[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[S. 389 Introduced in Senate (IS)]







107th CONGRESS
  1st Session
                                 S. 389

   To protect the energy security of the United States and decrease 
 America's dependency on foreign oil sources to 50 percent by the year 
  2011 by enhancing the use of renewable energy resources, conserving 
    energy resources, improving energy efficiencies, and increasing 
  domestic energy supplies; improve environmental quality by reducing 
 emissions of air pollutants and greenhouse gases; mitigate the effect 
 of increases in energy prices on the American consumer, including the 
             poor and the elderly; and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                           February 26, 2001

 Mr. Murkowski (for himself, Mr. Breaux, Mr. Lott, Mr. Voinovich, Mr. 
 Domenici, Mr. Craig, Mr. Campbell, Mr. Thomas, Mr. Shelby, Mr. Burns, 
 Mr. Hagel, Mr. Stevens, and Mr. Hutchinson) introduced the following 
  bill; which was read twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
   To protect the energy security of the United States and decrease 
 America's dependency on foreign oil sources to 50 percent by the year 
  2011 by enhancing the use of renewable energy resources, conserving 
    energy resources, improving energy efficiencies, and increasing 
  domestic energy supplies; improve environmental quality by reducing 
 emissions of air pollutants and greenhouse gases; mitigate the effect 
 of increases in energy prices on the American consumer, including the 
             poor and the elderly; 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.

    This Act may be cited as the ``National Energy Security Act of 
2001''.

SEC. 2. FINDINGS AND PURPOSES.

    (a) Findings.--The Congress finds that--
            (1) Increasing dependence on foreign sources of oil causes 
        systemic harm to all sectors of the United States economy, 
        threatens national security, undermines the ability of Federal, 
        State, and local units of government to provide essential 
        services, and jeopardizes the peace, security, and welfare of 
        the American people;
            (2) dependence on imports of foreign oil was 46 percent in 
        1992, rose to more than 55 percent by the beginning of 2000, 
        and is estimated by the Department of Energy to rise to 65 
        percent by 2020 unless current policies are altered;
            (3) even with increased energy efficiency, energy use in 
        the United States is expected to increase 27 percent by 2020;
            (4) the United States lacks a comprehensive national energy 
        policy and has taken actions that limit the availability and 
        capability of the domestic energy sources of oil and gas, coal, 
        nuclear and hydroelectric;
            (5) a comprehensive energy strategy must be developed to 
        combat this trend, decrease the United States dependence on 
        imported oil supplies and strengthen our national energy 
        security;
            (6) this comprehensive strategy must decrease the United 
        States dependence on foreign oil supplies to not more than 50 
        percent by the year 2011;
            (7) this comprehensive energy strategy must be multi-
        faceted and enhance the use of renewable energy resources 
        (including hydroelectric, solar, wind, geothermal and biomass), 
        conserve energy resources (including improving energy 
        efficiencies), and increase domestic supplies of conventional 
        energy resources (including oil, natural gas, coal, and 
        nuclear);
            (8) conservation efforts and alternative fuels alone will 
        not enable America to meet this goal as conventional energy 
        sources supply 96 percent of America's power at this time;
            (9) immediate actions must also be taken to mitigate the 
        economic effects of recent increases in the price of crude oil, 
        natural gas, and electricity and the related impacts on 
        American consumers, including the poor and the elderly.
    (b) Purposes.--The purposes of this Act are to protect the energy 
security of the United States by decreasing America's dependence on 
foreign oil sources to not more than 50 percent by 2010, by enhancing 
the use of renewable energy resources, conserving energy resources 
(including improving energy efficiencies), and increasing domestic 
energy supplies, improving environmental quality by reducing emissions 
of air pollutants and greenhouse gases, and mitigating the immediate 
effect of increases in energy prices on the American consumer, 
including the poor and the elderly.

   TITLE I--GENERAL PROVISIONS TO PROTECT ENERGY SUPPLY AND SECURITY

SEC. 101. CONSULTATION AND REPORT ON FEDERAL AGENCY ACTIONS AFFECTING 
              DOMESTIC ENERGY SUPPLY.

    Prior to taking or initiating any action that could have a 
significant adverse effect on the availability or supply of domestic 
energy resources or on the domestic capability to distribute or 
transport such resources, the head of a Federal agency proposing or 
participating in such action shall notify the Secretary of Energy in 
writing of the nature and scope of the action, the need for such 
action, the potential effect of such action on energy resource 
supplies, price, distribution, and transportation, and any alternatives 
to such action or options to mitigate the effects and shall provide the 
Secretary of Energy with adequate time to review the proposed action 
and make recommendations to avoid or minimize the adverse effect of the 
proposed action. The proposing agency shall consider any such 
recommendations made by the Secretary of Energy. The Secretary of 
Energy shall provide an annual report to the Committee on Energy and 
Natural Resources of the United States Senate and to the appropriate 
Committees of the House of Representatives on all actions brought to 
his attention, what mitigation or alternatives, if any, were 
implemented, and what the short-term, mid-term, and long-term effect of 
the final action will likely be on domestic energy resource supplies 
and their development, distribution, or transmission.

SEC. 102. ANNUAL REPORT ON UNITED STATES ENERGY INDEPENDENCE.

    (a) Report.--Beginning on October 1, 2001, and annually thereafter, 
the Secretary of Energy, in consultation with the Secretary of Defense 
and the heads of other relevant Federal agencies, shall submit a report 
to the President and the Congress which evaluates the progress the 
United States has made toward obtaining the goal of not more than 50 
percent dependence on foreign oil sources by 2010.
    (b) Alternatives.--The report shall specify legislative or 
administrative actions that must be implemented to meet this goal and 
set forth a range of options and alternatives with a benefit/cost 
analysis for each option or alternative together with an estimate of 
the contribution each option or alternative could make to reduce 
foreign oil imports. The Secretary shall solicit information from the 
public and request information from the Energy Information Agency and 
other agencies to develop the report. The report shall indicate, in 
detail, options and alternatives to (1) increase the use of renewable 
domestic energy sources, including conventional and non-conventional 
sources such as, but not limited to, increased hydroelectric generation 
at existing Federal facilities, (2) conserve energy resources, 
including improving efficiencies and decreasing consumption, and (3) 
increase domestic production and use of oil, natural gas, nuclear, and 
coal, including any actions necessary to provide access to, and 
transportation of, these energy resources.
    (c) Refinery Capacity.--As part of the reports submitted in 2001, 
2005, and 2008, the Secretary shall examine and report on the condition 
of the domestic refinery industry and the extent of domestic storage 
capacity for various categories of petroleum products and make such 
recommendations as he believes will enhance domestic capabilities to 
respond to short-term shortages of various fuels due to climate or 
supply interruptions and ensure long-term supplies on a reliable and 
affordable basis.
    (d) Notification to Congress.--Whenever the Secretary determines 
that stocks of petroleum products have declined or are anticipated to 
decline to levels that would jeopardize national security or threaten 
supply shortages or price increases on a national or regional basis, he 
shall immediately notify the Congress of the situation and shall make 
such recommendations for administrative or legislative action as he 
believes are necessary to alleviate the situation.

SEC. 103. STRATEGIC PETROLEUM RESERVE STUDY AND REPORT.

    The President shall immediately establish an Interagency Panel on 
the Strategic Petroleum Study (referred to as the ``Panel'' in this 
section) to study oil markets and estimate the extent and frequency of 
fluctuations in the supply and price of, and demand for crude oil in 
the future and determine appropriate capacity of and uses for the 
Strategic Petroleum Reserve. The Panel may recommend changes in 
existing authorities to strengthen the ability of the Strategic 
Petroleum Reserve to respond to energy requirements. The Panel shall 
complete its study and submit a report containing its findings and any 
recommendations to the President and the Congress within six months 
from the date of enactment of this Act.

SEC. 104. STUDY OF EXISTING RIGHTS-OF-WAY TO DETERMINE CAPABILITY TO 
              SUPPORT NEW PIPELINES OR OTHER TRANSMISSION FACILITIES.

    Within one year from the date of enactment of this Act, the head of 
each Federal agency that has authorized a right-of-way across Federal 
lands for transportation of energy supplies or transmission of 
electricity shall review each such right-of-way and submit a report to 
the Secretary of Energy and the Chairman of the Federal Energy 
Regulatory Commission whether the right-of-way can be used to support 
new or additional capacity and what modifications or other changes, if 
any, would be necessary to accommodate such additional capacity. In 
performing the review, the head of each agency shall consult with 
agencies of State or local units of government as appropriate and 
consider whether safety or other concerns related to current uses might 
preclude the availability of a right-of-way for additional or new 
transportation or transmission facilities and shall set forth those 
considerations in the report.

SEC. 105. USE OF FEDERAL FACILITIES.

    (a) The Secretary of the Interior and the Secretary of the Army 
shall each inventory all dams, impoundments, and other facilities under 
their jurisdiction.
    (b) Based on this inventory and other information, the Secretary of 
the Interior and the Secretary of the Army shall each submit a report 
to the Congress within six months from the date of enactment of this 
Act. Each report shall--
            (1) describe, in detail, each facility that is capable, 
        with or without modification, of producing additional 
        hydroelectric power. For each such facility, the report shall 
        state the full potential for the facility to generate 
        hydroelectric power, whether the facility is currently 
        generating hydroelectric power, and the costs to install, 
        upgrade, modify, or take other actions to increase the 
        hydroelectric generating capability of the facility. For each 
        facility that currently has hydroelectric generating equipment, 
        the report shall indicate the condition of such equipment, 
        maintenance requirements, and schedule for any improvements as 
        well as the purposes for which power is generated, and
            (2) describe what actions are planned or underway to 
        increase hydroelectric production from facilities under his 
        jurisdiction and shall include any recommendations the 
        Secretary deems advisable to increase such production, reduce 
        costs, and improve efficiency at Federal facilities, including, 
        but not limited to, use of lease of power privilege and 
        contracting with non-Federal entities for operation and 
        maintenance.

SEC. 106. NUCLEAR GENERATION STUDY.

    The Chairman of the Nuclear Regulatory Commission shall submit a 
report to the Congress within six months from the date of enactment of 
this Act on the state of nuclear power generation and production in the 
United States and the potential for increasing nuclear generating 
capacity and production as part of this Nation's energy mix. The report 
shall include an assessment of agency readiness to license new advanced 
reactor designs and discuss the needed confirmatory and anticipatory 
research activities that would support such a state of readiness. The 
report shall also review the status of the relicensing process for 
civilian nuclear power plants, including current and anticipated 
applications, and recommendations for improvements in the process, 
including, but not limited to recommendations for expediting the 
process and ensuring that relicensing is accomplished in a timely 
manner.

SEC. 107. DEVELOPMENT OF A NATIONAL SPENT NUCLEAR FUEL STRATEGY AND 
              ESTABLISHMENT OF AN OFFICE OF SPENT NUCLEAR FUEL 
              RESEARCH.

    (a) Prior to the Federal Government taking any irreversible action 
relating to the disposal of spent nuclear fuel, Congress must determine 
whether the spent fuel should be treated as waste subject to permanent 
burial or should be considered an energy resource that is needed to 
meet future energy requirements.
    (b) Office of Spent Nuclear Fuel Research.--There is hereby 
established an Office of Spent Nuclear Fuel Research (referred to as 
the ``Office'' in this section) within the Office of Nuclear Energy 
Science and Technology of the Department of Energy. The Office shall be 
headed by the Associate Director, who shall be a member of the Senior 
Executive Service appointed by the Director of the Office of Nuclear 
Energy Science and Technology, and compensated at a rate determined by 
applicable law.
    (c) Associate Director.--The Associate Director of the Office of 
Spent Nuclear Fuel Research shall be responsible for carrying out an 
integrated research, development, and demonstration program on 
technologies for treatment, recycling, and disposal of high-level 
nuclear radioactive waste and spent nuclear fuel, subject to the 
general supervision of the Secretary. The Associate Director of the 
Office shall report to the Director of the Office of Nuclear Energy 
Science and Technology. The first such Associate Director shall be 
appointed within 90 days of the enactment of this Act.
    (d) Grant and Contract Authority.--In carrying out his 
responsibilities under this Section, the Secretary may make grants, or 
enter into contracts, for the purposes of the research projects and 
activities described in (e)(2).
    (e)(1) Duties.--The Associate Director of the Office shall involve 
national laboratories, universities, the commercial nuclear industry, 
and other organizations to investigate technologies for the treatment, 
recycling, and disposal of spent nuclear fuel and high-level 
radioactive waste.
    (2) The Associate Director of the Office shall--
            (A) develop a research plan to provide recommendations by 
        2015;
            (B) identify technologies for the treatment, recycling, and 
        disposal of spent nuclear fuel and high-level radioactive 
        waste;
            (C) conduct research and development activities on such 
        technologies;
            (D) ensure that all activities include as key objectives 
        minimization of proliferation concerns and risk to health of 
        the general public or site workers, as well as development of 
        cost-effective technologies;
            (E) require research on both reactor- and accelerator-based 
        transmutation systems;
            (F) require research on advanced processing and 
        separations;
            (G) encourage that research efforts include participation 
        of international collaborators;
            (H) be authorized to fund international collaborators when 
        they bring unique capabilities not available in the United 
        States and their host country is unable to provide for their 
        support;
            (I) ensure that research efforts with the Office are 
        coordinated with research on advanced fuel cycles and reactors 
        conducted within the Office of Nuclear Energy Science and 
        Technology.
    (f) Report.--The Associate Director of the Office of Spent Nuclear 
Fuel Research shall annually prepare and submit a report to the 
Congress on the activities and expenditures of the Office, including 
the progress that has been made to achieve the objectives of subsection 
(c).

SEC. 108. STUDY AND REPORT ON STATUS OF DOMESTIC REFINING INDUSTRY AND 
              PRODUCT DISTRIBUTION SYSTEM.

    (a) Annual Report.--The Secretary of Energy, in consultation with 
the Administrator of the Environmental Protection Agency, the States, 
the National Petroleum Council, and other representatives of the 
petroleum refining, distribution and retailing industries, shall submit 
a report to the Congress on the condition of the domestic petroleum 
refining industry and the petroleum product distribution system. The 
first such report shall be submitted no later than January 1, 2002, and 
revised annually thereafter.
    (b) Recommendations.--Each annual report shall include any 
recommendations that the Secretary believes should be implemented 
either through legislation or regulation to ensure that there is 
adequate domestic refining capacity and motor fuel supplies to meet the 
economic, social, and security requirements of the United States.
    (c) Preparation.--In preparing each annual report, the Secretary 
shall--
            (1) provide an assessment of the condition of the domestic 
        petroleum refining industry and the Nation's motor fuel 
        distribution system, including the ability to make future 
        capital investments necessary to manufacture, transport, and 
        store different petroleum products required by local, State, 
        and Federal statute and regulations;
            (2) examine the reliability and cost of feedstocks and 
        energy supplied to the refining industry as well as the 
        reliability and cost of products manufactured by such industry;
            (3) provide an assessment of the collective effect of 
        current and future motor fuel requirements on--
                    (A) the ability of the domestic motor fuels 
                refining, distribution, and retailing industries to 
                reliably and cost-effectively supply fuel to the 
                Nation's consumers and businesses;
                    (B) gasoline (reformulated and conventional) and 
                diesel fuel (on-highway and off-highway) supplies;
                    (C) retail motor fuel price volatility;
            (4) explore opportunities to streamline permitting and 
        siting decisions and approvals for expanding existing and/or 
        building new domestic refining capacity;
            (5) recommend actions that can be taken to reduce future 
        motor supply concerns; and
            (6) provide an assessment of whether uniform, regional, or 
        national performance-based fuel specifications would reduce 
        supply disruptions and price spikes.
    (d) Confidentiality of Data.--Any information requested by the 
Secretary to be submitted by industry for purposes of this section 
shall be treated as confidential and shall be used only for the 
preparation of the annual report.

SEC. 109. REVIEW OF FEDERAL ENERGY REGULATORY COMMISSION NATURAL GAS 
              PIPELINE CERTIFICATION PROCEDURES.

    The Federal Energy Regulatory Commission shall, in consultation 
with other appropriate Federal agencies, immediately undertake a 
comprehensive review of policies, procedures, and regulations for the 
certification of natural gas pipelines to determine how to reduce the 
cost and time of obtaining a certificate. The Commission shall report 
its findings within 6 months of the date of the enactment of this Act 
to the Senate Committee on Energy and Natural Resources and the 
appropriate Committees of the United States House of Representatives, 
including any recommendations for legislative changes.

SEC. 110. ANNUAL REPORT ON AVAILABILITY OF DOMESTIC ENERGY RESOURCES TO 
              MAINTAIN THE UNITED STATES' ELECTRICITY GRID.

    (a) Beginning on October 1, 2001, and annually thereafter, the 
Secretary of Energy, in consultation with the Federal Energy Regulatory 
Commission and the North American Electric Reliability Council, States, 
and appropriate regional organizations, shall submit a report to the 
President and the Congress which evaluates the availability and 
capacity of domestic sources of energy generation to maintain the 
electricity grid in the United States. Specifically, the Secretary 
shall evaluate each region of the country with regard to grid stability 
during peak periods, such as summer, and options for improving grid 
stability.
    (b) The report shall specify specific legislative or administrative 
actions that could be implemented to improve baseload generation and 
set forth a range of options and alternatives with a benefit/cost 
analysis for each option or alternative together with an estimate of 
the contribution each option or alternative could make to reduce 
foreign oil imports. The report shall indicate, in detail, options and 
alternatives to (1) increase the use of nonemitting domestic energy 
sources, including conventional and nonconventional sources such as, 
but not limited to, increased nuclear energy generation, and (2) 
conserve energy resources, including improving efficiencies and 
decreasing fuel consumption.

SEC. 111. STUDY OF FINANCING FOR NEW TECHNOLOGIES.

    (a) The Secretary of Energy shall undertake an independent 
assessment of innovative financing techniques to encourage and enable 
construction of new electricity supply technologies with high initial 
capital costs that might not otherwise be built in a deregulated 
market.
    (b) The assessment shall be conducted by a firm with proven 
expertise in financing large capital projects or in financial services 
consulting, and is to be provided to the Congress no later than nine 
months from the date of enactment of this Act.
    (c) The assessment shall include a comprehensive examination of all 
available techniques to safeguard private investors in high capital 
technologies--including advanced design power plants including, but not 
limited to, nuclear--against government-imposed risks that are beyond 
the investors' control. Such techniques may include (but not be limited 
to) Federal loan guarantees, Federal price guarantees, special tax 
considerations, and direct Federal Government investment.

SEC. 112. REVIEW OF REGULATIONS TO ELIMINATE BARRIERS TO EMERGING 
              ENERGY TECHNOLOGY.

    (a) In General.--Each Federal agency shall carry out a review of 
its regulations and standards to determine those that act as a barrier 
to market entry for emerging energy-efficient technologies, including, 
but not limited to, fuel cells, combined heat and power, and 
distributed generation (including small-scale renewable energy).
    (b) Report to Congress.--No later than eighteen months from date of 
enactment of this section, each agency shall provide a report to 
Congress and the President detailing all regulatory barriers to 
emerging energy-efficient technologies, along with actions the agency 
intends to take, or has taken, to remove such barriers.
    (c) Periodic Review.--Each agency shall subsequently review its 
regulations and standards in this manner no less frequently than every 
five years, and report their findings to Congress and President. Such 
reviews shall include a detailed analysis of all agency actions taken 
to remove existing barriers to emerging energy technologies.

SEC. 113. INTERAGENCY AGREEMENT ON ENVIRONMENTAL REVIEW OF INTERSTATE 
              NATURAL GAS PIPELINE PROJECTS.

    The Secretary of Energy, in coordination with the Federal Energy 
Regulatory Commission, shall establish an administrative interagency 
task force to develop an interagency agreement to expedite and 
facilitate the environmental review and permitting of interstate 
natural gas pipeline projects. The task force shall include the Bureau 
of Land Management and the Fish and Wildlife Service in the Department 
of the Interior, the United States Army Corps of Engineers, the United 
States Forest Service, the Environmental Protection Agency, the 
Advisory Council on Historic Preservation and such other agencies as 
the Office and the Federal Energy Regulatory Commission deem 
appropriate. The interagency agreement shall require that agencies 
complete their review of interstate pipeline projects within a specific 
period of time after referral of the matter by the Federal Energy 
Regulatory Commission. The agreement shall be completed within six 
months after the effective date of this section.

SEC. 114. PIPELINE INTEGRITY, SAFETY, AND RELIABILITY RESEARCH AND 
              DEVELOPMENT.

    (a) In General.--The Secretary of Transportation, in coordination 
with the Secretary of Energy, shall develop and implement an 
accelerated cooperative program of research and development to ensure 
the integrity of natural gas and hazardous liquid pipelines. This 
research and development program shall include materials inspection 
techniques, risk assessment methodology, and information systems 
surety.
    (b) Purpose.--The purpose of the cooperative research program shall 
be to promote research and development to--
            (1) ensure long-term safety, reliability and service life 
        for existing pipelines;
            (2) expand capabilities of internal inspection devices to 
        identify and accurately measure defects and anomalies;
            (3) develop inspection techniques for pipelines that cannot 
        accommodate the internal inspection devices available on the 
        date of enactment;
            (4) develop innovative techniques to measure the structural 
        integrity of pipelines to prevent pipeline failures;
            (5) develop improved materials and coatings for use in 
        pipelines;
            (6) improve the capability, reliability, and practicality 
        of external leak detection devices;
            (7) identify underground environments that might lead to 
        shortened service life;
            (8) enhance safety in pipeline siting and land use;
            (9) minimize the environmental impact of pipelines;
            (10) demonstrate technologies that improve pipeline safety, 
        reliability, and integrity;
            (11) provide risk assessment tools for optimizing risk 
        mitigation strategies; and
            (12) provide highly secure information systems for 
        controlling the operation of pipelines.
    (c) Areas.--In carrying out this section, the Secretary of 
Transportation, in coordination with the Secretary of Energy, shall 
consider research and development on natural gas, crude oil, and 
petroleum product pipelines for--
            (1) early crack, defect, and damage detection, including 
        real-time damage monitoring;
            (2) automated internal pipeline inspection sensor systems;
            (3) land use guidance and set back management along 
        pipeline rights-of-way for communities;
            (4) internal corrosion control;
            (5) corrosion-resistant coatings;
            (6) improved cathodic protection;
            (7) inspection techniques where internal inspection is not 
        feasible, including measurement of structural integrity;
            (8) external leak detection, including portable real-time 
        video imaging technology, and the advancement of computerized 
        control center leak detection systems utilizing real-time 
        remote field data input;
            (9) longer life, high strength, non-corrosive pipeline 
        materials;
            (10) assessing the remaining strength of existing pipes;
            (11) risk and reliability analysis models, to be used to 
        identify safety improvements that could be realized in the near 
        term resulting from analysis of data obtained from a pipeline 
        performance tracking initiative;
            (12) identification, monitoring, and prevention of outside 
        force damage, including satellite surveillance; and
            (13) any other areas necessary to ensuring the public 
        safety and protecting the environment.
    (d) Research and Development Program Plan.--Within 240 days after 
the date of enactment of this section, the Secretary of Transportation, 
in coordination with the Secretary of Energy and the Pipeline Integrity 
Technical Advisory Committee, shall prepare and submit to the Congress 
a five-year program plan to guide activities under this section. In 
preparing the program plan, the Secretary shall consult with the 
appropriate representatives of the natural gas, crude oil, and 
petroleum product pipeline industries to select and prioritize 
appropriate project proposals. The Secretary may also seek the advice 
of utilities, manufacturers, institutions of higher learning, Federal 
agencies, the pipeline research institutions, national laboratories, 
State pipeline safety officials, environmental organizations, pipeline 
safety advocates, and professional and technical societies.
    (e)  Implementation.--The Secretary of Transportation shall have 
primary responsibility for ensuring the five-year plan provided for in 
subsection (d) is implemented as intended by this section. In carrying 
out the research, development, and demonstration activities under this 
section, the Secretary of Transportation and the Secretary of Energy 
may use, to the extent authorized under applicable provisions of law, 
contracts, cooperative agreements, cooperative research and development 
agreements under the Stevenson-Wydler Technology Innovation Act of 1980 
(15 U.S.C. 3701 et seq.), grants, joint ventures, other transactions, 
and any other form of agreement available to the Secretary consistent 
with the recommendations of the Advisory Committee.
    (f) Reports to Congress.--The Secretary of Transportation shall 
report to the Congress annually as to the status and results to date of 
the implementation of the research and development program plan. The 
report shall include the activities of the Departments of 
Transportation and Energy, the national laboratories, universities, and 
any other research organizations, including industry research 
organizations.
    (g) Pipeline Integrity Technical Advisory Committee.--
            (1) Establishment.--The Secretary of Transportation shall 
        enter into appropriate arrangements with the National Academy 
        of Sciences to establish and manage the Pipeline Integrity 
        Technical Advisory Committee for the purpose of advising the 
        Secretary of Transportation and the Secretary of Energy on the 
        development and implementation of the five-year research, 
        development, and demonstration program plan as defined in sec. 
        3(e). The Advisory Committee shall have an ongoing role in 
        evaluating the progress and results of the research, 
        development, and demonstration carried out under this section.
            (2) Membership.--The National Academy of Sciences shall 
        appoint the members of the Pipeline Integrity Technical 
        Advisory Committee after consultation with the Secretary of 
        Transportation and the Secretary of Energy. Members appointed 
        to the Advisory Committee should have the necessary 
        qualifications to provide technical contributions to the 
        purposes of the Advisory Committee.
    (h) Authorization of Appropriations.--There are authorized to be 
appropriated to the Secretary of Transportation and to the Secretary of 
Energy for carrying out this section such sums as may be necessary for 
each of the fiscal years 2002 through 2006.

SEC. 115. RESEARCH AND DEVELOPMENT FOR NEW NATURAL GAS TECHNOLOGIES.

    (a) The Secretary of Energy shall conduct a comprehensive five-year 
program for research, development and demonstration to improve the 
reliability, efficiency, safety and integrity of the natural gas 
transportation and distribution infrastructure and for distributed 
energy resources (including microturbines, fuel cells, advanced engine-
generators gas turbines reciprocating engines, hybrid power generation 
systems, and all ancillary equipment for dispatch, control and 
maintenance).
    (b) There are authorized to be appropriated such sums as may be 
necessary for the purposes of this section.

  TITLE II--TECHNOLOGY RESEARCH AND DEVELOPMENT PROGRAM FOR ADVANCED 
 CLEAN COAL TECHNOLOGY FOR COAL-BASED ELECTRICITY GENERATING FACILITIES

SEC. 201. PURPOSE.

    The purpose of this title is to direct the Secretary of Energy 
(referred to as ``Secretary'' in this title) to--
            (1) establish a coal-based technology development program 
        designed to achieve cost and performance goals;
            (2) carry out a study to identify technologies that may be 
        capable of achieving, either individually or in combination, 
        the cost and performance goals and for other purposes; and
            (3) implement a research, development, and demonstration 
        program to develop and demonstrate, in commercial-scale 
        applications, advanced clean coal technologies for coal-fired 
        generating units constructed before the date of enactment of 
        this title.

SEC. 202. COST AND PERFORMANCE GOALS.

    (a) In General.--The Secretary shall perform an assessment that 
identifies costs and associated performance of technologies that would 
permit the continued cost-competitive use of coal for electricity 
generation, as chemical feedstocks, and as transportation fuel in 2007, 
2015, and the years after 2020.
    (b) Consultation.--In establishing cost and performance goals, the 
Secretary shall consult with representatives of--
            (1) the United States coal industry;
            (2) State coal development agencies;
            (3) the electric utility industry;
            (4) railroads and other transportation industries;
            (5) manufacturers of equipment using advanced coal 
        technologies;
            (6) organizations representing workers; and
            (7) organizations formed to--
                    (A) further the goals of environmental protection;
                    (B) promote the use of coal; or
                    (C) promote the development and use of advanced 
                coal technologies.
    (c) Timing.--The Secretary shall--
            (1) not later than 120 days after the date of enactment of 
        this Act, issue a set of draft cost and performance goals for 
        public comment; and
            (2) not later than 180 days after the date of enactment of 
        this Act, and after taking into consideration any public 
        comments received, submit to Congress the final cost and 
        performance goals.

SEC. 203. STUDY.

    (a) In General.--Not later than 1 year after the date of enactment 
of this Act, the Secretary, in cooperation with the Secretary of the 
Interior and the Administrator of the Environmental Protection Agency, 
shall conduct a study to--
            (1) identify technologies capable of achieving cost and 
        performance goals, either individually or in various 
        combinations;
            (2) assess costs that would be incurred by, and the period 
        of time that would be required for, the development and 
        demonstration of technologies that contribute, either 
        individually or in various combinations, to the achievement of 
        cost and performance goals; and
            (3) develop recommendations for technology development 
        programs, which the Department of Energy could carry out in 
        cooperation with industry, to develop and demonstrate such 
        technologies.
    (b) Cooperation.--In carrying out this section, the Secretary shall 
give appropriate consideration to the expert advice of representatives 
from the entities described in section 111(b).

SEC. 204. TECHNOLOGY RESEARCH AND DEVELOPMENT PROGRAM.

    (a) In General.--The Secretary shall carry out a program of 
research on and development, demonstration, and commercial application 
of coal-based technologies under--
            (1) this Act;
            (2) the Federal Nonnuclear Energy Research and Development 
        Act of 1974 (42 U.S.C. 5901 et seq.);
            (3) the Energy Reorganization Act of 1974 (42 U.S.C. 5801 
        et seq.); and
            (4) title XVI of the Energy Policy Act of 1992 (42 U.S.C. 
        13381 et seq.).
    (b) Conditions.--The research, development, demonstration, and 
commercial application programs identified in section 203(a) shall be 
designed to achieve the cost and performance goals, either individually 
or in various combinations.
    (c) Report.--Not later than 18 months after the date of enactment 
of this Act, the Secretary shall submit to the President and Congress a 
report containing--
            (1) a description of the programs that, as of the date of 
        the report, are in effect or are to be carried out by the 
        Department of Energy to support technologies that are designed 
        to achieve the cost and performance goals; and
            (2) recommendations for additional authorities required to 
        achieve the cost and performance goals.

SEC. 205. AUTHORIZATION OF APPROPRIATIONS.

    (a) In General.--There is authorized to be appropriated to carry 
out the provisions of sections 202, 203, and 204, $100,000,000 for each 
of fiscal years 2002 through 2012, to remain available until expended.
    (b) Conditions of Authorization.--The authorization of 
appropriations under subsection (a)--
            (1) shall be in addition to authorizations of 
        appropriations in effect on the date of enactment of this Act; 
        and
            (2) shall not be a cap on Department of Energy fossil 
        energy research and development and clean coal technology 
        appropriations.

SEC. 206. POWER PLANT IMPROVEMENT INITIATIVE.

    (a) In General.--The Secretary shall carry out a power plant 
improvement initiative program that will demonstrate commercial 
applications of advanced coal-based technologies applicable to new or 
existing power plants, including co-production plants, that, either 
individually or in combination, advance the efficiency, environmental 
performance and cost competitiveness well beyond that which is in 
operation or has been demonstrated to date.
    (b) Plan.--Not later than 120 days after the date of enactment of 
this title, the Secretary shall submit to Congress a plan to carry out 
subsection (a) that includes a description of--
            (1) the program elements and management structure to be 
        used;
            (2) the technical milestones to be achieved with respect to 
        each of the advanced coal-based technologies included in the 
        plan; and
            (3) the demonstration activities that will benefit new or 
        existing coal-based electric generation units having at least a 
        50 megawatt nameplate rating including improvements to allow 
        the units to achieve either--
                    (A) an overall design efficiency improvement of not 
                less than 3 percentage points as compared with the 
                efficiency of the unit as operated on the date of the 
                enactment of this title and before any retrofit, 
                repowering, replacement or installation;
                    (B) a significant improvement in the environmental 
                performance related to the control of sulfur dioxide, 
                nitrogen oxide or mercury in a manner that is well 
                below the cost of technologies that are in operation or 
                have been demonstrated to date; or
                    (C) a means of recycling or reusing a significant 
                proportion of coal combustion wastes produced by coal-
                based generating units excluding practices that are 
                commercially available at the date of enactment.

SEC. 207. FINANCIAL ASSISTANCE.

    (a) In General.--Not later than 180 days after the date on which 
the Secretary submits to Congress the plan under section 206(b), the 
Secretary shall solicit proposals for projects which serve or benefit 
new or existing facilities and, either individually or in combination, 
are designed to achieve the levels of performance set forth in section 
206(b)(3).
    (b) Project Criteria.--A solicitation under subsection (a) may 
include solicitation of a proposal for a project to demonstrate--
            (1) the reduction of emissions of one or more pollutants; 
        or
            (2) the production of coal combustion byproducts that are 
        capable of obtaining economic values significantly greater than 
        byproducts produced on the date of enactment of this title.
    (c) Financial Assistance.--The Secretary shall provide financial 
assistance to projects that--
            (1) demonstrate overall cost reductions in the utilization 
        of coal to generate useful forms of energy;
            (2) improve the competitiveness of coal among various forms 
        of energy to maintain a diversity of fuel choices in the United 
        States to meet electricity generation requirements;
            (3) achieve in a cost-effective manner, one or more of the 
        criteria set out in the solicitation; and
            (4) demonstrate technologies that are applicable to 25 
        percent of the electricity generating facilities that use coal 
        as the primary feedstock on the date of enactment of this 
        title.
    (d) Federal Share.--The Federal share of the cost of any project 
funded under this section shall not exceed 50 percent.
    (e) Exemption From New Source Review Provisions.--A project funded 
under this section shall be exempt from the new source review 
provisions of the Clean Air Act (42 U.S.C. 7401 et seq.).

SEC. 208. FUNDING.

    To carry out sections 206 and 207, there are authorized to be 
appropriated such sums as may be necessary.

SEC. 209. RESEARCH AND DEVELOPMENT FOR ADVANCED SAFE AND EFFICIENT COAL 
              MINING TECHNOLOGIES.

    (a) The Secretary of Energy shall establish a cooperative research 
partnership involving appropriate Federal agencies, coal producers, 
including associations, equipment manufacturers, universities with 
mining engineering departments, and other relevant entities to develop 
mining research priorities identified by the Mining Industry of the 
Future Program and in the National Academy of Sciences report on Mining 
Technologies, establish a process for joint industry-government 
research, and expand mining research capabilities at universities.
    (b) There are authorized to be appropriated to carry out the 
requirements of this section, $10,000,000 in fiscal year 2002, 
$12,000,000 in fiscal year 2003, and $15,000,000 in fiscal year 2004. 
At least 20 percent of any funds appropriated shall be dedicated to 
research carried out at universities.

SEC. 210. RAILROAD EFFICIENCY.

    (a) The Secretary shall, in conjunction with the Secretaries of 
Transportation and Defense, and the Administrator of the Environmental 
Protection Agency, establish a public-private research partnership 
involving the Federal Government, railroad carriers, locomotive 
manufacturers, and the Association of American Railroads. The goal of 
the initiative shall include developing and demonstrating locomotive 
technologies that increase fuel economy, reduce emissions, improve 
safety, and lower costs.
    (b) There are authorized to be appropriated to carry out the 
requirements of this Section $50 million in fiscal year 2002, $60 
million in fiscal year 2003, and $70 million in fiscal year 2004.

                         TITLE III--OIL AND GAS

           Subtitle A--Deepwater and Frontier Royalty Relief

SEC. 301. SHORT TITLE.

    This part may be referred to as the ``Outer Continental Shelf Deep 
Water and Frontier Royalty Relief Act''.

SEC. 302. AMENDMENTS TO THE OUTER CONTINENTAL SHELF LANDS ACT.

    (a) Section 8(a)(3) of the Outer Continental Shelf Lands Act (43 
U.S.C. 1337(a)(3)), is amended--
            (1) by designating the provisions of paragraph (3) as 
        subparagraph (A) of such paragraph (3); and
            (2) by inserting after subparagraph (A), as so designated, 
        the following:
                    ``(B) In the Western and Central Planning Areas of 
                the Gulf of Mexico and the portion of the Eastern 
                Planning Area of the Gulf of Mexico encompassing whole 
                lease blocks lying west of 87 degrees, 30 minutes West 
                longitude, the Secretary may, in order to--
                            ``(i) promote development or increased 
                        production or producing or non-producing 
                        leases; or
                            ``(ii) encourage production of marginal 
                        resources on producing or non-producing leases;
                through primary, secondary, or tertiary recovery means, 
                reduce or eliminate any royalty or net profit share set 
                forth in the lease(s). With the lessee's consent, the 
                Secretary may make other modifications to the royalty 
                or net profit share terms of the lease in order to 
                achieve these purposes.
                    ``(C)(i) Notwithstanding the provisions of this Act 
                other than this subparagraph, with respect to any lease 
                or unit in existence on the date of enactment of the 
                Outer Continental Shelf Deep Water Royalty Relief Act 
                meeting the requirements of this subparagraph, no 
                royalty payments shall be due on new production, as 
                defined in clause (iv) of this subparagraph, from any 
                lease or unit located in water depths of 200 meters or 
                greater in the Western and Central Planning Areas of 
                the Gulf of Mexico, including that portion of the 
                Eastern Planning Area of the Gulf of Mexico 
                encompassing whole lease blocks lying west of 87 
                degrees, 30 minutes West longitude, until such volume 
                of production as determined pursuant to clause (ii) has 
                been produced by the lessee.
                    ``(ii) Upon submission of a complete application by 
                the lessee, the Secretary shall determine within 180 
                days of such application whether new production from 
                such lease or unit would be economic in the absence of 
                the relief from the requirement to pay royalties 
                provided for by clause (i) of this subparagraph. In 
                making such determination, the Secretary shall consider 
                the increased technological and financial risk of deep 
                water development and all costs associated with 
                exploring, developing, and producing from the lease. 
                The lessee shall provide information required for a 
                complete application to the Secretary prior to such 
determination. The Secretary shall clearly define the information 
required for a complete application under this section. Such 
application may be made on the basis of an individual lease or unit. If 
the Secretary determines that such new production would be economic in 
the absence of the relief from the requirement to pay royalties 
provided for by clause (i) of this subparagraph, the provisions of 
clause (i) shall not apply to such production. If the Secretary 
determines that such new production would not be economic in the 
absence of the relief from the requirement to pay royalties provided 
for by clause (i), the Secretary must determine the volume of 
production from the lease or unit on which no royalties would be due in 
order to make such new production economically viable; except that for 
new production as defined in clause (iv)(I), in no case will that 
volume be less than 17.5 million barrels of oil equivalent in water 
depths of 200 to 400 meters, 52.5 million barrels of oil equivalent in 
400-800 meters of water, and 87.5 million barrels of oil equivalent in 
water depths greater than 800 meters. Redetermination of the 
applicability of clause (i) shall be undertaken by the Secretary when 
requested by the lessee prior to the commencement of the new production 
and upon significant change in the factors upon which the original 
determination was made. The Secretary shall make such redetermination 
within 120 days of submission of a complete application. The Secretary 
may extend the time period for making any determination or 
redetermination under this clause for 30 days, or longer if agreed to 
by the applicant, if circumstances so warrant. The lessee shall be 
notified in writing of any determination or redetermination and the 
reasons for and assumptions used for such determination. Any 
determination or redetermination under this clause shall be a final 
agency action. The Secretary's determination or redetermination shall 
be subject to judicial review under section 10(a) of the Administrative 
Procedures Act (5 U.S.C. 702), only for actions filed within 30 days of 
the Secretary's determination or redetermination.
                    ``(iii) In the event that the Secretary fails to 
                make the determination or redetermination called for in 
                clause (ii) upon application by the lessee within the 
                time period, together with any extension thereof, 
                provided for by clause (ii), no royalty payments shall 
                be due on new production as follows:
                            ``(I) For new production, as defined in 
                        clause (iv)(I) of this subparagraph, no royalty 
                        shall be due on such production according to 
                        the schedule of minimum volumes specified in 
                        clause (ii) of this subparagraph.
                            ``(II) For new production, as defined in 
                        clause (iv)(II) of this subparagraph, no 
                        royalty shall be due on such production for one 
                        year following the start of such production.
                    ``(iv) For purposes of this subparagraph, the term 
                `new production' is--
                            ``(I) any production from a lease from 
                        which no royalties are due on production, other 
                        than test production, prior to the date of 
                        enactment of the Outer Continental Shelf Deep 
                        Water Royalty Relief Act; or
                            ``(II) any production resulting from lease 
                        development activities pursuant to a 
                        Development Operations Coordination Document, 
                        or supplement thereto that would expand 
                        production significantly beyond the level 
                        anticipated in the Development Operations 
                        Coordination Document, approved by the 
                        Secretary after the date of enactment of the 
                        Outer Continental Shelf Deep Water Royalty 
                        Relief Act.
                    ``(v) During the production of volumes determined 
                pursuant to clause (ii) or (iii) of this subparagraph, 
                in any year during which the arithmetic average of the 
                closing prices on the New York Mercantile Exchange for 
                light sweet crude oil exceeds $28.00 per barrel, any 
                production of oil will be subject to royalties at the 
                lease stipulated royalty rate. Any production subject 
                to this clause shall be counted toward the production 
                volume determined pursuant to clause (ii) or (iii). 
                Estimated royalty payments will be made if such average 
                of the closing prices for the previous year exceeds 
                $28.00. After the end of the calendar year, when the 
                new average price can be calculated, lessees will pay 
                any royalties due, with interest but without penalty, 
                or can apply for a refund, with interest, of any 
                overpayment.
                    ``(vi) During the production of volumes determined 
                pursuant to clause (ii) or (iii) of this subparagraph, 
                in any year during which the arithmetic average of the 
                closing prices on the New York Mercantile Exchange for 
                natural gas exceeds $3.50 per million British thermal 
                units, any production of natural gas will be subject to 
                royalties at the lease stipulated royalty rate. Any 
                production subject to this clause shall be counted 
                toward the production volume determined pursuant to 
                clause (ii) or (iii). Estimated royalty payments will 
                be made if such average of the closing prices for the 
                previous year exceeds $3.50. After the end of the 
                calendar year, when the new average price can be 
                calculated, lessees will pay any royalties due, with 
                interest but without penalty, or can apply for a 
                refund, with interest, of any overpayment.
                    ``(vii) The prices referred to in clauses (v) and 
                (vi) of this subparagraph shall be changed during any 
                calendar year after 1994 by the percentage, if any, by 
                which the implicit price deflator for the gross 
                domestic product changed during the preceding calendar 
                year.''.
    (b) Section 8(a)(1)(D) of the Outer Continental Shelf Lands Act (43 
U.S.C. 1337(a)(1)(D)) is amended by striking the word ``area;'' and 
inserting in lieu thereof the word ``area,'' and the following new 
text: ``except in the Arctic areas of Alaska, where the Secretary is 
authorized to set the net profit share at 16\2/3\ percent. For purposes 
of this section, `Arctic areas' means the Beaufort Sea and Chukchi Sea 
Planning Areas of Alaska.''.
    (c) Section 8(a) of the Outer Continental Shelf Lands Act (43 
U.S.C. 1337(a)) is amended by adding a new subparagraph (10) at the end 
thereof:
            ``(10) After an oil and gas lease is granted pursuant to 
        any of the bidding systems of paragraph (1) of this subsection, 
        the Secretary shall reduce any future royalty or rental 
        obligation of the lessee on any lease issued by the Secretary 
        (and proposed by the lessee for such reduction) by an amount 
        equal to--
                    ``(A) 10 percent of the qualified costs of 
                exploratory wells drilled or geophysical work performed 
                on any lease issued by the Secretary, whichever is 
                greater, pursuant to this Act in Arctic areas of 
                Alaska; and
                    ``(B) an additional 10 percent of the qualified 
                costs of any such exploratory wells which are located 
                ten or more miles from another well drilled for oil and 
                gas.
         For purposes of this Act, `qualified costs' shall mean the 
costs allocated to the exploratory well or geophysical work in support 
of an exploration program pursuant to 26 U.S.C. as amended; 
`exploratory well' shall mean either an exploratory well as defined by 
the United States Securities and Exchange Commission in 17 CFR 210.4-
10(a)(10), as amended, or a well three or more miles from any oil or 
gas well or a pipeline which transports oil or gas to a market or 
terminal; `geophysical work' shall mean all geophysical data gathering 
methods used in hydrocarbon exploration and includes seismic, gravity, 
magnetic, and electromagnetic measurements; and all distances shall be 
measured in horizontal distance. When a measurement beginning or ending 
point is a well, the measurement point shall be the bottom hole 
location of that well.''.

SEC. 303. NEW LEASES.

    Section 8(a)(1) of the Outer Continental Shelf Lands Act, as 
amended (43 U.S.C. 1337(a)(1)) is amended--
            (1) by redesignating subparagraph (H) as subparagraph (I);
            (2) by striking ``or'' at the end of subparagraph (G); and
            (3) by inserting after subparagraph (G) the following new 
        subparagraph:
                    ``(H) cash bonus bid with royalty at no less than 
                12\1/2\ per centum fixed by the Secretary in amount or 
                value of production saved, removed, or sold, and with 
                suspension of royalties for a period, volume, or value 
                of production determined by the Secretary, which 
                suspensions may vary based on the price of production 
                from the lease; or''.

SEC. 304. LEASE SALES.

    For all tracts located in water depths of 200 meters or greater in 
the Western and Central Planning Area of the Gulf of Mexico, including 
that portion of the Eastern Planning Area of the Gulf of Mexico 
encompassing whole lease blocks lying west of 87 degrees 30 minutes 
West longitude, any lease sale within five years of the date of 
enactment of this part, shall use the bidding system authorized in 
section 8(a)(1)(H) of the Outer Continental Shelf Lands Act, as amended 
by this part, except that the suspension of royalties shall be set at a 
volume of not less than the following:
            (1) 17.5 million barrels of oil equivalent for leases in 
        water depths of 200 to 400 meters;
            (2) 52.5 million barrels of oil equivalent for leases in 
        400 to 800 meters of water; and
            (3) 87.5 million barrels of oil equivalent for leases in 
        water depths greater than 800 meters.

SEC. 305. REGULATIONS.

    The Secretary shall promulgate such rules and regulations as are 
necessary to implement the provisions of this part within 180 days 
after the enactment of this Act.

SEC. 306. SAVINGS CLAUSE.

    Nothing in this part shall be construed to affect any offshore pre-
leasing, leasing, or development moratorium, including any moratorium 
applicable to the Eastern Planning Area of the Gulf of Mexico located 
off the Gulf Coast of Florida.

               Subtitle B--Oil and Gas Royalties in Kind

SEC. 310. PROGRAM ON OIL AND GAS ROYALTIES IN KIND.

    (a) Applicability of Section.--Notwithstanding any other provision 
of law, the provisions of this section shall apply to all royalty in 
kind accepted by the Secretary of the Interior under any Federal oil or 
gas lease or permit under section 36 of the Mineral Leasing Act (30 
U.S.C. 192) or section 27 of the Outer Continental Shelf Lands Act (43 
U.S.C. 1353) or any other mineral leasing law from the date of 
enactment of this Act through September 30, 2006.
    (b) Terms and Conditions.--All royalty accruing to the United 
States under any Federal oil or gas lease or permit under the Mineral 
Leasing Act (30 U.S.C. 181 et seq.) or the Outer Continental Shelf 
Lands Act (43 U.S.C. 1331 et seq.) or any other mineral leasing law on 
demand of the Secretary of the Interior shall be paid in oil or gas. If 
the Secretary of the Interior elects to accept the royalty in kind--
            (1) Delivery by, or on behalf of, the lessee of the royalty 
        amount and quality due at the lease satisfies the lessee's 
        royalty obligation for the amount delivered, except that 
        transportation and processing reimbursements paid to, or 
        deductions claimed by, the lessee shall be subject to review 
        and audit.
            (2) Royalty production shall be placed in marketable 
        condition at no cost to the United States.
            (3) The Secretary of the Interior may--
                    (A) sell or otherwise dispose of any royalty oil or 
                gas taken in kind for not less than fair market value; 
                and
                    (B) transport or process any oil or gas royalty 
                taken in kind.
            (4) The Secretary of the Interior may, notwithstanding 
        section 3302 of title 31, United States Code, retain and use a 
        portion of the revenues from the sale of oil and gas royalties 
        taken in kind that otherwise would be deposited to 
        miscellaneous receipts, without regard to fiscal year 
        limitation, or may use royalty production, to pay the cost of--
                    (A) transporting the oil or gas,
                    (B) processing the gas, or
                    (C) disposing of the oil or gas.
            (5) The Secretary may not use revenues from the sale of oil 
        and gas royalties taken in kind to pay for personnel, travel or 
        other administrative costs of the Federal Government.
    (c) Reimbursement of Cost.--If the lessee, pursuant to an agreement 
with the United States or as provided in the lease, processes the gas 
or delivers the royalty oil or gas at a point not on or adjacent to the 
lease area, the Secretary of the Interior shall reimburse the lessee 
for the reasonable costs of transportation (not including gathering) 
from the lease to the point of delivery or for processing costs, or, at 
the discretion of the Secretary of the Interior, allow the lessee to 
deduct such transportation or processing costs in reporting and paying 
royalties in value for other Federal oil and gas leases.
    (d) Benefit to the United States.--The Secretary shall administer 
any program taking royalty oil or gas in kind only if the Secretary 
determines that the program is providing benefits to the United States 
greater than or equal to those which would be realized under a 
comparable royalty in value program.
    (e) Report to Congress.--For every fiscal year, beginning in 2002 
through 2006, in which the United States takes oil or gas royalties 
within any State or from the Outer Continental Shelf in kind, excluding 
royalties taken in kind and sold to refineries under subsection (h) of 
this section, the Secretary of the Interior shall provide a report to 
Congress describing:
            (1) the methodology or methodologies used by the Secretary 
        to determine compliance with subsection (d), including 
        performance standards for comparing to amounts likely to have 
        been received had royalties been taken in value;
            (2) an explanation of the evaluation that led the Secretary 
        to take royalties in kind from a lease or group of leases, 
        including the expected revenue effect of taking royalties in 
        kind;
            (3) actual amounts realized from taking royalties in kind, 
        and costs and savings associated with taking royalties in kind; 
        and
            (4) an evaluation of other relevant public benefits or 
        detriments associated with taking royalties in kind.
    (f) Deduction of Expenses.--
            (1) Prior to making disbursements under section 35 of the 
        Mineral Leasing Act (30 U.S.C. 191) or section 8(g) of the 
        Outer Continental Shelf Lands Act (30 U.S.C. 1337(g)) or other 
        applicable provision of law, of revenues derived from the sale 
        of royalty production taken in kind from a lease, the Secretary 
        of the Interior shall deduct amounts paid or deducted under 
        paragraphs (b)(3) and (c), and shall deposit such amounts to 
        miscellaneous receipts.
            (2) If the Secretary of the Interior allows the lessee to 
        deduct transportation or processing costs under paragraph (c), 
        the Secretary of the Interior may not reduce any payments to 
        recipients of revenues derived from any other Federal oil and 
        gas lease as a consequence of that deduction.
    (g) Consultation With States.--The Secretary of the Interior will 
consult with a State prior to conducting a royalty in kind program 
within the State and may delegate management of any portion of the 
Federal royalty in kind program to such State except as otherwise 
prohibited by Federal law. The Secretary shall also consult annually 
with any State from which Federal royalty oil or gas is being taken in 
kind to ensure to the maximum extent practicable that the royalty in 
kind program provides revenues to the State greater than or equal to 
those which would be realized under a comparable royalty in value 
program.
    (h) Provisions for Small Refineries.--
            (1) If the Secretary of the Interior determines that 
        sufficient supplies of crude oil are not available in the open 
        market to refineries not having their own source of supply for 
        crude oil, the Secretary may grant preference to such 
        refineries in the sale of any royalty oil accruing or reserved 
        to the United States under Federal oil and gas leases issued 
        under any mineral leasing law, for processing or use in such 
        refineries at private sale at not less than fair market value.
            (2) In selling oil under this subsection, the Secretary of 
        the Interior may at his discretion prorate such oil among such 
        refineries in the area in which the oil is produced.
    (i) Disposition to Federal Agencies.--
            (1) Any royalty oil or gas taken in kind from onshore oil 
        and gas leases may be sold at not less than the fair market 
        value to any department or agency of the United States.
            (2) Any royalty oil or gas taken in kind from Federal oil 
        and gas leases on the Outer Continental Shelf may be disposed 
        of under 43 U.S.C. 1353(a)(3).

Subtitle C--Use of Royalty In Kind Oil To Fill the Strategic Petroleum 
                                Reserve

SEC. 320. USE OF ROYALTY IN KIND OIL TO FILL THE STRATEGIC PETROLEUM 
              RESERVE.

    The Secretary of the Interior shall enter into an agreement with 
the Secretary of Energy to transfer title to the Federal share of crude 
oil production from Federal lands for use at the discretion of the 
Secretary of Energy in filling the Strategic Petroleum Reserve during 
periods of crude oil market stability. The Secretary of Energy may also 
use the Federal share of crude oil produced from Federal lands for 
other disposal within the Federal Government, as he may determine, to 
carry out the energy policy of the United States.

    Subtitle D--Improvements to Federal Oil and Gas Lease Management

SEC. 330. SHORT TITLE.

    This Part may be cited as the ``Federal Oil and Gas Lease 
Management Improvement Act of 2000''.

SEC. 331. DEFINITIONS.

    In this Part--
            (1) Application for a permit to drill.--The term 
        ``application for a permit to drill'' means a drilling plan 
        including design, mechanical, and engineering aspects for 
        drilling a well.
            (2) Federal land.--
                    (A) In general.--The term ``Federal land'' means 
                all land and interests in land owned by the United 
                States that are subject to the mineral leasing laws, 
                including mineral resources or mineral estates reserved 
                to the United States in the conveyance of a surface or 
                non-mineral estate.
                    (B) Exclusion.--The term ``Federal land'' does not 
                include--
                            (i) Indian land (as defined in section 3 of 
                        the Federal Oil and Gas Royalty Management Act 
                        of 1982 (30 U.S.C. 1702)); or
                            (ii) submerged land on the Outer 
                        Continental Shelf (as defined in section 2 of 
                        the Outer Continental Shelf Lands Act (43 
                        U.S.C. 1331)).
            (3) Oil and gas conservation authority.--The term ``oil and 
        gas conservation authority'' means the agency or agencies in 
        each State responsible for regulating for conservation purposes 
        operations to explore for and produce oil and natural gas.
            (4) Project.--The term ``project'' means an activity by a 
        lessee, an operator, or an operating rights owner to explore 
        for, develop, produce, or transport oil or gas resources.
            (5) Secretary.--The term ``Secretary'' means--
                    (A) the Secretary of the Interior, with respect to 
                land under the administrative jurisdiction of the 
                Department of the Interior; and
                    (B) the Secretary of Agriculture, with respect to 
                land under the administrative jurisdiction of the 
                Department of Agriculture.
            (6) Surface use plan of operations.--The term ``surface use 
        plan of operations'' means a plan for surface use, disturbance, 
        and reclamation.

SEC. 332. NO PROPERTY RIGHT.

    Nothing in this part gives a State a property right or interest in 
any Federal lease or land.

SEC. 333. TRANSFER OF AUTHORITY.

    (a) Notification.--Not before the date that is 180 days after the 
date of enactment of this Act, a State may notify the Secretary of its 
intent to accept authority for regulation of operations, as described 
in subparagraphs (A) through (K) of subsection (b)(2), under oil and 
gas leases on Federal land within the State.
    (b) Transfer of Authority.--
            (1) In general.--Effective 180 days after the Secretary 
        receives the State's notice, authority for the regulation of 
        oil and gas leasing operations is transferred from the 
        Secretary to the State.
            (2) Authority included.--The authority transferred under 
        paragraph (1) includes--
                    (A) processing and approving applications for 
                permits to drill, subject to surface use agreements and 
                other terms and conditions determined by the Secretary;
                    (B) production operations;
                    (C) well testing;
                    (D) well completion;
                    (E) well spacing;
                    (F) communization;
                    (G) conversion of a producing well to a water well;
                    (H) well abandonment procedures;
                    (I) inspections;
                    (J) enforcement activities; and
                    (K) site security.
    (c) Retained Authority.--The Secretary shall--
            (1) retain authority over the issuance of leases and the 
        approval of surface use plans of operations and project-level 
        environmental analyses; and
            (2) spend appropriated funds to ensure that timely 
        decisions are made respecting oil and gas leasing, taking into 
        consideration multiple uses of Federal land, socioeconomic and 
        environmental impacts, and the results of consultations with 
        State and local government officials.

SEC. 334. ACTIVITY FOLLOWING TRANSFER OF AUTHORITY.

    (a) Federal Agencies.--Following the transfer of authority, no 
Federal agency shall exercise the authority formerly held by the 
Secretary as to oil and gas lease operations and related operations on 
Federal land.
    (b) State Authority.--
            (1) In general.--Following the transfer of authority, each 
        State shall enforce its own oil and gas conservation laws and 
        requirements pertaining to transferred oil and gas lease 
        operations and related operations with due regard to the 
        national interest in the expedited, environmentally sound 
        development of oil and gas resources in a manner consistent 
        with oil and gas conservation principles.
            (2) Appeals.--Following a transfer of authority under 
        section 333, an appeal of any decision made by a State oil and 
        gas conservation authority shall be made in accordance with 
        State administrative procedures.
    (c) Pending Enforcement Actions.--The Secretary may continue to 
enforce any pending actions respecting acts committed before the date 
on which authority is transferred to a State under section 333 until 
those proceedings are concluded.
    (d) Pending Applications.--
            (1) Transfer to state.--All applications respecting oil and 
        gas lease operations and related operations on Federal land 
        pending before the Secretary on the date on which authority is 
        transferred under section 333 shall be immediately transferred 
        to the oil and gas conservation authority of the State in which 
        the lease is located.
            (2) Action by the state.--The oil and gas conservation 
        authority shall act on the application in accordance with State 
        laws (including regulations) and requirements.

SEC. 335. COMPENSATION FOR COSTS.

    (a) In General.--Subject to the availability of appropriations, the 
Secretary shall compensate any State for costs incurred to carry out 
the authorities transferred under section 333.
    (b) Payment Schedule.--Payments shall be made not less frequently 
than every quarter.
    (c) Cost Breakdown Report.--Each State seeking compensation shall 
report to the Secretary a cost breakdown for the authorities 
transferred.

SEC. 336. APPLICATIONS.

    (a) Limitation on Cost Recovery.--Notwithstanding sections 304 and 
504 of the Federal Land Policy and Management Act of 1976 (43 U.S.C. 
1734, 1764) and section 9701 of Title 31, United States Code, the 
Secretary shall not recover the Secretary's costs with respect to 
applications and other documents relating to oil and gas leases.
    (b) Completion of Planning Documents and Analyses.--
            (1) In general.--The Secretary shall complete any resource 
        management planning documents and analyses not later than 90 
        days after receiving any offer, application, or request for 
        which a planning document or analysis is required to be 
        prepared.
            (2) Preparation by applicant or lessee.--If the Secretary 
        is unable to complete the document or analysis within the time 
        prescribed by paragraph (1), the Secretary shall notify the 
        applicant or lessee of the opportunity to prepare the required 
        document or analysis for the agency's review and use in 
        decisionmaking.
    (c) Reimbursement for Costs of NEPA Analyses, Documentation, and 
Studies.--If--
            (1) adequate funding to enable the Secretary to timely 
        prepare a project-level analysis required under the National 
        Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.) with 
        respect to an oil or gas lease is not appropriated; and
            (2) the lessee, operator, or operating rights owner 
        voluntarily pays for the cost of the required analysis, 
        documentation, or related study;
the Secretary shall reimburse the lessee, operator, or operating rights 
owner for its costs through royalty credits attributable to the lease, 
unit agreement, or project area.

SEC. 337. TIMELY ISSUANCE OF DECISIONS.

    (a) In General.--The Secretary shall ensure the timely issuance of 
Federal agency decisions respecting oil and gas leasing and operations 
on Federal land.
    (b) Offer To Lease.--
            (1) Deadline.--The Secretary shall accept or reject an 
        offer to lease not later than 90 days after the filing of the 
        offer.
            (2) Failure to meet deadline.--If an offer is not acted 
        upon within that time, the offer shall be deemed to have been 
        accepted.
    (c) Application for Permit To Drill.--
            (1) Deadline.--The Secretary and a State that has accepted 
        a transfer of authority under section 610 shall approve or 
        disapprove an application for permit to drill not later than 30 
        days after receiving a complete application.
            (2) Failure to meet deadline.--If the application is not 
        acted on within the time prescribed by paragraph (1), the 
        application shall be deemed to have been approved.
    (d) Surface Use Plan of Operations.--The Secretary shall approve or 
disapprove a surface use plan of operations not later than 30 days 
after receipt of a complete plan.
    (e) Administrative Appeals.--
            (1) Deadline.--From the time that a Federal oil and gas 
        lessee or operator files a notice of administrative appeal of a 
        decision or order of an officer or employee of the Department 
        of the Interior or the Forest Service respecting a Federal oil 
        and gas Federal lease, the Secretary shall have 2 years in 
        which to issue a final decision in the appeal.
            (2) Failure to meet deadline.--If no final decision has 
        been issued within the time prescribed by paragraph (1), the 
        appeal shall be deemed to have been granted.

SEC. 338. ELIMINATION OF UNWARRANTED DENIALS AND STAYS.

    (a) In General.--The Secretary shall ensure that unwarranted 
denials and stays of lease issuance and unwarranted restrictions on 
lease operations are eliminated from the administration of oil and gas 
leasing on Federal land.
    (b) Land Designated for Multiple Use.--
            (1) In general.--Land designated as available for multiple 
        use under Bureau of Land Management resource management plans 
        and Forest Service leasing analyses shall be available for oil 
        and gas leasing without lease stipulations more stringent than 
        restrictions on surface use and operations imposed under the 
        laws (including regulations) of the State oil and gas 
        conservation authority unless the Secretary includes in the 
        decision approving the management plan or leasing analysis a 
        written explanation why more stringent stipulations are 
        warranted.
            (2) Appeal.--Any decision to require a more stringent 
        stipulation shall be administratively appealable and, following 
        a final agency decision, shall be subject to judicial review.
    (c) Rejection of Offer To Lease.--
            (1) In general.--If the Secretary rejects an offer to lease 
        on the ground that the land is unavailable for leasing, the 
        Secretary shall provide a written, detailed explanation of the 
        reasons the land is unavailable for leasing.
            (2) Previous resource management decision.--If the 
        determination of unavailability is based on a previous resource 
        management decision, the explanation shall include a careful 
        assessment of whether the reasons underlying the previous 
        decision are still persuasive.
            (3) Segregation of available land from unavailable land.--
        The Secretary may not reject an offer to lease land available 
        for leasing on the ground that the offer includes land 
        unavailable for leasing, and the Secretary shall segregate 
        available land from unavailable land, on the offeror's request 
        following notice by the Secretary, before acting on the offer 
        to lease.
    (d) Disapproval or Required Modification of Surface Use Plans of 
Operations and Application for Permit To Drill.--The Secretary shall 
provide a written, detailed explanation of the reasons for disapproving 
or requiring modifications of any surface use plan of operations or 
application for permit to drill.
    (e) Effectiveness of Decision.--A decision of the Secretary 
respecting an oil and gas lease shall be effective pending 
administrative appeal to the appropriate office within the Department 
of the Interior or the Department of Agriculture unless that office 
grants a stay in response to a petition satisfying the criteria for a 
stay established by section 4.21(b) of title 43, Code of Federal 
Regulations (or any successor regulation).

SEC. 339. REPORTS.

    (a) In General.--Not later than March 31, 2002, the Secretaries 
shall jointly submit to the Congress a report explaining the most 
efficient means of eliminating overlapping jurisdiction, duplication of 
effort, and inconsistent policymaking and policy implementation as 
between the Bureau of Land Management and the Forest Service.
    (b) Recommendations.--The report shall include recommendations on 
statutory changes needed to implement the report's conclusions.

              Subtitle E--Royalty Reinvestment in America

SEC. 351. ROYALTY INCENTIVE PROGRAM.

    (a) In General.--To encourage exploration and development 
expenditures on Federal land and the Outer Continental Shelf for the 
development of oil and gas resources when the cash price of West Texas 
Intermediate crude oil, as posted on the Dow Jones Commodities Index 
chart is less than $18 per barrel for 90 consecutive pricing days or 
when natural gas prices as delivered at Henry Hub, Louisiana, are less 
that $2.30 per million British thermal units for 90 consecutive days, 
the Secretary shall allow a credit against the payment of royalties on 
Federal oil production and gas production, respectively, in an amount 
equal to 20 percent of the capital expenditures made on exploration and 
development activities on Federal oil and gas leases.
    (b) No Crediting Against Onshore Federal Royalty Obligations.--In 
no case shall such capital expenditures made on Outer Continental Shelf 
leases be credited against onshore Federal royalty obligations.

                           TITLE IV--NUCLEAR

                  Subtitle A--Price-Anderson Amendments

SEC. 401. SHORT TITLE.

    This Subtitle may be cited as the ``Price-Anderson Amendments Act 
of 2001''.

SEC. 402. INDEMNIFICATION AUTHORITY.

    (a) Indemnification of NRC Licensees.--Section 170 c. of the Atomic 
Energy Act of 1954 (42 U.S.C. 2210(c)) is amended by striking ``August 
1, 2002'' each place it appears and inserting ``August 1, 2012''.
    (b) Indemnification of DOE Contractors.--Section 170 d.(1)(A) of 
the Atomic Energy Act of 1954 (42 U.S.C. 2210(d)(1)(A)) is amended by 
striking ``, until August 1, 2002,''.
    (c) Indemnification of Nonprofit Educational Institutions.--Section 
170 k. of the Atomic Energy Act of 1954 (42 U.S.C. 2210(k)) is amended 
by striking ``August 1, 2002'' each place it appears and inserting 
``August 1, 2012''.

SEC. 403. MAXIMUM ASSESSMENT.

    Section 170 b.(1) of the Atomic Energy Act of 1954 (42 U.S.C. 
2210(b)(1)) is amended by striking ``$10,000,000'' and inserting 
``$20,000,000''.

SEC. 404. DOE LIABILITY LIMIT.

    (a) Aggregate Liability Limit.--Section 170 d. of the Atomic Energy 
Act of 1954 (42 U.S.C. 2210(d)) is amended by striking subsection (2) 
and inserting the following:
            ``(2) In agreements of indemnification entered into under 
        paragraph (1), the Secretary--
                    ``(A) may require the contractor to provide and 
                maintain financial protection of such a type and in 
                such amounts as the Secretary shall determine to be 
                appropriate to cover public liability arising out of or 
                in connection with the contractual activity, and
                    ``(B) shall indemnify the persons indemnified 
                against such claims above the amount of the financial 
                protection required, in the amount of $10,000,000,000 
                (subject to adjustment for inflation under subsection 
                t.), in the aggregate, for all persons indemnified in 
                connection with such contract and for each nuclear 
                incident, including such legal costs of the contractor 
                as are approved by the Secretary.''.
    (b) Contract Amendments.--Section 170 d. of the Atomic Energy Act 
of 1954 (42 U.S.C. 2210(d)) is further amended by striking subsection 
(3) and inserting the following:
            ``(3) All agreements of indemnification under which the 
        Department of Energy (or its predecessor agencies) may be 
        required to indemnify any person, shall be deemed to be 
        amended, on the date of the enactment of the Price-Anderson 
        Amendments Act of 2001, to reflect the amount of indemnity for 
        public liability and any applicable financial protection 
        required of the contractor under this subsection on such 
        date.''.

SEC. 405. INCIDENTS OUTSIDE THE UNITED STATES.

    (a) Amount of Indemnification.--Section 170 d.(5) of the Atomic 
Energy Act of 1954 (42 U.S.C. 2210(d)(5)) is amended by striking 
``$100,000,000'' and inserting ``$500,000,000''.
    (b) Liability Limit.--Section 170 e.(4) of the Atomic Energy Act of 
1954 (42 U.S.C. 2210(e)(4)) is amended by striking ``$100,000,000'' and 
inserting ``$500,000,000''.

SEC. 406. REPORTS.

    Section 170 p. of the Atomic Energy Act of 1954 (42 U.S.C. 2210(p)) 
is amended by striking ``August 1, 1998'' and inserting ``August 1, 
2008''.

SEC. 407. INFLATION ADJUSTMENT.

    Section 170 t. of the Atomic Energy Act of 1954 (42 U.S.C. 2210(t)) 
is amended--
            (1) by renumbering paragraph (2) as paragraph (3); and
            (2) by adding after paragraph (1) the following new 
        paragraph:
            ``(2) The Secretary shall adjust the amount of 
        indemnification provided under an agreement of indemnification 
        under subsection d. not less than once during each 5-year 
        period following the date of the enactment of the Price-
        Anderson Amendments Act of 2001, in accordance with the 
        aggregate percentage change in the Consumer Price Index since--
                    ``(A) such date of enactment, in the case of the 
                first adjustment under this subsection; or
                    ``(B) the previous adjustment under this 
                subsection.''.

SEC. 408. CIVIL PENALTIES.

    (a) Repeal of Automatic Remission.--Section 234A b.(2) of the 
Atomic Energy Act of 1954 (42 U.S.C. 2282a(b)(2)) is amended by 
striking the last sentence.
    (b) Limitation for Nonprofit Institutions.--Section 234A of the 
Atomic Energy Act of 1954 (42 U.S.C. 2282a) is further amended by 
striking subsection d. and inserting the following:
            ``d. Notwithstanding subsection a., no contractor, 
        subcontractor, or supplier considered to be nonprofit under the 
        Internal Revenue Code of 1954 shall be subject to a civil 
        penalty under this section in excess of the amount of any 
        performance fee paid by the Secretary to such contractor, 
        subcontractor, or supplier under the contract under which the 
        violation or violations; occur.''.

SEC. 409. EFFECTIVE DATE.

    (a) In General.--The amendments made by this subtitle shall become 
effective on the date of the enactment of this subtitle.
    (b) Indemnification Provisions.--The amendments made by sections 
703, 704, and 705 shall not apply to any nuclear incident occurring 
before the date of the enactment of this subtitle.
    (c) Civil Penalty Provisions.--The amendments made by section 708 
to section 234A of the Atomic Energy Act of 1954 (42 U.S.C. 
2282a(b)(2)) shall not apply to any violation occurring under a 
contract entered into before the date of the enactment of this 
subtitle.

           Subtitle B--Funding From the Department of Energy

SEC. 410. NUCLEAR ENERGY RESEARCH INITIATIVE.

    There are authorized to be appropriated $60,000,000 for fiscal year 
2002 and such sums as are necessary for each fiscal year thereafter for 
a Nuclear Energy Research Initiative to be managed by the Director of 
the Office of Nuclear Energy, for grants to be competitively awarded 
and subject to peer review for research relating to nuclear energy. The 
Secretary of Energy shall submit to the Committee on Science and the 
Committee on Appropriations in the House of Representatives, and to the 
Committee on Energy and Natural Resources and the Committee on 
Appropriations of the Senate, an annual report on the activities of the 
Nuclear Energy Research Initiative.

SEC. 411. NUCLEAR ENERGY PLANT OPTIMIZATION PROGRAM.

     There are authorized to be appropriated $10,000,000 for fiscal 
year 2002 and such sums as are necessary for each fiscal year 
thereafter for a Nuclear Energy Plant Optimization Program to be 
managed by the Director of the Office of Nuclear Energy, for a joint 
program with industry cost-shared by at least 50 percent and subject to 
annual review by the Secretary of Energy's Nuclear Energy 
Research Advisory Council. The Secretary of Energy shall submit to the 
Committee on Science and the Committee on Appropriations in the House 
of Representatives, and to the Committee on Energy and Natural 
Resources and the Committee on Appropriations of the Senate, an annual 
report on the activities of the Nuclear Energy Plant Optimization 
Program.

SEC. 412. NUCLEAR ENERGY TECHNOLOGY DEVELOPMENT PROGRAM.

    There are authorized to be appropriated $25,000,000 for fiscal year 
2002 and such sums as are necessary for each fiscal year thereafter for 
a Nuclear Energy Technology Development Program to be managed by the 
Director of the Office of Nuclear Energy, for a roadmap to design and 
develop a new nuclear energy facility in the United States and subject 
to annual review by the Secretary of Energy's Nuclear Energy Research 
Advisory Council. The Secretary of Energy shall submit to the Committee 
on Science and the Committee on Appropriations in the House of 
Representatives, and to the Committee on Energy and Natural Resources 
and the Committee on Appropriations of the Senate, an annual report on 
the activities of the Nuclear Technology Development Program.

 Subtitle C--Grants for Incentive Payments for Capital Improvements To 
                          Increase Efficiency

SEC. 420. NUCLEAR ENERGY PRODUCTION INCENTIVES.

    (a) Incentive Payments.--For electric energy generated and sold by 
an existing nuclear energy facility during the incentive period, the 
Secretary of Energy shall make, subject to the availability of 
appropriations, incentive payments to the owner or operator of such 
facility. The amount of such payment made to any such owner or operator 
shall be as determined under subsection (e) of this section. Payments 
under this section may only be made upon receipt by the Secretary of an 
incentive payment application, which establishes that the applicant is 
eligible to receive such payment and which satisfies such other 
requirements as the Secretary deems necessary. Such application shall 
be in such form, and shall be submitted at such time, as the Secretary 
shall establish.
    (b) Definitions.--For purposes of this section:
            (1) Qualified nuclear energy facility.--The term 
        ``qualified nuclear energy facility'' means an existing reactor 
        used to generate electricity for sale.
            (2) Existing reactor.--The term ``existing reactor'' means 
        any nuclear reactor the construction of which was completed and 
        licensed by the Nuclear Regulatory Commission before the date 
        of enactment of this section.
    (c) Incentive Period.--A qualified nuclear energy facility may 
receive payments under this section for a period of 15 years (referred 
to in this section as the ``incentive period'').
    (d) Amount of Payment.--
            (1) Payments made by the Secretary under this section to 
        the owner or operator of a nuclear energy facility shall be 
        based on the increased volume of kilowatt hours of electricity 
        generated by the qualified nuclear energy facility during the 
        incentive period. The amount of such payment shall be 1 mill 
        for each kilowatt-hour produced in excess of the total 
        generation produced over the most recent calendar year prior to 
        the first fiscal year in which payment is sought. Such payment 
        is subject to the availability of appropriations under 
        subsection (g), except that no facility may receive more than 
        $2,000,000 in one calendar year.
            (2) The amount of the payment made to any person under this 
        section as provided in paragraph (1) shall be adjusted for 
        inflation for each fiscal year beginning after calendar year 
        2001 in the same manner as provided in the provisions of 
        section 29(d)(2)(B) of the Internal Revenue Code of 1986, 
        except that in applying such provisions, the calendar year 2001 
        shall be substituted for the calendar year 1979.
    (e) Sunset.--No payment may be made under this section to any 
nuclear energy facility after the expiration of the period of 20 fiscal 
years beginning with fiscal year 2001, and no payment may be made under 
this section to any such facility after a payment has been made with 
respect to such facility for a period of 15 fiscal years.
    (f) Authorization of Appropriations.--There are authorized to be 
appropriated to the Secretary to carry out the purposes of this section 
$50,000,000 for each of the fiscal years 2001 through 2015.

SEC. 421. NUCLEAR ENERGY EFFICIENCY IMPROVEMENT.

    (a) Incentive Payments.--The Secretary of Energy shall make 
incentive payments to the owners or operators of qualified nuclear 
energy facilities to be used to make capital improvements in the 
facilities that are directly related to improving the electrical output 
efficiency of such facilities by at least 1 percent.
    (b) Limitations.--
            (1) Incentive payments under this section shall not exceed 
        10 percent of the costs of the capital improvement concerned 
        and not more than one payment may be made with respect to 
        improvements at a single facility.
            (2) No payments in excess of $1,000,000 may be made with 
        respect to improvements at a single facility.
            (3) Payments may be made by the Department or used by a 
        facility to offset the costs of NRC permitting fees for a 
        capital improvement.
            (4) Payments made by the Department to the Nuclear 
        Regulatory Commission for permitting an improvement that can 
        impact multiple facilities are not subject to the limitation in 
        (b)(2).
    (c) Authorization.--There is authorized to be appropriated to carry 
out this section not more than $20,000,000 in each fiscal year after 
the fiscal year 2001.

   TITLE V--ARCTIC COASTAL PLAIN DOMESTIC ENERGY SECURITY ACT OF 2001

SEC. 501. SHORT TITLE.

    This title may be cited as the ``Arctic Coastal Plain Domestic 
Energy Security Act of 2001''.

SEC. 502. DEFINITIONS.

    When used in this title the term--
            (1) ``1002 Area'' means that area identified as ``Coastal 
        Plain'' in the map entitled ``Arctic National Wildlife 
        Refuge'', dated August 1980, as referenced in section 1002(b) 
        of the Alaska National Interest Lands Conservation Act of 1980 
        (16 U.S.C. 3142(b)(1)) comprising approximately 1,549,000 
        acres; and
            (2) ``Secretary'', except as otherwise provided, means the 
        Secretary of the Interior or the Secretary's designee.

SEC. 503. LEASING PROGRAM FOR LANDS WITHIN THE ANWR 1002 AREA.

    (a) Authorization.--The Congress hereby authorizes and directs the 
Secretary, acting through the Bureau of Land Management in consultation 
with the Fish and Wildlife Service and other appropriate Federal 
offices and agencies, to take such actions as are necessary to 
establish and implement a competitive oil and gas leasing program that 
will result in an environmentally sound program for the exploration, 
development, and production of the oil and gas resources of the 1002 
Area and to administer the provisions of this title through 
regulations, lease terms, conditions, restrictions, prohibitions, 
stipulations and other provisions that ensure the oil and gas 
exploration, development, and production activities on the 1002 Area 
will result in no significant adverse effect on fish and wildlife, 
their habitat, subsistence resources, and the environment, and shall 
require the application of the best commercially available technology 
for oil and gas exploration, development, and production, on all new 
exploration, development, and production operations, and whenever 
practicable, on existing operations, and in a manner to ensure the 
receipt of fair market value by the public for the mineral resources to 
be leased.
    (b) Repeal.--The prohibitions and limitations contained in section 
1003 of the Alaska National Interest Lands Conservation Act of 1980 (16 
U.S.C. 3143) are hereby repealed.
    (c) Compatibility.--Congress hereby determines that the oil and gas 
leasing program and activities authorized by this section in the 1002 
Area are compatible with the purposes for which the Arctic National 
Wildlife Refuge was established, and that no further findings or 
decisions are required to implement this determination.
    (d) Sole Authority.--This title shall be the sole authority for 
leasing on the 1002 Area: Provided, That nothing in this title shall be 
deemed to expand or limit State and local regulatory authority.
    (e) Federal Land.--The 1002 Area shall be considered ``Federal 
land'' for the purposes of the Federal Oil and Gas Royalty Management 
Act of 1982.
    (f) Special Areas.--The Secretary, after consultation with the 
State of Alaska, City of Kaktovik, and the North Slope Borough, is 
authorized to designate up to a total of 45,000 acres of the 1002 Area 
as Special Areas and close such areas to leasing if the Secretary 
determines that these Special Areas are of such unique character and 
interest so as to require special management and regulatory protection. 
The Secretary may, however, permit leasing of all or portions of any 
Special Areas within the 1002 Area by setting lease terms that limit or 
condition surface use and occupancy by lessees of such lands but permit 
the use of horizontal drilling technology from sites on leases located 
outside the designated Special Areas.
    (g) Limitation on Closed Areas.--The Secretary's sole authority to 
close lands within the 1002 Area to oil and gas leasing and to 
exploration, development, and production is that set forth in this 
title.
    (h) Conveyance.--In order to maximize Federal revenues by removing 
clouds on title of lands and clarifying land ownership patterns within 
the 1002 Area, the Secretary, notwithstanding the provisions of section 
1302(h)(2) of the Alaska National Interest Lands Conservation Act (16 
U.S.C. 3192(h)(2)), is authorized and directed to convey (1) to the 
Kaktovik Inupiat Corporation the surface estate of the lands described 
in paragraph 2 of Public Land Order 6959, to the extent necessary to 
fulfill the Corporation's entitlement under section 12 of the Alaska 
Native Claims Settlement Act (43 U.S.C. 1611), and (2) to the Arctic 
Slope Regional Corporation the subsurface estate beneath such surface 
estate pursuant to the August 9, 1983, agreement between the Arctic 
Slope Regional Corporation and the United States of America.

SEC. 504. RULES AND REGULATIONS.

    (a) Promulgation.--The Secretary shall prescribe such rules and 
regulations as may be necessary to carry out the purposes and 
provisions of this title, including rules and regulations relating to 
protection of the fish and wildlife, their habitat, subsistence 
resources, and the environment of the 1002 Area. Such rules and 
regulations shall be promulgated no later than fourteen months after 
the date of enactment of this title and shall, as of their effective 
date, apply to all operations conducted under a lease issued or 
maintained under the provisions of this title and all operations on the 
1002 Area related to the leasing, exploration, development and 
production of oil and gas.
    (b) Revision of Regulations.--The Secretary shall periodically 
review and, if appropriate, revise the rules and regulations issued 
under subsection (a) of this section to reflect any significant 
biological, environmental, or engineering data which come to the 
Secretary's attention.

SEC. 505 ADEQUACY OF THE DEPARTMENT OF THE INTERIOR'S LEGISLATIVE 
              ENVIRONMENTAL IMPACT STATEMENT.

    The ``Final Legislative Environmental Impact Statement'' (April 
1987) prepared pursuant to section 1002 of the Alaska National Interest 
Lands Conservation Act of 1980 (16 U.S.C. 3142) and section 102(2)(C) 
of the National Environmental Policy Act of 1969 (42 U.S.C. 4332(2)(C)) 
is hereby found by the Congress to be adequate to satisfy the legal and 
procedural requirements of the National Environmental Policy Act of 
1969 with respect to actions authorized to be taken by the Secretary to 
develop and promulgate the regulations for the establishment of the 
leasing program authorized by this title, to conduct the first lease 
sale and any subsequent lease sale authorized by this title, and to 
grant rights-of-way and easements to carry out the purposes of this 
title.

SEC. 506. LEASE SALES.

    (a) Lease Sales.--Lands may be leased pursuant to the provisions of 
this title to any person qualified to obtain a lease for deposits of 
oil and gas under the Mineral Leasing Act, as amended (30 U.S.C. 181).
    (b) Procedures.--The Secretary shall, by regulation, establish 
procedures for--
            (1) receipt and consideration of sealed nominations for any 
        area in the 1002 Area for inclusion in, or exclusion (as 
        provided in subsection (c)) from, a lease sale; and
            (2) public notice of and comment on designation of areas to 
        be included in, or excluded from, a lease sale.
    (c) Lease Sales on 1002 Area.--The Secretary shall, by regulation, 
provide for lease sales of lands on the 1002 Area. When lease sales are 
to be held, they shall occur after the nomination process provided for 
in subsection (b) of this section. For the first lease sale, the 
Secretary shall offer for lease those acres receiving the greatest 
number of nominations, but no less than two hundred thousand acres and 
no more than three hundred thousand acres shall be offered. If the 
total acreage nominated is less than two hundred thousand acres, the 
Secretary shall include in such sales any other acreage which he 
believes has the highest resource potential, but in no event shall more 
than three hundred thousand acres be offered in such sale. With respect 
to subsequent lease sales, the Secretary shall offer for lease no less 
than two hundred thousand acres of the 1002 Area. The initial lease 
sale shall be held within twenty months of the date of enactment of 
this title. The second lease sale shall be held no later than twenty-
four months after the initial sale, with additional sales conducted no 
later than twelve months thereafter so long as sufficient interest in 
development exists to warrant, in the Secretary's judgment, the conduct 
of such sales.

SEC. 507. GRANT OF LEASES BY THE SECRETARY.

    (a) In General.--The Secretary is authorized to grant to the 
highest responsible qualified bidder by sealed competitive cash bonus 
bid any lands to be leased on the 1002 Area upon payment by the lessee 
of such bonus as may be accepted by the Secretary and of such royalty 
as may be fixed in the lease, which shall be not less than 12\1/2\ per 
centum in amount or value of the production removed or sold from the 
lease.
    (b) Antitrust Review.--Following each notice of a proposed lease 
sale and before the acceptance of bids and the issuance of leases based 
on such bids, the Secretary shall allow the Attorney General, in 
consultation with the Federal Trade Commission, thirty days to perform 
an antitrust review of the results of such lease sale on the likely 
effects the issuance of such leases would have on competition and the 
Attorney General shall advise the Secretary with respect to such 
review, including any recommendation for the nonacceptance of any bid 
or the imposition of terms or conditions on any lease, as may be 
appropriate to prevent any situation inconsistent with the antitrust 
laws.
    (c) Subsequent Transfers.--No lease issued under this title may be 
sold, exchanged, assigned, sublet, or otherwise transferred except with 
the approval of the Secretary. Prior to any such approval the Secretary 
shall consult with, and give due consideration to the views of, the 
Attorney General.
    (d) Immunity.--Nothing in this title shall be deemed to convey to 
any person, association, corporation, or other business organization 
immunity from civil or criminal liability, or to create defenses to 
actions, under any antitrust law.
    (e) Definitions.--As used in this section, the term--
            (1) ``antitrust review'' shall be deemed an ``antitrust 
        investigation'' for the purposes of the Antitrust Civil Process 
        Act (15 U.S.C. 1311); and
            (2) ``antitrust laws'' means those Acts set forth in 
        section 1 of the Clayton Act (15 U.S.C. 12) as amended.

SEC. 508. LEASE TERMS AND CONDITIONS.

    An oil or gas lease issued pursuant to this title shall--
            (1) be for a tract consisting of a compact area not to 
        exceed five thousand seven hundred sixty acres, or nine 
        surveyed or protracted sections which shall be as compact in 
        form as possible;
            (2) be for an initial period of ten years and shall be 
        extended for so long thereafter as oil or gas is produced in 
        paying quantities from the lease or unit area to which the 
        lease is committed or for so long as drilling or reworking 
        operations, as approved by the Secretary, are conducted on the 
        lease or unit area;
            (3) require the payment of royalty as provided for in 
        section 507 of this title;
            (4) require that exploration activities pursuant to any 
        lease issued or maintained under this title shall be conducted 
        in accordance with an exploration plan or a revision of such 
        plan approved by the Secretary;
            (5) require that all development and production pursuant to 
        a lease issued or maintained pursuant to this title shall be 
        conducted in accordance with development and production plans 
        approved by the Secretary;
            (6) require posting of bond as required by section 509 of 
        this title;
            (7) provide that the Secretary may close, on a seasonal 
        basis, portions of the 1002 Area to exploratory drilling 
        activities as necessary to protect caribou calving areas and 
        other species of fish and wildlife;
            (8) contain such provisions relating to rental and other 
        fees as the Secretary may prescribe at the time of offering the 
        area for lease;
            (9) provide that the Secretary may direct or assent to the 
        suspension of operations and production under any lease granted 
        under the terms of this title in the interest of conservation 
        of the resource or where there is no available system to 
        transport the resource. If such a suspension is directed or 
        assented to by the Secretary, any payment of rental prescribed 
        by such lease shall be suspended during such period of 
        suspension of operations and production, and the term of the 
        lease shall be extended by adding any such suspension period 
        thereto;
            (10) provide that whenever the owner of a nonproducing 
        lease fails to comply with any of the provisions of this Act, 
        or of any applicable provision of Federal or State 
        environmental law, or of the lease, or of any regulation issued 
        under this title, such lease may be canceled by the Secretary 
        if such default continues for more than thirty days after 
        mailing of notice by registered letter to the lease owner at 
        the lease owner's post office address of record;
            (11) provide that whenever the owner of any producing lease 
        fails to comply with any of the provisions of this title, or of 
        any applicable provision of Federal or State environmental law, 
        or of the lease, or of any regulation issued under this title, 
        such lease may be forfeited and canceled by any appropriate 
        proceeding brought by the Secretary in any United States 
        district court having jurisdiction under the provisions of this 
        title;
            (12) provide that cancellation of a lease under this title 
        shall in no way release the owner of the lease from the 
        obligation to provide for reclamation of the lease site;
            (13) allow the lessee, at the discretion of the Secretary, 
        to make written relinquishment of all rights under any lease 
        issued pursuant to this title. The Secretary shall accept such 
        relinquishment by the lessee of any lease issued under this 
        title where there has not been surface disturbance on the lands 
        covered by the lease;
            (14) provide that for the purpose of conserving the natural 
        resources of any oil or gas pool, field, or like area, or any 
        part thereof, and in order to avoid the unnecessary duplication 
        of facilities, to protect the environment of the 1002 Area, and 
        to protect correlative rights, the Secretary shall require 
        that, to the greatest extent practicable, lessees unite with 
        each other in collectively adopting and operating under a 
        cooperative or unit plan of development for operation of such 
        pool, field, or like area, or any part thereof, and the 
        Secretary is also authorized and directed to enter into such 
        agreements as are necessary or appropriate for the protection 
        of the United States against drainage;
            (15) require that the holder of a lease or leases on lands 
        within the 1002 Area shall be fully responsible and liable for 
        the reclamation of those lands within and any other Federal 
        lands adversely affected in connection with exploration, 
        development, production or transportation activities on a lease 
        within the 1002 Area by the holder of a lease or as a result of 
        activities conducted on the lease by any of the leaseholder's 
        subcontractors or agents;
            (16) provide that the holder of a lease may not delegate or 
        convey, by contract or otherwise, the reclamation 
        responsibility and liability to another party without the 
        express written approval of the Secretary;
            (17) provide that the standard of reclamation for lands 
        required to be reclaimed under this title be, as nearly as 
        practicable, a condition capable of supporting the uses which 
        the lands were capable of supporting prior to any exploration, 
        development, or production activities, or upon application by 
        the lessee, to a higher or better use as approved by the 
        Secretary;
            (18) contain the terms and conditions relating to 
        protection of fish and wildlife, their habitat, and the 
        environment, as required by section 503(a) of this title;
            (19) provide that the holder of a lease, its agents, and 
        contractors use best efforts to provide a fair share, as 
        determined by the level of obligation previously agreed to in 
        the 1974 agreement implementing section 29 of the Federal 
        Agreement and Grant of Right of Way for the Operation of the 
        Trans-Alaska Pipeline, of employment and contracting for Alaska 
        Natives and Alaska Native Corporations from throughout the 
        State;
            (20) require project agreements to the extent feasible that 
        will ensure productivity and consistency recognizing a national 
        interest in both labor stability and the ability of 
        construction labor and management to meet the particular needs 
        and conditions of projects to be developed under leases issued 
        pursuant to this Act; and
            (21) contain such other provisions as the Secretary 
        determines necessary to ensure compliance with the provisions 
        of this title and the regulations issued under this title.

SEC. 509. BONDING REQUIREMENTS TO ENSURE FINANCIAL RESPONSIBILITY OF 
              LESSEE AND AVOID FEDERAL LIABILITY.

    (a) Requirement.--The Secretary shall, by rule or regulation, 
establish such standards as may be necessary to ensure that an adequate 
bond, surety, or other financial arrangement will be established prior 
to the commencement of surface disturbing activities on any lease, to 
ensure the complete and timely reclamation of the lease tract, and the 
restoration of any lands or surface waters adversely affected by lease 
operations after the abandonment or cessation of oil and gas operations 
on the lease. Such bond, surety, or financial arrangement is in 
addition to, and not in lieu of, any bond, surety, or financial 
arrangement required by any other regulatory authority or required by 
any other provision of law.
    (b) Amount.--The bond, surety, or financial arrangement shall be in 
an amount--
            (1) to be determined by the Secretary to provide for 
        reclamation of the lease site in accordance with an approved or 
        revised exploration or development and production plan; plus
            (2) set by the Secretary consistent with the type of 
        operations proposed, to provide the means for rapid and 
        effective cleanup, and to minimize damages resulting from an 
        oil spill, the escape of gas, refuse, domestic wastewaster, 
        hazardous or toxic substances, or fire caused by oil and gas 
        activities.
    (c) Adjustment.--In the event that an approved exploration or 
development and production plan is revised, the Secretary may adjust 
the amount of the bond, surety, or other financial arrangement to 
conform to such modified plan.
    (d) Duration.--The responsibility and liability of the lessee and 
its surety under the bond, surety, or other financial arrangement shall 
continue until such time as the Secretary determines that there has 
been compliance with the terms and conditions of the lease and all 
applicable laws.
    (e) Termination.--Within sixty days after determining that there 
has been compliance with the terms and conditions of the lease and all 
applicable laws, the Secretary, after consultation with affected 
Federal and State agencies, shall notify the lessee that the period of 
liability under the bond, surety, or other financial arrangement has 
been terminated.

SEC. 510. OIL AND GAS INFORMATION.

    (a) In General.--(1) Any lessee or permittee conducting any 
exploration for, or development or production of, oil or gas pursuant 
to this title shall provide the Secretary access to all data and 
information from any lease granted pursuant to this title (including 
processed and analyzed) obtained from such activity and shall provide 
copies of such data and information as the Secretary may request. Such 
data and information shall be provided in accordance with regulations 
which the Secretary shall prescribe.
    (2) If processed and analyzed information provided pursuant to 
paragraph (1) is provided in good faith by the lessee or permittee, 
such lessee or permittee shall not be responsible for any consequence 
of the use or of reliance upon such processed and analyzed information.
    (3) Whenever any data or information is provided to the Secretary, 
pursuant to paragraph (1)--
            (A) by a lessee or permittee, in the form and manner of 
        processing which is utilized by such lessee or permittee in the 
        normal conduct of business, the Secretary shall pay the 
        reasonable cost of reproducing such data and information; or
            (B) by a lessee or permittee, in such other form and manner 
        of processing as the Secretary may request, the Secretary shall 
        pay the reasonable cost of processing and reproducing such data 
        and information.
    (b) Regulations.--The Secretary shall prescribe regulations to:
            (1) assure that the confidentiality of privileged or 
        proprietary information received by the Secretary under this 
        section will be maintained; and
            (2) set forth the time periods and conditions which shall 
        be applicable to the release of such information.

SEC. 511. EXPEDITED JUDICIAL REVIEW.

    (a) Any complaint seeking judicial review of any provision in this 
title, or any other action of the Secretary under this title may be 
filed in any appropriate district court of the United States, and such 
complaint must be filed within ninety days from the date of the action 
being challenged, or after such date if such complaint is based solely 
on grounds arising after such ninetieth day, in which case the 
complaint must be filed within ninety days after the complainant knew 
or reasonably should have known of the grounds for the complaint: 
Provided, That any complaint seeking judicial review of an action of 
the Secretary in promulgating any regulation under this title may be 
filed only in the United States Court of Appeals for the District of 
Columbia.
    (b) Actions of the Secretary with respect to which review could 
have been obtained under this section shall not be subject to judicial 
review in any civil or criminal proceeding for enforcement.

SEC. 512. RIGHTS-OF-WAY ACROSS THE 1002 AREA.

    Notwithstanding title XI of the Alaska National Interest Lands 
Conservation Act of 1980 (16 U.S.C. 3161 et seq.), the Secretary is 
authorized and directed to grant, in accordance with the provisions of 
section 28(c) through (t) and (v) through (y) of the Mineral Leasing 
Act of 1920 (30 U.S.C. 185), rights-of-way and easements across the 
1002 Area for the transportation of oil and gas under such terms and 
conditions as may be necessary so as not to result in a significant 
adverse effect on the fish and wildlife, subsistence resources, their 
habitat, and the environment of the 1002 Area. Such terms and 
conditions shall include requirements that facilities be sited or 
modified so as to avoid unnecessary duplication of roads and pipelines. 
The regulations issued as required by section 504 of this title shall 
include provisions granting rights-of-way and easements across the 1002 
area.

SEC. 513. ENFORCEMENT OF SAFETY AND ENVIRONMENTAL REGULATIONS TO ENSURE 
              COMPLIANCE WITH TERMS AND CONDITIONS OF LEASE.

    (a) Responsibility of the Secretary.--The Secretary shall 
diligently enforce all regulations, lease terms, conditions, 
restrictions, prohibitions, and stipulations promulgated pursuant to 
this title.
    (b) Responsibility of Holders of Lease.--It shall be the 
responsibility of any holder of a lease under this title to--
            (1) maintain all operations within such lease area in 
        compliance with regulations intended to protect persons and 
        property on, and fish and wildlife, their habitat, subsistence 
        resources, and the environment of, the 1002 Area; and
            (2) allow prompt access at the site of any operations 
        subject to regulation under this title to any appropriate 
        Federal or State inspector, and to provide such documents and 
        records which are pertinent to occupational or public health, 
        safety, or environmental protection, and may be requested.
    (c) On-site Inspection.--The Secretary shall promulgate regulations 
to provide for--
            (1) scheduled onsite inspection by the Secretary, at least 
        twice a year, of each facility on the 1002 Area which is 
        subject to any environmental or safety regulation promulgated 
        pursuant to this title or conditions contained in any lease 
        issued pursuant to this title to assure compliance with such 
        environmental or safety regulations or conditions; and
            (2) periodic onsite inspection by the Secretary at least 
        once a year without advance notice to the operator of such 
        facility to assure compliance with all environmental or safety 
        regulations.

SEC. 514. NEW REVENUES.

    (a) Deposit Into Treasury.--Notwithstanding any other provision of 
law, all revenues received by the Federal Government from competitive 
bids, sales, bonuses, royalties, rents, fees, or interest derived from 
the leasing of oil and gas within the 1002 Area shall be deposited into 
the Treasury of the United States, solely as provided in this section. 
The Secretary of the Treasury shall pay to the State of Alaska the same 
percentage of such revenues as is set forth under the heading 
``EXPLORATION OF NATIONAL PETROLEUM RESERVE IN ALASKA'' in Public Law 
96-514 (94 Stat. 2957, 2964) semiannually to the State of Alaska, on 
March 30 and September 30 of each year and shall deposit the balance of 
all such revenues as miscellaneous receipts in the Treasury. 
Notwithstanding any other provision of law, the Secretary of the 
Treasury shall monitor the total revenue deposited into the Treasury as 
miscellaneous receipts from oil and gas leases issued under the 
authority of this subtitle and shall deposit amounts received as bonus 
bids into a special fund established in the Treasury of the United 
States known as the Renewable Energy Research and Development Fund (in 
this section referred to as the ``Renewable Energy Fund'').
    (b) Use of Renewable Energy Fund.--Of the amounts in the Renewable 
Energy Fund, an amount equal to ten percent of the total deposits shall 
be made available to the Secretary of Energy, without further 
appropriation, at the beginning of each fiscal year in which amounts 
are available, and may be expended by the Secretary of Energy for 
research and development of renewable domestic energy resources of 
wind, solar, biomass, geothermal and hydroelectric. Such amounts shall 
remain available until expended and shall be in addition to funds 
appropriated in the preceding fiscal year to the Secretary of Energy 
for renewable energy research, development and demonstration programs 
authorized by section 103 of the Energy Reorganization Act of 1974 (42 
U.S.C. 5813). The Secretary of Energy shall develop procedures for the 
use of the Renewable Energy Fund that ensure accountability and 
demonstrated results. Beginning the first full fiscal year after 
deposits are made into the Renewable Energy Fund, the Secretary of 
Energy shall submit an annual report to the Committee on Energy and 
Natural Resources of the United States Senate and the appropriate 
Committees of the United States House of Representatives detailing the 
use of any expenditures.

TITLE VI--ENERGY EFFICIENCY, CONSERVATION, AND ASSISTANCE TO LOW-INCOME 
                                FAMILIES

SEC. 601. EXTENSION OF LOW INCOME HOME ENERGY ASSISTANCE PROGRAM.

    (a) Authorization of Appropriations.--Section 2602(b) of the 
Omnibus Budget Reconciliation Act of 1981 (42 U.S.C. 8621), is amended 
by striking ``such sums as may be necessary for each of fiscal years 
2000 and 2001, and $2,000,000,000 for each of fiscal years 2002 through 
2004'' and inserting ``$3,000,000,000 for each of fiscal years 2000 
through 2010''.
    (b) Payments to States.--Section 2602(d)(2) of the Omnibus Budget 
Reconciliation Act of 1981 (42 U.S.C. 8621) is amended by striking 
``2004'' and inserting ``2010''.
    (c) Emergency Funds.--Section 2602(e) of the Omnibus Budget 
Reconciliation Act of 1981 (42 U.S.C. 8621), is amended by striking 
``$600,000,000'' and inserting ``$1,000,000,000''.

SEC. 602. ENERGY EFFICIENT SCHOOLS PROGRAM.

    (a) Establishment.--There is established in the Department of 
Energy the Energy Efficient Schools Program (hereafter in this section 
referred to as the ``Program'').
    (b) In General.--The Secretary of Energy may, through the Program, 
make grants to--
            (1) be provided to school districts to implement the 
        purpose of this section;
            (2) administer the program of assistance to school 
        districts pursuant to this section; and,
            (3) promote participation by school districts in the 
        program established by this section.
    (c) Grants To Assist School Districts.--Grants under paragraph 
(b)(1) shall be used to achieve energy efficiency performance not less 
than 30 percent beyond the levels prescribed in the 1998 International 
Energy Conservation Code as it is in effect for new construction and 
existing buildings. Grants under such subsection shall be made to 
school districts that have--
            (1) demonstrated a need for such grants in order to respond 
        appropriately to increasing elementary and secondary school 
        enrollments or to make major investments in renovation of 
        school facilities;
            (2) demonstrated that the districts do not have adequate 
        funds to respond appropriately to such enrollments or achieve 
        such investments without assistance; and
            (3) made a commitment to use the grant funds to develop 
        energy efficient school buildings in accordance with the plan 
        developed and approved pursuant to paragraph (e)(1).
    (d) Other Grants.--
            (1) Grants for administration.--Grants under paragraph 
        (b)(2) shall be used to evaluate compliance by school districts 
        with the requirements of this section and in addition may be 
        used for--
                    (A) distributing information and materials to 
                clearly define and promote the development of energy 
                efficient school buildings for both new and existing 
                facilities;
                    (B) organizing and conducting programs for school 
                board members, school district personnel, architects, 
                engineers, and others to advance the concepts of energy 
                efficient school buildings;
                    (C) obtaining technical services and assistance in 
                planning and designing energy efficient school 
                buildings; and
                    (D) collecting and monitoring data and information 
                pertaining to the energy efficient school building 
                projects.
            (2) Grants to promote participation.--Grants under 
        paragraph (b)(3) may be used for promotional and marketing 
        activities, including facilitating private and public 
        financing, promoting the use of energy service companies, 
        working with school administrations, students, and communities, 
        and coordinating public benefit programs.
    (e) Implementation.--
            (1) Plans.--Grants under subsection (b) shall be provided 
        only to school districts that, in consultation with State 
        offices of energy and education, have developed plans that the 
        State energy office determines to be feasible and appropriate 
        in order to achieve the purposes for which such grants were 
        made.
            (2) Supplementing grant funds.--The State agency referred 
        to in paragraph (1) shall encourage qualifying school districts 
        to supplement their grant funds with funds from other sources 
        in the implementation of their plans.
    (f) Allocation of Funds.--
            (1) In general.--Except as provided in subsection (c), 
        funds appropriated for the implementation of this section shall 
        be provided to State energy offices to administer the program 
        of assistance to school districts under this section.
    (g) Purposes.--Except as provided in subsection (c), funds 
appropriated under this section shall be allocated as follows:
            (1) Seventy percent shall be used to make grants under 
        paragraph (b)(1).
            (2) Fifteen percent shall be used to make grants under 
        paragraph (b)(2).
            (3) Fifteen percent shall be used to make grants under 
        paragraph (b)(3).
    (h) Other Funds.--The Secretary of Energy may, through the Program 
established under subsection (a), retain an amount, not exceed $300,000 
per year, to assist State energy offices in coordinating and 
implementing such Program. Such funds may be used to develop reference 
materials to further define the principles and criteria to achieve 
energy efficient school buildings.
    (i) Authorization of Appropriations.--For this section, there are 
authorized to be appropriated $200,000,000 for each of fiscal years 
2002 through 2005, and such sums as may be necessary for each of fiscal 
years 2006 through 2011.
    (j) Definitions.--
            (1) Elementary and secondary school.--The terms 
        ``elementary school'' and ``secondary school'' shall have the 
        same meaning given such terms in paragraphs (14) and (25) of 
        section 14101 of the Elementary and Secondary Education Act of 
        1965 (20 U.S.C. 8801(14),(25)).
            (2) Energy efficient school building.--The term ``energy 
        efficient school building'' refers to a school building which, 
        in its design, construction, operation, and maintenance 
        maximizes use of renewable energy and efficient energy 
        practices, is cost-effective on a life-cycle basis, uses 
        affordable, environmentally preferable, durable materials, 
        enhances indoor environmental quality, protects and conserves 
        water, and optimizes site potential.
            (3) Renewable energy.--The term ``renewable energy'' means 
        energy produced by solar, wind, geothermal, hydroelectric 
        power, and biomass power.

SEC. 603. AMENDMENTS TO WEATHERIZATION ASSISTANCE PROGRAM.

    (a) Eligibility.--Section 412 of the Energy Conservation and 
Production Act (42 U.S.C. 6862) is amended by--
            (1) in definition (7)(A), striking ``125'' and inserting 
        ``150'', and
            (2) in definition (7)(C), striking ``125'' and inserting 
        ``150''.
    (b) Authorization of Appropriations.--Section 422(a) of the Energy 
Conservation and Production Act (42 U.S.C. 6872) is amended by--
            (1) striking ``$200,000,000'' and inserting 
        ``$250,000,000'';
            (2) striking ``1991'' and inserting ``2002, $325,000,000 
        for fiscal year 2003, $400,000,000 for fiscal year 2004, 
        $500,000,000 for fiscal year 2005''; and
            (3) striking ``1992, 1993 and 1994'' and inserting ``for 
        each fiscal year thereafter''.

SEC. 604. AMENDMENTS TO STATE ENERGY PROGRAM.

    (a) State Energy Conservation Plans.--Section 362 of the Energy 
Policy and Conservation Act (42 U.S.C. 6322) is amended by--
            (1) redesignating subsection (f) as subsection (g), and
            (2) inserting after subsection (e) the following new 
        subsection (f)--
    ``(f) The Secretary shall, at least once every three years, invite 
the Governor of each State to review and, if necessary, revise the 
energy conservation plan of such State submitted under section 362(b) 
or (e). Such reviews should consider the energy conservation plans of 
other States within the region, and identify opportunities and actions 
carried out in pursuit of common energy conservation goals.''.
    (b) State Energy Efficiency Goals.--Section 364 of the Energy 
Policy and Conservation Act (42 U.S.C. 6324) is amended by--
            (1) striking ``October 1, 1991'' and inserting ``January 1, 
        2001'',
            (2) striking ``10'' and inserting ``25'', and
            (3) striking ``2000'' and inserting ``2010''.
    (c) Authorization of Appropriations.--Section 365(f)(1) of the 
Energy Policy and Conservation Act (42 U.S.C. 6325) is amended by--
            (1) striking ``and'',
            (2) striking the period and inserting ``$75,000,000 for 
        fiscal year 2002, $100,000,000 for fiscal years 2003 and 2004, 
        $125,000,000 for fiscal year 2005 and such sums as are 
        necessary for each fiscal year thereafter.''.

SEC. 605. ENHANCEMENT AND EXTENSION OF AUTHORITY RELATING TO FEDERAL 
              ENERGY SAVINGS PERFORMANCE CONTRACTS.

    (a) Energy Savings Through Construction of Replacement 
Facilities.--Section 804 of the National Energy Conservation Policy Act 
(42 U.S.C. 8287c) is amended--
            (1) in paragraph (2)--
                    (A) by redesignating subparagraphs (A) and (B) as 
                clauses (i) and (ii), respectively;
                    (B) by inserting ``(A)'' and ``(2)''; and
                    (C) by adding at the end the following new 
                subparagraph:
                    ``(B) The term ``energy savings'' also means a 
                reduction in the cost of energy, from such a base cost 
                established through a methodology set forth in the 
                contract, that would otherwise be utilized in one or 
                more existing federally owned buildings or other 
                federally owned facilities by reason of the 
                construction and operation of one or more new buildings 
                or facilities.''; and
            (2) in paragraph (3), by inserting after the first sentence 
        of the following new sentence: ``The terms also mean a contract 
        that provides for energy savings through the construction and/
        or operation of one or more new buildings or facilities.''.
    (b) Cost Savings From Operation and Maintenance Efficiencies in 
Replacement Facilities.--Section 801(a) of the National Energy 
Conservation Policy Act (42 U.S.C. 8287(a)) is amended by adding at the 
end the following new paragraph:
            ``(3)(A) In the case of an energy savings contract or 
        energy savings performance contract providing for energy 
        savings through the construction and operation of one or more 
        buildings or facilities to replace one or more existing 
        buildings or facilities, benefits ancillary to the purpose of 
        such contract under paragraph (1) may include savings resulting 
        from reduced costs of operation and maintenance at new and/or 
        additional buildings or facilities, from a base cost of 
        operation and maintenance established through a methodology set 
        forth in the contract.
            ``(B) Notwithstanding paragraph (2)(B), aggregate annual 
        payments by an agency under an energy savings contract or 
        energy savings performance contract referred to in subparagraph 
        (A) may take into account (through the procedures developed 
        pursuant to this section) savings resulting from reduced costs 
        of operation and maintenance as described in that 
        subparagraph.''.
    (c) Five-Year Extension of Authority.--Section 801(c) of the 
National Energy Conservation Policy Act (42 U.S.C. 8287(c)) is amended 
by striking ``October 1, 2003'' and inserting ``October 1, 2008''.
    (d) Utility Incentive Programs.--Section 546 of the National Energy 
Conservation Policy Act (42 U.S.C. 8256(c)) is amended by--
            (1) in paragraph (3) by adding at the end the following two 
        new sentences: ``Such a utility incentive program may include a 
        contract or contract term designed to provide for cost-
        effective electricity demand management, energy efficiency, 
        and/or water conservation. Notwithstanding section 201(a)(3) of 
        63 Stat. 383 (40 U.S.C. 481(a)(3)), such contracts or contract 
        terms may be made for periods not exceeding 25 years.''.
            (2) by adding at the end the following new paragraph:
            ``(6) A utility incentive program may include a contract or 
        contract term for a reduction in the cost of energy, from a 
        base cost established through a methodology set forth in such a 
        contract, that would otherwise be utilized in one or more 
        federally owned buildings or other federally owned facilities 
        by reason of the construction and/or operation of one or more 
        buildings or facilities, as well as benefits ancillary to the 
        purpose of such contract or contract term, including savings 
        resulting from reduced costs of operation and maintenance at 
        new and/or additional buildings or facilities when compared 
with the costs of operation and maintenance at existing buildings or 
facilities.''.

SEC. 606. FEDERAL ENERGY EFFICIENCY REQUIREMENT.

    (a) In General.--Through cost-effective measures, each agency shall 
reduce energy consumption per gross square foot of its facilities by 30 
percent by 2010 and 50 percent by 2020 relative to 1990.
    (b) Implementation Plan.--Not later than one year after date of 
enactment of this section, each agency shall develop and submit to 
Congress and the President an implementation plan for fulfilling the 
requirements of this section.
    (c) Annual Report.--
            (1) In general.--Each agency shall measure and report 
        annually to Congress and the President its progress in meeting 
        the requirements of this section.
            (2) Guidelines.--The Secretary of Energy, in consultation 
        with the Administrator of the Energy Information 
        Administration, shall develop and issue guidelines for 
        agencies' preparation of their annual report, including 
        guidance on how to measure energy consumption in federal 
        facilities.
    (d) Exemption of Certain Facilities.--A facility may be deemed 
exempt when the Secretary determines that compliance with the Energy 
Policy Act of 1992 is not practical for that particular facility. No 
later than one year from date of enactment, the Secretary shall, in 
consultation with the Administrator of the Energy Information 
Administration, set guidelines for agencies to use in excluding certain 
kinds of facilities to meet the requirements of this section.
    (e) Applicability.--The Department of Defense (DOD) is subject to 
this order only to the extent that it does not impair or adversely 
affect military operations and training (including tactical aircraft, 
ships, weapons systems, combat training, and border security).
    (f) Definitions.--For the purposes of this section.
            (1) ``agency'' means an executive agency as defined in 5 
        U.S.C. 105. Military departments, as defined in 5 U.S.C. 102, 
        are covered under the auspices of the Department of Defense.
            (2) ``facility'' means any individual building or 
        collection of buildings, grounds, or structure, as well as any 
        fixture or part thereof, including the associated energy or 
        water-consuming support systems, which is constructed, 
        renovated, or purchased in whole or in part for use by the 
        Federal Government. It includes leased facilities where the 
        Federal Government has a purchase option or facilities planned 
        for purchase. In any provision of this order, the term 
        ``facility'' also includes any building 100 percent leased for 
        use by the Federal Government where the Federal Government pays 
        directly or indirectly for the utility costs associated with 
        its leased space, and Government-owned contractor-operated 
        facilities.

SEC. 607. ENERGY EFFICIENCY SCIENCE INITIATIVE.

    There are authorized to be appropriated $25,000,000 for fiscal year 
2001 and such sums as are necessary for each fiscal year thereafter, 
but not to exceed $50,000,000 in any fiscal year, for an Energy 
Efficiency Science Initiative to be managed by the Assistant Secretary 
for Energy Efficiency and Renewable Energy in consultation with the 
Director of the Office of Science, for grants to be competitively 
awarded and subject to peer review for research relating to energy 
efficiency. The Secretary of Energy shall submit to the Committee on 
Science and the Committee on Appropriations of the United States House 
of Representatives, and to the Committee on Energy and Natural 
Resources and the Committee on Appropriations of the United States 
Senate, an annual report on the activities of the Energy Efficiency 
Science Initiative, including a description of the process used to 
award the funds and an explanation of how the research relates to 
energy efficiency.

           TITLE VII--ALTERNATIVE FUELS AND RENEWABLE ENERGY

                     Subtitle A--Alternative Fuels

SEC. 701. 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''.

SEC. 702. ALTERNATIVE FUEL VEHICLE CREDITS FOR INSTALLATION OF 
              QUALIFYING INFRASTRUCTURE.

    Section 508 of the Energy Policy Act of 1992 (42 U.S.C. 13258) is 
amended by adding the following at the end:
    ``(e) Credit for Acquisition or Installation of Qualifying 
Infrastructure.--The Secretary shall allocate an infrastructure credit 
to a fleet or covered person that is required to acquire an alternative 
fueled vehicle under this title, or to a Federal fleet as defined by 
section 303(b)(3) of Title III of this Act, for the acquisition or 
installation of the fuel or the needed infrastructure, including the 
supply and delivery systems, necessary to operate or maintain the 
alternative fueled vehicle. Such necessary infrastructure shall 
include, but is not limited to, the following:
            ``(A) equipment required to refuel or recharge the 
        alternative fueled vehicle;
            ``(B) facilities or equipment required to maintain, repair 
        or operate the alternative fueled vehicle;
            ``(C) training programs, educational materials or other 
        activities necessary to provide information regarding the 
        operation, maintenance or benefits associated with the 
        alternative fueled vehicle; and
            ``(D) such other activity as the Secretary deems an 
        appropriate expenditure in support of the operation, 
        maintenance or further wide spread adoption or utilization of 
        the alternative fueled vehicle.
    ``(f) Qualifying Infrastructure Credit.--The term `infrastructure 
credit' shall mean--
            ``(A) that equipment or activity defined in subsection (e) 
        above; and
            ``(B) be equivalent in cost to the acquisition of an 
        alternative fueled vehicle for which the expenditure on the 
        infrastructure is made.
    ``(g) Limitation on Number of Infrastructure Credits Issued.--Each 
fleet or covered person that is required to acquire an alternative 
fueled vehicle under this title, or each Federal fleet as defined by 
section 303(b)(3) of title III of this Act, shall be limited in the 
number of infrastructure credits that may be acquired and used to meet 
the alternative fueled vehicle requirements of this Act to no more than 
the equivalent of one half of the alternative fueled vehicles required 
per annum.''.

SEC. 703. STATE AND LOCAL GOVERNMENT USE OF FEDERAL ALTERNATIVE FUEL 
              REFUELING FACILITIES.

    Section 304 of the Energy Policy Act of 1992 (42 U.S.C. 13213) is 
amended by adding the following at the end:
    ``(c) State and Local Government Owned Vehicles.--Federal agencies 
may include any alternative fuel vehicles owned by States or local 
governments in any commercial arrangements for the purpose of fueling 
Federal alternative fueled vehicles as authorized under subsection (a) 
of this section. The Secretary may allocate equivalent infrastructure 
credits to a Federal fleet as defined by section 303(b)(3) of title III 
of this Act, for the inclusion of such vehicles in any such commercial 
fueling arrangements.''.

SEC. 704. FEDERAL FLEET FUEL ECONOMY AND USE OF ALTERNATIVE FUELS.

    (a) Fuel Economy.--Through cost-effective measures, each agency 
shall increase the average EPA fuel economy rating of passenger cars 
and light trucks acquired by at least 3 miles per gallon (mpg) by the 
end of fiscal year 2005 compared to acquisitions in fiscal year 2000.
    (b) Use of Alternative Fuels.--Through cost-effective measures, 
each agency shall, by the end of fiscal year 2005, use alternative 
fuels for at least 50 percent of the total annual volume of fuel used 
by the agency. No more than 25 percent of fuel purchased by State and 
local governments at federally-owned refueling facilities as described 
under section 403 may be included by an agency in meeting the 
requirement of this section.
    (c) Implementation Plan.--No later than one year after date of 
enactment of this section, each agency shall develop and submit to 
Congress and the President an implementation plan for fulfilling the 
requirements of this section. Each agency should develop an 
implementation plan that meets its unique fleet configuration and fleet 
requirements.
    (d) Annual Report.--
            (1) In general.--Each agency shall measure and report 
        annually to Congress and the President its progress in meeting 
        the requirements of this section.
            (2) Guidelines.--The Secretary of Energy, through the 
        Federal Energy Management Program and in consultation with the 
        Administrator of the Energy Information Administration, shall 
        develop and issue guidelines for agencies' preparation of their 
        annual report, including guidance on how to measure fuel 
        economy for the collection and annual reporting of data to 
        demonstrate compliance with the requirements of this section.
    (e) Applicability.--This order applies to each federal agency 
operating 20 or more motor vehicles within the United States.
    (f) Exemption of Certain Vehicles.--Department of Defense military 
tactical vehicles are exempt from this order. Law enforcement, 
emergency, and any other vehicle class or type determined by the 
Secretary, in consultation with the Federal Energy Management Program, 
are exempted from the requirements of this section. No later than one 
year from date of enactment, the Secretary shall, in consultation with 
the Federal Energy Management Program, set guidelines for agencies to 
use in the determination of exemptions.
    (g) Definitions.--For the purposes of this section--
            (1) ``agency'' means an executive agency as defined in 5 
        U.S.C. 105. Military departments, as defined in 5 U.S.C. 102, 
        are covered under the auspices of the Department of Defense.
            (2) ``alternative fuel'' means any fuel defined as an 
        alternative fuel pursuant to section 301 of the Energy Policy 
        Act of 1992 (Public Law 102-486).
    (h) Conforming Amendments.--Section 400AA of the Energy Policy and 
Conservation Act (42 U.S.C. 6374) is amended as follows:
            (1) in subsection (a)(3)(E), insert the following sentence 
        at the end, ``Except that, no later than fiscal year 2005 at 
        least 50 percent of the total annual volume of fuel used must 
        be from alternative fuels.'', and
            (2) in subsection (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. 705. LOCAL GOVERNMENT GRANT PROGRAM.

    (a) Establishment.--Within one year of date of enactment of this 
section, the Secretary of Energy shall establish a program for making 
grants to local governments for covering the incremental cost of 
qualified alternative fuel motor vehicles.
    (b) Criteria.--In deciding to whom grants shall be made under this 
subsection, the Secretary of Energy shall consider the goal of 
assisting the greatest number of applicants, provided that no grant 
award shall exceed $1,000,000.
    (c) Priorities.--Priority shall be given under this section to 
those local government fleets where the use of alternative fuels would 
have a significant beneficial effect on energy security and the 
environment.
    (d) Qualified Alternative Fuel Motor Vehicle Defined.--For purposes 
of this section, the term ``qualified motor vehicle'' means any motor 
vehicle which is capable of operating only on an alternative fuel.
    (e) Incremental Cost.--For purposes of this section, the 
incremental cost of any qualified alternative fuel motor vehicle is 
equal to the amount of the excess of the manufacturer's suggested 
retail price for such vehicle over such price for a gasoline or diesel 
motor vehicle of the same model.
    (f) Authorization of Appropriations.--For the purposes of this 
section, there are authorized to be appropriated $100,000,000 annually 
for each of the fiscal years 2002 through 2006.

                      Subtitle B--Renewable Energy

SEC. 710. RESIDENTIAL RENEWABLE ENERGY GRANT PROGRAM.

    (a) In General.--The Secretary of Energy shall develop and 
implement a grant program that to offset a portion of the total cost of 
certain eligible residential renewable energy systems.
    (b) Eligibility.--Grants may be awarded for any of the following:
            (1) new installation of an eligible residential renewable 
        energy system for an existing dwelling unit,
            (2) purchase of an existing dwelling unit with an eligible 
        residential renewable energy system that was installed prior to 
        the date of enactment of this section,
            (3) addition to or augmentation of an existing eligible 
        residential renewable energy system installed on a dwelling 
        unit prior to the date of enactment of this section, provided 
        that any such addition or augmentation results in additional 
        electricity, heat, or other useful energy, or
            (4) construction of a new home or rental property which 
        includes an eligible residential renewable energy system.
    (c) Total Cost.--
            (1) In general.--For purposes of this section, ``total 
        cost'' means expenditure of funds for the following:
                    (A) any equipment whose primary purpose is to 
                provide for the collection, conversion, transfer, 
                distribution, storage or control of electricity or heat 
                generated from renewable energy,
                    (B) installation charges,
                    (C) labor costs properly allocable to the onsite 
                preparation, assembly, or original installation of the 
                system, and
                    (D) piping or wiring to interconnect such system to 
                the dwelling unit.
            (2) Leased systems.--In the case of a system that is 
        leased, ``total cost'' means the principle recovery portion of 
        all lease payments scheduled to be made during the full term of 
        the lease, excluding interest charges and maintenance expenses.
            (3) Existing systems.--In the case of addition to or 
        augmentation of an existing system, ``total cost'' shall 
        include only those expenditures related to the incremental cost 
        of the addition or augmentation, and not the full cost of the 
        system.
    (d) Cost Buy-Down.--Grants provided under this section shall not 
exceed $3,000 per eligible residential renewable energy system, and 
shall be limited further as follows:
            (1) For fiscal years 2002 and 2003, grants provided under 
        this section shall be limited to the smaller of--
                    (A) 50 percent of the total cost of the energy 
                system, or
                    (B) $3.00 per watt of system electricity output or 
                equivalent.
            (2) For fiscal years 2004 and 2005, grants provided under 
        this section shall be limited to the smaller of--
                    (A) 40 percent of the total cost of the energy 
                system, or
                    (B) $2.50 per watt of system electricity output.
            (3) For fiscal years 2006 and 2007, grants provided under 
        this section shall be limited to the smaller of--
                    (A) 30 percent of the total cost of the energy 
                system, or
                    (B) $2.00 per watt of system electricity output.
            (4) For fiscal years 2008 and 2009, grants provided under 
        this section shall be limited to the smaller of--
                    (A) 20 percent of the total cost of the energy 
                system, or
                    (B) $1.50 per watt of system electricity output.
            (5) For fiscal years 2010 and 2011, grants provided under 
        this section shall be limited to the smaller of--
                    (A) 10 percent of the total cost of the energy 
                system, or
                    (B) $1.00 per watt of system electricity output.
    (e) Limitations.--No grant shall be allowed under this section for 
an eligible residential renewable energy system unless--
            (1) such expenditure is made for property installed on or 
        in connection with a dwelling unit which is located in the 
        United States and which is used as a residence,
            (2) in the case of solar water heating equipment, such 
        equipment 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
            (3) such system meets appropriate fire and electric code 
        requirements.
    (f) Definitions.--For purposes of this section.--
            (1) Renewable energy system.--The term ``renewable energy 
        system'' means property that uses any of the following 
        renewable energy forms to create electricity, heat, or other 
        forms of useful energy:
                    (A) solar thermal,
                    (B) solar photovoltaic,
                    (C) wind,
                    (D) biomass,
                    (E) hydroelectric, or
                    (F) geothermal.
            (2) Solar panels.--No expenditure relating to a solar panel 
        or other property installed as a roof (or portion thereof) 
        shall fail to be treated as property described in paragraph (1) 
        solely because it constitutes a structural component of the 
        structure on which it is installed.
            (3) Energy storage medium.--Expenditures which 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 shall not be taken into account for purposes of 
        this section.
    (g) Special Rules.--For purposes of this section--
            (1) Tenant-stockholder in cooperative housing 
        corporation.--In the case of an individual who is a tenant-
        stockholder (as defined in 26 U.S.C. 216) in a cooperative 
        housing corporation (as defined in such section), such 
        individual shall be treated as having made his tenant-
        stockholder's proportionate share (as defined in 26 U.S.C. 
        216(b)(3)) of any expenditures of such corporation.
            (2) Condominiums.--
                    (A) In general.--In the case of an individual who 
                is a member of a condominium management association 
                with respect to a condominium which he owns, such 
                individual shall be treated as having made his 
                proportionate share of any expenditures of such 
                association.
                    (B) Condominium management association.--For 
                purposes of this paragraph, the term ``condominium 
                management association'' means an organization which 
                meets the requirements of paragraph (1) of 26 U.S.C. 
                528(c) (other than subparagraph (E) thereof) with 
                respect to a condominium project substantially all of 
                the units of which are used as residences.
            (3) Renewable energy systems for multiple dwellings.--
                    (A) In general.--Any expenditure otherwise 
                qualifying as an expenditure described in paragraph (1) 
                of subsection (c) 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 
                expenditure described in subparagraph (A), the amount 
                of the grant available under subsection (d) shall be 
                computed separately with respect to the amount of the 
                expenditure made for each dwelling unit.
    (h) Annual Report.--The Secretary shall submit to Congress and the 
President an annual report on grants distributed pursuant to this 
section. The report shall include, at minimum, the following:
            (1) a summary of the eligible residential renewable energy 
        systems receiving grants in the year just concluded,
            (2) an estimate of new renewable energy generation 
        installed as a result of grants awarded, and its distribution 
        by renewable energy source and geographic location,
            (3) evidence that the program is contributing to declining 
        costs for renewable energy technologies, and
            (4) description of the methods used to award such grants.
    (i) Authorization of Appropriations.--For the purposes of this 
section, there are authorized to be appropriated $30,000,000 for fiscal 
2002 and such sums as are necessary for each fiscal year thereafter, 
but not to exceed $150,000,000 in any fiscal year.

SEC. 711. ASSESSMENT OF RENEWABLE ENERGY RESOURCES.

    (a) In General.--No later than twelve months after the date of 
enactment of this section, the Secretary of Energy shall submit to the 
Congress an assessment of all renewable energy resources available 
within the United States.
    (b) Resource Assessment.--Such report shall include a detailed 
inventory describing the available amount and characteristics of solar, 
wind, biomass, geothermal, hydroelectric and other renewable energy 
sources, and an estimate of the costs needed to develop each resource. 
The report shall also include such other information as the Secretary 
of Energy believes would be useful in siting renewable energy 
generation, such as appropriate terrain, population and load centers, 
nearby energy infrastructure, and location of energy and water 
resources.
    (c) Availability.--The information and cost estimates in this 
report shall be updated annually and made available to the public, 
along with the data used to create the report.
    (d) Authorization of Appropriations.--For the purposes of carrying 
out this section, there are authorized to be appropriated $10,000,000 
for fiscal years 2002 through 2006.

               Subtitle C--Hydroelectric Licensing Reform

SEC. 721. SHORT TITLE.

    This Act may be cited as the ``Hydroelectric Licensing Process 
Improvement Act of 2001''.

SEC. 722. FINDINGS.

    Congress finds that--
            (1) hydroelectric power is an irreplaceable source of 
        clean, economic, renewable energy with the unique capability of 
        supporting reliable electric service while maintaining 
        environmental quality;
            (2) hydroelectric power is the leading renewable energy 
        resource of the United States;
            (3) hydroelectric power projects provide multiple benefits 
        to the United States, including recreation, irrigation, flood 
        control, water supply, and fish and wildlife benefits;
            (4) in the next 15 years, the bulk of all non-Federal 
        hydroelectric power capacity in the United States is due to be 
        relicensed by the Federal Energy Regulatory Commission;
            (5) the process of licensing hydroelectric projects by the 
        Commission--
                    (A) does not produce optimal decisions, because the 
                agencies that participate in the process are not 
                required to consider the full effects of their 
                mandatory and recommended conditions on a license;
                    (B) is inefficient, in part because agencies do not 
                always submit their mandatory and recommended 
                conditions by a time certain;
                    (C) is burdened by uncoordinated environmental 
                reviews and duplicative permitting authority; and
                    (D) is burdensome for all participants and too 
                often results in litigation; and
            (6) while the alternative licensing procedures available to 
        applicants for hydroelectric project licenses provide important 
        opportunities for the collaborative resolution of many of the 
        issues in hydroelectric project licensing, those procedures are 
        not appropriate in every case and cannot substitute for 
        statutory reforms of the hydroelectric licensing process.

SEC. 723. PURPOSE.

    The purpose of this Act is to achieve the objective of relicensing 
hydroelectric power projects to maintain high environmental standards 
while preserving low cost power by--
            (1) requiring agencies to consider the full effects of 
        their mandatory and recommended conditions on a hydroelectric 
        power license and to document the consideration of a broad 
        range of factors;
            (2) requiring the Federal Energy Regulatory Commission to 
        impose deadlines by which Federal agencies must submit proposed 
        mandatory and recommended conditions to a license; and
            (3) making other improvements in the licensing process.

SEC. 724. PROCESS FOR CONSIDERATION BY FEDERAL AGENCIES OF CONDITIONS 
              TO LICENSES.

    (a) In general.--Part I of the Federal Power Act (16 U.S.C. 791a et 
seq.) is amended by adding at the end the following:

``SEC. 32. PROCESS FOR CONSIDERATION BY FEDERAL AGENCIES OF CONDITIONS 
              TO LICENSES.

    ``(a) Definitions.--In this section:
            ``(1) Condition.--The term `condition' means--
                    ``(A) a condition to a license or a project on a 
                Federal reservation determined by a consulting agency 
                for the purpose of the first proviso of section 4(e); 
                and
                    ``(B) a prescription relating to the construction, 
                maintenance, or operation of a fishway determined by a 
                consulting agency for the purpose of the first sentence 
                of section 18.
            ``(2) Consulting agency.--The term `consulting agency' 
        means--
                    ``(A) in relation to a condition described in 
                paragraph (1)(A), the Federal agency with 
                responsibility for supervising the reservation; and
                    ``(B) in relation to a condition described in 
                paragraph (1)(B), the Secretary of the Interior or the 
                Secretary of Commerce, as appropriate.
    ``(b) Factors To Be Considered.--
            ``(1) In general.--In determining a condition, a consulting 
        agency shall take into consideration--
                    ``(A) the impacts of the condition on--
                            ``(i) economic and power values;
                            ``(ii) electric generation capacity and 
                        system reliability;
                            ``(iii) air quality (including 
                        consideration of the impacts on greenhouse gas 
                        emissions); and
                            ``(iv) drinking, flood control, irrigation, 
                        navigation, or recreation water supply;
                    ``(B) compatibility with other conditions to be 
                included in the license, including mandatory conditions 
                of other agencies, when available; and
                    ``(C) means to ensure that the condition addresses 
                only direct project environmental impacts, and does so 
                at the lowest project cost.
            ``(2) Documentation.--
                    ``(A) In general.--In the course of the 
                consideration of factors under paragraph (1) and before 
                any review under subsection (e), a consulting agency 
                shall create written documentation detailing, among 
                other pertinent matters, all proposals made, comments 
                received, facts considered, and analyses made regarding 
                each of those factors sufficient to demonstrate that 
                each of the factors was given full consideration in 
                determining the condition to be submitted to the 
                Commission.
                    ``(B) Submission to the commission.--A consulting 
                agency shall include the documentation under 
                subparagraph (A) in its submission of a condition to 
                the Commission.
    ``(c) Scientific Review.--
            ``(1) In general.--Each condition determined by a 
        consulting agency shall be subjected to appropriately 
        substantiated scientific review.
            ``(2) Data.--For the purpose of paragraph (1), a condition 
        shall be considered to have been subjected to appropriately 
        substantiated scientific review if the review--
                    ``(A) was based on current empirical data or field-
                tested data; and
                    ``(B) was subjected to peer review.
    ``(d) Relationship to Impacts on Federal Reservation.--In the case 
of a condition for the purpose of the first proviso of section 4(e), 
each condition determined by a consulting agency shall be directly and 
reasonably related to the impacts of the project within the Federal 
reservation.
    ``(e) Administrative Review.--
            ``(1) Opportunity for review.--Before submitting to the 
        Commission a proposed condition, and at least 90 days before a 
        license applicant is required to file a license application 
        with the Commission, a consulting agency shall provide the 
        proposed condition to the license applicant and offer the 
        license applicant an opportunity to obtain expedited review 
        before an administrative law judge or other independent 
        reviewing body of--
                    ``(A) the reasonableness of the proposed condition 
                in light of the effect that implementation of the 
                condition will have on the energy and economic values 
                of a project; and
                    ``(B) compliance by the consulting agency with the 
                requirements of this section, including the requirement 
                to consider the factors described in subsection (b)(1).
            ``(2) Completion of review.--
                    ``(A) In general.--A review under paragraph (1) 
                shall be completed not more than 180 days after the 
                license applicant notifies the consulting agency of the 
                request for review.
                    ``(B) Failure to make timely completion of 
                review.--If review of a proposed condition is not 
                completed within the time specified by subparagraph 
                (A), the Commission may treat a condition submitted by 
                the consulting agency as a recommendation is treated 
                under section 10(j).
            ``(3) Remand.--If the administrative law judge or reviewing 
        body finds that a proposed condition is unreasonable or that 
        the consulting agency failed to comply with any of the 
        requirements of this section, the administrative law judge or 
        reviewing body shall--
                    ``(A) render a decision that--
                            ``(i) explains the reasons for a finding 
                        that the condition is unreasonable and may make 
                        recommendations that the administrative law 
                        judge or reviewing body may have for the 
                        formulation of a condition that would not be 
                        found unreasonable; or
                            ``(ii) explains the reasons for a finding 
                        that a requirement was not met and may describe 
                        any action that the consulting agency should 
                        take to meet the requirement; and
                    ``(B) remand the matter to the consulting agency 
                for further action.
            ``(4) Submission to the commission.--Following 
        administrative review under this subsection, a consulting 
        agency shall--
                    ``(A) take such action as is necessary to--
                            ``(i) withdraw the condition;
                            ``(ii) formulate a condition that follows 
                        the recommendation of the administrative law 
                        judge or reviewing body; or
                            ``(iii) otherwise comply with this section; 
                        and
                    ``(B) include with its submission to the Commission 
                of a proposed condition--
                            ``(i) the record on administrative review; 
                        and
                            ``(ii) documentation of any action taken 
                        following administrative review.
    ``(f) Submission of Final Condition.--
            ``(1) In general.--After an applicant files with the 
        Commission an application for a license, the Commission shall 
        set a date by which a consulting agency shall submit to the 
        Commission a final condition.
            ``(2) Limitation.--Except as provided in paragraph (3), the 
        date for submission of a final condition shall be not later 
        than 1 year after the date on which the Commission gives the 
        consulting agency notice that a license application is ready 
        for environmental review.
            ``(3) Default.--If a consulting agency does not submit a 
        final condition to a license by the date set under paragraph 
        (1)--
                    ``(A) the consulting agency shall not thereafter 
                have authority to recommend or establish a condition to 
                the license; and
                    ``(B) the Commission may, but shall not be required 
                to, recommend or establish an appropriate condition to 
                the license that--
                            ``(i) furthers the interest sought to be 
                        protected by the provision of law that 
                        authorizes the consulting agency to propose or 
                        establish a condition to the license; and
                            ``(ii) conforms to the requirements of this 
                        Act.
            ``(4) Extension.--The Commission may make 1 extension, of 
        not more than 30 days, of a deadline set under paragraph (1).
    ``(g) Analysis by the Commission.--
            ``(1) Economic analysis.--The Commission shall conduct an 
        economic analysis of each condition submitted by a consulting 
        agency to determine whether the condition would render the 
        project uneconomic.
            ``(2) Consistency with this section.--In exercising 
        authority under section 10(j)(2), the Commission shall consider 
        whether any recommendation submitted under section 10(j)(1) is 
        consistent with the purposes and requirements of subsections 
        (b) and (c) of this section.
    ``(h) Commission Determination on Effect of Conditions.--When 
requested by a license applicant in a request for rehearing, the 
Commission shall make a written determination on whether a condition 
submitted by a consulting agency--
            ``(1) is in the public interest, as measured by the impact 
        of the condition on the factors described in subsection (b)(1);
            ``(2) was subjected to scientific review in accordance with 
        subsection (c);
            ``(3) relates to direct project impacts within the 
        reservation, in the case of a condition for the first proviso 
        of section 4(e);
            ``(4) is reasonable;
            ``(5) is supported by substantial evidence; and
            ``(6) is consistent with this Act and other terms and 
        conditions to be included in the license.''.
    (b) Conforming and Technical Amendments.--
            (1) Section 4.--Section 4(e) of the Federal Power Act (16 
        U.S.C. 797(e)) is amended--
                    (A) in the first proviso of the first sentence by 
                inserting after ``conditions'' the following: ``, 
                determined in accordance with section 32,''; and
                    (B) in the last sentence, by striking the period 
                and inserting `(including consideration of the impacts 
                on greenhouse gas emissions)'.
            (2) Section 18.--Section 18 of the Federal Power Act (16 
        U.S.C. 811) is amended in the first sentence by striking 
        ``prescribed by the Secretary of Commerce'' and inserting 
        ``prescribed, in accordance with section 32, by the Secretary 
        of the Interior or the Secretary of Commerce, as appropriate.''

SEC. 725. COORDINATED ENVIRONMENTAL REVIEW PROCESS.

    Part I of the Federal Power Act (16 U.S.C. 791a et seq.) (as 
amended by section 4) is amended by adding at the end the following:

``SEC. 33. COORDINATED ENVIRONMENTAL REVIEW PROCESS.

    ``(a) Lead Agency Responsibility.--The Commission, as the lead 
agency for environmental reviews under the National Environmental 
Policy Act of 1969 (42 U.S.C. 4321 et seq.) for projects licensed under 
this part, shall conduct a single consolidated environmental review--
            ``(1) for each such project; or
            ``(2) if appropriate, for multiple projects located in the 
        same area.
    ``(b) Consulting Agencies.--In connection with the formulation of a 
condition in accordance with section 32, a consulting agency shall not 
perform any environmental review in addition to any environmental 
review performed by the Commission in connection with the action to 
which the condition relates.
    ``(c) Deadlines.--
            ``(1) In general.--The Commission shall set a deadline for 
        the submission of comments by Federal, State, and local 
        government agencies in connection with the preparation of any 
        environmental impact statement or environmental assessment 
        required for a project.
            ``(2) Considerations.--In setting a deadline under 
        paragraph (1), the Commission shall take into consideration--
                    ``(A) the need of the license applicant for a 
                prompt and reasonable decision;
                    ``(B) the resources of interested Federal, State, 
                and local government agencies; and
                    ``(C) applicable statutory requirements.''.

SEC. 726. STUDY OF SMALL HYDROELECTRIC PROJECTS.

    (a) In General.--Not later than 18 months after the date of 
enactment of this Act, the Federal Energy Regulatory Commission shall 
submit to the Committee on Energy and Natural Resources of the Senate 
and the Committee on Commerce of the House of Representatives a study 
of the feasibility of establishing a separate licensing procedure for 
small hydroelectric projects.
    (b) Definition of Small Hydroelectric Project.--The Commission may 
by regulation define the term ``small hydroelectric project'' for the 
purpose of subsection (a), except that the term shall include at a 
minimum a hydroelectric project that has a generating capacity of 5 
megawatts or less.

  TITLE VIII--ELECTRIC SUPPLY RELIABILITY; PURPA REPEAL; PUHCA REPEAL

          Subtitle A--Electric Energy Transmission Reliability

SEC. 801. SHORT TITLE.

    The subtitle may be cited as the ``National Electric Reliability 
Act''.

SEC. 802. ELECTRIC ENERGY TRANSMISSION RELIABILITY.

    (a) Electric Reliability Organization and Oversight.--
            (1) In general.--The Federal Power Act is amended by adding 
        the following new section after section 214:

``SEC. 215. ELECTRIC RELIABILITY ORGANIZATION AND OVERSIGHT.

    ``(a) Definitions.--As used in this section:
            ``(1) Affiliated regional reliability entity.--The term 
        `affiliated regional reliability entity' means an entity 
        delegated authority under the provisions of subsection (h).
            ``(2) Bulk power system.--The term `bulk power system' 
        means all facilities and control systems necessary for 
        operating an interconnected transmission grid (or any portion 
        thereof), including high-voltage transmission lines; 
        substations; control centers; communications; data, and 
        operations planning facilities; and the output of generating 
        units necessary to maintain transmission system reliability.
            ``(3) Electric reliability organization, or organization.--
        The term `Electric Reliability Organization' or `Organization' 
        means the organization approved by the Commission under 
        subsection (d)(4).
            ``(4) Entity rule.--The term `entity rule' means a rule 
        adopted by an affiliated regional reliability entity for a 
        specific region and designed to implement or enforce one or 
        more Organization Standards. An entity rule shall be approved 
        by the organization and once approved, shall be treated as an 
        Organization Standard.
            ``(5) Industry sector.--The term `industry sector' means a 
        group of users of the bulk power system with substantially 
        similar commercial interests, as determined by the Board of the 
        Electric Reliability Organization.
            ``(6) Interconnection.--The term `interconnection' means a 
        geographic area in which the operation of bulk power system 
        components is synchronized such that the failure of one or more 
        such components may adversely affect the ability of the 
        operators of other components within the interconnection to 
        maintain safe and reliable operation of the facilities within 
        their control.
            ``(7) Organization standard.--The term `Organization 
        Standard' means a policy or standard duly adopted by the 
        Electric Reliability Organization to provide for the reliable 
        operation of a bulk power system.
            ``(8) Public interest group.--The term `public interest 
        group' means any nonprofit private or public organization that 
        has an interest in the activities of the Electric Reliability 
        Organization, including, but not limited to, ratepayer 
advocates, environmental groups, and State and local government 
organizations that regulate market participants and promulgate 
government policy.
            ``(9) Variance.--The term `variance' means an exception or 
        variance from the requirements of an Organization Standard 
        (including a proposal for an Organization Standard where there 
        is no Organization Standard) that is adopted by an affiliated 
        regional reliability entity and applicable to all or a part of 
        the region for which the affiliated regional reliability entity 
        is responsible. A variance shall be approved by the 
        organization and once approved, shall be treated as an 
        Organization Standard.
            ``(10) System operator.--The term `system operator' means 
        any entity that operates or is responsible for the operation of 
        a bulk power system, including but not limited to a control 
        area operator, an independent system operator, a regional 
        transmission organization, a transmission company, a 
        transmission system operator, or a regional security 
        coordinator.
            ``(11) User of the bulk power system.--The term `user of 
        the bulk power system' means any entity that sells, purchases, 
        or transmits electric power over a bulk power system, or that 
        owns, operates, or maintains facilities or control systems that 
        are part of a bulk power system, or that is a system operator.
    ``(b) Commission Authority.--
            ``(1) Within the United States, the Commission shall have 
        jurisdiciton over the Electric Reliability Organization, all 
        affiliated regional reliability entites, all system operators, 
        and all users of the bulk-power system, for purposes of 
        approving and enforcing compliance with the requirements of 
        this section.
            ``(2) The Commission may, by rule, define any other term 
        used in this section, provided such definition is consistent 
        with the definitions in, and the purpose and intent of, this 
        Act.
            ``(3) Not later than 90 days after the date of enactment of 
        this section, the Commission shall issue a proposed rule for 
        implementing the requirements of this section. The Commission 
        shall provide notice and opportunity for comment on the 
        proposed rule. The Commission shall issue a final rule under 
        this subsection within 180 days after the date of enactment of 
        this section.
            ``(4) Nothing in this section shall be construed as 
        limiting or impairing any authority of the Commission under any 
        other provision of this Act, including its exclusive authority 
        to determine rates, terms, and conditions of transmission 
        services subject to its jurisdiction.
    ``(c) Existing Reliability Standards.--Following enactment of this 
section, and prior to the approval of an organization under subsection 
(d), any entity, including the North American Electric Reliability 
Council and its member regional reliability councils, may file any 
reliability standard, guidance, or practice that such entity would 
propose to be made mandatory and enforceable. The Commission, after 
allowing an opportunity to submit comments, may approve any such 
proposed mandatory standard, guidance, or practice, or any amendment 
thereto, if it finds that the standard, guidance, or practice, or 
amendment is just, reasonable, not unduly discriminatory or 
preferential, and in the public interest. The Commission may, without 
further proceeding or finding, grant its approval to any standard, 
guidance, or practice for which no substantive objections are filed in 
the comment period. Filed standards, guidances, or practices, including 
any amendments thereto, shall be mandatory and applicable according to 
their terms following approval by the Commission and shall remain in 
effect until--
            ``(1) withdrawn, disapproved, or superseded by an 
        Organization Standard, issued or approved by the Electric 
        Reliability Organization and made effective by the Commission 
        under subsection (e); or
            ``(2) disapproved by the Commission if, upon complaint or 
        upon its own motion and after notice and an opportunity for 
        comment, the Commission finds the standard, guidance, or 
        practice unjust, unreasonable, unduly discriminatory, or 
        preferential or not in the public interest.
Standards, guidances, or practices in effect pursuant to the provisions 
of this subsection shall be enforceable by the Commission.
    ``(d) Organization Approval.--
            ``(1) Following the issuance of a final Commission rule 
        under subsection (b)(3), an entity may submit an application to 
        the Commission for approval as the Electric Reliability 
        Organization. The applicant shall specify in its application 
        its governance and procedures, as well as its funding mechanism 
        and initial funding requirements.
            ``(2) The Commission shall provide public notice of the 
        application and afford interested parties an opportunity to 
        comment.
            ``(3) The Commission shall approve the application if the 
        Commission determines that the applicant--
                    ``(A) has the ability to develop, implement, and 
                enforce standards that provide for an adequate level of 
                reliability of the bulk power system;
                    ``(B) permits voluntary membership to any user of 
                the bulk power system or public interest group;
                    ``(C) assures fair representation of its members in 
                the selection of its directors and fair management of 
                its affairs, taking into account the need for 
                efficiency and effectiveness in decisionmaking and 
                operations and the requirements for technical 
                competency in the development of Organization Standards 
                and the exercise of oversight of bulk power system 
                reliability;
                    ``(D) assures that no two industry sectors have the 
                ability to control, and no one industry sector has the 
                ability to veto, the Electric Reliability 
                Organization's discharge of its responsibilities 
                (including actions by committees recommending standards 
                to the board or other board actions to implement and 
                enforce standards);
                    ``(E) provides for governance by a board wholly 
                comprised of independent directors;
                    ``(F) provides a funding mechanism and requirements 
                that are just, reasonable, and not unduly 
                discriminatory or preferential and are in the public 
                interest, and which satisfy the requirements of 
                subsection (l);
                    ``(G) establishes procedures for development of 
                Organization Standards that provide reasonable notice 
                and opportunity for public comment, taking into account 
                the need for efficiency and effectiveness in 
                decisionmaking and operations and the requirements for 
                technical competency in the development of Organization 
                Standards, and which standards development process has 
                the following attributes:
                            ``(i) openness,
                            ``(ii) balance of interests, and
                            ``(iii) due process, except that the 
                        procedures may include alternative procedures 
                        for emergencies;
                    ``(H) establishes fair and impartial procedures for 
                implementation and enforcement of Organization 
                Standards, either directly or through delegation to an 
                affiliated regional reliability entity, including the 
                imposition of penalties, limitations on activities, 
                functions, or operations, or other appropriate 
                sanctions;
                    ``(I) establishes procedures for notice and 
                opportunity for public observation of all meetings, 
                except that the procedures for public observation may 
                include alternative procedures for emergencies or for 
                the discussion of information the directors determine 
                should take place in closed session, such as 
                litigation, personnel actions, or commercially 
                sensitive information;
                    ``(J) provides for the consideration of 
                recommendations of States and State commissions; and
                    ``(K) addresses other matters that the Commission 
                may deem necessary or appropriate to ensure that the 
                procedures, governance, and funding of the Electric 
                Reliability Organization are just, reasonable, not 
                unduly discriminatory or preferential, and are in the 
                public interest.
            ``(4) The Commission shall approve only one Electric 
        Reliability Organization. If the Commission receives two or 
        more timely applications that satisfy the requirements of this 
        subsection, the Commission shall approve only the application 
        it concludes will best implement the provisions of this 
        section.
    ``(e) Establishment of and Modifications to Organization 
Standards.--
            ``(1) The Electric Reliability Organization shall file with 
        the Commission any new or modified organization standards, 
        including any variances or entity rules, and the Commission 
        shall follow the procedures under paragraph (2) for review of 
        that filing.
            ``(2) Submissions under paragraph (1) shall include:
                    ``(A) a concise statement of the purpose of the 
                proposal, and
                    ``(B) a record of any proceedings conducted with 
                respect to such proposal.
        The Commission shall provide notice of the filing of such 
        proposal and afford interested entities 30 days to submit 
        comments. The Commission, after taking into consideration any 
        submitted comments, shall approve or disapprove such proposal 
        not later than 60 days after the deadline for the submission of 
        comments, except that the Commission may extend the 60 day 
        period for an additional 90 days for good cause, and except 
        further that if the Commission does not act to approve or 
        disapprove a proposal within the foregoing periods, the 
        proposal shall go into effect subject to its terms, without 
        prejudice to the authority of the Commission thereafter to 
        modify the proposal in accordance with the standards and 
        requirements of this section. Proposals approved by the 
        Commission shall take effect according to their terms but not 
        earlier than 30 days after the effective date of the 
        Commission's order, except as provided in paragraph (3) of this 
        subsection.
            ``(3)(A) In the exercise of its review responsibilities 
        under this subsection, the Commission shall give due weight to 
        the technical expertise of the Electric Reliability 
        Organization with respect to the content of a new or modified 
        organization standard, but shall not defer to the organization 
        with respect to the effect of the standard on competition. The 
        Commission shall approve a proposed new or modified 
        organization standard if it determines the proposal to be just, 
        reasonable, not unduly discriminatory or preferential, and in 
        the public interest.
            ``(B) An existing or proposed organization standard which 
        is disapproved in whole or in part by the Commission shall be 
        remanded to the Electric Reliability Organization for further 
        consideration.
            ``(C) The Commission, on its own motion or upon complaint, 
        may direct the Electric Reliability Organization to develop an 
        organization standard, including modification to an existing 
        organization standard, addressing a specific matter by a date 
        certain if the Commission considers such new or modified 
        organization standard necessary or appropriate to further 
the purposes of this section. The Electric Reliability Organization 
shall file any such new or modified organization standard in accordance 
with this subsection.
            ``(D) An affiliated regional reliability entity may propose 
        a variance or entity rule to the Electric Reliability 
        Organization. The affiliated regional reliability entity may 
        request that the Electric Reliability Organization expedite 
        consideration of the proposal, and may file a notice of such 
        request with the Commission, if expedited consideration is 
        necessary to provide for bulk-power system reliability. If the 
        Electric Reliability Organization fails to adopt the variance 
        or entity rule, either in whole or in part, the affiliated 
        regional reliability entity may request that the Commission 
        review such action. If the Commission determines, after its 
        review of such a request, that the action of the Electric 
        Reliability Organization did not conform to the applicable 
        standards and procedures approved by the Commission, or if the 
        Commission determines that the variance or entity rule is just, 
        reasonable, not unduly discriminatory or preferential, and in 
        the public interest, and that the Electric Reliability 
        Organization has unreasonably rejected the proposed variance or 
        entity rule, then the Commission may remand the proposed 
        variance or entity rule for further consideration by the 
        Electric Reliability Organization or may direct the Electric 
        Reliability Organization or the affiliated regional reliability 
        entity to develop a variance or entity rule consistent with 
        that requested by the affiliated regional reliability entity. 
        Any such variance or entity rule proposed by an affiliated 
        regional reliability entity shall be submitted to the Electric 
        Reliability Organization for review and filing with the 
        Commission in accordance with the procedures specified in this 
        subsection.
            ``(E) Notwithstanding any other provision of this 
        subsection, a proposed organization standard or amendment shall 
        take effect according to its terms if the Electric Reliability 
        Organization determines that an emergency exists requiring that 
        such proposed organization standard or amendment take effect 
        without notice or comment. The Electric Reliability 
        Organization shall notify the Commission immediately following 
        such determination and shall file such emergency organization 
        standard or amendment with the Commission not later than 5 days 
        following such determination and shall include in such filing 
        an explanation of the need for such emergency standard. 
        Subsequently, the Commission shall provide notice of the 
        organization standard or amendment for comment, and shall 
        follow the procedures set out in paragraphs (2) and (3) for 
        review of the new or modified organization standard. Any such 
        organization standard that has gone into effect shall remain in 
        effect unless and until suspended or disapproved by the 
        Commission. If the Commission determines at any time that the 
        emergency organization standard or amendment is not necessary, 
        the Commission may suspend such emergency organization standard 
        or amendment.
            ``(4) All users of the bulk power system shall comply with 
        any organization standard that takes effect under this section.
    ``(f) Coordination With Canada and Mexico.--The Electric 
Reliability Organization shall take all appropriate steps to gain 
recognition in Canada and Mexico. The United States shall use its best 
efforts to enter into international agreements with the appropriate 
governments of Canada and Mexico to provide for effective compliance 
with organization standards and to provide for the effectiveness of the 
Electric Reliability Organization in carrying out its mission and 
responsibilities. All actions taken by the Electric Reliability 
Organization, any affiliated regional reliability entity, and the 
Commission shall be consistent with the provisions of such 
international agreements.
    ``(g) Changes in Procedures, Governance, or Funding.--
            ``(1) The Electric Reliability Organization shall file with 
        the Commission any proposed change in its procedures, 
        governance, or funding, or any changes in the affiliated 
        regional reliability entity's procedures, governance, or 
        funding relating to delegated functions, and shall include with 
        the filing an explanation of the basis and purpose for the 
        change.
            ``(2) A proposed procedural change may take effect 90 days 
        after filing with the Commission if the change constitutes a 
        statement of policy, practice, or interpretation with respect 
        to the meaning or enforcement of an existing procedure. 
        Otherwise, a proposed procedural change shall take effect only 
        upon a finding by the Commission, after notice and opportunity 
        for comments, that the change is just, reasonable, not unduly 
        discriminatory or preferential, is in the public interest, and 
        satisfies the requirements of subsection (d)(4).
            ``(3) A change in governance or funding shall not take 
        effect unless the Commission finds that the change is just, 
        reasonable, not unduly discriminatory or preferential, in the 
        public interest, and satisfies the requirements of subsection 
        (d)(4).
            ``(4) The Commission, upon complaint or upon its own 
        motion, may require the Electric Reliability Organization to 
        amend the procedures, governance, or funding if the Commission 
        determines that the amendment is necessary to meet the 
        requirements of this section. The Electric Reliability 
        Organization shall file the amendment in accordance with 
        paragraph (1) of this subsection.
    ``(h) Delegations of Authority.--
            ``(1) The Electric Reliability Organization shall, upon 
        request by an entity, enter into an agreement with such entity 
        for the delegation of authority to implement and enforce 
        compliance with organization standards in a specified 
        geographic area if the organization finds that the entity 
        requesting the delegation satisfies the requirements of 
        subparagraphs (A), (B), (C), (D), (F), (J), and (K) of 
        subsection (d)(4), and if the delegation promotes the effective 
and efficient implementation and administration of bulk power system 
reliability. The Electric Reliability Organization may enter into an 
agreement to delegate to the entity any other authority, except that 
the Electric Reliability Organization shall reserve the right to set 
and approve standards for bulk power system reliability.
            ``(2) The Electric Reliability Organization shall file with 
        the Commission any agreement entered into under this subsection 
        and any information the Commission requires with respect to the 
        affiliated regional reliability entity to which authority is to 
        be delegated. The Commission shall approve the agreement, 
        following public notice and an opportunity for comment, if it 
        finds that the agreement meets the requirements of paragraph 
        (1), and is just, reasonable, not unduly discriminatory or 
        preferential, and is in the public interest. A proposed 
        delegation agreement with an affiliated regional reliability 
        entity organized on an interconnection-wide basis shall be 
        rebuttably presumed by the Commission to promote the effective 
        and efficient implementation and administration of bulk power 
        system reliability. No delegation by the Electric Reliability 
        Organization shall be valid unless approved by the Commission.
            ``(3)(A) A delegation agreement entered into under this 
        subsection shall specify the procedures for an affiliated 
        regional reliability entity to propose entity rules or 
        variances for review by the Electric Reliability Organization. 
        With respect to any such proposal that would apply on an 
        interconnection-wide basis, the Electric Reliability 
        Organization shall presume such proposal valid if made by an 
        interconnection-wide affiliated regional reliability entity 
        unless the Electric Reliability Organization makes a written 
        finding that the proposal--
                    ``(i) was not developed in a fair and open process 
                that provided an opportunity for all interested parties 
                to participate;
                    ``(ii) has a significant adverse impact on 
                reliability or commerce in other interconnections;
                    ``(iii) fails to provide a level of reliability of 
                the bulk-power system within the interconnection such 
                that it would constitute a serious and substantial 
                threat to public health, safety, welfare, or national 
                security; or
                    ``(iv) creates a serious and substantial burden on 
                competitive markets within the interconnection that is 
                not necessary for reliability.
            ``(B) With respect to any such proposal that would apply 
        only to part of an interconnection, the Electric Reliability 
        Organization shall find such proposal valid if the affiliated 
        regional reliability entity or entities making the proposal 
        demonstrate that it--
                    ``(i) was developed in a fair and open process that 
                provided an opportunity for all interested parties to 
                participate;
                    ``(ii) would not have an adverse impact on commerce 
                that is not necessary for reliability;
                    ``(iii) provides a level of bulk power system 
                reliability adequate to protect public health, safety, 
                welfare, and national security, and would not have a 
                significant adverse impact on reliability; and
                    ``(iv) in the case of a variance, is based on 
                legitimate differences between regions or between 
                subregions within the affiliated regional reliability 
                entity's geographic area.
        The Electric Reliability Organization shall approve or 
        disapprove such proposal within 120 days, or the proposal shall 
        be deemed approved. Following approval of any such proposal 
        under this paragraph, the Electric Reliability Organization 
        shall seek Commission approval pursuant to the procedures 
        prescribed under subsection (e)(3). Affiliated regional 
        reliability entities may not make requests for approval 
        directly to the Commission except pursuant to subsection 
        (e)(3)(D).
            ``(4) If an affiliated regional reliability entity 
        requests, consistent with paragraph (1) of this subsection, 
        that the Electric Reliability Organization delegate authority 
        to it, but is unable within 180 days to reach agreement with 
        the Electric Reliability Organization with respect to such 
        requested delegation, such entity may seek relief from the 
        Commission. If, following notice and opportunity for comment, 
        the Commission determines that a delegation to the entity would 
        meet the requirements of paragraph (1) above, and that the 
        delegation would be just, reasonable, not unduly discriminatory 
        or preferential, and in the public interest, and that the 
        Electric Reliability Organization has unreasonably withheld 
        such delegation, the Commission may, by order, direct the 
        Electric Reliability Organization to make such delegation.
            ``(5)(A) The Commission may, upon its own motion or upon 
        complaint, and with notice to the appropriate affiliated 
        regional reliability entity or entities, direct the Electric 
        Reliability Organization to propose a modification to an 
        agreement entered into under this subsection if the Commission 
        determines that--
                    ``(i) the affiliated regional reliability entity no 
                longer has the capacity to carry out effectively or 
                efficiently its implementation or enforcement 
                responsibilities under that agreement, has failed to 
                meet its obligations under that agreement, or has 
                violated any provision of this section;
                    ``(ii) the rules, practices, or procedures of the 
                affiliated regional reliability entity no longer 
                provide for fair and impartial discharge of its 
                implementation or enforcement responsibilities under 
                the agreement;
                    ``(iii) the geographic boundary of a transmission 
                entity approved by the Commission is not wholly within 
the boundary of an affiliated regional reliability entity and such 
difference is inconsistent with the effective and efficient 
implementation and administration of bulk power system reliability; or
                    ``(iv) the agreement is inconsistent with another 
                delegation agreement as a result of actions taken under 
                paragraph (4) of this subsection.
            ``(B) Following an order of the Commission issued under 
        subparagraph (A), the Commission may suspend the affected 
        agreement if the Electric Reliability Organization or the 
        affiliated regional reliability entity does not propose an 
        appropriate and timely modification. If the agreement is 
        suspended, the Electric Reliability Organization shall assume 
        the previously delegated responsibilities. The Commission shall 
        allow the Electric Reliability Organization and the affiliated 
        regional reliability entity an opportunity to appeal the 
        suspension.
    ``(i) Organization Membership.--Every system operator shall be 
required to be a member of the electric Reliability Organization and 
shall be required also to be a member of any affiliated regional 
reliability entity operating under an agreement effective pursuant to 
subsection (h) applicable to the region in which the system operator 
operates or is responsible for the operation of bulkpower system 
facilities.
    ``(j) Injunctions and Disciplinary Action.--
            ``(1) Consistent with the range of actions approved by the 
        Commission under subsection (d)(4)(H), the Electric Reliability 
        Organization may impose a penalty, limitation of activities, 
        functions, operations, or other disciplinary action the 
        Electric Reliability Organization finds appropriate against a 
        user of the bulk power system if the Electric Reliability 
        Organization, after notice and an opportunity for interested 
        parties to be heard, issues a finding in writing that the user 
        of the bulk-power system has violated an organization standard. 
        The Electric Reliability Organization shall immediately notify 
        the Commission of any disciplinary action imposed with respect 
        to an act or failure to act of a user of the bulk-power system 
        that affected or threatened to affect bulk power system 
        facilities located in the United States, and the sanctioned 
        party shall have the right to seek modification or rescission 
        of such disciplinary action by the Commission. If the 
        organization finds it necessary to prevent a serious threat to 
        reliability, the organization may seek injunctive relief in a 
        Federal court in the district in which the affected facilities 
        are located.
            ``(2) A disciplinary action taken under paragraph (1) may 
        take effect not earlier than the 30th day after the Electric 
        Reliability Organization files with the Commission its written 
        finding and record of proceedings before the Electric 
        Reliability Organization and the Commission posts its written 
        finding, unless the Commission, on its own motion or upon 
        application by the user of the bulk power system which is the 
        subject of the action, suspends the action. The action shall 
        remain in effect or remain suspended unless and until the 
        Commission, after notice and opportunity for hearing, affirms, 
        sets aside, modifies, or reinstates the action, but the 
        Commission shall conduct such hearing under procedures 
        established to ensure expedited consideration of the action 
        taken.
            ``(3) The Commission, on its own motion or on complaint, 
        may order compliance with an organization standard and may 
        impose a penalty, limitation of activities, functions, or 
        operations, or take such other disciplinary action as the 
        Commission finds appropriate, against a user of the bulk power 
        system with respect to actions affecting or threatening to 
        affect bulk power system facilities located in the United 
        States if the Commission finds, after notice and opportunity 
        for a hearing, that the user of the bulk power system has 
        violated or threatens to violate an organization standard.
            ``(4) The Commission may take such action as is necessary 
        against the Electric Reliability Organization or an affiliated 
        regional reliability entity to assure compliance with an 
        organization standard, or any Commission order affecting the 
        Electric Reliability Organization or an affiliated regional 
        reliability entity.
    ``(k) Reliability Reports.--The Electric Reliability Organization 
shall conduct periodic assessments of the reliability and adequacy of 
the interconnected bulk power system in North America and shall report 
annually to the Secretary of Energy and the Commission its findings and 
recommendations for monitoring or improving system reliability and 
adequacy.
    ``(l) Assessment and Recovery of Certain Costs.--The reasonable 
costs of the Electric Reliability Organization, and the reasonable 
costs of each affiliated regional reliability entity that are related 
to implementation and enforcement of organization standards or other 
requirements contained in a delegation agreement approved under 
subsection (h), shall be assessed by the Electric Reliability 
Organization and each affiliated regional reliability entity, 
respectively, taking into account the relationship of costs to reach 
region and based on an allocation that reflects an equitable sharing of 
the costs among all end users. The Commission shall provide by rule for 
the review of such costs and allocations, pursuant to the standards in 
this subsection and subsection (d)(4)(F).
    ``(m) Savings Provisions.--
            ``(1) The Electric Reliability Organization shall have 
        authority to develop, implement and enforce compliance with 
        standards for the reliable operation of only the bulk power 
        system.
            ``(2) This section does not provide the Electric 
        Reliability Organization or the Commission with the authority 
        to set and enforce compliance with standards for adequacy or 
        safety of electric facilities or services.
            ``(3) Nothing in this section shall be construed to preempt 
        any authority of any State to take action to ensure the safety, 
        adequacy, and reliability of electric service within that 
        State, as long as such action is not inconsistent with any 
        Organization Standard.
            ``(4) Within 90 days of the application of the Electric 
        Reliability Organization or other affected party, the 
        Commission shall issue a final order determining whether a 
        state action is inconsistent with an Organization Standard, 
        after notice and opportunity for comment, taking into 
        consideration any recommendations of the Electric Reliability 
        Organization.
            ``(5) The Commission, after consultation with the Electric 
        Reliability Organization, may stay the effectiveness of any 
        state action, pending the Commission's issuance of a final 
        order.
    ``(n) Regional Advisory Bodies.--The Commission shall establish a 
regional advisory body on the petition of at least two-thirds of the 
States within a region that have more than one-half of their electric 
loan served within the region. A regional advisory body shall be 
composed of one member from each participating State in the region, 
appointed by the Governor of each State, and may include 
representatives of agencies, States, and provinces outside the United 
States, upon execution of an international agreement or agreements 
described in subsection (f). A regional advisory body may provide 
advice to the electric reliability organization, an affiliated regional 
reliability entity, or the Commission regarding the governance of an 
existing or proposed affiliated regional reliability entity within the 
same region, whether an organization standard, entity rule, or variance 
proposed to apply within the region is just, reasonable, not unduly 
discriminatory or preferential, and in the public interest, and whether 
fees proposed to be assessed within the region are just, reasonable, 
not unduly discriminatory or preferential, in the public interest, and 
consistent with the requirements of subsection (l). The Commission may 
give deference to the advice of any such regional advisory body if that 
body is organized on an interconnection-wide basis.
    ``(o) Coordination With Regional Transmission Organizations.--
            ``(1) Each regional transmission organization authorized by 
        the Commission shall be responsible for maintaining the short-
        term reliability of the bulk power system that it operates, 
        consistent with organization standards.
            ``(2) Except as provided in paragraph (5), in connection 
        with a proceeding under subsection (e) to consider a proposed 
        organization standard, each regional transmission organization 
        authorized by the Commission shall report to the Commission, 
        and notify the electric reliability organization and any 
        applicable affiliated regional reliability entity, regarding 
        whether the proposed organization standard hinders or conflicts 
        with that regional transmission organization's ability to 
        fulfill the requirements of any rule, regulation, order, 
        tariff, rate schedule, or agreement accepted, approved or 
        ordered by the Commission. Where such hindrance or conflict is 
        identified, the Commission shall address such hindrance or 
        conflict, and the need for any changes to such rule, order, 
        tariff, rate schedule, or agreement accepted, approved or 
        ordered by the Commission in its order under subsection (e) 
        regarding the proposed standard. Where such hindrance or 
        conflict is identified between a proposed organization standard 
        and a provision of any rule, order, tariff, rate schedule or 
        agreement accepted, approved or ordered by the Commission 
        applicable to a regional transmission organization, nothing in 
        this section shall require a change in the regional 
        transmission organization's obligation to comply with such 
        provision unless the Commission orders such a change and the 
        change becomes effective. If the Commission finds that the 
        tariff, rate schedule, or agreement needs to be changed, the 
        regional transmission organization must expeditiously make a 
        section 205 filing to reflect the change. If the Commission 
        finds that the proposed organization standard needs to be 
        changed, it shall remand the proposed organization standard to 
        the electric reliability organization under subsection 
        (e)(3)(B).
            ``(3) Except as provided in paragraph (5), to the extent 
        hindrances and conflicts arise after approval of a reliability 
        standard under subsection (c) or organization standard under 
        subsection (e), each regional transmission organization 
        authorized by the Commission shall report to the Commission, 
        and notify the electric reliability organization and any 
        applicable affiliated regional reliability entity, regarding 
        any reliability standard approved under subsection (c) or 
        organization standard that hinders or conflicts with that 
        regional transmission organization's ability to fulfill the 
        requirements of any rule, regulation, order tariff, rate 
        schedule, or agreement accepted, approved or ordered by the 
        Commission. The Commission shall seek to assure that such 
        hindrances or conflicts are resolved promptly. Where a 
        hindrance or conflict is identified between a reliability 
        standard or an organization standard and a provision of any 
        rule, order, tariff, rate schedule or agreement accepted, 
        approved or ordered by the Commission applicable to a regional 
        reliability organization, nothing in this section shall require 
        a change in the regional transmission organization's obligation 
        to comply with such provision unless the Commission orders such 
        a change and the change becomes effective. If the Commission 
        finds that the tariff, rate schedule or agreement needs to be 
        changed, the regional transmission organization must 
        expeditiously make a section 205 filing to reflect the change. 
        If the Commission finds that an organization standard needs to 
        be changed, it shall order the electric reliability 
        organization to develop and submit a modified organization 
        standard under subsection (e)(3)(C).
            ``(4) An affiliated regional reliability entity and a 
        regional transmission organization operating in the same 
        geographic area shall cooperate to avoid conflicts between 
implementation and enforcement of organization standards by the 
affiliated regional reliability entity and implementation and 
enforcement by the regional transmission organization of tariffs, rate 
schedules, and agreements accepted, approved or ordered by the 
Commission. In areas without an affiliated regional reliability entity, 
the electric reliability organization shall act as the affiliated 
regional reliability entity for purposes of this paragraph.
            ``(5) Until 6 months after approval of applicable 
        subsection (h)(3) procedures, any reliability standard, 
        guidance, or practice contained in Commission-accepted tariffs, 
        rate schedules, or agreements in effect of any Commission-
        authorized independent system operator or regional transmission 
        organization shall continue to apply unless the Commission 
        accepts an amendment thereto by the applicable operator or 
        organization, or upon complaint finds them to be unjust, 
        unreasonable, unduly discriminatory or preferential, or not in 
        the public interest. At the conclusion of such transition 
        period, any such reliability standard, guidance, practice, or 
        amendment thereto that the Commission determines is 
        inconsistent with organization standards shall no longer 
        apply.''.
            (2) Enforcement.--Sections 316 and 316A of the Federal 
        Power Act are each amended by striking ``or 214'' each place it 
        appears and inserting ``214, or 215''.
    (b) Application of Antitrust Laws.--Notwithstanding any other 
provision of law, each of the following activities are rebuttably 
presumed to be in compliance with the antitrust laws of the United 
States:
            (1) Activities undertaken by the Electric Reliability 
        Organization under section 215 of the Federal Power Act or 
        affiliated regional reliability entity operating under an 
        agreement in effect under section 215(h) of such Act.
            (2) Activities of a member of the Electric Reliability 
        Organization or affiliated regional reliability entity in 
        pursuit of organization objectives under section 215 of the 
        Federal Power Act undertaken in good faith under the rules of 
        the organization.
Primary jurisdiction, and immunities and other affirmative defenses, 
shall be available to the extent otherwise applicable.

       Subtitle B--PURPA Mandatory Purchase and Sale Requirements

SEC. 803. PURPA MANDATORY PURCHASE AND SALE REQUIREMENTS.

    Section 210 of the Public Utility Regulatory Policies Act of 1978 
is amended by adding the following:
    ``(m) Termination of Mandatory Purchase and Sale Requirements.--
            ``(1) In general.--After the date of the enactment of this 
        subsection, no electric utility shall be required to enter into 
        a new contract or obligation to purchase electric energy from, 
        or sell electric energy under this section.
            ``(2) No effect on existing rights and remedies.--Nothing 
        in this subsection affects the rights or remedies of any party 
        with respect to the purchase or sale of electric energy or 
        capacity from or to a facility under this section under any 
        contract or obligation to purchase or to sell electric energy 
        or capacity on the date of enactment of this subsection, 
        including--
                    ``(A) the right to recover costs of purchasing such 
                electric energy or capacity; and
                    ``(B) in States without competition for retail 
                electric supply, the obligation of a utility to 
                provide, at just and reasonable rates for consumption 
                by a qualifying small power production facility or a 
                qualifying cogeneration facility, backup, standby, and 
                maintenance power.
            ``(3) Recovery of costs.--
                    ``(A) Regulation.--To ensure recovery, by an 
                electric utility that purchases electricity or capacity 
                from a qualifying facility pursuant to any legally 
                enforceable obligation entered into or imposed under 
                this section before the date of enactment of this 
                subsection, of all costs associated with the purchases, 
                the Commission shall issue and enforce such regulations 
                as are required to ensure that no electric utility 
                shall be required directly or indirectly to absorb the 
                costs associated with such purchases.
                    ``(B) Enforcement.--A regulation under subparagraph 
                (A) shall be enforceable in accordance with the 
                provisions of law applicable to enforcement of 
                regulations under the Federal Power Act.''.

 Subtitle C--Repeal of the Public Utility Holding Company Act of 1935 
    and Enactment of the Public Utility Holding Company Act of 2001

SEC. 810. SHORT TITLE.

    This subtitle may be cited as the ``Public Utility Holding Company 
Act of 2001''.

SEC. 811. FINDINGS AND PURPOSES.

    (a) Findings.--The Congress finds that--
            (1) the Public Utility Holding Company Act of 1935 was 
        intended to facilitate the work of Federal and State regulators 
        by placing certain constraints on the activities of holding 
        company systems;
            (2) developments since 1935, including changes in other 
        regulation and in the electric and gas industries, have called 
        into question the continued relevance of the model of 
        regulation established by that Act;
            (3) there is a continuing need for State regulation in 
        order to ensure the rate protection of utility customers; and
            (4) limited Federal regulation is necessary to supplement 
        the work of State commissions for the continued rate protection 
        of electric and gas utility customers.
    (b) Purposes.--The purposes of this title are--
            (1) to eliminate unnecessary regulation, yet continue to 
        provide for consumer protection by facilitating existing rate 
regulatory authority through improved Federal and State commission 
access to books and records of all companies in a holding company 
system, to the extent that such information is relevant to rates paid 
by utility customers, while affording companies the flexibility 
required to compete in the energy markets; and
            (2) to address protection of electric and gas utility 
        customers by providing for Federal and State access to books 
        and records of all companies in a holding company system that 
        are relevant to utility rates.

SEC. 812. DEFINITIONS.

    For the purposes of this subtitle--
            (1) the term ``affiliate'' of a company means any company 5 
        percent or more of the outstanding voting securities of which 
        are owned, controlled, or held with power to vote, directly or 
        indirectly, by such company;
            (2) the term ``associate company'' of a company means any 
        company in the same holding company system with such company;
            (3) the term ``Commission'' means the Federal Energy 
        Regulatory Commission;
            (4) the term ``company'' means a corporation, partnership, 
        association, joint stock company, business trust, or any 
        organized group of persons, whether incorporated or not, or a 
        receiver, trustee, or other liquidating agent of any of the 
        foregoing;
            (5) the term ``electric utility company'' means any company 
        that owns or operates facilities used for the generation, 
        transmission, or distribution of electric energy for sale;
            (6) the terms ``exempt wholesale generator'' and ``foreign 
        utility company'' have the same meanings as in sections 32 and 
        33, respectively, of the Public Utility Holding Company Act of 
        1935, as those sections existed on the day before the effective 
        date of this Act;
            (7) the term ``gas utility company'' means any company that 
        owns or operates facilities used for distribution at retail 
        (other than the distribution only in enclosed portable 
        containers or distribution to tenants or employees of the 
        company operating such facilities for their own use and not for 
        resale) of natural or manufactured gas for heat, light, or 
        power;
            (8) the term ``holding company'' means--
                    (A) any company that directly or indirectly owns, 
                controls, or holds with power to vote, 10 percent or 
                more of the outstanding voting securities of a public 
                utility company or of a holding company of any public 
                utility company; and
                    (B) any person, determined by the Commission, after 
                notice and opportunity for hearing, to exercise 
                directly or indirectly (either alone or pursuant to an 
                arrangement or understanding with one or more persons) 
                such a controlling influence over the management or 
                policies of any public utility company or holding 
                company as to make it necessary or appropriate for the 
                rate protection of utility customers with respect to 
                rates that such person be subject to the obligations, 
                duties, and liabilities imposed by this Title upon 
                holding companies;
            (9) the term ``holding company system'' means a holding 
        company, together with its subsidiary companies;
            (10) the term ``jurisdiction rates'' means rates 
        established by the Commission for the transmission of electric 
        energy in interstate commerce, the sale of electric energy at 
        wholesale in interstate commerce, the transportation of natural 
        gas in interstate commerce, and the sale in interstate commerce 
        of natural gas for resale for ultimate public consumption for 
        domestic, commercial, industrial, or any other use;
            (11) the term ``natural gas company'' means a person 
        engaged in the transportation of natural gas in interstate 
        commerce or the sale of such gas in interstate commerce for 
        resale;
            (12) the term ``person'' means an individual or company;
            (13) the term ``public utility'' means any person who owns 
        or operates facilities used for transmission of electric energy 
        in interstate commerce or sales of electric energy at wholesale 
        in interstate commerce;
            (14) the term ``public utility company'' means an electric 
        utility company or a gas utility company;
            (15) the term ``State commission'' means any commission, 
        board, agency, or officer, by whatever name designated, of a 
        State, municipality, or other political subdivision of a State 
        that, under the laws of such State, has jurisdiction to 
        regulate public utility companies;
            (16) the term ``subsidiary company'' of a holding company 
        means--
                    (A) any company, 10 percent or more of the 
                outstanding voting securities of which are directly or 
                indirectly owned, controlled, or held with power to 
                vote, by such holding company; and
                    (B) any person, the management or policies of which 
                the Commission, after notice and opportunity for 
                hearing, determines to be subject to a controlling 
                influence, directly or indirectly, by such holding 
                company (either alone or pursuant to an arrangement or 
                understanding with one or more other persons) so as to 
                make it necessary for the rate protection of utility 
                customers with respect to rates that such person be 
                subject to the obligations, duties, and liabilities 
                imposed by this Title upon subsidiary companies of 
                holding companies; and
            (17) the term ``voting security'' means any security 
        presently entitling the owner or holder thereof to vote in the 
        direction or management of the affairs of a company.

SEC. 813. REPEAL OF THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935.

    The Public Utility Holding Company Act of 1935 (15 U.S.C. 79a et 
seq.) is repealed, effective one year after the date of enactment of 
this subtitle.

SEC. 814. FEDERAL ACCESS TO BOOKS AND RECORDS.

    (a) In General.--Each holding company and each associate company 
thereof shall maintain, and shall make available to the Commission, 
such books, accounts, memoranda, and other records as the Commission 
deems to be relevant to costs incurred by a public utility or natural 
gas company that is an associate company of such holding company and 
necessary or appropriate for the protection of utility customers with 
respect to jurisdictional rates for the transmission of electric energy 
in interstate commerce, the sale of electric energy at wholesale in 
interstate commerce, the transportation of natural gas in interstate 
commerce, and the sale in interstate commerce of natural gas for resale 
for ultimate public consumption for domestic, commercial, industrial, 
or any other use.
    (b) Affiliate Companies.--Each affiliate of a holding company or of 
any subsidiary company of a holding company shall maintain, and make 
available to the Commission, such books, accounts, memoranda, and other 
records with respect to any transaction with another affiliate, as the 
Commission deems to be relevant to costs incurred by a public utility 
or natural gas company that is an associate company of such holding 
company and necessary or appropriate for the protection of utility 
customers with respect to jurisdictional rates.
    (c) Holding Company Systems.--The Commission may examine the books, 
accounts, memoranda, and other records of any company in a holding 
company system, or any affiliate thereof, as the Commission deems to be 
relevant to costs incurred by a public utility or natural gas company 
within such holding company system and necessary or appropriate for the 
protection of utility customers with respect to jurisdictional rates.
    (d) Confidentiality.--No member, officer, or employee of the 
Commission shall divulge any fact or information that may come to his 
or her knowledge during the course of examination of books, accounts, 
memoranda, or other records as provided in this section, except as may 
be directed by the Commission or by a court of competent jurisdiction.

SEC. 815. STATE ACCESS TO BOOKS AND RECORDS.

    (a) In General.--Upon the written request of a State commission 
having jurisdiction to regulate a public utility company in a holding 
company system, the holding company or any associate company or 
affiliate thereof, other than such public utility company, wherever 
located, shall produce for inspection books, accounts, memoranda, and 
other records that--
            (1) have been identified in reasonable detail in a 
        proceeding before the State commission;
            (2) the State commission deems are relevant to costs 
        incurred by such public utility company; and
            (3) are necessary for the effective discharge of the 
        responsibilities of the State commission with respect to such 
        proceeding.
    (b) Limitation.--Subsection (a) does not apply to any person that 
is a holding company solely by reason of ownership of one or more 
qualifying facilities under the Public Utility Regulatory Policies Act.
    (c) Confidentiality of Information.--The production of books, 
accounts, memoranda, and other records under subsection (a) shall be 
subject to such terms and conditions as may be necessary and 
appropriate to safeguard against unwarranted disclosure to the public 
of any trade secrets or sensitive commercial information.
    (d) Effect on State Law.--Nothing in this section shall preempt 
applicable State law concerning the provision of books, records, or any 
other information, or in any way limit the rights of any State to 
obtain books, records, or any other information under any other Federal 
law, contract, or otherwise.
    (e) Court Jurisdiction.--Any United States district court located 
in the State in which the State commission referred to in subsection 
(a) is located shall have jurisdiction to enforce compliance with this 
section.

SEC. 816. EXEMPTION AUTHORITY.

    (a) Rulemaking.--Not later than 90 days after the effective date of 
this subtitle, the Commission shall promulgate a final rule to exempt 
from the requirements of section 815 any person that is a holding 
company, solely with respect to one or more--
            (1) qualifying facilities under the Public Utility 
        Regulatory Policies Act of 1978;
            (2) exempt wholesale generators; or
            (3) foreign utility companies.
    (b) Other Authority.--If, upon application or upon its own motion, 
the Commission finds that the books, records, accounts, memoranda, and 
other records of any person are not relevant to the jurisdictional 
rates of a public utility or natural gas company, or if the Commission 
finds that any class of transactions is not relevant to the 
jurisdictional rates of a public utility or natural gas company, the 
Commission shall exempt such person or transaction from the 
requirements of section 815.

SEC. 817. AFFILIATE TRANSACTION.

    Nothing in this subtitle shall preclude the Commission or a State 
commission from exercising its jurisdiction under otherwise applicable 
law to determine whether a public utility company, public utility, or 
natural gas company may recover in rates any costs of an activity 
performed by an associate company, or any costs of goods or services 
acquired by such public utility company from an associate company.

SEC. 818. APPLICABILITY.

    No provision of this subtitle shall apply to, or be deemed to 
include--
            (1) the United States;
            (2) a State or any political subdivision of a State;
            (3) any foreign governmental authority not operating in the 
        United States;
            (4) any agency, authority, or instrumentality of any entity 
        referred to in paragraph (1), (2), or (3); or
            (5) any officer, agent, or employee of any entity referred 
        to in paragraph (1), (2), or (3) acting as such in the course 
        of his or her official duty.

SEC. 819. EFFECT ON OTHER REGULATIONS.

    Nothing in this subtitle precludes the Commission or a State 
commission from exercising its jurisdiction under otherwise applicable 
law to protect utility customers.

SEC. 820. ENFORCEMENT.

    The Commission shall have the same powers as set forth in sections 
306 through 317 of the Federal Power Act (16 U.S.C. 825d-825p) to 
enforce the provisions of this subtitle.

SEC. 821. SAVINGS PROVISIONS.

    (a) In General.--Nothing in this subtitle prohibits a person from 
engaging in or continuing to engage in activities or transactions in 
which it is legally engaged or authorized to engage on the effective 
date of this subtitle.
    (b) Effect on Other Commission Authority.--Nothing in this subtitle 
limits the authority of the Commission under the Federal Power Act (16 
U.S.C. 791a et seq.) (including section 301 of that Act) or the Natural 
Gas Act (15 U.S.C. 717 et seq.) (including section 8 of that Act).

SEC. 822. IMPLEMENTATION.

    Not later than 6 months after the date of enactment of this 
subtitle, the Commission shall--
            (1) promulgate such regulations as may be necessary or 
        appropriate to implement this title (other than section 815); 
        and
            (2) submit to Congress detailed recommendations on 
        technical and conforming amendments to Federal law necessary to 
        carry out this subtitle and the amendments made by this 
        subtitle.

SEC. 823. TRANSFER OF RESOURCES.

    All books and records that relate primarily to the functions 
transferred to the Commission under this subtitle shall be transferred 
from the Securities and Exchange Commission to the Commission.

SEC. 824. AUTHORIZATION OF APPROPRIATIONS.

    There are authorized to be appropriated such funds as may be 
necessary to carry out this subtitle.

SEC. 825. CONFORMING AMENDMENT TO THE FEDERAL POWER ACT.

    Section 318 of the Federal Power Act (16 U.S.C. 825q) is repealed.

 Subtitle D--Emission-Free Control Measures Under State Implementation 
                                 Plans

SEC. 830. EMISSION-FREE CONTROL MEASURES UNDER A STATE IMPLEMENTATION 
              PLAN.

    Actions taken by a State to support the continued operation of 
existing emission-free electricity sources, or the construction or 
operation of new emission-free electricity sources, shall be considered 
control measures necessary or appropriate to meet applicable 
requirements under section 110(a) of the Clean Air Act (42 U.S.C. 
7410(a)) and shall be included in a State Implementation Plan.

    TITLE IX--TAX INCENTIVES FOR ENERGY PRODUCTION AND CONSERVATION

SEC. 900. SHORT TITLE; AMENDMENT OF 1986 CODE; TABLE OF CONTENTS.

    (a) Short Title.--This title may be cited as the ``Energy Security 
Tax Policy Act of 2001''.
    (b) Amendment of 1986 Code.--Except as otherwise expressly 
provided, whenever in this title 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 of this title is as 
follows:

    TITLE IX--TAX INCENTIVES FOR ENERGY PRODUCTION AND CONSERVATION

Sec. 900. Short title; amendment of 1986 Code; table of contents.
       Subtitle A--Enhancement of Domestic Oil and Gas Production

                          Part I--Tax Credits

Sec. 901. Tax credit for marginal domestic oil and natural gas well 
                            production.
Sec. 902. Enhanced oil recovery credit extended to certain nontertiary 
                            recovery methods.
Sec. 903. Extension of credit for producing fuel from a nonconventional 
                            source.
                     Part II--Percentage Depletion

Sec. 911. 10-year carryback for percentage depletion for oil and gas 
                            property.
Sec. 912. Net income limitation on percentage depletion repealed for 
                            oil and gas properties.
Sec. 913. Determination of small refiner exception to oil depletion 
                            deduction.
                          Part III--Expensing

Sec. 916. Election to expense geological and geophysical expenditures 
                            and delay rental payments.
                         Part IV--Depreciation

Sec. 921. Oil and gas pipelines treated as 7-year property.
Sec. 922. Class life for petroleum storage facilities.
Sec. 923. Class life for petroleum refineries.
          Part V--Offshore Oil and Gas Vessels and Structures

Sec. 931. Accelerated depreciation.
Sec. 932. Tax credit.
Sec. 933. Capital construction funds for United States-built drilling 
                            vessels.
                Subtitle B--Provisions Relating to Coal

 Part I--Credit for Emission Reductions and Efficiency Improvements in 
         Existing Coal-based Electricity Generation Facilities

Sec. 941. Credit for investment in qualifying clean coal technology.
Sec. 942. Credit for production from a qualifying clean coal technology 
                            unit.
Part II--Incentives for Early Commercial Applications of Advanced Clean 
                           Coal Technologies

Sec. 946. Credit for investment in qualifying advanced clean coal 
                            technology.
Sec. 947. Credit for production from qualifying advanced clean coal 
                            technology.
             Subtitle C--Provisions Relating to Natural Gas

Sec. 951. Arbitrage rules not to apply to prepayments for natural gas 
                            and other commodities.
Sec. 952. Private loan financing test not to apply to prepayments for 
                            natural gas and other commodities.
           Subtitle D--Provisions Relating to Electric Power

Sec. 956. Depreciation of property used in the generation or 
                            transmission of electricity.
Sec. 957. Tax-exempt bond financing of certain electric facilities.
Sec. 958. Independent transmission companies.
Sec. 959. Certain amounts received by energy, natural gas, or steam 
                            utilities excluded from gross income as 
                            contributions to capital.
           Subtitle E--Provisions Relating to Nuclear Energy

Sec. 961. Expensing of costs incurred for temporary storage of spent 
                            nuclear fuel.
Sec. 962. Nuclear decommissioning reserve fund.
            Subtitle F--Tax Incentives for Energy Efficiency

Sec. 971. Credit for certain distributed power and combined heat and 
                            power system property used in business.
Sec. 972. Credit for energy efficiency improvements to existing homes.
Sec. 973. Business credit for construction of new energy efficient 
                            home.
Sec. 974. Tax credit for energy efficient appliances.
Sec. 975. Credit for certain energy efficient motor vehicles.
                     Subtitle G--Alternative Fuels

Sec. 981. Credit for alternative fuel vehicles.
Sec. 982. Modification of credit for qualified electric vehicles.
Sec. 983. Credit for retail sale of alternative fuels as motor vehicle 
                            fuel.
Sec. 984. Extension of deduction for certain refueling property.
Sec. 985. Additional deduction for cost of installation of alternative 
                            fueling stations.
                      Subtitle H--Renewable Energy

Sec. 991. Modifications to credit for electricity produced from 
                            renewable resources and extension to waste 
                            energy.
Sec. 992. Credit for residential solar and wind energy property.
Sec. 993. Treatment of facilities using bagasse to produce energy as 
                            solid waste disposal facilities eligible 
                            for tax-exempt financing.

       Subtitle A--Enhancement of Domestic Oil and Gas Production

                          PART I--TAX CREDITS

SEC. 901. TAX CREDIT FOR MARGINAL DOMESTIC OIL AND NATURAL GAS WELL 
              PRODUCTION.

    (a) Purpose.--The purpose of this section is to prevent the 
abandonment of marginal oil and gas wells responsible for half of the 
domestic production of oil and gas in the United States.
    (b) Credit for Producing Oil and Gas From Marginal Wells.--Subpart 
D of part IV of subchapter A of chapter 1 (relating to business 
credits) is amended by adding at the end the following new section:

``SEC. 45E. 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 crude 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 $15 ($1.67 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 for 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 2001, 
                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 as 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), except that `22 
                        degrees' shall be substituted for `20 degrees' 
                        in applying subparagraph (F) thereof, 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 
                conversion 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 the 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 (12), by striking the period 
at the end of paragraph (13) and inserting ``, plus'', and by adding at 
the end the following new paragraph:
            ``(14) the marginal oil and gas well production credit 
        determined under section 45E(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 45E(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 (as defined in section 38(c)(3))--
                    ``(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 (B) 
                        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 1 is amended by adding at the end 
the following item:

                              ``45E. 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. 902. ENHANCED OIL RECOVERY CREDIT EXTENDED TO CERTAIN NONTERTIARY 
              RECOVERY METHODS.

    (a) Purpose.--The purpose of this section is to extend the 
productive lives of existing domestic oil and gas wells in order to 
recover the 75 percent of the oil and gas that is not recoverable using 
primary oil and gas recovery techniques.
    (b) Qualified Projects.--Clause (i) of section 43(c)(2)(A) 
(defining qualified enhanced oil recovery project) is amended to read 
as follows:
                            ``(i) which involves the application (in 
                        accordance with sound engineering principles) 
                        of--
                                    ``(I) one or more tertiary recovery 
                                methods (as defined in section 
                                193(b)(3)) which can reasonably be 
                                expected to result in more than an 
                                insignificant increase in the amount of 
                                crude oil which will ultimately be 
                                recovered, or
                                    ``(II) one or more qualified 
                                nontertiary recovery methods which are 
                                required to recover oil with 
                                traditionally immobile characteristics 
                                or from formations which have proven to 
                                be uneconomical or noncommercial under 
                                conventional recovery methods,''
    (c) Qualified Nontertiary Recovery Methods.--Section 43(c)(2) is 
amended by adding at the end the following new subparagraphs:
                    ``(C) Qualified nontertiary recovery method.--For 
                purposes of this paragraph--
                            ``(i) In general.--The term `qualified 
                        nontertiary recovery method' means any recovery 
                        method described in clause (ii), (iii), or 
                        (iv), or any combination thereof.
                            ``(ii) Enhanced gravity drainage (egd) 
                        methods.--The methods described in this clause 
                        are as follows:
                                    ``(I) Horizontal drilling.--The 
                                drilling of horizontal, rather than 
                                vertical, wells to penetrate any 
                                hydrocarbon-bearing formation which has 
                                an average in situ calculated 
                                permeability to fluid flow of less than 
                                or equal to 12 or less millidarcies and 
                                which has been demonstrated by use of a 
                                vertical wellbore to be uneconomical 
                                unless drilled with lateral horizontal 
                                lengths in excess of 1,000 feet.
                                    ``(II) Gravity drainage.--The 
                                production of oil by gravity flow from 
                                drainholes which are drilled from a 
                                shaft or tunnel dug within or below the 
                                oil-bearing zone.
                            ``(iii) Marginally economic reservoir 
                        repressurization (merr) methods.--The methods 
                        described in this clause are as follows, except 
                        that this clause shall only apply to the first 
                        1,000,000 barrels produced in any project:
                                    ``(I) Cyclic gas injection.--The 
                                increase or maintenance of pressure by 
                                injection of hydrocarbon gas into the 
                                reservoir from which it was originally 
                                produced.
                                    ``(II) Flooding.--The injection of 
                                water into an oil reservoir to displace 
                                oil from the reservoir rock and into 
                                the bore of a producing well.
                            ``(iv) Other methods.--Any method used to 
                        recover oil having an average laboratory 
                        measured air permeability less than or equal to 
                        100 millidarcies when averaged over the 
                        productive interval being completed, or an in 
                        situ calculated permeability to fluid flow less 
                        than or equal to 12 millidarcies or oil defined 
                        by the Department of Energy as being immobile.
                    ``(D) Authority to add other nontertiary recovery 
                methods.--The Secretary shall provide procedures under 
                which--
                            ``(i) the Secretary may treat methods not 
                        described in clause (ii), (iii), or (iv) of 
                        subparagraph (C) as qualified nontertiary 
                        recovery methods, and
                            ``(ii) a taxpayer may request the Secretary 
                        to treat any method not so described as a 
                        qualified nontertiary recovery method.
                The Secretary may only specify methods as qualified 
                nontertiary recovery methods under this subparagraph if 
                the Secretary determines that such specification is 
                consistent with the purposes of subparagraph (C) and 
                will result in greater production of oil and natural 
                gas.''
    (d) Conforming Amendment.--Clause (iii) of section 43(c)(2)(A) is 
amended to read as follows:
                            ``(iii) with respect to which--
                                    ``(I) in the case of a tertiary 
                                recovery method, the first injection of 
                                liquids, gases, or other matter 
                                commences after December 31, 1990, and
                                    ``(II) in the case of a qualified 
                                nontertiary recovery method, the 
                                implementation of the method begins 
                                after December 31, 2000.''.
    (e) Effective Date.--The amendments made by this section shall 
apply to taxable years ending after December 31, 2000.

SEC. 903. EXTENSION OF CREDIT FOR PRODUCING FUEL FROM A NONCONVENTIONAL 
              SOURCE.

    (a) Extension of Credit.--Subsection (f) of section 29 (relating to 
credit for producing fuel from a nonconventional source) is amended--
            (1) in paragraph (1)(A), by inserting before ``or'' the 
        following: ``or from a well drilled after the date of the 
        enactment of the Energy Security Tax Policy Act of 2001, and 
        before January 1, 2011,'',
            (2) in paragraph (1)(B), by inserting before ``and'' at the 
        end the following: ``or placed in service after the date of the 
        enactment of the Energy Security Tax Policy Act of 2001, and 
        before January 1, 2011,'', and
            (3) in paragraph (2), by striking ``2003'' and inserting 
        ``2013''.
    (b) Reduction in Amount of Credit Starting in 2007.--Subsection (a) 
of section 29 is amended to read as follows:
    ``(a) Allowance of Credit.--
            ``(1) In general.--There shall be allowed as a credit 
        against the tax imposed by this chapter for the taxable year an 
        amount equal to--
                    ``(A) the applicable amount, multiplied by
                    ``(B) the barrel-of-oil equivalent of qualified 
                fuels--
                            ``(i) sold by the taxpayer to an unrelated 
                        person during the taxable year, and
                            ``(ii) the production of which is 
                        attributable to the taxpayer.
            ``(2) Applicable amount.--For purposes of paragraph (1), 
        the applicable amount is the amount determined in accordance 
        with the following table:

        ``In the case of taxable
                                                  The applicable amount
        years beginning in calendar year:
                                                              is:      
                2001 to 2008.........................        $3.00     
                2009.................................        $2.60     
                2010.................................        $2.00     
                2011.................................        $1.40     
                2012.................................        $0.80     
                2013 and thereafter..................      $0.00.''    
    (c) Qualified Fuels To Include Heavy Oil.--Subsection (c) of 
section 29 (defining qualified fuels) is amended--
            (1) in paragraph (1), 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 new subparagraph:
                    ``(D) heavy oil, as defined in section 613A(c)(6), 
                except that `22 degrees' shall be substituted for `20 
                degrees' in applying subparagraph (F) thereof.'', and
            (2) by adding at the end the following new paragraph:
            ``(4) Special rules for heavy oil.--
                    ``(A) Termination.--Heavy oil shall be considered 
                to be a qualified fuel only if it is produced from a 
                well drilled, or in a facility placed in service, after 
                the date of the enactment of the Energy Security Tax 
                Policy Act of 2001, and before January 1, 2011.
                    ``(B) Waiver of unrelated person requirement.--In 
                the case of heavy oil, the requirement under subsection 
                (a)(1)(B)(i) of a sale to an unrelated person shall not 
                apply to any sale to the extent that the heavy oil is 
                not consumed in the immediate vicinity of the 
                wellhead.''
    (d) Conforming Amendment.--Section 29(g) (relating to extension for 
certain facilities) is amended to read as follows:
    ``(g) Extension for Certain Facilities.--In the case of a facility 
for producing qualified fuels described in subparagraph (B)(ii) or (C) 
of subsection (c)(1), such facility shall, for purposes of subsection 
(f)(1)(B), be treated as being placed in service before January 1, 
1993, if such facility is placed in service before July 1, 1998, 
pursuant to a binding written contract in effect before January 1, 
1997.''
    (e) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2000.

                     PART II--PERCENTAGE DEPLETION

SEC. 911. 10-YEAR CARRYBACK FOR PERCENTAGE DEPLETION FOR OIL AND GAS 
              PROPERTY.

    (a) In General.--Subsection (d)(1) of section 613A (relating to 
limitations on percentage depletion in case of oil and gas wells) is 
amended to read as follows:
            ``(1) Limitation based on taxable income.--
                    ``(A) In general.--The deduction for the taxable 
                year attributable to the application of subsection (c) 
                shall not exceed so much of the taxpayer's taxable 
                income for the year as the taxpayer elects, computed 
                without regard to--
                            ``(i) any depletion on production from an 
                        oil or gas property which is subject to the 
                        provisions of subsection (c),
                            ``(ii) any net operating loss carryback to 
                        the taxable year under section 172,
                            ``(iii) any capital loss carryback to the 
                        taxable year under section 1212, and
                            ``(iv) in the case of a trust, any 
                        distributions to its beneficiary, except in the 
                        case of any trust where any beneficiary of such 
                        trust is a member of the family (as defined in 
                        section 267(c)(4)) of a settlor who created 
                        inter vivos and testamentary trusts for members 
                        of the family and such settlor died within the 
                        last six days of the fifth month in 1970, and 
                        the law in the jurisdiction in which such trust 
                        was created requires all or a portion of the 
                        gross or net proceeds of any royalty or other 
                        interest in oil, gas, or other mineral 
                        representing any percentage depletion allowance 
                        to be allocated to the principal of the trust.
                    ``(B) Carrybacks and carryforwards.--
                            ``(i) In general.--If any amount is 
                        disallowed as a deduction for the taxable year 
                        (in this subparagraph referred to as the 
                        `unused depletion year') by reason of 
                        application of subparagraph (A), the disallowed 
                        amount shall be treated as an amount allowable 
                        as a deduction under subsection (c) for--
                                    ``(I) each of the 10 taxable years 
                                preceding the unused depletion year, 
                                and
                                    ``(II) the taxable year following 
                                the unused depletion year,
                        subject to the application of subparagraph (A) 
                        to such taxable year.
                            ``(ii) Election to waive carryback.--Any 
                        taxpayer may elect to waive any carryback under 
                        clause (i) to any of the taxable years to which 
                        the carryback may otherwise be carried. A 
                        taxpayer making an election under this clause 
                        with respect to any taxable year may revoke 
                        such election in any succeeding taxable year in 
                        such manner as the Secretary may prescribe.
                    ``(C) Allocation of disallowed amounts.--For 
                purposes of basis adjustments and determining whether 
                cost depletion exceeds percentage depletion with 
                respect to the production from a property, any amount 
                disallowed as a deduction on the application of this 
                paragraph shall be allocated to the respective 
                properties from which the oil or gas was produced in 
                proportion to the percentage depletion otherwise 
                allowable to such properties under subsection (c).''
    (b) Effective Date.--
            (1) In general.--The amendment made by this section shall 
        apply to taxable years beginning after December 31, 2000, and 
        to any taxable year beginning on or before such date to the 
        extent necessary to apply section 613A(d)(1) of the Internal 
        Revenue Code of 1986 (as amended by subsection (a)).
            (2) Waiver of limitations.--If refund or credit of any 
        overpayment of tax resulting from the application of the 
        amendment made by this section is prevented at any time before 
        the close of the 1-year period beginning on the date of the 
        enactment of this Act by the operation of any law or rule of 
        law (including res judicata), such refund or credit may 
        nevertheless be made or allowed if claimed therefor is filed 
        before the close of such period.

SEC. 912. NET INCOME LIMITATION ON PERCENTAGE DEPLETION REPEALED FOR 
              OIL AND GAS PROPERTIES.

    (a) In General.--Section 613(a) (relating to percentage depletion) 
is amended by striking the second sentence and inserting: ``Except in 
the case of oil and gas properties, such allowance shall not exceed 50 
percent of the taxpayer's taxable income from the property (computed 
without allowances for depletion).''
    (b) Conforming Amendments.--
            (1) Section 613A(c)(7) (relating to special rules) is 
        amended by striking subparagraph (C) and redesignating 
        subparagraph (D) as subparagraph (C).
            (2) Section 613A(c)(6) (relating to oil and natural gas 
        produced from marginal properties) is amended by striking 
        subparagraph (H).
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2000.

SEC. 913. DETERMINATION OF SMALL REFINER EXCEPTION TO OIL DEPLETION 
              DEDUCTION.

    (a) In General.--Paragraph (4) of section 613A(d) (relating to 
certain refiners excluded) is amended to read as follows:
            ``(4) Certain refiners excluded.--If the taxpayer or 
        related person engages in the refining of crude oil, subsection 
        (c) shall not apply to the taxpayer for a taxable year if the 
        average daily refinery runs of the taxpayer and the related 
        person for the taxable year exceed 50,000 barrels. For purposes 
        of this paragraph, the average daily refinery runs for any 
        taxable year shall be determined by dividing the aggregate 
        refinery runs for the taxable year by the number of days in the 
        taxable year.''
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2000.

                          PART III--EXPENSING

SEC. 916. ELECTION TO EXPENSE GEOLOGICAL AND GEOPHYSICAL EXPENDITURES 
              AND DELAY RENTAL PAYMENTS.

    (a) Purpose.--The purpose of this section is to recognize that 
geological and geophysical expenditures and delay rentals are ordinary 
and necessary business expenses that should be deducted in the year the 
expense is incurred.
    (b) Election To Expense Geological and Geophysical Expenditures.--
            (1) In general.--Section 263 (relating to capital 
        expenditures) is amended by adding at the end the following new 
        subsection:
    ``(j) 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.''
            (2) Conforming amendment.--Section 263A(c)(3) is amended by 
        inserting ``263(j),'' after ``263(i),''.
            (3) Effective date.--
                    (A) In general.--The amendments made by this 
                subsection shall apply to expenses paid or incurred 
                after the date of the enactment of this Act.
                    (B) Transition rule.--In the case of any expenses 
                described in section 263(j) of the Internal Revenue 
                Code of 1986, as added by this subsection, which were 
                paid or incurred on or before the date of the enactment 
                of this Act, the taxpayer may elect, at such time and 
                in such manner as the Secretary of the Treasury may 
                prescribe, to amortize the suspended portion of such 
                expenses over the 36-month period beginning with the 
                month in which the date of the enactment of this Act 
                occurs. For purposes of this subparagraph, the 
                suspended portion of any expense is that portion of 
                such expense which, as of the first day of the 36-month 
                period, has not been included in the cost of a property 
                or otherwise deducted.
    (c) Election To Expense Delay Rental Payments.--
            (1) In general.--Section 263 (relating to capital 
        expenditures), as amended by subsection (b)(1), is amended by 
        adding at the end the following new subsection:
    ``(k) 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 the drilling of an oil or gas well 
        under an oil or gas lease.''
            (2) Conforming amendment.--Section 263A(c)(3), as amended 
        by subsection (b)(2), is amended by inserting ``263(k),'' after 
        ``263(j),''.
            (3) Effective date.--
                    (A) In general.--The amendments made by this 
                subsection shall apply to payments made or incurred 
                after the date of the enactment of this Act.
                    (B) Transition rule.--In the case of any expenses 
                described in section 263(k) of the Internal Revenue 
                Code of 1986, as added by this subsection, which were 
                paid or incurred on or before the date of the enactment 
                of this Act, the taxpayer may elect, at such time and 
                in such manner as the Secretary of the Treasury may 
                prescribe, to amortize the suspended portion of such 
                expenses over the 36-month period beginning with the 
                month in which the date of the enactment of this Act 
                occurs. For purposes of this subparagraph, the 
                suspended portion of any expense is that portion of 
                such expense which, as of the first day of the 36-month 
                period, has not been included in the cost of a property 
                or otherwise deducted.

                         PART IV--DEPRECIATION

SEC. 921. OIL AND GAS PIPELINES TREATED AS 7-YEAR PROPERTY.

    (a) In General.--Subparagraph (C) of section 168(e)(3) (relating to 
classification of certain property) is amended by redesignating clause 
(ii) as clause (iii) and by inserting after clause (i) the following 
new clause:
                            ``(ii) any oil and gas pipeline, and''.
    (b) Oil and Gas Pipeline.--Subsection (i) of section 168 is amended 
by adding at the end the following new paragraph:
            ``(15) Oil and gas pipeline.--The term `oil and gas 
        pipeline' means the pipe, storage facilities, equipment, 
        distribution infrastructure, and appurtenances used to deliver 
        oil, natural gas, crude oil, or crude oil products.''
    (c) Effective Date.--
            (1) In general.--The amendments made by this section shall 
        apply to property placed in service on or after the date of the 
        enactment of this Act.
            (2) Gas gathering lines.--In the case of gas gathering 
        lines, such amendments shall, at the election of the taxpayer, 
        also apply to property placed in service before such date. For 
        purposes of the preceding sentence, a gas gathering line 
        includes the pipe, storage facilities, equipment, and 
        appurtenances used to deliver natural gas from the wellhead or 
        a common point to the point at which such gas first reaches a 
        gas processing plant, an interconnection with a transmission 
        pipeline, or a direct interconnection with a local distribution 
        company, a gas storage facility, or an industrial consumer.
            (3) Accounting rule for public utility property.--If any 
        oil and gas pipeline is public utility property (as defined in 
        section 46(f)(5) 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), the amendments made by 
        this section shall only apply to such property if, with respect 
        to such property, the taxpayer uses a normalization method of 
        accounting.

SEC. 922. CLASS LIFE FOR PETROLEUM STORAGE FACILITIES.

    (a) 7-Year Property.--
            (1) In general.--Subparagraph (C) of section 168(e)(3), as 
        amended by this Act, is amended by striking ``and'' at the end 
        of clause (ii), by redesignating clause (iii) as clause (iv), 
        and by adding after clause (ii) the following:
                            ``(iii) any section 1245 property described 
                        in section 1245(a)(3)(E) other than property to 
                        which section 179(b)(5) applies, and''.
            (2) Conforming amendment.--Subparagraph (B) of section 
        168(g)(3) (relating to special rules for determining class 
        life) is amended by inserting after the item relating to 
        subparagraph (C)(i) in the table contained therein the 
        following new item:

``(C)(iii).....................................................   10''.
    (b) Full Expensing of Heating Oil, Natural Gas, and Propane Storage 
Facility.--Section 179(b) (relating to limitations) is amended by 
adding at the end the following new paragraph:
            ``(5) Full expensing of heating oil, natural gas, and 
        propane storage facility.--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 heating oil, natural gas, 
        or liquefied petroleum gas.''
    (c) Effective Date.--The amendments made by this section shall 
apply to property which is placed in service on or after the date of 
enactment of this Act. A taxpayer may elect (in such form and manner as 
the Secretary of the Treasury may prescribe) to have such amendments 
apply with respect to any property placed in service before such date.

SEC. 923. CLASS LIFE FOR PETROLEUM REFINERIES.

    (a) 7-Year Property.--
            (1) In general.--Subparagraph (C) of section 168(e)(3) 
        (relating to classification of certain property), as amended by 
        this Act, is amended by striking ``and'' at the end of clause 
        (iii), by redesignating clause (iv) as clause (v), and by 
        adding at the end the following new clause:
            ``(iv) any petroleum refining assets, and''.
            (2) Conforming amendment.--Subparagraph (B) of section 
        168(g)(3) (relating to special rules for determining class 
        life) is amended by inserting after the item relating to 
        subparagraph (C)(iii) in the table contained therein the 
        following new item:

``(C)(iv)......................................................   10''.
    (b) Assets Used in Petroleum Refining.--Subsection (i) of section 
168 is amended by adding at the end the following new paragraph:
            ``(16) Assets used in petroleum refining.--The term 
        `petroleum refining assets' means assets used for the 
        distillation, fractionation, and catalytic cracking of crude 
        petroleum into gasoline and other petroleum products.''
    (c) Effective Date.--The amendments made by this section shall 
apply to property which is placed in service on or after the date of 
enactment of this Act.

          PART V--OFFSHORE OIL AND GAS VESSELS AND STRUCTURES

SEC. 931. ACCELERATED DEPRECIATION.

    (a) 7-Year Property.--
            (1) In general.--Subparagraph (C) of section 168(e)(3) 
        (relating to classification of certain property), as amended by 
        this Act, is amended by striking ``and'' at the end of clause 
        (iv), by redesignating clause (v) as clause (vi), and by adding 
        at the end the following new clause:
            ``(v) a vessel of at least 10,000 gross tons, or any type 
        of structure of at least 10,000 tons, that is owned by a 
        drilling company and used to explore for, drill for, or produce 
        offshore oil and gas, if that vessel or structure was 
        constructed or reconstructed in the United States, and''.
            (2) Conforming amendment.--Subparagraph (B) of section 
        168(g)(3) (relating to special rules for determining class 
        life) is amended by inserting after the item relating to 
        subparagraph (C)(iv) in the table contained therein the 
        following new item:

``(C)(v).......................................................   10''.
            (3) Drilling company defined.--Section 168(i) is amended by 
        adding at the end the following new paragraph:
            ``(17) Drilling company.--The term `drilling company' means 
        a person engaged in the business of exploration, development, 
        or production of oil and gas.''
    (b) Effective Date.--The amendments made by this section shall 
apply to vessels and structures placed in service after December 31, 
2000, and constructed or reconstructed under a contract executed before 
January 1, 2007.

SEC. 932. TAX CREDIT.

    (a) Amendments.--
            (1) Credit for certain vessels and structures.--Section 
        48(a)(3)(A) (relating to the energy tax credit) is amended--
                    (A) by striking ``or'' at the end of clause (i);
                    (B) by adding ``or'' at the end of clause (ii); and
                    (C) by adding at the end the following new clause:
                            ``(iii) a vessel of at least 10,000 gross 
                        tons, or any type of structure of at least 
                        10,000 tons, that is owned by a drilling 
                        company and used to explore for, drill for, or 
                        produce oil and gas, if that vessel or 
                        structure was constructed or reconstructed in 
                        the United States,''.
            (2) Drilling company defined.--Section 48(a)(3) is amended 
        by adding at the end the following new sentence: ``The term 
        `drilling company' means a person engaged in the business of 
        exploration, development, or production of oil and gas.''
    (b) Effective Date.--The amendments made by this section shall 
apply to vessels and structures placed in service after December 31, 
2000, and constructed or reconstructed under a contract executed before 
January 1, 2007.

SEC. 933. CAPITAL CONSTRUCTION FUNDS FOR UNITED STATES-BUILT DRILLING 
              VESSELS.

    (a) Amendments to Merchant Marine Act, 1936.--
            (1) Changes in vessels to which capital construction funds 
        apply.--
                    (A) The second sentence of section 607(a) of the 
                Merchant Marine Act, 1936 (46 U.S.C. App. 1177(a)), is 
                amended by striking ``for operation in the United 
                States foreign, Great Lakes, or noncontiguous domestic 
                trade or in the fisheries of the United States'' and 
                inserting "for the operation in the fisheries of the 
                United States, or in the United States foreign, Great 
                Lakes, or noncontiguous domestic trade, or for 
                operation as an oil and gas drilling vessel in the 
                United States foreign or domestic commerce,''.
                    (B) Section 607(k)(1) of that Act (46 U.S.C. App. 
                1177(k)(1)) is amended by inserting ``, including an 
                oil and gas drilling vessel'' after ``means any 
                vessel''.
                    (C) Subparagraph (C) of section 607(k)(2) of that 
                Act (46 U.S.C. App. 1177(k)(2)) is amended to read as 
                follows:
                    ``(C) which the person maintaining the fund agrees 
                with the Secretary will be operated in the fisheries of 
                the United States, in the United States foreign, Great 
                Lakes, or non-contiguous domestic trade, or, in the 
                case of an oil and gas drilling vessel, in the foreign 
                or domestic commerce of the United States.''
                    (D) Section 607(k) of that Act (46 U.S.C. App. 
                1177(k)) is amended by adding at the end the following 
                new paragraph:
            ``(10) The term `oil and gas drilling vessel' means a 
        vessel constructed or reconstructed that is at least 10,000 
        gross tons and is used to explore for, drill for, or produce 
        oil and gas.''
            (2) Treatment of certain lease payments.--
                    (A) Section 607(f)(1) of the Merchant Marine Act, 
                1936 (46 U.S.C. App. 1171(f)(1)), is amended--
                            (i) by striking ``or'' at the end of 
                        subparagraph (B);
                            (ii) by striking the period at the end of 
                        subparagraph (C) and inserting ``, or''; and
                            (iii) by inserting after subparagraph (C) 
                        the following new subparagraph:
                    ``(D) the payment of amounts which reduce the 
                principal amount (as determined under regulations 
                promulgated by the Secretary) of a qualified lease of a 
                qualified vessel or container which is part of the 
                complement of a qualified vessel.''
                    (B) Section 607(g)(4) of that Act (46 U.S.C. App. 
                1171(g)(4)) is amended by inserting ``or to reduce the 
                principal amount of any qualified lease'' after 
                ``indebtedness''.
                    (C) Section 607(k) of that Act (46 U.S.C. App. 
                1171(k)), as previously amended in this Act, is further 
                amended by adding at the end the following new 
                paragraph:
            ``(11) The term `qualified lease' means any lease with a 
        term of at least 5 years.''
            (3) Treatment of capital gains and losses.--
                    (A) Section 607(e)(3) of the Merchant Marine Act, 
                1936 (46 U.S.C. App. 1177(e)(3)), is amended to read as 
                follows:
            ``(3) The capital gain account shall consist of--
                    ``(A) amounts representing long-term capital gains 
                (as defined in section 1222 of such Code) on assets 
                referred to in subsection (b)(1)(C), reduced by,
                    ``(B) amounts representing long-term capital losses 
                (as defined in such section 1222) on assets held in the 
                fund.''
                    (B) Section 607(e)(4)(B) of that Act (46 U.S.C. 
                App. 1177(e)(4)(B)) is amended to read as follows:
                    ``(B)(i) amounts representing short-term capital 
                gains (as defined in section 1222 of such Code) on 
                assets referred to in subsection (b)(1)(C), reduced by,
                    ``(ii) amounts representing short-term capital 
                losses (as defined in such section 1222) on assets held 
                in the fund,''.
                    (C) Section 607(h)(3)(B) of that Act (46 U.S.C. 
                App. 1177(h)(3)(B)) is amended by striking ``gain'' and 
                all that follows and inserting "long-term capital gain 
                (as defined in section 1222 of such Code), and''.
                    (D) The last sentence of section 607(h)(6)(A) of 
                that Act (46 U.S.C. App. 1177(h)(6)(A)) is amended by 
                striking ``20 percent (34 percent in the case of a 
                corporation)'' and inserting ''the rate applicable to 
                net capital gain under section 1(h) or 1201(a) of such 
                Code, as the case may be''.
            (4) Computation of interest with respect to nonqualified 
        withdrawals.--
                    (A) Section 607(h)(3)(C) of the Merchant Marine 
                Act, 1936 (46 U.S.C. App. 1177(h)(3)(C)), is amended--
                            (i) by amending clause (i) to read as 
                        follows:
                            ``(i) no addition to the tax shall be 
                        payable under section 6651 of such Code,''; and
                            (ii) in clause (ii), by striking ``paid at 
                        the applicable rate (as defined in paragraph 
                        (4))'' and inserting ``paid in accordance with 
                        section 6601 of such Code''.
                    (B) Section 607(h) of that Act (46 U.S.C. App. 
                1177(h)) is amended by striking paragraph (4) and by 
                redesignating paragraphs (5) and (6) as paragraphs (4) 
                and (5), respectively.
                    (C) Section 607(h)(5)(A) of that Act (46 U.S.C. 
                App. 1177(h)(5)(A)), as so redesignated by paragraph 
                (2) of this subsection, is amended by striking 
                ``paragraph (5)'' and inserting ``paragraph (4)''.
            (5) Other changes.--Section 607 of the Merchant Marine Act, 
        1936 (46 U.S.C. App. 1177) is amended by striking ``Internal 
        Revenue Code of 1954'' each place it appears and inserting 
        ``Internal Revenue Code of 1986''.
    (b) Amendments to Internal Revenue Code of 1986.--
            (1) Treatment of certain lease payments.--
                    (A) Section 7518(e)(1) (relating to purposes of 
                qualified withdrawals) is amended--
                            (i) by striking ``or'' at the end of 
                        subparagraph (B);
                            (ii) by striking the period at the end of 
                        subparagraph (C) and inserting ``, or''; and
                            (iii) by inserting after subparagraph (C) 
                        the following new subparagraph:
                    ``(D) the payment of amounts which reduce the 
                principal amount (as determined under regulations) of a 
                qualified lease of a qualified vessel or container 
                which is part of the complement of a qualified 
                vessel.''
                    (B) Section 7518(f)(4) is amended by inserting ``or 
                to reduce the principal amount of any qualified lease'' 
                after ``indebtedness''.
            (2) Treatment of capital gains and losses.--
                    (A) Section 7518(d)(3) is amended to read as 
                follows:
            ``(3) Capital gain account.--The capital gain account shall 
        consist of--
                    ``(A) amounts representing long-term capital gain 
                (as defined in section 1222) on assets referred to in 
                subsection (a)(1)(C), reduced by,
                    ``(B) amounts representing long-term capital loss 
                (as defined in section 1222) on assets held in the 
                fund.''
                    (B) Section 7518(d)(4)(B) is amended to read as 
                follows:
                    ``(B)(i) amounts representing short-term capital 
                gain (as defined in section 1222) on assets referred to 
                in subsection (a)(1)(C), reduced by,
                    ``(ii) amounts representing short-term capital loss 
                (as defined in section 1222) on assets held in the 
                fund,''.
                    (C) Section 7518(g)(3)(B) is amended by striking 
                ``gain'' and all that follows and inserting ``long-term 
                capital gain (as defined in section 1222), and''.
                    (D) The last sentence of section 7518(g)(6)(A) is 
                amended by striking ``20 percent (34 percent in the 
                case of a corporation)'' and inserting ``the rate 
                applicable to net capital gain under section 1(h) or 
                1201(a), as the case may be''.
            (3) Computation of interest with respect to nonqualified 
        withdrawals.--
                    (A) Section 7518(g)(3)(C) is amended--
                            (i) by striking clause (i) and inserting 
                        the following new clause:
                            ``(i) no addition to the tax shall be 
                        payable under section 6651,''; and
                            (ii) in clause (ii), by striking ``paid at 
                        the applicable rate (as defined in paragraph 
                        (4))'' and inserting ``paid in accordance with 
                        section 6601''.
                    (B) Section 7518(g) is amended by striking 
                paragraph (4) and by redesignating paragraphs (5) and 
                (6) as paragraphs (4) and (5), respectively.
                    (C) Section 7518(g)(5)(A), as redesignated by 
                paragraph (2) of this subsection, is amended by 
                striking ``paragraph (5)'' and inserting ``paragraph 
                (4)''.
            (4) Applicability of alternative minimum tax.--Section 
        56(c) is amended by striking paragraph (2) and by redesignating 
        paragraph (3) as paragraph (2).
            (5) Other changes.--
            (1) Section 7518(i) is amended by striking ``enactment of 
        this section'' and inserting ``enactment of the Energy Security 
        Tax Policy Act of 2001''.
            (2) Section 543(a)(1)(B) is amended to read as follows:
                    ``(B) interest on amounts set aside in a capital 
                construction fund under section 607 of the Merchant 
                Marine Act, 1936 (46 App. U.S.C. 1177), or in a 
                construction reserve fund under section 511 of such Act 
                (46 App. U.S.C. 1161),''.
    (c) Regulations.--
            (1) 46 cfr part 390.--Not later than 90 days after the date 
        of the enactment of this Act, the Secretary of Transportation 
        shall promulgate final regulations implementing the amendments 
        made by subsection (a)(1).
            (2) Joint regulations.--The amendments made by paragraphs 
        (2) through (4) of subsection (a) shall be implemented under 
        revised joint regulations promulgated by the Secretary of 
        Transportation and the Secretary of the Treasury.
    (d) Effective Date.--
            (1) In general.--Except as otherwise provided in this 
        subsection, the amendments made by this section shall apply as 
        of the date of the enactment of this Act.
            (2) Changes in computation of interest.--The amendments 
        made by subsections (a)(4) and (b)(3) shall apply to 
        withdrawals made after December 31, 2000, including for 
        purposes of computing interest on such a withdrawal for periods 
        on or before such date.
            (3) Qualified leases.--The amendments made by subsections 
        (a)(2) and (b)(1) shall apply to leases in effect on, or 
        entered into after, December 31, 2000.

                Subtitle B--Provisions Relating to Coal

 PART I--CREDIT FOR EMISSION REDUCTIONS AND EFFICIENCY IMPROVEMENTS IN 
         EXISTING COAL-BASED ELECTRICITY GENERATION FACILITIES

SEC. 941. CREDIT FOR INVESTMENT IN QUALIFYING CLEAN COAL TECHNOLOGY.

    (a) Allowance of Qualifying Clean Coal Technology Unit 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 unit credit.''
    (b) Amount of Qualifying Clean Coal Technology Unit Credit.--
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. QUALIFYING CLEAN COAL TECHNOLOGY UNIT CREDIT.

    ``(a) In General.--For purposes of section 46, the qualifying clean 
coal technology unit credit for any taxable year is an amount equal to 
10 percent of the qualified investment in a qualifying system of 
continuous emission control for such taxable year.
    ``(b) Qualifying System of Continuous Emission Control.--
            ``(1) In general.--For purposes of subsection (a), the term 
        `qualifying system of continuous emission control' means a 
        system of the taxpayer which--
                    ``(A) serves, is added to, or retrofits an existing 
                coal-based electricity generation unit, the 
                construction, installation, or retrofitting of which is 
                completed by the taxpayer (but only with respect to 
                that portion of the basis which is properly 
                attributable to such construction, installation, or 
                retrofitting),
                    ``(B) removes or reduces 1 or more of the 
                pollutants regulated under title I of the Clean Air Act 
                (42 U.S.C. 7401 et seq.),
                    ``(C) is depreciable under section 167,
                    ``(D) has a useful life of not less than 4 years, 
                and
                    ``(E) is located in the United States.
            ``(2) Special rule for sale-leasebacks.--For purposes of 
        subparagraph (A) of paragraph (1), in the case of a unit 
        which--
                    ``(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 unit was originally placed in service, for a 
                period of not less than 12 years,
        such unit 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.
    ``(c) Existing Coal-Based Electricity Generation Unit.--For 
purposes of subsection (a), the term `existing coal-based electricity 
generating unit' means, with respect to any taxable year, a steam 
generator-turbine unit that uses coal to produce 75 percent or more of 
its output as electricity and was in operation before the effective 
date of this section.
    ``(d) Limit on Qualifying Clean Coal Technology Unit Credit.--For 
purposes of subsection (a), the credit shall be applicable to not more 
than the first $100,000,000 of qualifying investment in a qualifying 
system of continuous emission control at any 1 existing coal-based 
electricity generating unit.
    ``(e) Qualified Investment.--For purposes of subsection (a), the 
term `qualified investment' means, with respect to any taxable year, 
the basis of a qualifying system of continuous emission control placed 
in service by the taxpayer during such taxable year.
    ``(f) 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 (e) without regard to 
        this subsection) 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 
        system of continuous emission control 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) Nonself-constructed property.--In the case of 
                nonself-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) Nonself-constructed property.--The term 
                `nonself-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 system of 
                continuous emission control to be taken into account.--
                Construction shall be taken into account only if, for 
                purposes of this subpart, expenditures therefore 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.
    ``(g) 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 48 is allowed 
unless the taxpayer elects to waive the application of such credit to 
such property.
    ``(h) Termination.--This section shall not apply with respect to 
any qualified investment made more than 10 years after the effective 
date of this section.''
    (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 system of 
        continuous emission control.--For purposes of applying this 
        subsection in the case of any credit allowable by reason of 
        section 48A, 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 system of continuous 
                emission control (as defined by section 48A(b)(1)) 
                multiplied by a fraction whose numerator is the number 
                of years remaining to fully depreciate under this title 
                the qualifying system of continuous emission control 
                disposed of, and whose denominator is the total number 
                of years over which such unit would otherwise have been 
                subject to depreciation. For purposes of the preceding 
                sentence, the year of disposition of the qualifying 
                system of continuous emission control 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 system of continuous 
                emission control under section 48A, 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 system 
                of continuous emission control.''
    (d) Transitional Rule.--Section 39(d) (relating to transitional 
rules) is amended by adding at the end the following:
            ``(10) No carryback of section 48a credit before effective 
        date.--No portion of the unused business credit for any taxable 
        year which is attributable to the qualifying clean coal 
        technology unit credit determined under section 48A may be 
        carried back to a taxable year ending before the date of 
        enactment of section 48A.''
    (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 system of continuous emission 
                        control attributable to any qualified 
                        investment (as defined by section 48A(e)).''
            (2) Section 50(a)(4) is amended by striking ``and (2)'' and 
        inserting ``, (2), and (6)''.
            (3) Section 50(c) is amended by adding at the end the 
        following:
            ``(6) Nonapplication.--Paragraphs (1) and (2) shall not 
        apply to any qualifying clean coal technology unit credit under 
        section 48A.''
            (4) The table of sections for subpart E of part IV of 
        subchapter A of chapter 1 is amended by inserting after the 
        item relating to section 48 the following:

``48A. Qualifying clean coal technology unit credit.''
    (f) Installations Not Subject to New Source Review, Etc.--
            (1) Exemption from new source review.--The installation of 
        a qualifying system of continuous emission control (as defined 
        in section 48A(b)(1) of the Internal Revenue Code of 1986, as 
        added by subsection (b)), shall be exempt from the new source 
        review provisions of the Clean Air Act (42 U.S.C. 7401 et 
        seq.).
            (2) Exemption from emission control requirements.--The 
        installation of a qualifying system of continuous emission 
        control (as so defined) on an existing coal-based electricity 
        generating unit, which meets or exceeds, for the applicable 
        source category and pollutant being controlled by such 
        qualified system, the standard of performance for new 
        stationary sources, shall exempt the existing unit from any new 
        or increased emission control requirements for the pollutant 
        being controlled by such qualified system under title I of the 
        Clean Air Act (42 U.S.C. 7401 et seq.) for a period of 10 years 
        after the date such qualified system is originally placed in 
        service.
    (g) 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 enactment of the Revenue 
Reconciliation Act of 1990).

SEC. 942. CREDIT FOR PRODUCTION FROM A QUALIFYING CLEAN COAL TECHNOLOGY 
              UNIT.

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

``SEC. 45F. CREDIT FOR PRODUCTION FROM A QUALIFYING CLEAN COAL 
              TECHNOLOGY UNIT.

    ``(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 product of--
            ``(1) the applicable amount of clean coal technology 
        production credit, multiplied by
            ``(2) the kilowatt hours of electricity produced by the 
        taxpayer during such taxable year at a qualifying clean coal 
        technology unit during the 10-year period beginning on the date 
        the unit was returned to service after retrofit, repowering, or 
        replacement.
    ``(b) Applicable Amount.--
            ``(1) In general.--For purposes of this section, the 
        applicable amount of clean coal technology production credit is 
        equal to $0.0034.
            ``(2) Inflation adjustment factor.--For calendar years 
        after 2001, the applicable amount of clean coal technology 
        production credit shall 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.
    ``(c) Definitions and Special Rules.--For purposes of this 
section--
            ``(1) Qualifying clean coal technology unit.--The term 
        `qualifying clean coal technology unit' means a unit of the 
        taxpayer which--
                    ``(A) is an existing coal-based electricity 
                generating steam generator-turbine unit,
                    ``(B) has a nameplate capacity rating of not more 
                than 300,000 kilowatts, and
                    ``(C) has been retrofitted, repowered, or replaced 
                with a clean coal technology within 10 years of the 
                effective date of this section.
            ``(2) Clean coal technology.--The term `clean coal 
        technology' means technology which--
                    ``(A) uses 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, or any other 
                technology for the production of electricity,
                    ``(B) has a design heat rate not less than 500 Btu/
                kWh below that of the existing unit before it is 
                retrofit, repowered, or replaced with the qualifying 
                clean coal technology,
                    ``(C) has a maximum design heat rate of not more 
                than 9,000 Btu/kWh when the design coal has a heat 
                content of more than 8,000 Btu per pound, and
                    ``(D) has a maximum design heat rate of not more 
                than 10,500 Btu/kWh when the design coal has a heat 
                content of 8,000 Btu per pound or less.
            ``(3) Application of certain rules.--The rules of 
        paragraphs (3), (4), and (5) of section 45 shall apply.
            ``(4) Inflation adjustment factor.--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 
        2000.
            ``(5) GDP implicit price deflator.--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.
    ``(d) Coordination With Other Credits.--This section shall not 
apply to any property with respect to which the qualifying clean coal 
technology unit credit under section 48A is allowed unless the taxpayer 
elects to waive the application of such credit to such property.''
    (b) Credit Treated as Business Credit.--Section 38(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 qualifying clean coal technology production 
        credit determined under section 45F(a).''
    (c) Transitional Rule.--Section 39(d) (relating to transitional 
rules), as amended by this Act, is amended by adding at the end the 
following:
            ``(11) No carryback of section 45f credit before effective 
        date.--No portion of the unused business credit for any taxable 
        year which is attributable to the qualifying clean coal 
        technology production credit determined under section 45F may 
        be carried back to a taxable year ending before the date of 
        enactment of section 45F.''
    (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. 45F. Credit for production from a qualifying clean coal 
                            technology unit.''
    (e) Modifications and Installations Not Subject to New Source 
Review, Etc.--
            (1) Exemption from new source review.--Modifications made 
        to an existing coal-based generation unit because of, or as 
        part of a qualifying clean coal technology unit (as defined in 
        section 45F(c)(1) of the Internal Revenue Code of 1986, as 
        added by subsection (a)), shall be exempt from the new source 
        review provisions of the Clean Air Act (42 U.S.C. 7401 et 
        seq.).
            (2) Exemption from emission control requirements.--The 
        installation of a qualifying clean coal technology (as so 
        defined) on an existing coal-based electricity generating unit, 
        which meets or exceeds, for the applicable source category, the 
        standard of performance for new stationary sources under 
        section 111 of the Clean Air Act (42 U.S.C. 7411), shall exempt 
        the existing unit from any new or increased emission control 
        requirements under title I of such Act (42 U.S.C. 7401 et seq.) 
        for a period of 10 years after the date the qualifying clean 
        coal technology is originally placed in service.
    (f) Effective Date.--The amendments made by this section shall 
apply to production after the date of enactment of this Act.

PART II--INCENTIVES FOR EARLY COMMERCIAL APPLICATIONS OF ADVANCED CLEAN 
                           COAL TECHNOLOGIES

SEC. 946. CREDIT FOR INVESTMENT IN QUALIFYING ADVANCED CLEAN COAL 
              TECHNOLOGY.

    (a) Allowance of Qualifying Advanced Clean Coal Technology Facility 
Credit.--Section 46 (relating to amount of credit), as amended by this 
Act, 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 qualifying advanced clean coal technology 
        facility credit.''
    (b) Amount of Qualifying Advanced 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 this Act, is 
amended by inserting after section 48A the following:

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

    ``(a) In General.--For purposes of section 46, the qualifying 
advanced clean coal technology facility credit for any taxable year is 
an amount equal to 10 percent of the qualified investment in a 
qualifying advanced clean coal technology facility for such taxable 
year.
    ``(b) Qualifying Advanced Clean Coal Technology Facility.--
            ``(1) In general.--For purposes of subsection (a), the term 
        `qualifying advanced 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) which is acquired through purchase (as 
                defined by section 179(d)(2)),
                    ``(B) which is depreciable under section 167,
                    ``(C) which has a useful life of not less than 4 
                years,
                    ``(D) which is located in the United States, and
                    ``(E) which uses qualifying advanced 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 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) Qualifying advanced clean coal technology.--For 
        purposes of paragraph (1)--
                    ``(A) In general.--The term `qualifying advanced 
                clean coal technology' means, with respect to clean 
                coal technology--
                            ``(i) multiple applications, with a 
                        combined capacity of not more than 5,000 
                        megawatts, of advanced pulverized coal or 
                        atmospheric fluidized bed combustion 
                        technology--
                                    ``(I) installed as a new, retrofit, 
                                or repowering application,
                                    ``(II) operated between 2001 and 
                                2011, and
                                    ``(III) with a design net heat rate 
                                of not more than 9,500 Btu per kilowatt 
                                hour when the design coal has a heat 
                                content of more than 8,000 Btu per 
                                pound, or a design net heat rate of not 
                                more than 9,900 Btu per kilowatt hour 
                                when the design coal has a heat content 
                                of 8,000 Btu per pound or less,
                            ``(ii) multiple applications, with a 
                        combined capacity of not more than 1,000 
                        megawatts, of pressurized fluidized bed 
                        combustion technology--
                                    ``(I) installed as a new, retrofit, 
                                or repowering application,
                                    ``(II) operated between 2001 and 
                                2011, and
                                    ``(III) with a design net heat rate 
                                of not more than 8,400 Btu per kilowatt 
                                hour when the design coal has a heat 
                                content of more than 8,000 Btu per 
                                pound, or a design net heat rate of not 
                                more than 9,900 Btu's per kilowatt hour 
                                when the design coal has a heat content 
                                of 8,000 Btu per pound or less,
                            ``(iii) multiple applications, with a 
                        combined capacity of not more than 2,000 
                        megawatts, of integrated gasification combined 
                        cycle technology, with or without fuel or 
                        chemical co-production--
                                    ``(I) installed as a new, retrofit, 
                                or repowering application,
                                    ``(II) operated between 2001 and 
                                2011,
                                    ``(III) with a design net heat rate 
                                of not more than 8,550 Btu per kilowatt 
                                hour when the design coal has a heat 
                                content of more than 8,000 Btu per 
                                pound, or a design net heat rate of not 
                                more than 9,900 Btu per kilowatt hour 
                                when the design coal has a heat content 
                                of 8,000 Btu per pound or less, and
                                    ``(IV) with a net thermal 
                                efficiency on any fuel or chemical co-
                                production of not less than 39 percent 
                                (higher heating value), and
                            ``(iv) multiple applications, with a 
                        combined capacity of not more than 2,000 
                        megawatts of technology for the production of 
                        electricity--
                                    ``(I) installed as a new, retrofit, 
                                or repowering application,
                                    ``(II) operated between 2001 and 
                                2011, and
                                    ``(III) with 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 which uses coal 
                to produce 75 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 with or without fuel or chemical co-
                production, and any other technology for the production 
                of electricity that exceeds the performance of 
                conventional technology.
                    ``(D) Conventional technology.--The term 
                `conventional technology' means--
                            ``(i) coal-fired combustion technology with 
                        a design net heat rate of not less than 9,500 
                        Btu per kilowatt hour (HHV) and a carbon 
                        equivalents emission rate of not more than 0.54 
                        pounds of carbon per kilowatt hour when the 
                        design coal has a heat content of more than 
                        8,000 Btu per pound,
                            ``(ii) coal-fired combustion technology 
                        with a design net heat rate of not less than 
                        10,500 Btu per kilowatt hour (HHV) and a carbon 
                        equivalents emission rate of not more than 0.60 
                        pound of carbon per kilowatt hour when the 
                        design coal has a heat content of 8,000 Btu per 
                        pound or less, or
                            ``(iii) natural gas-fired combustion 
                        technology with a design net heat rate of not 
                        less than 7,500 Btu per kilowatt hour (HHV) and 
                        a carbon equivalents emission rate of not more 
                        than 0.24 pound of carbon per kilowatt hour.
                    ``(E) Design net heat rate.--The design net heat 
                rate shall be based on the design annual heat input to 
                and the design annual net electrical output from the 
                qualifying advanced 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 net heat rate, maximum design 
                        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 advanced 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 
        advanced 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) Nonself-constructed property.--In the case of 
                nonself-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) Nonself-constructed property.--The term 
                `nonself-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 advanced 
                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 48 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 made more than 10 years after the effective 
date of this section.''
    (c) Recapture.--Section 50(a) (relating to other special rules), as 
amended by this Act, is amended by adding at the end the following:
            ``(7) Special rules relating to qualifying advanced 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 advanced 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 advanced 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 advanced 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 advanced 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 
                advanced clean coal technology facility.''
    (d) Transitional Rule.--Section 39(d) (relating to transitional 
rules), as amended by this Act, is amended by adding at the end the 
following:
            ``(12) 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 advanced 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), as amended by this Act, 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 
                        qualifying advanced clean coal technology 
                        facility attributable to any qualified 
                        investment (as defined by section 48B(c)).''
            (2) Section 50(a)(4), as amended by this Act, is amended by 
        striking ``and (6)'' and inserting ``(6), and (7)''.
            (3) Section 50(c)(6), as added by this Act, is amended by 
        inserting ``or any advanced clean coal technology facility 
        credit under section 48B'' after ``section 48A''.
            (4) The table of sections for subpart E of part IV of 
        subchapter A of chapter 1, as amended by this Act, is amended 
        by inserting after the item relating to section 48A the 
        following:

``Sec. 48B. Qualifying advanced clean coal technology facility 
                            credit.''
    (f) Installations Not Subject to New Source Review, Etc.--
            (1) Exemption from new source review.--The installation of 
        a qualifying advanced clean coal technology facility (as 
        defined in section 48B(b)(1) of the Internal Revenue Code of 
        1986, as added by subsection (b)), shall be exempt from the new 
        source review provisions of the Clean Air Act (42 U.S.C. 7401 
        et seq.).
            (2) Exemption from emission control requirements.--The 
        installation of a qualifying advanced clean coal technology 
        facility (as so defined) which meets or exceeds, for the 
        applicable source category, the standard of performance for new 
        stationary sources established under section 111 of the Clean 
        Air Act (42 U.S.C. 7411), shall exempt that facility from any 
        new or increased emission control requirements under title I of 
        such Act (42 U.S.C. 7401 et seq.) for a period of 10 years 
        after the date the qualifying advanced clean coal technology 
        facility is originally placed in service.
    (g) 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. 947. CREDIT FOR PRODUCTION FROM QUALIFYING ADVANCED CLEAN COAL 
              TECHNOLOGY.

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

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

    ``(a) General Rule.--For purposes of section 38, the qualifying 
advanced clean coal technology production credit of any taxpayer for 
any taxable year is equal to--
            ``(1) the applicable amount of advanced clean coal 
        technology production credit, multiplied by
            ``(2) the sum of--
                    ``(A) the kilowatt hours of electricity, plus
                    ``(B) each 3413 Btu of fuels or chemicals,
        produced by the taxpayer during such taxable year at a 
        qualifying advanced clean coal technology facility during the 
        10-year period beginning on the date the facility was 
        originally placed in service.
    ``(b) Applicable Amount.--For purposes of this section, the 
applicable amount of advanced clean coal technology production credit 
with respect to production from a qualifying advanced clean coal 
technology facility shall be determined as follows:
            ``(1) Where the design coal has a heat content of more than 
        8,000 Btu per pound:
                    ``(A) In the case of a facility originally placed 
                in service before 2008, if--
      

------------------------------------------------------------------------
                                       The applicable amount is:
  ``The facility design net  -------------------------------------------
 heat rate, Btu/kWh (HHV) is   For 1st 5 years of     For 2d 5 years of
          equal to:               such service          such service
------------------------------------------------------------------------
Not more than 8,400.........         $.0050                $.0030
More than 8,400 but not more         $.0010                $.0010
 than 8,550.
More than 8,550 but not more         $.0005                $.0005.
 than 8,750.
------------------------------------------------------------------------

                    ``(B) In the case of a facility originally placed 
                in service after 2007 and before 2012, if--
      

------------------------------------------------------------------------
                                       The applicable amount is:
  ``The facility design net  -------------------------------------------
 heat rate, Btu/kWh (HHV) is   For 1st 5 years of     For 2d 5 years of
          equal to:               such service          such service
------------------------------------------------------------------------
Not more than 7,770.........         $.0090                $.0075
More than 7,770 but not more         $.0070                $.0050
 than 8,125.
More than 8,125 but not more         $.0060                $.0040.
 than 8,350.
------------------------------------------------------------------------

                    ``(C) In the case of a facility originally placed 
                in service after 2011 and before 2015, if--
      

------------------------------------------------------------------------
                                       The applicable amount is:
  ``The facility design net  -------------------------------------------
 heat rate, Btu/kWh (HHV) is   For 1st 5 years of     For 2d 5 years of
          equal to:               such service          such service
------------------------------------------------------------------------
Not more than 7,380.........         $.0120                $.0090
More than 7,380 but not more         $.0095                $.0070.
 than 7,720.
------------------------------------------------------------------------

            ``(2) Where the design coal has a heat content of not more 
        than 8,000 Btu per pound:
                    ``(A) In the case of a facility originally placed 
                in service before 2008, if--
      

------------------------------------------------------------------------
                                       The applicable amount is:
  ``The facility design net  -------------------------------------------
 heat rate, Btu/kWh (HHV) is   For 1st 5 years of     For 2d 5 years of
          equal to:               such service          such service
------------------------------------------------------------------------
Not more than 8,500.........         $.0050                $.0030
More than 8,500 but not more         $.0010                $.0010
 than 8,650.
More than 8,650 but not more         $.0005                $.0005.
 than 8,750.
------------------------------------------------------------------------

                    ``(B) In the case of a facility originally placed 
                in service after 2007 and before 2012, if--
      

------------------------------------------------------------------------
                                       The applicable amount is:
  ``The facility design net  -------------------------------------------
 heat rate, Btu/kWh (HHV) is   For 1st 5 years of     For 2d 5 years of
          equal to:               such service          such service
------------------------------------------------------------------------
Not more than 8,000.........         $.0090                $.0075
More than 8,000 but not more         $.0070                $.0050
 than 8,250.
More than 8,250 but not more         $.0060                $.0040.
 than 8,400.
------------------------------------------------------------------------

                    ``(C) In the case of a facility originally placed 
                in service after 2011 and before 2015, if--
      

------------------------------------------------------------------------
                                       The applicable amount is:
  ``The facility design net  -------------------------------------------
 heat rate, Btu/kWh (HHV) is   For 1st 5 years of     For 2d 5 years of
          equal to:               such service          such service
------------------------------------------------------------------------
Not more than 7,800.........         $.0120                $.0090
More than 7,800 but not more         $.0095                $.0070.
 than 7,950.
------------------------------------------------------------------------

            ``(3) Where the clean coal technology facility is producing 
        fuel or chemicals:
                    ``(A) In the case of a facility originally placed 
                in service before 2008, if--
      

------------------------------------------------------------------------
                                       The applicable amount is:
  ``The facility design net  -------------------------------------------
 thermal efficiency (HHV) is   For 1st 5 years of     For 2d 5 years of
          equal to:               such service          such service
------------------------------------------------------------------------
Not less than 40.6 percent..         $.0050                $.0030
Less than 40.6 but not less          $.0010                $.0010
 than 40 percent.
Less than 40 but not less            $.0005                $.0005.
 than 39 percent.
------------------------------------------------------------------------

                    ``(B) In the case of a facility originally placed 
                in service after 2007 and before 2012, if--
      

------------------------------------------------------------------------
                                       The applicable amount is:
  ``The facility design net  -------------------------------------------
 thermal efficiency (HHV) is   For 1st 5 years of     For 2d 5 years of
          equal to:               such service          such service
------------------------------------------------------------------------
Not less than 43.9 percent..         $.0090                $.0075
Less than 43.9 but not less          $.0070                $.0050
 than 42 percent.
Less than 42 but not less            $.0060                $.0040.
 than 40.9 percent.
------------------------------------------------------------------------

                    ``(C) In the case of a facility originally placed 
                in service after 2011 and before 2015, if--
      

------------------------------------------------------------------------
                                       The applicable amount is:
  ``The facility design net  -------------------------------------------
 thermal efficiency (HHV) is   For 1st 5 years of     For 2d 5 years of
          equal to:               such service          such service
------------------------------------------------------------------------
Not less than 44.2 percent..         $.0120                $.0090
Less than 44.2 but not less          $.0095                $.0070.
 than 43.6 percent.
------------------------------------------------------------------------

    ``(c) Inflation Adjustment Factor.--For calendar years after 2001, 
each amount in paragraphs (1), (2), and (3) of subsection (b) shall be 
adjusted by multiplying such amount by the inflation adjustment factor 
for the calendar year in which the amount is applied. If any amount has 
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) In general.--Any term used in this section which is 
        also used in section 48B shall have the meaning given such term 
        in section 48B.
            ``(2) Applicable rules.--The rules of paragraphs (3), (4), 
        and (5) of section 45 shall apply.
            ``(3) Inflation adjustment factor.--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 
        2000.
            ``(4) GDP implicit price deflator.--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), as amended 
by this Act, is amended by striking ``plus'' at the end of paragraph 
(14), by striking the period at the end of paragraph (15) and inserting 
``, plus'', and by adding at the end the following:
            ``(16) the qualifying advanced clean coal technology 
        production credit determined under section 45G(a).''
    (c) Transitional Rule.--Section 39(d) (relating to transitional 
rules), as amended by this Act, is amended by adding at the end the 
following:
            ``(13) No carryback of section 45h credit before effective 
        date.--No portion of the unused business credit for any taxable 
        year which is attributable to the qualifying advanced clean 
        coal technology production credit determined under section 45G 
        may be carried back to a taxable year ending before the date of 
        enactment of section 45G.''
    (d) Clerical Amendment.--The table of sections for subpart D of 
part IV of subchapter A of chapter 1, as amended by this Act, is 
amended by adding at the end the following:

``Sec. 45G. Credit for production from qualifying advanced clean coal 
                            technology.''
    (e) Installations Not Subject to New Source Review, Etc..--
            (1) Exemption from new source review.--The installation of 
        a qualifying advanced clean coal technology facility which has 
        qualified for a qualifying advanced clean coal technology 
        production credit determined under section 45G of the Internal 
        Revenue Code of 1986, as added by subsection (a), shall be 
        exempt from the new source review provisions of the Clean Air 
        Act (42 U.S.C. 7401 et seq.).
            (2) Exemption from emission control requirements.--The 
        installation of a qualifying advanced clean coal technology 
        facility which has qualified for a qualifying advanced clean 
        coal technology production credit determined under such section 
        45G and which meets or exceeds, for the applicable source 
        category, the standard of performance for new stationary 
        sources established under section 111 of the Clean Air Act (42 
        U.S.C. 7411), shall exempt that facility from any new or 
        increased emission control requirements under title I of such 
        Act (42 U.S.C. 7401 et seq.) for a period of 10 years after the 
        date the qualifying advanced clean coal technology facility is 
        originally placed in service.
    (f) Effective Date.--The amendments made by this section shall 
apply to production after the date of the enactment of this Act.

             Subtitle C--Provisions Relating to Natural Gas

SEC. 951. ARBITRAGE RULES NOT TO APPLY TO PREPAYMENTS FOR NATURAL GAS 
              AND OTHER COMMODITIES.

    (a) In General.--Section 148(b) (defining higher yielding 
investments) is amended by adding at the end the following new 
paragraph:
            ``(4) Investment property not to include certain 
        prepayments to ensure commodity supply.--The term `investment 
        property' shall not include a prepayment entered into for the 
        purpose of obtaining a supply of a commodity reasonably 
        expected to be used in a business of one or more utilities each 
        of which is owned and operated by a State or local government, 
        any political subdivision or instrumentality thereof, or any 
        governmental unit acting for or on behalf of such a utility.''
    (b) Effective Date.--The amendments made by this section shall 
apply to obligations issued after the date of the enactment of this 
Act.

SEC. 952. PRIVATE LOAN FINANCING TEST NOT TO APPLY TO PREPAYMENTS FOR 
              NATURAL GAS AND OTHER COMMODITIES.

    (a) In General.--Section 141(c)(2) (providing exceptions to the 
private loan financing test) is amended by striking ``or'' at the end 
of subparagraph (A), by striking the period at the end of subparagraph 
(B) and inserting ``, or'', and by adding at the end the following:
                    ``(C) arises from a transaction described in 
                section 148(b)(4).''
    (b) Effective Date.--The amendments made by this section shall 
apply to obligations issued after the date of the enactment of this 
Act.

           Subtitle D--Provisions Relating to Electric Power

SEC. 956. DEPRECIATION OF PROPERTY USED IN THE GENERATION OR 
              TRANSMISSION OF ELECTRICITY.

    (a) Depreciation of Property Used in the Generation or Transmission 
of Electricity.--
            (1) In general.--Subparagraph (C) of section 168(e)(3) 
        (relating to 7-year property), as amended by this Act, is 
        amended by striking ``and'' at the end of clause (v), by 
        redesignating clause (vi) as clause (vii), and by inserting 
        after clause (v) the following new clause:
                            ``(vi) any property used in the generation 
                        or transmission of electricity, and''.
            (2) 10-year class life.--The table contained in section 
        168(g)(3)(B) is amended by inserting after the item relating to 
        subparagraph (C)(v) the following new item:

``(C)(vi)......................................................   10''.
    (b) Definition of Property Used in the Generation or Transmission 
of Electricity.--Subsection (i) of section 168, as amended by this Act, 
is amended by adding at the end the following new paragraph:
            ``(18) Property used in the generation or transmission of 
        electricity.--
                    ``(A) Generation.--The term `property used in the 
                generation of electricity' means property used in 
                nuclear power production of electricity for sale, 
                property used in hydraulic power production of 
                electricity for sale, property used in steam power 
                production of electricity for sale, and property used 
                in combustion turbine production of electricity for 
                sale.
                    ``(B) Transmission.--The term `property used in the 
                transmission of electricity' means property used in the 
                transmission of electricity for sale.''
    (c) Effective Date.--The amendments made by this section shall 
apply to property placed in service after the date of the enactment of 
this Act.

SEC. 957. TAX-EXEMPT BOND FINANCING OF CERTAIN ELECTRIC FACILITIES.

    (a) Rules Applicable to Electric Output Facilities.--Subpart A of 
part IV of subchapter B of chapter 1 (relating to tax exemption 
requirements for State and local bonds) is amended by inserting after 
section 141 the following new section:

``SEC. 141A. ELECTRIC OUTPUT FACILITIES.

    ``(a) Election To Terminate Tax-Exempt Bond Financing for Certain 
Electric Output Facilities.--
            ``(1) In general.--A governmental unit may make an 
        irrevocable election under this paragraph to terminate certain 
        tax-exempt financing for electric output facilities. If the 
        governmental unit makes such election, then--
                    ``(A) except as provided in paragraph (2), on or 
                after the date of such election the governmental unit 
                may not issue with respect to an electric output 
                facility any bond the interest on which is exempt from 
                tax under section 103, and
                    ``(B) notwithstanding paragraph (1) or (2) of 
                section 141(a) or paragraph (4) or (5) of section 
                141(b), no bond which was issued by such unit with 
                respect to an electric output facility before the date 
                of enactment of this subsection (or which is described 
                in paragraph (2)(B), (D), (E) or (F)) the interest on 
                which was exempt from tax on such date, shall be 
                treated as a private activity bond.
            ``(2) Exceptions.--An election under paragraph (1) does not 
        apply to any of the following bonds:
                    ``(A) Any qualified bond (as defined in section 
                141(e)).
                    ``(B) Any eligible refunding bond (as defined in 
                subsection (d)(6)).
                    ``(C) Any bond issued to finance a qualifying 
                transmission facility or a qualifying distribution 
                facility.
                    ``(D) Any bond issued to finance equipment or 
                facilities necessary to meet Federal or State 
                environmental requirements applicable to an existing 
                generation facility.
                    ``(E) Any bond issued to finance repair of any 
                existing generation facility. Repairs of facilities may 
                not increase the generation capacity of the facility by 
                more than 3 percent above the greater of its nameplate 
                or rated capacity as of the date of the enactment of 
                this section.
                    ``(F) Any bond issued to acquire or construct (i) a 
                qualified facility, as defined in section 45(c)(3), if 
                such facility is placed in service during a period in 
                which a qualified facility may be placed in service 
                under such section, or (ii) any energy property, as 
                defined in section 48(a)(3).
            ``(3) Form and effect of election.--
                    ``(A) In general.--An election under paragraph (1) 
                shall be made in such a manner as the Secretary 
                prescribes and shall be binding on any successor in 
                interest to, or any related party with respect to, the 
                electing governmental unit. For purposes of this 
                paragraph, a governmental unit shall be treated as 
                related to another governmental unit if it is a member 
                of the same controlled group.
                    ``(B) Treatment of electing governmental unit.--A 
                governmental unit which makes an election under 
                paragraph (1) shall be treated for purposes of section 
                141 as a person which is not a governmental unit and 
                which is engaged in a trade or business, with respect 
                to its purchase of electricity generated by an electric 
                output facility placed in service after such election, 
                if such purchase is under a contract executed after 
                such election.
            ``(4) Definitions.--For purposes of this subsection:
                    ``(A) Existing generation facility.--The term 
                `existing generation facility' means an electric 
                generation facility in service on the date of the 
                enactment of this subsection or the construction of 
                which commenced before June 1, 2000.
                    ``(B) Qualifying distribution facility.--The term 
                `qualifying distribution facility' means a distribution 
                facility over which open access distribution services 
                described in subsection (b)(2)(C) are provided.
                    ``(C) Qualifying transmission facility.--The term 
                `qualifying transmission facility' means a local 
                transmission facility (as defined in subsection 
                (c)(3)(A)) over which open access transmission services 
                described in subparagraph (A), (B), or (E) of 
                subsection (b)(2) are provided.
    ``(b) Permitted Open Access Activities and Sales Transactions Not a 
Private Business Use for Bonds Which Remain Subject to Private Use 
Rules.--
            ``(1) General rule.--For purposes of this section and 
        section 141, the term `private business use' shall not include 
        a permitted open access activity or a permitted sales 
        transaction.
            ``(2) Permitted open access activities.--For purposes of 
        this section, the term `permitted open access activity' means 
        any of the following transactions or activities with respect to 
        an electric output facility owned by a governmental unit:
                    ``(A) Providing nondiscriminatory open access 
                transmission service and ancillary services--
                            ``(i) pursuant to an open access 
                        transmission tariff filed with and approved by 
                        FERC, but, in the case of a voluntarily filed 
                        tariff, only if the governmental unit 
                        voluntarily files a report described in 
                        paragraph (c) or (h) of section 35.34 of title 
                        18 of the Code of Federal Regulations or 
                        successor provision (relating to whether or not 
                        the issuer will join a regional transmission 
                        organization) not later than the later of the 
                        applicable date prescribed in such paragraphs 
                        or 60 days after the date of the enactment of 
                        this section,
                            ``(ii) under an independent system operator 
                        agreement, regional transmission organization 
                        agreement, or regional transmission group 
                        agreement approved by FERC, or
                            ``(iii) in the case of an ERCOT utility (as 
                        defined in section 212(k)(2)(B) of the Federal 
                        Power Act (16 U.S.C. 824k(k)(2)(B)), pursuant 
                        to a tariff approved by the Public Utility 
                        Commission of Texas.
                    ``(B) Participation in--
                            ``(i) an independent system operator 
                        agreement,
                            ``(ii) a regional transmission organization 
                        agreement, or
                            ``(iii) a regional transmission group,
                which has been approved by FERC, or by the Public 
                Utility Commission of Texas in the case of an ERCOT 
                utility (as so defined). Such participation may include 
                transfer of control of transmission facilities to an 
                organization described in clause (i), (ii), or (iii).
                    ``(C) Delivery on a nondiscriminatory open access 
                basis of electric energy sold to end-users served by 
                distribution facilities owned by such governmental 
                unit.
                    ``(D) Delivery on a nondiscriminatory open access 
                basis of electric energy generated by generation 
                facilities connected to distribution facilities owned 
                by such governmental unit.
                    ``(E) Other transactions providing 
                nondiscriminatory open access transmission or 
                distribution services under Federal, State, or local 
                open access, retail competition, or similar programs, 
                to the extent provided in regulations prescribed by the 
                Secretary.
            ``(3) Permitted sales transaction.--For purposes of this 
        subsection, the term `permitted sales transaction' means any of 
        the following sales of electric energy from existing generation 
        facilities (as defined in subsection (a)(4)(A)):
                    ``(A) The sale of electricity to an on-system 
                purchaser, if the seller provides open access 
                distribution service under paragraph (2)(C) and, in the 
                case of a seller which owns or operates transmission 
                facilities, if such seller provides open access 
                transmission under subparagraph (A), (B), or (E) of 
                paragraph (2).
                    ``(B) The sale of electricity to a wholesale native 
                load purchaser or in a wholesale stranded cost 
                mitigation sale--
                            ``(i) if the seller provides open access 
                        transmission service described in subparagraph 
                        (A), (B), or (E) of paragraph (2), or
                            ``(ii) if the seller owns or operates no 
                        transmission facilities and transmission 
                        providers to the seller's wholesale native load 
                        purchasers provide open access transmission 
                        service described in subparagraph (A), (B), or 
                        (E) of paragraph (2).
            ``(4) Definitions and special rules.--For purposes of this 
        subsection--
                    ``(A) On-system purchaser.--The term `on-system 
                purchaser' means a person whose electric facilities or 
                equipment are directly connected with transmission or 
                distribution facilities which are owned by a 
                governmental unit, and such person--
                            ``(i) purchases electric energy from such 
                        governmental unit at retail and either was 
                        within such unit's distribution area in the 
                        base year or is a person as to whom the 
                        governmental unit has a service obligation, or
                            ``(ii) is a wholesale native load purchaser 
                        from such governmental unit.
                    ``(B) Wholesale native load purchaser.--The term 
                `wholesale native load purchaser' means a wholesale 
                purchaser as to whom the governmental unit had--
                            ``(i) a service obligation at wholesale in 
                        the base year, or
                            ``(ii) an obligation in the base year under 
                        a requirements contract, or under a firm sales 
                        contract which has been in effect for (or has 
                        an initial term of) at least 10 years,
                but only to the extent that in either case such 
                purchaser resells the electricity at retail to persons 
                within the purchaser's distribution area.
                    ``(C) Wholesale stranded cost mitigation sale.--The 
                term `wholesale stranded cost mitigation sale' means 1 
                or more wholesale sales made in accordance with the 
                following requirements:
                            ``(i) A governmental unit's allowable sales 
                        under this subparagraph during the recovery 
                        period may not exceed the sum of its annual 
                        load losses for each year of the recovery 
                        period.
                            ``(ii) The governmental unit's annual load 
                        loss for each year of the recovery period is 
                        the amount (if any) by which--
                                    ``(I) sales in the base year to 
                                wholesale native load purchasers which 
                                do not constitute a private business 
                                use, exceed
                                    ``(II) sales during that year of 
                                the recovery period to wholesale native 
                                load purchasers which do not constitute 
                                a private business use.
                            ``(iii) If actual sales under this 
                        subparagraph during the recovery period are 
                        less than allowable sales under clause (i), the 
                        amount not sold (but not more than 10 percent 
                        of the aggregate allowable sales under clause 
                        (i)) may be carried over and sold as wholesale 
                        stranded cost mitigation sales in the calendar 
                        year following the recovery period.
                    ``(D) Recovery period.--The recovery period is the 
                7-year period beginning with the start-up year.
                    ``(E) Start-up year.--The start-up year is 
                whichever of the following calendar years the 
                governmental unit elects:
                            ``(i) The year the governmental unit first 
                        offers open transmission access.
                            ``(ii) The first year in which at least 10 
                        percent of the governmental unit's wholesale 
                        customers' aggregate retail native load is open 
                        to retail competition.
                            ``(iii) The calendar year which includes 
                        the date of the enactment of this section, if 
                        later than the year described in clause (i) or 
                        (ii).
                    ``(F) Permitted sales transactions under existing 
                contracts.--A sale to a wholesale native load purchaser 
                (other than a person to whom the governmental unit had 
                a service obligation) under a contract which resulted 
                in private business use in the base year shall be 
                treated as a permitted sales transaction only to the 
                extent that sales under the contract exceed the lesser 
                of--
                            ``(i) in any year, the private business use 
                        which resulted during the base year, or
                            ``(ii) the maximum amount of private 
                        business use which could occur (absent the 
                        enactment of this section) without causing the 
                        bonds to be private activity bonds.
                This subparagraph shall only apply to the extent that 
                the sale is allocable to bonds issued before the date 
                of the enactment of this section (or bonds issued to 
                refund such bonds).
                    ``(G) Joint action agencies.--A joint action 
                agency, or a member of (or a wholesale native load 
                purchaser from) a joint action agency, which is 
                entitled to make a sale described in subparagraph (A) 
                or (B) in a year, may transfer the entitlement to make 
                that sale to the member (or purchaser), or the joint 
                action agency, respectively.
    ``(c) Certain Bonds for Transmission and Distribution Facilities 
Not Tax Exempt.--
            ``(1) General rule.--For purposes of this title, no bond 
        the interest on which is exempt from taxation under section 103 
        may be issued on or after the date of the enactment of this 
        subsection if any of the proceeds of such issue are used to 
        finance--
                    ``(A) any transmission facility which is not a 
                local transmission facility, or
                    ``(B) a start-up utility distribution facility.
            ``(2) Exceptions.--Paragraph (1) shall not apply to--
                    ``(A) any qualified bond (as defined in section 
                141(e)),
                    ``(B) any eligible refunding bond (as defined in 
                subsection (d)(6)), or
                    ``(C) any bond issued to finance--
                            ``(i) any repair of a transmission facility 
                        in service on the date of the enactment of this 
                        section, so long as the repair does not 
                        increase the voltage level over its level in 
                        the base year or increase the thermal load 
                        limit of the transmission facility by more than 
                        3 percent over such limit in the base year,
                            ``(ii) any qualifying upgrade of a 
                        transmission facility in service on the date of 
                        the enactment of this section, or
                            ``(iii) a transmission facility necessary 
                        to comply with an obligation under a shared or 
                        reciprocal transmission agreement in effect on 
                        the date of the enactment of this section.
            ``(3) Local transmission facility definitions and special 
        rules.--For purposes of this subsection--
                    ``(A) Local transmission facility.--The term `local 
                transmission facility' means a transmission facility 
                which is located within the governmental unit's 
                distribution area or which is, or will be, necessary to 
                supply electricity to serve retail native load or 
                wholesale native load of 1 or more governmental units. 
                For purposes of this subparagraph, the distribution 
                area of a public power authority which was created in 
                1931 by a State statute and which, as of January 1, 
                1999, owned at least one-third of the transmission 
                circuit miles rated at 230kV or greater in the State, 
                shall be determined under regulations of the Secretary.
                    ``(B) Retail native load.--The term `retail native 
                load' is the electric load of end-users served by 
                distribution facilities owned by a governmental unit.
                    ``(C) Wholesale native load.--The term `wholesale 
                native load' is--
                            ``(i) the retail native load of a 
                        governmental unit's wholesale native load 
                        purchasers, and
                            ``(ii) the electric load of purchasers (not 
                        described in clause (i)) under wholesale 
                        requirements contracts which--
                                    ``(I) do not constitute private 
                                business use under the rules in effect 
                                absent this subsection, and
                                    ``(II) were in effect in the base 
                                year.
                    ``(D) Necessary to serve load.--For purposes of 
                determining whether a transmission or distribution 
                facility is, or will be, necessary to supply 
                electricity to retail native load or wholesale native 
                load--
                            ``(i) electric reliability standards or 
                        requirements of national or regional 
                        reliability organizations, regional 
                        transmission organizations, and the Electric 
                        Reliability Council of Texas shall be taken 
                        into account, and
                            ``(ii) transmission, siting, and 
                        construction decisions of regional transmission 
                        organizations or independent system operators 
                        and State and Federal agencies shall be 
                        presumptive evidence regarding whether 
                        transmission facilities are necessary to serve 
                        native load.
                    ``(E) Qualifying upgrade.--The term `qualifying 
                upgrade' means an improvement or addition to 
                transmission facilities in service on the date of the 
                enactment of this section which is ordered or approved 
                by a regional transmission organization, by an 
                independent system operator, or by a State regulatory 
                or siting agency.
            ``(4) Start-up utility distribution facility defined.--For 
        purposes of this subsection, the term `start-up utility 
        distribution facility' means any distribution facility to 
        provide electric service to the public that is placed in 
        service--
                    ``(A) by a governmental unit which did not operate 
                an electric utility on the date of the enactment of 
                this section, and
                    ``(B) before the date on which such governmental 
                unit operates in a qualified service area (as such term 
                is defined in section 141(d)(3)(B)).
        A governmental unit is deemed to have operated an electric 
        utility on the date of the enactment of this section if it 
        operates electric output facilities which were operated by 
        another governmental unit to provide electric service to the 
        public on such date.
    ``(d) Definitions; Special Rules.--For purposes of this section--
            ``(1) Base year.--The term `base year' means the calendar 
        year which includes the date of the enactment of this section 
        or, at the election of the governmental unit, either of the 2 
        immediately preceding calendar years.
            ``(2) Distribution area.--The term `distribution area' 
        means the area in which a governmental unit owns distribution 
        facilities.
            ``(3) Electric output facility.--The term `electric output 
        facility' means an output facility that is an electric 
        generation, transmission, or distribution facility.
            ``(4) Distribution facility.--The term `distribution 
        facility' means an electric output facility that is not a 
        generation or transmission facility.
            ``(5) Transmission facility.--The term `transmission 
        facility' means an electric output facility (other than a 
        generation facility) that operates at an electric voltage of 
        69kV or greater, except that the owner of the facility may 
        elect to treat any output facility that is a transmission 
        facility for purposes of the Federal Power Act as a 
        transmission facility for purposes of this section.
            ``(6) Eligible refunding bond.--The term `eligible 
        refunding bond' means any State or local bond issued after an 
        election described in subsection (a) that directly or 
        indirectly refunds any tax-exempt bond (other than a qualified 
        bond) issued before such election, if the weighted average 
        maturity of the issue of which the refunding bond is a part 
        does not exceed the remaining weighted average maturity of the 
        bonds issued before the election. In applying such term for 
        purposes of subsection (c)(2)(B), the date of election shall be 
        deemed to be the date of the enactment of this section.
            ``(7) FERC.--The term `FERC' means the Federal Energy 
        Regulatory Commission.
            ``(8) Government-owned facility.--An electric output 
        facility shall be treated as owned by a governmental unit if it 
        is an electric output facility that either is--
                    ``(A) owned or leased by such governmental unit, or
                    ``(B) a transmission facility in which the 
                governmental unit acquired before the base year long-
                term firm capacity for the purposes of serving 
                customers to which the unit had at that time either--
                            ``(i) a service obligation, or
                            ``(ii) an obligation under a requirements 
                        contract.
            ``(9) Repair.--The term `repair' shall include replacement 
        of components of an electric output facility, but shall not 
        include replacement of the facility.
            ``(10) Service obligation.--The term `service obligation' 
        means an obligation under State or Federal law (exclusive of an 
        obligation arising solely from a contract entered into with a 
        person) to provide electric distribution services or electric 
        sales service, as provided in such law.
    ``(e) Savings Clause.--Subsection (b) shall not affect the 
applicability of section 141 to (or the Secretary's authority to 
prescribe, amend, or rescind regulations respecting) any transaction 
which is not a permitted open access transaction or permitted sales 
transaction.''
    (b) Repeal of Exception for Certain Nongovernmental Electric Output 
Facilities.--Section 141(d)(5) is amended by inserting ``(except in the 
case of an electric output facility which is a distribution 
facility),'' after ``this subsection''.
    (c) Conforming Amendment.--The table of sections for subpart A of 
part IV of subchapter B of chapter 1 is amended by inserting after the 
item relating to section 141 the following new item:

                              ``Sec. 141A. Electric output 
                                        facilities.''
    (d) Effective Date; Applicability.--
            (1) Effective date.--The amendments made by this section 
        shall take effect on the date of the enactment of this Act, 
        except that a governmental unit may elect to apply paragraphs 
        (1) and (2) of section 141A(b) of the Internal Revenue Code of 
        1986, as added by subsection (a), with respect to permitted 
        open access activities entered into on or after April 14, 1996.
            (2) Certain existing agreements.--The amendment made by 
        subsection (b) (relating to repeal of the exception for certain 
        nongovernmental output facilities) does not apply to any 
        acquisition of facilities made pursuant to an agreement that 
        was entered into before the date of the enactment of this Act.
            (3) Applicability.--References in this Act to sections of 
        the Internal Revenue Code of 1986, shall be deemed to include 
        references to comparable sections of the Internal Revenue Code 
        of 1954.

SEC. 958. INDEPENDENT TRANSMISSION COMPANIES.

    (a) Sales or Dispositions To Implement Federal Energy Regulatory 
Commission or State Electric Restructuring Policy.--
            (1) In general.--Section 1033 (relating to involuntary 
        conversions) is amended by redesignating subsection (k) as 
        subsection (l) and by inserting after subsection (j) the 
        following new subsection:
    ``(k) Sales or Dispositions To Implement Federal Energy Regulatory 
Commission or State Electric Restructuring Policy.--
            ``(1) In general.--For purposes of this subtitle, if a 
        taxpayer elects the application of this subsection to a 
        qualifying electric transmission transaction and the proceeds 
        received from such transaction are invested in exempt utility 
        property, such transaction shall be treated as an involuntary 
        conversion to which this section applies.
            ``(2) Extension of replacement period.--In the case of any 
        involuntary conversion described in paragraph (1), subsection 
        (a)(2)(B) shall be applied by substituting `4 years' for `2 
        years' in clause (i) thereof.
            ``(3) Qualifying electric transmission transaction.--For 
        purposes of this subsection, the term `qualifying electric 
        transmission transaction' means any sale or other disposition 
        of property used in the trade or business of electric 
        transmission, or an ownership interest in a person whose 
        primary trade or business consists of providing electric 
        transmission services, to another person that is an independent 
        transmission company.
            ``(4) Independent transmission company.--For purposes of 
        this subsection, the term `independent transmission company' 
        means--
                    ``(A) a regional transmission organization approved 
                by the Federal Energy Regulatory Commission,
                    ``(B) a person--
                            ``(i) who the Federal Energy Regulatory 
                        Commission determines in its authorization of 
                        the transaction under section 203 of the 
                        Federal Power Act (16 U.S.C. 823b) is not a 
                        market participant within the meaning of such 
                        Commission's rules applicable to regional 
                        transmission organizations, and
                            ``(ii) whose transmission facilities to 
                        which the election under this subsection 
                        applies are placed under the operational 
                        control of a Federal Energy Regulatory 
                        Commission-approved regional transmission 
                        organization within the period specified in 
                        such order, but not later than the close of the 
                        replacement period, or
                    ``(C) in the case of facilities subject to the 
                exclusive jurisdiction of the Public Utility Commission 
                of Texas, a person which is approved by that Commission 
                as consistent with Texas State law regarding an 
                independent transmission organization.
            ``(5) Exempt utility property.--For purposes of this 
        subsection, the term `exempt utility property' means--
                    ``(A) property used in the trade or business of 
                generating, transmitting, distributing, or selling 
                electricity or producing, transmitting, distributing, 
                or selling natural gas, or
                    ``(B) stock in a person whose primary trade or 
                business consists of generating, transmitting, 
                distributing, or selling electricity or producing, 
                transmitting, distributing, or selling natural gas.
            ``(6) Special rules for consolidated groups.--
                    ``(A) Investment by qualifying group members.--
                            ``(i) In general.--This subsection shall 
                        apply to a qualifying electric transmission 
                        transaction engaged in by a taxpayer if the 
                        proceeds are invested in exempt utility 
                        property by a qualifying group member.
                            ``(ii) Qualifying group member.--For 
                        purposes of this subparagraph, the term 
                        `qualifying group member' means any member of a 
                        consolidated group within the meaning of 
                        section 1502 and the regulations promulgated 
                        thereunder of which the taxpayer is also a 
                        member.
                    ``(B) Coordination with consolidated return 
                provisions.--A sale or other disposition of electric 
                transmission property or an ownership interest in a 
                qualifying electric transmission transaction, where an 
                election is made under this subsection, shall not 
                result in the recognition of income or gain under the 
                consolidated return provisions of subchapter A of 
                chapter 6. The Secretary shall prescribe such 
                regulations as may be necessary to provide for the 
                treatment of any exempt utility property received in a 
                qualifying electric transmission transaction as 
                successor assets subject to the application of such 
                consolidated return provisions.
            ``(7) Election.--Any election made by a taxpayer under this 
        subsection shall be made by a statement to that effect in the 
        return for the taxable year in which the qualifying electric 
        transmission transaction takes place in such form and manner as 
        the Secretary shall prescribe, and such election shall be 
        binding for that taxable year and all subsequent taxable 
        years.''
            (2) Savings clause.--Nothing in section 1033(k) of the 
        Internal Revenue Code of 1986, as added by subsection (a), 
        shall affect Federal or State regulatory policy respecting the 
        extent to which any acquisition premium paid in connection with 
        the purchase of an asset in a qualifying electric transmission 
        transaction can be recovered in rates.
            (3) Effective date.--The amendments made by this subsection 
        shall apply to transactions occurring after the date of the 
        enactment of this Act.
    (b) Distributions of Stock To Implement Federal Energy Regulatory 
Commission or State Electric Restructuring Policy.
            (1) In general.--Section 355(e)(4) is amended by 
        redesignating subparagraphs (C), (D), and (E) as subparagraphs 
        (D), (E), and (F), respectively, and by inserting after 
        subparagraph (B) the following new subparagraph:
                    ``(C) Distributions of stock to implement federal 
                energy regulatory commission or state electric 
                restructuring policy.--
                            ``(i) In general.--Paragraph (1) shall not 
                        apply to any distribution which is a qualifying 
                        electric transmission transaction. For purposes 
                        of this subparagraph, a `qualifying electric 
                        transmission transaction' means any 
                        distribution of stock in a corporation whose 
                        primary trade or business consists of providing 
                        electric transmission services, where such 
                        stock is later acquired (or where the assets of 
                        such corporation are later acquired) by another 
                        person that is an independent transmission 
                        company.
                            ``(ii) Independent transmission company.--
                        For purposes of this subsection, the term 
                        `independent transmission company' means--
                                    ``(I) a regional transmission 
                                organization approved by the Federal 
                                Energy Regulatory Commission,
                                    ``(II) a person who the Federal 
                                Energy Regulatory Commission determines 
                                in its authorization of the transaction 
                                under section 203 of the Federal Power 
                                Act (16 U.S.C. 824b) is not a market 
                                participant within the meaning of such 
                                Commission's rules applicable to 
                                regional transmission organizations, 
                                and whose transmission facilities 
                                transferred as a part of such 
                                qualifying electric transmission 
                                transaction are placed under the 
                                operational control of a Federal Energy 
                                Regulatory Commission-approved regional 
                                transmission organization within the 
                                period specified in such order, but not 
                                later than the close of the replacement 
                                period (as defined in section 
                                1033(k)(2)), or
                                    ``(III) in the case of facilities 
                                subject to the exclusive jurisdiction 
                                of the Public Utility Commission of 
                                Texas, a person that is approved by 
                                that Commission as consistent with 
                                Texas State law regarding an 
                                independent transmission 
                                organization.''
            (2) Effective date.--The amendments made by this subsection 
        shall apply to distributions occurring after the date of the 
        enactment of this Act.

SEC. 959. CERTAIN AMOUNTS RECEIVED BY ENERGY, NATURAL GAS, OR STEAM 
              UTILITIES EXCLUDED FROM GROSS INCOME AS CONTRIBUTIONS TO 
              CAPITAL.

    (a) In General.--Subsection (c) of section 118 (relating to 
contributions to the capital of a corporation) is amended--
            (1) by striking ``Water and Sewage Disposal'' in the 
        heading and inserting ``Certain'',
            (2) by striking ``water or,'' in the matter preceding 
        subparagraph (A) of paragraph (1) and inserting ``electric 
        energy, natural gas (through a local distribution system or by 
        pipeline), steam, water, or'',
            (3) by striking ``water or'' in paragraph (1)(B) and 
        inserting ``electric energy (but not including assets used in 
        the generation of electricity), natural gas, steam, water, 
        or'',
            (4) by striking ``water or'' in paragraph (2)(A)(ii) and 
        inserting ``electric energy (but not including assets used in 
        the generation of electricity), natural gas, steam, water, 
        or'',
            (5) by inserting ``such term shall include amounts paid as 
        customer connection fees (including amounts paid to connect the 
        customer's line to an electric line, a gas main, a steam line, 
        or a main water or sewer line) and'' after ``except that'' in 
        paragraph (3)(A), and
            (6) by striking ``water or'' in paragraph (3)(C) and 
        inserting ``electric energy, natural gas, steam, water, or''.
    (b) Effective Date.--The amendments made by this section shall 
apply to amounts received after the date of the enactment of this Act.

           Subtitle E--Provisions Relating to Nuclear Energy

SEC. 961. EXPENSING OF COSTS INCURRED FOR TEMPORARY STORAGE OF SPENT 
              NUCLEAR FUEL.

    (a) In General.--Part VI of subchapter B of chapter 1 (relating to 
itemized deductions for individuals and corporations) is amended by 
adding at the end the following new section:

``SEC. 199. EXPENSING OF COSTS FOR TEMPORARY STORAGE OF SPENT NUCLEAR 
              FUEL.

    ``A taxpayer may elect to treat any amount paid or incurred during 
the taxable year for the temporary storage or isolation of spent 
nuclear fuel as an expense which is not chargeable to capital account. 
Any expenditure which is so treated shall be allowed as a deduction for 
the taxable year in which it is paid or incurred.''
    (b) Conforming Amendment.--The table of sections for part VI of 
subchapter B of chapter 1 is amended by adding at the end the following 
new item:

``Sec. 199. Expensing of costs for temporary storage of spent nuclear 
                            fuel.''
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2000.

SEC. 962. NUCLEAR DECOMMISSIONING RESERVE FUND.

    (a) Increase in Amount Permitted To Be Paid Into Nuclear 
Decommissioning Reserve Fund.--Subsection (b) of section 468A is 
amended to read as follows:
    ``(b) Limitation on Amounts Paid Into Fund.--
            ``(1) In general.--The amount which a taxpayer may pay into 
        the Fund for any taxable year during the funding period shall 
        not exceed the level funding amount determined pursuant to 
        subsection (d), except--
                    ``(A) where the taxpayer is permitted by Federal or 
                State law or regulation (including authorization by a 
                public service commission) to charge customers a 
                greater amount for nuclear decommissioning costs, in 
                which case the taxpayer may pay into the Fund such 
                greater amount; or
                    ``(B) in connection with the transfer of a nuclear 
                powerplant, where the transferor or transferee (or 
                both) is required pursuant to the terms of the transfer 
                to contribute a greater amount for nuclear 
                decommissioning costs, in which case the transferor or 
                transferee (or both) may pay into the Fund such greater 
                amount.
            ``(2) Contributions after funding period.--Notwithstanding 
        any other provision of this section, a taxpayer may make 
        deductible payments to the Fund in any taxable year between the 
        end of the funding period and the termination of the license 
        issued by the Nuclear Regulatory Commission for the nuclear 
        powerplant to which the Fund relates but only if such payments 
        do not cause the assets of the Fund to exceed the nuclear 
        decommissioning costs allocable to the taxpayer's current or 
        former interest in the nuclear powerplant to which the Fund 
        relates. The foregoing limitation shall be applied by taking 
        into account a reasonable rate of inflation for the nuclear 
        decommissioning costs and a reasonable after-tax rate of return 
        on the assets of the Fund until such assets are anticipated to 
        be expended.''
    (b) Deduction for Nuclear Decommissioning Costs When Paid.--
Paragraph (2) of section 468A(c) is amended to read as follows:
            ``(2) Deduction of nuclear decommissioning costs.--In 
        addition to any deduction under subsection (a), nuclear 
        decommissioning costs paid or incurred by the taxpayer during 
        any taxable year shall constitute ordinary and necessary 
        expenses in carrying on a trade or business under section 
        162.''
    (c) Level Funding Amounts.--Subsection (d) of section 468A is 
amended to read as follows:
    ``(d) Level Funding Amounts.--
            ``(1) Annual amounts.--For purposes of this section, the 
        level funding amount for any taxable year shall equal the 
        annual amount required to be contributed to the Fund in each 
        year remaining in the funding period in order for the Fund to 
        accumulate the nuclear decommissioning costs allocable to the 
        taxpayer's current or former interest in the nuclear powerplant 
        to which the Fund relates. The annual amount described in the 
        preceding sentence shall be calculated by taking into account a 
        reasonable rate of inflation for the nuclear decommissioning 
        costs and a reasonable after-tax rate of return on the assets 
        of the Fund until such assets are anticipated to be expended.
            ``(2) Funding period.--The funding period for a Fund shall 
        end on the last day of the last taxable year of the expected 
        operating life of the nuclear powerplant.
            ``(3) Nuclear decommissioning costs.--For purposes of this 
        section, the term `nuclear decommissioning costs' means all 
        costs to be incurred in connection with entombing, 
        decontaminating, dismantling, removing, and disposing of a 
        nuclear powerplant, and includes all associated preparation, 
        security, fuel storage, and radiation monitoring costs. The 
        taxpayer may identify such costs by reference either to a site-
        specific engineering study or to the financial assurance amount 
        calculated pursuant to section 50.75 of title 10 of the Code of 
        Federal Regulations. The term shall include all such costs 
        which, outside of the decommissioning context, might otherwise 
        be capital expenditures.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to amounts paid after June 8, 1999, in taxable years ending after 
such date.

            Subtitle F--Tax Incentives for Energy Efficiency

SEC. 971. CREDIT FOR CERTAIN DISTRIBUTED POWER AND COMBINED HEAT AND 
              POWER SYSTEM PROPERTY USED IN BUSINESS.

    (a) In General.--Section 48(a)(3) (defining energy property) is 
amended by inserting before the last sentence the following: ``The term 
`energy property' includes distributed power property or combined heat 
and power system property, but only if the requirements of 
subparagraphs (B) and (C) are met with respect to the property.''
    (b) Definitions.--Subsection (a) of section 48 (relating to the 
energy credit) is amended by adding at the end the following new 
paragraphs:
            ``(6) 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, with a rated total capacity in excess 
                        of 1 kilowatt, or
                            ``(ii) in the taxpayer's industrial 
                        manufacturing process or plant activity, with a 
                        rated total capacity in excess of 500 
                        kilowatts,
                    ``(B) which may also produce usable thermal energy 
                or mechanical power for use in a heating or cooling 
                application, but only if at least 30 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) if it is reasonably expected that not more 
                than 50 percent of the produced electricity will be 
                sold to, or used by, unrelated persons.
            ``(7) Combined heat and power system property.--For 
        purposes of this subsection--
                    ``(A) Combined heat and power system property.--The 
                term `combined heat and power system property' means 
                property comprising a system--
                            ``(i) which uses the same energy source for 
                        the simultaneous or sequential generation of 
                        electrical power, mechanical shaft power, or 
                        both, in combination with the generation of 
                        steam or other forms of useful thermal energy 
                        (including heating and cooling applications),
                            ``(ii) which 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,
                            ``(iii) which produces--
                                    ``(I) at least 20 percent of its 
                                total useful energy in the form of 
                                thermal energy, and
                                    ``(II) at least 20 percent of its 
                                total useful energy in the form of 
                                electrical or mechanical power (or a 
                                combination thereof), and
                            ``(iv) the energy efficiency percentage of 
                        which exceeds 60 percent (70 percent in the 
                        case of a system with an electrical capacity in 
                        excess of 50 megawatts or a mechanical energy 
                        capacity in excess of 67,000 horsepower, or an 
                        equivalent combination of electrical and 
                        mechanical energy capacities).
                    ``(B) Special rules.--
                            ``(i) Energy efficiency percentage.--For 
                        purposes of subparagraph (A)(iv), the energy 
                        efficiency percentage of a system is the 
                        fraction--
                                    ``(I) the numerator of which is the 
                                total useful electrical, thermal, and 
                                mechanical power produced by the system 
                                at normal operating rates, and
                                    ``(II) the denominator of which is 
                                the lower heating value of the primary 
                                fuel source for the system.
                            ``(ii) Determinations made on btu basis.--
                        The energy efficiency percentage and the 
                        percentages under subparagraph (A)(iii) shall 
                        be determined on a Btu basis.
                            ``(iii) Input and output property not 
                        included.--The term `combined heat and power 
                        system property' does not include property used 
                        to transport the energy source to the facility 
                        or to distribute energy produced by the 
                        facility.
                            ``(iv) Public utility property.--
                                    ``(I) Accounting rule for public 
                                utility property.--If the 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 this subsection if, with respect 
                                to such property, the taxpayer uses a 
                                normalization method of accounting.
                                    ``(II) Certain exception not to 
                                apply.--The matter in paragraph (3) 
                                which follows subparagraph (D) shall 
                                not apply to combined heat and power 
                                system property.''.
    (c) No Carryback of Energy Credit Before Effective Date.--
Subsection (d) of section 39, as amended by this Act, is amended by 
adding at the end the following new paragraph:
            ``(14) No carryback of energy credit before effective 
        date.--No portion of the unused business credit for any taxable 
        year which is attributable to the portion of the energy credit 
        described in section 48(a) (6) or (7) may be carried back to a 
        taxable year ending before the date of the enactment of this 
        paragraph.''
    (d) Depreciation.--
            (1) Subparagraph (C) of section 168(e)(3), as amended by 
        this Act, is amended by striking ``and'' at the end of clause 
        (vi), by redesignating clause (vii) as clause (viii), and by 
        inserting after clause (vi) the following new clause:
                            ``(vii) any energy property (as defined in 
                        paragraph (6) or (7) of section 48(a)) for 
                        which a credit is allowed under section 48 and 
                        which, but for this clause, would have a 
                        recovery period of less than 15 years, and''.
            (2) The table contained in subparagraph (B) of section 
        168(g)(3) is amended by inserting after the item relating to 
        subparagraph (C)(vi) the following:

``(C)(vii).....................................................   10''.
    (e) 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. 972. CREDIT FOR ENERGY EFFICIENCY IMPROVEMENTS TO EXISTING HOMES.

    (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 new section:

``SEC. 25B. ENERGY EFFICIENCY IMPROVEMENTS TO EXISTING HOMES.

    ``(a) Allowance of Credit.--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 20 percent of the amount paid 
or incurred by the taxpayer for qualified energy efficiency 
improvements installed during such taxable year.
    ``(b) Limitations.--
            ``(1) Maximum credit.--The credit allowed by this section 
        with respect to a dwelling shall not exceed $2,000.
            ``(2) Prior credit amounts for taxpayer on same dwelling 
        taken into account.--If a credit was allowed to the taxpayer 
        under subsection (a) with respect to a dwelling in 1 or more 
        prior taxable years, the amount of the credit otherwise 
        allowable for the taxable year with respect to that dwelling 
        shall not exceed the amount of $2,000 reduced by the sum of the 
        credits allowed under subsection (a) to the taxpayer with 
        respect to the dwelling for all prior taxable years.
    ``(c) Carryforward of Unused Credit.--If the credit allowable under 
subsection (a) exceeds the limitation imposed by section 26(a) for such 
taxable year reduced by the sum of the credits allowable under subpart 
A of part IV of subchapter A (other than this section), such excess 
shall be carried to the succeeding taxable year and added to the credit 
allowable under subsection (a) for such taxable year.
    ``(d) Qualified Energy Efficiency Improvements.--For purposes of 
this section, the term `qualified energy efficiency improvements' means 
any energy efficient building envelope component that is certified to 
meet or exceed the prescriptive criteria for such component established 
by the 1998 International Energy Conservation Code, if--
            ``(1) such component is installed in or on a dwelling--
                    ``(A) located in the United States, and
                    ``(B) owned and used by the taxpayer as the 
                taxpayer's principal residence (within the meaning of 
                section 121),
            ``(2) the original use of such component commences with the 
        taxpayer, and
            ``(3) such component reasonably can be expected to remain 
        in use for at least 5 years.
    ``(e) Certification.--The certification described in subsection (d) 
shall be--
            ``(1) determined on the basis of the technical 
        specifications or applicable ratings (including product 
        labeling requirements) for the measurement of energy 
        efficiency, based upon energy use or building envelope 
        component performance, for the energy efficient building 
        envelope component,
            ``(2) provided by the contractor who installed such 
        building envelope component, a local building regulatory 
        authority, a utility, a manufactured home production inspection 
        primary inspection agency (IPIA), or an accredited home energy 
        rating system provider who is accredited by or otherwise 
        authorized to use approved energy performance measurement 
        methods by the Home Energy Ratings Systems Council or the 
        National Association of State Energy Officials, and
            ``(3) made in writing in a manner that specifies in readily 
        verifiable fashion the energy efficient building envelope 
        components installed and their respective energy efficiency 
        levels.
    ``(f) Definitions and Special Rules.--
            ``(1) 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 paid his tenant-
        stockholder's proportionate share (as defined in section 
        216(b)(3)) of the cost of qualified energy efficiency 
        improvements made by such corporation.
            ``(2) Condominiums.--
                    ``(A) In general.--In the case of an individual who 
                is a member of a condominium management association 
                with respect to a condominium which he owns, such 
                individual shall be treated as having paid his 
                proportionate share of the cost of qualified energy 
                efficiency improvements made by such association.
                    ``(B) Condominium management association.--For 
                purposes of this paragraph, the term `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 condominium project substantially all of 
                the units of which are used as residences.
            ``(3) Building envelope component.--The term `building 
        envelope component' means--
                    ``(A) insulation material or system which is 
                specifically and primarily designed to reduce the heat 
                loss or gain or a dwelling when installed in or on such 
                dwelling, and
                    ``(B) exterior windows (including skylights) and 
                doors.
            ``(4) Manufactured homes included.--For purposes of this 
        section, the term `dwelling' includes a manufactured home which 
        conforms to Federal Manufactured Home Construction and Safety 
        Standards (24 C.F.R. 3280).
    ``(g) Basis Adjustment.--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.
    ``(h) Termination.--Subsection (a) shall apply to qualified energy 
efficiency improvements installed during the period beginning on 
January 1, 2001, and ending on December 31, 2005.''.
    (b) Conforming Amendments.--
            (1) Subsection (c) of section 23 is amended by inserting 
        ``, section 25B, and section 1400C'' after ``other than this 
        section''.
            (2) Subparagraph (C) of section 25(e)(1) is amended by 
        striking ``section 23'' and inserting ``sections 23, 25B, and 
        1400C''.
            (3) Subsection (d) of section 1400C is amended by inserting 
        ``and section 25B'' after ``other than this section''.
            (4) Subsection (a) of section 1016 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 new paragraph:
            ``(28) to the extent provided in section 25B(f), in the 
        case of amounts with respect to which a credit has been allowed 
        under section 25B.''.
            (5) 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 new item:

                              ``Sec. 25B. Energy efficiency 
                                        improvements to existing 
                                        homes.''
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years ending after December 31, 2000.

SEC. 973. BUSINESS CREDIT FOR CONSTRUCTION OF NEW ENERGY EFFICIENT 
              HOME.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
(relating to business related credits), as amended by this Act, is 
amended by inserting after section 45G the following new section:

``SEC. 45H. NEW ENERGY EFFICIENT HOME CREDIT.

    ``(a) In General.--For purposes of section 38, in the case of an 
eligible contractor, the credit determined under this section for the 
taxable year is an amount equal to the aggregate adjusted bases of all 
energy efficient property installed in a qualified new energy efficient 
home during construction of such home.
    ``(b) Limitations.--
            ``(1) Maximum credit.--
                    ``(A) In general.--The credit allowed by this 
                section with respect to a dwelling shall not exceed 
                $2,000.
                    ``(B) Prior credit amounts on same dwelling taken 
                into account.--If a credit was allowed under subsection 
                (a) with respect to a dwelling in 1 or more prior 
                taxable years, the amount of the credit otherwise 
                allowable for the taxable year with respect to that 
                dwelling shall not exceed the amount of $2,000 reduced 
                by the sum of the credits allowed under subsection (a) 
                with respect to the dwelling for all prior taxable 
                years.
            ``(2) Coordination with rehabilitation and energy 
        credits.--For purposes of this section--
                    ``(A) the basis of any property referred to in 
                subsection (a) shall be reduced by that portion of the 
                basis of any property which is attributable to 
                qualified rehabilitation expenditures (as defined in 
                section 47(c)(2)) or to the energy percentage of energy 
                property (as determined under section 48(a)), and
                    ``(B) expenditures taken into account under either 
                section 47 or 48(a) shall not be taken into account 
                under this section.
    ``(c) Definitions.--For purposes of this section--
            ``(1) Eligible contractor.--The term `eligible contractor' 
        means the person who constructed the new energy efficient home, 
        or in the case of a manufactured home which conforms to Federal 
        Manufactured Home Construction and Safety Standards (24 C.F.R. 
        3280), the manufactured home producer of such home.
            ``(2) Energy efficient property.--The term `energy 
        efficient property' means any energy efficient building 
        envelope component, and any energy efficient heating or cooling 
        appliance.
            ``(3) Qualified new energy efficient home.--The term 
        `qualified new energy efficient home' means a dwelling--
                    ``(A) located in the United States,
                    ``(B) the construction of which is substantially 
                completed after December 31, 2000,
                    ``(C) the original use of which is as a principal 
                residence (within the meaning of section 121) which 
                commences with the person who acquires such dwelling 
                from the eligible contractor, and
                    ``(D) which is certified to have a level of annual 
                heating and cooling energy consumption that is at least 
                30 percent below the annual level of heating and 
                cooling energy consumption of a comparable dwelling 
                constructed in accordance with the standards of the 
                1998 International Energy Conservation Code.
            ``(4) Construction.--The term `construction' includes 
        reconstruction and rehabilitation.
            ``(5) Acquire.--The term `acquire' includes purchase and, 
        in the case of reconstruction and rehabilitation, such term 
        includes a binding written contract for such reconstruction or 
        rehabilitation.
            ``(6) Building envelope component.--The term `building 
        envelope component' means--
                    ``(A) insulation material or system which is 
                specifically and primarily designed to reduce the heat 
                loss or gain of a dwelling when installed in or on such 
                dwelling, and
                    ``(B) exterior windows (including skylights) and 
                doors.
            ``(7) Manufactured home included.--The term `dwelling' 
        includes a manufactured home conforming to Federal Manufactured 
        Home Construction and Safety Standards (24 C.F.R. 3280).
    ``(d) Certification.--
            ``(1) Method.--A certification described in subsection 
        (c)(3)(D) shall be determined on the basis of one of the 
        following methods:
                    ``(A) The technical specifications or applicable 
                ratings (including product labeling requirements) for 
                the measurement of energy efficiency for the energy 
                efficient building envelope component or energy 
                efficient heating or cooling appliance, based upon 
                energy use or building envelope component performance.
                    ``(B) An energy performance measurement method that 
                utilizes computer software approved by organizations 
                designated by the Secretary.
            ``(2) Provider.--Such certification shall be provided by--
                    ``(A) in the case of a method described in 
                paragraph (1)(A), the eligible contractor, a local 
                building regulatory authority, a utility, a 
                manufactured home production inspection primary 
                inspection agency (IPIA), or an accredited home energy 
                rating systems provider who is accredited by, or 
                otherwise authorized to use, approved energy 
                performance measurement methods by the Home Energy 
                Ratings Systems Council or the National Association of 
                State Energy Officials, or
                    ``(B) in the case of a method described in 
                paragraph (1)(B), an individual recognized by an 
                organization designated by the Secretary for such 
                purposes.
            ``(3) Form.--Such certification shall be made in writing in 
        a manner that specifies in readily verifiable fashion the 
        energy efficient building envelope components and energy 
        efficient heating or cooling appliances installed and their 
        respective energy efficiency levels, and in the case of a 
        method described in subparagraph (B) of paragraph (1), 
        accompanied by written analysis documenting the proper 
        application of a permissible energy performance measurement 
        method to the specific circumstances of such dwelling.
            ``(4) Regulations.--
                    ``(A) In general.--In prescribing regulations under 
                this subsection for energy performance measurement 
                methods, the Secretary shall prescribe procedures for 
                calculating annual energy costs for heating and cooling 
                and cost savings and for the reporting of the results. 
                Such regulations shall--
                            ``(i) be based on the National Home Energy 
                        Rating Technical Guidelines of the National 
                        Association of State Energy Officials and the 
                        1998 California Residential ACM manual,
                            ``(ii) provide that any calculation 
                        procedures be developed such that the same 
                        energy efficiency measures allow a home to 
                        qualify for the credit under this section 
                        regardless of whether the house uses a gas or 
                        oil furnace or boiler or an electric heat pump, 
                        and
                            ``(iii) require that any computer software 
                        allow for the printing of the Federal tax forms 
                        necessary for the credit under this section and 
                        explanations for the homebuyer of the energy 
                        efficient features that were used to comply 
                        with the requirements of this section.
                    ``(B) Providers.--For purposes of paragraph (2)(B), 
                the Secretary shall establish requirements for the 
                designation of individuals based on the requirements 
                for energy consultants and home energy raters specified 
                by the National Association of State Energy Officials.
    ``(e) Basis Adjustment.--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.
    ``(f) Termination.--Subsection (a) shall apply to dwellings 
purchased during the period beginning on January 1, 2001, and ending on 
December 31, 2005.''
    (b) Credit Made Part of General Business Credit.--Subsection (b) of 
section 38 (relating to current year business credit) is amended by 
striking ``plus'' at the end of paragraph (15), by striking the period 
at the end of paragraph (16) and inserting ``, plus'', and by adding at 
the end thereof the following new paragraph:
            ``(17) the new energy efficient home credit determined 
        under section 45H.''
    (c) Denial of Double Benefit.--Section 280C (relating to certain 
expenses for which credits are allowable) is amended by adding at the 
end thereof the following new subsection:
    ``(d) New Energy Efficient Home Expenses.--No deduction shall be 
allowed for that portion of expenses for a new energy efficient home 
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 45H.''
    (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 (5) as paragraph (6) and by inserting after paragraph 
        (4) the following new paragraph:
            ``(5) Special rules for new energy efficient home credit.--
                    ``(A) In general.--In the case of the new energy 
                efficient home 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) subparagraph (A) 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 new energy 
                                efficient home credit).
                    ``(B) New energy efficient home credit.--For 
                purposes of this subsection, the term `new energy 
                efficient home credit' means the credit allowable under 
                subsection (a) by reason of section 45H.''
            (2) Conforming amendments.--Subclause (II) of section 
        38(c)(2)(A)(ii), subclause (II) of section 38(c)(3)(A)(ii), and 
        subclause (II) of section 38(c)(4)(A)(ii) are each amended by 
        inserting ``or the new energy efficient home credit'' after 
        ``enhanced oil recovery credit''.
    (e) Limitation on Carryback.--Subsection (d) of section 39, as 
amended by this Act, is amended by adding at the end the following new 
paragraph:
            ``(15) No carryback of new energy efficient home credit 
        before effective date.--No portion of the unused business 
        credit for any taxable year which is attributable to the credit 
        determined under section 45H may be carried back to any taxable 
        year ending before the date of the enactment of section 45H.''
    (f) Deduction for Certain Unused Business Credits.--Subsection (c) 
of section 196 is amended by striking ``and'' at the end of paragraph 
(7), by striking the period at the end of paragraph (8) and inserting 
``, and'', and by adding after paragraph (8) the following new 
paragraph:
            ``(9) the new energy efficient home credit determined under 
        section 45H.''
    (g) Clerical Amendment.--The table of sections for subpart D of 
part IV of subchapter A of chapter 1 is amended by inserting after the 
item relating to section 45G the following new item:

                              ``Sec. 45H. New energy efficient home 
                                        credit.''
    (h) Effective Date.--The amendments made by this section shall 
apply to taxable years ending after December 31, 2000.

SEC. 974. TAX CREDIT FOR ENERGY EFFICIENT APPLIANCES.

    (a) In General.--Subpart B of part IV of subchapter A of chapter 1 
(relating to other credits) is amended by adding at the end the 
following new section:

``SEC. 30B. ENERGY EFFICIENT APPLIANCE CREDIT.

    ``(a) General Rule.--There shall be allowed as a credit against the 
tax imposed by this chapter for the taxable year an amount equal to the 
amount paid or incurred by the taxpayer during the taxable year for 
qualified energy efficient appliances.
    ``(b) Limitations.--
            ``(1) Dollar amount.--The amount which may be taken into 
        account under subsection (a) shall not exceed--
                    ``(A) in the case of an energy efficient clothes 
                washer described in subsection (c)(2)(A) or an energy 
                efficient refrigerator described in subsection 
                (c)(3)(B)(i), $50, and
                    ``(B) in the case of an energy efficient clothes 
                washer described in subsection (c)(2)(B) or an energy 
                efficient refrigerator described in subsection 
                (c)(3)(B)(ii), $100.
            ``(2) Application with other credits.--The credit allowed 
        under subsection (a) for any taxable year shall not exceed the 
        excess (if any) of--
                    ``(A) the regular tax for the taxable year reduced 
                by the sum of the credits allowable under subpart A and 
                sections 27 and 30, over
                    ``(B) the tentative minimum tax for the taxable 
                year.
    ``(c) Qualified Energy Efficient Appliance.--For purposes of this 
section--
            ``(1) In general.--The term `qualified energy efficient 
        appliance' means--
                    ``(A) an energy efficient clothes washer, or
                    ``(B) an energy efficient refrigerator.
            ``(2) Energy efficient clothes washer.--The term `energy 
        efficient clothes washer' means a residential clothes washer, 
        including a residential style coin operated washer, which is 
        manufactured with--
                    ``(A) a 1.26 Modified Energy Factor (referred to in 
                this paragraph as `MEF') (as determined by the 
                Secretary of Energy), or
                    ``(B) a 1.42 MEF (as determined by the Secretary of 
                Energy) (1.5 MEF for calendar years beginning after 
                2004).
            ``(3) Energy efficient refrigerator.--The term `energy 
        efficient refrigerator' means an automatic defrost 
        refrigerator-freezer which--
                    ``(A) has an internal volume of at least 16.5 cubic 
                feet, and
                    ``(B) consumes--
                            ``(i) 10 percent less kw/hr/yr than the 
                        energy conservation standards promulgated by 
                        the Department of Energy for such refrigerator 
                        for 2001, or
                            ``(ii) 15 percent less kw/hr/yr than such 
                        energy conservation standards.
    ``(d) Verification.--The taxpayer shall submit such information or 
certification as the Secretary, in consultation with the Secretary of 
Energy, determines necessary to claim the credit amount under 
subsection (a).
    ``(e) Termination.--This section shall not apply--
            ``(1) with respect to energy efficient refrigerators 
        described in subsection (c)(3)(B)(i) purchased in calendar 
        years beginning after 2004, and
            ``(2) with respect to all other qualified energy efficient 
        appliances purchased in calendar years beginning after 2006.''
    (b) Clerical Amendment.--The table of sections for subpart B of 
part IV of subchapter A of chapter 1 is amended by inserting at the end 
the following new item:

                              ``Sec. 30B. Energy efficient appliance 
                                        credit.''
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2000.

SEC. 975. CREDIT FOR CERTAIN ENERGY EFFICIENT MOTOR VEHICLES.

    (a) In General.--Subpart B of part IV of subchapter A of chapter 1, 
as amended by this Act, is amended by adding at the end the following 
new section:

``SEC. 30C. CREDIT FOR HYBRID VEHICLES.

    ``(a) Allowance of Credit.--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 the credit amounts for each qualified hybrid 
vehicle placed in service during the taxable year.
    ``(b) Credit Amount.--For purposes of this section, the credit 
amount for each qualified hybrid vehicle with a rechargeable energy 
storage system which provides the applicable percentage of the maximum 
available power shall be the amount specified in the following table:

  ``Applicable percentage                                 Credit amount
        Greater than or equal to 20 percent but less than 40      $500 
            percent.
        Greater than or equal to 40 percent but less than 60    $1,000 
            percent.
        Greater than or equal to 60 percent.................... $2,000.
    ``(c) Definitions.--For purposes of this section--
            ``(1) Qualified hybrid vehicle.--The term `qualified hybrid 
        vehicle' means an automobile which meets all applicable 
        regulatory requirements and which can draw propulsion energy 
        from both of the following onboard sources of stored energy:
                    ``(A) A consumable fuel.
                    ``(B) A rechargeable energy storage system.
            ``(2) 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 nonheat energy 
        conversion devices available for a driver's command for maximum 
        acceleration at vehicle speeds under 75 miles per hour.
            ``(3) 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.
    ``(d) Application With Other Credits.--The credit allowed by 
subsection (a) for any taxable year shall not exceed the excess (if 
any) of--
            ``(1) the regular tax for the taxable year reduced by the 
        sum of the credits allowable under subpart A and sections 27, 
        30, and 30B of this subpart, over
            ``(2) the tentative minimum tax for the taxable year.
    ``(e) Special Rules.--
            ``(1) Basis reduction.--The basis of any property for which 
        a credit is allowable under subsection (a) shall be reduced by 
        the amount of such credit (determined without regard to 
        subsection (d)).
            ``(2) Recapture.--The Secretary shall, by regulations, 
        provide for recapturing the benefit of any credit allowable 
        under subsection (a) with respect to any property which ceases 
        to be property eligible for such credit.
            ``(3) Property used outside united states, etc., not 
        qualified.--No credit shall be allowed under this section with 
        respect to--
                    ``(A) any property for which a credit is allowed 
                under section 30,
                    ``(B) any property referred to in section 50(b), or
                    ``(C) any property taken into account under section 
                179 or 179A.
            ``(4) Election to not take credit.--No credit shall be 
        allowed under subsection (a) for any vehicle if the taxpayer 
        elects to not have this section apply to such vehicle.
            ``(5) Leased vehicles.--No credit shall be allowed under 
        this section with respect to a leased motor vehicle unless the 
        lease documents clearly disclose to the lessee the specific 
        amount of any credit otherwise allowable to the lessor under 
        this section.
    ``(f) Regulations.--
            ``(1) Treasury.--The Secretary shall prescribe such 
        regulations as may be necessary or appropriate to carry out the 
        purposes of this section.
            ``(2) Environmental protection agency.--The Administrator 
        of the Environmental Protection Agency, in coordination with 
        the Secretary of Transportation and consistent with the laws 
        administered by such agency for automobiles, shall timely 
        prescribe such regulations as may be necessary or appropriate 
        solely for the purpose of specifying the testing and 
        calculation procedures to determine whether a vehicle meets the 
        qualifications for a credit under this section.
    ``(g) Application of Section.--This section shall apply to any 
qualified hybrid vehicles placed in service after December 31, 2000, 
and before January 1, 2009.''
    (b) Conforming Amendments.--
            (1) Subsection (a) of section 1016, as amended by this Act, 
        is amended by striking ``and'' at the end of paragraph (27), by 
        striking the period at the end of paragraph (28) and inserting 
        ``, and'', and by adding at the end the following new 
        paragraph:
            ``(29) to the extent provided in section 30C(e)(1).''
            (2) The table of sections for subpart B of part IV of 
        subchapter A of chapter 1 is amended by adding at the end the 
        following new item:

                              ``Sec. 30C. Credit for hybrid vehicles.''
    (c) Effective Date.--The amendments made by this title shall apply 
to vehicles placed in service after December 31, 2000.

                     Subtitle G--Alternative Fuels

SEC. 981. CREDIT FOR ALTERNATIVE FUEL VEHICLES.

    (a) In General.--Subpart B of part IV of subchapter A of chapter 1 
(relating to foreign tax credit, etc.), as amended by this Act, is 
amended by inserting after section 30C the following:

``SEC. 30D. CREDIT FOR ALTERNATIVE FUEL VEHICLES.

    ``(a) Allowance of Credit.--There shall be allowed as a credit 
against the tax imposed by this chapter an amount equal to the 
applicable percentage of the incremental cost of any qualified 
alternative fuel motor vehicle placed in service by the taxpayer during 
the taxable year.
    ``(b) Applicable Percentage.--For purposes of subsection (a), the 
applicable percentage with respect to any qualified alternative fuel 
motor vehicle is--
            ``(1) 50 percent, plus
            ``(2) 35 percent, if such vehicle--
                    ``(A) has a gross weight vehicle rating of less 
                than 14,000 pounds, and
                            ``(i) has received a certificate of 
                        conformity under the Clean Air Act and meets or 
                        exceeds the most stringent standard available 
                        for certification under the Clean Air Act for 
                        that make and model year vehicle (other than a 
                        zero emission standard), or
                            ``(ii) has received an order certifying the 
                        vehicle for sale in California and meets or 
                        exceeds the most stringent standard available 
                        for certification under the laws of the State 
                        of California for that make and model year 
                        vehicle (other than a zero emission standard), 
                        or
                    ``(B) has a gross weight vehicle rating of 14,000 
                or more pounds, and
                            ``(i) has received a certificate of 
                        conformity under the Clean Air Act at emissions 
                        levels that are not more than 50 percent of the 
                        standard applicable to a vehicle of that make 
                        and model year, or
                            ``(ii) has received an order certifying the 
                        vehicle for sale in California at emissions 
                        levels that are not more than 50 percent of the 
                        standard applicable under the laws of the State 
                        of California to a vehicle of that make and 
                        model year.
    ``(c) Incremental Cost.--For purposes of this section, the 
incremental cost of any qualified alternative fuel motor vehicle is 
equal to the amount of the excess of the manufacturer's suggested 
retail price for such vehicle over such price for a gasoline or diesel 
fuel motor vehicle of the same model, to the extent such amount does 
not exceed--
            ``(1) $5,000, if such vehicle has a gross vehicle weight 
        rating of not more than 8,500 pounds,
            ``(2) $10,000, if such vehicle has a gross vehicle weight 
        rating of more than 8,500 pounds but not more than 14,000 
        pounds,
            ``(3) $25,000, if such vehicle has a gross vehicle weight 
        rating of more than 14,000 pounds but not more than 26,000 
        pounds, and
            ``(4) $50,000, if such vehicle has a gross vehicle weight 
        rating of more than 26,000 pounds.
    ``(d) Qualified Alternative Fuel Motor Vehicle Defined.--For 
purposes of this section, the term `qualified alternative fuel motor 
vehicle' means any motor vehicle--
            ``(1) which is only capable of operating on an alternative 
        fuel,
            ``(2) the original use of which commences with the 
        taxpayer, and
            ``(3) which is acquired by the taxpayer for use or to 
        lease, but not for resale.
    ``(e) Application With Other Credits.--The credit allowed under 
subsection (a) for any taxable year shall not exceed the excess (if 
any) of--
            ``(1) the regular tax for the taxable year reduced by the 
        sum of the credits allowable under subpart A and sections 27, 
        29, 30, 30A, 30B, and 30C, over
            ``(2) the tentative minimum tax for the taxable year.
    ``(f) Other Definitions and Special Rules.--For purposes of this 
section--
            ``(1) Alternative fuel.--The term `alternative fuel' has 
        the meaning given such term by section 301(2) of the Energy 
        Policy Act of 1992 (42 U.S.C. 13211(2)), as in effect on the 
        date of the enactment of this section.
            ``(2) Motor vehicle.--The term `motor vehicle' has the 
        meaning given such term by section 30(c)(2).
            ``(3)  Reduction in basis.--For purposes of this subtitle, 
        the basis of any property for which a credit is allowable under 
        subsection (a) shall be reduced by the amount of such credit so 
        allowed (determined without regard to subsection (e).
            ``(4) No double benefit.--The amount of any deduction or 
        credit allowable under this chapter for any incremental cost 
        taken into account in computing the amount of the credit 
        determined under subsection (a) shall be reduced by the amount 
        of such credit attributable to such cost.
            ``(5) Leased vehicles.--No credit shall be allowed under 
        subsection (a) with respect to a leased motor vehicle unless 
        the lease documents clearly disclose to the lessee the specific 
        amount of any credit otherwise allowable to the lessor under 
        subsection (a).
            ``(6) Recapture.--The Secretary shall, by regulations, 
        provide for recapturing the benefit of any credit allowable 
        under subsection (a) with respect to any property which ceases 
        to be property eligible for such credit.
            ``(7) Property used outside united states, etc., not 
        qualified.--No credit shall be allowed under subsection (a) 
        with respect to any property referred to in section 50(b) or 
        with respect to the portion of the cost of any property taken 
        into account under section 179.
            ``(8) Election to not take credit.--No credit shall be 
        allowed under subsection (a) for any vehicle if the taxpayer 
        elects to not have this section apply to such vehicle.
    ``(g) Termination.--This section shall not apply to any property 
placed in service after December 31, 2007.''
    (b) Conforming Amendments.--
            (1) Section 1016(a), as amended by this Act, is amended by 
        striking ``and'' at the end of paragraph (28), by striking the 
        period at the end of paragraph (29) and inserting ``, and'', 
        and by adding at the end the following:
            ``(30) to the extent provided in section 30D(f)(3).''
            (2) Section 53(d)(1)(B)(iii) is amended by inserting ``, or 
        not allowed under section 30D solely by reason of the 
        application of section 30D(e)(2)'' before the period.
            (3) Section 55(c)(2) is amended by inserting ``30D(e),'' 
        after ``30(b)(3)''.
            (4) Section 6501(m) is amended by inserting ``30D(f)(8),'' 
        after ``30(d)(4),''.
            (5) The table of sections for subpart B of part IV of 
        subchapter A of chapter 1 is amended by inserting after the 
        item relating to section 30C the following:

        ``Sec. 30D. Credit for alternative fuel vehicles.''
    (e) Effective Date.--The amendments made by this section shall 
apply to property placed in service after December 31, 2000, in taxable 
years ending after such date.

SEC. 982. MODIFICATION OF CREDIT FOR QUALIFIED ELECTRIC VEHICLES.

    (a) Amount of Credit.--
            (1) In general.--Section 30(a) (relating to allowance of 
        credit) is amended by striking ``10 percent of''.
            (2) Limitation of credit according to type of vehicle.--
        Section 30(b) (relating to limitations) is amended--
                    (A) by striking paragraphs (1) and (2) and 
                inserting the following new paragraph:
            ``(1) Limitation according to type of vehicle.--The amount 
        of the credit allowed under subsection (a) for any vehicle 
        shall not exceed the greatest of the following amounts 
        applicable to such vehicle:
                    ``(A) In the case of a vehicle with a rated top 
                speed not exceeding 50 miles per hour, the lesser of--
                            ``(i) 10 percent of the cost of the 
                        vehicle, or
                            ``(ii) $4,250.
                    ``(B) In the case of a vehicle with a gross vehicle 
                weight rating not exceeding 8,500 pounds and a rated 
                top speed exceeding 50 miles per hour, $4,250.
                    ``(C) In the case of a vehicle capable of a driving 
                range of at least 100 miles on a single charge of the 
                vehicle's rechargeable batteries and measured pursuant 
                to the urban dynamometer schedules under appendix I to 
                part 86 of title 40, Code of Federal Regulations, 
                $6,375.
                    ``(D) In the case of a vehicle capable of a payload 
                capacity of at least 1000 pounds, $6,375.
                    ``(E) In the case of a vehicle with a gross vehicle 
                weight rating exceeding 8,500 but not exceeding 14,000 
                pounds, $8,500.
                    ``(F) In the case of a vehicle with a gross vehicle 
                weight rating exceeding 14,000 but not exceeding 26,000 
                pounds, $21,250.
                    ``(G) In the case of a vehicle with a gross vehicle 
                weight rating exceeding 26,000 pounds, $42,500.'', and
                    (B) by redesignating paragraph (3) as paragraph 
                (2).
            (3) Conforming amendments.--
                    (A) Section 53(d)(1)(B)(iii) is amended by striking 
                ``section 30(b)(3)(B)'' and inserting ``section 
                30(b)(2)(B)''.
            (3) Section 55(c)(2) is amended by striking ``30(b)(3)'' 
        and inserting ``30(b)(2)''.
    (b) Qualified Electric Vehicle.--Section 30(c)(1)(A) (defining 
qualified electric vehicle) is amended to read as follows:
                    ``(A) which is powered primarily by an electric 
                motor drawing current from rechargeable batteries, fuel 
                cells which generate electrical current from an 
                alternative fuel (as defined in section 30D(f)(1)), or 
                other portable sources of electrical current generated 
                on board the vehicle from an alternative fuel (as so 
                defined),''.
    (c) Additional Special Rules.--Section 30(d) (relating to special 
rules) is amended by adding at the end the following new paragraphs:
            ``(5) No double benefit.--The amount of any deduction or 
        credit allowable under this chapter for any cost taken into 
        account in computing the amount of the credit determined under 
        subsection (a) shall be reduced by the amount of such credit 
        attributable to such cost.
            ``(6) Leased vehicles.--No credit shall be allowed under 
        subsection (a) with respect to a leased motor vehicle unless 
        the lease documents clearly disclose to the lessee the specific 
        amount of any credit otherwise allowable to the lessor under 
        subsection (a).''
    (d) Extension.--Section 30(e) (relating to termination) is amended 
by striking ``2004'' and inserting ``2007''.
    (e) Effective Date.--The amendments made by this section shall 
apply to property placed in service after December 31, 2000, in taxable 
years ending after such date.

SEC. 983. CREDIT FOR RETAIL SALE OF ALTERNATIVE FUELS AS MOTOR VEHICLE 
              FUEL.

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

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

    ``(a) General Rule.--For purposes of section 38, the alternative 
fuel retail sales credit of any taxpayer for any taxable year is 25 
cents for each gasoline gallon equivalent of alternative 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) Alternative fuel.--The term `alternative fuel' has 
        the meaning given such term by section 301(2) of the Energy 
        Policy Act of 1992 (42 U.S.C. 13211(2)), as in effect on the 
        date of the enactment of this section.
            ``(2) Gasoline gallon equivalent.--The term `gasoline 
        gallon equivalent' means, with respect to any alternative 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)(2)) 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 
                alternative 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 a vehicle by such 
                person.
    ``(c) No Double Benefit.--The amount of any deduction or credit 
allowable under this chapter for any fuel taken into account in 
computing the amount of the credit determined under subsection (a) 
shall be reduced by the amount of such credit attributable to such 
fuel.
    ``(d) Pass-Thru in the Case of Estates and Trusts.--Under 
regulations prescribed by the Secretary, rules similar to the rules of 
subsection (d) of section 52 shall apply.
    ``(e) 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) (relating to 
current year business credit), as amended by this Act, is amended by 
striking ``plus'' at the end of paragraph (16), by striking the period 
at the end of paragraph (17) and inserting ``, plus'', and by adding at 
the end the following:
            ``(18) the alternative fuel retail sales credit determined 
        under section 40A(a).''.
    (c) Transitional Rule.--Section 39(d) (relating to transitional 
rules), as amended by this Act, is amended by adding at the end the 
following:
            ``(16) 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 alternative fuel retail sales 
        credit determined under section 40A(a) may be carried back to a 
        taxable year ending before January 1, 2001.''.
    (d) Clerical Amendment.--The table of sections for subpart D of 
part IV of subchapter A of chapter 1 is amended by inserting after the 
item relating to section 40 the following:

        ``Sec. 40A. Credit for retail sale of alternative 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. 984. EXTENSION OF DEDUCTION FOR CERTAIN REFUELING PROPERTY.

    (a) In General.--Section 179A(f) (relating to termination) is 
amended by striking ``2004'' and inserting ``2007''.
    (b) Conforming Amendment.--Section 179A(c) (relating to qualified 
clean-fuel vehicle property defined) is amended by striking paragraph 
(3).
    (c) Effective Date.--The amendments made by this section shall 
apply to property placed in service after December 31, 2000, in taxable 
years ending after such date.

SEC. 985. ADDITIONAL DEDUCTION FOR COST OF INSTALLATION OF ALTERNATIVE 
              FUELING STATIONS.

    (a) In General.--Subparagraph (A) of section 179A(b)(2) (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.

                      Subtitle H--Renewable Energy

SEC. 991. MODIFICATIONS TO CREDIT FOR ELECTRICITY PRODUCED FROM 
              RENEWABLE RESOURCES AND EXTENSION TO WASTE ENERGY.

    (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 (A), by striking subparagraph (B), and by adding 
        at the end the following:
                    ``(B) biomass,
                    ``(C) municipal solid waste,
                    ``(D) incremental hydropower,
                    ``(E) geothermal,
                    ``(F) landfill gas, and
                    ``(G) steel cogeneration.''
            (2) Definitions.--Section 45(c) is amended by redesignating 
        paragraph (3) as paragraph (8) and by striking paragraph (2) 
        and inserting the following:
            ``(2) Biomass.--The term `biomass' means--
                    ``(A) any organic material from a plant which is 
                planted exclusively for purposes of being used at a 
                qualified facility to produce electricity, or
                    ``(B) any solid, nonhazardous waste material which 
                is derived from--
                            ``(i) any of the following forest-related 
                        resources: mill residues, precommercial 
                        thinnings, slash, and brush, but 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 or paper that is destined for recycling, 
                        or
                            ``(iii) agriculture sources, including 
                        switchgrass, orchard tree crops, vineyards, 
                        grain, legumes, sugar, and other crop by-
                        products or residues.
            ``(3) Municipal solid waste.--The term `municipal solid 
        waste' has the same meaning given the term `solid waste' under 
        section 2(27) of the Solid Waste Utilization Act (42 U.S.C. 
        6903).
            ``(4) Incremental hydropower.--The term `incremental 
        hydropower' means additional generating capacity achieved from 
        increased efficiency or additions of new capacity at existing 
        hydroelectric dams licensed by the Federal Energy Regulatory 
        Commission.
            ``(5) Geothermal.--The term `geothermal' means 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.
            ``(6) Landfill gas.--The term `landfill gas' means gas 
        generated from the decomposition of any household solid waste, 
        commercial solid waste, and industrial solid waste disposed of 
        in a municipal solid waste landfill unit (as such terms are 
        defined in regulations promulgated under subtitle D of the 
        Solid Waste Disposal Act (42 U.S.C. 6941 et seq.).
            ``(7) 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 which produces 
        or integrates the production of coke, direct reduced iron ore, 
        iron, or steel but only if 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.''
    (b) Extension and Modification of Placed-In-Service Rules.--
Paragraph (8) of section 45(c), as redesignated by subsection (a), is 
amended to read as follows:
            ``(8) Qualified facility.--
                    ``(A) In general.--The term `qualified facility' 
                means any facility owned or leased by the taxpayer 
                which is originally placed in service--
                            ``(i) in the case of a facility using wind 
                        to produce electricity, after December 31, 
                        1993, and before July 1, 2011,
                            ``(ii) in the case of a facility using 
                        municipal solid waste, geothermal or landfill 
                        gas to produce electricity, after the date of 
                        the enactment of this subparagraph and before 
                        July 1, 2011,
                            ``(iii) in the case of a facility using 
                        biomass to produce electricity, before July 1, 
                        2011, except that a facility shall not be 
                        treated as a qualified facility for any month 
                        unless, for such month, biomass comprises not 
                        less than 75 percent (on a Btu basis) of the 
                        average monthly fuel input of the facility for 
                        the taxable year which includes such month, and
                            ``(iv) in the case of a facility using 
                        steel cogeneration to produce electricity, 
                        after December 31, 2000, and before January 1, 
                        2011.
                    ``(B) 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 
                chemicals and fuels from renewable resources.
                    ``(C) Special rules.--In the case of a qualified 
                facility described in subparagraph (A) (ii), (iii), or 
                (iv)--
                            ``(i) the 10-year period referred to in 
                        subsection (a) shall be treated as beginning no 
                        earlier than the date of the enactment of this 
                        paragraph, and
                            ``(ii) subsection (b)(3) shall not apply to 
                        any such facility originally placed in service 
                        before January 1, 1997.''
    (c) Special Rules for Landfill Gas.--Section 45(d) is amended by 
adding at the end the following:
            ``(8) Credit allowable for sale of landfill gas.--
                    ``(A) In general.--In the case of landfill gas 
                which is produced by the taxpayer but not used by the 
                taxpayer to produce electricity, paragraph (2) of 
                subsection (a) shall be applied as if it read as 
                follows:
            ```(2) the kilowatt-hour equivalent of the landfill gas--
                    ```(A) produced by the taxpayer at a qualified 
                facility during the 10-year period beginning on the 
                date the facility was originally placed in service, and
                    ```(B) sold by the taxpayer to an unrelated person 
                during the taxable year.'.
                    ``(B) Kilowatt hour equivalent.--For purposes of 
                applying subparagraph (A), the kilowatt hour equivalent 
                for landfill gas is the amount of such gas which has a 
                Btu content of 10,000.
                    ``(C) Special rules.--In the case of landfill gas 
                to which subparagraph (A) applies--
                            ``(i) the reference to electricity in 
                        paragraphs (1) and (4) shall be treated as 
                        including a reference to such gas,
                            ``(ii) the reference price for such gas 
                        shall be determined under paragraph (2)(C) on 
                        the basis of kilowatt hour equivalents, and
                            ``(iii) the reference to ownership 
                        interests in paragraph (3) shall be treated as 
                        including a reference to any economic 
                        interest.''
    (d) Coordination With Other Credits.--Section 45(d) (relating to 
definitions and special rules) is amended by adding at the end the 
following:
            ``(9) Coordination with other credits.--This section shall 
        not apply to any production with respect to which the clean 
        coal technology production credit under section 45F or 45G, or 
        the nonconventional fuel production credit under section 29, is 
        allowed unless the taxpayer elects to waive the application of 
        such credit to such production.''.
    (e) 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''.
    (f) Effective Date.--The amendments made by this section shall 
apply to electricity produced after the date of the enactment of this 
Act.

SEC. 992. CREDIT FOR RESIDENTIAL SOLAR AND WIND ENERGY PROPERTY.

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

``SEC. 25C. RESIDENTIAL SOLAR AND WIND ENERGY PROPERTY.

    ``(a) Allowance of Credit.--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--
            ``(1) 15 percent of the qualified photovoltaic property 
        expenditures made by the taxpayer during the taxable year,
            ``(2) 15 percent of the qualified solar water heating 
        property expenditures made by the taxpayer during the taxable 
        year, and
            ``(3) 15 percent of the qualified wind energy property 
        expenditures made by the taxpayer during the taxable year.
    ``(b) Limitations.--
            ``(1) Maximum credit.--The credit allowed under subsection 
        (a)(2) shall not exceed $2,000 for each system of solar energy 
        property.
            ``(2) Type of property.--No expenditure may be taken into 
        account under this section unless such expenditure is made by 
        the taxpayer for property installed on or in connection with a 
        dwelling unit which is located in the United States and which 
        is used as a residence.
            ``(3) Safety certifications.--No credit shall be allowed 
        under this section for an item of property unless--
                    ``(A) in the case of solar water heating equipment, 
                such equipment 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 a photovoltaic or wind energy 
                system, such system meets appropriate fire and electric 
                code requirements.
    ``(c) Definitions.--For purposes of this section--
            ``(1) Qualified solar water heating property expenditure.--
        The term `qualified solar water heating property expenditure' 
        means an expenditure for property that uses solar energy to 
        heat water for use in a dwelling unit with respect to which a 
        majority of the energy is derived from the sun.
            ``(2) Qualified photovoltaic property expenditure.--The 
        term `qualified photovoltaic property expenditure' means an 
        expenditure for property that uses solar energy to generate 
        electricity for use in a dwelling unit.
            ``(3) Solar panels.--No expenditure relating to a solar 
        panel or other property installed as a roof (or portion 
        thereof) shall fail to be treated as property described in 
        paragraph (1) or (2) solely because it constitutes a structural 
        component of the structure on which it is installed.
            ``(4) Qualified wind energy property expenditure.--The term 
        `qualified wind energy property expenditure' means an 
        expenditure for property which uses wind energy to generate 
        electricity for use in a dwelling unit.
            ``(5) Labor costs.--Expenditures for labor costs properly 
        allocable to the onsite preparation, assembly, or original 
        installation of the property described in paragraph (1), (2), 
        or (4) and for piping or wiring to interconnect such property 
        to the dwelling unit shall be taken into account for purposes 
        of this section.
            ``(6) Energy storage medium.--Expenditures which 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 shall not be taken into account for 
        purposes of this section.
    ``(d) Special Rules.--For purposes of this section--
            ``(1) Dollar amounts in case of joint occupancy.--In the 
        case of any dwelling unit which is 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 (as the case 
                may be) made during such 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 
                individual 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 proportionate share (as defined in section 
        216(b)(3)) of any expenditures of such corporation.
            ``(3) Condominiums.--
                    ``(A) In general.--In the case of an individual who 
                is a member of a condominium management association 
                with respect to a condominium which he owns, such 
                individual shall be treated as having made his 
                proportionate share of any expenditures of such 
                association.
                    ``(B) Condominium management association.--For 
                purposes of this paragraph, the term `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 condominium project substantially all of 
                the units of which are used as residences.
            ``(4) Joint ownership of items of solar or wind energy 
        property.--
                    ``(A) In general.--Any expenditure otherwise 
                qualifying as an expenditure described in paragraph 
                (1), (2), or (4) of subsection (c) 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 expenditure 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.--If less than 80 percent 
        of the use of an item is for nonbusiness residential purposes, 
        only that portion of the expenditures for such item which is 
        properly allocable to use for nonbusiness residential 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 residential purposes.
            ``(6) 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 or reconstruction of a structure, such 
                expenditure shall be treated as made when the original 
                use of the constructed or reconstructed structure by 
                the taxpayer begins.
                    ``(C) Amount.--The amount of any expenditure shall 
                be the cost thereof.
            ``(7) Reduction of credit for grants, tax-exempt bonds, and 
        subsidized energy financing.--The rules of section 29(b)(3) 
        shall apply for purposes of this section.
    ``(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.
    ``(f) Termination.--The credit allowed under this section shall not 
apply to taxable years beginning after December 31, 2011.''.
    (b) Conforming Amendments.--
            (1) Subsection (a) of section 1016 is amended by striking 
        ``and'' at the end of paragraph (29), by striking the period at 
        the end of paragraph (30) and inserting ``; and'', and by 
        adding at the end the following new paragraph:
            ``(31) to the extent provided in section 25C(e), in the 
        case of amounts with respect to which a credit has been allowed 
        under section 25C.''
            (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 25B the following new item:

                              ``Sec. 25C. Residential solar and wind 
                                        energy property.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years ending after December 31, 2001.

SEC. 993. 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 
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.
                                 <all>