[Congressional Record Volume 147, Number 39 (Thursday, March 22, 2001)]
[Senate]
[Pages S2735-S2772]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. BINGAMAN (for himself, Mr. Daschle, Mr. Akaka, Mr. Baucus, 
        Mr. Breaux, Ms. Cantwell, Mr. Dorgan, Mr. Leahy, Mr. Reid, Mr. 
        Schumer, Mr. Kennedy, Mrs. Murray, Mr. Rockefeller and Mr. 
        Torricelli):
  S. 597. A bill to provide for a comprehensive and balanced national 
energy policy; to the Committee on Energy and Natural Resources.
  Mr. BINGAMAN. Mr. President, today, I, along with many of my 
colleagues in the Senate, members of the Democratic caucus, have 
introduced two bills: the Comprehensive and Balanced Energy Policy Act 
of 2001, and its companion measure, the Energy Security and Tax 
Incentive Act of 2001. I expect the first of those will be referred to 
the Committee on Energy and Natural Resources and the other will be 
referred to the Committee on Finance because it does contain tax 
provisions.
  Mr. President, the Nation is facing important challenges to its 
energy future. For decades, we have been able to rely on the fact that 
our energy supplies were abundant, dependable, and affordable. Events 
in recent months have shaken the faith of many in that reliance. 
Volatile prices, high prices and outright failures of supply are 
reported in newspaper headlines almost daily.
  Why are we seeing these problems emerge now? Energy prices remained 
relatively stable over the last decade due to increased productivity, 
lower energy use per dollar of GDP, and introduction of market 
competition. All of these factors acted to hold down prices, in spite 
of robust economic growth and increasing demand for energy. Before the 
introduction of competition into energy markets we had policies that 
required large excess capacity margins. We paid a lot for that excess 
capacity in the past, but we also benefitted from that buffer. It kept 
the system functioning as markets restructured with low prices and 
relatively minor bumps along the way. As the economic growth of recent 
years has used up that excess capacity in the fuels, power and natural 
gas sectors, the frictions and imperfections in those markets have 
become apparent. That is what we are seeing today.

[[Page S2736]]

  Three weeks ago, when Senator Murkowski, Chairman of the Energy 
Committee on which I serve, introduced the Republican energy message 
bill, I gave an outline of what I thought should be included in 
comprehensive energy legislation for the Congress to put together a 
balanced and adequate response to the energy issues that confront the 
Nation.
  At that time I said that I strongly believed that a package with 
equal emphasis on both supply and demand side measures developed with 
bipartisan support is the only way we can pass energy legislation this 
Congress.
  The key word is balance. The bill introduced by my Republican 
colleague is strong on the supply side and I support many of its 
provisions but short on the demand side of the equation. Many 
provisions of the Republican package I support, as do a number of my 
Democratic colleagues.
  However, after reviewing that bill overall, I believe it is 
appropriate to introduce a countermeasure, a measure that addresses our 
energy needs as I see it in a more balanced and comprehensive way. This 
will help our discussion for final legislation in this area and help 
focus in on what the priorities need to be as we move forward.
  The first of the issues left out of the Republican bill for any real 
consideration was the issue of climate change. In 1992, the Senate 
ratified the Rio Treaty calling for a reduction in carbon dioxide 
emissions to 1990 levels by the year 2000. I know some in this body do 
not believe we should have acted to approve that treaty, but we did. 
Last year, instead of reaching those 1990 levels by the year 2000, we 
were 17 percent above those levels.
  We and the rest of the world have recognized the vital importance of 
preventing the potential for catastrophic climate change, that our 
human activities are, in fact, threatening. We have made commitments, 
but we have not met those commitments. We need to do so, not as some 
isolated exercise undertaken without regard to the economy, but as an 
integral part of our energy policy for the 21st century.
  In my view, we cannot separate climate change policy from energy 
policy. To do one is to inextricably affect the other. The policy bill 
I am introducing creates a bipartisan national commission on energy and 
climate change to be appointed by this President and to conduct a study 
of measures that could achieve stabilization of greenhouse gas 
emissions in this country at 1990 levels by the year 2010--and below 
1990 levels by the year 2020.
  The commission would then develop recommendations concerning measures 
appropriate for implementation, for legislation, and for administrative 
action to implement this goal.
  There are some who believe we should be looking at even deeper cuts 
to our emissions than to return to 1990 levels by 2010. I have some 
sympathy for that perspective. But if we are to take a bipartisan 
approach to the task of integrating climate change policy with energy 
policy, it is more realistic to start with a point that the Senate is 
on record as agreeing to. Most Members who were here at the time the 
vote occurred in 1992 on the Rio Treaty believe that commitment to go 
to 1990 levels by the year 2000, although on a voluntary basis, was a 
good-faith and reasonable commitment.
  I believe there should not be objection to reaching that same goal 
given an extra 10 years in which to achieve it. The answer to how we 
get to this point may help illuminate the issues of what more 
aggressive actions are needed to reduce greenhouse gas emissions. The 
bill I am introducing calls for a much more vigorous effort by the U.S. 
Government to get U.S. clean energy technology into developing 
countries that are expected to experience major increases in their 
greenhouse gas emissions over the next decade.
  The United States cannot solve the greenhouse gas problem by itself, 
and we all know that. Other countries need to do their part. But since 
our particular strength in this country has been the development of 
technology, we should be making every effort to help those developing 
countries adopt the cleanest technologies in each energy area that we 
have to offer.
  It makes good business sense, it makes good climate sense, and the 
appropriate Federal agencies should help facilitate the process.
  Another missing element in the Republican bill is the area of how to 
site energy infrastructure. There has been a lot of talk about the 
problem, but not much action beyond finger-pointing in this area. I 
believe we need to recognize the wisdom of the old Pogo adage, ``We 
have met the enemy and he is us.'' Even communities that are 
experiencing energy crunches are having trouble siting new energy 
infrastructure because of local sentiment against it. This is not 
principally a problem with environmental regulations, as some would 
suggest. It is NIMBY-- ``not in my backyard''--pure and simple.
  If we are to effectively deal with this siting problem, we will need 
new tools and models. One that I think is particularly promising is 
regional cooperation, partly because most energy markets are regional. 
For example, as technologies for transmitting electricity have 
improved, electric utilities have come more and more to depend on the 
wholesale market for electricity supply. Those markets are increasingly 
regional in scope.
  A similar picture can be painted for the natural gas market. In order 
to meet the challenges of these new market realities, we must change 
the regulatory institutions to reflect the structures of the market. 
The markets are regional. So we must think regionally.
  We have seen regional bodies help site other important societal 
infrastructure, such as highways. But if a similar construct is to be 
helpful in the energy area, there will be a great need for technical 
assistance and for a regular forum where regional leaders and decision 
makers in Federal agencies can meet to discuss the real issues and 
problems. For that reason, the bill I am introducing has provisions 
that have the DOE meet these needs.
  I realize that this is a small beginning, but I believe this is an 
important piece of this bill. I know that a number of States, 
particularly in the West and the Northeast, as well as other regions, 
are already engaged in varying degrees of cooperative effort to address 
the regionalization of energy markets. I look forward to working with 
the States, and with Federal agencies to develop a framework to support 
these efforts.
  The bill that I am introducing requires a review of the adequacy of 
FERC transmission policies and its interpretation of market power. It 
calls for an investigation of the possibility using existing rights-of-
way owned by Federal Power Marketing agencies for siting energy 
facilities.
  As the electricity industry has changed, the structure for assuring 
the reliability of the power grid has come under fire. Many in the 
industry and the regulatory community believe that the old system of 
self-policing, voluntary compliance with rules generated by the 
suppliers will not continue to provide the reliability that we have 
come to expect.
  Last year the Senate passed a bill that addressed this issue by 
creating a new entity to develop and enforce electric reliability 
rules. I have included that bill as part of this package, and the text 
is identical to what was included in the Republican bill I mentioned 
earlier.
  This bill also contains a number of provisions intended to provide 
additional protection for electricity consumers. Among these are 
protections against such unfair trade practices as slamming and 
cramming; encouragement to the States to ensure universal and 
affordable service; a rural construction grant program; a comprehensive 
Indian energy program; greater transparency of information on the 
availability transmission and generating capacity; and a public 
benefits fund to help States with various energy efficiency, renewable 
energy and low income energy programs and to support investments in 
climate change mitigation.
  Perhaps most importantly, this bill contains language to address the 
immediate crisis being experienced by California, both in terms of 
electricity and natural gas. We cannot ignore the problem of 
California, or simply sit back and give speeches heaping blame on their 
politicians and then think that we've done our job. The motto carved in 
stone over the desk of the Presiding Officer in this Chamber is ``E 
Pluribus Unum,'' or, ``Out of Many, One.'' A more colloquial version of 
that might be, ``We're all in this together.''

[[Page S2737]]

 The market in California for electricity and gas is broken in several 
respects. In the two hearings we have held before the Committee on 
Energy and Natural Resources, it is clear that the prices received by 
many generators are far above the cost of production. It is also clear 
that market signals are not getting through to consumers. The 
provisions of this bill, which I have inserted at the request of 
Senator Feinstein, take on both of those issues. These provisions to 
help Californians deserve full and careful attention by the Senate, 
because this issue is worsening as we speak.
  One of the best ways to protect against market volatility in energy 
is to diversify supply sources. I believe that much can be done to 
increase energy supplies from traditional resources, and the bills that 
I am introducing, taken together have a robust mix of tax and policy 
provisions to see that we continue to develop our domestic energy 
resources effectively. Of particular importance are countercyclical tax 
measures that kick in when prices fall to very low levels, so that new 
domestic production does not come to a standstill. If we can even out 
some of the boom-and-bust quality of our domestic oil and gas drilling, 
we will maintain both the production and the skilled labor force in oil 
and natural gas exploration and production that this country needs.

  The bill that I am introducing does not open ANWR to oil and gas 
drilling. I find it ironic that, at the same time the President is 
seeking to open up ANWR a wildlife refuge, he is being importuned by 
his brother, the Governor of Florida, to put a large and promising 
tract in the deepwater Gulf of Mexico off limits to oil and gas 
leasing. The policy bill that I am introducing today mandates that the 
lease sale go forward on its current schedule.
  Let me just make reference to that with this chart. This chart shows 
the area at issue. It is called the Sale 181 area. As you can see most 
of it is over 100 miles from Florida:
  It is this area fully 100 miles from Florida we believe should be 
offered for development without hesitation. It is scheduled for 
December, and we do not believe it is good public policy for us to back 
away from developing resources in an area where we have a demonstrated 
history of safe and environmentally sensitive development. This area in 
the deepwater should be made available for leasing and exploration, and 
we believe it will be if this legislation becomes law.
  Although the Democratic energy legislation does not open ANWR, it 
does take what I think is a meaningful step to make sure that the 
abundant natural gas in Alaska, which is produced around Prudhoe Bay, 
makes it to the lower 48 States where it is needed. The Democratic 
energy tax bill contains a tax incentive for any Alaskan gas that 
enters interstate commerce before January 1, 2009. This should be a 
significant inducement to producers to get the various proposals for 
pipelines between Alaska and the lower 48 sorted out, and to start 
building a pipeline to bring that gas to our markets as soon as 
possible.
  In addition to traditional energy sources, both bills that I am 
introducing encourage alternative energy supplies. This bill gives a 
great deal of attention to renewable resources, such as wind, solar, 
geothermal, biomass, hydroelectric and other renewable generation 
options, as well as encouraging development and deployment of fuel 
cells, distributed generation and combined heating and power 
facilities. We require Federal energy facilities to set the example by 
meeting targets for percentages of their electricity supply to be 
derived from renewable resources. We also require that the rules for 
interconnection of electricity customers who self-generate, especially 
with renewable resources, be spelled out and made equitable. The bill 
would ease access to the transmission system for intermittent sources 
such as wind generators.

  That is a brief summary of what the Democratic bill does on energy 
supply. But, as I mentioned in the beginning of my remarks, this bill 
balances its emphasis on supply with a strong emphasis on demand 
reduction and efficiency.
  Increasing the efficient use of energy is the single most effective 
and least-cost energy policy for the short term and long term. Just 
yesterday, the Wall Street Journal ran an article titled ``States 
Rediscover Energy Policies''.
  Mr. President, I ask unanimous consent, following my remarks, to have 
printed in the Record this article from yesterday's issue of the Wall 
Street Journal.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (See exhibit 1.)
  Mr. BINGAMAN. Mr. President, the focus of the article is the fact 
that overall the last decade a number of States reduced their 
commitments to energy efficiency at a cost of 15,000 megawatts in power 
savings, and that now many States, through the National Association of 
State Energy Officials, are refocusing their attention on energy 
efficiency--the easiest and least cost source of energy.
  Energy-efficient lighting, appliances, and buildings generate 
benefits in terms of energy savings, emission reductions and human 
health improvements. Improvements to installation practices for heating 
and cooling systems, including duct-work, could take considerable 
pressure off the power grid and natural gas supplies almost 
immediately.
  We have included a number provisions that will help bring the next 
generation of ultra efficient appliances into the marketplace sooner. 
We would also establish a new program to make grants to local school 
districts to improve energy efficiency of school buildings and expand 
the use of renewable energy. Research has shown that better lighting, 
heating and cooling systems improve students' performance. We are 
urging the Secretary of Energy to work with energy-intensive industries 
to negotiate voluntary agreements to improve their energy intensity.
  This bill also takes on the issue of energy efficiency in vehicles. 
That is a controversial issue. A lot has been said on this floor about 
the undesirability of depending on foreign sources of oil. But most of 
that oil goes into transportation fuel uses. If we're really serious 
about energy policy, climate policy, and national energy security, then 
we need to address vehicle fuel efficiency.
  Hardly a speech is given on the Senate floor that does not talk about 
how unfortunate it is that our dependence on foreign oil continues to 
grow. We need to recognize what the main cause of that increased 
dependence is that we are consuming more and more petroleum in the 
transportation sector of our economy.
  The top line on this chart shows the amount of consumption of 
petroleum in the transportation sector. This is up to the year 2000. 
Then you can see what is expected in the next 20 years with this 
enormous increase in the amount of petroleum going into our 
transportation sector.
  The debate on fuel efficiency has often been sidetracked into a 
discussion of specific proposals to change the corporate average fuel 
economy, or CAFE standards. Disagreements on CAFE have kept us from 
making progress on fuel efficiency in this country at a huge cost to 
consumers and our economy.
  At the same time, U.S.-based automobile manufacturers have entered 
into voluntary agreements with European countries to significantly 
increase the fuel efficiency of vehicles sold in Europe. While I 
recognize that there may be differences between Europe and the U.S., 
the concept of requiring a negotiation to see what can be done to 
further fuel efficiency in this country sounds like a reasonable idea 
to me. We ought to let the Department of Transportation take the lead, 
and authorize as much flexibility as possible in how an agreement is 
structured and what mechanisms are used to ensure the development of a 
vibrant market for fuel-efficient vehicles. That is exactly what this 
bill does on fuel efficiency does. It keeps the focus on the ultimate 
goal--how much petroleum gets consumed by light-duty vehicles. It 
allows consumption to grow slightly over the next few years, but 
requires implementation of policies that would cap the increase in fuel 
use in the light vehicle sector by the year 2008 by no more than 5 
percent above the level of use in 2000. The effect of this proposal is 
to increase fuel efficiency by more than just closing the light truck 
``loophole'' in the CAFE standards, while at the same time ensuring the 
light trucks needed by farmers, ranchers and

[[Page S2738]]

businesses are still available. The flexibility with respect to the 
mechanisms, but not the final result, will protect U.S. manufacturing 
jobs.
  Let me show another chart that relates to this. The chart is entitled 
``Potential Oil Supply From Arctic National Wildlife Refuge versus the 
Oil Savings From Improved Vehicle Fuel Economy.''
  You can see the amount of oil supply anticipated from ANWR, according 
to the U.S. Geological Survey. It is this first column. If you double 
that, if you assume that estimate is wrong and double it, you get this 
volume.
  Vehicle fuel economy by the year 2010 will yield a much greater 
savings to us in oil usage than we could possibly achieve by drilling 
in ANWR, and by the year 2020 there is absolutely no comparison, as I 
am sure this chart aptly demonstrates.
  Beyond increases in vehicle fuel efficiency, this bill also seeks to 
relieve stress on our fuel system by studying how to move to regional 
or national fuel standards, so that there is more flexibility in the 
fuel delivery system to accommodate refinery shutdowns or pipeline 
problems. The bill would also require Federal fleet vehicles with 
alternative dual fuel capability to increase their use of the 
alternative fuel to 50 percent of the total use by 2003, and 75 percent 
by 2005. In addition, State highway agencies would be permitted to 
allow alternative fuel vehicles to use High Occupancy Vehicle lanes on 
highways, regardless of the number of passengers carried.
  Along with the commitment to implementing available technologies must 
come a long-term commitment to development of new technologies. This 
bill would establish the framework for a comprehensive research, 
development and deployment program to reduce energy intensity by 1.9 
percent per year through 2020, reduce total consumption by eight 
quadrillion Btu in 2020 and reduce total carbon dioxide emission from 
expected levels by 166 million tons per year by 2020.
  This kind of commitment to a coordinated, comprehensive research and 
development program is essential if we are to meet the challenges that 
lie before us. One of the biggest disappointments of the new 
administration to date is its lack of attention to the importance of 
science and technology in general, and of energy R&D in particular. By 
all accounts, the new Bush administration is preparing to savage DOE 
energy technology programs, particularly in renewables and energy 
efficiency, in the detailed budget that it will be sending to the 
Congress in early April. I don't see how the administration can have a 
credible energy strategy at the same time that it is cutting energy 
R&D.
  The bill that I am introducing recognizes that our energy future 
depends crucially on our ability to innovate to produce more energy, at 
lower cost, and to use the resulting energy more efficiently.
  The Clinton administration--the previous administration-- prepared a 
comprehensive plan for boosting energy research and development 
spending, but it could find very little support for that proposal in 
Congress. That was in 1997. We have taken that blueprint and we have 
updated it to reflect some of the past appropriations by the Congress. 
I believe that we have come up with a broad approach to boost research 
and development spending for energy efficiency and for every energy 
supply option that is on the table.
  This bill also supports basic science that is related to energy that 
may lead to discoveries that could create entirely new energy 
technologies, such as happened when high-temperature superconductivity 
was discovered in the late 1980s. The Department of Energy's Office of 
Science has had a stagnant budget throughout the 1990s. We now see 
evidence that this lag negatively affected our productivity in basic 
areas such as chemistry, physics, and material sciences. The U.S. 
scientific productivity in these disciplines, which support both energy 
research and develpment as well as research and development in other 
high-tech areas, is markedly lower now than during the 1970s and 1980s. 
Many of us in Congress are talking about the need to double the budget 
for the National Institutes of Health. The administration is talking 
about that as well. I support doing that. But there is a similar 
national need to greatly increase our support for basic energy research 
and development. This effort to maintain research and development in 
this energy area is absolutely essential if Congress is going to do 
what needs to be done in this area.
  Tax Policy. Along with the programs outlined above, we need to 
consider the use of tax incentives to encourage commercial activities 
that will meet the goals for increased efficiency and diversification 
of our energy supplies. To accomplish this we have included tax credits 
and incentives to accompany the policy programs that we have 
authorized, such as, stimulus for residential and commercial energy 
efficiency, renewable energy development, clean coal technology, and 
distributed generation. To complement these incentives and encourage 
further development of new traditional supplies we have also provided 
for tax incentives for heating fuels and storage and oil and gas 
production.
  Mr. President, the lights went off again this week in California. We 
are all aware of that. Electricity bills throughout the West are 
causing businesses to shut down because they can't afford to operate. 
We are threatened with that in my own state of New Mexico. Citizens 
across the country have seen their gas bills double and in some cases 
triple the level they were a year ago. If you drive up to the gasoline 
pump you will see numbers that would have surprised and shocked you not 
too long ago. I think the citizens of this Nation know that the energy 
industries are in trouble, and that actually will mean trouble for 
them. We in Congress--we in Washington--need to respond.
  This bill is an attempt to further the dialogue that has already 
begun in this Congress. Consider it as an outline. We need to hold 
hearings. We need to debate how best to respond. We need to develop a 
balanced response that takes advantage of all the options that are 
available to us. We can't supply our way out of this unfortunate 
circumstance. We can't just conserve our way out of it either. We must 
do both. I expect many changes in the content of this bill before we 
are finally finished. But this is a good beginning toward a 
comprehensive and balanced energy policy for the Nation.
  Mr. President, I ask unanimous consent that the text of both bills be 
printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                 S. 596

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

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

       (a) Short Title.--This Act may be cited as the ``Energy 
     Security and Tax Incentive Policy Act of 2001''.
       (b) Amendment of 1986 Code.--Except as otherwise expressly 
     provided, whenever in this Act an amendment or repeal is 
     expressed in terms of an amendment to, or repeal of, a 
     section or other provision, the reference shall be considered 
     to be made to a section or other provision of the Internal 
     Revenue Code of 1986.
       (c) Table of Contents.--The table of contents for this Act 
     is as follows:

Sec. 1. Short title; amendment of 1986 Code; table of contents.

          TITLE I--ENERGY-EFFICIENT PROPERTY USED IN BUSINESS

Sec. 101. Credit for energy-efficient property used in business.
Sec. 102. Energy Efficient Commercial Building Property Deduction.
Sec. 103. Credit for energy-efficient appliances.

                  TITLE II--RESIDENTIAL ENERGY SYSTEMS

Sec. 201. Business credit for construction of new energy-efficient 
              home.
Sec. 202. Credit for energy efficiency improvements to existing homes.
Sec. 203. Credit for residential solar, wind, and fuel cell energy 
              property.

            TITLE III--ELECTRICITY FACILITIES AND PRODUCTION

Sec. 301. Incentive for Distributed Generation.
Sec. 302. Modifications to credit for electricity produced from 
              renewable and waste resources.
Sec. 303. Treatment of facilities using bagasse to produce energy as 
              solid waste disposal facilities eligible for tax-exempt 
              financing.
Sec. 304. Depreciation of property used in the transmission of 
              electricity.

  TITLE IV--INCENTIVES FOR EARLY COMMERCIAL APPLICATIONS OF ADVANCED 
                        CLEAN COAL TECHNOLOGIES

Sec. 401. Credit for investment in qualifying advanced clean coal 
              technology.

[[Page S2739]]

Sec. 402. Credit for production from qualifying advanced clean coal 
              technology.
Sec. 403. Risk pool for qualifying advanced clean coal technology.

                   TITLE V--HEATING FUELS AND STORAGE

Sec. 501. Full expensing of propane storage facilities.
Sec. 502. Arbitrage rules not to apply to prepayments for natural gas 
              and other commodities.
Sec. 503. Private loan financing test not to apply to prepayments for 
              natural gas and other commodities.

        TITLE VI--OIL AND GAS PRODUCTION AND PETROLEUM PRODUCTS

Sec. 601. Credit for production of re-refined lubricating oil.
Sec. 602. Oil and gas from marginal wells.
Sec. 603. Deduction for delay rental payments.
Sec. 604. Election to expense geological and geophysical expenditures.
Sec. 605. Gas pipelines treated as 7-year property.
Sec. 606. Crude oil and natural gas development credit.
Sec. 607. Credit for capture of coalmine methane gas.
Sec. 608. Allocation of alcohol fuels credit to patrons of a 
              cooperative.
Sec. 609. Extension of credit for producing fuel from a nonconventional 
              source.

          TITLE I--ENERGY-EFFICIENT PROPERTY USED IN BUSINESS

     SEC. 101. CREDIT FOR CERTAIN ENERGY-EFFICIENT PROPERTY USED 
                   IN BUSINESS.

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

     ``SEC. 48A. ENERGY CREDIT.

       ``(a) In General.--For purposes of section 46, the energy 
     credit for any taxable year is the energy percentage of the 
     basis of each energy property placed in service during such 
     taxable year.
       ``(b) Energy Percentage.--
       ``(1) In general.--The energy percentage is--
       ``(A) except as otherwise provided in this subparagraph, 10 
     percent,
       ``(B) in the case of energy property described in clauses 
     (i), (iii), and (vi) of subsection (c)(1)(A), 20 percent,
       ``(C) in the case of energy property described in 
     subsection (c)(1)(A)(v), 15 percent,
       ``(D) in the case of energy property described in 
     subsection (c)(1)(A)(ii) relating to a high risk geothermal 
     well, 20 percent, and
       ``(E) in the case of energy property described in 
     subsection (c)(1)(A)(vii), 30 percent.
       ``(2) Coordination with rehabilitation.--The energy 
     percentage shall not apply to that portion of the basis of 
     any property which is attributable to qualified 
     rehabilitation expenditures.
       ``(c) Energy Property Defined.--
       ``(1) In general.--For purposes of this subpart, the term 
     `energy property' means any property--
       ``(A) which is--
       ``(i) solar energy property,
       ``(ii) geothermal energy property,
       ``(iii) energy-efficient building property other than 
     property described in clauses (iii)(I) and (v)(I) of 
     subsection (d)(3)(A),
       ``(iv) combined heat and power system property,
       ``(v) low core loss distribution transformer property,
       ``(vi) qualified anaerobic digester property, or
       ``(vii) qualified wind energy systems equipment property,
       ``(B)(i) the construction, reconstruction, or erection of 
     which is completed by the taxpayer, or
       ``(ii) which is acquired by the taxpayer if the original 
     use of such property commences with the taxpayer.
       ``(C) which can reasonably be expected to remain in 
     operation for at least 5 years,
       ``(D) with respect to which depreciation (or amortization 
     in lieu of depreciation) is allowable, and
       ``(E) which meets the performance and quality standards (if 
     any) which--
       ``(i) have been prescribed by the Secretary by regulations 
     (after consultation with the Secretary of Energy), and
       ``(ii) are in effect at the time of the acquisition of the 
     property.
       ``(2) Exceptions.--
       ``(A) Public utility property.--Such term shall not include 
     any property which is public utility property (as defined in 
     section 46(f)(5) as in effect on the day before the date of 
     the enactment of the Revenue Reconciliation Act of 1990), 
     except for property described in paragraph (1)(A)(iv).
       ``(B) Certain wind equipment.--Such term shall not include 
     equipment described in paragraph (1)(A)(vii) which is taken 
     into account for purposes of section 45 for the taxable year.
       ``(d) Definitions Relating to Types of Energy Property.--
     For purposes of this section--
       ``(1) Solar energy property.--
       ``(A) In general.--The term `solar energy property' means 
     equipment which uses solar energy to generate electricity, to 
     heat or cool (or provide hot water for use in) a structure, 
     or to provide solar process heat.
       ``(B) Swimming pools, etc. used as storage medium.--The 
     term `solar energy property' shall not include property with 
     respect to which expenditures are properly allocable to a 
     swimming pool, hot tub, or any other energy storage medium 
     which has a function other than the function of such storage.
       ``(C) Solar panels.--No solar panel or other property 
     installed as a roof (or portion thereof) shall fail to be 
     treated as solar energy property solely because it 
     constitutes a structural component of the structure on which 
     it is installed.
       ``(2) Geothermal energy property.--
       ``(A) In general.--The term `geothermal energy property' 
     means equipment used to produce, distribute, or use energy 
     derived from a geothermal deposit (within the meaning of 
     section 613(e)(2)), but only, in the case of electricity 
     generated by geothermal power, up to (but not including) the 
     electrical transmission stage.
       ``(B) High risk geothermal well.--The term `high risk 
     geothermal well' means a geothermal deposit (within the 
     meaning of section 613(e)(2)) which requires high risk 
     drilling techniques. Such deposit may not be located in a 
     State or national park or in an area in which the relevant 
     State park authority or the National Park Service determines 
     the development of such a deposit will negatively impact on a 
     State or national park.
       ``(3) Energy-efficient building property.--
       ``(A) In general.--The term `energy-efficient building 
     property' means--
       ``(i) a fuel cell which--

       ``(I) generates electricity using an electrochemical 
     process,
       ``(II) has an electricity-only generation efficiency 
     greater than 30 percent, and
       ``(III) has a minimum generating capacity of 2 kilowatts,

       ``(ii) an electric heat pump hot water heater which yields 
     an energy factor of 1.7 or greater under test procedures 
     prescribed by the Secretary of Energy,
       ``(iii)(I) an electric heat pump which has a heating system 
     performance factor (HSPF) of at least 8.5 but less than 9 and 
     a cooling seasonal energy efficiency ratio (SEER) of at least 
     13.5 but less than 15,
       ``(II) an electric heat pump which has a heating system 
     performance factor (HSPF) of 9 or greater and a cooling 
     seasonal energy efficiency ratio (SEER) of 15 or greater,
       ``(iv) a natural gas heat pump which has a coefficient of 
     performance of not less than 1.25 for heating and not less 
     than 0.70 for cooling,
       ``(v)(I) a central air conditioner which has a cooling 
     seasonal energy efficiency ratio (SEER) of at least 13.5 but 
     less than 15,
       ``(II) a central air conditioner which has a cooling 
     seasonal energy efficiency ratio (SEER) of 15 or greater,
       ``(vi) an advanced natural gas water heater which--

       ``(I) increases steady state efficiency and reduces standby 
     and vent losses, and
       ``(II) has an energy factor of at least 0.65,

       ``(vii) an advanced natural gas furnace which achieves a 90 
     percent AFUE and rated for seasonal electricity use of less 
     than 300 kWh per year, and
       ``(viii) natural gas cooling equipment which meets all 
     applicable standards of the American Society of Heating, 
     Refrigerating, and Air Conditioning Engineers and which--

       ``(I) has a coefficient of performance of not less than 
     .60, or
       ``(II) uses desiccant technology and has an efficiency 
     rating of not less than 50 percent.

       ``(B) Limitations.--The credit under subsection (a) for the 
     taxable year may not exceed--
       ``(i) $500 in the case of property described in 
     subparagraph (A) other than clauses (i), (iv), and (viii) 
     thereof,
       ``(ii) $500 for each kilowatt of capacity in the case of 
     any fuel cell described in subparagraph (A)(i),
       ``(iii) $1,000 in the case of any natural gas heat pump 
     described in subparagraph (A)(iv), and
       ``(iv) $150 for each ton of capacity in the case of any 
     natural gas cooling equipment described in subparagraph 
     (A)(viii).
       ``(4) Combined heat and power system property.--
       ``(A) In general.--The term `combined heat and power system 
     property' means property--
       ``(i) comprising a system for the same energy source for 
     the simultaneous or sequential generation of electrical 
     power, mechanical shaft power, or both, in combination with 
     steam, heat, or other forms of useful energy,
       ``(ii) 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--

       ``(I) 60 percent in the case of a system with an electrical 
     capacity of less than 1 megawatt),
       ``(II) 65 percent in the case of a system with an 
     electrical capacity of not less than 1 megawatt and not in 
     excess of 50 megawatts), and

[[Page S2740]]

       ``(III) 70 percent in the case of a system with an 
     electrical capacity in excess of 50 megawatts).

       ``(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) 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 subsection (a)(1) if, with respect to such 
     property, the taxpayer uses a normalization method of 
     accounting.
       ``(5) Low core loss distribution transformer property.--The 
     term `low core loss distribution transformer property' means 
     a distribution transformer which has energy savings from a 
     highly efficient core of at least 20 percent more than the 
     average for power ratings reported by studies required under 
     section 124 of the Energy Policy Act of 1992.
       ``(6) Qualified anaerobic digester property.--The term 
     `qualified anaerobic digester property' means an anaerobic 
     digester for manure or crop waste which achieves at least 65 
     percent efficiency measured in terms of the fraction of 
     energy input converted to electricity and useful thermal 
     energy.
       ``(7) Qualified wind energy systems equipment property.--
     The term `qualified wind energy systems equipment property' 
     means wind energy systems equipment with a turbine size of 
     not more than 75 kilowatts rated capacity.
       ``(e) Special Rules.--For purposes of this section--
       ``(1) Special rule for property financed by subsidized 
     energy financing or industrial development bonds.--
       ``(A) Reduction of basis.--For purposes of applying the 
     energy percentage to any property, if such property is 
     financed in whole or in part by--
       ``(i) subsidized energy financing, or
       ``(ii) the proceeds of a private activity bond (within the 
     meaning of section 141) the interest on which is exempt from 
     tax under section 103, the amount taken into account as the 
     basis of such property shall not exceed the amount which (but 
     for this subparagraph) would be so taken into account 
     multiplied by the fraction determined under subparagraph (B).
       ``(B) Determination of fraction.--For purposes of 
     subparagraph (A), the fraction determined under this 
     subparagraph is 1 reduced by a fraction--
       ``(i) the numerator of which is that portion of the basis 
     of the property which is allocable to such financing or 
     proceeds, and
       ``(ii) the denominator of which is the basis of the 
     property.
       ``(C) Subsidized energy financing.--For purposes of 
     subparagraph (A), the term `subsidized energy financing' 
     means financing provided under a Federal, State, or local 
     program a principal purpose of which is to provide subsidized 
     financing for projects designed to conserve or produce 
     energy.
       ``(2) Certain progress expenditure rules made applicable.--
     Rules similar to the rules of subsections (c)(4) and (d) of 
     section 46 (as in effect on the day before the date of the 
     enactment of the Revenue Reconciliation Act of 1990) shall 
     apply for purposes of this section.
       ``(f) Application of Section.--
       ``(1) In general.--Except as provided by paragraph (2), 
     this section shall apply to property placed in service after 
     December 31, 2001, and before January 1, 2009.
       ``(2) Exceptions.--
       ``(A) Solar energy and geothermal energy property.--
     Paragraph (1) shall not apply to solar energy property or 
     geothermal energy property.
       ``(B) Certain electric heat pumps and central air 
     conditioners.--In the case of property which is described in 
     subsection (d)(3)(A)(iii)(I) or (d)(3)(A)(v)(I), this section 
     shall apply to property placed in service after December 31, 
     2001, and before January 1, 2006.''.
       (b) Conforming Amendments.--
       (1) Section 48 is amended to read as follows:

     ``SEC. 48. REFORESTATION CREDIT.

       ``(a) In General.--For purposes of section 46, the 
     reforestation credit for any taxable year is 20 percent of 
     the portion of the amortizable basis of any qualified timber 
     property which was acquired during such taxable year and 
     which is taken into account under section 194 (after the 
     application of section 194(b)(1)).
       ``(b) Definitions.--For purposes of this subpart, the terms 
     `amortizable basis' and `qualified timber property' have the 
     respective meanings given to such terms by section 194.''.
       (2) Section 39(d) is amended by adding at the end the 
     following:
       ``(10) No carryback of energy credit before effective 
     date.--No portion of the unused business credit for any 
     taxable year which is attributable to the energy credit 
     determined under section 48A may be carried back to a taxable 
     year ending before January 1, 2002.''.
       (3) Section 280C is amended by adding at the end the 
     following:
       ``(d) Credit for Energy Property Expenses.--
       ``(1) In general.--No deduction shall be allowed for that 
     portion of the expenses for energy property (as defined in 
     section 48A(c)) otherwise allowable as a deduction for the 
     taxable year which is equal to the amount of the credit 
     determined for such taxable year under section 48A(a).
       ``(2) Similar rule where taxpayer capitalizes rather than 
     deducts expenses.--If--
       ``(A) the amount of the credit allowable for the taxable 
     year under section 48A (determined without regard to section 
     38(c)), exceeds
       ``(B) the amount allowable as a deduction for the taxable 
     year for expenses for energy property (determined without 
     regard to paragraph (1)), the amount chargeable to capital 
     account for the taxable year for such expenses shall be 
     reduced by the amount of such excess.
       ``(3) Controlled groups.--Paragraph (3) of subsection (b) 
     shall apply for purposes of this subsection.''.
       (4) Section 29(b)(3)(A)(i)(III) is amended by striking 
     `section 48(a)(4)(C)' and inserting `section 48A(e)(1)(C)'.
       (5) Section 50(a)(2)(E) is amended by striking `section 
     48(a)(5)' and inserting `section 48A(e)(2)'.
       (6) Section 168(e)(3)(B) is amended--
       (A) by striking clause (vi)(I) and inserting the following:
       ``(I) is described in paragraph (1) or (2) of section 
     48A(d) (or would be so described if `solar and wind' were 
     substituted for `solar' in paragraph (1)(B)),'', and
       (B) in the last sentence by striking ``section 48(a)(3)'' 
     and inserting ``section 48A(c)(2)(A)''.
       (c) Clerical Amendment.--The table of sections for subpart 
     E of part IV of subchapter A of chapter 1 is amended by 
     striking the item relating to section 48 and inserting the 
     following:

``Sec. 48. Reforestation credit.
``Sec. 48A. Energy credit.''.

       (d) Effective Date.--The amendments made by this section 
     shall apply to property placed in service after December 31, 
     2001, 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. 102. ENERGY-EFFICIENT COMMERCIAL BUILDING PROPERTY 
                   DEDUCTION.

       (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:

     ``SEC. 199. ENERGY-EFFICIENT COMMERCIAL BUILDING PROPERTY.

       ``(a) In General.--There shall be allowed as a deduction 
     for the taxable year an amount equal to the energy-efficient 
     commercial building property expenditures made by a taxpayer 
     for the taxable year.
       ``(b) Maximum Amount of Deduction.--The amount of energy-
     efficient commercial building property expenditures taken 
     into account under subsection (a) shall not exceed an amount 
     equal to the product of--
       ``(1) $2.25, and
       ``(2) the square footage of the building with respect to 
     which the expenditures are made.
       ``(c) Year Deduction Allowed.--The deduction under 
     subsection (a) shall be allowed in the taxable year in which 
     the construction of the building is completed.
       ``(d) Energy-Efficient Commercial Building Property 
     Expenditures.--For purposes of this section--
       ``(1) In general.--The term `energy-efficient commercial 
     building property expenditures' means an amount paid or 
     incurred for energy-efficient commercial building property 
     installed on or in connection with new construction or 
     reconstruction of property--
       ``(A) for which depreciation is allowable under section 
     167,
       ``(B) which is located in the United States, and
       ``(C) the construction or erection of which is completed by 
     the taxpayer.

     Such property includes all residential rental property, 
     including low-rise multifamily structures and single family 
     housing property which is not within the scope of Standard 
     90.1-1999 (described in paragraph (3)).
       ``(2) Labor costs included.--Such term includes 
     expenditures for labor costs properly allocable to the onsite 
     preparation, assembly, or original installation of the 
     property.
       ``(3) Energy expenditures excluded.--Such term does not 
     include any expenditures taken into account in determining 
     any credit allowed under section 48A.
       ``(e) Energy-Efficient Commercial Building Property.--For 
     purposes of subsection (d)--
       ``(1) In general.--The term `energy-efficient commercial 
     building property' means any property which reduces total 
     annual energy and power costs with respect to the lighting, 
     heating, cooling, ventilation, and hot water supply systems 
     of the building by

[[Page S2741]]

     50 percent or more in comparison to a reference building 
     which meets the requirements of Standard 90.1-1999 of the 
     American Society of Heating, Refrigerating, and Air 
     Conditioning Engineers and the Illuminating Engineering 
     Society of North America using methods of calculation under 
     subparagraph (B) and certified by qualified professionals as 
     provided under paragraph (6).
       ``(2) Methods of calculation.--The Secretary, in 
     consultation with the Secretary of Energy, shall promulgate 
     regulations which describe in detail methods for calculating 
     and verifying energy and power consumption and cost, taking 
     into consideration the provisions of the 1998 California 
     Nonresidential ACM Manual. These procedures shall meet the 
     following requirements:
       ``(A) In calculating tradeoffs and energy performance, the 
     regulations shall prescribe the costs per unit of energy and 
     power, such as kilowatt hour, kilowatt, gallon of fuel oil, 
     and cubic foot or Btu of natural gas, which may be dependent 
     on time of usage.
       ``(B) The calculational methodology shall require that 
     compliance be demonstrated for a whole building. If some 
     systems of the building, such as lighting, are designed later 
     than other systems of the building, the method shall provide 
     that either--
       ``(i) the expenses taken into account under paragraph (1) 
     shall not occur until the date designs for all energy-using 
     systems of the building are completed, or
       ``(ii) the expenses taken into account under paragraph (1) 
     shall be a fraction of such expenses based on the performance 
     of less than all energy-using systems in accordance with 
     subparagraph (C), and the energy performance of all systems 
     and components not yet designed shall be assumed to comply 
     minimally with the requirements of such Standard 90.1-1999.
       ``(C) The expenditures in connection with the design of 
     subsystems in the building, such as the envelope, the 
     heating, ventilation, air conditioning and water heating 
     system, and the lighting system shall be allocated to the 
     appropriate building subsystem based on system-specific 
     energy cost savings targets in regulations promulgated by the 
     Secretary of Energy which are equivalent, using the 
     calculation methodology, to the whole building requirement of 
     50 percent savings.
       ``(D) The calculational methods under this paragraph need 
     not comply fully with section 11 of such Standard 90.1-1999.
       ``(E) The calculational methods shall be fuel neutral, such 
     that the same energy efficiency features shall qualify a 
     building for the deduction under this section regardless of 
     whether the heating source is a gas or oil furnace or an 
     electric heat pump.
       ``(F) The calculational methods shall provide appropriate 
     calculated energy savings for design methods and technologies 
     not otherwise credited in either such Standard 90.1-1999 or 
     in the 1998 California Nonresidential ACM Manual, including 
     the following:
       ``(i) Natural ventilation.
       ``(ii) Evaporative cooling.
       ``(iii) Automatic lighting controls such as occupancy 
     sensors, photocells, and timeclocks.
       ``(iv) Daylighting.
       ``(v) Designs utilizing semi-conditioned spaces which 
     maintain adequate comfort conditions without air conditioning 
     or without heating.
       ``(vi) Improved fan system efficiency, including reductions 
     in static pressure.
       ``(vii) Advanced unloading mechanisms for mechanical 
     cooling, such as multiple or variable speed compressors.
       ``(viii) The calculational methods may take into account 
     the extent of commissioning in the building, and allow the 
     taxpayer to take into account measured performance which 
     exceeds typical performance.
       ``(3) Computer software.--
       ``(A) In general.--Any calculation under this subsection 
     shall be prepared by qualified computer software.
       ``(B) Qualified computer software.--For purposes of this 
     paragraph, the term `qualified computer software' means 
     software--
       ``(i) for which the software designer has certified that 
     the software meets all procedures and detailed methods for 
     calculating energy and power consumption and costs as 
     required by the Secretary,
       ``(ii) which provides such forms as required to be filed by 
     the Secretary in connection with energy efficiency of 
     property and the deduction allowed under this section, and
       ``(iii) which provides a notice form which summarizes the 
     energy efficiency features of the building and its projected 
     annual energy costs.
       ``(4) Allocation of deduction for public property.--In the 
     case of energy-efficient commercial building property 
     installed on or in public property, the Secretary shall 
     promulgate a regulation to allow the allocation of the 
     deduction to the person primarily responsible for designing 
     the property in lieu of the public entity which is the owner 
     of such property. Such person shall be treated as the 
     taxpayer for purposes of this section.
       ``(5) Notice to owner.--The qualified individual shall 
     provide an explanation to the owner of the building regarding 
     the energy efficiency features of the building and its 
     projected annual energy costs as provided in the notice under 
     paragraph (3)(B)(iii).
       ``(6) Certification.--
       ``(A) In general.--Except as provided in this paragraph, 
     the Secretary, in consultation with the Secretary of Energy, 
     shall establish requirements for certification and compliance 
     procedures similar to the procedures under section 45F(d).
       ``(B) Qualified individuals.--Individuals qualified to 
     determine compliance shall be only those individuals who are 
     recognized by an organization certified by the Secretary for 
     such purposes.
       ``(C) Proficiency of qualified individuals.--The Secretary 
     shall consult with nonprofit organizations and State agencies 
     with expertise in energy efficiency calculations and 
     inspections to develop proficiency tests and training 
     programs to qualify individuals to determine compliance.
       ``(f) Termination.--This section shall not apply with 
     respect to any energy-efficient commercial building property 
     expenditures in connection with property--
       ``(1) the plans for which are not certified under 
     subsection (e)(6) on or before December 31, 2006, and
       ``(2) the construction of which is not completed on or 
     before December 31, 2008.''.
       (b) Conforming Amendments.--Section 1016(a) is amended by 
     striking ``and'' at the end of paragraph (26), by striking 
     the period at the end of paragraph (27) and inserting ``, 
     and'', and by inserting the following:
       ``(28) for amounts allowed as a deduction under section 
     199(a).''.
       (c) Clerical Amendment.--The table of sections for part VI 
     of subchapter B of chapter 1 is amended by adding at the end 
     the following:

``Sec. 199. Energy-efficient commercial building property.''.

       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2001.

     SEC. 103. CREDIT FOR ENERGY-EFFICIENT APPLIANCES.

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

     ``SEC. 45E. ENERGY-EFFICIENT APPLIANCE CREDIT.

       ``(a) General Rule.--For purposes of section 38, the 
     energy-efficient appliance credit determined under this 
     section for the taxable year is an amount equal to the 
     applicable amount determined under subsection (b) with 
     respect to qualified energy-efficient appliances produced by 
     the taxpayer during the calendar year ending with or within 
     the taxable year.
       ``(b) Applicable Amount.--For purposes of subsection (a), 
     the applicable amount determined under this subsection with 
     respect to a taxpayer is the sum of--
       ``(1) in the case of an energy-efficient clothes washer 
     described in subsection (d)(2)(A) or an energy-efficient 
     refrigerator described in subsection (d)(3)(B)(i), an amount 
     equal to--
       ``(A) $50, multiplied by
       ``(B) the number of such washers and refrigerators produced 
     by the taxpayer during such calendar year, and
       ``(2) in the case of an energy-efficient clothes washer 
     described in subsection (d)(2)(B) or an energy-efficient 
     refrigerator described in subsection (d)(3)(B)(ii), an amount 
     equal to--
       ``(A) $100, multiplied by
       ``(B) the number of such washers and refrigerators produced 
     by the taxpayer during such calendar year.
       ``(c) Limitation on Maximum Credit.--
       ``(1) In general.--The maximum amount of credit allowed 
     under subsection (a) with respect to a taxpayer for all 
     taxable years shall be--
       ``(A) $30,000,000 with respect to the credit determined 
     under subsection (b)(1), and
       ``(B) $30,000,000 with respect to the credit determined 
     under subsection (b)(2).
       ``(2) Limitation based on gross receipts.--The credit 
     allowed under subsection (a) with respect to a taxpayer for 
     the taxable year shall not exceed an amount equal to 2 
     percent of the average annual gross receipts of the taxpayer 
     for the 3 taxable years preceding the taxable year in which 
     the credit is determined.
       ``(3) Gross receipts.--For purposes of this subsection, the 
     rules of paragraphs (2) and (3) of section 448(c) shall 
     apply.
       ``(d) 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 kWh per year than the energy 
     conservation standards promulgated by the Department of 
     Energy for such refrigerator for 2001, or
       ``(ii) 15 percent less kWh per year than such energy 
     conservation standards.
       ``(e) Special Rules.--

[[Page S2742]]

       ``(1) In general.--Rules similar to the rules of 
     subsections (c), (d), and (e) of section 52 shall apply for 
     purposes of this section.
       ``(2) Aggregation rules.--All persons treated as a single 
     employer under subsection (a) or (b) of section 52 or 
     subsection (m) or (o) of section 414 shall be treated as one 
     person for purposes of subsection (a).
       ``(f) 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).
       ``(g) Termination.--This section shall not apply--
       ``(1) with respect to energy-efficient refrigerators 
     described in subsection (d)(3)(B)(i) produced in calendar 
     years beginning after 2005, and
       ``(2) with respect to all other qualified energy-efficient 
     appliances produced in calendar years beginning after 
     2007.''.
       (b) Limitation on Carryback.--Section 39(d) (relating to 
     transition rules), as amended by section 101(b)(2), is 
     amended by adding at the end the following:
       ``(11) No carryback of energy-efficient appliance credit 
     before 2002.--No portion of the unused business credit for 
     any taxable year which is attributable to the energy-
     efficient appliance credit determined under section 45E may 
     be carried to a taxable year beginning before January 1, 
     2002.''.
       (c) Denial of Double Benefit.--Section 280C (relating to 
     certain expenses for which credits are allowable), as amended 
     by section 102(b)(3), is amended by adding at the end the 
     following:
       ``(e) Credit for Energy-Efficient Appliance Expenses.--No 
     deduction shall be allowed for that portion of the expenses 
     for qualified energy-efficient appliances (as defined in 
     section 45E(d)) 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 45E(a).''.
       (d) Conforming Amendment.--Section 38(b) (relating to 
     general business credit) is amended by striking ``plus'' at 
     the end of paragraph (12), by striking the period at the end 
     of paragraph (13) and inserting ``, plus'', and by adding at 
     the end the following:
       ``(14) the energy-efficient appliance credit determined 
     under section 45E(a).''.
       (e) 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 45D the 
     following:

``Sec. 45E. Energy-efficient appliance credit.''.

       (f) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2001.

                  TITLE II--RESIDENTIAL ENERGY SYSTEMS

     SEC. 201. 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 section 103(a), is amended by inserting after section 45E 
     the following:

     ``SEC. 45F. 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--
       ``(i) in the case of a dwelling described in subsection 
     (c)(3)(D)(i), $1,500, and
       ``(ii) in the case of a dwelling described in subsection 
     (c)(3)(D)(ii), $2,500.
       ``(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 
     under clause (i) or (ii) (as the case may be), 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 48A(a)), and
       ``(B) expenditures taken into account under either section 
     47 or 48A(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 equipment which can, individually or in combination 
     with other components, meet the requirements of this section.
       ``(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 projected level of 
     annual heating and cooling energy consumption, measured in 
     terms of average annual energy cost to the homeowner which is 
     at least--
       ``(i) 30 percent less than the annual level of heating and 
     cooling energy consumption of a reference dwelling 
     constructed in accordance with the standards of chapter 4 of 
     the 2000 International Energy Conservation Code, or
       ``(ii) 50 percent less than such annual level of heating 
     and cooling energy consumption.
       ``(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 1 of the 
     following methods:
       ``(A) A component-based method, using the applicable 
     technical energy efficiency specifications or ratings 
     (including product labeling requirements) for the energy-
     efficient building envelope component or energy-efficient 
     heating or cooling equipment. The Secretary shall, in 
     consultation with the Administrator of the Environmental 
     Protection Agency, develop prescriptive component-based 
     packages that are equivalent in energy performance to 
     properties that qualify under subparagraph (B).
       ``(B) An energy performance-based method that calculates 
     projected energy usage and cost reductions in the dwelling in 
     relation to a reference dwelling--
       ``(i) heated by the same energy source and heating system 
     type, and
       ``(ii) constructed in accordance with the standards of 
     chapter 4 of the 2000 International Energy Conservation Code.

     Computer software shall be used in support of an energy 
     performance-based method certification under subparagraph 
     (B). Such software shall meet procedures and methods for 
     calculating energy and cost savings in regulations 
     promulgated by the Secretary of Energy. Such regulations on 
     the specifications for software and verification protocols 
     shall be based on the 1998 California Residential Alternative 
     Calculation Method Approval Manual.
       ``(2) Provider.--Such certification shall be provided by--
       ``(A) in the case of a method described in paragraph 
     (1)(A), a local building regulatory authority, a utility, a 
     manufactured home production inspection primary inspection 
     agency (IPIA), or a home energy rating organization, 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.--
       ``(A) In general.--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 equipment installed and 
     their respective rated energy efficiency performance, and in 
     the case of a method described in paragraph (1)(B), 
     accompanied by written analysis documenting the proper 
     application of a permissible energy performance calculation 
     method to the specific circumstances of such dwelling.
       ``(B) Form provided to buyer.--A form documenting the 
     energy-efficient building envelope components and energy-
     efficient heating or cooling equipment installed and their 
     rated energy efficiency performance shall be provided to the 
     buyer of the dwelling. The form shall include labeled R-value 
     for insulation products, NFRC-labeled U-factor and Solar Heat 
     Gain Coefficient for windows, skylights, and doors, labeled 
     AFUE ratings for furnaces and boilers, labeled HSPF ratings 
     for electric heat pumps, and labeled SEER ratings for air 
     conditioners.
       ``(C) Ratings label affixed in dwelling.--A permanent label 
     documenting the ratings in subparagraph (B) shall be affixed 
     to the front of the electrical distribution panel of the 
     dwelling, or shall be otherwise permanently displayed in a 
     readily inspectable location in the dwelling.
       ``(4) Regulations.--
       ``(A) In general.--In prescribing regulations under this 
     subsection for energy performance-based certification 
     methods, the

[[Page S2743]]

     Secretary, after examining the requirements for energy 
     consultants and home energy ratings providers specified by 
     the Mortgage Industry National Accreditation Procedures for 
     Home Energy Rating Systems, shall prescribe procedures for 
     calculating annual energy usage and cost reductions for 
     heating and cooling and for the reporting of the results. 
     Such regulations shall--
       ``(i) provide that any calculation procedures be fuel 
     neutral such that the same energy efficiency measures allow a 
     home to qualify for the credit under this section regardless 
     of whether the dwelling uses a gas or oil furnace or boiler 
     or an electric heat pump, and
       ``(ii) require that any computer software allow for the 
     printing of the Federal tax forms necessary for the credit 
     under this section and for the printing of forms for 
     disclosure to the homebuyer.
       ``(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 Mortgage Industry 
     National Accreditation Procedures for Home Energy Rating 
     Systems.
       ``(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), as amended by section 103(d), 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 new energy-efficient home credit determined 
     under section 45F.''.
       (c) Denial of Double Benefit.--Section 280C (relating to 
     certain expenses for which credits are allowable), as amended 
     by section 103(c), is amended by adding at the end the 
     following:
       ``(f) 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 45F.''.
       (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 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) 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 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 45F.''.
       (2) Conforming amendment.--Subclause (II) of section 
     38(c)(2)(A)(ii) is amended by inserting ``or the new energy 
     efficient home credit'' after ``employment credit''.
       (e) Limitation on Carryback.--Subsection (d) of section 39, 
     as amended by section 103(b), is amended by adding at the end 
     the following:
       ``(12) 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 45F may be carried back to 
     any taxable year ending before January 1, 2001.''.
       (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:
       ``(9) the new energy-efficient home credit determined under 
     section 45F.''.
       (g) Clerical Amendment.--The table of sections for subpart 
     D of part IV of subchapter A of chapter 1, as amended by 
     section 103(d), is amended by inserting after the item 
     relating to section 45E the following:

``Sec. 45F. 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. 202. 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 which is certified to meet or exceed the 
     prescriptive criteria for such component in the 2000 
     International Energy Conservation Code, or any combination of 
     energy efficiency measures which achieves at least a 30 
     percent reduction in heating and cooling energy usage for the 
     dwelling (as measured in terms of energy cost to the 
     taxpayer), if--
       ``(1) such component or combinations of measures 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 or combination of 
     measures commences with the taxpayer, and
       ``(3) such component or combination of measures reasonably 
     can be expected to remain in use for at least 5 years.
       ``(e) Certification.--The certification described in 
     subsection (d) shall be--
       ``(1) in the case of any component described in subsection 
     (d), determined on the basis of applicable energy efficiency 
     ratings (including product labeling requirements) for 
     affected building envelope components,
       ``(2) in the case of combinations of measures described in 
     subsection (d), determined by the performance-based methods 
     described in section 45F(d),
       ``(3) provided by a third party, such as a local building 
     regulatory authority, a utility, a manufactured home 
     production inspection primary inspection agency (IPIA), or a 
     home energy rating organization, consistent with the 
     requirements of section 45F(d)(2), and
       ``(4) made in writing on forms which specify in readily 
     inspectable fashion the energy-efficient components and other 
     measures and their respective efficiency ratings, and which 
     shall include a permanent label affixed to the electrical 
     distribution panel as described in section 45F(d)(3)(C).
       ``(f) Definitions and Special Rules.--
       ``(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 for the qualified energy 
     efficiency improvements 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 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.
       ``(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 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

[[Page S2744]]

     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) 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.
       ``(5) 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 the date of the enactment of this section 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, as amended by section 
     102(b), 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:
       ``(29) 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 on or after the date of 
     the enactment of this Act.

     SEC. 203. CREDIT FOR RESIDENTIAL SOLAR, WIND, AND FUEL CELL 
                   ENERGY PROPERTY.

       (a) In General.--Subpart A of part IV of subchapter A of 
     chapter 1 (relating to nonrefundable personal credits), as 
     amended by section 201(a), is amended by inserting after 
     section 25B the following:

     ``SEC. 25C. RESIDENTIAL SOLAR, WIND, AND FUEL CELL 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,
       ``(2) 15 percent of the qualified solar water heating 
     property expenditures,
       ``(3) 30 percent of the qualified wind energy property 
     expenditures, and
       ``(4) 20 percent for the qualified fuel cell 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 property, such 
     property is certified for performance and safety by the non-
     profit Solar Rating Certification Corporation or a comparable 
     entity endorsed by the government of the State in which such 
     property is installed, and
       ``(B) in the case of a photovoltaic, wind energy, or fuel 
     cell property, such property 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 which 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 which 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) Qualified fuel cell property expenditure.--The term 
     `qualified fuel cell property expenditure' means an 
     expenditure for property which uses an electrochemical fuel 
     cell system to generate electricity for use in a dwelling 
     unit.
       ``(6) Labor costs.--Expenditures for labor costs properly 
     allocable to the onsite preparation, assembly, or original 
     installation of the property described in paragraph (1), (2), 
     (4), or (5) and for piping or wiring to interconnect such 
     property to the dwelling unit shall be taken into account for 
     purposes of this section.
       ``(7) 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 such individual 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

[[Page S2745]]

     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, as amended by section 
     201(b)(4), 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 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, as amended by section 201(b)(2), 
     is amended by inserting after the item relating to section 
     25B the following:

``Sec. 25C. Residential solar, wind, and fuel cell energy property.''.

       (c) Effective Date.--The amendments made by this section 
     shall apply to expenditures made after the date of the 
     enactment of this Act, in taxable years ending after such 
     date.

            TITLE III--ELECTRICITY FACILITIES AND PRODUCTION

     SEC. 301. INCENTIVE FOR DISTRIBUTED GENERATION.

       (a) Depreciation of Distributed Power Property.--
       (1) In general.--Subparagraph (C) of section 168(e)(3) 
     (relating to 7-year property) is amended by redesignating 
     clause (ii) as clause (iii) and by inserting after clause (i) 
     the following:
       ``(ii) any distributed power property, 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)(i) the following:

``(C)(ii).........................................................10''.

       (b) Distributed Power Property.--Section 168(i) is amended 
     by adding at the end the following:
       ``(15) Distributed power property.--The term `distributed 
     power property' means property--
       ``(A) which is used in the generation of electricity for 
     primary use--
       ``(i) in nonresidential real or residential rental property 
     used in the taxpayer's trade or business, or
       ``(ii) in the taxpayer's industrial manufacturing process 
     or plant activity, with a rated total capacity in excess of 
     500 kilowatts,
       ``(B) which also may produce usable thermal energy or 
     mechanical power for use in a heating or cooling application, 
     as long as at least 40 percent of the total useful energy 
     produced consists of--
       ``(i) with respect to assets described in subparagraph 
     (A)(i), electrical power (whether sold or used by the 
     taxpayer), or
       ``(ii) with respect to assets described in subparagraph 
     (A)(ii), electrical power (whether sold or used by the 
     taxpayer) and thermal or mechanical energy used in the 
     taxpayer's industrial manufacturing process or plant 
     activity,
       ``(C) which is not used to transport primary fuel to the 
     generating facility or to distribute energy within or outside 
     of the facility, and
       ``(D) where it is reasonably expected that not more than 50 
     percent of the produced electricity will be sold to, or used 
     by, unrelated persons.

     For purposes of subparagraph (B), energy output is determined 
     on the basis of expected annual output levels, measured in 
     British thermal units (Btu), using standard conversion 
     factors established by the Secretary.''.
       (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. 302. MODIFICATIONS TO CREDIT FOR ELECTRICITY PRODUCED 
                   FROM RENEWABLE AND WASTE PRODUCTS.

       (a) Increase in Credit Rate.--
       (1) In general.--Section 45(a)(1) is amended by striking 
     ``1.5 cents'' and inserting ``1.8 cents''.
       (2) Conforming amendments.--
       (A) Section 45(b)(2) is amended by striking ``1.5 cent'' 
     and inserting ``1.8 cent''.
       (B) Section 45(d)(2)(B) is amended by inserting ``(calendar 
     year 2001 in the case of the 1.8 cent amount in subsection 
     (a))'' after ``1992''.
       (b) Expansion of Qualified Resources.--
       (1) In general.--Section 45(c)(1) (relating to qualified 
     energy resources) is amended by striking ``and'' at the end 
     of subparagraph (B), by striking the period at the end of 
     subparagraph (C) and inserting ``, and'', and by adding at 
     the end the following:
       ``(D) alternative resources.''.
       (2) Definition of alternative resources.--Section 45(c) 
     (relating to definitions) is amended--
       (A) by redesignating paragraph (3) as paragraph (5),
       (B) by redesignating paragraph (4) as paragraph (3), and
       (C) by inserting after paragraph (3), as redesignated by 
     subparagraph (B), the following:
       ``(4) Alternative Resources.--
       ``(A) In general.--The term `alternative resources' means--
       ``(i) solar,
       ``(ii) biomass (other than closed loop biomass),
       ``(iii) municipal solid waste,
       ``(iv) incremental hydropower,
       ``(v) geothermal,
       ``(vi) landfill gas, and
       ``(vii) steel cogeneration.
       ``(B) Biomass.--The term `biomass' means any solid, 
     nonhazardous, cellulosic waste material or any organic 
     carbohydrate matter, which is segregated from other waste 
     materials, and which is derived from--
       ``(i) any of the following forest-related resources: mill 
     residues, precommercial thinnings, slash, and brush, but not 
     including old-growth timber,
       ``(ii) waste pallets, crates, dunnage, untreated wood waste 
     from construction or manufacturing activities, and landscape 
     or right-of-way tree trimmings, but not including 
     unsegregated municipal solid waste or post-consumer 
     wastepaper, or
       ``(iii) any of the following agriculture sources: orchard 
     tree crops, vineyard, grain, legumes, sugar, and other crop 
     by-products or residues, including any packaging and other 
     materials which are nontoxic and biodegradable and are 
     associated with the processing, feeding, selling, 
     transporting, and disposal of such agricultural materials.
       ``(C) 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).
       ``(D) Incremental hydropower.--The term `incremental 
     hydropower' means additional generating capacity achieved 
     from--
       ``(i) increased efficiency, or
       ``(ii) additions of new capacity,
     at a licensed non-Federal hydroelectric project originally 
     placed in service before the date of the enactment of this 
     paragraph.
       ``(E) 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.
       ``(F) 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.).
       ``(G) 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 defined in 
     paragraphs (2) and (3) and subparagraphs (B) and (C) of this 
     paragraph within an operating facility which produces or 
     integrates the production of coke, direct reduced iron ore, 
     iron, or steel provided that the cogeneration meets any 
     regulatory energy-efficiency standards established by the 
     Secretary, and only to the extent that such energy is 
     produced from--
       ``(i) gases or heat generated from the production of 
     metallurgical coke,
       ``(ii) gases or heat generated from the production of 
     direct reduced iron ore or iron, from blast furnace or direct 
     ironmaking processes, or
       ``(iii) gases or heat generated from the manufacture of 
     steel.''.
       (3) Qualified facility.--Section 45(c)(5) (defining 
     qualified facility), as redesignated by paragraph 2(A), is 
     amended by adding at the end the following:
       ``(D) Alternative resources facility.--
       ``(i) In general.--Except as provided in clauses (ii), 
     (iii), and (iv), in the case of a facility using alternative 
     resources to produce electricity, the term `qualified 
     facility' means any facility of the taxpayer which is 
     originally placed in service after the date of the enactment 
     of this subparagraph.
       ``(ii) Biomass facility.--In the case of a facility using 
     biomass described in paragraph (4)(A)(ii) to produce 
     electricity, the term `qualified facility' means any facility 
     of the taxpayer.
       ``(iii) Geothermal facility.--In the case of a facility 
     using geothermal to produce electricity, the term `qualified 
     facility' means any facility of the taxpayer which is 
     originally placed in service after December 31, 1992.
       ``(iv) Steel cogeneration facilities.--In the case of a 
     facility using steel cogeneration to produce electricity, the 
     term `qualified facility' means any facility permitted to 
     operate under the environmental requirements of the Clean Air 
     Act Amendments of 1990 which is owned by the taxpayer and 
     originally placed in service after the date of the enactment 
     of this subparagraph. Such a facility may be treated as 
     originally placed in service when such facility was last 
     upgraded to increase efficiency or generation capability 
     after such date.
       ``(v) Special rules.--In the case of a qualified facility 
     described in this subparagraph, the 10-year period referred 
     to in subsection (a) shall be treated as beginning no earlier 
     than the date of the enactment of this subparagraph.''.
       (4) Government-owned facility.--Section 45(d)(6) (relating 
     to credit eligibility in the case of government-owned 
     facilities using poultry waste) is amended--
       (A) by inserting ``or alternative resources'' after 
     ``poultry waste'', and
       (B) by inserting ``or alternative resources'' after 
     ``poultry waste'' in the heading thereof.
       (5) Qualified facilities with co-production.--Section 45(b) 
     (relating to limitations

[[Page S2746]]

     and adjustments) is amended by adding at the end the 
     following:
       ``(4) Increased credit for co-production facilities.--
       ``(A) In general.--In the case of a qualified facility 
     described in subsection (c)(3)(D)(i) which has a co-
     production facility or a qualified facility described in 
     subparagraph (A), (B), or (C) of subsection (c)(3) which adds 
     a co-production facility after the date of the enactment of 
     this paragraph, the amount in effect under subsection (a)(1) 
     for an eligible taxable year of a taxpayer shall (after 
     adjustment under paragraph (2) and before adjustment under 
     paragraphs (1) and (3)) be increased by .25 cents.
       ``(B) Co-production facility.--For purposes of subparagraph 
     (A), the term `co-production facility' means a facility 
     which--
       ``(i) enables a qualified facility to produce heat, 
     mechanical power, chemicals, liquid fuels, or minerals from 
     qualified energy resources in addition to electricity, and
       ``(ii) produces such energy on a continuous basis.
       ``(C) Eligible taxable year.--For purposes of subparagraph 
     (A), the term `eligible taxable year' means any taxable year 
     in which the amount of gross receipts attributable to the co-
     production facility of a qualified facility are at least 10 
     percent of the amount of gross receipts attributable to 
     electricity produced by such facility.''.
       (6) Qualified facilities located within qualified indian 
     lands.--Section 45(b) (relating to limitations and 
     adjustments), as amended by paragraph (5), is amended by 
     adding at the end the following:
       ``(5) Increased credit for qualified facility located 
     within qualified indian land.--In the case of a qualified 
     facility described in subsection (c)(3)(D) which--
       ``(A) is located within--
       ``(i) qualified Indian lands (as defined in section 
     7871(c)(3)), or
       ``(ii) lands which are held in trust by a Native 
     Corporation (as defined in section 3(m) of the Alaska Native 
     Claims Settlement Act (43 U.S.C. 1602(m)) for Alaska Natives, 
     and
       ``(B) is operated with the explicit written approval of the 
     Indian tribal government or Native Corporation (as so 
     defined) having jurisdiction over such lands,

     the amount in effect under subsection (a)(1) for a taxable 
     year shall (after adjustment under paragraphs (2) and (4) and 
     before adjustment under paragraphs (1) and (3)) be increased 
     by .25 cents.''.
       (7) Electricity produced from certain resources co-fired in 
     coal plants.--Section 45(d) (relating to definitions and 
     special rules) is amended by adding at the end the following:
       ``(8) Special rule for electricity produced from certain 
     resources co-fired in coal plants.--In the case of 
     electricity produced from biomass (including closed loop 
     biomass), municipal solid waste, or animal waste, co-fired in 
     a facility which produces electricity from coal--
       ``(A) subsection (a)(1) shall be applied by substituting `1 
     cent' for `1.8 cents',
       ``(B) such facility shall be considered a qualified 
     facility for purposes of this section, and
       ``(C) 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.''.
       (8) Conforming amendments.--
       (A) The heading for section 45 is amended by inserting 
     ``and waste energy'' after ``renewable''.
       (B) 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''.
       (c) Additional Modifications of Renewable and Waste Energy 
     Resource Credit.--
       (1) Credits for certain tax exempt organizations and 
     governmental units.--Section 45(d) (relating to definitions 
     and special rules), as amended by subsection (b)(7), is 
     amended by adding at the end the following:
       ``(9) Credits for certain tax exempt organizations and 
     governmental units.--
       ``(A) Allowance of credit.--Any credit which would be 
     allowable under subsection (a) with respect to a qualified 
     facility of an entity if such entity were not exempt from tax 
     under this chapter shall be treated as a credit allowable 
     under subpart C to such entity if such entity is--
       ``(i) an organization described in section 501(c)(12)(C) 
     and exempt from tax under section 501(a),
       ``(ii) an organization described in section 1381(a)(2)(C), 
     or
       ``(iii) an entity the income of which is excludable from 
     gross income under section 115.
       ``(B) Use of credit.--
       ``(i) Transfer of credit.--An entity described in 
     subparagraph (A) may assign, trade, sell, or otherwise 
     transfer any credit allowable to such entity under 
     subparagraph (A) to any taxpayer.
       ``(ii) Use of credit as an offset.--Notwithstanding any 
     other provision of law, in the case of an entity described in 
     clause (i) or (ii) of subparagraph (A), any credit allowable 
     to such entity under subparagraph (A) may be applied by such 
     entity, without penalty, as a prepayment of any loan, debt, 
     or other obligation the entity has incurred under subchapter 
     I of chapter 31 of title 7 of the Rural Electrification Act 
     of 1936 (7 U.S.C. 901 et seq.).
       ``(C) Credit not income.--Neither a transfer under clause 
     (i) or a use under clause (ii) of subparagraph (B) of any 
     credit allowable under subparagraph (A) shall result in 
     income for purposes of section 501(c)(12).
       ``(D) Transfer proceeds treated as arising from essential 
     government function.--Any proceeds derived by an entity 
     described in subparagraph (A)(iii) from the transfer of any 
     credit under subparagraph (B)(i) shall be treated as arising 
     from an essential government function.
       ``(E) Credits not reduced by tax-exempt bonds or certain 
     other subsidies.--Subsection (b)(3) shall not apply to reduce 
     any credit allowable under subparagraph (A) with respect to--
       ``(i) proceeds described in subparagraph (A)(ii) of such 
     subsection, or
       ``(ii) any loan, debt, or other obligation incurred under 
     subchapter I of chapter 31 of title 7 of the Rural 
     Electrification Act of 1936 (7 U.S.C. 901 et seq.),
     used to provide financing for any qualified facility.
       ``(F) Treatment of unrelated persons.--For purposes of this 
     paragraph, sales among and between entities described in 
     subparagraph (A) shall be treated as sales between unrelated 
     parties.''.
       (2) Coordination with other credits.--Section 45(d), as 
     amended by paragraph (1), is amended by adding at the end the 
     following:
       ``(10) Coordination with other credits.--This section shall 
     not apply to any qualified facility with respect to which a 
     credit under any other section is allowed for the taxable 
     year unless the taxpayer elects to waive the application of 
     such credit to such facility.''.
       (3) Expansion to include animal waste.--Section 45 
     (relating to electricity produced from certain renewable 
     resources), as amended by paragraphs (2) and (4) of 
     subsection (b), is amended--
       (A) by striking ``poultry'' each place it appears in 
     subsection (c)(1)(C) and subsection (d)(6) and inserting 
     ``animal'',
       (B) by striking ``poultry'' in the heading of paragraph (6) 
     of subsection (d) and inserting ``animal'',
       (C) by striking paragraph (3) of subsection (c) and 
     inserting the following:
       ``(3) Animal waste.--The term `animal waste' means poultry 
     manure and litter and other animal wastes, including--
       ``(A) wood shavings, straw, rice hulls, and other bedding 
     material for the disposition of manure, and
       ``(B) byproducts, packaging, and other materials which are 
     nontoxic and biodegradable and are associated with the 
     processing, feeding, selling, transporting, and disposal of 
     such animal wastes.'', and
       (D) by striking subparagraph (C) of subsection (c)(5) and 
     inserting the following:
       ``(C) Animal waste facility.--
       ``(i) In general.--Except as provided in clause (ii), in 
     the case of a facility using animal waste (other than 
     poultry) to produce electricity, the term `qualified 
     facility' means any facility of the taxpayer which is 
     originally placed in service after the date of the enactment 
     of this clause.
       ``(ii) Poultry waste.--In the case of a facility using 
     animal waste relating to poultry to produce electricity, the 
     term `qualified facility' means any facility of the taxpayer 
     which is originally placed in service after December 31, 
     1999.''.
       (4) Treatment of qualified facilities not in compliance 
     with pollution laws.--Section 45(c)(5) (relating to qualified 
     facilities), as amended by paragraphs (2) and (3) of 
     subsection (b), is amended by adding at the end the 
     following:
       ``(E) Noncompliance with pollution laws.--For purposes of 
     this paragraph, a facility which is not in compliance with 
     the applicable State and Federal pollution prevention, 
     control, and permit requirements for any period of time shall 
     not be considered to be a qualified facility during such 
     period.''.
       (5) Permanent extension of qualified facility dates.--
     Section 45(c)(5) (relating to qualified facility), as 
     redesignated by subsection (b)(2), is amended by striking ``, 
     and before January 1, 2002'' in subparagraphs (A) and (B).
       (d) Effective Date.--The amendments made by this section 
     shall apply to electricity and other energy produced after 
     the date of the enactment of this Act.

     SEC. 303. TREATMENT OF FACILITIES USING BAGASSE TO PRODUCE 
                   ENERGY AS SOLID WASTE DISPOSAL FACILITIES 
                   ELIGIBLE FOR TAX-EXEMPT FINANCING.

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

     SEC. 304. DEPRECIATION OF PROPERTY USED IN THE TRANSMISSION 
                   OF ELECTRICITY.

       (a) Depreciation of Property Used in the Transmission of 
     Electricity.--
       (1) In general.--Subparagraph (C) of section 168(e)(3) 
     (relating to 7-year property), as amended by section 
     301(a)(1), is amended by striking ``and'' at the end of 
     clause (ii), by redesignating clause (iii) as clause (iv), 
     and by inserting after clause (ii) the following:
       ``(iii) any property used in the transmission of 
     electricity, and''.

[[Page S2747]]

       (2) 10-year class life.--The table contained in section 
     168(g)(3)(B), as amended by section 301(a)(2), is amended by 
     inserting after the item relating to subparagraph (C)(ii) the 
     following:

``(C)(iii)........................................................10''.

       (b) Definition of Property Used in the Transmission of 
     Electricity.--Section 168(i), as amended by section 301(b), 
     is amended by adding at the end the following:
       ``(16) Property used in the transmission of electricity.--
     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.

  TITLE IV--INCENTIVES FOR EARLY COMMERCIAL APPLICATIONS OF ADVANCED 
                        CLEAN COAL TECHNOLOGIES

     SEC. 401. 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) 
     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 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 section 101(a), 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 which--
       ``(A)(i)(I) replaces a conventional technology facility of 
     the taxpayer and the original use of which commences with the 
     taxpayer, or
       ``(II) 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) is acquired through purchase (as defined by section 
     179(d)(2)),
       ``(B) is depreciable under section 167,
       ``(C) has a useful life of not less than 4 years,
       ``(D) is located in the United States, and
       ``(E) 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 
     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 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 2,000 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 2015, 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 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 5,000 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 2015,
       ``(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 2015, and
       ``(III) with a carbon emission rate which 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 which 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 
     pounds 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 pounds 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.
       ``(4) Noncompliance with pollution laws.--For purposes of 
     this subsection, a facility which is not in compliance with 
     the applicable State and Federal pollution prevention, 
     control, and permit requirements for any period of time shall 
     not be considered to be a qualifying advanced clean coal 
     technology facility during such period.
       ``(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

[[Page S2748]]

     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) Credits for Certain Tax Exempt Organizations and 
     Governmental Units.--
       ``(1) Allowance of credit.--Any credit which would be 
     allowable under subsection (a) with respect to a qualifying 
     advanced clean coal technology facility of an entity if such 
     entity were not exempt from tax under this chapter shall be 
     treated as a credit allowable under subpart C to such entity 
     if such entity is--
       ``(A) an organization described in section 501(c)(12)(C) 
     and exempt from tax under section 501(a),
       ``(B) an organization described in section 1381(a)(2)(C),
       ``(C) an entity the income of which is excludable from 
     gross income under section 115, or
       ``(D) the Tennessee Valley Authority.
       ``(2) Use of credit.--
       ``(A) Transfer of credit.--An entity described in 
     subparagraph (A), (B), or (C) of paragraph (1) may assign, 
     trade, sell, or otherwise transfer any credit allowable to 
     such entity under paragraph (1) to any taxpayer.
       ``(B) Use of credit as an offset.--Notwithstanding any 
     other provision of law, in the case of an entity described in 
     subparagraph (A) or (B) of paragraph (1), any credit 
     allowable to such entity under paragraph (1) may be applied 
     by such entity, without penalty, as a prepayment of any loan, 
     debt, or other obligation the entity has incurred under 
     subchapter I of chapter 31 of title 7 of the Rural 
     Electrification Act of 1936 (7 U.S.C. 901 et seq.).
       ``(C) Use by tva.--
       ``(i) In general.--Notwithstanding any other provision of 
     law, in the case of an entity described in paragraph (1)(D), 
     any credit allowable under paragraph (1) to such entity may 
     be applied as a credit against the payments required to be 
     made in any fiscal year under section 15d(e) of the Tennessee 
     Valley Authority Act of 1933 (16 U.S.C. 831n-4(e)) as an 
     annual return on the appropriations investment and an annual 
     repayment sum.
       ``(ii) Treatment of credits.--The aggregate amount of 
     credits described in paragraph (1) shall be treated in the 
     same manner and to the same extent as if such credits were a 
     payment in cash and shall be applied first against the annual 
     return on the appropriations investment.
       ``(iii) Credit carryover.--With respect to any fiscal year, 
     if the aggregate amount of credits described in paragraph (1) 
     exceeds the aggregate amount of payment obligations described 
     in clause (i), the excess amount shall remain available for 
     application as credits against the amounts of such payment 
     obligations in succeeding fiscal years in the same manner as 
     described in this subparagraph.
       ``(3) Credit not income.--Neither a transfer under 
     subparagraph (A) or a use under subparagraph (B) of paragraph 
     (2) of any credit allowable under paragraph (1) shall result 
     in income for purposes of section 501(c)(12).
       ``(4) Transfer proceeds treated as arising from essential 
     government function.--Any proceeds derived by an entity 
     described in paragraph (1)(C) from the transfer of any credit 
     under paragraph (2)(A) shall be treated as arising from an 
     essential government function.
       ``(f) Coordination With Other Credits.--This section shall 
     not apply to any property with respect to which the 
     rehabilitation credit under section 47 or the energy credit 
     under section 48A is allowed unless the taxpayer elects to 
     waive the application of such credit to such property.
       ``(g) 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 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) of the Internal 
     Revenue Code of 1986 (relating to transitional rules), as 
     amended by section 201(e), is amended by adding at the end 
     the following:
       ``(13) 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 January 1, 2002.''.
       (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 advanced 
     clean coal technology facility attributable to any qualified 
     investment (as defined by section 48B(c)).''.
       (2) Section 50(a)(4) is amended by striking ``and (2)'' and 
     inserting ``(2), and (6)''.
       (3) Section 50(c) is amended by adding at the end the 
     following:
       ``(6) Nonapplication.--Paragraphs (1) and (2) shall not 
     apply to any advanced clean coal technology facility credit 
     under section 48B.''.
       (4) The table of sections for subpart E of part IV of 
     subchapter A of chapter 1, as amended by section 101(c), is 
     amended by inserting after the item relating to section 48A 
     the following:

``Sec. 48B. Qualifying advanced clean coal technology facility 
              credit.''.

       (f) Effective Date.--The amendments made by this section 
     shall apply to periods after December 31, 2001, 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. 402. 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 of the Internal Revenue Code of 1986 (relating to 
     business related credits), as amended by section 201(a), 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 3,413 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 equal to:    For 1st 5 years    For 2d 5 years
                                      of such service    of such service
------------------------------------------------------------------------
Not more than 8,400................        $.0050            $.0030
More than 8,400 but not more than          $.0010            $.0010
 8,550.
More than 8,550 but not more than          $.0005            $.0005.
 8,750.
------------------------------------------------------------------------

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

[[Page S2749]]



------------------------------------------------------------------------
                                          The applicable amount is:
   ``The facility design net heat   ------------------------------------
  rate, Btu/kWh (HHV) is equal to:    For 1st 5 years    For 2d 5 years
                                      of such service    of such service
------------------------------------------------------------------------
Not more than 7,770................        $.0090            $.0075
More than 7,770 but not more than          $.0070            $.0050
 8,125.
More than 8,125 but not more than          $.0060            $.0040.
 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 equal to:    For 1st 5 years    For 2d 5 years
                                      of such service    of such service
------------------------------------------------------------------------
Not more than 7,380................        $.0120            $.0090
More than 7,380 but not more than          $.0095            $.0070.
 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 equal to:    For 1st 5 years    For 2d 5 years
                                      of such service    of such service
------------------------------------------------------------------------
Not more than 8,500................        $.0050            $.0030
More than 8,500 but not more than          $.0010            $.0010
 8,650.
More than 8,650 but not more than          $.0005            $.0005.
 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 equal to:    For 1st 5 years    For 2d 5 years
                                      of such service    of such service
------------------------------------------------------------------------
Not more than 8,000................        $.0090            $.0075
More than 8,000 but not more than          $.0070            $.0050
 8,250.
More than 8,250 but not more than          $.0060            $.0040.
 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 equal to:    For 1st 5 years    For 2d 5 years
                                      of such service    of such service
------------------------------------------------------------------------
Not more than 7,800................        $.0120            $.0090
More than 7,800 but not more than          $.0095            $.0070.
 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 equal to:      For 1st 5 years    For 2d 5 years
                                      of such service    of such service
------------------------------------------------------------------------
Not less than 40.6 percent.........        $.0050            $.0030
Less than 40.6 but not less than 40        $.0010            $.0010
 percent.
Less than 40 but not less than 39          $.0005            $.0005.
 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 equal to:      For 1st 5 years    For 2d 5 years
                                      of such service    of such service
------------------------------------------------------------------------
Not less than 43.9 percent.........        $.0090            $.0075
Less than 43.9 but not less than 42        $.0070            $.0050
 percent.
Less than 42 but not less than 40.9        $.0060            $.0040.
 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 equal to:      For 1st 5 years    For 2d 5 years
                                      of such service    of such service
------------------------------------------------------------------------
Not less than 44.2 percent.........        $.0120            $.0090
Less than 44.2 but not less than           $.0095            $.0070.
 43.6 percent.
------------------------------------------------------------------------

       ``(c) Inflation Adjustment Factor.--For calendar years 
     after 2001, each amount in paragraphs (1), (2), and (3) 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.
       ``(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(d) and section 48B(e) 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 section 201(b), 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 section 401(d), is amended 
     by adding at the end the following:
       ``(14) No carryback of section 45g 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 the 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 
     section 201(g), is amended by adding at the end the 
     following:

``Sec. 45G. Credit for production from qualifying advanced clean coal 
              technology.''.

       (e) Effective Date.--The amendments made by this section 
     shall apply to production after the date of the enactment of 
     this Act.

     SEC. 403. RISK POOL FOR QUALIFYING ADVANCED CLEAN COAL 
                   TECHNOLOGY.

       (a) Establishment.--The Secretary of the Treasury shall 
     establish a financial risk pool which shall be available to 
     any United States owner of a qualifying advanced clean coal 
     technology which has qualified for an advanced clean coal 
     technology production credit (as defined in section 45G of 
     the Internal Revenue Code of 1986, as added by section 402) 
     to offset for the first 3 years of the operation of such 
     technology the costs (not to exceed 5 percent of the total 
     cost of installation) for modifications resulting from the 
     technology's failure to achieve its design performance.
       (b) Authorization of Appropriations.--There is authorized 
     to be appropriated such sums as are necessary to carry out 
     the purposes of this section.

                  TITLE V--HEATING FUELS AND STORAGE.

     SEC. 501. FULL EXPENSING OF HOME HEATING OIL AND PROPANE 
                   STORAGE FACILITIES.

       (a) In General.--Section 179(b) (relating to limitations) 
     is amended by adding at the end the following:
       ``(5) Full expensing of home heating oil and propane 
     storage facilities.--Paragraphs (1) and (2) shall not apply 
     to section 179 property which is any storage facility (not 
     including a building or its structural components) used in 
     connection with the distribution of home heating oil or 
     liquefied petroleum gas.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to property placed in service on or after the 
     date of the enactment of this Act.

     SEC. 502. ARBITRAGE RULES NOT TO APPLY TO PREPAYMENTS FOR 
                   NATURAL GAS AND OTHER COMMODITIES.

       (a) In General.--Subsection (b) of section 148 (defining 
     higher yielding investments) is amended by adding at the end 
     the following:
       ``(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 amendment made by this section 
     shall apply to obligations issued after the date of the 
     enactment of this Act.

     SEC. 503. 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.

                    TITLE VI--OIL AND GAS PRODUCTION

     SEC. 601.  CREDIT FOR PRODUCTION OF RE-REFINED LUBRICATING 
                   OIL.

       (a) In General.--Subpart D of part IV of subchapter A of 
     chapter 1 (relating to business related credits), as amended 
     by section 402(a), is amended by adding at the end the 
     following:

[[Page S2750]]



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

       ``(a) General Rule.--For purposes of section 38, the re-
     refined lubricating oil production credit of any taxpayer for 
     any taxable year is equal to $4.05 per barrel of qualified 
     re-refined lubricating oil production which is attributable 
     to the taxpayer (within the meaning of section 29(d)(3)).
       ``(b) Qualified Re-Refined Lubricating Oil Production.--For 
     purposes of this section--
       ``(1) In general.--The term `qualified re-refined 
     lubricating oil production' means a base oil manufactured 
     from at least 95 percent used oil and not more than 2 percent 
     of previously unused oil by a re-refining process at a 
     qualified facility which effectively removes physical and 
     chemical impurities and spent and unspent additives to the 
     extent that such base oil meets industry standards for engine 
     oil as defined by the American Petroleum Institute document 
     API 1509 as in effect on the date of the enactment of this 
     section.
       ``(2) Limitation on amount of production which may 
     qualify.--Re-refined lubricating oil produced during any 
     taxable year shall not be treated as qualified re-refined 
     lubricating oil production but only to the extent average 
     daily production during the taxable year exceeds 7,000 
     barrels.
       ``(3) Barrel.--The term `barrel' has the meaning given such 
     term by section 613A(e)(4).
       ``(4) Noncompliance with pollution laws.--For purposes of 
     paragraph (1), a facility which is not in compliance with the 
     applicable State and Federal pollution prevention, control, 
     and permit requirements for any period of time shall not be 
     considered to be a qualified facility during such period.
       (c) Inflation Adjustment.--In the case of any taxable year 
     beginning in a calendar year after 2001, the dollar amount 
     contained in subsection (a) shall be increased to an amount 
     equal to such dollar amount multiplied by the inflation 
     adjustment factor for such calendar year (determined under 
     section 29(d)(2)(B) by substituting `2000' for `1979').''.
       (b) Credit Treated as Business Credit.--Section 38(b) 
     (relating to current year business credit), as amended by 
     section 402(b), 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 the following:
       ``(17) the re-refined lubricating oil production credit 
     determined under section 45H(a).''.
       (c) Clerical Amendment.--The table of sections for subpart 
     D of part IV of subchapter A of chapter 1, as amended by 
     section 402(d), is amended by adding at the end the 
     following:

``Sec. 45H.  Credit for producing re-refined lubricating oil.''.

       (d) Effective Date.--The amendments made by this section 
     shall apply to production after the date of the enactment of 
     this Act.

     SEC. 602. OIL AND GAS FROM MARGINAL WELLS.

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

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

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

     The applicable reference price for a taxable year is the 
     reference price of the calendar year preceding the calendar 
     year in which the taxable year begins.
       ``(B) Inflation adjustment.--In the case of any taxable 
     year beginning in a calendar year after 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 
     qualified marginal well.
       ``(2) Limitation on amount of production which may 
     qualify.--
       ``(A) In general.--Crude oil or natural gas produced during 
     any taxable year from any well shall not be treated or 
     qualified crude oil production or qualified natural gas 
     production to the extent production from the well during the 
     taxable year exceeds 1,095 barrels or barrel equivalents.
       ``(B) Proportionate reductions.--
       ``(i) Short taxable years.--In the case of a short taxable 
     year, the limitations under this paragraph shall be 
     proportionately reduced to reflect the ratio which the number 
     of days in such taxable year bears to 365.
       ``(ii) Wells not in production entire year.--In the case of 
     a well which is not capable of production during each day of 
     a taxable year, the limitations under this paragraph 
     applicable to the well shall be proportionately reduced to 
     reflect the ratio which the number of days of production 
     bears to the total number of days in the taxable year.
       ``(3) Definitions.--
       ``(A) Qualified marginal well.--The term `qualified 
     marginal well' means a domestic well--
       ``(i) the production from which during the taxable year is 
     treated as marginal production under section 613A(c)(6), or
       ``(ii) which, during the taxable year--

       ``(I) has average daily production of not more than 25 
     barrel equivalents, and
       ``(II) produces water at a rate not less than 95 percent of 
     total well effluent.

       ``(B) Crude oil, etc.--The terms `crude oil', `natural 
     gas', `domestic', and `barrel' have the meanings given such 
     terms by section 613A(e).
       ``(C) Barrel equivalent.--The term `barrel equivalent' 
     means, with respect to natural gas, a conversation ratio of 
     6,000 cubic feet of natural gas to 1 barrel of crude oil.
       ``(d) Other Rules.--
       ``(1) Production attributable to the taxpayer.--In the case 
     of a qualified marginal well in which there is more than one 
     owner of operating interests in the well and the crude oil or 
     natural gas production exceeds the limitation under 
     subsection (c)(2), qualifying crude oil production or 
     qualifying natural gas production attributable to the 
     taxpayer shall be determined on the basis of the ratio which 
     taxpayer's revenue interest in the production bears to the 
     aggregate of the revenue interests of all operating interest 
     owners in the production.
       ``(2) Operating interest required.--Any credit under this 
     section may be claimed only on production which is 
     attributable to the holder of an operating interest.
       ``(3) Production from nonconventional sources excluded.--In 
     the case of production from a qualified 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.
       ``(4) Noncompliance with pollution laws.--For purposes of 
     subsection (c)(3)(A), a marginal well which is not in 
     compliance with the applicable State and Federal pollution 
     prevention, control, and permit requirements for any period 
     of time shall not be considered to be a qualified marginal 
     well during such period.''.
       (b) Credit Treated as Business Credit.--Section 38(b), as 
     amended by section 601(b), 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 marginal oil and gas well production credit 
     determined under section 45I(a).''.
       (c) Credit Allowed Against Regular and Minimum Tax.--
       (1) In general.--Subsection (c) of section 38 (relating to 
     limitation based on amount of tax), as amended by section 
     201(d)(1), is amended by redesignating paragraph (4) as 
     paragraph (5) and by inserting after paragraph (3) the 
     following:
       ``(4) 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 45I(a).''.
       (2) Conforming amendments.--Subclause (II) of section 
     38(c)(2)(A)(ii), as amended by section 201(d)(2), and 
     subclause (II) of section 38(c)(3)(A)(ii), as added by 
     section 201(d)(1), are each amended by inserting ``or the 
     marginal oil and gas well production credit'' after ``home 
     credit''.
       (d) Carryback.--Subsection (a) of section 39 (relating to 
     carryback and carryforward of

[[Page S2751]]

     unused credits generally) is amended by adding at the end the 
     following:
       ``(3) 10-year carryback for marginal oil and gas well 
     production credit.--In the case of the marginal oil and gas 
     well production credit--
       ``(A) this section shall be applied separately from the 
     business credit (other than the marginal oil and gas well 
     production credit),
       ``(B) paragraph (1) shall be applied by substituting `10 
     taxable years' for `1 taxable years' in subparagraph (A) 
     thereof, and
       ``(C) paragraph (2) shall be applied--
       ``(i) by substituting `31 taxable years' for `21 taxable 
     years' in subparagraph (A) thereof, and
       ``(ii) by substituting `30 taxable years' for `20 taxable 
     years' in subparagraph (A) thereof.''.
       (e) Coordination With Section 29.--Section 29(a) is amended 
     by striking ``There'' and inserting ``At the election of the 
     taxpayer, there''.
       (f) Clerical Amendment.--The table of sections for subpart 
     D of part IV of subchapter A of chapter I, as amended by 
     section 601(c), is amended by adding at the end the 
     following:

``Sec. 45I. Credit for producing oil and gas from marginal wells.''.

       (g) Effective Date.--The amendments made by this section 
     shall apply to production in taxable years beginning after 
     December 31, 2001.

     SEC. 603. DEDUCTION FOR DELAY RENTAL PAYMENTS.

       (a) In General.--Section 263 (relating to capital 
     expenditures) is amended by adding at the end the following:
       ``(j) Delay Rental Payments for Domestic Oil and Gas 
     Wells.--
       ``(1) In general.--Notwithstanding subsection (a), a 
     taxpayer may elect to treat delay rental payments incurred in 
     connection with the development of oil or gas within the 
     United States (as defined in section 638) as payments which 
     are not chargeable to capital account. Any payments so 
     treated shall be allowed as a deduction in the taxable year 
     in which paid or incurred.
       ``(2) Delay rental payments.--For purposes of paragraph 
     (1), the term `delay rental payment' means an amount paid for 
     the privilege of deferring development of an oil or gas well 
     under an oil or gas lease.''.
       (b) Conforming Amendment.--Section 263A(c)(3) is amended by 
     inserting ``263(j),'' after `263(i),'.
       (c) Effective Date.--The amendments made by this section 
     shall apply to amounts paid or incurred in taxable years 
     beginning after December 31, 2001.

     SEC. 604. ELECTION TO EXPENSE GEOLOGICAL AND GEOPHYSICAL 
                   EXPENDITURES.

       (a) In General.--Section 263 (relating to capital 
     expenditures), as amended by section 603(a), is amended by 
     adding at the end the following:
       ``(k) Geological and Geophysical Expenditures for Domestic 
     Oil and Gas Wells.--Notwithstanding subsection (a), a 
     taxpayer may elect to treat geological and geophysical 
     expenses incurred in connection with the exploration for, or 
     development of, oil or gas within the United States (as 
     defined in section 638) as expenses which are not chargeable 
     to capital account. Any expenses so treated shall be allowed 
     as a deduction in the taxable year in which paid or 
     incurred.''.
       (b) Conforming Amendment.--Section 263A(c)(3), as amended 
     by section 603(b), is amended by inserting ``263(k),'' after 
     ``263(j),''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to costs paid or incurred in taxable years 
     beginning after December 31, 2001.

     SEC. 605. GAS PIPELINES TREATED AS 7-YEAR PROPERTY.

       (a) In General.--Subparagraph (C) of section 168(e)(3) 
     (relating to classification of certain property), as amended 
     by section 304(a)(1), is amended by striking ``and'' at the 
     end of clause (iii), by redesignating clause (iv) as clause 
     (v), and by inserting after clause (iii) the following:
       ``(iv) any gas pipeline, and''.
       (b) Gas Pipeline.--Subsection (i) of section 168, as 
     amended by section 304(b), is amended by adding at the end 
     the following:
       ``(17) Gas pipeline.--The term `gas pipeline' means the 
     pipe, storage facilities, equipment, distribution 
     infrastructure, and appurtenances used to deliver natural 
     gas.''
       (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) Accounting rule for public utility property.--If any 
     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. 606. CRUDE OIL AND NATURAL GAS DEVELOPMENT CREDIT.

       (a) In General.--Subpart D of part IV of subchapter A of 
     chapter 1 (relating to business related credits), as amended 
     by section 602(a), is amended by adding at the end the 
     following:

     ``SEC. 45J. CRUDE OIL AND NATURAL GAS DEVELOPMENT CREDIT.

       ``(a) In General.--For purposes of section 38, the crude 
     oil and natural gas development credit determined under this 
     section for any taxable year shall be an amount equal to the 
     taxpayer's qualified investment for the taxable year.
       ``(b) Reduction as oil and gas prices increase.--
       ``(1) In general.--The amount which would (but for this 
     subsection) be taken into account under subsection (a) for 
     the taxable year shall be reduced (but not below zero) by an 
     amount which bears the same ratio to such amount (determined 
     without regard to this subsection) as--
       ``(A) the excess (if any) of the applicable reference price 
     over $11, bears to
       ``(B) $3.

     The applicable reference price for a taxable year is the 
     reference price of the calendar year preceding the calendar 
     year in which the taxable year begins.
       ``(2) Inflation adjustment.--In the case of any taxable 
     year beginning in a calendar year after 2001, each of the 
     dollar amounts contained in paragraph (1) 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').
       ``(3) Reference price.--For purposes of this subsection, 
     the term `reference price' means, with respect to any 
     calendar year, the reference price determined under section 
     29(d)(2)(C).
       ``(c) Qualified Investment.--For purposes of this section, 
     the term `qualified investment' means amounts paid or 
     incurred--
       ``(1) for the purpose of drilling and equipping crude oil 
     and natural gas wells (including pollution control equipment 
     used in connection with such wells), or
       ``(2) for the purpose of performing secondary or tertiary 
     recovery techniques,

     on properties located within the United States (as defined in 
     section 638), but only to the extent that the expenditure is 
     not taken into account for purposes of a credit under any 
     other section.
       ``(d) Special Rules.--For purposes of this section--
       ``(1) Aggregation of qualified investment expenses.--
       ``(A) Controlled groups; common control.--In determining 
     the amount of the credit under this section, all members of 
     the same controlled group of corporations (within the meaning 
     of section 52(a)) and all persons under common control 
     (within the meaning of section 52(b)) shall be treated as a 
     single taxpayer for purposes of this section.
       ``(B) Apportionment of credit.--The credit (if any) 
     allowable by this section to members of any group (or to any 
     person) described in subparagraph (A) shall be such member's 
     or person's proportionate share of the qualified investment 
     expenses giving rise to the credit determined under 
     regulations prescribed by the Secretary.
       ``(2) Partnerships, s corporations, estates and trusts.--
       ``(A) Partnerships and s corporations.--In the case of a 
     partnership, the credit shall be allocated among partners 
     under regulations prescribed by the Secretary. A similar rule 
     shall apply in the case of an S corporation and its 
     shareholders.
       ``(B) 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.
       ``(3) Adjustments for certain acquisitions and 
     dispositions.--Under regulations prescribed by the Secretary, 
     rules similar to the rules contained in section 41(f)(3) 
     shall apply with respect to the acquisition or disposition of 
     a taxpayer.
       ``(4) Short taxable years.--In the case of any short 
     taxable year, qualified investment expenses shall be 
     annualized in such circumstances and under such methods as 
     the Secretary may prescribe by regulation.
       ``(5) Denial of double benefit.--
       ``(A) Disallowance of deduction.--Any deduction allowable 
     under this chapter for any costs 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 costs.
       ``(B) Basis adjustments.--For purposes of this subtitle, if 
     a credit is determined 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 expenditures shall be reduced by the amount of the 
     credit so allowed.''.
       (b) Credit Treated as Business Credit.--Section 38(b), as 
     amended by section 602(b), is amended by striking ``plus'' at 
     the end of paragraph (17), by striking the period at the end 
     of paragraph (18) and inserting ``, plus'', and by adding at 
     the end the following:
       ``(19) the crude oil and natural gas development credit 
     determined under section 45J(a).''.
       (c) Transitional Rule.--Section 39(d) (relating to 
     transitional rules), as amended by section 402(c), is amended 
     by adding at the end the following:
       ``(15) No carryback of section 45j credit before effective 
     date.--No portion of the unused business credit for any 
     taxable year which is attributable to the crude oil and 
     natural gas development credit determined under section 48J 
     may be carried back to a taxable year ending before January 
     1, 2002.''.
       (d) Credit Allowed Against Regular and Minimum Tax.--

[[Page S2752]]

       (1) In general.--Subsection (c) of section 38 (relating to 
     limitation based on amount of tax), as amended by section 
     602(c)(1), is amended by redesignating paragraph (5) as 
     paragraph (6) and by inserting after paragraph (4) the 
     following:
       ``(5) Special rules for crude oil and natural gas 
     development credit.--
       ``(A) In general.--In the case of the crude oil and natural 
     gas development 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 crude oil 
     and natural gas development credit).

       ``(B) Crude oil and natural gas development credit.--For 
     purposes of this subsection, the term `crude oil and natural 
     gas development credit' means the credit allowable under 
     subsection (a) by reason of section 45J(a).''.
       (2) Conforming amendments.--Subclause (II) of section 
     38(c)(2)(A)(ii) and subclause (II) of section 
     38(c)(3)(A)(ii), as amended by section 602(c)(2), and 
     subclause (II) of section 38(c)(4)(A)(ii), as added by 
     section 602(c)(1), are each amended by inserting ``or the 
     crude oil and natural gas development credit'' after ``well 
     production credit''.
       (e) Clerical Amendment.--The table of sections for subpart 
     D of part IV of subchapter A of chapter 1, as amended by 
     section 602(f), is amended by adding at the end the 
     following:

``Sec. 45J. Crude oil and natural gas development credit.''.

       (f) Effective Date.--The amendments made by this section 
     shall apply to expenditures paid or incurred in taxable years 
     beginning after December 31, 2001.

     SEC. 607. CREDIT FOR CAPTURE OF COALMINE METHANE GAS.

       (a) In General.--Subpart D of part IV of subchapter A of 
     chapter 1 (relating to business related credits), as amended 
     by section 606(a), is amended by adding at the end the 
     following:

     ``SEC. 45K. CAPTURE OF COALMINE METHANE GAS.

       ``(a) In General.--For purposes of section 38, the coalmine 
     methane gas capture credit of any taxpayer for any taxable 
     year is $1.21 for 1,000,000 Btu of coalmine methane gas 
     captured by the taxpayer and utilized as a fuel source or 
     sold by or on behalf of the taxpayer to an unrelated person 
     during such taxable year (within the meaning of section 45).
       ``(b) Coalmine Methane Gas.--For purposes of this section, 
     the term `coalmine methane gas' means any methane gas which 
     is being liberated, or would be liberated, during qualified 
     coal mining operations or as a result of past qualified coal 
     mining operations, or which is extracted up to 10 years in 
     advance of qualified coal mining operations as part of 
     specific plan to mine a coal deposit.
       ``(c) Special Rule for Advanced Extraction.--In the case of 
     coalmine methane gas which is captured in advance of 
     qualified coal mining operations, the credit under subsection 
     (a) shall be allowed only after the date the coal extraction 
     occurs in the immediate area where the coalmine methane gas 
     was removed.
       ``(d) Noncompliance with pollution laws.--For purposes of 
     subsections (b) and (c), coal mining operations which are not 
     in compliance with the applicable State and Federal pollution 
     prevention, control, and permit requirements for any period 
     of time shall not be considered to be qualified coal mining 
     operations during such period.
       ``(e) Application of Rules.--For purposes of this section, 
     rules similar to the rules of paragraphs (3), (4), and (5) of 
     section 45(d) shall apply.''.
       (b) Credit Treated as Business Credit.--Section 38(b), as 
     amended by section 606(b), is amended by striking ``plus'' at 
     the end of paragraph (18), by striking the period at the end 
     of paragraph (19) and inserting ``, plus'', and by adding at 
     the end the following:
       ``(20) the coalmine methane gas capture credit determined 
     under section 45K(a).''.
       (c) Clerical Amendment.--The table of sections for subpart 
     D of part IV of subchapter A of chapter 1, as amended by 
     section 606(c), is amended by adding at the end the 
     following:

``Sec. 45K.  Capture of coalmine methane gas.''.

       (d) Effective Date.--The amendments made by this section 
     shall apply to the capture of coalmine methane gas after the 
     date of the enactment of this Act.

     SEC. 608.  ALLOCATION OF ALCOHOL FUELS CREDIT TO PATRONS OF A 
                   COOPERATIVE.

       (a) In General.--Section 40(d) (relating to alcohol used as 
     fuel) is amended by adding at the end the following:
       ``(6) Allocation of small ethanol producer credit to 
     patrons of cooperative.--
       ``(A) In general.--In the case of a cooperative 
     organization described in section 1381(a), any portion of the 
     credit determined under subsection (a)(3) for the taxable 
     year may, at the election of the organization made on a 
     timely filed return (including extensions) for such year, be 
     apportioned pro rata among patrons of the organization on the 
     basis of the quantity or value of business done with or for 
     such patrons for the taxable year. Such an election, once 
     made, shall be irrevocable for such taxable year.
       ``(B) Treatment of organizations and patrons.--The amount 
     of the credit apportioned to patrons pursuant to subparagraph 
     (A)--
       ``(i) shall not be included in the amount determined under 
     subsection (a) for the taxable year of the organization, and
       ``(ii) shall be included in the amount determined under 
     subsection (a) for the taxable year of each patron in which 
     the patronage dividend for the taxable year referred to in 
     subparagraph (A) is includible in gross income.
       ``(C) Special rule for decreasing credit for taxable 
     year.--If the amount of the credit of a cooperative 
     organization determined under subsection (a)(3) for a taxable 
     year is less than the amount of such credit shown on the 
     cooperative organization's return for such year, an amount 
     equal to the excess of such reduction over the amount not 
     apportioned to the patrons under subparagraph (A) for the 
     taxable year shall be treated as an increase in tax imposed 
     by this chapter on the organization. Any such increase shall 
     not be treated as tax imposed by this chapter for purposes of 
     determining the amount of any credit under this subpart or 
     subpart A, B, E, or G of this part.''.
       (b) Technical Amendment.--Section 1388 (relating to 
     definitions and special rules for cooperative organizations) 
     is amended by adding at the end the following:
       ``(k) Cross Reference.--For provisions relating to the 
     apportionment of the alcohol fuels credit between cooperative 
     organizations and their patrons, see section 40(d)(6).''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2001.

     SEC. 609. EXTENSION OF CREDIT FOR PRODUCING FUEL FROM A 
                   NONCONVENTIONAL SOURCE.

       (a) Inclusion of Alaska Natural Gas.--Section 29(c)(1) 
     (defining qualified fuels) is amended by striking ``and'' at 
     the end of subparagraph (B)(ii), by striking the period at 
     the end of subparagraph (C) and inserting ``, and'', and by 
     adding at the end the following:
       ``(D) Alaska natural gas.''.
       (b) Definition.--Section 29(c) is amended by adding at the 
     end the following:
       ``(4) Alaska natural gas.--The term `Alaska natural gas' 
     means gas produced in compliance with the applicable State 
     and Federal pollution prevention, control, and permit 
     requirements from the area generally known as the North Slope 
     of Alaska (including the continental shelf thereof within the 
     meaning of section 638(1)), determined without regard to the 
     area of the Alaska National Wildlife Refuge (including the 
     continental shelf thereof within the meaning of section 
     638(1)).''.
       (c) Amount of Credit.--
       (1) In general.--Section 29(a)(1) (relating to allowance of 
     credit) is amended by inserting ``($1.45 in the case of a 
     qualified fuel described in subsection (c)(1)(D))'' after 
     ``$3''.
       (2) Conforming amendments.--
       (A) Section 29(b)(2) is amended by striking ``The $3 
     amount'' and inserting ``The $3 and $1.45 amounts''.
       (B) Section 29(d)(2)(B) is amended by inserting ``(calendar 
     year 2001 in the case of the $1.45 amount in subsection 
     (a)(1))'' after ``1979''.
       (d) Extension of Credit.--Section 29(g) (relating to 
     extension for certain facilities) is amended by adding at the 
     end the following:
       ``(3) Special rule for alaska natural gas wells.--In the 
     case of a well for producing qualified fuel described in 
     subsection (c)(1)(D)--
       ``(A) for purposes of subsection (f)(1)(A), such well shall 
     be treated as being placed in service before January 1, 1993, 
     if such well is placed in service before January 1, 2009, and
       ``(B) subsection (f)(2) shall be applied with respect to 
     such well by substituting `after December 31, 2001, and 
     before January 1, 2009' for `before January 1, 2003'.''.
       (e) Effective Date.--The amendments made by this section 
     shall apply to taxable years ending after December 31, 2001.
                                  ____


                                 S. 597

       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 ``Comprehensive and Balanced 
     Energy Policy Act of 2001.''

     SEC. 2. ORGANIZATION OF ACT INTO DIVISIONS; TABLE OF 
                   CONTENTS.

       (a) Divisions.--This Act is organized into five divisions 
     as follows:
       (1) Division A--National Energy Policy Planning and 
     Coordination.
       (2) Division B--Reliable and Diverse Power Generation and 
     Transmission.
       (3) Division C--Domestic Oil and Gas Production and 
     Transportation.
       (4) Division D--Diversifying Energy Demand and Improving 
     Efficiency.
       (5) Division E--Enhancing Research, Development, and 
     Training.
       (b) Table of Contents.--The table of contents for this Act 
     is as follows:
Sec. 1.  Short title.
Sec. 2.  Table of contents.

[[Page S2753]]

      DIVISION A--NATIONAL ENERGY POLICY PLANNING AND COORDINATION

    TITLE I--INTEGRATION OF ENERGY POLICY AND CLIMATE CHANGE POLICY

      Subtitle A--National Commission on Energy and Climate Change

Sec. 101.  National Commission on Energy and Climate Change.
Sec. 102.  Duties of the Commission.
Sec. 103.  Powers of the Commission.
Sec. 104.  Commission personnel matters.
Sec. 105.  Termination.
Sec. 106.  Authorization of appropriations.
Sec. 107.  Definition of Commission.

       Subtitle B--International Clean Energy Technology Transfer

Sec. 111.  International Clean Energy Technology Transfer.
        TITLE 11--REGIONAL COORDINATION ON ENERGY INFRASTRUCTURE

Sec. 201.  Policy on regional coordination.
Sec. 202.  Federal support for regional coordination.
               TITLE III--REGULATORY REVIEWS AND STUDIES

Sec. 301.  Regulatory reviews for new technologies and processes.
Sec. 302.  Review of FERC policies on transmission and wholesale power 
              markets.
Sec. 303.  Study of policies to address volatility in domestic oil and 
              gas investment.
Sec. 304.  Power marketing administration rights-of-way study.
Sec. 305.  Review of natural gas pipeline certification procedures.
Sec. 306.  Streamlining fuel specifications.
Sec. 307.  Study on financing for new technologies.
Sec. 308.  Study on the use of the Strategic Petroleum Reserve.
   DIVISION B--RELIABLE AND DIVERSE POWER GENERATION AND TRANSMISSION

           TITLE IV--ELECTRIC ENERGY TRANSMISSION RELIABILITY

See. 401.  Electric reliability organization and oversight.
Sec. 402.  Application of antitrust laws.
           TITLE V--IMPROVED ELECTRICITY CAPACITY AND ACCESS

Sec. 501.  Universal and affordable service.
Sec. 502.  Public benefits fund.
Sec. 503.  Rural construction grants.
Sec. 504.  Comprehensive Indian energy program.
Sec. 505.  Environmental disclosure to consumers.
Sec. 506.  Consumer protections.
Sec. 507.  Wholesale electricity market data.
Sec. 508.  Wholesale electric energy rates in the western energy 
              market.
Sec. 509.  Natural gas rate ceiling in California.
Sec. 510.  Sale price in bundled natural gas transactions.
            TITLE VI--RENEWABLES AND DISTRIBUTED GENERATION

Sec. 601.  Assessment of available renewable energy resources.
Sec. 602.  Federal purchase requirement.
Sec. 603.  Interconnection standards.
Sec. 604.  Net metering.
Sec. 605.  Access to transmission by intermittent generators.
                  TITLE VII--HYDROELECTRIC RELICENSING

Sec. 701.  Alternative conditions.
Sec. 702.  Disposition of hydroelectric charges.
Sec. 703.  Relicensing study.
                            TITLE VIII--COAL

Sec. 801.  Definitions.

Subtitle A--National Coal-Based Technology Development and Applications 
                                Program

Sec. 811.  Cost and performance goals.
Sec. 812.  Study.
Sec. 813.  Technology research and development programs.
Sec. 814.  Authorization of appropriations.

             Subtitle B--Power Plant Improvement Initiative

Sec. 821.  Power plant improvement initiative program.
Sec. 822.  Financial assistance.
Sec. 823.  Funding.
              TITLE IX--PRICE-ANDERSON ACT REAUTHORIZATION

Sec. 901.  Short title.
Sec. 902.  Indemnification authority.
Sec. 903.  Maximum assessment.
Sec. 904.  DOE liability limit.
Sec. 905.  Incidents outside the United States.
Sec. 906.  Reports.
Sec. 907.  Inflation adjustment.
Sec. 908.  Civil penalties.
Sec. 909.  Effective date.
     DIVISION C--DOMESTIC OIL AND GAS PRODUCTION AND TRANSPORTATION

                    TITLE X--OIL AND GAS PRODUCTION

Sec. 1001.  Outer Continental Shelf Oil and Gas Lease Sale 181.
Sec. 1002.  Federal onshore leasing programs for oil and gas.
Sec. 1003.  Increasing production on State and private lands.
           TITLE XI--PIPELINE SAFETY RESEARCH AND DEVELOPMENT

Sec. 1101.  Pipeline integrity research and development.
Sec. 1102.  Pipeline integrity technical advisory committee.
Sec. 1103.  Authorization of appropriations.
    DIVISION D--DIVERSIFYING ENERGY DEMAND AND IMPROVING EFFICIENCY

                          TITLE XII--VEHICLES

Sec. 1201.  Vehicle fuel efficiency.
Sec. 1202.  Increased use of alternative fuels by federal fleets.
Sec. 1203.  Exception to HOV passenger requirements for alternative 
              fuel vehicles.
                         TITLE XIII--FACILITIES

Sec. 1301.  Federal energy bank.
Sec. 1302.  Incentives for energy-efficient schools.
Sec. 1303.  Voluntary commitments to reduce industrial energy 
              intensity.  
       DIVISION E--ENHANCING RESEARCH, DEVELOPMENT, AND TRAINING

              TITLE XIV--RESEARCH AND DEVELOPMENT PROGRAMS

Sec. 1401.  Short title and findings.
Sec. 1402.  Enhanced energy efficiency research and development.
Sec. 1403.  Enhanced renewable energy research and development.
Sec. 1404.  Enhanced fossil energy research and development.
Sec. 1405.  Enhanced nuclear energy research and development.
Sec. 1406.  Enhanced programs in fundamental energy science.
      TITLE XV--MANAGEMENT OF DOE SCIENCE AND TECHNOLOGY PROGRAMS

Sec. 1501.  Merit review.
Sec. 1502.  Cost sharing.
Sec. 1503.  Improved coordination and management of science and 
              technology.
                   TITLE XVI-- PERSONNEL AND TRAINING

Sec. 1601.  Workforce trends and traineeship grants.
Sec. 1602.  Training guidelines for electric energy industry personnel.

      DIVISION A--NATIONAL ENERGY POLICY PLANNING AND COORDINATION

    TITLE I--INTEGRATION OF ENERGY POLICY AND CLIMATE CHANGE POLICY

      Subtitle A--National Commission on Energy and Climate Change

     SEC. 101. NATIONAL COMMISSION ON ENERGY AND CLIMATE CHANGE.

       (a) Establishment.--There is established a National 
     Commission on Energy and Climate Change, which shall be an 
     independent establishment within the executive branch.
       (b) Members.--
       (1) Appointment.--The Commission shall consist of 11 
     members who shall be appointed by the President not later 
     than 30 days after the date of enactment of this title.
       (2) Composition.--The members of the Commission shall be--
       (A) eminent in the field of--
       (i) energy production, distribution, or conservation,
       (ii) energy science or technology,
       (iii) environmental sciences,
       (iv) global change sciences, or
       (v) energy economics; and
       (B) selected to reflect a fair balance among the points of 
     view represented.
       (3) Political affiliation.--No more than 6 members of the 
     Commission may be members of the same political party as the 
     President. Not less than half of the members of the minority 
     party shall be appointed from among a list of 12 persons 
     nominated by the Democratic Leader of the United States 
     Senate and the Minority Leader of the United States House of 
     Representatives.
       (4) Chairperson.--The President shall designate a member of 
     the Commission to serve as its chairperson.
       (5) Term.--Members shall be appointed for the life of the 
     Commission and may be removed by the President only for 
     inefficiency, neglect of duty, or malfeasance in office.
       (6) Vacancies.--Any vacancy in the Commission shall be 
     filled in the same manner as the original appointment.

     SEC. 102. DUTIES OF THE COMMISSION.

       (a) Energy and Climate Change Study.--
       (1) In general.--The Commission shall conduct a study of 
     measures that--
       (A) could achieve stabilization of greenhouse gas emissions 
     in the United States--
       (i) at the 1990 level by not later than 2010; and
       (ii) below the 1990 level by not later than 2020;
       (B) are consistent with the goals of an overall United 
     States energy and environmental policy; and
       (C) will lead to the long-term stabilization of greenhouse 
     gas concentrations.
       (2) Types of measures.--The measures to be studied under 
     paragraph (1) shall include--
       (A) a variety of cost-effective Federal and State policies, 
     programs, standards, and incentives;
       (B) a domestic or international system that integrates 
     innovative, market-based solutions; and
       (C) participation in other international institutions, or 
     in the support of international activities, that are 
     established to achieve economically and enviromnentally sound 
     greenhouse gas stabilization solutions.
       (b) Recommendations.--The Commission shall develop 
     recommendations concerning--
       (1) the measures described in subsection (a)(1) that the 
     Commission determines to be appropriate for implementation, 
     giving preference to cost-effective, voluntary, and 
     technologically feasible measures that will--
       (A) produce measurable net reductions in United States 
     emissions that lead toward the stabilization described in 
     subsection (a)(1)(A); and

[[Page S2754]]

       (B) minimize any adverse impacts on the economy of the 
     United States; and
       (2) the text of legislation and administrative actions that 
     would be necessary to effectuate the measures.
       (c) Strategy.--
       (1) In general.--Not later than one year after the date of 
     enactment of this title, the Commission shall develop and 
     submit to the Congress a United States greenhouse gas 
     management strategy that contains--
       (A) a detailed statement of the findings and conclusions of 
     the Commission;
       (B) the recommendations of the Commission for such 
     legislative and administrative actions as the Commissions 
     considers appropriate; and
       (C) appropriate funding recommendations to carry out the 
     recommendations under subparagraph (B).
       (2) Required recommendations.--Recommendations under 
     paragraph (1)(B) shall include specific recommendations 
     concerning--
       (A) the development of--
       (i) advanced technologies for a full range of energy 
     sources;
       (ii) enhanced energy efficiency and conservation measures; 
     and
       (iii) alternative energy technologies and energy sources;
       (B) economically and environmentally sound emission 
     reduction strategies to stabilize atmospheric concentrations 
     of greenhouse gases;
       (C) such changes in institutional and technological systems 
     as are necessary to adapt to climate change in the near tenn 
     and the long term; and
       (D) such review, modification, and enhancement of the 
     scientific and economic research efforts of the United 
     States, and improvements to the data resulting from such 
     research, as are appropriate to improve the accuracy of 
     predictions concerning climate change and economic costs and 
     opportunities.

     SEC. 103. POWERS OF THE COMMISSION.

       (a) Hearings.--The Commission may hold such hearings, sit 
     and act at such times and places, take such testimony, and 
     receive such evidence as the Commission considers advisable 
     to carry out the duties of the Commission under this title.
       (b) Information From Federal Agencies.--The Commission may 
     secure directly from any Federal department or agency such 
     information as the Commission considers necessary to carry 
     out the duties of Commission under this title. Upon request 
     of the Chairperson of the Commission, the head of such 
     department or agency shall furnish such information to the 
     Commission.
       (c) Postal Services.--The Commission may use the United 
     States mails in the same manner and under the same conditions 
     as other departments and agencies of the Federal Government.

     SEC. 104. COMMISSION PERSONNEL MATTERS.

       (a) Compensation of Members.--A member of the Commission 
     shall be compensated at a rate equal to the daily equivalent 
     of the annual rate of basic pay prescribed for level IV of 
     the Executive Schedule under section 5315 of title 5, United 
     States Code, for each day (including travel time) during 
     which the member is engaged in the performance of the duties 
     of the Commission.
       (b) Travel Expenses.--A member of the Commission shall be 
     allowed travel expenses, including per diem in lieu of 
     subsistence, at rates authorized for an employee of an agency 
     under subchapter I of chapter 57 of title 5, United States 
     Code, while away from the home or regular place of business 
     of the member in the performance of the duties of the 
     Commission.
       (c) Staff.--
       (1) Appointment.--The Chairperson of the Commission may, 
     without regard to the civil service laws and regulations, 
     appoint and terminate an executive director and such other 
     additional personnel as may be necessary to enable the 
     Commission to perform its duties. The appointment and 
     termination of the executive director shall be subject to 
     confirmation by the Commission.
       (2) Compensation.--
       (A) In general.--Except as provided in subparagraph (B), 
     the Chairperson of the Commission may fix the compensation of 
     the executive director and other personnel without regard to 
     the provisions of chapter 51 and subchapter III of chapter 53 
     of title 5, United States Code, relating to classification of 
     positions and General Schedule pay rates.
       (B) Maximum rate of pay.--The rate of pay for the executive 
     director and other personnel may not exceed the rate payable 
     for level V of the Executive Schedule under section 5316 of 
     title 5, United States Code.
       (d) Detail of Government Employees.--Upon the request of 
     the Chairperson of the Commission, the head of any Federal 
     department or agency may detail employees to the Commission 
     without reimbursement, and without interruption or loss of 
     civil service status or privilege.
       (e) Procurement of Temporary or Intermittent Services.--The 
     Chairperson of the Commission may procure temporary and 
     intermittent services in accordance with section 3109(b) of 
     title 5, United States Code, at rates for individuals that do 
     not exceed the daily equivalent of the annual rate of basic 
     pay prescribed for level V of the Executive Schedule under 
     section 5316 of that title.

     SEC. 105. TERMINATION.

       The Commission shall terminate 90 days after the date on 
     which the Commission submits the report under section 102(b).

     SEC. 106. AUTHORIZATION OF APPROPRIATIONS.

       There are authorized to be appropriated such sums as may be 
     necessary to carry out this section, which shall remain 
     available until expended.

     SEC. 107. DEFINITION OF COMMISSION.

       For purposes of this title, the term ``Commission'' means 
     the National Commission on Energy and Climate Change 
     established by section 101(a).

       Subtitle B--International Clean Energy Technology Transfer

     SEC. 111. INTERNATIONAL CLEAN ENERGY TECHNOLOGY TRANSFER

       (a) Definitions.--In this section:
       (1) Clean energy technology.--The term ``clean energy 
     technology'' means an energy supply or end-use technology 
     that, over its lifecycle and compared to a similar technology 
     already in commercial use in developing countries or 
     countries in transition--
       (A) emits substantially lower levels of pollutants or 
     greenhouse gases; and
       (B) generates substantially smaller or less toxic volumes 
     of solid or liquid waste.
       (2) Interagency working group.--The term ``interagency 
     working group'' means the Interagency Working Group on Clean 
     Energy Technology Transfer established under subsection (b).
       (b) Interagency Working Group.--
       (1) Establishment.--Not later than 180 days after the date 
     of enactment of this section, the Secretary of Energy, the 
     Secretary of Commerce, and the Administrator of the U.S. 
     Agency for International Development shall jointly establish 
     a Interagency Working Group on Clean Energy Technology 
     Transfer. The interagency working group will focus on the 
     transfer of clean energy technology to the developing 
     countries and countries in transition that are expected to 
     experience, over the next 20 years, the most significant 
     growth in energy production and associated greenhouse gas 
     emissions.
       (2) Membership.--The interagency working group shall be 
     jointly chaired by representatives appointed by the agency 
     heads under paragraph (1) and shall also include 
     representatives from the Department of State, the Department 
     of Treasury, the Environmental Protection Agency, the Export-
     Import Bank, the Overseas Private Investment Corporation, the 
     Trade and Development Agency, and other federal agencies as 
     deemed appropriate by all three agency head under paragraph 
     (1).
       (3) Duties.--The interagency working group shall--
       (A) analyze technology, policy, and market opportunities 
     for international development, demonstration, and deployment 
     of clean energy technology;
       (B) investigate issues associated with building capacity to 
     deploy clean energy technology in developing countries and 
     countries in transition, including--
       (i) energy-sector reform;
       (ii) creation of open, transparent, and competitive markets 
     for energy technologies;
       (iii) availability of trained personnel to deploy and 
     maintain the technology; and
       (iv) demonstration and cost-buydown mechanisms to promote 
     first adoption of the technology;
       (C) consult with the private sector and other interested 
     groups on the export and deployment of clean energy 
     technology;
       (D) monitor each agency's progress towards meeting goals in 
     the 5-year strategic plan submitted to Congress pursuant to 
     the Energy and Water Development Appropriations Act, 2001,
       (E) make recommendations to heads of appropriate Federal 
     agencies on ways to streamline federal programs and policies 
     improve each agency's role in the international development, 
     demonstration, and deployment of clean energy technology.
       (c) Federal Support for Clean Energy Technology Transfer.--
     Notwithstanding any other provision of law, each federal 
     agency or government corporation carrying out an assistance 
     program in support of the activities of United States persons 
     in the environment or energy sector of a developing country 
     or country in transition shall support, to the maximum extent 
     practicable, the transfer of United States clean energy 
     technology as part of that program.
       (d) Authorization of Appropriations.--There are authorized 
     to be appropriated to the departments, agencies, and entities 
     of the United States described in subsection (b) such sums as 
     may be necessary to support the transfer of clean energy 
     technology, consistent with the subsidy codes of the World 
     Trade Organization, as part of assistance programs carried 
     out by those departments, agencies, and entities in support 
     of activities of United States persons in the energy sector 
     of a developing country or country in transition.

        TITLE II--REGIONAL COORDINATION ON ENERGY INFRASTRUCTURE

     SEC. 201. POLICY ON REGIONAL COORDINATION.

       (a) Statemeent of Policy.--It is the policy of the Federal 
     Government to encourage States to coordinate, on a regional 
     basis, State energy policies to provide reliable and 
     affordable energy services to the public while minimizing the 
     impact of providing energy services on communities and the 
     environment.
       (b) Definition of Energy Services.--For purposes of this 
     section, the term ``energy services'' means--
       (1) the generation or transmission of electric energy,

[[Page S2755]]

       (2) the transportation, storage, and distribution of crude 
     oil, residual fuel oil, refined petroleum product, or natural 
     gas, or
       (3) the reduction in load through increased efficiency, 
     conservation, or load control measures.

     SEC. 202. FEDERAL SUPPORT FOR REGIONAL COORDINATION.

       (a) Technical Assistance.--The Secretary of Energy may 
     provide technical assistance to States and regional 
     organizations formed by two or more States to assist them in 
     coordinating their energy policies on a regional basis. Such 
     technical assistance may include assistance in--
       (1) assessing future supply availability and demand 
     requirements,
       (2) planning and siting additional energy infrastructure, 
     including generating facilities, electric transmission 
     facilities, pipelines, refineries, and distributed generation 
     facilities to meet regional needs,
       (3) identifying and resolving problems in distribution 
     networks,
       (4) developing plans to respond to surge demand or 
     emergency needs, and
       (5) developing energy efficiency, conservation, and load 
     control programs.
       (b) Annual Conference on Regional Energy Coordination.--
       (1) Annual Conference.--The Secretary of Energy shall 
     convene an annual conference to promote regional coordination 
     on energy policy and infrastructure issues.
       (2) Participation.--The Secretary of Energy shall invite 
     appropriate representatives of federal, state, and regional 
     energy organizations, and other interested parties.
       (3) Federal Agency Cooperation.--The Secretary of Energy 
     shall consult and cooperate with the Secretary of the 
     Interior, the Secretary of Agriculture, the Secretary of 
     Commerce, the Secretary of the Treasury, the Chairman of the 
     Federal Energy Regulatory Commission, the Administrator of 
     the Environmental Protection Agency, and the Chairman of the 
     Council on Environmental Quality in the planning and conduct 
     of the conference.
       (4) Agenda.--The Secretary of Energy, in consultation with 
     the officials identified in paragraph (3) and participants 
     identified in paragraph (2), shall establish an agenda for 
     each conference that promotes regional coordination on energy 
     policy and infrastructure issues.
       (5) Recommendations.--Not later than 60 days after the 
     conclusion of each annual conference, the Secretary of Energy 
     shall report to the President and the Congress 
     recommendations arising out of the conference that may 
     improve--
       (A) regional coordination on energy policy and 
     infrastructure issues, and
       (B) federal support for regional coordination.

               TITLE III--REGULATORY REVIEWS AND STUDIES

     SEC. 301. REGULATORY REVIEWS FOR NEW TECHNOLOGIES AND 
                   PROCESSES

       (a) Regulatory Reviews.--Not later than one year after the 
     date of enactment of this section and every five years 
     thereafter, each Federal agency shall review its regulations 
     and standards to identify--
       (1) existing regulations or standards that act as barriers 
     to market entry for emerging energy technologies (including 
     fuel cells, combined heat and power, distributed generation, 
     and small-scale renewable energy), and
       (2) actions the agency is taking or could take to--
       (A) remove barriers to market entry for emerging energy 
     technologies,
       (B) increase energy efficiency, or
       (C) encourage the use of new processes to meet energy and 
     environmental goals.
       (b) Report to Congress.--Not later than 18 months after the 
     date of enactment of this section, and every five years 
     thereafter, the Director of the Office of Science and 
     Technology Policy shall report to the Congress on the results 
     of the agency reviews conducted under subsection (a).
       (e) Contents of the Report.--The report shall--
       (1) identify all regulatory barriers to the development and 
     commercialization of emerging energy technologies and 
     processes,
       (2) actions taken, or proposed to be taken, to remove such 
     barriers, and
       (3) recommendations for changes in laws or regulations that 
     may be needed to--
       (A) expedite the siting and development of energy 
     production and distribution facilities,
       (B) encourage the adoption of energy efficiency and process 
     improvements, and
       (C) reduce the environmental impacts of energy facilities 
     through transparent and flexible compliance methods.

     SEC. 302. REVIEW OF FERC POLICIES ON TRANSMISSION AND 
                   WHOLESALE POWER MARKETS.

       (a) Study.--The Federal Energy Regulatory Commission shall 
     reevaluate its regulatory policies on the transmission of 
     electric energy and wholesale power rates.
       (b) Scope of Study.--The study shall--
       (1) reevaluate the methods and models for determining 
     market power, taking into account the experience in the 
     Western power grid,
       (2) reevaluate the adequacy and appropriateness of the 
     Commission's definition of ``market power'' as applied to 
     wholesale power markets and the transmission grid,
       (3) analyze the impact of wholesale price volatility on 
     power markets and the effect on the national interest in a 
     reliable and affordable electricity system,
       (4) reevaluate the Commission's policies on transmission, 
     specifically identifying policy changes that may be needed to 
     ensure adequate construction of transmission capacity and 
     operating procedures to ensure the most efficient use of the 
     transmission grid, and
       (5) determine the adequacy of the Commission's voluntary 
     approach to forming regional transmission organizations.
       (c) Report.--The Commission shall report its findings to 
     the Congress not later than 120 days after the date of the 
     enactment of this section.

     SEC. 303. STUDY OF POLICIES TO ADDRESS VOLATILITY IN DOMESTIC 
                   OIL AND GAS INVESTMENT.

       (a) Study.--The Secretary of Energy, in close coordination 
     with the Secretary of the Interior, the Secretary of 
     Commerce, the Secretary of Treasury, and the Interstate Oil 
     and Gas Compact Commission, shall evaluate the impact 
     existing federal and state tax and royalty policies have on 
     the development of domestic oil and gas resources.
       (b) Scope of Study.--The study under subsection (a) shall 
     analyze--(1) the impact on development and drilling of 
     different price scenarios for oil and natural gas;
       (2) the impact of the Alternative Minimum Tax and fixed 
     royalty rates on maintaining development drilling during 
     periods of depressed prices;
       (3) the effect of Federal and state tax and royalty 
     policies on investment in different geological and 
     developmental circumstances, including but not limited to 
     deepwater environments, subsalt formations, well-depth 
     environments, coalbed methane and other unconventional gas 
     formations, and Arctic conditions; and
       (4) compare those policies with tax and royalty regimes in 
     other countries with similar geological, developmental and 
     infrastructure conditions.
       (b) Upon completion of the study under subsection (a), a 
     report describing the findings and recommendations for policy 
     changes shall be provided to the Congress and the Governors 
     of the member states of the Interstate Oil and Gas Compact 
     Commission. The recommendations should ensure that the public 
     interest in receiving the economic benefits of tax and 
     royalty revenues is balanced against the need for revised 
     policies to--
       (1) maintain adequate natural gas development drilling 
     during periods of low world oil prices;
       (2) ameliorate the boom-bust cycles negatively affecting 
     the oil and gas service industry; and
       (3) ensure a consistent level of domestic activity to 
     encourage the education and retention of a technical 
     workforce.
       (c) The study under subsection (a) shall be completed not 
     later than 240 days after the date of enactment of this 
     section. The report required in (b) shall be transmitted to 
     Congress not later than 60 days following the completion of 
     the study.

     SEC. 304. POWER MARKETING ADMINISTRATION RIGHTS-OF-WAY STUDY.

       The Secretary of Energy shall conduct a study of the 
     rights-of-way owned by the Federal power marketing agencies 
     and the Tennessee Valley Authority to determine their 
     location and whether they can be used by pipelines or other 
     transmission services where new capacity is needed. Not later 
     than one year after the date of enactment of this section, 
     the Secretary shall transmit a report to Congress summarizing 
     the results of the study.

     SEC. 305. REVIEW OF NATURAL GAS PIPELINE CERTIFICATION 
                   PROCEDURES.

       (a) FERC Review.--The Federal Energy Regulatory Commission 
     shall, in consultation with other appropriate Federal 
     agencies, conduct 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 and any recommendations for legislation to the 
     Committee on Energy and Natural Resources of the United 
     States Senate and the Committee on Energy and Commerce of the 
     United States House of Representatives not later than 6 
     months after the date of enactment of this section.
       (b) Interagency Review.--The Chairman of the Council on 
     Environmental Quality, in coordination with the Federal 
     Energy Regulatory Commission, shall establish an interagency 
     task force to develop an interagency memorandum of 
     understanding to expedite the environmental review and 
     permitting of natural gas pipeline projects.
       (c) Membership of Interagency Task Force.--The task force 
     shall consist of--
       (1) the Chairman of the Council on Environmental Quality, 
     who shall serve as the Chairman of the interagency task 
     force,
       (2) the Chairman of the Federal Energy Regulatory 
     Commission,
       (3) the Director of the Bureau of Land Management,
       (4) the Director of the U.S. Fish and Wildlife Service,
       (5) the Commanding General, U.S. Army Corps of Engineers,
       (6) the Chief of the Forest Service,
       (7) the Administrator of the Environmental Protection 
     Agency,
       (8) the Chairman of the Advisory Council on Historic 
     Preservation, and
       (9) and the heads of such other agencies as the Chairman of 
     the Council on Environmental Quality and the Chairman of the 
     Federal Energy Regulatory Commission deem appropriate.
       (d) Memorandum of Understanding.--The agencies represented 
     by the members of the

[[Page S2756]]

     interagency task force shall enter into the memorandum of 
     understanding not later than one year after the date of the 
     enactment of this section.

     SEC. 306. STREAMLINING FUEL SPECIFICATIONS.

       (a) Report.--Not later than nine months after the date of 
     enactment of this title, the Administrator of the 
     Environmental Protection Agency and the Secretary of Energy 
     shall jointly report to the Congress on the technical and 
     economic feasibility of developing national or regional 
     vehicle fuel specifications for the contiguous United States 
     that would--
       (1) enhance flexibility in the distribution of fuels,
       (2) reduce price volatility and costs to consumers and 
     producers, and
       (3) meet local, regional, and national air quality 
     requirements and goals.
       (b) Recommendations.--The report shall include 
     recommendations for appropriate changes to existing laws and 
     regulations.
       (c) Consultation.--The Administrator and the Secretary 
     shall consult with the Governors of the several States, 
     automobile manufacturers, vehicle fuel producers and 
     distributors, and the public in the preparation of the 
     report.

     SEC. 307. STUDY OF FINANCING FOR NEW TECHNOLOGIES.

       (a) Independent Assessment.--The Secretary of Energy shall 
     commission an independent assessment of innovative financing 
     techniques to facilitate construction of new electricity 
     supply technologies that might not otherwise be built in a 
     competitive electricity market.
       (b) Conduct of the Assessment.--The Secretary shall retain 
     an independent contractor with proven expertise in financing 
     large capital projects or in financial services consulting to 
     conduct the assessment.
       (c) Content of the Assessment.--The assessment shall 
     include a comprehensive examination of all available 
     techniques to safeguard private investors against risks 
     (including both market-based and govemment-imposed risks) 
     that are beyond the control of the investors. Such techniques 
     may include Federal loan guarantees, Federal price 
     guarantees, special tax considerations, and direct Federal 
     investment.
       (d) Report.--The Secretary shall submit the results of the 
     independent assessment to the Congress not later than 9 
     months after the date of enactment of this section.

     SEC. 308. STUDY ON THE USE OF THE STRATEGIC PETROLEUM 
                   RESERVE.

       (a) Report.--The Secretary of Energy shall report to the 
     President and to the Committee on Energy and Natural 
     Resources of the United States Senate and the Committee on 
     Energy and Commerce of the United States House of 
     Representatives, not later than 6 months after the date of 
     enactment of this title, on whether section 161 of the Energy 
     Policy and Conservation Act (42 U.S.C. 6241) should be 
     amended to give the Secretary greater flexibility to drawdown 
     and distribute the Reserve to mitigate price volatility or 
     regional supply shortages.
       (b) Contents of the Report.--The Secretary shall include in 
     the report--
       (1) an assessment of how extreme market conditions in the 
     past (including, in particular, the conditions between July 
     1990 and February 1991) may have been mitigated by more 
     timely use of the Reserve, and
       (2) specific recommendations for any changes in the 
     existing law the Secretary determines to be necessary or 
     desirable and a statement of the reasons for any such 
     changes.

   DIVISION B--DIVERSE AND RELIABLE POWER GENERATION AND TRANSMISSION

           TITLE IV--ELECTRIC ENERGY TRANSMISSION RELIABILITY

     SEC. 401. ELECTRIC RELIABILITY ORGANIZATION AND OVERSIGHT.

       (a) In General.--Part H of the Federal Power Act (16 U.S.C. 
     824-824m) is amended by adding at the end the following:

     ``SEC. 216. 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 of 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 
     jurisdiction over the Electric Reliability Organization, all 
     affiliated regional reliability entities, 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

[[Page S2757]]

     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 detemiines 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 anytime 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 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

[[Page S2758]]

     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 
     cffect 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 operates or is responsible for 
     the operation of bulk power system facilities.
       ``(j) Injunctions and Disciplinary Actions.--
       ``(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

[[Page S2759]]

     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 each 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 load 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 (1). 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.''.
       (b) 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 216''.

     SEC. 402. 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 216 of the Federal Power Act or 
     affiliated regional reliability entity operating under an 
     agreement in effect under section 216(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 216 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.

           TITLE V--IMPROVED ELECTRICITY CAPACITY AND ACCESS

     SEC. 501. UNIVERSAL AND AFFORDABLE SERVICE.

       It is the sense of the Congress that--
       (1) every retail electric consumer should have access to 
     electric energy at reasonable and affordable rates; and
       (2) the States should ensure that retail electric 
     competition does not result in the loss of service to rural, 
     residential, or low-income consumers.

     SEC. 502. PUBLIC BENEFITS FUND.

       (a) Definitions.--For purposes of this section--
       (1) the term ``eligible public purpose program'' means a 
     State or tribal program that--
       (A) assists low-income households in meeting their home 
     energy needs;
       (B) provides for the planning, construction, or improvement 
     of facilities to generate, transmit, or distribute 
     electricity to Indian tribes or rural and remote communities;

[[Page S2760]]

       (C) provides for the development and implementation of 
     measures to reduce the demand for electricity;
       (D) provides for the development and implementation of a 
     qualifying greenhouse gas mitigation project; or
       (E) provides for--
       (i) new or additional capacity, or improves the efficiency 
     of existing capacity, from a wind, biomass, geothermal, solar 
     thermal, photovoltaic, combined heat and power energy source, 
     or
       (ii) additional generating capacity achieved from increased 
     efficiency at existing hydroelectric dams or additions of new 
     capacity at existing hydroelectric dams;
       (2) the term ``fiscal agent'' means the entity designated 
     under subsection (c);
       (3) the term ``Fund'' means the Public Benefits Fund 
     established under subsection (b);
       (4) the term ``qualifying greenhouse gas mitigation 
     project'' means a project to reduce the emissions of 
     greenhouse gases that is at least fifty percent cofunded by a 
     power generator;
       (5) the term ``Indian tribe'' means any Indian tribe, band, 
     nation, or other organized group or community, including any 
     Alaska Native village or regional or village corporation as 
     defined in or established pursuant to the Alaska Native 
     Claims Settlement Act (43 U.S.C. 1601 et seq.), which is 
     recognized as eligible for the special programs and services 
     provided by the United States to Indians because of their 
     status as Indians;
       (6) the term ``Secretary'' means the Secretary of Energy; 
     and
       (7) the term ``State'' means each of the States and the 
     District of Columbia.
       (b) Public Benefits Fund.--There is established in the 
     Treasury of the United States a separate fund, to be known as 
     the Public Benefits Fund. The Fund shall consist of amounts 
     collected by the fiscal agent under subsection (e). The 
     fiscal agent may disburse amounts in the Fund, without 
     further appropriation, in accordance with this section.
       (c) Duties of the Fiscal Agent.--The Secretary shall 
     appoint a fiscal agent shall collect and disburse the amounts 
     in the Fund in accordance with this section.
       (d) Duties of the Secretary.--The Secretary shall 
     prescribe--
       (1) rules for the equitable allocation of the Fund among 
     States and Indian tribes based upon--
       (A) the number of low-income households in such State or 
     tribal jurisdiction; and
       (B) the average annual cost of electricity used by 
     households in such State or tribal jurisdiction;
       (2) the criteria by which the fiscal agent determines 
     whether a State or tribal government's program is an eligible 
     public purpose program; and
       (3) rules governing the award of funds for qualifying 
     greenhouse gas mitigation projects that the Secretary 
     determines are necessary to ensure such projects are cost-
     effective.
       (e) Public Benefits Charge.--
       (1) Amount of charge.--As a condition of existing or future 
     interconnection with facilities of any transmitting utility, 
     each owner of an electric generating facility whose nameplate 
     capacity exceeds five megawatts shall pay the transmitting 
     utility a public benefits charge equal to one mill per 
     kilowatt-hour on electric energy generated by such electric 
     generating facility.
       (2) Affiliates.--Each owner of an electric generating 
     facility subject to the charge under paragraph (1) shall pay 
     the charge even if the generation facility and the 
     transmitting facility are under common ownership or are 
     otherwise affiliated.
       (3) Imported electricity.--Each importer of electric energy 
     from Canada or Mexico, as a condition of existing or future 
     interconnection with facilities of any transmitting utility 
     in the United States, shall pay this same charge for imported 
     electric energy.
       (4) Payment of the charge.--The transmitting utility shall 
     pay the amounts collected to the fiscal agent at the close of 
     each month, and the fiscal agent shall deposit the amounts 
     into the Fund as offsetting collections.
       (f) Disbursal From the Fund.--
       (1) Block grants.--The fiscal agent shall disburse amounts 
     in the Fund to participating States and tribal governments as 
     a block grant to carry out eligible public purpose programs 
     in accordance with this subsection and rules prescribed under 
     subsection (d).
       (2) Annual payments.--The fiscal agent shall disburse 
     amounts for a calendar year from the Fund to a State or 
     tribal government in twelve equal monthly payments beginning 
     two months after the beginning of the calendar year.
       (3) Eligible recipients.--The fiscal agent shall make 
     distributions to the State or tribal government or to an 
     entity designated by the State or tribal government to 
     receive payments.
       (4) Limitation on use of funds.--A State or tribal 
     government may use amounts received only for the eligible 
     public purpose programs the State or tribal government 
     designated in its submission to the fiscal agent and the 
     fiscal agent determined eligible.
       (g) Report.--One year before the date of expiration of this 
     section, the Secretary shall report to Congress whether a 
     public benefits fund should continue to exist.
       (h) Sunset.--This section expires at midnight on December 
     31, 2015.

     SEC. 503. RURAL CONSTRUCTION GRANTS.

       Section 313 of the Rural Electrification Act of 1936 (7 
     U.S.C. 940c) is amended by adding after subsection (b) the 
     following:
       ``(c) Rural and Remote Communities Electrification 
     Grants.--The Secretary of Agriculture, in consultation with 
     the Secretary of Energy and the Secretary of the Interior, 
     may provide grants to eligible borrowers under this Act for 
     the purpose of increasing energy efficiency, siting or 
     upgrading transmission and distribution lines, or providing 
     or modernizing electric facilities for--
       ``(1) a unit of local government of a State or territory; 
     or
       ``(2) an Indian tribe.
       ``(d) Grant Criteria.--The Secretary shall make grants 
     based on a determination of cost-effectiveness and most 
     effective use of the funds to achieve the stated purposes of 
     this section.
       ``(e) Preference.--In making grants under this section, the 
     Secretary shall give a preference to renewable energy 
     facilities.
       ``(f) Definition.--For purposes of this section, the term 
     `Indian tribe' means any Indian tribe, band, nation, or other 
     organized group or community, including any Alaska Native 
     village or regional or village corporation as defined in or 
     established pursuant to the Alaska Native Claims Settlement 
     Act (43 U.S.C. 1601 et seq.), which is recognized as eligible 
     for the special programs and services provided by the United 
     States to Indians because of their status as Indians.
       ``(g) Authorization.--There is authorized to be 
     appropriated for purposes of subsection (c) $20,000,000 for 
     each of the seven fiscal years following the date of 
     enactment of this section.''.

     SEC. 504. COMPREHENSIVE INDIAN ENERGY PROGRAM.

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

     ``SEC. 2607. COMPREHENSIVE INDIAN ENERGY PROGRAM.

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

[[Page S2761]]

       ``(2) In implementing this subsection, an agency or 
     department shall pay no more for energy production than the 
     prevailing market price and shall obtain no less than 
     existing market terms and conditions.
       ``(d) Effect on Other Laws.--This section does not--
       ``(1) limit the discretion vested in an Administrator of a 
     Federal power marketing agency to market and allocate Federal 
     power, or
       ``(2) alter Federal laws under which a Federal power 
     marketing agency markets, allocates, or purchases power.''.
       (b) Office of Indian Policy and Programs.--Title II of the 
     Department of Energy Organization Act is amended by adding at 
     the end the following:
       ``OFFICE OF INDIAN ENERGY POLICY AND PROGRAMS.
       ``SEC. 217. (a) There is established within the Department 
     an Office of Indian Energy Policy and Progams. This Office 
     shall be headed by a Director, who shall be appointed by the 
     Secretary and compensated at the rate equal to that of level 
     IV of the Executive Schedule under section 5315 of Title 
     5, United States Code. The Director shall perform the 
     duties assigned the Director under the Comprehensive 
     Indian Energy Act and this section.
       ``(b) The Director shall provide, direct, foster, 
     coordinate, and implement energy planning, education, 
     management, conservation, and delivery programs of the 
     Department that--
       ``(1) promote tribal energy efficiency and utilization;
       ``(2) modernize and develop, for the benefit of Indian 
     tribes, tribal energy and economic infrastructure related to 
     natural resource development and electrification;
       ``(3) preserve and promote tribal sovereignty and self 
     determination related to energy matters and energy 
     deregulation;
       ``(4) lower or stabilize energy costs; and
       ``(5) electrify tribal members' homes and tribal lands.
       ``(c) The Director shall carry out the duties assigned the 
     Secretary under title XXVI of the Energy Policy Act of 1992 
     (25 U.S.C. 3501 et seq.).''.
       (c) Conforming Amendments.--
       (1) Section 2603(c) of the Energy Policy Act of 1992 (25 
     U.S.C. 3503(c)) is amended to read as follows:
       ``(c) There are authorized to be appropriated such sums as 
     may be necessary to carry out the purposes of this section.''
       (2) The Table of Contents of the Department of Energy Act 
     is amended by inserting after the item relating to section 
     216 the following new item:

     ``217. Office of Indian Energy Policy and Programs.''

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

     SEC. 505. ENVIRONMENTAL DISCLOSURE TO CONSUMERS.

       (a) Retail Sales.--The Federal Trade Commission shall issue 
     rules requiring each retail electric supplier to include with 
     each monthly billing to retail electric consumers a statement 
     of the known energy sources used to generate the electricity 
     the supplier distributes, on an annual basis, stated in 
     numbers of kilowatt-hours, both in percentages and in the 
     form of a pie chart, of biomass power, coal-fired power, 
     hydropower, natural gas-fired power, nuclear power, oil-fired 
     power, wind power, geothermal power, solar thermal power, 
     photovoltaic power, combined heat and power, and other 
     sources of power, respectively.
       (b) Wholesale Sales.--The Federal Trade Commission shall 
     issue rules requiring any electric supplier that sells or 
     makes an offer to sell electric energy at wholesale to 
     provide the purchaser or offeree such known information about 
     the energy source used to generate the electricity, on an 
     annual basis, as the Commission may determine.
       (c) Certification Program.--The Secretary of Energy, in 
     consultation with the Federal Trade Commission, shall develop 
     a certification program for each retail electric supplier 
     that sells electric energy, at least 50 percent of which, 
     averaged over a year, is generated from renewable energy 
     sources. For purposes of this subsection, the term 
     ``renewable energy source'' means biomass, wind power, 
     geothermal power, solar thermal power, or photovoltaic power.

     SEC. 506. CONSUMER PROTECTIONS.

       (a) Information Disclosure.--The Federal Trade Commission 
     shall issue rules requiring any retail electric supplier that 
     sells or makes an offer to sell electric energy, or 
     solicits retail electric consumers to purchase electric 
     energy, to provide the retail electric consumers, in 
     addition to the information required under section 505, a 
     statement containing the following information:
       (1) The nature of the service being offered, including 
     information about interr-uptibility of service.
       (2) The price of electric energy, including a description 
     of any variable charges.
       (3) A description of all other charges that are associated 
     with the service being offered, including access charges, 
     exit charges, back-up service charges, stranded cost recovery 
     charges, and customer service charges.
       (4) Information concerning the product or price that the 
     Federal Trade Commission determines is technologically and 
     economically feasible to provide and is of assistance to 
     retail electric consumers in making purchasing decisions.
       (b) Consumer Privacy.--
       (1) Prohibition.--The Federal Trade Commission shall issue 
     rules prohibiting anyperson who obtains consumer information 
     in connection with the sale or delivery of electric energy to 
     a retail electric consumer from using, disclosing, or 
     permitting access to such information unless the consumer to 
     whom such information relates provides prior written 
     approval.
       (2) Permitted use.--The rules issued under this subsection 
     shall not prohibit any person from using, disclosing, or 
     permitting access to consumer information referred to in 
     paragraph (1) for any of the following purposes:
       (A) To facilitate a retail electric consumer's change in 
     selection of a retail electric supplier under procedures 
     approved by the State or State commission.
       (B) To initiate, render, bill, or collect for the sale or 
     delivery of electric energy to retail electric consumers or 
     for related services.
       (C) To protect the rights or property of the person 
     obtaining such information.
       (D) To protect retail electric consumers from fraud, abuse, 
     and unlawful subscription in the sale or delivery of electric 
     energy to such consumers.
       (E) For law enforcement purposes.
       (F) For purposes of compliance with any Federal, State, or 
     local law or regulation authorizing disclosure of information 
     to a Federal, State, or local agency.
       (3) Aggregate consumer information.--The rules issued under 
     this subsection shall permit any person to use, disclose, and 
     permit access to aggregate consumer information and shall 
     require local distribution companies to make such information 
     available to retail electric suppliers upon request and 
     payment of a reasonable fee.
       (4) Definitions.--As used in this section:
       (1) The term ``aggregate consumer information'' means 
     collective data that relates to a group or category of retail 
     electric consumers, from which individual consumer identities 
     and characteristics have been removed.
       (2) The term ``consumer information'' means information 
     that relates to the quantity, technical configuration, type, 
     destination, or amount of use of electric energy delivered to 
     any retail electric consumer.
       (3) The term ``State commission'' has the meaning given 
     such term in section 3(15) of the Federal Power Act (16 
     U.S.C. 796(15)).
       (c) Unfair Trade Practices.--
       (1) Slamming.--The Federal Trade Commission shall issue 
     rules prohibiting the change of selection of a retail 
     electric supplier except with the informed consent of the 
     retail electric consumer.
       (2) Cramming.--The Federal Trade Commission shall issue 
     rules prohibiting the sale of goods and services to a retail 
     electric consumer unless expressly authorized by law or the 
     retail electric consumer.
       (d) Federal Trade Commission Enforcement.--Violation of a 
     rule issued under this section shall be treated as a 
     violation of a rule under section 18 of the Federal Trade 
     Commission Act (15 U.S.C. 57a). All functions and powers of 
     the Federal Trade Commission under such Act are available to 
     the Federal Trade Commission to enforce compliance with this 
     section notwithstanding any jurisdictional limits in such 
     Act.
       (e) State Authority.--(1) This section does not preclude a 
     State or State commission from prescribing and enforcing 
     additional laws, rules, or procedures regarding the practices 
     which are the subject of this section, so long as such laws, 
     rules, or procedures are not inconsistent with the provisions 
     of this section or with any rule prescribed by the Federal 
     Trade Commission pursuant to it.
       (2) The remedies provided by this section are in addition 
     to any other remedies available by law.
       (f) Definitions.--As used in this section--
       (1) the term ``retail electric consumer'' means any person 
     who purchases electric energy for ultimate consumption;
       (2) the term ``retail electric supplier'' means any person 
     who sells electric energy to a retail electric consumer for 
     ultimate consumption; and
       (3) the term ``State commission'' has the meaning given 
     such term in section 3(15) of the Federal Power Act (16 
     U.S.C. 796(15)).

     SEC. 507. WHOLESALE ELECTRICITY MARKET DATA.

       Section 213 of the Federal Power Act (16 U.S.C. 824l) is 
     amended by adding at the end the following:
       ``(c) Wholesale Electricity Market Data.--
       ``(1) Not later than 180 days after the date of the 
     enactment of this subsection, the Commission shall, by rule, 
     establish an information system that gives persons who buy 
     electric energy for resale, State regulatory authorities, and 
     the public access to current information about--
       ``(A) the availability of electric energy generating 
     capacity and known generating constraints, and
       ``(B) the availability of transmission capacity and known 
     transmission constraints.
       ``(2) The rule shall require--
       ``(A) each electric utility and each Federal power 
     marketing administration that owns, operates, or controls 
     facilities used for the generation or transmission of 
     electric energy sold or transmitted in interstate commerce to 
     report, by unit, on a real-time basis--
       ``(i) the total number of megawatts (as a 60 second 
     average) produced by each generating facility it owns, 
     operates, or controls, and

[[Page S2762]]

       ``(ii) the total number of megawatts of capacity at each 
     facility it owns, operates, or controls that is not being 
     used to generate electric power; and
       ``(B) each transmitting utility to report, on a real-time 
     basis--
       ``(i) the total number of megawatts transmitted on each 
     transmission facility it owns, operates, or controls, and
       ``(ii) the total number of megawatts scheduled and the 
     current capacity or rating of each transmission facility it 
     owns, operates, or controls.
       ``(3) The Commission may enter agreements with regional 
     electric reliability councils to collect, retain, and make 
     available to persons who buy electric energy for resale, 
     state regulatory authorities, and the public the information 
     required to be submitted by the rule.''.

     SEC. 508. WHOLESALE ELECTRIC ENERGY RATES IN THE WESTERN 
                   ENERGY MARKET.

       (a) Imposition of Wholesale Electric Energy Rates.--Not 
     later than 60 days after the date of enactment of this title, 
     the Federal Energy Regulatory Commission shall impose just 
     and reasonable load-differentiated demand rates or cost-of-
     service based rates on sales by electric utilities of 
     electric energy at wholesale in the western energy market.
       (b) Limitations.--
       (1) In general.--A load-differentiated demand rate or cost-
     of-service based rate shall not apply to a sale of electric 
     energy at wholesale for delivery in a State that--
       (A) prohibits electric utilities from passing through to 
     retail consumers wholesale rates approved by the Commission; 
     or
       (B) imposes a price limit on the sale of electric energy at 
     retail that--
       (i) precludes an electric utility from recovering all of 
     the costs incurred by the electric utility in purchasing 
     electric energy; or
       (ii) has precluded an electric utility (or any entity that 
     is authorized to purchase electricity on behalf of an 
     electric utility or a State) from making a payment when due 
     to any entity within the western energy market from which the 
     electric utility purchased electric energy, and the default 
     has not been cured.
       (2) No orders to sell without guarantee of payment.--
     Notwithstanding section 302 of the Natural Gas Policy Act of 
     1978 (15 U.S.C. 3362), section 202(c) of the Federal Power 
     Act (16 U.S.C. 824a(c)), or section 101 of the Defense 
     Production Act of 1950 (50 U.S.C. App. 2071), neither the 
     President, the Secretary of Energy, nor the Commission may 
     issue an order that requires a seller of electric energy or 
     natural gas to sell, on or after the date of enactment of 
     this title, electric energy or natural gas to a purchaser in 
     a State described in paragraph (1) unless there is a 
     guarantee that, in the determination of the Commission, is 
     sufficient to ensure that the seller will be paid--
       (A) the full purchase price when due, as agreed upon by the 
     buyer and seller; or
       (B) if the buyer and seller are unable to agree upon a 
     price--
       (i) a fair and equitable price for natural gas as 
     determined by the President under section 302 of the Natural 
     Gas Policy Act of 1978 (15 U.S.C. 3362), or
       (ii) a just and reasonable price for electric energy as 
     determined by the Secretary of Energy or the Commission, as 
     appropriate, under section 202(c) of the Federal Power Act 
     (16 U.S.C. 824a(c)).
       (3) Requirement to meet in-state demand.--Notwithstanding 
     any other provision of law, a State electric utility 
     commission in the western energy market may prohibit an 
     electric utility in the State from making any sale of 
     electric energy to a purchaser in a State described in 
     paragraph (1) at any time at which a State electric utility 
     commission determines that the electric utility is not 
     meeting the demand for electric energy in the service area of 
     the electric utility.
       (c) Report.--Not later than 120 days after the date of 
     enactment of this title, the Secretary of Energy shall--
       (1) conduct an investigation to determine whether any 
     electric utility in a State described in subsection (d)(1) 
     has been rendered uncreditworthy or has defaulted on any 
     payment for electric energy as a result of a transfer of 
     funds by the electric utility to a parent company or to an 
     affiliate of the electric utility (except a payment made in 
     accordance with a State deregulation statute); and
       (2) submit to the Committee on Energy and Commerce of the 
     House of Representatives and the Committee on Energy and 
     Natural Resources of the Senate a report describing the 
     results of the investigation.
       (d) Duration.--A load-differentiated demand rate or cost-
     of-service based rate imposed under this section shall remain 
     in effect until such time as the market for electric energy 
     in the western energy market reflects just and reasonable 
     rates, as determined by the Commission.
       (e) Authority of State Regulatory Authorities.--This 
     section does not diminish or have any other effect on the 
     authority of a State regulatory authority (as defined in 
     section 3 of the Federal Power Act (16 U.S.C. 796)) to 
     regulate rates and charges for the sale of electric energy to 
     consumers, including the authority to determine the manner in 
     which wholesale rates shall be passed on to consumers 
     (including the setting of tiered pricing, real-time pricing, 
     and baseline rates).
       (g) Definitions.--For purposes of this section--
       (1) Commission.--The term ``Commission'' means the Federal 
     Energy Regulatory Commission.
       (2) Cost-of-service based rate.--The term ``cost-of-service 
     based rate'' means a rate, charge, or classification for the 
     sale of electric energy that is equal to--
       (A) all the variable and fixed costs for producing the 
     electric energy; and
       (B) a reasonable return on invested capital.
       (3) Electric utility.--The term ``electric utility'' means 
     any person, State agency (including any municipality), 
     Federal agency (including the Tennessee Valley Authority or 
     any Federal power marketing agency) that sells electric 
     energy in interstate commerce.
       (4) Load-differentiated demand rate.--The term ``load-
     differentiated demand rate'' means a rate, charge, or 
     classification for the sale of electric energy that reflects 
     differences in the demand for electric energy during various 
     times of day, months, seasons, or other time periods.
       (5) Western energy market.--The term ``western energy 
     market'' means the area covered by the Western Systems 
     Coordinating Council of the North American Electric 
     Reliability Council.
       (i) Repeal.--Effective March 1, 2003, this section is 
     repealed, and any load-differentiated demand rate or cost-of-
     service based rate imposed under this section that is then in 
     effect shall no longer be effective.

     SEC. 509. NATURAL GAS RATE CEILING IN CALIFORNIA.

       Section 284.8(i) of title 18, Code of Federal Regulations 
     (relating to the waiver of the maximum rate ceiling on 
     capacity release transactions on interstate natural gas 
     pipelines) shall not apply to the transportation of natural 
     gas into the State of California from outside the State, 
     effective on the date of enactment of this section.

     SEC. 510. SALE PRICE IN BUNDLED NATURAL GAS TRANSACTIONS.

       (a) Disclosure.--Not later than 60 days after the date of 
     enactment of this section, the Federal Energy Regulatory 
     Commission shall issue a rule under section 4 of the Natural 
     Gas Act (15 U.S.C. 717c) requiring any person that sells 
     natural gas subject to the jurisdiction of the Commission in 
     a bundled transaction to file with the Commission, not later 
     than the date specified by the Commission, a statement that 
     discloses--
       (1) the portion of the sale price that is attributable to 
     the price paid by the seller for the natural gas; and
       (2) the portion of the sale price that is attributable to 
     the price paid for the transportation of the natural gas.
       (b) Definition of Bundled Transaction.--For purposes of 
     this section, the term ``bundled transaction'' means a 
     transaction for the sale of natural gas in which the sale 
     price includes both the cost of the natural gas and the cost 
     of transporting the natural gas.

            TITLE VI--RENEWABLES AND DISTRIBUTED GENERATION

     SEC. 601. ASSESSMENT OF RENEWABLE ENERGY RESOURCES.

       (a) Resource Assessment.--Not later than one year after the 
     date of enactment of this title, and each year thereafter, 
     the Secretary of Energy shall publish an assessment of all 
     renewable energy resources available within the United 
     States.
       (b) Contents of Report.--The report published under 
     subsection (a) shall contain--
       (1) a detailed inventory describing the available amount 
     and characteristics of solar, wind, biomass, geothermal, 
     hydroelectric and other renewable energy sources, and
       (2) such other information as the Secretary of Energy 
     believes would be useful in developing such renewable energy 
     resources, including descriptions of surrounding terrain, 
     population and load centers, nearby energy infrastructure, 
     location of energy and water resources, and available 
     estimates of the costs needed to develop each resource.

     SEC. 602. FEDERAL PURCHASE REQUIREMENT.

       (a) Requirement.--The President shall ensure that, of the 
     total amount of electric power the federal government 
     purchases during any fiscal year--
       (1) not less than 3 percent in fiscal years 2002 through 
     2004,
       (2) not less than 5 percent in fiscal years 2005 through 
     2009, and
       (3) not less than 7.5 percent in fiscal year 2010 and each 
     fiscal year thereafter--shall be electric power generated by 
     a renewable energy source.
       (b) Definition.--For purposes of this section, the term 
     ``renewable energy source'' means--
       (1) wind;
       (2) biomass;
       (3) a geothermal source;
       (4) a solar thermal source;
       (5) a photovoltaic source;
       (6) fuel cells; or
       (7) additional hydroelectric generation capacity achieved 
     from increased efficiency or additions of new capacity at an 
     existing hydroelectric dam.

     SEC. 603. INTERCONNECTION STANDARDS.

       Section 210 of the Federal Power Act (42 U.S.C. 824i) is 
     amended by adding at the end the following:
       ``(f) Special Rule for Distributed Generation Facilities.--
       ``(1) Definition.--As used in this subsection, the term 
     `distributed generation facility' means an electric power 
     generation facility that--
       ``(A) is designed to serve retail customers at or near the 
     point of consumption; and

[[Page S2763]]

       ``(B) interconnects with local distribution facilities.
       ``(2) Interconnection.--A local distribution company shall 
     interconnect a distributed generation facility with the local 
     distribution facilities of such company if the distributed 
     generation facility owner or operator complies with the final 
     rule adopted under paragraph (3) and pays the costs directly 
     related to such interconnection. Costs, terms, and conditions 
     related to such interconnection shall be just, reasonable, 
     and not unduly discriminatory.
       ``(3) Rules.--Within one year after the date of enactment 
     of this subsection, the Commission shall adopt a final rule 
     to establish safety, reliability, and power quality standards 
     related to distributed generation facilities. For purposes of 
     developing such standards, the Commission may classify 
     distributed power generation facilities based on size and 
     prescribe different requirements for different classes of 
     facilities. The Commission shall establish an advisory 
     committee composed of qualified experts to make 
     recommendations to the Commission on the development of such 
     standards.''.

     SEC. 604. NET METERING.

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

     ``SEC. 605. NET METERING FOR RENEWABLE ENERGY AND FUEL CELLS.

       ``(a) Definitions.--For purposes of this section:
       ``(1) The term `eligible on-site generating facility' 
     means--
       ``(A) a facility on the site of a residential electric 
     consumer with a maximum generating capacity of 100 kilowatts 
     or less that is fueled by solar or wind energy; or
       ``(B) a facility on the site of a commercial electric 
     consumer with a maximum generating capacity of 250 kilowatts 
     or less that is fueled solely by a renewable energy resource.
       ``(2) The term `renewable energy resource' means solar 
     energy, wind energy, biomass, geothermal energy, or fuel 
     cells.
       ``(3) The term `net metering service' means service to an 
     electric consumer under which electricity generated by that 
     consumer from an eligible on-site generating facility and 
     delivered to the distribution system through the same meter 
     through which purchased electricity is received may be 
     used to offset electricity provided by the retail electric 
     supplier to the electric consumer during the applicable 
     billing period so that an electric consumer is billed only 
     for the net electricity consumed during the billing 
     period.
       ``(b) Requirement To Provide Net Metering Service.--Each 
     retail electric supplier shall make available upon request 
     net metering service to any retail electric consumer that the 
     supplier currently serves or solicits for service.
       ``(c) Rates and Charges.--
       ``(1) Identical charges.--A retail electric supplier--
       ``(A) shall charge the owner or operator of an on-site 
     generating facility rates and charges that are identical to 
     those that would be charged other retail electric customers 
     of the electric company in the same rate class; and
       ``(B) shall not charge the owner or operator of an on-site 
     generating facility any additional standby, capacity, 
     interconnection, or other rate or charge.
       ``(2) Measurement.--A retail electric supplier that 
     supplies electricity to the owner or operator of an on-site 
     generating facility shall measure the quantity of electricity 
     produced by the on-site facility and the quantity of 
     electricity consumed by the owner or operator of an on-site 
     generating facility during a billing period in accordance 
     with normal metering practices.
       ``(3) Electricity supplied exceeding electricity 
     generated.--If the quantity of electricity supplied by a 
     retail electric supplier during a billing period exceeds the 
     quantity of electricity generated by an on-site generating 
     facility and fed back to the electric distribution system 
     during the billing period, the supplier may bill the owner or 
     operator for the net quantity of electricity supplied by the 
     retail electric supplier, in accordance with normal metering 
     practices.
       ``(4) Electricity generated exceeding electricity 
     supplied.--If the quantity of electricity generated by an on-
     site generating facility during a billing period exceeds the 
     quantity of electricity supplied by the retail electric 
     supplier during the billing period--
       ``(A) the retail electric supplier may bill the owner or 
     operator of the on-site generating facility for the 
     appropriate charges for the billing period in accordance with 
     paragraph (2); and
       ``(B) the owner or operator of the on-site generating 
     facility shall be credited for the excess kilowatt-hours 
     generated during the billing period, with the kilowatt-hour 
     credit appearing on the bill for the following billing 
     period.
       ``(d) Safety and Performance Standards.--
       ``(1) An eligible on-site generating facility and net 
     metering system used by a retail electric consumer shall meet 
     all applicable safety, performance, reliability, and 
     interconnection standards established by the National 
     Electrical Code, the Institute of Electrical and Electronics 
     Engineers, and Underwriters Laboratories.
       ``(2) The Commission, after consultation with State 
     regulatory authorities and nonregulated local distribution 
     systems and after notice and opportunity for comment, may 
     adopt, by rule, additional control and testing requirements 
     for on-site generating facilities and net metering systems 
     that the Commission determines are necessary to protect 
     public safety and system reliability.''

     SEC. 605. ACCESS TO TRANSMISSION BY INTERMITTENT GENERATORS.

       Part II of the Federal Power Act (16 U.S.C. 824-824m) is 
     amended by adding at the end the following:

     ``SEC. 217. ACCESS TO TRANSMISSION BY INTERMITTENT 
                   GENERATORS.

       ``(a) In General.--The Commission shall ensure that all 
     transmitting utilities provide transmission service to 
     intermittent generators in a manner that does not penalize 
     such generators, directly or indirectly, for characteristics 
     that are--
       ``(1) inherent to intermittent energy resources; and
       ``(2) are beyond the control of such generators.
       ``(b) Policies.--The Commission shall ensure that the 
     requirement in subsection (a) is met by adopting such 
     policies as it deems appropriate which shall include, but not 
     be limited to, the following:
       ``(1) Subject to the sole exception set forth in paragraph 
     (2), the Commission shall ensure that the rates transmitting 
     utilities charge intermittent generator customers for 
     transmission services do not directly or indirectly penalize 
     intermittent generator customers for scheduling deviations.
       ``(2) The Commission may exempt a transmitting utility from 
     the requirement set forth in subsection (b) if the 
     transmitting utility demonstrates that scheduling deviations 
     by its intermittent generator customers are likely to have a 
     substantial adverse impact on the reliability of the 
     transmitting utility's system. For purposes of administering 
     this exemption, there shall be a rebuttable presumption of no 
     adverse impact where intermittent generators collectively 
     constitute 20 percent or less of total generation 
     interconnected with transmitting utility's system and using 
     transmission services provided by transmitting utility.
       ``(3) The Commission shall ensure that to the extent any 
     transmission charges recovering the transmitting utility's 
     embedded costs are assessed to intermittent generators, they 
     are assessed to such generators on the basis of kilowatt-
     hours generated rather than the intermittent generator's 
     capacity.
       ``(4) The Commission shall require transmitting utilities 
     to offer at least to intermittent generators, if not all 
     transmission customers, access to nonfirm transmission 
     service pursuant to long-term contracts of up to ten years 
     duration under reasonable terms and conditions.
       ``(c) Definitions.--In this section:
       ``(1) Intermittent generator.--The term `intermittent 
     generator' means a person that generates electricity using 
     wind or solar energy.
       ``(2) Nonfirm transmission service.--The term `nonfirm 
     transmission service' means transmission service provided on 
     an `as available' basis.
       ``(3) Scheduling deviation.--The term `scheduling 
     deviation' means delivery of more or less energy than has 
     previously been forecast in a schedule submitted by an 
     intermittent generator to a control area operator or 
     transmitting utility.''.

                  TITLE VII--HYDROELECTRIC RELICENSING

     SEC. 701. ALTERNATIVE CONDITIONS.

       (a) Alternative Mandatory Conditions.--Section 4 of the 
     Federal Power Act (16 U.S.C. 797) is amended by adding at the 
     end the following:
       ``(h)(1) Whenever any person applies for a license for any 
     project works within any reservation of the United States 
     under subsection (e), and the Secretary of the department 
     under whose supervision such reservation falls shall deem a 
     condition to such license to be necessary under the first 
     proviso of such section, the license applicant may propose an 
     alternative condition.
       ``(2) Notwithstanding the first proviso of subsection (e), 
     the Secretary of the department under whose supervision the 
     reservation falls shall accept the alternative condition 
     proposed by the license applicant, and the Commission 
     shall include in the license such alternative condition, 
     if the Secretary of the appropriate department determines 
     that the alternative condition--
       ``(A) provides equal or greater protection for the 
     reservation than the condition deemed necessary by the 
     Secretary;
       ``(B) is based on sound science; and
       ``(C) will either--
       ``(i) cost less to implement than the condition deemed 
     necessary by the Secretary, or
       ``(ii) result in less loss of generating capacity than the 
     condition deemed necessary by the Secretary.''.
       (b) Alternative Fishways.--Section 18 of the Federal Power 
     Act (16 U.S.C. 811) is amended by--
       (1) inserting ``(a)'' before the first sentence; and
       (2) adding at the end the following:
       ``(b)(1) Whenever the Commission shall require a licensee 
     to construct, maintain, or operate a fishway prescribed by 
     the Secretary of the Interior or the Secretary of Commerce 
     under this section, the licensee may propose an alternative.
       ``(2) Notwithstanding subsection (a), the Secretary of the 
     Interior or the Secretary of Commerce, as appropriate, shall 
     accept and prescribe, and the Commission shall require, the 
     alternative proposed by the licensee, if

[[Page S2764]]

     the Secretary of the appropriate department determines that 
     the alternative--
       ``(i) will result in equal or greater fish passage than the 
     fishway initially prescribed by the Secretary;
       ``(ii) is based on sound science; and
       ``(iii) will either--
       ``(I) cost less to implement than the fishway initially 
     prescribed by the Secretary, or
       ``(II) result in less loss of generating capacity than the 
     fishway initially prescribed by the Secretary.''.

     SEC. 702. DISPOSITION OF HYDROELECTRIC CHARGES.

       (a) Annual Charges.--Section 10(e)(1) of the Federal Power 
     Act (16 U.S.C. 803(e)(1) is amended--
       (1) by striking ``subject to annual appropriations Acts'' 
     in the first proviso; and
       (2) by inserting after ``(in addition to other funds 
     appropriated for such purposes)'' in the first proviso the 
     following: ``without further appropriation''.
       (b) Other Charges.--Section 17(a) of the Federal Power Act 
     (16 U.S.C. 810(a)) is amended by striking ``into the Treasury 
     of the United States and credited to 'Miscellaneous 
     receipts''' and inserting the following: ``to the Secretary 
     of the department under whose supervision the affected 
     reservation falls, without further appropriation, to be used 
     in accordance with subsection (c)''.
       (c) Use of Funds.--Section 17 of the Federal Power Act (16 
     U.S.C. 810) is further amended by adding at the end the 
     following:
       ``(c)(1) The Secretary receiving a distribution of 12\1/2\ 
     per centum of the proceeds of charges under subsection (a) 
     may use such proceeds solely for the protection of the water 
     resources on--
       ``(A) the reservation on which the project for which the 
     proceeds were paid is located; or
       ``(B) the reservation on which the headwaters of the 
     waterway, on which the project for which the proceeds were 
     paid, is located.
       ``(2) For purposes of this subsection, activities for the 
     protection of water resources for which proceeds made 
     available under this subsection may be used may only include 
     the following:
       ``(A) promoting the recovery of threatened and endangered 
     species;
       ``(B) road and trail assessments and plans, maintenance, 
     obliteration, or closure;
       ``(C) wildlife and fish habitat management;
       ``(D) multiparty monitoring of water protection activities;
       ``(E) watershed analysis, including resource conditions and 
     trend assessments;
       ``(F) erosion control and restoring hydrologic function to 
     meadows, wetlands, and floodplains; and
       ``(G) job training associated with paragraph (3).
       ``(3) In order to provide employment and job training 
     opportunities to residents of rural communities located 
     within or near a reservation identified in paragraph (1), the 
     Secretary may make grants or enter into cooperative 
     agreements or contracts with-
       ``(A) a private, non-profit, or cooperative entity within 
     the same county as the reservation;
       ``(B) businesses that employ 25 or less employees;
       ``(C) an entity that will hire or train residents of 
     communities located within or near the reservation to perform 
     the contract; or
       ``(D) the Youth Conservation Corps or related partnerships 
     with State, local, or nonprofit youth groups.''

     SEC. 703. RELICENSING STUDY.

       (a) In General.--The Federal Energy Regulatory Commission 
     shall, in consultation with the Secretary of Commerce, the 
     Secretary of the Interior, and the Secretary of Agriculture, 
     conduct a study of all new licensees issued for existing 
     projects under section 15 since January 1, 1994.
       (b) Scope.--The study shall analyze:
       (1) the length of time the Commission has taken to issue 
     each new license for an existing project;
       (2) the additional cost to the licensee attributable to new 
     license conditions;
       (3) the change in generating capacity attributable to new 
     license conditions;
       (4) the environmental benefits achieved by new license 
     conditions; and
       (5) litigation arising from the issuance or failure to 
     issue new licenses for existing projects under section 15 or 
     the imposition or failure to impose new license conditions.
       (c) Definition.--As used in this section, the term ``new 
     license condition'' means any condition imposed under-
       (1) section 4(e) of the Federal Power Act (16 U.S.C. 
     797(e)),
       (2) section 10(e) of the Federal Power Act (16 U.S.C. 
     803(e)),
       (3) section 100) of the Federal Power Act (16 U.S.C. 
     8030)),
       (4) section 18 of the Federal Power Act (16 U.S.C. 811), or
       (5) section 401(d) of the Clean Water Act (33 U.S.C. 
     1341(d)).
       (d) Consultation.--The Commission shall give interested 
     persons and licensees an opportunity to submit information 
     and views in writing.
       (e) Report.--The Commission shall report its findings to 
     the Committee on Energy and Natural Resources of the United 
     States Senate and the Committee on Energy and Commerce of the 
     House of Representatives not later than six months after the 
     date of enactment of this section.

                            TITLE VIII--COAL

     SEC. 801. DEFINITIONS.

       In this title:
       (1) Cost and performance goals.--The term ``cost and 
     performance goals'' means the cost and performance goals 
     established under section 811.
       (2) Secretary.--The term ``Secretary'' means the Secretary 
     of Energy.

Subtitle A--National Coal-Based Technology Development and Applications 
                                Program

     SEC. 811. 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 the periods:
       (1) 2007 through 2014;
       (2) 2015 through 2019; and
       (3) 2020 and each year thereafter.
       (b) Consultation.--In establishing the 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 title, 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 title, after taking into consideration any public 
     comments received, submit to Congress the final cost and 
     performance goals.

     SEC. 812. STUDY.

       (a) In General.--Not later than I year after the date of 
     enactment of this title, 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 the cost and 
     performance goals;
       (2) assess the costs that would be incurred by, and the 
     period of time that would be required for, the development 
     and demonstration of the 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 the 
     cost and performance goals.
       (b) Cooperation.--In carrying out this section, the 
     Secretary shall give due weight to the expert advice of 
     representatives of the entities described in section 811(b).

     SEC. 813. 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 the statutory 
     authorities available to him for carrying out research and 
     development.
       (b) Conditions.--The research, development, demonstration, 
     and commercial application programs identified in section 
     812(a) shall be designed to achieve the cost and performance 
     goals.
       (c) Report.--Not later than 18 months after the date of 
     enactment of this title, 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. 814. AUTHORIZATION OF APPROPRIATIONS.

       (a) In General.--There are authorized to be appropriated to 
     carry out this subtitle $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 
     title; and
       (2) shall not be a cap on Department of Energy fossil 
     energy research and development and clean coal technology 
     appropriations.

             Subtitle B--Power Plant Improvement Initiative

     SEC. 821. POWER PLANT IMPROVEMENT INITIATIVE PROGRAM.

       (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, which must advance the efficiency, 
     environmental performance, and cost competitiveness well 
     beyond that which is in operation or has been demonstrated on 
     the date of enactment of this title.
       (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--

[[Page S2765]]

       (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 proposed to be conducted 
     at new or existing coal-based electric generation units 
     having at least 50 megawatts nameplate rating, including 
     improvements to allow the units to achieve 1 or more of the 
     following:
       (A) An overall design efficiency improvement of not less 
     than 3 percent as compared with the efficiency of the unit as 
     operated on the date of 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, and mercury in a manner that is different and 
     well below the cost of technologies that are in operation or 
     have been demonstrated on the date of enactment of this 
     title.
       (C) A means of recycling, reusing, or sequestering a 
     significant portion of coal combustion wastes produced by 
     coal-based generating units excluding practices that are 
     commercially available at the date of enactment of this 
     title.

     SEC. 822. FINANCIAL ASSISTANCE.

       (a) In General.--Not later than 180 days after the date on 
     which the Secretary submits to Congress the plan under 
     section 821 (b), the Secretary shall solicit proposals for 
     projects at new or existing facilities designed to achieve 
     the levels of performance set forth in section 821(b)(3).
       (b) Project Criteria.--A solicitation under subsection (a) 
     may include solicitation of a proposal for a project to 
     demonstrate--
       (1) the control of emissions of 1 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 in order to maintain a diversity of fuel choices in 
     the United States to meet electricity generation 
     requirements;
       (3) achieve, in a cost-effective manner, 1 or more of the 
     criteria described 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 cost of a project 
     funded under this subtitle shall not exceed 50 percent.

     SEC. 823. FUNDING.

       To carry out this subtitle, the Secretary may use any 
     unobligated funds available to the Secretary and any funds 
     obligated to any project selected under the clean coal 
     technology program that become unobligated.

              TITLE IX--PRICE-ANDERSON ACT REAUTHORIZATION

     SEC. 901. SHORT TITLE.

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

     SEC. 902. 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 
     170d.(l)(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 170k. 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. 903. 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. 904. 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 1999, 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. 905. 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 170e.(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. 906. 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. 907. 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. 908. CIVIL PENALTIES.

       (a) Repeal of Automatic Remission.--Section 234A b.(2) of 
     the Atomic Energy 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. 909. EFFECTIVE DATE.

       (a) In General.--The amendments made by this title shall 
     become effective on the date of the enactment of this title.
       (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 
     title.
       (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 title.

     DIVISION C--DOMESTIC OIL AND GAS PRODUCTION AND TRANSPORTATION

TITLE X--OIL AND GAS PRODUCTION SEC. 1001. OUTER CONTINENTAL SHELF OIL 
                        AND GAS LEASE SALE 181.

       (a) Requirement.--Subject to applicable laws and 
     regulations, not later than December 31, 2001, the Secretary 
     of the Interior shall proceed with the proposed Eastern Gulf 
     of Mexico Outer Continental Shelf Oil and Gas Lease Sale 181.
       (b) Modification.--In carrying out the sale under 
     subsection (a), the Secretary of the Interior shall modify 
     the lease area by excluding the 120 blocks in a narrow strip 
     beginning 15 miles from the coast of Alabama. The Secretary 
     shall include the 913 blocks in the area that is greater than 
     100 miles from the coast of Florida in Lease Sale 181.

     SEC. 1002. FEDERAL ONSHORE LEASING PROGRAMS FOR OIL AND GAS.

       Consistent with applicable law and regulations, there are 
     authorized to be appropriated to the Secretary of the 
     Interior and the Secretary of Agriculture such sums as may be 
     necessary, including salary expenses to hire additional 
     personnel, to ensure expeditious compliance with National 
     Environmental Policy Act requirements applicable to oil and 
     gas production on public lands and national forest system 
     lands.

     SEC. 1003. INCREASING PRODUCTION ON STATE AND PRIVATE LANDS.

       (a) Study.--The Secretary of Energy, in close coordination 
     with the Interstate Oil and Gas Compact Commission, shall 
     conduct a study to evaluate the opportunities for increasing 
     oil and natural gas production from State and privately 
     controlled lands in the United States. The study shall take 
     into account trends in land use and development that may 
     affect oil and gas development, the various leasing practices 
     and rules for development among the States, and differences 
     in contract terms from State to State and among private 
     landowners. The evaluation should also include an assessment 
     of whether optimal recovery practices, including in-fill 
     drilling, work-overs, and enhanced recovery

[[Page S2766]]

     operations, are being employed consistently to ensure the 
     full development and conservation of the resources. The 
     evaluation should determine what impediments may exist to 
     ensuring optimal recovery practices and make recommendations 
     as to how those impediments could be overcome. The study 
     should also determine whether production rights or leases are 
     controlled by parties no longer interested in fully 
     recovering the resource, with inactivity for a period of 
     time being considered as indicating a lack of interest.
       (b) Report to Congress and Governors.--Not later than 240 
     days after the date of enactment of this section, the 
     Secretary shall provide a report to the Committee on Energy 
     and Natural Resources in the Senate, and the Committee on 
     Resources in the House of Representatives, summarizing the 
     findings of the study carried out under subsection (a) and 
     providing recommendations for policies or other actions that 
     could help increase production on State and private lands. 
     The Secretary shall also provide a copy of the report to the 
     Governors of the Member States of the Interstate Oil and 
     Compact Commission.

           TITLE XI--PIPELINE SAFETY RESEARCH AND DEVELOPMENT

     SEC. 1101. PIPELINE INTEGRITY 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 title, 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) Points of Contact.--
       (1) Designation.--To coordinate and implement the research 
     and development programs and activities authorized under this 
     title--
       (A) the Secretary of Transportation shall designate, as the 
     point of contact for the Department of Transportation, an 
     officer of the Department of Transportation who has been 
     appointed by the President and confirmed by the Senate; and
       (B) the Secretary of Energy shall designate, as the point 
     of contact for the Department of Energy, an officer of the 
     Department of Energy who has been appointed by the President 
     and confirmed by the Senate.
       (2) Duties.--(A) The point of contact for the Department of 
     Transportation shall have the primary responsibility for 
     coordinating and overseeing the implementation of the 
     research, development, and demonstration program plan, as 
     defined in subsections (e) and (f).
       (B) The points of contact shall jointly assist in arranging 
     cooperative agreements for research, development, and 
     demonstration involving their respective Departments, 
     national laboratories, universities, and industry research 
     organizations.
       (e) Research and Development Program Plan.--Within 240 days 
     after the date of enactment of this Act, 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 5-year program 
     plan to guide activities under this Act. In preparing the 
     program plan, the Secretary of Transportation shall consult 
     with 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.
       (f) Implementation.--The Secretary of Transportation shall 
     have primary responsibility for ensuring the five-year plan 
     provided for in subsection (e) is implemented as intended by 
     this Act. In carrying out the research, development, and 
     demonstration activities under this Act, 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.
       (g) 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 Department of Transportation, the 
     Department of Energy, the national laboratories, 
     universities, and any other research organizations, including 
     industry research organizations.

     SEC. 1102. PIPELINE INTEGRITY TECHNICAL ADVISORY COMMITTEE.

       (a) 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 
     section 1101(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 title.
       (b) 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.

     SEC. 1103. AUTHORIZATION OF APPROPRIATIONS.

       (a) There are authorized to be appropriated to the 
     Secretary of Transportation for carrying out this title 
     $3,000,000, which is to be derived from user fees (49 U.S.C. 
     Sec. 60125), for each of the fiscal years 2002 through 2006.
       (b) Of the amounts available in the Oil Spill Liability 
     Trust Fund (26 U.S.C. Sec. 9509), $3,000,000 shall be 
     transferred to the Secretary of Transportation to carry out 
     programs for detection, prevention, and mitigation of oil 
     spills authorized in this title for each of the fiscal years 
     2002 through 2006.
       (c) There are authorized to be appropriated to the 
     Secretary of Energy for carrying out this title such sums as 
     may be necessary for each of the fiscal years 2002 through 
     2006.

    DIVISION D--DIVERSIFYING ENERGY DEMAND AND IMPROVING EFFICIENCY

                          TITLE XII--VEHICLES

     SEC. 1201. VEHICLE FUEL EFFICIENCY.

       (a) Requirement.--The Secretary of Transportation, in 
     consultation with the Secretary of Energy and the 
     Administrator of the Environmental Protection Agency, shall 
     develop and implement mechanisms to increase fuel efficiency 
     of light-duty vehicles to limit total demand for petroleum 
     products by light-duty vehicles in the year 2008 and 
     thereafter to no more than 105 percent of the consumption by 
     such vehicles in the year 2000.
       (b) Negotiations.--Upon completion of the study of the 
     National Academy of Sciences on the effectiveness and impact 
     of corporate average fuel economy standards, and taking into 
     account its findings, the Secretary of Transportation, in 
     coordination with the Secretary of Energy and the 
     Administrator of the Environmental Protection Agency, shall 
     negotiate with the manufacturers of automobiles sold in the 
     United States enforceable mechanisms to increase vehicle 
     efficiency or provide vehicle alternatives to

[[Page S2767]]

     meet the petroleum demand target in subsection (a) while 
     ensuring consumers reliable and affordable transportation 
     services.
       (c) Rules.--Upon completion of the negotiations under 
     subsection (b) and, in any event, not later than 18 months 
     after the date of enactment of this section, the Secretary of 
     Transportation shall establish, by rule--
       (1) the enforceable mechanisms agreed to under subsection 
     (b); or
       (2) if enforceable mechanism cannot be agreed on under 
     subsection (b), specific fuel economy regulations to meet the 
     petroleum demand targets under subsection (a).
       (c) Analyses and Reports to Congress.--The Department of 
     Energy shall assist the Secretary of Transportation by 
     carrying out analyses of recommended policies or combinations 
     of policies to determine if the petroleum demand target in 
     subsection (a) is likely to be met. Once enforceable 
     mechanisms are adopted under subsection (b), the Secretary of 
     Energy shall track progress towards meeting the petroleum 
     demand target and shall report to Congress three years after 
     the date of enactment of this section, and every two years 
     thereafter until the year 2008, on the Secretary of Energy's 
     determination as to whether the mechanisms are effectively 
     meeting the petroleum demand target. If the Secretary of 
     Energy determines that the mechanisms are not effectively 
     meeting the target, then the Secretary shall recommend in the 
     report to Congress on further policies that may be required 
     to meet the target.
       (d) Definitions--.In this section:
       (1) Light-duty vehicles.--.The term ``light duty vehicles'' 
     includes passenger automobiles, in addition to all light 
     trucks and sport utility vehicles marketed as passenger 
     vehicles, regardless of weight.
       (2) Mechanisms.--The term ``mechanisms'' includes stronger 
     standards for corporate average fuel economy, alternatives to 
     the current fuel economy standards such as combining cars and 
     light trucks for the purpose of fuel economy regulation, 
     specific fuel efficiency standards by vehicle class, tax 
     incentives for highly efficient or alternative fuel vehicles, 
     updating and expanding the scope of the current gas guzzler 
     tax program, and new programs to promote the purchase of high 
     efficiency and alternative fuel vehicles or early retirement 
     of inefficient vehicles.

     SEC. 1202. INCREASED USE OF ALTERNATIVE FUELS BY FEDERAL 
                   FLEETS.

       (a) Requirement To Use Alternative Fuels.--Section 
     400AA(a)(3)(E) of the Energy Policy and Conservation Act (42 
     U.S.C. 6374(a)(3)(E)) is amended to read as follows:
       ``Dual fueled vehicles acquired pursuant to this section 
     shall be operated on alternative fuels. If the Secretary 
     determines that all dual fueled vehicles acquired pursuant to 
     this section cannot operate on alternative fuels at all 
     times, he may waive the requirement in part, but only to the 
     extent that:
       ``(i) not later than September 30, 2003, not less than 50 
     percent of the total annual volume of fuel used in such dual 
     fueled vehicles shall be from alternative fuels; and
       ``(ii) not later than September 30, 2005, not less than 75 
     percent of the total annual volume of fuel used in such dual 
     fueled vehicles shall be from alternative fuels.''.
       (b) Section 400AA(g)(4)(B) of the Energy Policy and 
     Conservation Act (42 U.S.C. 6374(g)(4)(B)) is amended by 
     adding, after the words, ``solely on alternative fuel'', ``, 
     including a three-wheeled enclosed electric vehicle having a 
     vehicle identification number''.

     SEC. 1203. EXCEPTION TO HOV PASSENGER REQUIREMENTS FOR 
                   ALTERNATIVE FUEL VEHICLES.

       Section 102(a)(1) of title 23, United States Code, is 
     amended by inserting after ``required' the following: 
     ``(unless, in the discretion of the State transportation 
     department, the vehicle is being operated on, or is being 
     fueled by, an alternative fuel (as defined in section 301(2) 
     of the Energy Policy Act of 1992 (42 U.S.C. 13211(2)))''.

                         TITLE XIII--FACILITIES

     SEC. 1301. FEDERAL ENERGY BANK.

       (a) Definitions.--In this section:
       (1) Agency.--The term ``agency'' means--
       (A) an Executive agency (as defined in section 105 of title 
     5, United States Code, except that the term also includes the 
     United States Postal Service);
       (B) Congress and any other entity in the legislative 
     branch; and
       (C) a court and any other entity in the judicial branch.
       (2) Bank.--The term ``Bank'' means the Federal Energy Bank 
     established by subsection (b).
       (3) Energy efficiency project.--The term ``energy 
     efficiency project'' means a project that assists an agency 
     in meeting or exceeding the energy efficiency goals stated 
     in--
       (A) part 3 of title V of the National Energy Conservation 
     Policy Act (42 U.S.C. 8251 et seq.);
       (B) subtitle F of title I of the Energy Policy Act of 1992; 
     and
       (C) applicable Executive orders, including Executive Order 
     Nos. 12759 and 12902.
       (4) Secretary.--The term ``Secretary'' means the Secretary 
     of Energy.
       (5) Total utility payments.--The term ``total utility 
     payments'' means payments made to supply electricity, natural 
     gas, and any other form of energy to provide the heating, 
     ventilation, and air conditioning, lighting, and other energy 
     needs of an agency facility.
       (b) Establishment of Bank.--
       (1) In general.--There is established in the Treasury of 
     the United States a trust fund to be known as the ``Federal 
     Energy Bank'', consisting of--
       (A) such amounts as are appropriated to the Bank under 
     subsection (f);
       (B) such amounts as are transferred to the Bank under 
     paragraph (2);
       (C) such amounts as are repaid to the Bank under subsection 
     (c)(2)(D); and
       (D) any interest earned on investment of amounts in the 
     Bank under paragraph (3).
       (2) Transfers to bank.--
       (A) In general.--At the beginning of each of fiscal years 
     2002, 2003, and 2004, each agency shall transfer to the 
     Secretary of the Treasury, for deposit in the Bank, an amount 
     equal to 5 percent of the total utility payments paid by the 
     agency in the preceding fiscal year.
       (B) Utilities paid for as part of rental payments.--The 
     Secretary shall by regulation establish a formula by which 
     the appropriate portion of a rental payment that covers the 
     cost of utilities shall be considered to be a utility payment 
     for the purposes of subparagraph (A).
       (3) Investment of funds.--The Secretary of the Treasury 
     shall invest such portion of funds in the Bank as is not, in 
     the Secretary's judgment, required to meet current 
     withdrawals. Investments may be made only in interest-bearing 
     obligations of the United States.
       (c) Loans From the Bank.--
       (1) In general.--The Secretary of the Treasury shall 
     transfer from the Bank to the Secretary such amounts as are 
     appropriated to carry out the loan program under paragraph 
     (2).
       (2) Loan program.--
       (A) In general.--In accordance with subsection (d), the 
     Secretary shall establish a program to loan amounts from the 
     Bank to any agency that submits an application satisfactory 
     to the Secretary in order to finance an energy efficiency 
     project.
       (B) Performance contracting funding.--To the extent 
     practicable, an agency shall not submit a project for which 
     performance contracting funding is available.
       (C) Purposes of loan.--
       (i) In general.--A loan under this section may be made to 
     pay the costs of--
       (I) an energy efficiency project; or
       (II) development and administration of a performance 
     contract.
       (ii) Limitation.--An agency may use not more than 15 
     percent of the amount of a loan under clause (i)(I) to pay 
     the costs of administration and proposal development 
     (including data collection and energy surveys).
       (D) Repayments.--
       (i) In general.--An agency shall repay to the Bank the 
     principal amount of the energy efficiency project loan plus 
     interest at a rate determined by the President, in 
     consultation with the Secretary and the Secretary of the 
     Treasury.
       (ii) Waiver.--The Secretary may waive the requirement of 
     clause (i) if the Secretary determines that payment of 
     interest by an agency is not required to sustain the needs of 
     the Bank in making energy efficiency project loans.
       (E) Agency energy budgets.--Until a loan is repaid, an 
     agency budget submitted to Congress for a fiscal year shall 
     not be reduced by the value of energy savings accrued as a 
     result of the energy conservation measure implemented with 
     funds from the Bank.
       (F) Availability of funds.--An agency shall not rescind or 
     reprogram funds made available by this Act. Funds loaned to 
     an agency shall be retained by the agency until expended, 
     without regard to fiscal year limitation.
       (d) Selection Criteria.--
       (1) In general.--The Secretary shall establish criteria for 
     the selection of energy efficiency projects to be awarded 
     loans in accordance with paragraph (2).
       (2) Selection criteria.--The Secretary may make loans only 
     for energy efficiency projects that--
       (A) are technically feasible;
       (B) are determined to be cost-effective using life cycle 
     cost methods established by the Secretary by regulation;
       (C) include a measurement and management component to--
       (i) commission energy savings for new Federal facilities; 
     and
       (ii) monitor and improve energy efficiency management at 
     existing Federal facilities; and
       (D) have a project payback period of 7 years or less.
       (e) Reports and Audits.--
       (1) Reports to the secretary.--Not later than I year after 
     the installation of an energy efficiency project that has a 
     total cost of more than $1,000,000, and each year thereafter, 
     an agency shall submit to the Secretary a report that--
       (A) states whether the project meets or fails to meet the 
     energy savings projections for the project; and
       (B) for each project that fails to meet the savings 
     projections, states the reasons for the failure and describes 
     proposed remedies.
       (2) Audits.--The Secretary may audit any energy efficiency 
     project financed with funding from the Bank to assess the 
     project's performance.
       (3) Reports to congress.--At the end of each fiscal year, 
     the Secretary shall submit to Congress a report on the 
     operations of the Bank, including a statement of the total 
     receipts into the Bank, and the total expenditures from the 
     Bank to each agency.
       (f) Authorization of Appropriations.--There are authorized 
     to be appropriated such

[[Page S2768]]

     sums as are necessary to carry out this section.

     SEC. 1302. INCENTIVES FOR ENERGY EFFICIENT SCHOOLS.

       (a) Establishment.--There is established in the Department 
     of Education the High Performance Schools Program (hereafter 
     in this section referred to as the ``Program'').
       (b) Grants.--The Secretary of Education may make grants to 
     State educational agencies--
       (1) to assist schools in achieving energy efficiency 
     performance not less than 30 percent below the least 
     efficient levels, as measured over the full fuel cycle, 
     permitted under the 1998 International Energy Conservation 
     Code as it is in effect for new construction and existing 
     buildings;
       (2) to administer the Program; and
       (3) to promote participation in the Program.
       (c) Grants to Assist School Districts.--Grants under 
     subsection (b)(1) shall be used for schools that--
       (1) have 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) have demonstrated that the districts do not have 
     adequate funds to respond appropriately to such enrollments 
     or achieve such investments without assistance;
       (3) have made a commitment to use the grant funds to 
     develop high performance school buildings in accordance with 
     a plan that the State educational agency, in consultation 
     with the State energy office, has determined is feasible and 
     appropriate to achieve the purposes for which the grant is 
     made.
       (d) Grants for Adminstration.--Grants under subsection 
     (b)(2) shall be used to--
       (A) evaluate compliance by schools with requirements of 
     this section;
       (B) distribute information and materials to clearly define 
     and promote the development of high performance school 
     buildings for both new and existing facilities;
       (C) organize and conduct programs for school board members, 
     school personnel, architects, engineers, and others to 
     advance the concepts of high performance school buildings;
       (D) obtain technical services and assistance in planning 
     and designing high performance school buildings; or
       (E) collect and monitor data and information pertaining to 
     the high performance school building projects.
       (e) Grants To Promote Participation.--Grants under 
     subsection (b)(3) shall 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.
       (f) Supplementing Grant Funds.--The State educational 
     agency shall encourage qualifying schools to supplement funds 
     awarded pursuant to this section with funds from other 
     sources in the implementation of their plans.
       (g) Purposes.--Except as provided in subsection (h), funds 
     appropriated to carry out this section shall be allocated as 
     follows:
       (1) 70 percent shall be used to make grants under 
     subsection (b)(1).
       (2) 15 percent shall be used to make grants under 
     subsection (b)(2).
       (3) 15 percent shall be used to make grants under 
     subsection (b)(3).
       (h) Other Funds.--The Secretary of Education may retain an 
     amount, not to exceed $300,000 per year, to assist State 
     educational agencies designated in coordinating and 
     implementing the Program. Such funds may be used to develop 
     reference materials to further define the principles and 
     criteria to achieve high performance school buildings.
       (i) Authorization of Appropriations.--For grants under 
     subsection (b) there are authorized to be appropriated--
       (1) $200,000,000 for fiscal year 2002,
       (2) $210,000,000 for fiscal year 2003,
       (3) $220,000,000 for fiscal year 2004,
       (4) $230,000,000 for fiscal year 2005, and
       (5) such sums as may be necessary for each of the 
     subsequent 6 fiscal years.
       (j) Definitions.--For purposes of this section:
       (1) High performance school building.--The term ``high 
     performance school building'' refers to a school building 
     that, in its design, construction, operation, and 
     maintenance, maximizes use of renewable energy, direct use of 
     environmentally clean fossil fuels for supplementary space 
     conditioning and water heating and energy conservation 
     practices, represents the most cost-effective alternatives on 
     a life-cycle basis considering energy price forecasts from 
     the U. S. Energy Information Administration, uses affordable, 
     environmentally preferable, durable materials, enhances 
     indoor environmental quality, protects and conserves water, 
     and optimizes site potential.
       (2) Renewable energy.--The term ``renewable energy'' means 
     energy produced by solar, wind, geothermal, hydropower, and 
     biomass power.
       (3) School.--The term ``school'' means--
       (A) an ``elementary school'' as that term is defined in 
     section 14101(14) of the Elementary and Secondary Education 
     Act of 1965 (20 U.S.C. 8801(14)),
       (B) a ``secondary school'' as that term is defined in 
     section 14101(25) of the Elementary and Secondary Education 
     Act of 1965 (20 U.S.C. 8801(25)), or
       (C) an elementary of secondary Indian school funded by the 
     Bureau of Indian Affairs.
       (4) State educational agency.--The term ``State educational 
     agency'' has the same meaning given such term in section 
     14101(28) of the Elementary and Secondary Education Act of 
     1965 (20 U.S.C. 8801(28)).

     SEC. 1303. VOLUNTARY COMMITMENTS TO REDUCE INDUSTRIAL ENERGY 
                   INTENSITY.

       (a) Voluntary Agreements.--The Secretary of Energy shall 
     enter into voluntary agreements with one or more persons in 
     industrial sectors that consume significant amounts of 
     primary energy per unit of physical output to reduce the 
     energy intensity of their production activities.
       (b) Goal.--Voluntary agreements under this section shall 
     have a goal of reducing energy intensity by not less than 1 
     percent each year from 2002 through 2012.
       (c) Recognition.--The Secretary of Energy, in cooperation 
     with other appropriate federal agencies, shall develop 
     mechanisms to recognize and publicize the commitments made by 
     participants in voluntary agreements under this section.
       (d) Definition.--In this section, the term ``energy 
     intensity'' means the primary energy consumed per unit of 
     physical output in an industrial process.

       DIVISION E--ENHANCING RESEARCH, DEVELOPMENT, AND TRAINING

              TITLE XIV--RESEARCH AND DEVELOPMENT PROGRAMS

     SEC. 1401. SHORT TITLE AND FINDINGS.

       (a) Short Title.--This title may be cited as ``Energy 
     Science and Technology Enhancement Act''.
       (b) Findings.--
       (1) A coherent strategy for ensuring a diverse national 
     energy supply requires an energy research and development 
     program that supports basic energy research and provides 
     mechanisms to develop, demonstrate, and deploy new energy 
     technologies in partnership with industry.
       (2) Federal budget authority for energy research and 
     development, measured in constant 1992 dollars, has declined 
     roughly three-fourths from about $6 billion in 1980 to $1.5 
     billion in 2000.
       (3) According to the Energy Information Administration, an 
     aggressive national energy research, development, and 
     technology deployment program can--
       (A) result in United States energy intensity declines of 
     1.9 percent per year from 1999 to 2020;
       (B) reduce United States energy consumption in 2020 by 8 
     quadrillion Btu from otherwise expected levels; and
       (C) reduce carbon dioxide emissions from expected levels of 
     166 million metric tons in carbon equivalent in 2020.
       (4) An aggressive national energy research, development, 
     and technology deployment program can also help maintain 
     domestic United States production of energy. As one example, 
     such a program could increase the success rates of finding 
     and drilling for oil and natural gas, and thereby increase 
     United States hydrocarbon reserves in 2020 by 14 percent over 
     otherwise expected levels, and contributing to natural gas 
     prices in 2020 that would be 20 percent lower than otherwise 
     expected.
       (5) An aggressive national energy research, development, 
     and technology deployment program is needed if United States 
     suppliers and manufacturers are to compete in future 
     markets for advanced energy technologies. Vehicles based 
     on advanced energy technologies in automotive applications 
     could account, for example, for nearly 17 percent of all 
     light-duty vehicle sales by 2020 displacing 203,000 oil 
     barrels a day equivalent.
       (6) To achieve these results across a broad range of 
     sources of energy supply and energy end-uses, a comprehensive 
     and balanced energy research, development, and technology 
     deployment program must be supported by the Department of 
     Energy.

     SEC. 1402. ENHANCED ENERGY EFFICIENCY RESEARCH AND 
                   DEVELOPMENT.

       (a) Goals.--It is the sense of Congress that a balanced 
     energy research, development, and deployment program to 
     enhance energy efficiency should have the following goals:
       (1) For energy efficiency in housing, the program develop 
     technologies, housing components, designs and production 
     methods that will, by 2010--
       (A) reduce the time needed to move technologies to market 
     by 50 percent,
       (B) reduce the monthly cost of new housing by 20 percent,
       (C) cut the environmental impact and energy use of new 
     housing by 50 percent, and
       (D) reduce energy use in 15 million existing homes by 30 
     percent, and
       (E) improve durability and reduce maintenance costs by 50 
     percent.
       (2) For industrial energy efficiency, the program should, 
     in cooperation with the affected industries--
       (A) develop a microturbine (40 to 300 kilowatt) that is 
     more than 40 percent efficient by 2006,
       (B) develop a microturbine that is more than 50 percent 
     efficient by 2010,
       (C) develop advanced materials for combustion systems that 
     reduce emissions of nitrogen oxides by 30 to 50 percent while 
     increasing efficiency 5 to 10 percent by 2007, and
       (D) improve the energy intensity of the major energy-
     consuming industries by at least 25 percent by 2010.
       (3) For transportation energy efficiency, the program 
     should, in cooperation with affected industries--

[[Page S2769]]

       (A) develop an 80-mile-per-gallon production prototype 
     passenger automobile by 2004,
       (B) develop a heavy truck (Classes 7 and 8) with ultra low 
     emissions and the ability to use an alternative fuel that has 
     an average fuel economy of--
       (i) 10 miles per gallon by 2007, and
       (ii) 13 miles per gallon by 2010,
       (C) develop a production prototype of a passenger 
     automobile with zero equivalent emissions that has an average 
     fuel economy of 100 miles per gallon by 2010, and
       (D) improve, by 2010, the average fuel economy of trucks--
       (i) in Classes 1 and 2 by 300 percent, and
       (ii) in Classes 3 through 6 by 200 percent.
       (b) Definition.--For purposes of subsection (a)(2), the 
     term ``major energy consuming industries'' means--
       (1) the forest product industry,
       (2) the steel industry,
       (3) the aluminum industry,
       (4) the metal casting industry,
       (5) the chemical industry,
       (6) the petroleum refining industry, and
       (7) the glass-making industry.
       (c) Authorization of Appropriations.--There are authorized 
     to be appropriated to the Secretary of Energy for operating 
     expenses and capital equipment for research, development, 
     demonstration, and initial deployment assistance activities 
     related to energy efficiency research and development 
     including state and local grants and the federal energy 
     management program--
       (1) $879,000,000 for fiscal year 2002;
       (2) $948,000,000 for fiscal year 2003;
       (3) $1,024,000,000 for fiscal year 2004;
       (4) $1,106,000,000 for fiscal year 2005; and
       (5) $1,195,000,000 for fiscal year 2006.
       (d) Special Projects in Energy-Efficient Transmission.--
     From amounts authorized under this section, the Secretary of 
     Energy shall make not more than 3 awards for projects 
     demonstrating the use of advanced technology--
       (1) to construct a bulk electricity transmission line of 
     not less than 35 miles based on wire fabricated from 
     superconducting materials; and
       (2) to provide a 20 percent increase in the average 
     efficiency in electricity transmission systems in rural and 
     remote areas.

     SEC. 1403. ENHANCED RENEWABLE ENERGY RESEARCH AND 
                   DEVELOPMENT.

       (a) Goals.--It is the sense of Congress that a balanced 
     energy research, development, and deployment program to 
     enhance renewable energy should have the following goals.
       (1) For wind power, the program should reduce the cost of 
     wind electricity by 50 percent by 2006, so that wind power 
     can be widely competitive with fossil-fuel-based electricity 
     in a restructured electric industry, with concentration 
     within the program on a variety of advanced wind turbine 
     concepts and manufacturing technologies.
       (2) For photovoltaics, the programs should pursue research 
     and development that would lead to photovoltaic systems 
     prices of $3,000 per kilowatt in 2003 and $1500 per kilowatt 
     by 2006. Program activities should include assisting industry 
     in developing manufacturing technologies, giving greater 
     attention to balance of system issues, and expanding 
     fundamental research on relevant advanced materials.
       (3) For solar thermal electric systems the program should 
     strengthen ongoing research and development combining high-
     efficiency and high-temperature receivers with advanced 
     thermal storage and power cycles, with the goal of making 
     solar-only power (including baseload solar power) widely 
     competitive with fossil fuel power by 2015.
       (4) For biomass-based power systems, the program should 
     enable commercialization, within five years, integrated 
     power-generating technologies that employ gas turbines and 
     fuel cells integrated with biomass gasifiers. The program 
     should embrace an interagency bioenergy framework to triple 
     United States bioenergy use by 2010.
       (5) For geothermal energy, the programs should continue 
     work on hydrothermal systems, and reactivate research and 
     development on advanced concepts, giving top priority to 
     high-grade hot dry-rock geothermal energy. This technology 
     offers the long-term potential, with advanced drilling and 
     reservoir exploitation technology, of providing heat and 
     baseload electricity in most areas of the United States.
       (6) For biofuels, the program should accelerate research 
     and development on advanced enzymatic hydrolysis technology 
     for making ethanol from cellulosic feedstock, with the goal 
     that between 2010 and 2015 ethanol produced from energy crops 
     would be fully competitive in terms of price with gasoline as 
     a neat fuel, in either internal combustion engine or fuel 
     cell vehicles. The programs should coordinate this 
     development with the biopower program so as to co-optimize 
     the production of ethanol from the carbohydrate fractions of 
     the biomass and electricity from the lighting using advanced 
     biopower technology using a suite of integrated systems from 
     gas turbines to fuel cells.
       (7) For hydrogen-based energy systems, the program should 
     support research and development on hydrogen-using and 
     hydrogen-producing technologies. The programs should also 
     coordinate hydrogen-using technology development with proton-
     exchange-membrane fuel-cell vehicle development activities 
     under the enhanced energy efficiency program in section 1002.
       (8) For hydropower, the program should provide a new 
     generation of turbine technologies that are less damaging to 
     fish and aquatic ecosystems. By deploying such technologies 
     at existing dams and in new low-head, run-of-river 
     applications, as much as an additional 50,000 MW could be 
     possible by 2020.
       (9) For electric energy and storage, the program should 
     develop a high capacity superconducting transmission lines, 
     generators, and develop distributed generating systems to 
     accommodate multiple types of energy sources under a common 
     interconnect standard.
       (b) Authorization of Appropriations.--There are authorized 
     to be appropriated to the Secretary of Energy for operating 
     expenses and capital equipment for research, development, 
     demonstration, and initial deployment assistance activities 
     related to solar and renewable resources technologies, under 
     the Office of Energy Efficiency and Renewable Energy, as 
     follows:
       (1) $419,500,000 for fiscal year 2002;
       (2) $468,000,000 for fiscal year 2003;
       (3) $523,000,000 for fiscal year 2004;
       (4) $583,000,000 for fiscal year 2005; and
       (5) $652,000,000 for fiscal year 2006.
       (d) Special Projects in Renewable Energy.--From amounts 
     authorized under this section, the Secretary of Energy shall 
     make not more than 3 awards for projects demonstrating the 
     use of advanced wind energy technology to assist in 
     delivering electricity in rural and remote locations. The 
     Secretary may provide financial assistance to rural electric 
     cooperatives and other rural entities seeking to submit 
     proposals for such projects.

     SEC. 1404. ENHANCED FOSSIL ENERGY RESEARCH AND DEVELOPMENT.

       (a) Goals.--It is the sense of Congress that a balanced 
     energy research, development, and deployment program to 
     enhance renewable energy should have the following goals:
       (1) For core fossil energy research and development, the 
     program should achieve the goals outlined by the Department 
     of Energy's Vision 21 program for fossil energy research. 
     This research should aim towards increased efficiency of the 
     combined cycle using high temperature fuel cells, advanced 
     gasification technologies for coal and biomass to produce 
     power and clean fuels. The program should include a carbon 
     dioxide based sequestration program to help reduce global 
     warming.
       (2) For offshore oil and natural gas resources, the program 
     should investigate and develop technologies to--
       (A) extract methane hydrates in coastal waters of the 
     United States, and
       (B) develop natural gas and oil reserves in the ultra-
     deepwater of the Central and Western Gulf of Mexico. Research 
     and development on ultra-deepwater resource recovery shall 
     focus on improving the safety and efficiency of such recovery 
     and of sub-sea production technology used for such recovery, 
     while lowering costs.
       (3) For transportation fuels, the program should support a 
     comprehensive transportation fuels strategy to increase the 
     price elasticity of oil supply and demand by focusing 
     research on reducing the cost of producing transportation 
     fuels from natural gas and indirect liquefaction of coal and 
     biomass.
       (b) Study.--The Secretary of Energy, in consultation with 
     the Secretary of the Interior, the Administrator of the 
     Environmental Protection Agency and affected industries 
     (including electric utilities, electrical equipment 
     manufacturers, and organizations representing electrical 
     workers) should conduct a study to identify technologies and 
     a research program that would permit the cost-competitive use 
     of coal for electricity generation through 2020 while 
     furthering national environmental goals.
       (c) Authorization of Appropriations.--In addition to the 
     amounts authorized under section 814 of this Act, there are 
     authorized to be appropriated to the Secretary of Energy for 
     operating expenses and capital equipment for research, 
     development, demonstration, and initial deployment assistance 
     activities related to fossil energy resources technologies, 
     under the Office of Fossil Energy, including the clean coal 
     technology demonstration program:
       (1) $462,500,000 for fiscal year 2002;
       (2) $485,000,000 for fiscal year 2003;
       (3) $508,000,000 for fiscal year 2004;
       (4) $532,000,000 for fiscal year 2005; and
       (5) $558,000,000 for fiscal year 2006.

     SEC. 1405. ENHANCED NUCLEAR ENERGY RESEARCH AND DEVELOPMENT.

       (a) Goals.--It is the sense of Congress that a balanced 
     energy research, development, and deployment program to 
     enhance renewable energy should have the following goals:
       (1) The program should support research related to existing 
     United States nuclear power reactors to extend their 
     lifetimes and increase their reliability while optimizing 
     their current operations for greater efficiencies.
       (2) The program should address examine advanced 
     proliferation-resistant reactor designs, proliferation-
     resistant and high burn-up nuclear fuels, minimization of 
     generation of radioactive materials, improved nuclear waste 
     management technologies, and improved instrumentation 
     science.
       (3) The program should attract new students and faculty to 
     the nuclear sciences and nuclear engineering through a 
     university-based fundamental research program for existing 
     faculty and new junior faculty, a program to re-license 
     existing training reactors at universities in conjunction 
     with industry, and a program to complete the conversion 
     of existing training reactors with proliferation resistant 
     fuels that are low enriched and to

[[Page S2770]]

     adapt those reactors to new investigative uses.
       (4) The program should maintain a national capability and 
     infrastructure to produce medical isotopes and ensure a well 
     trained cadre of nuclear medicine specialists in partnership 
     with industry.
       (5) The program should ensure that our nation has adequate 
     capability for power future satellite and space missions.
       (6) The programs should investigate the fundamental and 
     applied sciences associated with high- and low-energy 
     accelerators as a method to transmute nuclear waste, 
     particularly wastes that may be difficult to dispose of by 
     other methods.
       (7) The program should maintain, where appropriate through 
     a prioritization process, a balanced research infrastructure 
     so that future research programs can utilize these 
     facilities.
       (b) Authorization of Appropriations.--There are authorized 
     to be appropriated to the Secretary of Energy for operating 
     expenses and capital equipment for research, development, 
     demonstration, and initial deployment assistance activities 
     related to nuclear energy research and development:
       (1) $433,000,000 for fiscal year 2002;
       (2) $461,000,000 for fiscal year 2003;
       (3) $491,000,000 for fiscal year 2004;
       (4) $523,000,000 for fiscal year 2005; and
       (5) $557,000,000 for fiscal year 2006.

     SEC. 1406. ENHANCED PROGRAMS IN FUNDAMENTAL ENERGY SCIENCE.

       (a) Findings.--The Congress finds the following:
       (1) The Office of Science within the Department of Energy 
     is the nation's single largest funding source for the basic 
     physical sciences. These intellectual disciplines, which 
     include physics, chemistry, and materials science, are 
     crucial to the nation's future ability to develop energy 
     technologies. The United States should be the world leader in 
     these areas.
       (2) Despite the importance of the physical sciences, the 
     Office of Science budget has remained stagnant over the past 
     decade.
       (3) The stagnation in funding for the physical sciences 
     through the Office of Science has been reflected in a decline 
     in United States contributions to leading scientific 
     journals, as the share of European and Asian submissions to 
     these journals since 1990 has increased from 50 to 75 percent 
     while the United States share has decreased to 25 percent.
       (b) Goals.--It is the sense of Congress that the Department 
     of Energy, through the Office of Science, should--
       (1) develop a robust portfolio of fundamental energy 
     research, including chemical sciences, physics, materials 
     sciences, biological and environmental sciences, geosciences, 
     engineering sciences, plasma sciences, mathematics, and 
     advanced scientific computing;
       (2) maintain, upgrade and expand the scientific user 
     facilities maintained by the Office of Science and insure 
     that they are an integral part of the Department's mission 
     for exploring the frontiers of fundamental energy sciences;
       (3) maintain a leading-edge research capability in the 
     energy-related aspects of nanoscience and nanotechnology, 
     advanced scientific computing and genome research; and
       (4) ensure that its fundamental energy sciences programs, 
     where appropriate, help inform the applied research and 
     development programs of the Department.
       (b) Authorization of Appropriations.--There are authorized 
     to be appropriated to the Secretary of Energy for operating 
     expenses and capital equipment for fundamental energy 
     research and development in the Office of Science--
       (1) $3,716,000,000 for fiscal year 2002;
       (2) $4,087,000,000 for fiscal year 2003;
       (3) $4,496,000,000 for fiscal year 2004;
       (4) $4,946,000,000 for fiscal year 2005; and
       (5) $5,440,000,000 for fiscal year 2006.
       TITLE XV--MANAGEMENT OF DOE SCIENCE AND TECHNOLOGY PROGRAMS

     SEC. 1501. MERIT REVIEW.

       Awards of funds authorized under title XIV shall be made 
     only after independent review of the scientific and technical 
     merit of the proposals therefor has been undertaken by the 
     Department of Energy.

     SEC. 1502. COST SHARING.

       (a) Research and Development.--For research and development 
     projects funded from appropriations authorized under sections 
     1402 through 1405, the Secretary of Energy shall require a 
     commitment from non-Federal sources of at least 20 percent of 
     the cost of the project. The Secretary may reduce or 
     eliminate the non-Federal requirement under this paragraph if 
     the Secretary determines that the research and development is 
     of a basic or fundamental nature.
       (b) Demonstration and Deployment.--For demonstration and 
     deployment activities funded from appropriations authorized 
     under sections 1402 through 1405, the Secretary of Energy 
     shall require a commitment from non-Federal sources of at 
     least 50 percent of the costs of the project directly and 
     specifically related to any demonstration, deployment, or 
     commercial application. The Secretary may reduce or eliminate 
     the non-Federal requirement under this paragraph if the 
     Secretary determines that the reduction is necessary and 
     appropriate considering the technological risks involved in 
     the project and is necessary to meet one or more goals of 
     this title.
       (c) Calculation of Amount.--In calculating the amount of 
     the non-Federal commitment under subsection (a) or (b), the 
     Secretary shall include cash, personnel, services, equipment, 
     and other resources.

     SEC. 1503. IMPROVED COORDINATION AND MANAGEMENT OF SCIENCE 
                   AND TECHNOLOGY.

       (a) National Energy Research and Development Advisory 
     Boards.--
       (1) Establishment.--The Secretary of Energy shall establish 
     an advisory board to oversee Department of Energy research 
     and development programs in each of the following areas--
       (A) energy efficiency;
       (B) renewable energy;
       (C) fossil energy; and
       (D) nuclear energy.

     The Secretary may designate an existing advisory board within 
     the Department to fulfill the responsibilities of an advisory 
     board under this subsection, or may enter into appropriate 
     arrangements with the National Academy of Sciences to 
     establish such an advisory board.
       (2) Utilization of existing committees.--The Secretary of 
     Energy shall continue to use the scientific program advisory 
     committees chartered under the Federal Advisory Committee Act 
     by the Office of Science to oversee research and development 
     programs under that Office.
       (3) Membership.--Each advisory board under this subsection 
     shall consist of experts drawn from industry, academia, 
     federal laboratories, or other research institutions.
       (4) Meetings and purposes.--Each advisory board under this 
     subsection shall meet at least semi-annually to review and 
     advise on the progress made by the respective research, 
     development, and deployment program. The advisory board shall 
     also review the adequacy and relevance of the goals 
     established for each program by Congress and the President, 
     and may otherwise advise on promising future directions in 
     research and development that should be considered by each 
     program.
       (b) Effective Coordination of Department Programs.--Section 
     202(b) of the Department of Energy Organization Act (42 
     U.S.C. 7132(b)) is amended to read as follows:
       ``(b)(1) There shall be in the Department an Under 
     Secretary for Science and Technology, who shall be appointed 
     by the President, by and with the advice and consent of the 
     Senate. The Under Secretary shall be compensated at the rate 
     provided for at level III of the Executive Schedule under 
     section 5314 of title 5, United States Code.
       ``(2) The Under Secretary for Science and Technology shall 
     be appointed from among persons who--
       ``(A) have extensive background in scientific or 
     engineering fields; and
       ``(B) are well qualified to manage the civilian research 
     and development programs of the Department of Energy.
       ``(3) The Under Secretary for Science and Technology 
     shall--
       ``(A) serve as the Science and Technology Advisor to the 
     Secretary;
       ``(B) monitor the Department's research and development 
     programs in order to advise the Secretary with respect to any 
     undesirable duplication or gaps in such programs;
       ``(C) advise the Secretary with respect to the well-being 
     and management of the multipurpose laboratories under the 
     jurisdiction of the Department;
       ``(D) advise the Secretary with respect to education and 
     training activities required for effective short- and long-
     term basic and applied research activities of the Department;
       ``(E) advise the Secretary with respect to grants and other 
     forms of financial assistance required for effective short- 
     and long-term basic and applied research activities of the 
     Department; and
       ``(F) exercise authority and responsibility over the 
     performance of functions under section 203(a)(2), as well as 
     other civilian research and development authorities assigned 
     to the Secretary by statute.
       (c) Transfer of Responsibilities From Office of Science.--
     Section 209 of the Department of Energy Organization Act (41 
     U.S.C. 7139) is amended by--
       (1) striking ``(a)''; and
       (2) striking subsection (b).
       (d) Technical and Conforming Amendments.--
       (1) Section 202 of the Department of Energy Organization 
     Act (42 U.S.C. 7132) is further amended by adding the 
     following at the end:
       ``(c) There shall be in the Department an Under Secretary, 
     who shall be appointed by the President, by and with the 
     advice and consent of the Senate, and who shall perform such 
     functions and duties as the Secretary shall prescribe, 
     consistent with this section. The Under Secretary shall be 
     compensated at the rate provided for level III of the 
     Executive Schedule under section 5314 of title 5, United 
     States Code.
       ``(d) There shall be in the Department a General Counsel, 
     who shall be appointed by the President, by and with the 
     advice and consent of the Senate. The General Counsel shall 
     be compensated at the rate provided for level IV of the 
     Executive Schedule under section 5315 of title 5, United 
     States Code.''.
       (2) Section 5314 of title 5, United States Code is amended 
     by striking ``Under Secretaries of Energy (2)'' and inserting 
     ``Under Secretaries of Energy (3)''.

                   TITLE XVI--PERSONNEL AND TRAINING

     SEC. 1601. WORKFORCE TRENDS AND TRAINEESHIP GRANTS.

       (a) Workforce Trends.--

[[Page S2771]]

       (1) Monitoring.--The Secretary of Energy, acting through 
     the Administrator of the Energy Information Administration, 
     in consultation with the Secretary of Labor, shall monitor 
     trends in the workforce of skilled technical personnel 
     supporting energy technology industries, including renewable 
     energy industries, companies developing and commercializing 
     devices to increase energy efficiency, the oil and gas 
     industry, nuclear power industry, the coal industry, and 
     other industrial sectors as the Secretary of Energy may deem 
     appropriate.
       (2) Annual reports.--The Administrator of the Energy 
     Information Administration shall include statistics on energy 
     industry workforce trends in the annual reports of the Energy 
     Information Administration.
       (3) Special reports.--The Secretary shall report to the 
     appropriate committees of Congress whenever the Secretary 
     determines that significant shortfalls of technical personnel 
     in one or more energy industry segments are forecast or have 
     occurred.
       (b) Traineeship Grants for Technically Skilled Personnel.--
       (1) Grant programs.--The Secretary shall establish grant 
     programs in the appropriate offices of the Department of 
     Energy to enhance training of technically skilled personnel 
     for which a shortfall is determined under subsection (a).
       (2) Eligible institutions.--As determined by the Secretary 
     of Energy to be appropriate to the particular workforce 
     shortfall, the Secretary shall make grants under paragraph 
     (1) to--
       (A) an institution of higher education (within the meaning 
     given that term in section 1201(a) of the Higher Education 
     Act of 1965 (20 U.S.C. 1141(a));
       (B) a postsecondary educational institution providing 
     vocational and technical education (within the meaning given 
     those terms in section 3 of the Carl D. Perkins Vocational 
     and Technical Education Act of 1998 (20 U.S.C. 2302)); or
       (C) appropriate agencies of State, local, or tribal 
     governments.

     SEC. 1602. TRAINING GUIDELINES FOR ELECTRIC ENERGY INDUSTRY 
                   PERSONNEL.

       (a) Model Guidelines.--The Secretary of Energy shall, in 
     cooperation with electric utilities and local distribution 
     companies and recognized representatives of employees of 
     those entities, develop model employee training guidelines to 
     support electric supply system reliability and safety.
       (b) Content of Guidelines.--The guidelines under this 
     section shall include--
       (1) requirements for worker training, competency, and 
     certification, developed using criteria set forth by the 
     Utility Industry Group recognized by the National Skill 
     Standards Board; and
       (2) consolidation of existing guidelines on the 
     construction, operation, maintenance, and inspection of 
     electric supply generation, transmission and distribution 
     facilities such as those established by the National Electric 
     Safety Code and other industry consensus standards.

                               Exhibit I

             [From the Wall Street Journal, Mar. 21, 2001]

 States Rediscover Energy Policies--Looming Power Crises Spur a Return 
                  to Strategies Fostering Conservation

                           (By Robert Gavin)

       Energy policy is hot.
       Again.
       Spurred by sharply rising prices and California's 
     electricity fiasco, states from coast to coast are dusting 
     off decade-old energy plans and revisiting the policies that 
     sprang from past crises. At least five governors have created 
     task forces to recommend responses to the current crisis 
     while energy legislation of all sorts is pending in nearly 
     every state capital in the nation.
       In the Northeast, where officials fear a hot summer could 
     bring electricity shortages and soaring prices, the New 
     England Governors' Conference has, after four years of 
     dormancy, revived its power-planning arm to coordinate every 
     policy among the six states. And at ground zero, California, 
     lawmakers have filed more than 30 energy-related bills.


                           back to the future

       The policies under consideration should be familiar to 
     anyone who remembers the energy shocks of the 1970s and the 
     high prices of the 1980s--old standbys like tax breaks for 
     new power sources, such as windmills or solar cells; rebates 
     for energy-efficient appliances and renovations; and just 
     plain-old planning ahead. But this time, consumer and 
     environmental activists say, state officials ought to do 
     something different; actually follow the policies they adopt.
       Today's situation might well be far less dire had states 
     stuck with programs adopted in the wake of the earlier energy 
     crises, particularly in energy efficiency. These programs--
     financed by small surcharges on utility bills, administered 
     by utilities and overseen by state regulators--were key 
     components of energy policies in nearly every state. But in 
     the years leading up to the current crisis, spending on state 
     energy-efficiency programs fell by nearly half nationwide--to 
     $912.5 million in 1998 from $1.65 billion in 1993--at a cost 
     of nearly 15,000 megawatts in power savings, according to the 
     American Council for an Energy-Efficient Economy, a 
     Washington, D.C., advocacy group.
       California, by many estimates, would have 1,000 more 
     megawatts of power available right now had it merely 
     maintained energy-efficiency spending at 1993 levels, instead 
     of allowing it to plunge by half. That's enough generating 
     capacity to power about one million homes. In Washington 
     State, where a drought is hampering hydroelectric generation 
     and compounding the West's power shortage, steady investment 
     in energy efficiency would have produced 300 megawatts in 
     extra generating capacity (enough for about 300,000 
     households), according to the NW Energy Coalition, a Seattle-
     based group that advocates for conservation and alternative 
     energy sources, like wind and solar power.
       Energy-efficiency spending fell 73% in Washington between 
     1993 and 1998. Ironically, the decline coincided with the 
     state's 1994 adoption of an energy strategy that stated its 
     main focus was efficiency. ``There's no question that had we 
     maintained that commitment to conservation, we'd be several 
     hundred megawatts better off,'' says David Danner, energy 
     policy adviser to Washington Gov. Gary Locke.
       The West, of course, isn't alone. Two-thirds of states 
     allowed energy-efficiency spending to fall by 20% or more 
     between 1993 and 1998, including Georgia, which saw a 97% 
     reduction; Michigan, 93%; and Pennsylvania, 92%. More 
     broadly, these declines reflect a trend that relegated state 
     energy policies and programs to diminished roles. In 1989, 
     the average state energy office had 44 employees and a budget 
     of $22.5 million, according to the National Association of 
     State Energy Officials, an Alexandria, Va.-based professional 
     organization. A decade later, the average office had only 29 
     employees and a $14.5 million budget--a cut of about 35%. 
     ``There wasn't a whole lot of interest in energy,'' says 
     Frank Bishop, executive director of the energy-officials 
     group.


                             Market Forces

       This lack of interest emerged from cheap and apparently 
     plentiful power supplies available in the mid-1990s, and a 
     national movement toward energy deregulation. In the West, 
     for example, wholesale electricity prices in 1995 plunged 
     well below $20 per megawatt hour--compared with prices that 
     today sometimes exceed $300 per megawatt hour--and energy 
     efficiency didn't seem to pay.
       Steve King, a spokesman for the Washington Utilities and 
     Transportation Commission, says regulators there allowed 
     utilities to dramatically reduce spending on energy 
     efficiency during this period because such policies couldn't 
     deliver power as cheaply as the market.
       At the same time, political leaders across the nation were 
     embracing the central tenet of deregulation: that the market, 
     rather than centralized state energy policy, could determine 
     the right mix of power production and energy conservation to 
     ensure stable supplies and prices. Under pressure from 
     utilities, which, in preparation for competition wanted to 
     shed any costs that might contribute to higher rates, policy 
     makers allowed energy-efficient programs to be scaled back. 
     Under Massachusetts' 1997 deregulation law, for example, 
     utility-administered efficiency programs are scheduled to be 
     phased out by 2002. Lawmakers, however, now are expected to 
     extend the program and a utility-bill surcharge of about 0.3% 
     for at least another five years.
       ``What everybody wants to avoid is being the next 
     California,'' John Shea, director of energy and environment 
     at the New England Governors' Conference, says of the 
     newfound interest in such policies.


                          On Again, Off Again

       To be sure, some argue that the market works, and the 
     recent resurgence in energy-efficiency spending is just a 
     natural part of that. In New York, state regulators and 
     government-owned utilities recently restored energy-
     efficiency spending to near its 1993 levels after allowing it 
     to fall by some 60%. Paul DeCotis, director of energy 
     analysis at the New York State Energy and Research 
     Development Authority, says that maintaining big energy-
     efficiency funds when prices are low doesn't make sense. 
     Unless utility bills are high enough to justify consumers' 
     making the investment, rebates alone are unlikely to get 
     people to buy energy-efficient products.
       ``One could argue that the responsible public policy will 
     be to turn efficiency programs on and [then] off when they 
     can no longer be economically justified,'' says Mr. DeCotis.
       Still, many observers believe now that states are 
     rediscovering energy efficiency, they will be sticking with 
     it for the long haul. The reason: California, of course. 
     ``The severity of this problem is going to be a vivid memory 
     for long years,'' says Ralph Cavanagh, energy-programs 
     director for the Natural Resources Defense Council, a New 
     York-based environmental advocacy group, ``and the desire to 
     never see this happen again is not going to fade anytime 
     soon.''


                              Powered Down

       Most states allowed reduced spending on energy-efficiency 
     programs in recent years, when power was cheap. Here are the 
     10 states with the biggest declines:

------------------------------------------------------------------------
                                      1993 SpendinPercent
              State                       thousandSChangeg
----------------------------------------------------(In-----
West Virginia....................       $1,157           $0         -100
Nevada...........................        5,515            4         -100
Virginia.........................        9,477          192          -98
Georgia..........................       42,015        1,248          -97
Michigan.........................       55,707        3,901          -93
Indiana..........................       28,502        2,051          -93
Pennsylvania.....................       15,498        1,236          -92
Alabama..........................        4,863          496          -90
Idaho............................       20,819        2,393          -89

[[Page S2772]]

 
Nebraska.........................          530           71          -87
U.S..............................    1,651,032      912,525          -45
------------------------------------------------------------------------
Source: American Council for an Energy-Efficient Economy


  Mr. REID. Mr. President, I am generally pleased to be a cosponsor of 
this Democratic energy package. It is made up of two pieces: one on 
energy policy named the Comprehensive and Balanced Energy Policy Act of 
2001 and the other on energy tax incentives called the Energy Security 
Tax and Policy Act of 2001.
  Unlike the President's and the Republicans' energy package, these 
bills show that the Democrats are taking leadership in correcting 
complex short- and long-term deficiencies in our national energy 
policy. We choose to emphasize energy efficiency, renewables, security 
and reliability, and we recognize that our energy policy must be 
environmentally responsible.
  Not everything in these bills is perfect. In fact, I have serious 
substantive and jurisdictional objections to an extension of the Price-
Anderson Act, which provides a huge, hidden subsidy to the nuclear 
industry. And, I think we could do more to address climate change. But, 
this is a good place to start a serious and swift debate.
  My state of Nevada will benefit greatly from these bills. My bill, S. 
249, the Renewable Energy Development Incentives Act, has been largely 
incorporated in this package. It makes the wind, solar, geothermal and 
biomass electricity production tax credit permanent. There are also 
other important provisions that will encourage the development of 
infrastructure to meet the specific needs of renewable and distributed 
electricity generation.
  Nevada is rich in renewable resources. Currently, a major wind farm 
is being built at the Nevada Test Site that will deliver 260 MW to meet 
the needs of 260,000 Nevadans. Nevada is sometimes known as the ``Saudi 
Arabia of Geothermal,'' with a long-term potential of 2,500 to 3,700 
MW, enough capacity to meet half the state's present energy needs. And, 
rough estimates suggest that the solar energy in a 100\2\ mile area in 
Nevada could meet the annual electricity demand for the entire US.
  The Democratic energy policy bill includes important provisions and 
incentives to improve reliability and the development of new 
transmission access. Nevada is inextricably linked to the Western grid 
and the California market, so we are really feeling the shockwaves of 
the crisis there. Nearly 50 percent of the power generated in Nevada is 
sent to California, leaving us in an unenviable importing situation. 
Plus, generation and transmission access in Nevada has not kept up with 
our phenomenal growth and could lead to supply shortfalls in the north 
this year and in the south next year.
  Our bills are focused on avoiding supply problems like California's. 
We want to stimulate the development of cleaner energy sources that do 
not foul our air, land or water and encourage sources that are 
economically sustainable. We should and can avert the need to crack 
down further on future energy-related pollution as Congress was forced 
to do in the Clean Air Act Amendments of 1990 to protect the public's 
health and the environment.
  That's why we are working in the Environment and Public Works 
Committee on a multi-pollutant bill to reduce electric utility 
emissions. Despite the President's flip-flop on a comprehensive bill 
covering carbon dioxide, we hope to develop a bipartisan bill that 
significantly reduces anticipated power plant emissions of sulfur 
dioxide, nitrogen oxides, mercury and carbon dioxide. We can do this in 
a sensible way that will provide long term certainty to power producers 
if they invest in the right kinds of generation capacity now. Then, we 
can all be assured of a stable electricity supply for the future and a 
cleaner environment.
  We are taking a major step in addressing climate change in this 
policy bill. Science continues to show us that manmade sources of 
airborne carbon are causing the global warming that becomes clearer 
every day. Now, experts say that average temperatures could rise from 
3-10 degrees over the next 100 years, causing extreme storms and 
droughts, ice cap melting, sea level rising, potentially dangerous 
public health crises, and billions, if not, trillions of dollars in 
economic damage.
  The President needs to lead the nation and we need leadership today 
to address the challenge of climate change. We think he should 
establish a commission to propose an integrated way to achieve at least 
the reductions in greenhouse gas emissions that his father, President 
Bush, approved and accepted and that the Senate ratified as part of the 
United Nations Framework Convention on Climate Change. The nation needs 
a constructive proposal to meet that target as soon as possible, and 
the President has the administrative and technical resources to do 
this. Greenhouse gas concentrations are dangerously high and our 
international trading partners are wondering if the U.S. is going to 
abrogate its responsibility to be a good global citizen. The time for 
delay is over.
  We have taken some important steps in this legislation to start 
addressing climate change--encouraging renewables and this new 
Presidential commission. But, we also have included a requirement that 
the efficiency of light-duty vehicles must increase significantly. The 
transportation sector is responsible for more than a third of U.S. 
greenhouse gas emissions. The national fleet has become increasingly 
less fuel efficient as manufacturers sell larger and larger sport 
utility vehicles that do not meet passenger car standards. As a result, 
carbon dioxide emissions and air pollution problems are increasing and 
our energy security is badly threatened.
  In the energy tax bill, we also are taking a new and extraordinary 
precaution to ensure that the energy tax incentives that we provide 
will protect the environment. Those incentives will only be available 
when energy producers or investors are in full compliance with state 
and federal pollution prevention, control and permit requirements. This 
is good precedent and good tax policy.
  For the most part, these bills are charting a new, more holistic 
direction. We have to consider all the facets of our energy decisions, 
especially their impact on the global climate. That's why I'm 
disappointed that this package includes a very short-sighted section 
extending the Price-Anderson Act, and thus continuing to limit the 
liability of the nuclear industry for catastrophic accidents. That 
section provides an unfair advantage to an industry that has yet to 
resolve serious long term public health, safety and waste issues.
  Under the Price-Anderson Act, the owners of commercial nuclear power 
reactors and Department of Energy contractors have their liability 
capped far below the potential cost of a nuclear incident. This system 
amounts to what one economic analysis determined was a $130 billion 
subsidy for the nuclear power industry. This seems to be an unnecessary 
benefit for an industry that claims to be a perfectly safe alternative 
to other energy sources. But, I'm glad to note that Senators Bingaman 
and Murkowski have agreed that the Environment Committee will be 
consulted on and will have sequential referral of any bills at all that 
affect the Price-Anderson Act.
  In one sense, the President was right last week when he said that, 
``. . ..the nation has got a real problem when it comes to energy.'' We 
do have a nearly unquenchable thirst for cheap power which verges on an 
unhealthy addiction. This thirst has fueled our economic growth, but it 
has also drastically affected our environmental quality and created a 
dependency that leaves us vulnerable to market manipulation, 
disruptions and fluctuations. Our package is designed to avoid making 
stupid choices in the rush to satisfy that thirst in the short term. We 
want and need a dependable and replenishable supply of energy that 
doesn't leave us always gasping for more.
  I hope the President and his energy task force will work with us to 
move thoughtful legislation that provides a stable and environmentally 
sustainable energy policy.
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