[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[S. 2904 Introduced in Senate (IS)]







106th CONGRESS
  2d Session
                                S. 2904

To amend the Internal Revenue Code of 1986 to provide tax incentives to 
 encourage the production and use of efficient energy sources, and for 
                            other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             July 21, 2000

Mr. Bingaman (for himself, Mr. Daschle, Mr. Baucus, Mr. Byrd, Mr. Bayh, 
 Mr. Levin, Mr. Rockefeller, and Mr. Johnson) introduced the following 
  bill; which was read twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
To amend the Internal Revenue Code of 1986 to provide tax incentives to 
 encourage the production and use of efficient energy sources, and for 
                            other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Energy Security 
Tax and Policy Act of 2000''.
    (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.
    (c) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; amendment of 1986 Code; table of contents.
          TITLE I--ENERGY-EFFICIENT PROPERTY USED IN BUSINESS

Sec. 101. Incentive for Distributed Generation.
Sec. 102. Credit for energy-efficient property used in business, 
                            including hybrid vehicles.
Sec. 103. Energy Efficient Commercial Building Property Deduction.
                  TITLE II--NONBUSINESS ENERGY SYSTEMS

Sec. 201. Credit for certain nonbusiness energy systems.
                      TITLE III--ALTERNATIVE FUELS

Sec. 301. Allocation of alcohol fuels credit to patrons of a 
                            cooperative.
                         TITLE IV--AUTOMOBILES

Sec. 401. Extension of credit for qualified electric vehicles.
Sec. 402. Additional Deduction for Cost of Installation of Alternative 
                            Fueling Stations.
Sec. 403. Credit for Retail Sale of Clean Burning Fuels as Motor 
                            Vehicle Fuel.
Sec. 404. Exception to HOV Passenger Requirements for Alternative Fuel 
                            Vehicles.
                    TITLE V--CLEAN COAL TECHNOLOGIES

Sec. 501. Credit for investment in qualifying clean coal technology.
Sec. 502. Credit for production from qualifying clean coal technology.
Sec. 503. Risk pool for qualifying clean coal technology.
                       TITLE VI--METHANE RECOVERY

Sec. 601. Credit for capture of coalmine methane gas.
                   TITLE VII--OIL AND GAS PRODUCTION

Sec. 701. Credit for production of re-refined lubricating oil.
Sec. 702. Oil and gas from marginal wells.
Sec. 703. Deduction for delay rental payments.
Sec. 704. Election to expense geological and geophysical expenditures.
                 TITLE VIII--RENEWABLE POWER GENERATION

Sec. 801. Modifications to credit for electricity produced from 
                            renewable resources.
Sec. 802. Credit for capital costs of qualified biomass-based 
                            generating system.
Sec. 803. Treatment of facilities using bagasse to produce energy as 
                            solid waste disposal facilities eligible 
                            for tax-exempt financing.
Sec. 804. Federal renewable portfolio standard.
                         TITLE IX--STEELMAKING

Sec. 901. Extension of credit for electricity to production from steel 
                            cogeneration.
                      TITLE X--ENERGY EMERGENCIES

Sec. 1001. Energy Policy and Conservation Act Amendments.
Sec. 1002. Energy Conservation Programs for Schools and Hospitals.
Sec. 1003. State Energy Programs.
Sec. 1004. Annual Home Heating Readiness.
Sec. 1005. Summer Fill and Fuel Budgeting Programs.
Sec. 1006. Use of Energy Futures for Fuel Purchases.
Sec. 1007. Increased Use of Alternative Fuels by Federal Fleets.
Sec. 1008. Full Expensing of Home Heating Oil and Propane Storage 
                            Facilities.
                      TITLE XI--ENERGY EFFICIENCY

Sec. 1101. Energy Savings Performance Contracts.
Sec. 1102. Weatherization.
Sec. 1103. Public Benefits System.
Sec. 1104. National Oil Heat Research Alliance Act.
                         TITLE XII--ELECTRICITY

Sec. 1201. Comprehensive Indian Energy Program.
Sec. 1202. Interconnection.

          TITLE I--ENERGY-EFFICIENT PROPERTY USED IN BUSINESS

SEC. 101. INCENTIVE FOR DISTRIBUTED GENERATION.

    (a) In General.--Section 168(e)(3)(E) of the Internal Revenue Code 
(classifying certain property as 15-year property) is amended by 
striking ``and'' at the end of clause (ii), striking the period at the 
end of clause (iii) and inserting ``, and'', and by adding the 
following new clause:
                            ``(iv) any distributed power property.''.
    (b) Conforming Amendments.--(1) Section 168(i) is amended by adding 
at the end the following new paragraph:
            ``(15) Distributed power property.--The term `distributed 
        power property' means property--
                    ``(A) which is used in the generation of 
                electricity for primary use--
                            ``(i) in nonresidential real or residential 
                        rental property used in the taxpayer's trade or 
                        business, or
                            ``(ii) in the taxpayer's industrial 
                        manufacturing process or plant activity, with a 
                        rated total capacity in excess of 500 
                        kilowatts,
                    ``(B) which also may produce usable thermal energy 
                or mechanical power for use in a heating or cooling 
                application, as long as at least 40 percent of the 
                total useful energy produced consists of--
                            ``(i) with respect to assets described in 
                        subparagraph (A)(i), electrical power (whether 
                        sold or used by the taxpayer), or
                            ``(ii) with respect to assets described in 
                        subparagraph (A)(ii), electrical power (whether 
                        sold or used by the taxpayer) and thermal or 
                        mechanical energy used in the taxpayer's 
                        industrial manufacturing process or plant 
                        activity,
                    ``(C) which is not used to transport primary fuel 
                to the generating facility or to distribute energy 
                within or outside of the facility, and
                    ``(D) where it is reasonably expected that not more 
                than 50 percent of the produced electricity will be 
                sold to, or used by, unrelated persons.
        For purposes of subparagraph (B), energy output is determined 
        on the basis of expected annual output levels, measured in 
        British thermal units (Btu), using standard conversion factors 
        established by the Secretary.''.
    (2) Subparagraph (B) of section 168(g)(3) is amended by inserting 
after the item relating to subparagraph (E)(iii) in the table contained 
therein the following new line:
                    ``(E)(iv) 22''.
    (c) Effective Date.--The amendments made by this section are 
effective for property placed in service on or after December 31, 2000.

SEC. 102. CREDIT FOR CERTAIN ENERGY-EFFICIENT PROPERTY USED IN 
              BUSINESS.

    (a) In General.--Subpart E of part IV of subchapter A of chapter 1 
(relating to rules for computing investment credit) is amended by 
inserting after section 48 the following:

``SEC. 48A. ENERGY CREDIT.

    ``(a) In General.--For purposes of section 46, the energy credit 
for any taxable year is the sum of--
            ``(1) the amount equal to the energy percentage of the 
        basis of each energy property placed in service during such 
        taxable year, and
            ``(2) the credit amount for each qualified hybrid vehicle 
        placed in service during the taxable year.
    ``(b) Energy Percentage.--
            ``(1) In general.--The energy percentage is--
                    ``(A) except as otherwise provided in this 
                subparagraph, 10 percent,
                    ``(B) in the case of energy property described in 
                clauses (i), (iii), (vi), and (vii) of subsection 
                (c)(1)(A), 20 percent,
                    ``(C) in the case of energy property described in 
                subsection (c)(1)(A)(v), 15 percent, and
                    ``(D) in the case of energy property described in 
                subsection (c)(1)(A)(ii) relating to a high risk 
                geothermal well, 20 percent.
            ``(2) Coordination with rehabilitation.--The energy 
        percentage shall not apply to that portion of the basis of any 
        property which is attributable to qualified rehabilitation 
        expenditures.
    ``(c) Energy Property Defined.--
            ``(1) In general.--For purposes of this subpart, the term 
        `energy property' means any property--
                    ``(A) which is--
                            ``(i) solar energy property,
                            ``(ii) geothermal energy property,
                            ``(iii) energy-efficient building property,
                            ``(iv) combined heat and power system 
                        property,
                            ``(v) low core loss distribution 
                        transformer property,
                            ``(vi) qualified anaerobic digester 
                        property, or
                            ``(vii) qualified wind energy systems 
                        equipment property,
                    ``(B)(i) the construction, reconstruction, or 
                erection of which is completed by the taxpayer, or
                    ``(ii) which is acquired by the taxpayer if the 
                original use of such property commences with the 
                taxpayer.
                    ``(C) which can reasonably be expected to remain in 
                operation for at least 5 years,
                    ``(D) with respect to which depreciation (or 
                amortization in lieu of depreciation) is allowable, and
                    ``(E) which meets the performance and quality 
                standards (if any) which--
                            ``(i) have been prescribed by the Secretary 
                        by regulations (after consultation with the 
                        Secretary of Energy), and
                            ``(ii) are in effect at the time of the 
                        acquisition of the property.
            ``(2) Exceptions.--
                    ``(A) Public utility property.--Such term shall not 
                include any property which is public utility property 
                (as defined in section 46(f)(5) as in effect on the day 
                before the date of the enactment of the Revenue 
                Reconciliation Act of 1990), except for property 
                described in paragraph (1)(A)(iv).
                    ``(B) Certain wind equipment.--Such term shall not 
                include equipment described in paragraph (1)(A)(vii) 
                which is taken into account for purposes of section 45 
                for the taxable year.
    ``(d) Definitions Relating to Types of Energy Property.--For 
purposes of this section--
            ``(1) Solar energy property.--
                    ``(A) In general.--The term `solar energy property' 
                means equipment which uses solar energy to generate 
                electricity, to heat or cool (or provide hot water for 
                use in) a structure, or to provide solar process heat.
                    ``(B) Swimming pools, etc. used as storage 
                medium.--The term `solar energy property' shall not 
                include property with respect to which expenditures are 
                properly allocable to a swimming pool, hot tub, or any 
                other energy storage medium which has a function other 
                than the function of such storage.
                    ``(C) Solar panels.--No solar panel or other 
                property installed as a roof (or portion thereof) shall 
fail to be treated as solar energy property solely because it 
constitutes a structural component of the structure on which it is 
installed.
            ``(2) Geothermal energy property.--
                    ``(A) In general.--The term `geothermal energy 
                property' means equipment used to produce, distribute, 
                or use energy derived from a geothermal deposit (within 
                the meaning of section 613(e)(2)), but only, in the 
                case of electricity generated by geothermal power, up 
                to (but not including) the electrical transmission 
                stage.
                    ``(B) High risk geothermal well.--The term `high 
                risk geothermal well' means a geothermal deposit 
                (within the meaning of section 613(e)(2)) which 
                requires high risk drilling techniques. Such deposit 
                may not be located in a State or national park or in an 
                area in which the relevant State park authority or the 
                National Park Service determines the development of 
                such a deposit will negatively impact on a State or 
                national park.
            ``(3) Energy-efficient building property.--
                    ``(A) In general.--The term `energy-efficient 
                building property' means--
                            ``(i) a fuel cell that--
                                    ``(I) generates electricity and 
                                heat using an electrochemical process,
                                    ``(II) has an electricity-only 
                                generation efficiency greater than 35 
                                percent, and
                                    ``(III) has a minimum generating 
                                capacity of 5 kilowatts,
                            ``(ii) an electric heat pump hot water 
                        heater that yields an energy factor of 1.7 or 
                        greater under standards prescribed by the 
                        Secretary of Energy,
                            ``(iii) an electric heat pump that has a 
                        heating system performance factor (HSPF) of 9 
                        or greater and a cooling seasonal energy 
                        efficiency ratio (SEER) of 13.5 or greater,
                            ``(iv) a natural gas heat pump that has a 
                        coefficient of performance of not less than 
                        1.25 for heating and not less than 0.60 for 
                        cooling,
                            ``(v) a central air conditioner that has a 
                        cooling seasonal energy efficiency ratio (SEER) 
                        of 13.5 or greater,
                            ``(vi) an advanced natural gas water heater 
                        that--
                                    ``(I) increases steady state 
                                efficiency and reduces standby and vent 
                                losses, and
                                    ``(II) has an energy factor of at 
                                least 0.65,
                            ``(vii) an advanced natural gas furnace 
                        that achieves a 95 percent AFUE, and
                            ``(viii) natural gas cooling equipment--
                                    ``(I) that has a coefficient of 
                                performance of not less than .60, or
                                    ``(II) that uses desiccant 
                                technology and has an efficiency rating 
                                of 40 percent.
                    ``(B) Limitations.--The credit under subsection 
                (a)(1) for the taxable year may not exceed--
                            ``(i) $500 in the case of property 
                        described in subparagraph (A) other than 
                        clauses (i) and (iv) thereof,
                            ``(ii) $500 for each kilowatt of capacity 
                        in the case of a fuel cell described in 
                        subparagraph (A)(i), and
                            ``(iii) $1,000 in the case of a natural gas 
                        heat pump described in subparagraph (A)(iv).
            ``(4) Combined heat and power system property.--
                    ``(A) In general.--The term `combined heat and 
                power system property' means property--
                            ``(i) comprising a system for the same 
                        energy source for the simultaneous or 
                        sequential generation of electrical power, 
                        mechanical shaft power, or both, in combination 
                        with steam, heat, or other forms of useful 
                        energy,
                            ``(ii) that has an electrical capacity of 
                        more than 50 kilowatts or a mechanical energy 
                        capacity of more than 67 horsepower or an 
                        equivalent combination of electrical and 
                        mechanical energy capacities, and
                            ``(iii) that produces at least 20 percent 
                        of its total useful energy in the form of both 
                        thermal energy and electrical or mechanical 
                        power.
                    ``(B) Accounting rule for public utility 
                property.--In the case that combined heat and power 
                system property is public utility property (as defined 
                in section 46(f)(5) as in effect on the day before the 
                date of the enactment of the Revenue Reconciliation Act 
                of 1990), the taxpayer may only claim the credit under 
                subsection (a)(1) if, with respect to such property, 
                the taxpayer uses a normalization method of accounting.
            ``(5) Low core loss distribution transformer property.--The 
        term `low core loss distribution transformer property' means a 
        distribution transformer which has energy savings from a highly 
        efficient core of at least 20 percent more than the average for 
        power ratings reported by studies required under section 124 of 
        the Energy Policy Act of 1992.
            ``(6) Qualified anaerobic digester property.--The term 
        `qualified anaerobic digester property' means an anaerobic 
        digester for manure or crop waste that achieves at least 65 
        percent efficiency measured in terms of the fraction of energy 
        input converted to electricity and useful thermal energy.
            ``(7) Qualified wind energy systems equipment property.--
        The term `qualified wind energy systems equipment property' 
        means wind energy systems equipment with a turbine size of not 
        more than 50 kilowatts rated capacity.
    ``(e) Qualified Hybrid Vehicles.--For purposes of subsection 
(a)(2)--
            ``(1) Credit amount.--
                    ``(A) In general.--The credit amount for each 
                qualified hybrid vehicle with a rechargeable energy 
                storage system that provides the applicable percentage 
                of the maximum available power shall be the amount 
                specified in the following table:


 
``Applicable percentage greater than or equal   Less than--     Credit
               to--  (Percent)                   (Percent)    amount is:
 
5............................................           10          $500
10...........................................           20         1,000
20...........................................           30         1,500
30...........................................  ............        2,000
 

                    ``(B) Increase in credit amount for regenerative 
                braking system.--In the case of a qualified hybrid 
                vehicle that actively employs a regenerative braking 
                system which supplies to the rechargeable energy 
                storage system the applicable percentage of the energy 
                available from braking in a typical 60 miles per hour 
                to 0 miles per hour braking event, the credit amount 
                determined under subparagraph (A) shall be increased by 
                the amount specified in the following table:

 
                                                                Credit
``Applicable percentage greater than or equal   Less than--     amount
               to--  (Percent)                   (Percent)     increase
                                                                 is:
 
20...........................................           40          $250
40...........................................           60           500
60...........................................  ............        1,000
 

            ``(2) Qualified hybrid vehicle.--The term `qualified hybrid 
        vehicle' means an automobile that meets all regulatory 
requirements applicable to gasoline-powered automobiles and that can 
draw propulsion energy from both of the following on-board sources of 
stored energy:
                    ``(A) A consumable fuel.
                    ``(B) A rechargeable energy storage system, 
                provided that the automobile is at least 33% more 
                efficient than the average vehicle in its vehicle 
                characterization as defined by EPA.
            ``(3) Maximum available power.--The term `maximum available 
        power' means the maximum value of the sum of the heat engine 
        and electric drive system power or other non-heat energy 
        conversion devices available for a driver's command for maximum 
        acceleration at vehicle speeds under 75 miles per hour.
            ``(4) Automobile.--The term `automobile' has the meaning 
        given such term by section 4064(b)(1) (without regard to 
        subparagraphs (B) and (C) thereof). A vehicle shall not fail to 
        be treated as an automobile solely by reason of weight if such 
        vehicle is rated at 8,500 pounds gross vehicle weight rating or 
        less.
            ``(5) Double benefit; property used outside united states, 
        etc., not qualified.--No credit shall be allowed under 
        subsection (a)(2) with respect to--
                    ``(A) any property for which a credit is allowed 
                under section 25B or 30,
                    ``(B) any property referred to in section 50(b), 
                and
                    ``(C) the portion of the cost of any property taken 
                into account under section 179 or 179A.
            ``(6) Regulations.--
                    ``(A) Treasury.--The Secretary shall prescribe such 
                regulations as may be necessary or appropriate to carry 
                out the purposes of this subsection.
                    ``(B) Environmental protection agency.--The 
                Administrator of the Environmental Protection Agency 
                shall prescribe such regulations as may be necessary or 
                appropriate to specify the testing and calculation 
                procedures that would be used to determine whether a 
                vehicle meets the qualifications for a credit under 
                this subsection.
            ``(7) Termination.--Paragraph (2) shall not apply with 
        respect to any vehicle placed in service during a calendar year 
        ending before January 1, 2003, or after December 31, 2006.
    ``(f) Special Rules.--For purposes of this section--
            ``(1) Special rule for property financed by subsidized 
        energy financing or industrial development bonds.--
                    ``(A) Reducation of basis.--For purposes of 
                applying the energy percentage to any property, if such 
                property is financed in whole or in part by--
                            ``(i) subsidized energy financing, or
                            ``(ii) the proceeds of a private activity 
                        bond (within the meaning of section 141) the 
                        interest on which is exempt from tax under 
                        section 103, the amount taken into account as 
                        the basis of such property shall not exceed the 
                        amount which (but for this subparagraph) would 
                        be so taken into account multiplied by the 
                        fraction determined under subparagraph (B).
                    ``(B) Determination of fraction.--For purposes of 
                subparagraph (A), the fraction determined under this 
                subparagraph is 1 reduced by a fraction--
                            ``(i) the numerator of which is that 
                        portion of the basis of the property which is 
                        allocable to such financing or proceeds, and
                            ``(ii) the denominator of which is the 
                        basis of the property.
                    ``(C) Subsidized energy financing.--For purposes of 
                subparagraph (A), the term `subsidized energy 
                financing' means financing provided under a Federal, 
                State, or local program a principal purpose of which is 
                to provide subsidized financing for projects designed 
                to conserve or produce energy.
            ``(2) Certain progress expenditure rules made applicable.--
        Rules similar to the rules of subsections (c)(4) and (d) of 
        section 46 (as in effect on the day before the date of the 
        enactment of the Revenue Reconciliation Act of 1990) shall 
        apply for purposes of this section.
    ``(g) Application of Section.--
            ``(1) In general.--Except as provided by paragraph (2) and 
        subsection (e), this section shall apply to property placed in 
        service after December 31, 2000, and before January 1, 2004.
            ``(2) Exceptions.--
                    ``(A) Solar energy and geothermal energy 
                property.--Paragraph (1) shall not apply to solar 
                energy property or geothermal energy property.
                    ``(B) Fuel cell property.--In the case of property 
                that is a fuel cell described in subsection 
                (d)(3)(A)(i), this section shall apply to property 
                placed in service after December 31, 2000, and before 
                January 1, 2005.''
    (b) Conforming Amendments.--
            (1) Section 48 is amended to read as follows:

``SEC. 48. REFORESTATION CREDIT.

    ``(a) In General.--For purposes of section 46, the reforestation 
credit for any taxable year is 20 percent of the portion of the 
amortizable basis of any qualified timber property which was acquired 
during such taxable year and which is taken into account under section 
194 (after the application of section 194(b)(1)).
    ``(b) Definitions.--For purposes of this subpart, the terms 
`amortizable basis' and `qualified timber property' have the respective 
meanings given to such terms by section 194.''
            (2) Section 39(d) is amended by adding at the end the 
        following:
            ``(9) No carryback of energy credit before effective 
        date.--No portion of the unused business credit for any taxable 
        year which is attributable to the energy credit determined 
        under section 48A may be carried back to a taxable year ending 
        before the date of the enactment of section 48A.''
            (3) Section 280C is amended by adding at the end the 
        following:
    ``(d) Credit for Energy Property Expenses.--
            ``(1) In general.--No deduction shall be allowed for that 
        portion of the expenses for energy property (as defined in 
        section 48A(c)) otherwise allowable as a deduction for the 
        taxable year which is equal to the amount of the credit 
        determined for such taxable year under section 48A(a).
            ``(2) Similar rule where taxpayer capitalizes rather than 
        deducts expenses.--If--
                    ``(A) the amount of the credit allowable for the 
                taxable year under section 48A (determined without 
                regard to section 38(c)), exceeds
                    ``(B) the amount allowable as a deduction for the 
                taxable year for expenses for energy property 
                (determined without regard to paragraph (1)), the 
                amount chargeable to capital account for the taxable 
                year for such expenses shall be reduced by the amount 
                of such excess.
            ``(3) Controlled groups.--Paragraph (3) of subsection (b) 
        shall apply for purposes of this subsection.''
            (4) Section 29(b)(3)(A)(i)(III) is amended by striking 
        `section 48(a)(4)(C)' and inserting `section 48A(f)(1)(C)'.
            (5) Section 50(a)(2)(E) is amended by striking `section 
        48(a)(5)' and inserting `section 48A(f)(2)'.
            (6) Section 168(e)(3)(B) is amended--
                    (A) by striking clause (vi)(I) and inserting the 
                following:
                            ``(I) is described in paragraph (1) or (2) 
                        of section 48A(d) (or would be so described if 
                        `solar and wind' were substituted for `solar' 
                        in paragraph (1)(B)),'', and
                    (B) in the last sentence by striking ``section 
                48(a)(3)'' and inserting ``section 48A(c)(2)(A)''.
    (c) Clerical Amendment.--The table of sections for subpart E of 
part IV of subchapter A of chapter 1 is amended by striking the item 
relating to section 48 and inserting the following:

``Sec. 48. Reforestation credit.
``Sec. 48A. Energy credit.''
    (d) Effective Date.--The amendments made by this section shall 
apply to property placed in service after December 31, 2000, under 
rules similar to the rules of section 48(m) of the Internal Revenue 
Code of 1986 (as in effect on the day before the date of the enactment 
of the Revenue Reconciliation Act of 1990).

SEC. 103. ENERGY EFFICIENT COMMERCIAL BUILDING PROPERTY DEDUCTION.

    ``(a) In General.--There shall be allowed as a deduction for the 
taxable year an amount equal to the sum of the energy efficient 
commercial building amount determined under subsection (b).
    ``(b)(1) Deduction Allowed.--For purposes of subsection (a)--
            ``(A) In general.--The energy efficient commercial building 
        property deduction determined under this subsection is an 
        amount equal to energy efficient commercial building property 
        expenditures made by a taxpayer for the taxable year.
            ``(B) Maximum amount of deduction.--The amount of energy 
        efficient commercial building property expenditures taken into 
        account under subparagraph (A) shall not exceed an amount equal 
        to the product of--
                    ``(i) $2.25, and
                    ``(ii) the square footage of the building with 
                respect to which the expenditures are made.
            ``(C) Year deduction allowed.--The deduction under 
        subparagraph (A) shall be allowed in the taxable year in which 
        the construction of the building is completed.
    ``(2) Energy Efficient Commercial Building Property Expenditures.--
For purposes of this subsection, the term `energy efficient commercial 
building property expenditures' means an amount paid or incurred for 
energy efficient commercial building property installed on or in 
connection with new construction or reconstruction of property--
            ``(A) for which depreciation is allowable under section 
        167,
            ``(B) which is located in the United States, and
            ``(C) the construction or erection of which is completed by 
        the taxpayer.
Such property includes all residential rental property, including low-
rise multifamily structures and single family housing property which is 
not within the scope of Standard 90.1-1999 (described in paragraph 
(3)). Such term includes expenditures for labor costs properly 
allocable to the onsite preparation, assembly, or original installation 
of the property.
    ``(3) Energy Efficient Commercial Building Property.--For purposes 
of paragraph (2)--
            ``(A) In general.--The term `energy efficient commercial 
        building property' means any property which reduces total 
        annual energy and power costs with respect to the lighting, 
        heating, cooling, ventilation, and hot water supply systems of 
        the building by 50 percent or more in comparison to a reference 
        building which meets the requirements of Standard 90.1-1999 of 
        the American Society of Heating, Refrigerating, and Air 
        Conditioning Engineers and the Illuminating Engineering Society 
        of North America using methods of calculation under 
        subparagraph (B) and certified by qualified professionals as 
        provided under paragraph (6).
            ``(B) Methods of calculation.--The Secretary, in 
        consultation with the Secretary of Energy, shall promulgate 
        regulations which describe in detail methods for calculating 
        and verifying energy and power consumption and cost, taking 
        into consideration the provisions of the 1998 California 
        Nonresidential ACM Manual. These procedures shall meet the 
        following requirements:
                    ``(i) In calculating tradeoffs and energy 
                performance, the regulations shall prescribe the costs 
                per unit of energy and power, such as kilowatt hour, 
                kilowatt, gallon of fuel oil, and cubic foot or Btu of 
                natural gas, which may be dependent on time of usage.
                    ``(ii) The calculational methodology shall require 
                that compliance be demonstrated for a whole building. 
                If some systems of the building, such as lighting, are 
                designed later than other systems of the building, the 
                method shall provide that either--
                            ``(I) the expenses taken into account under 
                        paragraph (1) shall not occur until the date 
                        designs for all energy-using systems of the 
                        building are completed,
                            ``(II) the energy performance of all 
                        systems and components not yet designed shall 
                        be assumed to comply minimally with the 
                        requirements of such Standard 90.1-1999, or
                            ``(III) the expenses taken into account 
                        under paragraph (1) shall be a fraction of such 
                        expenses based on the performance of less than 
                        all energy-using systems in accordance with 
                        clause (iii).
                    ``(iii) The expenditures in connection with the 
                design of subsystems in the building, such as the 
                envelope, the heating, ventilation, air conditioning 
                and water heating system, and the lighting system shall 
                be allocated to the appropriate building subsystem 
                based on system-specific energy cost savings targets in 
                regulations promulgated by the Secretary of Energy 
                which are equivalent, using the calculation 
                methodology, to the whole building requirement of 50 
                percent savings.
                    ``(iv) The calculational methods under this 
                subparagraph need not comply fully with section 11 of 
                such Standard 90.1-1999.
                    ``(v) The calculational methods shall be fuel 
                neutral, such that the same energy efficiency features 
                shall qualify a building for the deduction under this 
                subsection regardless of whether the heating source is 
                a gas or oil furnace or an electric heat pump.
                    ``(vi) The calculational methods shall provide 
                appropriate calculated energy savings for design 
                methods and technologies not otherwise credited in 
                either such Standard 90.1-1999 or in the 1998 
                California Nonresidential ACM Manual, including the 
                following:
                            ``(I) Natural ventilation.
                            ``(II) Evaporative cooling.
                            ``(III) Automatic lighting controls such as 
                        occupancy sensors, photocells, and timeclocks.
                            ``(IV) Daylighting.
                            ``(V) Designs utilizing semi-conditioned 
                        spaces that maintain adequate comfort 
                        conditions without air conditioning or without 
                        heating.
                            ``(VI) Improved fan system efficiency, 
                        including reductions in static pressure.
                            ``(VII) Advanced unloading mechanisms for 
                        mechanical cooling, such as multiple or 
                        variable speed compressors.
                            ``(VIII) The calculational methods may take 
                        into account the extent of commissioning in the 
                        building, and allow the taxpayer to take into 
                        account measured performance that exceeds 
                        typical performance.
            ``(C) Computer software.--
                    ``(i) In general.--Any calculation under this 
                paragraph shall be prepared by qualified computer 
                software.
                    ``(ii) Qualified computer software.--For purposes 
                of this subparagraph, the term `qualified computer 
                software' means software--
                            ``(I) for which the software designer has 
                        certified that the software meets all 
                        procedures and detailed methods for caculating 
                        energy and power consumption and costs as 
                        required by the Secretary.
                            ``(II) which provides such forms as 
                        required to be filed by the Secretary in 
                        connection with energy efficiency of property 
                        and the deduction allowed under this 
                        subsection, and
                            ``(III) which provides a notice form which 
                        summarizes the energy efficiency features of 
                        the building and its projected annual energy 
                        costs.
    ``(4) Allocation of deduction for public property.--In the case of 
energy efficient commercial building property installed on or in public 
property, the Secretary shall promulgate a regulation to allow the 
allocation of the deduction to the person primarily responsible for 
designing the property in lieu of the public entity which is the owner 
of such property. Such person shall be treated as the tax payer for 
purposes of this subsection.
    ``(5) Notice to owner.--The qualified individual shall provide an 
explanation to the owner of the building regarding the energy 
efficiency features of the building and its projected annual energy 
costs as provided in the notice under paragraph (3)(C)(ii)(III).
    ``(6) Certification.--
            ``(A) In general.--Except as provided in this paragraph, 
        the Secretary, in consultation with the Secretary of Energy, 
        shall establish requirements for certification and compliance 
        procedures similar to the procedures under section 25B(c)(7).
          ``(B) Qualified individuals.--Individuals qualified to 
        determine compliance shall be only those individuals who are 
        recognized by an organization certified by the Secretary for 
        such purposes.
          ``(C) Proficiency of qualified individuals.--The Secretary 
        shall consult with nonprofit organizations and State agencies 
        with expertise in energy efficiency calculations and 
        inspections to develop proficiency tests and training programs 
        to qualify individuals to determine compliance.
    ``(g) Termination.--This section shall not apply with respect to--
            ``(1) any energy property placed in service before December 
        31, 2000, and after December 31, 2006, and
            ``(2) any energy efficient commercial building property 
        expenditures in connection with property--
                    ``(A) the plans for which are not certified under 
                subsection (f)(6) on or before December 31, 2006, and
                    ``(B) the construction of which is not completed on 
                or before December 31, 2008.''

                  TITLE II--NONBUSINESS ENERGY SYSTEMS

SEC. 201. CREDIT FOR CERTAIN NONBUSINESS ENERGY SYSTEMS.

    (a) In General.--Subpart A of part IV of subchapter A of chapter 1 
(relating to nonrefundable personal credits) is amended by inserting 
after section 25A the following:

``SEC. 25B. NONBUSINESS ENERGY PROPERTY.

    ``(a) Allowance of Credit.--
            ``(1) In general.--In the case of an individual, there 
        shall be allowed as a credit against the tax imposed by this 
        chapter for the taxable year an amount equal to the sum of--
                    ``(A) the applicable percentage of residential 
                energy property expenditures made by the taxpayer 
                during such year,
                    ``(B) the credit amount (determined under section 
                48A(e)) for each vehicle purchased during the taxable 
                year which is a qualified hybrid vehicle (as defined in 
                section 48A(e)(2)), and
                    ``(C) the credit amount specified in the following 
                table for a new, highly energy-efficient principal 
                residence:
  

 
                                                    For the period:
                                 The credit
        In the case of:          amount is:     Beginning
                                                   on:       Ending on:
 
30 percent property...........       $1,000      1/1/2001    12/31/2002
50 percent property...........       $2,000      1/1/2001   12/31/2004.
 

                In the case of any new, highly energy-efficient 
                principal residence, the credit amount shall be zero 
                for any period for which a credit amount is not 
                specified for such property in the table under 
                subparagraph (C).
            ``(2) Applicable percentage.--
                    ``(A) In general.--The applicable percentage shall 
                be determined in accordance with the following table:

 
                                                    For the period:
                                 Percentage
        In the case of:              is:        Beginning
                                                   on:       Ending on:
 
20% energy-eff. bldg. prop....           20      1/1/2001    12/31/2004
10% energy-eff. bldg. prop....           10      1/1/2001    12/31/2002
Solar water heating property..           15      1/1/2001    12/31/2007
Photovoltaic property.........           15      1/1/2001   12/31/2007.
 

                    ``(B) Periods for which percentage not specified.--
                In the case of any residential energy property, the 
                applicable percentage shall be zero for any period for 
                which an applicable percentage is not specified for 
                such property under subparagraph (A).
    ``(b) Maximum Credit.--
            ``(1) In general.--In the case of property described in the 
        following table, the amount of the credit allowed under 
        subsection (a)(1)(A) for the taxable year for each item of such 
        property with respect to a dwelling unit shall not exceed the 
        amount specified for such property in such table:
Description of property item:       Maximum allowable credit amount is:
    20 percent energy-efficient 
        building property (other 
        than a fuel cell or natural 
        gas heat pump).
                                        $500.
    20 percent energy-efficient 
        building property fuel cell 
        described in section 
        48A(d)(3)(A)(i).
                                        $500 per each kw/hr of 
                                                capacity.
    Natural gas heat pump described 
        in section 
        48A(d)(3)(D)(iv).
                                        $1,000.
    10 percent energy-efficient 
        building property.
                                        $250.
    Solar water heating property...
                                        $1,000.
    Photovoltaic property..........
                                        $2,000.
            (2) Coordination of limitations.--If a credit is allowed to 
        the taxpayer for any taxable year by reason of an acquisition 
        of a new, highly energy-efficient principal residence, no other 
        credit shall be allowed under subsection (a)(1)(A) with respect 
        to such residence during the 1-taxable year period beginning 
        with such taxable year.
    ``(c) Definitions.--For purposes of this section--
            ``(1) Residential energy property expenditures.--The term 
        `residential energy property expenditures' means expenditures 
        made by the taxpayer for qualified energy property installed on 
        or in connection with a dwelling unit which--
                    ``(A) is located in the United States, and
                    ``(B) is used by the taxpayer as a residence.
        Such term includes expenditures for labor costs properly 
        allocable to the onsite preparation, assembly, or original 
        installation of the property.
            ``(2) Qualified energy property.--
                    ``(A) In general.--The term `qualified energy 
                property' means--
                            ``(i) energy-efficient building property,
                            ``(ii) solar water heating property, and
                            ``(iii) photovoltaic property.
                    ``(B) Swimming pool, etc., used as storage medium; 
                solar panels.--For purposes of this paragraph, the 
                provisions of subparagraphs (B) and (C) of section 
                48A(d)(1) shall apply.
            ``(3) Energy-efficient building property.--The term 
        `energy-efficient building property' has the meaning given to 
        such term by section 48A(e)(3).
            ``(4) Solar water heating property.--The term `solar water 
        heating property' means property which, when installed in 
        connection with a structure, uses solar energy for the purpose 
        of providing hot water for use within such structure.
            ``(5) Photovoltaic property.--The term `photovoltaic 
        property' means property which, when installed in connection 
        with a structure, uses a solar photovoltaic process to generate 
        electricity for use in such structure.
            ``(6) New, highly energy-efficient principal residence.--
                    ``(A) In general.--Property is a new, highly 
                energy-efficient principal residence if--
                            ``(i) such property is located in the 
                        United States,
                            ``(ii) the original use of such property 
                        commences with the taxpayer and is, at the time 
                        of such use, the principal residence of the 
                        taxpayer, and
                            ``(iii) such property is certified before 
                        such use commences as being 50 percent property 
                        or 30 percent property.
                    ``(B) 50 or 30 percent property.--
                            ``(i) In general.--For purposes of 
                        subparagraph (A), property is 50 percent 
                        property or 30 percent property if the 
                        projected energy usage of such property is 
                        reduced by 50 percent or 30 percent, 
                        respectively, compared to the energy usage of a 
                        reference house that complies with minimum 
                        standard practice, such as the 1998 
                        International Energy Conservation Code of the 
                        International Code Council, as determined 
                        according to the requirements specified in 
                        clause (ii).
                            ``(ii) Procedures.--
                                    ``(I) In general.--For purposes of 
                                clause (i), energy usage shall be 
                                demonstrated either by a component-
                                based approach or a performance-based 
                                approach.
                                    ``(II) Component approach.--
                                Compliance by the component approach is 
                                achieved when all of the components of 
                                the house comply with the requirements 
                                of prescriptive packages established by 
                                the Secretary of Energy, in 
                                consultation with the Administrator of 
                                the Environmental Protection Agency, 
                                such that they are equivalent to the 
                                results of using the performance-based 
                                approach of subclause (III) to achieve 
                                the required reduction in energy usage.
                                    ``(III) Performance-based 
                                approach.--Performance-based compliance 
                                shall be demonstrated in terms of the 
                                required percentage reductions in 
                                projected energy use. Computer software 
                                used in support of performance-based 
                                compliance must meet all of the 
                                procedures and methods for calculating 
                                energy savings reductions that are 
                                promulgated by the Secretary of Energy. 
                                Such regulations on the specifications 
                                for software shall be based in the 1998 
                                California Residential Alternative 
                                Calculation Method Approval Manual, 
                                except that the calculation procedures 
                                shall be developed such that the same 
                                energy efficiency measures qualify as a 
                                home for tax credits regardless of 
                                whether the home uses a gas or 
oil furnace or boiler, or an electric heat pump.
                                    ``(IV) Approval of software 
                                submissions.--The Secretary of Energy 
                                shall approve software submissions that 
                                comply with the calculation 
                                requirements of subclause (III).
                    ``(C) Determinations of compliance.--A 
                determination of compliance made for the purposes of 
                this paragraph shall be filed with the Secretary of 
                Energy within 1 year of the date of such determination 
                and shall include the TIN of the certifer, the address 
                of the building in compliance, and the identity of the 
                person for whom such determination was performed. 
                Determinations of compliance filed within the Secretary 
                of Energy shall be available for inspection by the 
                Secretary.
                    ``(D) Compliance.--
                            ``(i) In general.--The Secretary of Energy 
                        in consultation with the Secretary of the 
                        Treasury shall establish requirements for 
                        certification and compliance procedures after 
                        examining the requirements for energy 
                        consultants and home energy ratings providers 
                        specified by the Mortgage Industry National 
                        Accreditation Procedures for Home Energy Rating 
                        Systems.
                            ``(ii) Individuals qualified to determine 
                        compliance.--Indivdiuals qualified to determine 
                        compliance shall be only those individuals who 
                        are recognized by an organization certified by 
                        the Secretary of Energy for such purposes.
                ``(E) Principal Residence.--The term `principal 
                residence' has the same meaning as when used in section 
                121, except that the period for which a building is 
                treated as the principal residence of the taxpayer 
                shall also include the 60-day period ending on the 1st 
                day on which it would (but for this subparagraph) first 
                be treated as the taxpayer's principal residence.
    ``(d) Special Rules.--For purposes of this section--
            ``(1) Dollar amounts in case of joint occupancy.--In the 
        case of any dwelling unit which if jointly occupied and used 
        during any calendar year as a residence by 2 or more 
        individuals the following shall apply:
                    ``(A) The amount of the credit allowable under 
                subsection (a) by reason of expenditures made during 
                each calendar year by any of such individuals with 
                respect to such dwelling unit shall be determined by 
                treating all of such individuals as 1 taxpayer whose 
                taxable year is such calendar year.
                    ``(B) There shall be allowable with respect to such 
                expenditures to each of such individuals, a credit 
                under subsection (a) for the taxable year in which such 
                calendar year ends in an amount which bears the same 
                ratio to the amount determined under subparagraph (A) 
                as the amount of such expenditures made by such 
                individuals during such calendar year bears to the 
                aggregate of such expenditures made by all of such 
                individuals during such calendar year.
            ``(2) Tenant-stockholder in cooperative housing 
        corporation.--In the case of an individual who is a tenant-
        stockholder (as defined in section 216) in a cooperative 
        housing corporation (as defined in such section), such 
        individual shall be treated as having made his tenant-
        stockholder's proportinate share (as defined in section 
        216(b)(3)) of any expenditures of such corporation.
            ``(3) Condominiums.--
                    ``(A) In general.--In the case of an individiual 
                who is a member of a condominium management association 
                with respect to a condominium which the individual 
                owns, such individual shall be treated as having made 
                his proportionate share of any expenditures of such 
                association.
                    ``(B) Condominium management association.--For 
                purpose of this paragraph, the `condominium management 
                association' means an organization which meets the 
                requirements of paragraph (1) of section 528(c) (other 
                than subparagraph (E) thereof) with respect to a 
                condominimum project substantially all of the units of 
                which are used as residences.
            ``(4) Joint ownership of energy items.--
                    ``(A) In general.--Any expenditure otherwise 
                qualifying as a residential energy property expenditure 
                shall not be treated as failing to so qualify merely 
                because such expenditure was made with respect to 2 or 
                more dwelling units.
                    ``(B) Limits applied separately.--In the case of 
                any ependiture described in subparagraph (A), the 
                amount of the credit allowable under subsection (a) 
                shall (subject to paragraph (1)) be computed separately 
                with respect to the amount of the expenditure made for 
                each dwelling unit.
            ``(5) Allocation in certain cases.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), if less than 80 percent of the use of 
                an item as for nonbusiness purposes, only that portion 
                of the expenditures for such item which is properly 
                allocable to use for nonbusiness purposes shall be 
                taken into account. For purposes of this paragraph, use 
                for a swimming pool shall be treated as use which is 
                not for nonbusiness purposes.
                    ``(B) Special rule for vehicles.--For purposes of 
                this section and section 48A, a vehicle shall be 
                treated as used entirely for business or nonbusiness 
                purposes if the majority of the use of such vehicle is 
                for business or nonbusiness purposes, as the case may 
                be.
            ``(6) Double benefit; property used outside united states, 
        etc., not qualified.--No credit shall be allowed under 
        subsection (a)(1)(B) with respect to--
                    ``(A) any property for which a credit is allowed 
                under section 30 or 48A.
                    ``(B) any property referrerd to in section 50(b), 
                and
                    ``(C) the portion of the cost of any property taken 
                into account under section 179 or 179A.
            ``(7) When expenditure made; amount of expenditure.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), an expenditure with respect to an 
                item shall be treated as made when the original 
                installation of the item is completed.
                    ``(B) Expenditures part of building construction.--
                In the case of an expenditure in connection with the 
                construction of a structure, such expenditure shall be 
                treated as made when the original use of the 
                constructed structure by the taxpayer begins.
                    ``(C) Amount.--The amount of any expenditure shall 
                be the cost thereof.
            ``(8) Property financed by subsidized energy financing.--
                    ``(A) Reduction of expenditures.--For purposes of 
                determining the amount of residential energy property 
                expenditures made by any individual with respect to any 
                dwelling unit, there shall not be taken in to account 
                expenditures which are made from subsidized energy 
                financing (as defined in section 48A(f)(1)(C)).
                    ``(B) Dollar limits reduced.--The dollar amounts in 
                the table contained in subsection (b)(1) with respect 
                to each property purchased for such dwelling unit for 
                any taxable year of such taxpayer shall be reduced 
                proportionately by an amount equal to the sum of--
                            ``(i) the amount of the expenditures made 
                        by the taxpayer during such taxable year with 
                        respect to such dwelling unit and not taken 
                        into account by reason of subparagraph (A), and
                            ``(ii) the amount of any Federal, State, or 
                        local grant received by the taxpayer during 
                        such taxable year which is used to make 
                        residential energy property expenditures with 
                        respect to the dwelling unit and is not 
                        included in the gross income of such taxpayer.
            ``(9) Safety certifications.--No credit shall be allowed 
        under this section for an  item of property unless--
                    ``(A) in the case of solar water heating property, 
                such property is certified for performance and safety 
                by the non-profit Solar Rating Certification 
                Corporation or a comparable entity endorsed by the 
                government of the State in which such property is 
                installed, and
                    ``(B) in the case of photovoltaic property, such 
                property meets appropriate fire and electric code 
                requirements.
    ``(e) Basis Adjustments.--For purposes of this subtitle, if a 
credit is allowed under this section for any expenditure with respect 
to any property, the increase in the basis of such property which would 
(but for this subsection) result from such expenditure shall be reduced 
by the amount of the credit so allowed.''
    (b) Conforming Amendments.--
            (1) Section 1016(a) is amended by striking ``and'' at the 
        end of paragraph (26), by striking the period at the end of 
        paragraph (27) and inserting ``; and'', and by adding at the 
        end the following:
            ``(28) to the extent provided in section 25B(e), in the 
        case of amounts with respect to which a credit has been allowed 
        under section 25B.''
            (2) The table of sections for subpart A of part IV of 
        subchapter A of chapter 1 is amended by inserting after the 
        item relating to section 25A the following:

``Sec. 25B. Nonbusiness energy property.''
    (c) Effective Date.--The amendments made by this section shall 
apply to expenditures after December 31, 2000.

                      TITLE III--ALTERNATIVE FUELS

SEC. 301.  ALLOCATION OF ALCOHOL FUELS CREDIT TO PATRONS OF A 
              COOPERATIVE.

    (a) In General.--Section 40(d) (relating to alcohol used as fuel) 
is amended by adding at the end the following:
            ``(6) Allocation of small ethanol producer credit to 
        patrons of cooperative.--
                    ``(A) In general.--In the case of a cooperative 
                organization described in section 1381(a), any portion 
                of the credit determined under subsection (a)(3) for 
                the taxable year may, at the election of the 
                organization made on a timely filed return (including 
                extensions) for such year, be apportioned pro rata 
                among patrons of the organization on the basis of the 
                quantity or value of business done with or for such 
                patrons for the taxable year. Such an election, once 
                made, shall be irrevocable for such taxable year.
                    ``(B) Treatment of organizations and patrons.--The 
                amount of the credit apportioned to patrons pursuant to 
                subparagraph (A)--
                            ``(i) shall not be included in the amount 
                        determined under subsection (a) for the taxable 
                        year of the organization, and
                            ``(ii) shall be included in the amount 
                        determined under subsection (a) for the taxable 
                        year of each patron in which the patronage 
                        dividend for the taxable year referred to in 
                        subparagraph (A) is includible in gross income.
                    ``(C) Special rule for decreasing credit for 
                taxable year.--If the amount of the credit of a 
                cooperative organization determined under subsection 
                (a)(3) for a taxable year is less than the amount of 
                such credit shown on the cooperative organization's 
                return for such year, an amount equal to the excess of 
                such reduction over the amount not apportioned to the 
                patrons under subparagraph (a) for the taxable year 
                shall be treated as an increase in tax imposed by this 
                chapter on the organization. Any such increase shall 
                not be treated as tax imposed by this chapter for 
                purposes of determining the amount of any credit under 
                this subpart or subpart A, B, E, or G of this part.''
    (b) Technical Amendment.--Section 1388 (relating to definitions and 
special rules for cooperative organizations) is amended by adding at 
the end the following:
    ``(k) Cross Reference.--For provisions relating to the 
apportionment of the alcohol fuels credit between cooperative 
organizations and their patrons, see section 40(d)(6).''
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2000.

                         TITLE IV--AUTOMOBILES

SEC. 401.  EXTENSION OF CREDIT FOR QUALIFIED ELECTRIC VEHICLES.

    (a) Extension of Credit for Qualified Electric Vehicles.--
Subsection (f) of section 30 (relating to termination) is amended by 
striking ``December 31, 2004'' and inserting ``December 31, 2006''.
    (b) Repeal of Phaseout.--Subsection (b) of section 30 (relating to 
limitations) is amended by striking paragraph (2) and redesignating 
paragraph (3) as paragraph (2).
    (c) No Double Benefit.--
            (1) Subsection (d) of section 30 (relating to special 
        rules) is amended by adding at the end the following:
            ``(5) No double benefit.--No credit shall be allowed under 
        subsection (a) with respect to any vehicle if the taxpayer 
        claims a credit for such vehicle under section 25B(a)(1)(B) or 
        48A(a)(2).''
            (2) Paragraph (3) of section 30(d) (relating to property 
        used outside United States, etc., not qualified) is amended by 
        striking ``section 50(b)'' and inserting ``section 25B, 48A, or 
        50(b)''.
            (3) Paragraph (5) of section 179A(e) (relating to property 
        used outside United States, etc., not qualified) is amended by 
        striking ``section 50(b)'' and inserting ``section 25B, 48A, or 
        50(b)''.
    (d) Effective Date.--The amendments made by this section shall 
apply to property placed in service after December 31, 2000.

SEC. 402.  ADDITIONAL DEDUCTION FOR COST OF INSTALLATION OF ALTERNATIVE 
              FUELING STATIONS.

    (a) In General.--Subparagraph (A) of section 179A(b)(2) of the 
Internal Revenue Code of 1986 (relating to qualified clean-fuel vehicle 
refueling property) is amended to read as follows:
                    ``(A) In general.--The aggregate cost which may be 
                taken into account under subsection (a)(1)(B) with 
                respect to qualified clean-fuel vehicle refueling 
                property placed in service during the taxable year at a 
                location shall not exceed the sum of--
                            ``(i) with respect to costs not described 
                        in clause (ii), the excess (if any) of--
                                    ``(I) $100,000, over
                                    ``(II) the aggregate amount of such 
                                costs taken into account under 
                                subsection (a)(1)(B) by the taxpayer 
                                (or any related person or predecessor) 
                                with respect to property placed in 
                                service at such location for all 
                                preceding taxable years, plus
                            ``(ii) the lesser of--
                                    ``(I) the cost of the installation 
                                of such property, or
                                    ``(II) $30,000.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to property placed in service after December 31, 2000.

SEC. 403. CREDIT FOR RETAIL SALE OF CLEAN BURNING FUELS AS MOTOR 
              VEHICLE FUEL.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to business related 
credits) is amended by inserting after section 40 the following:

``SEC. 40A. CREDIT FOR RETAIL SALE OF CLEAN BURNING FUELS AS MOTOR 
              VEHICLE FUEL.

    ``(a) General Rule.--For purposes of section 38, the clean burning 
fuel retail sales credit of any taxpayer for any taxable year is 50 
cents for each gasoline gallon equivalent of clean burning fuel sold at 
retail by the taxpayer during such year as a fuel to propel any 
qualified motor vehicle.
    ``(b) Definitions.--For purposes of this section--
            ``(1) Clean burning fuel.--The term `clean burning fuel' 
        means natural gas, compressed natural gas, liquefied natural 
        gas, liquefied petroleum gas, hydrogen, and any liquid at least 
        85 percent of which consists of methanol.
            ``(2) Gasoline gallon equivalent.--The term `gasoline 
        gallon equivalent' means, with respect to any clean burning 
        fuel, the amount (determined by the Secretary) of such fuel 
        having a Btu content of 114,000.
            ``(3) Qualified motor vehicle.--The term `qualified motor 
        vehicle' means any motor vehicle (as defined in section 
        179A(e)) which meets any applicable Federal or State emissions 
        standards with respect to each fuel by which such vehicle is 
        designed to be propelled.
            ``(4) Sold at retail.--
                    ``(A) In general.--The term `sold at retail' means 
                the sale, for a purpose other than resale, after 
                manufacture, production, or importation.
                    ``(B) Use treated as sale.--If any person uses 
                clean burning fuel as a fuel to propel any qualified 
                motor vehicle (including any use after importation) 
                before such fuel is sold at retail, then such use shall 
                be treated in the same manner as if such fuel were sold 
                at retail as a fuel to propel such vehicle by such 
                person.
    ``(c) No Double Benefit.--The amount of the credit determined under 
subsection (a) shall be reduced by the amount of any deduction or 
credit allowable under this chapter for fuel taken into account in 
computing the amount of such credit.
    ``(d) Termination.--This section shall not apply to any fuel sold 
at retail after December 31, 2007.''.
    (b) Credit Treated as Business Credit.--Section 38(b) of the 
Internal Revenue Code of 1986 (relating to current year business 
credit) is amended by striking ``plus'' at the end of paragraph (11), 
by striking the period at the end of paragraph (12) and inserting, ``, 
plus'', and by adding at the end the following:
            ``(13) the clean burning fuel retail sales credit 
        determined under section 40A(a).''.
    (c) Transitional Rule.--Section 39(d) of the Internal Revenue Code 
of 1986 (relating to transitional rules) is amended by adding at the 
end the following:
            ``(9) No carryback of section 40a credit before effective 
        date.--No portion of the unused business credit for any taxable 
        year which is attributable to the clean burning fuel retail 
        sales credit determined under section 40A(a) may be carried 
        back to a taxable year ending before January 1, 2000.''.
    (d) Clerical Amendment.--The table of sections for subpart D of 
part IV of subchapter A of chapter 1 of the Internal Revenue Code of 
1986 is amended by inserting after the item relating to section 40 the 
following:

                              ``Sec. 40A. Credit for retail sale of 
                                        clean burning fuels as motor 
                                        vehicle fuel.''.
    (e) Effective Date.--The amendments made by this section shall 
apply to fuel sold at retail after December 31, 2000, in taxable years 
ending after such date.

SEC. 404. EXCEPTION TO HOV PASSENGER REQUIREMENTS FOR ALTERNATIVE FUEL 
              VEHICLES.

    Section 102(a) of title 23, United States Code, is amended by 
inserting ``(unless, at the discretion of the State highway department, 
the vehicle operates on, or is fueled by, an alternative fuel (as 
defined in section 301 of Public Law 102-486 (42 U.S.C. 13211(2)))'' 
after ``required''.

                    TITLE V--CLEAN COAL TECHNOLOGIES

SEC. 501. CREDIT FOR INVESTMENT IN QUALIFFYING CLEAN COAL TECHNOLOGY.

    (a) Allowance of Qualifying Clean Coal Technology Facility 
Credit.--Section 46 (relating to amount of credit) is amended by 
striking ``and'' at the end of paragraph (2), by striking the period at 
the end of paragraph (3) and inserting ``, and'', and by adding at the 
end the following:
            ``(4) the qualifying clean coal technology facility 
        credit.''
    (b) Amount of Qualifying Clean Coal Technology Facility Credit.--
Subpart E of part IV of subchapter A of chapter 1 (relating to rules 
for computing investment credit), as amended by section 101(a), is 
amended by inserting after section 48A the following:

``SEC. 48B. QUALIFYING CLEAN COAL TECHNOLOGY FACILITY CREDIT.

    ``(a) In General.--For purposes of section 46, the qualifying clean 
coal technology facility credit for any taxable year is an amount equal 
to 10 percent of the qualified investment in a qualifying clean coal 
technology facility for such taxable year.
    ``(b) Qualifying Clean Coal Technology Facility.--
            ``(1) In general.--For purposes of subsection (a), the term 
        `qualifying clean coal technology facility' means a facility of 
        the taxpayer--
                    ``(A)(i)(I) which replaces a conventional 
                technology facility of the taxpayer and the original 
                use of which commences with the taxpayer, or
                    ``(II) which is a retrofitted or repowered 
                conventional technology facility, the retrofitting or 
                repowering of which is completed by the taxpayer (but 
                only with respect to that portion of the basis which is 
                properly attributable to such retrofitting or 
                repowering), or
                    ``(ii) that is acquired through purchase (as 
                defined by section 179(d)(2)),
                    ``(B) that is depreciable under section 167,
                    ``(C) that has a useful life of not less than 4 
                years,
                    ``(D) that is located in the United States, and
                    ``(E) that uses qualifying clean coal technology.
            ``(2) Special rule for sale-leasebacks.--For purposes of 
        subparagraph (A) of paragraph (1), in the case of a facility 
        that--
                    ``(A) is originally placed in service by a person, 
                and
                    ``(B) is sold and leased back by such person, or is 
                leased to such person, within 3 months after the date 
                such facility was originally placed in servcie, for a 
                period of not less than 12 years.
        such facility shall be treated as originally placed in service 
        not earlier than the date on which such property is used under 
        the leaseback (or lease) referred to in subparagraph (B). The 
        preceding sentence shall not apply to any property if the 
        lessee and lessor of such property make an election under this 
        sentence. Such an election, once made, may be revoked only with 
        the consent of the Secretary.
            ``(3) Qualifying clean coal technology.--For purposes of 
        paragraph (1)(A)--
                    ``(A) In general.--The term `qualifying clean coal 
                technology' means, with respect to clean coal 
                technology--
                            ``(i) applications totaling 1,000 megawatts 
                        of advanced pulverized coal or atmospheric 
                        fluidized bed combustion technology installed 
                        as a new, retrofit, or repowering application 
                        and operated between 2000 and 2014 that has a 
                        design average net heat rate of not more than 
                        8,750 Btu's per kilowatt hour,
                            ``(ii) applications totaling 1,500 
                        megawatts of pressurized fluidized bed 
                        combustion technology installed as a new, 
                        retrofit, or repowering application and 
                        operated between 2000 and 2014 that has a 
                        design average net heat rate of not more than 
                        8,400 Btu's per kilowatt hour,
                            ``(iii) applications totaling 1,500 
                        megawatts of integrated gasification combined 
                        cycle technology installed as a new, retrofit, 
                        or repowering application and operated between 
                        2000 and 2014 that has a design average net 
                        heat rate of not more than 8,550 Btu's per 
                        kilowatt hour,
                            ``(iv) applications totaling 2,000 
                        megawatts or equivalent of technology for the 
                        production of electricity installed as a new, 
                        retrofit, or repowering application and 
                        operated between 2000 and 2014 that has a 
                        carbon emission rate that is not more than 85 
                        percent of conventional technology.
                    ``(B) Exceptions.--Such term shall not include 
                clean coal technology projects receiving or scheduled 
                to receive funding under the Clean Coal Technology 
                Program of the Department of Energy.
                    ``(C) Clean coal technology.--The term `clean coal 
                technology' means advanced technology that utilizes 
                coal to produce 50 percent or more of its thermal 
                output as electricity including advanced pulverized 
                coal or atmospheric fluidized bed combustion, 
                pressurized fluidized bed combustion, integrated 
                gasification combined cycle, and any other technology 
                for the production of electricity that exceeds the 
                performance of conventional technology.
                    ``(D) Conventional coal technology.--The term 
                `conventional technology' means--
                            ``(i) coal-fired combustion technology with 
                        a design average net heat rate of not less than 
                        9,300 Btu's per kilowatt hour (HHV) and a 
                        carbon equivalents emission rate of not more 
                        than 0.53 pounds of carbon per kilowatt hour; 
                        or
                            ``(ii) natural gas-fired combustion 
                        technology with a design average net heat rate 
                        of not less than 7,500 Btu's per kilowatt hour 
                        (HHV) and a carbon equivalents emission rate of 
                        not more than 0.24 pound of carbon per kilowatt 
                        hour.
                    ``(E) Design average net heat rate.--The term 
                `design average net heat rate' shall be based on the 
                design average annual heat input to and the design 
                average annual net electrical output from the 
                qualifying clean coal technology (determined without 
                regard to such technology's co-generation of steam).
                    ``(F) Selection criteria.--Selection criteria for 
                clean coal technology facilities--
                            ``(i) shall be established by the Secretary 
                        of Energy as part of a competitive 
                        solicitation,
                            ``(ii) shall include primary criteria of 
                        minimum design average net heat rate, maximum 
                        design average thermal efficiency, and lowest 
                        cost to the government, and
                            ``(iii) shall include supplemental criteria 
                        as determined appropriate by the Secretary of 
                        Energy.
    ``(c) Qualified Investment.--For purposes of subsection (a), the 
term `qualified investment' means, with respect to any taxable year, 
the basis of a qualifying clean coal technology facility placed in 
service by the taxpayer during such taxable year.
    ``(d) Qualified Progress Expenditures.--
            ``(1) Increase in qualified investment.--In the case of a 
        taxpayer who has made an election under paragraph (5), the 
        amount of the qualified investment of such taxpayer for the 
        taxable year (determined under subsection (c) without regard to 
        this section) shall be increased by an amount equal to the 
        aggregate of each qualified progress expenditure for the 
        taxable year with respect to progress expenditure property.
            ``(2) Progress expenditure property defined.--For purposes 
        of this subsection, the term `progress expenditure property' 
        means any property being constructed by or for the taxpayer and 
        which it is reasonable to believe will qualify as a qualifying 
        clean coal technology facility which is being constructed by or 
        for the taxpayer when it is placed in service.
            ``(3) Qualified progress expenditures defined.--For 
        purposes of this subsection--
                    ``(A) Self-constructed property.--In the case of 
                any self-constructed property, the term `qualified 
                progress expenditures' means the amount which, for 
                purposes of this subpart, is properly chargeable 
                (during such taxable year) to capital account with 
                respect to such property.
                    ``(B) Non-self-constructed property.--In the case 
                of non-self-constructed property, the term `qualified 
                progress expenditures' means the amount paid during the 
                taxable year to another person for the construction of 
                such property.
            ``(4) Other definitions.--For purposes of this subsection--
                    ``(A) Self-constructed property.--The term `self-
                constructed property' means property for which it is 
                reasonable to believe that more than half of the 
                construction expenditures will be made directly by the 
                taxpayer.
                    ``(B) Non-self-constructed property.--The term 
                `non-self-constructed property' means property which is 
                not self-constructed property.
                    ``(C) Construction, etc.--The term `construction' 
                includes reconstruction and erection, and the term 
                `constructed' includes reconstructed and erected.
                    ``(D) Only construction of qualifying clean coal 
                technology facility to be taken into account.--
                Construction shall be taken into account only if, for 
                purposes of this subpart, expenditures therefor are 
                properly chargeable to capital account with respect to 
                the property.
            ``(5) Election.--An election under this subsection may be 
        made at such time and in such manner as the Secretary may by 
        regulations prescribe. Such an election shall apply to the 
        taxable year for which made and to all subsequent taxable 
        years. Such an election, once made, may not be revoked except 
        with the consent of the Secretary.
    ``(e) Coordination With Other Credits.--This section shall not 
apply to any property with respect to which the rehabilitation credit 
under section 47 or the energy credit under section 48A is allowed 
unless the taxpayer elects to waive the application of such credit to 
such property.
    ``(f) Termination.--This section shall not apply with respect to 
any qualified investment after December 31, 2014.''
    ``(c) Recapture.--Section 50(a) (relating to other special rules) 
is amended by adding at the end the following:
            ``(6) Special rules relating to qualifying clean coal 
        technology facility.--For purposes of applying this subsection 
        in the case of any credit allowable by reason of section 48B, 
        the following shall apply:
                    ``(A) General rule.--In lieu of the amount of the 
                increase in tax under paragraph (1), the increase in 
                tax shall be an amount equal to the investment tax 
                credit allowed under section 38 for all prior taxable 
                years with respect to a qualifying clean coal 
                technology facility (as defined by section 48B(b)(1)) 
                multiplied by a fraction whose numerator is the number 
                of years remaining to fully depreciate under this title 
                the qualifying clean coal technology facility disposed 
                of, and whose denominator is the total number of years 
                over which such facility would otherwise have been 
                subject to depreciation. For purposes of the preceding 
                sentence, the year of disposition of the qualifying 
                clean coal technology facility property shall be 
                treated as a year of remaining depreciation.
                    ``(B) Property ceases to qualify for progress 
                expenditures.--Rules similar to the rules of paragraph 
                (2) shall apply in the case of qualified progress 
                expenditures for a qualifying clean coal technology 
                facility under section 48B, except that the amount of 
                the increase in tax under subparagraph (A) of this 
                paragraph shall be substituted in lieu of the amount 
                described in such paragraph (2).
                    ``(C) Application of paragraph.--This paragraph 
                shall be applied separately with respect to the credit 
                allowed under section 38 regarding a qualifying clean 
                coal technology facility.''
    (d) Transitional Rule.--Section 39(d) of the Internal Revenue Code 
of 1986 (relating to transitional rules), as amended by section 
101(b)(2), is amended by adding at the end the following:
            ``(10) No carryback of section 48b credit before effective 
        date.--No portion of the unused business credit for any taxable 
        year which is attributable to the qualifying clean coal 
        technology facility credit determined under section 48B may be 
        carried back to a taxable year ending before the date of the 
        enactment of section 48B.''
    (e) Technical Amendments.--
            (1) Section 49(a)(1)(C) is amended by striking ``and'' at 
        the end of clause (ii), by striking the period at the end of 
        clause (iii) and inserting ``, and'', and by adding at the end 
        the following:
                                    ``(iv) the portion of the basis of 
                                any qualifying clean coal technology 
                                facility attributable to any qualified 
                                investment (as defined by section 
                                48B(c)).''
            (2) Section 50(a)(4) is amended by striking ``and (2)'' and 
        inserting ``, (2), and (6)''.
            (3) The table of sections for subpart E of part IV of 
        subchapter A of chapter 1, as amended by section 101(d), is 
        amended by inserting after the item relating to section 48A the 
        following:

``Sec. 48B. Qualifying clean coal technology facility credit.''
    (f) Effective Date.--The amendments made by this section shall 
apply to periods after December 31, 2000, under rules similar to the 
rules of section 48(m) of the Internal Revenue Code of 1986 (as in 
effect on the day before the date of the enactment of the Revenue 
Reconciliation Act of 1990).

SEC. 502. CREDIT FOR PRODUCTION FROM QUALIFYING CLEAN COAL TECHNOLOGY.

    (a) Credit for Production From Qualifying Clean Coal Technology.--
Subpart D of part IV of subchapter A of chapter 1 (relating to business 
related credits) is amended by adding at the end the following:

``SEC. 45D. CREDIT FOR PRODUCTION FROM QUALIFYING CLEAN COAL 
              TECHNOLOGY.

    ``(a) General Rule.--For purposes of section 38, the qualifying 
clean coal technology production credit of any taxpayer for any taxable 
year is equal to the applicable amount for each kilowatt hour--
            ``(1) produced by the taxpayer at a qualifying clean coal 
        technology facility during the 10-year period beginning on the 
        date the facility was originally placed in service, and
            ``(2) sold by the taxpayer to an unrelated person during 
        such taxable year.
    ``(b) Applicable Amount.--For purposes of this section, the 
applicable amount with respect to production from a qualifying clean 
coal technology facility shall be determined as follows:
            ``(1) In the case of a facility originally placed in 
        service before 2007, if--

 
                                                  The applicable amount
                                                           is:
 ``The facility design average net heat rate,
          Btu/kWh (HHV) is equal to:             For 1st 5     For 2d 5
                                                yrs of such  yrs of such
                                                  service      service
 
Not more than 8400............................       $.0130       $.0110
More than 8400 but not more than 8550.........        .0100        .0085
More than 8550 but not more than 8750.........        .0090       .0070.
 

            ``(2) In the case of a facility originally placed in 
        service after 2006 and before 2011, if--

 
                                                  The applicable amount
                                                           is:
 ``The facility design average net heat rate,
          Btu/kWh (HHV) is equal to:             For 1st 5     For 2d 5
                                                yrs of such  yrs of such
                                                  service      service
 
Not more than 7770............................       $.0100       $.0080
More than 7770 but not more than 8125.........        .0080        .0065
More than 8125 but not more than 8350.........        .0070       .0055.
 

            ``(3) In the case of a facility originally placed in 
        service after 2010 and before 2015, if--

 
                                                  The applicable amount
                                                           is:
 ``The facility design average net heat rate,
          Btu/kWh (HHV) is equal to:             For 1st 5     For 2d 5
                                                yrs of such  yrs of such
                                                  service      service
 
Not more than 7720............................       $.0085       $.0070
More than 7720 but not more than 7380.........        .0070       .0045.
 

    ``(c) Inflation Adjustment Factor.--Each amount in paragraphs (1), 
(2), and (3) shall each be adjusted by multiplying such amount by the 
inflation adjustment factor for the calendar year in which the amount 
is applied. If any amount as increased under the preceding sentence is 
not a multiple of 0.01 cent, such amount shall be rounded to the 
nearest multiple of 0.01 cent.
    ``(d) Definitions and Special Rules.--For purposes of this 
section--
            ``(1) any term used in this section which is also used in 
        section 48B shall have the meaning given such term in section 
        48B,
            ``(2) the rules of paragraphs (3), (4), and (5) of section 
        45 shall apply,
            ``(3) the term `inflation adjustment factor' means, with 
        respect to a calendar year, a fraction the numerator of which 
        is the GDP implicit price deflator for the preceding calendar 
        year and the denominator of which is the GDP implicit price 
        deflator for the calendar year 1998, and
            ``(4) the term `GDP implicit price deflator' means the most 
        recent revision of the implicit price deflator for the gross 
        domestic product as computed by the Department of Commerce 
        before March 15 of the calendar year.''
    (b) Credit Treated as Business Credit.--Section 38(b) is amended by 
striking ``plus'' at the end of paragraph (11), by striking the period 
at the end of paragraph (12) and inserting ``, plus'', and by adding at 
the end the following:
            ``(13) the qualifying clean coal technology production 
        credit determined under section 45D(a).''
    (c) Transitional Rule.--Section 39(d) (relating to transitional 
rules), as amended by section 501(d), is amended by adding at the end 
the following:
            ``(11) No carryack of certain credits before effective 
        date.--No portion of the unused business credit for any taxable 
        year which is attributable to the credits allowable under any 
        section added to this subpart by the amendments made by the 
        Energy Security Tax and Policy Act of 2000 may be carried back 
        to a taxable year ending before the date of the enactment of 
        such Act.''
    (d) Clerical Amendment.--The table of sections for subpart D of 
part IV of subchapter A  of chapter 1 is amended by adding at the end 
the following:

``Sec. 45D. Credit for production from qualifying clean coal 
                            technology.''.
    (e) Effective Date.--The amendments made by this section shall 
apply to production after December 31, 2000.

SEC. 503.  RISK POOL FOR QUALIFYING CLEAN COAL TECHNOLOGY.

    (a) Establishment.--The Secretary of the Treasury shall establish a 
financial risk pool which shall be available to any United States owner 
of qualifying clean coal technology (as defined in section 48B(b)(3) of 
the Internal Revenue Code of 1986) to offset for the first 3 three 
years of the operation of such technology the costs (not to exceed 5 
percent of the total cost of installation) for modifications resulting 
from the technology's failure to achieve its design performance.
    (b) Authorization of Appropriations.--There is authorized to be 
appropriated such sums as are necessary to carry out the purposes of 
this section.

                       TITLE VI--METHANE RECOVERY

SEC. 601.  CREDIT FOR CAPTURE OF COALMINE METHANE GAS.

    (a) Credit for Capture of Coalmine Methane Gas.--Subpart D of part 
IV of subchapter A of chapter 1 (relating to business related credits), 
as amended by section 502(a), is amended by adding at the end the 
following:

``SEC. 45E.  CREDIT FOR CAPTURE OF COALMINE METHANE GAS.

    ``(b) Definition of Coalmine Methane Gas.--The term ``Coalmine 
Methane Gas'' as used in this section means any methane gas which is 
being liberated, or would be liberated, during coal mine operations or 
as a result of past coal mining operations, or which is extracted up to 
ten years in advance of coal mining operations as part of specific plan 
to mine a coal deposit.
    ``For the purpose of section 38, the coalmine methane gas capture 
credit of any taxpayer for any taxable year is $1.21 for each one 
million British thermal units of coalmine methane gas captured by the 
taxpayer and utilized as a fuel source or sold by or on behalf of the 
taxpayer to an unrelated person during such taxable year (within the 
meaning of section 45).''.
    (b) Credits for the capture of coalmine methane gas shall be earned 
upon the utilization as a fuel source or sale and delivery of the 
coalmine methane gas to an unrelated party, except that credit for 
coalmine methane gas which is captured in advance of mining operations 
shall be claimed only after coal extraction occurs in the immediate 
area where the coalmine methane gas was removed.
    (c) Credit Treated as Business Credit.--Section 38(b), as amended 
by section 502(b), is amended by striking ``plus'' at the end of 
paragraph (12), by striking the period at the end of paragraph (13) and 
inserting ``, plus'', and by adding at the end the following:
            ``(14) the coalmine methane gas capture credit determined 
        under section 45E(a).''.
    (d) Clerical Amendment.--The table of sections for subpart D of 
part IV of subchapter A of chapter 1, as amended by section 502(d), is 
amended by adding at the end the following:

``Sec. 45E.  Credit for the capture of coalmine methane gas.''.
    (e) Effective Date.--The amendments made by this section shall 
apply to the capture of coalmine methane gas after December 31, 2000, 
and on or before December 31, 2006.

                   TITLE VII--OIL AND GAS PRODUCTION

SEC. 701.  CREDIT FOR PRODUCTION OR RE-REFINED LUBRICATING OIL.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
(relating to business related credits), as amended by section 601(a), 
is amended by adding at the end the following:

``SEC. 45F. CREDIT FOR PRODUCING RE-REFINED LUBRICATING OIL.

    ``(a) General Rule.--For purposes of section 38, the re-refined 
lubricating oil production credit of any taxpayer for any taxable year 
is equal to $4.05 per barrel of qualified re-refined lubricating oil 
production which is attributable to the taxpayer (within the meaning of 
section 29(d)(3)).
    ``(b) Qualified Re-Refined Lubricating Oil Production.--For 
purposes of this section--
            ``(1) In general.--The term `qualified re-refined 
        lubricating oil production' means a base oil manufactured from 
        at least 95 percent used oil and not more than 2 percent of 
        previously unused oil by a re-refining process which 
        effectively removes physical and chemical impurities and spent 
        and unspent additives to the extent that such base oil meets 
        industry standards for engine oil as defined by the American 
        Petroleum Institute document API 1509 as in effect on the date 
        of the enactment of this section.
            ``(2) Limitation on amount of production which may 
        qualify.--Re-refined lubricating oil produced during any 
        taxable year shall not be treated as qualified re-refined 
        lubricating oil production but only to the extent average daily 
        production during the taxable year exceeds 7,000 barrels.
            ``(3) Barrel.--The term `barrel' has the meaning given such 
        term by section 613A(e)(4).
    (c) Inflation Adjustment.--In the case of any taxable year 
beginning in a calendar year after 2000, the dollar amount contained in 
subsection (a) shall be increased to an amount equal to such dollar 
amount multiplied by the inflation adjustment factor for such calendar 
year (determined under section 29(d)(2)(B) by substituting `2000' for 
`1979').''.
    (b) Credit Treated as Business Credit.--Section 38(b) (relating to 
current year business credit), as amended by section 601(b), is amended 
by striking `plus' at the end of paragraph (13), by striking the period 
at the end of paragraph (14), and inserting `, plus', and by adding at 
the end the following:
            ``(15) the re-refined lubricating oil production credit 
        determined under section 45F(a).''.
    (c) Clerical Amendment.--The table of sections for subpart D of 
part IV of subchapter A of chapter 1, as amended by section 601(c), is 
amended by adding at the end the following:

``Sec. 45F.  Credit for producing re-refined lubricating oil.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to production after December 31, 2000.

SEC. 702.  OIL AND GAS FROM MARGINAL WELLS.

``SEC. 45D.  CREDIT FOR PRODUCING OIL AND GAS FROM MARGINAL WELLS.

    ``(a) General Rule.--For purposes of section 38, the marginal well 
production credit for any taxable year is an amount equal to the 
product of--
            ``(1) the credit amount, and
            ``(2) the qualified credit oil production and the qualified 
        natural gas production which is attributable to the taxpayer.
    ``(b) Credit Amount.--For purposes of this section--
            ``(1) In general.--The credit amount is--
                    ``(A) $3 per barrel of qualified crude oil 
                production, and
                    ``(B) 50 cents per 1,000 cubic feet of qualified 
                natural gas production.
            ``(2) Reduction as oil and gas prices increase.--
                    ``(A) In general.--The $3 and 50 cents amounts 
                under paragraph (1) shall each be reduced (but not 
                below zero) by an amount which bears the same ratio to 
                such amount (determined without regard to this 
                paragraph) as--
                            ``(i) the excess (if any) of the applicable 
                        reference price over $14 ($1.56 for qualified 
                        natural gas production), bears to
                            ``(ii) $3 ($0.33 for qualified natural gas 
                        production).

                The applicable reference price for a taxable year is 
                the reference price of the calendar year preceding the 
                calendar year in which the taxable year begins.

                    ``(B) Inflation adjustment.--In the case of any 
                taxable year beginning in a calendar year after 2000, 
                each of the dollar amounts contained in 
subparagraph (A) shall be increased to an amount equal to such dollar 
amount multiplied by the inflation adjustment factor for such calendar 
year (determined under section 43(b)(3)(B) by substituting `2000' for 
`1990').
                    ``(C) Reference price.--For purposes of this 
                paragraph, the term `reference price' means, with 
                respect to any calendar year--
                            ``(i) in the case of qualified crude oil 
                        production, the reference price determined 
                        under section 29(d)(2)(C), and
                            ``(ii) in the case of qualified natural gas 
                        production, the Secretary's estimate of the 
                        annual average wellhead price per 1,000 cubic 
                        feet for all domestic natural gas.
    ``(c) Qualified Crude Oil and Natural Gas Production.--For purposes 
of this section--
            ``(1) In general.--The terms `qualified crude oil 
        production' and `qualified natural gas production' mean 
        domestic crude oil or natural gas which is produced from a 
        marginal well.
            ``(2) Limitation on amount of production which may 
        qualify.--
                    ``(A) In general.--Crude oil or natural gas 
                produced during any taxable year from any well shall 
                not be treated or qualified crude oil production or 
                qualified natural gas production to the extent 
                production from the well during the taxable year 
                exceeds 1,095 barrels or barrel equivalents.
                    ``(B) Proportionate reductions.--
                            ``(i) Short taxable years.--In the case of 
                        a short taxable year, the limitations under 
                        this paragraph shall be proportionately reduced 
                        to reflect the ratio which the number of days 
                        in such taxable year bears to 365.
                            ``(ii) Wells not in production entire 
                        year.--In the case of a well which is not 
                        capable of production during each day of a 
                        taxable year, the limitations under this 
                        paragraph applicable to the well shall be 
                        proportionately reduced to reflect the ratio 
                        which the number of days of production bears to 
                        the total number of days in the taxable year.
            ``(3) Definitions.--
                    ``(A) Marginal well.--The term `marginal well' 
                means a domestic well--
                            ``(i) the production from which during the 
                        taxable year is treated as marginal production 
                        under section 613A(c)(6), or
                            ``(ii) which, during the taxable year--
                                    ``(I) has average daily production 
                                of not more than 25 barrel equivalents, 
                                and
                                    ``(II) produces water at a rate not 
                                less than 95 percent of total well 
                                effluent.
                    ``(B) Crude oil, etc.--The terms `crude oil', 
                `natural gas', `domestic', and `barrel' have the 
                meanings given such terms by section 613A(e).
                    ``(C) Barrel equivalent.--The term `barrel 
                equivalent' means, with respect to natural gas, a 
                conversation ratio of 6,000 cubic feet of natural gas 
                to 1 barrel of crude oil.
    ``(d) Other Rules.--
            ``(1) Production attributable to the taxpayer.--In the case 
        of a marginal well in which there is more than one owner of 
        operating interests in the well and the crude oil or natural 
        gas production exceeds the limitation under subsection (c)(2), 
        qualifying crude oil production or qualifying natural gas 
        production attributable to the taxpayer shall be determined on 
        the basis of the ratio which taxpayer's revenue interest in the 
        production bears to the aggregate of the revenue interests of 
        all operating interest owners in the production.
            ``(2) Operating interest required.--Any credit under this 
        section may be claimed only on production which is attributable 
        to the holder of an operating interest.
            ``(3) Production from nonconventional sources excluded.--In 
        the case of production from a marginal well which is eligible 
        for the credit allowed under section 29 for the taxable year, 
        no credit shall be allowable under this section unless the 
        taxpayer elects not to claim the credit under section 29 with 
        respect to the well.''.
    (c) Credit Treated as Business Credit.--Section 38(b) is amended by 
striking `plus' at the end of paragraph (11), by striking the period at 
the end of paragraph (12) and inserting `, plus', and by adding at the 
end the following new paragraph:
            ``(13) the marginal oil and gas well production credit 
        determined under section 45D(a).''.
    (d) Credit Allowed Against Regular and Minimum Tax.--
            (1) In general.--Subsection (c) of section 38 (relating to 
        limitation based on amount of tax) is amended by redesignating 
        paragraph (3) as paragraph (4) and by inserting after paragraph 
        (2) the following new paragraph:
            ``(3) Special rules for marginal oil and gas well 
        production credit.--
                    ``(A) In general.--In the case of the marginal oil 
                and gas well production credit--
                            ``(i) this section and section 39 shall be 
                        applied separately with respect to the credit, 
                        and
                            ``(ii) in applying paragraph (1) to the 
                        credit--
                                    ``(I) subparagraphs (A) and (B) 
                                thereof shall not apply, and
                                    ``(II) the limitation under 
                                paragraph (1) (as modified by subclause 
                                (I)) shall be reduced by the credit 
                                allowed under subsection (a) for the 
                                taxable year (other than the marginal 
                                oil and gas well production credit).
                    ``(B) Marginal oil and gas well production 
                credit.--For purposes of this subsection, the term 
                `marginal oil and gas well production credit' means the 
                credit allowable under subsection (a) by reason of 
                section 45D(a).''.
            (2) Conforming amendment.--Subclause (II) of section 
        38(c)(2)(A)(ii) is amended by inserting ``or the marginal oil 
        and gas well production credit'' after ``employment credit''.
    (e) Carryback.--Subsection (a) of section 39 (relating to carryback 
and carryforward of unused credits generally) is amended by adding at 
the end the following new paragraph:
            ``(3) 10-year carryback for marginal oil and gas well 
        production credit.--In the case of the marginal oil and gas 
        well production credit--
                    ``(A) this section shall be applied separately from 
                the business credit (other than the marginal oil and 
                gas well production credit),
                    ``(B) paragraph (1) shall be applied by 
                substituting `10 taxable years' for `1 taxable years' 
                in subparagraph (A) thereof, and
                    ``(C) paragraph (2) shall be applied--
                            ``(i) by substituting `31 taxable years' 
                        for `21 taxable years' in subparagraph (A) 
                        thereof, and
                            ``(ii) by substituting `30 taxable years' 
                        for `20 taxable years' in subparagraph (A) 
                        thereof.''.
    (f) Coordination With Section 29.--Section 29(a) is amended by 
striking ``There'' and inserting ``At the election of the taxpayer, 
there''.
    (g) Clerical Amendment.--The table of sections for subpart D of 
part IV of subchapter A of chapter I is amended by adding at the end 
the following item:

``Sec. 45D. Credit for producing oil and gas from marginal wells.''
    (h) Effective Date.--The amendments made by this section shall 
apply to production in taxable years beginning after December 31, 2000.

SEC. 703. DEDUCTION FOR DELAY RENTAL PAYMENTS.

    (a) In General.--Section 263 (relating to capital expenditures) is 
amended by adding after subsection (i) the following new subsection:
    ``(j) Delay Rental Payments for Domestic Oil and Gas Wells.--
            ``(1) In general.--Notwithstanding subsection (a), a 
        taxpayer may elect to treat delay rental payments incurred in 
        connection with the development of oil or gas within the United 
        States (as defined in section 638) as payments which are not 
        chargeable to capital account. Any payments so treated shall be 
        allowed as a deduction in the taxable year in which paid or 
        incurred.
            ``(2) Delay rental payments.--For purposes of paragraph 
        (1), the term `delay rental payment' means an amount paid for 
        the privilege of deferring development of an oil or gas well.''
    (b) Conforming Amendment.--Section 263A(c)(3) is amended by 
inserting ``263(j),'' after `263(i),'.
    (c) Effective Date.--The amendments made by this section shall 
apply to amounts paid or incurred in taxable years beginning after 
December 31, 2000.

SEC. 704. ELECTION TO EXPENSE GEOLOGICAL AND GEOPHYSICAL EXPENDITURES.

    (a) In General.--Section 263 (relating to capital expenditures) is 
amended by adding after subsection (j) the following new subsection:
    ``(k) Geological and Geophysical Expenditures for Domestic Oil and 
Gas Wells.--Notwithstanding subsection (a), a taxpayer may elect to 
treat geological and geophysical expenses incurred in connection with 
the exploration for, or development of, oil or gas within the United 
States (as defined in section 638) as expenses which are not chargeable 
to capital account. Any expenses so treated shall be allowed as a 
deduction in the taxable year in which paid or incurred.''
    (b) Conforming Amendment.--Section 263A(c)(3) is amended by 
inserting ``263(k),'' after ``263(j),''.
    (c) Effective Date.--The amendments made by this section shall 
apply to costs paid or incurred in taxable years beginning after 
December 31, 2000.

                 TITLE VIII--RENEWABLE POWER GENERATION

SEC. 801. MODIFICATIONS TO CREDIT FOR ELECTRICITY PRODUCED FROM 
              RENEWABLE RESOURCES.

    (a) Expansion of Qualified Energy Resources.--
            (1) In general.--Section 45(c)(1) (defining qualified 
        energy resources) is amended by striking ``and'' at the end of 
        subparagraph (B), by striking subparagraph (C), and by adding 
        at the end the following:
                    ``(C) biomass (other than closed-loop biomass), or
                    ``(D) poultry waste.''
            (2) Definitions.--Section 45(c) is amended by redesignating 
        paragraph (3) as paragraph (4) and by striking paragraphs (2) 
        and (4) and inserting the following:
            ``(2) Biomass.--
                    ``(A) In general.--The term `biomass' means--
                            ``(i) closed-loop biomass, and
                            ``(ii) any solid, nonhazardous, cellulosic 
                        waste material, which is segregated from other 
                        waste materials, and which is derived from--
                                    ``(I) any of the following forest-
                                related resources: mill residues, 
                                precommercial thinnings, slash, and 
                                brush, not including old-growth timber,
                                    ``(II) waste pallets, crates, and 
                                dunnage, and landscape or right-of-way 
                                tree trimmings, but not including 
                                unsegregated municipal solid waste 
                                (garbage) and post-consumer wastepaper, 
                                or
                                    ``(III) agriculture sources, 
                                including orchard tree crops, vineyard, 
                                grain, legumes, sugar, and other crop 
                                by-products or residues.
                    ``(B) Closed-loop biomass.--The term `closed-loop 
                biomass' means any organic material from a plant which 
                is planted exclusively for purposes of being used at a 
                qualified facility to produce electricity.
            ``(3) Poultry Waste.--The term `poultry waste' means 
        poultry manure and litter, including wood shavings, straw, rice 
        hulls, and other bedding material for the disposition of 
        manure.''
    (b) Extension and Modification of Placed-in Service Rules.--
Paragraph (4) of section 45(c), as redesignated by subsection (a), is 
amended to read as follows:
            ``(4) Qualified facility.--
                    ``(A) Wind facility.--In the case of a facility 
                using wind to produce electricity, the term `qualified 
                facility' means any facility owned by the taxpayer 
                which is originally placed in service after December 
                31, 1993.
                    ``(B) Closed-loop biomass facility.--In the case of 
                a facility using closed-loop biomass to produce 
                electricity, the term `qualified facility' means any 
                facility owned by the taxpayer which:
                            ``(i) is originally placed in service after 
                        December 31, 1992 and before January 1, 2005, 
                        or
                            ``(ii) is originally placed in service 
                        before December 31, 2000, and modified to use 
                        closed loop biomass to co-fire with coal after 
                        such date and before January 1, 2005.
                    ``(C) Biomass facility.--In the case of a facility 
                using biomass (other than closed-loop biomass) to 
                produce electricity, the term `qualified facility' 
                means:
                            ``(i) any facility owned by the taxpayer 
                        which is originally placed in service after 
                        December 31, 2000 and before January 1, 2005, 
                        or
                            ``(ii) is originally placed in service 
                        before December 31, 2000 and modified to co-
                        fire biomass with coal after such date and 
                        before January 1, 2005.
                    ``(D) Poultry waste facility.--In the case of a 
                facility using poultry waste to produce electricity, 
                the term `qualified facility' means:
                            ``(i) any facility of the taxpayer which is 
                        originally placed in service after December 31, 
                        1999 and before January 1, 2005, or
                            ``(ii) is originally placed in service 
                        before December 31, 2000 and modified to co-
                        fire poultry waste with coal after such date 
                        and before January 1, 2005.
                    ``(E) Special rules.--
                            ``(i) Combined production facilities 
                        included.--For purposes of this paragraph, the 
                        term `qualified facility' shall include a 
                        facility using biomass to produce electricity 
                        and other biobased products such as renewables 
                        based chemicals and fuels.
                            ``(ii) Special rules.--In the case of a 
                        qualified facility described in subparagraph 
                        (B), (C) or (D)--
                                    ``(I) the 10-year period referred 
                                to in subsection (a) shall be treated 
                                as beginning upon the date the taxpayer 
                                first applies for the credit, and
                                    ``(II) subsection (b)(3) shall not 
                                apply to any such facility originally 
                                placed in service before January 1, 
                                1997.'
    (c) Electricity Produced From Biomass Co-Fired in Coal Plants.--
Paragraph (1) of section 45(a) (relating to general rule) is amended by 
inserting ``(1.0 cents in the case of electricity produced from 
biomass, other than closed loop biomass, co-fired in a facility which 
produces electricity from coal) after ``1.5 cents.''
    (d) Coordination With Other Credits.--Section 45(d) (relating to 
definitions and special rules) is amended by adding at the end the 
following:
            ``(8) Coordination with other credits.--This section shall 
        not apply to any production with respect to which the clean 
        coal technology production credit under section 45(b) is 
        allowed unless the taxpayer elects to waive the application of 
        such credit to such production.''
    (e) Effective Date.--The amendments made by this section shall 
apply to electricity produced after December 31, 2000.

SEC. 802. CREDIT FOR CAPITAL COSTS OF QUALIFIED BIOMASS-BASED 
              GENERATING SYSTEM.

    (a) Allowance of Qualified Biomass-Based Generating System Facility 
Credit.--Section 46 (relating to amount of credit), as amended by 
section 501(a), is amended by striking ``and'' at the end of paragraph 
(3), by striking the period at the end of paragraph (4) and inserting 
``, and'', and by adding at the end the following:
            ``(5) the qualified biomass-based generating system 
        facility credit.''
    (b) Amount of Credit.--Subpart E of part IV of subchapter A of 
chapter 1 (relating to rules for computing investment credit), as 
amended by section 501(b), is amended by inserting after section 48C 
the following:

SEC. 48C. Qualified biomass-based generating system facility credit.
    ``(a) In General.--For purposes of section 46, the qualified 
biomass-based generating system facility credit for any taxable year is 
an amount equal to 20 percent of the qualified investment in a 
qualified biomass-based generating system facility for such taxable 
year.
    ``(b) Qualified Biomass-Based Generating System Facility.--
            ``(1) In General.--For purposes of subsection (a), the term 
        `qualified biomass-based generating system facility' means a 
        facility of the taxpayer--
                    ``(A)(i) the original use of which commences with 
                the taxpayer or the reconstruction of which is 
                completed by the taxpayer (but only with respect to 
                that portion of the basis which is properly 
                attributable to such reconstruction), or
                    ``(ii) that is acquired through purchase (as 
                defined by section 179(d)(2)),
                    ``(B) that is depreciable under section 167,
                    ``(C) that has a useful life of not less than 4 
                years, and
                    ``(D) that uses a qualified biomass-based 
                generating system.
            ``(2) Special rule for sale-leasebacks.--For purposes of 
        subparagraph (A) of paragraph (1), in the case of a facility 
        that--
                    ``(A) is originally placed in service by a person, 
                and
                    ``(B) is sold and leased back by such person, or is 
                leased to such person, within 3 months after the date 
                such facility was originally placed in service, for a 
                period of not less than 12 years, such facility shall 
                be treated as originally placed in service not earlier 
                than the date on which such property is used under the 
                leaseback (or lease) referred to in subparagraph (B). 
                The preceding sentence shall not apply to any property 
                if the lessee and lessor of such property make an 
                election under this sentence. Such an election, once 
                made, may be revoked only with the consent of the 
                Secretary.
            ``(3) Qualified biomass-based generating system.--For 
        purposes of paragraph (1)(D), the term `qualified biomass-based 
        generating system' means a biomass-based integrated 
        gasification combined cycle (IGCC) generating system which has 
        an electricity-only generation efficiency greater than 40 
        percent.
    ``(c) Qualified Investment.--For purposes of subsection (a), the 
term `qualified investment' means, with respect to any taxable year, 
the basis of a qualified biomass-based generating system facility 
placed in service by the taxpayer during such taxable year.
    ``(d) Qualified Progress Expenditures.--
            ``(1) Increase in qualified investment.--In the case of a 
        taxpayer who has made an election under paragraph (5), the 
        amount of the qualified investment of such taxpayer for the 
        taxable year (determined under subsection (c) without regard to 
        this section) shall be increased by an amount equal to the 
        aggregate of each qualified progress expenditure for the 
        taxable year with respect to progress expenditure property.
            ``(2) Progress expenditure property defined.--For purposes 
        of this subsection, the term `progress expenditure property' 
means any property being constructed by or for the taxpayer and which--
                    ``(A) cannot reasonably be expected to be completed 
                in less than 18 months, and
                    ``(B) it is reasonable to believe will qualify as a 
                qualified biomass-based generating system facility 
                which is being constructed by or for the taxpayer when 
                it is placed in service.
            ``(3) Qualified progress expenditures defined.--For 
        purposes of this subsection--
                    ``(A) Self-constructed property.--In the case of 
                any self-constructed property, the term `qualified 
                progress expenditures' means the amount which, for 
                purposes of this subpart, is properly chargeable 
                (during such taxable year) to capital account with 
                respect to such property.
                    ``(B) Non-self-constructed property.--In the case 
                of non-self-constructed property, the term `qualified 
                progress expenditures' means the amount paid during the 
                taxable year to another person for the construction of 
                such property.
            ``(4) Other definitions.--For purposes of this subsection--
                    ``(A) Self-constructed property.--The term `self-
                constructed property' means property for which it is 
                reasonable to believe that more than half of the 
                construction expenditures will be made directly by the 
                taxpayer.
                    ``(B) Non-self-constructed property.--The term 
                `non-self-constructed property' means property which is 
                not self-constructed property.
                    ``(C) Construction, etc..--The term `construction' 
                includes reconstruction and erection, and the term 
                `constructed' includes reconstructed and erected.
                    ``(D) Only construction of qualified biomass-based 
                generating system facility to be taken into account.--
                Construction shall be taken into account only if, for 
                purposes of this subpart, expenditures therefor are 
                properly chargeable to capital account with respect to 
                the property.
            ``(5) Election.--An election under this subsection may be 
        made at such time and in such manner as the Secretary may by 
        regulations prescribe. Such an election shall apply to the 
        taxable year for which made and to all subsequent taxable 
        years. Such an election, once made, may not be revoked except 
        with the consent of the Secretary.
    ``(e) Coordination With Other Credits.--This section shall not 
apply to any property with respect to which the rehabilitation credit 
under section 47 or the energy credit under section 48A is allowed 
unless the taxpayer elects to waive the application of such credits to 
such property.''.
    (c) Recapture.--Section 50(a) (relating to other special rules), as 
amended by section 501(c), is amended by adding at the end the 
following:
            ``(7) Special rules relating to qualified biomass-based 
        generating system facility.--For purposes of applying this 
        subsection in the case of any credit allowable by reason of 
        section 48C, the following shall apply:
                    ``(A) General rule.--In lieu of the amount of the 
                increase in tax under paragraph (1), the increase in 
                tax shall be an amount equal to the investment tax 
                credit allowed under section 38 for all prior taxable 
                years with respect to a qualified biomass-based 
                generating system facility (as defined by section 
                48C(b)) multiplied by a fraction whose numerator is the 
                number of years remaining to fully depreciate under 
                this title the qualified biomass-based generating 
                system facility disposed of, and whose denominator is 
                the total number of years over which such facility 
                would otherwise have been subject to depreciation. For 
                purposes of the preceding sentence, the year of 
                disposition of the qualified biomass-based generating 
                system facility shall be treated as a year of remaining 
                depreciation.
                    ``(B) Property ceases to qualify for progress 
                expenditures.--Rules similar to the rules of paragraph 
                (2) shall apply in the case of qualified progress 
                expenditures for a qualified biomass-based generating 
                system facility under section 48C, except that the 
                amount of the increase in tax under subparagraph (A) of 
                this paragraph shall be substituted in lieu of the 
                amount described in such paragraph (2).
                    ``(C) Application of paragraph.--This paragraph 
                shall be applied separately with respect to the credit 
                allowed under section 38 regarding a qualified biomass-
                based generating system facility.''.
    (d) Transitional Rule.--Section 39(d) of the Internal Revenue Code 
of 1986 (relating to transitional rules), as amended by section 501(d), 
is amended by adding at the end the following:
            ``(11) No carryback of section 48c credit before effective 
        date.--No portion of the unused business credit for any taxable 
        year which is attributable to the qualified biomass-based 
        generating system facility credit determined under section 48C 
        may be carried back to a taxable year ending before the date of 
        the enactment of section 48C.''.
    (e) Technical Amendments.--
            (1) Section 49(a)(1)(C), as amended by section 501(e), is 
        amended by striking ``and'' at the end of clause (iii), by 
        striking the period at the end of clause (iv) and inserting ``, 
        and'', and by adding at the end the following:
                            ``(v) the portion of the basis of any 
                        qualified biomass-based generating system 
                        facility attributable to any qualified 
                        investment (as defined by section 48C(c)).''.
            (2) Section 50(a)(4), as amended by section 501(e), is 
        amended by striking ``and (6)'' and inserting ``, (6), and 
        (7)''.
            (3) The table of sections for subpart E of part IV of 
        subchapter A of chapter 1, as amended by section 501(e), is 
        amended by inserting after the item relating to section 48B the 
        following:

``Sec. 48C. Qualified biomass-based generating system facility 
                            credit.''.
    (f) Effective Date.--The amendments made by this section shall 
apply to periods after December 31, 1999, under rules similar to the 
rules of section 48(m) of the Internal Revenue Code of 1986 (as in 
effect on the day before the date of the enactment of the Revenue 
Reconciliation Act of 1990).

SEC. 803. TREATMENT OF FACILITIES USING BAGASSE TO PRODUCE ENERGY AS 
              SOLID WASTE DISPOSAL FACILITIES ELIGIBLE FOR TAX-EXEMPT 
              FINANCING.

    (a) In General.--Section 142 (relating to exempt facility bond) is 
amended by adding at the end the following:
    ``(k) Solid Waste Disposal Facilities.--For purposes of subsection 
(a)(6), the term `solid waste disposal facilities' includes property 
located in Hawaii and used for the collection, storage, treatment, 
utilization, processing, or final disposal of bagasse in the 
manufacture of ethanol.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to bonds issued after the date of the enactment of this Act.

SEC. 804. FEDERAL RENEWABLE PORTFOLIO STANDARD.

    Title VI of the Public Utility Regulatory Policies Act of 1978 is 
further amended by adding at the end the following:

``SEC. 610. FEDERAL RENEWABLE PORTFOLIO STANDARD.

    ``(a) Minimum Renewable Generation Requirement.--For each calendar 
year beginning with 2003, a retail electric supplier shall submit to 
the Secretary renewable energy credits in an amount equal to the 
required annual percentage, specified in subsection (b), of the total 
electric energy sold by the retain electric supplier to electric 
consumers in the calendar year. The retail electric supplier shall make 
this submission before April 1 of the following calendar year.
    ``(b) Required Annual Percentage.--
            ``(1) For calendar years 2003 and 2004, the required annual 
        percentage shall determined by the Secretary in an amount less 
        than the amount in paragraph (2);
            ``(2) For calendar years 2005 through 2015, the required 
        annual percentage shall be determined by the Secretary, but no 
        less than 2.5 percent of the retail electric supplier's base 
        amount by the year 2007 increasing to 5.0 percent by the year 
        2012 continuing through 2015.
    ``(c) Submission of Credits.--(1) A retail electric supplier may 
satisfy the requirements of subsection (a) through the submission of--
            ``(A) renewable energy credits issued under subsection (d) 
        for renewable energy generated by the retail electric supplier 
        in the calendar year for which credits are being submitted or 
        any previous calendar year;
            ``(B) renewable energy credits obtained by purchase or 
        exchange under subsection (e);
            ``(C) renewable energy credits borrowed against future 
        years under subsection (f); or
            ``(D) any combination of credits under subparagraphs (A), 
        (B), and (C).
    ``(2) A credit may be counted toward compliance with subsection (a) 
only once.
    ``(d) Issuance of Credits.--(1) The Secretary shall establish, not 
later than one year after the date of enactment of this section, a 
program to issue, monitor the sale or exchange of, and track renewable 
energy credits.
    ``(2) Under the program, an entity that generates electric energy 
through the use of a renewable energy resource may apply to the 
Secretary for the issuance of renewable energy credits. The application 
shall indicate--
            ``(A) the type of renewable energy resource used to produce 
        the electricity,
            ``(B) the State in which the electric energy was produced, 
        and
            ``(C) any other information the Secretary determines 
        appropriate.
    ``(3)(A) Except as provided in paragraphs (B) and (C), the 
Secretary shall issue to an entity one renewable energy credit for each 
kilowatt-hour of electric energy the entity generates through the use 
of a renewable energy resource in any State in 2001 and any succeeding 
year through 2015.
    ``(B) For incremental hydropower the credits shall be calculated 
based on normalized water flows, and not actual generation. The 
calculation of the credits for incremental hydropower shall not be 
based on any operational changes at the hydroproject not directly 
associated with the efficiency improvements or capacity additions.
    ``(C) The Secretary shall issue two renewable energy credits for 
each kilowatt-hour of electric energy generated through the use of a 
renewable energy resource in any State in 2001 and any succeeding year, 
if the generating facility is located on Indian land. For purposes of 
this paragraph, renewable energy generated by biomass cofired with 
other fuels is eligible for two credits only if the biomass was grown 
on the land eligible under this paragraph.
    ``(D) To be eligible for a renewable energy credit, the unit of 
electricity generated through the use of a renewable energy resource 
may be sold or may be used by the generator. If both a renewable energy 
resource and a non-renewable energy resource are used to generate the 
electric energy, the Secretary shall issue credits based on the 
proportion of the renewable energy source used. The Secretary shall 
identify renewable energy credits by type of generation and by the 
State in which the generating facility is located.
    ``(4) In order to receive a renewable energy credit, the recipient 
of a renewable energy credit shall pay a fee, calculated by the 
Secretary, in an amount that is equal to the administrative costs of 
issuing, recording, monitoring the sale or exchange of, and tracking 
the credit or does not exceed five percent of the dollar value of the 
credit, whichever is lower. The Secretary shall retain the fee and use 
it to pay these administrative costs.
    ``(5) When a generator sells electric energy generated through the 
use of a renewable energy resource to a retail electric supplier under 
a contract subject to section 210 of this Act, the retail electric 
supplier is treated as the generator of the electric energy for the 
purposes of this section for the duration of the contract.
    ``(e) Credit Trading.--A renewable energy credit may be sold or 
exchanged by the entity to whom issued or by any other entity who 
acquires the credit. A renewable energy credit for any year that is not 
used to satisfy the minimum renewable generation requirement of 
subsection (a) for that year may be carried forward for use in another 
year.
    ``(f) Credit Borrowing.--At any time before the end of the calendar 
year, a retail electric supplier that has reason to believe that it 
will not have sufficient renewable energy credits to comply with 
subsection (a) may--
            ``(1) submit a plan to the Secretary demonstrating that the 
        retail electric supplier will earn sufficient credits within 
        the next 3 calendar years which, when taken into account, will 
        enable the retail electric supplier to meet the requirements of 
        subsection (a) for the calendar year involved; and
            ``(2) upon the approval of the plan by the Secretary, apply 
        credits that the plan demonstrates will be earned within the 
        next 3 calendar years to meet the requirements of subsection 
        (a) for the calendar year involved.
    ``(g) Enforcement.--The Secretary may bring an action in the 
appropriate United States district court to impose a civil penalty on a 
retail supplier that does not comply with subsection (a). A retail 
electric supplier who does not submit the required number of renewable 
energy credits under subsection (a) is subject to a civil penalty of 
not more than 3 cents each for the renewable energy credits not 
submitted.
    ``(h) Information Collection.--The Secretary may collect the 
information necessary to verify and audit--
            ``(1) the annual electric energy generation and renewable 
        energy generation of any entity applying for renewable energy 
        credits under this section,
            ``(2) the validity of renewable energy credits submitted by 
        a retail electric supplier to the Secretary, and
            ``(3) the quantity of electricity sales of all retail 
        electric suppliers.
    ``(i) Environmental Savings Clause.--Incremental hydropower shall 
be subject to all applicable environmental laws and licensing and 
regulatory requirements.
    ``(j) Exemption for Alaska and Hawaii.--This section shall not 
apply to any retail electric supplier in Alaska or Hawaii.
    ``(k) State Savings Clause.--This section does not preclude a State 
from requiring additional renewable energy generation in that State.
    ``(l) Definitions.--For purposes of this section--
            ``(1) The term `incremental hydropower' means additional 
        generation capacity achieved from increased efficiency or 
        additions of new capacity at an existing hydroelectric dam.
            ``(2) The term `Indian land' means--
                    ``(A) any land within the limits of any Indian 
                reservation, pueblo or rancheria,
                    ``(B) any land not within the limits of any Indian 
                reservation, pueblo or rancheria title to which was on 
                the date of enactment of this paragraph either held by 
                the United States for the benefit of any Indian tribe 
                or individual or held by any Indian tribe or individual 
                subject to restriction by the United States against 
                alienation,
                    ``(C) any dependent Indian community, and
                    ``(D) any land conveyed to any Alaska Native 
                corporation under the Alaska Native Claims Settlement 
                Act.
            ``(3) The term `Indian tribe' means any Indian tribe, band, 
        nation, or other organized group or community, including any 
        Alaska Native village or regional or village corporation as 
        defined in or established pursuant to the Alaska Native Claims 
        Settlement Act (43 U.S.C. 1601 et seq.), which is recognized as 
        eligible for the special programs and services provided by the 
        United States to Indians because of their status as Indians.
            ``(4) The term `renewable energy' means electric energy 
        generated by a renewable energy resource.
            ``(5) The term `renewable energy resource' means solar 
        thermal, photovoltaic, wind, geothermal, biomass (including 
        organic waste, but not unsegregated municipal solid waste), or 
        incremental hydropower facility or modification to an existing 
        facility to co-fire biomass or to expand electricity production 
        from an existing renewable facility that is placed in service 
        on or after January 1, 2001.
            ``(6) The term `retail electric supplier' means a person, 
        State agency, or Federal agency that sells electric energy to 
        an electric consumer.
            ``(7) The term `retail electric supplier's base amount' 
        means the total amount of electric energy sold by the retail 
        electric supplier to electric customers during the most recent 
        calendar year for which information is available, excluding 
        electric energy generated by solar energy, wind, geothermal, 
        biomass, or hydroelectric facility placed in service prior to 
        January 1, 2001.
    ``(m) Sunset.--Subsection (a) of this section expires December 31, 
2015.''.

                         TITLE IX--STEELMAKING

SEC. 901. EXTENSION OF CREDIT FOR ELECTRICITY TO PRODUCTION FROM STEEL 
              CONGENERATION.

    (a) Extension of Credit for Coke Production and Steel Manufacturing 
Facilities.--Section 45(c)(1) (defining qualified energy resources), as 
amended by section 507 of Public Law 106-170, is amended by striking 
``and'' at the end of subparagraph (B), by striking the period at the 
end of subparagraph (C) and inserting ``, and'', and by adding at the 
end the following:
                    ``(E) steel congeneration.''.
    (b) Steel Cogeneration.--Section 45(c), is amended by adding at the 
end the following:
            ``(5) Steel cogeneration.--The term `steel cogeneration' 
        means the production of electricity and steam (or other form of 
        thermal energy) from any or all waste sources in subparagraphs 
        (A), (B), and (C) within an operating facility that produces or 
        integrates the production of coke, direct reduced iron ore, 
        iron, or steel provided that the cogeneration meets any 
        regulatory energy-efficiency standards established by the 
        Secretary, and only to the extent that such energy is produced 
        from--
                    ``(A) gases or heat generated from the production 
                of metallurgical coke,
                    ``(B) gases or heat generated from the production 
                of direct reduced iron ore or iron, from blast furnace 
                or direct ironmaking processes, or
                    ``(C) gases or heat generated from the manufacture 
                of steel.''.
    (c) Modification of Placed in Service Rules for Steel Cogeneration 
Facilities.--Section 45(c)(4) (defining qualified facility), as amended 
by section 507 of Public Law 106-170, is amended by adding at the end 
the following:
                    ``(F) Steel cogeneration facilities.--In the case 
                of a facility using steel cogeneration to produce 
                electricity, the term `qualified facility' means any 
                facility permitted to operate under the environmental 
                requirements of the Clean Air Act Amendments of 1990 
                which is owned by the taxpayer and originally placed in 
                service after December 31, 2000, and before January 1, 
                2006. Such a facility may be treated as originally 
                placed in service when such facility was last upgraded 
                to increase efficiency or generation capability. 
                However, no facility shall be allowed a credit under 
                this section for more than 10 years of production.''.
    (d) Conforming Amendments.--
            (1) The heading for section 45 is amended by inserting 
        ``and waste energy'' after ``renewable''.
            (2) The item relating to section 45 in the table of 
        sections subpart D of part IV of subchapter A of chapter 1 is 
        amended by inserting ``and waste energy'' after ``renewable''.
    (e) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2001.

                      TITLE X--ENERGY EMERGENCIES

SEC. 1001. ENERGY POLICY AND CONSERVATION ACT AMENDMENTS.

    (a) Title I of the Energy Policy and Conservation Act (42 U.S.C. 
6211-6251) is amended--
            (1) in section 166 (42 U.S.C. 6246), by inserting ``through 
        2003'' after ``2000.''
            (2) in section 181 (42 U.S.C. 6251), by striking ``March 
        31, 2000'' each place it appears and inserting ``September 30, 
        2003''.
    (b) Title II of the Energy Policy and Conservation Act (42 U.S.C. 
6261-6285) is amended--
            (1) in section 256(h) (42 U.S.C. 6276(h)), by striking the 
        last sentence and inserting the following, ``For the purpose of 
        carrying out this subsection, there are authorized to be 
        appropriated such sums as may be necessary.''.
            (2) in section 281 (42 U.S.C. 6285), by striking ``March 
        31, 2000'' each place it appears and inserting ``September 30, 
        2003''.
    (c) Amendment.--Title I of the Energy Policy and Conservation Act 
is amended by--
            (1) redesignating part D as part E;
            (2) redesignating section 181 as section 191; and
            (3) inserting after part C the following new part D:

              ``PART D--NORTHEAST HOME HEATING OIL RESERVE

                            ``establishment

    ``Sec. 181. (a) Notwithstanding any other provision of this Act, 
the Secretary may establish, maintain, and operate in the Northeast a 
Northeast Home Heating Oil Reserve. A Reserve established under this 
part is not a component of the Strategic Petroleum Reserve established 
under part B of this title. A Reserve established under this part shall 
contain no more than 2 million barrels of petroleum distillate.
    ``(b) For the purposes of this part--
            ``(1) the term `Northeast' means the States of Maine, New 
        Hampshire, Vermont, Massachusetts, Connecticut, Rhode Island, 
        New York, Pennsylvania, and New Jersey; and
            ``(2) the term `petroleum distillate' includes heating oil 
        and diesel fuel.

                              ``authority

    ``Sec. 182. To the extent necessary or appropriate to carry out 
this part, the Secretary may--
            ``(1) purchase, contract for, lease, or otherwise acquire, 
        in whole or in part, storage and related facilities, and 
        storage services;
            ``(2) use, lease, maintain, sell, or otherwise dispose of 
        storage and related facilities acquired under this part;
            ``(3) acquire by purchase, exchange (including exchange of 
        petroleum product from the Strategic Petroleum Reserve or 
        received as royalty from Federal lands), lease, or otherwise, 
        petroleum distillate for storage in the Northeast Home Heating 
        Oil Reserve;
            ``(4) store petroleum distillate in facilities not owned by 
        the United States;
            ``(5) sell, exchange, or otherwise dispose of petroleum 
        distillate from the Reserve established under this part; 
        including to maintain the quality or quantity of the petroleum 
        distillate in the Reserve or to maintain the operational 
        capability of the Reserve.

                     ``conditions for release; plan

    ``Sec. 183. The Secretary may drawdown the Reserve only upon a 
finding by the President that there is a severe energy supply 
interruption. A `severe energy supply interruption' may be deemed to 
exist--
            ``(1) if the President determines that a severe increase in 
        the price of heating oil has resulted from such emergency 
        situation;
            ``(2) if the President finds that (1) a circumstance, other 
        than that described in subsection (a) exists that constitutes a 
        regional supply shortage of significant scope or duration; and 
        (2) action taken under this subsection would assist directly 
        and significantly in reducing the adverse impact of such 
        shortage.
            ``(3) Definition.--For purposes of this section `severe 
        increase in the price of heating oil' means--
                    ``(A) the price differential between crude oil, as 
                reflected in the spot price from a published index, and 
                No. 2 heating oil, as reported in the Energy 
                Information Administration's retail price data for the 
                Northeast, increases by more than 50 percent over 
its five year seasonal rolling average, and continues for 10 
consecutive days; and
                    ``(B) The price differential continues to increase 
                during the most recent week for which price information 
                is available.
            ``(4) The Secretary shall conduct a continuing evaluation 
        of the residential price data supplied by the Energy 
        Information Administration for the Northeast and data on crude 
        oil prices from published sources.
            ``(5) After consultation with the heating oil industry, the 
        Secretary shall determine procedures to be used during a 
        drawdown of the Reserve. The procedures shall ensure that:
                    ``(A) the petroleum distillate is sold through a 
                competitive process; and
                    ``(B) in all sales or exchanges, the Secretary 
                receives revenue or its equivalent in petroleum 
                distillate that provides the Department with full 
                market value.
            ``(6) Within 45 days of the date of the enactment of this 
        section, the Secretary shall transmit to the President and, if 
        the President approves, to the Congress a plan describing--
                    ``(A) the acquisition of storage and related 
                facilities or storage services for the Reserve;
                    ``(B) the acquisition of petroleum distillate for 
                storage in the Reserve;
                    ``(C) the anticipated methods of disposition of 
                petroleum distillate from the Reserve; and
                    ``(D) the estimated costs of establishment, 
                maintenance, and operation of the Reserve.

              ``northeast home heating oil reserve account

    ``Sec. 184. (a) Upon a decision of the Secretary of Energy to 
establish a Reserve under this part, the Secretary of the Treasury 
shall establish in the Treasury of the United States an account known 
as the `Northeast Home Heating Oil Reserve Account' (referred to in 
this section as the `Account').
    ``(b) The Secretary of the Treasury shall deposit in the Account 
any amounts appropriated to the Account and any receipts from the sale, 
exchange, or other disposition of petroleum distillate from the 
Reserve.
    ``(c) The Secretary of Energy may obligate amounts in the Account 
to carry out activities under this part without the need for further 
appropriation, and amounts available to the Secretary of Energy for 
obligation under this section shall remain available without fiscal 
year limitation.

                              ``exemptions

    ``Sec. 185. An action taken under this part is not subject to the 
rulemaking requirements of section 523 of this Act, section 501 of the 
Department of Energy Organization Act, or section 553 of title 5, 
United States Code; and
    ``(b) Authorization of Appropriations.--There are authorized to be 
appropriated such sums as may be necessary to carry out part D of title 
I of the Energy Policy and Conservation Act.''.

SEC. 1002. ENERGY CONSERVATION PROGRAMS FOR SCHOOLS AND HOSPITALS.

    Title III of the Energy Policy and Conservation Act (42 U.S.C. 
6325) is amended as follows:
    ``Sec. 365 (f). For the purpose of carrying out this part there are 
authorized to be appropriated such sums as may be necessary.''.

SEC. 1003. STATE ENERGY PROGRAMS.

    Title III of the Energy Policy and Conservation Act (42 U.S.C. 
6371f) is amended as follows:
    ``Sec. 397. For the purpose of carrying out this part, there are 
authorized to be appropriated such sums as may be necessary.

SEC. 1004. ANNUAL HOME HEATING READINESS PROGRAM.

    (a) In General.--Part A of title I of the Energy Policy and 
Conservation Act (42 U.S.C. 6211 et seq.) is amended by adding at the 
end the following:

                    ``annual home heating readiness

    ``(a) In General.--The Secretary, in conjunction with the 
Administrator of the Energy Information Agency, shall coordinate with 
all interested states on an annual basis a program to assess the 
adequacy of supplies for natural gas, heating oil and propane and 
develop joint recommendations for responding to regional shortages or 
price spikes.
    ``(b) On or before September 1 of each year, the Secretary, acting 
through the Administrator of the Energy Information Agency, shall 
submit to Congress a Home Heating Readiness Report on the readiness of 
the natural gas, heating oil and propane industries to supply fuel 
under various weather conditions, including rapid decreases in 
temperature.
    ``(c) Contents.--The Home Heating Readiness Report shall include--
            ``(1) estimates of the consumption, expenditures, and 
        average price per MMBtu or gallon of natural gas, heating oil 
        and propane for the upcoming period of October through March 
        for various weather conditions, with special attention to 
        extreme weather, and various regions of the country;
            ``(2) an evaluation of--
                    ``(A) global and regional crude oil and refined 
                product supplies;
                    ``(B) the adequacy and utilization of refinery 
                capacity;
                    ``(C) weather conditions;
                    ``(D) the refined product transportation system;
                    ``(E) market inefficiencies; and
                    ``(F) any other factor affecting the functional 
                capability of the natural gas, heating oil industry and 
                propane industry that has the potential to affect 
                national or regional supplies and prices;
            ``(3) recommendations on steps that the Federal, State, and 
        local governments can take to prevent or alleviate the impact 
        of sharp and sustained increases in the price of natural gas, 
        heating oil and propane; and
            ``(4) recommendations on steps that companies engaged in 
        the production, refining, storage, transportation of heating 
        oil or propane, or any other activity related to the heating 
        oil industry or propane industry, can take to prevent or 
        alleviate the impact of sharp and sustained increases in the 
        price of heating oil and propane.
    ``(d) Information Requests.--The Secretary may request information 
necessary to prepare the Home Heating Readiness Report from companies 
described in subsection (b)(4).''.
    (b) Conforming and Technical Amendments.--The Energy Policy and 
Conservation Act is amended--
            (1) in the table of contents in the first section (42 
        U.S.C. prec. 6201), by inserting after the item relating to 
        section 106 the following:

``Sec. 107. Major fuel burning stationary source.
``Sec. 108. Annual home heating readiness report.''; and
            (2) in section 107 (42 U.S.C. 6215), by striking ``Sec. 
        107. (a) No Governor'' and inserting the following:

``SEC. 107. MAJOR FUEL BURNING STATIONARY SOURCE.

    ``(a) No Governor''.

SEC. 1005. SUMMER FILL AND FUEL BUDGETING PROGRAMS.

    (a) In General.--Part C of title II of the Energy Policy and 
Conservation Act (42 U.S.C. 6211 et seq.) is amended by adding at the 
end the following:

``SEC. 273. SUMMER FILL AND FUEL BUDGETING PROGRAMS.

    ``(a) Definitions.--In this section:
            ``(1) Budget contract.--The term `budget contract' means a 
        contract between a retailer and a consumer under which the 
        heating expenses of the consumer are spread evenly over a 
        period of months.
            ``(2) Fixed-price contract.--The term `fixed-price 
        contract' means a contract between a retailer and a consumer 
        under which the retailer charges the consumer a set price for 
        propane, kerosene, or heating oil without regard to market 
        price fluctuations.
            ``(3) Price cap contract.--The term `price cap contract' 
        means a contract between a retailer and a consumer under which 
        the retailer charges the consumer the market price for propane, 
        kerosene, or heating oil, but the cost of the propane, 
        kerosene, or heating oil may not exceed a maximum amount stated 
        in the contract.
    ``(b) Assistance.--At the request of the chief executive officer of 
a State, the Secretary shall provide information, technical assistance, 
and funding--
            ``(1) to develop education and outreach programs to 
        encourage consumers to fill their storage facilities for 
        propane, kerosene, and heating oil during the summer months; 
        and
            ``(2) to promote the use of budget contracts, price cap 
        contracts, fixed-price contracts, and other advantageous 
        financial arrangements;
to avoid severe seasonal price increases for and supply shortages of 
those products.
    ``(c) Preference.--In implementing this section, the Secretary 
shall give preference to States that contribute public funds or 
leverage private funds to develop State summer fill and fuel budgeting 
programs.
    ``(d) Authorization of Appropriations.--There are authorized to be 
appropriated to carry out this section--
            ``(1) $25,000,000 for fiscal year 2001; and
            ``(2) such sums as are necessary for each fiscal year 
        thereafter.
    ``(e) Inapplicability of Expiration Provision.--Section 281 does 
not apply to this section.''
    (b) Conforming Amendment.--The table of contents in the first 
section of the Energy Policy and Conservation Act (42 U.S.C. prec. 
6201) is amended by inserting after the item relating to section 272 
the following:

``Sec. 273. Summer fill and fuel budgeting programs.''.

SEC. 1006. USE OF ENERGY FUTURES FOR FUEL PURCHASES.

    (a) Heating Oil Study.--The Secretary shall conduct a study--
            (1) to ascertain if the use of energy futures and options 
        contracts could provide cost-effective protection from sudden 
        surges in the price of heating oil (including number two fuel 
        oil, propane, and kerosene) for governments, consumer 
        cooperatives, and other organizations that purchase heating oil 
        in bulk to market to end use consumers in the Northeast (Maine, 
        New Hampshire, Vermont, Massachusetts, Rhode Island, 
        Connecticut, New York, Pennsylvania, and New Jersey); and
            (2) to ascertain how these entities may be most effectively 
        educated in the prudent use of energy futures and options 
        contracts to maximize their purchasing effectiveness, protect 
        themselves against sudden or unanticipated surges in the price 
        of heating oil, and minimize long-term heating oil costs.
    (b) Report.--The Secretary, no later than 180 days after 
appropriations are enacted to carry out this Act, shall transmit the 
study required in this section to the Committee on Energy and Commerce 
of the House of Representatives and the Committee on Energy and Natural 
Resources of the Senate. The report shall contain a review of prior 
studies conducted on the subjects described in subsection (a).
    (c) Pilot Program.--If the study required in subsection (a) 
indicates that futures and options contracts can provide cost-effective 
protection from sudden surges in heating oil prices, the Secretary 
shall conduct a pilot program, commencing not later than 30 days after 
the transmission of the study required in subsection (b), to educate 
such governmental entities, consumer cooperatives, and other 
organizations on the prudent and cost-effective use of energy futures 
and options contracts to increase their protection against sudden or 
unanticipated surges in the price of heating oil and increase the 
efficiency of their heating oil purchase programs.
    (d) Authorization.--There is authorized to be appropriated $3 
million in fiscal year 2001 to carry out this section.

SEC. 1007. INCREASED USE OF ALTERNATIVE FUELS BY FEDERAL FLEETS.

    Title IV of the Energy Policy and Conservation Act (42 U.S.C. 6374) 
is amended as follows: In Sec. 400AA(a)(3)(E), insert the following 
sentence at the end, ``Except that, no later than fiscal year 2003 at 
least 50 percent of the total annual volume of fuel used must be from 
alternative fuels.'', and in Sec. 400AA(g)(4)(B), after the words, 
``solely on alternative fuel'', insert the words ``, including a three 
wheeled enclosed electric vehicle having a VIN number''.

SEC. 1008. FULL EXPENSING OF HOME HEATING OIL AND PROPANE STORAGE 
              FACILITIES.

    (a) In General.--Section 179(b) of the Internal Revenue Code of 
1986 (relating to limitations) is amended by adding at the end the 
following:
            ``(5) Full expensing of home heating oil and propane 
        storage facilities.--Paragraphs (1) and (2) shall not apply to 
        section 179 property which is any storage facility (not 
        including a building or its structural components) used in 
        connection with the distribution of home heating oil or 
        liquefied petroleum gas.''.

                      TITLE XI--ENERGY EFFICIENCY

SEC. 1101. ENERGY SAVINGS PERFORMANCE CONTRACTS.

    (a) Section 801(a)(1) of the National Energy Conservation Policy 
Act (42 U.S.C. 8287(a)(1)) is amended by--
            (1) inserting ``and water'' after ``energy'' the first 
        place it appears;
            (2) striking ``that purpose'' and inserting ``these 
        purposes'';
            (3) inserting ``or water'' after ``energy'' the second 
        place it appears;
            (4) inserting ``or water conservation'' after ``energy'' 
        the third place it appears; and
            (5) inserting ``or water'' after ``energy'' the fourth 
        place it appears.
    (b) Section 801(a)(2)(A) of the National Energy Conservation Policy 
Act (42 U.S.C. 8287(a)(2)(A)) is amended by--
            (1) inserting ``or water'' after ``energy'' the first place 
        it appears; and
            (2) inserting ``or water conservation'' after ``energy'' 
        the next two places it appears.
    (c) Section 801(a)(2)(B) of the National Energy Conservation Policy 
Act (42 U.S.C. 8287(a)(2)(B)) is amended by--
            (1) inserting ``or water'' after ``energy'' each place it 
        appears; and
            (2) inserting ``energy or'' before ``utilities'' the second 
        place it appears.
    (d) Section 801(a)(2)(D)(iii) of the National Energy Conservation 
Policy Act (42 U.S.C. 8287(a)(2)(D)) is amended by striking 
``$750,000'' and inserting ``$10,000,000''.
    (e) Section 801(b)(1)(A) of the National Energy Conservation Policy 
Act (42 U.S.C. 8287(b)(1)(B)) is amended by inserting ``and water'' 
after ``energy''.
    (f) Section 801(b)(1)(B) of the National Energy Conservation Policy 
Act (42 U.S.C. 8287(b)(1)(B)) is amended by--
            (1) inserting ``or water'' after ``energy'' the first place 
        it appears; and
            (2) inserting ``or water'' after ``energy'' the second 
        place it appears.
    (g) Section 801(b)(2)(A) of the National Energy Conservation Policy 
Act (42 U.S.C. 8287(b)(2)(A)) is amended by inserting ``or water'' 
after ``energy'' each place it appears.
    (h) Section 801(b)(2)(C) of the National Energy Conservation Policy 
Act (42 U.S.C. 8287(b)(2)(C)) is amended by inserting ``or water'' 
after ``energy'' each place it appears.
    (i) Section 801(b)(3) of the National Energy Conservation Policy 
Act (42 U.S.C. 8287(b)(3)) is amended by inserting ``or water'' after 
``energy''.
    (j) Section 801(c)(1) of the National Energy Conservation Policy 
Act (42 U.S.C. 8287(c)(1)) is repealed.
    (k) Section 801(c)(2) of the National Energy Conservation Policy 
Act (42 U.S.C. 8287(c)) is amended by inserting ``or water'' after 
``energy'' each place it appears.
    (l) Section 802 of the National Energy Conservation Policy Act (42 
U.S.C. 8287a.) is amended by inserting ``and water'' after ``energy''.
    (m) Section 803 of the National Energy Conservation Policy Act (42 
U.S.C. 8287b.) is amended by inserting ``and water'' after ``energy''.
    (n) Section 804(2) of the National Energy Conservation Policy Act 
(42 U.S.C. 8287c.(2)) is amended in paragraph (a)(2) by inserting ``or 
water'' after ``energy'' each place it appears.
    (o) Section 804(3) of the National Energy Conservation Policy Act 
(42 U.S.C. 8287c.(3)) is amended in paragraph (a)(3) by inserting ``or 
water'' after ``energy''.
    (p) Section 804(4) of the National Energy Conservation Policy Act 
(42 U.S.C. 8287c.(3)) is amended to read as follows:
            ``(4) The term `energy or water conservation measure' 
        includes an `energy conservation measure' as defined in section 
        551(4), or a `water conservation measure,' which is a measure 
        applied to a Federal building that improves water efficiency, 
        is life cycle cost effective, and involves water conservation, 
        water recycling or reuse, improvements in operation or 
        maintenance efficiencies, retrofit activities or other related 
        activities.''.
    (q) The seventh paragraph under the heading ``Administrative 
Provisions, Department of Energy,'' in title II of the Act Making 
Appropriation for the Department of the Interior and Related Agencies 
for the Fiscal Year Ending September 30, 1999 is amended by inserting 
``and water'' after ``energy'' each place it appears.
    (r) Section 101(e) of Public Law 105-277 is amended by--
            (1) inserting ``and water conservation'' after 
        ``efficiency'' in the title; and
            (2) inserting ``and water'' after ``energy'' each place it 
        appears.

SEC. 1102. WEATHERIZATION.

    (a) Section 414 of the Energy and Conservation and Production Act 
(42 U.S.C. 6865) is amended by inserting the following sentence in 
subsection (a): ``The application shall contain the state's best 
estimate of matching funding available from state and local governments 
and from private sources,'' after the words ``assistance to such 
persons''. And, by inserting the words, ``without regard to 
availability of matching funding'', after the words ``low-income 
persons throughout the States,''.
    (b) Section 415 of the Energy and Conservation and Production Act 
(42 U.S.C. 6865) is amended--
            (1) in subsection (a)(1) by striking the first sentence;
            (2) in subsection (a)(2) by--
                    (A) striking ``(A)'',
                    (B) striking ``approve a State's application to 
                waive the 40 percent requirement established in 
                paragraph (1) if the State includes in its plan'' and 
                inserting ``establish'', and
                    (C) striking subparagraph (B);
            (3) in subsection (c)(1) by--
                    (A) striking ``paragraphs (3) and (4)'' and 
                inserting ``paragraph (3)'',
                    (B) striking ``$1600'' and inserting ``$2500'',
                    (C) striking ``and'' at the end of subparagraph 
                (C),
                    (D) striking the period and inserting ``; and'' in 
                subparagraph (D), and
                    (E) inserting after subparagraph (D) the following 
                new subparagraph: ``(E) the cost of making heating and 
                cooling modifications, including replacement.'';
            (4) in subsection (c)(3) by--
                    (A) striking ``1991, the $1600 per dwelling unit 
                limitation'' and inserting ``2000, the $2500 per 
                dwelling unit average'',
                    (B) striking ``limitation'' and inserting 
                ``average'' each time it appears, and
                    (C) inserting ``the'' after ``beginning of'' in 
                subparagraph (B); and
            (5) by striking subsection (c)(4).

SEC. 1103. PUBLIC BENEFITS FUND.

    (a) Definitions.--For purposes of this section--
            (1) the term ``eligible public purpose program'' means a 
        State or tribal program that--
                    (A) assists low-income households in meeting their 
                home energy needs;
                    (B) provides for the planning, construction, or 
                improvement of facilities to generate, transmit, or 
                distribute electricity to Indian tribes or rural and 
                remote communities;
                    (C) provides for the development and implementation 
                of measures to reduce the demand for electricity; or
                    (D) provides for--
                            (i) new or additional capacity, or improves 
                        the efficiency of existing capacity, from a 
                        wind, biomass, geothermal, solar thermal, 
                        photovoltaic, combined heat and power energy 
                        source, or
                            (ii) additional generating capacity 
                        achieved from increased efficiency at existing 
                        hydroelectric dams or additions of new capacity 
                        at existing hydroelectric dams;
            (2) the term ``fiscal agent'' means the entity designated 
        under subsection (b)(2)(B);
            (3) the term ``Fund'' means the Public Benefits Fund 
        established under subsection (b)(2)(A);
            (4) the term ``Indian tribe'' means any Indian tribe, band, 
        nation, or other organized group or community, including any 
        Alaska Native village or regional or village corporation as 
        defined in or established pursuant to the Alaska Native Claims 
        Settlement Act (43 U.S.C. 1601 et seq.), which is recognized as 
        eligible for the special programs and services provided by the 
        United States to Indians because of their status as Indians; 
        and
            (5) the term ``State'' means each of the States and the 
        District of Columbia.
    (b) Public Benefits Fund.--There is established in the Treasury of 
the United States a separate fund, to be known as the Public Benefits 
Fund. The Fund shall consist of amounts collected by the fiscal agent 
under subsection (e). The fiscal agent may disburse amounts in the 
Fund, without further appropriation, in accordance with this section.
    (c) Fiscal Agent.--The Secretary shall appoint a fiscal agent shall 
collect and disburse the amounts in the Fund in accordance with this 
section.
    (d) Secretary.--The Secretary shall prescribe rules for:
            (1) the determination of charges under subsection (e);
            (2) the collection of amounts for the Fund, including 
        provisions for overcollection or undercollection;
            (3) the equitable allocation of the Fund among States and 
        Indian tribes based upon--
                    (A) the number of low-income households in such 
                State or tribal jurisdiction; and
                    (B) the average annual cost of electricity used by 
                households in such State or tribal jurisdiction; and
            (4) the criteria by which the fiscal agent determines 
        whether a State or tribal government's program is an eligible 
        public purpose program.
    (e) Public Benefits Charge.--(1) As a condition of existing or 
future interconnection with facilities of any transmitting utility, 
each owner of an electric generating facility whose nameplate capacity 
exceeds five megawatts shall pay the transmitting utility a public 
benefits charge determined under paragraph (2), even if the generation 
facility and the transmitting facility are under common ownership or 
are otherwise affiliated. Each importer of electric energy from Canada 
or Mexico, as a condition of existing or future interconnection with 
facilities of any transmitting utility in the United States, shall pay 
this same charge for imported electric energy. The transmitting 
utility common ownership or are otherwise affiliated. Each importer of 
electric energy from Canada or Mexico, as a condition of existing or 
future interconnection with facilities of any transmitting utility in 
the United States, shall pay this same charge for imported electric 
energy. The transmitting utility shall pay the amounts collected to the 
fiscal agent at the close of each month, and the fiscal agent shall 
deposit the amounts into the Fund as offsetting collections.
    (2)(A) The Commission shall calculate the rate for the public 
benefits charge for each calendar year at an amount--
            (i) equal to $3 billion per year, divided by the estimated 
        kilowatt hours of electric energy to be generated by generators 
        subject to the charge, but
            (ii) not to exceed 1 mill per kilowatt-hour.
    (B) Amounts collected in excess of $3 billion in a fiscal year 
shall be retained in the fund and the assessment in the following year 
shall be reduced by that amount.
    (f) Disbursal From the Fund.--
            (1) The fiscal agent shall disburse amounts in the Fund to 
        participating States and tribal governments as a block grant to 
        carry out eligible public purpose programs in accordance with 
        this subsection and rules prescribed under subsection (d).
            (2)(A) The fiscal agent shall disburse amounts for a 
        calendar year from the Fund to a State or tribal government in 
        twelve equal monthly payments beginning two months after the 
        beginning of the calendar year.
            (B) The fiscal agent shall make distributions to the State 
        or tribal government or to an entity designated by the State or 
        tribal government to receive payments. The State or tribal 
        government may designate a nonregulated utility as an entity to 
        receive payments under this section.
            (C) A State or tribal government may use amounts received 
        only for the eligible public purpose programs the State or 
        tribal government designated in its submission to the fiscal 
        agent and the fiscal agent determined eligible.
    (g) Report.--One year before the date of expiration of this 
section, the Secretary shall report to Congress whether a public 
benefits fund should continue to exist.
    (h) Sunset.--This section expires at midnight on December 31, 
2015.''.

SEC. 1104. NATIONAL OIL HEAT RESEARCH ALLIANCE ACT DEFINITIONS.

    In this section:
            (1) Alliance.--The term ``Alliance'' means a national 
        oilheat research alliance established under section 104.
            (2) Consumer education.--The term ``consumer education'' 
        means the provision of information to assist consumers and 
        other persons in making evaluations and decisions regarding 
        oilheat and other nonindustrial commercial or residential space 
        or hot water heating fuels.
            (3) Exchange.--The term ``exchange'' means an agreement 
        that--
                    (A) entitles each party or its customers to receive 
                oilheat from the other party; and
                    (B) requires only an insubstantial portion of the 
                volumes involved in the exchange to be settled in cash 
                or property other than the oilheat.
            (4) Industry trade association.--The term ``industry trade 
        association'' means an organization described in paragraph (3) 
        or (6) of section 501(c) of the Internal Revenue Code of 1986 
        that is exempt from taxation under section 501(a) of that Code 
        and is organized for the purpose of representing the oilheat 
        industry.
            (5) No. 1 distillate.--The term ``No. 1 distillate'' means 
        fuel oil classified as No. 1 distillate by the American Society 
        for Testing and Materials.
            (6) No. 2 dyed distillate.--The term ``No. 2 dyed 
        distillate'' means fuel oil classified as No. 2 distillate by 
        the American Society for Testing and Materials that is 
        indelibly dyed in accordance with regulations prescribed by the 
        Secretary of the Treasury under section 4082(a)(2) of the 
        Internal Revenue Code of 1986.
            (7) Oilheat.--The term ``oilheat'' means--
                    (A) No. 1 distillate; and
                    (B) No. 2 dyed distillate;
        that is used as a fuel for nonindustrial commercial or 
        residential space or hot water heating.
            (8) Oilheat industry.--
                    (A) In general.--The term ``oilheat industry'' 
                means--
                            (i) persons in the production, 
                        transportation, or sale of oilheat; and
                            (ii) persons engaged in the manufacture or 
                        distribution of oilheat utilization equipment.
                    (B) Exclusion.--The term ``oilheat industry'' does 
                not include ultimate consumers of oilheat.
            (9) Public member.--The term ``public member'' means a 
        member of the Alliance described in section 105(c)(1)(F).
            (10) Qualified industry organization.--The term ``qualified 
        industry organization'' means the National Association for 
        Oilheat Research and Education or a successor organization.
            (11) Qualified state association.--The term ``qualified 
        State association'' means the industry trade association or 
        other organization that the qualified industry organization or 
        the Alliance determines best represents retail marketers in a 
        State.
            (12) Retail marketer.--The term ``retail marketer'' means a 
        person engaged primarily in the sale of oilheat to ultimate 
        consumers.
            (13) Secretary.--The term ``Secretary'' means the Secretary 
        of Energy.
            (14) Wholesale distributor.--The term ``wholesale 
        distributor'' means a person that--
                    (A)(i) produces No. 1 distillate or No. 2 dyed 
                distillate;
                    (ii) imports No. 1 distillate or No. 2 dyed 
                distillate; or
                    (iii) transports No. 1 distillate or No. 2 dyed 
                distillate across State boundaries or among local 
                marketing areas; and
                    (B) sells the distillate to another person that 
                does not produce, import, or transport No. 1 distillate 
                or No. 2 dyed distillate across State boundaries or 
                among local marketing areas.
            (15) State.--The term `State' means the several States, 
        except the State of Alaska.

``SEC. 102. REFERENDA.

    ``(a) Creation of Program.--
            ``(1) In general.--The oilheat industry, through the 
        qualified industry organization, may conduct, at its own 
        expense, a referendum among retail marketers and wholesale 
        distributors for the establishment of a national oilheat 
        research alliance.
            ``(2) Reimbursement of cost.--The Alliance, if established, 
        shall reimburse the qualified industry organization for the 
        cost of accounting and documentation for the referendum.
            ``(3) Conduct.--A referendum under paragraph (1) shall be 
        conducted by an independent auditing firm.
            ``(4) Voting rights.--
                    ``(A) Retail marketers.--Voting rights of retail 
                marketers in a referendum under paragraph (1) shall be 
                based on the volume of oilheat sold in a State by each 
                retail marketer in the calendar year previous to the 
                year in which the referendum is conducted or in another 
                representative period.
                    ``(B) Wholesale distributors.--Voting rights of 
                wholesale distributors in a referendum under paragraph 
                (1) shall be based on the volume of No. 1 distillate 
                and No. 2 dyed distillate sold in a State by each 
                wholesale distributor in the calendar year previous to 
                the year in which the referendum is conducted or in 
                another representative period, weighted by the ratio of 
                the total volume or No. 1 distillate and No. 2 dyed 
                distillate sold for nonindustrial commercial and 
                residential space and hot water heating in the State to 
                the total volume of No. 1 distillate and No. 2 dyed 
                distillate sold in that State.
            ``(5) Establishment by approval of two-thirds.--
                    ``(A) In general.--Subject to subparagraph (B), on 
                approval of persons representing two-thirds of the 
                total volume of oilheat voted in the retail marketer 
                class and two-thirds of the total weighted volume of 
                No. 1 distillate and No. 2 dyed distillate voted in the 
                wholesale distributor class, the Alliance shall be 
                established and shall be authorized to levy assessments 
                under section 107.
                    ``(B) Requirement of majority of retail 
                marketers.--Except as provided in subsection (b), the 
                oilheat industry in a State shall not participate in 
                the Alliance if less than 50 percent of the retail 
                marketer vote in the State approves establishment of 
                the Alliance.
            ``(6) Certification of volumes.--Each person voting in the 
        referendum shall certify to the independent auditing firm the 
        volume of oilheat, No. 1 distillate, or No. 2 dyed distillate 
        represented by the vote of the person.
            ``(7) Notification.--Not later than 90 days after the date 
        of enactment of this title, a qualified State association may 
        notify the qualified industry organization in writing that a 
        referendum under paragraph (1) will not be conducted in the 
        State.
    ``(b) Subsequent State Participation.--The oilheat industry in a 
State that has not participated initially in the Alliance may 
subsequently elect to participate by conducting a referendum under 
subsection (a).
    ``(c) Termination or Suspension.--
            ``(1) In general.--On the initiative of the Alliance or on 
        petition to the Alliance by retail marketers and wholesale 
        distributors representing 35 percent of the volume of oilheat 
        or weighted No. 1 distillate and No. 2 dyed distillate in each 
        class, the Alliance shall, at its own expense, hold a 
        referendum, to be conducted by an independent auditing firm 
        selected by the Alliance, to determine whether the oilheat 
        industry favors termination or suspension of the Alliance.
            ``(2) Volume percentages required to terminate or 
        suspend.--Termination or suspension shall not take effect 
        unless termination or suspension is approved by--
                    ``(A) persons representing more than one-half of 
                the total volume of oilheat voted in the retail 
                marketer class and more than one-half of the total 
                volume of weighted No. 1 distillate and No. 2 dyed 
                distillate voted in the wholesale distributor class; or
                    ``(B) persons representing more than two-thirds of 
                the total volume of fuel voted in either such class.
    ``(d) Calculation of Oilheat Sales.--For the purposes of this 
section and section 105, the volume of oilheat sold annually in a State 
shall be determined on the basis of information provided by the Energy 
Information Administration with respect to a calendar year or other 
representative period.

``SEC. 103. MEMBERSHIP.

    ``(a) Selection.--
            ``(1) In general.--Except as provided in subsection 
        (c)(1)(C), the qualified industry organization shall select 
        members of the Alliance representing the oilheat industry in a 
        State from a list of nominees submitted by the qualified State 
        association in the State.
            ``(2) Vacancies.--A vacancy in the Alliance shall be filled 
        in the same manner as the original selection.
    ``(b) Representation.--In selecting members of the Alliance, the 
qualified industry organization shall make best efforts to select 
members that are representative of the oilheat industry, including 
representation of--
            ``(1) interstate and intrastate operators among retail 
        marketers;
            ``(2) wholesale distributors of No. 1 distillate and No. 2 
        dyed distillate;
            ``(3) large and small companies among wholesale 
        distributors and retail marketers; and
            ``(4) diverse geographic regions of the country.
    ``(c) Number of Members.--
            ``(1) In general.--The membership of the Alliance shall be 
        as follows:
                    ``(A) One member representing each State with 
                oilheat sales in excess of 32,000,000 gallons per year.
                    ``(B) If fewer than 24 States are represented under 
                subparagraph (A), 1 member representing each of the 
                States with the highest volume of annual oilheat sales, 
                as necessary to cause the total number of States 
                represented under subparagraph (A) and this 
                subparagraph to equal 24.
                    ``(C) 5 representatives of retail marketers, 1 each 
                to be selected by the qualified State associations of 
                the 5 States with the highest volume of annual oilheat 
                sales.
                    ``(D) 5 additional representatives of retail 
                marketers.
                    ``(E) 21 representatives of wholesale distributors.
                    ``(F) 6 public members, who shall be 
                representatives of significant users of oilheat, the 
                oilheat research community, State energy officials, or 
                other groups knowledgeable about oilheat.
            ``(2) Full-time owners or employees.--Other than the public 
        members, Alliance members shall be full-time owners or 
        employees of members of the oilheat industry, except that 
        members described in subparagraphs (C), (D), and (E) of 
        paragraph (1) may be employees of the qualified industry 
        organization or an industry trade association.
    ``(d) Compensation.--Alliance members shall receive no compensation 
for their service, nor shall Alliance members be reimbursed for 
expenses relating to their service, except that public members, on 
request, may be reimbursed for reasonable expenses directly related to 
participation in meetings of the Alliance.
    ``(e) Terms.--
            ``(1) In general.--Subject to paragraph (4), a member of 
        the Alliance shall serve a term of 3 years, except that a 
        member filling an unexpired term may serve a total of 7 
        consecutive years.
            ``(2) Term limit.--A member may serve not more than 2 full 
        consecutive terms.
            ``(3) Former members.--A former member of the Alliance may 
        be returned to the Alliance if the member has not been a member 
        for a period of 2 years.
            ``(4) Initial appointments.--Initial appointments to the 
        Alliance shall be for terms of 1, 2, and 3 years, as determined 
        by the qualified industry organization, staggered to provide 
        for the subsequent selection of one-third of the members each 
        year.

``SEC. 104. FUNCTIONS.

    ``(a) In General.--
            ``(1) Programs, projects; contracts and other agreements.--
        The Alliance--
                    ``(A) shall develop programs and projects and enter 
                into contracts or other agreements with other persons 
                and entities for implementing this title, including 
                programs--
                            ``(i) to enhance consumer and employee 
                        safety and training;
                            ``(ii) to provide for research development, 
                        and demonstration of clean and efficient 
                        oilheat utilization equipment; and
                            ``(iii) for consumer education; and
                    ``(B) may provide for the payment of the costs of 
                carrying out subparagraph (A) with assessments 
                collected under section 107.
            ``(2) Coordination.--The Alliance shall coordinate its 
        activities with industry trade associations and other persons 
        as appropriate to provide efficient delivery of services and to 
        avoid unnecessary duplication of activities.
            ``(3) Activities.--
                    ``(A) Exclusions.--Activities under clause (i) or 
                (ii) of paragraph (1)(A) shall not include advertising, 
                promotions, or consumer surveys in support of 
                advertising or promotions.
                    ``(B) Research, development, and demonstration 
                activities.--
                            ``(i) In general.--Research, development, 
                        and demonstration activities under paragraph 
                        (1)(A)(ii) shall include--
                                    ``(I) all activities incidental to 
                                research, development, and 
                                demonstration of clean and efficient 
                                oilheat utilization equipment; and
                                    ``(II) the obtaining of patents, 
                                including payment of attorney's fees 
                                for making and perfecting a patent 
                                application.
                            ``(ii) Excluded activities.--Research, 
                        development, and demonstration activities under 
                        paragraph (1)(A)(ii) shall not include 
                        research, development, and demonstration of 
                        oilheat utilization equipment with respect to 
                        which technically feasible and commercially 
                        feasible operations have been verified, except 
                        that funds may be provided for improvements to 
                        existing equipment until the technical 
                        feasibility and commercial feasibility of the 
                        operation of those improvements have been 
                        verified.
    ``(b) Priorities.--In the development of programs and projects, the 
Alliance shall give priority to issues relating to--
            ``(1) research, development, and demonstration;
            ``(2) safety;
            ``(3) consumer education; and
            ``(4) training.
    ``(c) Administration.--
            ``(1) Officers; Committees; Bylaws.--The Alliance--
                    ``(A) shall select from among its members a 
                chairperson and other officers as necessary;
                    ``(B) may establish and authorize committees and 
                subcommittees of the Alliance to take specific actions 
                that the Alliance is authorized to take; and
                    ``(C) shall adopt bylaws for the conduct of 
                business and the implementation of this title.
            ``(2) Solicitation of oilheat industry comment and 
        recommendations.--The Alliance shall establish procedures for 
        the solicitation of oilheat industry comment and 
        recommendations on any significant contracts and other 
        agreements, programs, and projects to be funded by the 
        Alliance.
            ``(4) Voting.--Each member of the Alliance shall have 1 
        vote in matters before the Alliance.
    ``(d) Administrative Expenses.--
            ``(1) In general.--The administrative expenses of operating 
        the Alliance (not including costs incurred in the collection of 
        assessments under section 107) plus amounts paid under 
        paragraph (2) shall not exceed 7 percent of the amount of 
        assessments collected in any calendar year, except that during 
        the first year of operation of the Alliance such expenses and 
        amounts shall not exceed 10 percent of the amount of 
        assessments.
            ``(2) Reimbursement of the secretary.--
                    ``(A) In general.--The Alliance shall annually 
                reimburse the Secretary for costs incurred by the 
                Federal Government relating to the Alliance.
                    ``(B) Limitation.--Reimbursement under subparagraph 
                (A) for any calendar year shall not exceed the amount 
                that the Secretary determines is twice the average 
                annual salary of 1 employee of the Department of 
                Energy.
    ``(e) Budget.--
            ``(1) Publication of proposed budget.--Before August 1 of 
        each year, the Alliance shall publish for public review and 
        comment a proposed budget for the next calendar year, including 
        the probable costs of all programs, projects, and contracts and 
        other agreements.
            ``(2) Submission to the secretary and congress.--After 
        review and comment under paragraph (1), the Alliance shall 
        submit the proposed budget to the Secretary and Congress.
            ``(3) Recommendations by the Secretary.--The Secretary may 
        recommend for inclusion in the budget programs and activities 
        that the Secretary considers appropriate.
            ``(4) Implementation.--The Alliance shall not implement a 
        proposed budget until the expiration of 60 days after 
        submitting the proposed budget to the Secretary.
    ``(f) Records; Audits.--
            ``(1) Records.--The Alliance shall--
                    ``(A) keep records that clearly reflect all of the 
                acts the transactions of the Alliance; and
                    ``(B) make the records available to the public.
            ``(2) Audits.--
                    ``(A) In general.--The records of the Alliance 
                (including fee assessment reports and applications for 
                refunds under section 107(b)(4)) shall be audited by a 
                certified public accountant at least once each year and 
                at such other times as the Alliance may designate.
                    ``(B) Availability of audit reports.--Copies of 
                each audit report shall be provided to the Secretary, 
                the members of the Alliance, and the qualified industry 
                organization, and, on request to other members of the 
                oilheat industry.
                    ``(C) Policies and procedures.--
                                    ``(i) In general.--The Alliance 
                                shall establish policies and procedures 
                                for auditing compliance with this 
                                title.
                                    ``(ii) Conformity with GAAP.--The 
                                policies and procedures established 
                                under clause (i) shall conform with 
                                generally accepted accounting 
                                principles.
    ``(g) Public Access to Alliance Proceedings.--
            ``(1) Public notice.--The alliance shall give at least 30 
        days' public notice of each meeting of the Alliance.
            ``(2) Meetings open to the public.--Each meeting of the 
        Alliance shall be open to the public.
            ``(3) Minutes.--The minutes of each meeting of the Alliance 
        shall be made available to and readily accessible by the 
        public.
    ``(h) Annual report.--Each year the Alliance shall prepare and make 
publicly available a report that--
            ``(1) includes a description of all programs, projects, and 
        contracts and other agreements undertaken by the Alliance 
        during the previous year and those planned for the current 
        year; and
            ``(2) details the allocation of Alliance resources for each 
        such program and project.

``SEC. 105. ASSESSMENTS.

    ``(a) Rate.--The assessment rate shall be equal to two-tenths-cent 
per gallon of No. 1 distillate and No. 2 dyed distillate.
    ``(b) Collection Rules.--
            ``(1) Collection at point of sale.--The assessment shall be 
        collected at the point of sale of No. 1 distillate and No. 2 
        dyed distillate by a wholesale distributor to a person other 
        than a wholesale distributor, including a sale made pursuant to 
        an exchange.
            ``(2) Responsibility for payment.--A wholesale 
        distributor--
                    ``(A) shall be responsible for payment of an 
                assessment to the Alliance on a quarterly basis; and
                    ``(B) shall provide to the Alliance certification 
                of the volume of fuel sold.
            ``(3) No ownership interest.--A person that has no 
        ownership interest in No. 1 distillate or No. 2 dyed distillate 
        shall not be responsible for payment of an assessment under 
        this section.
            ``(4) Failure to receive payment.--
                    ``(A) Refund.--A wholesale distributor that does 
                not receive payments from a purchaser for No. 1 
                distillate or No. 2 dyed distillate within 1 year of 
                the date of sale may apply for a refund from the 
                Alliance of the assessment paid.
                    ``(B) Amount.--The amount of a refund shall not 
                exceed the amount of the assessment levied on the No. 1 
                distillate or No. 2 dyed distillate for which payment 
                was not received.
            ``(5) Importation after point of sale.--The owner of No. 1 
        distillate or No. 2 dyed distillate imported after the point of 
        sale--
                    ``(A) shall be responsible for payment of the 
                assessment of the Alliance at the point at which the 
                product enters the United States; and
                    ``(B) shall provide to the Alliance certification 
                of the volume of fuel imported.
            ``(6) Late payment charge.--The Alliance may establish a 
        late payment charge and rate of interest to be imposed on any 
        person who fails to remit or pay to the Alliance any amount due 
        under this title.
            ``(7) Alternative collection rules.--The Alliance may 
        establish, or approve a request of the oilheat industry in a 
        State for, an alternative means of collecting the assessment if 
        another means is determined to be more efficient or more 
        effective.
    ``(c) Sale for Use Other Than as Oilheat.--No. 1 distillate and No. 
2 dyed distillate sold for uses other than as oilheat are excluded from 
the assessment.
    ``(d) Investment of Funds.--Pending disbursement under a program, 
project, or contract or other agreement the Alliance may invest funds 
collected through assessments, and any other finds received by the 
Alliance, only--
            ``(1) in obligations of the United States or any agency of 
        the United States;
            ``(2) in general obligations of any State or any political 
        subdivision of a State;
            ``(3) in any interest-bearing account or certificate of 
        deposit of a bank that is a member of the Federal Reserve 
        System; or
            ``(4) in obligations fully guaranteed as principal and 
        interest by the United States.
    ``(e) State, Local, and Regional Programs.--
            ``(1) Coordination.--The Alliance shall establish a program 
        coordinating the operation of the Alliance with the operator of 
        any similar State, local, or regional program created under 
        State law (including a regulation), or similar entity.
            ``(2) Funds made available to qualified state 
        associations.--
                    ``(A) In general.--
                            ``(i) Base amount.--The Alliance shall make 
                        available to the qualified State association of 
                        each State an amount equal to 15 percent of the 
                        amount of assessments collected in the State.
                            ``(ii) Additional amount.--
                                    ``(I) In general.--A qualified 
                                State association may request that the 
                                Alliance provide to the association any 
                                portion of the remaining 85 percent of 
                                the amount of assessments collected in 
                                the State.
                                    ``(II) Request requirements.--A 
                                request under this clause shall--
                                            ``(aa) specify the amount 
                                        of funds requested;
                                            ``(bb) describe in detail 
                                        the specific uses for which the 
                                        requested funds are sought;
                                            ``(cc) include a commitment 
                                        to comply with this title in 
                                        using the requested funds; and
                                            ``(dd) be made publicly 
                                        available.
                                    ``(III) Direct benefit.--The 
                                Alliance shall not provide any funds in 
                                response to a request under this clause 
                                unless the Alliance determines that the 
                                funds will be used to directly benefit 
                                the oilheat industry.
                                    ``(IV) Monitoring; terms, 
                                conditions, and reporting 
                                requirements.--The Alliance shall--
                                            ``(aa) monitor the use of 
                                        funds provided under this 
                                        clause; and
                                            ``(bb) impose whatever 
                                        terms, conditions, and 
                                        reporting requirements that the 
                                        Alliance considers necessary to 
                                        ensure compliance with this 
                                        title.

``SEC. 106. MARKET SURVEY AND CONSUMER PROTECTION.

    ``(a) Price Analysis.--Beginning 2 years after establishment of the 
Alliance and annually thereafter, the Secretary of Commerce, using only 
data provided by the Energy Information Administration and other public 
sources, shall prepare and make available to the Congress, the 
Alliance, the Secretary of Energy, and the public, an analysis of 
changes in the price of oilheat relative to other energy sources. The 
oilheat price analysis shall compare indexed changes in the price of 
consumer grade oilheat to a composite of indexed changes in the price 
of residential electricity, residential natural gas, and propane on an 
annual average basis. For purposes of indexing changes in oilheat, 
residential electricity, residential natural gas, and propane prices, 
the Secretary of Commerce shall use a 5-year rolling average price 
beginning with the year 4 years prior to the establishment of the 
Alliance.
    ``(b) Authority To Restrict Activities.--If in any year the 5-year 
average price composite index of consumer grade oilheat exceeds the 5-
year rolling average price composite index of residential electricity, 
residential natural gas, and propane in an amount greater than 10.1 
percent, the activities of the Alliance shall be restricted to research 
and development, training, and safety matters. The Alliance shall 
inform the Secretary of Energy and the Congress of any restriction of 
activities under this subsection. Upon expiration of 180 days after the 
beginning of any such restriction of activities, the Secretary of 
Commerce shall again conduct the oilheat price analysis described in 
subsection (a). Activities of the Alliance shall continue to be 
restricted under this subsection until the price index excess is 10.1 
percent or less.

``SEC. 107. COMPLIANCE.

    ``(a) In General.--The Alliance may bring a civil action in United 
States district court to compel payment of an assessment under section 
107.
    ``(b) Costs.--A successful action for compliance under this section 
may also require payment by the defendant of the costs incurred by the 
Alliance in bringing the action.

``SEC. 108. LOBBYING RESTRICTIONS.

    ``No funds derived from assessments under section 107 collected by 
the Alliance shall be used to influence legislation or elections, 
except that the Alliance may use such funds to formulate and submit to 
the Secretary recommendations for amendments to this title or other 
laws that would further the purposes of this title.

``SEC. 109. DISCLOSURE.

    ``Any consumer education activity undertaken with funds provided by 
the Alliance shall include a statement that the activities were 
supported, in whole or in part, by the Alliance.

``SEC. 110. VIOLATIONS.

    ``(a) Prohibition.--It shall be unlawful for any person to conduct 
a consumer education activity, undertaken with funds derived from 
assessments collected by the Alliance under section 107, that 
includes--
            ``(1) a reference to a private brand name;
            ``(2) a false or unwarranted claim on behalf of oilheat or 
        related products; or
            ``(3) a reference with respect to the attributes or use of 
        any competing product.
    ``(b) Complaints.--
            ``(1) In general.--A public utility that is aggrieved by a 
        violation described in subsection (a) may file a complaint with 
        the Alliance.
            ``(2) Transmittal to qualified state association.--A 
        complaint shall be transmitted concurrently to any qualified 
        State association undertaking the consumer education activity 
        with respect to which the complaint is made.
            ``(3) Cessation of activities.--On receipt of a complaint 
        under this subsection, the Alliance, and any qualified State 
        association undertaking the consumer education activity with 
        respect to which the complaint is made, shall cease that 
        consumer education activity until--
                    ``(A) the complaint is withdrawn; or
                    ``(B) a court determines that the conduct of the 
                activity complained of does not constitute a violation 
                of subsection (a).
    ``(c) Resolution by Parties.--
            ``(1) In general.--Not later than 10 days after a compliant 
        is filed and transmitted under subsection (b), the complaining 
        party, the Alliance, and any qualified State association 
        undertaking the consumer education activity with respect to 
        which the compliant is made shall meet to attempt to resolve 
        the compliant.
            ``(2) Withdrawal of complaint.--If the issues in dispute 
        are resolved in those discussions, the complaining party shall 
        withdraw its complaint.
    ``(d) Judicial Review.--
            ``(1) In general.--A public utility filing a complaint 
        under this section, the Alliance, a qualified State association 
        undertaking the consumer education activity with respect to 
        which a complaint under this section is made, or any person 
        aggrieved by a violation of subsection (a) may seek appropriate 
        relief in United States district court.
            ``(2) Relief.--A public utility filing a complaint under 
        this section shall be entitled to temporary and injunctive 
        relief enjoining the consumer education activity with respect 
        to which a complaint under this section is made until--
                    ``(A) the complaint is withdrawn; or
                    ``(B) the court has determined that what the 
                consumer education activity complained of does not 
                constitute a violation of subsection (a).
    ``(e) Attorney's fees.--
            ``(1) Meritorious case.--In a case in Federal court in 
        which the court grants a public utility injunctive relief under 
        subsection (d), the public utility shall be entitled to recover 
        an attorney's fee from the Alliance and any qualified State 
        association undertaking the consumer education activity with 
        respect to which a complaint under this section is made.
            ``(2) Nonmeritorious case.--In any case under subsection 
        (d) in which the court determines a complaint under subsection 
        (b) to be frivolous and without merit, the prevailing party 
        shall be entitled to recover an attorney's fee.
    ``(f) Savings Clause.--Nothing in this section shall limit causes 
of action brought under any other law.

``SEC. 111. SUNSET.

    ``This title shall cease to be effective as of the date that is 4 
years after the date on which the Alliance is established.''.

                         TITLE XII--ELECTRICITY

SEC. 1201. COMPREHENSIVE INDIAN ENERGY PROGRAM.

    (a) Title XXVI of the Energy Policy Act of 1992 (25 U.S.C. 3501-
3506) is amended by adding after section 2606 the following new 
section--

``SEC. 2607. COMPREHENSIVE INDIAN ENERGY PROGRAM.

    ``(a) Definitions.--For purposes of this section--
            ``(1) `Director' means the Director of the Office of Indian 
        Energy Policy and Programs established by section 217 of the 
        Department of Energy Organization Act; and
            ``(2) `Indian land' means--
                    ``(A) any land within the limits of an Indian 
                reservation, pueblo, or ranchera;
                    ``(B) any land not within the limits of an Indian 
                reservation, pueblo, or ranchera whose title on the 
                date of enactment of this section was held--
                            ``(i) in trust by the United States for the 
                        benefit of an Indian tribe,
                            ``(ii) by an Indian tribe subject to 
                        restriction by the United States against 
                        alienation, or
                            ``(iii) by a dependent Indian community; 
                        and
                    ``(C) land conveyed to an Alaska Native Corporation 
                under the Alaska Native Claims Settlement Act.
    ``(b) Indian Energy Education, Planning and Management 
Assistance.--(1) The Director shall establish programs within the 
Office of Indian Energy Policy and Programs to assist Indian tribes to 
meet their energy education, research and development, planning, and 
management needs.
    ``(2) The Director may make grants, on a competitive basis, to an 
Indian tribe for--
            ``(A) renewable, energy efficiency, and conservation 
        programs;
            ``(B) studies and other activities supporting tribal 
        acquisition of energy supplies, services, and facilities; and
            ``(C) planning, constructing, developing, operating, 
        maintaining, and improving tribal electrical generation, 
        transmission, and distribution facilities.
    ``(3) The Director may develop, in consultation with Indian tribes, 
a formula for making grants under this section. The formula may take 
into account the following--
            ``(A) total number of acres of Indian land owned by an 
        Indian tribe;
            ``(B) total number of households on the tribe's Indian 
        land;
            ``(C) total number of households on the Indian tribe's 
        Indian land that have no electricity service or are 
        underserved; and
            ``(D) financial or other assets available to the tribe from 
        any source.
    ``(4) In making a grant under paragraph (2)(E), the Director shall 
give priority to an application received from an Indian tribe that is 
not served or served inadequately by an electric utility, as that term 
is defined in section 3(4) of the Public Utility Regulatory Policies 
Act of 1978 (16 U.S.C. 2602(4)), or by a person, State agency, or any 
other non-federal entity that owns or operates a local distribution 
facility used for the sale of electric energy to an electric consumer.
    ``(5) There are authorized to be appropriated to the Department of 
Energy such sums as may be necessary to carry out the purposes of this 
section.
    ``(c) Application of Buy Indian Act.--(1) An agency or department 
of the United States Government may give, in the purchase and sale of 
electricity, oil, gas, coal, or other energy product or by-product 
produced, converted, or transferred on Indian lands, preference, under 
section 23 of the Act of June 25, 1910 (25 U.S.C. 47) (commonly known 
as the ``Buy Indian Act''), to an energy and resource production 
enterprise, partnership, corporation, or other type of business 
organization majority or wholly owned and controlled by an Indian, a 
tribal government, or a business, enterprise, or operation of the 
American Indian Tribal Governments.
    ``(2) In implementing this subsection, an agency or department 
shall pay no more for energy production than the prevailing market 
price and shall obtain no less than existing market terms and 
conditions.
    ``(d) This section does not--
            ``(1) limit the discretion vested in an Administrator of a 
        Federal Power Administration to market and allocate Federal 
        power, or
            ``(2) alter Federal laws under which a Federal Power 
        Administration markets, allocates, or purchases power.''.
    (b) Office of Indian Policy and Programs.--Title II of the 
Department of Energy Organization Act is amended by inserting the 
following after section 216:

             ``office of indian energy policy and programs

    ``Sec. 217. (a) There is established within the Department an 
Office of Indian Energy Policy and Programs. This Office shall be 
headed by a Director, who shall be appointed by the Secretary and 
compensated at the rate equal to that of level IV of the Executive 
Schedule under section 5315 of Title 5, United States Code. The 
Director shall perform the duties assigned the Director under the 
Comprehensive Indian Energy Act and this section.
    ``(b) The Director shall provide, direct, foster, coordinate, and 
implement energy planning, education, management, conservation, and 
delivery programs of the Department that--
            ``(1) promote tribal energy efficiency and utilization;
            ``(2) modernize and develop, for the benefit of Indian 
        tribes, tribal energy and economic infrastructure related to 
        natural resource development and electrification;
            ``(3) preserve and promote tribal sovereignty and self 
        determination related to energy matters and energy 
        deregulation;
            ``(4) lower or stabilize energy costs; and
            ``(5) electrify tribal members' homes and tribal lands.
    ``(c) The Director shall carry out the duties assigned the 
Secretary under title XXVI of the Energy Policy Act of 1992 (25 U.S.C. 
3501 et seq.).''.
    (c) Conforming Amendment.--Section 2603(c) of the Energy Policy Act 
of 1992 (25 U.S.C. 3503(c)) is amended to read as follows:
    ``(c) There are authorized to be appropriated such sums as may be 
necessary to carry out the purposes of this section.''.
    (d) The Table of Contents of the Department of Energy Act is 
amended by inserting after the item relating to section 216 the 
following new item:

``217. Office of Indian Energy Policy and Programs.''.
    (e) Section 5315 of title 5, United States Code, is amended by 
inserting ``Director, Office of Indian Energy Policy and Programs, 
Department of Energy.'' after ``Director, Office of Science, Department 
of Energy.''.

SEC. 1202. INTERCONNECTION.

    Title II of the Federal Power Act is further amended by adding 
after section 210 (16 U.S.C. 824i) the following:

``SEC. 210A. INTERCONNECTION OF DISTRIBUTED GENERATION FACILITIES.

    ``(a) Rulemaking Authority.--Not later than one year after the date 
of enactment of this section, the Commission shall adopt rules to 
ensure the interconnection of distributed generation facilities to 
local distribution facilities of an electric utility.
    ``(b) Interconnection Authority.--Upon the application of the owner 
or operator of a distributed generation facility, the Commission may 
issue an order requiring the physical connection of the local 
distribution facilities of an electric utility with the distributed 
generation facility of the applicant.
    ``(c) State Authority.--Any interconnection ordered under this 
section shall be subject to regulation by the appropriate State 
commission.
    ``(d) Definition.--As used in this section, the term `distributed 
generation facility' means--
            ``(1) a small-scale electric power generation facility that 
        is designed to serve customers at or near the facility, or
            ``(2) a facility using a single fuel source to produce at 
        the point of use either electric or mechanical power and 
        thermal energy.''.
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