(3) The economic impacts, particularly new job 
creation, resulting from the grants to and operation 
of the eligible operations. 
SEC. 207. BIOBASED PRODUCTS. 
Section 9002(c)(1) of the Farm Security and Rural 
Investment Act of 2002 (7 U.S.C. 8102(c)(1)) is amended 
by inserting ‘‘or such items that comply with the regula-
tions issued under section 103 of Public Law 100–556 (42 
U.S.C. 6914b–1)’’ after ‘‘practicable’’. 
SEC. 208. RENEWABLE ENERGY SECURITY. 
(a) WEATHERIZATION ASSISTANCE.—Section 415(c) 
of the Energy Conservation and Production Act (42 
U.S.C. 6865(c)) is amended—
(1) in paragraph (1), by striking ‘‘in paragraph 
(3)’’ and inserting ‘‘in paragraphs (3) and (4)’’; 
(2) in paragraph (3), by striking ‘‘$2,500 per 
dwelling unit average provided in paragraph (1)’’ 
and inserting ‘‘dwelling unit averages provided in 
paragraphs (1) and (4)’’; and 
(3) by adding at the end the following new 
paragraphs: 
‘‘(4) The expenditure of financial assistance provided 
under this part for labor, weatherization materials, and 
related matters for a renewable energy system shall not 
exceed an average of $3,000 per dwelling unit.
‘‘(5)(A) The Secretary shall by regulations—
‘‘(i) establish the criteria which are to be used 
in prescribing performance and quality standards 
under paragraph (6)(A)(ii) or in specifying any form 
of renewable energy under paragraph (6)(A)(i)(I); 
and 
‘‘(ii) establish a procedure under which a manu-
facturer of an item may request the Secretary to 
certify that the item will be treated, for purposes of 
this paragraph, as a renewable energy system. 
‘‘(B) The Secretary shall make a final determination 
with respect to any request filed under subparagraph 
(A)(ii) within 1 year after the filing of the request, to-
gether with any information required to be filed with such 
request under subparagraph (A)(ii). 
‘‘(C) Each month the Secretary shall publish a report 
of any request under subparagraph (A)(ii) which has been 
denied during the preceding month and the reasons for 
the denial. 
‘‘(D) The Secretary shall not specify any form of re-
newable energy under paragraph (6)(A)(i)(I) unless the 
Secretary determines that—
‘‘(i) there will be a reduction in oil or natural 
gas consumption as a result of such specification;
‘‘(ii) such specification will not result in an in-
creased use of any item which is known to be, or 
reasonably suspected to be, environmentally haz-
ardous or a threat to public health or safety; and 
‘‘(iii) available Federal subsidies do not make 
such specification unnecessary or inappropriate (in 
the light of the most advantageous allocation of eco-
nomic resources). 
‘‘(6) In this subsection—
‘‘(A) the term ‘renewable energy system’ means 
a system which—
‘‘(i) when installed in connection with a 
dwelling, transmits or uses—
‘‘(I) solar energy, energy derived from 
the geothermal deposits, energy derived 
from biomass, or any other form of renew-
able energy which the Secretary specifies 
by regulations, for the purpose of heating 
or cooling such dwelling or providing hot 
water or electricity for use within such 
dwelling; or 
‘‘(II) wind energy for nonbusiness res-
idential purposes;
‘‘(ii) meets the performance and quality 
standards (if any) which have been prescribed 
by the Secretary by regulations; 
‘‘(iii) in the case of a combustion rated 
system, has a thermal efficiency rating of at 
least 75 percent; and 
‘‘(iv) in the case of a solar system, has a 
thermal efficiency rating of at least 15 percent; 
and 
‘‘(B) the term ‘biomass’ means any organic 
matter that is available on a renewable or recurring 
basis, including agricultural crops and trees, wood 
and wood wastes and residues, plants (including 
aquatic plants), grasses, residues, fibers, and animal 
wastes, municipal wastes, and other waste mate-
rials.’’. 
(b) DISTRICT HEATING AND COOLING PROGRAMS.—
Section 172 of the Energy Policy Act of 1992 (42 U.S.C. 
13451 note) is amended—
(1) in subsection (a)—
(A) by striking ‘‘and’’ at the end of para-
graph (3); 
(B) by striking the period at the end of 
paragraph (4) and inserting ‘‘; and’’; and
(C) by adding at the end the following new 
paragraph: 
‘‘(5) evaluate the use of renewable energy sys-
tems (as such term is defined in section 415(c) of 
the Energy Conservation and Production Act (42 
U.S.C. 6865(c))) in residential buildings.’’; and 
(2) in subsection (b), by striking ‘‘this Act’’ and 
inserting ‘‘the Energy Policy Act of 2005’’. 
(c) DEFINITION OF BIOMASS.—Section 203(2) of the 
Biomass Energy and Alcohol Fuels Act of 1980 (42 
U.S.C. 8802(2)) is amended to read as follows: 
‘‘(2) The term ‘biomass’ means any organic 
matter that is available on a renewable or recurring 
basis, including agricultural crops and trees, wood 
and wood wastes and residues, plants (including 
aquatic plants), grasses, residues, fibers, and animal 
wastes, municipal wastes, and other waste mate-
rials.’’. 
(d) REBATE PROGRAM.—
(1) ESTABLISHMENT.—The Secretary of En-
ergy shall establish a program providing rebates for 
consumers for expenditures made for the installation 
of a renewable energy system in connection with a 
dwelling unit or small business.
(2) AMOUNT
OF
REBATE.—Rebates provided 
under the program established under paragraph (1) 
shall be in an amount not to exceed the lesser of—
(A) 25 percent of the expenditures de-
scribed in paragraph (1) made by the con-
sumer; or 
(B) $3,000. 
(3) DEFINITION.—For purposes of this sub-
section, the term ‘‘renewable energy system’’ has the 
meaning given that term in section 415(c)(6)(A) of 
the Energy Conservation and Production Act (42 
U.S.C. 6865(c)(6)(A)), as added by subsection 
(a)(3) of this section. 
(4) AUTHORIZATION
OF
APPROPRIATIONS.—
There are authorized to be appropriated to the Sec-
retary of Energy for carrying out this subsection, to 
remain available until expended—
(A) $150,000,000 for fiscal year 2006; 
(B) $150,000,000 for fiscal year 2007; 
(C) $200,000,000 for fiscal year 2008; 
(D) $250,000,000 for fiscal year 2009; 
and 
(E) $250,000,000 for fiscal year 2010. 
(e) RENEWABLE FUEL INVENTORY.—Not later than 
180 days after the date of enactment of this Act, the Sec-
retary of Energy shall transmit to Congress a report con-
taining—
(1) an inventory of renewable fuels available for 
consumers; and 
(2) a projection of future inventories of renew-
able fuels based on the incentives provided in this 
section 
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 
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—
‘‘(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, 
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, 
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,
100
distribution, cost, and use; flood control; navigation; water 
supply; and air quality (in addition to the preservation of 
other aspects of environmental quality); based on such in-
formation as may be available to the Secretary, including 
information voluntarily provided in a timely manner by the 
applicant and others. The Secretary shall also submit, to-
gether with the aforementioned written statement, all 
studies, data, and other factual information available to 
the Secretary and relevant to the Secretary’s decision. 
‘‘(4) Nothing in this section shall prohibit other inter-
ested parties from proposing alternative prescriptions. 
‘‘(5) If the Secretary concerned does not accept an 
applicant’s alternative prescription under this section, and 
the Commission finds that the Secretary’s prescription 
would be inconsistent with the purposes of this part, or 
other applicable law, the Commission may refer the dis-
pute to the Commission’s Dispute Resolution Service. The 
Dispute Resolution Service shall consult with the Sec-
retary and the Commission and issue a non-binding advi-
sory within 90 days. The Secretary may accept the Dis-
pute Resolution Service advisory unless the Secretary 
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
101
written determination into the record of the Commission’s 
proceeding.’’. 
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
102
hydroelectric energy for sale and which is added to 
an existing dam or conduit. 
(2) EXISTING
DAM
OR
CONDUIT.—The term 
‘‘existing dam or conduit’’ means any dam or con-
duit the construction of which was completed before 
the date of the enactment of this section and which 
does not require any construction or enlargement of 
impoundment or diversion structures (other than re-
pair or reconstruction) in connection with the instal-
lation of a turbine or other generating device. 
(3) CONDUIT.—The term ‘‘conduit’’ has the 
same meaning as when used in section 30(a)(2) of 
the Federal Power Act (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.
103
(d) INCENTIVE PERIOD.—A qualified hydroelectric 
facility may receive payments under this section for a pe-
riod of 10 fiscal years (referred to in this section as the 
‘‘incentive period’’). Such period shall begin with the fiscal 
year in which electric energy generated from the facility 
is first eligible for such payments. 
(e) AMOUNT OF PAYMENT.—
(1) IN GENERAL.—Payments made by the Sec-
retary under this section to the owner or operator of 
a qualified hydroelectric facility shall be based on 
the number of kilowatt hours of hydroelectric energy 
generated by the facility during the incentive period. 
For any such facility, the amount of such payment 
shall be 1.8 cents per kilowatt hour (adjusted as 
provided in paragraph (2)), subject to the avail-
ability of appropriations under subsection (g), except 
that no facility may receive more than $750,000 in 
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 
2005 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-
104
sions the calendar year 2005 shall be substituted for 
calendar year 1979. 
(f) SUNSET.—No payment may be made under this 
section to any qualified hydroelectric facility after the ex-
piration of the period of 20 fiscal years beginning with 
the first full fiscal year occurring after the date of enact-
ment of this subtitle, and no payment may be made under 
this section to any such facility after a payment has been 
made with respect to such facility for a period of 10 fiscal 
years. 
(g) AUTHORIZATION
OF APPROPRIATIONS.—There 
are authorized to be appropriated to the Secretary to carry 
out the purposes of this section $10,000,000 for each of 
the fiscal years 2006 through 2015. 
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
105
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 
not more than $10,000,000 for each of the fiscal years 
2006 through 2015. 
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.
106
(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 
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,
107
including quantified estimates of any additional en-
ergy or capacity from each facility identified under 
subsection (b). 
(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