483
funding awards to particular consortia or other entities, 
or for specific projects. 
SEC. 973. LIMITS ON PARTICIPATION. 
An entity shall be eligible to receive an award under 
this chapter only if the Secretary finds—
(1) that the entity’s participation in the pro-
gram under this chapter would be in the economic 
interest 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 that af-
fords—
(i) to United States-owned entities op-
portunities, comparable to those afforded 
to any other entity, to participate in any 
cooperative research venture similar to 
those authorized under this part; 
(ii) to United States-owned entities 
local investment opportunities comparable 
to those afforded to any other entity; and
484
(iii) adequate and effective protection 
for the intellectual property rights of 
United States-owned entities. 
SEC. 974. SUNSET. 
The authority provided by this chapter shall termi-
nate on September 30, 2014. 
SEC. 975. 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) INDEPENDENT
PRODUCER
OF
OIL
OR 
GAS.—
(A) IN GENERAL.—The term ‘‘independent 
producer of oil or gas’’ means any person that 
produces oil or gas other than a person to 
whom subsection (c) of section 613A of the In-
ternal Revenue Code of 1986 does not apply by 
reason of paragraph (2) (relating to certain re-
tailers) or paragraph (4) (relating to certain re-
finers) of section 613A(d) of such Code. 
(B) RULES FOR APPLYING PARAGRAPHS (2) 
AND (4) OF SECTION 613A(d).—For purposes of 
subparagraph (A), paragraphs (2) and (4) of 
section 613A(d) of the Internal Revenue Code
485
of 1986 shall be applied by substituting ‘‘cal-
endar year’’ for ‘‘taxable year’’ each place it ap-
pears in such paragraphs. 
(3) PROGRAM CONSORTIUM.—The term ‘‘pro-
gram consortium’’ means the consortium selected 
under section 970(d). 
(4) 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. 
(5) SMALL PRODUCER.—The term ‘‘small pro-
ducer’’ means an entity organized under the laws of 
the United States with production levels of less than 
1,000 barrels per day of oil equivalent. 
(6) ULTRA-DEEPWATER.—The term ‘‘ultra-
deepwater’’ means a water depth that is equal to or 
greater than 1,500 meters. 
(7) 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. 
(8) ULTRA-DEEPWATER
TECHNOLOGY.—The 
term ‘‘ultra-deepwater technology’’ means a discrete
486
technology that is specially suited to address 1 or 
more challenges associated with the exploration for, 
or production of, natural gas or other petroleum re-
sources located at ultra-deepwater depths. 
(9) 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, including resources of small pro-
ducers. 
SEC. 976. FUNDING. 
(a) IN GENERAL.—
(1) OIL AND GAS LEASE INCOME.—For each of 
fiscal years 2005 through 2014, from any excess 
Federal royalties derived from Federal onshore and 
offshore oil and gas leases issued under the Outer 
Continental Shelf Lands Act and the Mineral Leas-
ing Act which are deposited in the Treasury, and 
after prior distributions as described in subsection 
(c) have been made, all excess Federal royalties up 
to $200,000,000 shall be deposited into the Ultra-
Deepwater and Unconventional Natural Gas and 
Other Petroleum Research Fund (in this section re-
ferred to as the Fund).
487
(2) DEFINITIONS.—For purposes of paragraph 
(1)—
(A) excess Federal royalty receipts are the 
amount calculated on the basis of the difference 
between the prevailing market prices upon 
which the royalty payment was made and 110 
percent of the projected market prices for that 
fiscal year, as contained in the economic as-
sumptions underlying the Concurrent Resolu-
tion on the Budget, under section 301 of the 
Congressional Budget and Impoundment Con-
trol Act or 1974; and 
(B) the term ‘‘royalties’’ excludes proceeds 
from the sale of royalty production taken in 
kind and royalty production that is transferred 
under section 27(a)(3) of the Outer Continental 
Shelf Lands Act (43 U.S.C. 1353(a)(3)). 
(b) OBLIGATIONAL
AUTHORITY.—Monies in the 
Fund shall be available to the Secretary for obligation 
under this chapter without fiscal year limitation, to remain 
available until expended. 
(c) PRIOR DISTRIBUTIONS.—The distributions de-
scribed in subsection (a) are those required by law—
488
(1) to States and to the Reclamation Fund 
under the Mineral Leasing Act (30 U.S.C. 191(a)); 
and 
(2) to other funds receiving monies from Fed-
eral oil and gas leasing programs, including—
(A) any recipients pursuant to section 8(g) 
of the Outer Continental Shelf Lands Act (43 
U.S.C. 1337(g)); 
(B) the Land and Water Conservation 
Fund, pursuant to section 2(c) of the Land and 
Water Conservation Fund Act of 1965 (16 
U.S.C. 4601–5(c)); 
(C) the Historic Preservation Fund, pursu-
ant to section 108 of the National Historic 
Preservation Act (16 U.S.C. 470h); and 
(D) the Secure Energy Reinvestment 
Fund. 
(d) ALLOCATION.—Amounts obligated from the Fund 
under subsection (a)(1) in each fiscal year shall be allo-
cated as follows: 
(1) 35 percent shall be for activities under sec-
tion 969(b)(1). 
(2) 32.5 percent shall be for activities under 
section 969(b)(2).
489
(3) 7.5 percent shall be for activities under sec-
tion 969(b)(3). 
(4) 25 percent shall be for complementary re-
search under section 969(b)(4) and other activities 
under section 969(b) to include program direction 
funds, overall program oversight, contract manage-
ment, and the establishment and operation of a tech-
nical committee to ensure that in-house research ac-
tivities funded under subsection 969(b)(4) are tech-
nically complementary to, and not duplicative of, re-
search conducted under section 969(b)(1), (2), and 
(3). 
(e) FUND.—There is hereby established in the Treas-
ury of the United States a separate fund to be known as 
the ‘‘Ultra-Deepwater and Unconventional Natural Gas 
and Other Petroleum Research Fund’’. 
Subtitle G—Improved Coordination 
and 
Management 
of 
Civilian 
Science and Technology Pro-
grams 
SEC. 978. IMPROVED COORDINATION AND MANAGEMENT 
OF CIVILIAN SCIENCE AND TECHNOLOGY 
PROGRAMS. 
(a) RECONFIGURATION OF POSITION OF DIRECTOR 
OF THE OFFICE OF SCIENCE.—Section 209 of the Depart-
490
ment of Energy Organization Act (42 U.S.C. 7139) is 
amended to read as follows: 
‘‘OFFICE OF SCIENCE 
‘‘SEC. 209. (a) There shall be within the Department 
an Office of Science, to be headed by an Assistant Sec-
retary of Science, who shall be appointed by the President, 
by and with the advice and consent of the Senate, and 
who shall be compensated at the rate provided for level 
IV of the Executive Schedule under section 5315 of title 
5, United States Code. 
‘‘(b) The Assistant Secretary of Science shall be in 
addition to the Assistant Secretaries provided for under 
section 203 of this Act. 
‘‘(c) It shall be the duty and responsibility of the As-
sistant Secretary of Science to carry out the fundamental 
science and engineering research functions of the Depart-
ment, including the responsibility for policy and manage-
ment of such research, as well as other functions vested 
in the Secretary which he may assign to the Assistant Sec-
retary.’’. 
(b) ADDITIONAL ASSISTANT SECRETARY POSITION 
TO ENABLE IMPROVED MANAGEMENT OF NUCLEAR EN-
ERGY ISSUES.—(1) Section 203(a) of the Department of 
Energy Organization Act (42 U.S.C. 7133(a)) is amended 
by striking ‘‘There shall be in the Department six Assist-
ant Secretaries’’ and inserting ‘‘Except as provided in sec-
491
tion 209, there shall be in the Department seven Assistant 
Secretaries’’. 
(2) It is the sense of the Congress that the leadership 
for departmental missions in nuclear energy should be at 
the Assistant Secretary level. 
(c) TECHNICAL AND CONFORMING AMENDMENTS.—
(1) Section 5315 of title 5, United States Code, is amend-
ed by—
(A) striking ‘‘Director, Office of Science, De-
partment of Energy.’’; and 
(B) striking ‘‘Assistant Secretaries of Energy 
(6)’’ and inserting ‘‘Assistant Secretaries of Energy 
(8)’’. 
(2) The table of contents for the Department of En-
ergy Organization Act (42 U.S.C. 7101 note) is amend-
ed—
(A) by striking ‘‘Section 209’’ and inserting 
‘‘Sec. 209’’; 
(B) by striking ‘‘213.’’ and inserting ‘‘Sec. 
213.’’; 
(C) by striking ‘‘214.’’ and inserting ‘‘Sec. 
214.’’; 
(D) by striking ‘‘215.’’ and inserting ‘‘Sec. 
215.’’; and
492
(E) by striking ‘‘216.’’ and inserting ‘‘Sec. 
216.’’. 
TITLE X—DEPARTMENT OF 
ENERGY MANAGEMENT 
SEC. 1002. OTHER TRANSACTIONS AUTHORITY. 
Section 646 of the Department of Energy Organiza-
tion Act (42 U.S.C. 7256) is amended by adding at the 
end the following: 
‘‘(g)(1) In addition to other authorities granted to the 
Secretary under law, the Secretary may exercise the same 
authority (subject to the same restrictions and conditions) 
with respect to such research and projects as the Secretary 
of Defense may exercise under section 2371 of title 10, 
United States Code, except for subsections (b) and (f) of 
such section 2371. Such other transactions shall not be 
subject to the provisions of section 9 of the Federal Non-
nuclear Energy Research and Development Act of 1974 
(42 U.S.C. 5908) or section 152 of the Atomic Energy 
Act of 1954 (42 U.S.C. 2182). 
‘‘(2)(A) The Secretary may, under the authority of 
paragraph (1), carry out prototype projects in accordance 
with the requirements and conditions provided for car-
rying out prototype projects under section 845 of the Na-
tional Defense Authorization Act for Fiscal Year 1994 
(Public Law 103–160; 10 U.S.C. 2371 note), including
493
that, to the maximum extent practicable, competitive pro-
cedures shall be used when entering into agreements to 
carry out projects under subsection (a) of that section and 
that the period of authority to carry out projects under 
such subsection (a) terminates as provided in subsection 
(g) of that section. 
‘‘(B) In applying the requirements and conditions of 
section 845 of the National Defense Authorization Act for 
Fiscal Year 1994 under this subsection—
‘‘(i) subsection (c) of that section shall apply 
with respect to prototype projects carried out under 
this paragraph; and 
‘‘(ii) the Director of the Office of Management 
and Budget shall perform the functions of the Sec-
retary of Defense under subsection (d) of that sec-
tion. 
‘‘(C) The Secretary may exercise authority under this 
subsection for a project only if authorized by the Director 
of the Office of Management and Budget to use the au-
thority for such project. 
‘‘(D) The annual report of the head of an executive 
agency that is required under subsection (h) of section 
2371 of title 10, United States Code, as applied to the 
head of the executive agency by subsection (a), shall be 
submitted to Congress.
494
‘‘(3) Not later than 90 days after the date of enact-
ment of this subsection, the Secretary, in consultation 
with the Director of the Office of Management and Budg-
et, shall prescribe guidelines for using other transactions 
authorized by paragraph (1). Such guidelines shall be pub-
lished in the Federal Register for public comment under 
rulemaking procedures of the Department. 
‘‘(4) The authority of the Secretary under this sub-
section may be delegated only to an officer of the Depart-
ment who is appointed by the President by and with the 
advice and consent of the Senate and may not be delegated 
to any other person. 
‘‘(5)(A) Not later than September 31, 2006, the 
Comptroller General of the United States shall report to 
Congress on the Department’s use of the authorities 
granted under this section, including the ability to attract 
nontraditional government contractors and whether addi-
tional safeguards are needed with respect to the use of 
such authorities. 
‘‘(B) In this section, the term ‘nontraditional Govern-
ment contractor’ has the same meaning as the term ‘non-
traditional defense contractor’ as defined in section 845(e) 
of the National Defense Authorization Act for Fiscal Year 
1994 (Public Law 103–160; 10 U.S.C. 2371 note).’’.
495
SEC. 1003. UNIVERSITY COLLABORATION. 
Not later than 2 years after the date of enactment 
of this Act, the Secretary of Energy shall transmit to the 
Congress a report that examines the feasibility of pro-
moting collaborations between major universities and 
other colleges and universities in grants, contracts, and 
cooperative agreements made by the Secretary for energy 
projects. For purposes of this section, major universities 
are schools listed by the Carnegie Foundation as Doctoral 
Research Extensive Universities. The Secretary shall also 
consider providing incentives to increase the inclusion of 
small institutions of higher education, including minority-
serving institutions, in energy grants, contracts, and coop-
erative agreements. 
SEC. 1004. SENSE OF CONGRESS. 
It is the sense of the Congress that—
(1) the Secretary of Energy should develop and 
implement more stringent procurement and inven-
tory controls, including controls on the purchase 
card program, to prevent waste, fraud, and abuse of 
taxpayer funds by employees and contractors of the 
Department of Energy; and 
(2) the Department’s Inspector General should 
continue to closely review purchase card purchases 
and other procurement and inventory practices at 
the Department.
496
TITLE XII—ELECTRICITY 
SEC. 1201. SHORT TITLE. 
This title may be cited as the ‘‘Electric Reliability 
Act of 2005’’. 
Subtitle A—Reliability Standards 
SEC. 1211. ELECTRIC RELIABILITY STANDARDS. 
(a) IN GENERAL.—Part II of the Federal Power Act 
(16 U.S.C 824 et seq.) is amended by adding at the end 
the following: 
‘‘SEC. 215. 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-
497
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, 
including cybersecurity protection, and the design of 
planned additions or modifications to such facilities 
to the extent necessary to provide for reliable oper-
ation of the bulk-power system, but the term does 
not include any requirement to enlarge such facilities 
or to construct new transmission capacity or genera-
tion 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, including 
a cybersecurity incident, or unanticipated 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
498
failure of 1 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. 
‘‘(7) The term ‘regional entity’ means an entity 
having enforcement authority pursuant to subsection 
(e)(4). 
‘‘(8) The term ‘cybersecurity incident’ means a 
malicious act or suspicious event that disrupts, or 
was an attempt to disrupt, the operation of those 
programmable electronic devices and communication 
networks including hardware, software and data that 
are essential to the reliable operation of the bulk 
power system. 
‘‘(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
499
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. The Commission 
may certify 1 such ERO if the Commission determines 
that such ERO—
‘‘(1) has the ability to develop and enforce, sub-
ject to subsection (e)(2), reliability standards that 
provide for an adequate level of reliability of the 
bulk-power system; and 
‘‘(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
500
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 
‘‘(E) provide for taking, after certification, 
appropriate steps to gain recognition in Canada 
and Mexico. 
The total amount of all dues, fees, and other charges 
collected by the ERO in each of the fiscal years 
2006 through 2015 and allocated under subpara-
graph (B) shall not exceed $50,000,000. 
‘‘(d) RELIABILITY STANDARDS.—(1) The Electric 
Reliability Organization shall file each reliability standard
501
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 
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.
502
‘‘(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—
‘‘(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
503
‘‘(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 ERO 
files with the Commission notice of the penalty and the 
record of proceedings. Such penalty shall be subject to re-
view by the Commission, on its own motion or upon appli-
cation by the user, owner or operator that is the subject 
of the penalty filed within 30 days after the date such
504
notice is filed with the Commission. Application to the 
Commission for review, or the initiation of review by the 
Commission on its own motion, shall not operate as a stay 
of such penalty unless the Commission otherwise orders 
upon its own motion or upon application by the user, 
owner or operator that is the subject of such penalty. In 
any proceeding to review a penalty imposed under para-
graph (1), the Commission, after notice and opportunity 
for hearing (which hearing may consist solely of the record 
before the ERO and opportunity for the presentation of 
supporting reasons to affirm, modify, or set aside the pen-
alty), shall by order affirm, set aside, reinstate, or modify 
the penalty, and, if appropriate, remand to the ERO for 
further proceedings. The Commission shall implement ex-
pedited 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 
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.
505
‘‘(4) The Commission shall issue regulations author-
izing the ERO to enter into an agreement to delegate au-
thority to a regional entity for the purpose of proposing 
reliability standards to the ERO and enforcing reliability 
standards under paragraph (1) if—
‘‘(A) the regional entity is governed by—
‘‘(i) an independent board; 
‘‘(ii) a balanced stakeholder board; or 
‘‘(iii) a combination independent and bal-
anced stakeholder board. 
‘‘(B) the regional entity otherwise satisfies the 
provisions of subsection (c)(1) and (2); and 
‘‘(C) the agreement promotes effective and effi-
cient administration of bulk-power system reliability. 
The Commission may modify such delegation. The ERO 
and the Commission shall rebuttably presume that a pro-
posal for delegation to a regional entity organized on an 
Interconnection-wide basis promotes effective and efficient 
administration of bulk-power system reliability and should 
be approved. Such regulation may provide that the Com-
mission may assign the ERO’s authority to enforce reli-
ability standards under paragraph (1) directly to a re-
gional entity consistent with the requirements of this para-
graph.
506
‘‘(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 ELECTRIC RELIABILITY ORGANIZA-
TION RULES.—The Electric Reliability Organization shall 
file with the Commission for approval any proposed rule 
or proposed rule change, accompanied by an explanation 
of its basis and purpose. The Commission, upon its own 
motion or complaint, may propose a change to the rules 
of the ERO. A proposed rule or proposed rule change shall 
take effect upon a finding by the Commission, after notice 
and opportunity for comment, that the change is just, rea-
sonable, not unduly discriminatory or preferential, is in 
the public interest, and satisfies the requirements of sub-
section (c). 
‘‘(g) RELIABILITY REPORTS.—The ERO shall con-
duct periodic assessments of the reliability and adequacy 
of the bulk-power system in North America.
507
‘‘(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 ERO in the United States and 
Canada or Mexico. 
‘‘(i) SAVINGS PROVISIONS.—(1) The ERO shall have 
authority to develop and enforce compliance with reli-
ability standards for only the bulk-power system. 
‘‘(2) This section does not authorize the ERO or the 
Commission to order the construction of additional gen-
eration or transmission capacity or to set and enforce com-
pliance with standards for adequacy 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 
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
508
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 ERO. 
‘‘(5) The Commission, after consultation with the 
ERO and the State taking action, may stay the effective-
ness of any State action, pending 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 2⁄3 of the States within a region that have more 
than 1⁄2 of their electric load served within the region. A 
regional advisory body shall be composed of 1 member 
from each participating State in the region, appointed by 
the Governor of each State, and may include representa-
tives 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 existing or 
proposed regional entity within the same region, whether 
a standard proposed to apply within the region is just, 
reasonable, not unduly discriminatory or preferential, and 
in the public interest, whether fees proposed to be assessed 
within the region are just, reasonable, not unduly discrimi-
natory or preferential, and in the public interest and any
509
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) ALASKA AND HAWAII.—The provisions of this 
section do not apply to Alaska or Hawaii.’’. 
(b) STATUS OF ERO.—The Electric Reliability Orga-
nization certified by the Federal Energy Regulatory Com-
mission under section 215(c) of the Federal Power Act 
and any regional entity delegated enforcement authority 
pursuant to section 215(e)(4) of that Act are not depart-
ments, agencies, or instrumentalities of the United States 
Government. 
(c) LIMITATION
ON ANNUAL APPROPRIATIONS.—
There is authorized to be appropriated not more than 
$50,000,000 per year for fiscal years 2006 through 2015 
for all activities under the amendment made by subsection 
(a). 
Subtitle B—Transmission 
Infrastructure Modernization 
SEC. 1221. SITING OF INTERSTATE ELECTRIC 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:
510
‘‘SEC. 216. SITING OF INTERSTATE ELECTRIC TRANS-
MISSION FACILITIES. 
‘‘(a) DESIGNATION OF NATIONAL INTEREST ELEC-
TRIC TRANSMISSION CORRIDORS.—
‘‘(1) TRANSMISSION
CONGESTION
STUDY.—
Within 1 year after the enactment of this section, 
and every 3 years thereafter, the Secretary of En-
ergy, in consultation with affected States, shall con-
duct a study of electric transmission congestion. 
After considering alternatives and recommendations 
from interested parties, including an opportunity for 
comment from affected States, the Secretary shall 
issue a report, based on such study, which may des-
ignate any geographic area experiencing electric en-
ergy transmission capacity constraints or congestion 
that adversely affects consumers as a national inter-
est electric transmission corridor. The Secretary 
shall conduct the study and issue the report in con-
sultation with any appropriate regional entity ref-
erenced in section 215 of this Act. 
‘‘(2) CONSIDERATIONS.—In determining wheth-
er to designate a national interest electric trans-
mission corridor referred to in paragraph (1) under 
this section, the Secretary may consider whether—
‘‘(A) the economic vitality and development 
of the corridor, or the end markets served by
511
the corridor, may be constrained by lack of ade-
quate or reasonably priced electricity; 
‘‘(B)(i) economic growth in the corridor, or 
the end markets served by the corridor, may be 
jeopardized by reliance on limited sources of en-
ergy; and 
‘‘(ii) a diversification of supply is war-
ranted; 
‘‘(C) the energy independence of the 
United States would be served by the designa-
tion; 
‘‘(D) the designation would be in the inter-
est of national energy policy; and 
‘‘(E) the designation would enhance na-
tional defense and homeland security. 
‘‘(b) CONSTRUCTION PERMIT.—Except as provided 
in subsection (i), the Commission is authorized, after no-
tice and an opportunity for hearing, to issue a permit or 
permits for the construction or modification of electric 
transmission facilities in a national interest electric trans-
mission corridor designated by the Secretary under sub-
section (a) if the Commission finds that—
‘‘(1)(A) a State in which the transmission fa-
cilities are to be constructed or modified is without 
authority to—
512
‘‘(i) approve the siting of the facilities; or 
‘‘(ii) consider the interstate benefits ex-
pected to be achieved by the proposed construc-
tion or modification of transmission facilities in 
the State; 
‘‘(B) the applicant for a permit is a transmit-
ting utility under this Act but does not qualify to 
apply for a permit or siting approval for the pro-
posed project in a State because the applicant does 
not serve end-use customers in the State; or 
‘‘(C) a State commission or other entity that 
has authority to approve the siting of the facilities 
has—
‘‘(i) withheld approval for more than 1 
year after the filing of an application pursuant 
to applicable law seeking approval or 1 year 
after the designation of the relevant national in-
terest electric transmission corridor, whichever 
is later; or 
‘‘(ii) conditioned its approval in such a 
manner that the proposed construction or modi-
fication will not significantly reduce trans-
mission congestion in interstate commerce or is 
not economically feasible;
513
‘‘(2) the facilities to be authorized by the per-
mit will be used for the transmission of electric en-
ergy in interstate commerce; 
‘‘(3) the proposed construction or modification 
is consistent with the public interest; 
‘‘(4) the proposed construction or modification 
will significantly reduce transmission congestion in 
interstate commerce and protects or benefits con-
sumers; and 
‘‘(5) the proposed construction or modification 
is consistent with sound national energy policy and 
will enhance energy independence. 
‘‘(c) PERMIT APPLICATIONS.—Permit applications 
under subsection (b) shall be made in writing to the Com-
mission. The Commission shall issue rules setting forth 
the form of the application, the information to be con-
tained in the application, and the manner of service of no-
tice 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
514
present their views and recommendations with respect to 
the need for and impact of a facility covered by the permit. 
‘‘(e) RIGHTS-OF-WAY.—In the case of a permit under 
subsection (b) for electric transmission facilities to be lo-
cated on property other than property owned by the 
United States or a State, if the permit holder cannot 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 or modifying any 
transmission facility pursuant to State law. 
‘‘(g) COMPENSATION.—Any exercise of eminent do-
main authority pursuant to this section shall be considered 
a taking of private property for which just compensation
515
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 the construction or modification 
of electric transmission facilities within a reasonable pe-
riod of time after the acquisition. Other than construction, 
modification, operation, or maintenance of electric trans-
mission facilities and related facilities, property acquired 
under subsection (e) may not be used for any purpose (in-
cluding use for any heritage area, recreational trail, or 
park) without the consent of the owner of the parcel from 
whom the property was acquired (or the owner’s heirs or 
assigns). 
‘‘(h) COORDINATION OF FEDERAL AUTHORIZATIONS 
FOR TRANSMISSION AND DISTRIBUTION FACILITIES.—
‘‘(1) LEAD AGENCY.—If an applicant, or pro-
spective applicant, for a Federal authorization re-
lated to an electric transmission or distribution facil-
ity so requests, the Department of Energy (DOE)
516
shall act as the lead agency for purposes of coordi-
nating all applicable Federal authorizations and re-
lated environmental reviews of the facility. For pur-
poses of this subsection, the term ‘Federal author-
ization’ means any authorization required under 
Federal law in order to site a transmission or dis-
tribution facility, including but not limited to such 
permits, special use authorizations, certifications, 
opinions, or other approvals as may be required, 
whether issued by a Federal or a State agency. To 
the maximum extent practicable under applicable 
Federal law, the Secretary of Energy shall coordi-
nate this Federal authorization and review process 
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 agencies responsible for Federal authorizations 
and, as appropriate, with Indian tribes, multi-State 
entities, and State agencies that are willing to co-
ordinate their own separate permitting and environ-
mental reviews with the Federal authorization and
517
environmental reviews, shall establish prompt and 
binding intermediate milestones and ultimate dead-
lines for the review of, and Federal authorization de-
cisions relating to, the proposed facility. The Sec-
retary of Energy shall ensure that once an applica-
tion has been submitted with such data as the Sec-
retary considers necessary, all permit decisions and 
related environmental reviews under all applicable 
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. 
‘‘(3) CONSOLIDATED ENVIRONMENTAL REVIEW 
AND RECORD OF DECISION.—As lead agency head, 
the Secretary of Energy, in consultation with the af-
518
fected agencies, shall prepare a single environmental 
review document, which shall be used as the basis 
for all decisions on the proposed project under Fed-
eral law. The document may be an environmental as-
sessment or environmental impact statement under 
the National Environmental Policy Act of 1969 if 
warranted, or such other form of analysis as may be 
warranted. The Secretary of Energy and the heads 
of other agencies shall streamline the review and 
permitting of transmission and distribution facilities 
within corridors designated under section 503 of the 
Federal Land Policy and Management Act (43 
U.S.C. 1763) by fully taking into account prior anal-
yses and decisions relating to the corridors. Such 
document shall include consideration by the relevant 
agencies of any applicable criteria or other matters 
as required under applicable laws. 
‘‘(4) APPEALS.—In the event that any agency 
has denied a Federal authorization required for a 
transmission or distribution facility, or has failed to 
act by the deadline established by the Secretary pur-
suant to this section for deciding whether to issue 
the authorization, the applicant or any State in 
which the facility would be located may file an ap-
peal with the Secretary, who shall, in consultation
519
with the affected agency, review the denial or take 
action on the pending application. Based on the 
overall record and in consultation with the affected 
agency, the Secretary may then either issue the nec-
essary authorization with any appropriate condi-
tions, 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 paragraph, 
the Secretary shall comply with applicable require-
ments of Federal law, including any requirements of 
the Endangered Species Act, the Clean Water Act, 
the National Forest Management Act, the National 
Environmental Policy Act of 1969, and the Federal 
Land Policy and Management Act. 
‘‘(5) CONFORMING REGULATIONS AND MEMO-
RANDA
OF
UNDERSTANDING.—Not later than 18 
months after the date of enactment of this section, 
the Secretary of Energy shall issue any regulations 
necessary to implement this subsection. Not later 
than 1 year after the date of enactment of this sec-
tion, the Secretary and the heads of all Federal 
agencies with authority to issue Federal authoriza-
tions shall enter into Memoranda of Understanding 
to ensure the timely and coordinated review and per-
mitting of electricity transmission and distribution
520
facilities. The head of each Federal agency with au-
thority to issue a Federal authorization shall des-
ignate a senior official responsible for, and dedicate 
sufficient other staff and resources to ensure, full 
implementation of the DOE regulations and any 
Memoranda. Interested Indian tribes, multi-State 
entities, and State agencies may enter such Memo-
randa of Understanding. 
‘‘(6) DURATION AND RENEWAL.—Each Federal 
land use authorization for an electricity transmission 
or distribution facility shall be issued—
‘‘(A) for a duration, as determined by the 
Secretary of Energy, commensurate with the 
anticipated use of the facility, and 
‘‘(B) with appropriate authority to manage 
the right-of-way for reliability and environ-
mental protection. 
Upon the expiration of any such authorization (in-
cluding an authorization issued prior to enactment 
of this section), the authorization shall be reviewed 
for renewal taking fully into account reliance on 
such electricity infrastructure, recognizing its impor-
tance for public health, safety and economic welfare 
and as a legitimate use of Federal lands.
521
‘‘(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), FERC-ap-
proved electric reliability organizations (including re-
lated regional entities), and FERC-approved Re-
gional Transmission Organizations and Independent 
System Operators. 
‘‘(i) INTERSTATE COMPACTS.—The consent of Con-
gress is hereby given for 3 or more contiguous States to 
enter into an interstate compact, subject to approval by 
Congress, establishing regional transmission siting agen-
cies to facilitate siting of future electric energy trans-
mission facilities within such States and to carry out the 
electric energy transmission siting responsibilities of such 
States. The Secretary of Energy may provide technical as-
sistance to regional transmission siting agencies estab-
lished under this subsection. Such regional transmission 
siting agencies shall have the authority to review, certify, 
and permit siting of transmission facilities, including fa-
cilities in national interest electric transmission corridors 
(other than facilities on property owned by the United 
States). The Commission shall have no authority to issue 
a permit for the construction or modification of electric
522
transmission facilities within a State that is a party to 
a compact, unless the members of a compact are in dis-
agreement and the Secretary makes, after notice and an 
opportunity for a hearing, the finding described in sub-
section (b)(1)(C). 
‘‘(j) 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. 
Subsection (h)(4) of this section shall not apply to any 
Congressionally-designated components of the National 
Wilderness Preservation System, the National Wild and 
Scenic Rivers System, or the National Park system (in-
cluding National Monuments therein). 
‘‘(k) ERCOT.—This section shall not apply within 
the area referred to in section 212(k)(2)(A).’’. 
(b) REPORTS
TO CONGRESS
ON CORRIDORS
AND 
RIGHTS OF WAY ON FEDERAL LANDS.—The Secretary of 
the Interior, the Secretary of Energy, the Secretary of Ag-
riculture, 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 each of the following: 
(1) All existing designated transmission and 
distribution corridors on Federal land and the status
523
of work related to proposed transmission and dis-
tribution corridor designations under Title V of the 
Federal Land Policy and Management Act (43 
U.S.C. 1761 et seq.), the schedule for completing 
such work, any impediments to completing the work, 
and steps that Congress could take to expedite 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. 
(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. 
SEC. 1222. THIRD-PARTY FINANCE. 
(a) EXISTING FACILITIES.—The Secretary of Energy 
(hereinafter in this section referred to as the ‘‘Secretary’’), 
acting through the Administrator of the Western Area 
Power Administration (hereinafter in this section referred
524
to as ‘‘WAPA’’), or through the Administrator of the 
Southwestern Power Administration (hereinafter in this 
section referred to as ‘‘SWPA’’), or both, may design, de-
velop, construct, operate, maintain, or own, or participate 
with other entities in designing, developing, constructing, 
operating, maintaining, or owning, an electric power 
transmission facility and related facilities (‘‘Project’’) 
needed to upgrade existing transmission facilities owned 
by SWPA or WAPA if the Secretary of Energy, in con-
sultation with the applicable Administrator, determines 
that the proposed Project—
(1)(A) is located in a national interest electric 
transmission corridor designated under section 
216(a) of the Federal Power Act and will reduce 
congestion of electric transmission in interstate com-
merce; or 
(B) is necessary to accommodate an actual or 
projected increase in demand for electric trans-
mission capacity; 
(2) is consistent with—
(A) transmission needs identified, in a 
transmission expansion plan or otherwise, by 
the appropriate Regional Transmission Organi-
zation or Independent System Operator (as de-
525
fined in the Federal Power Act), if any, or ap-
proved regional reliability organization; and 
(B) efficient and reliable operation of the 
transmission grid; and 
(3) would be operated in conformance with pru-
dent utility practice. 
(b) 
NEW
FACILITIES.—The 
Secretary, 
acting 
through WAPA or SWPA, or both, may design, develop, 
construct, operate, maintain, or own, or participate with 
other entities in designing, developing, constructing, oper-
ating, maintaining, or owning, a new electric power trans-
mission facility and related facilities (‘‘Project’’) located 
within any State in which WAPA or SWPA operates if 
the Secretary, in consultation with the applicable Adminis-
trator, determines that the proposed Project—
(1)(A) is located in an area designated under 
section 216(a) of the Federal Power Act and will re-
duce congestion of electric transmission in interstate 
commerce; or 
(B) is necessary to accommodate an actual or 
projected increase in demand for electric trans-
mission capacity; 
(2) is consistent with—
(A) transmission needs identified, in a 
transmission expansion plan or otherwise, by
526
the appropriate Regional Transmission Organi-
zation or Independent System Operator, if any, 
or approved regional reliability organization; 
and 
(B) efficient and reliable operation of the 
transmission grid; 
(3) will be operated in conformance with pru-
dent utility practice; 
(4) will be operated by, or in conformance with 
the rules of, the appropriate (A) Regional Trans-
mission Organization or Independent System Oper-
ator, if any, or (B) if such an organization does not 
exist, regional reliability organization; and 
(5) will not duplicate the functions of existing 
transmission facilities or proposed facilities which 
are the subject of ongoing or approved siting and re-
lated permitting proceedings. 
(c) OTHER FUNDS.—
(1) IN GENERAL.—In carrying out a Project 
under subsection (a) or (b), the Secretary may ac-
cept and use funds contributed by another entity for 
the purpose of carrying out the Project. 
(2) AVAILABILITY.—The contributed funds 
shall be available for expenditure for the purpose of 
carrying out the Project—