185
areas designated by the Secretary under subsection (a) if 
the Commission makes each of the following findings: 
‘‘(1) A finding that—
‘‘(A) the State in which the transmission 
facilities are to be constructed or modified is 
without authority to approve the siting of the 
facilities, or 
‘‘(B) a State commission or body in the 
State in which the transmission facilities are to 
be constructed or modified that has authority to 
approve the siting of the facilities has withheld 
approval, conditioned its approval in such a 
manner that the proposed construction or modi-
fication will not significantly reduce trans-
mission congestion in interstate commerce and 
is otherwise not economically feasible, or de-
layed final approval for more than one year 
after the filing of an application seeking ap-
proval or one year after the designation of the 
relevant interstate congestion area, whichever is 
later. 
‘‘(2) A finding that the facilities to be author-
ized by the permit will be used for the transmission 
of electric energy in interstate commerce.
186
‘‘(3) A finding that the proposed construction 
or modification is consistent with the public interest. 
‘‘(4) A finding that the proposed construction 
or modification will significantly reduce transmission 
congestion in interstate commerce. 
The Commission may include in a permit issued under this 
section conditions consistent with the public interest. 
‘‘(c) PERMIT APPLICATIONS.—Permit applications 
under subsection (b) shall be made in writing to the Com-
mission and verified under oath. The Commission shall 
issue rules setting forth the form of the application, the 
information it is to contain, and the manner of service of 
notice of the permit application upon interested persons. 
‘‘(d) COMMENTS.—In any proceeding before the 
Commission under subsection (b), the Commission shall 
afford each State in which a transmission facility covered 
by the permit is or will be located, each affected Federal 
agency and Indian tribe, private property owners, and 
other interested persons, a reasonable opportunity to 
present their views and recommendations with respect to 
the need for and impact of a facility covered by the permit. 
‘‘(e) RIGHTS-OF-WAY.—In the case of a permit under 
subsection (b) for electric transmission facilities to be lo-
cated on property other than property owned by the 
United States or a State, if the permit holder cannot ac-
187
quire by contract, or is unable to agree with the owner 
of the property to the compensation to be paid for, the 
necessary right-of-way to construct or modify such trans-
mission facilities, the permit holder may acquire the right-
of-way by the exercise of the right of eminent domain in 
the district court of the United States for the district in 
which the property concerned is located, or in the appro-
priate court of the State in which the property is located. 
The practice and procedure in any action or proceeding 
for that purpose in the district court of the United States 
shall conform as nearly as may be with the practice and 
procedure in similar action or proceeding in the courts of 
the State where the property is situated. 
‘‘(f) STATE LAW.—Nothing in this section shall pre-
clude any person from constructing any transmission fa-
cilities pursuant to State law. 
‘‘(g) COMPLIANCE WITH OTHER LAWS.—Commis-
sion action under this section shall be subject to the Na-
tional Environmental Policy Act of 1969 (42 U.S.C. 4321 
et seq.) and all other applicable Federal laws. 
‘‘(h) COMPENSATION.—Any exercise of eminent do-
main authority pursuant to this section shall be considered 
a taking of private property for which just compensation 
is due. Just compensation shall be an amount equal to 
the full fair market value of the property taken on the
188
date of the exercise of eminent domain authority, except 
that the compensation shall exceed fair market value if 
necessary to make the landowner whole for decreases in 
the value of any portion of the land not subject to eminent 
domain. Any parcel of land acquired by eminent domain 
under this subsection shall be transferred back to the 
owner from whom it was acquired (or his heirs or assigns) 
if the land is not used for power line construction or modi-
fication within a reasonable period of time after the acqui-
sition. Property acquired under this subsection may not 
be used for any heritage area, recreational trail, or park, 
or for any other purpose (other than power line construc-
tion or modification, and for power line operation and 
maintenance) without the consent of the owner of the par-
cel from whom the property was acquired (or his heirs or 
assigns). 
‘‘(i) ERCOT.—Nothing in this section shall be con-
strued to authorize any interconnection with any facility 
owned or operated by an entity referred to in section 
212(k)(2)(B). 
‘‘(j) RIGHTS OF WAY ON FEDERAL LANDS.—
‘‘(1) LEAD AGENCY.—If an applicant, or pro-
spective applicant, for Federal authorization related 
to an electricity transmission or distribution facility 
so requests, the Department of Energy (DOE) shall
189
act as the lead agency for purposes of coordinating 
all applicable Federal authorization and related envi-
ronmental review of the facility. The term ‘Federal 
authorization’ shall mean any authorization required 
under Federal law in order to site a transmission or 
distribution facility, including but not limited to 
such permits, special use authorizations, certifi-
cations, opinions, or other approvals as may be re-
quired, whether issued by a Federal or a State agen-
cy. To the maximum extent practicable under appli-
cable Federal law, the Secretary of Energy shall co-
ordinate this Federal authorization and review proc-
ess with any Indian tribes, multi-State entities, and 
State agencies that are responsible for conducting 
any separate permitting and environmental reviews 
of the facility, to ensure timely and efficient review 
and permit decisions. 
‘‘(2) AUTHORITY TO SET DEADLINES.—As lead 
agency, the Department of Energy, in consultation 
with other Federal and, as appropriate, with Indian 
tribes, multi-State entities, and State agencies that 
are willing to coordinate their own separate permit-
ting and environmental reviews with the Federal au-
thorization and environmental reviews, shall estab-
lish prompt and binding intermediate milestones and
190
ultimate deadlines for the review of and Federal au-
thorization decisions relating to the proposed facil-
ity. The Secretary of Energy shall ensure that once 
an application has been submitted with such data as 
the Secretary deems necessary, all permit decisions 
and related environmental reviews under all applica-
ble Federal laws shall be completed within 1 year or, 
if a requirement of another provision of Federal law 
makes this impossible, as soon thereafter as is prac-
ticable. The Secretary of Energy also shall provide 
an expeditious pre-application mechanism for pro-
spective applicants to confer with the agencies in-
volved to have each such agency determine and com-
municate to the prospective applicant within 60 days 
of when the prospective applicant submits a request 
for such information concerning—
‘‘(A) the likelihood of approval for a poten-
tial facility; and 
‘‘(B) key issues of concern to the agencies 
and public. 
‘‘(3) CONSOLIDATED ENVIRONMENTAL REVIEW 
AND RECORD OF DECISION.—The Secretary of En-
ergy, in consultation with the affected agencies, shall 
prepare a single environmental review document, 
which shall be used as the basis for all decisions on
191
the proposed project under Federal law. The docu-
ment may be an environmental assessment or envi-
ronmental impact statement under the National En-
vironmental Policy Act of 1969 if warranted, or such 
other form of analysis as may be warranted. DOE 
and other agencies shall streamline the review and 
permitting of transmission and distribution facilities 
within corridors designated under section 503 of the 
Federal Land Policy and Management Act (43 
U.S.C. 1763) by fully taking into account prior anal-
yses and decisions as to the corridors. The document 
under this section may consist of or include an envi-
ronmental assessment, if allowed by law, or an envi-
ronmental impact statement, if warranted or re-
quired by law, or such other form of analysis as war-
ranted, consistent with any requirement of the Na-
tional Environmental Policy Act, the Federal Land 
Policy and Management Act, or any other applicable 
law. Such document shall include consideration by 
the relevant agencies of any applicable criteria or 
other matters as required under applicable laws. 
‘‘(4) APPEALS.—In the event that any agency 
has denied a Federal authorization required for a 
transmission or distribution facility, or has failed to 
act by the deadline established by the Secretary pur-
192
suant to this section for deciding whether to issue 
the authorization, the applicant or any State in 
which the facility would be located may file an ap-
peal with the Secretary of Energy, who shall, in con-
sultation with the affected agency, review the denial 
or take action on the pending application. Based on 
the overall record and in consultation with the af-
fected agency, the Secretary may then either issue 
the necessary authorization with any appropriate 
conditions, or deny the application. The Secretary 
shall issue a decision within 90 days of the filing of 
the appeal. In making a decision under this para-
graph, the Secretary shall comply with all applicable 
requirements of Federal law, including any require-
ments of the Endangered Species Act, the Clean 
Water Act, the National Forest Management Act, 
the National Environmental Policy Act, and the 
Federal Land Management and Policy Act. 
‘‘(5) CONFORMING REGULATIONS AND MEMO-
RANDA OF AGREEMENT.—Not later than 18 months 
after the date of enactment of this section, the Sec-
retary of Energy shall issue any regulations nec-
essary to implement the foregoing provisions. Not 
later than 1 year after the date of enactment of this 
section, the Secretary and the heads of all relevant
193
Federal departments and non-departmental agencies 
shall, and interested Indian tribes, multi-State enti-
ties, and State agencies may, enter into Memoranda 
of Agreement to ensure the timely and coordinated 
review and permitting of electricity transmission and 
distribution facilities. The head of each Federal de-
partment or non-departmental agency with approval 
authority shall designate a senior responsible official 
and dedicate sufficient other staff and resources to 
ensure that the DOE regulations and any Memo-
randa are fully implemented. 
‘‘(6) MISCELLANEOUS.—Each Federal author-
ization for an electricity transmission or distribution 
facility shall be issued for a duration, as determined 
by the Secretary of Energy, commensurate with the 
anticipated use of the facility and with appropriate 
authority to manage the right-of-way for reliability 
and environmental protection. Further, when such 
authorizations expire, they shall be reviewed for re-
newal taking fully into account reliance on such elec-
tricity infrastructure, recognizing its importance for 
public health, safety and economic welfare and as a 
legitimate use of Federal lands. 
‘‘(7) MAINTAINING
AND
ENHANCING
THE 
TRANSMISSION INFRASTRUCTURE.—In exercising the
194
responsibilities under this section, the Secretary of 
Energy shall consult regularly with the Federal En-
ergy Regulatory Commission (FERC) and FERC-
approved Regional Transmission Organizations and 
Independent System Operators. 
‘‘(k) INTERSTATE COMPACTS.—The consent of Con-
gress is hereby given for States to enter into interstate 
compacts establishing regional transmission siting agen-
cies to facilitate coordination among the States within 
such areas for purposes of siting future electric energy 
transmission facilities and to carry out State electric en-
ergy transmission siting responsibilities. The Secretary of 
Energy may provide technical assistance to regional trans-
mission siting agencies established under this subsection. 
‘‘(l) SAVINGS CLAUSE.—Nothing in this section shall 
be construed to affect any requirement of the environ-
mental laws of the United States, including, but not lim-
ited to, the National Environmental Policy Act of 1969. 
This section shall not apply to any component of the Na-
tional Wilderness Preservation System, the National Wild 
and Scenic Rivers System, or the National Park system 
(including National Monuments therein).’’. 
(b) FEDERAL CORRIDORS.—The Secretary of the In-
terior, the Secretary of Energy, the Secretary of Agri-
culture, and the Chairman of the Council on Environ-
195
mental Quality shall, within 90 days of the date of enact-
ment of this subsection, submit a joint report to Congress 
identifying the following: 
(1) all existing designated transmission and dis-
tribution corridors on Federal land and the status of 
work related to proposed transmission and distribu-
tion corridor designations, the schedule for com-
pleting such work, any impediments to completing 
the work, and steps that Congress could take to ex-
pedite the process; 
(2) the number of pending applications to lo-
cate transmission and distribution facilities on Fed-
eral lands, key information relating to each such fa-
cility, how long each application has been pending, 
the schedule for issuing a timely decision as to each 
facility, and progress in incorporating existing and 
new such rights-of-way into relevant land use and 
resource management plans or their equivalent; and 
(3) the number of existing transmission and 
distribution rights-of-way on Federal lands that will 
come up for renewal within the following 5, 10, and 
15 year periods, and a description of how the Secre-
taries plan to manage such renewals.
196
SEC. 16013. TRANSMISSION TECHNOLOGIES. 
The Federal Energy Regulatory Commission shall 
shall take affirmative steps in the exercise of its authori-
ties under the Federal Power Act to encourage the deploy-
ment of transmission technologies that utilize real time 
monitoring and analytical software to increase and maxi-
mize the capacity and efficiency of transmission networks 
and to reduce line losses. 
Subtitle B—Transmission 
Operation 
SEC. 16021. OPEN ACCESS TRANSMISSION BY CERTAIN 
UTILITIES. 
Part II of the Federal Power Act (16 U.S.C. 824 et 
seq.) is amended by inserting after section 211 the fol-
lowing: 
‘‘SEC. 211A. OPEN ACCESS BY UNREGULATED TRANSMIT-
TING UTILITIES. 
‘‘(a) IN GENERAL.—Subject to section 212(h), the 
Commission may, by rule or order, require an unregulated 
transmitting utility to provide transmission services—
‘‘(1) at rates that are comparable to those that 
the unregulated transmitting utility charges itself, 
and 
‘‘(2) on terms and conditions (not relating to 
rates) that are comparable to those under which 
such unregulated transmitting utility provides trans-
197
mission services to itself and that are not unduly 
discriminatory or preferential. 
‘‘(b) EXEMPTIONS.—
‘‘(1) IN GENERAL.—The Commission shall ex-
empt from any rule or order under this subsection 
any unregulated transmitting utility that—
‘‘(A)(i) sells no more than 4,000,000 
megawatt hours of electricity per year; and 
‘‘(ii) is a distribution utility; or 
‘‘(B) does not own or operate any trans-
mission facilities that are necessary for oper-
ating an interconnected transmission system (or 
any portion thereof); or 
‘‘(C) meets other criteria the Commission 
determines to be in the public interest. 
‘‘(2) LOCAL DISTRIBUTION.— The requirements 
of subsection (a) shall not apply to facilities used in 
local distribution. 
‘‘(c) RATE
CHANGING
PROCEDURES.—The rate 
changing procedures applicable to public utilities under 
subsections (c) and (d) of section 205 are applicable to 
unregulated transmitting utilities for purposes of this sec-
tion. 
‘‘(d) REMAND.—In exercising its authority under 
paragraph (1), the Commission may remand transmission
198
rates to an unregulated transmitting utility for review and 
revision where necessary to meet the requirements of sub-
section (a). 
‘‘(e) SECTION 211 REQUESTS.—The provision of 
transmission services under subsection (a) does not pre-
clude a request for transmission services under section 
211. 
‘‘(f) DEFINITIONS.—For purposes of this section—
‘‘(1) The term ‘unregulated transmitting utility’ 
means an entity that—
‘‘(A) owns or operates facilities used for 
the transmission of electric energy in interstate 
commerce, and 
‘‘(B) is either an entity described in sec-
tion 201(f) or a rural electric cooperative. 
‘‘(2) The term ‘distribution utility’ means an 
unregulated transmitting utility that serves at least 
ninety percent of its electric customers at retail.’’. 
SEC. 16022. REGIONAL TRANSMISSION ORGANIZATIONS. 
(a) SENSE OF THE CONGRESS ON RTOS.—It is the 
sense of Congress that, in order to promote fair, open ac-
cess to electric transmission service, benefit retail con-
sumers, facilitate wholesale competition, improve effi-
ciencies in transmission grid management, promote grid 
reliability, remove opportunities for unduly discriminatory
199
or preferential transmission practices, and provide for the 
efficient development of transmission infrastructure need-
ed to meet the growing demands of competitive wholesale 
power markets, all transmitting utilities in interstate com-
merce should voluntarily become members of independ-
ently administered regional transmission organizations 
that have operational control of interstate transmission fa-
cilities and do not own or control generation facilities used 
to supply electric energy for sale at wholesale. 
(b) SENSE OF THE CONGRESS ON CAPITAL INVEST-
MENT.—It is the sense of the Congress that the Federal 
Energy Regulatory Commission should provide to any 
transmitting utility that becomes a member of an oper-
ational regional transmitting organization approved by the 
Commission a return on equity sufficient to attract new 
investment capital for expansion of transmission capacity, 
in accordance with sections 205 and 206 of the Federal 
Power Act (16 U.S.C. 824d and 824e), including the re-
quirement that rates be just and reasonable. 
(c) REPORT ON PENDING APPLICATIONS.—Not later 
than 120 days after the date of enactment of this section, 
the Federal Energy Regulatory Commission shall submit 
to the Committee on Energy and Commerce of the United 
States House of Representatives and the Committee on
200
Energy and Natural Resources of the United States Sen-
ate a report containing the following: 
(1) A list of all regional transmission organiza-
tion applications filed at the Commission pursuant 
to the Commission’s Order No. 2000, including an 
identification of each public utility and other entity 
included within the proposed membership of the re-
gional transmission organization. 
(2) A table showing the date each such applica-
tion was filed, the date of any revised filings of such 
application, the date of each preliminary or final 
Commission order regarding such application, and a 
statement of whether the application has been re-
jected, preliminarily approved, finally approved, or 
has some other status (including a description of 
that status). 
(3) For any application that has not been fi-
nally approved by the Commission, a detailed de-
scription of every aspect of the application that the 
Commission has determined does not conform to the 
requirements of Order No. 2000. 
(4) For any application that has not been fi-
nally approved by the Commission, an explanation 
by the Commission of why the items described pur-
suant to paragraph (3) constitute material non-
201
compliance with the requirements of the Commis-
sion’s Order No. 2000 sufficient to justify denial of 
approval by the Commission. 
(5) For all regional transmission organization 
applications filed pursuant to the Commission’s 
Order No. 2000, whether finally approved or not—
(A) a discussion of that regional trans-
mission organization’s efforts to minimize rate 
seams between itself and—
(i) other regional transmission organi-
zations; and 
(ii) entities not participating in a re-
gional transmission organization; and 
(B) a discussion of the impact of such 
seams on consumers and wholesale competition; 
and 
(C) a discussion of minimizing cost-shifting 
on consumers. 
(d) FEDERAL UTILITY PARTICIPATION IN RTOS.—
(1) DEFINITIONS.—For purposes of this sec-
tion—
(A) The term ‘‘appropriate Federal regu-
latory authority’’ means— 
(i) with respect to a Federal power 
marketing agency, the Secretary of En-
202
ergy, except that the Secretary may des-
ignate the Administrator of a Federal 
power marketing agency to act as the ap-
propriate Federal regulatory authority with 
respect to the transmission system of that 
Federal power marketing agency; and 
(ii) with respect to the Tennessee Val-
ley Authority, the Board of Directors of 
the Tennessee Valley Authority. 
(B) The term ‘‘Federal utility’’ means a 
Federal power marketing agency or the Ten-
nessee Valley Authority. 
(C) The term ‘‘transmission system’’ 
means electric transmission facilities owned, 
leased, or contracted for by the United States 
and operated by a Federal utility. 
(2) TRANSFER.—The appropriate Federal regu-
latory authority is authorized to enter into a con-
tract, agreement or other arrangement transferring 
control and use of all or part of the Federal utility’s 
transmission system to a regional transmission orga-
nization approved by the Federal Energy Regulatory 
Commission. Such contract, agreement or arrange-
ment shall include—
203
(A) performance standards for operation 
and use of the transmission system that the 
head of the Federal utility determines necessary 
or appropriate, including standards that assure 
recovery of all the Federal utility’s costs and 
expenses related to the transmission facilities 
that are the subject of the contract, agreement 
or other arrangement, consistency with existing 
contracts and third-party financing arrange-
ments, and consistency with said Federal util-
ity’s statutory authorities, obligations, and limi-
tations; 
(B) provisions for monitoring and over-
sight by the Federal utility of the regional 
transmission organization’s fulfillment of the 
terms and conditions of the contract, agreement 
or other arrangement, including a provision 
that may provide for the resolution of disputes 
through arbitration or other means with the re-
gional transmission organization or with other 
participants, notwithstanding the obligations 
and limitations of any other law regarding arbi-
tration; and 
(C) a provision that allows the Federal 
utility to withdraw from the regional trans-
204
mission organization and terminate the con-
tract, agreement or other arrangement in ac-
cordance with its terms. 
Neither this section, actions taken pursuant to it, 
nor any other transaction of a Federal utility using 
a regional transmission organization shall serve to 
confer upon the Federal Energy Regulatory Com-
mission jurisdiction or authority over the Federal 
utility’s electric generation assets, electric capacity 
or energy that the Federal utility is authorized by 
law to market, or the Federal utility’s power sales 
activities. 
(3) EXISTING STATUTORY AND OTHER OBLIGA-
TIONS.—
(A) 
SYSTEM
OPERATION
REQUIRE-
MENTS.—Any statutory provision requiring or 
authorizing a Federal utility to transmit electric 
power or to construct, operate or maintain its 
transmission system shall not be construed to 
prohibit a transfer of control and use of its 
transmission system pursuant to, and subject to 
all requirements of paragraph (2). 
(B) 
OTHER
OBLIGATIONS.—This 
sub-
section shall not be construed to—
205
(i) suspend, or exempt any Federal 
utility from, any provision of existing Fed-
eral law, including but not limited to any 
requirement or direction relating to the use 
of the Federal utility’s transmission sys-
tem, environmental protection, fish and 
wildlife protection, flood control, naviga-
tion, water delivery, or recreation; or 
(ii) authorize abrogation of any con-
tract or treaty obligation. 
SEC. 16023. NATIVE LOAD. 
Part II of the Federal Power Act (16 U.S.C. 824 et 
seq.) is amended by adding the following new section at 
the end thereof: 
‘‘SEC. 217. SERVICE OBLIGATIONS OF LOAD-SERVING ENTI-
TIES. 
‘‘(a) IN GENERAL.—In exercising authority under 
this Act, the Commission shall ensure that any load-serv-
ing entity that either—
‘‘(1) owns transmission facilities for the trans-
mission of electric energy in interstate commerce 
used to purchase or deliver electric energy to meet—
‘‘(A) a service obligation to customers; or 
‘‘(B) an existing wholesale contractual obli-
gation; or
206
‘‘(2) holds a contract or service agreement for 
firm transmission service used to purchase or deliver 
electric energy to meet—
‘‘(A) a service obligation to customers; or 
‘‘(B) an existing wholesale contractual obli-
gation 
shall be entitled to use such transmission facilities or 
equivalent transmission rights to meet such obligations be-
fore transmission capacity is made available for other 
uses. 
‘‘(b) USE BY SUCCESSOR IN INTEREST.—To the ex-
tent that all or a portion of the service obligation or con-
tractual obligation covered by subsection (a) is transferred 
to another load serving entity, the successor shall be enti-
tled to use such transmission facilities or firm trans-
mission rights associated with the transferred service obli-
gation consistent with subsection (a). Subsequent trans-
fers to another load serving entity, or back to the original 
load-serving entity, shall be entitled to the same rights. 
‘‘(c) OTHER ENTITIES.—The Commission may exer-
cise authority under this Act to make transmission rights 
not used to meet an obligation covered by subsection (a) 
available to other entities in a manner determined by the 
Commission to be not unduly discriminatory or pref-
erential.
207
‘‘(d) DEFINITIONS.—For the purposes of this section: 
‘‘(1) The term ‘load-serving entity’ means an 
electric utility, transmitting utility or Federal power 
marketing agency that has an obligation under Fed-
eral, State, or local law, or under long-term con-
tracts, to provide electric service to either—
‘‘(A) electric consumers (as defined in sec-
tion 3(5) of the Public Utility Regulatory Poli-
cies Act of 1978 (16 U.S.C. 2602(5)); or 
‘‘(B) an electric utility as defined in sec-
tion 3(4) of the Public Utility Regulatory Poli-
cies Act of 1978 (16 U.S.C. 2602(5)) that has 
an obligation to provide electric service to elec-
tric consumers. 
Such obligations shall be deemed ‘service obliga-
tions’. 
‘‘(2) The term ‘existing wholesale contractual 
obligation’ means an obligation under a firm long-
term wholesale contract that was in effect on March 
28, 2003. A contract modification after March 28, 
2003 (other than one that increases the quantity of 
electric energy sold under the contract) shall not af-
fect the status of such contract as an existing whole-
sale contractual obligation.
208
‘‘(e) RELATIONSHIP TO OTHER PROVISIONS.—To the 
extent that a transmitting utility reserves transmission ca-
pacity (or reserves the equivalent amount of tradable 
transmission rights) to provide firm transmission service 
to meet service obligations or firm long-term wholesale 
contractual obligations pursuant to subsection (a), that 
transmitting utility shall not be considered as engaging 
in undue discrimination or preference under this Act. 
‘‘(f) JURISDICTION.—This section shall not apply to 
an entity located in an area referred to in section 
212(k)(2)(A).
‘‘(g) SAVINGS CLAUSE.—Nothing in this section shall 
affect any allocation of transmission rights by the PJM 
Interconnection, the New York Independent System Oper-
ator, the New England Independent System Operator, the 
Midwest Independent System Operator, or the California 
Independent System Operator. Nothing in this section 
shall provide a basis for abrogating any contract for firm 
transmission service or rights in effect as of the date of 
enactment of this section.’’.
Subtitle C—Reliability 
SEC. 16031. ELECTRIC RELIABILITY STANDARDS. 
Part II of the Federal Power Act (16 U.S.C 824 et 
seq.) is amended by inserting the following new section 
at the end thereof:
209
‘‘SEC. 218. ELECTRIC RELIABILITY. 
‘‘(a) DEFINITIONS.—For purposes of this section—
‘‘(1) The term ‘bulk-power system’ means—
‘‘(A) facilities and control systems nec-
essary for operating an interconnected electric 
energy transmission network (or any portion 
thereof); and 
‘‘(B) electric energy from generation facili-
ties needed to maintain transmission system re-
liability. 
The term does not include facilities used in the local 
distribution of electric energy. 
‘‘(2) The terms ‘Electric Reliability Organiza-
tion’ and ‘ERO’ mean the organization certified by 
the Commission under subsection (c) the purpose of 
which is to establish and enforce reliability stand-
ards for the bulk-power system, subject to Commis-
sion review. 
‘‘(3) The term ‘reliability standard’ means a re-
quirement, approved by the Commission under this 
section, to provide for reliable operation of the bulk-
power system. The term includes requirements for 
the operation of existing bulk-power system facilities 
and the design of planned additions or modifications 
to such facilities to the extent necessary to provide 
for reliable operation of the bulk-power system, but
210
the term does not include any requirement to en-
large such facilities or to construct new transmission 
capacity or generation capacity. 
‘‘(4) The term ‘reliable operation’ means oper-
ating the elements of the bulk-power system within 
equipment and electric system thermal, voltage, and 
stability limits so that instability, uncontrolled sepa-
ration, or cascading failures of such system will not 
occur as a result of a sudden disturbance or unan-
ticipated failure of system elements. 
‘‘(5) The term ‘Interconnection’ means a geo-
graphic area in which the operation of bulk-power 
system components is synchronized such that the 
failure of one or more of such components may ad-
versely affect the ability of the operators of other 
components within the system to maintain reliable 
operation of the facilities within their control. 
‘‘(6) The term ‘transmission organization’ 
means a regional transmission organization, inde-
pendent system operator, independent transmission 
provider, or other transmission organization finally 
approved by the Commission for the operation of 
transmission facilities.
211
‘‘(7) The term ‘regional entity’ means an entity 
having enforcement authority pursuant to subsection 
(e)(4). 
‘‘(b) JURISDICTION AND APPLICABILITY.—(1) The 
Commission shall have jurisdiction, within the United 
States, over the ERO certified by the Commission under 
subsection (c), any regional entities, and all users, owners 
and operators of the bulk-power system, including but not 
limited to the entities described in section 201(f), for pur-
poses of approving reliability standards established under 
this section and enforcing compliance with this section. All 
users, owners and operators of the bulk-power system 
shall comply with reliability standards that take effect 
under this section. 
‘‘(2) The Commission shall issue a final rule to imple-
ment the requirements of this section not later than 180 
days after the date of enactment of this section. 
‘‘(c) CERTIFICATION.—Following the issuance of a 
Commission rule under subsection (b)(2), any person may 
submit an application to the Commission for certification 
as the Electric Reliability Organization (ERO). The Com-
mission may certify one such ERO if the Commission de-
termines that such ERO—
‘‘(1) has the ability to develop and enforce, sub-
ject to subsection (e)(2), reliability standards that
212
provide for an adequate level of reliability of the 
bulk-power system; 
‘‘(2) has established rules that—
‘‘(A) assure its independence of the users 
and owners and operators of the bulk-power 
system, while assuring fair stakeholder rep-
resentation in the selection of its directors and 
balanced decisionmaking in any ERO com-
mittee or subordinate organizational structure; 
‘‘(B) allocate equitably reasonable dues, 
fees, and other charges among end users for all 
activities under this section; 
‘‘(C) provide fair and impartial procedures 
for enforcement of reliability standards through 
the imposition of penalties in accordance with 
subsection (e) (including limitations on activi-
ties, functions, or operations, or other appro-
priate sanctions); 
‘‘(D) provide for reasonable notice and op-
portunity for public comment, due process, 
openness, and balance of interests in developing 
reliability standards and otherwise exercising its 
duties; and
213
‘‘(E) provide for taking, after certification, 
appropriate steps to gain recognition in Canada 
and Mexico. 
‘‘(d) RELIABILITY STANDARDS.—(1) The Electric 
Reliability Organization shall file each reliability standard 
or modification to a reliability standard that it proposes 
to be made effective under this section with the Commis-
sion. 
‘‘(2) The Commission may approve, by rule or order, 
a proposed reliability standard or modification to a reli-
ability standard if it determines that the standard is just, 
reasonable, not unduly discriminatory or preferential, and 
in the public interest. The Commission shall give due 
weight to the technical expertise of the Electric Reliability 
Organization with respect to the content of a proposed 
standard or modification to a reliability standard and to 
the technical expertise of a regional entity organized on 
an Interconnection-wide basis with respect to a reliability 
standard to be applicable within that Interconnection, but 
shall not defer with respect to the effect of a standard 
on competition. A proposed standard or modification shall 
take effect upon approval by the Commission. 
‘‘(3) The Electric Reliability Organization shall 
rebuttably presume that a proposal from a regional entity 
organized on an Interconnection-wide basis for a reliability
214
standard or modification to a reliability standard to be ap-
plicable on an Interconnection-wide basis is just, reason-
able, and not unduly discriminatory or preferential, and 
in the public interest. 
‘‘(4) The Commission shall remand to the Electric 
Reliability Organization for further consideration a pro-
posed reliability standard or a modification to a reliability 
standard that the Commission disapproves in whole or in 
part. 
‘‘(5) The Commission, upon its own motion or upon 
complaint, may order the Electric Reliability Organization 
to submit to the Commission a proposed reliability stand-
ard or a modification to a reliability standard that ad-
dresses a specific matter if the Commission considers such 
a new or modified reliability standard appropriate to carry 
out this section. 
‘‘(6) The final rule adopted under subsection (b)(2) 
shall include fair processes for the identification and time-
ly resolution of any conflict between a reliability standard 
and any function, rule, order, tariff, rate schedule, or 
agreement accepted, approved, or ordered by the Commis-
sion applicable to a transmission organization. Such trans-
mission organization shall continue to comply with such 
function, rule, order, tariff, rate schedule or agreement ac-
cepted approved, or ordered by the Commission until—
215
‘‘(A) the Commission finds a conflict exists be-
tween a reliability standard and any such provision; 
‘‘(B) the Commission orders a change to such 
provision pursuant to section 206 of this part; and 
‘‘(C) the ordered change becomes effective 
under this part. 
If the Commission determines that a reliability standard 
needs to be changed as a result of such a conflict, it shall 
order the ERO to develop and file with the Commission 
a modified reliability standard under paragraph (4) or (5) 
of this subsection. 
‘‘(e) ENFORCEMENT.—(1) The ERO may impose, 
subject to paragraph (2), a penalty on a user or owner 
or operator of the bulk-power system for a violation of a 
reliability standard approved by the Commission under 
subsection (d) if the ERO, after notice and an opportunity 
for a hearing—
‘‘(A) finds that the user or owner or operator 
has violated a reliability standard approved by the 
Commission under subsection (d); and 
‘‘(B) files notice and the record of the pro-
ceeding with the Commission. 
‘‘(2) A penalty imposed under paragraph (1) may 
take effect not earlier than the 31st day after the electric 
reliability organization files with the Commission notice of
216
the penalty and the record of proceedings. Such penalty 
shall be subject to review by the Commission, on its own 
motion or upon application by the user, owner or operator 
that is the subject of the penalty filed within 30 days after 
the date such notice is filed with the Commission. Applica-
tion to the Commission for review, or the initiation of re-
view by the Commission on its own motion, shall not oper-
ate as a stay of such penalty unless the Commission other-
wise orders upon its own motion or upon application by 
the user, owner or operator that is the subject of such 
penalty. In any proceeding to review a penalty imposed 
under paragraph (1), the Commission, after notice and op-
portunity for hearing (which hearing may consist solely 
of the record before the electric reliability organization and 
opportunity for the presentation of supporting reasons to 
affirm, modify, or set aside the penalty), shall by order 
affirm, set aside, reinstate, or modify the penalty, and, 
if appropriate, remand to the electric reliability organiza-
tion for further proceedings. The Commission shall imple-
ment expedited procedures for such hearings. 
‘‘(3) On its own motion or upon complaint, the Com-
mission may order compliance with a reliability standard 
and may impose a penalty against a user or owner or oper-
ator of the bulk-power system, if the Commission finds, 
after notice and opportunity for a hearing, that the user
217
or owner or operator of the bulk-power system has en-
gaged or is about to engage in any acts or practices that 
constitute or will constitute a violation of a reliability 
standard. 
‘‘(4) The Commission shall establish regulations au-
thorizing the ERO to enter into an agreement to delegate 
authority to a regional entity for the purpose of proposing 
reliability standards to the ERO and enforcing reliability 
standards under paragraph (1) if—
‘‘(A) the regional entity is governed by—
‘‘(i) an independent board; 
‘‘(ii) a balanced stakeholder board; or 
‘‘(iii) a combination independent and bal-
anced stakeholder board. 
‘‘(B) the regional entity otherwise satisfies the 
provisions of subsection (c)(1) and (2); and 
‘‘(C) the agreement promotes effective and effi-
cient administration of bulk-power system reliability. 
The Commission may modify such delegation. The ERO 
and the Commission shall rebuttably presume that a pro-
posal for delegation to a regional entity organized on an 
Interconnection-wide basis promotes effective and efficient 
administration of bulk-power system reliability and should 
be approved. Such regulation may provide that the Com-
mission may assign the ERO’s authority to enforce reli-
218
ability standards under paragraph (1) directly to a re-
gional entity consistent with the requirements of this para-
graph. 
‘‘(5) The Commission may take such action as is nec-
essary or appropriate against the ERO or a regional entity 
to ensure compliance with a reliability standard or any 
Commission order affecting the ERO or a regional entity. 
‘‘(6) Any penalty imposed under this section shall 
bear a reasonable relation to the seriousness of the viola-
tion and shall take into consideration the efforts of such 
user, owner, or operator to remedy the violation in a time-
ly manner. 
‘‘(f) CHANGES IN ELECTRICITY RELIABILITY ORGA-
NIZATION RULES.—The Electric Reliability Organization 
shall file with the Commission for approval any proposed 
rule or proposed rule change, accompanied by an expla-
nation of its basis and purpose. The Commission, upon 
its own motion or complaint, may propose a change to the 
rules of the Electric Reliability Organization. A proposed 
rule or proposed rule change shall take effect upon a find-
ing by the Commission, after notice and opportunity for 
comment, that the change is just, reasonable, not unduly 
discriminatory or preferential, is in the public interest, and 
satisfies the requirements of subsection (c).
219
‘‘(g) RELIABILITY REPORTS.—The Electric Reli-
ability Organization shall conduct periodic assessments of 
the reliability and adequacy of the bulk-power system in 
North America. 
‘‘(h) COORDINATION WITH CANADA AND MEXICO.—
The President is urged to negotiate international agree-
ments with the governments of Canada and Mexico to pro-
vide for effective compliance with reliability standards and 
the effectiveness of the Electric Reliability Organization 
in the United States and Canada or Mexico. 
‘‘(i) SAVINGS PROVISIONS.—(1) The Electric Reli-
ability Organization shall have authority to develop and 
enforce compliance with reliability standards for only the 
bulk-power system. 
‘‘(2) This section does not authorize the Electric Reli-
ability Organization or the Commission to order the con-
struction of additional generation or transmission capacity 
or to set and enforce compliance with standards for ade-
quacy or safety of electric facilities or services. 
‘‘(3) Nothing in this section shall be construed to pre-
empt any authority of any State to take action to ensure 
the safety, adequacy, and reliability of electric service 
within that State, as long as such action is not incon-
sistent with any reliability standard, except that the State 
of New York may establish rules that result in greater
220
reliability within that State, as long as such action does 
not result in lesser reliability outside the State than that 
provided by the reliability standards. 
‘‘(4) Within 90 days of the application of the Electric 
Reliability Organization or other affected party, and after 
notice and opportunity for comment, the Commission shall 
issue a final order determining whether a State action is 
inconsistent with a reliability standard, taking into consid-
eration any recommendation of the Electric Reliability Or-
ganization. 
‘‘(5) The Commission, after consultation with the 
Electric Reliability Organization and the State taking ac-
tion, may stay the effectiveness of any State action, pend-
ing the Commission’s issuance of a final order. 
‘‘(j) REGIONAL ADVISORY BODIES.—The Commis-
sion shall establish a regional advisory body on the petition 
of at least two-thirds of the States within a region that 
have more than one-half of their electric load served within 
the region. A regional advisory body shall be composed or 
of one member from each participating State in the region, 
appointed by the Governor of each State, and may include 
representatives of agencies, States, and provinces outside 
the United States. A regional advisory body may provide 
advice to the Electric Reliability Organization, a regional 
entity, or the Commission regarding the governance of an
221
existing or proposed regional entity within the same re-
gion, whether a standard proposed to apply within the re-
gion is just, reasonable, not unduly discriminatory or pref-
erential, and in the public interest, whether fees proposed 
to be assessed within the region are just, reasonable, not 
unduly discriminatory or preferential, and in the public 
interest and any other responsibilities requested by the 
Commission. The Commission may give deference to the 
advice of any such regional advisory body if that body is 
organized on an Interconnection-wide basis. 
‘‘(k) APPLICATION TO ALASKA AND HAWAII.—The 
provisions of this section do not apply to Alaska or Ha-
waii.’’. 
Subtitle D—PUHCA Amendments 
SEC. 16041. SHORT TITLE. 
This subtitle may be cited as the ‘‘Public Utility 
Holding Company Act of 2003’’. 
SEC. 16042. DEFINITIONS. 
For purposes of this subtitle: 
(1) The term ‘‘affiliate’’ of a company means 
any company, 5 percent or more of the outstanding 
voting securities of which are owned, controlled, or 
held with power to vote, directly or indirectly, by 
such company.
222
(2) The term ‘‘associate company’’ of a com-
pany means any company in the same holding com-
pany system with such company. 
(3) The term ‘‘Commission’’ means the Federal 
Energy Regulatory Commission. 
(4) The term ‘‘company’’ means a corporation, 
partnership, association, joint stock company, busi-
ness trust, or any organized group of persons, 
whether incorporated or not, or a receiver, trustee, 
or other liquidating agent of any of the foregoing. 
(5) The term ‘‘electric utility company’’ means 
any company that owns or operates facilities used 
for the generation, transmission, or distribution of 
electric energy for sale. 
(6) The terms ‘‘exempt wholesale generator’’ 
and ‘‘foreign utility company’’ have the same mean-
ings as in sections 32 and 33, respectively, of the 
Public Utility Holding Company Act of 1935 (15 
U.S.C. 79z–5a, 79z–5b), as those sections existed on 
the day before the effective date of this subtitle. 
(7) The term ‘‘gas utility company’’ means any 
company that owns or operates facilities used for 
distribution at retail (other than the distribution 
only in enclosed portable containers or distribution 
to tenants or employees of the company operating
223
such facilities for their own use and not for resale) 
of natural or manufactured gas for heat, light, or 
power. 
(8) The term ‘‘holding company’’ means— 
(A) any company that directly or indirectly 
owns, controls, or holds, with power to vote, 10 
percent or more of the outstanding voting secu-
rities of a public utility company or of a holding 
company of any public utility company; and 
(B) any person, determined by the Com-
mission, after notice and opportunity for hear-
ing, to exercise directly or indirectly (either 
alone or pursuant to an arrangement or under-
standing with one or more persons) such a con-
trolling influence over the management or poli-
cies of any public utility company or holding 
company as to make it necessary or appropriate 
for the rate protection of utility customers with 
respect to rates that such person be subject to 
the obligations, duties, and liabilities imposed 
by this subtitle upon holding companies. 
(9) The term ‘‘holding company system’’ means 
a holding company, together with its subsidiary com-
panies.
224
(10) The term ‘‘jurisdictional rates’’ means 
rates established by the Commission for the trans-
mission of electric energy in interstate commerce, 
the sale of electric energy at wholesale in interstate 
commerce, the transportation of natural gas in inter-
state commerce, and the sale in interstate commerce 
of natural gas for resale for ultimate public con-
sumption for domestic, commercial, industrial, or 
any other use. 
(11) The term ‘‘natural gas company’’ means a 
person engaged in the transportation of natural gas 
in interstate commerce or the sale of such gas in 
interstate commerce for resale. 
(12) The term ‘‘person’’ means an individual or 
company. 
(13) The term ‘‘public utility’’ means any per-
son who owns or operates facilities used for trans-
mission of electric energy in interstate commerce or 
sales of electric energy at wholesale in interstate 
commerce. 
(14) The term ‘‘public utility company’’ means 
an electric utility company or a gas utility company. 
(15) The term ‘‘State commission’’ means any 
commission, board, agency, or officer, by whatever 
name designated, of a State, municipality, or other
225
political subdivision of a State that, under the laws 
of such State, has jurisdiction to regulate public util-
ity companies. 
(16) The term ‘‘subsidiary company’’ of a hold-
ing company means— 
(A) any company, 10 percent or more of 
the outstanding voting securities of which are 
directly or indirectly owned, controlled, or held 
with power to vote, by such holding company; 
and 
(B) any person, the management or poli-
cies of which the Commission, after notice and 
opportunity for hearing, determines to be sub-
ject to a controlling influence, directly or indi-
rectly, by such holding company (either alone or 
pursuant to an arrangement or understanding 
with one or more other persons) so as to make 
it necessary for the rate protection of utility 
customers with respect to rates that such per-
son be subject to the obligations, duties, and li-
abilities imposed by this subtitle upon sub-
sidiary companies of holding companies. 
(17) The term ‘‘voting security’’ means any se-
curity presently entitling the owner or holder thereof
227
(c) HOLDING COMPANY SYSTEMS.—The Commission 
may examine the books, accounts, memoranda, and other 
records of any company in a holding company system, or 
any affiliate thereof, as the Commission deems to be rel-
evant to costs incurred by a public utility or natural gas 
company within such holding company system and nec-
essary or appropriate for the protection of utility cus-
tomers with respect to jurisdictional rates. 
(d) CONFIDENTIALITY.—No member, officer, or em-
ployee of the Commission shall divulge any fact or infor-
mation that may come to his or her knowledge during the 
course of examination of books, accounts, memoranda, or 
other records as provided in this section, except as may 
be directed by the Commission or by a court of competent 
jurisdiction. 
SEC. 16045. STATE ACCESS TO BOOKS AND RECORDS. 
(a) In GENERAL.—Upon the written request of a 
State commission having jurisdiction to regulate a public 
utility company in a holding company system, the holding 
company or any associate company or affiliate thereof, 
other than such public utility company, wherever located, 
shall produce for inspection books, accounts, memoranda, 
and other records that—
(1) have been identified in reasonable detail by 
the State commission;
228
(2) the State commission deems are relevant to 
costs incurred by such public utility company; and 
(3) are necessary for the effective discharge of 
the responsibilities of the State commission with re-
spect to such proceeding. 
(b) LIMITATION.—Subsection (a) does not apply to 
any person that is a holding company solely by reason of 
ownership of one or more qualifying facilities under the 
Public Utility Regulatory Policies Act of 1978 (16 U.S.C. 
2601 et seq.). 
(c) CONFIDENTIALITY OF INFORMATION.—The pro-
duction of books, accounts, memoranda, and other records 
under subsection (a) shall be subject to such terms and 
conditions as may be necessary and appropriate to safe-
guard against unwarranted disclosure to the public of any 
trade secrets or sensitive commercial information. 
(d) EFFECT ON STATE LAW.—Nothing in this sec-
tion shall preempt applicable State law concerning the pro-
vision of books, accounts, memoranda, and other records, 
or in any way limit the rights of any State to obtain books, 
accounts, memoranda, and other records under any other 
Federal law, contract, or otherwise. 
(e) COURT JURISDICTION.—Any United States dis-
trict court located in the State in which the State commis-
229
sion referred to in subsection (a) is located shall have ju-
risdiction to enforce compliance with this section. 
SEC. 16046. EXEMPTION AUTHORITY. 
(a) RULEMAKING.—Not later than 90 days after the 
effective date of this subtitle, the Commission shall pro-
mulgate a final rule to exempt from the requirements of 
section 16044 (relating to Federal access to books and 
records) any person that is a holding company, solely with 
respect to one or more—
(1) qualifying facilities under the Public Utility 
Regulatory Policies Act of 1978 (16 U.S.C. 2601 et 
seq.); 
(2) exempt wholesale generators; or 
(3) foreign utility companies. 
(b) OTHER AUTHORITY.—The Commission shall ex-
empt a person or transaction from the requirements of 
section 16044 (relating to Federal access to books and 
records) if, upon application or upon the motion of the 
Commission— 
(1) the Commission finds that the books, ac-
counts, memoranda, and other records of any person 
are not relevant to the jurisdictional rates of a pub-
lic utility or natural gas company; or
230
(2) the Commission finds that any class of 
transactions is not relevant to the jurisdictional 
rates of a public utility or natural gas company. 
SEC. 16047. AFFILIATE TRANSACTIONS. 
(a) COMMISSION AUTHORITY UNAFFECTED.—Noth-
ing in this subtitle shall limit the authority of the Commis-
sion under the Federal Power Act (16 U.S.C. 791a et seq.) 
to require that jurisdictional rates are just and reasonable, 
including the ability to deny or approve the pass through 
of costs, the prevention of cross-subsidization, and the pro-
mulgation of such rules and regulations as are necessary 
or appropriate for the protection of utility consumers. 
(b) RECOVERY OF COSTS.—Nothing in this subtitle 
shall preclude the Commission or a State commission from 
exercising its jurisdiction under otherwise applicable law 
to determine whether a public utility company, public util-
ity, or natural gas company may recover in rates any costs 
of an activity performed by an associate company, or any 
costs of goods or services acquired by such public utility 
company from an associate company. 
SEC. 16048. APPLICABILITY. 
Except as otherwise specifically provided in this sub-
title, no provision of this subtitle shall apply to, or be 
deemed to include— 
(1) the United States;
231
(2) a State or any political subdivision of a 
State; 
(3) any foreign governmental authority not op-
erating in the United States; 
(4) any agency, authority, or instrumentality of 
any entity referred to in paragraph (1), (2), or (3); 
or 
(5) any officer, agent, or employee of any entity 
referred to in paragraph (1), (2), or (3) acting as 
such in the course of his or her official duty. 
SEC. 16049. EFFECT ON OTHER REGULATIONS. 
Nothing in this subtitle precludes the Commission or 
a State commission from exercising its jurisdiction under 
otherwise applicable law to protect utility customers. 
SEC. 16050. ENFORCEMENT. 
The Commission shall have the same powers as set 
forth in sections 306 through 317 of the Federal Power 
Act (16 U.S.C. 825e–825p) to enforce the provisions of 
this subtitle. 
SEC. 16051. SAVINGS PROVISIONS. 
(a) IN GENERAL.—Nothing in this subtitle prohibits 
a person from engaging in or continuing to engage in ac-
tivities or transactions in which it is legally engaged or 
authorized to engage on the date of enactment of this Act,
232
so long as that person continues to comply with the terms 
of any such authorization, whether by rule or by order. 
(b) EFFECT ON OTHER COMMISSION AUTHORITY.—
Nothing in this subtitle limits the authority of the Com-
mission under the Federal Power Act (16 U.S.C. 791a et 
seq.) (including section 301 of that Act) or the Natural 
Gas Act (15 U.S.C. 717 et seq.) (including section 8 of 
that Act). 
SEC. 16052. IMPLEMENTATION. 
Not later than 12 months after the date of enactment 
of this subtitle, the Commission shall— 
(1) promulgate such regulations as may be nec-
essary or appropriate to implement this subtitle 
(other than section 16045, relating to State access 
to books and records); and 
(2) submit to the Congress detailed rec-
ommendations on technical and conforming amend-
ments to Federal law necessary to carry out this 
subtitle and the amendments made by this subtitle. 
SEC. 16053. TRANSFER OF RESOURCES. 
All books and records that relate primarily to the 
functions transferred to the Commission under this sub-
title shall be transferred from the Securities and Exchange 
Commission to the Commission.
233
SEC. 16054. EFFECTIVE DATE. 
This subtitle shall take effect 12 months after the 
date of enactment of this subtitle. 
SEC. 16055. AUTHORIZATION OF APPROPRIATIONS. 
There are authorized to be appropriated such funds 
as may be necessary to carry out this subtitle. 
SEC. 16056. CONFORMING AMENDMENTS TO THE FEDERAL 
POWER ACT. 
(a) CONFLICT OF JURISDICTION.—Section 318 of the 
Federal Power Act (16 U.S.C. 825q) is repealed. 
(b) DEFINITIONS.—(1) Section 201(g)(5) of the Fed-
eral Power Act (16 U.S.C. 824(g)(5)) is amended by strik-
ing ‘‘1935’’ and inserting ‘‘2003’’. 
(2) Section 214 of the Federal Power Act (16 U.S.C. 
824m) is amended by striking ‘‘1935’’ and inserting 
‘‘2003’’. 
Subtitle E—PURPA Amendments 
SEC. 16061. REAL-TIME PRICING AND TIME-OF-USE METER-
ING STANDARDS. 
(a) ADOPTION OF STANDARDS.—Section 111(d) of 
the Public Utility Regulatory Policies Act of 1978 (16 
U.S.C. 2621(d)) is amended by adding at the end the fol-
lowing: 
‘‘(11) REAL-TIME PRICING.—(A) Each electric 
utility shall, at the request of an electric consumer, 
provide electric service under a real-time rate sched-
234
ule, under which the rate charged by the electric 
utility varies by the hour (or smaller time interval) 
according to changes in the electric utility’s whole-
sale power cost. The real-time pricing service shall 
enable the electric consumer to manage energy use 
and cost through real-time metering and commu-
nications technology. 
‘‘(B) For purposes of implementing this para-
graph, any reference contained in this section to the 
date of enactment of the Public Utility Regulatory 
Policies Act of 1978 shall be deemed to be a ref-
erence to the date of enactment of this paragraph. 
‘‘(C) Notwithstanding subsections (b) and (c) of 
section 112, each State regulatory authority shall 
consider and make a determination concerning 
whether it is appropriate to implement the standard 
set out in subparagraph (A) not later than 1 year 
after the date of enactment of this paragraph. 
‘‘(12) TIME-OF-USE METERING.—(A) Each elec-
tric utility shall, at the request of an electric con-
sumer, provide electric service under a time-of-use 
rate schedule which enables the electric consumer to 
manage energy use and cost through time-of-use me-
tering and technology.
235
‘‘(B) For purposes of implementing this para-
graph, any reference contained in this section to the 
date of enactment of the Public Utility Regulatory 
Policies Act of 1978 shall be deemed to be a ref-
erence to the date of enactment of this paragraph. 
‘‘(C) Notwithstanding subsections (b) and (c) of 
section 112, each State regulatory authority shall 
consider and make a determination concerning 
whether it is appropriate to implement the standards 
set out in subparagraph (A) not later than 1 year 
after the date of enactment of this paragraph.’’. 
(b) SPECIAL RULES.—Section 115 of the Public Util-
ity Regulatory Policies Act of 1978 (16 U.S.C. 2625) is 
amended by adding at the end the following: 
‘‘(i) REAL-TIME PRICING.—In a State that permits 
third-party marketers to sell electric energy to retail elec-
tric consumers, the electric consumer shall be entitled to 
receive the same real-time metering and communication 
service as a direct retail electric consumer of the electric 
utility. 
‘‘(j) TIME-OF-USE METERING.—In a State that per-
mits third-party marketers to sell electric energy to retail 
electric consumers, the electric consumer shall be entitled 
to receive the same time-of-use metering and communica-
236
tion service as a direct retail electric consumer of the elec-
tric utility.’’. 
SEC. 16062. COGENERATION AND SMALL POWER PRODUC-
TION PURCHASE AND SALE REQUIREMENTS. 
(a) TERMINATION OF MANDATORY PURCHASE AND 
SALE REQUIREMENTS.—Section 210 of the Public Utility 
Regulatory Policies Act of 1978 (16 U.S.C. 824a–3) is 
amended by adding at the end the following: 
‘‘(m) TERMINATION OF MANDATORY PURCHASE AND 
SALE REQUIREMENTS.—
‘‘(1) OBLIGATION
TO
PURCHASE.—After the 
date of enactment of this subsection, no electric util-
ity shall be required to enter into a new contract or 
obligation to purchase electric energy from a quali-
fying cogeneration facility or a qualifying small 
power production facility under this section if the 
Commission finds that— 
‘‘(A) the qualifying cogeneration facility or 
qualifying small power production facility has 
access to 
‘‘(i) independently administered, auc-
tion-based day ahead and real time whole-
sale markets for the sale of electric energy, 
and
237
‘‘(ii) long-term wholesale markets for 
the sale of capacity and electric energy; 
‘‘(B) the qualifying cogeneration facility or 
qualifying small power production facility has 
access to a competitive wholesale market for the 
sale of electric energy that provides such quali-
fying cogeneration facility or qualifying small 
power production facility with opportunities to 
sell electric energy that, at a minimum, are 
comparable to the opportunities provided by the 
markets, or some minimum combination there-
of, described in subparagraph (A); or 
‘‘(C) the qualifying cogeneration facility 
does not meet criteria established by the Com-
mission pursuant to the rulemaking set forth in 
subparagraph (n) and has not filed with the 
Commission a notice of self-certification or an 
application for Commission certification under 
18 C.F.R. 292.207 prior to the date of enact-
ment of this subsection. 
‘‘(2) COMMISSION
REVIEW.—(A) Any electric 
utility may file an application with the Commission 
for relief from the mandatory purchase obligation 
pursuant to this subsection on a utility-wide basis. 
Such application shall set forth the reasons why
238
such relief is appropriate and describe how the con-
ditions set forth in subparagraphs (A) and (B) of 
paragraph (1) of this subsection have been met. 
‘‘(B) After notice, including sufficient notice to 
potentially affected qualifying facilities, and an op-
portunity for comment, and within 90 days of the 
filing of an application under subparagraph (A), the 
Commission shall make a final determination as to 
whether the conditions set forth in subparagraphs 
(A) and (B) of paragraph (1) have been met. The 
Commission shall not be authorized to issue a tolling 
order regarding such application or otherwise delay 
a final decision regarding such application. 
‘‘(3) REINSTATEMENT OF OBLIGATION TO PUR-
CHASE.—(A) At any time after the Commission 
makes a finding under paragraph (2) relieving an 
electric utility of its obligation to purchase electric 
energy, a qualifying cogeneration facility or a quali-
fying small power production facility may apply to 
the Commission for an order reinstating the electric 
utility’s obligation to purchase electric energy under 
this section. Such application shall set forth the rea-
sons why such relief is no longer appropriate and de-
scribe how the tests set forth in subparagraphs (A)
239
and (B) of paragraph (1) of this subsection are no 
longer met. 
‘‘(B) After notice, including sufficient notice to 
potentially affected utilities, and opportunity for 
comment, and within 90 days of the filing of an ap-
plication under subparagraph (A), the Commission 
shall issue an order reinstating the electric utility’s 
obligation to purchase electric energy under this sec-
tion if the Commission finds that the condition in 
paragraph (1), which relieved the obligation to pur-
chase, is no longer met. The Commission shall not 
be authorized to issue a tolling order regarding such 
application or otherwise delay a final decision re-
garding such application. 
‘‘(4) OBLIGATION TO SELL.—After the date of 
enactment of this subsection, no electric utility shall 
be required to enter into a new contract or obliga-
tion to sell electric energy to a qualifying cogenera-
tion facility or a qualifying small power production 
facility if—
‘‘(A) competing retail electric suppliers are 
willing and able to provide electric energy to the 
qualifying cogeneration facility or qualifying 
small power production facility, and
240
‘‘(B) the electric utility is not required by 
State law to sell electric energy in its service 
territory. 
‘‘(5) NO
EFFECT
ON
EXISTING
RIGHTS
AND 
REMEDIES.—Nothing in this subsection affects the 
rights or remedies of any party under any contract 
or obligation, in effect or pending approval before 
the appropriate State regulatory authority or non-
regulated electric utility on the date of enactment of 
this subsection, to purchase electric energy or capac-
ity from or to sell electric energy or capacity to a 
facility under this Act (including the right to recover 
costs of purchasing electric energy or capacity). 
‘‘(6) RECOVERY OF COSTS.—
‘‘(A) REGULATION.—To ensure recovery 
by an electric utility that purchases electric en-
ergy or capacity from a qualifying facility pur-
suant to any legally enforceable obligation en-
tered into or imposed under this section of all 
prudently incurred costs associated with the 
purchases, the Commission shall issue and en-
force such regulations as may be required to en-
sure that the electric utility shall recover the 
prudently incurred costs associated with such 
purchases.
241
‘‘(B) ENFORCEMENT.—A regulation under 
subparagraph (A) shall be enforceable in ac-
cordance with the provisions of law applicable 
to enforcement of regulations under the Federal 
Power Act (16 U.S.C. 791a et seq.). 
‘‘(n) RULEMAKING FOR NEW FACILITIES.—
‘‘(1) IN GENERAL.—Not later than 180 days 
after the date of enactment of this subsection, the 
Commission shall issue a rule revising the criteria 
for qualifying cogeneration facilities in 18 C.F.R. 
292.205. In particular, the Commission shall evalu-
ate the rules regarding qualifying facility criteria 
and revise such rules, as necessary, to ensure—
‘‘(A) that the thermal energy output of a 
new qualifying cogeneration facility is used in a 
productive and beneficial manner; 
‘‘(B) the electrical and thermal output of 
the cogeneration facility is used predominantly 
for commercial or industrial processes and not 
intended predominantly for sale to an electric 
utility; and–
‘‘(C) continuing progress in the develop-
ment of efficient electric energy generating 
technology.
242
‘‘(2) APPLICABILITY.—Any revisions made to 
operating and efficiency standards shall be applica-
ble only to a cogeneration facility that—
‘‘(A) was not a qualifying cogeneration fa-
cility, or–
‘‘(B) had not filed with the Commission a 
notice of self-certification or an application for 
Commission certification under 18 C.F.R. 
292.207
prior to the date of enactment of this subsection. 
‘‘(3) DEFINITION.—For purposes of this sub-
section, the term ‘commercial processes’ includes 
uses of thermal and electric energy for educational 
and healthcare facilities. 
‘‘(o) RULES FOR EXISTING FACILITIES.— Notwith-
standing rule revisions under subsection (n), the Commis-
sion’s rules in effect prior to the effective date of any re-
vised rules prescribed under subsection (n) shall continue 
to apply to any cogeneration facility or small power pro-
duction facility that—
‘‘(1) was a qualifying cogeneration facility or a 
qualifying small power production facility, or 
‘‘(2) had filed with the Commission a notice of 
self-certification or an application for Commission 
certification under 18 C.F.R. 292.207
243
prior to the date of enactment of subsections (m) and 
(n).’’. 
(b) ELIMINATION OF OWNERSHIP LIMITATIONS.—
(1) Section 3(17)(C) of the Federal Power Act (16 U.S.C. 
796(17)(C)) is amended to read as follows: 
‘‘(C) ‘qualifying small power production fa-
cility’ means a small power production facility 
that the Commission determines, by rule, meets 
such requirements (including requirements re-
specting minimum size, fuel use, and fuel effi-
ciency) as the Commission may, by rule, pre-
scribe.’’. 
(2) Section 3(18)(B) of the Federal Power Act (16 
U.S.C. 796(18)(B)) is amended to read as follows: 
‘‘(B) 
‘qualifying 
cogeneration 
facility’ 
means a cogeneration facility that the Commis-
sion determines, by rule, meets such require-
ments (including requirements respecting min-
imum size, fuel use, and fuel efficiency) as the 
Commission may, by rule, prescribe.’’. 
SEC. 16063. SMART METERING. 
(a) IN GENERAL.—Section 111(d) of the Public Utili-
ties Regulatory Policies Act of 1978 (16 U.S.C. 2621(d)) 
is amended by adding at the end the following:
244
‘‘(13) TIME-BASED
METERING
AND
COMMU-
NICATIONS.—(A) Not later than eighteen (18) 
months after the date of enactment of this para-
graph, each electric utility shall offer each of its cus-
tomer classes, and provide individual customers upon 
customer request, a time-based rate schedule under 
which the rate charged by the electric utility varies 
during different time periods and reflects the vari-
ance in the costs of generating and purchasing elec-
tricity at the wholesale level. The time-based rate 
schedule shall enable the electric consumer to man-
age energy use and cost through advanced metering 
and communications technology. 
‘‘(B) The types of time-based rate schedules 
that may be offered under the schedule referred to 
in subparagraph (A) include, among others, each the 
following: 
‘‘(i) Time-Of-Use pricing whereby elec-
tricity prices are set for a specific time period 
on an advance or forward basis, typically not 
changing more often than twice a year. Prices 
paid for energy consumed during these periods 
shall be pre-established and known to con-
sumers in advance of such consumption, allow-
ing them to vary their demand and usage in re-
245
sponse to such prices and manage their energy 
costs by shifting usage to a lower cost period or 
reducing their consumption overall. 
‘‘(ii) Critical Peak Pricing whereby time-
of-use prices are in effect except for certain 
peak days, when prices may reflect the costs of 
generating and purchasing electricity at the 
wholesale level and when consumers may receive 
additional discounts for reducing peak period 
energy consumption. 
‘‘(iii) Real-Time pricing whereby electricity 
prices are set for a specific time period on an 
advanced or forward basis and may change as 
often as hourly. 
‘‘(C) Each electric utility subject to subpara-
graph (A) shall provide each customer requesting a 
time-based rate with a time-based meter capable of 
enabling the utility and customer to offer and re-
ceive such rate, respectively. 
‘‘(D) For purposes of implementing this para-
graph, any reference contained in this section to the 
date of enactment of the Public Utility Regulatory 
Policies Act of 1978 shall be deemed to be a ref-
erence to the date of enactment of this paragraph.
246
‘‘(E) In a State that permits third-party mar-
keters to sell electric energy to retail electric con-
sumers, such consumers shall be entitled to receive 
that same time-based metering and communications 
device and service as a retail electric consumer of 
the electric utility. 
‘‘(F) Notwithstanding subsections (b) and (c) of 
section 112, each State regulatory authority shall, 
not later than twelve (12) months after enactment 
of this paragraph conduct an investigation in accord-
ance with section 115(i) and issue a decision wheth-
er it is appropriate to implement the standards set 
out in subparagraphs (A) and (C).’’. 
(b) STATE INVESTIGATION OF DEMAND RESPONSE 
AND TIME-BASED METERING.—
Section 115 of the Public Utilities Regulatory Poli-
cies Act of 1978 (16 U.S.C. 2625) is amended by adding 
the at the end the following: 
‘‘(k) TIME-BASED
METERING
AND
COMMUNICA-
TIONS.—Each State regulatory authority shall, not later 
than twelve (12) months after enactment of this sub-
section, conduct an investigation and issue a decision 
whether or not it is appropriate for electric utilities to pro-
vide and install time-based meters and communications 
devices for each of their customers which enable such cus-
247
tomers to participate in time-based pricing rate schedules 
and other demand response programs.’’. 
(c) 
FEDERAL
ASSISTANCE
ON
DEMAND
RE-
SPONSE.—Section 132(a) of the Public Utility Regulatory 
Polices Act of 1978 (16 U.S.C. 2642(a)) is amended by 
striking ‘‘and’’ at the end of paragraph (3), striking the 
period at the end of paragraph (4) and inserting ‘‘; and’’, 
and by adding the following at the end thereof: 
‘‘(5) technologies, techniques and rate-making 
methods related to advanced metering and commu-
nications and the use of these technologies, tech-
niques and methods in demand response programs.’’. 
(d) FEDERAL GUIDANCE.—Section 132 of the Public 
Utility Regulatory Policies Act of 1978 (16 U.S.C. 2643) 
is amended by adding the following at the end thereof: 
‘‘(d) DEMAND RESPONSE.—The Secretary shall be 
responsible for each of the following: 
‘‘(1) Educating consumers on the availability, 
advantages and benefits of advanced metering and 
communications technologies including the funding 
of demonstration or pilot projects. 
‘‘(2) Working with States, utilities, other energy 
providers and advanced metering and communica-
tions experts to identify and address barriers to the 
adoption of demand response programs, and
248
‘‘(3) Within 6 months of enactment, provide the 
Congress with a report that identifies and quantifies 
the national benefits of demand response and pro-
vides policy recommendations as to how to achieve 
specific levels of such benefits by January 1, 2005.’’. 
(e) DEMAND RESPONSE AND REGIONAL COORDINA-
TION.—
(1) POLICY.—It is the policy of the United 
States to encourage States to coordinate, on a re-
gional basis, State energy policies to provide reliable 
and affordable demand response services to the pub-
lic. 
(2) TECHNICAL ASSISTANCE.—The Secretary of 
Energy shall provide technical assistance to States 
and regional organizations formed by two or more 
States to assist them in—
(A) identifying the areas with the greatest 
demand response potential; 
(B) identifying and resolving problems in 
transmission and distribution networks, includ-
ing through the use of demand response; and 
(C) developing plans and programs to use 
demand response to respond to peak demand or 
emergency needs.
249
(3) REPORT.—The Federal Energy Regulatory 
Commission shall prepare and publish an annual re-
port, by appropriate region, that assesses demand 
response resources, including those available from all 
consumer classes, and which identifies and reviews 
each of the following: 
(A) Saturation and penetration rate of ad-
vanced 
meters 
and 
communications 
tech-
nologies, devices and systems. 
(B) Existing demand response programs 
and time-based rate programs. 
(C) The annual resource contribution of 
demand resources, including the prior year and 
following years. 
(D) The potential for demand response as 
a quantifiable, reliable resource for regional 
planning purposes. 
(E) Steps taken to ensure that, in regional 
transmission planning and operations, that de-
mand resources are provided equitable treat-
ment as a quantifiable, reliable resource relative 
to the resource obligations of any load-serving 
entity, transmission provider or transmitting 
party.
250
(f) COST RECOVERY OF DEMAND RESPONSE DE-
VICES.—It is the policy of the United States that time-
based pricing and other forms of demand response, where-
by electricity customers are provided with electricity price 
signals and the ability to benefit by responding to them, 
shall be encouraged and the deployment of such tech-
nology and devices that enable electricity customers to 
participate in such pricing and demand response systems 
shall be facilitated. It is further the policy of the United 
States that the benefits of such demand response that ac-
crue to those not deploying such technology and devices, 
but who are part of the same regional electricity entity, 
shall be recognized. 
Subtitle F—Renewable Energy 
SEC. 16071. NET METERING. 
(a) ADOPTION OF STANDARD.—Section 111(d) of the 
Public Utility Regulatory Policies Act of 1978 (16 U.S.C. 
2621(d)) is amended by adding at the end the following: 
‘‘(14) NET METERING.—(A) Each electric util-
ity shall make available upon request net metering 
service to any electric consumer that the electric 
utility serves. 
‘‘(B) For purposes of implementing this para-
graph, any reference contained in this section to the 
date of enactment of the Public Utility Regulatory
251
Policies Act of 1978 shall be deemed to be a ref-
erence to the date of enactment of this paragraph. 
‘‘(C) Notwithstanding subsections (b) and (c) of 
section 112, each State regulatory authority shall 
consider and make a determination concerning 
whether it is appropriate to implement the standard 
set out in subparagraph (A) not later than 1 year 
after the date of enactment of this paragraph.’’. 
(b) SPECIAL RULES FOR NET METERING.—Section 
115 of the Public Utility Regulatory Policies Act of 1978 
(16 U.S.C. 2625) is amended by adding at the end the 
following: 
‘‘(l) NET METERING.—In undertaking the consider-
ation and making the determination under section 111 
with respect to the standard concerning net metering es-
tablished by section 111(d)(14), the term ‘net metering 
service’ shall mean a service provided in accordance with 
the following standards: 
‘‘(1) RATES AND CHARGES.—An electric util-
ity—
‘‘(A) shall charge the owner or operator of 
an on-site generating facility rates and charges 
that are identical to those that would be 
charged other electric consumers of the electric 
utility in the same rate class; and
252
‘‘(B) shall not charge the owner or oper-
ator of an on-site generating facility any addi-
tional standby, capacity, interconnection, or 
other rate or charge. 
‘‘(2) MEASUREMENT.—An electric utility that 
sells electric energy to the owner or operator of an 
on-site generating facility shall measure the quantity 
of electric energy produced by the on-site facility 
and the quantity of electric energy consumed by the 
owner or operator of an on-site generating facility 
during a billing period in accordance with normal 
metering practices. 
‘‘(3) ELECTRIC ENERGY SUPPLIED EXCEEDING 
ELECTRIC ENERGY GENERATED.—If the quantity of 
electric energy sold by the electric utility to an on-
site generating facility exceeds the quantity of elec-
tric energy supplied by the on-site generating facility 
to the electric utility during the billing period, the 
electric utility may bill the owner or operator for the 
net quantity of electric energy sold, in accordance 
with normal metering practices. 
‘‘(4) ELECTRIC ENERGY GENERATED EXCEED-
ING ELECTRIC ENERGY SUPPLIED.—If the quantity 
of electric energy supplied by the on-site generating 
facility to the electric utility exceeds the quantity of
253
electric energy sold by the electric utility to the on-
site generating facility during the billing period—
‘‘(A) the electric utility may bill the owner 
or operator of the on-site generating facility for 
the appropriate charges for the billing period in 
accordance with paragraph (2); and 
‘‘(B) the owner or operator of the on-site 
generating facility shall be credited for the ex-
cess kilowatt-hours generated during the billing 
period, with the kilowatt-hour credit appearing 
on the bill for the following billing period. 
‘‘(5) SAFETY
AND
PERFORMANCE
STAND-
ARDS.—An eligible on-site generating facility and 
net metering system used by an electric consumer 
shall meet all applicable safety, performance, reli-
ability, and interconnection standards established by 
the National Electrical Code, the Institute of Elec-
trical and Electronics Engineers, and Underwriters 
Laboratories. 
‘‘(6) ADDITIONAL CONTROL AND TESTING RE-
QUIREMENTS.—The Commission, after consultation 
with State regulatory authorities and nonregulated 
electric utilities and after notice and opportunity for 
comment, may adopt, by rule, additional control and 
testing requirements for on-site generating facilities
254
and net metering systems that the Commission de-
termines are necessary to protect public safety and 
system reliability. 
‘‘(7) DEFINITIONS.—For purposes of this sub-
section: 
‘‘(A) The term ‘eligible on-site generating 
facility’ means—
‘‘(i) a facility on the site of a residen-
tial electric consumer with a maximum 
generating capacity of 10 kilowatts or less 
that is fueled by solar energy, wind energy, 
or fuel cells; or 
‘‘(ii) a facility on the site of a com-
mercial electric consumer with a maximum 
generating capacity of 500 kilowatts or 
less that is fueled solely by a renewable en-
ergy resource, landfill gas, or a high effi-
ciency system. 
‘‘(B) The term ‘renewable energy resource’ 
means solar, wind, biomass, or geothermal en-
ergy. 
‘‘(C) The term ‘high efficiency system’ 
means service fuel cells or combined heat and 
power.
255
‘‘(D) The term ‘net metering’ means serv-
ice to an electric consumer under which electric 
energy generated by that electric consumer 
from an eligible on-site generating facility and 
delivered to the local distribution facilities may 
be used to offset electric energy provided by the 
electric utility to the electric consumer during 
the applicable billing period.’’
SEC. 16072. RENEWABLE ENERGY PRODUCTION INCENTIVE. 
(a) INCENTIVE PAYMENTS.—Section 1212(a) of the 
Energy Policy Act of 1992 (42 U.S.C. 13317(a)) is 
amended by striking ‘‘and which satisfies’’ and all that 
follows through ‘‘Secretary shall establish.’’ and inserting 
‘‘. If there are insufficient appropriations to make full pay-
ments for electric production from all qualified renewable 
energy facilities in any given year, the Secretary shall as-
sign 60 percent of appropriated funds for that year to fa-
cilities that use solar, wind, geothermal, or closed-loop 
(dedicated energy crops) biomass technologies to generate 
electricity, and assign the remaining 40 percent to other 
projects. The Secretary may, after transmitting to the 
Congress an explanation of the reasons therefor, alter the 
percentage requirements of the preceding sentence.’’.
256
(b) QUALIFIED RENEWABLE ENERGY FACILITY.—
Section 1212(b) of the Energy Policy Act of 1992 (42 
U.S.C. 13317(b)) is amended—
(1) by striking ‘‘a State or any political’’ and 
all that follows through ‘‘nonprofit electrical cooper-
ative’’ and inserting ‘‘a not-for-profit electric cooper-
ative, a public utility described in section 115 of the 
Internal Revenue Code of 1986, a State, Common-
wealth, territory, or possession of the United States 
or the District of Columbia, or a political subdivision 
thereof, or an Indian tribal government of subdivi-
sion thereof,’’; and 
(2) by inserting ‘‘landfill gas,’’ after ‘‘wind, bio-
mass,’’. 
(c) ELIGIBILITY WINDOW.—Section 1212(c) of the 
Energy Policy Act of 1992 (42 U.S.C. 13317(c)) is 
amended by striking ‘‘during the 10-fiscal year period be-
ginning with the first full fiscal year occurring after the 
enactment of this section’’ and inserting ‘‘after October 
1, 2003, and before October 1, 2013’’. 
(d) AMOUNT OF PAYMENT.—Section 1212(e)(1) of 
the Energy Policy Act of 1992 (42 U.S.C. 13317(e)(1)) 
is amended by inserting ‘‘landfill gas,’’ after ‘‘wind, bio-
mass,’’.
257
(e) SUNSET.—Section 1212(f) of the Energy Policy 
Act of 1992 (42 U.S.C. 13317(f)) is amended by striking 
‘‘the expiration of’’ and all that follows through ‘‘of this 
section’’ and inserting ‘‘September 30, 2023’’. 
(f) AUTHORIZATION OF APPROPRIATIONS.—Section 
1212(g) of the Energy Policy Act of 1992 (42 U.S.C. 
13317(g)) is amended to read as follows: 
‘‘(g) AUTHORIZATION OF APPROPRIATIONS.—
‘‘(1) IN GENERAL.—Subject to paragraph (2), 
there are authorized to be appropriated such sums 
as may be necessary to carry out this section for fis-
cal years 2003 through 2023. 
‘‘(2) AVAILABILITY OF FUNDS.—Funds made 
available under paragraph (1) shall remain available 
until expended.’’. 
SEC. 16073. RENEWABLE ENERGY ON FEDERAL LANDS. 
(a) REPORT TO CONGRESS.—Within 24 months after 
the date of enactment of this section, the Secretary of the 
Interior, in cooperation with the Secretary of Agriculture, 
shall develop and report to the Congress recommendations 
on opportunities to develop renewable energy on public 
lands under the jurisdiction of the Secretary of the Inte-
rior and National Forest System lands under the jurisdic-
tion of the Secretary of Agriculture. The report shall in-
clude—
258
(1) 5-year plans developed by the Secretary of 
the Interior and the Secretary of Agriculture, re-
spectively, for encouraging the development of wind 
and solar energy consistent with applicable law and 
management plans; and 
(2) an analysis of—
(A) the use of rights-of-ways, leases, or 
other methods to develop wind and solar energy 
on such lands; 
(B) the anticipated benefits of grants, 
loans, tax credits, or other provisions to pro-
mote wind and solar energy development on 
such lands; and 
(C) any issues that the Secretary of the 
Interior or the Secretary of Agriculture have 
encountered in managing wind or solar energy 
projects on such lands, or believe are likely to 
arise in relation to the development of wind or 
solar energy on such lands; 
(3) a list, developed in consultation with the 
Secretary of Energy and the Secretary of Defense, 
of lands under the jurisdiction of the Department of 
Energy or Defense that would be suitable for devel-
opment for wind or solar energy, and any rec-
259
ommended statutory and regulatory mechanisms for 
such development; and 
(4) any recommendations pertaining to the 
issues addressed in the report. 
(b) NATIONAL ACADEMY OF SCIENCES STUDY.—
(1) IN
GENERAL.—Within 90 days after the 
date of the enactment of this Act, the Secretary of 
the Interior shall contract with the National Acad-
emy of Sciences to—
(A) study the potential for the development 
of wind, solar, and ocean energy on the Outer 
Continental Shelf; 
(B) assess existing Federal authorities for 
the development of such resources; and 
(C) recommend statutory and regulatory 
mechanisms for such development. 
(2) TRANSMITTAL OF RESULTS.—The results of 
the study shall be transmitted to the Congress with-
in 24 months after the date of the enactment of this 
Act.
SEC. 16074. ASSESSMENT OF RENEWABLE ENERGY RE-
SOURCES. 
(a) RESOURCE ASSESSMENT.—Not later than 3 
months after the date of enactment of this Act, and each 
year thereafter, the Secretary of Energy shall review the
260
available assessments of renewable energy resources avail-
able within the United States, including solar, wind, bio-
mass, ocean, geothermal, and hydroelectric energy re-
sources, and undertake new assessments as necessary, 
taking into account changes in market conditions, avail-
able technologies, and other relevant factors. 
(b) CONTENTS OF REPORTS.—Not later than 1 year 
after the date of enactment of this Act, and each year 
thereafter, the Secretary shall publish a report based on 
the assessment under subsection (a). The report shall con-
tain—
(1) a detailed inventory describing the available 
amount and characteristics of the renewable energy 
resources; and 
(2) such other information as the Secretary be-
lieves would be useful in developing such renewable 
energy resources, including descriptions of sur-
rounding terrain, population and load centers, near-
by energy infrastructure, location of energy and 
water resources, and available estimates of the costs 
needed to develop each resource, together with an 
identification of any barriers to providing adequate 
transmission for remote sources of renewable energy 
resources to current and emerging markets, rec-
ommendations for removing or addressing such bar-
261
riers, and ways to provide access to the grid that do 
not unfairly disadvantage renewable or other energy 
producers. 
Subtitle G—Market Transparency, 
Round Trip Trading Prohibi-
tion, and Enforcement 
SEC. 16081. MARKET TRANSPARENCY RULES. 
Part II of the Federal Power Act is amended by add-
ing the following new section at the end thereof: 
‘‘SEC. 219. MARKET TRANSPARENCY RULES. 
‘‘(a) COMMISSION RULES.—Not later than 180 days 
after the date of enactment of this section, the Commis-
sion shall issue rules establishing an electronic information 
system to provide the Commission and the public with ac-
cess to such information as is necessary or appropriate 
to facilitate price transparency and participation in mar-
kets subject to the Commission’s jurisdiction. Such sys-
tems shall provide information about the availability and 
market price of sales of electric energy at wholesale in 
interstate commerce and transmission of electric energy 
in interstate commerce to the Commission, State commis-
sions, buyers and sellers of wholesale electric energy, users 
of transmission services, and the public on a timely basis. 
The Commission shall have authority to obtain such infor-
mation from any person, and any entity described in sec-
262
tion 201(f), who sells electric energy at wholesale in inter-
state commerce or provides transmission services in inter-
state commerce. 
‘‘(b) EXEMPTIONS.—The Commission shall exempt 
from disclosure information it determines would, if dis-
closed, (1) be detrimental to the operation of an effective 
market; or (2) jeopardize system security. This section 
shall not apply to an entity described in section 
212(k)(2)(B) with respect to transactions for the purchase 
or sale of wholesale electric energy and transmission serv-
ices within the area described in section 212(k)(2)(A).’’. 
SEC. 16082. PROHIBITION ON ROUND TRIP TRADING. 
Part II of the Federal Power Act is amended by add-
ing the following new section at the end thereof: 
‘‘SEC. 220. PROHIBITION ON ROUND TRIP TRADING. 
‘‘(a) PROHIBITION.—It shall be a violation of this Act 
for any person, and any entity described in section 201(f), 
willfully and knowingly to enter into any contract or other 
arrangement to execute a round-trip trade for the pur-
chase or sale of electric energy at wholesale. 
‘‘(b) DEFINITION OF ROUND-TRIP TRADE.—For the 
purposes of this section, the term ‘round-trip trade’ means 
a transaction, or combination of transactions, in which a 
person or other entity—
263
‘‘(1) enters into a contract or other arrange-
ment to purchase from, or sell to, any other person 
or other entity electric energy at wholesale; 
‘‘(2) simultaneously with entering into the con-
tract described in paragraph (1), arranges a finan-
cially offsetting trade with such other person or enti-
ty for the same quantity of electric energy so that, 
collectively, the purchase and sale transactions in 
themselves result in no financial gain or loss; and 
‘‘(3) has a specific intent to distort reported 
revenues, trading volumes, or prices.’’. 
SEC. 16083. CONFORMING CHANGES. 
Section 201(e) of the Federal Power Act is amended 
by striking ‘‘or 212’’ and inserting ‘‘212, 215, 216, 217, 
218, 219, or 220’’. Section 201(b)(2) of such Act is 
amended by striking ‘‘and 212’’ and inserting ‘‘212, 215, 
216, 217, 218, 219, and 220’’. 
SEC. 16084. ENFORCEMENT. 
(a) COMPLAINTS.—Section 306 of the Federal Power 
Act (16 U.S.C. 825e) is amended by—
(1) inserting ‘‘electric utility,’’ after ‘‘Any per-
son,’’; and 
(2) inserting ‘‘, transmitting utility,’’ after ‘‘li-
censee’’ each place it appears.
264
(b) REVIEW
OF
COMMISSION
ORDERS.—Section 
313(a) of the Federal Power Act (16 U.S.C. 8251) is 
amended by inserting ‘‘electric utility,’’ after ‘‘person,’’ in 
the first place it appears and by striking ‘‘any person un-
less such person’’ and inserting ‘‘any entity unless such 
entity’’. 
(c) CRIMINAL PENALTIES.—Section 316 of the Fed-
eral Power Act (16 U.S.C. 825o) is amended—
(1) in subsection (a), by striking ‘‘$5,000’’ and 
inserting ‘‘$1,000,000’’, and by striking ‘‘two years’’ 
and inserting ‘‘five years’’; 
(2) in subsection (b), by striking ‘‘$500’’ and 
inserting ‘‘$25,000’’; and 
(3) by striking subsection (c). 
(d) CIVIL PENALTIES.—Section 316A of the Federal 
Power Act (16 U.S.C. 825–1) is amended—
(1) in subsections (a) and (b), by striking ‘‘sec-
tion 211, 212, 213, or 214’’ each place it appears 
and inserting ‘‘Part II’’; and 
(2) in subsection (b), by striking ‘‘$10,000’’ 
and inserting ‘‘$1,000,000’’. 
Subtitle H—Consumer Protections 
SEC. 16091. REFUND EFFECTIVE DATE. 
Section 206(b) of the Federal Power Act (16 U.S.C. 
824e(b)) is amended by—
265
(1) striking ‘‘the date 60 days after the filing 
of such complaint nor later than 5 months after the 
expiration of such 60-day period’’ in the second sen-
tence and inserting ‘‘the date of the filing of such 
complaint nor later than 5 months after the filing of 
such complaint’’; 
(2) striking ‘‘60 days after’’ in the third sen-
tence and inserting ‘‘of’’; 
(3) striking ‘‘expiration of such 60-day period’’ 
in the third sentence and inserting ‘‘publication 
date’’; and 
(4) in the fifth sentence after ‘‘rendered by the’’ 
insert ‘‘date 60 days after the’’. 
SEC. 16092. JURISDICTION OVER INTERSTATE SALES. 
(a) SCOPE OF AUTHORITY.—Section 206 of the Fed-
eral Power Act (16 U.S.C. 824e) is amended by adding 
the following new subsection at the end thereof: 
‘‘(e)(1) If an entity that is not a public utility (includ-
ing an entity referred to in section 201(f)) voluntarily 
makes a spot market sale of electric energy and such sale 
violates Commission rules in effect at the time of such 
sale, such entity shall be subject to the Commission’s re-
fund authority under this section with respect to such vio-
lation.
266
‘‘(2) This section shall not apply to any entity that 
is either—
‘‘(A) an entity described in section 201(f); or 
‘‘(B) a rural electric cooperative 
that does not sell more than 4,000,000 megawatt hours 
of electricity per year. 
‘‘(3) For purposes of this subsection, the term ‘spot 
market sale’ means an agreement for the sale of electric 
energy at wholesale in interstate commerce that is for 24 
hours or less and that is entered into the day of, or the 
day prior to, delivery.’’. 
(b) CONFORMING AMENDMENTS.—(1) Section 206 of 
the Federal Power Act (16 U.S.C. 824e) is amended as 
follows: 
(A) In subsection (b), in the seventh sentence, 
by striking ‘‘the public utility to make’’. 
(B) In the first sentence of subsection (a), by 
striking ‘‘hearing had’’ and inserting ‘‘hearing held’’. 
(2) Section 201(b)(2) of such Act (16 U.S.C. 
824(b)(2)) is amended as follows: 
(A) In the first sentence by striking ‘‘sections 
210’’ and inserting ‘‘sections 206(f), 210’’. 
(B) In the second sentence by striking ‘‘section 
210’’ and inserting ‘‘section 206(f), 210,’’.
267
(3) Section 201(e) of the Federal Power Act is 
amended by striking ‘‘section 210’’ and inserting ‘‘section 
206(f), 210’’. 
(c) UNIFORM INVESTIGATION AUTHORITY.—Section 
307(a) of the Federal Power Act (16 U.S.C. 825f(a)) is 
amended as follows: 
(1) By inserting ‘‘, electric utility, transmitting 
utility, or other entity’’ after ‘‘person’’ each time it 
appears. 
(2) By striking the period at the end of the 
first sentence and inserting the following: ‘‘or in ob-
taining information about the sale of electric energy 
at wholesale in interstate commerce and the trans-
mission of electric energy in interstate commerce.’’. 
(d) SANCTITY OF CONTRACT.—(1) The Federal En-
ergy Regulatory Commission shall have no authority to ab-
rogate or modify any provision of a contract, except upon 
a finding, after notice and opportunity for a hearing, that 
such action is necessary to protect the public interest, un-
less such contract expressly provides for a different stand-
ard of review. 
(2) For purposes of this subsection, a contract is any 
agreement, in effect and subject to the jurisdiction of the 
Commission—
268
(A) under section 4 of the Natural Gas Act or 
section 205 of the Federal Power Act; and 
(B) that is not for sales in an organized ex-
change or auction spot market. 
(3) This subsection shall not apply to any contract 
executed before the date of enactment of this section un-
less such contract is an interconnection agreement, nor 
shall this subsection affect the outcome in any proceeding 
regarding any contract for sales of electric power executed 
before the date of enactment of this section. 
SEC. 16093. CONSUMER PRIVACY. 
(a) IN GENERAL.—The Federal Trade Commission 
shall issue rules protecting the privacy of electric con-
sumers from the disclosure of consumer information ob-
tained in connection with the sale or delivery of electric 
energy to electric consumers. The Federal Trade Commis-
sion shall proceed in accordance with section 553 of title 
5, United States Code, when prescribing a rule under this 
section. 
(b) STATE AUTHORITY.—If the Federal Trade Com-
mission determines that a State’s regulations provide 
equivalent or greater protection than the provisions of this 
section, such State regulations shall apply in that State 
in lieu of the regulations issued by the Commission under 
this section.
269
SEC. 16094. UNFAIR TRADE PRACTICES. 
(a) SLAMMING.—The Federal Trade Commission 
shall issue rules prohibiting the change of selection of an 
electric utility except with the informed consent of the 
electric consumer or if approved by the appropriate State 
regulatory authority. 
(b) CRAMMING.—The Federal Trade Commission 
shall issue rules prohibiting the sale of goods and services 
to an electric consumer unless expressly authorized by law 
or the electric consumer. 
(c) RULEMAKING.—The Federal Trade Commission 
shall proceed in accordance with section 553 of title 5, 
United States Code, when prescribing a rule under this 
section. 
(d) STATE AUTHORITY.—If the Federal Trade Com-
mission determines that a State’s regulations provide 
equivalent or greater protection than the provisions of this 
section, such State regulations shall apply in that State 
in lieu of the regulations issued by the Commission under 
this section. 
Subtitle I—Merger Review Reform 
and Accountability 
SEC. 16101. MERGER REVIEW REFORM AND ACCOUNT-
ABILITY. 
(a) MERGER REVIEW REFORM.—Within 180 days 
after the date of enactment of this Act, the Secretary of
270
Energy, in consultation with the Federal Energy Regu-
latory Commission and the Department of Justice, shall 
prepare, and transmit to the Committee on Energy and 
Commerce of the House of Representatives and the Com-
mittee on Energy and Natural Resources of the Senate 
each of the following: 
(1) A study of the extent to which the authori-
ties vested in the Federal Energy Regulatory Com-
mission under section 203 of the Federal Power Act 
are duplicative of authorities vested in—
(A) other agencies of Federal and State 
government; and 
(B) the Federal Energy Regulatory Com-
mission, including under sections 205 and 206 
of the Federal Power Act. 
(2) Recommendations on reforms to the Fed-
eral Power Act that would eliminate any unneces-
sary duplication in the exercise of regulatory author-
ity or unnecessary delays in the approval (or dis-
approval) of applications for the sale, lease, or other 
disposition of public utility facilities. 
(b) MERGER REVIEW ACCOUNTABILITY.—Not later 
than 1 year after the date of enactment of this Act and 
annually thereafter, with respect to all orders issued with-
in the preceding year that impose a condition on a sale,
271
lease, or other disposition of public utility facilities under 
section 203(b) of the Federal Power Act, the Federal En-
ergy Regulatory Commission shall transmit a report to the 
Committee on Energy and Commerce of the House of 
Representatives and the Committee on Energy and Nat-
ural Resources of the Senate explaining each of the fol-
lowing: 
(1) The condition imposed. 
(2) Whether the Commission could have im-
posed such condition by exercising its authority 
under any provision of the Federal Power Act other 
than under section 203(b). 
(3) If the Commission could not have imposed 
such condition other than under section 203(b), why 
the Commission determined that such condition was 
consistent with the public interest.
Subtitle J—Study of Economic 
Dispatch 
SEC. 16111. STUDY ON THE BENEFITS OF ECONOMIC DIS-
PATCH. 
(a) STUDY.—The Secretary of Energy, in coordina-
tion and consultation with the States, shall conduct a 
study on—
(1) the procedures currently used by electric 
utilities to perform economic dispatch,
272
(2) identifying possible revisions to those proce-
dures to improve the ability of nonutility generation 
resources to offer their output for sale for the pur-
pose of inclusion in economic dispatch; and 
(3) the potential benefits to residential, com-
mercial, and industrial electricity consumers nation-
ally and in each state if economic dispatch proce-
dures were revised to improve the ability of non-
utility generation resources to offer their output for 
inclusion in economic dispatch. 
(b) DEFINITION.—The term ‘‘economic dispatch’’ 
when used in this section means the operation of genera-
tion facilities to produce energy at the lowest cost to reli-
ably serve consumers, recognizing any operational limits 
of generation and transmission facilities. 
(c) REPORT TO CONGRESS AND THE STATES.—Not 
later than 90 days after the date of enactment of this Act, 
and on a yearly basis following, the Secretary of Energy 
shall submit a report to the Congress and the States on 
the results of the study conducted under subsection (a), 
including recommendations to the Congress and the States 
for any suggested legislative or regulatory changes.
273
TITLE VII—MOTOR FUELS 
Subtitle A—General Provisions 
SEC. 17101. RENEWABLE CONTENT OF MOTOR VEHICLE 
FUEL. 
(a) IN GENERAL.—Section 211 of the Clean Air Act 
(42 U.S.C. 7545) is amended—
(1) by redesignating subsection (o) as sub-
section (q); and 
(2) by inserting after subsection (n) the fol-
lowing: 
‘‘(o) RENEWABLE FUEL PROGRAM.—
‘‘(1) DEFINITIONS.—In this section: 
‘‘(A) CELLULOSIC
BIOMASS
ETHANOL.—
The term ‘cellulosic biomass ethanol’ means 
ethanol derived from any lignocellulosic or 
hemicellulosic matter that is available on a re-
newable or recurring basis, including—
‘‘(i) dedicated energy crops and trees; 
‘‘(ii) wood and wood residues; 
‘‘(iii) plants; 
‘‘(iv) grasses; 
‘‘(v) agricultural residues; 
‘‘(vi) fibers;
274
‘‘(vii) animal wastes, including poultry 
fats and poultry wastes, and other waste 
materials; and 
‘‘(viii) municipal solid waste. 
‘‘(B) RENEWABLE FUEL.—
‘‘(i) IN GENERAL.—The term ‘renew-
able fuel’ means motor vehicle fuel that—
‘‘(I)(aa) is produced from grain, 
starch, oilseeds, or other biomass; or 
‘‘(bb) is natural gas produced 
from a biogas source, including a 
landfill, sewage waste treatment plant, 
feedlot, or other place where decaying 
organic material is found; and 
‘‘(II) is used to replace or reduce 
the quantity of fossil fuel present in a 
fuel mixture used to operate a motor 
vehicle. 
‘‘(ii) INCLUSION.—The term ‘renew-
able fuel’ includes cellulosic biomass eth-
anol and biodiesel (as defined in section 
312(f) of the Energy Policy Act of 1992 
(42 U.S.C. 13220(f)) and any blending 
components derived from renewable fuel 
(provided that only the renewable fuel por-
275
tion of any such blending component shall 
be considered part of the applicable volume 
under the renewable fuel program estab-
lished by this subsection). 
‘‘(C) SMALL REFINERY.—The term ‘small 
refinery’ means a refinery for which average ag-
gregate daily crude oil throughput for the cal-
endar year (as determined by dividing the ag-
gregate throughput for the calendar year by the 
number of days in the calendar year) does not 
exceed 75,000 barrels. 
‘‘(2) RENEWABLE FUEL PROGRAM.—
‘‘(A) IN GENERAL.—Not later than 1 year 
from enactment of this provision, the Adminis-
trator shall promulgate regulations ensuring 
that gasoline sold or dispensed to consumers in 
the contiguous United States, on an annual av-
erage basis, contains the applicable volume of 
renewable fuel as specified in subparagraph 
(B). Regardless of the date of promulgation, 
such regulations shall contain compliance provi-
sions for refiners, blenders, and importers, as 
appropriate, to ensure that the requirements of 
this section are met, but shall not restrict where 
renewables can be used, or impose any per-gal-
276
lon obligation for the use of renewables. If the 
Administrator does not promulgate such regula-
tions, the applicable percentage, on a volume 
percentage of gasoline basis, shall be 1.62 in 
2005. 
‘‘(B) APPLICABLE VOLUME.—
‘‘(i) CALENDAR YEARS 2005 THROUGH 
2015.—For the purpose of subparagraph 
(A), the applicable volume for any of cal-
endar years 2005 through 2015 shall be 
determined in accordance with the fol-
lowing table:
Applicable volume of renewable fuel 
‘‘Calendar year: 
(In billions of gallons) 
2005 .....................................................................................
2.7
2006 .....................................................................................
2.7
2007 .....................................................................................
2.9
2008 .....................................................................................
2.9
2009 .....................................................................................
3.4
2010 .....................................................................................
3.4
2011 .....................................................................................
3.4
2012 .....................................................................................
4.2
2013 .....................................................................................
4.2
2014 .....................................................................................
4.2
2015 .....................................................................................
5.0.
‘‘(ii) CALENDAR
YEAR
2016
AND 
THEREAFTER.—For the purpose of sub-
paragraph (A), the applicable volume for 
calendar year 2016 and each calendar year 
thereafter shall be equal to the product ob-
tained by multiplying—
277
‘‘(I) the number of gallons of 
gasoline that the Administrator esti-
mates will be sold or introduced into 
commerce in the calendar year; and 
‘‘(II) the ratio that—
‘‘(aa) 5.0 billion gallons of 
renewable fuels; bears to 
‘‘(bb) the number of gallons 
of gasoline sold or introduced 
into commerce in calendar year 
2015. 
‘‘(3) APPLICABLE
PERCENTAGES.—Not later 
than October 31 of each calendar year after 2002, 
the Administrator of the Energy Information Ad-
ministration shall provide the Administrator an esti-
mate of the volumes of gasoline sales in the United 
States for the coming calendar year. Based on such 
estimates, the Administrator shall, by November 30 
of each calendar year after 2003, determine and 
publish in the Federal Register, the renewable fuel 
obligation, on a volume percentage of gasoline basis, 
applicable to refiners, blenders, and importers, as 
appropriate, for the coming calendar year, to ensure 
that the requirements of paragraph (2) are met. For 
each calendar year, the Administrator shall establish
278
a single applicable percentage that applies to all par-
ties, and make provision to avoid redundant obliga-
tions. In determining the applicable percentages, the 
Administrator shall make adjustments to account for 
the use of renewable fuels by exempt small refineries 
during the previous year. 
‘‘(4) CELLULOSIC BIOMASS ETHANOL.—For the 
purpose of paragraph (2), 1 gallon of cellulosic bio-
mass ethanol shall be considered to be the equivalent 
of 1.5 gallon of renewable fuel. 
‘‘(5) CREDIT PROGRAM.—
‘‘(A) IN GENERAL.—The regulations pro-
mulgated to carry out this subsection shall pro-
vide for the generation of an appropriate 
amount of credits by any person that refines, 
blends, or imports gasoline that contains a 
quantity of renewable fuel that is greater than 
the quantity required under paragraph (2). 
Such regulations shall provide for the genera-
tion of an appropriate amount of credits for 
biodiesel fuel. If a small refinery notifies the 
Administrator that it waives the exemption pro-
vided by this Act, the regulations shall provide 
for the generation of credits by the small refin-
279
ery beginning in the year following such notifi-
cation. 
‘‘(B) USE
OF
CREDITS.—A person that 
generates credits under subparagraph (A) may 
use the credits, or transfer all or a portion of 
the credits to another person, for the purpose 
of complying with paragraph (2). 
‘‘(C) LIFE
OF
CREDITS.—A credit gen-
erated under this paragraph shall be valid to 
show compliance: 
‘‘(i) in the calendar year in which the 
credit was generated or the next calendar 
year, or 
‘‘(ii) in the calendar year in which the 
credit was generated or next two consecu-
tive calendar years if the Administrator 
promulgates regulations under paragraph 
(6). 
‘‘(D) INABILITY TO PURCHASE SUFFICIENT 
CREDITS.—The regulations promulgated to 
carry out this subsection shall include provi-
sions allowing any person that is unable to gen-
erate or purchase sufficient credits to meet the 
requirements under paragraph (2) to carry for-
ward a renewables deficit provided that, in the
280
calendar year following the year in which the 
renewables deficit is created, such person shall 
achieve compliance with the renewables require-
ment under paragraph (2), and shall generate 
or purchase additional renewables credits to off-
set the renewables deficit of the previous year. 
‘‘(6) SEASONAL
VARIATIONS
IN
RENEWABLE 
FUEL USE.—
‘‘(A) STUDY.—For each of calendar years 
2005 through 2015, the Administrator of the 
Energy Information Administration, shall con-
duct a study of renewable fuels blending to de-
termine whether there are excessive seasonal 
variations in the use of renewable fuels. 
‘‘(B) REGULATION
OF
EXCESSIVE
SEA-
SONAL VARIATIONS.—If, for any calendar year, 
the Administrator of the Energy Information 
Administration, based on the study under sub-
paragraph (A), makes the determinations speci-
fied in subparagraph (C), the Administrator 
shall promulgate regulations to ensure that 35 
percent or more of the quantity of renewable 
fuels necessary to meet the requirement of 
paragraph (2) is used during each of the peri-
281
ods specified in subparagraph (D) of each sub-
sequent calendar year. 
‘‘(C) DETERMINATIONS.—The determina-
tions referred to in subparagraph (B) are 
that—
‘‘(i) less than 35 percent of the quan-
tity of renewable fuels necessary to meet 
the requirement of paragraph (2) has been 
used during one of the periods specified in 
subparagraph (D) of the calendar year; 
‘‘(ii) a pattern of excessive seasonal 
variation described in clause (i) will con-
tinue in subsequent calendar years; and 
‘‘(iii) promulgating regulations or 
other requirements to impose a 35% or 
more seasonal use of renewable fuels will 
not prevent or interfere with the attain-
ment of national ambient air quality stand-
ards or significantly increase the price of 
motor fuels to the consumer. 
‘‘(D) PERIODS.—The two periods referred 
to in this paragraph are—
‘‘(i) April through September; and 
‘‘(ii) January through March and Oc-
tober through December.
282
‘‘(E) 
EXCLUSIONS.—Renewable 
fuels 
blended or consumed in 2005 in a State which 
has received a waiver under section 209(b) shall 
not be included in the study in subparagraph 
(A). 
‘‘(7) WAIVERS.—
‘‘(A) IN GENERAL.—The Administrator, in 
consultation with the Secretary of Agriculture 
and the Secretary of Energy, may waive the re-
quirement of paragraph (2) in whole or in part 
on petition by one or more States by reducing 
the national quantity of renewable fuel required 
under this subsection—
‘‘(i) based on a determination by the 
Administrator, after public notice and op-
portunity for comment, that implementa-
tion of the requirement would have a sig-
nificant and meaningful adverse impact on 
the economy or environment of a State, a 
region, or the United States, or will pre-
vent or interfere with the attainment of a 
national ambient air quality standard in 
any area of a State; or 
‘‘(ii) based on a determination by the 
Administrator, after public notice and op-
283
portunity for comment, that there is an in-
adequate domestic supply or distribution 
capacity to meet the requirement. 
‘‘(B) PETITIONS FOR WAIVERS.—The Ad-
ministrator, in consultation with the Secretary 
of Agriculture and the Secretary of Energy, 
shall approve or disapprove a State petition for 
a waiver of the requirement of paragraph (2) 
within 90 days after the date on which the peti-
tion is received by the Administrator. If the Ad-
ministrator does not act to approve or dis-
approve a State petition for a waiver within 90 
days, the Administrator shall publish a notice 
setting forth the reasons for not acting within 
the required 90-day period. 
‘‘(C) TERMINATION OF WAIVERS.—A waiv-
er granted under subparagraph (A) shall termi-
nate after 1 year, but may be renewed by the 
Administrator after consultation with the Sec-
retary of Agriculture and the Secretary of En-
ergy. 
‘‘(8) STUDY AND WAIVER FOR INITIAL YEAR OF 
PROGRAM.—Not later than 180 days from enact-
ment, the Secretary of Energy shall complete for the 
Administrator a study assessing whether the renew-
284
able fuels requirement under paragraph (2) will like-
ly result in significant adverse consumer impacts in 
2005, on a national, regional or State basis. Such 
study shall evaluate renewable fuel supplies and 
prices, blendstock supplies, and supply and distribu-
tion system capabilities. Based on such study, the 
Secretary shall make specific recommendations to 
the Administrator regarding waiver of the require-
ments of paragraph (2), in whole or in part, to avoid 
any such adverse impacts. Within 270 days from en-
actment, the Administrator shall, consistent with the 
recommendations of the Secretary waive, in whole or 
in part, the renewable fuels requirement under para-
graph (2) by reducing the national quantity of re-
newable fuel required under this subsection in 2005. 
This provision shall not be interpreted as limiting 
the Administrator’s authority to waive the require-
ments of paragraph (2) in whole, or in part, under 
paragraph (7) or paragraph (9), pertaining to waiv-
ers. 
‘‘(9) ASSESSMENT
AND
WAIVER.—The Sec-
retary of Energy, in consultation with the Adminis-
trator of the Environmental Protection Agency and 
the Secretary of Agriculture on his own motion, or 
upon petition of any State shall evaluate the require-
285
ment of paragraph (2) and determine, prior to Janu-
ary 1, 2007, or prior to January 1 of any subse-
quent year in which the applicable volume of renew-
able fuel is increased under paragraph (2)(B), 
whether the requirement of paragraph (2), including 
the applicable volume of renewable fuel contained in 
paragraph (2)(B) should remain in effect, in whole 
or in part, during 2007 or any year or years subse-
quent to 2007. In evaluating the requirement of 
paragraph (2) and in making any determination 
under this section, the Secretary shall consider the 
best available information and data collected by ac-
cepted methods or best available means regarding—
‘‘(A) the capacity of renewable fuel pro-
ducers to supply an adequate amount of renew-
able fuel at competitive prices to fulfill the re-
quirement in paragraph (2); 
‘‘(B) the potential of the requirement in 
paragraph (2) to significantly raise the price of 
gasoline, food or heating oil for consumers in 
any significant area or region of the country 
above the price that would otherwise apply to 
such commodities in the absence of the require-
ment;
286
‘‘(C) the potential of the requirement in 
paragraph (2) to interfere with the supply of 
fuel in any significant gasoline market or region 
of the country, including interference with the 
efficient operation of refiners, blenders, import-
ers, wholesale suppliers, and retail vendors of 
gasoline, and other motor fuels; and 
‘‘(D) the potential of the requirement to 
cause or promote exceedences of Federal, State, 
or local air quality standards. 
If the Secretary determines, after public notice and 
the opportunity for comment, that the requirement 
of paragraph (2) would have significant and mean-
ingful adverse impact on the supply of fuel and re-
lated infrastructure or on the economy, environment, 
public health or environment of any significant area 
or region of the country, the Secretary may waive, 
in whole or in part, the requirement of paragraph 
(2) in any one year or period of years as well as re-
duce the applicable volume of renewable fuel con-
tained in paragraph (2)(B) in any one year or period 
of years. 
‘‘(10) SMALL REFINERIES.—
‘‘(A) IN
GENERAL.—The requirement of 
paragraph (2) shall not apply to small refineries
287
until the first calendar year beginning more 
than 5 years after the first year set forth in the 
table in paragraph (2)(B)(i). Not later than De-
cember 31, 2006, the Secretary of Energy shall 
complete for the Administrator a study to de-
termine whether the requirement of paragraph 
(2) would impose a disproportionate economic 
hardship on small refineries. For any small re-
finery that the Secretary of Energy determines 
would experience a disproportionate economic 
hardship, the Administrator shall extend the 
small refinery exemption for such small refinery 
for no less than two additional years. 
‘‘(B) ECONOMIC HARDSHIP.—
‘‘(i) EXTENSION OF EXEMPTION.—A 
small refinery may at any time petition the 
Administrator for an extension of the ex-
emption from the requirement of para-
graph (2) for the reason of dispropor-
tionate economic hardship. In evaluating a 
hardship petition, the Administrator, in 
consultation with the Secretary of Energy, 
shall consider the findings of the study in 
addition to other economic factors.
288
‘‘(ii) DEADLINE FOR ACTION ON PETI-
TIONS.—The Administrator shall act on 
any petition submitted by a small refinery 
for a hardship exemption not later than 90 
days after the receipt of the petition. 
‘‘(C) CREDIT PROGRAM.—If a small refin-
ery notifies the Administrator that it waives the 
exemption provided by this Act, the regulations 
shall provide for the generation of credits by 
the small refinery beginning in the year fol-
lowing such notification. 
‘‘(D) OPT-IN
FOR
SMALL
REFINERS.—A 
small refinery shall be subject to the require-
ments of this section if it notifies the Adminis-
trator that it waives the exemption under sub-
paragraph (A).’’. 
(b) 
PENALTIES
AND
ENFORCEMENT.—Section 
211(d) of the Clean Air Act (42 U.S.C. 7545(d)) is 
amended—
(1) in paragraph (1)—
(A) in the first sentence, by striking ‘‘or 
(n)’’ each place it appears and inserting ‘‘(n) or 
(o)’’; and 
(B) in the second sentence, by striking ‘‘or 
(m)’’ and inserting ‘‘(m), or (o)’’; and
289
(2) in the first sentence of paragraph (2), by 
striking ‘‘and (n)’’ each place it appears and insert-
ing ‘‘(n), and (o)’’. 
(c) SURVEY OF RENEWABLE FUEL MARKET.—
(1) SURVEY AND REPORT.—Not later than De-
cember 1, 2006, and annually thereafter, the Admin-
istrator of the Environmental Protection Agency (in 
consultation with the Secretary of Energy acting 
through the Administrator of the Energy Informa-
tion Administration) shall—
(A) conduct, with respect to each conven-
tional gasoline use area and each reformulated 
gasoline use area in each State, a survey to de-
termine the market shares of—
(i) conventional gasoline containing 
ethanol; 
(ii) reformulated gasoline containing 
ethanol; 
(iii) conventional gasoline containing 
renewable fuel; and 
(iv) reformulated gasoline containing 
renewable fuel; and 
(B) submit to Congress, and make publicly 
available, a report on the results of the survey 
under subparagraph (A).
290
(2) RECORDKEEPING
AND
REPORTING
RE-
QUIREMENTS.—The Administrator may require any 
refiner, blender, or importer to keep such records 
and make such reports as are necessary to ensure 
that the survey conducted under paragraph (1) is 
accurate. The Administrator shall rely, to the extent 
practicable, on existing reporting and recordkeeping 
requirements to avoid duplicative requirements. 
(3) APPLICABLE
LAW.—Activities carried out 
under this subsection shall be conducted in a man-
ner designed to protect confidentiality of individual 
responses. 
(4) CALCULATION OF MARKET SHARES.—Mar-
ket shares for conventional gasoline and reformu-
lated gasoline use areas will be calculated on a state-
wide basis using information collected under para-
graph (2) and other information available to the Ad-
ministrator. Market share information may be based 
upon gasoline distribution patterns that include 
multistate use areas. 
SEC. 17102. FUELS SAFE HARBOR. 
(a) IN GENERAL.—Notwithstanding any other provi-
sion of Federal or State law, no renewable fuel, as defined 
by section 211(o)(1) of the Clean Air Act, or fuel con-
taining MTBE, used or intended to be used as a motor
291
vehicle fuel, nor any motor vehicle fuel containing such 
renewable fuel or MTBE, shall be deemed defective in de-
sign or manufacture by virtue of the fact that it is, or 
contains, such a renewable fuel or MTBE, if it does not 
violate a control or prohibition imposed by the Adminis-
trator under section 211 of such Act, and the manufac-
turer is in compliance with all requests for information 
under subsection (b) of such section 211(b) of the Clean 
Air Act. If the safe harbor provided by this section does 
not apply, the existence of a design defect or manufac-
turing defect shall be determined under otherwise applica-
ble law. Nothing in this paragraph shall be construed to 
affect the liability of any person for environmental remedi-
ation costs, drinking water contamination, negligence, 
public nuisance or any other liability other than liability 
for a defect in design or manufacture of a motor vehicle 
fuel. 
(b) EFFECTIVE DATE.—This section shall be effec-
tive as of the date of enactment and shall apply with re-
spect to all claims filed on or after that date. 
SEC. 17103. FINDINGS AND MTBE TRANSITION ASSISTANCE. 
(a) FINDINGS.—Congress finds that—
(1) since 1979, methyl tertiary butyl ether (re-
ferred to in this section as ‘‘MTBE’’) has been used
292
nationwide at low levels in gasoline to replace lead 
as an octane booster or anti-knocking agent; 
(2) Public Law 101–549 (commonly known as 
the ‘‘Clean Air Act Amendments of 1990’’) (42 
U.S.C. 7401 et seq.) established a fuel oxygenate 
standard under which reformulated gasoline must 
contain at least 2 percent oxygen by weight; 
(3) at the time of the adoption of the fuel oxy-
gen standard, Congress was aware that significant 
use of MTBE would result from the adoption of that 
standard, and that the use of MTBE would likely be 
important to the cost-effective implementation of 
that program; 
(4) Congress was aware that gasoline and its 
component additives can and do leak from storage 
tanks; 
(5) the fuel industry responded to the fuel oxy-
genate standard established by Public Law 101–549 
by making substantial investments in—
(A) MTBE production capacity; and 
(B) systems to deliver MTBE-containing 
gasoline to the marketplace; 
(6) Congress has—
293
(A) reconsidered the relative value of the 
oxygenate requirement for reformulated gaso-
line; and 
(B) decided to provide for the elimination 
of the oxygenate requirement for reformulated 
gasoline and to provide for a renewable content 
requirement for motor fuel; and 
(7) it is appropriate for Congress to provide 
some limited transition assistance—
(A) to merchant producers of MTBE who 
produced MTBE in response to a market cre-
ated by the oxygenate requirement contained in 
the Clean Air Act; and 
(B) for the purpose of mitigating any fuel 
supply problems that may result from the elimi-
nation of the oxygenate requirement for refor-
mulated gasoline. 
(b) PURPOSES.—The purpose of this section is to 
provide assistance to merchant producers of MTBE in 
making the transition from producing MTBE to producing 
other fuel additives. 
(c) MTBE MERCHANT PRODUCER CONVERSION AS-
SISTANCE.—Section 211(c) of the Clean Air Act (42 
U.S.C. 7545(c)) is amended by adding at the end the fol-
lowing:
294
‘‘(5) MTBE MERCHANT
PRODUCER
CONVER-
SION ASSISTANCE.—
‘‘(A) IN GENERAL.—
‘‘(i) GRANTS.—The Secretary of En-
ergy, in consultation with the Adminis-
trator, may make grants to merchant pro-
ducers of methyl tertiary butyl ether in the 
United States to assist the producers in 
the conversion of eligible production facili-
ties described in subparagraph (C) to the 
production of iso-octane and alkylates. 
‘‘(ii) DETERMINATION.—The Admin-
istrator, in consultation with the Secretary 
of Energy, may determine that transition 
assistance for the production of iso-octane 
and alkylates is inconsistent with the pro-
visions of subparagraph (B) and, on that 
basis, may deny applications for grants au-
thorized by this provision. 
‘‘(B) FURTHER
GRANTS.—The Secretary 
of Energy, in consultation with the Adminis-
trator, may also further make grants to mer-
chant producers of MTBE in the United States 
to assist the producers in the conversion of eli-
gible production facilities described in subpara-
295
graph (C) to the production of such other fuel 
additives that, consistent with this subsection—
‘‘(i) unless the Administrator deter-
mines that such fuel additives may reason-
ably be anticipated to endanger public 
health or the environment; 
‘‘(ii) have been registered and have 
been tested or are being tested in accord-
ance with the requirements of this section; 
and 
‘‘(iii) will contribute to replacing gaso-
line volumes lost as a result of paragraph 
(5). 
‘‘(C) 
ELIGIBLE
PRODUCTION
FACILI-
TIES.—A production facility shall be eligible to 
receive a grant under this paragraph if the pro-
duction facility—
‘‘(i) is located in the United States; 
and 
‘‘(ii) produced methyl tertiary butyl 
ether for consumption before April 1, 2003 
and ceased production at any time after 
the date of enactment. 
‘‘(D) 
AUTHORIZATION
OF
APPROPRIA-
TIONS.—There is authorized to be appropriated
296
to carry out this paragraph $250,000,000 for 
each of fiscal years 2004 through 2006, to re-
main available until expended.’’.
(d) EFFECT
ON STATE LAW.—The amendments 
made to the Clean Air Act by this title have no effect re-
garding any available authority of States to limit the use 
of methyl tertiary butyl ether in motor vehicle fuel.
SEC. 17104. ELIMINATION OF OXYGEN CONTENT REQUIRE-
MENT FOR REFORMULATED GASOLINE. 
(a) ELIMINATION.—
(1) IN GENERAL.—Section 211(k) of the Clean 
Air Act (42 U.S.C. 7545(k)) is amended—
(A) in paragraph (2)—
(i) in the second sentence of subpara-
graph (A), by striking ‘‘(including the oxy-
gen content requirement contained in sub-
paragraph (B))’’; 
(ii) by striking subparagraph (B); and 
(iii) by redesignating subparagraphs 
(C) and (D) as subparagraphs (B) and 
(C), respectively; 
(B) in paragraph (3)(A), by striking clause 
(v); 
(C) in paragraph (7)—
(i) in subparagraph (A)—
297
(I) by striking clause (i); and 
(II) by redesignating clauses (ii) 
and (iii) as clauses (i) and (ii), respec-
tively; and 
(ii) in subparagraph (C)—
(I) by striking clause (ii); and 
(II) by redesignating clause (iii) 
as clause (ii); and 
(2) EFFECTIVE DATE.—The amendments made 
by paragraph (1) take effect 270 days after the date 
of enactment of this Act, except that such amend-
ments shall take effect upon enactment in any State 
that has received a waiver under section 209(b) of 
the Clean Air Act. 
(b) MAINTENANCE OF TOXIC AIR POLLUTANT EMIS-
SION REDUCTIONS.—Section 211(k)(1) of the Clean Air 
Act (42 U.S.C. 7545(k)(1)) is amended—
(1) by striking ‘‘Within 1 year after the enact-
ment of the Clean Air Act Amendments of 1990,’’ 
and inserting the following: 
‘‘(A) IN
GENERAL.—Not later than No-
vember 15, 1991,’’; and 
(2) by adding at the end the following:
298
‘‘(B) MAINTENANCE OF TOXIC AIR POL-
LUTANT EMISSIONS REDUCTIONS FROM REFOR-
MULATED GASOLINE.—
‘‘(i) DEFINITIONS.—In this subpara-
graph the term ‘PADD’ means a Petro-
leum Administration for Defense District. 
‘‘(ii) REGULATIONS REGARDING EMIS-
SIONS
OF
TOXIC
AIR
POLLUTANTS.—Not 
later than 270 days after the date of en-
actment of this subparagraph the Adminis-
trator shall establish, for each refinery or 
importer, standards for toxic air pollutants 
from use of the reformulated gasoline pro-
duced or distributed by the refinery or im-
porter that maintain the reduction of the 
average annual aggregate emissions of 
toxic air pollutants for reformulated gaso-
line produced or distributed by the refinery 
or importer during calendar years 1999 
and 2000, determined on the basis of data 
collected by the Administrator with respect 
to the refinery or importer. 
‘‘(iii) STANDARDS
APPLICABLE
TO 
SPECIFIC REFINERIES OR IMPORTERS.—
299
‘‘(I) APPLICABILITY
OF
STAND-
ARDS.—For any calendar year, the 
standards applicable to a refinery or 
importer under clause (ii) shall apply 
to the quantity of gasoline produced 
or distributed by the refinery or im-
porter in the calendar year only to the 
extent that the quantity is less than 
or equal to the average annual quan-
tity of reformulated gasoline produced 
or distributed by the refinery or im-
porter during calendar years 1999 
and 2000. 
‘‘(II) APPLICABILITY OF OTHER 
STANDARDS.—For any calendar year, 
the quantity of gasoline produced or 
distributed by a refinery or importer 
that is in excess of the quantity sub-
ject to subclause (I) shall be subject 
to standards for toxic air pollutants 
promulgated under subparagraph (A) 
and paragraph (3)(B). 
‘‘(iv) CREDIT PROGRAM.—The Admin-
istrator shall provide for the granting and 
use of credits for emissions of toxic air pol-
300
lutants in the same manner as provided in 
paragraph (7). 
‘‘(v) 
REGIONAL
PROTECTION
OF 
TOXICS REDUCTION BASELINES.—
‘‘(I) IN
GENERAL.—Not later 
than 60 days after the date of enact-
ment of this subparagraph, and not 
later than April 1 of each calendar 
year that begins after that date of en-
actment, the Administrator shall pub-
lish in the Federal Register a report 
that specifies, with respect to the pre-
vious calendar year—
‘‘(aa) the quantity of refor-
mulated gasoline produced that is 
in excess of the average annual 
quantity of reformulated gasoline 
produced in 1999 and 2000; and 
‘‘(bb) the reduction of the 
average annual aggregate emis-
sions of toxic air pollutants in 
each PADD, based on retail sur-
vey data or data from other ap-
propriate sources.
301
‘‘(II) EFFECT
OF
FAILURE
TO 
MAINTAIN
AGGREGATE
TOXICS
RE-
DUCTIONS.—If, in any calendar year, 
the reduction of the average annual 
aggregate emissions of toxic air pol-
lutants in a PADD fails to meet or 
exceed the reduction of the average 
annual aggregate emissions of toxic 
air pollutants in the PADD in cal-
endar years 1999 and 2000, the Ad-
ministrator, not later than 90 days 
after the date of publication of the re-
port for the calendar year under sub-
clause (I), shall—
‘‘(aa) identify, to the max-
imum extent practicable, the rea-
sons for the failure, including the 
sources, volumes, and character-
istics of reformulated gasoline 
that contributed to the failure; 
and 
‘‘(bb) promulgate revisions 
to the regulations promulgated 
under clause (ii), to take effect 
not earlier than 180 days but not
302
later than 270 days after the 
date of promulgation, to provide 
that, 
notwithstanding 
clause 
(iii)(II), all reformulated gasoline 
produced or distributed at each 
refinery or importer shall meet 
the standards applicable under 
clause (ii) not later than April 1 
of the year following the report 
in subclause (II) and for subse-
quent years. 
‘‘(vi) 
REGULATIONS
TO
CONTROL 
HAZARDOUS
AIR
POLLUTANTS
FROM 
MOTOR
VEHICLES
AND
MOTOR
VEHICLE 
FUELS.—Not later than July 1, 2004, the 
Administrator shall promulgate final regu-
lations to control hazardous air pollutants 
from motor vehicles and motor vehicle 
fuels, as provided for in section 80.1045 of 
title 40, Code of Federal Regulations (as 
in effect on the date of enactment of this 
subparagraph).’’. 
(c) CONSOLIDATION IN REFORMULATED GASOLINE 
REGULATIONS.—Not later than 180 days after the date 
of enactment of this Act, the Administrator shall revise
303
the reformulated gasoline regulations under subpart D of 
part 80 of title 40, Code of Federal Regulations, to con-
solidate the regulations applicable to VOC-Control Re-
gions 1 and 2 under section 80.41 of that title by elimi-
nating the less stringent requirements applicable to gaso-
line designated for VOC-Control Region 2 and instead ap-
plying the more stringent requirements applicable to gaso-
line designated for VOC-Control Region 1. 
(d) SAVINGS CLAUSE.—Nothing in this section is in-
tended to affect or prejudice either any legal claims or ac-
tions with respect to regulations promulgated by the Ad-
ministrator prior to enactment of this Act regarding emis-
sions of toxic air pollutants from motor vehicles or the 
adjustment of standards applicable to a specific refinery 
or importer made under such prior regulations and the 
Administrator may apply such adjustments to the stand-
ards applicable to such refinery or importer under clause 
(iii)(I) of section 211(k)(1)(B) of the Clean Air Act, ex-
cept that— 
(1) the Administrator shall revise such adjust-
ments to be based only on calendar years 1999–
2000, and 
(2) for adjustments based on toxic air pollutant 
emissions from reformulated gasoline significantly 
below the national annual average emissions of toxic
304
air pollutants from all reformulated gasoline, the 
Administrator may revise such adjustments to take 
account of the scope of any lawful and enforceable 
Federal or State prohibition on methyl tertiary butyl 
ether imposed after the effective date of the enact-
ment of this paragraph, except that any such adjust-
ment shall require such refiner or importer, to the 
greatest extent practicable, to maintain the reduc-
tion achieved during calendar year 1999–2000 in the 
average annual aggregate emissions of toxic air pol-
lutants from reformulated gasoline produced or dis-
tributed by the refinery or importer. Any such ad-
justment shall not be made at a level below the aver-
age percentage of reductions of emissions of toxic air 
pollutants for reformulated gasoline supplied to 
PADD I during calendar years 1999–2000. 
SEC. 17105. ANALYSES OF MOTOR VEHICLE FUEL CHANGES. 
Section 211 of the Clean Air Act (42 U.S.C. 7545) 
is amended by inserting after subsection (o) the following: 
‘‘(p) ANALYSES OF MOTOR VEHICLE FUEL CHANGES 
AND EMISSIONS MODEL.—
‘‘(1) ANTI-BACKSLIDING ANALYSIS.—
‘‘(A) DRAFT ANALYSIS.—Not later than 4 
years after the date of enactment of this para-
graph, the Administrator shall publish for pub-
305
lic comment a draft analysis of the changes in 
emissions of air pollutants and air quality due 
to the use of motor vehicle fuel and fuel addi-
tives resulting from implementation of the 
amendments made by title VII of the Energy 
Policy Act of 2003. 
‘‘(B) FINAL ANALYSIS.—After providing a 
reasonable opportunity for comment but not 
later than 5 years after the date of enactment 
of this paragraph, the Administrator shall pub-
lish the analysis in final form. 
‘‘(2) EMISSIONS MODEL.—For the purposes of 
this subsection, as soon as the necessary data are 
available, the Administrator shall develop and final-
ize an emissions model that reasonably reflects the 
effects of gasoline characteristics or components on 
emissions from vehicles in the motor vehicle fleet 
during calendar year 2005.’’. 
SEC. 17106. DATA COLLECTION. 
Section 205 of the Department of Energy Organiza-
tion Act (42 U.S.C. 7135) is amended by adding at the 
end the following: 
‘‘(m) RENEWABLE FUELS SURVEY.—(1) In order to 
improve the ability to evaluate the effectiveness of the Na-
tion’s renewable fuels mandate, the Administrator shall
306
conduct and publish the results of a survey of renewable 
fuels demand in the motor vehicle fuels market in the 
United States monthly, and in a manner designed to pro-
tect the confidentiality of individual responses. In con-
ducting the survey, the Administrator shall collect infor-
mation both on a national and regional basis, including—
‘‘(A) the quantity of renewable fuels produced; 
‘‘(B) the quantity of renewable fuels blended; 
‘‘(C) the quantity of renewable fuels imported; 
‘‘(D) the quantity of renewable fuels demanded; 
‘‘(E) market price data; and 
‘‘(F) such other analyses or evaluations as the 
Administrator finds is necessary to achieve the pur-
poses of this section. 
‘‘(2) The Administrator shall also collect or estimate 
information both on a national and regional basis, pursu-
ant to subparagraphs (A) through (F) of paragraph (1), 
for the five years prior to implementation of this sub-
section. 
‘‘(3) This subsection does not affect the authority of 
the Administrator to collect data under section 52 of the 
Federal Energy Administration Act of 1974 (15 U.S.C. 
790a).’’.
307
SEC. 17107. FUEL SYSTEM REQUIREMENTS HARMONI-
ZATION STUDY. 
(a) STUDY.—
(1) IN
GENERAL.—The Administrator of the 
Environmental Protection Agency and the Secretary 
of Energy shall jointly conduct a study of Federal, 
State, and local requirements concerning motor vehi-
cle fuels, including—
(A) requirements relating to reformulated 
gasoline, volatility (measured in Reid vapor 
pressure), oxygenated fuel, and diesel fuel; and 
(B) other requirements that vary from 
State to State, region to region, or locality to 
locality. 
(2) REQUIRED ELEMENTS.—The study shall as-
sess—
(A) the effect of the variety of require-
ments described in paragraph (1) on the supply, 
quality, and price of motor vehicle fuels avail-
able to consumers in various States and local-
ities; 
(B) the effect of the requirements de-
scribed in paragraph (1) on achievement of—
(i) national, regional, and local air 
quality standards and goals; and
308
(ii) related environmental and public 
health protection standards and goals; 
(C) the effect of Federal, State, and local 
motor vehicle fuel regulations, including mul-
tiple motor vehicle fuel requirements, on—
(i) domestic refineries; 
(ii) the fuel distribution system; and 
(iii) industry investment in new capac-
ity; 
(D) the effect of the requirements de-
scribed in paragraph (1) on emissions from ve-
hicles, refineries, and fuel handling facilities; 
(E) the feasibility of developing national or 
regional motor vehicle fuel slates for the 48 
contiguous States that, while improving air 
quality at the national, regional and local levels 
consistent with the attainment of national am-
bient air quality standards, could—
(i) enhance flexibility in the fuel dis-
tribution infrastructure and improve fuel 
fungibility; 
(ii) reduce price volatility and costs to 
consumers and producers; 
(iii) provide increased liquidity to the 
gasoline market; and
309
(iv) enhance fuel quality, consistency, 
and supply; 
(F) the feasibility of providing incentives, 
to promote cleaner burning motor vehicle fuel; 
and 
(G) the extent to which improvements in 
air quality and any increases or decreases in 
the price of motor fuel can be projected to re-
sult from the Environmental Protection Agen-
cy’s Tier II requirements for conventional gaso-
line and vehicle emission systems, the reformu-
lated gasoline program, the renewable content 
requirements established by this subtitle, State 
programs regarding gasoline volatility, and any 
other requirements imposed by States or local-
ities affecting the composition of motor fuel. 
(b) REPORT.—
(1) IN GENERAL.—Not later than December 31, 
2006, the Administrator of the Environmental Pro-
tection Agency and the Secretary of Energy shall 
submit to Congress a report on the results of the 
study conducted under subsection (a). 
(2) RECOMMENDATIONS.—
310
(A) IN GENERAL.—The report shall con-
tain recommendations for legislative and admin-
istrative actions that may be taken—
(i) to improve air quality; 
(ii) to reduce costs to consumers and 
producers; and 
(iii) to increase supply liquidity. 
(B) 
REQUIRED
CONSIDERATIONS.—The 
recommendations under subparagraph (A) shall 
take into account the need to provide advance 
notice of required modifications to refinery and 
fuel distribution systems in order to ensure an 
adequate supply of motor vehicle fuel in all 
States. 
(3) CONSULTATION.—In developing the report, 
the Administrator of the Environmental Protection 
Agency and the Secretary of Energy shall consult 
with—
(A) the Governors of the States; 
(B) automobile manufacturers; 
(C) motor vehicle fuel producers and dis-
tributors; and 
(D) the public.
311
SEC. 17108. COMMERCIAL BYPRODUCTS FROM MUNICIPAL 
SOLID WASTE LOAN GUARANTEE PROGRAM. 
(a) DEFINITION OF MUNICIPAL SOLID WASTE.—In 
this section, the term ‘‘municipal solid waste’’ has the 
meaning given the term ‘‘solid waste’’ in section 1004 of 
the Solid Waste Disposal Act (42 U.S.C. 6903). 
(b) ESTABLISHMENT OF PROGRAM.—The Secretary 
of Energy shall establish a program to provide guarantees 
of loans by private institutions for the construction of fa-
cilities for the processing and conversion of municipal solid 
waste into fuel ethanol and other commercial byproducts. 
(c) REQUIREMENTS.—The Secretary may provide a 
loan guarantee under subsection (b) to an applicant if—
(1) without a loan guarantee, credit is not 
available to the applicant under reasonable terms or 
conditions sufficient to finance the construction of a 
facility described in subsection (b); 
(2) the prospective earning power of the appli-
cant and the character and value of the security 
pledged provide a reasonable assurance of repayment 
of the loan to be guaranteed in accordance with the 
terms of the loan; and 
(3) the loan bears interest at a rate determined 
by the Secretary to be reasonable, taking into ac-
count the current average yield on outstanding obli-
312
gations of the United States with remaining periods 
of maturity comparable to the maturity of the loan. 
(d) CRITERIA.—In selecting recipients of loan guar-
antees from among applicants, the Secretary shall give 
preference to proposals that—
(1) meet all applicable Federal and State per-
mitting requirements; 
(2) are most likely to be successful; and 
(3) are located in local markets that have the 
greatest need for the facility because of—
(A) the limited availability of land for 
waste disposal; or 
(B) a high level of demand for fuel ethanol 
or other commercial byproducts of the facility. 
(e) MATURITY.—A loan guaranteed under subsection 
(b) shall have a maturity of not more than 20 years. 
(f) TERMS AND CONDITIONS.—The loan agreement 
for a loan guaranteed under subsection (b) shall provide 
that no provision of the loan agreement may be amended 
or waived without the consent of the Secretary. 
(g) ASSURANCE
OF REPAYMENT.—The Secretary 
shall require that an applicant for a loan guarantee under 
subsection (b) provide an assurance of repayment in the 
form of a performance bond, insurance, collateral, or other
313
means acceptable to the Secretary in an amount equal to 
not less than 20 percent of the amount of the loan. 
(h) GUARANTEE FEE.—The recipient of a loan guar-
antee under subsection (b) shall pay the Secretary an 
amount determined by the Secretary to be sufficient to 
cover the administrative costs of the Secretary relating to 
the loan guarantee. 
(i) FULL FAITH AND CREDIT.—The full faith and 
credit of the United States is pledged to the payment of 
all guarantees made under this section. Any such guar-
antee made by the Secretary shall be conclusive evidence 
of the eligibility of the loan for the guarantee with respect 
to principal and interest. The validity of the guarantee 
shall be incontestable in the hands of a holder of the guar-
anteed loan. 
(j) REPORTS.—Until each guaranteed loan under this 
section has been repaid in full, the Secretary shall annu-
ally submit to Congress a report on the activities of the 
Secretary under this section. 
(k) AUTHORIZATION
OF APPROPRIATIONS.—There 
are authorized to be appropriated such sums as are nec-
essary to carry out this section. 
(l) TERMINATION OF AUTHORITY.—The authority of 
the Secretary to issue a loan guarantee under subsection
314
(b) terminates on the date that is 10 years after the date 
of enactment of this Act.
Subtitle B—MTBE Cleanup 
SEC. 17201. FUNDING FOR MTBE CONTAMINATION. 
Notwithstanding any other provision of law, there is 
authorized to be appropriated to the Administrator of the 
United States Environmental Protection Agency from the 
Leaking Underground Storage Tank Trust Fund not more 
than $850,000,000 to be used for taking such action lim-
ited to site assessment (including exposure assessment), 
corrective action, inspection of underground storage tank 
systems, and groundwater monitoring as the Adminis-
trator deems necessary to protect human health, welfare, 
and the environment from underground storage tank re-
leases of fuel containing fuel oxygenates.
TITLE VIII—AUTOMOBILE 
EFFICIENCY 
SEC. 18001. AUTHORIZATION OF APPROPRIATIONS FOR IM-
PLEMENTATION 
AND 
ENFORCEMENT 
OF 
FUEL ECONOMY STANDARDS. 
In addition to any other funds authorized by law, 
there are authorized to be appropriated to the National 
Highway Traffic Safety Administration to implement and 
enforce average fuel economy standards $5,000,000 for 
fiscal years 2004 through 2006.
315
SEC. 18002. STUDY OF FEASIBILITY AND EFFECTS OF RE-
DUCING USE OF FUEL FOR AUTOMOBILES. 
(a) IN GENERAL.—Not later than 30 days after the 
date of the enactment of this Act, the Administrator of 
the National Highway Traffic Safety Administration shall 
study the feasibility and effects of reducing by model year 
2012, by a significant percentage, the use of fuel for auto-
mobiles. 
(b) SUBJECTS OF STUDY.—The study under this sec-
tion shall include—
(1) examination of, and recommendation of al-
ternatives to, the policy under current Federal law 
of establishing average fuel economy standards for 
automobiles and requiring each automobile manufac-
turer to comply with average fuel economy standards 
that apply to the automobiles it manufactures; 
(2) examination of how automobile manufactur-
ers could contribute toward achieving the reduction 
referred to in subsection (a); 
(3) examination of the potential of fuel cell 
technology in motor vehicles in order to determine 
the extent to which such technology may contribute 
to achieving the reduction referred to in subsection 
(a); and 
(4) examination of the effects of the reduction 
referred to in subsection (a) on—
316
(A) gasoline supplies; 
(B) the automobile industry, including 
sales of automobiles manufactured in the 
United States; 
(C) motor vehicle safety; and 
(D) air quality. 
(c) REPORT.—The Administrator shall submit to the 
Congress a report on the findings, conclusion, and rec-
ommendations of the study under this section by not later 
than 1 year after the date of the enactment of this Act.
DIVISION B—SCIENCE 
SEC. 20001. PURPOSES. 
The purposes of this division are to—
(1) contribute to a national energy strategy 
through an energy research and development pro-
gram that supports basic energy research and pro-
vides mechanisms to develop, demonstrate, and pro-
mote the commercial application of new energy tech-
nologies in partnership with industry; 
(2) protect and strengthen the Nation’s econ-
omy, standard of living, and national security by re-
ducing dependence on imported energy; 
(3) meet future needs for energy services at the 
lowest total cost to the Nation, giving balanced and 
comprehensive consideration to technologies that im-
317
prove the efficiency of energy end uses and that en-
hance energy supply; 
(4) reduce the environmental impacts of energy 
production, distribution, transportation, and use; 
(5) help increase domestic production of energy, 
increase the availability of hydrocarbon reserves, and 
lower energy prices; and 
(6) stimulate economic growth and enhance the 
ability of United States companies to compete in fu-
ture markets for advanced energy technologies. 
SEC. 20002. GOALS. 
(a) IN GENERAL.—In order to achieve the purposes 
of this division, the Secretary shall conduct a balanced set 
of programs of energy research, development, demonstra-
tion, and commercial application, guided by the following 
goals: 
(1) ENERGY EFFICIENCY.—
(A) BUILDINGS.—Develop, in partnership 
with industry, technologies, designs, and pro-
duction methods that will enable an average 25 
percent increase by 2010 in the energy effi-
ciency of all new buildings, as compared to a 
new building in 1996. 
(B) INDUSTRY.—Develop, in partnership 
with industry, technologies, designs, and pro-
318
duction methods that will enable the energy in-
tensity of the major energy-consuming indus-
tries to improve by at least 25 percent by 2010 
as compared to 1991. 
(C) VEHICLES.—Develop, in partnership 
with industry, technologies that will enable—
(i) by 2010, mid-sized passenger auto-
mobiles with a fuel economy of 80 miles 
per gallon; 
(ii) by 2010, light trucks (classes 1 
and 2a) with a fuel economy of 60 miles 
per gallon; 
(iii) by 2010, medium trucks and 
buses (classes 2b through 6 and class 8 
transit buses) with a fuel economy, in ton-
miles per gallon for trucks and passenger 
miles per gallon for buses, that is 3 times 
that of year 2000 equivalent vehicles; 
(iv) by 2010, heavy trucks (classes 7 
and 8) with a fuel economy, in ton-miles 
per gallon, that is 2 times that of year 
2000 equivalent vehicles; and 
(v) by 2020, meeting the goal of the 
President’s Hydrogen Initiative.
319
(2) DISTRIBUTED ENERGY AND ELECTRIC EN-
ERGY SYSTEMS.—
(A) DISTRIBUTED GENERATION.—Develop, 
in partnership with industry, technologies based 
on natural gas that achieve electricity gener-
ating efficiencies greater than 40 percent by 
2015 for on-site, or distributed, generation 
technologies. 
(B) ELECTRIC
ENERGY
SYSTEMS
AND 
STORAGE.—Develop, in partnership with indus-
try—
(i) technologies for generators and 
transmission, distribution, and storage sys-
tems that combine high capacity with high 
efficiency (particularly for electric trans-
mission facilities in rural and remote 
areas); 
(ii) new transmission and distribution 
technologies, including flexible alternating 
current transmission systems, composite 
conductor materials, advanced protection 
devices, and controllers; 
(iii) technologies for interconnection 
of distributed energy resources with elec-
tric power systems;
320
(iv) high-temperature superconducting 
materials for power delivery equipment 
such as transmission and distribution ca-
bles, transformers, and generators; and
(v) real-time transmission and dis-
tribution system control technologies that 
provide for continual exchange of informa-
tion between generation, transmission, dis-
tribution, and end-user facilities. 
(3) RENEWABLE ENERGY.—
(A) WIND POWER.—Develop, in partner-
ship with industry, technologies and designs 
that will—
(i) reduce the cost of wind power by 
40 percent by 2012 as compared to 2000; 
and 
(ii) expand utilization of class 3 and 4 
winds. 
(B) PHOTOVOLTAICS.—Develop, in part-
nership with industry, total photovoltaic sys-
tems with installed costs of $5,000 per peak kil-
owatt by 2005 and $2000 per peak kilowatt by 
2015. 
(C) SOLAR THERMAL SYSTEMS.—Develop, 
in partnership with industry, solar power tech-
321
nologies (including baseload solar power) that 
combine high-efficiency and high-temperature 
receivers with advanced thermal storage and 
power cycles to accommodate peak loads and 
reduce lifecycle costs. 
(D) GEOTHERMAL ENERGY.—Develop, in 
partnership with industry, technologies and 
processes based on advanced hydrothermal sys-
tems and advanced heat and power systems, in-
cluding geothermal or ground source heat pump 
technology, with a specific focus on—
(i) improving exploration and charac-
terization technology to increase the prob-
ability of drilling successful wells from 20 
percent to 40 percent by 2010; 
(ii) reducing the cost of drilling by 
2008 to an average cost of $225 per foot; 
(iii) developing enhanced geothermal 
systems technology with the potential to 
double the usable geothermal resource 
base, as compared to the date of enact-
ment of this Act; and 
(iv) reducing the cost of installing the 
ground loop of ground-source heat pumps
322
by 30 percent by 2007 compared to the 
cost in 2000. 
(E) BIOMASS-BASED
POWER
SYSTEMS.—
Develop, in partnership with industry, inte-
grated power generating systems, advanced con-
version, and feedstock technologies capable of 
producing electric power that is cost-competitive 
with fossil-fuel generated electricity by 2010, 
through co-production of fuels, chemicals, and 
other products under subparagraph (F). 
(F) BIOFUELS.—Develop, in partnership 
with industry, new and emerging technologies 
and biotechnology processes capable of mak-
ing—
(i) gaseous and liquid biofuels that 
are price-competitive, by 2010, with gaso-
line or diesel in either internal combustion 
engines or fuel cells; and 
(ii) biofuels, biobased polymers, and 
chemicals, including those derived from 
lignocellulosic feedstock, with particular 
emphasis on developing biorefineries that 
use enzyme-based processing systems. 
(G) HYDROPOWER.—Develop, in partner-
ship with industry, a new generation of turbine
323
technologies that will increase generating capac-
ity and be less damaging to fish and aquatic 
ecosystems. 
(4) FOSSIL ENERGY.— 
(A) POWER
GENERATION.—Develop, in 
partnership with industry, technologies, includ-
ing precombustion technologies, by 2015 with 
the capability of realizing—
(i) electricity generating efficiencies of 
75 percent (lower heating value) for nat-
ural gas; and 
(ii) widespread commercial application 
of combined heat and power with thermal 
efficiencies of more than 85 percent (high-
er heating value). 
(B) 
OFFSHORE
OIL
AND
GAS
RE-
SOURCES.—Develop, in partnership with indus-
try, technologies to—
(i) extract methane hydrates in coast-
al waters of the United States; and 
(ii) develop natural gas and oil re-
serves in the ultra-deepwater of the Cen-
tral and Western Gulf of Mexico, with a 
focus on improving, while lowering costs
324
and reducing environmental impacts, the 
safety and efficiency of—
(I) the recovery of ultra-deep-
water resources; and 
(II) sub-sea production tech-
nology used for such recovery. 
(C) ONSHORE OIL AND GAS RESOURCES.—
Advance the science and technology available to 
domestic onshore petroleum producers, particu-
larly independent producers of oil or gas, 
through—
(i) advances in technology for explo-
ration and production of domestic petro-
leum resources, particularly those not ac-
cessible with current technology; 
(ii) improvement in the ability to ex-
tract hydrocarbons (including heavy oil) 
from known reservoirs and classes of res-
ervoirs; and 
(iii) development of technologies and 
practices that reduce the impact on the en-
vironment from petroleum exploration and 
production.
325
(D) TRANSPORTATION
FUELS.—Increase 
the availability of transportation fuels by focus-
ing research on—
(i) reducing the cost of producing 
transportation fuels from coal and natural 
gas; and 
(ii) indirect liquefaction of coal and 
biomass. 
(5) NUCLEAR ENERGY.—
(A) EXISTING
REACTORS.—Support re-
search to extend the lifetimes of existing United 
States nuclear power reactors, and increase 
their reliability while optimizing their current 
operations for greater efficiencies. 
(B) ADVANCED
REACTORS.—Develop, in 
partnership with industry—
(i) advanced, efficient, lower cost, and 
passively safe reactor designs; 
(ii) proliferation-resistant and high-
burn-up nuclear fuels; and 
(iii) technologies to minimize genera-
tion of radioactive materials and improve 
the management of nuclear waste. 
(C) NUCLEAR
SCIENTISTS
AND
ENGI-
NEERS.—Attract new students and faculty to
326
the nuclear sciences, nuclear engineering, and 
related fields (including health physics, nuclear 
medicine, 
nuclear 
chemistry, 
and 
radiochemistry). 
(6) HYDROGEN.—Carry out programs related 
to hydrogen in the Fossil Fuel Program and the Nu-
clear Energy Program. 
(b) REVIEW AND ASSESSMENT OF GOALS.—
(1) EVALUATION
AND
MODIFICATION.—Based 
on amounts appropriated and developments in 
science and technology, the Secretary shall evaluate 
the goals set forth in subsection (a) at least once 
every 5 years, and shall report to the Congress any 
proposed modifications to the goals. 
(2) CONSULTATION.—In evaluating and pro-
posing modifications to the goals as provided in 
paragraph (1), the Secretary shall solicit public 
input. 
(3) PUBLIC COMMENT.—(A) After consultation 
under paragraph (2), the Secretary shall publish in 
the Federal Register a set of draft modifications to 
the goals for public comment. 
(B) Not later than 60 days after the date of 
publication of draft modifications under subpara-
graph (A), and after consideration of any public
327
comments received, the Secretary shall publish the 
final modifications, including a summary of the pub-
lic comments received, in the Federal Register. 
(4) EFFECTIVE
DATE.—No modification to 
goals under this section shall take effect before the 
date which is 5 years after the date of enactment of 
this Act. 
(c) EFFECT OF GOALS.—(1) Nothing in paragraphs 
(1) through (6) of subsection (a), or any subsequent modi-
fication to the goals therein pursuant to subsection (b), 
shall—
(A) create any new—
(i) authority for any Federal agency; or 
(ii) requirement for any other person; 
(B) be used by a Federal agency to support the 
establishment of regulatory standards or regulatory 
requirements; or 
(C) alter the authority of the Secretary to make 
grants or other awards. 
(2) Nothing in this subsection shall be construed to 
limit the authority of the Secretary to impose conditions 
on grants or other awards based on the goals in subsection 
(a) or any subsequent modification thereto. 
SEC. 20003. DEFINITIONS. 
For purposes of this division:
328
(1) DEPARTMENT.—The term ‘‘Department’’ 
means the Department of Energy. 
(2) DEPARTMENTAL MISSION.—The term ‘‘de-
partmental mission’’ means any of the functions 
vested in the Secretary of Energy by the Depart-
ment of Energy Organization Act (42 U.S.C. 7101 
et seq.) or other law. 
(3) INDEPENDENT
PRODUCER
OF
OIL
OR 
GAS.—
(A) IN GENERAL.—The term ‘‘independent 
producer of oil or gas’’ means any person who 
produces oil or gas other than a person to 
whom subsection (c) of section 613A of the In-
ternal Revenue Code of 1986 does not apply by 
reason of paragraph (2) (relating to certain re-
tailers) or paragraph (4) (relating to certain re-
finers) of section 613A(d) of such Code. 
(B) RULES FOR APPLYING PARAGRAPHS (2) 
AND (4) OF SECTION 613A(d).—For purposes of 
subparagraph (A), paragraphs (2) and (4) of 
section 613A(d) of the Internal Revenue Code 
of 1986 shall be applied by substituting ‘‘cal-
endar year’’ for ‘‘taxable year’’ each place it ap-
pears in such paragraphs.
329
(4) INSTITUTION OF HIGHER EDUCATION.—The 
term ‘‘institution of higher education’’ has the 
meaning given that term in section 101(a) of the 
Higher Education Act of 1965 (20 U.S.C. 1001(a)). 
(5) JOINT
VENTURE.—The term ‘‘joint ven-
ture’’ has the meaning given that term under section 
2 of the National Cooperative Research and Produc-
tion Act of 1993 (15 U.S.C. 4301). 
(6) NATIONAL LABORATORY.—The term ‘‘Na-
tional Laboratory’’ means any of the following lab-
oratories owned by the Department: 
(A) Ames National Laboratory. 
(B) Argonne National Laboratory. 
(C) Brookhaven National Laboratory. 
(D) Fermi National Laboratory. 
(E) Idaho National Engineering and Envi-
ronmental Laboratory. 
(F) Lawrence Berkeley National Labora-
tory. 
(G) Lawrence Livermore National Labora-
tory. 
(H) Los Alamos National Laboratory. 
(I) National Energy Technology Labora-
tory.
330
(J) National Renewable Energy Labora-
tory. 
(K) Oak Ridge National Laboratory. 
(L) Pacific Northwest National Labora-
tory. 
(M) Princeton Plasma Physics Laboratory. 
(N) Sandia National Laboratories.
(O) Thomas Jefferson National Accel-
erator Facility. 
(7) NONMILITARY ENERGY LABORATORY.—The 
term ‘‘nonmilitary energy laboratory’’ means any of 
the following laboratories of the Department: 
(A) Ames National Laboratory. 
(B) Argonne National Laboratory. 
(C) Brookhaven National Laboratory. 
(D) Fermi National Laboratory. 
(E) Lawrence Berkeley National Labora-
tory. 
(F) Oak Ridge National Laboratory. 
(G) Pacific Northwest National Labora-
tory. 
(H) Princeton Plasma Physics Laboratory. 
(I) Stanford Linear Accelerator Center. 
(J) Thomas Jefferson National Accelerator 
Facility.
332
TITLE I—RESEARCH AND 
DEVELOPMENT 
Subtitle A—Energy Efficiency 
PART 1—AUTHORIZATION OF APPROPRIATIONS 
SEC. 21101. ENERGY EFFICIENCY. 
(a) IN GENERAL.—The following sums are author-
ized to be appropriated to the Secretary for energy effi-
ciency and conservation research, development, dem-
onstration, and commercial application activities, includ-
ing activities authorized under this subtitle: 
(1) For fiscal year 2004, $616,000,000. 
(2) For fiscal year 2005, $695,000,000. 
(3) For fiscal year 2006, $772,000,000. 
(4) For fiscal year 2007, $865,000,000. 
(b) ALLOCATIONS.—From amounts authorized under 
subsection (a), the following sums are authorized: 
(1) LIGHTING SYSTEMS.—For activities under 
section 21111, $50,000,000 for each of fiscal years 
2004 through 2007. 
(2) 
ELECTRIC
MOTOR
CONTROL
TECH-
NOLOGY.—For 
activities 
under 
section 
21122, 
$2,000,000 for each of fiscal years 2004 through 
2007.
333
(3) SECONDARY ELECTRIC VEHICLE BATTERY 
USE
PROGRAM.—For 
activities 
under 
section 
21132—
(A) for fiscal year 2004, $4,000,000; 
(B) for fiscal year 2005, $7,000,000; 
(C) for fiscal year 2006, $7,000,000; and 
(D) for fiscal year 2007, $7,000,000. 
(4) ENERGY
EFFICIENCY
SCIENCE
INITIA-
TIVE.—For activities under section 21141—
(A) for fiscal year 2004, $20,000,000; 
(B) for fiscal year 2005, $25,000,000; 
(C) for fiscal year 2006, $30,000,000; and 
(D) for fiscal year 2007, $35,000,000. 
(c) EXTENDED AUTHORIZATION.—There are author-
ized to be appropriated to the Secretary for activities 
under section 21111, $50,000,000 for each of fiscal years 
2008 through 2012. 
(d) LIMITS ON USE OF FUNDS.—None of the funds 
authorized to be appropriated under this section may be 
used for—
(1) the promulgation and implementation of en-
ergy efficiency regulations; 
(2) the Weatherization Assistance Program 
under part A of title IV of the Energy Conservation 
and Production Act;
334
(3) the State Energy Program under part D of 
title III of the Energy Policy and Conservation Act; 
or 
(4) the Federal Energy Management Program 
under part 3 of title V of the National Energy Con-
servation Policy Act. 
PART 2—LIGHTING SYSTEMS
SEC. 21111. NEXT GENERATION LIGHTING INITIATIVE. 
(a) IN GENERAL.—The Secretary shall carry out a 
Next Generation Lighting Initiative in accordance with 
this section to support research, development, demonstra-
tion, and commercial application activities related to ad-
vanced solid-state lighting technologies based on white 
light emitting diodes. 
(b) OBJECTIVES.—The objectives of the initiative 
shall be—
(1) to develop, by 2012, advanced solid-state 
lighting technologies based on white light emitting 
diodes that, compared to incandescent and fluores-
cent lighting technologies, are—
(A) longer lasting; 
(B) more energy-efficient; and 
(C) cost-competitive;
335
(2) to develop an inorganic white light emitting 
diode that has an efficiency of 160 lumens per watt 
and a 10-year lifetime; and 
(3) to develop an organic white light emitting 
diode with an efficiency of 100 lumens per watt with 
a 5-year lifetime that—
(A) illuminates over a full color spectrum; 
(B) covers large areas over flexible sur-
faces; and 
(C) does not contain harmful pollutants, 
such as mercury, typical of fluorescent lamps. 
(c) FUNDAMENTAL RESEARCH.—
(1) CONSORTIUM.—The Secretary shall carry 
out the fundamental research activities of the Next 
Generation Lighting Initiative through a private 
consortium (which may include private firms, trade 
associations and institutions of higher education), 
which the Secretary shall select through a competi-
tive process. Each proposed consortium shall submit 
to the Secretary such information as the Secretary 
may require, including a program plan agreed to by 
all participants of the consortium. 
(2) JOINT VENTURE.—The consortium shall be 
structured as a joint venture among the participants
336
of the consortium. The Secretary shall serve on the 
governing council of the consortium. 
(3) ELIGIBILITY.—To be eligible to be selected 
as the consortium under paragraph (1), an applicant 
must be broadly representative of United States 
solid-state lighting research, development, and man-
ufacturing expertise as a whole. 
(4) GRANTS.—(A) The Secretary shall award 
grants for fundamental research to the consortium, 
which the consortium may disburse to researchers, 
including those who are not participants of the con-
sortium. 
(B) To receive a grant, the consortium must 
provide a description to the Secretary of the pro-
posed research and list the parties that will receive 
funding. 
(C) Grants shall be matched by the consortium 
pursuant to section 21802. 
(5) NATIONAL LABORATORIES.—National Lab-
oratories may participate in the research described 
in this section, and may receive funds from the con-
sortium. 
(6) INTELLECTUAL PROPERTY.—Participants in 
the consortium and the Federal Government shall 
have royalty-free nonexclusive rights to use intellec-
337
tual property derived from research funded pursuant 
to this subsection. 
(d) DEVELOPMENT, DEMONSTRATION, AND COM-
MERCIAL APPLICATION.—The Secretary shall carry out 
the development, demonstration, and commercial applica-
tion activities of the Next Generation Lighting Initiative 
through awards to private firms, trade associations, and 
institutions of higher education. In selecting awardees, the 
Secretary may give preference to members of the consor-
tium selected pursuant to subsection (c). 
(e) PLANS AND ASSESSMENTS.—(1) The consortium 
shall formulate an annual operating plan which shall in-
clude research priorities, technical milestones, and plans 
for technology transfer, and which shall be subject to ap-
proval by the Secretary. 
(2) The Secretary shall enter into an arrangement 
with the National Academy of Sciences to conduct periodic 
reviews of the Next Generation Lighting Initiative. The 
Academy shall review the research priorities, technical 
milestones, and plans for technology transfer established 
under paragraph (1) and evaluate the progress toward 
achieving them. The Secretary shall consider the results 
of such reviews in evaluating the plans submitted under 
paragraph (1).
338
(f) AUDIT.—The Secretary shall retain an inde-
pendent, commercial auditor to perform an audit of the 
consortium to determine the extent to which the funds au-
thorized by this section have been expended in a manner 
consistent with the purposes of this section. The auditor 
shall transmit a report annually to the Secretary, who 
shall transmit the report to the Congress, along with a 
plan to remedy any deficiencies cited in the report. 
(g) SUNSET.—The Next Generation Lighting Initia-
tive shall terminate no later than September 30, 2013. 
(h) DEFINITIONS.—As used in this section: 
(1) ADVANCED
SOLID-STATE
LIGHTING.—The 
term ‘‘advanced solid-state lighting’’ means a 
semiconducting device package and delivery system 
that produces white light using externally applied 
voltage. 
(2) 
FUNDAMENTAL
RESEARCH.—The 
term 
‘‘fundamental research’’ includes basic research on 
both solid-state materials and manufacturing proc-
esses. 
(3) 
INORGANIC
WHITE
LIGHT
EMITTING 
DIODE.—The term ‘‘inorganic white light emitting 
diode’’ means an inorganic semiconducting package 
that produces white light using externally applied 
voltage.
339
(4) ORGANIC WHITE LIGHT EMITTING DIODE.—
The term ‘‘organic white light emitting diode’’ 
means an organic semiconducting compound that 
produces white light using externally applied voltage. 
PART 3—BUILDINGS
SEC. 21121. NATIONAL BUILDING PERFORMANCE INITIA-
TIVE. 
(a) INTERAGENCY GROUP.—Not later than 3 months 
after the date of enactment of this Act, the Director of 
the Office of Science and Technology Policy shall establish 
an interagency group to develop, in coordination with the 
advisory committee established under subsection (e), a 
National Building Performance Initiative (in this section 
referred to as the ‘‘Initiative’’). The interagency group 
shall be cochaired by appropriate officials of the Depart-
ment and the Department of Commerce, who shall jointly 
arrange for the provision of necessary administrative sup-
port to the group. 
(b) INTEGRATION
OF
EFFORTS.—The Initiative, 
working with the National Institute of Building Sciences, 
shall integrate Federal, State, and voluntary private sector 
efforts to reduce the costs of construction, operation, 
maintenance, and renovation of commercial, industrial, in-
stitutional, and residential buildings.
340
(c) PLAN.—Not later than 1 year after the date of 
enactment of this Act, the interagency group shall submit 
to Congress a plan for carrying out the appropriate Fed-
eral role in the Initiative. The plan shall be based on whole 
building principles and shall include—
(1) research, development, demonstration, and 
commercial application of systems and materials for 
new construction and retrofit relating to the building 
envelope and building system components; and 
(2) the collection, analysis, and dissemination of 
research results and other pertinent information on 
enhancing building performance to industry, govern-
ment entities, and the public. 
(d) DEPARTMENT OF ENERGY ROLE.—Within the 
Federal portion of the Initiative, the Department shall be 
the lead agency for all aspects of building performance re-
lated to use and conservation of energy. 
(e) ADVISORY COMMITTEE.—
(1) ESTABLISHMENT.—The Director of the Of-
fice of Science and Technology Policy shall establish 
an advisory committee to—
(A) analyze and provide recommendations 
on potential private sector roles and participa-
tion in the Initiative; and
341
(B) review and provide recommendations 
on the plan described in subsection (c). 
(2) MEMBERSHIP.—Membership of the advisory 
committee shall include representatives with a broad 
range of appropriate expertise, including expertise 
in—
(A) building research and technology; 
(B) architecture, engineering, and building 
materials and systems; and 
(C) the residential, commercial, and indus-
trial sectors of the construction industry. 
(f) CONSTRUCTION.—Nothing in this section provides 
any Federal agency with new authority to regulate build-
ing performance. 
SEC. 21122. ELECTRIC MOTOR CONTROL TECHNOLOGY. 
The Secretary shall conduct a research, development, 
demonstration, and commercial application program on 
advanced control devices to improve the energy efficiency 
of electric motors used in heating, ventilation, air condi-
tioning, and comparable systems. 
PART 4—VEHICLES 
SEC. 21131. DEFINITIONS. 
For purposes of this part, the term—
(1) ‘‘battery’’ means an energy storage device 
that previously has been used to provide motive
342
power in a vehicle powered in whole or in part by 
electricity; and 
(2) ‘‘associated equipment’’ means equipment 
located where the batteries will be used that is nec-
essary to enable the use of the energy stored in the 
batteries. 
SEC. 21132. ESTABLISHMENT OF SECONDARY ELECTRIC VE-
HICLE BATTERY USE PROGRAM. 
(a) PROGRAM.—The Secretary shall establish and 
conduct a research, development, demonstration, and com-
mercial application program for the secondary use of bat-
teries. Such program shall be—
(1) designed to demonstrate the use of batteries 
in secondary application, including utility and com-
mercial power storage and power quality; 
(2) structured to evaluate the performance, in-
cluding useful service life and costs, of such bat-
teries in field operations, and evaluate the necessary 
supporting infrastructure, including reuse and dis-
posal of batteries; and 
(3) coordinated with ongoing secondary battery 
use programs at the National Laboratories and in 
industry. 
(b) SOLICITATION.—(1) Not later than 6 months 
after the date of the enactment of this Act, the Secretary
343
shall solicit proposals to demonstrate the secondary use 
of batteries and associated equipment and supporting in-
frastructure in geographic locations throughout the 
United States. The Secretary may make additional solici-
tations for proposals if the Secretary determines that such 
solicitations are necessary to carry out this section. 
(2)(A) Proposals submitted in response to a solicita-
tion under this section shall include—
(i) a description of the project, including the 
batteries to be used in the project, the proposed lo-
cations and applications for the batteries, the num-
ber of batteries to be demonstrated, and the type, 
characteristics, and estimated life-cycle costs of the 
batteries compared to other energy storage devices 
currently used; 
(ii) the contribution, if any, of State or local 
governments and other persons to the demonstration 
project; 
(iii) the type of associated equipment and sup-
porting infrastructure to be demonstrated; and 
(iv) any other information the Secretary con-
siders appropriate. 
(B) If the proposal includes a lease arrangement, the 
proposal shall indicate the terms of such lease arrange-
ment for the batteries and associated equipment.
346
(B) the proposer provide to the Secretary such 
information regarding the operation, maintenance, 
performance, and use of the batteries as the Sec-
retary may request; 
(C) the proposer provide to the Secretary such 
information regarding the disposal of the batteries 
as the Secretary may require to ensure that the pro-
poser disposes of the batteries in accordance with 
applicable law; and 
(D) the proposer provide at least 50 percent of 
the costs associated with the proposal. 
PART 5—ENERGY EFFICIENCY SCIENCE 
INITIATIVE 
SEC. 21141. ENERGY EFFICIENCY SCIENCE INITIATIVE. 
(a) ESTABLISHMENT.—The Secretary shall establish 
an Energy Efficiency Science Initiative to be managed by 
the Assistant Secretary in the Department with responsi-
bility for energy conservation under section 203(a)(9) of 
the Department of Energy Organization Act (42 U.S.C. 
7133(a)(9)), in consultation with the Director of the Of-
fice of Science, for grants to be competitively awarded and 
subject to peer review for research relating to energy effi-
ciency. 
(b) REPORT.—The Secretary shall submit to the Con-
gress, along with the President’s annual budget request
347
under section 1105(a) of title 31, United States Code, a 
report on the activities of the Energy Efficiency Science 
Initiative, including a description of the process used to 
award the funds and an explanation of how the research 
relates to energy efficiency. 
PART 6—ADVANCED ENERGY TECHNOLOGY 
TRANSFER CENTERS 
SEC. 21151. ADVANCED ENERGY TECHNOLOGY TRANSFER 
CENTERS. 
(a) GRANTS.—Not later than 18 months after the 
date of the enactment of this Act, the Secretary shall 
make grants to nonprofit institutions, State and local gov-
ernments, or universities (or consortia thereof), to estab-
lish a geographically dispersed network of Advanced En-
ergy Technology Transfer Centers, to be located in areas 
the Secretary determines have the greatest need of the 
services of such Centers. 
(b) ACTIVITIES.—(1) Each Center shall operate a 
program to encourage demonstration and commercial ap-
plication of advanced energy methods and technologies 
through education and outreach to building and industrial 
professionals, and to other individuals and organizations 
with an interest in efficient energy use.
348
(2) Each Center shall establish an advisory panel to 
advise the Center on how best to accomplish the activities 
under paragraph (1). 
(c) APPLICATION.—A person seeking a grant under 
this section shall submit to the Secretary an application 
in such form and containing such information as the Sec-
retary may require. The Secretary may award a grant 
under this section to an entity already in existence if the 
entity is otherwise eligible under this section. 
(d) SELECTION
CRITERIA.—The Secretary shall 
award grants under this section on the basis of the fol-
lowing criteria, at a minimum: 
(1) The ability of the applicant to carry out the 
activities in subsection (b). 
(2) The extent to which the applicant will co-
ordinate the activities of the Center with other enti-
ties, such as State and local governments, utilities, 
and educational and research institutions. 
(e) MATCHING FUNDS.—The Secretary shall require 
a non-Federal matching requirement of at least 50 percent 
of the costs of establishing and operating each Center. 
(f) ADVISORY COMMITTEE.—The Secretary shall es-
tablish an advisory committee to advise the Secretary on 
the establishment of Centers under this section. The advi-
sory committee shall be composed of individuals with ex-
349
pertise in the area of advanced energy methods and tech-
nologies, including at least 1 representative from—
(1) State or local energy offices; 
(2) energy professionals; 
(3) trade or professional associations; 
(4) architects, engineers, or construction profes-
sionals; 
(5) manufacturers; 
(6) the research community; and 
(7) nonprofit energy or environmental organiza-
tions. 
(g) DEFINITIONS.—For purposes of this section—
(1) the term ‘‘advanced energy methods and 
technologies’’ means all methods and technologies 
that promote energy efficiency and conservation, in-
cluding distributed generation technologies, and life-
cycle analysis of energy use; 
(2) the term ‘‘Center’’ means an Advanced En-
ergy Technology Transfer Center established pursu-
ant to this section; and 
(3) the term ‘‘distributed generation’’ means an 
electric power generation facility that is designed to 
serve retail electric consumers at or near the facility 
site.
350
Subtitle B—Distributed Energy and 
Electric Energy Systems 
PART 1—AUTHORIZATION OF APPROPRIATIONS 
SEC. 21201. DISTRIBUTED ENERGY AND ELECTRIC ENERGY 
SYSTEMS. 
(a) IN GENERAL.—The following sums are author-
ized to be appropriated to the Secretary for distributed 
energy and electric energy systems activities, including ac-
tivities authorized under this subtitle: 
(1) For fiscal year 2004, $190,000,000. 
(2) For fiscal year 2005, $200,000,000. 
(3) For fiscal year 2006, $220,000,000. 
(4) For fiscal year 2007, $240,000,000. 
(b) 
MICRO-COGENERATION
ENERGY
TECH-
NOLOGY.—From amounts authorized under subsection 
(a), the following sums shall be available for activities 
under section 21213: 
(1) For fiscal year 2004, $5,000,000. 
(2) For fiscal year 2005, $5,500,000. 
(3) For fiscal year 2006, $6,000,000. 
(4) For fiscal year 2007, $6,500,000. 
PART 2—DISTRIBUTED POWER
SEC. 21211. STRATEGY. 
(a) REQUIREMENT.—Not later than 1 year after the 
date of enactment of this Act, the Secretary shall develop
351
and transmit to the Congress a strategy for a comprehen-
sive research, development, demonstration, and commer-
cial application program to develop hybrid distributed 
power systems that combine—
(1) one or more renewable electric power gen-
eration technologies of 10 megawatts or less located 
near the site of electric energy use; and 
(2) nonintermittent electric power generation 
technologies suitable for use in a distributed power 
system. 
(b) CONTENTS.—The strategy shall—
(1) identify the needs best met with such hybrid 
distributed power systems and the technological bar-
riers to the use of such systems; 
(2) provide for the development of methods to 
design, test, integrate into systems, and operate 
such hybrid distributed power systems; 
(3) include, as appropriate, research, develop-
ment, demonstration, and commercial application on 
related technologies needed for the adoption of such 
hybrid distributed power systems, including energy 
storage devices and environmental control tech-
nologies; 
(4) include research, development, demonstra-
tion, and commercial application of interconnection
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technologies for communications and controls of dis-
tributed generation architectures, particularly tech-
nologies promoting real-time response to power mar-
ket information and physical conditions on the elec-
trical grid; and 
(5) describe how activities under the strategy 
will be integrated with other research, development, 
demonstration, and commercial application activities 
supported by the Department of Energy related to 
electric power technologies. 
SEC. 21212. HIGH POWER DENSITY INDUSTRY PROGRAM. 
The Secretary shall establish a comprehensive re-
search, development, demonstration, and commercial ap-
plication program to improve energy efficiency of high 
power density facilities, including data centers, server 
farms, and telecommunications facilities. Such program 
shall consider technologies that provide significant im-
provement in thermal controls, metering, load manage-
ment, peak load reduction, or the efficient cooling of elec-
tronics. 
SEC. 21213. MICRO-COGENERATION ENERGY TECHNOLOGY. 
The Secretary shall make competitive, merit-based 
grants to consortia for the development of micro-cogenera-
tion energy technology. The consortia shall explore the use
353
of small-scale combined heat and power in residential 
heating appliances. 
PART 3—TRANSMISSION SYSTEMS
SEC. 21221. TRANSMISSION INFRASTRUCTURE SYSTEMS RE-
SEARCH, DEVELOPMENT, DEMONSTRATION, 
AND COMMERCIAL APPLICATION. 
(a) PROGRAM AUTHORIZED.—The Secretary shall de-
velop and implement a comprehensive research, develop-
ment, demonstration, and commercial application program 
to promote improved reliability and efficiency of electrical 
transmission systems. Such program may include—
(1) advanced energy technologies, materials, 
and systems; 
(2) advanced grid reliability and efficiency tech-
nology development; 
(3) technologies contributing to significant load 
reductions; 
(4) advanced metering, load management, and 
control technologies; 
(5) technologies to enhance existing grid compo-
nents; 
(6) the development and use of high-tempera-
ture superconductors to—
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(A) enhance the reliability, operational 
flexibility, or power-carrying capability of elec-
tric transmission or distribution systems; or 
(B) increase the efficiency of electric en-
ergy generation, transmission, distribution, or 
storage systems; 
(7) integration of power systems, including sys-
tems to deliver high-quality electric power, electric 
power reliability, and combined heat and power; 
(8) any other infrastructure technologies, as ap-
propriate; and 
(9) technology transfer and education. 
(b) PROGRAM PLAN.—Not later than 1 year after the 
date of the enactment of this Act, the Secretary, in con-
sultation with other appropriate Federal agencies, shall 
prepare and transmit to Congress a 5-year program plan 
to guide activities under this section. In preparing the pro-
gram plan, the Secretary shall consult with utilities, en-
ergy services providers, manufacturers, institutions of 
higher education, other appropriate State and local agen-
cies, environmental organizations, professional and tech-
nical societies, and any other persons the Secretary con-
siders appropriate. 
(c) REPORT.—Not later than 2 years after the trans-
mittal of the plan under subsection (b), the Secretary shall
355
transmit a report to Congress describing the progress 
made under this section and identifying any additional re-
sources needed to continue the development and commer-
cial application of transmission infrastructure tech-
nologies. 
Subtitle C—Renewable Energy 
PART 1—AUTHORIZATION OF APPROPRIATIONS 
SEC. 21301. RENEWABLE ENERGY. 
(a) IN GENERAL.—The following sums are author-
ized to be appropriated to the Secretary for renewable en-
ergy research, development, demonstration, and commer-
cial application activities, including activities authorized 
under this subtitle: 
(1) For fiscal year 2004, $380,000,000. 
(2) For fiscal year 2005, $420,000,000. 
(3) For fiscal year 2006, $460,000,000. 
(4) For fiscal year 2007, $499,000,000. 
(b) BIOENERGY.—From the amounts authorized 
under subsection (a), the following sums are authorized 
to be appropriated to carry out section 21311 and section 
21706: 
(1) For fiscal year 2004, $135,425,000. 
(2) For fiscal year 2005, $155,600,000. 
(3) For fiscal year 2006, $167,650,000. 
(4) For fiscal year 2007, $180,000,000.
356
(c) PUBLIC BUILDINGS.—From the amounts author-
ized under subsection (a), $30,000,000 for each of the fis-
cal years 2004 through 2007 are authorized to be appro-
priated to carry out section 21322. 
(d) LIMITS ON USE OF FUNDS.—
(1) EXCLUSION.—None of the funds authorized 
to be appropriated under this section may be used 
for Renewable Support and Implementation. 
(2) BIOENERGY.—Of the funds authorized 
under subsection (b), not less than $5,000,000 for 
each fiscal year shall be made available for grants to 
Historically Black Colleges and Universities, Tribal 
Colleges, and Hispanic-Serving Institutions. 
(3) RURAL AND REMOTE LOCATIONS.—In car-
rying out this section, the Secretary, in consultation 
with the Secretary of Agriculture, shall demonstrate 
the use of advanced wind power technology, biomass, 
geothermal energy systems, and other renewable en-
ergy technologies to assist in delivering electricity to 
rural and remote locations. 
(4) REGIONAL
FIELD
VERIFICATION.—Of the 
funds authorized under subsection (a), not less than 
$4,000,000 for each fiscal year shall be made avail-
able for the Regional Field Verification Program of 
the Department.
357
(5) 
HYDROPOWER
DEMONSTRATION 
PROJECTS.—Of the funds authorized under sub-
section (a), such sums as may be necessary shall be 
made available for demonstration projects of off-
stream pumped storage hydropower. 
PART 2—BIOENERGY 
SEC. 21311. BIOENERGY PROGRAMS. 
The Secretary shall conduct a program of research, 
development, demonstration, and commercial application 
for bioenergy, including—
(1) biopower energy systems; 
(2) biofuels; 
(3) integrated applications of both biopower and 
biofuels; 
(4) cross-cutting research and development in 
feedstocks; and 
(5) economic analysis. 
PART 3—MISCELLANEOUS PROJECTS 
SEC. 21321. MISCELLANEOUS PROJECTS. 
(a) PROGRAMS.—The Secretary shall conduct re-
search, development, demonstration, and commercial ap-
plication programs for—
(1) ocean energy, including wave energy; 
(2) the combined use of renewable energy tech-
nologies with one another and with other energy
358
technologies, including the combined use of wind 
power and coal gasification technologies; and 
(3) hydrogen carrier fuels. 
(b) STUDY.—(1) The Secretary shall enter into an 
arrangement with the National Academy of Sciences to 
conduct a study on—
(A) the feasibility of various methods of renew-
able generation of energy from the ocean, including 
energy from waves, tides, currents, and thermal gra-
dients; and 
(B) the research, development, demonstration, 
and commercial application activities required to 
make marine renewable energy generation competi-
tive with other forms of electricity generation. 
(2) Not later than 1 year after the date of the enact-
ment of this Act, the Secretary shall transmit the study 
to the Congress along with the Secretary’s recommenda-
tions for implementing the results of the study. 
SEC. 21322. RENEWABLE ENERGY IN PUBLIC BUILDINGS. 
(a) DEMONSTRATION AND TECHNOLOGY TRANSFER 
PROGRAM.—The Secretary shall establish a program for 
the demonstration of innovative technologies for solar and 
other renewable energy sources in buildings owned or op-
erated by a State or local government, and for the dissemi-
359
nation of information resulting from such demonstration 
to interested parties. 
(b) LIMIT ON FEDERAL FUNDING.—The Secretary 
shall provide under this section no more than 40 percent 
of the incremental costs of the solar or other renewable 
energy source project funded. 
(c) REQUIREMENT.—As part of the application for 
awards under this section, the Secretary shall require all 
applicants—
(1) to demonstrate a continuing commitment to 
the use of solar and other renewable energy sources 
in buildings they own or operate; and 
(2) to state how they expect any award to fur-
ther their transition to the significant use of renew-
able energy. 
Subtitle D—Nuclear Energy 
PART 1—AUTHORIZATION OF APPROPRIATIONS 
SEC. 21401. NUCLEAR ENERGY. 
(a) IN GENERAL.—The following sums are author-
ized to be appropriated to the Secretary for nuclear energy 
research, development, demonstration, and commercial ap-
plication activities, including activities authorized under 
this subtitle: 
(1) For fiscal year 2004, $388,000,000. 
(2) For fiscal year 2005, $416,000,000.
360
(3) For fiscal year 2006, $445,000,000. 
(4) For fiscal year 2007, $474,000,000. 
(b) ALLOCATIONS.—From amounts authorized under 
subsection (a), the following sums are authorized:
(1) NUCLEAR
INFRASTRUCTURE
SUPPORT.—
For activities under section 21411(e)—
(A) for fiscal year 2004, $125,000,000; 
(B) for fiscal year 2005, $130,000,000; 
(C) for fiscal year 2006, $135,000,000; 
and 
(D) for fiscal year 2007, $140,000,000. 
(2) ADVANCED FUEL RECYCLING PROGRAM.—
For activities under section 21421—
(A) for fiscal year 2004, $80,000,000; 
(B) for fiscal year 2005, $93,000,000; 
(C) for fiscal year 2006, $106,000,000; 
and 
(D) for fiscal year 2007, $120,000,000. 
(3) UNIVERSITY
PROGRAMS.—For activities 
under section 21431—
(A) for fiscal year 2004, $35,200,000, of 
which—
(i) $3,000,000 shall be for activities 
under subsection (b)(1) of that section;
361
(ii) $4,275,000 shall be for activities 
under subsection (b)(2) of that section; 
(iii) $8,000,000 shall be for activities 
under subsection (b)(3) of that section; 
(iv) $500,000 shall be for activities 
under subsection (b)(5) of that section; 
(v) $7,000,000 shall be for activities 
under subsection (c)(1) of that section; 
(vi) $700,000 shall be for activities 
under subsection (c)(2) of that section; 
(vii) $10,000,000 shall be for activi-
ties under subsection (c)(3) of that section; 
(viii) $1,000,000 shall be for activities 
under subsection (d)(1) of that section; 
and 
(ix) $725,000 shall be for activities 
under subsection (d)(2) of that section; 
(B) for fiscal year 2005, $44,350,000, of 
which—
(i) $3,100,000 shall be for activities 
under subsection (b)(1) of that section; 
(ii) $6,275,000 shall be for activities 
under subsection (b)(2) of that section; 
(iii) $12,000,000 shall be for activities 
under subsection (b)(3) of that section;
362
(iv) $550,000 shall be for activities 
under subsection (b)(5) of that section; 
(v) $7,500,000 shall be for activities 
under subsection (c)(1) of that section; 
(vi) $1,100,000 shall be for activities 
under subsection (c)(2) of that section; 
(vii) $12,000,000 shall be for activi-
ties under subsection (c)(3) of that section; 
(viii) $1,100,000 shall be for activities 
under subsection (d)(1) of that section; 
and 
(ix) $725,000 shall be for activities 
under subsection (d)(2) of that section; 
(C) for fiscal year 2006, $49,200,000, of 
which—
(i) $3,200,000 shall be for activities 
under subsection (b)(1) of that section; 
(ii) $7,150,000 shall be for activities 
under subsection (b)(2) of that section; 
(iii) $13,000,000 shall be for activities 
under subsection (b)(3) of that section; 
(iv) $600,000 shall be for activities 
under subsection (b)(5) of that section; 
(v) $8,000,000 shall be for activities 
under subsection (c)(1) of that section;
363
(vi) $1,200,000 shall be for activities 
under subsection (c)(2) of that section; 
(vii) $14,000,000 shall be for activi-
ties under subsection (c)(3) of that section; 
(viii) $1,200,000 shall be for activities 
under subsection (d)(1) of that section; 
and 
(ix) $850,000 shall be for activities 
under subsection (d)(2) of that section; 
and 
(D) for fiscal year 2007, $54,950,000, of 
which—
(i) $3,200,000 shall be for activities 
under subsection (b)(1) of that section; 
(ii) $8,150,000 shall be for activities 
under subsection (b)(2) of that section; 
(iii) $15,000,000 shall be for activities 
under subsection (b)(3) of that section; 
(iv) $650,000 shall be for activities 
under subsection (b)(5) of that section; 
(v) $8,500,000 shall be for activities 
under subsection (c)(1); of that section; 
(vi) $1,300,000 shall be for activities 
under subsection (c)(2) of that section;
364
(vii) $16,000,000 shall be for activi-
ties under subsection (c)(3) of that section; 
(viii) $1,300,000 shall be for activities 
under subsection (d)(1) of that section; 
and 
(ix) $850,000 shall be for activities 
under subsection (d)(2) of that section. 
(c) LIMIT ON USE OF FUNDS.—None of the funds 
authorized under this section may be used for decommis-
sioning the Fast Flux Test Facility. 
PART 2—NUCLEAR ENERGY RESEARCH 
PROGRAMS
SEC. 21411. NUCLEAR ENERGY RESEARCH PROGRAMS. 
(a) NUCLEAR ENERGY RESEARCH INITIATIVE.—The 
Secretary shall carry out a Nuclear Energy Research Ini-
tiative for research and development related to nuclear en-
ergy. 
(b) NUCLEAR ENERGY PLANT OPTIMIZATION PRO-
GRAM.—The Secretary shall carry out a Nuclear Energy 
Plant Optimization Program to support research and de-
velopment activities addressing reliability, availability, pro-
ductivity, and component aging in existing nuclear power 
plants. 
(c) NUCLEAR POWER 2010 PROGRAM.—The Sec-
retary shall carry out a Nuclear Power 2010 Program,
365
consistent with recommendations in the October 2001 re-
port entitled ‘‘A Roadmap to Deploy New Nuclear Power 
Plants in the United States by 2010’’ issued by the Nu-
clear Energy Research Advisory Committee of the Depart-
ment. The Program shall—
(1) rely on the expertise and capabilities of the 
National Laboratories in the areas of advanced nu-
clear fuels cycles and fuels testing; 
(2) pursue an approach that considers a variety 
of reactor designs; 
(3) include participation of international col-
laborators in research, development, and design ef-
forts as appropriate; and 
(4) encourage industry participation. 
(d) GENERATION IV NUCLEAR ENERGY SYSTEMS 
INITIATIVE.—The Secretary shall carry out a Generation 
IV Nuclear Energy Systems Initiative to develop an over-
all technology plan and to support research and develop-
ment necessary to make an informed technical decision 
about the most promising candidates for eventual commer-
cial application. The Initiative shall examine advanced 
proliferation-resistant and passively safe reactor designs, 
including designs that—
(1) are economically competitive with other elec-
tric power generation plants;
366
(2) have higher efficiency, lower cost, and im-
proved safety compared to reactors in operation on 
the date of enactment of this Act;
(3) use fuels that are proliferation resistant and 
have substantially reduced production of high-level 
waste per unit of output; and 
(4) utilize improved instrumentation. 
(e) NUCLEAR
INFRASTRUCTURE
SUPPORT.—The 
Secretary shall develop and implement a strategy for the 
facilities of the Office of Nuclear Energy, Science, and 
Technology and shall transmit a report containing the 
strategy along with the President’s budget request to the 
Congress for fiscal year 2005. Such strategy shall provide 
a cost-effective means for—
(1) maintaining existing facilities and infra-
structure, as needed; 
(2) closing unneeded facilities; 
(3) making facility upgrades and modifications; 
and 
(4) building new facilities. 
PART 3—ADVANCED FUEL RECYCLING 
SEC. 21421. ADVANCED FUEL RECYCLING PROGRAM. 
(a) IN GENERAL.—The Secretary, through the Direc-
tor of the Office of Nuclear Energy, Science and Tech-
nology, shall conduct an advanced fuel recycling tech-
367
nology research and development program to evaluate pro-
liferation-resistant fuel recycling and transmutation tech-
nologies which minimize environmental or public health 
and safety impacts as an alternative to aqueous reprocess-
ing technologies deployed as of the date of enactment of 
this Act in support of evaluation of alternative national 
strategies for spent nuclear fuel and the Generation IV 
advanced reactor concepts, subject to annual review by the 
Secretary’s Nuclear Energy Research Advisory Committee 
or other independent entity, as appropriate. Opportunities 
to enhance progress of this program through international 
cooperation should be sought. 
(b) REPORTS.—The Secretary shall report on the ac-
tivities of the advanced fuel recycling technology research 
and development program, as part of the Department’s 
annual budget submission. 
PART 4—UNIVERSITY PROGRAMS 
SEC. 21431. UNIVERSITY NUCLEAR SCIENCE AND ENGI-
NEERING SUPPORT. 
(a) ESTABLISHMENT.—The Secretary shall support 
a program to invest in human resources and infrastructure 
in the nuclear sciences and engineering and related fields 
(including health physics and nuclear and radiochemistry), 
consistent with departmental missions related to civilian 
nuclear research and development.
368
(b) DUTIES.—In carrying out the program under this 
section, the Secretary shall—
(1) establish a graduate and undergraduate fel-
lowship program to attract new and talented stu-
dents; 
(2) establish a Junior Faculty Research Initi-
ation Grant Program to assist institutions of higher 
education in recruiting and retaining new faculty in 
the nuclear sciences and engineering; 
(3) support fundamental nuclear sciences and 
engineering research through the Nuclear Engineer-
ing Education Research Program; 
(4) encourage collaborative nuclear research 
among industry, National Laboratories, and institu-
tions of higher education through the Nuclear En-
ergy Research Initiative; and 
(5) support communication and outreach re-
lated to nuclear science and engineering. 
(c) STRENGTHENING UNIVERSITY RESEARCH AND 
TRAINING REACTORS
AND ASSOCIATED INFRASTRUC-
TURE.—Activities under this section may include—
(1) converting research reactors currently using 
high-enrichment fuels to low-enrichment fuels, up-
grading operational instrumentation, and sharing of 
reactors among institutions of higher education;