(e) REGULATIONS.—The Commission may issue reg-
ulations to carry out the provisions of this section.
SEC. 12007. FEDERAL COORDINATOR.
(a) ESTABLISHMENT.—There is established, as an
independent office in the executive branch, the Office of
the Federal Coordinator for Alaska Natural Gas Trans-
portation Projects.
(b) FEDERAL COORDINATOR.—The Office shall be
headed by a Federal Coordinator for Alaska Natural Gas
Transportation Projects, who shall—
(1) be appointed by the President, by and with
the advice of the Senate;
(2) hold office at the pleasure of the President;
and
(3) be compensated at the rate prescribed for
level III of the Executive Schedule (5 U.S.C. 5314).
(c) DUTIES.—The Federal Coordinator shall be re-
sponsible for—
(1) coordinating the expeditious discharge of all
activities by Federal agencies with respect to an
Alaska natural gas transportation project; and
(2) ensuring the compliance of Federal agencies
with the provisions of this subtitle.
(d) REVIEWS AND ACTIONS OF OTHER FEDERAL
AGENCIES.—
(1) EXPEDITED
REVIEWS
AND
ACTIONS.—All
reviews conducted and actions taken by any Federal
officer or agency relating to an Alaska natural gas
transportation project authorized under this section
shall be expedited, in a manner consistent with com-
pletion of the necessary reviews and approvals by the
deadlines set forth in this subtitle.
(2) PROHIBITION ON CERTAIN TERMS AND CON-
DITIONS.—Except with respect to Commission ac-
tions under sections 12004, 12005, and 12006, no
Federal officer or agency shall have the authority to
include terms and conditions that are permitted, but
not required, by law on any certificate, right-of-way,
permit, lease, or other authorization issued to an
Alaska natural gas transportation project if the Fed-
eral Coordinator determines that the terms and con-
ditions would prevent or impair in any significant re-
spect the expeditious construction and operation of
the project.
(3) PROHIBITION ON CERTAIN ACTIONS.—Ex-
cept with respect to Commission actions under sec-
tions 12004, 12005, and 12006, unless required by
law, no Federal officer or agency shall add to,
amend, or abrogate any certificate, right-of-way, per-
mit, lease, or other authorization issued to an Alas-
ka natural gas transportation project if the Federal
Coordinator determines that such action would pre-
vent or impair in any significant respect the expedi-
tious construction and operation of the project.
(e) STATE COORDINATION.—The Federal Coordi-
nator shall enter into a Joint Surveillance and Monitoring
Agreement, approved by the President and the Governor
of Alaska, with the State of Alaska similar to that in effect
during construction of the Trans-Alaska Oil Pipeline to
monitor the construction of the Alaska natural gas trans-
portation project. The Federal Government shall have pri-
mary surveillance and monitoring responsibility where the
Alaska natural gas transportation project crosses Federal
lands and private lands, and the State government shall
have primary surveillance and monitoring responsibility
where the Alaska natural gas transportation project
crosses State lands.
(f) TRANSFER OF FEDERAL INSPECTOR FUNCTIONS
AND AUTHORITY.—Upon appointment of the Federal Co-
ordinator by the President, all of the functions and au-
thority of the Office of Federal Inspector of Construction
for the Alaska Natural Gas Transportation System vested
in the Secretary of Energy pursuant to section 3012(b)
of Public Law 102–486 (15 U.S.C. 719e(b)), including all
functions and authority described and enumerated in the
Reorganization Plan No. 1 of 1979 (44 Fed. Reg. 33,663),
Executive Order No. 12142 of June 21, 1979 (44 Fed.
Reg. 36,927), and section 5 of the President’s decision,
shall be transferred to the Federal Coordinator.
SEC. 12008. JUDICIAL REVIEW.
(a) EXCLUSIVE JURISDICTION.—Except for review by
the Supreme Court of the United States on writ of certio-
rari, the United States Court of Appeals for the District
of Columbia Circuit shall have original and exclusive juris-
diction to determine—
(1) the validity of any final order or action (in-
cluding a failure to act) of any Federal agency or of-
ficer under this subtitle;
(2) the constitutionality of any provision of this
subtitle, or any decision made or action taken under
this subtitle; or
(3) the adequacy of any environmental impact
statement prepared under the National Environ-
mental Policy Act of 1969 with respect to any action
under this subtitle.
(b) DEADLINE FOR FILING CLAIM.—Claims arising
under this subtitle may be brought not later than 60 days
after the date of the decision or action giving rise to the
claim.
(c) 
EXPEDITED
CONSIDERATION.—The 
United
States Court of Appeals for the District of Columbia Cir-
cuit shall set any action brought under subsection (a) for
expedited consideration, taking into account the national
interest as described in section 12002(a).
(d) AMENDMENT TO ANGTA.—Section 10(c) of the
Alaska Natural Gas Transportation Act of 1976 (15
U.S.C. 719h) is amended by inserting after paragraph (1)
the following:
‘‘(2) The United States Court of Appeals for the Dis-
trict of Columbia Circuit shall set any action brought
under this section for expedited consideration, taking into
account the national interest described in section 2.’’.
SEC. 12009. STATE JURISDICTION OVER IN-STATE DELIV-
ERY OF NATURAL GAS.
(a) LOCAL DISTRIBUTION.—Any facility receiving
natural gas from the Alaska natural gas transportation
project for delivery to consumers within the State of Alas-
ka shall be deemed to be a local distribution facility within
the meaning of section 1(b) of the Natural Gas Act (15
U.S.C. 717(b)), and therefore not subject to the jurisdic-
tion of the Commission.
(b) ADDITIONAL PIPELINES.—Nothing in this sub-
title, except as provided in section 12004(d), shall preclude
or affect a future gas pipeline that may be constructed
to deliver natural gas to Fairbanks, Anchorage,
Matanuska-Susitna Valley, or the Kenai peninsula or
Valdez or any other site in the State of Alaska for con-
sumption within or distribution outside the State of Alas-
ka.
(c) RATE COORDINATION.—Pursuant to the Natural
Gas Act, the Commission shall establish rates for the
transportation of natural gas on the Alaska natural gas
transportation project. In exercising such authority, the
Commission, pursuant to section 17(b) of the Natural Gas
Act (15 U.S.C. 717p(b)), shall confer with the State of
Alaska regarding rates (including rate settlements) appli-
cable to natural gas transported on and delivered from the
Alaska natural gas transportation project for use within
the State of Alaska.
SEC. 12010. STUDY OF ALTERNATIVE MEANS OF CONSTRUC-
TION.
(a) REQUIREMENT OF STUDY.—If no application for
the issuance of a certificate or amended certificate of pub-
lic convenience and necessity authorizing the construction
and operation of an Alaska natural gas transportation
project has been filed with the Commission not later than
18 months after the date of enactment of this Act, the
Secretary of Energy shall conduct a study of alternative
approaches to the construction and operation of the
project.
(b) SCOPE OF STUDY.—The study shall consider the
feasibility of establishing a Government corporation to
construct an Alaska natural gas transportation project,
and alternative means of providing Federal financing and
ownership (including alternative combinations of Govern-
ment and private corporate ownership) of the project.
(c) CONSULTATION.—In conducting the study, the
Secretary of Energy shall consult with the Secretary of
the Treasury and the Secretary of the Army (acting
through the Commanding General of the Corps of Engi-
neers).
(d) REPORT.—If the Secretary of Energy is required
to conduct a study under subsection (a), the Secretary
shall submit a report containing the results of the study,
the Secretary’s recommendations, and any proposals for
legislation to implement the Secretary’s recommendations
to Congress.
SEC. 12011. CLARIFICATION OF ANGTA STATUS AND AU-
THORITIES.
(a) SAVINGS CLAUSE.—Nothing in this subtitle af-
fects any decision, certificate, permit, right-of-way, lease,
or other authorization issued under section 9 of the Alaska
Natural Gas Transportation Act of 1976 (15 U.S.C.
719g) or any Presidential findings or waivers issued in
accordance with that Act.
(b) CLARIFICATION
OF
AUTHORITY
TO
AMEND
TERMS AND CONDITIONS TO MEET CURRENT PROJECT
REQUIREMENTS.—Any Federal officer or agency respon-
sible for granting or issuing any certificate, permit, right-
of-way, lease, or other authorization under section 9 of
the Alaska Natural Gas Transportation Act of 1976 (15
U.S.C. 719g) may add to, amend, or abrogate any term
or condition included in such certificate, permit, right-of-
way, lease, or other authorization to meet current project
requirements (including the physical design, facilities, and
tariff specifications), so long as such action does not com-
pel a change in the basic nature and general route of the
Alaska natural gas transportation system as designated
and described in section 2 of the President’s decision, or
would otherwise prevent or impair in any significant re-
spect the expeditious construction and initial operation of
such transportation system.
(c) UPDATED ENVIRONMENTAL REVIEWS.—The Sec-
retary of Energy shall require the sponsor of the Alaska
natural gas transportation system to submit such updated
environmental data, reports, permits, and impact analyses
as the Secretary determines are necessary to develop de-
tailed terms, conditions, and compliance plans required by
section 5 of the President’s decision.
SEC. 12012. SENSE OF CONGRESS.
It is the sense of Congress that an Alaska natural
gas transportation project will provide significant eco-
nomic benefits to the United States and Canada. In order
to maximize those benefits, Congress urges the sponsors
of the pipeline project to make every effort to use steel
that is manufactured or produced in North America and
to negotiate a project labor agreement to expedite con-
struction of the pipeline.
SEC. 12013. PARTICIPATION OF SMALL BUSINESS CON-
CERNS.
(a) SENSE OF CONGRESS.—It is the sense of Con-
gress that an Alaska natural gas transportation project
will provide significant economic benefits to the United
States and Canada. In order to maximize those benefits,
Congress urges the sponsors of the pipeline project to
maximize the participation of small business concerns in
contracts and subcontracts awarded in carrying out the
project.
(b) STUDY.—
(1) IN
GENERAL.—The Comptroller General
shall conduct a study on the extent to which small
business concerns participate in the construction of
oil and gas pipelines in the United States.
(2) REPORT.—Not later that 1 year after the
date of enactment of this Act, the Comptroller Gen-
eral shall transmit to Congress a report containing
the results of the study.
(3) UPDATES.—The Comptroller General shall
update the study at least once every 5 years and
transmit to Congress a report containing the results
of the update.
(4) APPLICABILITY.—After the date of comple-
tion of the construction of an Alaska natural gas
transportation project, this subsection shall no
longer apply.
(c) SMALL BUSINESS CONCERN DEFINED.—In this
section, the term ‘‘small business concern’’ has the mean-
ing given such term in section 3(a) of the Small Business
Act (15 U.S.C. 632(a)).
SEC. 12014. ALASKA PIPELINE CONSTRUCTION TRAINING
PROGRAM.
(a) ESTABLISHMENT OF PROGRAM.—The Secretary
of Labor (in this section referred to as the ‘‘Secretary’’)
may make grants to the Alaska Department of Labor and
Workforce Development to—
(1) develop a plan to train, through the work-
force investment system established in the State of
Alaska under the Workforce Investment Act of 1998
(112 Stat. 936 et seq.), adult and dislocated work-
ers, including Alaska Natives, in urban and rural
Alaska in the skills required to construct and oper-
ate an Alaska gas pipeline system; and
(2) implement the plan developed pursuant to
paragraph (1).
(b) REQUIREMENTS FOR PLANNING GRANTS.—The
Secretary may make a grant under subsection (a)(1) only
if—
(1) the Governor of Alaska certifies in writing
to the Secretary that there is a reasonable expecta-
tion that construction of an Alaska gas pipeline will
commence within 3 years after the date of such cer-
tification; and
(2) the Secretary of the Interior concurs in
writing to the Secretary with the certification made
under paragraph (1).
(c) 
REQUIREMENTS
FOR
IMPLEMENTATION
GRANTS.—The Secretary may make a grant under sub-
section (a)(2) only if—
(1) the Secretary has approved a plan developed
pursuant to subsection (a)(1);
(2) the Governor of Alaska requests the grant
funds and certifies in writing to the Secretary that
there is a reasonable expectation that the construc-
tion of an Alaska gas pipeline system will commence
within 2 years after the date of such certification;
(3) the Secretary of the Interior concurs in
writing to the Secretary with the certification made
under paragraph (2) after considering—
(A) the status of necessary State and Fed-
eral permits;
(B) the availability of financing for the
pipeline project; and
(C) 
other 
relevant 
factors 
and 
cir-
cumstances.
(d) AUTHORIZATION
OF APPROPRIATIONS.—There
are authorized to be appropriated to the Secretary of
Labor such sums as may be necessary, but not to exceed
$20,000,000, to carry out this section.
Subtitle B—Strategic Petroleum
Reserve
SEC. 12101. FULL CAPACITY OF STRATEGIC PETROLEUM
RESERVE.
The President shall—
(1) fill the Strategic Petroleum Reserve estab-
lished pursuant to part B of title I of the Energy
Policy and Conservation Act (42 U.S.C. 6231 et
seq.) to full capacity as soon as practicable;
(2) acquire petroleum for the Strategic Petro-
leum Reserve by the most practicable and cost-effec-
tive means, with consideration being given to domes-
tically produced petroleum, including the acquisition
of crude oil the United States is entitled to receive
in kind as royalties from production on Federal
lands; and
(3) ensure that the fill rate minimizes impacts
on petroleum markets.
SEC. 12102. STRATEGIC PETROLEUM RESERVE EXPANSION.
(a) PLAN.—Not later than 180 days after the date
of the enactment of this Act, the Secretary of Energy shall
transmit to the Congress a plan for the expansion of the
Strategic Petroleum Reserve to 1,000,000,000 barrels,
including—
(1) plans for the elimination of infrastructure
impediments to maximum drawdown capability;
(2) a schedule for the completion of all required
environmental reviews;
(3) provision for consultation with Federal and
State environmental agencies;
(4) a schedule and procedures for site selection;
and
(5) anticipated annual budget requests.
(b) CONSTRUCTION OF ADDITIONAL CAPACITY.—The
Secretary of Energy shall acquire property and complete
construction for the expansion of the Strategic Petroleum
Reserve in accordance with the plan transmitted under
subsection (a).
(c) AUTHORIZATION
OF APPROPRIATIONS.—There
are authorized to be appropriated to the Secretary of En-
ergy $1,500,000,000 for carrying out this section, to re-
main available until expended.
SEC. 12103. PERMANENT AUTHORITY TO OPERATE THE
STRATEGIC 
PETROLEUM 
RESERVE 
AND
OTHER ENERGY PROGRAMS.
(a) AMENDMENT TO TITLE I OF THE ENERGY POL-
ICY AND CONSERVATION ACT.—Title I of the Energy Pol-
icy and Conservation Act (42 U.S.C. 6211 et seq.) is
amended—
(1) by striking section 166 (42 U.S.C. 6246)
and inserting—
‘‘AUTHORIZATION OF APPROPRIATIONS
‘‘SEC. 166. There are authorized to be appropriated
to the Secretary such sums as may be necessary to carry
out this part and part D, to remain available until ex-
pended.’’;
(2) by striking section 186 (42 U.S.C. 6250e);
and
(3) by striking part E (42 U.S.C. 6251; relat-
ing to the expiration of title I of the Act).
(b) AMENDMENT TO TITLE II OF THE ENERGY POL-
ICY AND CONSERVATION ACT.—Title II of the Energy
Policy and Conservation Act (42 U.S.C. 6271 et seq.) is
amended—
(1) by inserting before section 273 (42 U.S.C.
6283) the following:
‘‘PART C—SUMMER FILL AND FUEL BUDGETING
PROGRAMS’’;
(2) by striking section 273(e) (42 U.S.C.
6283(e); relating to the expiration of summer fill
and fuel budgeting programs); and
(3) by striking part D (42 U.S.C. 6285; relat-
ing to the expiration of title II of the Act).
(c) TECHNICAL AMENDMENTS.—The table of con-
tents for the Energy Policy and Conservation Act is
amended—
(1) by inserting after the items relating to part
C of title I the following:
‘‘PART D—NORTHEAST HOME HEATING OIL RESERVE
‘‘Sec. 181. Establishment.
‘‘Sec. 182. Authority.
‘‘Sec. 183. Conditions for release; plan.
‘‘Sec. 184. Northeast Home Heating Oil Reserve Account.
‘‘Sec. 185. Exemptions.’’;
(2) by amending the items relating to part C of
title II to read as follows:
‘‘PART C—SUMMER FILL AND FUEL BUDGETING PROGRAMS
‘‘Sec. 273. Summer fill and fuel budgeting programs.’’; and
(3) by striking the items relating to part D of
title II.
(d) AMENDMENT TO THE ENERGY POLICY AND CON-
SERVATION ACT.—Section 183(b)(1) of the Energy Policy
and Conservation Act (42 U.S.C. 6250b(b)(1)) is amended
by inserting ‘‘(considered as a heating season average)’’
after ‘‘mid-October through March’’.
Subtitle C—Hydraulic Fracturing
SEC. 12201. HYDRAULIC FRACTURING.
Paragraph (1) of section 1421(d) of the Safe Drink-
ing Water Act (42 U.S.C. 300h(d)) is amended to read
as follows:
‘‘(1) The term ‘underground injection’—
‘‘(A) means the subsurface emplacement of
fluids by well injection; and
‘‘(B) excludes—
‘‘(i) the underground injection of nat-
ural gas for purposes of storage; and
‘‘(ii) the underground injection of
fluids or propping agents pursuant to hy-
draulic fracturing operations related to oil
or gas production activities.’’.
Subtitle D—Unproven Oil and Nat-
ural 
Gas 
Reserves 
Recovery
Program
SEC. 12301. PROGRAM.
The Secretary shall carry out a program to dem-
onstrate technologies for the recovery of oil and natural
gas reserves from reservoirs described in section 12302.
SEC. 12302. ELIGIBLE RESERVOIRS.
The program under this subtitle shall only address
oil and natural gas reservoirs with 1 or more of the fol-
lowing characteristics:
(1) Complex geology involving rapid changes in
the type and quality of the oil reservoir across the
reservoir.
(2) Low reservoir pressure.
(3) Unconventional natural gas reservoirs in
coalbeds, tight sands, or shales.
SEC. 12303. FOCUS AREAS.
The program under this subtitle may focus on areas
including coal-bed methane, deep drilling, natural gas pro-
duction from tight sands, natural gas production from gas
shales, innovative production techniques (including hori-
zontal drilling, fracture detection methodologies, and
three-dimensional seismic), and enhanced recovery tech-
niques.
100
SEC. 12304. LIMITATION ON LOCATION OF ACTIVITIES.
Activities under this subtitle shall be carried out
only—
(1) in—
(A) areas onshore in the United States on
public land administered by the Secretary of the
Interior available for oil and gas leasing, where
consistent with applicable law and land use
plans; and
(B) areas onshore in the United States on
State or private land, subject to applicable law;
and
(2) with the approval of the appropriate Fed-
eral or State land management agency or private
land owner.
SEC. 12305. PROGRAM ADMINISTRATION.
(a) ROLE OF THE SECRETARY.—The Secretary shall
have ultimate responsibility for, and oversight of, all as-
pects of the program under this subtitle.
(b) ROLE OF THE PROGRAM CONSORTIUM.—
(1) IN GENERAL.—The Secretary shall contract
with a consortium to—
(A) manage awards pursuant to subsection
(e)(4);
(B) make recommendations to the Sec-
retary for project solicitations;
101
(C) disburse funds awarded under sub-
section (e) as directed by the Secretary in ac-
cordance with the annual plan under subsection
(d); and
(D) carry out other activities assigned to
the program consortium by this section.
(2) LIMITATION.—The Secretary may not as-
sign any activities to the program consortium except
as specifically authorized under this section.
(3) CONFLICT
OF
INTEREST.—(A) The Sec-
retary shall establish procedures—
(i) to ensure that each board member, offi-
cer, or employee of the program consortium
who is in a decisionmaking capacity under sub-
section (e)(3) or (4) shall disclose to the Sec-
retary any financial interests in, or financial re-
lationships with, applicants for or recipients of
awards under this section, including those of
his or her spouse or minor child, unless such re-
lationships or interests would be considered to
be remote or inconsequential; and
(ii) to require any board member, officer,
or employee with a financial relationship or in-
terest disclosed under clause (i) to recuse him-
self or herself from any review under subsection
102
(e)(3) or oversight under subsection (e)(4) with
respect to such applicant or recipient.
(B) The Secretary may disqualify an applica-
tion or revoke an award under this section if a board
member, officer, or employee has failed to comply
with 
procedures 
required 
under 
subparagraph
(A)(ii).
(c) SELECTION OF THE PROGRAM CONSORTIUM.—
(1) IN GENERAL.—The Secretary shall select
the program consortium through an open, competi-
tive process.
(2) MEMBERS.—The program consortium may
include corporations and institutions of higher edu-
cation. The Secretary shall give preference in the se-
lection of the program consortium to applicants with
broad representation from the various major oil and
natural gas basins in the United States. After sub-
mitting a proposal under paragraph (4), the pro-
gram consortium may not add members without the
consent of the Secretary.
(3) TAX
STATUS.—The program consortium
shall be an entity that is exempt from tax under sec-
tion 501(c)(3) of the Internal Revenue Code of
1986.
103
(4) SCHEDULE.—Not later than 90 days after
the date of enactment of this Act, the Secretary
shall solicit proposals for the creation of the pro-
gram consortium, which must be submitted not less
than 180 days after the date of enactment of this
Act. The Secretary shall select the program consor-
tium not later than 240 days after such date of en-
actment.
(5) APPLICATION.—Applicants shall submit a
proposal including such information as the Secretary
may require. At a minimum, each proposal shall—
(A) list all members of the consortium;
(B) fully describe the structure of the con-
sortium, including any provisions relating to in-
tellectual property; and –
(C) describe how the applicant would carry
out the activities of the program consortium
under this section.
(6) ELIGIBILITY.—To be eligible to be selected
as the program consortium, an applicant must be an
entity whose members collectively have demonstrated
capabilities in planning and managing programs for
the production of oil or natural gas.
(7) CRITERION.—The Secretary may consider
the amount of the fee an applicant proposes to re-
104
ceive under subsection (f) in selecting a consortium
under this section.
(d) ANNUAL PLAN.—
(1) IN
GENERAL.—The program under this
subtitle shall be carried out pursuant to an annual
plan prepared by the Secretary in accordance with
paragraph (2).
(2) DEVELOPMENT.—(A) Before drafting an
annual plan under this subsection, the Secretary
shall solicit specific written recommendations from
the program consortium for each element to be ad-
dressed in the plan, including those described in
paragraph (4). The Secretary may request that the
program consortium submit its recommendations in
the form of a draft annual plan.
(B) The Secretary shall submit the rec-
ommendations of the program consortium under
subparagraph (A) to the Advisory Committee for re-
view, and the Advisory Committee shall provide to
the Secretary written comments by a date deter-
mined by the Secretary. The Secretary may also so-
licit comments from any other experts.
(C) The Secretary shall consult regularly with
the program consortium throughout the preparation
of the annual plan.
105
(3) PUBLICATION.—The Secretary shall trans-
mit to the Congress and publish in the Federal Reg-
ister the annual plan, along with any written com-
ments received under paragraph (2)(A) and (B).
The annual plan shall be transmitted and published
not later than 60 days after the date of enactment
of an Act making appropriations for a fiscal year for
the program under this subtitle.
(4) CONTENTS.—The annual plan shall describe
the ongoing and prospective activities of the pro-
gram under this subtitle and shall include—
(A) a list of any solicitations for awards
that the Secretary plans to issue to carry out
activities, including the topics for such work,
who would be eligible to apply, selection cri-
teria, and the duration of awards; and
(B) a description of the activities expected
of the program consortium to carry out sub-
section (e)(4).
(e) AWARDS.—
(1) IN GENERAL.—The Secretary shall make
awards to carry out activities under the program
under this subtitle. The program consortium shall
not be eligible to receive such awards, but members
of the program consortium may receive such awards.
106
(2) PROPOSALS.—
(A) SOLICITATION.—The Secretary shall
solicit proposals for awards under this sub-
section in such manner and at such time as the
Secretary may prescribe, in consultation with
the program consortium.
(B) CONTENTS.—Each proposal submitted
shall include the following:
(i) An estimate of the potential
unproven reserves in the reservoir, estab-
lished by a registered petroleum engineer.
(ii) An estimate of the potential for
success of the project.
(iii) A detailed project plan.
(iv) A detailed analysis of the costs
associated with the project.
(v) A time frame for project comple-
tion.
(vi) Evidence that any lienholder on
the project will subordinate its interests to
the extent necessary to ensure that the
Federal government receives its portion of
any revenues pursuant to section 12308.
(vii) Such other matters as the Sec-
retary considers appropriate.
107
(3) REVIEW.—The Secretary shall make awards
under this subsection through a competitive process,
which shall include a review by individuals selected
by the Secretary. Such individuals shall include, for
each application, Federal officials, the program con-
sortium, and non-Federal experts who are not board
members, officers, or employees of the program con-
sortium or of a member of the program consortium.
(4) OVERSIGHT.—(A) The program consortium
shall oversee the implementation of awards under
this subsection, consistent with the annual plan
under subsection (d), including disbursing funds and
monitoring activities carried out under such awards
for compliance with the terms and conditions of the
awards.
(B) Nothing in subparagraph (A) shall limit the
authority or responsibility of the Secretary to over-
see awards, or limit the authority of the Secretary
to review or revoke awards.
(C) The Secretary shall provide to the program
consortium the information necessary for the pro-
gram consortium to carry out its responsibilities
under this paragraph.
(f) FEE.—To compensate the program consortium
for carrying out its activities under this section, the Sec-
108
retary shall provide to the program consortium a fee in
an amount not to exceed 7.5 percent of the amounts
awarded under subsection (e) for each fiscal year.
(g) DISALLOWED EXPENSES.—No portion of any
award shall be used by a recipient for general or adminis-
trative expenses of any kind.
(h) AUDIT.—The Secretary shall retain an inde-
pendent, commercial auditor to determine the extent to
which funds provided to the program consortium, and
funds provided under awards made under subsection (e),
have been expended in a manner consistent with the pur-
poses and requirements of this subtitle. The auditor shall
transmit a report annually to the Secretary, who shall
transmit the report to Congress, along with a plan to rem-
edy any deficiencies cited in the report.
SEC. 12306. ADVISORY COMMITTEE.
(a) ESTABLISHMENT.—Not later than 270 days after
the date of enactment of this Act, the Secretary shall es-
tablish an Advisory Committee.
(b) MEMBERSHIP.—The Advisory Committee shall be
composed of members appointed by the Secretary and
including—
(1) individuals with extensive experience or
operational knowledge of oil and natural gas produc-
tion, including independent oil and gas producers;
109
(2) individuals broadly representative of oil and
natural gas production; and
(3) no individuals who are Federal employees.
(c) DUTIES.—The Advisory Committee shall advise
the Secretary on the development and implementation of
activities under this subtitle.
(d) COMPENSATION.—A member of the Advisory
Committee shall serve without compensation but shall re-
ceive travel expenses, including per diem in lieu of subsist-
ence, in accordance with applicable provisions under sub-
chapter I of chapter 57 of title 5, United States Code.
(e) PROHIBITION.—The Advisory Committee shall
not make recommendations on funding awards to con-
sortia or for specific projects.
SEC. 12307. LIMITS ON PARTICIPATION.
An entity shall be eligible to receive an award under
this subtitle only if the Secretary finds—
(1) that the entity’s participation in the pro-
gram under this subtitle would be in the economic
interest of the United States;
(2) that the entity is a United States-owned en-
tity organized under the laws of the United States
with production levels of less than 1,000 barrels per
day of oil equivalent; and
110
(3) that the entity has demonstrated that non-
governmental third party sources of financing are
not available for the proposal project.
SEC. 12308. PAYMENTS TO FEDERAL GOVERNMENT.
(a) INITIAL RATE.—Until the amount of a grant
under this subtitle has been fully repaid to the Federal
Government under this subsection, 95 percent of all reve-
nues derived from increased incremental production at-
tributable to participation in the program under this sub-
title shall be paid to the Secretary by the purchaser of
such increased production.
(b) RATE AFTER REPAYMENT.—After the Federal
Government has been fully repaid under subsection (a),
5 percent of all revenues derived from increased incre-
mental production attributable to participation in the pro-
gram under this subtitle shall be paid to the Secretary
by the purchaser of such increased production.
SEC. 12309. AUTHORIZATION OF APPROPRIATIONS.
There are authorized to be appropriated to the Sec-
retary for carrying out this subtitle $100,000,000, to re-
main available until expended.
SEC. 12310. PUBLIC AVAILABILITY OF PROJECT RESULTS
AND METHODOLOGIES.
The results of any project undertaken pursuant to
this subtitle and the methodologies used to achieve those
111
results shall be made public by the Secretary. The meth-
odologies used shall not be proprietary so that such meth-
odologies may be used for other projects by persons not
seeking awards pursuant to this subtitle.
SEC. 12311. SUNSET.
The authority provided by this subtitle shall termi-
nate on September 30, 2010.
SEC. 12312. DEFINITIONS.
In this subtitle:
(1) PROGRAM CONSORTIUM.—The term ‘‘pro-
gram consortium’’ means the consortium selected
under section 12305(c).
(2) REMOTE OR INCONSEQUENTIAL.—The term
‘‘remote or inconsequential’’ has the meaning given
that term in regulations issued by the Office of Gov-
ernment Ethics under section 208(b)(2) of title 18,
United States Code.
(3) SECRETARY.—The term ‘‘Secretary’’ means
the Secretary of Energy.
Subtitle E—Miscellaneous
SEC. 12401. APPEALS RELATING TO PIPELINE CONSTRUC-
TION PROJECTS.
(a) AGENCY OF RECORD.—Any Federal administra-
tive agency proceeding that is an appeal or review of Fed-
eral authority for an interstate natural gas pipeline con-
112
struction project, including construction of natural gas
storage and liquefied natural gas facilities, shall use as
its exclusive record for all purposes the record compiled
by the Federal Energy Regulatory Commission pursuant
to such Commission’s proceeding under section 7 of the
Natural Gas Act.
(b) SENSE OF THE CONGRESS.—It is the sense of
the Congress that all Federal and State agencies with ju-
risdiction over interstate natural gas pipeline construction
activities should coordinate their proceedings within the
time frames established by the Federal Energy Regulatory
Commission while it is acting pursuant to section 7 of the
Natural Gas Act to determine whether a proposed inter-
state natural gas pipeline is in the public convenience and
necessity.
SEC. 12402. NATURAL GAS MARKET DATA TRANSPARENCY.
(a) ESTABLISHMENT OF SYSTEM.—Not later than
180 days after the date of enactment of this Act, the Fed-
eral Energy Regulatory Commission shall issue rules au-
thorizing or establishing an electronic information system
to provide the Commission and the public with timely ac-
cess to such information as is necessary or appropriate
to facilitate price transparency and participation in nat-
ural gas markets. Such system shall provide information
113
about the market price of natural gas sold in interstate
commerce.
(b) DATA SUBJECT TO DISCLOSURE.—Rules issued
under subsection (a) shall require public availability only
of—
(1) aggregate data; and
(2) transaction-specific data that is otherwise
required by the Federal Energy Regulatory Commis-
sion to be made public.
(c) CIVIL PENALTY.—Any person who violates any
provision of a rule issued under subsection (a) shall be
subject to a civil penalty of not more than $1,000,000 for
each day that such violation continues. Such penalty shall
be assessed by the Federal Energy Regulatory Commis-
sion, after notice and opportunity for public hearing. In
determining the amount of a proposed penalty, the Com-
mission shall take into consideration the seriousness of the
violation and the efforts of such person to remedy the vio-
lation in a timely manner.
SEC. 12403. OIL AND GAS EXPLORATION AND PRODUCTION
DEFINED.
Section 502 of the Federal Water Pollution Control
Act (33 U.S.C. 1362) is amended by adding at the end
the following:
114
‘‘(24) The term ‘oil and gas exploration and produc-
tion’ means all field operations necessary for both explo-
ration and production of oil and gas, including activities
necessary to prepare a site for drilling and for the move-
ment and placement of drilling equipment, whether or not
such activities may be considered construction activities.’’.
SEC. 12404. COMPLEX WELL TECHNOLOGY TESTING FACIL-
ITY.
The Secretary, in coordination with industry leaders
in extended reach drilling technology, shall establish a
Complex Well Technology Testing Facility at the Rocky
Mountain Oilfield Testing Center to increase the range of
extended drilling technology to 50,000 feet, so that more
energy resources can be realized with fewer drilling facili-
ties.
TITLE III—HYDROELECTRIC
Subtitle A—Alternative Conditions
SEC. 13001. ALTERNATIVE CONDITIONS AND FISHWAYS.
(a) FEDERAL RESERVATIONS.—Section 4(e) of the
Federal Power Act (16 U.S.C. 797(e)) is amended by in-
serting after ‘‘adequate protection and utilization of such
reservation.’’ at the end of the first proviso the following:
‘‘The license applicant shall be entitled to a determination
on the record, after opportunity for an agency trial-type
115
hearing of any disputed issues of material fact, with re-
spect to such conditions.’’.
(b) FISHWAYS.—Section 18 of the Federal Power Act
(16 U.S.C. 811) is amended by inserting after ‘‘and such
fishways as may be prescribed by the Secretary of Com-
merce.’’ the following: ‘‘The license applicant shall be enti-
tled to a determination on the record, after opportunity
for an agency trial-type hearing of any disputed issues of
material fact, with respect to such fishways.’’.
(c) ALTERNATIVE
CONDITIONS
AND
PRESCRIP-
TIONS.—Part I of the Federal Power Act (16 U.S.C. 791a
et seq.) is amended by adding the following new section
at the end thereof:
‘‘SEC. 33. ALTERNATIVE CONDITIONS AND PRESCRIPTIONS.
‘‘(a) ALTERNATIVE CONDITIONS.—(1) Whenever any
person applies for a license for any project works within
any reservation of the United States, and the Secretary
of the department under whose supervision such reserva-
tion falls (referred to in this subsection as ‘the Secretary’)
deems a condition to such license to be necessary under
the first proviso of section 4(e), the license applicant may
propose an alternative condition.
‘‘(2) Notwithstanding the first proviso of section 4(e),
the Secretary shall accept the proposed alternative condi-
tion referred to in paragraph (1), and the Commission
116
shall include in the license such alternative condition, if
the Secretary determines, based on substantial evidence
provided by the license applicant or otherwise available to
the Secretary, that such alternative condition—
‘‘(A) provides for the adequate protection and
utilization of the reservation; and
‘‘(B) will either—
‘‘(i) cost less to implement; or
‘‘(ii) result in improved operation of the
project works for electricity production,
as compared to the condition initially deemed nec-
essary by the Secretary.
‘‘(3) The Secretary shall submit into the public
record of the Commission proceeding with any condition
under section 4(e) or alternative condition it accepts under
this section, a written statement explaining the basis for
such condition, and reason for not accepting any alter-
native condition under this section. The written statement
must demonstrate that the Secretary gave equal consider-
ation to the effects of the condition adopted and alter-
natives not accepted on energy supply, distribution, cost,
and use; flood control; navigation; water supply; and air
quality (in addition to the preservation of other aspects
of environmental quality); based on such information as
may be available to the Secretary, including information
117
voluntarily provided in a timely manner by the applicant
and others. The Secretary shall also submit, together with
the aforementioned written statement, all studies, data,
and other factual information available to the Secretary
and relevant to the Secretary’s decision.
‘‘(4) Nothing in this section shall prohibit other inter-
ested parties from proposing alternative conditions.
‘‘(5) If the Secretary does not accept an applicant’s
alternative condition under this section, and the Commis-
sion finds that the Secretary’s condition would be incon-
sistent with the purposes of this part, or other applicable
law, the Commission may refer the dispute to the Commis-
sion’s Dispute Resolution Service. The Dispute Resolution
Service shall consult with the Secretary and the Commis-
sion and issue a non-binding advisory within 90 days. The
Secretary may accept the Dispute Resolution Service advi-
sory unless the Secretary finds that the recommendation
will not adequately protect the reservation. The Secretary
shall submit the advisory and the Secretary’s final written
determination into the record of the Commission’s pro-
ceeding.
‘‘(b) ALTERNATIVE PRESCRIPTIONS.—(1) Whenever
the Secretary of the Interior or the Secretary of Commerce
prescribes a fishway under section 18, the license appli-
cant or licensee may propose an alternative to such pre-
118
scription to construct, maintain, or operate a fishway. The
alternative may include a fishway or an alternative to a
fishway.
‘‘(2) Notwithstanding section 18, the Secretary of the
Interior or the Secretary of Commerce, as appropriate,
shall accept and prescribe, and the Commission shall re-
quire, the proposed alternative referred to in paragraph
(1), if the Secretary of the appropriate department deter-
mines, based on substantial evidence provided by the li-
censee or otherwise available to the Secretary, that such
alternative—
‘‘(A) will be no less protective of the fish re-
sources than the fishway initially prescribed by the
Secretary; and
‘‘(B) will either—
‘‘(i) cost less to implement; or
‘‘(ii) result in improved operation of the
project works for electricity production,
as compared to the fishway initially deemed nec-
essary by the Secretary.
‘‘(3) The Secretary concerned shall submit into the
public record of the Commission proceeding with any pre-
scription under section 18 or alternative prescription it ac-
cepts under this section, a written statement explaining
the basis for such prescription, and reason for not accept-
119
ing any alternative prescription under this section. The
written statement must demonstrate that the Secretary
gave equal consideration to the effects of the condition
adopted and alternatives not accepted on energy supply,
distribution, cost, and use; flood control; navigation; water
supply; and air quality (in addition to the preservation of
other aspects of environmental quality); based on such in-
formation as may be available to the Secretary, including
information voluntarily provided in a timely manner by the
applicant and others. The Secretary shall also submit, to-
gether with the aforementioned written statement, all
studies, data, and other factual information available to
the Secretary and relevant to the Secretary’s decision.
‘‘(4) Nothing in this section shall prohibit other inter-
ested parties from proposing alternative prescriptions.
‘‘(5) If the Secretary concerned does not accept an
applicant’s alternative prescription under this section, and
the Commission finds that the Secretary’s prescription
would be inconsistent with the purposes of this part, or
other applicable law, the Commission may refer the dis-
pute to the Commission’s Dispute Resolution Service. The
Dispute Resolution Service shall consult with the Sec-
retary and the Commission and issue a non-binding advi-
sory within 90 days. The Secretary may accept the Dis-
pute Resolution Service advisory unless the Secretary
120
finds that the recommendation will not adequately protect
the fish resources. The Secretary shall submit the advisory
and the Secretary’s final written determination into the
record of the Commission’s proceeding.’’.
Subtitle B—Additional Hydropower
SEC. 13201. HYDROELECTRIC PRODUCTION INCENTIVES.
(a) INCENTIVE PAYMENTS.—For electric energy gen-
erated and sold by a qualified hydroelectric facility during
the incentive period, the Secretary of Energy (referred to
in this section as the ‘‘Secretary’’) shall make, subject to
the availability of appropriations, incentive payments to
the owner or operator of such facility. The amount of such
payment made to any such owner or operator shall be as
determined under subsection (e) of this section. Payments
under this section may only be made upon receipt by the
Secretary of an incentive payment application which estab-
lishes that the applicant is eligible to receive such payment
and which satisfies such other requirements as the Sec-
retary deems necessary. Such application shall be in such
form, and shall be submitted at such time, as the Sec-
retary shall establish.
(b) DEFINITIONS.—For purposes of this section:
(1) QUALIFIED
HYDROELECTRIC
FACILITY.—
The term ‘‘qualified hydroelectric facility’’ means a
turbine or other generating device owned or solely
121
operated by a non-Federal entity which generates
hydroelectric energy for sale and which is added to
an existing dam or conduit.
(2) EXISTING
DAM
OR
CONDUIT.—The term
‘‘existing dam or conduit’’ means any dam or con-
duit the construction of which was completed before
the date of the enactment of this section and which
does not require any construction or enlargement of
impoundment or diversion structures (other than re-
pair or reconstruction) in connection with the instal-
lation of a turbine or other generating device.
(3) CONDUIT.—The term ‘‘conduit’’ has the
same meaning as when used in section 30(a)(2) of
the Federal Power Act.
The terms defined in this subsection shall apply without
regard to the hydroelectric kilowatt capacity of the facility
concerned, without regard to whether the facility uses a
dam owned by a governmental or nongovernmental entity,
and without regard to whether the facility begins oper-
ation on or after the date of the enactment of this section.
(c) ELIGIBILITY WINDOW.—Payments may be made
under this section only for electric energy generated from
a qualified hydroelectric facility which begins operation
during the period of 10 fiscal years beginning with the
122
first full fiscal year occurring after the date of enactment
of this subtitle.
(d) INCENTIVE PERIOD.—A qualified hydroelectric
facility may receive payments under this section for a pe-
riod of 10 fiscal years (referred to in this section as the
‘‘incentive period’’). Such period shall begin with the fiscal
year in which electric energy generated from the facility
is first eligible for such payments.
(e) AMOUNT OF PAYMENT.—
(1) IN GENERAL.—Payments made by the Sec-
retary under this section to the owner or operator of
a qualified hydroelectric facility shall be based on
the number of kilowatt hours of hydroelectric energy
generated by the facility during the incentive period.
For any such facility, the amount of such payment
shall be 1.8 cents per kilowatt hour (adjusted as
provided in paragraph (2)), subject to the avail-
ability of appropriations under subsection (g), except
that no facility may receive more than $750,000 in
one calendar year.
(2) ADJUSTMENTS.—The amount of the pay-
ment made to any person under this section as pro-
vided in paragraph (1) shall be adjusted for inflation
for each fiscal year beginning after calendar year
2003 in the same manner as provided in the provi-
123
sions of section 29(d)(2)(B) of the Internal Revenue
Code of 1986, except that in applying such provi-
sions the calendar year 2003 shall be substituted for
calendar year 1979.
(f) SUNSET.—No payment may be made under this
section to any qualified hydroelectric facility after the ex-
piration of the period of 20 fiscal years beginning with
the first full fiscal year occurring after the date of enact-
ment of this subtitle, and no payment may be made under
this section to any such facility after a payment has been
made with respect to such facility for a period of 10 fiscal
years.
(g) AUTHORIZATION
OF APPROPRIATIONS.—There
are authorized to be appropriated to the Secretary to carry
out the purposes of this section $10,000,000 for each of
the fiscal years 2004 through 2013.
SEC. 13202. HYDROELECTRIC EFFICIENCY IMPROVEMENT.
(a) INCENTIVE PAYMENTS.—The Secretary of En-
ergy shall make incentive payments to the owners or oper-
ators of hydroelectric facilities at existing dams to be used
to make capital improvements in the facilities that are di-
rectly related to improving the efficiency of such facilities
by at least 3 percent.
(b) LIMITATIONS.—Incentive payments under this
section shall not exceed 10 percent of the costs of the cap-
124
ital improvement concerned and not more than one pay-
ment may be made with respect to improvements at a sin-
gle facility. No payment in excess of $750,000 may be
made with respect to improvements at a single facility.
(c) AUTHORIZATION.—There is authorized to be ap-
propriated to carry out this section not more than
$10,000,000 for each of the fiscal years 2004 through
2013.
SEC. 13203. SMALL HYDROELECTRIC POWER PROJECTS.
Section 408(a)(6) of the Public Utility Regulatory
Policies Act of 1978 is amended by striking ‘‘April 20,
1977’’ and inserting ‘‘March 4, 2003’’.
SEC. 13204. INCREASED HYDROELECTRIC GENERATION AT
EXISTING FEDERAL FACILITIES.
(a) IN GENERAL.—The Secretary of Energy, in con-
sultation with the Secretary of the Interior and Secretary
of the Army, shall conduct studies of the cost-effective op-
portunities to increase hydropower generation at existing
federally-owned or operated water regulation, storage, and
conveyance facilities. Such studies shall be completed with-
in two years after the date of enactment of this subtitle
and transmitted to the Committee on Commerce of the
House of Representatives and the Committee on Energy
and Natural Resources of the Senate. An individual study
shall be prepared for each of the Nation’s principal river
125
basins. Each such study shall identify and describe with
specificity the following matters:
(1) Opportunities to improve the efficiency of
hydropower generation at such facilities through, but
not limited to, mechanical, structural, or operational
changes.
(2) Opportunities to improve the efficiency of
the use of water supplied or regulated by Federal
projects where such improvement could, in the ab-
sence of legal or administrative constraints, make
additional water supplies available for hydropower
generation or reduce project energy use.
(3) Opportunities to create additional hydro-
power generating capacity at existing facilities
through, but not limited to, the construction of addi-
tional generating facilities, the uprating of genera-
tors and turbines, and the construction of pumped
storage facilities.
(4) Preliminary assessment of the costs and the
economic and environmental consequences of such
measures.
(b) PREVIOUS STUDIES.—If studies of the type re-
quired by subsection (a) have been prepared by any agency
of the United States and published within the five years
prior to the date of enactment of this subtitle, the Sec-
126
retary of Energy may choose not to perform new studies
and incorporate the information in such studies into the
studies required by subsection (a).
(c) AUTHORIZATION.—There is authorized to be ap-
propriated such sums as may be necessary to carry out
the purposes of this section.
TITLE IV—NUCLEAR MATTERS
Subtitle A—Price-Anderson Act
Amendments
SEC. 14001. SHORT TITLE.
This subtitle may be cited as the ‘‘Price-Anderson
Amendments Act of 2003’’.
SEC. 14002. EXTENSION OF INDEMNIFICATION AUTHORITY.
(a) INDEMNIFICATION
OF NUCLEAR REGULATORY
COMMISSION LICENSEES.—Section 170 c. of the Atomic
Energy Act of 1954 (42 U.S.C. 2210(c)) is amended—
(1) in the subsection heading, by striking ‘‘LI-
CENSES’’ and inserting ‘‘LICENSEES’’; and
(2) by striking ‘‘December 31, 2003’’ each
place it appears and inserting ‘‘August 1, 2017’’.
(b) INDEMNIFICATION OF DEPARTMENT OF ENERGY
CONTRACTORS.—Section 170 d.(1)(A) of the Atomic En-
ergy Act of 1954 (42 U.S.C. 2210(d)(1)(A)) is amended
by striking ‘‘December 31, 2004’’ and inserting ‘‘August
1, 2017’’.
127
(c) INDEMNIFICATION OF NONPROFIT EDUCATIONAL
INSTITUTIONS.—Section 170 k. of the Atomic Energy Act
of 1954 (42 U.S.C. 2210(k)) is amended by striking ‘‘Au-
gust 1, 2002’’ each place it appears and inserting ‘‘August
1, 2017’’.
SEC. 14003. MAXIMUM ASSESSMENT.
Section 170 of the Atomic Energy Act of 1954 (42
U.S.C. 2210) is amended—
(1) in subsection b.(1), in the second proviso of
the third sentence—
(A) by striking ‘‘$63,000,000’’ and insert-
ing ‘‘$94,000,000’’; and
(B) by striking ‘‘$10,000,000 in any 1
year’’ and inserting ‘‘$15,000,000 in any 1 year
(subject to adjustment for inflation under sub-
section t.)’’; and
(2) in subsection t.—
(A) by inserting ‘‘total and annual’’ after
‘‘amount of the maximum’’;
(B) by striking ‘‘the date of the enactment
of the Price-Anderson Amendments Act of
1988’’ and inserting ‘‘July 1, 2002’’; and
(C) by striking ‘‘such date of enactment’’
and inserting ‘‘July 1, 2002’’.
128
SEC. 14004. DEPARTMENT OF ENERGY LIABILITY LIMIT.
(a) INDEMNIFICATION OF DEPARTMENT OF ENERGY
CONTRACTORS.—Section 170 d. of the Atomic Energy Act
of 1954 (42 U.S.C. 2210(d)) is amended by striking para-
graph (2) and inserting the following:
‘‘(2) In an agreement of indemnification entered into
under paragraph (1), the Secretary—
‘‘(A) may require the contractor to provide and
maintain the financial protection of such a type and
in such amounts as the Secretary shall determine to
be appropriate to cover public liability arising out of
or in connection with the contractual activity; and
‘‘(B) shall indemnify the persons indemnified
against such liability above the amount of the finan-
cial 
protection 
required, 
in 
the 
amount 
of
$10,000,000,000 (subject to adjustment for inflation
under subsection t.), in the aggregate, for all per-
sons indemnified in connection with the contract and
for each nuclear incident, including such legal costs
of the contractor as are approved by the Secretary.’’.
(b) CONTRACT AMENDMENTS.—Section 170 d. of the
Atomic Energy Act of 1954 (42 U.S.C. 2210(d)) is
amended by striking paragraph (3) and inserting the fol-
lowing:
‘‘(3) All agreements of indemnification under which
the Department of Energy (or its predecessor agencies)
129
may be required to indemnify any person under this sec-
tion shall be deemed to be amended, on the date of enact-
ment of the Price-Anderson Amendments Act of 2003, to
reflect the amount of indemnity for public liability and any
applicable financial protection required of the contractor
under this subsection.’’.
(c) LIABILITY LIMIT.—Section 170 e.(1)(B) of the
Atomic Energy Act of 1954 (42 U.S.C. 2210(e)(1)(B)) is
amended—
(1) by striking ‘‘the maximum amount of finan-
cial protection required under subsection b. or’’; and
(2) by striking ‘‘paragraph (3) of subsection d.,
whichever amount is more’’ and inserting ‘‘para-
graph (2) of subsection d.’’.
SEC. 14005. INCIDENTS OUTSIDE THE UNITED STATES.
(a) AMOUNT
OF INDEMNIFICATION.—Section 170
d.(5) of the Atomic Energy Act of 1954 (42 U.S.C.
2210(d)(5)) is amended by striking ‘‘$100,000,000’’ and
inserting ‘‘$500,000,000’’.
(b) LIABILITY LIMIT.—Section 170 e.(4) of the
Atomic Energy Act of 1954 (42 U.S.C. 2210(e)(4)) is
amended by striking ‘‘$100,000,000’’ and inserting
‘‘$500,000,000’’.
131
‘‘(5)(A) For purposes of this section only, the Com-
mission shall consider a combination of facilities described
in subparagraph (B) to be a single facility having a rated
capacity of 100,000 electrical kilowatts or more.
‘‘(B) A combination of facilities referred to in sub-
paragraph (A) is 2 or more facilities located at a single
site, each of which has a rated capacity of 100,000 elec-
trical kilowatts or more but not more than 300,000 elec-
trical kilowatts, with a combined rated capacity of not
more than 1,300,000 electrical kilowatts.’’.
SEC. 14009. APPLICABILITY.
The amendments made by sections 14003, 14004,
and 14005 do not apply to a nuclear incident that occurs
before the date of enactment of this Act.
SEC. 14010. PROHIBITION ON ASSUMPTION BY UNITED
STATES GOVERNMENT OF LIABILITY FOR
CERTAIN FOREIGN ACCIDENTS.
Section 170 of the Atomic Energy Act of 1954 (42
U.S.C. 2210) is amended by adding at the end the fol-
lowing new subsection:
‘‘u. PROHIBITION ON ASSUMPTION OF LIABILITY FOR
CERTAIN FOREIGN ACCIDENTS.—Notwithstanding this
section or any other provision of law, no officer of the
United States or of any department, agency, or instrumen-
tality of the United States Government may enter into any
132
contract or other arrangement, or into any amendment or
modification of a contract or other arrangement, the pur-
pose or effect of which would be to directly or indirectly
impose liability on the United States Government, or any
department, agency, or instrumentality of the United
States Government, or to otherwise directly or indirectly
require an indemnity by the United States Government,
for nuclear accidents occurring in connection with the de-
sign, construction, or operation of a production facility or
utilization facility in any country whose government has
been identified by the Secretary of State as engaged in
state sponsorship of terrorist activities (specifically includ-
ing any country the government of which, as of September
11, 2001, had been determined by the Secretary of State
under section 620A(a) of the Foreign Assistance Act of
1961, section 6(j)(1) of the Export Administration Act of
1979, or section 40(d) of the Arms Export Control Act
to have repeatedly provided support for acts of inter-
national terrorism).’’.
SEC. 14011. SECURE TRANSFER OF NUCLEAR MATERIALS.
(a) AMENDMENT.—Chapter 14 of the Atomic Energy
Act of 1954 (42 U.S.C. 2201–2210b) is amended by add-
ing at the end the following new section:
‘‘SEC. 170C. SECURE TRANSFER OF NUCLEAR MA-
TERIALS.—
133
‘‘a. The Nuclear Regulatory Commission shall estab-
lish a system to ensure that, with respect to activities by
any party pursuant to a license issued under this Act—
‘‘(1) materials described in subsection b., when
transferred or received in the United States—
‘‘(A) from a facility licensed by the Nu-
clear Regulatory Commission;
‘‘(B) from a facility licensed by an agree-
ment State; or
‘‘(C) from a country with whom the United
States has an agreement for cooperation under
section 123,
are accompanied by a manifest describing the type
and amount of materials being transferred;
‘‘(2) each individual transferring or accom-
panying the transfer of such materials has been sub-
ject to a security background check by appropriate
Federal entities; and
‘‘(3) such materials are not transferred to or
received at a destination other than a facility li-
censed by the Nuclear Regulatory Commission or an
agreement State under this Act or other appropriate
Federal facility, or a destination outside the United
States in a country with whom the United States
has an agreement for cooperation under section 123.
134
‘‘b. Except as otherwise provided by the Commission
by regulation, the materials referred to in subsection a.
are byproduct materials, source materials, special nuclear
materials, high-level radioactive waste, spent nuclear fuel,
transuranic waste, and low-level radioactive waste (as de-
fined in section 2(16) of the Nuclear Waste Policy Act
of 1982 (42 U.S.C. 10101(16))).’’.
(b) REGULATIONS.—Not later than 1 year after the
date of the enactment of this Act, and from time to time
thereafter as it considers necessary, the Nuclear Regu-
latory Commission shall issue regulations identifying ra-
dioactive materials that, consistent with the protection of
public health and safety and the common defense and se-
curity, are appropriate exceptions to the requirements of
section 170C of the Atomic Energy Act of 1954, as added
by subsection (a) of this section.
(c) EFFECTIVE DATE.—The amendment made by
subsection (a) shall take effect upon the issuance of regu-
lations under subsection (b).
(d) EFFECT ON OTHER LAW.—Nothing in this sec-
tion or the amendment made by this section shall waive,
modify, or affect the application of chapter 51 of title 49,
United States Code, part A of subtitle V of title 49,
United States Code, part B of subtitle VI of title 49,
United States Code, and title 23, United States Code.
135
(e) TABLE OF SECTIONS AMENDMENT.—The table of
sections for chapter 14 of the Atomic Energy Act of 1954
is amended by adding at the end the following new item:
‘‘Sec. 170C. Secure transfer of nuclear materials.’’.
SEC. 14012. NUCLEAR FACILITY THREATS.
(a) STUDY.—The President, in consultation with the
Nuclear Regulatory Commission and other appropriate
Federal, State, and local agencies and private entities,
shall conduct a study to identify the types of threats that
pose an appreciable risk to the security of the various
classes of facilities licensed by the Nuclear Regulatory
Commission under the Atomic Energy Act of 1954. Such
study shall take into account, but not be limited to—
(1) the events of September 11, 2001;
(2) an assessment of physical, cyber, bio-
chemical, and other terrorist threats;
(3) the potential for attack on facilities by mul-
tiple coordinated teams of a large number of individ-
uals;
(4) the potential for assistance in an attack
from several persons employed at the facility;
(5) the potential for suicide attacks;
(6) the potential for water-based and air-based
threats;
(7) the potential use of explosive devices of con-
siderable size and other modern weaponry;
136
(8) the potential for attacks by persons with a
sophisticated knowledge of facility operations;
(9) the potential for fires, especially fires of
long duration; and
(10) the potential for attacks on spent fuel
shipments by multiple coordinated teams of a large
number of individuals.
(b) SUMMARY AND CLASSIFICATION REPORT.—Not
later than 180 days after the date of the enactment of
this Act, the President shall transmit to the Congress and
the Nuclear Regulatory Commission a report—
(1) summarizing the types of threats identified
under subsection (a); and
(2) classifying each type of threat identified
under subsection (a), in accordance with existing
laws and regulations, as either—
(A) involving attacks and destructive acts,
including sabotage, directed against the facility
by an enemy of the United States, whether a
foreign government or other person, or other-
wise falling under the responsibilities of the
Federal Government; or
(B) involving the type of risks that Nu-
clear Regulatory Commission licensees should
be responsible for guarding against.
137
(c) FEDERAL ACTION REPORT.—Not later than 90
days after the date on which a report is transmitted under
subsection (b), the President shall transmit to the Con-
gress a report on actions taken, or to be taken, to address
the types of threats identified under subsection (b)(2)(A).
Such report may include a classified annex as appropriate.
(d) REGULATIONS.—Not later than 270 days after
the date on which a report is transmitted under subsection
(b), the Nuclear Regulatory Commission shall issue regu-
lations, including changes to the design basis threat, to
ensure that licensees address the threats identified under
subsection (b)(2)(B).
(e) PHYSICAL SECURITY PROGRAM.—The Nuclear
Regulatory Commission shall establish an operational
safeguards response evaluation program that ensures that
the physical protection capability and operational safe-
guards response for sensitive nuclear facilities, as deter-
mined by the Commission consistent with the protection
of public health and the common defense and security,
shall be tested periodically through Commission approved
or designed, observed, and evaluated force-on-force exer-
cises to determine whether the ability to defeat the design
basis threat is being maintained. For purposes of this sub-
section, the term ‘‘sensitive nuclear facilities’’ includes at
a minimum commercial nuclear power plants, including
138
associated spent fuel storage facilities, spent fuel storage
pools and dry cask storage at closed reactors, independent
spent fuel storage facilities and geologic repository oper-
ations areas, category I fuel cycle facilities, and gaseous
diffusion plants.
(f) CONTROL OF INFORMATION.—In carrying out this
section, the President and the Nuclear Regulatory Com-
mission shall control the dissemination of restricted data,
safeguards information, and other classified national secu-
rity information in a manner so as to ensure the common
defense and security, consistent with chapter 12 of the
Atomic Energy Act of 1954.
SEC. 14013. UNREASONABLE RISK CONSULTATION.
Section 170 of the Atomic Energy Act of 1954 (42
U.S.C. 2210) is amended by adding at the end the fol-
lowing new subsection:
‘‘v. UNREASONABLE RISK CONSULTATION.—(1) Be-
fore entering into an agreement of indemnification under
this section with respect to a utilization facility, the Nu-
clear Regulatory Commission shall consult with the Assist-
ant to the President for Homeland Security (or any suc-
cessor official) concerning whether the location of the pro-
posed facility and the design of that type of facility ensure
that the facility provides for adequate protection of public
health and safety if subject to a terrorist attack.
139
‘‘(2) Before issuing a license or a license renewal for
a sensitive nuclear facility, the Nuclear Regulatory Com-
mission shall consult with the Secretary of Homeland Se-
curity or his designee concerning the emergency evacu-
ation plan for the communities living near the sensitive
nuclear facility. For purposes of this paragraph, the term
‘sensitive nuclear facility’ has the meaning given that term
in section 14012 of the Energy Policy Act of 2003.’’.
SEC. 14014. FINANCIAL ACCOUNTABILITY.
(a) AMENDMENT.—Section 170 of the Atomic En-
ergy Act of 1954 (42 U.S.C. 2210) is amended by adding
at the end the following new subsection:
‘‘w. FINANCIAL
ACCOUNTABILITY.—(1) Notwith-
standing subsection d., the Attorney General may bring
an action in the appropriate United States district court
to recover from a contractor of the Secretary (or subcon-
tractor or supplier of such contractor) amounts paid by
the Federal Government under an agreement of indem-
nification under subsection d. for public liability resulting
from conduct which constitutes intentional misconduct of
any corporate officer, manager, or superintendent of such
contractor (or subcontractor or supplier of such con-
tractor).
140
‘‘(2) The Attorney General may recover under para-
graph (1) an amount not to exceed the amount of the prof-
it derived by the defendant from the contract.
‘‘(3) No amount recovered from any contractor (or
subcontractor or supplier of such contractor) under para-
graph (1) may be reimbursed directly or indirectly by the
Department of Energy.
‘‘(4) Paragraph (1) shall not apply to any nonprofit
entity conducting activities under contract for the Sec-
retary.
‘‘(5) No waiver of a defense required under this sec-
tion shall prevent a defendant from asserting such defense
in an action brought under this subsection.
‘‘(6) The Secretary shall, by rule, define the terms
‘profit’ and ‘nonprofit entity’ for purposes of this sub-
section. Such rulemaking shall be completed not later than
180 days after the date of the enactment of this sub-
section.’’.
(b) EFFECTIVE DATE.—The amendment made by
this section shall not apply to any agreement of indem-
nification entered into under section 170 d. of the Atomic
Energy Act of 1954 (42 U.S.C. 2210(d)) before the date
of the enactment of this Act.
141
SEC. 14015. CIVIL PENALTIES.
(a) REPEAL
OF AUTOMATIC REMISSION.—Section
234A b. (2) of the Atomic Energy Act of 1954 (42 U.S.C.
2282a(b)(2)) is amended by striking the last sentence.
(b) LIMITATION FOR NONPROFIT INSTITUTIONS.—
Subsection d. of section 234A of the Atomic Energy Act
of 1954 (42 U.S.C. 2282a(d)) is amended to read as fol-
lows:
‘‘d. Notwithstanding subsection a., a civil penalty for
a violation under subsection a. shall not exceed the amount
of any discretionary fee paid under the contract under
which such violation occurs for any nonprofit contractor,
subcontractor, or supplier—
‘‘(1) described in section 501(c)(3) of the Inter-
nal Revenue Code of 1986 and exempt from tax
under section 501(a) of such Code; or
‘‘(2) identified by the Secretary by rule as ap-
propriate to be treated the same under this sub-
section as an entity described in paragraph (1), con-
sistent with the purposes of this section.’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall not apply to any violation of the Atomic
Energy Act of 1954 occurring under a contract entered
into before the date of the enactment of this Act.
(d) RULEMAKING.—Not later than 6 months after
the date of the enactment of this Act, the Secretary of
142
Energy shall issue a rule for the implementation of the
amendment made by subsection (b).
Subtitle B—Miscellaneous Matters
SEC. 14021. LICENSES.
Section 103 c. of the Atomic Energy Act of 1954 (42
U.S.C. 2133(c)) is amended by inserting ‘‘from the au-
thorization to commence operations’’ after ‘‘forty years’’.
SEC. 14022. NUCLEAR REGULATORY COMMISSION MEET-
INGS.
If a quorum of the Nuclear Regulatory Commission
gathers to discuss official Commission business the discus-
sions shall be recorded, and the Commission shall notify
the public of such discussions within 15 days after they
occur. The Commission shall promptly make a transcript
of the recording available to the public on request, except
to the extent that public disclosure is exempted or prohib-
ited by law. This section shall not apply to a meeting,
within the meaning of that term under section 552b(a)(2)
of title 5, United States Code.
SEC. 14023. NRC TRAINING PROGRAM.
(a) IN GENERAL.—In order to maintain the human
resource investment and infrastructure of the United
States in the nuclear sciences, health physics, and engi-
neering fields, in accordance with the statutory authorities
of the Commission relating to the civilian nuclear energy
143
program, the Nuclear Regulatory Commission shall carry
out a training and fellowship program to address short-
ages of individuals with critical nuclear safety regulatory
skills.
(b) AUTHORIZATION OF APPROPRIATIONS.—
(1) IN GENERAL.—There are authorized to be
appropriated to carry out this section $1,000,000 for
each of fiscal years 2004 through 2007.
(2) 
AVAILABILITY.—Funds 
made 
available
under paragraph (1) shall remain available until ex-
pended.
SEC. 14024. COST RECOVERY FROM GOVERNMENT AGEN-
CIES.
Section 161 w. of the Atomic Energy Act of 1954
(42 U.S.C. 2201(w)) is amended—
(1) by striking ‘‘for or is issued’’ and all that
follows through ‘‘1702’’ and inserting ‘‘to the Com-
mission for, or is issued by the Commission, a li-
cense or certificate’’;
(2) by striking ‘‘483a’’ and inserting ‘‘9701’’;
and
(3) by striking ‘‘, of applicants for, or holders
of, such licenses or certificates’’.
144
SEC. 14025. ELIMINATION OF PENSION OFFSET.
Section 161 of the Atomic Energy Act of 1954 (42
U.S.C. 2201) is amended by adding at the end the fol-
lowing:
‘‘y. exempt from the application of sections
8344 and 8468 of title 5, United States Code, an
annuitant who was formerly an employee of the
Commission who is hired by the Commission as a
consultant, if the Commission finds that the annu-
itant has a skill that is critical to the performance
of the duties of the Commission.’’.
SEC. 14026. CARRYING OF FIREARMS BY LICENSEE EM-
PLOYEES.
Section 161 k. of the Atomic Energy Act of 1954 (42
U.S.C. 2201(k)) is amended to read as follows:
‘‘k. authorize such of its members, officers, and
employees as it deems necessary in the interest of
the common defense and security to carry firearms
while in the discharge of their official duties. The
Commission may also authorize—
‘‘(1) such of those employees of its con-
tractors and subcontractors (at any tier) en-
gaged in the protection of property under the
jurisdiction of the United States located at fa-
cilities owned by or contracted to the United
States or being transported to or from such fa-
145
cilities as it deems necessary in the interests of
the common defense and security; and
‘‘(2) such of those employees of persons li-
censed or certified by the Commission (includ-
ing employees of contractors of licensees or cer-
tificate holders) engaged in the protection of
property of (A) facilities owned or operated by
a Commission licensee or certificate holder that
are designated by the Commission, or (B) prop-
erty of significance to the common defense and
security located at facilities owned or operated
by a Commission licensee or certificate holder
or being transported to or from such facilities;
to carry firearms while in the discharge of their offi-
cial duties. A person authorized to carry firearms
under this subsection may, while in the performance
of, and in connection with, official duties, make ar-
rests without warrant for any offense against the
United States committed in that person’s presence
or for any felony cognizable under the laws of the
United States if that person has reasonable grounds
to believe that the individual to be arrested has com-
mitted or is committing such felony. An employee of
a contractor or subcontractor or of a Commission li-
censee or certificate holder (or a contractor of a li-
146
censee or certificate holder) authorized to carry fire-
arms under this subsection may make such arrests
only when the individual to be arrested is within, or
in direct flight from, the area of such offense. A per-
son granted authority to make arrests by this sub-
section may exercise that authority only in the en-
forcement of laws regarding the property of the
United States in the custody of the Department of
Energy, the Nuclear Regulatory Commission, or a
contractor of the Department of Energy or Nuclear
Regulatory Commission or of a licensee or certificate
holder of the Commission, laws applicable to facili-
ties owned or operated by a Commission licensee or
certificate holder that are designated by the Com-
mission pursuant to this subsection and property of
significance to the common defense and security that
is in the custody of a licensee or certificate holder
or a contractor of a licensee or certificate holder of
the Commission, or any provision of this Act that
may subject an offender to a fine, imprisonment, or
both. The arrest authority conferred by this sub-
section is in addition to any arrest authority under
other laws. The Secretary and the Commission, with
the approval of the Attorney General, shall issue
guidelines to implement this subsection;’’.
147
SEC. 
14027. 
UNAUTHORIZED 
INTRODUCTION 
OF 
DAN-
GEROUS WEAPONS.
Section 229 a. of the Atomic Energy Act of 1954 (42
U.S.C. 2278a(a)) is amended by adding after ‘‘custody of
the Commission’’ the following: ‘‘or subject to its licensing
authority or to certification by the Commission under this
Act or any other Act’’.
SEC. 14028. SABOTAGE OF NUCLEAR FACILITIES OR FUEL.
Section 236 a. of the Atomic Energy Act of 1954 (42
U.S.C. 2284(a)) is amended to read as follows:
‘‘a. Any person who intentionally and willfully de-
stroys or causes physical damage to, or who intentionally
and willfully attempts to destroy or cause physical damage
to—
‘‘(1) any production facility or utilization facil-
ity licensed under this Act;
‘‘(2) any nuclear waste storage, treatment, or
disposal facility licensed under this Act;
‘‘(3) any nuclear fuel for a utilization facility li-
censed under this Act or any spent nuclear fuel from
such a facility;
‘‘(4) any uranium enrichment or nuclear fuel
fabrication facility licensed or certified by the Nu-
clear Regulatory Commission; or
‘‘(5) any production, utilization, waste storage,
waste treatment, waste disposal, uranium enrich-
148
ment, or nuclear fuel fabrication facility subject to
licensing or certification under this Act during its
construction where the destruction or damage
caused or attempted to be caused could affect public
health and safety during the operation of the facil-
ity,
shall be fined not more than $1,000,000 or imprisoned
for up to life in prison without parole, or both.’’.
SEC. 14029. COOPERATIVE RESEARCH AND DEVELOPMENT
AND SPECIAL DEMONSTRATION PROJECTS
FOR THE URANIUM MINING INDUSTRY.
(a) AUTHORIZATION
OF APPROPRIATIONS.—There
are authorized to be appropriated to the Secretary of En-
ergy $10,000,000 for each of fiscal years 2004, 2005, and
2006 for—
(1) cooperative, cost-shared agreements between
the Department of Energy and domestic uranium
producers to identify, test, and develop improved in
situ leaching mining technologies, including low-cost
environmental restoration technologies that may be
applied to sites after completion of in situ leaching
operations; and
(2) funding for competitively selected dem-
onstration projects with domestic uranium producers
relating to—
149
(A) enhanced production with minimal en-
vironmental impacts;
(B) restoration of well fields; and
(C) decommissioning and decontamination
activities.
(b) DOMESTIC URANIUM PRODUCER.—For purposes
of this section, the term ‘‘domestic uranium producer’’ has
the meaning given that term in section 1018(4) of the En-
ergy Policy Act of 1992 (42 U.S.C. 2296b–7(4)), except
that the term shall not include any producer that has not
produced uranium from domestic reserves on or after July
30, 1998, in Colorado, Nebraska, Texas, Utah, or Wyo-
ming.
SEC. 14030. URANIUM SALES.
(a) RESTRICTIONS ON INVENTORY SALES.—Section
3112(d) of the USEC Privatization Act (42 U.S.C.
2297h–10(d)) is amended to read as follows:
‘‘(d) INVENTORY SALES.—(1) In addition to the
transfers and sales authorized under subsections (b), (c),
and (e), the Secretary of Energy or the Secretary of the
Army may transfer or sell uranium subject to paragraph
(2).
‘‘(2) Except as provided in subsections (b), (c), and
(e), no sale or transfer of uranium shall be made under
151
the Army to the domestic uranium industry shall be the
preferred method of making uranium available. The recov-
ered uranium shall be counted against the annual max-
imum deliveries set for in this section, when such uranium
is sold to end users.’’.
(b) TRANSFERS TO CORPORATION.—Section 3112 of
the USEC Privatization Act (42 U.S.C. 2297h–10) is fur-
ther amended by adding at the end the following new sub-
section:
‘‘(g) 
TRANSFERS
TO
CORPORATION.—Notwith-
standing subsection (b)(2) and subsection (d)(2), the Sec-
retary may transfer up to 9,550 metric tons of uranium
to the Corporation to replace uranium that the Secretary
transferred to the Corporation on or about June 30, 1993,
April 20, 1998, and May 18, 1998, and that does not meet
commercial specifications.’’.
(c) SERVICES.—Section 3112 of the USEC Privatiza-
tion Act (42 U.S.C. 2297h–10) is further amended by
adding at the end the following new subsection:
‘‘(h) SERVICES.—(1) Notwithstanding any other pro-
vision of this section, if the Secretary determines that if
the Corporation has failed, or may fail, to perform any
obligation under the Agreement between the Department
of Energy and the Corporation dated June 17, 2002, and
as amended thereafter, which failure could result in termi-
152
nation of the Agreement, the Secretary shall notify the
Committee on Energy and Commerce of the House of
Representatives and the Committee on Energy and Nat-
ural Resources of the Senate, in such a manner that af-
fords the Committees an opportunity to comment, prior
to a determination by the Secretary whether termination,
waiver, or modification of the Agreement is required. The
Secretary is authorized to take such action as he deter-
mines necessary under the Agreement to terminate, waive,
or modify provisions of the Agreement to achieve its pur-
poses.
‘‘(2) Notwithstanding any other provision of this sec-
tion, if the Secretary determines in accordance with Arti-
cle 2D of the Agreement between the Department of En-
ergy and the Corporation dated June 17, 2002, and as
amended thereafter, to transition operation of the Padu-
cah gaseous diffusion plant, the Secretary may provide
uranium enrichment services in a manner consistent with
Article 2D of such Agreement.’’.
(d) REPORT.—Within 3 years after the date of enact-
ment of this Act, the Secretary shall report to the Con-
gress on the implementation of this section. The report
shall include a discussion of available excess uranium in-
ventories, all sales or transfers made by the Secretary of
Energy or the Secretary of the Army, the impact of such
153
sales or transfers on the domestic uranium industry, the
spot market uranium price, and the national security in-
terests of the United States, and any steps taken to reme-
diate any adverse impacts of such sales or transfers.
SEC. 14031. MEDICAL ISOTOPE PRODUCTION.
Section 134 of the Atomic Energy Act of 1954 (42
U.S.C. 2160d) is amended—
(1) by redesignating subsection b. as subsection
f.;
(2) by inserting after subsection a. the fol-
lowing:
‘‘b. The Commission may issue a license authorizing
the export (including shipment to and use at intermediate
and ultimate consignees specified in the license) to a Re-
cipient Country of highly enriched uranium for medical
isotope production if, in addition to any other require-
ments of this Act, the Commission determines that—
‘‘(1) a Recipient Country that supplies an as-
surance letter to the United States Government in
connection with the Commission’s consideration of
the export license application has informed the
United States Government that any intermediate
consignees and the ultimate consignee specified in
the application are required to use such highly en-
154
riched uranium solely to produce medical isotopes;
and
‘‘(2) the highly enriched uranium for medical
isotope production will be irradiated only in a reac-
tor in a Recipient Country that—
‘‘(A) uses an alternative nuclear reactor
fuel; or
‘‘(B) is the subject of an agreement with
the United States Government to convert to an
alternative nuclear reactor fuel when such fuel
can be used in that reactor.
‘‘c. Applications to the Commission for licenses au-
thorizing the export to a Recipient Country of highly en-
riched uranium for medical isotope production shall be
subject to subsection b., and subsection a. shall not be ap-
plicable to such exports.
‘‘d. The Commission is authorized to specify, by rule-
making or decision in connection with an export license
application, that a country other than a Recipient Country
may receive exports of highly enriched uranium for med-
ical isotope production in accordance with the same cri-
teria established by subsection b. for exports to a Recipi-
ent Country, upon the Commission’s finding that such ad-
ditional country is a party to the Treaty on the Non-
proliferation of Nuclear Weapons and the Convention on
155
the Physical Protection of Nuclear Material and will re-
ceive such highly enriched uranium pursuant to an agree-
ment with the United States concerning peaceful uses of
nuclear energy.
‘‘e. The Commission shall review the adequacy of
physical protection requirements that are currently appli-
cable to the transportation of highly enriched uranium for
medical isotope production. If it determines that addi-
tional physical protection measures are necessary, includ-
ing any limits that the Commission finds are necessary
on the quantity of highly enriched uranium contained in
a single shipment for medical isotope production, the Com-
mission shall impose such requirements, as license condi-
tions or through other appropriate means.’’; and
(3) in subsection f., as so redesignated by para-
graph (1) of this section—
(A) by striking ‘‘and’’ at the end of para-
graph (2);
(B) by striking the period at the end of
paragraph (3)(B) and inserting a semicolon;
and
(C) by adding at the end the following:
‘‘(4) the term ‘medical isotopes’ means radio-
active isotopes, including Molybdenum 99, Iodine
131, and Xenon 133, that are used to produce radio-
156
pharmaceuticals for diagnostic or therapeutic proce-
dures on patients, or in connection with research
and development of radiopharmaceuticals;
‘‘(5) the term ‘highly enriched uranium for
medical isotope production’ means highly enriched
uranium contained in, or for use in, targets to be ir-
radiated for the sole purpose of producing medical
isotopes; –
‘‘(6) the term ‘radiopharmaceuticals’ means ra-
dioactive isotopes containing byproduct material
combined with chemical or biological material that
are designed to accumulate temporarily in a part of
the body, for therapeutic purposes or for enabling
the production of a useful image of the appropriate
body organ or function for use in diagnosis of med-
ical conditions; and
‘‘(7) the term ‘Recipient Country’ means Can-
ada, Belgium, France, Germany, and the Nether-
lands.’’.
SEC. 
14032. 
HIGHLY 
ENRICHED 
URANIUM 
DIVERSION
THREAT REPORT.
Section 307 of the Energy Reorganization Act of
1974 (42 U.S.C. 5877) is amended by adding at the end
the following new subsection:
157
‘‘(d) Not later than 6 months after the date of the
enactment of this Act, the Secretary of Energy shall trans-
mit to the Congress a report with recommendations on re-
ducing the threat resulting from the theft or diversion of
highly enriched uranium. Such report shall address—
‘‘(1) monitoring of highly enriched uranium
supplies at any commercial companies who have ac-
cess to substantial amounts of highly enriched ura-
nium;
‘‘(2) assistance to companies described in para-
graph (1) with security and personnel checks;
‘‘(3) acceleration of the process of blending
down excess highly enriched uranium into low-en-
riched uranium;
‘‘(4) purchasing highly enriched uranium (ex-
cept for production of medical isotopes);
‘‘(5) paying the cost of shipping highly enriched
uranium;
‘‘(6) accelerating the conversion of commercial
research reactors and energy reactors to the use of
low-enriched uranium fuel where they now use high-
ly enriched uranium fuel;
‘‘(7) minimizing, and encouraging transparency
in, the further enrichment of low-enriched uranium
to highly enriched uranium; and
158
‘‘(8) accelerating the purchase of excess weap-
ons grade plutonium and uranium from Russia to
reduce the likelihood that such plutonium and ura-
nium could be stolen or sold to terrorists.’’.
SEC. 14033. WHISTLEBLOWER PROTECTION.
(a) DEFINITION OF EMPLOYER.—Section 211(a)(2)
of the Energy Reorganization Act of 1974 (42 U.S.C.
5851(a)(2)) is amended—
(1) by striking ‘‘and’’ at the end of subpara-
graph (C);
(2) in subparagraph (D), by striking ‘‘that is
indemnified’’ and all that follows through ‘‘12344.’’
and inserting ‘‘or the Commission; and’’; and
(3) by adding at the end the following new sub-
paragraph:
‘‘(E) the Department of Energy and the Com-
mission.’’.
(b) DE NOVO REVIEW.—Subsection (b) of such sec-
tion 211 is amended by adding at the end the following
new paragraph:
‘‘(4) If the Secretary has not issued a final decision
within 180 days after the filing of a complaint under para-
graph (1), and there is no showing that such delay is due
to the bad faith of the claimant, the claimant may bring
an action at law or equity for de novo review in the appro-
159
priate district court of the United States, which shall have
jurisdiction over such an action without regard to the
amount in controversy.’’.
SEC. 14034. PREVENTING THE MISUSE OF NUCLEAR MATE-
RIALS AND TECHNOLOGY.
(a) AMENDMENT.—Chapter 14 of the Atomic Energy
Act of 1954 (42 U.S.C. 2201 et seq.) is amended by add-
ing at the end the following new section:
‘‘SEC. 170D. PREVENTING
THE MISUSE
OF NU-
CLEAR MATERIALS AND TECHNOLOGY.—
‘‘a. In order to successfully promote the development
of nuclear energy as a safe and reliable source of electrical
energy, it is the policy of the United States to prevent
any nuclear materials, technology, components, sub-
stances, technical information, or related goods or services
from being misused or diverted from peaceful nuclear en-
ergy purposes.
‘‘b. In order to further advance the policy set forth
in subsection a., notwithstanding any other provision of
law, no Federal agency shall issue any license, approval,
or authorization for the export or reexport, or the transfer
or retransfer, either directly or indirectly, to any country
whose government has been identified by the Secretary of
State as engaged in state sponsorship of terrorist activities
(specifically including any country the government of
160
which, as of September 11, 2001, had been determined
by the Secretary of State under section 620A(a) of the
Foreign Assistance Act of 1961, section 6(j)(1) of the Ex-
port Administration Act of 1979, or section 40(d) of the
Arms Export Control Act to have repeatedly provided sup-
port for acts of international terrorism) of—
‘‘(1) any special nuclear material or byproduct
material;
‘‘(2) any nuclear production or utilization facili-
ties; or
‘‘(3) any components, technologies, substances,
technical information, or related goods or services
used (or which could be used) in a nuclear produc-
tion or utilization facility.
‘‘c. Any license, approval, or authorization described
in subsection b. made prior to the date of enactment of
this section is hereby revoked.’’.
(b) TABLE OF CONTENTS AMENDMENT.—The table
of contents of such chapter 14 is amended by adding at
the end the following item:
‘‘Sec. 170D. Preventing the misuse of nuclear materials and technology.’’.
SEC. 14035. LIMITATION ON LEGAL FEE REIMBURSEMENT.
The Department of Energy shall not, except as re-
quired under a contract entered into before the date of
enactment of this Act, reimburse any contractor or sub-
contractor of the Department for any legal fees or ex-
161
penses incurred with respect to a complaint subsequent
to—
(1) an adverse determination on the merits with
respect to such complaint against the contractor or
subcontractor by the Director of the Department of
Energy’s Office of Hearings and Appeals pursuant
to section 708 of title 10, Code of Federal Regula-
tions, or by a Department of Labor Administrative
Law Judge pursuant to section 211 of the Energy
Reorganization Act of 1974 (42 U.S.C. 5851); or
(2) an adverse final judgment by any State or
Federal court with respect to such complaint against
the contractor or subcontractor for wrongful termi-
nation or retaliation due to the making of disclo-
sures protected under chapter 12 of title 5, United
States Code, section 211 of the Energy Reorganiza-
tion Act of 1974 (42 U.S.C. 5851), or any com-
parable State law,
unless the adverse determination or final judgment is re-
versed upon further administrative or judicial review.
SEC. 14036. TRANSFER.
Not later than December 31, 2003, the Secretary of
Energy shall transmit to the Congress a plan for the
transfer to the Secretary of title to, and full responsibility
for the possession, transportation, disposal, stewardship,
162
maintenance, and monitoring of, all facilities, property,
and radioactive waste at the Western New York Service
Center in West Valley, New York. The Secretary shall con-
sult with the President of the New York State Energy Re-
search and Development Authority in developing such
plan.
SEC. 14037. STUDY TO DETERMINE FEASIBILITY OF DEVEL-
OPING COMMERCIAL NUCLEAR ENERGY PRO-
DUCTION FACILITIES AT EXISTING DEPART-
MENT OF ENERGY SITES.
(a) IN GENERAL.—The Secretary of Energy shall
conduct a study to determine the feasibility of developing
commercial nuclear energy production facilities at Depart-
ment of Energy sites in existence on the date of the enact-
ment of this Act, including—
(1) options for how and where nuclear power
plants can be developed on existing Department of
Energy sites;
(2) estimates on cost savings to the Federal
Government that may be realized by locating new
nuclear power plants on Federal sites;
(3) the feasibility of incorporating new tech-
nology into nuclear power plants located on Federal
sites;
163
(4) potential improvements in the licensing and
safety oversight procedures of nuclear power plants
located on Federal sites;
(5) an assessment of the effects of nuclear
waste management policies and projects as a result
of locating nuclear power plants located on Federal
sites; and
(6) any other factors that the Secretary believes
would be relevant in making the determination.
(b) REPORT.—Not later than 90 days after the date
of the enactment of this Act, the Secretary shall submit
to Congress a report describing the results of the study
under subsection (a).
TITLE V—VEHICLES AND FUELS
Subtitle A—Energy Policy Act
Amendments
SEC. 15011. CREDIT FOR SUBSTANTIAL CONTRIBUTION TO-
WARD NONCOVERED FLEETS.
Section 508 of the Energy Policy Act of 1992 (42
U.S.C. 13258) is amended by adding at the end the fol-
lowing new subsection:
‘‘(e) CREDIT FOR SUBSTANTIAL CONTRIBUTION TO-
WARD USE OF DEDICATED VEHICLES IN NONCOVERED
FLEETS.—
‘‘(1) DEFINITIONS.—In this subsection:
165
section if the fleet or person makes a substantial
contribution toward the acquisition and use of a me-
dium or heavy duty vehicle.
‘‘(4) USE OF CREDITS.—At the request of a
fleet or covered person allocated a credit under this
subsection, the Secretary shall, for the year in which
the acquisition of the dedicated vehicle or neighbor-
hood electric vehicle is made, treat that credit as the
acquisition of 1 alternative fueled vehicle that the
fleet or covered person is required to acquire under
this title.
‘‘(5) LIMITATION.—Except as provided in para-
graph (3), no more than 1 credit shall be allocated
under this subsection for each vehicle.’’.
SEC. 15012. CREDIT FOR ALTERNATIVE FUEL INFRASTRUC-
TURE.
Section 508 of the Energy Policy Act of 1992 (42
U.S.C. 13258), as amended by this division, is further
amended by adding at the end the following new sub-
section:
‘‘(f) CREDIT
FOR INVESTMENT
IN ALTERNATIVE
FUEL INFRASTRUCTURE.—
‘‘(1) DEFINITION.—In this subsection, the term
‘qualifying infrastructure’ means—
166
‘‘(A) equipment required to refuel or re-
charge alternative fueled vehicles;
‘‘(B) facilities or equipment required to
maintain, repair, or operate alternative fueled
vehicles;
‘‘(C) training programs, educational mate-
rials, or other activities necessary to provide in-
formation regarding the operation, mainte-
nance, or benefits associated with alternative
fueled vehicles; and
‘‘(D) such other activities the Secretary
considers to constitute an appropriate expendi-
ture in support of the operation, maintenance,
or further widespread adoption of or utilization
of alternative fueled vehicles.
‘‘(2) ALLOCATION OF CREDITS.—The Secretary
shall allocate a credit to a fleet or covered person
under this section for investment in qualifying infra-
structure if the qualifying infrastructure is open to
the general public during regular business hours.
‘‘(3) AMOUNT.—For the purposes of credits
under this subsection—
‘‘(A) 1 credit shall be equal to a minimum
investment of $25,000 in cash or in kind serv-
ices, as determined by the Secretary; and
167
‘‘(B) except in the case of a Federal or
State fleet, no part of the investment may be
provided by Federal or State funds.
‘‘(4) USE OF CREDITS.—At the request of a
fleet or covered person allocated a credit under this
subsection, the Secretary shall, for the year in which
the investment is made, treat that credit as the ac-
quisition of 1 alternative fueled vehicle that the fleet
or covered person is required to acquire under this
title.’’.
SEC. 15013. ALTERNATIVE FUELED VEHICLE REPORT.
(a) DEFINITIONS.—In this section:
(1) ALTERNATIVE
FUEL.—The term ‘‘alter-
native fuel’’ has the meaning given the term in sec-
tion 301 of the Energy Policy Act of 1992 (42
U.S.C. 13211).
(2) ALTERNATIVE
FUELED
VEHICLE.—The
term ‘‘alternative fueled vehicle’’ has the meaning
given the term in section 301 of the Energy Policy
Act of 1992 (42 U.S.C. 13211).
(3) LIGHT DUTY MOTOR VEHICLE.—The term
‘‘light duty motor vehicle’’ has the meaning given
the term in section 301 of the Energy Policy Act of
1992 (42 U.S.C. 13211).
168
(4) SECRETARY.—The term ‘‘Secretary’’ means
the Secretary of Energy.
(b) REPORT.—Not later than 1 year after the date
of enactment of this Act, the Secretary shall submit to
Congress a report on the effect that titles III, IV, and
V of the Energy Policy Act of 1992 have had on the devel-
opment of alternative fueled vehicle technology, the avail-
ability of alternative fueled vehicles in the market, the cost
of light duty motor vehicles that are alternative fueled ve-
hicles, and the availability, cost, and use of alternative
fuels and biodiesel. Such report shall include any rec-
ommendations of the Secretary for legislation concerning
the alternative fueled vehicle requirements under the En-
ergy Policy Act of 1992, and shall examine, discuss, and
determine the following:
(1) The number of alternative fueled vehicles
acquired by fleets or covered persons required to ac-
quire alternative fueled vehicles.
(2) The extent to which fleets subject to alter-
native fueled vehicle acquisition requirements have
met those requirements through the use of fuel mix-
tures that contain at least 20 percent biodiesel pur-
suant to section 312 of the Energy Policy Act of
1992 (42 U.S.C. 13220).
169
(3) The amount of alternative fuel used in al-
ternative fueled vehicles acquired by fleets required
to acquire alternative fueled vehicles under the En-
ergy Policy Act of 1992.
(4) The amount of petroleum displaced by the
use of alternative fueled vehicles acquired by fleets
or covered persons.
(5) The cost of compliance with vehicle acquisi-
tion requirements under the Energy Policy Act of
1992, and the benefits of using such fuel and vehi-
cles.
(6) Projections of the amount of biodiesel, the
number of alternative fueled vehicles, and the
amount of alternative fuel that will be used over the
next decade by fleets required to acquire alternative
fueled vehicles under the Energy Policy Act of 1992.
(7) The existence of any obstacles to increased
use of alternative fuel and biodiesel in vehicles ac-
quired or maintained by fleets required to acquire al-
ternative fueled vehicles under the Energy Policy
Act of 1992, and the benefits of using such fuel and
vehicles.
170
SEC. 15014. ALLOCATION OF INCREMENTAL COSTS.
Section 303(c) of the Energy Policy Act of 1992 (42
U.S.C. 13212(c)) is amended by striking ‘‘may’’ and in-
serting ‘‘shall’’.
Subtitle B—Advanced Vehicles
SEC. 15021. DEFINITIONS.
For the purposes of this subtitle, the following defini-
tions apply:
(1) ALTERNATIVE
FUELED
VEHICLE..—The
term ‘‘alternative fueled vehicle’’ means a vehicle
propelled solely on an alternative fuel as defined in
section 301 of the Energy Policy Act of 1992 (42
U.S.C. 13211), except the term does not include any
vehicle that the Secretary determines, by rule, does
not yield substantial environmental benefits over a
vehicle operating solely on gasoline or diesel derived
from fossil fuels.
(2) FUEL CELL VEHICLE.—The term ‘‘fuel cell
vehicle’’ means a vehicle propelled by an electric
motor powered by a fuel cell system that converts
chemical energy into electricity by combining oxygen
(from air) with hydrogen fuel that is stored on the
vehicle or is produced onboard by reformation of a
hydrocarbon fuel. Such fuel cell system may or may
not include the use of auxiliary energy storage sys-
tems to enhance vehicle performance.
171
(3) HYBRID VEHICLE.—The term ‘‘hybrid vehi-
cle’’ means a medium or heavy duty vehicle propelled
by an internal combustion engine or heat engine
using any combustible fuel and an onboard recharge-
able energy storage device.
(4) NEIGHBORHOOD ELECTRIC VEHICLE.—The
term ‘‘neighborhood electric vehicle’’ means a motor
vehicle capable of traveling at speeds of 25 miles per
hour that is—
(A) a low-speed vehicle, as such term is de-
fined in section 571.3(b) of title 49, Code of
Federal Regulations;
(B) a zero-emission vehicle, as such term is
defined in section 86.1702–99 of title 40, Code
of Federal Regulations; and
(C) otherwise lawful to use on local streets.
(5) PILOT
PROGRAM.—The term ‘‘pilot pro-
gram’’ means the competitive grant program estab-
lished under section 15022.
(6) ULTRA-LOW
SULFUR
DIESEL
VEHICLE.—
The term ‘‘ultra-low sulfur diesel vehicle’’ means a
vehicle manufactured in model years 2002 through
2006 powered by a heavy-duty diesel engine that—
172
(A) is fueled by diesel fuel which contains
sulfur at not more than 15 parts per million;
and
(B) emits not more than the lesser of—
(i) for vehicles manufactured in—
(I) model years 2002 and 2003,
3.0 grams per brake horsepower-hour
of oxides of nitrogen and .01 grams
per brake horsepower-hour of particu-
late matter; and
(II) model years 2004 through
2006, 2.5 grams per brake horse-
power-hour of nonmethane hydro-
carbons and oxides of nitrogen and
.01 grams per brake horsepower-hour
of particulate matter; or
(ii) the emissions of nonmethane hy-
drocarbons, oxides of nitrogen, and partic-
ulate matter of the best performing tech-
nology of ultra-low sulfur diesel vehicles of
the same class and application that are
commercially available.
SEC. 15022. PILOT PROGRAM.
(a) ESTABLISHMENT.—The Secretary shall establish
a competitive grant pilot program, to be administered
173
through the Clean Cities Program of the Department of
Energy, to provide not more than 10 geographically dis-
persed project grants to State governments, local govern-
ments, or metropolitan transportation authorities to carry
out a project or projects for the purposes described in sub-
section (b).
(b) GRANT PURPOSES.—Grants under this section
may be used for the following purposes:
(1) The acquisition of alternative fueled vehicles
or fuel cell vehicles, including—
(A) passenger vehicles including neighbor-
hood electric vehicles; and
(B) motorized two-wheel bicycles, scooters,
or other vehicles for use by law enforcement
personnel or other State or local government or
metropolitan transportation authority employ-
ees.
(2) The acquisition of alternative fueled vehi-
cles, hybrid vehicles, or fuel cell vehicles, including—
(A) buses used for public transportation or
transportation to and from schools;
(B) delivery vehicles for goods or services;
and
174
(C) ground support vehicles at public air-
ports, including vehicles to carry baggage or
push airplanes away from terminal gates.
(3) The acquisition of ultra-low sulfur diesel ve-
hicles.
(4) Infrastructure necessary to directly support
an alternative fueled vehicle, fuel cell vehicle, or hy-
brid vehicle project funded by the grant, including
fueling and other support equipment.
(5) Operation and maintenance of vehicles, in-
frastructure, and equipment acquired as part of a
project funded by the grant.
(c) APPLICATIONS.—
(1) REQUIREMENTS.—The Secretary shall issue
requirements for applying for grants under the pilot
program. At a minimum, the Secretary shall require
that applications be submitted by the head of a
State or local government or a metropolitan trans-
portation authority, or any combination thereof, and
a registered participant in the Clean Cities Program
of the Department of Energy, and shall include—
(A) a description of the projects proposed
in the application, including how they meet the
requirements of this subtitle;
175
(B) an estimate of the ridership or degree
of use of the projects proposed in the applica-
tion;
(C) an estimate of the air pollution emis-
sions reduced and fossil fuel displaced as a re-
sult of the projects proposed in the application,
and a plan to collect and disseminate environ-
mental data, related to the projects to be fund-
ed under the grant, over the life of the projects;
(D) a description of how the projects pro-
posed in the application will be sustainable
without Federal assistance after the completion
of the term of the grant;
(E) a complete description of the costs of
each project proposed in the application, includ-
ing acquisition, construction, operation, and
maintenance costs over the expected life of the
project;
(F) a description of which costs of the
projects proposed in the application will be sup-
ported by Federal assistance under this subtitle;
and
(G) documentation to the satisfaction of
the Secretary that diesel fuel containing sulfur
at not more than 15 parts per million is avail-
176
able for carrying out the projects, and a com-
mitment by the applicant to use such fuel in
carrying out the projects.
(2) PARTNERS.—An applicant under paragraph
(1) may carry out projects under the pilot program
in partnership with public and private entities.
(d) SELECTION CRITERIA.—In evaluating applica-
tions under the pilot program, the Secretary shall consider
each applicant’s previous experience with similar projects
and shall give priority consideration to applications that—
(1) are most likely to maximize protection of
the environment;
(2) demonstrate the greatest commitment on
the part of the applicant to ensure funding for the
proposed projects and the greatest likelihood that
each project proposed in the application will be
maintained or expanded after Federal assistance
under this subtitle is completed; and
(3) exceed the minimum requirements of sub-
section (c)(1)(A).
(e) PILOT PROJECT REQUIREMENTS.—
(1) MAXIMUM
AMOUNT.—The Secretary shall
not provide more than $20,000,000 in Federal as-
sistance under the pilot program to any applicant.
177
(2) COST SHARING.—The Secretary shall not
provide more than 50 percent of the cost, incurred
during the period of the grant, of any project under
the pilot program.
(3) MAXIMUM PERIOD OF GRANTS.—The Sec-
retary shall not fund any applicant under the pilot
program for more than 5 years.
(4) DEPLOYMENT
AND
DISTRIBUTION.—The
Secretary shall seek to the maximum extent prac-
ticable to ensure a broad geographic distribution of
project sites.
(5) TRANSFER OF INFORMATION AND KNOWL-
EDGE.—The Secretary shall establish mechanisms to
ensure that the information and knowledge gained
by participants in the pilot program are transferred
among the pilot program participants and to other
interested parties, including other applicants that
submitted applications.
(f) SCHEDULE.—
(1) PUBLICATION.—Not later than 3 months
after the date of the enactment of this Act, the Sec-
retary shall publish in the Federal Register, Com-
merce Business Daily, and elsewhere as appropriate,
a request for applications to undertake projects
178
under the pilot program. Applications shall be due
within 6 months of the publication of the notice.
(2) SELECTION.—Not later than 6 months after
the date by which applications for grants are due,
the Secretary shall select by competitive, peer review
all applications for projects to be awarded a grant
under the pilot program.
(g) LIMIT ON FUNDING.—The Secretary shall pro-
vide not less than 20 percent and not more than 25 per-
cent of the grant funding made available under this sec-
tion for the acquisition of ultra-low sulfur diesel vehicles.
SEC. 15023. REPORTS TO CONGRESS.
(a) INITIAL REPORT.—Not later than 2 months after
the date grants are awarded under this subtitle, the Sec-
retary shall transmit to the Congress a report
containing—
(1) an identification of the grant recipients and
a description of the projects to be funded;
(2) an identification of other applicants that
submitted applications for the pilot program; and
(3) a description of the mechanisms used by the
Secretary to ensure that the information and knowl-
edge gained by participants in the pilot program are
transferred among the pilot program participants
179
and to other interested parties, including other ap-
plicants that submitted applications.
(b) EVALUATION.—Not later than 3 years after the
date of the enactment of this Act, and annually thereafter
until the pilot program ends, the Secretary shall transmit
to the Congress a report containing an evaluation of the
effectiveness of the pilot program, including an assessment
of the benefits to the environment derived from the
projects included in the pilot program as well as an esti-
mate of the potential benefits to the environment to be
derived from widespread application of alternative fueled
vehicles and ultra-low sulfur diesel vehicles.
SEC. 15024. AUTHORIZATION OF APPROPRIATIONS.
There are authorized to be appropriated to the Sec-
retary $200,000,000 to carry out this subtitle, to remain
available until expended.
Subtitle C—Hydrogen Fuel Cell
Heavy-Duty Vehicles
SEC. 15031. DEFINITION.
For the purposes of this subtitle, the term ‘‘advanced
vehicle technologies program’’ means the program created
pursuant to section 5506 of title 49, United States Code.
SEC. 15032. FINDINGS.
The Congress makes the following findings:
180
(1) The Department of Energy and the Depart-
ment of Transportation jointly developed the consor-
tium-based advanced vehicle technologies program to
develop energy efficient and clean heavy-duty vehi-
cles in 1998.
(2) The majority of clean fuel vehicles in oper-
ation today are transit buses.
(3) Hydrogen fuel cell heavy-duty vehicle bus
deployments can most appropriately advance hydro-
gen fuel cell technology development due to central-
ized refueling, stable duty cycles, and fixed routes.
(4) Hydrogen fuel cell heavy-duty vehicle bus
deployments are the most effective manner in which
to advance technology developments for public
awareness, consumption, and acceptance.
SEC. 15033. HYDROGEN FUEL CELL BUSES.
The Secretary of Energy, through the advanced vehi-
cle technologies program, in coordination with the Sec-
retary of Transportation, shall advance the development
of fuel cell bus technologies by providing funding for 4
demonstration sites that—
(1) have or will soon have hydrogen infrastruc-
ture for fuel cell bus operation; and
(2) are operated by entities with experience in
the development of fuel cell bus technologies,
181
to enable the widespread utilization of fuel cell buses. Such
demonstrations shall address the reliability of fuel cell
heavy-duty vehicles, expense, infrastructure, containment,
storage, safety, training, and other issues.
SEC. 15034. AUTHORIZATION OF APPROPRIATIONS.
There are authorized to be appropriated to the Sec-
retary of Energy $10,000,000 for each of the fiscal years
2004 through 2008 for carrying out this subtitle.
Subtitle D—Miscellaneous
SEC. 15041. RAILROAD EFFICIENCY.
(a) ESTABLISHMENT.—The Secretary shall, in con-
junction with the Secretary of Transportation and the Ad-
ministrator of the Environmental Protection Agency, es-
tablish a public-private research partnership involving the
Federal Government, the railroad industry, locomotive
manufacturers and equipment suppliers, and the research
facility owned by the Federal Railroad Administration and
operated by contract. The goal of the research partnership
shall include developing and demonstrating locomotive
technologies that increase fuel economy, reduce emissions,
and lower costs.
(b) AUTHORIZATION
OF APPROPRIATIONS.—There
are authorized to be appropriated to carry out the require-
ments of this section $25,000,000 for fiscal year 2004,
182
$30,000,000 for fiscal year 2005, and $35,000,000 for fis-
cal year 2006.
SEC. 15042. MOBILE EMISSION REDUCTIONS TRADING AND
CREDITING.
Within 180 days after the date of enactment of this
Act, the Administrator of the Environmental Protection
Agency shall provide a report to the Congress on the Envi-
ronmental Protection Agency’s experience with the trading
of mobile source emission reduction credits for use by own-
ers and operators of stationary source emission sources
to meet emission offset requirements within a nonattain-
ment area. The report shall describe—
(1) projects approved by the Environmental
Protection Agency that include the trading of mobile
source emission reduction credits for use by sta-
tionary sources in complying with offset require-
ments, including project and stationary sources loca-
tion, volumes of emissions offset and traded, a de-
scription of the sources of mobile emission reduction
credits, and, if available, the cost of the credits;
(2) the significant issues identified by the Envi-
ronmental Protection Agency in its consideration
and approval of trading in such projects;
(3) the requirements for monitoring and assess-
ing the air quality benefits of any approved project;
183
(4) the statutory authority upon which the En-
vironmental Protection Agency has based approval
of such projects;
(5) an evaluation of how the resolution of issues
in approved projects could be utilized in other
projects; and
(6) any other issues the Environmental Protec-
tion Agency considers relevant to the trading and
generation of mobile source emission reduction cred-
its for use by stationary sources or for other pur-
poses.
SEC. 15043. IDLE REDUCTION TECHNOLOGIES.
(a) DEFINITIONS.—For purposes of this section:
(1) IDLE REDUCTION TECHNOLOGY.—The term
‘‘idle reduction technology’’ means a device or sys-
tem of devices utilized to reduce long-duration idling
of a heavy-duty vehicle.
(2) HEAVY-DUTY VEHICLE.—The term ‘‘heavy-
duty vehicle’’ means a vehicle that has a gross vehi-
cle weight rating greater than 26,000 pounds and is
powered by a diesel engine.
(3) LONG-DURATION IDLING.—The term ‘‘long-
duration idling’’ means the operation of a main drive
engine, for a period greater than 15 consecutive
minutes, where the main drive engine is not engaged
184
in gear. Such term does not apply to routine stop-
pages associated with traffic movement or conges-
tion.
(b) STUDIES OF THE BENEFITS OF IDLE REDUCTION
TECHNOLOGIES.—
(1) POTENTIAL FUEL SAVINGS.—Not later than
90 days after the date of enactment of this section,
the Secretary of Energy shall, in consultation with
the Secretary of Transportation, commence a study
to analyze the potential fuel savings resulting from
use of idle reduction technologies.
(2) RECOGNITION OF BENEFITS OF ADVANCED
IDLE REDUCTION TECHNOLOGIES.—Within 90 days
after the date of enactment of this section, the Ad-
ministrator of the Environmental Protection Agency
is directed to commence a review of the Agency’s
mobile source air emissions models used under the
Clean Air Act to determine whether such models ac-
curately reflect the emissions resulting from long-du-
ration idling of heavy-duty trucks and other vehicles
and engines, and shall update those models as the
Administrator deems appropriate. Additionally, with-
in 90 days after the date of enactment of this sec-
tion, the Administrator shall commence a review as
to the appropriate emissions reductions credit that
185
should be allotted under the Clean Air Act for the
use of advanced idle reduction technologies, and
whether such credits should be subject to an emis-
sions trading system, and shall revise Agency regula-
tions and guidance as the Administrator deems ap-
propriate.
(3) IDLING
TECHNOLOGIES.—Not later than
180 days after the date of the enactment of this sec-
tion, the Secretary of Energy, in consultation with
the Secretary of Transportation and the Adminis-
trator of the Environmental Protection Agency, shall
commence a study to analyze where heavy duty and
other vehicles stop for long duration idling.
(c) VEHICLE WEIGHT EXEMPTION.—Section 127(a)
of title 23, United States Code, is amended by adding at
the end the following: ‘‘In instances where an idle reduc-
tion technology is installed onboard a motor vehicle, the
maximum gross vehicle weight limit and the axle weight
limit for any motor vehicle equipped with an idling reduc-
tion system may be increased by an amount necessary to
compensate for the additional weight of the idling reduc-
tion system, except that the weight limit increase shall be
no greater than 400 pounds.’’.
186
SEC. 15044. STUDY OF AVIATION FUEL CONSERVATION AND
EMISSIONS.
The Administrator of the Federal Aviation Adminis-
tration and the Administrator of the Environmental Pro-
tection Agency shall jointly commence a study within 60
days after the date of enactment of this Act to identify
the impact of aircraft emissions on air quality in non-
attainment areas and to identify ways to promote fuel con-
servation measures for aviation, enhance fuel efficiency,
and reduce emissions. As part of this study, the Adminis-
trator of the Federal Aviation Administration and the Ad-
ministrator of the Environmental Protection Agency shall
focus on how air traffic management inefficiencies, such
as aircraft idling at airports, result in unnecessary fuel
burn and air emissions. Within 180 days after the com-
mencement of the study, the Administrator of the Federal
Aviation Administration and the Administrator of the En-
vironmental Protection Agency shall submit a report to
the Committees on Energy and Commerce and Transpor-
tation and Infrastructure of the House of Representatives
and the Committees on Environment and Public Works
and Commerce, Science, and Transportation of the Senate
containing the results of the study and recommendations
as to how unnecessary fuel use and emissions affecting
air quality may be reduced, without impacting safety and
security, increasing individual aircraft noise, and taking
187
into account all aircraft emissions and their relative im-
pact on human health.
SEC. 15045. DIESEL FUELED VEHICLES.
(a) DIESEL COMBUSTION AND AFTER TREATMENT
TECHNOLOGIES.—The Secretary of Energy shall accel-
erate efforts to improve diesel combustion and after-treat-
ment technologies for use in diesel fueled motor vehicles.
(b) GOAL.—
(1) COMPLIANCE
WITH
TIER
EMISSION
STANDARDS BY 2010.—The Secretary shall carry out
subsection (a) with a view to developing and dem-
onstrating diesel technology meeting tier 2 emission
standards not later than 2010.
(2) TIER 2 EMISSION STANDARDS DEFINED.—
In this subsection, the term ‘‘tier 2 emission stand-
ards’’ means the motor vehicle emission standards
promulgated by the Administrator of the Environ-
mental Protection Agency on February 10, 2000,
under sections 202 and 211 of the Clean Air Act to
apply to passenger cars, light trucks, and larger pas-
senger vehicles of model years after the 2003 vehicle
model year.
188
SEC. 15046. WAIVERS OF ALTERNATIVE FUELED VEHICLE
FUELING REQUIREMENT.
Section 400AA(a)(3)(E) of the Energy Policy and
Conservation Act (42 U.S.C. 6374(a)(3)(E)) is amended
to read as follows:
‘‘(E)(i) Dual fueled vehicles acquired pursuant to this
section shall be operated on alternative fuels unless the
Secretary determines that an agency needs a waiver of
such requirement for vehicles in the fleet of the agency
in a particular geographic area where—
‘‘(I) the alternative fuel otherwise required to
be used in the vehicle is not reasonably available to
retail purchasers of the fuel, as certified to the Sec-
retary by the head of the agency; or
‘‘(II) the cost of the alternative fuel otherwise
required to be used in the vehicle is unreasonably
more expensive compared to gasoline, as certified by
the head of the agency.
‘‘(ii) The Secretary shall monitor compliance with
this subparagraph by all such fleets and shall report annu-
ally to the Congress on the extent to which the require-
ments of this subparagraph are being achieved. The report
shall include information on annual reductions achieved
of petroleum-based fuels and the problems, if any, encoun-
tered in acquiring alternative fuels.’’.
189
SEC. 15047. TOTAL INTEGRATED THERMAL SYSTEMS.
The Secretary shall—
(1) conduct a study of the benefits of total inte-
grated thermal systems in reducing demand for oil
and protecting the environment; and
(2) examine the feasibility of using total inte-
grated thermal systems in Department of Defense
and other Federal motor vehicle fleets.
SEC. 15048. OIL BYPASS FILTRATION TECHNOLOGY.
The Secretary of Energy and the Administrator of
the Environmental Protection Agency shall—
(1) conduct a joint study of the benefits of oil
bypass filtration technology in reducing demand for
oil and protecting the environment; and
(2) examine the feasibility of using oil bypass
filtration technology in Federal motor vehicle fleets.
SEC. 15049. NATURAL GAS CONDENSATE STUDY.
Not later than 18 months after the date of enactment
of this Act, the Secretary of Energy, in consultation with
the Administrator of the Environmental Protection Agen-
cy, shall transmit to the Congress the results of a study
to consider fuels derived from natural gas condensate and
the appropriate blending of such condensates. The study
shall consider—
(1) usage options;
(2) potential volume capacities;
190
(3) costs;
(4) air emissions;
(5) fuel efficiencies; and
(6) potential use in the Federal fleet program
under title III of the Energy Policy Act of 1992 (42
U.S.C. 13201 et seq.).
SEC. 15050. STUDY ON REDUCING PETROLEUM CONSUMP-
TION.
(a) IN GENERAL.—The Administrator of General
Services, in cooperation with the Secretary of Energy,
shall conduct a study to consider the merits of establishing
performance measures to guide the reduction of petroleum
consumption by Federal fleets.
(b) MATTERS TO BE ADDRESSED.—The study shall
assess the feasibility of performance measures—
(1) to enable agency and congressional decision-
makers to establish annual and long-term perform-
ance goals to define the level of petroleum consump-
tion reduction to be achieved by Federal fleets;
(2) to improve the effectiveness and account-
ability of Federal efforts to reduce petroleum con-
sumption and dependency;
(3) to enhance decisionmaking by providing ob-
jective information on achieving performance objec-
tives; and
191
(4) to provide an alternative to the mandated
alternative fueled vehicle requirements in section
303 of the Energy Policy Act of 1992 (42 U.S.C.
13212).
(c) REPORT.—Not later than 12 months after the
date of enactment of this Act, the Administrator shall sub-
mit to the Committees on Environment and Public Works
and Governmental Affairs of the Senate and the Commit-
tees on Energy and Commerce and Government Reform
of the House of Representatives a report on the study.
SEC. 15051. CONSERVE BY BICYCLING PROGRAM.
(a) DEFINITIONS.—In this section:
(1) PROGRAM.—The term ‘‘program’’ means
the Conserve by Bicycling Program established by
subsection (b).
(2) SECRETARY.—The term ‘‘Secretary’’ means
the Secretary of Transportation.
(b) ESTABLISHMENT.—There is established within
the Department of Transportation a program to be known
as the ‘‘Conserve by Bicycling Program’’.
(c) PROJECTS.—
(1) IN GENERAL.—In carrying out the program,
the Secretary shall establish not more than 10 pilot
projects that are—
192
(A) dispersed geographically throughout
the United States; and
(B) designed to conserve energy resources
by encouraging the use of bicycles in place of
motor vehicles.
(2) REQUIREMENTS.—A pilot project described
in paragraph (1) shall—
(A) use education and marketing to con-
vert motor vehicle trips to bicycle trips;
(B) document project results and energy
savings (in estimated units of energy con-
served);
(C) facilitate partnerships among inter-
ested parties in at least 2 of the fields of—
(i) transportation;
(ii) law enforcement;
(iii) education;
(iv) public health;
(v) environment; and
(vi) energy;
(D) maximize bicycle facility investments;
(E) demonstrate methods that may be
used in other regions of the United States; and
(F) facilitate the continuation of ongoing
programs that are sustained by local resources.
193
(3) COST SHARING.—At least 20 percent of the
cost of each pilot project described in paragraph (1)
shall be provided from State or local sources.
(d) ENERGY AND BICYCLING RESEARCH STUDY.—
(1) IN GENERAL.—Not later than 2 years after
the date of enactment of this Act, the Secretary
shall enter into a contract with the National Acad-
emy of Sciences for, and the National Academy of
Sciences shall conduct and submit to Congress a re-
port on, a study on the feasibility of converting
motor vehicle trips to bicycle trips.
(2) COMPONENTS.—The study shall—
(A) document the results or progress of
the pilot projects under subsection (c);
(B) determine the type and duration of
motor vehicle trips that people in the United
States may feasibly make by bicycle, taking into
consideration factors such as—
(i) weather;
(ii) land use and traffic patterns;
(iii) the carrying capacity of bicycles;
and
(iv) bicycle infrastructure;
194
(C) determine any energy savings that
would result from the conversion of motor vehi-
cle trips to bicycle trips;
(D) include a cost-benefit analysis of bicy-
cle infrastructure investments; and
(E) include a description of any factors
that would encourage more motor vehicle trips
to be replaced with bicycle trips.
(e) AUTHORIZATION OF APPROPRIATIONS.—There is
authorized to be appropriated to carry out this section
$6,200,000, to remain available until expended, of
which—
(1) $5,150,000 shall be used to carry out pilot
projects described in subsection (c);
(2) $300,000 shall be used by the Secretary to
coordinate, publicize, and disseminate the results of
the program; and
(3) $750,000 shall be used to carry out sub-
section (d).
195
TITLE VI—ELECTRICITY
Subtitle A—Transmission Capacity
SEC. 16011. TRANSMISSION INFRASTRUCTURE IMPROVE-
MENT RULEMAKING.
Part II of the Federal Power Act (16 U.S.C. 824 et
seq.) is amended by adding the following new section at
the end thereof:
‘‘SEC. 215. TRANSMISSION INFRASTRUCTURE IMPROVE-
MENT RULEMAKING.
‘‘(a) RULEMAKING REQUIREMENT.—Within 1 year
after the enactment of this section, the Commission shall
establish, by rule, incentive-based (including but not lim-
ited to performance-based) transmission rate treatments
to promote capital investment in the enlargement and im-
provement of facilities for the transmission of electric en-
ergy in interstate commerce as appropriate to—
‘‘(1) promote economically efficient trans-
mission and generation of electricity;
‘‘(2) provide a return on equity that attracts
new investment in transmission facilities and reason-
ably reflects the risks taken by public utilities in re-
structuring control of transmission assets; and
‘‘(3) encourage deployment of transmission
technologies and other measures to increase the ca-
196
pacity and efficiency of existing transmission facili-
ties and improve the operation of such facilities.
The Commission may, from time to time, revise such rule.
‘‘(b) FUNDING OF CERTAIN FACILITIES.—The rule
promulgated pursuant to this section shall provide that,
upon the request of a regional transmission organization
or other Commission-approved transmission organization,
new transmission facilities that increase the transfer capa-
bility of the transmission system shall be participant fund-
ed. In such rules, the Commission shall also provide guid-
ance as to what types of facilities may be participant fund-
ed.
‘‘(c) JUST AND REASONABLE RATES.—With respect
to any transmission rate filed with the Commission on or
after the effective date of the rule promulgated under this
section, the Commission shall, in its review of such rate
under sections 205 and 206, apply the rules adopted pur-
suant to this section, including any revisions thereto.
Nothing in this section shall be construed to override,
weaken, or conflict with the procedural and other require-
ments of this part, including the requirement of sections
205 and 206 that all rates, charges, terms, and conditions
be just and reasonable and not unduly discriminatory or
preferential.’’.
197
SEC. 16012. SITING OF INTERSTATE ELECTRICAL TRANS-
MISSION FACILITIES.
(a) AMENDMENT OF FEDERAL POWER ACT.—Part
II of the Federal Power Act is amended by adding at the
end the following:
‘‘SEC. 216. SITING OF INTERSTATE ELECTRICAL TRANS-
MISSION FACILITIES.
‘‘(a) TRANSMISSION
STUDIES.—Within one year
after the enactment of this section, and every 3 years
thereafter, the Secretary of Energy shall conduct a study
of electric transmission congestion. After considering al-
ternatives and recommendations from interested parties
the Secretary shall issue a report, based on such study,
which may designate one or more geographic areas experi-
encing electric energy transmission congestion as ‘inter-
state congestion areas’.
‘‘(b) CONSTRUCTION PERMIT.—The Commission is
authorized, after notice and an opportunity for hearing,
to issue permits for the construction or modification of
electric transmission facilities in interstate congestion
areas designated by the Secretary under subsection (a) if
the Commission makes each of the following findings:
‘‘(1) A finding that—
‘‘(A) the State in which the transmission
facilities are to be constructed or modified is
198
without authority to approve the siting of the
facilities, or
‘‘(B) a State commission or body in the
State in which the transmission facilities are to
be constructed or modified that has authority to
approve the siting of the facilities has withheld
approval, conditioned its approval in such a
manner that the proposed construction or modi-
fication will not significantly reduce trans-
mission congestion in interstate commerce and
is otherwise not economically feasible, or de-
layed final approval for more than one year
after the filing of an application seeking ap-
proval or one year after the designation of the
relevant interstate congestion area, whichever is
later.
‘‘(2) A finding that the facilities to be author-
ized by the permit will be used for the transmission
of electric energy in interstate commerce.
‘‘(3) A finding that the proposed construction
or modification is consistent with the public interest.
‘‘(4) A finding that the proposed construction
or modification will significantly reduce transmission
congestion in interstate commerce.
199
The Commission may include in a permit issued under this
section conditions consistent with the public interest.
‘‘(c) PERMIT APPLICATIONS.—Permit applications
under subsection (b) shall be made in writing to the Com-
mission and verified under oath. The Commission shall
issue rules setting forth the form of the application, the
information it is to contain, and the manner of service of
notice of the permit application upon interested persons.
‘‘(d) COMMENTS.—In any proceeding before the
Commission under subsection (b), the Commission shall
afford each State in which a transmission facility covered
by the permit is or will be located, each affected Federal
agency and Indian tribe, private property owners, and
other interested persons, a reasonable opportunity to
present their views and recommendations with respect to
the need for and impact of a facility covered by the permit.
‘‘(e) RIGHTS-OF-WAY.—In the case of a permit under
subsection (b) for electric transmission facilities to be lo-
cated on property other than property owned by the
United States or a State, if the permit holder cannot ac-
quire by contract, or is unable to agree with the owner
of the property to the compensation to be paid for, the
necessary right-of-way to construct or modify such trans-
mission facilities, the permit holder may acquire the right-
of-way by the exercise of the right of eminent domain in
200
the district court of the United States for the district in
which the property concerned is located, or in the appro-
priate court of the State in which the property is located.
The practice and procedure in any action or proceeding
for that purpose in the district court of the United States
shall conform as nearly as may be with the practice and
procedure in similar action or proceeding in the courts of
the State where the property is situated.
‘‘(f) STATE LAW.—Nothing in this section shall pre-
clude any person from constructing any transmission fa-
cilities pursuant to State law.
‘‘(g) COMPLIANCE WITH OTHER LAWS.—Commis-
sion action under this section shall be subject to the Na-
tional Environmental Policy Act of 1969 (42 U.S.C. 4321
et seq.) and all other applicable Federal laws.
‘‘(h) COMPENSATION.—Any exercise of eminent do-
main authority pursuant to this section shall be considered
a taking of private property for which just compensation
is due. Just compensation shall be an amount equal to
the full fair market value of the property taken on the
date of the exercise of eminent domain authority, except
that the compensation shall exceed fair market value if
necessary to make the landowner whole for decreases in
the value of any portion of the land not subject to eminent
domain. Any parcel of land acquired by eminent domain
201
under this subsection shall be transferred back to the
owner from whom it was acquired (or his heirs or assigns)
if the land is not used for power line construction or modi-
fication within a reasonable period of time after the acqui-
sition. Property acquired under this subsection may not
be used for any heritage area, recreational trail, or park,
or for any other purpose (other than power line construc-
tion or modification, and for power line operation and
maintenance) without the consent of the owner of the par-
cel from whom the property was acquired (or his heirs or
assigns).
‘‘(i) ERCOT.—Nothing in this section shall be con-
strued to authorize any interconnection with any facility
owned or operated by an entity referred to in section
212(k)(2)(B).
‘‘(j) RIGHTS OF WAY ON FEDERAL LANDS.—
‘‘(1) LEAD AGENCY.—If an applicant, or pro-
spective applicant, for Federal authorization related
to an electricity transmission or distribution facility
so requests, the Department of Energy (DOE) shall
act as the lead agency for purposes of coordinating
all applicable Federal authorization and related envi-
ronmental review of the facility. The term ‘Federal
authorization’ shall mean any authorization required
under Federal law in order to site a transmission or
202
distribution facility, including but not limited to
such permits, special use authorizations, certifi-
cations, opinions, or other approvals as may be re-
quired, whether issued by a Federal or a State agen-
cy. To the maximum extent practicable under appli-
cable Federal law, the Secretary of Energy shall co-
ordinate this Federal authorization and review proc-
ess with any Indian tribes, multi-State entities, and
State agencies that are responsible for conducting
any separate permitting and environmental reviews
of the facility, to ensure timely and efficient review
and permit decisions.
‘‘(2) AUTHORITY TO SET DEADLINES.—As lead
agency, the Department of Energy, in consultation
with other Federal and, as appropriate, with Indian
tribes, multi-State entities, and State agencies that
are willing to coordinate their own separate permit-
ting and environmental reviews with the Federal au-
thorization and environmental reviews, shall estab-
lish prompt and binding intermediate milestones and
ultimate deadlines for the review of and Federal au-
thorization decisions relating to the proposed facil-
ity. The Secretary of Energy shall ensure that once
an application has been submitted with such data as
the Secretary deems necessary, all permit decisions
203
and related environmental reviews under all applica-
ble Federal laws shall be completed within 1 year or,
if a requirement of another provision of Federal law
makes this impossible, as soon thereafter as is prac-
ticable. The Secretary of Energy also shall provide
an expeditious pre-application mechanism for pro-
spective applicants to confer with the agencies in-
volved to have each such agency determine and com-
municate to the prospective applicant within 60 days
of when the prospective applicant submits a request
for such information concerning—
‘‘(A) the likelihood of approval for a poten-
tial facility; and
‘‘(B) key issues of concern to the agencies
and public.
‘‘(3) CONSOLIDATED ENVIRONMENTAL REVIEW
AND RECORD OF DECISION.—The Secretary of En-
ergy, in consultation with the affected agencies, shall
prepare a single environmental review document,
which shall be used as the basis for all decisions on
the proposed project under Federal law. The docu-
ment may be an environmental assessment or envi-
ronmental impact statement under the National En-
vironmental Policy Act of 1969 if warranted, or such
other form of analysis as may be warranted. DOE
204
and other agencies shall streamline the review and
permitting of transmission and distribution facilities
within corridors designated under section 503 of the
Federal Land Policy and Management Act (43
U.S.C. 1763) by fully taking into account prior anal-
yses and decisions as to the corridors. The document
under this section may consist of or include an envi-
ronmental assessment, if allowed by law, or an envi-
ronmental impact statement, if warranted or re-
quired by law, or such other form of analysis as war-
ranted, consistent with any requirement of the Na-
tional Environmental Policy Act, the Federal Land
Policy and Management Act, or any other applicable
law. Such document shall include consideration by
the relevant agencies of any applicable criteria or
other matters as required under applicable laws.
‘‘(4) APPEALS.—In the event that any agency
has denied a Federal authorization required for a
transmission or distribution facility, or has failed to
act by the deadline established by the Secretary pur-
suant to this section for deciding whether to issue
the authorization, the applicant or any State in
which the facility would be located may file an ap-
peal with the Secretary of Energy, who shall, in con-
sultation with the affected agency, review the denial
205
or take action on the pending application. Based on
the overall record and in consultation with the af-
fected agency, the Secretary may then either issue
the necessary authorization with any appropriate
conditions, or deny the application. The Secretary
shall issue a decision within 90 days of the filing of
the appeal. In making a decision under this para-
graph, the Secretary shall comply with all applicable
requirements of Federal law, including any require-
ments of the Endangered Species Act, the Clean
Water Act, the National Forest Management Act,
the National Environmental Policy Act, and the
Federal Land Management and Policy Act.
‘‘(5) CONFORMING REGULATIONS AND MEMO-
RANDA OF AGREEMENT.—Not later than 18 months
after the date of enactment of this section, the Sec-
retary of Energy shall issue any regulations nec-
essary to implement the foregoing provisions. Not
later than 1 year after the date of enactment of this
section, the Secretary and the heads of all relevant
Federal departments and non-departmental agencies
shall, and interested Indian tribes, multi-State enti-
ties, and State agencies may, enter into Memoranda
of Agreement to ensure the timely and coordinated
review and permitting of electricity transmission and
206
distribution facilities. The head of each Federal de-
partment or non-departmental agency with approval
authority shall designate a senior responsible official
and dedicate sufficient other staff and resources to
ensure that the DOE regulations and any Memo-
randa are fully implemented.
‘‘(6) MISCELLANEOUS.—Each Federal author-
ization for an electricity transmission or distribution
facility shall be issued for a duration, as determined
by the Secretary of Energy, commensurate with the
anticipated use of the facility and with appropriate
authority to manage the right-of-way for reliability
and environmental protection. Further, when such
authorizations expire, they shall be reviewed for re-
newal taking fully into account reliance on such elec-
tricity infrastructure, recognizing its importance for
public health, safety and economic welfare and as a
legitimate use of Federal lands.
‘‘(7) MAINTAINING
AND
ENHANCING
THE
TRANSMISSION INFRASTRUCTURE.—In exercising the
responsibilities under this section, the Secretary of
Energy shall consult regularly with the Federal En-
ergy Regulatory Commission (FERC) and FERC-
approved Regional Transmission Organizations and
Independent System Operators.
207
‘‘(k) INTERSTATE COMPACTS.—The consent of Con-
gress is hereby given for States to enter into interstate
compacts establishing regional transmission siting agen-
cies to facilitate coordination among the States within
such areas for purposes of siting future electric energy
transmission facilities and to carry out State electric en-
ergy transmission siting responsibilities. The Secretary of
Energy may provide technical assistance to regional trans-
mission siting agencies established under this subsection.
‘‘(l) SAVINGS CLAUSE.—Nothing in this section shall
be construed to affect any requirement of the environ-
mental laws of the United States, including, but not lim-
ited to, the National Environmental Policy Act of 1969.
This section shall not apply to any component of the Na-
tional Wilderness Preservation System, the National Wild
and Scenic Rivers System, or the National Park system
(including National Monuments therein).’’.
(b) FEDERAL CORRIDORS.—The Secretary of the In-
terior, the Secretary of Energy, the Secretary of Agri-
culture, and the Chairman of the Council on Environ-
mental Quality shall, within 90 days of the date of enact-
ment of this subsection, submit a joint report to Congress
identifying the following:
(1) all existing designated transmission and dis-
tribution corridors on Federal land and the status of
208
work related to proposed transmission and distribu-
tion corridor designations, the schedule for com-
pleting such work, any impediments to completing
the work, and steps that Congress could take to ex-
pedite the process;
(2) the number of pending applications to lo-
cate transmission and distribution facilities on Fed-
eral lands, key information relating to each such fa-
cility, how long each application has been pending,
the schedule for issuing a timely decision as to each
facility, and progress in incorporating existing and
new such rights-of-way into relevant land use and
resource management plans or their equivalent; and
(3) the number of existing transmission and
distribution rights-of-way on Federal lands that will
come up for renewal within the following 5, 10, and
15 year periods, and a description of how the Secre-
taries plan to manage such renewals.
SEC. 16013. TRANSMISSION TECHNOLOGIES.
The Federal Energy Regulatory Commission shall
shall take affirmative steps in the exercise of its authori-
ties under the Federal Power Act to encourage the deploy-
ment of transmission technologies that utilize real time
monitoring and analytical software to increase and maxi-
209
mize the capacity and efficiency of transmission networks
and to reduce line losses.
Subtitle B—Transmission
Operation
SEC. 16021. OPEN ACCESS TRANSMISSION BY CERTAIN
UTILITIES.
Part II of the Federal Power Act (16 U.S.C. 824 et
seq.) is amended by inserting after section 211 the fol-
lowing:
‘‘SEC. 211A. OPEN ACCESS BY UNREGULATED TRANSMIT-
TING UTILITIES.
‘‘(a) IN GENERAL.—Subject to section 212(h), the
Commission may, by rule or order, require an unregulated
transmitting utility to provide transmission services—
‘‘(1) at rates that are comparable to those that
the unregulated transmitting utility charges itself,
and
‘‘(2) on terms and conditions (not relating to
rates) that are comparable to those under which
such unregulated transmitting utility provides trans-
mission services to itself and that are not unduly
discriminatory or preferential.
‘‘(b) EXEMPTIONS.—
210
‘‘(1) IN GENERAL.—The Commission shall ex-
empt from any rule or order under this subsection
any unregulated transmitting utility that—
‘‘(A)(i) sells no more than 4,000,000
megawatt hours of electricity per year; and
‘‘(ii) is a distribution utility; or
‘‘(B) does not own or operate any trans-
mission facilities that are necessary for oper-
ating an interconnected transmission system (or
any portion thereof); or
‘‘(C) meets other criteria the Commission
determines to be in the public interest.
‘‘(2) LOCAL DISTRIBUTION.— The requirements
of subsection (a) shall not apply to facilities used in
local distribution.
‘‘(c) RATE
CHANGING
PROCEDURES.—The rate
changing procedures applicable to public utilities under
subsections (c) and (d) of section 205 are applicable to
unregulated transmitting utilities for purposes of this sec-
tion.
‘‘(d) REMAND.—In exercising its authority under
paragraph (1), the Commission may remand transmission
rates to an unregulated transmitting utility for review and
revision where necessary to meet the requirements of sub-
section (a).
211
‘‘(e) SECTION 211 REQUESTS.—The provision of
transmission services under subsection (a) does not pre-
clude a request for transmission services under section
211.
‘‘(f) DEFINITIONS.—For purposes of this section—
‘‘(1) The term ‘unregulated transmitting utility’
means an entity that—
‘‘(A) owns or operates facilities used for
the transmission of electric energy in interstate
commerce, and
‘‘(B) is either an entity described in sec-
tion 201(f) or a rural electric cooperative.
‘‘(2) The term ‘distribution utility’ means an
unregulated transmitting utility that serves at least
ninety percent of its electric customers at retail.’’.
SEC. 16022. REGIONAL TRANSMISSION ORGANIZATIONS.
(a) SENSE OF THE CONGRESS ON RTOS.—It is the
sense of Congress that, in order to promote fair, open ac-
cess to electric transmission service, benefit retail con-
sumers, facilitate wholesale competition, improve effi-
ciencies in transmission grid management, promote grid
reliability, remove opportunities for unduly discriminatory
or preferential transmission practices, and provide for the
efficient development of transmission infrastructure need-
ed to meet the growing demands of competitive wholesale
212
power markets, all transmitting utilities in interstate com-
merce should voluntarily become members of independ-
ently administered regional transmission organizations
that have operational control of interstate transmission fa-
cilities and do not own or control generation facilities used
to supply electric energy for sale at wholesale.
(b) SENSE OF THE CONGRESS ON CAPITAL INVEST-
MENT.—It is the sense of the Congress that the Federal
Energy Regulatory Commission should provide to any
transmitting utility that becomes a member of an oper-
ational regional transmitting organization approved by the
Commission a return on equity sufficient to attract new
investment capital for expansion of transmission capacity,
in accordance with sections 205 and 206 of the Federal
Power Act (16 U.S.C. 824d and 824e), including the re-
quirement that rates be just and reasonable.
(c) REPORT ON PENDING APPLICATIONS.—Not later
than 120 days after the date of enactment of this section,
the Federal Energy Regulatory Commission shall submit
to the Committee on Energy and Commerce of the United
States House of Representatives and the Committee on
Energy and Natural Resources of the United States Sen-
ate a report containing the following:
(1) A list of all regional transmission organiza-
tion applications filed at the Commission pursuant
213
to the Commission’s Order No. 2000, including an
identification of each public utility and other entity
included within the proposed membership of the re-
gional transmission organization.
(2) A table showing the date each such applica-
tion was filed, the date of any revised filings of such
application, the date of each preliminary or final
Commission order regarding such application, and a
statement of whether the application has been re-
jected, preliminarily approved, finally approved, or
has some other status (including a description of
that status).
(3) For any application that has not been fi-
nally approved by the Commission, a detailed de-
scription of every aspect of the application that the
Commission has determined does not conform to the
requirements of Order No. 2000.
(4) For any application that has not been fi-
nally approved by the Commission, an explanation
by the Commission of why the items described pur-
suant to paragraph (3) constitute material non-
compliance with the requirements of the Commis-
sion’s Order No. 2000 sufficient to justify denial of
approval by the Commission.
214
(5) For all regional transmission organization
applications filed pursuant to the Commission’s
Order No. 2000, whether finally approved or not—
(A) a discussion of that regional trans-
mission organization’s efforts to minimize rate
seams between itself and—
(i) other regional transmission organi-
zations; and
(ii) entities not participating in a re-
gional transmission organization; and
(B) a discussion of the impact of such
seams on consumers and wholesale competition;
and
(C) a discussion of minimizing cost-shifting
on consumers.
(d) FEDERAL UTILITY PARTICIPATION IN RTOS.—
(1) 
DEFINITIONS.—For 
purposes 
of 
this
section—
(A) The term ‘‘appropriate Federal regu-
latory authority’’ means—
(i) with respect to a Federal power
marketing agency, the Secretary of En-
ergy, except that the Secretary may des-
ignate the Administrator of a Federal
power marketing agency to act as the ap-
215
propriate Federal regulatory authority with
respect to the transmission system of that
Federal power marketing agency; and
(ii) with respect to the Tennessee Val-
ley Authority, the Board of Directors of
the Tennessee Valley Authority.
(B) The term ‘‘Federal utility’’ means a
Federal power marketing agency or the Ten-
nessee Valley Authority.
(C) The term ‘‘transmission system’’
means electric transmission facilities owned,
leased, or contracted for by the United States
and operated by a Federal utility.
(2) TRANSFER.—The appropriate Federal regu-
latory authority is authorized to enter into a con-
tract, agreement or other arrangement transferring
control and use of all or part of the Federal utility’s
transmission system to a regional transmission orga-
nization approved by the Federal Energy Regulatory
Commission. Such contract, agreement or arrange-
ment shall include—
(A) performance standards for operation
and use of the transmission system that the
head of the Federal utility determines necessary
or appropriate, including standards that assure
216
recovery of all the Federal utility’s costs and
expenses related to the transmission facilities
that are the subject of the contract, agreement
or other arrangement, consistency with existing
contracts and third-party financing arrange-
ments, and consistency with said Federal util-
ity’s statutory authorities, obligations, and limi-
tations;
(B) provisions for monitoring and over-
sight by the Federal utility of the regional
transmission organization’s fulfillment of the
terms and conditions of the contract, agreement
or other arrangement, including a provision
that may provide for the resolution of disputes
through arbitration or other means with the re-
gional transmission organization or with other
participants, notwithstanding the obligations
and limitations of any other law regarding arbi-
tration; and
(C) a provision that allows the Federal
utility to withdraw from the regional trans-
mission organization and terminate the con-
tract, agreement or other arrangement in ac-
cordance with its terms.
217
Neither this section, actions taken pursuant to it,
nor any other transaction of a Federal utility using
a regional transmission organization shall serve to
confer upon the Federal Energy Regulatory Com-
mission jurisdiction or authority over the Federal
utility’s electric generation assets, electric capacity
or energy that the Federal utility is authorized by
law to market, or the Federal utility’s power sales
activities.
(3) EXISTING STATUTORY AND OTHER OBLIGA-
TIONS.—
(A) 
SYSTEM
OPERATION
REQUIRE-
MENTS.—Any statutory provision requiring or
authorizing a Federal utility to transmit electric
power or to construct, operate or maintain its
transmission system shall not be construed to
prohibit a transfer of control and use of its
transmission system pursuant to, and subject to
all requirements of paragraph (2).
(B) 
OTHER
OBLIGATIONS.—This 
sub-
section shall not be construed to—
(i) suspend, or exempt any Federal
utility from, any provision of existing Fed-
eral law, including but not limited to any
requirement or direction relating to the use
218
of the Federal utility’s transmission sys-
tem, environmental protection, fish and
wildlife protection, flood control, naviga-
tion, water delivery, or recreation; or
(ii) authorize abrogation of any con-
tract or treaty obligation.
SEC. 16023. NATIVE LOAD.
Part II of the Federal Power Act (16 U.S.C. 824 et
seq.) is amended by adding the following new section at
the end thereof:
‘‘SEC. 217. SERVICE OBLIGATIONS OF LOAD-SERVING ENTI-
TIES.
‘‘(a) IN GENERAL.—In exercising authority under
this Act, the Commission shall ensure that any load-serv-
ing entity that either—
‘‘(1) owns transmission facilities for the trans-
mission of electric energy in interstate commerce
used to purchase or deliver electric energy to meet—
‘‘(A) a service obligation to customers; or
‘‘(B) an existing wholesale contractual obli-
gation; or
‘‘(2) holds a contract or service agreement for
firm transmission service used to purchase or deliver
electric energy to meet—
‘‘(A) a service obligation to customers; or
219
‘‘(B) an existing wholesale contractual obli-
gation,
shall be entitled to use such transmission facilities or
equivalent transmission rights to meet such obligations be-
fore transmission capacity is made available for other
uses.
‘‘(b) USE BY SUCCESSOR IN INTEREST.—To the ex-
tent that all or a portion of the service obligation or con-
tractual obligation covered by subsection (a) is transferred
to another load serving entity, the successor shall be enti-
tled to use such transmission facilities or firm trans-
mission rights associated with the transferred service obli-
gation consistent with subsection (a). Subsequent trans-
fers to another load serving entity, or back to the original
load-serving entity, shall be entitled to the same rights.
‘‘(c) OTHER ENTITIES.—The Commission may exer-
cise authority under this Act to make transmission rights
not used to meet an obligation covered by subsection (a)
available to other entities in a manner determined by the
Commission to be not unduly discriminatory or pref-
erential.
‘‘(d) DEFINITIONS.—For the purposes of this section:
‘‘(1) The term ‘load-serving entity’ means an
electric utility, transmitting utility or Federal power
marketing agency that has an obligation under Fed-
220
eral, State, or local law, or under long-term con-
tracts, to provide electric service to either—
‘‘(A) electric consumers (as defined in sec-
tion 3(5) of the Public Utility Regulatory Poli-
cies Act of 1978 (16 U.S.C. 2602(5)); or
‘‘(B) an electric utility as defined in sec-
tion 3(4) of the Public Utility Regulatory Poli-
cies Act of 1978 (16 U.S.C. 2602(5)) that has
an obligation to provide electric service to elec-
tric consumers.
Such obligations shall be deemed ‘service obliga-
tions’.
‘‘(2) The term ‘existing wholesale contractual
obligation’ means an obligation under a firm long-
term wholesale contract that was in effect on March
28, 2003. A contract modification after March 28,
2003 (other than one that increases the quantity of
electric energy sold under the contract) shall not af-
fect the status of such contract as an existing whole-
sale contractual obligation.
‘‘(e) RELATIONSHIP TO OTHER PROVISIONS.—To the
extent that a transmitting utility reserves transmission ca-
pacity (or reserves the equivalent amount of tradable
transmission rights) to provide firm transmission service
to meet service obligations or firm long-term wholesale
221
contractual obligations pursuant to subsection (a), that
transmitting utility shall not be considered as engaging
in undue discrimination or preference under this Act.
‘‘(f) JURISDICTION.—This section shall not apply to
an entity located in an area referred to in section
212(k)(2)(A).
‘‘(g) SAVINGS CLAUSE.—Nothing in this section shall
affect any allocation of transmission rights by the PJM
Interconnection, the New York Independent System Oper-
ator, the New England Independent System Operator, the
Midwest Independent System Operator, or the California
Independent System Operator. Nothing in this section
shall provide a basis for abrogating any contract for firm
transmission service or rights in effect as of the date of
enactment of this section.’’.
Subtitle C—Reliability
SEC. 16031. ELECTRIC RELIABILITY STANDARDS.
Part II of the Federal Power Act (16 U.S.C 824 et
seq.) is amended by inserting the following new section
at the end thereof:
‘‘SEC. 218. ELECTRIC RELIABILITY.
‘‘(a) DEFINITIONS.—For purposes of this section—
‘‘(1) The term ‘bulk-power system’ means—
‘‘(A) facilities and control systems nec-
essary for operating an interconnected electric
222
energy transmission network (or any portion
thereof); and
‘‘(B) electric energy from generation facili-
ties needed to maintain transmission system re-
liability.
The term does not include facilities used in the local
distribution of electric energy.
‘‘(2) The terms ‘Electric Reliability Organiza-
tion’ and ‘ERO’ mean the organization certified by
the Commission under subsection (c) the purpose of
which is to establish and enforce reliability stand-
ards for the bulk-power system, subject to Commis-
sion review.
‘‘(3) The term ‘reliability standard’ means a re-
quirement, approved by the Commission under this
section, to provide for reliable operation of the bulk-
power system. The term includes requirements for
the operation of existing bulk-power system facilities
and the design of planned additions or modifications
to such facilities to the extent necessary to provide
for reliable operation of the bulk-power system, but
the term does not include any requirement to en-
large such facilities or to construct new transmission
capacity or generation capacity.
223
‘‘(4) The term ‘reliable operation’ means oper-
ating the elements of the bulk-power system within
equipment and electric system thermal, voltage, and
stability limits so that instability, uncontrolled sepa-
ration, or cascading failures of such system will not
occur as a result of a sudden disturbance or unan-
ticipated failure of system elements.
‘‘(5) The term ‘Interconnection’ means a geo-
graphic area in which the operation of bulk-power
system components is synchronized such that the
failure of one or more of such components may ad-
versely affect the ability of the operators of other
components within the system to maintain reliable
operation of the facilities within their control.
‘‘(6) The term ‘transmission organization’
means a regional transmission organization, inde-
pendent system operator, independent transmission
provider, or other transmission organization finally
approved by the Commission for the operation of
transmission facilities.
‘‘(7) The term ‘regional entity’ means an entity
having enforcement authority pursuant to subsection
(e)(4).
‘‘(b) JURISDICTION AND APPLICABILITY.—(1) The
Commission shall have jurisdiction, within the United
224
States, over the ERO certified by the Commission under
subsection (c), any regional entities, and all users, owners
and operators of the bulk-power system, including but not
limited to the entities described in section 201(f), for pur-
poses of approving reliability standards established under
this section and enforcing compliance with this section. All
users, owners and operators of the bulk-power system
shall comply with reliability standards that take effect
under this section.
‘‘(2) The Commission shall issue a final rule to imple-
ment the requirements of this section not later than 180
days after the date of enactment of this section.
‘‘(c) CERTIFICATION.—Following the issuance of a
Commission rule under subsection (b)(2), any person may
submit an application to the Commission for certification
as the Electric Reliability Organization (ERO). The Com-
mission may certify one such ERO if the Commission de-
termines that such ERO—
‘‘(1) has the ability to develop and enforce, sub-
ject to subsection (e)(2), reliability standards that
provide for an adequate level of reliability of the
bulk-power system;
‘‘(2) has established rules that—
‘‘(A) assure its independence of the users
and owners and operators of the bulk-power
225
system, while assuring fair stakeholder rep-
resentation in the selection of its directors and
balanced decisionmaking in any ERO com-
mittee or subordinate organizational structure;
‘‘(B) allocate equitably reasonable dues,
fees, and other charges among end users for all
activities under this section;
‘‘(C) provide fair and impartial procedures
for enforcement of reliability standards through
the imposition of penalties in accordance with
subsection (e) (including limitations on activi-
ties, functions, or operations, or other appro-
priate sanctions);
‘‘(D) provide for reasonable notice and op-
portunity for public comment, due process,
openness, and balance of interests in developing
reliability standards and otherwise exercising its
duties; and
‘‘(E) provide for taking, after certification,
appropriate steps to gain recognition in Canada
and Mexico.
‘‘(d) RELIABILITY STANDARDS.—(1) The Electric
Reliability Organization shall file each reliability standard
or modification to a reliability standard that it proposes
226
to be made effective under this section with the Commis-
sion.
‘‘(2) The Commission may approve, by rule or order,
a proposed reliability standard or modification to a reli-
ability standard if it determines that the standard is just,
reasonable, not unduly discriminatory or preferential, and
in the public interest. The Commission shall give due
weight to the technical expertise of the Electric Reliability
Organization with respect to the content of a proposed
standard or modification to a reliability standard and to
the technical expertise of a regional entity organized on
an Interconnection-wide basis with respect to a reliability
standard to be applicable within that Interconnection, but
shall not defer with respect to the effect of a standard
on competition. A proposed standard or modification shall
take effect upon approval by the Commission.
‘‘(3) The Electric Reliability Organization shall
rebuttably presume that a proposal from a regional entity
organized on an Interconnection-wide basis for a reliability
standard or modification to a reliability standard to be ap-
plicable on an Interconnection-wide basis is just, reason-
able, and not unduly discriminatory or preferential, and
in the public interest.
‘‘(4) The Commission shall remand to the Electric
Reliability Organization for further consideration a pro-
227
posed reliability standard or a modification to a reliability
standard that the Commission disapproves in whole or in
part.
‘‘(5) The Commission, upon its own motion or upon
complaint, may order the Electric Reliability Organization
to submit to the Commission a proposed reliability stand-
ard or a modification to a reliability standard that ad-
dresses a specific matter if the Commission considers such
a new or modified reliability standard appropriate to carry
out this section.
‘‘(6) The final rule adopted under subsection (b)(2)
shall include fair processes for the identification and time-
ly resolution of any conflict between a reliability standard
and any function, rule, order, tariff, rate schedule, or
agreement accepted, approved, or ordered by the Commis-
sion applicable to a transmission organization. Such trans-
mission organization shall continue to comply with such
function, rule, order, tariff, rate schedule or agreement ac-
cepted approved, or ordered by the Commission until—
‘‘(A) the Commission finds a conflict exists be-
tween a reliability standard and any such provision;
‘‘(B) the Commission orders a change to such
provision pursuant to section 206 of this part; and
‘‘(C) the ordered change becomes effective
under this part.
228
If the Commission determines that a reliability standard
needs to be changed as a result of such a conflict, it shall
order the ERO to develop and file with the Commission
a modified reliability standard under paragraph (4) or (5)
of this subsection.
‘‘(e) ENFORCEMENT.—(1) The ERO may impose,
subject to paragraph (2), a penalty on a user or owner
or operator of the bulk-power system for a violation of a
reliability standard approved by the Commission under
subsection (d) if the ERO, after notice and an opportunity
for a hearing—
‘‘(A) finds that the user or owner or operator
has violated a reliability standard approved by the
Commission under subsection (d); and
‘‘(B) files notice and the record of the pro-
ceeding with the Commission.
‘‘(2) A penalty imposed under paragraph (1) may
take effect not earlier than the 31st day after the electric
reliability organization files with the Commission notice of
the penalty and the record of proceedings. Such penalty
shall be subject to review by the Commission, on its own
motion or upon application by the user, owner or operator
that is the subject of the penalty filed within 30 days after
the date such notice is filed with the Commission. Applica-
tion to the Commission for review, or the initiation of re-
229
view by the Commission on its own motion, shall not oper-
ate as a stay of such penalty unless the Commission other-
wise orders upon its own motion or upon application by
the user, owner or operator that is the subject of such
penalty. In any proceeding to review a penalty imposed
under paragraph (1), the Commission, after notice and op-
portunity for hearing (which hearing may consist solely
of the record before the electric reliability organization and
opportunity for the presentation of supporting reasons to
affirm, modify, or set aside the penalty), shall by order
affirm, set aside, reinstate, or modify the penalty, and,
if appropriate, remand to the electric reliability organiza-
tion for further proceedings. The Commission shall imple-
ment expedited procedures for such hearings.
‘‘(3) On its own motion or upon complaint, the Com-
mission may order compliance with a reliability standard
and may impose a penalty against a user or owner or oper-
ator of the bulk-power system, if the Commission finds,
after notice and opportunity for a hearing, that the user
or owner or operator of the bulk-power system has en-
gaged or is about to engage in any acts or practices that
constitute or will constitute a violation of a reliability
standard.
‘‘(4) The Commission shall establish regulations au-
thorizing the ERO to enter into an agreement to delegate
230
authority to a regional entity for the purpose of proposing
reliability standards to the ERO and enforcing reliability
standards under paragraph (1) if—
‘‘(A) the regional entity is governed by—
‘‘(i) an independent board;
‘‘(ii) a balanced stakeholder board; or
‘‘(iii) a combination independent and
balanced stakeholder board.
‘‘(B) the regional entity otherwise satisfies the
provisions of subsection (c)(1) and (2); and
‘‘(C) the agreement promotes effective and effi-
cient administration of bulk-power system reliability.
The Commission may modify such delegation. The ERO
and the Commission shall rebuttably presume that a pro-
posal for delegation to a regional entity organized on an
Interconnection-wide basis promotes effective and efficient
administration of bulk-power system reliability and should
be approved. Such regulation may provide that the Com-
mission may assign the ERO’s authority to enforce reli-
ability standards under paragraph (1) directly to a re-
gional entity consistent with the requirements of this para-
graph.
‘‘(5) The Commission may take such action as is nec-
essary or appropriate against the ERO or a regional entity
231
to ensure compliance with a reliability standard or any
Commission order affecting the ERO or a regional entity.
‘‘(6) Any penalty imposed under this section shall
bear a reasonable relation to the seriousness of the viola-
tion and shall take into consideration the efforts of such
user, owner, or operator to remedy the violation in a time-
ly manner.
‘‘(f) CHANGES IN ELECTRICITY RELIABILITY ORGA-
NIZATION RULES.—The Electric Reliability Organization
shall file with the Commission for approval any proposed
rule or proposed rule change, accompanied by an expla-
nation of its basis and purpose. The Commission, upon
its own motion or complaint, may propose a change to the
rules of the Electric Reliability Organization. A proposed
rule or proposed rule change shall take effect upon a find-
ing by the Commission, after notice and opportunity for
comment, that the change is just, reasonable, not unduly
discriminatory or preferential, is in the public interest, and
satisfies the requirements of subsection (c).
‘‘(g) RELIABILITY REPORTS.—The Electric Reli-
ability Organization shall conduct periodic assessments of
the reliability and adequacy of the bulk-power system in
North America.
‘‘(h) COORDINATION WITH CANADA AND MEXICO.—
The President is urged to negotiate international agree-
232
ments with the governments of Canada and Mexico to pro-
vide for effective compliance with reliability standards and
the effectiveness of the Electric Reliability Organization
in the United States and Canada or Mexico.
‘‘(i) SAVINGS PROVISIONS.—(1) The Electric Reli-
ability Organization shall have authority to develop and
enforce compliance with reliability standards for only the
bulk-power system.
‘‘(2) This section does not authorize the Electric Reli-
ability Organization or the Commission to order the con-
struction of additional generation or transmission capacity
or to set and enforce compliance with standards for ade-
quacy or safety of electric facilities or services.
‘‘(3) Nothing in this section shall be construed to pre-
empt any authority of any State to take action to ensure
the safety, adequacy, and reliability of electric service
within that State, as long as such action is not incon-
sistent with any reliability standard, except that the State
of New York may establish rules that result in greater
reliability within that State, as long as such action does
not result in lesser reliability outside the State than that
provided by the reliability standards.
‘‘(4) Within 90 days of the application of the Electric
Reliability Organization or other affected party, and after
notice and opportunity for comment, the Commission shall
233
issue a final order determining whether a State action is
inconsistent with a reliability standard, taking into consid-
eration any recommendation of the Electric Reliability Or-
ganization.
‘‘(5) The Commission, after consultation with the
Electric Reliability Organization and the State taking ac-
tion, may stay the effectiveness of any State action, pend-
ing the Commission’s issuance of a final order.
‘‘(j) REGIONAL ADVISORY BODIES.—The Commis-
sion shall establish a regional advisory body on the petition
of at least two-thirds of the States within a region that
have more than one-half of their electric load served within
the region. A regional advisory body shall be composed or
of one member from each participating State in the region,
appointed by the Governor of each State, and may include
representatives of agencies, States, and provinces outside
the United States. A regional advisory body may provide
advice to the Electric Reliability Organization, a regional
entity, or the Commission regarding the governance of an
existing or proposed regional entity within the same re-
gion, whether a standard proposed to apply within the re-
gion is just, reasonable, not unduly discriminatory or pref-
erential, and in the public interest, whether fees proposed
to be assessed within the region are just, reasonable, not
unduly discriminatory or preferential, and in the public
234
interest and any other responsibilities requested by the
Commission. The Commission may give deference to the
advice of any such regional advisory body if that body is
organized on an Interconnection-wide basis.
‘‘(k) APPLICATION TO ALASKA AND HAWAII.—The
provisions of this section do not apply to Alaska or Ha-
waii.’’.
Subtitle D—PUHCA Amendments
SEC. 16041. SHORT TITLE.
This subtitle may be cited as the ‘‘Public Utility
Holding Company Act of 2003’’.
SEC. 16042. DEFINITIONS.
For purposes of this subtitle:
(1) The term ‘‘affiliate’’ of a company means
any company, 5 percent or more of the outstanding
voting securities of which are owned, controlled, or
held with power to vote, directly or indirectly, by
such company.
(2) The term ‘‘associate company’’ of a com-
pany means any company in the same holding com-
pany system with such company.
(3) The term ‘‘Commission’’ means the Federal
Energy Regulatory Commission.
(4) The term ‘‘company’’ means a corporation,
partnership, association, joint stock company, busi-
235
ness trust, or any organized group of persons,
whether incorporated or not, or a receiver, trustee,
or other liquidating agent of any of the foregoing.
(5) The term ‘‘electric utility company’’ means
any company that owns or operates facilities used
for the generation, transmission, or distribution of
electric energy for sale.
(6) The terms ‘‘exempt wholesale generator’’
and ‘‘foreign utility company’’ have the same mean-
ings as in sections 32 and 33, respectively, of the
Public Utility Holding Company Act of 1935 (15
U.S.C. 79z–5a, 79z–5b), as those sections existed on
the day before the effective date of this subtitle.
(7) The term ‘‘gas utility company’’ means any
company that owns or operates facilities used for
distribution at retail (other than the distribution
only in enclosed portable containers or distribution
to tenants or employees of the company operating
such facilities for their own use and not for resale)
of natural or manufactured gas for heat, light, or
power.
(8) The term ‘‘holding company’’ means—
(A) any company that directly or indirectly
owns, controls, or holds, with power to vote, 10
percent or more of the outstanding voting secu-
236
rities of a public utility company or of a holding
company of any public utility company; and
(B) any person, determined by the Com-
mission, after notice and opportunity for hear-
ing, to exercise directly or indirectly (either
alone or pursuant to an arrangement or under-
standing with one or more persons) such a con-
trolling influence over the management or poli-
cies of any public utility company or holding
company as to make it necessary or appropriate
for the rate protection of utility customers with
respect to rates that such person be subject to
the obligations, duties, and liabilities imposed
by this subtitle upon holding companies.
(9) The term ‘‘holding company system’’ means
a holding company, together with its subsidiary com-
panies.
(10) The term ‘‘jurisdictional rates’’ means
rates established by the Commission for the trans-
mission of electric energy in interstate commerce,
the sale of electric energy at wholesale in interstate
commerce, the transportation of natural gas in inter-
state commerce, and the sale in interstate commerce
of natural gas for resale for ultimate public con-
237
sumption for domestic, commercial, industrial, or
any other use.
(11) The term ‘‘natural gas company’’ means a
person engaged in the transportation of natural gas
in interstate commerce or the sale of such gas in
interstate commerce for resale.
(12) The term ‘‘person’’ means an individual or
company.
(13) The term ‘‘public utility’’ means any per-
son who owns or operates facilities used for trans-
mission of electric energy in interstate commerce or
sales of electric energy at wholesale in interstate
commerce.
(14) The term ‘‘public utility company’’ means
an electric utility company or a gas utility company.
(15) The term ‘‘State commission’’ means any
commission, board, agency, or officer, by whatever
name designated, of a State, municipality, or other
political subdivision of a State that, under the laws
of such State, has jurisdiction to regulate public util-
ity companies.
(16) The term ‘‘subsidiary company’’ of a hold-
ing company means—
(A) any company, 10 percent or more of
the outstanding voting securities of which are
238
directly or indirectly owned, controlled, or held
with power to vote, by such holding company;
and
(B) any person, the management or poli-
cies of which the Commission, after notice and
opportunity for hearing, determines to be sub-
ject to a controlling influence, directly or indi-
rectly, by such holding company (either alone or
pursuant to an arrangement or understanding
with one or more other persons) so as to make
it necessary for the rate protection of utility
customers with respect to rates that such per-
son be subject to the obligations, duties, and li-
abilities imposed by this subtitle upon sub-
sidiary companies of holding companies.
(17) The term ‘‘voting security’’ means any se-
curity presently entitling the owner or holder thereof
to vote in the direction or management of the affairs
of a company.
SEC. 16043. REPEAL OF THE PUBLIC UTILITY HOLDING
COMPANY ACT OF 1935.
The Public Utility Holding Company Act of 1935 (15
U.S.C. 79 et seq.) is repealed.
239
SEC. 16044. FEDERAL ACCESS TO BOOKS AND RECORDS.
(a) IN GENERAL.—Each holding company and each
associate company thereof shall maintain, and shall make
available to the Commission, such books, accounts, memo-
randa, and other records as the Commission deems to be
relevant to costs incurred by a public utility or natural
gas company that is an associate company of such holding
company and necessary or appropriate for the protection
of utility customers with respect to jurisdictional rates.
(b) AFFILIATE COMPANIES.—Each affiliate of a hold-
ing company or of any subsidiary company of a holding
company shall maintain, and shall make available to the
Commission, such books, accounts, memoranda, and other
records with respect to any transaction with another affil-
iate, as the Commission deems to be relevant to costs in-
curred by a public utility or natural gas company that is
an associate company of such holding company and nec-
essary or appropriate for the protection of utility cus-
tomers with respect to jurisdictional rates.
(c) HOLDING COMPANY SYSTEMS.—The Commission
may examine the books, accounts, memoranda, and other
records of any company in a holding company system, or
any affiliate thereof, as the Commission deems to be rel-
evant to costs incurred by a public utility or natural gas
company within such holding company system and nec-
240
essary or appropriate for the protection of utility cus-
tomers with respect to jurisdictional rates.
(d) CONFIDENTIALITY.—No member, officer, or em-
ployee of the Commission shall divulge any fact or infor-
mation that may come to his or her knowledge during the
course of examination of books, accounts, memoranda, or
other records as provided in this section, except as may
be directed by the Commission or by a court of competent
jurisdiction.
SEC. 16045. STATE ACCESS TO BOOKS AND RECORDS.
(a) In GENERAL.—Upon the written request of a
State commission having jurisdiction to regulate a public
utility company in a holding company system, the holding
company or any associate company or affiliate thereof,
other than such public utility company, wherever located,
shall produce for inspection books, accounts, memoranda,
and other records that—
(1) have been identified in reasonable detail by
the State commission;
(2) the State commission deems are relevant to
costs incurred by such public utility company; and
(3) are necessary for the effective discharge of
the responsibilities of the State commission with re-
spect to such proceeding.
241
(b) LIMITATION.—Subsection (a) does not apply to
any person that is a holding company solely by reason of
ownership of one or more qualifying facilities under the
Public Utility Regulatory Policies Act of 1978 (16 U.S.C.
2601 et seq.).
(c) CONFIDENTIALITY OF INFORMATION.—The pro-
duction of books, accounts, memoranda, and other records
under subsection (a) shall be subject to such terms and
conditions as may be necessary and appropriate to safe-
guard against unwarranted disclosure to the public of any
trade secrets or sensitive commercial information.
(d) EFFECT ON STATE LAW.—Nothing in this sec-
tion shall preempt applicable State law concerning the pro-
vision of books, accounts, memoranda, and other records,
or in any way limit the rights of any State to obtain books,
accounts, memoranda, and other records under any other
Federal law, contract, or otherwise.
(e) COURT JURISDICTION.—Any United States dis-
trict court located in the State in which the State commis-
sion referred to in subsection (a) is located shall have ju-
risdiction to enforce compliance with this section.
SEC. 16046. EXEMPTION AUTHORITY.
(a) RULEMAKING.—Not later than 90 days after the
effective date of this subtitle, the Commission shall pro-
mulgate a final rule to exempt from the requirements of
242
section 16044 (relating to Federal access to books and
records) any person that is a holding company, solely with
respect to one or more—
(1) qualifying facilities under the Public Utility
Regulatory Policies Act of 1978 (16 U.S.C. 2601 et
seq.);
(2) exempt wholesale generators; or
(3) foreign utility companies.
(b) OTHER AUTHORITY.—The Commission shall ex-
empt a person or transaction from the requirements of
section 16044 (relating to Federal access to books and
records) if, upon application or upon the motion of the
Commission—
(1) the Commission finds that the books, ac-
counts, memoranda, and other records of any person
are not relevant to the jurisdictional rates of a pub-
lic utility or natural gas company; or
(2) the Commission finds that any class of
transactions is not relevant to the jurisdictional
rates of a public utility or natural gas company.
SEC. 16047. AFFILIATE TRANSACTIONS.
(a) COMMISSION AUTHORITY UNAFFECTED.—Noth-
ing in this subtitle shall limit the authority of the Commis-
sion under the Federal Power Act (16 U.S.C. 791a et seq.)
to require that jurisdictional rates are just and reasonable,
243
including the ability to deny or approve the pass through
of costs, the prevention of cross-subsidization, and the pro-
mulgation of such rules and regulations as are necessary
or appropriate for the protection of utility consumers.
(b) RECOVERY OF COSTS.—Nothing in this subtitle
shall preclude the Commission or a State commission from
exercising its jurisdiction under otherwise applicable law
to determine whether a public utility company, public util-
ity, or natural gas company may recover in rates any costs
of an activity performed by an associate company, or any
costs of goods or services acquired by such public utility
company from an associate company.
SEC. 16048. APPLICABILITY.
Except as otherwise specifically provided in this sub-
title, no provision of this subtitle shall apply to, or be
deemed to include—
(1) the United States;
(2) a State or any political subdivision of a
State;
(3) any foreign governmental authority not op-
erating in the United States;
(4) any agency, authority, or instrumentality of
any entity referred to in paragraph (1), (2), or (3);
or
244
(5) any officer, agent, or employee of any entity
referred to in paragraph (1), (2), or (3) acting as
such in the course of his or her official duty.
SEC. 16049. EFFECT ON OTHER REGULATIONS.
Nothing in this subtitle precludes the Commission or
a State commission from exercising its jurisdiction under
otherwise applicable law to protect utility customers.
SEC. 16050. ENFORCEMENT.
The Commission shall have the same powers as set
forth in sections 306 through 317 of the Federal Power
Act (16 U.S.C. 825e–825p) to enforce the provisions of
this subtitle.
SEC. 16051. SAVINGS PROVISIONS.
(a) IN GENERAL.—Nothing in this subtitle prohibits
a person from engaging in or continuing to engage in ac-
tivities or transactions in which it is legally engaged or
authorized to engage on the date of enactment of this Act,
so long as that person continues to comply with the terms
of any such authorization, whether by rule or by order.
(b) EFFECT ON OTHER COMMISSION AUTHORITY.—
Nothing in this subtitle limits the authority of the Com-
mission under the Federal Power Act (16 U.S.C. 791a et
seq.) (including section 301 of that Act) or the Natural
Gas Act (15 U.S.C. 717 et seq.) (including section 8 of
that Act).
245
SEC. 16052. IMPLEMENTATION.
Not later than 12 months after the date of enactment
of this subtitle, the Commission shall—
(1) promulgate such regulations as may be nec-
essary or appropriate to implement this subtitle
(other than section 16045, relating to State access
to books and records); and
(2) submit to the Congress detailed rec-
ommendations on technical and conforming amend-
ments to Federal law necessary to carry out this
subtitle and the amendments made by this subtitle.
SEC. 16053. TRANSFER OF RESOURCES.
All books and records that relate primarily to the
functions transferred to the Commission under this sub-
title shall be transferred from the Securities and Exchange
Commission to the Commission.
SEC. 16054. EFFECTIVE DATE.
This subtitle shall take effect 12 months after the
date of enactment of this subtitle.
SEC. 16055. AUTHORIZATION OF APPROPRIATIONS.
There are authorized to be appropriated such funds
as may be necessary to carry out this subtitle.
SEC. 16056. CONFORMING AMENDMENTS TO THE FEDERAL
POWER ACT.
(a) CONFLICT OF JURISDICTION.—Section 318 of the
Federal Power Act (16 U.S.C. 825q) is repealed.
246
(b) DEFINITIONS.—(1) Section 201(g)(5) of the Fed-
eral Power Act (16 U.S.C. 824(g)(5)) is amended by strik-
ing ‘‘1935’’ and inserting ‘‘2003’’.
(2) Section 214 of the Federal Power Act (16 U.S.C.
824m) is amended by striking ‘‘1935’’ and inserting
‘‘2003’’.
Subtitle E—PURPA Amendments
SEC. 16061. REAL-TIME PRICING AND TIME-OF-USE METER-
ING STANDARDS.
(a) ADOPTION OF STANDARDS.—Section 111(d) of
the Public Utility Regulatory Policies Act of 1978 (16
U.S.C. 2621(d)) is amended by adding at the end the fol-
lowing:
‘‘(11) REAL-TIME PRICING.—(A) Each electric
utility shall, at the request of an electric consumer,
provide electric service under a real-time rate sched-
ule, under which the rate charged by the electric
utility varies by the hour (or smaller time interval)
according to changes in the electric utility’s whole-
sale power cost. The real-time pricing service shall
enable the electric consumer to manage energy use
and cost through real-time metering and commu-
nications technology.
‘‘(B) For purposes of implementing this para-
graph, any reference contained in this section to the
247
date of enactment of the Public Utility Regulatory
Policies Act of 1978 shall be deemed to be a ref-
erence to the date of enactment of this paragraph.
‘‘(C) Notwithstanding subsections (b) and (c) of
section 112, each State regulatory authority shall
consider and make a determination concerning
whether it is appropriate to implement the standard
set out in subparagraph (A) not later than 1 year
after the date of enactment of this paragraph.
‘‘(12) TIME-OF-USE METERING.—(A) Each elec-
tric utility shall, at the request of an electric con-
sumer, provide electric service under a time-of-use
rate schedule which enables the electric consumer to
manage energy use and cost through time-of-use me-
tering and technology.
‘‘(B) For purposes of implementing this para-
graph, any reference contained in this section to the
date of enactment of the Public Utility Regulatory
Policies Act of 1978 shall be deemed to be a ref-
erence to the date of enactment of this paragraph.
‘‘(C) Notwithstanding subsections (b) and (c) of
section 112, each State regulatory authority shall
consider and make a determination concerning
whether it is appropriate to implement the standards
248
set out in subparagraph (A) not later than 1 year
after the date of enactment of this paragraph.’’.
(b) SPECIAL RULES.—Section 115 of the Public Util-
ity Regulatory Policies Act of 1978 (16 U.S.C. 2625) is
amended by adding at the end the following:
‘‘(i) REAL-TIME PRICING.—In a State that permits
third-party marketers to sell electric energy to retail elec-
tric consumers, the electric consumer shall be entitled to
receive the same real-time metering and communication
service as a direct retail electric consumer of the electric
utility.
‘‘(j) TIME-OF-USE METERING.—In a State that per-
mits third-party marketers to sell electric energy to retail
electric consumers, the electric consumer shall be entitled
to receive the same time-of-use metering and communica-
tion service as a direct retail electric consumer of the elec-
tric utility.’’.
SEC. 16062. COGENERATION AND SMALL POWER PRODUC-
TION PURCHASE AND SALE REQUIREMENTS.
(a) TERMINATION OF MANDATORY PURCHASE AND
SALE REQUIREMENTS.—Section 210 of the Public Utility
Regulatory Policies Act of 1978 (16 U.S.C. 824a–3) is
amended by adding at the end the following:
‘‘(m) TERMINATION OF MANDATORY PURCHASE AND
SALE REQUIREMENTS.—
249
‘‘(1) OBLIGATION
TO
PURCHASE.—After the
date of enactment of this subsection, no electric util-
ity shall be required to enter into a new contract or
obligation to purchase electric energy from a quali-
fying cogeneration facility or a qualifying small
power production facility under this section if the
Commission finds that—
‘‘(A) the qualifying cogeneration facility or
qualifying small power production facility has
access to—
‘‘(i) independently administered, auc-
tion-based day ahead and real time whole-
sale markets for the sale of electric energy,
and
‘‘(ii) long-term wholesale markets for
the sale of capacity and electric energy;
‘‘(B) the qualifying cogeneration facility or
qualifying small power production facility has
access to a competitive wholesale market for the
sale of electric energy that provides such quali-
fying cogeneration facility or qualifying small
power production facility with opportunities to
sell electric energy that, at a minimum, are
comparable to the opportunities provided by the
250
markets, or some minimum combination there-
of, described in subparagraph (A); or
‘‘(C) the qualifying cogeneration facility
does not meet criteria established by the Com-
mission pursuant to the rulemaking set forth in
subparagraph (n) and has not filed with the
Commission a notice of self-certification or an
application for Commission certification under
18 C.F.R. 292.207 prior to the date of enact-
ment of this subsection.
‘‘(2) COMMISSION
REVIEW.—(A) Any electric
utility may file an application with the Commission
for relief from the mandatory purchase obligation
pursuant to this subsection on a utility-wide basis.
Such application shall set forth the reasons why
such relief is appropriate and describe how the con-
ditions set forth in subparagraphs (A) and (B) of
paragraph (1) of this subsection have been met.
‘‘(B) After notice, including sufficient notice to
potentially affected qualifying facilities, and an op-
portunity for comment, and within 90 days of the
filing of an application under subparagraph (A), the
Commission shall make a final determination as to
whether the conditions set forth in subparagraphs
(A) and (B) of paragraph (1) have been met. The
251
Commission shall not be authorized to issue a tolling
order regarding such application or otherwise delay
a final decision regarding such application.
‘‘(3) REINSTATEMENT OF OBLIGATION TO PUR-
CHASE.—(A) At any time after the Commission
makes a finding under paragraph (2) relieving an
electric utility of its obligation to purchase electric
energy, a qualifying cogeneration facility or a quali-
fying small power production facility may apply to
the Commission for an order reinstating the electric
utility’s obligation to purchase electric energy under
this section. Such application shall set forth the rea-
sons why such relief is no longer appropriate and de-
scribe how the tests set forth in subparagraphs (A)
and (B) of paragraph (1) of this subsection are no
longer met.
‘‘(B) After notice, including sufficient notice to
potentially affected utilities, and opportunity for
comment, and within 90 days of the filing of an ap-
plication under subparagraph (A), the Commission
shall issue an order reinstating the electric utility’s
obligation to purchase electric energy under this sec-
tion if the Commission finds that the condition in
paragraph (1), which relieved the obligation to pur-
chase, is no longer met. The Commission shall not
252
be authorized to issue a tolling order regarding such
application or otherwise delay a final decision re-
garding such application.
‘‘(4) OBLIGATION TO SELL.—After the date of
enactment of this subsection, no electric utility shall
be required to enter into a new contract or obliga-
tion to sell electric energy to a qualifying cogenera-
tion facility or a qualifying small power production
facility if—
‘‘(A) competing retail electric suppliers are
willing and able to provide electric energy to the
qualifying cogeneration facility or qualifying
small power production facility, and
‘‘(B) the electric utility is not required by
State law to sell electric energy in its service
territory.
‘‘(5) NO
EFFECT
ON
EXISTING
RIGHTS
AND
REMEDIES.—Nothing in this subsection affects the
rights or remedies of any party under any contract
or obligation, in effect or pending approval before
the appropriate State regulatory authority or non-
regulated electric utility on the date of enactment of
this subsection, to purchase electric energy or capac-
ity from or to sell electric energy or capacity to a
253
facility under this Act (including the right to recover
costs of purchasing electric energy or capacity).
‘‘(6) RECOVERY OF COSTS.—
‘‘(A) REGULATION.—To ensure recovery
by an electric utility that purchases electric en-
ergy or capacity from a qualifying facility pur-
suant to any legally enforceable obligation en-
tered into or imposed under this section of all
prudently incurred costs associated with the
purchases, the Commission shall issue and en-
force such regulations as may be required to en-
sure that the electric utility shall recover the
prudently incurred costs associated with such
purchases.
‘‘(B) ENFORCEMENT.—A regulation under
subparagraph (A) shall be enforceable in ac-
cordance with the provisions of law applicable
to enforcement of regulations under the Federal
Power Act (16 U.S.C. 791a et seq.).
‘‘(n) RULEMAKING FOR NEW FACILITIES.—
‘‘(1) IN GENERAL.—Not later than 180 days
after the date of enactment of this subsection, the
Commission shall issue a rule revising the criteria
for qualifying cogeneration facilities in 18 C.F.R.
292.205. In particular, the Commission shall evalu-
254
ate the rules regarding qualifying facility criteria
and revise such rules, as necessary, to ensure—
‘‘(A) that the thermal energy output of a
new qualifying cogeneration facility is used in a
productive and beneficial manner;
‘‘(B) the electrical and thermal output of
the cogeneration facility is used predominantly
for commercial or industrial processes and not
intended predominantly for sale to an electric
utility; and
‘‘(C) continuing progress in the develop-
ment of efficient electric energy generating
technology.
‘‘(2) APPLICABILITY.—Any revisions made to
operating and efficiency standards shall be applica-
ble only to a cogeneration facility that—
‘‘(A) was not a qualifying cogeneration fa-
cility, or
‘‘(B) had not filed with the Commission a
notice of self-certification or an application for
Commission certification under 18 C.F.R.
292.207,
prior to the date of enactment of this subsection.
‘‘(3) DEFINITION.—For purposes of this sub-
section, the term ‘commercial processes’ includes
255
uses of thermal and electric energy for educational
and healthcare facilities.
‘‘(o) RULES FOR EXISTING FACILITIES.— Notwith-
standing rule revisions under subsection (n), the Commis-
sion’s rules in effect prior to the effective date of any re-
vised rules prescribed under subsection (n) shall continue
to apply to any cogeneration facility or small power pro-
duction facility that—
‘‘(1) was a qualifying cogeneration facility or a
qualifying small power production facility, or
‘‘(2) had filed with the Commission a notice of
self-certification or an application for Commission
certification under 18 C.F.R. 292.207,
prior to the date of enactment of subsections (m) and
(n).’’.
(b) ELIMINATION OF OWNERSHIP LIMITATIONS.—
(1) Section 3(17)(C) of the Federal Power Act (16 U.S.C.
796(17)(C)) is amended to read as follows:
‘‘(C) ‘qualifying small power production fa-
cility’ means a small power production facility
that the Commission determines, by rule, meets
such requirements (including requirements re-
specting minimum size, fuel use, and fuel effi-
ciency) as the Commission may, by rule, pre-
scribe.’’.
256
(2) Section 3(18)(B) of the Federal Power Act (16
U.S.C. 796(18)(B)) is amended to read as follows:
‘‘(B) 
‘qualifying 
cogeneration 
facility’
means a cogeneration facility that the Commis-
sion determines, by rule, meets such require-
ments (including requirements respecting min-
imum size, fuel use, and fuel efficiency) as the
Commission may, by rule, prescribe.’’.
SEC. 16063. SMART METERING.
(a) IN GENERAL.—Section 111(d) of the Public Utili-
ties Regulatory Policies Act of 1978 (16 U.S.C. 2621(d))
is amended by adding at the end the following:
‘‘(13) TIME-BASED
METERING
AND
COMMU-
NICATIONS.—(A) Not later than eighteen (18)
months after the date of enactment of this para-
graph, each electric utility shall offer each of its cus-
tomer classes, and provide individual customers upon
customer request, a time-based rate schedule under
which the rate charged by the electric utility varies
during different time periods and reflects the vari-
ance in the costs of generating and purchasing elec-
tricity at the wholesale level. The time-based rate
schedule shall enable the electric consumer to man-
age energy use and cost through advanced metering
and communications technology.
257
‘‘(B) The types of time-based rate schedules
that may be offered under the schedule referred to
in subparagraph (A) include, among others, each the
following:
‘‘(i) Time-Of-Use pricing whereby elec-
tricity prices are set for a specific time period
on an advance or forward basis, typically not
changing more often than twice a year. Prices
paid for energy consumed during these periods
shall be pre-established and known to con-
sumers in advance of such consumption, allow-
ing them to vary their demand and usage in re-
sponse to such prices and manage their energy
costs by shifting usage to a lower cost period or
reducing their consumption overall.
‘‘(ii) Critical Peak Pricing whereby time-
of-use prices are in effect except for certain
peak days, when prices may reflect the costs of
generating and purchasing electricity at the
wholesale level and when consumers may receive
additional discounts for reducing peak period
energy consumption.
‘‘(iii) Real-Time pricing whereby electricity
prices are set for a specific time period on an
258
advanced or forward basis and may change as
often as hourly.
‘‘(C) Each electric utility subject to subpara-
graph (A) shall provide each customer requesting a
time-based rate with a time-based meter capable of
enabling the utility and customer to offer and re-
ceive such rate, respectively.
‘‘(D) For purposes of implementing this para-
graph, any reference contained in this section to the
date of enactment of the Public Utility Regulatory
Policies Act of 1978 shall be deemed to be a ref-
erence to the date of enactment of this paragraph.
‘‘(E) In a State that permits third-party mar-
keters to sell electric energy to retail electric con-
sumers, such consumers shall be entitled to receive
that same time-based metering and communications
device and service as a retail electric consumer of
the electric utility.
‘‘(F) Notwithstanding subsections (b) and (c) of
section 112, each State regulatory authority shall,
not later than twelve (12) months after enactment
of this paragraph conduct an investigation in accord-
ance with section 115(i) and issue a decision wheth-
er it is appropriate to implement the standards set
out in subparagraphs (A) and (C).’’.
259
(b) STATE INVESTIGATION OF DEMAND RESPONSE
AND TIME-BASED METERING.—Section 115 of the Public
Utilities Regulatory Policies Act of 1978 (16 U.S.C. 2625)
is amended by adding the at the end the following:
‘‘(k) TIME-BASED
METERING
AND
COMMUNICA-
TIONS.—Each State regulatory authority shall, not later
than twelve (12) months after enactment of this sub-
section, conduct an investigation and issue a decision
whether or not it is appropriate for electric utilities to pro-
vide and install time-based meters and communications
devices for each of their customers which enable such cus-
tomers to participate in time-based pricing rate schedules
and other demand response programs.’’.
(c) 
FEDERAL
ASSISTANCE
ON
DEMAND
RE-
SPONSE.—Section 132(a) of the Public Utility Regulatory
Polices Act of 1978 (16 U.S.C. 2642(a)) is amended by
striking ‘‘and’’ at the end of paragraph (3), striking the
period at the end of paragraph (4) and inserting ‘‘; and’’,
and by adding the following at the end thereof:
‘‘(5) technologies, techniques and rate-making
methods related to advanced metering and commu-
nications and the use of these technologies, tech-
niques and methods in demand response programs.’’.