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(2) MEMBERSHIP.—The advisory committee 
under this subsection shall be composed of members 
appointed by the Secretary including— 
(A) individuals with extensive research ex-
perience or operational knowledge of offshore 
natural gas and other petroleum exploration 
and production; 
(B) individuals broadly representative of 
the affected interests in ultra-deepwater natural 
gas and other petroleum production, including 
interests in environmental protection and safe 
operations; 
(C) no individuals who are Federal employ-
ees; and 
(D) no individuals who are board members, 
officers, or employees of the program consor-
tium. 
(3) DUTIES.—The advisory committee under 
this subsection shall— 
(A) advise the Secretary on the develop-
ment and implementation of programs under 
this chapter related to ultra-deepwater natural 
gas and other petroleum resources; and 
(B) carry out section 970(e)(2)(B).
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(4) COMPENSATION.—A member of the advi-
sory committee under this subsection shall serve 
without compensation but shall receive travel ex-
penses in accordance with applicable provisions 
under subchapter I of chapter 57 of title 5, United 
States Code. 
(b) UNCONVENTIONAL
RESOURCES
TECHNOLOGY 
ADVISORY COMMITTEE.— 
(1) ESTABLISHMENT.—Not later than 270 days 
after the date of enactment of this Act, the Sec-
retary shall establish an advisory committee to be 
known as the Unconventional Resources Technology 
Advisory Committee. 
(2) MEMBERSHIP.—The advisory committee 
under this subsection shall be composed of members 
appointed by the Secretary including— 
(A) a majority of members who are em-
ployees or representatives of independent pro-
ducers of natural gas and other petroleum, in-
cluding small producers; 
(B) individuals with extensive research ex-
perience or operational knowledge of unconven-
tional natural gas and other petroleum resource 
exploration and production;
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(C) individuals broadly representative of 
the affected interests in unconventional natural 
gas and other petroleum resource exploration 
and production, including interests in environ-
mental protection and safe operations; 
(D) no individuals who are Federal em-
ployees; and 
(E) no individuals who are board members, 
officers, or employees of the program consor-
tium. 
(3) DUTIES.—The advisory committee under 
this subsection shall— 
(A) advise the Secretary on the develop-
ment and implementation of activities under 
this chapter related to unconventional natural 
gas and other petroleum resources; and 
(B) carry out section 970(e)(2)(B). 
(4) COMPENSATION.—A member of the advi-
sory committee under this subsection shall serve 
without compensation but shall receive travel ex-
penses in accordance with applicable provisions 
under subchapter I of chapter 57 of title 5, United 
States Code. 
(c) PROHIBITION.—No advisory committee estab-
lished under this section shall make recommendations on
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funding awards to particular consortia or other entities, 
or for specific projects. 
SEC. 973. LIMITS ON PARTICIPATION. 
An entity shall be eligible to receive an award under 
this chapter only if the Secretary finds— 
(1) that the entity’s participation in the pro-
gram under this chapter would be in the economic 
interest of the United States; and 
(2) that either— 
(A) the entity is a United States-owned en-
tity organized under the laws of the United 
States; or 
(B) the entity is organized under the laws 
of the United States and has a parent entity or-
ganized under the laws of a country that af-
fords— 
(i) to United States-owned entities op-
portunities, comparable to those afforded 
to any other entity, to participate in any 
cooperative research venture similar to 
those authorized under this part; 
(ii) to United States-owned entities 
local investment opportunities comparable 
to those afforded to any other entity; and
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(iii) adequate and effective protection 
for the intellectual property rights of 
United States-owned entities. 
SEC. 974. SUNSET. 
The authority provided by this chapter shall termi-
nate on September 30, 2014. 
SEC. 975. DEFINITIONS. 
In this part: 
(1) 
DEEPWATER.—The 
term 
‘‘deepwater’’ 
means a water depth that is greater than 200 but 
less than 1,500 meters. 
(2) INDEPENDENT
PRODUCER
OF
OIL
OR 
GAS.— 
(A) IN GENERAL.—The term ‘‘independent 
producer of oil or gas’’ means any person that 
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
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of 1986 shall be applied by substituting ‘‘cal-
endar year’’ for ‘‘taxable year’’ each place it ap-
pears in such paragraphs. 
(3) PROGRAM CONSORTIUM.—The term ‘‘pro-
gram consortium’’ means the consortium selected 
under section 970(d). 
(4) REMOTE OR INCONSEQUENTIAL.—The term 
‘‘remote or inconsequential’’ has the meaning given 
that term in regulations issued by the Office of Gov-
ernment Ethics under section 208(b)(2) of title 18, 
United States Code. 
(5) SMALL PRODUCER.—The term ‘‘small pro-
ducer’’ means an entity organized under the laws of 
the United States with production levels of less than 
1,000 barrels per day of oil equivalent. 
(6) ULTRA-DEEPWATER.—The term ‘‘ultra- 
deepwater’’ means a water depth that is equal to or 
greater than 1,500 meters. 
(7) ULTRA-DEEPWATER
ARCHITECTURE.—The 
term ‘‘ultra-deepwater architecture’’ means the inte-
gration of technologies for the exploration for, or 
production of, natural gas or other petroleum re-
sources located at ultra-deepwater depths. 
(8) ULTRA-DEEPWATER
TECHNOLOGY.—The 
term ‘‘ultra-deepwater technology’’ means a discrete
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technology that is specially suited to address 1 or 
more challenges associated with the exploration for, 
or production of, natural gas or other petroleum re-
sources located at ultra-deepwater depths. 
(9) UNCONVENTIONAL
NATURAL
GAS
AND 
OTHER PETROLEUM RESOURCE.—The term ‘‘uncon-
ventional natural gas and other petroleum resource’’ 
means natural gas and other petroleum resource lo-
cated onshore in an economically inaccessible geo-
logical formation, including resources of small pro-
ducers. 
SEC. 976. FUNDING. 
(a) IN GENERAL.— 
(1) OIL AND GAS LEASE INCOME.—For each of 
fiscal years 2005 through 2014, from any excess 
Federal royalties derived from Federal onshore and 
offshore oil and gas leases issued under the Outer 
Continental Shelf Lands Act and the Mineral Leas-
ing Act which are deposited in the Treasury, and 
after prior distributions as described in subsection 
(c) have been made, all excess Federal royalties up 
to $200,000,000 shall be deposited into the Ultra- 
Deepwater and Unconventional Natural Gas and 
Other Petroleum Research Fund (in this section re-
ferred to as the Fund).
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(2) DEFINITIONS.—For purposes of paragraph 
(1)— 
(A) excess Federal royalty receipts are the 
amount calculated on the basis of the difference 
between the prevailing market prices upon 
which the royalty payment was made and 110 
percent of the projected market prices for that 
fiscal year, as contained in the economic as-
sumptions underlying the Concurrent Resolu-
tion on the Budget, under section 301 of the 
Congressional Budget and Impoundment Con-
trol Act or 1974; and 
(B) the term ‘‘royalties’’ excludes proceeds 
from the sale of royalty production taken in 
kind and royalty production that is transferred 
under section 27(a)(3) of the Outer Continental 
Shelf Lands Act (43 U.S.C. 1353(a)(3)). 
(b) OBLIGATIONAL
AUTHORITY.—Monies in the 
Fund shall be available to the Secretary for obligation 
under this chapter without fiscal year limitation, to remain 
available until expended. 
(c) PRIOR DISTRIBUTIONS.—The distributions de-
scribed in subsection (a) are those required by law—
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(1) to States and to the Reclamation Fund 
under the Mineral Leasing Act (30 U.S.C. 191(a)); 
and 
(2) to other funds receiving monies from Fed-
eral oil and gas leasing programs, including— 
(A) any recipients pursuant to section 8(g) 
of the Outer Continental Shelf Lands Act (43 
U.S.C. 1337(g)); 
(B) the Land and Water Conservation 
Fund, pursuant to section 2(c) of the Land and 
Water Conservation Fund Act of 1965 (16 
U.S.C. 4601–5(c)); 
(C) the Historic Preservation Fund, pursu-
ant to section 108 of the National Historic 
Preservation Act (16 U.S.C. 470h); and 
(D) the Secure Energy Reinvestment 
Fund. 
(d) ALLOCATION.—Amounts obligated from the Fund 
under subsection (a)(1) in each fiscal year shall be allo-
cated as follows: 
(1) 35 percent shall be for activities under sec-
tion 969(b)(1). 
(2) 32.5 percent shall be for activities under 
section 969(b)(2).
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(3) 7.5 percent shall be for activities under sec-
tion 969(b)(3). 
(4) 25 percent shall be for complementary re-
search under section 969(b)(4) and other activities 
under section 969(b) to include program direction 
funds, overall program oversight, contract manage-
ment, and the establishment and operation of a tech-
nical committee to ensure that in-house research ac-
tivities funded under subsection 969(b)(4) are tech-
nically complementary to, and not duplicative of, re-
search conducted under section 969(b)(1), (2), and 
(3). 
(e) FUND.—There is hereby established in the Treas-
ury of the United States a separate fund to be known as 
the ‘‘Ultra-Deepwater and Unconventional Natural Gas 
and Other Petroleum Research Fund’’. 
TITLE X—DEPARTMENT OF 
ENERGY MANAGEMENT 
SEC. 1002. OTHER TRANSACTIONS AUTHORITY. 
Section 646 of the Department of Energy Organiza-
tion Act (42 U.S.C. 7256) is amended by adding at the 
end the following: 
‘‘(g)(1) In addition to other authorities granted to the 
Secretary under law, the Secretary may exercise the same 
authority (subject to the same restrictions and conditions)
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with respect to such research and projects as the Secretary 
of Defense may exercise under section 2371 of title 10, 
United States Code, except for subsections (b) and (f) of 
such section 2371. Such other transactions shall not be 
subject to the provisions of section 9 of the Federal Non-
nuclear Energy Research and Development Act of 1974 
(42 U.S.C. 5908) or section 152 of the Atomic Energy 
Act of 1954 (42 U.S.C. 2182). 
‘‘(2)(A) The Secretary may, under the authority of 
paragraph (1), carry out prototype projects in accordance 
with the requirements and conditions provided for car-
rying out prototype projects under section 845 of the Na-
tional Defense Authorization Act for Fiscal Year 1994 
(Public Law 103–160; 10 U.S.C. 2371 note), including 
that, to the maximum extent practicable, competitive pro-
cedures shall be used when entering into agreements to 
carry out projects under subsection (a) of that section and 
that the period of authority to carry out projects under 
such subsection (a) terminates as provided in subsection 
(g) of that section. 
‘‘(B) In applying the requirements and conditions of 
section 845 of the National Defense Authorization Act for 
Fiscal Year 1994 under this subsection—
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‘‘(i) subsection (c) of that section shall apply 
with respect to prototype projects carried out under 
this paragraph; and 
‘‘(ii) the Director of the Office of Management 
and Budget shall perform the functions of the Sec-
retary of Defense under subsection (d) of that sec-
tion. 
‘‘(C) The Secretary may exercise authority under this 
subsection for a project only if authorized by the Director 
of the Office of Management and Budget to use the au-
thority for such project. 
‘‘(D) The annual report of the head of an executive 
agency that is required under subsection (h) of section 
2371 of title 10, United States Code, as applied to the 
head of the executive agency by subsection (a), shall be 
submitted to Congress. 
‘‘(3) Not later than 90 days after the date of enact-
ment of this subsection, the Secretary, in consultation 
with the Director of the Office of Management and Budg-
et, shall prescribe guidelines for using other transactions 
authorized by paragraph (1). Such guidelines shall be pub-
lished in the Federal Register for public comment under 
rulemaking procedures of the Department. 
‘‘(4) The authority of the Secretary under this sub-
section may be delegated only to an officer of the Depart-
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ment who is appointed by the President by and with the 
advice and consent of the Senate and may not be delegated 
to any other person. 
‘‘(5)(A) Not later than September 31, 2006, the 
Comptroller General of the United States shall report to 
Congress on the Department’s use of the authorities 
granted under this section, including the ability to attract 
nontraditional government contractors and whether addi-
tional safeguards are needed with respect to the use of 
such authorities. 
‘‘(B) In this section, the term ‘nontraditional Govern-
ment contractor’ has the same meaning as the term ‘non-
traditional defense contractor’ as defined in section 845(e) 
of the National Defense Authorization Act for Fiscal Year 
1994 (Public Law 103–160; 10 U.S.C. 2371 note).’’. 
SEC. 1003. UNIVERSITY COLLABORATION. 
Not later than 2 years after the date of enactment 
of this Act, the Secretary of Energy shall transmit to the 
Congress a report that examines the feasibility of pro-
moting collaborations between major universities and 
other colleges and universities in grants, contracts, and 
cooperative agreements made by the Secretary for energy 
projects. For purposes of this section, major universities 
are schools listed by the Carnegie Foundation as Doctoral 
Research Extensive Universities. The Secretary shall also
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consider providing incentives to increase the inclusion of 
small institutions of higher education, including minority- 
serving institutions, in energy grants, contracts, and coop-
erative agreements. 
SEC. 1004. SENSE OF CONGRESS. 
It is the sense of the Congress that— 
(1) the Secretary of Energy should develop and 
implement more stringent procurement and inven-
tory controls, including controls on the purchase 
card program, to prevent waste, fraud, and abuse of 
taxpayer funds by employees and contractors of the 
Department of Energy; and 
(2) the Department’s Inspector General should 
continue to closely review purchase card purchases 
and other procurement and inventory practices at 
the Department. 
TITLE XII—ELECTRICITY 
SEC. 1201. SHORT TITLE. 
This title may be cited as the ‘‘Electric Reliability 
Act of 2005’’. 
Subtitle A—Reliability Standards 
SEC. 1211. ELECTRIC RELIABILITY STANDARDS. 
(a) IN GENERAL.—Part II of the Federal Power Act 
(16 U.S.C 824 et seq.) is amended by adding at the end 
the following:
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‘‘SEC. 215. 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, 
including cybersecurity protection, and the design of 
planned additions or modifications to such facilities 
to the extent necessary to provide for reliable oper-
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ation of the bulk-power system, but the term does 
not include any requirement to enlarge such facilities 
or to construct new transmission capacity or genera-
tion 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, including 
a cybersecurity incident, or unanticipated 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 1 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.
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‘‘(7) The term ‘regional entity’ means an entity 
having enforcement authority pursuant to subsection 
(e)(4). 
‘‘(8) The term ‘cybersecurity incident’ means a 
malicious act or suspicious event that disrupts, or 
was an attempt to disrupt, the operation of those 
programmable electronic devices and communication 
networks including hardware, software and data that 
are essential to the reliable operation of the bulk 
power system. 
‘‘(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.
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‘‘(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. The Commission 
may certify 1 such ERO if the Commission determines 
that such ERO— 
‘‘(1) has the ability to develop and enforce, sub-
ject to subsection (e)(2), reliability standards that 
provide for an adequate level of reliability of the 
bulk-power system; and 
‘‘(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-
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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 
‘‘(E) provide for taking, after certification, 
appropriate steps to gain recognition in Canada 
and Mexico. 
The total amount of all dues, fees, and other charges 
collected by the ERO in each of the fiscal years 
2006 through 2015 and allocated under subpara-
graph (B) shall not exceed $50,000,000. 
‘‘(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
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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 
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
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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— 
‘‘(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
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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 ERO 
files with the Commission notice of the penalty and the 
record of proceedings. Such penalty shall be subject to re-
view by the Commission, on its own motion or upon appli-
cation 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. Application to the 
Commission for review, or the initiation of review by the 
Commission on its own motion, shall not operate as a stay 
of such penalty unless the Commission otherwise 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 para-
graph (1), the Commission, after notice and opportunity 
for hearing (which hearing may consist solely of the record 
before the ERO and opportunity for the presentation of
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supporting reasons to affirm, modify, or set aside the pen-
alty), shall by order affirm, set aside, reinstate, or modify 
the penalty, and, if appropriate, remand to the ERO for 
further proceedings. The Commission shall implement ex-
pedited 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 
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 issue regulations author-
izing the ERO to enter into an agreement to delegate au-
thority 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.
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‘‘(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-
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 ELECTRIC RELIABILITY ORGANIZA-
TION RULES.—The Electric Reliability Organization shall
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file with the Commission for approval any proposed rule 
or proposed rule change, accompanied by an explanation 
of its basis and purpose. The Commission, upon its own 
motion or complaint, may propose a change to the rules 
of the ERO. A proposed rule or proposed rule change shall 
take effect upon a finding by the Commission, after notice 
and opportunity for comment, that the change is just, rea-
sonable, not unduly discriminatory or preferential, is in 
the public interest, and satisfies the requirements of sub-
section (c). 
‘‘(g) RELIABILITY REPORTS.—The ERO shall con-
duct 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 ERO in the United States and 
Canada or Mexico. 
‘‘(i) SAVINGS PROVISIONS.—(1) The ERO shall have 
authority to develop and enforce compliance with reli-
ability standards for only the bulk-power system. 
‘‘(2) This section does not authorize the ERO or the 
Commission to order the construction of additional gen-
eration or transmission capacity or to set and enforce com-
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pliance with standards for adequacy 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 
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 ERO. 
‘‘(5) The Commission, after consultation with the 
ERO and the State taking action, may stay the effective-
ness of any State action, pending 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 2⁄3 of the States within a region that have more 
than 1⁄2 of their electric load served within the region. A
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regional advisory body shall be composed of 1 member 
from each participating State in the region, appointed by 
the Governor of each State, and may include representa-
tives 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 existing or 
proposed regional entity within the same region, whether 
a standard proposed to apply within the region is just, 
reasonable, not unduly discriminatory or preferential, and 
in the public interest, whether fees proposed to be assessed 
within the region are just, reasonable, not unduly discrimi-
natory 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) ALASKA AND HAWAII.—The provisions of this 
section do not apply to Alaska or Hawaii.’’. 
(b) STATUS OF ERO.—The Electric Reliability Orga-
nization certified by the Federal Energy Regulatory Com-
mission under section 215(c) of the Federal Power Act 
and any regional entity delegated enforcement authority 
pursuant to section 215(e)(4) of that Act are not depart-
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ments, agencies, or instrumentalities of the United States 
Government. 
(c) LIMITATION
ON ANNUAL APPROPRIATIONS.— 
There is authorized to be appropriated not more than 
$50,000,000 per year for fiscal years 2006 through 2015 
for all activities under the amendment made by subsection 
(a). 
Subtitle B—Transmission 
Infrastructure Modernization 
SEC. 1221. SITING OF INTERSTATE ELECTRIC TRANS-
MISSION FACILITIES. 
(a) AMENDMENT OF FEDERAL POWER ACT.—Part 
II of the Federal Power Act is amended by adding at the 
end the following: 
‘‘SEC. 216. SITING OF INTERSTATE ELECTRIC TRANS-
MISSION FACILITIES. 
‘‘(a) DESIGNATION OF NATIONAL INTEREST ELEC-
TRIC TRANSMISSION CORRIDORS.— 
‘‘(1) TRANSMISSION
CONGESTION
STUDY.— 
Within 1 year after the enactment of this section, 
and every 3 years thereafter, the Secretary of En-
ergy, in consultation with affected States, shall con-
duct a study of electric transmission congestion. 
After considering alternatives and recommendations 
from interested parties, including an opportunity for
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comment from affected States, the Secretary shall 
issue a report, based on such study, which may des-
ignate any geographic area experiencing electric en-
ergy transmission capacity constraints or congestion 
that adversely affects consumers as a national inter-
est electric transmission corridor. The Secretary 
shall conduct the study and issue the report in con-
sultation with any appropriate regional entity ref-
erenced in section 215 of this Act. 
‘‘(2) CONSIDERATIONS.—In determining wheth-
er to designate a national interest electric trans-
mission corridor referred to in paragraph (1) under 
this section, the Secretary may consider whether— 
‘‘(A) the economic vitality and development 
of the corridor, or the end markets served by 
the corridor, may be constrained by lack of ade-
quate or reasonably priced electricity; 
‘‘(B)(i) economic growth in the corridor, or 
the end markets served by the corridor, may be 
jeopardized by reliance on limited sources of en-
ergy; and 
‘‘(ii) a diversification of supply is war-
ranted;
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‘‘(C) the energy independence of the 
United States would be served by the designa-
tion; 
‘‘(D) the designation would be in the inter-
est of national energy policy; and 
‘‘(E) the designation would enhance na-
tional defense and homeland security. 
‘‘(b) CONSTRUCTION PERMIT.—Except as provided 
in subsection (i), the Commission is authorized, after no-
tice and an opportunity for hearing, to issue a permit or 
permits for the construction or modification of electric 
transmission facilities in a national interest electric trans-
mission corridor designated by the Secretary under sub-
section (a) if the Commission finds that— 
‘‘(1)(A) a State in which the transmission fa-
cilities are to be constructed or modified is without 
authority to— 
‘‘(i) approve the siting of the facilities; or 
‘‘(ii) consider the interstate benefits ex-
pected to be achieved by the proposed construc-
tion or modification of transmission facilities in 
the State; 
‘‘(B) the applicant for a permit is a transmit-
ting utility under this Act but does not qualify to 
apply for a permit or siting approval for the pro-
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posed project in a State because the applicant does 
not serve end-use customers in the State; or 
‘‘(C) a State commission or other entity that 
has authority to approve the siting of the facilities 
has— 
‘‘(i) withheld approval for more than 1 
year after the filing of an application pursuant 
to applicable law seeking approval or 1 year 
after the designation of the relevant national in-
terest electric transmission corridor, whichever 
is later; or 
‘‘(ii) conditioned its approval in such a 
manner that the proposed construction or modi-
fication will not significantly reduce trans-
mission congestion in interstate commerce or is 
not economically feasible; 
‘‘(2) the facilities to be authorized by the per-
mit will be used for the transmission of electric en-
ergy in interstate commerce; 
‘‘(3) the proposed construction or modification 
is consistent with the public interest; 
‘‘(4) the proposed construction or modification 
will significantly reduce transmission congestion in 
interstate commerce and protects or benefits con-
sumers; and
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‘‘(5) the proposed construction or modification 
is consistent with sound national energy policy and 
will enhance energy independence. 
‘‘(c) PERMIT APPLICATIONS.—Permit applications 
under subsection (b) shall be made in writing to the Com-
mission. The Commission shall issue rules setting forth 
the form of the application, the information to be con-
tained in the application, and the manner of service of no-
tice 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-
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-
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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 or modifying any 
transmission facility pursuant to State law. 
‘‘(g) 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 
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 the construction or modification
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of electric transmission facilities within a reasonable pe-
riod of time after the acquisition. Other than construction, 
modification, operation, or maintenance of electric trans-
mission facilities and related facilities, property acquired 
under subsection (e) may not be used for any purpose (in-
cluding use for any heritage area, recreational trail, or 
park) without the consent of the owner of the parcel from 
whom the property was acquired (or the owner’s heirs or 
assigns). 
‘‘(h) COORDINATION OF FEDERAL AUTHORIZATIONS 
FOR TRANSMISSION AND DISTRIBUTION FACILITIES.— 
‘‘(1) LEAD AGENCY.—If an applicant, or pro-
spective applicant, for a Federal authorization re-
lated to an electric transmission or distribution facil-
ity so requests, the Department of Energy (DOE) 
shall act as the lead agency for purposes of coordi-
nating all applicable Federal authorizations and re-
lated environmental reviews of the facility. For pur-
poses of this subsection, the term ‘Federal author-
ization’ means any authorization required under 
Federal law in order to site a transmission or dis-
tribution facility, including but not limited to such 
permits, special use authorizations, certifications, 
opinions, or other approvals as may be required, 
whether issued by a Federal or a State agency. To
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the maximum extent practicable under applicable 
Federal law, the Secretary of Energy shall coordi-
nate this Federal authorization and review process 
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 agencies responsible for Federal authorizations 
and, as appropriate, with Indian tribes, multi-State 
entities, and State agencies that are willing to co-
ordinate their own separate permitting and environ-
mental reviews with the Federal authorization and 
environmental reviews, shall establish prompt and 
binding intermediate milestones and ultimate dead-
lines for the review of, and Federal authorization de-
cisions relating to, the proposed facility. The Sec-
retary of Energy shall ensure that once an applica-
tion has been submitted with such data as the Sec-
retary considers necessary, all permit decisions and 
related environmental reviews under all applicable 
Federal laws shall be completed within 1 year or, if 
a requirement of another provision of Federal law
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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.—As lead agency head, 
the Secretary of Energy, in consultation with the af-
fected agencies, shall prepare a single environmental 
review document, which shall be used as the basis 
for all decisions on the proposed project under Fed-
eral law. The document may be an environmental as-
sessment or environmental impact statement under 
the National Environmental Policy Act of 1969 if 
warranted, or such other form of analysis as may be 
warranted. The Secretary of Energy and the heads 
of other agencies shall streamline the review and 
permitting of transmission and distribution facilities
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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 relating to the corridors. 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-
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, who shall, in consultation 
with the affected agency, review the denial or take 
action on the pending application. Based on the 
overall record and in consultation with the affected 
agency, the Secretary may then either issue the nec-
essary authorization with any appropriate condi-
tions, 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 paragraph, 
the Secretary shall comply with applicable require-
ments of Federal law, including any requirements of
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the Endangered Species Act, the Clean Water Act, 
the National Forest Management Act, the National 
Environmental Policy Act of 1969, and the Federal 
Land Policy and Management Act. 
‘‘(5) CONFORMING REGULATIONS AND MEMO-
RANDA
OF
UNDERSTANDING.—Not later than 18 
months after the date of enactment of this section, 
the Secretary of Energy shall issue any regulations 
necessary to implement this subsection. Not later 
than 1 year after the date of enactment of this sec-
tion, the Secretary and the heads of all Federal 
agencies with authority to issue Federal authoriza-
tions shall enter into Memoranda of Understanding 
to ensure the timely and coordinated review and per-
mitting of electricity transmission and distribution 
facilities. The head of each Federal agency with au-
thority to issue a Federal authorization shall des-
ignate a senior official responsible for, and dedicate 
sufficient other staff and resources to ensure, full 
implementation of the DOE regulations and any 
Memoranda. Interested Indian tribes, multi-State 
entities, and State agencies may enter such Memo-
randa of Understanding.
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‘‘(6) DURATION AND RENEWAL.—Each Federal 
land use authorization for an electricity transmission 
or distribution facility shall be issued— 
‘‘(A) for a duration, as determined by the 
Secretary of Energy, commensurate with the 
anticipated use of the facility, and 
‘‘(B) with appropriate authority to manage 
the right-of-way for reliability and environ-
mental protection. 
Upon the expiration of any such authorization (in-
cluding an authorization issued prior to enactment 
of this section), the authorization shall be reviewed 
for renewal taking fully into account reliance on 
such electricity infrastructure, recognizing its impor-
tance 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 
responsibilities under this section, the Secretary of 
Energy shall consult regularly with the Federal En-
ergy Regulatory Commission (FERC), FERC-ap-
proved electric reliability organizations (including re-
lated regional entities), and FERC-approved Re-
gional Transmission Organizations and Independent 
System Operators.
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HR 6 PCS 
‘‘(i) INTERSTATE COMPACTS.—The consent of Con-
gress is hereby given for 3 or more contiguous States to 
enter into an interstate compact, subject to approval by 
Congress, establishing regional transmission siting agen-
cies to facilitate siting of future electric energy trans-
mission facilities within such States and to carry out the 
electric energy transmission siting responsibilities of such 
States. The Secretary of Energy may provide technical as-
sistance to regional transmission siting agencies estab-
lished under this subsection. Such regional transmission 
siting agencies shall have the authority to review, certify, 
and permit siting of transmission facilities, including fa-
cilities in national interest electric transmission corridors 
(other than facilities on property owned by the United 
States). The Commission shall have no authority to issue 
a permit for the construction or modification of electric 
transmission facilities within a State that is a party to 
a compact, unless the members of a compact are in dis-
agreement and the Secretary makes, after notice and an 
opportunity for a hearing, the finding described in sub-
section (b)(1)(C). 
‘‘(j) 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.
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Subsection (h)(4) of this section shall not apply to any 
Congressionally-designated components of the National 
Wilderness Preservation System, the National Wild and 
Scenic Rivers System, or the National Park system (in-
cluding National Monuments therein). 
‘‘(k) ERCOT.—This section shall not apply within 
the area referred to in section 212(k)(2)(A).’’. 
(b) REPORTS
TO CONGRESS
ON CORRIDORS
AND 
RIGHTS OF WAY ON FEDERAL LANDS.—The Secretary of 
the Interior, the Secretary of Energy, the Secretary of Ag-
riculture, and the Chairman of the Council on Environ-
mental Quality shall, within 90 days of the date of enact-
ment of this subsection, submit a joint report to Congress 
identifying each of the following: 
(1) All existing designated transmission and 
distribution corridors on Federal land and the status 
of work related to proposed transmission and dis-
tribution corridor designations under Title V of the 
Federal Land Policy and Management Act (43 
U.S.C. 1761 et seq.), the schedule for completing 
such work, any impediments to completing the work, 
and steps that Congress could take to expedite the 
process. 
(2) The number of pending applications to lo-
cate transmission and distribution facilities on Fed-
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HR 6 PCS 
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. 
(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. 
SEC. 1222. THIRD-PARTY FINANCE. 
(a) EXISTING FACILITIES.—The Secretary of Energy 
(hereinafter in this section referred to as the ‘‘Secretary’’), 
acting through the Administrator of the Western Area 
Power Administration (hereinafter in this section referred 
to as ‘‘WAPA’’), or through the Administrator of the 
Southwestern Power Administration (hereinafter in this 
section referred to as ‘‘SWPA’’), or both, may design, de-
velop, construct, operate, maintain, or own, or participate 
with other entities in designing, developing, constructing, 
operating, maintaining, or owning, an electric power 
transmission facility and related facilities (‘‘Project’’) 
needed to upgrade existing transmission facilities owned 
by SWPA or WAPA if the Secretary of Energy, in con-
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sultation with the applicable Administrator, determines 
that the proposed Project— 
(1)(A) is located in a national interest electric 
transmission corridor designated under section 
216(a) of the Federal Power Act and will reduce 
congestion of electric transmission in interstate com-
merce; or 
(B) is necessary to accommodate an actual or 
projected increase in demand for electric trans-
mission capacity; 
(2) is consistent with— 
(A) transmission needs identified, in a 
transmission expansion plan or otherwise, by 
the appropriate Regional Transmission Organi-
zation or Independent System Operator (as de-
fined in the Federal Power Act), if any, or ap-
proved regional reliability organization; and 
(B) efficient and reliable operation of the 
transmission grid; and 
(3) would be operated in conformance with pru-
dent utility practice. 
(b) 
NEW
FACILITIES.—The 
Secretary, 
acting 
through WAPA or SWPA, or both, may design, develop, 
construct, operate, maintain, or own, or participate with 
other entities in designing, developing, constructing, oper-
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HR 6 PCS 
ating, maintaining, or owning, a new electric power trans-
mission facility and related facilities (‘‘Project’’) located 
within any State in which WAPA or SWPA operates if 
the Secretary, in consultation with the applicable Adminis-
trator, determines that the proposed Project— 
(1)(A) is located in an area designated under 
section 216(a) of the Federal Power Act and will re-
duce congestion of electric transmission in interstate 
commerce; or 
(B) is necessary to accommodate an actual or 
projected increase in demand for electric trans-
mission capacity; 
(2) is consistent with— 
(A) transmission needs identified, in a 
transmission expansion plan or otherwise, by 
the appropriate Regional Transmission Organi-
zation or Independent System Operator, if any, 
or approved regional reliability organization; 
and 
(B) efficient and reliable operation of the 
transmission grid; 
(3) will be operated in conformance with pru-
dent utility practice; 
(4) will be operated by, or in conformance with 
the rules of, the appropriate (A) Regional Trans-
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HR 6 PCS 
mission Organization or Independent System Oper-
ator, if any, or (B) if such an organization does not 
exist, regional reliability organization; and 
(5) will not duplicate the functions of existing 
transmission facilities or proposed facilities which 
are the subject of ongoing or approved siting and re-
lated permitting proceedings. 
(c) OTHER FUNDS.— 
(1) IN GENERAL.—In carrying out a Project 
under subsection (a) or (b), the Secretary may ac-
cept and use funds contributed by another entity for 
the purpose of carrying out the Project. 
(2) AVAILABILITY.—The contributed funds 
shall be available for expenditure for the purpose of 
carrying out the Project— 
(A) without fiscal year limitation; and 
(B) as if the funds had been appropriated 
specifically for that Project. 
(3) ALLOCATION OF COSTS.—In carrying out a 
Project under subsection (a) or (b), any costs of the 
Project not paid for by contributions from another 
entity shall be collected through rates charged to 
customers using the new transmission capability pro-
vided by the Project and allocated equitably among
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HR 6 PCS 
these project beneficiaries using the new trans-
mission capability. 
(d) RELATIONSHIP TO OTHER LAWS.—Nothing in 
this section affects any requirement of— 
(1) any Federal environmental law, including 
the National Environmental Policy Act of 1969 (42 
U.S.C. 4321 et seq.); 
(2) any Federal or State law relating to the 
siting of energy facilities; or 
(3) any existing authorizing statutes. 
(e) SAVINGS CLAUSE.—Nothing in this section shall 
constrain or restrict an Administrator in the utilization 
of other authority delegated to the Administrator of 
WAPA or SWPA. 
(f) SECRETARIAL
DETERMINATIONS.—Any deter-
mination made pursuant to subsections (a) or (b) shall 
be based on findings by the Secretary using the best avail-
able data. 
(g) MAXIMUM FUNDING AMOUNT.—The Secretary 
shall not accept and use more than $100,000,000 under 
subsection (c)(1) for the period encompassing fiscal years 
2006 through 2015. 
SEC. 1223. TRANSMISSION SYSTEM MONITORING. 
Within 6 months after the date of enactment of this 
Act, the Secretary of Energy and the Federal Energy Reg-
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HR 6 PCS 
ulatory Commission shall study and report to Congress on 
the steps which must be taken to establish a system to 
make available to all transmission system owners and Re-
gional Transmission Organizations (as defined in the Fed-
eral Power Act) within the Eastern and Western Inter-
connections real-time information on the functional status 
of all transmission lines within such Interconnections. In 
such study, the Commission shall assess technical means 
for implementing such transmission information system 
and identify the steps the Commission or Congress must 
take to require the implementation of such system. 
SEC. 1224. ADVANCED TRANSMISSION TECHNOLOGIES. 
(a) AUTHORITY.—The Federal Energy Regulatory 
Commission, in the exercise of its authorities under the 
Federal Power Act and the Public Utility Regulatory Poli-
cies Act of 1978, shall encourage the deployment of ad-
vanced transmission technologies. 
(b) DEFINITION.—For the purposes of this section, 
the term ‘‘advanced transmission technologies’’ means 
technologies that increase the capacity, efficiency, or reli-
ability of existing or new transmission facilities, including, 
but not limited to— 
(1) high-temperature lines (including super-
conducting cables); 
(2) underground cables;
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HR 6 PCS 
(3) advanced conductor technology (including 
advanced composite conductors, high-temperature 
low-sag conductors, and fiber optic temperature 
sensing conductors); 
(4) high-capacity ceramic electric wire, connec-
tors, and insulators; 
(5) optimized transmission line configurations 
(including multiple phased transmission lines); 
(6) modular equipment; 
(7) wireless power transmission; 
(8) ultra-high voltage lines; 
(9) high-voltage DC technology; 
(10) flexible AC transmission systems; 
(11) energy storage devices (including pumped 
hydro, compressed air, superconducting magnetic en-
ergy storage, flywheels, and batteries); 
(12) controllable load; 
(13) distributed generation (including PV, fuel 
cells, microturbines); 
(14) enhanced power device monitoring; 
(15) direct system state sensors; 
(16) fiber optic technologies; 
(17) power electronics and related software (in-
cluding real time monitoring and analytical soft-
ware); and
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HR 6 PCS 
(18) any other technologies the Commission 
considers appropriate. 
(c) 
OBSOLETE
OR
IMPRACTICABLE
TECH-
NOLOGIES.—The Commission is authorized to cease en-
couraging the deployment of any technology described in 
this section on a finding that such technology has been 
rendered obsolete or otherwise impracticable to deploy. 
SEC. 1225. ELECTRIC TRANSMISSION AND DISTRIBUTION 
PROGRAMS. 
(a) ELECTRIC TRANSMISSION
AND DISTRIBUTION 
PROGRAM.—The Secretary of Energy (hereinafter in this 
section referred to as the ‘‘Secretary’’) acting through the 
Director of the Office of Electric Transmission and Dis-
tribution shall establish a comprehensive research, devel-
opment, demonstration and commercial application pro-
gram to promote improved reliability and efficiency of 
electrical transmission and distribution systems. This pro-
gram shall include— 
(1) advanced energy delivery and storage tech-
nologies, materials, and systems, including new 
transmission technologies, such as flexible alter-
nating current transmission systems, composite con-
ductor materials and other technologies that enhance 
reliability, operational flexibility, or power-carrying 
capability;
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HR 6 PCS 
(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— 
(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) supply of electricity to the power grid by 
small scale, distributed and residential-based power 
generators; 
(9) the development and use of advanced grid 
design, operation and planning tools;
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HR 6 PCS 
(10) any other infrastructure technologies, as 
appropriate; and 
(11) technology transfer and education. 
(b) PROGRAM PLAN.—Not later than 1 year after the 
date of the enactment of this legislation, the Secretary, 
in consultation 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 program plan, the Secretary may consult with utilities, 
energy 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) IMPLEMENTATION.—The Secretary shall consider 
implementing this program using a consortium of indus-
try, university and national laboratory participants. 
(d) REPORT.—Not later than 2 years after the trans-
mittal of the plan under subsection (b), the Secretary shall 
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 and distribution infra-
structure technologies. 
(e) POWER DELIVERY RESEARCH INITIATIVE.—
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HR 6 PCS 
(1) IN GENERAL.—The Secretary shall establish 
a research, development, demonstration, and com-
mercial application initiative specifically focused on 
power delivery utilizing components incorporating 
high temperature superconductivity. 
(2) GOALS.—The goals of this initiative shall be 
to— 
(A) establish facilities to develop high tem-
perature superconductivity power applications 
in partnership with manufacturers and utilities; 
(B) provide technical leadership for estab-
lishing reliability for high temperature super-
conductivity power applications including suit-
able modeling and analysis; 
(C) facilitate commercial transition toward 
direct current power transmission, storage, and 
use for high power systems utilizing high tem-
perature superconductivity; and 
(D) facilitate the integration of very low 
impedance high temperature superconducting 
wires and cables in existing electric networks to 
improve system performance, power flow control 
and reliability. 
(3) REQUIREMENTS.—The initiative shall in-
clude—
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HR 6 PCS 
(A) feasibility analysis, planning, research, 
and design to construct demonstrations of 
superconducting links in high power, direct cur-
rent and controllable alternating current trans-
mission systems; 
(B) public-private partnerships to dem-
onstrate deployment of high temperature super-
conducting cable into testbeds simulating a re-
alistic transmission grid and under varying 
transmission conditions, including actual grid 
insertions; and 
(C) testbeds developed in cooperation with 
national laboratories, industries, and univer-
sities to demonstrate these technologies, pre-
pare the technologies for commercial introduc-
tion, and address cost or performance road-
blocks to successful commercial use. 
(4) AUTHORIZATION OF APPROPRIATIONS.—For 
purposes of carrying out this subsection, there are 
authorized to be appropriated— 
(A) for fiscal year 2006, $15,000,000; 
(B) for fiscal year 2007, $20,000,000; 
(C) for fiscal year 2008, $30,000,000; 
(D) for fiscal year 2009, $35,000,000; and 
(E) for fiscal year 2010, $40,000,000.
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HR 6 PCS 
SEC. 1226. ADVANCED POWER SYSTEM TECHNOLOGY IN-
CENTIVE PROGRAM. 
(a) PROGRAM.—The Secretary of Energy is author-
ized to establish an Advanced Power System Technology 
Incentive Program to support the deployment of certain 
advanced power system technologies and to improve and 
protect certain critical governmental, industrial, and com-
mercial processes. Funds provided under this section shall 
be used by the Secretary to make incentive payments to 
eligible owners or operators of advanced power system 
technologies to increase power generation through en-
hanced operational, economic, and environmental perform-
ance. Payments under this section may only be made upon 
receipt by the Secretary of an incentive payment applica-
tion establishing an applicant as either— 
(1) a qualifying advanced power system tech-
nology facility; or 
(2) a qualifying security and assured power fa-
cility. 
(b) INCENTIVES.—Subject to availability of funds, a 
payment of 1.8 cents per kilowatt-hour shall be paid to 
the owner or operator of a qualifying advanced power sys-
tem technology facility under this section for electricity 
generated at such facility. An additional 0.7 cents per kilo-
watt-hour shall be paid to the owner or operator of a quali-
fying security and assured power facility for electricity
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generated at such facility. Any facility qualifying under 
this section shall be eligible for an incentive payment for 
up to, but not more than, the first 10,000,000 kilowatt- 
hours produced in any fiscal year. 
(c) ELIGIBILITY.—For purposes of this section: 
(1) QUALIFYING
ADVANCED
POWER
SYSTEM 
TECHNOLOGY FACILITY.—The term ‘‘qualifying ad-
vanced power system technology facility’’ means a 
facility using an advanced fuel cell, turbine, or hy-
brid power system or power storage system to gen-
erate or store electric energy. 
(2) QUALIFYING
SECURITY
AND
ASSURED 
POWER
FACILITY.—The term ‘‘qualifying security 
and assured power facility’’ means a qualifying ad-
vanced power system technology facility determined 
by the Secretary of Energy, in consultation with the 
Secretary of Homeland Security, to be in critical 
need of secure, reliable, rapidly available, high-qual-
ity power for critical governmental, industrial, or 
commercial applications. 
(d) AUTHORIZATION.—There are authorized to be ap-
propriated to the Secretary of Energy for the purposes 
of this section, $10,000,000 for each of the fiscal years 
2006 through 2012.
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SEC. 1227. OFFICE OF ELECTRIC TRANSMISSION AND DIS-
TRIBUTION. 
(a) CREATION OF AN OFFICE OF ELECTRIC TRANS-
MISSION AND DISTRIBUTION.—Title II of the Department 
of Energy Organization Act (42 U.S.C. 7131 et seq.) (as 
amended by section 502(a) of this Act) is amended by in-
serting the following after section 217, as added by title 
V of this Act: 
‘‘SEC. 218. OFFICE OF ELECTRIC TRANSMISSION AND DIS-
TRIBUTION. 
‘‘(a) ESTABLISHMENT.—There is established within 
the Department an Office of Electric Transmission and 
Distribution. This Office shall be headed by a Director, 
subject to the authority of the Secretary. The Director 
shall be appointed by the Secretary. The Director shall 
be compensated at the annual rate prescribed for level IV 
of the Executive Schedule under section 5315 of title 5, 
United States Code. 
‘‘(b) DIRECTOR.—The Director shall— 
‘‘(1) coordinate and develop a comprehensive, 
multi-year strategy to improve the Nation’s elec-
tricity transmission and distribution; 
‘‘(2) implement or, where appropriate, coordi-
nate the implementation of, the recommendations 
made in the Secretary’s May 2002 National Trans-
mission Grid Study;
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‘‘(3) oversee research, development, and dem-
onstration to support Federal energy policy related 
to electricity transmission and distribution; 
‘‘(4) grant authorizations for electricity import 
and export pursuant to section 202(c), (d), (e), and 
(f) of the Federal Power Act (16 U.S.C. 824a); 
‘‘(5) perform other functions, assigned by the 
Secretary, related to electricity transmission and dis-
tribution; and 
‘‘(6) develop programs for workforce training in 
power and transmission engineering.’’. 
(b) CONFORMING AMENDMENTS.—(1) The table of 
contents of the Department of Energy Organization Act 
(42 U.S.C. 7101 note) is amended by inserting after the 
item relating to section 217 the following new item: 
‘‘Sec. 218. Office of Electric Transmission and Distribution.’’. 
(2) Section 5315 of title 5, United States Code, is 
amended by inserting after the item relating to ‘‘Inspector 
General, Department of Energy.’’ the following: 
‘‘Director, Office of Electric Transmission and 
Distribution, Department of Energy.’’.
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Subtitle C—Transmission 
Operation Improvements 
SEC. 1231. OPEN NONDISCRIMINATORY ACCESS. 
Part II of the Federal Power Act (16 U.S.C. 824 et 
seq.) is amended by inserting after section 211 the fol-
lowing new section: 
‘‘SEC. 211A. OPEN ACCESS BY UNREGULATED TRANSMIT-
TING UTILITIES. 
‘‘(a) TRANSMISSION SERVICES.—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-
mission services to itself and that are not unduly 
discriminatory or preferential. 
‘‘(b) EXEMPTION.—The Commission shall exempt 
from any rule or order under this section any unregulated 
transmitting utility that— 
‘‘(1) sells no more than 4,000,000 megawatt 
hours of electricity per year; or
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‘‘(2) does not own or operate any transmission 
facilities that are necessary for operating an inter-
connected transmission system (or any portion 
thereof); or 
‘‘(3) meets other criteria the Commission deter-
mines to be in the public interest. 
‘‘(c) LOCAL DISTRIBUTION FACILITIES.—The re-
quirements of subsection (a) shall not apply to facilities 
used in local distribution. 
‘‘(d) EXEMPTION
TERMINATION.—Whenever the 
Commission, after an evidentiary hearing held upon a 
complaint and after giving consideration to reliability 
standards established under section 215, finds on the 
basis of a preponderance of the evidence that any exemp-
tion granted pursuant to subsection (b) unreasonably im-
pairs the continued reliability of an interconnected trans-
mission system, it shall revoke the exemption granted to 
that transmitting utility. 
‘‘(e) APPLICATION
TO UNREGULATED TRANSMIT-
TING UTILITIES.—The rate changing procedures applica-
ble to public utilities under subsections (c) and (d) of sec-
tion 205 are applicable to unregulated transmitting utili-
ties for purposes of this section. 
‘‘(f) REMAND.—In exercising its authority under 
paragraph (1) of subsection (a), the Commission may re-
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mand transmission rates to an unregulated transmitting 
utility for review and revision where necessary to meet the 
requirements of subsection (a). 
‘‘(g) OTHER REQUESTS.—The provision of trans-
mission services under subsection (a) does not preclude a 
request for transmission services under section 211. 
‘‘(h) LIMITATION.—The Commission may not require 
a State or municipality to take action under this section 
that would violate a private activity bond rule for purposes 
of section 141 of the Internal Revenue Code of 1986 (26 
U.S.C. 141). 
‘‘(i) TRANSFER OF CONTROL OF TRANSMITTING FA-
CILITIES.—Nothing in this section authorizes the Commis-
sion to require an unregulated transmitting utility to 
transfer control or operational control of its transmitting 
facilities to an RTO or any other Commission-approved 
independent transmission organization designated to pro-
vide nondiscriminatory transmission access. 
‘‘(j) DEFINITION.—For purposes of this section, the 
term ‘unregulated transmitting utility’ means an entity 
that— 
‘‘(1) owns or operates facilities used for the 
transmission of electric energy in interstate com-
merce; and 
‘‘(2) is an entity described in section 201(f).’’.
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SEC. 1232. SENSE OF CONGRESS ON REGIONAL TRANS-
MISSION ORGANIZATIONS. 
It is the sense of Congress that, in order to promote 
fair, open access to electric transmission service, benefit 
retail consumers, facilitate wholesale competition, improve 
efficiencies in transmission grid management, promote 
grid reliability, remove opportunities for unduly discrimi-
natory or preferential transmission practices, and provide 
for the efficient development of transmission infrastruc-
ture needed to meet the growing demands of competitive 
wholesale power markets, all transmitting utilities in inter-
state commerce should voluntarily become members of Re-
gional Transmission Organizations as defined in section 
3 of the Federal Power Act. 
SEC. 1233. REGIONAL TRANSMISSION ORGANIZATION AP-
PLICATIONS PROGRESS REPORT. 
Not later than 120 days after the date of enactment 
of this section, the Federal Energy Regulatory Commis-
sion shall submit to Congress a report containing each of 
the following: 
(1) A list of all regional transmission organiza-
tion applications filed at the Commission pursuant 
to subpart F of part 35 of title 18, Code of Federal 
Regulations (in this section referred to as ‘‘Order 
No. 2000’’), including an identification of each pub-
lic utility and other entity included within the pro-
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posed membership of the regional transmission orga-
nization. 
(2) A brief description of the status of each 
pending regional transmission organization applica-
tion, including a precise explanation of how each 
fails to comply with the minimal requirements of 
Order No. 2000 and what steps need to be taken to 
bring each application into such compliance. 
(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-
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—
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(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; 
(B) a discussion of the impact of such 
seams on consumers and wholesale competition; 
and 
(C) a discussion of minimizing cost-shifting 
on consumers. 
SEC. 1234. FEDERAL UTILITY PARTICIPATION IN REGIONAL 
TRANSMISSION ORGANIZATIONS. 
(a) DEFINITIONS.—For purposes of this section— 
(1) APPROPRIATE FEDERAL REGULATORY AU-
THORITY.—The term ‘‘appropriate Federal regu-
latory authority’’ means— 
(A) with respect to a Federal power mar-
keting agency (as defined in the Federal Power 
Act), the Secretary of Energy, except that the 
Secretary may designate the Administrator of a 
Federal power marketing agency to act as the 
appropriate Federal regulatory authority with
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respect to the transmission system of that Fed-
eral power marketing agency; and 
(B) with respect to the Tennessee Valley 
Authority, the Board of Directors of the Ten-
nessee Valley Authority. 
(2) FEDERAL
UTILITY.—The term ‘‘Federal 
utility’’ means a Federal power marketing agency or 
the Tennessee Valley Authority. 
(3) TRANSMISSION SYSTEM.—The term ‘‘trans-
mission system’’ means electric transmission facili-
ties owned, leased, or contracted for by the United 
States and operated by a Federal utility. 
(b) TRANSFER.—The appropriate Federal regulatory 
authority is authorized to enter into a contract, agreement 
or other arrangement transferring control and use of all 
or part of the Federal utility’s transmission system to an 
RTO or ISO (as defined in the Federal Power Act), ap-
proved by the Federal Energy Regulatory Commission. 
Such contract, agreement or arrangement shall include— 
(1) 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
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contract, agreement or other arrangement; consist-
ency with existing contracts and third-party financ-
ing arrangements; and consistency with said Federal 
utility’s statutory authorities, obligations, and limi-
tations; 
(2) provisions for monitoring and oversight by 
the Federal utility of the RTO’s or ISO’s fulfillment 
of the terms and conditions of the contract, agree-
ment or other arrangement, including a provision for 
the resolution of disputes through arbitration or 
other means with the regional transmission organi-
zation or with other participants, notwithstanding 
the obligations and limitations of any other law re-
garding arbitration; and 
(3) a provision that allows the Federal utility to 
withdraw from the RTO or ISO and terminate the 
contract, agreement or other arrangement in accord-
ance with its terms. 
Neither this section, actions taken pursuant to it, nor any 
other transaction of a Federal utility using an RTO or 
ISO shall confer upon the Federal Energy Regulatory 
Commission jurisdiction or authority over the Federal util-
ity’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.
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(c) EXISTING STATUTORY
AND OTHER OBLIGA-
TIONS.— 
(1) SYSTEM OPERATION REQUIREMENTS.—No 
statutory provision requiring or authorizing a Fed-
eral utility to transmit electric power or to construct, 
operate or maintain its transmission system shall be 
construed to prohibit a transfer of control and use 
of its transmission system pursuant to, and subject 
to all requirements of subsection (b). 
(2) OTHER
OBLIGATIONS.—This subsection 
shall not be construed to— 
(A) suspend, or exempt any Federal utility 
from, any provision of existing Federal law, in-
cluding but not limited to any requirement or 
direction relating to the use of the Federal util-
ity’s transmission system, environmental protec-
tion, fish and wildlife protection, flood control, 
navigation, water delivery, or recreation; or 
(B) authorize abrogation of any contract 
or treaty obligation. 
(3) REPEAL.—Section 311 of title III of Appen-
dix B of the Act of October 27, 2000 (P.L. 106– 
377, section 1(a)(2); 114 Stat. 1441, 1441A–80; 16 
U.S.C. 824n) is repealed.
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SEC. 1235. STANDARD MARKET DESIGN. 
(a) REMAND.—The Commission’s proposed rule-
making entitled ‘‘Remedying Undue Discrimination 
through Open Access Transmission Service and Standard 
Electricity Market Design’’ (Docket No. RM01–12–000) 
(‘‘SMD NOPR’’) is remanded to the Commission for re-
consideration. No final rule mandating a standard elec-
tricity market design pursuant to the proposed rule-
making, including any rule or order of general applica-
bility within the scope of the proposed rulemaking, may 
be issued before October 31, 2006, or take effect before 
December 31, 2006. Any final rule issued by the Commis-
sion pursuant to the proposed rulemaking shall be pre-
ceded by a second notice of proposed rulemaking issued 
after the date of enactment of this Act and an opportunity 
for public comment. 
(b) SAVINGS CLAUSE.—This section shall not be con-
strued to modify or diminish any authority or obligation 
the Commission has under this Act, the Federal Power 
Act, or other applicable law, including, but not limited to, 
any authority to— 
(1) issue any rule or order (of general or par-
ticular applicability) pursuant to any such authority 
or obligation; or 
(2) act on a filing or filings by 1 or more trans-
mitting utilities for the voluntary formation of a Re-