175
ance. Payments under this section may only be made upon 
receipt by the Secretary of an incentive payment applica-
tion establishing an applicant as either—
(1) a qualifying advanced power system tech-
nology facility; or 
(2) a qualifying security and assured power fa-
cility. 
(b) INCENTIVES.—Subject to availability of funds, a 
payment of 1.8 cents per kilowatt-hour shall be paid to 
the owner or operator of a qualifying advanced power sys-
tem technology facility under this section for electricity 
generated at such facility. An additional 0.7 cents per kilo-
watt-hour shall be paid to the owner or operator of a quali-
fying security and assured power facility for electricity 
generated at such facility. Any facility qualifying under 
this section shall be eligible for an incentive payment for 
up to, but not more than, the first 10,000,000 kilowatt-
hours produced in any fiscal year. 
(c) ELIGIBILITY.—For purposes of this section—
(1) the term ‘‘qualifying advanced power system 
technology facility’’ means a facility using an ad-
vanced fuel cell, turbine, or hybrid power system or 
power storage system to generate or store electric 
energy; and
176
(2) the term ‘‘qualifying security and assured 
power facility’’ means a qualifying advanced power 
system technology facility determined by the Sec-
retary of Energy, in consultation with the Secretary 
of Homeland Security, to be in critical need of se-
cure, reliable, rapidly available, high-quality power 
for critical governmental, industrial, or commercial 
applications. 
(d) AUTHORIZATION.—There are authorized to be ap-
propriated to the Secretary of Energy for the purposes 
of this section, $10,000,000 for each of the fiscal years 
2004 through 2010.
Subtitle C—Clean School Buses 
SEC. 5031. ESTABLISHMENT OF PILOT PROGRAM. 
(a) ESTABLISHMENT.—The Secretary of Energy, in 
consultation with the Secretary of Transportation and the 
Administrator of the Environmental Protection Agency, 
shall establish a pilot program for awarding grants on a 
competitive basis to eligible entities for the acquisition of 
alternative fuel school buses and ultra-low sulfur diesel 
school buses. 
(b) REQUIREMENTS.—Not later than 3 months after 
the date of the enactment of this Act, the Secretary shall 
establish and publish in the Federal register grant require-
ments on eligibility for assistance, and on implementation
177
of the program established under subsection (a), including 
certification requirements to ensure compliance with this 
subtitle. 
(c) SOLICITATION.—Not later than 6 months after 
the date of the enactment of this Act, the Secretary shall 
solicit proposals for grants under this section. 
(d) ELIGIBLE RECIPIENTS.—A grant shall be award-
ed under this section only—
(1) to a local or State governmental entity re-
sponsible for providing school bus service to one or 
more public school systems or responsible for the 
purchase of school buses; or 
(2) to a contracting entity that provides school 
bus service to one or more public school systems, if 
the grant application is submitted jointly with the 
school system or systems which the buses will serve. 
(e) TYPES OF GRANTS.—
(1) IN
GENERAL.—Grants under this section 
shall promote the conservation of energy and im-
provement of public health and the environment by 
facilitating the acquisition of alternative fuel school 
buses and ultra-low sulfur diesel school buses in lieu 
of buses manufactured before model year 1977 and 
diesel-powered buses manufactured before model 
year 1991.
178
(2) NO ECONOMIC BENEFIT.—Other than the 
receipt of the grant, a recipient of a grant under this 
section may not receive any economic benefit in con-
nection with the receipt of the grant. 
(3) PRIORITY OF GRANT APPLICATIONS.—The 
Secretary shall give priority to awarding grants to 
applicants who will utilize grants to replace buses 
manufactured before model year 1977. 
(f) CONDITIONS OF GRANT.—A grant provided under 
this section shall include the following conditions: 
(1) All buses acquired with funds provided 
under the grant shall be operated as part of the 
school bus fleet for which the grant was made for a 
minimum of 5 years. 
(2) Funds provided under the grant may only 
be used—
(A) to pay the cost, except as provided in 
paragraph (3), of new alternative fuel school 
buses or ultra-low sulfur diesel school buses, in-
cluding State taxes and contract fees; and 
(B) to provide—
(i) up to 10 percent of the price of the 
alternative fuel buses acquired, for nec-
essary alternative fuel infrastructure if the
179
infrastructure will only be available to the 
grant recipient; and 
(ii) up to 15 percent of the price of 
the alternative fuel buses acquired, for nec-
essary alternative fuel infrastructure if the 
infrastructure will be available to the grant 
recipient and to other bus fleets. 
(3) The grant recipient shall be required to pro-
vide at least the lesser of 15 percent of the total cost 
of each bus received or $15,000 per bus. 
(4) In the case of a grant recipient receiving a 
grant to demonstrate ultra-low sulfur diesel school 
buses, the grant recipient shall be required to pro-
vide documentation to the satisfaction of the Sec-
retary that diesel fuel containing sulfur at not more 
than 15 parts per million is available for carrying 
out the purposes of the grant, and a commitment by 
the applicant to use such fuel in carrying out the 
purposes of the grant. 
(g) BUSES.—Funding under a grant made under this 
section may be used to facilitate the use only of new alter-
native fuel school buses or ultra-low sulfur diesel school 
buses—
(1) with a gross vehicle weight of greater than 
14,000 pounds;
180
(2) that are powered by a heavy duty engine; 
(3) that, in the case of alternative fuel school 
buses, emit not more than—
(A) for buses manufactured in model year 
2002, 2.5 grams per brake horsepower-hour of 
nonmethane hydrocarbons and oxides of nitro-
gen and .01 grams per brake horsepower-hour 
of particulate matter; and 
(B) for buses manufactured in model years 
2003 through 2006, 1.8 grams per brake horse-
power-hour of nonmethane hydrocarbons and 
oxides of nitrogen and .01 grams per brake 
horsepower-hour of particulate matter; and 
(4) that, in the case of ultra-low sulfur diesel 
school buses, emit not more than—
(A) for buses manufactured in model years 
2002 through 2003, 3.0 grams per brake horse-
power-hour of oxides of nitrogen and .01 grams 
per brake horsepower-hour of particulate mat-
ter; and 
(B) for buses manufactured in model years 
2004 through 2006, 2.5 grams per brake horse-
power-hour of nonmethane hydrocarbons and 
oxides of nitrogen and .01 grams per brake 
horsepower-hour of particulate matter,
181
except that under no circumstances shall buses be 
acquired under this section that emit nonmethane 
hydrocarbons, oxides of nitrogen, or particulate mat-
ter at a rate greater than the best performing tech-
nology of the same class of ultra-low sulfur diesel 
school buses commercially available at the time the 
grant is made. 
(h) DEPLOYMENT
AND DISTRIBUTION.—The Sec-
retary shall seek to the maximum extent practicable to 
achieve nationwide deployment of alternative fuel school 
buses and ultra-low sulfur diesel school buses through the 
program under this section, and shall ensure a broad geo-
graphic distribution of grant awards, with a goal of no 
State receiving more than 10 percent of the grant funding 
made available under this section for a fiscal year. 
(i) 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 
any fiscal year for the acquisition of ultra-low sulfur diesel 
school buses. 
(j) REDUCTION
OF SCHOOL BUS IDLING.—Each 
local educational agency (as defined in section 9101 of the 
Elementary and Secondary Education Act of 1965 (20 
U.S.C. 7801)) that receives Federal funds under the Ele-
mentary and Secondary Education Act of 1965 (20 U.S.C.
182
6301 et seq.) is encouraged to develop a policy, consistent 
with the health, safety, and welfare of students and the 
proper operation and maintenance of school buses, to re-
duce the incidence of unnecessary school bus idling at 
schools when picking up and unloading students. 
(k) ANNUAL REPORT.—Not later than January 31 
of each year, the Secretary of Energy shall provide a re-
port evaluating implementation of the program under this 
section to the Congress. Such report shall include the total 
number of grant applications received, the number and 
types of alternative fuel school buses and ultra-low sulfur 
diesel school buses requested in grant applications, a list 
of grants awarded and the criteria used to select the grant 
recipients, certified engine emission levels of all buses pur-
chased under the program, and any other information the 
Secretary considers appropriate. 
(l) DEFINITIONS.—For purposes of this section—
(1) the term ‘‘alternative fuel school bus’’ 
means a school bus powered substantially by elec-
tricity (including electricity supplied by a fuel cell), 
or by liquefied natural gas, compressed natural gas, 
liquefied petroleum gas, hydrogen, propane, or meth-
anol or ethanol at no less than 85 percent by vol-
ume;
183
(2) the term ‘‘idling’’ means operating an en-
gine while remaining stationary for more than ap-
proximately 3 minutes, except that such term does 
not apply to routine stoppages associated with traf-
fic movement or congestion; and 
(3) the term ‘‘ultra-low sulfur diesel school 
bus’’ means a school bus powered by diesel fuel 
which contains sulfur at not more than 15 parts per 
million. 
SEC. 5032. FUEL CELL BUS DEVELOPMENT AND DEM-
ONSTRATION PROGRAM. 
(a) ESTABLISHMENT OF PROGRAM.—The Secretary 
shall establish a program for entering into cooperative 
agreements with private sector fuel cell bus developers for 
the acquisition of fuel cell-powered school buses, and sub-
sequently with not less than 2 units of local government 
using natural gas-powered school buses and such private 
sector fuel cell bus developers to facilitate the use of fuel 
cell-powered school buses. 
(b) COST SHARING.—The non-Federal contribution 
for activities funded under this section shall be not less 
than 20 percent for fuel infrastructure development activi-
ties. 
(c) FUNDING.—No more than $25,000,000 of the 
amounts authorized under section 5033 may be used for
184
carrying out this section for the period encompassing fis-
cal years 2003 through 2006. 
(d) REPORTS TO CONGRESS.—Not later than 3 years 
after the date of the enactment of this Act, and not later 
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 
result 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
185
propelled solely on an alternative fuel as defined in 
section 301 of the Energy Policy Act (42 U.S.C. 
13211), except the term does not include any vehicle 
that the Secretary determines, by rule, does not 
yield substantial environmental benefits over a vehi-
cle 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 stor-
age 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 
Federal Regulations; and
186
(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 pro-
gram’’ means the competitive grant program estab-
lished under section 5042. 
(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 particu-
late matter; and 
(II) model years 2004 through 
2006, 2.5 grams per brake horse-
power-hour of nonmethane hydro-
carbons and oxides of nitrogen and
187
.01 grams per brake horsepower-hour 
of particulate matter; or 
(ii) the emissions of nonmethane hy-
drocarbons, oxides of nitrogen, and partic-
ulate matter of the best performing tech-
nology of ultra-low sulfur diesel vehicles of 
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 
Energy, to provide not more than 10 geographically dis-
persed project grants to State governments, local govern-
ments, or metropolitan transportation authorities to carry 
out a project or projects for the purposes described in sub-
section (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
188
personnel or other State or local government or 
metropolitan transportation authority employ-
ees. 
(2) The acquisition of alternative fueled vehi-
cles, hybrid vehicles, or fuel cell vehicles, including—
(A) buses used for public transportation or 
transportation to and from schools; 
(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
189
that applications be submitted by the head of a 
State or local government or a metropolitan trans-
portation authority, or any combination thereof, and 
a registered participant in the Clean Cities Program 
of the Department of Energy, and shall include—
(A) a description of the projects proposed 
in the application, including how they meet the 
requirements of this subtitle; 
(B) an estimate of the ridership or degree 
of use of the projects proposed in the applica-
tion; 
(C) an estimate of the air pollution emis-
sions reduced and fossil fuel displaced as a re-
sult of the projects proposed in the application, 
and a plan to collect and disseminate environ-
mental data, related to the projects to be fund-
ed 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
190
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 
(G) documentation to the satisfaction of 
the Secretary that diesel fuel containing sulfur 
at not more than 15 parts per million is avail-
able for carrying out the projects, and a com-
mitment 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 
proposed projects and the greatest likelihood that 
each project proposed in the application will be
191
maintained 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.—
(1) MAXIMUM
AMOUNT.—The Secretary shall 
not provide more than $20,000,000 in Federal as-
sistance 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 
Secretary shall seek to the maximum extent prac-
ticable 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
192
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-
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 pro-
vide not less than 20 percent and not more than 25 per-
cent of the grant funding made available under this sec-
tion 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 con-
taining—
193
(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 
and to other interested parties, including other ap-
plicants 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 esti-
mate 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.
194
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: 
(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 vehi-
cles in 1998. 
(2) The majority of clean fuel vehicles in oper-
ation today are transit buses. 
(3) Hydrogen fuel cell heavy-duty vehicle bus 
deployments can most appropriately advance hydro-
gen fuel cell technology development due to central-
ized refueling, stable duty cycles, and fixed routes. 
(4) Hydrogen fuel cell heavy-duty vehicle bus 
deployments are the most effective manner in which 
to advance technology developments for public 
awareness, consumption, and acceptance.
195
SEC. 5053. HYDROGEN FUEL CELL BUSES. 
The Secretary of Energy, through the advanced vehi-
cle technologies program, in coordination with the Sec-
retary 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, 
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, es-
tablish a public-private research partnership involving the 
Federal Government, the railroad industry, locomotive 
manufacturers and equipment suppliers, and the research
196
facility owned by the Federal Railroad Administration and 
operated by contract. The goal of the research partnership 
shall include developing and demonstrating locomotive 
technologies that increase fuel economy, reduce emissions, 
and lower costs. 
(b) AUTHORIZATION
OF APPROPRIATIONS.—There 
are authorized to be appropriated to carry out the require-
ments of this section $25,000,000 for fiscal year 2004, 
$30,000,000 for fiscal year 2005, and $35,000,000 for fis-
cal year 2006. 
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 nonattain-
ment area. The report shall describe—
(1) projects approved by the Environmental 
Protection 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-
197
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 En-
vironmental Protection Agency has based approval 
of such projects; 
(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 cred-
its for use by stationary sources or for other pur-
poses. 
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 sys-
tem of devices utilized to reduce long-duration idling 
of a heavy-duty vehicle.
198
(2) HEAVY-DUTY VEHICLE.—The term ‘‘heavy-
duty vehicle’’ means a vehicle that has a gross vehi-
cle weight rating greater than 26,000 pounds and is 
powered 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 
minutes, where the main drive engine is not engaged 
in gear. Such term does not apply to routine stop-
pages associated with traffic movement or conges-
tion. 
(b) STUDIES OF THE BENEFITS OF IDLE REDUCTION 
TECHNOLOGIES.—
(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 Ad-
ministrator of the Environmental Protection Agency 
is directed to commence a review of the Agency’s 
mobile source air emissions models used under the
199
Clean Air Act to determine whether such models ac-
curately reflect the emissions resulting from long-du-
ration idling of heavy-duty trucks and other vehicles 
and engines, and shall update those models as the 
Administrator deems appropriate. Additionally, with-
in 90 days after the date of enactment of this sec-
tion, the Administrator 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 emis-
sions trading system, and shall revise Agency regula-
tions and guidance as the Administrator deems ap-
propriate. 
(3) IDLING
TECHNOLOGIES.—Not later than 
180 days after the date of the enactment of this sec-
tion, the Secretary of Energy, in consultation with 
the Secretary of Transportation and the Adminis-
trator 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 reduc-
tion technology is installed onboard a motor vehicle, the
200
maximum gross vehicle weight limit and the axle weight 
limit for any motor vehicle equipped with an idling reduc-
tion system may be increased by an amount necessary to 
compensate for the additional weight of the idling reduc-
tion 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 Pro-
tection 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 non-
attainment areas and to identify ways to promote fuel con-
servation measures for aviation, enhance fuel efficiency, 
and reduce emissions. As part of this study, the Adminis-
trator of the Federal Aviation Administration and the Ad-
ministrator of the Environmental Protection Agency shall 
focus on how air traffic management inefficiencies, such 
as aircraft idling at airports, result in unnecessary fuel 
burn and air emissions. Within 180 days after the com-
mencement of the study, the Administrator of the Federal 
Aviation Administration and the Administrator of the En-
vironmental Protection Agency shall submit a report to 
the Committees on Energy and Commerce and Transpor-
201
tation and Infrastructure of the House of Representatives 
and the Committees on Environment and Public Works 
and Commerce, Science, and Transportation 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 impacting safety and 
security, increasing individual aircraft noise, and taking 
into account all aircraft emissions and their relative im-
pact on human health. 
SEC. 5065. DIESEL FUELED VEHICLES. 
(a) DIESEL COMBUSTION AND AFTER TREATMENT 
TECHNOLOGIES.—The Secretary of Energy shall accel-
erate efforts to improve diesel combustion and after-treat-
ment technologies for use in diesel fueled motor vehicles. 
(b) GOAL.—
(1) COMPLIANCE
WITH
TIER
EMISSION 
STANDARDS BY 2010.—The Secretary shall carry out 
subsection (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 stand-
ards’’ means the motor vehicle emission standards 
promulgated by the Administrator of the Environ-
mental Protection Agency on February 10, 2000,
202
under sections 202 and 211 of the Clean Air Act to 
apply to passenger cars, light trucks, and larger pas-
senger vehicles 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 
vehicle’’ means a motor vehicle which draws propulsion en-
ergy from both—
(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
203
Secretary determines that an agency needs a waiver of 
such requirement for vehicles in the fleet of the agency 
in a particular geographic area where—
‘‘(I) the alternative fuel otherwise required to 
be used in the vehicle is not reasonably available to 
retail 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 
required 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 annu-
ally to the Congress on the extent to which the require-
ments of this subparagraph are being achieved. The report 
shall include information on annual reductions achieved 
of petroleum-based fuels and the problems, if any, encoun-
tered 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;
204
(2) protect and strengthen the Nation’s econ-
omy, standard of living, and national security by re-
ducing 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 
(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 
vested in the Secretary of Energy by the Depart-
ment of Energy Organization Act (42 U.S.C. 7101 
et seq.) or other law.
205
(3) INSTITUTION OF HIGHER EDUCATION.—The 
term ‘‘institution of higher education’’ has the 
meaning 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 ven-
ture’’ has the meaning given that term under section 
2 of the National Cooperative Research and Produc-
tion 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. 
(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.
206
(J) National Renewable Energy Labora-
tory. 
(K) Oak Ridge National Laboratory. 
(L) Pacific Northwest National Labora-
tory. 
(M) Princeton Plasma Physics Laboratory. 
(N) Sandia National Laboratories. 
(O) Thomas Jefferson National Accel-
erator 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. 
(E) Lawrence Berkeley National Labora-
tory. 
(F) Oak Ridge National Laboratory. 
(G) Pacific Northwest National Labora-
tory. 
(H) Princeton Plasma Physics Laboratory. 
(I) Stanford Linear Accelerator Center. 
(J) Thomas Jefferson National Accelerator 
Facility.
207
(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 author-
ized to be appropriated to the Secretary for energy effi-
ciency and conservation activities, including activities au-
thorized 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: 
(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;
208
(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 
authorized 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; 
(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-
209
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 
diodes that, compared to incandescent and fluores-
cent 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 
(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 sur-
faces; 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
210
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-state lighting research, development, and man-
ufacturing 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 
provide a description to the Secretary of the pro-
posed activities and list the parties that will receive 
funding.
211
(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 pursu-
ant to this subsection. 
(d) DEVELOPMENT, DEMONSTRATION, AND COM-
MERCIAL APPLICATION.—The Secretary shall carry out 
the development, demonstration, and commercial applica-
tion activities of the Next Generation Lighting Initiative 
through awards to private firms, trade associations, and 
institutions of higher education. In selecting awardees, the 
Secretary may give preference to members of the consor-
tium 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
212
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 re-
views 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. 
(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
213
that produces 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 
electricity; and 
(2) ‘‘associated equipment’’ means equipment 
located where the batteries will be used that is nec-
essary to enable the use of the energy stored in the 
batteries. 
SEC. 6032. ESTABLISHMENT OF SECONDARY ELECTRIC VE-
HICLE BATTERY USE PROGRAM. 
(a) PROGRAM.—The Secretary shall establish and 
conduct a program for the secondary use of batteries. 
Such program shall be—
(1) designed to demonstrate the use of batteries 
in secondary application, including utility and com-
mercial power storage and power quality;
214
(2) structured to evaluate the performance, in-
cluding useful service life and costs, of such bat-
teries in field operations, and evaluate the necessary 
supporting infrastructure, including reuse and dis-
posal of batteries; and 
(3) coordinated with ongoing secondary battery 
use programs at the National Laboratories and in 
industry. 
(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 batteries and associated equipment and supporting in-
frastructure in geographic locations throughout the 
United States. The Secretary may make additional solici-
tations for proposals 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—
(i) a description of the project, including the 
batteries to be used in the project, the proposed lo-
cations and applications for the batteries, the num-
ber of batteries to be demonstrated, and the type, 
characteristics, and estimated life-cycle costs of the 
batteries compared to other energy storage devices 
currently used;
215
(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 arrange-
ment for the batteries and associated equipment. 
(c) SELECTION OF PROPOSALS.—(1)(A) The Sec-
retary, in cooperation with affected Federal Regulatory 
agencies, shall, not later than 3 months after the closing 
date established by the Secretary for receipt of proposals 
under subsection (b), select at least 5 proposals to receive 
financial assistance under this section. 
(B) No one project selected under this section shall 
receive more than 25 percent of the funds authorized 
under this section. No more than 3 projects selected under 
this section shall demonstrate the same battery type. 
(2) In selecting a proposal under this section, the 
Secretary shall consider—
(A) the ability of the proposer to acquire the 
batteries and associated equipment and to success-
fully manage and conduct the demonstration project,
216
including 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—
(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 con-
siders appropriate.
217
(3) CONDITIONS.—The Secretary shall require that—
(A) as a part of a demonstration project, the 
users of the batteries provide to the proposer infor-
mation regarding the operation, maintenance, per-
formance, and use of the batteries, and the proposer 
provide such information to the battery manufac-
turer, for 3 years after the beginning of the dem-
onstration project; 
(B) the proposer provide to the Secretary and 
the Administrator of the United States Environ-
mental Protection Agency such information regard-
ing the operation, maintenance, performance, and 
use of the batteries as the Secretary or the Adminis-
trator 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 pro-
poser 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.
218
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 comprehen-
sive program to develop hybrid distributed power systems 
that combine—
(1) one or more renewable electric power gen-
eration technologies of 10 megawatts or less located 
near the site of electric energy use; and
219
(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 
design, test, integrate into systems, and operate 
such hybrid 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 pro-
gram to improve energy efficiency of high power density 
facilities, including data centers, server farms, and tele-
communications facilities. Such program shall consider 
technologies that provide significant improvement in ther-
220
mal controls, metering, load management, peak load re-
duction, or the efficient 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 
heating 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; 
(5) technologies to enhance existing grid compo-
nents;
221
(6) the development and use of high-tempera-
ture 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 en-
ergy 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 con-
sultation 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 pro-
gram plan, the Secretary shall consult with utilities, en-
ergy services providers, manufacturers, institutions of 
higher education, other appropriate State and local agen-
cies, environmental organizations, professional and tech-
nical societies, and any other persons the Secretary con-
siders appropriate.
222
(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 re-
sources needed to continue the development and commer-
cial application of transmission infrastructure tech-
nologies. 
Subtitle C—Renewable Energy 
PART 1—AUTHORIZATION OF APPROPRIATIONS 
SEC. 6301. RENEWABLE ENERGY. 
(a) IN GENERAL.—The following sums are author-
ized to be appropriated to the Secretary for renewable en-
ergy activities, including activities authorized under this 
subtitle: 
(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 appropriated 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. 
(3) For fiscal year 2006, $167,650,000.
223
(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 
Historically 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 locations.
(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—
(1) biopower energy systems;
224
(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 
energy activities, regulation of research and development 
activities 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): 
(1) For fiscal year 2004, $120,000,000.
225
(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 
authorized under this section may be used for decommis-
sioning the Fast Flux Test Facility.
226
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 de-
velopment activities addressing reliability, availability, pro-
ductivity, and component aging in existing nuclear power 
plants. 
(c) NUCLEAR POWER 2010 PROGRAM.—The Sec-
retary shall carry out a Nuclear Power 2010 Program, 
consistent with recommendations in the October 2001 re-
port entitled ‘‘A Roadmap to Deploy New Nuclear Power 
Plants in the United States by 2010’’ issued by the Nu-
clear Energy Research Advisory Committee of the Depart-
ment. The Program 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;
227
(3) include participation of international col-
laborators in research, development, and design ef-
forts as appropriate; and 
(4) encourage industry participation. 
(d) GENERATION IV NUCLEAR ENERGY SYSTEMS 
INITIATIVE.—The Secretary shall carry out a Generation 
IV Nuclear Energy Systems Initiative to develop an over-
all technology plan and to support research and develop-
ment necessary to make an informed technical decision 
about the most promising candidates for eventual commer-
cial application. The Initiative shall examine advanced 
proliferation-resistant and passively safe reactor designs, 
including designs 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 
Secretary shall carry out research to examine designs for
228
high-temperature reactors capable of producing large-scale 
quantities of hydrogen using thermochemical processes. 
(f) NUCLEAR
INFRASTRUCTURE
SUPPORT.—The 
Secretary shall develop and implement a strategy for the 
facilities of the Office of Nuclear Energy, Science, and 
Technology 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-effective 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 Direc-
tor of the Office of Nuclear Energy, Science and Tech-
nology, shall conduct an advanced fuel recycling tech-
nology research and development program to evaluate pro-
liferation-resistant fuel recycling and transmutation tech-
nologies which minimize environmental or public health 
and safety impacts as an alternative to aqueous reprocess-
ing technologies deployed as of the date of enactment of
229
this Act in support of evaluation of alternative national 
strategies for spent nuclear fuel and the Generation IV 
advanced reactor concepts, subject to annual review by the 
Secretary’s Nuclear Energy Research Advisory Committee 
or other independent 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 
annual 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;
230
(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 Engineer-
ing Education Research Program; 
(4) encourage collaborative nuclear research 
among industry, National Laboratories, and institu-
tions of higher education through the Nuclear En-
ergy Research Initiative; and 
(5) support communication and outreach re-
lated to nuclear science and engineering. 
(c) MAINTAINING
UNIVERSITY
RESEARCH
AND 
TRAINING REACTORS
AND ASSOCIATED INFRASTRUC-
TURE.—Activities 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
231
(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.—Fund-
ing for a research project provided under this section may 
be used to offset a portion of the operating and mainte-
nance costs of a research reactor at an institution of high-
er education used in the research project.
232
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 uncon-
ventional natural gas and other petroleum resource explo-
ration and production, including safe operations and envi-
ronmental 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.
233
(3) Unconventional natural gas and other petro-
leum resource exploration and production tech-
nology. 
(c) LIMITATION ON LOCATION OF FIELD ACTIVI-
TIES.—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 Fed-
eral or State land management agency or private 
land owner. 
(d) NATIONAL
ENERGY
TECHNOLOGY
LABORA-
TORY.—The Secretary, through the National Energy 
Technology Laboratory, shall carry out activities com-
plementary to activities under subsection (b)(1).
234
(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 as-
pects 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 Sec-
retary for project solicitations; 
(C) disburse funds awarded under sub-
section (f) as directed by the Secretary in ac-
235
cordance 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 as-
sign any activities to the program consortium except 
as specifically authorized under this section. 
(3) CONFLICT
OF
INTEREST.—(A) The Sec-
retary 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 sub-
section (f)(3) or (4) shall disclose to the Sec-
retary any financial interests in, or financial re-
lationships with, applicants for or recipients of 
awards under this section, including those of 
his or her spouse or minor child, unless such re-
lationships 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 in-
terest disclosed under clause (i) to recuse him-
self or herself from any review under subsection 
(f)(3) or oversight under subsection (f)(4) with 
respect to such applicant or recipient.
236
(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, competi-
tive process. 
(2) MEMBERS.—The program consortium may 
include corporations, institutions of higher edu-
cation, National Laboratories, or other research in-
stitutions. After submitting a proposal under para-
graph (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 sec-
tion 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 pro-
gram consortium, which must be submitted not less 
than 180 days after the date of enactment of this 
Act. The Secretary shall select the program consor-
237
tium not later than 240 days after such date of en-
actment. 
(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 
entity whose members collectively have demonstrated 
capabilities in planning and managing programs in 
natural gas or other petroleum exploration or pro-
duction. 
(7) CRITERION.—The Secretary may consider 
the amount of the fee an applicant proposes to re-
ceive 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
238
prepared by the Secretary in accordance with para-
graph (2). 
(2) DEVELOPMENT.—(A) Before drafting an 
annual plan under this subsection, the Secretary 
shall solicit specific written recommendations from 
the program consortium for each element to be ad-
dressed in the plan, including those described in 
paragraph (4). The Secretary may request that the 
program consortium submit its recommendations in 
the form of a draft annual plan. 
(B) The Secretary shall submit the rec-
ommendations of the program consortium under 
subparagraph (A) to the Ultra-Deepwater Advisory 
Committee established under section 6525(a) for re-
view, and such Advisory Committee shall provide to 
the Secretary written comments by a date deter-
mined by the Secretary. The Secretary may also so-
licit 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 trans-
mit to the Congress and publish in the Federal Reg-
ister the annual plan, along with any written com-
ments received under paragraph (2)(A) and (B).
239
The annual plan shall be transmitted and published 
not later than 60 days after the date of enactment 
of an Act making appropriations for a fiscal year for 
the program under this section. 
(4) CONTENTS.—The annual plan shall describe 
the ongoing and prospective activities of the pro-
gram under this section and shall include—
(A) a list of any solicitations for awards 
that the Secretary plans to issue to carry out 
activities, including the topics for such work, 
who would be eligible to apply, selection cri-
teria, 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 
proposals for awards under this subsection in such 
manner and at such time as the Secretary may pre-
scribe, in consultation with the program consortium.
240
(3) REVIEW.—The Secretary shall make awards 
under this subsection through a competitive process, 
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 con-
sortium 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 
monitoring 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 over-
see awards, or limit the authority of the Secretary 
to review or revoke awards. 
(C) The Secretary shall provide to the program 
consortium the information necessary for the pro-
gram consortium to carry out its responsibilities 
under this paragraph. 
(g) FEE.—
241
(1) IN GENERAL.—To compensate the program 
consortium for carrying out its activities under this 
section, the Secretary shall provide to the program 
consortium a fee in an amount not to exceed 7.5 
percent 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 pur-
poses 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. 
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
242
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 such resources, while improving safety and minimizing 
environmental 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
243
environmental mitigation of unconventional natural gas 
and other petroleum resources exploration and production. 
(e) ACTIVITIES BY THE UNITED STATES GEOLOGI-
CAL SURVEY.—The Secretary of the Interior, through the 
United States Geological Survey, shall, where appropriate, 
carry out programs to complement the programs under 
this section. 
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.
244
(d) TECHNOLOGY TRANSFER.—Each recipient of an 
award under this part shall conduct technology transfer 
activities, as appropriate. 
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 produc-
tion; 
(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
245
(D) no individuals who are board members, 
officers, or employees of the program consor-
tium. 
(3) DUTIES.—The advisory committee under 
this subsection shall—
(A) advise the Secretary on the develop-
ment and implementation of programs under 
this part 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 advi-
sory committee under this subsection shall serve 
without compensation but shall receive travel ex-
penses, including per diem in lieu of subsistence, in 
accordance with applicable provisions under sub-
chapter I of chapter 57 of title 5, United States 
Code. 
(b) UNCONVENTIONAL
RESOURCES
TECHNOLOGY 
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 Unconventional Resources Technology 
Advisory Committee.
246
(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 nat-
ural gas and other petroleum resource explo-
ration and production, including independent oil 
and gas producers; 
(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 de-
velopment and implementation of activities under 
this part related to unconventional natural gas and 
other petroleum resources. 
(4) COMPENSATION.—A member of the advi-
sory committee under this subsection shall serve 
without compensation but shall receive travel ex-
penses, including per diem in lieu of subsistence, in 
accordance with applicable provisions under sub-
247
chapter I of chapter 57 of title 5, United States 
Code. 
(c) PROHIBITION.—No advisory committee estab-
lished 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 re-
ceive an award under this part only if the Secretary 
finds—
(1) that the entity’s participation in the pro-
gram under this part would be in the economic in-
terest 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 
cooperative venture similar to those au-
thorized under this part;
248
(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 de-
veloped under this part is to be developed primarily for 
production of ultra-deepwater natural gas and other petro-
leum resources of the United States, and that this priority 
is to be reflected in the terms of grants, contracts, and 
cooperative agreements entered under this part. As part 
of the annual Departmental budget submission, the Sec-
retary shall report on all steps taken to implement the pol-
icy 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 
Petroleum Products Fund’’. 
SEC. 6528. SUNSET. 
The authority provided by this part shall terminate 
on September 30, 2010.
249
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 
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-
deepwater’’ means a water depth that is equal to or 
greater than 1,500 meters. 
(5) ULTRA-DEEPWATER
ARCHITECTURE.—The 
term ‘‘ultra-deepwater architecture’’ means the inte-
gration of technologies for the exploration for, or 
production of, natural gas or other petroleum re-
sources located at ultra-deepwater depths. 
(6) ULTRA-DEEPWATER
TECHNOLOGY.—The 
term ‘‘ultra-deepwater technology’’ means a discrete 
technology that is specially suited to address one or 
more challenges associated with the exploration for,
250
or production of, natural gas or other petroleum re-
sources located at ultra-deepwater depths. 
(7) UNCONVENTIONAL
NATURAL
GAS
AND 
OTHER PETROLEUM RESOURCE.—The term ‘‘uncon-
ventional natural gas and other petroleum resource’’ 
means natural gas and other petroleum resource lo-
cated onshore in an economically inaccessible geo-
logical formation. 
Subtitle F—Miscellaneous 
SEC. 6601. WASTE REDUCTION AND USE OF ALTERNATIVES. 
(a) GRANT AUTHORITY.—The Secretary is author-
ized to make a single grant to a qualified institution to 
examine and develop the feasibility of burning post-con-
sumer carpet in cement kilns as an alternative energy 
source. The purposes of the grant shall include deter-
mining—
(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 
relevant environmental impacts; and 
(4) how this process provides benefits to both 
cement kiln operations and carpet suppliers.
251
(b) QUALIFIED INSTITUTION.—For the purposes of 
subsection (a), a qualified institution is a research-inten-
sive institution of higher education with demonstrated ex-
pertise in the fields of fiber recycling and logistical mod-
eling of carpet waste collection and preparation. 
(c) WASTE
REDUCTION
AND
USE
OF
ALTER-
NATIVES.—There are authorized to be appropriated to the 
Secretary to carry out activities under this section 
$500,000 for fiscal year 2004. 
SEC. 6602. COAL GASIFICATION. 
The Secretary is authorized to provide loan guaran-
tees for a project to produce energy from a plant using 
integrated gasification combined cycle technology of at 
least 400 megawatts in capacity that produces power at 
competitive rates in deregulated energy generation mar-
kets and that does not receive any subsidy (direct or indi-
rect) from ratepayers. 
SEC. 6603. PETROLEUM COKE GASIFICATION. 
The Secretary is authorized to provide loan guaran-
tees 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
252
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 experi-
ence, for the transfer of technologies relating to ultra-
deepwater research and development developed at the 
Naval Surface Warfare Center, Carderock Division. 
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 
enactment of this Act, reimburse any contractor or sub-
contractor of the Department for any legal fees or ex-
penses incurred 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 Regula-
tions, or by a Department of Labor Administrative 
Law Judge pursuant to section 211 of the Energy 
Reorganization Act of 1974 (42 U.S.C. 5851); or
253
(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 disclo-
sures protected under chapter 12 of title 5, United 
States Code, section 211 of the Energy Reorganiza-
tion Act of 1974 (42 U.S.C. 5851), or any com-
parable State law, 
unless the adverse determination or final judgment is re-
versed upon further administrative or judicial review.
SEC. 6607. COMPLEX WELL TECHNOLOGY TESTING FACIL-
ITY. 
The Secretary, in coordination with industry leaders 
in extended reach drilling technology, shall establish a 
Complex Well Technology Testing Facility at the Rocky 
Mountain Oilfield Testing Center to increase the range of 
extended drilling technology to 50,000 feet, so that more 
energy resources can be realized with fewer drilling facili-
ties. 
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
254
(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 
bypass 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.
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 lim-
ited to performance-based) transmission rate treatments 
to promote capital investment in the enlargement and im-
255
provement of facilities for the transmission of electric en-
ergy in interstate commerce as appropriate to—
‘‘(1) promote economically efficient trans-
mission 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 
technologies and other measures to increase the ca-
pacity and efficiency of existing transmission facili-
ties 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
256
section, the Commission shall, in its review of such rate 
under sections 205 and 206, apply the rules adopted pur-
suant to this section, including any revisions thereto. 
Nothing in this section shall be construed to override, 
weaken, or conflict with the procedural and other require-
ments of this part, including the requirement of sections 
205 and 206 that all rates, charges, terms, and conditions 
be just and reasonable and not unduly discriminatory or 
preferential.’’.
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 al-
ternatives and recommendations from interested parties 
the Secretary shall issue a report, based on such study, 
which may designate one or more geographic areas experi-
encing electric energy transmission congestion as ‘inter-
state congestion areas’.
257
‘‘(b) CONSTRUCTION PERMIT.—The Commission is 
authorized, after notice and an opportunity for hearing, 
to issue permits for the construction or modification of 
electric transmission facilities in interstate congestion 
areas designated by the Secretary under subsection (a) if 
the Commission makes each of the following findings: 
‘‘(1) A finding that—
‘‘(A) the State in which the transmission 
facilities are to be constructed or modified is 
without authority to approve the siting of the 
facilities, or 
‘‘(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 de-
layed final approval for more than one year 
after the filing of an application seeking ap-
proval or one year after the designation of the 
relevant interstate congestion area, whichever is 
later.
258
‘‘(2) A finding that the facilities to be author-
ized 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-
mission and verified under oath. The Commission shall 
issue rules setting forth the form of the application, the 
information 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 
Commission 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 interested 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.
259
‘‘(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 ac-
quire by contract, or is unable to agree with the owner 
of the property to the compensation to be paid for, the 
necessary right-of-way to construct or modify such trans-
mission facilities, the permit holder may acquire the right-
of-way by the exercise 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 appro-
priate court of the State in which the property is located. 
The practice and procedure in any action or proceeding 
for that purpose in the 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 fa-
cilities pursuant to State law. 
‘‘(g) COMPLIANCE WITH OTHER LAWS.—Commis-
sion action under this section shall be subject to the Na-
tional Environmental Policy Act of 1969 (42 U.S.C. 4321 
et seq.) and all other applicable Federal laws.
260
‘‘(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 parcel of land acquired by eminent domain 
under this subsection 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 modi-
fication within a reasonable period of time after the acqui-
sition. Property acquired under this subsection may not 
be used for any heritage area, recreational trail, or park, 
or for any other purpose (other than power line construc-
tion or modification, and for power line operation and 
maintenance) without the consent of the owner of the par-
cel 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).
261
‘‘(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 envi-
ronmental review of the facility. The term ‘Federal 
authorization’ 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, certifi-
cations, opinions, or other approvals as may be re-
quired, whether issued by a Federal or a State agen-
cy. To the maximum extent practicable under appli-
cable Federal law, the Secretary of Energy shall co-
ordinate this Federal authorization and review proc-
ess with any Indian tribes, multi-State entities, and 
State agencies that are responsible for conducting 
any separate permitting and environmental reviews 
of the facility, to ensure timely and efficient review 
and permit decisions. 
‘‘(2) AUTHORITY TO SET DEADLINES.—As lead 
agency, the Department of Energy, in consultation 
with other Federal and, as appropriate, with Indian
262
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 estab-
lish prompt and binding intermediate milestones and 
ultimate deadlines for the review of and Federal au-
thorization decisions relating to the proposed facil-
ity. The Secretary of Energy shall ensure that once 
an application has been submitted with such data as 
the Secretary deems necessary, all permit decisions 
and related environmental reviews under all applica-
ble Federal laws shall be completed within 1 year or, 
if a requirement of another provision of Federal law 
makes this impossible, as soon thereafter as is prac-
ticable. The Secretary of Energy also shall provide 
an expeditious pre-application mechanism for pro-
spective applicants to confer with the agencies in-
volved to have each such agency determine and com-
municate to the prospective applicant within 60 days 
of when the prospective applicant submits a request 
for such information concerning—
‘‘(A) the likelihood of approval for a poten-
tial facility; and 
‘‘(B) key issues of concern to the agencies 
and public.
263
‘‘(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 docu-
ment may be an environmental assessment or envi-
ronmental impact statement under the National En-
vironmental 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. Section 1763) by fully taking into account 
prior analyses and decisions as to the corridors. The 
document under this section may consist of or in-
clude an environmental assessment, if allowed by 
law, or an environmental impact statement, if war-
ranted or required by law, or such other form of 
analysis as warranted, consistent with any require-
ment 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 appli-
264
cable criteria or other matters as required under ap-
plicable 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 ap-
peal with the Secretary of Energy, who shall, in con-
sultation with the affected agency, review the denial 
or take action on the pending application. Based on 
the overall record and in consultation with the af-
fected agency, the Secretary may then either issue 
the necessary authorization with any appropriate 
conditions, or deny the application. The Secretary 
shall issue a decision within 90 days of the filing of 
the appeal. In making a decision under this para-
graph, the Secretary shall comply with all applicable 
requirements of Federal law, including any require-
ments 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.
265
‘‘(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 nec-
essary 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 departments and non-departmental agencies 
shall, and interested Indian tribes, multi-State enti-
ties, and State agencies may, enter into Memoranda 
of Agreement to ensure the timely and coordinated 
review and permitting of electricity transmission and 
distribution facilities. The head of each Federal de-
partment or non-departmental agency with approval 
authority shall designate a senior responsible official 
and dedicate sufficient other staff and resources to 
ensure that the DOE regulations and any Memo-
randa are fully implemented. 
‘‘(6) MISCELLANEOUS.—Each Federal author-
ization for an electricity transmission or distribution 
facility shall be issued for a duration, as determined 
by the Secretary of Energy, commensurate with the 
anticipated use of the facility and with appropriate 
authority to manage the right-of-way for reliability 
and environmental protection. Further, when such
266
authorizations expire, they shall be reviewed for re-
newal taking fully into account reliance on such elec-
tricity infrastructure, recognizing its importance for 
public health, safety and economic welfare and as 
a legitimate use of Federal lands. 
‘‘(7) MAINTAINING
AND
ENHANCING
THE 
TRANSMISSION INFRASTRUCTURE.—In exercising the 
responsibilities under this Section, the Secretary of 
Energy shall consult regularly with the Federal En-
ergy Regulatory Commission (FERC) and FERC-
approved Regional Transmission Organizations and 
Independent System Operators. 
‘‘(k) INTERSTATE COMPACTS.—The consent of Con-
gress is hereby given for States to enter into interstate 
compacts establishing regional transmission siting agen-
cies to facilitate coordination among the States within 
such areas for purposes of siting future electric energy 
transmission facilities and to carry out State electric en-
ergy transmission siting responsibilities. The Secretary of 
Energy may provide technical assistance to regional trans-
mission siting agencies established under this subsection. 
‘‘(l) SAVINGS CLAUSE.—Nothing in this section shall 
be construed to affect any requirement of the environ-
mental laws of the United States, including, but not lim-
ited to, the National Environmental Policy Act of 1969.
267
This section shall not apply to any component of the Na-
tional Wilderness Preservation System, the National Wild 
and Scenic Rivers System, or the National Park system 
(including National Monuments therein).’’. 
(b) FEDERAL CORRIDORS.—The Secretary of the In-
terior, the Secretary of Energy, the Secretary of Agri-
culture, and the Chairman of the Council on Environ-
mental Quality shall, within 90 days of the date of enact-
ment 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 com-
pleting such work, any impediments to completing 
the work, and steps that Congress could take to ex-
pedite the process; 
(2) the number of pending applications to lo-
cate transmission and distribution facilities on Fed-
eral lands, key information relating to each such fa-
cility, how long each application has been pending, 
the schedule for issuing a timely decision as to each 
facility, and progress in incorporating existing and 
new such rights-of-way into relevant land use and 
resource management plans or their equivalent; and
268
(3) the number of existing transmission and 
distribution 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 UTIL-
ITIES. 
Part II of the Federal Power Act (16 U.S.C. 824 et 
seq.) is amended by inserting after section 211 the fol-
lowing: 
‘‘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 
discriminatory or preferential.
269
‘‘(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 
megawatt 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. 
‘‘(2) LOCAL DISTRIBUTION.— The requirements 
of subsection (a) shall not apply to facilities used in 
local distribution. 
‘‘(c) RATE
CHANGING
PROCEDURES.—The rate 
changing procedures applicable to public utilities under 
subsections (c) and (d) of section 205 are applicable to 
unregulated transmitting utilities for purposes of this sec-
tion. 
‘‘(d) REMAND.—In exercising its authority under 
paragraph (1), the Commission may remand transmission 
rates to an unregulated transmitting utility for review and
270
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 pre-
clude 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 
commerce, and 
‘‘(B) is either an entity described in sec-
tion 201(f) or a rural electric cooperative. 
‘‘(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 ac-
cess to electric transmission service, benefit retail con-
sumers, facilitate wholesale competition, improve effi-
ciencies in transmission grid management, promote grid 
reliability, remove opportunities for unduly discriminatory 
or preferential transmission practices, and provide for the
271
efficient development of transmission infrastructure need-
ed to meet the growing demands of competitive wholesale 
power markets, all transmitting utilities in interstate com-
merce should voluntarily become members of independ-
ently administered regional transmission organizations 
that have operational control of interstate transmission fa-
cilities and do not own or control generation facilities used 
to supply electric energy for sale at wholesale. 
(b) SENSE OF THE CONGRESS ON CAPITAL INVEST-
MENT.—It is the sense of the Congress that the Federal 
Energy Regulatory Commission should provide to any 
transmitting utility that becomes a member of an oper-
ational regional transmitting organization approved by the 
Commission a return on equity sufficient to attract new 
investment capital for expansion of transmission capacity, 
in accordance with sections 205 and 206 of the Federal 
Power Act (16 U.S.C. 824d and 824e), including the re-
quirement 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 
Energy and Natural Resources of the United States Sen-
ate a report containing the following:
272
(1) A list of all regional transmission organiza-
tion applications filed at the Commission pursuant 
to the Commission’s Order No. 2000, including an 
identification of each public utility and other entity 
included 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 re-
jected, preliminarily approved, finally approved, or 
has some other status (including a description of 
that status). 
(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 pur-
suant to paragraph (3) constitute material non-
compliance with the requirements of the Commis-
273
sion’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 
(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 En-
ergy, except that the Secretary may des-
274
ignate the Administrator of a Federal 
power marketing agency to act as the ap-
propriate Federal 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. 
(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
275
head of the Federal utility determines necessary 
or appropriate, including standards that assure 
recovery of all the Federal utility’s costs and 
expenses related to the transmission facilities 
that are the subject of the contract, agreement 
or other arrangement, consistency with existing 
contracts and third-party financing arrange-
ments, and consistency with said Federal util-
ity’s statutory authorities, obligations, and limi-
tations; 
(B) provisions for monitoring and over-
sight by the Federal utility of the regional 
transmission 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 
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 
utility to withdraw from the regional trans-
mission organization and terminate the con-
276
tract, agreement or other arrangement in ac-
cordance with its terms. 
Neither this section, actions taken pursuant to it, 
nor any other transaction of a Federal utility using 
a regional transmission organization shall serve to 
confer upon the Federal Energy Regulatory Com-
mission jurisdiction or authority over the Federal 
utility’s electric 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
REQUIRE-
MENTS.—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 transfer of control and use of its 
transmission system pursuant to, and subject to 
all requirements of paragraph (2). 
(B) 
OTHER
OBLIGATIONS.—This 
sub-
section shall not be construed to—
(i) suspend, or exempt any Federal 
utility from, any provision of existing Fed-
277
eral law, including but not limited to any 
requirement or direction relating to the use 
of the Federal utility’s transmission sys-
tem, environmental protection, fish and 
wildlife protection, flood control, naviga-
tion, 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-serv-
ing entity that either—
‘‘(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
278
‘‘(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 
equivalent transmission rights to meet such obligations be-
fore transmission capacity is made available for other 
uses. 
‘‘(b) USE BY SUCCESSOR IN INTEREST.—To the ex-
tent that all or a portion of the service obligation or con-
tractual obligation covered by subsection (a) is transferred 
to another load serving entity, the successor shall be enti-
tled to use such transmission facilities or firm trans-
mission rights associated with the transferred service obli-
gation consistent with subsection (a). Subsequent trans-
fers to another load serving entity, or back to the original 
load-serving entity, shall be entitled to the same rights. 
‘‘(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.
280
‘‘(e) RELATIONSHIP TO OTHER PROVISIONS.—To the 
extent that a transmitting utility reserves transmission ca-
pacity (or reserves the equivalent amount of tradable 
transmission 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 discrimination 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 
transmission service or rights in effect as of the date of 
enactment of this section.’’.
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:
281
‘‘SEC. 217. ELECTRIC RELIABILITY. 
‘‘(a) DEFINITIONS.—For purposes of this section—
‘‘(1) The term ‘bulk-power system’ means—
‘‘(A) facilities and control systems nec-
essary 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 stand-
ards for the bulk-power system, subject to Commis-
sion review. 
‘‘(3) The term ‘reliability standard’ means a re-
quirement, approved by the Commission under this 
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
282
the term does not include any requirement to en-
large such facilities or to construct new transmission 
capacity 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 unan-
ticipated 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 
failure of one or more of such components may ad-
versely 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, inde-
pendent system operator, independent transmission 
provider, or other transmission organization finally 
approved by the Commission for the operation of 
transmission facilities.
283
‘‘(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-
mission may certify one such ERO if the Commission de-
termines that such ERO—
‘‘(1) has the ability to develop and enforce, sub-
ject to subsection (e)(2), reliability standards that
284
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 
system, while assuring fair stakeholder rep-
resentation in the selection of its directors and 
balanced decisionmaking in any ERO com-
mittee or subordinate organizational structure; 
‘‘(B) allocate equitably reasonable dues, 
fees, and other charges among end users for all 
activities 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, 
openness, and balance of interests in developing 
reliability standards and otherwise exercising its 
duties; and
285
‘‘(E) provide for taking, after certification, 
appropriate steps to gain recognition in Canada 
and Mexico. 
‘‘(d) RELIABILITY STANDARDS.—(1) The Electric 
Reliability Organization shall file each reliability standard 
or modification to a reliability standard that it proposes 
to be made effective under this section with the Commis-
sion. 
‘‘(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 
Organization with respect to the content of a proposed 
standard or modification to a reliability standard and to 
the technical expertise of a regional entity organized on 
an Interconnection-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 
organized on an Interconnection-wide basis for a reliability
286
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 
Reliability Organization for further consideration a pro-
posed reliability standard or a modification to a reliability 
standard 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 ad-
dresses 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 time-
ly resolution of any conflict between a reliability standard 
and any function, rule, order, tariff, rate schedule, or 
agreement accepted, approved, or ordered by the Commis-
sion applicable to a transmission organization. Such trans-
mission organization shall continue to comply with such 
function, rule, order, tariff, rate schedule or agreement ac-
cepted approved, or ordered by the Commission until—
287
‘‘(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, 
subject to paragraph (2), a penalty on a user or owner 
or operator 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 
Commission under subsection (d); and 
‘‘(B) files notice and the record of the pro-
ceeding with the Commission. 
‘‘(2) A penalty imposed under paragraph (1) may 
take effect not earlier than the 31st day after the electric 
reliability organization files with the Commission notice of
288
the penalty and the record of proceedings. Such penalty 
shall 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. Applica-
tion to the Commission for review, or the initiation of re-
view by the Commission on its own motion, shall not oper-
ate as a stay of such penalty unless the Commission other-
wise 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 paragraph (1), the Commission, after notice and op-
portunity 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, remand to the electric reliability organiza-
tion for further proceedings. The Commission shall imple-
ment expedited procedures 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
289
or owner or operator of the bulk-power system has en-
gaged or is about 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-
290
ability standards under paragraph (1) directly to a re-
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 viola-
tion and shall take into consideration the efforts of such 
user, owner, or operator to remedy the violation in a time-
ly manner. 
‘‘(f) CHANGES IN ELECTRICITY RELIABILITY ORGA-
NIZATION 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 find-
ing by the Commission, after notice and opportunity for 
comment, that the change is just, reasonable, not unduly 
discriminatory or preferential, is in the public interest, and 
satisfies the requirements of subsection (c).
291
‘‘(g) RELIABILITY REPORTS.—The Electric Reli-
ability Organization shall conduct periodic assessments of 
the reliability and adequacy of the bulk-power system in 
North America. 
‘‘(h) COORDINATION WITH CANADA AND MEXICO.—
The President is urged to negotiate international agree-
ments with the governments of Canada and Mexico to pro-
vide for effective compliance with reliability standards and 
the effectiveness 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 
within that State, as long as such action is not incon-
sistent with any reliability standard, except that the State 
of New York may establish rules that result in greater
292
reliability within that State, as long as such action does 
not result 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 
Electric Reliability Organization and the State taking ac-
tion, may stay the effectiveness of any State action, pend-
ing the Commission’s issuance of a final order. 
‘‘(j) REGIONAL ADVISORY BODIES.—The Commis-
sion 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 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 
advice to the Electric Reliability Organization, a regional 
entity, or the Commission regarding the governance of an
293
existing or proposed regional entity within the same re-
gion, whether a standard proposed to apply within the re-
gion is just, reasonable, not unduly discriminatory or pref-
erential, and in the public interest, whether fees proposed 
to be assessed 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 
provisions of this section do not apply to Alaska or Ha-
waii.’’. 
Subtitle D—PUHCA Amendments 
SEC. 7041. SHORT TITLE. 
This subtitle may be cited as the ‘‘Public Utility 
Holding 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.
294
(2) The term ‘‘associate company’’ of a com-
pany means any company in the same holding com-
pany system with such company. 
(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 
electric energy for sale. 
(6) The terms ‘‘exempt wholesale generator’’ 
and ‘‘foreign utility company’’ have the same mean-
ings as in sections 32 and 33, respectively, of the 
Public Utility 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 
distribution at retail (other than the distribution 
only in enclosed portable containers or distribution 
to tenants or employees of the company operating
295
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— 
(A) any company that directly or indirectly 
owns, controls, or holds, with power to vote, 10 
percent or more of the outstanding voting secu-
rities of a public utility company or of a holding 
company of any public utility company; and 
(B) any person, determined by the Com-
mission, after notice and opportunity for hear-
ing, to exercise directly or indirectly (either 
alone or pursuant to an arrangement or under-
standing with one or more persons) such a con-
trolling influence over the management or poli-
cies 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 obligations, duties, and liabilities imposed 
by this subtitle upon holding companies. 
(9) The term ‘‘holding company system’’ means 
a holding company, together with its subsidiary com-
panies.
296
(10) The term ‘‘jurisdictional rates’’ means 
rates established by the Commission for the trans-
mission of electric energy in interstate commerce, 
the sale of electric energy at wholesale in interstate 
commerce, the transportation of natural gas in inter-
state commerce, and the sale in interstate commerce 
of natural gas for resale for ultimate public con-
sumption 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 per-
son who owns or operates facilities used for trans-
mission 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
297
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 
directly or indirectly owned, controlled, or held 
with power to vote, by such holding company; 
and 
(B) any person, the management or poli-
cies of which the Commission, after notice and 
opportunity for hearing, determines to be sub-
ject to a controlling influence, directly or indi-
rectly, 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 per-
son be subject to the obligations, duties, and li-
abilities imposed by this subtitle upon sub-
sidiary companies of holding companies. 
(17) The term ‘‘voting security’’ means any se-
curity presently entitling the owner or holder thereof
298
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. 
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 
company 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 cus-
tomers with respect to jurisdictional rates.
299
(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-
essary or appropriate for the protection of utility cus-
tomers with respect to jurisdictional rates. 
(d) CONFIDENTIALITY.—No member, officer, or em-
ployee of the Commission shall divulge any fact or infor-
mation 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 
jurisdiction. 
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 
company 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;
300
(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 re-
spect to such proceeding. 
(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 pro-
duction of books, accounts, memoranda, and other records 
under subsection (a) shall be subject to such terms and 
conditions as may be necessary and appropriate to safe-
guard against unwarranted disclosure to the public of any 
trade secrets or sensitive commercial information. 
(d) EFFECT ON STATE LAW.—Nothing in this sec-
tion shall preempt applicable State law concerning the pro-
vision 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 dis-
trict court located in the State in which the State commis-
301
sion referred to in subsection (a) is located shall have ju-
risdiction 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 pro-
mulgate a final rule to exempt from the requirements of 
section 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 
section 7044 (relating to Federal access to books and 
records) if, upon application or upon the motion of the 
Commission— 
(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 pub-
lic utility or natural gas company; or
302
(2) the Commission finds that any class of 
transactions is not relevant to the jurisdictional 
rates of a public utility or natural gas company. 
SEC. 7047. AFFILIATE TRANSACTIONS. 
(a) COMMISSION AUTHORITY UNAFFECTED.—Noth-
ing in this subtitle shall limit the authority of the Commis-
sion under the Federal Power Act (16 U.S.C. 791a et seq.) 
to require that jurisdictional rates are just and reasonable, 
including the ability to deny or approve the pass through 
of costs, the prevention of cross-subsidization, and the pro-
mulgation of such rules and regulations as are necessary 
or appropriate 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;
303
(2) a State or any political subdivision of a 
State; 
(3) any foreign governmental authority not op-
erating in the United States; 
(4) any agency, authority, or instrumentality of 
any entity referred to in paragraph (1), (2), or (3); 
or 
(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 subtitle. 
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,
304
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 Com-
mission 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). 
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 rec-
ommendations on technical and conforming amend-
ments 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 
functions transferred to the Commission under this sub-
title shall be transferred from the Securities and Exchange 
Commission to the Commission.
305
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. 
(b) DEFINITIONS.—(1) Section 201(g) of the Federal 
Power Act (16 U.S.C. 824(g)) is amended by striking 
‘‘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 fol-
lowing: 
‘‘(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-
306
ule, under which the rate charged by the electric 
utility varies by the hour (or smaller time interval) 
according to changes in the electric utility’s whole-
sale power cost. The real-time pricing service shall 
enable the electric consumer to manage energy use 
and cost through real-time metering and commu-
nications 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 ref-
erence to the date of enactment of this paragraph. 
‘‘(C) Notwithstanding subsections (b) and (c) of 
section 112, each State regulatory authority shall 
consider 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.
307
‘‘(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 ref-
erence to the date of enactment of this paragraph. 
‘‘(C) Notwithstanding subsections (b) and (c) of 
section 112, each State regulatory authority shall 
consider 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.’’. 
(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 elec-
tric 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-
308
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 util-
ity shall be required to enter into a new contract or 
obligation to purchase electric energy from a quali-
fying cogeneration facility or a qualifying small 
power production 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
309
‘‘(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 
comparable to the opportunities provided by the 
markets, or some minimum combination there-
of, described in subparagraph (A); or 
‘‘(C) the qualifying cogeneration facility 
does not meet criteria established by the Com-
mission pursuant to the rulemaking set forth in 
subparagraph (n) and has not 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 enact-
ment 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
310
such relief is appropriate and describe how the con-
ditions 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 
filing 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 
Commission shall not be authorized to issue a tolling 
order regarding such application or otherwise delay 
a final decision regarding such application. 
‘‘(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)
311
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 
comment, and within 90 days of the filing of an ap-
plication under subparagraph (A), the Commission 
shall issue an order reinstating the electric utility’s 
obligation to purchase electric energy under this sec-
tion if the Commission finds that the condition in 
paragraph (1), which relieved the obligation to pur-
chase, is no longer met. The Commission shall not 
be authorized to issue a tolling order regarding such 
application or otherwise delay a final decision re-
garding such application. 
‘‘(4) OBLIGATION TO SELL.—After the date of 
enactment of this subsection, no electric utility shall 
be required to enter into a new contract or obliga-
tion to sell electric energy to a qualifying cogenera-
tion facility 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
312
‘‘(B) the electric utility is not required by 
State law to sell electric energy in its service 
territory. 
‘‘(5) NO
EFFECT
ON
EXISTING
RIGHTS
AND 
REMEDIES.—Nothing in this subsection affects the 
rights or remedies of any party under any contract 
or obligation, in effect or pending approval before 
the appropriate State regulatory authority or non-
regulated electric utility on the date of enactment of 
this subsection, to purchase electric energy or capac-
ity 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.—
‘‘(A) REGULATION.—To ensure recovery 
by an electric utility that purchases electric en-
ergy or capacity from a qualifying facility pur-
suant to any legally enforceable obligation en-
tered into or imposed under this section of all 
prudently incurred costs associated with the 
purchases, the Commission shall issue and en-
force such regulations as may be required to en-
sure that the electric utility shall recover the 
prudently incurred costs associated with such 
purchases.
313
‘‘(B) ENFORCEMENT.—A regulation under 
subparagraph (A) shall be enforceable in ac-
cordance with the provisions of law applicable 
to enforcement 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 evalu-
ate the rules regarding qualifying facility criteria 
and revise such rules, as necessary, to ensure—
‘‘(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 develop-
ment of efficient electric energy generating 
technology.
314
‘‘(2) APPLICABILITY.—Any revisions made to 
operating and efficiency standards shall be applica-
ble 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 18 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. 
‘‘(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 re-
vised rules prescribed under subsection (n) shall continue 
to apply to any cogeneration facility or small power pro-
duction 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—
315
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 fa-
cility’ means a small power production facility 
that the Commission determines, by rule, meets 
such requirements (including requirements re-
specting minimum size, fuel use, and fuel effi-
ciency) as the Commission may, by rule, pre-
scribe.’’. 
(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 cogeneration facility that the Commis-
sion determines, by rule, meets such require-
ments (including requirements respecting min-
imum size, fuel use, and fuel efficiency) as the 
Commission may, by rule, prescribe.’’. 
SEC. 7063. SMART METERING. 
(a) IN GENERAL.—Section 111 (d) of the Public Util-
ities Regulatory Policies Act of 1978 (16 U.S.C. 2621(d)) 
is amended by adding at the end the following:
316
‘‘(11) (A) Not later than eighteen (18) months 
after the date of enactment of this paragraph, each 
electric utility shall offer each of its customer class-
es, and provide individual customers upon customer 
request, a time-based rate schedule under which the 
rate charged by the electric utility varies during dif-
ferent 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 commu-
nications technology. 
‘‘(B) The types of time-based rate schedules 
that may be offered under the schedule referred to 
in subparagraph (A) include, among others, each the 
following: 
‘‘(i) Time-Of-Use pricing whereby elec-
tricity prices are set for a specific time period 
on 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 con-
sumers in advance of such consumption, allow-
ing them to vary their demand and usage in re-
sponse to such prices and manage their energy
317
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 
generating and purchasing electricity at the 
wholesale level and when consumers may receive 
additional discounts for reducing peak period 
energy consumption. 
‘‘(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 re-
ceive such rate, respectively. 
‘‘(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 ref-
erence 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-
318
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 accord-
ance with section 115(i) and issue a decision wheth-
er 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 Poli-
cies Act of 1978 (16 U.S.C. 2625) is amended by adding 
the at the end the following: 
‘‘(i) TIME-BASED
METERING
AND
COMMUNICA-
TIONS.—(1) Each State regulatory authority shall, not 
later than twelve (12) months after enactment of this sub-
section, conduct an investigation and issue a decision 
whether or not it is appropriate for electric utilities to pro-
vide and install time-based meters and communications 
devices for each of their customers which enable such cus-
tomers to participate in time-based pricing rate schedules 
and other demand response programs.’’.
319
(c) 
FEDERAL
ASSISTANCE
ON
DEMAND
RE-
SPONSE.—Section 132 (a) of the Public Utility Regulatory 
Policies 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, tech-
niques 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 
responsible for each of the following: 
‘‘(1) Educating consumers on the availability, 
advantages and benefits of advanced metering and 
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
320
the national benefits of demand response and pro-
vides policy recommendations as to how to achieve 
specific levels of such benefits by January 1, 2005.’’. 
(e) DEMAND RESPONSE AND REGIONAL COORDINA-
TION.—
(1) It is the policy of the United States to en-
courage States to coordinate, on a regional basis, 
State energy policies to provide reliable and afford-
able 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; 
(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 
response resources, including those available from all
321
consumer classes, and which identifies and reviews 
each of the following: 
(A) Saturation and penetration rate of ad-
vanced 
meters 
and 
communications 
tech-
nologies, devices and systems. 
(B) Existing demand response programs 
and time-based rate programs. 
(C) The annual resource contribution of 
demand resources, including the prior year and 
following years. 
(D) The potential for demand response as 
a quantifiable, reliable resource for regional 
planning purposes. 
(E) Steps taken to ensure that, in regional 
transmission planning and operations, that de-
mand resources are provided equitable treat-
ment 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, where-
by electricity customers are provided with electricity price 
signals and the ability to benefit by responding to them,
322
shall be encouraged and the deployment of such tech-
nology and devices 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 ac-
crue 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: 
‘‘(13) NET METERING.—(A) Each electric util-
ity shall make available upon request net metering 
service to any electric consumer that the electric 
utility serves. 
‘‘(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 ref-
erence to the date of enactment of this paragraph. 
‘‘(C) Notwithstanding subsections (b) and (c) of 
section 112, each State regulatory authority shall 
consider and make a determination concerning
323
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 
following: 
‘‘(k) NET METERING.—In undertaking the consider-
ation and making the determination under section 111 
with respect to the standard concerning net metering es-
tablished by section 111(d)(13), 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 
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 oper-
ator of an on-site generating facility any addi-
tional standby, capacity, interconnection, or 
other rate or charge.
324
‘‘(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 elec-
tric energy 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. 
‘‘(4) ELECTRIC ENERGY GENERATED EXCEED-
ING ELECTRIC ENERGY SUPPLIED.—If the quantity 
of electric 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 generating facility during the billing period—
‘‘(A) the electric utility may bill the owner 
or operator of the on-site generating facility for
325
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 ex-
cess kilowatt-hours generated during the billing 
period, with the kilowatt-hour credit appearing 
on the bill for the following billing period. 
‘‘(5) SAFETY
AND
PERFORMANCE
STAND-
ARDS.—An eligible on-site generating facility and 
net metering system used by an electric consumer 
shall meet all applicable safety, performance, reli-
ability, and interconnection standards established by 
the National Electrical Code, the Institute of Elec-
trical and Electronics Engineers, and Underwriters 
Laboratories. 
‘‘(6) ADDITIONAL CONTROL AND TESTING RE-
QUIREMENTS.—The Commission, after consultation 
with State regulatory authorities and nonregulated 
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 de-
termines are necessary to protect public safety and 
system reliability.
326
‘‘(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 
generating 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 com-
mercial electric consumer with a maximum 
generating capacity of 500 kilowatts or 
less that is fueled solely by a renewable en-
ergy resource, landfill gas, or a high effi-
ciency system. 
‘‘(B) The term ‘renewable energy resource’ 
means solar, wind, biomass, or geothermal en-
ergy. 
‘‘(C) The term ‘high efficiency system’ 
means service fuel cells or combined heat and 
power. 
‘‘(D) The term ‘net metering’ means serv-
ice to an electric consumer under which electric 
energy generated by that electric consumer 
from an eligible on-site generating facility and
327
delivered to the local distribution facilities may 
be used to offset electric energy provided by the 
electric utility 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 pay-
ments for electric production from all qualified renewable 
energy facilities in any given year, the Secretary shall as-
sign 60 percent of appropriated funds for that year to fa-
cilities that use solar, wind, geothermal, or closed-loop 
(dedicated energy crops) biomass technologies to generate 
electricity, and assign the remaining 40 percent to other 
projects. The Secretary may, after transmitting to the 
Congress an explanation of the reasons therefor, alter the 
percentage requirements of the preceding sentence.’’. 
(b) QUALIFIED RENEWABLE ENERGY FACILITY.—
Section 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 cooper-
ative’’ and inserting ‘‘a not-for-profit electric cooper-
328
ative, 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 subdivi-
sion thereof,’’; and 
(2) by inserting ‘‘landfill gas,’’ after ‘‘wind, bio-
mass,’’. 
(c) ELIGIBILITY WINDOW.—Section 1212(c) of the 
Energy Policy Act of 1992 (42 U.S.C. 13317(c)) is 
amended by striking ‘‘during the 10-fiscal year period be-
ginning 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 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:
329
‘‘(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 fis-
cal 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 Inte-
rior and National Forest System lands under the jurisdic-
tion of the Secretary of Agriculture. The report shall in-
clude—
(1) 5-year plans developed by the Secretary of 
the Interior and the Secretary of Agriculture, re-
spectively, for encouraging the development of wind 
and solar energy consistent with applicable law and 
management plans; and 
(2) an analysis of—
330
(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 pro-
mote wind and solar energy development on 
such lands; and 
(C) any issues that the Secretary of the 
Interior or the Secretary of Agriculture have 
encountered 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 
Secretary of Energy and the Secretary of Defense, 
of lands under the jurisdiction of the Department of 
Energy or Defense that would be suitable for devel-
opment for wind or solar energy, and any rec-
ommended statutory and regulatory mechanisms for 
such development; 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
331
the Interior shall contract with the National Acad-
emy 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 with-
in 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-
able within the United States, including solar, wind, bio-
mass, ocean, geothermal, and hydroelectric energy re-
sources, and undertake new assessments as necessary, 
taking into account changes in market conditions, avail-
able technologies, and other relevant factors.
332
(b) CONTENTS OF REPORTS.—Not later than 1 year 
after the date of enactment of this Act, and each year 
thereafter, the Secretary shall publish a report based on 
the assessment under subsection (a). The report shall con-
tain—
(1) a detailed inventory describing the available 
amount and characteristics of the renewable energy 
resources; and 
(2) such other information as the Secretary be-
lieves would be useful in developing such renewable 
energy resources, including descriptions of sur-
rounding terrain, population and load centers, near-
by energy infrastructure, location of energy and 
water resources, and available estimates of the costs 
needed to develop each resource, together with an 
identification of any barriers to providing adequate 
transmission for remote sources of renewable energy 
resources to current and emerging markets, rec-
ommendations for removing or addressing such bar-
riers, and ways to provide access to the grid that do 
not unfairly disadvantage renewable or other energy 
producers.
333
Subtitle G—Market Transparency, 
Round Trip Trading Prohibi-
tion, and Enforcement 
SEC. 7081. MARKET TRANSPARENCY RULES. 
Part II of the Federal Power Act is amended by add-
ing the following new section at the end thereof: 
‘‘SEC. 218. MARKET TRANSPARENCY RULES. 
‘‘(a) COMMISSION RULES.—Not later than 180 days 
after the date of enactment of this section, the Commis-
sion shall issue rules establishing an electronic information 
system to provide the Commission and the public with ac-
cess to such information as is necessary or appropriate 
to facilitate price transparency and participation in mar-
kets subject to the Commission’s jurisdiction. Such sys-
tems shall provide information about the availability and 
market price of sales of electric energy at wholesale in 
interstate commerce and transmission of electric energy 
in interstate commerce to the Commission, State commis-
sions, buyers and sellers of wholesale electric energy, users 
of transmission services, and the public on a timely basis. 
The Commission shall have authority to obtain such infor-
mation from any person, and any entity described in sec-
tion 201(f), who sells electric energy at wholesale in inter-
state commerce or provides transmission services in inter-
state commerce.
334
‘‘(b) EXEMPTIONS.—The Commission shall exempt 
from disclosure information it determines would, if dis-
closed, (1) be detrimental to the operation of an effective 
market; or (2) jeopardize system security. This section 
shall not apply to an entity described in section 
212(k)(2)(B) with respect to transactions for the purchase 
or sale of wholesale electric energy and transmission serv-
ices within the area described in section 212(k)(2)(A). 
SEC. 7082. PROHIBITION ON ROUND TRIP TRADING. 
Part II of the Federal Power Act is amended by add-
ing the following new section at the end thereof: 
‘‘SEC. 219. PROHIBITION ON ROUND TRIP TRADING. 
‘‘(a) PROHIBITION.—It shall be a violation of this Act 
for any person, and any entity described in section 201(f), 
willfully and knowingly to enter into any contract or other 
arrangement to execute a round-trip trade for the pur-
chase or sale of electric energy at wholesale. 
‘‘(b) DEFINITION OF ROUND-TRIP TRADE.—For the 
purposes of this section, the term ‘‘round-trip trade’’ 
means a transaction, or combination of transactions, in 
which a person or other entity—
‘‘(1) enters into a contract or other arrange-
ment to purchase from, or sell to, any other person 
or other entity electric energy at wholesale;
335
‘‘(2) simultaneously with entering into the con-
tract described in paragraph (1), arranges a finan-
cially offsetting trade with such other person or enti-
ty for the same quantity of electric energy so that, 
collectively, the purchase and sale transactions in 
themselves result in no financial gain or loss; and 
‘‘(3) has a specific intent to distort reported 
revenues, trading volumes, or prices.’’. 
SEC. 7083. CONFORMING CHANGES. 
Sections 201(b)(2) and 201(e) of the Federal Power 
Act are each amended by striking ‘‘or 212’’ and inserting 
‘‘212, 215, 216, 217, 218, or 219’’. Section 201(b)(2) of 
such Act is further amended by striking ‘‘and 212’’ and 
inserting ‘‘, 212, 215, 216, 217, 218, and 219’’. 
SEC. 7084. ENFORCEMENT. 
(a) COMPLAINTS.—Section 306 of the Federal Power 
Act (16 U.S.C. 825e) is amended by—
(1) inserting ‘‘electric utility,’’ after ‘‘Any per-
son,’’; and 
(2) inserting ‘‘, transmitting utility,’’ after ‘‘li-
censee’’ each place it appears. 
(b) REVIEW
OF
COMMISSION
ORDERS.—Section 
313(a) of the Federal Power Act (16 U.S.C. 8251) is 
amended by inserting ‘‘electric utility,’’ after ‘‘person,’’ in 
the first place it appears and by striking ‘‘any person un-
336
less such person’’ and inserting ‘‘any entity unless such 
entity’’. 
(c) CRIMINAL PENALTIES.—Section 316 of the Fed-
eral Power Act (16 U.S.C. 825o) is amended—
(1) in subsection (a), by striking ‘‘$5,000’’ and 
inserting ‘‘$1,000,000’’, and by striking ‘‘two years’’ 
and inserting ‘‘five years’’; 
(2) in subsection (b), by striking ‘‘$500’’ and 
inserting ‘‘$25,000’’; and 
(3) by striking subsection (c). 
(d) CIVIL PENALTIES.—Section 316A of the Federal 
Power Act (16 U.S.C. 825–1) is amended—
(1) in subsections (a) and (b), by striking ‘‘sec-
tion 211, 212, 213, or 214’’ each place it appears 
and inserting ‘‘Part II’’; and 
(2) in subsection (b), by striking ‘‘$10,000’’ 
and inserting ‘‘$1,000,000’’. 
Subtitle H—Consumer Protections 
SEC. 7091. REFUND EFFECTIVE DATE. 
Section 206(b) of the Federal Power Act (16 U.S.C. 
824e(b)) is amended by—
(1) striking ‘‘the date 60 days after the filing 
of such complaint nor later than 5 months after the 
expiration of such 60-day period’’ in the second sen-
tence and inserting ‘‘the date of the filing of such
337
complaint nor later than 5 months after the filing of 
such complaint’’; 
(2) striking ‘‘60 days after’’ in the third sen-
tence and inserting ‘‘of’’; 
(3) striking ‘‘expiration of such 60-day period’’ 
in the third sentence and inserting ‘‘publication 
date’’; and 
(4) in the fifth sentence after ‘‘rendered by the’’ 
insert ‘‘date 60 days after the’’. 
SEC. 7092. JURISDICTION OVER INTERSTATE SALES. 
(a) SCOPE OF AUTHORITY.—Section 206 of the Fed-
eral Power Act (16 U.S.C. 824e) is amended by adding 
the following new subsection at the end thereof: 
‘‘(f)(1) If an entity that is not a public utility (includ-
ing an entity referred to in section 201(f)) voluntarily 
makes a spot market sale of electric energy and such sale 
violates Commission rules in effect at the time of such 
sale, such entity shall be subject to the Commission’s re-
fund authority under this section with respect to such vio-
lation. 
‘‘(2) This section shall not apply to any entity that 
is either—
‘‘(A) an entity described in section 201(f); or 
‘‘(B) a rural electric cooperative
338
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 
energy 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 
follows: 
(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 ‘‘section 
210’’ and inserting ‘‘section 206(f), 210,’’. 
(B) In the second sentence by striking ‘‘section 
210’’ and inserting ‘‘206(f), 210,’’. 
(3) Section 201(e) of the Federal Power Act is 
amended by striking ‘‘section 210’’ and inserting ‘‘section 
206(f), 210’’.
339
(c) UNIFORM INVESTIGATION AUTHORITY.—Section 
307(a) of the Federal Power Act (16 U.S.C. 825f(a)) is 
amended as follows: 
(1) By inserting ‘‘, electric utility, transmitting 
utility, or other entity’’ after ‘‘person’’ each time it 
appears. 
(2) By striking the period at the end of the 
first sentence and inserting the following: ‘‘or in ob-
taining information about the sale of electric energy 
at wholesale in interstate commerce and the trans-
mission of electric energy in interstate commerce.’’. 
(d) SANCTITY OF CONTRACT.—(1) The Federal En-
ergy Regulatory Commission shall have no authority to ab-
rogate or modify any provision of a contract, except upon 
a finding, after notice and opportunity for a hearing, that 
such action is necessary to protect the public interest, un-
less such contract expressly provides for a different stand-
ard of review. 
(2) For purposes of this subsection, a contract is any 
agreement, in effect and subject to the jurisdiction of the 
Commission—
(A) under section 4 of the Natural Gas Act or 
section 205 of the Federal Power Act; and 
(B) that is not for sales in an organized ex-
change or auction spot market.
340
(3) This subsection shall not apply to any contract 
executed before the date of enactment of this section un-
less such contract is an interconnection agreement, nor 
shall this subsection affect the outcome in any proceeding 
regarding any contract for sales of electric power executed 
before the date of enactment of this section. 
SEC. 7093. CONSUMER PRIVACY. 
(a) IN GENERAL.—The Federal Trade Commission 
shall issue rules protecting the privacy of electric con-
sumers from the disclosure of consumer information ob-
tained in connection with the sale or delivery of electric 
energy to electric consumers. The Federal Trade Commis-
sion shall proceed in accordance with section 553 of title 
5, United States Code, when prescribing a rule under this 
section. 
(b) STATE AUTHORITY.—If the Federal Trade Com-
mission determines that a State’s regulations provide 
equivalent or greater protection than the provisions of this 
section, such State regulations shall apply in that State 
in lieu of the regulations issued by the Commission under 
this section. 
SEC. 7094. UNFAIR TRADE PRACTICES. 
(a) SLAMMING.—The Federal Trade Commission 
shall issue rules prohibiting the change of selection of an 
electric utility except with the informed consent of the
341
electric consumer or if approved by the appropriate State 
regulatory authority. 
(b) CRAMMING.—The Federal Trade Commission 
shall issue rules prohibiting the sale of goods and services 
to an electric consumer unless expressly authorized by law 
or the electric consumer. 
(c) RULEMAKING.—The Federal Trade Commission 
shall proceed in accordance with section 553 of title 5, 
United States Code, when prescribing a rule under this 
section. 
(d) STATE AUTHORITY.—If the Federal Trade Com-
mission determines that a State’s regulations provide 
equivalent or greater protection than the provisions of this 
section, such State regulations shall apply in that State 
in lieu of the regulations issued by the Commission under 
this section. 
Subtitle I—Merger Review Reform 
and Accountability 
SEC. 7101. MERGER REVIEW REFORM AND ACCOUNT-
ABILITY. 
(a) MERGER REVIEW REFORM.—Within 180 days 
after the date of enactment of this act, the Secretary of 
Energy, in consultation with the Federal Energy Regu-
latory Commission and the Department of Justice, shall 
prepare, and transmit to the Committee on Energy and
342
Commerce of the House of Representatives and the Com-
mittee on Energy and Natural Resources of the Senate 
each of the following: 
(1) A study of the extent to which the authori-
ties vested in the Federal Energy Regulatory Com-
mission under section 203 of the Federal Power Act 
are duplicative of authorities vested in—
(A) other agencies of Federal and State 
government; and 
(B) the Federal Energy Regulatory Com-
mission, including under sections 205 and 206 
of the Federal Power Act. 
(2) Recommendations on reforms to the Fed-
eral Power Act that would eliminate any unneces-
sary duplication in the exercise of regulatory author-
ity or unnecessary delays in the approval (or dis-
approval) of applications for the sale, lease, or other 
disposition of public utility facilities. 
(b) MERGER REVIEW ACCOUNTABILITY.—Not later 
than 1 year after the date of enactment of this Act and 
annually thereafter, with respect to all orders issued with-
in the preceding year that impose a condition on a sale, 
lease, or other disposition of public utility facilities under 
section 203(b) of the Federal Power Act, the Federal En-
ergy Regulatory Commission shall transmit a report to the
343
Committee on Energy and Commerce of the House of 
Representatives and the Committee on Energy and Nat-
ural Resources of the Senate explaining each of the fol-
lowing: 
(1) The condition imposed. 
(2) Whether the Commission could have im-
posed such condition by exercising its authority 
under any provision of the Federal Power Act other 
than under section 203(b). 
(3) If the Commission could not have imposed 
such condition other than under section 203(b), why 
the Commission determined that such condition was 
consistent with the public interest.
Subtitle J—Study of Economic 
Dispatch 
SEC. 7111. STUDY ON THE BENEFITS OF ECONOMIC DIS-
PATCH. 
(a) STUDY.—The Secretary of Energy, in coordina-
tion and consultation with the States, shall conduct a 
study on—
(1) the procedures currently used by electric 
utilities to perform economic dispatch, 
(2) identifying possible revisions to those proce-
dures to improve the ability of nonutility generation
344
resources to offer their output for sale for the pur-
pose of inclusion in economic dispatch; and 
(3) the potential benefits to residential, com-
mercial, and industrial electricity consumers nation-
ally and in each state if economic dispatch proce-
dures were revised to improve the ability of non-
utility generation resources to offer their output for 
inclusion in economic dispatch. 
(b) DEFINITION.—The term ‘‘economic dispatch’’ 
when used in this section means the operation of genera-
tion facilities to produce energy at the lowest cost to reli-
ably serve consumers, recognizing any operational limits 
of generation and transmission facilities. 
(c) REPORT TO CONGRESS AND THE STATES.—Not 
later than 90 days after the date of enactment of this Act, 
and on a yearly basis following, the Secretary of Energy 
shall submit a report to the Congress and the States on 
the results of the study conducted under subsection (a), 
including recommendations to the Congress and the States 
for any suggested legislative or regulatory changes.
TITLE VIII—COAL
SEC. 8001. AUTHORIZATION OF APPROPRIATIONS. 
(a) CLEAN COAL POWER INITIATIVE.—Except as 
provided in subsection (b), there are authorized to be ap-
propriated to the Secretary to carry out the activities au-
345
thorized by this title $200,000,000 for each of the fiscal 
years 2005 through 2013, to remain available until ex-
pended. 
(b) LIMIT ON USE OF FUNDS.—The Secretary shall 
transmit to the Congress the report required by this sub-
section not later than September 30, 2004. Notwith-
standing subsection (a), no funds may be used to carry 
out the activities authorized by this title after September 
30, 2004, unless the report has been transmitted. The re-
port shall include, with respect to subsection (a), a 10-
year plan containing—
(1) a detailed assessment of whether the aggre-
gate funding levels provided under subsection (a) are 
the appropriate funding levels for that program; 
(2) a detailed description of how proposals will 
be solicited and evaluated, including a list of all ac-
tivities expected to be undertaken; 
(3) a detailed list of technical milestones for 
each coal and related technology that will be pur-
sued; and 
(4) a detailed description of how the program 
will avoid problems enumerated in General Account-
ing Office reports on the Clean Coal Technology 
Program, including problems that have resulted in
346
unspent funds and projects that failed either finan-
cially or scientifically. 
(c) APPLICABILITY.—Subsection (b) shall not apply 
to any project begun before September 30, 2004. 
SEC. 8002. PROJECT CRITERIA. 
(a) IN GENERAL.—The Secretary shall not provide 
funding under this title for any project that does not ad-
vance efficiency, environmental performance, and cost 
competitiveness well beyond the level of technologies that 
on a full scale are in operation or have been demonstrated 
as of the date of the enactment of this Act. 
(b) TECHNICAL CRITERIA FOR CLEAN COAL POWER 
INITIATIVE.—
(1) GASIFICATION.—(A) In allocating the funds 
made available under section 8001(a), the Secretary 
shall ensure that up to 80 percent of the funds are 
used only for coal-based gasification technologies, in-
cluding gasification combined cycle, gasification fuel 
cells, gasification coproduction and hybrid gasifi-
cation/combustion. 
(B) The Secretary shall set technical milestones 
specifying emissions levels for projects funded under 
this paragraph. The milestones shall be designed to 
increasingly restrict emission levels through the life
347
of the program. The milestones shall be designed to 
achieve by 2020 coal gasification projects able—
(i) to remove 99 percent of sulfur dioxide; 
(ii) to emit no more than .05 lbs of NOx 
per million BTU; 
(iii) to achieve substantial reductions in 
mercury emissions; and 
(iv) to achieve a thermal efficiency of— 
(I) 60 percent for coal of more than 
9,000 Btu; 
(II) 59 percent for coal of 7,000 to 
9,000 Btu; and 
(III) 50 percent for coal of less than 
7,000 Btu. 
(2) OTHER PROJECTS.—For projects not de-
scribed in paragraph (1), the Secretary shall set 
technical milestones specifying emissions levels. The 
milestones shall be designed to increasingly restrict 
emission levels through the life of the program. The 
milestones shall be designed to achieve by 2010 
projects able—
(A) to remove 97 percent of sulfur dioxide; 
(B) to emit no more than .08 lbs of NOx 
per million BTU;
348
(C) to achieve substantial reductions in 
mercury emissions; and 
(D) except as provided in paragraph (4), 
to achieve a thermal efficiency of—
(i) 45 percent for coal of more than 
9,000 Btu; 
(ii) 44 percent for coal of 7,000 to 
9,000 Btu; and 
(iii) 42 percent for coal of less than 
7,000 Btu. 
(3) CONSULTATION.—Before setting the tech-
nical milestones under paragraphs (1)(B) and (2), 
the Secretary shall consult with the Administrator of 
the Environmental Protection Agency and interested 
entities, including coal producers, industries using 
coal, organizations to promote coal or advanced coal 
technologies, environmental organizations, and orga-
nizations representing workers. 
(4) EXISTING UNITS.—In the case of projects 
at existing units, in lieu of the thermal efficiency re-
quirements set forth in paragraph (1)(B)(iv) and 
(2)(D), the projects shall be designed to achieve an 
overall thermal design efficiency improvement com-
pared to the efficiency of the unit as operated, of not 
less than—
349
(A) 7 percent for coal of more than 9,000 
Btu; 
(B) 6 percent for coal of 7,000 to 9,000 
Btu; or 
(C) 4 percent for coal of less than 7,000 
Btu. 
(5) PERMITTED
USES.—In allocating funds 
made available under section 8001, the Secretary 
may fund projects that include, as part of the 
project, the separation and capture of carbon diox-
ide. 
(c) FINANCIAL CRITERIA.—The Secretary shall not 
provide a funding award under this title unless the recipi-
ent has documented to the satisfaction of the Secretary 
that—
(1) the award recipient is financially viable 
without the receipt of additional Federal funding; 
(2) the recipient will provide sufficient informa-
tion to the Secretary for the Secretary to ensure 
that the award funds are spent efficiently and effec-
tively; and 
(3) a market exists for the technology being 
demonstrated or applied, as evidenced by statements 
of interest in writing from potential purchasers of 
the technology.
350
(d) FINANCIAL ASSISTANCE.—The Secretary shall 
provide financial assistance to projects that meet the re-
quirements of subsections (a), (b), and (c) and are likely 
to—
(1) achieve overall cost reductions in the utiliza-
tion of coal to generate useful forms of energy; 
(2) improve the competitiveness of coal among 
various forms of energy in order to maintain a diver-
sity of fuel choices in the United States to meet elec-
tricity generation requirements; and 
(3) demonstrate methods and equipment that 
are applicable to 25 percent of the electricity gener-
ating facilities, utilizing different types of coal, that 
use coal as the primary feedstock as of the date of 
the enactment of this Act. 
(e) FEDERAL SHARE.—The Federal share of the cost 
of a project funded by the Secretary under this title shall 
not exceed 50 percent. 
(f) APPLICABILITY.—No technology, or level of emis-
sion reduction, shall be treated as adequately dem-
onstrated for purposes of section 111 of the Clean Air Act, 
achievable for purposes of section 169 of that Act, or 
achievable in practice for purposes of section 171 of that 
Act solely by reason of the use of such technology, or the
351
achievement of such emission reduction, by one or more 
facilities receiving assistance under this title. 
SEC. 8003. REPORT. 
Not later than 1 year after the date of the enactment 
of this Act, and once every 2 years thereafter for the fol-
lowing 8 years, the Secretary, in consultation with other 
appropriate Federal agencies, shall transmit to the Con-
gress a report describing—
(1) the technical milestones set forth in section 
8002 and how those milestones ensure progress to-
ward meeting the requirements of subsections 
(b)(1)(B) and (b)(2) of section 8002; and 
(2) the status of projects funded under this 
title. 
SEC. 8004. CLEAN COAL CENTERS OF EXCELLENCE. 
As part of the program authorized in section 8001, 
the Secretary shall award competitive, merit-based grants 
to universities for the establishment of Centers of Excel-
lence for Energy Systems of the Future. The Secretary 
shall provide grants to universities that can show the 
greatest potential for advancing new clean coal tech-
nologies.