129 
SEC. 225. ANNUAL RENTAL. 
(a) ANNUAL RENTAL RATE.—Section 5 of the Geo-
thermal Steam Act of 1970 (30 U.S.C. 1004) is further 
amended in subsection (a) in paragraph (3) by striking 
‘‘$1 per acre or fraction thereof for each year of the lease’’ 
and all that follows through the end of the paragraph and 
inserting ‘‘$1 per acre or fraction thereof for each year 
of the lease through the tenth year in the case of a lease 
awarded in a noncompetitive lease sale; or $2 per acre or 
fraction thereof for the first year, $3 per acre or fraction 
thereof for each of the second through tenth years, in the 
case of a lease awarded in a competitive lease sale; and 
$5 per acre or fraction thereof for each year after the 10th 
year thereof for all leases.’’. 
(b) TERMINATION OF LEASE FOR FAILURE TO PAY 
RENTAL.—Section 5 of the Geothermal Steam Act of 
1970 (30 U.S.C. 1004) is further amended by adding at 
the end the following: 
‘‘(g) TERMINATION OF LEASE FOR FAILURE TO PAY 
RENTAL.— 
‘‘(1) IN GENERAL.—The Secretary shall termi-
nate any lease with respect to which rental is not 
paid in accordance with this Act and the terms of 
the lease under which the rental is required, upon 
the expiration of the 45-day period beginning on the 
date of the failure to pay such rental.
130 
‘‘(2) 
NOTIFICATION.—The 
Secretary 
shall 
promptly notify a lessee that has not paid rental re-
quired under the lease that the lease will be termi-
nated at the end of the period referred to in para-
graph (1). 
‘‘(3) REINSTATEMENT.—A lease that would 
otherwise terminate under paragraph (1) shall not 
terminate under that paragraph if the lessee pays to 
the Secretary, before the end of the period referred 
to in paragraph (1), the amount of rental due plus 
a late fee equal to 10 percent of such amount.’’. 
SEC. 226. LEASING AND PERMITTING ON FEDERAL LANDS 
WITHDRAWN FOR MILITARY PURPOSES. 
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 each military service and 
with interested States, counties, representatives of the 
geothermal industry, and other persons, shall submit to 
Congress a joint report concerning leasing and permitting 
activities for geothermal energy on Federal lands with-
drawn for military purposes. Such report shall include the 
following: 
(1) A description of the Military Geothermal 
Program, including any differences between it and 
the non-Military Geothermal Program, including re-
131 
quired security procedures, and operational consider-
ations, and discussions as to the differences, and 
why they are important. Further, the report shall 
describe revenues or energy provided to the Depart-
ment of Defense and its facilities, royalty structures, 
where applicable, and any revenue sharing with 
States and counties or other benefits between— 
(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 
(B) the administration of geothermal leas-
ing under section 2689 of title 10, United 
States Code, by the Secretary of Defense. 
(2) If appropriate, a description of the current 
methods and procedures used to ensure interagency 
coordination, where needed, in developing renewable 
energy sources on Federal lands withdrawn for mili-
tary purposes, and an identification of any new pro-
cedures that might be required in the future for the 
improvement of interagency coordination to ensure 
efficient processing and administration of leases or 
contracts for geothermal energy on Federal lands 
withdrawn for military purposes, consistent with the 
defense purposes of such withdrawals.
132 
(3) Recommendations for any legislative or ad-
ministrative actions that might better achieve in-
creased geothermal production, including a common 
royalty structure, leasing procedures, or other 
changes that increase production, offset military op-
eration costs, or enhance the Federal agencies’ abil-
ity to develop geothermal resources. 
Except as provided in this section, nothing in this subtitle 
shall affect the legal status of the Department of the Inte-
rior and the Department of the Defense with respect to 
each other regarding geothermal leasing and development 
until such status is changed by law. 
SEC. 227. TECHNICAL AMENDMENTS. 
The Geothermal Steam Act of 1970 (30 U.S.C. 1001 
et seq.) is further amended as follows: 
(1) By striking ‘‘geothermal steam and associ-
ated geothermal resources’’ each place it appears 
and inserting ‘‘geothermal resources’’. 
(2) Section 2(e) (30 U.S.C. 1001(e)) is amend-
ed to read as follows: 
‘‘(e) ‘direct use’ means utilization of geothermal 
resources for commercial, residential, agricultural, 
public facilities, or other energy needs other than the 
commercial production of electricity; and’’.
133 
(3) Section 21 (30 U.S.C. 1020) is amended by 
striking ‘‘(a) Within one hundred’’ and all that fol-
lows through ‘‘(b) Geothermal’’ and inserting ‘‘Geo-
thermal’’. 
(4) The first section (30 U.S.C. 1001 note) is 
amended by striking ‘‘That this’’ and inserting the 
following: 
‘‘SEC. 1. SHORT TITLE. 
‘‘This’’. 
(5) Section 2 (30 U.S.C. 1001) is amended by 
striking ‘‘SEC. 2. As’’ and inserting the following: 
‘‘SEC. 2. DEFINITIONS. 
‘‘As’’. 
(6) Section 3 (30 U.S.C. 1002) is amended by 
striking ‘‘SEC. 3. Subject’’ and inserting the fol-
lowing: 
‘‘SEC. 3 . LANDS SUBJECT TO GEOTHERMAL LEASING. 
‘‘Subject’’. 
(7) Section 5 (30 U.S.C. 1004) is further 
amended by striking ‘‘SEC. 5.’’, and by inserting im-
mediately before and above subsection (a) the fol-
lowing:
134 
‘‘SEC. 5. RENTS AND ROYALTIES. ’’. 
(8) Section 7 (30 U.S.C. 1006) is amended by 
striking ‘‘SEC. 7. A geothermal’’ and inserting the 
following: 
‘‘SEC. 7. ACREAGE OF GEOTHERMAL LEASE. 
‘‘A geothermal’’. 
(9) Section 8 (30 U.S.C. 1007) is amended by 
striking ‘‘SEC. 8. (a) The’’ and inserting the fol-
lowing: 
‘‘SEC. 8. READJUSTMENT OF LEASE TERMS AND CONDI-
TIONS. 
‘‘(a) The’’. 
(10) Section 9 (30 U.S.C. 1008) is amended by 
striking ‘‘SEC. 9. If’’ and inserting the following: 
‘‘SEC. 9. BYPRODUCTS. 
‘‘If’’. 
(11) Section 10 (30 U.S.C. 1009) is amended 
by striking ‘‘SEC. 10. The’’ and inserting the fol-
lowing: 
‘‘SEC. 10. RELINQUISHMENT OF GEOTHERMAL RIGHTS. 
‘‘The’’. 
(12) Section 11 (30 U.S.C. 1010) is amended 
by striking ‘‘SEC. 11. The’’ and inserting the fol-
lowing: 
‘‘SEC. 11. SUSPENSION OF OPERATIONS AND PRODUCTION. 
‘‘The’’.
135 
(13) Section 12 (30 U.S.C. 1011) is amended 
by striking ‘‘SEC. 12. Leases’’ and inserting the fol-
lowing: 
‘‘SEC. 12. TERMINATION OF LEASES. 
‘‘Leases’’. 
(14) Section 13 (30 U.S.C. 1012) is amended 
by striking ‘‘SEC. 13. The’’ and inserting the fol-
lowing: 
‘‘SEC. 13. WAIVER, SUSPENSION, OR REDUCTION OF RENT-
AL OR ROYALTY. 
‘‘The’’. 
(15) Section 14 (30 U.S.C. 1013) is amended 
by striking ‘‘SEC. 14. Subject’’ and inserting the fol-
lowing: 
‘‘SEC. 14. SURFACE LAND USE. 
‘‘Subject’’. 
(16) Section 15 (30 U.S.C. 1014) is amended 
by striking ‘‘SEC. 15. (a) Geothermal’’ and inserting 
the following: 
‘‘SEC. 15. LANDS SUBJECT TO GEOTHERMAL LEASING. 
‘‘(a) Geothermal’’. 
(17) Section 16 (30 U.S.C. 1015) is amended 
by striking ‘‘SEC. 16. Leases’’ and inserting the fol-
lowing:
136 
‘‘SEC. 16. REQUIREMENT FOR LESSEES. 
‘‘Leases’’. 
(18) Section 17 (30 U.S.C. 1016) is amended 
by striking ‘‘SEC. 17. Administration’’ and inserting 
the following: 
‘‘SEC. 17. ADMINISTRATION. 
‘‘Administration’’. 
(19) Section 19 (30 U.S.C. 1018) is amended 
by striking ‘‘SEC. 19. Upon’’ and inserting the fol-
lowing: 
‘‘SEC. 19. DATA FROM FEDERAL AGENCIES. 
‘‘Upon’’. 
(20) Section 21 (30 U.S.C. 1020) is further 
amended by striking ‘‘SEC. 21.’’, and by inserting 
immediately before and above the remainder of that 
section the following: 
‘‘SEC. 21. PUBLICATION IN FEDERAL REGISTER; RESERVA-
TION OF MINERAL RIGHTS. ’’. 
(21) Section 22 (30 U.S.C. 1021) is amended 
by striking ‘‘SEC. 22. Nothing’’ and inserting the 
following: 
‘‘SEC. 22. FEDERAL EXEMPTION FROM STATE WATER LAWS. 
‘‘Nothing’’. 
(22) Section 23 (30 U.S.C. 1022) is amended 
by striking ‘‘SEC. 23. (a) All’’ and inserting the fol-
lowing:
137 
‘‘SEC. 23. PREVENTION OF WASTE; EXCLUSIVITY. 
‘‘(a) All’’. 
(23) Section 24 (30 U.S.C. 1023) is amended 
by striking ‘‘SEC. 24. The’’ and inserting the fol-
lowing: 
‘‘SEC. 24. RULES AND REGULATIONS. 
‘‘The’’. 
(24) Section 25 (30 U.S.C. 1024) is amended 
by striking ‘‘SEC. 25. As’’ and inserting the fol-
lowing: 
‘‘SEC. 25. INCLUSION OF GEOTHERMAL LEASING UNDER 
CERTAIN OTHER LAWS. 
‘‘As’’. 
(25) Section 26 is amended by striking ‘‘SEC. 
26. The’’ and inserting the following: 
‘‘SEC. 26. AMENDMENT. 
‘‘The’’. 
(26) Section 27 (30 U.S.C. 1025) is amended 
by striking ‘‘SEC. 27. The’’ and inserting the fol-
lowing: 
‘‘SEC. 27. FEDERAL RESERVATION OF CERTAIN MINERAL 
RIGHTS. 
‘‘The’’. 
(27) Section 28 (30 U.S.C. 1026) is amended 
by striking ‘‘SEC. 28. (a)(1) The’’ and inserting the 
following:
138 
‘‘SEC. 28. SIGNIFICANT THERMAL FEATURES. 
‘‘(a)(1) The’’. 
(28) Section 29 (30 U.S.C. 1027) is amended 
by striking ‘‘SEC. 29. The’’ and inserting the fol-
lowing: 
‘‘SEC. 29. LAND SUBJECT TO PROHIBITION ON LEASING. 
‘‘The’’. 
Subtitle C—Hydroelectric 
PART I—ALTERNATIVE CONDITIONS 
SEC. 231. 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 expedited agency 
trial-type hearing of any disputed issues of material fact, 
with respect to such conditions. Such hearing may be con-
ducted in accordance with procedures established by agen-
cy regulation in consultation with the Federal Energy 
Regulatory 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 shall be enti-
tled to a determination on the record, after opportunity
139 
for an expedited agency trial-type hearing of any disputed 
issues of material fact, with respect to such fishways. Such 
hearing may be conducted in accordance with procedures 
established by agency regulation in consultation with the 
Federal Energy Regulatory Commission.’’. 
(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 
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—
140 
‘‘(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 
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,
141 
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 provide for the adequate protection and utilization 
of the reservation. The Secretary shall submit the advisory 
and the Secretary’s final written determination into the 
record of the Commission’s proceeding. 
‘‘(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-
scription to construct, maintain, or operate a fishway. 
‘‘(2) Notwithstanding section 18, the Secretary of the 
Interior or the Secretary of Commerce, as appropriate,
142 
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 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-
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
143 
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 
finds that the recommendation will be less protective than 
the fishway initially prescribed by the Secretary. The Sec-
retary shall submit the advisory and the Secretary’s final 
written determination into the record of the Commission’s 
proceeding.’’.
144 
PART II—ADDITIONAL HYDROPOWER 
SEC. 241. 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 
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-
145 
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 (16 U.S.C. 823a(a)(2)). 
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 
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
146 
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 
1 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-
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-
147 
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. 242. 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-
ital improvement concerned and not more than 1 payment 
may be made with respect to improvements at a single 
facility. No payment in excess of $750,000 may be made 
with respect to improvements at a single facility. 
(c) AUTHORIZATION
OF APPROPRIATIONS.—There 
are authorized to be appropriated to carry out this section
148 
not more than $10,000,000 for each of the fiscal years 
2004 through 2013. 
SEC. 243. SMALL HYDROELECTRIC POWER PROJECTS. 
Section 408(a)(6) of the Public Utility Regulatory 
Policies Act of 1978 (16 U.S.C. 2708(a)(6)) is amended 
by striking ‘‘April 20, 1977’’ and inserting ‘‘March 4, 
2003’’. 
SEC. 244. INCREASED HYDROELECTRIC GENERATION AT 
EXISTING FEDERAL FACILITIES. 
(a) IN GENERAL.—The Secretary of the Interior and 
the Secretary of Energy, in consultation with the Sec-
retary of the Army, shall jointly conduct a study of the 
potential for increasing electric power production capa-
bility at federally owned or operated water regulation, 
storage, and conveyance facilities. 
(b) CONTENT.—The study under this section shall in-
clude identification and description in detail of each facil-
ity that is capable, with or without modification, of pro-
ducing additional hydroelectric power, including esti-
mation of the existing potential for the facility to generate 
hydroelectric power. 
(c) REPORT.—The Secretaries shall submit to the 
Committees on Energy and Commerce, Resources, and 
Transportation and Infrastructure of the House of Rep-
resentatives and the Committee on Energy and Natural
149 
Resources of the Senate a report on the findings, conclu-
sions, and recommendations of the study under this sec-
tion by not later than 18 months after the date of the 
enactment of this Act. The report shall include each of 
the following: 
(1) The identifications, descriptions, and esti-
mations referred to in subsection (b). 
(2) A description of activities currently con-
ducted or considered, or that could be considered, to 
produce additional hydroelectric power from each 
identified facility. 
(3) A summary of prior actions taken by the 
Secretaries to produce additional hydroelectric power 
from each identified facility. 
(4) The costs to install, upgrade, or modify 
equipment or take other actions to produce addi-
tional hydroelectric power from each identified facil-
ity and the level of Federal power customer involve-
ment in the determination of such costs. 
(5) The benefits that would be achieved by such 
installation, upgrade, modification, or other action, 
including quantified estimates of any additional en-
ergy or capacity from each facility identified under 
subsection (b).
150 
(6) A description of actions that are planned, 
underway, or might reasonably be considered to in-
crease hydroelectric power production by replacing 
turbine runners, by performing generator upgrades 
or rewinds, or construction of pumped storage facili-
ties. 
(7) The impact of increased hydroelectric power 
production on irrigation, fish, wildlife, Indian tribes, 
river health, water quality, navigation, recreation, 
fishing, and flood control. 
(8) Any additional recommendations to increase 
hydroelectric power production from, and reduce 
costs and improve efficiency at, federally owned or 
operated water regulation, storage, and conveyance 
facilities. 
SEC. 245. SHIFT OF PROJECT LOADS TO OFF-PEAK PERI-
ODS. 
(a) IN GENERAL.—The Secretary of the Interior 
shall— 
(1) review electric power consumption by Bu-
reau of Reclamation facilities for water pumping 
purposes; and 
(2) make such adjustments in such pumping as 
possible to minimize the amount of electric power 
consumed for such pumping during periods of peak
151 
electric power consumption, including by performing 
as much of such pumping as possible during off- 
peak hours at night. 
(b) CONSENT OF AFFECTED IRRIGATION CUSTOMERS 
REQUIRED.—The Secretary may not under this section 
make any adjustment in pumping at a facility without the 
consent of each person that has contracted with the 
United States for delivery of water from the facility for 
use for irrigation and that would be affected by such ad-
justment. 
(c) EXISTING OBLIGATIONS NOT AFFECTED.—This 
section shall not be construed to affect any existing obliga-
tion of the Secretary to provide electric power, water, or 
other benefits from Bureau of Reclamation facilities, in-
cluding recreational releases. 
SEC. 246. CORPS OF ENGINEERS HYDROPOWER OPERATION 
AND MAINTENANCE FUNDING. 
(a) IN GENERAL.—Notwithstanding the last sentence 
of section 5 of the Act of December 22, 1944 (commonly 
known as the ‘‘Flood Control Act of 1944’’) (58 Stat. 890, 
chapter 665; 16 U.S.C. 825s), the 11th paragraph under 
the heading ‘‘OFFICE OF THE SECRETARY’’ in title I of 
the Act of October 12, 1949 (63 Stat. 767, chapter 680; 
16 U.S.C. 825s–1), the matter under the heading ‘‘CON-
TINUING
FUND, SOUTHEASTERN
POWER
ADMINISTRA-
152 
TION’’ in title I of the Act of August 31, 1951 (65 Stat. 
249, chapter 375; 16 U.S.C. 825s–2), section 3302 of title 
31, United States Code, or any other law, and without 
further appropriation or fiscal year limitation, for fiscal 
year 2004, the Administrator of the Southeastern Power 
Administration, the Administrator of the Southwestern 
Power Administration, and the Administrator of the West-
ern Area Power Administration may credit to the Sec-
retary of the Army (referred to in this section as the ‘‘Sec-
retary’’), receipts, in an amount determined under sub-
section (c), from the sale of power and related services. 
(b) USE OF FUNDS.— 
(1) IN GENERAL.—The Secretary— 
(A) shall, except as provided in paragraph 
(2), use the amounts credited under subsection 
(a) to fund only the Corps of Engineers annual 
operation and maintenance activities that are 
allocated exclusively to the power function and 
assigned to the respective power marketing ad-
ministration and respective project system as 
applicable for repayment; and 
(B) shall not use the amounts for any 
costs allocated to non-power functions of Corps 
of Engineer operations.
153 
(2) EXCEPTION.—The Secretary may use 
amounts credited by the Southwestern Power Ad-
ministration under subsection (a) for capital and 
nonrecurring costs. 
(c) AMOUNT.—The amount of the receipts credited 
under subsection (a) shall be equal to such amount as— 
(1) the Secretary of the Army requests; and 
(2) the appropriate Administrator, in consulta-
tion with the power customers of the Administrator’s 
power marketing administration, determines to be 
appropriate to apply to the costs referred to in sub-
section (b). 
(d) APPLICABLE LAW.—The amounts credited under 
subsection (a) are exempt from sequestration under the 
Balanced Budget and Emergency Deficit Control Act of 
1985 (2 U.S.C. 901 et seq.). 
SEC. 247. LIMITATION ON CERTAIN CHARGES ASSESSED TO 
THE FLINT CREEK PROJECT, MONTANA. 
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 pur-
poses of operating and maintaining a hydroelectric devel-
opment licensed by the Federal Energy Regulatory Com-
mission (referred to in this section as the ‘‘Commission’’),
154 
any political subdivision of the State of Montana that 
holds a license for Commission Project No. 1473 in Gran-
ite and Deer Lodge Counties, Montana, 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. 
SEC. 248. REINSTATEMENT AND TRANSFER. 
(a) REINSTATEMENT AND TRANSFER OF FEDERAL 
LICENSE
FOR PROJECT NUMBERED 2696.—Notwith-
standing section 8 of the Federal Power Act (16 U.S.C. 
801) or any other provision of such Act, the Federal En-
ergy Regulatory Commission shall reinstate the license for 
Project No. 2696 and transfer the license, without delay 
or the institution of any proceedings, to the Town of 
Stuyvesant, New York, holder of Federal Energy Regu-
latory Commission Preliminary Permit No. 11787, within 
30 days after the date of enactment of this Act. 
(b) HYDROELECTRIC
INCENTIVES.—Project No. 
2696 shall be entitled to the full benefit of any Federal 
legislation that promotes hydroelectric development that
155 
is enacted within 2 years either before or after the date 
of enactment of this Act. 
(c) PROJECT DEVELOPMENT AND FINANCING.—The 
Federal Energy Regulatory Commission shall permit the 
Town of Stuyvesant to add as a colicensee any private or 
public entity or entities to the reinstated license at any 
time, notwithstanding the issuance of a preliminary permit 
to the Town of Stuyvesant and any consideration of mu-
nicipal preference. The town shall be entitled, to the extent 
that funds are available or shall be made available, to re-
ceive loans under sections 402 and 403 of the Public Util-
ity Regulatory Policies Act of 1978 (16 U.S.C. 2702 and 
2703), or similar programs, for the reimbursement of fea-
sibility studies or development costs, or both, incurred 
since January 1, 2001, through and including December 
31, 2006. All power produced by the project shall be 
deemed incremental hydropower for purpose of qualifying 
for any energy credit or similar benefits.
156 
TITLE III—OIL AND GAS 
Subtitle A—Petroleum Reserve and 
Home Heating Oil 
SEC. 301. PERMANENT AUTHORITY TO OPERATE THE STRA-
TEGIC 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 the following: 
‘‘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—
157 
(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
158 
and Conservation Act (42 U.S.C. 6250(b)(1)) is amended 
by striking all after ‘‘increases’’ through to ‘‘mid-October 
through March’’ and inserting ‘‘by more than 60 percent 
over its 5-year rolling average for the months of mid-Octo-
ber through March (considered as a heating season aver-
age)’’. 
(e) FILL STRATEGIC PETROLEUM RESERVE TO CA-
PACITY.—The Secretary of Energy shall, as expeditiously 
as practicable, acquire petroleum in amounts sufficient to 
fill the Strategic Petroleum Reserve to the 1,000,000,000 
barrel capacity authorized under section 154(a) of the En-
ergy Policy and Conservation Act (42 U.S.C. 6234(a)), 
consistent with the provisions of sections 159 and 160 of 
such Act (42 U.S.C. 6239, 6240). 
SEC. 302. NATIONAL OILHEAT RESEARCH ALLIANCE. 
Section 713 of the Energy Act of 2000 (42 U.S.C. 
6201 note) is amended by striking ‘‘4’’ and inserting ‘‘9’’. 
Subtitle B—Production Incentives 
SEC. 311. DEFINITION OF SECRETARY. 
In this subtitle, the term ‘‘Secretary’’ means the Sec-
retary of the Interior. 
SEC. 312. PROGRAM ON OIL AND GAS ROYALTIES IN-KIND. 
(a) APPLICABILITY OF SECTION.—Notwithstanding 
any other provision of law, this section applies to all roy-
alty in-kind accepted by the Secretary on or after the date
159 
of enactment of this Act under any Federal oil or gas lease 
or permit under section 36 of the Mineral Leasing Act 
(30 U.S.C. 192), section 27 of the Outer Continental Shelf 
Lands Act (43 U.S.C. 1353), or any other Federal law 
governing leasing of Federal land for oil and gas develop-
ment. 
(b) TERMS AND CONDITIONS.—All royalty accruing 
to the United States shall, on the demand of the Sec-
retary, be paid in oil or gas. If the Secretary makes such 
a demand, the following provisions apply to such payment: 
(1) SATISFACTION OF ROYALTY OBLIGATION.— 
Delivery by, or on behalf of, the lessee of the royalty 
amount and quality due under the lease satisfies the 
lessee’s royalty obligation for the amount delivered, 
except that transportation and processing reimburse-
ments paid to, or deductions claimed by, the lessee 
shall be subject to review and audit. 
(2) MARKETABLE CONDITION.— 
(A) IN
GENERAL.—Royalty production 
shall be placed in marketable condition by the 
lessee at no cost to the United States. 
(B) DEFINITION OF MARKETABLE CONDI-
TION.—In this paragraph, the term ‘‘in market-
able condition’’ means sufficiently free from im-
purities and otherwise in a condition that the
160 
royalty production will be accepted by a pur-
chaser under a sales contract typical of the field 
or area in which the royalty production was 
produced. 
(3) DISPOSITION
BY
THE
SECRETARY.—The 
Secretary may— 
(A) sell or otherwise dispose of any royalty 
production taken in-kind (other than oil or gas 
transferred under section 27(a)(3) of the Outer 
Continental Shelf Lands Act (43 U.S.C. 
1353(a)(3)) for not less than the market price; 
and 
(B) transport or process (or both) any roy-
alty production taken in-kind. 
(4) RETENTION BY THE SECRETARY.—The Sec-
retary may, notwithstanding section 3302 of title 31, 
United States Code, retain and use a portion of the 
revenues from the sale of oil and gas taken in-kind 
that otherwise would be deposited to miscellaneous 
receipts, without regard to fiscal year limitation, or 
may use oil or gas received as royalty taken in-kind 
(in this paragraph referred to as ‘‘royalty produc-
tion’’) to pay the cost of— 
(A) transporting the royalty production; 
(B) processing the royalty production;
161 
(C) disposing of the royalty production; or 
(D) any combination of transporting, proc-
essing, and disposing of the royalty production. 
(5) LIMITATION.— 
(A) IN GENERAL.—Except as provided in 
subparagraph (B), the Secretary may not use 
revenues from the sale of oil and gas taken in- 
kind to pay for personnel, travel, or other ad-
ministrative costs of the Federal Government. 
(B) EXCEPTION.—Notwithstanding sub-
paragraph (A), the Secretary may use a portion 
of the revenues from the sale of oil taken in- 
kind, without fiscal year limitation, to pay 
transportation costs, salaries, and other admin-
istrative costs directly related to filling the 
Strategic Petroleum Reserve. 
(c) REIMBURSEMENT OF COST.—If the lessee, pursu-
ant to an agreement with the United States or as provided 
in the lease, processes the royalty gas or delivers the roy-
alty oil or gas at a point not on or adjacent to the lease 
area, the Secretary shall— 
(1) reimburse the lessee for the reasonable costs 
of transportation (not including gathering) from the 
lease to the point of delivery or for processing costs; 
or
162 
(2) allow the lessee to deduct the transportation 
or processing costs in reporting and paying royalties 
in-value for other Federal oil and gas leases. 
(d) BENEFIT TO THE UNITED STATES REQUIRED.— 
The Secretary may receive oil or gas royalties in-kind only 
if the Secretary determines that receiving royalties in-kind 
provides benefits to the United States that are greater 
than or equal to the benefits that are likely to have been 
received had royalties been taken in-value. 
(e) REPORTS.— 
(1) IN GENERAL.—Not later than September 
30, 2005, the Secretary shall submit to Congress a 
report that addresses— 
(A) actions taken to develop businesses 
processes and automated systems to fully sup-
port the royalty-in-kind capability to be used in 
tandem with the royalty-in-value approach in 
managing Federal oil and gas revenue; and 
(B) future royalty-in-kind businesses oper-
ation plans and objectives. 
(2) REPORTS ON OIL OR GAS ROYALTIES TAKEN 
IN-KIND.—For each of fiscal years 2004 through 
2013 in which the United States takes oil or gas 
royalties in-kind from production in any State or 
from the outer Continental Shelf, excluding royalties
163 
taken in-kind and sold to refineries under subsection 
(h), the Secretary shall submit to Congress a report 
that describes— 
(A) the methodology or methodologies used 
by the Secretary to determine compliance with 
subsection (d), including the performance 
standard for comparing amounts received by 
the United States derived from royalties in-kind 
to amounts likely to have been received had roy-
alties been taken in-value; 
(B) an explanation of the evaluation that 
led the Secretary to take royalties in-kind from 
a lease or group of leases, including the ex-
pected revenue effect of taking royalties in-kind; 
(C) actual amounts received by the United 
States derived from taking royalties in-kind and 
costs and savings incurred by the United States 
associated with taking royalties in-kind, includ-
ing, but not limited to, administrative savings 
and any new or increased administrative costs; 
and 
(D) an evaluation of other relevant public 
benefits or detriments associated with taking 
royalties in-kind. 
(f) DEDUCTION OF EXPENSES.—
164 
(1) IN
GENERAL.—Before making payments 
under section 35 of the Mineral Leasing Act (30 
U.S.C. 191) or section 8(g) of the Outer Continental 
Shelf Lands Act (43 U.S.C. 1337(g)) of revenues 
derived from the sale of royalty production taken in- 
kind from a lease, the Secretary shall deduct 
amounts paid or deducted under subsections (b)(4) 
and (c) and deposit the amount of the deductions in 
the miscellaneous receipts of the United States 
Treasury. 
(2) ACCOUNTING FOR DEDUCTIONS.—When the 
Secretary allows the lessee to deduct transportation 
or processing costs under subsection (c), the Sec-
retary may not reduce any payments to recipients of 
revenues derived from any other Federal oil and gas 
lease as a consequence of that deduction. 
(g) 
CONSULTATION
WITH
STATES.—The 
Sec-
retary— 
(1) shall consult with a State before conducting 
a royalty in-kind program under this subtitle within 
the State, and may delegate management of any 
portion of the Federal royalty in-kind program to 
the State except as otherwise prohibited by Federal 
law; and
165 
(2) shall consult annually with any State from 
which Federal oil or gas royalty is being taken in- 
kind to ensure, to the maximum extent practicable, 
that the royalty in-kind program provides revenues 
to the State greater than or equal to those likely to 
have been received had royalties been taken in-value. 
(h) SMALL REFINERIES.— 
(1) PREFERENCE.—If the Secretary finds that 
sufficient supplies of crude oil are not available in 
the open market to refineries that do not have their 
own source of supply for crude oil, the Secretary 
may grant preference to such refineries in the sale 
of any royalty oil accruing or reserved to the United 
States under Federal oil and gas leases issued under 
any mineral leasing law, for processing or use in 
such refineries at private sale at not less than the 
market price. 
(2) PRORATION
AMONG
REFINERIES
IN
PRO-
DUCTION AREA.—In disposing of oil under this sub-
section, the Secretary of Energy may, at the discre-
tion of the Secretary, prorate the oil among refin-
eries described in paragraph (1) in the area in which 
the oil is produced. 
(i) DISPOSITION TO FEDERAL AGENCIES.—
166 
(1) ONSHORE ROYALTY.—Any royalty oil or gas 
taken by the Secretary in-kind from onshore oil and 
gas leases may be sold at not less than the market 
price to any Federal agency. 
(2) OFFSHORE ROYALTY.—Any royalty oil or 
gas taken in-kind from a Federal oil or gas lease on 
the outer Continental Shelf may be disposed of only 
under section 27 of the Outer Continental Shelf 
Lands Act (43 U.S.C. 1353). 
(j) FEDERAL LOW-INCOME ENERGY ASSISTANCE 
PROGRAMS.— 
(1) PREFERENCE.—In disposing of royalty oil 
or gas taken in-kind under this section, the Sec-
retary may grant a preference to any person, includ-
ing any Federal or State agency, for the purpose of 
providing additional resources to any Federal low-in-
come energy assistance program. 
(2) REPORT.—Not later than 3 years after the 
date of enactment of this Act, the Secretary shall 
transmit a report to Congress, assessing the effec-
tiveness of granting preferences specified in para-
graph (1) and providing a specific recommendation 
on the continuation of authority to grant pref-
erences.
167 
SEC. 313. MARGINAL PROPERTY PRODUCTION INCENTIVES. 
(a) DEFINITION OF MARGINAL PROPERTY.—Until 
such time as the Secretary issues regulations under sub-
section (e) that prescribe a different definition, in this sec-
tion the term ‘‘marginal property’’ means an onshore unit, 
communitization agreement, or lease not within a unit or 
communitization agreement, that produces on average the 
combined equivalent of less than 15 barrels of oil per well 
per day or 90 million British thermal units of gas per well 
per day calculated based on the average over the 3 most 
recent production months, including only wells that 
produce on more than half of the days during those 3 pro-
duction months. 
(b) CONDITIONS
FOR
REDUCTION
OF
ROYALTY 
RATE.—Until such time as the Secretary issues regula-
tions under subsection (e) that prescribe different thresh-
olds or standards, the Secretary shall reduce the royalty 
rate on— 
(1) oil production from marginal properties as 
prescribed in subsection (c) when the spot price of 
West Texas Intermediate crude oil at Cushing, Okla-
homa, is, on average, less than $15 per barrel for 90 
consecutive trading days; and 
(2) gas production from marginal properties as 
prescribed in subsection (c) when the spot price of 
natural gas delivered at Henry Hub, Louisiana, is,
168 
on average, less than $2.00 per million British ther-
mal units for 90 consecutive trading days. 
(c) REDUCED ROYALTY RATE.— 
(1) IN GENERAL.—When a marginal property 
meets the conditions specified in subsection (b), the 
royalty rate shall be the lesser of— 
(A) 5 percent; or 
(B) the applicable rate under any other 
statutory or regulatory royalty relief provision 
that applies to the affected production. 
(2) PERIOD OF EFFECTIVENESS.—The reduced 
royalty rate under this subsection shall be effective 
beginning on the first day of the production month 
following the date on which the applicable condition 
specified in subsection (b) is met. 
(d) TERMINATION OF REDUCED ROYALTY RATE.— 
A royalty rate prescribed in subsection (d)(1)(A) shall ter-
minate— 
(1) with respect to oil production from a mar-
ginal property, on the first day of the production 
month following the date on which— 
(A) the spot price of West Texas Inter-
mediate crude oil at Cushing, Oklahoma, on av-
erage, exceeds $15 per barrel for 90 consecutive 
trading days; or
169 
(B) the property no longer qualifies as a 
marginal property; and 
(2) with respect to gas production from a mar-
ginal property, on the first day of the production 
month following the date on which— 
(A) the spot price of natural gas delivered 
at Henry Hub, Louisiana, on average, exceeds 
$2.00 per million British thermal units for 90 
consecutive trading days; or 
(B) the property no longer qualifies as a 
marginal property. 
(e) REGULATIONS PRESCRIBING DIFFERENT RE-
LIEF.— 
(1) DISCRETIONARY REGULATIONS.—The Sec-
retary may by regulation prescribe different param-
eters, standards, and requirements for, and a dif-
ferent degree or extent of, royalty relief for marginal 
properties in lieu of those prescribed in subsections 
(a) through (d). 
(2) MANDATORY
REGULATIONS.—Not later 
than 18 months after the date of enactment of this 
Act, the Secretary shall by regulation— 
(A) prescribe standards and requirements 
for, and the extent of royalty relief for, mar-
170 
ginal properties for oil and gas leases on the 
outer Continental Shelf; and 
(B) define what constitutes a marginal 
property on the outer Continental Shelf for pur-
poses of this section. 
(3) CONSIDERATIONS.—In promulgating regu-
lations under this subsection, the Secretary may con-
sider— 
(A) oil and gas prices and market trends; 
(B) production costs; 
(C) abandonment costs; 
(D) Federal and State tax provisions and 
the effects of those provisions on production ec-
onomics; 
(E) other royalty relief programs; 
(F) regional differences in average well-
head prices; 
(G) national energy security issues; and 
(H) other relevant matters. 
(f) SAVINGS PROVISION.—Nothing in this section 
prevents a lessee from receiving royalty relief or a royalty 
reduction pursuant to any other law (including a regula-
tion) that provides more relief than the amounts provided 
by this section.
171 
SEC. 314. INCENTIVES FOR NATURAL GAS PRODUCTION 
FROM DEEP WELLS IN THE SHALLOW WA-
TERS OF THE GULF OF MEXICO. 
(a) ROYALTY INCENTIVE REGULATIONS.—The Sec-
retary shall publish a final regulation to complete the rule-
making begun by the Notice of Proposed Rulemaking enti-
tled ‘‘Relief or Reduction in Royalty Rates—Deep Gas 
Provisions’’, published in the Federal Register on March 
26, 2003 (Federal Register, volume 68, number 58, 
14868–14886). 
(b) ROYALTY INCENTIVE REGULATIONS FOR ULTRA 
DEEP GAS WELLS.— 
(1) IN
GENERAL.—Not later than 180 days 
after the date of enactment of this Act, in addition 
to any other regulations that may provide royalty in-
centives for natural gas produced from deep wells on 
oil and gas leases issued pursuant to the Outer Con-
tinental Shelf Lands Act (43 U.S.C. 1331 et seq.), 
the Secretary shall issue regulations, in accordance 
with the regulations published pursuant to sub-
section (a), granting royalty relief suspension vol-
umes of not less than 35,000,000,000 cubic feet 
with respect to the production of natural gas from 
ultra deep wells on leases issued before January 1, 
2001, in shallow waters less than 200 meters deep 
located in the Gulf of Mexico wholly west of 87 de-
172 
grees, 30 minutes West longitude. Regulations 
issued under this subsection shall be retroactive to 
the date that the Notice of Proposed Rulemaking is 
published in the Federal Register. 
(2) DEFINITION
OF
ULTRA
DEEP
WELL.—In 
this subsection, the term ‘‘ultra deep well’’ means a 
well drilled with a perforated interval, the top of 
which is at least 20,000 feet true vertical depth 
below the datum at mean sea level. 
SEC. 315. ROYALTY RELIEF FOR DEEP WATER PRODUC-
TION. 
(a) IN GENERAL.—For all tracts located in water 
depths of greater than 400 meters in the Western and 
Central Planning Area of the Gulf of Mexico, including 
the portion of the Eastern Planning Area of the Gulf of 
Mexico encompassing whole lease blocks lying west of 87 
degrees, 30 minutes West longitude, any oil or gas lease 
sale under the Outer Continental Shelf Lands Act (43 
U.S.C. 1331 et seq.) occurring within 5 years after the 
date of enactment of this Act shall use the bidding system 
authorized in section 8(a)(1)(H) of the Outer Continental 
Shelf Lands Act (43 U.S.C. 1337(a)(1)(H)), except that 
the suspension of royalties shall be set at a volume of not 
less than—
173 
(1) 5,000,000 barrels of oil equivalent for each 
lease in water depths of 400 to 800 meters; 
(2) 9,000,000 barrels of oil equivalent for each 
lease in water depths of 800 to 1,600 meters; and 
(3) 12,000,000 barrels of oil equivalent for each 
lease in water depths greater than 1,600 meters. 
(b) LIMITATION.—The Secretary may place limita-
tions on the suspension of royalty relief granted based on 
market price. 
SEC. 316. ALASKA OFFSHORE ROYALTY SUSPENSION. 
Section 8(a)(3)(B) of the Outer Continental Shelf 
Lands Act (43 U.S.C. 1337(a)(3)(B)) is amended by in-
serting ‘‘and in the Planning Areas offshore Alaska’’ after 
‘‘West longitude’’. 
SEC. 317. OIL AND GAS LEASING IN THE NATIONAL PETRO-
LEUM RESERVE IN ALASKA. 
(a) TRANSFER OF AUTHORITY.— 
(1) REDESIGNATION.—The Naval Petroleum 
Reserves Production Act of 1976 (42 U.S.C. 6501 
et seq.) is amended by redesignating section 107 (42 
U.S.C. 6507) as section 108. 
(2) TRANSFER.—The matter under the heading 
‘‘EXPLORATION OF NATIONAL PETROLEUM RESERVE 
IN
ALASKA’’ under the heading ‘‘ENERGY AND
174 
MINERALS’’ of title I of Public Law 96–514 (42 
U.S.C. 6508) is— 
(A) transferred to the Naval Petroleum 
Reserves Production Act of 1976 (42 U.S.C. 
6501 et seq.); 
(B) redesignated as section 107 of that 
Act; and 
(C) moved so as to appear after section 
106 of that Act (42 U.S.C. 6506). 
(b) COMPETITIVE LEASING.—Section 107 of the 
Naval Petroleum Reserves Production Act of 1976 (as 
amended by subsection (a) of this section) is amended— 
(1) by striking the heading and all that follows 
through ‘‘Provided, That (1) activities’’ and insert-
ing the following: 
‘‘SEC. 107. COMPETITIVE LEASING OF OIL AND GAS. 
‘‘(a) IN GENERAL.—Notwithstanding any other pro-
vision of law and pursuant to regulations issued by the 
Secretary, the Secretary shall conduct an expeditious pro-
gram of competitive leasing of oil and gas in the National 
Petroleum Reserve in Alaska (referred to in this section 
as the ‘Reserve’). 
‘‘(b) MITIGATION OF ADVERSE EFFECTS.—Activi-
ties’’;
175 
(2) by striking ‘‘Alaska (the Reserve); (2) the’’ 
and inserting ‘‘Alaska. 
‘‘(c) LAND USE PLANNING; BLM WILDERNESS 
STUDY.—The’’; 
(3) by striking ‘‘Reserve; (3) the’’ and inserting 
‘‘Reserve. 
‘‘(d) FIRST LEASE SALE.—The’’; 
(4) by striking ‘‘4332); (4) the’’ and inserting 
‘‘4321 et seq.). 
‘‘(e) WITHDRAWALS.—The’’; 
(5) by striking ‘‘herein; (5) bidding’’ and insert-
ing ‘‘under this section. 
‘‘(f) BIDDING SYSTEMS.—Bidding’’; 
(6) by striking ‘‘629); (6) lease’’ and inserting 
‘‘629). 
‘‘(g) GEOLOGICAL STRUCTURES.—Lease’’; 
(7) by striking ‘‘structures; (7) the’’ and insert-
ing ‘‘structures. 
‘‘(h) SIZE OF LEASE TRACTS.—The’’; 
(8) by striking ‘‘Secretary; (8)’’ and all that fol-
lows through ‘‘Drilling, production,’’ and inserting 
‘‘Secretary. 
‘‘(i) TERMS.— 
‘‘(1) IN GENERAL.—Each lease shall be—
176 
‘‘(A) issued for an initial period of not 
more than 10 years; and 
‘‘(B) renewed for successive 10-year terms 
if— 
‘‘(i) oil or gas is produced from the 
lease in paying quantities; 
‘‘(ii) oil or gas is capable of being pro-
duced in paying quantities; or 
‘‘(iii) drilling or reworking operations, 
as approved by the Secretary, are con-
ducted on the leased land. 
‘‘(2) RENEWAL OF NONPRODUCING LEASES.— 
The Secretary shall renew for an additional 10-year 
term a lease that does not meet the requirements of 
paragraph (1)(B) if the lessee submits to the Sec-
retary an application for renewal not later than 60 
days before the expiration of the primary lease 
and— 
‘‘(A) the lessee certifies, and the Secretary 
agrees, that hydrocarbon resources were discov-
ered on 1 or more wells drilled on the leased 
land in such quantities that a prudent operator 
would hold the lease for potential future devel-
opment; 
‘‘(B) the lessee—
177 
‘‘(i) pays the Secretary a renewal fee 
of $100 per acre of leased land; and 
‘‘(ii) provides evidence, and the Sec-
retary agrees that, the lessee has diligently 
pursued exploration that warrants continu-
ation with the intent of continued explo-
ration or future development of the leased 
land; or 
‘‘(C) all or part of the lease— 
‘‘(i) is part of a unit agreement cov-
ering a lease described in subparagraph 
(A) or (B); and 
‘‘(ii) has not been previously con-
tracted out of the unit. 
‘‘(3) APPLICABILITY.—This subsection applies 
to a lease that— 
‘‘(A) is entered into before, on, or after the 
date of enactment of the Energy Policy Act of 
2003; and 
‘‘(B) is effective on or after the date of en-
actment of that Act. 
‘‘(j) UNIT AGREEMENTS.— 
‘‘(1) IN GENERAL.—For the purpose of con-
servation of the natural resources of all or part of 
any oil or gas pool, field, reservoir, or like area, les-
178 
sees (including representatives) of the pool, field, 
reservoir, or like area may unite with each other, or 
jointly or separately with others, in collectively 
adopting and operating under a unit agreement for 
all or part of the pool, field, reservoir, or like area 
(whether or not any other part of the oil or gas pool, 
field, reservoir, or like area is already subject to any 
cooperative or unit plan of development or oper-
ation), if the Secretary determines the action to be 
necessary or advisable in the public interest. 
‘‘(2) PARTICIPATION BY STATE OF ALASKA.— 
The Secretary shall ensure that the State of Alaska 
is provided the opportunity for active participation 
concerning creation and management of units 
formed or expanded under this subsection that in-
clude acreage in which the State of Alaska has an 
interest in the mineral estate. 
‘‘(3) PARTICIPATION
BY
REGIONAL
CORPORA-
TIONS.—The Secretary shall ensure that any Re-
gional Corporation (as defined in section 3 of the 
Alaska Native Claims Settlement Act (43 U.S.C. 
1602)) is provided the opportunity for active partici-
pation concerning creation and management of units 
that include acreage in which the Regional Corpora-
tion has an interest in the mineral estate.
179 
‘‘(4) 
PRODUCTION
ALLOCATION
METHOD-
OLOGY.—The Secretary may use a production alloca-
tion methodology for each participating area within 
a unit created for land in the Reserve, State of Alas-
ka land, or Regional Corporation land shall, when 
appropriate, be based on the characteristics of each 
specific oil or gas pool, field, reservoir, or like area 
to take into account reservoir heterogeneity and a 
real variation in reservoir producibility across diverse 
leasehold interests. 
‘‘(5) BENEFIT OF OPERATIONS.—Drilling, pro-
duction,’’; 
(9) by striking ‘‘When separate’’ and inserting 
the following: 
‘‘(6) POOLING.—If separate’’; 
(10) by inserting ‘‘(in consultation with the 
owners of the other land)’’ after ‘‘determined by the 
Secretary of the Interior’’; 
(11) by striking ‘‘thereto; (10) to’’ and all that 
follows through ‘‘the terms provided therein’’ and in-
serting ‘‘to the agreement. 
‘‘(k) EXPLORATION INCENTIVES.— 
‘‘(1) IN GENERAL.— 
‘‘(A) WAIVER, SUSPENSION, OR
REDUC-
TION.—To encourage the greatest ultimate re-
180 
covery of oil or gas or in the interest of con-
servation, the Secretary may waive, suspend, or 
reduce the rental fees or minimum royalty, or 
reduce the royalty on an entire leasehold (in-
cluding on any lease operated pursuant to a 
unit agreement), if (after consultation with the 
State of Alaska and the North Slope Borough 
of Alaska and the concurrence of any Regional 
Corporation for leases that include lands avail-
able for acquisition by the Regional Corporation 
under the provisions of section 1431(o) of the 
Alaska National Interest Lands Conservation 
Act (16 U.S.C. 3101 et seq.)) the Secretary de-
termines that the waiver, suspension, or reduc-
tion is in the public interest. 
‘‘(B) APPLICABILITY.—This paragraph ap-
plies to a lease that— 
‘‘(i) is entered into before, on, or after 
the date of enactment of the Energy Policy 
Act of 2003; and 
‘‘(ii) is effective on or after the date 
of enactment of that Act.’’; 
(12) by striking ‘‘The Secretary is authorized 
to’’ and inserting the following:
181 
‘‘(2) SUSPENSION OF OPERATIONS AND PRO-
DUCTION.—The Secretary may’’; 
(13) by striking ‘‘In the event’’ and inserting 
the following: 
‘‘(3) SUSPENSION OF PAYMENTS.—If’’; 
(14) by striking ‘‘thereto; and (11) all’’ and in-
serting ‘‘to the lease. 
‘‘(l) RECEIPTS.—All’’; 
(15) by redesignating clauses (A), (B), and (C) 
as clauses (1), (2), and (3), respectively; 
(16) by striking ‘‘Any agency’’ and inserting 
the following: 
‘‘(m) EXPLORATIONS.—Any agency’’; 
(17) by striking ‘‘Any action’’ and inserting the 
following: 
‘‘(n) ENVIRONMENTAL IMPACT STATEMENTS.— 
‘‘(1) JUDICIAL REVIEW.—Any action’’; 
(18) by striking ‘‘The detailed’’ and inserting 
the following: 
‘‘(2) INITIAL LEASE SALES.—The detailed’’; 
(19) by striking ‘‘of the Naval Petroleum Re-
serves Production Act of 1976 (90 Stat. 304; 42 
U.S.C. 6504)’’; and 
(20) by adding at the end the following:
182 
‘‘(o) WAIVER OF ADMINISTRATION FOR CONVEYED 
LANDS.—Notwithstanding section 14(g) of the Alaska 
Native Claims Settlement Act (43 U.S.C. 1613(g)) or any 
other provision of law— 
‘‘(1) the Secretary of the Interior shall waive 
administration of any oil and gas lease insofar as 
such lease covers any land in the National Petro-
leum Reserve in Alaska in which the subsurface es-
tate is conveyed to the Arctic Slope Regional Cor-
poration; and 
‘‘(2) if any such conveyance of such subsurface 
estate does not cover all the land embraced within 
any such oil and gas lease— 
‘‘(A) the person who owns the subsurface 
estate in any particular portion of the land cov-
ered by such lease shall be entitled to all of the 
revenues reserved under such lease as to such 
portion, including, without limitation, all the 
royalty payable with respect to oil or gas pro-
duced from or allocated to such particular por-
tion of the land covered by such lease; and 
‘‘(B) the Secretary of the Interior shall 
segregate such lease into 2 leases, 1 of which 
shall cover only the subsurface estate conveyed 
to the Arctic Slope Regional Corporation, and
183 
operations, production, or other circumstances 
(other than payment of rentals or royalties) 
that satisfy obligations of the lessee under, or 
maintain, either of the segregated leases shall 
likewise satisfy obligations of the lessee under, 
or maintain, the other segregated lease to the 
same extent as if such segregated leases re-
mained a part of the original unsegregated 
lease.’’. 
SEC. 318. ORPHANED, ABANDONED, OR IDLED WELLS ON 
FEDERAL LAND. 
(a) IN GENERAL.—The Secretary, in cooperation 
with the Secretary of Agriculture, shall establish a pro-
gram not later than 1 year after the date of enactment 
of this Act to remediate, reclaim, and close orphaned, 
abandoned, or idled oil and gas wells located on land ad-
ministered by the land management agencies within the 
Department of the Interior and the Department of Agri-
culture. 
(b) ACTIVITIES.—The program under subsection (a) 
shall— 
(1) include a means of ranking orphaned, aban-
doned, or idled wells sites for priority in remedi-
ation, reclamation, and closure, based on public
184 
health and safety, potential environmental harm, 
and other land use priorities; 
(2) provide for identification and recovery of 
the costs of remediation, reclamation, and closure 
from persons or other entities currently providing a 
bond or other financial assurance required under 
State or Federal law for an oil or gas well that is 
orphaned, abandoned, or idled; and 
(3) provide for recovery from the persons or en-
tities identified under paragraph (2), or their sure-
ties or guarantors, of the costs of remediation, rec-
lamation, and closure of such wells. 
(c) COOPERATION
AND CONSULTATIONS.—In car-
rying out the program under subsection (a), the Secretary 
shall— 
(1) work cooperatively with the Secretary of Ag-
riculture and the States within which Federal land 
is located; and 
(2) consult with the Secretary of Energy and 
the Interstate Oil and Gas Compact Commission. 
(d) PLAN.—Not later than 1 year after the date of 
enactment of this Act, the Secretary, in cooperation with 
the Secretary of Agriculture, shall submit to Congress a 
plan for carrying out the program under subsection (a).
185 
(e) IDLED WELL.—For the purposes of this section, 
a well is idled if— 
(1) the well has been nonoperational for at least 
7 years; and 
(2) there is no anticipated beneficial use for the 
well. 
(f) TECHNICAL ASSISTANCE PROGRAM
FOR NON- 
FEDERAL LAND.— 
(1) IN
GENERAL.—The Secretary of Energy 
shall establish a program to provide technical and fi-
nancial assistance to oil and gas producing States to 
facilitate State efforts over a 10-year period to en-
sure a practical and economical remedy for environ-
mental problems caused by orphaned or abandoned 
oil and gas exploration or production well sites on 
State or private land. 
(2) ASSISTANCE.—The Secretary of Energy 
shall work with the States, through the Interstate 
Oil and Gas Compact Commission, to assist the 
States in quantifying and mitigating environmental 
risks of onshore orphaned or abandoned oil or gas 
wells on State and private land. 
(3) ACTIVITIES.—The program under para-
graph (1) shall include—
186 
(A) mechanisms to facilitate identification, 
if feasible, of the persons currently providing a 
bond or other form of financial assurance re-
quired under State or Federal law for an oil or 
gas well that is orphaned or abandoned; 
(B) criteria for ranking orphaned or aban-
doned well sites based on factors such as public 
health and safety, potential environmental 
harm, and other land use priorities; 
(C) information and training programs on 
best practices for remediation of different types 
of sites; and 
(D) funding of State mitigation efforts on 
a cost-shared basis. 
(g) FEDERAL REIMBURSEMENT
FOR ORPHANED 
WELL RECLAMATION PILOT PROGRAM.— 
(1) REIMBURSEMENT FOR REMEDIATING, RE-
CLAIMING, AND CLOSING WELLS ON LAND SUBJECT 
TO A NEW LEASE.—The Secretary shall carry out a 
pilot program under which, in issuing a new oil and 
gas lease on federally owned land on which 1 or 
more orphaned wells are located, the Secretary— 
(A) may require, but not as a condition of 
the lease, that the lessee remediate, reclaim, 
and close in accordance with standards estab-
187 
lished by the Secretary, all orphaned wells on 
the land leased; and 
(B) shall develop a program to reimburse 
a lessee, through a royalty credit against the 
Federal share of royalties owed or other means, 
for the reasonable actual costs of remediating, 
reclaiming, and closing the orphaned well pur-
suant to that requirement. 
(2) REIMBURSEMENT
FOR
RECLAIMING
OR-
PHANED WELLS ON OTHER LAND.—In carrying out 
this subsection, the Secretary— 
(A) may authorize any lessee under an oil 
and gas lease on federally owned land to re-
claim in accordance with the Secretary’s stand-
ards— 
(i) an orphaned well on unleased fed-
erally owned land; or 
(ii) an orphaned well located on an ex-
isting lease on federally owned land for the 
reclamation of which the lessee is not le-
gally responsible; and 
(B) shall develop a program to provide re-
imbursement of 115 percent of the reasonable 
actual costs of remediating, reclaiming, and 
closing the orphaned well, through credits
188 
against the Federal share of royalties or other 
means. 
(3) EFFECT OF REMEDIATION, RECLAMATION, 
OR CLOSURE OF WELL PURSUANT TO AN APPROVED 
REMEDIATION PLAN.— 
(A) 
DEFINITION
OF
REMEDIATING 
PARTY.—In this paragraph the term ‘‘remedi-
ating party’’ means a person who remediates, 
reclaims, or closes an abandoned, orphaned, or 
idled well pursuant to this subsection. 
(B) GENERAL RULE.—A remediating party 
who remediates, reclaims, or closes an aban-
doned, orphaned, or idled well in accordance 
with a detailed written remediation plan ap-
proved by the Secretary under this subsection, 
shall be immune from civil liability under Fed-
eral environmental laws, for— 
(i) pre-existing environmental condi-
tions at or associated with the well, unless 
the remediating party owns or operates, in 
the past owned or operated, or is related to 
a person that owns or operates or in the 
past owned or operated, the well or the 
land on which the well is located; or
189 
(ii) any remaining releases of pollut-
ants from the well during or after comple-
tion of the remediation, reclamation, or 
closure of the well, unless the remediating 
party causes increased pollution as a result 
of activities that are not in accordance 
with the approved remediation plan. 
(C) LIMITATIONS.—Nothing in this section 
shall limit in any way the liability of a remedi-
ating party for injury, damage, or pollution re-
sulting from the remediating party’s acts or 
omissions that are not in accordance with the 
approved remediation plan, are reckless or will-
ful, constitute gross negligence or wanton mis-
conduct, or are unlawful. 
(4) REGULATIONS.—The Secretary may issue 
such regulations as are appropriate to carry out this 
subsection. 
(h) AUTHORIZATION OF APPROPRIATIONS.— 
(1) IN GENERAL.—There are authorized to be 
appropriated to carry out this section $25,000,000 
for each of fiscal years 2005 through 2009. 
(2) USE.—Of the amounts authorized under 
paragraph (1), $5,000,000 are authorized for each 
fiscal year for activities under subsection (f).
190 
SEC. 319. COMBINED HYDROCARBON LEASING. 
(a) SPECIAL PROVISIONS REGARDING LEASING.— 
Section 17(b)(2) of the Mineral Leasing Act (30 U.S.C. 
226(b)(2)) is amended— 
(1) by inserting ‘‘(A)’’ after ‘‘(2)’’; and 
(2) by adding at the end the following: 
‘‘(B) For any area that contains any combination of 
tar sand and oil or gas (or both), the Secretary may issue 
under this Act, separately— 
‘‘(i) a lease for exploration for and extraction of 
tar sand; and 
‘‘(ii) a lease for exploration for and development 
of oil and gas. 
‘‘(C) A lease issued for tar sand shall be issued using 
the same bidding process, annual rental, and posting pe-
riod as a lease issued for oil and gas, except that the min-
imum acceptable bid required for a lease issued for tar 
sand shall be $2 per acre. 
‘‘(D) The Secretary may waive, suspend, or alter any 
requirement under section 26 that a permittee under a 
permit authorizing prospecting for tar sand must exercise 
due diligence, to promote any resource covered by a com-
bined hydrocarbon lease.’’. 
(b) 
CONFORMING
AMENDMENT.—Section 
17(b)(1)(B) of the Mineral Leasing Act (30 U.S.C. 
226(b)(1)(B)) is amended in the second sentence by in-
191 
serting ‘‘, subject to paragraph (2)(B),’’ after ‘‘Sec-
retary’’. 
(c) REGULATIONS.—Not later than 45 days after the 
date of enactment of this Act, the Secretary shall issue 
final regulations to implement this section. 
SEC. 320. LIQUIFIED NATURAL GAS. 
Section 3 of the Natural Gas Act (15 U.S.C. 717b) 
is amended by adding at the end the following: 
‘‘(d) LIMITATION ON COMMISSION AUTHORITY.—If 
an applicant under this section proposes to construct or 
expand a liquified natural gas terminal either onshore or 
in State waters for the purpose of importing liquified nat-
ural gas into the United States, the Commission shall not 
deny or condition the application solely on the basis that 
the applicant proposes to utilize the terminal exclusively 
or partially for gas that the applicant or any affiliate 
thereof will supply thereto. In all other respects, sub-
section (a) shall remain applicable to any such proposal.’’. 
SEC. 321. ALTERNATE ENERGY-RELATED USES ON THE 
OUTER CONTINENTAL SHELF. 
(a) AMENDMENT TO OUTER CONTINENTAL SHELF 
LANDS ACT.—Section 8 of the Outer Continental Shelf 
Lands Act (43 U.S.C. 1337) is amended by adding at the 
end the following:
192 
‘‘(p) LEASES, EASEMENTS, OR RIGHTS-OF-WAY FOR 
ENERGY AND RELATED PURPOSES.— 
‘‘(1) IN GENERAL.—The Secretary, in consulta-
tion with the Secretary of the Department in which 
the Coast Guard is operating and other relevant de-
partments and agencies of the Federal Government, 
may grant a lease, easement, or right-of-way on the 
outer Continental Shelf for activities not otherwise 
authorized in this Act, the Deepwater Port Act of 
1974 (33 U.S.C. 1501 et seq.), or the Ocean Ther-
mal Energy Conversion Act of 1980 (42 U.S.C. 
9101 et seq.), or other applicable law, if those activi-
ties— 
‘‘(A) support exploration, development, 
production, transportation, or storage of oil, 
natural gas, or other minerals; 
‘‘(B) produce or support production, trans-
portation, or transmission of energy from 
sources other than oil and gas; or 
‘‘(C) use, for energy-related or marine-re-
lated purposes, facilities currently or previously 
used for activities authorized under this Act. 
‘‘(2) PAYMENTS.—The Secretary shall establish 
reasonable forms of payments for any easement or 
right-of-way granted under this subsection. Such
193 
payments shall not be assessed on the basis of 
throughput or production. The Secretary may estab-
lish fees, rentals, bonus, or other payments by rule 
or by agreement with the party to which the lease, 
easement, or right-of-way is granted. 
‘‘(3) CONSULTATION.—Before exercising au-
thority under this subsection, the Secretary shall 
consult with the Secretary of Defense and other ap-
propriate agencies concerning issues related to na-
tional security and navigational obstruction. 
‘‘(4) 
COMPETITIVE
OR
NONCOMPETITIVE 
BASIS.— 
‘‘(A) IN
GENERAL.—The Secretary may 
issue a lease, easement, or right-of-way for en-
ergy and related purposes as described in para-
graph (1) on a competitive or noncompetitive 
basis. 
‘‘(B) CONSIDERATIONS.—In determining 
whether a lease, easement, or right-of-way shall 
be granted competitively or noncompetitively, 
the Secretary shall consider such factors as— 
‘‘(i) prevention of waste and conserva-
tion of natural resources; 
‘‘(ii) the economic viability of an en-
ergy project;
194 
‘‘(iii) protection of the environment; 
‘‘(iv) the national interest and na-
tional security; 
‘‘(v) human safety; 
‘‘(vi) protection of correlative rights; 
and 
‘‘(vii) potential return for the lease, 
easement, or right-of-way. 
‘‘(5) REGULATIONS.—Not later than 270 days 
after the date of enactment of the Energy Policy Act 
of 2003, the Secretary, in consultation with the Sec-
retary of the Department in which the Coast Guard 
is operating and other relevant agencies of the Fed-
eral Government and affected States, shall issue any 
necessary regulations to ensure safety, protection of 
the environment, prevention of waste, and conserva-
tion of the natural resources of the outer Conti-
nental Shelf, protection of national security inter-
ests, and protection of correlative rights in the outer 
Continental Shelf. 
‘‘(6) SECURITY.—The Secretary shall require 
the holder of a lease, easement, or right-of-way 
granted under this subsection to furnish a surety 
bond or other form of security, as prescribed by the 
Secretary, and to comply with such other require-
195 
ments as the Secretary considers necessary to pro-
tect the interests of the United States. 
‘‘(7) EFFECT OF SUBSECTION.—Nothing in this 
subsection displaces, supersedes, limits, or modifies 
the jurisdiction, responsibility, or authority of any 
Federal or State agency under any other Federal 
law. 
‘‘(8) APPLICABILITY.—This subsection does not 
apply to any area on the outer Continental Shelf 
designated as a National Marine Sanctuary.’’. 
(b) CONFORMING AMENDMENT.—Section 8 of the 
Outer Continental Shelf Lands Act (43 U.S.C. 1337) is 
amended by striking the section heading and inserting the 
following: ‘‘LEASES, EASEMENTS, AND RIGHTS-OF-WAY 
ON THE OUTER CONTINENTAL SHELF.—’’. 
(c) SAVINGS PROVISION.—Nothing in the amendment 
made by subsection (a) requires, with respect to any 
project— 
(1) for which offshore test facilities have been 
constructed before the date of enactment of this Act; 
or 
(2) for which a request for proposals has been 
issued by a public authority, 
any resubmittal of documents previously submitted or any 
reauthorization of actions previously authorized.
311 
‘‘(3) pollution control equipment and processes 
for the mitigation or collection of more than one pol-
lutant; 
‘‘(4) advanced combustion technology for the 
control of at least two pollutants, including mercury, 
particulate matter, nitrogen oxides, and sulfur diox-
ide, which may also be designed to improve the en-
ergy efficiency of the unit; and 
‘‘(5) advanced pollution control equipment and 
processes designed to allow use of the waste byprod-
ucts or other byproducts of the equipment or an 
electrical generation unit designed to allow the use 
of byproducts. 
Funds appropriated under this subsection which are not 
awarded before fiscal year 2011 may be applied to projects 
under subsection (b), in addition to amounts authorized 
under subsection (b). 
‘‘(b) GENERATION PROJECTS.—There are authorized 
to be appropriated to the Secretary $150,000,000 for fis-
cal year 2006, $250,000,000 for each of the fiscal years 
2007 through 2011, and $100,000,000 for fiscal year 
2012, to remain available until expended, for generation 
projects and air pollution control projects. Such projects 
may include—
342 
Secretary under paragraph (2). For the purpose of 
this subparagraph, the term ‘negotiated terms’ 
means any terms or provisions that are negotiated 
by an Indian tribe and any other party or parties to 
a lease, business agreement, or right-of-way entered 
into pursuant to an approved tribal energy resource 
agreement. 
‘‘(7)(A) In this paragraph, the term ‘interested 
party’ means any person or entity the interests of 
which have sustained or will sustain a significant ad-
verse environmental impact as a result of the failure 
of an Indian tribe to comply with a tribal energy re-
source agreement of the Indian tribe approved by 
the Secretary under paragraph (2). 
‘‘(B) After exhaustion of tribal remedies, and in 
accordance with the process and requirements set 
forth in regulations adopted by the Secretary pursu-
ant to paragraph (8), an interested party may sub-
mit to the Secretary a petition to review compliance 
of an Indian tribe with a tribal energy resource 
agreement of the Indian tribe approved by the Sec-
retary under paragraph (2). 
‘‘(C)(i) Not later than 120 days after the date 
on which the Secretary receives a petition under sub-
paragraph (B), the Secretary shall determine wheth-