710 
and Infrastructure of the House of Representatives and the 
Committee on Commerce, Science, and Transportation of 
the Senate a report on the short sea transportation program 
established under the amendments made by section 1121. 
The report shall include a description of the activities con-
ducted under the program, and any recommendations for 
further legislative or administrative action that the Sec-
retary of Transportation considers appropriate. 
Subtitle D—Highways 
SEC. 
1131. 
INCREASED 
FEDERAL 
SHARE 
FOR 
CMAQ 
PROJECTS. 
Section 120(c) of title 23, United States Code, is 
amended— 
(1) in the subsection heading by striking ‘‘FOR 
CERTAIN SAFETY PROJECTS’’; 
(2) by striking ‘‘The Federal share’’ and insert-
ing the following: 
‘‘(1) CERTAIN SAFETY PROJECTS.—The Federal 
share’’; and 
(3) by adding at the end the following: 
‘‘(2) CMAQ PROJECTS.—The Federal share pay-
able on account of a project or program carried out 
under section 149 with funds obligated in fiscal year 
2008 or 2009, or both, shall be not less than 80 per-
711 
cent and, at the discretion of the State, may be up 
to 100 percent of the cost thereof.’’. 
SEC. 1132. DISTRIBUTION OF RESCISSIONS. 
(a) IN
GENERAL.—Any unobligated balances of 
amounts that are appropriated from the Highway Trust 
Fund for a fiscal year, and apportioned under chapter 1 
of title 23, United States Code, before, on, or after the date 
of enactment of this Act and that are rescinded in fiscal 
year 2008 or fiscal year 2009 shall be distributed by the 
Secretary of Transportation within each State (as defined 
in section 101 of such title) among all programs for which 
funds are apportioned under such chapter for such fiscal 
year, to the extent sufficient funds remain available for obli-
gation, in the ratio that the amount of funds apportioned 
for each program under such chapter for such fiscal year, 
bears to the amount of funds apportioned for all such pro-
grams under such chapter for such fiscal year. 
(b) ADJUSTMENTS.—A State may make adjustments 
to the distribution of a rescission within the State for a 
fiscal year under subsection (a) by transferring the amounts 
to be rescinded among the programs for which funds are 
apportioned under chapter 1 of title 23, United States Code, 
for such fiscal year, except that in making such adjustments 
the State may not rescind from any such program more 
than 110 percent of the funds to be rescinded from the pro-
712 
gram for the fiscal year as determined by the Secretary of 
Transportation under subsection (a). 
(c) TREATMENT OF TRANSPORTATION ENHANCEMENT 
SET-ASIDE
AND FUNDS SUBALLOCATED
TO SUBSTATE 
AREAS.—Funds set aside under sections 133(d)(2) and 
133(d)(3) of title 23, United States Code, shall be treated 
as being apportioned under chapter 1 of such title for pur-
poses of subsection (a). 
SEC. 1133. SENSE OF CONGRESS REGARDING USE OF COM-
PLETE STREETS DESIGN TECHNIQUES. 
It is the sense of Congress that in constructing new 
roadways or rehabilitating existing facilities, State and 
local governments should consider policies designed to ac-
commodate all users, including motorists, pedestrians, cy-
clists, transit riders, and people of all ages and abilities, 
in order to— 
(1) serve all surface transportation users by cre-
ating a more interconnected and intermodal system; 
(2) create more viable transportation options; 
and 
(3) facilitate the use of environmentally friendly 
options, such as public transportation, walking, and 
bicycling.
713 
TITLE XII—SMALL BUSINESS 
ENERGY PROGRAMS 
SEC. 1201. EXPRESS LOANS FOR RENEWABLE ENERGY AND 
ENERGY EFFICIENCY. 
Section 7(a)(31) of the Small Business Act (15 U.S.C. 
636(a)(31)) is amended by adding at the end the following: 
‘‘(F) EXPRESS LOANS FOR RENEWABLE EN-
ERGY AND ENERGY EFFICIENCY.— 
‘‘(i) DEFINITIONS.—In this subpara-
graph— 
‘‘(I) the term ‘biomass’— 
‘‘(aa) means any organic 
material that is available on a re-
newable or recurring basis, in-
cluding— 
‘‘(AA) 
agricultural 
crops; 
‘‘(BB) trees grown for 
energy production; 
‘‘(CC) wood waste and 
wood residues; 
‘‘(DD) plants (including 
aquatic plants and grasses); 
‘‘(EE) residues; 
‘‘(FF) fibers;
714 
‘‘(GG) animal wastes 
and other waste materials; 
and 
‘‘(HH) fats, oils, and 
greases (including recycled 
fats, oils, and greases); and 
‘‘(bb) does not include— 
‘‘(AA) paper that is 
commonly recycled; or 
‘‘(BB) 
unsegregated 
solid waste; 
‘‘(II) the term ‘energy efficiency 
project’ means the installation or up-
grading of equipment that results in a 
significant reduction in energy usage; 
and 
‘‘(III) the term ‘renewable energy 
system’ means a system of energy de-
rived from— 
‘‘(aa) a wind, solar, biomass 
(including 
biodiesel), 
or 
geo-
thermal source; or 
‘‘(bb) hydrogen derived from 
biomass or water using an energy 
source described in item (aa).
716 
‘‘(II) the proceeds of which are 
used to purchase energy efficient de-
signs, equipment, or fixtures, or to re-
duce the energy consumption of the 
borrower by 10 percent or more; and 
‘‘(iii) the term ‘pilot program’ means 
the pilot program established under sub-
paragraph (B) 
‘‘(B) ESTABLISHMENT.—The Administrator 
shall establish and carry out a pilot program 
under which the Administrator shall reduce the 
fees for covered energy efficiency loans. 
‘‘(C) DURATION.—The pilot program shall 
terminate at the end of the second full fiscal year 
after the date that the Administrator establishes 
the pilot program. 
‘‘(D) MAXIMUM PARTICIPATION.—A covered 
energy efficiency loan shall include the max-
imum participation levels by the Administrator 
permitted for loans made under this subsection. 
‘‘(E) FEES.— 
‘‘(i) IN GENERAL.—The fee on a cov-
ered energy efficiency loan shall be equal to 
50 percent of the fee otherwise applicable to 
that loan under paragraph (18).
717 
‘‘(ii) 
WAIVER.—The 
Administrator 
may waive clause (i) for a fiscal year if— 
‘‘(I) for the fiscal year before that 
fiscal year, the annual rate of default 
of covered energy efficiency loans ex-
ceeds that of loans made under this 
subsection that are not covered energy 
efficiency loans; 
‘‘(II) the cost to the Administra-
tion of making loans under this sub-
section is greater than zero and such 
cost is directly attributable to the cost 
of making covered energy efficiency 
loans; and 
‘‘(III) no additional sources of 
revenue authority are available to re-
duce the cost of making loans under 
this subsection to zero. 
‘‘(iii) EFFECT OF WAIVER.—If the Ad-
ministrator waives the reduction of fees 
under clause (ii), the Administrator— 
‘‘(I) shall not assess or collect fees 
in an amount greater than necessary 
to ensure that the cost of the program
718 
under this subsection is not greater 
than zero; and 
‘‘(II) shall reinstate the fee reduc-
tions under clause (i) when the condi-
tions in clause (ii) no longer apply. 
‘‘(iv) NO INCREASE OF FEES.—The Ad-
ministrator shall not increase the fees under 
paragraph (18) on loans made under this 
subsection that are not covered energy effi-
ciency loans as a direct result of the pilot 
program. 
‘‘(F) GAO REPORT.— 
‘‘(i) IN GENERAL.—Not later than 1 
year after the date that the pilot program 
terminates, the Comptroller General of the 
United States shall submit to the Committee 
on Small Business of the House of Rep-
resentatives and the Committee on Small 
Business and Entrepreneurship of the Sen-
ate a report on the pilot program. 
‘‘(ii) 
CONTENTS.—The 
report 
sub-
mitted under clause (i) shall include— 
‘‘(I) the number of covered energy 
efficiency loans for which fees were re-
duced under the pilot program;
719 
‘‘(II) a description of the energy 
efficiency savings with the pilot pro-
gram; 
‘‘(III) a description of the impact 
of the pilot program on the program 
under this subsection; 
‘‘(IV) an evaluation of the efficacy 
and potential fraud and abuse of the 
pilot program; and 
‘‘(V) recommendations for improv-
ing the pilot program.’’. 
SEC. 1203. SMALL BUSINESS ENERGY EFFICIENCY. 
(a) DEFINITIONS.—In this section— 
(1) the terms ‘‘Administration’’ and ‘‘Adminis-
trator’’ mean the Small Business Administration and 
the Administrator thereof, respectively; 
(2) the term ‘‘association’’ means the association 
of small business development centers established 
under section 21(a)(3)(A) of the Small Business Act 
(15 U.S.C. 648(a)(3)(A)); 
(3) the term ‘‘disability’’ has the meaning given 
that term in section 3 of the Americans with Disabil-
ities Act of 1990 (42 U.S.C. 12102);
720 
(4) the term ‘‘Efficiency Program’’ means the 
Small Business Energy Efficiency Program estab-
lished under subsection (c)(1); 
(5) the term ‘‘electric utility’’ has the meaning 
given that term in section 3 of the Public Utility Reg-
ulatory Policies Act of 1978 (16 U.S.C. 2602); 
(6) the term ‘‘high performance green building’’ 
has the meaning given that term in section 401; 
(7) the term ‘‘on-bill financing’’ means a low in-
terest or no interest financing agreement between a 
small business concern and an electric utility for the 
purchase or installation of equipment, under which 
the regularly scheduled payment of that small busi-
ness concern to that electric utility is not reduced by 
the amount of the reduction in cost attributable to the 
new equipment and that amount is credited to the 
electric utility, until the cost of the purchase or in-
stallation is repaid; 
(8) the term ‘‘small business concern’’ has the 
same meaning as in section 3 of the Small Business 
Act (15 U.S.C. 632); 
(9) the term ‘‘small business development center’’ 
means a small business development center described 
in section 21 of the Small Business Act (15 U.S.C. 
648);
721 
(10) the term ‘‘telecommuting’’ means the use of 
telecommunications to perform work functions under 
circumstances which reduce or eliminate the need to 
commute; 
(11) the term ‘‘Telecommuting Pilot Program’’ 
means the pilot program established under subsection 
(d)(1)(A); and 
(12) the term ‘‘veteran’’ has the meaning given 
that term in section 101 of title 38, United States 
Code. 
(b) IMPLEMENTATION OF SMALL BUSINESS ENERGY 
EFFICIENCY PROGRAM.— 
(1) IN GENERAL.—Not later than 90 days after 
the date of enactment of this Act, the Administrator 
shall promulgate final rules establishing the Govern-
ment-wide program authorized under subsection (d) 
of section 337 of the Energy Policy and Conservation 
Act (42 U.S.C. 6307) that ensure compliance with 
that subsection by not later than 6 months after such 
date of enactment. 
(2) PROGRAM
REQUIRED.—The Administrator 
shall develop and coordinate a Government-wide pro-
gram, building on the Energy Star for Small Busi-
ness program, to assist small business concerns in— 
(A) becoming more energy efficient;
722 
(B) understanding the cost savings from 
improved energy efficiency; and 
(C) identifying financing options for energy 
efficiency upgrades. 
(3) CONSULTATION
AND
COOPERATION.—The 
program required by paragraph (2) shall be developed 
and coordinated— 
(A) in consultation with the Secretary of 
Energy and the Administrator of the Environ-
mental Protection Agency; and 
(B) in cooperation with any entities the Ad-
ministrator considers appropriate, such as in-
dustry trade associations, industry members, and 
energy efficiency organizations. 
(4) AVAILABILITY
OF
INFORMATION.—The Ad-
ministrator shall make available the information and 
materials developed under the program required by 
paragraph (2) to— 
(A) small business concerns, including 
smaller design, engineering, and construction 
firms; and 
(B) other Federal programs for energy effi-
ciency, such as the Energy Star for Small Busi-
ness program. 
(5) STRATEGY AND REPORT.—
723 
(A) STRATEGY REQUIRED.—The Adminis-
trator shall develop a strategy to educate, encour-
age, and assist small business concerns in adopt-
ing energy efficient building fixtures and equip-
ment. 
(B) REPORT.—Not later than December 31, 
2008, the Administrator shall submit to Congress 
a report containing a plan to implement the 
strategy developed under subparagraph (A). 
(c) SMALL BUSINESS SUSTAINABILITY INITIATIVE.— 
(1) AUTHORITY.—The Administrator shall estab-
lish a Small Business Energy Efficiency Program to 
provide energy efficiency assistance to small business 
concerns through small business development centers. 
(2) SMALL BUSINESS DEVELOPMENT CENTERS.— 
(A) IN GENERAL.—In carrying out the Effi-
ciency Program, the Administrator shall enter 
into agreements with small business development 
centers under which such centers shall— 
(i) provide access to information and 
resources on energy efficiency practices, in-
cluding on-bill financing options; 
(ii) conduct training and educational 
activities;
724 
(iii) offer confidential, free, one-on-one, 
in-depth energy audits to the owners and 
operators of small business concerns regard-
ing energy efficiency practices; 
(iv) give referrals to certified profes-
sionals and other providers of energy effi-
ciency assistance who meet such standards 
for educational, technical, and professional 
competency as the Administrator shall es-
tablish; 
(v) to the extent not inconsistent with 
controlling State public utility regulations, 
act as a facilitator between small business 
concerns, electric utilities, lenders, and the 
Administration to facilitate on-bill financ-
ing arrangements; 
(vi) provide necessary support to small 
business concerns to— 
(I) evaluate energy efficiency op-
portunities and opportunities to design 
or construct high performance green 
buildings; 
(II) evaluate renewable energy 
sources, such as the use of solar and
725 
small wind to supplement power con-
sumption; 
(III) secure financing to achieve 
energy efficiency or to design or con-
struct high performance green build-
ings; and 
(IV) implement energy efficiency 
projects; 
(vii) assist owners of small business 
concerns with the development and commer-
cialization of clean technology products, 
goods, services, and processes that use re-
newable energy sources, dramatically reduce 
the use of natural resources, and cut or 
eliminate 
greenhouse 
gas 
emissions 
through— 
(I) technology assessment; 
(II) intellectual property; 
(III) Small Business Innovation 
Research submissions under section 9 
of the Small Business Act (15 U.S.C. 
638); 
(IV) strategic alliances; 
(V) business model development; 
and
726 
(VI) preparation for investors; 
and 
(viii) help small business concerns im-
prove environmental performance by shift-
ing to less hazardous materials and reduc-
ing waste and emissions, including by pro-
viding assistance for small business con-
cerns to adapt the materials they use, the 
processes they operate, and the products and 
services they produce. 
(B) REPORTS.—Each small business devel-
opment center participating in the Efficiency 
Program shall submit to the Administrator and 
the Administrator of the Environmental Protec-
tion Agency an annual report that includes— 
(i) a summary of the energy efficiency 
assistance provided by that center under the 
Efficiency Program; 
(ii) the number of small business con-
cerns assisted by that center under the Effi-
ciency Program; 
(iii) statistics on the total amount of 
energy saved as a result of assistance pro-
vided by that center under the Efficiency 
Program; and
728 
distribution of centers participating in the Effi-
ciency Program; and 
(B) may not select more than 1 small busi-
ness development center in a State to participate 
in the Efficiency Program. 
(5) MATCHING
REQUIREMENT.—Subparagraphs 
(A) and (B) of section 21(a)(4) of the Small Business 
Act (15 U.S.C. 648(a)(4)) shall apply to assistance 
made available under the Efficiency Program. 
(6) GRANT AMOUNTS.—Each small business de-
velopment center selected to participate in the Effi-
ciency Program under paragraph (4) shall be eligible 
to receive a grant in an amount equal to— 
(A) not less than $100,000 in each fiscal 
year; and 
(B) not more than $300,000 in each fiscal 
year. 
(7) EVALUATION AND REPORT.—The Comptroller 
General of the United States shall— 
(A) not later than 30 months after the date 
of disbursement of the first grant under the Effi-
ciency Program, initiate an evaluation of that 
program; and 
(B) not later than 6 months after the date 
of the initiation of the evaluation under sub-
729 
paragraph (A), submit to the Administrator, the 
Committee on Small Business and Entrepreneur-
ship of the Senate, and the Committee on Small 
Business of the House of Representatives, a re-
port containing— 
(i) the results of the evaluation; and 
(ii) any recommendations regarding 
whether the Efficiency Program, with or 
without modification, should be extended to 
include the participation of all small busi-
ness development centers. 
(8) GUARANTEE.—To the extent not inconsistent 
with State law, the Administrator may guarantee the 
timely payment of a loan made to a small business 
concern through an on-bill financing agreement on 
such terms and conditions as the Administrator shall 
establish through a formal rule making, after pro-
viding notice and an opportunity for comment. 
(9) IMPLEMENTATION.—Subject to amounts ap-
proved in advance in appropriations Acts and sepa-
rate from amounts approved to carry out section 
21(a)(1) of the Small Business Act (15 U.S.C. 
648(a)(1)), the Administrator may make grants or 
enter into cooperative agreements to carry out this 
subsection.
730 
(10) AUTHORIZATION
OF
APPROPRIATIONS.— 
There are authorized to be appropriated such sums as 
are necessary to make grants and enter into coopera-
tive agreements to carry out this subsection. 
(11) TERMINATION.—The authority under this 
subsection shall terminate 4 years after the date of 
disbursement of the first grant under the Efficiency 
Program. 
(d) SMALL BUSINESS TELECOMMUTING.— 
(1) PILOT PROGRAM.— 
(A) IN GENERAL.—The Administrator shall 
conduct, in not more than 5 of the regions of the 
Administration, a pilot program to provide in-
formation regarding telecommuting to employers 
that are small business concerns and to encour-
age such employers to offer telecommuting op-
tions to employees. 
(B) SPECIAL
OUTREACH
TO
INDIVIDUALS 
WITH DISABILITIES.—In carrying out the Tele-
commuting Pilot Program, the Administrator 
shall make a concerted effort to provide informa-
tion to— 
(i) small business concerns owned by 
or employing individuals with disabilities,
731 
particularly veterans who are individuals 
with disabilities; 
(ii) Federal, State, and local agencies 
having knowledge and expertise in assisting 
individuals with disabilities, including vet-
erans who are individuals with disabilities; 
and 
(iii) any group or organization, the 
primary purpose of which is to aid individ-
uals with disabilities or veterans who are 
individuals with disabilities. 
(C) PERMISSIBLE ACTIVITIES.—In carrying 
out the Telecommuting Pilot Program, the Ad-
ministrator may— 
(i) produce educational materials and 
conduct presentations designed to raise 
awareness in the small business community 
of the benefits and the ease of telecom-
muting; 
(ii) conduct outreach— 
(I) to small business concerns that 
are considering offering telecommuting 
options; and 
(II) as provided in subparagraph 
(B); and
732 
(iii) 
acquire 
telecommuting 
tech-
nologies and equipment to be used for dem-
onstration purposes. 
(D) SELECTION
OF
REGIONS.—In deter-
mining which regions will participate in the 
Telecommuting Pilot Program, the Adminis-
trator shall give priority consideration to regions 
in which Federal agencies and private-sector em-
ployers have demonstrated a strong regional 
commitment to telecommuting. 
(2) REPORT TO CONGRESS.—Not later than 2 
years after the date on which funds are first appro-
priated to carry out this subsection, the Adminis-
trator shall transmit to the Committee on Small 
Business and Entrepreneurship of the Senate and the 
Committee on Small Business of the House of Rep-
resentatives a report containing the results of an eval-
uation of the Telecommuting Pilot Program and any 
recommendations regarding whether the pilot pro-
gram, with or without modification, should be ex-
tended to include the participation of all regions of 
the Administration. 
(3) TERMINATION.—The Telecommuting Pilot 
Program shall terminate 4 years after the date on
733 
which funds are first appropriated to carry out this 
subsection. 
(4) AUTHORIZATION
OF
APPROPRIATIONS.— 
There is authorized to be appropriated to the Admin-
istration $5,000,000 to carry out this subsection. 
(e) ENCOURAGING INNOVATION
IN ENERGY EFFI-
CIENCY.—Section 9 of the Small Business Act (15 U.S.C. 
638) is amended by adding at the end the following: 
‘‘(z) ENCOURAGING INNOVATION
IN ENERGY EFFI-
CIENCY.— 
‘‘(1) FEDERAL
AGENCY
ENERGY-RELATED
PRI-
ORITY.—In carrying out its duties under this section 
relating to SBIR and STTR solicitations by Federal 
departments and agencies, the Administrator shall— 
‘‘(A) ensure that such departments and 
agencies give high priority to small business con-
cerns that participate in or conduct energy effi-
ciency or renewable energy system research and 
development projects; and 
‘‘(B) include in the annual report to Con-
gress under subsection (b)(7) a determination of 
whether the priority described in subparagraph 
(A) is being carried out. 
‘‘(2) CONSULTATION REQUIRED.—The Adminis-
trator shall consult with the heads of other Federal
734 
departments and agencies in determining whether 
priority has been given to small business concerns 
that participate in or conduct energy efficiency or re-
newable energy system research and development 
projects, as required by this subsection. 
‘‘(3) GUIDELINES.—The Administrator shall, as 
soon as is practicable after the date of enactment of 
this subsection, issue guidelines and directives to as-
sist Federal agencies in meeting the requirements of 
this subsection. 
‘‘(4) DEFINITIONS.—In this subsection— 
‘‘(A) the term ‘biomass’— 
‘‘(i) means any organic material that 
is available on a renewable or recurring 
basis, including— 
‘‘(I) agricultural crops; 
‘‘(II) trees grown for energy pro-
duction; 
‘‘(III) wood waste and wood resi-
dues; 
‘‘(IV) plants (including aquatic 
plants and grasses); 
‘‘(V) residues; 
‘‘(VI) fibers;
735 
‘‘(VII) animal wastes and other 
waste materials; and 
‘‘(VIII) fats, oils, and greases (in-
cluding recycled fats, oils, and greases); 
and 
‘‘(ii) does not include— 
‘‘(I) paper that is commonly recy-
cled; or 
‘‘(II) unsegregated solid waste; 
‘‘(B) the term ‘energy efficiency project’ 
means the installation or upgrading of equip-
ment that results in a significant reduction in 
energy usage; and 
‘‘(C) the term ‘renewable energy system’ 
means a system of energy derived from— 
‘‘(i) a wind, solar, biomass (including 
biodiesel), or geothermal source; or 
‘‘(ii) hydrogen derived from biomass or 
water using an energy source described in 
clause (i).’’.
736 
SEC. 1204. LARGER 504 LOAN LIMITS TO HELP BUSINESS 
DEVELOP 
ENERGY 
EFFICIENT 
TECH-
NOLOGIES AND PURCHASES. 
(a) 
ELIGIBILITY
FOR
ENERGY
EFFICIENCY 
PROJECTS.—Section 501(d)(3) of the Small Business In-
vestment Act of 1958 (15 U.S.C. 695(d)(3)) is amended— 
(1) in subparagraph (G) by striking ‘‘or’’ at the 
end; 
(2) in subparagraph (H) by striking the period 
at the end and inserting a comma; 
(3) by inserting after subparagraph (H) the fol-
lowing: 
‘‘(I) reduction of energy consumption by at 
least 10 percent, 
‘‘(J) increased use of sustainable design, in-
cluding designs that reduce the use of greenhouse 
gas emitting fossil fuels, or low-impact design to 
produce buildings that reduce the use of non-re-
newable resources and minimize environmental 
impact, or 
‘‘(K) plant, equipment and process up-
grades of renewable energy sources such as the 
small-scale production of energy for individual 
buildings or communities consumption, com-
monly known as micropower, or renewable fuels
737 
producers including biodiesel and ethanol pro-
ducers.’’; and 
(4) by adding at the end the following: ‘‘In sub-
paragraphs (J) and (K), terms have the meanings 
given those terms under the Leadership in Energy 
and Environmental Design (LEED) standard for 
green building certification, as determined by the Ad-
ministrator.’’. 
(b) LOANS FOR PLANT PROJECTS USED FOR ENERGY- 
EFFICIENT PURPOSES.—Section 502(2)(A) of the Small 
Business Investment Act of 1958 (15 U.S.C. 696(2)(A)) is 
amended— 
(1) in clause (ii) by striking ‘‘and’’ at the end; 
(2) in clause (iii) by striking the period at the 
end and inserting a semicolon; and 
(3) by adding at the end the following: 
‘‘(iv) $4,000,000 for each project that 
reduces the borrower’s energy consumption 
by at least 10 percent; and 
‘‘(v) $4,000,000 for each project that 
generates renewable energy or renewable 
fuels, such as biodiesel or ethanol produc-
tion.’’.
738 
SEC. 1205. ENERGY SAVING DEBENTURES. 
(a) IN GENERAL.—Section 303 of the Small Business 
Investment Act of 1958 (15 U.S.C. 683) is amended by add-
ing at the end the following: 
‘‘(k) ENERGY SAVING DEBENTURES.—In addition to 
any other authority under this Act, a small business invest-
ment company licensed in the first fiscal year after the date 
of enactment of this subsection or any fiscal year thereafter 
may issue Energy Saving debentures.’’. 
(b) DEFINITIONS.—Section 103 of the Small Business 
Investment Act of 1958 (15 U.S.C. 662) is amended— 
(1) in paragraph (16), by striking ‘‘and’’ at the 
end; 
(2) in paragraph (17), by striking the period at 
the end and inserting a semicolon; and 
(3) by adding at the end the following: 
‘‘(18) the term ‘Energy Saving debenture’ means 
a deferred interest debenture that— 
‘‘(A) is issued at a discount; 
‘‘(B) has a 5-year maturity or a 10-year 
maturity; 
‘‘(C) requires no interest payment or an-
nual charge for the first 5 years; 
‘‘(D) is restricted to Energy Saving quali-
fied investments; and
739 
‘‘(E) is issued at no cost (as defined in sec-
tion 502 of the Credit Reform Act of 1990) with 
respect to purchasing and guaranteeing the de-
benture; and 
‘‘(19) the term ‘Energy Saving qualified invest-
ment’ means investment in a small business concern 
that is primarily engaged in researching, manufac-
turing, developing, or providing products, goods, or 
services that reduce the use or consumption of non-re-
newable energy resources.’’. 
SEC. 1206. INVESTMENTS IN ENERGY SAVING SMALL BUSI-
NESSES. 
(a) MAXIMUM LEVERAGE.—Section 303(b)(2) of the 
Small Business Investment Act of 1958 (15 U.S.C. 
303(b)(2)) is amended by adding at the end the following: 
‘‘(D) INVESTMENTS
IN
ENERGY
SAVING 
SMALL BUSINESSES.— 
‘‘(i) IN
GENERAL.—Subject to clause 
(ii), in calculating the outstanding leverage 
of a company for purposes of subparagraph 
(A), the Administrator shall exclude the 
amount of the cost basis of any Energy Sav-
ing qualified investment in a smaller enter-
prise made in the first fiscal year after the 
date of enactment of this subparagraph or
740 
any fiscal year thereafter by a company li-
censed in the applicable fiscal year. 
‘‘(ii) LIMITATIONS.— 
‘‘(I) AMOUNT
OF
EXCLUSION.— 
The amount excluded under clause (i) 
for a company shall not exceed 33 per-
cent of the private capital of that com-
pany. 
‘‘(II) MAXIMUM INVESTMENT.—A 
company shall not make an Energy 
Saving qualified investment in any 
one entity in an amount equal to more 
than 20 percent of the private capital 
of that company. 
‘‘(III) OTHER TERMS.—The exclu-
sion of amounts under clause (i) shall 
be subject to such terms as the Admin-
istrator may impose to ensure that 
there is no cost (as that term is defined 
in section 502 of the Federal Credit 
Reform Act of 1990 (2 U.S.C. 661a)) 
with respect to purchasing or guaran-
teeing any debenture involved.’’. 
(b) MAXIMUM AGGREGATE AMOUNT OF LEVERAGE.— 
Section 303(b)(4) of the Small Business Investment Act of
741 
1958 (15 U.S.C. 303(b)(4)) is amended by adding at the 
end the following: 
‘‘(E) INVESTMENTS
IN
ENERGY
SAVING 
SMALL BUSINESSES.— 
‘‘(i) IN
GENERAL.—Subject to clause 
(ii), in calculating the aggregate out-
standing leverage of a company for pur-
poses of subparagraph (A), the Adminis-
trator shall exclude the amount of the cost 
basis of any Energy Saving qualified in-
vestment in a smaller enterprise made in 
the first fiscal year after the date of enact-
ment of this subparagraph or any fiscal 
year thereafter by a company licensed in 
the applicable fiscal year. 
‘‘(ii) LIMITATIONS.— 
‘‘(I) AMOUNT
OF
EXCLUSION.— 
The amount excluded under clause (i) 
for a company shall not exceed 33 per-
cent of the private capital of that com-
pany. 
‘‘(II) MAXIMUM INVESTMENT.—A 
company shall not make an Energy 
Saving qualified investment in any 
one entity in an amount equal to more
742 
than 20 percent of the private capital 
of that company. 
‘‘(III) OTHER TERMS.—The exclu-
sion of amounts under clause (i) shall 
be subject to such terms as the Admin-
istrator may impose to ensure that 
there is no cost (as that term is defined 
in section 502 of the Federal Credit 
Reform Act of 1990 (2 U.S.C. 661a)) 
with respect to purchasing or guaran-
teeing any debenture involved.’’. 
SEC. 1207. RENEWABLE FUEL CAPITAL INVESTMENT COM-
PANY. 
Title III of the Small Business Investment Act of 1958 
(15 U.S.C. 681 et seq.) is amended by adding at the end 
the following: 
‘‘PART C—RENEWABLE FUEL CAPITAL 
INVESTMENT PILOT PROGRAM 
‘‘SEC. 381. DEFINITIONS. 
‘‘In this part: 
‘‘(1) 
OPERATIONAL
ASSISTANCE.—The 
term 
‘operational assistance’ means management, mar-
keting, and other technical assistance that assists a 
small business concern with business development.
743 
‘‘(2) PARTICIPATION
AGREEMENT.—The term 
‘participation agreement’ means an agreement, be-
tween the Administrator and a company granted 
final approval under section 384(e), that— 
‘‘(A) details the operating plan and invest-
ment criteria of the company; and 
‘‘(B) requires the company to make invest-
ments in smaller enterprises primarily engaged 
in researching, manufacturing, developing, pro-
ducing, or bringing to market goods, products, or 
services that generate or support the production 
of renewable energy. 
‘‘(3) RENEWABLE ENERGY.—The term ‘renewable 
energy’ means energy derived from resources that are 
regenerative or that cannot be depleted, including 
solar, wind, ethanol, and biodiesel fuels. 
‘‘(4) RENEWABLE
FUEL
CAPITAL
INVESTMENT 
COMPANY.—The term ‘Renewable Fuel Capital Invest-
ment company’ means a company— 
‘‘(A) that— 
‘‘(i) has been granted final approval by 
the Administrator under section 384(e); and 
‘‘(ii) has entered into a participation 
agreement with the Administrator; or
744 
‘‘(B) that has received conditional approval 
under section 384(c). 
‘‘(5) STATE.—The term ‘State’ means each of the 
several States, the District of Columbia, the Common-
wealth of Puerto Rico, the Virgin Islands, Guam, 
American Samoa, the Commonwealth of the Northern 
Mariana Islands, and any other commonwealth, terri-
tory, or possession of the United States. 
‘‘(6) VENTURE CAPITAL.—The term ‘venture cap-
ital’ means capital in the form of equity capital in-
vestments, as that term is defined in section 
303(g)(4). 
‘‘SEC. 382. PURPOSES. 
‘‘The purposes of the Renewable Fuel Capital Invest-
ment Program established under this part are— 
‘‘(1) to promote the research, development, man-
ufacture, production, and bringing to market of goods, 
products, or services that generate or support the pro-
duction of renewable energy by encouraging venture 
capital investments in smaller enterprises primarily 
engaged such activities; and 
‘‘(2) to establish a venture capital program, with 
the mission of addressing the unmet equity invest-
ment needs of smaller enterprises engaged in research-
ing, developing, manufacturing, producing, and
745 
bringing to market goods, products, or services that 
generate or support the production of renewable en-
ergy, to be administered by the Administrator— 
‘‘(A) to enter into participation agreements 
with Renewable Fuel Capital Investment compa-
nies; 
‘‘(B) to guarantee debentures of Renewable 
Fuel Capital Investment companies to enable 
each such company to make venture capital in-
vestments in smaller enterprises engaged in the 
research, development, manufacture, production, 
and bringing to market of goods, products, or 
services that generate or support the production 
of renewable energy; and 
‘‘(C) to make grants to Renewable Fuel In-
vestment Capital companies, and to other enti-
ties, for the purpose of providing operational as-
sistance to smaller enterprises financed, or ex-
pected to be financed, by such companies. 
‘‘SEC. 383. ESTABLISHMENT. 
‘‘The Administrator shall establish a Renewable Fuel 
Capital Investment Program, under which the Adminis-
trator may— 
‘‘(1) enter into participation agreements for the 
purposes described in section 382; and
746 
‘‘(2) guarantee the debentures issued by Renew-
able Fuel Capital Investment companies as provided 
in section 385. 
‘‘SEC. 384. SELECTION OF RENEWABLE FUEL CAPITAL IN-
VESTMENT COMPANIES. 
‘‘(a) ELIGIBILITY.—A company is eligible to apply to 
be designated as a Renewable Fuel Capital Investment com-
pany if the company— 
‘‘(1) is a newly formed for-profit entity or a 
newly formed for-profit subsidiary of an existing enti-
ty; 
‘‘(2) has a management team with experience in 
alternative energy financing or relevant venture cap-
ital financing; and 
‘‘(3) has a primary objective of investment in 
smaller enterprises that research, manufacture, de-
velop, produce, or bring to market goods, products, or 
services that generate or support the production of re-
newable energy. 
‘‘(b) APPLICATION.—A company desiring to be des-
ignated as a Renewable Fuel Capital Investment company 
shall submit an application to the Administrator that in-
cludes— 
‘‘(1) a business plan describing how the company 
intends to make successful venture capital investments
747 
in smaller enterprises primarily engaged in the re-
search, manufacture, development, production, or 
bringing to market of goods, products, or services that 
generate or support the production of renewable en-
ergy; 
‘‘(2) information regarding the relevant venture 
capital qualifications and general reputation of the 
management of the company; 
‘‘(3) a description of how the company intends 
to seek to address the unmet capital needs of the 
smaller enterprises served; 
‘‘(4) a proposal describing how the company in-
tends to use the grant funds provided under this part 
to provide operational assistance to smaller enter-
prises financed by the company, including informa-
tion regarding whether the company has employees 
with appropriate professional licenses or will contract 
with another entity when the services of such an indi-
vidual are necessary; 
‘‘(5) with respect to binding commitments to be 
made to the company under this part, an estimate of 
the ratio of cash to in-kind contributions; 
‘‘(6) a description of whether and to what extent 
the company meets the criteria under subsection
748 
(c)(2) and the objectives of the program established 
under this part; 
‘‘(7) information regarding the management and 
financial strength of any parent firm, affiliated firm, 
or any other firm essential to the success of the busi-
ness plan of the company; and 
‘‘(8) such other information as the Administrator 
may require. 
‘‘(c) CONDITIONAL APPROVAL.— 
‘‘(1) IN GENERAL.—From among companies sub-
mitting applications under subsection (b), the Admin-
istrator shall conditionally approve companies to op-
erate as Renewable Fuel Capital Investment compa-
nies. 
‘‘(2) SELECTION
CRITERIA.—In conditionally 
approving companies under paragraph (1), the Ad-
ministrator shall consider— 
‘‘(A) the likelihood that the company will 
meet the goal of its business plan; 
‘‘(B) the experience and background of the 
management team of the company; 
‘‘(C) the need for venture capital invest-
ments in the geographic areas in which the com-
pany intends to invest;
749 
‘‘(D) the extent to which the company will 
concentrate its activities on serving the geo-
graphic areas in which it intends to invest; 
‘‘(E) the likelihood that the company will be 
able to satisfy the conditions under subsection 
(d); 
‘‘(F) the extent to which the activities pro-
posed by the company will expand economic op-
portunities in the geographic areas in which the 
company intends to invest; 
‘‘(G) the strength of the proposal by the 
company to provide operational assistance under 
this part as the proposal relates to the ability of 
the company to meet applicable cash require-
ments and properly use in-kind contributions, 
including the use of resources for the services of 
licensed professionals, when necessary, whether 
provided by employees or contractors; and 
‘‘(H) any other factor determined appro-
priate by the Administrator. 
‘‘(3) NATIONWIDE DISTRIBUTION.—From among 
companies submitting applications under subsection 
(b), the Administrator shall consider the selection cri-
teria under paragraph (2) and shall, to the maximum
750 
extent practicable, approve at least one company from 
each geographic region of the Administration. 
‘‘(d) REQUIREMENTS TO BE MET FOR FINAL AP-
PROVAL.— 
‘‘(1) IN
GENERAL.—The Administrator shall 
grant each conditionally approved company 2 years 
to satisfy the requirements of this subsection. 
‘‘(2) 
CAPITAL
REQUIREMENT.—Each 
condi-
tionally approved company shall raise not less than 
$3,000,000 of private capital or binding capital com-
mitments from 1 or more investors (which shall not 
be departments or agencies of the Federal Govern-
ment) who meet criteria established by the Adminis-
trator. 
‘‘(3) 
NONADMINISTRATION
RESOURCES
FOR 
OPERATIONAL ASSISTANCE.— 
‘‘(A) IN
GENERAL.—In order to provide 
operational assistance to smaller enterprises ex-
pected to be financed by the company, each con-
ditionally approved company shall have binding 
commitments (for contribution in cash or in- 
kind)— 
‘‘(i) from sources other than the Ad-
ministration that meet criteria established 
by the Administrator; and
751 
‘‘(ii) payable or available over a 
multiyear period determined appropriate by 
the Administrator (not to exceed 10 years). 
‘‘(B) EXCEPTION.—The Administrator may, 
in the discretion of the Administrator and based 
upon a showing of special circumstances and 
good cause, consider an applicant to have satis-
fied the requirements of subparagraph (A) if the 
applicant has— 
‘‘(i) a viable plan that reasonably 
projects the capacity of the applicant to 
raise the amount (in cash or in-kind) re-
quired under subparagraph (A); and 
‘‘(ii) binding commitments in an 
amount equal to not less than 20 percent of 
the total amount required under paragraph 
(A). 
‘‘(C) LIMITATION.—The total amount of a 
in-kind contributions by a company shall be not 
more than 50 percent of the total contributions 
by a company. 
‘‘(e) FINAL APPROVAL; DESIGNATION.—The Adminis-
trator shall, with respect to each applicant conditionally 
approved under subsection (c)—
752 
‘‘(1) grant final approval to the applicant to op-
erate as a Renewable Fuel Capital Investment com-
pany under this part and designate the applicant as 
such a company, if the applicant— 
‘‘(A) satisfies the requirements of subsection 
(d) on or before the expiration of the time period 
described in that subsection; and 
‘‘(B) enters into a participation agreement 
with the Administrator; or 
‘‘(2) if the applicant fails to satisfy the require-
ments of subsection (d) on or before the expiration of 
the time period described in paragraph (1) of that 
subsection, revoke the conditional approval granted 
under that subsection. 
‘‘SEC. 385. DEBENTURES. 
‘‘(a) IN GENERAL.—The Administrator may guar-
antee the timely payment of principal and interest, as 
scheduled, on debentures issued by any Renewable Fuel 
Capital Investment company. 
‘‘(b) TERMS
AND CONDITIONS.—The Administrator 
may make guarantees under this section on such terms and 
conditions as it determines appropriate, except that— 
‘‘(1) the term of any debenture guaranteed under 
this section shall not exceed 15 years; and 
‘‘(2) a debenture guaranteed under this section—
753 
‘‘(A) shall carry no front-end or annual 
fees; 
‘‘(B) shall be issued at a discount; 
‘‘(C) shall require no interest payments dur-
ing the 5-year period beginning on the date the 
debenture is issued; 
‘‘(D) shall be prepayable without penalty 
after the end of the 1-year period beginning on 
the date the debenture is issued; and 
‘‘(E) shall require semiannual interest pay-
ments after the period described in subparagraph 
(C). 
‘‘(c) FULL FAITH
AND CREDIT
OF
THE UNITED 
STATES.—The full faith and credit of the United States is 
pledged to pay all amounts that may be required to be paid 
under any guarantee under this part. 
‘‘(d) MAXIMUM GUARANTEE.— 
‘‘(1) IN GENERAL.—Under this section, the Ad-
ministrator may guarantee the debentures issued by 
a Renewable Fuel Capital Investment company only 
to the extent that the total face amount of outstanding 
guaranteed debentures of such company does not ex-
ceed 150 percent of the private capital of the com-
pany, as determined by the Administrator.
754 
‘‘(2) 
TREATMENT
OF
CERTAIN
FEDERAL 
FUNDS.—For the purposes of paragraph (1), private 
capital shall include capital that is considered to be 
Federal funds, if such capital is contributed by an in-
vestor other than a department or agency of the Fed-
eral Government. 
‘‘SEC. 386. ISSUANCE AND GUARANTEE OF TRUST CERTIFI-
CATES. 
‘‘(a) ISSUANCE.—The Administrator may issue trust 
certificates representing ownership of all or a fractional 
part of debentures issued by a Renewable Fuel Capital In-
vestment company and guaranteed by the Administrator 
under this part, if such certificates are based on and backed 
by a trust or pool approved by the Administrator and com-
posed solely of guaranteed debentures. 
‘‘(b) GUARANTEE.— 
‘‘(1) IN
GENERAL.—The Administrator may, 
under such terms and conditions as it determines ap-
propriate, guarantee the timely payment of the prin-
cipal of and interest on trust certificates issued by the 
Administrator or its agents for purposes of this sec-
tion. 
‘‘(2) LIMITATION.—Each guarantee under this 
subsection shall be limited to the extent of principal
755 
and interest on the guaranteed debentures that com-
pose the trust or pool. 
‘‘(3) PREPAYMENT OR DEFAULT.—If a debenture 
in a trust or pool is prepaid, or in the event of de-
fault of such a debenture, the guarantee of timely 
payment of principal and interest on the trust certifi-
cates shall be reduced in proportion to the amount of 
principal and interest such prepaid debenture rep-
resents in the trust or pool. Interest on prepaid or de-
faulted debentures shall accrue and be guaranteed by 
the Administrator only through the date of payment 
of the guarantee. At any time during its term, a trust 
certificate may be called for redemption due to pre-
payment or default of all debentures. 
‘‘(c) FULL FAITH
AND CREDIT
OF
THE UNITED 
STATES.—The full faith and credit of the United States is 
pledged to pay all amounts that may be required to be paid 
under any guarantee of a trust certificate issued by the Ad-
ministrator or its agents under this section. 
‘‘(d) FEES.—The Administrator shall not collect a fee 
for any guarantee of a trust certificate under this section, 
but any agent of the Administrator may collect a fee ap-
proved by the Administrator for the functions described in 
subsection (f)(2). 
‘‘(e) SUBROGATION AND OWNERSHIP RIGHTS.—
756 
‘‘(1) SUBROGATION.—If the Administrator pays 
a claim under a guarantee issued under this section, 
it shall be subrogated fully to the rights satisfied by 
such payment. 
‘‘(2) OWNERSHIP RIGHTS.—No Federal, State, or 
local law shall preclude or limit the exercise by the 
Administrator of its ownership rights in the deben-
tures residing in a trust or pool against which trust 
certificates are issued under this section. 
‘‘(f) MANAGEMENT AND ADMINISTRATION.— 
‘‘(1) REGISTRATION.—The Administrator may 
provide for a central registration of all trust certifi-
cates issued under this section. 
‘‘(2) CONTRACTING OF FUNCTIONS.— 
‘‘(A) IN
GENERAL.—The Administrator 
may contract with an agent or agents to carry 
out on behalf of the Administrator the pooling 
and the central registration functions provided 
for in this section, including, not withstanding 
any other provision of law— 
‘‘(i) maintenance, on behalf of and 
under the direction of the Administrator, of 
such commercial bank accounts or invest-
ments in obligations of the United States as 
may be necessary to facilitate the creation
757 
of trusts or pools backed by debentures guar-
anteed under this part; and 
‘‘(ii) the issuance of trust certificates to 
facilitate the creation of such trusts or 
pools. 
‘‘(B) FIDELITY
BOND
OR
INSURANCE
RE-
QUIREMENT.—Any agent performing functions 
on behalf of the Administrator under this para-
graph shall provide a fidelity bond or insurance 
in such amounts as the Administrator deter-
mines to be necessary to fully protect the inter-
ests of the United States. 
‘‘(3) REGULATION OF BROKERS AND DEALERS.— 
The Administrator may regulate brokers and dealers 
in trust certificates issued under this section. 
‘‘(4) ELECTRONIC
REGISTRATION.—Nothing in 
this subsection may be construed to prohibit the use 
of a book-entry or other electronic form of registration 
for trust certificates issued under this section. 
‘‘SEC. 387. FEES. 
‘‘(a) IN GENERAL.—Except as provided in section 
386(d), the Administrator may charge such fees as it deter-
mines appropriate with respect to any guarantee or grant 
issued under this part, in an amount established annually 
by the Administrator, as necessary to reduce to zero the cost
758 
(as defined in section 502 of the Federal Credit Reform Act 
of 1990) to the Administration of purchasing and guaran-
teeing debentures under this part, which amounts shall be 
paid to and retained by the Administration. 
‘‘(b) OFFSET.—The Administrator may, as provided 
by section 388, offset fees charged and collected under sub-
section (a). 
‘‘SEC. 388. FEE CONTRIBUTION. 
‘‘(a) IN GENERAL.—To the extent that amounts are 
made available to the Administrator for the purpose of fee 
contributions, the Administrator shall contribute to fees 
paid by the Renewable Fuel Capital Investment companies 
under section 387. 
‘‘(b) ANNUAL ADJUSTMENT.—Each fee contribution 
under subsection (a) shall be effective for 1 fiscal year and 
shall be adjusted as necessary for each fiscal year thereafter 
to ensure that amounts under subsection (a) are fully used. 
The fee contribution for a fiscal year shall be based on the 
outstanding commitments made and the guarantees and 
grants that the Administrator projects will be made during 
that fiscal year, given the program level authorized by law 
for that fiscal year and any other factors that the Adminis-
trator determines appropriate. 
‘‘SEC. 389. OPERATIONAL ASSISTANCE GRANTS. 
‘‘(a) IN GENERAL.—
759 
‘‘(1) 
AUTHORITY.—The 
Administrator 
may 
make grants to Renewable Fuel Capital Investment 
companies to provide operational assistance to small-
er enterprises financed, or expected to be financed, by 
such companies or other entities. 
‘‘(2) TERMS.—A grant under this subsection 
shall be made over a multiyear period not to exceed 
10 years, under such other terms as the Administrator 
may require. 
‘‘(3) GRANT AMOUNT.—The amount of a grant 
made under this subsection to a Renewable Fuel Cap-
ital Investment company shall be equal to the lesser 
of— 
‘‘(A) 10 percent of the resources (in cash or 
in kind) raised by the company under section 
384(d)(2); or 
‘‘(B) $1,000,000. 
‘‘(4) PRO
RATA
REDUCTIONS.—If the amount 
made available to carry out this section is insufficient 
for the Administrator to provide grants in the 
amounts provided for in paragraph (3), the Adminis-
trator shall make pro rata reductions in the amounts 
otherwise payable to each company and entity under 
such paragraph.
760 
‘‘(5) GRANTS TO CONDITIONALLY APPROVED COM-
PANIES.— 
‘‘(A) IN
GENERAL.—Subject to subpara-
graphs (B) and (C), upon the request of a com-
pany conditionally approved under section 
384(c), the Administrator shall make a grant to 
the company under this subsection. 
‘‘(B) REPAYMENT BY COMPANIES NOT AP-
PROVED.—If a company receives a grant under 
this paragraph and does not enter into a partici-
pation agreement for final approval, the com-
pany shall, subject to controlling Federal law, 
repay the amount of the grant to the Adminis-
trator. 
‘‘(C) DEDUCTION OF GRANT TO APPROVED 
COMPANY.—If a company receives a grant under 
this paragraph and receives final approval 
under section 384(e), the Administrator shall de-
duct the amount of the grant from the total 
grant amount the company receives for oper-
ational assistance. 
‘‘(D) AMOUNT
OF
GRANT.—No company 
may receive a grant of more than $100,000 
under this paragraph. 
‘‘(b) SUPPLEMENTAL GRANTS.—
761 
‘‘(1) IN
GENERAL.—The Administrator may 
make supplemental grants to Renewable Fuel Capital 
Investment companies and to other entities, as au-
thorized by this part, under such terms as the Admin-
istrator may require, to provide additional oper-
ational assistance to smaller enterprises financed, or 
expected to be financed, by the companies. 
‘‘(2) MATCHING REQUIREMENT.—The Adminis-
trator may require, as a condition of any supple-
mental grant made under this subsection, that the 
company or entity receiving the grant provide from 
resources (in a cash or in kind), other then those pro-
vided by the Administrator, a matching contribution 
equal to the amount of the supplemental grant. 
‘‘(c) LIMITATION.—None of the assistance made avail-
able under this section may be used for any overhead or 
general and administrative expense of a Renewable Fuel 
Capital Investment company. 
‘‘SEC. 390. BANK PARTICIPATION. 
‘‘(a) IN GENERAL.—Except as provided in subsection 
(b), any national bank, any member bank of the Federal 
Reserve System, and (to the extent permitted under applica-
ble State law) any insured bank that is not a member of 
such system, may invest in any Renewable Fuel Capital
762 
Investment company, or in any entity established to invest 
solely in Renewable Fuel Capital Investment companies. 
‘‘(b) LIMITATION.—No bank described in subsection (a) 
may make investments described in such subsection that are 
greater than 5 percent of the capital and surplus of the 
bank. 
‘‘SEC. 391. FEDERAL FINANCING BANK. 
‘‘Notwithstanding section 318, the Federal Financing 
Bank may acquire a debenture issued by a Renewable Fuel 
Capital Investment company under this part. 
‘‘SEC. 392. REPORTING REQUIREMENT. 
‘‘Each Renewable Fuel Capital Investment company 
that participates in the program established under this part 
shall provide to the Administrator such information as the 
Administrator may require, including— 
‘‘(1) information related to the measurement cri-
teria that the company proposed in its program ap-
plication; and 
‘‘(2) in each case in which the company makes, 
under this part, an investment in, or a loan or a 
grant to, a business that is not primarily engaged in 
the research, development, manufacture, or bringing 
to market or renewable energy sources, a report on the 
nature, origin, and revenues of the business in which 
investments are made.
763 
‘‘SEC. 393. EXAMINATIONS. 
‘‘(a) IN GENERAL.—Each Renewable Fuel Capital In-
vestment company that participates in the program estab-
lished under this part shall be subject to examinations made 
at the direction of the Investment Division of the Adminis-
tration in accordance with this section. 
‘‘(b) ASSISTANCE OF PRIVATE SECTOR ENTITIES.— 
Examinations under this section may be conducted with the 
assistance of a private sector entity that has both the quali-
fications and the expertise necessary to conduct such exami-
nations. 
‘‘(c) COSTS.— 
‘‘(1) ASSESSMENT.— 
‘‘(A) IN
GENERAL.—The Administrator 
may assess the cost of examinations under this 
section, including compensation of the exam-
iners, against the company examined. 
‘‘(B) PAYMENT.—Any company against 
which the Administrator assesses costs under this 
paragraph shall pay such costs. 
‘‘(2) DEPOSIT OF FUNDS.—Funds collected under 
this section shall be deposited in the account for sala-
ries and expenses of the Administration. 
‘‘SEC. 394. MISCELLANEOUS. 
‘‘To the extent such procedures are not inconsistent 
with the requirements of this part, the Administrator may
764 
take such action as set forth in sections 309, 311, 312, and 
314 and an officer, director, employee, agent, or other par-
ticipant in the management or conduct of the affairs of a 
Renewable Fuel Capital Investment company shall be sub-
ject to the requirements of such sections. 
‘‘SEC. 395. REMOVAL OR SUSPENSION OF DIRECTORS OR 
OFFICERS. 
‘‘Using the procedures for removing or suspending a 
director or an officer of a licensee set forth in section 313 
(to the extent such procedures are not inconsistent with the 
requirements of this part), the Administrator may remove 
or suspend any director or officer of any Renewable Fuel 
Capital Investment company. 
‘‘SEC. 396. REGULATIONS. 
‘‘The Administrator may issue such regulations as the 
Administrator determines necessary to carry out the provi-
sions of this part in accordance with its purposes. 
‘‘SEC. 397. AUTHORIZATIONS OF APPROPRIATIONS. 
‘‘(a) IN GENERAL.—Subject to the availability of ap-
propriations, the Administrator is authorized to make 
$15,000,000 in operational assistance grants under section 
389 for each of fiscal years 2008 and 2009. 
‘‘(b) FUNDS COLLECTED FOR EXAMINATIONS.—Funds 
deposited under section 393(c)(2) are authorized to be ap-
propriated only for the costs of examinations under section
765 
393 and for the costs of other oversight activities with re-
spect to the program established under this part. 
‘‘SEC. 398. TERMINATION. 
‘‘The program under this part shall terminate at the 
end of the second full fiscal year after the date that the Ad-
ministrator establishes the program under this part.’’. 
SEC. 1208. STUDY AND REPORT. 
The Administrator of the Small Business Administra-
tion shall conduct a study of the Renewable Fuel Capital 
Investment Program under part C of title III of the Small 
Business Investment Act of 1958, as added by this Act. Not 
later than 3 years after the date of enactment of this Act, 
the Administrator shall complete the study under this sec-
tion and submit to Congress a report regarding the results 
of the study. 
TITLE XIII—SMART GRID 
SEC. 1301. STATEMENT OF POLICY ON MODERNIZATION OF 
ELECTRICITY GRID. 
It is the policy of the United States to support the 
modernization of the Nation’s electricity transmission and 
distribution system to maintain a reliable and secure elec-
tricity infrastructure that can meet future demand growth 
and to achieve each of the following, which together charac-
terize a Smart Grid:
767 
(9) Development of standards for communication 
and interoperability of appliances and equipment 
connected to the electric grid, including the infra-
structure serving the grid. 
(10) Identification and lowering of unreasonable 
or unnecessary barriers to adoption of smart grid 
technologies, practices, and services. 
SEC. 1302. SMART GRID SYSTEM REPORT. 
The Secretary, acting through the Assistant Secretary 
of the Office of Electricity Delivery and Energy Reliability 
(referred to in this section as the ‘‘OEDER’’) and through 
the Smart Grid Task Force established in section 1303, 
shall, after consulting with any interested individual or en-
tity as appropriate, no later than one year after enactment, 
and every two years thereafter, report to Congress con-
cerning the status of smart grid deployments nationwide 
and any regulatory or government barriers to continued de-
ployment. The report shall provide the current status and 
prospects of smart grid development, including information 
on technology penetration, communications network capa-
bilities, costs, and obstacles. It may include recommenda-
tions for State and Federal policies or actions helpful to 
facilitate the transition to a smart grid. To the extent ap-
propriate, it should take a regional perspective. In pre-
paring this report, the Secretary shall solicit advice and
768 
contributions from the Smart Grid Advisory Committee cre-
ated in section 1303; from other involved Federal agencies 
including but not limited to the Federal Energy Regulatory 
Commission (‘‘Commission’’), the National Institute of 
Standards and Technology (‘‘Institute’’), and the Depart-
ment of Homeland Security; and from other stakeholder 
groups not already represented on the Smart Grid Advisory 
Committee. 
SEC. 1303. SMART GRID ADVISORY COMMITTEE AND SMART 
GRID TASK FORCE. 
(a) SMART GRID ADVISORY COMMITTEE.— 
(1) ESTABLISHMENT.—The Secretary shall estab-
lish, within 90 days of enactment of this Part, a 
Smart Grid Advisory Committee (either as an inde-
pendent entity or as a designated sub-part of a larger 
advisory committee on electricity matters). The Smart 
Grid Advisory Committee shall include eight or more 
members appointed by the Secretary who have suffi-
cient experience and expertise to represent the full 
range of smart grid technologies and services, to rep-
resent both private and non-Federal public sector 
stakeholders. One member shall be appointed by the 
Secretary to Chair the Smart Grid Advisory Com-
mittee.
769 
(2) MISSION.—The mission of the Smart Grid 
Advisory Committee shall be to advise the Secretary, 
the Assistant Secretary, and other relevant Federal of-
ficials concerning the development of smart grid tech-
nologies, the progress of a national transition to the 
use of smart-grid technologies and services, the evo-
lution of widely-accepted technical and practical 
standards and protocols to allow interoperability and 
inter-communication among smart-grid capable de-
vices, and the optimum means of using Federal incen-
tive authority to encourage such progress. 
(3) APPLICABILITY OF FEDERAL ADVISORY COM-
MITTEE ACT.—The Federal Advisory Committee Act 
(5 U.S.C. App.) shall apply to the Smart Grid Advi-
sory Committee. 
(b) SMART GRID TASK FORCE.— 
(1) ESTABLISHMENT.—The Assistant Secretary 
of the Office of Electricity Delivery and Energy Reli-
ability shall establish, within 90 days of enactment of 
this Part, a Smart Grid Task Force composed of des-
ignated employees from the various divisions of that 
office who have responsibilities related to the transi-
tion to smart-grid technologies and practices. The As-
sistant Secretary or his designee shall be identified as 
the Director of the Smart Grid Task Force. The
770 
Chairman of the Federal Energy Regulatory Commis-
sion and the Director of the National Institute of 
Standards and Technology shall each designate at 
least one employee to participate on the Smart Grid 
Task Force. Other members may come from other 
agencies at the invitation of the Assistant Secretary 
or the nomination of the head of such other agency. 
The Smart Grid Task Force shall, without disrupting 
the work of the Divisions or Offices from which its 
members are drawn, provide an identifiable Federal 
entity to embody the Federal role in the national 
transition toward development and use of smart grid 
technologies. 
(2) MISSION.—The mission of the Smart Grid 
Task Force shall be to insure awareness, coordination 
and integration of the diverse activities of the Office 
and elsewhere in the Federal government related to 
smart-grid technologies and practices, including but 
not limited to: smart grid research and development; 
development of widely accepted smart-grid standards 
and protocols; the relationship of smart-grid tech-
nologies and practices to electric utility regulation; 
the relationship of smart-grid technologies and prac-
tices to infrastructure development, system reliability 
and security; and the relationship of smart-grid tech-
771 
nologies and practices to other facets of electricity 
supply, demand, transmission, distribution, and pol-
icy. The Smart Grid Task Force shall collaborate 
with the Smart Grid Advisory Committee and other 
Federal agencies and offices. The Smart Grid Task 
Force shall meet at the call of its Director as nec-
essary to accomplish its mission. 
(c) AUTHORIZATION.—There are authorized to be ap-
propriated for the purposes of this section such sums as are 
necessary to the Secretary to support the operations of the 
Smart Grid Advisory Committee and Smart Grid Task 
Force for each of fiscal years 2008 through 2020. 
SEC. 1304. SMART GRID TECHNOLOGY RESEARCH, DEVEL-
OPMENT, AND DEMONSTRATION. 
(a) POWER
GRID
DIGITAL
INFORMATION
TECH-
NOLOGY.—The Secretary, in consultation with the Federal 
Energy Regulatory Commission and other appropriate 
agencies, electric utilities, the States, and other stakeholders, 
shall carry out a program— 
(1) to develop advanced techniques for measuring 
peak load reductions and energy-efficiency savings 
from smart metering, demand response, distributed 
generation, and electricity storage systems;
772 
(2) to investigate means for demand response, 
distributed generation, and storage to provide ancil-
lary services; 
(3) to conduct research to advance the use of 
wide-area measurement and control networks, includ-
ing data mining, visualization, advanced computing, 
and secure and dependable communications in a 
highly-distributed environment; 
(4) to test new reliability technologies, including 
those concerning communications network capabili-
ties, in a grid control room environment against a 
representative set of local outage and wide area black-
out scenarios; 
(5) to identify communications network capacity 
needed to implement advanced technologies. 
(6) to investigate the feasibility of a transition 
to time-of-use and real-time electricity pricing; 
(7) to develop algorithms for use in electric 
transmission system software applications; 
(8) to promote the use of underutilized electricity 
generation capacity in any substitution of electricity 
for liquid fuels in the transportation system of the 
United States; and 
(9) in consultation with the Federal Energy Reg-
ulatory Commission, to propose interconnection pro-
773 
tocols to enable electric utilities to access electricity 
stored in vehicles to help meet peak demand loads. 
(b) SMART GRID REGIONAL DEMONSTRATION INITIA-
TIVE.— 
(1) IN GENERAL.—The Secretary shall establish 
a smart grid regional demonstration initiative (re-
ferred to in this subsection as the ‘‘Initiative’’) com-
posed of demonstration projects specifically focused on 
advanced technologies for use in power grid sensing, 
communications, analysis, and power flow control. 
The Secretary shall seek to leverage existing smart 
grid deployments. 
(2) GOALS.—The goals of the Initiative shall 
be— 
(A) to demonstrate the potential benefits of 
concentrated investments in advanced grid tech-
nologies on a regional grid; 
(B) to facilitate the commercial transition 
from the current power transmission and dis-
tribution system technologies to advanced tech-
nologies; 
(C) to facilitate the integration of advanced 
technologies in existing electric networks to im-
prove system performance, power flow control, 
and reliability;
774 
(D) to demonstrate protocols and standards 
that allow for the measurement and validation of 
the energy savings and fossil fuel emission reduc-
tions associated with the installation and use of 
energy efficiency and demand response tech-
nologies and practices; and 
(E) to investigate differences in each region 
and regulatory environment regarding best prac-
tices in implementing smart grid technologies. 
(3) DEMONSTRATION PROJECTS.— 
(A) IN GENERAL.—In carrying out the ini-
tiative, the Secretary shall carry out smart grid 
demonstration projects in up to 5 electricity con-
trol areas, including rural areas and at least 1 
area in which the majority of generation and 
transmission assets are controlled by a tax-ex-
empt entity. 
(B) 
COOPERATION.—A 
demonstration 
project under subparagraph (A) shall be carried 
out in cooperation with the electric utility that 
owns the grid facilities in the electricity control 
area in which the demonstration project is car-
ried out. 
(C) FEDERAL SHARE OF COST OF TECH-
NOLOGY INVESTMENTS.—The Secretary shall pro-
775 
vide to an electric utility described in subpara-
graph (B) financial assistance for use in paying 
an amount equal to not more than 50 percent of 
the cost of qualifying advanced grid technology 
investments made by the electric utility to carry 
out a demonstration project. 
(D) INELIGIBILITY FOR GRANTS.—No per-
son or entity participating in any demonstra-
tion project conducted under this subsection shall 
be eligible for grants under section 1306 for oth-
erwise qualifying investments made as part of 
that demonstration project. 
(c) AUTHORIZATION OF APPROPRIATIONS.—There are 
authorized to be appropriated— 
(1) to carry out subsection (a), such sums as are 
necessary for each of fiscal years 2008 through 2012; 
and 
(2) to carry out subsection (b), $100,000,000 for 
each of fiscal years 2008 through 2012. 
SEC. 1305. SMART GRID INTEROPERABILITY FRAMEWORK. 
(a) INTEROPERABILITY FRAMEWORK.—The Director of 
the National Institute of Standards and Technology shall 
have primary responsibility to coordinate the development 
of a framework that includes protocols and model standards 
for information management to achieve interoperability of
776 
smart grid devices and systems. Such protocols and stand-
ards shall further align policy, business, and technology ap-
proaches in a manner that would enable all electric re-
sources, including demand-side resources, to contribute to 
an efficient, reliable electricity network. In developing such 
protocols and standards— 
(1) the Director shall seek input and cooperation 
from the Commission, OEDER and its Smart Grid 
Task Force, the Smart Grid Advisory Committee, 
other relevant Federal and State agencies; and 
(2) the Director shall also solicit input and co-
operation from private entities interested in such pro-
tocols and standards, including but not limited to the 
Gridwise Architecture Council, the International 
Electrical and Electronics Engineers, the National 
Electric Reliability Organization recognized by the 
Federal Energy Regulatory Commission, and Na-
tional Electrical Manufacturer’s Association. 
(b) SCOPE OF FRAMEWORK.—The framework devel-
oped under subsection (a) shall be flexible, uniform and 
technology neutral, including but not limited to technologies 
for managing smart grid information, and designed— 
(1) to accommodate traditional, centralized gen-
eration and transmission resources and consumer dis-
tributed resources, including distributed generation,
777 
renewable generation, energy storage, energy effi-
ciency, and demand response and enabling devices 
and systems; 
(2) to be flexible to incorporate— 
(A) regional and organizational differences; 
and 
(B) technological innovations; 
(3) to consider the use of voluntary uniform 
standards for certain classes of mass-produced electric 
appliances and equipment for homes and businesses 
that enable customers, at their election and consistent 
with applicable State and Federal laws, and are 
manufactured with the ability to respond to electric 
grid emergencies and demand response signals by cur-
tailing all, or a portion of, the electrical power con-
sumed by the appliances or equipment in response to 
an emergency or demand response signal, including 
through— 
(A) load reduction to reduce total electrical 
demand; 
(B) adjustment of load to provide grid an-
cillary services; and 
(C) in the event of a reliability crisis that 
threatens an outage, short-term load shedding to 
help preserve the stability of the grid; and
778 
(4) such voluntary standards should incorporate 
appropriate manufacturer lead time. 
(c) TIMING OF FRAMEWORK DEVELOPMENT.—The In-
stitute shall begin work pursuant to this section within 60 
days of enactment. The Institute shall provide and publish 
an initial report on progress toward recommended or con-
sensus standards and protocols within one year after enact-
ment, further reports at such times as developments war-
rant in the judgment of the Institute, and a final report 
when the Institute determines that the work is completed 
or that a Federal role is no longer necessary. 
(d) STANDARDS FOR INTEROPERABILITY IN FEDERAL 
JURISDICTION.—At any time after the Institute’s work has 
led to sufficient consensus in the Commission’s judgment, 
the Commission shall institute a rulemaking proceeding to 
adopt such standards and protocols as may be necessary 
to insure smart-grid functionality and interoperability in 
interstate transmission of electric power, and regional and 
wholesale electricity markets. 
(e) AUTHORIZATION.—There are authorized to be ap-
propriated for the purposes of this section $5,000,000 to the 
Institute to support the activities required by this sub-
section for each of fiscal years 2008 through 2012.
779 
SEC. 1306. FEDERAL MATCHING FUND FOR SMART GRID IN-
VESTMENT COSTS. 
(a) MATCHING FUND.—The Secretary shall establish 
a Smart Grid Investment Matching Grant Program to pro-
vide reimbursement of one-fifth (20 percent) of qualifying 
Smart Grid investments. 
(b) QUALIFYING INVESTMENTS.—Qualifying Smart 
Grid investments may include any of the following made 
on or after the date of enactment of this Act: 
(1) In the case of appliances covered for purposes 
of establishing energy conservation standards under 
part B of title III of the Energy Policy and Conserva-
tion Act of 1975 (42 U.S.C. 6291 et seq.), the docu-
mented expenditures incurred by a manufacturer of 
such appliances associated with purchasing or design-
ing, creating the ability to manufacture, and manu-
facturing and installing for one calendar year, inter-
nal devices that allow the appliance to engage in 
Smart Grid functions. 
(2) In the case of specialized electricity-using 
equipment, including motors and drivers, installed in 
industrial or commercial applications, the docu-
mented expenditures incurred by its owner or its 
manufacturer of installing devices or modifying that 
equipment to engage in Smart Grid functions.
780 
(3) In the case of transmission and distribution 
equipment fitted with monitoring and communica-
tions devices to enable smart grid functions, the docu-
mented expenditures incurred by the electric utility to 
purchase and install such monitoring and commu-
nications devices. 
(4) In the case of metering devices, sensors, con-
trol devices, and other devices integrated with and at-
tached to an electric utility system or retail dis-
tributor or marketer of electricity that are capable of 
engaging in Smart Grid functions, the documented 
expenditures incurred by the electric utility, dis-
tributor, or marketer and its customers to purchase 
and install such devices. 
(5) In the case of software that enables devices or 
computers to engage in Smart Grid functions, the 
documented purchase costs of the software. 
(6) In the case of entities that operate or coordi-
nate operations of regional electric grids, the docu-
mented expenditures for purchasing and installing 
such equipment that allows Smart Grid functions to 
operate and be combined or coordinated among mul-
tiple electric utilities and between that region and 
other regions.
781 
(7) In the case of persons or entities other than 
electric utilities owning and operating a distributed 
electricity generator, the documented expenditures of 
enabling that generator to be monitored, controlled, or 
otherwise integrated into grid operations and elec-
tricity flows on the grid utilizing Smart Grid func-
tions. 
(8) In the case of electric or hybrid-electric vehi-
cles, the documented expenses for devices that allow 
the vehicle to engage in Smart Grid functions (but 
not the costs of electricity storage for the vehicle). 
(9) The documented expenditures related to pur-
chasing and implementing Smart Grid functions in 
such other cases as the Secretary shall identify. In 
making such grants, the Secretary shall seek to re-
ward innovation and early adaptation, even if success 
is not complete, rather than deployment of proven 
and commercially viable technologies. 
(c) INVESTMENTS NOT INCLUDED.—Qualifying Smart 
Grid investments do not include any of the following: 
(1) Investments or expenditures for Smart Grid 
technologies, devices, or equipment that are eligible for 
specific tax credits or deductions under the Internal 
Revenue Code, as amended.
782 
(2) Expenditures for electricity generation, 
transmission, or distribution infrastructure or equip-
ment not directly related to enabling Smart Grid 
functions. 
(3) After the final date for State consideration of 
the Smart Grid Information Standard under section 
1307 (paragraph (17) of section 111(d) of the Public 
Utility Regulatory Policies Act of 1978), an invest-
ment that is not in compliance with such standard. 
(4) After the development and publication by the 
Institute of protocols and model standards for inter-
operability of smart grid devices and technologies, an 
investment that fails to incorporate any of such pro-
tocols or model standards. 
(5) Expenditures for physical interconnection of 
generators or other devices to the grid except those 
that are directly related to enabling Smart Grid func-
tions. 
(6) Expenditures for ongoing salaries, benefits, 
or personnel costs not incurred in the initial installa-
tion, training, or start up of smart grid functions. 
(7) Expenditures for travel, lodging, meals or 
other personal costs.
783 
(8) Ongoing or routine operation, billing, cus-
tomer relations, security, and maintenance expendi-
tures. 
(9) Such other expenditures that the Secretary 
determines not to be Qualifying Smart Grid Invest-
ments by reason of the lack of the ability to perform 
Smart Grid functions or lack of direct relationship to 
Smart Grid functions. 
(d) SMART GRID FUNCTIONS.—The term ‘‘smart grid 
functions’’ means any of the following: 
(1) The ability to develop, store, send and receive 
digital information concerning electricity use, costs, 
prices, time of use, nature of use, storage, or other in-
formation relevant to device, grid, or utility oper-
ations, to or from or by means of the electric utility 
system, through one or a combination of devices and 
technologies. 
(2) The ability to develop, store, send and receive 
digital information concerning electricity use, costs, 
prices, time of use, nature of use, storage, or other in-
formation relevant to device, grid, or utility oper-
ations to or from a computer or other control device. 
(3) The ability to measure or monitor electricity 
use as a function of time of day, power quality char-
acteristics such as voltage level, current, cycles per
784 
second, or source or type of generation and to store, 
synthesize or report that information by digital 
means. 
(4) The ability to sense and localize disruptions 
or changes in power flows on the grid and commu-
nicate such information instantaneously and auto-
matically for purposes of enabling automatic protec-
tive responses to sustain reliability and security of 
grid operations. 
(5) The ability to detect, prevent, communicate 
with regard to, respond to, or recover from system se-
curity threats, including cyber-security threats and 
terrorism, using digital information, media, and de-
vices. 
(6) The ability of any appliance or machine to 
respond to such signals, measurements, or commu-
nications automatically or in a manner programmed 
by its owner or operator without independent human 
intervention. 
(7) The ability to use digital information to op-
erate functionalities on the electric utility grid that 
were previously electro-mechanical or manual. 
(8) The ability to use digital controls to manage 
and modify electricity demand, enable congestion
785 
management, assist in voltage control, provide oper-
ating reserves, and provide frequency regulation. 
(9) Such other functions as the Secretary may 
identify as being necessary or useful to the operation 
of a Smart Grid. 
(e) The Secretary shall— 
(1) establish and publish in the Federal Register, 
within one year after the enactment of this Act proce-
dures by which applicants who have made qualifying 
Smart Grid investments can seek and obtain reim-
bursement of one-fifth of their documented expendi-
tures; 
(2) establish procedures to ensure that there is no 
duplication or multiple reimbursement for the same 
investment or costs, that the reimbursement goes to 
the party making the actual expenditures for Quali-
fying Smart Grid Investments, and that the grants 
made have significant effect in encouraging and fa-
cilitating the development of a smart grid; 
(3) maintain public records of reimbursements 
made, recipients, and qualifying Smart Grid invest-
ments which have received reimbursements; 
(4) establish procedures to provide, in cases 
deemed by the Secretary to be warranted, advance 
payment of moneys up to the full amount of the pro-
786 
jected eventual reimbursement, to creditworthy appli-
cants whose ability to make Qualifying Smart Grid 
Investments may be hindered by lack of initial cap-
ital, in lieu of any later reimbursement for which 
that applicant qualifies, and subject to full return of 
the advance payment in the event that the Qualifying 
Smart Grid investment is not made; and 
(5) have and exercise the discretion to deny 
grants for investments that do not qualify in the rea-
sonable judgment of the Secretary. 
(f) AUTHORIZATION OF APPROPRIATIONS.—There are 
authorized to be appropriated to the Secretary such sums 
as are necessary for the administration of this section and 
the grants to be made pursuant to this section for fiscal 
years 2008 through 2012. 
SEC. 1307. STATE CONSIDERATION OF SMART GRID. 
(a) 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: 
‘‘(16) CONSIDERATION OF SMART GRID INVEST-
MENTS.— 
‘‘(A) IN GENERAL.—Each State shall con-
sider requiring that, prior to undertaking invest-
ments in nonadvanced grid technologies, an elec-
tric utility of the State demonstrate to the State
787 
that the electric utility considered an investment 
in a qualified smart grid system based on appro-
priate factors, including— 
‘‘(i) total costs; 
‘‘(ii) cost-effectiveness; 
‘‘(iii) improved reliability; 
‘‘(iv) security; 
‘‘(v) system performance; and 
‘‘(vi) societal benefit. 
‘‘(B) RATE
RECOVERY.—Each State shall 
consider authorizing each electric utility of the 
State to recover from ratepayers any capital, op-
erating expenditure, or other costs of the electric 
utility relating to the deployment of a qualified 
smart grid system, including a reasonable rate of 
return on the capital expenditures of the electric 
utility for the deployment of the qualified smart 
grid system. 
‘‘(C) OBSOLETE EQUIPMENT.—Each State 
shall consider authorizing any electric utility or 
other party of the State to deploy a qualified 
smart grid system to recover in a timely manner 
the remaining book-value costs of any equipment 
rendered obsolete by the deployment of the quali-
788 
fied smart grid system, based on the remaining 
depreciable life of the obsolete equipment. 
‘‘(17) SMART GRID INFORMATION.— 
‘‘(A) STANDARD.—All electricity purchasers 
shall be provided direct access, in written or elec-
tronic machine-readable form as appropriate, to 
information from their electricity provider as 
provided in subparagraph (B). 
‘‘(B) INFORMATION.—Information provided 
under this section, to the extent practicable, shall 
include: 
‘‘(i) PRICES.—Purchasers and other 
interested persons shall be provided with in-
formation on— 
‘‘(I) time-based electricity prices 
in the wholesale electricity market; and 
‘‘(II) time-based electricity retail 
prices or rates that are available to the 
purchasers. 
‘‘(ii) USAGE.—Purchasers shall be pro-
vided with the number of electricity units, 
expressed in kwh, purchased by them. 
‘‘(iii) INTERVALS AND PROJECTIONS.— 
Updates of information on prices and usage 
shall be offered on not less than a daily
789 
basis, shall include hourly price and use in-
formation, where available, and shall in-
clude a day-ahead projection of such price 
information to the extent available. 
‘‘(iv) SOURCES.—Purchasers and other 
interested persons shall be provided annu-
ally with written information on the sources 
of the power provided by the utility, to the 
extent it can be determined, by type of gen-
eration, including greenhouse gas emissions 
associated with each type of generation, for 
intervals during which such information is 
available on a cost-effective basis. 
‘‘(C) ACCESS.—Purchasers shall be able to 
access their own information at any time 
through the internet and on other means of com-
munication elected by that utility for Smart 
Grid applications. Other interested persons shall 
be able to access information not specific to any 
purchaser through the Internet. Information spe-
cific to any purchaser shall be provided solely to 
that purchaser.’’. 
(b) COMPLIANCE.— 
(1) TIME LIMITATIONS.—Section 112(b) of the 
Public Utility Regulatory Policies Act of 1978 (16
790 
U.S.C. 2622(b)) is amended by adding the following 
at the end thereof: 
‘‘(6)(A) Not later than 1 year after the enact-
ment of this paragraph, each State regulatory author-
ity (with respect to each electric utility for which it 
has ratemaking authority) and each nonregulated 
utility shall commence the consideration referred to in 
section 111, or set a hearing date for consideration, 
with respect to the standards established by para-
graphs (17) through (18) of section 111(d). 
‘‘(B) Not later than 2 years after the date of the 
enactment of the this paragraph, each State regu-
latory authority (with respect to each electric utility 
for which it has ratemaking authority), and each 
nonregulated electric utility, shall complete the con-
sideration, and shall make the determination, referred 
to in section 111 with respect to each standard estab-
lished by paragraphs (17) through (18) of section 
111(d).’’. 
(2) FAILURE TO COMPLY.—Section 112(c) of the 
Public Utility Regulatory Policies Act of 1978 (16 
U.S.C. 2622(c)) is amended by adding the following 
at the end: 
‘‘In the case of the standards established by paragraphs 
(16) through (19) of section 111(d), the reference contained
791 
in this subsection to the date of enactment of this Act shall 
be deemed to be a reference to the date of enactment of such 
paragraphs.’’. 
(3) PRIOR STATE ACTIONS.—Section 112(d) of 
the Public Utility Regulatory Policies Act of 1978 (16 
U.S.C. 2622(d)) is amended by inserting ‘‘and para-
graphs (17) through (18)’’ before ‘‘of section 111(d)’’. 
SEC. 1308. STUDY OF THE EFFECT OF PRIVATE WIRE LAWS 
ON THE DEVELOPMENT OF COMBINED HEAT 
AND POWER FACILITIES. 
(a) STUDY.— 
(1) IN GENERAL.—The Secretary, in consultation 
with the States and other appropriate entities, shall 
conduct a study of the laws (including regulations) 
affecting the siting of privately owned electric dis-
tribution wires on and across public rights-of-way. 
(2) REQUIREMENTS.—The study under para-
graph (1) shall include— 
(A) an evaluation of— 
(i) the purposes of the laws; and 
(ii) the effect the laws have on the de-
velopment of combined heat and power fa-
cilities; 
(B) a determination of whether a change in 
the laws would have any operating, reliability,
792 
cost, or other impacts on electric utilities and the 
customers of the electric utilities; and 
(C) an assessment of— 
(i) whether privately owned electric 
distribution wires would result in duplica-
tive facilities; and 
(ii) whether duplicative facilities are 
necessary or desirable. 
(b) REPORT.—Not later than 1 year after the date of 
enactment of this Act, the Secretary shall submit to Con-
gress a report that describes the results of the study con-
ducted under subsection (a). 
SEC. 1309. DOE STUDY OF SECURITY ATTRIBUTES OF 
SMART GRID SYSTEMS. 
(a) DOE STUDY.—The Secretary shall, within 18 
months after the date of enactment of this Act, submit a 
report to Congress that provides a quantitative assessment 
and determination of the existing and potential impacts of 
the deployment of Smart Grid systems on improving the 
security of the Nation’s electricity infrastructure and oper-
ating capability. The report shall include but not be limited 
to specific recommendations on each of the following: 
(1) How smart grid systems can help in making 
the Nation’s electricity system less vulnerable to dis-
ruptions due to intentional acts against the system.
793 
(2) How smart grid systems can help in restor-
ing the integrity of the Nation’s electricity system 
subsequent to disruptions. 
(3) How smart grid systems can facilitate na-
tionwide, interoperable emergency communications 
and control of the Nation’s electricity system during 
times of localized, regional, or nationwide emergency. 
(4) What risks must be taken into account that 
smart grid systems may, if not carefully created and 
managed, create vulnerability to security threats of 
any sort, and how such risks may be mitigated. 
(b) CONSULTATION.—The Secretary shall consult with 
other Federal agencies in the development of the report 
under this section, including but not limited to the Sec-
retary of Homeland Security, the Federal Energy Regu-
latory Commission, and the Electric Reliability Organiza-
tion certified by the Commission under section 215(c) of 
the Federal Power Act (16 U.S.C. 824o) as added by section 
1211 of the Energy Policy Act of 2005 (Public Law 109– 
58; 119 Stat. 941).
794 
TITLE XIV—RENEWABLE 
ELECTRICITY STANDARD 
SEC. 1401. RENEWABLE ELECTRICITY STANDARD. 
(a) IN GENERAL.—Title VI of the Public Utility Regu-
latory Policies Act of 1978 is amended by adding at the 
end the following: 
‘‘SEC. 610. RENEWABLE ELECTRICITY STANDARD. 
‘‘(a) DEFINITIONS.—For purposes of this section: 
‘‘(1) BIOMASS.— 
‘‘(A) IN
GENERAL.—The term ‘biomass’ 
means each of the following: 
‘‘(i) Cellulosic (plant fiber) organic 
materials from a plant that is planted for 
the purpose of being used to produce energy. 
‘‘(ii) Nonhazardous, plant or algal 
matter that is derived from any of the fol-
lowing: 
‘‘(I) An agricultural crop, crop 
byproduct or residue resource. 
‘‘(II) Waste such as landscape or 
right-of-way trimmings (but not in-
cluding municipal solid waste, recycla-
ble postconsumer waste paper, painted, 
treated, or pressurized wood, wood con-
taminated with plastic or metals).
795 
‘‘(iii) Animal waste or animal byprod-
ucts. 
‘‘(iv) Landfill methane. 
‘‘(B) NATIONAL FOREST LANDS AND CER-
TAIN OTHER PUBLIC LANDS.—With respect to or-
ganic material removed from National Forest 
System lands or from public lands administered 
by the Secretary of the Interior, the term ‘bio-
mass’ covers only organic material from (i) eco-
logical forest restoration; (ii) pre-commercial 
thinnings; (iii) brush; (iv) mill residues; and (v) 
slash. 
‘‘(C) EXCLUSION
OF
CERTAIN
FEDERAL 
LANDS.—Notwithstanding 
subparagraph 
(B), 
material or matter that would otherwise qualify 
as biomass are not included in the term biomass 
if they are located on the following Federal 
lands: 
‘‘(i) 
Federal 
land 
containing 
old 
growth forest or late successional forest un-
less the Secretary of the Interior or the Sec-
retary of Agriculture determines that the re-
moval of organic material from such land is 
appropriate for the applicable forest type 
and maximizes the retention of late-succes-
797 
tion that is achieved from increased efficiency or ad-
ditions of capacity made on or after January 1, 2001, 
or the effective date of an existing applicable State re-
newable portfolio standard program at a hydroelectric 
facility that was placed in service before that date. 
‘‘(5) INDIAN
LAND.—The term ‘Indian land’ 
means— 
‘‘(A) any land within the limits of any In-
dian reservation, pueblo, or rancheria; 
‘‘(B) any land not within the limits of any 
Indian reservation, pueblo, or rancheria title to 
which was on the date of enactment of this para-
graph either held by the United States for the 
benefit of any Indian tribe or individual or held 
by any Indian tribe or individual subject to re-
striction by the United States against alienation; 
‘‘(C) any dependent Indian community; or 
‘‘(D) any land conveyed to any Alaska Na-
tive corporation under the Alaska Native Claims 
Settlement Act. 
‘‘(6) INDIAN
TRIBE.—The term ‘Indian tribe’ 
means any Indian tribe, band, nation, or other orga-
nized group or community, including any Alaskan 
Native village or regional or village corporation as 
defined in or established pursuant to the Alaska Na-
800 
one or more of the foregoing, or a rural electric coop-
erative, except that a political subdivision of
a 
State, or an agency, authority or instrumentality of 
the United States, a State or a political subdivision 
of a State, or a rural electric cooperative that sells 
electric energy to electric consumers or any other enti-
ty that sells electric energy to electric consumers that 
would not otherwise qualify as a retail electric sup-
plier shall be deemed a retail electric supplier if such 
entity notifies the Secretary that it voluntarily agrees 
to participate in the Federal renewable electricity 
standard program. 
‘‘(11) 
RETAIL
ELECTRIC
SUPPLIER’S
BASE 
AMOUNT.—The term ‘retail electric supplier’s base 
amount’ means the total amount of electric energy 
sold by the retail electric supplier, expressed in terms 
of kilowatt hours, to electric customers for purposes 
other than resale during the most recent calendar 
year for which information is available, excluding— 
‘‘(A) electric energy that is not incremental 
hydropower generated by a hydroelectric facility; 
and 
‘‘(B) electricity generated through the incin-
eration of municipal solid waste.
801 
‘‘(b) COMPLIANCE.—For each calendar year beginning 
in calendar year 2010, each retail electric supplier shall 
meet the requirements of subsection (c) by submitting to the 
Secretary, not later than April 1 of the following calendar 
year, one or more of the following: 
‘‘(1) Federal renewable energy credits issued 
under subsection (e). 
‘‘(2) Federal energy efficiency credits issued 
under subsection (i), except that Federal energy effi-
ciency credits may not be used to meet more than 27 
percent of the requirements of subsection (c) in any 
calendar year. Energy efficiency credits may only be 
used for compliance in a State where the Governor 
has petitioned the Secretary pursuant to subjection 
(i)(2). 
‘‘(3) Certification of the renewable energy gen-
erated and electricity savings pursuant to the funds 
associated with State compliance payments as speci-
fied in subsection (e)(3)(G). 
‘‘(4) Alternative compliance payments pursuant 
to subsection (j). 
‘‘(c) REQUIRED ANNUAL PERCENTAGE.—For calendar 
years 2010 through 2039, the required annual percentage 
of the retail electric supplier’s base amount that shall be 
generated from renewable energy resources, or otherwise
802 
credited towards such percentage requirement pursuant to 
subsection (d), shall be the percentage specified in the fol-
lowing table: 
Required annual 
‘‘Calendar Years 
percentage 
2010 ............................................................................................
2.75 
2011 ............................................................................................
2.75 
2012 ............................................................................................
3.75 
2013 ............................................................................................
4.5 
2014 ............................................................................................
5.5 
2015 ............................................................................................
6.5 
2016 ............................................................................................
7.5 
2017 ............................................................................................
8.25 
2018 ............................................................................................
10.25 
2019 ............................................................................................
12.25 
2020 and thereafter through 2039 ............................................
‘‘(d) RENEWABLE ENERGY AND ENERGY EFFICIENCY 
CREDITS.—(1) A retail electric supplier may satisfy the re-
quirements of subsection (b)(1) through the submission of 
Federal renewable energy credits— 
‘‘(A) issued to the retail electric supplier under 
subsection (e); 
‘‘(B) obtained by purchase or exchange under 
subsection (f) or (g); or 
‘‘(C) borrowed under subsection (h). 
‘‘(2) A retail electric supplier may satisfy the require-
ments of subsection (b)(2) through the submission of Federal 
energy efficiency credits issued to the retail electric supplier 
obtained by purchase or exchange pursuant to subsection 
(i). 
‘‘(3) A Federal renewable energy credit may be counted 
toward compliance with subsection (b)(1) only once. A Fed-
803 
eral energy efficiency credit may be counted toward compli-
ance with subsection (b)(2) only once. 
‘‘(e) ISSUANCE
OF FEDERAL RENEWABLE ENERGY 
CREDITS.—(1) The Secretary shall establish by rule, not 
later than 1 year after the date of enactment of this section, 
a program to verify and issue Federal renewable energy 
credits to generators of renewable energy, track their sale, 
exchange and retirement and to enforce the requirements 
of this section. To the extent possible, in establishing such 
program, the Secretary shall rely upon existing and emerg-
ing State or regional tracking systems that issue and track 
non-Federal renewable energy credits. 
‘‘(2) An entity that generates electric energy through 
the use of a renewable energy resource may apply to the 
Secretary for the issuance of renewable energy credits. The 
applicant must demonstrate that the electric energy will be 
transmitted onto the grid or, in the case of a generation 
offset, that the electric energy offset would have otherwise 
been consumed on site. The application shall indicate— 
‘‘(A) the type of renewable energy resource used 
to produce the electricity; 
‘‘(B) the location where the electric energy was 
produced; and 
‘‘(C) any other information the Secretary deter-
mines appropriate.
804 
‘‘(3)(A) Except as provided in subparagraphs (B), (C), 
and (D), the Secretary shall issue to a generator of electric 
energy one Federal renewable energy credit for each kilo-
watt hour of electric energy generated by the use of a renew-
able energy resource at an eligible facility. 
‘‘(B) For purpose of compliance with this section, Fed-
eral renewable energy credits for incremental hydropower 
shall be based, on the increase in average annual generation 
resulting from the efficiency improvements or capacity ad-
ditions. The incremental generation shall be calculated 
using the same water flow information used to determine 
a historic average annual generation baseline for the hydro-
electric facility and certified by the Secretary or the Federal 
Energy Regulatory Commission. The calculation of the Fed-
eral renewable energy credits for incremental hydropower 
shall not be based on any operational changes at the hydro-
electric facility not directly associated with the efficiency 
improvements or capacity additions. 
‘‘(C) The Secretary shall issue 2 renewable energy cred-
its for each kilowatt hour of electric energy generated and 
supplied to the grid in that calendar year through the use 
of a renewable energy resource at an eligible facility located 
on Indian land. For purposes of this paragraph, renewable 
energy generated by biomass cofired with other fuels is eligi-
805 
ble for two credits only if the biomass was grown on such 
land. 
‘‘(D) For electric energy generated by a renewable en-
ergy resource at an on-site eligible facility no larger than 
one megawatt in capacity and used to offset part or all 
of the customer’s requirements for electric energy, the Sec-
retary shall issue 3 renewable energy credits to such cus-
tomer for each kilowatt hour generated. 
‘‘(E) In the case of an on-site eligible facility on In-
dian land no more than 3 credits per kilowatt hour may 
be issued. 
‘‘(F) If both a renewable energy resource and a non- 
renewable energy resource are used to generate the electric 
energy, the Secretary shall issue the Federal renewable en-
ergy credits based on the proportion of the renewable energy 
resources used. 
‘‘(G) When a generator has sold electric energy gen-
erated through the use of a renewable energy resource to 
a retail electric supplier under a contract for power from 
an existing facility, and the contract has not determined 
ownership of the Federal renewable energy credits associ-
ated with such generation, the Secretary shall issue such 
Federal renewable energy credits to the retail electric sup-
plier for the duration of the contract.
806 
‘‘(H) Payments made by a retail electricity supplier, 
directly or indirectly, to a State for compliance with a 
State renewable portfolio standard program, or for an alter-
native compliance mechanism, shall be valued at one credit 
per kilowatt hour for the purpose of subsection (b)(2) based 
on the amount of electric energy generation from renewable 
resources and electricity savings up to 27 percent of the util-
ity’s requirement that results from those payments. 
‘‘(f) EXISTING FACILITIES.—The Secretary shall en-
sure that a retail electric supplier that acquires Federal re-
newable energy credits associated with the generation of re-
newable energy from an existing facility may use such cred-
its for purpose of its compliance with subsection (b)(1). 
Such credits may not be sold, exchanged, or transferred for 
the purpose of compliance by another retail electric sup-
plier. 
‘‘(g) RENEWABLE ENERGY CREDIT TRADING.—(1) A 
Federal renewable energy credit, may be sold, transferred 
or exchanged by the entity to whom issued or by any other 
entity who acquires the Federal renewable energy credit, ex-
cept for those renewable energy credits from existing facili-
ties. A Federal renewable energy credit for any year that 
is not submitted to satisfy the minimum renewable genera-
tion requirement of subsection (c) for that year may be car-
807 
ried forward for use pursuant to subsection (b)(1) within 
the next 3 years. 
‘‘(2) A Federally owned or cooperatively owned utility, 
or a State or subdivision thereof, that is not a retail electric 
supplier that generates electric energy by the use of a renew-
able energy resource at an eligible facility may only sell, 
transfer or exchange a Federal renewable energy credit to 
a cooperatively owned utility or an agency, authority or 
instrumentality of a State or political subdivision of a 
State that is a retail electric supplier that has acquired the 
electric energy associated with the credit. 
‘‘(3) The Secretary may delegate to an appropriate 
market-making entity the administration of a national 
tradeable renewable energy credit market and a nation en-
ergy efficiency credit market for purposes of creating a 
transparent national market for the sale or trade of renew-
able energy credits and a transparent national market for 
the sale or trade of Federal energy efficiency credits. 
‘‘(h) RENEWABLE ENERGY CREDIT BORROWING.—At 
any time before the end of calendar year 2012, a retail elec-
tric supplier that has reason to believe it will not be able 
to fully comply with subsection (b) may— 
‘‘(1) submit a plan to the Secretary dem-
onstrating that the retail electric supplier will earn 
sufficient Federal renewable energy credits and Fed-
808 
eral energy efficiency credits within the next 3 cal-
endar years which, when taken into account, will en-
able the retail electric supplier to meet the require-
ments of subsection (b) for calendar year 2012 and 
the subsequent calendar years involved; and 
‘‘(2) upon the approval of the plan by the Sec-
retary, apply Federal renewable energy credits and 
Federal energy efficiency credits that the plan dem-
onstrates will be earned within the next 3 calendar 
years to meet the requirements of subsection (b) for 
each calendar year involved. 
The retail electric supplier must repay all of the borrowed 
Federal renewable energy credits and Federal energy effi-
ciency credits by submitting an equivalent number of Fed-
eral renewable energy credits and Federal energy efficiency 
credits, in addition to those otherwise required under sub-
section (b), by calendar year 2020 or any earlier deadlines 
specified in the approved plan. Failure to repay the bor-
rowed Federal renewable energy credits and Federal energy 
efficiency credits shall subject the retail electric supplier to 
civil penalties under subsection (i) for violation of the re-
quirements of subsection (b) for each calendar year in-
volved. 
‘‘(i) ENERGY EFFICIENCY CREDITS.— 
‘‘(1) DEFINITIONS.—In this subsection—
809 
‘‘(A) CUSTOMER
FACILITY
SAVINGS.—The 
term ‘customer facility savings’ means a reduc-
tion in end-use electricity at a facility of an end- 
use consumer of electricity served by a retail 
electric supplier, as compared to— 
‘‘(i) consumption at the facility during 
a base year; 
‘‘(ii) in the case of new equipment (re-
gardless of whether the new equipment re-
places existing equipment at the end of the 
useful life of the existing equipment), con-
sumption by the new equipment of average 
efficiency; or 
‘‘(iii) in the case of a new facility, con-
sumption at a reference facility. 
‘‘(B) ELECTRICITY
SAVINGS.—The term 
‘electricity savings’ means— 
‘‘(i) customer facility savings of elec-
tricity consumption adjusted to reflect any 
associated increase in fuel consumption at 
the facility; 
‘‘(ii) reductions in distribution system 
losses of electricity achieved by a retail elec-
tricity distributor, as compared to losses 
during the base years;
810 
‘‘(iii) the output of new combined heat 
and power systems, to the extent provided 
under paragraph (5); and 
‘‘(iv) recycled energy savings. 
‘‘(C) QUALIFYING ELECTRICITY SAVINGS.— 
The term ‘qualifying electricity savings’ means 
electricity saving that meet the measurement and 
verification requirements of paragraph (4). 
‘‘(D) RECYCLED
ENERGY
SAVINGS.—The 
term ‘recycled energy savings’ means a reduction 
in electricity consumption that is attributable to 
electrical or mechanical power, or both, produced 
by modifying an industrial or commercial sys-
tem that was in operation before July 1, 2007, 
in order to recapture energy that would other-
wise be wasted. 
‘‘(2) PETITION.—The Governor of a State may 
petition the Secretary to allow up to 27 percent of the 
requirements of a retail electric supplier under sub-
section (c) in the State to be met by submitting Fed-
eral energy efficiency credits issued pursuant to this 
subsection. 
‘‘(3) ISSUANCE OF CREDITS.—(A) Upon petition 
by the Governor, the Secretary shall issue energy effi-
ciency credits for electricity savings described in sub-
817 
electric utility, State regulated electric utility, State agen-
cy, Commission, and State regulatory authority. 
‘‘(p) PROGRAM REVIEW.—The Secretary shall enter 
into a contract with the National Academy of Sciences to 
conduct a comprehensive evaluation of all aspects of the 
program established under this section, within 8 years of 
enactment of this section. The study shall include an eval-
uation of— 
‘‘(1) the effectiveness of the program in increas-
ing the market penetration and lowering the cost of 
the eligible renewable energy and energy efficiency 
technologies; 
‘‘(2) the opportunities for any additional tech-
nologies and sources of renewable energy and energy 
efficiency emerging since enactment of this section; 
‘‘(3) the impact on the regional diversity and re-
liability of supply sources, including the power qual-
ity benefits of distributed generation; 
‘‘(4) the regional resource development relative to 
renewable potential and reasons for any under invest-
ment in renewable resources; and 
‘‘(5) the net cost/benefit of the renewable elec-
tricity standard to the national and State economies, 
including retail power costs, economic development 
benefits of investment, avoided costs related to envi-