II 118th CONGRESS 2d Session S. 5352 IN THE SENATE OF THE UNITED STATES November 20, 2024 Mr. Welch (for himself and Mr. Van Hollen ) introduced the following bill; which was read twice and referred to the Committee on Energy and Natural Resources A BILL To amend title VI of the Public Utility Regulatory Policies Act of 1978 to establish a Federal renewable electricity standard for retail electricity suppliers, and for other purposes.

1. Short title This Act may be cited as the American Renewable Energy Act of 2024 . 2. Findings Congress finds that— (1) the Federal renewable electricity standard established by section 610 of the Public Utility Regulatory Policies Act of 1978 (as added by this Act) establishes a market-based policy to create ongoing competition among renewable electricity generators across the United States and provide the greatest quantity of clean electricity for the lowest price; and (2) the United States has vast wind, solar, hydropower, and geothermal resources that— (A) are renewable; (B) are dispersed widely across different regions of the United States; (C) can be harnessed to generate a significant share of electricity in the United States; and (D) when deployed, will significantly reduce and eliminate the emission of harmful greenhouse gases and criteria pollutants, which have historically been concentrated in underserved communities and communities of color, contributing to disproportionate burdens and environmental injustices. 3. Federal renewable electricity standard (a) In general Title VI of the Public Utility Regulatory Policies Act of 1978 ( Public Law 95–617 ; 92 Stat. 3164) is amended by adding at the end the following: 610. Federal renewable electricity standard (a) Definitions In this section: (1) Base quantity of electricity The term base quantity of electricity means the total quantity of electricity, expressed in megawatt hours, sold by a retail electricity supplier to electric consumers during the relevant calendar year, excluding electricity generated by a hydroelectric facility (other than qualified hydropower). (2) Criteria air pollutant The term criteria air pollutant means an air pollutant for which a national ambient air quality standard has been promulgated under section 109 of the Clean Air Act ( 42 U.S.C. 7409 ). (3) Distributed generation The term distributed generation means a noncentralized renewable energy resource installation, or interconnected series of installations, that generates electricity near the point of use with a total generating capacity of 1 megawatt or less. (4) Environmental justice community (A) In general The term environmental justice community means a low-income or low-wealth community that is impacted by environmental injustice. (B) Inclusions The term environmental justice community includes any community that— (i) is located nearest to an existing area of significant environmental pollution and degradation; (ii) bears a burden of negative public health effects from pollution; (iii) includes 1 or more sites of— (I) a facility that is a part of a polluting industry; (II) a waste dump; or (III) a facility for fossil resource extraction; (iv) experiences a high incidence of climate change impacts and disasters; (v) has been excluded or harmed by racist or discriminatory policies that have resulted in disproportionate burdens of environmental pollution and related health and socioeconomic disparities; (vi) has a land-based or food subsistence culture that is experiencing ecosystem disruption and devastation; (vii) faces relocation and resettlement resulting from— (I) climate change; or (II) impacts to the environment and ecosystems; or (viii) is an Indigenous community. (5) Federal renewable electricity credit The term Federal renewable electricity credit means a credit that— (A) represents, for purposes of compliance with this section, 1 megawatt hour of renewable electricity; and (B) is issued pursuant to subsection (e). (6) Impacted community (A) In general The term impacted community means a community that is harmed by environmental, economic, or socioeconomic injustice. (B) Inclusions The term impacted community includes— (i) an environmental justice community; and (ii) a community that— (I) has a high concentration of low-income and low-wealth households, including households composed primarily of members of groups that have historically experienced discrimination on the basis of race, gender, national origin, or ethnicity (including Black, Indigenous, Latinx, Arab, Asian, and Pacific Islander communities); (II) has experienced or is experiencing economic transition, deindustrialization, historic underinvestment, and poverty; or (III) has high unemployment due to— (aa) a significant decline in coal mining activity; or (bb) the closure of a coal-fired power plant. (7) Indian Tribe The term Indian Tribe means any Indian Tribe, band, nation, or other organized group or community (including any Native village, Regional Corporation, or Village Corporation (as those terms are defined in section 3 of the Alaska Native Claims Settlement Act ( 43 U.S.C. 1602 ))) that is recognized as eligible for the special programs and services provided by the United States to Indians because of their status as Indians. (8) Qualified hydropower The term qualified hydropower means energy produced from generating capacity added to a dam on or after January 1, 2001, if the Commission certifies that— (A) the dam— (i) was placed in service before the date of enactment of this section; (ii) was operated for flood control, navigation, or water supply purposes; and (iii) was not producing hydroelectric power prior to the addition of the capacity; and (B) the hydroelectric project installed on the dam— (i) is licensed or is exempt from licensing by the Commission; (ii) is in compliance with— (I) the terms and conditions of the license or exemption; and (II) other applicable legal requirements for the protection of environmental quality, including applicable fish passage requirements; and (iii) is operated so that the water surface elevation at any given location and time that would have occurred in the absence of the hydroelectric project is maintained, subject to any license or exemption requirements that require changes in water surface elevation for the purpose of improving the environmental quality of the affected waterway. (9) Renewable electricity The term renewable electricity means electricity generated (including by means of a fuel cell) from a renewable energy resource. (10) Renewable energy resource The term renewable energy resource means each of the following: (A) Wind energy. (B) Solar energy. (C) Geothermal energy. (D) Biogas derived from— (i) anaerobic digestion at wastewater treatment facilities; or (ii) farm anaerobic digestion. (E) Qualified hydropower. (F) Marine energy (as defined in section 632 of the Energy Independence and Security Act of 2007 ( 42 U.S.C. 17211 )). (11) Retail electricity supplier (A) In general The term retail electricity supplier means, for any calendar year, an electric utility that sells not fewer than 1,000,000 megawatt hours of electricity to electric consumers during the preceding calendar year. (B) Inclusions and limitations For purposes of determining whether an electric utility qualifies as a retail electricity supplier under subparagraph (A)— (i) the sales made by any affiliate of the electric utility to electric consumers, other than sales to lessees or tenants of the affiliate, shall be considered to be sales made by the electric utility; and (ii) sales made by the electric utility to an affiliate, lessee, or tenant of the electric utility shall not be treated as sales to electric consumers. (C) Affiliate In this paragraph, the term affiliate , when used in relation to an electric utility, means any person that directly or indirectly owns or controls, is owned or controlled by, or is under common ownership or control with, that electric utility, as determined under regulations promulgated by the Commission. (12) Retire and retirement The terms retire and retirement , with respect to a Federal renewable electricity credit, mean to disqualify the credit for any subsequent use under this section, regardless of whether the use is a sale, transfer, exchange, or submission in satisfaction of a compliance obligation. (b) Annual compliance obligation (1) In general Except as otherwise provided in subsection (f), for each of calendar years 2025 through 2034, not later than March 31 of the following calendar year, each retail electricity supplier shall submit to the Commission a quantity of Federal renewable electricity credits that represents a quantity of megawatt hours of renewable electricity that is at least equal to the annual target of the retail electricity supplier under subsection (d). (2) Equity requirements (A) Distributed generation The Commission shall require that, of the quantity of Federal renewable electricity credits required to be submitted by a retail electricity supplier to comply with paragraph (1)— (i) for the period of calendar years 2025 through 2028, at least 15 percent of those Federal renewable electricity credits represent megawatt hours of renewable electricity generated by distributed generation; and (ii) for the period of calendar years 2029 through 2034, at least 20 percent of those Federal renewable electricity credits represent megawatt hours of renewable electricity generated by distributed generation. (B) Impacted communities The Commission shall require that, of the quantity of Federal renewable electricity credits required to be submitted by a retail electricity supplier to comply with paragraph (1)— (i) for the period of calendar years 2025 through 2028, at least 15 percent of those Federal renewable electricity credits represent megawatt hours of renewable electricity generated in impacted communities; and (ii) for the period of calendar years 2029 through 2034, at least 20 percent of those Federal renewable electricity credits represent megawatt hours of renewable electricity generated in impacted communities. (C) Distributed generation occurring in an impacted community For any calendar year, distributed generation that occurs in an impacted community may be used for purposes of complying with both subparagraph (A) and subparagraph (B). (c) Regulations (1) In general Not later than January 1, 2026, the Commission shall promulgate regulations to implement and enforce the requirements of this section. (2) Considerations In promulgating regulations under paragraph (1), the Commission shall, to the maximum extent practicable— (A) preserve the integrity and incorporate best practices of existing State and Tribal renewable electricity programs; (B) preserve the integrity of voluntary renewable energy markets; (C) design and implement those regulations in a manner that seeks to be equitable and just; (D) identify and prioritize measures to maximize reductions of emissions of greenhouse gases and criteria air pollutants in impacted communities; (E) ensure that activities undertaken to comply with those regulations result in a net decrease in emissions of criteria air pollutants in impacted communities; (F) ensure that the deployment of any new renewable electricity generation provides economic, health, and resiliency benefits to the communities and areas in which the applicable generation facility or resource is built or installed, including through the use of community benefit agreements or equivalent means as determined appropriate by the Commission; (G) prioritize measures that will incentivize or allow for distributed, community, and public ownership over renewable energy projects; (H) establish and delegate to an appropriate entity the administration of a national Federal renewable electricity credit trading market for the issuance and trade of Federal renewable electricity credits, relying on existing and emerging State, Tribal, or regional tracking systems that issue and track non-Federal renewable electricity credits; (I) establish and delegate to appropriate entities the administration of not fewer than 6 regional, geographically-based, Federal renewable electricity credit trading markets, and determine the optimal levels of credit trading allowed within and between regions to maximize deployment of new renewable electricity generation within each region; (J) cooperate with States and Indian Tribes— (i) to facilitate coordination between State, Tribal, and Federal renewable electricity programs; and (ii) to minimize administrative burdens and costs to retail electricity suppliers; and (K) encourage strategic deployment of distributed generation to maximize system benefits that can lower costs for all customers, including siting generation resources in grid-constrained areas and colocation of renewable energy resources with energy storage. (d) Annual compliance requirement (1) Annual targets For each calendar year, the annual target of a retail electricity supplier shall be equal to the number of megawatt hours that is equal to the product obtained by multiplying— (A) the required annual percentage for that calendar year under paragraph (2) or (3), as applicable; and (B) the base quantity of electricity of that retail electricity supplier for that calendar year. (2) Required annual percentage for calendar years 2025 through 2034 For each of calendar years 2025 through 2034, the required annual percentage shall be as follows: Required annual Year: percentage: 2025 20.0 2026 24.5 2027 29.0 2028 34.0 2029 39.0 2030 45.0 2031 51.0 2032 57.0 2033 63.5 2034 70.0. (3) Required annual percentage for subsequent calendar years (A) Calendar years 2035 through 2044 Not later than December 31, 2034, the Commission shall promulgate regulations establishing required annual percentages for each of calendar years 2035 through 2044. (B) Increase Except at provided in subparagraph (C), for each of calendar years 2035 through 2044, the required annual percentage shall be equal to the sum obtained by adding— (i) the required annual percentage for the previous calendar year; and (ii) 3 percentage points. (C) Feasibility (i) Adjustment Subject to clause (ii), for any of calendar years 2035 through 2044, the Commission may increase or decrease the 3 percentage point increase required under subparagraph (B) if the Commission determines necessary based on technical and economic feasibility studies or other equivalent means. (ii) Requirement For each of calendar years 2035 through 2044, the percentage point increase required under this paragraph for the required annual percentage shall be greater than zero. (D) Minimum percentage In no case shall the required annual percentage for any calendar year after calendar year 2035 be less than the required annual percentage for calendar year 2035. (e) Federal renewable electricity credits (1) In general (A) Issuance; tracking; verification The regulations promulgated under this section shall include provisions governing the issuance, tracking, and verification of Federal renewable electricity credits. (B) Credit ratio Except as provided in paragraphs (2) through (5), the Commission shall issue to each generator of renewable electricity 1 Federal renewable electricity credit for each megawatt hour of renewable electricity generated by the generator after December 31, 2024. (C) Serial number The Commission shall assign a unique serial number to each Federal renewable electricity credit. (2) Generation from certain State renewable electricity programs (A) In general If renewable electricity is generated with the support of payments from a retail electricity supplier pursuant to a State renewable electricity program (whether through State alternative compliance payments or through payments to a State renewable electricity procurement fund or entity)— (i) the Commission shall issue Federal renewable electricity credits to the retail electricity supplier for the portion of the relevant renewable electricity generation that is attributable to the payments made by the retail electricity supplier, as determined pursuant to regulations promulgated by the Commission; and (ii) for any remaining portion of the relevant renewable electricity generation, the Commission shall issue Federal renewable electricity credits to the generator, as provided in paragraph (1), subject to the condition that not more than 1 Federal renewable electricity credit shall be issued for any 1 megawatt hour of electricity. (B) State guidance In determining how Federal renewable electricity credits will be apportioned among retail electricity suppliers and generators under this paragraph, the Commission shall consider information and guidance issued by the applicable 1 or more States. (3) Certain power sales contracts Except as otherwise provided in paragraph (2), if a generator has sold renewable electricity to a retail electricity supplier under a contract for power from a facility placed in service before the date of enactment of this section, and the contract does not provide for the determination of ownership of the Federal renewable electricity credits associated with the generation, the Commission shall issue the Federal renewable electricity credits to the retail electricity supplier for the duration of the contract. (4) Credits based on qualified hydropower For purposes of this subsection, the number of megawatt hours of renewable electricity generation from qualified hydropower shall be calculated— (A) based solely on the increase in average annual generation directly resulting from the capacity additions described in subsection (a)(8); and (B) using the same water flow information used to determine a historic average annual generation baseline for the applicable hydroelectric facility, as certified by the Commission. (5) Credits based on farm anaerobic digestion For any calendar year, a generator may only receive Federal renewable electricity credits for renewable electricity generated from biogas that is derived from farm anaerobic digestion if— (A) any manure used for that anaerobic digestion is from a farm that only provides its manure for anaerobic digestion to 1 anaerobic digester system; (B) the anaerobic digester system used by that generator has a capacity of less than, or equal to, 1 megawatt; and (C) during that calendar year, the total renewable electricity produced from biogas derived from farm anaerobic digestion in the applicable State represents not more than 10 percent of the total electricity usage in the State. (6) Generation from mixed renewable and nonrenewable resources If electricity is generated using both a renewable energy resource and an energy resource that is not a renewable energy resource, the Commission shall issue Federal renewable electricity credits based on the proportion that— (A) the electricity generated that is attributable to the renewable energy resource; bears to (B) the total electricity generated. (7) Prohibition against double-counting The Commission shall ensure that— (A) no Federal renewable electricity credit is used more than once for compliance with this section; and (B) not more than 1 Federal renewable electricity credit is issued for any megawatt hour of renewable electricity generated. (8) Trading The lawful holder of a Federal renewable electricity credit may— (A) sell, exchange, or transfer the credit; (B) submit the credit for compliance under subsection (b); or (C) submit the credit for retirement by the Commission. (9) Banking (A) In general A Federal renewable electricity credit may be submitted in satisfaction of the compliance obligation under subsection (b) for— (i) the compliance year for which the credit was issued; or (ii) the first or second compliance year thereafter. (B) Retirement The Commission shall retire any Federal renewable electricity credit that has not been retired by April 2 of the calendar year that is 2 years after the calendar year during which the credit was issued. (10) Retirement The Commission shall retire a Federal renewable electricity credit immediately upon submission by the lawful holder of the credit, whether in satisfaction of a compliance obligation under subsection (b) or for another reason. (f) Alternative compliance payments (1) In general A retail electricity supplier may satisfy the requirements of subsection (b) in whole or in part by submitting, in accordance with this subsection, in lieu of a Federal renewable electricity credit that would otherwise be submitted, an alternative compliance payment equal to $50, adjusted for inflation on January 1 of each year after calendar year 2024, in accordance with regulations promulgated by the Commission. (2) Payment to State funds (A) In general Except as provided in subparagraph (B), payments made under this subsection shall be made directly to the 1 or more States in which the applicable retail electricity supplier sells electricity, subject to the conditions that— (i) the amount of each payment shall be based on the proportion that— (I) the portion of the base quantity of electricity of the retail electricity supplier that is sold within the applicable State; bears to (II) the base quantity of electricity of the retail electricity supplier; (ii) the payments are deposited directly into a fund of the State treasury established for that purpose; and (iii) the State uses the funds in accordance with paragraphs (3) and (4). (B) Noncompliance If the Commission determines that a State is in substantial noncompliance with paragraph (3) or (4), the Commission shall direct that any future alternative compliance payments that would otherwise be paid to the State under this subsection shall instead be paid to the Commission and deposited in the Treasury. (3) State use of funds As a condition of receipt of alternative compliance payments pursuant to this subsection, a State shall— (A) use the payments exclusively for— (i) deploying technologies that generate electricity from renewable energy resources; (ii) deploying technologies that store electricity for use at a later time; or (iii) implementing cost-effective energy efficiency programs to achieve energy savings; and (B) invest or use the payments in a manner designed to ensure that impacted communities receive, or directly benefit from, at least 50 percent of the funds. (4) Reporting (A) In general As a condition of receipt of alternative compliance payments pursuant to this subsection, a State shall submit to the Commission an annual report, in accordance with regulations promulgated by the Commission, containing a full accounting of the use of the payments, including a detailed description of the activities funded by the payments, and demonstrating compliance with the requirements of this subsection. (B) Deadline A State shall submit a report under subparagraph (A)— (i) not later than 1 year after the date on which the first alternative compliance payment is received; and (ii) every year thereafter until all alternative compliance payments are expended. (g) Information collection The Commission may require any retail electricity supplier, renewable electricity generator, or other entity that the Commission determines appropriate, to provide any information the Commission determines appropriate to carry out this section. (h) Enforcement and judicial review (1) Failure to submit credits (A) In general If any person fails to comply with the requirements of subsection (b) or (f) for a calendar year, the person shall be liable to pay to the Commission a civil penalty equal to the product obtained by multiplying— (i) double the alternative compliance payment calculated under subsection (f)(1) for that calendar year; and (ii) the aggregate quantity of Federal renewable electricity credits or equivalent alternative compliance payments that the person failed to submit in violation of the requirements of subsections (b) and (f) for that calendar year. (B) Enforcement The Commission shall assess a civil penalty under subparagraph (A) in accordance with the procedures described in section 31(d) of the Federal Power Act ( 16 U.S.C. 823b(d) ). (2) Violation of other requirements (A) In general Any person who violates or fails or refuses to comply with any requirement of this section (including any regulation promulgated or order issued under this section), other than a requirement of subsection (b) or (f), shall be subject to a civil penalty under section 316A(b) of the Federal Power Act ( 16 U.S.C. 825o–1(b) ). (B) Assessment The penalty under subparagraph (A) shall be assessed by the Commission in the same manner as in the case of a violation referred to in section 316A(b) of the Federal Power Act ( 16 U.S.C. 825o–1(b) ). (3) Judicial review (A) In general Any person aggrieved by a final action taken by the Commission under this section, other than the assessment of a civil penalty under paragraph (1) or (2), may use the procedures for review described in section 313 of the Federal Power Act ( 16 U.S.C. 825l ). (B) Reference For purposes of this paragraph, references to an order in section 313 of the Federal Power Act ( 16 U.S.C. 825l ) shall be considered to refer also to all other final actions of the Commission under this section other than the assessment of a civil penalty under paragraph (1) or (2). (i) Administration Nothing in this section— (1) diminishes or qualifies any authority of a State, a political subdivision of a State, or an Indian Tribe— (A) to adopt or enforce any law (including regulations) respecting renewable electricity, including any law establishing requirements that are more stringent than those established by this section, subject to the condition that no such law may relieve any person of any requirement otherwise applicable under this section; or (B) to regulate the acquisition and disposition of Federal renewable electricity credits by retail electricity suppliers within the jurisdiction of the State, political subdivision, or Indian Tribe, including the authority to require a retail electricity supplier to acquire and submit to the Commission for retirement Federal renewable electricity credits in excess of those submitted under this section; or (2) affects the application of, or the responsibility for, compliance with any other provision of law (including regulations). . (b) Conforming amendment The table of contents in section 1(b) of the Public Utility Regulatory Policies Act of 1978 ( Public Law 95–617 ; 92 Stat. 3118) is amended by adding at the end of the items relating to title VI the following: Sec. 609. Rural and remote communities electrification grants. Sec. 610. Federal renewable electricity standard. . 4. Clarifying State authority to adopt renewable energy incentives 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: (o) Clarification of State authority To adopt renewable energy incentives (1) Definition of State-approved production incentive program In this subsection, the term State-approved production incentive program means a requirement imposed pursuant to State law, or by a State regulatory authority acting within its authority under State law, that an electric utility purchase renewable energy (as defined in section 609(a)) at a specified rate. (2) State authority to adopt renewable energy incentives Notwithstanding any other provision of this Act or the Federal Power Act ( 16 U.S.C. 791a et seq. ), a State law or State regulatory authority may set the rates for a sale of electricity by a facility generating renewable energy (as defined in section 609(a)) pursuant to a State-approved production incentive program under which the facility voluntarily participates in the State-approved production incentive program. .