[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.
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