181
than October 1, 2006, the Secretary shall transmit to the 
Congress a report that—
(1) evaluates the process of converting natural 
gas infrastructure to accommodate fuel cell-powered 
school buses; and 
(2) assesses the overall impact on energy con-
servation, public health, and the environment as a re-
sult of this program under this section. 
SEC. 5033. AUTHORIZATION OF APPROPRIATIONS. 
There are authorized to be appropriated to the Sec-
retary for carrying out this subtitle, to remain available 
until expended—
(1) $60,000,000 for fiscal year 2004; 
(2) $70,000,000 for fiscal year 2005; and 
(3) $80,000,000 for fiscal year 2006. 
Subtitle D—Advanced Vehicles 
SEC. 5041. DEFINITIONS. 
For the purposes of this subtitle, the following defini-
tions apply: 
(1) ALTERNATIVE FUELED VEHICLE.—The term 
‘‘alternative fueled vehicle’’ means a vehicle propelled 
solely on an alternative fuel as defined in section 301 
of the Energy Policy Act of 1992 (42 U.S.C. 13211), 
except the term does not include any vehicle that the 
Secretary determines, by rule, does not yield substan-
182
tial environmental benefits over a vehicle operating 
solely on gasoline or diesel derived from fossil fuels. 
(2) FUEL CELL VEHICLE.—The term ‘‘fuel cell 
vehicle’’ means a vehicle propelled by one or more 
cells that convert chemical energy directly into elec-
tricity by combining oxygen with hydrogen fuel which 
is stored on board the vehicle in any form and may 
or may not require reformation prior to use. 
(3) HYBRID VEHICLE.—The term ‘‘hybrid vehi-
cle’’ means a medium or heavy duty vehicle propelled 
by an internal combustion engine using any combus-
tible fuel and an onboard rechargeable battery storage 
system. 
(4) NEIGHBORHOOD
ELECTRIC
VEHICLE.—The 
term ‘‘neighborhood electric vehicle’’ means a motor 
vehicle that qualifies as both—
(A) a low-speed vehicle, as such term is de-
fined in section 571.3(b) of title 49, Code of Fed-
eral Regulations; and 
(B) a zero-emission vehicle, as such term is 
defined in section 86.1702–99 of title 40, Code of 
Federal Regulations. 
(5) PILOT PROGRAM.—The term ‘‘pilot program’’ 
means the competitive grant program established 
under section 5042.
183
(6) ULTRA-LOW SULFUR DIESEL VEHICLE.—The 
term ‘‘ultra-low sulfur diesel vehicle’’ means a vehicle 
manufactured in model years 2002 through 2006 
powered by a heavy-duty diesel engine that—
(A) is fueled by diesel fuel which contains 
sulfur at not more than 15 parts per million; 
and 
(B) emits not more than the lesser of—
(i) for vehicles manufactured in—
(I) model years 2002 and 2003, 
3.0 grams per brake horsepower-hour of 
oxides of nitrogen and .01 grams per 
brake horsepower-hour of particulate 
matter; and 
(II) model years 2004 through 
2006, 2.5 grams per brake horsepower-
hour of nonmethane hydrocarbons and 
oxides of nitrogen and .01 grams per 
brake horsepower-hour of particulate 
matter; or 
(ii) the emissions of nonmethane hy-
drocarbons, oxides of nitrogen, and particu-
late matter of the best performing tech-
nology of ultra-low sulfur diesel vehicles of
184
the same class and application that are 
commercially available. 
SEC. 5042. PILOT PROGRAM. 
(a) ESTABLISHMENT.—The Secretary shall establish a 
competitive grant pilot program, to be administered 
through the Clean Cities Program of the Department of En-
ergy, to provide not more than 10 geographically dispersed 
project grants to State governments, local governments, or 
metropolitan transportation authorities to carry out a 
project or projects for the purposes described in subsection 
(b). 
(b) GRANT PURPOSES.—Grants under this section 
may be used for the following purposes: 
(1) The acquisition of alternative fueled vehicles 
or fuel cell vehicles, including—
(A) passenger vehicles including neighbor-
hood electric vehicles; and 
(B) motorized two-wheel bicycles, scooters, 
or other vehicles for use by law enforcement per-
sonnel or other State or local government or met-
ropolitan transportation authority employees. 
(2) The acquisition of alternative fueled vehicles, 
hybrid vehicles, or fuel cell vehicles, including—
(A) buses used for public transportation or 
transportation to and from schools;
185
(B) delivery vehicles for goods or services; 
and 
(C) ground support vehicles at public air-
ports, including vehicles to carry baggage or 
push airplanes away from terminal gates. 
(3) The acquisition of ultra-low sulfur diesel ve-
hicles. 
(4) Infrastructure necessary to directly support 
an alternative fueled vehicle, fuel cell vehicle, or hy-
brid vehicle project funded by the grant, including 
fueling and other support equipment. 
(5) Operation and maintenance of vehicles, in-
frastructure, and equipment acquired as part of a 
project funded by the grant. 
(c) APPLICATIONS.—
(1) REQUIREMENTS.—The Secretary shall issue 
requirements for applying for grants under the pilot 
program. At a minimum, the Secretary shall require 
that applications be submitted by the head of a State 
or local government or a metropolitan transportation 
authority, or any combination thereof, and a reg-
istered participant in the Clean Cities Program of the 
Department of Energy, and shall include—
186
(A) a description of the projects proposed in 
the application, including how they meet the re-
quirements of this subtitle; 
(B) an estimate of the ridership or degree of 
use of the projects proposed in the application; 
(C) an estimate of the air pollution emis-
sions reduced and fossil fuel displaced as a result 
of the projects proposed in the application, and 
a plan to collect and disseminate environmental 
data, related to the projects to be funded under 
the grant, over the life of the projects; 
(D) a description of how the projects pro-
posed in the application will be sustainable 
without Federal assistance after the completion 
of the term of the grant; 
(E) a complete description of the costs of 
each project proposed in the application, includ-
ing acquisition, construction, operation, and 
maintenance costs over the expected life of the 
project; 
(F) a description of which costs of the 
projects proposed in the application will be sup-
ported by Federal assistance under this subtitle; 
and
187
(G) documentation to the satisfaction of the 
Secretary that diesel fuel containing sulfur at 
not more than 15 parts per million is available 
for carrying out the projects, and a commitment 
by the applicant to use such fuel in carrying out 
the projects. 
(2) PARTNERS.—An applicant under paragraph 
(1) may carry out projects under the pilot program 
in partnership with public and private entities. 
(d) SELECTION CRITERIA.—In evaluating applica-
tions under the pilot program, the Secretary shall consider 
each applicant’s previous experience with similar projects 
and shall give priority consideration to applications that—
(1) are most likely to maximize protection of the 
environment; 
(2) demonstrate the greatest commitment on the 
part of the applicant to ensure funding for the pro-
posed projects and the greatest likelihood that each 
project proposed in the application will be main-
tained or expanded after Federal assistance under 
this subtitle is completed; and 
(3) exceed the minimum requirements of sub-
section (c)(1)(A). 
(e) PILOT PROJECT REQUIREMENTS.—
188
(1) MAXIMUM AMOUNT.—The Secretary shall not 
provide more than $20,000,000 in Federal assistance 
under the pilot program to any applicant. 
(2) COST
SHARING.—The Secretary shall not 
provide more than 50 percent of the cost, incurred 
during the period of the grant, of any project under 
the pilot program. 
(3) MAXIMUM
PERIOD
OF
GRANTS.—The Sec-
retary shall not fund any applicant under the pilot 
program for more than 5 years. 
(4) DEPLOYMENT AND DISTRIBUTION.—The Sec-
retary shall seek to the maximum extent practicable 
to ensure a broad geographic distribution of project 
sites. 
(5) TRANSFER
OF
INFORMATION
AND
KNOWL-
EDGE.—The Secretary shall establish mechanisms to 
ensure that the information and knowledge gained by 
participants in the pilot program are transferred 
among the pilot program participants and to other 
interested parties, including other applicants that 
submitted applications. 
(f) SCHEDULE.—
(1) PUBLICATION.—Not later than 3 months 
after the date of the enactment of this Act, the Sec-
retary shall publish in the Federal Register, Com-
189
merce Business Daily, and elsewhere as appropriate, 
a request for applications to undertake projects under 
the pilot program. Applications shall be due within 6 
months of the publication of the notice. 
(2) SELECTION.—Not later than 6 months after 
the date by which applications for grants are due, the 
Secretary shall select by competitive, peer review all 
applications for projects to be awarded a grant under 
the pilot program. 
(g) LIMIT ON FUNDING.—The Secretary shall provide 
not less than 20 percent and not more than 25 percent of 
the grant funding made available under this section for the 
acquisition of ultra-low sulfur diesel vehicles. 
SEC. 5043. REPORTS TO CONGRESS. 
(a) INITIAL REPORT.—Not later than 2 months after 
the date grants are awarded under this subtitle, the Sec-
retary shall transmit to the Congress a report containing—
(1) an identification of the grant recipients and 
a description of the projects to be funded; 
(2) an identification of other applicants that 
submitted applications for the pilot program; and 
(3) a description of the mechanisms used by the 
Secretary to ensure that the information and knowl-
edge gained by participants in the pilot program are 
transferred among the pilot program participants
190
and to other interested parties, including other appli-
cants that submitted applications. 
(b) EVALUATION.—Not later than 3 years after the 
date of the enactment of this Act, and annually thereafter 
until the pilot program ends, the Secretary shall transmit 
to the Congress a report containing an evaluation of the 
effectiveness of the pilot program, including an assessment 
of the benefits to the environment derived from the projects 
included in the pilot program as well as an estimate of the 
potential benefits to the environment to be derived from 
widespread application of alternative fueled vehicles and 
ultra-low sulfur diesel vehicles. 
SEC. 5044. AUTHORIZATION OF APPROPRIATIONS. 
There are authorized to be appropriated to the Sec-
retary $200,000,000 to carry out this subtitle, to remain 
available until expended. 
Subtitle E—Hydrogen Fuel Cell 
Heavy-Duty Vehicles 
SEC. 5051. DEFINITION. 
For the purposes of this subtitle, the term ‘‘advanced 
vehicle technologies program’’ means the program created 
pursuant to section 5506 of title 49, United States Code. 
SEC. 5052. FINDINGS. 
The Congress makes the following findings:
191
(1) The Department of Energy and the Depart-
ment of Transportation jointly developed the consor-
tium-based advanced vehicle technologies program to 
develop energy efficient and clean heavy-duty vehicles 
in 1998. 
(2) The majority of clean fuel vehicles in oper-
ation today are transit buses. 
(3) Hydrogen fuel cell heavy-duty vehicle bus de-
ployments can most appropriately advance hydrogen 
fuel cell technology development due to centralized re-
fueling, stable duty cycles, and fixed routes. 
(4) Hydrogen fuel cell heavy-duty vehicle bus de-
ployments are the most effective manner in which to 
advance technology developments for public aware-
ness, consumption, and acceptance. 
SEC. 5053. HYDROGEN FUEL CELL BUSES. 
The Secretary of Energy, through the advanced vehicle 
technologies program, in coordination with the Secretary 
of Transportation, shall advance the development of fuel cell 
bus technologies by providing funding for 4 demonstration 
sites that—
(1) have or will soon have hydrogen infrastruc-
ture for fuel cell bus operation; and 
(2) are operated by entities with experience in 
the development of fuel cell bus technologies,
192
to enable the widespread utilization of fuel cell buses. Such 
demonstrations shall address the reliability of fuel cell 
heavy-duty vehicles, expense, infrastructure, containment, 
storage, safety, training, and other issues. 
SEC. 5054. AUTHORIZATION OF APPROPRIATIONS. 
There are authorized to be appropriated to the Sec-
retary of Energy $10,000,000 for each of the fiscal years 
2004 through 2008 for carrying out this subtitle. 
Subtitle F—Miscellaneous 
SEC. 5061. RAILROAD EFFICIENCY. 
(a) ESTABLISHMENT.—The Secretary shall, in con-
junction with the Secretary of Transportation and the Ad-
ministrator of the Environmental Protection Agency, estab-
lish a public-private research partnership involving the 
Federal Government, the railroad industry, locomotive 
manufacturers and equipment suppliers, and the research 
facility owned by the Federal Railroad Administration and 
operated by contract. The goal of the research partnership 
shall include developing and demonstrating locomotive tech-
nologies that increase fuel economy, reduce emissions, and 
lower costs. 
(b) AUTHORIZATION OF APPROPRIATIONS.—There are 
authorized to be appropriated to carry out the requirements 
of this section $25,000,000 for fiscal year 2004, $30,000,000 
for fiscal year 2005, and $35,000,000 for fiscal year 2006.
193
SEC. 5062. MOBILE EMISSION REDUCTIONS TRADING AND 
CREDITING. 
Within 180 days after the date of enactment of this 
Act, the Administrator of the Environmental Protection 
Agency shall provide a report to the Congress on the Envi-
ronmental Protection Agency’s experience with the trading 
of mobile source emission reduction credits for use by own-
ers and operators of stationary source emission sources to 
meet emission offset requirements within a nonattainment 
area. The report shall describe—
(1) projects approved by the Environmental Pro-
tection Agency that include the trading of mobile 
source emission reduction credits for use by sta-
tionary sources in complying with offset require-
ments, including project and stationary sources loca-
tion, volumes of emissions offset and traded, a de-
scription of the sources of mobile emission reduction 
credits, and, if available, the cost of the credits; 
(2) the significant issues identified by the Envi-
ronmental Protection Agency in its consideration and 
approval of trading in such projects; 
(3) the requirements for monitoring and assess-
ing the air quality benefits of any approved project; 
(4) the statutory authority upon which the Envi-
ronmental Protection Agency has based approval of 
such projects;
194
(5) an evaluation of how the resolution of issues 
in approved projects could be utilized in other 
projects; and 
(6) any other issues the Environmental Protec-
tion Agency considers relevant to the trading and 
generation of mobile source emission reduction credits 
for use by stationary sources or for other purposes. 
SEC. 5063. IDLE REDUCTION TECHNOLOGIES. 
(a) DEFINITIONS.—For purposes of this section: 
(1) IDLE REDUCTION TECHNOLOGY.—The term 
‘‘idle reduction technology’’ means a device or system 
of devices utilized to reduce long-duration idling of a 
heavy-duty vehicle. 
(2) HEAVY-DUTY VEHICLE.—The term ‘‘heavy-
duty vehicle’’ means a vehicle that has a gross vehicle 
weight rating greater than 26,000 pounds and is pow-
ered by a diesel engine. 
(3) LONG-DURATION IDLING.—The term ‘‘long-
duration idling’’ means the operation of a main drive 
engine, for a period greater than 15 consecutive min-
utes, where the main drive engine is not engaged in 
gear. Such term does not apply to routine stoppages 
associated with traffic movement or congestion. 
(b) STUDIES OF THE BENEFITS OF IDLE REDUCTION 
TECHNOLOGIES.—
195
(1) POTENTIAL FUEL SAVINGS.—Not later than 
90 days after the date of enactment of this section, the 
Secretary of Energy shall, in consultation with the 
Secretary of Transportation, commence a study to 
analyze the potential fuel savings resulting from use 
of idle reduction technologies. 
(2) RECOGNITION OF BENEFITS OF ADVANCED 
IDLE REDUCTION TECHNOLOGIES.—Within 90 days 
after the date of enactment of this section, the Admin-
istrator of the Environmental Protection Agency is 
directed to commence a review of the Agency’s mobile 
source air emissions models used under the Clean Air 
Act to determine whether such models accurately re-
flect the emissions resulting from long-duration idling 
of heavy-duty trucks and other vehicles and engines, 
and shall update those models as the Administrator 
deems appropriate. Additionally, within 90 days after 
the date of enactment of this section, the Adminis-
trator shall commence a review as to the appropriate 
emissions reductions credit that should be allotted 
under the Clean Air Act for the use of advanced idle 
reduction technologies, and whether such credits 
should be subject to an emissions trading system, and 
shall revise Agency regulations and guidance as the 
Administrator deems appropriate.
196
(3) IDLING TECHNOLOGIES.—Not later than 180 
days after the date of the enactment of this section, 
the Secretary of Energy, in consultation with the Sec-
retary of Transportation and the Administrator of the 
Environmental Protection Agency, shall commence a 
study to analyze where heavy duty and other vehicles 
stop for long duration idling. 
(c) VEHICLE WEIGHT EXEMPTION.—Section 127(a) of 
title 23, United States Code, is amended by adding at the 
end the following: ‘‘In instances where an idle reduction 
technology is installed onboard a motor vehicle, the max-
imum gross vehicle weight limit and the axle weight limit 
for any motor vehicle equipped with an idling reduction 
system may be increased by an amount necessary to com-
pensate for the additional weight of the idling reduction 
system, except that the weight limit increase shall be no 
greater than 400 pounds.’’. 
SEC. 5064. STUDY OF AVIATION FUEL CONSERVATION AND 
EMISSIONS. 
The Administrator of the Federal Aviation Adminis-
tration and the Administrator of the Environmental Protec-
tion Agency shall jointly commence a study within 60 days 
after the date of enactment of this Act to identify the impact 
of aircraft emissions on air quality in nonattainment areas 
and to identify ways to promote fuel conservation measures
197
for aviation, enhance fuel efficiency, and reduce emissions. 
As part of this study, the Administrator of the Federal 
Aviation Administration and the Administrator of the En-
vironmental Protection Agency shall focus on how air traf-
fic management inefficiencies, such as aircraft idling at 
airports, result in unnecessary fuel burn and air emissions. 
Within 180 days after the commencement of the study, the 
Administrator of the Federal Aviation Administration and 
the Administrator of the Environmental Protection Agency 
shall submit a report to the Committees on Energy and 
Commerce and Transportation and Infrastructure of the 
House of Representatives and the Committees on Environ-
ment and Public Works and Commerce, Science, and Trans-
portation of the Senate containing the results of the study 
and recommendations as to how unnecessary fuel use and 
emissions affecting air quality may be reduced, without im-
pacting safety and security, increasing individual aircraft 
noise, and taking into account all aircraft emissions and 
their relative impact on human health. 
SEC. 5065. DIESEL FUELED VEHICLES. 
(a) DIESEL COMBUSTION
AND AFTER TREATMENT 
TECHNOLOGIES.—The Secretary of Energy shall accelerate 
efforts to improve diesel combustion and after-treatment 
technologies for use in diesel fueled motor vehicles. 
(b) GOAL.—
198
(1) COMPLIANCE WITH TIER 2 EMISSION STAND-
ARDS BY 2010.—The Secretary shall carry out sub-
section (a) with a view to developing and dem-
onstrating diesel technology meeting tier 2 emission 
standards not later than 2010. 
(2) TIER 2 EMISSION STANDARDS DEFINED.—In 
this subsection, the term ‘‘tier 2 emission standards’’ 
means the motor vehicle emission standards promul-
gated by the Administrator of the Environmental 
Protection Agency on February 10, 2000, under sec-
tions 202 and 211 of the Clean Air Act to apply to 
passenger cars, light trucks, and larger passenger ve-
hicles of model years after the 2003 vehicle model 
year. 
SEC. 5066. HYBRID VEHICLES. 
(a) IN GENERAL.—Notwithstanding section 102(a)(1) 
of title 23, United States Code, a State may, for the purpose 
of promoting energy conservation, permit a hybrid vehicle 
which is either a passenger automobile or light duty truck 
with fewer than 2 occupants to operate in high occupancy 
vehicle lanes. 
(b) DEFINITION.—In this section, the term ‘‘hybrid ve-
hicle’’ means a motor vehicle which draws propulsion en-
ergy from both—
199
(1) an internal combustion or heat engine using 
combustible fuel; and 
(2) an onboard rechargeable energy storage sys-
tem.
SEC. 5067. WAIVERS OF ALTERNATIVE FUELED VEHICLE 
FUELING REQUIREMENT. 
Section 400AA(a)(3)(E) of the Energy Policy and 
Conservation Act (42 U.S.C. 6374(a)(3)(E)) is amended to 
read as follows: 
‘‘(E)(i) Dual fueled vehicles acquired pursuant to this 
section shall be operated on alternative fuels unless the Sec-
retary determines that an agency needs a waiver of such 
requirement for vehicles in the fleet of the agency in a par-
ticular geographic area where—
‘‘(I) the alternative fuel otherwise required to be 
used in the vehicle is not reasonably available to re-
tail purchasers of the fuel, as certified to the Sec-
retary by the head of the agency; or 
‘‘(II) the cost of the alternative fuel otherwise re-
quired to be used in the vehicle is unreasonably more 
expensive compared to gasoline, as certified by the 
head of the agency. 
‘‘(ii) The Secretary shall monitor compliance with this 
subparagraph by all such fleets and shall report annually 
to the Congress on the extent to which the requirements of
200
this subparagraph are being achieved. The report shall in-
clude information on annual reductions achieved of petro-
leum-based fuels and the problems, if any, encountered in 
acquiring alternative fuels.’’. 
TITLE VI—DOE PROGRAMS 
SEC. 6001. PURPOSES. 
The purposes of this title are to—
(1) contribute to a national energy strategy 
through Department of Energy programs that pro-
mote the production and conservation of energy in 
partnership with industry; 
(2) protect and strengthen the Nation’s economy, 
standard of living, and national security by reducing 
dependence on imported energy; 
(3) meet future needs for energy services at the 
lowest total cost to the Nation, giving balanced and 
comprehensive consideration to technologies that im-
prove the efficiency of energy end uses and that en-
hance energy supply; 
(4) reduce the environmental impacts of energy 
production, distribution, transportation, and use; 
(5) help increase domestic production of energy, 
increase the availability of hydrocarbon reserves, and 
lower energy prices; and
201
(6) stimulate economic growth and enhance the 
ability of United States companies to compete in fu-
ture markets for advanced energy technologies. 
SEC. 6002. DEFINITIONS. 
For purposes of this title: 
(1) DEPARTMENT.—The term ‘‘Department’’ 
means the Department of Energy. 
(2) DEPARTMENTAL
MISSION.—The term ‘‘de-
partmental mission’’ means any of the functions vest-
ed in the Secretary of Energy by the Department of 
Energy Organization Act (42 U.S.C. 7101 et seq.) or 
other law. 
(3) INSTITUTION OF HIGHER EDUCATION.—The 
term ‘‘institution of higher education’’ has the mean-
ing given that term in section 101(a) of the Higher 
Education Act of 1965 (20 U.S.C. 1001(a)). 
(4) JOINT VENTURE.—The term ‘‘joint venture’’ 
has the meaning given that term under section 2 of 
the National Cooperative Research and Production 
Act of 1993 (15 U.S.C. 4301). 
(5) NATIONAL
LABORATORY.—The term ‘‘Na-
tional Laboratory’’ means any of the following lab-
oratories owned by the Department: 
(A) Ames National Laboratory. 
(B) Argonne National Laboratory.
202
(C) Brookhaven National Laboratory. 
(D) Fermi National Laboratory. 
(E) Idaho National Engineering and Envi-
ronmental Laboratory. 
(F) Lawrence Berkeley National Labora-
tory. 
(G) Lawrence Livermore National Labora-
tory. 
(H) Los Alamos National Laboratory. 
(I) National Energy Technology Labora-
tory. 
(J) National Renewable Energy Laboratory. 
(K) Oak Ridge National Laboratory. 
(L) Pacific Northwest National Laboratory. 
(M) Princeton Plasma Physics Laboratory. 
(N) Sandia National Laboratories. 
(O) Thomas Jefferson National Accelerator 
Facility. 
(6) NONMILITARY
ENERGY
LABORATORY.—The 
term ‘‘nonmilitary energy laboratory’’ means any of 
the following laboratories of the Department: 
(A) Ames National Laboratory. 
(B) Argonne National Laboratory. 
(C) Brookhaven National Laboratory. 
(D) Fermi National Laboratory.
203
(E) Lawrence Berkeley National Labora-
tory. 
(F) Oak Ridge National Laboratory. 
(G) Pacific Northwest National Laboratory. 
(H) Princeton Plasma Physics Laboratory. 
(I) Stanford Linear Accelerator Center. 
(J) Thomas Jefferson National Accelerator 
Facility. 
(7) SECRETARY.—The term ‘‘Secretary’’ means 
the Secretary of Energy. 
Subtitle A—Energy Efficiency 
PART 1—AUTHORIZATION OF APPROPRIATIONS 
SEC. 6011. ENERGY EFFICIENCY. 
(a) IN GENERAL.—The following sums are authorized 
to be appropriated to the Secretary for energy efficiency and 
conservation activities, including activities authorized 
under this subtitle: 
(1) For fiscal year 2003, $560,000,000. 
(2) For fiscal year 2004, $616,000,000. 
(3) For fiscal year 2005, $695,000,000. 
(4) For fiscal year 2006, $772,000,000. 
(5) For fiscal year 2007, $865,000,000. 
(b) ALLOCATIONS.—From amounts authorized under 
subsection (a), the following sums are authorized:
204
(1) LIGHTING
SYSTEMS.—For activities under 
section 6021, $10,000,000 for fiscal year 2003 and 
$50,000,000 for each of fiscal years 2004 through 
2007. 
(2) SECONDARY
ELECTRIC
VEHICLE
BATTERY 
USE PROGRAM.—For activities under section 6032—
(A) for fiscal year 2003, $1,000,000; 
(B) for fiscal year 2004, $4,000,000; 
(C) for fiscal year 2005, $7,000,000; 
(D) for fiscal year 2006, $7,000,000; and 
(E) for fiscal year 2007, $7,000,000. 
(c) EXTENDED AUTHORIZATION.—There are author-
ized to be appropriated to the Secretary for activities under 
section 6021, $50,000,000 for each of fiscal years 2008 
through 2012. 
(d) LIMITS ON USE OF FUNDS.—None of the funds au-
thorized to be appropriated under this section may be used 
for—
(1) the promulgation and implementation of en-
ergy efficiency regulations; 
(2) the Weatherization Assistance Program 
under part A of title IV of the Energy Conservation 
and Production Act;
205
(3) the State Energy Program under part D of 
title III of the Energy Policy and Conservation Act; 
or 
(4) the Federal Energy Management Program 
under part 3 of title V of the National Energy Con-
servation Policy Act. 
PART 2—LIGHTING SYSTEMS
SEC. 6021. NEXT GENERATION LIGHTING INITIATIVE. 
(a) IN GENERAL.—The Secretary shall carry out a 
Next Generation Lighting Initiative in accordance with this 
section to support activities related to advanced solid-state 
lighting technologies based on white light emitting diodes. 
(b) OBJECTIVES.—The objectives of the initiative shall 
be—
(1) to develop, by 2012, advanced solid-state 
lighting technologies based on white light emitting di-
odes that, compared to incandescent and fluorescent 
lighting technologies, are—
(A) longer lasting; 
(B) more energy-efficient; and 
(C) cost-competitive; 
(2) to develop an inorganic white light emitting 
diode that has an efficiency of 160 lumens per watt 
and a 10-year lifetime; and
206
(3) to develop an organic white light emitting 
diode with an efficiency of 100 lumens per watt with 
a 5-year lifetime that—
(A) illuminates over a full color spectrum; 
(B) covers large areas over flexible surfaces; 
and 
(C) does not contain harmful pollutants, 
such as mercury, typical of fluorescent lamps. 
(c) CONSORTIUM.—
(1) IN GENERAL.—The Secretary shall establish 
the Next Generation Lighting Initiative through a 
private consortium (which may include private firms, 
trade associations and institutions of higher edu-
cation), which the Secretary shall select through a 
competitive process. Each proposed consortium shall 
submit to the Secretary such information as the Sec-
retary may require, including a program plan agreed 
to by all participants of the consortium. 
(2) JOINT VENTURE.—The consortium shall be 
structured as a joint venture among the participants 
of the consortium. The Secretary shall serve on the 
governing council of the consortium. 
(3) ELIGIBILITY.—To be eligible to be selected as 
the consortium under paragraph (1), an applicant 
must be broadly representative of United States solid-
207
state lighting research, development, and manufac-
turing expertise as a whole. 
(4) GRANTS.—(A) The Secretary shall award 
grants to the consortium, which the consortium may 
disburse to researchers, including those who are not 
participants of the consortium. 
(B) To receive a grant, the consortium must pro-
vide a description to the Secretary of the proposed ac-
tivities and list the parties that will receive funding. 
(5) NATIONAL
LABORATORIES.—National Lab-
oratories may participate in the activities described 
in this section, and may receive funds from the con-
sortium. 
(6) INTELLECTUAL PROPERTY.—Participants in 
the consortium and the Federal Government shall 
have royalty-free nonexclusive rights to use intellec-
tual property derived from activities funded pursuant 
to this subsection. 
(d) DEVELOPMENT, DEMONSTRATION, AND COMMER-
CIAL APPLICATION.—The Secretary shall carry out the de-
velopment, demonstration, and commercial application ac-
tivities of the Next Generation Lighting Initiative through 
awards to private firms, trade associations, and institu-
tions of higher education. In selecting awardees, the Sec-
208
retary may give preference to members of the consortium 
selected pursuant to subsection (c). 
(e) PLANS AND ASSESSMENTS.—(1) The consortium 
shall formulate an annual operating plan which shall in-
clude priorities, technical milestones, and plans for tech-
nology transfer, and which shall be subject to approval by 
the Secretary. 
(2) The Secretary shall enter into an arrangement 
with the National Academy of Sciences to conduct periodic 
reviews of the Next Generation Lighting Initiative. The 
Academy shall review the priorities, technical milestones, 
and plans for technology transfer established under para-
graph (1) and evaluate the progress toward achieving them. 
The Secretary shall consider the results of such reviews in 
evaluating the plans submitted under paragraph (1). 
(f) AUDIT.—The Secretary shall retain an inde-
pendent, commercial auditor to perform an audit of the 
consortium to determine the extent to which the funds au-
thorized by this section have been expended in a manner 
consistent with the purposes of this section. The auditor 
shall transmit a report annually to the Secretary, who shall 
transmit the report to the Congress, along with a plan to 
remedy any deficiencies cited in the report. 
(g) SUNSET.—The Next Generation Lighting Initia-
tive shall terminate no later than September 30, 2013.
209
(h) DEFINITIONS.—As used in this section: 
(1) ADVANCED
SOLID-STATE
LIGHTING.—The 
term 
‘‘advanced 
solid-state 
lighting’’ 
means 
a 
semiconducting device package and delivery system 
that produces white light using externally applied 
voltage. 
(2) INORGANIC WHITE LIGHT EMITTING DIODE.—
The term ‘‘inorganic white light emitting diode’’ 
means an inorganic semiconducting package that pro-
duces white light using externally applied voltage. 
(3) ORGANIC WHITE LIGHT EMITTING DIODE.—
The term ‘‘organic white light emitting diode’’ means 
an organic semiconducting compound that produces 
white light using externally applied voltage. 
PART 3—VEHICLES 
SEC. 6031. DEFINITIONS. 
For purposes of this part, the term—
(1) ‘‘battery’’ means an energy storage device 
that previously has been used to provide motive power 
in a vehicle powered in whole or in part by elec-
tricity; and 
(2) ‘‘associated equipment’’ means equipment lo-
cated where the batteries will be used that is necessary 
to enable the use of the energy stored in the batteries.
210
SEC. 6032. ESTABLISHMENT OF SECONDARY ELECTRIC VE-
HICLE BATTERY USE PROGRAM. 
(a) PROGRAM.—The Secretary shall establish and con-
duct a program for the secondary use of batteries. Such pro-
gram shall be—
(1) designed to demonstrate the use of batteries 
in secondary application, including utility and com-
mercial power storage and power quality; 
(2) structured to evaluate the performance, in-
cluding useful service life and costs, of such batteries 
in field operations, and evaluate the necessary sup-
porting infrastructure, including reuse and disposal 
of batteries; and 
(3) coordinated with ongoing secondary battery 
use programs at the National Laboratories and in in-
dustry. 
(b) SOLICITATION.—(1) Not later than 6 months after 
the date of the enactment of this Act, the Secretary shall 
solicit proposals to demonstrate the secondary use of bat-
teries and associated equipment and supporting infrastruc-
ture in geographic locations throughout the United States. 
The Secretary may make additional solicitations for pro-
posals if the Secretary determines that such solicitations are 
necessary to carry out this section. 
(2)(A) Proposals submitted in response to a solicita-
tion under this section shall include—
211
(i) a description of the project, including the bat-
teries to be used in the project, the proposed locations 
and applications for the batteries, the number of bat-
teries to be demonstrated, and the type, characteris-
tics, and estimated life-cycle costs of the batteries com-
pared to other energy storage devices currently used; 
(ii) the contribution, if any, of State or local 
governments and other persons to the demonstration 
project; 
(iii) the type of associated equipment and sup-
porting infrastructure to be demonstrated; and 
(iv) any other information the Secretary con-
siders appropriate. 
(B) If the proposal includes a lease arrangement, the 
proposal shall indicate the terms of such lease arrangement 
for the batteries and associated equipment. 
(c) SELECTION OF PROPOSALS.—(1)(A) The Secretary, 
in cooperation with affected Federal Regulatory agencies, 
shall, not later than 3 months after the closing date estab-
lished by the Secretary for receipt of proposals under sub-
section (b), select at least 5 proposals to receive financial 
assistance under this section. 
(B) No one project selected under this section shall re-
ceive more than 25 percent of the funds authorized under
212
this section. No more than 3 projects selected under this sec-
tion shall demonstrate the same battery type. 
(2) In selecting a proposal under this section, the Sec-
retary shall consider—
(A) the ability of the proposer to acquire the bat-
teries and associated equipment and to successfully 
manage and conduct the demonstration project, in-
cluding satisfying the reporting requirements set forth 
in paragraph (3)(B); 
(B) the geographic and climatic diversity of the 
projects selected; 
(C) the long-term technical and competitive via-
bility of the batteries to be used in the project and of 
the original manufacturer of such batteries; 
(D) the suitability of the batteries for their in-
tended uses; 
(E) the technical performance of the batteries, 
including the expected additional useful life and the 
batteries’ ability to retain energy; 
(F) the environmental effects of the use of and 
disposal of the batteries proposed to be used in the 
project selected; 
(G) the extent of involvement of State or local 
government and other persons in the demonstration 
project and whether such involvement will—
213
(i) permit a reduction of the Federal cost 
share per project; or 
(ii) otherwise be used to allow the Federal 
contribution to be provided to demonstrate a 
greater number of batteries; and 
(H) such other criteria as the Secretary considers 
appropriate. 
(3) CONDITIONS.—The Secretary shall require that—
(A) as a part of a demonstration project, the 
users of the batteries provide to the proposer informa-
tion regarding the operation, maintenance, perform-
ance, and use of the batteries, and the proposer pro-
vide such information to the battery manufacturer, 
for 3 years after the beginning of the demonstration 
project; 
(B) the proposer provide to the Secretary and the 
Administrator of the United States Environmental 
Protection Agency such information regarding the op-
eration, maintenance, performance, and use of the 
batteries as the Secretary or the Administrator may 
request; 
(C) the proposer provide to the Secretary such 
information regarding the disposal of the batteries as 
the Secretary may require to ensure that the proposer
214
disposes of the batteries in accordance with applicable 
law; and 
(D) the proposer provide at least 50 percent of 
the costs associated with the proposal. 
Subtitle B—Distributed Energy and 
Electric Energy Systems 
PART 1—AUTHORIZATION OF APPROPRIATIONS 
SEC. 6201. DISTRIBUTED ENERGY AND ELECTRIC ENERGY 
SYSTEMS. 
The following sums are authorized to be appropriated 
to the Secretary for distributed energy and electric energy 
systems activities, including activities authorized under 
this subtitle: 
(1) For fiscal year 2004, $190,000,000. 
(2) For fiscal year 2005, $200,000,000. 
(3) For fiscal year 2006, $220,000,000. 
(4) For fiscal year 2007, $240,000,000. 
PART 2—DISTRIBUTED POWER
SEC. 6221. STRATEGY. 
(a) REQUIREMENT.—Not later than 1 year after the 
date of enactment of this Act, the Secretary shall develop 
and transmit to the Congress a strategy for a comprehensive 
program to develop hybrid distributed power systems that 
combine—
215
(1) one or more renewable electric power genera-
tion technologies of 10 megawatts or less located near 
the site of electric energy use; and 
(2) nonintermittent electric power generation 
technologies suitable for use in a distributed power 
system. 
(b) CONTENTS.—The strategy shall—
(1) identify the needs best met with such hybrid 
distributed power systems and the technological bar-
riers to the use of such systems; 
(2) provide for the development of methods to de-
sign, test, integrate into systems, and operate such hy-
brid distributed power systems; 
(3) include, as appropriate, activities needed for 
the adoption of such hybrid distributed power sys-
tems, including energy storage devices and environ-
mental control technologies; and 
(4) describe how activities under the strategy 
will be integrated with other activities supported by 
the Department of Energy related to electric power 
technologies. 
SEC. 6222. HIGH POWER DENSITY INDUSTRY PROGRAM. 
The Secretary shall establish a comprehensive program 
to improve energy efficiency of high power density facilities, 
including data centers, server farms, and telecommuni-
216
cations facilities. Such program shall consider technologies 
that provide significant improvement in thermal controls, 
metering, load management, peak load reduction, or the ef-
ficient cooling of electronics. 
SEC. 6223. MICRO-COGENERATION ENERGY TECHNOLOGY. 
The Secretary shall make competitive, merit-based 
grants to consortia for the development of micro-cogenera-
tion energy technology. The consortia shall explore the use 
of small-scale combined heat and power in residential heat-
ing appliances. 
PART 3—TRANSMISSION SYSTEMS
SEC. 6231. TRANSMISSION INFRASTRUCTURE SYSTEMS. 
(a) PROGRAM AUTHORIZED.—The Secretary shall de-
velop a program to promote improved reliability and effi-
ciency of electrical transmission systems. Such program 
may include—
(1) advanced energy technologies, materials, and 
systems; 
(2) advanced grid reliability and efficiency tech-
nology development; 
(3) technologies contributing to significant load 
reductions; 
(4) advanced metering, load management, and 
control technologies;
217
(5) technologies to enhance existing grid compo-
nents; 
(6) the development and use of high-temperature 
superconductors to—
(A) enhance the reliability, operational 
flexibility, or power-carrying capability of elec-
tric transmission or distribution systems; or 
(B) increase the efficiency of electric energy 
generation, transmission, distribution, or storage 
systems; 
(7) integration of power systems, including sys-
tems to deliver high-quality electric power, electric 
power reliability, and combined heat and power; 
(8) any other infrastructure technologies, as ap-
propriate; and 
(9) technology transfer and education. 
(b) PROGRAM PLAN.—Not later than 1 year after the 
date of the enactment of this Act, the Secretary, in consulta-
tion with other appropriate Federal agencies, shall prepare 
and transmit to Congress a 5-year program plan to guide 
activities under this section. In preparing the program 
plan, the Secretary shall consult with utilities, energy serv-
ices providers, manufacturers, institutions of higher edu-
cation, other appropriate State and local agencies, environ-
218
mental organizations, professional and technical societies, 
and any other persons the Secretary considers appropriate. 
(c) REPORT.—Not later than 2 years after the trans-
mittal of the plan under subsection (b), the Secretary shall 
transmit a report to Congress describing the progress made 
under this section and identifying any additional resources 
needed to continue the development and commercial appli-
cation of transmission infrastructure technologies. 
Subtitle C—Renewable Energy 
PART 1—AUTHORIZATION OF APPROPRIATIONS 
SEC. 6301. RENEWABLE ENERGY. 
(a) IN GENERAL.—The following sums are authorized 
to be appropriated to the Secretary for renewable energy 
activities, including activities authorized under this sub-
title: 
(1) For fiscal year 2004, $460,000,000. 
(2) For fiscal year 2005, $510,000,000. 
(3) For fiscal year 2006, $560,000,000. 
(4) For fiscal year 2007, $609,000,000. 
(b) BIOENERGY.—From the amounts authorized under 
subsection (a), the following sums are authorized to be ap-
propriated to carry out section 6321 and other bioenergy 
activities: 
(1) For fiscal year 2004, $135,425,000. 
(2) For fiscal year 2005, $155,600,000.
219
(3) For fiscal year 2006, $167,650,000. 
(4) For fiscal year 2007, $180,000,000. 
(c) USE OF FUNDS.—
(1) BIOENERGY.—Of the funds authorized under 
subsection (b), not less than $5,000,000 for each fiscal 
year shall be made available for grants to Histori-
cally Black Colleges and Universities, Tribal Colleges, 
and Hispanic-Serving Institutions. 
(2) RURAL AND REMOTE LOCATIONS.—In car-
rying out this section, the Secretary, in consultation 
with the Secretary of Agriculture, shall demonstrate 
the production and use of energy from advanced wind 
power technology, biomass, geothermal energy systems, 
and other renewable energy technologies in order to 
assist in delivering electricity to rural and remote lo-
cations.
(3) HYDROPOWER.—Of the funds authorized 
under subsection (a), not less than $5,000,000 for 
each fiscal year shall be made available for dem-
onstration projects of off-stream pumped storage hy-
dropower. 
PART 2—BIOENERGY 
SEC. 6321. BIOENERGY PROGRAMS. 
(a) PROGRAM.—The Secretary shall conduct a pro-
gram to facilitate the production of bioenergy, including—
220
(1) biopower energy systems; 
(2) biofuels; 
(3) integrated applications of both biopower and 
biofuels; 
(4) feedstocks; and 
(5) economic analysis. 
(b) DEFINITION.—For purposes of this section, the 
term ‘‘bioenergy’’ includes energy produced from animal 
waste and agricultural crops. 
Subtitle D—Nuclear Energy 
PART 1—AUTHORIZATION OF APPROPRIATIONS 
SEC. 6411. NUCLEAR ENERGY. 
(a) CORE PROGRAMS.—The following sums are au-
thorized to be appropriated to the Secretary for nuclear en-
ergy activities, regulation of research and development ac-
tivities and nuclear regulatory research, including activi-
ties authorized under this subtitle, other than those de-
scribed in subsection (b): 
(1) For fiscal year 2004, $200,000,000. 
(2) For fiscal year 2005, $233,000,000. 
(3) For fiscal year 2006, $266,000,000. 
(4) For fiscal year 2007, $300,000,000. 
(b) NUCLEAR INFRASTRUCTURE SUPPORT.—The fol-
lowing sums are authorized to be appropriated to the Sec-
retary for activities under section 6421(f):
221
(1) For fiscal year 2004, $120,000,000. 
(2) For fiscal year 2005, $125,000,000. 
(3) For fiscal year 2006, $130,000,000. 
(4) For fiscal year 2007, $135,000,000. 
(c) ALLOCATIONS.—From amounts authorized under 
subsection (a), the following sums are authorized: 
(1) ADVANCED FUEL RECYCLING PROGRAM.—For 
activities under section 6431—
(A) for fiscal year 2004, $80,000,000; 
(B) for fiscal year 2005, $93,000,000; 
(C) for fiscal year 2006, $106,000,000; and 
(D) for fiscal year 2007, $120,000,000. 
(2) 
UNIVERSITY
PROGRAMS.—For 
activities 
under section 6441—
(A) for fiscal year 2004, $25,000,000; 
(B) for fiscal year 2005, $33,900,000; 
(C) for fiscal year 2006, $37,900,000; and 
(D) for fiscal year 2007, $43,600,000. 
(d) LIMIT ON USE OF FUNDS.—None of the funds au-
thorized under this section may be used for decommis-
sioning the Fast Flux Test Facility.
222
PART 2—NUCLEAR ENERGY RESEARCH 
PROGRAMS
SEC. 6421. NUCLEAR ENERGY RESEARCH PROGRAMS. 
(a) NUCLEAR ENERGY RESEARCH INITIATIVE.—The 
Secretary shall carry out a Nuclear Energy Research Ini-
tiative for research and development related to nuclear en-
ergy. 
(b) NUCLEAR ENERGY PLANT OPTIMIZATION PRO-
GRAM.—The Secretary shall carry out a Nuclear Energy 
Plant Optimization Program to support research and devel-
opment activities addressing reliability, availability, pro-
ductivity, and component aging in existing nuclear power 
plants. 
(c) NUCLEAR POWER 2010 PROGRAM.—The Secretary 
shall carry out a Nuclear Power 2010 Program, consistent 
with recommendations in the October 2001 report entitled 
‘‘A Roadmap to Deploy New Nuclear Power Plants in the 
United States by 2010’’ issued by the Nuclear Energy Re-
search Advisory Committee of the Department. The Pro-
gram shall—
(1) rely on the expertise and capabilities of the 
National Laboratories in the areas of advanced nu-
clear fuels cycles and fuels testing; 
(2) pursue an approach that considers a variety 
of reactor designs;
223
(3) include participation of international col-
laborators in research, development, and design efforts 
as appropriate; and 
(4) encourage industry participation. 
(d) GENERATION IV NUCLEAR ENERGY SYSTEMS INI-
TIATIVE.—The Secretary shall carry out a Generation IV 
Nuclear Energy Systems Initiative to develop an overall 
technology plan and to support research and development 
necessary to make an informed technical decision about the 
most promising candidates for eventual commercial appli-
cation. The Initiative shall examine advanced proliferation-
resistant and passively safe reactor designs, including de-
signs that—
(1) are economically competitive with other elec-
tric power generation plants; 
(2) have higher efficiency, lower cost, and im-
proved safety compared to reactors in operation on 
the date of enactment of this Act; 
(3) use fuels that are proliferation resistant and 
have substantially reduced production of high-level 
waste per unit of output; and 
(4) utilize improved instrumentation. 
(e) REACTOR PRODUCTION OF HYDROGEN.—The Sec-
retary shall carry out research to examine designs for high-
224
temperature reactors capable of producing large-scale quan-
tities of hydrogen using thermochemical processes. 
(f) NUCLEAR INFRASTRUCTURE SUPPORT.—The Sec-
retary shall develop and implement a strategy for the facili-
ties of the Office of Nuclear Energy, Science, and Tech-
nology and shall transmit a report containing the strategy 
along with the President’s budget request to the Congress 
for fiscal year 2005. Such strategy shall provide a cost-effec-
tive means for—
(1) maintaining existing facilities and infra-
structure, as needed; 
(2) closing unneeded facilities; 
(3) making facility upgrades and modifications; 
and 
(4) building new facilities. 
PART 3—ADVANCED FUEL RECYCLING 
SEC. 6431. ADVANCED FUEL RECYCLING PROGRAM. 
(a) IN GENERAL.—The Secretary, through the Director 
of the Office of Nuclear Energy, Science and Technology, 
shall conduct an advanced fuel recycling technology re-
search and development program to evaluate proliferation-
resistant fuel recycling and transmutation technologies 
which minimize environmental or public health and safety 
impacts as an alternative to aqueous reprocessing tech-
nologies deployed as of the date of enactment of this Act
225
in support of evaluation of alternative national strategies 
for spent nuclear fuel and the Generation IV advanced reac-
tor concepts, subject to annual review by the Secretary’s Nu-
clear Energy Research Advisory Committee or other inde-
pendent entity, as appropriate. Opportunities to enhance 
progress of this program through international cooperation 
should be sought. 
(b) REPORTS.—The Secretary shall report on the ac-
tivities of the advanced fuel recycling technology research 
and development program, as part of the Department’s an-
nual budget submission. 
PART 4—UNIVERSITY PROGRAMS 
SEC. 6441. UNIVERSITY NUCLEAR SCIENCE AND ENGINEER-
ING SUPPORT. 
(a) ESTABLISHMENT.—The Secretary shall support a 
program to invest in human resources and infrastructure 
in the nuclear sciences and engineering and related fields 
(including health physics and nuclear and radiochemistry), 
consistent with departmental missions related to civilian 
nuclear research and development. 
(b) DUTIES.—In carrying out the program under this 
section, the Secretary shall—
(1) establish a graduate and undergraduate fel-
lowship program to attract new and talented stu-
dents;
226
(2) establish a Junior Faculty Research Initi-
ation Grant Program to assist institutions of higher 
education in recruiting and retaining new faculty in 
the nuclear sciences and engineering; 
(3) support fundamental nuclear sciences and 
engineering research through the Nuclear Engineering 
Education Research Program; 
(4) encourage collaborative nuclear research 
among industry, National Laboratories, and institu-
tions of higher education through the Nuclear Energy 
Research Initiative; and 
(5) support communication and outreach related 
to nuclear science and engineering. 
(c) MAINTAINING UNIVERSITY RESEARCH AND TRAIN-
ING REACTORS AND ASSOCIATED INFRASTRUCTURE.—Ac-
tivities under this section may include—
(1) converting research reactors currently using 
high-enrichment fuels to low-enrichment fuels, up-
grading operational instrumentation, and sharing of 
reactors among institutions of higher education; 
(2) providing technical assistance, in collabora-
tion with the United States nuclear industry, in reli-
censing and upgrading training reactors as part of a 
student training program; and
227
(3) providing funding for reactor improvements 
as part of a focused effort that emphasizes research, 
training, and education. 
(d) 
UNIVERSITY-NATIONAL
LABORATORY
INTER-
ACTIONS.—The Secretary shall develop—
(1) a sabbatical fellowship program for profes-
sors at institutions of higher education to spend ex-
tended periods of time at National Laboratories in 
the areas of nuclear science and technology; and 
(2) a visiting scientist program in which Na-
tional Laboratory staff can spend time in academic 
nuclear science and engineering departments. 
The Secretary may provide fellowships for students to spend 
time at National Laboratories in the area of nuclear science 
with a member of the Laboratory staff acting as a mentor. 
(e) OPERATING AND MAINTENANCE COSTS.—Funding 
for a research project provided under this section may be 
used to offset a portion of the operating and maintenance 
costs of a research reactor at an institution of higher edu-
cation used in the research project.
228
Subtitle E—Fossil Energy 
PART 1—AUTHORIZATION OF APPROPRIATIONS 
SEC. 6501. FOSSIL ENERGY. 
There are authorized to be appropriated to the Sec-
retary for fossil energy activities, including activities au-
thorized under this subtitle—
(1) $523,000,000 for fiscal year 2004; 
(2) $542,000,000 for fiscal year 2005; 
(3) $558,000,000 for fiscal year 2006; and 
(4) $585,000,000 for fiscal year 2007.
PART 2—ULTRA-DEEPWATER AND UNCONVEN-
TIONAL NATURAL GAS AND OTHER PETRO-
LEUM RESOURCES 
SEC. 6521. PROGRAM AUTHORITY. 
(a) IN GENERAL.—The Secretary shall carry out a 
program under this part for ultra-deepwater and unconven-
tional natural gas and other petroleum resource exploration 
and production, including safe operations and environ-
mental mitigation. 
(b) PROGRAM ELEMENTS.—The program under this 
part shall address the following areas, including improving 
safety and minimizing environmental impacts of activities 
within each area: 
(1) Ultra-deepwater technology. 
(2) Ultra-deepwater architecture.
229
(3) Unconventional natural gas and other petro-
leum resource exploration and production technology. 
(c) LIMITATION ON LOCATION OF FIELD ACTIVITIES.—
Field activities under the program under this part shall 
be carried out only—
(1) in—
(A) areas in the territorial waters of the 
United States not under any Outer Continental 
Shelf moratorium as of September 30, 2002; 
(B) areas onshore in the United States on 
public land administered by the Secretary of the 
Interior available for oil and gas leasing, where 
consistent with applicable law and land use 
plans; and 
(C) areas onshore in the United States on 
State or private land, subject to applicable law; 
and 
(2) with the approval of the appropriate Federal 
or State land management agency or private land 
owner. 
(d) NATIONAL ENERGY TECHNOLOGY LABORATORY.—
The Secretary, through the National Energy Technology 
Laboratory, shall carry out activities complementary to ac-
tivities under subsection (b)(1).
230
(e) CONSULTATION WITH SECRETARY OF THE INTE-
RIOR.—In carrying out this part, the Secretary shall con-
sult regularly with the Secretary of the Interior. 
SEC. 6522. ULTRA-DEEPWATER PROGRAM. 
(a) IN GENERAL.—The Secretary shall carry out the 
activities under paragraphs (1) and (2) of section 6521(b), 
to maximize the value of the ultra-deepwater natural gas 
and other petroleum resources of the United States by in-
creasing the supply of such resources and by reducing the 
cost and increasing the efficiency of exploration for and 
production of such resources, while improving safety and 
minimizing environmental impacts. 
(b) ROLE OF THE SECRETARY.—The Secretary shall 
have ultimate responsibility for, and oversight of, all aspects 
of the program under this section. 
(c) ROLE OF THE PROGRAM CONSORTIUM.—
(1) IN GENERAL.—The Secretary shall contract 
with a consortium to—
(A) manage awards pursuant to subsection 
(f)(4); 
(B) make recommendations to the Secretary 
for project solicitations; 
(C) disburse funds awarded under sub-
section (f) as directed by the Secretary in accord-
231
ance with the annual plan under subsection (e); 
and 
(D) carry out other activities assigned to 
the program consortium by this section. 
(2) LIMITATION.—The Secretary may not assign 
any activities to the program consortium except as 
specifically authorized under this section. 
(3) CONFLICT OF INTEREST.—(A) The Secretary 
shall establish procedures—
(i) to ensure that each board member, offi-
cer, or employee of the program consortium who 
is in a decisionmaking capacity under subsection 
(f)(3) or (4) shall disclose to the Secretary any 
financial interests in, or financial relationships 
with, applicants for or recipients of awards 
under this section, including those of his or her 
spouse or minor child, unless such relationships 
or interests would be considered to be remote or 
inconsequential; and 
(ii) to require any board member, officer, or 
employee with a financial relationship or inter-
est disclosed under clause (i) to recuse himself or 
herself from any review under subsection (f)(3) 
or oversight under subsection (f)(4) with respect 
to such applicant or recipient.
232
(B) The Secretary may disqualify an applica-
tion or revoke an award under this section if a board 
member, officer, or employee has failed to comply 
with procedures required under subparagraph (A)(ii). 
(d) SELECTION OF THE PROGRAM CONSORTIUM.—
(1) IN GENERAL.—The Secretary shall select the 
program consortium through an open, competitive 
process. 
(2) MEMBERS.—The program consortium may 
include corporations, institutions of higher education, 
National Laboratories, or other research institutions. 
After submitting a proposal under paragraph (4), the 
program consortium may not add members without 
the consent of the Secretary. 
(3) TAX STATUS.—The program consortium shall 
be an entity that is exempt from tax under section 
501(c)(3) of the Internal Revenue Code of 1986. 
(4) SCHEDULE.—Not later than 90 days after 
the date of enactment of this Act, the Secretary shall 
solicit proposals for the creation of the program con-
sortium, which must be submitted not less than 180 
days after the date of enactment of this Act. The Sec-
retary shall select the program consortium not later 
than 240 days after such date of enactment.
233
(5) APPLICATION.—Applicants shall submit a 
proposal including such information as the Secretary 
may require. At a minimum, each proposal shall—
(A) list all members of the consortium; 
(B) fully describe the structure of the con-
sortium, including any provisions relating to in-
tellectual property; and 
(C) describe how the applicant would carry 
out the activities of the program consortium 
under this section. 
(6) ELIGIBILITY.—To be eligible to be selected as 
the program consortium, an applicant must be an en-
tity whose members collectively have demonstrated ca-
pabilities in planning and managing programs in 
natural gas or other petroleum exploration or produc-
tion. 
(7) CRITERION.—The Secretary may consider the 
amount of the fee an applicant proposes to receive 
under subsection (g) in selecting a consortium under 
this section. 
(e) ANNUAL PLAN.—
(1) IN GENERAL.—The program under this sec-
tion shall be carried out pursuant to an annual plan 
prepared by the Secretary in accordance with para-
graph (2).
234
(2) DEVELOPMENT.—(A) Before drafting an an-
nual plan under this subsection, the Secretary shall 
solicit specific written recommendations from the pro-
gram consortium for each element to be addressed in 
the plan, including those described in paragraph (4). 
The Secretary may request that the program consor-
tium submit its recommendations in the form of a 
draft annual plan. 
(B) The Secretary shall submit the recommenda-
tions of the program consortium under subparagraph 
(A) to the Ultra-Deepwater Advisory Committee es-
tablished under section 6525(a) for review, and such 
Advisory Committee shall provide to the Secretary 
written comments by a date determined by the Sec-
retary. The Secretary may also solicit comments from 
any other experts. 
(C) The Secretary shall consult regularly with 
the program consortium throughout the preparation 
of the annual plan. 
(3) PUBLICATION.—The Secretary shall transmit 
to the Congress and publish in the Federal Register 
the annual plan, along with any written comments 
received under paragraph (2)(A) and (B). The annual 
plan shall be transmitted and published not later 
than 60 days after the date of enactment of an Act
235
making appropriations for a fiscal year for the pro-
gram under this section. 
(4) CONTENTS.—The annual plan shall describe 
the ongoing and prospective activities of the program 
under this section and shall include—
(A) a list of any solicitations for awards 
that the Secretary plans to issue to carry out ac-
tivities, including the topics for such work, who 
would be eligible to apply, selection criteria, and 
the duration of awards; and 
(B) a description of the activities expected 
of the program consortium to carry out sub-
section (f)(4). 
(f) AWARDS.—
(1) IN
GENERAL.—The Secretary shall make 
awards to carry out activities under the program 
under this section. The program consortium shall not 
be eligible to receive such awards, but members of the 
program consortium may receive such awards. 
(2) PROPOSALS.—The Secretary shall solicit pro-
posals for awards under this subsection in such man-
ner and at such time as the Secretary may prescribe, 
in consultation with the program consortium. 
(3) REVIEW.—The Secretary shall make awards 
under this subsection through a competitive process,
236
which shall include a review by individuals selected 
by the Secretary. Such individuals shall include, for 
each application, Federal officials, the program con-
sortium, and non-Federal experts who are not board 
members, officers, or employees of the program consor-
tium or of a member of the program consortium. 
(4) OVERSIGHT.—(A) The program consortium 
shall oversee the implementation of awards under this 
subsection, consistent with the annual plan under 
subsection (e), including disbursing funds and moni-
toring activities carried out under such awards for 
compliance with the terms and conditions of the 
awards. 
(B) Nothing in subparagraph (A) shall limit the 
authority or responsibility of the Secretary to oversee 
awards, or limit the authority of the Secretary to re-
view or revoke awards. 
(C) The Secretary shall provide to the program 
consortium the information necessary for the program 
consortium to carry out its responsibilities under this 
paragraph. 
(g) FEE.—
(1) IN GENERAL.—To compensate the program 
consortium for carrying out its activities under this 
section, the Secretary shall provide to the program
237
consortium a fee in an amount not to exceed 7.5 per-
cent of the amounts awarded under subsection (f) for 
each fiscal year. 
(2) ADVANCE.—The Secretary shall advance 
funds to the program consortium upon selection of the 
consortium, which shall be deducted from amounts to 
be provided under paragraph (1). 
(h) AUDIT.—The Secretary shall retain an inde-
pendent, commercial auditor to determine the extent to 
which funds provided to the program consortium, and funds 
provided under awards made under subsection (f), have 
been expended in a manner consistent with the purposes 
and requirements of this part. The auditor shall transmit 
a report annually to the Secretary, who shall transmit the 
report to Congress, along with a plan to remedy any defi-
ciencies cited in the report. 
SEC. 6523. UNCONVENTIONAL NATURAL GAS AND OTHER 
PETROLEUM RESOURCES PROGRAM. 
(a) IN GENERAL.—The Secretary, after consulting 
with appropriate Federal regulatory agencies, shall carry 
out activities under section 6521(b)(3), to maximize the 
value of the onshore unconventional natural gas and other 
petroleum resources of the United States by increasing the 
supply of such resources and by reducing the cost and in-
creasing the efficiency of exploration for and production of
238
such resources, while improving safety and minimizing en-
vironmental impacts. 
(b) AWARDS.—
(1) IN GENERAL.—The Secretary shall carry out 
this section through awards made through an open, 
competitive process. 
(2) CONSORTIA.—In carrying out paragraph (1), 
the Secretary shall give preference to making awards 
to consortia. 
(c) AUDIT.—The Secretary shall retain an inde-
pendent, commercial auditor to determine the extent to 
which funds provided under awards made under this sec-
tion have been expended in a manner consistent with the 
purposes and requirements of this part. The auditor shall 
transmit a report annually to the Secretary, who shall 
transmit the report to Congress, along with a plan to rem-
edy any deficiencies cited in the report. 
(d) FOCUS AREAS.—Awards under this section may 
focus on areas including advanced coal-bed methane, deep 
drilling, natural gas production from tight sands, natural 
gas production from gas shales, innovative exploration and 
production techniques, enhanced recovery techniques, and 
environmental mitigation of unconventional natural gas 
and other petroleum resources exploration and production.
239
(e) ACTIVITIES BY THE UNITED STATES GEOLOGICAL 
SURVEY.—The Secretary of the Interior, through the United 
States Geological Survey, shall, where appropriate, carry 
out programs to complement the programs under this sec-
tion. 
SEC. 6524. ADDITIONAL REQUIREMENTS FOR AWARDS. 
(a) DEMONSTRATION PROJECTS.—An application for 
an award under this part for a demonstration project shall 
describe with specificity the intended commercial use of the 
technology to be demonstrated. 
(b) FLEXIBILITY
IN
LOCATING
DEMONSTRATION 
PROJECTS.—Subject to the limitation in section 6521(c), 
a demonstration project under this part relating to an 
ultra-deepwater technology or an ultra-deepwater architec-
ture may be conducted in deepwater depths. 
(c) INTELLECTUAL PROPERTY AGREEMENTS.—If an 
award under this part is made to a consortium (other than 
the program consortium), the consortium shall provide to 
the Secretary a signed contract agreed to by all members 
of the consortium describing the rights of each member to 
intellectual property used or developed under the award. 
(d) TECHNOLOGY TRANSFER.—Each recipient of an 
award under this part shall conduct technology transfer ac-
tivities, as appropriate.
240
SEC. 6525. ADVISORY COMMITTEES. 
(a) ULTRA-DEEPWATER ADVISORY COMMITTEE.—
(1) ESTABLISHMENT.—Not later than 270 days 
after the date of enactment of this section, the Sec-
retary shall establish an advisory committee to be 
known as the Ultra-Deepwater Advisory Committee. 
(2) 
MEMBERSHIP.—The 
advisory 
committee 
under this subsection shall be composed of members 
appointed by the Secretary and including—
(A) individuals with extensive experience or 
operational knowledge of offshore natural gas 
and other petroleum exploration and production; 
(B) individuals broadly representative of 
the affected interests in ultra-deepwater natural 
gas and other petroleum production, including 
interests in environmental protection and safe 
operations; 
(C) no individuals who are Federal employ-
ees; and 
(D) no individuals who are board members, 
officers, or employees of the program consortium. 
(3) DUTIES.—The advisory committee under this 
subsection shall—
(A) advise the Secretary on the development 
and implementation of programs under this part
241
related to ultra-deepwater natural gas and other 
petroleum resources; and 
(B) carry out section 6522(e)(2)(B). 
(4) COMPENSATION.—A member of the advisory 
committee under this subsection shall serve without 
compensation but shall receive travel expenses, includ-
ing per diem in lieu of subsistence, in accordance 
with applicable provisions under subchapter I of 
chapter 57 of title 5, United States Code. 
(b) UNCONVENTIONAL RESOURCES TECHNOLOGY AD-
VISORY COMMITTEE.—
(1) ESTABLISHMENT.—Not later than 270 days 
after the date of enactment of this section, the Sec-
retary shall establish an advisory committee to be 
known as the Unconventional Resources Technology 
Advisory Committee. 
(2) 
MEMBERSHIP.—The 
advisory 
committee 
under this subsection shall be composed of members 
appointed by the Secretary and including—
(A) individuals with extensive experience or 
operational knowledge of unconventional natural 
gas and other petroleum resource exploration 
and production, including independent oil and 
gas producers;
242
(B) individuals broadly representative of 
the affected interests in unconventional natural 
gas and other petroleum resource exploration 
and production, including interests in environ-
mental protection and safe operations; and 
(C) no individuals who are Federal employ-
ees. 
(3) DUTIES.—The advisory committee under this 
subsection shall advise the Secretary on the develop-
ment and implementation of activities under this 
part related to unconventional natural gas and other 
petroleum resources. 
(4) COMPENSATION.—A member of the advisory 
committee under this subsection shall serve without 
compensation but shall receive travel expenses, includ-
ing per diem in lieu of subsistence, in accordance 
with applicable provisions under subchapter I of 
chapter 57 of title 5, United States Code. 
(c) PROHIBITION.—No advisory committee established 
under this section shall make recommendations on funding 
awards to consortia or for specific projects. 
SEC. 6526. LIMITS ON PARTICIPATION. 
(a) IN GENERAL.—An entity shall be eligible to receive 
an award under this part only if the Secretary finds—
243
(1) that the entity’s participation in the pro-
gram under this part would be in the economic inter-
est of the United States; and 
(2) that either—
(A) the entity is a United States-owned en-
tity organized under the laws of the United 
States; or 
(B) the entity is organized under the laws 
of the United States and has a parent entity or-
ganized under the laws of a country which af-
fords—
(i) to United States-owned entities op-
portunities, comparable to those afforded to 
any other entity, to participate in any co-
operative venture similar to those author-
ized under this part; 
(ii) to United States-owned entities 
local investment opportunities comparable 
to those afforded to any other entity; and 
(iii) adequate and effective protection 
for the intellectual property rights of United 
States-owned entities. 
(b) SENSE OF CONGRESS AND REPORT.—It is the 
Sense of the Congress that ultra-deepwater technology devel-
oped under this part is to be developed primarily for pro-
244
duction of ultra-deepwater natural gas and other petroleum 
resources of the United States, and that this priority is to 
be reflected in the terms of grants, contracts, and coopera-
tive agreements entered under this part. As part of the an-
nual Departmental budget submission, the Secretary shall 
report on all steps taken to implement the policy described 
in this subsection. 
SEC. 6527. FUND. 
There is hereby established in the Treasury of the 
United States a separate fund to be known as the ‘‘Ultra-
Deepwater and Unconventional Natural Gas and Other Pe-
troleum Products Fund’’. 
SEC. 6528. SUNSET. 
The authority provided by this part shall terminate 
on September 30, 2010. 
SEC. 6529. DEFINITIONS. 
In this part: 
(1) DEEPWATER.—The term ‘‘deepwater’’ means 
a water depth that is greater than 200 but less than 
1,500 meters. 
(2) PROGRAM
CONSORTIUM.—The term ‘‘pro-
gram consortium’’ means the consortium selected 
under section 6522(d). 
(3) REMOTE OR INCONSEQUENTIAL.—The term 
‘‘remote or inconsequential’’ has the meaning given
245
that term in regulations issued by the Office of Gov-
ernment Ethics under section 208(b)(2) of title 18, 
United States Code. 
(4) ULTRA-DEEPWATER.—The term ‘‘ultra-deep-
water’’ means a water depth that is equal to or great-
er than 1,500 meters. 
(5) ULTRA-DEEPWATER
ARCHITECTURE.—The 
term ‘‘ultra-deepwater architecture’’ means the inte-
gration of technologies for the exploration for, or pro-
duction of, natural gas or other petroleum resources 
located at ultra-deepwater depths. 
(6) ULTRA-DEEPWATER TECHNOLOGY.—The term 
‘‘ultra-deepwater technology’’ means a discrete tech-
nology that is specially suited to address one or more 
challenges associated with the exploration for, or pro-
duction of, natural gas or other petroleum resources 
located at ultra-deepwater depths. 
(7) UNCONVENTIONAL NATURAL GAS AND OTHER 
PETROLEUM RESOURCE.—The term ‘‘unconventional 
natural gas and other petroleum resource’’ means nat-
ural gas and other petroleum resource located onshore 
in an economically inaccessible geological formation.
246
Subtitle F—Miscellaneous 
SEC. 6601. WASTE REDUCTION AND USE OF ALTERNATIVES. 
(a) GRANT AUTHORITY.—The Secretary is authorized 
to make a single grant to a qualified institution to examine 
and develop the feasibility of burning post-consumer carpet 
in cement kilns as an alternative energy source. The pur-
poses of the grant shall include determining—
(1) how post-consumer carpet can be burned 
without disrupting kiln operations; 
(2) the extent to which overall kiln emissions 
may be reduced; 
(3) the emissions of air pollutants and other rel-
evant environmental impacts; and 
(4) how this process provides benefits to both ce-
ment kiln operations and carpet suppliers. 
(b) QUALIFIED INSTITUTION.—For the purposes of 
subsection (a), a qualified institution is a research-intensive 
institution of higher education with demonstrated expertise 
in the fields of fiber recycling and logistical modeling of 
carpet waste collection and preparation. 
(c) WASTE REDUCTION AND USE OF ALTERNATIVES.—
There are authorized to be appropriated to the Secretary 
to carry out activities under this section $500,000 for fiscal 
year 2004.
247
SEC. 6602. COAL GASIFICATION. 
The Secretary is authorized to provide loan guarantees 
for a project to produce energy from a plant using inte-
grated gasification combined cycle technology of at least 400 
megawatts in capacity that produces power at competitive 
rates in deregulated energy generation markets and that 
does not receive any subsidy (direct or indirect) from rate-
payers. 
SEC. 6603. PETROLEUM COKE GASIFICATION. 
The Secretary is authorized to provide loan guarantees 
for at least one petroleum coke gasification polygeneration 
project. 
SEC. 6604. OTHER BIOPOWER AND BIOENERGY. 
The Secretary shall conduct a program to assist in the 
planning, design, and implementation of projects to convert 
rice straw, rice hulls, sugarcane bagasse, forest thinnings, 
and barley grain into biopower and biofuels. 
SEC. 6605. TECHNOLOGY TRANSFER. 
There are authorized to be appropriated to the Sec-
retary $1,000,000 for a competitively awarded contract, to 
an entity with offshore oil and gas management experience, 
for the transfer of technologies relating to ultra-deepwater 
research and development developed at the Naval Surface 
Warfare Center, Carderock Division.
248
SEC. 6606. LIMITATION ON LEGAL FEE REIMBURSEMENT. 
The Department of Energy shall not, except as re-
quired under a contract entered into before the date of en-
actment of this Act, reimburse any contractor or subcon-
tractor of the Department for any legal fees or expenses in-
curred with respect to a complaint subsequent to—
(1) an adverse determination on the merits with 
respect to such complaint against the contractor or 
subcontractor by the Director of the Department of 
Energy’s Office of Hearings and Appeals pursuant to 
section 708 of title 10, Code of Federal Regulations, 
or by a Department of Labor Administrative Law 
Judge pursuant to section 211 of the Energy Reorga-
nization Act of 1974 (42 U.S.C. 5851); or 
(2) an adverse final judgment by any State or 
Federal court with respect to such complaint against 
the contractor or subcontractor for wrongful termi-
nation or retaliation due to the making of disclosures 
protected under chapter 12 of title 5, United States 
Code, section 211 of the Energy Reorganization Act 
of 1974 (42 U.S.C. 5851), or any comparable State 
law, 
unless the adverse determination or final judgment is re-
versed upon further administrative or judicial review.
249
SEC. 6607. COMPLEX WELL TECHNOLOGY TESTING FACIL-
ITY. 
The Secretary, in coordination with industry leaders 
in extended reach drilling technology, shall establish a Com-
plex Well Technology Testing Facility at the Rocky Moun-
tain Oilfield Testing Center to increase the range of ex-
tended drilling technology to 50,000 feet, so that more en-
ergy resources can be realized with fewer drilling facilities. 
SEC. 6608. TOTAL INTEGRATED THERMAL SYSTEMS. 
The Secretary shall—
(1) conduct a study of the benefits of total inte-
grated thermal systems in reducing demand for oil 
and protecting the environment; and 
(2) examine the feasibility of using total inte-
grated thermal systems in Department of Defense and 
other Federal motor vehicle fleets. 
SEC. 6609. OIL BYPASS FILTRATION TECHNOLOGY. 
The Secretary of Energy and the Administrator of the 
Environmental Protection Agency shall—
(1) conduct a joint study of the benefits of oil by-
pass filtration technology in reducing demand for oil 
and protecting the environment; and 
(2) examine the feasibility of using oil bypass 
filtration technology in Federal motor vehicle fleets.
250
TITLE VII—ELECTRICITY 
Subtitle A—Transmission Capacity 
SEC. 7011. TRANSMISSION INFRASTRUCTURE IMPROVE-
MENT RULEMAKING. 
Part II of the Federal Power Act (16 U.S.C. 824 et 
seq.) is amended by adding the following new section at 
the end thereof: 
‘‘SEC. 215. TRANSMISSION INFRASTRUCTURE IMPROVE-
MENT RULEMAKING. 
‘‘(a) RULEMAKING REQUIREMENT.—Within 1 year 
after the enactment of this section, the Commission shall 
establish, by rule, incentive-based (including but not limited 
to performance-based) transmission rate treatments to pro-
mote capital investment in the enlargement and improve-
ment of facilities for the transmission of electric energy in 
interstate commerce as appropriate to—
‘‘(1) promote economically efficient transmission 
and generation of electricity; 
‘‘(2) provide a return on equity that attracts 
new investment in transmission facilities and reason-
ably reflects the risks taken by public utilities in re-
structuring control of transmission assets; and 
‘‘(3) encourage deployment of transmission tech-
nologies and other measures to increase the capacity
251
and efficiency of existing transmission facilities and 
improve the operation of such facilities. 
The Commission may, from time to time, revise such rule. 
‘‘(b) FUNDING
OF CERTAIN FACILITIES.—The rule 
promulgated pursuant to this section shall provide that, 
upon the request of a regional transmission organization 
or other Commission-approved transmission organization, 
new transmission facilities that increase the transfer capa-
bility of the transmission system shall be participant fund-
ed. In such rules, the Commission shall also provide guid-
ance as to what types of facilities may be participant fund-
ed. 
‘‘(c) JUST AND REASONABLE RATES.—With respect to 
any transmission rate filed with the Commission on or after 
the effective date of the rule promulgated under this section, 
the Commission shall, in its review of such rate under sec-
tions 205 and 206, apply the rules adopted pursuant to this 
section, including any revisions thereto. Nothing in this sec-
tion shall be construed to override, weaken, or conflict with 
the procedural and other requirements of this part, includ-
ing the requirement of sections 205 and 206 that all rates, 
charges, terms, and conditions be just and reasonable and 
not unduly discriminatory or preferential.’’.
252
SEC. 7012. SITING OF INTERSTATE ELECTRICAL TRANS-
MISSION FACILITIES. 
(a) AMENDMENT OF FEDERAL POWER ACT.—Part II 
of the Federal Power Act is amended by adding at the end 
the following: 
‘‘SEC. 216. SITING OF INTERSTATE ELECTRICAL TRANS-
MISSION FACILITIES 
‘‘(a) TRANSMISSION STUDIES.—Within one year after 
the enactment of this section, and every 3 years thereafter, 
the Secretary of Energy shall conduct a study of electric 
transmission congestion. After considering alternatives and 
recommendations from interested parties the Secretary shall 
issue a report, based on such study, which may designate 
one or more geographic areas experiencing electric energy 
transmission congestion as ‘interstate congestion areas’. 
‘‘(b) CONSTRUCTION PERMIT.—The Commission is au-
thorized, after notice and an opportunity for hearing, to 
issue permits for the construction or modification of electric 
transmission facilities in interstate congestion areas des-
ignated by the Secretary under subsection (a) if the Com-
mission makes each of the following findings: 
‘‘(1) A finding that—
‘‘(A) the State in which the transmission fa-
cilities are to be constructed or modified is with-
out authority to approve the siting of the facili-
ties, or
253
‘‘(B) a State commission or body in the 
State in which the transmission facilities are to 
be constructed or modified that has authority to 
approve the siting of the facilities has withheld 
approval, conditioned its approval in such a 
manner that the proposed construction or modi-
fication will not significantly reduce trans-
mission congestion in interstate commerce and is 
otherwise not economically feasible, or delayed 
final approval for more than one year after the 
filing of an application seeking approval or one 
year after the designation of the relevant inter-
state congestion area, whichever is later. 
‘‘(2) A finding that the facilities to be authorized 
by the permit will be used for the transmission of 
electric energy in interstate commerce. 
‘‘(3) A finding that the proposed construction or 
modification is consistent with the public interest. 
‘‘(4) A finding that the proposed construction or 
modification will significantly reduce transmission 
congestion in interstate commerce. 
The Commission may include in a permit issued under this 
section conditions consistent with the public interest. 
‘‘(c) PERMIT
APPLICATIONS.—Permit applications 
under subsection (b) shall be made in writing to the Com-
254
mission and verified under oath. The Commission shall 
issue rules setting forth the form of the application, the in-
formation it is to contain, and the manner of service of 
notice of the permit application upon interested persons. 
‘‘(d) COMMENTS.—In any proceeding before the Com-
mission under subsection (b), the Commission shall afford 
each State in which a transmission facility covered by the 
permit is or will be located, each affected Federal agency 
and Indian tribe, private property owners, and other inter-
ested persons, a reasonable opportunity to present their 
views and recommendations with respect to the need for and 
impact of a facility covered by the permit. 
‘‘(e) RIGHTS-OF-WAY.—In the case of a permit under 
subsection (b) for electric transmission facilities to be lo-
cated on property other than property owned by the United 
States or a State, if the permit holder cannot acquire by 
contract, or is unable to agree with the owner of the prop-
erty to the compensation to be paid for, the necessary right-
of-way to construct or modify such transmission facilities, 
the permit holder may acquire the right-of-way by the exer-
cise of the right of eminent domain in the district court 
of the United States for the district in which the property 
concerned is located, or in the appropriate court of the State 
in which the property is located. The practice and proce-
dure in any action or proceeding for that purpose in the
255
district court of the United States shall conform as nearly 
as may be with the practice and procedure in similar action 
or proceeding in the courts of the State where the property 
is situated. 
‘‘(f) STATE LAW.—Nothing in this section shall pre-
clude any person from constructing any transmission facili-
ties pursuant to State law. 
‘‘(g) COMPLIANCE WITH OTHER LAWS.—Commission 
action under this section shall be subject to the National 
Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.) 
and all other applicable Federal laws. 
‘‘(h) COMPENSATION.—Any exercise of eminent do-
main authority pursuant to this section shall be considered 
a taking of private property for which just compensation 
is due. Just compensation shall be an amount equal to the 
full fair market value of the property taken on the date of 
the exercise of eminent domain authority, except that the 
compensation shall exceed fair market value if necessary to 
make the landowner whole for decreases in the value of any 
portion of the land not subject to eminent domain. Any par-
cel of land acquired by eminent domain under this sub-
section shall be transferred back to the owner from whom 
it was acquired (or his heirs or assigns) if the land is not 
used for power line construction or modification within a 
reasonable period of time after the acquisition. Property ac-
256
quired under this subsection may not be used for any herit-
age area, recreational trail, or park, or for any other pur-
pose (other than power line construction or modification, 
and for power line operation and maintenance) without the 
consent of the owner of the parcel from whom the property 
was acquired (or his heirs or assigns). 
‘‘(i) ERCOT.—Nothing in this section shall be con-
strued to authorize any interconnection with any facility 
owned or operated by an entity referred to in section 
212(k)(2)(B). 
‘‘(j) RIGHTS OF WAY ON FEDERAL LANDS.—
‘‘(1) LEAD AGENCY.—If an applicant, or pro-
spective applicant, for Federal authorization related 
to an electricity transmission or distribution facility 
so requests, the Department of Energy (DOE) shall 
act as the lead agency for purposes of coordinating all 
applicable Federal authorization and related environ-
mental review of the facility. The term ‘Federal au-
thorization’ shall mean any authorization required 
under Federal law in order to site a transmission or 
distribution facility, including but not limited to such 
permits, special use authorizations, certifications, 
opinions, or other approvals as may be required, 
whether issued by a Federal or a State agency. To the 
maximum extent practicable under applicable Federal
257
law, the Secretary of Energy shall coordinate this 
Federal authorization and review process with any 
Indian tribes, multi-State entities, and State agencies 
that are responsible for conducting any separate per-
mitting and environmental reviews of the facility, to 
ensure timely and efficient review and permit deci-
sions. 
‘‘(2) AUTHORITY TO SET DEADLINES.—As lead 
agency, the Department of Energy, in consultation 
with other Federal and, as appropriate, with Indian 
tribes, multi-State entities, and State agencies that 
are willing to coordinate their own separate permit-
ting and environmental reviews with the Federal au-
thorization and environmental reviews, shall establish 
prompt and binding intermediate milestones and ulti-
mate deadlines for the review of and Federal author-
ization decisions relating to the proposed facility. The 
Secretary of Energy shall ensure that once an appli-
cation has been submitted with such data as the Sec-
retary deems necessary, all permit decisions and re-
lated environmental reviews under all applicable Fed-
eral laws shall be completed within 1 year or, if a re-
quirement of another provision of Federal law makes 
this impossible, as soon thereafter as is practicable. 
The Secretary of Energy also shall provide an expedi-
258
tious pre-application mechanism for prospective ap-
plicants to confer with the agencies involved to have 
each such agency determine and communicate to the 
prospective applicant within 60 days of when the pro-
spective applicant submits a request for such informa-
tion concerning—
‘‘(A) the likelihood of approval for a poten-
tial facility; and 
‘‘(B) key issues of concern to the agencies 
and public. 
‘‘(3) CONSOLIDATED
ENVIRONMENTAL
REVIEW 
AND RECORD OF DECISION.—The Secretary of En-
ergy, in consultation with the affected agencies, shall 
prepare a single environmental review document, 
which shall be used as the basis for all decisions on 
the proposed project under Federal law. The document 
may be an environmental assessment or environ-
mental impact statement under the National Envi-
ronmental Policy Act of 1969 if warranted, or such 
other form of analysis as may be warranted. DOE 
and other agencies shall streamline the review and 
permitting of transmission and distribution facilities 
within corridors designated under section 503 of the 
Federal Land Policy and Management Act (43 U.S.C. 
1763) by fully taking into account prior analyses and
259
decisions as to the corridors. The document under this 
section may consist of or include an environmental 
assessment, if allowed by law, or an environmental 
impact statement, if warranted or required by law, or 
such other form of analysis as warranted, consistent 
with any requirement of the National Environmental 
Policy Act, the Federal Land Policy and Management 
Act, or any other applicable law. Such document shall 
include consideration by the relevant agencies of any 
applicable criteria or other matters as required under 
applicable laws. 
‘‘(4) APPEALS.—In the event that any agency 
has denied a Federal authorization required for a 
transmission or distribution facility, or has failed to 
act by the deadline established by the Secretary pur-
suant to this section for deciding whether to issue the 
authorization, the applicant or any State in which 
the facility would be located may file an appeal with 
the Secretary of Energy, who shall, in consultation 
with the affected agency, review the denial or take ac-
tion on the pending application. Based on the overall 
record and in consultation with the affected agency, 
the Secretary may then either issue the necessary au-
thorization with any appropriate conditions, or deny 
the application. The Secretary shall issue a decision
260
within 90 days of the filing of the appeal. In making 
a decision under this paragraph, the Secretary shall 
comply with all applicable requirements of Federal 
law, including any requirements of the Endangered 
Species Act, the Clean Water Act, the National Forest 
Management Act, the National Environmental Policy 
Act, and the Federal Land Management and Policy 
Act. 
‘‘(5) CONFORMING
REGULATIONS
AND
MEMO-
RANDA OF AGREEMENT.—Not later than 18 months 
after the date of enactment of this section, the Sec-
retary of Energy shall issue any regulations necessary 
to implement the foregoing provisions. Not later than 
1 year after the date of enactment of this section, the 
Secretary and the heads of all relevant Federal de-
partments and non-departmental agencies shall, and 
interested Indian tribes, multi-State entities, and 
State agencies may, enter into Memoranda of Agree-
ment to ensure the timely and coordinated review and 
permitting of electricity transmission and distribu-
tion facilities. The head of each Federal department 
or non-departmental agency with approval authority 
shall designate a senior responsible official and dedi-
cate sufficient other staff and resources to ensure that
261
the DOE regulations and any Memoranda are fully 
implemented. 
‘‘(6) MISCELLANEOUS.—Each Federal authoriza-
tion for an electricity transmission or distribution fa-
cility shall be issued for a duration, as determined by 
the Secretary of Energy, commensurate with the an-
ticipated use of the facility and with appropriate au-
thority to manage the right-of-way for reliability and 
environmental protection. Further, when such author-
izations expire, they shall be reviewed for renewal 
taking fully into account reliance on such electricity 
infrastructure, recognizing its importance for public 
health, safety and economic welfare and as a legiti-
mate use of Federal lands. 
‘‘(7) MAINTAINING AND ENHANCING THE TRANS-
MISSION INFRASTRUCTURE.—In exercising the respon-
sibilities under this section, the Secretary of Energy 
shall consult regularly with the Federal Energy Regu-
latory Commission (FERC) and FERC-approved Re-
gional Transmission Organizations and Independent 
System Operators. 
‘‘(k) INTERSTATE COMPACTS.—The consent of Con-
gress is hereby given for States to enter into interstate com-
pacts establishing regional transmission siting agencies to 
facilitate coordination among the States within such areas
262
for purposes of siting future electric energy transmission 
facilities and to carry out State electric energy trans-
mission siting responsibilities. The Secretary of Energy 
may provide technical assistance to regional transmission 
siting agencies established under this subsection. 
‘‘(l) SAVINGS CLAUSE.—Nothing in this section shall 
be construed to affect any requirement of the environmental 
laws of the United States, including, but not limited to, 
the National Environmental Policy Act of 1969. This sec-
tion shall not apply to any component of the National Wil-
derness Preservation System, the National Wild and Scenic 
Rivers System, or the National Park system (including Na-
tional Monuments therein).’’. 
(b) FEDERAL CORRIDORS.—The Secretary of the Inte-
rior, the Secretary of Energy, the Secretary of Agriculture, 
and the Chairman of the Council on Environmental Qual-
ity shall, within 90 days of the date of enactment of this 
subsection, submit a joint report to Congress identifying the 
following: 
(1) all existing designated transmission and dis-
tribution corridors on Federal land and the status of 
work related to proposed transmission and distribu-
tion corridor designations, the schedule for completing 
such work, any impediments to completing the work,
263
and steps that Congress could take to expedite the 
process; 
(2) the number of pending applications to locate 
transmission and distribution facilities on Federal 
lands, key information relating to each such facility, 
how long each application has been pending, the 
schedule for issuing a timely decision as to each facil-
ity, and progress in incorporating existing and new 
such rights-of-way into relevant land use and resource 
management plans or their equivalent; and 
(3) the number of existing transmission and dis-
tribution rights-of-way on Federal lands that will 
come up for renewal within the following 5, 10, and 
15 year periods, and a description of how the Secre-
taries plan to manage such renewals. 
Subtitle B—Transmission 
Operation 
SEC. 7021. OPEN ACCESS TRANSMISSION BY CERTAIN UTILI-
TIES. 
Part II of the Federal Power Act (16 U.S.C. 824 et 
seq.) is amended by inserting after section 211 the following:
264
‘‘SEC. 211A. OPEN ACCESS BY UNREGULATED TRANSMIT-
TING UTILITIES. 
‘‘(a) IN GENERAL.—Subject to section 212(h), the 
Commission may, by rule or order, require an unregulated 
transmitting utility to provide transmission services—
‘‘(1) at rates that are comparable to those that 
the unregulated transmitting utility charges itself, 
and 
‘‘(2) on terms and conditions (not relating to 
rates) that are comparable to those under which such 
unregulated transmitting utility provides trans-
mission services to itself and that are not unduly dis-
criminatory or preferential. 
‘‘(b) EXEMPTIONS.—
‘‘(1) IN GENERAL.—The Commission shall ex-
empt from any rule or order under this subsection 
any unregulated transmitting utility that—
‘‘(A)(i) sells no more than 4,000,000 mega-
watt hours of electricity per year; and 
‘‘(ii) is a distribution utility; or 
‘‘(B) does not own or operate any trans-
mission facilities that are necessary for oper-
ating an interconnected transmission system (or 
any portion thereof); or 
‘‘(C) meets other criteria the Commission 
determines to be in the public interest.
265
‘‘(2) LOCAL DISTRIBUTION.— The requirements 
of subsection (a) shall not apply to facilities used in 
local distribution. 
‘‘(c) RATE CHANGING PROCEDURES.—The rate chang-
ing procedures applicable to public utilities under sub-
sections (c) and (d) of section 205 are applicable to unregu-
lated transmitting utilities for purposes of this section. 
‘‘(d) REMAND.—In exercising its authority under 
paragraph (1), the Commission may remand transmission 
rates to an unregulated transmitting utility for review and 
revision where necessary to meet the requirements of sub-
section (a). 
‘‘(e) SECTION
211 REQUESTS.—The provision of 
transmission services under subsection (a) does not preclude 
a request for transmission services under section 211. 
‘‘(f) DEFINITIONS.—For purposes of this section—
‘‘(1) The term ‘unregulated transmitting utility’ 
means an entity that—
‘‘(A) owns or operates facilities used for the 
transmission of electric energy in interstate com-
merce, and 
‘‘(B) is either an entity described in section 
201(f) or a rural electric cooperative.
266
‘‘(2) The term ‘distribution utility’ means an 
unregulated transmitting utility that serves at least 
ninety percent of its electric customers at retail.’’. 
SEC. 7022. REGIONAL TRANSMISSION ORGANIZATIONS. 
(a) SENSE OF THE CONGRESS ON RTOS.—It is the 
sense of Congress that, in order to promote fair, open access 
to electric transmission service, benefit retail consumers, fa-
cilitate wholesale competition, improve efficiencies in trans-
mission grid management, promote grid reliability, remove 
opportunities for unduly discriminatory or preferential 
transmission practices, and provide for the efficient devel-
opment of transmission infrastructure needed to meet the 
growing demands of competitive wholesale power markets, 
all transmitting utilities in interstate commerce should vol-
untarily become members of independently administered re-
gional transmission organizations that have operational 
control of interstate transmission facilities and do not own 
or control generation facilities used to supply electric en-
ergy for sale at wholesale. 
(b) SENSE OF THE CONGRESS ON CAPITAL INVEST-
MENT.—It is the sense of the Congress that the Federal En-
ergy Regulatory Commission should provide to any trans-
mitting utility that becomes a member of an operational 
regional transmitting organization approved by the Com-
mission a return on equity sufficient to attract new invest-
267
ment capital for expansion of transmission capacity, in ac-
cordance with sections 205 and 206 of the Federal Power 
Act (16 U.S.C. 824d and 824e), including the requirement 
that rates be just and reasonable. 
(c) REPORT ON PENDING APPLICATIONS.—Not later 
than 120 days after the date of enactment of this section, 
the Federal Energy Regulatory Commission shall submit to 
the Committee on Energy and Commerce of the United 
States House of Representatives and the Committee on En-
ergy and Natural Resources of the United States Senate a 
report containing the following: 
(1) A list of all regional transmission organiza-
tion applications filed at the Commission pursuant to 
the Commission’s Order No. 2000, including an iden-
tification of each public utility and other entity in-
cluded within the proposed membership of the re-
gional transmission organization. 
(2) A table showing the date each such applica-
tion was filed, the date of any revised filings of such 
application, the date of each preliminary or final 
Commission order regarding such application, and a 
statement of whether the application has been rejected, 
preliminarily approved, finally approved, or has 
some other status (including a description of that sta-
tus).
268
(3) For any application that has not been fi-
nally approved by the Commission, a detailed de-
scription of every aspect of the application that the 
Commission has determined does not conform to the 
requirements of Order No. 2000. 
(4) For any application that has not been fi-
nally approved by the Commission, an explanation 
by the Commission of why the items described pursu-
ant to paragraph (3) constitute material noncompli-
ance with the requirements of the Commission’s Order 
No. 2000 sufficient to justify denial of approval by 
the Commission. 
(5) For all regional transmission organization 
applications filed pursuant to the Commission’s 
Order No. 2000, whether finally approved or not—
(A) a discussion of that regional trans-
mission organization’s efforts to minimize rate 
seams between itself and—
(i) other regional transmission organi-
zations; and 
(ii) entities not participating in a re-
gional transmission organization; and 
(B) a discussion of the impact of such seams 
on consumers and wholesale competition; and
269
(C) a discussion of minimizing cost-shifting 
on consumers. 
(d) FEDERAL UTILITY PARTICIPATION IN RTOS.—
(1) DEFINITIONS.—For purposes of this sec-
tion—
(A) The term ‘‘appropriate Federal regu-
latory authority’’ means— 
(i) with respect to a Federal power 
marketing agency, the Secretary of Energy, 
except that the Secretary may designate the 
Administrator of a Federal power mar-
keting agency to act as the appropriate Fed-
eral regulatory authority with respect to the 
transmission system of that Federal power 
marketing agency; and 
(ii) with respect to the Tennessee Val-
ley Authority, the Board of Directors of the 
Tennessee Valley Authority. 
(B) The term ‘‘Federal utility’’ means a 
Federal power marketing agency or the Ten-
nessee Valley Authority. 
(C) The term ‘‘transmission system’’ means 
electric transmission facilities owned, leased, or 
contracted for by the United States and operated 
by a Federal utility.
270
(2) TRANSFER.—The appropriate Federal regu-
latory authority is authorized to enter into a con-
tract, agreement or other arrangement transferring 
control and use of all or part of the Federal utility’s 
transmission system to a regional transmission orga-
nization approved by the Federal Energy Regulatory 
Commission. Such contract, agreement or arrange-
ment shall include—
(A) performance standards for operation 
and use of the transmission system that the head 
of the Federal utility determines necessary or ap-
propriate, including standards that assure recov-
ery of all the Federal utility’s costs and expenses 
related to the transmission facilities that are the 
subject of the contract, agreement or other ar-
rangement, consistency with existing contracts 
and third-party financing arrangements, and 
consistency with said Federal utility’s statutory 
authorities, obligations, and limitations; 
(B) provisions for monitoring and oversight 
by the Federal utility of the regional trans-
mission organization’s fulfillment of the terms 
and conditions of the contract, agreement or 
other arrangement, including a provision that 
may provide for the resolution of disputes
271
through arbitration or other means with the re-
gional transmission organization or with other 
participants, notwithstanding the obligations 
and limitations of any other law regarding arbi-
tration; and 
(C) a provision that allows the Federal util-
ity to withdraw from the regional transmission 
organization and terminate the contract, agree-
ment or other arrangement in accordance with 
its terms. 
Neither this section, actions taken pursuant to it, nor 
any other transaction of a Federal utility using a re-
gional transmission organization shall serve to confer 
upon the Federal Energy Regulatory Commission ju-
risdiction or authority over the Federal utility’s elec-
tric generation assets, electric capacity or energy that 
the Federal utility is authorized by law to market, or 
the Federal utility’s power sales activities. 
(3) EXISTING STATUTORY AND OTHER OBLIGA-
TIONS.—
(A) SYSTEM OPERATION REQUIREMENTS.—
Any statutory provision requiring or authorizing 
a Federal utility to transmit electric power or to 
construct, operate or maintain its transmission 
system shall not be construed to prohibit a trans-
272
fer of control and use of its transmission system 
pursuant to, and subject to all requirements of 
paragraph (2). 
(B) OTHER OBLIGATIONS.—This subsection 
shall not be construed to—
(i) suspend, or exempt any Federal 
utility from, any provision of existing Fed-
eral law, including but not limited to any 
requirement or direction relating to the use 
of the Federal utility’s transmission system, 
environmental protection, fish and wildlife 
protection, flood control, navigation, water 
delivery, or recreation; or 
(ii) authorize abrogation of any con-
tract or treaty obligation. 
SEC. 7023. NATIVE LOAD. 
Part II of the Federal Power Act (16 U.S.C. 824 et 
seq.) is amended by adding the following new section at 
the end thereof: 
‘‘SEC. 217. SERVICE OBLIGATIONS OF LOAD-SERVING ENTI-
TIES. 
‘‘(a) IN GENERAL.—In exercising authority under this 
Act, the Commission shall ensure that any load-serving en-
tity that either—
273
‘‘(1) owns transmission facilities for the trans-
mission of electric energy in interstate commerce used 
to purchase or deliver electric energy to meet—
‘‘(A) a service obligation to customers; or 
‘‘(B) an existing wholesale contractual obli-
gation; or 
‘‘(2) holds a contract or service agreement for 
firm transmission service used to purchase or deliver 
electric energy to meet—
‘‘(A) a service obligation to customers; or 
‘‘(B) an existing wholesale contractual obli-
gation 
shall be entitled to use such transmission facilities or equiv-
alent transmission rights to meet such obligations before 
transmission capacity is made available for other uses. 
‘‘(b) USE BY SUCCESSOR IN INTEREST.—To the extent 
that all or a portion of the service obligation or contractual 
obligation covered by subsection (a) is transferred to an-
other load serving entity, the successor shall be entitled to 
use such transmission facilities or firm transmission rights 
associated with the transferred service obligation consistent 
with subsection (a). Subsequent transfers to another load 
serving entity, or back to the original load-serving entity, 
shall be entitled to the same rights.
274
‘‘(c) OTHER ENTITIES.—The Commission may exer-
cise authority under this Act to make transmission rights 
not used to meet an obligation covered by subsection (a) 
available to other entities in a manner determined by the 
Commission to be not unduly discriminatory or pref-
erential. 
‘‘(d) DEFINITIONS.—For the purposes of this section: 
‘‘(1) The term ‘load-serving entity’ means an 
electric utility, transmitting utility or Federal power 
marketing agency that has an obligation under Fed-
eral, State, or local law, or under long-term contracts, 
to provide electric service to either—
‘‘(A) electric consumers (as defined in sec-
tion 3(5) of the Public Utility Regulatory Poli-
cies Act of 1978 (16 U.S.C. 2602(5)); or 
‘‘(B) an electric utility as defined in section 
3(4) of the Public Utility Regulatory Policies Act 
of 1978 (16 U.S.C. 2602(5)) that has an obliga-
tion to provide electric service to electric con-
sumers. 
Such obligations shall be deemed ‘service obligations’. 
‘‘(2) The term ‘existing wholesale contractual ob-
ligation’ means an obligation under a firm long-term 
wholesale contract that was in effect on March 28, 
2003. A contract modification after March 28, 2003
275
(other than one that increases the quantity of electric 
energy sold under the contract) shall not affect the 
status of such contract as an existing wholesale con-
tractual obligation. 
‘‘(e) RELATIONSHIP TO OTHER PROVISIONS.—To the 
extent that a transmitting utility reserves transmission ca-
pacity (or reserves the equivalent amount of tradable trans-
mission rights) to provide firm transmission service to meet 
service obligations or firm long-term wholesale contractual 
obligations pursuant to subsection (a), that transmitting 
utility shall not be considered as engaging in undue dis-
crimination or preference under this Act. 
‘‘(f) JURISDICTION.—This section shall not apply to 
an entity located in an area referred to in section 
212(k)(2)(A).
‘‘(g) SAVINGS CLAUSE.—Nothing in this section shall 
affect any allocation of transmission rights by the PJM 
Interconnection, the New York Independent System Oper-
ator, the New England Independent System Operator, the 
Midwest Independent System Operator, or the California 
Independent System Operator. Nothing in this section shall 
provide a basis for abrogating any contract for firm trans-
mission service or rights in effect as of the date of enactment 
of this section.’’.
276
Subtitle C—Reliability 
SEC. 7031. ELECTRIC RELIABILITY STANDARDS. 
Part II of the Federal Power Act (16 U.S.C 824 et 
seq.) is amended by inserting the following new section at 
the end thereof: 
‘‘SEC. 218. ELECTRIC RELIABILITY. 
‘‘(a) DEFINITIONS.—For purposes of this section—
‘‘(1) The term ‘bulk-power system’ means—
‘‘(A) facilities and control systems necessary 
for operating an interconnected electric energy 
transmission network (or any portion thereof); 
and 
‘‘(B) electric energy from generation facili-
ties needed to maintain transmission system re-
liability. 
The term does not include facilities used in the local 
distribution of electric energy. 
‘‘(2) The terms ‘Electric Reliability Organiza-
tion’ and ‘ERO’ mean the organization certified by 
the Commission under subsection (c) the purpose of 
which is to establish and enforce reliability standards 
for the bulk-power system, subject to Commission re-
view. 
‘‘(3) The term ‘reliability standard’ means a re-
quirement, approved by the Commission under this
277
section, to provide for reliable operation of the bulk-
power system. The term includes requirements for the 
operation of existing bulk-power system facilities and 
the design of planned additions or modifications to 
such facilities to the extent necessary to provide for 
reliable operation of the bulk-power system, but the 
term does not include any requirement to enlarge 
such facilities or to construct new transmission ca-
pacity or generation capacity. 
‘‘(4) The term ‘reliable operation’ means oper-
ating the elements of the bulk-power system within 
equipment and electric system thermal, voltage, and 
stability limits so that instability, uncontrolled sepa-
ration, or cascading failures of such system will not 
occur as a result of a sudden disturbance or unantici-
pated failure of system elements. 
‘‘(5) The term ‘Interconnection’ means a geo-
graphic area in which the operation of bulk-power 
system components is synchronized such that the fail-
ure of one or more of such components may adversely 
affect the ability of the operators of other components 
within the system to maintain reliable operation of 
the facilities within their control. 
‘‘(6) The term ‘transmission organization’ means 
a regional transmission organization, independent
278
system operator, independent transmission provider, 
or other transmission organization finally approved 
by the Commission for the operation of transmission 
facilities. 
‘‘(7) The term ‘regional entity’ means an entity 
having enforcement authority pursuant to subsection 
(e)(4). 
‘‘(b) JURISDICTION
AND APPLICABILITY.—(1) The 
Commission shall have jurisdiction, within the United 
States, over the ERO certified by the Commission under 
subsection (c), any regional entities, and all users, owners 
and operators of the bulk-power system, including but not 
limited to the entities described in section 201(f), for pur-
poses of approving reliability standards established under 
this section and enforcing compliance with this section. All 
users, owners and operators of the bulk-power system shall 
comply with reliability standards that take effect under this 
section. 
‘‘(2) The Commission shall issue a final rule to imple-
ment the requirements of this section not later than 180 
days after the date of enactment of this section. 
‘‘(c) CERTIFICATION.—Following the issuance of a 
Commission rule under subsection (b)(2), any person may 
submit an application to the Commission for certification 
as the Electric Reliability Organization (ERO). The Com-
279
mission may certify one such ERO if the Commission deter-
mines that such ERO—
‘‘(1) has the ability to develop and enforce, sub-
ject to subsection (e)(2), reliability standards that 
provide for an adequate level of reliability of the bulk-
power system; 
‘‘(2) has established rules that—
‘‘(A) assure its independence of the users 
and owners and operators of the bulk-power sys-
tem, while assuring fair stakeholder representa-
tion in the selection of its directors and balanced 
decisionmaking in any ERO committee or subor-
dinate organizational structure; 
‘‘(B) allocate equitably reasonable dues, fees, 
and other charges among end users for all activi-
ties under this section; 
‘‘(C) provide fair and impartial procedures 
for enforcement of reliability standards through 
the imposition of penalties in accordance with 
subsection (e) (including limitations on activi-
ties, functions, or operations, or other appro-
priate sanctions); 
‘‘(D) provide for reasonable notice and op-
portunity for public comment, due process, open-
ness, and balance of interests in developing reli-
280
ability standards and otherwise exercising its 
duties; and 
‘‘(E) provide for taking, after certification, 
appropriate steps to gain recognition in Canada 
and Mexico. 
‘‘(d) RELIABILITY STANDARDS.—(1) The Electric Reli-
ability Organization shall file each reliability standard or 
modification to a reliability standard that it proposes to 
be made effective under this section with the Commission. 
‘‘(2) The Commission may approve, by rule or order, 
a proposed reliability standard or modification to a reli-
ability standard if it determines that the standard is just, 
reasonable, not unduly discriminatory or preferential, and 
in the public interest. The Commission shall give due weight 
to the technical expertise of the Electric Reliability Organi-
zation with respect to the content of a proposed standard 
or modification to a reliability standard and to the tech-
nical expertise of a regional entity organized on an Inter-
connection-wide basis with respect to a reliability standard 
to be applicable within that Interconnection, but shall not 
defer with respect to the effect of a standard on competition. 
A proposed standard or modification shall take effect upon 
approval by the Commission. 
‘‘(3) The Electric Reliability Organization shall 
rebuttably presume that a proposal from a regional entity
281
organized on an Interconnection-wide basis for a reliability 
standard or modification to a reliability standard to be ap-
plicable on an Interconnection-wide basis is just, reason-
able, and not unduly discriminatory or preferential, and 
in the public interest. 
‘‘(4) The Commission shall remand to the Electric Re-
liability Organization for further consideration a proposed 
reliability standard or a modification to a reliability stand-
ard that the Commission disapproves in whole or in part. 
‘‘(5) The Commission, upon its own motion or upon 
complaint, may order the Electric Reliability Organization 
to submit to the Commission a proposed reliability stand-
ard or a modification to a reliability standard that address-
es a specific matter if the Commission considers such a new 
or modified reliability standard appropriate to carry out 
this section. 
‘‘(6) The final rule adopted under subsection (b)(2) 
shall include fair processes for the identification and timely 
resolution of any conflict between a reliability standard and 
any function, rule, order, tariff, rate schedule, or agreement 
accepted, approved, or ordered by the Commission applica-
ble to a transmission organization. Such transmission orga-
nization shall continue to comply with such function, rule, 
order, tariff, rate schedule or agreement accepted approved, 
or ordered by the Commission until—
282
‘‘(A) the Commission finds a conflict exists be-
tween a reliability standard and any such provision; 
‘‘(B) the Commission orders a change to such 
provision pursuant to section 206 of this part; and 
‘‘(C) the ordered change becomes effective under 
this part. 
If the Commission determines that a reliability standard 
needs to be changed as a result of such a conflict, it shall 
order the ERO to develop and file with the Commission a 
modified reliability standard under paragraph (4) or (5) 
of this subsection. 
‘‘(e) ENFORCEMENT.—(1) The ERO may impose, sub-
ject to paragraph (2), a penalty on a user or owner or oper-
ator of the bulk-power system for a violation of a reliability 
standard approved by the Commission under subsection (d) 
if the ERO, after notice and an opportunity for a hearing—
‘‘(A) finds that the user or owner or operator has 
violated a reliability standard approved by the Com-
mission under subsection (d); and 
‘‘(B) files notice and the record of the proceeding 
with the Commission. 
‘‘(2) A penalty imposed under paragraph (1) may take 
effect not earlier than the 31st day after the electric reli-
ability organization files with the Commission notice of the 
penalty and the record of proceedings. Such penalty shall
283
be subject to review by the Commission, on its own motion 
or upon application by the user, owner or operator that 
is the subject of the penalty filed within 30 days after the 
date such notice is filed with the Commission. Application 
to the Commission for review, or the initiation of review 
by the Commission on its own motion, shall not operate 
as a stay of such penalty unless the Commission otherwise 
orders upon its own motion or upon application by the 
user, owner or operator that is the subject of such penalty. 
In any proceeding to review a penalty imposed under para-
graph (1), the Commission, after notice and opportunity 
for hearing (which hearing may consist solely of the record 
before the electric reliability organization and opportunity 
for the presentation of supporting reasons to affirm, modify, 
or set aside the penalty), shall by order affirm, set aside, 
reinstate, or modify the penalty, and, if appropriate, re-
mand to the electric reliability organization for further pro-
ceedings. The Commission shall implement expedited proce-
dures for such hearings. 
‘‘(3) On its own motion or upon complaint, the Com-
mission may order compliance with a reliability standard 
and may impose a penalty against a user or owner or oper-
ator of the bulk-power system, if the Commission finds, after 
notice and opportunity for a hearing, that the user or owner 
or operator of the bulk-power system has engaged or is about
284
to engage in any acts or practices that constitute or will 
constitute a violation of a reliability standard. 
‘‘(4) The Commission shall establish regulations au-
thorizing the ERO to enter into an agreement to delegate 
authority to a regional entity for the purpose of proposing 
reliability standards to the ERO and enforcing reliability 
standards under paragraph (1) if—
‘‘(A) the regional entity is governed by—
‘‘(i) an independent board; 
‘‘(ii) a balanced stakeholder board; or 
‘‘(iii) a combination independent and bal-
anced stakeholder board. 
‘‘(B) the regional entity otherwise satisfies the 
provisions of subsection (c)(1) and (2); and 
‘‘(C) the agreement promotes effective and effi-
cient administration of bulk-power system reliability. 
The Commission may modify such delegation. The ERO 
and the Commission shall rebuttably presume that a pro-
posal for delegation to a regional entity organized on an 
Interconnection-wide basis promotes effective and efficient 
administration of bulk-power system reliability and should 
be approved. Such regulation may provide that the Com-
mission may assign the ERO’s authority to enforce reli-
ability standards under paragraph (1) directly to a re-
285
gional entity consistent with the requirements of this para-
graph. 
‘‘(5) The Commission may take such action as is nec-
essary or appropriate against the ERO or a regional entity 
to ensure compliance with a reliability standard or any 
Commission order affecting the ERO or a regional entity. 
‘‘(6) Any penalty imposed under this section shall bear 
a reasonable relation to the seriousness of the violation and 
shall take into consideration the efforts of such user, owner, 
or operator to remedy the violation in a timely manner. 
‘‘(f) CHANGES IN ELECTRICITY RELIABILITY ORGANI-
ZATION RULES.—The Electric Reliability Organization 
shall file with the Commission for approval any proposed 
rule or proposed rule change, accompanied by an expla-
nation of its basis and purpose. The Commission, upon its 
own motion or complaint, may propose a change to the 
rules of the Electric Reliability Organization. A proposed 
rule or proposed rule change shall take effect upon a finding 
by the Commission, after notice and opportunity for com-
ment, that the change is just, reasonable, not unduly dis-
criminatory or preferential, is in the public interest, and 
satisfies the requirements of subsection (c). 
‘‘(g) RELIABILITY REPORTS.—The Electric Reliability 
Organization shall conduct periodic assessments of the reli-
286
ability and adequacy of the bulk-power system in North 
America. 
‘‘(h) COORDINATION WITH CANADA AND MEXICO.—The 
President is urged to negotiate international agreements 
with the governments of Canada and Mexico to provide for 
effective compliance with reliability standards and the effec-
tiveness of the Electric Reliability Organization in the 
United States and Canada or Mexico. 
‘‘(i) SAVINGS PROVISIONS.—(1) The Electric Reli-
ability Organization shall have authority to develop and 
enforce compliance with reliability standards for only the 
bulk-power system. 
‘‘(2) This section does not authorize the Electric Reli-
ability Organization or the Commission to order the con-
struction of additional generation or transmission capacity 
or to set and enforce compliance with standards for ade-
quacy or safety of electric facilities or services. 
‘‘(3) Nothing in this section shall be construed to pre-
empt any authority of any State to take action to ensure 
the safety, adequacy, and reliability of electric service with-
in that State, as long as such action is not inconsistent 
with any reliability standard, except that the State of New 
York may establish rules that result in greater reliability 
within that State, as long as such action does not result
287
in lesser reliability outside the State than that provided by 
the reliability standards. 
‘‘(4) Within 90 days of the application of the Electric 
Reliability Organization or other affected party, and after 
notice and opportunity for comment, the Commission shall 
issue a final order determining whether a State action is 
inconsistent with a reliability standard, taking into consid-
eration any recommendation of the Electric Reliability Or-
ganization. 
‘‘(5) The Commission, after consultation with the Elec-
tric Reliability Organization and the State taking action, 
may stay the effectiveness of any State action, pending the 
Commission’s issuance of a final order. 
‘‘(j) REGIONAL ADVISORY BODIES.—The Commission 
shall establish a regional advisory body on the petition of 
at least two-thirds of the States within a region that have 
more than one-half of their electric load served within the 
region. A regional advisory body shall be composed or of 
one member from each participating State in the region, 
appointed by the Governor of each State, and may include 
representatives of agencies, States, and provinces outside the 
United States. A regional advisory body may provide ad-
vice to the Electric Reliability Organization, a regional en-
tity, or the Commission regarding the governance of an ex-
isting or proposed regional entity within the same region,
288
whether a standard proposed to apply within the region is 
just, reasonable, not unduly discriminatory or preferential, 
and in the public interest, whether fees proposed to be as-
sessed within the region are just, reasonable, not unduly 
discriminatory or preferential, and in the public interest 
and any other responsibilities requested by the Commission. 
The Commission may give deference to the advice of any 
such regional advisory body if that body is organized on 
an Interconnection-wide basis. 
‘‘(k) APPLICATION TO ALASKA AND HAWAII.—The pro-
visions of this section do not apply to Alaska or Hawaii.’’. 
Subtitle D—PUHCA Amendments 
SEC. 7041. SHORT TITLE. 
This subtitle may be cited as the ‘‘Public Utility Hold-
ing Company Act of 2003’’. 
SEC. 7042. DEFINITIONS. 
For purposes of this subtitle: 
(1) The term ‘‘affiliate’’ of a company means 
any company, 5 percent or more of the outstanding 
voting securities of which are owned, controlled, or 
held with power to vote, directly or indirectly, by 
such company. 
(2) The term ‘‘associate company’’ of a company 
means any company in the same holding company 
system with such company.
289
(3) The term ‘‘Commission’’ means the Federal 
Energy Regulatory Commission. 
(4) The term ‘‘company’’ means a corporation, 
partnership, association, joint stock company, busi-
ness trust, or any organized group of persons, whether 
incorporated or not, or a receiver, trustee, or other 
liquidating agent of any of the foregoing. 
(5) The term ‘‘electric utility company’’ means 
any company that owns or operates facilities used for 
the generation, transmission, or distribution of elec-
tric energy for sale. 
(6) The terms ‘‘exempt wholesale generator’’ and 
‘‘foreign utility company’’ have the same meanings as 
in sections 32 and 33, respectively, of the Public Util-
ity Holding Company Act of 1935 (15 U.S.C. 79z–5a, 
79z–5b), as those sections existed on the day before the 
effective date of this subtitle. 
(7) The term ‘‘gas utility company’’ means any 
company that owns or operates facilities used for dis-
tribution at retail (other than the distribution only in 
enclosed portable containers or distribution to tenants 
or employees of the company operating such facilities 
for their own use and not for resale) of natural or 
manufactured gas for heat, light, or power. 
(8) The term ‘‘holding company’’ means—
290
(A) any company that directly or indirectly 
owns, controls, or holds, with power to vote, 10 
percent or more of the outstanding voting securi-
ties of a public utility company or of a holding 
company of any public utility company; and 
(B) any person, determined by the Commis-
sion, after notice and opportunity for hearing, to 
exercise directly or indirectly (either alone or 
pursuant to an arrangement or understanding 
with one or more persons) such a controlling in-
fluence over the management or policies of any 
public utility company or holding company as to 
make it necessary or appropriate for the rate 
protection of utility customers with respect to 
rates that such person be subject to the obliga-
tions, duties, and liabilities imposed by this sub-
title upon holding companies. 
(9) The term ‘‘holding company system’’ means 
a holding company, together with its subsidiary com-
panies. 
(10) The term ‘‘jurisdictional rates’’ means rates 
established by the Commission for the transmission of 
electric energy in interstate commerce, the sale of elec-
tric energy at wholesale in interstate commerce, the 
transportation of natural gas in interstate commerce,
291
and the sale in interstate commerce of natural gas for 
resale for ultimate public consumption for domestic, 
commercial, industrial, or any other use. 
(11) The term ‘‘natural gas company’’ means a 
person engaged in the transportation of natural gas 
in interstate commerce or the sale of such gas in 
interstate commerce for resale. 
(12) The term ‘‘person’’ means an individual or 
company. 
(13) The term ‘‘public utility’’ means any person 
who owns or operates facilities used for transmission 
of electric energy in interstate commerce or sales of 
electric energy at wholesale in interstate commerce. 
(14) The term ‘‘public utility company’’ means 
an electric utility company or a gas utility company. 
(15) The term ‘‘State commission’’ means any 
commission, board, agency, or officer, by whatever 
name designated, of a State, municipality, or other 
political subdivision of a State that, under the laws 
of such State, has jurisdiction to regulate public util-
ity companies. 
(16) The term ‘‘subsidiary company’’ of a hold-
ing company means— 
(A) any company, 10 percent or more of the 
outstanding voting securities of which are di-
292
rectly or indirectly owned, controlled, or held 
with power to vote, by such holding company; 
and 
(B) any person, the management or policies 
of which the Commission, after notice and oppor-
tunity for hearing, determines to be subject to a 
controlling influence, directly or indirectly, by 
such holding company (either alone or pursuant 
to an arrangement or understanding with one or 
more other persons) so as to make it necessary 
for the rate protection of utility customers with 
respect to rates that such person be subject to the 
obligations, duties, and liabilities imposed by 
this subtitle upon subsidiary companies of hold-
ing companies. 
(17) The term ‘‘voting security’’ means any secu-
rity presently entitling the owner or holder thereof to 
vote in the direction or management of the affairs of 
a company. 
SEC. 7043. REPEAL OF THE PUBLIC UTILITY HOLDING COM-
PANY ACT OF 1935. 
The Public Utility Holding Company Act of 1935 (15 
U.S.C. 79 et seq.) is repealed.
293
SEC. 7044. FEDERAL ACCESS TO BOOKS AND RECORDS. 
(a) IN GENERAL.—Each holding company and each 
associate company thereof shall maintain, and shall make 
available to the Commission, such books, accounts, memo-
randa, and other records as the Commission deems to be 
relevant to costs incurred by a public utility or natural gas 
company that is an associate company of such holding com-
pany and necessary or appropriate for the protection of 
utility customers with respect to jurisdictional rates. 
(b) AFFILIATE COMPANIES.—Each affiliate of a hold-
ing company or of any subsidiary company of a holding 
company shall maintain, and shall make available to the 
Commission, such books, accounts, memoranda, and other 
records with respect to any transaction with another affil-
iate, as the Commission deems to be relevant to costs in-
curred by a public utility or natural gas company that is 
an associate company of such holding company and nec-
essary or appropriate for the protection of utility customers 
with respect to jurisdictional rates. 
(c) HOLDING COMPANY SYSTEMS.—The Commission 
may examine the books, accounts, memoranda, and other 
records of any company in a holding company system, or 
any affiliate thereof, as the Commission deems to be rel-
evant to costs incurred by a public utility or natural gas 
company within such holding company system and nec-
294
essary or appropriate for the protection of utility customers 
with respect to jurisdictional rates. 
(d) CONFIDENTIALITY.—No member, officer, or em-
ployee of the Commission shall divulge any fact or informa-
tion that may come to his or her knowledge during the 
course of examination of books, accounts, memoranda, or 
other records as provided in this section, except as may be 
directed by the Commission or by a court of competent ju-
risdiction. 
SEC. 7045. STATE ACCESS TO BOOKS AND RECORDS. 
(a) In GENERAL.—Upon the written request of a State 
commission having jurisdiction to regulate a public utility 
company in a holding company system, the holding com-
pany or any associate company or affiliate thereof, other 
than such public utility company, wherever located, shall 
produce for inspection books, accounts, memoranda, and 
other records that—
(1) have been identified in reasonable detail by 
the State commission; 
(2) the State commission deems are relevant to 
costs incurred by such public utility company; and 
(3) are necessary for the effective discharge of the 
responsibilities of the State commission with respect 
to such proceeding.
295
(b) LIMITATION.—Subsection (a) does not apply to 
any person that is a holding company solely by reason of 
ownership of one or more qualifying facilities under the 
Public Utility Regulatory Policies Act of 1978 (16 U.S.C. 
2601 et seq.). 
(c) CONFIDENTIALITY OF INFORMATION.—The produc-
tion of books, accounts, memoranda, and other records 
under subsection (a) shall be subject to such terms and con-
ditions as may be necessary and appropriate to safeguard 
against unwarranted disclosure to the public of any trade 
secrets or sensitive commercial information. 
(d) EFFECT ON STATE LAW.—Nothing in this section 
shall preempt applicable State law concerning the provision 
of books, accounts, memoranda, and other records, or in any 
way limit the rights of any State to obtain books, accounts, 
memoranda, and other records under any other Federal 
law, contract, or otherwise. 
(e) COURT JURISDICTION.—Any United States district 
court located in the State in which the State commission 
referred to in subsection (a) is located shall have jurisdic-
tion to enforce compliance with this section. 
SEC. 7046. EXEMPTION AUTHORITY. 
(a) RULEMAKING.—Not later than 90 days after the 
effective date of this subtitle, the Commission shall promul-
gate a final rule to exempt from the requirements of section
296
7044 (relating to Federal access to books and records) any 
person that is a holding company, solely with respect to 
one or more—
(1) qualifying facilities under the Public Utility 
Regulatory Policies Act of 1978 (16 U.S.C. 2601 et 
seq.); 
(2) exempt wholesale generators; or 
(3) foreign utility companies. 
(b) OTHER AUTHORITY.—The Commission shall ex-
empt a person or transaction from the requirements of sec-
tion 7044 (relating to Federal access to books and records) 
if, upon application or upon the motion of the Commis-
sion— 
(1) the Commission finds that the books, ac-
counts, memoranda, and other records of any person 
are not relevant to the jurisdictional rates of a public 
utility or natural gas company; or 
(2) the Commission finds that any class of trans-
actions is not relevant to the jurisdictional rates of a 
public utility or natural gas company. 
SEC. 7047. AFFILIATE TRANSACTIONS. 
(a) COMMISSION AUTHORITY UNAFFECTED.—Nothing 
in this subtitle shall limit the authority of the Commission 
under the Federal Power Act (16 U.S.C. 791a et seq.) to 
require that jurisdictional rates are just and reasonable, in-
297
cluding the ability to deny or approve the pass through of 
costs, the prevention of cross-subsidization, and the promul-
gation of such rules and regulations as are necessary or ap-
propriate for the protection of utility consumers. 
(b) RECOVERY OF COSTS.—Nothing in this subtitle 
shall preclude the Commission or a State commission from 
exercising its jurisdiction under otherwise applicable law 
to determine whether a public utility company, public util-
ity, or natural gas company may recover in rates any costs 
of an activity performed by an associate company, or any 
costs of goods or services acquired by such public utility 
company from an associate company. 
SEC. 7048. APPLICABILITY. 
Except as otherwise specifically provided in this sub-
title, no provision of this subtitle shall apply to, or be 
deemed to include— 
(1) the United States; 
(2) a State or any political subdivision of a 
State; 
(3) any foreign governmental authority not oper-
ating in the United States; 
(4) any agency, authority, or instrumentality of 
any entity referred to in paragraph (1), (2), or (3); 
or
298
(5) any officer, agent, or employee of any entity 
referred to in paragraph (1), (2), or (3) acting as 
such in the course of his or her official duty. 
SEC. 7049. EFFECT ON OTHER REGULATIONS. 
Nothing in this subtitle precludes the Commission or 
a State commission from exercising its jurisdiction under 
otherwise applicable law to protect utility customers. 
SEC. 7050. ENFORCEMENT. 
The Commission shall have the same powers as set 
forth in sections 306 through 317 of the Federal Power Act 
(16 U.S.C. 825e–825p) to enforce the provisions of this sub-
title. 
SEC. 7051. SAVINGS PROVISIONS. 
(a) IN GENERAL.—Nothing in this subtitle prohibits 
a person from engaging in or continuing to engage in ac-
tivities or transactions in which it is legally engaged or 
authorized to engage on the date of enactment of this Act, 
so long as that person continues to comply with the terms 
of any such authorization, whether by rule or by order. 
(b) EFFECT ON OTHER COMMISSION AUTHORITY.—
Nothing in this subtitle limits the authority of the Commis-
sion under the Federal Power Act (16 U.S.C. 791a et seq.) 
(including section 301 of that Act) or the Natural Gas Act 
(15 U.S.C. 717 et seq.) (including section 8 of that Act).
299
SEC. 7052. IMPLEMENTATION. 
Not later than 12 months after the date of enactment 
of this subtitle, the Commission shall— 
(1) promulgate such regulations as may be nec-
essary or appropriate to implement this subtitle 
(other than section 7045, relating to State access to 
books and records); and 
(2) submit to the Congress detailed recommenda-
tions on technical and conforming amendments to 
Federal law necessary to carry out this subtitle and 
the amendments made by this subtitle. 
SEC. 7053. TRANSFER OF RESOURCES. 
All books and records that relate primarily to the func-
tions transferred to the Commission under this subtitle shall 
be transferred from the Securities and Exchange Commis-
sion to the Commission. 
SEC. 7054. EFFECTIVE DATE. 
This subtitle shall take effect 12 months after the date 
of enactment of this subtitle. 
SEC. 7055. AUTHORIZATION OF APPROPRIATIONS. 
There are authorized to be appropriated such funds as 
may be necessary to carry out this subtitle. 
SEC. 7056. CONFORMING AMENDMENTS TO THE FEDERAL 
POWER ACT. 
(a) CONFLICT OF JURISDICTION.—Section 318 of the 
Federal Power Act (16 U.S.C. 825q) is repealed.
300
(b) DEFINITIONS.—(1) Section 201(g)(5) of the Fed-
eral Power Act (16 U.S.C. 824(g)(5)) is amended by strik-
ing ‘‘1935’’ and inserting ‘‘2003’’. 
(2) Section 214 of the Federal Power Act (16 U.S.C. 
824m) is amended by striking ‘‘1935’’ and inserting 
‘‘2003’’. 
Subtitle E—PURPA Amendments 
SEC. 7061. REAL-TIME PRICING AND TIME-OF-USE METER-
ING STANDARDS. 
(a) ADOPTION OF STANDARDS.—Section 111(d) of the 
Public Utility Regulatory Policies Act of 1978 (16 U.S.C. 
2621(d)) is amended by adding at the end the following: 
‘‘(11) REAL-TIME
PRICING.—(A) Each electric 
utility shall, at the request of an electric consumer, 
provide electric service under a real-time rate sched-
ule, under which the rate charged by the electric util-
ity varies by the hour (or smaller time interval) ac-
cording to changes in the electric utility’s wholesale 
power cost. The real-time pricing service shall enable 
the electric consumer to manage energy use and cost 
through real-time metering and communications tech-
nology. 
‘‘(B) For purposes of implementing this para-
graph, any reference contained in this section to the 
date of enactment of the Public Utility Regulatory
301
Policies Act of 1978 shall be deemed to be a reference 
to the date of enactment of this paragraph. 
‘‘(C) Notwithstanding subsections (b) and (c) of 
section 112, each State regulatory authority shall con-
sider and make a determination concerning whether 
it is appropriate to implement the standard set out 
in subparagraph (A) not later than 1 year after the 
date of enactment of this paragraph. 
‘‘(12) TIME-OF-USE METERING.—(A) Each elec-
tric utility shall, at the request of an electric con-
sumer, provide electric service under a time-of-use 
rate schedule which enables the electric consumer to 
manage energy use and cost through time-of-use me-
tering and technology. 
‘‘(B) For purposes of implementing this para-
graph, any reference contained in this section to the 
date of enactment of the Public Utility Regulatory 
Policies Act of 1978 shall be deemed to be a reference 
to the date of enactment of this paragraph. 
‘‘(C) Notwithstanding subsections (b) and (c) of 
section 112, each State regulatory authority shall con-
sider and make a determination concerning whether 
it is appropriate to implement the standards set out 
in subparagraph (A) not later than 1 year after the 
date of enactment of this paragraph.’’.
302
(b) SPECIAL RULES.—Section 115 of the Public Util-
ity Regulatory Policies Act of 1978 (16 U.S.C. 2625) is 
amended by adding at the end the following: 
‘‘(i) REAL-TIME PRICING.—In a State that permits 
third-party marketers to sell electric energy to retail electric 
consumers, the electric consumer shall be entitled to receive 
the same real-time metering and communication service as 
a direct retail electric consumer of the electric utility. 
‘‘(j) TIME-OF-USE METERING.—In a State that per-
mits third-party marketers to sell electric energy to retail 
electric consumers, the electric consumer shall be entitled 
to receive the same time-of-use metering and communica-
tion service as a direct retail electric consumer of the elec-
tric utility.’’. 
SEC. 7062. COGENERATION AND SMALL POWER PRODUC-
TION PURCHASE AND SALE REQUIREMENTS. 
(a) TERMINATION
OF MANDATORY PURCHASE
AND 
SALE REQUIREMENTS.—Section 210 of the Public Utility 
Regulatory Policies Act of 1978 (16 U.S.C. 824a–3) is 
amended by adding at the end the following: 
‘‘(m) TERMINATION OF MANDATORY PURCHASE AND 
SALE REQUIREMENTS.—
‘‘(1) OBLIGATION TO PURCHASE.—After the date 
of enactment of this subsection, no electric utility 
shall be required to enter into a new contract or obli-
303
gation to purchase electric energy from a qualifying 
cogeneration facility or a qualifying small power pro-
duction facility under this section if the Commission 
finds that— 
‘‘(A) the qualifying cogeneration facility or 
qualifying small power production facility has 
access to 
‘‘(i) independently administered, auc-
tion-based day ahead and real time whole-
sale markets for the sale of electric energy, 
and 
‘‘(ii) long-term wholesale markets for 
the sale of capacity and electric energy; 
‘‘(B) the qualifying cogeneration facility or 
qualifying small power production facility has 
access to a competitive wholesale market for the 
sale of electric energy that provides such quali-
fying cogeneration facility or qualifying small 
power production facility with opportunities to 
sell electric energy that, at a minimum, are com-
parable to the opportunities provided by the 
markets, or some minimum combination thereof, 
described in subparagraph (A); or 
‘‘(C) the qualifying cogeneration facility 
does not meet criteria established by the Commis-
304
sion pursuant to the rulemaking set forth in sub-
paragraph (n) and has not filed with the Com-
mission a notice of self-certification or an appli-
cation for Commission certification under 18 
C.F.R. 292.207 prior to the date of enactment of 
this subsection. 
‘‘(2) COMMISSION
REVIEW.—(A) Any electric 
utility may file an application with the Commission 
for relief from the mandatory purchase obligation 
pursuant to this subsection on a utility-wide basis. 
Such application shall set forth the reasons why such 
relief is appropriate and describe how the conditions 
set forth in subparagraphs (A) and (B) of paragraph 
(1) of this subsection have been met. 
‘‘(B) After notice, including sufficient notice to 
potentially affected qualifying facilities, and an op-
portunity for comment, and within 90 days of the fil-
ing of an application under subparagraph (A), the 
Commission shall make a final determination as to 
whether the conditions set forth in subparagraphs (A) 
and (B) of paragraph (1) have been met. The Com-
mission shall not be authorized to issue a tolling 
order regarding such application or otherwise delay a 
final decision regarding such application.
305
‘‘(3) REINSTATEMENT OF OBLIGATION TO PUR-
CHASE.—(A) At any time after the Commission 
makes a finding under paragraph (2) relieving an 
electric utility of its obligation to purchase electric 
energy, a qualifying cogeneration facility or a quali-
fying small power production facility may apply to 
the Commission for an order reinstating the electric 
utility’s obligation to purchase electric energy under 
this section. Such application shall set forth the rea-
sons why such relief is no longer appropriate and de-
scribe how the tests set forth in subparagraphs (A) 
and (B) of paragraph (1) of this subsection are no 
longer met. 
‘‘(B) After notice, including sufficient notice to 
potentially affected utilities, and opportunity for com-
ment, and within 90 days of the filing of an applica-
tion under subparagraph (A), the Commission shall 
issue an order reinstating the electric utility’s obliga-
tion to purchase electric energy under this section if 
the Commission finds that the condition in paragraph 
(1), which relieved the obligation to purchase, is no 
longer met. The Commission shall not be authorized 
to issue a tolling order regarding such application or 
otherwise delay a final decision regarding such appli-
cation.
306
‘‘(4) OBLIGATION TO SELL.—After the date of en-
actment of this subsection, no electric utility shall be 
required to enter into a new contract or obligation to 
sell electric energy to a qualifying cogeneration facil-
ity or a qualifying small power production facility 
if—
‘‘(A) competing retail electric suppliers are 
willing and able to provide electric energy to the 
qualifying cogeneration facility or qualifying 
small power production facility, and 
‘‘(B) the electric utility is not required by 
State law to sell electric energy in its service ter-
ritory. 
‘‘(5) NO EFFECT ON EXISTING RIGHTS AND REM-
EDIES.—Nothing in this subsection affects the rights 
or remedies of any party under any contract or obli-
gation, in effect or pending approval before the ap-
propriate State regulatory authority or nonregulated 
electric utility on the date of enactment of this sub-
section, to purchase electric energy or capacity from 
or to sell electric energy or capacity to a facility 
under this Act (including the right to recover costs of 
purchasing electric energy or capacity). 
‘‘(6) RECOVERY OF COSTS.—
307
‘‘(A) REGULATION.—To ensure recovery by 
an electric utility that purchases electric energy 
or capacity from a qualifying facility pursuant 
to any legally enforceable obligation entered into 
or imposed under this section of all prudently 
incurred costs associated with the purchases, the 
Commission shall issue and enforce such regula-
tions as may be required to ensure that the elec-
tric utility shall recover the prudently incurred 
costs associated with such purchases. 
‘‘(B) ENFORCEMENT.—A regulation under 
subparagraph (A) shall be enforceable in accord-
ance with the provisions of law applicable to en-
forcement of regulations under the Federal Power 
Act (16 U.S.C. 791a et seq.). 
‘‘(n) RULEMAKING FOR NEW FACILITIES.—
‘‘(1) IN
GENERAL.—Not later than 180 days 
after the date of enactment of this subsection, the 
Commission shall issue a rule revising the criteria for 
qualifying cogeneration facilities in 18 C.F.R. 
292.205. In particular, the Commission shall evaluate 
the rules regarding qualifying facility criteria and re-
vise such rules, as necessary, to ensure—
308
‘‘(A) that the thermal energy output of a 
new qualifying cogeneration facility is used in a 
productive and beneficial manner; 
‘‘(B) the electrical and thermal output of 
the cogeneration facility is used predominantly 
for commercial or industrial processes and not 
intended predominantly for sale to an electric 
utility; and 
‘‘(C) continuing progress in the development 
of efficient electric energy generating technology. 
‘‘(2) APPLICABILITY.—Any revisions made to op-
erating and efficiency standards shall be applicable 
only to a cogeneration facility that—
‘‘(A) was not a qualifying cogeneration fa-
cility, or 
‘‘(B) had not filed with the Commission a 
notice of self-certification or an application for 
Commission 
certification 
under 
C.F.R. 
292.207
prior to the date of enactment of this subsection. 
‘‘(3) DEFINITION.—For purposes of this sub-
section, the term ‘commercial processes’ includes uses 
of thermal and electric energy for educational and 
healthcare facilities.
309
‘‘(o) RULES
FOR EXISTING FACILITIES.—Notwith-
standing rule revisions under subsection (n), the Commis-
sion’s rules in effect prior to the effective date of any revised 
rules prescribed under subsection (n) shall continue to 
apply to any cogeneration facility or small power produc-
tion facility that—
‘‘(1) was a qualifying cogeneration facility or a 
qualifying small power production facility, or 
‘‘(2) had filed with the Commission a notice of 
self-certification or an application for Commission 
certification under 18 C.F.R. 292.207
prior to the date of enactment of subsections (m) and (n).’’. 
(b) ELIMINATION OF OWNERSHIP LIMITATIONS.—(1) 
Section 3(17)(C) of the Federal Power Act (16 U.S.C. 
796(17)(C)) is amended to read as follows: 
‘‘(C) ‘qualifying small power production facility’ 
means a small power production facility that the Commis-
sion determines, by rule, meets such requirements (includ-
ing requirements respecting minimum size, fuel use, and 
fuel efficiency) as the Commission may, by rule, prescribe.’’. 
(2) Section 3(18)(B) of the Federal Power Act (16 
U.S.C. 796(18)(B)) is amended to read as follows: 
‘‘(B) ‘qualifying cogeneration facility’ means a cogen-
eration facility that the Commission determines, by rule, 
meets such requirements (including requirements respecting
310
minimum size, fuel use, and fuel efficiency) as the Commis-
sion may, by rule, prescribe.’’. 
SEC. 7063. SMART METERING. 
(a) IN GENERAL.—Section 111(d) of the Public Utili-
ties Regulatory Policies Act of 1978 (16 U.S.C. 2621(d)) 
is amended by adding at the end the following: 
‘‘(13) TIME-BASED METERING AND COMMUNICA-
TIONS.—(A) Not later than eighteen (18) months after 
the date of enactment of this paragraph, each electric 
utility shall offer each of its customer classes, and 
provide individual customers upon customer request, 
a time-based rate schedule under which the rate 
charged by the electric utility varies during different 
time periods and reflects the variance in the costs of 
generating and purchasing electricity at the wholesale 
level. The time-based rate schedule shall enable the 
electric consumer to manage energy use and cost 
through advanced metering and communications tech-
nology. 
‘‘(B) The types of time-based rate schedules that 
may be offered under the schedule referred to in sub-
paragraph (A) include, among others, each of the fol-
lowing: 
‘‘(i) Time-Of-Use pricing whereby elec-
tricity prices are set for a specific time period on
311
an advance or forward basis, typically not 
changing more often than twice a year. Prices 
paid for energy consumed during these periods 
shall be pre-established and known to consumers 
in advance of such consumption, allowing them 
to vary their demand and usage in response to 
such prices and manage their energy costs by 
shifting usage to a lower cost period or reducing 
their consumption overall. 
‘‘(ii) Critical Peak Pricing whereby time-of-
use prices are in effect except for certain peak 
days, when prices may reflect the costs of gener-
ating and purchasing electricity at the wholesale 
level and when consumers may receive additional 
discounts for reducing peak period energy con-
sumption. 
‘‘(iii) Real-Time pricing whereby electricity 
prices are set for a specific time period on an 
advanced or forward basis and may change as 
often as hourly. 
‘‘(C) Each electric utility subject to subpara-
graph (A) shall provide each customer requesting a 
time-based rate with a time-based meter capable of 
enabling the utility and customer to offer and receive 
such rate, respectively.
312
‘‘(D) For purposes of implementing this para-
graph, any reference contained in this section to the 
date of enactment of the Public Utility Regulatory 
Policies Act of 1978 shall be deemed to be a reference 
to the date of enactment of this paragraph. 
‘‘(E) In a State that permits third-party mar-
keters to sell electric energy to retail electric con-
sumers, such consumers shall be entitled to receive 
that same time-based metering and communications 
device and service as a retail electric consumer of the 
electric utility. 
‘‘(F) Notwithstanding subsections (b) and (c) of 
section 112, each State regulatory authority shall, not 
later than twelve (12) months after enactment of this 
paragraph conduct an investigation in accordance 
with section 115(i) and issue a decision whether it is 
appropriate to implement the standards set out in 
subparagraphs (A) and (C).’’. 
(b) STATE INVESTIGATION OF DEMAND RESPONSE AND 
TIME-BASED METERING.—
Section 115 of the Public Utilities Regulatory Policies 
Act of 1978 (16 U.S.C. 2625) is amended by adding the 
at the end the following: 
‘‘(k) TIME-BASED
METERING
AND
COMMUNICA-
TIONS.—Each State regulatory authority shall, not later
313
than twelve (12) months after enactment of this subsection, 
conduct an investigation and issue a decision whether or 
not it is appropriate for electric utilities to provide and 
install time-based meters and communications devices for 
each of their customers which enable such customers to par-
ticipate in time-based pricing rate schedules and other de-
mand response programs.’’. 
(c) FEDERAL ASSISTANCE ON DEMAND RESPONSE.—
Section 132(a) of the Public Utility Regulatory Polices Act 
of 1978 (16 U.S.C. 2642(a)) is amended by striking ‘‘and’’ 
at the end of paragraph (3), striking the period at the end 
of paragraph (4) and inserting ‘‘; and’’, and by adding the 
following at the end thereof: 
‘‘(5) technologies, techniques and rate-making 
methods related to advanced metering and commu-
nications and the use of these technologies, techniques 
and methods in demand response programs.’’. 
(d) FEDERAL GUIDANCE.—Section 132 of the Public 
Utility Regulatory Policies Act of 1978 (16 U.S.C. 2643) 
is amended by adding the following at the end thereof: 
‘‘(d) DEMAND RESPONSE.—The Secretary shall be re-
sponsible for each of the following: 
‘‘(1) Educating consumers on the availability, 
advantages and benefits of advanced metering and
314
communications technologies including the funding of 
demonstration or pilot projects. 
‘‘(2) Working with States, utilities, other energy 
providers and advanced metering and communica-
tions experts to identify and address barriers to the 
adoption of demand response programs, and 
‘‘(3) Within 6 months of enactment, provide the 
Congress with a report that identifies and quantifies 
the national benefits of demand response and provides 
policy recommendations as to how to achieve specific 
levels of such benefits by January 1, 2005.’’. 
(e) DEMAND RESPONSE AND REGIONAL COORDINA-
TION.—
(1) POLICY.—It is the policy of the United 
States to encourage States to coordinate, on a re-
gional basis, State energy policies to provide reliable 
and affordable demand response services to the public. 
(2) TECHNICAL ASSISTANCE.—The Secretary of 
Energy shall provide technical assistance to States 
and regional organizations formed by two or more 
States to assist them in—
(A) identifying the areas with the greatest 
demand response potential;
315
(B) identifying and resolving problems in 
transmission and distribution networks, includ-
ing through the use of demand response; and 
(C) developing plans and programs to use 
demand response to respond to peak demand or 
emergency needs. 
(3) REPORT.—The Federal Energy Regulatory 
Commission shall prepare and publish an annual re-
port, by appropriate region, that assesses demand re-
sponse resources, including those available from all 
consumer classes, and which identifies and reviews 
each of the following: 
(A) Saturation and penetration rate of ad-
vanced meters and communications technologies, 
devices and systems. 
(B) Existing demand response programs 
and time-based rate programs. 
(C) The annual resource contribution of de-
mand resources, including the prior year and 
following years. 
(D) The potential for demand response as a 
quantifiable, reliable resource for regional plan-
ning purposes. 
(E) Steps taken to ensure that, in regional 
transmission planning and operations, that de-
316
mand resources are provided equitable treatment 
as a quantifiable, reliable resource relative to the 
resource obligations of any load-serving entity, 
transmission provider or transmitting party. 
(f) COST RECOVERY
OF DEMAND RESPONSE DE-
VICES.—It is the policy of the United States that time-based 
pricing and other forms of demand response, whereby elec-
tricity customers are provided with electricity price signals 
and the ability to benefit by responding to them, shall be 
encouraged and the deployment of such technology and de-
vices that enable electricity customers to participate in such 
pricing and demand response systems shall be facilitated. 
It is further the policy of the United States that the benefits 
of such demand response that accrue to those not deploying 
such technology and devices, but who are part of the same 
regional electricity entity, shall be recognized. 
Subtitle F—Renewable Energy 
SEC. 7071. NET METERING. 
(a) ADOPTION OF STANDARD.—Section 111(d) of the 
Public Utility Regulatory Policies Act of 1978 (16 U.S.C. 
2621(d)) is amended by adding at the end the following: 
‘‘(14) NET METERING.—(A) Each electric utility 
shall make available upon request net metering serv-
ice to any electric consumer that the electric utility 
serves.
317
‘‘(B) For purposes of implementing this para-
graph, any reference contained in this section to the 
date of enactment of the Public Utility Regulatory 
Policies Act of 1978 shall be deemed to be a reference 
to the date of enactment of this paragraph. 
‘‘(C) Notwithstanding subsections (b) and (c) of 
section 112, each State regulatory authority shall con-
sider and make a determination concerning whether 
it is appropriate to implement the standard set out 
in subparagraph (A) not later than 1 year after the 
date of enactment of this paragraph.’’. 
(b) SPECIAL RULES FOR NET METERING.—Section 
115 of the Public Utility Regulatory Policies Act of 1978 
(16 U.S.C. 2625) is amended by adding at the end the fol-
lowing: 
‘‘(l) NET METERING.—In undertaking the consider-
ation and making the determination under section 111 with 
respect to the standard concerning net metering established 
by section 111(d)(14), the term ‘net metering service’ shall 
mean a service provided in accordance with the following 
standards: 
‘‘(1) RATES
AND
CHARGES.—An electric util-
ity—
‘‘(A) shall charge the owner or operator of 
an on-site generating facility rates and charges
318
that are identical to those that would be charged 
other electric consumers of the electric utility in 
the same rate class; and 
‘‘(B) shall not charge the owner or operator 
of an on-site generating facility any additional 
standby, capacity, interconnection, or other rate 
or charge. 
‘‘(2) MEASUREMENT.—An electric utility that 
sells electric energy to the owner or operator of an on-
site generating facility shall measure the quantity of 
electric energy produced by the on-site facility and the 
quantity of electric energy consumed by the owner or 
operator of an on-site generating facility during a 
billing period in accordance with normal metering 
practices. 
‘‘(3) ELECTRIC
ENERGY
SUPPLIED
EXCEEDING 
ELECTRIC ENERGY GENERATED.—If the quantity of 
electric energy sold by the electric utility to an on-site 
generating facility exceeds the quantity of electric en-
ergy supplied by the on-site generating facility to the 
electric utility during the billing period, the electric 
utility may bill the owner or operator for the net 
quantity of electric energy sold, in accordance with 
normal metering practices.
319
‘‘(4) ELECTRIC ENERGY GENERATED EXCEEDING 
ELECTRIC ENERGY SUPPLIED.—If the quantity of elec-
tric energy supplied by the on-site generating facility 
to the electric utility exceeds the quantity of electric 
energy sold by the electric utility to the on-site gener-
ating facility during the billing period—
‘‘(A) the electric utility may bill the owner 
or operator of the on-site generating facility for 
the appropriate charges for the billing period in 
accordance with paragraph (2); and 
‘‘(B) the owner or operator of the on-site 
generating facility shall be credited for the excess 
kilowatt-hours generated during the billing pe-
riod, with the kilowatt-hour credit appearing on 
the bill for the following billing period. 
‘‘(5) SAFETY AND PERFORMANCE STANDARDS.—
An eligible on-site generating facility and net meter-
ing system used by an electric consumer shall meet all 
applicable safety, performance, reliability, and inter-
connection standards established by the National 
Electrical Code, the Institute of Electrical and Elec-
tronics Engineers, and Underwriters Laboratories. 
‘‘(6) ADDITIONAL
CONTROL
AND
TESTING
RE-
QUIREMENTS.—The Commission, after consultation 
with State regulatory authorities and nonregulated
320
electric utilities and after notice and opportunity for 
comment, may adopt, by rule, additional control and 
testing requirements for on-site generating facilities 
and net metering systems that the Commission deter-
mines are necessary to protect public safety and sys-
tem reliability. 
‘‘(7) DEFINITIONS.—For purposes of this sub-
section: 
‘‘(A) The term ‘eligible on-site generating 
facility’ means—
‘‘(i) a facility on the site of a residen-
tial electric consumer with a maximum gen-
erating capacity of 10 kilowatts or less that 
is fueled by solar energy, wind energy, or 
fuel cells; or 
‘‘(ii) a facility on the site of a commer-
cial electric consumer with a maximum 
generating capacity of 500 kilowatts or less 
that is fueled solely by a renewable energy 
resource, landfill gas, or a high efficiency 
system. 
‘‘(B) The term ‘renewable energy resource’ 
means solar, wind, biomass, or geothermal en-
ergy.
321
‘‘(C) The term ‘high efficiency system’ 
means service fuel cells or combined heat and 
power. 
‘‘(D) The term ‘net metering’ means service 
to an electric consumer under which electric en-
ergy generated by that electric consumer from an 
eligible on-site generating facility and delivered 
to the local distribution facilities may be used to 
offset electric energy provided by the electric util-
ity to the electric consumer during the applicable 
billing period.’’
SEC. 7072. RENEWABLE ENERGY PRODUCTION INCENTIVE. 
(a) INCENTIVE PAYMENTS.—Section 1212(a) of the 
Energy Policy Act of 1992 (42 U.S.C. 13317(a)) is amended 
by striking ‘‘and which satisfies’’ and all that follows 
through ‘‘Secretary shall establish.’’ and inserting ‘‘. If there 
are insufficient appropriations to make full payments for 
electric production from all qualified renewable energy fa-
cilities in any given year, the Secretary shall assign 60 per-
cent of appropriated funds for that year to facilities that 
use solar, wind, geothermal, or closed-loop (dedicated energy 
crops) biomass technologies to generate electricity, and as-
sign the remaining 40 percent to other projects. The Sec-
retary may, after transmitting to the Congress an expla-
322
nation of the reasons therefor, alter the percentage require-
ments of the preceding sentence.’’. 
(b) QUALIFIED RENEWABLE ENERGY FACILITY.—Sec-
tion 1212(b) of the Energy Policy Act of 1992 (42 U.S.C. 
13317(b)) is amended—
(1) by striking ‘‘a State or any political’’ and 
all that follows through ‘‘nonprofit electrical coopera-
tive’’ and inserting ‘‘a not-for-profit electric coopera-
tive, a public utility described in section 115 of the 
Internal Revenue Code of 1986, a State, Common-
wealth, territory, or possession of the United States or 
the District of Columbia, or a political subdivision 
thereof, or an Indian tribal government of subdivision 
thereof,’’; and 
(2) by inserting ‘‘landfill gas,’’ after ‘‘wind, bio-
mass,’’. 
(c) ELIGIBILITY WINDOW.—Section 1212(c) of the En-
ergy Policy Act of 1992 (42 U.S.C. 13317(c)) is amended 
by striking ‘‘during the 10-fiscal year period beginning 
with the first full fiscal year occurring after the enactment 
of this section’’ and inserting ‘‘after October 1, 2003, and 
before October 1, 2013’’. 
(d) AMOUNT OF PAYMENT.—Section 1212(e)(1) of the 
Energy Policy Act of 1992 (42 U.S.C. 13317(e)(1)) is
323
amended by inserting ‘‘landfill gas,’’ after ‘‘wind, bio-
mass,’’. 
(e) SUNSET.—Section 1212(f) of the Energy Policy Act 
of 1992 (42 U.S.C. 13317(f)) is amended by striking ‘‘the 
expiration of’’ and all that follows through ‘‘of this section’’ 
and inserting ‘‘September 30, 2023’’. 
(f) AUTHORIZATION
OF APPROPRIATIONS.—Section 
1212(g) of the Energy Policy Act of 1992 (42 U.S.C. 
13317(g)) is amended to read as follows: 
‘‘(g) AUTHORIZATION OF APPROPRIATIONS.—
‘‘(1) IN
GENERAL.—Subject to paragraph (2), 
there are authorized to be appropriated such sums as 
may be necessary to carry out this section for fiscal 
years 2003 through 2023. 
‘‘(2) AVAILABILITY
OF
FUNDS.—Funds made 
available under paragraph (1) shall remain available 
until expended.’’. 
SEC. 7073. RENEWABLE ENERGY ON FEDERAL LANDS. 
(a) REPORT TO CONGRESS.—Within 24 months after 
the date of enactment of this section, the Secretary of the 
Interior, in cooperation with the Secretary of Agriculture, 
shall develop and report to the Congress recommendations 
on opportunities to develop renewable energy on public 
lands under the jurisdiction of the Secretary of the Interior
324
and National Forest System lands under the jurisdiction 
of the Secretary of Agriculture. The report shall include—
(1) 5-year plans developed by the Secretary of 
the Interior and the Secretary of Agriculture, respec-
tively, for encouraging the development of wind and 
solar energy consistent with applicable law and man-
agement plans; and 
(2) an analysis of—
(A) the use of rights-of-ways, leases, or other 
methods to develop wind and solar energy on 
such lands; 
(B) the anticipated benefits of grants, loans, 
tax credits, or other provisions to promote wind 
and solar energy development on such lands; and 
(C) any issues that the Secretary of the In-
terior or the Secretary of Agriculture have en-
countered in managing wind or solar energy 
projects on such lands, or believe are likely to 
arise in relation to the development of wind or 
solar energy on such lands; 
(3) a list, developed in consultation with the Sec-
retary of Energy and the Secretary of Defense, of 
lands under the jurisdiction of the Department of En-
ergy or Defense that would be suitable for develop-
ment for wind or solar energy, and any recommended
325
statutory and regulatory mechanisms for such devel-
opment; and 
(4) any recommendations pertaining to the 
issues addressed in the report. 
(b) NATIONAL ACADEMY OF SCIENCES STUDY.—
(1) IN GENERAL.—Within 90 days after the date 
of the enactment of this Act, the Secretary of the Inte-
rior shall contract with the National Academy of 
Sciences to—
(A) study the potential for the development 
of wind, solar, and ocean energy on the Outer 
Continental Shelf; 
(B) assess existing Federal authorities for 
the development of such resources; and 
(C) recommend statutory and regulatory 
mechanisms for such development. 
(2) TRANSMITTAL OF RESULTS.—The results of 
the study shall be transmitted to the Congress within 
24 months after the date of the enactment of this Act.
SEC. 7074. ASSESSMENT OF RENEWABLE ENERGY RE-
SOURCES. 
(a) RESOURCE
ASSESSMENT.—Not later than 3 
months after the date of enactment of this Act, and each 
year thereafter, the Secretary of Energy shall review the 
available assessments of renewable energy resources avail-
332
‘‘(A) an entity described in section 201(f); or 
‘‘(B) a rural electric cooperative 
that does not sell more than 4,000,000 megawatt hours of 
electricity per year. 
‘‘(3) For purposes of this subsection, the term ‘spot 
market sale’ means an agreement for the sale of electric en-
ergy at wholesale in interstate commerce that is for 24 hours 
or less and that is entered into the day of, or the day prior 
to, delivery.’’. 
(b) CONFORMING AMENDMENTS.—(1) Section 206 of 
the Federal Power Act (16 U.S.C. 824e) is amended as fol-
lows: 
(A) In subsection (b), in the seventh sentence, by 
striking ‘‘the public utility to make’’. 
(B) In the first sentence of subsection (a), by 
striking ‘‘hearing had’’ and inserting ‘‘hearing held’’. 
(2) Section 201(b)(2) of such Act (16 U.S.C. 824(b)(2)) 
is amended as follows: 
(A) In the first sentence by striking ‘‘sections 
210’’ and inserting ‘‘sections 206(f), 210’’. 
(B) In the second sentence by striking ‘‘section 
210’’ and inserting ‘‘section 206(f), 210,’’. 
(3) Section 201(e) of the Federal Power Act is amended 
by striking ‘‘section 210’’ and inserting ‘‘section 206(f), 
210’’.