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not below 0) by the amount of any advanced royalties
paid under the lease to the extent that the advance
royalties have not been used to reduce production roy-
alties for a prior year.
‘‘(3) EXCEPTIONS.—Paragraph (1) shall not
apply if the cessation in production is required or
otherwise caused by—
‘‘(A) the Secretary;
‘‘(B) the Secretary of the Air Force;
‘‘(C) the Secretary of the Army;
‘‘(D) the Secretary of the Navy;
‘‘(E) a State or a political subdivision of a
State; or
‘‘(F) a force majeure.’’.
SEC. 271. LEASING AND PERMITTING ON FEDERAL LAND
WITHDRAWN FOR MILITARY PURPOSES.
(a) IN GENERAL.—Not later than 2 years after the
date of enactment of this Act, the Secretary of the Interior
and the Secretary of Defense, in consultation with the Sec-
retary of the Air Force, the Secretary of the Army, the Sec-
retary of the Navy, interested States, political subdivisions
of States, and representatives of the geothermal industry,
and other interested persons, shall submit to the appro-
priate committees of Congress a joint report on leasing and
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permitting activities for geothermal energy on Federal land
withdrawn for military purposes.
(b) REQUIREMENTS.—The report required under sub-
section (a) shall include—
(1) a description of the military geothermal pro-
gram, including a description of—
(A) any differences between the military
geothermal program and the nonmilitary geo-
thermal program, including required security
procedures and operational considerations; and
(B) the reasons the differences described in
subparagraph (A) are significant;
(2) with respect to the military geothermal pro-
gram, a description of—
(A) revenues or energy provided to the De-
partment of Defense and facilities of the Depart-
ment Defense; and
(B) royalty structures, as applicable;
(3) any revenue sharing with States and polit-
ical subdivisions of States and other benefits from—
(A) the implementation of the Geothermal
Steam Act of 1970 (30 U.S.C 1001 et seq.) and
other applicable Federal law by the Secretary of
the Interior; and
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(B) the administration of geothermal leas-
ing under section 2689 of title 10, United States
Code, by the Secretary of Defense;
(4) if appropriate—
(A) a description of the current methods
and procedures used to ensure interagency co-
ordination, as needed, in developing renewable
energy sources on Federal land withdrawn for
military purposes; and
(B) an identification of any new procedures
that would improve interagency coordination to
ensure efficient processing and administration of
leases or contracts for geothermal energy on Fed-
eral land withdrawn for military purposes, con-
sistent with the defense purposes of the with-
drawals; and
(5) recommendations for any legislative or ad-
ministrative actions that would increase geothermal
production, including—
(A) a common royalty structure;
(B) leasing procedures; and
(C) other changes that—
(i) increase production;
(ii) offset military operation costs; or
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(iii) enhance the ability of Federal
agencies to develop geothermal resources.
(c) EFFECT.—Nothing in this section affects the legal
status of geothermal leasing and development conducted by
the Department of the Interior and the Department of De-
fense.
SEC. 272. TECHNICAL AMENDMENTS.
(a) The Geothermal Steam Act of 1970 (30 U.S.C.
1001 et seq.) is amended by striking ‘‘geothermal steam and
associated geothermal resources’’ each place it appears and
inserting ‘‘geothermal resources’’.
(b) The first section of the Geothermal Steam Act of
1970 (30 U.S.C. 1001 note) is amended by striking ‘‘That
this’’ and inserting the following:
‘‘SECTION 1. SHORT TITLE.
‘‘This’’.
(c) Section 2 of the Geothermal Steam Act of 1970 (30
U.S.C. 1001) is amended—
(1) by striking ‘‘SEC. 2. As’’ and inserting the
following:
‘‘SEC. 2. DEFINITIONS.
‘‘As’’; and
(2) by striking subsection (e) and inserting the
following:
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‘‘(e) ‘direct use’ means use of geothermal re-
sources for commercial, residential, agricultural, pub-
lic facilities, or other energy needs other than the
commercial production of electricity; and’’.
(d) Section 3 of the Geothermal Steam Act of 1970 (30
U.S.C. 1002) is amended by striking ‘‘SEC. 3. Subject’’ and
inserting the following:
‘‘SEC. 3 . LANDS SUBJECT TO GEOTHERMAL LEASING.
‘‘Subject’’.
(e) Section 5 of the Geothermal Steam Act of 1970 (30
U.S.C. 1004) is amended by striking ‘‘SEC. 5. Geothermal’’
and inserting the following:
‘‘SEC. 5. RENTS AND ROYALTIES.
‘‘Geothermal’’.
(f) Section 6 of the Geothermal Steam Act of 1970 (30
U.S.C. 1005) is amended by striking ‘‘SEC. 6. (a) The’’ and
inserting the following:
‘‘SEC. 6. DURATION OF LEASES.
‘‘(a) The’’.
(g) Section 7 of the Geothermal Steam Act of 1970 (30
U.S.C. 1006) is amended by striking ‘‘SEC. 7. A geo-
thermal’’ and inserting the following:
‘‘SEC. 7. ACREAGE OF GEOTHERMAL LEASE.
‘‘A geothermal’’.
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(h) Section 8 of the Geothermal Steam Act of 1970 (30
U.S.C. 1007) is amended by striking ‘‘SEC. 8. (a) The’’ and
inserting the following:
‘‘SEC. 8. READJUSTMENT OF LEASE TERMS AND CONDI-
TIONS.
‘‘(a) The’’.
(i) Section 9 of the Geothermal Steam Act of 1970 (30
U.S.C. 1008) is amended by striking ‘‘SEC. 9. If’’ and in-
serting the following:
‘‘SEC. 9. BYPRODUCTS.
‘‘If’’.
(j) Section 10 of the Geothermal Steam Act of 1970
(30 U.S.C. 1009) is amended by striking ‘‘SEC. 10. The’’
and inserting the following:
‘‘SEC. 10. RELINQUISHMENT OF GEOTHERMAL RIGHTS.
‘‘The’’.
(k) Section 11 of the Geothermal Steam Act of 1970
(30 U.S.C. 1010) is amended by striking ‘‘SEC. 11. The’’
and inserting the following:
‘‘SEC. 11. SUSPENSION OF OPERATIONS AND PRODUCTION.
‘‘The’’.
(l) Section 12 of the Geothermal Steam Act of 1970
(30 U.S.C. 1011) is amended by striking ‘‘SEC. 12. Leases’’
and inserting the following:
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‘‘SEC. 12. TERMINATION OF LEASES.
‘‘Leases’’.
(m) Section 13 of the Geothermal Steam Act of 1970
(30 U.S.C. 1012) is amended by striking ‘‘SEC. 13. The’’
and inserting the following:
‘‘SEC. 13. WAIVER, SUSPENSION, OR REDUCTION OF RENTAL
OR ROYALTY.
‘‘The’’.
(n) Section 14 of the Geothermal Steam Act of 1970
(30 U.S.C. 1013) is amended by striking ‘‘SEC. 14. Subject’’
and inserting the following:
‘‘SEC. 14. SURFACE LAND USE.
‘‘Subject’’.
(o) Section 15 of the Geothermal Steam Act of 1970
(30 U.S.C. 1014) is amended by striking ‘‘SEC. 15. (a) Geo-
thermal’’ and inserting the following:
‘‘SEC. 15. LANDS SUBJECT TO GEOTHERMAL LEASING.
‘‘(a) Geothermal’’.
(p) Section 16 of the Geothermal Steam Act of 1970
(30 U.S.C. 1015) is amended by striking ‘‘SEC. 16. Leases’’
and inserting the following:
‘‘SEC. 16. REQUIREMENT FOR LESSEES.
‘‘Leases’’.
(q) Section 17 of the Geothermal Steam Act of 1970
(30 U.S.C. 1016) is amended by striking ‘‘SEC. 17. Admin-
istration’’ and inserting the following:
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‘‘SEC. 17. ADMINISTRATION.
‘‘Administration’’.
(r) Section 19 of the Geothermal Steam Act of 1970
(30 U.S.C. 1018) is amended by striking ‘‘SEC. 19. Upon’’
and inserting the following:
‘‘SEC. 19. DATA FROM FEDERAL AGENCIES.
‘‘Upon’’.
(s) Section 20 of the Geothermal Steam Act of 1970
(30 U.S.C. 1019) is amended by striking ‘‘SEC. 20. Subject’’
and inserting the following:
‘‘SEC. 20. DISPOSITION OF AMOUNTS RECEIVED FROM
SALES, BONUSES, ROYALTIES, AND RENTALS.
‘‘Subject’’.
(t) Section 21 of the Geothermal Steam Act of 1970
(30 U.S.C. 1020) is amended by striking ‘‘SEC. 21.’’ and
all that follows through ‘‘(b) Geothermal’’ and inserting the
following:
‘‘SEC. 21. PUBLICATION IN FEDERAL REGISTER; RESERVA-
TION OF MINERAL RIGHTS.
‘‘Geothermal’’.
(u) Section 22 of the Geothermal Steam Act of 1970
(30 U.S.C. 1021) is amended by striking ‘‘SEC. 22. Noth-
ing’’ and inserting the following:
‘‘SEC. 22. FEDERAL EXEMPTION FROM STATE WATER LAWS.
‘‘Nothing’’.
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(v) Section 23 of the Geothermal Steam Act of 1970
(30 U.S.C. 1022) is amended by striking ‘‘SEC. 23. (a) All’’
and inserting the following:
‘‘SEC. 23. PREVENTION OF WASTE; EXCLUSIVITY.
‘‘(a) All’’.
(w) Section 24 of the Geothermal Steam Act of 1970
(30 U.S.C. 1023) is amended by striking ‘‘SEC. 24. The’’
and inserting the following:
‘‘SEC. 24. RULES AND REGULATIONS.
‘‘The’’.
(x) Section 25 of the Geothermal Steam Act of 1970
(30 U.S.C. 1024) is amended by striking ‘‘SEC. 25. As’’ and
inserting the following:
‘‘SEC. 25. INCLUSION OF GEOTHERMAL LEASING UNDER
CERTAIN OTHER LAWS.
‘‘As’’.
(y) Section 26 of the Geothermal Steam Act of 1970
is amended by striking ‘‘SEC. 26. The’’ and inserting the
following:
‘‘SEC. 26. AMENDMENT.
‘‘The’’.
(z) Section 27 of the Geothermal Steam Act of 1970
(30 U.S.C. 1025) is amended by striking ‘‘SEC. 27. The’’
and inserting the following:
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‘‘SEC. 27. FEDERAL RESERVATION OF CERTAIN MINERAL
RIGHTS.
‘‘The’’.
(aa) Section 28 of the Geothermal Steam Act of 1970
(30 U.S.C. 1026) is amended by striking ‘‘SEC. 28. (a)(1)
The’’ and inserting the following:
‘‘SEC. 28. SIGNIFICANT THERMAL FEATURES.
‘‘(a)(1) The’’.
(bb) Section 29 of the Geothermal Steam Act of 1970
(30 U.S.C. 1027) is amended by striking ‘‘SEC. 29. The’’
and inserting the following:
‘‘SEC. 29. LAND SUBJECT TO PROHIBITION ON LEASING.
‘‘The’’.
Subtitle G—Hydroelectric
SEC. 281. ALTERNATIVE CONDITIONS AND FISHWAYS.
(a) FEDERAL RESERVATIONS.—Section 4(e) of the
Federal Power Act (16 U.S.C. 797(e)) is amended by insert-
ing after ‘‘adequate protection and utilization of such res-
ervation.’’ at the end of the first proviso the following: ‘‘The
license applicant and any party to the proceeding shall be
entitled to a determination on the record, after opportunity
for an agency trial-type hearing of no more than 90 days,
on any disputed issues of material fact with respect to such
conditions. All disputed issues of material fact raised by
any party shall be determined in a single trial-type hearing
to be conducted within a time frame established by the Com-
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mission for each license proceeding. Within 90 days of the
date of enactment of this Act, the Secretaries of the Interior,
Commerce, and Agriculture shall establish jointly, by rule,
the procedures for such expedited trial-type hearing, includ-
ing the opportunity to undertake discovery and cross-exam-
ine witnesses, in consultation with the Federal Energy Reg-
ulatory Commission.’’.
(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 and any party
to the proceeding shall be entitled to a determination on
the record, after opportunity for an agency trial-type hear-
ing of no more than 90 days, on any disputed issues of
material fact with respect to such fishways. All disputed
issues of material fact raised by any party shall be deter-
mined in a single trial-type hearing to be conducted within
a time frame established by the Commission for each license
proceeding. Within 90 days of the date of enactment of this
Act, the Secretaries of the Interior, Commerce, and Agri-
culture shall establish jointly, by rule, the procedures for
such expedited trial-type hearing, including the oppor-
tunity to undertake discovery and cross-examine witnesses,
in consultation with the Federal Energy Regulatory Com-
mission.’’.
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(c) ALTERNATIVE CONDITIONS AND PRESCRIPTIONS.—
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 reservation
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 or any other
party to the license proceeding 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 shall
include in the license such alternative condition, if the Sec-
retary determines, based on substantial evidence provided
by the license applicant, any other party to the proceeding,
or otherwise available to the Secretary, that such alternative
condition—
‘‘(A) provides for the adequate protection and
utilization of the reservation; and
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‘‘(B) the Secretary concurs with the license ap-
plicant’s judgment that the alternative condition will
either—
‘‘(i) cost significantly less to implement; or
‘‘(ii) result in improved operation of the
project works for electricity production, as com-
pared to the condition initially deemed necessary
by the Secretary.
‘‘(3) The Secretary concerned shall submit into the
public record of the Commission proceeding with any condi-
tion 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 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 environ-
mental quality); based on such information as may be
available to the Secretary, including information volun-
tarily 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
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other factual information available to the Secretary and rel-
evant to the Secretary’s decision.
‘‘(4) 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 applicant
or any other party to the license proceeding may propose
an alternative to such prescription to construct, maintain,
or operate 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 require, the
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proposed alternative referred to in paragraph (1), if the
Secretary of the appropriate department determines, based
on substantial evidence provided by the license applicant,
any other party to the proceeding, or otherwise available
to the Secretary, that such alternative—
‘‘(A) will be no less protective than the fishway
initially prescribed by the Secretary; and
‘‘(B) the Secretary concurs with the license ap-
plicant’s judgment that the alternative prescription
will either—
‘‘(i) cost significantly less to implement; or
‘‘(ii) result in improved operation of the
project works for electricity production, as com-
pared to the fishway initially deemed necessary
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 accepting
any alternative prescription under this section. The written
statement must demonstrate that the Secretary gave equal
consideration to the effects of the prescription adopted and
alternatives not accepted on energy supply, distribution,
cost, and use; flood control; navigation; water supply; and
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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
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 rel-
evant to the Secretary’s decision.
‘‘(4) If the Secretary concerned does not accept an ap-
plicant’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 dispute
to the Commission’s Dispute Resolution Service. The Dis-
pute Resolution Service shall consult with the Secretary and
the Commission and issue a non-binding advisory within
90 days. The Secretary may accept the Dispute Resolution
Service advisory unless the Secretary finds that the rec-
ommendation 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 Commis-
sion’s proceeding.’’.
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SEC. 282. ALASKA STATE JURISDICTION OVER SMALL HY-
DROELECTRIC PROJECTS.
Section 32 of the Federal Power Act (16 U.S.C. 823c)
is amended—
(1) in subsection (a)(3)(C), by inserting ‘‘except
as provided in subsection (j),’’ before ‘‘conditions’’;
and
(2) by adding at the end the following:
‘‘(j) FISH AND WILDLIFE.—If the State of Alaska de-
termines that a recommendation under subsection (a)(3)(C)
is inconsistent with paragraphs (1) and (2) of subsection
(a), the State of Alaska may decline to adopt all or part
of the recommendations in accordance with the procedures
established under section 10(j)(2).’’.
SEC. 283. FLINT CREEK HYDROELECTRIC PROJECT.
(a) EXTENSION OF TIME.—Notwithstanding the time
period specified in section 5 of the Federal Power Act (16
U.S.C. 798) that would otherwise apply to the Federal En-
ergy Regulatory Commission (referred to in this section as
the ‘‘Commission’’) project numbered 12107, the Commis-
sion shall—
(1) if the preliminary permit is in effect on the
date of enactment of this Act, extend the preliminary
permit for a period of 3 years beginning on the date
on which the preliminary permit expires; or
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(2) if the preliminary permit expired before the
date of enactment of this Act, on request of the per-
mittee, reinstate the preliminary permit for an addi-
tional 3-year period beginning on the date of enact-
ment of this Act.
(b) LIMITATION ON CERTAIN FEES.—Notwithstanding
section 10(e)(1) of the Federal Power Act (16 U.S.C.
803(e)(1)) or any other provision of Federal law providing
for the payment to the United States of charges for the use
of Federal land for the purposes of operating and maintain-
ing a hydroelectric development licensed by the Commis-
sion, any political subdivision of the State of Montana that
holds a Commission license for the Commission project
numbered 12107 in Granite and Deer Lodge Counties, Mon-
tana, shall be required to pay to the United States for the
use of that land for each year during which the political
subdivision continues to hold the license for the project, the
lesser of—
(1) $25,000; or
(2) such annual charge as the Commission or
any other department or agency of the Federal Gov-
ernment may assess.
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Subtitle H—Renewable Portfolio
Standard
SEC. 291. RENEWABLE PORTFOLIO STANDARD.
Title VI of the Public Utility Regulatory Policies Act
of 1978 (16 U.S.C. 2601 et seq.) is amended by adding at
the end the following:
‘‘SEC. 609. FEDERAL RENEWABLE PORTFOLIO STANDARD.
‘‘(a) RENEWABLE ENERGY REQUIREMENT.—
‘‘(1) IN
GENERAL.—Each electric utility that
sells electricity to electric consumers shall obtain a
percentage of the base amount of electricity it sells to
electric consumers in any calendar year from new re-
newable energy or existing renewable energy. The per-
centage obtained in a calendar year shall not be less
than the amount specified in the following table:
‘‘Calendar year:
Minimum annual
percentage:
2008 through 2011 .........................................................................
2.5
2012 through 2015 .........................................................................
5.0
2016 through 2019 .........................................................................
7.5
2020 through 2030 .........................................................................
10.0.
‘‘(2) MEANS OF COMPLIANCE.—An electric util-
ity shall meet the requirements of paragraph (1) by—
‘‘(A) generating electric energy using new
renewable energy or existing renewable energy;
‘‘(B) purchasing electric energy generated
by new renewable energy or existing renewable
energy;
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‘‘(C) purchasing renewable energy credits
issued under subsection (b); or
‘‘(D) a combination of the foregoing.
‘‘(b) RENEWABLE ENERGY CREDIT TRADING PRO-
GRAM.—
‘‘(1) Not later than January 1, 2007, the Sec-
retary shall establish a renewable energy credit trad-
ing program to permit an electric utility that does
not generate or purchase enough electric energy from
renewable energy to meet its obligations under sub-
section (a)(1) to satisfy such requirements by pur-
chasing sufficient renewable energy credits.
‘‘(2) As part of such program the Secretary
shall—
‘‘(A) issue renewable energy credits to gen-
erators of electric energy from new renewable en-
ergy;
‘‘(B) sell renewable energy credits to electric
utilities at the rate of 1.5 cents per kilowatt-hour
(as adjusted for inflation under subsection (g));
‘‘(C) ensure that a kilowatt hour, including
the associated renewable energy credit, shall be
used only once for purposes of compliance with
this section; and
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‘‘(D) allow double credits for generation
from facilities on Indian Lands, and triple cred-
its for generation from small renewable distrib-
uted generators (meaning those those no larger
than 1 megawatt).
‘‘(3) Credits under paragraph (2)(A) may only
be used for compliance with this section for 3 years
from the date issued.
‘‘(c) ENFORCEMENT.—
‘‘(1) CIVIL PENALTIES.—Any electric utility that
fails to meet the renewable energy requirements of
subsection (a) shall be subject to a civil penalty.
‘‘(2) AMOUNT OF PENALTY.—The amount of the
civil penalty shall be determined by multiplying the
number of kilowatt-hours of electric energy sold to
electric consumers in violation of subsection (a) by the
greater of 1.5 cents (adjusted for inflation under sub-
section (g)) or 200 percent of the average market
value of renewable energy credits during the year in
which the violation occurred.
‘‘(3) MITIGATION
OR
WAIVER.—The Secretary
may mitigate or waive a civil penalty under this sub-
section if the electric utility was unable to comply
with subsection (a) for reasons outside of the reason-
able control of the utility. The Secretary shall reduce
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the amount of any penalty determined under para-
graph (2) by an amount paid by the electric utility
to a State for failure to comply with the requirement
of a State renewable energy program if the State re-
quirement is greater than the applicable requirement
of subsection (a).
‘‘(4) PROCEDURE
FOR
ASSESSING
PENALTY.—
The Secretary shall assess a civil penalty under this
subsection in accordance with the procedures pre-
scribed by section 333(d) of the Energy Policy and
Conservation Act of 1954 (42 U.S.C. 6303).
‘‘(d) STATE RENEWABLE ENERGY ACCOUNT PRO-
GRAM.—
‘‘(1) The Secretary shall establish, not later than
December 31, 2008, a State renewable energy account
program.
‘‘(2) All money collected by the Secretary from
the sale of renewable energy credits and the assess-
ment of civil penalties under this section shall be de-
posited into the renewable energy account established
pursuant to this subsection. The State renewable en-
ergy account shall be held by the Secretary and shall
not be transferred to the Treasury Department.
‘‘(3) Proceeds deposited in the State renewable
energy account shall be used by the Secretary, subject
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to appropriations, for a program to provide grants to
the State agency responsible for developing State en-
ergy conservation plans under section 362 of the En-
ergy Policy and Conservation Act (42 U.S.C. 6322)
for the purposes of promoting renewable energy pro-
duction, including programs that promote tech-
nologies that reduce the use of electricity at customer
sites such as solar water heating.
‘‘(4) The Secretary may issue guidelines and cri-
teria for grants awarded under this subsection. State
energy offices receiving grants under this section shall
maintain such records and evidence of compliance as
the Secretary may require.
‘‘(5) In allocating funds under this program, the
Secretary shall give preference—
‘‘(A) to States in regions which have a dis-
proportionately small share of economically sus-
tainable renewable energy generation capacity;
and
‘‘(B) to State programs to stimulate or en-
hance innovative renewable energy technologies.
‘‘(e) RULES.—The Secretary shall issue rules imple-
menting this section not later than 1 year after the date
of enactment of this section.
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‘‘(f) EXEMPTIONS.—This section shall not apply in
any calendar year to an electric utility—
‘‘(1) that sold less than 4,000,000 megawatt-
hours of electric energy to electric consumers during
the preceding calendar year; or
‘‘(2) in Hawaii.
‘‘(g) INFLATION ADJUSTMENT.—Not later than Decem-
ber 31 of each year beginning in 2008, the Secretary shall
adjust for inflation the price of a renewable energy credit
under subsection (b)(2)(B) and the amount of the civil pen-
alty per kilowatt-hour under subsection (c)(2).
‘‘(h) STATE PROGRAMS.—Nothing in this section shall
diminish any authority of a State or political subdivision
thereof to adopt or enforce any law or regulation respecting
renewable energy, but, except as provided in subsection
(c)(3), no such law or regulation shall relieve any person
of any requirement otherwise applicable under this section.
The Secretary, in consultation with States having such re-
newable energy programs, shall, to the maximum extent
practicable, facilitate coordination between the Federal pro-
gram and State programs.
‘‘(i) DEFINITIONS.—For purposes of this section:
‘‘(1) BASE AMOUNT OF ELECTRICITY.—The term
‘base amount of electricity’ means the total amount of
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electricity sold by an electric utility to electric con-
sumers in a calendar year, excluding—
‘‘(A) electricity generated by a hydroelectric
facility (including a pumped storage facility but
excluding incremental hydropower); and
‘‘(B) electricity generated through the incin-
eration of municipal solid waste.
‘‘(2) DISTRIBUTED GENERATION FACILITY.—The
term ‘distributed generation facility’ means a facility
at a customer site.
‘‘(3) EXISTING RENEWABLE ENERGY.—The term
‘existing renewable energy’ means, except as provided
in paragraph (7)(B), electric energy generated at a
facility (including a distributed generation facility)
placed in service prior to the date of enactment of this
section from solar, wind, or geothermal energy; ocean
energy; biomass (as defined in section 203(a) of the
Energy Policy Act of 2005); or landfill gas.
‘‘(4) GEOTHERMAL
ENERGY.—The term ‘geo-
thermal energy’ means energy derived from a geo-
thermal deposit (within the meaning of section
613(e)(2) of the Internal Revenue Code of 1986).
‘‘(5) 
INCREMENTAL
GEOTHERMAL
PRODUC-
TION.—
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‘‘(A) IN GENERAL.—The term ‘incremental
geothermal production’ means for any year the
excess of—
‘‘(i) the total kilowatt hours of elec-
tricity produced from a facility (including
a distributed generation facility) using geo-
thermal energy, over
‘‘(ii) the average annual kilowatt hours
produced at such facility for 5 of the pre-
vious 7 calendar years before the date of en-
actment of this section after eliminating the
highest and the lowest kilowatt hour produc-
tion years in such 7-year period.
‘‘(B) SPECIAL RULE.—A facility described
in subparagraph (A) which was placed in service
at least 7 years before the date of enactment of
this section shall commencing with the year in
which such date of enactment occurs, reduce the
amount calculated under subparagraph (A)(ii)
each year, on a cumulative basis, by the average
percentage decrease in the annual kilowatt hour
production for the 7-year period described in
subparagraph (A)(ii) with such cumulative sum
not to exceed 30 percent.
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‘‘(6) INCREMENTAL
HYDROPOWER.—The term
‘incremental hydropower’ means additional energy
generated as a result of efficiency improvements or
capacity additions made on or after the date of enact-
ment of this section or the effective date of an existing
applicable State renewable portfolio standard pro-
gram at a hydroelectric facility that was placed in
service before that date. The term does not include ad-
ditional energy generated as a result of operational
changes not directly associated with efficiency im-
provements or capacity additions. Efficiency im-
provements and capacity additions shall be measured
on the basis of the same water flow information used
to determine a historic average annual generation
baseline for the hydroelectric facility and certified by
the Secretary or the Federal Energy Regulatory Com-
mission.
‘‘(7) NEW RENEWABLE ENERGY.—The term ‘new
renewable energy’ means—
‘‘(A) electric energy generated at a facility
(including a distributed generation facility)
placed in service on or after January 1, 2003,
from—
‘‘(i) solar, wind, or geothermal energy
or ocean energy;
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‘‘(ii) biomass (as defined in section
203(a) of the Energy Policy Act of 2005);
‘‘(iii) landfill gas; or
‘‘(iv) incremental hydropower; and
‘‘(B) for electric energy generated at a facil-
ity (including a distributed generation facility)
placed in service prior to the date of enactment
of this section—
‘‘(i) the additional energy above the
average generation in the 3 years preceding
the date of enactment of this section at the
facility from—
‘‘(I) solar or wind energy or ocean
energy;
‘‘(II) biomass (as defined in sec-
tion 203(a) of the Energy Policy Act of
2005);
‘‘(III) landfill gas; or
‘‘(IV) incremental hydropower.
‘‘(ii) the incremental geothermal pro-
duction.
‘‘(8) OCEAN ENERGY.—The term ‘ocean energy’
includes current, wave, tidal, and thermal energy.
‘‘(j) SUNSET.—This section expires on December 31,
2030.’’.