor vehicle

23 fuels, as provided for in section 80.1045 of

24 title 40, Code of Federal Regulations (as
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1 in effect on the date of enactment of this

2 subparagraph).’’.

3 (c) CONSOLIDATION IN REFORMULATED GASOLINE

4 REGULATIONS.—Not later than 180 days after the date

5 of enactment of this Act, the Administrator shall revise

6 the reformulated gasoline regulations under subpart D of

7 part 80 of title 40, Code of Federal Regulations, to con8 solidate the regulations applicable to VOC-Control Re9 gions 1 and 2 under section 80.41 of that title by elimi10 nating the less stringent requirements applicable to gaso11 line designated for VOC-Control Region 2 and instead ap12 plying the more stringent requirements applicable to gaso13 line designated for VOC-Control Region 1.

14 (d) SAVINGS CLAUSE.—Nothing in this section is in15 tended to affect or prejudice either any legal claims or ac16 tions with respect to regulations promulgated by the Ad17 ministrator prior to enactment of this Act regarding emis18 sions of toxic air pollutants from motor vehicles or the

19 adjustment of standards applicable to a specific refinery

20 or importer made under such prior regulations and the

21 Administrator may apply such adjustments to the stand22 ards applicable to such refinery or importer under clause

23 (iii)(I) of section 211(k)(1)(B) of the Clean Air Act, ex24 cept that—
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1 (1) the Administrator shall revise such adjust2 ments to be based only on calendar years 1999–

3 2000, and

4 (2) for adjustments based on toxic air pollutant

5 emissions from reformulated gasoline significantly

6 below the national annual average emissions of toxic

7 air pollutants from all reformulated gasoline, the

8 Administrator may revise such adjustments to take

9 account of the scope of any lawful and enforceable

10 Federal or State prohibition on methyl tertiary butyl

11 ether imposed after the effective date of the enact12 ment of this paragraph, except that any such adjust13 ment shall require such refiner or importer, to the

14 greatest extent practicable, to maintain the reduc15 tion achieved during calendar year 1999–2000 in the

16 average annual aggregate emissions of toxic air pol17 lutants from reformulated gasoline produced or dis18 tributed by the refinery or importer. Any such ad19 justment shall not be made at a level below the aver20 age percentage of reductions of emissions of toxic air

21 pollutants for reformulated gasoline supplied to

22 PADD I during calendar years 1999–2000.

23 SEC. 17105. ANALYSES OF MOTOR VEHICLE FUEL CHANGES.

24 Section 211 of the Clean Air Act (42 U.S.C. 7545)

25 is amended by inserting after subsection (o) the following:
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1 ‘‘(p) ANALYSES OF MOTOR VEHICLE FUEL CHANGES

2 AND EMISSIONS MODEL.—

3 ‘‘(1) ANTI-BACKSLIDING ANALYSIS.—

4 ‘‘(A) DRAFT ANALYSIS.—Not later than 4

5 years after the date of enactment of this para6 graph, the Administrator shall publish for pub7 lic comment a draft analysis of the changes in

8 emissions of air pollutants and air quality due

9 to the use of motor vehicle fuel and fuel addi10 tives resulting from implementation of the

11 amendments made by title VII of the Energy

12 Policy Act of 2003.

13 ‘‘(B) FINAL ANALYSIS.—After providing a

14 reasonable opportunity for comment but not

15 later than 5 years after the date of enactment

16 of this paragraph, the Administrator shall pub17 lish the analysis in final form.

18 ‘‘(2) EMISSIONS MODEL.—For the purposes of

19 this subsection, as soon as the necessary data are

20 available, the Administrator shall develop and final21 ize an emissions model that reasonably reflects the

22 effects of gasoline characteristics or components on

23 emissions from vehicles in the motor vehicle fleet

24 during calendar year 2005.’’.
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1 SEC. 17106. DATA COLLECTION.

2 Section 205 of the Department of Energy Organiza3 tion Act (42 U.S.C. 7135) is amended by adding at the

4 end the following:

5 ‘‘(m) RENEWABLE FUELS SURVEY.—(1) In order to

6 improve the ability to evaluate the effectiveness of the Na7 tion’s renewable fuels mandate, the Administrator shall

8 conduct and publish the results of a survey of renewable

9 fuels demand in the motor vehicle fuels market in the

10 United States monthly, and in a manner designed to pro11 tect the confidentiality of individual responses. In con12 ducting the survey, the Administrator shall collect infor13 mation both on a national and regional basis, including—

14 ‘‘(A) the quantity of renewable fuels produced;

15 ‘‘(B) the quantity of renewable fuels blended;

16 ‘‘(C) the quantity of renewable fuels imported;

17 ‘‘(D) the quantity of renewable fuels demanded;

18 ‘‘(E) market price data; and

19 ‘‘(F) such other analyses or evaluations as the

20 Administrator finds is necessary to achieve the pur21 poses of this section.

22 ‘‘(2) The Administrator shall also collect or estimate

23 information both on a national and regional basis, pursu24 ant to subparagraphs (A) through (F) of paragraph (1),

25 for the five years prior to implementation of this sub26 section.
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1 ‘‘(3) This subsection does not affect the authority of

2 the Administrator to collect data under section 52 of the

3 Federal Energy Administration Act of 1974 (15 U.S.C.

4 790a).’’.

5 SEC. 17107. FUEL SYSTEM REQUIREMENTS HARMONI6 ZATION STUDY.

7 (a) STUDY.—

8 (1) IN GENERAL.—The Administrator of the

9 Environmental Protection Agency and the Secretary

10 of Energy shall jointly conduct a study of Federal,

11 State, and local requirements concerning motor vehi12 cle fuels, including—

13 (A) requirements relating to reformulated

14 gasoline, volatility (measured in Reid vapor

15 pressure), oxygenated fuel, and diesel fuel; and

16 (B) other requirements that vary from

17 State to State, region to region, or locality to

18 locality.

19 (2) REQUIRED ELEMENTS.—The study shall

20 assess—

21 (A) the effect of the variety of require22 ments described in paragraph (1) on the supply,

23 quality, and price of motor vehicle fuels avail24 able to consumers in various States and local25 ities;
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1 (B) the effect of the requirements de2 scribed in paragraph (1) on achievement of—

3 (i) national, regional, and local air

4 quality standards and goals; and

5 (ii) related environmental and public

6 health protection standards and goals;

7 (C) the effect of Federal, State, and local

8 motor vehicle fuel regulations, including mul9 tiple motor vehicle fuel requirements, on—

10 (i) domestic refineries;

11 (ii) the fuel distribution system; and

12 (iii) industry investment in new capac13 ity;

14 (D) the effect of the requirements de15 scribed in paragraph (1) on emissions from ve16 hicles, refineries, and fuel handling facilities;

17 (E) the feasibility of developing national or

18 regional motor vehicle fuel slates for the 48

19 contiguous States that, while improving air

20 quality at the national, regional and local levels

21 consistent with the attainment of national am22 bient air quality standards, could—

23 (i) enhance flexibility in the fuel dis24 tribution infrastructure and improve fuel

25 fungibility;
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1 (ii) reduce price volatility and costs to

2 consumers and producers;

3 (iii) provide increased liquidity to the

4 gasoline market; and

5 (iv) enhance fuel quality, consistency,

6 and supply;

7 (F) the feasibility of providing incentives,

8 to promote cleaner burning motor vehicle fuel;

9 and

10 (G) the extent to which improvements in

11 air quality and any increases or decreases in

12 the price of motor fuel can be projected to re13 sult from the Environmental Protection Agen14 cy’s Tier II requirements for conventional gaso15 line and vehicle emission systems, the reformu16 lated gasoline program, the renewable content

17 requirements established by this subtitle, State

18 programs regarding gasoline volatility, and any

19 other requirements imposed by States or local20 ities affecting the composition of motor fuel.

21 (b) REPORT.—

22 (1) IN GENERAL.—Not later than December 31,

23 2006, the Administrator of the Environmental Pro24 tection Agency and the Secretary of Energy shall
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1 submit to Congress a report on the results of the

2 study conducted under subsection (a).

3 (2) RECOMMENDATIONS.—

4 (A) IN GENERAL.—The report shall con5 tain recommendations for legislative and admin6 istrative actions that may be taken—

7 (i) to improve air quality;

8 (ii) to reduce costs to consumers and

9 producers; and

10 (iii) to increase supply liquidity.

11 (B) REQUIRED CONSIDERATIONS.—The

12 recommendations under subparagraph (A) shall

13 take into account the need to provide advance

14 notice of required modifications to refinery and

15 fuel distribution systems in order to ensure an

16 adequate supply of motor vehicle fuel in all

17 States.

18 (3) CONSULTATION.—In developing the report,

19 the Administrator of the Environmental Protection

20 Agency and the Secretary of Energy shall consult

21 with—

22 (A) the Governors of the States;

23 (B) automobile manufacturers;

24 (C) motor vehicle fuel producers and dis25 tributors; and
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1 (D) the public.

2 SEC. 17107A. REDUCING THE PROLIFERATION BOUTIQUE

3 FUELS.

4 (a) EPA APPROVAL OF STATE PLANS WITH BOU5 TIQUE FUELS.—Section 211(c)(4) of the Clean Air Act

6 (42 U.S.C. 7545(c)(4)) is amended by adding the fol7 lowing at the end thereof:

8 ‘‘(D) In the case of gasoline, after the enactment of

9 this subparagraph, the Administrator shall give a pref10 erence to the approval of implementation plan provisions

11 described in subparagraph (C) if the control or prohibition

12 in such provisions requires the use of either of the fol13 lowing:

14 ‘‘(i) Federal clean burning fuel meeting the re15 quirements of subsection (p)(1).

16 ‘‘(ii) Low RVP gasoline meeting the require17 ments of subsection (p)(2).’’.

18 (b) PREFERRED GASOLINE OPTIONS.—Section 211

19 of the Clean Air Act (42 U.S.C. 7545) is amended by add20 ing the following new subsection at the end thereof:

21 ‘‘(r) PREFERRED GASOLINE OPTIONS.—

22 ‘‘(1) FEDERAL CLEAN BURNING GASOLINE.—

23 For purposes of this section, the term ‘Federal clean

24 burning gasoline’ means reformulated gasoline as de25 fined in subsection (k), the Reid Vapor Pressure of
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1 which is equal to 6.8 pounds per square inch (psi)

2 for the high ozone season (as determined by the Ad3 ministrator).

4 ‘‘(2) LOW RVP GASOLINE.—The Administrator

5 shall promulgate regulations providing for a gasoline

6 blend for the high ozone season (as determined by

7 the Administrator) having a Reid Vapor Pressure of

8 7.8 pounds per square inch (psi).’’.

9 SEC. 17108. COMMERCIAL BYPRODUCTS FROM MUNICIPAL

10 SOLID WASTE LOAN GUARANTEE PROGRAM.

11 (a) DEFINITION OF MUNICIPAL SOLID WASTE.—In

12 this section, the term ‘‘municipal solid waste’’ has the

13 meaning given the term ‘‘solid waste’’ in section 1004 of

14 the Solid Waste Disposal Act (42 U.S.C. 6903).

15 (b) ESTABLISHMENT OF PROGRAM.—The Secretary

16 of Energy shall establish a program to provide guarantees

17 of loans by private institutions for the construction of fa18 cilities for the processing and conversion of municipal solid

19 waste into fuel ethanol and other commercial byproducts.

20 (c) REQUIREMENTS.—The Secretary may provide a

21 loan guarantee under subsection (b) to an applicant if—

22 (1) without a loan guarantee, credit is not

23 available to the applicant under reasonable terms or

24 conditions sufficient to finance the construction of a

25 facility described in subsection (b);
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1 (2) the prospective earning power of the appli2 cant and the character and value of the security

3 pledged provide a reasonable assurance of repayment

4 of the loan to be guaranteed in accordance with the

5 terms of the loan; and

6 (3) the loan bears interest at a rate determined

7 by the Secretary to be reasonable, taking into ac8 count the current average yield on outstanding obli9 gations of the United States with remaining periods

10 of maturity comparable to the maturity of the loan.

11 (d) CRITERIA.—In selecting recipients of loan guar12 antees from among applicants, the Secretary shall give

13 preference to proposals that—

14 (1) meet all applicable Federal and State per15 mitting requirements;

16 (2) are most likely to be successful; and

17 (3) are located in local markets that have the

18 greatest need for the facility because of—

19 (A) the limited availability of land for

20 waste disposal; or

21 (B) a high level of demand for fuel ethanol

22 or other commercial byproducts of the facility.

23 (e) MATURITY.—A loan guaranteed under subsection

24 (b) shall have a maturity of not more than 20 years.
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1 (f) TERMS AND CONDITIONS.—The loan agreement

2 for a loan guaranteed under subsection (b) shall provide

3 that no provision of the loan agreement may be amended

4 or waived without the consent of the Secretary.

5 (g) ASSURANCE OF REPAYMENT.—The Secretary

6 shall require that an applicant for a loan guarantee under

7 subsection (b) provide an assurance of repayment in the

8 form of a performance bond, insurance, collateral, or other

9 means acceptable to the Secretary in an amount equal to

10 not less than 20 percent of the amount of the loan.

11 (h) GUARANTEE FEE.—The recipient of a loan guar12 antee under subsection (b) shall pay the Secretary an

13 amount determined by the Secretary to be sufficient to

14 cover the administrative costs of the Secretary relating to

15 the loan guarantee.

16 (i) FULL FAITH AND CREDIT.—The full faith and

17 credit of the United States is pledged to the payment of

18 all guarantees made under this section. Any such guar19 antee made by the Secretary shall be conclusive evidence

20 of the eligibility of the loan for the guarantee with respect

21 to principal and interest. The validity of the guarantee

22 shall be incontestable in the hands of a holder of the guar23 anteed loan.

24 (j) REPORTS.—Until each guaranteed loan under this

25 section has been repaid in full, the Secretary shall annu-
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1 ally submit to Congress a report on the activities of the

2 Secretary under this section.

3 (k) AUTHORIZATION OF APPROPRIATIONS.—There

4 are authorized to be appropriated such sums as are nec5 essary to carry out this section.

6 (l) TERMINATION OF AUTHORITY.—The authority of

7 the Secretary to issue a loan guarantee under subsection

8 (b) terminates on the date that is 10 years after the date

9 of enactment of this Act.

10 Subtitle B—MTBE Cleanup

11 SEC. 17201. FUNDING FOR MTBE CONTAMINATION.

12 Notwithstanding any other provision of law, there is

13 authorized to be appropriated to the Administrator of the

14 United States Environmental Protection Agency from the

15 Leaking Underground Storage Tank Trust Fund not more

16 than $850,000,000 to be used for taking such action lim17 ited to site assessment (including exposure assessment),

18 corrective action, inspection of underground storage tank

19 systems, and groundwater monitoring as the Adminis20 trator deems necessary to protect human health, welfare,

21 and the environment from underground storage tank re22 leases of fuel containing fuel oxygenates.
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1 TITLE VIII—AUTOMOBILE

2 EFFICIENCY

3 SEC. 18001. AUTHORIZATION OF APPROPRIATIONS FOR IM4 PLEMENTATION AND ENFORCEMENT OF

5 FUEL ECONOMY STANDARDS.

6 In addition to any other funds authorized by law,

7 there are authorized to be appropriated to the National

8 Highway Traffic Safety Administration to implement and

9 enforce average fuel economy standards $5,000,000 for

10 fiscal years 2004 through 2006.

11 SEC. 18002. STUDY OF FEASIBILITY AND EFFECTS OF RE12 DUCING USE OF FUEL FOR AUTOMOBILES.

13 (a) IN GENERAL.—Not later than 30 days after the

14 date of the enactment of this Act, the Administrator of

15 the National Highway Traffic Safety Administration shall

16 study the feasibility and effects of reducing by model year

17 2012, by a significant percentage, the use of fuel for auto18 mobiles.

19 (b) SUBJECTS OF STUDY.—The study under this sec20 tion shall include—

21 (1) examination of, and recommendation of al22 ternatives to, the policy under current Federal law

23 of establishing average fuel economy standards for

24 automobiles and requiring each automobile manufac-
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1 turer to comply with average fuel economy standards

2 that apply to the automobiles it manufactures;

3 (2) examination of how automobile manufactur4 ers could contribute toward achieving the reduction

5 referred to in subsection (a);

6 (3) examination of the potential of fuel cell

7 technology in motor vehicles in order to determine

8 the extent to which such technology may contribute

9 to achieving the reduction referred to in subsection

10 (a); and

11 (4) examination of the effects of the reduction

12 referred to in subsection (a) on—

13 (A) gasoline supplies;

14 (B) the automobile industry, including

15 sales of automobiles manufactured in the

16 United States;

17 (C) motor vehicle safety; and

18 (D) air quality.

19 (c) REPORT.—The Administrator shall submit to the

20 Congress a report on the findings, conclusion, and rec21 ommendations of the study under this section by not later

22 than 1 year after the date of the enactment of this Act.

23 DIVISION B—SCIENCE

24 SEC. 20001. PURPOSES.

25 The purposes of this division are to—
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1 (1) contribute to a national energy strategy

2 through an energy research and development pro3 gram that supports basic energy research and pro4 vides mechanisms to develop, demonstrate, and pro5 mote the commercial application of new energy tech6 nologies in partnership with industry;

7 (2) protect and strengthen the Nation’s econ8 omy, standard of living, and national security by re9 ducing dependence on imported energy;

10 (3) meet future needs for energy services at the

11 lowest total cost to the Nation, giving balanced and

12 comprehensive consideration to technologies that im13 prove the efficiency of energy end uses and that en14 hance energy supply;

15 (4) reduce the environmental impacts of energy

16 production, distribution, transportation, and use;

17 (5) help increase domestic production of energy,

18 increase the availability of hydrocarbon reserves, and

19 lower energy prices; and

20 (6) stimulate economic growth and enhance the

21 ability of United States companies to compete in fu22 ture markets for advanced energy technologies.

23 SEC. 20002. GOALS.

24 (a) IN GENERAL.—In order to achieve the purposes

25 of this division, the Secretary shall conduct a balanced set
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1 of programs of energy research, development, demonstra2 tion, and commercial application, guided by the following

3 goals:

4 (1) ENERGY EFFICIENCY.—

5 (A) BUILDINGS.—Develop, in partnership

6 with industry, technologies, designs, and pro7 duction methods that will enable an average 25

8 percent increase by 2010 in the energy effi9 ciency of all new buildings, as compared to a

10 new building in 1996.

11 (B) INDUSTRY.—Develop, in partnership

12 with industry, technologies, designs, and pro13 duction methods that will enable the energy in14 tensity of the major energy-consuming indus15 tries to improve by at least 25 percent by 2010

16 as compared to 1991.

17 (C) VEHICLES.—Develop, in partnership

18 with industry, technologies that will enable—

19 (i) by 2010, mid-sized passenger auto20 mobiles with a fuel economy of 80 miles

21 per gallon;

22 (ii) by 2010, light trucks (classes 1

23 and 2a) with a fuel economy of 60 miles

24 per gallon;
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1 (iii) by 2010, medium trucks and

2 buses (classes 2b through 6 and class 8

3 transit buses) with a fuel economy, in ton4 miles per gallon for trucks and passenger

5 miles per gallon for buses, that is 3 times

6 that of year 2000 equivalent vehicles;

7 (iv) by 2010, heavy trucks (classes 7

8 and 8) with a fuel economy, in ton-miles

9 per gallon, that is 2 times that of year

10 2000 equivalent vehicles; and

11 (v) by 2020, meeting the goal of the

12 President’s Hydrogen Initiative.

13 (2) DISTRIBUTED ENERGY AND ELECTRIC EN14 ERGY SYSTEMS.—

15 (A) DISTRIBUTED GENERATION.—Develop,

16 in partnership with industry, technologies based

17 on natural gas that achieve electricity gener18 ating efficiencies greater than 40 percent by

19 2015 for on-site, or distributed, generation

20 technologies.

21 (B) ELECTRIC ENERGY SYSTEMS AND

22 STORAGE.—Develop, in partnership with

23 industry—

24 (i) technologies for generators and

25 transmission, distribution, and storage sys-
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1 tems that combine high capacity with high

2 efficiency (particularly for electric trans3 mission facilities in rural and remote

4 areas);

5 (ii) new transmission and distribution

6 technologies, including flexible alternating

7 current transmission systems, composite

8 conductor materials, advanced protection

9 devices, and controllers;

10 (iii) technologies for interconnection

11 of distributed energy resources with elec12 tric power systems;

13 (iv) high-temperature superconducting

14 materials for power delivery equipment

15 such as transmission and distribution ca16 bles, transformers, and generators; and

17 (v) real-time transmission and dis18 tribution system control technologies that

19 provide for continual exchange of informa20 tion between generation, transmission, dis21 tribution, and end-user facilities.

22 (3) RENEWABLE ENERGY.—

23 (A) WIND POWER.—Develop, in partner24 ship with industry, technologies and designs

25 that will—
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1 (i) reduce the cost of wind power by

2 40 percent by 2012 as compared to 2000;

3 and

4 (ii) expand utilization of class 3 and 4

5 winds.

6 (B) PHOTOVOLTAICS.—Develop, in part7 nership with industry, total photovoltaic sys8 tems with installed costs of $5,000 per peak kil9 owatt by 2005 and $2000 per peak kilowatt by

10 2015.

11 (C) SOLAR THERMAL SYSTEMS.—Develop,

12 in partnership with industry, solar power tech13 nologies (including baseload solar power) that

14 combine high-efficiency and high-temperature

15 receivers with advanced thermal storage and

16 power cycles to accommodate peak loads and

17 reduce lifecycle costs.

18 (D) GEOTHERMAL ENERGY.—Develop, in

19 partnership with industry, technologies and

20 processes based on advanced hydrothermal sys21 tems and advanced heat and power systems, in22 cluding geothermal or ground source heat pump

23 technology, with a specific focus on—

24 (i) improving exploration and charac25 terization technology to increase the prob-
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1 ability of drilling successful wells from 20

2 percent to 40 percent by 2010;

3 (ii) reducing the cost of drilling by

4 2008 to an average cost of $225 per foot;

5 (iii) developing enhanced geothermal

6 systems technology with the potential to

7 double the usable geothermal resource

8 base, as compared to the date of enact9 ment of this Act; and

10 (iv) reducing the cost of installing the

11 ground loop of ground-source heat pumps

12 by 30 percent by 2007 compared to the

13 cost in 2000.

14 (E) BIOMASS-BASED POWER SYSTEMS.—

15 Develop, in partnership with industry, inte16 grated power generating systems, advanced con17 version, and feedstock technologies capable of

18 producing electric power that is cost-competitive

19 with fossil-fuel generated electricity by 2010,

20 through co-production of fuels, chemicals, and

21 other products under subparagraph (F).

22 (F) BIOFUELS.—Develop, in partnership

23 with industry, new and emerging technologies

24 and biotechnology processes capable of

25 making—
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1 (i) gaseous and liquid biofuels that

2 are price-competitive, by 2010, with gaso3 line or diesel in either internal combustion

4 engines or fuel cells; and

5 (ii) biofuels, biobased polymers, and

6 chemicals, including those derived from

7 lignocellulosic feedstock, with particular

8 emphasis on developing biorefineries that

9 use enzyme-based processing systems.

10 (G) HYDROPOWER.—Develop, in partner11 ship with industry, a new generation of turbine

12 technologies that will increase generating capac13 ity and be less damaging to fish and aquatic

14 ecosystems.

15 (4) FOSSIL ENERGY.—

16 (A) POWER GENERATION.—Develop, in

17 partnership with industry, technologies, includ18 ing precombustion technologies, by 2015 with

19 the capability of realizing—

20 (i) electricity generating efficiencies of

21 75 percent (lower heating value) for nat22 ural gas; and

23 (ii) widespread commercial application

24 of combined heat and power with thermal
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1 efficiencies of more than 85 percent (high2 er heating value).

3 (B) OFFSHORE OIL AND GAS RE4 SOURCES.—Develop, in partnership with indus5 try, technologies to—

6 (i) extract methane hydrates in coast7 al waters of the United States; and

8 (ii) develop natural gas and oil re9 serves in the ultra-deepwater of the Cen10 tral and Western Gulf of Mexico, with a

11 focus on improving, while lowering costs

12 and reducing environmental impacts, the

13 safety and efficiency of—

14 (I) the recovery of ultra-deep15 water resources; and

16 (II) sub-sea production tech17 nology used for such recovery.

18 (C) ONSHORE OIL AND GAS RESOURCES.—

19 Advance the science and technology available to

20 domestic onshore petroleum producers, particu21 larly independent producers of oil or gas,

22 through—

23 (i) advances in technology for explo24 ration and production of domestic petro-
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1 leum resources, particularly those not ac2 cessible with current technology;

3 (ii) improvement in the ability to ex4 tract hydrocarbons (including heavy oil)

5 from known reservoirs and classes of res6 ervoirs; and

7 (iii) development of technologies and

8 practices that reduce the impact on the en9 vironment from petroleum exploration and

10 production.

11 (D) TRANSPORTATION FUELS.—Increase

12 the availability of transportation fuels by focus13 ing research on—

14 (i) reducing the cost of producing

15 transportation fuels from coal and natural

16 gas; and

17 (ii) indirect liquefaction of coal and

18 biomass.

19 (5) NUCLEAR ENERGY.—

20 (A) EXISTING REACTORS.—Support re21 search to extend the lifetimes of existing United

22 States nuclear power reactors, and increase

23 their reliability while optimizing their current

24 operations for greater efficiencies.
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1 (B) ADVANCED REACTORS.—Develop, in

2 partnership with industry—

3 (i) advanced, efficient, lower cost, and

4 passively safe reactor designs;

5 (ii) proliferation-resistant and high6 burn-up nuclear fuels; and

7 (iii) technologies to minimize genera8 tion of radioactive materials and improve

9 the management of nuclear waste.

10 (C) NUCLEAR SCIENTISTS AND ENGI11 NEERS.—Attract new students and faculty to

12 the nuclear sciences, nuclear engineering, and

13 related fields (including health physics, nuclear

14 medicine, nuclear chemistry, and

15 radiochemistry).

16 (6) HYDROGEN.—Carry out programs related

17 to hydrogen in the Fossil Fuel Program and the Nu18 clear Energy Program.

19 (b) REVIEW AND ASSESSMENT OF GOALS.—

20 (1) EVALUATION AND MODIFICATION.—Based

21 on amounts appropriated and developments in

22 science and technology, the Secretary shall evaluate

23 the goals set forth in subsection (a) at least once

24 every 5 years, and shall report to the Congress any

25 proposed modifications to the goals.
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1 (2) CONSULTATION.—In evaluating and pro2 posing modifications to the goals as provided in

3 paragraph (1), the Secretary shall solicit public

4 input.

5 (3) PUBLIC COMMENT.—(A) After consultation

6 under paragraph (2), the Secretary shall publish in

7 the Federal Register a set of draft modifications to

8 the goals for public comment.

9 (B) Not later than 60 days after the date of

10 publication of draft modifications under subpara11 graph (A), and after consideration of any public

12 comments received, the Secretary shall publish the

13 final modifications, including a summary of the pub14 lic comments received, in the Federal Register.

15 (4) EFFECTIVE DATE.—No modification to

16 goals under this section shall take effect before the

17 date which is 5 years after the date of enactment of

18 this Act.

19 (c) EFFECT OF GOALS.—(1) Nothing in paragraphs

20 (1) through (6) of subsection (a), or any subsequent modi21 fication to the goals therein pursuant to subsection (b),

22 shall—

23 (A) create any new—

24 (i) authority for any Federal agency; or

25 (ii) requirement for any other person;
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1 (B) be used by a Federal agency to support the

2 establishment of regulatory standards or regulatory

3 requirements; or

4 (C) alter the authority of the Secretary to make

5 grants or other awards.

6 (2) Nothing in this subsection shall be construed to

7 limit the authority of the Secretary to impose conditions

8 on grants or other awards based on the goals in subsection

9 (a) or any subsequent modification thereto.

10 SEC. 20003. DEFINITIONS.

11 For purposes of this division:

12 (1) DEPARTMENT.—The term ‘‘Department’’

13 means the Department of Energy.

14 (2) DEPARTMENTAL MISSION.—The term ‘‘de15 partmental mission’’ means any of the functions

16 vested in the Secretary of Energy by the Depart17 ment of Energy Organization Act (42 U.S.C. 7101

18 et seq.) or other law.

19 (3) INDEPENDENT PRODUCER OF OIL OR

20 GAS.—

21 (A) IN GENERAL.—The term ‘‘independent

22 producer of oil or gas’’ means any person who

23 produces oil or gas other than a person to

24 whom subsection (c) of section 613A of the In25 ternal Revenue Code of 1986 does not apply by
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1 reason of paragraph (2) (relating to certain re2 tailers) or paragraph (4) (relating to certain re3 finers) of section 613A(d) of such Code.

4 (B) RULES FOR APPLYING PARAGRAPHS (2)

5 AND (4) OF SECTION 613A(d).—For purposes of

6 subparagraph (A), paragraphs (2) and (4) of

7 section 613A(d) of the Internal Revenue Code

8 of 1986 shall be applied by substituting ‘‘cal9 endar year’’ for ‘‘taxable year’’ each place it ap10 pears in such paragraphs.

11 (4) INSTITUTION OF HIGHER EDUCATION.—The

12 term ‘‘institution of higher education’’ has the

13 meaning given that term in section 101(a) of the

14 Higher Education Act of 1965 (20 U.S.C. 1001(a)).

15 (5) JOINT VENTURE.—The term ‘‘joint ven16 ture’’ has the meaning given that term under section

17 2 of the National Cooperative Research and Produc18 tion Act of 1993 (15 U.S.C. 4301).

19 (6) NATIONAL LABORATORY.—The term ‘‘Na20 tional Laboratory’’ means any of the following lab21 oratories owned by the Department:

22 (A) Ames National Laboratory.

23 (B) Argonne National Laboratory.

24 (C) Brookhaven National Laboratory.

25 (D) Fermi National Laboratory.
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1 (E) Idaho National Engineering and Envi2 ronmental Laboratory.

3 (F) Lawrence Berkeley National Labora4 tory.

5 (G) Lawrence Livermore National Labora6 tory.

7 (H) Los Alamos National Laboratory.

8 (I) National Energy Technology Labora9 tory.

10 (J) National Renewable Energy Labora11 tory.

12 (K) Oak Ridge National Laboratory.

13 (L) Pacific Northwest National Labora14 tory.

15 (M) Princeton Plasma Physics Laboratory.

16 (N) Sandia National Laboratories.

17 (O) Thomas Jefferson National Accel18 erator Facility.

19 (7) NONMILITARY ENERGY LABORATORY.—The

20 term ‘‘nonmilitary energy laboratory’’ means any of

21 the following laboratories of the Department:

22 (A) Ames National Laboratory.

23 (B) Argonne National Laboratory.

24 (C) Brookhaven National Laboratory.

25 (D) Fermi National Laboratory.
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1 (E) Lawrence Berkeley National Labora2 tory.

3 (F) Oak Ridge National Laboratory.

4 (G) Pacific Northwest National Labora5 tory.

6 (H) Princeton Plasma Physics Laboratory.

7 (I) Stanford Linear Accelerator Center.

8 (J) Thomas Jefferson National Accelerator

9 Facility.

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

11 the Secretary of Energy.

12 (9) SINGLE-PURPOSE RESEARCH FACILITY.—

13 The term ‘‘single-purpose research facility’’ means

14 any of the following primarily single-purpose entities

15 owned by the Department:

16 (A) East Tennessee Technology Park.

17 (B) Fernald Environmental Management

18 Project.

19 (C) Kansas City Plant.

20 (D) Nevada Test Site.

21 (E) New Brunswick Laboratory.

22 (F) Pantex Weapons Facility.

23 (G) Savannah River Technology Center.

24 (H) Stanford Linear Accelerator Center.
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1 (I) Y–12 facility at Oak Ridge National

2 Laboratory.

3 (J) Waste Isolation Pilot Plant.

4 (K) Any other similar organization of the

5 Department designated by the Secretary that

6 engages in technology transfer, partnering, or

7 licensing activities.

8 TITLE I—RESEARCH AND

9 DEVELOPMENT

10 Subtitle A—Energy Efficiency

11 PART 1—AUTHORIZATION OF APPROPRIATIONS

12 SEC. 21101. ENERGY EFFICIENCY.

13 (a) IN GENERAL.—The following sums are author14 ized to be appropriated to the Secretary for energy effi15 ciency and conservation research, development, dem16 onstration, and commercial application activities, includ17 ing activities authorized under this subtitle:

18 (1) For fiscal year 2004, $616,000,000.

19 (2) For fiscal year 2005, $695,000,000.

20 (3) For fiscal year 2006, $772,000,000.

21 (4) For fiscal year 2007, $865,000,000.

22 (b) ALLOCATIONS.—From amounts authorized under

23 subsection (a), the following sums are authorized:
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1 (1) LIGHTING SYSTEMS.—For activities under

2 section 21111, $50,000,000 for each of fiscal years

3 2004 through 2007.

4 (2) ELECTRIC MOTOR CONTROL TECH5 NOLOGY.—For activities under section 21122,

6 $2,000,000 for each of fiscal years 2004 through

7 2007.

8 (3) SECONDARY ELECTRIC VEHICLE BATTERY

9 USE PROGRAM.—For activities under section

10 21132—

11 (A) for fiscal year 2004, $4,000,000;

12 (B) for fiscal year 2005, $7,000,000;

13 (C) for fiscal year 2006, $7,000,000; and

14 (D) for fiscal year 2007, $7,000,000.

15 (4) ENERGY EFFICIENCY SCIENCE INITIA16 TIVE.—For activities under section 21141—

17 (A) for fiscal year 2004, $20,000,000;

18 (B) for fiscal year 2005, $25,000,000;

19 (C) for fiscal year 2006, $30,000,000; and

20 (D) for fiscal year 2007, $35,000,000.

21 (c) EXTENDED AUTHORIZATION.—There are author22 ized to be appropriated to the Secretary for activities

23 under section 21111, $50,000,000 for each of fiscal years

24 2008 through 2012.
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1 (d) LIMITS ON USE OF FUNDS.—None of the funds

2 authorized to be appropriated under this section may be

3 used for—

4 (1) the promulgation and implementation of en5 ergy efficiency regulations;

6 (2) the Weatherization Assistance Program

7 under part A of title IV of the Energy Conservation

8 and Production Act;

9 (3) the State Energy Program under part D of

10 title III of the Energy Policy and Conservation Act;

11 or

12 (4) the Federal Energy Management Program

13 under part 3 of title V of the National Energy Con14 servation Policy Act.

15 PART 2—LIGHTING SYSTEMS

16 SEC. 21111. NEXT GENERATION LIGHTING INITIATIVE.

17 (a) IN GENERAL.—The Secretary shall carry out a

18 Next Generation Lighting Initiative in accordance with

19 this section to support research, development, demonstra20 tion, and commercial application activities related to ad21 vanced solid-state lighting technologies based on white

22 light emitting diodes.

23 (b) OBJECTIVES.—The objectives of the initiative

24 shall be—
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1 (1) to develop, by 2012, advanced solid-state

2 lighting technologies based on white light emitting

3 diodes that, compared to incandescent and fluores4 cent lighting technologies, are—

5 (A) longer lasting;

6 (B) more energy-efficient; and

7 (C) cost-competitive;

8 (2) to develop an inorganic white light emitting

9 diode that has an efficiency of 160 lumens per watt

10 and a 10-year lifetime; and

11 (3) to develop an organic white light emitting

12 diode with an efficiency of 100 lumens per watt with

13 a 5-year lifetime that—

14 (A) illuminates over a full color spectrum;

15 (B) covers large areas over flexible sur16 faces; and

17 (C) does not contain harmful pollutants,

18 such as mercury, typical of fluorescent lamps.

19 (c) FUNDAMENTAL RESEARCH.—

20 (1) CONSORTIUM.—The Secretary shall carry

21 out the fundamental research activities of the Next

22 Generation Lighting Initiative through a private

23 consortium (which may include private firms, trade

24 associations and institutions of higher education),

25 which the Secretary shall select through a competi-
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1 tive process. Each proposed consortium shall submit

2 to the Secretary such information as the Secretary

3 may require, including a program plan agreed to by

4 all participants of the consortium.

5 (2) JOINT VENTURE.—The consortium shall be

6 structured as a joint venture among the participants

7 of the consortium. The Secretary shall serve on the

8 governing council of the consortium.

9 (3) ELIGIBILITY.—To be eligible to be selected

10 as the consortium under paragraph (1), an applicant

11 must be broadly representative of United States

12 solid-state lighting research, development, and man13 ufacturing expertise as a whole.

14 (4) GRANTS.—(A) The Secretary shall award

15 grants for fundamental research to the consortium,

16 which the consortium may disburse to researchers,

17 including those who are not participants of the con18 sortium.

19 (B) To receive a grant, the consortium must

20 provide a description to the Secretary of the pro21 posed research and list the parties that will receive

22 funding.

23 (C) Grants shall be matched by the consortium

24 pursuant to section 21802.
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1 (5) NATIONAL LABORATORIES.—National Lab2 oratories may participate in the research described

3 in this section, and may receive funds from the con4 sortium.

5 (6) INTELLECTUAL PROPERTY.—Participants in

6 the consortium and the Federal Government shall

7 have royalty-free nonexclusive rights to use intellec8 tual property derived from research funded pursuant

9 to this subsection.

10 (d) DEVELOPMENT, DEMONSTRATION, AND COM11 MERCIAL APPLICATION.—The Secretary shall carry out

12 the development, demonstration, and commercial applica13 tion activities of the Next Generation Lighting Initiative

14 through awards to private firms, trade associations, and

15 institutions of higher education. In selecting awardees, the

16 Secretary may give preference to members of the consor17 tium selected pursuant to subsection (c).

18 (e) PLANS AND ASSESSMENTS.—(1) The consortium

19 shall formulate an annual operating plan which shall in20 clude research priorities, technical milestones, and plans

21 for technology transfer, and which shall be subject to ap22 proval by the Secretary.

23 (2) The Secretary shall enter into an arrangement

24 with the National Academy of Sciences to conduct periodic

25 reviews of the Next Generation Lighting Initiative. The
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1 Academy shall review the research priorities, technical

2 milestones, and plans for technology transfer established

3 under paragraph (1) and evaluate the progress toward

4 achieving them. The Secretary shall consider the results

5 of such reviews in evaluating the plans submitted under

6 paragraph (1).

7 (f) AUDIT.—The Secretary shall retain an inde8 pendent, commercial auditor to perform an audit of the

9 consortium to determine the extent to which the funds au10 thorized by this section have been expended in a manner

11 consistent with the purposes of this section. The auditor

12 shall transmit a report annually to the Secretary, who

13 shall transmit the report to the Congress, along with a

14 plan to remedy any deficiencies cited in the report.

15 (g) SUNSET.—The Next Generation Lighting Initia16 tive shall terminate no later than September 30, 2013.

17 (h) DEFINITIONS.—As used in this section:

18 (1) ADVANCED SOLID-STATE LIGHTING.—The

19 term ‘‘advanced solid-state lighting’’ means a

20 semiconducting device package and delivery system

21 that produces white light using externally applied

22 voltage.

23 (2) FUNDAMENTAL RESEARCH.—The term

24 ‘‘fundamental research’’ includes basic research on
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1 both solid-state materials and manufacturing proc2 esses.

3 (3) INORGANIC WHITE LIGHT EMITTING

4 DIODE.—The term ‘‘inorganic white light emitting

5 diode’’ means an inorganic semiconducting package

6 that produces white light using externally applied

7 voltage.

8 (4) ORGANIC WHITE LIGHT EMITTING DIODE.—

9 The term ‘‘organic white light emitting diode’’

10 means an organic semiconducting compound that

11 produces white light using externally applied voltage.

12 PART 3—BUILDINGS

13 SEC. 21121. NATIONAL BUILDING PERFORMANCE INITIA14 TIVE.

15 (a) INTERAGENCY GROUP.—Not later than 3 months

16 after the date of enactment of this Act, the Director of

17 the Office of Science and Technology Policy shall establish

18 an interagency group to develop, in coordination with the

19 advisory committee established under subsection (e), a

20 National Building Performance Initiative (in this section

21 referred to as the ‘‘Initiative’’). The interagency group

22 shall be cochaired by appropriate officials of the Depart23 ment and the Department of Commerce, who shall jointly

24 arrange for the provision of necessary administrative sup25 port to the group.
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1 (b) INTEGRATION OF EFFORTS.—The Initiative,

2 working with the National Institute of Building Sciences,

3 shall integrate Federal, State, and voluntary private sector

4 efforts to reduce the costs of construction, operation,

5 maintenance, and renovation of commercial, industrial, in6 stitutional, and residential buildings.

7 (c) PLAN.—Not later than 1 year after the date of

8 enactment of this Act, the interagency group shall submit

9 to Congress a plan for carrying out the appropriate Fed10 eral role in the Initiative. The plan shall be based on whole

11 building principles and shall include—

12 (1) research, development, demonstration, and

13 commercial application of systems and materials for

14 new construction and retrofit relating to the building

15 envelope and building system components; and

16 (2) the collection, analysis, and dissemination of

17 research results and other pertinent information on

18 enhancing building performance to industry, govern19 ment entities, and the public.

20 (d) DEPARTMENT OF ENERGY ROLE.—Within the

21 Federal portion of the Initiative, the Department shall be

22 the lead agency for all aspects of building performance re23 lated to use and conservation of energy.

24 (e) ADVISORY COMMITTEE.—
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1 (1) ESTABLISHMENT.—The Director of the Of2 fice of Science and Technology Policy shall establish

3 an advisory committee to—

4 (A) analyze and provide recommendations

5 on potential private sector roles and participa6 tion in the Initiative; and

7 (B) review and provide recommendations

8 on the plan described in subsection (c).

9 (2) MEMBERSHIP.—Membership of the advisory

10 committee shall include representatives with a broad

11 range of appropriate expertise, including expertise

12 in—

13 (A) building research and technology;

14 (B) architecture, engineering, and building

15 materials and systems; and

16 (C) the residential, commercial, and indus17 trial sectors of the construction industry.

18 (f) CONSTRUCTION.—Nothing in this section provides

19 any Federal agency with new authority to regulate build20 ing performance.

21 SEC. 21122. ELECTRIC MOTOR CONTROL TECHNOLOGY.

22 The Secretary shall conduct a research, development,

23 demonstration, and commercial application program on

24 advanced control devices to improve the energy efficiency
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1 of electric motors used in heating, ventilation, air condi2 tioning, and comparable systems.

3 PART 4—VEHICLES

4 SEC. 21131. DEFINITIONS.

5 For purposes of this part, the term—

6 (1) ‘‘battery’’ means an energy storage device

7 that previously has been used to provide motive

8 power in a vehicle powered in whole or in part by

9 electricity; and

10 (2) ‘‘associated equipment’’ means equipment

11 located where the batteries will be used that is nec12 essary to enable the use of the energy stored in the

13 batteries.

14 SEC. 21132. ESTABLISHMENT OF SECONDARY ELECTRIC VE15 HICLE BATTERY USE PROGRAM.

16 (a) PROGRAM.—The Secretary shall establish and

17 conduct a research, development, demonstration, and com18 mercial application program for the secondary use of bat19 teries. Such program shall be—

20 (1) designed to demonstrate the use of batteries

21 in secondary application, including utility and com22 mercial power storage and power quality;

23 (2) structured to evaluate the performance, in24 cluding useful service life and costs, of such bat25 teries in field operations, and evaluate the necessary
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1 supporting infrastructure, including reuse and dis2 posal of batteries; and

3 (3) coordinated with ongoing secondary battery

4 use programs at the National Laboratories and in

5 industry.

6 (b) SOLICITATION.—(1) Not later than 6 months

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

8 shall solicit proposals to demonstrate the secondary use

9 of batteries and associated equipment and supporting in10 frastructure in geographic locations throughout the

11 United States. The Secretary may make additional solici12 tations for proposals if the Secretary determines that such

13 solicitations are necessary to carry out this section.

14 (2)(A) Proposals submitted in response to a solicita15 tion under this section shall include—

16 (i) a description of the project, including the

17 batteries to be used in the project, the proposed lo18 cations and applications for the batteries, the num19 ber of batteries to be demonstrated, and the type,

20 characteristics, and estimated life-cycle costs of the

21 batteries compared to other energy storage devices

22 currently used;

23 (ii) the contribution, if any, of State or local

24 governments and other persons to the demonstration

25 project;
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1 (iii) the type of associated equipment and sup2 porting infrastructure to be demonstrated; and

3 (iv) any other information the Secretary con4 siders appropriate.

5 (B) If the proposal includes a lease arrangement, the

6 proposal shall indicate the terms of such lease arrange7 ment for the batteries and associated equipment.

8 (c) SELECTION OF PROPOSALS.—(1)(A) The Sec9 retary shall, not later than 3 months after the closing date

10 established by the Secretary for receipt of proposals under

11 subsection (b), select at least 5 proposals to receive finan12 cial assistance under this section.

13 (B) No one project selected under this section shall

14 receive more than 25 percent of the funds authorized

15 under this section. No more than 3 projects selected under

16 this section shall demonstrate the same battery type.

17 (2) In selecting a proposal under this section, the

18 Secretary shall consider—

19 (A) the ability of the proposer to acquire the

20 batteries and associated equipment and to success21 fully manage and conduct the demonstration project,

22 including satisfying the reporting requirements set

23 forth in paragraph (3)(B);

24 (B) the geographic and climatic diversity of the

25 projects selected;
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1 (C) the long-term technical and competitive via2 bility of the batteries to be used in the project and

3 of the original manufacturer of such batteries;

4 (D) the suitability of the batteries for their in5 tended uses;

6 (E) the technical performance of the batteries,

7 including the expected additional useful life and the

8 batteries’ ability to retain energy;

9 (F) the environmental effects of the use of and

10 disposal of the batteries proposed to be used in the

11 project selected;

12 (G) the extent of involvement of State or local

13 government and other persons in the demonstration

14 project and whether such involvement will—

15 (i) permit a reduction of the Federal cost

16 share per project; or

17 (ii) otherwise be used to allow the Federal

18 contribution to be provided to demonstrate a

19 greater number of batteries; and

20 (H) such other criteria as the Secretary con21 siders appropriate.

22 (3) CONDITIONS.—The Secretary shall require that—

23 (A) as a part of a demonstration project, the

24 users of the batteries provide to the proposer infor25 mation regarding the operation, maintenance, per-
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1 formance, and use of the batteries, and the proposer

2 provide such information to the battery manufac3 turer, for 3 years after the beginning of the dem4 onstration project;

5 (B) the proposer provide to the Secretary such

6 information regarding the operation, maintenance,

7 performance, and use of the batteries as the Sec8 retary may request;

9 (C) the proposer provide to the Secretary such

10 information regarding the disposal of the batteries

11 as the Secretary may require to ensure that the pro12 poser disposes of the batteries in accordance with

13 applicable law; and

14 (D) the proposer provide at least 50 percent of

15 the costs associated with the proposal.

16 PART 5—ENERGY EFFICIENCY SCIENCE

17 INITIATIVE

18 SEC. 21141. ENERGY EFFICIENCY SCIENCE INITIATIVE.

19 (a) ESTABLISHMENT.—The Secretary shall establish

20 an Energy Efficiency Science Initiative to be managed by

21 the Assistant Secretary in the Department with responsi22 bility for energy conservation under section 203(a)(9) of

23 the Department of Energy Organization Act (42 U.S.C.

24 7133(a)(9)), in consultation with the Director of the Of25 fice of Science, for grants to be competitively awarded and
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1 subject to peer review for research relating to energy effi2 ciency.

3 (b) REPORT.—The Secretary shall submit to the Con4 gress, along with the President’s annual budget request

5 under section 1105(a) of title 31, United States Code, a

6 report on the activities of the Energy Efficiency Science

7 Initiative, including a description of the process used to

8 award the funds and an explanation of how the research

9 relates to energy efficiency.

10 PART 6—ADVANCED ENERGY TECHNOLOGY

11 TRANSFER CENTERS

12 SEC. 21151. ADVANCED ENERGY TECHNOLOGY TRANSFER

13 CENTERS.

14 (a) GRANTS.—Not later than 18 months after the

15 date of the enactment of this Act, the Secretary shall

16 make grants to nonprofit institutions, State and local gov17 ernments, or universities (or consortia thereof), to estab18 lish a geographically dispersed network of Advanced En19 ergy Technology Transfer Centers, to be located in areas

20 the Secretary determines have the greatest need of the

21 services of such Centers.

22 (b) ACTIVITIES.—(1) Each Center shall operate a

23 program to encourage demonstration and commercial ap24 plication of advanced energy methods and technologies

25 through education and outreach to building and industrial
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1 professionals, and to other individuals and organizations

2 with an interest in efficient energy use.

3 (2) Each Center shall establish an advisory panel to

4 advise the Center on how best to accomplish the activities

5 under paragraph (1).

6 (c) APPLICATION.—A person seeking a grant under

7 this section shall submit to the Secretary an application

8 in such form and containing such information as the Sec9 retary may require. The Secretary may award a grant

10 under this section to an entity already in existence if the

11 entity is otherwise eligible under this section.

12 (d) SELECTION CRITERIA.—The Secretary shall

13 award grants under this section on the basis of the fol14 lowing criteria, at a minimum:

15 (1) The ability of the applicant to carry out the

16 activities in subsection (b).

17 (2) The extent to which the applicant will co18 ordinate the activities of the Center with other enti19 ties, such as State and local governments, utilities,

20 and educational and research institutions.

21 (e) MATCHING FUNDS.—The Secretary shall require

22 a non-Federal matching requirement of at least 50 percent

23 of the costs of establishing and operating each Center.

24 (f) ADVISORY COMMITTEE.—The Secretary shall es25 tablish an advisory committee to advise the Secretary on
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1 the establishment of Centers under this section. The advi2 sory committee shall be composed of individuals with ex3 pertise in the area of advanced energy methods and tech4 nologies, including at least 1 representative from—

5 (1) State or local energy offices;

6 (2) energy professionals;

7 (3) trade or professional associations;

8 (4) architects, engineers, or construction profes9 sionals;

10 (5) manufacturers;

11 (6) the research community; and

12 (7) nonprofit energy or environmental organiza13 tions.

14 (g) DEFINITIONS.—For purposes of this section—

15 (1) the term ‘‘advanced energy methods and

16 technologies’’ means all methods and technologies

17 that promote energy efficiency and conservation, in18 cluding distributed generation technologies, and life19 cycle analysis of energy use;

20 (2) the term ‘‘Center’’ means an Advanced En21 ergy Technology Transfer Center established pursu22 ant to this section; and

23 (3) the term ‘‘distributed generation’’ means an

24 electric power generation facility that is designed to
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1 serve retail electric consumers at or near the facility

2 site.

3 Subtitle B—Distributed Energy and

4 Electric Energy Systems

5 PART 1—AUTHORIZATION OF APPROPRIATIONS

6 SEC. 21201. DISTRIBUTED ENERGY AND ELECTRIC ENERGY

7 SYSTEMS.

8 (a) IN GENERAL.—The following sums are author9 ized to be appropriated to the Secretary for distributed

10 energy and electric energy systems activities, including ac11 tivities authorized under this subtitle:

12 (1) For fiscal year 2004, $190,000,000.

13 (2) For fiscal year 2005, $200,000,000.

14 (3) For fiscal year 2006, $220,000,000.

15 (4) For fiscal year 2007, $240,000,000.

16 (b) MICRO-COGENERATION ENERGY TECH17 NOLOGY.—From amounts authorized under subsection

18 (a), the following sums shall be available for activities

19 under section 21213:

20 (1) For fiscal year 2004, $5,000,000.

21 (2) For fiscal year 2005, $5,500,000.

22 (3) For fiscal year 2006, $6,000,000.

23 (4) For fiscal year 2007, $6,500,000.
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1 PART 2—DISTRIBUTED POWER

2 SEC. 21211. STRATEGY.

3 (a) REQUIREMENT.—Not later than 1 year after the

4 date of enactment of this Act, the Secretary shall develop

5 and transmit to the Congress a strategy for a comprehen6 sive research, development, demonstration, and commer7 cial application program to develop hybrid distributed

8 power systems that combine—

9 (1) one or more renewable electric power gen10 eration technologies of 10 megawatts or less located

11 near the site of electric energy use; and

12 (2) nonintermittent electric power generation

13 technologies suitable for use in a distributed power

14 system.

15 (b) CONTENTS.—The strategy shall—

16 (1) identify the needs best met with such hybrid

17 distributed power systems and the technological bar18 riers to the use of such systems;

19 (2) provide for the development of methods to

20 design, test, integrate into systems, and operate

21 such hybrid distributed power systems;

22 (3) include, as appropriate, research, develop23 ment, demonstration, and commercial application on

24 related technologies needed for the adoption of such

25 hybrid distributed power systems, including energy
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1 storage devices and environmental control tech2 nologies;

3 (4) include research, development, demonstra4 tion, and commercial application of interconnection

5 technologies for communications and controls of dis6 tributed generation architectures, particularly tech7 nologies promoting real-time response to power mar8 ket information and physical conditions on the elec9 trical grid; and

10 (5) describe how activities under the strategy

11 will be integrated with other research, development,

12 demonstration, and commercial application activities

13 supported by the Department of Energy related to

14 electric power technologies.

15 SEC. 21212. HIGH POWER DENSITY INDUSTRY PROGRAM.

16 The Secretary shall establish a comprehensive re17 search, development, demonstration, and commercial ap18 plication program to improve energy efficiency of high

19 power density facilities, including data centers, server

20 farms, and telecommunications facilities. Such program

21 shall consider technologies that provide significant im22 provement in thermal controls, metering, load manage23 ment, peak load reduction, or the efficient cooling of elec24 tronics.
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1 SEC. 21213. MICRO-COGENERATION ENERGY TECHNOLOGY.

2 The Secretary shall make competitive, merit-based

3 grants to consortia for the development of micro-cogenera4 tion energy technology. The consortia shall explore the use

5 of small-scale combined heat and power in residential

6 heating appliances.

7 PART 3—TRANSMISSION SYSTEMS

8 SEC. 21221. TRANSMISSION INFRASTRUCTURE SYSTEMS RE9 SEARCH, DEVELOPMENT, DEMONSTRATION,

10 AND COMMERCIAL APPLICATION.

11 (a) PROGRAM AUTHORIZED.—The Secretary shall de12 velop and implement a comprehensive research, develop13 ment, demonstration, and commercial application program

14 to promote improved reliability and efficiency of electrical

15 transmission systems. Such program may include—

16 (1) advanced energy technologies, materials,

17 and systems;

18 (2) advanced grid reliability and efficiency tech19 nology development;

20 (3) technologies contributing to significant load

21 reductions;

22 (4) advanced metering, load management, and

23 control technologies;

24 (5) technologies to enhance existing grid compo25 nents;
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1 (6) the development and use of high-tempera2 ture superconductors to—

3 (A) enhance the reliability, operational

4 flexibility, or power-carrying capability of elec5 tric transmission or distribution systems; or

6 (B) increase the efficiency of electric en7 ergy generation, transmission, distribution, or

8 storage systems;

9 (7) integration of power systems, including sys10 tems to deliver high-quality electric power, electric

11 power reliability, and combined heat and power;

12 (8) any other infrastructure technologies, as ap13 propriate; and

14 (9) technology transfer and education.

15 (b) PROGRAM PLAN.—Not later than 1 year after the

16 date of the enactment of this Act, the Secretary, in con17 sultation with other appropriate Federal agencies, shall

18 prepare and transmit to Congress a 5-year program plan

19 to guide activities under this section. In preparing the pro20 gram plan, the Secretary shall consult with utilities, en21 ergy services providers, manufacturers, institutions of

22 higher education, other appropriate State and local agen23 cies, environmental organizations, professional and tech24 nical societies, and any other persons the Secretary con25 siders appropriate.
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1 (c) REPORT.—Not later than 2 years after the trans2 mittal of the plan under subsection (b), the Secretary shall

3 transmit a report to Congress describing the progress

4 made under this section and identifying any additional re5 sources needed to continue the development and commer6 cial application of transmission infrastructure tech7 nologies.

8 Subtitle C—Renewable Energy

9 PART 1—AUTHORIZATION OF APPROPRIATIONS

10 SEC. 21301. RENEWABLE ENERGY.

11 (a) IN GENERAL.—The following sums are author12 ized to be appropriated to the Secretary for renewable en13 ergy research, development, demonstration, and commer14 cial application activities, including activities authorized

15 under this subtitle:

16 (1) For fiscal year 2004, $380,000,000.

17 (2) For fiscal year 2005, $420,000,000.

18 (3) For fiscal year 2006, $460,000,000.

19 (4) For fiscal year 2007, $499,000,000.

20 (b) BIOENERGY.—From the amounts authorized

21 under subsection (a), the following sums are authorized

22 to be appropriated to carry out section 21311 and section

23 21706:

24 (1) For fiscal year 2004, $135,425,000.

25 (2) For fiscal year 2005, $155,600,000.
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1 (3) For fiscal year 2006, $167,650,000.

2 (4) For fiscal year 2007, $180,000,000.

3 (c) PUBLIC BUILDINGS.—From the amounts author4 ized under subsection (a), $30,000,000 for each of the fis5 cal years 2004 through 2007 are authorized to be appro6 priated to carry out section 21322.

7 (d) LIMITS ON USE OF FUNDS.—

8 (1) EXCLUSION.—None of the funds authorized

9 to be appropriated under this section may be used

10 for Renewable Support and Implementation.

11 (2) BIOENERGY.—Of the funds authorized

12 under subsection (b), not less than $5,000,000 for

13 each fiscal year shall be made available for grants to

14 Historically Black Colleges and Universities, Tribal

15 Colleges, and Hispanic-Serving Institutions.

16 (3) RURAL AND REMOTE LOCATIONS.—In car17 rying out this section, the Secretary, in consultation

18 with the Secretary of Agriculture, shall demonstrate

19 the use of advanced wind power technology, biomass,

20 geothermal energy systems, and other renewable en21 ergy technologies to assist in delivering electricity to

22 rural and remote locations.

23 (4) REGIONAL FIELD VERIFICATION.—Of the

24 funds authorized under subsection (a), not less than

25 $4,000,000 for each fiscal year shall be made avail-
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1 able for the Regional Field Verification Program of

2 the Department.

3 (5) HYDROPOWER DEMONSTRATION

4 PROJECTS.—Of the funds authorized under sub5 section (a), such sums as may be necessary shall be

6 made available for demonstration projects of off7 stream pumped storage hydropower.

8 PART 2—BIOENERGY

9 SEC. 21311. BIOENERGY PROGRAMS.

10 The Secretary shall conduct a program of research,

11 development, demonstration, and commercial application

12 for bioenergy, including—

13 (1) biopower energy systems;

14 (2) biofuels;

15 (3) integrated applications of both biopower and

16 biofuels;

17 (4) cross-cutting research and development in

18 feedstocks; and

19 (5) economic analysis.

20 PART 3—MISCELLANEOUS PROJECTS

21 SEC. 21321. MISCELLANEOUS PROJECTS.

22 (a) PROGRAMS.—The Secretary shall conduct re23 search, development, demonstration, and commercial ap24 plication programs for—

25 (1) ocean energy, including wave energy;
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1 (2) the combined use of renewable energy tech2 nologies with one another and with other energy

3 technologies, including the combined use of wind

4 power and coal gasification technologies; and

5 (3) hydrogen carrier fuels.

6 (b) STUDY.—(1) The Secretary shall enter into an

7 arrangement with the National Academy of Sciences to

8 conduct a study on—

9 (A) the feasibility of various methods of renew10 able generation of energy from the ocean, including

11 energy from waves, tides, currents, and thermal gra12 dients; and

13 (B) the research, development, demonstration,

14 and commercial application activities required to

15 make marine renewable energy generation competi16 tive with other forms of electricity generation.

17 (2) Not later than 1 year after the date of the enact18 ment of this Act, the Secretary shall transmit the study

19 to the Congress along with the Secretary’s recommenda20 tions for implementing the results of the study.

21 SEC. 21322. RENEWABLE ENERGY IN PUBLIC BUILDINGS.

22 (a) DEMONSTRATION AND TECHNOLOGY TRANSFER

23 PROGRAM.—The Secretary shall establish a program for

24 the demonstration of innovative technologies for solar and

25 other renewable energy sources in buildings owned or op-
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1 erated by a State or local government, and for the dissemi2 nation of information resulting from such demonstration

3 to interested parties.

4 (b) LIMIT ON FEDERAL FUNDING.—The Secretary

5 shall provide under this section no more than 40 percent

6 of the incremental costs of the solar or other renewable

7 energy source project funded.

8 (c) REQUIREMENT.—As part of the application for

9 awards under this section, the Secretary shall require all

10 applicants—

11 (1) to demonstrate a continuing commitment to

12 the use of solar and other renewable energy sources

13 in buildings they own or operate; and

14 (2) to state how they expect any award to fur15 ther their transition to the significant use of renew16 able energy.

17 Subtitle D—Nuclear Energy

18 PART 1—AUTHORIZATION OF APPROPRIATIONS

19 SEC. 21401. NUCLEAR ENERGY.

20 (a) IN GENERAL.—The following sums are author21 ized to be appropriated to the Secretary for nuclear energy

22 research, development, demonstration, and commercial ap23 plication activities, including activities authorized under

24 this subtitle:

25 (1) For fiscal year 2004, $388,000,000.
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1 (2) For fiscal year 2005, $416,000,000.

2 (3) For fiscal year 2006, $445,000,000.

3 (4) For fiscal year 2007, $474,000,000.

4 (b) ALLOCATIONS.—From amounts authorized under

5 subsection (a), the following sums are authorized:

6 (1) NUCLEAR INFRASTRUCTURE SUPPORT.—

7 For activities under section 21411(e)—

8 (A) for fiscal year 2004, $125,000,000;

9 (B) for fiscal year 2005, $130,000,000;

10 (C) for fiscal year 2006, $135,000,000;

11 and

12 (D) for fiscal year 2007, $140,000,000.

13 (2) ADVANCED FUEL RECYCLING PROGRAM.—

14 For activities under section 21421—

15 (A) for fiscal year 2004, $80,000,000;

16 (B) for fiscal year 2005, $93,000,000;

17 (C) for fiscal year 2006, $106,000,000;

18 and

19 (D) for fiscal year 2007, $120,000,000.

20 (3) UNIVERSITY PROGRAMS.—For activities

21 under section 21431—

22 (A) for fiscal year 2004, $35,200,000, of

23 which—

24 (i) $3,000,000 shall be for activities

25 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,

14 including—

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,

22 including—

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

11 affords—

12 (i) to United States-owned entities op13 portunities, comparable to those afforded

14 to any other entity, to participate in any

15 cooperative research venture similar to

16 those authorized under this part;

17 (ii) to United States-owned entities

18 local investment opportunities comparable

19 to those afforded to any other entity; and

20 (iii) adequate and effective protection

21 for the intellectual property rights of

22 United States-owned entities.

23 (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

24 section—
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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

8 determining—

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

3 amended—

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 SEC. 22003. REPORT ON EQUAL EMPLOYMENT OPPOR15 TUNITY PRACTICES.

16 Not later than twelve months after the date of enact17 ment of this Act, and biennially thereafter, the Secretary

18 shall transmit to Congress a report on the equal employ19 ment opportunity practices at Department of Energy Na20 tional laboratories. Such report shall include—

21 (1) a thorough review of each laboratory con22 tractor’s equal employment opportunity policies, in23 cluding promotion to management and professional

24 positions and pay raises;
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1 (2) a statistical report on complaints and their

2 disposition in the laboratories;

3 (3) a description of how equal employment op4 portunity practices at the laboratories are treated in

5 the contract and in calculating award fees for each

6 contractor;

7 (4) a summary of disciplinary actions and their

8 disposition by either the Department or the relevant

9 contractors for each laboratory;

10 (5) a summary of outreach efforts to attract

11 women and minorities to the laboratories;

12 (6) a summary of efforts to retain women and

13 minorities in the laboratories; and

14 (7) a summary of collaboration efforts with the

15 Office of Federal Contract Compliance Programs to

16 improve equal employment opportunity practices at

17 the laboratories.

18 SEC. 22004. SENSE OF CONGRESS.

19 It is the sense of the Congress that—

20 (1) the Secretary of Energy should develop and

21 implement more stringent procurement and inven22 tory controls, including controls on the purchase

23 card program, to prevent waste, fraud, and abuse of

24 taxpayer funds by employees and contractors of the

25 Department of Energy; and
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1 (2) the Department’s Inspector General should

2 continue to closely review purchase card purchases

3 and other procurement and inventory practices at

4 the Department.

5 TITLE III—CLEAN SCHOOL

6 BUSES

7 SEC. 23001. ESTABLISHMENT OF PILOT PROGRAM.

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

9 consultation with the Administrator of the Environmental

10 Protection Agency, shall establish a pilot program for

11 awarding grants on a competitive basis to eligible entities

12 for the demonstration and commercial application of alter13 native fuel school buses and ultra-low sulfur diesel school

14 buses.

15 (b) REQUIREMENTS.—Not later than 3 months after

16 the date of the enactment of this Act, the Secretary shall

17 establish and publish in the Federal register grant require18 ments on eligibility for assistance, and on implementation

19 of the program established under subsection (a), including

20 certification requirements to ensure compliance with this

21 title.

22 (c) SOLICITATION.—Not later than 6 months after

23 the date of the enactment of this Act, the Secretary shall

24 solicit proposals for grants under this section.
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1 (d) ELIGIBLE RECIPIENTS.—A grant shall be award2 ed under this section only—

3 (1) to a local or State governmental entity re4 sponsible for providing school bus service to one or

5 more public school systems or responsible for the

6 purchase of school buses; or

7 (2) to a contracting entity that provides school

8 bus service to one or more public school systems, if

9 the grant application is submitted jointly with the

10 school system or systems which the buses will serve.

11 (e) TYPES OF GRANTS.—

12 (1) IN GENERAL.—Grants under this section

13 shall be for the demonstration and commercial appli14 cation of technologies to facilitate the use of alter15 native fuel school buses and ultra-low sulfur diesel

16 school buses in lieu of buses manufactured before

17 model year 1977 and diesel-powered buses manufac18 tured before model year 1991.

19 (2) NO ECONOMIC BENEFIT.—Other than the

20 receipt of the grant, a recipient of a grant under this

21 section may not receive any economic benefit in con22 nection with the receipt of the grant.

23 (3) PRIORITY OF GRANT APPLICATIONS.—The

24 Secretary shall give priority to awarding grants to

25 applicants who can demonstrate the use of alter-
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1 native fuel buses and ultra-low sulfur diesel school

2 buses in lieu of buses manufactured before model

3 year 1977.

4 (f) CONDITIONS OF GRANT.—A grant provided under

5 this section shall include the following conditions:

6 (1) All buses acquired with funds provided

7 under the grant shall be operated as part of the

8 school bus fleet for which the grant was made for a

9 minimum of 5 years.

10 (2) Funds provided under the grant may only

11 be used—

12 (A) to pay the cost, except as provided in

13 paragraph (3), of new alternative fuel school

14 buses or ultra-low sulfur diesel school buses, in15 cluding State taxes and contract fees; and

16 (B) to provide—

17 (i) up to 10 percent of the price of the

18 alternative fuel buses acquired, for nec19 essary alternative fuel infrastructure if the

20 infrastructure will only be available to the

21 grant recipient; and

22 (ii) up to 15 percent of the price of

23 the alternative fuel buses acquired, for nec24 essary alternative fuel infrastructure if the
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1 infrastructure will be available to the grant

2 recipient and to other bus fleets.

3 (3) The grant recipient shall be required to pro4 vide at least the lesser of 15 percent of the total cost

5 of each bus received or $15,000 per bus.

6 (4) In the case of a grant recipient receiving a

7 grant to demonstrate ultra-low sulfur diesel school

8 buses, the grant recipient shall be required to pro9 vide documentation to the satisfaction of the Sec10 retary that diesel fuel containing sulfur at not more

11 than 15 parts per million is available for carrying

12 out the purposes of the grant, and a commitment by

13 the applicant to use such fuel in carrying out the

14 purposes of the grant.

15 (g) BUSES.—Funding under a grant made under this

16 section may be used to demonstrate the use only of new

17 alternative fuel school buses or ultra-low sulfur diesel

18 school buses—

19 (1) with a gross vehicle weight of greater than

20 14,000 pounds;

21 (2) that are powered by a heavy duty engine;

22 (3) that, in the case of alternative fuel school

23 buses manufactured in model years 2003 through

24 2006, emit not more than 1.8 grams per brake

25 horsepower-hour of nonmethane hydrocarbons and
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1 oxides of nitrogen and .01 grams per brake horse2 power-hour of particulate matter; and

3 (4) that, in the case of ultra-low sulfur diesel

4 school buses, emit not more than—

5 (A) for buses manufactured in model year

6 2003, 3.0 grams per brake horsepower-hour of

7 oxides of nitrogen and .01 grams per brake

8 horsepower-hour of particulate matter; and

9 (B) for buses manufactured in model years

10 2004 through 2006, 2.5 grams per brake horse11 power-hour of nonmethane hydrocarbons and

12 oxides of nitrogen and .01 grams per brake

13 horsepower-hour of particulate matter,

14 except that under no circumstances shall buses be

15 acquired under this section that emit nonmethane

16 hydrocarbons, oxides of nitrogen, or particulate mat17 ter at a rate greater than the best performing tech18 nology of the same class of ultra-low sulfur diesel

19 school buses commercially available at the time the

20 grant is made.

21 (h) DEPLOYMENT AND DISTRIBUTION.—The Sec22 retary shall seek to the maximum extent practicable to

23 achieve nationwide deployment of alternative fuel school

24 buses and ultra-low sulfur diesel school buses through the

25 program under this section, and shall ensure a broad geo-
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1 graphic distribution of grant awards, with a goal of no

2 State receiving more than 10 percent of the grant funding

3 made available under this section for a fiscal year.

4 (i) LIMIT ON FUNDING.—The Secretary shall provide

5 not less than 20 percent and not more than 25 percent

6 of the grant funding made available under this section for

7 any fiscal year for the acquisition of ultra-low sulfur diesel

8 school buses.

9 (j) REDUCTION OF SCHOOL BUS IDLING.—Each

10 local educational agency (as defined in section 9101 of the

11 Elementary and Secondary Education Act of 1965 (20

12 U.S.C. 7801)) that receives Federal funds under the Ele13 mentary and Secondary Education Act of 1965 (20 U.S.C.

14 6301 et seq.) is encouraged to develop a policy, consistent

15 with the health, safety, and welfare of students and the

16 proper operation and maintenance of school buses, to re17 duce the incidence of unnecessary school bus idling at

18 schools when picking up and unloading students.

19 (k) ANNUAL REPORT.—Not later than January 31

20 of each year, the Secretary of Energy shall provide a re21 port evaluating implementation of the program under this

22 title to the Congress. Such report shall include the total

23 number of grant applications received, the number and

24 types of alternative fuel buses and ultra-low sulfur diesel

25 school buses requested in grant applications, a list of
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1 grants awarded and the criteria used to select the grant

2 recipients, certified engine emission levels of all buses pur3 chased under the program, and any other information the

4 Secretary considers appropriate.

5 (l) DEFINITIONS.—For purposes of this section—

6 (1) the term ‘‘alternative fuel school bus’’

7 means a bus powered substantially by electricity (in8 cluding electricity supplied by a fuel cell), or by liq9 uefied natural gas, compressed natural gas, liquefied

10 petroleum gas, hydrogen, propane, or methanol or

11 ethanol at no less than 85 percent by volume;

12 (2) the term ‘‘idling’’ means operating an en13 gine while remaining stationary for more than ap14 proximately 15 minutes, except that such term does

15 not apply to routine stoppages associated with traf16 fic movement or congestion; and

17 (3) the term ‘‘ultra-low sulfur diesel school

18 bus’’ means a school bus powered by diesel fuel

19 which contains sulfur at not more than 15 parts per

20 million.

21 SEC. 23002. FUEL CELL BUS DEVELOPMENT AND DEM22 ONSTRATION PROGRAM.

23 (a) ESTABLISHMENT OF PROGRAM.—The Secretary

24 shall establish a program for entering into cooperative

25 agreements with private sector fuel cell bus developers for
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1 the development of fuel cell-powered school buses, and

2 subsequently with not less than 2 units of local govern3 ment using natural gas-powered school buses and such

4 private sector fuel cell bus developers to demonstrate the

5 use of fuel cell-powered school buses.

6 (b) COST SHARING.—The non-Federal contribution

7 for activities funded under this section shall be not less

8 than—

9 (1) 20 percent for fuel infrastructure develop10 ment activities; and

11 (2) 50 percent for demonstration activities and

12 for development activities not described in paragraph

13 (1).

14 (c) FUNDING.—No more than $25,000,000 of the

15 amounts authorized under section 23004(a) may be used

16 for carrying out this section for the period encompassing

17 fiscal years 2004 through 2006.

18 (d) REPORTS TO CONGRESS.—Not later than 3 years

19 after the date of the enactment of this Act, and not later

20 than October 1, 2006, the Secretary shall transmit to the

21 Congress a report that—

22 (1) evaluates the process of converting natural

23 gas infrastructure to accommodate fuel cell-powered

24 school buses; and
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1 (2) assesses the results of the development and

2 demonstration program under this section.

3 SEC. 23003. DIESEL RETROFIT PROGRAM.

4 (a) ESTABLISHMENT.—The Administrator of the En5 vironmental Protection Agency and the Secretary shall es6 tablish a pilot program for awarding grants on a competi7 tive basis to eligible recipients for the demonstration and

8 commercial application of retrofit technologies for diesel

9 school buses.

10 (b) ELIGIBLE RECIPIENTS.—A grant shall be award11 ed under this section only—

12 (1) to a local or State governmental entity re13 sponsible for providing school bus service to one or

14 more public school systems; 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 (c) CONDITIONS OF GRANT.—A grant provided under

20 this section may be used only to demonstrate the use of

21 retrofit emissions-control technology on diesel buses

22 that—

23 (1) operate on ultra-low sulfur diesel fuel; and

24 (2) were manufactured in model year 1991 or

25 later.
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1 (d) VERIFICATION.—Not later than 3 months after

2 the date of enactment of this Act, the Administrator shall

3 publish in the Federal Register procedures to verify—

4 (1) the retrofit emissions-control technology to

5 be demonstrated; and

6 (2) that buses on which retrofit emissions-con7 trol technology are to be demonstrated will operate

8 on diesel fuel containing not more than 15 parts per

9 million of sulfur.

10 SEC. 23004. AUTHORIZATION OF APPROPRIATIONS.

11 (a) SCHOOL BUS GRANTS.—There are authorized to

12 be appropriated to the Secretary for carrying out this title,

13 to remain available until expended—

14 (1) $90,000,000 for fiscal year 2004;

15 (2) $100,000,000 for fiscal year 2005; and

16 (3) $110,000,000 for fiscal year 2006.

17 (b) RETROFIT GRANTS.—There are authorized to be

18 appropriated to the Administrator of the Environmental

19 Protection Agency and the Secretary such sums as may

20 be necessary for carrying out section 23003.

21 DIVISION C—RESOURCES

22 TITLE I—INDIAN ENERGY

23 SEC. 30101. INDIAN ENERGY.

24 Title XXVI of the Energy Policy Act of 1992 (25

25 U.S.C. 3501 et seq.) is amended to read as follows:
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1 ‘‘TITLE XXVI—INDIAN ENERGY

2 ‘‘SEC. 2601. DEFINITIONS.

3 ‘‘In this title:

4 ‘‘(1) INDIAN.—The term ‘Indian’ means an in5 dividual member of an Indian tribe who owns land

6 or an interest in land, the title to which land—

7 ‘‘(A) is held in trust by the United States;

8 or

9 ‘‘(B) is subject to a restriction against

10 alienation imposed by the United States.

11 ‘‘(2) INDIAN LAND.—The term ‘Indian land’

12 means—

13 ‘‘(A) any land located within the bound14 aries of an Indian reservation, pueblo, or

15 rancheria; or

16 ‘‘(B) any land not located within the

17 boundaries of an Indian reservation, pueblo, or

18 rancheria, the title to which is held—

19 ‘‘(i) in trust by the United States for

20 the benefit of an Indian tribe;

21 ‘‘(ii) by an Indian tribe, subject to re22 striction by the United States against

23 alienation; or

24 ‘‘(iii) by a dependent Indian commu25 nity.
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1 ‘‘(3) INDIAN RESERVATION.—The term ‘Indian

2 reservation’ includes—

3 ‘‘(A) an Indian reservation in existence as

4 of the date of the enactment of this paragraph;

5 ‘‘(B) a public domain Indian allotment;

6 ‘‘(C) a former reservation in the State of

7 Oklahoma; and

8 ‘‘(D) a dependent Indian community lo9 cated within the borders of the United States,

10 regardless of whether the community is

11 located—

12 ‘‘(i) on original or acquired territory

13 of the community; or

14 ‘‘(ii) within or outside the boundaries

15 of any particular State.

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

17 has the meaning given that term in section 4 of the

18 Indian Self-Determination and Education Assistance

19 Act (25 U.S.C. 450b), except the term, for the pur20 poses of this title, shall not include any Native Cor21 poration.

22 ‘‘(5) NATIVE CORPORATION.—The term ‘Native

23 Corporation’ has the meaning given the term in sec24 tion 3 of the Alaska Native Claims Settlement Act

25 (43 U.S.C. 1602).
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1 ‘‘(6) SECRETARY.—The term ‘Secretary’ means

2 the Secretary of the Interior.

3 ‘‘(7) TRIBAL CONSORTIUM.—The term ‘tribal

4 consortium’ means an organization that consists of

5 at least 3 entities, at least 1 of which is an Indian

6 tribe.

7 ‘‘SEC. 2602. INDIAN TRIBAL RESOURCE REGULATION.

8 ‘‘To the maximum extent practicable, the Secretary

9 and the Secretary of Energy shall make available to In10 dian tribes, tribal consortia, and Native Corporations sci11 entific and technical data for use in the development and

12 management of energy resources on Indian land and on

13 land conveyed to a Native Corporation.

14 ‘‘SEC. 2603. LEASES, BUSINESS AGREEMENTS, AND RIGHTS15 OF-WAY INVOLVING ENERGY DEVELOPMENT

16 OR TRANSMISSION.

17 ‘‘(a) IN GENERAL.—Notwithstanding any other pro18 vision of law—

19 ‘‘(1) an Indian or Indian tribe may enter into

20 a lease or business agreement for the purpose of en21 ergy development, including a lease or business

22 agreement for—

23 ‘‘(A) exploration for, extraction of, proc24 essing of, or other development of energy re25 sources; and
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1 ‘‘(B) construction or operation of—

2 ‘‘(i) an electric generation, trans3 mission, or distribution facility located on

4 Indian land; or

5 ‘‘(ii) a facility to process or refine en6 ergy resources developed on Indian land;

7 and

8 ‘‘(2) a lease or business agreement described in

9 paragraph (1) shall not require the approval of the

10 Secretary if—

11 ‘‘(A) the lease or business agreement is ex12 ecuted under tribal regulations approved by the

13 Secretary under subsection (e); and

14 ‘‘(B) the term of the lease or business

15 agreement does not exceed 30 years.

16 ‘‘(b) RIGHTS-OF-WAY FOR PIPELINES OR ELECTRIC

17 TRANSMISSION OR DISTRIBUTION LINES.—An Indian

18 tribe may grant a right-of-way over the Indian land of the

19 Indian tribe for a pipeline or an electric transmission or

20 distribution line without specific approval by the Secretary

21 if—

22 ‘‘(1) the right-of-way is executed under and

23 complies with tribal regulations approved by the Sec24 retary under subsection (e);
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1 ‘‘(2) the term of the right-of-way does not ex2 ceed 30 years; and

3 ‘‘(3) the pipeline or electric transmission or dis4 tribution line serves—

5 ‘‘(A) an electric generation, transmission,

6 or distribution facility located on Indian land;

7 or

8 ‘‘(B) a facility located on Indian land that

9 processes or refines renewable or nonrenewable

10 energy resources developed on Indian land.

11 ‘‘(c) RENEWALS.—A lease or business agreement en12 tered into or a right-of-way granted by an Indian tribe

13 under this section may be renewed at the discretion of the

14 Indian tribe, in accordance with this section.

15 ‘‘(d) VALIDITY.—No lease, business agreement, or

16 right-of-way under this section shall be valid unless the

17 lease, business agreement, or right-of-way is authorized in

18 accordance with tribal regulations approved by the Sec19 retary under subsection (e).

20 ‘‘(e) TRIBAL REGULATORY REQUIREMENTS.—

21 ‘‘(1) IN GENERAL.—An Indian tribe may sub22 mit to the Secretary for approval tribal regulations

23 governing leases, business agreements, and rights-of24 way under this section.

25 ‘‘(2) APPROVAL OR DISAPPROVAL.—
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1 ‘‘(A) IN GENERAL.—Not later than 120

2 days after the date on which the Secretary re3 ceives tribal regulations submitted by an Indian

4 tribe under paragraph (1) (or such later date as

5 may be agreed to by the Secretary and the In6 dian tribe), the Secretary shall approve or dis7 approve the regulations.

8 ‘‘(B) CONDITIONS FOR APPROVAL.—The

9 Secretary shall approve tribal regulations sub10 mitted under paragraph (1) only if the regula11 tions include provisions that, with respect to a

12 lease, business agreement, or right-of-way

13 under this section—

14 ‘‘(i) ensure the acquisition of nec15 essary information from the applicant for

16 the lease, business agreement, or right-of17 way;

18 ‘‘(ii) address the term of the lease or

19 business agreement or the term of convey20 ance of the right-of-way;

21 ‘‘(iii) address amendments and renew22 als;

23 ‘‘(iv) address consideration for the

24 lease, business agreement, or right-of-way;
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1 ‘‘(v) address technical or other rel2 evant requirements;

3 ‘‘(vi) establish requirements for envi4 ronmental review in accordance with sub5 paragraph (C);

6 ‘‘(vii) ensure compliance with all ap7 plicable environmental laws;

8 ‘‘(viii) identify final approval author9 ity;

10 ‘‘(ix) provide for public notification of

11 final approvals; and

12 ‘‘(x) establish a process for consulta13 tion with any affected States concerning

14 potential off-reservation impacts associated

15 with the lease, business agreement, or

16 right-of-way.

17 ‘‘(C) ENVIRONMENTAL REVIEW PROC18 ESS.—Tribal regulations submitted under para19 graph (1) shall establish, and include provisions

20 to ensure compliance with, an environmental re21 view process that, with respect to a lease, busi22 ness agreement, or right-of-way under this sec23 tion, provides for—
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1 ‘‘(i) the identification and evaluation

2 of all significant environmental impacts (as

3 compared with a no-action alternative);

4 ‘‘(ii) the identification of proposed

5 mitigation;

6 ‘‘(iii) a process for ensuring that the

7 public is informed of and has an oppor8 tunity to comment on any proposed lease,

9 business agreement, or right-of-way before

10 tribal approval of the lease, business agree11 ment, or right-of-way (or any amendment

12 to or renewal of a lease, business agree13 ment, or right-of-way); and

14 ‘‘(iv) sufficient administrative support

15 and technical capability to carry out the

16 environmental review process.

17 ‘‘(3) PUBLIC PARTICIPATION.—The Secretary

18 may provide notice and opportunity for public com19 ment on tribal regulations submitted under para20 graph (1).

21 ‘‘(4) DISAPPROVAL.—If the Secretary dis22 approves tribal regulations submitted by an Indian

23 tribe under paragraph (1), the Secretary shall—

24 ‘‘(A) notify the Indian tribe in writing of

25 the basis for the disapproval;
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1 ‘‘(B) identify what changes or other ac2 tions are required to address the concerns of

3 the Secretary; and

4 ‘‘(C) provide the Indian tribe with an op5 portunity to revise and resubmit the regula6 tions.

7 ‘‘(5) EXECUTION OF LEASE OR BUSINESS

8 AGREEMENT OR GRANTING OF RIGHT-OF-WAY.—If

9 an Indian tribe executes a lease or business agree10 ment or grants a right-of-way in accordance with

11 tribal regulations approved under this subsection,

12 the Indian tribe shall provide to the Secretary—

13 ‘‘(A) a copy of the lease, business agree14 ment, or right-of-way document (including all

15 amendments to and renewals of the document);

16 and

17 ‘‘(B) in the case of tribal regulations or a

18 lease, business agreement, or right-of-way that

19 permits payment to be made directly to the In20 dian tribe, documentation of those payments

21 sufficient to enable the Secretary to discharge

22 the trust responsibility of the United States as

23 appropriate under applicable law.

24 ‘‘(6) LIABILITY.—The United States shall not

25 be liable for any loss or injury sustained by any
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1 party (including an Indian tribe or any member of

2 an Indian tribe) to a lease, business agreement, or

3 right-of-way executed in accordance with tribal regu4 lations approved under this subsection.

5 ‘‘(7) COMPLIANCE REVIEW.—

6 ‘‘(A) IN GENERAL.—After exhaustion of

7 tribal remedies, any person may submit to the

8 Secretary, in a timely manner, a petition to re9 view compliance of an Indian tribe with tribal

10 regulations of the Indian tribe approved under

11 this subsection.

12 ‘‘(B) ACTION BY SECRETARY.—The Sec13 retary shall—

14 ‘‘(i) not later than 60 days after the

15 date on which the Secretary receives a pe16 tition under subparagraph (A), review

17 compliance of an Indian tribe described in

18 subparagraph (A); and

19 ‘‘(ii) on completion of the review, if

20 the Secretary determines that an Indian

21 tribe is not in compliance with tribal regu22 lations approved under this subsection,

23 take such action as is necessary to compel

24 compliance, including—
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1 ‘‘(I)(aa) rescinding a lease, busi2 ness agreement, or right-of-way under

3 this section; or

4 ‘‘(bb) suspending a lease, busi5 ness agreement, or right-of-way under

6 this section until an Indian tribe is in

7 compliance with tribal regulations;

8 and

9 ‘‘(II) rescinding approval of the

10 tribal regulations and reassuming the

11 responsibility for approval of leases,

12 business agreements, or rights-of-way

13 associated with an energy pipeline or

14 distribution line described in sub15 section (b).

16 ‘‘(C) COMPLIANCE.—If the Secretary seeks

17 to compel compliance of an Indian tribe with

18 tribal regulations under subparagraph (B)(ii),

19 the Secretary shall—

20 ‘‘(i) make a written determination

21 that describes the manner in which the

22 tribal regulations have been violated;

23 ‘‘(ii) provide the Indian tribe with a

24 written notice of the violation together

25 with the written determination; and
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1 ‘‘(iii) before taking any action de2 scribed in subparagraph (B)(ii) or seeking

3 any other remedy, provide the Indian tribe

4 with a hearing and a reasonable oppor5 tunity to attain compliance with the tribal

6 regulations.

7 ‘‘(D) APPEAL.—An Indian tribe described

8 in subparagraph (C) shall retain all rights to

9 appeal as provided in regulations promulgated

10 by the Secretary.

11 ‘‘(f) AGREEMENTS.—

12 ‘‘(1) IN GENERAL.—Any agreement by an In13 dian tribe that relates to the development of an elec14 tric generation, transmission, or distribution facility,

15 or a facility to process or refine renewable or non16 renewable energy resources developed on Indian

17 land, shall not require the specific approval of the

18 Secretary under section 2103 of the Revised Stat19 utes (25 U.S.C. 81) if the activity that is the subject

20 of the agreement is carried out in accordance with

21 this section.

22 ‘‘(2) LIABILITY.—The United States shall not

23 be liable for any loss or injury sustained by any per24 son (including an Indian tribe or any member of an

25 Indian tribe) resulting from an action taken in per-
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1 formance of an agreement entered into under this

2 subsection.

3 ‘‘(g) NO EFFECT ON OTHER LAW.—Nothing in this

4 section affects the application of any provision of—

5 ‘‘(1) the Act of May 11, 1938 (commonly

6 known as the Indian Mineral Leasing Act of 1938;

7 25 U.S.C. 396a et seq.);

8 ‘‘(2) the Indian Mineral Development Act of

9 1982 (25 U.S.C. 2101 et seq.);

10 ‘‘(3) the Surface Mining Control and Reclama11 tion Act of 1977 (30 U.S.C. 1201 et seq.); or

12 ‘‘(4) any Federal environmental law.

13 ‘‘(h) AUTHORIZATION OF APPROPRIATIONS.—There

14 are authorized to be appropriated such sums as are nec15 essary to carry out this section, to remain available until

16 expended.’’.

17 TITLE II—OIL AND GAS

18 SEC. 30201. PROGRAM ON OIL AND GAS ROYALTIES IN19 KIND.

20 (a) APPLICABILITY OF SECTION.—Notwithstanding

21 any other provision of law, the provisions of this section

22 shall apply to all royalty in-kind accepted by the Secretary

23 of the Interior on or after the date of the enactment of

24 this Act under any Federal oil or gas lease or permit under

25 section 36 of the Mineral Leasing Act (30 U.S.C. 192),
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1 section 27 of the Outer Continental Shelf Lands Act (43

2 U.S.C. 1353), or any other Federal law governing leasing

3 of Federal lands for oil and gas development.

4 (b) TERMS AND CONDITIONS.—All royalty accruing

5 to the United States shall, on the demand of the Secretary

6 of the Interior, be paid in oil or gas. If the Secretary of

7 the Interior makes such a demand, the following provi8 sions apply to such payment:

9 (1) Delivery by, or on behalf of, the lessee of

10 the royalty amount and quality due under the lease

11 satisfies the lessee’s royalty obligation for the

12 amount delivered, except that transportation and

13 processing reimbursements paid to, or deductions

14 claimed by, the lessee shall be subject to review and

15 audit.

16 (2)(A) Royalty production shall be placed in

17 marketable condition by the lessee at no cost to the

18 United States.

19 (B) In this paragraph, the term ‘‘in marketable

20 condition’’ means sufficiently free from impurities

21 and otherwise in a condition that it will be accepted

22 by a purchaser under a sales contract typical of the

23 field or area in which the royalty production was

24 produced.

25 (3) The Secretary of the Interior may—
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1 (A) sell or otherwise dispose of any royalty

2 production taken in-kind (other than oil or gas

3 transferred under section 27(a)(3) of the Outer

4 Continental Shelf Lands Act (43 U.S.C.

5 1353(a)(3)) for not less than the market price;

6 and

7 (B) transport or process (or both) any roy8 alty production taken in-kind.

9 (4) The Secretary of the Interior may, notwith10 standing section 3302 of title 31, United States

11 Code, retain and use a portion of the revenues from

12 the sale of oil and gas royalties taken in-kind that

13 otherwise would be deposited to miscellaneous re14 ceipts, without regard to fiscal year limitation, or

15 may use royalty production, to pay the cost of—

16 (A) transporting the royalty production;

17 (B) processing the royalty production;

18 (C) disposing of the royalty production; or

19 (D) any combination of transporting, proc20 essing, and disposing of the royalty production.

21 (5) The Secretary of the Interior may use a

22 portion of the revenues from the sale of oil royalties

23 taken in-kind, without fiscal year limitation, to pay

24 transportation costs, salaries, and other administra-
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1 tive costs directly related to filling the Strategic Pe2 troleum Reserve.

3 (c) REIMBURSEMENT OF COST.—If the lessee, pursu4 ant to an agreement with the United States or as provided

5 in the lease, processes the royalty gas or delivers the roy6 alty oil or gas at a point not on or adjacent to the lease

7 area, the Secretary of the Interior shall—

8 (1) reimburse the lessee for the reasonable costs

9 of transportation (not including gathering) from the

10 lease to the point of delivery or for processing costs;

11 or

12 (2) at the discretion of the Secretary of the In13 terior, allow the lessee to deduct such transportation

14 or processing costs in reporting and paying royalties

15 in value for other Federal oil and gas leases.

16 (d) BENEFIT TO THE UNITED STATES REQUIRED.—

17 The Secretary of the Interior may receive oil or gas royal18 ties in-kind only if the Secretary determines that receiving

19 such royalties provides benefits to the United States great20 er than or equal to those likely to have been received had

21 royalties been taken in value.

22 (e) REPORT TO CONGRESS.—By June 30, 2004, the

23 Secretary of the Interior shall provide a report to the Con24 gress that describes actions taken to develop an organiza25 tion, business processes, and automated systems to sup-
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1 port a full royalty in-kind capability to be used in tandem

2 with the royalty in value approach to managing Federal

3 oil and gas revenues.

4 (f) DEDUCTION OF EXPENSES.—

5 (1) IN GENERAL.—Before making payments

6 under section 35 of the Mineral Leasing Act (30

7 U.S.C. 191) or section 8(g) of the Outer Continental

8 Shelf Lands Act (43 U.S.C. 1337(g)) of revenues

9 derived from the sale of royalty production taken in10 kind from a lease, the Secretary of the Interior shall

11 deduct amounts paid or deducted under subsections

12 (b)(4) and (c), and shall deposit such amounts to

13 miscellaneous receipts.

14 (2) ACCOUNTING FOR DEDUCTIONS.—If the

15 Secretary of the Interior allows the lessee to deduct

16 transportation or processing costs under subsection

17 (c), the Secretary may not reduce any payments to

18 recipients of revenues derived from any other Fed19 eral oil and gas lease as a consequence of that de20 duction.

21 (g) CONSULTATION WITH STATES.—The Secretary

22 of the Interior—

23 (1) shall consult with a State before conducting

24 a royalty in-kind program under this title within the

25 State, and may delegate management of any portion
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1 of the Federal royalty in-kind program to such State

2 except as otherwise prohibited by Federal law; and

3 (2) shall consult annually with any State from

4 which Federal oil or gas royalty is being taken in5 kind to ensure to the maximum extent practicable

6 that the royalty in-kind program provides revenues

7 to the State greater than or equal to those likely to

8 have been received had royalties been taken in-value.

9 (h) PROVISIONS FOR SMALL REFINERIES.—

10 (1) PREFERENCE.—If the Secretary of the In11 terior determines that sufficient supplies of crude oil

12 are not available in the open market to refineries not

13 having their own source of supply for crude oil, the

14 Secretary may grant preference to such refineries in

15 the sale of any royalty oil accruing or reserved to the

16 United States under Federal oil and gas leases

17 issued under any mineral leasing law, for processing

18 or use in such refineries at private sale at not less

19 than the market price.

20 (2) PRORATION AMONG REFINERIES IN PRO21 DUCTION AREA.—In disposing of oil under this sub22 section, the Secretary of the Interior may, at the

23 discretion of the Secretary, prorate such oil among

24 such refineries in the area in which the oil is pro25 duced.
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1 (i) DISPOSITION TO FEDERAL AGENCIES.—

2 (1) ONSHORE ROYALTY.—Any royalty oil or gas

3 taken by the Secretary of the Interior in-kind from

4 onshore oil and gas leases may be sold at not less

5 than the market price to any department or agency

6 of the United States.

7 (2) OFFSHORE ROYALTY.—Any royalty oil or

8 gas taken in-kind from Federal oil and gas leases on

9 the outer Continental Shelf may be disposed of only

10 under section 27 of the Outer Continental Shelf

11 Lands Act (43 U.S.C. 1353).

12 (j) PREFERENCE FOR FEDERAL LOW-INCOME EN13 ERGY ASSISTANCE PROGRAMS.—In disposing of royalty oil

14 or gas taken in-kind under this section, the Secretary may

15 grant a preference to any person, including any State or

16 Federal agency, for the purpose of providing additional re17 sources to any Federal low-income energy assistance pro18 gram.

19 SEC. 30202. CLARIFICATION OF FAIR MARKET RENTAL

20 VALUE DETERMINATIONS FOR PUBLIC

21 LANDS AND FOREST SERVICE RIGHTS-OF22 WAY.

23 (a) LINEAR RIGHTS-OF-WAY UNDER FEDERAL

24 LAND POLICY AND MANAGEMENT ACT.—Section 504 of

25 the Federal Land Policy and Management Act of 1976
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1 (43 U.S.C. 1764) is amended by adding at the end the

2 following:

3 ‘‘(k) DETERMINATION OF FAIR MARKET VALUE OF

4 LINEAR RIGHTS-OF-WAY.—(1) Effective upon the

5 issuance of the rules required by paragraph (2), for pur6 poses of subsection (g), the Secretary concerned shall de7 termine the fair market rental for the use of land encum8 bered by a linear right-of-way granted, issued, or renewed

9 under this title using the valuation method described in

10 paragraphs (2), (3), and (4).

11 ‘‘(2) Not later than 1 year after the date of enact12 ment of this subsection, and in accordance with subsection

13 (k), the Secretary of the Interior shall amend section

14 2803.1–2 of title 43, Code of Federal Regulations, as in

15 effect on the date of enactment of this subsection, to revise

16 the per acre rental fee zone value schedule by State, coun17 ty, and type of linear right-of-way use to reflect current

18 values of land in each zone. The Secretary of Agriculture

19 shall make the same revisions for linear rights-of-way

20 granted, issued, or renewed under this title on National

21 Forest System lands.

22 ‘‘(3) The Secretary concerned shall update annually

23 the schedule revised under paragraph (2) by multiplying

24 the current year’s rental per acre by the annual change,

25 second quarter to the second quarter (June 30 to June
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1 30) in the Gross National Product Implicit Price Deflator

2 Index published in the Survey of Current Business of the

3 Department of Commerce, Bureau of Economic Analysis.

4 ‘‘(4) Whenever the cumulative change in the index

5 referred to in paragraph (3) exceeds 30 percent, or the

6 change in the 3-year average of the 1-year Treasury inter7 est rate used to determine per acre rental fee zone values

8 exceeds plus or minus 50 percent, the Secretary concerned

9 shall conduct a review of the zones and rental per acre

10 figures to determine whether the value of Federal land has

11 differed sufficiently from the index referred to in para12 graph (3) to warrant a revision in the base zones and rent13 al per acre figures. If, as a result of the review, the Sec14 retary concerned determines that such a revision is war15 ranted, the Secretary concerned shall revise the base zones

16 and rental per acre figures accordingly.’’.

17 (b) RIGHTS-OF-WAY UNDER MINERAL LEASING

18 ACT.—Section 28(l) of the Mineral Leasing Act (30

19 U.S.C. 185(l)) is amended by inserting before the period

20 at the end the following: ‘‘using the valuation method de21 scribed in section 2803.1–2 of title 43, Code of Federal

22 Regulations, as revised pursuant to section 504(k) of the

23 Federal Land Policy and Management Act of 1976 (43

24 U.S.C. 1764(k))’’.
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1 SEC. 30203. USGS ESTIMATES OF OIL AND GAS RESOURCES

2 UNDERLYING ONSHORE FEDERAL LANDS.

3 Section 604(a) of the Energy Act of 2000 (42 U.S.C.

4 6217) is amended—

5 (1) in subsection (a)(1)—

6 (A) by striking ‘‘reserve’’; and

7 (B) by striking ‘‘and’’ after the semicolon;

8 (2) by striking subsection (a)(2) and inserting

9 the following:

10 ‘‘(2) the extent and nature of any restrictions

11 or impediments to the development of such re12 sources, including—

13 ‘‘(A) impediments to the timely granting of

14 leases; and

15 ‘‘(B) post-lease restrictions, impediments,

16 or delays on development, involving conditions

17 of approval, applications for permits to drill, or

18 processing of environmental permits; and

19 ‘‘(C) permits or restrictions associated with

20 transporting the resources for entry into com21 merce; and

22 ‘‘(3) the amount of resources not produced or

23 introduced into commerce because of those restric24 tions.’’; and

25 (3) in subsection (b)—
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1 (A) by striking ‘‘reserve’’ and inserting

2 ‘‘resource’’; and

3 (B) by striking ‘‘publically’’ and inserting

4 ‘‘publicly’’.

5 SEC. 30204. ROYALTY INCENTIVES FOR CERTAIN OFF6 SHORE AREAS.

7 (a) OUTER CONTINENTAL SHELF SHALLOW WATER

8 DEEP GAS ROYALTY RELIEF.—

9 (1) SHORT TITLE.—This subsection may be

10 cited as the ‘‘Outer Continental Shelf Shallow Water

11 Deep Gas Royalty Relief Act’’.

12 (2) PURPOSES.—The purposes of this sub13 section are the following:

14 (A) To accelerate natural gas exploration,

15 development, and production from wells drilled

16 to deep depths on existing shallow water lease

17 tracts on the Outer Continental Shelf.

18 (B) To provide royalty incentives for the

19 production of natural gas from such tracts.

20 (C) To provide royalty incentives for devel21 opment of new technologies and the exploration

22 and development of the new frontier of deep

23 drilling on the Outer Continental Shelf.
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1 (3) ROYALTY INCENTIVES UNDER EXISTING

2 LEASES FOR PRODUCTION OF DEEP GAS IN SHAL3 LOW WATER IN THE GULF OF MEXICO.—

4 (A) SUSPENSION OF ROYALTIES.—

5 (i) IN GENERAL.—The Secretary of

6 the Interior shall grant royalty relief for

7 natural gas produced under leases issued

8 under the Outer Continental Shelf Lands

9 Act (43 U.S.C. 1301 et seq.) prior to Jan10 uary 1, 2001, from deep wells on oil and

11 gas lease tracts in shallow waters of the

12 Gulf of Mexico located wholly west of 87

13 degrees, 30 minutes west longitude.

14 (ii) AMOUNT OF RELIEF.—The Sec15 retary shall grant royalty relief to eligible

16 leases in the following amounts:

17 (I) A suspension volume of at

18 least 15 billion cubic feet of natural

19 gas produced from a successful deep

20 well with a total vertical depth of

21 15,000 feet to 17,999 feet.

22 (II) A suspension volume of at

23 least 25 billion cubic feet of natural

24 gas produced from a successful deep
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1 well with a total vertical depth of

2 18,000 feet to 19,999 feet.

3 (III) A suspension volume of at

4 least 35 billion cubic feet of natural

5 gas produced from any ultra deep

6 well.

7 (IV) A suspension volume of at

8 least 5 billion cubic feet of natural gas

9 per well for up to 2 unsuccessful wells

10 drilled to a depth of at least 18,000

11 feet on a lease tract that subsequently

12 produces natural gas from a success13 ful deep well.

14 (iii) LIMITATION.—The Secretary

15 shall not grant the royalty incentives out16 lined in this subparagraph if the average

17 annual NYMEX natural gas price exceeds

18 for one full calendar year the threshold

19 price of $5 per million Btu, adjusted from

20 the year 2000 for inflation.

21 (B) DEFINITIONS.—For purposes of this

22 paragraph:

23 (i) The term ‘‘deep well’’ means a well

24 drilled with a perforated interval, the top

25 of which is at least 15,000 feet true
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1 vertical depth below the datum at mean

2 sea level.

3 (ii) The term ‘‘eligible lease’’ means a

4 lease that—

5 (I) was issued in a lease sale held

6 before January 1, 2001;

7 (II) is for a tract located in the

8 Gulf of Mexico entirely in water

9 depths less than 200 meters on a

10 block wholly west of 87 degrees, 30

11 minutes west longitude; and

12 (III) is for a tract that has not

13 produced gas or oil from a well that

14 commenced drilling before March 26,

15 2003, with a completion 15,000 feet

16 true vertical depth below the datum at

17 mean sea level or deeper.

18 (iii) The term ‘‘shallow water’’ means

19 water less than 200 meters deep.

20 (iv) The term ‘‘ultra deep well’’ means

21 a well drilled with a perforated interval,

22 the top of which is at least 20,000 feet

23 true vertical depth below the datum at

24 mean sea level.
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1 (4) SUNSET.—This subsection shall have no

2 force or effect after the end of the 5-year period be3 ginning on the date of the enactment of this Act.

4 (b) DEEP WATER AREAS.—Section 8(a) of the Outer

5 Continental Shelf Lands Act (43 U.S.C. 1337(a)) is

6 amended by adding at the end the following:

7 ‘‘(9)(A) For all tracts located in water depths of

8 greater than 400 meters in the Western and Central Plan9 ning Area of the Gulf of Mexico, including that portion

10 of the Eastern Planning Area of the Gulf of Mexico en11 compassing whole lease blocks lying west of 87 degrees,

12 30 minutes West longitude, and for all tracts in a frontier

13 area offshore Alaska, any oil or gas lease sale under this

14 Act occurring after the date of the enactment of this para15 graph and before July 1, 2007, shall use the bidding sys16 tem authorized in paragraph (1)(H), except that the sus17 pension of royalties shall be set at a volume of not less

18 than the following:

19 ‘‘(i) 5 million barrels of oil equivalent for each

20 lease in water depths of 400 to 800 meters.

21 ‘‘(ii) 9 million barrels of oil equivalent for each

22 lease in water depths of 800 to 1,600 meters.

23 ‘‘(iii) 12 million barrels of oil equivalent for

24 each lease in water depths greater than 1,600 me25 ters.
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1 ‘‘(B) For purposes of this paragraph, the term ‘fron2 tier area offshore Alaska’ includes, at a minimum, those

3 areas offshore Alaska with seasonal ice, long distances to

4 existing pipelines and ports, or a lack of production infra5 structure.’’.

6 (c) APPLICATION OF OTHER EXISTING AUTHORITY

7 TO OFFSHORE ALASKA.—Section 8(a)(3)(B) of the Outer

8 Continental Shelf Lands Act (43 U.S.C. 1337(a)(3)(B))

9 is amended—

10 (1) by striking ‘‘and the portion’’ and inserting

11 ‘‘, the portion’’; and

12 (2) by inserting after ‘‘longitude,’’ the fol13 lowing: ‘‘and in the planning areas offshore Alas14 ka,’’.

15 (d) RELATIONSHIP TO EXISTING AUTHORITY.—Ex16 cept as expressly provided in this section, nothing in this

17 section is intended to limit the authority of the Secretary

18 of the Interior under the Outer Continental Shelf Lands

19 Act (43 U.S.C. 1331 et seq.) to provide royalty suspen20 sion.

21 (e) SAVINGS CLAUSE.—Nothing in this section shall

22 be construed to affect any offshore preleasing, leasing, or

23 development moratorium, including any moratorium appli24 cable to the Eastern Planning Area of the Gulf of Mexico

25 located off the Gulf Coast of Florida.
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1 SEC. 30205. MARGINAL PROPERTY PRODUCTION INCEN2 TIVES.

3 (a) PURPOSE.—The purpose of this section is to pro4 vide to independent producers incentives for extended pro5 duction from Federal oil and gas leases that are still pro6 ducible but approaching abandonment due to economic

7 factors.

8 (b) MARGINAL PROPERTY DEFINED.—

9 (1) IN GENERAL.—Until such time as the Sec10 retary of the Interior promulgates rules under sub11 section (f) that prescribe a different definition, for

12 purposes of the royalty relief granted under this sec13 tion the term ‘‘marginal property’’ means an on14 shore unit, communitization agreement, or lease not

15 within a unit or communitization agreement, that

16 produces on average the combined equivalent of less

17 than 15 barrels of oil per well per day or 90 million

18 British thermal units of gas per well per day.

19 (2) CALCULATION OF AVERAGE PER WELL PRO20 DUCTION.—In calculating the average per well pro21 duction under paragraph (1), the lessee and the Sec22 retary shall—

23 (A) include those wells that produce more

24 than half the days in the three most recent pro25 duction months; and
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1 (B) calculate the average over the three

2 most recent production months.

3 (c) CONDITIONS FOR REDUCTION OF ROYALTY

4 RATE.—Until such time as the Secretary of the Interior

5 promulgates rules under subsection (f) that prescribe dif6 ferent thresholds or standards—

7 (1) the Secretary shall, upon request by the op8 erator of a marginal property who is an independent

9 producer, reduce the royalty rate on oil production

10 from the marginal property as prescribed in sub11 section (d) when the spot price of West Texas Inter12 mediate crude oil at Cushing, Oklahoma, is, on aver13 age, less than $15 per barrel for 90 consecutive

14 trading days; and

15 (2) the Secretary shall, upon request by the op16 erator of a marginal property who is an independent

17 producer, reduce the royalty rate on gas production

18 from the marginal property to the rate prescribed in

19 subsection (d) when the spot price of natural gas de20 livered at Henry Hub, Louisiana, is, on average, less

21 than $2 per million British thermal units for 90 con22 secutive trading days.

23 (d) REDUCED ROYALTY RATE.—

24 (1) IN GENERAL.—The reduced royalty rate

25 under this subsection shall be the lesser of—
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1 (A) 5 percent; or

2 (B) the applicable rate under any other

3 statutory or regulatory royalty relief provision

4 that applies to the affected production.

5 (2) EFFECTIVE DATE.—The reduced royalty

6 rate under this subsection shall be effective on the

7 first day of the production month following the date

8 on which the applicable price standard prescribed in

9 subsection (c) is met.

10 (e) TERMINATION OF REDUCED ROYALTY RATE.—

11 A royalty rate prescribed in subsection (d)(1) shall

12 terminate—

13 (1) for oil production from a marginal property,

14 on the first day of the production month following

15 the date on which—

16 (A) the spot price of West Texas Inter17 mediate crude oil at Cushing, Oklahoma, on av18 erage, exceeds $15 per barrel for 90 consecutive

19 trading days, or

20 (B) the property no longer qualifies as a

21 marginal property under subsection (b); and

22 (2) for gas production from a marginal prop23 erty, on the first day of the production month fol24 lowing the date on which—
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1 (A) the spot price of natural gas delivered

2 at Henry Hub, Louisiana, on average, exceeds

3 $2 per million British thermal units for 90 con4 secutive trading days, or

5 (B) the property no longer qualifies as a

6 marginal property under subsection (b).

7 (f) RULES PRESCRIBING DIFFERENT RELIEF.—

8 (1) IN GENERAL.—The Secretary of the Inte9 rior, after consultation with the Secretary of Energy,

10 may by rule prescribe different parameters, stand11 ards, and requirements for, and a different degree or

12 extent of, royalty relief for marginal properties in

13 lieu of those prescribed in subsections (b) through

14 (d).

15 (2) MARGINAL PROPERTIES.—The Secretary of

16 the Interior, after consultation with the Secretary of

17 Energy, and within 1 year after the date of enact18 ment of this Act, shall—

19 (A) by rule prescribe standards and re20 quirements for, and the extent of royalty relief

21 for, marginal properties for oil and gas leases

22 on the outer Continental Shelf; and

23 (B) by rule define what constitutes a mar24 ginal property on the outer Continental Shelf

25 for purposes of this section.
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1 (3) CONSIDERATIONS.—In promulgating rules

2 under this subsection, the Secretary of the Interior

3 may consider—

4 (A) oil and gas prices and market trends;

5 (B) production costs;

6 (C) abandonment costs;

7 (D) Federal and State tax provisions and

8 their effects on production economics;

9 (E) other royalty relief programs;

10 (F) regional differences in average well11 head prices;

12 (G) national energy security issues; and

13 (H) other relevant matters.

14 (g) SAVINGS PROVISION.—Nothing in this section

15 shall prevent a lessee from receiving royalty relief or a roy16 alty reduction pursuant to any other law or regulation that

17 provides more relief than the amounts provided by this

18 section.

19 (h) INDEPENDENT PRODUCER DEFINED.—In this

20 section the term ‘‘independent producer’’ means a person

21 who is not an integrated oil company, as that term is de22 fined in section 219(b)(4) of the Internal Revenue Code

23 of 1986 (26 U.S.C. 291(b)(4)).
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1 SEC. 30206. FEDERAL ONSHORE OIL AND GAS LEASING AND

2 PERMITTING PRACTICES.

3 (a) REVIEW OF ONSHORE OIL AND GAS LEASING

4 PRACTICES.—The Secretary of the Interior, in cooperation

5 with the Secretary of Agriculture with respect to National

6 Forest System lands under the jurisdiction of the Depart7 ment of Agriculture, shall perform an internal review of

8 Federal onshore oil and gas leasing and permitting prac9 tices. The review shall include the following:

10 (1) The process by which Federal land man11 agers accept or reject an offer to lease, including the

12 timeframes in which such offers are acted upon, and

13 any recommendations for improving and expediting

14 the process.

15 (2) The process for considering applications for

16 permits to drill, including the timeframes in which

17 such applications are considered, and any rec18 ommendations for improving and expediting the

19 process.

20 (3) The process for considering surface use

21 plans of operation, including the timeframes in

22 which such plans are considered, and any rec23 ommendations for improving and expediting the

24 process.

25 (4) The process for administrative appeal of de26 cisions or orders of officers or employees of the Bu-
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1 reau of Land Management with respect to a Federal

2 oil or gas lease, including the timeframes in which

3 such appeals are heard and decided, and any rec4 ommendations for improving and expediting the

5 process.

6 (5) The process by which Federal land man7 agers identify stipulations to address site-specific

8 concerns and conditions, including those relating to

9 the environment and resource use conflicts, whether

10 stipulations are effective in addressing resource val11 ues, and any recommendations for expediting and

12 improving the identification and effectiveness of stip13 ulations.

14 (6) The process by which the Federal land

15 management agencies coordinate planning and anal16 ysis with planning of Federal, State, and local agen17 cies having jurisdiction over adjacent areas and

18 other land uses, and any recommendations for im19 proving and expediting the process.

20 (7) The documentation provided to lease appli21 cants and lessees with respect to determinations to

22 reject lease applications or to require modification of

23 proposed surface use plans of operation and rec24 ommendations regarding improvement of such docu-
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1 mentation to more clearly set forth the basis for the

2 decision.

3 (b) REPORT.—The Secretaries shall report to the

4 Committee on Resources of the House of Representatives

5 and to the Committee on Energy and Natural Resources

6 of the Senate no later than 1 year after the date of the

7 enactment of this Act, summarizing the findings of their

8 respective reviews undertaken pursuant to this section and

9 the actions they have taken or plan to take to improve

10 the Federal onshore oil and gas leasing program.

11 SEC. 30207. MANAGEMENT OF FEDERAL OIL AND GAS LEAS12 ING PROGRAMS.

13 (a) TIMELY ACTION ON LEASES AND PERMITS.—To

14 ensure timely action on oil and gas leases and applications

15 for permits to drill on lands otherwise available for leasing,

16 the Secretary of the Interior shall—

17 (1) ensure expeditious compliance with the re18 quirements of section 102(2)(C) of the National En19 vironmental Policy Act of 1969 (42 U.S.C.

20 4332(2)(C));

21 (2) improve consultation and coordination with

22 the States and the public; and

23 (3) improve the collection, storage, and retrieval

24 of information related to such leasing activities.

25 (b) BEST MANAGEMENT PRACTICES.—
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1 (1) IN GENERAL.—Within 18 months after the

2 date of enactment of this Act, the Secretary of the

3 Interior shall develop and implement best manage4 ment practices to improve the administration of the

5 onshore oil and gas leasing program pursuant to the

6 Mineral Leasing Act (30 U.S.C. 181, et seq.) and

7 ensure timely action on oil and gas leases and appli8 cations for permits to drill on lands otherwise avail9 able for leasing.

10 (2) CONSIDERATION AND CONSULTATION.—In

11 developing such best management practices the Sec12 retary shall consider the recommendations resulting

13 from the review under section 30206.

14 (3) REGULATIONS.—Within 180 days after the

15 development of best management practices under

16 paragraph (1), the Secretary shall publish for public

17 comment proposed regulations that set forth specific

18 timeframes for processing leases and applications in

19 accordance with those practices, including deadlines

20 for—

21 (A) approving or disapproving—

22 (i) resource management plans and

23 related documents;

24 (ii) lease applications;
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1 (iii) applications for permits to drill;

2 and

3 (iv) surface use plans; and

4 (B) related administrative appeals.

5 SEC. 30208. CONSULTATION REGARDING OIL AND GAS

6 LEASING ON PUBLIC LANDS.

7 (a) IN GENERAL.—Not later than six months after

8 the date of enactment of this Act, the Secretary of the

9 Interior and the Secretary of Agriculture shall enter into,

10 and submit to the Congress, a memorandum of under11 standing in accordance with this section regarding oil and

12 gas leasing on public lands within the jurisdiction of the

13 Secretary of the Interior and National Forest System

14 lands within the jurisdiction of the Secretary of Agri15 culture.

16 (b) CONTENTS.—The memorandum of understanding

17 shall include provisions that—

18 (1) establish an administrative procedure for

19 timely processing of oil and gas lease applications,

20 including lines of authority, steps in application

21 processing, and timeframes for application proc22 essing;

23 (2) establish an administrative procedure for

24 timely processing of surface use plans of operation

25 and applications for permits to drill, including lines
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1 of authority and steps for processing such plans and

2 applications within 30 days after receipt by the Sec3 retary concerned;

4 (3) provide for coordination of planning relating

5 to oil and gas development;

6 (4) provide for coordination of environmental

7 compliance efforts to avoid duplication of effort;

8 (5) provide for coordination of use of lease stip9 ulations to achieve consistency;

10 (6) ensure that lease stipulations are only as re11 strictive as is necessary to protect the resource for

12 which the stipulations are applied; and

13 (7) establish reasonable timeframes to process

14 applications for permits to drill.

15 (c) DATA RETRIEVAL SYSTEM.—

16 (1) IN GENERAL.—The Secretary of the Inte17 rior and the Secretary of Agriculture shall establish

18 a joint data retrieval system that is capable of track19 ing applications and formal requests made pursuant

20 to procedures of the Federal onshore oil and gas

21 leasing program and providing information as to the

22 status of such applications and requests within the

23 Department of the Interior and the Department of

24 Agriculture.
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1 (2) AVAILABILITY OF DATA.—Data in the joint

2 data retrieval system shall be made available to the

3 public, consistent with applicable laws and regula4 tions regarding confidentiality and proprietary data.

5 (3) RESOURCE MAPPING.—The Secretary of the

6 Interior and the Secretary of Agriculture shall estab7 lish a joint GIS mapping system for use in tracking

8 surface resource values to aid in resource manage9 ment and processing of surface use plans of oper10 ation and applications for permits to drill.

11 SEC. 30209. OIL AND GAS LEASE ACREAGE LIMITATIONS.

12 Section 27(d)(1) of the Mineral Leasing Act (30

13 U.S.C. 184(d)(1)) is amended by inserting after ‘‘acreage

14 held in special tar sand areas’’ the following: ‘‘as well as

15 acreage under any lease any portion of which has been

16 committed to a federally approved unit or cooperative plan

17 or communitization agreement, or for which royalty, in18 cluding compensatory royalty or royalty in kind, was paid

19 in the preceding calendar year,’’.

20 SEC. 30210. FEDERAL REIMBURSEMENT FOR ORPHAN WELL

21 RECLAMATION.

22 (a) DEFINITIONS.—In this section:

23 (1) LESSEE.—The term ‘‘lessee’’ means a per24 son who owns a lease, working interest, or operating
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1 rights in an oil and gas lease on lands owned by the

2 United States.

3 (2) ORPHAN WELL.—The term ‘‘orphan well’’

4 means any oil or gas well—

5 (A) that is located on lands owned by the

6 United States;

7 (B) that requires plugging and abandon8 ment under the regulations of the Department

9 of the Interior; and

10 (C) for which the Secretary is unable to

11 find any person who is legally responsible and

12 has the financial resources to reclaim the well.

13 (3) SECRETARY.—The term ‘‘Secretary’’ means

14 the Secretary of the Interior or the Secretary’s des15 ignee.

16 (b) REIMBURSEMENT FOR RECLAIMING WELLS ON

17 LANDS SUBJECT TO NEW LEASES.—If the Secretary

18 issues a new oil and gas lease on federally owned lands

19 on which 1 or more orphaned wells are located, the

20 Secretary—

21 (1) may require, as a condition of the lease,

22 that the lessee reclaim pursuant to the Secretary’s

23 standards all orphaned wells on the land leased; and

24 (2) shall provide to the lessee a credit against

25 royalties due under the lease for 100 percent of the
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1 reasonable actual costs of reclaiming the orphaned

2 well pursuant to such requirement.

3 (c) ROYALTY CREDITS FOR RECLAIMING ORPHAN

4 WELLS ON OTHER LANDS.—The Secretary—

5 (1) may authorize any lessee under an oil and

6 gas lease on federally owned lands to reclaim pursu7 ant to the Secretary’s standards—

8 (A) an orphan well on unleased federally

9 owned lands or unleased lands on the outer

10 Continental Shelf; or

11 (B) an orphan well located on an existing

12 lease on federally owned lands or the outer Con13 tinental Shelf for the reclamation of which the

14 lessee is not legally responsible; and

15 (2) shall provide to the lessee a credit against

16 royalties under the lessee’s lease of 115 percent of

17 the reasonable actual costs of reclaiming the orphan

18 well.

19 (d) REPORTING AND APPLICATION OF ROYALTY

20 CREDITS.—

21 (1) IN GENERAL.—Any credit against royalties

22 required to be provided to a lessee under this section

23 may be reported against royalties on production

24 from any oil and gas lease on federally owned lands,
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1 or on the outer Continental Shelf, administered by

2 the Secretary, that are owed by—

3 (A) a lessee;

4 (B) any wholly owned affiliate or wholly

5 commonly owned affiliate of a lessee; or

6 (C) any wholly owned affiliate or wholly

7 commonly owned affiliate of the person con8 ducting the reclamation work on an orphan

9 well.

10 (2) REPORTING BY DESIGNEES.—Credits

11 against royalties required to be provided to a lessee

12 under this section may be reported by a designee (as

13 defined in section 3 of the Federal Oil and Gas Roy14 alty Simplification and Fairness Act of 1982 (30

15 U.S.C. 1702)), when the designee reports and pays

16 royalty on behalf of the lessee.

17 (e) IMPLEMENTING REGULATIONS.—The Secretary

18 may promulgate such regulations as may be necessary and

19 appropriate to implement this section.

20 (f) PROTECTION AGAINST LIABILITY.—No person

21 who reclaims an orphan well under this section shall be

22 liable under any provision of Federal law for any costs

23 or damages as a result of action taken or omitted in the

24 course of carrying out a reclamation plan approved by the

25 Secretary under this section. This section shall not pre-
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1 clude liability for costs or damages as a result of a gross

2 negligence or intentional misconduct by the person car3 rying out an approved reclamation plan. For purposes of

4 the preceding sentence, reckless, willful, or wanton mis5 conduct shall constitute gross negligence.

6 SEC. 30211. PRESERVATION OF GEOLOGICAL AND GEO7 PHYSICAL DATA.

8 (a) SHORT TITLE.—This section may be cited as the

9 ‘‘National Geological and Geophysical Data Preservation

10 Program Act of 2003’’.

11 (b) PROGRAM.—The Secretary of the Interior shall

12 carry out a National Geological and Geophysical Data

13 Preservation Program in accordance with this section—

14 (1) to archive geologic, geophysical, and engi15 neering data, maps, well logs, and samples;

16 (2) to provide a national catalog of such archi17 val material; and

18 (3) to provide technical and financial assistance

19 related to the archival material.

20 (c) PLAN.—Within 1 year after the date of the enact21 ment of this Act, the Secretary shall develop and submit

22 to the Committee on Resources of the House of Represent23 atives and the Committee on Energy and Natural Re24 sources of the Senate a plan for the implementation of

25 the Program.
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1 (d) DATA ARCHIVE SYSTEM.—

2 (1) ESTABLISHMENT.—The Secretary shall es3 tablish, as a component of the Program, a data ar4 chive system, which shall provide for the storage,

5 preservation, and archiving of subsurface, surface,

6 geological, geophysical and engineering data and

7 samples. The Secretary, in consultation with the Ad8 visory Committee, shall develop guidelines relating to

9 the data archive system, including the types of data

10 and samples to be preserved.

11 (2) SYSTEM COMPONENTS.—The system shall

12 be comprised of State agencies and agencies within

13 the Department of the Interior that maintain geo14 logical and geophysical data and samples that are

15 designated by the Secretary in accordance with this

16 subsection. The Program shall provide for the stor17 age of data and samples through data repositories

18 operated by such agencies.

19 (3) LIMITATION OF DESIGNATION.—The Sec20 retary may not designate a State agency as a com21 ponent of the data archive system unless it is the

22 agency that acts as the geological survey in the

23 State.

24 (4) DATA FROM FEDERAL LANDS.—The data

25 archive system shall provide for the archiving of rel-
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1 evant subsurface data and samples obtained from

2 Federal lands—

3 (A) in the most appropriate repository des4 ignated under paragraph (2), with preference

5 being given to archiving data in the State in

6 which the data was collected; and

7 (B) consistent with all applicable law and

8 requirements relating to confidentiality and pro9 prietary data.

10 (e) NATIONAL CATALOG.—

11 (1) IN GENERAL.—As soon as practicable after

12 the date of the enactment of this section, the Sec13 retary shall develop and maintain, as a component

14 of the Program, a national catalog that identifies—

15 (A) data and samples available in the data

16 archive system established under subsection (d);

17 (B) the repository for particular material

18 in such system; and

19 (C) the means of accessing the material.

20 (2) AVAILABILITY.—The Secretary shall make

21 the national catalog accessible to the public on the

22 site of the Survey on the World Wide Web, con23 sistent with all applicable requirements related to

24 confidentiality and proprietary data.

25 (f) ADVISORY COMMITTEE.—
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1 (1) IN GENERAL.—The Advisory Committee

2 shall advise the Secretary on planning and imple3 mentation of the Program.

4 (2) NEW DUTIES.—In addition to its duties

5 under the National Geologic Mapping Act of 1992

6 (43 U.S.C. 31b et seq.), the Advisory Committee

7 shall perform the following duties:

8 (A) Advise the Secretary on developing

9 guidelines and procedures for providing assist10 ance for facilities in subsection (g)(1).

11 (B) Review and critique the draft imple12 mentation plan prepared by the Secretary pur13 suant to subsection (c).

14 (C) Identify useful studies of data archived

15 under the Program that will advance under16 standing of the Nation’s energy and mineral re17 sources, geologic hazards, and engineering geol18 ogy.

19 (D) Review the progress of the Program in

20 archiving significant data and preventing the

21 loss of such data, and the scientific progress of

22 the studies funded under the Program.

23 (E) Include in the annual report to the

24 Secretary required under section 5(b)(3) of the

25 National Geologic Mapping Act of 1992 (43
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1 U.S.C. 31d(b)(3)) an evaluation of the progress

2 of the Program toward fulfilling the purposes of

3 the Program under subsection (b).

4 (g) FINANCIAL ASSISTANCE.—

5 (1) ARCHIVE FACILITIES.—Subject to the avail6 ability of appropriations, the Secretary shall provide

7 financial assistance to a State agency that is des8 ignated under subsection (d)(2), for providing facili9 ties to archive energy material.

10 (2) STUDIES.—Subject to the availability of ap11 propriations, the Secretary shall provide financial as12 sistance to any State agency designated under sub13 section (d)(2) for studies that enhance under14 standing, interpretation, and use of materials

15 archived in the data archive system established

16 under subsection (d).

17 (3) FEDERAL SHARE.—The Federal share of

18 the cost of an activity carried out with assistance

19 under this subsection shall be no more than 50 per20 cent of the total cost of that activity.

21 (4) PRIVATE CONTRIBUTIONS.—The Secretary

22 shall apply to the non-Federal share of the cost of

23 an activity carried out with assistance under this

24 subsection the value of private contributions of prop25 erty and services used for that activity.
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1 (h) REPORT.—The Secretary shall include in each re2 port under section 8 of the National Geologic Mapping Act

3 of 1992 (43 U.S.C. 31g)—

4 (1) a description of the status of the Program;

5 (2) an evaluation of the progress achieved in

6 developing the Program during the period covered by

7 the report; and

8 (3) any recommendations for legislative or other

9 action the Secretary considers necessary and appro10 priate to fulfill the purposes of the Program under

11 subsection (b).

12 (i) DEFINITIONS.—As used in this section:

13 (1) ADVISORY COMMITTEE.—The term ‘‘Advi14 sory Committee’’ means the advisory committee es15 tablished under section 5 of the National Geologic

16 Mapping Act of 1992 (43 U.S.C. 31d).

17 (2) SECRETARY.—The term ‘‘Secretary’’ means

18 the Secretary of the Interior acting through the Di19 rector of the United States Geological Survey.

20 (3) PROGRAM.—The term ‘‘Program’’ means

21 the National Energy Data Preservation Program

22 carried out under this section.

23 (4) SURVEY.—The term ‘‘Survey’’ means the

24 United States Geological Survey.
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1 (j) MAINTENANCE OF STATE EFFORT.—It is the in2 tent of the Congress that the States not use this section

3 as an opportunity to reduce State resources applied to the

4 activities that are the subject of the Program.

5 (k) AUTHORIZATION OF APPROPRIATIONS.—There is

6 authorized to be appropriated to the Secretary

7 $30,000,000 for each of fiscal years 2004 through 2008

8 for carrying out this section.

9 SEC. 30212. COMPLIANCE WITH EXECUTIVE ORDER 13211;

10 ACTIONS CONCERNING REGULATIONS THAT

11 SIGNIFICANTLY AFFECT ENERGY SUPPLY,

12 DISTRIBUTION, OR USE.

13 (a) REQUIREMENT.—The Secretary of the Interior

14 shall—

15 (1) require that before any person takes any ac16 tion that could have a significant adverse effect on

17 the supply of domestic energy resources from Fed18 eral public lands, the person shall comply with Exec19 utive Order No. 13211; and

20 (2) within 180 days after the date of the enact21 ment of this Act, publish guidance for purposes of

22 this section describing what constitutes a significant

23 adverse effect on the supply of domestic energy re24 sources under Executive Order No. 13211.
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1 (b) MOU.—The Secretary of the Interior and the

2 Secretary of Agriculture shall include in the memorandum

3 of understanding under section 30208 provisions regard4 ing implementation of subsection (a)(1) of this section.

5 SEC. 30213. REIMBURSEMENT FOR COSTS OF NEPA ANAL6 YSES, DOCUMENTATION, AND STUDIES.

7 (a) IN GENERAL.—The Mineral Leasing Act (30

8 U.S.C. 181 et seq.) is amended by inserting after section

9 37 the following:

10 ‘‘REIMBURSEMENT FOR COSTS OF CERTAIN ANALYSES,

11 DOCUMENTATION, AND STUDIES

12 ‘‘SEC. 38. (a) IN GENERAL.—The Secretary of the

13 Interior may, through royalty credits, reimburse a person

14 who is a lessee, operator, operating rights owner, or appli15 cant for any lease under this Act for reasonable amounts

16 paid by the person for preparation by the Secretary (or

17 a contractor or other person selected by the Secretary) of

18 any project-level analysis, documentation, or related study

19 required under the National Environmental Policy Act of

20 1969 (42 U.S.C. 4321 et seq.) with respect to the lease.

21 ‘‘(b) CONDITIONS.—The Secretary may provide reim22 bursement under subsection (b) only if—

23 ‘‘(1) adequate funding to enable the Secretary

24 to timely prepare the analysis, documentation, or re25 lated study is not appropriated;

26 ‘‘(2) the person paid the costs voluntarily; and
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1 ‘‘(3) the person maintains records of its costs

2 in accordance with regulations prescribed by the

3 Secretary.’’.

4 (b) APPLICATION.—The amendment made by this

5 section shall apply with respect to any lease entered into

6 before, on, or after the date of the enactment of this Act.

7 (c) DEADLINE FOR REGULATIONS.—The Secretary of

8 the Interior shall issue regulations implementing the

9 amendment made by this section by not later than 90 days

10 after the date of the enactment of this Act.

11 SEC. 30214. ALTERNATE ENERGY-RELATED USES ON THE

12 OUTER CONTINENTAL SHELF.

13 (a) PURPOSES.—The purposes of this section are as

14 follows:

15 (1) To protect the economic and land use inter16 ests of the Federal Government in the management

17 of the Outer Continental Shelf for energy-related

18 and certain other purposes.

19 (2) To provide an administrative framework for

20 the oversight and management of energy-related ac21 tivities on the Outer Continental Shelf, consistent

22 with other applicable laws.

23 (3) To expedite projects to increase the produc24 tion, transmission, or conservation of energy on the

25 Outer Continental Shelf.
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1 (4) To provide for interagency coordination in

2 the siting and permitting of energy-related activities

3 on the Outer Continental Shelf.

4 (5) To ensure that energy-related activities on

5 the Outer Continental Shelf are conducted in a man6 ner that provides for safety, protection of the envi7 ronment, prevention of waste, conservation of nat8 ural resources, protection of correlative rights, and

9 protection of national security interests.

10 (6) To authorize alternate uses of existing

11 structures and facilities previously permitted under

12 the Outer Continental Shelf Lands Act (43 U.S.C.

13 1331 note).

14 (7) To ensure that the Federal Government re15 ceives a fair return for any easement or right-of-way

16 granted under section 8(p) of the Outer Continental

17 Shelf Lands Act.

18 (b) AMENDMENT TO OUTER CONTINENTAL SHELF

19 LANDS ACT.—Section 8 of the Outer Continental Shelf

20 Lands Act (43 U.S.C. 1337) is amended by adding at the

21 end the following new subsection:

22 ‘‘(p) EASEMENTS OR RIGHTS-OF-WAY FOR ENERGY

23 AND RELATED PURPOSES.—

24 ‘‘(1) The Secretary, in consultation with the

25 Secretary of the Department in which the Coast
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1 Guard is operating and other relevant departments

2 and agencies of the Federal Government, may grant

3 an easement or right-of-way on the Outer Conti4 nental Shelf for activities not otherwise authorized

5 in this Act, the Deepwater Port Act of 1974 (33

6 U.S.C. 1501 et seq.), or the Ocean Thermal Energy

7 Conversion Act of 1980 (42 U.S.C. 9101 et seq.), or

8 other applicable law when such activities—

9 ‘‘(A) support exploration, development,

10 production, transportation, or storage of oil,

11 natural gas, or other minerals;

12 ‘‘(B) produce or support production, trans13 portation, or transmission of energy from

14 sources other than oil and gas; or

15 ‘‘(C) use facilities currently or previously

16 used for activities authorized under this Act.

17 ‘‘(2)(A) The Secretary shall establish reason18 able forms of annual or one-time payments for any

19 easement or right-of-way granted under this sub20 section. Such payments shall not be assessed on the

21 basis of throughput or production. The Secretary

22 may establish fees, rentals, bonus, or other payments

23 by rule or by agreement with the party to whom the

24 easement or right-of-way is granted.
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1 ‘‘(B) Before exercising the authority granted

2 under this subsection, the Secretary shall consult

3 with the Secretary of Defense and other appropriate

4 agencies concerning issues related to national secu5 rity and navigational obstruction.

6 ‘‘(C) The Secretary is authorized to issue an

7 easement or right-of-way for energy and related pur8 poses as described in paragraph (1) on a competitive

9 or noncompetitive basis. In determining whether

10 such easement or right-of-way shall be granted com11 petitively or noncompetitively, the Secretary shall

12 consider such factors as prevention of waste and

13 conservation of natural resources, economic viability

14 of an energy project, protection of the environment,

15 national interest, national security, human safety,

16 protection of correlative rights, and potential return

17 for the easement or right-of-way.

18 ‘‘(3) The Secretary, in consultation with the

19 Secretary of the Department in which the Coast

20 Guard is operating and other relevant departments

21 and agencies of the Federal Government and af22 fected States, shall prescribe any necessary regula23 tions to assure safety, protection of the environment,

24 prevention of waste, and conservation of the natural

25 resources of the Outer Continental Shelf, protection
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1 of national security interests, and protection of cor2 relative rights therein.

3 ‘‘(4) The Secretary shall require the holder of

4 an easement or right-of-way granted under this sub5 section to furnish a surety bond or other form of se6 curity, as prescribed by the Secretary, and to comply

7 with such other requirements as the Secretary may

8 deem necessary to protect the interests of the United

9 States.

10 ‘‘(5) Nothing in this subsection shall be con11 strued to displace, supersede, limit, or modify the ju12 risdiction, responsibility, or authority of any Federal

13 or State agency under any other Federal law.

14 ‘‘(6) This subsection shall not apply to any area

15 on the Outer Continental Shelf designated as a Na16 tional Marine Sanctuary.’’.

17 (c) CONFORMING AMENDMENT.—The text of the

18 heading for section 8 of the Outer Continental Shelf

19 Lands Act is amended to read as follows: ‘‘LEASES, EASE20 MENTS, AND RIGHTS-OF-WAY ON THE OUTER CONTI21 NENTAL SHELF.’’.
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1 SEC. 30215. DEADLINE FOR DECISION ON APPEALS OF CON2 SISTENCY DETERMINATIONS UNDER THE

3 COASTAL ZONE MANAGEMENT ACT OF 1972.

4 (a) IN GENERAL.—Section 319 of the Coastal Zone

5 Management Act of 1972 (16 U.S.C. 1465) is amended

6 to read as follows:

7 ‘‘APPEALS TO THE SECRETARY

8 ‘‘SEC. 319. (a) NOTICE.—The Secretary shall publish

9 an initial notice in the Federal Register within 30 days

10 after the date of the filing of any appeal to the Secretary

11 of a consistency determination under section 307.

12 ‘‘(b) CLOSURE OF RECORD.—(1) No later than the

13 end of 360-day period beginning on the date of publication

14 of an initial notice under subsection (a), the Secretary

15 shall receive no more filings on the appeal and the record

16 of decision regarding the appeal shall be closed.

17 ‘‘(2) Upon the closure of the record of decision, the

18 Secretary shall immediately publish a notice that the

19 record of decision has been closed.

20 ‘‘(3) The Secretary may extend the period specified

21 in paragraph (1) with respect to an appeal—

22 ‘‘(A) in accordance with the mutual agreement

23 of the parties to the appeal; or

24 ‘‘(B) as needed to complete the development of

25 any environmental analyses required under the Na-
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1 tional Environmental Policy Act of 1969 (42 U.S.C.

2 4331 et seq.).

3 ‘‘(c) DEADLINE FOR DECISION.—The Secretary shall

4 issue a decision in any appeal filed under section 307 no

5 later than 90 days after the publication of a notice under

6 subsection (b)(2).

7 ‘‘(d) APPLICATION.— This section applies to appeals

8 initiated by the Secretary and appeals filed by an appli9 cant.’’.

10 (b) APPLICATION.—The amendment made by sub11 section (a)—

12 (1) shall apply with respect to any appeal initi13 ated or filed on or after the date of the enactment

14 of this Act; and

15 (2) shall not affect any appeal initiated or filed

16 before the date of the enactment of this Act.

17 SEC. 30216. TASK FORCE ON ENERGY PROJECT STREAM18 LINING.

19 (a) FINDINGS.—The Congress finds that—

20 (1) increased production and transmission of

21 energy in a safe and environmentally sound manner

22 is essential to the well-being of the American people;

23 (2) on May 18, 2001, President George W.

24 Bush signed Executive Order No. 13212 requiring

25 agencies to expedite their review of permits of other
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1 actions as necessary to accelerate the completion of

2 energy-related projects, while maintaining safety,

3 public health, and environmental protections; and

4 (3) Executive Order No. 13212 established an

5 interagency task force chaired by the Chairman of

6 the Council on Environmental Quality to monitor

7 and assist agencies in their efforts to expedite review

8 of actions consistent with the Executive order, and

9 to monitor and assist agencies in setting up appro10 priate mechanisms to coordinate Federal, State,

11 tribal, and local permitting in geographic areas

12 where increased permitting activity is expected.

13 (b) SENSE OF CONGRESS.—It is the sense of the

14 Congress that the Task Force established pursuant to Ex15 ecutive Order No. 13212 should remain in existence until

16 such time as the President finds that the needs for which

17 it was established have been met.

18 SEC. 30217. PILOT PROGRAM ON NORTHERN ROCKY MOUN19 TAINS ENERGY RESOURCE MANAGEMENT.

20 (a) FINDINGS.—The Congress finds that the task

21 force established by President George W. Bush by the

22 issuance of Executive Order No. 13212, and headed by

23 the Chairman of the Council on Environmental Quality,

24 has developed a pilot project the goals of which are—
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1 (1) to reduce conflict, uncertainty, and the time

2 involved in making decisions on energy resource

3 management in the Northern Rocky Mountains;

4 (2) to establish a mechanism to provide for the

5 coordination of Federal and State policy guidance

6 regarding the development of regional energy re7 sources and their transmission to markets;

8 (3) to institutionalize early collaboration and

9 participation of all parties involved in regional deci10 sions on environmental, economic and energy issues

11 related to the exploration, development, and produc12 tion of energy resources; and

13 (4) to take a long-term and regional view on

14 how best to manage the energy resources in the

15 Northern Rocky Mountains.

16 (b) SENSE OF THE CONGRESS.—It is the sense of

17 the Congress that the task force should carry out this pilot

18 project and report to the Congress no later than 36

19 months after the date of enactment of this Act on the

20 progress it has made in accomplishing the goals set forth

21 in subsection (a) of this section.

22 SEC. 30218. ENERGY DEVELOPMENT FACILITATOR STUDY.

23 (a) IN GENERAL.—The Chairman of the Council on

24 Environmental Quality shall conduct a study to determine

25 the feasibility of establishing under the Council the posi-
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1 tion of Facilitator for Energy Development, to coordinate

2 Federal agency actions relating to energy project permit3 ting. The study shall consider, among other matters—

4 (1) the ways in which a facilitator can facilitate

5 the long-term coordination of energy projects on

6 Federal lands; and

7 (2) the role of a facilitator in ensuring that the

8 questions or concerns of permit applicants and other

9 persons involved in energy projects are addressed in

10 the agency.

11 (b) REPORT.—Not later than 12 months after the

12 date of enactment of this section, the Chairman shall sub13 mit a report to the Committee on Resources of the House

14 of Representatives and the Committee on Energy and

15 Natural Resources of the Senate detailing the findings of

16 the study required by subsection (a), and including any

17 legislative recommendations of the Chairman with respect

18 to the establishment of the position studied.

19 SEC. 30219. COMBINED HYDROCARBON LEASING.

20 (a) SPECIAL PROVISIONS REGARDING LEASING.—

21 Section 17(b)(2) of the Mineral Leasing Act (30 U.S.C.

22 226(b)(2)) is amended—

23 (1) by inserting ‘‘(A)’’ after ‘‘(2)’’; and

24 (2) by adding at the end the following:
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1 ‘‘(B) For any area that contains any combination of

2 tar sand and oil or gas (or both), the Secretary may issue

3 under this Act, separately—

4 ‘‘(i) a lease for exploration for and extraction of

5 tar sand; and

6 ‘‘(ii) a lease for exploration for and development

7 of oil and gas.

8 ‘‘(C) A lease issued for tar sand shall be issued using

9 the same bidding process, annual rental, and posting pe10 riod as a lease issued for oil and gas, except that the min11 imum acceptable bid required for a lease issued for tar

12 sand shall be $2 per acre.

13 ‘‘(D) The Secretary may waive, suspend, or alter any

14 requirement under section 26 that a permittee under a

15 permit authorizing prospecting for tar sand must exercise

16 due diligence, to promote any resource covered by a com17 bined hydrocarbon lease.’’.

18 (b) CONFORMING AMENDMENT.—Section

19 17(b)(1)(B) of the Mineral Leasing Act (30 U.S.C.

20 226(b)(1)(B)) is amended in the second sentence by in21 serting ‘‘, subject to paragraph (2)(B),’’ after ‘‘The Sec22 retary’’.

23 (c) REGULATIONS.—Within 45 days after the date of

24 the enactment of this Act, the Secretary of the Interior

25 shall issue final regulations to implement this section.
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1 SEC. 30220. ROYALTY PAYMENTS UNDER LEASES UNDER

2 THE OUTER CONTINENTAL SHELF LANDS

3 ACT.

4 (a) ROYALTY RELIEF.—

5 (1) IN GENERAL.—For purposes of providing

6 compensation for lessees and a State for which

7 amounts are authorized by section 6004(c) of the Oil

8 Pollution Act of 1980 (Public Law 101–380), a les9 see may withhold from payment any royalty due and

10 owing to the United States under any lease under

11 the Outer Continental Shelf Lands Act (43 U.S.C.

12 1301 et seq.) for offshore oil or gas production from

13 a covered lease tract if, on or before the date that

14 the payment is due and payable to the United

15 States, the lessee makes a payment to the State of

16 44 cents for every $1 of royalty withheld.

17 (2) TREATMENT OF WITHHELD AMOUNTS.—

18 Any royalty withheld by a lessee in accordance with

19 this section shall be treated as paid for purposes of

20 satisfaction of the royalty obligations of the lessee to

21 the United States.

22 (3) CERTIFICATION OF WITHHELD AMOUNTS.—

23 The Secretary of the Treasury shall—

24 (A) determine the amount of royalty with25 held by a lessee under this section; and
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1 (B) promptly publish a certification when

2 the total amount of royalty withheld by the les3 see under this section is equal to the lessee’s

4 share of the total drainage claim for the West

5 Delta field (with interest) as described at page

6 47 of Senate Report number 101–534.

7 (b) PERIOD OF ROYALTY RELIEF.—Subsection (a)

8 shall apply to royalty amounts that are due and payable

9 in the period beginning on January 1, 2003, and ending

10 on the date on which the Secretary publishes a certifi11 cation under subsection (a)(3)(B).

12 (c) DEFINITIONS.—As used in this section:

13 (1) COVERED LEASE TRACT.—The term ‘‘cov14 ered lease tract’’ means a leased tract (or portion of

15 a leased tract)—

16 (A) lying seaward of the zone defined and

17 governed by section 8(g) of the Outer Conti18 nental Shelf Lands Act (43 U.S.C. 1337(g)); or

19 (B) lying within such zone but to which

20 such section does not apply.

21 (2) LESSEE.—The term ‘‘lessee’’ means a per22 son (including a successor or assign of a person)

23 that, on the date of the enactment of the Oil Pollu24 tion Act of 1980, was a lessee referred to in section

25 6004(c) of that Act (as in effect on that date of the
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1 enactment), but did not hold lease rights in Federal

2 offshore lease OCS–G–5669.

3 TITLE III—BIOMASS ENERGY

4 SEC. 30301. GRANTS TO IMPROVE THE COMMERCIAL VALUE

5 OF FOREST BIOMASS FOR ELECTRIC ENERGY,

6 USEFUL HEAT, TRANSPORTATION FUELS, PE7 TROLEUM-BASED PRODUCT SUBSTITUTES,

8 AND OTHER COMMERCIAL PURPOSES.

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

10 (1) Thousands of communities in the United

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

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

13 managed by the Secretary of Agriculture and the

14 Secretary of the Interior are at risk of catastrophic

15 fire in the near future. The accumulation of heavy

16 forest fuel loads continues to increase as a result of

17 disease, insect infestations, and drought, further

18 raising the risk of fire each year.

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

20 across all land ownerships are at risk to higher than

21 normal mortality over the next 15 years from insect

22 infestation and disease. High levels of tree mortality

23 from insects and disease result in increased fire risk,

24 loss of old growth, degraded watershed conditions,

25 and changes in species diversity and productivity, as
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1 well as diminished fish and wildlife habitat and de2 creased timber values.

3 (3) Preventive treatments such as removing fuel

4 loading, ladder fuels, and hazard trees, planting

5 proper species mix and restoring and protecting

6 early successional habitat, and other specific restora7 tion treatments designed to reduce the susceptibility

8 of forest land, woodland, and rangeland to insect

9 outbreaks, disease, and catastrophic fire present the

10 greatest opportunity for long-term forest health by

11 creating a mosaic of species-mix and age distribu12 tion. Such prevention treatments are widely acknowl13 edged to be more successful and cost effective than

14 suppression treatments in the case of insects, dis15 ease, and fire.

16 (4) The by-products of preventive treatment

17 (wood, brush, thinnings, chips, slash, and other haz18 ardous fuels) removed from forest lands, woodlands

19 and rangelands represent an abundant supply of bio20 mass for biomass-to-energy facilities and raw mate21 rial for business. There are currently few markets

22 for the extraordinary volumes of by-products being

23 generated as a result of the necessary large-scale

24 preventive treatment activities.

25 (5) The United States should—
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1 (A) promote economic and entrepreneurial

2 opportunities in using by-products removed

3 through preventive treatment activities related

4 to hazardous fuels reduction, disease, and insect

5 infestation; and

6 (B) develop and expand markets for tradi7 tionally underused wood and biomass as an out8 let for by-products of preventive treatment ac9 tivities.

10 (b) DEFINITIONS.—In this section:

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

12 trees and woody plants, including limbs, tops, nee13 dles, and other woody parts, and by-products of pre14 ventive treatment, such as wood, brush, thinnings,

15 chips, and slash, that are removed—

16 (A) to reduce hazardous fuels; or

17 (B) to reduce the risk of or to contain dis18 ease or insect infestation.

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

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

21 the Indian Self-Determination and Education Assist22 ance Act (25 U.S.C. 450b(e)).

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

24 (A) an individual;
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1 (B) a community (as determined by the

2 Secretary concerned);

3 (C) an Indian tribe;

4 (D) a small business, micro-business, or a

5 corporation that is incorporated in the United

6 States; and

7 (E) a nonprofit organization.

8 (4) PREFERRED COMMUNITY.—The term ‘‘pre9 ferred community’’ means—

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

11 other similar unit of local government (as deter12 mined by the Secretary concerned) that—

13 (i) has a population of not more than

14 50,000 individuals; and

15 (ii) the Secretary concerned, in the

16 sole discretion of the Secretary concerned,

17 determines contains or is located near

18 land, the condition of which is at signifi19 cant risk of catastrophic wildfire, disease,

20 or insect infestation or which suffers from

21 disease or insect infestation; or

22 (B) any county that—

23 (i) is not contained within a metro24 politan statistical area; and
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1 (ii) the Secretary concerned, in the

2 sole discretion of the Secretary concerned,

3 determines contains or is located near

4 land, the condition of which is at signifi5 cant risk of catastrophic wildfire, disease,

6 or insect infestation or which suffers from

7 disease or insect infestation.

8 (5) SECRETARY CONCERNED.—The term ‘‘Sec9 retary concerned’’ means—

10 (A) the Secretary of Agriculture with re11 spect to National Forest System lands; and

12 (B) the Secretary of the Interior with re13 spect to Federal lands under the jurisdiction of

14 the Secretary of the Interior and Indian lands.

15 (c) BIOMASS COMMERCIAL USE GRANT PROGRAM.—

16 (1) IN GENERAL.—The Secretary concerned

17 may make grants to any person that owns or oper18 ates a facility that uses biomass as a raw material

19 to produce electric energy, sensible heat, transpor20 tation fuels, or substitutes for petroleum-based prod21 ucts to offset the costs incurred to purchase biomass

22 for use by such facility.

23 (2) GRANT AMOUNTS.—A grant under this sub24 section may not exceed $20 per green ton of biomass

25 delivered.
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1 (3) MONITORING OF GRANT RECIPIENT ACTIVI2 TIES.—As a condition of a grant under this sub3 section, the grant recipient shall keep such records

4 as the Secretary concerned may require to fully and

5 correctly disclose the use of the grant funds and all

6 transactions involved in the purchase of biomass.

7 Upon notice by a representative of the Secretary

8 concerned, the grant recipient shall afford the rep9 resentative reasonable access to the facility that pur10 chases or uses biomass and an opportunity to exam11 ine the inventory and records of the facility.

12 (d) IMPROVED BIOMASS USE GRANT PROGRAM.—

13 (1) IN GENERAL.—The Secretary concerned

14 may make grants to persons to offset the cost of

15 projects to develop or research opportunities to im16 prove the use of, or add value to, biomass. In mak17 ing such grants, the Secretary concerned shall give

18 preference to persons in preferred communities.

19 (2) SELECTION.—The Secretary concerned shall

20 select a grant recipient under paragraph (1) after

21 giving consideration to the anticipated public bene22 fits of the project, including the potential to develop

23 thermal or electric energy resources or affordable en24 ergy, opportunities for the creation or expansion of
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1 small businesses and micro-businesses, and the po2 tential for new job creation.

3 (3) GRANT AMOUNT.—A grant under this sub4 section may not exceed $100,000.

5 (e) AUTHORIZATION OF APPROPRIATIONS.—There is

6 authorized to be appropriated $50,000,000 for each of the

7 fiscal years 2004 through 2014 to carry out this section.

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

9 Secretary of Agriculture, in consultation with the Sec10 retary of the Interior, shall submit to the Committee on

11 Energy and Natural Resources and the Committee on Ag12 riculture, Nutrition, and Forestry of the Senate and the

13 Committee on Resources and the Committee on Agri14 culture of the House of Representatives a report describ15 ing the results of the grant programs authorized by this

16 section. The report shall include the following:

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

18 use of biomass by persons that receive grants under

19 this section.

20 (2) The distance between the land from which

21 the biomass was removed and the facility that used

22 the biomass.

23 (3) The economic impacts, particularly new job

24 creation, resulting from the grants to and operation

25 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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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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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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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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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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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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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;

22 (2) require the application of the best commer23 cially available technology for oil and gas explo24 ration, development, and production on all new ex-
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1 ploration, development, and production operations;

2 and

3 (3) ensure that the maximum amount of sur4 face acreage covered by production and support fa5 cilities, including airstrips and any areas covered by

6 gravel berms or piers for support of pipelines, does

7 not exceed 2,000 acres on the Coastal Plain.

8 (b) SITE-SPECIFIC ASSESSMENT AND MITIGATION.—

9 The Secretary shall also require, with respect to any pro10 posed drilling and related activities, that—

11 (1) a site-specific analysis be made of the prob12 able effects, if any, that the drilling or related activi13 ties will have on fish and wildlife, their habitat, and

14 the environment;

15 (2) a plan be implemented to avoid, minimize,

16 and mitigate (in that order and to the extent prac17 ticable) any significant adverse effect identified

18 under paragraph (1); and

19 (3) the development of the plan shall occur

20 after consultation with the agency or agencies hav21 ing jurisdiction over matters mitigated by the plan.

22 (c) REGULATIONS TO PROTECT COASTAL PLAIN

23 FISH AND WILDLIFE RESOURCES, SUBSISTENCE USERS,

24 AND THE ENVIRONMENT.—Before implementing the leas25 ing program authorized by this title, the Secretary shall
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1 prepare and promulgate regulations, lease terms, condi2 tions, restrictions, prohibitions, stipulations, and other

3 measures designed to ensure that the activities undertaken

4 on the Coastal Plain under this title are conducted in a

5 manner consistent with the purposes and environmental

6 requirements of this title.

7 (d) COMPLIANCE WITH FEDERAL AND STATE ENVI8 RONMENTAL LAWS AND OTHER REQUIREMENTS.—The

9 proposed regulations, lease terms, conditions, restrictions,

10 prohibitions, and stipulations for the leasing program

11 under this title shall require compliance with all applicable

12 provisions of Federal and State environmental law and

13 shall also require the following:

14 (1) Standards at least as effective as the safety

15 and environmental mitigation measures set forth in

16 items 1 through 29 at pages 167 through 169 of the

17 ‘‘Final Legislative Environmental Impact State18 ment’’ (April 1987) on the Coastal Plain.

19 (2) Seasonal limitations on exploration, develop20 ment, and related activities, where necessary, to

21 avoid significant adverse effects during periods of

22 concentrated fish and wildlife breeding, denning,

23 nesting, spawning, and migration.

24 (3) That exploration activities, except for sur25 face geological studies, be limited to the period be-
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1 tween approximately November 1 and May 1 each

2 year and that exploration activities shall be sup3 ported by ice roads, winter trails with adequate snow

4 cover, ice pads, ice airstrips, and air transport meth5 ods, except that such exploration activities may

6 occur at other times, if the Secretary finds that such

7 exploration will have no significant adverse effect on

8 the fish and wildlife, their habitat, and the environ9 ment of the Coastal Plain.

10 (4) Design safety and construction standards

11 for all pipelines and any access and service roads,

12 that—

13 (A) minimize, to the maximum extent pos14 sible, adverse effects upon the passage of mi15 gratory species such as caribou; and

16 (B) minimize adverse effects upon the flow

17 of surface water by requiring the use of cul18 verts, bridges, and other structural devices.

19 (5) Prohibitions on public access and use on all

20 pipeline access and service roads.

21 (6) Stringent reclamation and rehabilitation re22 quirements, consistent with the standards set forth

23 in this title, requiring the removal from the Coastal

24 Plain of all oil and gas development and production

25 facilities, structures, and equipment upon completion
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1 of oil and gas production operations, except that the

2 Secretary may exempt from the requirements of this

3 paragraph those facilities, structures, or equipment

4 that the Secretary determines would assist in the

5 management of the Arctic National Wildlife Refuge

6 and that are donated to the United States for that

7 purpose.

8 (7) Appropriate prohibitions or restrictions on

9 access by all modes of transportation.

10 (8) Appropriate prohibitions or restrictions on

11 sand and gravel extraction.

12 (9) Consolidation of facility siting.

13 (10) Appropriate prohibitions or restrictions on

14 use of explosives.

15 (11) Avoidance, to the extent practicable, of

16 springs, streams, and river system; the protection of

17 natural surface drainage patterns, wetlands, and ri18 parian habitats; and the regulation of methods or

19 techniques for developing or transporting adequate

20 supplies of water for exploratory drilling.

21 (12) Avoidance or reduction of air traffic-re22 lated disturbance to fish and wildlife.

23 (13) Treatment and disposal of hazardous and

24 toxic wastes, solid wastes, reserve pit fluids, drilling

25 muds and cuttings, and domestic wastewater, includ-
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1 ing an annual waste management report, a haz2 ardous materials tracking system, and a prohibition

3 on chlorinated solvents, in accordance with applica4 ble Federal and State environmental law.

5 (14) Fuel storage and oil spill contingency plan6 ning.

7 (15) Research, monitoring, and reporting re8 quirements.

9 (16) Field crew environmental briefings.

10 (17) Avoidance of significant adverse effects

11 upon subsistence hunting, fishing, and trapping by

12 subsistence users.

13 (18) Compliance with applicable air and water

14 quality standards.

15 (19) Appropriate seasonal and safety zone des16 ignations around well sites, within which subsistence

17 hunting and trapping shall be limited.

18 (20) Reasonable stipulations for protection of

19 cultural and archeological resources.

20 (21) All other protective environmental stipula21 tions, restrictions, terms, and conditions deemed

22 necessary by the Secretary.

23 (e) CONSIDERATIONS.—In preparing and promul24 gating regulations, lease terms, conditions, restrictions,
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1 prohibitions, and stipulations under this section, the Sec2 retary shall consider the following:

3 (1) The stipulations and conditions that govern

4 the National Petroleum Reserve-Alaska leasing pro5 gram, as set forth in the 1999 Northeast National

6 Petroleum Reserve-Alaska Final Integrated Activity

7 Plan/Environmental Impact Statement.

8 (2) The environmental protection standards

9 that governed the initial Coastal Plain seismic explo10 ration program under parts 37.31 to 37.33 of title

11 50, Code of Federal Regulations.

12 (3) The land use stipulations for exploratory

13 drilling on the KIC–ASRC private lands that are set

14 forth in Appendix 2 of the August 9, 1983, agree15 ment between Arctic Slope Regional Corporation and

16 the United States.

17 (f) FACILITY CONSOLIDATION PLANNING.—

18 (1) IN GENERAL.—The Secretary shall, after

19 providing for public notice and comment, prepare

20 and update periodically a plan to govern, guide, and

21 direct the siting and construction of facilities for the

22 exploration, development, production, and transpor23 tation of Coastal Plain oil and gas resources.

24 (2) OBJECTIVES.—The plan shall have the fol25 lowing objectives:
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1 (A) Avoiding unnecessary duplication of fa2 cilities and activities.

3 (B) Encouraging consolidation of common

4 facilities and activities.

5 (C) Locating or confining facilities and ac6 tivities to areas that will minimize impact on

7 fish and wildlife, their habitat, and the environ8 ment.

9 (D) Utilizing existing facilities wherever

10 practicable.

11 (E) Enhancing compatibility between wild12 life values and development activities.

13 (g) ACCESS TO PUBLIC LANDS.—The Secretary

14 shall—

15 (1) manage public lands in the Coastal Plain

16 subject to section subsections (a) and (b) of section

17 811 of the Alaska National Interest Lands Con18 servation Act (16 U.S.C. 3121); and

19 (2) ensure that local residents shall have rea20 sonable access to public lands in the Coastal Plain

21 for traditional uses.

22 SEC. 30408. EXPEDITED JUDICIAL REVIEW.

23 (a) FILING OF COMPLAINT.—

24 (1) DEADLINE.—Subject to paragraph (2), any

25 complaint seeking judicial review of any provision of
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1 this title or any action of the Secretary under this

2 title shall be filed in any appropriate district court

3 of the United States—

4 (A) except as provided in subparagraph

5 (B), within the 90-day period beginning on the

6 date of the action being challenged; or

7 (B) in the case of a complaint based solely

8 on grounds arising after such period, within 90

9 days after the complainant knew or reasonably

10 should have known of the grounds for the com11 plaint.

12 (2) VENUE.—Any complaint seeking judicial re13 view of an action of the Secretary under this title

14 may be filed only in the United States Court of Ap15 peals for the District of Columbia.

16 (3) LIMITATION ON SCOPE OF CERTAIN RE17 VIEW.—Judicial review of a Secretarial decision to

18 conduct a lease sale under this title, including the

19 environmental analysis thereof, shall be limited to

20 whether the Secretary has complied with the terms

21 of this title and shall be based upon the administra22 tive record of that decision. The Secretary’s identi23 fication of a preferred course of action to enable

24 leasing to proceed and the Secretary’s analysis of

25 environmental effects under this title shall be pre-
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1 sumed to be correct unless shown otherwise by clear

2 and convincing evidence to the contrary.

3 (b) LIMITATION ON OTHER REVIEW.—Actions of the

4 Secretary with respect to which review could have been

5 obtained under this section shall not be subject to judicial

6 review in any civil or criminal proceeding for enforcement.

7 SEC. 30409. FEDERAL AND STATE DISTRIBUTION OF REVE8 NUES.

9 (a) IN GENERAL.—Notwithstanding any other provi10 sion of law, of the amount of adjusted bonus, rental, and

11 royalty revenues from oil and gas leasing and operations

12 authorized under this title—

13 (1) 50 percent shall be paid to the State of

14 Alaska; and

15 (2) except as provided in section 30412(d) the

16 balance shall be deposited into the Treasury as mis17 cellaneous receipts.

18 (b) PAYMENTS TO ALASKA.—Payments to the State

19 of Alaska under this section shall be made semiannually.

20 (c) USE OF BONUS PAYMENTS FOR LOW-INCOME

21 HOME ENERGY ASSISTANCE.—Amounts that are received

22 by the United States as bonuses for leases under this title

23 and deposited into the Treasury under subsection (a)(2)

24 may be appropriated to the Secretary of the Health and

25 Human Services, in addition to amounts otherwise avail-
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1 able, to provide assistance under the Low-Income Home

2 Energy Assistance Act of 1981 (42 U.S.C. 8621 et seq.).

3 SEC. 30410. RIGHTS-OF-WAY ACROSS THE COASTAL PLAIN.

4 (a) EXEMPTION.—Title XI of the Alaska National In5 terest Lands Conservation Act of 1980 (16 U.S.C. 3161

6 et seq.) shall not apply to the issuance by the Secretary

7 under section 28 of the Mineral Leasing Act (30 U.S.C.

8 185) of rights-of-way and easements across the Coastal

9 Plain for the transportation of oil and gas.

10 (b) TERMS AND CONDITIONS.—The Secretary shall

11 include in any right-of-way or easement referred to in sub12 section (a) such terms and conditions as may be necessary

13 to ensure that transportation of oil and gas does not result

14 in a significant adverse effect on the fish and wildlife, sub15 sistence resources, their habitat, and the environment of

16 the Coastal Plain, including requirements that facilities be

17 sited or designed so as to avoid unnecessary duplication

18 of roads and pipelines.

19 (c) REGULATIONS.—The Secretary shall include in

20 regulations under section 30403(g) provisions granting

21 rights-of-way and easements described in subsection (a)

22 of this section.

23 SEC. 30411. CONVEYANCE.

24 In order to maximize Federal revenues by removing

25 clouds on title to lands and clarifying land ownership pat-
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1 terns within the Coastal Plain, the Secretary, notwith2 standing the provisions of section 1302(h)(2) of the Alas3 ka National Interest Lands Conservation Act (16 U.S.C.

4 3192(h)(2)), shall convey—

5 (1) to the Kaktovik Inupiat Corporation the

6 surface estate of the lands described in paragraph 1

7 of Public Land Order 6959, to the extent necessary

8 to fulfill the Corporation’s entitlement under section

9 12 of the Alaska Native Claims Settlement Act (43

10 U.S.C. 1611) in accordance with the terms and con11 ditions of the Agreement between the Department of

12 the Interior, the United States Fish and Wildlife

13 Service, the Bureau of Land Management, and the

14 Kaktovik Inupiat Corporation effective January 22,

15 1993; and

16 (2) to the Arctic Slope Regional Corporation

17 the remaining subsurface estate to which it is enti18 tled pursuant to the August 9, 1983, agreement be19 tween the Arctic Slope Regional Corporation and the

20 United States of America.

21 SEC. 30412. LOCAL GOVERNMENT IMPACT AID AND COMMU22 NITY SERVICE ASSISTANCE.

23 (a) FINANCIAL ASSISTANCE AUTHORIZED.—

24 (1) IN GENERAL.—The Secretary may use

25 amounts available from the Coastal Plain Local Gov-
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1 ernment Impact Aid Assistance Fund established by

2 subsection (d) to provide timely financial assistance

3 to entities that are eligible under paragraph (2) and

4 that are directly impacted by the exploration for or

5 production of oil and gas on the Coastal Plain under

6 this title.

7 (2) ELIGIBLE ENTITIES.—The North Slope

8 Borough, Kaktovik, and other boroughs, municipal

9 subdivisions, villages, and any other community or10 ganized under Alaska State law shall be eligible for

11 financial assistance under this section.

12 (b) USE OF ASSISTANCE.—Financial assistance

13 under this section may be used only for—

14 (1) planning for mitigation of the potential ef15 fects of oil and gas exploration and development on

16 environmental, social, cultural, recreational and sub17 sistence values;

18 (2) implementing mitigation plans and main19 taining mitigation projects;

20 (3) developing, carrying out, and maintaining

21 projects and programs that provide new or expanded

22 public facilities and services to address needs and

23 problems associated with such effects, including fire24 fighting, police, water, waste treatment, medivac,

25 and medical services; and
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1 (4) establishment of a coordination office, by

2 the North Slope Borough, in the City of Kaktovik,

3 which shall—

4 (A) coordinate with and advise developers

5 on local conditions, impact, and history of the

6 areas utilized for development; and

7 (B) provide to the Committee on Resources

8 of the Senate and the Committee on Energy

9 and Resources of the Senate an annual report

10 on the status of coordination between devel11 opers and the communities affected by develop12 ment.

13 (c) APPLICATION.—

14 (1) IN GENERAL.—Any community that is eligi15 ble for assistance under this section may submit an

16 application for such assistance to the Secretary, in

17 such form and under such procedures as the Sec18 retary may prescribe by regulation.

19 (2) NORTH SLOPE BOROUGH COMMUNITIES.—A

20 community located in the North Slope Borough may

21 apply for assistance under this section either directly

22 to the Secretary or through the North Slope Bor23 ough.

24 (3) APPLICATION ASSISTANCE.—The Secretary

25 shall work closely with and assist the North Slope
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1 Borough and other communities eligible for assist2 ance under this section in developing and submitting

3 applications for assistance under this section.

4 (d) ESTABLISHMENT OF FUND.—

5 (1) IN GENERAL.—There is established in the

6 Treasury the Coastal Plain Local Government Im7 pact Aid Assistance Fund.

8 (2) USE.—Amounts in the fund may be used

9 only for providing financial assistance under this

10 section.

11 (3) DEPOSITS.—Subject to paragraph (4), there

12 shall be deposited into the fund amounts received by

13 the United States as revenues derived from rents,

14 bonuses, and royalties under on leases and lease

15 sales authorized under this title.

16 (4) LIMITATION ON DEPOSITS.—The total

17 amount in the fund may not exceed $11,000,000.

18 (5) INVESTMENT OF BALANCES.—The Sec19 retary of the Treasury shall invest amounts in the

20 fund in interest bearing government securities.

21 (e) AUTHORIZATION OF APPROPRIATIONS.—To pro22 vide financial assistance under this section there is author23 ized to be appropriated to the Secretary from the Coastal

24 Plain Local Government Impact Aid Assistance Fund

25 $5,000,000 for each fiscal year.
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1 TITLE V—HYDROPOWER

2 SEC. 30501. STUDY AND REPORT ON INCREASING ELECTRIC

3 POWER PRODUCTION CAPABILITY OF EXIST4 ING FACILITIES.

5 (a) IN GENERAL.—The Secretary of the Interior, in

6 consultation with the Administrator of each Federal power

7 marketing administration, shall conduct a study of the po8 tential for increasing electric power production capability

9 at existing facilities under the administrative jurisdiction

10 of the Secretary.

11 (b) CONTENT.—The study under this section shall in12 clude identification and description in detail of each facil13 ity that is capable, with or without modification, of pro14 ducing additional hydroelectric power, including esti15 mation of the existing potential for the facility to generate

16 hydroelectric power.

17 (c) REPORT.—The Secretary shall submit to the Con18 gress a report on the findings, conclusions, and rec19 ommendations of the study under this section by not later

20 than 12 months after the date of the enactment of this

21 Act. The Secretary shall include in the report the fol22 lowing:

23 (1) The identifications, descriptions, and esti24 mations referred to in subsection (b).
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1 (2) A description of activities the Secretary is

2 currently conducting or considering, or that could be

3 considered, to produce additional hydroelectric power

4 from each identified facility.

5 (3) A summary of action that has already been

6 taken by the Secretary to produce additional hydro7 electric power from each identified facility.

8 (4) The costs to install, upgrade, or modify

9 equipment or take other actions to produce addi10 tional hydroelectric power from each identified facil11 ity and the level of Federal power customer involve12 ment in the Secretary’s determination of such costs.

13 (5) The benefits that would be achieved by such

14 installation, upgrade, modification, or other action,

15 including quantified estimates of any additional en16 ergy or capacity from each facility identified under

17 subsection (b).

18 (6) A description of actions that are planned,

19 underway, or might reasonably be considered to in20 crease hydroelectric power production by replacing

21 turbine runners.

22 (7) A description of actions that are planned,

23 underway, or might reasonably be considered to in24 crease hydroelectric power production by performing

25 generator uprates and rewinds.
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1 (8) The impact of increased hydroelectric power

2 production on irrigation, fish, wildlife, Indian tribes,

3 river health, water quality, navigation, recreation,

4 fishing, and flood control.

5 (9) Any additional recommendations the Sec6 retary considers advisable to increase hydroelectric

7 power production from, and reduce costs and im8 prove efficiency at, facilities under the jurisdiction of

9 the Secretary.

10 SEC. 30502. STUDY AND IMPLEMENTATION OF INCREASED

11 OPERATIONAL EFFICIENCIES IN HYDRO12 ELECTRIC POWER PROJECTS.

13 (a) IN GENERAL.—The Secretary of Interior shall

14 conduct a study of operational methods and water sched15 uling techniques at all hydroelectric power plants under

16 the administrative jurisdiction of the Secretary that have

17 an electric power production capacity greater than 50

18 megawatts, to—

19 (1) determine whether such power plants and

20 associated river systems are operated so as to opti21 mize energy and capacity capabilities; and

22 (2) identify measures that can be taken to im23 prove operational flexibility at such plants to achieve

24 such optimization.
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1 (b) REPORT.—The Secretary shall submit a report on

2 the findings, conclusions, and recommendations of the

3 study under this section by not later than 18 months after

4 the date of the enactment of this Act, including a sum5 mary of the determinations and identifications under

6 paragraphs (1) and (2) of subsection (a). The Secretary

7 shall include in the report the impact of optimized hydro8 electric power production on irrigation, fish, wildlife, In9 dian tribes, river health, water quality, navigation, recre10 ation, fishing, and flood control.

11 (c) COOPERATION WITH FEDERAL POWER MAR12 KETING ADMINISTRATIONS.—The Secretary shall coordi13 nate with the Administrator of each Federal power mar14 keting administration in determining how the value of

15 electric power produced by each hydroelectric power facil16 ity that produces power marketed by the administration

17 can be optimized.

18 SEC. 30503. SHIFT OF PROJECT LOADS TO OFF-PEAK PERI19 ODS.

20 (a) IN GENERAL.—The Secretary of the Interior

21 shall—

22 (1) review electric power consumption by Bu23 reau of Reclamation facilities for water pumping

24 purposes; and
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1 (2) make such adjustments in such pumping as

2 possible to minimize the amount of electric power

3 consumed for such pumping during periods of peak

4 electric power consumption, including by performing

5 as much of such pumping as possible during off6 peak hours at night.

7 (b) CONSENT OF AFFECTED IRRIGATION CUSTOMERS

8 REQUIRED.—The Secretary may not under this section

9 make any adjustment in pumping at a facility without the

10 consent of each person that has contracted with the

11 United States for delivery of water from the facility for

12 use for irrigation and that would be affected by such ad13 justment.

14 (c) EXISTING OBLIGATIONS NOT AFFECTED.—This

15 section shall not be construed to affect any existing obliga16 tion of the Secretary to provide electric power, water, or

17 other benefits from Bureau of Reclamation facilities.

18 TITLE VI—GEOTHERMAL

19 ENERGY

20 SEC. 30601. COMPETITIVE LEASE SALE REQUIREMENTS.

21 (a) IN GENERAL.—Section 4 of the Geothermal

22 Steam Act of 1970 (30 U.S.C. 1003) is amended to read

23 as follows:

24 ‘‘LEASING PROCEDURES

25 ‘‘SEC. 4. (a) IN GENERAL.—
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1 ‘‘(1) NOMINATIONS.—The Secretary shall ac2 cept nominations at any time from qualified compa3 nies and individuals of areas to be leased under this

4 Act.

5 ‘‘(2) COMPETITIVE LEASE SALE REQUIRED.—

6 The Secretary shall hold a competitive lease sale at

7 least once every 2 years for lands in a State in that

8 are located areas with respect to which there are

9 nominations pending under paragraph (1).

10 ‘‘(3) NONCOMPETITIVE LEASING.—The Sec11 retary shall make available for a period of 2 years

12 for noncompetitive leasing any lands for which a

13 competitive lease sale is held, but for which the Sec14 retary does not receive any bids in a competitive

15 lease sale.’’.

16 (b) PENDING LEASE APPLICATIONS.—Not later than

17 6 months after the date of the enactment of this Act, the

18 Secretary of the Interior shall initiate competitive lease

19 sales under the Geothermal Steam Act of 1970 (30 U.S.C.

20 1001 et seq.), as amended by this Act, for areas with re21 spect to which applications for leasing are pending on the

22 date of the enactment of this Act.
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1 SEC. 30602. SPECIAL PROVISIONS REGARDING DIRECT USE

2 OF LOW TEMPERATURE GEOTHERMAL EN3 ERGY RESOURCES.

4 (a) LEASING PROCEDURE.—Section 4 of the Geo5 thermal Steam Act of 1970 (30 U.S.C. 1003) is further

6 amended by adding at the end the following:

7 ‘‘(b) LEASING OF LOW TEMPERATURE GEOTHERMAL

8 RESOURCES.—Lands leased under this Act exclusively for

9 qualified development and direct utilization of low tem10 perature geothermal resources shall be leased to any quali11 fied applicant who first applies for such lease under regu12 lations formulated by the Secretary.’’.

13 (b) LIMITATION ON LEASE AREA.—Section 7 of the

14 Geothermal Steam Act of 1970 (30 U.S.C. 1006) is

15 amended—

16 (1) in the first sentence by striking ‘‘A geo17 thermal lease’’ and inserting ‘‘(a) IN GENERAL.—

18 Except as provided in subsection (b), a geothermal

19 lease’’; and

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

21 ‘‘(b) LEASING OF LOW TEMPERATURE GEOTHERMAL

22 RESOURCES.—A geothermal lease for qualified develop23 ment and direct utilization of low temperature geothermal

24 resources shall embrace not more than the minimum

25 amount of acreage determined by the Secretary to be rea26 sonably necessary for such utilization.’’.
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1 (c) ANNUAL PAYMENT.—Section 5 of the Geothermal

2 Steam Act of 1970 (30 U.S.C. 1004) is amended—

3 (1) in paragraph (c) by redesignating subpara4 graphs (1) and (2) as subparagraphs (A) and (B);

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

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

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

8 ‘‘SEC. 5.’’; and

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

10 ‘‘(b) EXEMPTION FOR USE OF LOW TEMPERATURE

11 RESOURCES.—

12 ‘‘(1) IN GENERAL.—In lieu of any royalty or

13 rental under subsection (a), a lease for qualified de14 velopment and direct utilization of low temperature

15 geothermal resources shall provide for payment by

16 the lessee of an annual fee per well of not less than

17 $100, and not more than $1,000, in accordance with

18 the schedule issued under paragraph (2).

19 ‘‘(2) SCHEDULE.—The Secretary shall issue a

20 schedule of fees under this section under which a fee

21 is based on the scale of development and utilization

22 to which the fee applies.’’.

23 (d) DEFINITIONS.—Section 2 of the Geothermal

24 Steam Act of 1970 (30 U.S.C. 1001) is amended—
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1 (1) in paragraph (f) by redesignating subpara2 graphs (1) through (4) in order as subparagraphs

3 (A) through (D);

4 (2) by redesignating paragraphs (a) through (f)

5 in order as paragraphs (1) through (6); and

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

7 ‘‘(7) LOW TEMPERATURE GEOTHERMAL RE8 SOURCES.—The term ‘low temperature geothermal

9 resources’ means geothermal steam and associated

10 geothermal resources having a wellhead temperature

11 of less than 195 degrees Fahrenheit.

12 ‘‘(8) QUALIFIED DEVELOPMENT AND DIRECT

13 UTILIZATION.—The term ‘qualified development and

14 direct utilization’ means development and utilization

15 in which all products of geothermal resources, other

16 than any heat utilized, are returned to the geo17 thermal formation from which they are produced.’’.

18 (e) EXISTING LEASES.—

19 (1) APPLICATION TO CONVERT.—Any lessee

20 under a lease under the Geothermal Steam Act of

21 1970 that was issued before the date of the enact22 ment of this Act may apply to the Secretary of the

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

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

25 to a lease for qualified development and direct utili-
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1 zation of low temperature geothermal resources in

2 accordance with the amendments made by this sec3 tion.

4 (2) CONVERSION.—The Secretary shall approve

5 such an application and convert such a lease to a

6 lease in accordance with the amendments by not

7 later than 180 days after receipt of such application,

8 unless the Secretary determines that the applicant is

9 not a qualified applicant with respect to the lease.

10 SEC. 30603. ROYALTIES AND NEAR-TERM PRODUCTION IN11 CENTIVES.

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

13 Act of 1970 (30 U.S.C. 1004) is further amended in sub14 section (a) by striking paragraph (1) and inserting the fol15 lowing:

16 ‘‘(1) a royalty on direct use of geothermal

17 steam and associated geothermal resources, other

18 than low temperature geothermal resources, which

19 shall be—

20 ‘‘(A) 3.5 percent of the gross proceeds

21 from the sale of electricity produced by such re22 sources; and

23 ‘‘(B) 0.75 percent of the gross proceeds

24 from the sale of items produced by the direct

25 use of such resources;’’.
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1 (b) NEAR-TERM PRODUCTION INCENTIVE.—

2 (1) IN GENERAL.—Notwithstanding section

3 5(a) of the Geothermal Steam Act of 1970, as

4 amended by subsection (a), or any provision of any

5 lease under that Act, the royalty required to be

6 paid—

7 (A) under any qualified geothermal energy

8 lease with respect to commercial production of

9 heat or energy from a facility that begins such

10 production in the 6-year period beginning on

11 the date of the enactment of this Act; or

12 (B) on qualified expansion geothermal en13 ergy;

14 shall be 50 percent of the amount of royalty other15 wise required to be paid under those provisions.

16 (2) STATE SHARE.—Notwithstanding section 20

17 of the Geothermal Steam Act of 1970 (30 U.S.C.

18 1019), section 35 of the Mineral Leasing Act (30

19 U.S.C.191), or section 6 of the Mineral Leasing Act

20 for Acquired Lands (30 U.S.C. 355), in the case of

21 monies received by the United States from royalty

22 described in subparagraph (A) or (B) of paragraph

23 (1), the percentage required to be paid by the Sec24 retary of the Treasury to a State under those sec25 tions shall be 100 percent.
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1 (3) 4-YEAR APPLICATION.—Paragraphs (1) and

2 (2) apply only to commercial production of heat or

3 energy from a facility in the first 4 years of such

4 production.

5 (4) NO EFFECT ON STATE PORTION.—This sub6 section shall not be construed to reduce the amount

7 of royalty required to be paid to a State.

8 (c) DEFINITIONS.—In this section:

9 (1) QUALIFIED EXPANSION GEOTHERMAL EN10 ERGY.—The term ‘‘qualified expansion geothermal

11 energy’’ means geothermal energy produced from a

12 generation facility for which—

13 (A) the production is increased by more

14 than 10 percent as a result of expansion of the

15 facility carried out in the 6-year period begin16 ning on the date of the enactment of this Act;

17 and

18 (B) such production increase is greater

19 than 10 percent of the average production by

20 the facility during the 5-year period preceding

21 the expansion of the facility.

22 (2) QUALIFIED GEOTHERMAL ENERGY

23 LEASE.—The term ‘‘qualified geothermal energy

24 lease’’ means a lease under the Geothermal Steam

25 Act of 1970 (30 U.S.C. 1001 et seq.)—
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1 (A) that was executed before the end of

2 the 6-year period beginning on the date of the

3 enactment of this Act; and

4 (B) under which no commercial production

5 of any form of heat or energy occurred before

6 the date of the enactment of this Act.

7 (d) ROYALTY EXISTING LEASES.—

8 (1) IN GENERAL.—Any lessee under a lease

9 issued under the Geothermal Steam Act of 1970 be10 fore the date of the enactment of this Act may mod11 ify the terms of the lease relating to payment of roy12 alties to comply with the amendment made by sub13 section (a), by applying to the Secretary of the Inte14 rior by not later than 18 months after the date of

15 the enactment of this Act.

16 (2) APPLICATION OF MODIFICATION.—Such

17 modification shall apply to any use of geothermal

18 steam and associated geothermal resources to which

19 the amendment applies that occurs after the date of

20 that application.

21 SEC. 30604. CONSULTATION REGARDING GEOTHERMAL

22 LEASING AND PERMITTING ON PUBLIC

23 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 leasing

4 and permitting, for geothermal development, of public

5 lands under their respective administrative jurisdictions.

6 (b) LEASE AND PERMIT APPLICATIONS.—The memo7 randum of understanding shall include provisions that—

8 (1) identify known geothermal areas on public

9 lands within the National Forest System and when

10 necessary review management plans to consider leas11 ing under the Geothermal Steam Act of 1970 (30

12 U.S.C. 1001 et seq.) as a land use;

13 (2) establish an administrative procedure for

14 processing geothermal lease applications, including

15 lines of authority, steps in application processing,

16 and timeframes for application processing;

17 (3) provide that the Secretary concerned

18 shall—

19 (A) within 14 days after receiving an ap20 plication for a lease, determine whether the ap21 plication contains sufficient information to

22 allow processing of the application; and

23 (B) if the application is found not to con24 tain sufficient information to allow processing

25 the application the Secretary shall, before the
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1 end of such 14-day period, provide written noti2 fication to the lease applicant that the applica3 tion is being returned to the applicant without

4 processing and itemizing the deficiencies in the

5 application that prevent processing;

6 (4) provide that the Secretary concerned shall

7 within 30 days after receiving a lease application,

8 provide written notice to the lease applicant regard9 ing the status of the application, including an esti10 mation of the time that will be required to complete

11 action on the application; and

12 (5) establish an administrative procedure for

13 processing geothermal development permits, includ14 ing lines of authority, steps in permit processing,

15 and timeframes for permit processing.

16 (c) FIVE-YEAR LEASING PLAN.—The memorandum

17 of understanding shall develop a 5-year plan for leasing

18 under the Geothermal Steam Act of 1970 (30 U.S.C. 1001

19 et seq.) of public land in the National Forest System. The

20 plan for geothermal leasing shall be updated every 5 years.

21 (d) DATA RETRIEVAL SYSTEM.—The memorandum

22 of understanding shall establish a joint data retrieval sys23 tem that is capable of tracking lease and permit applica24 tions and requests and providing to the applicant or re25 quester information as to their status within the Depart-
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1 ments of the Interior and Agriculture, including an esti2 mate of the time required for administrative action.

3 SEC. 30605. REVIEW AND REPORT TO CONGRESS.

4 The Secretary of the Interior shall promptly review

5 and report to the Congress within 3 years after the date

6 of the enactment of this Act regarding the status of all

7 moratoria on and withdrawals from leasing under the Geo8 thermal Steam Act of 1970 (30 U.S.C. 1001 et seq.) of

9 known geothermal resources areas (as that term is defined

10 in section 2 of that Act (30 U.S.C. 1001), specifying for

11 each such area whether the basis for such moratoria or

12 withdrawal still applies.

13 SEC. 30606. REIMBURSEMENT FOR COSTS OF NEPA ANAL14 YSES, DOCUMENTATION, AND STUDIES.

15 (a) IN GENERAL.—The Geothermal Steam Act of

16 1970 (30 U.S.C. 1001 et seq.) is amended by adding at

17 the end the following:

18 ‘‘REIMBURSEMENT FOR COSTS OF CERTAIN ANALYSES,

19 DOCUMENTATION, AND STUDIES

20 ‘‘SEC. 30. (a) IN GENERAL.—The Secretary of the

21 Interior may, through royalty credits, reimburse a person

22 who is a lessee, operator, operating rights owner, or appli23 cant for a lease under this Act for reasonable amounts

24 paid by the person for preparation by the Secretary (or

25 a contractor or other person selected by the Secretary) of

26 any project-level analysis, documentation, or related study
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1 required under the National Environmental Policy Act of

2 1969 (42 U.S.C. 4321 et seq.) with respect to the lease.

3 ‘‘(b) CONDITIONS.—The Secretary may provide reim4 bursement under subsection (a) only if—

5 ‘‘(1) adequate funding to enable the Secretary

6 to timely prepare the analysis, documentation, or re7 lated study is not appropriated;

8 ‘‘(2) the person paid the amounts voluntarily;

9 and

10 ‘‘(3) the person maintains records of its costs

11 in accordance with regulations prescribed by the

12 Secretary.’’.

13 (b) APPLICATION.—The amendments made by this

14 section shall apply with respect to any lease entered into

15 before, on, or after the date of the enactment of this Act.

16 (c) DEADLINE FOR REGULATIONS.—The Secretary

17 shall issue regulations implementing the amendments

18 made by this section by not later than 90 days after the

19 date of the enactment of this Act.

20 SEC. 30607. ASSESSMENT OF GEOTHERMAL ENERGY PO21 TENTIAL.

22 The Secretary of Interior, acting through the Direc23 tor of the United States Geological Survey, shall update

24 the 1978 Assessment of Geothermal Resources, and sub25 mit that updated assessment to the Committee on Re-
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1 sources of the House of Representatives and the Com2 mittee on Energy and Natural Resources of the Senate—

3 (1) within 3 years after the date of enactment

4 of this Act; and

5 (2) thereafter as the availability of data and de6 velopments in technology warrant.

7 SEC. 30608. COOPERATIVE OR UNIT PLANS.

8 (a) IN GENERAL.—Section 18 of the Geothermal

9 Steam Act of 1970 (30 U.S.C. 1017) is amended to read

10 as follows:

11 ‘‘COOPERATIVE OR UNIT PLANS

12 ‘‘SEC. 18. (a) ADOPTION OF PLAN BY LESSEES.—

13 ‘‘(1) IN GENERAL.—For the purpose of more

14 properly conserving the natural resources of any

15 geothermal field, or like area, or any part thereof

16 (whether or not any part of the geothermal field, or

17 like area, is then subject to any cooperative or unit

18 plan of development or operation), lessees thereof

19 and their representatives may unite with each other,

20 or jointly or separately with others, in collectively

21 adopting and operating under a cooperative or unit

22 plan of development or operation of such field, or

23 like area, or any part thereof, if determined and cer24 tified by the Secretary to be necessary or advisable

25 in the public interest.
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1 ‘‘(2) MODIFICATION OF LEASE REQUIREMENTS

2 BY SECRETARY.—The Secretary may, in the discre3 tion of the Secretary, and with the consent of the

4 holders of leases involved, establish, alter, change, or

5 revoke drilling, producing, rental, minimum royalty,

6 and royalty requirements of such leases and to make

7 such regulations with reference to such leases, with

8 the consent of the lessees, in connection with the in9 stitution and operation of any such cooperative or

10 unit plan as the Secretary may deem necessary or

11 proper to secure the proper protection of the public

12 interest.

13 ‘‘(b) REQUIREMENT OF PLANS UNDER NEW

14 LEASES.—The Secretary—

15 ‘‘(1) may provide that geothermal leases issued

16 under this Act after the date of the enactment of

17 this section shall contain a provision requiring the

18 lessee to operate under such a reasonable coopera19 tive or unit plan; and

20 ‘‘(2) may prescribe such a plan under which

21 such lessee shall operate, which shall adequately pro22 tect the rights of all parties in interest, including the

23 United States.

24 ‘‘(c) MODIFICATION OF RATE OF PROSPECTING, DE25 VELOPMENT, AND PRODUCTION.—The Secretary may re-
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1 quire that any plan authorized by the this section that

2 applies to lands owned by the United States contain a pro3 vision under which authority is vested in the Secretary,

4 or any person, committee, or State or Federal officer or

5 agency as may be designated in the plan, to alter or mod6 ify from time to time the rate of prospecting and develop7 ment and the quantity and rate of production under such

8 plan.

9 ‘‘(d) EXCLUSION FROM DETERMINATION OF HOLD10 ING OR CONTROL.—Any lands that are subject to any plan

11 approved or prescribed by the Secretary under this section

12 shall not be considered in determining holdings or control

13 under any provision of this Act.

14 ‘‘(e) POOLING OF CERTAIN LANDS.—If separate

15 tracts of lands cannot be independently developed and op16 erated to use geothermal steam and associated geothermal

17 resources pursuant to this Act in conformity with an es18 tablished development program—

19 ‘‘(1) any such lands, or a portion thereof, may

20 be pooled with other lands, whether or not owned by

21 the United States, for purposes of such development

22 and operation under a communitization agreement

23 providing for an apportionment of production or roy24 alties among the separate tracts of land comprising
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1 the production unit, if such pooling is determined by

2 the Secretary to be in the public interest; and

3 ‘‘(2) operation or production pursuant to such

4 an agreement shall be treated as operation or pro5 duction with respect to each tract of land that is

6 subject to the agreement.

7 ‘‘(f) PLAN REVIEW.—No more than 5 years after ap8 proval of any cooperative or unit plan of development or

9 operation, and at least every 5 years thereafter, the Sec10 retary shall review each such plan and, after notice and

11 opportunity for comment, eliminate from inclusion in such

12 plan any lands that the Secretary determines are not rea13 sonably necessary for cooperative or unit operations under

14 the plan. Such elimination shall be based on scientific evi15 dence, and shall occur only if it is determined by the Sec16 retary to be for the purpose of conserving and properly

17 managing the geothermal resource. Any land so eliminated

18 shall be eligible for an extension under subsection (c) or

19 (g) of section 6 if it meets the requirements for such an

20 extension.

21 ‘‘(g) APPROVAL BY SECRETARY.—The Secretary

22 may, on such conditions as the Secretary may prescribe,

23 approve operating, drilling, or development contracts made

24 by one or more lessees of geothermal leases, with one or

25 more persons, associations, or corporations if, in the dis-
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1 cretion of the Secretary, the conservation of natural re2 sources or the public convenience or necessity may require

3 or the interests of the United States may be best served

4 thereby. All leases operated under such approved oper5 ating, drilling, or development contracts, and interests

6 thereunder, shall be excepted in determining holdings or

7 control under section 7 of this Act.’’.

8 SEC. 30609. ROYALTY ON BYPRODUCTS.

9 Section 5 of the Geothermal Steam Act of 1970 (30

10 U.S.C. 1004) is further amended in subsection (a) by

11 striking paragraph (2) and inserting the following:

12 ‘‘(2) a royalty on any byproduct that is a min13 eral named in the first section of the Mineral Leas14 ing Act (30 U.S.C. 181), and that is derived from

15 production under the lease, at the rate of the royalty

16 that applies under that Act to production of such

17 mineral under a lease under that Act;’’.

18 SEC. 30610. REPEAL OF AUTHORITIES OF SECRETARY TO

19 READJUST TERMS, CONDITIONS, RENTALS,

20 AND ROYALTIES.

21 Section 8 of the Geothermal Steam Act of 1970 (30

22 U.S.C. 1007) is amended by repealing subsections (a) and

23 (b), and by striking ‘‘(c)’’.
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1 SEC. 30611. CREDITING OF RENTAL TOWARD ROYALTY.

2 Section 5 of the Geothermal Steam Act of 1970 (30

3 U.S.C. 1004) is further amended—

4 (1) in subsection (a)(2) by inserting ‘‘and’’

5 after the semicolon at the end;

6 (2) in subsection (a)(3) by striking ‘‘; and’’ and

7 inserting a period;

8 (3) by striking paragraph (4) of subsection (a);

9 and

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

11 ‘‘(c) CREDITING OF RENTAL TOWARD ROYALTY.—

12 Any annual rental under this section that is paid with re13 spect to a lease before the first day of the year for which

14 the annual rental is owed shall be credited to the amount

15 of royalty that is required to be paid under the lease for

16 that year.’’.

17 SEC. 30612. LEASE DURATION AND WORK COMMITMENT RE18 QUIREMENTS.

19 (a) IN GENERAL.—Section 6 of the Geothermal

20 Steam Act of 1970 (30 U.S.C. 1005) is amended—

21 (1) by striking so much as precedes subsection

22 (c), and striking subsections (e), (g), (h), (i), and

23 (j);

24 (2) by redesignating subsections (c), (d), and

25 (f) in order as subsections (g), (h), and (i);
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1 (3) by inserting before subsection (g), as so re2 designated, the following:

3 ‘‘LEASE TERM AND WORK COMMITMENT REQUIREMENTS

4 ‘‘SEC. 6. (a) PRIMARY TERM.—

5 ‘‘(1) IN GENERAL.—A geothermal lease shall be

6 for a primary term of ten years.

7 ‘‘(2) INITIAL EXTENSION.—The Secretary shall

8 extend the primary term of a geothermal lease for

9 5 years if, for each year after the fifth year of the

10 lease—

11 ‘‘(A) the Secretary determined under sub12 section (c) that the lessee satisfied the work

13 commitment requirements that applied to the

14 lease for that year; or

15 ‘‘(B) the lessee paid in accordance with

16 subsection (d) the value of any work that was

17 not completed in accordance with those require18 ments.

19 ‘‘(3) ADDITIONAL EXTENSION.—The Secretary

20 shall extend the primary term of a geothermal lease

21 (after an extension under paragraph (2)) for an ad22 ditional 5 years if, for each year after the fifteenth

23 year of the lease, the Secretary determined under

24 subsection (c) that the lessee satisfied the work com25 mitment requirements that applied to the lease for

26 that year.
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1 ‘‘(b) REQUIREMENT TO SATISFY ANNUAL WORK

2 COMMITMENT REQUIREMENT.—

3 ‘‘(1) IN GENERAL.—The lessee for a geothermal

4 lease shall, for each year after the fifth year of the

5 lease, satisfy work commitment requirements pre6 scribed by the Secretary that apply to the lease for

7 that year.

8 ‘‘(2) PRESCRIPTION OF WORK COMMITMENT RE9 QUIREMENTS.—The Secretary shall issue regulations

10 prescribing minimum work commitment require11 ments for geothermal leases, that—

12 ‘‘(A) require that a lessee, in each year

13 after the fifth year of the primary term of a

14 geothermal lease, diligently work to achieve

15 commercial production or utilization of steam

16 under the lease;

17 ‘‘(B) require that in each year to which

18 work commitment requirements under the regu19 lations apply, the lessee shall significantly re20 duce the amount of work that remains to be

21 done to achieve such production or utilization;

22 ‘‘(C) describe specific work that must be

23 completed by a lessee by the end of each year

24 to which the work commitment requirements

25 apply;
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1 ‘‘(D) carry forward and apply to work

2 commitment requirements for a year, work

3 completed in any year in the preceding 3-year

4 period that was in excess of the work required

5 to be performed in that preceding year; and

6 ‘‘(E) establish transition rules for leases

7 issued before the date of the enactment of this

8 subsection.

9 ‘‘(3) TERMINATION OF APPLICATION OF RE10 QUIREMENTS.—Work commitment requirements pre11 scribed under this subsection shall not apply to a

12 geothermal lease after the date on which geothermal

13 steam is produced or utilized under the lease in com14 mercial quantities.

15 ‘‘(c) DETERMINATION OF WHETHER REQUIREMENTS

16 SATISFIED.—The Secretary shall, by not later than 21

17 days after the end of each year for which work commit18 ment requirements under subsection (b) apply to a geo19 thermal lease—

20 ‘‘(1) determine whether the lessee has satisfied

21 the requirements that apply for that year;

22 ‘‘(2) notify the lessee of that determination; and

23 ‘‘(3) in the case of a notification that the lessee

24 did not satisfy work commitment requirements for

25 the year, include in the notification—
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1 ‘‘(A) a description of the specific work that

2 was not completed by the lessee in accordance

3 with the requirements; and

4 ‘‘(B) the amount of the dollar value of

5 such work that was not completed, reduced by

6 the amount of expenditures made for work com7 pleted in a prior year that is carried forward

8 pursuant to subsection (b)(2)(D).

9 ‘‘(d) PAYMENT OF VALUE OF UNCOMPLETED

10 WORK.—

11 ‘‘(1) IN GENERAL.—If the Secretary notifies a

12 lessee that the lessee failed to satisfy work commit13 ment requirements under subsection (b), the lessee

14 shall pay to the Secretary, by not later than the end

15 of the 60-day period beginning on the date of the

16 notification, the dollar value of work that was not

17 completed by the lessee, in the amount stated in the

18 notification (as reduced under subsection (c)(3)(B)).

19 ‘‘(2) FAILURE TO PAY VALUE OF

20 UNCOMPLETED WORK.—If a lessee fails to pay such

21 amount to the Secretary before the end of that pe22 riod, the lease shall terminate upon the expiration of

23 the period.

24 ‘‘(e) CONTINUATION AFTER COMMERCIAL PRODUC25 TION OR UTILIZATION.—If geothermal steam is produced
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1 or utilized in commercial quantities within the primary

2 term of the lease under subsection (a) (including any ex3 tension of the lease under subsection (a)), such lease shall

4 continue until the date on which geothermal steam is no

5 longer produced or utilized in commercial quantities.

6 ‘‘(f) CONVERSION OF GEOTHERMAL LEASE TO MIN7 ERAL LEASE.—The lessee under a lease that has produced

8 geothermal steam for electrical generation, has been deter9 mined by the Secretary to be incapable of any further com10 mercial production or utilization of geothermal steam, and

11 that is producing any valuable byproduct in payable quan12 tities may, within 6 months after such determination—

13 ‘‘(1) convert the lease to a mineral lease under

14 the Mineral Leasing Act (30 U.S.C. 181 et seq.) or

15 under the Mineral Leasing Act for Acquired Lands

16 (30 U.S.C. 351 et seq.), if the lands that are subject

17 to the lease can be leased under that Act for the

18 production of such byproduct; or

19 ‘‘(2) convert the lease to a mining claim under

20 the general mining laws, if the byproduct is a

21 locatable mineral.’’.

22 (b) CONFORMING AMENDMENT.—

23 (1) Section 18 of the Geothermal Steam Act of

24 1970 (30 U.S.C. 1017) is amended by striking ‘‘sub25 section (c) or (g)’’ and inserting ‘‘subsection (g)’’.
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1 (2) Section 20 of the Geothermal Steam Act of

2 1970 (30 U.S.C. 1019) is amended by striking ‘‘, in3 cluding the payments referred to in section 6(i),’’.

4 SEC. 30613. ADVANCED ROYALTIES REQUIRED FOR SUS5 PENSION OF PRODUCTION.

6 Section 5 of the Geothermal Steam Act of 1970 (30

7 U.S.C. 1004) is further amended by adding at the end

8 the following:

9 ‘‘(d) ADVANCED ROYALTIES REQUIRED FOR SUS10 PENSION OF PRODUCTION.—(1) If production of heat or

11 energy under a geothermal lease is suspended after the

12 date of any such production for which royalty is required

13 under section 5(a), the Secretary shall require the lessee,

14 until the end of such suspension, to pay royalty in advance

15 at the monthly pro-rata rate of the average annual rate

16 at which such royalty was paid each year in the 5-year17 period preceding the date of suspension.

18 ‘‘(2) Paragraph (1) shall not apply if the suspension

19 is required or otherwise caused by the Secretary, the Sec20 retary of a military department, or a State or local govern21 ment.’’.

22 SEC. 30614. ANNUAL RENTAL.

23 (a) ANNUAL RENTAL RATE.—Section 5 of the Geo24 thermal Steam Act of 1970 (30 U.S.C. 1004) is further

25 amended in subsection (a) in paragraph (3) by striking
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1 ‘‘$1 per acre or fraction thereof for each year of the lease’’

2 and all that follows through the end of the paragraph and

3 inserting ‘‘$1 per acre or fraction thereof for each year

4 of the lease in the case of a lease awarded in a noncompeti5 tive lease sale; or $2 per acre or fraction thereof for the

6 first year, $3 per acre or fraction thereof for each of the

7 second through tenth years, and $5 per acre or fraction

8 thereof for each year after the 10th year thereof, in the

9 case of a lease awarded in a competitive lease sale; and’’.

10 (b) TERMINATION OF LEASE FOR FAILURE TO PAY

11 RENTAL.—Section 5 of the Geothermal Steam Act of

12 1970 (30 U.S.C. 1004) is further amended by adding at

13 the end the following:

14 ‘‘(e) TERMINATION OF LEASE FOR FAILURE TO PAY

15 RENTAL.—

16 ‘‘(1) IN GENERAL.—The Secretary shall termi17 nate any lease with respect to which rental is not

18 paid in accordance with this Act and the terms of

19 the lease under which the rental is required, upon

20 the expiration of the 45-day period beginning on the

21 date of the failure to pay such rental.

22 ‘‘(2) NOTIFICATION.—The Secretary shall

23 promptly notify a lessee that has not paid rental re24 quired under the lease that the lease will be termi-
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1 nated at the end of the period referred to in para2 graph (1).

3 ‘‘(3) REINSTATEMENT.—A lease that would

4 otherwise terminate under paragraph (1) shall not

5 terminate under that paragraph if the lessee pays to

6 the Secretary, before the end of the period referred

7 to in paragraph (1), the amount of rental due plus

8 a late fee equal to 10 percent of such amount.’’.

9 TITLE VII—COAL

10 SEC. 30701. SHORT TITLE.

11 This title may be cited as the ‘‘Coal Leasing Amend12 ments Act of 2003’’.

13 SEC. 30702. REPEAL OF THE 160-ACRE LIMITATION FOR

14 COAL LEASES.

15 Section 3 of the Mineral Leasing Act (30 U.S.C. 203)

16 is amended in the first sentence by striking ‘‘such lease,’’

17 and all that follows through the end of the sentence and

18 inserting ‘‘such lease.’’.

19 SEC. 30703. MINING PLANS.

20 Section 2(d)(2) of the Mineral Leasing Act (30

21 U.S.C. 202a(2)) is amended—

22 (1) by inserting ‘‘(A)’’ after ‘‘(2)’’; and

23 (2) by adding at the end the following:
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1 ‘‘(B) The Secretary may establish a period of more

2 than 40 years if the Secretary determines that the longer

3 period—

4 ‘‘(i) will ensure the maximum economic recovery

5 of a coal deposit; or

6 ‘‘(ii) the longer period is in the interest of the

7 orderly, efficient, or economic development of a coal

8 resource.’’.

9 SEC. 30704. PAYMENT OF ADVANCE ROYALTIES UNDER

10 COAL LEASES.

11 (a) IN GENERAL.—Section 7(b) of the Mineral Leas12 ing Act of 1920 (30 U.S.C. 207(b)) is amended to read

13 as follows:

14 ‘‘(b)(1) Each lease shall be subjected to the condition

15 of diligent development and continued operation of the

16 mine or mines, except where operations under the lease

17 are interrupted by strikes, the elements, or casualties not

18 attributable to the lessee.

19 ‘‘(2)(A) The Secretary of the Interior, upon deter20 mining that the public interest will be served thereby, may

21 suspend the condition of continued operation upon the

22 payment of advance royalties.

23 ‘‘(B) Such advance royalties shall be computed based

24 on the average price for coal sold in the spot market from
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1 the same region during the last month of each applicable

2 continued operation year.

3 ‘‘(C) The aggregate number of years during the ini4 tial and any extended term of any lease for which advance

5 royalties may be accepted in lieu of the condition of contin6 ued operation shall not exceed 20.

7 ‘‘(3) The amount of any production royalty paid for

8 any year shall be reduced (but not below zero) by the

9 amount of any advance royalties paid under such lease to

10 the extent that such advance royalties have not been used

11 to reduce production royalties for a prior year.

12 ‘‘(4) This subsection shall be applicable to any lease

13 or logical mining unit in existence on the date of the enact14 ment of this paragraph or issued or approved after such

15 date.

16 ‘‘(5) Nothing in this subsection shall be construed to

17 affect the requirement contained in the second sentence

18 of subsection (a) relating to commencement of production

19 at the end of 10 years.’’.

20 (b) AUTHORITY TO WAIVE, SUSPEND, OR REDUCE

21 ADVANCE ROYALTIES.—Section 39 of the Mineral Leas22 ing Act (30 U.S.C. 209) is amended by striking the last

23 sentence.
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1 SEC. 30705. ELIMINATION OF DEADLINE FOR SUBMISSION

2 OF COAL LEASE OPERATION AND RECLAMA3 TION PLAN.

4 Section 7(c) of the Mineral Leasing Act (30 U.S.C.

5 207(c)) is amended by striking ‘‘and not later than three

6 years after a lease is issued,’’.

7 SEC. 30706. AMENDMENTS RELATING TO FINANCIAL ASSUR8 ANCES WITH RESPECT TO BONUS BIDS.

9 (a) PROHIBITION ON REQUIRING SURETY BONDS.—

10 Section 2(a) of the Mineral Leasing Act (30 U.S.C.

11 201(a)) is amended by adding at the end the following:

12 ‘‘(4) The Secretary shall not require a surety bond

13 or any other financial assurance to guarantee payment of

14 deferred bonus bid installments with respect to any coal

15 lease issued based upon a cash bonus bid.

16 ‘‘(5) Notwithstanding any other provision of law, if

17 the lessee under a coal lease fails to pay any installment

18 of a deferred cash bonus bid within 10 days after the Sec19 retary provides written notice that payment of such in20 stallment is past due—

21 ‘‘(A) such lease shall automatically terminate;

22 ‘‘(B) any deferred bonus payments that have

23 not been paid to the United States with respect to

24 such lease shall no longer be owed to the United

25 States; and
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1 ‘‘(C) any bonus payments already made to the

2 United States with respect to such lease shall not be

3 returned to the lessee or credited in any future lease

4 sale.’’.

5 (b) CONFORMING AMENDMENT.—Section 2(a)(1) of

6 the Mineral Leasing Act (30 U.S.C. 201(a)(1)) is amend7 ed by striking ‘‘Upon default or cancellation of any coal

8 lease for which bonus payments are due, any unpaid re9 mainder of the bid shall be immediately payable to the

10 United States.’’.

11 SEC. 30707. INVENTORY REQUIREMENT.

12 (a) REVIEW OF ASSESSMENTS.—

13 (1) IN GENERAL.—The Secretary of the Inte14 rior, in consultation with the Secretary of Agri15 culture and the Secretary of Energy, shall review

16 coal assessments and other available data to

17 identify—

18 (A) public lands with coal resources;

19 (B) the extent and nature of any restric20 tions or impediments to the development of coal

21 resources on public lands identified under para22 graph (1); and

23 (C) with respect to areas of such lands for

24 which sufficient data exists, resources of com25 pliant coal and supercompliant coal.
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1 (2) DEFINITIONS.—For purposes of this

2 subsection—

3 (A) the term ‘‘compliant coal’’ means coal

4 that contains not less than 1.0 and not more

5 than 1.2 pounds of sulfur dioxide per million

6 Btu; and

7 (B) the term ‘‘supercompliant coal’’ means

8 coal that contains less than 1.0 pounds of sul9 fur dioxide per million Btu.

10 (b) COMPLETION AND UPDATING OF THE INVEN11 TORY.—The Secretary—

12 (1) shall complete the inventory under sub13 section (a) by not later than 2 years after the date

14 of the enactment of this Act; and

15 (2) shall update the inventory as the availability

16 of data and developments in technology warrant.

17 (c) REPORT.—The Secretary shall submit to the

18 Committee on Resources of the House of Representatives

19 and to the Committee on Energy and Natural Resources

20 of the Senate and make publicly available—

21 (1) a report containing the inventory under this

22 section, by not later than 2 years after the effective

23 date of this section; and

24 (2) each update of such inventory.
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1 SEC. 30708. APPLICATION OF AMENDMENTS.

2 The amendments made by this title apply with re3 spect to any coal lease issued before, on, or after the date

4 of the enactment of this Act.

5 TITLE VIII—INSULAR AREAS

6 ENERGY SECURITY

7 SEC. 30801. INSULAR AREAS ENERGY SECURITY.

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

9 appropriations for certain insular areas of the United

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

11 1980 (Public Law 96–597; 94 Stat. 3480–3481), is

12 amended—

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

14 and inserting a semicolon;

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

16 following new paragraphs:

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

21 such damage often costs millions of dollars to repair;

22 and

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

25 Energy Assessment prepared pursuant to subsection

26 (c) reveals the need to reassess the state of energy
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1 production, consumption, infrastructure, reliance on

2 imported energy, and indigenous sources in regard

3 to the insular areas.’’;

4 (3) by amending subsection (e) to read as fol5 lows:

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

7 with the Secretary of Energy and the chief executive offi8 cer of each insular area, shall update the plans required

9 under subsection (c) by—

10 ‘‘(A) updating the contents required by sub11 section (c);

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

13 insular areas with the objective of reducing, to the

14 extent feasible, their reliance on energy imports by

15 the year 2010 and maximizing, to the extent fea16 sible, use of indigenous energy sources; and

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

18 line plans for such insular areas with the objective

19 that the maximum percentage feasible of electric

20 power transmission and distribution lines in each in21 sular area be protected from damage caused by hur22 ricanes and typhoons.

23 ‘‘(2) Not later than May 31, 2004, the Secretary of

24 the Interior shall submit to the Congress the updated
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1 plans for each insular area required by this subsection.’’;

2 and

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

4 follows:

5 ‘‘(4) POWER LINE GRANTS FOR TERRI6 TORIES.—

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

8 Interior is authorized to make grants to govern9 ments of territories of the United States to

10 carry out eligible projects to protect electric

11 power transmission and distribution lines in

12 such territories from damage caused by hurri13 canes and typhoons.

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

15 may award grants under subparagraph (A) only

16 to governments of territories of the United

17 States that submit written project plans to the

18 Secretary for projects that meet the following

19 criteria:

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

21 electric power transmission and distribu22 tion lines located in one or more of the ter23 ritories of the United States from damage

24 caused by hurricanes and typhoons.
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1 ‘‘(ii) The project is likely to substan2 tially reduce the risk of future damage,

3 hardship, loss, or suffering.

4 ‘‘(iii) The project addresses one or

5 more problems that have been repetitive or

6 that pose a significant risk to public health

7 and safety.

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

9 more than the value of the reduction in di10 rect damage and other negative impacts

11 that the project is designed to prevent or

12 mitigate. The cost benefit analysis required

13 by this criterion shall be computed on a

14 net present value basis.

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

16 consideration long-term changes to the

17 areas and persons it is designed to protect

18 and has manageable future maintenance

19 and modification requirements.

20 ‘‘(vi) The project plan includes an

21 analysis of a range of options to address

22 the problem it is designed to prevent or

23 mitigate and a justification for the selec24 tion of the project in light of that analysis.
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1 ‘‘(vii) The applicant has demonstrated

2 to the Secretary that the matching funds

3 required by subparagraph (D) are avail4 able.

5 ‘‘(C) PRIORITY.—When making grants

6 under this paragraph, the Secretary shall give

7 priority to grants for projects which are likely

8 to—

9 ‘‘(i) have the greatest impact on re10 ducing future disaster losses; and

11 ‘‘(ii) best conform with plans that

12 have been approved by the Federal Govern13 ment or the government of the territory

14 where the project is to be carried out for

15 development or hazard mitigation for that

16 territory.

17 ‘‘(D) MATCHING REQUIREMENT.—The

18 Federal share of the cost for a project for which

19 a grant is provided under this paragraph shall

20 not exceed 75 percent of the total cost of that

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

22 be provided in the form of cash or services.

23 ‘‘(E) TREATMENT OF FUNDS FOR CERTAIN

24 PURPOSES.—Grants provided under this para25 graph shall not be considered as income, a re-
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1 source, or a duplicative program when deter2 mining eligibility or benefit levels for Federal

3 major disaster and emergency assistance.

4 ‘‘(F) AUTHORIZATION OF APPROPRIA5 TIONS.—There is authorized to be appropriated

6 to carry out this paragraph $5,000,000 for each

7 fiscal year beginning after the date of the en8 actment of this paragraph.’’.

9 TITLE IX—MISCELLANEOUS

10 PROVISIONS

11 SEC. 30901. REPORT ON ENERGY FACILITY RIGHTS-OF-WAY

12 AND CORRIDORS ON FEDERAL LANDS.

13 (a) REPORT TO CONGRESS.—

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

15 the date of the enactment of this section, the Sec16 retary of Agriculture and the Secretary of the Inte17 rior, in consultation with the Secretaries of Com18 merce, Defense, and Energy and the Federal Energy

19 Regulatory Commission, shall submit to the Commit20 tees on Energy and Commerce and Resources of the

21 House of Representatives and the Committee on En22 ergy and Natural Resources of the Senate a joint

23 report—

24 (A) addressing—
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1 (i) the location of existing rights-of2 way and designated and de facto corridors

3 for oil and gas pipelines and electric trans4 mission and distribution facilities on Fed5 eral lands; and

6 (ii) opportunities for additional oil

7 and gas pipeline and electric transmission

8 capacity within such rights-of-way and cor9 ridors; and

10 (B) containing a plan for making available,

11 upon request, to the appropriate Federal, State,

12 and local agencies, tribal governments, and

13 other persons involved in the siting of oil and

14 gas pipelines and electricity transmission facili15 ties Geographic Information System-based in16 formation regarding the location of such exist17 ing rights-of-way and corridors and any planned

18 rights-of-way and corridors.

19 (2) CONSULTATIONS AND CONSIDERATIONS.—

20 In undertaking the report, the Secretary of the Inte21 rior and the Secretary of Agriculture shall consult

22 with—

23 (A) other agencies of Federal, State, tribal,

24 or local units of government as appropriate;
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1 (B) persons involved in the siting of oil

2 and gas pipelines and electric transmission fa3 cilities; and

4 (C) other interested members of the public.

5 (3) LIMITATION.—The Secretary of the Interior

6 and the Secretary of Agriculture shall limit the dis7 tribution of the report and Geographic Information

8 System-based information referred to in paragraph

9 (1) as necessary for national and infrastructure se10 curity reasons, if either Secretary determines that

11 such information is authorized to be withheld from

12 public disclosure pursuant to a national security or

13 other exception under section 552(b) of title 5,

14 United States Code (popularly known as the ‘‘Free15 dom of Information Act’’).

16 (b) CORRIDOR DESIGNATIONS.—

17 (1) WITHIN THE 11 CONTIGUOUS WESTERN

18 STATES.—Not later than 24 months after the date

19 of the enactment of this section, the Secretaries of

20 Agriculture, Commerce, Defense, Energy, and the

21 Interior, in consultation with the Federal Energy

22 Regulatory Commission and the affected utility in23 dustries, jointly shall—

24 (A) designate, pursuant to title 5 of the

25 Federal Land Policy and Management Act of
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1 1976 (43 U.S.C. 1761 et seq.), and other appli2 cable Federal laws, corridors needed or useful

3 for oil and gas pipelines and electricity trans4 mission and facilities on Federal lands in the

5 eleven contiguous Western States as that term

6 is defined in section 103(o) of the Federal Land

7 Policy and Management Act of 1976 (43 U.S.C.

8 1702(o));

9 (B) perform any environmental reviews

10 that may be required to complete the designa11 tions of corridors for such facilities on Federal

12 lands in those States; and

13 (C) incorporate the designated corridors

14 into the relevant departmental and agency land

15 use and resource management plans or the

16 equivalent.

17 (2) WITHIN THE REMAINING STATES.—Not

18 later than 4 years after the date of the enactment

19 of this section, the Secretaries of Agriculture, Com20 merce, Defense, Energy, and the Interior, in con21 sultation with the Federal Energy Regulatory Com22 mission and the affected utility industries, jointly

23 shall identify corridors needed or useful for oil and

24 gas pipelines and electricity transmission and dis25 tribution facilities on Federal lands in the States
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1 other than those described in paragraph (1), and

2 shall schedule prompt action to identify, designate,

3 and incorporate these corridors into the land use

4 plan.

5 (3) ONGOING RESPONSIBILITIES.—The Secre6 taries of Agriculture, Commerce, Defense, Energy,

7 and the Interior, in consultation with the Federal

8 Energy Regulatory Commission and the affected

9 utility industries, shall ensure that additional cor10 ridors as may be needed or useful for oil and gas

11 pipelines and electricity transmission and distribu12 tion facilities on Federal lands are promptly des13 ignated. The Secretaries shall provide a process for

14 the prompt review of applications for such corridors.

15 (c) FACTORS TO CONSIDER.—When carrying out this

16 section, the Secretaries shall take into account the need

17 for upgraded and new electricity transmission and dis18 tribution facilities to improve reliability, relieve congestion,

19 and enhance the capability of the national grid to deliver

20 electricity.

21 (d) DEFINITION OF CORRIDOR.—As used in this sec22 tion and for purposes of title V of the Federal Land Policy

23 and Management Act of 1976, the term ‘corridor’ shall

24 mean a linear strip of land without definite width, but lim25 ited by technological, environmental, and topographical
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1 factors, and that contains or may in the future contain

2 one or more utility, communication, or transportation fa3 cilities. A corridor is a land use designation identified for

4 the purpose of establishing policy direction as to the pre5 ferred location of compatible linear facilities and compat6 ible and conflicting land uses. It does not imply entitle7 ment of use or limits as to siting facilities in additional

8 locations. Appropriate environmental review and regu9 latory permitting reflecting work already undertaken in

10 the designation of a corridor shall precede occupancy on

11 a project-specific basis.

12 SEC. 30902. ELECTRICITY TRANSMISSION LINE RIGHT-OF13 WAY, CLEVELAND NATIONAL FOREST AND

14 ADJACENT PUBLIC LANDS, CALIFORNIA.

15 (a) ISSUANCE.—Subject to subsection (c), the Sec16 retary of the Interior and the Secretary of Agriculture

17 shall issue all necessary grants, easements, permits, plan

18 amendments, and other approvals to allow for the siting

19 and construction of a high-voltage electricity transmission

20 line right-of-way running approximately north to south

21 through the Trabuco Ranger District of the Cleveland Na22 tional Forest in the State of California and adjacent lands

23 under the jurisdiction of the Bureau of Land Management

24 and the Forest Service. The right-of-way approvals shall

25 provide all necessary Federal authorization from the Sec-
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1 retary of the Interior and the Secretary of Agriculture for

2 the routing, construction, operation, and maintenance of

3 a 500 KV transmission line capable of meeting the long4 term electricity transmission needs of the region between

5 the existing Valley-Serrano transmission line to the north

6 and the Telega–Escondido transmission line to the south,

7 and for connecting to future generating capacity that may

8 be developed in the region.

9 (b) PROTECTION OF WILDERNESS AREAS.—The Sec10 retary of the Interior and the Secretary of Agriculture

11 shall not allow any portion of a transmission line right12 of-way corridor identified in subsection (a) to enter any

13 identified wilderness area in existence as of the date of

14 the enactment of this section.

15 (c) ENVIRONMENTAL AND ADMINISTRATIVE RE16 VIEWS.—

17 (1) DEPARTMENT OF INTERIOR OR LOCAL

18 AGENCY.—The Secretary of the Interior, acting

19 through the Bureau of Land Management, shall be

20 the lead Federal agency with overall responsibility to

21 ensure completion of required environmental and

22 other reviews of the approvals to be issued under

23 subsection (a).

24 (2) NATIONAL FOREST SYSTEM LAND.—For the

25 portions of the corridor on National Forest System
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1 lands, the Secretary of Agriculture shall complete all

2 required environmental reviews and administrative

3 actions in coordination with the Secretary of the In4 terior.

5 (3) EXPEDITIOUS COMPLETION.—The reviews

6 required for issuance of the approvals under sub7 section (a) shall be completed not later than 1 year

8 after the date of the enactment of this Act.

9 (d) TIME FOR ISSUANCE.—The necessary grants,

10 easements, permits, plan amendments, and other approv11 als for the transmission line right-of-way shall be issued

12 not later than 60 days after the completion of the environ13 mental reviews under subsection (c).

14 (e) OTHER TERMS AND CONDITIONS.—The trans15 mission line right-of-way shall be subject to such terms

16 and conditions as the Secretary of the Interior and the

17 Secretary of Agriculture consider necessary, as a result

18 of the environmental reviews under subsection (c), to pro19 tect the value of historic, cultural, and natural resources

20 under the jurisdiction of the Department of the Interior

21 or the Department of Agriculture.

22 (f) PREFERENCE AMONG PROPOSALS.—The Sec23 retary of the Interior and the Secretary of Agriculture

24 shall give a preference to any application or preapplication

25 proposal for a transmission line right-of-way, as described
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1 in subsection (a), that was submitted before December 31,

2 2002, over all other applications and proposals for the

3 same or similar right-of-way submitted on or after that

4 date.

5 SEC. 30903. CONSULTATION REGARDING ENERGY RIGHTS6 OF-WAY ON PUBLIC LANDS.

7 (a) IN GENERAL.—Not later than 6 months after the

8 date of the enactment of this Act, the Secretary of the

9 Interior and the Secretary of Agriculture shall enter into,

10 and submit to the Congress, a memorandum of under11 standing in accordance with this section regarding the

12 processing of new applications for linear rights of way for

13 electrical transmission lines and oil or gas pipelines on

14 public lands within the jurisdiction of the Secretary of the

15 Interior and National Forest System lands within the ju16 risdiction of the Secretary of Agriculture.

17 (b) CONTENTS.—The memorandum of understanding

18 shall include provisions that—

19 (1) establish an administrative procedure for

20 processing right-of-way applications, including lines

21 of authority, steps in application processing, and

22 timeframes for application processing;

23 (2) provide for coordination of planning relating

24 to the granting of these rights-of-way;
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1 (3) provide for coordination of environmental

2 compliance efforts to avoid duplication of effort; and

3 (4) provide for coordination of use of right-of4 way stipulations to achieve consistency.

5 SEC. 30904. ENHANCING ENERGY EFFICIENCY IN MANAGE6 MENT OF FEDERAL LANDS.

7 (a) SENSE OF THE CONGRESS.—It is the sense of the

8 Congress that Federal agencies should enhance the use of

9 energy efficient technologies in the management of natural

10 resources.

11 (b) ENERGY EFFICIENT BUILDINGS.—To the extent

12 practicable, the Secretary of the Interior, the Secretary

13 of Commerce, and the Secretary of Agriculture shall seek

14 to incorporate energy efficient technologies in public and

15 administrative buildings associated with management of

16 the National Park System, National Wildlife Refuge Sys17 tem, National Forest System, National Marine Sanc18 tuaries System, and other public lands and resources man19 aged by the Secretaries.

20 (c) ENERGY EFFICIENT VEHICLES.—To the extent

21 practicable, the Secretary of the Interior, the Secretary

22 of Commerce, and the Secretary of Agriculture shall seek

23 to use energy efficient motor vehicles, including vehicles

24 equipped with biodiesel or hybrid engine technologies, in

25 the management of the National Park System, National
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1 Wildlife Refuge System, National Forest System, National

2 Marine Sanctuaries System, and other public lands and

3 resources managed by the Secretaries.

4 SEC. 30905. PERMITTING OF WIND ENERGY DEVELOPMENT

5 PROJECTS ON PUBLIC LANDS.

6 (a) REQUIRED POLICIES AND PROCEDURES.—The

7 Secretary of the Interior shall process right-of-way appli8 cations for wind energy site testing and monitoring facili9 ties on public lands administered by the Bureau of Land

10 Management in accordance with policies and procedures

11 that are substantially the same as those set forth in Bu12 reau of Land Management Instruction Memorandum No.

13 2003-020, dated October 16, 2002.

14 (b) LIMITATION ON RENT AND OTHER CHARGES.—

15 (1) IN GENERAL.—The Secretary of the Inte16 rior may not impose rent and other charges with re17 spect to any wind energy development project on

18 public lands that, in the aggregate, exceed 50 per19 cent of the maximum amount of rent that could be

20 charged with respect to that project under the terms

21 of the Bureau of Land Management Instruction

22 Memorandum referred to in subsection (a).

23 (2) TERMINATION.—Paragraph (1) shall not

24 apply after the earlier of—
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1 (A) the date on which the Secretary of the

2 Interior determines there exists at least 10,000

3 megawatts of electricity generating capacity

4 from non-hydropower renewable energy re5 sources on public lands; or

6 (B) the end of the 10-year period begin7 ning on the date of the enactment of this Act.

8 (3) STATE SHARE NOT AFFECTED.—This sub9 section shall not affect any State share of rent and

10 other charges with respect to any wind energy devel11 opment project on public lands.

12 SEC. 30906. SENSE OF THE CONGRESS REGARDING GEN13 ERATION CAPACITY OF ELECTRICITY FROM

14 RENEWABLE ENERGY RESOURCES ON PUB15 LIC LANDS.

16 It is the sense of the Congress that the Secretary of

17 the Interior shall, within the next 10 years after the date

18 of the enactment of this Act, seek to have approved non19 hydropower renewable energy projects located on the pub20 lic lands with a generation capacity of at least 10,000

21 megawatts of electricity.
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1 SEC. 30907. ASSESSMENT OF OCEAN THERMAL ENERGY RE2 SOURCES.

3 (a) RESOURCE ASSESSMENT.—Not later than 3

4 months after the date of the enactment of this Act, and

5 each year thereafter, the Secretary of the Interior shall—

6 (1) review assessments of ocean thermal energy

7 resources, other than resources of any area of the

8 Outer Continental Shelf that is subject to a morato9 rium on leasing for energy exploration or develop10 ment, that are available in the United States and its

11 territories and possessions; and

12 (2) undertake new assessments of such re13 sources as necessary.

14 (b) CONSIDERATIONS.—In reviewing and under15 taking assessments under subsection (a), the Secretary

16 shall take into account changes in market conditions,

17 available technologies, and other relevant factors.

18 (c) REPORTS.—Not later than 1 year after the date

19 of the enactment of this Act, and each year thereafter,

20 the Secretary shall publish a report on reviews and assess21 ments under subsection (a). Each report shall contain—

22 (1) a detailed inventory of the available amount

23 and characteristics of ocean thermal energy re24 sources;
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1 (2) estimates of the costs of actions needed to

2 develop and accelerate efforts to commercialize ocean

3 thermal energy conversion; and

4 (3) such other information as the Secretary

5 considers would be useful in developing ocean ther6 mal energy resources.

7 SEC. 30908. SENSE OF THE CONGRESS REGARDING DEVEL8 OPMENT OF MINERALS UNDER PADRE IS9 LAND NATIONAL SEASHORE.

10 (a) FINDINGS.—The Congress finds the following:

11 (1) Pursuant to Public Law 87–712 (16 U.S.C.

12 459d et seq.; popularly known as the ‘‘Federal Ena13 bling Act’’) and various deeds and actions there14 under, the United States is the owner of the surface

15 estate only of certain lands constituting the Padre

16 Island National Seashore.

17 (2) Ownership of the oil, gas, and other min18 erals in the subsurface estate of the lands consti19 tuting the Padre Island National Seashore was never

20 acquired by the United States and ownership of

21 those interests are held by the State of Texas and

22 private parties.

23 (3) The Federal Enabling Act expressly con24 templated that the United States would recognize

25 the ownership and future development of the oil,
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1 gas, and other minerals in the subsurface estate of

2 the lands constituting the Padre Island National

3 Seashore by the owners and their mineral lessees

4 and recognized that approval of the State of Texas

5 was required to create Padre Island National Sea6 shore.

7 (4) Approval was given for the creation of

8 Padre Island National Seashore by the State of

9 Texas through TEX. REV. CIV. STAT. ANN. Art.

10 6077(t) (Vernon 1970), which expressly recognized

11 that development of the oil, gas, and other minerals

12 in the subsurface of the lands constituting Padre Is13 land National Seashore would be conducted with full

14 rights of ingress and egress under the laws of the

15 State of Texas.

16 (b) SENSE OF THE CONGRESS.—With regard to Fed17 eral law, any regulation of the development of oil, gas, or

18 other minerals in the subsurface of the lands constituting

19 Padre Island National Seashore should be made as if those

20 lands retained the status that they had on September 27,

21 1962.

22 SEC. 30909. ENCOURAGING PROHIBITION OF OFF-SHORE

23 DRILLING IN THE GREAT LAKES.

24 (a) FINDINGS.—The Congress finds that—
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1 (1) the water resources of the Great Lakes

2 Basin are precious public natural resources, shared

3 and held in trust by the States of Illinois, Indiana,

4 Michigan, Minnesota, New York, Ohio, Pennsyl5 vania, and Wisconsin, and the Canadian Province of

6 Ontario;

7 (2) the environmental dangers associated with

8 off-shore drilling in the Great Lakes for oil and gas

9 outweigh the potential benefits of such drilling;

10 (3) in accordance with the Submerged Lands

11 Act (43 U.S.C. 1301 et seq.), each State that bor12 ders any of the Great Lakes has authority over the

13 area between that State’s coastline and the bound14 ary of Canada or another State;

15 (4) the States of Illinois, Michigan, New York,

16 Pennsylvania, and Wisconsin each have a statutory

17 prohibition of off-shore drilling in the Great Lakes

18 for oil and gas;

19 (5) the States of Indiana, Minnesota, and Ohio

20 do not have such a prohibition; and

21 (6) the Canadian Province of Ontario does not

22 have such a prohibition, and drilling for and produc23 tion of gas occurs in the Canadian portion of Lake

24 Erie.
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1 (b) ENCOURAGEMENT OF PROHIBITIONS ON OFF2 SHORE DRILLING.—The Congress encourages—

3 (1) the States of Illinois, Michigan, New York,

4 Pennsylvania, and Wisconsin to continue to prohibit

5 off-shore drilling in the Great Lakes for oil and gas;

6 (2) the States of Indiana, Minnesota, and Ohio

7 and the Canadian Province of Ontario to enact a

8 prohibition of such drilling; and

9 (3) the Canadian Province of Ontario to require

10 the cessation of any such drilling and any production

11 resulting from such drilling.

12 DIVISION D—TAX

13 SEC. 40001. SHORT TITLE; ETC.

14 (a) SHORT TITLE.—This division may be cited as the

15 ‘‘Energy Tax Policy Act of 2003’’.

16 (b) AMENDMENT OF 1986 CODE.—Except as other17 wise expressly provided, whenever in this division an

18 amendment or repeal is expressed in terms of an amend19 ment to, or repeal of, a section or other provision, the ref20 erence shall be considered to be made to a section or other

21 provision of the Internal Revenue Code of 1986.
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1 TITLE I—CONSERVATION

2 SEC. 41001. CREDIT FOR RESIDENTIAL SOLAR ENERGY

3 PROPERTY.

4 (a) IN GENERAL.—Subpart A of part IV of sub5 chapter A of chapter 1 (relating to nonrefundable personal

6 credits) is amended by inserting after section 25B the fol7 lowing new section:

8 ‘‘SEC. 25C. RESIDENTIAL SOLAR ENERGY PROPERTY.

9 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in10 dividual, there shall be allowed as a credit against the tax

11 imposed by this chapter for the taxable year an amount

12 equal to the sum of—

13 ‘‘(1) 15 percent of the qualified photovoltaic

14 property expenditures made by the taxpayer during

15 such year, and

16 ‘‘(2) 15 percent of the qualified solar water

17 heating property expenditures made by the taxpayer

18 during the taxable year.

19 ‘‘(b) LIMITATIONS.—

20 ‘‘(1) MAXIMUM CREDIT.—The credit allowed

21 under subsection (a) shall not exceed—

22 ‘‘(A) $2,000 for each system of property

23 described in subsection (c)(1), and

24 ‘‘(B) $2,000 for each system of property

25 described in subsection (c)(2).
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1 ‘‘(2) SAFETY CERTIFICATIONS.—No credit shall

2 be allowed under this section for an item of property

3 unless—

4 ‘‘(A) in the case of solar water heating

5 equipment, such equipment is certified for per6 formance and safety by the non-profit Solar

7 Rating Certification Corporation or a com8 parable entity endorsed by the government of

9 the State in which such property is installed,

10 and

11 ‘‘(B) in the case of a photovoltaic system,

12 such system meets appropriate fire and electric

13 code requirements.

14 ‘‘(c) DEFINITIONS.—For purposes of this section—

15 ‘‘(1) QUALIFIED SOLAR WATER HEATING PROP16 ERTY EXPENDITURE.—The term ‘qualified solar

17 water heating property expenditure’ means an ex18 penditure for property to heat water for use in a

19 dwelling unit located in the United States and used

20 as a residence if at least half of the energy used by

21 such property for such purpose is derived from the

22 sun.

23 ‘‘(2) QUALIFIED PHOTOVOLTAIC PROPERTY EX24 PENDITURE.—The term ‘qualified photovoltaic prop25 erty expenditure’ means an expenditure for property
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1 which uses solar energy to generate electricity for

2 use in a dwelling unit.

3 ‘‘(3) SOLAR PANELS.—No expenditure relating

4 to a solar panel or other property installed as a roof

5 (or portion thereof) shall fail to be treated as prop6 erty described in paragraph (1) or (2) solely because

7 it constitutes a structural component of the struc8 ture on which it is installed.

9 ‘‘(4) LABOR COSTS.—Expenditures for labor

10 costs properly allocable to the onsite preparation, as11 sembly, or original installation of the property de12 scribed in paragraph (1) or (2) and for piping or

13 wiring to interconnect such property to the dwelling

14 unit shall be taken into account for purposes of this

15 section.

16 ‘‘(5) SWIMMING POOLS, ETC., USED AS STOR17 AGE MEDIUM.—Expenditures which are properly al18 locable to a swimming pool, hot tub, or any other

19 energy storage medium which has a function other

20 than the function of such storage shall not be taken

21 into account for purposes of this section.

22 ‘‘(d) SPECIAL RULES.—

23 ‘‘(1) DOLLAR AMOUNTS IN CASE OF JOINT OC24 CUPANCY.—In the case of any dwelling unit which is

25 jointly occupied and used during any calendar year
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1 as a residence by 2 or more individuals the following

2 shall apply:

3 ‘‘(A) The amount of the credit allowable

4 under subsection (a) by reason of expenditures

5 made during such calendar year by any of such

6 individuals with respect to such dwelling unit

7 shall be determined by treating all of such indi8 viduals as 1 taxpayer whose taxable year is

9 such calendar year.

10 ‘‘(B) There shall be allowable with respect

11 to such expenditures to each of such individ12 uals, a credit under subsection (a) for the tax13 able year in which such calendar year ends in

14 an amount which bears the same ratio to the

15 amount determined under subparagraph (A) as

16 the amount of such expenditures made by such

17 individual during such calendar year bears to

18 the aggregate of such expenditures made by all

19 of such individuals during such calendar year.

20 ‘‘(C) Subparagraphs (A) and (B) shall be

21 applied separately with respect to qualified

22 solar water heating property expenditures and

23 qualified photovoltaic property expenditures.

24 ‘‘(2) TENANT-STOCKHOLDER IN COOPERATIVE

25 HOUSING CORPORATION.—In the case of an indi-
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1 vidual who is a tenant-stockholder (as defined in sec2 tion 216) in a cooperative housing corporation (as

3 defined in such section), such individual shall be

4 treated as having made his tenant-stockholder’s pro5 portionate share (as defined in section 216(b)(3)) of

6 any expenditures of such corporation.

7 ‘‘(3) CONDOMINIUMS.—

8 ‘‘(A) IN GENERAL.—In the case of an indi9 vidual who is a member of a condominium man10 agement association with respect to a condo11 minium which he owns, such individual shall be

12 treated as having made his proportionate share

13 of any expenditures of such association.

14 ‘‘(B) CONDOMINIUM MANAGEMENT ASSO15 CIATION.—For purposes of this paragraph, the

16 term ‘condominium management association’

17 means an organization which meets the require18 ments of paragraph (1) of section 528(c) (other

19 than subparagraph (E) thereof) with respect to

20 a condominium project substantially all of the

21 units of which are used as residences.

22 ‘‘(4) ALLOCATION IN CERTAIN CASES.—If less

23 than 80 percent of the use of an item is for nonbusi24 ness purposes, only that portion of the expenditures
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1 for such item which is properly allocable to use for

2 nonbusiness purposes shall be taken into account.

3 ‘‘(5) WHEN EXPENDITURE MADE; AMOUNT OF

4 EXPENDITURE.—

5 ‘‘(A) IN GENERAL.—Except as provided in

6 subparagraph (B), an expenditure with respect

7 to an item shall be treated as made when the

8 original installation of the item is completed.

9 ‘‘(B) EXPENDITURES PART OF BUILDING

10 CONSTRUCTION.—In the case of an expenditure

11 in connection with the construction or recon12 struction of a structure, such expenditure shall

13 be treated as made when the original use of the

14 constructed or reconstructed structure by the

15 taxpayer begins.

16 ‘‘(C) AMOUNT.—The amount of any ex17 penditure shall be the cost thereof.

18 ‘‘(6) PROPERTY FINANCED BY SUBSIDIZED EN19 ERGY FINANCING.—For purposes of determining the

20 amount of expenditures made by any individual with

21 respect to any dwelling unit, there shall not be taken

22 into account expenditures which are made from sub23 sidized energy financing (as defined in section

24 48(a)(4)(A)).
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1 ‘‘(e) BASIS ADJUSTMENTS.—For purposes of this

2 subtitle, if a credit is allowed under this section for any

3 expenditure with respect to any property, the increase in

4 the 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 ‘‘(f) TERMINATION.—The credit allowed under this

8 section shall not apply to taxable years beginning after

9 December 31, 2006 (December 31, 2008, with respect to

10 qualified photovoltaic property expenditures).’’.

11 (b) CONFORMING AMENDMENTS.—

12 (1) Subsection (a) of section 1016 is amended

13 by striking ‘‘and’’ at the end of paragraph (27), by

14 striking the period at the end of paragraph (28) and

15 inserting ‘‘, and’’, and by adding at the end the fol16 lowing new paragraph:

17 ‘‘(29) to the extent provided in section 25C(e),

18 in the case of amounts with respect to which a credit

19 has been allowed under section 25C.’’.

20 (2) The table of sections for subpart A of part

21 IV of subchapter A of chapter 1 is amended by in22 serting after the item relating to section 25B the fol23 lowing new item:

‘‘Sec. 25C. Residential solar energy property.’’.
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1 (c) EFFECTIVE DATE.—The amendments made by

2 this section shall apply to taxable years ending after De3 cember 31, 2003.

4 SEC. 41002. EXTENSION AND EXPANSION OF CREDIT FOR

5 ELECTRICITY PRODUCED FROM RENEWABLE

6 RESOURCES.

7 (a) EXTENSION OF CREDIT FOR WIND AND CLOSED8 LOOP BIOMASS FACILITIES.—Subparagraphs (A) and (B)

9 of section 45(c)(3) are each amended by striking ‘‘2004’’

10 and inserting ‘‘2007’’.

11 (b) EXPANSION OF CREDIT FOR OPEN-LOOP BIO12 MASS, LANDFILL GAS FACILITIES, AND TRASH COMBUS13 TION FACILITIES.—Paragraph (3) of section 45(c) is

14 amended by adding at the end the following new subpara15 graphs:

16 ‘‘(D) OPEN-LOOP BIOMASS FACILITIES.—

17 In the case of a facility using open-loop biomass

18 to produce electricity, the term ‘qualified facil19 ity’ means any facility owned by the taxpayer

20 which is originally placed in service before Jan21 uary 1, 2007.

22 ‘‘(E) LANDFILL GAS FACILITIES.—In the

23 case of a facility producing electricity from gas

24 derived from the biodegradation of municipal

25 solid waste, the term ‘qualified facility’ means
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1 any facility owned by the taxpayer which is

2 originally placed in service before January 1,

3 2007.

4 ‘‘(F) TRASH COMBUSTION FACILITIES.—In

5 the case of a facility which burns municipal

6 solid waste to produce electricity, the term

7 ‘qualified facility’ means any facility owned by

8 the taxpayer which is originally placed in serv9 ice after the date of the enactment of this sub10 paragraph and before January 1, 2007.’’.

11 (c) DEFINITION AND SPECIAL RULES.—Subsection

12 (c) of section 45 is amended by adding at the end the

13 following new paragraphs:

14 ‘‘(5) OPEN-LOOP BIOMASS.—The term ‘open15 loop biomass’ means any solid, nonhazardous, cel16 lulosic waste material which is segregated from other

17 waste materials and which is derived from—

18 ‘‘(A) any of the following forest-related re19 sources: mill residues, precommercial thinnings,

20 slash, and brush,

21 ‘‘(B) solid wood waste materials, including

22 waste pallets, crates, dunnage, manufacturing

23 and construction wood wastes (other than pres24 sure-treated, chemically-treated, or painted

25 wood wastes), and landscape or right-of-way
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1 tree trimmings, but not including municipal

2 solid waste (garbage), gas derived from the bio3 degradation of solid waste, or paper that is

4 commonly recycled, or

5 ‘‘(C) agriculture sources, including orchard

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

7 other crop by-products or residues.

8 Such term shall not include closed-loop biomass.

9 ‘‘(6) REDUCED CREDIT FOR CERTAIN

10 PREEFFECTIVE DATE FACILITIES.—In the case of

11 any facility described in subparagraph (D) or (E) of

12 paragraph (3) which is placed in service before the

13 date of the enactment of this paragraph—

14 ‘‘(A) subsection (a)(1) shall be applied by

15 substituting ‘1.0 cents’ for ‘1.5 cents’, and

16 ‘‘(B) the 5-year period beginning on the

17 date of the enactment of this paragraph shall

18 be substituted in lieu of the 10-year period in

19 subsection (a)(2)(A)(ii).

20 ‘‘(7) CREDIT ELIGIBILITY FOR OPEN-LOOP BIO21 MASS FACILITIES.—In the case of any facility de22 scribed in paragraph (3)(D) which is placed in serv23 ice before the date of enactment of this paragraph,

24 if the owner of such facility is not the producer of

25 the electricity, the person eligible for the credit al-
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1 lowable under subsection (a) is the lessee or the op2 erator of such facility.

3 ‘‘(8) LIMIT ON REDUCTIONS FOR GRANTS, ETC.,

4 FOR OPEN-LOOP BIOMASS FACILITIES.—If the

5 amount of the credit determined under subsection

6 (a) with respect to any open-loop biomass facility is

7 required to be reduced under paragraph (3) of sub8 section (b), the fraction under such paragraph shall

in no event be greater than 1 9 ⁄2.

10 ‘‘(9) COORDINATION WITH SECTION 29.—The

11 term ‘qualified facility’ shall not include any facility

12 the production from which is allowed as a credit

13 under section 29 for the taxable year or any prior

14 taxable year.’’.

15 (d) QUALIFIED ENERGY RESOURCES.—Paragraph

16 (1) of section 45(c) (relating to qualified energy resources)

17 is amended to read as follows:

18 ‘‘(1) QUALIFIED ENERGY RESOURCES.—The

19 term ‘qualified energy resources’ means any resource

20 described in paragraph (3) which is used to generate

21 electricity at a qualified facility.’’.

22 (e) EFFECTIVE DATE.—The amendments made by

23 this section shall apply to electricity sold after the date

24 of the enactment of this Act, in taxable years ending after

25 such date.
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1 SEC. 41003. CREDIT FOR QUALIFIED FUEL CELL POWER

2 PLANTS.

3 (a) BUSINESS PROPERTY.—

4 (1) IN GENERAL.—Subparagraph (A) of section

5 48(a)(3) (defining energy property) is amended by

6 striking ‘‘or’’ at the end of clause (i), by adding

7 ‘‘or’’ at the end of clause (ii), and by inserting after

8 clause (ii) the following new clause:

9 ‘‘(iii) equipment which is part of a

10 qualified fuel cell power plant,’’.

11 (2) QUALIFIED FUEL CELL POWER PLANT.—

12 Subsection (a) of section 48 is amended by redesig13 nating paragraphs (4) and (5) as paragraphs (5)

14 and (6), respectively, and by inserting after para15 graph (3) the following new paragraph:

16 ‘‘(4) QUALIFIED FUEL CELL POWER PLANT.—

17 For purposes of this subsection—

18 ‘‘(A) IN GENERAL.—The term ‘qualified

19 fuel cell power plant’ means a fuel cell power

20 plant that has an electricity-only generation ef21 ficiency greater than 30 percent.

22 ‘‘(B) LIMITATION.—The energy credit with

23 respect to any qualified fuel cell power plant for

24 any taxable year shall not exceed—

‘‘(i) $500 for each 1 25 ⁄2 kilowatt of ca26 pacity of the power plant, reduced by
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1 ‘‘(ii) the aggregate energy credits al2 lowed with respect to such power plant for

3 all prior taxable years.

4 ‘‘(C) FUEL CELL POWER PLANT.—The

5 term ‘fuel cell power plant’ means an integrated

6 system comprised of a fuel cell stack assembly

7 and associated balance of plant components

8 that converts a fuel into electricity using elec9 trochemical means.

10 ‘‘(D) TERMINATION.—Such term shall not

11 include any property placed in service after De12 cember 31, 2006.’’.

13 (3) EFFECTIVE DATE.—The amendments made

14 by this subsection shall apply to property placed in

15 service after December 31, 2003, under rules similar

16 to the rules of section 48(m) of the Internal Revenue

17 Code of 1986 (as in effect on the day before the

18 date of the enactment of the Revenue Reconciliation

19 Act of 1990).

20 (b) NONBUSINESS PROPERTY.—

21 (1) IN GENERAL.—Subpart A of part IV of sub22 chapter A of chapter 1 (relating to nonrefundable

23 personal credits) is amended by inserting after sec24 tion 25C the following new section:
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1 ‘‘SEC. 25D. NONBUSINESS QUALIFIED FUEL CELL POWER

2 PLANT.

3 ‘‘(a) IN GENERAL.—In the case of an individual,

4 there shall be allowed as a credit against the tax imposed

5 by this chapter for the taxable year an amount equal to

6 10 percent of the qualified fuel cell power plant expendi7 tures which are paid or incurred during such year.

8 ‘‘(b) LIMITATIONS.—The credit allowed under sub9 section (a) with respect to any qualified fuel cell power

10 plant for any taxable year shall not exceed—

‘‘(1) $500 for each 1 11 ⁄2 kilowatt of capacity of

12 the power plant, reduced by

13 ‘‘(2) the aggregate energy credits allowed with

14 respect to such power plant for all prior taxable

15 years.

16 ‘‘(c) QUALIFIED FUEL CELL POWER PLANT EX17 PENDITURES.—For purposes of this section, the term

18 ‘qualified fuel cell power plant expenditures’ means ex19 penditures by the taxpayer for any qualified fuel cell power

20 plant (as defined in section 48(a)(4))—

21 ‘‘(1) which meets the requirements of subpara22 graphs (B) and (D) of section 48(a)(3), and

23 ‘‘(2) which is installed on or in connection with

24 a dwelling unit—

25 ‘‘(A) which is located in the United States,

26 and
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1 ‘‘(B) which is used by the taxpayer as a

2 residence.

3 Such term includes expenditures for labor costs properly

4 allocable to the onsite preparation, assembly, or original

5 installation of the property.

6 ‘‘(d) SPECIAL RULES.—For purposes of this section,

7 rules similar to the rules of section 25C(d) shall apply.

8 ‘‘(e) BASIS ADJUSTMENTS.—For purposes of this

9 subtitle, if a credit is allowed under this section for any

10 expenditure with respect to any property, the increase in

11 the basis of such property which would (but for this sub12 section) result from such expenditure shall be reduced by

13 the amount of the credit so allowed.

14 ‘‘(f) TERMINATION.—This section shall not apply to

15 any expenditure made after December 31, 2006.’’.

16 (2) CONFORMING AMENDMENTS.—

17 (A) Subsection (a) of section 1016 is

18 amended by striking ‘‘and’’ at the end of para19 graph (28), by striking the period at the end of

20 paragraph (29) and inserting ‘‘, and’’, and by

21 adding at the end the following new paragraph:

22 ‘‘(30) to the extent provided in section 25D(e),

23 in the case of amounts with respect to which a credit

24 has been allowed under section 25D.’’.
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1 (B) The table of sections for subpart A of

2 part IV of subchapter A of chapter 1 is amend3 ed by inserting after the item relating to section

4 25C the following new item:

‘‘Sec. 25D. Nonbusiness qualified fuel cell power plant.’’.

5 (3) EFFECTIVE DATE.—The amendments made

6 by this subsection shall apply to expenditures paid

7 or incurred after December 31, 2003, in taxable

8 years ending after such date.

9 SEC. 41004. CREDIT FOR ENERGY EFFICIENCY IMPROVE10 MENTS TO EXISTING HOMES.

11 (a) IN GENERAL.—Subpart A of part IV of sub12 chapter A of chapter 1 (relating to nonrefundable personal

13 credits) is amended by inserting after section 25D the fol14 lowing new section:

15 ‘‘SEC. 25E. ENERGY EFFICIENCY IMPROVEMENTS TO EXIST16 ING HOMES.

17 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in18 dividual, there shall be allowed as a credit against the tax

19 imposed by this chapter for the taxable year an amount

20 equal to 20 percent of the amount paid or incurred by

21 the taxpayer for qualified energy efficiency improvements

22 installed during such taxable year.

23 ‘‘(b) LIMITATIONS.—
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1 ‘‘(1) MAXIMUM CREDIT.—The credit allowed by

2 this section with respect to a dwelling shall not ex3 ceed $2,000.

4 ‘‘(2) PRIOR CREDIT AMOUNTS FOR TAXPAYER

5 ON SAME DWELLING TAKEN INTO ACCOUNT.—If a

6 credit was allowed to the taxpayer under subsection

7 (a) with respect to a dwelling in 1 or more prior tax8 able years, the amount of the credit otherwise allow9 able for the taxable year with respect to that dwell10 ing shall not exceed the amount of $2,000 reduced

11 by the sum of the credits allowed under subsection

12 (a) to the taxpayer with respect to the dwelling for

13 all prior taxable years.

14 ‘‘(c) CARRYFORWARD OF UNUSED CREDIT.—If the

15 credit allowable under subsection (a) exceeds the limita16 tion imposed by section 26(a) for such taxable year re17 duced by the sum of the credits allowable under this sub18 part (other than this section) for such taxable year, such

19 excess shall be carried to the succeeding taxable year and

20 added to the credit allowable under subsection (a) for such

21 succeeding taxable year.

22 ‘‘(d) QUALIFIED ENERGY EFFICIENCY IMPROVE23 MENTS.—For purposes of this section, the term ‘qualified

24 energy efficiency improvements’ means any energy effi25 cient building envelope component which meets the pre-
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1 scriptive criteria for such component established by the

2 2000 International Energy Conservation Code (or, in the

3 case of metal roofs with appropriate pigmented coatings,

4 meets the Energy Star program requirements), if—

5 ‘‘(1) such component is installed in or on a

6 dwelling—

7 ‘‘(A) located in the United States, and

8 ‘‘(B) owned and used by the taxpayer as

9 the taxpayer’s principal residence (within the

10 meaning of section 121),

11 ‘‘(2) the original use of such component com12 mences with the taxpayer, and

13 ‘‘(3) such component reasonably can be ex14 pected to remain in use for at least 5 years.

15 If the aggregate cost of such components with respect to

16 any dwelling exceeds $1,000, such components shall be

17 treated as qualified energy efficiency improvements only

18 if such components are also certified in accordance with

19 subsection (e) as meeting such criteria.

20 ‘‘(e) CERTIFICATION.—The certification described in

21 subsection (d) shall be—

22 ‘‘(1) determined on the basis of the technical

23 specifications or applicable ratings (including prod24 uct labeling requirements) for the measurement of

25 energy efficiency, based upon energy use or building
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1 envelope component performance, for the energy effi2 cient building envelope component,

3 ‘‘(2) provided by a local building regulatory au4 thority, a utility, a manufactured home production

5 inspection primary inspection agency (IPIA), or an

6 accredited home energy rating system provider who

7 is accredited by or otherwise authorized to use ap8 proved energy performance measurement methods by

9 the Residential Energy Services Network

10 (RESNET), and

11 ‘‘(3) made in writing in a manner that specifies

12 in readily verifiable fashion the energy efficient

13 building envelope components installed and their re14 spective energy efficiency levels.

15 ‘‘(f) DEFINITIONS AND SPECIAL RULES.—

16 ‘‘(1) TENANT-STOCKHOLDER IN COOPERATIVE

17 HOUSING CORPORATION.—In the case of an indi18 vidual who is a tenant-stockholder (as defined in sec19 tion 216) in a cooperative housing corporation (as

20 defined in such section), such individual shall be

21 treated as having paid his tenant-stockholder’s pro22 portionate share (as defined in section 216(b)(3)) of

23 the cost of qualified energy efficiency improvements

24 made by such corporation.

25 ‘‘(2) 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 paid his proportionate share

6 of the cost of qualified energy efficiency im7 provements made by such association.

8 ‘‘(B) CONDOMINIUM MANAGEMENT ASSO9 CIATION.—For purposes of this paragraph, the

10 term ‘condominium management association’

11 means an organization which meets the require12 ments of paragraph (1) of section 528(c) (other

13 than subparagraph (E) thereof) with respect to

14 a condominium project substantially all of the

15 units of which are used as residences.

16 ‘‘(3) BUILDING ENVELOPE COMPONENT.—The

17 term ‘building envelope component’ means insulation

18 material or system which is specifically and pri19 marily designed to reduce the heat loss or gain of a

20 dwelling when installed in or on such dwelling, exte21 rior windows (including skylights) and doors, and

22 metal roofs with appropriate pigmented coatings

23 which are specifically and primarily designed to re24 duce the heat gain of a dwelling when installed in

25 or on such dwelling.
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1 ‘‘(4) MANUFACTURED HOMES INCLUDED.—For

2 purposes of this section, the term ‘dwelling’ includes

3 a manufactured home which conforms to Federal

4 Manufactured Home Construction and Safety Stand5 ards (section 3280 of title 24, Code of Federal Reg6 ulations, as in effect on April 3, 2003).

7 ‘‘(g) BASIS ADJUSTMENT.—For purposes of this sub8 title, if a credit is allowed under this section for any ex9 penditure with respect to any property, the increase in the

10 basis of such property which would (but for this sub11 section) result from such expenditure shall be reduced by

12 the amount of the credit so allowed.

13 ‘‘(h) APPLICATION OF SECTION.—This section shall

14 apply to qualified energy efficiency improvements installed

15 after December 31, 2003, and before January 1, 2007.’’.

16 (b) CONFORMING AMENDMENTS.—

17 (1) Subsection (c) of section 23 is amended by

18 striking ‘‘section 1400C’’ and inserting ‘‘sections

19 25E and 1400C’’.

20 (2) Subsection (a) of section 1016 is amended

21 by striking ‘‘and’’ at the end of paragraph (29), by

22 striking the period at the end of paragraph (30) and

23 inserting ‘‘, and’’, and by adding at the end the fol24 lowing new paragraph:
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1 ‘‘(31) to the extent provided in section 25E(g),

2 in the case of amounts with respect to which a credit

3 has been allowed under section 25E.’’.

4 (3) Subsection (d) of section 1400C is amended

5 by inserting ‘‘and section 25E’’ after ‘‘this section’’.

6 (4) The table of sections for subpart A of part

7 IV of subchapter A of chapter 1 is amended by in8 serting after the item relating to section 25D the

9 following new item:

‘‘Sec. 25E. Energy efficiency improvements to existing homes.’’.

10 (c) EFFECTIVE DATE.—The amendments made by

11 this section shall apply to taxable years ending after De12 cember 31, 2003.

13 SEC. 41005. BUSINESS CREDIT FOR CONSTRUCTION OF NEW

14 ENERGY EFFICIENT HOME.

15 (a) IN GENERAL.—Subpart D of part IV of sub16 chapter A of chapter 1 (relating to business related cred17 its) is amended by inserting after section 45F the fol18 lowing new section:

19 ‘‘SEC. 45G. NEW ENERGY EFFICIENT HOME CREDIT.

20 ‘‘(a) IN GENERAL.—For purposes of section 38, in

21 the case of an eligible contractor, the credit determined

22 under this section for the taxable year is an amount equal

23 to the aggregate adjusted bases of all energy efficient

24 property installed in a qualified new energy efficient home

25 during construction of such home.
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1 ‘‘(b) LIMITATIONS.—

2 ‘‘(1) MAXIMUM CREDIT.—

3 ‘‘(A) IN GENERAL.—The credit allowed by

4 this section with respect to a dwelling shall not

5 exceed $2,000.

6 ‘‘(B) PRIOR CREDIT AMOUNTS ON SAME

7 DWELLING TAKEN INTO ACCOUNT.—If a credit

8 was allowed under subsection (a) with respect

9 to a dwelling in 1 or more prior taxable years,

10 the amount of the credit otherwise allowable for

11 the taxable year with respect to that dwelling

12 shall not exceed the amount of $2,000 reduced

13 by the sum of the credits allowed under sub14 section (a) with respect to the dwelling for all

15 prior taxable years.

16 ‘‘(2) COORDINATION WITH REHABILITATION

17 AND ENERGY CREDITS.—For purposes of this

18 section—

19 ‘‘(A) the basis of any property referred to

20 in subsection (a) shall be reduced by that por21 tion of the basis of any property which is attrib22 utable to qualified rehabilitation expenditures

23 (as defined in section 47(c)(2)) or to the energy

24 percentage of energy property (as determined

25 under section 48(a)), and
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1 ‘‘(B) expenditures taken into account

2 under either section 47 or 48(a) shall not be

3 taken into account under this section.

4 ‘‘(c) DEFINITIONS.—For purposes of this section—

5 ‘‘(1) ELIGIBLE CONTRACTOR.—The term ‘eligi6 ble contractor’ means the person who constructed

7 the new energy efficient home, or in the case of a

8 manufactured home which conforms to Federal

9 Manufactured Home Construction and Safety Stand10 ards (section 3280 of title 24, Code of Federal Reg11 ulations, as in effect on April 3, 2003), the manufac12 tured home producer of such home.

13 ‘‘(2) ENERGY EFFICIENT PROPERTY.—The

14 term ‘energy efficient property’ means any energy

15 efficient building envelope component, and any en16 ergy efficient heating or cooling appliance.

17 ‘‘(3) QUALIFIED NEW ENERGY EFFICIENT

18 HOME.—The term ‘qualified new energy efficient

19 home’ means a dwelling—

20 ‘‘(A) located in the United States,

21 ‘‘(B) the construction of which is substan22 tially completed after December 31, 2003,

23 ‘‘(C) the original use of which is as a prin24 cipal residence (within the meaning of section

25 121) which commences with the person who ac-
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1 quires such dwelling from the eligible con2 tractor, and

3 ‘‘(D) which is certified to have a level of

4 annual heating and cooling energy consumption

5 that is at least 30 percent below the annual

6 level of heating and cooling energy consumption

7 of a comparable dwelling constructed in accord8 ance with the standards of the 2000 Inter9 national Energy Conservation Code and to have

10 building envelope component improvements account for 1 11 ⁄3 of such 30 percent.

12 ‘‘(4) CONSTRUCTION.—The term ‘construction’

13 includes reconstruction and rehabilitation.

14 ‘‘(5) ACQUIRE.—The term ‘acquire’ includes

15 purchase and, in the case of reconstruction and re16 habilitation, such term includes a binding written

17 contract for such reconstruction or rehabilitation.

18 ‘‘(6) BUILDING ENVELOPE COMPONENT.—The

19 term ‘building envelope component’ means insulation

20 material or system which is specifically and pri21 marily designed to reduce the heat loss or gain of a

22 dwelling when installed in or on such dwelling, exte23 rior windows (including skylights) and doors, and

24 metal roofs with appropriate pigmented coatings

25 which are specifically and primarily designed to re-
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1 duce the heat gain of a dwelling when installed in

2 or on such dwelling.

3 ‘‘(7) MANUFACTURED HOME INCLUDED.—The

4 term ‘dwelling’ includes a manufactured home con5 forming to Federal Manufactured Home Construc6 tion and Safety Standards (section 3280 of title 24,

7 Code of Federal Regulations, as in effect on April 3,

8 2003).

9 ‘‘(d) CERTIFICATION.—

10 ‘‘(1) METHOD.—A certification described in

11 subsection (c)(3)(D) shall be determined on the

12 basis of one of the following methods:

13 ‘‘(A) The technical specifications or appli14 cable ratings (including product labeling re15 quirements) for the measurement of energy effi16 ciency for the energy efficient building envelope

17 component or energy efficient heating or cooling

18 appliance, based upon energy use or building

19 envelope component performance.

20 ‘‘(B) An energy performance measurement

21 method that utilizes computer software ap22 proved by organizations designated by the Sec23 retary.

24 ‘‘(2) PROVIDER.—Such certification shall be

25 provided by—
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1 ‘‘(A) in the case of a method described in

2 paragraph (1)(A), a local building regulatory

3 authority, a utility, a manufactured home pro4 duction inspection primary inspection agency

5 (IPIA), or an accredited home energy rating

6 systems provider who is accredited by, or other7 wise authorized to use, approved energy per8 formance measurement methods by the Home

9 Energy Ratings Systems Council or the Na10 tional Association of State Energy Officials, or

11 ‘‘(B) in the case of a method described in

12 paragraph (1)(B), an individual recognized by

13 an organization designated by the Secretary for

14 such purposes.

15 ‘‘(3) FORM.—Such certification shall be made

16 in writing in a manner that specifies in readily

17 verifiable fashion the energy efficient building enve18 lope components and energy efficient heating or

19 cooling appliances installed and their respective en20 ergy efficiency levels, and in the case of a method

21 described in subparagraph (B) of paragraph (1), ac22 companied by written analysis documenting the

23 proper application of a permissible energy perform24 ance measurement method to the specific cir25 cumstances of such dwelling.
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1 ‘‘(4) REGULATIONS.—

2 ‘‘(A) IN GENERAL.—In prescribing regula3 tions under this subsection for energy perform4 ance measurement methods, the Secretary shall

5 prescribe procedures for calculating annual en6 ergy costs for heating and cooling and cost sav7 ings and for the reporting of the results. Such

8 regulations shall—

9 ‘‘(i) be based on the National Home

10 Energy Rating Technical Guidelines of the

11 National Association of State Energy Offi12 cials, the Home Energy Rating Guidelines

13 of the Home Energy Rating Systems

14 Council, or the modified 2001 California

15 Residential ACM manual,

16 ‘‘(ii) provide that any calculation pro17 cedures be developed such that the same

18 energy efficiency measures allow a home to

19 qualify for the credit under this section re20 gardless of whether the house uses a gas

21 or oil furnace or boiler or an electric heat

22 pump, and

23 ‘‘(iii) require that any computer soft24 ware allow for the printing of the Federal

25 tax forms necessary for the credit under
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1 this section and explanations for the home2 buyer of the energy efficient features that

3 were used to comply with the requirements

4 of this section.

5 ‘‘(B) PROVIDERS.—For purposes of para6 graph (2)(B), the Secretary shall establish re7 quirements for the designation of individuals

8 based on the requirements for energy consult9 ants and home energy raters specified by the

10 National Association of State Energy Officials.

11 ‘‘(e) BASIS ADJUSTMENT.—For purposes of this sub12 title, if a credit is determined under this section for any

13 expenditure with respect to any property, the increase in

14 the basis of such property which would (but for this sub15 section) result from such expenditure shall be reduced by

16 the amount of the credit so determined.

17 ‘‘(f) APPLICATION OF SECTION.—Subsection (a) shall

18 apply to dwellings purchased during the period beginning

19 on January 1, 2004, and ending on December 31, 2006.’’.

20 (b) CREDIT MADE PART OF GENERAL BUSINESS

21 CREDIT.—Subsection (b) of section 38 (relating to current

22 year business credit) is amended by striking ‘‘plus’’ at the

23 end of paragraph (14), by striking the period at the end

24 of paragraph (15) and inserting ‘‘, plus’’, and by adding

25 at the end thereof the following new paragraph:
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1 ‘‘(16) the new energy efficient home credit de2 termined under section 45G.’’.

3 (c) DENIAL OF DOUBLE BENEFIT.—Section 280C

4 (relating to certain expenses for which credits are allow5 able) is amended by adding at the end thereof the fol6 lowing new subsection:

7 ‘‘(d) NEW ENERGY EFFICIENT HOME EXPENSES.—

8 No deduction shall be allowed for that portion of expenses

9 for a new energy efficient home otherwise allowable as a

10 deduction for the taxable year which is equal to the

11 amount of the credit determined for such taxable year

12 under section 45G.’’.

13 (d) LIMITATION ON CARRYBACK.—Subsection (d) of

14 section 39 is amended by adding at the end the following

15 new paragraph:

16 ‘‘(11) NO CARRYBACK OF NEW ENERGY EFFI17 CIENT HOME CREDIT BEFORE EFFECTIVE DATE.—

18 No portion of the unused business credit for any

19 taxable year which is attributable to the credit deter20 mined under section 45G may be carried back to any

21 taxable year ending before January 1, 2004.’’.

22 (e) DEDUCTION FOR CERTAIN UNUSED BUSINESS

23 CREDITS.—Subsection (c) of section 196 is amended by

24 striking ‘‘and’’ at the end of paragraph (9), by striking

25 the period at the end of paragraph (10) and inserting ‘‘,
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1 and’’, and by adding after paragraph (10) the following

2 new paragraph:

3 ‘‘(11) the new energy efficient home credit de4 termined under section 45G.’’.

5 (f) CLERICAL AMENDMENT.—The table of sections

6 for subpart D of part IV of subchapter A of chapter 1

7 is amended by inserting after the item relating to section

8 45F the following new item:

‘‘Sec. 45G. New energy efficient home credit.’’.

9 (g) EFFECTIVE DATE.—The amendments made by

10 this section shall apply to taxable years ending after De11 cember 31, 2003.

12 SEC. 41006. ENERGY CREDIT FOR COMBINED HEAT AND

13 POWER SYSTEM PROPERTY.

14 (a) IN GENERAL.—Subparagraph (A) of section

15 48(a)(3) (defining energy property) is amended by strik16 ing ‘‘or’’ at the end of clause (ii), by adding ‘‘or’’ at the

17 end of clause (iii), and by inserting after clause (iii) the

18 following new clause:

19 ‘‘(iv) combined heat and power system

20 property,’’.

21 (b) COMBINED HEAT AND POWER SYSTEM PROP22 ERTY.—Subsection (a) of section 48 is amended by redes23 ignating paragraphs (5) and (6) as paragraphs (6) and

24 (7), respectively, and by inserting after paragraph (4) the

25 following new paragraph:
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1 ‘‘(5) COMBINED HEAT AND POWER SYSTEM

2 PROPERTY.—For purposes of this subsection—

3 ‘‘(A) COMBINED HEAT AND POWER SYS4 TEM PROPERTY.—The term ‘combined heat and

5 power system property’ means property com6 prising a system—

7 ‘‘(i) which uses the same energy

8 source for the simultaneous or sequential

9 generation of electrical power, mechanical

10 shaft power, or both, in combination with

11 the generation of steam or other forms of

12 useful thermal energy (including heating

13 and cooling applications),

14 ‘‘(ii) which has an electrical capacity

15 of more than 50 kilowatts or a mechanical

16 energy capacity of more than 67 horse17 power or an equivalent combination of elec18 trical and mechanical energy capacities,

19 ‘‘(iii) which produces—

20 ‘‘(I) at least 20 percent of its

21 total useful energy in the form of

22 thermal energy, and

23 ‘‘(II) at least 20 percent of its

24 total useful energy in the form of elec-
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1 trical or mechanical power (or com2 bination thereof),

3 ‘‘(iv) the energy efficiency percentage

4 of which exceeds 60 percent (70 percent in

5 the case of a system with an electrical ca6 pacity in excess of 50 megawatts or a me7 chanical energy capacity in excess of

8 67,000 horsepower, or an equivalent com9 bination of electrical and mechanical en10 ergy capacities), and

11 ‘‘(v) which is placed in service after

12 December 31, 2003, and before January 1,

13 2007.

14 ‘‘(B) SPECIAL RULES.—

15 ‘‘(i) ENERGY EFFICIENCY PERCENT16 AGE.—For purposes of subparagraph

17 (A)(iv), the energy efficiency percentage of

18 a system is the fraction—

19 ‘‘(I) the numerator of which is

20 the total useful electrical, thermal,

21 and mechanical power produced by

22 the system at normal operating rates,

23 and
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1 ‘‘(II) the denominator of which is

2 the lower heating value of the primary

3 fuel source for the system.

4 ‘‘(ii) DETERMINATIONS MADE ON BTU

5 BASIS.—The energy efficiency percentage

6 and the percentages under subparagraph

7 (A)(iii) shall be determined on a Btu basis.

8 ‘‘(iii) INPUT AND OUTPUT PROPERTY

9 NOT INCLUDED.—The term ‘combined heat

10 and power system property’ does not in11 clude property used to transport the en12 ergy source to the facility or to distribute

13 energy produced by the facility.

14 ‘‘(iv) PUBLIC UTILITY PROPERTY.—

15 ‘‘(I) ACCOUNTING RULE FOR

16 PUBLIC UTILITY PROPERTY.—If the

17 combined heat and power system

18 property is public utility property (as

19 defined in section 168(i)(1)), the tax20 payer may only claim the credit under

21 the subsection if, with respect to such

22 property, the taxpayer uses a normal23 ization method of accounting.

24 ‘‘(II) CERTAIN EXCEPTION NOT

25 TO APPLY.—The matter in paragraph
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1 (3) which follows subparagraph (D)

2 shall not apply to combined heat and

3 power system property.

4 ‘‘(C) EXTENSION OF DEPRECIATION RE5 COVERY PERIOD.—If a taxpayer is allowed cred6 it under this section for combined heat and

7 power system property and such property would

8 (but for this subparagraph) have a class life of

9 15 years or less under section 168, such prop10 erty shall be treated as having a 22-year class

11 life for purposes of section 168.’’.

12 (c) NO CARRYBACK OF ENERGY CREDIT BEFORE

13 EFFECTIVE DATE.—Subsection (d) of section 39 is

14 amended by adding at the end the following new para15 graph:

16 ‘‘(12) NO CARRYBACK OF ENERGY CREDIT BE17 FORE EFFECTIVE DATE.—No portion of the unused

18 business credit for any taxable year which is attrib19 utable to the energy credit with respect to property

20 described in section 48(a)(5) may be carried back to

21 a taxable year ending before January 1, 2004.’’.

22 (d) EFFECTIVE DATE.—The amendments made by

23 this section shall apply to property placed in service after

24 December 31, 2003, in taxable years ending after such

25 date.
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1 SEC. 41007. NEW NONREFUNDABLE PERSONAL CREDITS AL2 LOWED AGAINST REGULAR AND MINIMUM

3 TAXES.

4 (a) IN GENERAL.—

5 (1) SECTION 25C.—Section 25C(b), as added

6 by section 41001, is amended by adding at the end

7 the following new paragraph:

8 ‘‘(3) LIMITATION BASED ON AMOUNT OF

9 TAX.—The credit allowed under subsection (a) for

10 the taxable year shall not exceed the excess of—

11 ‘‘(A) the sum of the regular tax liability

12 (as defined in section 26(b)) plus the tax im13 posed by section 55, over

14 ‘‘(B) the sum of the credits allowable

15 under this subpart (other than this section and

16 section 25D and 25E) and section 27 for the

17 taxable year.’’.

18 (2) SECTION 25D.—Section 25D(b), as added

19 by section 103, is amended to read as follows:

20 ‘‘(b) LIMITATIONS.—

21 ‘‘(1) IN GENERAL.—The credit allowed under

22 subsection (a) with respect to any qualified fuel cell

23 power plant for any taxable year shall not exceed—

‘‘(A) $500 for each 1 24 ⁄2 kilowatt of capacity

25 of the power plant, reduced by
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1 ‘‘(B) the aggregate energy credits allowed

2 with respect to such power plant for all prior

3 taxable years.

4 ‘‘(2) LIMITATION BASED ON AMOUNT OF

5 TAX.—The credit allowed under subsection (a) for

6 the taxable year shall not exceed the excess of—

7 ‘‘(A) the sum of the regular tax liability

8 (as defined in section 26(b)) plus the tax im9 posed by section 55, over

10 ‘‘(B) the sum of the credits allowable

11 under this subpart (other than this section and

12 section 25E) and section 27 for the taxable

13 year.’’.

14 (3) SECTION 25E.—Section 25E(b), as added

15 by section 41004, is amended by adding at the end

16 the following new paragraph:

17 ‘‘(3) LIMITATION BASED ON AMOUNT OF

18 TAX.—The credit allowed under subsection (a) for

19 the taxable year shall not exceed the excess of—

20 ‘‘(A) the sum of the regular tax liability

21 (as defined in section 26(b)) plus the tax im22 posed by section 55, over

23 ‘‘(B) the sum of the credits allowable

24 under this subpart (other than this section) and

25 section 27 for the taxable year.’’.
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1 (b) CONFORMING AMENDMENTS.—

2 (1) Section 23(b)(4)(B) is amended by inserting

3 ‘‘and sections 25C, 25D, and 25E’’ after ‘‘this sec4 tion’’.

5 (2) Section 24(b)(3)(B) is amended by striking

6 ‘‘and 25B’’ and inserting ‘‘, 25B, 25C, 25D, and

7 25E’’.

8 (3) Section 25(e)(1)(C) is amended by inserting

9 ‘‘25C, 25D, and 25E’’ after ‘‘25B,’’.

10 (4) Section 25B(g)(2) is amended by striking

11 ‘‘section 23’’ and inserting ‘‘sections 23, 25C, 25D,

12 and 25E’’.

13 (5) Section 25E(c), as added by section 41004,

14 is amended by striking ‘‘section 26(a) for such tax15 able year reduced by the sum of the credits allowable

16 under this subpart (other than this section)’’ and in17 serting ‘‘subsection (b)(3)’’.

18 (6) Section 26(a)(1) is amended by striking

19 ‘‘and 25B’’ and inserting ‘‘25B, 25C, 25D, and

20 25E’’.

21 (7) Section 904(h) is amended by striking ‘‘and

22 25B’’ and inserting ‘‘25B, 25C, 25D, and 25E’’.

23 (8) Section 1400C(d) is amended by striking

24 ‘‘and 25B’’ and inserting ‘‘25B, 25C, 25D, and

25 25E’’.
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1 (c) EFFECTIVE DATE.—The amendments made by

2 this section shall apply to taxable years beginning after

3 December 31, 2003.

4 SEC. 41008. REPEAL OF 4.3-CENT MOTOR FUEL EXCISE

5 TAXES ON RAILROADS AND INLAND WATER6 WAY TRANSPORTATION WHICH REMAIN IN

7 GENERAL FUND.

8 (a) TAXES ON TRAINS.—

9 (1) IN GENERAL.—Subparagraph (A) of section

10 4041(a)(1) is amended by striking ‘‘or a diesel-pow11 ered train’’ each place it appears and by striking ‘‘or

12 train’’.

13 (2) CONFORMING AMENDMENTS.—

14 (A) Subparagraph (C) of section

15 4041(a)(1) is amended by striking clause (ii)

16 and by redesignating clause (iii) as clause (ii).

17 (B) Subparagraph (C) of section

18 4041(b)(1) is amended by striking all that fol19 lows ‘‘section 6421(e)(2)’’ and inserting a pe20 riod.

21 (C) Subsection (d) of section 4041 is

22 amended by redesignating paragraph (3) as

23 paragraph (4) and by inserting after paragraph

24 (2) the following new paragraph:
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1 ‘‘(3) DIESEL FUEL USED IN TRAINS.—There is

2 hereby imposed a tax of 0.1 cent per gallon on any

3 liquid other than gasoline (as defined in section

4 4083)—

5 ‘‘(A) sold by any person to an owner, les6 see, or other operator of a diesel-powered train

7 for use as a fuel in such train, or

8 ‘‘(B) used by any person as a fuel in a die9 sel-powered train unless there was a taxable

10 sale of such fuel under subparagraph (A).

11 No tax shall be imposed by this paragraph on the

12 sale or use of any liquid if tax was imposed on such

13 liquid under section 4081.’’.

14 (D) Subsection (f) of section 4082 is

15 amended by striking ‘‘section 4041(a)(1)’’ and

16 inserting ‘‘subsections (d)(3) and (a)(1) of sec17 tion 4041, respectively’’.

18 (E) Paragraph (3) of section 4083(a) is

19 amended by striking ‘‘or a diesel-powered

20 train’’.

21 (F) Paragraph (3) of section 6421(f) is

22 amended to read as follows:

23 ‘‘(3) GASOLINE USED IN TRAINS.—In the case

24 of gasoline used as a fuel in a train, this section

25 shall not apply with respect to the Leaking Under-
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1 ground Storage Tank Trust Fund financing rate

2 under section 4081.’’.

3 (G) Paragraph (3) of section 6427(l) is

4 amended to read as follows:

5 ‘‘(3) REFUND OF CERTAIN TAXES ON FUEL

6 USED IN DIESEL-POWERED TRAINS.—For purposes

7 of this subsection, the term ‘nontaxable use’ includes

8 fuel used in a diesel-powered train. The preceding

9 sentence shall not apply to the tax imposed by sec10 tion 4041(d) and the Leaking Underground Storage

11 Tank Trust Fund financing rate under section 4081

12 except with respect to fuel sold for exclusive use by

13 a State or any political subdivision thereof.’’.

14 (b) FUEL USED ON INLAND WATERWAYS.—

15 (1) IN GENERAL.—Paragraph (1) of section

16 4042(b) is amended by adding ‘‘and’’ at the end of

17 subparagraph (A), by striking ‘‘, and’’ at the end of

18 subparagraph (B) and inserting a period, and by

19 striking subparagraph (C).

20 (2) CONFORMING AMENDMENT.—Paragraph (2)

21 of section 4042(b) is amended by striking subpara22 graph (C).

23 (c) EFFECTIVE DATE.—The amendments made by

24 this section shall take effect on January 1, 2004.
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1 SEC. 41009. REDUCED MOTOR FUEL EXCISE TAX ON CER2 TAIN MIXTURES OF DIESEL FUEL.

3 (a) IN GENERAL.—Paragraph (2) of section 4081(a)

4 is amended by adding at the end the following:

5 ‘‘(C) DIESEL-WATER FUEL EMULSION.—In

6 the case of diesel-water fuel emulsion at least

7 14 percent of which is water and with respect

8 to which the emulsion additive is registered by

9 a United States manufacturer with the Envi10 ronmental Protection Agency pursuant to sec11 tion 211 of the Clean Air Act (as in effect on

12 March 31, 2003), subparagraph (A)(iii) shall be

13 applied by substituting ‘19.7 cents’ for ‘24.3

14 cents’.’’.

15 (b) SPECIAL RULES FOR DIESEL-WATER FUEL

16 EMULSIONS.—

17 (1) REFUNDS FOR TAX-PAID PURCHASES.—Sec18 tion 6427 is amended by redesignating subsections

19 (m) through (p) as subsections (n) through (q), re20 spectively, and by inserting after subsection (l) the

21 following new subsection:

22 ‘‘(m) DIESEL FUEL USED TO PRODUCE EMUL23 SION.—

24 ‘‘(1) IN GENERAL.—Except as provided in sub25 section (k), if any diesel fuel on which tax was im26 posed by section 4081 at the regular tax rate is used
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1 by any person in producing an emulsion described in

2 section 4081(a)(2)(C) which is sold or used in such

3 person’s trade or business, the Secretary shall pay

4 (without interest) to such person an amount equal to

5 the excess of the regular tax rate over the incentive

6 tax rate with respect to such fuel.

7 ‘‘(2) DEFINITIONS.—For purposes of paragraph

8 (1)—

9 ‘‘(A) REGULAR TAX RATE.—The term ‘reg10 ular tax rate’ means the aggregate rate of tax

11 imposed by section 4081 determined without re12 gard to section 4081(a)(2)(C).

13 ‘‘(B) INCENTIVE TAX RATE.—The term

14 ‘incentive tax rate’ means the aggregate rate of

15 tax imposed by section 4081 determined with

16 regard to section 4081(a)(2)(C).’’.

17 (2) LATER SEPARATION OF FUEL.—

18 (A) IN GENERAL.—Section 4081 (relating

19 to imposition of tax) is amended by redesig20 nating subsections (d) and (e) as subsections

21 (e) and (f), respectively, and by inserting after

22 subsection (c) the following new subsection:

23 ‘‘(d) LATER SEPARATION OF FUEL FROM DIESEL24 WATER FUEL EMULSION.—If any person separates the

25 taxable fuel from a diesel-water fuel emulsion on which
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1 tax was imposed under subsection (a) at a rate determined

2 under subsection (a)(2)(C) (or with respect to which a

3 credit or payment was allowed or made by reason of sec4 tion 6427), such person shall be treated as the refiner of

5 such taxable fuel. The amount of tax imposed on any re6 moval of such fuel by such person shall be reduced by the

7 amount of tax imposed (and not credited or refunded) on

8 any prior removal or entry of such fuel.’’.

9 (B) CONFORMING AMENDMENT.—Sub10 section (d) of section 6416 is amended by strik11 ing ‘‘section 4081(e)’’ and inserting ‘‘section

12 4081(f)’’.

13 (c) EFFECTIVE DATE.—The amendments made by

14 this section shall take effect on October 1, 2003.

15 SEC. 41010. REPEAL OF PHASEOUTS FOR QUALIFIED ELEC16 TRIC VEHICLE CREDIT AND DEDUCTION FOR

17 CLEAN FUEL-VEHICLES.

18 (a) CREDIT FOR QUALIFIED ELECTRIC VEHICLES.—

19 Subsection (b) of section 30 (relating to limitations) is

20 amended by striking paragraph (2) and redesignating

21 paragraph (3) as paragraph (2).

22 (b) DEDUCTION FOR CLEAN-FUEL VEHICLES AND

23 CERTAIN REFUELING PROPERTY.—Paragraph (1) of sec24 tion 179A(b) (relating to qualified clean-fuel vehicle prop25 erty) is amended to read as follows:
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1 ‘‘(1) QUALIFIED CLEAN-FUEL VEHICLE PROP2 ERTY.— The cost which may be taken into account

3 under subsection (a)(1)(A) with respect to any

4 motor vehicle shall not exceed—

5 ‘‘(A) in the case of a motor vehicle not de6 scribed in subparagraph (B) or (C), $2,000,

7 ‘‘(B) in the case of any truck or van with

8 a gross vehicle weight rating greater than

9 10,000 pounds but not greater than 26,000

10 pounds, $5,000, or

11 ‘‘(C) $50,000 in the case of—

12 ‘‘(i) a truck or van with a gross vehi13 cle weight rating greater than 26,000

14 pounds, or

15 ‘‘(ii) any bus which has a seating ca16 pacity of at least 20 adults (not including

17 the driver).’’.

18 SEC. 41011. ALTERNATIVE MOTOR VEHICLE CREDIT.

19 (a) IN GENERAL.—Subpart B of part IV of sub20 chapter A of chapter 1 (relating to foreign tax credit, etc.)

21 is amended by adding at the end the following:

22 ‘‘SEC. 30B. ALTERNATIVE MOTOR VEHICLE CREDIT.

23 ‘‘(a) ALLOWANCE OF CREDIT.—There shall be al24 lowed as a credit against the tax imposed by this chapter

25 for the taxable year an amount equal to the sum of—
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1 ‘‘(1) the new qualified fuel cell motor vehicle

2 credit determined under subsection (b), and

3 ‘‘(2) the advanced lean burn technology motor

4 vehicle credit determined under subsection (c).

5 ‘‘(b) NEW QUALIFIED FUEL CELL MOTOR VEHICLE

6 CREDIT.—

7 ‘‘(1) IN GENERAL.—For purposes of subsection

8 (a), the new qualified fuel cell motor vehicle credit

9 determined under this subsection with respect to a

10 new qualified fuel cell motor vehicle placed in service

11 by the taxpayer during the taxable year is—

12 ‘‘(A) $4,000, if such vehicle has a gross ve13 hicle weight rating of not more than 8,500

14 pounds,

15 ‘‘(B) $10,000, if such vehicle has a gross

16 vehicle weight rating of more than 8,500

17 pounds but not more than 14,000 pounds,

18 ‘‘(C) $20,000, if such vehicle has a gross

19 vehicle weight rating of more than 14,000

20 pounds but not more than 26,000 pounds, and

21 ‘‘(D) $40,000, if such vehicle has a gross

22 vehicle weight rating of more than 26,000

23 pounds.

24 ‘‘(2) INCREASE FOR FUEL EFFICIENCY.—
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1 ‘‘(A) IN GENERAL.—The amount deter2 mined under paragraph (1)(A) with respect to

3 a new qualified fuel cell motor vehicle which is

4 a passenger automobile or light truck shall be

5 increased by—

6 ‘‘(i) $1,000, if such vehicle achieves at

7 least 150 percent but less than 175 per8 cent of the 2000 model year city fuel econ9 omy,

10 ‘‘(ii) $1,500, if such vehicle achieves

11 at least 175 percent but less than 200 per12 cent of the 2000 model year city fuel econ13 omy,

14 ‘‘(iii) $2,000, if such vehicle achieves

15 at least 200 percent but less than 225 per16 cent of the 2000 model year city fuel econ17 omy,

18 ‘‘(iv) $2,500, if such vehicle achieves

19 at least 225 percent but less than 250 per20 cent of the 2000 model year city fuel econ21 omy,

22 ‘‘(v) $3,000, if such vehicle achieves

23 at least 250 percent but less than 275 per24 cent of the 2000 model year city fuel econ25 omy,
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1 ‘‘(vi) $3,500, if such vehicle achieves

2 at least 275 percent but less than 300 per3 cent of the 2000 model year city fuel econ4 omy, and

5 ‘‘(vii) $4,000, if such vehicle achieves

6 at least 300 percent of the 2000 model

7 year city fuel economy.

8 ‘‘(B) 2000 MODEL YEAR CITY FUEL ECON9 OMY.—For purposes of subparagraph (A), the

10 2000 model year city fuel economy with respect

11 to a vehicle shall be determined in accordance

12 with the following tables:

13 ‘‘(i) In the case of a passenger auto14 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.

15 ‘‘(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
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‘‘If vehicle inertia weight

class is:

The 2000 model year city fuel

economy is:

2,750 lbs .................................................................................. 25.9 mpg

3,000 lbs .................................................................................. 24.1 mpg

3,500 lbs .................................................................................. 21.3 mpg

4,000 lbs .................................................................................. 19.0 mpg

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

4 subsection—

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

22 recognized—

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

2 exceeds—

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 TITLE III—PRODUCTION

9 SEC. 43001. OIL AND GAS FROM MARGINAL WELLS.

10 (a) IN GENERAL.—Subpart D of part IV of sub11 chapter A of chapter 1 (relating to business credits) is

12 amended by adding at the end the following:

13 ‘‘SEC. 45I. CREDIT FOR PRODUCING OIL AND GAS FROM

14 MARGINAL WELLS.

15 ‘‘(a) GENERAL RULE.—For purposes of section 38,

16 the marginal well production credit for any taxable year

17 is an amount equal to the product of—

18 ‘‘(1) the credit amount, and

19 ‘‘(2) the qualified credit oil production and the

20 qualified natural gas production which is attrib21 utable to the taxpayer.

22 ‘‘(b) CREDIT AMOUNT.—For purposes of this

23 section—

24 ‘‘(1) IN GENERAL.—The credit amount is—
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1 ‘‘(A) $3 per barrel of qualified crude oil

2 production, and

3 ‘‘(B) 50 cents per 1,000 cubic feet of

4 qualified natural gas production.

5 ‘‘(2) REDUCTION AS OIL AND GAS PRICES IN6 CREASE.—

7 ‘‘(A) IN GENERAL.—The $3 and 50 cents

8 amounts under paragraph (1) shall each be re9 duced (but not below zero) by an amount which

10 bears the same ratio to such amount (deter11 mined without regard to this paragraph) as—

12 ‘‘(i) the excess (if any) of the applica13 ble reference price over $15 ($1.67 for

14 qualified natural gas production), bears to

15 ‘‘(ii) $3 ($0.33 for qualified natural

16 gas production).

17 The applicable reference price for a taxable

18 year is the reference price of the calendar year

19 preceding the calendar year in which the tax20 able year begins.

21 ‘‘(B) INFLATION ADJUSTMENT.—In the

22 case of any taxable year beginning in a calendar

23 year after 2003, each of the dollar amounts

24 contained in subparagraph (A) shall be in25 creased to an amount equal to such dollar
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1 amount multiplied by the inflation adjustment

2 factor for such calendar year (determined under

3 section 43(b)(3)(B) by substituting ‘2002’ for

4 ‘1990’).

5 ‘‘(C) REFERENCE PRICE.—For purposes of

6 this paragraph, the term ‘reference price’

7 means, with respect to any calendar year—

8 ‘‘(i) in the case of qualified crude oil

9 production, the reference price determined

10 under section 29(d)(2)(C), and

11 ‘‘(ii) in the case of qualified natural

12 gas production, the Secretary’s estimate of

13 the annual average wellhead price per

14 1,000 cubic feet for all domestic natural

15 gas.

16 ‘‘(c) QUALIFIED CRUDE OIL AND NATURAL GAS

17 PRODUCTION.—For purposes of this section—

18 ‘‘(1) IN GENERAL.—The terms ‘qualified crude

19 oil production’ and ‘qualified natural gas production’

20 mean domestic crude oil or natural gas which is pro21 duced from a qualified marginal well.

22 ‘‘(2) LIMITATION ON AMOUNT OF PRODUCTION

23 WHICH MAY QUALIFY.—

24 ‘‘(A) IN GENERAL.—Crude oil or natural

25 gas produced during any taxable year from any
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1 well shall not be treated or qualified crude oil

2 production or qualified natural gas production

3 to the extent production from the well during

4 the taxable year exceeds 1,095 barrels or barrel

5 equivalents.

6 ‘‘(B) PROPORTIONATE REDUCTIONS.—

7 ‘‘(i) SHORT TAXABLE YEARS.—In the

8 case of a short taxable year, the limitations

9 under this paragraph shall be proportion10 ately reduced to reflect the ratio which the

11 number of days in such taxable year bears

12 to 365.

13 ‘‘(ii) WELLS NOT IN PRODUCTION EN14 TIRE YEAR.—In the case of a well which is

15 not capable of production during each day

16 of a taxable year, the limitations under

17 this paragraph applicable to the well shall

18 be proportionately reduced to reflect the

19 ratio which the number of days of produc20 tion bears to the total number of days in

21 the taxable year.

22 ‘‘(3) DEFINITIONS.—

23 ‘‘(A) QUALIFIED MARGINAL WELL.—The

24 term ‘qualified marginal well’ means a domestic

25 well—
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1 ‘‘(i) the production from which during

2 the taxable year is treated as marginal

3 production under section 613A(c)(6), or

4 ‘‘(ii) which, during the taxable year—

5 ‘‘(I) has average daily production

6 of not more than 25 barrel equiva7 lents, and

8 ‘‘(II) produces water at a rate

9 not less than 95 percent of total well

10 effluent.

11 ‘‘(B) CRUDE OIL, ETC.—The terms ‘crude

12 oil’, ‘natural gas’, ‘domestic’, and ‘barrel’ have

13 the meanings given such terms by section

14 613A(e).

15 ‘‘(C) BARREL EQUIVALENT.—The term

16 ‘barrel equivalent’ means, with respect to nat17 ural gas, a conversation ratio of 6,000 cubic

18 feet of natural gas to 1 barrel of crude oil.

19 ‘‘(d) OTHER RULES.—

20 ‘‘(1) PRODUCTION ATTRIBUTABLE TO THE TAX21 PAYER.—In the case of a qualified marginal well in

22 which there is more than one owner of operating in23 terests in the well and the crude oil or natural gas

24 production exceeds the limitation under subsection

25 (c)(2), qualifying crude oil production or qualifying
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1 natural gas production attributable to the taxpayer

2 shall be determined on the basis of the ratio which

3 taxpayer’s revenue interest in the production bears

4 to the aggregate of the revenue interests of all oper5 ating interest owners in the production.

6 ‘‘(2) OPERATING INTEREST REQUIRED.—Any

7 credit under this section may be claimed only on

8 production which is attributable to the holder of an

9 operating interest.

10 ‘‘(3) PRODUCTION FROM NONCONVENTIONAL

11 SOURCES EXCLUDED.—In the case of production

12 from a qualified marginal well which is eligible for

13 the credit allowed under section 29 for the taxable

14 year, no credit shall be allowable under this section

15 unless the taxpayer elects not to claim the credit

16 under section 29 with respect to the well.’’.

17 (b) CREDIT TREATED AS BUSINESS CREDIT.—Sec18 tion 38(b) is amended by striking ‘‘plus’’ at the end of

19 paragraph (16), by striking the period at the end of para20 graph (17) and inserting ‘‘, plus’’, and by adding at the

21 end the following:

22 ‘‘(18) the marginal oil and gas well production

23 credit determined under section 45I(a).’’.
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1 (c) CARRYBACK.—Subsection (a) of section 39 (relat2 ing to carryback and carryforward of unused credits gen3 erally) is amended by adding at the end the following:

4 ‘‘(3) 10-YEAR CARRYBACK FOR MARGINAL OIL

5 AND GAS WELL PRODUCTION CREDIT.—In the case

6 of the marginal oil and gas well production credit—

7 ‘‘(A) this section shall be applied sepa8 rately from the business credit (other than the

9 marginal oil and gas well production credit),

10 ‘‘(B) paragraph (1) shall be applied by

11 substituting ‘10 taxable years’ for ‘1 taxable

12 years’ in subparagraph (A) thereof, and

13 ‘‘(C) paragraph (2) shall be applied—

14 ‘‘(i) by substituting ‘31 taxable years’

15 for ‘21 taxable years’ in subparagraph (A)

16 thereof, and

17 ‘‘(ii) by substituting ‘30 taxable years’

18 for ‘20 taxable years’ in subparagraph (A)

19 thereof.’’.

20 (d) COORDINATION WITH SECTION 29.—Section

21 29(a) is amended by striking ‘‘There’’ and inserting ‘‘At

22 the election of the taxpayer, there’’.

23 (e) CLERICAL AMENDMENT.—The table of sections

24 for subpart D of part IV of subchapter A of chapter 1

25 is amended by adding at the end the following:

‘‘Sec. 45I. Credit for producing oil and gas from marginal wells.’’.
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1 (f) EFFECTIVE DATE.—The amendments made by

2 this section shall apply to production in taxable years be3 ginning after December 31, 2003.

4 SEC. 43002. TEMPORARY SUSPENSION OF LIMITATION

5 BASED ON 65 PERCENT OF TAXABLE INCOME

6 AND EXTENSION OF SUSPENSION OF TAX7 ABLE INCOME LIMIT WITH RESPECT TO MAR8 GINAL PRODUCTION.

9 (a) LIMITATION BASED ON 65 PERCENT OF TAX10 ABLE INCOME.—Subsection (d) of section 613A (relating

11 to limitation on percentage depletion in case of oil and

12 gas wells) is amended by adding at the end the following

13 new paragraph:

14 ‘‘(6) TEMPORARY SUSPENSION OF TAXABLE IN15 COME LIMIT.—Paragraph (1) shall not apply to tax16 able years beginning after December 31, 2003, and

17 before January 1, 2007, including with respect to

18 amounts carried under the second sentence of para19 graph (1) to such taxable years.’’.

20 (b) EXTENSION OF SUSPENSION OF TAXABLE IN21 COME LIMIT WITH RESPECT TO MARGINAL PRODUC22 TION.—Subparagraph (H) of section 613A(c)(6) (relating

23 to temporary suspension of taxable income limit with re24 spect to marginal production) is amended by striking

25 ‘‘2004’’ and inserting ‘‘2007’’.
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1 (c) EFFECTIVE DATE.—The amendment made by

2 subsection (a) shall apply to taxable years beginning after

3 December 31, 2003.

4 SEC. 43003. AMORTIZATION OF DELAY RENTAL PAYMENTS.

5 (a) IN GENERAL.—Section 167 (relating to deprecia6 tion) is amended by redesignating subsection (h) as sub7 section (i) and by inserting after subsection (g) the fol8 lowing new subsection:

9 ‘‘(h) AMORTIZATION OF DELAY RENTAL PAYMENTS

10 FOR DOMESTIC OIL AND GAS WELLS.—

11 ‘‘(1) IN GENERAL.—Any delay rental payment

12 paid or incurred in connection with the development

13 of oil or gas wells within the United States (as de14 fined in section 638) shall be allowed as a deduction

15 ratably over the 24-month period beginning on the

16 date that such payment was paid or incurred.

17 ‘‘(2) HALF-YEAR CONVENTION.—For purposes

18 of paragraph (1), any payment paid or incurred dur19 ing the taxable year shall be treated as paid or in20 curred on the mid-point of such taxable year.

21 ‘‘(3) EXCLUSIVE METHOD.—Except as provided

22 in this subsection, no depreciation or amortization

23 deduction shall be allowed with respect to such pay24 ments.
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1 ‘‘(4) TREATMENT UPON ABANDONMENT.—If

2 any property to which a delay rental payment relates

3 is retired or abandoned during the 24-month period

4 described in paragraph (1), no deduction shall be al5 lowed on account of such retirement or abandon6 ment and the amortization deduction under this sub7 section shall continue with respect to such payment.

8 ‘‘(5) DELAY RENTAL PAYMENTS.—For purposes

9 of this subsection, the term ‘delay rental payment’

10 means an amount paid for the privilege of deferring

11 development of an oil or gas well under an oil or gas

12 lease.’’.

13 (b) EFFECTIVE DATE.—The amendment made by

14 this section shall apply to amounts paid or incurred in tax15 able years beginning after December 31, 2003.

16 SEC. 43004. AMORTIZATION OF GEOLOGICAL AND GEO17 PHYSICAL EXPENDITURES.

18 (a) IN GENERAL.—Section 167 (relating to deprecia19 tion) is amended by redesignating subsection (i) as sub20 section (j) and by inserting after subsection (h) the fol21 lowing new subsection:

22 ‘‘(i) AMORTIZATION OF GEOLOGICAL AND GEO23 PHYSICAL EXPENDITURES.—

24 ‘‘(1) IN GENERAL.—Any geological and geo25 physical expenses paid or incurred in connection
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1 with the exploration for, or development of, oil or

2 gas within the United States (as defined in section

3 638) shall be allowed as a deduction ratably over the

4 24-month period beginning on the date that such ex5 pense was paid or incurred.

6 ‘‘(2) SPECIAL RULES.—For purposes of this

7 subsection, rules similar to the rules of paragraphs

8 (2), (3), and (4) of subsection (h) shall apply.’’.

9 (b) EFFECTIVE DATE.—The amendment made by

10 this section shall apply to costs paid or incurred in taxable

11 years beginning after December 31, 2003.

12 SEC. 43005. EXTENSION AND MODIFICATION OF CREDIT

13 FOR PRODUCING FUEL FROM A NONCONVEN14 TIONAL SOURCE.

15 (a) IN GENERAL.—Section 29 is amended by adding

16 at the end the following new subsection:

17 ‘‘(h) EXTENSION FOR OTHER FACILITIES.—

18 ‘‘(1) EXTENSION FOR OIL AND CERTAIN GAS.—

19 In the case of a well for producing qualified fuels de20 scribed in subparagraph (A) or (B)(i) of subsection

21 (c)(1)—

22 ‘‘(A) APPLICATION OF CREDIT FOR NEW

23 WELLS.—Notwithstanding subsection (f), this

24 section shall apply with respect to such fuels—
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1 ‘‘(i) which are produced from a well

2 drilled after the date of the enactment of

3 this subsection and before January 1,

4 2007, and

5 ‘‘(ii) which are sold not later than the

6 close of the 4-year period beginning on the

7 date that such well is drilled, or, if earlier,

8 January 1, 2010.

9 ‘‘(B) EXTENSION OF CREDIT FOR OLD

10 WELLS.—Subsection (f)(2) shall be applied by

11 substituting ‘2007’ for ‘2003’ with respect to

12 wells described in subsection (f)(1)(A) with re13 spect to such fuels.

14 ‘‘(2) EXTENSION FOR FACILITIES PRODUCING

15 QUALIFIED FUEL FROM LANDFILL GAS.—

16 ‘‘(A) IN GENERAL.—In the case of a facil17 ity for producing qualified fuel from landfill gas

18 which was placed in service after June 30,

19 1998, and before January 1, 2007, this section

20 shall apply to fuel produced at such facility dur21 ing the 5-year period beginning on the later

22 of—

23 ‘‘(i) the date such facility was placed

24 in service, or
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1 ‘‘(ii) the date of the enactment of this

2 subsection.

3 ‘‘(B) REDUCTION OF CREDIT FOR CERTAIN

4 LANDFILL FACILITIES.—In the case of a facility

5 to which paragraph (1) applies and which is lo6 cated at a landfill which is required pursuant to

7 section 60.751(b)(2) or section 60.33c of title

8 40, Code of Federal Regulations (as in effect on

9 April 3, 2003) to install and operate a collec10 tion and control system which captures gas gen11 erated within the landfill, subsection (a)(1)

12 shall be applied to gas so captured by sub13 stituting ‘$2’ for ‘$3’ for the taxable year dur14 ing which such system is required to be in15 stalled and operated.

16 ‘‘(3) SPECIAL RULES.—In determining the

17 amount of credit allowable under this section solely

18 by reason of this subsection—

19 ‘‘(A) DAILY LIMIT.—The amount of quali20 fied fuels sold during any taxable year which

21 may be taken into account by reason of this

22 subsection with respect to any project shall not

23 exceed an average barrel-of-oil equivalent of

24 200,000 cubic feet of natural gas per day. Days

25 before the date the project is placed in service
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1 shall not be taken into account in determining

2 such average.

3 ‘‘(B) EXTENSION PERIOD TO COMMENCE

4 WITH UNADJUSTED CREDIT AMOUNT.—In the

5 case of fuels sold during 2003, the dollar

6 amount applicable under subsection (a)(1) shall

7 be $3 (without regard to subsection (b)(2)). In

8 the case of fuels sold after 2003, subparagraph

9 (B) of subsection (d)(2) shall be applied by sub10 stituting ‘2003’ for ‘1979’.’’.

11 (b) TREATMENT AS BUSINESS CREDIT.—

12 (1) CREDIT MOVED TO SUBPART RELATING TO

13 BUSINESS RELATED CREDITS.—The Internal Rev14 enue Code of 1986 is amended by redesignating sec15 tion 29 as section 45J and by moving section 45J

16 (as so redesignated) from subpart B of part IV of

17 subchapter A of chapter 1 to the end of subpart D

18 of part IV of subchapter A of chapter 1.

19 (2) CREDIT TREATED AS BUSINESS CREDIT.—

20 Section 38(b) is amended by striking ‘‘plus’’ at the

21 end of paragraph (17), by striking the period at the

22 end of paragraph (18) and inserting ‘‘, plus’’, and

23 by adding at the end the following:

24 ‘‘(19) the nonconventional source production

25 credit determined under section 45J(a).’’.
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1 (3) CONFORMING AMENDMENTS.—

2 (A) Section 30(b)(2)(A), as redesignated

3 by section 110(a), is amended by striking ‘‘sec4 tions 27 and 29’’ and inserting ‘‘section 27’’.

5 (B) Section 30B(d), as added by section

6 41011, is amended by striking ‘‘, 29,’’.

7 (C) Section 39(d) is amended by adding at

8 the end the following new paragraph:

9 ‘‘(13) NO CARRYBACK FOR NONCONVENTIONAL

10 SOURCE PRODUCTION CREDIT.—No portion of the

11 unused business credit for any taxable year which is

12 attributable to the credit under section 45J may be

13 carried back to a taxable year ending before April 1,

14 2003.’’.

15 (D) Sections 43(b)(2), 45I(b)(2)(C) (as

16 added by section 43001), and 613A(c)(6)(C)

17 are each amended by striking ‘‘section

18 29(d)(2)(C)’’ and inserting ‘‘section

19 45J(d)(2)(C)’’.

20 (E) Paragraph (9) of section 45(c), as

21 added by section 41002(c), is amended by strik22 ing ‘‘section 29’’ and inserting ‘‘section 45J’’

23 and by striking ‘‘SECTION 29’’ in the heading of

24 such paragraph and inserting ‘‘SECTION 45J’’.
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1 (F) Section 45I(d)(3), as added by section

2 43001, is amended by striking ‘‘section 29’’

3 each place it appears and inserting ‘‘section

4 45J’’.

5 (G) Section 45J(a), as amended by section

6 43001(d) and redesignated by paragraph (1), is

7 amended by striking ‘‘At the election of the tax8 payer, there shall be allowed as a credit against

9 the tax imposed by this chapter for the taxable

10 year’’ and inserting ‘‘For purposes of section

11 38, if the taxpayer elects to have this section

12 apply, the nonconventional source production

13 credit determined under this section for the tax14 able year is’’.

15 (H) Section 45J(b), as so redesignated, is

16 amended by striking paragraph (6).

17 (I) Section 53(d)(1)(B)(iii) is amended by

18 striking ‘‘under section 29’’ and all that follows

19 through ‘‘or not allowed’’.

20 (J) Section 55(c)(2) is amended by strik21 ing ‘‘29(b)(6),’’.

22 (K) Subsection (a) of section 772 is

23 amended by inserting ‘‘and’’ at the end of para24 graph (9), by striking paragraph (10), and by
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1 redesignating paragraph (11) as paragraph

2 (10).

3 (L) Paragraph (5) of section 772(d) is

4 amended by striking ‘‘the foreign tax credit,

5 and the credit allowable under section 29’’ and

6 inserting ‘‘and the foreign tax credit’’.

7 (M) The table of sections for subpart B of

8 part IV of subchapter A of chapter 1 is amend9 ed by striking the item relating to section 29.

10 (N) The table of sections for subpart D of

11 part IV of subchapter A of chapter 1 is amend12 ed by inserting after the item relating to section

13 45I the following new item:

‘‘Sec. 45J. Credit for producing fuel from a nonconventional

source.’’.

14 (c) EFFECTIVE DATES.—

15 (1) IN GENERAL.—The amendment made by

16 subsection (a) shall apply to fuel sold after March

17 31, 2003, in taxable years ending after such date.

18 (2) TREATMENT AS BUSINESS CREDIT.—The

19 amendments made by subsection (b) shall apply to

20 taxable years ending after March 31, 2003.
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1 SEC. 43006. BUSINESS RELATED ENERGY CREDITS AL2 LOWED AGAINST REGULAR AND MINIMUM

3 TAX.

4 (a) IN GENERAL.—Subsection (c) of section 38 (re5 lating to limitation based on amount of tax) is amended

6 by redesignating paragraph (4) as paragraph (5) and by

7 inserting after paragraph (3) the following new paragraph:

8 ‘‘(4) SPECIAL RULES FOR SPECIFIED ENERGY

9 CREDITS.—

10 ‘‘(A) IN GENERAL.—In the case of speci11 fied energy credits—

12 ‘‘(i) this section and section 39 shall

13 be applied separately with respect to such

14 credits, and

15 ‘‘(ii) in applying paragraph (1) to

16 such credits—

17 ‘‘(I) the tentative minimum tax

18 shall be treated as being zero, and

19 ‘‘(II) the limitation under para20 graph (1) (as modified by subclause

21 (I)) shall be reduced by the credit al22 lowed under subsection (a) for the

23 taxable year (other than the specified

24 energy credits).

25 ‘‘(B) SPECIFIED ENERGY CREDITS.—For

26 purposes of this subsection, the term ‘specified
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1 energy credits’ means the credits determined

2 under sections 45G, 45H, and 45I.

3 ‘‘(C) SPECIAL RULE FOR QUALIFIED WIND

4 FACILITIES.—For purposes of this subsection,

5 the term ‘specified energy credits’ shall include

6 the credit determined under section 45 to the

7 extent that such credit is attributable to elec8 tricity produced—

9 ‘‘(i) at a facility using wind to

10 produce electricity which is originally

11 placed in service after the date of the en12 actment of this paragraph, and

13 ‘‘(ii) during the 4-year period begin14 ning on the date that such facility was

15 originally placed in service.’’.

16 (b) CONFORMING AMENDMENTS.—Paragraphs

17 (2)(A)(ii)(II) and (3)(A)(ii)(II) of section 38(c) are each

18 amended by inserting ‘‘or the specified energy credits’’

19 after ‘‘employee credit’’.

20 (c) EFFECTIVE DATE.—The amendments made by

21 this section shall apply to taxable years ending after the

22 date of the enactment of this Act.
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1 SEC. 43007. TEMPORARY REPEAL OF ALTERNATIVE MIN2 IMUM TAX PREFERENCE FOR INTANGIBLE

3 DRILLING COSTS.

4 (a) IN GENERAL.—Clause (ii) of section 57(a)(2)(E)

5 is amended by adding at the end the following new sen6 tence: ‘‘The preceding sentence shall not apply to taxable

7 years beginning after December 31, 2003, and before Jan8 uary 1, 2006.’’.

9 (b) EFFECTIVE DATE.—The amendment made by

10 this section shall apply to taxable years beginning after

11 December 31, 2003.

12 SEC. 43008. ALLOWANCE OF ENHANCED RECOVERY CREDIT

13 AGAINST THE ALTERNATIVE MINIMUM TAX.

14 (a) IN GENERAL.—Subparagraph (B) of section

15 38(c)(4), as amended by section 43006, is amended by

16 adding at the end the following new sentence: ‘‘For taxable

17 years beginning after December 31, 2003, and before Jan18 uary 1, 2006, such term includes the credit determined

19 under section 43.’’.

20 (b) EFFECTIVE DATE.—The amendment made by

21 this section shall apply to taxable years beginning after

22 December 31, 2003.
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1 TITLE IV—CORPORATE

2 EXPATRIATION

3 SEC. 44001. TAX TREATMENT OF CORPORATE EXPATRIA4 TION.

5 (a) IN GENERAL.—Subchapter C of chapter 80 (re6 lating to provisions affecting more than one subtitle) is

7 amended by adding at the end the following new section:

8 ‘‘SEC. 7874. TAX TREATMENT OF CORPORATE EXPATRIA9 TION.

10 ‘‘(a) INVERTED CORPORATIONS TREATED AS DOMES11 TIC CORPORATIONS.—

12 ‘‘(1) IN GENERAL.—If a foreign incorporated

13 entity is treated as an inverted domestic corporation,

14 then, notwithstanding section 7701(a)(4), such enti15 ty shall be treated for purposes of this title as a do16 mestic corporation.

17 ‘‘(2) INVERTED DOMESTIC CORPORATION.—For

18 purposes of this section, a foreign incorporated enti19 ty shall be treated as an inverted domestic corpora20 tion if, pursuant to a plan (or a series of related

21 transactions)—

22 ‘‘(A) the entity completes after March 4,

23 2003, the direct or indirect acquisition of sub24 stantially all of the properties held directly or

25 indirectly by a domestic corporation or substan-
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1 tially all of the properties constituting a trade

2 or business of a domestic partnership,

3 ‘‘(B) after the acquisition at least 80 per4 cent of the stock (by vote or value) of the entity

5 is held—

6 ‘‘(i) in the case of an acquisition with

7 respect to a domestic corporation, by

8 former shareholders of the domestic cor9 poration by reason of holding stock in the

10 domestic corporation, or

11 ‘‘(ii) in the case of an acquisition with

12 respect to a domestic partnership, by

13 former partners of the domestic partner14 ship by reason of holding a capital or prof15 its interest in the domestic partnership,

16 and

17 ‘‘(C) the expanded affiliated group which

18 after the acquisition includes the entity does

19 not have substantial business activities in the

20 foreign country in which or under the law of

21 which the entity is created or organized when

22 compared to the total business activities of such

23 expanded affiliated group.
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1 ‘‘(3) TERMINATION.—This subsection shall not

2 apply to any acquisition completed after December

3 31, 2004.

4 ‘‘(b) DEFINITIONS AND SPECIAL RULES.—For pur5 poses of this section—

6 ‘‘(1) FOREIGN INCORPORATED ENTITY.—The

7 term ‘foreign incorporated entity’ means any entity

8 which is, or but for subsection (a) would be, treated

9 as a foreign corporation for purposes of this title.

10 ‘‘(2) EXPANDED AFFILIATED GROUP.—The

11 term ‘expanded affiliated group’ means an affiliated

12 group as defined in section 1504(a) but without re13 gard to paragraphs (2), (3), and (4) of section

14 1504(b), except that section 1504(a) shall be applied

15 by substituting ‘more than 50 percent’ for ‘at least

16 80 percent’ each place it appears.

17 ‘‘(3) CERTAIN STOCK DISREGARDED.—There

18 shall not be taken into account in determining own19 ership under subsection (a)(3)(B)—

20 ‘‘(A) stock held by members of the ex21 panded affiliated group which includes the for22 eign incorporated entity, or

23 ‘‘(B) stock of such foreign incorporated en24 tity which is sold in a public offering related to
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1 the acquisition described in subsection

2 (a)(3)(A).

3 ‘‘(4) PLAN DEEMED IN CERTAIN CASES.—If a

4 foreign incorporated entity acquires directly or indi5 rectly substantially all of the properties of a domes6 tic corporation or partnership during the 4-year pe7 riod beginning on the date which is 2 years before

8 the ownership requirements of subsection (a)(3)(B)

9 are met, such actions shall be treated as pursuant

10 to a plan.

11 ‘‘(5) CERTAIN TRANSFERS DISREGARDED.—The

12 transfer of properties or liabilities (including by con13 tribution or distribution) shall be disregarded if such

14 transfers are part of a plan a principal purpose of

15 which is to avoid the purposes of this section.

16 ‘‘(6) SPECIAL RULE FOR RELATED PARTNER17 SHIPS.—For purposes of applying subsection

18 (a)(3)(B) to the acquisition of a domestic partner19 ship, except as provided in regulations, all partner20 ships which are under common control (within the

21 meaning of section 482) shall be treated as 1 part22 nership.

23 ‘‘(7) REGULATIONS.—The Secretary shall pre24 scribe such regulations as may be appropriate to de-
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1 termine whether a corporation is an inverted domes2 tic corporation, including regulations—

3 ‘‘(A) to treat warrants, options, contracts

4 to acquire stock, convertible debt interests, and

5 other similar interests as stock, and

6 ‘‘(B) to treat stock as not stock.

7 ‘‘(c) SPECIAL RULE FOR TREATIES.—Nothing in sec8 tion 894 or 7852(d) or in any other provision of law shall

9 be construed as permitting an exemption, by reason of any

10 treaty obligation of the United States heretofore or here11 after entered into, from the provisions of this section.

12 ‘‘(d) REGULATIONS.—The Secretary shall provide

13 such regulations as are necessary to carry out this section,

14 including regulations providing for such adjustments to

15 the application of this section as are necessary to prevent

16 the avoidance of the purposes of this section, including the

17 avoidance of such purposes through—

18 ‘‘(1) the use of related persons, pass-through or

19 other noncorporate entities, or other intermediaries,

20 or

21 ‘‘(2) transactions designed to have persons

22 cease to be (or not become) members of expanded

23 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.

Passed the House of Representatives April 11, 2003.

Attest:

Clerk.