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SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE.

    (a) Short Title.--This Act may be cited as the ``Long-Term 
Investment Incentive Act of 1997''.
    (b) Amendment of 1986 Code.--Except as otherwise expressly 
provided, whenever in this Act an amendment or repeal is expressed in 
terms of an amendment to, or repeal of, a section or other provision, 
the reference shall be considered to be made to a section or other 
provision of the Internal Revenue Code of 1986.

SEC. 2. REDUCTION OF TAX ON LONG-TERM CAPITAL GAINS ON ASSETS HELD MORE 
              THAN 2 YEARS.

    (a) In General.--Part I of subchapter P of chapter 1 (relating to 
treatment of capital gains) is amended by redesignating section 1202 as 
section 1203 and by inserting after section 1201 the following new 
section:

``SEC. 1202. CAPITAL GAINS DEDUCTION FOR ASSETS HELD BY NONCORPORATE 
              TAXPAYERS MORE THAN 2 YEARS.

    ``(a) General Rule.--If a taxpayer other than a corporation has a 
net capital gain for any taxable year, there shall be allowed as a 
deduction an amount equal to the sum of the applicable percentages of 
the classes of net capital gain described in the table under subsection 
(b).
    ``(b) Applicable Percentage.--For purposes of this subsection, the 
applicable percentage shall be the percentage determined in accordance 
with the following table:

          
                                                         The applicable
          ``In the case of:
                                                         percentage is:
                  2-year gain........................        7.145     
                  3-year gain........................        14.29     
                  4-year gain........................        21.45     
                  5-year gain........................        28.57     
                  6-year gain........................        35.71     
                  7-year gain........................        42.86     
                  8-year gain........................        50.00.    
    ``(c) Gain to Which Deduction Applies.--For purposes of this 
section--
            ``(1) 2-year gain.--The term `2-year gain' means the lesser 
        of--
                    ``(A) the net capital gain for the taxable year, or
                    ``(B) the amount of long-term capital gain which 
                would be computed for the taxable year if only gain 
                from the sale or exchange of property held by the 
                taxpayer for more than 2 years but not more than 3 
                years were taken into account.
            ``(2) 3-year gain, etc.--The terms `3-, 4-,
        5-, 6-, or 7-year gain' mean the amounts determined under 
        paragraph (1)--
                    ``(A) by reducing the amount of the net capital 
                gain under subparagraph (A) thereof by an amount equal 
                to the long-term capital gain from the sale or exchange 
                of property with a holding period less than the minimum 
                holding period for any such category, and
                    ``(B) by substituting 3, 4, 5, 6, or 7 years for 2 
                years and 4, 5, 6, 7, or 8 years for 3 years, 
                respectively, in subparagraph (B) thereof.
            ``(3) 8-year gain.--The term `8-year gain' means the lesser 
        of--
                    ``(A) the net capital gain for the taxable year, 
                reduced by in the same manner as under paragraph 
                (2)(A), or
                    ``(B) the amount of the long-term capital gain 
                which would be computed for the taxable year if only 
                gain from the sale or exchange of property held by the 
                taxpayer for more than 8 years were taken into account.
    ``(d) Estates and Trusts.--In the case of an estate or trust, the 
deduction under subsection (a) shall be computed by excluding the 
portion (if any) of the gains for the taxable year from sales or 
exchanges of capital assets which, under sections 652 and 662 (relating 
to inclusions of amounts in gross income of beneficiaries of trusts), 
is includible by the income beneficiaries as gain derived from the sale 
or exchange of capital assets.
    ``(e) Coordination With Treatment of Capital Gain Under Limitation 
on Investment Interest.--For purposes of this section, the net capital 
gain for any taxable year shall be reduced (but not below zero) by the 
amount which the taxpayer takes into account as investment income under 
section 163(d)(4)(B)(iii).
    ``(f) Treatment of Collectibles.--
            ``(1) In general.--Solely for purposes of this section, any 
        gain or loss from the sale or exchange of a collectible shall 
be treated as a short-term capital gain or loss (as the case may be), 
without regard to the period such asset was held. The preceding 
sentence shall apply only to the extent the gain or loss is taken into 
account in computing taxable income.
            ``(2) Treatment of certain sales of interest in 
        partnership, etc.--For purposes of paragraph (1), any gain from 
        the sale or exchange of an interest in a partnership, S 
        corporation, or trust which is attributable to unrealized 
        appreciation in the value of collectibles held by such entity 
        shall be treated as gain from the sale or exchange of a 
        collectible. Rules similar to the rules of section 751(f) shall 
        apply for purposes of the preceding sentence.
            ``(3) Collectible.--For purposes of this subsection, the 
        term `collectible' means any capital asset which is a 
        collectible (as defined in section 408(m) without regard to 
        paragraph (3) thereof).
    ``(g) Transitional Rule.--
            ``(1) In general.--Gain may be taken into account under 
        subsection (c) only if such gain is properly taken into account 
        on or after May 7, 1997.
            ``(2) Special rules for pass-thru entities.--
                    ``(A) In general.--In applying paragraph (1) with 
                respect to any pass-thru entity, the determination of 
                when gains and losses are properly taken into account 
                shall be made at the entity level.
                    ``(B) Pass-thru entity defined.--For purposes of 
                subparagraph (A), the term `pass-thru entity' means--
                            ``(i) a regulated investment company,
                            ``(ii) a real estate investment trust,
                            ``(iii) an S corporation,
                            ``(iv) a partnership,
                            ``(v) an estate or trust, and
                            ``(vi) a common trust fund.''
    (b) Deduction Allowable in Computing Adjusted Gross Income.--
Subsection (a) of section 62 is amended by inserting after paragraph 
(16) the following new paragraph:
            ``(17) Long-term capital gains.--The deduction allowed by 
        section 1202.''
    (c) Maximum Capital Gains Rate.--Section 1(h) is amended by adding 
at the end the following new sentence: ``For purposes of this 
subsection, taxable income shall be computed without regard to the 
deduction allowed under section 1202.''
    (d) Treatment of Certain Pass-Thru Entities.--
            (1) Capital gain dividends of regulated investment 
        companies.--
                    (A) Subparagraph (B) of section 852(b)(3) is 
                amended to read as follows:
                    ``(B) Treatment of capital gain dividends by 
                shareholders.--A capital gain dividend shall be treated 
                by the shareholders as gain from the sale or exchange 
                of a capital asset held for more than 1 year but not 
                more than 2 years; except that the portion of any such 
                dividend designated by the company as allocable 2-, 3-, 
                4-, 5-, 6-, 7-, or 8-year gain of the company shall be 
                treated as gain from the sale or exchange of a capital 
                asset held for the amount of years in such class for 
                purposes of section 1202. Rules similar to the rules of 
                subparagraph (C) shall apply to any designation under 
                the preceding sentence.''
                    (B) Clause (i) of section 852(b)(3)(D) is amended 
                by adding at the end the following new sentence: 
                ``Rules similar to the rules of subparagraph (B) shall 
                apply in determining character of the amount to be so 
                included by any such shareholder.''
            (2) Capital gain dividends of real estate investment 
        trusts.--Subparagraph (B) of section 857(b)(3) is amended to 
        read as follows:
                    ``(B) Treatment of capital gain dividends by 
                shareholders.--A capital gain dividend shall be treated 
                by the shareholders or holders of beneficial interests 
                as gain from the sale or exchange of a capital asset 
                held for more than 1 year but not more than 2 years; 
                except that the portion of any such dividend designated 
                by the company as allocable to 2-, 3-, 4-, 5-, 6-, 7-, 
                or 8-year gain of the company shall be treated as gain 
                from the sale or exchange of a capital asset held for 
                the amount of years in such class for purposes of 
                section 1202. Rules similar to the rules of 
                subparagraph (C) shall apply to any designation under 
                the preceding sentence.''
            (3) Common trust funds.--Subsection (c) of section 584 is 
        amended--
                    (A) by inserting ``and not more than 2 years'' 
                after ``1 year'' each place it appears in paragraph 
                (2),
                    (B) by striking ``and'' at the end of paragraph 
                (2), and
                    (C) by redesignating paragraph (3) as paragraph (4) 
                and inserting after paragraph (2) the following new 
                paragraph:
            ``(3) as part of its gains from sales or exchanges of 
        capital assets held for periods described in the classes of 
        gains under section 1202(c), its proportionate share of the 
        gains of the common trust fund from sales or exchanges of 
        capital assets held for such periods, and''.
    (e) Technical and Conforming Changes.--
            (1) Subparagraph (B) of section 170(e)(1) is amended by 
        inserting ``(or, in the case of a taxpayer other than a 
        corporation, the percentage of such gain equal to 100 percent 
        minus the percentage applicable to such gain under section 
        1202(a))'' after ``the amount of gain''.
            (2) Subparagraph (B) of section 172(d)(2) is amended to 
        read as follows:
                    ``(B) the deduction under section 1202 and the 
                exclusion under section 1203 shall not be allowed.''
            (3)(A) Section 221 (relating to cross reference) is amended 
        to read as follows:

``SEC. 221. CROSS REFERENCES.

    ``(1) For deduction for net capital gains in the case of a taxpayer 
other than a corporation, see section 1202.
    ``(2) For deductions in respect of a decedent, see section 691.''
            (B) The table of sections for part VII of subchapter B of 
        chapter 1 is amended by striking ``reference'' in the item 
        relating to section 221 and inserting ``references''.
            (4) The last sentence of section 453A(c)(3) is amended by 
        striking all that follows ``long-term capital gain,'' and 
        inserting ``the maximum rate on net capital gain under section 
        1(h) or 1201 or the deduction under section 1202 (whichever is 
        appropriate) shall be taken into account.''
            (5) Paragraph (4) of section 642(c) is amended to read as 
        follows:
            ``(4) Adjustments.--To the extent that the amount otherwise 
        allowable as a deduction under this subsection consists of gain 
        from the sale or exchange of capital assets held for more than 
        1 year, proper adjustment shall be made for any deduction 
        allowable to the estate or trust under section 1202 or any 
        exclusion allowable to the estate or trust under section 
        1203(a). In the case of a trust, the deduction allowed by this 
        subsection shall be subject to section 681 (relating to 
        unrelated business income).''
            (6) The last sentence of paragraph (3) of section 643(a) is 
        amended to read as follows: ``The deduction under section 1202 
        and the exclusion under section 1203 shall not be taken into 
        account.''
            (7) Subparagraph (C) of section 643(a)(6) is amended by 
        inserting ``(i)'' before ``there shall'' and by inserting 
        before the period ``, and (ii) the deduction under section 1202 
        (relating to capital gains deduction) shall not be taken into 
        account''.
            (8) Paragraph (4) of section 691(c) is amended by striking 
        ``sections 1(h), 1201, and 1211'' and inserting ``sections 
        1(h), 1201, 1202, and 1211''.
            (9) The second sentence of section 871(a)(2) is amended by 
        inserting ``or 1203'' after ``1202''.
            (10) Subsection (d) of section 1044 is amended by striking 
        ``1202'' and inserting ``1203''.
            (11) Paragraph (1) of section 1402(i) is amended by 
        inserting ``, and the deduction provided by section 1202 shall 
        not apply'' before the period at the end thereof.
    (f) Clerical Amendment.--The table of sections for part I of 
subchapter P of chapter 1 is amended by inserting after the item 
relating to section 1201 the following new item:

                              ``Sec. 1202. Capital gains deduction for 
                                        assets held by noncorporate 
                                        taxpayers more than 2 years.''
    (g) Effective Date.--
            (1) In general.--Except as otherwise provided in this 
        subsection, the amendments made by this section shall apply to 
        taxable years ending on and after May 7, 1997.
            (2) Contributions.--The amendment made by subsection (e)(1) 
        shall apply to contributions on or after May 7, 1997.
Long-Term Investment Incentive Act of 1997 - Amends the Internal Revenue Code to establish a sliding scale capital gains deduction on assets held between two years and eight years by noncorporate taxpayers.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Preserving Marginal Lands and 
Protecting Farming Act of 2013''.

SEC. 2. MAXIMUM ENROLLMENT.

    Section 1231(d) of the Food Security Act of 1985 (16 U.S.C. 
3831(d)) is amended to read as follows:
    ``(d) Maximum Enrollment.--The Secretary may maintain in the 
conservation reserve at any 1 time, not more than--
            ``(1) during fiscal year 2013, 29,000,000 acres;
            ``(2) during fiscal year 2014, 26,000,000 acres; and
            ``(3) during each of fiscal years 2015 through 2018, 
        24,000,000 acres.''.

SEC. 3. INELIGIBLE LAND.

    Section 1231 of the Food Security Act of 1985 (16 U.S.C. 3831) is 
amended by adding at the end the following new subsection:
    ``(j) Ineligible Land.--Notwithstanding any other provision of this 
section, after the date of enactment of this subsection, the Secretary 
may not enroll land in the conservation reserve that is classified as 
class I or class II land under the land capability classification 
system published in the National Soil Survey Handbook of the Natural 
Resources Conservation Service, unless such land is enrolled as a 
buffer, filterstrip, or strip adjacent to a riparian area.''.

SEC. 4. CONTRACT REQUIREMENTS.

    (a) Early Termination by Owner or Operator.--Section 1235(e) of the 
Food Security Act of 1985 (16 U.S.C. 3835(e)) is amended--
            (1) in paragraph (1)(A)--
                    (A) by striking ``The Secretary'' and inserting 
                ``During fiscal year 2014, the Secretary''; and
                    (B) by striking ``before January 1, 1995,'';
            (2) in paragraph (2), by striking subparagraph (C) and 
        inserting the following:
                    ``(C) Land devoted to hardwood trees.
                    ``(D) Wildlife habitat, duck nesting habitat, 
                pollinator habitat, upland bird habitat buffer, 
                wildlife food plots, State acres for wildlife 
                enhancement, shallow water areas for wildlife, and rare 
                and declining habitat.
                    ``(E) Farmable wetland and restored wetland.
                    ``(F) Land that contains diversions, erosion 
                control structures, flood control structures, contour 
                grass strips, living snow fences, salinity reducing 
                vegetation, cross wind trap strips, and sediment 
                retention structures.
                    ``(G) Land located within a federally-designated 
                wellhead protection area.
                    ``(H) Land that is covered by an easement under the 
                conservation reserve program.
                    ``(I) Land located within an average width, 
                according to the applicable Natural Resources 
                Conservation Service field office technical guide, of a 
                perennial stream or permanent water body.''; and
            (3) in paragraph (3), by striking ``60 days after the date 
        on which the owner or operator submits the notice required 
        under paragraph (1)(C)'' and inserting ``upon approval by the 
        Secretary''.
    (b) Transition Option for Certain Farmers or Ranchers.--Section 
1235(f) of the Food Security Act of 1985 (16 U.S.C. 3835(f)) is 
amended--
            (1) in paragraph (1)--
                    (A) in the matter preceding subparagraph (A), by 
                striking ``Duties'' and all that follows through ``a 
                beginning farmer'' and inserting ``Transition to 
                covered farmer or rancher.--In the case of a contract 
                modification approved in order to facilitate the 
                transfer of land subject to a contract from a retired 
                farmer or rancher to a beginning farmer'';
                    (B) in subparagraph (A)(i), by inserting ``, 
                including preparing to plant an agricultural crop'' 
                after ``improvements'';
                    (C) in subparagraph (D), by striking ``the farmer 
                or rancher'' and inserting ``the covered farmer or 
                rancher''; and
                    (D) in subparagraph (E), by striking ``section 
                1001A(b)(3)(B)'' and inserting ``section 1001(a)''; and
            (2) in paragraph (2), by striking ``requirement of section 
        1231(h)(4)(B)'' and inserting ``option pursuant to section 
        1231(h)''.
    (c) Final Year Contract.--Section 1235 of the Food Security Act of 
1985 (16 U.S.C. 3835) is amended by adding at the end the following new 
subsection:
    ``(g) Final Year of Contract.--The Secretary shall not consider an 
owner or operator to be in violation of a term or condition of the 
conservation reserve contract if--
            ``(1) during the year prior to expiration of the contract, 
        the land is enrolled in the conservation stewardship program; 
        and
            ``(2) the activity required under the conservation 
        stewardship program pursuant to such enrollment is consistent 
        with this subchapter.''.
Preserving Marginal Lands and Protecting Farming Act of 2013 - Amends the Food Security Act of 1985 to set the maximum number of acres that may be enrolled at any one time in the conservation reserve program (CRP) at: (1) 29 million acres for FY2013, (2) 26 million acres for FY2014, and (3) 26 million acres for each of FY2015 through FY2018. Prohibits the enrollment of land in the conservation reserve that is classified as class I or class II land under the National Soil Survey Handbook's land capability classification system unless such land is enrolled as a buffer, filterstrip, or strip adjacent to a riparian area. Directs the Secretary of Agriculture (USDA), during FY2014, to permit a participant that entered into a CRP contract to terminate the contract at any time if the contract has been in effect for at least five years.  Revises the types of land that are not subject to early contract termination.

SECTION 1. RENEWABLE PORTFOLIO STANDARD.

    (a) In General.--Title VI of the Public Utility Regulatory Policies 
Act of 1978 (16 U.S.C. 2601 et seq.) is amended by adding at the end 
the following:

``SEC. 610. FEDERAL RENEWABLE PORTFOLIO STANDARD.

    ``(a) Renewable Energy Requirement.--
            ``(1) In general.--Each electric utility that sells 
        electricity to electric consumers shall obtain a percentage of 
        the base amount of electricity it sells to electric consumers 
        in any calendar year from new renewable energy or existing 
        renewable energy. The percentage obtained in a calendar year 
        shall not be less than the amount specified in the following 
        table:

 
 
 
``Calendar year:                    Minimum annual percentage:
  2010............................  1
  2011............................  2
  2012............................  4
  2013............................  6
  2014............................  8
  2015............................  10
  2016............................  12
  2017............................  14
  2018............................  16
  2019............................  18
  2020............................  20
  2021............................  21
  2022............................  22
  2023............................  23
  2024............................  24
  2025............................  25.

            ``(2) Means of compliance.--An electric utility shall meet 
        the requirements of paragraph (1) by--
                    ``(A) submitting to the Secretary renewable energy 
                credits issued under subsection (b);
                    ``(B) making alternative compliance payments to the 
                Secretary at the rate of 2 cents per kilowatt hour (as 
                adjusted for inflation under subsection (g)); or
                    ``(C) a combination of activities described in 
                subparagraphs (A) and (B).
    ``(b) Renewable Energy Credit Trading Program.--
            ``(1) In general.--Not later than July 1, 2009, the 
        Secretary shall establish a renewable energy credit trading 
        program under which electric utilities shall submit to the 
        Secretary renewable energy credits to certify the compliance of 
        the electric utilities with respect to obligations under 
        subsection (a)(1).
            ``(2) Administration.--As part of the program, the 
        Secretary shall--
                    ``(A) issue tradeable renewable energy credits to 
                generators of electric energy from new renewable 
                energy;
                    ``(B) issue nontradeable renewable energy credits 
                to generators of electric energy from existing 
                renewable energy;
                    ``(C) issue renewable energy credits to electric 
                utilities associated with State renewable portfolio 
                standard compliance mechanisms pursuant to subsection 
                (h);
                    ``(D) ensure that a kilowatt hour, including the 
                associated renewable energy credit, shall be used only 
                once for purposes of compliance with this Act;
                    ``(E) allow double credits for generation from 
                facilities on Indian land, and triple credits for 
                generation from small renewable distributed generators 
                (meaning those no larger than 1 megawatt); and
                    ``(F) ensure that, with respect to a purchaser 
                that, as of the date of enactment of this section, has 
                a purchase agreement from a renewable energy facility 
                placed in service before that date, the credit 
                associated with the generation of renewable energy 
                under the contract is issued to the purchaser of the 
                electric energy.
            ``(3) Duration.--A credit described in subparagraph (A) or 
        (B) of paragraph (2) may only be used for compliance with this 
        section during the 3-year period beginning on the date of 
        issuance of the credit.
            ``(4) Transfers.--An electric utility that holds credits in 
        excess of the quantity of credits needed to comply with 
        subsection (a) may transfer the credits to another electric 
        utility in the same utility holding company system.
            ``(5) Delegation of market function.--The Secretary may 
        delegate to an appropriate market-making entity the 
        administration of a national tradeable renewable energy credit 
        market for purposes of creating a transparent national market 
        for the sale or trade of renewable energy credits.
    ``(c) Enforcement.--
            ``(1) Civil penalties.--Any electric utility that fails to 
        meet the compliance requirements of subsection (a) shall be 
        subject to a civil penalty.
            ``(2) Amount of penalty.--The amount of the civil penalty 
        shall be determined by multiplying the number of kilowatt-hours 
        of electric energy sold to electric consumers in violation of 
        subsection (a) by the greater of 2 cents (adjusted for 
        inflation under subsection (g)) or 200 percent of the average 
        market value of renewable energy credits during the year in 
        which the violation occurred.
            ``(3) Mitigation or waiver.--The Secretary may mitigate or 
        waive a civil penalty under this subsection if the electric 
        utility was unable to comply with subsection (a) for reasons 
        outside of the reasonable control of the utility. The Secretary 
        shall reduce the amount of any penalty determined under 
        paragraph (2) by an amount paid by the electric utility to a 
        State for failure to comply with the requirement of a State 
        renewable energy program if the State requirement is greater 
        than the applicable requirement of subsection (a).
            ``(4) Procedure for assessing penalty.--The Secretary shall 
        assess a civil penalty under this subsection in accordance with 
        the procedures prescribed by section 333(d) of the Energy 
        Policy and Conservation Act of 1954 (42 U.S.C. 6303).
    ``(d) State Renewable Energy Account Program.--
            ``(1) In general.--The Secretary shall establish, not later 
        than December 31, 2008, a State renewable energy account 
        program.
            ``(2) Deposits.--All money collected by the Secretary from 
        alternative compliance payments and the assessment of civil 
        penalties under this section shall be deposited into the 
        renewable energy account established pursuant to this 
        subsection. The State renewable energy account shall be held by 
        the Secretary and shall not be transferred to the Treasury 
        Department.
            ``(3) Use.--Proceeds deposited in the State renewable 
        energy account shall be used by the Secretary, subject to 
        appropriations, for a program to provide grants to the State 
        agency responsible for developing State energy conservation 
        plans under section 362 of the Energy Policy and Conservation 
        Act (42 U.S.C. 6322) for the purposes of promoting renewable 
        energy production, including programs that promote technologies 
        that reduce the use of electricity at customer sites such as 
        solar water heating.
            ``(4) Administration.--The Secretary may issue guidelines 
        and criteria for grants awarded under this subsection. State 
        energy offices receiving grants under this section shall 
        maintain such records and evidence of compliance as the 
        Secretary may require.
            ``(5) Preference.--In allocating funds under this program, 
        the Secretary shall give preference--
                    ``(A) to States in regions which have a 
                disproportionately small share of economically 
                sustainable renewable energy generation capacity; and
                    ``(B) to State programs to stimulate or enhance 
                innovative renewable energy technologies.
    ``(e) Rules.--The Secretary shall issue rules implementing this 
section not later than 1 year after the date of enactment of this 
section.
    ``(f) Exemptions.--This section shall not apply in any calendar 
year to an electric utility--
            ``(1) that sold less than 4,000,000 megawatt-hours of 
        electric energy to electric consumers during the preceding 
        calendar year; or
            ``(2) in Hawaii.
    ``(g) Inflation Adjustment.--Not later than December 31 of each 
year beginning in 2008, the Secretary shall adjust for inflation the 
price of a renewable energy credit under subsection (b)(2) and the 
amount of the civil penalty per kilowatt-hour under subsection (c)(2).
    ``(h) State Programs.--
            ``(1) In general.--Nothing in this section diminishes any 
        authority of a State or political subdivision of a State to 
        adopt or enforce any law or regulation respecting renewable 
        energy, but, except as provided in subsection (c)(3), no such 
        law or regulation shall relieve any person of any requirement 
        otherwise applicable under this section. The Secretary, in 
        consultation with States having such renewable energy programs, 
        shall, to the maximum extent practicable, facilitate 
        coordination between the Federal program and State programs.
            ``(2) Regulations.--
                    ``(A) In general.--The Secretary, in consultation 
                with States, shall promulgate regulations to ensure 
                that an electric utility subject to the requirements of 
                this section that is also subject to a State renewable 
                energy standard receives renewable energy credits in 
                relation to equivalent quantities of renewable energy 
                associated with compliance mechanisms, other than the 
                generation or purchase of renewable energy by the 
                electric utility, including the acquisition of 
                certificates or credits and the payment of taxes, fees, 
                surcharges, or other financial compliance mechanisms by 
                the electric utility or a customer of the electric 
                utility, directly associated with the generation or 
                purchase of renewable energy.
                    ``(B) Prohibition on double counting.--The 
                regulations promulgated under this paragraph shall 
                ensure that a kilowatt hour associated with a renewable 
                energy credit issued pursuant to this subsection shall 
                not be used for compliance with this section more than 
                once.
    ``(i) Recovery of Costs.--
            ``(1) In general.--The Commission shall issue and enforce 
        such regulations as are necessary to ensure that an electric 
        utility recovers all prudently incurred costs associated with 
        compliance with this section.
            ``(2) Applicable law.--A regulation under paragraph (1) 
        shall be enforceable in accordance with the provisions of law 
        applicable to enforcement of regulations under the Federal 
        Power Act (16 U.S.C. 791a et seq.).
    ``(j) Wind Energy Development Study.--The Secretary, in 
consultation with appropriate Federal and State agencies, shall 
conduct, and submit to Congress a report describing the results of, a 
study on methods to increase transmission line capacity for wind energy 
development.
    ``(k) Definitions.--In this section:
            ``(1) Base amount of electricity.--The term `base amount of 
        electricity' means the total amount of electricity sold by an 
        electric utility to electric consumers in a calendar year, 
        excluding municipal waste and electricity generated by a 
        hydroelectric facility (including a pumped storage facility, 
        but excluding incremental hydropower).
            ``(2) Distributed generation facility.--The term 
        `distributed generation facility' means a facility at a 
        customer site.
            ``(3) Existing renewable energy.--The term `existing 
        renewable energy' means, except as provided in paragraph 
        (7)(B), electric energy generated at a facility (including a 
        distributed generation facility) placed in service prior to 
        January 1, 2001, from solar, wind, or geothermal energy, ocean 
        energy, biomass (as defined in section 203(a) of the Energy 
        Policy Act of 2005), or landfill gas.
            ``(4) Geothermal energy.--The term `geothermal energy' 
        means energy derived from a geothermal deposit (within the 
        meaning of section 613(e)(2) of the Internal Revenue Code of 
        1986).
            ``(5) Incremental geothermal production.--
                    ``(A) In general.--The term `incremental geothermal 
                production' means for any year the excess of--
                            ``(i) the total kilowatt hours of 
                        electricity produced from a facility (including 
                        a distributed generation facility) using 
                        geothermal energy; over
                            ``(ii) the average annual kilowatt hours 
                        produced at such facility for 5 of the previous 
                        7 calendar years before the date of enactment 
                        of this section after eliminating the highest 
                        and the lowest kilowatt hour production years 
                        in such 7-year period.
                    ``(B) Special rule.--A facility described in 
                subparagraph (A) that was placed in service at least 7 
                years before the date of enactment of this section 
                shall, commencing with the year in which such date of 
                enactment occurs, reduce the amount calculated under 
                subparagraph (A)(ii) each year, on a cumulative basis, 
                by the average percentage decrease in the annual 
                kilowatt hour production for the 7-year period 
                described in subparagraph (A)(ii) with such cumulative 
                sum not to exceed 30 percent.
            ``(6) Incremental hydropower.--The term `incremental 
        hydropower' means additional energy generated as a result of 
        efficiency improvements or capacity additions made on or after 
        January 1, 2001, or the effective date of an existing 
        applicable State renewable portfolio standard program at a 
        hydroelectric facility that was placed in service before that 
        date. The term does not include additional energy generated as 
        a result of operational changes not directly associated with 
        efficiency improvements or capacity additions. Efficiency 
        improvements and capacity additions shall be measured on the 
        basis of the same water flow information used to determine a 
        historic average annual generation baseline for the 
        hydroelectric facility and certified by the Secretary or the 
        Federal Energy Regulatory Commission.
            ``(7) New renewable energy.--The term `new renewable 
        energy' means--
                    ``(A) electric energy generated at a facility 
                (including a distributed generation facility) placed in 
                service on or after January 1, 2001, from--
                            ``(i) solar, wind, or geothermal energy or 
                        ocean energy;
                            ``(ii) biomass (as defined in section 
                        203(b) of the Energy Policy Act of 2005 (42 
                        U.S.C. 15852(b));
                            ``(iii) landfill gas; or
                            ``(iv) incremental hydropower; and
                    ``(B) for electric energy generated at a facility 
                (including a distributed generation facility) placed in 
                service prior to the date of enactment of this 
                section--
                            ``(i) the additional energy above the 
                        average generation in the 3 years preceding the 
                        date of enactment of this section at the 
                        facility from--
                                    ``(I) solar or wind energy or ocean 
                                energy;
                                    ``(II) biomass (as defined in 
                                section 203(b) of the Energy Policy Act 
                                of 2005 (42 U.S.C. 15852(b));
                                    ``(III) landfill gas; or
                                    ``(IV) incremental hydropower.
                            ``(ii) incremental geothermal production.
            ``(8) Ocean energy.--The term `ocean energy' includes 
        current, wave, tidal, and thermal energy.
    ``(l) Sunset.--This section expires on December 31, 2040.''.
    (b) Table of Contents Amendment.--The table of contents of the 
Public Utility Regulatory Policies Act of 1978 (16 U.S.C. prec. 2601) 
is amended by adding at the end of the items relating to title VI the 
following:

``Sec. 610. Federal renewable portfolio standard.''.

Amends the Public Utility Regulatory Policies Act of 1978 to set forth a federal renewable energy portfolio standard applicable to calendar years 2010 to 2025.

Instructs the Secretary of Energy to establish: (1) a renewable energy credit trading program under which electric utilities shall submit to the Secretary renewable energy credits to certify their compliance with such standard; and (2) a state renewable energy account program for grants to state agencies to promote renewable energy production (including programs that promote technologies that reduce the use of electricity at customer sites such as solar water heating).



Requires the Federal Energy Regulatory Commission (FERC) to issue and enforce regulations to ensure that an electric utility recovers all prudently incurred costs associated with compliance with this Act.

Instructs the Secretary to study and report to Congress on methods to increase transmission line capacity for wind energy development.