would contribute significantly to our energy inde-
pendence and security. 
(6) New and emerging technologies are on the 
rise, and small businesses are leading the way, for 
example the vast majority of renewable fuels pro-
ducers, such as biodiesel and ethanol, are small busi-
nesses. 
(7) Small businesses currently use almost half 
of the Nation’s business related energy consumption 
and employ half of the Nation’s workforce, yet the 
Energy Star program, the lead Federal energy effi-
ciency program allocates less than 2 percent of its 
resources to its small business program and should 
allocate more to educate small businesses. 
(8) Therefore, it is in the national interest for 
the Federal Government to invest in incentives in 
the form of improved loan terms, additional invest-
ment inducements, and expert counseling and infor-
mation to assist small businesses to develop, invest 
in, and purchase energy efficient buildings, equip-
ment, fixtures, and other technology.
SEC. 3003. LARGER 504 LOAN LIMITS TO HELP BUSINESS 
DEVELOP 
ENERGY 
EFFICIENT 
TECH-
NOLOGIES AND PURCHASES. 
(a) 
ELIGIBILITY
FOR
ENERGY
EFFICIENCY 
PROJECTS.—Section 501(d)(3) of the Small Business In-
vestment Act of 1958 (15 U.S.C. 695(d)(3)) is amended— 
(1) in subparagraph (G) by striking ‘‘or’’ at the 
end; 
(2) in subparagraph (H) by striking the period 
at the end and inserting a comma; and 
(3) by inserting after subparagraph (H) the fol-
lowing: 
‘‘(I) reduction of energy consumption by at 
least 10 percent, 
‘‘(J) increased use of sustainable design or 
low-impact design to produce buildings that re-
duce the use of non-renewable resources, mini-
mize environmental impact, and relate people 
with the natural environment, or 
‘‘(K) plant, equipment and process up-
grades of renewable energy sources such as 
micropower or renewable fuels producers includ-
ing biodiesel and ethanol producers.’’. 
(b) LOANS FOR PLANT PROJECTS USED FOR EN-
ERGY-EFFICIENT PURPOSES.—Section 502(2)(A) of the
Small Business Investment Act of 1958 (15 U.S.C. 
696(2)(A)) is amended— 
(1) in clause (ii) by striking ‘‘and’’ at the end; 
(2) in clause (iii) by striking the period at the 
end and inserting a semicolon; and 
(3) by adding at the end the following new 
clauses: 
‘‘(iv) $4,000,000 for each project that 
reduces the borrower’s energy consumption 
by at least 10 percent; and 
‘‘(v) $4,000,000 for each project that 
generates renewable energy or renewable 
fuels, such as biodiesel or ethanol produc-
tion.’’. 
SEC. 3004. REDUCED 7(a) FEES AND HIGHER LOAN GUARAN-
TEES FOR PURCHASE OF ENERGY EFFICIENT 
TECHNOLOGIES. 
Section 7(a) of the Small Business Act (15 U.S.C. 
636(a)) is amended by adding at the end the following: 
‘‘(35) LOANS FOR ENERGY EFFICIENT TECH-
NOLOGIES.—The Administrator shall carry out a 
program for loans the proceeds of which are used to 
purchase energy efficient equipment or fixtures or to 
reduce the energy consumption of the borrower, in-
cluding, but not limited to, renewable fuels and en-
ergy products such as biodiesel and ethanol, by 10 
percent or more. For a loan made under this para-
graph, the following shall apply: 
‘‘(A) The loan shall include the participa-
tion by the Administration equal to 90 percent 
of the balance of the financing outstanding at 
the time of disbursement. 
‘‘(B) The fees on the loan under para-
graphs (18) and (23) shall be reduced by half.’’. 
SEC. 3005. SMALL BUSINESS SUSTAINABILITY INITIATIVE. 
Section 21 of the Small Business Act (15 U.S.C. 648) 
is amended by adding at the end the following: 
‘‘(n) SMALL
BUSINESS
SUSTAINABILITY
INITIA-
TIVE.— 
‘‘(1) IN GENERAL.—A Small Business Develop-
ment Center may apply for an additional grant to 
carry out a small business sustainability initiative 
program. 
‘‘(2) ELEMENTS OF PROGRAM.—Under a pro-
gram under paragraph (1), the Center shall— 
‘‘(A) provide necessary support to smaller 
and medium-sized businesses to— 
‘‘(i) evaluate energy efficiency and 
green building opportunities;
‘‘(ii) 
evaluate 
renewable 
energy 
sources such as the use of solar and small 
wind to supplement power consumption; 
‘‘(iii) secure financing to achieve en-
ergy efficiency or to construct green build-
ings; and 
‘‘(iv) empower management to imple-
ment energy efficiency projects; 
‘‘(B) assist entrepreneurs with clean tech-
nology development and technology commer-
cialization through— 
‘‘(i) technology assessment; 
‘‘(ii) intellectual property; 
‘‘(iii) Small Business Innovation Re-
search submissions; 
‘‘(iv) strategic alliances; 
‘‘(v) business model development; and 
‘‘(vi) preparation for investors; and 
‘‘(C) help small business improve environ-
mental performance by shifting to less haz-
ardous materials and reducing waste and emis-
sions at the source, including by providing as-
sistance for businesses to adapt the materials 
they use, the processes they operate, and the 
products and services they produce.
‘‘(3) MINIMUM
AMOUNT.—Each grant under 
this subsection shall be for at least $150,000. 
‘‘(4) MAXIMUM AMOUNT.—A grant under this 
subsection may not exceed $300,000. 
‘‘(5) AUTHORIZATION
OF
APPROPRIATIONS.— 
Subject to amounts approved in advance in appro-
priations Acts and separate from amounts approved 
to carry out section 21(a)(1), the Administrator may 
make grants or enter into cooperative agreements to 
carry out the provisions of this subsection.’’. 
SEC. 3006. SMALL BUSINESS ADMINISTRATION TO EDU-
CATE AND PROMOTE ENERGY EFFICIENCY 
IDEAS TO SMALL BUSINESSES AND WORK 
WITH THE SMALL BUSINESS COMMUNITY TO 
MAKE SUCH INFORMATION WIDELY AVAIL-
ABLE. 
The Small Business Act is amended— 
(1) by redesignating section 37 as section 99; 
and 
(2) by inserting after section 36 (15 U.S.C. 
657f) the following: 
‘‘SEC. 37. PROGRAM TO PROVIDE EDUCATION ON ENERGY 
EFFICIENCY. 
‘‘(a) PROGRAM REQUIRED.—The Administrator shall 
develop and coordinate a Government-wide program,
‘‘(A) has been granted final approval by 
the Administrator under section 384(e); and 
‘‘(B) has entered into a participation 
agreement with the Administrator. 
‘‘(3) OPERATIONAL
ASSISTANCE.—The term 
‘operational assistance’ means management, mar-
keting, and other technical assistance that assists a 
small business concern with business development. 
‘‘(4) PARTICIPATION
AGREEMENT.—The term 
‘participation agreement’ means an agreement, be-
tween the Administrator and a company granted 
final approval under section 384(e), that— 
‘‘(A) details the company’s operating plan 
and investment criteria; and 
‘‘(B) requires the company to make invest-
ments in smaller enterprises primarily engaged 
in researching, manufacturing, developing, or 
bringing to market renewable energy sources. 
‘‘(5) RENEWABLE ENERGY.—The term ‘renew-
able energy means’ energy derived from resources 
that are regenerative or that cannot be depleted, in-
cluding but not limited to ethanol and biodiesel 
fuels. 
‘‘(6) STATE.—The term ‘State’ means such of 
the several States, the District of Columbia, the
Commonwealth of Puerto Rico, the Virgin Islands, 
Guam, American Samoa, the Commonwealth of the 
Northern Mariana Islands, and any other common-
wealth, territory, or possession of the United States. 
‘‘SEC. 382. PURPOSES. 
‘‘The purposes of the Renewable Fuel Capital Invest-
ment Program established under this part are— 
‘‘(1) to promote the research, development, 
manufacture and bringing to market of renewable 
energy sources by encouraging venture capital in-
vestments in smaller enterprises primarily engaged 
such activities; and 
‘‘(2) to establish a venture capital program, 
with the mission of addressing the unmet equity in-
vestment needs of small enterprises engaged in re-
searching, developing, manufacturing, and bringing 
to market renewable energy sources, to be adminis-
tered by the Administrator— 
‘‘(A) to enter into participation agreements 
with Renewable Fuel Capital Investment com-
panies; 
‘‘(B) to guarantee debentures of Renew-
able Fuel Capital Investment companies to en-
able each such company to make venture capital 
investments in smaller enterprises engaged in
the research, development, manufacture, and 
bringing to market renewable energy sources; 
and 
‘‘(C) to make grants to Renewable Fuel 
Investment Capital companies, and to other en-
tities, for the purpose of providing operational 
assistance to smaller enterprises financed, or 
expected to be financed, by such companies. 
‘‘SEC. 383. ESTABLISHMENT. 
‘‘In accordance with this part, the Administrator 
shall establish a Renewable Fuel Capital Investment Pro-
gram, under which the Administrator may— 
‘‘(1) enter into participation agreements with 
companies granted final approval under section 
384(e) for the purposes set forth in section 382; and 
‘‘(2) guarantee the debentures issued by Renew-
able Fuel Capital Investment companies as provided 
in section 385. 
‘‘SEC. 384. SELECTION OF RENEWABLE FUEL CAPITAL IN-
VESTMENT COMPANIES. 
‘‘(a) ELIGIBILITY.—A company shall be eligible to 
apply to participate, as a Renewable Fuel Capital Invest-
ment company, in the program established under this part 
if—
100 
‘‘(1) the company is a newly formed for-profit 
entity or a newly formed for-profit subsidiary of an 
existing entity; 
‘‘(2) the company has a management team with 
experience in alternative energy financing or relevant 
venture capital financing; and 
‘‘(3) the company has a primary objective of in-
vestment in companies that research, manufacture, 
develop, or bring to market renewable energy 
sources. 
‘‘(b) APPLICATION.—To participate, as a Renewable 
Fuel Capital Investment company, in the program estab-
lished under this part a company meeting the eligibility 
requirements set forth in subsection (a) shall submit an 
application to the Administrator that includes— 
‘‘(1) a business plan describing how the com-
pany intends to make successful venture capital in-
vestments in smaller businesses primarily engaged in 
the research, manufacture, development, or bringing 
to market of renewable energy sources; 
‘‘(2) information regarding the relevant venture 
capital qualifications and general reputation of the 
company’s management;
101 
‘‘(3) a description of how the company intends 
to seek to address the unmet capital needs of the 
smaller businesses served; 
‘‘(4) a proposal describing how the company in-
tends to use the grant funds provided under this 
part to provide operational assistance to smaller en-
terprises financed by the company, including infor-
mation regarding whether the company intends to 
use licensed professionals when necessary on the 
company’s staff or from an outside entity; 
‘‘(5) with respect to binding commitments to be 
made to the company under this part, an estimate 
of the ratio of cash to in-kind contributions; 
‘‘(6) a description of the criteria to be used to 
evaluate whether and to what extent the company 
meets the objectives of the program established 
under this part; 
‘‘(7) information regarding the management 
and financial strength of any parent firm, affiliated 
firm, or any other firm essential to the success of 
the company’s business plan; and 
‘‘(8) such other information as the Adminis-
trator may require. 
‘‘(c) CONDITIONAL APPROVAL.—
119 
‘‘SEC. 395. REMOVAL OR SUSPENSION OF DIRECTORS OR 
OFFICERS. 
‘‘Using the procedures for removing or suspending a 
director or an officer of a licensee set forth in section 313 
(to the extent such procedures are not inconsistent with 
the requirements of this part), the Administrator may re-
move or suspend any director or officer of any Renewable 
Fuel Capital Investment company. 
‘‘SEC. 396. REGULATIONS. 
‘‘The Administrator may issue such regulations as it 
deems necessary to carry out the provisions of this part 
in accordance with its purposes. 
‘‘SEC. 397. AUTHORIZATIONS OF APPROPRIATIONS. 
‘‘(a) GRANTS.—The Administrator is authorized to 
make $15,000,000 per fiscal year in operational assistance 
grants. 
‘‘(b) FUNDS COLLECTED
FOR EXAMINATIONS.— 
Funds deposited under section 393(c)(2) are authorized 
to be appropriated only for the costs of examinations 
under section 393 and for the costs of other oversight ac-
tivities with respect to the program established under this 
part.’’. 
SEC. 3010. STUDY AND REPORT. 
The Administrator shall conduct a study of the Re-
newable Fuel Capital Investment Program under part C 
of title III of the Small Business Investment Act of 1958.
120 
Not later than 3 years after the date of the enactment 
of this Act, the Administrator shall complete the study 
and submit to the Congress a report of the results of the 
study. 
TITLE IV—SCIENCE AND 
TECHNOLOGY 
Subtitle A—Advanced Research 
Projects Agency-Energy 
SEC. 4001. ADVANCED RESEARCH PROJECTS AGENCY-EN-
ERGY. 
(a) ESTABLISHMENT.—There is established the Ad-
vanced Research Projects Agency-Energy (in this subtitle 
referred to as ‘‘ARPA–E’’) within the Department of En-
ergy to overcome the long-term and high-risk technological 
barriers in the development of energy technologies. 
(b) GOALS.—The goals of ARPA–E are to enhance 
the Nation’s economic and energy security through the de-
velopment of energy technologies that result in reductions 
of imports of energy from foreign sources, reductions of 
energy-related emissions including greenhouse gases, im-
provements in the energy efficiency of all economic sectors, 
and to ensure that the United States maintains a techno-
logical lead in developing and deploying energy tech-
nologies. ARPA–E will achieve this by—
121 
(1) identifying and promoting revolutionary ad-
vances in fundamental sciences; 
(2) translating scientific discoveries and cut-
ting-edge inventions into technological innovations; 
and 
(3) accelerating transformational technological 
advances in areas that industry by itself is not likely 
to undertake because of technical and financial un-
certainty. 
(c) DIRECTOR.—ARPA–E shall be headed by a Di-
rector who shall be appointed by the Secretary of Energy. 
The Director shall report to the Secretary. No other pro-
grams within the Department of Energy shall report to 
the Director of ARPA–E. 
(d) RESPONSIBILITIES.—The Director shall admin-
ister the Fund established under section 4002 to award 
competitive grants, cooperative agreements, or contracts 
to institutions of higher education, companies, research 
foundations, trade and industry research collaborations, or 
consortia of such entities which may include federally 
funded research and development centers, to achieve the 
goals stated in subsection (b) through targeted accelera-
tion of— 
(1) novel early-stage energy research with pos-
sible technology applications;
122 
(2) development of techniques, processes, and 
technologies, and related testing and evaluation; 
(3) research and development of manufacturing 
processes for novel energy technologies; and 
(4) demonstration and coordination with non-
governmental entities for commercial applications of 
energy technologies and research applications. 
(e) PERSONNEL.— 
(1) PROGRAM MANAGERS.—The Director shall 
designate employees to serve as program managers 
for each of the programs established pursuant to the 
responsibilities established for ARPA–E under sub-
section (d). Program managers shall be responsible 
for— 
(A) establishing research and development 
goals for the program, including through the 
convening of workshops and conferring with 
outside experts, as well as publicizing the goals 
to the public and private sectors; 
(B) soliciting applications for specific areas 
of particular promise, especially those which the 
private sector or the Federal Government are 
not likely to undertake alone; 
(C) building research collaborations for 
carrying out the program;
123 
(D) selecting on the basis of merit, with 
advice under section 4003 as appropriate, each 
of the energy projects to be supported under 
the program following consideration of— 
(i) the novelty and scientific and tech-
nical merit of the proposed projects; 
(ii) the demonstrated capabilities of 
the applicants to successfully carry out the 
proposed research project; 
(iii) the applicant’s consideration of 
future commercial applications of the 
project, 
including 
the 
feasibility 
of 
partnering with 1 or more commercial enti-
ties; and 
(iv) such other criteria as are estab-
lished by the Director; and 
(E) monitoring the progress of projects 
supported under the program, and prescribing 
program restructure or termination of research 
partnerships or whole projects that do not show 
promise. 
(2) HIRING AND MANAGEMENT.—In hiring per-
sonnel for ARPA–E, the Director shall have the au-
thority to make appointments of scientific, engineer-
ing, and professional personnel without regard to the
124 
civil service laws, and fix the compensation of such 
personnel at a rate to be determined by the Director. 
The term of appointments for employees may not ex-
ceed 3 years before the granting of any extension. In 
hiring initial staff the Secretary shall give preference 
to applicants with experience in the Defense Ad-
vanced Research Projects Agency, academia, or in 
private sector technology development. The Sec-
retary or Director may contract with private recruit-
ing firms in hiring qualified technical staff. 
(3) ADDITIONAL
HIRING.—The Director may 
hire additional technical, financial, managerial, or 
other staff as needed to carry out the activities of 
the program. 
(f) COORDINATION AND NONDUPLICATION.—To the 
extent practicable, the Director shall ensure that the ac-
tivities of ARPA–E are coordinated with, and do not du-
plicate the efforts of, existing programs and laboratories 
within the Department of Energy and other relevant re-
search agencies. Where appropriate, the Director may co-
ordinate technology transfer efforts with the Technology 
Transfer Coordinator established in section 1001 of the 
Energy Policy Act of 2005 (42 U.S.C. 16391). 
(g) 
FEDERAL
DEMONSTRATION
OF
TECH-
NOLOGIES.—The Secretary shall make information avail-
125 
able to purchasing and procurement programs of Federal 
agencies regarding the potential to demonstrate tech-
nologies resulting from activities funded through ARPA– 
E. 
SEC. 4002. FUND. 
(a) ESTABLISHMENT.—There is established in the 
Treasury the Energy Transformation Acceleration Fund 
(in this subtitle referred to as the ‘‘Fund’’), which shall 
be administered by the Director of ARPA–E for the pur-
poses of carrying out this subtitle. 
(b) AUTHORIZATION
OF APPROPRIATIONS.—There 
are authorized to be appropriated to the Director of 
ARPA–E for deposit in the Fund $300,000,000 for fiscal 
year 2008, $1,000,000,000 for fiscal year 2009, 
$1,100,000,000 for fiscal year 2010, $1,200,000,000 for 
fiscal year 2011, and $1,300,000,000 for fiscal year 2012, 
to remain available until expended. 
(c) LIMITATION.—No amounts may be appropriated 
for the first year of funding for ARPA–E unless the 
amount appropriated for the activities of the Office of 
Science of the Department of Energy for that fiscal year 
exceed the amount appropriated for that Office for fiscal 
year 2007, as adjusted for inflation according to the Con-
sumer Price Index.
126 
(d) ALLOCATION.—Of the amounts appropriated for 
a fiscal year under subsection (b)— 
(1) not more than 50 percent shall be for activi-
ties under section 4001(d)(4); 
(2) not more than 8 percent shall be made 
available to Federally Funded Research and Devel-
opment Centers; 
(3) not more than 10 percent may be used for 
administrative expenses; 
(4) at least 2.5 percent shall be designated for 
technology transfer and outreach activities; and 
(5) during the first 5 years of operation of 
ARPA–E, no funds may be used for construction of 
new buildings or facilities. 
SEC. 4003. ADVICE. 
(a) ADVISORY COMMITTEES.—The Director may seek 
advice on any aspect of ARPA–E from— 
(1) existing Department of Energy advisory 
committees; and 
(2) new advisory committees organized to sup-
port the programs of ARPA–E and to provide advice 
and assistance on— 
(A) specific program tasks; or 
(B) overall direction of ARPA–E.