[Congressional Record Volume 152, Number 52 (Thursday, May 4, 2006)]
[Senate]
[Pages S4059-S4072]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. BINGAMAN (for himself, Mr. Bayh, Mr. Coleman, Mr. 
        Lieberman, Mr. Lugar, Ms. Cantwell, Ms. Collins, Mr. Salazar, 
        Mr. Kerry, Mrs. Clinton, and Mr. Nelson of Florida):
  S. 2748. A bill to amend the Internal Revenue Code of 1986 to provide 
tax incentives to promote energy production and conservation, and for 
other purposes; to the Committee on Finance.
  Mr. BINGAMAN. Mr. President. I rise today to introduce two energy 
bills: the Enhanced Energy Security Act of 2006; and the Enhanced 
Energy Security Tax Incentives Act of 2006.
  All of us know that we face a challenging energy situation in this 
country in both the short term and the long term. The world market 
price of crude oil is above $72 per barrel. We have seen gasoline 
prices above $3 per gallon in many parts of the country. In my home 
State of New Mexico, these prices are a real hardship to the many New 
Mexicans who are forced to drive long-distances to work, without the 
prospect of car pooling or public transportation. The steep rise in the 
price of gas at the pump is putting a nearly unbearable squeeze on 
family budgets in New Mexico and all across America.
  So, we have a major national problem and not much time left in this 
Congress to make progress on it. The question is, what can we do in the 
remaining weeks of this Congress that would be bipartisan, that could 
be signed into law by the President, and that would hold out the 
prospect of eventually helping to moderate the price of gasoline at the 
pump?
  I have thought for some time that the most effective way of 
approaching the real issues driving the high prices that consumers find 
unacceptable is through a four-part strategy focusing on 1. increasing 
consumer protection, 2. increasing supply, 3. increasing efficiency of 
oil and gas use, and 4. providing incentives for forward-looking energy 
choices in the market.
  A fair number of bills have already been introduced that deal with 
the first two parts of that strategy. What has been lacking is a 
bipartisan path forward to consensus on increasing energy efficiency 
and on stimulating forward-looking investments in energy efficiency and 
renewable energy technologies.
  Today's bills are intended to fill that gap. Each of these two bills 
is designed to go to a single committee with jurisdiction over most, if 
not all, of its contents.
  The first bill, the Enhanced Energy Security Act of 2006, is 
comprised of provisions that generally fall in the jurisdiction of the 
Committee on Energy and Natural Resources.
  The second bill, the Enhanced Energy Security Tax Incentives Act of 
2006, is comprised solely of provisions in the jurisdiction of the 
Senate Finance Committee.
  Some of the provisions in these two bills have been drawn from other 
bills, including S. 2025, the Vehicles and Fuels Choices for American 
Security Act, which was introduced last year by Senators Bayh, Coleman, 
Lieberman and Brownback along with others. I appreciate their 
leadership and their support for this effort. What is newsworthy here 
today is that we are putting a large body of good policy ideas in a 
form that will facilitate committee action here in the Senate.
  Relying on the Energy and the Finance committees to do the necessary 
homework to come up with bipartisan solutions to our energy challenges 
is the best way for us to make progress in this Congress. Both 
committees have leaders, in Senators Domenici and Senator Grassley, who 
demonstrated their commitment to bipartisan engagement on energy issues 
during the enactment of last year's Energy Policy Act of 2005. I am 
looking forward to working with both Committee Chairs to move forward 
with the ideas in these bills on a bipartisan basis.
  The basic idea behind the first bill, which is coming to the Energy 
Committee, is that if we want, in the long term, to moderate the prices 
that consumers are seeing in today's markets from oil and natural gas, 
we need to focus more strongly on increasing energy efficiency, and 
particularly increased efficiency of our use of oil and natural gas.
  That's an area where we were unable to do much in the last Energy 
bill. But, there is a lot that needs to be done.
  Among the most important provisions we are taking from S. 2025 and 
putting in the new bill, is an emphasis on an expanded plan for 
economy-wide oil savings. The President is to come up with a plan that 
will cut our oil use, from projected levels, by 2.5 million barrels of 
oil per day by 2016, 7 million barrels of oil per day by 2026, and 10 
million barrels of oil per day by 2031.
  The new bill, also like S. 2025, includes a number of initiatives 
designed to reduce our nearly total reliance on petroleum products in 
the transportation sector. These include: programs that will speed the 
development of new vehicle technologies such as ``plug-in hybrids'' and 
the use of advanced light weight materials in vehicles; expanding the 
authority of the Secretary of Energy to provide loan guarantees and 
competitive grants to auto manufacturers and parts manufacturers for 
converting existing facilities or building new facilities for 
manufacturing fuel-efficient vehicles and vehicle components; 
increasing the availability of alternative fuels, such as E85, across 
the country by providing funding for alternative fuel fueling stations; 
and providing incentives for the production of cellulosic ethanol--
including loan guarantees and a reverse auction for production 
payments.
  The new bill will also include a number of provisions aimed at 
relieving demand and price pressure on natural gas. These include: 
strengthening the Federal purchase requirement for renewable energy; 
the 10 percent renewable portfolio standard that has passed the full 
Senate 3 times in the past 4 years; encouraging States to strengthen 
their programs on demand-side management; and better educating 
consumers about energy efficiency measures that they can take.
  The basic idea behind the second bill, the Enhanced Energy Security 
Tax Incentives Act of 2006, is to create fiscal incentives that help 
forward-looking energy technologies to enter the market. As is often 
the case with technological advancements, many of the energy technology 
alternatives that are poised to enter the marketplace will not be able 
to successfully compete without some transitional help.
  The first set of provisions in the bill extends, through 2010, the 
various alternative fuel, efficiency and renewable energy tax 
provisions we passed last year. These existing tax incentives will work 
best if investors, manufacturers and consumers know that the government 
is committed and that they can plan for these tax incentives being 
there for a few years. The tax provisions we are extending include 
provisions to encourage the purchase of energy efficient housing and 
office materials, as well as the generation of electricity from 
alternative sources such

[[Page S4060]]

as biomass, fuel cells, the wind and the sun. It will be nearly 
impossible for Congress to create a comprehensive national energy 
policy if important energy tax incentives such as these are in a 
perpetual state of uncertainty over the long term. If we extend these 
tax incentives through 2010 now, we will see a great increase in their 
usefulness in an industry that needs a few years lead-time to plan and 
build major energy projects.
  The second set of provisions in the new tax bill will create new 
incentives to encourage our country to move towards more fuel efficient 
vehicles, such as hybrids. It accomplishes this in several ways.
  First, as the President has suggested, we lift the current cap on the 
number of vehicles per manufacturer that are eligible for a consumer 
tax credit. This proposal was also part of the package unveiled last 
week by Senators Domenici and Frist. Under the bill I will be 
introducing, this modified version of the tax credit will be also 
extended until 2010.
  Next, we create a 35 percent tax credit for manufacturers on the 
expenses involved in retrofitting or setting up manufacturing 
facilities to make these fuel efficient vehicles.
  To encourage businesses with fleets of vehicles, we create a 15 
percent tax credit for the purchase of more than 10 fuel efficient 
vehicles in a year.
  In order to encourage alternative fueling stations, we expand the 
current 30 percent tax credit to 50 percent and allow it to be 
operative until the end of 2010.
  Finally, we create a 25 percent tax credit for the purchase of 
qualified idling reduction equipment so that vehicles currently on the 
road are not running their engines any more than necessary.
  While this is a rather large expansion of the currently available tax 
incentives for fuel efficient vehicles, it is what is going to be 
necessary to get our vehicle policy headed in the right direction.
  The legislation also contains new provisions to encourage the 
purchase of fuel efficient technologies for residences and businesses. 
It creates a 10 percent tax credit for the purchase of energy efficient 
combined heat and power units as well as provides for three year 
depreciation on the purchase price for ``smart meters.'' These 
provisions have broad support in the Senate but were regrettably 
dropped in last year's conference on the Energy Bill. I think is 
important that we look at these provisions anew.
  A question that usually arises when you talk about expanding tax 
incentives is whether they are going to be paid for. Many of us here in 
the Senate are worried about the deficit, so the tax bill that I am 
describing contains several revenue offsets, such as the provisions 
contained in last year's reconciliation tax bill that get rid of tax 
benefits in the oil and gas industry that are unnecessary and a waste 
of taxpayer dollars. This legislation would also close the SUV tax 
loophole that provides a windfall for the purchasers of inefficient 
cars at a time when the nation needs to be discouraging this activity.
  I look forward to working with the Chairman and Ranking Member of the 
Finance Committee on both these new tax incentives but also on ways of 
paying for them, so that we are acting in a way that is fiscally 
responsible.
  I ask unanimous consent that the text of both bills be printed in the 
Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 2747

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

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Enhanced 
     Energy Security Act of 2006''.
       (b) Table of Contents.--The table of contents of this Act 
     is as follows:

Sec. 1. Short title; table of contents.
Sec. 2. Definition of Secretary.

          TITLE I--NATIONAL OIL SAVINGS PLAN AND REQUIREMENTS

Sec. 101. Oil savings target and action plan.
Sec. 102. Standards and requirements.
Sec. 103. Initial evaluation.
Sec. 104. Review and update of action plan.
Sec. 105. Baseline and analysis requirements.

         TITLE II--FEDERAL PROGRAMS FOR THE CONSERVATION OF OIL

Sec. 201. Federal fleet conservation requirements.
Sec. 202. Assistance for State programs to retire fuel-inefficient 
              motor vehicles.
Sec. 203. Assistance to States to reduce school bus idling.
Sec. 204. Near-term vehicle technology program.
Sec. 205. Lightweight materials research and development.
Sec. 206. Loan guarantees for fuel-efficient automobile manufacturer 
              and suppliers.
Sec. 207. Funding for alternative infrastructure for the distribution 
              of transportation fuels.
Sec. 208. Deployment of new technologies to reduce oil use in 
              transportation.
Sec. 209. Production incentives for cellulosic biofuels.

    TITLE III--FEDERAL PROGRAMS FOR THE CONSERVATION OF NATURAL GAS

Sec. 301. Renewable portfolio standard.
Sec. 302. Federal requirement to purchase electricity generated by 
              renewable energy.

              TITLE IV--GENERAL ENERGY EFFICIENCY PROGRAMS

Sec. 401. Energy savings performance contracts.
Sec. 402. Deployment of new technologies for high-efficiency consumer 
              products.
Sec. 403. National media campaign to decrease oil and natural gas 
              consumption.
Sec. 404. Energy efficiency resource programs.

                TITLE V--ASSISTANCE TO ENERGY CONSUMERS

Sec. 501. Energy emergency disaster relief loans to small business and 
              agricultural producers.
Sec. 502. Efficient and safe equipment replacement program for 
              weatherization purposes.

     SEC. 2. DEFINITION OF SECRETARY.

       In this Act, the term ``Secretary'' means the Secretary of 
     Energy.

          TITLE I--NATIONAL OIL SAVINGS PLAN AND REQUIREMENTS

     SEC. 101. OIL SAVINGS TARGET AND ACTION PLAN.

       Not later than 270 days after the date of enactment of this 
     Act, the Director of the Office of Management and Budget 
     (referred to in this title as the ``Director'') shall publish 
     in the Federal Register an action plan consisting of--
       (1) a list of requirements proposed or to be proposed 
     pursuant to section 102 that are authorized to be issued 
     under law in effect on the date of enactment of this Act, and 
     this Act, that will be sufficient, when taken together, to 
     save from the baseline determined under section 105--
       (A) 2,500,000 barrels of oil per day on average during 
     calendar year 2016;
       (B) 7,000,000 barrels of oil per day on average during 
     calendar year 2026; and
       (C) 10,000,000 barrels per day on average during calendar 
     year 2031; and
       (2) a Federal Government-wide analysis of--
       (A) the expected oil savings from the baseline to be 
     accomplished by each requirement; and
       (B) whether all such requirements, taken together, will 
     achieve the oil savings specified in this section.

     SEC. 102. STANDARDS AND REQUIREMENTS.

       (a) In General.--On or before the date of publication of 
     the action plan under section 101, the Secretary of Energy, 
     the Secretary of Transportation, the Secretary of Defense, 
     the Secretary of Agriculture, the Administrator of the 
     Environmental Protection Agency, and the head of any other 
     agency the President determines appropriate shall each 
     propose, or issue a notice of intent to propose, regulations 
     establishing each standard or other requirement listed in the 
     action plan that is under the jurisdiction of the respective 
     agency using authorities described in subsection (b).
       (b) Authorities.--The head of each agency described in 
     subsection (a) shall use to carry out this section--
       (1) any authority in existence on the date of enactment of 
     this Act (including regulations); and
       (2) any new authority provided under this Act (including an 
     amendment made by this Act).
       (c) Final Regulations.--Not later than 18 months after the 
     date of enactment of this Act, the head of each agency 
     described in subsection (a) shall promulgate final versions 
     of the regulations required under this section.
       (d) Agency Analyses.--Each proposed and final regulation 
     promulgated under this section shall--
       (1) be designed to achieve at least the oil savings 
     resulting from the regulation under the action plan published 
     under section 101; and
       (2) be accompanied by an analysis by the applicable agency 
     describing the manner in which the regulation will promote 
     the achievement of the oil savings from the baseline 
     determined under section 105.

     SEC. 103. INITIAL EVALUATION.

       (a) In General.--Not later than 2 years after the date of 
     enactment of this Act, the Director shall publish in the 
     Federal Register a Federal Government-wide analysis of the 
     oil savings achieved from the baseline established under 
     section 105.

[[Page S4061]]

       (b) Inadequate Oil Savings.--If the oil savings are less 
     than the targets established under section 101, 
     simultaneously with the analysis required under subsection 
     (a)--
       (1) the Director shall publish a revised action plan that 
     is adequate to achieve the targets; and
       (2) the Secretary of Energy, the Secretary of 
     Transportation, and the Administrator shall propose new or 
     revised regulations under subsections (a), (b), and (c), 
     respectively, of section 102.
       (c) Final Regulations.--Not later than 180 days after the 
     date on which regulations are proposed under subsection 
     (b)(2), the Secretary of Energy, the Secretary of 
     Transportation, and the Administrator shall promulgate final 
     versions of those regulations.

     SEC. 104. REVIEW AND UPDATE OF ACTION PLAN.

       (a) Review.--Not later than January 1, 2011, and every 3 
     years thereafter, the Director shall submit to Congress, and 
     publish, a report that--
       (1) evaluates the progress achieved in implementing the oil 
     savings targets established under section 101;
       (2) analyzes the expected oil savings under the standards 
     and requirements established under this Act and the 
     amendments made by this Act; and
       (3)(A) analyzes the potential to achieve oil savings that 
     are in addition to the savings required by section 101; and
       (B) if the President determines that it is in the national 
     interest, establishes a higher oil savings target for 
     calendar year 2017 or any subsequent calendar year.
       (b) Inadequate Oil Savings.--If the oil savings are less 
     than the targets established under section 101, 
     simultaneously with the report required under subsection 
     (a)--
       (1) the Director shall publish a revised action plan that 
     is adequate to achieve the targets; and
       (2) the Secretary of Energy, the Secretary of 
     Transportation, and the Administrator shall propose new or 
     revised regulations under subsections (a), (b), and (c), 
     respectively, of section 102.
       (c) Final Regulations.--Not later than 180 days after the 
     date on which regulations are proposed under subsection 
     (b)(2), the Secretary of Energy, the Secretary of 
     Transportation, and the Administrator shall promulgate final 
     versions of those regulations.

     SEC. 105. BASELINE AND ANALYSIS REQUIREMENTS.

       In performing the analyses and promulgating proposed or 
     final regulations to establish standards and other 
     requirements necessary to achieve the oil savings required by 
     this title, the Secretary of Energy, the Secretary of 
     Transportation, the Secretary of Defense, the Secretary of 
     Agriculture, the Administrator of the Environmental 
     Protection Agency, and the head of any other agency the 
     President determines to be appropriate shall--
       (1) determine oil savings as the projected reduction in oil 
     consumption from the baseline established by the reference 
     case contained in the report of the Energy Information 
     Administration entitled ``Annual Energy Outlook 2005'';
       (2) determine the oil savings projections required on an 
     annual basis for each of calendar years 2009 through 2026; 
     and
       (3) account for any overlap among the standards and other 
     requirements to ensure that the projected oil savings from 
     all the promulgated standards and requirements, taken 
     together, are as accurate as practicable.

         TITLE II--FEDERAL PROGRAMS FOR THE CONSERVATION OF OIL

     SEC. 201. FEDERAL FLEET CONSERVATION REQUIREMENTS.

       (a) In General.--Part J of title IV of the Energy Policy 
     and Conservation Act (42 U.S.C. 6374 et seq.) is amended by 
     adding at the end the following:

     ``SEC. 400FF. FEDERAL FLEET CONSERVATION REQUIREMENTS.

       ``(a) Mandatory Reduction in Petroleum Consumption.--
       ``(1) In general.--The Secretary shall issue regulations 
     for Federal fleets subject to section 400AA requiring that 
     not later than October 1, 2009, each Federal agency achieve 
     at least a 20 percent reduction in petroleum consumption, as 
     calculated from the baseline established by the Secretary for 
     fiscal year 1999.
       ``(2) Plan.--
       ``(A) Requirement.--The regulations shall require each 
     Federal agency to develop a plan to meet the required 
     petroleum reduction level.
       ``(B) Measures.--The plan may allow an agency to meet the 
     required petroleum reduction level through--
       ``(i) the use of alternative fuels;
       ``(ii) the acquisition of vehicles with higher fuel 
     economy, including hybrid vehicles;
       ``(iii) the substitution of cars for light trucks;
       ``(iv) an increase in vehicle load factors;
       ``(v) a decrease in vehicle miles traveled;
       ``(vi) a decrease in fleet size; and
       ``(vii) other measures.
       ``(C) Replacement tires.--The regulations shall include a 
     requirement that each Federal agency purchase energy-
     efficient replacement tires for the respective fleet vehicles 
     of the agency.
       ``(b) Federal Employee Incentive Programs for Reducing 
     Petroleum Consumption.--
       ``(1) In general.--Each Federal agency shall actively 
     promote incentive programs that encourage Federal employees 
     and contractors to reduce petroleum through the use of 
     practices such as--
       ``(A) telecommuting;
       ``(B) public transit;
       ``(C) carpooling; and
       ``(D) bicycling.
       ``(2) Monitoring and support for incentive programs.--The 
     Administrator of the General Services Administration, the 
     Director of the Office of Personnel Management, and the 
     Secretary of the Department of Energy shall monitor and 
     provide appropriate support to agency programs described in 
     paragraph (1).''.
       (b) Table of Contents Amendment.--The table of contents of 
     the Energy Policy and Conservation Act (42 U.S.C. prec. 6201) 
     is amended by adding at the end of the items relating to part 
     J of title III the following:

``Sec. 400FF. Federal fleet conservation requirements.''.

     SEC. 202. ASSISTANCE FOR STATE PROGRAMS TO RETIRE FUEL-
                   INEFFICIENT MOTOR VEHICLES.

       (a) Definitions.--In this section:
       (1) Fuel-efficient automobile.--The term ``fuel-efficient 
     automobile'' means a passenger automobile or a light-duty 
     truck that has a fuel economy rating that is 40 percent 
     greater than the average fuel economy standard prescribed 
     pursuant to section 32902 of title 49, United States Code, or 
     other law, applicable to the passenger automobile or light-
     duty truck.
       (2) Fuel-inefficient automobiles.--The term ``fuel-
     inefficient automobile'' means a passenger automobile or a 
     light-duty truck manufactured in a model year more than 15 
     years before the fiscal year in which appropriations are made 
     under subsection (f) that, at the time of manufacture, had a 
     fuel economy rating that was equal to or less than [20? ] 
     miles per gallon.
       (3) Light-duty truck.--
       (A) In general.--The term ``light-duty truck'' means an 
     automobile that is not a passenger automobile.
       (B) Inclusions.--The term ``light-duty truck'' includes a 
     pickup truck, a van, or a four-wheel-drive general utility 
     vehicle, as those terms are defined in section 600.002-85 of 
     title 40, Code of Federal Regulations.
       (4) State.--The term ``State'' means any of the several 
     States and the District of Columbia.
       (b) Establishment.--The Secretary shall establish a 
     program, to be known as the ``National Motor Vehicle 
     Efficiency Improvement Program,'' under which the Secretary 
     shall provide grants to States to operate voluntary programs 
     to offer owners of fuel inefficient automobiles financial 
     incentives to replace the automobiles with fuel efficient 
     automobiles.
       (c) Eligibility Criteria.--The Secretary shall approve a 
     State plan and provide the funds made available under 
     subsection (f), if the State plan--
       (1) except as provided in paragraph (8), requires that all 
     passenger automobiles and light-duty trucks turned in be 
     scrapped, after allowing a period of time for the recovery of 
     spare parts;
       (2) requires that all passenger automobiles and light-duty 
     trucks turned in be registered in the State in order to be 
     eligible;
       (3) requires that all passenger automobiles and light-duty 
     trucks turned in be operational at the time that the 
     passenger automobiles and light-duty trucks are turned in;
       (4) restricts automobile owners (except not-for-profit 
     organizations) from turning in more than 1 passenger 
     automobile and 1 light-duty truck during a 1-year period;
       (5) provides an appropriate payment to the person recycling 
     the scrapped passenger automobile or light-duty truck for 
     each turned-in passenger automobile or light-duty truck;
       (6) subject to subsection (d)(2), provides a minimum 
     payment to the automobile owner for each passenger automobile 
     and light-duty truck turned in; and
       (7) provides appropriate exceptions to the scrappage 
     requirement for vehicles that qualify as antique cars under 
     State law.
       (d) State Plan.--
       (1) In general.--To be eligible to receive funds under the 
     program, the Governor of a State shall submit to the 
     Secretary a plan to carry out a program under this section in 
     that State.
       (2) Additional state credit.--In addition to the payment 
     under subsection (c)(6), the State plan may provide a credit 
     that may be redeemed by the owner of the replaced fuel-
     inefficient automobile at the time of purchase of the new 
     fuel-efficient automobile.
       (e) Allocation Formula.--The amounts appropriated pursuant 
     to subsection (f) shall be allocated among the States on the 
     basis of the number of registered motor vehicles in each 
     State at the time that the Secretary needs to compute shares 
     under this subsection.
       (f) Authorization of Appropriations.--There are authorized 
     to be appropriated to the Secretary such sums as are 
     necessary to carry out this section, to remain available 
     until expended.

     SEC. 203. ASSISTANCE TO STATES TO REDUCE SCHOOL BUS IDLING.

       (a) Statement of Policy.--Congress encourages each local 
     educational agency (as defined in section 9101(26) of the 
     Elementary and Secondary Education Act of 1965 (20 U.S.C. 
     7801(26))) that receives Federal funds

[[Page S4062]]

     under the Elementary and Secondary Education Act of 1965 (20 
     U.S.C. 6301 et seq.) to develop a policy to reduce the 
     incidence of school bus idling at schools while picking up 
     and unloading students.
       (b) Authorization of Appropriations.--There are authorized 
     to be appropriated to the Secretary of Energy, working in 
     coordination with the Secretary of Education, $5,000,000 for 
     each of fiscal years 2007 through 2012 for use in educating 
     States and local education agencies about--
       (1) benefits of reducing school bus idling; and
       (2) ways in which school bus idling may be reduced.

     SEC. 204. NEAR-TERM VEHICLE TECHNOLOGY PROGRAM.

       (a) Purposes.--The purposes of this section are--
       (1) to enable and promote, in partnership with industry, 
     comprehensive development, demonstration, and 
     commercialization of a wide range of electric drive 
     components, systems, and vehicles using diverse electric 
     drive transportation technologies;
       (2) to make critical public investments to help private 
     industry, institutions of higher education, National 
     Laboratories, and research institutions to expand innovation, 
     industrial growth, and jobs in the United States;
       (3) to expand the availability of the existing electric 
     infrastructure for fueling light duty transportation and 
     other on-road and nonroad vehicles that are using petroleum 
     and are mobile sources of emissions--
       (A) including the more than 3,000,000 reported units (such 
     as electric forklifts, golf carts, and similar nonroad 
     vehicles) in use on the date of enactment of this Act; and
       (B) with the goal of enhancing the energy security of the 
     United States, reduce dependence on imported oil, and reduce 
     emissions through the expansion of grid supported mobility;
       (4) to accelerate the widespread commercialization of all 
     types of electric drive vehicle technology into all sizes and 
     applications of vehicles, including commercialization of 
     plug-in hybrid electric vehicles and plug-in hybrid fuel cell 
     vehicles; and
       (5) to improve the energy efficiency of and reduce the 
     petroleum use in transportation.
       (b) Definitions.--In this section:
       (1) Battery.--The term ``battery'' means an energy storage 
     device used in an on-road or nonroad vehicle powered in whole 
     or in part using an off-board or on-board source of 
     electricity.
       (2) Electric drive transportation technology.--The term 
     ``electric drive transportation technology'' means--
       (A) vehicles that use an electric motor for all or part of 
     their motive power and that may or may not use off-board 
     electricity, including battery electric vehicles, fuel cell 
     vehicles, engine dominant hybrid electric vehicles, plug-in 
     hybrid electric vehicles, plug-in hybrid fuel cell vehicles, 
     and electric rail; or
       (B) equipment relating to transportation or mobile sources 
     of air pollution that use an electric motor to replace an 
     internal combustion engine for all or part of the work of the 
     equipment, including corded electric equipment linked to 
     transportation or mobile sources of air pollution.
       (3) Engine dominant hybrid electric vehicle.--The term 
     ``engine dominant hybrid electric vehicle'' means an on-road 
     or nonroad vehicle that--
       (A) is propelled by an internal combustion engine or heat 
     engine using--
       (i) any combustible fuel;
       (ii) an on-board, rechargeable storage device; and
       (B) has no means of using an off-board source of 
     electricity.
       (4) Fuel cell vehicle.--The term ``fuel cell vehicle'' 
     means an on-road or nonroad vehicle that uses a fuel cell (as 
     defined in section 3 of the Spark M. Matsunaga Hydrogen 
     Research, Development, and Demonstration Act of 1990).
       (5) Nonroad vehicle.--The term ``nonroad vehicle'' has the 
     meaning given the term in section 216 of the Clean Air Act 
     (42 U.S.C. 7550).
       (6) Plug-in hybrid electric vehicle.--The term ``plug-in 
     hybrid electric vehicle'' means an on-road or nonroad vehicle 
     that is propelled by an internal combustion engine or heat 
     engine using--
       (A) any combustible fuel;
       (B) an on-board, rechargeable storage device; and
       (C) a means of using an off-board source of electricity.
       (7) Plug-in hybrid fuel cell vehicle.--The term ``plug-in 
     hybrid fuel cell vehicle'' means a fuel cell vehicle with a 
     battery powered by an off-board source of electricity.
       (c) Program.--The Secretary shall conduct a program of 
     research, development, demonstration, and commercial 
     application for electric drive transportation technology, 
     including--
       (1) high capacity, high efficiency batteries;
       (2) high efficiency on-board and off-board charging 
     components;
       (3) high power drive train systems for passenger and 
     commercial vehicles and for nonroad equipment;
       (4) control system development and power train development 
     and integration for plug-in hybrid electric vehicles, plug-in 
     hybrid fuel cell vehicles, and engine dominant hybrid 
     electric vehicles, including--
       (A) development of efficient cooling systems;
       (B) analysis and development of control systems that 
     minimize the emissions profile when clean diesel engines are 
     part of a plug-in hybrid drive system; and
       (C) development of different control systems that optimize 
     for different goals, including--
       (i) battery life;
       (ii) reduction of petroleum consumption; and
       (iii) green house gas reduction;
       (5) nanomaterial technology applied to both battery and 
     fuel cell systems;
       (6) large-scale demonstrations, testing, and evaluation of 
     plug-in hybrid electric vehicles in different applications 
     with different batteries and control systems, including--
       (A) military applications;
       (B) mass market passenger and light-duty truck 
     applications;
       (C) private fleet applications; and
       (D) medium- and heavy-duty applications;
       (7) a nationwide education strategy for electric drive 
     transportation technologies providing secondary and high 
     school teaching materials and support for university 
     education focused on electric drive system and component 
     engineering;
       (8) development, in consultation with the Administrator of 
     the Environmental Protection Agency, of procedures for 
     testing and certification of criteria pollutants, fuel 
     economy, and petroleum use for light-, med-
     ium-, and heavy-duty vehicle applications, including 
     consideration of--
       (A) the vehicle and fuel as a system, not just an engine; 
     and
       (B) nightly off-board charging; and
       (9) advancement of battery and corded electric 
     transportation technologies in mobile source applications 
     by--
       (A) improvement in battery, drive train, and control system 
     technologies; and
       (B) working with industry and the Administrator of the 
     Environmental Protection Agency to--
       (i) understand and inventory markets; and
       (ii) identify and implement methods of removing barriers 
     for existing and emerging applications.
       (d) Goals.--The goals of the electric drive transportation 
     technology program established under subsection (c) shall be 
     to develop, in partnership with industry and institutions of 
     higher education, projects that focus on--
       (1) innovative electric drive technology developed in the 
     United States;
       (2) growth of employment in the United States in electric 
     drive design and manufacturing;
       (3) validation of the plug-in hybrid potential through 
     fleet demonstrations; and
       (4) acceleration of fuel cell commercialization through 
     comprehensive development and commercialization of the 
     electric drive technology systems that are the foundational 
     technology of the fuel cell vehicle system.
       (e) Authorization of Appropriations.--There is authorized 
     to be appropriated to carry out this section $300,000,000 for 
     each of fiscal years 2007 through 2012.

     SEC. 205. LIGHTWEIGHT MATERIALS RESEARCH AND DEVELOPMENT.

       (a) In General.--As soon as practicable after the date of 
     enactment of this Act, the Secretary shall establish a 
     research and development program to determine ways in which--
       (1) the weight of vehicles may be reduced to improve fuel 
     efficiency without compromising passenger safety; and
       (2) the cost of lightweight materials (such as steel alloys 
     and carbon fibers) required for the construction of lighter-
     weight vehicles may be reduced.
       (b) Authorization of Appropriations.--There is authorized 
     to be appropriated to carry out this section $60,000,000 for 
     each of fiscal years 2007 through 2012.

     SEC. 206. LOAN GUARANTEES FOR FUEL-EFFICIENT AUTOMOBILE 
                   MANUFACTURER AND SUPPLIERS.

       (a) In General.--Section 712(a) of the Energy Policy Act of 
     2005 (42 U.S.C. 16062(a)) is amended in the second sentence 
     by striking ``grants to automobile manufacturers'' and 
     inserting ``grants and loan guarantees under section 1703 to 
     automobile manufacturers and suppliers''.
       (b) Conforming Amendment.--Section 1703(b) of the Energy 
     Policy Act of 2005 (42 U.S.C. 16513(b)) is amended by 
     striking paragraph (8) and inserting the following:
       ``(8) Production facilities for the manufacture of fuel-
     efficient vehicles or parts of such vehicles, including 
     hybrid and advanced diesel vehicles.''.

     SEC. 207. FUNDING FOR ALTERNATIVE INFRASTRUCTURE FOR THE 
                   DISTRIBUTION OF TRANSPORTATION FUELS.

       (a) In General.--There is established in the Treasury of 
     the United States a trust fund, to be known as the 
     ``Alternative Fueling Infrastructure Trust Fund'' (referred 
     to in this section as the ``Trust Fund''), consisting of such 
     amounts as are deposited into the Trust Fund under subsection 
     (b) and any interest earned on investment of amounts in the 
     Trust Fund.
       (b) Penalties.--The Secretary of Transportation shall remit 
     90 percent of the amount collected in civil penalties under 
     section 32912 of title 49, United States Code, to the Trust 
     Fund.
       (c) Grant Program.--
       (1) In general.--The Secretary of Energy shall obligate 
     such sums as are available in the Trust Fund to establish a 
     grant program to increase the number of locations at which 
     consumers may purchase alternative transportation fuels.
       (2) Administration.--

[[Page S4063]]

       (A) In general.--The Secretary may award grants under this 
     subsection to--
       (i) individual fueling stations; and
       (ii) corporations (including nonprofit corporations) with 
     demonstrated experience in the administration of grant 
     funding for the purpose of alternative fueling 
     infrastructure.
       (B) Maximum amount of grants.--A grant provided under this 
     subsection may not exceed--
       (i) $150,000 for each site of an individual fueling 
     station; and
       (ii) $500,000 for each corporation (including a nonprofit 
     corporation).
       (C) Prioritization.--The Secretary shall prioritize the 
     provision of grants under this subsection to recognized 
     nonprofit corporations that have proven experience and 
     demonstrated technical expertise in the establishment of 
     alternative fueling infrastructure, as determined by the 
     Secretary.
       (D) Administrative expenses.--Not more than 10 percent of 
     the funds provided in any grant may be used by the recipient 
     of the grant to pay administrative expenses.
       (E) Number of vehicles.--In providing grants under this 
     subsection, the Secretary shall consider the number of 
     vehicles in service capable of using a specific type of 
     alternative fuel.
       (F) Match.--Grant recipients shall provide a non-Federal 
     match of not less than $1 for every $3 of grant funds 
     received under this subsection.
       (G) Locations.--Each grant recipient shall select the 
     locations for each alternative fuel station to be constructed 
     with grant funds received under this subsection on a formal, 
     open, and competitive basis.
       (H) Use of information in selection of recipients.--In 
     selecting grant recipients under this subsection, the 
     Secretary may consider--
       (i) public demand for each alternative fuel in a particular 
     county based on State registration records indicating the 
     number of vehicles that may be operated using alternative 
     fuel; and
       (ii) the opportunity to create or expand corridors of 
     alternative fuel stations along interstates or highways.
       (3) Use of grant funds.--Grant funds received under this 
     subsection may be used to--
       (A) construct new facilities to dispense alternative fuels;
       (B) purchase equipment to upgrade, expand, or otherwise 
     improve existing alternative fuel facilities; or
       (C) purchase equipment or pay for specific turnkey fueling 
     services by alternative fuel providers.
       (4) Facilities.--Facilities constructed or upgraded with 
     grant funds under this subsection shall--
       (A) provide alternative fuel available to the public for a 
     period not less than 4 years;
       (B) establish a marketing plan to advance the sale and use 
     of alternative fuels;
       (C) prominently display the price of alternative fuel on 
     the marquee and in the station;
       (D) provide point of sale materials on alternative fuel;
       (E) clearly label the dispenser with consistent materials;
       (F) price the alternative fuel at the same margin that is 
     received for unleaded gasoline; and
       (G) support and use all available tax incentives to reduce 
     the cost of the alternative fuel to the lowest practicable 
     retail price.
       (5) Opening of stations.--
       (A) In general.--Not later than the date on which each 
     alternative fuel station begins to offer alternative fuel to 
     the public, the grant recipient that used grant funds to 
     construct the station shall notify the Secretary of the 
     opening.
       (B) Website.--The Secretary shall add each new alternative 
     fuel station to the alternative fuel station locator on the 
     website of the Department of Energy when the Secretary 
     receives notification under this subsection.
       (6) Reports.--Not later than 180 days after the receipt of 
     a grant award under this subsection, and every 180 days 
     thereafter, each grant recipient shall submit a report to the 
     Secretary that describes--
       (A) the status of each alternative fuel station constructed 
     with grant funds received under this subsection;
       (B) the quantity of alternative fuel dispensed at each 
     station during the preceding 180-day period; and
       (C) the average price per gallon of the alternative fuel 
     sold at each station during the preceding 180-day period.

     SEC. 208. DEPLOYMENT OF NEW TECHNOLOGIES TO REDUCE OIL USE IN 
                   TRANSPORTATION.

       (a) Fuel From Cellulosic Biomass.--
       (1) In general.--The Secretary shall provide deployment 
     incentives under this subsection to encourage a variety of 
     projects to produce transportation fuel from cellulosic 
     biomass, relying on different feedstocks in different regions 
     of the United States.
       (2) Project eligibility.--Incentives under this subsection 
     shall be provided on a competitive basis to projects that 
     produce fuel that--
       (A) meet United States fuel and emission specifications;
       (B) help diversify domestic transportation energy supplies; 
     and
       (C) improve or maintain air, water, soil, and habitat 
     quality.
       (3) Incentives.--Incentives under this subsection may 
     consist of--
       (A) loan guarantees under section 1510 of the Energy Policy 
     Act of 2005 (42 U.S.C. 16501), subject to section 1702 of 
     that Act (22 U.S.C. 16512), for the construction of 
     production facilities and supporting infrastructure; or
       (B) production payments through a reverse auction in 
     accordance with paragraph (4).
       (4) Reverse auction.--
       (A) In general.--In providing incentives under this 
     subsection, the Secretary shall--
       (i) issue regulations under which producers of fuel from 
     cellulosic biomass may bid for production payments under 
     paragraph (3)(B); and
       (ii) solicit bids from producers of different classes of 
     transportation fuel, as the Secretary determines to be 
     appropriate.
       (B) Requirement.--The rules under subparagraph (A) shall 
     require that incentives be provided to the producers that 
     submit the lowest bid (in terms of cents per gallon) for each 
     class of transportation fuel from which the Secretary 
     solicits a bid.
       (b) Advanced Technology Vehicles Manufacturing Incentive 
     Program.--
       (1) Definitions.--In this subsection:
       (A) Adjusted fuel economy.--The term ``adjusted fuel 
     economy'' means the average fuel economy of a manufacturer 
     for all light duty motor vehicles produced by the 
     manufacturer, adjusted such that the fuel economy of each 
     vehicle that qualifies for a credit shall be considered to be 
     equal to the average fuel economy for the weight class of the 
     vehicle for model year 2002.
       (B) Advanced lean burn technology motor vehicle.--The term 
     ``advanced lean burn technology motor vehicle'' means a 
     passenger automobile or a light truck with an internal 
     combustion engine that--
       (i) is designed to operate primarily using more air than is 
     necessary for complete combustion of the fuel;
       (ii) incorporates direct injection; and
       (iii) achieves at least 125 percent of the city fuel 
     economy of vehicles in the same size class as the vehicle for 
     model year 2002.
       (C) Advanced technology vehicle.--The term ``advanced 
     technology vehicle'' means a light duty motor vehicle that--
       (i) is a hybrid motor vehicle or an advanced lean burn 
     technology motor vehicle; and
       (ii) meets--

       (I) the Bin 5 Tier II emission standard established in 
     regulations issued by the Administrator of the Environmental 
     Protection Agency under section 202(i) of the Clean Air Act 
     (42 U.S.C. 7521(i)), or a lower-numbered Bin emission 
     standard;
       (II) any new emission standard for fine particulate matter 
     prescribed by the Administrator under that Act (42 U.S.C. 
     7401 et seq.); and
       (III) at least 125 percent of the base year city fuel 
     economy for the weight class of the vehicle.

       (D) Engineering integration costs.--The term ``engineering 
     integration costs'' includes the cost of engineering tasks 
     relating to--
       (i) incorporating qualifying components into the design of 
     advanced technology vehicles; and
       (ii) designing new tooling and equipment for production 
     facilities that produce qualifying components or advanced 
     technology vehicles.
       (E) Hybrid motor vehicle.--The term ``hybrid motor 
     vehicle'' means a motor vehicle that draws propulsion energy 
     from onboard sources of stored energy that are--
       (i) an internal combustion or heat engine using combustible 
     fuel; and
       (ii) a rechargeable energy storage system.
       (F) Qualifying components.--The term ``qualifying 
     components'' means components that the Secretary determines 
     to be--
       (i) specially designed for advanced technology vehicles; 
     and
       (ii) installed for the purpose of meeting the performance 
     requirements of advanced technology vehicles.
       (2) Manufacturer facility conversion awards.--The Secretary 
     shall provide facility conversion funding awards under this 
     subsection to automobile manufacturers and component 
     suppliers to pay not more than 30 percent of the cost of--
       (A) reequipping or expanding an existing manufacturing 
     facility in the United States to produce--
       (i) qualifying advanced technology vehicles; or
       (ii) qualifying components; and
       (B) engineering integration performed in the United States 
     of qualifying vehicles and qualifying components.
       (3) Period of availability.--An award under paragraph (2) 
     shall apply to--
       (A) facilities and equipment placed in service before 
     December 30, 2017; and
       (B) engineering integration costs incurred during the 
     period beginning on the date of enactment of this Act and 
     ending on December 30, 2017.
       (4) Improvement.--The Secretary shall issue regulations 
     that require that, in order for an automobile manufacturer to 
     be eligible for an award under this subsection during a 
     particular year, the adjusted average fuel economy of the 
     manufacturer for light duty vehicles produced by the 
     manufacturer during the most recent year for which data are 
     available shall be not less than the average fuel economy for 
     all light duty motor vehicles of the manufacturer for model 
     year 2002.

[[Page S4064]]

     SEC. 209. PRODUCTION INCENTIVES FOR CELLULOSIC BIOFUELS.

       Section 942(f) of the Energy Policy Act of 2005 (42 U.S.C. 
     16251(f)) is amended by striking ``$250,000,000'' and 
     inserting ``$200,000,000 for each of fiscal years 2007 
     through 2011''.

    TITLE III--FEDERAL PROGRAMS FOR THE CONSERVATION OF NATURAL GAS

     SEC. 301. RENEWABLE PORTFOLIO STANDARD.

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

     ``SEC. 610. FEDERAL RENEWABLE PORTFOLIO STANDARD.

       ``(a) Renewable Energy Requirement.--
       ``(1) In general.--Each electric utility that sells 
     electricity to electric consumers shall obtain a percentage 
     of the base amount of electricity it sells to electric 
     consumers in any calendar year from new renewable energy or 
     existing renewable energy. The percentage obtained in a 
     calendar year shall not be less than the amount specified in 
     the following table:
``Calendar year:                             Minimum annual percentage:
2008 through 2011..................................................2.55
2012 through 2015..................................................5.05
2016 through 2019..................................................7.55
2020 through 2030..................................................10.0

       ``(2) Means of compliance.--An electric utility shall meet 
     the requirements of paragraph (1) by--
       ``(A) generating electric energy using new renewable energy 
     or existing renewable energy;
       ``(B) purchasing electric energy generated by new renewable 
     energy or existing renewable energy;
       ``(C) purchasing renewable energy credits issued under 
     subsection (b); or
       ``(D) a combination of the foregoing.
       ``(b) Renewable Energy Credit Trading Program.--
       ``(1) In general.--Not later than January 1, 2007, the 
     Secretary shall establish a renewable energy credit trading 
     program to permit an electric utility that does not generate 
     or purchase enough electric energy from renewable energy to 
     meet its obligations under subsection (a)(1) to satisfy such 
     requirements by purchasing sufficient renewable energy 
     credits.
       ``(2) Administration.--As part of the program, the 
     Secretary shall--
       ``(A) issue renewable energy credits to generators of 
     electric energy from new renewable energy;
       ``(B) sell renewable energy credits to electric utilities 
     at the rate of 1.5 cents per kilowatt-hour (as adjusted for 
     inflation under subsection (g));
       ``(C) ensure that a kilowatt hour, including the associated 
     renewable energy credit, shall be used only once for purposes 
     of compliance with this section; and
       ``(D) allow double credits for generation from facilities 
     on Indian land, and triple credits for generation from small 
     renewable distributed generators (meaning those no larger 
     than 1 megawatt).
       ``(3) Duration.--Credits under paragraph (2)(A) may only be 
     used for compliance with this section for 3 years from the 
     date issued.
       ``(4) Transfers.--An electric utility that holds credits in 
     excess of the amount needed to comply with subsection (a) may 
     transfer such credits to another electric utility in the same 
     utility holding company system.
       ``(5) Eastern interconnect.--In the case of a retail 
     electric supplier that is a member of a power pool located in 
     the Eastern Interconnect and that is subject to a State 
     renewable portfolio standard program that provides for 
     compliance primarily through the acquisition of certificates 
     or credits in lieu of the direct acquisition of renewable 
     power, the Secretary shall issue renewable energy credits in 
     an amount that corresponds to the kilowatt-hour obligation 
     represented by the State certificates and credits issued 
     pursuant to the State program to the extent the State 
     certificates and credits are associated with renewable 
     resources eligible under this section.
       ``(c) Enforcement.--
       ``(1) Civil penalties.--Any electric utility that fails to 
     meet the renewable energy requirements of subsection (a) 
     shall be subject to a civil penalty.
       ``(2) Amount of penalty.--The amount of the civil penalty 
     shall be determined by multiplying the number of kilowatt-
     hours of electric energy sold to electric consumers in 
     violation of subsection (a) by the greater of 1.5 cents 
     (adjusted for inflation under subsection (g)) or 200 percent 
     of the average market value of renewable energy credits 
     during the year in which the violation occurred.
       ``(3) Mitigation or waiver.--The Secretary may mitigate or 
     waive a civil penalty under this subsection if the electric 
     utility was unable to comply with subsection (a) for reasons 
     outside of the reasonable control of the utility. The 
     Secretary shall reduce the amount of any penalty determined 
     under paragraph (2) by an amount paid by the electric utility 
     to a State for failure to comply with the requirement of a 
     State renewable energy program if the State requirement is 
     greater than the applicable requirement of subsection (a).
       ``(4) Procedure for assessing penalty.--The Secretary shall 
     assess a civil penalty under this subsection in accordance 
     with the procedures prescribed by section 333(d) of the 
     Energy Policy and Conservation Act of 1954 (42 U.S.C. 6303).
       ``(d) State Renewable Energy Account Program.--
       ``(1) In general.--The Secretary shall establish, not later 
     than December 31, 2008, a State renewable energy account 
     program.
       ``(2) Deposits.--All money collected by the Secretary from 
     the sale of renewable energy credits and the assessment of 
     civil penalties under this section shall be deposited into 
     the renewable energy account established pursuant to this 
     subsection. The State renewable energy account shall be held 
     by the Secretary and shall not be transferred to the Treasury 
     Department.
       ``(3) Use.--Proceeds deposited in the State renewable 
     energy account shall be used by the Secretary, subject to 
     appropriations, for a program to provide grants to the State 
     agency responsible for developing State energy conservation 
     plans under section 362 of the Energy Policy and Conservation 
     Act (42 U.S.C. 6322) for the purposes of promoting renewable 
     energy production, including programs that promote 
     technologies that reduce the use of electricity at customer 
     sites such as solar water heating.
       ``(4) Administration.--The Secretary may issue guidelines 
     and criteria for grants awarded under this subsection. State 
     energy offices receiving grants under this section shall 
     maintain such records and evidence of compliance as the 
     Secretary may require.
       ``(5) Preference.--In allocating funds under this program, 
     the Secretary shall give preference--
       ``(A) to States in regions which have a disproportionately 
     small share of economically sustainable renewable energy 
     generation capacity; and
       ``(B) to State programs to stimulate or enhance innovative 
     renewable energy technologies.
       ``(e) Rules.--The Secretary shall issue rules implementing 
     this section not later than 1 year after the date of 
     enactment of this section.
       ``(f) Exemptions.--This section shall not apply in any 
     calendar year to an electric utility--
       ``(1) that sold less than 4,000,000 megawatt-hours of 
     electric energy to electric consumers during the preceding 
     calendar year; or
       ``(2) in Hawaii.
       ``(g) Inflation Adjustment.--Not later than December 31 of 
     each year beginning in 2008, the Secretary shall adjust for 
     inflation the price of a renewable energy credit under 
     subsection (b)(2)(B) and the amount of the civil penalty per 
     kilowatt-hour under subsection (c)(2).
       ``(h) State Programs.--Nothing in this section shall 
     diminish any authority of a State or political subdivision 
     thereof to adopt or enforce any law or regulation respecting 
     renewable energy, but, except as provided in subsection 
     (c)(3), no such law or regulation shall relieve any person of 
     any requirement otherwise applicable under this section. The 
     Secretary, in consultation with States having such renewable 
     energy programs, shall, to the maximum extent practicable, 
     facilitate coordination between the Federal program and State 
     programs.
       ``(i) Recovery of Costs.--
       ``(1) In general.--The Commission shall issue and enforce 
     such regulations as are necessary to ensure that an electric 
     utility recovers all prudently incurred costs associated with 
     compliance with this section.
       ``(2) Applicable law.--A regulation under paragraph (1) 
     shall be enforceable in accordance with the provisions of law 
     applicable to enforcement of regulations under the Federal 
     Power Act (16 U.S.C. 791a et seq.).
       ``(j) Definitions.--In this section:
       ``(1) Base amount of electricity.--The term `base amount of 
     electricity' means the total amount of electricity sold by an 
     electric utility to electric consumers in a calendar year, 
     excluding--
       ``(A) electricity generated by a hydroelectric facility 
     (including a pumped storage facility but excluding 
     incremental hydropower); and
       ``(B) electricity generated through the incineration of 
     municipal solid waste.
       ``(2) Distributed generation facility.--The term 
     `distributed generation facility' means a facility at a 
     customer site.
       ``(3) Existing renewable energy.--The term `existing 
     renewable energy' means, except as provided in paragraph 
     (7)(B), electric energy generated at a facility (including a 
     distributed generation facility) placed in service prior to 
     January 1, 2003, from solar, wind, or geothermal energy, 
     ocean energy, biomass (as defined in section 203(a) of the 
     Energy Policy Act of 2005), or landfill gas.
       ``(4) Geothermal energy.--The term `geothermal energy' 
     means energy derived from a geothermal deposit (within the 
     meaning of section 613(e)(2) of the Internal Revenue Code of 
     1986).
       ``(5) Incremental geothermal production.--
       ``(A) In general.--The term `incremental geothermal 
     production' means for any year the excess of--
       ``(i) the total kilowatt hours of electricity produced from 
     a facility (including a distributed generation facility) 
     using geothermal energy; over
       ``(ii) the average annual kilowatt hours produced at such 
     facility for 5 of the previous 7 calendar years before the 
     date of enactment of this section after eliminating the 
     highest and the lowest kilowatt hour production years in such 
     7-year period.
       ``(B) Special rule.--A facility described in subparagraph 
     (A) that was placed in service at least 7 years before the 
     date of enactment

[[Page S4065]]

     of this section shall commencing with the year in which such 
     date of enactment occurs, reduce the amount calculated under 
     subparagraph (A)(ii) each year, on a cumulative basis, by the 
     average percentage decrease in the annual kilowatt hour 
     production for the 7-year period described in subparagraph 
     (A)(ii) with such cumulative sum not to exceed 30 percent.
       ``(6) Incremental hydropower.--The term `incremental 
     hydropower' means additional energy generated as a result of 
     efficiency improvements or capacity additions made on or 
     after the date of enactment of this section or the effective 
     date of an existing applicable State renewable portfolio 
     standard program at a hydroelectric facility that was placed 
     in service before that date. The term does not include 
     additional energy generated as a result of operational 
     changes not directly associated with efficiency improvements 
     or capacity additions. Efficiency improvements and capacity 
     additions shall be measured on the basis of the same water 
     flow information used to determine a historic average annual 
     generation baseline for the hydroelectric facility and 
     certified by the Secretary or the Federal Energy Regulatory 
     Commission.
       ``(7) New renewable energy.--The term `new renewable 
     energy' means--
       ``(A) electric energy generated at a facility (including a 
     distributed generation facility) placed in service on or 
     after January 1, 2003, from--
       ``(i) solar, wind, or geothermal energy or ocean energy;
       ``(ii) biomass (as defined in section 203(b) of the Energy 
     Policy Act of 2005 (42 U.S.C. 15852(b));
       ``(iii) landfill gas; or
       ``(iv) incremental hydropower; and
       ``(B) for electric energy generated at a facility 
     (including a distributed generation facility) placed in 
     service prior to the date of enactment of this section--
       ``(i) the additional energy above the average generation in 
     the 3 years preceding the date of enactment of this section 
     at the facility from--

       ``(I) solar or wind energy or ocean energy;
       ``(II) biomass (as defined in section 203(b) of the Energy 
     Policy Act of 2005 (42 U.S.C. 15852(b));
       ``(III) landfill gas; or
       ``(IV) incremental hydropower.

       ``(ii) incremental geothermal production.
       ``(8) Ocean energy.--The term `ocean energy' includes 
     current, wave, tidal, and thermal energy.
       ``(k) Sunset.--This section expires on December 31, 
     2030.''.
       (b) Table of Contents Amendment.--The table of contents of 
     the Public Utility Regulatory Policies Act of 1978 (16 U.S.C. 
     prec. 2601) is amended by adding at the end of the items 
     relating to title VI the following:

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

     SEC. 302. FEDERAL REQUIREMENT TO PURCHASE ELECTRICITY 
                   GENERATED BY RENEWABLE ENERGY.

       Section 203 of the Energy Policy Act of 2005 (42 U.S.C. 
     15852) is amended by striking subsection (a) and inserting 
     the following:
       ``(a) Requirement.--The President, acting through the 
     Secretary, shall ensure that, of the total quantity of 
     electric energy the Federal Government consumes during any 
     fiscal year, the following amounts shall be renewable energy:
       ``(1) Not less than 5 percent in each of fiscal years 2008 
     and 2009.
       ``(2) Not less than 7.5 percent in each of fiscal years 
     2010 through 2012.
       ``(3) Not less than 10 percent in fiscal years 2013 and 
     each fiscal year thereafter.''.

              TITLE IV--GENERAL ENERGY EFFICIENCY PROGRAMS

     SEC. 401. ENERGY SAVINGS PERFORMANCE CONTRACTS.

       (a) Retention of Savings.--Section 546(c) of the National 
     Energy Conservation Policy Act (42 U.S.C. 8256(c)) is amended 
     by striking paragraph (5).
       (b) Financing Flexibility.--Section 801(a)(2) of the 
     National Energy Conservation Policy Act (42 U.S.C. 
     8287(a)(2)) is amended by adding at the end the following:
       ``(E) Separate contracts.--In carrying out a contract under 
     this title, a Federal agency may--
       ``(i) enter into a separate contract for energy services 
     and conservation measures under the contract; and
       ``(ii) provide all or part of the financing necessary to 
     carry out the contract.''.
       (c) Definition of Energy Savings.--Section 804(2) of the 
     National Energy Conservation Policy Act (42 U.S.C. 8287c(2)) 
     is amended--
       (1) by redesignating subparagraphs (A), (B), and (C) as 
     clauses (i), (ii), and (iii), respectively, and indenting 
     appropriately;
       (2) by striking ``means a reduction'' and inserting 
     ``means--
       ``(A) a reduction'';
       (3) by striking the period at the end and inserting a 
     semicolon; and
       (4) by adding at the end the following:
       ``(B) the increased efficient use of an existing energy 
     source by cogeneration or heat recovery, and installation of 
     renewable energy systems;
       ``(C) the sale or transfer of electrical or thermal energy 
     generated on-site, but in excess of Federal needs, to 
     utilities or non-Federal energy users; and
       ``(D) the increased efficient use of existing water sources 
     in interior or exterior applications.''.
       (d) Energy and Cost Savings in Nonbuilding Applications.--
       (1) Definitions.--In this subsection:
       (A) Nonbuilding application.--The term ``nonbuilding 
     application'' means--
       (i) any class of vehicles, devices, or equipment that is 
     transportable under the power of the applicable vehicle, 
     device, or equipment by land, sea, or air and that consumes 
     energy from any fuel source for the purpose of--

       (I) that transportation; or
       (II) maintaining a controlled environment within the 
     vehicle, device, or equipment; and

       (ii) any federally-owned equipment used to generate 
     electricity or transport water.
       (B) Secondary savings.--
       (i) In general.--The term ``secondary savings'' means 
     additional energy or cost savings that are a direct 
     consequence of the energy savings that result from the energy 
     efficiency improvements that were financed and implemented 
     pursuant to an energy savings performance contract.
       (ii) Inclusions.--The term ``secondary savings'' includes--

       (I) energy and cost savings that result from a reduction in 
     the need for fuel delivery and logistical support;
       (II) personnel cost savings and environmental benefits; and
       (III) in the case of electric generation equipment, the 
     benefits of increased efficiency in the production of 
     electricity, including revenues received by the Federal 
     Government from the sale of electricity so produced.

       (2) Study.--
       (A) In general.--As soon as practicable after the date of 
     enactment of this Act, the Secretary and the Secretary of 
     Defense shall jointly conduct, and submit to Congress and the 
     President a report of, a study of the potential for the use 
     of energy savings performance contracts to reduce energy 
     consumption and provide energy and cost savings in 
     nonbuilding applications.
       (B) Requirements.--The study under this subsection shall 
     include--
       (i) an estimate of the potential energy and cost savings to 
     the Federal Government, including secondary savings and 
     benefits, from increased efficiency in nonbuilding 
     applications;
       (ii) an assessment of the feasibility of extending the use 
     of energy savings performance contracts to nonbuilding 
     applications, including an identification of any regulatory 
     or statutory barriers to such use; and
       (iii) such recommendations as the Secretary and Secretary 
     of Defense determine to be appropriate.

     SEC. 402. DEPLOYMENT OF NEW TECHNOLOGIES FOR HIGH-EFFICIENCY 
                   CONSUMER PRODUCTS.

       (a) Definitions.--In this section:
       (1) Energy savings.--The term ``energy savings'' means 
     megawatt-hours of electricity or million British thermal 
     units of natural gas saved by a product, in comparison to 
     projected energy consumption under the energy efficiency 
     standard applicable to the product.
       (2) High-efficiency consumer product.--The term ``high-
     efficiency consumer product'' means a covered product to 
     which an energy conservation standard applies under section 
     325 of the Energy Policy and Conservation Act (42 U.S.C. 
     6295), if the energy efficiency of the product exceeds the 
     energy efficiency required under the standard.
       (b) Financial Incentives Program.--Effective beginning 
     October 1, 2006, the Secretary shall competitively award 
     financial incentives under this section for the manufacture 
     of high-efficiency consumer products.
       (c) Requirements.--
       (1) In general.--The Secretary shall make awards under this 
     section to manufacturers of high-efficiency consumer 
     products, based on the bid of each manufacturer in terms of 
     dollars per megawatt-hour or million British thermal units 
     saved.
       (2) Acceptance of bids.--In making awards under this 
     section, the Secretary shall--
       (A) solicit bids for reverse auction from appropriate 
     manufacturers, as determined by the Secretary; and
       (B) award financial incentives to the manufacturers that 
     submit the lowest bids that meet the requirements established 
     by the Secretary.
       (d) Forms of Awards.--An award for a high-efficiency 
     consumer product under this section shall be in the form of a 
     lump sum payment in an amount equal to the product obtained 
     by multiplying--
       (1) the amount of the bid by the manufacturer of the high-
     efficiency consumer product; and
       (2) the energy savings during the projected useful life of 
     the high-efficiency consumer product, not to exceed 10 years, 
     as determined under regulations issued by the Secretary.

     SEC. 403. NATIONAL MEDIA CAMPAIGN TO DECREASE OIL AND NATURAL 
                   GAS CONSUMPTION.

       (a) In General.--The Secretary, acting through the 
     Assistant Secretary for Energy Efficiency and Renewable 
     Energy (referred to in this section as the ``Secretary''), 
     shall develop and conduct a national media campaign for the 
     purpose of decreasing oil and natural gas consumption in the 
     United States over the next decade.
       (b) Contract With Entity.--The Secretary shall carry out 
     subsection (a) directly or through--
       (1) competitively bid contracts with 1 or more nationally 
     recognized media firms for

[[Page S4066]]

     the development and distribution of monthly television, 
     radio, and newspaper public service announcements; or
       (2) collective agreements with 1 or more nationally 
     recognized institutes, businesses, or nonprofit organizations 
     for the funding, development, and distribution of monthly 
     television, radio, and newspaper public service 
     announcements.
       (c) Use of Funds.--
       (1) In general.--Amounts made available to carry out this 
     section shall be used for the following:
       (A) Advertising costs.--
       (i) The purchase of media time and space.
       (ii) Creative and talent costs.
       (iii) Testing and evaluation of advertising.
       (iv) Evaluation of the effectiveness of the media campaign.
       (v) The negotiated fees for the winning bidder on requests 
     from proposals issued either by the Secretary for purposes 
     otherwise authorized in this section.
       (vi) Entertainment industry outreach, interactive outreach, 
     media projects and activities, public information, news media 
     outreach, and corporate sponsorship and participation.
       (B) Administrative costs.--Operational and management 
     expenses.
       (2) Limitations.--In carrying out this section, the 
     Secretary shall allocate not less than 85 percent of funds 
     made available under subsection (e) for each fiscal year for 
     the advertising functions specified under paragraph (1)(A).
       (d) Reports.--The Secretary shall annually submit to 
     Congress a report that describes--
       (1) the strategy of the national media campaign and whether 
     specific objectives of the campaign were accomplished, 
     including--
       (A) determinations concerning the rate of change of oil and 
     natural gas consumption, in both absolute and per capita 
     terms; and
       (B) an evaluation that enables consideration whether the 
     media campaign contributed to reduction of oil and natural 
     gas consumption;
       (2) steps taken to ensure that the national media campaign 
     operates in an effective and efficient manner consistent with 
     the overall strategy and focus of the campaign;
       (3) plans to purchase advertising time and space;
       (4) policies and practices implemented to ensure that 
     Federal funds are used responsibly to purchase advertising 
     time and space and eliminate the potential for waste, fraud, 
     and abuse; and
       (5) all contracts or cooperative agreements entered into 
     with a corporation, partnership, or individual working on 
     behalf of the national media campaign.
       (e) Authorization of Appropriations.--There is authorized 
     to be appropriated to carry out this section $5,000,000 for 
     each of fiscal years 2006 through 2010.

     SEC. 404. ENERGY EFFICIENCY RESOURCE PROGRAMS.

       (a) Electric Utility Programs.--Section 111 of the Public 
     Utilities Regulatory Policy Act of 1978 (16 U.S.C. 2621) is 
     amended by adding at the end the following:
       ``(e) Energy Efficiency Resource Programs.--
       ``(1) Definitions.--In this subsection:
       ``(A) Demand baseline.--The term `demand baseline' means 
     the baseline determined by the Secretary for an appropriate 
     period preceding the implementation of an energy efficiency 
     resource program.
       ``(B) Energy efficiency resource programs.--The term 
     `energy efficiency resource program' means an energy 
     efficiency or other demand reduction program that is designed 
     to reduce annual electricity consumption or peak demand of 
     consumers served by an electric utility by a percentage of 
     the demand baseline of the utility that is equal to not less 
     than 0.75 percent of the number of years during which the 
     program is in effect.
       ``(2) Public hearings; determinations.--
       ``(A) Public hearing.--As soon as practicable after the 
     date of enactment of this subsection, but not later than 3 
     years after that date, each State regulatory authority (with 
     respect to each electric utility over which the State has 
     ratemaking authority) and each nonregulated electric utility 
     shall, after notice, conduct a public hearing on the benefits 
     and feasibility of carrying out an energy efficiency resource 
     program.
       ``(B) Energy efficiency resource program.--A State 
     regulatory authority or nonregulated utility shall carry out 
     an energy efficiency resource program if, on the basis of a 
     hearing under subparagraph (A), the State regulatory 
     authority or nonregulated utility determines that the program 
     would--
       ``(i) benefit end-use customers;
       ``(ii) be cost-effective based on total resource cost;
       ``(iii) serve the public welfare; and
       ``(iv) be feasible to carry out.
       ``(3) Implementation.--
       ``(A) State regulatory authorities.--If a State regulatory 
     authority makes a determination under paragraph (2)(B), the 
     State regulatory authority shall--
       ``(i) require each electric utility over which the State 
     has ratemaking authority to carry out an energy efficiency 
     resource program; and
       ``(ii) allow such a utility to recover expenditures 
     incurred by the utility in carrying out the energy efficiency 
     resource program.
       ``(B) Nonregulated electric utilities.--If a nonregulated 
     electric utility makes a determination under paragraph 
     (2)(B), the utility shall carry out an energy efficiency 
     resource program.
       ``(4) Updating regulations.--A State regulatory authority 
     or nonregulated utility may update periodically a 
     determination under paragraph (2)(B) to determine whether an 
     energy efficiency resource program should be--
       ``(A) continued;
       ``(B) modified; or
       ``(C) terminated.
       ``(5) Exception.--Paragraph (2) shall not apply to a State 
     regulatory authority (or a nonregulated electric utility 
     operating in the State) that demonstrates to the Secretary 
     that an energy efficiency resource program is in effect in 
     the State.''.
       (b) Gas Utilities.--Section 303 of the Public Utilities 
     Regulatory Policy Act of 1978 (15 U.S.C. 3203) is amended by 
     adding at the end the following:
       ``(e) Energy Efficiency Resource Programs.--
       ``(1) Definitions.--In this subsection:
       ``(A) Demand baseline.--The term `demand baseline' means 
     the baseline determined by the Secretary for an appropriate 
     period preceding the implementation of an energy efficiency 
     resource program.
       ``(B) Energy efficiency resource programs.--The term 
     `energy efficiency resource program' means an energy 
     efficiency or other demand reduction program that is designed 
     to reduce annual gas consumption or peak demand of consumers 
     served by a gas utility by a percentage of the demand 
     baseline of the utility that is equal to not less than 0.75 
     percent of the number of years during which the program is in 
     effect.
       ``(2) Public hearings; determinations.--
       ``(A) Public hearing.--As soon as practicable after the 
     date of enactment of this subsection, but not later than 3 
     years after that date, each State regulatory authority (with 
     respect to each gas utility over which the State has 
     ratemaking authority) and each nonregulated gas utility 
     shall, after notice, conduct a public hearing on the benefits 
     and feasibility of carrying out an energy efficiency resource 
     program.
       ``(B) Energy efficiency resource program.--A State 
     regulatory authority or nonregulated utility shall carry out 
     an energy efficiency resource program if, on the basis of a 
     hearing under subparagraph (A), the State regulatory 
     authority or nonregulated utility determines that the program 
     would--
       ``(i) benefit end-use customers;
       ``(ii) be cost-effective based on total resource cost;
       ``(iii) serve the public welfare; and
       ``(iv) be feasible to carry out.
       ``(3) Implementation.--
       ``(A) State regulatory authorities.--If a State regulatory 
     authority makes a determination under paragraph (2)(B), the 
     State regulatory authority shall--
       ``(i) require each gas utility over which the State has 
     ratemaking authority to carry out an energy efficiency 
     resource program; and
       ``(ii) allow such a utility to recover expenditures 
     incurred by the utility in carrying out the energy efficiency 
     resource program.
       ``(B) Nonregulated gas utilities.--If a nonregulated gas 
     utility makes a determination under paragraph (2)(B), the 
     utility shall carry out an energy efficiency resource 
     program.
       ``(4) Updating regulations.--A State regulatory authority 
     or nonregulated utility may update periodically a 
     determination under paragraph (2)(B) to determine whether an 
     energy efficiency resource program should be--
       ``(A) continued;
       ``(B) modified; or
       ``(C) terminated.
       ``(5) Exception.--Paragraph (2) shall not apply to a State 
     regulatory authority (or a nonregulated gas utility operating 
     in the State) that demonstrates to the Secretary that an 
     energy efficiency resource program is in effect in the 
     State.''.

                TITLE V--ASSISTANCE TO ENERGY CONSUMERS

     SEC. 501. ENERGY EMERGENCY DISASTER RELIEF LOANS TO SMALL 
                   BUSINESS AND AGRICULTURAL PRODUCERS.

       (a) Definitions.--In this section--
       (1) the term ``Administrator'' means the Administrator of 
     the Small Business Administration; and
       (2) the term ``small business concern'' has the meaning 
     given the term in section 3 of the Small Business Act (15 
     U.S.C. 632).
       (b) Small Business Producer Energy Emergency Disaster Loan 
     Program.--
       (1) Disaster loan authority.--Section 7(b) of the Small 
     Business Act (15 U.S.C. 636(b)) is amended by inserting 
     immediately after paragraph (3) the following:
       ``(4) Energy disaster loans.--
       ``(A) Definitions.--In this paragraph--
       ``(i) the term `base price index' means the moving average 
     of the closing unit price on the New York Mercantile Exchange 
     for heating oil, natural gas, gasoline, or propane for the 10 
     days that correspond to the trading days described in clause 
     (ii) in each of the most recent 2 preceding years;
       ``(ii) the term `current price index' means the moving 
     average of the closing unit price on the New York Mercantile 
     Exchange, for the 10 most recent trading days, for contracts 
     to purchase heating oil, natural gas, gasoline, or propane 
     during the subsequent calendar month, commonly known as the 
     `front month'; and
       ``(iii) the term `significant increase' means--

       ``(I) with respect to the price of heating oil, natural 
     gas, gasoline, or propane, any time the current price index 
     exceeds the base price index by not less than 40 percent; and

[[Page S4067]]

       ``(II) with respect to the price of kerosene, any increase 
     which the Administrator, in consultation with the Secretary 
     of Energy, determines to be significant.

       ``(B) Loan authority.--The Administrator may make such 
     loans, either directly or in cooperation with banks or other 
     lending institutions through agreements to participate on an 
     immediate or deferred basis, to assist a small business 
     concern that has suffered or that is likely to suffer 
     substantial economic injury on or after January 1, 2005, as 
     the result of a significant increase in the price of heating 
     oil, natural gas, gasoline, propane, or kerosene occurring on 
     or after January 1, 2005.
       ``(C) Interest rate.--Any loan or guarantee extended 
     pursuant to this paragraph shall be made at the same interest 
     rate as economic injury loans under paragraph (2).
       ``(D) Maximum amount.--No loan may be made under this 
     paragraph, either directly or in cooperation with banks or 
     other lending institutions through agreements to participate 
     on an immediate or deferred basis, if the total amount 
     outstanding and committed to the borrower under this 
     subsection would exceed $1,500,000, unless such borrower 
     constitutes a major source of employment in its surrounding 
     area, as determined by the Administrator, in which case the 
     Administrator, in the discretion of the Administrator, may 
     waive the $1,500,000 limitation.
       ``(E) Disaster declaration.--For purposes of assistance 
     under this paragraph--
       ``(i) a declaration of a disaster area based on conditions 
     specified in this paragraph shall be required, and shall be 
     made by the President or the Administrator; or
       ``(ii) if no declaration has been made pursuant to clause 
     (i), the Governor of a State in which a significant increase 
     in the price of heating oil, natural gas, gasoline, propane, 
     or kerosene has occurred may certify to the Administrator 
     that small business concerns have suffered economic injury as 
     a result of such increase and are in need of financial 
     assistance which is not otherwise available on reasonable 
     terms in that State, and upon receipt of such certification, 
     the Administrator may make such loans as would have been 
     available under this paragraph if a disaster declaration had 
     been issued.
       ``(F) Conversion.--Notwithstanding any other provision of 
     law, loans made under this paragraph may be used by a small 
     business concern described in subparagraph (B) to convert 
     from the use of heating oil, natural gas, gasoline, propane, 
     or kerosene to a renewable or alternative energy source, 
     including agriculture and urban waste, geothermal energy, 
     cogeneration, solar energy, wind energy, or fuel cells.''.
       (2) Conforming amendments.--Section 3(k) of the Small 
     Business Act (15 U.S.C. 632(k)) is amended--
       (A) by inserting ``, a significant increase in the price of 
     heating oil, natural gas, gasoline, propane, or kerosene,'' 
     after ``civil disorders''; and
       (B) by inserting ``other'' before ``economic''.
       (c) Agricultural Producer Emergency Loans.--
       (1) In general.--Section 321(a) of the Consolidated Farm 
     and Rural Development Act (7 U.S.C. 1961(a)) is amended--
       (A) in the first sentence--
       (i) by striking ``aquaculture operations have'' and 
     inserting ``aquaculture operations (i) have''; and
       (ii) by inserting before ``: Provided,'' the following: ``, 
     or (ii)(I) are owned or operated by such an applicant that is 
     also a small business concern (as defined in section 3 of the 
     Small Business Act (15 U.S.C. 632)), and (II) have suffered 
     or are likely to suffer substantial economic injury on or 
     after January 1, 2005, as the result of a significant 
     increase in energy costs or input costs from energy sources 
     occurring on or after January 1, 2005, in connection with an 
     energy emergency declared by the President or the 
     Secretary'';
       (B) in the third sentence, by inserting before the period 
     at the end the following: ``or by an energy emergency 
     declared by the President or the Secretary''; and
       (C) in the fourth sentence--
       (i) by striking ``or natural disaster'' each place that 
     term appears and inserting ``, natural disaster, or energy 
     emergency''; and
       (ii) by inserting ``or declaration'' after ``emergency 
     designation''.
       (2) Funding.--Funds available on the date of enactment of 
     this Act for emergency loans under subtitle C of the 
     Consolidated Farm and Rural Development Act (7 U.S.C. 1961 et 
     seq.) shall be available to carry out the amendments made by 
     paragraph (1) to meet the needs resulting from natural 
     disasters.
       (d) Guidelines and Rulemaking.--
       (1) Guidelines.--Not later than 30 days after the date of 
     enactment of this Act, the Administrator and the Secretary of 
     Agriculture shall each issue guidelines to carry out 
     subsections (b) and (c), respectively, and the amendments 
     made thereby, which guidelines shall become effective on the 
     date of their issuance.
       (2) Rulemaking.--Not later than 30 days after the date of 
     enactment of this Act, the Administrator, after consultation 
     with the Secretary of Energy, shall promulgate regulations 
     specifying the method for determining a significant increase 
     in the price of kerosene under section 7(b)(4)(A)(iii)(II) of 
     the Small Business Act, as added by this section.
       (e) Reports.--
       (1) Small business administration.--Not later than 12 
     months after the date on which the Administrator issues 
     guidelines under subsection (d)(1), and annually thereafter, 
     until the date that is 12 months after the end of the 
     effective period of section 7(b)(4) of the Small Business 
     Act, as added by this section, the Administrator shall submit 
     to the Committee on Small Business and Entrepreneurship of 
     the Senate and the Committee on Small Business of the House 
     of Representatives, a report on the effectiveness of the 
     assistance made available under section 7(b)(4) of the Small 
     Business Act, as added by this section, including--
       (A) the number of small business concerns that applied for 
     a loan under such section 7(b)(4) and the number of those 
     that received such loans;
       (B) the dollar value of those loans;
       (C) the States in which the small business concerns that 
     received such loans are located;
       (D) the type of energy that caused the significant increase 
     in the cost for the participating small business concerns; 
     and
       (E) recommendations for ways to improve the assistance 
     provided under such section 7(b)(4), if any.
       (2) Department of agriculture.--Not later than 12 months 
     after the date on which the Secretary of Agriculture issues 
     guidelines under subsection (d)(1), and annually thereafter, 
     until the date that is 12 months after the end of the 
     effective period of the amendments made to section 321(a) of 
     the Consolidated Farm and Rural Development Act (7 U.S.C. 
     1961(a)) by this section, the Secretary shall submit to the 
     Committee on Small Business and Entrepreneurship and the 
     Committee on Agriculture, Nutrition, and Forestry of the 
     Senate and to the Committee on Small Business and the 
     Committee on Agriculture of the House of Representatives, a 
     report that--
       (A) describes the effectiveness of the assistance made 
     available under section 321(a) of the Consolidated Farm and 
     Rural Development Act (7 U.S.C. 1961(a)), as amended by this 
     section; and
       (B) contains recommendations for ways to improve the 
     assistance provided under such section 321(a).
       (f) Effective Date.--
       (1) Small business.--The amendments made by subsection (b) 
     shall apply during the 4-year period beginning on the earlier 
     of the date on which guidelines are published by the 
     Administrator under subsection (d)(1) or 30 days after the 
     date of enactment of this Act, with respect to assistance 
     under section 7(b)(4) of the Small Business Act, as added by 
     this section.
       (2) Agriculture.--The amendments made by subsection (c) 
     shall apply during the 4-year period beginning on the earlier 
     of the date on which guidelines are published by the 
     Secretary of Agriculture under subsection (d)(1) or 30 days 
     after the date of enactment of this Act, with respect to 
     assistance under section 321(a) of the Consolidated Farm and 
     Rural Development Act (7 U.S.C. 1961(a)), as amended by this 
     section.

     SEC. 502. EFFICIENT AND SAFE EQUIPMENT REPLACEMENT PROGRAM 
                   FOR WEATHERIZATION PURPOSES.

       (a) In General.--Part A of title IV of the Energy 
     Conservation and Production Act is amended--
       (1) by redesignating section 422 (42 U.S.C. 6872) as 
     section 423; and
       (2) by inserting after section 421 (42 U.S.C. 6871) the 
     following:

     ``SEC. 422. EFFICIENT AND SAFE EQUIPMENT REPLACEMENT PROGRAM 
                   FOR WEATHERIZATION PURPOSES.

       ``(a) Establishment of Program.--The Secretary shall 
     establish, within the Weatherization Assistance Program, a 
     program to assist in the replacement of unsafe or highly 
     inefficient heating and cooling units in low-income 
     households.
       ``(b) Administration.--
       ``(1) In general.--Except as otherwise provided in this 
     subsection, the Secretary shall administer the program 
     established under this section in accordance with this part.
       ``(2) Exemption for high-efficiency heating and cooling 
     equipment expenditures.--Assistance for high-efficiency 
     heating and cooling equipment under this section shall be 
     exempt from the standards established under section 413(b)(3) 
     and from section 415(c).
       ``(3) Identification of heating and cooling system 
     upgrades.--Assistance for system upgrades under this section 
     shall be based on a standard weatherization audit and 
     appropriate diagnostic procedures in use by the program.
       ``(4) Weatherization of home receiving new heating or 
     cooling system.--Assistance may be perceived for a home 
     receiving a new heating or cooling system under this section 
     regardless of whether the home is fully weatherized in the 
     year that the home received a new heating system.
       ``(5) Fuel.--The Secretary shall make no rule prohibiting a 
     grantee from installing high-efficiency equipment that uses a 
     fuel (including a renewable fuel) most likely to result in 
     reliable supply and the lowest practicable energy bills, 
     regardless of the fuel previously used by the household.
       ``(c) Authorization of Appropriations.--There are 
     authorized to be appropriated to the Secretary to carry out 
     this section--
       ``(1) $40,000,000 for fiscal year 2006;
       ``(2) $50,000,000 for fiscal year 2007; and
       ``(3) $60,000,000 for fiscal year 2008.''.
       (b) Table of Contents Amendment.--The table of contents of 
     the Energy Conservation and Production Act (42 U.S.C. prec. 
     6901) is amended--

[[Page S4068]]

       (1) by redesignating the item relating to section 422 as an 
     item relating to section 423; and
       (2) by inserting after the item relating to section 421 the 
     following:

``Sec. 422. Efficient and safe equipment program.''.

                                S. 2748

       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 CODE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Enhanced 
     Energy Security Tax Incentives Act of 2006''.
       (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 Code; table of contents.

                    TITLE I--EXTENSION OF INCENTIVES

Sec. 101. Extension of credit for electricity produced from certain 
              renewable resources.
Sec. 102. Extension and expansion of credit to holders of clean 
              renewable energy bonds.
Sec. 103. Extension of energy efficient commercial buildings deduction.
Sec. 104. Extension and expansion of new energy efficient home credit.
Sec. 105. Extension of nonbusiness energy property credit.
Sec. 106. Extension of residential energy efficient property credit.
Sec. 107. Extension of credit for business installation of qualified 
              fuel cells and stationary microturbine power plants.
Sec. 108. Extension of business solar investment tax credit.
Sec. 109. Extension of alternative fuel excise tax provisions, income 
              tax credits, and tariff duties.
Sec. 110. Extension of full credit for qualified electric vehicles.

           TITLE II--INCENTIVES FOR ALTERNATIVE FUEL VEHICLES

Sec. 201. Consumer incentives to purchase advanced technology vehicles.
Sec. 202. Advanced technology motor vehicles manufacturing credit.
Sec. 203. Tax incentives for private fleets.
Sec. 204. Modification of alternative vehicle refueling property 
              credit.
Sec. 205. Inclusion of heavy vehicles in limitation on depreciation of 
              certain luxury automobiles.
Sec. 206. Idling reduction tax credit.

                    TITLE III--ADDITIONAL INCENTIVES

Sec. 301. Energy credit for combined heat and power system property.
Sec. 302. Three-year applicable recovery period for depreciation of 
              qualified energy management devices.
Sec. 303. Three-year applicable recovery period for depreciation of 
              qualified water submetering devices.

                      TITLE IV--REVENUE PROVISIONS

Sec. 401. Revaluation of LIFO inventories of large integrated oil 
              companies.
Sec. 402. Elimination of amortization of geological and geophysical 
              expenditures for major integrated oil companies.
Sec. 403. Modifications of foreign tax credit rules applicable to large 
              integrated oil companies which are dual capacity 
              taxpayers.

                    TITLE I--EXTENSION OF INCENTIVES

     SEC. 101. EXTENSION OF CREDIT FOR ELECTRICITY PRODUCED FROM 
                   CERTAIN RENEWABLE RESOURCES.

       Section 45(d) (relating to qualified facilities) is amended 
     by striking ``2008'' each place it appears and inserting 
     ``2011''.

     SEC. 102. EXTENSION AND EXPANSION OF CREDIT TO HOLDERS OF 
                   CLEAN RENEWABLE ENERGY BONDS.

       (a) In General.--Section 54(m) (relating to termination) is 
     amended by striking ``2007'' and inserting ``2010''.
       (b) Annual Volume Cap for Bonds Issued During Extension 
     Period.--Paragraph (1) of section 54(f) (relating to 
     limitation on amount of bonds designated) is amended to read 
     as follows:
       ``(1) National limitation.--
       ``(A) Initial national limitation.--With respect to bonds 
     issued after December 31, 2005, and before January 1, 2008, 
     there is a national clean renewable energy bond limitation of 
     $800,000,000.
       ``(B) Annual national limitation.--With respect to bonds 
     issued after December 31, 2007, and before January 1, 2011, 
     there is a national clean renewable energy bond limitation 
     for each calendar year of $800,000,000.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to bonds issued after the date of the enactment 
     of this Act.

     SEC. 103. EXTENSION OF ENERGY EFFICIENT COMMERCIAL BUILDINGS 
                   DEDUCTION.

       Section 179D(h) (relating to termination) is amended by 
     striking ``2007'' and inserting ``2010''.

     SEC. 104. EXTENSION AND EXPANSION OF NEW ENERGY EFFICIENT 
                   HOME CREDIT.

       (a) Extension.--Section 45L(g) (relating to termination) is 
     amended by striking ``2007'' and inserting ``2010''.
       (b) Inclusion of 30 Percent Homes.--
       (1) In general.--Section 45L(c) (relating to energy saving 
     requirements) is amended--
       (A) by striking ``or'' at the end of paragraph (2),
       (B) by redesignating paragraph (3) as paragraph (4), and
       (C) by inserting after paragraph (2) the following new 
     paragraph:
       ``(3) certified--
       ``(A) to have a level of annual heating and cooling energy 
     consumption which is at least 30 percent below the annual 
     level described in paragraph (1), and
       ``(B) to have building envelope component improvements 
     account for at least \1/3\ of such 30 percent, or''.
       (2) Applicable amount of credit.--Section 45L(a)(2) is 
     amended by striking ``paragraph (3)'' and inserting 
     ``paragraph (3) or (4)''.
       (3) Effective date.--The amendments made by this subsection 
     shall apply to qualified new energy efficient homes acquired 
     after the date of the enactment of this Act.

     SEC. 105. EXTENSION OF NONBUSINESS ENERGY PROPERTY CREDIT.

       Section 25C(g) (relating to termination) is amended by 
     striking ``2007'' and inserting ``2010''.

     SEC. 106. EXTENSION OF RESIDENTIAL ENERGY EFFICIENT PROPERTY 
                   CREDIT.

       Section 25D(g) (relating to termination) is amended by 
     striking ``2007'' and inserting ``2010''.

     SEC. 107. EXTENSION OF CREDIT FOR BUSINESS INSTALLATION OF 
                   QUALIFIED FUEL CELLS AND STATIONARY 
                   MICROTURBINE POWER PLANTS.

       Sections 48(c)(1)(E) and 48(c)(2)(E) (relating to 
     termination) are each amended by striking ``2007'' and 
     inserting ``2010''.

     SEC. 108. EXTENSION OF BUSINESS SOLAR INVESTMENT TAX CREDIT.

       Sections 48(a)(2)(A)(i)(II) and 48(a)(3)(A)(ii) (relating 
     to termination) are each amended by striking ``2008'' and 
     inserting ``2011''.

     SEC. 109. EXTENSION OF ALTERNATIVE FUEL EXCISE TAX 
                   PROVISIONS, INCOME TAX CREDITS, AND TARIFF 
                   DUTIES.

       (a) Biodiesel.--Sections 40A(g), 6426(c)(6), and 
     6427(e)(5)(B) are each amended by striking ``2008'' and 
     inserting ``2010''.
       (b) Alternative Fuel.--
       (1) Fuels.--Sections 6426(d)(4) and 6427(e)(5)(C) are each 
     amended by striking ``September 30, 2009'' and inserting 
     ``December 31, 2010''.
       (2) Refueling property.--Section 30C(g) is amended by 
     striking ``2009'' and inserting ``2010''.
       (c) Ethanol Tariff Schedule.--Headings 9901.00.50 and 
     9901.00.52 of the Harmonized Tariff Schedule of the United 
     States (19 U.S.C. 3007) are each amended in the effective 
     period column by striking ``10/1/2007'' each place it appears 
     and inserting ``1/1/2011''.
       (d) Effective Date.--The amendments made by this section 
     shall take effect on January 1, 2007.

     SEC. 110. EXTENSION OF FULL CREDIT FOR QUALIFIED ELECTRIC 
                   VEHICLES.

       (a) In General.--Section 30(e) is amended by striking 
     ``2006'' and inserting ``2010''.
       (b) Repeal of Phaseout.--Section 30(b) (relating to 
     limitations) is amended by striking paragraph (2) and by 
     redesignating paragraph (3) as paragraph (2).
       (c) Credit Allowable Against Alternative Minimum Tax.--
     Paragraph (2) of section 30(b), as redesignated by subsection 
     (b), is amended to read as follows:
       ``(2) Application with other credits.--The credit allowed 
     by subsection (a) for any taxable year shall not exceed the 
     excess (if any) of--
       ``(A) the sum of the regular tax for the taxable year plus 
     the tax imposed by section 55, over
       ``(B) the sum of the credits allowable under subpart A and 
     section 27.''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2005.

           TITLE II--INCENTIVES FOR ALTERNATIVE FUEL VEHICLES

     SEC. 201. CONSUMER INCENTIVES TO PURCHASE ADVANCED TECHNOLOGY 
                   VEHICLES.

       (a) Elimination on Number of New Qualified Hybrid and 
     Advanced Lean Burn Technology Vehicles Eligible for 
     Alternative Motor Vehicle Credit.--
       (1) In general.--Section 30B is amended by striking 
     subsection (f) and by redesignating subsections (g) through 
     (j) as subsections (f) through (i), respectively.
       (2) Conforming amendments.--
       (A) Paragraphs (4) and (6) of section 30B(h) are each 
     amended by striking ``(determined without regard to 
     subsection (g))'' and inserting ``determined without regard 
     to subsection (f))''.
       (B) Section 38(b)(25) is amended by striking ``section 
     30B(g)(1)'' and inserting ``section 30B(f)(1)''.
       (C) Section 55(c)(2) is amended by striking ``section 
     30B(g)(2)'' and inserting ``section 30B(f)(2)''.
       (D) Section 1016(a)(36) is amended by striking ``section 
     30B(h)(4)'' and inserting ``section 30B(g)(4)''.
       (E) Section 6501(m) is amended by striking ``section 
     30B(h)(9)'' and inserting ``section 30B(g)(9)''.
       (b) Extension of Alternative Vehicle Credit for New 
     Qualified Hybrid Motor Vehicles.--Paragraph (3) of section 
     30B(i) (as redesignated by subsection (a)) is amended by 
     striking ``December 31, 2009'' and inserting ``December 31, 
     2010''.

[[Page S4069]]

       (c) Effective Date.--The amendments made by this section 
     shall apply to property placed in service after December 31, 
     2005, in taxable years ending after such date.

     SEC. 202. ADVANCED TECHNOLOGY MOTOR VEHICLES MANUFACTURING 
                   CREDIT.

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

     ``SEC. 30D. ADVANCED TECHNOLOGY MOTOR VEHICLES MANUFACTURING 
                   CREDIT.

       ``(a) Credit Allowed.--There shall be allowed as a credit 
     against the tax imposed by this chapter for the taxable year 
     an amount equal to 35 percent of so much of the qualified 
     investment of an eligible taxpayer for such taxable year as 
     does not exceed $75,000,000.
       ``(b) Qualified Investment.--For purposes of this section--
       ``(1) In general.--The qualified investment for any taxable 
     year is equal to the incremental costs incurred during such 
     taxable year--
       ``(A) to re-equip, expand, or establish any manufacturing 
     facility in the United States of the eligible taxpayer to 
     produce advanced technology motor vehicles or to produce 
     eligible components,
       ``(B) for engineering integration performed in the United 
     States of such vehicles and components as described in 
     subsection (d),
       ``(C) for research and development performed in the United 
     States related to advanced technology motor vehicles and 
     eligible components, and
       ``(D) for employee retraining with respect to the 
     manufacturing of such vehicles or components (determined 
     without regard to wages or salaries of such retrained 
     employees).
       ``(2) Attribution rules.--In the event a facility of the 
     eligible taxpayer produces both advanced technology motor 
     vehicles and conventional motor vehicles, or eligible and 
     non-eligible components, only the qualified investment 
     attributable to production of advanced technology motor 
     vehicles and eligible components shall be taken into account.
       ``(c) Advanced Technology Motor Vehicles and Eligible 
     Components.--For purposes of this section--
       ``(1) Advanced technology motor vehicle.--The term 
     `advanced technology motor vehicle' means--
       ``(A) any qualified electric vehicle (as defined in section 
     30(c)(1)),
       ``(B) any new qualified fuel cell motor vehicle (as defined 
     in section 30B(b)(3)),
       ``(C) any new advanced lean burn technology motor vehicle 
     (as defined in section 30B(c)(3)),
       ``(D) any new qualified hybrid motor vehicle (as defined in 
     section 30B(d)(2)(A) and determined without regard to any 
     gross vehicle weight rating),
       ``(E) any new qualified alternative fuel motor vehicle (as 
     defined in section 30B(e)(4), including any mixed-fuel 
     vehicle (as defined in section 30B(e)(5)(B)), and
       ``(F) any other motor vehicle using electric drive 
     transportation technology (as defined in paragraph (3)).
       ``(2) Eligible components.--The term `eligible component' 
     means any component inherent to any advanced technology motor 
     vehicle, including--
       ``(A) with respect to any gasoline or diesel-electric new 
     qualified hybrid motor vehicle--
       ``(i) electric motor or generator,
       ``(ii) power split device,
       ``(iii) power control unit,
       ``(iv) power controls,
       ``(v) integrated starter generator, or
       ``(vi) battery,
       ``(B) with respect to any hydraulic new qualified hybrid 
     motor vehicle--
       ``(i) hydraulic accumulator vessel,
       ``(ii) hydraulic pump, or
       ``(iii) hydraulic pump-motor assembly,
       ``(C) with respect to any new advanced lean burn technology 
     motor vehicle--
       ``(i) diesel engine,
       ``(ii) turbocharger,
       ``(iii) fuel injection system, or
       ``(iv) after-treatment system, such as a particle filter or 
     NOx absorber, and
       ``(D) with respect to any advanced technology motor 
     vehicle, any other component submitted for approval by the 
     Secretary.
       ``(3) Electric drive transportation technology.--The term 
     `electric drive transportation technology' means technology 
     used by vehicles that use an electric motor for all or part 
     of their motive power and that may or may not use off-board 
     electricity, such as battery electric vehicles, fuel cell 
     vehicles, engine dominant hybrid electric vehicles, plug-in 
     hybrid electric vehicles, and plug-in hybrid fuel cell 
     vehicles.
       ``(d) Engineering Integration Costs.--For purposes of 
     subsection (b)(1)(B), costs for engineering integration are 
     costs incurred prior to the market introduction of advanced 
     technology vehicles for engineering tasks related to--
       ``(1) establishing functional, structural, and performance 
     requirements for component and subsystems to meet overall 
     vehicle objectives for a specific application,
       ``(2) designing interfaces for components and subsystems 
     with mating systems within a specific vehicle application,
       ``(3) designing cost effective, efficient, and reliable 
     manufacturing processes to produce components and subsystems 
     for a specific vehicle application, and
       ``(4) validating functionality and performance of 
     components and subsystems for a specific vehicle application.
       ``(e) Eligible Taxpayer.--For purposes of this section, the 
     term `eligible taxpayer' means any taxpayer if more than 50 
     percent of its gross receipts for the taxable year is derived 
     from the manufacture of motor vehicles or any component parts 
     of such vehicles.
       ``(f) Limitation Based on Amount of Tax.--The credit 
     allowed under subsection (a) for the taxable year shall not 
     exceed the excess of--
       ``(1) the sum of--
       ``(A) the regular tax liability (as defined in section 
     26(b)) for such taxable year, plus
       ``(B) the tax imposed by section 55 for such taxable year 
     and any prior taxable year beginning after 1986 and not taken 
     into account under section 53 for any prior taxable year, 
     over
       ``(2) the sum of the credits allowable under subpart A and 
     sections 27, 30, and 30B for the taxable year.
       ``(g) Reduction in Basis.--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 paragraph) result 
     from such expenditure shall be reduced by the amount of the 
     credit so allowed.
       ``(h) No Double Benefit.--
       ``(1) Coordination with other deductions and credits.--
     Except as provided in paragraph (2), the amount of any 
     deduction or other credit allowable under this chapter for 
     any cost taken into account in determining the amount of the 
     credit under subsection (a) shall be reduced by the amount of 
     such credit attributable to such cost.
       ``(2) Research and development costs.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     any amount described in subsection (b)(1)(C) taken into 
     account in determining the amount of the credit under 
     subsection (a) for any taxable year shall not be taken into 
     account for purposes of determining the credit under section 
     41 for such taxable year.
       ``(B) Costs taken into account in determining base period 
     research expenses.--Any amounts described in subsection 
     (b)(1)(C) taken into account in determining the amount of the 
     credit under subsection (a) for any taxable year which are 
     qualified research expenses (within the meaning of section 
     41(b)) shall be taken into account in determining base period 
     research expenses for purposes of applying section 41 to 
     subsequent taxable years.
       ``(i) Business Carryovers Allowed.--If the credit allowable 
     under subsection (a) for a taxable year exceeds the 
     limitation under subsection (f) for such taxable year, such 
     excess (to the extent of the credit allowable with respect to 
     property subject to the allowance for depreciation) shall be 
     allowed as a credit carryback and carryforward under rules 
     similar to the rules of section 39.
       ``(j) Special Rules.--For purposes of this section, rules 
     similar to the rules of section 179A(e)(4) and paragraphs (1) 
     and (2) of section 41(f) shall apply
       ``(k) Election Not to Take Credit.--No credit shall be 
     allowed under subsection (a) for any property if the taxpayer 
     elects not to have this section apply to such property.
       ``(l) Regulations.--The Secretary shall prescribe such 
     regulations as necessary to carry out the provisions of this 
     section.
       ``(m) Termination.--This section shall not apply to any 
     qualified investment after December 31, 2010.''.
       (b) Conforming Amendments.--
       (1) Section 1016(a) is amended by striking ``and'' at the 
     end of paragraph (36), by striking the period at the end of 
     paragraph (37) and inserting ``, and'', and by adding at the 
     end the following new paragraph:
       ``(38) to the extent provided in section 30D(g).''.
       (2) Section 6501(m) is amended by inserting ``30D(k),'' 
     after ``30C(e)(5),''.
       (3) The table of sections for subpart B of part IV of 
     subchapter A of chapter 1 is amended by inserting after the 
     item relating to section 30C the following new item:

``Sec. 30D. Advanced technology motor vehicles manufacturing credit.''.

       (c) Effective Date.--The amendments made by this section 
     shall apply to amounts incurred in taxable years beginning 
     after December 31, 2005.

     SEC. 203. TAX INCENTIVES FOR PRIVATE FLEETS.

       (a) In General.--Subpart E of part IV of subchapter A of 
     chapter 1 is amended by inserting after section 48B the 
     following new section:

     ``SEC. 48C. FUEL-EFFICIENT FLEET CREDIT.

       ``(a) General Rule.--For purposes of section 46, the fuel-
     efficient fleet credit for any taxable year is 15 percent of 
     the qualified fuel-efficient vehicle investment amount of an 
     eligible taxpayer for such taxable year.
       ``(b) Vehicle Purchase Requirement.--In the case of any 
     eligible taxpayer which places less than 10 qualified fuel-
     efficient vehicles in service during the taxable year, the 
     qualified fuel-efficient vehicle investment amount shall be 
     zero.
       ``(c) Qualified Fuel-Efficient Vehicle Investment Amount.--
     For purposes of this section--
       ``(1) In general.--The term `qualified fuel-efficient 
     vehicle investment amount' means the basis of any qualified 
     fuel-efficient vehicle placed in service by an eligible 
     taxpayer during the taxable year.
       ``(2) Qualified fuel-efficient vehicle.--The term 
     `qualified fuel-efficient vehicle' means an automobile which 
     has a fuel economy which is at least 125 percent greater than 
     the average fuel economy standard for an automobile of the 
     same class and model year.

[[Page S4070]]

       ``(3) Other terms.--The terms `automobile', `average fuel 
     economy standard', `fuel economy', and `model year' have the 
     meanings given to such terms under section 32901 of title 49, 
     United States Code.
       ``(d) Eligible Taxpayer.--The term `eligible taxpayer' 
     means, with respect to any taxable year, a taxpayer who owns 
     a fleet of 100 or more vehicles which are used in the trade 
     or business of the taxpayer on the first day of such taxable 
     year.
       ``(e) Termination.--This section shall not apply to any 
     vehicle placed in service after December 31, 2010.''.
       (b) Credit Treated as Part of Investment Credit.--Section 
     46 is amended by striking ``and'' at the end of paragraph 
     (3), by striking the period at the end of paragraph (4) and 
     inserting ``, and'', and by adding at the end the following 
     new paragraph:
       ``(5) the fuel-efficient fleet credit.''.
       (c) Conforming Amendments.--
       (1) Section 49(a)(1)(C) is amended by striking ``and'' at 
     the end of clause (iii), by striking the period at the end of 
     clause (iv) and inserting ``, and'', and by adding at the end 
     the following new clause:
       ``(v) the basis of any qualified fuel-efficient vehicle 
     which is taken into account under section 48C.''.
       (2) The table of sections for subpart E of part IV of 
     subchapter A of chapter 1 is amended by inserting after the 
     item relating to section 48 the following new item:

``Sec. 48C. Fuel-efficient fleet credit.''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to periods after December 31, 2005, in taxable 
     years ending after such date, 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. 204. MODIFICATION OF ALTERNATIVE VEHICLE REFUELING 
                   PROPERTY CREDIT.

       (a) Increase in Credit Amount.--Subsection (a) of section 
     30C is amended by striking ``30 percent'' and inserting ``50 
     percent''.
       (b) Credit Allowable Against Alternative Minimum Tax.--
     Paragraph (2) of section 30C is amended to read as follows:
       ``(2) Personal credit.--The credit allowed under subsection 
     (a) (after the application of paragraph (1)) for any taxable 
     year shall not exceed the excess (if any) of--
       ``(A) the sum of the regular tax for the taxable year plus 
     the tax imposed by section 55, over
       ``(B) the sum of the credits allowable under subpart A and 
     sections 27, 30, and 30B.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2005.

     SEC. 205. INCLUSION OF HEAVY VEHICLES IN LIMITATION ON 
                   DEPRECIATION OF CERTAIN LUXURY AUTOMOBILES.

       (a) In General.--Section 280F(d)(5)(A) (defining passenger 
     automobile) is amended--
       (1) by striking clause (ii) and inserting the following new 
     clause:
       ``(ii)(I) which is rated at 6,000 pounds unloaded gross 
     vehicle weight or less, or
       ``(II) which is rated at more than 6,000 pounds but not 
     more than 14,000 pounds gross vehicle weight.'',
       (2) by striking ``clause (ii)'' in the second sentence and 
     inserting ``clause (ii)(I)''.
       (b) 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. 206. IDLING REDUCTION TAX CREDIT.

       (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 new section:

     ``SEC. 45N. IDLING REDUCTION CREDIT.

       ``(a) General Rule.--For purposes of section 38, the idling 
     reduction tax credit determined under this section for the 
     taxable year is an amount equal to 25 percent of the amount 
     paid or incurred for each qualifying idling reduction device 
     placed in service by the taxpayer during the taxable year.
       ``(b) Limitation.--The maximum amount allowed as a credit 
     under subsection (a) shall not exceed $1,000 per device.
       ``(c) Definitions.--For purposes of subsection (a)--
       ``(1) Qualifying idling reduction device.--The term 
     `qualifying idling reduction device' means any device or 
     system of devices that--
       ``(A) is installed on a heavy-duty diesel-powered on-
     highway vehicle,
       ``(B) is designed to provide to such vehicle those services 
     (such as heat, air conditioning, or electricity) that would 
     otherwise require the operation of the main drive engine 
     while the vehicle is temporarily parked or remains 
     stationary,
       ``(C) the original use of which commences with the 
     taxpayer,
       ``(D) is acquired for use by the taxpayer and not for 
     resale, and
       ``(E) is certified by the Secretary of Energy, in 
     consultation with the Administrator of the Environmental 
     Protection Agency and the Secretary of Transportation, to 
     reduce long-duration idling of such vehicle at a motor 
     vehicle rest stop or other location where such vehicles are 
     temporarily parked or remain stationary.
       ``(2) Heavy-duty diesel-powered on-highway vehicle.--The 
     term `heavy-duty diesel-powered on-highway vehicle' means any 
     vehicle, machine, tractor, trailer, or semi-trailer propelled 
     or drawn by mechanical power and used upon the highways in 
     the transportation of passengers or property, or any 
     combination thereof determined by the Federal Highway 
     Administration.
       ``(3) Long-duration idling.--The term `long-duration 
     idling' means the operation of a main drive engine, for a 
     period greater than 15 consecutive minutes, where the main 
     drive engine is not engaged in gear. Such term does not apply 
     to routine stoppages associated with traffic movement or 
     congestion.
       ``(d) No Double Benefit.--For purposes of this section--
       ``(1) Reduction in basis.--If a credit is determined under 
     this section with respect to any property by reason of 
     expenditures described in subsection (a), the basis of such 
     property shall be reduced by the amount of the credit so 
     determined.
       ``(2) Other deductions and credits.--No deduction or credit 
     shall be allowed under any other provision of this chapter 
     with respect to the amount of the credit determined under 
     this section.
       ``(e) Election Not to Claim Credit.--This section shall not 
     apply to a taxpayer for any taxable year if such taxpayer 
     elects to have this section not apply for such taxable year.
       ``(f) Termination.--This section shall not apply to any 
     property placed in service after December 31, 2010.''.
       (b) Credit to Be Part of General Business Credit.--
     Subsection (b) of section 38 (relating to general business 
     credit) is amended by striking ``and'' at the end of 
     paragraph (29), by striking the period at the end of 
     paragraph (30) and inserting ``, plus'' , and by adding at 
     the end the following new paragraph:
       ``(31) the idling reduction tax credit determined under 
     section 45N(a).''.
       (c) Conforming Amendments.--
       (1) 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 45M the following new item:

``Sec. 45N. Idling reduction credit''.
       (2) Section 1016(a), as amended by this Act, is amended by 
     striking ``and'' at the end of paragraph (37), by striking 
     the period at the end of paragraph (38) and inserting ``, 
     and'', and by adding at the end the following:
       ``(39) in the case of a facility with respect to which a 
     credit was allowed under section 45N, to the extent provided 
     in section 45N(d)(A).''.
       (3) Section 6501(m) is amended by inserting ``45N(e),'' 
     after ``45D(c)(4),''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2006.
       (e) Determination of Certification Standards by Secretary 
     of Energy for Certifying Idling Reduction Devices.--Not later 
     than 6 months after the date of the enactment of this Act and 
     in order to reduce air pollution and fuel consumption, the 
     Secretary of Energy, in consultation with the Administrator 
     of the Environmental Protection Agency and the Secretary of 
     Transportation, shall publish the standards under which the 
     Secretary, in consultation with the Administrator of the 
     Environmental Protection Agency and the Secretary of 
     Transportation, will, for purposes of section 45N of the 
     Internal Revenue Code of 1986 (as added by this section), 
     certify the idling reduction devices which will reduce long-
     duration idling of vehicles at motor vehicle rest stops or 
     other locations where such vehicles are temporarily parked or 
     remain stationary in order to reduce air pollution and fuel 
     consumption.

                    TITLE III--ADDITIONAL INCENTIVES

     SEC. 301. ENERGY CREDIT FOR COMBINED HEAT AND POWER SYSTEM 
                   PROPERTY.

       (a) In General.--Section 48(a)(3)(A) (defining energy 
     property) is by striking ``or'' at the end of clause (iii), 
     by inserting ``or'' at the end of clause (iv), and by adding 
     at the end the following new clause:
       ``(v) combined heat and power system property,''.
       (b) Combined Heat and Power System Property.--Section 48 is 
     amended by adding at the end the following new subsection:
       ``(d) Combined Heat and Power System Property.--For 
     purposes of subsection (a)(3)(A)(v)--
       ``(1) Combined heat and power system property.--The term 
     `combined heat and power system property' means property 
     comprising a system--
       ``(A) which uses the same energy source for the 
     simultaneous or sequential generation of electrical power, 
     mechanical shaft power, or both, in combination with the 
     generation of steam or other forms of useful thermal energy 
     (including heating and cooling applications),
       ``(B) which has an electrical capacity of not more than 15 
     megawatts or a mechanical energy capacity of not more than 
     2,000 horsepower or an equivalent combination of electrical 
     and mechanical energy capacities,
       ``(C) which produces--
       ``(i) at least 20 percent of its total useful energy in the 
     form of thermal energy which is not used to produce 
     electrical or mechanical power (or combination thereof), and
       ``(ii) at least 20 percent of its total useful energy in 
     the form of electrical or mechanical power (or combination 
     thereof),
       ``(D) the energy efficiency percentage of which exceeds 60 
     percent, and
       ``(E) which is placed in service before January 1, 2011.
       ``(2) Special rules.--
       ``(A) Energy efficiency percentage.--For purposes of this 
     subsection, the energy efficiency percentage of a system is 
     the fraction--

[[Page S4071]]

       ``(i) the numerator of which is the total useful 
     electrical, thermal, and mechanical power produced by the 
     system at normal operating rates, and expected to be consumed 
     in its normal application, and
       ``(ii) the denominator of which is the higher heating value 
     of the primary fuel sources for the system.
       ``(B) Determinations made on btu basis.--The energy 
     efficiency percentage and the percentages under paragraph 
     (1)(C) shall be determined on a Btu basis.
       ``(C) 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.
       ``(D) Certain exception not to apply.--The first sentence 
     of the matter in subsection (a)(3) which follows subparagraph 
     (D) thereof shall not apply to combined heat and power system 
     property.
       ``(3) Systems using bagasse.--If a system is designed to 
     use bagasse for at least 90 percent of the energy source--
       ``(A) paragraph (1)(D) shall not apply, but
       ``(B) the amount of credit determined under subsection (a) 
     with respect to such system shall not exceed the amount which 
     bears the same ratio to such amount of credit (determined 
     without regard to this paragraph) as the energy efficiency 
     percentage of such system bears to 60 percent.
       ``(4) Nonapplication of certain rules.--For purposes of 
     determining if the term `combined heat and power system 
     property' includes technologies which generate electricity or 
     mechanical power using back-pressure steam turbines in place 
     of existing pressure-reducing valves or which make use of 
     waste heat from industrial processes such as by using organic 
     rankin, stirling, or kalina heat engine systems, paragraph 
     (1) shall be applied without regard to subparagraphs (C) and 
     (D) thereof .''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to periods after December 31, 2006, in taxable 
     years ending after such date, 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. 302. THREE-YEAR APPLICABLE RECOVERY PERIOD FOR 
                   DEPRECIATION OF QUALIFIED ENERGY MANAGEMENT 
                   DEVICES.

       (a) In General.--Section 168(e)(3)(A) (defining 3-year 
     property) 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 
     new clause:
       ``(iv) any qualified energy management device.''.
       (b) Definition of Qualified Energy Management Device.--
     Section 168(i) (relating to definitions and special rules) is 
     amended by inserting at the end the following new paragraph:
       ``(18) Qualified energy management device.--
       ``(A) In general.--The term `qualified energy management 
     device' means any energy management device which is placed in 
     service before January 1, 2011, by a taxpayer who is a 
     supplier of electric energy or a provider of electric energy 
     services.
       ``(B) Energy management device.--For purposes of 
     subparagraph (A), the term `energy management device' means 
     any meter or metering device which is used by the taxpayer--
       ``(i) to measure and record electricity usage data on a 
     time-differentiated basis in at least 4 separate time 
     segments per day, and
       ``(ii) to provide such data on at least a monthly basis to 
     both consumers and the taxpayer.''.
       (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, in taxable years ending after such 
     date.

     SEC. 303. THREE-YEAR APPLICABLE RECOVERY PERIOD FOR 
                   DEPRECIATION OF QUALIFIED WATER SUBMETERING 
                   DEVICES.

       (a) In General.--Section 168(e)(3)(A) (defining 3-year 
     property), as amended by this Act, is amended by striking 
     ``and'' at the end of clause (iii), by striking the period at 
     the end of clause (iv) and inserting ``, and'', and by adding 
     at the end the following new clause:
       ``(v) any qualified water submetering device.''.
       (b) Definition of Qualified Water Submetering Device.--
     Section 168(i) (relating to definitions and special rules), 
     as amended by this Act, is amended by inserting at the end 
     the following new paragraph:
       ``(19) Qualified water submetering device.--
       ``(A) In general.--The term `qualified water submetering 
     device' means any water submetering device which is placed in 
     service before January 1, 2011, by a taxpayer who is an 
     eligible resupplier with respect to the unit for which the 
     device is placed in service.
       ``(B) Water submetering device.--For purposes of this 
     paragraph, the term `water submetering device' means any 
     submetering device which is used by the taxpayer--
       ``(i) to measure and record water usage data, and
       ``(ii) to provide such data on at least a monthly basis to 
     both consumers and the taxpayer.
       ``(C) Eligible resupplier.--For purposes of subparagraph 
     (A), the term `eligible resupplier' means any taxpayer who 
     purchases and installs qualified water submetering devices in 
     every unit in any multi-unit property.''.
       (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, in taxable years ending after such 
     date.

                      TITLE IV--REVENUE PROVISIONS

     SEC. 401. REVALUATION OF LIFO INVENTORIES OF LARGE INTEGRATED 
                   OIL COMPANIES.

       (a) General Rule.--Notwithstanding any other provision of 
     law, if a taxpayer is an applicable integrated oil company 
     for its last taxable year ending in calendar year 2005, the 
     taxpayer shall--
       (1) increase, effective as of the close of such taxable 
     year, the value of each historic LIFO layer of inventories of 
     crude oil, natural gas, or any other petroleum product 
     (within the meaning of section 4611) by the layer adjustment 
     amount, and
       (2) decrease its cost of goods sold for such taxable year 
     by the aggregate amount of the increases under paragraph (1).

     If the aggregate amount of the increases under paragraph (1) 
     exceed the taxpayer's cost of goods sold for such taxable 
     year, the taxpayer's gross income for such taxable year shall 
     be increased by the amount of such excess.
       (b) Layer Adjustment Amount.--For purposes of this 
     section--
       (1) In general.--The term ``layer adjustment amount'' 
     means, with respect to any historic LIFO layer, the product 
     of--
       (A) $18.75, and
       (B) the number of barrels of crude oil (or in the case of 
     natural gas or other petroleum products, the number of 
     barrel-of-oil equivalents) represented by the layer.
       (2) Barrel-of-oil equivalent.--The term ``barrel-of-oil 
     equivalent'' has the meaning given such term by section 
     29(d)(5) (as in effect before its redesignation by the Energy 
     Tax Incentives Act of 2005).
       (c) Application of Requirement.--
       (1) No change in method of accounting.--Any adjustment 
     required by this section shall not be treated as a change in 
     method of accounting.
       (2) Underpayments of estimated tax.--No addition to the tax 
     shall be made under section 6655 of the Internal Revenue Code 
     of 1986 (relating to failure by corporation to pay estimated 
     tax) with respect to any underpayment of an installment 
     required to be paid with respect to the taxable year 
     described in subsection (a) to the extent such underpayment 
     was created or increased by this section.
       (d) Applicable Integrated Oil Company.--For purposes of 
     this section, the term ``applicable integrated oil company'' 
     means an integrated oil company (as defined in section 
     291(b)(4) of the Internal Revenue Code of 1986) which has an 
     average daily worldwide production of crude oil of at least 
     500,000 barrels for the taxable year and which had gross 
     receipts in excess of $1,000,000,000 for its last taxable 
     year ending during calendar year 2005. For purposes of this 
     subsection all persons treated as a single employer under 
     subsections (a) and (b) of section 52 of the Internal Revenue 
     Code of 1986 shall be treated as 1 person and, in the case of 
     a short taxable year, the rule under section 448(c)(3)(B) 
     shall apply.

     SEC. 402. ELIMINATION OF AMORTIZATION OF GEOLOGICAL AND 
                   GEOPHYSICAL EXPENDITURES FOR MAJOR INTEGRATED 
                   OIL COMPANIES.

       (a) In General.--Section 167(h) is amended by adding at the 
     end the following new paragraph:
       ``(5) Nonapplication to major integrated oil companies.--
     This subsection shall not apply with respect to any expenses 
     paid or incurred for any taxable year by any integrated oil 
     company (as defined in section 291(b)(4)) which has an 
     average daily worldwide production of crude oil of at least 
     500,000 barrels for such taxable year.''.
       (b) Effective Date.--The amendment made by this section 
     shall take effect as if included in the amendment made by 
     section 1329(a) of the Energy Policy Act of 2005.

     SEC. 403. MODIFICATIONS OF FOREIGN TAX CREDIT RULES 
                   APPLICABLE TO LARGE INTEGRATED OIL COMPANIES 
                   WHICH ARE DUAL CAPACITY TAXPAYERS.

       (a) In General.--Section 901 (relating to credit for taxes 
     of foreign countries and of possessions of the United States) 
     is amended by redesignating subsection (m) as (n) and by 
     inserting after subsection (l) the following new subsection:
       ``(m) Special Rules Relating to Large Integrated Oil 
     Companies Which Are Dual Capacity Taxpayers.--
       ``(1) General rule.--Notwithstanding any other provision of 
     this chapter, any amount paid or accrued by a dual capacity 
     taxpayer which is a large integrated oil company to a foreign 
     country or possession of the United States for any period 
     shall not be considered a tax--
       ``(A) if, for such period, the foreign country or 
     possession does not impose a generally applicable income tax, 
     or
       ``(B) to the extent such amount exceeds the amount 
     (determined in accordance with regulations) which--
       ``(i) is paid by such dual capacity taxpayer pursuant to 
     the generally applicable income tax imposed by the country or 
     possession, or
       ``(ii) would be paid if the generally applicable income tax 
     imposed by the country or

[[Page S4072]]

     possession were applicable to such dual capacity taxpayer.

     Nothing in this paragraph shall be construed to imply the 
     proper treatment of any such amount not in excess of the 
     amount determined under subparagraph (B).
       ``(2) Dual capacity taxpayer.--For purposes of this 
     subsection, the term `dual capacity taxpayer' means, with 
     respect to any foreign country or possession of the United 
     States, a person who--
       ``(A) is subject to a levy of such country or possession, 
     and
       ``(B) receives (or will receive) directly or indirectly a 
     specific economic benefit (as determined in accordance with 
     regulations) from such country or possession.
       ``(3) Generally applicable income tax.--For purposes of 
     this subsection--
       ``(A) In general.--The term `generally applicable income 
     tax' means an income tax (or a series of income taxes) which 
     is generally imposed under the laws of a foreign country or 
     possession on income derived from the conduct of a trade or 
     business within such country or possession.
       ``(B) Exceptions.--Such term shall not include a tax unless 
     it has substantial application, by its terms and in practice, 
     to--
       ``(i) persons who are not dual capacity taxpayers, and
       ``(ii) persons who are citizens or residents of the foreign 
     country or possession.
       ``(4) Large integrated oil company.--For purposes of this 
     subsection, the term `large integrated oil company' means, 
     with respect to any taxable year, an integrated oil company 
     (as defined in section 291(b)(4)) which--
       ``(A) had gross receipts in excess of $1,000,000,000 for 
     such taxable year, and
       ``(B) has an average daily worldwide production of crude 
     oil of at least 500,000 barrels for such taxable year.''
       (b) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     apply to taxes paid or accrued in taxable years beginning 
     after the date of the enactment of this Act.
       (2) Contrary treaty obligations upheld.--The amendments 
     made by this section shall not apply to the extent contrary 
     to any treaty obligation of the United States.
                                 ______