I
106TH CONGRESS
2D SESSION
H. R. 4805
To protect the energy security of the United States and decrease America’s
dependency on foreign oil sources to 50 percent by the year 2010 by
enhancing the use of renewable energy resources, conserving energy re-
sources, improving energy efficiencies, and increasing domestic energy
supplies, mitigating the effect of increases in energy prices on the Amer-
ican consumer, including the poor and elderly, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
JUNE 29, 2000
Mr. WATKINS (for himself, Mr. THORNBERRY, Mr. SKEEN, Mr. SESSIONS, Mr.
SMITH of Texas, Mr. COMBEST, and Mr. YOUNG of Alaska) introduced
the following bill; which was referred to the Committee on Commerce,
and in addition to the Committees on Resources, Ways and Means, and
Science, for a period to be subsequently determined by the Speaker, in
each case for consideration of such provisions as fall within the jurisdic-
tion of the committee concerned
A BILL
To protect the energy security of the United States and
decrease America’s dependency on foreign oil sources
to 50 percent by the year 2010 by enhancing the use
of renewable energy resources, conserving energy re-
sources, improving energy efficiencies, and increasing do-
mestic energy supplies, mitigating the effect of increases
in energy prices on the American consumer, including
the poor and elderly, and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘National Energy Secu-
rity Act of 2000’’.
SEC. 2. FINDINGS AND PURPOSES.
(a) FINDINGS.—The Congress finds that—
(1) increasing dependence on foreign sources of
oil causes systemic harm to all sectors of the domes-
tic United States economy, threatens National secu-
rity, undermines the ability of Federal, state, and
local units of government to provide essential serv-
ices, and jeopardizes the peace, security, and welfare
of the American people;
(2) dependence on imports of foreign oil was 46
percent in 1992, rose to more than 55 percent by
the beginning of 2000, and is estimated by the De-
partment of Energy to rise to 65 percent by 2020
unless current policies are altered;
(3) despite increased energy efficiencies, energy
use in the United States is expected to increase 27
percent by 2020.
(4) the United States lacks a comprehensive na-
tional energy policy and has taken actions that limit
the availability and capability of the domestic energy
sources of oil and gas, coal, nuclear and hydro;
(5) a comprehensive energy strategy needs to be
developed to combat this trend, decrease the United
States dependence on imported oil supplies and
strengthen our national energy security;
(6) the goal of this comprehensive strategy
must be to decrease the United States dependence
on foreign oil supplies to not more than 50 percent
by the year 2010;
(7) in order to meet this goal, this comprehen-
sive energy strategy needs to be multi-faceted and
include enhancing the use of renewable energy re-
sources (including hydro, nuclear, solar, wind, and
biomass), conserving energy resources (including im-
proving energy efficiencies), and increasing domestic
supplies of nonrenewable resources (including oil,
natural gas, and coal);
(8) conservation efforts and alternative fuels
alone will not enable America to meet this goal as
conventional energy sources supply 96 percent of
America’s power at this time; and
(9) immediate actions also need to be taken in
order to mitigate the effect of recent increases in oil
prices on the American consumer, including the poor
and the elderly.
(b) PURPOSES.—The purposes of this Act are to pro-
tect the energy security of the United States by decreasing
America’s dependency on foreign oil sources to not more
than 50 percent by the year 2010 by enhancing the use
of renewable energy resources, conserving energy re-
sources (including improving energy efficiencies), and in-
creasing domestic energy supplies and to mitigate the im-
mediate effect of increases in energy prices on the Amer-
ican consumer, including the poor and the elderly.
TITLE I—ENERGY SECURITY AC-
TIONS 
REQUIRED 
OF 
THE
SECRETARY OF ENERGY
SEC. 101. ANNUAL REPORT ON UNITED STATES ENERGY
INDEPENDENCE.
(a) REPORT.—Beginning on October 1, 2000, and
annually thereafter, the Secretary of Energy, in consulta-
tion with the Secretary of Defense and the heads of other
Federal agencies, shall submit a report to the President
and the Congress which evaluates the progress the United
States has made toward obtaining the goal of not more
than 50 percent dependence on foreign oil sources by
2010. The Secretary shall adopt as interim goals, a reduc-
tion in dependence on oil imports to not more than 54
percent by 2005 and 52 percent by 2008.
(b) ALTERNATIVES.—The report submitted under
subsection (a) shall specify any specific legislation or ad-
ministrative actions necessary to meet the goal established
under such subsection, and set forth a range of options
and alternatives with a benefit/cost analysis for each op-
tion or alternative together with an estimate for the con-
tribution that each option or alternative could make to re-
duce foreign oil imports. The report shall indicate, in de-
tail, options and alternatives to—
(1) increase the use of renewable domestic en-
ergy sources, including conventional and non-conven-
tional sources such as, but not limited to, increased
hydroelectric generation at existing Federal facili-
ties,
(2) conserve energy resources, including improv-
ing efficiencies and decreasing consumption, and
(3) increase domestic production and use of oil,
natural gas, and coal, including any actions that
would need to be implemented to provide access to,
and transportation of, such energy resources.
(c) REFINERY CAPACITY.—As part of the reports
submitted in 2000, 2005, and 2008, the Secretary of En-
ergy shall examine and report on the condition of the do-
mestic refinery industry and the extent of domestic stor-
age capacity for various categories of petroleum products
and make such recommendations as such Secretary be-
lieves will enhance domestic capabilities to respond to
short-term shortages of various fuels due to climate or
supply interruptions.
SEC. 102. REPORT OF THE NATIONAL PETROLEUM COUN-
CIL.
The Secretary of Energy shall review the report of
the National Petroleum Council submitted to him on De-
cember 15, 1999, and shall submit such report, together
with any recommendations for administrative or legislative
actions, to the President no later than September 30,
2000.
SEC. 103. INTERAGENCY WORK GROUP ON NATURAL GAS.
(a) INTERAGENCY WORK GROUP.—The Secretary of
Energy shall establish an Interagency Work Group on
Natural Gas (referred to as ‘‘Group’’ in this subsection)
within the National Economic Council. The Group shall
include representatives from each Federal agency that has
a significant role in the development and implementation
of natural gas policy, resource assessment, or technologies
for natural gas exploration, production, transportation,
and use.
(b) STRATEGY AND COMPREHENSIVE POLICY.—The
Group shall develop a strategy and comprehensive policy
for the use of natural gas as an essential component of
overall national objectives of energy security, economic
growth, and environmental protection. In developing the
strategy and policy, the Group shall solicit and consider
suggestions from States and local units of government, in-
dustry, and other non-Federal groups, organizations, or
individuals possessing information or expertise in one or
more areas under review by the Group. The policy shall
recognize the significant lead times required for the devel-
opment of additional natural gas supplies and the delivery
infrastructure required to transport those supplies. The
Group shall consider, but is not limited to, issues of access
to and development of resources, transportation, tech-
nology development, environmental regulation and the as-
sociated economic and environmental costs of alternatives,
education of future workforce, financial incentives related
to exploration, production, transportation, development,
and use of natural gas.
(c) REPORT.—Not later than 6 months after the date
of the enactment of this Act, the Group shall submit a
report to the Secretary of Energy setting forth its rec-
ommendations on a comprehensive policy for the use of
natural gas and the specific elements of a national strat-
egy to achieve the objectives of the policy.
(d) SECRETARY REVIEW.—The Secretary of Energy
shall review the report and, within 3 months, submit the
report, together with any recommendations for adminis-
trative or legislative actions, to the President and the ap-
propriate committees of the Congress.
(e) TRENDS.—The Group shall monitor trends for
the assumptions used in developing its report, including
the specific elements of a national strategy to achieve the
objectives of the comprehensive policy, and shall advise the
Secretary whenever it anticipates changes that might re-
quire alterations in the strategy.
(f) PROGRESS REPORT.—On June 1, 2002, and every
two years thereafter, the Group shall submit a report to
the President and the Congress evaluating the progress
that has been made in the prior two years in implementing
the strategy and accomplishing the objectives of the com-
prehensive policy.
TITLE II—AMENDMENTS TO EN-
ERGY 
POLICY 
AND 
CON-
SERVATION 
ACT 
AND 
AC-
TIONS AFFECTING THE STRA-
TEGIC PETROLEUM RESERVE
SEC. 201. AMENDMENTS TO TITLE I OF EPCA.
Title I of the Energy Policy and Conservation Act
(42 U.S.C. 6211–6251) is amended—
(1) in section 161(h) (42 U.S.C. 6241), by—
(A) striking ‘‘and’’ at the end of (1)(A);
(B) striking ‘‘,’’ and inserting ‘‘; and’’ at
the end of (1)(B);
(C) inserting after paragraph (B) the fol-
lowing new paragraph:
‘‘(C) concurs in the determination of the
Secretary of Defense that action taken under
this subsection will not impair national secu-
rity.’’; and
(D) striking the period after ‘‘Reserve’’ at
the end of paragraph (2) and inserting ‘‘, if the
Secretary finds that action taken under this
subsection will not have an adverse effect on
the domestic petroleum industry.’’;
(2) in section 166 (42 U.S.C. 6246), by—
(A) striking ‘‘for fiscal year 2000’’ and in-
serting ‘‘2003’’; and
(B) striking ‘‘March 31, 2000’’ and insert-
ing ‘‘December 31, 2001’’; and
(3) in section 181 (42 U.S.C. 6251), by striking
‘‘March 31, 2000’’ each place it appears and insert-
ing ‘‘December 31, 2003’’.
SEC. 202. AMENDMENTS TO TITLE II OF EPCA.
Title II of the Energy Policy and Conservation Act
(42 U.S.C. 6261–6285) is amended—
(1) in section 256(h) (42 U.S.C. 6276(h)), by
striking ‘‘year 1997’’ and inserting ‘‘years 1997
through 2003’’; and
(2) in section 281 (42 U.S.C. 6285), by striking
‘March 31, 2000’ each place it appears and inserting
‘‘December 31, 2003’’.
SEC. 203. STRATEGIC PETROLEUM RESERVE STUDY AND
REPORT.
The President shall immediately establish an Inter-
agency Panel on the Strategic Petroleum Study (referred
to as the ‘‘Panel’’ in this section) to study oil markets
and estimate the extent and frequency of fluctuations in
the supply and price of, and demand for crude oil in the
future and determine appropriate capacity of and uses for
the Strategic Petroleum Reserve. The Panel may rec-
ommend changes in existing authorities to provide addi-
tional flexibility for and strengthen the ability of the Stra-
tegic Petroleum Reserve to respond to energy require-
ments. The Panel shall complete its study and submit a
report containing its findings and any recommendations
to the President and the Congress within six months from
the date of enactment of this Act.
TITLE III—PROVISIONS TO PRO-
TECT CONSUMERS AND LOW
INCOME FAMILIES AND EN-
COURAGE 
ENERGY 
EFFI-
CIENCIES
SEC. 301. CHANGES IN WEATHERIZATION PROGRAM TO
PROTECT LOW-INCOME PERSONS.
(a) The matter under the heading ‘‘ENERGY CON-
SERVATION (INCLUDING TRANSFER OF FUNDS)’’ in title II
of the Department of the Interior and Related Agencies
Appropriations Act, 2000 (113 Stat. 1535, 1501A–180),
is amended by striking ‘‘grants:’’ and all that follows and
inserting ‘‘grants.’’.
(b) Section 415 of the Energy Conservation and Pro-
duction Act (42 U.S.C. 6865) is amended—
(1) in subsection (a)(1) by striking the first
sentence;
(2) in subsection (a)(2) by—
(A) striking ‘‘(A)’’,
(B) striking ‘‘approve a State’s application
to waive the 40 percent requirement established
in paragraph (1) if the State includes in its
plan’’ and inserting ‘‘establish’’, and
(C) striking subparagraph (B);
(3) in subsection (c)(1) by—
(A) striking ‘‘paragraphs (3) and (4)’’ and
inserting ‘‘paragraph (3)’’;
(B) 
striking 
‘‘$1,600’’ 
and 
inserting
‘‘$2,500’’;
(C) striking ‘‘and’’ at the end of subpara-
graph (C);
(D) striking the period and inserting ‘‘,
and’’ in subparagraph (D); and
(E) inserting after subparagraph (D) the
following new subparagraph:
‘‘(E) the cost of making heating and cool-
ing modifications, including replacement.’’;
(4) in subsection (c)(3) by—
(A) striking ‘‘1991, the $1,600 per dwell-
ing unit limitation’’ and inserting ‘‘2000, the
$2,500 per dwelling unit average’’,
(B) striking ‘‘limitation’’ and inserting
‘‘average’’ each time it appears, and
(C) inserting ‘‘the’’ after ‘‘begining of’’ in
subparagraph (B); and
(5) by striking subsection (c)(4).
SEC. 302. SUMMER FILL AND FUEL BUDGETING PROGRAMS.
(a) Part C of title II of the Energy Policy and Con-
servation Act (42 U.S.C. 6211 et seq.) is amended by add-
ing at the end the following:
‘‘SUMMER FILL AND FUEL BUDGETING PROGRAMS
‘‘SEC. 273. (a) DEFINITIONS.—In this section:
‘‘(1) BUDGET
CONTRACT.—The term ‘budget
contract’ means a contract between a retailer and a
consumer under which the heating expenses of the
consumer are spread evenly over a period of months.
‘‘(2) 
FIXED-PRICE
CONTRACT.—The 
term
‘fixed-price contract’ means a contract between a re-
tailer and a consumer under which the retailer
charges the consumer a set price for propane, ker-
osene, or heating oil without regard to market price
fluctuations.
‘‘(3) PRICE CAP CONTRACT.—The term ‘price
cap contract’ means a contract between a retailer
and a consumer under which the retailer charges the
consumer the market price for propane, kerosene, or
heating oil, but the cost of the propane, kerosene, or
heating oil may not exceed a maximum amount stat-
ed in the contract.
‘‘(b) ASSISTANCE.—At the request of the chief execu-
tive officer of a State, the Secretary shall provide informa-
tion, technical assistance, and funding—
‘‘(1) to develop education and outreach pro-
grams to encourage consumers to fill their storage
facilities for propane, kerosene, and heating oil dur-
ing the summer months; and
‘‘(2) to promote the use of budget contracts,
price cap contracts, fixed-price contracts, and other
advantageous financial arrangements;
to avoid severe seasonal price increases for and supply
shortages of those products.
‘‘(c) PREFERENCE.—In implementing this section,
the Secretary shall give preference to States that con-
tribute public funds or leverage private funds to develop
State summer fill and fuel budgeting programs.
‘‘(d) AUTHORIZATION OF APPROPRIATIONS.—There
are authorized to be appropriated to carry out this
section—
‘‘(1) $25,000,000 for fiscal year 2001; and
‘‘(2) such sums as are necessary for each fiscal
year thereafter.
‘‘(e) INAPPLICABILITY OF EXPIRATION PROVISION.—
Section 281 shall not apply to this section.’’.
(b) The table of contents in the first section of the
Energy Policy and Conservation Act (42 U.S.C. prec.
6201) is amended by inserting after the item relating to
section 272 the following:
‘‘Sec. 273. Summer fill and fuel budgeting programs.’’.
SEC. 303. ENERGY EFFICIENCY SCIENCE INITIATIVE.
There are authorized to be appropriated $25,000,000
for fiscal year 2001 and such sums as are necessary for
each fiscal year thereafter for an Energy Efficiency
Science Initiative to be managed by the Assistant Sec-
retary for Energy Efficiency and Renewable Energy in
consultation with the Director of the Office of Science, for
grants to be competitively awarded and subject to peer re-
view for research relating to energy efficiency. The Sec-
retary of Energy shall submit to the Committee on Science
and the Committee on Appropriations of the House of
Representatives, and to the Committee on Energy and
Natural Resources and the Committee on Appropriations
of the Senate, an annual report on the activities of the
Energy Efficiency Science Initiative, including a descrip-
tion of the process used to award the funds and an expla-
nation of how the research relates to energy efficiency.
TITLE IV—PROVISIONS TO EN-
HANCE THE USE OF DOMES-
TIC ENERGY RESOURCES
Subtitle A—Hydroelectric
Resources
SEC. 401. USE OF FEDERAL FACILITIES.
(a) The Secretary of the Interior and the Secretary
of the Army shall each inventory all dams, impoundments,
and other facilities under their jurisdiction.
(b) Based on this inventory and other information,
the Secretary of the Interior and Secretary of the Army
shall each submit a report to the Congress within six
months from the date of enactment of this Act. Each re-
port shall—
(1) Describe, in detail, each facility that is ca-
pable, with or without modification, of producing ad-
ditional hydroelectric power. For each such facility,
the report shall state the full potential for the facil-
ity to generate hydroelectric power, whether the fa-
cility is currently generating hydroelectric power,
and the costs to install, upgrade, modify, or take
other actions to increase the hydroelectric generating
capability of the facility. For each facility that cur-
rently has hydroelectric generating equipment, the
report shall indicate the condition of such equip-
ment, the maintenance requirements, and the sched-
ule for any improvements as well as the purposes for
which power is generated.
(2) Describe what actions are planned and un-
derway to increase the hydroelectric production from
facilities under his jurisdiction and shall include any
recommendations the Secretary deems advisable to
increase such production, reduce costs, and improve
efficiency at Federal facilities, including, but not
limited to, use of lease of power privilege and con-
tracting with non-Federal entities for operation and
maintenance.
SEC. 402. EXPEDITED FERC HYDROELECTRIC LICENSING
PROCEDURES.
The Federal Energy Regulatory Commission shall
immediately undertake a comprehensive review of policies,
procedures and regulations for the licensing of hydro-
electric projects to determine how to reduce the cost and
time of obtaining a license. The Commission shall report
its findings within six months of the date of enactment
to the Congress, including any recommendations for legis-
lative changes.
Subtitle B—Nuclear Resources
SEC. 410. NUCLEAR GENERATION.
The Chairman of the Nuclear Regulatory Commis-
sion shall submit a report to the Congress within 6 months
from the date of enactment of this Act on the state of
nuclear power generation and production in the United
States and the potential for increasing nuclear generating
capacity and production as part of this nation’s energy
mix. The report shall also review the status of the reli-
censing process for civilian nuclear power plants, including
current and anticipated applications, and recommenda-
tions for improvements in the process, including rec-
ommendations for expediting the process and ensuring
that relicensing is accomplished in a timely manner.
SEC. 411. NRC HEARING PROCEDURE.
Section 189(a)(1) of the Atomic Energy Act of 1954
(42 U.S.C. 2239(a)(1)) is amended by adding at the end
the following—
‘‘(C) A hearing under this section shall be conducted
using informal adjudicatory procedures established under
sections 553 and 555 of title 5, United States Code, unless
the Commission determines that formal adjudicatory pro-
cedures are necessary—
‘‘(i) to develop a sufficient record; or
‘‘(ii) to achieve fairness.’’.
Subtitle C—Development of a Na-
tional Spent Nuclear Fuel Strat-
egy
SEC. 415. FINDINGS.
The Congress makes the following findings:
(1) Prior to permanent closure of the geologic
repository in Yucca Mountain, Congress must deter-
mine whether the spent fuel in the repository should
be treated as waste subject to permanent burial or
should be considered an energy resource that is
needed to meet future energy requirements.
(2) Future use of nuclear energy may require
construction of a second geologic repository unless
Yucca Mountain can safely accommodate additional
spent fuel. Improved spent fuel strategies may in-
crease the capacity of Yucca Mountain.
(3) Prior to construction of any second perma-
nent geologic repository, the nation’s current plans
for permanent burial of spent fuel should be reevalu-
ated.
SEC. 416. OFFICE OF SPENT NUCLEAR FUEL RESEARCH.
(a) ESTABLISHMENT.—There is established an Office
of Spent Nuclear Fuel Research (referred to as the ‘‘Of-
fice’’ in this section) within the Office of Nuclear Energy
Science and Technology of the Department of Energy.
The Office shall be headed by the Associate Director of
the Office of Nuclear Energy Science and Technology, who
shall be a member of the Senior Executive Service ap-
pointed by the Director of the Office of Nuclear Energy
Science and Technology and compensated at a rate deter-
mined by applicable law.
(b) ASSOCIATE DIRECTOR.—The Associate Director
of the Office of Spent Nuclear Fuel Research shall be re-
sponsible for carrying out an integrated research, develop-
ment, and demonstration program on technologies for
treatment, recycling, and disposal of high-level nuclear ra-
dioactive waste and spent nuclear fuel, subject to the gen-
eral supervision of the Secretary of Energy. The Associate
Director of the Office shall report to the Director of the
Office of Nuclear Energy Science and Technology. The
first such Associate Director shall be appointed within 90
days of the date of enactment of this Act.
(c) GRANT
AND CONTRACT AUTHORITY.—In car-
rying out the Secretary’s responsibilities under this sec-
tion, the Secretary may make grants or enter into con-
tracts for the purposes of the research projects and activi-
ties described in subsection (d)(2).
(d)(1) DUTIES.—The Associate Director of the Office
shall involve national laboratories, universities, the com-
mercial nuclear industry, and other organizations to inves-
tigate technologies for the treatment, recycling, and dis-
posal of spent nuclear fuel and high-level radioactive
waste.
(2) The Associate Director of the Office shall:
(A) develop a research plan to provide rec-
ommendations by 2015 for the treatment, recycling,
and disposal of spent nuclear fuel and high-level ra-
dioactive waste;
(B) identify technologies for the treatment, re-
cycling, and disposal of spent nuclear fuel and high-
level radioactive waste;
(C) conduct research and development activities
on such technologies;
(D) ensure that all activities include as key ob-
jectives minimization of proliferation concerns and
risk to health of the general public or site workers,
as well as development of cost-effective technologies;
(E) require research on both reactor- and accel-
erator-based transmutation systems;
(F) require research on advanced processing
and separations;
(G) encourage that research efforts include par-
ticipation of international collaborators;
(H) be authorized to fund international collabo-
rators when they bring unique capabilities not avail-
able in the United States and their host country is
unable to provide for their support;
(I) ensure that research efforts with the Office
are coordinated with research on advance fuel cycles
and reactors conducted within the Office of Nuclear
Energy Science and Technology.
(e) REPORT.—The Associate Director of the Office
of Spent Nuclear Fuel Research shall annually prepare
and submit a report to the Congress on the activities and
expenditures of the Office, including the process that has
been made to achieve the objectives of subsection (d)(2).
Subtitle D—Coal Resources
SEC. 420. COAL GENERATING CAPACITY.
The Secretary of Energy shall examine existing coal-
fired power plants and submit a report to the Congress
within six months from the enactment of this Act on the
potential of such plants for increased generation and any
impediments to achieving such increase. The report shall
describe, in detail, options for improving the efficiency of
these plants. The report shall include recommendations for
a program of research, development, demonstration, and
commercial application to develop economically and envi-
ronmentally acceptable advanced technologies for current
electricity generation facilities using coal as the primary
feedstock, including commercial-scale applications of ad-
vanced clean coal technologies. The report shall also in-
clude an assessment of the costs to develop and dem-
onstrate such technologies and the time required to under-
take such development and demonstration.
SEC. 425. COAL LIQUEFACTION.
The Secretary of Energy shall provide grants for the
refinement and demonstration of new technologies for the
conversion of coal to liquids. Such grants shall be for the
design and construction of an indirect liquefaction plant
capable of production in commercial quantities. There are
authorized to be appropriated for the purpose of this sec-
tion such sums as may be necessary through fiscal year
2004 facilities be sited or modified so as to avoid unneces-
sary duplication of roads and pipelines. The regulations
issued as required by section 504 of this title shall include
provisions granting rights-of-way and easements across
the Coastal Plain.
TITLE 
V—IMPROVEMENTS 
TO
FEDERAL OIL AND GAS LEASE
MANAGEMENT
SEC. 501. TITLE.
This title may be cited as the ‘‘Federal Oil and Gas
Lease Management Improvement Act of 2000’’.
SEC. 502. DEFINITIONS.
In this title—
(1) APPLICATION FOR A PERMIT TO DRILL.—
The term ‘‘application for a permit to drill’’ means
a drilling plan including design, mechanical, and en-
gineering aspects for drilling a well.
(2) FEDERAL LAND.—
(A) IN
GENERAL.—The term ‘‘Federal
land’’ means all land and interests in land
owned by the United States that are subject to
the mineral leasing laws, including mineral re-
sources or mineral estates reserved to the
United States in the conveyance of a surface or
nonmineral estate.
(B) 
EXCLUSION.—The 
term 
‘‘Federal
land’’ does not include—
(i) Indian land (as defined in section
3 of the Federal Oil and Gas Royalty Man-
agement Act of 1982 (30 U.S.C. 1702));
or
(ii) submerged land on the outer Con-
tinental Shelf (as defined in section 2 of
the Outer Continental Shelf Lands Act (43
U.S.C. 1331)).
(3) OIL AND GAS CONSERVATION AUTHORITY.—
The term ‘‘oil and gas conservation authority’’
means the agency or agencies in each State respon-
sible for regulating for conservation purposes oper-
ations to explore for and produce oil and natural
gas.
(4) PROJECT.—The term ‘‘project’’ means an
activity by a lessee, an operator, or an operating
rights owner to explore for, develop, produce, or
transport oil or gas resources.
(5) 
SECRETARY.—The 
term 
‘‘Secretary’’
means—
(A) the Secretary of the Interior, with re-
spect to land under the administrative jurisdic-
tion of the Department of the Interior; and
(B) the Secretary of Agriculture, with re-
spect to land under the administrative jurisdic-
tion of the Department of Agriculture.
(6) SURFACE USE PLAN OF OPERATIONS.—The
term ‘‘surface use plan of operations’’ means a plan
for surface use, disturbance, and reclamation.
SEC. 503. NO PROPERTY RIGHT.
Nothing in this title gives a State a property right
or interest in any Federal lease or land.
Subtitle A—State Option To Regu-
late Oil and Gas Lease Oper-
ations on Federal Land
SEC. 510. TRANSFER OF AUTHORITY.
(a) NOTIFICATION.—On or after the date that is 180
days after the date of enactment of this Act, a State may
notify the Secretary of its intent to accept authority for
regulation of operations, as described in subparagraphs
(A) through (K) of subsection (b)(2), under oil and gas
leases on Federal land within the State.
(b) TRANSFER OF AUTHORITY.—
(1) IN GENERAL.—Effective 180 days after the
Secretary receives the State’s notice, authority for
the regulation of oil and gas leasing operations is
transferred from the Secretary to the State.
(2) AUTHORITY
INCLUDED.—The authority
transferred under paragraph (1) includes—
(A) processing and approving applications
for permits to drill, subject to surface use
agreements and other terms and conditions de-
termined by the Secretary;
(B) production operations;
(C) well testing;
(D) well completion;
(E) well spacing;
(F) communization;
(G) conversion of a producing well to a
water well;
(H) well abandonment procedures;
(I) inspections;
(J) enforcement activities; and
(K) site security.
(c) RETAINED AUTHORITY.—The Secretary shall—
(1) retain authority over the issuance of leases
and the approval of surface use plans of operations
and project-level environmental analyses; and
(2) spend appropriated funds to ensure that
timely decisions are made respecting oil and gas
leasing, taking into consideration multiple uses of
Federal land, socioeconomic and environmental im-
pacts, and the results of consultations with State
and local government officials.
SEC. 511. ACTIVITY FOLLOWING TRANSFER OF AUTHORITY.
(a) FEDERAL AGENCIES.—Following the transfer of
authority, no Federal agency shall exercise the authority
formerly held by the Secretary as to oil and gas lease oper-
ations and related operations on Federal land.
(b) STATE AUTHORITY.—
(1) IN GENERAL.—Following the transfer of au-
thority, each State shall enforce its own oil and gas
conservation laws and requirements pertaining to
transferred oil and gas lease operations and related
operations with due regard to the national interest
in the expedited, environmentally sound development
of oil and gas resources in a manner consistent with
oil and gas conservation principles.
(2) APPEALS.—Following a transfer of author-
ity under section 510, an appeal of any decision
made by a State oil and gas conservation authority
shall be made in accordance with State administra-
tive procedures.
(c) PENDING ENFORCEMENT ACTIONS.—The Sec-
retary may continue to enforce any pending actions re-
specting acts committed before the date on which author-
ity is transferred to a State under section 510 until those
proceedings are concluded.
(d) PENDING APPLICATIONS.—
(1) TRANSFER TO STATE.—All applications re-
specting oil and gas lease operations and related op-
erations on Federal land pending before the Sec-
retary on the date on which authority is transferred
under section 510 shall be immediately transferred
to the oil and gas conservation authority of the
State in which the lease is located.
(2) ACTION BY THE STATE.—The oil and gas
conservation authority shall act on the application in
accordance with State laws (including regulations)
and requirements.
Subtitle B—Use of Cost Savings
From State Regulation
SEC. 521. COMPENSATION FOR COSTS.
(a) IN GENERAL.—Subject to the availability of ap-
propriations, the Secretary shall compensate any State for
costs incurred to carry out the authorities transferred
under section 510.
(b) PAYMENT SCHEDULE.—Payments shall be made
not less frequently than every quarter.
(c) COST BREAKDOWN REPORT.—Each State seek-
ing compensation shall report to the Secretary a cost
breakdown for the authorities transferred.
(d) LIMITATION ON AMOUNT.—
(1) IN
GENERAL.—Compensation to a State
may not exceed 50 percent of the Secretary’s allo-
cated cost for oil and gas leasing activities under
section 35(b) of the Mineral Leasing Act (30 U.S.C.
191(b)) for the State for fiscal year 1997.
(2) ADJUSTMENT.—The Secretary shall adjust
the maximum level of cost compensation at least
once every 2 years to reflect any increases in the
Consumer Price Index (all items, United States city
average) as prepared by the Department of Labor,
using 1997 as the baseline year.
SEC. 522. EXCLUSION OF COSTS OF PREPARING PLANNING
DOCUMENTS AND ANALYSES.
Section 35 of the Mineral Leasing Act (30 U.S.C.
191(b)) is amended by adding at the end the following:
‘‘(6) The Secretary shall not include, for the purpose
of calculating the deduction under paragraph (1), costs
of preparing resource management planning documents
and analyses for areas in which mineral leasing is excluded
or areas in which the primary activity under review is not
mineral leasing and development.’’.
SEC. 523. RECEIPT SHARING.
Section 35(b)(1) of the Mineral Leasing Act (30
U.S.C. 191(b)(1)) is amended by striking ‘‘paid to States’’
and inserting ‘‘paid to States (other than States that ac-
cept a transfer of authority under section 510 of the Fed-
eral Oil and Gas Lease Management Act of 2000)’’.
Subtitle C—Streamlining and Cost
Reduction
SEC. 531. APPLICATIONS.
(a) LIMITATION
ON COST RECOVERY.—Notwith-
standing sections 304 and 504 of the Federal Land Policy
and Management Act of 1976 (43 U.S.C. 1734, 1764) and
section 9701 of title 31, United State Code, the Secretary
shall not recover the Secretary’s costs with respect to ap-
plications and other documents relating to oil and gas
leases.
(b) COMPLETION OF PLANNING DOCUMENTS AND
ANALYSES.—
(1) IN GENERAL.—The Secretary shall complete
any resource management planning documents and
analyses not later than 90 days after receiving any
offer, application, or request for which a planning
document or analysis is required to be prepared.
(2) PREPARATION BY APPLICANT OR LESSEE.—
If the Secretary is unable to complete the document
or analysis within the time prescribed by paragraph
(1), the Secretary shall notify the applicant or lessee
of the opportunity to prepare the required document
or analysis for the agency’s review and use in deci-
sionmaking.
(c) REIMBURSEMENT FOR COSTS OF NEPA ANAL-
YSES, DOCUMENTATION, AND STUDIES.—If—
(1) adequate funding to enable the Secretary to
timely prepare a project-level analysis required
under the National Environmental Policy Act of
1969 (42 U.S.C. 4321 et seq.) with respect to an oil
or gas lease is not appropriated; and
(2) the lessee, operator, or operating rights
owner voluntarily pays for the cost of the required
analysis, documentation, or related study;
the Secretary shall reimburse the lessee, operator, or oper-
ating rights owner for its costs through royalty credits at-
tributable to the lease, unit agreement, or project area.
SEC. 532. TIMELY ISSUANCE OF DECISIONS.
(a) IN GENERAL.—The Secretary shall ensure the
timely issuance of Federal agency decisions respecting oil
and gas leasing and operations on Federal land.
(b) OFFER TO LEASE.—
(1) DEADLINE.—The Secretary shall accept or
reject an offer to lease not later than 90 days after
the filing of the offer.
(2) FAILURE TO MEET DEADLINE.—If an offer
is not acted upon within that time, the offer is
deemed to have been accepted.
(c) APPLICATION FOR PERMIT TO DRILL.—
(1) DEADLINE.—The Secretary and a State
that has accepted a transfer of authority under sec-
tion 510 shall approve or disapprove an application
for permit to drill not later than 30 days after re-
ceiving a complete application.
(2) FAILURE TO MEET DEADLINE.—If the ap-
plication is not acted on within the time prescribed
by paragraph (1), the application is deemed to have
been approved.
(d) SURFACE USE PLAN OF OPERATIONS.—The Sec-
retary shall approve or disapprove a surface use plan of
operations not later than 30 days after receipt of a com-
plete plan.
(e) ADMINISTRATIVE APPEALS.—
(1) DEADLINE.—From the time that a Federal
oil and gas lessee or operator files a notice of admin-
istrative appeal of a decision or order of an officer
or employee of the Department of the Interior or the
Forest Service respecting a Federal oil and gas Fed-
eral lease, the Secretary shall have 2 years in which
to issue a final decision in the appeal.
(2) FAILURE TO MEET DEADLINE.—If no final
decision has been issued within the time prescribed
by paragraph (1), the appeal is deemed to have been
granted.
SEC. 533. ELIMINATION OF UNWARRANTED DENIALS AND
STAYS.
(a) IN GENERAL.—The Secretary shall ensure that
unwarranted denials and stays of lease issuance and un-
warranted restrictions on lease operations are eliminated
from the administration of oil and gas leasing on Federal
land.
(b) LAND DESIGNATED FOR MULTIPLE USE.—
(1) IN GENERAL.—Land designated as available
for multiple use under Bureau of Land Management
resource management plans and Forest Service leas-
ing analyses shall be available for oil and gas leasing
without lease stipulations more stringent than re-
strictions on surface use and operations imposed
under the laws (including regulations) of the State
in which the lands are located unless the Secretary
includes in the decision approving the management
plan or leasing analysis a written explanation why
more stringent stipulations are warranted.
(2) APPEAL.—Any decision to require a more
stringent stipulation shall be administratively ap-
pealable and, following a final agency decision, shall
be subject to judicial review.
(c) REJECTION OF OFFER TO LEASE.—
(1) IN GENERAL.—If the Secretary rejects an
offer to lease on the ground that the land is unavail-
able for leasing, the Secretary shall provide a writ-
ten, detailed explanation of the reasons the land is
unavailable for leasing.
(2) PREVIOUS RESOURCE MANAGEMENT DECI-
SION.—If the determination of unavailability is
based on a previous resource management decision,
the explanation shall include a careful assessment of
whether the reasons underlying the previous decision
are still persuasive.
(3) SEGREGATION OF AVAILABLE LAND FROM
UNAVAILABLE LAND.—The Secretary may not reject
an offer to lease land available for leasing on the
ground that the offer includes land unavailable for
leasing, and the Secretary shall segregate available
land from unavailable land, on the offeror’s request
following notice by the Secretary, before acting on
the offer to lease.
(d) DISAPPROVAL OR REQUIRED MODIFICATION OF
SURFACE USE PLANS OF OPERATIONS AND APPLICATION
FOR PERMIT TO DRILL.—The Secretary shall provide a
written, detailed explanation of the reasons for dis-
approving or requiring modifications of any surface use
plan of operations or application for permit to drill.
(e) EFFECTIVENESS OF DECISION.—A decision of the
Secretary respecting an oil and gas lease shall be effective
pending administrative appeal to the appropriate office
within the Department of the Interior or the Department
of Agriculture unless that office grants a stay in response
to a petition satisfying the criteria for a stay established
by section 4.21(b) of title 43, Code of Federal Regulations
(or any successor regulation).
SEC. 534. REPORTS.
(a) IN GENERAL.—Not later than March 31, 2001,
the Secretaries shall jointly submit to the Congress a re-
port explaining the most efficient means of eliminating
overlapping jurisdiction, duplication of effort, and incon-
sistent policymaking and policy implementation as be-
tween the Bureau of Land Management and the Forest
Service.
(b) RECOMMENDATIONS.—The report shall include
recommendations on statutory changes needed to imple-
ment the report’s conclusions.
SEC. 535. SCIENTIFIC INVENTORY OF OIL AND GAS RE-
SERVES.
(a) IN GENERAL.—Not later than March 31, 2001,
the Secretary of the Interior, in consultation with the Di-
rector of the United States Geological Survey, shall pub-
lish, through notice in the Federal Register, a science-
based national inventory of the oil and gas reserves and
potential resources underlying Federal land and the Outer
Continental Shelf.
(b) CONTENTS.—The inventory shall—
(1) indicate what percentage of the oil and gas
reserves and resources is currently available for leas-
ing and development;
(2) specify the percentages of the reserves and
resources that are on—
(A) land that is open for leasing as of the
date of enactment of this Act that has never
been leased;
(B) land that is open for leasing or devel-
opment subject to no surface occupancy stipula-
tions; and
(C) land that is open for leasing or devel-
opment subject to other lease stipulations that
have significantly impeded or prevented, or are
likely to significantly impede or prevent, devel-
opment; and
(3) indicate the percentage of oil and gas re-
sources that are not available for leasing or are
withdrawn from leasing.
(c) PUBLIC COMMENT.—
(1) IN GENERAL.—The Secretary of the Inte-
rior shall invite public comment on the inventory to
be filed not later than September 30, 2001.
(2) RESOURCE MANAGEMENT DECISIONS.—Spe-
cifically, the Secretary of the Interior shall invite
public comment on the effect of Federal resource
management decisions on past and future oil and
gas development.
(d) REPORT.—
(1) IN GENERAL.—Not later than March 31,
2002, the Secretary of the Interior shall submit to
the President of the Senate and the Speaker of the
House of Representatives a report comprised of the
revised inventory and responses to the public com-
ments.
(2) CONTENTS.—The report shall specifically
indicate what steps the Secretaries believe are nec-
essary to increase the percentage of land open for
development of oil and gas resources.
Subtitle D—Federal Royalty
Certainty
SEC. 541. DEFINITIONS.
In this subtitle:
(1) 
MARKETABLE
CONDITION.—The 
term
‘‘marketable condition’’ means lease production that
is sufficiently free from impurities and otherwise in
a condition that the production will be accepted by
a purchaser under a sales contract typical for the
field or area.
(2) REASONABLE COMMERCIAL RATE.—
(A) IN GENERAL.—The term ‘‘reasonable
commercial rate’’ means—
(i) in the case of an arm’s-length con-
tract, the actual cost incurred by the les-
see; or
(ii) in the case of a non-arm’s-length
contract—
(I) the rate charged in a contract
for similar services in the same area
between parties with opposing eco-
nomic interests; or
(II) if there are no arm’s-length
contracts for similar services in the
same area, the just and reasonable
rate for the transportation service
rendered by the lessee or lessee’s affil-
iate.
(B) DISPUTES.—Disputes between the
Secretary and a lessee over what constitutes a
just and reasonable rate for such service shall
be resolved by the Federal Energy Regulatory
Commission.
SEC. 542. AMENDMENT OF OUTER CONTINENTAL SHELF
LANDS ACT.
Section 8(b)(3) of the Outer Continental Shelf Lands
Act (43 U.S.C. 1337(b)(3)) is amended by striking the
semicolon at the end and inserting the following: ‘‘: Pro-
vided, That if the payment is in value or amount, the roy-
alty due in value shall be based on the value of oil or gas
production at the lease in marketable condition, and the
royalty due in amount shall be based on the royalty share
of production at the lease; and if the payment in value
or amount is calculated from a point away from the lease,
the payment shall be adjusted for quality and location dif-
ferentials, and the lessee shall be allowed reimbursements
at a reasonable commercial rate for transportation (in-
cluding transportation to the point where the production
is put in marketable condition), marketing, processing,
and other services beyond the lease through the point of
sale, other disposition, or delivery;’’.
SEC. 543. AMENDMENT OF MINERAL LEASING ACT.
Section 17(c) of the Mineral Leasing Act (30 U.S.C.
226(c)) is amended by adding at the end the following:
‘‘(3) ROYALTY DUE IN VALUE.—
‘‘(A) IN GENERAL.—Royalty due in value
shall be based on the value of oil or gas produc-
tion at the lease in marketable condition, and
the royalty due in amount shall be based on the
royalty share of production at the lease.
‘‘(B) CALCULATION OF VALUE OR AMOUNT
FROM A POINT AWAY FROM A LEASE.—If the
payment in value or amount is calculated from
a point away from the lease—
‘‘(i) the payment shall be adjusted for
quality and location differentials; and
‘‘(ii) the lessee shall be allowed reim-
bursements at a reasonable commercial
rate for transportation (including transpor-
tation to the point where the production is
put in marketable condition), marketing,
processing, and other services beyond the
lease through the point of sale, other dis-
position, or delivery;’’.
SEC. 544. INDIAN LAND.
This subtitle shall not apply with respect to Indian
land.
Subtitle E—Royalty Reinvestment
in America
SEC. 551. ROYALTY INCENTIVE PROGRAM.
(a) IN GENERAL.—To encourage exploration and de-
velopment expenditures on Federal land and the Outer
Continental Shelf for the development of oil and gas re-
sources when the cash price of West Texas Intermediate
crude oil, as posted on the Dow Jones Commodities Index
chart, is less than $18 per barrel for 90 consecutive pric-
ing days or when natural gas prices as delivered at Henry
Hub, Louisiana, are less than $2.30 per million British
thermal units for 90 consecutive days, the Secretary shall
allow a credit against the payment of royalties on Federal
oil production and gas production, respectively, in an
amount equal to 20 percent of the capital expenditures
made on exploration and development activities on Federal
oil and gas leases.
(b) NO CREDITING AGAINST ONSHORE FEDERAL
ROYALTY OBLIGATIONS.—In no case shall such capital ex-
penditures made on Outer Continental Shelf leases be
credited against onshore Federal royalty obligations.
SEC. 552. MARGINAL WELL PRODUCTION INCENTIVES.
To enhance the economics of marginal oil and gas
production by increasing the ultimate recovery from mar-
ginal wells when the cash price of West Texas Inter-
mediate crude oil, as posted on the Dow Jones Commod-
ities Index chart, is less than $18 per barrel for 90 con-
secutive pricing days or when natural gas prices are deliv-
ered at Henry Hub, Louisiana, are less than $2.30 per
million British thermal units for 90 consecutive days, the
Secretary shall reduce the royalty rate as production de-
clines for—
(1) onshore oil wells producing less than 30
barrels per day;
well may suspend operation and production at the well for
a period beginning on the date of submission of the notice
and ending on the later of—
(1) the date that is 2 years after the date on
which the suspension of operation and production
commences; or
(2) the date on which the cash price of West
Texas Intermediate crude oil, as posted on the Dow
Jones Commodities Index chart, is greater than $15
per barrel for 90 consecutive pricing days.
TITLE VI—FRONTIER OIL AND
GAS EXPLORATION AND DE-
VELOPMENT INCENTIVES
SEC. 601. TITLE.
This title may be cited as the ‘‘Frontier Exploration
and Development Incentives Act of 2000’’.
SEC. 602. AMENDMENTS TO THE OUTER CONTINENTAL
SHELF LANDS ACT.
(a) CASH BONUS BID FIXED SHARE OF NET PROF-
ITS.—Section 8(a)(1)(D) of the Outer Continental Shelf
Lands Act, (43 U.S.C. 1337(a)(1)(D)) is amended by
striking ‘‘area;’’ and inserting ‘‘area, except that for pro-
duction in the Beaufort Sea and Chukchi Sea Planning
Areas of Alaska the Secretary is authorized to set the net
profit share at 162⁄3 percent;’’.
(b) Section 8(a) of the Outer Continental Shelf Lands
Act (43 U.S.C. 1337(a)) is amended by adding at the end
the following:
‘‘(10)(A) After an oil and gas lease is granted pursu-
ant to any of the bidding systems under paragraph (1),
the Secretary shall reduce any future royalty or rental ob-
ligation of the lessee on any lease issued by the Secretary
(and proposed by the lessee for such reduction) by an
amount equal to—
‘‘(i) 10 percent of the qualified costs of explor-
atory wells drilled or geophysical work performed on
any lease issued by the Secretary, whichever is
greater, pursuant to this Act in the Beaufort Sea
and Chukci Sea Planning Areas of Alaska; plus
‘‘(ii) an additional 10 percent of the qualified
costs of any such exploratory wells that are located
ten or more miles from another well drilled for oil
and gas.
‘‘(B) For purposes of this paragraph:
‘‘(i) The term ‘qualified costs’ means the costs
allocated to the exploratory well or geophysical work
in support of an exploration program pursuant to
section 263(j) the Internal Revenue Code of 1986.
‘‘(ii) The term ‘exploratory well’ means either
an exploratory well as defined by the United States
Securities and Exchange Commission in section
2100.4–10(a)(10) of title 17, Code of Federal Regu-
lations, or a well three or more miles from any oil
or gas well or a pipeline that transports oil or gas
to a market or terminal.
‘‘(iii) The term ‘geophysical work’ means all
geophysical data gathering methods used in hydro-
carbon exploration and includes seismic, gravity,
magnetic, and electromagnetic measurements.
‘‘(C) For purposes of this paragraph, all distances
shall be measured in horizontal distance. If a measure-
ment beginning or ending point is a well, the measurement
point shall be the bottom hole location of that well.’’.
TITLE VII—TAX MEASURES TO
ENHANCE DOMESTIC OIL AND
GAS PRODUCTION
Subtitle A—Marginal Well
Preservation
SEC. 701. SHORT TITLE; PURPOSE.
(a) SHORT TITLE.—This subtitle may be cited as the
‘‘Marginal Well Preservation Act of 2000’’.
(b) PURPOSE.—The purpose of section 702 is to pre-
vent the abandonment of marginal oil and gas wells re-
sponsible for half of the domestic production of oil and
gas in the United States and of section 703 is to recognize
that geological and geophysical expenditures and delay
rentals are ordinary and necessary business expenses that
should be deducted in the year the expense is incurred.
SEC. 702. TAX CREDIT FOR MARGINAL DOMESTIC OIL AND
NATURAL GAS WELL PRODUCTION.
(a) IN GENERAL.—Subpart D of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of
1986 (relating to business credits) is amended by adding
at the end the following new section:
‘‘SEC. 45D. CREDIT FOR PRODUCING OIL AND GAS FROM
MARGINAL WELLS.
‘‘(a) GENERAL RULE.—For purposes of section 38,
the marginal well production credit for any taxable year
is an amount equal to the product of—
‘‘(1) the credit amount, and
‘‘(2) the qualified crude oil production and the
qualified natural gas production which is attrib-
utable to the taxpayer.
‘‘(b) CREDIT
AMOUNT.—For purposes of this
section—
‘‘(1) IN GENERAL.—The credit amount is—
‘‘(A) $3 per barrel of qualified crude oil
production, and
‘‘(B) 50 cents per 1,000 cubic feet of
qualified natural gas production.
‘‘(2) REDUCTION AS OIL AND GAS PRICES IN-
CREASE.—
‘‘(A) IN GENERAL.—The $3 and 50 cents
amounts under paragraph (1) shall each be re-
duced (but not below zero) by an amount which
bears the same ratio to such amount (deter-
mined without regard to this paragraph) as—
‘‘(i) the excess (if any) of the applica-
ble reference price over $14 ($1.56 for
qualified natural gas production), bears to
‘‘(ii) $3 ($0.33 for qualified natural
gas production).
The applicable reference price for a taxable
year is the reference price for the calendar year
preceding the calendar year in which the tax-
able year begins.
‘‘(B) INFLATION
ADJUSTMENT.—In the
case of any taxable year beginning in a calendar
year after 2000, each of the dollar amounts
contained in subparagraph (A) shall be in-
creased to an amount equal to such dollar
amount multiplied by the inflation adjustment
factor for such calendar year (determined under
section 43(b)(3)(B) by substituting ‘2000’ for
‘1990’).
‘‘(C) REFERENCE PRICE.—For purposes of
this paragraph, the term ‘reference price’
means, with respect to any calendar year—
‘‘(i) in the case of qualified crude oil
production, the reference price determined
under section 29(d)(2)(C), and
‘‘(ii) in the case of qualified natural
gas production, the Secretary’s estimate of
the annual average wellhead price per
1,000 cubic feet for all domestic natural
gas.
‘‘(c) QUALIFIED CRUDE OIL
AND NATURAL GAS
PRODUCTION.—For purposes of this section—
‘‘(1) IN GENERAL.—The terms ‘qualified crude
oil production’ and ‘qualified natural gas production’
mean domestic crude oil or natural gas which is pro-
duced from a marginal well.
‘‘(2) LIMITATION ON AMOUNT OF PRODUCTION
WHICH MAY QUALIFY.—
‘‘(A) IN GENERAL.—Crude oil or natural
gas produced during any taxable year from any
well shall not be treated as qualified crude oil
production or qualified natural gas production
to the extent production from the well during
the taxable year exceeds 1,095 barrels or barrel
equivalents.
‘‘(B) PROPORTIONATE REDUCTIONS.—
‘‘(i) SHORT TAXABLE YEARS.—In the
case of a short taxable year, the limitations
under this paragraph shall be proportion-
ately reduced to reflect the ratio which the
number of days in such taxable year bears
to 365.
‘‘(ii) WELLS NOT IN PRODUCTION EN-
TIRE YEAR.—In the case of a well which is
not capable of production during each day
of a taxable year, the limitations under
this paragraph applicable to the well shall
be proportionately reduced to reflect the
ratio which the number of days of produc-
tion bears to the total number of days in
the taxable year.
‘‘(3) DEFINITIONS.—
‘‘(A) MARGINAL WELL.—The term ‘mar-
ginal well’ means a domestic well—
‘‘(i) the production from which during
the taxable year is treated as marginal
production under section 613A(c)(6), or
‘‘(ii) which, during the taxable year—
‘‘(I) has average daily production
of not more than 25 barrel equiva-
lents, and
‘‘(II) produces water at a rate
not less than 95 percent of total well
effluent.
‘‘(B) CRUDE OIL, ETC.—The terms ‘crude
oil’, ‘natural gas’, ‘domestic’, and ‘barrel’ have
the meanings given such terms by section
613A(e).
‘‘(C) BARREL
EQUIVALENT.—The term
‘barrel equivalent’ means, with respect to nat-
ural gas, a conversion ratio of 6,000 cubic feet
of natural gas to 1 barrel of crude oil.
‘‘(d) OTHER RULES.—
‘‘(1) PRODUCTION ATTRIBUTABLE TO THE TAX-
PAYER.—In the case of a marginal well in which
there is more than one owner of operating interests
in the well and the crude oil or natural gas produc-
tion exceeds the limitation under subsection (c)(2),
qualifying crude oil production or qualifying natural
gas production attributable to the taxpayer shall be
determined on the basis of the ratio which tax-
payer’s revenue interest in the production bears to
the aggregate to the revenue interests of all oper-
ating interest owners in the production.
‘‘(2) OPERATING
INTEREST
REQUIRED.—Any
credit under this section may be claimed only on
production which is attributable to the holder of an
operating interest.
‘‘(3) PRODUCTION
FROM
NONCONVENTIONAL
SOURCES
EXCLUDED.—In the case of production
from a marginal well which is eligible for the credit
allowed under section 29 for the taxable year, no
credit shall be allowable under this section unless
the taxpayer elects not to claim credit under section
29 with respect to the well.’’.
(b) CREDIT TREATED AS BUSINESS CREDIT.—Sec-
tion 38(b) of such Code is amended by striking ‘‘plus’’
at the end of paragraph (11), by striking the period at
the end of paragraph (12) and inserting’’, plus’’, and by
adding at the end of the following new paragraph:
‘‘(13) the marginal oil and gas well production
credit determined under section 45D(a).’’.
(c) CREDIT ALLOWED AGAINST REGULAR AND MIN-
IMUM TAX.—
(1) IN GENERAL.—Subsection (c) of section 38
of such Code (relating to limitation based on amount
of tax) is amended by redesignating paragraph (3)
as paragraph (4) and by inserting after paragraph
(2) the following new paragraph:
‘‘(3) SPECIAL RULES FOR MARGINAL OIL AND
GAS WELL PRODUCTION CREDIT.—
‘‘(A) IN
GENERAL.—In the case of the
marginal oil and gas well production credit—
‘‘(i) this section and section 39 shall
be applied separately with respect to the
credit, and
‘‘(ii) in applying paragraph (1) to the
credit—
‘‘(I) subparagraphs (A) and (B)
thereof shall not apply, and
‘‘(II) the limitation under para-
graph (1) (as modified by subclause
(I)) shall be reduced by the credit al-
lowed under subsection (a) for the
taxable year (other than the marginal
oil and gas well production credit).
‘‘(B) MARGINAL OIL AND GAS WELL PRO-
DUCTION CREDIT.—For purposes of this sub-
section, the term ‘marginal oil and gas well pro-
duction credit’ means the credit allowable under
subsection (a) by reason of section 45D(a).’’.
(2) CONFORMING AMENDMENT.—Subclause (II)
of section 38(c)(2)(A)(ii) of such Code is amended
by inserting ‘‘or the marginal oil and gas well pro-
duction credit’’ after ‘‘employment credit’’.
(d) CARRYBACK.—Subsection (a) of section 39 of
such Code (relating to carryback and carryforward of un-
used credits generally) is amended by adding at the end
the following new paragraph:
‘‘(3) 10-YEAR CARRYBACK FOR MARGINAL OIL
AND GAS WELL PRODUCTION CREDIT.—In the case
of the marginal oil and gas well production credit—
‘‘(A) this section shall be applied sepa-
rately from the business credit (other than the
marginal oil and gas well production credit),
‘‘(B) paragraph (1) shall be applied by
substituting ‘10 taxable year’ for ‘1 taxable
year’ in subparagraph (A) thereof, and
‘‘(C) paragraph (2) shall be applied—
‘‘(i) by substituting ‘31 taxable years’
for ‘21 taxable years’ in subparagraph (A)
thereof, and
‘‘(ii) by substituting ‘30 taxable years’
for ‘20 taxable years’ in subparagraph (B)
thereof.’’.
(e) COORDINATION
WITH
SECTION
29.—Section
29(a) of such Code is amended by striking ‘‘There’’ and
inserting ‘‘At the election of the taxpayer, there.’’
(f) CLERICAL AMENDMENT.—The table of sections
for subpart D of part IV of subchapter A of chapter 1
of such Code is amended by adding at the end the fol-
lowing item:
‘‘Sec. 45D. Credit for producing oil and gas from marginal wells.’’
(g) EFFECTIVE DATE.—The amendments made by
this section shall apply to production in taxable years be-
ginning after December 31, 2000.
SEC. 703. ELECTION TO EXPENSE GEOLOGICAL AND GEO-
PHYSICAL EXPENDITURES AND DELAY RENT-
AL PAYMENTS.
(a) GEOLOGICAL AND GEOPHYSICAL EXPENDITURES
FOR OIL AND WELLS.—
(1) IN GENERAL.—Section 263 of the Internal
Revenue Code of 1986 (relating to capital expendi-
tures) is amended by adding at the end the following
new subsection:
‘‘(j) GEOLOGICAL
AND
GEOPHYSICAL
EXPENDI-
TURES
FOR OIL
AND WELLS.—Notwithstanding sub-
section (a), a taxpayer may elect to treat geological and
geophysical expenses incurred in connection with the ex-
ploration for, or development of, oil or gas as expenses
which are not chargeable to capital account. Any expenses
so treated shall be allowed as a deduction in the taxable
year in which paid or incurred.’’.
(2) 
CONFORMING
AMENDMENT.—Section
263A(c)(3) of such Code is amended by inserting
‘‘263(j),’’ after ‘‘263(i),’’.
(3) EFFECTIVE DATE.—
(A) IN GENERAL.—The amendments made
by this subsection shall apply to expenses paid
or incurred after the date of the enactment of
this Act.
(B) TRANSITION
RULE.—In the case of
any expenses described in section 263(j) of the
Internal Revenue Code of 1986, as added by
this subsection, which were paid or incurred on
or before the date of the enactment of this Act,
the taxpayer may elect, at such time and in
such manner as the Secretary of the Treasury
may prescribe, to amortize the suspended por-
tion of such expenses over the 36-month period
beginning with the month in which the date of
the enactment of this Act occurs. For purposes
of this subparagraph, the suspended portion of
any expense is that portion of such expense
which, as of the first day of the 36-month pe-
riod, has not been included in the cost of a
property or otherwise deducted.
(b) DELAY RENTAL PAYMENTS FOR DOMESTIC OIL
AND GAS WELLS.—
(1) IN GENERAL.—Section 263 of such Code
(relating to capital expenditures), as amended by
subsection (a)(1), is amended by adding at the end
the following new subsection:
‘‘(k) DELAY RENTAL PAYMENTS FOR DOMESTIC OIL
AND GAS WELLS.—
‘‘(1) IN GENERAL.—Notwithstanding subsection
(a), a taxpayer may elect to treat delay rental pay-
ments incurred in connection with the development
of oil or gas within the United States (as defined in
section 638) as payments which are not chargeable
to capital account. Any payments so treated shall be
allowed as a deduction in the taxable year in which
paid or incurred.
‘‘(2) DELAY RENTAL PAYMENTS.—For purposes
of paragraph (1), the term ‘delay rental payment’
means an amount paid for the privilege of deferring
the drilling of an oil or gas well under an oil or gas
lease.’’.
(2) 
CONFORMING
AMENDMENT.—Section
263A(c)(3) of such Code, as amended by subsection
(a)(2), is amended by inserting ‘‘263(k),’’ after
‘‘263(j),’’.
(3) EFFECTIVE DATE.—
(A) IN GENERAL.—The amendments made
by this subsection shall apply to payments made
or incurred after the date of the enactment of
this Act.
(B) TRANSITION
RULE.—In the case of
any payments described in section 263(k) of the
Internal Revenue Code of 1986, as added by
this subsection, which were made or incurred on
or before the date of the enactment of this Act,
the taxpayer may elect, at such time and in
such manner as the Secretary of the Treasury
may prescribe, to amortize the suspended por-
tion of such payments over the 36-month period
beginning with the month in which the date of
the enactment of this Act occurs. For purposes
of this subparagraph, the suspended portion of
any payment is that portion of such payment
which, as of the first day of the 36-month pe-
riod, has not been included in the cost of a
property or otherwise deducted.
Subtitle B—Independent Oil and
Gas Producers
SEC. 711. 5-YEAR NET OPERATING LOSS CARRYBACK FOR
LOSSES ATTRIBUTABLE TO OPERATING MIN-
ERAL INTERESTS OF INDEPENDENT OIL AND
GAS PRODUCERS.
(a) IN GENERAL.—Paragraph (1) of section 172(b)
of the Internal Revenue Code of 1986 (relating to years
to which loss may be carried) is amended by adding at
the end the following new subparagraph:
‘‘(H) LOSSES ON OPERATING MINERAL IN-
TERESTS OF INDEPENDENT OIL AND GAS PRO-
DUCERS.—In the case of a taxpayer—
‘‘(i) which has an eligible oil and gas
loss (as defined in subsection (j)) for a tax-
able year, and
‘‘(ii) which is not an integrated oil
company (as defined in section 291(b)(4)),
such eligible oil and gas loss shall be a net
operating loss carryback to each of the 5
taxable years preceding the taxable year of
such loss.’’.
(b) ELIGIBLE OIL AND GAS LOSS.—Section 172 of
such Code is amended by redesignating subsection (j) as
subsection (k) and by inserting after subsection (i) the fol-
lowing new subsection—
‘‘(j) ELIGIBLE OIL AND GAS LOSS.—For purposes of
this section—
‘‘(1) IN GENERAL.—The term ‘eligible oil and
gas loss’ means the lesser of—
‘‘(A) the amount which would be the net
operating loss for the taxable year if only in-
come and deductions attributable to operating
mineral interests (as defined in section 614(d))
in oil and gas wells are taken into account, or
‘‘(B) the amount of the net operating loss
for such taxable year.
‘‘(2) 
COORDINATION
WITH
SUBSECTION
(b)(2).—For purposes of applying subsection (b)(2),
an eligible oil and gas loss for any taxable year shall
be treated in a manner similar to the manner in
which a specified liability loss is treated.
‘‘(3) ELECTION.—Any taxpayer entitled to a 5-
year carryback under subsection (b)(1)(H) from any
loss year may elect to have the carryback period
with respect to such loss year determined without re-
gard to subsection (b)(1)(H).’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to net operating losses for taxable
years beginning after December 31, 1999.
SEC. 712. TEMPORARY SUSPENSION OF LIMITATION BASED
ON 65 PERCENT OF TAXABLE INCOME AND
EXTENSION OF SUSPENSION OF TAXABLE IN-
COME LIMIT WITH RESPECT TO MARGINAL
PRODUCTION.
(a) LIMITATION BASED ON 65 PERCENT OF TAX-
ABLE INCOME.—Subsection (d) of section 613A of the In-
ternal Revenue Code of 1986 (relating to limitation on
percentage depletion in case of oil and gas wells) is amend-
ed by adding at the end the following new paragraph:
‘‘(6) TEMPORARY SUSPENSION OF TAXABLE IN-
COME LIMIT.—Paragraph (1) shall not apply to tax-
able years beginning after December 31, 1999, and
before January 1, 2006, including with respect to
amounts carried under the second sentence of para-
graph (1) to such taxable years.’’.
(b) EXTENSION OF SUSPENSION OF TAXABLE IN-
COME LIMIT WITH RESPECT TO MARGINAL PRODUC-
TION.—Subparagraph (H) of section 613A(c)(6) of such
Code (relating to temporary suspension of taxable income
limit with respect to marginal production) is amended by
striking ‘‘2002’’ and inserting ‘‘2006’’.
(c) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to taxable years beginning after
December 31, 1999.
Subtitle C—Other Provisions
SEC. 721. REPEAL OF REQUIREMENT OF CERTAIN AP-
PROVED TERMINALS TO OFFER DYED DIESEL
FUEL AND KEROSENE FOR NONTAXABLE
PURPOSES.
Section 4101 of the Internal Revenue Code of 1986
(relating to certain approved terminals of registered per-
sons required to offer dyed diesel fuel and kerosene for
nontaxable purposes) is amended by striking subsection
(e).
SEC. 
722. 
CLARIFICATION 
OF 
QUALIFIED 
TERTIARY
INJECTANT EXPENSES FOR PURPOSES OF
THE ENHANCED OIL RECOVERY CREDIT.
(a) IN GENERAL.—Subparagraph (C) of section
43(c)(1) of the Internal Revenue Code of 1986 (defining
qualified enhanced oil recovery costs) is amended to read
as follows:
‘‘(C) Any qualified tertiary injectant ex-
penses (as defined in section 193(b)(1)) which
are paid or incurred during the taxable year in
connection with a qualified enhanced oil recov-
ery project.’’.
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to amounts paid or incurred after
the date of the enactment of this Act.
TITLE VIII—TAX MEASURES TO
ENHANCE THE USE OF RE-
NEWABLE ENERGY SOURCES,
IMPROVE 
ENERGY 
EFFI-
CIENCIES, 
PROTECT 
CON-
SUMERS 
AND 
CONVERSION
TO CLEAN BURNING FUELS
SEC. 801. CREDIT FOR ELECTRICITY PRODUCED FROM RE-
NEWABLE RESOURCES.
(a) EXTENSION AND MODIFICATION OF PLACED-IN-
SERVICE RULES.—Subparagraph (B) of section 45(c)(3)
of the Internal Revenue Code of 1986 is amended to read
as follows:
‘‘(B) BIOMASS FACILITIES.—In the case of
a facility using biomass to produce electricity,
the term ‘qualified facility’ means, with respect
to any month, any facility owned, leased, or op-
erated by the taxpayer which is originally
placed in service before July 1, 2005, if, for
such month—
‘‘(i) biomass comprises not less than
75 percent (on a Btu basis) of the average
monthly fuel input of the facility for the
taxable year which includes such month, or
‘‘(ii) in the case of a facility prin-
cipally using coal to produce electricity,
biomass comprises not more than 25 per-
cent (on a Btu basis) of the average
monthly fuel input of the facility for the
taxable year which includes such month.’’.
(b) SPECIAL RULES.—Subsection (c) of section 45 of
such Code is amended by adding at the end the following
new paragraph:
‘‘(5) SPECIAL RULES.—
‘‘(A) 75 PERCENT BIOMASS INPUT FACIL-
ITY.—In the case of a qualified facility de-
scribed in paragraph (3)(B)(i)—
‘‘(i) the 10-year period referred to in
subsection (a) shall be treated as beginning
no earlier than the date of the enactment
of this paragraph, and
‘‘(ii) subsection (b)(3) shall not apply
to any such facility originally placed in
service before January 1, 1997.
‘‘(B) 25 PERCENT BIOMASS INPUT FACIL-
ITY.—In the case of a qualified facility de-
scribed in paragraph (3)(B)(ii)—
‘‘(i) the 10-year period referred to in
subsection (a) shall be treated as beginning
no earlier than the date of the enactment
of this paragraph, and
‘‘(ii) the amount of the credit deter-
mined under subsection (a) with respect to
any project for any taxable year shall be
adjusted by multiplying such amount (de-
termined without regard to this clause) by
0.59.’’.
(c) CREDIT NOT TO APPLY TO ELECTRICITY SOLD
TO UTILITIES UNDER CERTAIN CONTRACTS.—Section
45(b) of such Code (relating to limitations and adjust-
ments) is amended by adding at the end the following:
‘‘(4) CREDIT NOT TO APPLY TO ELECTRICITY
SOLD TO UTILITIES UNDER CERTAIN CONTRACTS.—
‘‘(A) IN GENERAL.—The credit determined
under subsection (a) shall not apply to
electricity—
‘‘(i) produced at a qualified facility
placed in service by the taxpayer after
June 30, 1999, and
‘‘(ii) sold to a utility pursuant to a
contract originally entered into before Jan-
uary 1, 1987 (whether or not amended or
restated after that date).
‘‘(B) 
EXCEPTION.—Subparagraph 
(A)
shall not apply if—
‘‘(i) the prices for energy and capacity
from such facility are established pursuant
to an amendment to the contract referred
to in subparagraph (A)(ii),
‘‘(ii) such amendment provides that
the prices set forth in the contract which
exceed avoided cost prices determined at
the time of delivery shall apply only to an-
nual quantities of electricity (prorated for
partial years) which do not exceed the
greater of—
‘‘(I) the average annual quantity
of electricity sold to the utility under
the contract during calendar years
1994, 1995, 1996, 1997, and 1998,
or
‘‘(II) the estimate of the annual
electricity production set forth in the
contract, or, if there is no such esti-
mate, the greatest annual quantity of
electricity sold to the utility under the
contract in any of the calendar years
1996, 1997, or 1998, and
‘‘(iii) such amendment provides that
energy and capacity in excess of the limita-
tion in clause (ii) may be—
‘‘(I) sold to the utility only at
prices that do not exceed avoided cost
prices determined at the time of deliv-
ery, or
‘‘(II) sold to a third party subject
to a mutually agreed upon advance
notice to the utility.
For purposes of this subparagraph, avoided cost
prices shall be determined as provided for in
section 292.304(d)(1) of title 18, Code of Fed-
eral Regulations, or any successor regulation.’’.
(d) QUALIFIED FACILITIES INCLUDE ALL BIOMASS
FACILITIES.—
(1) IN GENERAL.—Subparagraph (B) of section
45(c)(1) of such Code (defining qualified energy re-
sources) is amended to read as follows—
‘‘(B) biomass, and’’.
(2) BIOMASS DEFINED.—Paragraph (2) of sec-
tion 45(c) of such Code (relating to definitions) is
amended to read as follows:
‘‘(2) BIOMASS.—The term ‘biomass’ means—
‘‘(A) any organic material from a plant
which is planted exclusively for purposes of
being used at a qualified facility to produce
electricity, or
‘‘(B) any solid, nonhazardous, cellulosic
waste material which is segregated from other
waste materials and which is derived from—
‘‘(i) any of the following forest-related
resources: mill residues, precommercial
thinnings, slash, and brush, but not includ-
ing old-growth timber or wood waste, or
byproducts therefrom, used to produce
electricity for a pulp and paper production
facility,
‘‘(ii) poultry waste,
‘‘(iii) urban sources, including waste
pallets, crates, and dunnage, manufac-
turing and construction wood wastes, and
landscape or right-of-way tree trimmings,
but not including unsegregated municipal
solid waste (garbage) or paper that is com-
monly recycled, or
‘‘(iv) agriculture sources, including or-
chard tree crops, vineyard, grain, legumes,
sugar, and other crop by-products or resi-
dues.’’.
(e) EFFECTIVE DATE.—The amendments made by
this section shall apply to electricity produced after the
date of the enactment of this Act.
SEC. 802. CERTAIN AMOUNTS RECEIVED BY ELECTRIC EN-
ERGY, GAS, OR STEAM UTILITIES EXCLUDED
FROM GROSS INCOME AS CONTRIBUTIONS TO
CAPITAL.
(a) IN GENERAL.—Subsection (c) of section 118 of
the Internal Revenue Code of 1986 (relating to special
rules for water and sewerage disposal utilities) is
amended—
(1) in the heading, by striking, ‘‘WATER AND
SEWERAGE DISPOSAL’’ and inserting ‘‘CER-
TAIN’’,
(2) in paragraph (1)—
(A) in the matter preceding paragraph (1),
by striking ‘‘water or’’ and inserting ‘‘electric
energy, gas (through a local distribution system
or transportation by pipeline), steam, water,
or’’ and
(B) in subparagraph (B), by striking
‘‘water or’’ and inserting ‘‘electric energy, gas,
steam, water, or’’,
(3) in paragraph (2)(A)(ii), by striking ‘‘water
or’’ and inserting ‘‘electric energy, gas, steam,
water, or’’, and
(4) in paragraph (3)—
(A) in subparagraph (A), by inserting
‘‘such term shall include amounts paid as cus-
tomer connection fees (including amounts paid
to connect the customer’s line to an electric
line, a gas main, a steam line, or a main water
or sewer line) and’’ after ‘‘except that’’, and
(B) in subparagraph (C), by striking
‘‘water or’’ and inserting ‘‘electric energy, gas,
steam, water, or’’.
(b) EFFECTIVE DATE.—The amendments made by
subsection (a) shall apply to amounts received after the
date of the enactment of this Act.
SEC. 803. EXTENSION OF CREDIT FOR ELECTRICITY PRO-
DUCED FROM STEEL COGENERATION.
(a) EXTENSION OF CREDIT FOR COKE PRODUCTION
AND
STEEL
MANUFACTURING
FACILITIES.—Section
45(c)(1) (defining qualified energy resources) is amended
by striking ‘‘and’’ at the end of subparagraph (B), by
striking the period at the end of subparagraph (C) and
inserting ‘‘, and’’, and by adding at the end the following
new subparagraph:
‘‘(D) steel cogeneration.’’
(b) STEEL COGENERATION.—Section 45(c) of such
Code is amended by adding at the end the following:
‘‘(5) STEEL COGENERATION.—The term ‘steel
cogeneration’ means the production of steam or
other form of thermal energy of at least 20 percent
of total production and the production of electricity
or mechanical energy (or both) of at least 20 percent
of total production (meaning production from all
waste sources in subparagraphs (A), (B), and (C)
from the entire facility that produces coke, iron ore,
iron, or steel), provided that the cogeneration meets
any regulatory energy-efficiency standards estab-
lished by the Secretary, and only to the extent that
such energy is produced from—
‘‘(A) gases or heat generated during the
production of coke,
‘‘(B) blast furnace gases or heat generated
during the production of iron ore or iron, or
‘‘(C) waste gases or heat generated from
the manufacture of steel that uses at least 20
percent recycled material.’’.
(c) MODIFICATION
OF PLACED
IN SERVICE
RULES FOR STEEL COGENERATION FACILITIES.—
Section 45(c)(3) of such Code (defining qualified fa-
cility) is amended by adding at the end the fol-
lowing:
‘‘(D) STEEL COGENERATION FACILITIES.—
In the case of a facility using steel cogeneration
to produce electricity, the term ‘qualified facil-
ity’ means any facility permitted to operate
under the environmental requirements of the
Clean Air Act Amendments of 1990 which is
owned by the taxpayer and originally placed in
service after December 31, 1999, and before
January 1, 2005. Such a facility may be treated
as originally placed in service when such facility
was last upgraded to increase efficiency or gen-
eration capability. However, no facility shall be
allowed a credit for more than 10 years of pro-
duction.’’.
(d) CONFORMING AMENDMENTS.—
(1) The heading for section 45 of such Code is
amended by inserting ‘‘and waste energy’’ after ‘‘re-
newable’’.
(2) The item relating to section 45 in the table
of sections subpart D of part IV of subchapter A of
chapter 1 of such Code is amended by inserting
‘‘and waste energy’’ after ‘‘renewable’’.
(e) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 2001, and before January 1, 2005.
SEC. 804. FULL EXPENSING OF HOME HEATING OIL STOR-
AGE FACILITIES.
(a) IN GENERAL.—Section 179(b) of the Internal
Revenue Code of 1986 (relating to limitations) is amended
by adding at the end of the following:
‘‘(5) FULL EXPENSING OF HOME HEATING OIL
STORAGE FACILITIES.—Paragraphs (1) and (2) shall
not apply to section 179 property which is any stor-
age facility (not including a building or its structural
components) used in connection with the distribution
of home heating oil.’’.
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to property placed in service in
taxable years beginning after the date of the enactment
of this Act.
SEC. 805. RESIDENTIAL SOLAR ENERGY TAX CREDIT.
(a) IN GENERAL.—Subpart A of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of
1986 (relating to nonrefundable personal credits) is
amended by inserting after section 25A the following new
section:
‘‘SEC. 25B. RESIDENTIAL SOLAR ENERGY PROPERTY.
‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in-
dividual, there shall be allowed as a credit against the tax
imposed by this chapter for the taxable year an amount
equal to the sum of—
‘‘(1) 15 percent of the qualified photovoltaic
property expenditures made by the taxpayer during
such year, and
‘‘(2) 15 percent of the qualified solar water
heating property expenditures made by the taxpayer
during the taxable year.
‘‘(b) LIMITATIONS.—
‘‘(1) MAXIMUM
CREDIT.—The credit allowed
under subsection (a)(2) shall not exceed $2,000 for
each system of solar energy property.
‘‘(2) TYPE OF PROPERTY.—No expenditure may
be taken into account under this section unless such
expenditure is made by the taxpayer for property in-
stalled on or in connection with a dwelling unit
which is located in the United States and which is
used as a residence.
‘‘(3) SAFETY CERTIFICATIONS.—No credit shall
be allowed under this section for an item of property
unless—
‘‘(A) in the case of solar water heating
equipment, such equipment is certified for per-
formance and safety by the non-profit Solar
Rating Certification Corporation or a com-
parable entity endorsed by the government of
the State in which such property is installed,
and
‘‘(B) in the case of a photovoltaic system,
such system meets appropriate fire and electric
code requirements.
‘‘(c) DEFINITIONS.—For purposes of this section—
‘‘(1) QUALIFIED SOLAR WATER HEATING PROP-
ERTY
EXPENDITURE.—The term ‘qualified solar
water heating property expenditure’ means an ex-
penditure for property that uses solar energy to heat
water for use in a dwelling unit with respect to
which a majority of the energy is derived from the
sun.
‘‘(2) QUALIFIED PHOTOVOLTAIC PROPERTY EX-
PENDITURE.—The term ‘qualified photovoltaic prop-
erty expenditure’ means an expenditure for property
that uses solar energy to generate electricity for use
in a dwelling unit.
‘‘(3) SOLAR PANELS.—No expenditure relating
to a solar panel or other property installed as a roof
(or portion thereof) shall fail to be treated as prop-
erty described in paragraph (1) or (2) solely because
it constitutes a structural component of the struc-
ture on which it is installed.
‘‘(4) LABOR
COSTS.—Expenditures for labor
costs properly allocable to the onsite preparation, as-
sembly, or original installation of the property de-
scribed in paragraph (1) or (2) and for piping or
wiring to interconnect such property to the dwelling
unit shall be taken into account for purposes of this
section.
‘‘(5) SWIMMING POOLS, ETC., USED AS STOR-
AGE MEDIUM.—Expenditures which are properly al-
locable to a swimming pool, hot tub, or any other
energy storage medium which has a function other
than the function of such storage shall not be taken
into account for purposes of this section.
‘‘(d) SPECIAL
RULES.—For purposes of this
section—
‘‘(1) DOLLAR AMOUNTS IN CASE OF JOINT OC-
CUPANCY.—In the case of any dwelling unit which is
jointly occupied and used during any calendar year
as a residence by 2 or more individuals the following
shall apply—
‘‘(A) The amount of the credit allowable
under subsection (a) by reason of expenditures
(as the case may be) made during such cal-
endar year by any of such individuals with re-
spect to such dwelling unit shall be determined
by treating all of such individuals as 1 taxpayer
whose taxable year is such calendar year.
‘‘(B) There shall be allowable with respect
to such expenditures to each of such individ-
uals, a credit under subsection (a) for the tax-
able year in which such calendar year ends in
an amount which bears the same ratio to the
amount determined under subparagraph (A) as
the amount of such expenditures made by such
individual during such calendar year bears to
the aggregate of such expenditures made by all
of such individuals during such calendar year.
‘‘(2) TENANT-STOCKHOLDER IN COOPERATIVE
HOUSING CORPORATION.—In the case of an indi-
vidual who is a tenant-stockholder (as defined in sec-
tion 216) in a cooperative housing corporation (as
defined in such section), such individual shall be
treated as having made his tenant-stockholder’s pro-
portionate share (as defined in section 216(b)(3)) of
any expenditures of such corporation.
‘‘(3) CONDOMINIUMS.—
‘‘(A) IN GENERAL.—In the case of an indi-
vidual who is a member of a condominium man-
agement association with respect to a condo-
minium which he owns, such individual shall be
treated as having made his proportionate share
of any expenditures of such association.
‘‘(B) CONDOMINIUM
MANAGEMENT
ASSO-
CIATION.—For purposes of this paragraph, the
term ‘condominium management association’
means an organization which meets the require-
ments of paragraph (1) of section 528(c) (other
than subparagraph (E) thereof) with respect to
a condominium project substantially all of the
units of which are used as residences.
‘‘(4) JOINT OWNERSHIP OF ITEMS OF SOLAR
ENERGY PROPERTY.—
‘‘(A) IN GENERAL.—Any expenditure oth-
erwise qualifying as an expenditure described in
paragraph (1) or (2) of subsection (c) shall not
be treated as failing to so qualify merely be-
cause such expenditure was made with respect
to 2 or more dwelling units.
‘‘(B) LIMITS
APPLIED
SEPARATELY.—In
the case of any expenditure described in sub-
paragraph (A), the amount of the credit allow-
able under subsection (a) shall (subject to para-
graph (1)) be computed separately with respect
to the amount of the expenditure made for each
dwelling unit.
‘‘(5) ALLOCATION IN CERTAIN CASES.—If less
than 80 percent of the use of an item is for nonbusi-
ness residential purposes, only that portion of the
expenditures for such item which is properly allo-
cable to use for nonbusiness residential purposes
shall be taken into account. For purposes of this
paragraph, use for a swimming pool shall be treated
as use which is not for residential purposes.
‘‘(6) WHEN EXPENDITURE MADE; AMOUNT OF
EXPENDITURE.—
‘‘(A) IN GENERAL.—Except as provided in
subparagraph (B), an expenditure with respect
to an item shall be treated as made when the
original installation of the item is completed.
‘‘(B) EXPENDITURES PART OF BUILDING
CONSTRUCTION.—In the case of an expenditure
in connection with the construction or recon-
struction of a structure, such expenditure shall
be treated as made when the original use of the
constructed or reconstructed structure by the
taxpayer begins.
‘‘(C) AMOUNT.—The amount of an ex-
penditure shall be the cost thereof.
‘‘(e) BASIS ADJUSTMENTS.—For purposes of this
subtitle, if a credit is allowed under this section for any
expenditure with respect to any property, the increase in
the basis of such property which would (but for this sub-
section) result from such expenditure shall be reduced by
the amount of the credit so allowed.’’.
(b) CONFORMING AMENDMENTS.—
(1) Subsection (a) of section 1016 of such Code
is amended by striking ‘and’ at the end of paragraph
(26), by striking the period at the end of paragraph
(27) and inserting ‘‘; and’’, and by adding at the
end the following new paragraph:
‘‘(28) to the extent provided in section 25B(e),
in the case of amounts with respect to which a credit
has been allowed under section 25B.’’.
(2) The table of sections for subpart A of part
IV of subchapter A of chapter 1 of such Code is
amended by inserting after the item relating to sec-
tion 25A the following new item:
‘‘Sec. 25B. Residential solar energy property.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years ending after De-
cember 31, 1999 and before December 31, 2004.
SEC. 806. CREDIT FOR CERTAIN FUEL CELL AND COM-
BINED HEAT AND POWER SYSTEM PROPERTY
USED IN BUSINESS.
(a) ENERGY PERCENTAGE.—Paragraph (2) of sec-
tion 48(a) of the Internal Revenue Code of 1986 (relating
to energy percentage for energy credit) is amended by re-
designating subparagraph (B) as subparagraph (D) and
by inserting after subparagraph (A) the following new sub-
paragraphs:
‘‘(B) QUALIFIED FUEL CELL PROPERTY.—
The energy percentage shall be 20 percent in
the case of qualified fuel cell property.
‘‘(C) COMBINED HEAT AND POWER SYS-
TEM PROPERTY.—The energy percentage shall
be 8 percent in the case of combined heat and
power system property.’’.
(b) ENERGY PROPERTY DEFINED.—Subsection (a)
of section 48 of such Code (relating to the energy credit)
is amended by adding at the end the following new para-
graphs:
‘‘(6) QUALIFIED FUEL CELL PROPERTY.—For
purposes of this subsection—
‘‘(A) IN
GENERAL.—The term ‘energy
property’ shall include qualified fuel cell prop-
erty.
‘‘(B) QUALIFIED FUEL CELL PROPERTY.—
The term ‘qualified fuel cell property’ means a
fuel cell that—
‘‘(i) generates electricity and heat
using an electrochemical process,
‘‘(ii) has an electricity-only generation
efficiency greater than 35 percent, and
‘‘(iii) has a minimum generating ca-
pacity of 1 kilowatts.
‘‘(7) COMBINED
HEAT
AND
POWER
SYSTEM
PROPERTY.—For purposes of this subsection—
‘‘(A) IN
GENERAL.—The term ‘energy
property’ shall include combined heat and
power system property.
‘‘(B) COMBINED HEAT AND POWER SYS-
TEM PROPERTY.—The term ‘combined heat and
power system property’ means property com-
prising a system—
‘‘(i) which uses the same energy
source for the simultaneous or sequential
generation of electrical power, mechanical
shaft power, or both, in combination with
the generation of steam or other forms of
useful thermal energy (including heating
and cooling applications),
‘‘(ii) which has an electrical capacity
of more than 50 kilowatts or a mechanical
energy capacity of more than 67 horse-
power or an equivalent combination of elec-
trical and mechanical energy capacities,
‘‘(iii) which produces—
‘‘(I) at least 20 percent of its
total useful energy in the form of
thermal energy, and
‘‘(II) at least 20 percent of its
total useful energy in the form of elec-
trical or mechanical power (or a com-
bination thereof), and
‘‘(iv) the energy efficiency percentage
of which exceeds 60 percent (70 percent in
the case of a system with an electrical ca-
pacity in excess of 50 megawatts or a me-
chanical energy capacity in excess of
67,000 horsepower, or an equivalent com-
bination of electrical and mechanical en-
ergy capacities).
‘‘(C) SPECIAL RULES.—
‘‘(i) ENERGY
EFFICIENCY
PERCENT-
AGE.—For 
purposes 
of 
subparagraph
(B)(iv), the energy efficiency percentage of
a system is the fraction—
‘‘(I) the numerator of which is
the total useful electrical, thermal,
and mechanical power produced by
the system at normal operating rates,
and
‘‘(II) the denominator of which is
the lower heating value of the primary
fuel source for the system.
‘‘(ii) DETERMINATIONS MADE ON BTU
BASIS.—The energy efficiency percentage
and the percentages under subparagraph
(B)(iii) shall be determined on a Btu basis.
‘‘(iii) INPUT AND OUTPUT PROPERTY
NOT INCLUDED.—The term ‘combined heat
and power system property’ does not in-
clude property used to transport the en-
ergy source to the facility or to distribute
energy produced by the facility.
‘‘(iv) PUBLIC UTILITY PROPERTY.—
‘‘(I) ACCOUNTING
RULE
FOR
PUBLIC
UTILITY
PROPERTY.—In the
case that combined heat and power
system property is public utility prop-
erty (as defined in section 46(f)(5) as
in effect on the day before the date of
the enactment of the Revenue Rec-
onciliation Act of 1990), the taxpayer
may only claim the credit under this
subsection if, with respect to such
property, the taxpayer uses a normal-
ization method of accounting.
‘‘(II) CERTAIN
EXCEPTION
NOT
TO APPLY.—The matter in paragraph
(3) which follows subparagraph (D)
shall not apply to combined heat and
power system property.
‘‘(v) DEPRECIATION.—No credit shall
be allowed for any combined heat and
power system property unless the taxpayer
elects to treat such property for purposes
of section 168 as having a class life of not
less than 22 years.’’.
(c) NO CARRYBACK OF ENERGY CREDIT BEFORE
EFFECTIVE DATE.—Subsection (d) of section 39 of such
Code is amended by adding at the end the following new
paragraph:
‘‘(9) NO CARRYBACK OF ENERGY CREDIT BE-
FORE EFFECTIVE DATE.—No portion of the unused
business credit for any taxable year which is attrib-
utable to the portion of the energy credit described
in section 48(a)(6) or (7) may be carried back to a
taxable year ending before the date of the enactment
of this paragraph.’’.
(d) DEPRECIATION.—
(1) Subparagraph (C) of section 168(e)(3) of
such Code is amended by striking the period at the
end of clause (ii) and inserting ‘‘, and’’, and by in-
serting after clause (ii) the following new clause:
‘‘(iii) any energy property (as defined
in paragraphs (6) or (7) of section 48(a))
for which a credit is allowed under section
48 and which, but for this clause, would
have a recovery period of less than 15
years.’’.
(2) The table contained in subparagraph (B) of
section 168(g)(3) of such Code is amended by insert-
ing after the item relating to subparagraph (C)(i)
the following:
‘‘(C)(iii) ......................................................................................
10’’.
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to periods after December 31,
2000, under rules similar to the rules of section 48(m)
of the Internal Revenue Code of 1986 (as in effect on the
day before the date of the enactment of the Revenue Rec-
onciliation Act of 1990).
TITLE 
IX—ARCTIC 
COASTAL
PLAIN DOMESTIC ENERGY SE-
CURITY ACT OF 2000
SEC. 901. SHORT TITLE
This title may be cited as the ‘‘Arctic Coastal Plain
Domestic Energy Security Act of 2000’’.
SEC. 902. DEFINITIONS.
When used in this title the term—
(1) ‘‘Coastal Plain’’ means that area identified
as such in the map entitled ‘‘Arctic National Wildlife
Refuge’’, dated August 1980, as referenced in sec-
tion 1002(b) of the Alaska National Interest Lands
Conservation Act of 1980 (16 U.S.C. 3142(b)(1))
comprising approximately 1,549,000 acres; and
(2) ‘‘Secretary’’, except as otherwise provided,
means the Secretary of the Interior or the Sec-
retary’s designee.
SEC. 903. LEASING PROGRAM FOR LANDS WITHIN THE
COASTAL PLAIN.
(a) AUTHORIZATION.—The Congress hereby author-
izes and directs the Secretary, acting through the Bureau
of Land Management in consultation with the Fish and
Wildlife Service and other appropriate Federal offices and
agencies, to take such actions as are necessary to establish
and implement a competitive oil and gas leasing program
that will result in an environmentally sound program for
the exploration, development, and production of the oil
and gas resources of the Coastal Plain and to administer
the provisions of this title through regulations, lease
terms, conditions, restrictions, prohibitions, stipulations,
and other provisions that ensure the oil and gas explo-
ration, development, and production activities on the
Coastal Plain will result in no significant adverse effect
on fish and wildlife, their habitat, subsistence resources,
and the environment, and shall require the application of
the best commercially available technology for oil and gas
exploration, development, and production, on all new ex-
ploration, development, and production operations, and
whenever practicable, on existing operations, and in a
manner to ensure the receipt of fair market value by the
public for the mineral resources to be leased.
(b) REPEAL.—The prohibitions and limitations con-
tained in section 1003 of the Alaska National Interest
Lands Conservation Act of 1980 (16 U.S.C. 3143) are
hereby repealed.
(c) COMPATIBILITY.—Congress hereby determines
that the oil and gas leasing program and activities author-
ized by this section in the Coastal Plain are compatible
with the purposes for which the Arctic National Wildlife
Refuge was established, and that no further findings or
decisions are required to implement this determination.
(d) SOLE AUTHORITY.—This title shall be the sole
authority for leasing on the Coastal Plain: Provided, That
nothing in this title shall be deemed to expand or limit
State and local regulatory authority.
(e) FEDERAL LAND.—The Coastal Plain shall be
considered ‘‘Federal land’’ for the purposes of the Federal
Oil and Gas Royalty Management Act of 1982.
(f) SPECIAL AREAS.—The Secretary, after consulta-
tion with the State of Alaska, City of Kaktovik, and the
North Slope Borough, is authorized to designate up to a
total of 45,000 acres of the Coastal Plain as Special Areas
and close such areas to leasing if the Secretary determines
that these Special Areas are of such unique character and
interest so as to require special management and regu-
latory protection. The Secretary may, however, permit
leasing of all or portions of any Special Areas within the
Coastal Plain by setting lease terms that limit or condition
surface use and occupancy by lessees of such lands but
permit the use of horizontal drilling technology from sites
on leases located outside the designated Special Areas.
(g) LIMITATION
ON CLOSED AREAS.—The Sec-
retary’s sole authority to close lands within the Coastal
Plain to oil and gas leasing and to exploration, develop-
ment, and production is that set forth in this title.
(h) CONVEYANCE.—In order to maximize Federal
revenues by removing clouds on title of lands and clari-
fying land ownership patterns within the Coastal Plain,
the Secretary, notwithstanding the provisions of section
1302(h)(2) of the Alaska National Interest Lands Con-
servation Act (16 U.S.C. 3192(h)(2)), is authorized and
directed to convey (1) to the Kaktovik Inupiat Corporation
the surface estate of the lands described in paragraph 2
of the Public Land Order 6959, to the extent necessary
to fulfill the Corporation’s entitlement under section 12
of the Alaska Native Claims Settlement Act (43 U.S.C.
1611), and (2) to the Arctic Slope Regional Corporation
the subsurface estate beneath such surface estate pursu-
ant to the August 9, 1983, agreement between the Arctic
Slope Regional Corporation and the United States of
America.
SEC. 904. RULES AND REGULATIONS.
(a) PROMULGATION.—The Secretary shall prescribe
such rules and regulations as may be necessary to carry
out the purposes and provisions of this title, including
rules and regulations relating to protection of the fish and
wildlife, their habitat, subsistence resources, and the envi-
ronment of the Coastal Plain. Such rules and regulations
shall be promulgated no later than fourteen months after
the date of enactment of this title and shall, as of their
effective date, apply to all operations conducted under a
lease issued or maintained under the provisions of this
title and all operations on the Coastal Plain related to the
leasing, exploration, development, and production of oil
and gas.
(b) REVISION
OF REGULATIONS.—The Secretary
shall periodically review and, if appropriate, revise the
rules and regulations issued under subsection (a) of this
section to reflect any significant biological, environmental,
or engineering data which come to the Secretary’s atten-
tion.
SEC. 905. ADEQUACY OF THE DEPARTMENT OF THE INTE-
RIOR’S LEGISLATIVE ENVIRONMENTAL IM-
PACT STATEMENT.
The ‘‘Final Legislative Environmental Impact State-
ment’’ (April 1987) on the Coastal Plain prepared pursu-
ant to section 1002 of the Alaska National Interest Lands
Conservation Act of 1980 (16 U.S.C. 3142) and section
102(2)(C) of the National Environmental Policy Act of
1969 (42 U.S.C. 4332(2)(C)) is hereby found by the Con-
gress to be adequate to satisfy the legal and procedural
requirements of the National Environmental Policy Act of
1969 with respect to actions authorized to be taken by
the Secretary to develop and promulgate the regulations
for the establishment of the leasing program authorized
by this title, to conduct the first lease sale and any subse-
quent lease sale authorized by this title, and to grant
rights-of-way and easements to carry out the purposes of
this title.
SEC. 906. LEASE SALES.
(a) LEASE SALES.—Lands may be leased pursuant
to the provisions of this title to any person qualified to
obtain a lease for deposits of oil and gas under the Mineral
Leasing Act, as amended (30 U.S.C. 181).
(b) PROCEDURES.—The Secretary shall, by regula-
tion, establish procedures for—
(1) receipt and consideration of sealed nomina-
tions for any area in the Coastal Plain for inclusion
in, or exclusion (as provided in subsection (c)) from,
a lease sale; and
(2) public notice of and comment on designa-
tion of areas to be included in, or excluded from, a
lease sale.
(c) LEASE SALES ON COASTAL PLAIN.—The Sec-
retary shall, by regulation, provide for lease sales of lands
on the Coastal Plain. When lease sales are to be held, they
shall occur after the nomination process provided for in
subsection (b) of this section. For the first lease sale, the
Secretary shall offer for lease those acres receiving the
greatest number of nominations, but no less than two hun-
dred thousand acres and no more than three hundred
thousand acres shall be offered. If the total acreage nomi-
nated is less than two hundred thousand acres, the Sec-
retary shall include in such sale any other acreage which
he believes has the highest resource potential, but in no
event shall more than three hundred thousand acres of
the Coastal Plain be offered in such sale. With respect
to subsequent lease sales, the Secretary shall offer for
lease no less than two hundred thousand acres of the
Coastal Plain. The initial lease sale shall be held within
twenty months of the date of enactment of this title. The
second lease sale shall be held no later than twenty-four
months after the initial sale, with additional sales con-
ducted no later than twelve months thereafter so long as
sufficient interest in development exists to warrant, in the
Secretary’s judgment, the conduct of such sales.
SEC. 907. GRANT OF LEASES BY THE SECRETARY.
(a) IN GENERAL.—The Secretary is authorized to
grant to the highest responsible qualified bidder by sealed
competitive cash bonus bid any lands to be leased on the
Coastal Plain upon payment by the lessee of such bonus
as may be accepted by the Secretary and of such royalty
as may be fixed in the lease, which shall be not less then
121⁄2 per centum in amount or value of the production
removed or sold from the lease.
(b) ANTITRUST REVIEW.—Following each notice of
a proposed lease sale and before the acceptance of bids
and the issuance of leases based on such bids, the Sec-
retary shall allow the Attorney General, in consultation
with the Federal Trade Commission, thirty days to per-
form an antitrust review of the results of such lease sale
on the likely effects the issuance of such leases would have
on competition and the Attorney General shall advise the
Secretary with respect to such review, including any rec-
ommendation for the nonacceptance of any bid or the im-
position of terms or conditions on any lease, as may be
appropriate to prevent any situation inconsistent with the
antitrust laws.
(c) SUBSEQUENT
TRANSFERS.—No lease issued
under this title may be sold, exchanged, assigned, sublet,
or otherwise transferred except with the approval of the
Secretary. Prior to any such approval the Secretary shall
consult with, and give due consideration to the views of,
the Attorney General.
(d) IMMUNITY.—Nothing in this title shall be deemed
to convey to any person, association, corporation, or other
business organization immunity from civil or criminal li-
ability, or to create defenses to actions, under any anti-
trust law.
(e) DEFINITIONS.—As used in this section, the
term—
(1) ‘‘antitrust review’’ shall be deemed an
‘‘antitrust investigation’’ for the purposes of the
Antitrust Civil Process Act (15 U.S.C. 1311); and
(2) ‘‘antitrust laws’’ means those Acts set forth
in section 1 of the Clayton Act (15 U.S.C. 12) as
amended.
SEC. 908. LEASE TERMS AND CONDITIONS.
An oil or gas lease issued pursuant to this title
shall—
(1) be for a tract consisting of a compact area
not to exceed five thousand seven hundred sixty
acres, or nine surveyed or protracted sections which
shall be as compact in form as possible;
(2) be for an initial period of ten years and
shall be extended for so long thereafter as oil or gas
is produced in paying quantities from the lease or
unit area to which the lease is committed or for so
long as drilling or reworking operations, as approved
by the Secretary, are conducted on the lease or unit
area;
(3) require the payment of royalty as provided
for in section 907 of this title;
(4) require that exploration activities pursuant
to any lease issued or maintained under this title
shall be conducted in accordance with an exploration
plan or a revision of such plan approved by the Sec-
retary;
(5) require that all development and production
pursuant to a lease issued or maintained pursuant
to this title shall be conducted in accordance with
development and production plans approved by the
Secretary;
(6) require posting of bond as required by sec-
tion 909 of this title;
(7) provide that the Secretary may close, on a
seasonal basis, portions of the Coastal Plain to ex-
ploratory drilling activities as necessary to protect
caribou calving areas and other species of fish and
wildlife;
(8) contain such provisions relating to rental
and other fees as the Secretary may prescribe at the
time of offering the area for lease;
(9) provide that the Secretary may direct or as-
sent to the suspension of operations and production
under any lease granted under the terms of this title
in the interest of conservation of the resource or
where there is no available system to transport the
resource. If such a suspension is directed or as-
sented to by the Secretary, any payment of rental
prescribed by such lease shall be suspended during
such period of suspension of operations and produc-
tion, and the term of the lease shall be extended by
adding any such suspension period thereto;
(10) provide that whenever the owner of a non-
producing lease fails to comply with any of the pro-
visions of this Act, or of any applicable provision of
Federal or State environmental law, or of the lease,
or of any regulation issued under this title, such
lease may be canceled by the Secretary if such de-
fault continues for more than thirty days after mail-
ing of notice by registered letter to the lease owner
at the lease owner’s post office address of record;
(11) provide that whenever the owner of any
producing lease fails to comply with any of the pro-
visions of this title, or of any applicable provision of
Federal or State environmental law, or of the lease,
or of any regulation issued under this title, such
lease may be forfeited and canceled by any appro-
priate proceeding brought by the Secretary in any
United States district court having jurisdiction
under the provisions of this title;
(12) provide that cancellation of a lease under
this title shall in no way release the owner of the
lease from the obligation to provide for reclamation
of the lease site;
(13) allow the lessee, at the discretion of the
Secretary, to make written relinquishment of all
rights under any lease issued pursuant to this title.
The Secretary shall accept such relinquishment by
the lessee of any lease issued under this title where
there has not been surface disturbance on the lands
covered by the lease;
(14) provide that for the purpose of conserving
the natural resources of any oil or gas pool, field, or
like area, or any part thereof, and in order to avoid
the unnecessary duplication of facilities, to protect
the environment of the Coastal Plain, and to protect
correlative rights, the Secretary shall require that, to
the greatest extent practicable, lessees unite with
each other in collectively adopting and operating
under a cooperative or unit plan of development for
operation of such pool, field, or like area, or any
part thereof, and the Secretary is also authorized
and directed to enter into such agreements as are
necessary or appropriate for the protection of the
United States against drainage;
(15) require that the holder of a lease or leases
on lands within the Coastal Plain shall be fully re-
sponsible and liable for the reclamation of lands
within the Coastal Plain and any other Federal
lands adversely affected in connection with explo-
ration, development, production or transportation
activities on a lease within the Coastal Plain by the
holder of a lease or as a result of activities con-
ducted on the lease by any of the leaseholder’s sub-
contractors or agents;
(16) provide that the holder of a lease may not
delegate or convey, by contract of otherwise, the rec-
lamation responsibility and liability to another party
without the express written approval of the Sec-
retary;
(17) provide that the standard of reclamation
for lands required to be reclaimed under this title
be, as nearly as practicable, a condition capable of
supporting the uses which the lands were capable of
supporting prior to any exploration, development, or
production activities, or upon application by the les-
see, to a higher or better use as approved by the
Secretary;
100
(18) contain the terms and conditions relating
to protection of fish and wildlife, their habitat, and
the environment, as required by section 903(a) of
this title;
(19) provide that the holder of a lease, its
agents, and contractors use best efforts to provide a
fair share, as determined by the level of obligation
previously agreed to in the 1974 agreement imple-
menting section 29 of the Federal Agreement and
Grant of Right of Way for the Operation of the
Trans-Alaska Pipeline, of employment and con-
tracting for Alaska Natives and Alaska Native Cor-
porations from throughout the State;
(20) require project agreements to the extent
feasible that will ensure productivity and consistency
recognizing a national interest in both labor stability
and the ability of construction labor and manage-
ment to meet the particular needs and conditions of
projects to be developed under leases issued pursu-
ant to this Act; and
(21) contain such other provisions as the Sec-
retary determines necessary to ensure compliance
with the provisions of this title and the regulations
issued under this title.
101
SEC. 909. BONDING REQUIREMENTS TO ENSURE FINANCIAL
RESPONSIBILITY OF LESSEE AND AVOID FED-
ERAL LIABILITY.
(a) REQUIREMENT.—The Secretary shall, by rule or
regulation, establish such standards as may be necessary
to ensure that an adequate bond, surety, or other financial
arrangement will be established prior to the commence-
ment of surface disturbing activities on any lease, to en-
sure the complete and timely reclamation of the lease
tract, and the restoration of any lands or surface waters
adversely affected by lease operations after the abandon-
ment or cessation of oil and gas operations on the lease.
Such bond, surety, or financial arrangement is in addition
to, and not in lieu, of any bond, surety, or financial ar-
rangement required by any other regulatory authority or
required by any other provision of law.
(b) AMOUNT.—The bond, surety, or financial ar-
rangement shall be in an amount—
(1) to be determined by the Secretary to pro-
vide for reclamation of the lease site in accordance
with an approved or revised exploration or develop-
ment and production plan; plus
(2) set by the Secretary consistent with the
type of operations proposed, to provide the means
for rapid and effective cleanup, and to minimize
damages resulting from an oil spill, the escape of
102
gas, refuse, domestic wastewater, hazardous or toxic
substances, or fire caused by oil and gas activities.
(c) ADJUSTMENT.—In the event that an approved ex-
ploration or development and production plan is revised,
the Secretary may adjust the amount of the bond, surety,
or other financial arrangement to conform to such modi-
fied plan.
(d) DURATION.—The responsibility and liability of
the lessee and its surety under the bond, surety, or other
financial arrangement shall continue until such time as
the Secretary determines that there has been compliance
with the terms and conditions of the lease and all applica-
ble law.
(e) TERMINATION.—Within sixty days after deter-
mining that there has been compliance with the terms and
conditions of the lease and all applicable laws, the Sec-
retary, after consultation with affected Federal and State
agencies, shall notify the lessee that the period of liability
under the bond, surety, or other financial arrangement has
been terminated.
SEC. 910. OIL AND GAS INFORMATION.
(a) IN GENERAL.—(1) Any lessee or permittee con-
ducting any exploration for, or development or production
of, oil or gas pursuant to this title shall provide the Sec-
retary access to all data and information from any lease
103
granted pursuant to this title (including processed and
analyzed) obtained from such activity and shall provide
copies of such data and information as the Secretary may
request. Such data and information shall be provided in
accordance with regulations which the Secretary shall pre-
scribe.
(2) If processed and analyzed information provided
pursuant to paragraph (1) is provided in good faith by
the lessee or permittee, such lessee or permittee shall not
be responsible for any consequence of the use or of reliance
upon such processed and analyzed information.
(3) Whenever any data or information is provided to
the Secretary, pursuant to paragraph (1)—
(A) by a lessee or permittee, in the form and
manner of processing which is utilized by such lessee
or permittee in the normal conduct of business, the
Secretary shall pay the reasonable cost of reproduc-
ing such data and information; or
(B) by a lessee or permittee, in such other form
and manner of processing as the Secretary may re-
quest, the Secretary shall pay the reasonable cost of
processing and reproducing such data and informa-
tion.
(b) REGULATIONS.—The Secretary shall prescribe
regulations to: (1) assure that the confidentiality of privi-
104
leged or proprietary information received by the Secretary
under this section will be maintained; and (2) set forth
the time periods and conditions which shall be applicable
to the release of such information.
SEC. 911. EXPEDITED JUDICIAL REVIEW.
(a) Any complaint seeking judicial review of any pro-
vision in this title, or any other action of the Secretary
under this title may be filed in any appropriate district
court of the United States, and such complaint must be
filed within ninety days from the date of the action being
challenged, or after such date if such complaint is based
solely on grounds arising after such ninetieth day, in
which case the complaint must be filed within ninety days
after the complainant knew or reasonably should have
known of the grounds for the complaint: Provided, That
any complaint seeking judicial review of an action of the
Secretary in promulgating any regulation under this title
may be filed only in the United States Court of Appeals
for the District of Columbia.
(b) Actions of the Secretary with respect to which re-
view could have been obtained under this section shall not
be subject to judicial review in any civil or criminal pro-
ceeding for enforcement.
105
SEC. 912. RIGHTS-OF-WAY ACROSS THE COASTAL PLAIN.
Notwithstanding title XI of the Alaska National In-
terest Lands Conservation Act of 1980 (16 U.S.C. 3161
et seq.), the Secretary is authorized and directed to grant,
in accordance with the provisions of section 28 (c) through
(t) and (v) through (y) of the Mineral Leasing Act of 1920
(30 U.S.C. 185), rights-of-way and easements across the
Coastal Plain for the transportation of oil and gas under
such terms and conditions as may be necessary so as not
to result in a significant adverse effect on the fish and
wildlife, subsistence resources, their habitat, and the envi-
ronment of the Coastal Plain. Such terms and conditions
shall include requirements that facilities be sited or modi-
fied so as to avoid unnecessary duplication of roads and
pipelines. The regulations issued as required by section
904 of this title shall include provisions granting rights-
of-way and easements across the Coastal Plain.
SEC. 913. ENFORCEMENT OF SAFETY AND ENVIRON-
MENTAL REGULATIONS TO ENSURE COMPLI-
ANCE WITH TERMS AND CONDITIONS OF
LEASE.
(a) RESPONSIBILITY OF THE SECRETARY.—The Sec-
retary shall diligently enforce all regulations, lease terms,
conditions, restrictions, prohibitions, and stipulations pro-
mulgated pursuant to this title.
106
(b) RESPONSIBILITY OF HOLDERS OF LEASE.—It
shall be the responsibility of any holder of a lease under
this title to—
(1) maintain all operations within such lease
area in compliance with regulations intended to pro-
tect persons and property on, and fish and wildlife,
their habitat, subsistence resources, and the environ-
ment of, the Coastal Plain; and
(2) allow prompt access at the site of any oper-
ations subject to regulation under this title to any
appropriate Federal or State inspector, and to pro-
vide such documents and records which are pertinent
to occupational or public health, safety, or environ-
mental protection, as may be requested.
(c) ON-SITE INSPECTION.—The Secretary shall pro-
mulgate regulations to provide for—
(1) scheduled onsite inspection by the Sec-
retary, at least twice a year, of facility on the Coast-
al Plain which is subject to any environmental or
safety regulation promulgated pursuant to this title
or conditions contained in any lease issue pursuant
to this title to assure compliance with such environ-
mental or safety regulations or conditions; and
(2) periodic onsite inspection by the Secretary
at least once a year without advance notice to the
107
operator of such facility to assure compliance with
all environmental or safety regulations.
SEC. 914. NEW REVENUES.
Notwithstanding any other provision of law, all reve-
nues received by the Federal Government from competitive
bids, sales, bonuses, royalties, rents, fees, or interest de-
rived from the leasing of oil and gas within the Coastal
Plain shall be deposited into the Treasury of the United
States, solely as provided in this section. The Secretary
of the Treasury shall pay to the State of Alaska the same
percentage of such revenues as is set forth under the head-
ing ‘‘EXPLORATION OF NATIONAL PETROLEUM
RESERVE IN ALASKA’’ in Public Law 96–514 (94
Stat. 2957, 2964) semiannually to the State of Alaska,
on March 30 and September 30 of each year and shall
deposit the balance of all such revenues as miscellaneous
receipts in the Treasury.
TITLE X—CLEAN, RELIABLE,
AND AFFORDABLE ELECTRICITY
SEC. 1001. FINDINGS AND PURPOSES.
(a) FINDINGS.—Congress finds that—
(1) reliable, affordable, increasingly clean elec-
tricity will continue to power the growing the United
States 
economy. 
Increasing 
use 
of
electrotechnologies, the desire for continuous envi-
108
ronmental improvement, a more competitive elec-
tricity market, and concerns about rising energy
prices add importance to the need for reliable, af-
fordable, increasingly clean electricity,
(2) coal, which currently accounts for more
than 1⁄2 of all electricity generated in the United
States, is the Nation’s most abundant fossil energy
resource; it comprises more than 85 percent of all
fossil resources in the United States, representing a
250-year supply at current usage rates,
(3) investments in power plant emissions con-
trol technology over the past 30 years have reduced
health-based pollutants from coal-based generating
plants by 32 percent, even as coal used for elec-
tricity generation has nearly tripled,
(4) continuous improvement in efficiency and
environmental performance from generating stations
will allow continued use for coal, the Nation’s most
abundant energy resource, and preserve less abun-
dant energy resources for other energy uses,
(5) new technologies for converting coal into
electricity can effectively eliminate health-based
emissions and improve efficiency by as much as 50
percent, yet initial commercial deployment of new
coal generating technologies entails significant risk
109
that generators may be unable to accept in a newly
competitive electricity market, and
(6) continued environmental improvement in
coal-based generation toward an ultimate goal of
near-zero emissions is important and desirable.
(b) PURPOSE.—The purpose of this title is to amend
the Internal Revenue Code of 1986 and authorize Depart-
ment of Energy programs to—
(1) develop and implement an accelerated re-
search and development program for advanced clean
coal technologies for use in existing and new coal-
based electricity generating facilities,
(2) provide financial incentives to encourage the
retrofit, repowering, or replacement of existing coal-
based electricity generating facilities to protect the
environment and improve efficiency,
(3) encourage the early commercial application
of advanced clean coal technologies, and
(4) allow coal, the most abundant domestic en-
ergy resource, to help meet the Nation’s growing
need for clean, reliable, and affordable electricity.
110
Subtitle 
A—Accelerated 
Tech-
nology Research and Develop-
ment Program for Advanced
Clean Coal Technology for New
and Existing Coal-Based Elec-
tric Generating Facilities
PART 1—NATIONAL COAL-BASED TECHNOLOGY
DEVELOPMENT AND APPLICATIONS PROGRAM
SEC. 1011. PURPOSES.
The purposes of this subtitle are to direct the
Secretary—
(1) to establish a coal-based technology develop-
ment program designed to achieve cost and perform-
ance goals;
(2) to undertake a study to identify tech-
nologies that may be capable of achieving the cost
and performance goals and for other purposes; and
(3) to implement a research, development, and
demonstration program designed to develop and
demonstrate in commercial-scale applications ad-
vanced clean coal technologies for existing coal-fired
power generation units.
SEC. 1012. COST AND PERFORMANCE GOALS.
(a) Within 120 days of the date of enactment of this
Act, the Secretary is directed to issue a set of technology
111
cost and performance goals for public comment, and after
taking into account the public comments, the Secretary
shall submit the final technology cost and performance
goals to the Congress within 180 days of enactment of
this Act.
(b) In establishing these technology cost and perform-
ance goals, the Secretary shall consult with representatives
from the United States coal industry, electric utility indus-
try, railroads and other transportation industries, manu-
facturers of equipment utilizing advanced coal tech-
nologies, organizations representing workers, and mem-
bers of organizations formed to further the goals of envi-
ronmental protection or to promote the development and
use of advanced coal technologies.
(c) For purposes of this section, the term ‘‘cost and
performance goals’’ means the result of an assessment un-
dertaken by the Secretary, in consultation with those enti-
ties identified in subsection (b), that identifies costs and
associated performance of technologies that would permit
the continued cost-competitive use of coal for electricity
generation, as chemical feedstocks and as transportation
fuel in the years 2007, 2015, and beyond 2020.
SEC. 1013. STUDY.
(a) Not later than 12 months after the date of enact-
ment of this Act, the Secretary, in cooperation with the
112
Secretary of the Interior and the Administrator of the En-
vironmental Protection Agency, shall undertake a coopera-
tive study designed to—
(1) identify technologies capable of achieving
the cost and performance goals established in section
1012;
(2) assess the costs to develop and demonstrate
such technologies and the amount of time required
to undertake and accomplish such development and
demonstration; and
(3) set forth a set of recommendations by which
the Department of Energy could undertake, in co-
operation with industry, technology development pro-
grams to develop and demonstrate such technologies.
(b) In carrying out this section, the Secretary shall
incorporate the advice of representatives with applicable
expertise from the United States coal industry, electric
utility industry, railroads and other coal transportation in-
dustries, manufacturers of equipment utilizing advanced
coal technologies, organizations representing workers, and
members of organizations formed to further the goals of
environmental protection or to promote the development
and use of advanced coal technologies.
113
SEC. 1014. TECHNOLOGY RESEARCH AND DEVELOPMENT
PROGRAM.
(a) The Secretary shall, pursuant to the authority
and directions of this title and the Federal Non-Nuclear
Energy Research and Development Act of 1974 (Public
Law 93–577), the Energy Reorganization Act of 1974
(Public Law 93–438), and the Energy Policy Act of 1992
(Public Law 102–486), undertake and conduct programs
for research on and development, demonstration, and com-
mercial application of coal-based technologies. Such re-
search, development, demonstration, and commercial ap-
plication programs identified in section 1013 shall be de-
signed to achieve the cost and performance goals estab-
lished in sections 1012.
(b) Not later than 18 months after the date of enact-
ment of this Act, the Secretary shall transmit to the Presi-
dent and the Congress a report containing—
(1) a description of the programs in place or to
be undertaken within the Department of Energy to
support technologies that are designed to achieve the
cost and performance goals established in section
1012, and
(2) recommendations for additional authorities
required in order to achieve the cost and perform-
ance goals.
114
SEC. 1015. AUTHORIZATION OF APPROPRIATIONS.
There are authorized to be appropriated to the Sec-
retary for carrying out this subtitle $100,000,000 for each
of fiscal years 2002 through 2012, to remain available
until expended. This authorization is supplemental to ex-
isting authorities and shall not be construed as a cap on
Department of Energy Fossil Energy Research and Devel-
opment and Clean Coal Technology appropriations.
PART 2—EXISTING PLANT TECHNOLOGY
APPLICATIONS
SEC. 1021. EXISTING PLANT TECHNOLOGY APPLICATIONS.
(a) The Secretary shall conduct a program of re-
search, development, demonstration, and commercial ap-
plication for the purpose of developing economically and
environmentally acceptable advanced technologies for utili-
zation at or within current electricity generation facilities
utilizing coal as the primary feedstock.
(b) Within 120 days after the date of enactment of
this Act, the Secretary shall transmit to Congress a de-
tailed plan for conducting the research, development, dem-
onstration, and commercial application programs for the
purpose of developing economically and environmentally
acceptable advanced technologies for utilization at or with-
in existing electricity generation facilities utilizing coal as
the primary feedstock. Such plan shall include a descrip-
tion of—
115
(1) the program elements and management
structure to be utilized;
(2) the technical milestones to be achieved with
respect to each of the advanced coal-based tech-
nologies included in the plan;
(3) the research, development, and demonstra-
tion activities proposed to be conducted at existing
coal-based electric generation units of at least 50
megawatts nameplate rating and including design
improvements that will allow such units to provide
either—
(A) an overall design efficiency improve-
ment of not less than 5 percentage points on a
unit having design main steam throttle condi-
tions of at least 1,800 psi/1,000 F/1,000 F,
(B) a design removal for one or more of
the following emissions of not less than—
(i) 98 percent removal, annual aver-
age, of sulfur dioxide at a capital and oper-
ating cost at least 25 percent below com-
mercially available technology,
(ii) 85 percent removal, annual aver-
age, of nitrogen oxide without the use of
ammonia or urea, or
116
(iii) 75 percent, annual average, emis-
sion reduction of total mercury excluding
any reductions due to use of activated car-
bon or a system for selective catalytic re-
duction; or
(C) 100 percent recycle/utilization options
of coal combustion wastes excluding gypsum
production for wallboard and coal fly ash and
bottom ash use in Portland cement and con-
crete applications.
SEC. 1022. DEMONSTRATION AND COMMERCIAL APPLICA-
TION PROGRAM.
(a) Not later than 180 days after the date of sub-
mittal of the program described in section 1021 of this
Act, the Secretary shall cause to have solicited proposals
for demonstrations designed to achieve the technical mile-
stones set forth in section 1021(b)(1)(C).
(b) In selecting a project or projects for financial as-
sistance under this subtitle, the Secretary shall utilize the
criteria for a qualifying project which shall provide a min-
imum of 50 percent cost sharing with the Federal Govern-
ment for the installation and operation of the clean coal
technology. In making project selections that meet the cri-
teria and purposes of the solicitation, the Department of
Energy shall select those projects which—
117
(1) demonstrates overall cost reductions in the
utilization of coal to generate useful forms of energy;
(2) improves the competitiveness of coal among
various forms of energy in order to maintain a diver-
sity of fuel choices in the United States to meet elec-
tricity generation requirements; and
(3) cost-effectively achieves 1 or more of the
criteria set out in the solicitation, including a project
that demonstrates the emissions control of 1 or more
pollutants or the production of coal combustion by-
products that are capable of obtaining values signifi-
cantly greater than by-products currently produced.
(c) A qualifying project under this section shall be
exempt from the new source review provisions of the Clean
Air Act (42 U.S.C. 1857 et seq.).
SEC. 1023. AUTHORIZATION OF APPROPRIATIONS.
The Secretary, as of the date of enactment of this
Act, is authorized to utilize any funds appropriated, but
not currently committed, or that may become uncommit-
ted to any project selected under the existing ‘‘Clean Coal
Technology’’ program to administer and conduct this sub-
title.
118
Subtitle B—Credit for Emission Re-
ductions 
and 
Efficiency 
Im-
provements in Existing Coal-
Based 
Electricity 
Generation
Facilities
SEC. 1031. CREDIT FOR INVESTMENT IN QUALIFYING
CLEAN COAL TECHNOLOGY.
(a) ALLOWANCE
OF
QUALIFYING
CLEAN
COAL
TECHNOLOGY UNIT CREDIT.—Section 46 of the Internal
Revenue Code of 1986 (relating to amount of credit) is
amended by striking ‘‘and’’ at the end of paragraph (2),
by striking the period at the end of paragraph (3) and
inserting ‘‘, and’’, and by adding at the end the following:
‘‘(4) the qualifying clean coal technology unit
credit.’’.
(b) AMOUNT OF QUALIFYING CLEAN COAL TECH-
NOLOGY UNIT CREDIT.—Subpart E of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of
1986 (relating to rules for computing investment credit)
is amended by inserting after section 48 the following:
‘‘SEC. 48A. QUALIFYING CLEAN COAL TECHNOLOGY UNIT
CREDIT.
‘‘(a) IN GENERAL.—For purposes of section 46, the
qualifying clean coal technology unit credit for any taxable
year is an amount equal to 20 percent of the qualified
119
investment in a qualifying system of continuous emission
control for such taxable year.
‘‘(b) QUALIFYING SYSTEM OF CONTINUOUS EMIS-
SION CONTROL.—
‘‘(1) IN GENERAL.—For purposes of subsection
(a) the term ‘qualifying system of continuous emis-
sion control’ means a system of the taxpayer—
‘‘(A) which is retrofitted to an existing
coal-based electricity generating unit, the retro-
fitting of which is completed by the taxpayer
(but only with respect to that portion of the
basis which is properly attributable to such ret-
rofitting),
‘‘(B) which removes 1 or more of the pol-
lutants regulated under title I of the Clean Air
Act (42 U.S.C. 1857 et seq.),
‘‘(C) that is depreciable under section 167,
‘‘(D) that has a useful life of not less than
4 years, and
‘‘(E) that is located in the United States.
‘‘(2) SPECIAL RULE FOR SALE-LEASEBACKS.—
For purposes of subparagraph (A) of paragraph (1),
in the case of a unit that—
‘‘(A) is originally placed in service by a
person, and
120
‘‘(B) is sold and leased back by such per-
son, or is leased to such person, within 3
months after the date such unit was originally
placed in service, for a period of not less than
12 years,
such unit shall be treated as originally placed in
service not earlier than the date on which such prop-
erty is used under the leaseback (or lease) referred
to in subparagraph (B). The preceding sentence
shall not apply to any property if the lessee and les-
sor of such property makes an election under this
sentence. Such an election, once made, may be re-
voked only with the consent of the Secretary.
‘‘(c) EXISTING COAL-BASED ELECTRICITY GENER-
ATING UNIT.—For purposes of subsection (a), the term
‘existing coal-based electricity generating unit’ means,
with respect to any taxable year, a steam generator-tur-
bine unit that utilizes coal to produce 50 percent or more
of its output as electricity and was in operation before the
effective date of this section.
‘‘(d) LIMIT ON QUALIFYING CLEAN COAL TECH-
NOLOGY UNIT CREDIT.—For purposes of subsection (a),
the credit shall be applicable to no more than the first
$100,000,000 of qualifying investment in a qualifying sys-
121
tem of continuous emission control at any 1 existing coal-
based electricity generating unit.
‘‘(e) QUALIFIED INVESTMENT.—For purposes of sub-
section (a), the term ‘qualified investment’ means, with
respect to any taxable year, the basis of a qualifying sys-
tem of continuous emission control placed in service by
the taxpayer during such taxable year.
‘‘(f) QUALIFIED PROGRESS EXPENDITURES.—
‘‘(1) INCREASE IN QUALIFIED INVESTMENT.—
In the case of a taxpayer who has made an election
under paragraph (5), the amount of the qualified in-
vestment of such taxpayer for the taxable year (de-
termined under subsection (c) without regard to this
section) shall be increased by an amount equal to
the aggregate of each qualified progress expenditure
for the taxable year with respect to progress expend-
iture property.
‘‘(2) PROGRESS EXPENDITURE PROPERTY DE-
FINED.—For purposes of this subsection, the term
‘progress expenditure property’ means any property
being constructed by or for the taxpayer and which
it is reasonable to believe will qualify as a qualifying
system of continuous emission control which is being
constructed by or for the taxpayer when it is placed
in service.
122
‘‘(3) QUALIFIED PROGRESS EXPENDITURES DE-
FINED.—For purposes of this subsection—
‘‘(A) SELF-CONSTRUCTED PROPERTY.—In
the case of any self-constructed property, the
term ‘qualified progress expenditures’ means
the amount which, for purposes of this subpart,
is properly chargeable (during such taxable
year) to capital account with respect to such
property.
‘‘(B) 
NON-SELF-CONSTRUCTED
PROP-
ERTY.—In the case of non-self-constructed
property, the term ‘qualified progress expendi-
tures’ means the amount paid during the tax-
able year to another person for the construction
of such property.
‘‘(4) OTHER
DEFINITIONS.—For purposes of
this subsection—
‘‘(A) SELF-CONSTRUCTED
PROPERTY.—
The term ‘self-constructed property’ means
property for which it is reasonable to believe
that more than half of the construction expendi-
tures will be made directly by the taxpayer.
‘‘(B) 
NON-SELF-CONSTRUCTED
PROP-
ERTY.—The term ‘non-self-constructed prop-
123
erty’ means property which is not self-con-
structed property.
‘‘(C) CONSTRUCTION, 
ETC.—The term
‘construction’ includes reconstruction and erec-
tion, and the term ‘constructed’ includes recon-
structed and erected.
‘‘(D) ONLY
CONSTRUCTION
OF
QUALI-
FYING SYSTEM OF CONTINUOUS EMISSION CON-
TROL TO BE TAKEN INTO ACCOUNT.—Construc-
tion shall be taken into account only if, for pur-
poses of this subpart, expenditures therefor are
properly chargeable to capital account with re-
spect to the property.
‘‘(5) ELECTION.—An election under this sub-
section may be made at such time and in such man-
ner as the Secretary may by regulations prescribe.
Such an election shall apply to the taxable year for
which made and to all subsequent taxable years.
Such an election, once made, may not be revoked ex-
cept with the consent of the Secretary.
‘‘(g) COORDINATION WITH OTHER CREDITS.—This
section shall not apply to any property with respect to
which the rehabilitation credit under section 47 or the en-
ergy credit under section 48 is allowed unless the taxpayer
124
elects to waive the application of such credit to such prop-
erty.
‘‘(h) TERMINATION.—This section shall not apply
with respect to any qualified investment made more than
10 years after the effective date of this section.’’
(c) RECAPTURE.—Section 50(a) of the Internal Rev-
enue Code of 1986 (relating to other special rules) is
amended by adding at the end the following:
‘‘(6) SPECIAL RULES RELATING TO QUALIFYING
SYSTEM OF CONTINUOUS EMISSION CONTROL.—For
purposes of applying this subsection in the case of
any credit allowable by reason of section 48A, the
following shall apply:
‘‘(A) GENERAL
RULE.—In lieu of the
amount of the increase in tax under paragraph
(1), the increase in tax shall be an amount
equal to the investment tax credit allowed under
section 38 for all prior taxable years with re-
spect to a qualifying system of continuous emis-
sion control (as defined by section 48A(b)(1))
multiplied by a fraction whose numerator is the
number of years remaining to fully depreciate
under this title the qualifying system of contin-
uous emission control disposed of, and whose
denominator is the total number of years over
125
which such unit would otherwise have been sub-
ject to depreciation. For purposes of the pre-
ceding sentence, the year of disposition of the
qualifying system of continuous emission con-
trol property shall be treated as a year of re-
maining depreciation.
‘‘(B) PROPERTY CEASES TO QUALIFY FOR
PROGRESS
EXPENDITURES.—Rules similar to
the rules of paragraph (2) shall apply in the
case of qualified progress expenditures for a
qualifying system of continuous emission con-
trol under section 48A, except that the amount
of the increase in tax under subparagraph (A)
of this paragraph shall be substituted in lieu of
the amount described in such paragraph (2).
‘‘(C) APPLICATION OF PARAGRAPH.—This
paragraph shall be applied separately with re-
spect to the credit allowed under section 38 re-
garding a qualifying system of continuous emis-
sion control.’’
(d) TRANSITIONAL RULE.—Section 39(d) of the In-
ternal Revenue Code of 1986 (relating to transitional
rules) is amended by adding at the end the following:
‘‘(10) NO CARRYBACK OF SECTION 48A CREDIT
BEFORE EFFECTIVE DATE.—No portion of the un-
126
used business credit for any taxable year which is
attributable to the qualifying clean coal technology
unit credit determined under section 48A may be
carried back to a taxable year ending before the date
of the enactment of section 48A.’’
(e) TECHNICAL AMENDMENTS.—
(1) Section 49(a)(1)(C) is amended by striking
‘‘and’’ at the end of clause (ii), by striking the pe-
riod at the end of clause (iii) and inserting ‘‘, and’’,
and by adding at the end the following:
‘‘(iv) the portion of the basis of any
qualifying system of continuous emission
control attributable to any qualified invest-
ment (as defined by section 48A(c)).’’
(2) Section 50(a)(4) is amended by striking
‘‘and (2)’’ and inserting ‘‘, (2), and (6)’’.
(3) Section 50(c)(3) is amended—
(A) by inserting ‘‘(A)’’ before ‘‘In the case
of any energy credit or reforestation credit’’
and by striking ‘‘(A)’’ and ‘‘(B)’’ and inserting
‘‘(i)’’ and ‘‘(ii)’’; and
(B) by inserting after clause (ii) ‘‘(B) Any
clean coal technology unit credit shall be ex-
empt from paragraph (1) and paragraph (2) of
section 50(c).
127
(4) The table of sections for subpart E of part
IV of subchapter A of chapter 1, as amended by sec-
tion 101(d), is amended by inserting after the item
relating to section 48 the following:
‘‘Sec. 48A. Qualifying clean coal technology unit credit.’’
(f) INSTALLATIONS NOT SUBJECT TO NEW SOURCE
REVIEW.—
(1) Installation of a qualifying system of contin-
uous emission control shall be exempt from the new
source review provisions of the Clean Air Act (42
U.S.C. 1857 et seq.).
(2) Installation of a qualifying system of contin-
uous emission control that meets or exceeds, for the
applicable source category and pollutant being con-
trolled by the qualified system of continuous emis-
sion control, the standard of performance for new
stationary sources, on an existing coal-based elec-
tricity generating unit shall exempt the unit from
any new or increased emission control requirements
for the pollutant being controlled by the qualified
system of continuous emission control under title I
of the Clean Air Act (42 U.S.C. 1857 et seq.) for
a period of 10 years after the date the system of
continuous emission control is placed in service.
(g) EFFECTIVE DATE.—The amendments made by
this section shall apply to periods after December 31,
128
2000, under rules similar to the rules of section 48(m)
of the Internal Revenue Code of 1986 (as in effect on the
day before the date of the enactment of the Revenue Rec-
onciliation Act of 1990).
SEC. 1032. CREDIT FOR PRODUCTION FROM A QUALIFYING
CLEAN COAL TECHNOLOGY UNIT.
(a) CREDIT FOR PRODUCTION FROM A QUALIFYING
CLEAN COAL TECHNOLOGY UNIT.—Subpart D of part IV
of subchapter A of chapter 1 of the Internal Revenue Code
of 1986 (relating to business related credits) is amended
by adding at the end the following:
‘‘SEC. 45E. CREDIT FOR PRODUCTION FROM A QUALIFYING
CLEAN COAL TECHNOLOGY UNIT.
‘‘(a) GENERAL RULE.—For purposes of section 38,
the qualifying clean coal technology production credit of
any taxpayer for any taxable year is equal to the product
of—
‘‘(1) the applicable clean coal technology pro-
duction credit, multiplied by
‘‘(2) the kilowatt hours of electricity—
‘‘(A) produced by the taxpayer at a quali-
fying clean coal technology unit during the 10-
year period beginning on the date the unit was
returned to service after retrofit, repowering, or
replacement, and
129
‘‘(B) sold by the taxpayer to an unrelated
person during such taxable year.
‘‘(b) CLEAN COAL TECHNOLOGY PRODUCTION CRED-
IT.—For purposes of this section, the clean coal tech-
nology production credit is, except as otherwise provided
for in this subparagraph, six tenths of a cent ($0.006).
‘‘(c) INFLATION ADJUSTMENT FACTOR.—The appli-
cable amount of the clean coal technology production cred-
it shall each be adjusted by multiplying such amount by
the inflation adjustment factor for the calendar year in
which the amount is applied. If any amount as increased
under the preceding sentence is not a multiple of 0.01
cent, such amount shall be rounded to the nearest multiple
of 0.01 cent.
‘‘(d) DEFINITIONS AND SPECIAL RULES.—For pur-
poses of this section—
‘‘(1) the term ‘qualifying clean coal technology
unit’ means a unit of the taxpayer, which (A) is an
existing coal-based electricity generating steam gen-
erator-turbine unit which (B) has a nameplate ca-
pacity rating of not more than 300,000 kilowatts,
and (C) has been retrofitted, repowered, or replaced
with a clean coal technology within 10 years of the
effective date of this section,
130
‘‘(2) the term ‘clean coal technology’ means
technology that—
‘‘(A) utilizes coal to produce 50 percent or
more of its thermal output as electricity, includ-
ing advanced pulverized coal or atmospheric flu-
idized bed combustion, pressurized fluidized bed
combustion, integrated gasification combined
cycle, or any other technology for the produc-
tion of electricity,
‘‘(B) has a design heat rate not less than
500 Btu/kWh below that of the existing unit be-
fore it is retrofit, repowered, or replaced with
the qualifying clean coal technology,
‘‘(C) has a maximum design heat rate of
not more than 9,000 Btu/kWh when the design
coal has a heat content of more than 8,000 Btu
per pound, and
‘‘(D) has a maximum design heat rate of
not more than 10,500 Btu/kWh when the de-
sign coal has a heat content of 8,000 Btu per
pound or less,
‘‘(3) the rules of paragraphs (3), (4), and (5)
of section 45 shall apply,
‘‘(4) the term ‘inflation adjustment factor’
means, with respect to a calendar year, a fraction
131
the numerator of which is the GDP implicit price
deflator for the preceding calendar year and the de-
nominator of which is the GDP implicit price
deflator for the calendar year 1998, and
‘‘(5) the term ‘GDP implicit price deflator’
means the most recent revision of the implicit price
deflator for the gross domestic product as computed
by the Department of Commerce before March 15 of
the calendar year.’’
(c) CREDIT TREATED AS BUSINESS CREDIT.—Sec-
tion 38(b) of the Internal Revenue Code of 1986 is amend-
ed by striking ‘‘plus’’ at the end of paragraph (11), by
striking the period at the end of paragraph (12) and in-
serting ‘‘, plus’’, and by adding at the end the following:
‘‘(13) the qualifying clean coal technology pro-
duction credit determined under section 45E(a).’’
(d) TRANSITIONAL RULE.—Section 39(d) of the In-
ternal Revenue Code of 1986 (relating to transitional
rules), as amended by section 1031(d), is amended by add-
ing at the end the following:
‘‘(11) NO
CARRYBACK
OF
CERTAIN
CREDITS
BEFORE EFFECTIVE DATE.—No portion of the un-
used business credit for any taxable year which is
attributable to the credits allowable under any sec-
tion added to this subpart by the amendments made
132
by the National Energy Security Act of 2000 may
be carried back to a taxable year ending before the
date of the enactment of such Act.’’
(e) CLERICAL AMENDMENT.—The table of sections
for subpart D of part IV of subchapter A of chapter 1
of the Internal Revenue Code of 1986 is amended by add-
ing at the end the following:
‘‘Sec. 45E. Credit for production from qualifying clean coal tech-
nology unit.’’
(f) MODIFICATIONS EXCLUDED FROM NEW SOURCE
REVIEW.—
(1) Modifications made to an existing coal-
based generation unit because of, or as part of a
qualifying clean coal technology unit shall be exempt
from the new source review provisions of the Clean
Air Act (42 U.S.C. 1857 et seq.).
(2) Installation of a qualifying clean coal tech-
nology, that meets or exceeds, for the applicable
source category, the standards of performance for
new sources under section 111 of the Clean Air Act
(42 U.S.C. 1857 et seq.), on an existing coal-based
electricity generating unit shall exempt that unit
from any new or increased emission control require-
ments under title I of the Clean Air Act (42 U.S.C.
1857 et seq.) for a period of 10 years after the
133
qualifying clean coal technology is originally placed
in service.
(g) EFFECTIVE DATE.—The amendments made by
this section shall apply to production after the date of the
enactment of this Act.
SEC. 1033. DEBT REPAYMENT FOR THE INVESTMENT IN
THE RETROFIT, REPOWERING, OR REPLACE-
MENT OF EXISTING COAL-BASED GENERA-
TION WITH CERTAIN SYSTEMS OF CONTIN-
UOUS EMISSION CONTROL AND CLEAN COAL
TECHNOLOGY.
(a) ALLOWANCE OF DEBT REPAYMENT IN LIEU OF
QUALIFYING CLEAN COAL TECHNOLOGY CREDITS.—The
owner of a qualified system of continuous emission control
under section 1031 or a qualified clean coal technology
unit under section 1032 may elect to have the amount of
the credits applied to the prepayment of any debt or obli-
gations the owner has incurred under subchapter I, chap-
ter 31, title 7 of the Rural Electrification Act of 1936
(7 U.S.C. 901 et seq.) and has been selected by the owner
for such prepayment in lieu of a credit against the owner’s
tax obligations under the Internal Revenue Code of 1986.
(b) OWNER.—For purposes of this title, the owner
of a qualified system of continuous emission control under
section 1031 or a qualified clean coal technology unit
134
under section 1032 shall be deemed to be a taxpayer and
thereby qualify for the credits for investment in a qualified
system of continuous emission control or production from
a qualifying clean coal technology facility as described in
section 48A, section 45E and allowed by section 38, not-
withstanding provisions to the contrary, of the Internal
Revenue Code of 1986. Furthermore, neither the amount
of the credit produced nor the use of such credit for the
prepayment of debt as set forth in subsection (a) shall give
rise to ‘‘income’’ for purposes of section 501(c)(12) of
such Code.
(c) UNRELATED PERSON.—For purposes of this title,
the term ‘‘unrelated person’’ shall have the meaning given
to such term by section 45 of such Code.
Subtitle C—Incentives for Early
Commercial Applications of Ad-
vanced Clean Coal Technologies
SEC. 1041. CREDIT FOR INVESTMENT IN QUALIFYING AD-
VANCED CLEAN COAL TECHNOLOGY.
(a) ALLOWANCE OF QUALIFYING ADVANCED CLEAN
COAL TECHNOLOGY FACILITY CREDIT.—Section 46 of
the Internal Revenue Code of 1986 (relating to amount
of credit) is amended by striking ‘‘and’’ at the end of para-
graph (3), by striking the period at the end of paragraph
151
‘‘(d) DEFINITIONS AND SPECIAL RULES.—For pur-
poses of this section—
‘‘(1) the rules of paragraphs (3), (4), and (5)
of section 45 shall apply,
‘‘(2) the term ‘inflation adjustment factor’
means, with respect to a calendar year, a fraction
the numerator of which is the GDP implicit price
deflator for the preceding calendar year and the de-
nominator of which is the GDP implicit price
deflator for the calendar year 1998, and
‘‘(3) the term ‘GDP implicit price deflator’
means the most recent revision of the implicit price
deflator for the gross domestic product as computed
by the Department of Commerce before March 15 of
the calendar year.’’
(b) CREDIT TREATED AS BUSINESS CREDIT.—Sec-
tion 38(b) of the Internal Revenue Code of 1986 is amend-
ed by striking ‘‘plus’’ at the end of paragraph (11), by
striking the period at the end of paragraph (12) and in-
serting ‘‘, plus’’, and by adding at the end the following:
‘‘(13) the qualifying advanced clean coal tech-
nology production credit determined under section
45F(a).’’
(c) TRANSITIONAL RULE.—Section 39(d) of the In-
ternal Revenue Code of 1986 (relating to transitional